Costa Mesa Office /Redevelopment

$4,400,000

Price Reduction Motivated Seller

Opportunity ZoneResidential Zoning Overlay

777-779 W. 19th Street | Costa Mesa, CA 92627

PROPERTY FEATURES:

• Prime Coastal Submarket

• Current Use – Existing

Garden Style Office

• Value-Add Opportunity

• Residential Zoning Overlay

• Potential to Develop 16-24

Residential Units

• Unique Ability to Generate

Existing Income While

Processing For Entitlements

Units Type Unit SF Total SF Current Rent Avg

Market Rent

CurrentRent/SF

MarketRent/SF

1 Rivas 486 486 $1,200 $1,250 $2.47 $2.571 Parsion 270 270 $550 $600 $2.04 $2.221 Pena 270 270 $475 $525 $1.76 $1.941 Farshid 270 270 $600 $625 $2.22 $2.311 Banerjee 270 270 $500 $525 $1.85 $1.941 Romero 350 350 $685 $700 $1.96 $2.001 Trantum 760 760 $1,450 $1,500 $1.91 $1.971 Martinez 160 160 $510 $530 $3.19 $3.311 Pending 370 370 $620 $650 $1.68 $1.761 Pending 260 260 $510 $550 $1.96 $2.121 Garciia 460 460 $850 $900 $1.85 $1.961 Sanchez 270 270 $1,640 $1,675 $6.07 $6.201 Pagulayan 540 540 $1,050 $1,075 $1.94 $1.991 Sanchez 640 640 $1,240 $1,295 $1.94 $2.021 Alimagham 360 360 $749 $775 $2.08 $2.151 Seaberry 280 280 $575 $600 $2.05 $2.141 Mizrachi 280 280 $600 $625 $2.14 $2.231 Casillas 1,140 1,140 $2,685 $2,750 $2.36 $2.411 Connected 540 540 $990 $1,025 $1.83 $1.901 Ceja 270 270 $500 $525 $1.85 $1.941 Maddock 270 270 $600 $625 $2.22 $2.311 Dustfree 270 270 $500 $525 $1.85 $1.941 Fusion 270 270 $475 $500 $1.76 $1.851 Babak 270 270 $475 $500 $1.76 $1.851 Ansari 260 260 $475 $500 $1.83 $1.921 Negri 270 270 $500 $525 $1.85 $1.941 Caro 270 270 $500 $525 $1.85 $1.941 **Procopio 1,190 1,190 $1,800 $1,854 $1.51 $1.56

28 404 11,316 $832 $866 $2.06 $2.14

Income Pro Forma Pro Forma

Scheduled Market Rent $279,648 $291,048 Less: Vacancy 2.00% ($5,593) ($5,821)Net Rental Income $274,055 $285,227

Plus: Late Fee $988 $995 Plus: Signage $2,112 $2,125 Plus: Buy Out / Termination $1,200 $1,250Total Operating Income (EGI) $278,355 $289,597

Expenses Per UnitAdministrative $65 $1,828 $1,828Repairs & Maintenance/Turnover $179 $5,000 $5,000Management Fee 2.00% $199 $5,567 $5,792Utilities $665 $18,624 $18,624Contracted Services $118 $3,310 $3,310Real Estate Taxes 1.0528% $1,654 $46,323 $46,323Special Assessments $78 $2,190 $2,190Insurance $97 $2,725 $2,725

Total Expenses $85,567 $85,792

Per Unit: $3,056 $3,064Per SF: $7.56 $7.58

Net Operating Income $192,788 $203,805

Less: Debt Service ($154,123) ($154,123)Projected Net Cash Flow $38,665 $49,682

Cash-on-Cash Return (Based on List Price) 1.95% 2.51%

Debt Service Coverage1.25

List GRM 15.73 15.12Cap Rate Analysis Price $/Unit $/Foot Cap Rate Cap RateList Price $4,400,000 $157,143 $388.83 4.38% 4.63%

4.94% 5.95%5.59% 6.73%

All Financing Loan Amount Payment LTV Payment Constant$2,000,000 $1,980,000 45% ($12,844) 7.7%

New First Mortgage (to be originated at purchase)LTV for this loan Amount Interest Rate Amortization Payment Fees I/O Term (yrs)

55% $2,420,000 4.90% 30 ($12,844) 0.00% 0

IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Avison Young and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Berkadia. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Avison Young Employees, affiliates, and contractors are instructed to hard-code this model for reproduction and distribution. Not responsible for errors and omissions. COPYRIGHT 2017, All Rights Reserved. DRAFT REPORT: Privileged & Confidential, For Discussion Purposes Only.

