Hoover (Birmingham), Alabama
OFFERING MEMORANDUM
E XECUTIVE SUMMARY
1
PRESENTED BY: INVESTMENT ADVISORS Jim Hamilton Sr. Managing Director 404.942.2212 jhamilton@hfflp.com Brad Buchanan Director 404.942.3192 bbuchanan@hfflp.com Mike Allison Director 404.942.3195 mallison@hfflp.com Shea Petrick Analyst 404.942.2223 spetrick@hfflp.com Ryan Stoffer Analyst 404.942.3198 rstoffer@hfflp.com
DEBT ADVISOR Ed Coco Sr. Managing Director 404.942.2207 ecoco@hfflp.com
2
TABLE OF CONTENTS Executive Summary Market Overview Tenant Information Property Detail Financial Overview
5 21 31 37 41
EXECUTIVE SUMMARY
6
PROPERTY SUMMARY ADDRESS 3780 Riverchase Village Hoover (Birmingham), AL 35244
PROPERTY GLA 175,673 SF
OCCUPANCY 94%
INVESTMENT HIGHLIGHTS WHOLE FOODS MARKET ANCHORED
ANCHORS Whole Foods Market, PetSmart, Best Buy
TOP BIRMINGHAM SHOPPING DESTINATION
YEAR BUILT
SIGNIFICANT VALUE ADD OPPORTUNITY
1980
YEAR RENOVATED 1994 | 2016-2017
$
EXCEPTIONAL DEMOGRAPHICS
ECONOMICS Anchors Base Rent
$1,226,000
Shop Tenant Base Rent
$831,000
Expense Recovery Revenue
$454,000
Effective Gross Revenue
$2,511,000
Operating Expenses Net Operating Income
$479,000 $2,033,000
E XECUTIVE SUMMARY
7
WHOLE FOODS MARKET ANCHORED
THE MOST SOUGHT AFTER GROCER IN THE MARKET
CORE GROCERY OFFERING WITH OVER 18 YEARS OF LEASE TERM REMAINING
RENT BUMPS TOTALING A 33% INCREASE DURING WHOLE FOODS INITIAL TERM
NEWLY CONSTRUCTED WHOLE FOODS WITH LIMITED NEAR TERM CAPEX
THE MOST TECHNICALLY ADVANCED GROCER IN THE MARKET
8
METRICS SINCE ACQUISITION 4.4% Q4 2017 SALES INCREASE Q4 2017 sales rose 4.4% from Q4 2016. In addition to being the fastest rate of sales growth in 2 years, the figures outperformed Wall Street expectations.
6,000 NEW HIRED NATIONWIDE 62% OF SHOPPERS ARE PRIME MEMBERS Amazon plans to give additional benefits to Prime members in the form of discounts and cash-back benefits.
11% INCREASE IN VISITS AT STORES WITH LOCKERS Whole Foods Market Plaza has an Amazon Locker, which has shown to increase visits by 11% in comparison to stores without them.
E XECUTIVE SUMMARY
9
DOWNTOWN BIRMINGHAM
PATTON CREEK
459
112,670 VPD
RIVERCHASE GALLERIA
HOOVER PD
10 V
36,4 d. | rna R
Lo
M . wy yH
er
om
tg
on
31 90 ,9 47 D
VP
10
THE TOP SHOPPING DESTINATION IN BIRMINGHAM RETAIL FOOTPRINT
8.9 M
(3-Mi RADIUS)
SQUARE FEET OF RETAIL
97%
AVERAGE OCC. RATE
MAIN & MAIN INTERSECTION Whole Foods Market Plaza is located at the Main & Main intersection of Montgomery Hwy. & Lorna Rd. • Montgomery Hwy. (47,990 VPD) • Lorna Rd. (36,410 VPD)
RIVERCHASE GALLERIA THE LARGEST ENCLOSED MALL IN ALABAMA
•
1,570,000 SF
•
Strong Sales
•
100% Occupancy Rate
•
Super-regional drawing power
• Hyatt Regency (1,700,000 SF ) •
Galleria Tower (285,000 SF )
E XECUTIVE SUMMARY
11
SIGNIFICANT VALUE-ADD OPPORTUNITY
01
RIGHT-SIZE BEST BUY
Best Buy’s average store size nationally is 30,000 SF. Ownership has the ability to right-size Tenant’s space upon their lease expiration.
51,763 SF
Tenant Best Buy
GLA
LXP
Current Rent (PSF)
Current Rent (Annual)
51,763
Feb-25
$3.30
$170,818
Tenant
GLA
Best Buy (downsize)
30,000
02
Best Buy (downsize)
Tenant
(See page 11)
30,000 SF
21,763 SF
Jr. Anchor
03
Jr. Anchor
BACKFILL RESIDUAL SPACE
Tenant
Retailer not in the market
Tenant
GLA
Market Rent (PSF)
Market Rent (Annual)
30,000
$12.00
$360,000
+ GLA
Market Rent (PSF)
Market Rent (Annual)
21,763
$15.00
$326,445
POTENTIAL REVENUE INCREASE
$516,000 12
GLA 21,763
RETAILERS NOT IN THE MARKET
RESTRICTED TENANTS PER EXISTING LEASES
OVERALL VALUE-ADD OPPORTUNITY
01 02 03
Right-size Best Buy space and
mark-to-market rents
Lease-up of over of vacancy
9,500 SF
Potential revenue increase of over $700,000
E XECUTIVE SUMMARY
13
EXPLOSIVE DEMOGRAPHIC GROWTH The Whole Foods Market Plaza trade area has experienced exponential growth over the past 18 years with significant projected growth over the next 5 years, which will position the Property for long-term value appreciation.
