Mattress Firm - Midland, TX

OFFERING MEMORANDUM MATTRESS FIRM MIDLAND, TX

PRICING & FINANCIAL ANALYSIS

MATTRESS FIRM

FINANCIAL ANALYSIS

Mattress Firm 2510 North Loop 250 West Midland, TX 79707

Offering Summary Price Cap Rate Net Operating Income Gross Leasable Area Lot Size

6.55% $287,040

PROPERTY DESCRIPTION

Year Built

$4,382,000

2016 7,475 SF 1.38 Acres

Annualized Operating Data Lease Summary Lease Term Lease Commencement

Year(s)

Commencement

Annual

Increase

11 Years

1-5

7/1/2016

$287,040

-

7/1/2016

6-11

7/1/2021

$315,744

10.00%

Lease Expiration

6/30/2027

Option 1: 12-16

7/1/2026

$347,289

10.00%

Remaining Term

10.5 Years

Option 2: 17-21

7/1/2031

$382,047

10.00%

Lease Type Increases Options Options to Purchase

Net Operating Income

$287,040 MARKET OVERVIEW

Roof & Structure

NNN Landlord 10% Every 5 Years 2x5 No

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. © 2017 STRIVE

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TENANT INFORMATION

MATTRESS FIRM

FINANCIAL ANALYSIS

Tenant Summary Tenant Ownership Ticker Symbol Exchange

Subsidiary of Steinhoff International MFRM NASDAQ

Market Cap

2.38 Billion

Sales Volume

1.52 Billion

Number of Locations Years In Business Headquarters Website

3,500+ 31 Years

PROPERTY DESCRIPTION

Mattress Firm Inc. is an American retailing company and mattress store chain with the largest geographic footprint in the United States among multi-brand mattress retailers. The company, through its brands including Mattress Firm, Sleepy’s and Sleep Train, offers a broad selection of both traditional and specialty mattresses, bedding accessories and other related products from leading manufacturers, including Serta, Simmons and Hampton & Rhodes.

In September 2016, the company was acquired by Steinhoff

International for $3.8 billion, and Mattress Firm now operates as a subsidiary of Steinhoff.

Mattress Firm, Inc.

Houston, TX www.mattressfirm.com

Company Summary Company Ownership Ticker Symbol Exchange Years In Business Headquarters Website

Public SNH

MARKET OVERVIEW

Steinhoff International is a South African-based international retail holding company, dealing mainly in furniture and household goods, which operates in Europe, Africa, The United States and Australasia.

As of 1 August 2016, Steinhoff held retailing activities in 30 countries, counting 6,500 retail outlets belonging to 40 different brands, and employing about 90,000 employees. 60% of the company’s revenue, and 2/3 of its benefits, are made in Europe. Steinhoff expanded into the United States market on 7 August 2016.

Steinhoff International Holdings N.V.

FWB, JSE 53 Stellenbosch, South Africa www.steinhoffinternational.com

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. © 2017 STRIVE

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INVESTMENT HIGHLIGHTS

MATTRESS FIRM

FINANCIAL ANALYSIS

• Corporate Guaranteed – 10+ Year NN Lease • Brand New Construction - Built in 2016 • Rent Increase of 10% every 5 years – Includes Two Five-Year Option Periods

PROPERTY DESCRIPTION

• Densely Populated, Affluent Area - Population Within Five Miles Exceeds 113,000, with Average Household Income and Per Capita Income Above National Averages.

• The Midland-Odessa Area Was the FastestGrowing Region in the United States from 2010-15, According to Data from the U.S. Census Bureau.

• Located on Loop 250 Frontage Road – Traffic Counts Exceed 55,000 per day

MARKET OVERVIEW

• National Retailers Nearby Include: HEB, Sam’s Club, Academy Sports, Lowes, Domino’s and Many More • The Permian Basin, of which Midland is the Geographic Center, is Said to Contain 16%+ of the Nation’s Oil Reserves.

