1135 Torrey Pines Rd OFFERING MEMORANDUM 1135 TORREY PINES RD, LA JOLLA, CA 1135 TORREY PINES RD.

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1 1135 Torrey Pines Rd OFFERING MEMORANDUM 1135 TORREY PINES RD, LA JOLLA, CA MIKE SLATTERY CA Lic JASON KIMMEL CA Lic TIM WINSLOW CA Lic KEVIN NOLEN CA Lic

2 Offering Statement/Disclaimer Cushman & Wakefield (hereinafter CW ) has been retained as exclusive advisor by Prospect Street Associates, a California limited partnership (the Owner ) for the sale of 1135 Torrey Pines Rd. (the Property ), located in La Jolla, CA This Offering has been prepared by CW for use by a limited number of parties and does not purport to provide a necessarily complete summary of the Property or any of the documents related thereto, nor does it purport to be all-inclusive or to contain all of the information which prospective investors may need or desire. All projections have been developed by CW, and designated sources and are based upon assumptions relating to the general economy, competition, and other factors beyond the control of the Owner and CW, therefore, are subject to variation. No representation is made by CW or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of the Property. Although the information contained herein is believed to be correct, CW or Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, CW, Owner, and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omission from, this Investment Offering or any other written or oral communication transmitted or made available to the recipient. This Offering does not constitute a representation that there has been no change in the business or affairs of the Property since the date of preparation of the package. Analysis and verification of the information contained in this package is solely the responsibility of the prospective purchaser. Owner and CW each expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers regarding the Property and/ or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligation to any entity reviewing this Offering or making an offer to purchase the Property unless and until a written agreement for the purchase of the Property has been fully executed, delivered, and approved by Owner and its legal counsel, and any conditions to Owner s obligations thereunder have been satisfied or waived. CW is not authorized to make any representations or agreements on behalf of Owner. This Offering and the contents, except such information which is a matter of public record or is provided in sources available to the public (such contents as so limited herein are called the Contents ), are of a confidential nature. By accepting the package, you agree (i) to hold and treat it in the strictest confidence, (ii) not to photocopy or duplicate it, (iii) not to disclose the package or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or CW, (iv) not use the package or any of the contents in any fashion or manner detrimental to the interest of Owner or CW, and (v) to return it to CW immediately upon request of CW or Owner. If you have no further interest in the Property, please return this Investment Offering forthwith. Additional information and an opportunity to inspect the Property will be made available upon written request to interested and qualified prospective investors.

3 Table of Contents 01 Executive Summary 05 Investment Highlights 11 Market Overview 15 Demographics 17 Comparables 19 Amenities

4 Executive Summary 1 THE PROPERTY Cushman and Wakefield, as exclusive agent for Seller, is pleased to present to qualified investors a very rare opportunity to acquire 1135 Torrey Pines Road, a mixed use multi-family and retail building located in the heart of Southern California s most desirable coastal resort community, along one of the most iconic street in La Jolla, Torrey Pines Road Torrey Pines is a freestanding, three story multi-tenant building of 10,850 SF with tuck-under parking and ocean views from the two top floors. The property sits on approximately 8,315 SF of fee simple land with 14 secured parking spaces. The property consists of 6 multi-family apartment units ranging in size from 700-3,200 SF and 1 retail space of 1135 SF. The property has approximately 60 feet of frontage along Torrey Pines Road and approximately 140 feet along High Avenue. Because of the property s zoning and proximity to the Pacific Ocean, the property can also be converted to 100% residential or hotel per the La Jolla PDO. This is a rare opportunity to purchase a property like this in the heart of the Village of La Jolla with 32,000 cars per day along Torrey Pines Road. PROPERTY DESCRIPTION Mixed-use Multi-Family and Retail Building Address 1135 Torrey Pines Road APN Zoning Approx. Land AC LJPD AC Approx. Land SQFT 8,315 Approx. Building SQFT 10,850 Property Type Mixed-Use Muti-Family / Retail Building Stories 3 Year Renovated 1971 Elevators 1 Parking NOI (decreased NOI due to owner occupied unit) 14 secured parking spaces $158,580 Pro-Forma NOI $271,110 Mark to Market CAP Rate 4%-5% Asking Price $6,458,000 Price per SQFT $ Unit Mix 6 multi family units, 1 retail space

