La Verne Courtyard — LOS ANGELES COUNTY GROCERY ANCHORED SHOPPING CENTER —
OFFERING MEMORANDUM LA VERNE, CALIFORNIA La Verne Courtyard
OFFERING MEMORANDUM LA VERNE, CALIFORNIA
TABLE OF CONTENTS: Offering Summary 5 EXCLUSIVELY LISTED BY: Investment Highlights 6 Rent Roll 9 Bill Asher Executive Vice President Income & Expense 10 [email protected] 10-Year Cash Flow Analysis 11 949.585.7684 | BRE #01318078 10-Year Cash Flow Assumptions 12 Lease Expiration Analysis 13 Kevin Fryman Site Plan 16 Senior Vice President [email protected] Parcel Map 17 949.585.7674 | BRE #01321833 Aerial Overviews 19 Local Map 23 Ed Hanley Regional Map 24 President Tenant Profiles 27 [email protected] 949.585.7677 | BRE #01118569 Area Overview 31 Demographics 33 CONFIDENTIALITY DISCLAIMER LA VERNE COURTYARD
The information contained herein does not purport to provide a complete or fully accurate summary of the Property or any of the documents related thereto, nor does it purport to be all-inclusive or to contain all of the information which prospective buyers may need or desire. All financial projections are based on assumptions relating to the general economy, competition, and other factors beyond the control of the Owner and Broker and, therefore, are subject to material variation. This Marketing Package does not constitute an indication that there has been no change in the business or affairs of the Property or the Owner since the date of preparation of the information herein. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective buyers.
Neither Owner nor Broker nor any of their respective officers, Agents or principals has made or will make any representations or warranties, express or implied, as to the accuracy or completeness of this Marketing Package or any of its contents, and no legal commitment or obligation shall arise by reason of the Marketing Package or its contents. Analysis and verification of the information contained in the Marketing Package is solely the responsibility of the prospective buyer, with the Property to be sold on an as is, where-is basis without any representations as to the physical, financial or environmental condition of the Property.
Owner and Broker expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the Property and/ or terminate discussions with any entity at any time with or without notice. Owner has no legal commitment or obligations to any entity reviewing this Marketing Package or making an offer to purchase the Property unless and until such sale of the Property is approved by Owner in its sole discretion, a written agreement for purchase of the Property has been fully delivered, and approved by Owner, its legal counsel and any conditions to the Owner’s obligations thereunder have been satisfied or waived.
This Marketing Package and its contents, except such information which is a matter of public record or is provided in sources available to the public (such contents as so limited herein called the “Contents”), are of a confidential nature. By accepting this Marketing Package, you unconditionally agree that you will hold and treat the Marketing Package and the Contents in the strictest confidence, that you will not photocopy or duplicate the Marketing Package or any part thereof, that you will not disclose the Marketing Package or any of the Contents to any other entity (except in the case of a principal, who shall be permitted to disclose to your employees, contractors, investors and outside advisors retained by you, or to third-party institutional lenders for financing sought by you, if necessary, in your opinion, to assist in your determination of whether or not to make a proposal) without the prior authorization of the Owner or Broker, and that you will not use the Marketing Package or any of the Contents in any fashion or manner detrimental to the interest of the Owner or Broker.
