SAFEWAY ( Companies, Inc Guaranty) 1451 Ritchie Highway - ARNOLD, 21012 OFFERING MEMORANDUM

ACTUAL PROPERTY

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 1 Financial Overview 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

OFFERING SUMMARY PRIMARY TERM Lease Year Increase Monthly Rent Annual Rent PRICE $18,533,000 11/1/2017 10/31/2018 - $83,688 $1,004,250 CAP RATE 5.50% 11/1/2018 10/31/2019 1.50% $84,943 $1,019,314 NOI $1,004,250 11/1/2019 10/31/2020 1.50% $86,217 $1,034,603 11/1/2020 10/31/2021 1.50% $87,510 $1,050,123 PRICE PER SQUARE FOOT $408.77 11/1/2021 10/31/2022 1.50% $88,823 $1,065,874 RENT PER SQUARE FOOT $22.15 11/1/2022 10/31/2023 - $88,823 $1,065,874 11/1/2023 10/31/2024 - $88,823 $1,065,874 YEAR BUILT 2008 11/1/2024 10/31/2025 - $88,823 $1,065,874 APPROXIMATE LOT SIZE 3.54 Acres 11/1/2025 10/31/2026 - $88,823 $1,065,874 GROSS LEASEABLE AREA 45,338 11/1/2026 10/31/2027 - $88,823 $1,065,874 11/1/2027 10/31/2028 7.50% $95,485 $1,145,815 PARKING SPACES 280 11/1/2028 10/31/2029 - $95,485 $1,145,815 TYPE OF OWNERSHIP Fee Simple 11/1/2029 10/31/2030 - $95,485 $1,145,815 Albertsons Companies, 11/1/2030 10/31/2031 - $95,485 $1,145,815 LEASE GUARANTOR Incorporated (Inc) 11/1/2031 10/31/2032 - $95,485 $1,145,815 11/1/2032 10/31/2033 7.50% $102,646 $1,231,751 LEASE TYPE Absolute-Net 11/1/2033 10/31/2034 - $102,646 $1,231,751 ROOF AND STRUCTURE Tenant Responsible 11/1/2034 10/31/2035 - $102,646 $1,231,751 11/1/2035 10/31/2036 - $102,646 $1,231,751 LEASE SUMMARY 11/1/2036 10/31/2037 - $102,646 $1,231,751 OPTIONS LEASE COMMENCEMENT DATE 11/1/2017 Lease Years Increase Monthly Rent Annual Rent LEASE EXPIRATION DATE 10/31/2037 11/1/2037 10/31/2042 7.50% $110,344 $1,324,132 LEASE TERM 20 Years 11/1/2042 10/31/2047 7.50% $118,620 $1,423,442 TERM REMAINING 20 Years 11/1/2047 10/31/2052 7.50% $127,517 $1,530,200 1.5% Years 2-5, 11/1/2052 10/31/2057 7.50% $137,080 $1,644,966 INCREASES 7.5% Every 5 Starting Year 11 11/1/2057 10/31/2062 7.50% $147,361 $1,768,338 OPTIONS TO RENEW 8, 5-Year 11/1/2062 10/31/2067 TBD FMV/12 FMV 11/1/2067 10/31/2072 TBD FMV/12 FMV FIRST RIGHT OF REFUSAL Yes - Commencing in Year 5 11/1/2072 10/31/2077 TBD FMV/12 FMV

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 2 Investment Overview 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

