Arroyo Center. Pleasanton, California. »» Going In Double Digit Levered Yields via Accretive Debt Financing

Transcription

1 Strong, Stable Income Stream Backed by Highly Profitable Multi-Billion Dollar Firms Strategic San Francisco Bay Area Location with Direct Access to the Highly Educated Tri-Valley Labor Pool and Executive Talent Over $1,100,000 in Recent & Future Improvements Going In Double Digit Levered Yields via Accretive Debt Financing Acquisition and Exit Pricing Below Historical Norms Projected to Trade Well Below Replacement Cost Sustained Economic & Employment Growth in Alameda County: Highest Number of Employees In Over a Decade & Lowest Unemployment Rate since October 2008 Arroyo Center Pleasanton, California 100% Leased Investment in a Core San Francisco Bay Area Location

2 THE OPPORTUNITY The Colliers Investment Services Group, as exclusive advisor, is pleased to present the opportunity to acquire the 100% fee interest in W. Las Positas Boulevard ( Arroyo Center ) located in Pleasanton, CA. Arroyo Center is comprised of two Office/Flex buildings totaling 104,741 net rentable square feet located in the heart of the Hacienda Business Park. Proximate to San Francisco and located between the Silicon Valley and Walnut Creek, Arroyo Center s location benefits from its access to a skilled and highly educated labor force, its vicinity to the some of the most prestigious Universities and research centers in the world, and its well located, executive-laden bedroom communities. The Pleasanton market attracts a wide array of the nation s most innovative firms ranging from startups to mature companies across all industries. Address OFFERING SUMMARY W. Las Positas Blvd. Pleasanton, CA Total Rentable Square Footage 104,741 Square Footage Per Building Type Number of Buildings Number of Stories 5758: 50, : 54,314 Office/R&D Two 5758: 1 & 2 stories 5794: Single story Percentage Leased 100% Lease Expirations Autonomy: March 30, 2019 Gatan: February 28, % leased to two tenants, Autonomy Corporation Limited (a Hewlett Packard company) and Gatan Incorporated (lease guaranteed by $12.3 billion market cap parent Roper Industrial NYSE: ROP), Arroyo Center offers investors a stable income stream from two multi-billion dollar firms. Year Built / Renovated 1984 / 2007 Land Size Parking 6.68 acres 290,981 sq. ft. 416 spaces (3.97:1,000) COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA ii

3 SAN RAMON DUBLIN Dublin/Pleasanton BART Station yard Hop Gib d Roa ralt Sto ar D rive ner idg ed rive e riv n cie W. L as Po s itas B oulev ard PLEASANTON Ha D da ARROYO CENTER COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA iii

4 STRONG, STABLE INCOME STREAM BACKED BY HIGHLY PROFITABLE MULTI-BILLION DOLLAR FIRMS Arroyo Center is 100% leased to two tenants, Autonomy Corporation Limited, a $2.3B Hewlett Packard subsidiary, and Gatan, Incorporated, owned by Roper Industries Inc. (NYSE: ROP), a $12.3B global industrial technology conglomerate. TENANT OVERVIEW Founded in 1996 Headquartered in Cambridge, England Wholly Owned Subsidiary of Hewlett-Packard Company (NYSE: HPQ) Acquired by HP in Q HEWLETT-PACKARD FINANCIAL HIGHLIGHTS: $46B market cap (June 2013) $60B enterprise value (June 2013) $116B in revenue (MRQ) $13B in cash (MRQ) TENANT OVERVIEW Founded in 1964 in Pennslyvania Headquartered in Pleasanton, CA (subject site) 1996 Acquired by Roper Industries (NYSE: ROP) in Lease guaranteed by the parent company, Roper Industries, Inc. YE 2012 FINANCIAL HIGHLIGHTS FOR ROPER INDUSTRIES, INC. $12.26B market cap $2.99B in revenue $483.4M in net income $639M in free cash flow 30.4% EBITDA margin ARROYO CENTER PLEASANTON, CALIFORNIA COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA iv

