McCLATCHY COLUMBIA, SOUTH CAROLINA Sale / leaseback with 15-YEAR NNN LEASE 265,000 SQ. FT. on 22.35 AC. McClatchy publishes $17,000,000 30 DAILY NEWSPAPERS in 29 U.S. markets 9.49% capitalization rate Offering Memorandum Central Business District (7 minutes away) University of South Carolina State Fairgrounds USC Football Stadium Estes Express Lines Velvetex Carolina Eastern G&E Appliance Parts Center RR Donnelley SCDOT Shealy Leasing McCLATCHY COLUMBIA, SOUTH CAROLINA INVESTMENT CONTACT LOCAL MARKET CONTACTS Randy Getz Ben Brantley, SIOR Executive Vice President Vice President T +1 916 446 8287 T +1 803 744 6855 [email protected] benjamin.brantley@cbre com 500 Capitol Mall Martin Moore, SIOR, CCIM Suite 2400 Senior Vice President Sacramento, CA 95814 T +1 803 744 6842 martin [email protected] 1333 Main Street Suite 210 Columbia, SC 29201 COLUMBIA, SOUTH CAROLINA EX ECUTIV E SUMMARY THE STATE (COLUMBIA, SC) THE OFFERING CBRE, Inc., as exclusive advisor, is pleased to offer for sale a 265,000 square foot building on 22 acres which houses the administrative and production facilities of The State newspaper in Columbia, South Carolina. The property is owned by a wholly-owned subsidiary of The McClatchy Company (NYSE American: MNI), a media company that operates 30 daily newspapers in 29 markets and numerous digital media entities including websites, mobile apps, mobile news and advertising services, niche publications, direct marketing and direct mail services, and non-daily community newspapers. McClatchy was founded in 1857 and is headquartered in Sacramento, California. The State property is priced at $17,000,000 which represents an initial capitalization rate of 9.49%. Concurrently with closing, The McClatchy Company will execute a 15-year absolute NNN lease, the details of which are described elsewhere in this offering. Offering Summary LOCATION LAND AREA SF BUILDINGS ANNUAL NNN RENT FIRM TERM CAP RATE PRICE Columbia, SC 22.35 Ac. 265,000 $1,613,750 15 Years 9.49% $17,000,000 INVESTMENT HIGHLIGHTS › Following sale the Property will be leased back by The McClatchy › McClatchy is among the largest newspaper publishers in the United States and has Company for an initial term of 15 years with no early termination been an industry leader in expanding beyond print into digital media. provision and multiple options to extend. › Columbia’s MSA is a growth market and The State is the leading daily newspaper in › Lease will feature regularly scheduled rent increases. its market. › Lease will be absolutely net to the landlord, without exceptions. 6 THE STATE (COLUMBIA, SC) SHOP ROAD Parcel lines are approximate and for illustrative purposes only. 7 THE STATE (COLUMBIA, SC) Columbia Summary PARCEL NUMBER R11209-02-12 ADDRESS 1401 Shop Road, Columbia, SC 29201 IMPROVEMENTS Three-story office: basement, production, and parking SQUARE FOOTAGE ±265,000 ACREAGE ±22.35 Office - ±130,000 sf $8.00 MARKET RENT PSF/ Production - ±135,000 sf $4.25 ANNUALLY (NNN) Blended total - ±265,000 sf $6.09 LEASE TYPE NNN ANNUAL RENT / NOI $1,613,750 CAP RATE 9.49% PRICE $17,000,000 10 THE STATE (COLUMBIA, SC) Central Business District (7 minutes away) USC Baseball Stadium South Carolina State House University of South Carolina USC Football State Fairgrounds ROSEWOOD DR Stadium Gamecock Park University Oaks Apts. SC Army National Guard KEY RD R.R. Donnelley Stadium Suites Apts. Piedmont Plastics SHOP RD SCDOT CSX Railroad BLUFF RD Jim Hamilton- L.B. Owens Airport 11 THE STATE (COLUMBIA, SC) PROPERTY DESCRIPTION The State is published by The State Media Company additional production space is needed, given the Sun News (Myrtle Beach, SC) and The Daily Gamecock in a 265,000 square foot building situated on 22.35 production of other publications at this facility. They (University of South Carolina in Columbia). tree-shaded acres approximately seven minutes south recently enclosed the dock area and have now leased In addition to printing, The State is the regional of downtown Columbia. It was built in 1986 and is well additional space in a building across the street to hub for packaging, inserting preprints in all of the maintained. Approximately 130,000 square feet is assist with distribution of finished newspapers. There aforementioned papers plus the Charlotte Observer. devoted to office uses on three floors and there is also is enough excess acreage to expand the building This annual volume of preprint insertions is 980 million. a basement that contains a cafeteria and fitness center. should that ultimately prove necessary. The facility is Some office space is leased to third party tenants. At approximately seven minutes from downtown Columbia. The Property is located in the oldest and largest industrial submarket in Columbia – one which close of escrow these tenants will become subtenants Printing capacity exceeds what is needed to produce as McClatchy’s lease will include the entire premises. enjoys consistently low vacancy rates. The area has The State. The Company generates annual income been undergoing a recent resurgence, thanks to The remaining ±135,000 square feet is devoted to from “in-sourcing” print jobs from other third-party new development associated with the University of production, storage, and distribution operations. The or McClatchy publications including USA Today, The South Carolina which is just north of Subject. Recent production area is climate controlled and in very Herald (Rock Hill, SC), The Island Packet (Hilton Head university-related construction created new student good condition, but per the local operations manager Island, SC), The Beaufort Gazette (Beaufort, SC), The housing and expanded the athletic facilities. 