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industrial parkway west

hesperian blvd California State Lottery Building 2489 Industrial Parkway West | Hayward, CA 94545 Contents

Investment Summary...... 3

Investment Highlights...... 3

Property Overview...... 5

Lease Abstract...... 9

Valuation...... 11

Tenant Overview...... 12

Location Overview...... 13

Demographics...... 15

EXCLUSIVELY OFFERED BY: BRYAN WEBB Senior Vice President COLLIERS INTERNATIONAL 415.288.7873 101 Second Street [email protected] 11th Floor Lic. 01826546 San Francisco, CA 94105 415.788.3100 Capital Markets | Colliers Investment Services Group CALIFORNIA STATE LOTTERY BUILDING

Investment Summary Investment Highlights Colliers International, as Exclusive Advisor, is pleased to present the opportunity to ■■ 100% occupied by the California State Lottery acquire the fee-simple interest in a single-tenant building occupied by the California ■■ State of California Lottery total revenues over $4.4B in 2013 State Lottery, (the “Property”) in Hayward, California. The Property is located in the ■■ Additional ±4,000 sq. ft. of secured yard with grade level roll up door Pacific Business Park, which encompasses 31 separately owned buildings and maintains ■■ Close proximity to Interstate 880 and Hwy 92 the grounds and landscaping.

The Property consists of an approximate 6,406 square foot building on 12,158 square feet of land. There is an additional + 4,000 sq. ft. of secured yard with a grade-level roll Tenant / Lease up door on the first floor. The tenant, California State Lottery, currently occupies the ■■ For FY2015-16 lottery sales were nearly $6.3B entire building and has been a tenant since November 2000. In 2010 they extended ■■ Tenant has option to cancel the lease with 180 days prior written notice their lease for an additional seven years, and recently renewed for an additional ten ■■ After 2019, Landlord can cancel the lease with 180 days prior written notice years. ■■ Lease guarantor is the California State Lottery Property Information Demographics Address 2489 Industrial Parkway West, Hayward, CA Offering Price $1,995,000 1-Mile 3-Mile 5-Mile Cap Rate 4.74% 2016 Population 19,486 152,560 338,539 2016 Households 5,323 43,294 101,259 Price/SF $311 2016 Median HH Income $79,254 $72,855 $77,943 Net Operating Income $94,552 Rentable Square Feet 6,406 Land Area 12,158 sq. ft. Traffic Counts Original Lease Term 10 years Location Traffic Count 9/30/2027 Lease Expiration Hesperian Blvd & Industrial Pkwy W 34,392 Renewal Options None Industrial Pkwy W & Satellite St 21,030 Lease Type Full Service Year Built 1987

P. 3 CALIFORNIA STATE LOTTERY BUILDING

P. 4 CALIFORNIA STATE LOTTERY BUILDING

Property Overview

The Offering

The California State Lottery building is a 6,406 sq. ft. two-story building located within the Pacific Business Park, which maintains the grounds and landscaping. There is an additional ±4,000 square feet of secured yard with a grade level roll-up door on the first floor. The California State Lottery currently occupies the entire building and has been a tenant since November 2000. The building is well maintained, and the owner has recently completed interior renovations. This location serves as the California State Lottery East Bay District Office, and houses the scratcher machines and lottery kiosks for the several nearby retailers within the East Bay.

Site Description

Location 2489 Industrial Parkway West, Hayward, CA

Year Built 1987

Assessor’s Parcel Number 463-0097-019

Rentable Square Feet 6,406

Site Area 12,158 sq. ft.

Number of Floors 2

Occupancy 100%

Parking 12 spaces

Ownership Fee Simple

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Property Photos

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Floorplans

FENCED-IN YARD

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Parcel Map

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Lease Abstract Gross Rental Income

Tenant California State Lottery $300,000.00

Type Full Service $245,350.49 $250,000.00 $235,913.93 Commencement Date 10/1/2017 $226,840.32 $218,115.69 $209,726.63 $201,660.22 $193,904.06 Base Lease Term 10 Years $200,000.00 $186,446.21 $179,275.20 $172,380.00 $165,750.00 Lease Expiration 9/30/2027 $150,000.00 Options None

Current Annual Rent $165,750 $100,000.00

Taxes, Utilities & Insurance Landlord Obligation $50,000.00

Annual Increase 4% Annual Rent increase

$0.00 Roof & Structure Landlord Obligation 10/1/2017 10/1/2018 10/1/2019 10/1/2020 10/1/2021 10/1/2022 10/1/2023 10/1/2024 10/1/2025 10/1/2026 10/1/2027

Credit Rating Moody’s A1

EARLY TERMINATION CLAUSE A) The Lessee may terminate this lease at any time by giving written notice to the Lessor at least 180 days prior to the date when such termination shall become effective.

