Page 20 - Solana101_OfferingMemorandum_GSP

MARKET COMPARABLES

Entitlements allowing for a project of this size and scale near the beach are extremely rare in the north San

Diego County coastal markets. Solana 101 is one of the last approved developments of its kind in Solana
Beach given new zoning codes that were enacted after the project’s approval. Considering entitlements are MULTIFAMILY
so difficult to obtain, there are limited comparable properties in the submarket, and in particular, no new
$1MM+
Class A developments of similar scale.

Residential renters throughout the north coastal cities pay significant dollars for 1950s beach rentals and
1970s condos because there are no new luxury rentals in these markets. Solana 101 will offer the same Per Unit
beach-adjacent location but at a much higher quality, setting the property apart in its own class. The

Sponsor’s proforma rents are in line with the older local product and, although there are institutional apartment
comparables in Downtown San Diego, Little Italy, and UTC, prospective renters would not consider these $1K+
markets as alternatives. Given the lack of new supply, multifamily sale comparables for recently built Class A
product in the submarket are rare. While on a smaller basis, the inferior Class B/C properties consistently Per SF
trade for north of $1 million per unit and $1,000 per square foot, which parallel the Sponsor’s proforma

exit values. This theme is similar on the office side, with the shortage of new Class A office inventory as well.
Inferior coastal office product trades for north of $1,000 per square foot, again in line with the Sponsor’s OFFICE
valuation assumptions.
$1K+
Furthermore, a major consideration in the Sponsor’s investment thesis is the exit optionality considering the
Sponsor could refinance or sell each of the three building parcels (residential, office, and retail components)
individually. While the Sponsor plans to hold Solana 101 long term, a sale would likely produce local high Per SF
net worth private investors versus institutional buyers given that local buyers will accept a higher basis due

to the strong demand for coastal real estate and long-term value appreciation.

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