prospect point - loopnet

FREEWAY-VISIBLE, TWO-BUILDING OFFICE CAMPUS • $21,650,000 ($145 psf)

PROSPECT PO I N T

Capital Markets | Investment Properties

11000 & 11050 Olson Drive • Rancho Cordova, California

AFFILIATED 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.

COPYRIGHT NOTICE

© 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. 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. Photos herein are the property of their respective owners. Use of these images without the express written consent of the owner is prohibited. 20312183-242718

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Executive Summary ................05

Property Overview ..................13

Financial Overview .................25

Tenancy ...................................38

Area Overview ........................43

Market Trends ..........................50

INVESTMENT CONTACT

LOCAL MARKET CONTACTS

500 Capitol Mall, Suite 2400Sacramento, CA 95814

RANDY GETZExecutive Vice PresidentLic. 00828903+1 916 446 [email protected]

TONY WHITTAKERFirst Vice PresidentLic. 01780828+1 916 492 [email protected]

RICK HENRYSenior Vice PresidentLic. 00879584+1 916 492 [email protected]

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mailto:randy.getz%40cbre.com?subject=

mailto:tony.whittaker%40cbre.com?subject=

mailto:rick.henry%40cbre.com?subject=

Parcel lines are approximate and for illustrative purposes only.

11000

11050

PROSP

ECT

PARK DRIV

E

EXECUTIVE SUMMARYFO

LSO

M B

OU

LEV

ARD

ZINFANDEL DRIVE

Cordova Town Center Light Rail Station

THE OFFERING

CBRE, Inc., as exclusive advisor, is pleased to offer for

sale a freeway-visible two-building office campus totaling

149,641 rentable square feet in Rancho Cordova, a city of

73,000 people nine miles east of Sacramento, California.

The property is 91% leased to eight tenants and has been

substantially renovated and improved over the last three

years, including the addition of solar panels to reduce

energy costs. Approximately 65% of all the tenant space

is newly built, with the largest, 79,399 square feet for

Maximus, scheduled for completion in May 2018.

The asset is priced at $21,650,000 which equates to $145

per square foot with an initial capitalization rate of 7.01%.

If debt is utilized as modeled in our 10-year discounted

cash flow analysis, the projected annual return is 19.06%.

The steel-frame buildings are characterized by distinctive

brick exteriors complemented by lush landscaping, water

features, and mature evergreen trees. They occupy three

parcels that total ±11.6 acres with on-site parking for 707

vehicles, a ratio of 4.72 per 1,000 square feet. Should

additional parking be needed, a reciprocal parking

agreement with the adjacent First Covenant Church makes

240 additional spaces available for a total of 947 spaces

(6.5: 1,000 sf).

Rancho Cordova is within Sacramento’s Highway 50

Corridor office submarket, the region’s largest with

11.5-million square feet. In 2017 this submarket ranked

#1 in performance with more than 316,000 square feet

of net absorption, followed by the Sacramento CBD with

179,000 square feet. Prospective tenants are attracted

to this submarket by the combination of affordable rent,

abundant free parking, and proximity to freeways and

public transit.

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PROPERTY TYPE

Office Campus (two buildings)

PROPERTY NAME

Prospect Point

ADDRESS11000 and 11050 Olson Dr.

Rancho Cordova, CA 95670

NET RENTABLE AREA

11000 Olson Dr. 48,280 sf

11050 Olson Dr. 101,361 sf

Total 149,641 sf

OCCUPANCY 91%

OFFERING PRICE

$21,650,000 ($145 psf)

PROJECTED YIELDS

Initial capitalization rate: 7.01%

10-year projected leveraged

IRR: 19.06%

YEAR BUILT11000 Olson Dr. in 1988;

11050 Olson Dr. in 1985

OFFERING SUMMARY

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INVESTMENT HIGHLIGHTS

• Offered at $21,650,000 ($145 psf)

• Meticulously-maintained and managed assets are 91%

leased

• No significant short-term lease rollover

• No deferred maintenance

• Attractive yields: 7.01% going-in cap rate, with 19.06%

leveraged annual IRR projection

• New solar panels (2017) are expected to reduce future

operating costs

• Competitive rents with high-quality amenities and

professional work environment

• Abundant free parking

• Walking distance to shopping and dining

• Freeway visibility with excellent regional access

• Only 12 minutes from downtown Sacramento

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SELECTED TENANTS

TENANT SF LEASED OCCUPANCY COMMENCED EXPIRES ANNUAL RENT/SF

San Joaquin Valley College 17,535 Sep-2005 Mar-2024 $19.80

CAL Lighting 7,490 May-2016 Aug-2023 $21.00

Infor Global Solutions 6,212 Mar-2011 Jun-2021 $18.60

Maximus, Inc. 79,399 May-2018 Sep-2023 $17.40

Fidelity National Title 13,572 Sep-2011 Feb-2021 $17.40

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Sitting at the junction of Interstates 5 and 80, Sacramento,

California is the capital of the most populous state in America,

and its roughly 2.2 million residents make Sacramento the 25th

largest market in the country. The Sacramento MSA includes

seven counties and it is the cultural and economic center of the

region. Its economy is characterized by a strong, stable base

of government employment, a well-educated labor pool, and

a cost of living that is decidedly more affordable than the cities

and counties in the Greater San Francisco Bay and Silicon Valley

areas.

Prospect Point is within the Highway 50 Corridor which contains

11.4 million square feet, making it the largest office submarket

within the Sacramento MSA. Geographically it extends from

Watt Avenue on the west to Hazel Avenue on the east. As its

name implies the submarket follows the route of Highway 50

and is an ideal choice for tenants seeking affordability, abundant

free parking, good freeway access, proximity to light rail and

bus transportation, and a full range of housing alternatives for

employees and executives. Tenants seeking larger floor plates

have more choices within this submarket than any other.

The Highway 50 Corridor office submarket absorbed 316,460

square feet and the overall vacancy rate fell more than 300 bps

to 16.1%. Ideally, total space overhang needs to drop a bit more,

but the Highway 50 Corridor is well positioned as one of the few

submarkets able to accommodate large-block tenants. Rancho

Cordova is one of the few locations to feature office properties

with large floor plates and a parking ratio in excess of 4: 1,000

sf. With a prevailing trend in workplace design that emphasizes

optimizing worker density, Rancho Cordova office properties,

and Prospect Point in particular, are well positioned to continue

to compete successfully for new tenants.

AREA OVERVIEW

NMAP NOT TO SCALE

PROSPECT PO I N T

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PROPERTY OVERVIEW

Prospect Point is a steel-frame two-building office campus on Olson Drive, north of Highway 50 and just east of Zinfandel Drive, in

Rancho Cordova, California. The attractive two-story buildings project an upscale, professional image, featuring brick exteriors and

a pastoral setting among mature evergreen trees. In the aggregate, the property contains 149,641 rentable square feet of bright,

modern, well-appointed office space.

Parking is abundant and free. The grounds are attractively landscaped and Ownership has completed many cosmetic and functional

improvements over the last three years. These upgrades have not only enhanced the environment for tenants, but have also made the property

more economical to operate. The table below summarizes the improvements that have been made. In addition to investments in the common

areas, Ownership will have spent in excess of $4 million on tenant improvements by the time Maximus takes occupancy in May 2018.

