Wawa (Ground Lease) North East, Md Pricing and Financial Analysis

WAWA (GROUND LEASE) NORTH EAST, MD PRICING AND FINANCIAL ANALYSIS

INVESTMENT OVERVIEW

Investment Highlights

■ 20 Year Triple Net Ground Lease; Below Market Rental Rate

■ Investment Grade Tenant; "BBB" Rated Convenience Store/Fuel Operator

■ Signalized Intersection Along Major Highway (Route 40)

■ Strong Residual Value; Tenant Improvements Valued Over $2,500,000

Marcus & Millichap is pleased to exclusively offer for sale this Wawa (Ground Lease) opportunity situated within North East, Maryland. The subject location opened as a Wawa in mid-2006 subject to a 10 year absolute net ground lease. Due to the success of the location, the Landlord approached the Tenant about extending its lease early in exchange for various modifications to the lease. As a result of the negotiations, the subject offering is for sale conditioned upon the Landlord providing to the buyer an amendment to the lease stipulating that there will be a new 20 year lease term with six, five-year option terms. This 2.1 acre parcel is situated at a high traffic signaled corner along Pulaski Highway (Route 40) which runs parallel to Interstate 95 along the northern portion of Maryland. Wawa was recently rated by Fitch as "BBB", or investment grade. Aside from the company strong credit, they operate over 600 locations and are currently expanding into Florida. Investors should appreciate the creditworthiness and quality of the operator as well as the costly investment Wawa has made to build its improvements here. Wawa operates in a 5,140 square foot convenience store with ten multi-product dispensers (MPDs). It is estimated that Wawa invested over $2,500,000 in its improvements providing an investor further protections above and beyond the tenant’s credit. When this is combined with a new 20 year lease term to an already successful location and a flat rental rate for the tenant for the term of its lease, investors should feel highly confident that the tenant will remain in this location long term.

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 Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services of Washington, D.C. © 2012 Marcus & Millichap T0300259 WAWA (GROUND LEASE) NORTH EAST, MD PRICING AND FINANCIAL ANALYSIS

FINANCIAL OVERVIEW

Location Annualized Operating Data 2031 Pulaski Highway North East, MD 21901 Base Rent ($1.15/SF) $110,000 Net Operating Income $110,000 Price $1,833,333 Total Return 6.00% / $110,000 Down Payment 100% / $1,833,333 Rentable Square Feet 95,745 CAP Rate 6.00% Year Built 2006 Lot Size 95,745 SF Type of Ownership Leased Fee / Ground Lease

Tenant Summary Tenant Trade Name Wawa, Inc. Ownership Private Tenant Corporate Store Lease Guarantor Corporate Guarantee Lease Type NNN Ground Lease

Roof and Structure Tenant Responsible Lease Term 20 Years Lease Commencement Date 02/01/2013 Rent Commencement Date 02/01/2013 Lease Expiration Date 01/31/2033 Term Remaining on Lease 20 Years Increases None Options Six, Five-Year Terms

TENANT & LEASE OVERVIEW

Property Name WAWA (GROUND LEASE) Property Address 2031 Pulaski Highway North East, MD 21901 Property Type Net Leased Auto Service - Gas/Conv. Rentable Square Feet 95,745

Tenant Trade Name Wawa, Inc. Ownership Private Tenant Corporate Store Lease Guarantor Corporate Guarantee Credit Rating BBB Rating Agency Fitch Stock Symbol N / A

Lease Commencement Date 02/01/2013 Rent Commencement Date 02/01/2013 Lease Expiration Date 01/31/2033 Term Remaining on Lease 20 Years Lease Type NNN Ground Lease Roof and Structure Tenant Responsible Lease Term 20 Years Increases None

Options to Renew Six, Five-Year Terms Options to Terminate None Options to Purchase None First Right of Refusal Yes (30 Days)

No. of Locations 600 + Headquartered Wawa, Pennsylvania Web Site www.wawa.com

Wawa, Inc., a privately held company, began in 1803 as an iron foundry in New Jersey. Toward the end of the 19th Century, owner George Wood took an interest in dairy farming and the family began a small processing plant in Wawa, Pennsylvania, in 1902. The milk business was a huge success, due to its quality, cleanliness and “certified” process. As home delivery of milk declined in the early 1960’s, Grahame Wood, George’s grandson, opened the first Wawa Food Market in 1964 as an outlet for dairy products. Today, Wawa is your all day, everyday stop for fresh, built-to-order foods, beverages, coffee, fuel services, and surcharge-free ATM's. A chain of more than 602 convenience retail stores (300 offering gasoline), Wawa stores are located in Pennsylvania, New Jersey, Delaware, Maryland and Virginia and beginning in 2012, Central Florida.

