Exclusively Listed Investment Offering

EXCLUSIVELY LISTED INVESTMENT OFFERING

SAN DIEGO INVESTMENT OPPORTUNITY

3202 - 3222 UNIVERSITY AVENUE | SAN DIEGO, CA 92104

Presented By:

JASON STUART PONGSRIKUL NICK PRICE CHRIS BARRY Managing Principal Senior Vice President Associate Direct: 619.297.0055 x 302 Direct: 619.297.0055 x 303 Direct: 619.297.0055 x 305 [email protected] [email protected] [email protected] CA DRE Lic. 01918332 CA DRE Lic. 01773111 CA DRE Lic. 2018350

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619.297.0055 | www.pharmapropertygroup.com 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104 Property Overview 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104

Year Built: 2006 Lot Size: 50,655 Square Feet Building Size: 15,150 Square Feet Tenants: Walgreens & Starbucks Net Leases

Investment Highlights

STABLE INCOME SOLID DEMOGRAPHICS Rental income is guaranteed by Walgreens and Starbucks. The average household income in a one-mile radius is Both Walgreens (S&P BBB) and Starbucks (S&P A) parent $65,947, in a three-mile radius it is $72,539 and $75,387 companies are an investment grade, Fortune 500 in a five mile radius. Total one-mile population count is Companies. Walgreens has over 8,000 locations and 52,440, in a three-mile radius it is 277,112 and 611,379 in Starbucks has over 25, 000 locations. a five-mile radius. STRONG SALES 24 HOUR STORE & STRATEGIC LOCATION Walgreens is reporting strong sales at this location above This Walgreens is open 24 hours which speaks to the $3.3M annually. Walgreens has a percentage rent clause strength of its location and is reflected in the sales totals. in their lease. Starbucks does not report sales, but they The Walgreens also has a drive-thru which is open until renewed the lease twice at escalated rents. 9PM. There is a CVS on the adjacent corner making this a strategic location for both Walgreens and CVS. LONG TERM WALGREENS & STARBUCKS LEASES Walgreens has a 70 year triple net lease starting in 2006. TRENDING NORTH PARK NEIGHBORHOOD This lease allows for a right to terminate after 20 years. This dual-tenant building is uniquely leased by two nationally Walgreens also reserves the right to terminate every five renowned tenants in North Park, one of San Diego’s most years thereafter. Starbucks has a lease starting 2006 densely populated and trending neighborhoods due to with four 5-year options to renew with escalating rents. high end local eateries, craft breweries and easy freeway Starbucks has already exercised two 5-year options to access. extend beginning February 2017. The Starbucks lease has a 3% increase in March of 2022. Located right off Interstate 805, this is the entry point to multiple neighborhoods in the area making this Walgreens ANNUAL INCOME and Starbucks a natural place to stop and shop, with easy • Walgreens Annual Rent: $519,999.96* parking which is rarely found in the North Park area. The • Starbucks Annual Rent: $59,940.00, with a three large footprint of the commercially zoned lot and location percent (3%) increase in year 5. makes the land extremely valuable for future development. • Combined Annual Rent: $579,939.96 LEASE TYPE • Walgreens - Absolute NET Lease No Landlord responsibilities whatsoever. • Starbucks - NET Lease Landlord responsible for roof and structure. TRAFFIC COUNTS The property is located at the signalized hard corner of University Avenue and Lincoln Avenue with combined traffic counts of 27,142 vehicles per day. The store is only one block from the Interstate 805 with daily traffic counts of over 180,000.

*Walgreens percentage rent is approximately 2% of gross sales (excluding food and prescriptions), plus 0.5% of food and prescriptions, except for third party prescriptions.