PROPERTY OVERVIEW

OLSON DRIVE

IMPROVEMENT 11000 11050 TOTAL

Restroom renovation (2nd floor) $52,470 $0 $52,470

Monument signage $13,945 $13,945 $27,890

Replace two fire hydrants $6,973 $0 $6,973

Lobby staircase remodel $51,395 $0 $51,395

HVAC replacement units $49,720 $0 $49,720

HVAC controls upgrade $0 $168,000 $168,000

Parking lot seal coat and striping $9,320 $18,924 $28,244

Lobby furniture $2,980 $6,049 $9,029

Redwood trimming on Hwy 50 side $1,768 $3,590 $5,358

Exterior trash cans $3,503 $3,503 $7,006

Landscape upgrades $1,854 $9,754 $11,608

New bark $2,700 $3,510 $6,210

Light fixture retrofits $4,388 $3,240 $7,628

Exterior address signage $3,368 $3,368 $6,736

Exterior lights/pole refurbish $5,977 $3,627 $9,604

Parking lighting LED retrofit $6,160 $12,508 $18,668

Relocate irrigation backflow $0 $5,710 $5,710

Common Area painting $0 $3,025 $3,025

Lobby staircase base molding $0 $2,795 $2,795

BRIVO card access system $10,800 $10,800 $21,600

Door replacement (front/back lobby) $0 $27,900 $27,900

Totals $227,321 $300,248 $527,569

CAPITAL IMPROVEMENTS SINCE 2015

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OLSON DRIVE

OLS

ON

DRIV

E

Zinfandel Square

Rancho CordovaTown Center

11000

11050

FOLSOM BOULEVARD


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PROPERTY SUMMARY

NAME Prospect Point

ADDRESS 11000 and 11050 Olson Drive, Rancho Cordova, CA 95670

COUNTY Sacramento

PARCEL NUMBERS AND SIZE

072-0280-081: 3.59 acres (11000 Olson)

072-0280-031: 7.42 acres (11050 Olson)

072-0280-080: 0.23 acres (portion of parking)

TOTAL LAND AREA 11.24 acres

PARKING TOTAL / RATIO 707 / 4.7:1,000 sf. RPA with adjacent church for 240 additional spaces; total 947 / 6.5:1,000sf

ZONING OIMU: Office Industrial Mixed Use

YEAR BUILT 11000 in 1988; 11050 in 1985

FLOOR AREAS

11000 Olson: 48,280 sf

11050 Olson: 101,361 sf

Total: 149,641 sf

CONSTRUCTION TYPE Steel frame

EXTERIOR Brick veneer

FOUNDATION Six-inch concrete slab with vapor barrier over six inches of crushed rock.

ROOF Built-up commercial roofs with warranty until 2022

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ELEVATORS11000: One 2,500-pound capacity

11050: One 3500-pound and one 4,000-pound capacity

HVAC

11000: 31 roof-mounted package units. Three 5-ton AS/Trane gas/electric units installed in December 2017; two units installed

July 2016; SJVC added a new unit for their server room in January 2018.

11050: Two large Trane units and three smaller units provide central roof-mounted air conditioning, controlled by a new ALC

building management system with DDC controls. Heating is from eight roof-mounted electric heat pump units for perimeter heat

strips.

SECURITY/FIRE

11000: Hard-wired smoke detectors, pull stations, audible/visual devices, and fire extinguishers throughout. Napco Fire Alert

6000 alarm control panel; automatic wet pipe sprinkler system. Security provided by card key access and timed magnetic locks;

new exterior front doors in 2018.

11050: Same as above, but with Notifier MS9200 alarm control panel.

ELECTRICAL11000: one 800-amp and one 1600-amp panel, 480/277V

11050: 2500-amp panel, 480/277V.

PHOTOVOLTAIC SOLAR

PANELS

In 2017 agreements were executed with RCSolar-Prospect Point, LLC (“Provider”) to install solar panels on both buildings to

generate clean solar power which would then be purchased by Subject Property at a set per kWh rate that is lower than that

charged by the Sacramento Metropolitan Utility District (SMUD). The system became operational in May 2017.

The solar system was installed pursuant to a “Power Purchase Agreement” and remains the property of Provider unless or until

Host exercises an option to purchase. Provider is the primary supplier of electricity, with SMUD supplying any additional power as

needed. Excess electricity, if any, is sold to SMUD. Provider is solely responsible for all costs of maintenance and replacements for

the duration of the agreement.

A copy of the Agreements will be made available for review at the due diligence website described below.

CONFIDENTIALITY

AGREEMENT AND DUE

DILIGENCE ACCESS

A website containing documents and additional information about the property has been set up. Please contact us if you would

like to receive a link to the Confidentiality Agreement and access to the due diligence site.

17

SITE DESCRIPTION

The three parcels that make up the property are situated between U.S. Highway 50 on the south and Olson Drive on the north. The buildings are easily visible from

the freeway creating potential signage opportunities for certain types of tenants. The generous parking field contains 707 parking stalls and is served by four driveways

off Olson Drive. Retail shopping to the west and on the north side of Olson Drive includes Petsmart, Target, KP International Market, many shops and boutiques, and

multiple dining options.

Parcel lines are approxim

ate and for il

lustrativ

e purpose

s only.

OLSON DRIV

E

Zinfandel Square


11000

11050

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FLOOR PLANS: 11000 OLSON

1st FLOOR

Relay Application Innovation3,620 RSFSuite105

Infor Global Solutions 1,240 RSF Suite 107(+4,972 RSF on 2nd Floor)

Vacant1,627 RSFSuite 125

San Joaquin Valley College12,285 RSFSuite 101

San Joaquin Valley College5,250 RSFSuite 103

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2nd FLOOR

Infor Global Solutions4,972 RSFSuite 201

(+1,240 RSF on 1st Floor)

CAL Lighting7,490 RSFSuite 200



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FLOOR PLANS: 11050 OLSON

1st FLOOR

NOT TO SCALE -- ALL DIMENSIONS ARE APPROXIMATE.

MAXIMUS, Inc.50,818 RSF

Suites 100 & 110(+28,582 RSF on 2nd Floor)

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2nd FLOOR

NOT TO SCALE -- ALL DIMENSIONS ARE APPROXIMATE.

MAXIMUS, Inc.28,582 RSF

Suites 201, 205 & 220(+50,818 RSF on 1st Floor)

Fidelity National Title13,572 RSFSuite 200

Prof. Bureau of Collections of Md.

3,806 RSFSuite 240

Dept. of Industrial Relations4,584 RSFSuite 230

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FINANCIAL OVERVIEW

This is a projected income and expense statement that

values the complete offering with individual detail for

each building. Due to vacancy in 11000 a discounted

cash flow analysis was used with pricing that yields an

annual cash IRR of 11.92%. The 11050 building will be

fully leased effective with commencement of the Maximus

lease. The price represents an initial capitalization rate

of 7.78% and projected annual cash IRR of 11.49% per

the Argus™ analysis.

On a consolidated basis, the asset is priced at $145 per

square foot, with a going-in capitalization rate of 7.01%.

If debt is utilized as shown in our Argus™ modeling, the

leveraged annual return is projected to be 19.06%.

