Tustin Plaza - Jesse Lee N Tustin St Orange CA-OMP.pdf · Tustin Plaza ORANGE, CA. Tustin Plaza ORANGE, CA PRICING AND FINANCIAL ANALYSIS. Price 8,400,000 Down Payment 30% $2,520,000

ORANGE, CA

Tustin Plaza

OFFERING MEMORANDUM

CONFIDENTIALITY AND DISCLAIMER

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

ORANGE, CA

Tustin Plaza

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOURMARCUS & MILLICHAP AGENT FOR MORE DETAILS.

NON-ENDORSEMENT NOTICE

Section 1 PRICING AND FINANCIAL ANALYSIS

Section 2 PROPERTY DESCRIPTION

Section 3 RECENT SALES

Section 4 RENT COMPARABLES

Section 5 MARKET OVERVIEW

Section 6 DEMOGRAPHIC ANALYSIS

TABLE OF CONTENTS

Tustin PlazaORANGE, CA


PRICING AND FINANCIAL ANALYSIS

Price 8,400,000

Down Payment 30% $2,520,000

Price per Square Foot (GLA) $276.32

Gross Leasable Area (GLA) 30,400

Year Built 1987

Lot Size 2.11 Acres

VITAL DATA

CAP Rate - Current 6.11%

Net Operating Income - Current $513,511

Net Cash Flow After Debt Service - Current $170,516

Total Return - Current 10.77% / $271,395

1

Comments

Attractive Modern Design Shopping Strip in Orange

Major Tenants


Tenant Name

Tabi - Ji Japanese Restaurant

Suite Beauty

Linda's Nail Spa

Rancho BBQ

State Farm Insurance

Herbalife


Major Employers

CompanyLocal

Employees

UCI Medical Center 4,763

Irvine Medical Center 4,000

County of Orange 3,520

Octa 2,600

Kaiser Permanente 2,539

Think Together 2,503

Public Faclities Resources Dept 2,440

Santa Ana College 2,433

St Joseph Hospital of Orange 2,100

Tustin Unified School District 1,814

Alstyle AP & Activewear MGT Co 1,800

Pediatric Cancer Research 1,600

Demographics

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as tothe accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for anyinaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2015 W0100042 Marcus &Millichap. All rights reserved.

1-Mile 3-Miles 5-Miles

2014 Total 27,921 167,469 545,597

2019 Total 28,093 168,957 551,326

2014 Total 8,359 54,339 156,579

2019 Total 8,408 55,210 159,250

Median HH Income $63,868 $72,654 $63,403

Per Capita Income $27,379 $33,433 $26,932

Average (Mean) HH $87,253 $101,406 $92,293

OFFERING SUMMARY

2



Existing Financing

Loan Type Free and Clear


Proposed Financing

First Trust Deed

Loan Amount $5,880,000

Loan Type Proposed New

Interest Rate 4.15%

Amortization 30 Years

Program 30 Year Amortization

Loan to Value 70%

Spread 4.15% Fixed For Ten Years

Due Date 10 years

Debt Coverage Ratio 1.50

FINANCING

3

Herbalife: 3.95% Remaining: 7.74%

Japanese Restaurant: 14.80%

Salon Suites: 14.47%

Linda's Nail: 10.69%

Dr Office: 3.95%Dental Corporation: 4.44%

Cleaners: 4.93%Rancho BBQ: 4.93%

Karate: 5.92%

Dentist Office: 6.25%

Lease Pending: 8.06%

Make up School: 9.87%



Current Per SF

Real Estate Taxes $100,291 $3.30

Insurance $18,924 $0.62

CAM

Utilities $10,531 $0.35

Repairs & Maintenance $14,044 $0.46

Contract Services $11,400 $0.38

Trash Services $6,545 $0.22

TOTAL CAM $42,520 $1.40

Management Fee $18,000 $0.59

Reserves / Replacements $4,560 $0.15

TOTAL EXPENSES $184,295 $6.06


Tenants (% OF GLA)

EXPENSES

4



Current Per SF

Base Rent

Occupied Space $539,652 $17.75

GROSS POTENTIAL RENT $539,652 $17.75

Expense Reimbursements

Real Estate Taxes $100,291 $3.30

Insurance $18,924 $0.62

CAM $42,520 $1.40

Management Fee $18,000 $0.59

GROSS POTENTIAL INCOME $719,387 $23.66

Vacancy/Collection Allowance (% of GPI) 3.0% / $21,581 $0.71

EFFECTIVE GROSS INCOME $697,806 $22.95

Total Expenses $184,295 $6.06

NET OPERATING INCOME $513,511 $16.89


Gross Leasable Area (GLA) 30,400 SF

INCOME & EXPENSES

5



Comments

1. Lease Pending for Last Vacancy

2. CPI Incr = Consumer Price Index Increase in Rent

3. FMV = Fair Market Value for Rent


Suite Tenant GLA % of

GLA

Lease

Commence

Lease

Expire

Monthly

Rent

Rent/

SF

Changes

On

Changes

To

Expense

Reimbs.

