OFFERING MEMORANDUM LAWRENCEmarketplace LAWRENCE | KANSAS LAWRENCEmarketplace LAWRENCE | KANSAS EXCLUSIVELY LISTED BY: ZACHARY TURNER MARK RUBLE JAMIE MEDRESS Associate Senior Managing DIrector Executive Managing Director National Retail Group Net Leased Investments Net Leased Investments COLUMBUS OFFICE ARIZONA OFFICE ARIZONA OFFICE P: (614) 360-9032 C: (614) 961-9943 P: (602) 687-6766 F: (602) 687-6710 P: (602) 687-6778 C: (602) 687-6717 [email protected] [email protected] [email protected] License: OH SAL.2018003592 License: AZ SA550593000 License: AZ SA108228000 SCOTT WILES CRAIG FULLER ERIN PATTON Senior Vice President Investments Senior Vice President Investments Senior Vice President Investments Executive Director, National Retail Group Executive Director, National Retail Group Executive Director, National Retail Group CLEVELAND OFFICE CLEVELAND OFFICE COLUMBUS OFFICE P: (216) 264-2026 C: (216) 870-9424 P: (216) 264-2043 C: (216) 407-2430 P: (614) 360-9035 C: (614) 323-3345 [email protected] [email protected] [email protected] License: OH SAL.2005013197 License: OH SAL.2008001551 License: OH SAL.2004010274 LAWRENCEmarketplace ANCHORED BY PLANET FITNESS AND OFFICE DEPOT: NNN LEASES THROUGH 2025 AND 2026 LAWRENCEmarketplace LAWRENCE | KANSAS 90,982 9.56 100% 1974/ 2014 SQUARE ACRES OCCUPIED BUILT/ FEET RENOVATED LAWRENCEmarketplace OFFERING SUMMARY LAWRENCE | KANSAS Offering Price $10,805,000 Cap Rate 8.00% Gross Leasable Area (GLA) 90,982 SF Price/SF $118.76 Year Built/Renovated 1974/2014 Lot Size 6.27 AC Occupancy 100% VITAL DATA Current Net Operating Income $864,318 Year 1 Cash-on-Cash Return 11.21% 10-Year Uneveraged IRR 8.97% 10-Year Leveraged IRR 16.67% PROPOSED NEW FINANCING Loan Amount $7,563,500 Loan-to-Sale Ratio 70.00% Interest Rate 4.25% MAJOR TENANTS Amortization 25 Years Term 10 Years Tenant GLA Lease Exp. Lease Type Loan Constant 6.50% Office Depot 35,254 SF 7/2025 NNN Debt Service Coverage Ratio 1.76 Planet Fitness 21,587 SF 6/2026 NNN Breakaway Indoor Play 12,291 SF TBD (8 Year) NNN DEMOGRAPHIC SUMMARY The Mattress Hub 7,507 SF 4/2029 NNN 1 Mile 3 Miles 5 Miles MAJOR AREA EMPLOYERS 2018 Population 13,106 75,302 97,133 Major Employers Employees Industry 2023 Population Projection 13,170 77,100 101,662 The University of Kansas 9,872 Education 2018 Households 5,808 30,459 39,552 Lawrence Public Schools 1,831 Education 2023 Households Projection 5,910 31,517 41,849 Vangent 1,500 Information Services Average Household Income $56,021 $68,713 $75,092 City of Lawrence 1,431 Government Median Household Income $41,307 $46,152 $52,186 OFFERING HIGHLIGHTS » 100% Occupied 90,982 Square Foot Shopping Center in Lawrence, Kansas » Less Than 1-Mile from University of Kansas – Annual Enrollment Over 28,150 » 27,000 Cars/Day Passing in Front of Property on Iowa Street » Complimentary Tenant Mix - Fitness, Food, Active Entertainment, Office Supplies/Electronics, and Specialty Stores » Anchored by Planet Fitness and Office Depot – NNN Leases through 2025 and 2026 Respectively » Average Weighted Remaining Lease Term of 6.5 Years » Leveraged IRR in Year-10 of 16.67% » Minimal Deferred Maintenance: Complete Renovation in 2014 with New Buildouts » Ease of Management: Only 7 Tenants – NNN Leases – 94% TAX/INS/CAM Recovery » Ideal Site Layout with Over 500 Feet of Frontage Along Iowa Street – Lawrence’s Main Throughway – First Shopping Center South of University of Kansas » Located in Southern-Lawrence’s #1 Trade Area; Only Locations for Target, Home Depot, Menard’s and Kohl’s LAWRENCEmarketplace LAWRENCE | KANSAS INVESTMENT OVERVIEW Marcus & Millichap, on behalf of ownership, is pleased to present, Lawrence Marketplace, a 90,982 square foot shopping center located in Lawrence, Kansas. The subject property underwent extensive renovations in 2014 which revitalized the center, making it a go-to destination in Southern-Lawrence’s main retail corridor. Lawrence Marketplace is currently 100% occupied by a variety of prominent tenants which include Fitness, Food, Active Entertainment, Office Supplies/Electronics, and Specialty Stores. Office Depot is the centers largest tenant, occupying 35,254 square feet which equates to 39% of GLA and 27% of the center’s gross income. Office Depot has had success at this site since 1997 due to its strong location and below market rent. This is evident by their recent early-renewal which runs through 2025 and is bound by triple-net terms. These triple-net terms include prorata reimbursement for TAX/CAM/INS, as well as roof repair and replacement expenses. Planet Fitness is the centers second largest tenant, occupying 21,587 square feet, 24% of GLA and 28% of gross income. Planet Fitness opened in 2016 after commencing a 10-year triple-net lease. Other complimentary tenants at the site include Trek Bikes, Mattress Hub, HuHut Mongolian Grill and Breakaway Indoor Play. Trek and Mattress Hub are both leased into 2029, while HuHut is occupied into 2027. 