Item 2. Properties
ITEM 2. PROPERTIES
Our Portfolio
As of December 31, 2022, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel. Additionally, as of December 31, 2022, we owned land at three of our properties that we classified as held for development or construction in progress.
Retail and Office Portfolios
Property Location Year Built/
Renovated Number
of
Buildings Net
Rentable
Square
Feet Percentage
Leased Annualized
Base Rent (1)
Annualized
Base Rent
Per Leased
Square
Foot
OFFICE PROPERTIES
La Jolla Commons San Diego, CA 2008/2014 2 724,648 99.0 % $ 44,541,508 $ 62.09
Torrey Reserve Campus San Diego, CA 1996-2000/2014-2016/2021 14 547,035 95.2 24,544,722 47.13
Torrey Point
San Diego, CA 2017 2 93,264 96.8 5,426,536 60.11
Solana Beach Corporate Centre
Solana Beach, CA 1982/2005 4 224,009 85.1 7,887,387 41.38
The Landmark at One Market (2)
San Francisco, CA 1917/2000 1 422,426 100.0 39,562,897 93.66
One Beach Street San Francisco, CA 1924/1972/1987/1992 1 100,270 — — —
First & Main Portland, OR 2010 1 360,314 95.0 10,984,368 32.09
Lloyd Portfolio Portland, OR 1940-2015 3 547,864 89.5 16,684,740 34.03
City Center Bellevue Bellevue, WA 1987 1 496,357 89.7 24,963,482 56.07
Eastgate Office Park Bellevue, WA 1985 4 281,204 64.7 7,284,888 40.04
Corporate Campus East III Bellevue, WA 1986 4 159,578 85.0 5,818,665 42.90
Bel-Spring 520 Bellevue, WA 1983 2 93,295 69.4 2,571,405 39.71
Subtotal / Weighted Average Office Portfolio (3)
39 4,050,264 88.9 % $ 190,270,598 $ 52.84
RETAIL PROPERTIES
Carmel Country Plaza San Diego, CA 1991 9 78,098 87.6 % $ 3,667,449 $ 53.61
Carmel Mountain Plaza (4)
San Diego, CA 1994/2014 15 528,416 99.3 13,318,240 25.38
South Bay Marketplace (4)
San Diego, CA 1997 9 132,877 100.0 2,499,291 18.81
Gateway Marketplace San Diego, CA 1997/2016 3 127,861 100.0 2,663,055 20.83
Lomas Santa Fe Plaza Solana Beach, CA 1972/1997 9 208,297 97.7 6,329,685 31.10
Solana Beach Towne Centre Solana Beach, CA 1973/2000/2004 12 246,651 96.2 6,554,948 27.63
Del Monte Center (4)
Monterey, CA 1967/1984/2006 16 673,155 82.3 9,253,568 16.70
Geary Marketplace Walnut Creek, CA 2012 3 35,159 95.6 1,221,287 36.33
The Shops at Kalakaua Honolulu, HI 1971/2006 3 11,671 77.7 1,032,073 113.81
Waikele Center Waipahu, HI 1993/2008 9 418,047 100.0 12,298,465 29.42
Alamo Quarry Market (4)
San Antonio, TX 1997/1999 16 588,148 94.1 14,418,643 26.05
Hassalo on Eighth - Retail (5)
Portland, OR 2015 3 44,236 65.5 943,261 32.55
Subtotal / Weighted Average Retail Portfolio (1)
107 3,092,616 93.5 % $ 74,199,965 $ 25.66
Total / Weighted Average Retail and Office Portfolio (1)
146 7,142,880 90.9 % $ 264,470,563 $ 40.73
Mixed-Use Portfolio
Retail Portion Location Year Built/
Renovated Number
of
Buildings Net
Rentable
Square
Feet Percent
Leased Annualized
Base Rent Annualized
Base Rent
Per Leased
Square
Foot
Waikiki Beach Walk—Retail Honolulu, HI 2006 3 93,925 93.8 % $ 8,785,614 $ 99.72
Hotel Portion Location Year Built/
Renovated Number
of
Buildings Units Average
Occupancy Average
Daily Rate Revenue
per
Available
Room
Waikiki Beach Walk—Embassy Suites TM
Honolulu, HI 2008/2014/2020 2 369 76.9 % $ 367.97 $ 282.99
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Multifamily Portfolio
Property Location Year Built/
Renovated Number
of
Buildings Units Percentage
Leased Annualized
Base Rent Average Monthly Base Rent per Leased Unit