2000 2000
(5-mile radius)
(projected)
$102,502
65% Increase
$169,284
13% Increase
$190,410
29,563
21% Increase
35,655
9% Increase
38,866
$3.03 Billion
99% Increase
$6.04 Billion
23% Increase
$7.40 Billion
AVERAGE HH INCOME
HOUSEHOLDS BUYING POWER
2023
2018
DEMOGRAPHICS
20001 MILE
14
3 MILE
5 MILE
2018 Population
3,491
32,338
95,079
2018 Average Household Income
$121,361
$167,445
$169,284
2018 Bachelor’s Degree or Higher
63%
67%
64%
HIGHLY AFFLUENT CUSTOMER BASE The Whole Foods Market Plaza trade area compares favorably to many of the wealthiest submarkets in the Southeast.
AFFLUENT INCOME LEVELS
HIGHLY EDUCATED POPULATION
EXCELLENT BUYING POWER
The average household income within a 5-mile radius is over $169,000, 225% higher than the Birmingham average of $52,000.
64% of the Population has obtained a bachelor’s degree or higher compared to the national average of 27%. The high education level ensures greater affluence and stability in the trade area.
Buying power within a 5-mile radius of the Property is over $6.0 billion, comparing favorably with some of the Southeast’s wealthiest submarkets.
E XECUTIVE SUMMARY
15
DOWNTOWN BIRMINGHAM
MOUNTAIN BROOK
$162K
$94K
$124K
$86K
$136K
$142K
$113K
$112K
VESTAVIA HILLS
459
$72K
HOOVER
$116K
$145K
$149K
LEGEND AVERAGE HOUSEHOLD INCOME CENSUS TRACT BOUNDARY INTERSTATE 459
16
$98K
$188K
$106K
CONCENTRATED AFFLUENCE $119K $171K
Whole Foods Market Plaza is surrounded by highly concentrated pockets of wealth as seen to the left. The tenancy at Whole Foods Market Plaza has been leased to reflect the shopping tendencies of the affluent customer base.
$160K
$159K
$81K
E XECUTIVE SUMMARY
17
TENANT ROSTER 0
0
0 65
75
0 80
90
0
95
00
10
VPD
0
60 0
OMERY
HWY. | 47,990
50
0
100 150 200
MONTG
40 0
30
STE. 100 150 200 300 400 500 600 650 750 800 900 950 1000 TOTAL
TENANT Ironstone Pizzaworks Chicken Salad Chick Best Buy PetSmart Whole Foods Market Sola Salon Nothing Bundt Cakes Market House Available Bella's Bridal & Formal Available Lee Nails & Spa Newk's
LORNA RD. | 36,410 VPD
175,673 SF PROPERTY SIZE
18
96%
OCCUPANCY RATE
126,310 SF
ANCHOR FOOTPRINT
72% / 28%
ANCHOR / TENANT RATIO
SF 3,200 3,200 51,763 24,500 50,047 6,800 2,000 5,115 7,385 12,071 2,529 2,000 5,063 175,673
Lorna Rd. | 36,410 VPD PD
V 90
ry
e om
. wy
31
,9 47
H
tg
n Mo
E XECUTIVE SUMMARY
19
MARKET OVERVIEW
BIRMINGHAM
22
BIRMINGHAM MSA FAST FACTS
A Top 50 Metro in the U.S with a population of approximately 1.2 million and a growth rate of over 10% since 2000. Highly educated workforce with 7 accredited higher education schools and over 47,000 enrolled students.
v
Birmingham – Shuttlesworth International Airport has over 130 flights daily to 48 airports in 45 cities Five major interstate highways passing through Downtown: I-20, I-65, I-59, I-22, and I-49. One of the lowest costs of living in the top 50 U.S. Metros contributing to Birmingham’s employment growth
Healthcare hub with over 20 hospitals - 4 of which are top employers in the area.
