CAPITAL MARKETS

INVESTMENT PROPERTIES

10807) THORNMINT OFFERING MEMORANDUM

RANCHO BERNARDO, CA

POWAY

10807 ) THORNMINT

THORNMINT ROADCAMINO SAN BERNARDO

CAMINO DEL NORTE

...AND MORE

RANCHO BERNARDO TOWNE CENTER ...AND MORE

10807 THORNMINT

02

5785 OBERLIN035

5

5

5

805

8 8

15

15

8

15

76

76

79

7878

56

67

79

5267

94

54125

75

79Agra

Fallbrook

CampPendleton

North

Bonsall

VistaOceanside

Carlsbad

Escondido

EncinitasRancho

Santa Fe

Solana Beach

Del Mar

Mira Mesa

La Jolla

Pacific Beach

Chula Vista

El Cajon

Lakeside

Alpine

Dulzura

Descanso

Stallion Oaks

Pine Hills

Julian

Santa Ysabel

Ballena

San Felipe

WarnerSprings

La JollaAmago

Mesa Grande

Pala

Valley Center

Ramona

Poway

SAN DIEGO

PalomarMountain

CBRE Broker Lic. 004009987

© 2018 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. You should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk.

Photos herein are the property of their respective owners. Use of these images without the express written consent of the owner is prohibited.

CBRE and the CBRE logo are service marks of CBRE, Inc. All other marks displayed on this document are the property of their respective owners. All marks displayed on this document are the property of their respective owners.

MIRAMAR

...AND MORE

10807 ) THORNMINT

Anthony DeLorenzoGary Stache

Doug MackMichael Spiezia

Mark Shaffer

Orange County Los AngelesThomas Adelson

West Los AngelesMatt Pourcho

San DiegoSammy Cemo

Inland Empire

10807 THORNMINT

04

Matt Pourcho | San Diego Lic. 01705763 +1 858 546 4622 matt.pourcho@cbre.com

Anthony DeLorenzo Lic. 01706686 + 1 949 725 8425 anthony.delorenzo@cbre.com

Gary Stache Lic. 00773736 +1 949 725 8532 gary.stache@cbre.com

Doug Mack Lic. 01804065 +1 949 725 8571 doug.mack@cbre.com

Scott W. Peterson Lic. 01383970 +1 858 546 4607 scott.peterson@cbre.com

Jim Hatch Lic. 01236415 +1 858 546 2618 jim.hatch@cbre.com

CAPITAL MARKET EXPERTS

LOCAL MARKET

Scott D. Kincaid Lic. 01228568 + 1 858 546 4691 scott.kincaid@cbre.com

DEBT AND STRUCTURED F INANCE

10807 ) THORNMINT

SAN DIEGO

10807 THORNMINT05

INVESTMENT OVERVIEW 06PROPERTY OVERVIEW 12

MARKET OVERVIEW 18

FINANCIAL OVERVIEW 20

CONTENTS

INVE

STM

ENT

OVER

VIEW

10807 THORNMINT

06

10807 THORNMINT07

ADDRESS: 10807 Thornmint Road, San Diego, CA 92127

NUMBER OF BUILDINGS One (1)

LAND SIZE: ± 8,250 SF / ± 0.19 Acres

PROJECT SIZE ± 12,760 SF

ASKING PRICE $3,509,000 ($275/psf)

WEBSITE ipsocal.com/10807Thornmint

INVESTMENT SUMMARY

10807 THORNMINT

08

INVESTMENT HIGHLIGHTS

IDEAL CORPORATE HEADQUARTERS OWNER/ USER OFFICE OFFERING

• The Property consists of an attractive high-image office building with large floor plans, an impressive lobby, exceptional glass line with hillside views, building-top signage and excellent egress/ingress. The Property would serve as an ideal corporate headquarters for an owner-user seeking a lease savings trade-off.

• The fully-available Property is an exceptional opportunity for an owner-user to acquire the only office building for sale in Rancho Bernardo market that offers both 10,000+ square feet of contiguous space for occupancy and a parking ratio of over 4 per 1,000 square feet. The purchase provides this owner-user investor protection against future rental market uncertainty and rate hikes, after-tax equity accumulation, and consistent cash flow that provides both debt payments and higher yields.

• The Property’s large and open floor plates promote highly-versatile space configuration, including potential creative office conversions that can attract and retain top talent attracted to collaborative work settings.

10807 THORNMINT09

ATTRACTIVE RANCHO BERNARDO LOCATION WITH EXCEPTIONAL REGIONAL ACCESS

• The Rancho Bernardo submarket is well-established as San Diego’s second largest technology hub with the largest concentration of the region’s defense contractors. Corporate tenants include Northrop Grumman, General Atomics, BAE Systems, ATK Aerospace and SAIC, Sony, Broadcom, Fitbit, Hewlett Packard, Cymer and Microsoft.

