Post on 10-Aug-2020
S A N F R A N C I S C O , C A L I F O R N I A
OFFERING MEMORANDUM
Table of Contents
Contact Information
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 Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.
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. Kidder Mathews 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, current or past tax payments, 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, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews 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.
This information has been secured from sources we believe to be reliable. We make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Recipient of this report must verify the information and bears all risk for any inaccuracies.
Michael Gschwend michaelg@kiddermathews.com415.229.8908 | LIC #01406626
Cameron Shafercshafer@kiddermathews.com415.229.8980 | LIC #01945141
kiddermathews.com
The OpportunityExecutive Summary
Investment Highlights
Property Overview
Financial AnalysisExisting Lease
Expenses
Net Operating Income
Market OverviewSan Francisco Market
SOMA Submarket Overview
ComparablesLease Comparables
Sale Comparables
Transaction Guidelines/Seclection Process
01
02
03
04
05
The Opportunity
01
Executive Summary
Investment Summary
Property Overview
Floor Plans
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO4
The OpportunityKidder Mathews, as exclusive advisor, is pleased to present an extraordinary opportunity to acquire a 100% fee simple interest in 528-530 Bryant Street, San Francisco (the “Property”).
528-530 Bryant Street is a ±5,000 square foot creative boutique building located in SOMA – San Francisco’s most sought after submarket. The two story building is fully leased to Microsoft Corporation and has been recently renovated with an upgraded façade, above-standard finishes, and state of the art building systems. These extensive improvements will greatly minimize future capital and re-leasing costs as well as reduce future landlord responsibilities. The asset boasts easy access to Caltrain, BART, South Park, and numerous neighborhood amenities that have transformed SOMA into San Francisco’s premier technology hub.
Investment Highlights
100% leased to Microsoft
New high-end renovations
Ideal 1031 Exchange property
Fantastic SOMA location
OFFERING PRICE: INQUIRE WITH BROKER
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO5
INVESTMENT SUMMARY
One of the finest commercial, stand-alone buildings to be offered to the market. Presently 100% leased with approximately two (2) years left on the term, the Property presents investors with a rare combination of solid in place income and future upside potential.
The Property, having recently been fully renovated, possesses creative aesthetics including polished concrete floors, concrete columns, high exposed ceilings, and six large skylights providing great natural light.
With an attractive net operating income (NOI) in place, the Property is an ideal 1031 Exchange opportunity for buyers looking to own in San Francisco
Located within the Central SOMA Plan, the Property will most likely be up-zoned to Central Mixed Use Office (CMUO), which allows for a variety of uses.
Convenient access to transportation via 4th Street (home of the Central Subway) connecting the Muni T-Line to the Caltrain, BART and nearby freeways.
SOMA submarket continues to serve as the premier technology hub for the San Francisco office market – sustained demand from tech sector, declining vacancies, and a lack of new supply will continue to drive demand.
528-530 Bryant represents the rare opportunity to acquire a 100% leased, fully modernized “jewel box” commercial building within one of San Francisco’s hottest and fastest growing neighborhoods. The Property is positioned to benefit from tremendous on-going and future development taking place throughout the greater SOMA submarket.
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO6
PROPERTY OVERVIEW
Address 528-530 Bryant Street, San Francisco CA94107
APN 3762-014
Parcel Area ±3,837 Square Feet
Rentable Square Feet ±5,000 RSF
Number of Stories Two (2), all above grade
Year Built 1923
Years Renovated 2013, 2017 & 2018
ZoningSOMA Service - Light Industrial (SLI) – Probable up- zoning to Central Mixed Use Office (CMUO) per Cen-tral SOMA Plan.
Construction TypeConcrete building with timber framing. Various struc-tural upgrades over the years have been completed to accommodate new HVAC and other systems.
Exterior Facade Stucco covered concrete
Exterior DoorsHollow metal doors and one large automatic roll-up door
WindowsAluminum framed storefronts that were replaced in 2018
RoofBuilt Up Roof single ply APP modified bitumen roof - Dibiten poly 4 over 28 lb FRP by Johns Manville. Newly installed 2014 and re-coated in May 2018.
HVACFirst floor: 10 Ton package unit, installed in 2017Second floor: 3 Ton package unit
Electrical
The building’s electrical service was upgraded in 2018 to an overhead 400 Amp, 120/208 Volt, 3-Phase, 4-Wire system. The primary electrical panel is locat-ed in the first floor lobby which leads to the upstairs space. PG&E is the service provider.