Marcus & Millichap is pleased to present this • Safeway Supermarket in Arnold, Maryland | Five Miles from Annapolis in Arnold, Maryland; which is just five miles from Annapolis. Safeway is operating under a 20-year absolute-net lease with zero landlord • Brand New 20-Year Absolute-Net Lease | Zero Landlord Responsibilities responsibilities. There are 1.50 percent annual rent increases in years two through five, and 7.50 percent rent increases every five years • Strong Rent Increases | 1.50 Percent Annual Increases in Years Two Through Five | 7.50 beginning in year 11. The lease is backed by a corporate guaranty from Percent Rent Increases Every Five Years Beginning in Year 11 Albertsons Companies, Incorporated (Inc), who registered more than $60 billion in revenue across 2,324 nationwide. • Corporate Guaranty | Albertsons Companies, Incorporated (Inc) | Number 49 on June The subject property is situated at the signalized, hard corner 2017 Fortune 500 List | Number Three on June 2017 Forbes America’s Largest Private intersection of Governor Ritchie Highway/Route-2 and Arnold Road. Companies More than 67,000 vehicles pass through this intersection daily. Governor Ritchie Highway/Route-2 is the main thoroughfare through • Healthy Unit Level Financials | Low Rent-to-Sales | Tenant Reports High Sales Per Square Arnold, which provides direct access to both Annapolis and Baltimore. Foot | Contact Listing Broker for Details Safeway has been operating at this location for nearly a decade. The tenant reports strong unit level performance with high sales per • Signalized, Hard Corner Intersection of Governor Ritchie Highway/Route-2 and Arnold square foot and a low rent-to-sales ratio; contact the listing broker for Road | More Than 67,00 Vehicles Per Day (VPD) Direct Access to Annapolis and Baltimore more information. This asset also benefits from affluent demographics. The average household income in the one-mile radius is more than • Affluent Demographics | Average Household Income is Greater Than $146,900 in the One- $146,900 and more than $123,800 in the five-mile radius. Mile Radius | $123,800 in the Five-Mile Radius Additional tenants in the immediate vicinity include: CVS, McDonald’s, Exxon, Branch Banking & Trust (BB&T), TD Bank, Subway, 84 Lumber, • Additional Tenants in the Immediate Vicinity Include: CVS, McDonald’s, Exxon, Branch BMW of Annapolis, Mini Cooper of Annapolis, and many more. Banking & Trust (BB&T), TD Bank, Subway, 84 Lumber, BMW of Annapolis, Mini Cooper of Annapolis, and Many More

ACTUAL PROPERTY

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 3 Tenant Overview - SAFEWAY 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

In 1915, M.B. Skaggs, an ambitious young man in the small town of American Falls, , purchased a tiny from his father. M.B.’s business strategy, to give his customers value and to expand by keeping a narrow profit margin, proved spectacularly successful. By 1926 he was opening 428 Skaggs stores in 10 states. M.B. doubled the size of his business in 1926, when he merged his company with 322 Safeway (formerly Selig) stores and formed Safeway, Incorporated (Inc). M.B. Skagg’s value vision still drives Safeway today, though on a dramatically larger scale. In January 2015, Safeway merged with Albertsons, creating one of the largest food and drug retailers in the country. With in 19 states, the Safeway team is proud to carry on the tradition that M.B. Skaggs began nearly 100 years ago in American Falls, Idaho.

Albertsons is one of the largest food and drug retailers in the United States with a strong local presence, but on a national scale. As of February 25, 2017, the company operated 2,324 stores across 35 states and the District of Columbia under 20 well- known banners, including Albertsons, Safeway, , -Osco, Shaw’s, Acme, Tom Thumb, , , , , Carrs and . Albertsons operates in 122 Metropolitan Statistical Areas (MSAs) in the United States. The company is ranked number one or number two by market share in 66 percent of those Metropolitan Statistical Areas (MSAs). Albertsons focuses on providing their customers with a service-oriented shopping experience, including convenient and value-added services through 1,786 pharmacies, 1,227 in-store branded coffee shops, and 385 adjacent fuel centers. The company employs nearly 273,000 talented and dedicated employees serving on average 34 million customers each week.

