Subject Property

Offering Memorandum 5130 W Peoria Ave., Glendale, AZ 85302 Confidential Disclaimer

Offering Exclusively By This Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC. Bradly Richardson [email protected] This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This AZ License #:BR540628000 COM contains descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested in the Property. Such information is not all inclusive and is not represented to include all information that may be material to an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to Stan Johnson Company the actual documents and/or financial statements, which upon request may be made available. An interested 7702 E Doubletree Ranch Road party must conduct its own independent investigation and verification of any information the party deems Suite 300 material to consideration of the opportunity, or otherwise appropriate, without reliance upon SJC. Scottsdale, AZ 85258 Phone: 480-607-4365 The Property may be financed or withdrawn from without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time. The Property is offered and sold by its stanjohnsonco.com owner(s) as is, where is, and with all faults, without representation or warranty of any kind except for any customary warranties of title.

BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”), is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees, representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when obtaining such relief.

Sprouts Farmers Market • Glendale, AZ 2 The Offering

Stan Johnson Company is pleased to offer for sale to qualified investors, Purchase Price: $8,500,000 the opportunity to purchase a Sprouts Farmers Market property located at 5130 W Peoria Ave., Glendale, AZ 85302 (the “Property”). Cap Rate: 6.50% The Property totals ± 30,600 square feet on ± 3.32 acres. It is operating under a 15-year base lease term with 3.25 years remaining, offering four, 5-year lease option periods. Property Summary The lease features an average of 5.25% annual increases in the option Address: 5130 W Peoria Ave., Glendale, AZ 85302 periods. Additionally, the lease is Absolute NNN with zero landlord ± 30,600 SF responsibilities. Building Size (SF):

Land Area (Acres): ± 3.32 acres

Annual Rent: $553,544

Investment Highlights

Corporate Guarantee - The lease is guaranteed by Sprouts Farmers Rental Increases - The lease provides for approximate 4% rental Market LLC which is headquartered less than 10 miles away from the increases every 3 years (next increase 9/2017). subject property. America’s Fastest Growing County - In March 2017 the Census Bureau Strong Tenant - The company employs over 24,000 people while named ’s Maricopa as the county with the nation’s highest operating over 250 healthy grocery stores in 15 states across the annual population growth. Likewise, Forbes Magazine recently ranked country. Phoenix-Mesa-Glendale as the #14 fastest growing MSA in the country.

Publicly Traded Company - Traded on the NASDAQ under the symbol Demographics - Over 450,000 residents and an Average Household SFM, the stock price increased over 35% from March 2017 to June 2017 Income of over $60,000 within 5-mile radius. under speculation that the company is an attractive acquisition target. High Traffic Count - Over 55,000 combined vehicles per day at the Financially Sound - In 2016 Sprouts Farmers Market reported earnings corner of W. Peoria Ave. and N. 51st Ave. over $128 million on revenues just over $3.59 billion. The company also reported an increase in revenue of appropriately 14% in Q1 2017 vs. Q1 2016.

Sprouts Farmers Market • Glendale, AZ 3 Lease Abstract Rent Schedule

5130 W Peoria Ave., Glendale, AZ 85302 Years Term Annual Rent Increases

1-3 Sep-05 Aug-08 $488,137 Tenant: Sprouts Farmers Market 4-6 Sep-08 Aug-11 $509,939 4.74% Guarantor: Corporate - Sprouts Farmers Market, Inc. 7-9 Sep-11 Aug-14 $531,741 4.28% 10-12 Sep-14 Aug-17 $553,544 4.10% Property Type/Building Use: Retail / Grocery 13-15 Sep-17 Aug-20 $575,346 3.94% Option 1 Sep-20 Aug-25 $575,346 3.94% Building Square Feet: ± 30,600 SF Option 2 Sep-25 Aug-30 $633,485 6.09% Land Area: ± 3.32 acres Option 3 Sep-30 Aug-35 $669,822 5.74% Option 4 Sep-36 Aug-40 $706,159 5.42% Year Built/Remodeled: 1976/2004