FINANCIAL SUMMARY

11000 OLSON 11050 OLSON

Price $6,775,000 $14,875,000 $21,650,000

Net Rentable Area 48,280 101,361 149,641

Price per Square Foot $140 $147 $145

Prospective Financing:

Interest Rate - - 4.65%

Principal Amount @ 65% LTV - - $14,072,500

Down Payment - - $7,577,500

Amortization (years) - - 25

Years Due - - 10

Estimated Monthly Payment - - $79,422

Estimated Annual Payment - - $953,070

Occupancy 72.2% 100.0% 91.0%

Scheduled Gross Income $689,993 $1,779,326 $2,469,319

plus expense reimbursements $6,820 $14,571 $21,391

Adjusted Scheduled Gross Income $696,813 $1,793,897 $2,490,710

less vacancy and collection - - -

Effective Gross Income $696,813 $1,793,897 $2,490,710

less Operating Expenses ($335,437) ($636,644) ($972,081)

Net Operating Income $361,376 $1,157,253 $1,518,629

per square foot $7.49 $11.42 $10.15

Estimated Annual Debt Service - - ($953,070)

Pre-Tax Cash Flow - - $565,559

Initial Capitalization Rate 5.33% 7.78% 7.01%

Initial Cash-on-Cash Return - - 7.46%

Argus Unleveraged IRR 11.92% 11.49% 11.63%

Argus Leveraged IRR - - 19.06%

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RENT ROLL: 11000 OLSON

Annual rents are for the 12 months commencing June 1, 2018 including scheduled increases.

LEASE TERM CURRENT RENTEST.

EXPENSE RECOVERY

NEXT INCREASE OPTIONSBLDG.PRO RATASUITE TENANT

RENTABLE SQ. FT. START END MONTHLY

PER SQ. FT. ANNUAL

LEASE TYPE DATE

NEW MO. RENT

PER SQ. FT.

NO. X TERM

OPTION RENT

101/103 San Joaquin Valley College (1) (2) 17,535 Jan-18 May-24 $31,445 $1.65 $381,725 BY 2018 $3,180 Jan-19 $32,322 $1.70 1x5-yr. fmr 36.3%

- Jan-20 $0.05 annual increase

105 Relay Application Innovation 3,620 Mar-13 Feb-23 $5,430 $1.50 $27,150 BY 2018 $576 Mar-20 $5,611 $1.55 - - 7.5%

Mar-22 $5,792 $1.60

107/201 Infor Global Solutions (3) 6,212 Mar-11 Jun-21 $9,629 $1.55 $118,960 BY 2016 $1,389 Jul-18 $9,939 $1.60 1x5-yr. fmr 12.9%

Jul-19 $10,250 $1.65

Jul-20 $10,560 $1.70

200 CAL Lighting (4) 7,490 May-16 Jul-23 $13,482 $1.80 $162,159 BY 2016 $1,675 May-19 $13,857 $1.85 2x5-yr. fmr 15.5%

May-20 $14,231 $1.90

May-21 $14,606 $1.95

May-22 $14,980 $2.00

May-23 $15,535 $2.07

Subtotal leased 34,857 $59,986 $1.72 $689,993 $6,820 72.2%

125 Vacant 1,627 Mo. 2 $2,685 $1.65 $32,215 FS $0 - - - - - 3.4%

205 Vacant 5,208 Mo. 8 $8,593 $1.65 $103,118 FS $0 - - - - - 10.8%

210 Vacant 6,588 Mo. 14 $10,870 $1.65 $130,442 FS $0 - - - - - 13.6%

Subtotal vacant 13,423 $22,148 $1.65 $265,775 $0 27.8%

Total 11000 Olson Dr. 48,280 $82,134 $1.70 $955,769 $6,820 100.0%

(1) Any unamortized abatement of rent will be credited by Seller. Tenant has right of first refusal on space available in the building. Base year 2018 property tax expense calculated assuming property is reassessed at purchase price effective 6/1/18, and 2018 property tax expense includes five months at old assessment and seven months at the new assessment.(2) Rent shown includes excess TI costs with 8% annual interest. Monthly TI payments are $2,512.34 for the term of the lease.(3) Per sec. 2.04 of lease Tenant installed supplemental HVAC equipment for which it is solely responsible and utility costs for which are directly billed to Tenant.(4) Tenant has a Right of First Refusal on contiguous space.

A separate rent roll is shown for each building, with current rent, scheduled increases, and annual rent for the 12 months commencing June 1, 2018. The reimbursements

shown are for the first 12 months and are taken from the Argus™ analysis

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Annual rents are for the 12 months commencing June 1, 2018 including scheduled increases.

LEASE TERM CURRENT RENTEST.

EXPENSE RECOVERY

NEXT INCREASE OPTIONSBLDG.PRO RATASUITE TENANT

RENTABLE SQ. FT. START END MONTHLY

PER SQ. FT. ANNUAL

LEASE TYPE DATE

NEW MO. RENT

PER SQ. FT.

NO. X TERM

OPTION RENT

100, 110, 201, 205, 220

MAXIMUS, Inc. (1) 79,399 May-18 Sep-27 $115,129 $1.45 $1,385,513 2018 BY $13,598 May-19 $119,099 $1.50 4x1-yr. 2% inc. 78.3%

May-20 $123,068 $1.55

May-21 $127,038 $1.60

May-22 $131,008 $1.65

May-23 $134,978 $1.70

200 Fidelity National Title (2) 13,572 Sep-11 Feb-21 $19,679 $1.45 $238,867 2015 BY $761 Feb-19 $20,358 $1.50 13.4%

Feb-20 $21,037 $1.55

230 Dep't. of Industrial Relations (3) 4,584 Aug-13 Oct-21 $6,251 $1.36 $75,014 Gross $0 Nov-19 $6,453 $1.41 4.5%

240 Prof. Bureau of Collections of Md. 3,806 Jun-15 Nov-20 $6,661 $1.75 $79,932 2015 BY $212 Jun-19 $6,851 $1.80 1x5-yr. fmr 3.8%

Jun-20 $7,041 $1.85

Totals 101,361 $147,720 $1.46 $1,779,326 $14,571 100.0%

(1) Any remaining unamortized rent abatement will be credited by Seller at close of escrow. Tenant has a conditional early termination option in the event its contract with the State of California is terminated or curtailed. Tenant’s new contract with the State is for nine years and includes the right for the State to assume Tenant’s rights under the lease if contract is cancelled. Refer to lease for details of conditions and penalties for early termination. Base year 2018 property tax expense calculated assuming property is reassessed at purchase price effective 6/1/18, and 2018 property tax expense includes five months at old assessment and seven months at the new assessment.(2) Tenant has a one-time option to terminate the lease effective 2/14/19 with six months’ notice.(3) Tenant can terminate lease on 30 days’ notice. Square footage and rent/sf reflect conversion from Useable to Rentable using a 13.67% load factor.

RENT ROLL: 11500 OLSON

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EXPENSES

Expenses reflect Owner’s 2018 budget with property taxes adjusted for sale.

