Offering Memorandum Cresco, Iowa

Representative Photo Offering Memorandum

Cresco, Iowa CONFIDENTIALITY AND DISCLAIMER NET LEASED DISCLAIMER The information contained in the following Marketing Brochure is proprietary and strictly Marcus & Millichap hereby advises all prospective purchasers of Net Leased property confidential. It is intended to be reviewed only by the party receiving it from Marcus as follows: & Millichap Real Estate Investment Services of Florida, Inc. (“Marcus & Millichap”) and should not be made available to any other person or entity without the written The information contained in this Marketing Brochure has been obtained from sources consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide we believe to be reliable. However, Marcus & Millichap has not and will not verify any summary, unverified information to prospective purchasers, and to establish onlya of this information, nor has Marcus & Millichap conducted any investigation regarding preliminary level of interest in the subject property. The information contained herein is these matters. Marcus & Millichap makes no guarantee, warranty or representation not a substitute for a thorough due diligence investigation. Marcus & Millichap has not whatsoever about the accuracy or completeness of any information provided. made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance As the Buyer of a net leased property, it is the Buyer’s responsibility to independently of the property, the size and square footage of the property and improvements, the confirm the accuracy and completeness of all material information before completing presence or absence of contaminating substances, PCB’s or asbestos, the compliance any purchase. This Marketing Brochure is not a substitute for your thorough due with State and Federal regulations, the physical condition of the improvements thereon, diligence investigation of this investment opportunity. Marcus & Millichap expressly or the financial condition or business prospects of any tenant, or any tenant’s plans or denies any obligation to conduct a due diligence examination of this Property for Buyer. intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; Any projections, opinions, assumptions or estimates used in this Marketing Brochure however, Marcus & Millichap has not verified, and will not verify, any of the information are for example only and do not represent the current or future performance of this contained herein, nor has Marcus & Millichap conducted any investigation regarding property. The value of a net leased property to you depends on factors that should be these matters and makes no warranty or representation whatsoever regarding the evaluated by you and your tax, financial and legal advisors. accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs.

Like all real estate investments, this investment carries significant risks. Buyer and NON-ENDORSEMENT NOTICE Buyer’s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant’s Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial past performance at this or other locations is an important consideration, it is not a tenant or lessee identified in this marketing package. The presence of any corpora- guarantee of future success.Similarly, the lease rate for some properties, including tion’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or newly-constructed facilities or newly-acquired locations, may be set based on a endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or tenant’s projected sales with little or no record of actual performance, or comparable any agent, product, service, or commercial listing of Marcus & Millichap, and is solely rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail included for the purpose of providing tenant lessee information about this listing to to pay the lease rent or property taxes, or may fail to comply with other material terms prospective customers. of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT the intrinsic value of the property and the value of any long-term lease, including YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer’s legal ability to make alternate use of the property.

By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property. INVESTMENT SUMMARY Marcus & Millichap is pleased to exclusively market for sale the subject single-tenant net-leased Shopko Hometown located in Minimal Local Cresco, Iowa. Built in 2010, the subject property consists of 31,500 Competition with square feet of building space and is strategically situated on a 3.04- the Nearest Shopko acre parcel. Hometown Over 30 Miles Away and The subject property sits just off Iowa Highway 9 which is the Wal-Mart Over 20 most northern of Iowa’s eastwest highways, traversing the entire Miles Away northern tier of counties, and offers strong visibility and exposure from minimal local competition, with the nearest Shopko Hometown locatedto the vehicles over 30 that miles travel away through and Wal-Mart each day. over The 20 property miles away. benefits

The Shopko Hometown has roughly 13 years remaining on an original 15-year lease, which commenced in 2016. The current rent is $175,000 is subject to increases every 5 years. In addition to the options bringing the lease term remaining to roughly 23 years. current lease term, the tenant has two, five-year tenant renewal Founded in 1962 and headquartered in Green Bay, Wisconsin, Shopko Stores Operating Co., LLC operates 363 stores in 24 states

2010, Shopko introduced a new retail concept to augment Shopko’s largerthroughout store the format: Central, Shopko Western Hometown. and Pacific The Northwest Shopko Hometownregions. In merchandising strategy combining pharmacy services and a comprehensiveretail format offers HBA a(Health, differentiated Beauty & and Accessories) financially, household successful goods and dry grocery assortment with a broad and dynamic offering of strong national brands and high-value private label brands. Following its merger with Pamida in early 2012, Shopko acquired and converted over 170 stores and pharmacies to the Shopko brand.

