HomeMy WebLinkAboutWestfield LLC; 2012-04-23;IRVING GROU
April 16, 2012
Jerry Engen
Westfield, LLC
225 Broadway, Suite 1700
San Diego, CA 92101
RE: Best & Final Proposal for Ground Lease between the City of Carlsbad & Plaza Camino Real,
a Califomia limited partnership
Dear Jerry:
The City of Carlsbad ("Landlord") would be wilting to enter into a Ground Lease with PLAZA
CAMINO REAL, a California limited partnership ("Tenant") based on the following terms and
conditions:
1. PREMISES: Building Pads - The Tenant shall lease three Pads to
accommodate 26,500 gross square feet of building area. This
space will be allocated to three separate building pads
designated for retail use at the south east corner of the parking
lot. Any additional square footage required for the exclusive use
by Tenant, including that used for patios, is allowable but not to
exceed an additional 10,000 square feet total. Actual square
footage will be determined according final approved plans.
The space required by the City of Carlsbad for landscaping
setbacks, sidewalks and trash enclosures will not be considered
in the calculation of the 26,500 gross square feet or the
additional space. The Tenant is not required to pay additional
rent for this space.
Mall Expansion Area - Landlord shall sell the Mall Expansion
space, described as Parcel's G, H, and I, which consist of
approximately 27,399 square feet (Per attached Exhibit "A"), for
$644,682. Actual square footage will be determined according
final approved plans. [Note: For purposes of this Section, the sales
price, offered only at this time, is the Net Present Value of the
proposed Primary Term of thirty (30) years, using a Discount
Rate of ten percent (10%). Please note that the NPV with a
Discount Rate of 10% using a 10 year cash flow is commercially
typical. For purposes of calculation here, Westfield is wilting to
calculate the purchase price using a 30 year assumed cash flow
concurrent with the proposed Primary Term.]
4320 La Jolla Village Drive, Suite 250, San Diego, Califomia 92122 | Telephone: 858.999,0333 | Fax: 858,999.0225 | www,TheIrvingGroup,com
IHF IRVING CiROUP
Mr. Jerry Engen
03/29/12
Page 2 of7
2. USE FOR PADS: Tenant shall have the right to the following permitted uses
typically found at or consistent with the operation of a first-
class regional shopping center in San Diego and Orange
counties:
a) Any restaurant use,
b) Any retail use,
One non-restaurant or non-retail use not to exceed 6,500
square feet,
Indoor seasonal/temporary stores allowed for a cumulative
maximum sixty (60) days per year,
Permitted uses consistent with the Westfield Carlsbad
Specific Plan ("Specific Plan") subject to Landlord approval
based on the following list:
c)
d)
e)
i)
ii)
iii)
IV
Vi)
vii)
Any retail, restaurant or commercial use permitted
under the Specific Plan not identified under the use
criteria,
Retail uses offering primarily cellular phone service
and/or equipment,
Retail/office use for financial services of more than
6,500 square feet on the entire premises,
Indoor seasonal/temporary stores occupying space for a
cumulative period longer than sixty (60) days,
Non-retail/non-restaurant use requiring more than
6,500 square feet on any Pad,
Uses less than 2,500 square feet on any Pad,
The Ground Lease does not authorize use inconsistent
with the Specific Plan.
3. PROfflBITED PAD USES: Prohibited uses described in the Specific Plan and below will
require an amendment of the Ground Lease and/or Specific
Plan. Prohibited uses include:
a) Any restaurant or establishment which uses sexually
suggestive images as a core element of marketing,
b) Any restaurant offering drive-through service,
c) Any auto-related use,
d) Any retail use offering primarily heavily discounted
merchandise,
e) Check cashing or payday lending businesses,
£) Convenience stores or mini-marts,
g) Food court style establishments,
h) Tattoo parlors or body piercing facilities,
i) Education uses,
j) Churches or religious service uses,
k) Any other uses not specifically permitted in Section 2 (Uses)
above.
1 ilF IRVING GROU I
Mr. Jerry Engen
03/29/12
Page 3 of7
4. USE FOR MALL EXPANSION
AREA: Tenant shall be permitted to use the Mall Expansion area to be
consistent with the applicable Specific Plan.
5. TERM: The Lease Term shaU be for thirty (30) years.
6. COMMENCEMENT: The Lease term for the three Pads shall commence upon mutual
execution ofthe Ground Lease.
The Mall Expansion area shall be available upon completion of
an executed Purchase and Sale Agreement and mutual
execution of the Ground Lease for the Pads [and completion of
documentation adjusting the lot line].
7. RENTAL SCHEDULE: Building Pads - Beginning on the Commencement date, subject
to increased and prorated actual gross square feet as described
in paragraph 1 of Premises, Tenant shaU pay to Landlord the
minimum annual Base Rent per the schedule below inclusive of
all three pads. The rent shaU be a "Ground Lease" with the
annual rate paid on each anniversary of the Rent
Commencement date.
Years 1-5: $60,000
Years 6-10: $66,000
Years 11-15: $72,600
Years 16-20: $79,860
Years 21-25: $87,846
Years 26-30: $96,631
8. RENT ABATEMENT: Tenant shall be granted Base Rent abatement based on the
earlier of 24 months or certificate of occupancy ofthe first pad.
9. OPERATING EXPENSES:
10. ENTITLEMENTS & PERMITS:
Tenant shall pay the entire amount of all Operating Expenses
associated with the Premises and the project. Operating
Expenses include real estate taxes, common area maintenance
expenses and insurance costs.