1
#
MOST AFFORDABLE CITY (FORBES)
TOP
10
TOP
5
HOUSING MARKET FOR HOME BUYERS
UP & COMING TECH HOTSPOTS
(OWNERS.COM)
(LIVABILITY.COM)
1
#
CHEAPEST PLACE TO RETIRE (CNBC)
E XECUTIVE SUMMARY
23
DIVERSE & BALANCED ECONOMY Agriculture / Forestry / Fishing 0.1% Mining / Oil / Gas 0.2% Construction 4.4% Manufacturing 8.2% Wholesale Trade 2.6% Retail Trade 10.0% Transportation & Warehousing 3.8% Information 2.4% Finance and Insurance 5.5% Real Estate 1.7% Professional / Scientific Research 4.8% Management of Companies 0.1% Administrative / Support 5.6% Educational Services 9.7% Healthcare 17.7% Arts / Entertainment / Recreation 1.4% Accommodation / Food Service 10.0% 2.0%
24
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
The Birmingham-Hoover MSA is centrally located in Alabama, and can be conveniently accessed throughout the southeast by one of four interstates (I-65, I-20, I-59 and I-22). The MSA has a population close to 1.2 Million people, and has grown nearly 10% since 2000. Additionally, the MSA benefits from proximity to the Southeast’s most major markets: Atlanta, GA – 153 mi, Nashville, TN – 198 mi, Memphis, TN – 244 mi, Mobile, AL – 250 mi, New Orleans, LA – 344 mi.
ECONOMY Birmingham has seen a rise in new opportunity in the area with over 3,000 new jobs being created within the past year as well as the announcement of more than $370 Million in infrastructure improvements to spur new growth. Much of the city’s growth is attributed to the existing strength of the diverse set of economic drivers, the low cost of doing business in the area and the city’s sophisticated transportation infrastructure. Birmingham’s unemployment rate is currently 4.8%, which has decreased by 13% in the last year and is lower than the national average of 5.3%. Birmingham’s economic strength and growth is reflected in the following sample of businesses/industries that have announced recent expansions/investments to the area: Kamtec ($530 Million investment/354 new jobs), Birmingham Children’s Hospital ($570 Million expansion/760,000 SF).
MANUFACTURING Birmingham’s manufacturing industry employs nearly 8,000 people and contains two of the area’s top ten employers. Birmingham is a key player in metals manufacturing especially with the increasing demand for Birmingham steel. This industry is experiencing high growth, and Birmingham has benefited directly as seen by US Steel Corp’s new $230 Million electric arc furnace, which is expected to be installed in 2016.
UNEMPLOYMENT RATE 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
2008 Hoover
2009 Alabama
2010 United States
2011
2012
2013
2014
2015
2016
2017
(Source: U.S. Bureau of Labor Statistics )
E XECUTIVE SUMMARY
25
EMPLOYMENT HUB 2017 COST OF LIVING INDEX (U.S. AVERAGE = 100) Birmingham is the most affordable cities in the nation, with the cost of living well below the national average. Companies and employees will continue to move and reside in Birmingham as the cost of doing business is significantly less than other major metros around the country.
Seattle | 149.0 Boston | 148.2 New York City | 125.8 Chicago | 123.6 San Francisco | 192.9
Philadelphia | 117.2 Washington D.C | 144.3
Los Angeles | 148.0
Dallas / Ft. Worth | 102.1
Birmingham | 91.4
Atlanta | 99.0
Houston | 98.2
Source: ACCRA Cost of Living
26
Miami | 114.6
EMPLOYMENT HUB BIRMINGHAM MSA TOP CORPORATE EMPLOYERS Employer University of Alabama at Birmingham Regions Financial Corp.
# Birmingham Employees 23,000 7,134
Honda Manufacturing of Alabama
4,800
St. Vincent's Health System
4,786
Baptist Health Systems
4,633
Children's of Alabama
4,543
AT&T
4,517
Alabama Power Co.
3,982
Blue Cross-Blue Shield of Alabama
3,570
Mercedes-Benz
3,500
BBVA Compass
2,765
Buffalo Rock Co.
2,200
Southern Co. Services
2,166
HEALTHCARE Birmingham acts as a healthcare hub for central Alabama, houses over 20 hospitals, and contains four of the top ten employers in the area. Birmingham’s healthcare footprint recently expanded in Oct. 2015 with the addition of Grandview Medical Center – 200,000 SF. The new medical center is projected to create an additional 9,000 jobs for the local economy and $405M in additional annual economic earnings for the region. University of Alabama – Birmingham, home to the third largest public hospital in the United States (UAB Hospital), plays a vital healthcare role due to research and funding from the National Institute of Health and receives over $450M a year for research. Additionally, Southern Research Institute, headquartered in Birmingham, is also a major player and has seven FDA approved drugs on the market as well as seven more compounds currently being developed and going through clinical trials.
E XECUTIVE SUMMARY
27
EDUCATION Higher education employs nearly 20,000 in the metropolitan area. Seven universities and colleges, seven community/junior colleges, five degree-granting technical schools, three law schools, and the UAB medical, dental, and other specialized schools offer multiple educational opportunities to the area’s work force. As the area’s largest employer, the University of Alabama at Birmingham contributes to the economic impact of higher education with its 19,000+ employees, total annual budget of $957.5 million and 16,252 students. It offers 142 undergraduate and graduate degrees. A new study shows the University of Alabama at Birmingham’s annual economic impact has grown to $7.15 billion a year, up from $4.6 billion just eight years ago — a 55 percent increase. UAB now directly employs more than 23,000 and supports more than 64,000 jobs — one of every 31 in Alabama.