Loma Palisades San Diego, CA 1958/2001 - 2008/2021 80 548 94.3 % $ 16,734,228 $ 2,699
Imperial Beach Gardens Imperial Beach, CA 1959/2008 26 160 91.3 4,539,336 2,590
Mariner’s Point Imperial Beach, CA 1986 8 88 94.3 2,202,696 2,212
Santa Fe Park RV Resort (6)
San Diego, CA 1971/2007-2008 1 124 96.0 2,043,288 1,430
Pacific Ridge Apartments San Diego, CA 2013 3 533 88.6 20,721,768 3,657
Hassalo on Eighth - Multifamily (5)
Portland, OR 2015 3 657 91.3 11,482,272 1,595
Total / Weighted Average Multifamily 121 2,110 91.8 % $ 57,723,588 $ 2,483
(1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) under commenced leases for the month ended December 31, 2022 by 12. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. The foregoing notwithstanding:
a. The annualized base rent for La Jolla Commons has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $33,834,361 to our estimate of annual triple net operating expenses of $10,707,147 for an estimated annualized base rent on a modified gross lease basis of $44,541,508 for La Jolla Commons.
b. The annualized base rent for Eastgate Office Park has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $5,221,371 to our estimate of annual triple net operating expenses of $2,063,517 for an estimated annualized base rent on a modified gross lease basis of $7,284,888 for Eastgate Office Park.
c. The annualized base rent for Corporate Campus East III has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $4,286,679 to our estimate of annual triple net operating expenses of $1,531,986 for an estimated annualized base rent on a modified gross lease basis of $5,818,665 for Corporate Campus East III.
d. The annualized base rent for Bel-Spring 520 has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $1,970,275 to our estimate of annual triple net operating expenses of $601,131 for an estimated annualized base rent on a modified gross lease basis of $2,571,406 for Bel-Spring 520.
(2) This property contains 422,426 net rentable square feet consisting of The Landmark at One Market (378,206 net rentable square feet) as well as a separate long-term leasehold interest in approximately 44,220 net rentable square feet of space located in an adjacent six-story leasehold known as the Annex. We currently lease the Annex from an affiliate of the Paramount Group pursuant to a long-term master lease effective through June 30, 2026, which we have the option to extend until 2031 pursuant to one remaining five-year extension option.
(3) Lease data for signed but not commenced leases as of December 31, 2022 is in the following table:
Leased Square Feet Annualized Base Pro Forma Annualized
Under Signed But Annualized Rent per Base Rent per
Not Commenced Leases (a) Base Rent (b) Leased Square Foot (b) Leased Square Foot (c)
Office Portfolio $ 84,437 $ 4,498,255 $ 53.27 $ 54.09
Retail Portfolio 47,335 1,577,101 $ 33.32 $ 26.21
Total Retail and Office Portfolio $ 131,772 $ 6,075,356 $ 46.11 $ 41.67
(a) Office portfolio leases signed but not commenced of 27,753, 39,266 and 17,418 square feet are expected to commence during the first, second and third quarters of 2023, respectively. Retail portfolio leases signed but not commenced of 4,264, 11,300, 11,350, 19,433 and 988 square feet are expected to commence during the first, second, third and fourth quarters of 2023 and the fourth quarter of 2024, respectively.
