HUNTINGTON BEACH PIER PACIFIC OCEAN PACIFIC OCEAN SAN DIEGO FWY ±328,000 VPD MILE SQUARE GOLF COURSE SANTA ANA RIVER LOS AMIGOS HIGH SCHOOL S. HARBOR BLVD ±45,000 VPD 16111 HARBOR BLVD, FOUNTAIN VALLEY, CA OFFERING MEMORANDUM ™ EXECUTIVE CONTENTS 04 OVERVIEW FINANCIAL 06 OVERVIEW AREA 10 OVERVIEW TENANT 16 OVERVIEW LISTED BY CHAD KURZ ARON CLINE SVP & NATIONAL DIRECTOR SVP & SENIOR DIRECTOR DIRECT (214) 692-2927 DIRECT (949) 432-4509 MOBILE (562) 480-2937 MOBILE (818) 632-0233 [email protected] [email protected] LIC # 01911198 (CA) LIC # 01904371 (CA) INVESTMENT HIGHLIGHTS LONG-TERM OPERATIONAL HISTORY • Curacao, formerly La Curacao, was founded in 1978 and is headquartered in Los Angeles, CA with retail locations throughout California, Arizona, and Nevada. • The tenant, Curacao, has been at this location since 2006. In 2012, the tenant agreed to extend the lease an additional five years with the lease expiring on Oct. 31, 2026. • The subject property was originally built in 1968 but was renovated in 2006 when Curacao moved in. • Curacao ranks as one of the top 100 electronics and appliance retailers in the United States. Their proprietary financing model has opened the door to the world of credit for millions of people. SOUTHERN CALIFORNIA CORE REAL ESTATE • There are more than 300,000 residents in the 3-mile radius with average household income of $90,000, well above the national average. • There are more than 700,000 residents in the 5-mile radius with ±5% growth over the last decade. The average household income is nearly $100,000. • The subject property is located on Harbor Blvd, a main artery Southern California, which sees ±45,000 vehicles per day. • Fountain Valley is located in the heart of Orange County, it borders Huntington Beach, Costa Mesa, and Santa Ana. • The subject property is centrally located near some of the top attractions in Southern California, including: · South Coast Plaza, the 3rd largest mall in America (4.5 Miles) · Disneyland Resort, largest cumulative attendance for a theme park (5.7 Miles) · John Wayne Airport, Orange County’s largest airport (7.7 Miles) · Angel Stadium and Honda Center, Home of the Los Angeles Angels and Anaheim Ducks (7.8 Miles) · University of California Irvine, ± 35,000 students (8.7 Miles) · Huntington Beach Pier, Surf City USA (10.0 Miles) · Cal State Fullerton, ±40,000 students (12.2 Miles) · Cal State Long Beach, ±38,000 students (13.5 Miles) · Port of Los Angeles and Long Beach, America’s two largest ports. (23.1 Miles) · Downtown Los Angeles, mecca for business (31.9 Miles) · LAX Airport, 4th busiest airport in the world (37 Miles) EXECUTIVE SUMMARY EXECUTIVE 4 | OFFERING4 MEMORANDUM INVESTMENT OVERVIEW ADDRESS LIST PRICE CAP RATE 16111 Harbor Blvd $26,500,949 7.80% Fountain Valley, CA 92708 GROSS LEASABLE AREA LOT SIZE YEAR BUILT ± 103,000 SF ±264,409 (6.07 AC) 1968 / R2008 INVESTMENT HIGHLIGHTS CONTD. ATTRACTIVE RETURN WITH SIGNIFICANT UPSIDE FOR PASSIVE INVESTMENT • Current income and pricing reflects a ±7.80% cap rate with ±7.7 years of guaranteed term from Adir International, LLC, dba Curacao (Parent Company) • In two and half years, the rent on Curacao resets with a floor of $16.70PSF and a maximum amount of $22.69PSF. At a minimum, the cap rate would be 6.50% and at a maximum, the cap rate would increase to 8.83%. • Tenant is responsible for all common area maintenance, property taxes, and repairs and replacements to the building. The landlord is responsible only for the structural components and foundations of the Premises including the roof structure but not the roof covering or roof membrane. HIGHLY SOUGHT-AFTER TRADE AREA • Walgreens and Planet Fitness in same shopping center recently traded for ±$15,000,000 at a ±5.03% cap rate. The property represented a price of over $500PSF on the improvements and was paying an average rent of ±$26PSF. • Millions of square feet of retail, office, and industrial in immediate vicinity. • Brand new townhouse condominium built directly to the north of the subject property. • Rare opportunity to acquire over 6 acres of land and improvements at just ±$100PSF on the land and ±$250PSF on the improvements. AFFLUENT COASTAL, ORANGE COUNTY PROPERTY • Los Angeles-Long-Beach-Anaheim MSA is the second largest metropolitan area in the country with over 13M people, nearly double the DFW MSA • The median average household income in Orange County is over $80,000, significantly higher than the median average household income in America of under $60,000. The average household income in Orange County is over $100,000. • Fountain Valley has a warm Mediterranean climate with average high temperature ranging from 67-81 degrees year-round. MATTHEWS | 5 LIST PRICE CAP RATE LEASE TERM $26,500,949 7.80% ±7.7 YEARS TENANT SUMMARY Tenant Curacao Lease Guarantor Corporate Lease Type NNN Landlord Responsibility Structure Lease Commencement Date 11/21/2006 Lease