ECONOMIC IMPACT AMONG UNIVERSITIES
$7.1 B
University of Alabama Birmingham
$335 M
Samford University
BIRMINGHAM-SHUTTLESWORTH INTERNATIONAL AIRPORT Birmingham–Shuttlesworth International Airport (BHM), serving the city of Birmingham and its metropolitan area, including Tuscaloosa, in the United States. It is located in Jefferson County, five miles northeast of downtown Birmingham, near the interchange of Interstates 20 and 59. BHM averages 301 aircraft operations a day, including 130 flights daily to 48 airports in 45 cities. BHM served 2.7 million passengers in 2017, and is the largest and busiest airport in the state of Alabama by passenger volume.
28
E XECUTIVE SUMMARY
29
TENANT INFORMATION
30
E XECUTIVE SUMMARY
31
32
LEASE ABSTRACT
LEASE TERMS TENANT Whole Foods Market Group, Inc. USE For the operation of a grocery store, food market, and/or supermarket under the trade name Whole Foods Market, 365 by Whole Foods Market, or any other trade name used by Whole Foods Market, Inc. COMMON AREA MAINTENANCE Beginning on Tenant’s commencement date, Tenant shall pay a fixed annual fee of $2.00 PSF increasing at 3% annually. (2018 payment = $2.06)
INSURANCE Tenant shall reimburse Landlord its pro-rata share of Insurance premiums.
PROHIBITED USES (i) No more than five (in the aggregate) restaurants, coffee bars, or frozen yogurt or ice cream stores provided the store does not sell gelato, (A) which contain no more than 6,400 SF with respect to any individual store and no more than 13,467 SF in the aggregate, and (B) are not bakery concepts such as, but not limited to Panera Break, Corner Bakery, etc. (ii) Any of the following uses that contain more than 7,225 SF: health club, health spa, fitness center, yoga or pilates center, weight room, or gymnasium. (iii) Any juice or smoothie bar (iv) Lyfe Kitchen, Veggie Grill, or The Plant (v) Any use that would impair Tenant’s ability to obtain or maintain a license to sell alcoholic beverages for on or off-premises consumption. (vi) The sale of produce, meat, poultry, seafood, dairy, cheese, cereals, grains, fruits and vegetables, frozen foods, grocery products, bulk foods, gourmet foods, bakery goods, alcoholic beverages, body care products, cosmetics, health care items, beauty aids, plants, flowers, vitamins, nutritional supplements, coffee beans, smoothies and/or fresh fruit drinks or gelato.
REAL ESTATE TAXES Tenant shall reimburse Landlord its pro-rata share of Real Estate Taxes. PARKING REQUIREMENT 5.0 parking spaces per 1,000 SF of GLA 10.0 parking spaces per 1,000 SF of restaurant space RIGHT OF FIRST OFFER Tenant shall have continuing rights to lease additional space in the Development that is currently occupied by Sola Salon. Once available, Landlord will give Tenant notice the space is available and what terms the Landlord would be willing to accept with respect to the Offered Space. Tenant shall have one (1) month to accept Landlord’s offer. If Tenant declines, Tenant still retains the Right of First Offer if the space becomes available again.
EXCEPTIONS TO PROHIBITED USES (i) An ABC Liquor Store (ii) a boutique beauty salon that sells cosmetics (iii) a retailer that sells beauty or body care products such as, but not limited to, Sephora, MAC Cosmetics, or Aveda and does not sell natural or organic cosmetics or beauty / body care products. CO-TENANCY If less than 50% of the Rentable area in the Shopping Center (excluding the Demised Premises) is not open and operating for business for twelve (12) consecutive months, Tenant may pay the lesser of (i) fifty percent (50%) of Base Rent, or (ii) 1% of Gross Sales. If Tenant has been paying reduced rent for twelve (12) consecutive months, Tenant has the right to terminate the Lease or revert to paying 100% Base Rent. RECAPTURE RIGHT If Tenant has discontinued operation in the Demised Premises for four (4) consecutive months, Landlord shall thereafter have the right to terminate the Lease upon written notice to Tenant.
E XECUTIVE SUMMARY
33
LEASE ABSTRACT
LEASE TERMS TENANT PETSMART, Inc. USE Tenant’s primary business shall mean the retail sale of (i) pets, (ii) food, accessories, and other products relating to pets and animals, (iii) services relating to pets and animals such as grooming, boarding, training, obedience classes, adoption, and veterinary services, (iv) products relating to nature and the environment, (v) and educational products related to the foregoing. EXCLUSIVE During the term of the Lease, Tenant shall have the exclusive use to conduct its Primary Business as defined above.
