governor executive centre governor park plaza …

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GOVERNOR EXECUTIVE CENTRE & GOVERNOR PARK PLAZA

EXECUTIVE SUMMARY


Holliday Fenoglio Fowler, L.P., acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number 01385740 (“HFF”)

E X E C U T I V E S U M M A R Y

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GREENWICH DR

SHO

REHA

M PLGOVERNOR DR

HFF, L.P., as exclusive advisor, is pleased to present to qualified investors the opportunity to purchase, individually or together as a portfolio, the 100% fee simple interest in Governor Executive Centre and Governor Park Plaza (collectively, the “Properties” or “Portfolio”). At 90.4% leased, the Portfolio consists of two institutional quality office campuses encompassing four buildings, totaling 260,421 rentable square feet. The Portfolio offers durable in-place cash flow from the University of California, San Diego (Moody’s: Aa2), which occupies over 50% of the Portfolio and features a weighted average remaining lease term of nearly 7 years. Additionally, the Properties offer significant upside potential through the implementation of various amenity enhancements and the ability to increase in-place rents upon rollover, which are 17.0% below market. Strategically located within the boundaries of Interstates 5, 805 and State Highway 52, commonly referred to as “The Golden Triangle”, the Portfolio is situated in one of the most desirable, high-growth areas of San Diego.

OFFERING SUMMARY

UCSD SCHOOL OF MEDICINE

LA JOLLA

TROLLEY FUTURE BLUE LINE EXTENSION

FROM DOWNTOWN

UNIVERSITY SQUARE SHOPPING

CENTER

COSTA VERDE SHOPPING CENTER

($230M+ renovation planned)

PACIFIC OCEAN

The Portfolio is 90.4% leased with 50.6% credit tenancy in UCSD (Moody’s: Aa2). In-place rents for the Portfolio are 17.0% below market rents.

GOLDEN TRIANGLE AT A GLANCE

±14M SF of Commercial Property

50,000+ Full time residents

20,000+ Housing Units

80,000+ Daytime Population

2.26M SF of Retail Amenities

1,117 Hotel Rooms

80+ Restaurants

Governor Executive Centre and Governor Park Plaza can be acquired individually or as a single Portfolio.

GOVERNOR EXECUTIVE CENTRE

GOVERNOR PARK PLAZA PORTFOLIO

ADDRESS6165/6256 Greenwich Dr.

San Diego, CA 921226333/6363 Greenwich Dr.

San Diego, CA 921226165/6256/6333/6363 Greenwich

Dr. San Diego, CA 92122

ASSESSORS PARCEL # 348-850-04, 05 348-031-20-00 348-031-20 & 348-850-04, 05

NET RENTABLE AREA (IN-PLACE) 152,487 107,939 260,426

NET RENTABLE AREA (BOMA) 152,482 107,939 260,421

PERCENTAGE LEASED 91.8% 88.4% 90.4%

WTD. AVG. REMAINING LEASE TERM 3.6 years 6.8 years 4.9 years

PERCENTAGE LEASED TO UCSD 48.1% 54.0% 50.6%

WTD. AVG. REMAINING LEASE TERM FOR UCSD

4.7 years 9.4 years 6.8 years

NUMBER OF STORIES 3 & 5 2 2, 3 & 5

YEAR BUILT 1988 & 1989 1986 1988

PARKING RATIO 4.1 per 1,000 USF 4.5 per 1,000 USF 4.3 per 1,000 USF

LAND AREA 5.35 acres / 233,153 SF 7.12 acres / 310,275 SF 12.48 acres / 543,428 SF

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GREENWICH DRSH

ORE

HAM PL

GOVERNOR DR

GOVERNOR PARK PLAZA

GOVERNOR EXECUTIVE

CENTRE

MCAS MIRAMAR

DEL MAR HEIGHTSDEL MAR

TORREY PINES

UTC

SORRENTO MESA

SCRIPPS RESEARCH INSTITUTE

DEMOGRAPHIC INFORMATION

1 MILE 3 MILE 5 MILE

2020 Population Projection 8,344 106,837 273,349

2015 Population Estimate 8,097 101,353 262,161

Proj. Population Growth 2015-2020 3.05% 5.41% 4.27%

Population Growth 2010-2015 2.51% 5.78% 4.12%

2015 Average Household Income $101,124 $81,793 $90,285

Bachelor’s Degree Or Higher 1,668 20,295 49,774 Source: CoStar

UTC SHOPPING CENTER($1B renovation underway)

INFILL SUBMARKET WITH LIMITED POTENTIAL FOR NEW OFFICE SUPPLY

• The last remaining office development parcel in the Governor Park submarket was constructed over 15 years ago.