11000 11050 TOTAL

48,280 PSF 101,361 PSF 149,641 PSF

Reimbursable Expenses

Common Area R&M 33,269 0.69 52,738 0.52 86,007 0.57

HVAC 7,575 0.16 11,900 0.12 19,475 0.13

Insurance / General 6,583 0.14 13,367 0.13 19,950 0.13

Janitorial/cleaning 52,541 1.09 84,167 0.83 136,708 0.91

Landscaping 27,388 0.57 35,160 0.35 62,548 0.42

Management Fees: Property 24,839 0.51 53,184 0.52 78,023 0.52

Security 4,368 0.09 10,007 0.10 14,375 0.10

Direct levies 1,863 0.04 2,887 0.03 4,750 0.03

Ad valorem property taxes 79,356 1.64 174,231 1.72 253,586 1.69

Telecommunications 3,132 0.06 5,593 0.06 8,724 0.06

Electricity 64,000 1.33 156,821 1.55 220,821 1.48

Gas 5,820 0.12 - - 5,820 0.04

Water & sewer 24,704 0.51 36,590 0.36 61,294 0.41

Total Reimbursable Expenses 335,437 6.95 636,644 6.28 972,081 6.50

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ARGUS ASSUMPTIONS

The table below shows the key assumptions used in our Argus™ 10-year discounted cash flow analysis.

ANALYSIS TERM AND STARTING DATE: Ten years commencing June 2018

INFLATION RATES:

General: 2.5%

Market rent: 3.0%

Operating expenses: 2.5%

Property taxes: 2.0%

CURRENT MARKET RENT: $19.80 psf/year ($1.65/month) for all space except Maximus which is modeled at $18.60 psf/year due to its size.

RESERVES: $0.15 per square foot per year.

OPERATING EXPENSES: Projected 2018 post-sale with property taxes adjusted. Estimated management fee is 3% of effective gross income. 2018 base years estimated using current assessment for five months and offering price as assessed value as of 6/1/18.

EXPENSE REIMBURSEMENTS

Current: All tenants pay increases over a base year except the California Department of Industrial Relations which pays no reimbursements.

Future: Serviced, with increases over a base year.

VACANCY ABSORPTION: 11000: Three available suites lease during the first fourteen months of the analysis for five year terms at 100% of market rent with a TI allowance of $25 psf, three months of free rent, and 7.5% leasing commissions. 11050: Fully leased

ROLLOVER ASSUMPTIONS

Renewal probability: 75% standard; 90% for Maximus and SJVC.

Options: Assumes options to extend are exercised

Months dark: 6

Starting rent: 100% of fair market rent when the lease commences.

Escalations: Assumes rent is increased annually by 3%.

T.I. Allowance: $25 per rentable square foot on new leases; $7 per square foot on renewals.

Concessions: None

Term length: 5 years.

Leasing commissions: 6.0% of base rent on the first five years of term; 3.0% on the next five years.

MINIMUM STABILIZED VACANCY: None; natural as leases roll

DEBT / REFINANCING: 65% loan-to-value; 25-year amortization, due in 10 years; 4.65% interest rate.

REVERSION:

Terminal capitalization rate: 7.75%

Present value discounting method: Annually, midpoint on cash flow, endpoint on sale.

Costs of Sale: 2% of reversion price.

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ARGUS REPORTS

The native DCF files will be available

on our due diligence website for

parties that have executed the

Confidentiality Agreement and

have Argus™ software. There is a

separate file for each building and

a portfolio file that consolidates the

results.

The following reports are included

herein.

1. Cash flow (portfolio)

2. Resale and IRR (portfolio)

3. Presentation rent roll

(one for each building)

32

ARGUS: CASH FLOW, RESALE & IRR

Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 6/1/2018 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10

FOR THE YEARS ENDING MAY-2019 MAY-2020 MAY-2021 MAY-2022 MAY-2023 MAY-2024 MAY-2025 MAY-2026 MAY-2027 MAY-2028Gross Revenue Potential Rental Revenue $2,775,048 $2,859,663 $2,952,862 $3,074,860 $3,161,835 $3,253,716 $3,275,038 $3,330,681 $3,455,559 $3,626,470 Absorption & Turnover Vacancy (134,373) (48,640) (16,755) (13,764) (34,531) (17,652) (43,994) (73,952) (170,173) Base Rent Abatements (44,626) (22,812)

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ Scheduled Base Rental Revenue 2,596,049 2,836,851 2,904,222 3,058,105 3,148,071 3,219,185 3,257,386 3,286,687 3,381,607 3,456,297 Base Rental Step Revenue 1,821 16,810 33,714 53,990 76,806 41,822 59,614 Expense Reimbursement Revenue 22,516 64,714 87,847 107,730 134,292 140,950 134,991 157,607 157,188 113,762

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Gross Revenue 2,618,565 2,901,565 2,992,069 3,167,656 3,299,173 3,393,849 3,446,367 3,521,100 3,580,617 3,629,673

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Effective Gross Revenue 2,618,565 2,901,565 2,992,069 3,167,656 3,299,173 3,393,849 3,446,367 3,521,100 3,580,617 3,629,673

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Operating Expenses Reimbursable Expenses 966,345 1,010,318 1,030,359 1,060,729 1,087,541 1,111,516 1,138,701 1,163,331 1,187,056 1,205,010

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Operating Expenses 966,345 1,010,318 1,030,359 1,060,729 1,087,541 1,111,516 1,138,701 1,163,331 1,187,056 1,205,010

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Operating Income 1,652,220 1,891,247 1,961,710 2,106,927 2,211,632 2,282,333 2,307,666 2,357,769 2,393,561 2,424,663

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Debt Service Principal Payments 305,147 319,643 334,827 350,733 367,394 384,847 403,129 422,279 442,339 463,352 Interest Payments 647,922 633,427 618,242 602,337 585,675 568,223 549,941 530,791 510,731 489,718 Origination Points & Fees 140,725

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Debt Service 1,093,794 953,070 953,069 953,070 953,069 953,070 953,070 953,070 953,070 953,070

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Leasing & Capital Costs Tenant Improvements 223,717 111,858 190,621 100,253 45,952 168,863 59,672 52,028 341,435 872,595 Leasing Commissions 67,730 34,623 70,832 41,279 16,502 273,014 86,506 18,580 121,363 337,602 Capital Costs & Reserves 22,446 22,826 23,216 23,615 24,025 24,444 24,874 25,315 25,767 26,230

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Leasing & Capital Costs 313,893 169,307 284,669 165,147 86,479 466,321 171,052 95,923 488,565 1,236,427

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Cash Flow After Debt Service $244,533 $768,870 $723,972 $988,710 $1,172,084 $862,942 $1,183,544 $1,308,776 $951,926 $235,166 But Before Taxes ======= ======= ======= ======= ======= ======= ======= ======= ======= =======Resale Amount Gross Proceeds from Sale $24,403,187 $25,312,387 $27,186,154 $28,537,187 $29,449,458 $29,776,336 $30,422,825 $30,884,658 $31,285,974 $33,241,419 Commissions & Adjustments (488,064) (506,247) (543,723) (570,744) (588,989) (595,527) (608,457) (617,693) (625,720) (664,828)

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Proceeds From Sale 23,915,123 24,806,140 26,642,431 27,966,443 28,860,469 29,180,809 29,814,368 30,266,965 30,660,254 32,576,591

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Outstanding Debt Retirement Total Principal Balances (13,767,353) (13,447,709) (13,112,882) (12,762,149) (12,394,755) (12,009,908) (11,606,779) (11,184,500) (10,742,161) (10,278,810)

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Resale Proceeds After Debt $10,147,770 $11,358,431 $13,529,549 $15,204,294 $16,465,714 $17,170,901 $18,207,589 $19,082,465 $19,918,093 $22,297,781