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 3 FOOTHILL BOULEVARD OFFERING SUMMARY LA VERNE COURTYARD
LOCATION
La Verne Courtyard 2204-2278 Foothill Boulevard La Verne, CA 91750
OFFERING SUMMARY
Price: $24,800,000
Capitalization Rate: 5.25%
Net Rentable Area (NRA): 84,368
Price per Square Foot (NRA): $294
Year Built: 2000
Lot Size (Acres): 7.30
FINANCING SUMMARY
All Cash or Cash to New Financing
(Contact Hanley Investment Group for Further Details)
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 5 INVESTMENT HIGHLIGHTS LA VERNE COURTYARD
yy ALDI Grocery and Orchard Supply Hardware Anchored Shopping Center: οοALDI and Orchard Supply Hardware represent 85% of the current tenancy οοALDI is one of the world’s largest grocery chains with more than 10,000 markets worldwide; 1,500 in the United States οοALDI plans to open 650 new locations in the United States by 2018, largely in Southern California οοALDI is also the owner of Trader Joe’s and its 460 stores in the United States οοALDI executed a corporately guaranteed 15-year lease in 2014 with 10% increases every 5-years οοALDI spent significant money renovating their space, including installing new flooring, lighting, ceiling, partitions, refrigeration, security systems and renovating the exterior façade οοALDI is expanding into organic foods and products to better compete with Whole Foods οοOSH has operated at the center since it was built in 2000 οοOSH extended their lease until October 2020 in 2013 οοOrchard Supply Hardware was acquired by Lowe’s in 2013
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 6 LOCATION HIGHLIGHTS LA VERNE COURTYARD
yy 100% Occupied; 98% National/Regional Tenants: Including ALDI, Orchard Supply Hardware, Jersey Mike’s Subs, Pacific Dental, OneMain Financial, Pizza Hut, Rubio’s, and Nekter Juice Bar. yy Minimal Lease Rollover: All of the current tenants have either executed new leases or extended their existing leases since 2012. With these recent long-term commitments, 97% of the tenants’ leases are not scheduled to expire until at least 2020, including ALDI (2030), Orchard Supply Hardware (2020), Rubio’s (2025), Jersey Mike’s (2022), Pacific Dental (2022), and Nekter Juice Bar (2022). yy High Traffic Signalized Intersection: The subject property is located at the most well-travelled intersection in the city of La Verne with 42,500 cars per day. Other national tenants located at the intersection include Target, Kohl’s, Marshalls, Staples, Chipotle, El Pollo Loco, Jimmy John’s, McDonald’s, Panda Express, Panera Bread, Starbucks, Vitamin Shoppe and Wingstop. yy Easily Accessible from the I-210 Freeway: The subject property is ideally situated less than one half mile from the Fruit Street exit and just one mile from the Foothill Boulevard exit of the 210 Freeway. yy Infill Location; Affluent Demographics: The average household income within a 3-mile radius is approximately $95,000 with 290,000 people located within a 5-mile radius of the subject property.
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 7
RENT ROLL LA VERNE COURTYARD
RECENT LEASE LEASE RENT/ MONTHLY LEASE TENANT SUITE SF INCREASES OPTIONS LEASE START EXPIRATION SF RENT TYPE
Rubio's 2204 2,000 2015 05/12/00 05/31/25 $3.26 $6,520.00 6/20 - $7,180 NNN None
One 3-year @ Pizza Hut 2208 1,250 2015 12/04/01 12/03/18 $2.10 $2,620.23 None NNN $2,777
Nekter Juice Bar 2210 750 2016 TBD 5 Years $3.25 $2,437.50 3% Annually NNN TBD
Two 5-year @ 2% Annually Jersey Mike's Subs 2212 2,000 2012 05/19/12 05/31/22 $1.88 $3,753.89 NNN Fair Market Value with (June 2018) 2% Annual Increases
Pacific Dental 3% Annually Two 5-year @ 2216 4,000 2012 04/06/12 04/30/22 $2.49 $9,969.75 NNN (La Verne Dental Group) (May 2018) 3% Annual Increases