TENANT PROFILE TENANT TRADE NAME Safeway OWNERSHIP Private TENANT New Albertson’s, Incorporated (INC.) Albertsons Companies, Incorporated LEASE GUARANTOR (Inc) NUMBER OF LOCATIONS 2,324 HEADQUARTERED Boise, Idaho WEB SITE http://www.albertsons.com/#1 SALES VOLUME $59.7 Billion (2016) #49 on Fortune 500 (2017), #3 Forbes RANK America’s Largest Private Companies ACTUAL PROPERTY

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 4 Albertsons Companies, Inc COMPANY HIGHLIGHTS

FoundedFounded in 1939 andand basedbased inin Boise,Boise, Idaho,Idaho, AlbertsonsAlbertsons Companies,Companies, Inc (“Albertsons”,LLC (“Albertsons”, or the or“Company”)the “Company”) is the 2ndis thelargest2nd traditionallargest traditional grocer in grocerthe Unitedin theStatesUnited Statesservingserving over 34over million34 millioncustomerscustomers per weekper andweek generatingand generating $60 billion$ in60 salesbillion annually.in sales Inannually January. 2015,In January Albertsons2015 merged, Albertsons with Safeway,merged withcreatingSafeway, a best-in-classcr e at ing a bestorganization-in-class organizationdedicated to bringingdedicated a betterto bringing shoppinga better experienceshopping to customersexperience acrossto customers the country.across The theCompany’scountry powerful. The Company’s combinationpowerful of strongcombination local presenceof strong and localnationalpresence scale, andvastnational range ofscale, brandsvast andrange products,of brands and service-orientedand products,and staffservice enable-oriented them to meetstaff evolvingenable them shoppingtomeet preferences.evolving shopping preferences. AsAsof of June 2017,2017, thethe CompanyCompany operatedopera ted2,3292, 329storesstores acrossacross 35 states35 states under under20 well-known20 well banners-known withbanners long operatingwi th long histories.operating Albertsonshis tori es . hasAl ber grown ts ons has grown strategicallystrategicallythrough througha as series eri es of ofstrategic strategicacquisiti acquisitions ons in inrecent recentyears yearsinto intoa a$ $2.82.8 billionbillion adjustedadjusted EBITDAEBITDA companycompany asas ofof fiscalfiscal yearyea r20162016 endedended FebruaryFebruary 25,25 2017,, 2017 , andandas asof ofQ Q11 20172017 thethe Company hadhad alreadyalready generatedgenerated $771.7$771 million.7 million in adjustedin adjusted EBITDA.EBITDA .

#1#1 // #2 By market share 2nd largest Operates in 34 million in 66% of the traditional 2,300+ $59.7 billion 122 MSAs 35 states annual sales customers grocer in the US stores including , DC per week in which it operates

th $ 4 largest Home delivery in Ex perienced management $2.8 billion Currently ex ecuting e-commerce 8 of top 10 500 new items with 32 years adj. EBITDA launched every year $800 million platform US markets in FY 2016 in retail on average synergy realization plan in the US by end of FY 2017

One of the largest Nation’s largest brand retail employers 1,700+ in-store 380+ fuel 28 distribution 18 food and of USDA-certified 273,000 jobs pharmacies stations centers beverage plants organic products

COMPANY BANNERS

ACTUAL PROPERTY

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 5 Albertsons Credit Profile 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

COMPETITIVE LANDSCAPE

Albertsons Companies, Inc is one of the largest food retailers and the second largest traditional grocers in the United States.

Note: • Store counts based on publically available information ACTUAL• , PROPERTY , and Traget grocerysales based on a percentage of total sales as of the latest fiscal year. • and Albertsons sales exclude fuel sales of ~$14 billion and ~$3 billion, respectively ACTUAL PROPERTY

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 6 Safeway 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

Healthy Unit Level Financials | Low Rent-to-Sales | Tenant Reports High Brand New 20-Year Absolute-Net Lease | Zero Landlord Responsibilities Sales Per Square Foot

Signalized, Hard Corner Intersection of Governor Ritchie Highway/Route-2 and Affluent Demographics | Average Household Income is Greater Than $146,900 Arnold Road | More Than 67,00 Vehicles Per Day (VPD) in the One-Mile Radius

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 7 Aerial Overview 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 8 Area Overview & Demographics 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

174 100 Jacobsville 2 Fort Meade 170 Pasadena 177 5 MIL 97 E R AD IU S 32 Odenton 2

