Canby square

Can by , o r

Safeway anchored center highway 99 Visibility 1025-1061 SW 1st Avenue, Canby, 97013 [ www.CapitalPacific.com] Investment Highlights

CANBY SQUARE IS A 115,701 SQUARE FOOT SAFEWAY ANCHORED SHOPPING CENTER LOCATED IN CANBY, OREGON.

Developed in 2 phases, 1976 and 1995, this well maintained property is anchored by Safeway and is co-anchored by Dollar Tree and Ace Hardware, and features a strong mix of tenants. The Property is 67% occupied and is offered significantly below replacement costs and provides a 9.00% going in yield prior to the lease-up of the 37,750 SF of available space.

Canby Square is located at the south end of Canby off Highway 99E which is the main retail arterial that runs through Canby and connects to Oregon City and West Linn to the north. Canby, OR is approximately 5 miles east of which is a major highway connecting to Portland, OR just 20 miles to the north. PRICE: $8,739,000 CAP On in-place income: 9.00%

RENTABLE SF...... 115,701 SF PRICE PER SF...... $75 Build-to cap rate. . . . . 12.09% Occupancy...... 67% LAND AREA...... 7.8 Acres YEAR BUILT...... 1976/1995 PARKING*...... 390 (3.37/1,000 SF) ANCHORS...... Safeway, Dollar Tree, Ace Hardware *Parking is approximate and based on a manual count

Address: 1025-1061 SW 1st Avenue, Canby, OR 97013

Canby Square | 2 Core Characteristics

Excellent in-place yield

The Property is underwritten on in-place income with a true going in yield of 9.00%. Once the vacancy is absorbed and lease up costs are incurred the yield is north of 12% at 95% occupancy. The bay depths of the strip portion of the center are approximately 60 feet deep and the size of the spaces are adequate for a wide array of tenants. The existing monument sign provides an anchor or Jr. anchor excellent signage opportunity as well. ADD-VALUE Grocery anchored with rent increases Canby Square is anchored by Safeway who has occupied since 2002 and has a lease expiration of 2023. Safeway Opportunity has a unique lease structure that’s advantageous to a buyer, considering they have 5% rental increases every 3 years. The option terms are fixed with 5% rent increases every 5 years.

Additional Anchors In addition to Safeway, the Property is co-anchored by Dollar Tree and Ace Hardware. Ace Hardware has been a stable tenant at the Property for nearly 10 years and is paying just $6.60/SF with fixed rent escalations of upside through 10% in each of their available 5 year option periods. In addition, Dollar Tree has been doing well at this leasing-up and location and recently executed their last remaining 5 year extension option. Both tenants report sales and repositioning their health ratios are profitable (contact Capital Pacific for more information). Rite Aid vacated the center in 2009 and has been consistently paying rent since that time and their primary term is scheduled to expire in February 2014. Rite Aid constructed a free standing location about 1.25 miles northwest of Canby Square. Rite Aid officially submitted notification that they will not be renewing and that their lease will expire February 1, 2014.

Canby Square | 3 Core Characteristics Cont.

Priced Below Replacement Cost

Canby Square is priced significantly below replacement cost at $75 a foot which, combined with an above market yield of 9.00%, an investor is well positioned to be highly competitive in renewing existing tenants and attracting new ones. Highway 99 PAD SITE POTENTIAL There is an existing 4,000 square foot building located near the signalized interchange of SW 1st Avenue visibility and SW Berg Parkway. The space was previous occupied by a restaurant and can either be leased for a similar use or torn down and reconstructed as multi-tenant or single tenant build-to-suit. No value has been attributed to the vacant building in our analysis.

retail lOCATION main arterial Canby Square is located at the south end of Canby off Highway 99E which is the main retail arterial connecting Canby to that runs through Canby and connects to Oregon City and West Linn to the north. Canby, OR is Portland MSA approximately 5 miles east of Interstate 5 which is a major highway connecting to Portland, OR just 20 miles to the north.

