Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp. a California licensed real estate broker, California License Number (

Transcription

1 Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp. a California licensed real estate broker, California License Number ( HFF )

2 HFF has been engaged to extend to qualified investors the opportunity to acquire the 100% fee simple interest in 490 South California Avenue (the Property or 490 California ), a four-story, steel-framed Class A office building with premier ground floor retail located in the heart of Silicon Valley in the California Avenue submarket of Palo Alto, California. The 87.1% leased asset is prominently situated at the intersection of California Avenue and the El Camino Real Corridor, adjacent to Stanford Research Park and Stanford University. The Property offers unparalleled views of the Stanford Hills and features an abundance of walkable retail amenities including direct access to the California Avenue Caltrain stop. PROPERTY SUMMARY Property Address Size 490 S. California Avenue Palo Alto, CA 23,868 sq. ft. Percent Leased 87.1% In-Place Rents Market Rents Percent Below Market Upon Lease Expiration Year Built Year Renovated Parking Spaces* Ratio $5.28 NNN $6.23 NNN 24% spaces 1.1 / 1,000 CALIFORNIA represents a generational opportunity to acquire a core-quality office/retail asset in one of the most sought after submarkets in the country, providing an investor stable inplace cash flow, balanced lease rollover and potential upside from rents approximately 24% below market upon expiration. Site Area 0.33 acres Assessor s Parcel # *surface / subterranean 2

3 Iconic Core Class A Office Building with Sweeping Views of the Stanford Hills Institutional-quality asset located in the heart of Silicon Valley with 360-degree views of Palo Alto and the Stanford Hills Rare Institutional Quality Fee-Simple Investment Opportunity 100% fee-simple acquisition opportunity in Palo Alto Premier Location Offering Proximity to Stanford University & Stanford Research Park Directly adjacent to Stanford Research Park and only a 5-minute walk to Stanford University Direct Access to Executive Housing Corridor, Major Transportation Arterials & World Class Amenities In close proximity to Palo Alto s world renowned retail core; a short drive to Interstate 280 and the surrounding executive housing corridor Desirable Affluent Communities in Surrounding Area Located a short drive to some of the most affluential communities in the Bay Area Caltrain-Served Downtown Core Office Space in High Demand Just a 5-minute walk to the California Avenue Caltrain stop with direct access to San Francisco and Silicon Valley Worldwide Epicenter of Technology & Innovation 48% of all U.S venture capital investments made in the Bay Area more than 4.6x that of any other region in the country HIGH-PROFILE CORPORATE NEIGHBORS Lockheed Martin Cooley LLP Tibco Frank Rimmerman Corning Hewlett-Packard Theranos PAGE MILL ROAD CALTRAIN Sidley Austin LLP Cloudera Morgan Stanley Morrison Foerster LLP Sutter Hill Ventures Simpson Thatcher & Bartlett Genencor Machine Zone Wilmer Hale EL CAMINO REAL Wilson Sonsini Goodrich Merck Bingham Greenebaume Doll Paul Hastings Google ALMA STREET Wilson Sonsini Goodrich King & Spalding Tableau Software Yelp Ability to control one of Palo Alto s most desirable, highly-visible retail corners, located along El Camino Real at the entrance of the California Avenue corridor. 3

4 INVESTMENT HIGHLIGHTS Iconic Core Class A Office Building with Sweeping Views of the Stanford Hills 490 California is an irreplaceable, core-quality office building that is appealing to a vast array of tenants due to its prominent location with sweeping views of the Stanford Hills, proximity to major transportation corridors, walkable amenities and rare underground parking. STANFORD UNIVERSITY Situated in a high-barrier-to-entry market with strong economic fundamentals, low single-digit vacancy rates, and substantial rental growth projections. Located at the epicenter of Silicon Valley with direct access to a high concentration of executive housing in Atherton, Palo Alto, Palo Alto Hills, Los Altos Hills, Portola Valley, Woodside, and Hillsborough. Located within walking distance of the California Avenue retail core and California Avenue Caltrain stop. Rare on-site parking in addition to a two-level city parking structure adjacent to the Property. Long-term, net-leased to a diverse tenant roster at below market rents. Steel-frame construction with substantial building renovations completed in STANFORD RESEARCH PARK EL CAMINO REAL 4

