FOR SALE Long Term, Kaiser Leased Medical Building 7880 Alta Valley Way Sacramento CA O F F E R I N G M E M O R A N D U M Martin Chiechi Senior Managing Director 408.987.4178 mchiechi@newmarkccarey.com CA RE License # 00806069 David Brandenburger Managing Director 916.569.2310 dbrandenburger@newmarkccarey.com CA RE License # 01408572 Tom Heacox Executive Managing Director 916.569.2315 theacox@newmarkccarey.com CA RE License # 00913198 16-0241 12.16
Property Overview 7880 Alta Valley Road is a two-story, office building consisting of approximately 31,897 rentable square feet located adjacent to the Kaiser Permanente South Sacramento Medical Center, a Level II Trauma Center and Maternity Hospital. The building was constructed in 1985 and is currently 82% leased to four (4)) tenants, the primary one being Kaiser. The close proximity to Kaiser Permanente South Sacramento Medical Center provides a strong location for the medical users and associated administrative offices as the building is designed for and as a result, the overall tenancy will remain stable. AAA Anchor Tenant Kaiser Foundation Hospitals is one of three (3) distinct, but independent, groups of entities which, along with the Kaiser Foundation Health Plan and the regional Permanente Medical Groups, make up the Kaiser Permanente, an integrated managed care consortium with 180,000 employees. Operating in eight (8) states and the District of Columbia, it is the largest managed care organization in the U.S. Kaiser Foundation Hospitals is one of three (3) distinct, but independent, groups of entities which, along with the Kaiser Foundation Health Plan and the regional Permanente Medical Groups, make up the Kaiser Permanente, an integrated managed care consortium with 180,000 employees. Operating in eight (8) states and the District of Columbia, it is the largest managed care organization in the U.S. N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 2
Property Summary Overview Address: Location Property Type: Building Size: Site Size: Highway 99 and Mack/Bruceville Road Two-Story Office Building 31,897 Rentable SF 69,260 SF APN: 117-0330-006 Zoning: C-2 Year Built: 1985 Floors: 2 Parking: Current Occupancy: 82% 155 Stalls (48 Via Easement) Price: $4,450,000 ($150/SF) Cap Rate: 6.82% As-Is 9.11%,, Fully Leased N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 3
Geography Calvine Road Cosumnes River Boulevard East Stockton Boulevard Bruceville Road Bruceville Road Mack Road SITE Alta Valley Way Valley Hi Drive N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 4
Financials Current Potential Occupied Rentable Square Feet 26,138 31,897 Vacant Rentable Square Feet 5,759 0 Total Rentable Square Feet 31,897 31,897 Income Rental Income $462,047 $562,253 Expense Reimbursements $4,560 $4,560 Security Reimbursements $84,143 $90,835 Effective Gross Income (EGI) $550,750 $657,648 Expenses Property Taxes (1.1% of Purchase Price) $48,950 $48,950 Building Maintenance $2,247 $2,247 Insurance $5,607 $5,607 Janitorial Service $9,942 $9,942 Landscaping $6,850 $6,850 Pest Control $1,160 $1,160 Property Management Fee (5%) $23,102.35 $28,112.66 Repairs $18,000 $18,000 Security $90,835 $90,835 Utilities Electric $21,259 $21,259 Trash $7,561 $7,561 Water & Sewer $11,628 $11,628 Total Expenses $247,141 $252,151 Net Operating Income: $303,609 $405,497 Asking Price $4,450,000 $4,450,001 Cap Rate 6.82% 9.11% N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 5
Rent Roll RENT ROLL AUGUST 2017 SUITE NAME SECURITY START EXP. SQUARE COST MONTHLY ADDITIONAL SECURITY DEPOSIT DATE DATE FEET PER S.F. RENT RENT CONTRIB. 100, 102, 105, 160, 180, 200, 212 KAISER FOUNDATION HOSPITALS * None 10/1/2001 1/31/2022 23,135 $1.45 $33,545.75 $ 100 $ 7,012 104 ALLSTATE/ZACH WANDELL $ 1,757 1/1/2001 1/31/2019 1,212 $1.72 $2,084.64 $ 80 205 CHILD AND FAMILY INSTITUTE $ 1,085 $ 2,012 10/31/2017 700 $1.35 $945.00 n/a 210 CHILD AND FAMILY INSTITUTE None 1/1/2015 MTM 390 $1.35 $526.50 $ 50 203 PhlebXpress $1,402 2/1/2017 1/31/2020 701 $2.00 $1,402.00 $ 150 $0.00 26,138 $38,503.89 $380 $7,011.92 101 Vacant 4,492 $1.45 $6,513.40 $ 558 210 Vacant 1,267 $1.45 $1,837.15 $ - POTENTIAL RENT SUBTOTAL 5,759 $8,350.55 $0.00 $557.67 CURRENT PLUS POTENTIAL RENT TOTAL 31,897 $46,854.44 $380.00 $7,569.59 *Kaiser rent increases by $0.05 per RSF per month every February 1 and PhlebXpress rent increases by $0.05 per RSF per month every March 1. N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 6
