3505 cadillac avenue,bldg. o unit 103/204 - 9,780...

AVAILABLE FOR SALE3505 CADILLAC AVENUE,BLDG. O

UNIT 103/204 - 9,780 SFCambridge Business Park in Costa Mesa, CA

Exclusively listed by:

BRIAN GARBUTTSenior Vice President

License ID #01215482

[email protected]

MEASURE X

PROPERTY

Property Address: 3505 Cadillac Avenue Costa Mesa, CA 92626

Project Name: Cambridge Business Park

Unit Size: 103/204: 9,780 Square Feet Sale Price: $4,150,000 $425 PSF

Parking: 4:1000 Parking Ratio

OFFERING SUMMARY

3505 CADILLAC AVENUE, BUILDING O • COSTA MESA, CALIFORNIA 2

• Unique opportunity to purchase a building within the Measure X Zone of Costa Mesa which allows wholesale marijuana manufacturing, processing, transporting, and testing.

• Other Marijuana business are opening within the project. This will be the HUB for measure X allowed uses in Orange County.

• As the marijuana industry continues to grow, the value of this property should continue to appreciate as there will always be a limited supply of buildings in Orange County that will allow this use.

• Flexible occupancy, user can buy the building and lease-out spaces they aren’t occupying, giving them flexibility for future expansion.

• Lease rates in the project are $4.10 NNN, which allows a great investment on any spaces that are leased out.

BUILDING HIGHLIGHTS

• Occupancy cost to own (10% versus leasing) $349,813 over ten (10) year period with 3% annual appreciation and tax savings, as opposed to $3,770,486 to lease over the same ten (10) year period.

• 4:1,000 parked building.

• Part of a larger, well maintained professional business park.

• Excellent access to the and Freeways.

• Close proximity to SoCo Collection and The OC Mix which includes eclectic restaurants and shops.

• 10 minutes to John Wayne Airport.



UNIT 104: 2,578 RSF

UNIT 103: 2,411 RSFUNIT 204: 2,442 RSF

UNIT 203: 2,329 RSF

FLOOR PLANS

TOTAL SF: 9,780 RSF


Businesses that meet the requirements for operation can conduct wholesale medical marijuana distributing, manufacturing, processing, and transporting as well as establish research and development and testing laboratories. Cultivation and any type of retail sales of marijuana or marijuana product is not permitted in the City of Costa Mesa. Further, under Measure X, medical marijuana businesses may not conduct retail activity of any type - ie, businesses may not sell non-marijuana products.

Medical marijuana businesses are only permitted in a specific part of the City: north of South Coast Drive, west of Harbor Blvd, south of MacArthur Blvd. and east of the Santa Ana River. Medical marijuana businesses are not permitted within the South Coast (SoCo) Collection center. The ordinance imposes a new 6% annual gross receipt tax on any marijuana business. In addition, while not revenue, businesses are also required to pay all required administrative fees during the process, which include in part, zoning verifications, inspections, conditional use permits, and processing. These fees will be charged on a cost recovery basis at various points during the process.

Operators must pay for all City staff costs and consultant fees. The City will collect fees at various points during the permitting process and payments must be made by a certified check, cashier’s check, or a money order to the City of Costa Mesa. They estimate the total costs being in the ballpark of $50,000, but the initial fee for the Medical Marijuana Business Permit is currently $21,525 plus additional costs for background checks and must be renewed every two years. The Conditional Use Permit (CUP) cost is presently $27,508. This is a one-time fee. The City Business License costs up to $200 and must be renewed annually.

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HYLAND AVE

W MACARTHUR BLVD

HARBOR BLVD

SEGERSTROM AVE

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MEASURE X ZONE


3505 Cadillac Avenue, Suites O-103, O-104, O-203, O-204, Costa Mesa, California 92626Purchase vs. Lease Analysis - Buyer to occupy 9,780 SF and lease 0 SF to tenants

Lee & Associates

PROPERTY ASSUMPTIONS DEBT & EQUITY 1st TD 2nd TD Total APPRECIATION & TAXESPurchase Building Size in SF 9,780 Loan Amounts $2,062,500 $1,650,000 $3,712,500 Price Appreciation 3.00%Occupy Building Size in SF 9,780 Loan to Value Ratio 50% 40% 90% Building Value After 10 Years $5,543,655Market Rent - NNN $4.00 Loan Fees $25,625 $16,500 $42,125 Cost of Sale 3.00%

Equity Amount $454,625Monthly NNN Expense PSF $0.75 Interest Rate 4.25% 4.00% Standard Tax Rate 41.00%Annual Rent+Expense Growth 3.00% Amortization Period 30 20 Portion of Price For Building - % 80.00%

Monthly Debt Service $10,146 $9,999 $20,145 Portion of Price For Building - $'s $3,300,000Total Building Cost $4,125,000 Annual Debt Service $121,755 $119,984 $241,739 Years to Depreciate Asset 39.50Total Building Cost PSF $421.78 Loan Balance - End of Yr. 10 $1,638,517 $987,571 $2,626,088 Annual Depreciation Deduction $83,544