5 Rare Institutional Quality Fee-Simple Investment Opportunity Top Performing Palo Alto Submarket: The California Avenue submarket maintains an overall occupancy of 96.0% as of fourth quarter 2014 and Class A asking rents of $6.17 psf/mo. NNN. Palo Alto - Submarket Overview Limited Class A Space on the Market: Currently, there are only three availabilities in the California Avenue submarket for tenants seeking Class A office space of 2,500 to 5,000 sq. ft. Significant Tenant Demand: Silicon Valley is experiencing record levels of tenant demand with office tenants in the market seeking approximately 17 million sq. ft. of space. 18,000,000 Total Inventory Under Construction Total Vacancy Rate Class A Asking Rent (NNN) California Avenue 976,461 45, % $6.17 Downtown 2,240,862 66, % $7.14 Stanford Research Park 3,018,661 86, % $6.38 Bayshore 1,527, % $3.45 East Palo Alto 458, % $4.93 PALO ALTO - TOTAL 8,221, , % $5.98 Tenant Demand - Silicon Valley Q Q million sq. ft. average tenant demand Q Q million sq. ft. average tenant demand In the past ten years, there have only been nine institutional office building sales greater than 20,000 square feet in the Downtown Palo Alto/Middlefield Corridor/ Sand Hill submarkets, a testament to the long-term ownership in the area and the rare opportunity 490 California presents to acquire a high-quality asset in the submarket. The California Avenue submarket in particular features just three properties greater than 20,000 square feet built in the past 20 years. Additionally, 490 California offers the unique ability to acquire a 100% fee simple interest directly adjacent to the Stanford Research Park, which is comprised of solely leasehold properties. Property Sand Hill Rd 49% Interest 200 Middlefield Rd City Menlo Park Menlo Park Year Built 1987 / 2012 Size (SF) % Leased Sale Date Buyer Seller 133, % Dec-14 Invesco Clarion There have been just five comparable fee-simple Class A properties that have sold on Caltrain in the past decade , % May-14 TIAA-CREF Menlo Equities 130 Lytton Ave Palo Alto , % Nov-13 Rockwood Capital / Tarlton Properties Kenson Ventures 550 Hamilton Ave Palo Alto ,678 96% Aug-13 CM Capital Private 15,000,000 12,000, Sand Hill Rd 49% Interest 100 Hamilton Ave Menlo Park 1975 / 2005 Palo Alto 1983 / ,000 82% May-11 DivcoWest / PSP Kaiser Family Foundation 71, % Mar-11 RREEF Embarcadero Capital 9,000, Middlefield Rd Menlo Park 1968 / , % Nov-06 Pollock Financial Group Allstate Insurance 6,000,000 3,000,000 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q University Ave 250 University Ave Palo Alto 1912 / , % May-04 Premier Properties Management Private Group Palo Alto , % Nov-03 Inspire Real Estate Holdings Hewlett-Packard 5