32 3 MIL Gibson Island E R Severna AD IU Gambrills Arden-On-The-Severn Park S

178 Herald Harbor 3 1 MIL E Cape St Claire SITE 97 Sherwood Woods Landing Crownsville Forest 50 2 Skidmore The Downs 179 3 424 Whitehall 18 178 Manresa Manor Crofton 97

450 50 70 50 450 Parole Stevensville 450 Annapolis Chester 50 424 665 50 3 8 Donovans 552 50 Riva Riva

424 Edgewater Hillsmere Kent Island Londontowne Shores

1-Mile 3-Mile 5-Mile 1-Mile 3-Mile 5-Mile 1-Mile 3-Mile 5-Mile Population Households Household (HH) Incomes 2000 Population 3,570 43,107 106,093 2000 Households 1,191 15,009 39,212 2017 Average HH Income $146,913 $128,566 $123,830 2010 Population 3,648 44,709 112,851 2010 Households 1,243 15,735 42,076 2017 Median HH Income $124,691 $106,526 $101,214 2017 Population 3,867 45,510 117,774 2017 Households 1,316 15,960 43,887 2017 Per Capita Income $49,997 $45,087 $46,144 2022 Population 3,648 44,709 112,851 2022 Households 1,363 16,404 45,339

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 9 Market Overview - Arnold/Annapolis 1451 Ritchie Highway - ARNOLD, MARYLAND 21012

Arnold is a suburb of Annapolis, located on the scenic Broadneck peninsula. The city contains many scenic riversides with cliffs and beaches, providing plenty of places for leisure and sightseeing. There are 12 marinas in Arnold. Arnold Park hosts a playground and provides open ball fields for sporting. Additionally, Arnold Park is home to the Wilmer Stone White Oak, Maryland’s State Tree.

Annapolis served as the seat of the Confederation Congress and was temporarily the national capital from 1783–1784. General George Washington came before the body in the Maryland State House and resigned his commission as commander of the Continental Army. A month later, the Congress ratified the Treaty of Paris of 1783, ending the American Revolutionary War, with Great Britain recognizing the independence of the United States. Today, Annapolis is Maryland’s State Capital and home of Saint John’s College, founded 1696, as well as the United States (US) Naval Academy, established 1845.

Downtown Annapolis is famous for its historic inns and scenic streets. Along those streets are some of the finest restaurants the region has to offer. Maryland Avenue is long-treasured as one of downtown Annapolis’ best spots for shopping, dining, and experiencing the culture. Eastport in Annapolis is a place unto itself, with yachts, art galleries, residents, spas, and restaurants. The bridge into Eastport takes travelers from downtown Annapolis into the neighborhood. Additionally, the Annapolis Towne Centre is a consumer-utopia, featuring an assortment of restaurants, shops and more, all in one convenient location.

Home to the United States (US) Naval Academy, “Naptown” is influenced by the military and collegiate traditions that come with having a major military and world class academic institution within the city boundaries. As the undergraduate college of the country’s naval service, the Naval Academy prepares young men and women to become professional officers of competence, character, and compassion in the United States (US) Navy and Marine Corps. Naval Academy students are midshipmen on active duty in the United States (US) Navy. They attend the academy for four years, graduating with bachelor of science degrees and commissions as ensigns in the Navy or second lieutenants in the Marine Corps. Naval Academy graduates serve at least five years in the Navy or Marine Corps. From Commissioning Week, to home sporting events including Navy Football, to class reunions that sprinkle the weekends throughout the calendar, Annapolis is never too far from Navy’s influence.

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. Marcus & Millichap is a trademark of © 2016 Marcus & Millichap. Activity ID: Z0331252 10 Marcus & Millichap 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, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap 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. Marcus & Millichap 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 Marcus & Millichap Real Estate Investment Services 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. SAFEWAY (Albertsons Companies, Inc Guaranty)

1451 Ritchie Highway - ARNOLD, MARYLAND 21012

Broker of Record Bryn Merrey 7200 Wisconsin Ave, Suite 1101 Bethesda, MD 20814 License: 646476