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275
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PRIME COSTA MESA INVESTMENT OPPORTUNITY
OFFERING MEMORANDUM
DISCLAIMER This Confidential Offering Memorandum (this “Memorandum”) is being delivered subject to the terms of the Confidentiality Agreement signed by you (the “Confidentiality Agreement”) and constitutes part of the evaluation material. It is being given to you for the sole purpose of evaluating the possible acquisition of 275 McCormick Avenue, Costa Mesa, California (“Property”), and is not to be used for any other purpose or made available to any other party without the prior written consent of the Owner or Lee & Associates, Inc. - Irvine Commercial Real Estate Services (“Broker”). This Memorandum was prepared by the Broker based on information supplied by the Owner and the Broker. It contains selected information about the Property and the real estate market but does not contain all the information necessary to evaluate the acquisition of the Property. The financial projections contained herein (or in any other evaluation material) are for general reference only. They are based on assumptions relating to the general economy and local competition, among other factors. Accordingly, actual results may vary materially from such projections. Various documents have been summarized herein to facilitate your review; these summaries are not intended to be a comprehensive statement of the terms or a legal analysis of such documents. While the information contained in this Memorandum or any other evaluation material is believed to be reliable, neither Broker nor Owner guarantees its accuracy or completeness. Because of the foregoing and since the Property will be sold on an “AS IS,” “WHERE IS” basis, a prospective purchaser must make its own independent investigations, projections, and conclusions regarding the acquisition of the Property without reliance on this Memorandum or any other evaluation material. Although additional evaluation material (why may include engineering, environmental or other reports) may be provided to qualified parties as marketing information, prospective purchasers should seek advice from their own attorneys, accountants and engineering/environmental experts. Owner expressly reserves the right, at its sole discretion, to reject any offer to purchase the Property or to terminate any negotiations with any party at any time with or without written notice. Owner shall have no legal commitment or obligations to any prospective purchaser until a written sale agreement has been fully executed, delivered and approved by Owner and any conditions to Owner’s obligations hereunder have been satisfied or waived. Owner has retained Broker as its exclusive broker and will be responsible for any commission due to Broker in connection with a sale of the Property pursuant to separate agreement. Broker is not authorized to make any representation or agreement on behalf of Owner. Each prospective purchaser will be responsible for any claims or commissions by any other broker in connection with a sale of the Property if such claims arise from acts of such prospective purchaser or its broker. This Memorandum is the property of Owner and Broker and may be used only by parties approved by Owner and Broker. No portion of this Memorandum may be copied or otherwise reproduced or disclosed to anyone except as permitted under the Confidentiality Agreement.
INVESTMENT ADVISORS KURT BRUGGEMAN, CCIM PHIL COHEN
Lee & Associates, Inc. - Irvine Senior Vice President Senior Vice President
9838 Research Drive CalDRE 01264501 CalDRE 01156287
Irvine, California 92618
949.790.3125 949.790.3160
lee-associates.com | lee-cmg.com
kbruggeman@leeirvine.com pcohen@leeirvine.com
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TABLE OF Executive Summary
1
CONTENTS Property Description
2
Tenant Information
3
Area Overview
4
Financial Analysis
5
Sale Comparables
6
1 EXECUTIVE SUMMARY
OVERVIEW
Address 275 McCormick
Costa Mesa, CA 92626
(Building A & B)
Offering Price Best Offer
100% Leased / In-Place NNN
Income $1,080,779.40
Lease Type NNN
Number of Stories One (1) Story Office
High Ceiling Creative Office Campus
Net Rentable Building Area ±42,977 SF
(two buildings)
Land Area 3.14 acres
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OFFERING MEMORANDUM
THE INVESTMENT
Lee & Associates, Inc. – Irvine is pleased to present the opportunity
to acquire a 100% leased investment in 275 McCormick
consisting of Two (2) single story, high clearance, creative office
buildings totaling 43,607 square feet. The buildings are located
off the Red Hill in Costa Mesa with excellent access to the 55,
405 Freeways and 73 Toll Road.
HIGHLIGHTS
• Unique Creative Office Product: These buildings have
a unique feel as they were converted from an industrial
building into multiple creative office buildings. They have
ceiling heights of 18-20’ and provide tenants with drive up
parking and excellent central Costa Mesa location.