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6 Current Rent VS. Market Rent Rent Roll Unit Mix Unit # SF Current Rent PSF Market Rent PSF Market Rent PSF 2 BDRM 2A 1,500 $1.80 PSF $2.75 PSF $3.00 PSF 2 BDRM 2B 1,500 $1.89 PSF $2.75 PSF $3.00 PSF 2 BDRM 2C 1,500 $1.94 PSF $2.75 PSF $3.00 PSF 1 BDRM PHA 700 $2.36 PSF $2.75 PSF $3.00 PSF 1 BDRM PHB 700 $2.50 PSF $2.75 PSF $3.00 PSF 5 BDRM PHD 3,200 $1.17 PSF $2.75 PSF $3.00 PSF Retial Suite E 1,750 $3.28 PSF $3.38 PSF* $3.38 PSF* Annual Gross Income $256,018 $371,280 $398,580 *3% bump due to scheduled rental increase 3

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8 Investment Highlights THE PROPERTY Pride of Ownership Property: Rarely does a multi-family property along Torrey Pines Road in the heart of La Jolla come to market. The current owners have invested significant capital into the property and continue to personally manage the property on a day to day basis. High Traffic Location: With 60 feet of frontage along Torrey Pines Road and traffic counts of 32,000 cars per day 1135 Torrey Pines is one of the more visible properties within the Village of La Jolla. Irreplaceable / Walkable location: 1135 Torrey Pines allows tenants a very short walk to world class dinning, retail and entertainment. A tenant of 1135 Torrey Pines can walk to the heart of the La Jolla Village or the coast in minutes. The property also has easy access to Torrey Pines Road which is a major connector to the 5 freeway. Ocean Views: The property has ocean views from the two top floors facing South as well as West. There is also the possibility to expand the window line across the western portion of the property to increase the coastal views. Quality Construction/Below Replacement Cost: The two bottom floors were constructed with poured in place concrete and steel. If an investor were to build the project today with concrete, there would be a significant increase to the price of the property. Value Add Potential: With the multi-family units ranging in size from 700 SF to 3,200 SF there is an opportunity to increase the size of the smaller units and decrease the size of the larger units to increase the revenue per square foot. With the location in the La Jolla PDO Zone 2 this will allow an investor the opportunity to convert the property to luxury condos or a boutique hotel. Long Term Quality Retail Tenant: The retail tenant in the ground floor of the property recently signed a long term lease and spent signification dollars on improving the space. 100% Leased Property High Occupancy Property: Rarely if ever does 1135 Torrey Pines have vacancy with demonstrates the strength of the property s location and quality. 5

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13 Zone 1 PROSPECT ST IVANHOE AVE ZONE 2 Herschel Avenue This zone includes an area characterized by community serving office development intermixed with retail establishments. Development standards for this zone are designed to permit the limited grouping of community serving professional offices, and to encourage residential uses to provide a transition zone to the single-family residential areas to the east. Zone 3 Zone 2 Maximum Base Density Zone 2 GIRARD AVE HERSCHEL AVE TORREY PINES RD Zone Maximum Base Floor Area Ratio (FAR) Permitted Per Lot: 1.3 Maximum Office FAR or Area Permitted Within Maximum Base FAR (1): 1.0 or 5,000 gross sq. ft., whichever is less. EADS AVE FAY AVE Residential/Retail Use Projects Maximum Building Floor Area Ratio (including bonus): 1.7 DRAPER AVE Residential dwellings shall be limited to 29 dwelling units per acre. LA JOLLA B Hospitality also allowed Zone 4 PEARL ST

14 La Jolla MARKET OVERVIEW The La Jolla Village market is made up of nearly 8,500 acres, with 22,000 homes and over 47,000 residents. This upscale community consists of seven miles of prime coastline that boasts some of the most expensive real estate in Southern California. The average household income in La Jolla is estimated to be $144,214. The commercial real estate market in La Jolla Village emulates this wealth, commanding some of the highest rents in Southern California. La Jolla is a very strong market that caters to a unique clientele of both foreign and domestic businesses, residents and investors. Downtown La Jolla, specifically Prospect Street and Girard Avenue corridors, consistently generate the highest levels of retail and office activity in the Village of La Jolla. As a preferred location for office and retail tenants seeking San Diego s premier business address, demand for space in the Village of La Jolla has increased tremendously over the past 10 years. Downtown La Jolla is home to major restaurants and hotels, high-end boutiques, galleries, law firms, securities firms, insurance firms, accounting firms and real estate offices. 11

