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222 E. Carrillo Street, Suite 101, Santa Barbara, California 93101 | HayesCommercial.com

FOR SALE

1.48 acres of M-I land with 14,900 SF of structures in the

heart of the industrial corridor and vibrant Lagoon District

Existing leases are month-to-month, providing flexibility for

redeveloping or re-visioning the site on any timeline

Santa Barbara’s industrial vacancy has been below 2% for

10 consecutive years

Rare assemblage of 4 contiguous parcels owned by the same

family for 100+ years

411-425 N Quarantina St & 617-619 E Gutierrez St

Santa Barbara, CA

HIGHLIGHTS

The information contained herein has been obtained from the owner of the property or from other sources deemed reliable. We have no reason to doubt its accuracy, but we do not guarantee i t. All square footages are approximate — buyer to verify. 11/15/18

Michael Martz, MBA, [email protected]. 01391838

Liam Murphy, [email protected]. 01439777

Kristopher [email protected]. 01482732

PRICE REDUCED


PROPERTY SUMMARY Very rare opportunity to purchase an acre and a half of M-I zoned land in downtown Santa Barbara. Located in the heart of the emerging “Lagoon District” surrounding Haley and Gutierrez streets. High demand for industrial space along with the tenants’ month-to-month leases create an opportunity to redevelop the property for a variety of uses.

OFFERING SUMMARY

Offering Price $7,750,000

Buildings 14,900± SF

Land 1.48 acres

Zoning M-I

Frontage 200 ft on Quarantina and 120 ft on Gutierrez

Uses Industrial, warehouse, production, outdoor storage

Leases All leases month-to-month. Property can be delivered for owner-occupant.






Note: Parcel lines are approximate and for reference only.





423-425 N QUARANTINA STAPN 031-293-01024,393 SF of land with 4,300 SF of building in two structuresUses on-site include office, workshop, storage, and yard

OFFERING OVERVIEW

617-625 E GUTIERREZ STAPN 031-293-013 & 031-293-01416,553 SF of land with 7,500 SF of building in one structureUses on-site include office, auto, workshop, and retail

411-415 N QUARANTINA STAPN 031-293-01123,522 SF of land with 3,100 SF of building in two structuresUses on-site include office, workshop, storage, and yard


Summary of Land-Use ReportThe following are highlights from a land-use report completed by TW Land Planning in September 2018. The full report is available in the due diligence package subject to the enclosed confidentiality agreement.

• Given the zoning and land area, the potential exists to add commercial square footage to reach a total of 27,760 SF of building without acquiring additional development rights. This assumes maintaining requisite area for on-site, surface parking. The report provides five development scenarios ranging from 20,500 SF to 33,600 SF of commercial space.

• M-I Zoning is designated by the City “to provide area for a diverse range of industrial uses, including manufacturing and processing, research and development, fabrication, equipment and service yards, and wholesaling. Retail, office, and other nonresidential uses may be allowed as accessory uses to industrial uses.” The subject property is NOT located within the Coastal Zone.

• Brewery/Winery/Restaurant use: The City has determined that the production of beer and wine is an “industrial art,” and therefore, is permissible within the M-I zone. Restaurants are also permissible within the M-I zone as an accessory use.

• Parking: industrial/manufacturing/office/retail use buildings are parked at 1 space/250 SF, construction & materials yard buildings are parked at 1 space/500 SF, and warehouse buildings are parked at 1 space/1,000 SF.

DEVELOPMENT AND LAND USE

Examples of Recent Developments in the Lagoon District

E. GUTIERREZ STREET & N. QUARANTINA STREETDUE DILIGENCE/ HIGHEST & BEST USE DISCUSSION09/04/2018Page 3 of 24

one point approximately 19,674 SF of building on-site, of which 18,449 SF would be considered commercial.

