OFFERING MEMORANDUM OLLIE’S BARGAIN OUTLET 969 E BARNES CROSSING RD. | TUPELO, MS 38804 *STORE UNDER CONSTRUCTION EXCLUSIVELY LISTED BY: BEN SNYDER KYLE MATTHEWS ZACK BATES SVP & Senior Director Chairman & CEO Associate Vice President +1 (216) 503-3607 +1 (310) 919-5757 +1 (216) 503-3608 [email protected] [email protected] [email protected] License No. 2018002569 (OH) License No. 1469842 (CA) License No. 2018002393 (OH) BROKER OF RECORD Phillip Carpenter License No. 18906 (MS) *STORE UNDER CONSTRUCTION *STORE UNDER CONSTRUCTION 2 969 E Barnes Crossing Rd. | Tupelo, MS OLLIE’S BARGAIN OUTLET 969 E BARNES CROSSING RD. | TUPELO, MS 38804 4 INVESTMENT SUMMARY 6 PROPERTY OVERVIEW 8 TENANT PROFILE 10 LEASE ABSTRACT 14 AREA OVERVIEW *STORE UNDER CONSTRUCTION OLLIE’S BARGAIN OUTLET 3 OFFERING SUMMARY Matthews™ is pleased to exclusively offer a 31,059-square-foot freestanding Ollie’s Bargain Outlet situated on 3.59 acres in Tupelo, MS – the main component of the Tupelo Metropolitan Area (MSA Population: INVESTMENT SUMMARY 140,081). Ollie’s net lease is expected to commence in February 2020 and will feature 10 years of primary term with three 5-year renewal options. The property has excellent access and visibility off U.S. Highway 45 (Traffic Count: 36,800 VPD), which is the main freeway that runs north-south across eastern 969 E Barnes Crossing Rd. Mississippi. ADDRESS Tupelo, MS 38804 Ollie’s is strategically positioned within Barnes Crossing Plaza, which is anchored by Hobby Lobby, TJ LIST PRICE $3,336,000 Maxx, Burke’s Outlet, and Office Max. Ollie’s is also adjacent to the 746,194-square-foot The Mall at Barnes Crossing, which includes over 90 stores and is anchored by Belk, JCPenney, Dick’s Sporting PRICE PSF $107 Goods, Cinemark, and Barnes & Noble. The Mall at Barnes Crossing is the only mall within 90 miles and serves North Mississippi, Northwest Alabama and South Tennessee. YEAR 1 CAP RATE 6.75% The site benefits from its location within Northeast Mississippi’s main retail and commercial corridor YEAR 1 NOI $225,178 with 3.2 MSF of retail, 0.5 MSF of office, and 1.2 MSF of industrial within a 3-mile radius. Other major retailers within the immediate vicinity include Walmart, Sam’s Club, Lowe’s Home Improvement, Kohl’s, TERM REMAINING ± 10 Years Ross Dress for Less, Bed Bath & Beyond, Petco, JOANN, Dollar Tree, among many others. Furthermore, RENT INCREASES $0.25/SF after year 5 Ollie’s enjoys strong demographics with a population of 7,511 and an average household income of $61,154 within a 3-mile radius. BUILDING SIZE ± 31,059 SF INVESTMENT HIGHLIGHTS SITE SIZE ± 3.59 AC NATIONAL TENANT ▶ Headquartered in Harrisburg, Pennsylvania, Ollie’s Bargain Outlet Holdings Inc. (NASDAQ: OLLI) is one of the largest retailers of closeout merchandise and excess inventory. Known for their assortment of “Good Stuff Cheap,” they offer customers a broad selection of brand name products, including housewares, food, books and stationery, bed and bath, floor coverings, toys and hardware. Originally founded in 1982, Ollie’s currently operates 342 stores in 23 states. For the fiscal year ended February 2, 2019, Ollie’s reported net sales of $1.2 billion, net income of $135 million, and had net cash of $51 DEMOGRAPHICS million. NET LEASE WITH CONTRACTUAL RENT INCREASES 1-MILE 3-MILE 5-MILE ▶ Ollie’s net lease is expected to commence in February 2020 and features 10 years of primary term and three 5-year renewal options. Their net lease also contains contractual rent increases of $0.25 POPULATION 1,289 7,511 32,712 per square foot every five years, including in the renewal options. BELOW REPLACEMENT COST HOUSEHOLDS 534 3,091 13,076 ▶ At $107 per square foot, this offering is an excellent opportunity to acquire a highly desirable retail box at a price that is significantly below the replacement cost. HH INCOME $74,673 $61,154 $57,885 EXCELLENT ACCESS & VISIBILITY ▶ The property has excellent access and visibility off U.S. Highway 45 (Traffic Count: 36,800 VPD), which is the main freeway that runs north-south across eastern Mississippi. 