OFFERS DUE THURSDAY JUNE 18TH: The site carries a complete entitlement package for an 8-story, 225-key hotel under the "Core" zoning designation, which provides unlimited residential density, no minimum parking requirement, up to a 14:1 FAR, and by-right approvals with no discretionary review or CEQA exposure. Critically, a legal opinion from Atlantis Group Land Use Consultants confirms the project's Visitor Accommodation entitlement is vested prior to San Diego's 2024 Land Development Code Update, preserving the right to operate all units without length-of-stay restriction. The project was engineered to satisfy both hotel and multifamily code requirements, giving a buyer the flexibility to develop as a traditional hotel, extended-stay, market-rate apartments, or a hybrid — with no additional entitlement risk.

The property is being sold unencumbered of brand, but ownership has the option to brand with Hyatt for the Thompson Hotels brand (designed for 185 keys – see proforma), Hyatt is offering $5M at the start of construction as a promissory note that will be second to a construction lender. Upon completion Hyatt will convert the $5M to key money and provide an additional $3M for a total of $8M”— substantially reducing effective equity exposure. Thompson's lifestyle-forward design platform, strong F&B programming, and cultural activation are ideally suited to the Little Italy submarket, where the brand's "edgy and refined" positioning consistently commands premium ADR. There are other attractive brand options with Marriott and Hilton including Canopy by Hilton, which would be a great fit for the project as well.

We feel that buyers preferring alternative flags or a purely residential execution will find the dual entitlement and permit-ready drawings provide immediate optionality across a wide range of hotel brands and multifamily operators.

The site is located two blocks from the San Diego waterfront, walking distance to the Financial District and Gaslamp Quarter, and enjoys direct access to San Diego International Airport, Amtrak, and I-5 — placing it at the center of a market drawing 35 million annual visitors and $8 billion in tourism spending. As a Thompson branded hotel, the pro forma reflects a total project cost of approximately $92.3 million, stabilized NOI of $11.2 million, a 12.2% development yield on cost, and a projected disposition value of approximately $126.4 million at month 60 — implying a 28% IRR and 3.36x equity multiple which we feel will be attractive to the buyers and future developers of the site. The property currently generates $22,500+ per month from an interim parking operation, providing income stability through the construction start.

While development is still challenging in the current environment, we feel that the location, entitlements and brand options provide an attractive package for well capitalized developers to build a unique and profitable project in one of the most desirable markets in California.