• 100% Leased/Staggered Roll Over: The project is currently
100% leased with staggered lease expirations allowing
the investor a stable cash flowing asset without significant
vacancy at any one time.
• Condo Map Allows or Owner User Exit: Current ownership
processed a condo map on the property that would allow
an investor the flexibility to sell the buildings individually to
owner users or smaller investors down the road.
• Diversidied Tenant Mix: 275 McCormick has three (3)
excellent tenants in the project in clothing design, a long
standing church and an investor in middle market consumer
companies. All three have high end office finishes and unique
office environments.
• Airport Area Office Market/Low Rise Outperforming:
The entire airport area office market has over Fifty Million
(50M) rentable square feet and vacancy of about 16% as of
6/30/21. While many Class A highrise spaces are having
difficulty and seeing significant vacancy, the single-story
drive up office assets are outperforming since Covid hit in
2020 and have a vacancy rate of 8.3%.
9
2 PROPERTY DESCRIPTION
PROPERTY SPECIFICATIONS
275 McCormick
Address
Costa Mesa, CA 92626
County Orange Exterior Walls Concrete Tilt-up and Concrete Block
Land Area - Acres ±3.14 Roof Cover Built-Up Composition Roof
APN 427-061-07
Floor Structure Concrete Slab on Grade
±42,977 RSF (per the leases)
Rentable Building Area (Note: Buyer has ability to increase
Building has ~32 Package Units on the 2 Roofs
the RSF to 43,607 as leases roll per HVAC
with varying age and size/use
Stevenson Systems Report)
Number of Stories One (1) - Single Story, High Clearance
Occupancy 100%
Converted to Office 2001
Year Built / Renovated
Multiple Renovations 2005/2015/2020
Parking on Site 181 Stalls
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OFFERING MEMORANDUM13
PARCEL MAP
ALTA SURVEY
3
TENANT
I N F O R M AT I O NTENANT SUMMARY Space: 275 McCormick, Unit B
Costa Mesa, CA
www.bbdakota.com Tenant: B.B. Dakota, Inc.
BB Dakota is a modern lifestyle brand, distributed through top Lease Start: April 1, 2018
department stores, specialty boutiques in US and Canada, as Lease Expiration: March 31, 2023
well as the BB Dakota online store. BB Dakota is regularly
Size: 10,450 RSF
featured in Teen Vogue, Nylon, Shape, Glamour, Women’s
Wear Daily, and myriad other fashion rags. Many celebrities Base PSF Rent: $2.25 NNN
wear our brands; among them are Jessica Alba, Taylor Swift, Lease Term: 5 Years
Naomi Watts, Reese Witherspoon, and Vanessa Hudgens.
Annual Increases: $0.05
Monthly Rent Dates
$23,512.50 April 1, 2018 - March 31, 2019
$24,035.00 April 1, 2019 - March 31, 2020
$24,557.50 April 1, 2020 - March 31, 2021
$25,080.00 April 1, 2021 - March 31, 2022
$25,602.50 April 1, 2022 - March 31, 2023
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OFFERING MEMORANDUMSpace: 275 McCormick, Building A-200
Costa Mesa, CA
Tenant: Mission Bible Church USA
Lease Start: November 1, 2020
Lease Expiration: October 31, 2025
www.missionbible.org Size: 14,303 RSF
Welcome to Mission Bible Church. We’re glad Base PSF Rent: $2.25 NNN
that you took the time to stop by. As you look Lease Term: 5 Years
around our website, we hope you sense that
we’re a community of Christians who are Annual Increases: $0.05
committed to God’s Word. We give our best to Monthly Rent Dates*
understand it, to share it accurately, and apply $32,181.75 November 1, 2020 - October 31, 2021
it to our lives diligently every single day! As we $32,896.90 November 1, 2021 - October 31, 2022
grow closer to God, we’ll see our relationships $33,612.05 November 1, 2022 - October 31, 2023
with one another enhanced and strengthened.
