Subject Property Offering Memorandum Sprouts Farmers Market 5130 W Peoria Ave., Glendale, AZ 85302 Confidential Disclaimer Offering Exclusively By This Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC. Bradly Richardson [email protected] This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This AZ License #:BR540628000 COM contains descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested in the Property. Such information is not all inclusive and is not represented to include all information that may be material to an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to Stan Johnson Company the actual documents and/or financial statements, which upon request may be made available. An interested 7702 E Doubletree Ranch Road party must conduct its own independent investigation and verification of any information the party deems Suite 300 material to consideration of the opportunity, or otherwise appropriate, without reliance upon SJC. Scottsdale, AZ 85258 Phone: 480-607-4365 The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time. The Property is offered and sold by its stanjohnsonco.com owner(s) as is, where is, and with all faults, without representation or warranty of any kind except for any customary warranties of title. BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”), is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees, representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when obtaining such relief. Sprouts Farmers Market • Glendale, AZ 2 The Offering Stan Johnson Company is pleased to offer for sale to qualified investors, Purchase Price: $8,500,000 the opportunity to purchase a Sprouts Farmers Market property located at 5130 W Peoria Ave., Glendale, AZ 85302 (the “Property”). Cap Rate: 6.50% The Property totals ± 30,600 square feet on ± 3.32 acres. It is operating under a 15-year base lease term with 3.25 years remaining, offering four, 5-year lease option periods. Property Summary The lease features an average of 5.25% annual increases in the option Address: 5130 W Peoria Ave., Glendale, AZ 85302 periods. Additionally, the lease is Absolute NNN with zero landlord ± 30,600 SF responsibilities. Building Size (SF): Land Area (Acres): ± 3.32 acres Annual Rent: $553,544 Investment Highlights Corporate Guarantee - The lease is guaranteed by Sprouts Farmers Rental Increases - The lease provides for approximate 4% rental Market LLC which is headquartered less than 10 miles away from the increases every 3 years (next increase 9/2017). subject property. America’s Fastest Growing County - In March 2017 the Census Bureau Strong Tenant - The company employs over 24,000 people while named Arizona’s Maricopa as the county with the nation’s highest operating over 250 healthy grocery stores in 15 states across the annual population growth. Likewise, Forbes Magazine recently ranked country. Phoenix-Mesa-Glendale as the #14 fastest growing MSA in the country. Publicly Traded Company - Traded on the NASDAQ under the symbol Demographics - Over 450,000 residents and an Average Household SFM, the stock price increased over 35% from March 2017 to June 2017 Income of over $60,000 within 5-mile radius. under speculation that the company is an attractive acquisition target. High Traffic Count - Over 55,000 combined vehicles per day at the Financially Sound - In 2016 Sprouts Farmers Market reported earnings corner of W. Peoria Ave. and N. 51st Ave. over $128 million on revenues just over $3.59 billion. The company also reported an increase in revenue of appropriately 14% in Q1 2017 vs. Q1 2016. Sprouts Farmers Market • Glendale, AZ 3 Lease Abstract Rent Schedule 5130 W Peoria Ave., Glendale, AZ 85302 Years Term Annual Rent Increases 1-3 Sep-05 Aug-08 $488,137 Tenant: Sprouts Farmers Market 4-6 Sep-08 Aug-11 $509,939 4.74% Guarantor: Corporate - Sprouts Farmers Market, Inc. 7-9 Sep-11 Aug-14 $531,741 4.28% 10-12 Sep-14 Aug-17 $553,544 4.10% Property Type/Building Use: Retail / Grocery 13-15 Sep-17 Aug-20 $575,346 3.94% Option 1 Sep-20 Aug-25 $575,346 3.94% Building Square Feet: ± 30,600 SF Option 2 Sep-25 Aug-30 $633,485 6.09% Land Area: ± 3.32 acres Option 3 Sep-30 Aug-35 $669,822 5.74% Option 4 Sep-36 Aug-40 $706,159 5.42% Year Built/Remodeled: 1976/2004 Lease Term: 15 years Lease Term Remaining: 3.25 Lease Commencement: 9/1/2005 Original Term Through: 8/31/2020 Current Annual Rent: $553,544 Rent/SF: $18.09 Approx 4% in 9/2017, average 5.25% each Rent Increases: option period Renewal Options: Four (4), Five (5) Year Options Lease Type: Absolute NNN - Zero Landlord Responsibilities Subject Property Sprouts Farmers Market • Glendale, AZ 4 Tenant Overview Sprouts Farmers Market is an American health indoor farmers market. Sprouts is committed a public company traded on the NASDAQ food supermarket offering fresh, natural to operating in a way that minimizes the Stock Market (SFM) in August, 2013. In recent and organic foods at low prices. Sprouts offers impact on the environment and safeguards the years, the chain expanded into the Southeast a complete shopping experience that includes health of the surrounding communities. by adding new stores in Georgia, Missouri, fresh produce, bulk foods, vitamins and Alabama and Tennessee. Today, Sprouts is one supplements, packaged groceries, meat and Sprouts was founded by members of the of the fastest growing retailers in the country. seafood, deli, baked goods, dairy products, Boney family, long-time San Diego grocers Sprouts employs more than 24,000 team frozen foods, natural body care and household with a focus on making fresh foods available. members and operates 250 stores in 13 states items catering to consumers’ growing demand The first Sprouts store was opened in from coast to coast. in health and wellness. From selling fresh Chandler, Arizona in 2002. After a period of produce and wholesome grains in field bins, rapid growth through acquisitions and new barrels and wooden crates to the low shelving, store development, Sprouts joined Henry’s spacious aisles, and abundance of natural Holdings in 2011. A year later, Sprouts bought light, Sprouts locations evoke the feeling of an Sunflower Farmers Market. Sprouts became Sprouts Farmers Market • Glendale, AZ 5 Location Overview With an estimated population of nearly 4,200,000, Maricopa County, which includes both Glendale and Phoenix, is home to over half of Arizona’s population. While Glendale is one of the fastest-growing cities in Arizona, it still manages to be a well-planned blend of Old West and New Economy. Strategically located in the northwest region of the Phoenix Metropolitan Area, Glendale boasts nearly 250,000 citizens, making it the fourth-largest city in Arizona. Served extensively by ground, air and rail transportation, Glendale offers a well-developed arterial street system complemented by Interstate 10, Interstate 17 and State Route 101 ringing the Metropolitan Area. The Burlington-Northern Santa Fe Railroad runs through the city along U.S. Highway 60, and Phoenix Sky Harbor International Airport is only a 20 minute drive away. Glendale has an expansive sports entertainment district anchored by the state-of-the-art Glendale, AZ University of Phoenix Stadium (home of the NFL’s Arizona Cardinals and the annual Fiesta Bowl) and Jobing.com Arena (home of the NHL’s Phoenix Coyotes). Glendale is also home to some of the region’s major shopping areas; Arrowhead Towne Center, one of the Phoenix area’s largest and most popular malls, is located in northwest Glendale.