6 Direct Access to Executive Housing Corridor, Major Transportation Arterials & World Class Amenities 490 California is located directly off of El Camino Real and a short distance to Interstate 280, providing direct access to the nearby executive housing corridor. This stretch of communities including Monte Sereno, Los Altos, Los Altos Hills, Palo Alto Hills, and Portola Valley features some of the most affluent communities in the Bay Area and includes executives seeking low commute times. HILLSBOROUGH Stanford Shopping Center: With 140-plus stores, dozens of restaurants and coffee shops, and public art by nationally acclaimed artists, the open-air Stanford Shopping Center is considered one of the top shopping centers in the country. The Center features awardwinning gardens, a European-style street market, and 1.3 million square feet of premier retail space. Located conveniently off El Camino Real near Downtown Palo Alto and Stanford campus, the Stanford Shopping Center serves the nearby affluent communities of Palo Alto, Menlo Park, Woodside, and Atherton. Downtown Palo Alto: In addition to the world-renowned Stanford Shopping Center, Palo Alto features a vibrant downtown shopping district, a popular shopping and restaurant district centered around California Avenue just south of the Stanford campus, and Town & Country Village, a specialty center on El Camino Real across from Stanford Stadium. Visitors will find cafés and a wide variety of restaurants in all four shopping areas, as well as in neighboring Downtown Menlo Park and Downtown Mountain View. Caltrain: Caltrain is a commuter rail line that stretches from San Francisco to the north and Gilroy to the south. The rail system is comprised of 32 stations, with 29 served daily, two weekendonly stations, and one football-only station located at Stanford University. Trains leave San Francisco multiple times every hour and the Baby Bullet can make the 32-mile commute between San Francisco and the Palo Alto Caltrain Station in less than 39 minutes - and only 48 minutes to the California Avenue stop via the Limited-Stop train. California Avenue Corridor: Major Palo Alto thoroughfare connecting the Property to the Caltrain station, while offering a multitude of walkable amenities. This desirable retail corridor features a variety of restaurants, coffee shops, bars, a farmer s market, banking, and other services. ATHERTON MENLO PARK Desirable Affluent Communities in Surrounding Area The Property is located within close proximity to some of the most affluent and highly educated communities in the Bay Area including Atherton, Palo Alto, Palo Alto Hills, Los Altos Hills, Portola Valley, Woodside, and Hillsborough. DEMOGRAPHICS SUMMARY City % Bachelors Degree or Higher * Median Household Income Atherton 84.20% $228,400 Hillsborough 73.50% $228,000 Los Altos Hills 84.20% $196,500 Menlo Park 69.20% $113,800 Palo Alto 79.50% $122,500 Woodside 69.70% $212,700 *25+ Yrs of Age 6

7 CALTRAIN SAN FRANCISCO OAKLAND OAKLAND INTERNATIONAL AIRPORT SAN FRANCISCO INTERNATIONAL AIRPORT HILLSDALE SAN CARLOS BELMONT San Francisco Bay REDWOOD CITY ATHERTON MENLO PARK EL CAMINO REAL STANFORD SHOPPING CENTER PALO ALTO DOWNTOWN PALO ALTO PALO ALTO STANFORD UNIVERSITY RETAIL CORRIDOR PAGE MILL ROAD STANFORD RESEARCH PARK EL CAMINO REAL 7