$34,327.20 November 1, 2023 - October 31, 2024
Ultimately, God will use us for His glory, to impact
$35,042.35 November 1, 2024 - October 31, 2025
Orange County and the world. We’re excited that
you’re joining us online and hope you will come
by to worship with us this weekend.
Note: Tenant has one (1) Five (5) Year renewal option at FMV or minimum of $2.45 with $0.05 annual increases.
Space: 2757 McCormick, Building A-100
Costa Mesa, CA
Tenant: Compass Group Management, LLC
Lease Start: June 1, 2021
www.compassdiversified.com Lease Expiration: May 31, 2031
Size: 18,224 RSF
With a 22 year proven track record, Compass
Diversified (NYSE: CODI) offers shareholders Base PSF Rent: $1.80 NNN
a unique opportunity to own a diverse group Lease Term: 10 Years
of leading middle-market businesses. We own
Annual Increases: 3%
controlling interests in our subsidiary businesses,
which maximizes our operating flexibility and Monthly Rent: $18,224
drives long-term value creation. Compass Year Rent/SF Monthly Rent Dates Year Rent/SF Monthly Rent Dates
Diversified generated $1.7 billion in 2020 and 1 $1.80 $32,803.20 6/1/2021 - 5/30/2022 6 $2.05 $37,359.20 6/1/2026 - 5/30/2027
holds 4,000+ portfolio company employees. 2 $1.85 $33,714.40 6/1/2022 - 5/30/2023 7 $2.10 $38,270.40 6/1/2027 - 5/30/2028
3 $1.90 $34,625.60 6/1/2023 - 5/30/2024 8 $2.15 $39,181.60 6/1/2028 - 5/30/2029
4 $1.95 $35,536.80 6/1/2024 - 5/30/2025 9 $2.20 $40,092.80 6/1/2029 - 5/30/2030
5 $2.00 $36,448.00 6/1/2025 - 5/30/2026 10 $2.25 $41,004.00 6/1/2030 - 5/30/2031
Tenant has one(1) Five(5) Year renewal option at FMV or minimum of $2.25 with $0.05 annual increases.
*Note: Compass Group Management moved from a hig-rise office to a low rise single story building. 194
AREA
OVERVIEWNewport Beach
John Wayne Airport
Fashion Island
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Newport Harbor OFFERING MEMORANDUM South Coast PlazaORANGE COUNTY
Orange County’s 3 million residents enjoy a nearly perfect climate in which parks and beaches provide
abundant opportunities for outdoor activities. Orange County is the home of exciting professional
sports, a wide range of tourist attractions and quality venues for visual and performing arts. Orange
County boasts a thriving business economy and well educated work force.
Orange County has 42 miles of beautiful coastline, three harbors and 25 urban and wilderness parks -
including 230 miles of riding and hiking trails. The beaches and harbors host world-class yachts, dinner
cruises, electric boats and Olympic-caliber kayakers and rowers. The parks include various amenities
like tennis, volleyball and
basketball courts.
John Wayne Airport (SNA) is owned and operated by the County of Orange and is the only airport in
Orange County that provides commercial passenger and air-cargo service. John Wayne Airport is the
gateway through which millions of passengers travel each year to their homes, families, vacations and
businesses.
Orange County is one of the premier tourist destinations and features attractions such as: Angel
Stadium, Disneyland Park, Knott’s Berry Farm, Balboa Island, Anaheim Convention Center, Discovery
Science Center, Fashion Island, South Coast Plaza and many more.