COMMON AREA MAINTENANCE Tenant shall reimburse Landlord its pro-rata share of Common Area expenses including an administrative fee not to exceed 10%. INSURANCE Tenant shall reimburse Landlord its pro-rata share of Insurance premiums. REAL ESTATE TAXES Tenant shall reimburse Landlord its pro-rata share of Real Estate Taxes. CO-TENANCY If at any time during the term of the Lease the occupancy in the Shopping Center drops below 60%, Tenant may pay 50% of their Base Minimum Rent so as long as the condition continues. If the condition continues for a period of one (1) year, Tenant may terminate the lease within ninety (90) days written notice or revert to Full Base Minimum Rent.
LEASE TERMS TENANT BEST BUY STORES, Inc. (Former Service Merchandise Lease) USE The operation of a catalogue store and other retail sales and services customary in shopping centers, except as a supermarket
34
COMMON AREA MAINTENANCE Tenant shall reimburse Landlord its pro-rata share of Common Area expenses. INSURANCE Tenant shall reimburse Landlord its pro-rata share of Insurance premiums. REAL ESTATE TAXES Tenant shall reimburse Landlord its pro-rata share of Real Estate Taxes in excess of the Base Year of the original Service Merchandising Lease. (Base Year Amount: $45,513.64).
LEASE LANGUAGE
TENANT:
IronStone Pizzaworks
Chicken Salad Chick
Sola Salon
Nothing Bundt Cakes
SUITE:
100
150
500
600
EXCLUSIVE:
Yes
Yes
Yes
N/A
For the operation of a full service restaurant for on and off-premises consumption of pizza and related menu items including the sale of beer and wine.
For a restaurant selling primarily chicken salad and other related items and for no other purpose.
For the operation of an individual or separate salon studio and rooms to license third party stylists and retail sale of related products.
For the operation of a franchised Nothing Bundt Cakes which sells only baked goods, gift items, and coffee beans for off-premises consumption
CO-TENANCY:
N/A
N/A
Yes (1)
N/A
TERMINATION:
N/A
N/A
N/A
N/A
USE:
VENICE NAILS & SPA
TENANT:
Market House Boutique
Bella’s Bridal
Venice Nails & Spa
Newk’s Eatery
SUITE:
650
800
950
1000
EXCLUSIVE:
Yes
Yes
Yes
N/A
For a women’s clothing boutique and the retail sale of related items.
For the retail sale of bridal and related wear, including but not limited to wedding dresses, shoes, jewelry, bridesmaids and prom dresses.
For the operation of a first class nail salon which shall perform nail, manicure, pedicure, facial, and waxing services and no other purpose.
For the operation of a franchised Newk’s restaurant.
CO-TENANCY:
N/A
N/A
N/A
N/A
TERMINATION:
N/A
N/A
N/A
N/A
USE:
FOOTNOTES TO LEASE LANGUAGE:
1. Sola Salon Co-Tenancy: If at any time during the Lease Term, an Anchor Tenant (tenant using more than 18,000 SF) is vacant, Tenant shall pay $16.00 PSF in lieu of Base Rent. Tenant may pay reduced rent until the co-tenancy violation is cured. E XECUTIVE SUMMARY
35
PROPERTY DETAIL
PARKING xxxx
38
PROPERTY DETAIL PROPERTY GLA 175,673
YEAR BUILT / RENOVATED BUILT: 1980 RENOVATED: 1994 | 2016 - 2017
LAND AREA 18.9 acres
ZONING Hoover - Planned Commercial (PC)
ACCESS EIGHT (8) POINTS OF INGRESS / EGRESS
• Two (2) points of right-in, right-out access along Lorna Rd.
• Two (2) points of signalized access along Lorna Rd. • Two (2) points of right-in, right-out access along Montgomery Hwy.
• One (1) point of full access along Montgomery Hwy. • One (1) point of full access along Data Dr. ENVIRONMENTAL SURVEY A Phase I Environmental Survey was performed by Terracon on November 26, 2014. No recognized environmental conditions were identified and no further action was required.
E XECUTIVE SUMMARY
39
FINANCIAL OVERVIEW
RENT ROLL As of August 1, 2018 STE.
SQ. FT.
END
RENT
DATE
DATE
PER SF
RENT ESCALATIONS OPTION RENT (DENOTED IN BLUE) ANNUAL
DATE
PER SF
OPTIONS
$31.21 2% Annual Increases $36.56 2% Annual Increases $40.35 2% Annual Increases
Two, 5-Year
100
IronStone Pizzaworks
3,200
Jun-17
May-27
$30.60
$97,920
Jun-19 Jun-20 Jun-27 Jun-28 Jun-32 Jun-33
150
Chicken Salad Chick
3,200
Jun-16
May-26
$26.00
$83,200
Jun-21 Jun-26 Jun-31
$28.60 $31.46 $34.60
Two, 5-Year
51,763
Oct-78
Feb-20
$3.30
$170,818
Mar-20
$3.30
One, 5-Year
24,500
Oct-04
Jan-20
$15.50
$379,750
Feb-20
$17.00
One, 5-Year
$14.85 $16.34 $17.97 $19.70 $21.74 $23.92 $26.31
Four, 5-Year
200 300
42
TENANT
START
Best Buy *See Footnote #1
PetSmart
400
Whole Foods Market
50,047
Dec-16
Dec-36
$13.50
$675,635
Jan-22 Jan-27 Jan-32 Jan-37 Jan-42 Jan-47 Jan-52
500
Sola Salon
6,800
Jul-13
Jul-23
$19.54
$132,872
Aug-23 Aug-28 Aug-33
$21.49 $23.65 $26.01
Three, 5-Year
600
Nothing Bundt Cakes
2,000
Nov-16
Oct-26
$32.00
$64,000
Nov-21 Nov-26 Nov-31
$35.20 $38.72 $45.59
Three, 5-Year
RENT ROLL As of August 1, 2018 STE.
