1221 Hermosa Ave Hermosa Beach, CA - Beach City Capital · development and/or repositioning of multi-family, luxury housing, and commercial assets, targeting value-add/opportunistic

1221 Hermosa AveHermosa Beach, CA4,510 SFFlagship Location

Co-Working Business VentureBeach-centric Co-working Office Space

PRESENTED EXCLUSIVELY BY:

• Executive Summary

• Business Plan Overview

• Site / Urban Context

• Conceptual Design

• Market Overview

• Economics

• Sponsorship Overview

TABLE OF CONTENTS

BEACH CITY CAPITAL1240 Rosecrans Ave, Suite 120

Manhattan Beach, CA 90266

(424) 226-7780

[email protected]

www.beachcitycapital.com

mailto:[email protected]

EXECUTIVE SUMMARY

1221 Hermosa Ave, Hermosa Beach, CA


EXECUTIVE SUMMARY

LOCAL COLLABORATIVE 4

FLAGSHIP LOCATION OVERVIEW

DEAL OVERVIEW

Property SummaryFirst Location Hermosa Beach CA

Property Address 1221 Hermosa AveHermosa Beach, CA

Lease Square Footage 4,510

Capital SourcesTenant Improvement Allowance $225,000

Series A Debt Note $725,000

Total Cost $950,000

Project Costs

Hard Costs $675,272

Soft Costs $274,728

Total Costs $950,000

FLAGSHIP PROPERTY LOCATIONPROJECT PHASESPhase I: Permitting and Tenant Improvement Buildout

Tenant Improvements

(3 months)

Permits

(3 months)

Run Operations

Phase II: Membership Lease Procurement

Lease up -marketing

– Run promotions, office tours, and host events.

Local Collaborative is a beach-centric co-working office space company startup that aims to provide the highestpossible quality of spaces in the co-working industry. Beach City Capital is offering the opportunity to invest upto $725,000 in this Project with a five-year Debt Note that has a three-year minimum and can be convertible toEquity after two-year company valuation.

Series A Investor will receive a first position on returns and will receive a 10% preferred annual return for aminimum of a three-years. At year three, Investor has option to convert to Equity or sell Debt Position at 1.5x.At year five, Investor has option to convert to Equity or sell Debt Position at 1.8x.

Using extremely conservative assumptions, the project’s underwriting shows an average cash flow of $125kNOI and a 21% IRR over a ten-year hold. Current market analysis indicates a strong demand for co-workingspaces in the South Bay of Los Angeles, and a current lack of supply.

Series A - Investor ReturnsAnnual Debt Yield 10%

Minimum Hold Period 3 years

Options: Covert to Equity or sell at 1.5x Maximum Hold Period 5 years

Options: Covert to Equity or sell at 1.8x

Investor Returns Example – 3 year hold Year 1 Year 2 Year 3Investment Amount: $100,000 $10,000 $10,000 $10,0003 year 1.5x buyout option $120,000Subtotal $10,000 $10,000 $130,000Total $150,000

INVESTMENT HIGHLIGHTS

The first location located at 1221 Hermosa Ave is one block to the beach, in prime Hermosa Beach next to Pier Ave.

Hermosa Beach has a wide array of local businesses from new restaurants constantly opening, boutique shops, coffee

shops, and popular bars. The social atmosphere of Hermosa Beach is beneficial for local businesses and community

culture. Local Collaborative’s flagship office is across the street from several lunch spots, ideal for business outings,

interviews, or meetings. The vibrancy that local businesses bring to Hermosa Avenue provides a positive and lively

atmosphere.

• Experienced Business Managers and Real Estate / Investment Sponsors

Local Collaborative will be owned and managed by Beach City Capital. Beach City Capital is a private real estate

investment firm headquartered in Manhattan Beach, CA. The firm has raised 15 funds and focuses on executing the

development and/or repositioning of multi-family, luxury housing, and commercial assets, targeting value-

add/opportunistic returns. The owners and key management staff of Beach City Capital have more than 35 combined

years of real estate experience. Beach City Capital is currently managing $110,000,000 in active investments across

Los Angeles. Beach City Capital’s network and experience will lower risk and benefit this venture.