======= ======= ======= ======= ======= ======= ======= ======= ======= =======

Unleveraged Consolidated IRR 17.15% 14.30% 14.40% 14.02% 13.53% 12.69% 12.37% 12.08% 11.73% 11.63%Leveraged Consolidated IRR 37.71% 28.89% 28.07% 26.29% 24.56% 22.39% 21.33% 20.45% 19.53% 19.06%

33

ARGUS: PRESENTATION RENT ROLL - 11000 OLSON

(continued on next page)

Presentation Rent Roll & Current Term Tenant Summary As of Jun-2018 for 48,280 Square Feet

TENANT NAME FLOOR RATE & AMOUNT CPI & CURRENT MONTHS PCNT DESCRIPTION OF IMPRVMNTS COMMSSNS ASSUMPTION ABOUT

TYPE & SUITE NUMBER SQFT PER YEAR CHANGES CHANGES PORTERS’ WAGE TO TO OPERATING EXPENSE RATE RATE SUBSEQUENT TERMS

LEASE DATES & TERM BLDG SHARE PER MONTH ON TO MISCELLANEOUS ABATE ABATE REIMBURSEMENTS AMOUNT AMOUNT FOR THIS TENANT

1 San Joaquin Vly. Coll $21.52 Jan-2019 $22.12 - 1-12 100.00% Gross: Pays the - - Option

Office, Suite: 101/103 17,535.00 $377,341 Jan-2020 $22.72 increases over a See assumption:

Jan-2018 to May-2024 36.32% $1.79 Jan-2021 $23.32 base year ending $1.65 FS

77 Months $31,445 Jan-2022 $23.92 Dec-2018: $6.86.

Jan-2023 $24.52

Jan-2024 $25.12

1 San Joaquin Vly. Coll $23.64 Jun-2025 $24.24 - - - Gross: Pays the - $3.73 Market @90%

Option, Suite: 101/103 17,535.00 $414,567 Jun-2026 $24.84 increases over a 3.00% See assumption:

Jun-2024 to May-2029 36.32% $1.97 Jun-2027 $25.44 base year ending $65,341 $1.65 FS

60 Months $34,547 Jun-2028 $26.04 Dec-2024: $8.20.

@ 100% of Mkt

2 Relay Application Innovation $17.40 Mar-2018 $18.00 - - - Gross: Pays the - - Market

Office, Suite: 105 3,620.00 $62,988 Mar-2020 $18.60 increases over a See assumption:

Mar-2013 to Feb-2023 7.50% $1.45 Mar-2022 $19.20 base year ending $1.65 FS

120 Months $5,249 Dec-2018: $6.86.

3 Infor Global Solutions $18.60 Jul-2018 $19.20 - - - See method: 2016 - - Option

Office, Suite: 107/201 6,212.00 $115,548 Jul-2019 $19.80 BY See assumption:

Mar-2011 to Jun-2021 12.87% $1.55 Jul-2020 $20.40 $1.65 FS

124 Months $9,629

3 Infor Global Solutions $21.69 Jul-2022 $22.29 - - - See method: 2016 $7.00 $3.43 Market

Option, Suite: 107/201 6,212.00 $134,734 Jul-2023 $22.89 BY 3.00% See assumption:

Jul-2021 to Jun-2026 12.87% $1.81 Jul-2024 $23.49 $43,484 $21,328 $1.65 FS

60 Months $11,228 Jul-2025 $24.09

@ 100% of Mkt

4 CAL Lighting $21.00 May-2018 $21.60 - - - See method: 2016 - - Option

Office, Suite: 200 7,490.00 $157,296 May-2019 $22.20 BY See assumption:

May-2016 to Aug-2023 15.51% $1.75 May-2020 $22.80 $1.65 FS

88 Months $13,108 May-2021 $23.40

May-2022 $24.00

May-2023 $24.89

34

(continued from previous page)

4 CAL Lighting $23.12 Sep-2024 $23.72 - - - Gross: Pays the $7.00 $3.65 Option

Option, Suite: 200 7,490.00 $173,198 Sep-2025 $24.32 increases over a 3.00% See assumption:

Sep-2023 to Aug-2028 15.51% $1.93 Sep-2026 $24.92 base year ending $52,430 $27,328 $1.65 FS

60 Months $14,433 Sep-2027 $25.52 Dec-2023: $8.01.

@ 100% of Mkt

4 CAL Lighting $26.81 Sep-2029 $27.41 - - - Gross: Pays the - $4.20 Market

Option, Suite: 200 7,490.00 $200,784 Sep-2030 $28.01 increases over a 3.00% See assumption:

Sep-2028 to Aug-2033 15.51% $2.23 Sep-2031 $28.61 base year ending $31,466 $1.65 FS

60 Months $16,732 Sep-2032 $29.21 Dec-2028: $9.32.

@ 100% of Mkt

S1 Suites 125 / 205 / 21 $19.80 Jun-2019 $20.39 - 1-3 100.00% Gross: Pays the $25.00 $7.51 Market

Office, Suite: Hlf 1 4,474.33 $88,592 Jun-2020 $21.01 increases over a 7.50% See assumption:

Jun-2018 to May-2023 9.27% $1.65 Jun-2021 $21.64 base year ending $111,858 $33,615 $1.65 FS

60 Months $7,383 Jun-2022 $22.29 Dec-2018: $6.86.

S1 Suites 125 / 205 / 21 $20.09 Dec-2019 $20.70 - 1-3 100.00% Gross: Pays the $25.00 $7.62 Market

Office, Suite: Hlf 2 4,474.34 $89,911 Dec-2020 $21.32 increases over a 7.50% See assumption:

Dec-2018 to Nov-2023 9.27% $1.67 Dec-2021 $21.96 base year ending $111,859 $34,115 $1.65 FS

60 Months $7,493 Dec-2022 $22.62 Dec-2018: $6.86.

S1 Suites 125 / 205 / 21 $20.39 Jun-2020 $21.01 - 1-3 100.00% Gross: Pays the $25.00 $7.74 Market

Office, Suite: Hlf 3 4,474.33 $91,249 Jun-2021 $21.64 increases over a 7.50% See assumption:

Jun-2019 to May-2024 9.27% $1.70 Jun-2022 $22.29 base year ending $111,858 $34,623 $1.65 FS

60 Months $7,604 Jun-2023 $22.95 Dec-2019: $7.24.

Total Occupied SqFt 39,331.33

Total Available SqFt 8,948.67





35





1 MAXIMUS, Inc $17.40 May-2019 $18.00 - 1-8 100.00% See method: 2018 - - Option

Office, Suite: Multi 79,399 $1,381,543 May-2020 $18.60 BY est. See assumption:

May-2018 to Sep-2023 78.33% $1.45 May-2021 $19.20 Lg Space MLA

65 Months $115,129 May-2022 $19.80

May-2023 $20.40

1 MAXIMUS, Inc $20.81 Oct-2024 $21.22 - - - See method: 2018 - $2.57 Market @90%

Option, Suite: Multi 79,399 $1,652,134 Oct-2025 $21.65 BY est. 3.00% See assumption:

Oct-2023 to Sep-2027 78.33% $1.73 Oct-2026 $22.08 $204,284 Lg Space MLA

48 Months $137,678

2 Fidelity National Title $17.40 Feb-2019 $18.00 - - - See method: 2015 - - Market

Office, Suite: 200 13,572 $236,148 Feb-2020 $18.60 BY See assumption:

Sep-2011 to Feb-2021 13.39% $1.45 Sm. Space MLA

114 Months $19,679

3 Dept. of Industrial Relations $16.36 Nov-2019 $16.89 - - - Full Service: - - Market

Office, Suite: 230 4,584 $75,012 Pays no expense See assumption:

Aug-2013 to Oct-2021 4.52% $1.36 reimbursement. Sm. Space MLA

99 Months $6,251

4 Prof.Bureau of Collections $20.40 Jul-2018 $21.00 - - - See method: 2015 - - Option

Office, Suite: 240 3,806 $77,642 Jul-2019 $21.60 BY See assumption:

Jun-2015 to Nov-2020 3.75% $1.70 Jul-2020 $22.20 Sm. Space MLA

66 Months $6,470

4 Prof.Bureau of Collections $21.32 Dec-2021 $21.92 - - - Gross: Pays the $7.00 $3.38 Market

Option, Suite: 240 3,806 $81,139 Dec-2022 $22.52 increases over a 3.00% See assumption:

Dec-2020 to Nov-2025 3.75% $1.78 Dec-2023 $23.12 base year ending $26,642 $12,856 Sm. Space MLA

60 Months $6,762 Dec-2024 $23.72 Dec-2020: $6.54.

@ 100% of Mkt

Total Occupied SqFt 101,361

Total Available SqFt 0

ARGUS: PRESENTATION RENT ROLL - 11050 OLSON

36

TENANCY

Maximus, Inc5/1/18-9/30/2379,399 sfwww.maximus.com

MAXIMUS, Inc. (NYSE: MMS), founded in 1975 with headquarters in Reston, Virginia, provides consulting services and support to government health and human services programs in the United States, the United Kingdom, Australia, Canada, and Saudi Arabia. The company’s U.S. Federal Services division offers a multitude of services, including: centralized customer contact centers and support services; document and records management; case management, citizen engagement, and consumer education; independent medical reviews and worker’s compensation benefit appeals; health benefit appeals; eligibility appeals; modernization of systems and IT infrastructure; infrastructure operations and support; software development, operations, and management; and data analytics. Its Human Services segment provides states (including California) and local governments, with various business process and related consulting services for welfare-to-work, child support, higher education, and K-12 special education programs.

For the fiscal year ending 9/30/17 MAXIMUS, Inc. reported net income of $209 million on revenues totaling $2.45 billion. Cash on hand and equivalents totaled $166 million, with stockholder equity of $904 million. MAXIMUS has a market capitalization of $4.62 billion, and more than 97% of its stock is institutionally owned. No agency debt ratings are available because the company typically carries little or no debt.

San Joaquin Valley College1/1/18-3/31/2417,535 sfwww.sjvc.edu

San Joaquin Valley College is a private junior college founded in 1977 which has since grown to fifteen campuses throughout California. Branch campuses are located in Hesperia, Fresno, Madera, Delano, Bakersfield, Modesto, Rancho Cordova, Lancaster, San Diego, Temecula and Ontario. The aviation program is located at the Fresno Yosemite International Airport. SJVC also offers online programs in seven of its 20 career-focused areas of study. Privately held SJVC expanded and relocated from 11050 to 11000 as of 1/1/18 and has been a tenant at Prospect Point since 2005.

Fidelity National Title Company9/1/11-2/28/2113,347 sfwww.fnf.com

Fidelity National Title is a member of the Fidelity National Financial (NYSE: FNF) family of companies and the nation’s largest group of title companies and title insurance underwriters. Chicago Title Insurance Company, Commonwealth Land Title Insurance Company, Fidelity National Title Insurance Company, Alamo Title Insurance, Lawyers Title, and Ticor Title collectively issue more title insurance policies than any other title company in the United States. Fidelity National Financial, Inc. was founded in 1847 and is headquartered in Jacksonville, Florida.

For the fiscal year ended 12/31/16 the company reported net earnings of $642 million on revenues of $9.55 billion. Cash on hand and equivalents totaled more than $1.3 billion. The Company has a market capitalization of $11.1 billion, with total stockholder equity of just under $6 billion. Standard & Poor’s rates the company’s debt BBB, Stable.

TENANT PROFILES

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40

CAL Lighting5/1/16-7/31/237,490 sfcal.lighting

CAL Lighting is the designated representative in California and Northern Nevada for manufacturers of more than 119 different brands of lighting and lighting control equipment. They have offices in San Ramon, Santa Barbara, Clovis, Rancho Cordova, and Reno. They assist and support the lighting community with fixture selection and specifications, and utilize photometric software to model various layouts and lighting configurations.

Infor Global Solutions3/1/11-6/30/216,212 sfwww.infor.com

Headquartered in New York City, Infor is a privately-held enterprise software provider and technology partner for more than 90,000 organizations around the world. Infor builds business software for specific industries in the cloud. With 16,000 employees and 90,000 customers in 170 countries, their software is custom designed for each industry and user. According to Wikipedia Infor has acquired more than 40 other software companies since its founding in 2002, and presently has 58-million cloud users. Infor's customers include Bausch & Lomb, Ferrari, Heineken, Wyndham Hotels, Hershey Entertainment and Resorts, Boskalis, EBSCO, Legacy Health, and Best Western International. Their huge customer base is serviced by 41 offices worldwide, including the one in Rancho Cordova, California.

California Department of Industrial Relations8/1/13-10/31/214,584 rsf (4,021 usf)www.dir.ca.gov

The California Department of Industrial Relations (DIR) was established in 1927. Its mission is to improve working conditions for California's wage earners and to advance opportunities for profitable employment in California. DIR administers and enforces laws governing wages, hours and breaks, overtime, retaliation, workplace safety and health, apprenticeship training programs, and medical care and other benefits for injured workers. DIR also publishes materials and holds workshops and seminars to promote healthy employment relations, conducts research to improve its programs, and coordinates with other agencies to target egregious violators of labor laws and tax laws in the underground economy.

Professional Bureau of Collections of Maryland6/1/15-11/30-203,806 sf www.pbccorp.com

Originally founded in Elk Grove, CA in 1994, PBCM is based in Denver and is a leading provider of Accounts Receivable Management services. Their customers include banks, health care providers, utility companies and government agencies, among others.

The company is privately held.

Relay Application Innovation3/1/13-2/28/233,620 sfwww.relayapplication.com

Headquartered in Pullman, Washington, Relay Application Innovation designs electrical power protection systems including the programming and integration of protective relays and peripheral systems. Their customers include utilities, industrial plants, construction companies, project developers, system integrators, contractors, consultants and electric transmission companies.

The company is privately held.

(continued from previous page)

41

AREA OVERVIEW

SACRAMENTO

Sitting at the junction of Interstates 5 and 80, Sacramento,

California is the capital of the most populous state in America,

and its roughly 2.2 million residents make Sacramento the

25th largest market in the country. The Sacramento MSA

includes seven counties and it is the cultural and economic

center of the region. Its economy is characterized by a

strong, stable base of government employment, a well-

educated labor pool, and a cost of living that is decidedly

more affordable than the cities and counties in the Greater

San Francisco Bay and Silicon Valley areas.