4 of the 7 tenants have rent increases in year-5 of their leases providing meaningful rent growth over the hold period, as well as significant increases in their option terms. With proposed financing, Leveraged IRR in year-10 is 16.67%. Prospective purchasers will benefit from a national tenant base, long-term leases, ease of management, strong RET/ INS/CAM expense recovery, and irreplaceable real estate within walking distance of University of Kansas. Lawrence Marketplace is located less than one-mile south of University of Kansas, the state’s largest university with annual enrollment of over 28,150 students. The subject property is situated within the vibrant retail corridor along Iowa Street which sees over 27,000 vehicles per day. Iowa Street is the major north-south commercial thoroughfare that functions as the primary retail corridor for the south side of Lawrence. Lawrence marketplace is the first substantial shopping center commuters see when entering the corridor from the north and has the most frontage of any multi-tenant center along Iowa Street. Retailers in the immediate vicinity include Target, Walmart, Home Depot, Menards, Kohl’s, Hobby Lobby, Five Below, Ross, T.J. Maxx, Dillon’s and an array of small-shop tenants and quick service providers. Immediate demographics in the surrounding area are dense and mature, with population counts of 13,106 within 1-mile, 75,302 within 3-miles, and 97,113 within 5-miles. Average household income is above the national average at $75,092. Lawrence is located 35 miles west of Kansas City and 25 miles east of Topeka. Lawrence is the county seat of Douglas County and sixth-largest city in Kansas. Lawrence is a college town and the home to both the University of Kansas and Haskell Indian Nations University. More recently, the area has become a hotbed for families moving from Kansas City and surrounding areas. Lawrence is one of the fastest growing cities with population growth of 10.55% since 2010. Lawrence has a diverse economy spanning education, industrial, agricultural, government, finance and scientific research. Most of these are related to the University of Kansas, which is the largest employer in Lawrence. FUTURE BUILDING LAWRENCEmarketplace LAWRENCE | KANSAS property Property Name Lawrence Marketplace Property Address 2525 Iowa Street Lawrence, KS 66046 SITE DESCRIPTION Gross Leasable Area 90,982 SF Ownership Fee Simple Year Built 1974 Lot Size 6.27 AC Number of Stories One Parking +/- 252 Spaces Available Topography Level Zoning Commercial PARCELS Number of Tax Parcels One Parcel Number(s) 111-11-0-10-05-001.00-0 CONSTRUCTION Foundation Concrete Slab Framing Steel Exterior Masonry Parking Surface Asphalt Roof TPO mechanical HVAC Roof Mounted Fire Protection To Code Utilities All Local Providers ACCESS POINTS The property is accessed by one entrance from Iowa Street and two entrances from West 25th Street. NOT NOT A PART A PART LAWRENCEmarketplace LAWRENCE | KANSAS TENANT & LEASE SUMMARIES OFFICE DEPOT Office Depot, Inc. provides business services and LAWRENCE MARKETPLACE // PROPERTY ANALYSIS PROPERTY MARKETPLACE // LAWRENCE supplies, products, and technology solutions. Rent Commencement 8/1/1997 The company operates in three divisions: Business Solutions, Retail, and CompuCom. Lease Expiration 7/31/2025 The Business Solutions division offers office supply products and services through sales Gross Leasable Area 35,254 SF forces, catalogs, and telesales, as well as through Internet Websites in the United States, Puerto Option Term (2) 5-year Rico, U.S. Virgin Islands, and Canada. The Retail division operates a chain of retail stores, which offer office supplies; technology products and solutions; business machines and Pro Rata Share of Project 38.75% related supplies; print, cleaning, breakroom, and facilities products; and furniture in the United States, Puerto Rico, and the U.S. Virgin Islands. Its stores also provide printing, Headquartered Boca Raton, FL reproduction, mailing, and shipping services. As of April 4, 2019, this division operated 1,350 office supply stores. The CompuCom division sells information technology (IT) No. of Locations 1,378 outsourcing services and products in the United States, Canada, and Costa Rica. The company offers its products under various labels, including Office Depot, OfficeMax, Website www.officedepot.com Foray, Ativa, TUL, Realspace, WorkPro, Brenton Studio, Highmark, and Grand & Toy. Office Depot, Inc. was founded in 1986 and is headquartered in Boca Raton, Florida. Stock Symbol & Exchange ODP (NASDAQ) PLANET FITNESS Planet Fitness, Inc., together with its subsidiaries, Rent Commencement 6/17/2016 franchises and operates fitness centers under the Planet Fitness name. It operates through three Lease Expiration 6/30/2026 segments: Franchise, Corporate-Owned Stores, and Equipment. The Franchise segment is involved in Gross Leasable Area 21,587 SF franchising business in the United States, Puerto Rico, Canada, the Dominican Republic, and Panama. The Option Term (2) 5-year Corporate-Owned Stores segment operates corporate- Pro Rata Share of Project 23.73% owned stores in the United States and Canada.