(b) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for signed but not commenced leases as of December 31, 2022 by 12. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. Annualized base rent per leased square foot is calculated by dividing annualized base rent, by square footage for signed by not commenced leases.
(c) Pro forma annualized base rent is calculated by dividing annualized base rent for commenced leases and for signed but not commenced leases as of December 31, 2022, by square footage under lease as of December 31, 2022.
(4) Net rentable square feet at certain of our retail properties includes square footage leased pursuant to ground leases, as described in the following table:
Property Number of Ground Leases Square Footage Leased Pursuant to Ground Leases (a) Aggregate Annualized Base Rent
Carmel Mountain Plaza 5 17,607 $ 763,098
South Bay Marketplace 1 2,824 $ 114,552
Del Monte Center 1 212,500 $ 96,000
Alamo Quarry Market 3 20,694 $ 410,151
(a) 2,912 square feet of the ground leases at Carmel Mountain Plaza expire during the third quarter of 2023, with no extension options as of December 31, 2022
(5) The Hassalo on Eighth property is comprised of three multifamily buildings, each with a ground floor retail component: Velomor, Aster Tower and Elwood.
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(6) The Santa Fe Park RV Resort is subject to seasonal variation, with higher rates of occupancy occurring during the summer months. The number of units at the Santa Fe Park RV Resort includes 120 RV spaces and four apartments.
In the tables above:
• The net rentable square feet for each of our retail properties and the retail portion of our mixed-use property is the sum of (1) the square footages of existing leases, plus (2) for available space, the field-verified square footage. The net rentable square feet for each of our office properties is the sum of (a) the square footages of existing leases, plus (b) for available space, management's estimate of net rentable square feet based, in part, on past leases. The net rentable square feet included in such office leases is generally determined consistently with the Building Owners and Managers Association, or BOMA, 2010 measurement guidelines. Net rentable square footage may be adjusted from the prior period to reflect re-measurement of leased space at the properties.
• Percentage leased for each of our retail and office properties and the retail portion of the mixed-use property is calculated as square footage under leases as of December 31, 2022, divided by net rentable square feet, expressed as a percentage. The square footage under lease includes leases which may not have commenced as of December 31, 2022. Percentage leased for our multifamily properties is calculated as total units rented as of December 31, 2022, divided by total units available, expressed as a percentage.
• Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents, before abatements) for the month ended December 31, 2022, by 12. Annualized base rent per leased square foot is calculated by dividing annualized base rent, by square footage under lease as of December 31, 2022. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. Total abatements for leases in effect as of December 31, 2022 for our retail and office portfolio equaled approximately $8.4 million for the year ended December 31, 2022. Total abatements for leases in effect as of December 31, 2022 for our mixed-use portfolio equaled approximately $1.2 million for the year ended December 31, 2022. Total abatements for leases in effect as of December 31, 2022 for our multifamily portfolio equaled approximately $0.5 million for the year ended December 31, 2022.
• Units represent the total number of units available for sale or rent at December 31, 2022.
• Average occupancy represents the percentage of available units that were sold during the 12-month period ended December 31, 2022, and is calculated by dividing the number of units sold by the product of the total number of units and the total number of days in the period. Average daily rate represents the average rate paid for the units sold and is calculated by dividing the total room revenue (i.e., excluding food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services) for the 12-month period ended December 31, 2022, by the number of units sold. Revenue per available room, or RevPAR, represents the total unit revenue per total available units for the 12-month period ended December 31, 2022 and is calculated by multiplying average occupancy by the average daily rate. RevPAR does not include food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services.
• Average monthly base rent per leased unit represents the average monthly base rent per leased units as of December 31, 2022.