TITLE

It is unclear based on a cursory review of the Preliminary Title Reports (PTRs) if the subject assessor’s parcels are true legal lots. The Topographic Survey (Gromatici Land Surveying, Inc., 07/05/2018) indicates that there “are gaps outside the deeded boundaries of the parcels we surveyed.” Based on a subsequent conversation with the Gromatici principal land surveyor (Eric Ackerman, 09/04/2018), the lots mapped on the topographic survey are consistent with the deeded lots. There is, however, a 2.21’ strip of land immediately to the east of Lots 3 ad 4 (i.e., 415-423 N. Quarantina) that is not a part of the current grant deeds, but may or may not be associated with the true legal lot. If there were any desire to convey the lots separately at some future point in time, it is recommended that a chain of title be obtained/ reviewed in consultation with a land surveyor. It is unclear if the City of Santa Barbara would require a chain of title should the Lots 3 and/or 4 be included as part of a subdivision map. Off-site access across Lot 4 (423 N. Quarantina) appears to be occurring in order to access parking/ storage at the rear of 632 E. Haley, 628 E. Haley, and/or 624 E. Haley (see O.R. 2011-0013439: Grant of Easement and Agreement). This easement agreement grants access rights through Lot 4 to the following adjacent properties: 624 E Haley Street (APN 031-293-023) and 628 E. Haley Street (APN 031-293-024). The existing grant of easement appears to follow, in general, the exiting driveway pattern located on Lot 4. The easement agreement allows for the right to extinguish the current easement with a substitute easement; the substitute easement is a 20’ strip of land bordering the northern property line of Lot 4. Depending upon the specific redevelopment design(s), it may be necessary to renegotiate this easement agreement. The concept designs presented herein may allow for a shared driveway and access to 624/628 N. Quarantina, but not in the location of either the existing or substitute easement area.

Based upon a cursory review of a separate easement agreement (O.R. 2011-0013440), which appears to address lot line/ building discrepancies between 624 E Haley Street and 628 E. Haley Street, it does not appear to have any substantive effect on the adjacent Lot 4 property. HIGHEST & BEST USE DISCUSSION

The identification of a highest-and-best use(s) for any property is subjective and often depends on the unique investment goals and business objectives of a particular individual and/or group. Absent the identification of a specific investor, this discussion is intended to address the broad interests of the marketplace and provides a high-level review of potential

E. GUTIERREZ STREET & N. QUARANTINA STREET DUE DILIGENCE/ HIGHEST & BEST USE DISCUSSION 09/04/2018 Page 2 of 24

SITE STATISTICS

TABLE 1: EXISTING PROJECT STATISTICS LOT

# ADDRESS

(APN) LOT

AREA BUILDING

AREA BUILDING PERMITS

USE BUILDING HEIGHT

PARKING 1

617/619 E. Gutierrez St (APN 031-293-014)

0.19 AC

7,500 SF 9,860 SF Commercial/ Office

2 Story n/a*** 2 625 E. Gutierrez St

(APN 031-293-013) 0.19 AC

0 SF n/a Parking n/a +20 spaces*** 3 415 N. Quarantina St

619 E. Gutierrez St-Unit F

(APN 031-293-011)

0.54 AC

1,875 SF

1,225 SF

3,344 SF

1,225 SF*

Office/ Warehouse 1 Bd Resdntl

Yard Area

1 Story

1 Story

n/a***

4 423 N. Quarantina St 423-1/2 N. Quarantina St

425 N. Quarantina St 425 N. Quarantina St-

Unit K2 (APN 031-293-010)

0.56 AC

1,700 SF (see above) 2,600 SF

(see above)

5,245 Commercial Resdntl

Commercial Resdntl

Yard Area

1 Story 1 Story 1 Story 1 Story

n/a***

TOTAL: 1.48 AC

14,900 SF**

19,674 SF Mixed-Use 1-2 Story n/a*** NOTES: * Given the age of structure, this structure is assumed to be permitted, although no building permits were located. ** Per CBRE Phase 1 ESA (04/16/2018). City-approved Building Plans have not requested/ reviewed. Physical site measurements and/or review of City’s Architectural Archives is recommended. *** The existing City permit files did not identify parking for any of the existing structures. EXECUTIVE SUMMARY EXISTING DEVELOPMENT For purposes of this memo, the subject property is comprised of four (4) separate assessor’s parcels. Lot 1 of the subject property is developed with a two-story, 7,500 SF commercial/ office building. Lot 2 is developed with a 20-space (approx.) parking lot that serves the building located on Lot 1. Lot 3 is developed with a one-story 1,875 SF office/ warehouse building, a 1,225 SF residence, and a contractor yard area. Lot 4 is developed with a one-story 1,700 SF office/ retail building, a 2,600 SF office/ retail building, and a contractor yard area. The total building area on Lots 1-4 is approximately 14,900 SF, of which approximately 13,675 SF is devoted to commercial use. A review of historical building permits (note, a review of City of Santa Barbara Architectural Archive plans has not been conducted) indicates there was at

TW LAND PLANNING & DEVELOPMENT, LLC SANTA BARBARA OFFICE VENTURA OFFICE 903 State Street, Suite 202 1068 E. Main Street, Suite 225 Santa Barbara, CA 93101 Ventura, CA 93001 Ph: (805) 698-7153

DISCLAIMER: The information contained herein is intended to offer information and guidance relevant to the use and development of the above-referenced property. Information and analysis should generally be deemed reliable, but is not guaranteed.