Investment Highlights • 15-Year, Double Net Lease The Shopko located at 22422 IA-9 in Cresco, Iowa has a 15- Overview • Renewal Options and Rent Increases 22422 IA-9, Cresco, Iowa 52136 year, double net (NN) lease with 13 years remaing. Price: $2,060,000 Cap Rate: 8.50% There are two, five-year renewal options. There will be a three Rentable Square Feet: 31,500 optionpercent periods. rental increase in 2021, and five percent increases every five years following, in the base term and thoughout the Annual Rent: $175,000 • Minimal Local Competition Rent/Square Foot: $5.56 The nearest Shopko Hometown is located over 30 miles away Price/Square Foot: $65.39 and Wal-Mart is over 20 miles away. Land Area: 3.04 Acres Year Built: 2010 Lease Summary Tenant: Shopko Website: www.Shopko.com Base Term Annual Rent PSF Cap Rate Lease Guarantor: Corporate 3/1/2016-2/28/2021: $175,000 $5.56 8.50% Lease Type: 3/1/2021-2/28/2026: $180,250 $5.72 8.75% Lease Term: 15 Years 3/1/2026-2/28/2031: $189,263 $6.01 9.19% NN Option Periods: 2, 5-Year Options Rental Increases: 3% in 2021 Then 5% Every 5 Years Option Periods Annual Rent PSF Cap Rate Roof & Structure: Landlord 3/1/2031-2/28/2036: $198,726 $6.31 9.65% Rent Commencement: 3/1/2016 3/1/2036-2/28/2041: $208,662 $6.62 10.13% Lease Expiration: 2/28/2031

Shopko was founded in 1962 by pharmacist James Ruben. When Following its merger with Pamida in early 2012, Shopko acquired and converted over 170 stores and pharmacies to Shopko brand. envisioned a company focused on quality, convenience and value. HeRuben saw openedthe opportunity the first to Shopko combine store health in care Green services Bay inwith 1962, a large he Kitchen Aid, Fisher-Price, Gloria Vanderbilt and Sony. Shopko’s retailers to feature a pharmacy in its stores. In another innovative popularShopko carriesprivate namelabel brandsbrands suchinclude as Nike,Willow Adidas, Bay, Bailey’s New Balance, Point, step,discount Shopko store, added and opticalin 1971 care Shopko centers became to its storesone of in the 1978. first mass

In 2010, Shopko introduced a new retail concept to augment HeadquarteredNorthCrest, Energy in Green Zone, Bay,Soft Wisconsin,Sensations andShopko many Stores more. Operating Shopko’s larger store format: Shopko Hometown. The Shopko Co., LLC is now a $3 billion retailer that operates over 363 stores successful merchandising strategy. Shopko Hometown combines pharmacyHometown services retail formatand a comprehensive offers a differentiated HBA (Health, and financiallyBeauty & stores,in 24 statesproviding throughout quality name-brand the Midwest, merchandise, Mountain, North great Centralvalues, Accessories), household goods and dry grocery assortment with pharmacyand Pacific andNorthwest optical regions.services Retail in small formats to mid-sized include 134 cities; Shopko 176 a broad and dynamic offering of strong national brands and high- Shopko Hometown locations, a smaller concept store developed value private label brands of apparel, home goods, toys, consumer electronics, seasonal items, and lawn and garden products – all in Rx stores, a convenient neighborhood drugstore concept; and 18 store formats that range in size from 15,000–35,000 square feet. Shopkoto meet Pharmacy the needs locations. of smaller communities; five Shopko Express

DirectorsWithin the was last expanded 12 months, to the include Company two newhas reorganized independent and Directors. strengthened Under its this leadership new team, team Shopko with isa new executing Chief Executive on multiple Officer, operational Chief Merchandising initiatives, as detailedOfficer, Chief below: Customer Officer, SVP of Retail Health, adding an SVP of Strategic Analysis, and eliminating three senior level positions. Board of

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Lease Term: 15 Years

Option Periods: 2, 5-Year Option Periods

Lease Commencement: 3/1/2016

Lease Expiration: 2/28/2031

Tenant shall pay all real estate taxes, assessments, charges or levies (whether general or special), and personal property taxes, Taxes: which shall become due and payable against the Premises (the “Taxes”) during the Term (and any renewal thereof).

Tenant shall be responsible for removing snow and ice from the Tenant Parking Lot at its expense.

Exterior Maintenance: Tenant shall perform, at its expense, all necessary maintenance, repair and replacement of the Tenant Parking Lot during the Term of this Lease and any Extension Terms.

