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FINANCING CONTACTS
Terry Daly [email protected] Direct: +1 415 677 0478 Mobile: +1 415 847 4669 LIC #01330089
Nick Lamson [email protected] +1 415 489 6261 LIC #02050660
425 Market Street Suite 2300 San Francisco, CA 94105 www.cushwake.com
Table of Contents
LOAN PROPOSAL ....................................................................................................................................... I
Transaction Overview Borrower Overview Property and Financing Highlights Loan Proposal
ECONOMIC ANALYSIS ............................................................................................................................... II
As-Is Net Operating Income Analysis Income Statement Comparison
TENANCY .................................................................................................................................................... III
Rent Roll Lease Abstracts
PROPERTY DESCRIPTION ........................................................................................................................ IV
Property Description Site Plan Floor Plans
LOCATION AND MARKET .......................................................................................................................... V
Area and Neighborhood Maps Location Overview
We have undertaken certain procedures in our evaluation of the subject property and its competitive market. As part of these procedures, we have gathered information from third parties. While we have undertaken reasonable efforts to confirm the accuracy of information provided by third parties, we do not guarantee such accuracy, nor can we guarantee the sufficiency of the procedures undertaken.
LOAN PROPOSAL
TRANSACTION OVERVIEW Summary of Loan Request Property Address: 875 Embedded Way and 5325 Hellyer Avenue, San Jose, CA Financing Request: The Borrower is seeking a $45,000,000 fixed rate loan to refinance the subject property Rate: Best available interest rate
Term: 10 years Amortization: 30 years with as much interest only as possible
Prepayment: Flexible prepay Liability: Non-Recourse is preferred. Borrower is open to partial recourse. Debt Yield: 9.85% Loan per SF: $176
Closing: As soon as possible.
Real Estate
Property Type: Edenvale Industrial Park is a two building, 256,250 square foot, industrial park located in the San Jose, CA. Edenvale Industrial Park is 100% leased to two tenants Olympus Corporation of the Americas ($1.42B in Revenue in 2020; exp May 2035) and Teradyne (NYSE: TER; exp Dec 2027), providing stable and long-term cash flow. Both tenants at the property have either recently signed leases or lease amendments. Olympus Corporation of the Americas signed a 15-year lease at the property in 2020 and is currently building out their space. They are estimated to be spending roughly $24M on top of the TI allowance. Teradyne has been at the property since 2017 and recently signed a lease amendment extending their term for an additional 5 years through 2027. The property is located in an extremely tight market that rarely sees any vacancy.
NRSF: 256,250 Lot Size: 10.34 acres Parking Spaces: 990 (3.81 per 1,000 SF)
PROPERTY AND FINANCING HIGHLIGHTS
• Strong Tenancy: Property is 100% leased to two tenants with WALT of 9.5 years.
• Strong Debt Metrics: 9.85% DY after Teradyne lease amendment takes effect in January 2023.
• Low Loan Basis: $176/sf loan amount is well below the property’s estimated replacement cost. Full loan amount will be sub 60% LTV.
• Tenant Investment: Olympus Corporation of the Americas recently signed a 15 year lease and is spending roughly $24M on their buildout
• Strong Market: Market vacancy has been sub 4% throughout Covid and under 2% pre Covid.
• Strong Historical Occupancy: Building has had zero vacancy since it was built in 2000.
• Prominent Location: Great location with nearly 20% of the Santa Clara County’s population (~400k) within 5 miles of the property.
• Experienced Sponsorship: Strong sponsor with experience owning and operating commercial real estate.
BORROWER The borrower will be J&L Edenvale, an existing single purpose entity that owns the property and is controlled J&L Real Properties.
J&L Real Properties
J&L Real Properties is a privately owned real estate investment firm founded in 2012 by two partners with a principle focus on industrial assets. J&L Real Properties has approximately $260 million of commercial real estate in California, New York, New Jersey, Texas and Oklahoma. The combined assets total over 1 million square feet of space.
The two principals, Dr. Vimal Lala and Dr. Paul Johnson are physicians by profession. They started their practice in 2007 after completion of fellowship training at the University of California, Los Angeles. In addition to the clinical practice or medicine they began to develop, and manage ambulatory surgical centers. They currently own 9 ambulatory surgical centers throughout central and southern California representing a wide range of surgical specialties including neurosurgery, orthopedics, ENT, spine and pain. They were one of the first in the country to develop a successful model for out-patient joint replacement surgery.
Despite being in full-time medical practice they continue to grow and enhance the real estate portfolio and are in the process of developing and launching their first private equity real estate fund. The fund target start date is first quarter of 2022.
LOAN PROPOSAL
Purpose: The Borrower is seeking a $45,000,000 fixed rate loan to refinance the subject property
Sources & Uses:
Total Costs:
Amount $/SF
Loan Amount $45,000,000 $176
Total $45,000,000 $176
Payoff Existing Debt $31,900,000 $124
Swap Breakage $1,700,000 $7
Return of Equity $10,400,000 $41
Closing Costs/Fees $1,000,000 $4
Total $45,000,000 $176
Sources
Uses
Total Costs Amount $/SF
Purchase Price $51,250,000 $200
Tenant Improvements $3,800,000 $15
Leasing Commissions $680,000 $3
CapEx $400,000 $2
Closing Costs/Fees $1,750,000 $7
$57,880,000 $226
Property Description: Edenvale Industrial Park is a two building, 256,250 square foot, industrial park located in the San Jose, CA. Edenvale Industrial Park is 100% leased to two tenants Olympus Corporation of the Americas ($1.42B in Revenue in 2020; exp May 2035) and Teradyne (NYSE: TER; exp Dec 2027), providing stable and long term cash flow. Sitting on 10.34 acres and built in 2000, the property has 4,000 Amps (277/480 Volt Per building) of power and 990 parking spaces (3.81/1,000 SF). The foundation is steel reinforced slab and the building has 25’ – 30’ clear heights. Property History:
• Purchased in December 2019 for $51,250,000.
• IBM was in occupancy until December 2019 but the previous owner leased the space to Olympus prior to the sale. The Olympus lease demonstrates the lack of supply as the building was leased prior to marketing the space and long before the current tenant vacates. A lack of supply, coupled with a consistent, elevated demand, have increased asking rates over 54% since the beginning of 2014.
• Olympus is currently spending ~$23.7M to build out their space. They were originally scheduled to complete the build out in early 2021 but due to covid they are now projected to take occupancy in Q1 or Q2 2022. There are no outs in their lease.
• The borrower replaced the HVAC on the Teradyne space earlier this year for ~$400k.
• The borrower signed a lease amendment with Teradyne on October 29, 2021 extending the term an additional five years (1/1/23 to 12/31/27) and increased the base rent from $1.16/sf/mo/NNN to $1.45/sf/mo/NNN. This will increase the NOI by nearly $450k/year.
Tenant Profiles TERADYNE Teradyne designs, develops, manufactures, sells, and supports automatic test equipment worldwide. Founded in 1960, Teradyne uses state of the art technology to test semiconductors, wireless products, data storage and complex electronic systems for both public and private customers. Nextext is a subsidiary of Teradyne and is at the Property. With the electronic device market continuing to expand, Teradyne is well positioned for future growth. Teradyne has occupied the building since 2006. Tenant Overview Sector/Industry Electronic Testing Stock Ticker NYSE: TER Headquarters North Reading, Massachusetts No. Employees 4,900 Square Feet 128,000 Property Occupancy (% NRA) 50% Lease Expiration Dec-27 *see lease abstract for details
TERADYNE Financial Snapshot as of 12/31/2020 Market Cap as of Nov 12, 2021 $23.83 BN Revenue $3.12 BN EBIT $925 MM Total Cash & Cash Equivalents $914 MM Total Assets $3.6 BN Total Liabilities $1.4 BN Strong Balance Sheet Teradyne’s over $1.44 billion in total cash and short-term investments is more than ample to meet both its short-term (one year) and long-term commitments.