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. © 2017 STRIVE

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SITE PLAN

MATTRESS FIRM

FINANCIAL ANALYSIS

SITE SUMMARY 7,475 SQ FT RETAIL OFF-STREET PARKING REQUIREMENT: 1 SPACE / 200 SF OF FLOOR AREA OFF-STREET PARKING REQUIRED 7,475 (FLOOR AREA) / 200 SF =

38 SPACES

SPACES PROVIDED (REGULAR)

2

SPACES PROVIDED (ACCESSBILE)

40

TOTAL

PROPERTY DESCRIPTION

38

MARKET OVERVIEW This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. © 2017 STRIVE

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AERIAL MAP

MATTRESS FIRM

FINANCIAL ANALYSIS PROPERTY DESCRIPTION

Abell Junior High School

Bush Elementary School

Nueva Vista Golf Club MARKET OVERVIEW This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Š 2017 STRIVE

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LOCAL MAP

MATTRESS FIRM

FINANCIAL ANALYSIS PROPERTY DESCRIPTION MARKET OVERVIEW This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Š 2017 STRIVE

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REGIONAL MAP

MATTRESS FIRM

FINANCIAL ANALYSIS PROPERTY DESCRIPTION MARKET OVERVIEW This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Š 2017 STRIVE

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MARKET SUMMARY

MATTRESS FIRM

FINANCIAL ANALYSIS PROPERTY DESCRIPTION

MIDLAND–ODESSA, TX Midland–Odessa is a metropolitan area located in West Texas approximately halfway between El Paso and Fort Worth, Texas. In the past, the cities of Midland and Odessa experienced a rivalry of bitter competition and political intrigue. Since the early 1990s, the nature of the rivalry has changed into one of friendly competition and economic cooperation. The Midland–Odessa area today is marketed as “Two Cities, no Limits.”

MARKET OVERVIEW

Midland is the county seat of Midland County, Texas, United States, on the Southern Plains of the state’s western area. A small portion of the city extends into Martin County. At the 2010 census, the population of Midland was 111,147, and a 2015 estimate of 132,950, making it the twenty-fourth most populous city in the state of Texas. Due to the oil boom in Midland, certain officials have given population estimates above 155,000.

It is the principal city of the Midland, Texas Metropolitan Statistical Area, which includes all of Midland County.

The population of which grew 4.6 percent, between July 1, 2011 and July 1, 2012, to 151,662, respectively, according to the U.S. Census Bureau.

Odessa is the county seat of Ector County, Texas, United States. It is located primarily in Ector County, although a small portion of the city extends into Midland County.

Odessa’s population was 99,940 at the 2010 census making it the 29th-most populous city in Texas; estimates as of July 2015 indicate a population of 159,436 in the city. It is the principal city of the Odessa Metropolitan Statistical Area, which includes all of Ector County. The metropolitan area is also a component of the larger Midland–Odessa combined statistical area, which had a 2010 census population of 278,801; a recent report from the United States Census Bureau estimates that the combined population as of July 2015 is 326,115. In 2014, Forbes magazine ranked Odessa as the third fastestgrowing small city in the United States.

Historically, the Odessa economy has been primarily driven by the area’s oil industry, booming and busting in response to rises and falls in the crude oil price. Many of the city’s largest employers are oilfield supply companies and petrochemical processing companies.

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. © 2017 STRIVE

9

DEMOGRAPHIC SUMMARY

MATTRESS FIRM

Geography: 5 Miles

FINANCIAL ANALYSIS

Population In the identified area, the 2016 population was 113,697. The rate of change since 2000 was 33.13%. The five-year projection for the population in the area was 123,744 representing a change of 8.84% from 2016 to 2021. The 2016 population was 49.0% male and 51.0% female. The median age in this area was 34.5, compared to U.S. median age of 38.0.

Households In 2016 there were 43,146 households in your selected geography. The number of households has changed by 31.49% since 2000. It is estimated that the number of households in your area will be 46,774 five years from 2016, which represents a change of 8.41% from 2016. The average household size in your area for 2016 was 2.60 persons.

Income PROPERTY DESCRIPTION

In 2016, the median household income for your selected geography was $62,278, compare this to the Entire US average which was currently $54,149. It is estimated that the median household income in your area will be $70,014 five years from 2016, which represents a change of 12.42% from 2016.

The 2016 per capita income in your area was $34,689, compared to the Entire US average, which was $29,472. The 2016 average household income in your area was $90,094, compared to the Entire US average which was $77,008.

Race and Ethnicity The 2016 racial makeup of your selected area was as follows: 79.1% White, 5.6% Black, 0.7% Native American and 1.5% Asian/Pacific Islander.

Compare these to Entire US averages which were: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander.

People of Hispanic origin are counted independently of race. People of Hispanic origin made up 33.5% of the 2016 population in your selected area. Compare this to the Entire US average of 17.9%.