5 STRATEGIC SAN FRANCISCO BAY AREA LOCATION WITH DIRECT ACCESS TO THE HIGHLY EDUCATED TRI-VALLEY LABOR POOL AND EXECUTIVE TALENT Positioned in the heart of the San Francisco Bay Area s Tri-Valley region, Arroyo Center benefits from the local, skilled and highly educated labor force, its access to the some of the most prestigious Universities and research centers in the world, and its well located, executive-laden bedroom communities. Its close proximity to San Francisco, the Silicon Valley, and Oakland, further cements the location as a primary commerce hub. The Tri-Valley, comprised of the cities Pleasanton, Dublin, and Livermore, attracts a wide array of the nation s most innovative firms, ranging from start-ups to mature companies across all industries. COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA v

6 OVER $1,100,000 IN RECENT & FUTURE IMPROVEMENTS Arroyo Center has benefited from a recent capital improvement plan. Additionally, both tenants at Arroyo Center have extended their leases in 2012 and were given TI Allowances in the amounts of $10 psf (Autonomy) and $5 psf (Gatan). Gatan completed their TI upgrades in January 2013 and Autonomy is in the process of upgrading their space. CAPITAL IMPROVEMENTS Roof replacement at 5794 $183,877 $1.76 psf New compressor (HVAC) at 5794 Replaced/relocated backflow device at ,086 $0.06 psf 24,652 $0.24 psf New landscaping and hardscape at entranceway 11,275 $0.11 psf Bollard repairs and painting Parking lot repairs & new sealant/striping 5,900 $0.06 psf 41,088 $0.39 psf Total Capital Improvements $272,878 $2.61 psf TENANT IMPROVEMENTS Gatan renewal TIs $211,000 $2.01 psf Autonomy HVAC upgrades at ,718 $1.47 psf Autonomy remaining TI balance Total Tenant Improvements 517,412 $4.94 psf $882,130 $8.42 psf Total Capital & Tenant Improvements $1,155,008 $11.03 psf COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA vi

7 ACQUISITION AND EXIT PRICING BELOW HISTORICAL NORM From a historical perspective, the going-in acquisition price on a price per foot basis is below where similar product has traded throughout past cycles. Additionally, should an investor choose to exit, one can achieve the necessary return metrics and still exit the asset within historical norms and below replacement cost. HISTORICAL TRI-VALLEY SALE COMPS Transaction Date Address City SF Price PSF Q Triad Drive Livermore 219,818 $49,020,000 $223 Q N. Canyon Parkway Livermore 48,924 $15,120,000 $309 Q Koll Center Parkway Pleasanton 41,271 $9,490,000 $230 Q Franklin Drive Pleasanton 34,583 $8,230,000 $238 Q W. Las Positas Boulevard Pleasanton 39,306 $11,010,000 $280 Q Hacienda Drive Pleasanton 45,122 $16,240,000 $360 Q Independence Drive Livermore 105,820 $21,690,000 $205 Q Chabot Drive Pleasanton 52,596 $11,410,000 $217 Q W. Las Positas Boulevard Pleasanton 39,473 $9,510,000 $241 Q Inglewood Drive Pleasanton 103,444 $24,000,000 $232 Q Franklin Boulevard Pleasanton 62,864 $17,220,000 $274 Q Stoneridge Drive Pleasanton 296,537 $83,330,000 $281 Q Owens Drive Pleasanton 48,492 $9,990,000 $206 Q Chabot Boulevard Pleasanton 467,219 $103,720,000 $222 Q Hacienda Drive Pleasanton 45,123 $11,870,000 $263 Q Koll Center Parkway Pleasanton 227,700 $50,780,000 $223 Q Koll Center Parkway Pleasanton 122,442 $27,430,000 $224 Q Koll Center Parkway Pleasanton 108,564 $24,320,000 $224 COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA vii