TENANT
SQ. FT.
START
END
RENT
DATE
DATE
PER SF
RENT ESCALATIONS OPTION RENT (DENOTED IN BLUE) ANNUAL
DATE
PER SF
OPTIONS
$21.00 $21.50 $22.00 $23.00 $23.50 $24.00 $25.00
One, 5-Year
650
Market House Boutique
5,115
May-17
Oct-22
$20.00
$102,300
Nov-18 Nov-19 Nov-20 Nov-22 Nov-24 Nov-25 Nov-26
750
Available
7,385
Aug-19
Jul-24
$0.00
$0.00
Aug-19 Aug-20
$22.00 3% Annual Increases
None
12,071
Mar-17
Jun-27
$13.50
$162,959
Apr-22 Mar-27
$15.00 FMV
One, 5-Year
2,529
Aug-19
Jul-24
$0.00
$0.00
Aug-19 Aug-20
$28.00 3% Annual Increases
None
$33.29 2% Annual Increases $42.08 $26.29
Two, 5-Year
$26.40 $29.04 $31.94
Two, 5-Year
800 900
Bella’s Bridal *See Footnote #2
Available
950
Venice Nails & Spa
2,000
Feb-16
Sep-26
$32.64
$65,280
Oct-18 Oct-19 Oct-26 Oct-31
1000
Newk’s Eatery
5,063
Dec-14
Dec-24
$24.00
$121,512
Jan-20 Jan-25 Jan-30
TOTAL
175,673
FOOTNOTES TO RENT ROLL 1.
Best Buy Downsize: Best Buy was assumed to downsize to their average store size of 30,000 SF upon the expiration of their final option (Feb-25) and begin paying a market rent of $12.00 PSF. The residual space in the Best Buy box was leased at $15.00 PSF after 5 months of downtime. For more information on this scenario, please see pages 12, 43, or the Argus Model. 2. Fair Market Value Option: Tenants with Fair Market Value (FMV) option rents were assumed to exercise their respective renewals at rates in-line with historical rent bumps.
LEASE-UP SCHEDULE Suite
Area (SF)
Date Rent Bumps Leased
Lease Term
Suite 750
7,385
Aug-19
3% Annually
5 Years
Suite 900
2,529
Aug-19
3% Annually
5 Years
FINANCIAL OVERVIEW
43
CASH FLOW FO R T HE Y E A R EN D IN G As-Is
Jul-19
Jul-20
Jul-21
Jul-22
Jul-23
Jul-24
Jul-25
Jul-26
Jul-27
Jul-28
Jul-29
Whole Foods Market Base Rental Revenue
675,635
675,635
691,617
743,198
743,198
743,198
743,198
760,838
817,768
817,768
817,768
817,768
PetSmart Base Rental Revenue
379,750
379,750
398,125
416,500
416,500
416,500
416,500
344,770
409,560
409,560
409,560
409,560
Best Buy Base Rental Revenue
170,818
170,818
170,818
170,818
170,818
170,818
170,818
249,644
360,000
360,000
360,000
360,000
Shop Base Rental Revenue
831,342
1,071,560
1,099,634
1,131,613
1,147,255
1,161,375
1,186,560
1,274,806
1,552,743
1,588,444
1,650,556
1,692,568
-
(168,371)
-
-
-
-
-
(100,593)
-
-
(27,808)
(15,861)
Total Base Rental Revenue
2,057,545
2,129,392
2,360,194
2,462,129
2,477,770
2,491,891
2,517,076
2,529,465
3,140,071
3,175,772
3,210,076
3,264,035
Common Area Maintenance
284,016
290,430
313,802
323,522
332,689
342,108
351,925
350,678
431,191
442,768
452,586
466,314
Real Estate Taxes
145,475
147,718
160,123
165,329
170,691
176,215
181,903
177,035
207,209
213,425
218,751
225,874
Insurance
24,300
24,643
26,541
27,337
28,157
29,002
29,872
28,272
31,691
32,641
33,456
34,545
Total Expense Recovery Revenue
453,791
462,791
500,466
516,188
531,537
547,324
563,700
555,985
670,091
688,834
704,794
726,734
2,511,336
2,592,183
2,860,660
2,978,317
3,009,308
3,039,214
3,080,776
3,085,450
3,810,162
3,864,606
3,914,870
3,990,769
-
-
(85,820)
(89,350)
(90,279)
(91,176)
(92,423)
(64,516)
(114,305)
(115,938)
(98,621)
(103,862)
2,511,336
2,592,183
2,774,840
2,888,967
2,919,029
2,948,038
2,988,353
3,020,934
3,695,857
3,748,668
3,816,249
3,886,907
Common Area Maintenance
207,360
207,360
213,581
219,988
226,588
233,386
240,387
247,599
255,027
262,677
270,558
278,675
Real Estate Taxes
170,000
170,000
175,100
180,353
185,764
191,336
197,077
202,989
209,079
215,351
221,811
228,466
Insurance
26,000
26,000
26,780
27,583
28,411
29,263
30,141
31,045
31,977
32,936
33,924
34,942
Management Fee
75,340
77,765
83,245
86,669
87,571
88,441
89,651
90,628
110,876
112,460
114,487
116,607
478,700
481,125
498,706
514,594
528,333
542,426
557,255
572,261
606,958
623,424
640,781
658,689
2,032,636
2,111,058
2,276,134
2,374,374
2,390,695
2,405,612
2,431,097
2,448,673
3,088,899
3,125,243
3,175,468
3,228,217
-
76,066
-
-
-
-
241,452
802,972
-
16,685
Absorption & Turnover Vacancy
TOTAL POTENTIAL GROSS REVENUE
Vacancy Loss
EFFECTIVE GROSS REVENUE
Total Operating Expenses
NET OPERATING INCOME
Tenant Improvements Leasing Costs
-
53,307
-
-
12,123
22,773
174,613
10,067
48,257
26,575
Capital Reserves