• The Property has excellent regional access and is well-served by San Diego’s major freeways. It is only one mile from the I-15, near the I-15/SR-56 convergence, with central access to both North and South San Diego.

• Surrounding the Property is an abundance of amenities, including proximity to an exceptional employment base and quick access to both executive and workforce housing. The Property’s three-mile radius is supported by 2,813 businesses and a 36,901-employee base, an adult population that is 63% college-educated and an average household income that is $130,947.

• Surrounding amenities reflect the largest retail hub along the 1-15 Corridor, totaling more than 1.2 million SF. Within 3 miles, there are of 69 eating establishments, including 17 restaurants (specifically), 20 banking/ATM sites, 10 grocery stores, 7 health and fitness centers, and 5 hotels—many of which are at nearby 240,060-SF 4S Commons Town Center.

BELOW REPLACEMENT COSTSPriced significantly below the estimated replacement cost of $318 PSF.

10807 THORNMINT

010

INVESTMENT HIGHLIGHTS

STRONG MARKET FUNDAMENTALS • San Diego’s $215-billion economy is among

the top 15 in the nation that is outpacing neighboring Los Angeles/Orange County with an average annual growth of 3.37%, supported by strong population growth, high employment, and one of the nation’s top technology bases.

• The San Diego office market has experienced positive net absorption in 29 of the past 34 quarters, with a 5-year annual absorption average of 1.19M SF.

• Central San Diego is the County’s premier and best-performing office market, with strong absorption totaling 510,091 in 2017. In particular, low-rise office demand is high, as reflected in the product’s 6.0% vacancy. Low-rise office in Rancho Bernardo remains strong, with a vacancy of 8.6% in 4Q17.

• CBRE Econometric Advisors forecasts strong 15.4% rental rate growth over the next five years, supported by strong tenant demand and tightening market conditions in Rancho Bernardo.

10807 THORNMINT011

PROP

ERTY

OVE

RVIE

W

10807 THORNMINT

012

10807 THORNMINT013

ADDRESS: 10807 Thornmint Road, San Diego, CA 92127

APN: 678-291-32

BUILDING SIZE: ± 12,760 SF

LAND SIZE: ± 8,250 SF / ± 0.19 Acres

YEAR BUILT: 2001

STORIES: Two (2)

PARKING: 57 Approximate Spaces

CONSTRUCTION TYPE: Concrete, Wood, SteelExterior Finishes, Doors & Windows: Concrete, Stone, Curtain Walls, tinted glass, Aluminum Window Systems, metal doors, and the front lobby has ADA Auto Opener Swing Door System

ELEVATOR TYPE: Hydroelectric

HVAC SYSTEM: Package Heat Pumps/Carrier; Exhaust Fans/Greenheck

ROOFING SYSTEM: 20PSF Live Load Reducible; Wood, Steel, joists

STOREFRONT SYSTEM: Front lobby has ADA Auto Opener Swing Door System

ELECTRICAL SYSTEM: Basic Electrical System – gas, primary electrical, secondary electrical, SDGE transformer, meters (no lighting systems onsite)Life Safety/Fire Protection: Full Sprinkler System, Suppression System and Fire Extinguishers

ALARMS SYSTEM: DMP

ZONING: M

UTILITY PROVIDERS: GAS: SDGEELECTRIC: SDGEWATER: OlivenhainWASTE SERVICES: Managed by AssociationTELECOMMUNICATIONS: Cox Comm / AT&T as back-up

PROPERTY SUMMARY

10807 THORNMINT

014PARCEL MAP

10807 ) THORNMINTThis map was prepared for assessment purposes only. No liability is assumed for the accuracy of the data shown. Accessor’s parcels may not comply with local subdivision or building ordinances

10807 ) THORNMINT

THORNMINT ROAD

CAMIN

O SAN

BER

NAR

DIN

O

10807 THORNMINT015

SITE PLAN

10807 THORNMINT

016FLOOR PLANS

FIRST FLOOR

SECOND FLOOR

10807 THORNMINT017

POWAY

10807 ) THORNMINT

THORNMINT ROADCAMINO SAN BERNARDO

CAMINO DEL NORTE

...AND MORE

RANCHO BERNARDO TOWNE CENTER ...AND MORE

RANCHO BERNARDO IS ONE OF THE LARGEST AND MOST VIBRANT COMMUNITIES IN SAN DIEGO COUNTY

5785 THORNMENT

018M

ARK

ET O

VERV

IEW

MIRAMAR

...AND MORE

10807 THORNMINT019

2017 Population179,063

Number of Companies5,078

Household in 5 Miles64,570

Number of Employees59,321

Average Household Income$140,276

MARKETING HIGHLIGHTS

CORPORATE IDENTITYIn 2015, Petco moved into its newly acquired and repositioned 303,000-square-foot Rancho Bernardo Corporate Headquarters, another prime example of the trend of repurposing older industrial buildings to higher-end uses. Industry giants such as Sony, Petco, Hewlett-Packard, Northrop Grumman, BAE Systems, and General Atomics have all long-occupied space in the Rancho Bernardo business park. Other large corporate users that have chosen to locate in RB include Cymer, Broadcom, Scripps Health, Microsoft, State of California agencies and Bridgepoint Education.