OLYMPUS CORPORATION OF THE AMERICAS Olympus Corporation of the Americas (“Olympus”) is a global technology leader, crafting innovative optical and digital solutions in medical technologies; life sciences; industrial solutions; and cameras and audio products. Its innovative optic and digital solutions enable specialists to look inside the human body, further scientific research, ensure public safety and capture images of the world. Olympus is was founded in 1990 and is headquartered in Center Valley, Pennsylvania. Olympus employs approximately 5,300 employees throughout North and South America. Olympus Corporation of the Americas is a wholly owned subsidiary of Olympus Corporation (OCPNY), which is based in Tokyo, Japan. Olympus Corporation was established on 12 October 1919, initially specializing in microscopes and thermometers. Olympus Corporation holds roughly a 70-percent share of the global endoscope market, estimated to be worth approximately US$2.5 billion. OLYMPUS CORPORATION (Parent Company) Financial Snapshot for 3/31/2021 (Fiscal Year End) Ticker OCPNY Market Capitalization $29.49 BN Revenue $6.41 BN EBITDA $1.24 BN Total Cash & Cash Equivalents $1.9 BN Total Assets $10.3 BN Moody’s Rating Baa2 *Olympus Corporation is the parent company to Olympus Corporation of the Americas.
**Olympus Corporation is not on/guaranty the lease
LOCATION:
SILICON VALLEY A key component of the Bay Area economy, Silicon Valley is the world’s undisputed high-tech capital, blazing the trail for innovation in today’s global marketplace. Industry leaders in semiconductor design and manufacturing, network equipment, high tech manufacturing equipment, software design, information systems, life science, clean tech, and digital media call Silicon Valley home. The region draws its vitality not only from innovative new businesses, but also from the intense competition among its diverse array of existing companies. The Silicon Valley metro area ranks #3 in the world and #1 in the United States for GDP per capita. The region has one of the highest percentages of college educated adults in the country and continues to be a magnet for leading researchers and entrepreneurs. The combination of the world’s premier research and educational institutions, San Francisco’s world-class financial base, and the region’s well-established business creation infrastructure will ensure that Silicon Valley remains a leader in economic growth for decades to come.
SILICON VALLEY AT A GLANCE
$128,308
GPD PER CAPITA
#2 IN THE WORLD
LABOR FORCE OF OVER ONE MILLION 20 INCREASE OVER THE PAST 10 YEARS
HOME TO THREE OF THE
WORLD’S TOP 10
MOST VAULABLE COMPANIES
BY MARKET CAP (FORBES)
54% OF ALL
19 OF THE
FORTUNE 500 COMPANIES
HQ’D IN SILICON VALLEY
VENTURE CAPITAL INVESTMENTS IN THE US OVER THE PAST 2 YEARS
(PWC MONEYTREE, INCLUDES SF MSA)
47% OF RESIDENTS HOME OF THE
(AGE25+) #1 RANKED HAVE A BACHELOR’S DEGREE OR
HIGHER - COMPARED TO 32% NATIONALLY
COLLEGE IN THE US
SAN JOSE OVERVIEW San Jose, the third–largest city in California, the tenth largest in the U.S., and the county seat of Santa Clara County, is located just south of the San Francisco Bay. With a population of 1,026,908, San Jose was the third fastest growing city in the Top 10 US cities over the last five years.
Top Ten Cities in the US – Population
Rank City State 2020
Population
5 Year Growth
Rate Growth Rank
1 New York NY 8,550,405 4.59% 8
2 Los Angeles CA 3,971,883 4.73% 7
3 Chicago IL 2,720,546 0.93% 10
4 Houston TX 2,296,224 9.33% 2
5 Philadelphia PA 1,567,442 2.72% 9
6 Phoenix AZ 1,563,025 8.12% 5
7 San Antonio TX 1,469,845 10.73% 1
8 San Diego CA 1,394,928 6.69% 6
9 Dallas TX 1,300,092 8.54% 4
10 San Jose CA 1,026,908 8.56% 3
San Jose comprises a large portion of Silicon Valley, a region home to the leading tech companies of the world, including Google, Apple and Cisco Systems. Despite the development of other high–tech economic centers throughout the world, Silicon Valley continues to be the leading hub for high–tech innovation and development. San Jose boasts a highly educated and trained workforce, excellent quality of life, world–class research facilities, and a continually evolving history of pioneering innovation that spurs economic growth. San Jose is world renowned for its proximity to Stanford University, as well as Santa Clara University. Today, the private sector in San Jose is dominated by high-tech related industries driving economic growth across the region. Companies enjoy a competitive advantage by establishing a presence in San Jose due to its concentration of a highly skilled, well sought-after employee base that is able to enjoy a wide array of exciting cultural, recreational, and educational opportunities while living and working in San Jose.
EMPLOYMENT As the epicenter of innovation, San Jose has served as homebase to some of the world’s leading corporations across the technology, semiconductor, bioscience and medical industries. Currently, Stryker, Western Digital, Cobham, Paypal, TiVo, IDT, Samsung, eBay, Cisco Systems, Maxim Integrated Products, and Broadcom have offices or headquarters in San Jose, along with over 2,376 other tech companies that altogether provide 150,000 jobs in Silicon Valley. The high concentration of technology companies goes hand in hand with the influx of technology leaders in the region. The city boasts a diverse talent pool that enjoys the collaboration of the thriving industries. Many industry leaders are attracted to this city due to its prime Silicon Valley location and convenient access to Highway 101, Highway 237, Highway 85, Highway 87, Interstate 280, Interstate 880, and Interstate 680, which provide employers with multiple commute alternatives and proximity to the highly coveted executive housing communities of Los Altos Hills, Palo Alto Hills, Woodside, Portola Valley and Saratoga. POPULATION GROWTH The area within five miles of the Portfolio witnessed its population grow by 23,178 people from 2000 to 2010, or by 7.0%. In the next seven years, the population grew an additional 27,694 people (7.8% growth), and by 2022 an additional 20,186 people are forecasted to reside within 5 miles (5.3% growth). The City of San Jose is expected to have 400,000 new residents by 2040. With freeway congestion and limited available land for new housing in northern San Jose, much of the future growth will occur in the areas surrounding the Property. The acceleration in population growth in the immediate area is evidenced by a near doubling in the projected growth of 13.9% from 2010 to 2022, versus the 7% growth from 2000 to 2007
ESTABLISHED AND GROWING SURROUNDING POPULATION Edenvale Industrial Park is surrounded by an abundant range of housing options including executive housing in Silver Creek to the east and the Almaden Valley neighborhood. The Property is also in proximity to the communities of Los Gatos and Saratoga. In addition, nearly 3,000 new residential units, consisting of apartments, townhomes, and condominiums, have recently been completed at the mixed-use Cottle Transit Village located just to the north of the Property.
1 Mile 3 Mile 5 Mile
Current Population 15,073 170,474 383,035
5-Year Projected Growth Rate 4.20% 5.60% 5.30%
Housing Units 3,697 49,975 112,412
LOCATION HIGHLIGHTS
Executive Housing The Property is surrounded by an abundance of housing options, including executive housing in the Silver Creek neighborhood to the east of the Property and the Almaden Valley neighborhood to the southwest of the Property. Edenvale Industrial Park is also proximate to the communities of Los Gatos and Saratoga. Growing Surrounding Population Numerous housing options in South San Jose provide an abundant workforce in the immediate vicinity making it an attractive location for employers. 20% of Santa Clara County’s population resides within a five-mile radius of the Property.
1 Mile 3 Mile 5 Mile
Current Population 15,073 170,474 383,035
5-Year Projected Growth Rate 4.20% 5.60% 5.30%
Housing Units 3,697 49,975 112,412
SOUTH SAN JOSE IS A RAPIDLY EVOLVING SUBMARKET The overall South San Jose market has undergone a fundamental shift the past couple of years due to a wave of tenant migration into the submarket. Since 2017, over 2.75 million square feet of tenants and owner/occupiers have moved to South San Jose. Many of these companies are relocating from Northern Silicon Valley due to the lack of options within those submarkets and the high-quality space that South San Jose provides at more economical rental rates. The migrating companies represent a wide variety of industries, including automotive, technology and advanced manufacturers. In addition, the submarket has witnessed a significant residential and retail boom, with over 3,000 residential units recently completed, and several hundred under construction. On the retail front, over 400,000 square feet of new construction has taken place in the immediate area.