Units Type Unit SF Total SF Current Rent Avg

Market Rent

CurrentRent/SF

MarketRent/SF

1 Rivas 486 486 $1,200 $1,250 $2.47 $2.571 Parsion 270 270 $550 $600 $2.04 $2.221 Pena 270 270 $475 $525 $1.76 $1.941 Farshid 270 270 $600 $625 $2.22 $2.311 Banerjee 270 270 $500 $525 $1.85 $1.941 Romero 350 350 $685 $700 $1.96 $2.001 Trantum 760 760 $1,450 $1,500 $1.91 $1.971 Martinez 160 160 $510 $530 $3.19 $3.311 Pending 370 370 $620 $650 $1.68 $1.761 Pending 260 260 $510 $550 $1.96 $2.121 Garciia 460 460 $850 $900 $1.85 $1.961 Sanchez 270 270 $1,640 $1,675 $6.07 $6.201 Pagulayan 540 540 $1,050 $1,075 $1.94 $1.991 Sanchez 640 640 $1,240 $1,295 $1.94 $2.021 Alimagham 360 360 $749 $775 $2.08 $2.151 Seaberry 280 280 $575 $600 $2.05 $2.141 Mizrachi 280 280 $600 $625 $2.14 $2.231 Casillas 1,140 1,140 $2,685 $2,750 $2.36 $2.411 Connected 540 540 $990 $1,025 $1.83 $1.901 Ceja 270 270 $500 $525 $1.85 $1.941 Maddock 270 270 $600 $625 $2.22 $2.311 Dustfree 270 270 $500 $525 $1.85 $1.941 Fusion 270 270 $475 $500 $1.76 $1.851 Babak 270 270 $475 $500 $1.76 $1.851 Ansari 260 260 $475 $500 $1.83 $1.921 Negri 270 270 $500 $525 $1.85 $1.941 Caro 270 270 $500 $525 $1.85 $1.941 **Procopio 1,190 1,190 $1,800 $1,854 $1.51 $1.56

28 404 11,316 $832 $866 $2.06 $2.14

Income Pro Forma Pro Forma

Scheduled Market Rent $279,648 $291,048 Less: Vacancy 2.00% ($5,593) ($5,821)Net Rental Income $274,055 $285,227

Plus: Late Fee $988 $995 Plus: Signage $2,112 $2,125 Plus: Buy Out / Termination $1,200 $1,250Total Operating Income (EGI) $278,355 $289,597

Expenses Per UnitAdministrative $65 $1,828 $1,828Repairs & Maintenance/Turnover $179 $5,000 $5,000Management Fee 2.00% $199 $5,567 $5,792Utilities $665 $18,624 $18,624Contracted Services $118 $3,310 $3,310Real Estate Taxes 1.0528% $1,654 $46,323 $46,323Special Assessments $78 $2,190 $2,190Insurance $97 $2,725 $2,725

Total Expenses $85,567 $85,792

Per Unit: $3,056 $3,064Per SF: $7.56 $7.58

Net Operating Income $192,788 $203,805

Less: Debt Service ($154,123) ($154,123)Projected Net Cash Flow $38,665 $49,682Total Economic Loss 2.0% 2.0%

Cash-on-Cash Return (Based on List Price) 1.95% 2.51%Cash-on-Cash Return (Based on High Strike) 2.23% 2.75%Cash-on-Cash Return (Based on Low Strike) 3.86% 4.13%Debt Service Coverage 1.25