Over the last two decades Sacramento’s government and

business leaders have focused their attention on creating

private sector jobs to achieve a better balance between

private and public employment. A number of Bay Area tech

companies have established a presence in Sacramento,

citing its lower cost of living and freedom from potentially

disruptive seismic activity. Public/private partnerships have

been successful in helping the region develop and grow its

technology community, and publicize the region’s competitive

advantages. Health care companies such as Sutter, Kaiser,

and Dignity Health, have thrived in Sacramento. Other key

areas of growth are in the fields of agricultural/food sciences,

biotechnology, and renewable energy.

Some of the Sacramento MSA’s competitive advantages

include:

• Concentration of federal and state regulatory

agencies, trade associations, and the executive and

legislative branches of state government.

• Low costs of living and of doing business, with lower

home prices and business occupancy costs.

• Well-educated workforce. In addition to the University of

California Davis and California State University Sacramento,

the region has a robust system of community colleges and

vocational schools. The University of the Pacific’s highly-

regarded McGeorge School of Law has a Sacramento

campus as well.

• Strategic Location. The junction of Interstates 5 and 80 just

north of downtown Sacramento put most of the western U.S.

within a one-day drive by truck, a key logistics advantage.

Sacramento is also well served by air, rail, and even a deep-

water port in West Sacramento, 10 minutes from the CBD.

MAJOR EMPLOYERS

State government (non-education) 88,700

State government (education) 31,300

Local government (non-education) 47,200

Local government (education) 59,200

Federal government 16,200

Sutter Health Sacramento Region 15,014

Kaiser Permanente 14,368

U. C. Davis Health System 10,149

Dignity Health 7,853

Intel, Corp. 6,000

Raley’s, Inc. 5,597

Apple, Inc. 4,000

Safeway 3,917

VSP Global 2,906

Wells Fargo 2,891

Sources: Sacramento Business Journal, 2016 Book of Lists; California Department of Labor Statistics

44

DOWNTOWN RENAISSANCE

Downtown and Midtown Sacramento are experiencing unprecedented growth

in both residential and commercial development. The construction of the $558

million Sacramento Entertainment and Sports Complex (ESC) created a swell

of activity and attracted the interest of investors and developers not previously

active in this market. The new downtown ESC, which is now called Golden 1

Center, opened in October 2016 and features high-tech innovations and farm-

to-fork food offerings that rival those in Sacramento’s many fine restaurants.

In addition to Kings games the Arena’s state-of-the art design makes it a

perfect venue for concerts and other non-sporting events – a total of ±240

per year including Kings games. Other significant developments in downtown

Sacramento include the following.

• Downtown Arena. The new entertainment and sports arena, Golden 1

Center, has created a swell of activity and attracted the interest of investors

and developers not previously active in this market. The $588 million

Golden 1 Center is not only home to the NBA’s Sacramento Kings, it is

a state-of-the-art performance venue that accommodates sporting and

entertainment events such as professional and collegiate sports, concerts,

ice shows, indoor rodeo, trade shows, large graduations, and other

indoor entertainment. The center will eventually host up to 240 events

per year creating a significant economic boost for downtown businesses.

46

• DOCO. Adjacent to the arena, the partnership that owns the Sacramento

Kings is constructing a mixed-use development called Downtown

Commons (DOCO) that includes a 250-room Kimpton hotel, 475,000

square feet of office space, 350,000 square feet of retail, and up to

500,000 square feet for residential units.

• Sacramento Railyards. Formerly a Union Pacific rail yard, this 244-

acre development reportedly is the largest infill project in the country.

It sits at the northern edge of the city where substantial infrastructure

improvements are presently underway. The Railyards will nearly double

the size of “downtown”, with planned developments to include housing,

parks, retail, entertainment, office space, theaters, and hotels. Kaiser

Permanente has purchased 18 acres near Interstate 5 in the northwest

corner of the Railyards for a proposed hospital.

• Developments beyond the immediate “arena zone” are feeling the

economic glow as well. More than 25 projects in Downtown and Midtown

are under construction or in the planning stages, and the City is rushing

to hire additional staff to help manage the swell of new development and

construction. The sheer volume of commercial activity is a clear signal

that Sacramento is presently, and for the foreseeable future, a hot market.

New development is expensive to bring on line and necessitates higher office

rents and parking fees, which inevitably causes some occupiers to seek more

affordable suburban alternatives such as the Highway 50 Corridor submarket.

To review a summary of current and planned development activity in downtown

Sacramento, visit the Downtown Sacramento Partnership’s Emerging Projects

site: http://downtownsac.org/developments/emerging-projects/

47

http://downtownsac.org/developments/emerging-projects/

Highway 50 Corridor

HIGHWAY 50 CORRIDOR SUBMARKET

Prospect Point is within the Highway 50 Corridor which contains 11.4 million square feet, making it the largest office submarket within the Sacramento MSA.

Geographically it extends from Watt Avenue on the west to Hazel Avenue on the east. As its name implies the submarket follows the route of Highway 50 and is an

ideal choice for tenants seeking affordability, abundant free parking, good freeway access, proximity to light rail and bus transportation, and a full range of housing

alternatives for employees and executives. Tenants seeking larger floor plates have more choices within this submarket than any other.

NMAP NOT TO SCALE

48

Rancho Cordova

The City of Rancho Cordova is 11 miles east of Sacramento with a resident population of 73,000. On workdays, however, an estimated 50,000 additional people

from throughout the region arrive to work in Rancho Cordova which has within its city limits 7.8 million square feet of office space. A few well-known companies with

a presence in “Rancho” include Health Net, Vision Service Plan, Delta Dental, Blue Shield, USI Insurance Services (formerly Wells Fargo Insurance). In addition to these

private employers, many federal, state, and Sacramento County offices are also located in Rancho Cordova providing thousands of jobs.

By locating in Rancho Cordova employers can attract employees from multiple suburban Sacramento neighborhoods. In addition to immediate freeway access the

city is served by Sacramento Regional Transit’s light rail lines and bus routes. Rancho Cordova offers an attractive and affordable alternative to downtown where office

rents are nearly double those at Prospect Point.

Housing

Rancho Cordova currently has more than 73,000 residents and is still growing with many new homes under construction or in the planning stages. Some of the new

projects and approval status are listed below.

NAME DWELLING UNITS DEVELOPER APPROVAL STAGE

Rio Del Oro 12,189 Gencorp Specific Plan approved

Montelena 806 Montelena Douglas Tent. Map approved

Anatolia IV 139 AKT Investments Tent. Map approved

North Douglas 666 Lennar Communities Final map

Arista Del Sol 740 T. Johnson Tent. Map approved

Sunridge Lot J 369 Cresleigh Homes Tent. Map approved

Grantline 208 502 Riverwest Tent. Map approved

Douglas 103 198 Douglas Grantline Tent. Map approved

Douglas 98 528 Douglas 98, LLC Tent. Map approved

The Ranch 1,757 Hovnanian Homes Environmental review

Suncreek 4,893 Suncreek Owners Group Specific Plan approved

49

50

OLSON DRIVE

Zinfandel Square



11000

11050

OLS

ON

DR

IVE

ZINFANDEL DRIVE

PR

OS

PEC

T P

AR

K D

RIV

E

MARKET TRENDS

OLSON DRIVE

Zinfandel Square

FOLSO

M BO

ULEVA

RD


MARKET TRENDS

Attractive debt capital continues to be abundant, and

Sacramento is on more investor radar screens than

ever before. The price point for this asset will attract

private and institutional investors from around the

country, many with trade money. If the asset receives

national exposure and a well-orchestrated managed

bid process is implemented, investors will compete

aggressively to acquire the asset.