Company Size (SF) Year Type Previous Location New Location
County of Santa Clara 444,500 2018 Purchase Expansion in Santa Clara County Silver Creek Business Park
Velodyne LIDAR 203,807 2016 Purchase Morgan Hill (Expansion) 5521 Hellyer Ave
China Mobile 162,554 2017 Purchase New to Market 6320-6340 San Ignacio Ave
BAE Systems 161,718 2015 New Lease North San Jose 6331 San Ignacio Ave
Olympus 128,250 2019 New Lease North San Jose 5325 Hellyer Ave
Auxin Solar 99,576 2016 Purchase South San Jose 6835 Via Del Oro
Youngs Market 90,229 2019 New Lease Morgan Hill (Expansion) 448 Piercy Rd
San Andreas Regional Center 73,610 2017 New Lease Campbell 6203 San Ignacio Ave
Kaiser Health 67,701 2019 Purchase South San Jose (Expansion) 5901 Optical Ct
Disco Hi-Tec 67,500 2018 Purchase Santa Clara 5921 Optical Ct
Roche 67,500 2015 New Lease Palo Alto (Expansion) 5961 Optical Ct
Keystone Automotive Industries 65,778 2018 New Lease Expansion from Central San Jose 448 Piercy Rd
Genista Biosciences Inc 63,897 2018 New Lease Expansion/growth in S San Jose 5530 Hellyer Rd
Power Integrations 57,325 2015 Purchase Sunnyvale 5285 Hellyer Ave
E Systems 52,600 2014 New Lease Santa Clara 6341 San Ignacio Ave
C8 Medisensors 51,057 2011 Expansion Los Gatos 6375 San Ignacio Ave
C8 Medisensors 51,000 2011 New Lease Los Gatos 6375 San Ignacio Ave
Devry Education Group 48,802 2015 New Lease IBP 5883 Rue Ferrari St
Jabil Inc 47,739 2017 Expansion South San Jose 6212 Hellyer Ave
Barracuda Networks 47,378 2013 New Lease Campbell 5710 Fontanoso
Electronic Interface Company 43,182 2017 New Lease Meridian 6341 San Ignacio Ave
Contec 42,781 2014 New Lease Milpitas 302 Enzo Dr
Tadpole Group, Inc. 41,831 2014 Purchase Cupertino 6399 San Ignacio Ave
Edgewater Networks 37,821 2013 New Lease Santa Clara 5225 Hellyer Ave
Ampro Adlink Technology 37,301 2015 Expansion/Renewal Fremont 5215 Hellyer Ave
CTT, Inc 31,766 2016 New Lease Sunnyvale 5870 Hellyer Ave
Peak Technology Enterprises 30,274 2013 Purchase Santa Clara 6951 Via Del Oro
The Health Trust 29,708 2012 Purchase Campbell 3180 Newberry Dr
Unitek College 28,808 2015 New Lease Fremont (Expansion) 170 Great Oaks Blvd
Thermal Conductive Bonding 27,473 2011 Purchase East San Jose 19 Great Oaks Blvd
Sun Basket 26,519 2017 New Lease San Francisco (Expansion) 5215 Hellyer Ave
Granite Rock Company 21,584 2016 Relocation South San Jose 5215 Hellyer Ave
TOTAL: 2,361,340
SILICON VALLEY MANUFACTURING MARKET As a hub for many advanced-manufacturing companies, Silicon Valley’s manufacturing marekt is comprised of 59.8 million square feet and is consistently ranked as one of the nation’s top performing markets. For the last four years, the manufacturing market has had a vacancy rate under 3.0% demonstrating today’s advanced-manufacturing firm’s need to recruit and retain highly-trained workforce and to be proximate to their technology clients who have a major presence in Silicon Valley.
SUBMARKET INVENTORY
(SF) OVERALL
VACANCY RATE
UNDER CONSTRUCTION
(SF)
CONSTRUCTION COMPLETIONS
(SF)
OVERALL WEIGHTED AVG NET RENT (MF)
Palo Alto 931,522 7.5% 0 0 $2.03
Mountain View 2,509,604 3.5% 0 0 $2.92
101 Technology Corridor 3,441,126 4.6% 0 0 $2.53
Campbell 1,557,660 3.5% 0 0 $1.60
Sunnyvale 4,989,611 8.7% 0 0 $1.59
Santa Clara 15,471,922 2.0% 0 0 $1.61
North San Jose 19,730,829 3.9% 0 0 $1.26
South San Jose 24,430,381 4.0% 0 0 $1.20
Central Silicon Valley 66,180,403 3.8% 0 0 $1.37
Milpitas 8,729,393 7.8% 0 388,240 $1.27
Fremont 23,253,314 4.4% 0 0 $1.28
Newark 9,707,306 5.6% 0 0 $1.25
South I-880 Corridor 41,690,013 5.4% 0 388,240 $1.27
Morgan Hill/Gilroy 8,209,705 2.3% 452,427 0 $1.14
SUBTYPE BREAKDOWN
Warehouse 48,131,203 5.2% 0 388,240
Manufacturing 71,390,014 3.7% 452,427 0
SILICON VALLEY TOTALS 119,521,247 4.3% 452,427 388,240 $1.39
Edenvale Manufacturing Market The Edenvale manufacturing market consists of 35 buildings totaling over 4.6 million square feet. Nearly all of the buildings have been constructed within the last 20 years. The newer buildings tend to be on the east side of Highway 101 and the older buildings on the west side of the Highway. The market is extremely limited in terms of available space, as there is one existing space totaling 68,084 square feet at 6212 Hellyer Avenue. The lack of supply is understated by the fact that over 50% of the total square footage in the submarket is occupied by companies that own their buildings.
Building SF Year Built
1 5995 Hellyer Ave 155,909 2018
2 875 Embedded Way 125,000 2001
3 5325 Hellyer Ave 128,500 2000
4 5325 Hellyer Ave 100,000 2000
5 800 Embedded Way 239,000 2000
6 5550 Hellyer Ave 79,800 2001
7 5521 Hellyer Ave 203,807 1995
8 484 Piercy Rd 166,006 2017
9 6212 Hellyer Ave 111,043 2017
10 5900 Optical Ct 191,000 2002
11 5970 Optical Ct 128,520 2001
12 5981 Optical Ct 110,542 2001
13 300 Enzo Dr 97,831 1998
14 5801 Rue Ferrari St 78,000 1999
15 9 Great Oaks Blvd 126,569 2016
16 11 Great Oaks Blvd 133,500 2016
17 10 Great Oaks Blvd 250,000 2015
18 17 Great Oaks Blvd 22,040 1997
19 30 Great Oaks Blvd 200,000 1984
20 6311 San Ignacio Ave 30,000 1979
21 145 Martinvale Ln 27,800 1984
22 6835 Via Del Oro 99,576 1985
23 6850 Santa Teresa Blvd 30,000 1979
24 6276 San Ignacio Ave 9,853 1979
25 134 Martinvale Ln 18,624 1979
26 7007 Realm Dr 15,944 1979
27 7015 Realm Dr 10,000 1980
28 1 Cottle Rd 73,068 TBD
29 4 Cottle Rd 311,696 TBD
30 6 Cottle Rd 279,848 TBD
31 7 Cottle Rd 210,566 TBD
32 8 Cottle Rd 81,598 TBD
33 50 Cottle Rd 680,925 TBD
34 67 Cottle Rd 55,207 TBD
35 5710 Fontanoso 53,592 2001
KEY LEASED BUILDINGS OWNER/USER
Number of Buildings 35 Total Rentable Area 4,635,364 Total Available SF 68,084 Total Vacant SF 68,084 Vacancy Rate 1.47%
ECONOMIC ANALYSIS – NET OPERATING INCOME
LEASE
START
LEASE
EXPIRATION % SF SF
MONTHLY
RENT/SF
MONTHLY
RENT
ANNUAL
RENT/SF
TOTAL
ANNUAL RENT
% OF
GPI
RENTAL INCOME
Teradyne 1/1/2017 12/30/2027 50.0% 128,000 $1.45 $185,600 $17.40 $2,227,200 31%
Olympus 6/1/2020 5/30/2035 50.0% 128,250 $1.57 $201,523 $18.86 $2,418,280 34%
100.0% 256,250 $1.51 $387,123 $18.13 $4,645,480 66%
Occupied 100.0% 256,250 $1.51 $387,123 $18.13 $4,645,480 66%
Vacant 0.0% 0 $0.00 $0 $0.00 $0 0%
Total 100.0% 256,250 $1.51 $387,123 $18.13 $4,645,480 66%
OTHER INCOME