Other:

Options/

% Rent

Lease

Type

A Salon Suites 4,400 14.47% 5/1/2014 4/30/2024 $6,600.00 $1.50 5/1/2015 $7,700.00 $2,167.00 5.5 NNN

B Salon Reyna 600 1.97% 6/1/2006 5/31/2016 $1,185.00 $1.98 6/1/2015 CPI Incr $295.00 5 NNN

C-D Linda's Nail 3,250 10.69% 9/1/2013 8/31/2018 $4,797.00 $1.48 9/1/2015 CPI incr $1,601.00 5 NNN

E-F Japanese Restaurant 4,500 14.80% 5/1/2013 12/31/2018 $6,075.00 $1.35 8/1/2015 $6,525.00 $2,216.00 5.5 NNN

G-H State Farm Insurance 850 2.80% 2/1/2012 1/31/2017 $1,411.00 $1.66 2/1/2016 CPI Incr $420.00 5 NNN

I Happy Paw Salon 900 2.96% 1/25/2013 1/24/2016 $1,440.00 $1.60 4/24/2016 CPI Incr $444.00 5 NNN

J Rancho BBQ 1,500 4.93% 4/1/2012 6/30/2015 $2,025.00 $1.35 7/1/2015 $2,235.00 $739.00 3 NNN

K-L Dr Office 1,200 3.95% 3/1/2014 2/28/2019 $1,920.00 $1.60 3/1/2015 CPI Incr $592.00 5 NNN

M-N Cleaners 1,500 4.93% 3/1/2009 2/28/2019 $2,400.00 $1.60 3/1/2015 $2,472.00 $738.00 5 NNN

O Herbalife 1,200 3.95% 5/5/2013 8/8/2018 $1,620.00 $1.35 5/5/2015 $1,740.00 $596.00 5 NNN

P-Q Karate 1,800 5.92% 11/1/2010 10/31/2015 $2,556.00 $1.42 11/1/2015 FMV $887.00 5 NNN

T Make up School 3,000 9.87% 11/15/2013 12/31/2015 $3,030.00 $1.01 1/1/2016 $3,120.00 $1,478.00 5.5 NNN

U-V Dentist Office 1,900 6.25% 9/1/2013 8/31/2018 $3,250.00 $1.71 9/1/2015 CPI Incr $936.00 5.5 NNN

W Dental Corporation 1,350 4.44% 1/28/2013 3/27/2020 $2,497.00 $1.85 1/28/2016 $2,572.00 $665.00 5.5 NNN

Y Lease Pending 2,450 8.06% TBD TBD $4,165.00 $1.70 $1,207.00 NNN

TOTAL VACANT

TOTAL OCCUPIED 30,400 100.00% $44,971.00 $26,364.00 $14,981.00

TOTAL 30,400 100.00% $44,971.00 $26,364.00 $14,981.00

TENANT SUMMARY

JC

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6



For The Year Beginning Year 1

Jan 2014

Year 2

Jan 2015

Year 3

Jan 2016

Year 4

Jan 2017

Year 5

Jan 2018

Year 6

Jan 2019

Year 7

Jan 2020

Year 8

Jan 2021

Year 9

Jan 2022

Year 10

Jan 2023

Tenant(s) Name Rancho

BBQ

Karate

Make up

School

Salon Reyna

Happy Paw

Salon

State Farm

Insurance

Linda's Nail

Japanese

Restaurant

Herbalife

Dentist

Office

Dr Office

Cleaners

Dental

Corporation

Total Number of Tenants 3 2 1 4 2 1

Total Square Feet 6,300 1,500 850 10,850 2,700 1,350

Total Percentage 20.7% 4.9% 2.8% 35.7% 8.9% 4.4%

Cumulative Percentage 20.7% 25.7% 28.5% 64.1% 73.0% 77.5%


Percentage of SF Expiring Number of Tenants Expiring Cumulative % of SF Expiring

0%

10%

20%

30%

40%

50%

60%

70%

80%

To

tal P

roje

ct S

qu

are

Fo

ota

ge

0

1

2

3

4

Nu

mb

er

of T

en

an

tsJan 2014

0%Jan 2015

21%Jan 2016

5%Jan 2017

3%Jan 2018

36%Jan 2019

9%Jan 2020

4%Jan 2021

0%Jan 2022

0%Jan 2023

0%

LEASE EXPIRATION SUMMARY

Any projections, opinions, assumptions or estimates used here within are for example purposes only and do not represent the current or future performance of the property.

665 North Tustin Avenue

Orange, CA 92867

Price 8,400,000

Down Payment 30% $2,520,000

Gross Leasable Area (GLA) 30,400

Price/SF $276.32

CAP Rate - Current 6.11%

Lot Size 2.11 Acres

Year Built 1987

FIRST TRUST DEED

Loan Amount $5,880,000

Loan Type Proposed New

Interest Rate 4.15%

Amortization 30 Years

Program 30 Year

Loan to Value 70%

Annualized Operating Data

Income Current

Base Rent

Occupied Space $539,652

Gross Potential Rent $539,652

Expense Reimbursements $179,735

Gross Potential Income $719,387

Vacancy/Collection Allowance 3.0% / $21,581

Effective Gross Income $697,806

Total Expenses $184,295

Net Operating Income $513,511

Debt Service $342,995

Debt Coverage Ratio 1.50

Net Cash Flow After Debt Service 6.77% / $170,516

Principal Reduction $100,879

Total Return 10.77% / $271,395

7

Location


Financing


ExpensesReal Estate Taxes $100,291

Insurance $18,924

CAM

Utilities $10,531

Repairs & Maintenance $14,044

Contract Services $11,400

Trash Services $6,545

TOTAL CAM $42,520

Management Fee (% of EGI) 2.6% / $18,000

Reserves / Replacements $4,560

TOTAL EXPENSES $184,295

EXPENSES/SF $6.06


Loan information is time sensitive and subject to

change. Contact your local Marcus & Millichap Capital

Corporation representative.