RESIDENTIAL BASEBy offering attractive economics on large land parcels to major employers such as NCR, Sony, General Dynamics, Hewlett Packard and Burroughs (Unisys), AVCO spawned demand for their high quality residential developments within RB. Nationally renowned school districts and immediate access to higher-end residential communities have been a major benefit to the Rancho Bernardo office market. Within proximity are the master planned communities of 4S Ranch, Del Sur, Santa Luz, Poway, Rancho Penasquitos, Carmel Mountain Ranch and Scripps Ranch. Along with RB, these communities make up the core of the I-15 Corridor. The I-15 Corridor has historically been one of San Diego’s fastest growing areas, spurred initially by tremendous residential growth followed by office, industrial and retail development.

ACCESSRancho Bernardo features easy access to anywhere in San Diego County. Interstate 15 is the primary north-south thoroughfare running directly through Rancho Bernardo, while State Route 56 and Highway 78 provide convenient east-west links to the western areas of San Diego including the beaches. San Diego International Airport is less than 30 minutes away. Local bus transportation is provided through the North County Transit System and the San Diego Transit System. There are bus stops throughout the community with regularly scheduled stops every day of the week.

DEMOGRAPHIC OVERVIEW. WITHIN 5-MILE RADIUS

10807 THORNMINT

020FI

NAN

CIAL

OVE

RVIE

W

NNN

N:\Shared\SUPPORT\Private Client\TEMPLATES\_PCGNB Folder Template\01-RFP and Offering Memorandum\8 - Replacement Cost Analysis\Copy of REPLACEMENT - Thormint.xls

Land Size 8,276 Square FeetBuilding Size 12,760 Square Feet

HARD COSTS

Land Acquisition Cost @ 35.00$ 289,660$ Hard Costs @ 140.00$ 1,786,400$ TI's on Office 85.00$ 1,084,600$

3,160,660$ 78%

SOFT COSTS

A & E @ 2.0% 63,213$ Insurance $0.37 PSF 4,721 Property Taxes 1.03% Hard Costs 32,555 Development Fees $3.00 PSF of Bldg. Area 38,280 Legal 1% Hard Costs 31,607 Developer's Profit 8% Hard Costs 252,853 Loan Fee 1% Hard Costs 31,607 Contingency 2% Hard Costs 63,213 Interest on Land Carry 3% Land Cost 8,690 Interest on Construction 5% Hard Costs 158,033 Interest on Lease Up 3% Hard Costs 94,820 Leasing Commission 9.54$ PSF 121,730

901,321$ 22%

4,061,981$ 100%

318.34$

Economic Rent CalculationReplacement Costs 318.34$ Required Return 10.0% 31.83$ Operating Expenses $0 -$ Less Vacancy/Credit 5% 1.59$ Economic Rent Required, PSF per year (NNN) 33.43$ Economic Rent Required, PSF per month (NNN) 2.79$

TOTAL HARD COSTS

TOTAL SOFT COSTS

Total Development Costs

Cost Per Square Foot

Financial Information Disclaimer: You are solely responsible for independently verifying the information in this Memorandum. ANY RELIANCE ON IT IS SOLELY AT YOUR OWN RISK.

REPLACEMENT COST

10807 THORNMINT021

10807 THORNMINT

022AFFILIATED BUSINESS DISCLOSURE

CBRE, Inc. operates within a global family of companies with many subsidiaries and related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affiliates or their clients may have or express an interest in the property described in this Memorandum (the “Property”), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to disclose to you such Affiliates’ interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act in the best interest of their respective client(s), at arms’ length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will conduct their respective businesses in a manner consistent with the law and all fiduciary duties owed to their respective client(s).

CONFIDENTIALITY AGREEMENT

Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property (“Owner”) or CBRE, Inc., and (iv) you will not use any part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc.

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return it to CBRE, Inc.

DISCLAIMER

This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verified for accuracy, completeness, or fitness for any particular purpose. All information is presented “as is” without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualified prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property’s suitability for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK.

The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, definitive purchase and sale agreement delivered by the Owner.

Capital Markets | Investment Properties

10807 THORNMINT023

CBRE-SAN DIEGO

10807) THORNMINT