• There are 4 remaining vacant commercial land parcels totaling just 14.3 acres in the entire Golden Triangle market, restricting the potential for new office development.

I N V E S T M E N T H I G H L I G H T S

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Governor Executive Centre Governor Park Plaza

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LONG TERM CREDIT TENANCY

In excess of 50% of the Portfolio’s net rentable area is leased to credit tenant UCSD (Moody’s: Aa2) with a weighted average remaining lease term of 6.8 years.

CORE EXIT STRATEGY As UCSD continues to expand its space requirement, focusing on Governor Park for its administrative office functions, Governor Executive Centre and Governor Park Plaza are the ideal candidates for future UCSD expansion space. By increasing the amount of long-term credit tenancy in the Properties over time, an investor can reasonably project a core sale upon exit.

UC SAN DIEGO AT A GLANCE• Attracted an average of $1 billion in research funding

each year over the last five years

• Total revenues were $3.8 billion for fiscal year-end 2014, representing a 128% rise since 2011

• Total assets were $6.5 billion for fiscal year-end 2014, representing an increase of 15.5% over 2013

• Ranked #1 best hospital in San Diego

• Ranked #8 best public university in the U.S.

• Spun off 650-plus companies

2.1%

18.8%6.3% 9.0%

31.8%22.4%

$2.49 $2.50 $2.45 $2.63 $2.65

$3.05

$3.77

$2.91 $2.85$3.08 $3.07

$3.23$3.53 $3.76

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

RSF

Expi

ring

Rent

(PSF

/Mos

.)

Gross In-Place Rent (Upon Expiration) vs. Market Rent

% RSF Expiring Weighted Average In-Place Rent Weighted Average Market Rent

STRONG IN-PLACE CASH FLOW WITH SIGNIFICANT UPSIDE POTENTIAL

The Portfolio offers durable in-place cash flow from credit tenancy (50.6% of NRA) and an overall weighted average remaining lease term of 4.9 years, in addition to substantial value growth potential via in-place rents that are 17.0% below market.


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DEMONSTRATED LONG-TERM UCSD COMMITMENT

• UCSD, which occupies over 50% of the Portfolio NRA, has identified the Governor Park submarket as the main location for its administrative and extension functions in San Diego.

• Since mid-2015, UCSD has expanded into over 130,000 square feet of space in the Governor Park submarket to occupy a total of 216,517 square feet (25.2% of the submarket), committing to long-term leases in all instances.

• The class A image, superior accessibility, freeway visibility of Governor Park, as well is its proximity to UCSD’s main campus, clinical and research divisions in UTC and Torrey Pines, make it the ideal location for UCSD’s administrative and extension operations.

• UCSD has proven itself as a worldwide leader in research and medical innovation by continuing to offer the best in class research, cancer, trauma, and hospital centers. The ongoing expansion arises new employment opportunities, coupled with new office and developmental real estate demand.

1903FOUNDEDMarine Biological Assoc.of San Diego 1959

MOVE TO LA JOLLA

1960UCSD OFFICIALLY ESTABLISHED

1966UCSD BEGINSoperating 1st University Hospital

1968UCSD PURCHASES130 acres of land in La Jolla

SIZE EXEC. DATE70,987 SF Nov-15

6200 GREENWICH DR

OF LEASES SIGNED BY UCSD SINCE 2009 IN GOVERNOR PARK (±25% OF THE TOTAL SUBMARKET)

216,517 SF

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1976-1978FOUNDEDFirst Cancer & Trauma Centers founded

19901ST OFFICE SPACEsigned in La Jolla

2001CAMPUS OPENING6th and final college opens

2011RESEARCH MEDICAL CENTER OPENING

201629 ,000 DIRECT JOBSattributed to UCSD reputable companies

2011LEASE SIGNEDSigns first substantial size lease of nearly 50,000 SF at Gov. Exec. Centre