FINANCIAL OVERVIEW

JC

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PROPERTY DESCRIPTION

Tustin Plaza is a pride of ownership, strip retail shopping center consisting of approximately 30,400 net rentable square feet. The investment property is ideally situated immediately adjacent to the southwest corner of North Tustin Street and Mayfair Avenue in Orange. Tustin Street, one of Orange County's premier thoroughfares, is home to virtually every national retailer in the United States. The 830,000 square foot Mall of Orange, anchored by Wal-Mart, Sears, J.C. Penny, and Ross Dress For Less, is located approximately one mile north from the subject.

Built in 1987 and designed with a Mediterranean theme, the property has enjoyed a history of high occupancy. The Center enjoys excellent visibility from both north and south bound traffic, has two points of ingress/egress, and includes a left turn lane for southbound traffic directly into Center.

Additional features include, rear entry loading/unloading in each of the units, floor to ceiling glass storefronts that provide both maximum street exposure of the unit interior and allows interchangeable doorways to accommodate a wide array of users, and 60 foot bay depths which provide each tenant with maximum street visibility.

This offering represents all the basic ingredients for a successful opportunity. Stable tenancy, high quality construction, state of the art design, primary trade thoroughfare and an infill location.

Investment Highlights

■ Pride of Ownership Strip Shopping Center

■ Located on a Premier Retail Thoroughfare

■ Floor to Ceiling Glass Storefronts

■ All Tenants on Triple-Net Leases

■ Infill Location in The City of Orange

■ Low $276 Per Square Foot

■ Attractive 6.11 Percent Cap Rate

9




INVESTMENT OVERVIEW

The Offering

Property Tustin Plaza

Property Address 665 North Tustin Avenue

Orange, CA 92867

Assessor's Parcel Number 386-181-49

Zoning C1

Site Description

Number of Stories 1

Year Built 1987

Gross Leasable Area (GLA) 30,400 SF

Lot Size 2.11 Acres

Type of Ownership Fee Simple

Parking Ratio 4.8:1

Landscaping Palm Trees

Topography Flat

Construction

Foundation Concrete

Framing Concrete Tilt Up

Exterior Stucco

Parking Surface Asphalt

Roof Flat Tar & Gravel

Mechanical

HVAC Yes All Units

Fire Protection Yes Sprinklered

Utilities Yes Individuality Controlled Electric

Interior Detail

Walls Dry Wall

Ceilings Drop Ceilings

Floor Coverings Tile Floor/Carpeted

Rest Rooms Yes

10




PROPERTY SUMMARY

11




PROPERTY PHOTOS

Construction

Features

■ Concrete/Tilt-Up

■ Flat Tar and Gravel Roof

■ Individuality Controlled-Gas

■ Master Controlled-Gas

■ Air Conditioned

■ Carpeted

■ Drop Ceilings

■ Recessed Fluorescent Lighting

■ Floor to Ceiling Glass Storefronts

12




PROPERTY FEATURES

13




Local Map Regional Map

AREA MAPS

14




SITE PLAN

15




AERIAL PHOTO


RECENT SALES

1)

2)

3)

4)

5)

Tustin Plaza

Bristol Village Plaza

Michelson Marketplace

Garden Grove Festival Square

Beverly Plaza

MacArthur Plaza - Hutton Centre

17

RECENT SALES



RECENT SALES MAP

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

Subject BristolVillagePlaza

MichelsonMarketplace

GardenGrove

FestivalSquare

BeverlyPlaza

MacArthurPlaza

-HuttonCentre

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Subject BristolVillagePlaza

MichelsonMarketplace

GardenGrove

FestivalSquare

BeverlyPlaza

MacArthurPlaza

-HuttonCentre

Average Price per Square Foot

18

RECENT SALES


Average Cap Rate


CAP RATE AND PRICE PER SF

1

2

Tustin Plaza


Orange, CA 92867

Bristol Village Plaza

270 Bristol Street

Costa Mesa, CA 92626

Michelson Marketplace

222 Michelson Drive

Irvine, CA 92612

Close of Escrow: 3/7/2014

Year Built: 1978

Gross Leasable Area (GLA): 24,756 SF

Sale Price: $12,900,000

Percent Down: 100%

CAP Rate: 5.00%

Price/SF (GLA): $521.09

Lot Size: 3.68 Acres

Subject Property

Year Built: 1987


Offering Price: 8,400,000

Percent Down 30%

CAP Rate: 6.11%



19


Year Built: 1985


Sale Price: $13,000,000

Percent Down: 15%

CAP Rate: 5.20%



RECENT SALES



RECENT SALES

5

4

3 Garden Grove Festival Square

10130 Garden Grove Boulevard

Garden Grove, CA 92844

Beverly Plaza

26342 Oso Parkway

Mission Viejo, CA 92691

MacArthur Plaza - Hutton Centre

2 Hutton Centre Drive

Santa Ana, CA 92707


Year Built: 2001


Sale Price: $10,900,000

Percent Down: 36%

CAP Rate: 5.70%


Lot Size: 1.5 Acres


Year Built: 2006


Sale Price: $8,000,000

Percent Down: 50%

CAP Rate: 5.59%



20


Year Built: 2006


Sale Price: $11,900,000

Percent Down: 25%

CAP Rate: 5.59%



RECENT SALES



RECENT SALES


RENT COMPARABLES

1)