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 2 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104 Pricing Building

List Price: $12,887,466 (4.50% CAP) Building Square Footage: 15,150 Price/SF: $850,65 Walgreens Square Footage: 13,650 Price/SF Land: $254.41 Starbucks Square Footage: 1,500 Walgreens Annual Income: $519,999.96 Land Square Footage: 50,655 Starbucks Annual Income: $59,940.00 Year Built: 2006 Combined Annual Income: $579,939.96 Combined Monthly Income: $48,328 Combined Rent/SF: $38.27 Lease Overview

Tenant: Lease Overview STARBUCKS (NYSE: SBUX) Landlord Income: Tenant: CORPORATE GUARANTEE WALGREENS (NYSE: WAG) Credit Rating: Landlord Income: INVESTMENT GRADE, A (S&P) CORPORATE GUARANTEE Lease Type: Credit Rating: NET LEASE INVESTMENT GRADE, BBB (S&P) Landlord responsible for roof and structure. Lease Type: Lease Term: ABSOLUTE NET LEASE No landlord responsibilities whatsoever. 9 YEARS REMAINING WITH AN ADDITIONAL TWO (5-YEAR) RENEWALS Lease Term: Lease Commencement: 70 YEAR LEASE WITH RIGHT TO TERMINATE NOVEMBER 10, 2006 AFTER 20 YEARS AND EVERY 5 YEARS THEREAFTER. 8 YEARS 10 MONTHS REMAINING ON THE INITIAL TERM Next Renewal Period: MARCH 1, 2027 Lease Commencement: NOVEMBER 1, 2006 Annual Rent: $59,940 Next Right to Terminate: NOVEMBER 1, 2026 Monthly Rent: $4,995 Annual Rent: $519,999.96 Rent / Square Foot: $39.96 Monthly Rent: $43,333.33 Rent Schedule Rent / Square Foot: $34.32 TERM dates RENT

Initial Term 11/10/06 - 11/30/11 $3,975 Initial Term 12/1/11 - 2/28/17 $4,455 First Renewal (Exercised) 3/1/17 - 2/28/22 $4,995 Second Renewal (Exercised) 3/1/22 - 2/28/27 $5,595 Third Renewal 3/1/27 - 2/28/32 $6,270 Fourth Renewal 3/1/32 - 2/28/34 $7,020

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 3 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104

RESIDENTIAL AREAS RESIDENTIAL AREAS

SUBJECT PROPERTY

UNIVERSITY AVENUE - ±24,000 CARS PER DAY

±180,000 CARS PER DAY

TRENDING NORTH PARK NEIGHBORHOOD This dual-tenant building is uniquely leased by two nationally renowned tenants in North Park, one of San Diego’s most densely populated and trending neighborhoods due to high end eateries, craft breweries and easy freeway access. Located right off Interstate 805, this is the entry point to multiple neighborhoods in the area making this Walgreens and Starbucks a natural place to stop and shop, with easy parking which is rarely found in the North Park area. The large footprint of the commercially zoned lot and location makes the land extremely valuable for future development.

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 4 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104 Location Aerial

pacific ocean

SEA WORLD MISSION BAY PARK

SAN DIEGO NAVAL AIR STATION INTERNATIONAL NORTH ISLAND AIRPORT

SAN DIEGO ZOO NORTH PARK

downtown san diego

BALBOA PARK SUBJECT PROPERTY

Location Overview

an Diego is a worldwide tourist destination. Beaches, SeaWorld, San Diego Zoo, conventions and a thriving culture lure visitors from Saround the globe. Tourists pour billions of dollars into the local economy helping to fuel job growth, development, and tax revenue. The employment profile is diverse and includes one of the most tech-friendly environments in the country. Household incomes continue to grow above the rate of inflation and are now near $80,000. Government, education, health services, professional and business services continue to be among the top performing industries. SUBJECT PROPERTY

San Diego, is a major city in California and the seat of San Diego County. Adjacent to the Pacific Ocean in Southern California, San Diego is approximately 120 miles south of Los Angeles and immediately adjacent to the border with Mexico. San Diego is the eighth-largest city in the United States and second-largest in California. San Diego is known for its SAN DIEGO mild year-round climate, natural deep-water harbor, extensive beaches, association with the US Navy, and recent emergence as a healthcare and biotechnology development center. San Diego is the economic center of the region as well as the San Diego–Tijuana metropolitan area. San Diego's main economic engines are military and defense-related activities, tourism, international trade, and manufacturing.