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Tenant Diversification
At December 31, 2022, our operating portfolio had approximately 834 leases with office and retail tenants, of which 10 expired on December 31, 2022 and there were 22 that had not yet commenced as of such date. Our residential properties had 1,818 leases with residential tenants at December 31, 2022, excluding Santa Fe Park RV Resort. The retail portion of our mixed-use property had approximately 60 leases with retailers. Only one tenant or affiliated group of tenants accounted for more than 9.4% of our annualized base rent as of December 31, 2022 for our office, retail and retail portion of our mixed-use property portfolio. The following table sets forth information regarding the 25 tenants with the greatest annualized base rent for our combined office, retail and retail portion of our mixed-use property portfolios as of December 31, 2022.
Tenant Property(ies) Lease
Expiration Total Leased
Square Feet Rentable
Square
Feet as a
Percentage
of Total Annualized
Base Rent (1)
Annualized
Base Rent
as a
Percentage
of Total
Google LLC The Landmark at One Market 12/31/2029 253,198 3.5 % $ 25,651,314 9.4 %
LPL Holdings, Inc. La Jolla Commons 4/30/2029 421,001 5.8 19,305,775 7.1
Autodesk, Inc. The Landmark at One Market 12/31/2023
12/31/2027 138,615 1.9 12,965,599 4.7
Smartsheet, Inc. City Center Bellevue 12/31/2026
4/30/2029 123,041 1.7 6,830,332 2.5
Illumina, Inc. La Jolla Commons 10/31/2027 73,176 1.0 4,609,212 1.7
VMware, Inc City Center Bellevue 3/31/2028 75,000 1.0 4,447,886 1.6
Lowe's Waikele Center 5/31/2028 155,000 2.1 3,720,000 1.4
Clearesult Operating, LLC First & Main 4/30/2025 101,848 1.4 3,382,042 1.2
Industrious City Center Bellevue 4/30/2033
3/31/2034 55,256 0.8 3,111,931 1.1
State of Oregon: Department of Environmental Quality Lloyd District Portfolio 10/31/2031 87,787 1.2 2,935,024 1.1
Top technology tenant (2) La Jolla Commons 8/31/2030 47,826 0.7 2,737,440 1.0
Genentech, Inc Lloyd District Portfolio 10/31/2026 66,852 0.9 2,337,632 0.9
MEI Pharma, Inc. Torrey Reserve Campus 11/30/2029 45,088 0.6 2,266,536 0.8
Internal Revenue Service First & Main 8/31/2030 63,648 0.9 2,189,700 0.8
Sprouts Farmers Market Solana Beach Towne Centre,
Carmel Mountain Plaza,
Geary Marketplace 6/30/2024
3/31/2025
9/30/2032 71,431 1.0 2,121,187 0.8
California Bank & Trust Torrey Reserve Campus 2/28/2024 34,731 0.5 2,034,559 0.7
WeWork Lloyd District Portfolio 1/31/2032 55,395 0.8 1,998,131 0.7
Veterans Benefits Administration First & Main 8/31/2030 74,885 1.0 1,997,006 0.7
Perkins Coie, LLP Torrey Reserve Campus 12/31/2028 36,980 0.5 1,915,389 0.7
Nordstrom Rack Carmel Mountain Plaza,
Alamo Quarry Market 9/30/2027
10/31/2027 69,047 1.0 1,804,269 0.7
Troutman Sanders, LLP Torrey Reserve Campus
First & Main 3/31/2025
4/30/2025 33,812 0.5 1,798,680 0.7
Marshalls Solana Beach Towne Centre,
Carmel Mountain Plaza 1/31/2025
1/31/2029 68,055 0.9 1,728,228 0.6
Banner Corporation Corporate Campus East III 10/31/2027 46,572 0.6 1,583,448 0.6
Pillsbury Winthrop Shaw Pittman, LLP Torrey Reserve Campus 11/30/2033 26,152 0.4 1,474,973 0.5
Cisco Systems, Inc. City Center Bellevue 2/28/2023 25,689 0.4 1,426,234 0.5
TOTAL 2,250,085 31.1 % $ 116,372,527 42.5 %
(1) Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents before abatements) for the month ended December 31, 2022 for the applicable lease(s) by (ii) 12.