List GRM 15.73 15.12Cap Rate Analysis Price $/Unit $/Foot Cap Rate Cap RateNew List Price $4,400,000 $157,143 $388.83 4.38% 4.63%High Strike $4,300,000 $153,571 $379.99 4.51% 4.76% 4.94% 5.95%Low Strike $3,800,000 $135,714 $335.81 5.24% 5.53% 5.59% 6.73%

All Financing Loan Amount Payment LTV Payment Constant$2,000,000 $1,980,000 45% ($12,844) 7.7%

New First Mortgage (to be originated at purchase)LTV for this loan Amount Interest Rate Amortization Payment Fees I/O Term (yrs)

55% $2,420,000 4.90% 30 ($12,844) 0.00% 0

IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Avison Young and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Berkadia. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Avison Young Employees, affiliates, and contractors are instructed to hard-code this model for reproduction and distribution. Not responsible for errors and omissions. COPYRIGHT 2017, All Rights Reserved. DRAFT REPORT: Privileged & Confidential, For Discussion Purposes Only.

Units Type Unit SF Total SF Current Rent Avg

Market Rent

CurrentRent/SF

MarketRent/SF

1 Rivas 486 486 $1,200 $1,250 $2.47 $2.571 Parsion 270 270 $550 $600 $2.04 $2.221 Pena 270 270 $475 $525 $1.76 $1.941 Farshid 270 270 $600 $625 $2.22 $2.311 Banerjee 270 270 $500 $525 $1.85 $1.941 Romero 350 350 $685 $700 $1.96 $2.001 Trantum 760 760 $1,450 $1,500 $1.91 $1.971 Martinez 160 160 $510 $530 $3.19 $3.311 Pending 370 370 $620 $650 $1.68 $1.761 Pending 260 260 $510 $550 $1.96 $2.121 Garciia 460 460 $850 $900 $1.85 $1.961 Sanchez 270 270 $1,640 $1,675 $6.07 $6.201 Pagulayan 540 540 $1,050 $1,075 $1.94 $1.991 Sanchez 640 640 $1,240 $1,295 $1.94 $2.021 Alimagham 360 360 $749 $775 $2.08 $2.151 Seaberry 280 280 $575 $600 $2.05 $2.141 Mizrachi 280 280 $600 $625 $2.14 $2.231 Casillas 1,140 1,140 $2,685 $2,750 $2.36 $2.411 Connected 540 540 $990 $1,025 $1.83 $1.901 Ceja 270 270 $500 $525 $1.85 $1.941 Maddock 270 270 $600 $625 $2.22 $2.311 Dustfree 270 270 $500 $525 $1.85 $1.941 Fusion 270 270 $475 $500 $1.76 $1.851 Babak 270 270 $475 $500 $1.76 $1.851 Ansari 260 260 $475 $500 $1.83 $1.921 Negri 270 270 $500 $525 $1.85 $1.941 Caro 270 270 $500 $525 $1.85 $1.941 **Procopio 1,190 1,190 $1,800 $1,854 $1.51 $1.56

28 404 11,316 $832 $866 $2.06 $2.14

Income Pro Forma Pro Forma

Scheduled Market Rent $279,648 $291,048 Less: Vacancy 2.00% ($5,593) ($5,821)Net Rental Income $274,055 $285,227

Plus: Late Fee $988 $995 Plus: Signage $2,112 $2,125 Plus: Buy Out / Termination $1,200 $1,250Total Operating Income (EGI) $278,355 $289,597

Expenses Per UnitAdministrative $65 $1,828 $1,828Repairs & Maintenance/Turnover $179 $5,000 $5,000Management Fee 2.00% $199 $5,567 $5,792Utilities $665 $18,624 $18,624Contracted Services $118 $3,310 $3,310Real Estate Taxes 1.0528% $1,654 $46,323 $46,323Special Assessments $78 $2,190 $2,190Insurance $97 $2,725 $2,725

Total Expenses $85,567 $85,792

Per Unit: $3,056 $3,064Per SF: $7.56 $7.58

Net Operating Income $192,788 $203,805

Less: Debt Service ($154,123) ($154,123)Projected Net Cash Flow $38,665 $49,682Total Economic Loss 2.0% 2.0%