Tenant shall be responsible for obtaining all necessary
government approvals and permits for the Premises and the
uses to be conducted on the Premises as defined in Paragraphs
2 - 4. Landlord to cooperate as needed. Tenant shaU be solely
responsible, and indemnify Landlord from any claims, for the
payment of all costs, expenses or fees incurred in obtaining
permits or entitlements related to the Premises.
Mr. Jerry Engen
03/29/12
Page 4 of7
"IRVING CiROUl
11. CONSTRUCTION: Upon the lease Commencement date, Tenant shall have the
right to proceed with construction of the Mall Expansion area
and the development of the Building Pads. The construction is
subject to a lifting of the deed restriction on the Premises and
adjustment ofthe lot line.
12. RENEWAL OPTION: Subject to specific language of which shall be further defined in
the Ground Lease document and Sections 17 and 18 of this
Proposal, Tenant shall have two (2) ten (10) year Renewal
Options by providing at least twelve (12) months prior written
notice before the effective date of each Renewal Option term.
The annual rent schedule for the Renewal Options shaU be per
the schedule below:
Building Pads
First Renewal Option:
• Years 31-35: $106,294
• Years 36-40: $116,923
Second Renewal Option:
• Years 41-45: $128,615
• Years 46-50: $141,477
13. SECURITY DEPOSIT: Tenant shall tender a Security Deposit equal to one year's Rent,
calculated as the second year's Rent payment, upon Lease
execution. This section only applies to the Ground Lease. If
Tenant elects to purchase the Mall Expansion, Tenant is not
required to pay a Security Deposit for the Mall Expansion
space.
14. SUBLEASING: Tenant has the right to sublease portions of the Premises to
Subtenants if the intended use complies with Paragraphs 2-4
and the Subleases shall have specific language that includes the
use restrictions outline in this LOI.
15. ASSIGNMENT: Tenant is not allowed to assign the Ground Lease unless such
transfer is part of Tenant's entire transfer of Plaza Camino
Real.
Mr. Jerry Engen
03/29/12
Page 5 of7
IRVING CiROUP
16. REVERSION OF NEW
CONSTRUCTION:
17. BANKRUPTCY:
At the end of the Term or any extension thereof. Tenant shall
have the right to either renegotiate a new lease or demolish
improvements on the Pads and return the site to use as a
parking lot, in similar condition to the adjacent parking lot at
time of demolition.
In the event Tenant files for a Chapter 7 Bankruptcy
(liquidation) the Ground Lease will immediately terminate and
the Premises will revert back to the control of the Landlord.
If Tenant files for Chapter 11 Bankruptcy (reorganization) the
Ground Lease will remain in full force and effect as long as
Tenant continues to meet their obligations under the lease.
18. TERMINATION FOR
DEFAULT: In the event Tenant fails to cure any monetary or non-monetary
default, the specific language of which shall be further defined
in the Ground Lease document, Landlord shaU have the right to
terminate the Lease. Tenant shall have the right to contest
Landlord's assertion of a non-monetary default and have the
opportunity to cure the same within 15 business days following
the determination of the existence of a non-monetary default.
Landlord shaU not have the right to terminate the Lease if the
Tenant has commenced and is diligently pursuing the curing of
the violation. [Note: as noted in the meeting, if we have to
order materials, get permits, etc., that would extend the time
frame needed to complete a project].
19. MALL RENOVATION: As a material condition of the Ground Lease, Tenant is required
to invest a minimum of $50,000,000 in Direct Costs, also
described as "hard costs", for the Mall Renovation with a
planned completion to occur twenty-four (24) months after the
commencement date.
In the event Tenant fails to commence construction of the Mall
Renovation within twelve (12) months from the date of
Entitlement and Commencement, subject to economic or
financial collapse or force majeure, Landlord shall enforce a
penalty of $120,000 immediately due and payable by Tenant. If
Tenant fails to complete construction and receive Certificates of
Occupancy twenty-four (24) months following the date of
Commencement, subject to force majeure, Landlord shall
enforce an additional penalty of $120,000 immediately due and
payable by Tenant.
IRVING CiROUP
Mr. Jerry Engen
03/29/12
Page 6 of7
20. REINVESTMENT:
21. INDEMNIFICATION:
As a condition to Tenant's right to exercise its Renewal Options,
Tenant is required to reinvest in the mall and common areas
over the initial Term and Renewal Option(s). Tenant shall
maintain the Property, including the Building and all
sidewalks, pedestrian lighting, landscaping, irrigation of
landscaping on the Property, architectural elements identifying
the Property and other improvements on the Property in a first-
class condition similar to other regional shopping centers,
including Westfield UTC, Culver City, Century City, Fashion
Valley, Fashion Island, Irvine Spectrum and South Coast Plaza.
Maintenance standards include but are not limited to: painting
and cleaning of exterior surfaces, exterior facades comprising
aU private improvements on the Property, landscaping and
general infrastructure.
Tenant shall indemnify Landlord from any claims arising from
the Premises and the project subject to the specific language of
which shaU be further defined in the Ground Lease document.
Landlord and Tenant acknowledge that this Proposal is not a lease and is non-binding, and that it is
intended as the basis for negotiation of a lease. The Lease shall be subject to Landlord's and
Tenant's approval in their sole discretion and only a fiilly executed Lease shall bind the parties.
If you have any questions with respect to the foregoing, or if you require any additional information,
please contact me at (858) 999-0333.
Sincerely,
THE IRVING GROUP
Craig Irving
President
License Number 01900755
ACKNOWLEDGED AND ACCEPTED
THISDAY OF l\f/\\. 2012.
WESTFIELD y U-LCL.
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