Floor Plans FIRST FLOOR Kaiser OFFICE 8 OFFICE 9 OFFICE 10 OFFICE 11 Allstate Vacant OFFICE 7 KITCHEN OFFICE 6 STORAGE CLOSET OFFICE 5 FILE ROOM RR RR RECEPTION WAITING ROOM OFFICE 2 OFFICE 4 OFFICE 3 OFFICE 1 N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 7
REST ROOM Floor Plans SECOND FLOOR MEETING ROOM EQUIP ROOM REST ROOM STORAGE OFFICE 1 OFFICE 2 OFFICE 3 Kaiser CFI PhlebXpress Available N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 8
AAA Anchor Tenant Kaiser Permanente is an American non-profit integrated health plan, based in Oakland, California, made up of three distinct, but interdependent groups of entities: the Kaiser Founadation Health Plan, Inc. and its regional operating subsidiaries; Kaiser Foundation Hospitals and the regional Permanente Medical Groups. As of 2016, Kaiser Permanente has 9.6 million health plan members, 195,000 employees, 17,791 physicians, 49,778 nurses and 38 medical centers, and 620 medical offices and other facilities in eight states and the District of Columbia. The non-profit Kaiser Foundation Health Plan and Kaiser Foundation Hospitals entities reported a combined $3.1 billion in net income on $56.4 billion in operating revenues. Each Permanente Medical Group operates as a separate forprofit partnership or professional corporation in its individual territory and each is primarily funded by reimbursements fromits respective regional Kaiser Foundation Health Plan entity. Kaiser Foundation Health Plan is one of the largest not for profit organziations in the United States. N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 9
Market Overview Sacramento The nearly 1,000 square mile Sacramento metropolitan area is located approximately 80 miles northeast of San Francisco and 380 miles northwest of Los Angeles and comprises six (6) counties: El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba. Home to the state capitol of the of the 8th largest economy in the world (California), the Sacramento region s strong, government-based economy has diversified in recent years to include business services, information and, most notably, trade. The region s central California location, center of state government, seismic stability, relatively low operating costs, access to large markets, abundant natural resources, a skilled and growing labor force and high quality of life have made it a hotbed for corporate expansion and relocation. Hewlett-Packard, Intel Corporation and Apple, Inc. are just a few of the influential companies that have migrated to the region. Strategically located at the crossroads of Interstate 5 and Interstate 80 and two rivers, the Sacramento and American Rivers, Sacramento is one of the few inland metropolitan areas with a major international airport, deep-water port, transcontinental rail lines, an extensive highway system, making it a major hub for both national and global distribution. Population The Sacramento region is one of the fastestgrowing metropolitan areas in California with population growth attributed primarily to the migration of residents from other California and U.S. urban areas. The consistent growth of the Sacramento region is attributed to its desirability as a great place to live and work, while offering a much lower cost of living than the San Francisco Bay Area, Los Angeles and San Diego metropolitan areas. The Sacramento region is the 25th largest metropolitan statiscal area in the United States, roughly similar to the Portland, San Antonio, Denver and Orlando Metropolitan areas. The Sacramento region s population was almost 2.5 million people in 2015, with over half of the population in Sacramento County. The region has seen tremendous growth over the past ten years relative to the state and the nation. From 2000 to 2010, the region grew by 22 percent compared to California and the United States respective growth rates of about 15 percent and ten percent. Employment With a unique and increasingly healthy mix of economic opportunities for companies and job N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 10