Canby Square | 4 Financial Summary Canby Square

Offered Free and clear of debt IN-PLACE STABILIZED The Property is offered free and clear of any Purchase Price (Includes Remaining Rite Aid Payments): $8,739,000 $8,739,000 existing debt. A10 Capital has reviewed and Rite Aid Rent (NPV discounted @ 10%): $69,000 prequalified this property for acquisition Price Before Rite Aid $8,670,000 and lease-up financing under the following Leasing Costs: $973,000 terms: Total Investment $9,712,000 Capitalization Rate 9.00% 12.09% - Non-Recourse Price Per Foot: $75 $84 - Up to 65% Purchase Price + Capital NET OPERATING INCOME SUMMARY Expenditures Plus: Stabilized Income Per SF - Lease-Up Facility to Fund up to 100% of Scheduled Rent: 11/1/2013 $8.04 $930,048 $1,286,090 TI/LC Costs to Re-Stabilize the Property Plus: Rent Increases Thru 10/31/2013 $0.05 $6,049 $6,049 - Terms of up to 5 Years Plus: Expense Reimbursement $1.61 $186,774 $297,527 Equals: Scheduled Gross Income $9.70 $1,122,871 $1,589,666 Current │ Proforma Vacancy 33% 5% ($79,483) Equals: Effective Gross Income $9.70 $1,122,871 $1,510,183 For more information please contact KURT GREGG Per SF Less: OPERATING EXPENSES A10 Capital CAMS $1.02 $118,323 $118,323 Property Taxes $1.36 $157,314 $157,314 350 North 9th Street, Suite 400 Insurance $0.03 $3,587 $3,587 Boise, ID 83702 Management Fee 3.0% of EGI $0.39 $45,305 $45,305 W 208-577-5019 Reserves $0.10 $11,570 $11,570 [email protected] Total Operating Expenses ($2.90) ($336,100) ($336,100)

Equals: NET OPERATING INCOME $786,771 $1,174,083

LEASING COSTS TIs - Leasing Concessions $20 /SF $755,000 Leasing Commissions 6% 5 Year $107,000 CAMs on Vacancy 1 Year $111,000 TOTAL LEASING COSTS $973,000

Canby Square | 5 Canby Square

Rent Roll

LEASE TENANT INFO LEASE TERMS CURRENT RENT RENT INCREASES OPTIONS TYPE Occupancy Lease Monthly Date of Monthly Tenant Name Suite Size % of SF Rent/SF/YR Date Monthly Date Expiration Base Rent Increase Base Rent Safeway 1051 46,293 40.01% 8/7/02 8/31/23 $45,641 $11.83 8/14/14 $47,913 Twelve 5 Year: NNN comments: Tenant is not obligated to operate and Landlord may terminate the 8/14/17 $50,305 5% Increases lease if the Tenant ceases to operate after one year by giving 30 days notice and 8/14/20 $52,851 240 days notice paying a recapture fee equal to the unamortized value of any leasehold improvements contracted by the Tenant. Tenant is responsible for the roof membrane. Tenant will inherit exclusive right to operate a pharmacy if Rite Aid terminates. Vacant 1025 27,465 23.74% 7/15/91 2/1/14 $16,845 $7.36 6 Five Year: NNN comments: Rite Aid went dark 5/20/2009 and will not renew in February. Fixed Currently paying $7.36/SF/YR and has exclusive right to operate pharmacy. 90 days notice Dollar Tree 1057 8,438 7.29% 7/26/02 8/31/17 $7,657 $10.89 None NNN comments: Co-tenancy with Safeway. If Safeway or successor vacates, Base Rent shall abate to 50% of contract; may terminate if still vacant after 6 months or continue paying rent abatement. Canby Ace Hardware 1061 14,785 12.78% 4/4/05 7/31/15 $8,132 $6.60 Three 5 Year: NNN comments: Must give notice to extend 90 days prior to expiration of the initial 8/1/15 $8,945 term. 8/1/20 $9,832 8/1/25 $10,818 Vacant 1001 2,250 1.94% $2,813 $15.00 Two Five Year: NNN comments: Formerly occupied by Quizno's FMV 360 Days Notice Sun's up Tanning 1007 1,425 1.23% 3/8/10 7/31/15 $2,417 $20.35 One 5 Year: NNN comments: 8/1/15 $2,672

Los Dorado's 1011 2,990 2.58% 5/1/03 4/30/15 $6,062 $24.33 5/1/14 $6,305 None NNN comments: Tenant pays percentage rent of 6% of natural breakpoint.