TENANT PROFILE

Founded in 1803 by the Wood family and incorporated in 1865, Wawa, Inc. (the “Company” or “Wawa”) has roots in the manufacturing and textile businesses. The first Wawa Food Market opened on April 16, 1964. Today, the Company operates approximately 580 convenience stores, approximately 290 of which include a fuel offering, in Pennsylvania, New Jersey, Delaware, Maryland and Virginia. Wawa is a privately held company, with a majority of the Company stock still owned by the Wood family. Company associates who participate in the Employee Stock Ownership Plan have a nearly 37 percent ownership stake.

Wawa offers a large fresh foodservice selection, including freshly brewed coffee, a wide selection of delicatessen and dairy products, fresh produce, hot foods, built-to-order sandwiches and Wawa brands such as juices, teas, water and bakery products. The Company’s revenue principally consists of fuel and merchandise sales. The Company operates a dairy manufacturing facility, producing Wawa branded beverages and dairy products for distribution to, and sale in, its stores and to wholesale customers. The Company has a committed fuel storage terminal for the purpose of both storing fuel for distribution to, and sale in, its stores and for holding and selling fuel in wholesale markets.

Wawa has differentiated itself from its competitors by focusing on several key strategic areas: • Delivering fast and friendly customer service in a safe and clean shopping environment; • Promoting and developing Wawa-branded food, beverage and fresh food items; • Maintaining world-class facilities by systematically opening new stores, closing marginal stores and remodeling older stores; and • Maximizing operating efficiency by making significant investments in operations programs and technology.

Wawa exceeds industry norms in virtually every measurable category (Source: NACS State of the Industry Report of 2011 Data - most recent industry data available) • Wawa merchandise sales per store averaged $5.3 million for the year ended 2011 versus an industry average of $1.6 million for 2011 • Gasoline sales totaled nearly 1.5 billion gallons for the year 2011, an average of approximately 101,000 gallons per fuel store week in 2011 or slightly over three and hal times the industry average of approximately 28,000 gallons per fuel store week in 2011.

Total Sales for the Year Ended December 25, 2011 $8.4 billion Number of Associates Approx. 19,000 Fitch Rating (as of February 28, 2012) BBB / Stable Forbes 2012 Ranking in America's Largest Private Companies No. 40 Website www.wawa.com

LOCATION OVERVIEW This Wawa gas and convenience store is strategically situated along Pulaski Highway (Route 40) at the signalized intersection with Mechanics Valley Road in North East, Maryland. Pulaski Highway (Route 40) is a highly-trafficked artery through parts of Maryland as well as Delaware and is closely paralleled by Interstate-95. North East is located in Cecil County, Maryland at the top of the Chesapeake Bay. Situated almost halfway between Baltimore and Philadelphia, North East is quickly being discovered by commuters that want to take advantage of the easy access to Interstate-95, which runs just to the north. And the town is also benefiting from the large influx of jobs coming to the area, especially at Aberdeen Proving Ground, just a few miles to the south with the BRAC Program. North East has much to offer, including shops, restaurants, museums, and miles of scenic waterfront. On opposing corners of the subject property is a Builders Surplus Center and a local eatery, Fast Eddie's Pit Beef. Situated along Pulaski Highway are a number of national retailers including McDonald's, Dunkin Donuts, Walgreens, Domino's, Rite Aid Pharmacy, Kmart, PNC Bank, Cecil Bank, Bank of America and Waffle House. Further, west of the subject property at Route 40's intersection with Route 272 are two major retail venues - North East Plaza, anchored by Walmart, PETCO and Dollar Tree, and North East Station, anchored by Food Lion and Lowe's. "Main Street" in downtown North East boasts a large collection of antique stores, along with other gift shops, and restaurants. The Shoppes of Londonshire, located on Main Street, is a small indoor mall that once housed a department store but today contains several unique shops inside. Local eateries such as Woody's Crab House, Nauti-Goose Saloon, Steak & Main, Pier 1, Pickled Herring Pub and The Victorian Tea Cup.