Safeway, Inc.San Francisco Bay Area Single Tenant Offi ce / R&D Building

EXECUTIVE SUMMARY

Christopher Sheldon415-677-0441

Chris.Sheldon@cassidyturley.com

Lic #01806345

Andrew Bogardus415-677-0421

Andy.Bogardus@cassidyturley.com

Lic #00913825

Douglas Longyear 415-677-0458

Doug.Longyear@cassidyturley.com

Lic #00829911

Chris Crabtree925-621-3850

Chris.Crabtree@cassidyturley.com

Lic # 01298060

Disclaimer

The information contained in this marketing brochure (“Materials”) is proprietary

and confi dential. It is intended to be reviewed only by the person or entity receiving

the Materials from Cassidy Turley Northern California (“Agent”). The Materials are

intended to be used for the sole purpose of preliminary evaluation of the subject

property/properties (“Property”) for potential purchase.

The Materials have been prepared to provide unverifi ed summary fi nancial, property,

and market information to a prospective purchaser to enable it to establish a preliminary

level of interest in potential purchase of the Property. The Materials are not to be

considered fact. The information contained in the Materials is not a substitute for

thorough investigation of the fi nancial, physical, and market conditions relating to the

Property.

The information contained in the Materials has been obtained by Agent from sources

believed to be reliable; however, no representation or warranty is made regarding the

accuracy or completeness of the Materials. Agent makes no representation or warranty

regarding the Property, including but not limited to income, expenses, or fi nancial

performance (past, present, or future); size, square footage, condition, or quality

of the land and improvements; presence or absence of contaminating substances

(PCB’s, asbestos, mold, etc.); compliance with laws and regulations (local, state, and

federal); or, fi nancial condition or business prospects of any tenant (tenants’ intentions

regarding continued occupancy, payment of rent, etc). A prospective purchaser must

independently investigate and verify all of the information set forth in the Materials. A

prospective purchaser is solely responsible for any and all costs and expenses incurred

in reviewing the Materials and/or investigating and evaluating the Property.

By receiving the Materials you are agreeing to the Confi dentiality and Disclaimer set

forth herein.

Safeway, Inc. i

Investment Offering & Highlights

The Offering

• 71,324± sq. ft. one story concrete tilt-up offi ce/R&D building leased to Safeway

for 10 years from September 2014 to September 2024

• Price: $15,390,000 – 5.72% Return

Area Strengths / Location

• San Francisco Bay Area Economy

• The Property is near Safeway’s corporate headquarters

• The Property has good proximity to Interstates 580 and 680

• Average household incomes of $133,000 within a 5 miles radius of the Property

Tenant / Property / Lease

• Safeway is the largest grocery store chain in California

• Institutional quality improvements

• Long term lease

Financial

• Leased at market rent

• Value below replacement cost

• 3% annual rent increases

• 3.57% projected annual increase in Net Operating Income

• 8.05% projected average cash on cash return with a new 60% LTV loan

Safeway, Inc. 1

Location 477 North Canyons Parkway, Livermore, California

Lot Size Approximately 4.26 acres – 185,378± square feet

Improvements Completed in 1999, a freestanding 71,324± square foot single-story concrete tilt-up

R&D building with on-site parking, and reciprocal parking easement with 455 North

Canyons Parkway (next door). A new roof was installed this year.

Lease Leased to SAFEWAY INC., from October 1, 2014 until September 30, 2024 at an

initial gross rent of $1,091,257. The rent increases by 3% annually. The lease has a

gross expense structure with a 2015 calendar year expense stop. The expenses over

and above the expense stop are passed through to the tenant. Tenant pays for its own

utilities and janitorial. This expense structure enables the property’s projected cash

fl ow before debt service to increase at a rate greater than 3.5% per annum. This is due

to the increase in gross rents annually by approximately 3%, while real estate taxes

can only increase by a maximum of 2%. (See Net Operating Income and Cash Flow

Projection for more information).

Management Third party management fi rms are available to manage the property. These management

fees can be included in the base year/pass through structure. (See Net Operating

Income and Cash Flow Projection for more information).

Options to Renew Tenant has three options to extend the term for fi ve years each at fair market rent.

Projected Net Operating Income

Price: $15,390,000 – 5.72% Return

Price Per Square Foot $215.77

Financing The property will be delivered free and clear of permanent fi nancing.

