HARKINS THEATRES ARIZONA PAVILIONS 12 5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA | 85743
±45,595 SF SINGLE TENANT NET LEASED INVESTMENT PRICE: $8,995,000 CAP RATE: 7.60%
OFFERING MEMORANDUM AFFILIATED BUSINESS DISCLOSURE
Newmark Knight Frank (the “Agent”) has been engaged as the exclusive sales representative for the sale of 5755 West Arizona Pavilions Drive, Tucson, Arizona 85743 (the ”Property”) by ‘Ownership’ (the “Seller”).
This Memorandum does not constitute a representation that the business or affairs of the Property or Seller since the date of preparation (7/2/19) of this Memorandum have remained the same. Analysis and verification of the information contained in this Memorandum are solely the responsibility of the prospective purchaser.
Additional information and an opportunity to inspect the Property will be made available upon written request of interested and qualified prospective purchasers. Seller and Agent each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the Property, and/or terminate discussions with any party at any time with or without notice. Seller reserves the right to change the timing and procedures for the Offering process at any time in Seller’s sole discretion. Seller shall have no legal commitment or obligations to any party reviewing this Memorandum, or making an offer to purchase the Property, unless and until such offer is approved by Seller, and a written agreement for the purchase of the Property has been fully executed and delivered by Seller and the Purchaser thereunder.
This Memorandum and the contents, except such information which is a matter of public record or is provided in sources available to the public, are of a confidential nature. By accepting this Memorandum, you agree that you will hold and treat it in the strictest confidence, that you will not forward, photocopy or duplicate it, that you will not disclose this Memorandum or any of the contents to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether or not to make a proposal and from whom you have obtained an agreement of confidentiality) without the prior written authorization of Seller or Agent, and that you will not use this Memorandum or any of the contents in any fashion or manner detrimental to the interest of Seller or Agent. PREPARED BY 01 EXECUTIVE SUMMARY
TIM WESTFALL RYAN MORONEY FINANCIAL & LEASE Managing Director Associate Director 02 +1 602 952 3822 +1 602 952 3820 SUMMARY [email protected] [email protected]
03 TENANT PROFILE
04 AREA OVERVIEW
TABLE OF CONTENTS
EXECUTIVE SUMMARY THE OFFERING Newmark Knight Frank (NKF), as exclusive advisor, is pleased to present the opportunity to acquire the Harkins Arizona Pavilions 12 (the Property), a 45,595-square-foot theater in Tucson, Arizona.
This single-story building is located on ±6.74 acres in the Marana submarket.
Harkins Pavilions 12 is part of Arizona Pavilions – a major retail core for northwest Tucson, located just off Interstate 10 at Cortaro Road, in the growing community of Marana, located 15 minutes from Downtown Tucson and the University of Arizona.
Marana, Tucson MSA’s fastest growing community, boasts strong income in the area ($80K+ within 3 miles) with heavy traffic (85K+ AADT on Interstate10).