Other Income $9.55 $2,446,060 34%
Total Other Income $9.55 $2,446,060 34%
TOTAL GROSS POTENTIAL INCOME 100% $2.31 $590,961.68 $27.67 $7,091,540 100%
VACANCY ALLOWANCE 5.0% $0.67 $172,512 2.4%
EFFECTIVE GROSS INCOME $2.25 $576,586 $27.00 $6,919,029 98%
EXPENSE DETAIL $/SF/YR
TOTAL
ANNUAL
% OF
GPI
OPERATING EXPENSES
Property Tax $3.15 $807,018 11.4%
Insurance $1.46 $375,230 5.3%
Utilities $3.17 $811,336 11.4%
HVAC $0.01 $2,933 0.0%
Plumbing $0.03 $7,632 0.1%
Elevator Repair $0.02 $6,337 0.1%
Lanscaping $0.27 $68,116 1.0%
Roads/Grounds $0.07 $16,721 0.2%
Gen Building R&M $0.04 $10,189 0.1%
Security $0.25 $65,275 0.9%
Life Safety $0.26 $67,703 1.0%
Property Management 3.0% of UW EGI $0.81 $207,571 2.9%
TOTAL OPERATING EXPENSES $9.55 $2,446,060 0.1%
NET OPERATING INCOME $17.46 $4,472,968 97.5%
NON-REIMBURSABLE EXPENSES
Capital Reserves $0.10 $12,800 0.2%
TI's/LC's $0.20 $25,600 0.4%
TOTAL $0.30 $38,400 0.5%
UNDERWRITTEN CASH FLOW $17.31 $4,434,568 62.5%
Loan Amount $45,000,000
NET CASH FLOW $4,434,568 Loan Amount/SF $176
DEBT SERVICE ($1,350,000) Rate 3.00%
EXCESS CASH FLOW $3,084,568 Amortization (years) 1000
DEBT SERVICE COVERAGE RATIO 3.28 Annual Debt Service ($1,350,000)
DEBT YIELD 9.85% Monthly Debt Service ($112,500)
Constant 3.00%
NOTES
Based on RR
Rent reflects contractual increase per lease renewal commencing 1/1/2023
Averaged rents throughout the lease term
Assumed for UW Purposes: Excludes Olympus
Full NNN Leases
Per 2021 Income Statement Annualized
3% of UW EGI
Includes EQ
2020 Taxes grown 2%
Assumed for UW Purposes: Excludes Olympus
LOAN UNDERWRITING ANALYSIS PRICING
2020 2021
Actual Annualized (Thru Sept) Underwritten
Operating Income
Prepaid Income $276,896 $1,158,767 $0
Rental Income $2,850,969 $3,730,045 $4,645,480
Free Rent -$1,122,188 $0
Total Rental Income $2,005,677 $4,888,812 $4,645,480
Other Income
Reimbursements $1,708,412 $2,498,400 $2,446,060
Prior Year CAM $0 -$50,309 $0
Total Recovery Income $1,708,412 $2,448,091 $2,446,060
Other Income
Total Operating Income $3,714,089 $7,336,903 $7,091,540
Vacancy Allowance $0 $0 $172,512
Effective Gross Income $3,714,089 $7,336,903 $6,919,029
Operating Expenses
Property Tax $791,195 $725,979 $807,018
Insurance $210,023 $375,230 $375,230
Utilities $814,733 $811,336 $811,336
HVAC $0 $2,933 $2,933
Plumbing $862 $7,632 $7,632
Elevator Repair $6,996 $6,337 $6,337
Lanscaping $39,680 $68,116 $68,116
Roads/Grounds $5,066 $16,722 $16,721
Gen Building R&M $30,513 $10,189 $10,189
Security $19,840 $65,275 $65,275
Life Safety $18,242 $67,703 $67,703
Property Management $80,433 $127,169 $207,571
Total Operating Expenses $2,017,584 $2,284,620 $2,446,060
Net Operating Income $1,696,505 $5,052,283 $4,472,968
INCOME STATEMENT COMPARISON
TENANCY- RENT ROLL
Square Lease Start Lease Exp. Rent
Suite Tenant Name Feet Date Date Date Monthly Rent $/sf/mo
5345 Hellyer Teradyne Inc 128,000 Jan-17 Dec-27 Current $152,838.69 $1.19
Jan-23* $185,600.00 $1.45
Jan-24 $190,720.00 $1.49
Jan-25 $197,120.00 $1.54
Jan-26 $203,520.00 $1.59
Jan-27 $209,920.00 $1.64
5325 Hellyer Olympus 128,250 Jun-20 May-35 Current $165,121.88 $1.29
Jun-22 $170,075.53 $1.33
Jun-23 $175,177.80 $1.37
Jun-24 $180,433.13 $1.41
Jun-25 $185,846.13 $1.45
Jun-26 $191,421.51 $1.49
Jun-27 $197,164.15 $1.54
Jun-28 $203,079.08 $1.58
Jun-29 $209,171.45 $1.63
Jun-30 $215,446.59 $1.68
Jun-31 $221,909.99 $1.73
Jun-32 $228,567.29 $1.78
Jun-33 $235,424.31 $1.84
Jun-34 $242,487.04 $1.89
Totals: 256,250 $317,960.57 $1.24
Occupied 256,250
Vacant 0
*Teradyne recently signed a lease extension. Their current lease expires 12/31/22. Rent bump commencing 1/1/23 reflects the increase in rent per the
lease extension
LEASE ABSTRACTS
Property Address:
Tenant:
Date of Lease:
NRSF: 128,000
Expense Treatment: NNN
Utilities/Janitorial Tenant pays all utilities and janitorial services directly
Management Fee: Shall not exceed 3%
Taxes: No Prop 13 protection
Commencement Date:
Lease Expiration Date:
Use:
Option to Extend:
Estoppel:
Period Annual Total Annual PSF Monthly Total Monthly PSF
1/1/21 - 12/31/21 $1,780,645 $13.91 $148,387 $1.16
1/1/22 - 12/31/22 $1,834,064 $14.33 $152,839 $1.19
1/1/23 - 12/31/23 $2,227,200 $17.40 $185,600 $1.45
1/1/24 - 12/31/24 $2,288,640 $17.88 $190,720 $1.49
1/1/25 - 12/31/25 $2,365,440 $18.48 $197,120 $1.54
1/1/26 - 12/31/26 $2,442,240 $19.08 $203,520 $1.59
1/1/27 - 12/31/27 $2,519,040 $19.68 $209,920 $1.64
Assignment and Subletting: Tenant shall have the right to sublease a portion or all of the space, with the landlord's prior written consent which shall not be unreasonably withheld.
One (1) option to extend the lease by an additional five (5) years. Must give between nine (9) and tweleve (12) months notice. Rent shall be FMV.
Must be executed with in fifteen (15) days of request by landlord
December 31, 2027
General office, research and development, light industrial
Termination Rights: None
Teradyne
875 Embedded Way, San Jose, CA
Teradyne Inc
December 23, 2015
January 1, 2017
Property Address:
Tenant:
Date of Lease:
NRSF: 128,250
Expense Treatment: NNN. Tenant has 5% growth cap on previous year's controllable operating expenses
Free Rent: 7 months
Management Fee: 3% of Landlord's gross receipts
Taxes: No Prop 13 protection
Commencement Date:
Lease Expiration Date:
Use:
Option to Extend:
Estoppel:
Period Annual Total Annual PSF Monthly Total Monthly PSF
Year 1 (First 12 Months) $1,923,750 $15.00 $160,313 $1.25
Year 2 $1,981,463 $15.45 $165,122 $1.29
Year 3 $2,040,906 $15.91 $170,076 $1.33
Year 4 $2,102,134 $16.39 $175,178 $1.37
Year 5 $2,165,198 $16.88 $180,433 $1.41
Year 6 $2,230,153 $17.39 $185,846 $1.45
Year 7 $2,297,058 $17.91 $191,422 $1.49
Year 8 $2,365,970 $18.45 $197,164 $1.54
Year 9 $2,436,949 $19.00 $203,079 $1.58
Year 10 $2,510,057 $19.57 $209,171 $1.63
Year 11 $2,585,359 $20.16 $215,447 $1.68
Year 12 $2,662,920 $20.76 $221,910 $1.73
Year 13 $2,742,807 $21.39 $228,567 $1.78
Year 14 $2,825,092 $22.03 $235,424 $1.84
Year 15 $2,909,844 $22.69 $242,487 $1.89
Must be executed with in ten (10) days of request by landlord
Assignment and Subletting:
OLYMPUS
Two (2) options to extend the lease by an additional five (5) years. Must give between twelve (12) and fifteen (15) months notice. Rent shall be FMV.