5

EXECUTIVE SUMMARY

• Project Location / Local Businesses

• Market Comparable

LOCAL COLLABORATIVE

In comparison to other South Bay co-working offices, our underwritten rents are very conservative. WeWork in

Manhattan Beach offers co-working spaces for $3,900/month (6 person office). Local Collaborative’s projection for a

similar space will be market rate but with a better location one block from the ocean. Unita in Hermosa Beach offers a

smaller office for $3,275/month (6 person office). Local Collaborative is also very conservative with it’s rates for hot

desks which compare to El Camp, Unita, and CrossCampus by being $100-$200 less per month.

• Business Plan

Local Collaborative is excited to present the flagship location and the first of three co-working spaces to be released in

2019. Starting in Hermosa Beach in a 4,510 sf space located at 12221 Hermosa Ave, offering 12 offices, 2 conference

rooms and other amenities. The second location is planned for Redondo Beach and the third in Manhattan Beach.

These collaborative office spaces will harness the essence of the South Bay beach community. All locations will be

one block from the beach focusing heavily on design, art and technology, with modern furniture and innovative

architecture to appeal to all business professionals.

BUSINESS PLAN OVERVIEW



Local Collaborative is a beach-centric craft co-working space with an all-inclusive business model.

Local Collaborative will cater to developing professionals, technology ventures and established enterprises by

providing premier work space amenities and flexible but quality work-place solutions by first leasing a space,

building it out and offering membership for Business Revenue.

Amenities for members will include coffee, beer taps, printing, internet, parking, cleaning services, access to the

kitchenette, and open social space. Surrounding amenities include beachfront access and the shops / restaurants

available on Pier Ave.

• Master Lease Terms for First Location at 1221 Hermosa Ave, Hermosa Beach, CA

7


• Tenant Improvement Costs

Local Collaborative LLC will be responsible for coordinating the architects, engineers and others involved in the

design and construction of the tenant improvements necessary to operate the space successfully and will provide

$950,000 in capital towards these tenant improvements. $225K will be given by the owner and the other $725K

will be provided by Local Collaborative by way of Series A Investment Offering.

The terms of the lease include a 10-year MGR (Modified Gross Rent) payment of $3.50/SF/month to include a

total square footage of 4,510. The lease will have a 5-year option to extend with yearly rent increases based at

CPI with a 10% bump after 5 years. Product will yield 12 offices for use and additional amenities.

LOCAL COLLABORATIVE


The flagship location is planned to be on the coast in Hermosa Beach, California, just one block North ofthe Hermosa Beach Pier. The location is in a historic building, previously a movie theatre, that will berenovated to perfection to house Local Collaborative’s first location using Gensler Architects. It will addvalue to the building and preserve its history and authenticity at the same time. The interior will feature aunique palette of contrasting materials such as steel, glass, vintage brick and reclaimed wood. Commonamenity space with designer furniture will be the central point of the space and with adjacent private officesthat feature acoustic mitigation to host the best Local Co-lab members/startups.

The space will have 12 offices, 2 conference rooms, entry, mailroom and kitchen. The spaces will have awell designed vibrant lobby with a personable receptionist ready to greet clients. Local Collaborative aimsto keep the importance of professionalism in the workplace by screening interested members. All memberswill come from a wide array of South Bay industries. Local Collaborative will also host events fororganizations such as Urban Land Institute (ULI) and invite real estate networking organizations to hostconferences in our space on weekends and/or during evening hours. We will also open up our commonspace for community events hosting USC, local high school software classes and other communityeducation based events.

Local Collaborative is offering a $725,000 investment that will yield a 10% cash on cash return with a 5year Debt Note that has a three-year minimum and can be convertible to Equity after three-year companyvaluation or sell Debt position at 1.5x. Investment has also the option to yield 10% till year five and convertto equity or sell position at 1.8x. Our total build out cost will be $950,000. We have been given $225,000 oftenant improvement allowance by building owner along with five (5) months free rent. The $950,000 will beused for Hard ($675,000) and Soft ($274,000) Costs provided by Local Collaborative.