2)

3)

4)

5)

Tustin Plaza

455 -479 North Tustin Street

564 North Tustin Street

1888 - 1998 North Tustin Street



22

RENT COMPARABLES



RENT COMPARABLES MAP

0

10

20

30

40

50

60

70

80

90

100

Subject 455-479NorthTustinStreet

1888-

1998NorthTustinStreet

1838-


405-


0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Subject 455-479NorthTustinStreet


1888-


1838-


405-


23

RENT COMPARABLES


Average Rent per Square Foot


OCCUPANCY AND AVERAGE RENT PER SF

Average Occupancy

2

1

Subject Property

455 -479 North Tustin Street

Orange, CA 92867

564 North Tustin Street

Orange, CA 92867

Comments

There is a Lease for the last space of 2,450-square foot pending.

Date Surveyed: 10/22/2014

Occupancy: 0%

Year Built: 1963


Rent/SF (GLA): $1.60

Available SF: 2,150

Lot Size: .53 Acres

Lease Type: NNN


Occupancy: 70%

Year Built/Renovated: 1964/2008



Available SF: 3,896

Lot Size: .755 Acres

Lease Type: NNN


Occupancy: 100%

Year Built: 1987



Available SF: 0


Lease Type: NNN

Tustin Plaza


Orange, CA 92867

24

RENT COMPARABLES



RENT COMPARABLES

5

4

3


Orange, CA 92865


Orange, CA 92865


Orange, CA 92867


Occupancy: 73%

Year Built: 1966



Available SF: 5,590

Lot Size: 1.5 Acres

Lease Type: NNN


Occupancy: 85%

Year Built: 1970



Available SF: 5,635

Lot Size: 1.4 Acres

Lease Type: NNN


Occupancy: 75%

Year Built: 1970



Available SF: 16,338


Lease Type: NNN

25

RENT COMPARABLES



RENT COMPARABLES


MARKET OVERVIEW

27

Market Highlights

Diversified employment base

■ Major employers include those in tourism,

high-tech operations and aerospace/military

contracting.

Extensive foreign investment

■ Numerous foreign firms place headquarters in

the area to be near Southern California ports

of entry and the Southwest.

High median household income

■ The median household income in Orange

County is far above the national level.

MARKET OVERVIEW

Geography

Located in the heart of Southern California,

Orange County’s land area covers 790 square

miles, bordering the counties of Los Angeles,

San Diego, Riverside and San Bernardino.

Elevations range from sea level at the coast to

5,687 feet at Santiago Peak in the Saddleback

Mountains. The western edge of Orange

County is defined by 42 miles of Pacific

Ocean beachfront, comprising one of the

longest uninterrupted stretches of public

beaches in the world.



ORANGE COUNTY

Orange County

28

MARKET OVERVIEW

Metro

The population of the Orange County metro soared

during the 1980s and 1990s and today contains

approximately 3.1 million residents. Anaheim is the

largest city in the county, with 348,300 citizens,

followed by Santa Ana. Over the next five years, the

county is expected to grow at an annual rate of 0.4

percent, with the city of Irvine registering the most

dramatic growth.


Largest Cities in County by Population

Airports

■ John Wayne International Airport

■ One general aviation airport

Major Roadways

■ Interstates 5 and 405

■ State Routes 1, 22, 55, 57, 91 and 241

Rail

■ Freight - Union Pacific

■ Passenger - Amtrak

■ Commuter - Metrolink

Orange County is:

■ 30 miles from Los Angeles

■ 90 miles from San Diego

■ 110 miles from the Mexican border

■ 270 miles from Las Vegas


Infrastructure

Interstates 5 and 405, along with three major freeways

— state Routes 91, 22, 55 and 57 — serve as the

primary arteries for surface transportation within

Orange County. In addition, toll roads throughout the

county also aid in reducing traffic congestion.

As a result of growing populations in cities such as

Tustin and Irvine, efforts are being made to expand

state Route 241. This would help alleviate traffic on

Interstate 5 by offering an easier route to the northern

portion of the county and Riverside County.

Although John Wayne International Airport is the only

commercial-service airport in Orange County, three

additional international airports are located nearby in

Long Beach, Ontario and Los Angeles.

Bus service for the county is provided by the Orange

County Transportation Authority, while Metrolink

operates three commuter rail lines through the region.