Expiration Date 10/31/2026 Term Remaining on Lease ±7.7 Years RENT ROLL % OF ANNUAL LEASE CHANGES CHANGES TENANT GLA RPSF OPTIONS GLA RENT EXP. ON TO Curacao ±103,000 100% $2,032,332 $19.73 10/31/26 3, 5-Year 11/1/2021 *FMR American $34,741.62 9/23/2022 2, 5-Year 12/21/2019 3% annually Tower Total NOI $2,067,073.62 *In 2021 the rent will be adjusted to Fair Market Rent. The rent can be no less than $1,720,100, and no more than the CPI increase from 2016-2021. FINANCIAL OVERVIEW 6 | OFFERING6 MEMORANDUM SITE PLAN 8 | OFFERING MEMORANDUM MATTHEWS | 9 FOUNTAIN VALLEY, CA Fountain Valley is a suburban city in Orange County, California. As a suburban city, most of Fountain Valley’s residents commute to work in other urban centers. However, in recent years, the city has seen an increase in commercial jobs in the city, with the growth of a commercial center near the Santa Ana River known as the “Southpark” district. Although the economy of the area was once based mainly on agriculture, the remaining production consists of several fields of strawberries or other small crops, which are gradually being replaced by new office development. Efforts to bolster economic activity are evidenced by the city enacting policies to benefit small businesses, and even going so far as to paint a mural on the facade of a large water treatment building facing the freeway that depicts two shopping bags headlined by the words, “Shop in Fountain Valley.” Fountain Valley is home to the national headquarters of Hyundai Motor America and D-Link Corporation, the global headquarters of memory chip manufacturer Kingston Technology, and the corporate headquarters of Surefire, LLC, maker of military and commercial flashlights. The Southpark commercial area is also home to offices for companies such as D-Link, Starbucks, Satura and the Orange County Register. There are also a limited number of light industrial companies in this area. In addition, Fountain Valley is the location for Noritz, a tankless water heater manufacturer, and the main west coast offices of Ceridian, a professional employer organization. DEMOGRAPHICS POPULATION 1 MILE 3 MILE 5 MILE HOUSEHOLDS 1 MILE 3 MILE 5 MILE 2024 Projection 37,375 320,618 787,829 2024 Projection 8,946 76,039 213,411 2019 Estimate 36,120 311,582 762,297 2019 Estimate 8,635 73,663 205,907 2010 Census 34,591 301,215 726,049 2010 Census 8,244 70,894 195,242 Growth 2019 to 2024 3.48% 2.90% 3.35% Growth 2019 to 2024 3.60% 3.23% 3.64% Growth 2010 to 2019 4.42% 3.44% 4.99% Growth 2010 to 2019 4.74% 3.91% 5.46% HOUSEHOLD INCOME 1 MILE 3 MILE 5 MILE Average Household Income $89,818 $90,622 $93,639 Median Household Income $67,821 $68,835 $69,040 AREA OVERVIEW 1010 | OFFERING MEMORANDUM ORANGE COUNTY Orange County is situated in between the iconic cities of Los Angeles and San Diego stretching up and 3.22M POPULATION down the west coast from Seal Beach to San Clemente. Due to the large population being highly educated and wealthy, the OC has a major economic advantage. It is consistently one of the highest performing economies in Southern California. 1.06M HOUSEHOLDS Per a recent forecast from economist at Chapman University, Orange County is looking to add 39,000 jobs MEDIAN HH INCOME in 2017 on top of the 43,000 that was added in 2016 making it 254,600 jobs added since 2011, the best $81.837 seven years of hiring since 1995. The job categories predicted to increase are construction, education and health, and professional and business services. Additionally, Chapman sees local incomes, retail 37.7 MEDIAN AGE OC FACTS spending, and home prices continuing to rise as relative economic strength is also foreseen nationally and statewide. With the predicted increase in personal income, household budgets are looking to increase 1.59M NO. OF EMPLOYEES providing more room for leisurely spending. TOP EMPLOYERS & INDUSTRIES MANUFACTURING RETAIL TRADE HEALTHCARE & SOCIAL ASSISTANCE PROFESSIONAL, SCIENTIFIC, TECH SERVICES ACCOMODATION & FOOD SERVICE 0 20K 40K 60K 80K 100K 120K 140K 160K 180K 200K TOTAL EMPLOYEES RD 3 RANKED #1 TOP 7 MOST POPULOUS SAFEST AREA WEALTHIEST COUNTIES COUNTY IN THE NATION IN THE NATION IN CALIFORNIA MATTHEWS | 11 POINTS OF INTEREST 1 12 9 14 3 2 6 10 11 30-MILES 20-MILES 10-MILES 5-MILES 5 4 15 8 7 13 1 DOWNTOWN LOS ANGELES 2 HONDA CENTER ±5.9 MI 3 DISNEYLAND 4 JOHN WAYNE AIRPORT 5 SOUTH COAST PLAZA 6 ANGEL STADIUM 7 UNIVERSITY OF CALIFORNIA IRVINE 8 HUNTINGTON BEACH PIER 9 CAL STATE FULLERTON 10 CAL STATE LONG BEACH 11 PORT OF LOS ANGELES AND LONG BEACH 12 LAX AIRPORT 13 IRVINE SPECTRUM CENTER 14 KNOTT’S BERRY FARM 15 ORANGE COUNTY GREAT PARK ORANGE COUNTY UNIVERSITIES Orange County’s strong university system has helped contribute to the fact that 37% of residents over the age of 25 have a bachelor’s degree or higher, ranking Orange County as one of the top five regions in the nation when it comes to college-educated residents.