Local Collaborative aims to multiply locations this year. Our goal is to ultimately create a network of 20 co-working office spaces, along the coast from Palos Verdes to Pacific Palisades – Los Angeles.

DESIGN BY

OPPORTUNITY

GROWTH


PROGRAM

• Co-working office space’s unstoppable market growth

CO-WORKING MARKET

• The co-working sector has emerged as the primary growth driver within the U.S. office market. Expansion from this sector

claimed more than a quarter of the total U.S. office absorption over the past 24 months. No segment of the market has

demonstrated more overall growth than the co-working industry.

• Co-working offers numerous benefits to business professionals. Research shows that people are more effective due to

the energy and mindset adjustment that is generated by co-working. Other benefits include improving networks, reducing

costs and adding flexibility to businesses, as well as access to Internet, printing, copying, mail services, office clean up,

faxing, and amenities such as snacks and coffee.

• Due to competitive and costly office space in Los Angeles, there is an increasing demand for flexible office spaces that

include desks, meeting rooms, private offices and conference rooms. The major companies offering co-working space in

Los Angeles include WeWork, Cross Campus, NextSpace, Breather, Bizhaus, Unita, Spaces and El Camp.

• In the South Bay, the average price for a desk in a co-working space is $350/month. At WeWork in Manhattan Beach, a

150 sf space popularly rents for for $3,600 plus expenses. Popular co-working spaces such as WeWork can reach 90%

occupancy.

• The trend isn't limited to the United States. Big corporate users pay lucrative monthly fees for large corporate spaces on

flexible terms, often in multiple global locations. As coworking has moved well beyond mainstream status to become a

global business practice, evidence has been mounting that providers must move beyond serving solo workers and

freelancers in order to compete in the long run. For the immediate future, observers said the true picture points to steady

demand growth as companies, preparing for downturns, seek out the flexibility that comes from not committing to big long-

term leases when times are uncertain.




Investment Associates

Developers

Project Managers

Architects

Brokers Analysts

Civil Engineers

Underwriters

Agents Appraisers

General Contractors

RE Attorneys

All Under One Roof

All-Inclusive business model: Including coffee, bee taps, printing, internet, parking, cleaning services, access to the kitchenette, and open social space

One block from the ocean and one block from the pier

A historically preserved and unique building

A common ground for all South Bay real estate companies

An opportunity for growth in Los Angeles

The concept of co-working but with an emphasis on professionalism and collaboration

AN INTEGRATED CO-WORKING BUSINESS APPROACH

A SPACE FOR LOCAL BUSINESS PROFESSIONALS TO COLLABORATE

BankersAccountants

Technology Professionals

Marketing Professionals


(REAL ESTATE RELATED COMPANIES)

SANTA MONICA

VENICEMARINA DEL REY

PLAYA DELREY

REDONDO BEACH

MANHATTAN BEACH

HERMOSA BEACH

EL SEGUNDO

11LOCAL COLLABORATIVE

Local Collaborative’s business plan in 2019:

Fully establish the first three locations in Hermosa Beach,

Redondo Beach and Manhattan Beach

SANTA MONICA

LOCATION TARGETS

First Location:


5. Playa del Rey

6. Marina del Rey

7. Venice Beach


4

6

5

7

8

Target Expansion Locations

2. Redondo Beach

3. Manhattan Beach

4. El Segundo

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2

3 1

1

2

3

SITE / URBAN CONTEXT





SITE CONTEXT – FIRST LOCATION

1 min walk to sand and Pier

1Property

• The Property is located within a 1 minute walk of the Hermosa Beach Pier and its surrounding mix of eclectic restaurants, bars, and specialty retail stores, and is just one block away from the beach itself.

• The City of Hermosa Beach recently welcomed a 12,000 SF Trader Joe's Market, which is located just 0.6 miles (a 15 minute walk) from the property. Tenants will be able to enjoy the sunny skies on a swift walk to the local organic market.

• The Walk Score of this neighborhood is 95 out of 100. This location is a 5 minute walk to Downtown Hermosa Beach. Nearby parks include South Park, Clark Stadium and Roadway Park.