B) The Lessor may terminate this lease at any time after April 1, 2019 by giving written noice to the Lessee at least 180 days prior to the date when such termination shall become effective.

P. 9 CALIFORNIA STATE LOTTERY BUILDING

distribution center

hesperian blvd industrial parkway

P. 10 CALIFORNIA STATE LOTTERY BUILDING

Valuation

TENANT SF $/Mo $/SF/Mo Annual Rent California State Lottery 6,406 $13,812 $2.16 $165,744 Effective Gross Income $165,744 Operating Expenses Total Amount Property Tax (1.332% +640) $5.29 $27,213 Management (2%) $0.86 $3,314 Repairs and Maintanace $0.86 $1,250 Insurance $0.29 $871 PG&E $0.42 $14,051 HVAC Maintenance $0.17 $650 Park Maintenance Dues $0.38 $3,264 Elevator $0.38 $800 Janitorial $0.30 $9,960 Alhambra Water Service + Janitorial Supplies $0.30 $1,924 Water $0.44 $1,133 Waste Mgmt $1.58 $6,372 Pest Control $0.31 $390 Total Operating Expenses $0.97 $71,192

Current NOI $94,552 Current Cap Rate 4.74% Purchase Price $311.43 $1,995,000

P. 11 CALIFORNIA STATE LOTTERY BUILDING

Tenant Overview

The California State Lottery began on November 6, 1984, when a majority (58%) of California voters passed Proposition 37, the California State Lottery Act of 1984, authorizing the creation of a lottery. The Lottery Act mandated an extremely tight time line for establishing the Lottery and bringing it to operational status. To comply, the state government immediately built the Lottery’s original headquarters in only three months in the Richards neighborhood of Sacramento (just north of downtown), where it has been located ever since. The first lottery games were Scratchers; sales began on October 3, 1985. A weekly Lotto game began on October 14, 1986.

California joined Mega Millions on June 22, 2005; it became the 12th jurisdiction to offer the game, and the last to join before the 2010 cross-sell expansion with MUSL. A Mega Millions drawing was held in Hollywood to commemorate the event.

In September 2011, the California Lottery moved into a new $58 million headquarters at California State Lottery 700 North 10th Street across the street from the old one, which it promptly demolished. FY 2015-2016 Total Sales $6.3 Billion Because it was built in a frantic 90-day rush to comply with the Lottery Act, the original headquarters had numerous construction defects in the roof, foundation, and elevator, Total to Education $1.59 Billion as well as a mold problem. Number of Retailers 22,000 Formation November 6, 1984 In February 2012 the California Lottery initiated an impact analysis of the Powerball Type Lottery System game, in preparation for a recommendation in July 2012. Subsequently, the Fiscal Year 2012–2013 Business Plan included funding for a launch of Powerball within the fiscal Headquarters Sacramento, California year, with Powerball launching in California on April 8, 2013. As a result of the California District Offices 9 Supreme Court’s decision, California is the only state with variable payouts for both Website www.calottery.com games.

P. 12 CALIFORNIA STATE LOTTERY BUILDING

Location Overview

East Bay overview the city of hayward

The East Bay is located on the eastern shore of The City of Hayward was incorporated in 1876 the San Francisco Bay and covers approximately and is centrally located in Alameda County about 1,540 square miles. The East Bay encompasses 25 miles southeast of San Francisco, 14 miles 33 cities or towns and nearly 2.5 million residents, south of Oakland, 26 miles north of San Jose about 34.8% of the Bay Area’s population and and 10 miles west of the Tri-Valley communities labor force, 34.6% of its employed workers and surrounding Pleasanton. Hayward covers 29% of the Bay Area’s jobs. approximately 61 square miles and is bordered to the north by the City of San Leandro and The East Bay is connected by eight bridges to unincorporated are of Castro Valley, to the south San Francisco; the Peninsula and the venture by the cities of Fremont and Union City, to the capital center of the nation; Sacramento, the west by the City of Pleasanton and the Hayward State Capital, 45 minutes to the North East; and California State University East Bay Mountain Ridge and to the west by the San the Napa Valley “Wine Country” just to the north. Francisco Bay shoreline. The Central Valley lies to the east and San Jose to the South. Hayward is generally considered a “bedroom community” for the larger metropolitan areas of The East Bay has been the fastest growing Oakland and San Francisco. Hayward is centrally region in the San Francisco Bay Area since the located within Alameda County and transportation mid-1980’s. It will continue to do this for the next network adjoining communities, recreational decade and beyond because of its key location areas and employment centers are good. and available land for new residential, commercial and industrial uses. But it is the diversity of the East Bay cities – economic base, ethnicity, climate, lifestyles, housing and business location opportunities that provide the region’s exceptional strength.