4 969 E Barnes Crossing Rd. | Tupelo, MS REGIONAL MAP INVESTMENT HIGHLIGHTS CONTD. STRATEGIC LOCATION 150-MILES ▶ Ollie’s is strategically positioned within Barnes Crossing Plaza, which is anchored by Hobby Lobby, TJ Maxx, Burke’s Outlet, and Office Max. Ollie’s is also adjacent to the 746,194-square-foot The Mall at Barnes Crossing, which includes over 90 stores and is anchored by Belk, 100-MILES JCPenney, Dick’s Sporting Goods, Cinemark, and Barnes & Noble. The Mall at Barnes Crossing is the only mall within 90 miles and serves North Mississippi, Northwest Alabama and South Tennessee. The site benefits from its location within Northeast Mississippi’s main retail and commercial corridor with 3.2 MSF of retail, 0.5 MSF of 50-MILES office, and 1.2 MSF of industrial within a 3-mile radius. Other major retailers within the immediate vicinity include Walmart, Sam’s Club, Lowe’s Home Improvement, Kohl’s, Ross Dress for Less, Bed Bath & Beyond, Petco, JOANN, Dollar Tree, among many others. STRONG DEMOGRAPHICS ▶ Ollie’s enjoys strong demographics with a population of 7,511 and an average household income of $61,154 within a 3-mile radius. TUPELO/LEE COUNTY AREA ▶ Tupelo/Lee County is consistently ranked as one of the OLLIE’S BARGAIN OUTLET top counties in Mississippi for personal income, retail sales, total employment, and business activity. Tupelo is the headquarters of the North Mississippi Medical Center, the largest non-metropolitan hospital in the United States. It serves people in North Mississippi, northwest Alabama and portions of Tennessee. Also, Tupelo is recognized around the world as the birthplace of Elvis Presley. The house where Elvis was born, and the adjacent Elvis Presley Museum and memorial chapel, draw nearly 100,000 visitors each year. They are centerpieces of Tupelo’s $46 million tourism and hospitality industry. OLLIE’S BARGAIN OUTLET 5 2 1 PROPERTY OVERVIEW PROPERTY DESCRIPTION ▶ PROPERTY ADDRESS ▶ PARKING SPACES 969 E Barnes Crossing Rd.Tupelo, MS ± 210 ▶ BUILDING SIZE ▶ YEAR BUILT ± 31,059 SF 1994 ▶ SITE SIZE ▶ FRONTAGE & ACCESS ± 3.59 AC E Barnes Crossing Rd / US-45 ▶ APN ▶ TRAFFIC COUNTS 1 083V-08-041-03 US-45 ±36,800 VPD *STORE UNDER CONSTRUCTION 2 083U-07-086-08 6 969 E Barnes Crossing Rd. | Tupelo, MS SITE PLAN M A L L D R LEGEND: BARNES CROSSING RD SUBJECT PROPERTY NAP OLLIE’S BARGAIN OUTLET 7 TENANT PROFILE TOTAL SHAREHOLDER RETURN SINCE OLLIE’S IPO OLLIE’S BARGAIN OUTLET Ollie’s Bargain Outlet is one of America’s largest retailers of closeout TENANT merchandise and excess inventory. The 342 “semi-lovely” stores sell merchandise of all descriptions and some beyond description. Ollie’s Bargain Outlet 305% Dollar General 110% Real brands at real bargain prices in every department, from housewares to sporting goods to flooring and to food. Ollie’s buyers scour the world Dollar Tree 33% looking for closeouts, overstocks, package changes, manufacturer refurbished goods, and irregulars. Big Lots -48% Much of the merchandise comes direct from the finest manufacturers in * As of November 18, 2019 the country and abroad. For example, if a manufacturer makes too much of an item, or changes their packaging, Ollie’s will buy the overstocked or old packaged items. The customer will always find famous brand name products at Ollie’s, but a lot of them could be last year’s colors, patterns, NET SALES AND SAME STORE SALES or packaging that traditional retailers won’t sell. $1,400 +18.1% CAGR $1,241 $1,200 Ollie’s has also liquidated major retail centers, working very closely with $1,077 financial institutions. When companies liquidate, the banks will often $1,000 $890 dispose of remaining inventories and turn them into cash. Ollie’s brings $762 $800 the goods back to their stores and passes the savings to the customer. $638 $600 $400 $200 $0 2014 2015 2016 2017 2018 1982 HARRISBURG, PA OLLI SAME STORE SALES 4.4% 6.0% 3.2% 3.3% 4.2% *+18.1% CAGR FROM 2014-2018 Year NASDAQ: Headquarters Founded (S&P MidCap 400 Component) 8 969 E Barnes Crossing Rd. | Tupelo, MS COMPANY OVERVIEW Fast growing, extreme Total annual sales of Market cap of over $4 Share price has 342 stores in Opportunity to value retailer offering over $1.3 billion billion (compared to increased more than 23 states expand to 950 stores a broad selection of Big Lots’ market cap 300% since IPO in nationally “good cheap stuff” of $825 million) July 2015 CREDIT SNAPSHOT VS PEERS S&P COMP STORE EBIDTA MARGIN NET DEBT/(NET TENANTS DEBT TO EBITDA CREDIT RATING SALES (8Q AVG) (TTM) CASH) Ollie’s Bargain Outlet N/A 2.7% 14.0% ($77.7) 0.00x Big Lots BBB 1.1% 6.0% $495.9 1.73x Dollar General BBB 3.5% 10.2% $2,314.5 0.95x Dollar Tree BBB- 2.4% 10.1% $3,645.2 1.81x *As of February 2, 2019; $ in mil Higher Comp Store Sales + Higher Margins + ZERO Debt = Healthier Tenant OLLIE’S BARGAIN OUTLET 9 LEASE ABSTRACT LEASE ABSTRACT TENANT Ollie’s Bargain Outlet, Inc. TENANT SIZE (SF) ± 31,059 *RENT COMMENCEMENT DATE February 12, 2020 LEASE EXPIRATION DATE February 28, 2030 LEASE TERM (YEARS) 10 Years LEASE TERM (MONTHS) 120 Months LEASE TYPE NN REMAINING OPTIONS 3x5 years CONTRACT RENTAL RATE (YEAR 1-5) $225,178 CONTRACT RENT INCREASE (YEAR 6-10) $232,943 1ST OPTION (5 YEARS) $240,707 2ND OPTION (5 YEARS) $248,472 3RD OPTION (5 YEARS) $256,237 *Estimated *STORE UNDER CONSTRUCTION 10 969 E Barnes Crossing Rd.