17,567
17,567
17,567
17,567
17,567
17,567
17,567
17,567
17,567
17,567
Total Capital Costs
17,567
146,940
17,567
17,567
29,690
40,340
433,633
830,607
65,824
60,827
2,093,491
2,129,194
2,356,806
2,373,128
2,375,922
2,390,757
2,015,040
2,258,293
3,059,419
3,114,642
NET CASH FLOWS
44 |
RECOVERABLE EXPENSES
MISCELLANEOUS ASSUMPTIONS MARKET RENTS
RECOVERABLE PROPERTY EXPENSES 2018 Argus Common Area Maintenance 1 Trash - (IronStone Pizzaworks / Chicken Salad Chick) Snow Removal Electrical Repairs & Maintenance Plumbing Repairs/Maintenance Pressure Washing Landscape Contract Grounds Parking Lot Sweeping 1 Trash Removal General Maintenance Fire & Life Safety Pest Control Electricity Water/Sewer TOTAL Common Area Maintenance
2017 Actual
$4,100 $1,000 $6,800 $3,000 $7,000 $43,000 $12,000 $13,000 $4,300 $2,000 $4,000 $1,160 $30,000 $70,000
$0 $153 $6761 $4,771 $3,549 $34,444 $11,434 $12,684 $7,275 $1,971 $3,589 $1,160 $15,933 $61,485
$142,700
$125,952
170,000
$166,864
Real Estate Taxes & Insurance Real Estate Taxes Insurance TOTAL Real Estate Taxes & Insurance Management Fee TOTAL RECOVERABLE EXPENSES
26,000
$22,056
$201,360
$165,209
$75,340
$78,458
$472,700
$432,587
FOOTNOTES TO RECOVERABLE EXPENSES 1. Trash Removal: The decrease in the trash removal expense is due to Chicken Salad Chick and IronStone Pizzaworks sharing a trash container and paying 50% of the expense each beginning in 2018.
ADDITIONAL ASSUMPTIONS
Shop Tenants < 3,200 SF
$28.00 PSF
Shop Tenants > 3,200 SF
$25.00 PSF
Suite 750
$22.00 PSF
Suite 900
$28.00 PSF
PetSmart
$14.00 PSF
Best Buy (Downsize)
$12.00 PSF
Best Buy (Residual Space Backfill)
$15.00 PSF
TENANT IMPROVEMENT ALLOWANCE Shop Tenants
New Tenant: Renewal:
$10.00 PSF $0.00 PSF
Anchors:
New Tenant: Renewal:
$35.00 PSF $0.00 PSF
New Tenant: Renewal:
6.0% 2.0%
LEASING COMMISSIONS All Tenants: LEASE TERM Shop Tenants Petsmart Best Buy (Downsize and Residual Space)
5 Years 10 Years 10 Years
DOWNTIME BETWEEN LEASES Shop Tenants
6 Months
Petsmart
9 Months
Best Buy (Residual Space)
5 Months
OTHER ASSUMPTIONS General Inflation: Market Rent Growth: Tenant Renewal Probability: Capital Reserves: Vacancy Loss: Management Fee:
3.0% per annum 3.0% per annum 75% $0.10 PSF 3.0% no exclusions 3.0% of Effective Gross Revenue
Tenant Options: For the purpose of this Analysis, we have assumed that all Tenants with contractual renewal options will exercise those options throughout the term of the Analysis. Real Estate Tax Reassessment: A Real Estate Tax Reassessment was not included in the Analysis. FINANCIAL OVERVIEW
45
TENANT ROSTER 0
0
0 65
75
0 80
90
0
95
00
10
VPD
0
60 0
OMERY
HWY. | 47,990
50
0
100 150 200
MONTG
40 0
30
STE. 100 150 200 300 400 500 600 650 750 800 900 950 1000 TOTAL
TENANT Ironstone Pizzaworks Chicken Salad Chick Best Buy PetSmart Whole Foods Market Sola Salon Nothing Bundt Cakes Market House Available Bella's Bridal & Formal Available Lee Nails & Spa Newk's
LORNA RD. | 36,410 VPD
175,673 SF PROPERTY SIZE
46
96%
OCCUPANCY RATE
126,310 SF
ANCHOR FOOTPRINT
72% / 28%
ANCHOR / TENANT RATIO
SF 3,200 3,200 51,763 24,500 50,047 6,800 2,000 5,115 7,385 12,071 2,529 2,000 5,063 175,673
TRANSACTION GUIDELINES In addition to the limitations outlined herein, the Seller reserves the right to accept or reject any offer at any time and to extend the date for submission of offers for any reason at its sole discretion. ONLINE DUE DILIGENCE Investors will receive secure access to an on-line document center. The document center contains an electronic form of the Offering Memorandum, ARGUS model, and other pertinent information. If you have difficulty accessing this information, please contact Shea Petrick at 404.942.2223 or spetrick@hfflp.com. CALL FOR OFFERS Your proposal should be delivered to Jim Hamilton: By Facsimile:
404.942.2212
By E-mail:
jhamilton@hfflp.com
By Overnight:
Jim Hamilton HFF, LP 3424 Peachtree Rd. NE Suite 1750 Atlanta, GA 30326