8 PROJECTED TO TRADE WELL BELOW REPLACEMENT COST Arroyo Center is expected to trade significantly below the estimated replacement cost of approximately $303 per square foot. Investors are encouraged to conduct their own replacement cost analysis. The figures below are estimates and are for illustration purposes only. REPLACEMENT COST ANALYSIS SITE SUMMARY Lot Size 291,416 Buildable and Rentable Area (SF) 104,741 Land Acquisition $40 per buildable SF $4,189,640 Site Work $15 per buildable SF $1,571,115 TOTAL LAND COSTS $5,760,755 Core & Shell $150 per buildable SF $15,711,150 Tenant Improvements $50 per buildable SF $5,237,050 TOTAL HARD COSTS $20,948,200 Architectural and Engineering 5% of hard costs $1,047,410 Permits and Fees $10 per buildable SF $1,047,410 Legal/Accounting/Consultant $6 per buildable SF $628,446 Marketing and Commissions Market Commissions $1,500,000 TOTAL SOFT AND MARKETING COSTS $4,223,266 CONTINGENCY 3% of Hard and soft Costs $755,144 TOTAL PROJECT COSTS $31,687,36 TOTAL PROJECT COSTS PSF $303 Please Note: Replacement Cost Analysis should be conducted independently. * The above model does not include developer's fee or carrying costs including financing, property tax, or operating expenses. COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA viii

9 SUSTAINED ECONOMIC AND EMPLOYMENT GROWTH IN ALAMEDA COUNTY: HIGHEST NUMBER OF EMPLOYEES WITHIN THE COUNTY IN OVER A DECADE LOWEST UNEMPLOYMENT RATE SINCE OCTOBER 2008 Driven by a diverse tenant base and world renowned research institutions, the economy in Alameda County has rebounded and has experienced strong economic growth over the past three years. As a result, according to the Bureau of Labor Statistics, the unemployment rate within Alameda County (Oakland-Fremont-Hayward CA MSA) is now down to 7.0%, 460 bps below the 11.6% unemployment rate during The robust hiring momentum is further evidenced by the current 1.22 million employed within the MSA, the largest pool of employees within the last ten years, eclipsing the November 2007 total of 1.21 million employed. LOCAL AREA EMPLOYMENT STATISTICS (OAKLAND-FREMONT-HAYWARD) 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 1,222, % 1,240,000 1,220,000 1,200,000 1,180,000 1,160,000 1,140,000 1,120,000 1,100, % Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 1,080,000 Total Employed Unemployment Rate San Jose Santa Clara Sunnyvale untain View Palo Alto Cupertino Milpitas Los Gatos Campbell Gilroy COLLIERS INVESTMENT SERVICES GROUP SAN FRANCISCO BAY AREA ix

10 CONTACTS EXCLUSIVE ADVISORS ANDY ZIGHELBOIM Senior Vice President DIR CA License No Arroyo Center Pleasanton, California NATE JONES Investment Services Group DIR CA License No TOMMY KIM Transaction Coordinator DIR CA License No MARKET SPECIALISTS TED HELGANS Senior Vice President DIR CA License No USALITO OAKLAND DANVILLE 580 BRIAN LAGOMARSINO Senior Vice President DIR CA License No DEBT FINANCING RAMSEY DAYA Regency Capital Partners DIR CA License No N ANCISCO Dublin 280 BELMONT 280 EL GRANADA Canyon SAN BRUNO SAN MATEO BURLINGAME 101 Rd. FOSTER CITY SAN CARLOS REDWOOD CITY LOS ALTOS PALO ALTO CASTRO VALLEY SAN LEANDRO DUBLIN MT. VIEW HAYWARD UNION CITY NEWARK 85 CUPERTINO SARATOGA FREMONT SUNNYVALE 880 SANTA CLARA SAN STONERIDGE RAMON MALL 237 CAMPBELL PLEASANTON 680 Stoneridge 680 MILPITAS SAN JOSE Foothill Rd. LIVERMORE Hopyard Rd. Las Positas Blvd. Hacienda Dr. Arroyo Center Valley Ave. Santa Rita Rd.