DUE DILIGENCE MEMORANDUM TO: Kristopher Roth, Hayes Commercial FROM: Troy A. White, AICP DATE: 09/04/2018 SUBJECT: E. Gutierrez Street & N. Quarantina Street, Santa Barbara, CA Due Diligence/ Highest & Best Use Discussion As per your request, please find below the due diligence evaluation/ highest-and-best use discussion of the subject property, focused primarily on existing and potential land uses which appear to be permissible within 1) the existing building(s) and 2) the redeveloped subject property, and those uses’ potential consistency with City of Santa Barbara policies, permits, and regulations. TW Land Planning & Development, LLC (TW Land P&D) has reviewed the City General Plan (GP)/ Local Coastal Program (LCP), Title 30 “New” Zoning Ordinance (NZO), and available permit files for the subject property. Confirmation by City staff of initial conclusions identified herein is highly recommended.

GENERAL PLANNING INFORMATION Address (APN): Lot 1: 617/619 E. Gutierrez St (APN 031-293-014) Lot 2: 625 E. Gutierrez St (APN 031-293-013) Lot 3: 415 N. Quarantina St/ 619 E. Gutierrez St-Unit F (APN 031-293-011)* Lot 4: 423, 423-1/2, & 425 N. Quarantina St (APN 031-293-010) GP/ LCP: Industrial Zoning: M-I (Manufacturing Industrial Zone)

Chapter 30 (“New” Zoning Ordinance/ NZO) applies to this property. Property is NOT located in the Coastal Zone. Project is NOT located in the El Pueblo Viejo Landmark District. NOTES: * County of Santa Barbara/ City of Santa Barbara appear to have assigned 411 E. Gutierrez Street to APN 031-293-011, but the address is actually associated with the adjacent property to the east, APN 031-293-012.





406-412 E HALEY STAdaptive re-use of 19k sf former industrial showroom and warehouse. Now winery, brewery, restaurant, etc.

414 OLIVE STAdaptive re-use of 18k sf former manufacturing and warehouse. Now tech office and design showroom.

126 E HALEY STRe-positioning of industrial and office building. Upgrades to exterior and interior and rents have increased 30-40%.

604-610 E COTA STNew mixed-use development of former printing building. Includes approx. 2k sf of retail/office and over 25 apartment units.


SITE

LAGOON DISTRICT• The Sandbox• Rose café• Ooty’s Scooters• SLTWTR Creative Agency• Art from Scrap• Home Improvement

Center• French Press• Santa Barbara Design

Center• Santa Barbara Forge + Iron

THE FUNK ZONE• Municipal Wines• The Lark• The Blue Door• Lama Dog Taproom• Figueroa Mountain

Brewing Co• The Californian Hotel• Santa Barbara Winery• Mony’s Mexican Food• Cutler’s Artisan Spirits• The MOXI Museum• Loquita

East Beach





AREA OVERVIEW


AREA INFORMATION

THE LAGOON DISTRICTAn initiative started by local businesses, this district’s goal is to nurture the best of Santa Barbara’s food & beverage, arts & entertainment and retail, blended with high-quality nonprofit, tech, and industrial tenants. Lively events and an engaging atmo-sphere draw in locals and tourists alike, to this area surrounding the subject property.

THE FUNK ZONEGenerally defined by State Street to the west, Highway 101 to the north, Garden Street to the east, and the ocean to the south, the Funk Zone has historically been an industrial area. As time has passed and manufacturing waned, it has become a haven for the city’s artists and artisans. This unique history, combined with its prime location adjacent to both the beach and State Street, has recently attracted an influx of invest-ment and new tenants including wine tasting rooms, restaurants, tech companies, and art galleries.