Cash-on-Cash Return (Based on List Price) 1.95% 2.51%Cash-on-Cash Return (Based on High Strike) 2.23% 2.75%Cash-on-Cash Return (Based on Low Strike) 3.86% 4.13%Debt Service Coverage 1.25

List GRM 15.73 15.12Cap Rate Analysis Price $/Unit $/Foot Cap Rate Cap RateNew List Price $4,400,000 $157,143 $388.83 4.38% 4.63%High Strike $4,300,000 $153,571 $379.99 4.51% 4.76% 4.94% 5.95%Low Strike $3,800,000 $135,714 $335.81 5.24% 5.53% 5.59% 6.73%

All Financing Loan Amount Payment LTV Payment Constant$2,000,000 $1,980,000 45% ($12,844) 7.7%

New First Mortgage (to be originated at purchase)LTV for this loan Amount Interest Rate Amortization Payment Fees I/O Term (yrs)

55% $2,420,000 4.90% 30 ($12,844) 0.00% 0

IMPORTANT INFORMATION & DISCLAIMER: The information contained herein is assumed to be correct and market-supported. Output produced from this model should not be considered an appraisal. Projections are forecasts and are not to be considered fact. The information contained in this file is privileged and confidential; it is intended only for use by Avison Young and their clients. This file may not be reproduced physically or in electronic format without the expressed written consent of Berkadia. CAUTION: Security codes have been included into this file and unauthorized use may render this file useless. Avison Young Employees, affiliates, and contractors are instructed to hard-code this model for reproduction and distribution. Not responsible for errors and omissions. COPYRIGHT 2017, All Rights Reserved. DRAFT REPORT: Privileged & Confidential, For Discussion Purposes Only.

PROFORMA | VALUATION777-779 W. 19th Street, Costa Mesa

MARKET POSITIONINGOffice Sales Comparables

Address: City: Date: Year Built: Square Feet: Price / Sqft Cap Rate Sales Price

20062 Birch Street Newport Beach 8/13/2018 2006 11,684 $379.15 $4,430,000

2729 Bristol Street Costa Mesa 10/9/2018 1986 18,271 $383.12 $7,000,000

15 Corporate Park Irvine 8/28/2018 1986 14,920 $402.14 $6,000,000

3525 Hyland Avenue Costa Mesa 11/30/2018 1987 3,353 $345.96 $1,160,000

19722 MacArthur Boulevard Irvine 8/7/2018 1979 17,816 $342.46 $6,101,279

17200 Red Hill Avenue Irvine 10/23/2018 1965 4,770 $408.81 $1,950,000

3337 Susan Avenue* Costa Mesa 10/11/2018 2003 46,541 $402.88 $18,750,541

5075 Warner Avenue Huntington Beach 8/26/2018 1965 9,423 $387.35 $3,650,000

2 Wrigley Avenue Irvine 8/31/2018 1986 15,502 $340.92 $5,285,000

Averages: 1982 11,967 $373.74 $4,447,035

19th Street Costa Mesa 1960 11,316 $388.83 4.38% $4,400,000

* Not Included in the Averages

Avison Young | Hauser | Multifamily 4

MARKET POSITIONINGOffice Sales Comparables

$340.92 $342.46

$345.96

$379.15

$383.12

$387.35 $388.83

$402.14 $402.88

$408.81

$300.00

$320.00

$340.00

$360.00

$380.00

$400.00

$420.00

2 Wrigley Ave 19722MacArthur Blvd

3525 HylandAvenue

20062 BirchStreet

2729 BristolStreet

5075 WarnerAve

19th Street 15 CorporatePark

3337 Susan Ave 17200 Red HillAve

Price/SF

Average: $373.74

Avison Young | Hauser | Multifamily 5

MARKET POSITIONINGOffice Sales Comparables MapA. 20062 Birch Street Newport Beach