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16 RETAIL MARKET The present retail market in La Jolla is comprised of 1,971,801 RSF of projects (all 5,000 SF and larger). Driven by the demand that has come from retailers of national and international stature, La Jolla retail market continues to boom. Retail lease rates currently on Girard Ave and Prospect Street range from $4.50 to $7.50 per square foot triple net. Retail vacancy in Zone 1 has historically averaged less than 3% for prime street level locations. OFFICE MARKET The La Jolla office market continues to outperform San Diego County. La Jolla office vacancy continues to be far below the County average, with a current inventory of 1,081,891 rentable square feet (RSF). La Jolla is unique in that most office space is combined with retail, creating mixed use projects, catering to the community as a whole. However, current zoning requirements limit new office projects to 5,000 square feet, curtailing the future of La Jolla office development and putting larger office spaces in high demand. ATTRACTIONS & ACTIVITIES La Jolla is the home to the beautiful Torrey Pines Golf Course, made famous by the PGA tour Farmers Insurance Invitational held here in the winter. Just down the steps from the golf course is the more infamous nude beach, Black s Beach. Walking along the beach, especially at sunset, is popular recreation. Those ambling along may be able to get a glimpse of the green flash. Downtown La Jolla is another tourist attraction. Downtown is made up of gourmet delis and markets, boutique hotels, and numerous worldclass boutiques and restaurants. Notable for its architectural and historical presence is the La Valencia Hotel. There s also the Children s Beach, a quaint man-made cove near downtown which has unfortunately been taken over by harbor seals. The seals are protected animals under federal law, so removing them has become a difficult and controversial issue. 13

17 EDUCATION University of California of San Diego is the most notable center for education in La Jolla. Located on the North end, you can also find the Scripps Institution of Oceanography and the headquarters for National University. There are also several research institutions located near UCSD and the Torrey Pines Science Park such as the Scripps Research Institute, the Burnham Institute (formerly called the La Jolla Cancer Research Foundation) and the Salk Institute. La Jolla s preparatory schools are: La Jolla Country Day School, The Bishop s School and the Preuss School UCSD. La Jolla High School is part of the San Diego City School district and is home to several famous alumni, including Raquel Welch and Gregory Peck.

18 DEMOGRAPHICS 30% 1 MILE RADIUS 2016 Population 7,354 Median Age 55.6 Percent 25% 20% 15% 10% 5% Population by Age 30% 3 MILE RADIUS 2016 Population 61,230 Median Age 36.2 Percent 25% 20% 15% 10% 5% Population by Age 30% Population 169,675 25% 20% MILE RADIUS Median Age 33.5 Percent 15% 10% 5% Population by Age

19 POPULATION BY INCOME 1 MILE RADIUS Median Household Income $92,736 Mean Household Income $139,089 $200+ $159-$199 $100-$149 $75-$99 3 MILE RADIUS Median Household Income $102,774 Mean Household Income $159,538 $50-74 $35-$49 $25-$34 $15-$24 5 MILE RADIUS Median Household Income $76,235 Mean Household Income $108,619 <$ INCOME BRACKETS

20 RETAIL SALE COMPARABLES 7650 GIRARD AVE GIRARD AVE GIRARD AVE PROSPECT ST Sale Date 10/1/2015 Sale Date 1/8/2014 Sale Date 9/2/2016 Sale Date 4/4/2006 Sale Price $13,690,000 Sale Price $6,575,000 Sale Price $2,200,000 Sale Price $6,200,000 Land Area 7,000 SF Land Price/SF $1, Building Size 17,500 SF Building $/SF $ Land Area 7,000 SF Land Price/SF $ Building Size 3,600 SF Building $/SF $1, Land Area 3,485 SF Land Price/SF $ Building Size 2,075 SF Building $/SF $1, Land Area 9,278 SF Land Price/SF $ Building Size 7,030 SF Building $/SF $ GIRARD AVE GIRARD AVE GIRARD AVE Sale Date 10/1/2015 Sale Date 1/12/2016 Sale Date 1/15/2015 Sale Price $13,690,000 Sale Price $8,896,000 Sale Price $16,882,510 Land Area 7,000 SF Land Price/SF $1, Land Area 7,013 SF Land Price/SF $1, Land Area 19,602 SF Land Price/SF $ Building Size 17,500 SF Building $/SF $ Building Size 10,259 SF Building $/SF $ Building Size 22,606 SF Building $/SF $