FORM OF PROPOSALS Prospective purchasers will be required to submit in writing a detailed, non-binding proposal for the Property (“Proposal”). All Proposals must include the following: • Name of property • Purchase price • Initial deposit and total nonrefundable deposit • Transaction expense responsibility • Contract, due diligence and closing periods • Sources of equity • Detailed description of the principals of the prospective purchaser including, if applicable, each member of a consortium formed for the transaction and the single representative to act on their behalf. • Anticipated conditions to the execution of the transaction documents including shareholder’s consent and board, regulatory or other approvals. EXCLUSIVE SALE REPRESENTATIVE For further information, please contact the exclusive sales representative: Jim Hamilton Senior Managing Director T. 404.942.2212 jhamilton@hfflp.com
INVESTMENT SALES JIM HAMILTON Sr. Managing Director 404.942.2212 jhamilton@hfflp.com
SHEA PETRICK Analyst 404.942.2223 spetrick@hfflp.com
BRAD BUCHANAN Director 404.942.3192 bbuchanan@hfflp.com
RYAN STOFFER Analyst 404.942.3188 rstoffer@hfflp.com
MIKE ALLISON Director 404.942.3195 mallison@hfflp.com DEBT CONTACT ED COCO Sr. Managing Director 404.942.2207 ecoco@hfflp.com
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CONDITIONS OF OFFERING This Offering Memorandum has been prepared by Holliday Fenoglio Fowler, L.P. (“HFF”) for use by a limited number of parties and has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it, and make no guarantee, warranty or representation about it. It is your responsibility to confirm, independently, its accuracy and completeness. All projections have been developed by HFF, L.P. and designated sources, are based upon assumptions relating to the general economy, competition, and other factors beyond the control of HFF, and therefore are subject to variation. No representation is made by HFF, L.P. or Owner as to the accuracy or completeness of the information contained herein, and nothing contained herein is or shall be relied on as a promise or representation as to the future performance of the property. Although the information contained herein is believed to be correct, Owner and its employees disclaim any responsibility for inaccuracies and expect prospective purchasers to exercise independent due diligence in verifying all such information. Further, HFF, L.P., Owner and its employees disclaim any and all liability for representations and warranties, expressed and implied, contained in, or for omissions from, the Offering Memorandum or any other written or oral communication transmitted or made available to the recipient. Past results are not indicative of future performance. The Offering Memorandum does not constitute a representation that there has been no change in the business or affairs of the property or Owner since the date of preparation of the Offering Memorandum. Analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the prospective purchaser. Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors. Owner and HFF, L.P. each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations to any entity reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel, and any obligations set by Owner thereunder have been satisfied or waived. This Offering Memorandum and the contents, except such information, which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Offering Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not photocopy or duplicate it, that you will not disclose this Offering Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Owner or HFF, L.P. and that you will use the information in this Offering Memorandum for the sole purpose of evaluating your interest in the property and you will not use the Offering Memorandum or any of the contents in any fashion or manner detrimental to the interest of Owner or HFF, L.P. If you have no interest in the property, please return the Offering Memorandum forthwith.
Holliday Fenoglio Fowler, L.P. (“HFF”) a Tennessee licensed real estate broker. Copyright 2018 HFF (Holliday Fenoglio Fowler, L.P.) and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 26 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. Commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter at twitter.com/hff.
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