G E N E R A T I O N A L , M I X E D - U S E C O A S T A L , I N V E S T M E N T O P P P O R T U N I T Y

APRIL 2019

1 2 2 1 H E R M O S A A V E N U E | H E R M O S A B E A C H , C A

EXECUTIVE SUMMARY

THE OFFERING

Newmark Knight Frank (NKF), as exclusive advisor, is pleased to present the generational opportunity to acquire the fee-simple interest in The Bijou Building (the Property), a 94% leased, jewel box, three-story office/retail building in Downtown Hermosa Beach, California.

Just one block away from both the Pacific Ocean and the Hermosa Beach Pier, the Property is situated at a true, “Main & Main” location in Hermosa Beach—within walking distance of a wide variety of restaurants, bars, coffeehouses, boutique shops, and entertainment venues and adjacent to an abundance of garaged and surface parking.

Originally built as a theatre in 1923, this extraordinary Neo-Classical style building has been tastefully upgraded to attract a modern tenant mix drawn to the asset’s historic character, beachside location, and abundance of walkable amenities.

TOTAL SIZE23,172RSF

YEAR BUILT1923

LEASED94%

STORIES3

PROPERTY SUMMARY

1221 HERMOSA AVENUE, HERMOSA BEACH, CAADDRESS

INVESTMENT HIGHLIGHTS

HISTORIC, COASTAL, MIXED-USE PROPERTY

Originally developed in 1923 as the Metropolitan Theater, the asset was aptly renamed The Bijou—French for small and elegant—Building as part of an adaptive reuse initiative. Today, The Bijou Building offers its tenants high character space that includes hardwood floors, exposed brick walls, intricate plaster detail, and an abundance of natural light. The juxtaposition of the asset’s historic architectural features set in the heart of one of the most bustling coastal urban communities on the West Coast makes The Bijou Building truly one of one, and an irreplaceable fixture of the fabric of Hermosa Beach.

DIVERSIF IED INCOME STREAM

The Bijou Building is 94% leased to a diverse mix of office and retail tenants in the finance, fitness, real estate and apparel industries. The asset is anchored by Chase Bank (S&P: A+), which represents 31% of the rentable square footage and provides the investor with a predictable investment grade income stream for the foreseeable future.

TENANT RSF SECTOR % TOTALChase Bank (NYSE: JPM) 7,167 Banking 31%

Clothing Shop 5,150 Apparel 23%

Beach City Capital 4,510 Real Estate 20%

Steel Partners (NYSE: SPLP) 3,082 Investments 14%

Bar Method 1,530 Fitness 7%

TENANT SUMMARY

MARK TO MARKET RENTAL UPSIDE

43% of the rent roll expires by 2020, providing a mark to market opportunity with in-place rents that are currently 17% below market. The only current vacancy is a high image ground floor retail suite that fronts Hermosa Avenue and only recently became available, providing an investor the opportunity to add immediate value through lease-up. With an average suite size of only 3,800 square feet, a modest increase in rental rate on a percentage basis translates to a palatable increase in total monthly rent from a tenant’s perspective.

LOCATION HIGHLIGHTS

EXCEPTIONAL, “MAIN & MAIN” DOWNTOWN HERMOSA BEACH LOCATION

The Bijou Building provides an investor the highly coveted combination of coastal walkable amenities with professional office functionality and adjacent parking options—all with an ocean view—a combination that is nearly non-existent in this highly desirable submarket.

MARKET WITH H IGH BARRIERS TO ENTRY

Height and density limitations—coupled with severe development restrictions in Hermosa Beach—all but guarantee that no directly competitive product will be developed in the foreseeable future.

SCARCITY OF PRODUCT

Market vacancy rates are a mere 2.7% (office) and 2.1% (retail) in Hermosa Beach, which will continue to place upward pressure on market rents.

SIL ICON BEACH INFLUENCE

With migration of creative titans (Google, Facebook, Apple, Amazon, HBO) to the Lower Westside businesses are actively migrating and expanding to the South Bay, where quality office space is available at comparatively lower rental rates.