34,000E N R O L L M E N T10 YEAR GROWTH

IN ENROLLMENT

1ST

IN THE NATION LEADING RESEARCH, CIVIC ENGAGEMENT & SOCIAL MOBILITY

FOR 6 STRAIGHT YEARS

FULL/PART TIME EMPLOYEES29,986

2ND LARGEST EMPLOYER IN SAN DIEGO COUNTY

OF PURCHASED & LEASED SPACE IN SAN

DIEGO SINCE 2015

345,000 SF

SIZE EXEC. DATE

49,819 SF Nov-105,948 SF Apr-1517,633 SF Jun-15

6256 GREENWICH DR

SIZE EXEC. DATE

24,405 SF Sep-1133,854 SF* Jan-16

*UCSD sublease with Verizon

6333/6363 GREENWICH DR

SIZE EXEC. DATE

13,871 SF Jan-09

5060 SHOREHAM PL


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ABILITY TO ENHANCE VALUE THROUGH ADDITIONAL IMPROVEMENTS AND AMENITIES

Companies are demanding a new type of workplace, emphasizing employee satisfaction and retention of talent. Governor Executive Centre and Governor Park Plaza both offer an exceptional opportunity to enhance the common areas and project amenities.

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Add outdoor lounge area, providing free wifi access, coffee stands, and grab-and-go food options. Enhance exteriors with modernized landscaping.

ENHANCE EXTERIOR COMMON AREAS

Establish a new brand identity for the Properties, taking advantage of the heavy traffic count on I-805.

NEW BUILDING TOP SIGNAGE

3 Upgrade amenities around the existing tennis courts. Potential to upgrade to a state-of-the-art outdoor fitness complex.

ACTIVE AMENITY ENHANCEMENT

1

3

21

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PROMINENT IDENTITYGovernor Executive Centre enjoys unparalleled visibility from Interstate 805, which accommodates 200,000 cars per day. Governor Park Plaza also provides exceptional freeway visibility directly translating into highly valued signage rights for tenants at both Properties.

SUPERIOR FREEWAY ACCESSIBILITYSituated at the corner of Interstate 805 and State Highway 52, both Governor Executive Centre and Governor Park Plaza offer superior freeway access to tenants compared to the surrounding submarkets of UTC, Sorrento Mesa and Kearny Mesa.

200,000 VEHICLES PER DAY


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Ahi Sushi & GrillAladdin MediterraneanAmardeen MediterraneanAppollonia Greek BistroArby’sBombay CoastBottega ItalianaBuga Korean BarbecueCafé JapengoCalifornia Pizza KitchenCarmen’s Mexican FoodCarls Jr.Charley’sChipotleContinent DeliCorner BakeryCraft PizzaDaphne’sDenny’sDi-Chan Thai RestaurantDino’s GyrosDraft RepublicEddy M’sEdo SushiEinstein BagelsEl CotixanElijah’s DeliEureka! Burger

Fin’sFive GuysFlame BroilerFleming’s SteakhouseGreen Light CaféHavana GrillHi ThaiHumphrey’s La Jolla GrillIndian Express RestaurantIslandsIzakaya KanpaiJersey Mike’sKebab GrillKing’s BistroKi SushiLeucadia Pizzeria & ItalianL&L Hawaiian BBQLemonadeLittle Sheep MongolianLolita’s Taco ShopLorna’s Italian KitchenLos Pueblos MexicanMatsugawa SushiMcDonald’sMelting PotMicheline’s Pita HouseMom & Dom’s PizzaMongrill

Niban JapaneseNoodles & CompanyNordstrom CaféNozomiOn a RollOutback SteakhouseOutcast GrillPanda County RestaurantPanda ExpressPapa Chito’s Mexican FoodPapa John’s PizzaPF Chang’sPho La JollaPho T CaliPorter’s PubRamen YamadaRed ORed RobinRegents PizzeriaRock Bottom BreweryRound Table PizzaRoy’sRoyal India ExpressRubio’sSammy’s PizzaSantorini GreekSarku Japan

Schlotzsky’sSeasons 52ShogunSipz VegetarianSorrentino’s PizzaSouplantationSpecialty’s CaféSt. Tropez BistroStar Anise ThaiStarbucksStoneOvenSubmarinaSubwaySurf BrothersTender GreensThai KitchenTony’s Giant PizzeriaTorrey PintsTroy’s Family RestaurantTruluck’sUn Mundo Mexican GrillVeggie GrillWendy’sWhich-Wich

GOLD

EN T

RIAN

GLE

REST

AURA

NTS

& C

AFÉS

PROXIMITY TO AMENITIESThe Properties benefit from of over 1.7 million SF of nearby retail amenities, with an additional 750,000 SF expected to be delivered between 2017 and 2020 with the completion of the $1 billion Westfield UTC Mall renovation and Costa Verde Center redevelopment.