Building Summary
Floors Full Building
Square Feet ±5,000 RSF
Expiration July 31, 2020
Options Two (2) Three-year options to extend at Fair Market Value
Rent Current Base Rent: $70.48 PSF IG
Tenant Overview
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO7
Plat Map
PROPERTY OVERVIEW
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO8
FLOOR PLANS
BRYANT STREET
Ground Floor
Ram
p
Restroom
Restroom
Storage
Breakroom
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO9
FLOOR PLANS
BRYANT STREET
Second Floor
Skylights
Restroom
Wet B
ar
SECOND FLOOR
ROOF
Financial Analysis
02
Existing Lease
Expenses
Net Operating Income
Proforma Lease
Expenses
Net Operating Income
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO11
Financial Analysis
$352,400
$344,541
$7,859
NET OPERATING INCOME
Gross Income
Net Operating Income
Expenses
EXISTING LEASE
Total Rental Income
APPROX SFRENTAL RATE AS OF
August 1, 2018ANNUAL RENT
Ground & 2nd Floors ±5,000 SF $67.21 $336,050
Building Upgrades
Electrical ±5,000 SF $1.72 $8,600
HVAC ±5,000 SF $1.55 $7,750
TOTAL $70.48 $352,400
EXPENSES
Property Taxes* $2,410.46
Insurance $2,596.00
Repairs/Maintenance $2,102.55
Miscellaneous $750.00
TOTAL $7,859.01
*2017 Base Year Property Taxes
**Current ownership self-manages the Property, please take this into consideration when underwriting
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO12
$425,000
$348,271
$76,729
NET OPERATING INCOME
Gross Income
Net Operating Income
Expenses
PROFORMA LEASE
Total Rental Income
APPROX SFRENTAL RATE AS OF
August 1, 2020ANNUAL RENT
Ground & 2nd Floors ±5,000 SF $85.00 $425,000
TOTAL $425,000
EXPENSES
Property Taxes* $71,280.00
Insurance $2,596.00
Repairs/Maintenance $2,102.55
Miscellaneous $750.00
TOTAL $76,728.55
*Property Taxes based on estimated purchase price of $6,000,000
**Current ownership self-manages the Property, please take this into consideration when underwriting
Market Overview
03
San Francisco Market Overview
SOMA Submarket Overview
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO14
Market OverviewSAN FRANCISCO MARKET OVERVIEW
The next wave of construction deliveries is poised to bring substantial positive absorption to the San Francisco market in 2018, as large technology tenants that signed leases in a record-breaking 2017 move into their new spaces.
While Dropbox, Facebook, Salesforce, and others prepare to occupy The Exchange, 181 Fremont, Park Tower and the Salesforce Tower, respectively, other growing companies are increasingly facing stiff competition for the few large blocks of space available now and scheduled for delivery before 2020. With demand still outpacing supply, rental rates continue to trend upward, surpassing historical rental averages. Rents are up 2.6% year over year, on average, for Financial District offices, with freshly renovated creative spaces achieving 5% growth. While vacancies rose to 7.0% in the first quarter, the increase is a mirage attributable to the gradual occupancy of the newly delivered buildings. The citywide vacancy rate is likely to decline over the course of 2018 as companies move into their new spaces and secure subtenants to backfill their previous offices. Unemployment in San Francisco was at just 2.5% in February, and the strength and depth of the technology sector portends a strong year ahead.
SOMA SUBMARKET OVERVIEW
Office leasing activity in the SOMA submarket remains robust through the first quarter of 2018, carrying over the momentum from 2017. The renowned submarket caters to the specific needs of tech and creative users, as it possesses buildings with creative aesthetics such as brick and timber construction, exposed concrete pillars, large operable windows and high exposed ceilings, etc. When paired with its proximity to BART and CalTrain, other like-kind companies, and some of the city’s hippest restaurants, it has made SOMA one of the hottest office markets in the country. SOMA currently has vacancy rates falling below 4.5%.
On top of this, almost 5 million square feet of office space is being delivered in 2018, all of which is expected to be pre-leased or rumored to have leases pending. With Proposition M continuing to loom and restrict further development, SOMA should have continued low vacancy compared to the rest of the nation in the coming years.