21 MULTI-FAMILY COMPARABLE SALES 7431 LA JOLLA BLVD LA JOLLA BLVD. 290 PLAYA DEL SUR ST. 316 PROSPECT ST. Sale Date 8/25/2015 Sale Date 1/29/2015 Sale Date 9/3/2015 Sale Date 5/6/2014 Sale Price $8,550,000 Land Area 9,148 SF Land Price/SF $ Building Size 12,789 SF Building $/SF $ Sale Price $4,500,000 Land Area 13,721 SF Land Price/SF $ Building Size 6,780 SF Building $/SF $ Sale Price $4,150,000 Land Area 6,761 SF Land Price/SF $ Building Size 5,106 SF Building $/SF $ Sale Price $4,076,000 Land Area 7,802 Land Price/SF $ Building Size 4,862 SF Building $/SF $ SUBJECT PROSPECT ST 1020 PROSPECT 1135 TORREY PINES Sale Date 1/17/2017 Sale Date 1/17/2017 Sale Date N/A Sale Price $11,050,000 Sale Price $27,900,000 Sale Price 6,458,000 Land Area 13,277 SF Land Price/SF $ Land Area 23,522 SF Land Price/SF $1, Land Area 8,315 SF Land Price/SF $776 Building Size 12,442 SF Building $/SF $ Building Size 44,744 SF Building $/SF $ Building Size 10,850 SF Building $/SF $576.77

22 La Jolla Village Amenities RESTAURANTS 1 George s at the Cove 2 Crab Catcher Restaurant 3 Tommy Bahama 4 The Cottage Restaurant 5 La Plaza La Jolla COFFEE SHOPS 1 Starbucks BREWERIES 1 Karl Strauss Brewery 2 La Jolla Brewery BANKS 1 Morgan Stanley 2 Union Bank 3 Chase Bank 4 US Bank 5 Charles Schwab 6 Smith Barney 7 Bank of America HOTELS 1 La Valencia Hotel 2 Grande Colonial Hotel RETAIL 1 Brooks Brothers 2 Chico s 3 Gap, Banana Republic 4 LuluLemon Athletica/Talbots 5 Reebok 6 Ralph Lauren 7 La Jolla Galleria 8 La Jolla Yoga Center 9 24hr Fitness 10 Vons 11 Ferarri 12 CVS Pharmacy GALLERIES / ARTS San Diego Museum of Contemporary art The Athenaeum Music & Arts Library The Conrad / La Jolla Cinema Society / La Jolla Performing Arts Center (Under Construction) 13 BevMo 14 Maserati 15 THE LOT La Jolla 19

23 CO 2 VD BL GRANDE COLONIAL HOTEL L ST WAL 1 PROSPECT PLAZA 2 R D N ES PI CO AS T O ST 7 RAD THE CROSBY CENTER AVE FAY KLIN 9 FAY 15 VILLAGE PLAZA AVE ARD GI R 2 T RL S PEA N E ST LA JOLLA DESIGN CENTER 3 E S AV EAD THE BISHOP S SCHOOL 7 AVE FAY PR OS PE CT ST 4 LA JOLLA COMMUNITY PARK LANDMARK BANK BLDG R R EY BLV D 5 E SILV WALL ST BLDG. E E AV ST AVE ARD GI R S. JENN ER PR OS NH O IVA CT E 1 P COVE PLAZA OS PR MANCHESTER FINANCIAL BLDG. TO T AS LA JOLLA CO ST BLVD 1 T AS ELLEN BROWNING SCRIPPS PARK PE CT ST

24 1135 Torrey Pines Rd OFFERING MEMORANDUM 1135 TORREY PINES RD, LA JOLLA, CA MIKE SLATTERY CA Lic JASON KIMMEL CA Lic TIM WINSLOW CA Lic KEVIN NOLEN CA Lic