7/12/2019
General office, research and development, manufacturing, storage/warehouse
Olympus Corporation of the Americas, a New York corporation
5325 Hellyer Ave, San Jose, CA
Tenant shall have the right to sublease a portion or all of the space, with the landlord's prior written consent which shall not be unreasonably withheld.
June 20, 2020
Tenant shall have the right of first offer during the first 10 years of the lease to lease all the rentable space at 875 Embedded Way. Landlord shall not be required to break
up any of the space.
Right of First Offer at 875
Embedded Way
NoneTermination Rights:
May 31, 2035
PROPERTY DESCRIPTION
PROPERTY SUMMARY Addresses: 875 Embedded Way & 5325 Hellyer Ave.,
San Jose, CA Total Size: 875 Embedded Way: 128,000 SF
5325 Hellyer Avenue: 128,250 SF 256,250 SF
Year Built: 2000 Total Parcel Size: 20.5 Acres Clear Height: 25’ to 30’ Zoning: Industrial Park (IP) Parking: 3.81 Stalls per 1,000 SF (990 Stalls) Power: 4,000 Amps, 277/480 Volt Per Building Clear Height: 25’ to 30’ Zoning: Industrial Park (IP) Power: Each Building contains 4,000 amps
277/480 Volt
Parking 3.62 Stalls per 1,000 SF (928 Stalls)
STRUCTURE Foundation: The Buildings’ foundations are a steel-reinforced slab on a network of steel-reinforced concrete
spread footings placed on undisturbed soil or compacted structural fill. Structure: The Buildings’ structures consist of a combination of load-bearing precast, tilt-up concrete walls
and structural steel and wood framing. The exterior steel-reinforced precast concrete, tilt-up panels support the superstructure at the Buildings’ perimeters.
Exterior Walls: The exterior walls are 6” thick, steel-reinforced, precast, concrete-tilted panels supported by
concrete spread footings. Roof: The roof structure at 875 Embedded Way is wood frame construction with manufactured
laminated wood beams and joists supported by precast concrete walls along the perimeter and interior tube steel columns. The roof structure at 5325 Hellyer Avenue is a combination of glue-laminated beams and open web-pre-engineered wood joists. The roof decking is ½” to ¾” thick plywood sheathing, with the roof framing sloped to the perimeter roof drains. The roofs are from 2000.
Loading Doors: The Buildings are linked by a loading dock area with, six, motor-controlled, dock-high doors
with hydraulic dock levelers. Each building has one grade - level door. Olympus intends to add three additional dock-high doors as part of their tenant improvements.
BUILDING SYSTEMS Electrical: Electrical power for the Buildings is supplied by a 21KV Pacific Gas & Electric (PG&E) property-
owned substation. The substation also services 845 Embedded Way with the 845 Embedded Way owner reimbursing the owner of Edenvale Industrial Park for their usage via the CC&R’s. The service splits and serves two, pad-mounted transformers, that provides 2500 KVA to each building and with an additional 2500 KVA available on the development parcel. Each 277/480-volt service transformer provides power to its respective Building. Each Building is equipped with a 4,000-amp main electrical panel, located within the main electrical room. The 21KV substation dedicated to the site allows for the buildings to draw additional power if necessary.
Cooling/Ventilation: Conditioned air for both Buildings is provided by rooftop-packaged, air conditioning units and
furnaces, which route air to the variable-air-volume (VAV) terminal boxes. Return air is drawn
through the ceiling vents back to the rooftop HVAC units, which are controlled through localized thermostats.
Heating: Heating for 875 Embedded Way is provided by a single Lars Mightytherm® gas-fired water
heater. Hot water for 5325 Hellyer Avenue is provided by four, rooftop furnaces manufactured by Trane® with a maximum input of 600,000 to 800,000 BTU/hr. each.
Elevators: Each Building has a single, 2,500 lb. capacity hydraulic elevator with brushed steel doors, vinyl
clad walls, carpet tile floors and integrated lights. Life Safety / Fire Protection: A wet-pipe system is installed throughout both Buildings. Each Building is provided with an
individual riser. The systems are monitored by a fire alarm system.
875 Embedded Way is protected by a Silent Knight Intelliknight fire alarm system. The system uses an Intelliknight 5808 fire alarm control panel (FACP), which is in the main electrical room to the rear of the Building. An annunciator panel is located within the main lobby of the Building.
Security: The access control systems consist of a proximity card reader system for each Building with
readers provided at exterior entrance doors and throughout the tenant suites. The Property has a monitored security system with closed circuit television cameras in the interior of the tenant spaces and at each Building’s perimeter.
Exterior Lighting: Double-headed, pole-mounted, high-intensity discharge (HID) fixtures provide primary
illumination at the Buildings and within the parking areas. Additionally, wall-mounted HID lights are provided on exterior walls at the Buildings to provide security and general perimeter lighting.
Recent Capital Upgrades: New parking lot lighting for the Property and new restrooms at 875 Embedded Way were
installed in 2018.
UTILITIES Electricity: Pacific Gas & Electric (PG&E) Natural Gas: Pacific Gas & Electric (PG&E) Sanitary Sewerage: City of San Jose Potable Water: City of San Jose Solid Waste Removal: City of San Jose
SITE PLANS
FLOOR PLANS – 875 Embedded Way Teradyne, Inc. 128,000 SF (Full Building) Expires: December 2027 Floor Plan Breakdown: ~40% Office ~30% R&D ~30% Warehouse
Note: Olympus floorplan is unavailable as they are currently building out their space
REGIONAL MAP
AREA MAP
NEIGHBORHOOD MAP
LOCATION & MARKET
THE SAN FRANCISCO BAY AREA STORY
The San Francisco Bay Area is one of the top performing real estate markets in the country and a target for the institutional investment community. The area has excellent long-term fundamentals with a diversified tenant base, highly skilled talent pool, and prominence as an innovative and dynamic regional economy. World renowned for its scenic beauty, unparalleled amenity base, and unmatched access to intellectual and venture capital, the Bay Area serves as the West Coast business center for financial and professional services companies and is home to a dense concentration of mature and growing technology companies. The area is also a world-class shopping destination and is home to the most well recognized international retailers.
REGIONAL OVERVIEW BAY AREA OVERVIEW The San Francisco Bay Area is one of the largest and most diversified economies in the United States. Well known as the “High- Tech Capital of the World,” the Bay Area’s economy is in fact very multifaceted; Bay Area companies are distributed among a broad group of industries and business sectors including financial services, business services, retail, and entertainment/tourism. The Bay Area’s percentage of math and engineering jobs is twice the national average, and more than one-third of Bay Area workers are employed in managerial, professional or technical occupations. The San Francisco Bay Area is a major international gateway and one of the world’s most important commercial, cultural, and financial centers. The Bay Area prides itself on its diversity – the streets of Downtown San Francisco’s financial district, the globally sought-after innovation hub of Silicon Valley, the nationally acclaimed restaurants and cultural centers of Oakland, and the world-renowned wineries of Napa are all reasons why Conde Nast Traveler magazine named San Francisco the #1 U.S. city to visit for 18 straight years. Marked by a resilient economy, highly skilled workforce, temperate weather pattern, unique culture, and unparalleled quality of life, the San Francisco Bay Area continues to prosper as one of the world’s most desirable places to live, work, and play.