Two 5-year @ Orchard Supply Hardware 2244 46,747 2013 10/07/00 10/06/20 $0.97 $45,227.76 None NNN $48,620 $52,266 10% Every 5 Four 5-year @ ALDI 2268 24,600 2016 12/16/15 12/31/30 $1.31 $32,287.50 Years NNN 10% Every 5 Years (January 2021) 3% Annually One 5-year @ Zen Spa 2276 1,516 2014 03/12/14 03/31/19 $1.64 $2,492.90 NNN (March 2018) 3% Annual Increases
OneMain Financial 3% Annually 2278 1,505 2016 01/01/11 12/31/21 $2.63 $3,952.79 NNN None (CitiFinancial) (January 2018)
Verizon Cell Tower Cell NA 2016 TBD 5 Years - $2,100.00 3% Annually - TBD (In Negotiation) TOTAL SQUARE FOOTAGE: 84,368 TOTAL AVAILABLE: 0 0% Vacancy TOTAL OCCUPIED: 84,368 100% Occupancy
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 9 INCOME & EXPENSE LA VERNE COURTYARD
ANNUALIZED OPERATING DATA
June 2017 Scheduled Gross Income (SGI): $1,337,464 Expense Reimbursement: $457,595 Total Operating Income: $1,795,059 Total Operating Expenses: ($494,294) Net Operating Income (NOI): $1,300,765
OPERATING EXPENSES
Amount $/SF Taxes (1.11% of Purchase Price): $275,255 $3.26 Taxes (Special Assessments): $14,250 $0.17 Insurance: $22,282 $0.26 CAM: $129,008 $1.53 Management (4% of SGI): $53,499 $0.63
Total Expenses: $494,294 $5.86 Annually Per SF $0.49 Monthly Per SF
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 10 10-YEAR CASH FLOW ANALYSIS LA VERNE COURTYARD
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 For the Years Ending May-2018 May-2019 May-2020 May-2021 May-2022 May-2023 May-2024 May-2025 May-2026 May-2027
Potential Gross Revenue Base Rental Revenue $1,337,464 $1,346,727 $1,356,469 $1,413,250 $1,462,376 $1,477,104 $1,482,173 $1,486,582 $1,548,467 $1,600,035 Absorption & Turnover Vacancy ($7,358) ($7,463) ($2,987) ($8,361) ($8,531)
Scheduled Base Rental Revenue $1,337,464 $1,346,727 $1,356,469 $1,413,250 $1,455,018 $1,469,641 $1,479,186 $1,486,582 $1,540,106 $1,591,504 CPI & Other Adjustment Revenue $883 $6,897 $13,407 $21,096 $27,087 Total Reimbursement Revenue $457,595 $468,347 $479,366 $490,777 $501,005 $512,725 $525,552 $538,867 $550,634 $563,312
Total Potential Gross Revenue $1,795,059 $1,815,074 $1,835,835 $1,904,027 $1,956,023 $1,983,249 $2,011,635 $2,038,856 $2,111,836 $2,181,903
Effective Gross Revenue $1,795,059 $1,815,074 $1,835,835 $1,904,027 $1,956,023 $1,983,249 $2,011,635 $2,038,856 $2,111,836 $2,181,903
Operating Expenses
Taxes General $275,255 $280,760 $286,376 $292,103 $297,945 $303,904 $309,982 $316,182 $322,505 $328,955 Special Assessment $14,250 $14,535 $14,826 $15,122 $15,425 $15,733 $16,048 $16,369 $16,696 $17,030
Total $289,505 $295,295 $301,202 $307,225 $313,370 $319,637 $326,030 $332,551 $339,201 $345,985
Insurance $22,282 $22,950 $23,639 $24,348 $25,079 $25,831 $26,606 $27,404 $28,226 $29,073 CAM $129,008 $132,878 $136,865 $140,971 $145,200 $149,556 $154,042 $158,664 $163,423 $168,326 Management (4% SGI) $53,499 $53,869 $54,259 $56,530 $58,201 $58,786 $59,167 $59,463 $61,604 $63,660
Total Operating Expenses $494,294 $504,992 $515,965 $529,074 $541,850 $553,810 $565,845 $578,082 $592,454 $607,044
Net Operating Income $1,300,765 $1,310,082 $1,319,870 $1,374,953 $1,414,173 $1,429,439 $1,445,790 $1,460,774 $1,519,382 $1,574,859
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 11 10-YEAR CASH FLOW ASSUMPTIONS LA VERNE COURTYARD
ASSUMPTIONS TO CASH FLOW
Analysis Period – Start Date: 6/1/2017 (1) Market Rents: $1.65 NNN - $3.30 NNN
Occupancy Level (Year 1): 100% Down Time 3 Months
Operating Expense Source: Actual Term: 5 Years
Tax Rate (Actual): 1.11% Tenant Improvements New/Renewal: $5 / $0
CPI Growth Rate (Projected): 3.00% Leasing Commissions New/Renewal: 5% / 0%
Management Fee: 4.00% Renewal Probability: 80% (2)
NOTES (1) Assumes that all tenants whose lease expires before the end of the first year of the analysis (May 31, 2018) will continue to pay rent at the same terms and conditions until that date. (2) Assumes that all tenants with fixed options will exercise them per the language in their options.