B. 2729 Bristol Street Costa Mesa

C. 15 Corporate Park Irvine

D. 3525 Hyland Avenue Costa Mesa

E. 19722 MacArthur Blvd Irvine

F. 17200 Red Hill Avenue Irvine

G. 3337 Susan Avenue* Costa Mesa

H. 5075 Warner Avenue Huntington Beach

I. 2 Wrigley Avenue Irvine

J. 777-779 W. 19th Street Costa Mesa

A

B

CD

E

FG

H

IJ

Avison Young | Hauser | Multifamily 6

MARKET POSITIONINGLand Sales Comparables

Address: City: Date: Acres: Square Feet: Price / Acre: Price / SQFT: Sales Price: Comments:

2152‐2182 Alton Parkway Irvine 11/1/2018 9 392,040 $5,300,666 $121.68 $47,706,000 Unentitled and vacant, currently industrial. Planned 264 Multifamily Project and 93 Townhomes

8722 Garden Grove Boulevard Garden Grove 10/16/2018 0.84 36,399 $1,675,000 $46.02 $1,675,000 Leases run through 2020, currently retail. Planned Multifamily Project. Condominiums or Apartments

600 West Commonwealth Avenue Fullerton 7/31/2018 4.79 208,652 $19,770,000 $94.75 $19,770,000 Entitled at time of sale for 290 Unit Multifamily Project

312 Boca Del Canon San Clemente 6/11/2018 0.96 41,909 $4,573,329 $104.99 $4,400,000 Single Family Development on Market for 384 Days

Bolide Street Irvine 11/14/2018 0.92 40,274 $5,638,654 $129.45 $5,213,500 Lennar Single Family Development

102 Burgess Irvine 5/24/2018 0.53 23,035 $6,557,299 $150.53 $3,467,500 Lennar Single Family Development. Purchased from Irvine Company

2830 North Glassell Street Orange 9/10/2018 1.85 80,586 $4,418,918 $101.44 $8,175,000 40 Single Family Lots

Lunar Street Irvine 9/19/2018 0.82 35,872 $11,644,201 $267.31 $9,589,000 Single Family Development

Rockinhorse Irvine 7/10/2018 1.15 50,094 $8,104,869 $186.06 $9,320,600 12 Subdivided Unfinished Single Family Lots 

Averages: 2.32 100,985 $7,520,326 $133.58 $12,146,289

19th Street Costa Mesa 0.728 31,698 $6,043,956 $138.81 $4,400,000

Avison Young | Hauser | Multifamily 7

MARKET POSITIONINGLand Sales Comparables

$46.02

$94.75 $101.44 $104.99

$121.68 $129.45

$138.81 $150.53

$186.06

$267.31

$-

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

Garden Grove Blvd W. Commonwealth N. Glassell Street Boca Del Canon Alton Parkway Bolide Street 19th Street Burgess Rockinhorse Lunar Street

Price/SF

Average: $133.58

Avison Young | Hauser | Multifamily 8

MARKET POSITIONINGLand Sales Comparables MapA. 2152-2182 Alton Parkway Irvine

B. 8722 Garden Grove Boulevard Garden Grove

C. 600 West Commonwealth Ave Fullerton

D. 312 Boca Del Canon San Clemente

E. Bolide Street Irvine

F. 102 Burgess Irvine

G. 2830 North Glassell St Orange

H. Lunar Street Irvine

I. Rockinhorse Irvine

J. 777-779 19th Street Costa Mesa

A

B

C

J

D

E

I

F EH

G

Avison Young | Hauser | Multifamily 9

MARKET POSITIONINGCondominium Sales Comparables

Address Community Name Sale Date City BRBaths (FTHQ)