P. 13 CALIFORNIA STATE LOTTERY BUILDING

transportation Hayward is served by Interstate 880 (also known as the Nimitz Freeway), State Route 92 (Jackson Street) and State Route 238 (Mission Boulevard/Foothill Boulevard). State Route 92 continues west as the San Mateo-Hayward Bridge. The intersection of 880 and 92 was reconstructed over a four-year period, with completion of the project in October 2011. Mission Boulevard has been long known for chronic traffic congestion. Past proposals to convert Mission Boulevard to a freeway or build a 238 bypass have been controversial. One proposal, to build a freeway parallel to Mission Boulevard, extending a freeway south from 580 where it turns east towards Castro Valley, and connecting to Industrial Boulevard, had land purchased, but was cancelled after years of debate. The land is now scheduled for sale and zoning. Mission, Jackson, and Foothill all converge at one congested intersection south of downtown, known historically as “Five Flags” for a line of flagpoles located there. To alleviate congestion in the downtown area, the city has converted the A Street, Mission and Foothill triangle to one-way thoroughfares (counterclockwise), and is adding road improvements, landscaping, and telephone/ cable underground to Mission Boulevard south to Industrial Boulevard, and to Foothill Boulevard north to 580. The plan, the Route 238 Corridor Improvement Project, broke ground July 2010, completed rerouting in 2013, and was completed in 2013.

Bay Area Rapid Transit (BART), the regional rapid transit system, has two stations in Hayward: the Hayward station, in downtown; and the South Hayward station, near the Hayward-Union City border. BART operates a repair yard in Hayward. The AC Transit bus system, which provides bus service for Alameda County and Contra Costa County, operates in Hayward, and has a repair/training center located there. Amtrak, the national rail passenger system, provides daily service at its Hayward station for the Capitol Corridor train, which runs between San Jose in the South Bay, and Auburn in the Greater Sacramento area.

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Demographics CLOVERDALE COLOMA 99 ROSEVILLE FOLSOM 1 Mile 3 Mile 5 Mile GEYSERVILLE 80 LAKE 5 WOODLAND 50 2000 Total Population 16,332 138,081 298,317 128 HEALDSBURG 505 SACRAMENTO 2010 Total Population 17,553 139,019 308,742 CALLISTOGA LAKE BERRYESSA 80 101 DAVIS WINTERS 2016 Total Population 19,486 152,560 338,539 ST HELENA 128 16 116 2021 Total Population 21,069 164,991 367,967 SANTA DIXON ROSA YOUNTVILLE ELK GROVE Population Change 2000 to 2016 19.3% 10.5% 13.5% 12 84 121 VACAVILLE

POPULATION 29 99 ROHNERT 113 Population Change 2010 to 2021 20.0% 18.7% 19.2% PARK 80 SONOMA NAPA 5 Population Change 2016 to 2021 8.1% 8.1% 8.7% GALT PETALUMA FAIRFIELD 12 88 37 LODI 1 Mile 3 Mile 5 Mile VALLEJO 680 12 NOVATO 26 SAN SUISUN 160 2000 Households 4,779 41,218 94,142 PABLO 780 BAY 1 101 BAY 4 ANTIOCH 2010 Households 5,013 41,224 96,632 80 SAN RAFAEL CONCORD 2016 Households 5,323 43,294 101,259 BRENTWOOD STOCKTON 4 MILL VALLEY WALNUT CREEK 4 2021 Households 5,505 44,780 105,308 BERKELEY 99

Household Change 2000 to 2010 4.9% .0% 2.6% 80 OAKLAND SAN ALAMEDA SAN RAMON MANTECA 120 Household Change 2000 to 2016 11.4% 5.0% 7.6% FRANCISCO 205 H OLDS H OUSE 580 580 TRACY RIVERBANK Household Change 2010 to 2021 9.8% 8.6% 9.0% DALY SAN LIVERMORE Household Change 2016 to 2021 3.4% 3.4% 4.0% CITY FRANCISCO HAYWARD LIVERMORE BAY 680 132 MODESTO 280 92 PACIFICA 880 SAN MATEO FREMONT 99 1 5 1 Mile 3 Mile 5 Mile REDWOOD 84 CITY 680 PATTERSON TURLOCK up to $24,999 12.9% 13.8% 13.6% HALF MOON PALO ALTO MILPITAS BAY 35 280 33 $25,000 to $49,999 17.4% 20.4% 17.8% MOUNTAIN VIEW SAN JOSE $50,000 to $74,999 17.0% 17.3% 17.1% NEWMAN LA HONDA CAMPBELL $75,000 to $124,999 26.7% 25.7% 25.9% GUSTINE LOS GATOS 165 $125,000 to $199,999 19.1% 16.0% 17.5% 101 1 $200,000 or more 6.9% 6.8% 8.2% BOULDER 17