38.2% INCREASE IN EMPLOYMENT
33.3% INCREASE IN POPULATION
30.0% INCREASE IN
BAY AREA HOUSEHOLDS
BAY AREA ECONOMY The Bay Area benefits from being one of the world’s fastest growing financial centers ranking in the top 6 of all national economies. The economy is made up of a diverse group of world renowned corporations such as Google, Wells Fargo, McKesson, Chevron, Intel, HP, Facebook, and Apple. In the last 12-month period, the Bay Area has created over 300,000 jobs and is projected to create an additional 1.3 million jobs – an increase of nearly 40% - by 2040.
EDUCATION The San Francisco Bay Area’s education systems breed some of the most sought-after intellectual talent in the world. Employers from around the globe solidify their offices in the area to draw from this pool of higher education.
TOP UNIVERSITIES FUEL INNOVATION The San Francisco Bay Area’s ability to attract the world’s top intellectual talent is unparalleled. Employees from around the globe are drawn to the region by the presence of some of the nation’s top universities. The graduates emanating from these universities go on to fuel the intellectually capitalized workforce, driving the Bay Area economy. 40%+ of San Francisco and Bay Area residents have a Bachelor’s Degree or higher, and in the past five years the Bay Area produced 65,000 patents.
World-Class Education & Research Organizations The Bay Area generates 15% of all U.S. patents,
more than double of the next largest region, New York
60 Top Graduate School Programs in business
medicine, science, and engineering are located in the
Bay Area – more than any other region in the country:
Boston 43, New York 29.
The San Francisco Bay Area ranks first in tech job growth
& creation
1. SANTA CLARA UNIVERSITY Students: 9,015 Most Popular Major: Business
2. STANFORD UNIVERSITY Students: 16,430 Nobel Laureates: 31 Most Popular Major: Computer Science
3. UNIVERSITY OF CALIFORNIA BERKELEY Students: 41,910 Nobel Laureates: 22 Most Popular Major: Electrical Engineering & Computer Science
4. SAN JOSE STATE UNIVERSITY Students: 33,409 Most Popular Major: Business
5. UCSF Students: 2,940 Nobel Laureates: 5 Most Popular Major: Medical Science
SAN FRANCISCO BAY AREA OVERVIEW The San Francisco Bay Area is the most innovative place in the world, the byproduct of a highly educated and productive workforce, a deep venture capital pool, world-class educational and research organizations, excellent transportation infrastructure, and superb quality of life.
AIRPORTS The San Francisco Bay Area is home to three international airports: San Francisco International (SFO), Mineta San Jose International Airport (SJC), and Oakland International (OAK).
SFO SJC OAK
SAN FRANCISCO INTERNATIONAL AIRPORT: The Bay Area’s largest airport connects non-stop with more than 75 cities in the U.S. on 15 domestic airlines.
• Home to the NATION’S FIRST AIRPORT TERMINAL ACHIEVING LEED GOLD CERTIFICATION
• SFO directly accounted for more than $8.4 billion in business activity in the 2016-2017 Fiscal Year
• Factoring off-site business activities that depend directly on local air service for staff movements, cargo deliveries, or visitor spending, SFO contributed $35.7 billion in business sales with approximately 165,000 jobs to Bay Area economies
MINETA SAN JOSE INTERNATIONAL AIRPORT: SJC is a self-supporting enterprise owned and operated by the City of San Jose. The airport is located in San Jose, the third largest city in California, and the 10th largest city in the nation.
• 200+ peak daily departures on 16 international and domestic carriers to 54 non-stop destinations.
• SJC has been America’s fastest growing major airport over the past two years based on percentage increases in passenger seat capacity
OAKLAND INTERNATIONAL AIRPORT: Oakland International is the fourth busiest airport in California and second busiest in the San Francisco Bay Area.
• OAK is served by 13 major domestic and international airlines.
• 55 destinations in the U.S.
• North American west coast hub for FedEx
• 12th largest cargo airport in the U.S
55.8
42,800
Increase in passenger seat capacity
12.5
OVER 13
MILLION PASSENGERS
SERVED IN 2017
DIRECT JOBS AT THE AIRPORT
MILLION PASSENGERS SERVED IN 2017
MILLION PASSENGERS TRAVELED THRU 2017
SILICON VALLEY A key component of the Bay Area economy, Silicon Valley is the world’s undisputed high-tech capital, blazing the trail for innovation in today’s global marketplace. Industry leaders in semiconductor design and manufacturing, network equipment, high tech manufacturing equipment, software design, information systems, life science, clean tech, and digital media call Silicon Valley home. The region draws its vitality not only from innovative new businesses, but also from the intense competition among its diverse array of existing companies. The Silicon Valley metro area ranks #3 in the world and #1 in the United States for GDP per capita. The region has one of the highest percentages of college educated adults in the country and continues to be a magnet for leading researchers and entrepreneurs. The combination of the world’s premier research and educational institutions, San Francisco’s world-class financial base, and the region’s well-established business creation infrastructure will ensure that Silicon Valley remains a leader in economic growth for decades to come.
SILICON VALLEY AT A GLANCE
$128,308
GPD PER CAPITA
#2 IN THE WORLD
LABOR FORCE OF OVER ONE MILLION 20 INCREASE OVER THE PAST 10 YEARS
HOME TO THREE OF THE
WORLD’S TOP 10
MOST VAULABLE COMPANIES
BY MARKET CAP (FORBES)
54% OF ALL
19 OF THE
FORTUNE 500 COMPANIES
HQ’D IN SILICON VALLEY
VENTURE CAPITAL INVESTMENTS IN THE US OVER THE PAST 2 YEARS
(PWC MONEYTREE, INCLUDES SF MSA)
47% OF RESIDENTS HOME OF THE
(AGE25+) #1 RANKED HAVE A BACHELOR’S DEGREE OR
HIGHER - COMPARED TO 32% NATIONALLY
COLLEGE IN THE US
SILICON VALLEY AT A GLANCE
A KEY COMPONENT OF THE SAN FRANCISCO BAY AREA ECONOMY, SILICON VALLEY IS THE UNDISPUTED TECHNOLOGY CAPITAL OF THE WORLD
2.9% UNEMPLOYMENT
COMPARED TO CA AT 4.5% AND OVERALL US AT 4.1%
LABOR FORCE OF
ONE MILLION 22% INCREASE OVER THE
PAST 2 YEARS
<20 MILES FROM
SAN HILL ROAD/VC INVESTMENT CAPITAL OF THE WORLD
<50 MILES FROM
SAN FRANCISCO THE WEST COAST FINANCIAL CAPITAL
$77,440 GDP PER CAPITA,
#3 IN THE WORLD (BROOKINGS INSTITUTION 2020)
HOME OF THE THREE WORLD’S TOP 10 MOST VALUABLE COMPANIES
BY MARKET CAP (FORBES, 2020)
42% OF ALL VENTURE CAPITAL INVESTMENTS IN THE
US OVER PAST 2 YEARS (PWC MONEYTREE, INCLUDES SF MSA)
86,833 MEDIAN HOUSEHOLD INCOME,
#3 IN THE US (BUSINESS INSIDER)
47% OF RESIDENTS (AGE 25 & OVER) HAVE A
BACHELOR’S DEGREE OR HIGHER – COMPARED TO 32% NATIONALLY
TEMPERATE CLIMATE AVERAGE HIGH: 72° AVERAGE LOW: 50
SANTA CLARA IS AMONG THE TOP 3 HEALTHIEST COUNTIES IN THE
STATE. (THE ROBERT WOOD JOHNSON FOUNDATION)
EXTENSIVE NETWORK OF HIGHWAYS
HOME TO THE #1 RANKED COLLEGE IN THE US
16 OF THE
FORTUNE
500 COMPANIES HEADQUARTED IN
SILICON VALLEY
SAN JOSE OVERVIEW San Jose, the third–largest city in California, the tenth largest in the U.S., and the county seat of Santa Clara County, is located just south of the San Francisco Bay. With a population of 1,026,908, San Jose was the third fastest growing city in the Top 10 US cities over the last five years.
