executive summary

GOVERNOR EXECUTIVE CENTRE
E XEC U T I V E S UMMARY
&
GOVERNOR PARK PLAZA
GOVERNOR EXECUTIVE CENTRE & GOVERNOR PARK PLAZA
Holliday Fenoglio Fowler, L.P., acting by and through Holliday GP
Corp., a real estate broker licensed with the California Department
of Real Estate, License Number 01385740 (“HFF”)
1
EXECUTIVE SUMMARY
OFFERING SUMMARY
HFF, L.P., as exclusive advisor, is pleased to present to qualified investors the opportunity to purchase,
individually or together as a portfolio, the 100% fee simple interest in Governor Executive
Centre and Governor Park Plaza (collectively, the “Properties” or “Portfolio”). At 90.4% leased, the
Portfolio consists of two institutional quality office campuses encompassing four buildings, totaling
260,421 rentable square feet. The Portfolio offers durable in-place cash flow from the University
of California, San Diego (Moody’s: Aa2), which occupies over 50% of the Portfolio and features a
weighted average remaining lease term of nearly 7 years. Additionally, the Properties offer significant
upside potential through the implementation of various amenity enhancements and the ability to
increase in-place rents upon rollover, which are 17.0% below market. Strategically located within
the boundaries of Interstates 5, 805 and State Highway 52, commonly referred to as “The Golden
Triangle”, the Portfolio is situated in one of the most desirable, high-growth areas of San Diego.
Governor Executive Centre and Governor Park Plaza can be acquired individually or as a single Portfolio.
The Portfolio is 90.4% leased with 50.6% credit tenancy in UCSD (Moody’s: Aa2).
In-place rents for the Portfolio are 17.0% below market rents.
ADDRESS
GOVERNOR PARK PLAZA
PORTFOLIO
6165/6256 Greenwich Dr.
San Diego, CA 92122
6333/6363 Greenwich Dr.
San Diego, CA 92122
6165/6256/6333/6363 Greenwich
Dr. San Diego, CA 92122
348-850-04, 05
348-031-20-00
348-031-20 & 348-850-04, 05
NET RENTABLE AREA (IN-PLACE)
152,487
107,939
260,426
NET RENTABLE AREA (BOMA)
152,482
107,939
260,421
91.8%
88.4%
90.4%
3.6 years
6.8 years
4.9 years
48.1%
54.0%
50.6%
4.7 years
9.4 years
6.8 years
ASSESSORS PARCEL #
PERCENTAGE LEASED
WTD. AVG. REMAINING LEASE TERM
PERCENTAGE LEASED TO UCSD
WTD. AVG. REMAINING LEASE TERM
FOR UCSD
NUMBER OF STORIES
YEAR BUILT
PARKING RATIO
LAND AREA
2
GOVERNOR EXECUTIVE
CENTRE
3&5
2
2, 3 & 5
1988 & 1989
1986
1988
4.1 per 1,000 USF
4.5 per 1,000 USF
4.3 per 1,000 USF
5.35 acres / 233,153 SF
7.12 acres / 310,275 SF
12.48 acres / 543,428 SF
PACIFIC OCEAN
TROLLEY FUTURE BLUE
LINE EXTENSION
FROM DOWNTOWN
UCSD SCHOOL
OF MEDICINE
COSTA VERDE
SHOPPING CENTER
($230M+ renovation planned)
LA JOLLA
UNIVERSITY
SQUARE SHOPPING
CENTER
GOLDEN TRIANGLE AT A GLANCE
±14M SF of Commercial Property
50,000+ Full time residents
20,000+ Housing Units
80,000+ Daytime Population
2.26M SF of Retail Amenities
1,117 Hotel Rooms
80+ Restaurants
GOVERNOR EXECUTIVE CENTRE
&
GOVERNOR PARK PLAZA
DEMOGRAPHIC INFORMATION
DEL MAR
SCRIPPS RESEARCH
INSTITUTE
DEL MAR HEIGHTS
TORREY
PINES
SORRENTO MESA
1 MILE
3 MILE
5 MILE
2020 Population Projection
8,344
106,837
273,349
2015 Population Estimate
8,097
101,353
262,161
Proj. Population Growth 2015-2020
3.05%
5.41%
4.27%
Population Growth 2010-2015
2.51%
5.78%
4.12%
2015 Average Household Income
$101,124
$81,793
$90,285
Bachelor’s Degree Or Higher
1,668
20,295
49,774
Source: CoStar
UTC SHOPPING CENTER
UTC
($1B renovation underway)
GOVERNOR
PARK PLAZA
GR
EEN
WI
CH
M
SHOREHA
GOVE RNOR DR
PL
DR
MCAS MIRAMAR
GOVERNOR
EXECUTIVE
CENTRE
INFILL SUBMARKET WITH LIMITED
POTENTIAL FOR NEW OFFICE SUPPLY
•
The last remaining office
development parcel in the
Governor Park submarket was
constructed over 15 years ago.