Housing MARKET OVERVIEW

In 2016, there were 27,031 owner occupied housing units in your area and there were 16,115 renter occupied housing units in your area. Median home value in the area was $182,873, compared to a median home value of $198,891 for the U.S.

Employment In 2016, there were 56,265 employees in your selected area; this is also known as the daytime population. In 2016, 62.1% of employees were employed in white-collar occupations in this geography, and 24.9% were employed in blue-collar occupations. In 2016, unemployment in this area was 3.3%.

Demographic data Š 2016 esri This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Š 2017 STRIVE

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DEMOGRAPHIC STATISTICS

MATTRESS FIRM

1-Mile

3-Miles

5-Miles

Income

1-Mile

3-Miles

5-Miles

2000 Population

8,158

54,284

85,402

$ 0 - $14,999

9.3%

8.2%

9.8%

2010 Population

10,162

63,050

98,924

$ 15,000 - $24,999

7.6%

7.9%

8.6%

2016 Population

11,489

72,399

113,697

$ 25,000 - $34,999

9.2%

9.3%

9.4%

2021 Population

12,631

78,679

123,744

$ 35,000 - $49,999

10.5%

12.0%

11.9%

$ 50,000 - $74,999

17.2%

19.1%

17.8%

$ 75,000 - $99,999

17.4%

14.3%

13.3%

$100,000 - $149,999

14.6%

15.4%

14.8%

1-Mile

3-Miles

5-Miles

$150,000 - $199,999

5.0%

6.0%

5.9%

2000 Households

3,176

21,211

32,813

$200,000+

9.2%

7.9%

8.7%

2010 Households

4,171

24,712

38,068

2016 Median Household Income

$67,808

$64,216

$62,278

2016 Households

4,643

27,961

43,146

2016 Per Capita Income

$38,670

$34,616

$34,689

2021 Households

5,065

30,243

46,774

2016 Average Household Income

$91,938

$89,154

$90,094

2016 Daytime Population

5,797

36,850

56,265

2016 Average Household Size

2.42

2.57

2.60

2010 Owner Occupied Housing Units

55.1%

61.1%

61.8%

2010 Renter Occupied Housing Units

39.4%

33.2%

31.9%

5.5%

5.7%

6.3%

2016 Owner Occupied Housing Units

52.4%

58.2%

58.9%

2016 Renter Occupied Housing Units

42.3%

36.3%

35.1%

5.2%

5.5%

6.0%

2021 Owner Occupied Housing Units

52.4%

57.8%

58.3%

2021 Renter Occupied Housing Units

42.0%

36.3%

35.3%

5.6%

5.9%

6.4%

2010 Vacant

2016 Vacant

Traffic Counts

590 MARKET OVERVIEW

2021 Vacant

PROPERTY DESCRIPTION

Households

FINANCIAL ANALYSIS

Population

51,890

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Š 2017 STRIVE

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CONFIDENTIALITY AGREEMENT The information contained in the following offering memorandum is proprietary and strictly confidential.

It is intended to be reviewed only by the party receiving it from STRIVE and it should not be made available to any other person or entity without the written consent of STRIVE. By taking possession of and reviewing the information contained herein the recipient agrees to hold and treat all such information in the strictest confidence. The recipient further agrees that recipient will not photocopy or duplicate any part of the offering memorandum. If you have no interest in the subject property at this time, please return this offering memorandum to STRIVE. This offering memorandum has been prepared to provide summary, unverified financial and physical information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. STRIVE has not made any investigation, and makes no warranty or representation with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCBs or asbestos, the compliance with local, state and federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this offering memorandum has been obtained from sources we believe to be reliable; however, STRIVE has not verified, and will not verify, any of the information contained herein, nor has STRIVE conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Prospective buyers shall be responsible for their costs and expenses of investigating the subject property.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONTACT STRIVE AGENT FOR MORE DETAILS.

Net Lease Disclaimer STRIVE hereby advises all prospective purchasers of Net Leased property as follows: The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, STRIVE has not and will not verify any of this information, nor has STRIVE conducted any investigation regarding these matters. STRIVE makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided.

As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. STRIVE expressly denies any obligation to conduct a due diligence examination of this Property for Buyer.

Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs.

Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant’s past performance at this or other locations is an important consideration, it is not a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer’s legal ability to make alternate use of the property.

By accepting this Marketing Brochure you agree to release STRIVE and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property.

Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords.

B

Information About Brokerage Services

efore working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly.

IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written - listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent.

IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent.

IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an

intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property.

With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party.

If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.

Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee’s records.

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