OFFERING MEMORANDUM Capital Markets | Investment Properties Affiliated Business Disclosure CBRE, Inc
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SACRAMENTO, CALIFORNIA OFFERING MEMORANDUM Capital Markets | Investment Properties Affiliated Business Disclosure CBRE, Inc. operates within a global family of companies with many Additional information and an opportunity to inspect the Property subsidiaries and/or related entities (each an “Affiliate”) engaging in will be made available to interested and qualified prospective a broad range of commercial real estate businesses including, but not purchasers. In this Memorandum, certain documents, including limited to, brokerage services, property and facilities management, leases and other materials, are described in summary form. These valuation, investment fund management and development. At times summaries do not purport to be complete nor necessarily accurate different Affiliates may represent various clients with competing descriptions of the full agreements referenced. Interested parties interests in the same transaction. For example, this Memorandum are expected to review all such summaries and other documents of may be received by our Affiliates, including CBRE Investors, Inc. or whatever nature independently and not rely on the contents of this Trammell Crow Company. Those, or other, Affiliates may express Memorandum in any manner. an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may Neither the Owner or CBRE, Inc, nor any of their respective directors, be the successful bidder for the Property. You hereby acknowledge officers, Affiliates or representatives make any representation or that possibility and agree that neither CBRE, Inc. nor any involved warranty, expressed or implied, as to the accuracy or completeness Affiliate will have any obligation to disclose to you the involvement of this Memorandum or any of its contents, and no legal of any Affiliate in the sale or purchase of the Property. In all instances, commitment or obligation shall arise by reason of your receipt of however, CBRE, Inc. will act in the best interest of the client(s) it this Memorandum or use of its contents; and you are to rely solely represents in the transaction described in this Memorandum and on your investigations and inspections of the Property in evaluating will not act in concert with or otherwise conduct its business in a possible purchase of the real property. a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business The Owner expressly reserved the right, at its sole discretion, to in a manner consistent with the law and any fiduciary duties owed reject any or all expressions of interest or offers to purchase the to the client(s) it represents in the transaction described in this Property, and/or to terminate discussions with any entity at any Memorandum. time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or Confidentiality Agreement obligation to any entity reviewing this Memorandum or making an This is a confidential Memorandum intended solely for your limited offer to purchase the Property unless and until written agreement(s) use and benefit in determining whether you desire to express for the purchase of the Property have been fully executed, delivered further interest in the acquisition of the Property. and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of By receipt of this Memorandum, you agree that this Memorandum affairs of the Property or the owner of the Property (the “Owner”), and its contents are of a confidential nature, that you will hold and to be all-inclusive or to contain all or part of the information which treat it in the strictest confidence and that you will not disclose prospective investors may require to evaluate a purchase of real this Memorandum or any of its contents to any other entity without property. All financial projections and information are provided for the prior written authorization of the Owner or CBRE, Inc. You also general reference purposes only and are based on assumptions agree that you will not use this Memorandum or any of its contents relating to the general economy, market conditions, competition in any manner detrimental to the interest of the Owner or CBRE, and other factors beyond the control of the Owner and CBRE, Inc. Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All If after reviewing this Memorandum, you have no further interest in references to acreages, square footages, and other measurements purchasing the Property, kindly return this Memorandum to CBRE, are approximations. Inc. 2 • pavilions 05 Executive Summary 15 Property Overview 23 Financial 41 Tenant Profiles 47 Area Overview 53 RANDY GETZ STEVE EDWARDS Market Trends Executive Vice President President Lic. 00828903 Lic. 00977718 +1 916 446 8287 +1 916 277 8123 [email protected] [email protected] CBRE, Inc. The Edwards Company 500 Capitol Mall 301 University Avenue Suite 2400 Suite 140 Sacramento, CA 95814 Sacramento, CA 95825 pavilions • 3 4 • pavilions Executive Summary pavilions • 5 CBRE, Inc. is pleased to offer the opportunity to acquire Sacramento’s truly iconic boutique shopping destination – Pavilions Center. Located on Fair Oaks Boulevard just east of Howe Avenue, Pavilions is a retail landmark that features a variety of superb restaurants and specialty shops catering to a clientele that can afford the best in food, clothing, accessories, and personal services. With a level of attention to maintenance and cleanliness seldom encountered at other shopping venues, time spent at Pavilions is more than an outing, it’s an experience. The asset is priced at $25,625,000 ($334 per square foot), which represents a 7.5% capitalization rate on projected first year income. The Center is 95.2% leased to 22 tenants with two shop spaces presently available. An Argus™ discounted cash flow analysis projects that if the asset is held for 10 years and then sold, annual yields could average 10.6% on a cash basis, and 17.0% if leverage is employed as in our model. Built in 1984 by preeminent Sacramento developer Robert Powell, Pavilions quickly became known for its attention to detail, meticulous cleanliness, manicured landscaping, lavish holiday decorations, and valet parking and day porter staff attired in distinctive red and white-striped shirts. In the 34 years since, Pavilions has had only two owners. Now there is an opportunity for someone new to carry on Pavilions’ traditions of outstanding service to its tenants and their customers by acquiring this distinctive and unique property. 6 • pavilions OFFERING SUMMARY Property type Specialty Retail Property name Pavilions Center 500-581 Pavilions Lane, Address Sacramento, CA 95825 Net rentable area 76,719 square feet Current occupancy 95.2% Offering price (psf) $25,625,000 ($334 psf) Capitalization rate 7.5% on projected year-one NOI Projected annual yields Cash: 10.6% Leveraged: 17.0% (Argus™ 10-year DCF analysis) pavilions • 7 Investment Highlights • Sacramento’s premier upscale boutique shopping destination since 1984. • A synergistic blend of tenants offering food, apparel, accessories, and personal services to some of Sacramento’s most discerning shoppers. • Offered at $25,625,000, which represents a 7.5% capitalization rate on projected first year net operating income. • The Center is 95.2% leased to a group of experienced, successful proprietors who specialize in quality products and nonpareil customer service. • Rents and expense reimbursements are among the most robust of any retail center in Sacramento. • Outstanding location on Fair Oaks Boulevard between Howe Avenue and Munroe Street. Average daily traffic on Howe at Fair Oaks is 47,551 and on Fair Oaks at University is 30,410 for a total of 77,961 per day. 1 • Affluent neighborhood demographics: Within a five-mile radius 12.5% - nearly 19,000 households - have annual incomes that exceed $100,000, and within one mile 9% of household incomes exceed $200,000. • Internet-resistant tenants feature food, apparel and personal services, with annual sales averaging $514 per square foot. • Julius Clothing, Hamilton Jewelers, Madam Butterfly, Patrick James and several other tenants are exclusive to Pavilions, with some customers traveling as much as 100 miles to patronize these establishments. 8 • pavilions 1 Sacramento County 2016 data TENANT SUMMARY Tenant SF Leased Tenant Since Expires Base Rent psf2 Madam Butterfly 1,500 Jul. 1998 Jun. 2023 $48.00 Ruth’s Chris Steak House 7,200 Dec. 2005 Mar. 2021 $34.28 It’s A Small World 850 Sep. 2006 m-t-m $24.00 Hamilton Jewelers 1,650 Aug. 1985 Jan. 2022 $46.73 Soma Intimates 2,500 Jan. 2014 Jan. 2024 $40.00 Eyeglass Charlie’s 711 Jun 2015 Jun 2020 $43.87 Chico’s 3,000 May 2014 Apr. 2024 $40.00 Café Bernardo 3,780 Aug. 2013 Aug. 2023 $36.00 Williams-Sonoma 9,575 Oct. 1998 Jan. 2024 $34.98 Studio 55 6,510 Jan. 2013 Nov. 2023 $25.20 Patrick James 2,845 Jan. 2011 Jan. 2020 $33.00 Gregory Evrigenis, DDS 2,700 Sep. 1998 Jan. 2020 $35.64 Wildwood Kitchen & Bar 3,627 Aug. 2016 Jul. 2026 $39.00 J. Jill 4,225 Feb. 2012 Feb. 2022 $29.91 Pure Barre 1,898 Oct. 2017 Oct. 2022 $37.80 Paper Garden 1,100 Jan. 2012 Dec. 2021 $45.00 Pavilion Shoes & Gifts 1,700 Aug. 2014 m-t-m $17.16 Ristoranti Piatti 5,890 Jun. 2002 May 2022 $39.60 Julius Clothing 4,200 Sep. 1999 Aug. 2022 $35.00 Talbots 7,600 Feb. 2003 Jan. 2020 $42.00 2 Does not include reimbursements or percentage rent pavilions • 9 Area Overview Sacramento, California is the capital of the most populous state in America, and its roughly 2.2 million residents make Sacramento the 25th largest market in the country.