•
There are 4 remaining vacant
commercial land parcels
totaling just 14.3 acres in the
entire Golden Triangle market,
restricting the potential for new
office development.
3
INVESTMENT HIGHLIGHTS
Governor Executive Centre
4
Governor Park Plaza
GOVERNOR EXECUTIVE CENTRE
&
GOVERNOR PARK PLAZA
LONG TERM CREDIT TENANCY
STRONG IN-PLACE CASH FLOW WITH SIGNIFICANT UPSIDE POTENTIAL
In excess of 50% of the Portfolio’s net rentable area is leased
to credit tenant UCSD (Moody’s: Aa2) with a weighted average
remaining lease term of 6.8 years.
The Portfolio offers durable in-place cash flow from credit tenancy (50.6% of NRA)
and an overall weighted average remaining lease term of 4.9 years, in addition to
substantial value growth potential via in-place rents that are 17.0% below market.
UC SAN DIEGO AT A GLANCE
• Total assets were $6.5 billion for fiscal year-end
2014, representing an increase of 15.5% over 2013
$3.50
$3.00
$2.91
$2.85
$2.50
$2.49
$2.50
$2.00
$1.50
$1.00
$3.08
$3.07
$2.45
$2.63
18.8%
2.1%
% RSF Expiring
6.3%
$3.23
$3.53
$3.77
$3.76
$3.05
$2.65
31.8%
100.0%
80.0%
60.0%
22.4%
9.0%
40.0%
RSF Expiring
• Total revenues were $3.8 billion for fiscal year-end
2014, representing a 128% rise since 2011
Rent (PSF/Mos.)
• Attracted an average of $1 billion in research funding
each year over the last five years
Gross In-Place Rent (Upon Expiration) vs. Market Rent
$4.00
20.0%
0.0%
Weighted Average In-Place Rent
Weighted Average Market Rent
• Ranked #1 best hospital in San Diego
• Ranked #8 best public university in the U.S.
• Spun off 650-plus companies
CORE EXIT STRATEGY
As UCSD continues to expand its space requirement, focusing
on Governor Park for its administrative office functions,
Governor Executive Centre and Governor Park Plaza are the ideal
candidates for future UCSD expansion space. By increasing the
amount of long-term credit tenancy in the Properties over time,
an investor can reasonably project a core sale upon exit.
5
INVESTMENT HIGHLIGHTS
1903
DEMONSTRATED LONG-TERM UCSD COMMITMENT
1966
F OUNDED
Marine Biological Assoc.
of San Diego
U CSD
B E G INS
1959
M O VE T O
LA JOLLA
operating 1st
University Hospital
• UCSD, which occupies over 50% of the Portfolio NRA, has
identified the Governor Park submarket as the main location
for its administrative and extension functions in San Diego.
