EXCLUSIVE NET - LEASE OFFERING

Representative Photo HOMETOWN OFFERING MEMORANDUM

540 Jenner Drive - Allegan, MI 49010 Confidentiality and Disclaimer

Marcus & Millichap hereby advises all guarantee of future success. Similarly, the thorough due diligence investigation. prospective purchasers of Net Leased lease rate for some properties, including Marcus & Millichap has not made any property as follows: newly-constructed facilities or newly- investigation, and makes no warranty or Table of Contents acquired locations, may be set based on a representation, with respect to the income The information contained in this tenant’s projected sales with little or no or expenses for the subject property, the Marketing Brochure has been obtained record of actual performance, or future projected financial performance of Investment Summary. 3 from sources we believe to be reliable. comparable rents for the area. Returns are the property, the size and square footage However, Marcus & Millichap has not and not guaranteed; the tenant and any of the property and improvements, the Investment Highlights. 4 will not verify any of this information, nor guarantors may fail to pay the lease rent presence or absence of contaminating has Marcus & Millichap conducted any or property taxes, or may fail to comply substances, PCB’s or asbestos, the investigation regarding these matters. with other material terms of the lease; compliance with State and Federal Financial Analysis. 5 Marcus & Millichap makes no guarantee, cash flow may be interrupted in part or in regulations, the physical condition of the warranty or representation whatsoever whole due to market, economic, improvements thereon, or the financial about the accuracy or completeness of environmental or other conditions. condition or business prospects of any Tenant Overview. 6-9 any information provided. Regardless of tenant history and lease tenant, or any tenant’s plans or intentions guarantees, Buyer is responsible for to continue its occupancy of the subject As the Buyer of a net leased property, it is conducting his/her own investigation of all property. The information contained in this Surrounding Area. 10 the Buyer’s responsibility to independently matters affecting the intrinsic value of the Marketing Brochure has been obtained confirm the accuracy and completeness of property and the value of any long-term from sources we believe to be reliable; Location Overview. 11 all material information before completing lease, including the likelihood of locating a however, Marcus & Millichap has not any purchase. This Marketing Brochure is replacement tenant if the current tenant verified, and will not verify, any of the not a substitute for your thorough due should default or abandon the property, information contained herein, nor has State Map. 12 diligence investigation of this investment and the lease terms that Buyer may be Marcus & Millichap conducted any opportunity. Marcus & Millichap expressly able to negotiate with a potential investigation regarding these matters and denies any obligation to conduct a due replacement tenant considering the makes no warranty or representation Demographics. 13 diligence examination of this Property for location of the property, and Buyer’s legal whatsoever regarding the accuracy or Buyer. ability to make alternate use of the completeness of the information provided. property. All potential buyers must take appropriate Any projections, opinions, assumptions or By accepting this Marketing Brochure you measures to verify all of the information estimates used in this Marketing Brochure agree to release Marcus & Millichap Real set forth herein. are for example only and do not represent Estate Investment Services and hold it the current or future performance of this harmless from any kind of claim, cost, NON-ENDORSEMENT NOTICE property. The value of a net leased expense, or liability arising out of your property to you depends on factors that investigation and/or purchase of this net Marcus & Millichap Real Estate Investment Steven Chaben should be evaluated by you and your tax, leased property. Services, Inc. (“M&M”) is not affiliated with, Title: Broker of Record financial and legal advisors. sponsored by, or endorsed by any Marcus & Millichap CONFIDENTIALITY AND DISCLAIMER commercial tenant or lessee identified in Buyer and Buyer’s tax, financial, legal, and this marketing package. The presence of Two Towne Square, Suite 450 construction advisors should conduct a The information contained in the following any corporation’s logo or name is not Southfield, MI 48076 careful, independent investigation of any Marketing Brochure is proprietary and intended to indicate or imply affiliation with, Tel: (248) 415-2600 net leased property to determine to your strictly confidential. It is intended to be or sponsorship or endorsement by, said Fax: (248) 352-3813 satisfaction with the suitability of the reviewed only by the party receiving it from corporation of M&M, its affiliates or property for your needs. Marcus & Millichap and should not be subsidiaries, or any agent, product, License: 6502387903 made available to any other person or service, or commercial listing of M&M, and Like all real estate investments, this entity without the written consent of is solely included for the purpose of investment carries significant risks. Buyer Marcus & Millichap. This Marketing providing tenant lessee information about and Buyer’s legal and financial advisors Brochure has been prepared to provide this listing to prospective customers. must request and carefully review all legal summary, unverified information to and financial documents related to the prospective purchasers, and to establish ALL PROPERTY SHOWINGS ARE BY 540 Jenner Drive, Allegan, MI 49010 property and tenant. While the tenant’s only a preliminary level of interest in the APPOINTMENT ONLY. PLEASE past performance at this or other locations subject property. The information CONSULT YOUR MARCUS & MILLICHAP is an important consideration, it is not a contained herein is not a substitute for a AGENT FOR MORE DETAILS. INVESTMENT SUMMARY Marcus & Millichap is pleased to exclusively market for sale the subject single-tenant net-leased Shopko Hometown located at 540 Jenner Drive in Allegan, . Built in 2000, the subject property consists of roughly 36,000 square feet of building space. The property is strategically situated on a 3.6-acre parcel on the west side of Jenner Drive. The property’s location on Jenner Drive offers excellent visibility and exposure to the nearly 14,000 vehicles that travel through each day. The property also offers ease of access to State Routes 89 and 40.