Sources: Marcus & Millichap Research Services, Experian

ORANGE COUNTY

Anaheim 348,300

Santa Ana 343,000

Irvine 221,600

Huntington Beach 194,900

Garden Grove 175,400

Orange 140,300

29

MARKET OVERVIEW


Economy

The aerospace and technology industries comprise a

significant portion of Orange County’s economy,

creating products that are sold to national and global

markets. Defense spending has built a strong local

aerospace market, and the improving economy has

boosted tech sales. Employment in the missile and

space industry remains high, while manufacturers of

aircraft parts continue to produce equipment to meet

government needs. Homeland security and defense

contracts for technology and telecommunications-

related goods also support Orange County’s smaller

electronics firms.

The travel and tourism industry is improving in line

with national employment growth. The Walt Disney

Co. recently completed a $1.1 billion overhaul of

Disney’s California Adventure theme park. The

company expanded the 55-acre site by 12 acres and

used the space for new attractions.

Orange County’s high-tech sector is experiencing a

revival as major companies move to the area. Private

research and development, coupled with work done at

numerous universities, will play a vital role in the

growing high-tech base, which offers employment at

companies such as Broadcom and Google. Medical

device research and production is also expanding with

companies such as Beckman Coulter, Endologix,

Edwards Lifesciences and Allergan.


ORANGE COUNTY

30

MARKET OVERVIEW


Labor

The Orange County economy contains an employment base of more than 1.4 million workers. After outpacing

the nation's average rate of employment growth for the previous five years, Orange County is now expected to lag

the nation through 2018.

At 18 percent of total metro employment, the professional and business services sector represents the largest share

of area jobs. Some 265,000 positions exist in these industries, and these jobs are expected to expand by 1.7

percent annually in the coming five years. The trade, transportation and utilities segment is the next largest job

provider, and a considerable portion of jobs here are in retail. Growth in this sector is forecast to average 0.6

percent annually over the next five years.

Given the metro's numerous attractions and beaches, the leisure and hospitality sector is another key component

of the Orange County economy. Employment in this sector nears 191,000 jobs, or 13 percent of the employment

force. After taking a significant hit during the recession, average hotel occupancy in the county is on the rise. This

will translate into increased hiring as coastal resorts and hotels, restaurants, theme parks, and travel-related firms

add jobs to meet increased demand. Over the next five years, leisure and hospitality payrolls will expand 1.2

percent annually.

Throughout 2018, the fastest growing share of jobs will be in Orange County's relatively small information sector,

which will grow at an average pace of 2.0 percent each year. Only jobs in the manufacturing sector are forecast to

decline during this period.


ORANGE COUNTY

Employers

The Walt Disney Co. is one of Orange County's most

notable employers, providing positions for thousands of

mainly service workers. Disneyland serves as the

metro’s main tourist attraction, encompassing two

theme parks, a lively entertainment district and three

hotels. Disneyland and California Adventure theme

parks offer an array of entertainment, shopping and

dining options.

The University of California, Irvine, is a major

employer in the county and home to the UC Irvine

College of Medicine and the UC Irvine Medical

Center. The UC Irvine College of Medicine provides

scholarly research, physician education and high-quality

care to patients. Other healthcare companies include

Tenet Healthcare System, Kaiser Permanente and St.

Joseph Health Systems.

Boeing Co. employs thousands of people across

multiple sites in Orange County. Several years ago, the

company switched its operations from strictly airplane

manufacturing to an integrated aerospace

conglomerate. The metro’s manufacturing centers in

Anaheim and Seal Beach support the space and

communications sectors of the company, which focus

on global positioning system satellite construction and

defense electronics. In addition, high-tech companies

such as Broadcom and Google provide the county with

many high-quality jobs.

31

Major Employers

MARKET OVERVIEW



University of California, Irvine

The Walt Disney Co.

St. Joseph Health Systems

Boeing Co.

Bank of America Corp.

Memorial Care Health System

Cedar Fair LP

Kaiser Permanente

Target Corp.

Hoag Memorial Hospital Presbyterian

ORANGE COUNTY

32

MARKET OVERVIEW


Demographics

Orange County is one of the most populous counties in

the nation, with more than 3.1 million residents. From

2000 to 2010, the population increased by 0.6 percent

annually. Development constraints throughout Orange

County will continue to keep population growth at the

pace of only 0.4 percent annually through 2018.

An increase in employment will attract young workers

to the county. The population in the 25- to 44-year-

old age group accounts for 28 percent of the total

population. The influx of a youthful labor force has

kept the median age, currently at 36.6 years, lower

than the national level. Many of these workers are well-

educated. Currently, 36.5 percent of residents age 25

and above have attained a bachelor's degree, compared

with 28.3 percent for the U.S.

The high median home price in Orange County is a

major concern for the region, as rising prices have

already limited population gains and homeownership.

Last year, 58.2 percent of residents owned their homes.

A growing economy, however, is expected to create

higher-paying jobs, while recent declines in home

values will improve housing affordability. In addition,

over the next five years, household incomes are

expected to rise faster than home prices.


ORANGE COUNTY

Quality Of Life

From fishing to yachting, water sports of every kind

abound at the beaches, harbors and marinas that dot

the Orange County coast. Many of its beaches are

famous for surfing, and the town of Huntington Beach

is known worldwide as “Surf City, USA.” The weather

is also perfect for golfing on world-class courses, and

the mountains provide challenging hiking and

mountain biking. Orange County residents can use a

surfboard, wakeboard and snowboard all in one day.