1960
U CSD
O F F ICIA L LY
E STA B L ISH E D
• Since mid-2015, UCSD has expanded into over 130,000
square feet of space in the Governor Park submarket
to occupy a total of 216,517 square feet (25.2% of the
submarket), committing to long-term leases in all instances.
• The class A image, superior accessibility, freeway visibility
of Governor Park, as well is its proximity to UCSD’s main
campus, clinical and research divisions in UTC and Torrey
Pines, make it the ideal location for UCSD’s administrative
and extension operations.
• UCSD has proven itself as a worldwide leader in research
and medical innovation by continuing to offer the best in
class research, cancer, trauma, and hospital centers. The
ongoing expansion arises new employment opportunities,
coupled with new office and developmental real estate
demand.
6
6200 GREENWICH DR
SIZE
EXEC. DATE
70,987 SF
Nov-15
216,517 SF
OF LEASES SIGNED BY UCSD
SINCE 2009 IN GOVERNOR PARK
(±25% OF THE TOTAL SUBMARKET)
1968
U CSD
PU RCH A SE S
130 acres of land in La Jolla
GOVERNOR EXECUTIVE CENTRE
2001
1 S T O FFIC E
S PA C E
GOVERNOR PARK PLAZA
2011
C AM PUS
O PENING
1990
&
RESEARCH
M EDICAL CENTER
OPENING
6th and final
college opens
345,000 SF
OF PURCHASED &
LEASED SPACE IN SAN
DIEGO SINCE 2015
signed in La Jolla
1976-1978
FO U N D E D
2011
2016
Signs first substantial size
lease of nearly 50,000 SF
at Gov. Exec. Centre
attributed to UCSD
reputable companies
L EASE SIGNED
First Cancer & Trauma
Centers founded
2 9 ,0 0 0
DIRECT JOBS
2ND LARGEST EMPLOYER
IN SAN DIEGO COUNTY
29,986
FULL/PART TIME EMPLOYEES
5060 SHOREHAM PL
SIZE
EXEC. DATE
13,871 SF
Jan-09
6333/6363
GREENWICH DR
SIZE
EXEC. DATE
24,405 SF
Sep-11
33,854 SF*
Jan-16
1
ST
IN THE NATION
FOR 6 STRAI GHT
Y EARS
LEADING RESEARCH,
CIVIC ENGAGEMENT
& SOCIAL MOBILITY
*UCSD sublease with Verizon
6256 GREENWICH DR
SIZE
EXEC. DATE
49,819 SF
Nov-10
5,948 SF
Apr-15
17,633 SF
Jun-15
10 YEAR GROWTH
IN ENROLLMENT
34,000
ENROLLMENT
7
INVESTMENT HIGHLIGHTS
ABILITY TO ENHANCE VALUE THROUGH
ADDITIONAL IMPROVEMENTS AND AMENITIES
Companies are demanding a new type of workplace,
emphasizing employee satisfaction and retention of
talent. Governor Executive Centre and Governor Park
Plaza both offer an exceptional opportunity to enhance
the common areas and project amenities.
1
2
3
ENHANCE EXTERIOR COMMON AREAS
Add outdoor lounge area, providing free wifi access, coffee stands, and graband-go food options. Enhance exteriors with modernized landscaping.
NEW BUILDING TOP SIGNAGE
Establish a new brand identity for the Properties, taking advantage of the heavy
traffic count on I-805.
ACTIVE AMENITY ENHANCEMENT
Upgrade amenities around the existing tennis courts. Potential to upgrade to a
state-of-the-art outdoor fitness complex.
1
3
1
8
2
GOVERNOR EXECUTIVE CENTRE
&
GOVERNOR PARK PLAZA
PROMINENT IDENTITY
SUPERIOR FREEWAY ACCESSIBILITY
Governor Executive Centre enjoys unparalleled visibility from
Interstate 805, which accommodates 200,000 cars per day.
Governor Park Plaza also provides exceptional freeway visibility
directly translating into highly valued signage rights for tenants at
both Properties.