SACRAMENTO MARKET

The Sacramento office market continues to improve

both in the urban core and suburban submarkets. In

2017, Sacramento recorded approximately 875,000

SF of net absorption market wide, with suburban

properties accounting for approximately 80% of that

figure. This represents the 6th consecutive year of

growth in net absorption of office space. Average

lease rates continue to rise as evidenced by an appx.

$.10 psf increase in suburban markets and a $.17 psf

increase in Downtown compared to 2016.

The vacancy rates in downtown and midtown, 10%

and 5% respectively, continue to decrease, and are at

their lowest levels in a decade. These submarkets have

also experience the highest increase in rental rate with

top product achieving well over $3.00psf. A dearth of

large blocks of space coupled with higher rents have

forced sizable occupiers like The State of California into

suburban submarkets. South Natomas was the primary

beneficiary of this trend in 2016, but that submarket is

nearly full, and with no speculative office development

in the pipeline, Highway 50 has become the preferred

location for large public and private users.

Zinfandel Square


ZINFANDEL DRIVE

FOLSOM BOULEVARD

PROSPECT PARK DRIVE

Parcel lines are approximate and for illustrative purposes only.52

HIGHWAY 50 SUBMARKET

In 2017 the region’s largest lease transactions took place in the

Highway 50 Corridor.

• Centene/Healthnet: 55k SF at 10811 International Drive

• Centene/Heathnet: 180k SF at 10730 and 10734

International Drive

• Maximus: 80k SF at 11050 Olson Drive

• Tax Audit: 55k SF at 600 Coolidge Drive

• Department of Consumer Affairs: 55k SF at 2920 Kilgore Rd

• UC Davis: 45k SF at 10545 Armstrong Ave

• Superior Vision: 38k SF at 11090 White Rock Road

Despite Verizon having vacated 178,000 sf early in 2017, the Highway

50 Corridor office submarket was the Sacramento region’s strongest

performer in 2017 racking up net absorption totaling 316,460 square

feet. This leasing was concentrated in Class A and B office properties.

The overall vacancy rate fell more than 300 bps and now stands at

16.1%. Class C office properties, many of which are functionally

obsolete, are 25% vacant which skews overall market statistics. In

contrast, Class A and B office properties have a blended vacancy rate

of only 11.7% (CoStar data). Average lease rates are $1.85 psf for

Class A and $1.70psf for Class B, with the upward trend expected to

continue in the coming years.

The Highway 50 Corridor is one of the few submarkets able to

accommodate large-block tenants. Rancho Cordova features office

properties that, like Prospect Point, are characterized by large floor

plates and a parking ratio in excess of 4: 1,000 sf. With a prevailing

trend in workplace design that emphasizes optimizing worker density,

Rancho Cordova office properties, and Subject Property in particular,

are well positioned to continue to compete successfully for new tenants.

No New Construction

No new office buildings have been

delivered to the Highway 50 Submarket

since 2012 and none is under construction

at this time. It is reported that development

will soon begin on a 300,000 square

foot California Military Department

headquarters on Bear Hollow Drive In

Mather. This 30-acre complex would

house various agencies within the Military

Department, including the California Air

National Guard, California State Military

Reserve and California National Guard,

the last of which would relocate from

Bradshaw Business Park.

Institutional Ownership

The enduring strength of the Highway

50 Submarket is evidenced by the high

number of institutional investors who own

office properties in this area, including:

• KBS

• Griffin Capital

• UBS

• Deutsche Asset & Wealth

Management

• Panattoni

• Eaton Vance

• CalPERS

• Divco West

• Hines

OLSON DRIVE

Zinfandel Square

FOLSOM BOULEVARD



53

SALE COMPS

PROSPECT POINT 11000-11050 OLSON DR .

RANCHO CORDOVA

10590 ARMSTRONG AVE . MATHER

1515 R IVER PARK DR . SACRAMENTO 95815

OLYMPUS CORP CENTER 3001, 05, 09, 13 DOUGLAS BL.

ROSEVILLE

11020 SUN CENTER DR . RANCHO CORDOVA

548 GIBSON DR . ROSEVILLE

DATE SOLD Subject 9/29/17 4/28/17 1/20/17 12/20/16 7/22/16

SALE TYPE Investment Investment Investment Investment Investment Investment

PURCHASER TBD WHAL Properties Sacramento

Margetich Group Sacramento

Barker Pacific Group Los Angeles

Gov't. Prop. Income Trust Newton, MA

Schwager Davis, Inc. San Jose

TENANT(S)MAXIMUS, Inc.,

San Joaquin Vly. Coll., Fidelity Title etc.

County of Sacramento Multiple UBS, PNC Mortgage, City National Bank etc.

Cal. Water Resources; Capital Engineering

Keller Williams, Food Svc. Ins.,

Stewart Title etc.

BUILT 1985-1988 2009 1980 1995 1984 2007

OCCUPANCY 91% 100% 83% 78% 100% 93%

PRICE $21,650,000 $8,000,000 $5,094,723 $33,850,000 $14,100,000 $8,905,000

NOI $1,518,830 $630,400 $318,420 $2,413,505 $1,283,100 $641,160

CAP RATE ACTUAL 7.02% 7.88% 6.25% 7.13% 9.10% 7.20%

CAP RATE PROFORMA - - 7.50% 8.59% 9.10% 7.72%

PROPERTY SIZE 149,641 42,734 31,984 191,248 82,896 47,478

PRICE/SF $145 $187 $159 $177 $170 $188

ADJUSTMENTS TO VALUE

MARKET TIMING - 0% 0% 0% 0% 5%

LOCATION - 0% -5% -20% -5% -10%

AGE/CONDITION - -15% 5% -5% 0% -10%

OCCUPANCY - -5% 5% 10% 0% 0%

TERM/CREDIT - 0% 0% 0% -15% 0%

TOTAL ADJUST. - -20% 5% -15% -20% -15%

ADJUSTED VALUE $21,650,000 $6,400,000 $5,349,459 $28,772,500 $11,280,000 $7,569,250

ADJ. VALUE PSF $145 $150 $167 $150 $136 $159

1 2 3 4 5

54

PROSPECT PO I N T

1

2

3

4

5

NMAP NOT TO SCALE

Prospect Point 11000-11050 Olson Dr., Rancho Cordova

1 10590 Armstrong Ave., Mather

2 1515 River Park Dr., Sacramento 95815

3 Olympus Corp Center 3001, 05, 09, 13 Douglas Bl., Roseville

4 11020 Sun Center Dr., Rancho Cordova

5 548 Gibson Dr., Roseville

55

PROSPECT PO I N T

INVESTMENT CONTACT LOCAL MARKET CONTACTS

500 Capitol Mall, Suite 2400Sacramento, CA 95814

RANDY GETZExecutive Vice PresidentLic. 00828903+1 916 446 [email protected]

TONY WHITTAKERFirst Vice PresidentLic. 01780828+1 916 492 [email protected]

RICK HENRYSenior Vice PresidentLic. 00879584+1 916 492 [email protected]

mailto:randy.getz%40cbre.com?subject=

mailto:tony.whittaker%40cbre.com?subject=

mailto:rick.henry%40cbre.com?subject=

prospect point - loopnet

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