6 HARKINS THEATRES ARIZONA PAVILIONS 12 EXECUTIVE SUMMARY
NORTH CORTARO ROAD EXECUTIVE SUMMARY
PROPERTY NAME Harkins Arizona Pavilions 12 5755 West Arizona Pavilions Drive BUILDING ADDRESS Tucson, Arizona 85743 PRICE $8,995,000.00
CAP RATE 7.60%
NOI / ANNUALLY $683,925.00 (as of July 2019) TENANT Harkins Theatres
LEASE GUARANTOR Harkins
TYPE OF OWNERSHIP Fee Simple
ARIZONA PAVILIONS DRIVE LEASE TYPE NNN Lease
ROOF + STRUCTURE Landlord is responsible
LEASE COMMENCEMENT 5/2/2013
LEASE EXPIRATION 4/30/2028
REMAINING TERM 8.75 Years from July 1, 2019 10% every 5 years with 2% annual increases INCREASES in the options LEASE OPTIONS Three 5-year options
YEAR BUILT 2007
TOTAL BUILDING AREA ±45,595
LAND AREA ±6.74 AC
5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA 7 OFFERING HIGHLIGHTS
Located within a regional intersection Proximity to the I-10 Freeway – Harkins that includes major retailers like can be seen by over 85,000 vehicles per Walmart Supercenter, LA Fitness, Kohl’s, day LOCATED WITHIN HomeGoods, TJ Maxx, & Ross PROXIMITY TO I-10 REGIONAL ±85,000 VPD INTERSECTION
Harkins is the top theatre operator in the Harkinsinvested $4M+ into the premises stateof Arizona with 26 locations (most of when their lease started in 2013 any operator in the state) and 34 in total TOP THEATER IN AZ HARKINS INVESTED WITH 26 LOCATIONS $4M INTO THE (34 IN TOTAL) PREMISES
Doubledigit year-over-year sales growth 300,000+ people within a 15-minute since opening in 2013 drive of site
DOUBLE DIGIT 300,000+ PEOPLE YEAR-OVER-YEAR WITHIN 15 MINUTES SALES GROWTH OF THE SITE (SINCE 2013)
Located adjacent to the fully built-out Steady increase in sales YOY since ContinentalRanch & Gladden Farms master theatreopening in 2013, including a 20% plannedcommunities – 16,677 households increase from 2016 - 2018 16,600+ within a 3-mile radius of site STEADY SALES HOUSEHOLDS INCREASES YOY WITHIN 3 MILES
8 HARKINS THEATRES ARIZONA PAVILIONS 12 5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA 9
FINANCIAL & LEASE SUMMARY 12 HARKINS THEATRES ARIZONA PAVILIONS 12 FINANCIAL & LEASE SUMMARY
FINANCIAL SUMMARY 5755 West Arizona Pavilions Drive BUILDING ADDRESS Tucson, Arizona 85743 PRICE $8,995,000.00
CAP RATE 7.60%
NOI / ANNUALLY $683,925 (as of July 2019) TOTAL BUILDING AREA ±45,595
LAND AREA ±6.74 AC
YEAR BUILT 2007
FINANCING Free & Clear
LEASE SUMMARY
TENANT Harkins Theatres
LEASE GUARANTOR Harkins
LEASE TYPE NNN Lease
NOI / ANNUALLY $683,925 (as of 7/2/2019) RENT PER SF $15.00
TENANT RESPONSIBILITY Tenant shall keep and maintain the Premises and Premises’ Improvements, including maintenance of interior and exterior building, all maintenance/repair of HVAC, plumbing and electrical systems. LANDLORD RESPONSIBILITY Roof and structure
LEASE COMMENCEMENT 5/2/2013
LEASE EXPIRATION 4/30/2028
ORIGINAL LEASE TERM 15 Years
REMAINING TERM 8.75 Years as of July 1, 2019
LEASE OPTIONS Three 5-Year Options
RENTAL INCREASES 5/1/2023:10% increase 2% annual increases during lease options
5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA 13 INVESTMENT OVERVIEW The Harkins Arizona Pavilions 12 is located in Tucson, Arizona. The ±45,595 SF building on ±6.74 acres provides 12 screens for moviegoers INVESTMENT HIGHLIGHTS surrounding the Tucson-Marana metropolitan area.
The NNN lease has 8.75 years remaining on its original 15 year term. There are 3 – 5 year options with increases. The opportunity will yield a passive 7.60% to a qualified investor. Long term, stable cash flow make this an ideal 1031 exchange.
TENANT 2007 Harkins Year Built Theatres
45,595 SF 6.74 AC Building Size Total Lot size
GUARANTEE 12 Corporate Signature Screens
14 HARKINS THEATRES ARIZONA PAVILIONS 12 ARIZONA PAVILIONS DRIVE
5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA 15 Future Carondolet Microhospital & Dutch Brothers
NORTH CORTARO ROAD
ARIZONA PAVILIONS DRIVE
16 HARKINS THEATRES ARIZONA PAVILIONS 12
TENANT PROFILE Screens 12 Lease Expiration 2028 SF Leased 100% Website harkins.com
Harkins Theatres is a privately owned and operated business, founded and based in Arizona since 1933. With 34 locations in 5 states, Harkins Theatres is the 5th largest theatre chain in North America. With more than 80 years of colorful history, Harkins Theatres remains the Southwest’s premier entertainment company.