Lease Term: 15 years

Lease Term Remaining: 3.25

Lease Commencement: 9/1/2005

Original Term Through: 8/31/2020

Current Annual Rent: $553,544

Rent/SF: $18.09

Approx 4% in 9/2017, average 5.25% each Rent Increases: option period

Renewal Options: Four (4), Five (5) Year Options

Lease Type: Absolute NNN - Zero Landlord Responsibilities

Subject Property

Sprouts Farmers Market • Glendale, AZ 4 Tenant Overview

Sprouts Farmers Market is an American health indoor farmers market. Sprouts is committed a public company traded on the NASDAQ food offering fresh, natural to operating in a way that minimizes the Stock Market (SFM) in August, 2013. In recent and organic foods at low prices. Sprouts offers impact on the environment and safeguards the years, the chain expanded into the Southeast a complete shopping experience that includes health of the surrounding communities. by adding new stores in , , fresh produce, , vitamins and and . Today, Sprouts is one supplements, packaged groceries, meat and Sprouts was founded by members of the of the fastest growing retailers in the country. seafood, deli, baked goods, dairy products, Boney family, long-time San Diego grocers Sprouts employs more than 24,000 team frozen foods, natural body care and household with a focus on making fresh foods available. members and operates 250 stores in 13 states items catering to consumers’ growing demand The first Sprouts store was opened in from coast to coast. in health and wellness. From selling fresh Chandler, Arizona in 2002. After a period of produce and wholesome grains in field bins, rapid growth through acquisitions and new barrels and wooden crates to the low shelving, store development, Sprouts joined Henry’s spacious aisles, and abundance of natural Holdings in 2011. A year later, Sprouts bought light, Sprouts locations evoke the feeling of an Sunflower Farmers Market. Sprouts became

Sprouts Farmers Market • Glendale, AZ 5 Location Overview

With an estimated population of nearly 4,200,000, Maricopa County, which includes both Glendale and Phoenix, is home to over half of Arizona’s population. While Glendale is one of the fastest-growing cities in Arizona, it still manages to be a well-planned blend of Old West and New Economy. Strategically located in the northwest region of the Phoenix Metropolitan Area, Glendale boasts nearly 250,000 citizens, making it the fourth-largest city in Arizona. Served extensively by ground, air and rail transportation, Glendale offers a well-developed arterial street system complemented by Interstate 10, Interstate 17 and State Route 101 ringing the Metropolitan Area. The Burlington-Northern Santa Fe Railroad runs through the city along U.S. Highway 60, and Phoenix Sky Harbor International Airport is only a 20 minute drive away.

Glendale has an expansive sports entertainment district anchored by the state-of-the-art Glendale, AZ University of Phoenix Stadium (home of the NFL’s Arizona Cardinals and the annual Fiesta Bowl) and Jobing.com Arena (home of the NHL’s Phoenix Coyotes). Glendale is also home to some of the region’s major shopping areas; Arrowhead Towne Center, one of the Phoenix area’s largest and most popular malls, is located in northwest Glendale. Its 170 department stores, boutiques, restaurants and other vendors employ 2,500 people. With over 2,000 employees, Glendale’s largest single employer is Banner Health System, a group of general medical and surgical hospitals. Additional employers with 500 or more employees include Schuck & Son’s (prefab wood trusses and prehung doors manufacturer), Coming Gilbert Engineering Company (electrical equipment and supplies manufacturer), AAA, Honeywell International’s Space & Aviation Division, Arrow-head Community Hospital, Younger Brothers Construction Company, Wal-Mart Supercenter and Mitchell Electric (electrical contractor).

Phoenix, AZ

441,170 $57,049 154,975 ± 14 Miles Total Population within 5-Mile Radius Avg HHI within 5-Mile Radius Total Households within 5-Mile Radius The Subject Property is approximately of Subject Property of Subject Property of Subject Property 14 miles from downtown Phoenix. Sprouts Farmers Market • Glendale, AZ 6 County and MSA Are Among the Top in Population Growth

Census Bureau: Maricopa County fastest growing in country The Census Bureau says Arizona's Maricopa County the type of growth that we’ve experienced in prior Maricopa County historically has added residents has replaced ' Harris County as the county with decades,” said Rick Merritt, president of the economic at a rate above 3 percent per year, Merritt said. The the nation's highest annual population growth. consulting firm Elliott D. Pollack and Company in Census Bureau numbers show a county growth rate of Scottsdale. “Every other recession we’ve been in, 1.95 percent. Still, that’s higher than the top 10 largest there’s been significant growth immediately after. counties in the country, according to the Census. Maricopa County includes Phoenix and most of its That’s why it’s known as the Great Recession. It was so suburbs, and its estimated population now tops 4.2 deep and difficult.” million. Maricopa County gained most of its new residents by having more people relocate from elsewhere Maricopa County Total Population over Time in the U.S. than leaving for other locations. Other Maricopa County gained more than 81,000 people contributors were natural growth — having more between July 1, 2015, and July 1, 2016, an average daily births than deaths — and international migration. increase of 222 people. Harris County had an increase of nearly 57,000, or about 155 per day on average. “People come here because of the weather. It has a good job base. It’s an affordable place to live. There’s Population change over time a lot of high-tech industry here that helps to bring Although the figures are a positive sign, one expert highly educated people here. There’s lots of reasons says Maricopa County continues to recover slower people want to move to Maricopa County,” Merritt than normal from the 2008 housing crash. said. “There’s a shift from the Rust Belt in the North to the South and the Southwest,” feeding states like “It certainly is good news. But we still are not seeing Arizona, and . Continue reading here>>

America’s 25 Fastest-Growing Cities 2017 Read More #16 Phoenix-Mesa-Scottsdale, AZ Phoenix’s highest rank is eighth for 2016 population growth.

Sprouts Farmers Market • Glendale, AZ 7 The Subject Property is located central to Arizona State University West Campus and Glendale Community College.

