Harkins Theatres Arizona Pavilions 12 5755 West Arizona Pavilions Drive | Tucson, Arizona | 85743
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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.