Top Ten Cities in the US – Population
Rank City State 2020
Population
5 Year Growth
Rate Growth Rank
1 New York NY 8,550,405 4.59% 8
2 Los Angeles CA 3,971,883 4.73% 7
3 Chicago IL 2,720,546 0.93% 10
4 Houston TX 2,296,224 9.33% 2
5 Philadelphia PA 1,567,442 2.72% 9
6 Phoenix AZ 1,563,025 8.12% 5
7 San Antonio TX 1,469,845 10.73% 1
8 San Diego CA 1,394,928 6.69% 6
9 Dallas TX 1,300,092 8.54% 4
10 San Jose CA 1,026,908 8.56% 3
San Jose comprises a large portion of Silicon Valley, a region home to the leading tech companies of the world, including Google, Apple and Cisco Systems. Despite the development of other high–tech economic centers throughout the world, Silicon Valley continues to be the leading hub for high–tech innovation and development. San Jose boasts a highly educated and trained workforce, excellent quality of life, world–class research facilities, and a continually evolving history of pioneering innovation that spurs economic growth. San Jose is world renowned for its proximity to Stanford University, as well as Santa Clara University. Today, the private sector in San Jose is dominated by high-tech related industries driving economic growth across the region. Companies enjoy a competitive advantage by establishing a presence in San Jose due to its concentration of a highly skilled, well sought-after employee base that is able to enjoy a wide array of exciting cultural, recreational, and educational opportunities while living and working in San Jose.
EMPLOYMENT As the epicenter of innovation, San Jose has served as homebase to some of the world’s leading corporations across the technology, semiconductor, bioscience and medical industries. Currently, Stryker, Western Digital, Cobham, Paypal, TiVo, IDT, Samsung, eBay, Cisco Systems, Maxim Integrated Products, and Broadcom have offices or headquarters in San Jose, along with over 2,376 other tech companies that altogether provide 150,000 jobs in Silicon Valley. The high concentration of technology companies goes hand in hand with the influx of technology leaders in the region. The city boasts a diverse talent pool that enjoys the collaboration of the thriving industries. Many industry leaders are attracted to this city due to its prime Silicon Valley location and convenient access to Highway 101, Highway 237, Highway 85, Highway 87, Interstate 280, Interstate 880, and Interstate 680, which provide employers with multiple commute alternatives and proximity to the highly coveted executive housing communities of Los Altos Hills, Palo Alto Hills, Woodside, Portola Valley and Saratoga. POPULATION GROWTH The area within five miles of the Portfolio witnessed its population grow by 23,178 people from 2000 to 2010, or by 7.0%. In the next seven years, the population grew an additional 27,694 people (7.8% growth), and by 2022 an additional 20,186 people are forecasted to reside within 5 miles (5.3% growth). The City of San Jose is expected to have 400,000 new residents by 2040. With freeway congestion and limited available land for new housing in northern San Jose, much of the future growth will occur in the areas surrounding the Property. The acceleration in population growth in the immediate area is evidenced by a near doubling in the projected growth of 13.9% from 2010 to 2022, versus the 7% growth from 2000 to 2007
ESTABLISHED AND GROWING SURROUNDING POPULATION Edenvale Industrial Park is surrounded by an abundant range of housing options including executive housing in Silver Creek to the east and the Almaden Valley neighborhood. The Property is also in proximity to the communities of Los Gatos and Saratoga. In addition, nearly 3,000 new residential units, consisting of apartments, townhomes, and condominiums, have recently been completed at the mixed-use Cottle Transit Village located just to the north of the Property.
1 Mile 3 Mile 5 Mile
Current Population 15,073 170,474 383,035
5-Year Projected Growth Rate 4.20% 5.60% 5.30%
Housing Units 3,697 49,975 112,412
REVERSE COMMUTE LOCATION As congestion in the San Francisco Bay Area, particularly in Silicon Valley, continues to increase, commute times have become a major issue for both employers and employees. Extended commutes negatively affect the quality of life of employees, and a reduction in time spent driving to and from work can be a recruiting tool for employers. South San Jose has one of the most dramatic reverse commutes in the region, with reductions in drive times at peak commute periods of nearly 60%. This benefit not only attracts tenants to the submarket but also retains the tenants already located in South San Jose.
Travel Times To And From South San Jose to Northern Submarkets During Peak Commutes AM and PM (Pre Covid)
COTTLE TRANSIT VILLAGE The area immediately across Highway 101 from the Property has transformed into one of the Bay Area’s largest mixed-use, transit-oriented, infill developments. Cottle Transit Village, bounded by Cottle Road, Monterey Highway and State Route 85, comprises two, new retail/commercial centers, green infrastructure with parks, a bike trail, sports fields, and more than 3,000 homes sprouting up in new neighborhoods next to the Western Digital Campus. Cottle Transit Village benefits from connections to expanding regional transportation infrastructure: Caltrain connects to downtown San Jose’s historic Diridon Station, a multimodal hub linked to San Jose International Airport, Amtrak, and local and regional bus service. Diridon Station also is a planned stop for the San Jose BART extension and the California High-Speed Rail, which is anticipated by 2029 to run from San Francisco to the Los Angeles basin in under three hours.
1 2 3 4 5
Lowe’s Home Improvement • Completed in 2010 • 169,530 square feet of retail
• Owned by Lowes Home Improvement
Village Oaks Shopping Center • Completed in 2014 • Developed by Hunter/Storm • 320,000 square feet of retail
development • Anchored by Target and
Safeway
Western Digital Campus • Total campus size is 2.5 million
square feet • Headquarters for Western Digital
• Includes two, new buildings totaling 224,000 square feet
Equinix • A 128,131 square foot flex
telecom hotel/data hosting building
• A 131,283 square foot R&D building
• Both buildings are owned by Equinix
iStar Parcel • 76 total acres • Recently completed Costco
(2017) • Remaining development under
construction - 720 Homes
- 260,000 SF office space
6 7 8 9 10
Lexington Luxury Apartments • Completed in 2017 • Developed by ROEM
Development • 387 Units
• Five stories
Oak Grove Apartments • Completed in 2017 • Developed by ROEM
Development • 134 Affordable Apartment Units • Five-story, LEED Gold
Construction
Station 121 • Completed in 2017 • Developed by Taylor Morrison • Townhome-style condos and
motor courts
VIO Luxury Apartments • Completed in 2016 • Developed by Johnson
Development Associates • 234 Units
• Four stories
Ascent Apartments • Completed in 2015 • Developed by Shea Properties • 650 Units
• Six stories
11 12 13 14
Anton La Moraga • Completed in 2014 • Developed by St. Anton
Partners • 275 Units • Four stories
Charlotte Park • Completed in 2016 • Developed by ROEM
Development • 200 Affordable Apartment Units • Four-story, LEED Gold • Construction
Avenue One • Multiple phase, master-planned
residential communities • Developed by Lennar • 450 three, four and five bedroom,
single family and townhomes
San Jose Police Station • 107,000 square feet, 3-story
building • LEED Certified • Designed by Ross Drulis
Cusenbery Architecture, Inc. • Owned by the San Jose,
Department of Public Works
LOCATION HIGHLIGHTS
Executive Housing The Property is surrounded by an abundance of housing options, including executive housing in the Silver Creek neighborhood to the east of the Property and the Almaden Valley neighborhood to the southwest of the Property. Edenvale Industrial Park is also proximate to the communities of Los Gatos and Saratoga. Growing Surrounding Population Numerous housing options in South San Jose provide an abundant workforce in the immediate vicinity making it an attractive location for employers. 20% of Santa Clara County’s population resides within a five-mile radius of the Property.
1 Mile 3 Mile 5 Mile
Current Population 15,073 170,474 383,035
5-Year Projected Growth Rate 4.20% 5.60% 5.30%
Housing Units 3,697 49,975 112,412
TRANSPORTATION REVERSE COMMUTE The reverse commute to and from South San Jose offers employees a respite from the increasingly congested Northern Highway 101 submarkets. Reduction in peak drive times for reverse commuters is approximately 60%. Public Transportation Options The Blossom Hill Caltrain Station and the Cottle Road VTA Light Rail Station are one and two miles from the Property, respectively. Proximity to mass transit has become an increasingly important factor for tenants seeking new space as every employer is concerned about gaining an advantage over competitors attracting and retaining employees in today’s tight labor market.