This subject property is well-positioned on Jenner Drive, benefiting from the traffic driven by Allegan General Hospital, which is directly across the street. Allegan General Hospital, which is a 24-hour, 25-bed acute care facility, is the city’s third largest employer. This Shopko also benefits from the presence of numerous local and national retailers in the area. Major tenants nearby include: Burger King, Wendy’s, Pizza Hut, Ace Hardware, and AutoZone. The six primary and secondary schools within three miles of the property currently have a combined total enrollment of over 1,800 students.

The Shopko Hometown has roughly 11 years remaining on an original 20-year lease, which commenced in 2009. This is an absolute triple-net (NNN) lease with zero landlord responsibilities. The current rent is $145,469 and is subject to increases every 3 years that are the lesser of (i) 1.25x the change in CPI or (ii) 6.0%. In addition to the current lease term, the tenant has two (2), ten (10)-year tenant renewal options bringing the potential lease term remaining to roughly 32 years.

Founded in 1962 and headquartered in Green Bay, , Shopko Stores Operating Co., LLC operates 363 stores in 24 states throughout the Central, Western and Pacific Northwest regions. In 2010, Shopko introduced a new concept to augment Shopko’s larger store format: Shopko Hometown. The Shopko Hometown retail format offers a differentiated and financially successful merchandising strategy combining services and a comprehensive HBA, household goods and dry grocery assortment with a broad and dynamic offering of strong national brands and high-value private label brands. Following its merger with Pamida in early 2012, Shopko acquired and converted over 170 stores and to the Shopko brand. Investment Highlights PRICE: $1,818,364 | CAP: 8.00% | RENT: $145,469

About the Investment ✓ 11 Years Remaining on an Original 20-Year Lease ✓ Absolute Triple Net (NNN) Lease with Zero Landlord Responsibilities ✓ Attractive Rental Increases Every 3 Years by the Lesser of (i) 1.25x the change in CPI or (ii) 6.0% ✓ Two (2), Ten (10)-Year Tenant Renewal Options

About the Location ✓ Strategically Situated Directly Across from Allegan General Hospital, the Area’s Third Largest Employer ✓ National Retailers in the area Include: Burger King, Wendy’s, Pizza Hut, Ace Hardware, and AutoZone ✓ Freestanding Property | Features High Visibility and Ease of Access ✓ Strong Traffic Counts | Jenner Drive and Rossville Road | 13,900 and 17,200 Vehicles per Day Respectively

About the Tenant / Brand ✓ Leading Midwest General Merchandise Retail Chain ✓ 363 Total Stores Across 24 States ✓ Four Different Retail Formats | Shopko, Shopko Hometown, Shopko Express Rx and Shopko Pharmacy ✓ Owner has Invested in Over 285 Companies Since Inception in 1995 | Combined Sale in Excess of $45B

Shopko Hometown – Allegan, MI 4 Financial Analysis PRICE: $1,818,364 | CAP: 8.00% | RENT: $145,469