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 5 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104 Property Photos

WALGREENS FRONTAGE ON UNIVERSITY AVENUE AND access to parking LEADING TO WALGREENS DRIVE-THRU

WALGREENS & STARBUCKS FRONTAGE ON UNIVERSITY AVENUE STARBUCKS FRONTAGE ON UNIVERSITY AVENUE

WALGREENS DRIVE-THRU FRONTING 32ND STREET Building parking with access on university ave. and bancroft st.

Total Population Total Households Average Age 5 Miles 1 Mile 1 1 Mile 1 5 Miles 5 Miles 3 Miles 3 Miles 1 Mile 1 3 Miles 35.70 35.50 36.00 277,112 52,440 611,379 23,512 118,346 229,531

Average Household Inc 2017 Daytime Employment 2017 1 Mile 1 5 Miles 3 Miles 1 Mile 1 5 Miles 3 Miles $75,387 $65,947 8,908 $72,539 414,292 149,858

Disclaimer: This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage, age, distances, lot size, store opening dates, demographic information, aerial information, tenant information & store operating information are approximate.

Buyer and their representatives understands that Walgreens tenant information was gathered by sources deemed to be reliable including Walgreens public quarterly and annual reports. Demographic information was provided by Nielsen Information Systems.

By accepting this package, buyer and their representatives must verify the information and bears all risk for any inaccuracies.

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 7 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104

Company Summary*

Tenant History Walgreens, headquarteredd in Deerfield, IL, is the largest drug retailing chain in the United States with more than 8,175 stores in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Walgreens built out its national platform through its corporate real estate department heavily during the 1990’s continuing through the mid 2000’s. By 2012, Walgreens had opened its 8,000th store and later that year the company made a bold move by purchasing a 45% interest in Alliance Boots, a leading international pharmacy-led health and beauty group. Two years later, Walgreens exercised its option to purchase the remaining 55% of the Switzerland based Alliance Boots to merge and create a new holding company named Walgreens Boots Alliance(NASDAQ: WBA).

This transaction brought together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years. Today, Walgreens is part of the Retail Pharmacy USA division of Walgreens Boots Alliance. The company sells prescription and non-prescription drugs and general merchandise including household products, convenience and fresh foods, personal care, beauty care, photo finishing, as well as home medical equipment, contact lenses, vitamins, supplements and other health and wellness solutions. Walgreens also provides specialty pharmacy services for managing complex and chronic health conditions. In addition to these in-store offerings, the company operates digital businesses that include Walgreens.com, Drugstore.com, Beauty.com, SkinStore.com, and VisionDirect.com. *Walgreens company information received from Walgreens investor relations.

tenant profile Guarantor: Walgreens Boots Alliance, Inc. Ownership: Public Stock Symbol (NASDAQ): WBA Credit Rating (S&P): BBB Business: Retail Pharmacy Locations: 8,175 Annual Revenue: $117.35 Billion Market Capitalization: $71.25 Billion Headquarters: Deerfield, IL Website: www.walgreens.com

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 8 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104

Locations by State

E T T OR Y S Y R P CT J E O E UT C CO S O Y C C T O R SC S T

US R SS

Alabama 113 Idaho 39 Mississippi 76 Oklahoma 114 West Virginia 16 Alaska 12 Illinois 598 Missouri 212 Oregon 76 Wisconsin 225 Arizona 244 Indiana 190 Montana 13 Pennsylvania 123 Wyoming 10 Arkansas 81 Iowa 70 Nebraska 57 Rhode Island 25 Puerto Rico 120 California 633 Kansas 69 Nevada 82 South Carolina 114 US Virgin Islands 1 Colorado 159 Kentucky 95 New Hampshire 31 South Dakota 14 Connecticut 92 Louisiana 158 New Jersey 197 Tennessee 252 Delaware 64 Maine 14 New Mexico 72 Texas 713 Washington DC 8 Maryland 85 New York 469 Utah 48 Florida 831 Massachusetts 163 North Carolina 268 Vermont 3 Georgia 203 Michigan 228 North Dakota 1 Virginia 140 Hawaii 20 Minnesota 152 Ohio 247 Washington 135 *Nationwide locations as of August 31, 2016 Total 8,175* Note: Walgreens also operates specialty and institutional pharmacies. Walgreens Take Care Health Systems subsidiary manages more than 400 Healthcare Clinics at select Walgreens drugstores.