• Fun activities in the neighborhood include the Fiesta Hermosa Art Fair, which occurs every Memorial Day and Labor Day weekend in Downtown Hermosa Beach. The music scene always features high caliber, talented musicians. The Strand, which is the beachfront sidewalk linking Hermosa Beach to Manhattan Beach and Redondo Beach, is also very popular and great for an evening stroll.


• Proximity

Hermosa Pier

Pier Avenue

Killer Shrimp

Hennessey’s Tavern

Waterman’s

Greenbelt Restaurant

The RockefellerJava Man

Fritto Misto


SITE CONTEXT

Property1 min walk to pier

935 15TH Street 945 15TH Street to

Beach City Capital´s Projects:1. 1221 Hermosa Ave (Property)2. 935 15th Street (Townhome Development)3. 945 15th Street (Townhome Development)

1

2 3



HERMOSA BEACH, CA

1Property

• 1221 Hermosa Ave, Hermosa Beach, CA

• Leasable Sqft: 4,510 sf


Hermosa Pier


• Future Vision

Beach City Capital will adaptively reuse a 4,510 sf beachfront space into a co-workingoffice located within the historic 1221 Hermosa Ave building in Hermosa Beach, CA.

This property is located one block from the beach and one block from downtown HermosaBeach’s famous Pier Ave. The property is situated in a Class A business and retail districtthat will cater to the area’s rapidly growing aerospace, tech, finance, and service corporatedemographic.

This lot is immediately adjacent to the Pacific Ocean and is surrounded by vibrant retail in ahigh-income professional community with robust nightlife and tremendous walkability.

Before After

CONCEPTUAL DESIGN


DESIGN BY: BRANDING BY:



CONCEPTUAL DESIGN

PROPERTY LOCATION

1

City Context: Hermosa Beach

Neighborhood Context: Downtown Hermosa

Building Context: 1221 Hermosa Historic Building


CONCEPTUAL DESIGN

• Office space for lease one block from the beach

• 35 ft high ceilings, skylight, and built out private

offices

• Prime, downtown Hermosa Beach location

• Walking distance to an abundance of retail

amenities

• One-of-a-kind historic building

• Parking available throughout City of Hermosa Beach

• Lightwell and beautiful ornamental details

PROPERTY HIGHLIGHTS

EXISTING CONDITION

Chase Bank

Local Collaborative

4,510 sqft

Beach

Side

Wal

k

Hermosa Ave

Existing Plan:


CONCEPTUAL DESIGN

EXISTING SPACE


CONCEPTUAL DESIGN

EXISTING


CONCEPTUAL DESIGN

PROPOSED CONCEPTUAL DESIGN OPTIONS

1

2


CONCEPTUAL DESIGN

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

OUTDOOR AREA AND ENTRANCE

24

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

COMMON AREAS AND AMENITIES

25

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

COMMON AREAS AND AMENITIES

26

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

CONFERENCE ROOMS

27

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

COMMON AREAS AND OFFICES

28

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

PRIVATE OFFICES

29

LOCAL COLLABORATIVE

CONCEPTUAL DESIGN

30

CONCEPTS BY:

BRANDING BY:

MARKET OVERVIEW



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MARKET OVERVIEW

MARKET RENT COMPARISON

LOCAL COLLABORATIVE

33

MARKET OVERVIEW

MARKET RENT ANALYSIS

LOCAL COLLABORATIVE

$

$

$

$

$

$

$

$

$

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COWORKING COMPS

LOCAL COLLABORATIVE

NO LOCATION HOT DESK $ 2 SEAT OFFICE $ 4 SEAT OFFICE $ 6 SEAT OFFICE $

1 WeWork Manhattan Beach $406 $1,420 $2,320 $3,500

2 WeWork El Segundo $390 $1,480 $2,500 $3,400

3 Spaces El Segundo $299 $1,138 $2,276 $3,414

4 Cross Campus El Segundo $350 $1,210 $1,780 $3,100

5 Unita Hermosa Beach $525 $1,350 $1,900 $2,795

Comparable Average $394 $1,320 $2,155 $3,242

$380 $2,795$1,350 $1,900

SILICON BEACH

LAX

REDONDO BEACH

MANHATTAN BEACHHERMOSA BEACH

EL SEGUNDO

1

2

3

4

5

Note: Local Collaborative has a prime location one block from the Beach and Next to Hermosa Pier Ave