The area boasts big attractions such as Disneyland and

Knott’s Berry Farm while providing local events such

as the summer-long Laguna Beach Festival of

Arts/Pageant of the Masters and Broadway-quality

entertainment at the Segerstrom Center for the Arts.

Orange County also hosts two major sports teams.

Major League Baseball’s Los Angeles Angels make their

home at Angel Stadium of Anaheim, and the NHL’s

Anaheim Ducks play at the Honda Center, also in

Anaheim.

There are 31 school districts in Orange County,

encompassing 540 educational institutions. There are

also two public universities — California State

University, Fullerton, and the University of California,

Irvine — and more than 20 private universities,

including Chapman University and Concordia

University, Irvine.

33

MARKET OVERVIEW



The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.

ORANGE COUNTY

Cash-Heavy Buyers Hold Advantage in Orange County

Employment growth and the upcoming summer tourism season will buoy retailers in Orange County over thenext few quarters. Payrolls should reach pre-recession levels in mid-2015, a full year after the nation as a whole.Nonetheless, the leisure and hospitality sector is already well above the previous peak, a testament to the strengthof the local tourism industry. In 2013, 44.3 million people visited Orange County, just 1 percent below the all-time high set in 2006. The education and health services sector, which includes many well-paid healthcareworkers, is also at peak employment and the professional and business services sector will surpass the pre-recessionlevel within the next few months. These high-paying jobs are supporting retail sales, which recently eclipsed theprior high watermark set in 2007. While the market is improving, some headwinds persist for the local economy.Mortgage companies are beginning to pare payrolls again as interest rates rise and home sales ease, which willweigh on the struggling financial activities sector.

Investment opportunities in Orange County are limited due to a considerable gap between listings and buyers aswell as low cap rates. Properties west of Interstate 405 are the most challenging to obtain, though some ownerscould reposition their portfolios as upward pressure on first-year returns near the coast mounts. In submarketswhere the spreads between cap rates and interest rates are already razor thin, rising interest rates could have a moreimmediate impact on pricing. Thus far, spreads have absorbed the higher cost of borrowing, and areas withoutample cushion will need to be re-priced to attract leveraged investors. However, many buyers are coming into themarket ready to take high-equity positions, which will leave best-in-class assets near current price ranges. Single-tenant properties trade at cap rates starting in the low-4 percent range and move into the high-6 percent area.Average multi-tenant cap rates are in the high-5 percent range, though strip centers in eastern stretches of themetro can trade for significantly higher yields.

Employment: Job growth will remain healthy in 2014 as 39,100 positions are created,expanding the number of employed residents by 2.7 percent. In 2013, 28,600 spotswere generated.

Construction: Development activity will more than double this year as 350,000 squarefeet of retail space comes online, lifting inventory by a scant 0.3 percent. In 2013,165,000 square feet was completed.

Vacancy: Healthy job growth and limited additions to supply will support tighteningconditions this year. After a 60-basis point decline in vacancy during 2013, the ratewill dip 40 basis points to 5 percent in 2014.

Rents: As vacancy finally approaches the 5 percent threshold, asking rents will gaintraction this year. By year-end 2014, average asking rents will reach $23.23 per squarefoot, an annual rise of 2.4 percent. Last year, asking rents dipped 0.2 percent.

2014 Annual Retail Forecast

34

MARKET OVERVIEW



ORANGE COUNTY

Economy

■ During the 12-month period ending in the first quarter, employers in Orange County added 29,200 jobs, a 2percent increase. Growth accelerated during the past six months when 17,100 positions were created.

■ Thousands of apartment units and a handful of large office projects are underway in the county, which hasresulted in a surge in construction jobs. Over the past year, 12,300 construction positions have been filled,lifting the sector by 16.7 percent.

■ Similar to national trends, the rate of retail sales growth has moderated recently to a sustainable pace. In thepast 12 months, retail sales in Orange County climbed 1.9 percent, matching gains from the previous year.Retail sales are 15.7 percent above the pre-recession peak.

■ Outlook: Job growth will remain healthy in 2014 as 39,100 positions are created, expanding the number ofemployed residents by 2.7 percent. In 2013, 28,600 spots were generated.

35

MARKET OVERVIEW


Construction

■ The pace of new development in Orange County remains subdued as builders opt to wait on leasingcommitments prior to breaking ground on projects. Over the past year, 180,000 square feet of space cameonline, down from 290,000 square feet during the previous year.

■ More than 800,000 square feet of space is underway in the metro, mostly in the North County submarket. Pre-leasing is above 85 percent, limiting concerns about the addition of new supply. Another 780,000 square feet isplanned, though the pipeline is approximately half of the year-ago level.

■ The largest project under construction in the county is the outdoor mall Source at Beach in Buena Park.Completion of the 480,000 square feet of retail space is anticipated in early 2015.

■ Outlook: Development activity will more than double this year as 350,000 square feet of retail space comesonline, lifting inventory by a scant 0.3 percent. In 2013, 165,000 square feet was completed.


* ForecastSource: CoStar Group, Inc.