Situated at the corner of Interstate 805 and State Highway 52, both
Governor Executive Centre and Governor Park Plaza offer superior
freeway access to tenants compared to the surrounding submarkets
of UTC, Sorrento Mesa and Kearny Mesa.
200,000
VEHICLES PER DAY
9
INVESTMENT HIGHLIGHTS
PROXIMITY TO AMENITIES
SUBJECT PROPERTIES VS. SUBMARKET - HISTORICAL OCCUPANCY
GOLDEN TRIANGLE RESTAURANTS & CAFÉS
Governor Executive Centre and Governor Park Plaza have historically
outperformed the average submarket occupancy. Over the past five
years these projects have outpaced the market occupancy by 708
bps and 323 bps, respectively.
10
Ahi Sushi & Grill
Aladdin Mediterranean
Amardeen Mediterranean
Appollonia Greek Bistro
Arby’s
Bombay Coast
Bottega Italiana
Buga Korean Barbecue
Café Japengo
California Pizza Kitchen
Carmen’s Mexican Food
Carls Jr.
Charley’s
Chipotle
Continent Deli
Corner Bakery
Craft Pizza
Daphne’s
Denny’s
Di-Chan Thai Restaurant
Dino’s Gyros
Draft Republic
Eddy M’s
Edo Sushi
Einstein Bagels
El Cotixan
Elijah’s Deli
Eureka! Burger
Fin’s
Five Guys
Flame Broiler
Fleming’s Steakhouse
Green Light Café
Havana Grill
Hi Thai
Humphrey’s La Jolla Grill
Indian Express Restaurant
Islands
Izakaya Kanpai
Jersey Mike’s
Kebab Grill
King’s Bistro
Ki Sushi
Leucadia Pizzeria & Italian
L&L Hawaiian BBQ
Lemonade
Little Sheep Mongolian
Lolita’s Taco Shop
Lorna’s Italian Kitchen
Los Pueblos Mexican
Matsugawa Sushi
McDonald’s
Melting Pot
Micheline’s Pita House
Mom & Dom’s Pizza
Mongrill
Niban Japanese
Noodles & Company
Nordstrom Café
Nozomi
On a Roll
Outback Steakhouse
Outcast Grill
Panda County Restaurant
Panda Express
Papa Chito’s Mexican
Food
Papa John’s Pizza
PF Chang’s
Pho La Jolla
Pho T Cali
Porter’s Pub
Ramen Yamada
Red O
Red Robin
Regents Pizzeria
Rock Bottom Brewery
Round Table Pizza
Roy’s
Royal India Express
Rubio’s
Sammy’s Pizza
Santorini Greek
Sarku Japan
Governor
Executive Centre:
Outperformed
5-yr avg. market
occupancy by 708
bps
90%
80%
70%
60%
50%
40%
30%
20%
Governor Park Submarket
Schlotzsky’s
Seasons 52
Shogun
Sipz Vegetarian
Sorrentino’s Pizza
Souplantation
Specialty’s Café
St. Tropez Bistro
Star Anise Thai
Starbucks
StoneOven
Submarina
Subway
Surf Brothers
Tender Greens
Thai Kitchen
Tony’s Giant Pizzeria
Torrey Pints
Troy’s Family Restaurant
Truluck’s
Un Mundo Mexican Grill
Veggie Grill
Wendy’s
Which-Wich
Governor Park Plaza
Governor Executive Centre
SHOPS
GOLDEN TRIANGLE AMENITIES
TRACK RECORD OF OUTPERFORMING THE MARKET
100%
Occupancy %
The Properties benefit from of over 1.7 million SF of nearby retail
amenities, with an additional 750,000 SF expected to be delivered
between 2017 and 2020 with the completion of the $1 billion Westfield
UTC Mall renovation and Costa Verde Center redevelopment.