(2) Name withheld at tenant's request.
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Geographic Diversification
Our properties are located in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. The following table shows the number of properties, the net rentable square feet and the percentage of total portfolio net rentable square footage in each region as of December 31, 2022. Our six multifamily properties are excluded from the table below and are located in Southern California and Portland, Oregon. The hotel portion of our mixed-use property is also excluded and is located in Hawaii.
Region Number of Properties Net Rentable Square Feet Percentage of Net Rentable Square Feet (1)
Southern California 10 2,911,156 40.2 %
Northern California 4 1,231,010 17.0
Washington 4 1,030,434 14.2
Oregon 3 952,414 13.2
Texas 1 588,148 8.1
Hawaii (2)
3 523,643 7.2
Total 25 7,236,805 100.0 %
(1) Percentage of Net Rentable Square Feet is calculated based on the total net rentable square feet available in our retail portfolio, office portfolio and the retail portion of our mixed-use portfolio.
(2) Includes the retail portion related to the mixed-use property.
Segment Diversification
The following table sets forth information regarding the total property operating income for each of our segments for the year ended December 31, 2022 (dollars in thousands).
Segment Number of Properties Property Operating Income Percentage of Property Operating Income
Office 12 $ 145,913 54.0 %
Retail 12 70,606 26.1
Mixed-Use 1 31,883 11.8
Multifamily 6 21,813 8.1
Total 31 $ 270,215 100.0 %
Lease Expirations
The following table sets forth a summary schedule of the lease expirations for leases in place as of December 31, 2022, plus available space, for each of the ten calendar years beginning January 1, 2023 at the properties in our retail portfolio, office portfolio and the retail portion of our mixed-use portfolio. The square footage of available space excludes the space from 13 leases that terminated on December 31, 2022. In 2023, we expect a similar level of leasing activity for new and expiring leases compared to prior years with overall positive increases in rental income. However, changes in rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance that the rents on new leases will continue to increase at the above disclosed levels, if at all.
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The lease expirations for our multifamily portfolio and the hotel portion of our mixed-use portfolio are excluded from this table because multifamily unit leases generally have lease terms ranging from seven to 15 months, with a majority having 12-month lease terms, and because rooms in the hotel are rented on a nightly basis. The information set forth in the table assumes that tenants do not exercise any renewal options.
Year of Lease Expiration Square
Footage of
Expiring
Leases Percentage
of Portfolio
Net
Rentable
Square
Feet Annualized Base
Rent (1)
Percentage
of Portfolio
Annualized
Base Rent Annualized Base Rent Per Leased Square Foot (2)
Available 655,974 9.1 % $ — — % $ —
Month to Month 81,211 1.1 918,795 0.4 11.31
2023 495,608 6.8 25,605,784 9.9 51.67
2024 774,422 10.7 28,504,521 11.0 36.81
2025 648,046 9.0 23,516,747 9.1 36.29
2026 641,173 8.9 25,381,358 9.8 39.59
2027 831,859 11.5 33,430,534 12.9 40.19
2028 961,495 13.3 26,153,158 10.1 27.20
2029 1,063,288 14.7 58,172,606 22.5 54.71
2030 285,949 4.0 12,089,145 4.7 42.28
2031 279,759 3.9 10,462,653 4.0 37.40
2032 207,678 2.9 6,397,112 2.5 30.80
Thereafter 173,197 2.4 7,719,987 3.0 44.57
Signed Leases Not Commenced 137,146 1.9 — — —
Total: 7,236,805 100.0 % $ 258,352,400 100.0 % $ 35.70
(1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for the month ended December 31, 2022 for the leases expiring during the applicable period, by 12.
(2) Annualized base rent per leased square foot is calculated by dividing annualized base rent for leases expiring during the applicable period by square footage under such expiring leases.