INCOME MORGAN HILL CREEK 2000 Median Income $57,006 $57,731 $59,501 SCOTTS VALLEY LOS BANOS 152 SAN LUIS RESERVOIR 2010 Median Income $71,434 $68,656 $70,802 GILROY 5 SANTA 2016 Median Income $79,254 $72,855 $77,943 N CRUZ

2021 Median Income $84,080 $78,780 $83,885 MONTEREY BAY

P. 15 California State Lottery Building

CONFIDENTIALITY & DISCLAIMER

This Confidential Offering Memorandum (the “Memorandum”) has been prepared and This Memorandum may include statements regarding, references to, or summaries of, the presented to the recipient (the “Recipient”) by Colliers International (“Colliers”) as part of nature, scope or content of contracts and/or other documents relating to the Property. Those Colliers’ efforts to market for sale the real property located at 2489 Industrial Parkway West, statements, references or summaries may or may not be accurate, correct or complete. Hayward, CA 94545 (the “Property”). Colliers is the exclusive agent and broker for the Additionally, Colliers may not have referenced or included summaries of each and every contract owner(s) of the Property (the “Owner”). Colliers is providing this Memorandum and the and/or other document that the Recipient might determine is relevant to its evaluation of the material contained in it to the Recipient solely to assist the Recipient in determining whether Property. Nothing contained in this Memorandum should be construed as a representation or the Recipient is interested in potentially purchasing all or part of the Property. Colliers also warranty about the accuracy, correctness or completeness of such statements, representations is providing this Memorandum and the material in it to the Recipient with the understanding or summaries. On request and as available, and subject to the Owner’s consent, Colliers will that the Recipient will independently investigate those matters that it deems necessary and provide the Recipient with copies of all referenced contracts and other documents. Colliers appropriate to evaluate the Property and that the Recipient will rely only on its own investigation, assumes no obligation to supplement or modify the information contained in this Memorandum and not on Colliers, the Owner or this Memorandum, in determining whether to purchase the to reflect events or conditions occurring on or after the date of its preparation of this Property. The Recipient’s use of this Memorandum and the material in it is strictly governed by Memorandum. the terms and conditions of the Registration and Confidentiality Agreement that the Recipient previously executed and delivered to Colliers. This Memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, an interest in the Property. Nothing contained in this Memorandum may be construed to constitute Please Note the Following: legal or tax advice to a Recipient concerning the Property.

Colliers, the Owner and their respective agents, employees, representatives, property More detailed information regarding the anticipated terms, conditions and timing of any offering managers, officers, directors, shareholders, members, managers, partners, join venturers, by the Owner relating to the Property will be provided in due course by separate communication. corporate parents or controlling entities, subsidiaries, affiliates, assigns and predecessors and Colliers and/or the Owner reserve the right to engage at any time in discussions or negotiations successors-in-interest make no representations or warranties about the accuracy, correctness with one or more recipients of this Memorandum and/or other prospective purchasers of the or completeness of the information contained in this Memorandum. The Recipient is urged Property without notice or other obligation to the Recipient. not to rely on the information contained in this Memorandum and to make an independent investigation of all matters relating to the Property. The Owner reserves the right to change the terms of any offering relating to the Property or to terminate without notice that offering. The Owner also reserves the right to operate the This Memorandum includes statements and estimates provided by or to Colliers and/or Property in its sole and absolute discretion prior to the completion of any sale of the Property. the Owner regarding the Property. Those statements and estimates may or may not be Colliers reserves the right to require the return of this Memorandum and the material in it accurate, correct or complete. Nothing contained in this Memorandum should be construed and any other material provided by Colliers to the Recipient at any time. Acceptance of this as a representation or warranty about the accuracy, correctness or completeness of such Memorandum by the Recipient constitutes acceptance of the terms and conditions outlined statements and estimates. Further, nothing contained in this Memorandum should be construed above. as representation or warranty about any aspect of the Property, including, without limitation, the Property’s (1) past, current or future performance, income, uses or occupancy, (2) past, current or prospective tenants, (3) physical condition, (4) compliance or non-compliance with any permit, license, law, regulation, rule, guideline or ordinance, or (5) appropriateness for any particular purpose, investment, use or occupancy. Again, the Recipient is urged not to rely on this Memorandum and the statements and estimates in it and to make an independent investigation regarding the Property and the statements and estimates contained herein. California State Lottery Building

EXCLUSIVE ADVISOR:

BRYAN WEBB Senior Vice President 415.288.7873 [email protected]

Lic. 01826546