ROOM TO RUN IN THE BEACH C IT IES

Since 2012, neighboring lower Westside submarkets Culver City and Playa Vista have experienced dramatic 70%+ surges in office rental rates. While rental rates in El Segundo and the Beach Cities have increased nearly 50% over the same time period, rents remain a 25% to 45% discount to Culver City and Playa Vista.

OUTSTANDING DEMOGRAPHICS WITH PREMIER EXECUTIVE HOUSING

Hermosa Beach is one of the most affluent communities in Los Angeles—driven by quality schools, a coastal location, and strong executive housing options. In 2018, home prices in Hermosa Beach averaged $1.7 million, which will increase as tech and creative industries continue to expand throughout the Lower Westside.

Since 2012, rental rates in the Beach Cities have increased 50%, but remain a 25% to 45% discount to Playa Vista and Culver City.

SCOTTY’S ON THE STRAND

THE COMEDY AND MAGIC CLUB

BKB SWIMWEAR

LOCALE90 NEOPOLITAN

PIZZA

POKE BAR

B OF A

CITIBANK

CAFE BONAPARTEPALMILLA COCINA

Y TEQUILAPLAYA HERMOSA

FISH & OYSTER

SLATER’S 50/50 THE

DECK

GOOD STUFF

HERMOSA CYCLERY

PIER SURF

TOWER 12

AMERICAN

JUNKIE

BAJA

SHARKEEZPATRICK MOLLOY’SLIGHTHOUSE CAFEWATERMANS

SAFEHOUSE

HENNESSEY’S

TAVERN

HERMOSA BEACH PIER PLAZA

HERMOSA BEACH PIER

GREENBELT

PAISANO’S PIZZA & PASTA

ZANE’S

MONTCE SWIM

STEAK & WHISKY

ROK SUSHI KITCHEN

LAUREL TAVERN

BEACH HOUSE HOTEL

DIA DE CAMPO

SOHO YOGA

SEA SPRITE MOTEL

11th Street

13th Street

Pacific Ocean

Hermosa Avenue

Pier Avenue

REBEL REPUBLIC

SOCIAL HOUSESPYDER SURFBOARDS

THE BIJOU BUILDING

Corporate License #01355491

The information contained herein has been obtained from sources deemed reliable but has not been verified and no guarantee, warranty or representation, either express or implied, is made with respect to such information. Terms of sale or lease and availability are subject to change or withdrawal without notice.

INSTITUTIONAL INVESTMENT SALES CONTACTS

KEVIN SHANNONCo-Head, U.S. Capital Markets310.491.2005kevin.shannon@ngkf.comCA RE Lic. #00836549

KEN WHITEExecutive Managing Director310.491.2006ken.white@ngkf.comCA RE Lic. #01788506

ROB HANNANExecutive Managing Director310.491.2014rob.hannan@ngkf.comCA RE Lic. #01505847

LAURA STUMMSenior Managing Director310.491.2020laura.stumm@ngkf.comCA RE Lic. #01914207

PRIVATE CAPITAL INVESTMENT SALES CONTACTS

SEAN FULPExecutive Managing Director310.407.6596sfulp@ngkf.comCA RE Lic. #01389064

RYAN PLUMMERManaging Director310.407.6570ryan.plummer@ngkf.comCA RE Lic. #01765854

LOCAL MARKET CONTACTS

BRAD FELDVice Chairman213.596.2266brad.feld@ngkf.comCA RE Lic. #01011030

GEOFF LUDWIG Executive Managing Director 310.491.2077 geoff.ludwig@ngkf.com CA RE Lic. #01232244

FINANCING CONTACTS

DAVID MILESTONEVice Chairman310.491.2015david.milestone@ngkf.comCA RE Lic. #01515842

BRETT GREENSenior Managing Director310.491.2009brett.green@ngkf.comCA RE Lic. #01892016

APRIL 2019

1 2 2 1 H E R M O S A A V E N U E | H E R M O S A B E A C H , C A