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 12 LEASE EXPIRATION ANALYSIS LA VERNE COURTYARD
EXPIRATION LEASE CUMULATIVE TENANT SUITE SF % OF TOTAL CUMULATIVE SF YEAR EXPIRATION % OF TOTAL 2017 None - - 0 0.00% Subtotal: 0 0.00% 0 0.00% 2018 Pizza Hut 2208 12/03/18 1,250 1.48% Subtotal: 1,250 1.48% 1,250 1.48% 2019 Zen Spa 2276 03/31/19 1,516 1.80% Subtotal: 1,516 1.80% 2,766 3.28% 2020 Orchard Supply Hardware 2244 10/06/20 46,747 55.41% Subtotal: 46,747 55.41% 49,513 58.69% 2021 Verizon Cell Tower Cell 03/01/21 0 0.00% OneMain Financial (CitiFinancial) 2278 12/31/21 1,505 1.78% Subtotal: 1,505 1.78% 51,768 61.36% 2022 Jersey Mike's Subs 2212 05/31/22 2,000 2.37% Pacific Dental (La Verne Dental Group) 2216 04/30/22 4,000 4.74% Nekter Juice Bar 2210 5 Years 750 Subtotal: 6,750 8.00% 57,768 68.47% 2023 None - - 0 0.00% Subtotal: 0 0.00% 57,768 68.47% 2024 None - - 0 0.00% Subtotal: 0 0.00% 57,768 68.47% 2025 Rubio's 2204 05/31/25 2,000 2.37% Subtotal: 2,000 2.37% 59,768 70.84% 2026 None - - 0 0.00% Subtotal: 0 0.00% 59,768 70.84% 2027 None - - 0 0.00% Subtotal: 0 0.00% 59,768 70.84% 2028 None - - 0 0.00% Subtotal: 0 0.00% 59,768 70.84% 2029 None - - 0 0.00% Subtotal: 0 0.00% 59,768 70.84% 2030 ALDI 2268 12/31/30 24,600 29.16% Subtotal: 24,600 29.16% 84,368 100.00% 2031 None - - 0 0.00% Subtotal: 0 0.00% 84,368 100.00% Available None - - 0 0.00% Subtotal: 0 0.00% 84,368 100.00%
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 13 LEASE EXPIRATION ANALYSIS LA VERNE COURTYARD
Minimal Lease Rollover: All of the current tenants have either executed new leases or extended their existing lease since 2011. With these recent long-term commitments, 97% of the tenant’s leases are not scheduled to expire until at least 2020, including ALDI (2030), Orchard Supply Hardware (2020), Rubio’s (2025), Jersey Mike’s (2022), Pacific Dental (2022), and Nekter Juice Bar (2022).
Annual Square Feet Expiring
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Cumulative Square Feet Expiring
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 14
SITE PLAN LA VERNE COURTYARD
FOOTHILL BLVD
SUITE TENANTS SF SIGN 2204 Rubio's 2,000 2204 NAP 2208 Pizza Hut 1,250 2208 2210 Nekter Juice Bar 750 2210 HITE AVE UE 2212 Jersey Mike's Subs 2,000 2212 2216 Pacific Dental Group 4,000 2244 Orchard Supply Hardware 46,747 2216 2268 ALDI 24,600 2276 Zen Spa 1,516 2278 OneMain Financial 1,505
SIGN
OSH GARDEN CENTER NOT A PART 2276 2244 2278 SUBJECT PROPERTY 2268
DUR ARD A
N
The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy. 16 PARCEL MAP LA VERNE COURTYARD
FOOTHILL BLVD SIGN