Today, Harkins Theaters is over 500 screens #1 MARKET 5TH LARGEST 34 LOCATIONS $150M RECENT strong and growing with 6.4% growth year SHARE IN AZ THEATER CHAIN IN 5 STATES INVESTMENT over year compared to 2.5% industry-wide. 34 locations in 5 With annual attendance exceeding the Harkins has 5th largest states: Arizona, $150M recent capacity of Arizona’s top 25 venues combined, more locations theater chain California, than any other in the United Oklahoma, Harkins’ capital Harkins is the Southwest’s first choice for theatre in States with solid Texas and investment into entertainment and movie-going experience. Arizona growth plan Colorado existing theatres
19 HARKINS THEATRES ARIZONA PAVILIONS 12 LEASE ABSTRACT
HARKINS ARIZONA PAVILIONS 12 CONTRACT DATA
TENANT Harkins Arizona Pavilions 12 TENANT Harkins Theatres 5755 West Arizona Pavilions Drive ADDRESS COMMENCEMENT DATE 5/2/2013 Tucson, Arizona 85743 LEASE EXPIRATION 4/30/2028 CONCEPT Harkins Theatres NOI/ANNUALIZED $683,925.00 (As ofJuly 2019) TOTAL BUILDING AREA ±45,595 INCREASED STRUCTURE 10% increase LAND AREA ±6.74 AC YEAR BUILT 2007 NEXT INCREASE DATE 5/1/2023 BUSINESS DESCRIPTION Harkins Theatres is a privately owned and operated LEASE TYPE NNN business, founded and based in Arizona since LANDLORD OBLIGATIONS Roof and structure 1933. With 34 locations in 5 states, Harkins Theatres is the 5th largest theatre chain in North America. With more than 80 years of colorful history, Harkins Theatres remains the Southwest’s premier entertainment company.
RENT ROLL INCREASES
SF RENT PER SF ANNUAL RENT DATE ANNUAL RENT CAP RATE
45,595 $15.00 $56,993.75 5/1/2023 $62,693.17 8.40%
OPTIONS
LENGTH MONTHS RATE Percentage Rent: 8% net sales over minimum rent for year
5 years 181 - 240 2% per year
5 years 241 - 300 2% per year
5 years 301 - 360 2% per year
5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA 20
AREA OVERVIEW AREA OVERVIEW
TUCSON AREA DEMOS A diverse and welcoming community, Tucson 5-Mile offers an outstanding quality of life along with a low cost of doing business. Our manufacturers lead the way in innovation, in sectors as varied as aerospace, biotech, defense, healthcare, information technology, 93,884 optics, solar, and water. Residents
Tucson has the highest concentration of startups of any U.S. city its size and is ranked as a top five city for entreprenuers by 36,578 Entrepreneur Magazine. Households Just 60 miles from the Mexico border, with high-capacity border and transportation infrastructure, Tucson is the natural choice for companies doing business in the U.S. and 39.6 Mexico. Median Age
MARANA Marana is fast becoming known as the most business supportive community in $87,008 Southern Arizona. With exceptional access to multimodal transportation, a newly Average HH Income reorganized Development Services Center and a local government that values corporate investment, businesses both large and small are taking advantage of development opportunities in Marana.
23 HARKINS THEATRES ARIZONA PAVILIONS 12 ARIZONA PAVILIONS DRIVE
5755 WEST ARIZONA PAVILIONS DRIVE | TUCSON, ARIZONA 24 PREPARED BY
TIM WESTFALL RYAN MORONEY Managing Director Associate Director +1 602 952 3822 +1 602 952 3820 [email protected] [email protected]
Newmark Knight Frank (the “Agent”) has been engaged as the exclusive sales representative for the sale of [insert building address here] (the ”Property”) by ‘Ownership’ (the “Seller”). The information contained herein has been obtained from sources deemed reliable but has not been verified and no guarantee, warranty or representation, either express or implied, is made with respect to such information. Terms of sale or lease and availability are subject to change or withdrawal without notice.