Angel's Nails 1013 1,320 1.14% 6/16/11 9/30/16 $1,634 $14.85 10/1/14 $1,683 One 5 Year: NNN comments: 10/1/15 $1,734 3% Annual Increases Vacant 1015 1,050 0.91% $1,313 $15.00 NNN comments:

Vacant 1017 2,115 1.83% $2,468 $14.00 NNN comments:

US Army 1019 1,800 1.56% 1/15/08 7/31/17 $3,851 $25.67 None Gross comments: Tenant has right to terminate with 90 days notice.

Smoke For Less 1021 900 0.78% 1/1/03 12/31/17 $1,811 $24.15 1/1/17 $1,859 NNN comments: Tenant recently executed 5 year renewal. Tenant pays percentage rent of 6% over natural breakpoint. Vacant 1023 870 0.75% $1,233 $17.00 NNN comments:

Vacant 1075 4,000 3.46% $5,000 $15.00 NNN comments: Free Standing Corner Pad that faces Hwy 99.

Goodwill 0.00% $300 NA NNN comments: Goodwill collection container license agreement. $300/mo. Either party may terminate agreement with 15 days notice. Totals: 115,701 100% $107,174 $11.12 Occupied 77,951 67% $77,504 Leasable 37,750 33% $29,670

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. Buyer must verify the information and cANBY sQUARE | 6 bears all risk for any inaccuracies. Operating Expenses Canby Square

2013 OPERATING BUDGET REIMBURSEMENTS Total $/SF Comments In-Place Stabilized

CAM Pool 1 Insurance Premiums $11,387 Landscaping $14,311 Parking $5,130 Property Services $39,450 Repair & Maint. $1,194 Utilities $26,478 Based on 2012 Actuals with a 3% Total $97,950 $0.85 increase. $64,468 $96,427

CAM Pool 2 Property Services $6,706 Repair & Maint. $7,784 Roof $5,883 Based on 2012 Actuals with a 3% Total $20,373 $0.18 increase. $6,833 $17,913

Based on most recent tax statement on Property Taxes $157,314 $1.36 $103,539 $154,867 record with Clackamas County.

Insurance $3,587 $0.03 Based on 2012 Actuals with a 3% increase. $2,554 $3,433

Based on 3% of Stabilized Effective Gross Management Fee $45,305 $0.39 Income (EGI). Reimbursements include $9,380 $24,887 Admin Fees collected.

Reserves $11,570 $0.10 Based on $.10/SF $0 $0

Total Expenses $336,100 $2.90 $186,774 $297,527

This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or Canby Square | 7 implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. Canby Square

Reimbursements

CAM Pool 1 CAM Pool 2 Property Taxes Insurance Management Administrative Pro Rata Expense Pro Rata Expense Pro Rata Expense Pro Rata Expense Pro Rata Expense Admin. Admin. Tenant Name Notes % Total % Total % Total % Total % Total Fee Collected Expense Total $97,950 $20,373 $157,314 $3,587 $45,305 Safeway 40.0% $39,191 - - 40.0% $62,943 - - 40.0% - 10% $657 1

Vacant 23.7% $23,251 39.6% $8,062 23.7% $37,343 - - 23.7% $10,755 - -

Dollar Tree 7.3% $7,143 12.2% $546 7.3% $11,473 20.1% $722 7.3% - 10% $841 2

Canby Ace Hardware 12.8% $12,517 21.3% $4,340 12.8% $20,103 35.3% $1,264 12.8% $2,808 - - 3, 4