TRANSPORTATION HIGHWAYS The Property has direct access to Interstate 280, connecting to Interstate 880 and Highway 101, three of the Bay Area’s primary transportation arterials running north/south and east/west, allowing for expedient access to either the San Francisco Peninsula or greater East Bay. Highway 87, also known as the Guadalupe Parkway, provides access to South San Jose and has interconnections with I- 280, and Highways 101 and 85. VTA LIGHT RAIL Santa Clara Valley Transportation Authority (VTA) provides public transit running from Downtown Mountain View to the Santa Clara Convention Center, the San Jose Convention Center, and stretching down to the South San Jose/Santa Teresa Station. RAIL Caltrain provides commuter service from San Francisco to Gilroy with five stations in San Jose, two of which are within 11 minutes of the Property—Diridon and Santa Clara stations. Additionally, Amtrak national passenger rail service and Union Pacific freight rail service provide access beyond the Bay Area. The Altamont Commuter Express (ACE) from Stockton also serves the City of San Jose and brings in members of the workforce residing in the California Central Valley. AIR The Property lies within minutes of three major international airports: San Jose International Airport (10 minutes), San Francisco International Airport (35 minutes), and Oakland International Airport (50 minutes).
SILICON VALLEY MANUFACTURING MARKET As a hub for many advanced-manufacturing companies, Silicon Valley’s manufacturing marekt is comprised of 59.8 million square feet and is consistently ranked as one of the nation’s top performing markets. For the last four years, the manufacturing market has had a vacancy rate under 3.0% demonstrating today’s advanced-manufacturing firm’s need to recruit and retain highly-trained workforce and to be proximate to their technology clients who have a major presence in Silicon Valley.
SUBMARKET INVENTORY
(SF) OVERALL
VACANCY RATE
UNDER CONSTRUCTION
(SF)
CONSTRUCTION COMPLETIONS
(SF)
OVERALL WEIGHTED AVG NET RENT (MF)
Palo Alto 931,522 7.5% 0 0 $2.03
Mountain View 2,509,604 3.5% 0 0 $2.92
101 Technology Corridor 3,441,126 4.6% 0 0 $2.53
Campbell 1,557,660 3.5% 0 0 $1.60
Sunnyvale 4,989,611 8.7% 0 0 $1.59
Santa Clara 15,471,922 2.0% 0 0 $1.61
North San Jose 19,730,829 3.9% 0 0 $1.26
South San Jose 24,430,381 4.0% 0 0 $1.20
Central Silicon Valley 66,180,403 3.8% 0 0 $1.37
Milpitas 8,729,393 7.8% 0 388,240 $1.27
Fremont 23,253,314 4.4% 0 0 $1.28
Newark 9,707,306 5.6% 0 0 $1.25
South I-880 Corridor 41,690,013 5.4% 0 388,240 $1.27
Morgan Hill/Gilroy 8,209,705 2.3% 452,427 0 $1.14
SUBTYPE BREAKDOWN
Warehouse 48,131,203 5.2% 0 388,240
Manufacturing 71,390,014 3.7% 452,427 0
SILICON VALLEY TOTALS 119,521,247 4.3% 452,427 388,240 $1.39
Edenvale Manufacturing Market The Edenvale manufacturing market consists of 35 buildings totaling over 4.6 million square feet. Nearly all of the buildings have been constructed within the last 20 years. The newer buildings tend to be on the east side of Highway 101 and the older buildings on the west side of the Highway. The market is extremely limited in terms of available space, as there is one existing space totaling 68,084 square feet at 6212 Hellyer Avenue. The lack of supply is understated by the fact that over 50% of the total square footage in the submarket is occupied by companies that own their buildings.
Building SF Year Built
1 5995 Hellyer Ave 155,909 2018
2 875 Embedded Way 125,000 2001
3 5325 Hellyer Ave 128,500 2000
4 5325 Hellyer Ave 100,000 2000
5 800 Embedded Way 239,000 2000
6 5550 Hellyer Ave 79,800 2001
7 5521 Hellyer Ave 203,807 1995
8 484 Piercy Rd 166,006 2017
9 6212 Hellyer Ave 111,043 2017
10 5900 Optical Ct 191,000 2002
11 5970 Optical Ct 128,520 2001
12 5981 Optical Ct 110,542 2001
13 300 Enzo Dr 97,831 1998
14 5801 Rue Ferrari St 78,000 1999
15 9 Great Oaks Blvd 126,569 2016
16 11 Great Oaks Blvd 133,500 2016
17 10 Great Oaks Blvd 250,000 2015
18 17 Great Oaks Blvd 22,040 1997
19 30 Great Oaks Blvd 200,000 1984
20 6311 San Ignacio Ave 30,000 1979
21 145 Martinvale Ln 27,800 1984
22 6835 Via Del Oro 99,576 1985
23 6850 Santa Teresa Blvd 30,000 1979
24 6276 San Ignacio Ave 9,853 1979
25 134 Martinvale Ln 18,624 1979
26 7007 Realm Dr 15,944 1979
27 7015 Realm Dr 10,000 1980
28 1 Cottle Rd 73,068 TBD
29 4 Cottle Rd 311,696 TBD
30 6 Cottle Rd 279,848 TBD
31 7 Cottle Rd 210,566 TBD
32 8 Cottle Rd 81,598 TBD
33 50 Cottle Rd 680,925 TBD
34 67 Cottle Rd 55,207 TBD
35 5710 Fontanoso 53,592 2001
KEY LEASED BUILDINGS OWNER/USER
Number of Buildings 35 Total Rentable Area 4,635,364 Total Available SF 68,084 Total Vacant SF 68,084 Vacancy Rate 1.47%
SALES COMPARABLES
Property
Address City Date Built SF Sale Price PSF Buyer Seller
Optical Tech Park - Portfolio
5941 & 5945 Optical Ct San Jose Oct-20 2001 135,000 $51,500,000 $381 Nuveen Real Estate
Local Capital Corp/
DRA Advisors
Edenvale King Ranch
5521 Hellyer AvenueSan Jose May-21 1996 203,807 $51,400,000 $252 W.P. Carey Velodyne Lidar
Optical Tech Park - Portfolio
5970 & 5981 Optical CtSan Jose Aug-21 2002 239,763 $63,500,000 $264
Peninsula Land &
Capital
Capital Local Group/
DRA Advisors
Little Orchard Business Center-Portfolio
1712-1870 Little Orchard, Barnard & StauSan Jose Sep-21 1988 276,747 $95,750,000 $345 Back Creek Group
Stockbridge Capital
Group
DRA Advisors Portfolio
6311-6341 San Ignacio BlvdSan Jose Jun-21 1981 585,478 $142,000,000 $242
Peninsula Land &
Capital
DRA Advisors/
Westcore Properties
Optical Tech Park Portfolio
Edenvale King Ranch
Little Orchard Business Center
DRA Advisor Portfolio
LEASE COMPARABLES
Property
AddressCity
Lease SF Property SF Built / Reno. Lease Signed $ PSF NNN $ TI
Free Rent
(Mo.)
Term
(Yr.) Type Lessor Lessee
5729 Fontanoso Way
5729 Fontanoso WaySan Jose 79,180 79,180 1999 Aug-21 $1.65 $35.00 - 10.00 Direct TA Realty
Khloris
Biosciences
Optical Tech Park
5981 Optical CourtSan Jose 110,542 110,542 2001 Dec-20 $1.55 $30.00 12 9.00 Direct
Local Capital Corp/
DRA Advisors
GAF Energy
LLC
Tech Hub @ 85
6321-6325 San Ignacio BlvdSan Jose 103,894 103,894 1979 Jul-20 $1.40 $20.00 10 21.00 Direct Westcore Properties
Hummingbird
Energy Storage
1991-2011 Senter Road
1991-2011 Senter Road, Suite 1991San Jose 97,059 226,328 1979 Sep-21 $1.10 $1.00 - Renewal Dinapoli Companies
Bentek
Corporation
6781 Via Del Oro
6781 Vial Del Oro, Suite 140San Jose 52,700 52,700 1980 May-21 $1.85 $25.00 - 5.00 Renewal Kennedy Wilson
Watlow Electric
Manufacturing
1994-2011 Senter Road
5729 Fontanoso Way
Optical Tech Park
Tech Hub @85
6781 Via Del Oro
Terry Daly [email protected] Direct: +1 415 677 0478 Mobile: +1 415 847 4669 LIC #01330089
Nick Lamson [email protected] +1 415 489 6261 LIC #02050660
425 Market Street Suite 2300 San Francisco, CA 94105 www.cushwake.com