ORANGE COUNTY TOP EMPLOYERS ORANGE COUNTY DEMOGRAPHICS
Employer # of Employees Population 3.19M
The Walt Disney Company 30,000
University of California, Irvine 23,884 Median Age 38.3
County of Orange 17,271
Median HH Income $89,759
St. Joseph Health 14,000
Kaiser Permanente 8,178 Number of Employees 1.61M
Albertsons 7,670
Target Corp. 6,300 Median Property Value $709,800
Walmart Inc. 6,200
Unemployment Rate 5.9%
Hoag Memorial Hospital Presbyterian 6,100
(May 2021)
The Boeing Company 6,000
Memorial Care Health System 5,400
California State University, Fullerton 5,044
Bank of America Corp. 4,800
Edwards Life Sciences 4,652
23FINANCIAL
5
A N A LY S I SFINANCIAL OVERVIEW
RENT ROLL
Lease Term Current Base Rent
Suite Tenant Sq. Ft. Rent Type Rental Increases
Start Expire $/SF $/Mo
Compass Group
1 A-100 18,224 6/1/2021 05/30/2031 $1.80 $32,803.20 NNN $0.05 Annually
Management
Mission Bible Church
2 A-200 14,303 11/1/2020 10/31/2025 $2.25 $32,181.75 NNN $0.05 Annually
USA
3 B B.B. Dakota, Inc. 10,450 4/1/18 3/31/2023 $2.40 $25,080.00 NNN $0.05 Annually
TOTALS 42,977 $90,064.95
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OFFERING MEMORANDUMIN-PLACE INCOME
Income (2021)
Size (SF) Suite % Share Stabilized
Compass Group Mgmt 18,224 A-100 42.4% $393,638
Mission Bible Church 14,303 A-200 33.3% $386,181
B.B. Dakota, Inc. 10,450 B 24.3% $300,960
42,977 100% $1,080,779
Expense Reimbursement $258,069
Total Rent + Reimbursement Revenue $1,338,848
Current Estimated Operating Expenses
Property Taxes (to be adjusted on sale) ($87,190)
Liability & Casualty Insurance ($7,425)
Repairs & Maintenance ($25,440)
Utilities (Water / Electric) ($19,212)
Janitorial ($38,110)
Property Management ($42,604)
Landscaping ($34,571)
Trash Service ($3,517)
TOTAL: ($258,069)
NOI - In Place (Annualized) $1,080,779
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SALE
C O M PA R A B L E SSALE COMPARABLES
Year Price CAP
Property Address Bldg SF Sale Date Sale Price Buyer Seller
Built PSF Rate
26600 Aliso Viejo Pkwy CrossHarbor Capital
1. 53,624 1999 6/5/2020 $23,917,851 $446 IRA Capital, LLC
Aliso Viejo, CA Partners LLC
26650 Aliso Viejo Pkwy CrossHarbor Capital
2. 55,639 1999 6/5/2020 $23,801,679 $428 IRA Capital, LLC
Aliso Viejo, CA Partners LLC
26700 Aliso Viejo Pkwy CrossHarbor Capital
3. 55,765 1999 6/5/2020 $25,780,470 $462 IRA Capital, LLC
Aliso Viejo, CA Partners LLC
51 Colulmbia
4. 34,299 1992 7/7/2020 $16,850,000 $491 5.65% Kingsbarn Realty Capital John Pomer
Aliso Viejo, CA
3131 Katella Ave Lincoln Property
5. 63,708 1971 10/21/2020 $26,071,190 $409 Fine Investment
Los Alamitos, CA Company
2400 Marine Ave Hawkwood Ventures EverWest Real Estate
6. 50,000 2016 1/13/2021 $24,000,000 $480 5.60%
Redondo Beach, CA LLC Investors, LLC
14101 Myford Rd Easterly Government Stockbridge Capital
7. 66,818 1979 10/23/2019 $36,200,000 $542 6.58%
Tustin, CA Properties, Inc. Group, LLC
930 Roosevelt Ave
8. 20,228 2007 10/7/2019 $11,080,000 $548 5.42% Tong Chen Michael Orrantia
Irvine, CA
2260 University Dr Connected Care Health
9. 26,561 1983 1/14/2020 $12,500,000 $471 Twila True
Newport Beach, CA Services, Inc.
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OFFERING MEMORANDUM31
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PRIME COSTA MESA VALUE ADD INVESTMENT OPPORTUNITY
INVESTMENT ADVISORS KURT BRUGGEMAN, CCIM PHIL COHEN
Lee & Associates, Inc. - Irvine Senior Vice President Senior Vice President
9838 Research Drive CalDRE 01264501 CalDRE 01156287
Irvine, California 92618 949.790.3125 949.790.3160
lee-associates.com | lee-cmg.com kbruggeman@leeirvine.com pcohen@leeirvine.comYou can also read