Beginning on the Possession Date and continuing at all times during the Term, Tenant shall cause the Building located within

replacementthe Premises into full be ofinsured the Building. against loss or damage by fire, lightning, and such other risks as are from time to time included in “extended coverage” endorsements in an amount and form so that the proceeds thereof are sufficient to provide for actual Insurance: Commencing with the Possession Date and continuing at all times during the Term, Landlord and Tenant each agree, at no expense to the other party, to maintain or cause to be maintained commercial general liability insurance against claims for personal injury, bodily injury, death and property damage occurring upon, in or about the Premises. Such insurance in each case shall afford protection of not less than $5,000,000 (combined single limit) for personal injury, bodily injury and death (which limit may be included in an excess lines policy), and property damage to any number of persons arising out of any one occurrence.

Throughout the Term, Landlord, at Landlord’s sole expense, shall keep the foundation, exterior walls, and all structural components of the Building in good condition and shall be responsible for any and all maintenance, repairs and/or replacements Repairs, Alterations, thereof. In addition, Landlord shall be responsible, at Landlord’s sole expense, for replacement of the roof as necessary. Improvements and Replacements Except as set forth above, Tenant shall, at its sole expense, keep the Premises in good condition and repair and shall be responsible for any and all maintenance, repairs and replacements thereto, ordinary wear and tear excepted. Tenant shall enter into a contract (at Tenant’s expense) for routine HVAC maintenance to be performed at lease two (2) times per year.

Minnesota Iowa

POPULATION 3 MILES 5 MILES 10 MILES HOUSEHOLD INCOME 3 MILES 5 MILES 10 MILES 2010 Population 4,434 4,941 7,661 2010 Avg Household Income $53,528 $54,084 $54,948 2017 Population 4,352 4,857 7,594 2017 Avg Household Income $61,784 $62,394 $63,071 2022 Population 4,338 4,839 7,561 2022 Avg Household Income $75,087 $75,657 $75,186 2017 Male Population 2,108 2,369 3,781 2010 Med. Household Income $41,199 $41,805 $43,354 2017 Female Population 2,244 2,488 3,813 2017 Med. Household Income $46,437 $46,980 $48,837 2017 Median Age 39.6 40.3 41.4 2022 Med. Household Income $56,080 $56,706 $58,780 2010 Per Capita Income $22,776 $22,853 $23,072 RACE & ETHNICITY 3 MILES 5 MILES 10 MILES 2017 Per Capita Income $26,253 $26,327 $26,471 2022 Per Capita Income $32,068 $32,084 $31,815 American Indian, Eskimo 0.1% 0.1% 0.1% Asian 0.4% 0.4% 0.3% Black 1.1% 1.0% 0.7% 0.0% 0.0% 0.1% Click to View in White 96.5% 96.7% 97.3% Google Maps Hawaiian/Pacific Islander Other 0.9% 0.8% 0.7% Multi-Race 1.1% 1.1% 0.9% Hispanic Ethnicity 2.0% 2.0% 1.7% 98.0% 98.0% 98.3%

Not of Hispanic Ethnicity HOUSEHOLDS 3 MILES 5 MILES 10 MILES 2010 Households 1,856 2,054 3,179 2017 Households 1,824 2,021 3,155 2022 Households 1,832 2,029 3,173

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 is a service mark of Marcus & Millichap Real Estate Investment Services© 2017. All rights reserved. The Wolfe Retail Group of Marcus & Millichap specializes in the sale of single-tenant properties and shopping centers and has successfully assisted clients in selling over 450 separate commercial properties with a market value exceeding $1.25 billion. Having closed sales in more than 40 states, our track record is evidence that we are one of the premier brokerage teams in the United States.

clients,With our earning experience their trustand background and exceeding in various their expectations fields such whileas law best and assistingfinance, wethem have in theirproved real to estate be invaluable transactions. to our The Wolfe Retail Group For more about the Wolfe Retail Group, or to view all of our has sold over available listings, visit www.WolfeRetailGroup.com 450 properties in more than 40 states

About Marcus & Millichap Marcus & Millichap (NYSE: MMI) has established itself as a leading and expanding investment real estate company with nearly 1,500 brokers in 78 markets throughout the United States and Canada. The foundation of our investment sales is the depth of our local market knowledge. Our 44- year history of maintaining investor relationships in local markets enables us to be the best information source and transaction service provider in North America. Representative Photo

Barry M. Wolfe Alan Lipsky Senior Managing Director Investments Vice President Investments [email protected] [email protected] (954) 245-3493 (954) 245-3595

Evan Whelan Angelica Linares Catie Jackson Associate Transaction Coordinator Marketing Coordinator [email protected] [email protected] [email protected] (954) 245-3487 (954) 245-3416 (954) 245-3592