seekers alike, the Sacramento region has experienced strong population and steady job growth over the last few decades. This growth is credited to the diversification and strength of the region s economic base with a shift from primarily government employment to private sector employment that now represents dynamic and expanding industries including high technology, life sciences, healthcare and clean energy technology. In fact, the renewable energy and clean energy technology industries have been investing in the Sacramento region at levels never seen before and an increasing number of national and international firms are choosing the Sacramento region as their base of operations in the U.S. In addition to the Sacramento region s strengths for traditional businesses, including lower costs, a positive business climate and high quality of life, the region is experiencing a new wave of technology companies moving to the area to take advantage of an entirely new set of competitive advantages. These advantages include strong educational and research institutions, location of the state capitol, proximity to the San Francisco Bay Area, an emerging venture capital network, premier sites and facilities and a qualified technical workforce. From 2009 to 2019, total non-farm employment is projected to increase over 18 percent in the region and 14 percent statewide. Placer and Sutter Counties are anticipated to experience the greatest rates of growth over this 10-year period. As home to the state capitol and government operations, Sacramento s public sector has played a major role in the economy. While still very important to the health of the regional economy, during the last two decades its proportion of total jobs steadily declined as a result of the rapid growth of private sector jobs. Since the recession, the Sacramento Region is expected to grow by nearly 160,000 jobs by 2019. A large majority of the job growth will come from government jobs with the majority of those jobs from government educational services. Private education and health services also saw a boost of 1,200 jobs from September 2015, with 700 of those jobs coming from health care and social assistance services. Construction is still very much a large part of job growth with financial activities, trade, transportation and utilities all gaining 600 jobs. A large bright spot comes from the fact that since October of 2014 and 2015, total jobs in the region increased by 21,000 (2.3 percent), led by leisure and hospitality, trade, transportation and utilities, as well as professional and business services. As far as unemployment goes, there was a slight uptick between September 2015 and October 2015, rising from 5.1 percent to 5.5 percent. But overall, unemployment is still below the California average of 5.7 percent and slightly above the nation s average of 5 percent. Economic Highlights The Sacramento area contains one of the strongest economies in California. Beginning in the early 1990s, the region began its transformation from a government-based economy to one where the business services and trade sectors comprise nearly 50% of the regional employment. Sacramento s highly skilled and educated work force, relatively low cost of doing business, fast growing population and employment base and extensive transportation infrastructure make it one of the most attractive places to do business in the western United States. N E W M A R K C O R N I S H & C A R E Y OFFERING MEMORANDUM 11
Martin Chiechi Senior Managing Director 408.987.4178 mchiechi@newmarkccarey.com CA RE License # 00806069 David Brandenburger Managing Director 916.569.2310 dbrandenburger@newmarkccarey.com CA RE License # 01408572 Tom Heacox Executive Managing Director 916.569.2315 theacox@newmarkccarey.com CA RE License # 00913198 Procuring broker shall only be entitled to a commission, calculated in accordance with the rates approved by our principal only if such procuring broker executes a brokerage agreement acceptable to us and our principal and the conditions as set forth in the brokerage agreement are fully and unconditionally satisfied. Although all information furnished regarding property for sale, rental, or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof and it is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice and to any special conditions imposed by our principal. 16-0241 05.16