35

COWORKING COMPS

LOCAL COLLABORATIVE

2

3

WeWork El Segundo

Spaces El Segundo

4

Cross Campus El Segundo

1

Hot Desk $ $406/month

2 Seat Office $ $1,420/month



Average expenses /person $210/ month

WeWork Manhattan Beach
















36

COWORKING COMPS

LOCAL COLLABORATIVE

5





Unita Hermosa Beach

LOCATION HOT DESK $ 2 SEAT OFFICE $ 4 SEAT OFFICE $ 6 SEAT OFFICE $Average

Expenses/Person

WeWork Manhattan Beach $406 $1,420 $2,320 $3,500 $210

WeWork El Segundo $390 $1,480 $2,500 $3,400 $225

Spaces El Segundo $299 $1,138 $2,276 $3,414 $200

Cross Campus El Segundo $350 $1,210 $1,780 $3,100 $200

Unita Hermosa Beach $525 $1,350 $1,900 $2,795 $100

Comparable Average $394 $1,320 $2,155 $3,242 $183

$2,795$380 $180$1,350 $1,900

Note: Local Collaborative has a prime location one block from the Beach and Next to Hermosa Pier Ave

37

A small, sunny beach city of 1.43 square miles, Hermosa Beach sits at the center of Los

Angeles County’s South Bay coastline, just 5 miles south of Los Angeles International Airport.

The town is the very essence of the Southern California lifestyle, with temperatures ranging on

average from highs of 78 degrees in the summer to 65 degrees in winter, and nighttime

temperatures that rarely fall below 55 degrees. There are architecturally diverse residences on

The Strand, bungalows scattered throughout the town and multilevel homes in the hills with

ocean views. The City has police and fire departments, a skate park, green belt, community

theater and senior center.

• Beach City Community

• Culture

This lively beach city is also well known for its entertainment offerings, including live music

from rock and blues to jazz. Festivals and special events abound on weekends. The three-day

weekends of Memorial Day and Labor Day bring thousands of visitors to the Fiesta Hermosa

street fair, which has been a tradition for many years, featuring hundreds of crafters, artists

and live bands. In addition, Hermosa Beach is well known for its many tasty and diverse

restaurants. Hermosa Beach is within a few minutes commute to many of the large, well

known names in corporate America in fields such as aerospace, high tech, industrial, and

financial services.

• Local EconomyAs a beach community, Hermosa experiences a high visitor population. During the 2014-15

fiscal year, beach attendance ranged from a low of 77,600 in December 2014 to a high of

1,596,605 in July 2014, according to the Los Angeles County Fire Department, Lifeguard

Division. The three highest occupations are management, sales, and administrative support,

however residents enjoy access to a much more diverse employment base with the

close proximity of all of the other cities in Los Angeles County. The unemployment rate in

Hermosa Beach is 3.1%, compared with 7.4% for Los Angeles County, and 6.2% for California

as of June 2014.

LOCAL COLLABORATIVE

MARKET OVERVIEW

HERMOSA BEACH MARKET OVERVIEW


DEMOGRAPHICS

MARKET OVERVIEW


DEMOGRAPHICS

MARKET OVERVIEW

ECONOMICS



CAPITAL STACK

INVESTMENT OPPORTUNITY

4

Building Owner TI Allowance ($225,000)

Series A (Open for Investment, $725,000)Yields an annual return of 10%

3 year min – 5 year max

Example Investment:$100,000 investment will have several options:


$225k

$725k

$950kYear 3 options:

• Convert to Equity• Sell Note at 1.5x

Year 5 options:• Convert to Equity• Sell Note at 1.8x

Total Capital $950,000

Tenant Improvement Allowance $225,000

Series A Debt Note $725,000

1221 Hermosa Avenue Date 1/15/2019Local Collaborative, LLCInvestment Summary Business Location Info Debt Note Investment InformationLeased Spaced at 1221 Hermosa Avenue ‐ To Be improved to house Co‐working Space Capital Investment Notes:Office Space 4,510 sf Debt Note Investment Amount 725,000$ Modified Gross ‐ Rent 3.20 psf Annual Debt Yield 10%Cam 0.30 psf Note Maturity (years) 5 (2 extensions)NNN 0.00 psf Min Yield (Years) 3 Total Rent Due PSF 3.50$ psf Option at Year 3Per Month 15,785$ Convertible to equity or 1.5x Note BuyoutPer Year 189,420$ Option at Year 5

Convertible to equity or 1.8x Note Buyout

Sources UsesCapital Used for Improvement 950,000$ Tenant Improvement BudgetBuilding Owner Allowance 225,000$ Soft Costs 4,510 61 psf 274,728$ Debt Note Investment 725,000$ Hard Costs 138 623,250$ Dev Cap 19% Contingency 12 52,022$

Total Costs 211 950,000$

NOI Investment Stabilization Year 2 Year 3 Year 4 Year 5

10% Note Payment (725,000)$ 72,500$ 72,500$ 72,500$ 72,500$ 72,500$

Total Cash Flow Upside (725,000)$ 95,398$ 136,060$ 145,546$ 155,222$ 165,091$

3 Year Example Investment (100,000)$ 10,000$ 10,000$ 10,000$ Buyout Option at Year 3 120,000$ Total Proceeds 3yr Option 150,000$ Equity Multiple 1.5X

Comparable Set Average Local Collaborative ‐ Project ProjectionsUnit Type Base Rent Printing Parking $ Total/month Unit Type Base Rent Printing Parking $ Total/month DiscountHot Desk 394$ 80$ 103$ 577$ Hot Desk 380$ 100$ 80$ 560$ 3%2 seat office 1,320$ 160$ 206$ 1,686$ 2 seat office 1,350$ 150$ 160$ 1,660$ 2%4 seat office 2,155$ 320$ 412$ 2,887$ 4 seat office 1,900$ 250$ 320$ 2,470$ 14%6 seat office 3,242$ 480$ 618$ 4,340$ 6 seat office 2,795$ 300$ 480$ 3,575$ 18%

1221 Hermosa AvenueLocal Collaborative, LLCProject Business PlanComparable SetLocation Unit Type Base Rent Printing Parking Base Rent Printing Parking Base Rent Printing Parking Base Rent Printing ParkingHot Desk 406$ 100$ 110$ 390$ 100$ 125$ 299$ 100$ 100$ 350$ 100$ 100$ 2 seat office 1,420$ 200$ 220$ 1,480$ 200$ 250$ 1,138$ 200$ 200$ 1,210$ 200$ 200$ 4 seat office 2,320$ 400$ 440$ 2,500$ 400$ 500$ 2,276$ 400$ 400$ 1,780$ 400$ 400$ 6 seat office 3,500$ 600$ 660$ 3,400$ 600$ 750$ 3,414$ 600$ 600$ 3,100$ 600$ 600$

Location Local Collab ProjectionsUnit Type Base Rent Printing Parking Base Rent Printing Parking Unit Type Base Rent Printing Parking Total MonthlyHot Desk 525$ ‐$ 80$ 394$ 80$ 103$ Hot Desk 380$ 100$ 80$ 560$ 2 seat office 1,350$ ‐$ 160$ 1,320$ 160$ 206$ 2 seat office 1,350$ 150$ 160$ 1,660$ 4 seat office 1,900$ ‐$ 320$ 2,155$ 320$ 412$ 4 seat office 1,900$ 250$ 320$ 2,470$ 6 seat office 2,795$ ‐$ 480$ 3,242$ 480$ 618$ 6 seat office 2,795$ 300$ 480$ 3,575$

Local Collaborative Program Operations/ ExpensesLobby 1 Mail Room 1 SF 4,510 Hot Desks 35 Bar 1 General Vacancy 20% Base Rents 3.50$ 6 person office 12 Kitchen 1 Lease Up Vacancy 50% Management 10%Conference Rooms 2 Maintenance 7% CPI 2%