THE URBAN WINE TRAILWith 35,000 tourists on average every day, the area has become a thriving hub for this world-renowned wine region. Santa Barbara’s Urban Wine Trail brings heavy traf-fic – by train, bike and foot – into the Funk Zone and Lagoon District where patrons can choose from over 15 wineries within 3 blocks of the subject property.

THE SANTA BARBARA ALE TRAILSanta Barbara’s breweries have made a name for themselves in their own right — now referred to as the “Ale Trail,” the blooming hot spots are consistently and cre-atively providing hand-crafted brews and adding another layer to this vibrant pocket of Santa Barbara that overlaps with the subject property.






Vac

ancy

Rat

e

The commercial real estate market in the Santa Barbara area (known locally as the South Coast) is marked by low turnover, limited development and

high barriers to entry. Because of the growth constraints, the area enjoys below-average vacancy rates and stable rental income.

INDUSTRIAL SALES

Industrial sales gained momentum through 2018 and demand for CM and M-1 property remains very strong – arguably the most sought-after property type – but has met a limited inventory of fewer than 10 available properties on the South Coast for four straight years.

Despite the limited inventory, recent sales activity in the Lagoon District/Lower Eastside area of Santa Barbara has produced 21 sales valued at $47.3 million over the past 18 months. Almost all of the properties had either industrial improvements or undeveloped land. Most recently, 519 Garden St, 100-102 E Haley St, 719 Bond Ave, and 314 Edison Ave all sold in the second quarter of 2018. With Haley and Gutierrez Streets as its artery and vein, the neighborhood has been evolving gradually into a sprawling variation on the Funk Zone concept, dotted with “adaptive” repurposing of industrial property for beer and wine, artisan retail, and office use.

INDUSTRIAL LEASING

Santa Barbara is continuing the trajectory of very low industrial vacancy, while the number of lease transactions to date in 2018 is trending 30% above the prior 5-year average.

There are only six industrial spaces available in Santa Barbara, comprising a wispy vacancy rate of 0.35%. Asking rates vary substantially depending on location; not surprisingly, the Funk Zone is the high-rent area of town, where landlords are asking a premium of about 50 cents per square foot per month.

INDUSTRIAL VACANCY

MARKET OVERVIEW






COMPARABLE SALES

Address DealDate Price BldgSF LandSF BldgPPSF LandPPSF Zoning SiteCoverage

411NQuarantinaSt 6/4/17 $2,577,000 7,534 14,810 $342 $174 M-I 51%901NMilpasSt 12/5/17 $3,150,000 11,922 20,474 $264 $154 C-G 58%333EHaleySt 6/2/17 $2,343,000 5,869 10,000 $399 $234 M-C 59%513LagunaSt 12/12/17 $2,165,000 4,424 10,000 $489 $217 M-C 44%320-322ECotaSt 9/28/17 $2,620,000 3,288 15,244 $797 $172 M-C 22%614-618EHaleySt 12/21/17 $2,885,000 3,672 13,939 $786 $207 M-C 26%519GardenSt 6/18/18 $2,250,000 3,500 11,325 $643 $199 M-C 31%815EMasonSt 5/24/17 $1,950,000 5,000 11,250 $390 $173 M-I 44%822EYanonaliSt 1/25/18 $1,312,000 800 11,761 $1,640 $112 M-I 7%

Average 5,112 13,200 $639 $182 38%

Total $8,000,000 14,900 63,913 $537 $125 M-I 23%






CONFIDENTIALITY AGREEMENT

In connection with the proposed sale (“Proposed Sale”) of the property commonly known as 411-425 N Quarantina St and 617-619 E Gutierrez St, Santa Barbara, California (“Property”), Hayes Commercial Group (“Broker”), on behalf of MUFG Union Bank, N.A., Trustee of the Villalba Family Trust (“Seller”), is delivering to _ _ (“Accepting Party”), certain information that is confidential and/or proprietary in nature (collectively, the “Confidential Information”).

As used herein, “Confidential Information” means all data, reports, interpretation, forecasts, records and other information concerning or relating to the potential transaction or the Property including any offering material and/or broker correspondence, which is not available to the general public and which we, our affiliates or representatives may provide to you in the course of your potential purchase of the Property, together with analyses, compilations, studies or other documents, whether or not prepared by us which contain or otherwise reflect such information. Notwithstanding the foregoing, Confidential Information shall not include (i) information which was already in your possession prior to the date hereof, (ii) information which is obtained by you from a third person who is not prohibited from transmitting the information to you, or (iii) information that is publicly available.