TRACK RECORD OF OUTPERFORMING THE MARKETGovernor Executive Centre and Governor Park Plaza have historically outperformed the average submarket occupancy. Over the past five years these projects have outpaced the market occupancy by 708 bps and 323 bps, respectively.

20%30%40%50%60%70%80%90%

100%

Occ

upa

ncy

%

Governor Park Submarket Governor Park Plaza Governor Executive Centre

Governor Executive Centre:

Outperformed 5-yr avg. market

occupancy by 708 bps

Governor Park Plaza:

Outperformed 5-yr avg. market

occupancy by 323 bps

SUBJECT PROPERTIES VS. SUBMARKET - HISTORICAL OCCUPANCY

GOLD

EN T

RIAN

GLE

AMEN

ITIE

S

SHOPS

Abercrombie & FitchAnthropologieAppleBanana RepublicBest BuyBristol FarmsCrate & BarrelCVSDSW ShoesExpressFoot LockerForever 21Free PeopleGapGuessHollisterJ. CrewJusticeLucky BrandLululemonMacy’sMen’s WarehouseMichael KorsNordstromPottery BarnPirch

Ralph’sRestoration HardwareSearsSports ChaletStaplesTeslaTrader Joe’sUS Post OfficeVictoria’s SecretWhite House Black MarketWhole FoodsWilliams-SonomaWorld Market

LODGING

Radisson Hotel La JollaHyatt Regency La JollaSan Diego Marriott La Jolla

ENTERTAINMENT

AMC TheaterArcLight Cinemas La Jolla PlayhouseLandmark Theatres

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SURROUNDING INSTITUTIONAL OWNERSHIP (GOVERNOR PARK & UTC)The Golden Triangle has long been regarded as one of the most desired San Diego locations by institutional investors due to its central location, corporate tenant demand, abundance of amenities and historically sound fundamentals.

INSTITUTIONAL QUALITY OFFICE ASSETSBoth Governor Executive Centre and Governor Park Plaza have been meticulously maintained to the highest standards, having benefited from a long history of institutional ownership. Both Properties have been owned and operated exclusively by institutional owners since inception.

SIGNIFICANT BARRIERS TO ENTRYThe Golden Triangle area, due to its high land cost and lack of available sites for development, presents substantial barriers to entry for new development. With rents still significantly below levels that would justify new construction, an owner of the Portfolio is protected against new competing product.

DISCOUNT TO REPLACEMENT COSTGovernor Executive Centre and Governor Park Plaza present a unique opportunity to acquire two institutional quality assets at approximately 75% of replacement cost.

Governor Executive Centre and Governor Park Plaza represent a rare opportunity to acquire institutional quality office assets with durable in-place income and exceptional future upside

potential, at approximately 75% of replacement cost.

PA

CIF

IC O

CE

AN THE GOLDEN TRIANGLE

GOVERNOR EXECUTIVE CENTRE & GOVERNOR

PARK PLAZA

ZACK [email protected] Lic. # 01434957

ALDON COLESenior Managing [email protected] Lic. # 01457351

D E B T A D V I S O R S

NICK PSYLLOSSenior Managing [email protected] Lic. #00788060

RYAN GALLAGHERSenior Managing [email protected] Lic. # 01269918

I N V E S T M E N T A D V I S O R S

KARA MATHIS, CFASenior Real Estate [email protected] Lic. #01924947


MICHAEL LEGGETTSenior Managing [email protected] Lic. # 01056334

NICK [email protected] Lic. # 01819400

TIM [email protected] Lic. #01921744

STEVE BRUCESenior Managing [email protected] Lic. # 01455744

CHRISTOPHER HIGHSenior Managing [email protected] Lic. # 01734544

M A R K E T L E A S I N G A D V I S O R S

HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.

governor executive centre governor park plaza …

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