SCENARIO 1 - PURCHASE BUILDING

9,780 Sq. Ft. Initial Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Initial Equity Investment (454,625) - - - - - - - - - -Annual Operating Expenses (88,020) (90,661) (93,380) (96,182) (99,067) (102,039) (105,100) (108,253) (111,501) (114,846)Tenant RENT - 0 SF x $1.85 + 3.0% / yr. - - - - - - - - - -Tenant CAM - 0 SF x $0.75 + 3.0% / yr. - - - - - - - - - -Annual Debt Service (241,739) (241,739) (241,739) (241,739) (241,739) (241,739) (241,739) (241,739) (241,739) (241,739)Reversion Value After 10 Years - - - - - - - - - 5,543,655Cost of Sale - - - - - - - - - (166,310)Pay Off Remaining Loan Balance - - - - - - - - - (2,626,088)

Tax Benefit For Operating Expenses 36,088 37,171 38,286 39,435 40,618 41,836 43,091 44,384 45,715 47,087Tax COST For RENT From Tenants - - - - - - - - - -Tax COST For CAM From Tenants - - - - - - - - - -Tax Benefit For Interest Expense 62,313 60,777 59,176 57,509 55,772 53,962 52,077 50,113 48,067 45,935Tax Benefit For Depreciation 34,253 34,253 34,253 34,253 34,253 34,253 34,253 34,253 34,253 34,253Capital Gain Tax Due at Sale (521,947)

After Tax Cost of Ownership (454,625) (197,105) (200,199) (203,404) (206,724) (210,164) (213,727) (217,418) (221,243) (225,205) 2,000,001

COST TO OWN COST TO OWN TAXABLE GAIN ON SALEUndiscounted Cash Flow ($349,813) Cash Flow Discounted @ 6.50% ($781,066) Original Basis at Purchase $4,125,000Undiscounted Avg. Income (Cost) PSF/mo. ($0.30) Discounted Avg. Income (Cost) PSF/mo. ($0.67) Depreciation Taken (835,443)Monthly PSF income based on occupied area of 9,780 SF Monthly PSF income based on occupied area of 9,780 SF

Basis at Sale $3,289,557

Taxable Gain on Sale $2,087,788Capital Gain Tax - Rate @ 25.00% $521,947

PURCHASE VS. LEASE ANALYSIS3505 Cadillac Avenue, Building O, Units 103, 104, 203 & 204Buyer to occupy 9,780 SF and lease 0 SF to tenants


PURCHASE VS. LEASE ANALYSIS3505 Cadillac Avenue, Building O, Units 103, 104, 203 & 204Buyer to occupy 9,780 SF and lease 0 SF to tenants

3505 Cadillac Avenue, Suites O-103, O-104, O-203, O-204, Costa Mesa, California 92626Purchase vs. Lease Analysis - Buyer to occupy 9,780 SF and lease 0 SF to tenants

Lee & Associates

SCENARIO 2 - LEASE BUILDING

9,780 Sq. Ft. Initial Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

NNN Rent - 9,780 SF x $4.00 + 3.0% / yr. (469,440) (483,523) (498,029) (512,970) (528,359) (544,210) (560,536) (577,352) (594,673) (612,513)NNN Expense - 9,780 SF x $0.75 + 3.0% / yr. (88,020) (90,661) (93,380) (96,182) (99,067) (102,039) (105,100) (108,253) (111,501) (114,846)

Tax Benefit For Lease Payment 192,470 198,245 204,192 210,318 216,627 223,126 229,820 236,714 243,816 251,130Tax Benefit For Operating Expenses 36,088 37,171 38,286 39,435 40,618 41,836 43,091 44,384 45,715 47,087

After Tax Cost of Lease - (328,901) (338,768) (348,931) (359,399) (370,181) (381,287) (392,725) (404,507) (416,642) (429,142)

COST TO LEASE COST TO LEASEUndiscounted Cash Flow ($3,770,486) Cash Flow Discounted @ 6.50% ($2,669,371)Undiscounted Avg. Cost PSF/mo. ($3.21) Discounted Avg. Cost PSF/mo. ($2.27)

SUMMARY OF PURCHASE VS. LEASEBuilding Appreciation Over 10 Years $1,418,655 << final sale value minus original purchase priceCash Flow Savings of Ownership PSF $2.91 << difference between undiscounted average monthly cost to purchase vs. undiscounted average monthly cost to lease

This information is for illustration purposes only. Lee & Associates makes no representations or warranties as to the accuracy and validity of this report.Rates and terms are assumptive and each buyer should consult with their own tax accountant and attorney as to their own individual circumstances.


AVAILABLE FOR SALE3505 CADILLAC AVENUE,BLDG. O

UNITS 103/204

Exclusively listed by:

BRIAN GARBUTTSenior Vice PresidentLicense ID #01215482

[email protected]

MEASURE XPROPERTY

3505 cadillac avenue,bldg. o unit 103/204 - 9,780...

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