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO15
Area Amenities
1 Saison
2 TRES
3 Bravado
4 Momo’s
5 Twenty Five Lusk
6 Litttle Skillet
7 District San Francisco
8 Umami Burger
RESTAURANTS
1 Starbucks
2 Philz
3 Blue Bottle Coffee
4 Peet’s Coffee
5 Steep
6 The Point
COFFEE/TEA
1 Whole Foods
2 Safeway
3 Small Foods
4 Orange Theory Fitness
5 Barry’s Bootcamp
6 24 Hour Fitness
7 Pete’s Tavern
8 Public House
9 Alchemist Bar & Lounge
10 21st Amendment Brewery
11 Lord George
12 Petit Marlowe
13 Coin Op Game Room
14 Lava Restaurant & Lounge
15 Bar Basic
16 Bluxome Street Winery
17 JAX Vineyards
18 Polo Grounds Pub & Grill
19 The Yard at Mission Rock
20 Steep Creamery & Tea
21 Lucky Strike
LIFESTYLE
1
2
1
Third Street
King Stre
etTownse
nd Stre
et
Second Street
Brannan S
treet
Bryant S
treet
Fourth Street
Fifth Street
Harriso
n Stre
et 3
4
5
6
5
4
2
1
1
2
3
7
4
5
6
7
8 8
9 Nama Sushi
10 Marlowe
11 Cockscomb Restaurant
12 Alexander’s Steakhouse
13 Brickhouse Cafe
14 Darwin Cafe
15 Garaje
16 Cafe Centro
9
9
10
11
12
13
14
15 16
17 The Butler & The Chef Bistro
18 The Ozone Thai Restaurant
19 Sajj Mediterranean SF
20 Slice House Tony Gemignani
21 Woodbury
22 Rooh
23 The Creamery
24 The Bimini Twist
17
18
19
20
21
22
23
24
1011
3
12
13
14
21
15
6
16
17
18
19
20
South Park
AT&T Park
San Francisco Tennis Club
530 BRYANT STREET
SOMA SUBMARKET OVERVIEW
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO16
BROKER OPINION OF VALUE | RENTON LOGISTICS CENTER1
San Francisco Flower Mart
Tishman Speyer 2M,
Offi ce Campus
505 BrannanTMG/Alexandria
Pinterest5th & Brannan
TMG/Alexandria
490 BrannanStrada/Alexandria
AT&T Park
Financial District
Yerba Buena
SOMA
The Embarcadero
Fifth Street
Fourth Street
Third Street
King Street
Brannan Street
Bryant Stre
et
South Park
330 Townsend CIM
374 Units
655 4th StreetTishman Speyer
907 Units
636-648 4th StreetSolbach Property Group
427 Units
725-735 HarrisonBoston Properties
1.1M SF, Offi ce
Market Street
South Financial District
530 BRYANT STREET
Area Developments
SOMA SUBMARKET OVERVIEW
Comparables
04Lease Comparables
Sale Comparables
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO18
70 SOUTH PARK
Date Signed February, 2017
Tenant Name GGV Management
Square Feet ±1,500 SF
Lease Term 36 Months
Lease Rate (Starting) $112 PSF.