Vacant 1.9% $1,905 3.2% $660 1.9% $3,059 5.4% $192 1.9% $1,350 10% $257 5, 6

Sun's up Tanning 1.2% $1,206 2.1% $418 1.2% $1,938 3.4% $122 1.2% $558 15% $244 7

Los Dorado's 2.6% $2,531 4.3% $878 2.6% $4,065 7.1% $256 2.6% $2,910 - - 6

Angel's Nails 1.1% $1,117 1.9% $387 1.1% $1,795 3.1% $113 1.1% $784 15% $226 6, 7

Vacant 0.9% $889 1.5% $308 0.9% $1,428 2.5% $90 0.9% $411 - -

Vacant 1.8% $1,791 3.0% $621 1.8% $2,876 5.0% $181 1.8% $828 - -

US Army 1.6% - 2.6% - 1.6% - 4.3% - 1.6% - - -

Smoke For Less 0.8% $762 1.3% $264 0.8% $1,224 2.1% $77 0.8% $352 - - 8

Vacant 0.8% $737 1.3% $255 0.8% $1,183 2.1% $74 0.8% $341 - -

Vacant 3.5% $3,386 5.8% $1,174 3.5% $5,439 9.5% $342 3.5% $1,566 - - TOTAL 100% $96,427 100% $17,913 100% $154,867 100% $3,433 100% $22,663 $2,224

Notes: 1) 10% Admin Fee on CAMs (excluding insurance, utilities, and maintenance items in excess of $10,000). 2) CAMs shall not increase more than 5% per year on a non-cumulative basis. Amount billed in 2012 for CAMs was $7,323. 3) CAMs and Management are fixed at $1.33/SF for the initial term with 10% increases for each renewal period. 4) Tenant pays Management Fee equal to 10% of CAMs and Insurance. 5) 10% Admin Fee on CAMs 6) Management Fee equal to 4% of Base Rent. 7) 15% Admin Fee on CAMs 8) Tenant pays pro rata share of Management not to exceed 4% of Gross Shopping Center Rent.

This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or Canby Square | 8 implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. High Trafficked Location Aerial Located directly off highway 99E which is the main retail arterial that runs through Canby and connects to Oregon City and West Linn to the north. N Ivy Street

S Knights Bridge Road

SE 1st Avenue 99E

21,900 DAILY Canby Square

S Township Road

S Ivy Street

SW 1st Avenue 99E

SW 13th Avenue

PORTLAND 25 miles

Canby Square | 9 Site

3 ingress/egress access point

SW Berg Pkwy Canby Place Canby High School

®

SW 4th AVENUE

SE 1st AVENUE 99E

18,990 DAILY

Excellent ILY Visibility DA 5,550 from Highway 99

Canby Square | 10 Site Plan

Site Plan Key

Parcel outline:

Land Area: 7.8 Acres SW 4th Avenue Building Area: 115,701 sf 18,990 vpd

Leased nap Vacant SW 1st Avenue

99E Tenant breakdown VACANT

Sun’s Up Tenant Suite Size Tanning Vacant 1001 2,250 Sun's up Tanning 1007 1,425 Vacant Los Dorados Los Dorado's 1011 2,990 Angel's Nails 1013 1,320 Angel’s Nails Vacant 1015 1,050 VACANT Vacant 1017 2,115 US Army 1019 1,800 VACANT Smoke For Less 1021 900 Vacant 1023 870 Dept. of Army

5,550 vp d Smoke for Less VACANT

Tenant breakdown 2009 Rite Aid went dark in Tenant Suite Size and has been consistently paying Safeway 1051 46,293 Vacant 1075 4,000 rent ever since. Their primary Vacant 1025 27,465 Vacant 2/2014. Dollar Tree 1057 8,438 term will terminate Canby Ace Hardware 1061 14,785 SW Berg Parkway

Canby Square | 11 Safeway

10 years remain on lease

About Safeway BBB Safeway, Inc., together with its subsidiaries, operates as a food and drug retailer in North America. The company operates stores that provide an array of dry grocery items, food, and general merchandise, as well as features specialty departments, Investment Grade such as bakery, delicatessen, floral, and pharmacy, as well as coffee shops and fuel centers. Standard & Poor The company was founded in 1915. Safeway is based in Pleasanton, .