12 THE STATE (COLUMBIA, SC) Property Summary YEAR BUILT 1986 TYPE OF CONSTRUCTION Block/steel/stucco WALLS Masonry block and stucco ROOF TPO, 60 mil FOUNDATION Concrete HVAC SYSTEM Chillers for cooling; boilers for heat FIRE/LIFE/SAFETY Access cards; Simplex fire panel for sprinklers; CO2 press area ELEVATORS Three passenger; one freight (hydraulic) LOADING PROVISIONS Seven truck-high loading docks POWER 480v / 3-phase; 777 lighting; emergency generator COMMUNICATIONS FEATURES Fiber optic to servers and switches Proposed lease At close of escrow The McClatchy Company will execute a 15-year lease for the entire Columbia premises described above. The lease will include the following provisions. 1. Initial annual net rent for the Columbia premises shall be $1,613,750, payable monthly. 2. Rent shall be increased 10% every five years throughout the initial term of the lease. 3. Lease shall be absolutely NNN to Landlord who shall not be responsible for any costs or expenses. 4. Options for three 5-year extensions, each commencing at fair market rent, but not less than the rent paid at the end of the previous term, with 2% annual increases. 5. No option for early termination during the original term or any extension. 13 THE STATE (COLUMBIA, SC) The region features an array of transportation options including: three interstate freeways (I-20, I-26 and I-77) that converge in Columbia; passenger and freight rail service provided by CSX and Norfolk Southern; passenger and air cargo facilities at Columbia Metropolitan Airport. The Port of Charleston is 110 miles away. 14 THE STATE (COLUMBIA, SC) COLUMBIA, SOUTH CAROLINA OVERVIEW Population and growth trends The Columbia MSA consist of six counties: Richland (of which Columbia is the county seat), Calhoun, Fairfield, Kershaw, Lexington and Saluda. The 6,775-square-mile region contains a population of over 800,000 and is rich in history and cultural amenities. Columbia, with 133,000 residents, is the state capital and the largest city in South Carolina. Columbia is also home to the Gamecocks of the University of South Carolina. With an enrollment of nearly 33,000 students it is the state’s largest institution of higher learning and offers more than 300 degree options. Columbia is often recognized in national surveys for its outstanding quality of life, low cost of living, and abundant supply of skilled labor. Demographics The population of Columbia has surpassed 130,000 people and is projected to exceed 135,000 by 2020. Since 1990 Columbia has grown by 35.8%, making it one of the fastest growing metropolitan centers in the Southeast. 1990 2000 2010 2015 2020 PROJECTED COLUMBIA POPULATION 98,062 123,529 129,753 133,167 137,552 GROWTH % n/a 26.0% 5.0% 2.6% 3.3% SOUTH CAROLINA POPULATION 3,486,703 4,011,983 4,625,364 4,847,878 5,090,061 GROWTH % n/a 15.1% 15.3% 4.8% 5.0% 15 THE STATE (COLUMBIA, SC) KEY REGIONAL ECONOMIC DRIVERS › The University of South Carolina and the Army’s Fort Jackson both have a significant economic impact on the Columbia area. The main campus of USC covers 350 acres and has an enrollment of almost 33,000 students. At 52,000 acres, Fort Jackson is the largest, not to mention the most active, Initial Entry Training Center in the U.S. Army. Approximately 3,000 soldiers go through basic and advanced training each year. › The federal government, Palmetto Health, Lexington Medical Center, and Providence Hospitals are growing and expanding their facilities in Columbia. › Major manufacturers include Michelin, Westinghouse Electric and International Paper. › Major service providers include Blue Cross/Blue Shield, United Parcel Service, AT&T, Aflac, and Computer Sciences Corporation. The University of South Carolina campus › The Columbia MSA offers businesses a labor force of 368,600 people, aggressive incentives, and the lowest corporate income tax rate in the Southeast. › SCANA Corporation (#523 in the Fortune 1000) is an energy- › The region features an array of transportation based holding company located in Lexington County. options including: three interstate freeways (I- 20, I-26 and I-77) that converge in Columbia; › Following four consecutive years of growth Columbia Metropolitan passenger and freight rail service provided by CSX Airport is investing $22 million in capital improvements.