PROPERTY DESCRIPTION Annualized Operating Data Property Shopko Hometown Annual Rent $145,469 Property Address 540 Jenner Drive Monthly Rent $12,122.43 City, State, ZIP Allegan, MI 49010 Rent / SF $4.04 Year Built / Renovated 2000 Building Size 36,047 RENT SCHEDULE Rent Escalation Lot Size +/- 3.6 Acres Lease Year(s) Annual Rent Monthly Rent (%) Type of Ownership Fee Simple 6/1/2015 - 5/31/2018 $137,235.00 $11,436.25 - THE OFFERING Current Rent $145,469.10 $12,122.43 6.00% Annual Rent $145,469 6/1/2021 - 5/31/2024 $154,197.25 $12,849.77 6.00% CAP Rate 8.00% 6/1/2024 - 5/31/2027 $163,449.08 $13,620.76 6.00% Purchase Price $1,818,364 6/1/2027 - 7/31/2029 $173,256.03 $14,438.00 6.00% Price / SF $50.44 Rent / SF $4.04 Founded in 1962 and headquartered in Green Bay, Wisconsin, Shopko Stores LEASE SUMMARY Operating Co., LLC operates 363 stores in 24 states throughout the Central, Property Type Net Lease General Merchandise/Pharmacy Western and Pacific Northwest regions. Retail formats include 131 Shopko stores, providing quality name-brand merchandise, great values, pharmacy and Ownership Type Private optical services in small to mid-sized cities; 5 Shopko Express Rx stores, a Tenant / Guarantor Corporate convenient neighborhood drugstore concept; 5 Shopko Pharmacy locations; and Original Lease Term 20.2 Years 222 Shopko Hometown stores, a smaller concept store developed to meet the Lease Commencement June 1, 2009 needs of smaller communities. Lease Expiration July 31, 2029 Sun Capital Partners, Inc. has been partnering with Shopko since December 2005 Lease Term Remaining 11.0 Years to improve the retail company’s business model and market position. Sun Capital Lease Type Triple-Net (NNN) Partners, Inc. is a leading private investment firm focused on leveraged buyouts, Roof & Structure Tenant Responsible private equity, debt and other investments in market-leading companies. Every 3 Years by the Lesser of (i) 1.25x the Rental Increases Today Shopko is known for its excellence in optical care and its best in class change in CPI or (ii) 6.0% pharmacy services. Options to Renew Two (2), Ten (10)-Year Option Periods

Shopko Hometown – Allegan, MI 5 “Since implementing the go- forward plan, the Company has posted improved performance, proving its viability & long-term earnings potential.”

On January 16, 2018, Spirit Realty Capital (NYSE: SRC) received a letter from Shopko providing an update on Shopko’s select financial results. A copy of the letter has been posted to the investor relations section of Spirit’s website. http://www.snl.com/IRWebLinkX/corporateprofile.aspx?iid=4335136 Shopko efforts continue to deliver favorable results:

Delivered Expect Full Improved $37.4 Million Year fiscal 2017 inventory mix of EBITDA for EBITDA to be drove +250bp the 9 week 2.5 times fiscal increase in period ended 2016. Main Store December 30 Gross Margin.

On January 16, 2018, Spirit Realty Capital (NYSE: SRC) received a letter from Shopko providing an update on Shopko’s select financial results. A copy of the letter has been posted to the investor relations section of Spirit’s website. http://www.snl.com/IRWebLinkX/corporateprofile.aspx?iid=4335136 Operational Improvement Initiatives: Overview

Within the last 12 months, the Company has reorganized and strengthened its leadership team with a new Chief Executive Officer, Chief Merchandising Officer, Chief Customer Officer, SVP of Retail Health, adding an SVP of Strategic Analysis, and eliminating three senior level positions. Board of Directors was expanded to include two new independent Directors. Under this new team, Shopko is executing on multiple operational initiatives, as detailed below:

Q4 2017 Spirit Realty Capital Inc Earnings Conference Call (February 22, 2018) Shopko Investor Update January 2018 Compelling Growth Opportunities

Improved Store Optical Business Enhanced Marketing Experience Expansion Effort

Opportunity to improve in-store experience with Optical business is generating consistent growth 5.7mm Customers are enrolled in Shopko loyalty updated navigational and perimeter signing and superior margins, and can be further scaled programs, with the ability to increase lifetime across the store base value by optimizing the use of existing data Focused Brand signing can improve customer understanding of the breadth of offering Leverage excess capacity at the Company’s More targeted and customer-specific marketing available optical lab through new optical centers initiatives to reactivate inactive customers, but (Hometown or free-standing locations), the also drive incremental spending of active The Company is evaluating other initiatives that addition of second exam lanes at existing, high- customers will enhance the customer experience in our volume optical centers, or as a third party stores supplier. Adjusting the media mix to drive new customer engagement, developing customer-specific By optimizing the product offerings, based upon coupons, and creating Pharmacy and Optical regional preferences, the Company is able to specific efforts drive higher sales at better margins

Private Brand Private Label & National SG&A Reduction Opportunity Brand Purchasing Opportunity

Currently private brand products account for Improved liquidity position provides opportunity Implement cost savings identified by AlixPartners ~15% of sales vs.~25% - 50% for competitors to renegotiate merchandise costs to improve FY2018 EBITDA

Implemented a plan to increase private brand Use data analytics to optimize the placement of Significant SG&A saving opportunities that could volume and penetration through FY2020 to 30% product offerings and improve product be realized across three primary focus areas: (i) of merchandise sales profitability corporate headcount, (ii) indirect spending, and (iii) advertising strategy

Q4 2017 Spirit Realty Capital Inc Earnings Conference Call (February 22, 2018) Shopko Investor Update January 2018 Surrounding Area Property Address: 540 Jenner Drive, Allegan, MI 49010

Allegan High School

Allegan General Hospital 25- Beds

Shopko Hometown – Allegan, MI 10 Location Overview

This Shopko Hometown is located at 540 Jenner Drive in Allegan, Michigan. Allegan is situated in southwestern Michigan approximately 40 miles south of Grand Rapids and 25 miles northwest of Kalamazoo.