NYSE 2012 REVENUE NUMBER OF LOCATIONS SFW $44.2 BILLION 1,641 (US & Canada)

Canby Square | 12 Ace Hardware

About ACE Hardware Founded in 1924 by a small group of Chicago hardware store owners, Ace changed the retail landscape by allowing individual stores to purchase merchandise in bulk to save money and buy at the lowest possible price. This partnership enabled even the smaller stores to compete effectively at retail despite larger stores in their market. To this day, Ace Hardware Corporation is still owned solely and exclusively by the local Ace retail entrepreneurs. Over 4,600 of Ace’s 4,700 stores around the globe are independently owned and operated by local entrepreneurs. Ace stores offer a wide variety of paint, lawn and garden, tools, local niche services and virtually anything you’ll ever need to fix, repair and maintain your home.

2012 REVENUE NUMBER OF LOCATIONS $3.8 BILLION 4,7000 (Globally)

Canby Square | 13 Excerpt: CEO Letter Address to Shareholders Dollar Tree On behalf of all Dollar Tree Associates I am pleased to report that 2012 was another year of record results for Dollar Tree. Net sales increased 11.5% to $7.39 billion. Comparable-store sales increased 3.4% on top of a 6.0% comparable-store sales increase last year. Earnings increased to a record $2.68 per diluted share compared with $2.01 earnings per diluted share in 2011. In a tough and competitive environment, we achieved operating margin of 12.4%, compared with 11.8% last year. Additionally, operating income increased by $138.0 million, and net income rose 26.8%, to $619.3 million.

We continue to grow our business and improve upon key operational metrics. In 2012, we expanded selling square footage 7.7%, ending the year with 4,671 stores across 48 U.S. states and five Canadian provinces. Meanwhile, we achieved the highest new store productivity since 2001 and increased inventory turns for the eighth consecutive year. To support future growth, we broke ground on our new Distribution Center in Windsor, Connecticut. Dollar Tree Associates can take pride in all that we accomplished, together, in 2012.

Looking forward, we are excited about our potential to grow through increasing our relevance to the customer. We plan to continue expanding our business by providing even more value to a broader range of customers. We are doing this in many ways. The first way is by building more New Stores. Dollar Tree has grown every year since our founding in 1986, and we have plenty of room to grow in the years ahead. In fiscal 2012 we opened 345 new stores and relocated or expanded 87 stores for a total of 432 projects – including 30 projects in January 2013. In the About Dollar Tree past, we have chosen not to open stores in January, but that is changing. In fiscal 2012, due to the efficiency of our store development teams, we accelerated the opening of 25 new stores and 5 relocations from early fiscal 2013 into Dollar Tree, Inc. is the world’s leading operator of January, and we like the results. Our plan for fiscal 2013 includes approximately 340 new stores and 75 relocations for $1 price point variety stores. The Company also a total of 415 projects across the U.S. and Canada. offers value merchandise at prices above $1 at its 194 Deals stores and at prices of $1.25 (CAD) at its 140 stores in Canada. Dollar Tree operates more than 4,600 stores across the 48 contiguous United States and five Canadian provinces. The stores are bright, conveniently-located and fun to shop. We offer an ever changing assortment of merchandise at surprising values. The stores are supported by a coast-to-coast logistics network and more than 80,000 associates. A Fortune 500 Company, Dollar Tree has served North America for more than twenty-six years. The Company is headquartered in Chesapeake, Virginia.

Dollar Tree continues to grow and is reaching new customers at www.dollartree.com.

Canby Square | 14 Construction Details

Address 1025-1061 SW 1st Ave, Canby, Or 97013

County Clackamas

Owner Kimco

Year Built 1976/1995

Rentable Area 115,701 SF

Occupancy 67%

Zoning Fire Protection Highway Commercial (HC): Multiple uses permitted with this designation including department 100% Sprinklered stores, service/gas stations, restaurants, hotels, and other similar uses.