SqFt Sale Price/SqFt List Price Sale Price Year Built Notes

1685   Monarch  #79 17 West ‐ Lofts 8/9/2017 COSTA MESA 2 4 2,104 $391.41 $805,990 $823,527 2017

671  W 17th ST #14 17 West ‐ The Gallery 8/13/2017 COSTA MESA 3 3 2,051 $398.28 $829,523 $816,864 2017

669  W 17th ST #15 17 West ‐ The Gallery 4/10/2018 COSTA MESA 2 3 1,905 $444.61 $850,998 $846,990 2017

2632   Clarion DR  Aura ‐ Denova Homes 4/8/2018 COSTA MESA 3 3.5 2,143 $404.34 $866,490 $866,490 2018

405   Aura DR  Aura ‐ Denova Homes 4/27/2018 COSTA MESA 3 2.5 2,143 $405.27 $866,490 $868,490 2018

1687   Monarch  #78 17 West ‐ Lofts 8/13/2017 COSTA MESA 2 4.5 2,243 $400.30 $882,365 $897,867 2017

1560 Placentia Ave** Ebb Tide ‐ MBK HomesUnder 

Construction NEWPORT BEACH 4 4 1,809 $533.00 $964,200 2018Preselling. Built to suit. On the market.

1625 Hampton Drive* Lighthouse Plan 1 11/22/2017 COSTA MESA 4 3 1,858 $526.37 $978,000 $978,000 2018 Preselling. Built to suit.  

2110   Two Harbors Circle   Trumark Up Coast 1/30/2018 COSTA MESA 3 3.5 2,318 $506.90 $1,225,000 $1,175,000 2016

Averages: 2.9 3.4 2,064 $445.61 $918,784 $909,154

Avison Young | Hauser | Multifamily 10

MARKET POSITIONINGCondominium Sales Comparables

$816,864 $823,527 $846,990 $866,490 $868,490 $897,867

$978,000

$1,175,000

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

671 W. 17thStreet

1685 Monarch 669 W. 17thStreet

2632 ClarionDr

405 Aura Dr 1687 Monarch 1625Hampton Dr

2110 TwoHarbors

Condo Sale Price

Average: $909,154

Avison Young | Hauser | Multifamily 11

MARKET POSITIONINGCondominium Sales Comparables

$391.41 $398.28 $400.30 $404.34 $405.27

$444.61

$506.90 $526.37 $533.00

$-

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

1685 Monarch 671 W. 17thStreet

1687 Monarch 2632 ClarionDr

405 Aura Dr 669 W. 17thStreet

2110 TwoHarbors

1625Hampton Dr

1560 PlacentiaAve

Condo Sales Price/SF

Average: $445.61

Avison Young | Hauser | Multifamily 12

MARKET POSITIONINGCondominium Sales Comparables Map

A. 1685 Monarch #79 Costa Mesa

B. 671 W 17th ST #14 Costa Mesa

C. 669 W 17th ST #15 Costa Mesa

D. 2632 Clarion DR Costa Mesa

E. 405 Aura DR Costa Mesa

F. 1687 Monarch #78 Costa Mesa

G. 2110 Two Harbors Circle Costa Mesa

H. 1560 Placentia Ave Newport Beach

I. 1625 Hampton Drive Costa Mesa

J. 777 W. 19th Street Costa Mesa

E

J

G

I

H

A

D

FBC

Avison Young | Hauser | Multifamily 13

Bella Terra

POINTS OF INTEREST MAP

South Coast Plaza

Fashion Island

Pacific City

Lido Marina Village

Balboa Island

Triangle Square

Tustin Legacy &The District

SUBJECT PROPERTY

14Avison Young | Hauser | Multifamily

DEMOGRAPHIC OVERVIEW

POPULATION118,474

AVERAGEHOUSEHOLD

INCOME$97,514

MEDIAN 2018 HOME SALE

$962,500

MEDIAN AGE34.6

COSTA MESA

67.7% have some college education

or a degree

Avison Young | Hauser | Multifamily 15

W. 19th Street

Placentia Ave

PACIFIC OCEANNEWPORT HARBOR

HOAG HOSPITAL

www.multifamilysc.com

PETER HAUSERPrincipal949.430.0687peter.hauser@avisonyoung.comCA License #00856966

MATT HAUSERAssociate949.430.0689matt.hauser@avisonyoung.comCA License #01996149

MASA ITOAssociate949.430.0688masa.ito@avisonyoung.comCA License #02060408