ORANGE COUNTY

36

MARKET OVERVIEW


Vacancy

■ In this year’s opening period, vacancy remained steady at 5.4 percent, though the rate is 50 basis points below

the level in the first quarter of 2013. The most recent peak was during the third quarter of 2010, whencountywide vacancy was recorded at 6.4 percent.

■ The Airport Area submarket has the lowest vacancy rate in the metro at 3.7 percent in the first quarter, down

40 basis points from the previous year. North County, meanwhile, posted vacancy at 7.4 percent in theopening period.

■ Multi-tenant vacancy dipped 30 basis points during the past 12 months to 5.8 percent. The North County and

West County submarkets dragged on the overall rate.

■ Outlook: Healthy job growth and limited additions to supply will support tightening conditions this year.

After a 60-basis point decline in vacancy during 2013, the rate will dip 40 basis points to 5 percent in 2014.

Rents

■ Asking rents for available space are largely mired in a small range. During the past year, asking rents inched up

0.7 percent to $22.88 per square foot, following a 2.5 percent decline the previous year.

■ Only two submarkets posted gains in asking rents during the last 12 months. In South County, asking rents

advanced 4.4 percent to $27.94 per square foot in the past year. The Airport Area recorded a small 0.2 percent

rise in average asking rents to $25.95 per square foot.

■ Average revenue climbed 1.2 percent during the most recent 12-month period as both occupancy and rents

pushed higher. This year, revenue is anticipated to increase 2.9 percent.

■ Outlook: As vacancy finally approaches the 5 percent threshold, asking rents will gain traction this year. Byyear-end 2014, average asking rents will reach $23.23 per square foot, an annual rise of 2.4 percent. Last year,

asking rents dipped 0.2 percent.


ORANGE COUNTY

* ForecastSource: CoStar Group, Inc.

37

MARKET OVERVIEW


Single-Tenant Sales Trends**

■ During the most recent 12-month period, deal flow was stable when compared with the previous year. Buyer

preferences shifted to storefronts and away from convenience stores and fast-food restaurants as fewer of thoseproperties were listed last year.

■ Overall prices rose modestly during the period as buyer demand remained intense. Storefronts sold at an

average price of $419 per square foot, up 18 percent from the previous year. The average price of drugstoresover the past year was in the mid-$500 range.

■ Fast-food restaurants traded at average cap rates in the low-4 percent range during the most recent 12-month

period, while drugstores sold at first-year returns in the low-5 percent area.

■ Outlook: Available inventory will dictate sales activity during the coming year as buyers remain active in

Orange County. Rising interest rates will begin to close the gap between buyers and sellers in 2015.

Multi-Tenant Sales Trends**

■ Sales velocity in the multi-tenant sector inched up during the past year, though the number of transactions in

the segment is relatively limited. Overall, multi-tenant deal flow climbed 12 percent.

■ The average price per square foot during the past 12 months was $379, 10 percent higher than the previous

year. Investors targeted slightly smaller properties, indicative of less risk aversion.

■ Average cap rates were in the high-5 percent range over the past year, down 90 basis points from the previous

year. Neighborhood and community centers traded at first-year returns modestly above 6 percent.

■ Outlook: Investors increased their holdings of strip centers during the past year as risk aversion faded and some

buyers sought small properties occupied by national credit tenants as a substitute for the tight single-tenant

market.


ORANGE COUNTY

** Trailing 12-Month PeriodSources: CoStar Group, Inc., Real Capital Analytics

38

MARKET OVERVIEW


Local Highlights

■ Boeing recently announced plans to add 1,000 high-paying jobs in Long Beach and Seal Beach as the company

consolidates operations. The new engineering jobs will bring millions in consumer spending to the region,

supporting retail sales in the area.

■ In an effort to boost local tourism, several hotels are under construction in Irvine. While the beach cities and

Anaheim garner the most attention from travelers, guests will soon have 800 additional rooms to choose from

in Irvine. A 210-room Courtyard by Marriott will open in the Irvine Spectrum this year.

■ The city council in Anaheim approved plans for a seventh addition to the convention center, which will

support large gatherings in future years. The $180 million project will be complete in 2016 and add 200,000

square feet of convention space.


Capital Markets

■ The Fed continues to feel confident about the economic recovery and projects it will improve, notwithstanding

the disappointing growth in this year’s first quarter, which they believed to be impacted by the harsh winter

weather. The withdrawal of stimulus continues; at the end of April, the FOMC voted to reduce its monthly

bond purchases by an additional $10 billion. The yield on the 10-year U.S. Treasury remained in the mid- to

high-2 percent range throughout the first quarter, and is projected to stay in this range over the next few

months.

■ The national retail sector posted a solid performance in the first quarter this year. The vacancy rate ticked

down 20 basis points to 7.0 percent in the first three months of this year as total employment and retail

spending grew, generating new demand for retail space. Completions were also subdued, as only 6.9 million

square feet was brought online. This year, new demand will exceed completions and support a further drop in

the national vacancy rate.

■ Regional and local banks increased their share of lending on retail properties to 13 percent this year as they

escalated lending throughout 2013. Greater liquidity enhanced investors’ ability to obtain loans for the

purchase of small unanchored shopping centers. Across all lending institutions, the rising confidence in the

strengthening economy is generating an abundance of capital, which, in turn, is providing more leverage in

secondary and even tertiary markets.