8 x Caltrain-Served Downtown Core Office Space in High Demand Caltrain-served downtown submarkets have seen significant tenant demand as more users are seeking a walkable amenity-base with direct access to public transportation options. Overall occupancy for all core Silicon Valley downtown submarkets is currently 94.7%. Lack of availabilities in the downtown submarkets provides for higher tenant retention rates due to limited relocation alternatives. Located just a quarter mile to the California Avenue Caltrain station providing for direct access to San Francisco in just 48 minutes. Caltrain-served submarkets outperform surrounding areas as well as the overall market Premier Location Offering Proximity to Stanford University & Stanford Research Park 490 California is adjacent to Stanford University, one of the most prestigious research universities in the world. It is known for its entrepreneurial character and its relationship to Silicon Valley. Venture capitalists are drawn to Palo Alto due to its proximity to Stanford University and its unparalleled commitment to fostering entrepreneurs and startups. Student enrollment of 6,980 undergraduates and 8,897 graduates with 97% of undergraduates residing on campus Campus consists of 8,180 contiguous acres with nearly 700 major buildings 2,043 faculty including 22 Nobel laureates as current members of the Stanford community 5,100 externally sponsored research projects consisting of a $1.35 billion total budget $18.7 billion endowment RD. MILL PAGE STANFORD NORTH 28 ± Acres COYOTE 1701 STANFORD NORTH 52 ± Acres PORTER DR FOOTHILL 13 ± Acres HILL 16 ± Acres PAGE MILL RD HANOVER RD 855 CALIFORNIA AVE MIRANDA x x x x AVE HILLVIEW AVE ST AVE HILLVIEW x x x x x x x x x 975 HANSEN EXPWY. 925 WY HANOVER ST EL REAL CAMINO VA HOSPITAL HANSEN WY STANFORD RESEARCH PARK The Stanford Research Park is comprised of 700 Acres and includes 162 buildings with approximately 25,000 employees working for more than 150 companies. Established in 1951, the Research Park is almost completely owned by the Board of Trustees of the Leland Stanford Junior University, with extremely limited fee-simple opportunities. The desirability of Stanford Research Park is evidenced by its unparalleled market fundamentals including an overall vacancy rate of just 6.0% and Class A asking rental rates of $6.38 psf/mo. NNN as of the fourth quarter of Overall vacancy rates in the Stanford Research Park have averaged just 4.4% over the past 15 quarters. The Research Park has attracted world-class technology, research, recruiting, and law-firm tenants since its inception including Hewlett-Packard, General Electric, Lockheed, Wilson Sonsini, Cooley LLP, Morrison & Foerster, Merck Sharp & Dohme, Robert Half, VMWare, and Gibson, Dunn & Crutcher. DEER 18 ± Acres CREEK COYOTE HILL 37 ± Acres 5 ± Acres RD 3475 x x ARASTRADERO RD Stanford Research Park has long been known as a preferred location for the top law firms in the country with 27 of the top 100 law firms maintaining a location there STANFORD SOUTH 158 ± Acres

9 100% 95% OCCUPANCY FOR DOWNTOWN SOUTH PENINSULA SUBMARKETS 100% 95% HISTORICAL OCCUPANCY SPREAD BETWEEN DOWNTOWN CORE & TOTAL MARKET OCCUPANCIES The downtown core is currently outperforming previous cycles due to tenant demand requiring walkable amenities and access to Caltrain. 2.9% 90% 90% 6.2% 3.5% 5.3% 85% 85% 80% Market occupancy dipped below 90% due to Facebook ougrowing Downtown Palo Alto and subsequently moving out of the market. Q Q Q Q Q Q Q Q Q Q Palo Alto Peer Set (RWC-MP-MV)* *Peer set includes Redwood City, Menlo Park and Mountain View 80% Downtown Core* Total Submarket *Includes historical occupancy for Redwood City, San Mateo, Menlo Park, Palo Alto, and Mountain View submarkets CALTRAIN 5-minute walk to / from the Caltrain station CURRENT OCCUPANCY - 4Q 2014 Redwood City 93.9% Palo Alto 95.2% Mountain View 94.4% Menlo Park 95.2% TOTAL OF ALL DOWNTOWN SUBMARKETS 94.7% EL CAMINO REAL 9

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11 Worldwide Epicenter of Technology & Innovation The Palo Alto market has pursued a path of continuous growth, responding to the constant demand of the ever-changing landscape of high-technology advancement, gaining international recognition as the epicenter of technology and innovation. VENTURE CAPITAL INVESTMENT SILICON VALLEY 50% 45% 40% 490 California is ideally positioned in close proximity to venture capital and a highly educated workforce, providing an innovative landscape with surety of human capital and wealth creation. In 2014, 48% or $23.4 billion of total U.S. venture capital investments were made in the Bay Area, more than 4.6x that of any other region in the country representing 86% growth year-over-year, up from $12.6 billion in % 30% 25% 20% *Represents percentage of total U.S. investments 11

12 STEVEN GOLUBCHIK Senior Managing Director CA Lic. # BEN BULLOCK Director CA Lic. # JOHN SIMERLEIN Director CA Lic. # JOSH DISALLE Real Estate Analyst CA Lic. # BRUCE GANONG Senior Managing Director CA Lic. # JORDAN ANGEL Director CA Lic. # California Street, Suite 720 San Francisco, California HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references 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 buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.