By entering into this Confidentiality Agreement (“Agreement”) and accepting the Confidential Information, Accepting Party agrees as follows:

Except for the sole purpose of evaluating the possible acquisition of the Property by Accepting Party, the Confidential Information will not be used for any other purpose, including, without limitation, for the purpose of contacting the Seller’s tenants or soliciting additional buyers. Accepting Party shall not photocopy or duplicate the Confidential Information and shall keep all Confidential Information strictly confidential; provided, however, that such Confidential Information may be delivered to such persons or entities who because of their involvement with the Proposed Sale need to know such information for the purpose of giving advice with respect to, or consummating, the Proposed Sale (all of whom are collectively referred to as “Related Parties”).

Related Parties shall be informed by Accepting Party of the confidential nature of such information and shall be directed by Accepting Party (and Accepting Party shall cause such Related Parties) to keep all such information in the strictest confidence and to use such information only in connection with the Proposed Sale and in accordance with the terms of this Agreement. In all events, Accepting Party shall be liable for any breach of the obligations of confidentiality in this agreement by any Related Parties or by any other person or entity to whom Prospective Purchaser discloses the Confidential Information. If Accepting Party does not purchase the Property, or upon request of Seller, Accepting Party will promptly deliver to Seller all Confidential Information furnished, whether furnished before or after the date of this Agreement, without retaining copies thereof.

Accepting Party shall not (i) disclose the fact that discussions or negotiations are taking place concerning the possible acquisition of the Property or any of the terms thereof, or (ii) conduct any discussions, negotiations or make any inquiries concerning the possible acquisition of the Property with any other person or entity except for Seller and Listing Broker, except as may be permitted by the preceding paragraphs, or except as may be required by law. The parties shall be bound by this Agreement until the earlier of one (1) year from: (a) the date of this Agreement, or (b) the date that the Transaction is closed and/or the Property is sold by the Seller, unless otherwise extended by the parties in writing.

In the event that Accepting Party or Related Party becomes legally compelled to disclose all or any part of

the Confidential Information, Accepting Party will provide Seller with prompt written notice so that Seller may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that Seller waives compliance with the provisions of this Agreement, Accepting Party will furnish only that portion of the Confidential Information which is legally required and will exercise best efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Information.

Accepting Party acknowledges that remedies at law may be inadequate to protect against breach of this Agreement, and Accepting Party hereby agrees in advance to the granting of injunctive relief in Seller’s favor without proof of actual damages, in addition to any other remedies available at law or in equity. Accepting Party shall reimburse Seller for all costs and expenses, including reasonable attorney’s fees incurred by Seller in successfully enforcing Accepting Party’s obligations under this Agreement.

Seller makes no representations or warranties as to the accuracy or completeness of the Confidential Information or that actual results will conform to any projections. Seller expressly disclaims any and all liability for representations or warranties, expressed or implied, contained in the Confidential Information, or in any other written or oral communications transmitted or made available to Accepting Party by Seller.

Seller is under no legal obligation of any kind whatsoever with respect to the Proposed Sale by virtue of this Agreement, except for the matters specifically agreed to herein. Seller and Broker each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Seller shall have no legal commitment or obligations to any entity reviewing the Evaluation Material or making an offer to purchase the property unless and until a written agreement for the purchase of the property has been fully negotiated, executed, and delivered.

Accepting Party agrees to indemnify, defend and hold Broker and Seller and their respective members, partners, managers, officers, employees, affiliates, successors and assigns harmless against all claims, losses and/or damages resulting from Accepting Party’s breach of this agreement, as well as any breach thereof by Accepting Party’s Related Parties or consultants.

This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located, which is applicable to contracts made and to be performed wholly within such State.

Please acknowledge your agreement to and acceptance of the foregoing by signing where indicated below and returning one (1) executed copy to our attention.

ACCEPTED AND AGREED effective as of ______________________, 2018

PRINCIPAL BROKER

By: _____________________________ By: ______________________________

Name: __________________________ Name: ___________________________

Company: _______________________ Company: ________________________

Tel: _____________________________ Tel: ______________________________

Email: ___________________________ Email: ____________________________

411-425 N Quarantina and 617-619 E Gutierrez St | 14,900 SF on 1.48 Acres

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