ORANGE COUNTY


DEMOGRAPHIC ANALYSIS

1 Mile 3 Miles 5 Miles

2000 Population 25,644 156,416 517,945

2010 Population 27,038 161,431 524,090

2013 Population 27,921 167,469 545,597

2018 Population 28,093 168,957 551,326

2000 Households 8,235 50,752 145,932

2010 Households 8,071 52,033 149,648

2013 Households 8,359 54,339 156,579

2018 Households 8,408 55,210 159,250

2013 Average Household Size 3.09 2.99 3.36

2013 Daytime Population 8,705 101,992 287,668

2000 Owner Occupied Housing Units 58.01% 62.65% 53.20%

2000 Renter Occupied Housing Units 40.26% 35.29% 44.29%

2000 Vacant 1.73% 2.06% 2.51%



2013 Vacant 0.02% 0.91% 1.19%



2018 Vacant 0.01% 1.13% 1.40%

$ 0 - $14,999 8.1% 7.1% 7.9%

$ 15,000 - $24,999 9.3% 7.0% 8.7%

$ 25,000 - $34,999 8.1% 7.5% 9.1%

$ 35,000 - $49,999 11.5% 12.3% 13.7%

$ 50,000 - $74,999 21.8% 17.5% 18.3%

$ 75,000 - $99,999 12.6% 14.3% 13.2%

$100,000 - $124,999 10.9% 11.0% 9.7%

$125,000 - $149,999 6.3% 7.7% 6.2%

$150,000 - $199,999 6.0% 7.5% 6.2%

$200,000 - $249,999 2.1% 3.2% 2.8%

$250,000 + 3.3% 4.9% 4.2%

2013 Median Household Income $63,868 $72,654 $63,403

2013 Per Capita Income $27,379 $33,433 $26,932

2013 Average Household Income $87,253 $101,406 $92,293

Demographic data © 2012 by Experian.

40




DEMOGRAPHIC REPORT

Geography: 5 miles

Population

In 2014, the population in your selected geography is 545,596. The population has changed by 5.33% since 2000. It is estimated

that the population in your area will be 551,325 five years from now, which represents a change of 1.05% from the current year. The

current population is 50.46% male and 49.53% female. The median age of the population in your area is 32.4, compare this to the

Entire US average which is 37.3. The population density in your area is 6,946.09 people per square mile.

Households

There are currently 156,578 households in your selected geography. The number of households has changed by 7.29% since 2000.

It is estimated that the number of households in your area will be 159,249 five years from now, which represents a change of 1.70%

from the current year. The average household size in your area is 3.35 persons.

Income

In 2014, the median household income for your selected geography is $63,403, compare this to the $Entire US average which is

currently $51,972. The median household income for your area has changed by 23.18% since 2000. It is estimated that the median

household income in your area will be $73,200 five years from now, which represents a change of 15.45% from the current year.

The current year per capita income in your area is $26,931, compare this to the $Entire US average, which is $28,599. The current

year average household income in your area is $92,292, compare this to the $Entire US average which is $74,533.

Race & Ethnicity

The current year racial makeup of your selected area is as follows: 56.57% White, 1.88% Black, 0.31% Native American and 10.97%

Asian/Pacific Islander. Compare these to Entire US% averages which are: 71.60% White, 12.70% Black, 0.18% Native American

and 5.02% Asian/Pacific Islander.

People of Hispanic origin are counted independently of race. People of Hispanic origin make up 56.86% of the current year

population in your selected area. Compare this to the Entire US% average of 17.13%.

Housing

In 2000, there were 79,638 owner occupied housing units in your area and there were 66,293 renter occupied housing units in your

area. The median rent at the time was $772.

Employment

In 2014, there are 287,668 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed

that 56.27% of employees are employed in white-collar occupations in this geography, and 43.68% are employed in blue-collar

occupations. In 2014, unemployment in this area is 7.14%. In 2000, the average time traveled to work was 27.2 minutes.


41




SUMMARY REPORT

Number of people living in a given area per square mile.


42




POPULATION DENSITY

The number of people employed in a given area per square mile.


43




EMPLOYMENT DENSITY

Average income of all the people 15 years and older occupying a

single housing unit.


44




AVERAGE HOUSEHOLD INCOME

Two-way, average daily traffic volumes.

45




Traffic Count data © 2012 by TrafficMetrix. All rights reserved.

TRAFFIC COUNTS

* Traffic Count Estimate

ORANGE, CA

OFFERING MEMORANDUM

Tustin Plaza

Offices Throughout the U.S and Canada

www.MarcusMillichap.com

Exclusively Listed By:

Michael R. WoolbrightVice President Investments

Associate Director, National Retail GroupNewport Beach Office

License: CA: 01197079Tel: (949) 419-3200Fax: (949) 419-3210

[email protected]/MichaelRWoolbright

Documents

Tustin Plaza - Jesse Lee N Tustin St Orange CA-OMP.pdf · Tustin Plaza ORANGE, CA. Tustin Plaza ORANGE, CA PRICING AND FINANCIAL ANALYSIS. Price 8,400,000 Down Payment 30% $2,520,000