Parking Accessibility/Exposure The property is provided with a total of 390 parking spaces, of which 9 were designated as Vehicles access property by 3 designated driveways from Highway 99E and two entries from SW handicap accessible which meets ADA requirements. This equates to 3.37 Berg Parkway. The southernmost driveway on SW Berg Parkway allows for access to loading areas.

Foundation Foundation construction could not be verified while on-site due to hidden conditions. However, Exterior Walls/Doors detailed observations of the exterior walls revealed no apparent signs of cracking or movement CMU exterior load-bearing walls. The ground floor of each building is a cast-in-place concrete that would indicate excessive settlement or an improperly installed foundation system. Based on slab-on-grade. The mezzanine floor framing of the anchor tenants consists of a plywood deck these observations, the foundations appear to be adequate and in good condition. supported by wood joists, wood beams, steel pipe columns and CMU walls.

Exterior Walls Floor Coverings CMU exterior load-bearing walls. The ground floor of each building is a cast-in-place concrete The floors in each building are covered primarily with vinyl resilient floor covering, vinyl floor tiles, slab-on-grade. The mezzanine floor framing of the anchor tenants consists of a plywood deck carpeting and ceramic tile. supported by wood joists, wood beams, steel pipe columns and CMU walls.

Roof Interiors The primary roofing system of the East and South Buildings consists of an asphalt built-up roof The interior walls in each building consist primarily of painted gypsum wallboard, ceramic tile (BUR) with mineralized cap sheet surfacing. The condition of the roof of the West Building could and wall paper. The ceilings in each building consist primarily of suspended ceiling panels and not be determined due to lack of access. painted gypsum drywall.

Heat/AC The buildings are heated and cooled by variously positioned roof-mounted package units (gas- fired heating and electric cooling). A total of 22 package units were observed.

Canby Square | 15 Location & Demos can by , o r

Canby Area Overview Median Income

Canby is separated from its larger urban neighbors by a stretch of farmland in rolling hills and fields. Entering Canby from above Portland MSA the north brings visitors past the , and from the south through the historic community of Aurora. Oregon Route 99E bisects the city from east to west. East-west streets are generally numbered, with Highway 99E being considered South 1st street, where the subject property is located. The town is divided from east to west by Clackamas County Hwy. 170 (in town Highway 170 is known as Ivy St. and just out of town it is known as the Canby-Marquam Hwy.). Another of Canby’s major thoroughfares, Knights Bridge Rd., yields access to Interstate 5.

Major Employers

Growing consumer market Fred Meyer 250 Over the past five years, Canby has seen substantial public Johnson Controls 224 vancouver, wa and private investment, totaling nearly $100 million. Kendal Floral 198 Existing and future retail demand shows opportunities JV Northwest 140 5 for retail growth in many niches, including general merchandise, apparel and restaurants. The City of Canby MEC NW 140 portland is a strong partner with the business community, offering Marquis Care 105 several programs and incentives to strengthen the Shimadza USA Manufacturing 113 business base and continue infrastructure improvements Wilson Construction 106 throughout the city. SR Smith llc 86 35 Minutes 25 Miles Cutsforth Thriftway 75 5 American Steel 75 Canby Population Household incomes 1-Mile 3-Miles 5-Miles 2010 7,858 19,463 37,266 1-Mile 3-Miles 5-Miles 2012 7,810 19,412 37,609 Median $49,548 $53,477 $57,375 2017 7,831 19,567 38,673 Average $59,898 $66,524 $73,480 Canby Square | 16 A unique HUMAN The capital pacific experience - our daily commitment to our clients RESULTS-DRIVEN client experience [ www.CapitalPacific.com ]

Michael Horwitz Kevin Adatto Sean Tufts [email protected] | (503) 675-8381 [email protected] | (503) 675-7726 [email protected] | (206) 743-8468

Sean Mack Scott Frank Baylor Gordon [email protected] | (503) 675-8378 [email protected] | (503) 675-8383 [email protected] | (206) 457-8960

Peter Dunn [email protected] | (503) 607-0197