Abercrombie & Fitch
Anthropologie
Apple
Banana Republic
Best Buy
Bristol Farms
Crate & Barrel
CVS
DSW Shoes
Express
Foot Locker
Forever 21
Free People
Gap
Guess
Hollister
J. Crew
Justice
Lucky Brand
Lululemon
Macy’s
Men’s Warehouse
Michael Kors
Nordstrom
Pottery Barn
Pirch
Governor Park
Plaza:
Outperformed
5-yr avg. market
occupancy by 323
bps
Ralph’s
Restoration Hardware
Sears
Sports Chalet
Staples
Tesla
Trader Joe’s
US Post Office
Victoria’s Secret
White House Black Market
Whole Foods
Williams-Sonoma
World Market
LODGING
Radisson Hotel La Jolla
Hyatt Regency La Jolla
San Diego Marriott La Jolla
ENTERTAINMENT
AMC Theater
ArcLight Cinemas
La Jolla Playhouse
Landmark Theatres
GOVERNOR EXECUTIVE CENTRE
&
GOVERNOR PARK PLAZA
Governor Executive Centre and Governor Park Plaza represent a rare opportunity to acquire
institutional quality office assets with durable in-place income and exceptional future upside
potential, at approximately 75% of replacement cost.
SURROUNDING INSTITUTIONAL OWNERSHIP
(GOVERNOR PARK & UTC)
The Golden Triangle has long been regarded as one of the most
desired San Diego locations by institutional investors due to
its central location, corporate tenant demand, abundance of
amenities and historically sound fundamentals.
Both Governor Executive Centre and Governor Park Plaza
have been meticulously maintained to the highest standards,
having benefited from a long history of institutional
ownership. Both Properties have been owned and operated
exclusively by institutional owners since inception.
SIGNIFICANT BARRIERS TO ENTRY
PACIFIC OCEAN
INSTITUTIONAL QUALITY OFFICE ASSETS
THE GOLDEN TRIANGLE
GOVERNOR EXECUTIVE
CENTRE & GOVERNOR
PARK PLAZA
The Golden Triangle area, due to its high land cost and lack of
available sites for development, presents substantial barriers to
entry for new development. With rents still significantly below
levels that would justify new construction, an owner of the
Portfolio is protected against new competing product.
DISCOUNT TO REPLACEMENT COST
Governor Executive Centre and Governor Park Plaza present a
unique opportunity to acquire two institutional quality assets at
approximately 75% of replacement cost.
11
GOVERNOR EXECUTIVE CENTRE
&
GOVERNOR PARK PLAZA
INVESTMENT ADVISORS
NICK PSYLLOS
Senior Managing Director
npsyllos@hfflp.com
858.812.2352
CA Lic. #00788060
RYAN GALLAGHER
Senior Managing Director
rgallagher@hfflp.com
949.798.4100
CA Lic. # 01269918
KARA MATHIS, CFA
Senior Real Estate Analyst
kmathis@hfflp.com
858.242.6220
CA Lic. #01924947
TIM GEIMAN
Director
tgeiman@hfflp.com
949.798.4109
CA Lic. #01921744
NICK FRASCO
Director
nfrasco@hfflp.com
858.812.2354
CA Lic. # 01819400
DEBT ADVISORS
ALDON COLE
Senior Managing Director
acole@hfflp.com
858.812.2344
CA Lic. # 01457351
ZACK HOLDERMAN
Director
zholderman@hfflp.com
858.812.2350
CA Lic. # 01434957
MARKET LEASING ADVISORS
CHRISTOPHER HIGH
Senior Managing Director
chris.high@ngkf.com
858.875.3604
CA Lic. # 01734544
STEVE BRUCE
Senior Managing Director
steve.bruce@ngkf.com
858.875.3605
CA Lic. # 01455744
HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties]
described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers,
employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information.
Any and all reference 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 purchaser, and HFF, its partners, officers, employees and agents disclaim any liability
that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent
investigation and rely on those results. The information contained herein is subject to change.
MICHAEL LEGGETT
Senior Managing Director
mleggett@hfflp.com
415.276.6924
CA Lic. # 01056334