SURROUNDING RETAIL & POINTS OF INTEREST This subject property is well-positioned on Jenner Drive, benefiting from the traffic driven by Allegan General Hospital, which is directly across the street. Allegan General Hospital, which is a 24-hour, 25-bed acute care facility, is the city’s third largest employer. This Shopko also benefits from the presence of numerous local and national retailers in the area. Major tenants nearby include: Burger King, Wendy’s, Pizza Hut, Ace Hardware, and AutoZone. The six primary and secondary schools within three miles of the property currently have a combined total enrollment of over 1,800 students.

TRAFFIC COUNTS & DEMOGRAPHICS Allegan has a strong population with approximately 8,610 individuals residing ADTC: 17,200 within a three-mile radius of the property and almost 13,000 individuals within a five-mile radius. This Shopko is located on Jenner Drive, which intersects with Marshal Street near the downtown area. Jenner Drive and Marshall Street have average daily traffic counts of 13,900 and 17,200 vehicles respectively.

MARKET OVERVIEW Allegan sits along the Kalamazoo River and is approximately 20 miles west of Lake Michigan’s shore. To the west and northwest is the nearly 50,000 acre Allegan State Game Area for which the city is considered a gateway. Lake Allegan in Valley Township is also a great tourist destination for boating, fishing, and swimming activities. The largest employer in Allegan is the Perrigo ADTC: 13,900 Company, the largest maker of private label over-the-counter pharmaceuticals in the world. The city is served by Padgham Field, a small general aviation airport with one paved asphalt runway and one turf runway. Exceptionally preserved civil war era architecture fills much of the Allegan business district, creating a unique presentation of shops and professional offices. Allegan offers great cultural assets with the Griswald Auditorium and the Regent Theatre. The Allegan County Fair is one of the largest county fairs in the nation. The city is committed to investing for the future, as evidenced by its ongoing facade improvement, paint the town, and signage assistance programs.

Shopko Hometown – Allegan, MI 11 State Map Property Address: 540 Jenner Drive, Allegan, MI 49010

MICHIGAN

Shopko Hometown – Allegan, MI 12 Demographics Property Address: 540 Jenner Drive, Allegan, MI 49010

3 Miles 5 Miles 10 Miles 10 Miles Population: 2022 Projection 9,475 13,496 31,967 2017 Estimate 9,168 13,037 30,970 2010 Census 8,953 12,623 30,226 Growth 2017-2022 3.35% 3.52% 3.22% Growth 2010-2017 2.40% 3.28% 2.46% 5 Miles 2017 Population Hispanic Origin 318 408 1,114 2017 Population by Race: 3 Miles White 8,531 12,243 29,387 Black 310 359 570 Am. Indian & Alaskan 50 75 230 Asian 84 106 189 Hawaiian & Pacific Island 0 0 2 Other 192 255 593 Households: 2022 Projection 3,708 5,244 12,192 2017 Estimate 3,589 5,066 11,810 2010 Census 3,513 4,912 11,537 Growth 2017 - 2022 3.32% 3.51% 3.23% Growth 2010 - 2017 2.16% 3.14% 2.37% Owner Occupied 2,446 3,741 9,281 Renter Occupied 1,143 1,325 2,529 2017 Avg Household Income $55,554 $58,478 $62,168 2017 Med Household Income $46,649 $49,441 $52,579 2017 Households by Household Inc: <$25,000 862 1,176 2,557 $25,000 - $50,000 1,029 1,379 3,024 $50,000 - $75,000 756 1,072 2,801 $75,000 - $100,000 427 642 1,581 $100,000 - $125,000 384 555 1,041

Shopko Hometown – Allegan, MI 13 EXCLUSIVE NET LEASE OFFERING

Steven Chaben Title: Broker of Record Marcus & Millichap Two Towne Square, Suite 450 Southfield, MI 48076 Tel: (248) 415-2600 Fax: (248) 352-3813 License: 6502387903 540 Jenner Drive, Allegan, MI 49010