Base Rate Parking Printing/Mail Total Each Total Monthly Capital Reserve 1% Business x 3XHot Desks 35 380$ 80$ 100$ 560$ 19,600$ City Parking Costs 60$ Members 1066 seat Offices 12 2,795$ 480$ 300$ 3,575$ 42,900$ Total Monthly Gross Income 62,500 Yearly Gross Projection 750,000$

Cash Flow ModelInvestment Buildout/Lease up Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Effective Gross Income 750,000 765,000 780,300 795,906 811,824 828,061 844,622 861,514 878,745 896,319 Vacancy (375,000) (153,000) (156,060) (159,181) (162,365) (165,612) (168,924) (172,303) (175,749) (179,264) Rent (189,420) (189,420) (189,420) (189,420) (189,420) (212,529) (212,529) (212,529) (212,529) (212,529) Management (37,500) (76,500) (78,030) (79,591) (81,182) (82,806) (84,462) (86,151) (87,874) (89,632) Debt Investment (72,500) (72,500) (72,500) (72,500) (72,500) (72,500) (72,500) (72,500) (72,500) (72,500) Maintenance (26,250) (53,550) (54,621) (55,713) (56,828) (57,964) (59,124) (60,306) (61,512) (62,742)Parking Costs (76,320) (76,320) (76,320) (76,320) (76,320) (76,320) (76,320) (76,320) (76,320) (76,320)Balloon Payment (725,000)$ Concessions (5 Months) 72,160 Lease Reserves 57,728 Business Disposition 2,636,234$ Net Operating Income ‐$ 102,898$ 143,710$ 153,349$ 163,181$ 173,209$ 160,329$ 170,763$ 181,405$ 192,260$ 2,114,566$ Tenant Improvement Costs (950,000)$ Building Owner Allowance 225,000$ Cap X (7,500)$ (7,650)$ (7,803)$ (7,959)$ (8,118)$ (8,281)$ (8,446)$ (8,615)$ (8,787)$ (8,963)$ Total Cash Flow (725,000)$ 95,398$ 136,060$ 145,546$ 155,222$ 165,091$ 152,048$ 162,316$ 172,790$ 183,472$ 2,105,602$ Margin 12.7% 17.8% 18.7% 19.5% 20.3% 18.4% 19.2% 20.1% 20.9%DCR 1.32X 1.98X 2.12X 2.25X 2.39X 2.21X 2.36X 2.50X 2.65XProject IRR 25% Ten Year Business Value 2,636,234$

Cross Campus El Segundo

Unita Hermosa Beach Average

WeWork Manhattan Beach WeWork El Segundo Spaces El Segundo

1221 Hermosa AvenueLocal Collaborative, LLCProject Budget Date 3/20/2019

Lease SF 4,650 Units Psf Costs

Leaselease Hold for Construction 14,432 12.41 psf 57,728$ Subtotal 12.41 psf 57,728$

Soft Costs Hard CostsDesign Interior 86.02$ 86.02 psf 400,000$

Interior 13.98 psf 65,000$ Exterior 10.75$ 10.75 psf 50,000$ Exterior 2.15 psf 10,000$ FF&E 30.11 psf 140,000$

Structural 2.15 psf 10,000$ Art 5.38$ 5.38 psf 25,000$ MEP 2.15 psf 10,000$ Procurement 5% 1.77 psf 8,250$ T21 0.43 psf 2,000$ Subtotal 134.03 psf 623,250$ Historical 1.51 psf 7,000$ Permitting 1.51 psf 7,000$ Legal 1.51 psf 7,000$ Insurance 1.29 psf 6,000$ Total Budget 193.11 psf 897,978$ Marketing 0.00 psf Contingency 6% 11.19 psf 52,022$

Branding 6.45 psf 30,000$ Total Budget 204.30 psf 950,000$ Website/Ads 4.30 psf 20,000$

Accounting 0.65 psf 3,000$ Project Management 6.45 psf 30,000$ City Fees 2.15 psf 10,000$ Subtotal 46.67 psf 217,000$

SPONSORSHIP OVERVIEW


BEACH CITY CAPITAL MANAGEMENT

Beach City Capital is a Los Angeles based real estate investment firm focused on the acquisition and development of residential and commercial properties, founded by 3 USC graduates and joined by an incredible team of investors, advisors and Partners.