Investment Overview

Lease Years Net Operating Income* Return

1 $880,026 5.72%

2 $912,335 5.93%

3 $945,496 6.14%

4 $979,501 6.36%

5 $1,014,361 6.59%

6 $1,050,922 6.83%

7 $1,088,334 7.07%

8 $1,126,594 7.32%

9 $1,165,699 7.57%

10 $1,206,512 7.84%

* Includes Management and Reserves

Safeway, Inc. 2

SAFEWAY, INC. (NYSE: SWY) is the second largest

grocery store chain in the U.S. with approximately 1,332

stores and the largest chain in California with 251 stores

in Northern California and 279 Vons stores in southern

California.

For the fi scal year ended December 28, 2013, total

revenue was $36.1 billion with net income of $3.5 billion.

Total stockholder’s equity was $5.8 billion.

In March 2014, the company agreed to be bought by

an investor group led by Cerberus Capital Management,

also the owner of the Albertsons grocery store chain.

With the new combined companies, Cerberus will be the

parent company. (The deal is expected to close in the 4th

quarter of 2014.)

Safeway owns its headquarters location at 5918 Stoneridge

Mall Road, Pleasanton. Safeway’s headquarters is 7.5

miles west of the subject property. Safeway chose the

subject property due to its close proximity to its Pleasanton

headquarters for additional offi ce space and to place an

IT server farm.

Safeway, Inc.

Safeway, Inc. 3Safeway Corporate Headquarters, Pleasanton, CA

INDEPENDENCE DRIVE

NORT

H CA

NYON

S PA

RKW

AY±71,324 SF

477

NOT A PA

RT

455

N

Site Plan

NORTH CANYONS PARKWAY

NORTH CANYONS PARKWAY

Las PositasLas PositasGolf CourseGolf Course

Live

rmor

e M

unic

ipal

Live

rmor

e M

unic

ipal

Airpor

t

Airpor

t

PleasantonPleasanton

San MateoSan Mateo San FranciscoSan Francisco

DublinDublin

INDEPENDENCE DRIVE

INDEPENDENCE DRIVE

Dublin/Dublin/Pleasanton Pleasanton

BARTBART

84

84

580 580

580

680

680

4

LIVERMORE

PLEASANTON

DUBLIN

SANRAMON

DANVILLE

PLEASANTON RIDGEREGIONAL PARK

DUBLIN HILLSREGIONAL PARK

SHADOW CLIFFS REGIONALRECREATION AREA

POPPY RIDGEGOLD COURSE

LAWRENCELIVERMORENATIONAL

LABORATORY

BRUSHY PEAKREGIONALPRESERVE

LOS VAQUEROS RESERVOIR & WATERSHED

E. STANLEY BLVD

SA

NTA

RITA

RD

ALCO

STA BLVD

SU

NO

L B

LVD

DO

UG

HE

RT

Y R

D

HOPYARD RD

SAFEWAY

AIRWAY BLVD

S C O G O

HACIENDA BUSINESS

PARK

TRI-VALLEY TECHNOLOGY

PARK

BISHOP RANCH

Safeway, Inc. 6

4BRUSHY PEAKBRUSHY PEAK

REGIONALPRESERVE

The Tri-Valley area is an affl uent commercial and

residential area in the East Bay that encompasses the

cities of Danville, San Ramon, Dublin, Pleasanton, and

Livermore. The population in the Tri-Valley is estimated

to be approximately 300,000. The average household

income within a 5 mile radius of the Safeway building

is $150,000.

Livermore is located at the east end of the Tri-Valley,

approximately 40 miles southeast of San Francisco, 30

miles southeast of Oakland and 35 miles northeast of

San Jose. Livermore is situated in Alameda County and

has a population estimated to be 84,852.

Livermore straddles both sides of Interstate 580 and has

business parks, residential areas, and a private plane

airport. The city’s developed areas are surrounded by

award-winning wineries, farm lands and ranches that

mirror the valley’s western heritage.

Tri-Valley & Livermore

Las PositasLas PositasCollegeCollege

NORTH CANYONS PARKWAY

NORTH CANYONS PARKWAY

Proposed Proposed Livermore Livermore

BARTBART

Tri-Valley Technology ParkThe Safeway building is located at 477 North Canyons Parkway

in Livermore, Alameda County, California in a two building

complex named West Livermore Gateway. The other building

in the complex is a similar one story offi ce/R&D building

containing approximately 74,070 sq. ft. and is 100% leased

to Nissan, RH USA, Inc. and United Grocers. West Livermore

Gateway is part of a larger mixed-use business park named Tri-

Valley Technology Park and often referred to as “Tech Park.”