N

Sprouts Farmers Market • Glendale, AZ 8 Arizona State University West N 43RD AVE Campus

Ironwood High School

+/- 31,344 VPD N CACTUS RD Desert Palms Elementary School

+/- 31,607 VPD

Vineyard Church North Phoenix

+/- 30,855 VPD W PEORIA AVE

N 51ST AVE

Heritage Elementary School Sunset Elementary School Glendale Community +/- 29,676 VPD College

N +/- 31,411 VPD W OLIVE AVE

Sprouts Farmers Market • Glendale, AZ 9 Demographics

5130 W Peoria Ave, Glendale, AZ, 85302 0 - 1 mi. 0 - 3 mi. 0 - 5 mi.

Population

2016 Population 19,388 166,287 441,170

2021 Population 20,293 175,607 467,094

2010-2016 Annual Rate 0.69% 0.94% 0.99%

2016-2021 Annual Rate 0.92% 1.10% 1.15%

Households

2016 Total Households 6,807 60,711 154,975 0–1 mi.

2021 Total Households 7,115 64,050 163,680

2010-2016 Annual Rate 0.64% 0.87% 0.88%

2016-2021 Annual Rate 0.89% 1.08% 1.10% 0–3 mi.

Median Household Income

2016 Median Household Income $54,990 $48,658 $43,881 0–5 mi.

Average Household Income

2016 Average Household Income $66,752 $59,817 $57,049

Per Capita Income

2016 Per Capita Income $23,822 $22,254 $20,390 N

Sprouts Farmers Market • Glendale, AZ 10 Dominant Tapestry Map Demographic Profiles Dominant Profiles within 1-Mile Radius 5130 W Peoria Ave, Glendale, Arizona, 85302 2 Prepared by Esri 5130 W Peoria Ave, Glendale, Arizona, 85302 Latitude: 33.58195 Rings: 1, 3, 5 mile radii Longitude: -112.17041 LifeMode Group: Family Landscapes Tapestry segmentation (as seen below) provides an 4B accurate, detailed description of America’s neighborhoods Home Improvement - U.S. residential areas are divided into 67 distinctive segments based on their socioeconomic and demographic Avg. Household Size: 2.86 composition - then further classified into LifeMode and Urbanization Groups. The result is a detailed picture of the Median Age: 37.0 socioeconomics and demographics as well as attitudes and Median HHI: $67,000 brand preferences of people in a given area. Married-couple families occupy well over half of these suburban households. Most Home Improvement residences are single- family homes that are owner occupied, with only one-fifth of the households occupied by renters. Education and diversity levels are similar to the US as a whole. These families spend a lot of time on the go and therefore tend to eat out regularly. When at home, weekends are consumed with home improvement and remodeling projects.

LifeMode Group: GenXurban 5D Rustbelt Traditions

Avg. Household Size: 2.46 Median Age: 38.4 Median HHI: $49,000

The backbone of older industrial cities in states surrounding the Great Lakes, Rustbelt Traditions residents are a mix of married- couple families and singles living in older developments of single- family homes. While varied, the work force is primarily white collar, with a higher concentration of skilled workers in manufacturing, 1 Mile retail trade, and health care. Rustbelt Traditions represents a large market of stable, hard-working consumers with modest incomes but above average net worth (Index 111). Family oriented, they value time spent at home. Most have lived, worked, and played in the same area for years.

LifeMode Group: Ethnic Enclaves 7C American Dreamers

3 Miles Avg. Household Size: 3.16 Median Age: 31.8 Median HHI: $48,000

Located throughout the South and West, most American Dreamers residents own their own homes, primarily single-family housing— farther out of the city, where housing is more affordable. Median household income is slightly below average (Index 94). The 5 Miles majority of households include younger married-couple families with children and, frequently, grandparents. Diversity is high; many residents are foreign born, of Hispanic origin. Hard work and sacrifice have improved their economic circumstance as they pursue a better life for themselves and their family. Spending is focused more on the members of the household than the home. EntertainmentSprouts includes Farmers multiple Market televisions, • Glendale, movie rentals, AZ and 11 Esri is an international supplier of Geographic Information System (GIS) software, web GIS and geodatabase management applications. video games at home or visits to theme parks and zoos. This The company was founded in 1969 and has 40% of the global GIS market share. Learn more at www.esri.com. market is connected and adept at accessing what they want from the Internet.

Source: Esri

June 01, 2017

©2016 Esri Page 1 of 2 Subject Property Photos

Sprouts Farmers Market • Glendale, AZ 12 Surrounding Tenant Photos

Sprouts Farmers Market • Glendale, AZ 13 Offered Exclusively by

going beyond

Bradly Richardson [email protected] AZ License #:BR540628000

Stan Johnson Co. 7702 E Doubletree Ranch Road, Suite 300 Scottsdale, AZ 85258 Phone: 480-607-4365

stanjohnsonco.com

The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notices.