Annual Increases 3%
TI Allowance/Free Rent None
Lease Type IG
Space Condition Fully Renovated Creative
LEASE COMPARABLES
449 BRYANT STREET, 2ND FLOOR
Date Signed January, 2017
Tenant Name GoodRx
Square Feet ±1,500 SF
Lease Term 24 Months
Lease Rate (Starting) $105 PSF
Annual Increases 3%
TI Allowance/Free Rent None
Lease Type IG
Space Condition Fully Renovated Creative
436 BRYANT STREET, 3RD FLOOR
Date Signed March, 2017
Tenant Name Homebrew
Square Feet ±2,727 SF
Lease Term 60 Months
Lease Rate (Starting) $105 PSF
Annual Increases 3%
TI Allowance/Free Rent None
Lease Type IG
Space Condition Fully Renovated Creative
110 SOUTH PARK
Date Signed August, 2017
Tenant Name Aplitude
Square Feet ±2,000 SF
Lease Term 14 Months
Lease Rate (Starting) $108 PSF
Annual Increases 3%
TI Allowance/Free Rent None
Lease Type IG
Space Condition Fully Renovated Creative
436 BRYANT STREET, 2ND FLOOR
Date Signed January, 2017
Tenant Name Theorem
Square Feet ±2,727 SF
Lease Term 60 Months
Lease Rate (Starting) $95 PSF
Annual Increases 3%
TI Allowance/Free Rent None
Lease Type IG
Space Condition Fully Renovated Creative
436 BRYANT STREET, GROUND FLOOR
Date Signed January, 2017
Tenant Name Onera
Square Feet ±2,596 SF
Lease Term 48 Months
Lease Rate (Starting) $90 PSF
Annual Increases 3%
TI Allowance/Free Rent None
Lease Type IG
Space Condition Fully Renovated Creative
Comparables
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO19
401 WASHINGTON STREET
Submarket Jackson Square
Sale Date December, 2017
Sale Price / Price PSF $13,900,000 / $856 PSF
Square Feet ±16,243 SF
Cap Rate 4.66%
Seller PMI Properties
Buyer Century Urban
SALE COMPARABLES
944 FOLSOM STREET
Submarket South of Market
Sale Date June, 2018
Sale Price / Price PSF $11,150,000 / $1,037 PSF
Square Feet ±10,750 SF
Cap Rate Undisclosed
Seller Boyd Lighting
Buyer Undisclosed
426 BRANNAN STREET
Submarket South of Market
Sale Date December, 2017
Sale Price / Price PSF $3,000,000 / $1,263 PSF
Square Feet ±2,375 SF
Cap Rate Undisclosed
Seller Kirsch Family Trust
Buyer 426 Brannan Properties LLC
457 BRYANT STREET
Submarket South of Market
Sale Date June, 2018
Sale Price / Price PSF $6,600,000 / $1,100 PSF
Square Feet ±6,000 SF
Cap Rate 5.8%
Seller 298 Alabama LLC
Buyer Undisclosed
744 MONTGOMERY STREET
Submarket Jackson Square
Sale Date April, 2017
Sale Price / Price PSF $15,000,000 / $904 PSF
Square Feet ±16,598 SF
Cap Rate 4.70%
Seller Montgomery Lytton
Buyer 499 Jackson LLC
807 MONTGOMERY STREET
Submarket Jackson Square
Sale Date November, 2016
Sale Price / Price PSF $11,800,000 / $1,135 PSF
Square Feet ±10,397 SF
Cap Rate 5.23%
Seller 9 Mile Investments
Buyer D. & J. Sabah
1072 BRYANT STREET
Submarket South of Market
Sale Date February, 2018
Sale Price / Price PSF $3,545,000 / $985 PSF
Square Feet ±3,600 SF
Cap Rate Undisclosed
Seller Dev Eighteen LLC
Buyer 1072 Bryant Street LLC
558 SACRAMENTO STREET
Submarket Financial District
Sale Date August, 2017
Sale Price / Price PSF $11,300,000 / $942 PSF
Square Feet ±12,000 SF
Cap Rate 5.02%
Seller MWC Sutter Street LLC
Buyer 330 Townsend, LLC
Transaction Guidelines/
Selection Process
05
OFFERING MEMORANDUM | 528-530 BRYANT STREET, SAN FRANCISCO21
Michael Gschwend Senior Vice President, Partnermichaelg@kiddermathews.com415.229.8908 | LIC #01406626
Cameron ShaferVice Presidentcshafer@kiddermathews.com415.229.8980 | LIC #01945141
Thank you for reviewing the offering memorandum. We believe this site to be one of a kind and represents a tremendous opportunity for an investor or future owner/user. We welcome questions and comments, and encourage visit(s) to the site and surrounding areas to truly capture the magnitude and possibilities for this unique Property.
If you would like more information about the property, please execute the nondisclosure agreement (“NDA”) to gain access to the due diligence documents. Prospective buyers are invited to submit their proposals at any time, which should include the following:
Proposal Terms
Purchase price
Source of acquisition capital
Earnest money deposit
Due diligence and closing time frame
All prospective buyers should assume the property will be delivered on an “As-Is”, “Where-Is” basis after conducting due diligence at their own expense.
Initial questions, comments and tour arrangements should be set up through Michael Gschwend or Cameron Shafer. We look forward to working with you on this transaction.
Transaction Guidelines/ Selection Process
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