This Park is situated on the north side of Interstate 580. The

Tri-Valley Technology Park has a variety of uses including offi ce

buildings, R&D buildings, manufacturing buildings, Comcast

campus, Hilton Garden Inn, Courtyard by Marriot, Holiday

Inn, Hampton Inn, Residence Inn, parcels for future retail,

Costco, gas station/convenience center, Las Positas College and

residential neighborhoods.

Tri-Valley Technology Park Advantages

• Competitive offi ce rents

• Master planned environment

• Best Livermore proximity to Interstates 580 and 680

• Close to executive housing in the Tri-Valley area

• Shorter commute times to the Central Valley

• Future Livermore BART station near the Park

Tri-Valley Economy

Safeway, Inc. 8

The Tri-Valley Area has a diversifi ed economy with one of the U.S.’ largest research

laboratories and business parks which are populated with some of the San Francisco’s

Bay Area’s largest tech and main stream companies.

Lawrence Livermore National Laboratory

The largest employer in Livermore is the Lawrence Livermore National Laboratory

(LLNL). LLNL is one of the three largest national laboratories in the U.S. It is funded

by the Department of Energy and operated by a limited liability consortium named

Lawrence Livermore National Security, LLC (LLNS), a joint venture company of Bechtel

National, the University of California, BWX Technologies, URS, and Battelle. The lab

is the location of the IBM Sequoia supercomputer. LLNL is the location of the world’s

most powerful laser, the National Ignition Facility (NIF), a project designed to create

the fi rst sustained, controlled nuclear fusion reaction, which would generate fusion

power, a potential energy source. The laboratory was honored in 2012 by having the

synthetic chemical element livermorium named after it.

Lawrence Livermore National Laboratory has roughly 5,800 employees and has an

annual budget of $1.5 billion.

Sandia National Laboratories

Livermore is also the California site of Sandia National Laboratories, which is

operated by Sandia Corporation, a Lockheed-Martin owned Company. The Sandia

National Laboratories are two major United States Department of Energy research

and development national laboratories. The primary site is located in Albuquerque,

New Mexico. Their primary mission is to develop, engineer, and test the non-nuclear

components of nuclear weapons.

Hacienda Business Park

Hacienda Business Park is located in Pleasanton, six miles west of the subject property.

With 875 acres, Hacienda is one of the largest business parks in Northern California.

The park has approximately 11 million square feet of existing; mixed-use space is

occupied by approximately 550 companies that employ approximately 18,000 people.

A few of the largest employers in Hacienda include:

Bishop Ranch

Bishop Ranch is a 585 acre business park is located in San Ramon at the north end of

the Tri-Valley Area. The park has approximately 10 million square feet of offi ce space.

A few of the noteworthy tenant in Bishop Ranch include:

• Automatic Data Processing, Inc. • Roche Molecular Diagnostics

• Oracle Corporation • State Compensation Insurance Fund

• Kaiser Permanente • Cisco Systems, Inc.

• Shaklee Corporation • Farmers Insurance Group

• Chevron Corporation • Sprint Nextel Corporation

• AT&T • International Business Machines Corp.

• PG&E • The Coca-Cola Company

• General Electric • Bechtel Communications

Demographics

2014 Summary 5 miles 10 miles 15 miles

Population 152,343 306,251 642,891

Households 52,925 106,321 222,168

Families 38,745 80,147 166,009

Average Household Size 2.76 2.81 2.84

Owner Occupied Housing Units 35,217 74,109 143,956

Renter Occupied Housing Units 17,707 32,212 78,212

Median Age 38.4 38.9 38.7

Median Household Income $108,879 $117,401 $105,075

Average Household Income $133,827 $145,789 $131,164

2019 Summary

Population 164,069 329,969 685,759

Households 57,137 114,628 237,137

Families 41,858 86,391 177,192

Average Household Size 2.76 2.82 2.84

Owner Occupied Housing Units 37,895 79,490 153,175

Renter Occupied Housing Units 19,243 35,138 83,961

Median Age 38.8 39.1 39.2

Median Household Income $123,743 $136,031 $117,212

Average Household Income $157,678 $171,947 $153,706

Trends: 2014-2019 Annual Rate

Population 1.49% 1.50% 1.30%

Households 1.54% 1.52% 1.31%

Families 1.56% 1.51% 1.31%

Owner Households 1.48% 1.41% 1.25%

Median Household Income 2.59% 2.99% 2.21%

Wente Vineyards, Livermore ,CA