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 9 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104

Company Summary*

Tenant History Starbucks Corporation is an American global coffee company and Italian-style coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with approximately 25,734 in 67 countries, including Argentina, Aruba, Australia, Austria, Bahamas, Bahrain, Belgium, Bolivia, Brazil, Brunei, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Curacao, Cyprus, Czech Republic, Denmark, Egypt, El Salvador, Finland, France, Germany, Greece, Guatemala, Hong Kong, Hungary, India, Indonesia, Ireland, Japan, Jordan, Korea, Kuwait, Lebanon, Macau, Malaysia, Mexico, Monaco, Morocco, Netherlands, New Zealand, Norway, Oman, Panama, Peru, Philippines, Poland, Portugal, Puerto Rico, Qatar, Romania, Russia, Saudi Arabia, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, United Kingdom, United States and Vietnam.

Starbucks locations serve hot and cold beverages, whole-bean coffee, microground instant coffee, full-leaf teas, pastries, and snacks. Most stores also sell pre-packaged food items, hot and cold sandwiches, and items such as mugs and tumblers. Many of the company’s products are seasonal or specific to the locality of the store.

tenant profile Guarantor: Starbucks Corporation Ownership: Public Stock Symbol (NASDAQ): SBUX Credit Rating (S&P): A Business: Retail Coffee Shop Locations: 25,734 (as of 1/1/2017) Annual Revenue: $22.4 Billion Market Capitalization: $82.94 Billion Headquarters: Seattle, WA Website: www.starbucks.com

*Starbucks company information received from Starbucks investor relations.

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 10 3202 - 3222 UNIVERSITY AVENUE SAN DIEGO, CA 92104

Investment Property Recap

Lease Overview Tenant: Walgreens (NYSE: WAG) Starbucks (NYSE:SBUX) Landlord Income: Corporate Guarantee Credit Rating: Walgreens - BBB (S&P) Starbucks - A (S&p) 3202-3222 UNIVERSITY AVENUE Lease Type: SAN DIEGO, CA 92104 Walgreens - Absolute NET Lease No Landlord responsibilities whatsoever. Year Built: 2006 Starbucks - NET Lease Total Lot Size: 50,655 Square Feet Landlord responsible for roof and structure. Total Building Size: 15,150 Square Feet Lease Term: Walgreens - 70 year lease, right to terminate after 20 years and every 5 years thereafter. 8 years 10 months remaining on the initial term.

Starbucks - Starbucks has a lease starting in 2006 with four 5-year options to renew with escalating rents. Starbucks has already exercised two 5-year options to extend beginning February 2017. Pricing

Price: Cap Rate: Total Monthly Income: Total Annual Income: $12,887,466 4.50% $48,328 $579,939

Pharma Property Group | 5328 Banks Street, Suite B | San Diego, CA 92110 | 619-297-0055 | www.pharmapropertygroup.com page 11 JASON STUART PONGSRIKUL Managing Principal Direct: 619.297.0055 x302 [email protected] 5328 Banks Street, Suite B CA DRE Lic. 01918332 San Diego, California 92110 P 619.297.0055 | Fax: 619.839-3763 www.pharmapropertygroup.com NICK PRICE Senior Vice President Direct: 619.297.0055 x303 [email protected] CA DRE Lic. 01773111

CHRIS BARRY Associate Direct: 619.297.0055 x305 [email protected] CA DRE Lic. 2018350

EXCLUSIVELY LISTED INVESTMENT OFFERING

3202-3222 UNIVERSITY AVENUE | SAN DIEGO, CA 92104