The firm utilizes in-house associates who have a deep background in Acquisition, Finance, Entitlements and Development. Each project is adequately supervised by our staff to mitigate entitlement and development risk.

Our company mission is to improve the quality of life and community. Investing in urban growth and value add opportunity. We plan to help enhance and enrich the urban fabric of the city and in doing so, we design our projects to be affordable, well-integrated, and positively impactful.

SAM DUNBARDevelopment

Analyst

MARIA PEREZDevelopment Coordinator

PETER LARRDevelopment

Associate

JASON MULLERManaging Principal

LINDSEY MILLSDevelopment

Associate

MATT STEWARTBoard Member Capital Markets

GREG CULLENBoard Member

Business

SERENA SHLOMOFVP of Development

Board Members

BCC Team

SPONSORSHIP OVERVIEW

12763 - 12767 MITCHELL AVE

BEACH CITY CAPITAL


Beach City Capital is a private real estate investment firm headquartered in Manhattan Beach, California. Beach City Capital focuses on executing the development and repositioning of multi-family, luxury housing, and commercial assets, targeting value-add and opportunistic returns. Beach City Capital is a vertically integrated investment company with the ability to source, underwrite, acquire and develop all projects in house. Our investments capitalize on a broad platform, utilizing in-house real estate professionals whose expertise span all phases of the real estate life cycle. Our staff is made up of experienced professionals in Acquisition, Finance, Entitlement and Development, all seasoned to pursue a consistent investment process that combines local market knowledge and hands-on expertise, creating value for our shareholders.

As Beach City Capital reviews deals in coastal locations throughout Southern California, we strive to look for underutilized properties that lack their highest and best use. We focus on assets that are underperforming, mispriced, and mismanaged to add value and improve efficiencies. We use structured finance, an experienced team and government relations for entitlement review to find the true land residual before an acquisition. The firm is able to quickly find these opportunities by consistently analyzing key markets and being willing to compete against others using good sportsmanship. While Beach City Capital has extensive experience, what makes us successful is acknowledging that the real estate itself and best in-class service to our investors are the key factors in our Investment Platform’s growth.

Beach City Capital has long-standing presence in key markets throughout the United States with a decade of hands-on experience, intimate local market knowledge, and an extensive network of relationships with institutional and local banks, private equity firms, and family offices. This depth of experience and relationships with capital providers gives Beach City Capital a competitive advantage in identifying and closing attractive investments both on and off market. Our reputation has afforded us the opportunity to work with the best leaders in the industry, receiving attractive interest rates and optimal service with certainty.

Once acquired and financed, we thoroughly manage the Development Process from Entitlements, Permit Management, Preconstruction and through Construction Management and Disposition. We minimize construction risk and manage all jobs to be on time and within budget. We leverage industry knowledge, experience and technology to monitor, report on and manage the delivery of projects. Our customer service entails monthly reports and thorough communication to investors. Each project is crafted with pristine excellence and perfection with hopes to create spaces that inspire and modernize everyday life. Our company mission is to improve the quality of life and community one project at a time. We plan to help enhance and enrich the urban fabric of the city and in doing so, we design our projects to be affordable, well-integrated, and positively impactful.

Additional Investment Opportunities:

1221 Hermosa AveHermosa Beach, CA

C O N T A C T I N F O R M A T I O NBeach City Capital1240 Rosecrans Ave, Suite 120(424) [email protected]

CATALINA VILLAGE30 Unit Mixed-Use Development and 15,000 sf Retail• Location: 100 - 132 N Catalina Ave. Redondo Beach, CA• Deal Size: $39M• Debt: $26.8M• Equity: $12.2M

MAR VISTA• 28 Condo Unit Development• Location: 12757-12767 Mitchell Ave, Los Angeles, CA• Deal Size: $25.9M• Debt: $17.8M• Equity: $8.1M• JV Land Equity

Documents

1221 Hermosa Ave Hermosa Beach, CA - Beach City Capital · development and/or repositioning of multi-family, luxury housing, and commercial assets, targeting value-add/opportunistic