NET LEASE CAPITAL MARKETS OFFERING MEMORANDUM 380 & 386 Blanding Blvd. | Orange Park, FL NET LEASE CAPITAL MARKETS MATT BERRES Executive Managing Director 949.608.2066 [email protected] KEN HEDRICK Executive Managing Director 918.878.9540 [email protected] JERRY HOPKINS Executive Managing Director 918.878.9536 [email protected] D. ANDREW RAGSDALE, ESQ. Senior Managing Director 918.878.9535 [email protected] In association with: DREW FLEMING Senior Managing Director 404.806.2755 [email protected] RE Lic.# SL3268867 TABLE OF CONTENTS Investment Summary 5 Area Overview 10 Property Description 15 Tenant Overview 18 Financial Summary 22 44 INVESTMENT SUMMARY INVESTMENT OFFERING SUMMARY SUMMARY Newmark Knight Frank (NKF), as the exclusive broker, is pleased to present the opportunity to acquire a Two (2) Tenant Net Leased Investment located in Orange Park, FL (Jacksonville MSA). The Price Pro Forma NOI* Property consists of a freestanding 84,180 square foot Old Time Pottery and a 3,200 square foot ground leased Freddy’s Frozen Custard & Steakburgers. Old Time Pottery signed a Fifteen (15) Year Lease in 2015 and has Two (2), Five (5) Year Options to Extend and Freddy’s signed a Ten (10) Year Ground Lease in 2016 and has Four (4), Five (5) Year Options to Extend. Both $6,958,711 $469,713 Leases feature fixed rental increases every Five (5) Years, with Old Time Pottery’s rent increasing by 11% in Aug-2020 and Cap Rate Year 3 NOI Freddy’s rent increasing by 10% in Dec-2021, providing income growth and a hedge against inflation. Additionally, both Tenants are paying rents at a fraction of today’s market rate, offering stability as well as long term value creation opportunity for a Landlord. Old Time Pottery’s NN Lease and Freddy’s Absolute NNN Ground Lease Structures provide a passive investment 6.75% $477,639 ideal for local and out of area investors alike. Located in the heart of Orange Park’s retail hub, the Property is situated along Blanding Blvd (64,000 VPD), just north of the major intersection of Blanding Blvd and Kingsley Ave (94,500 VPD). Orange Park High School, home to 1,553 students, is located directly across the intersection from the Property. Neighboring tenants include Publix, Lowe’s, McDonald’s, and Burger King. *Pro Forma NOI is as of Aug-2020, reflecting Old Time Pottery’s Rental Increase. 6 INVESTMENT HIGHLIGHTS LONG TERM LEASES W/ STRONG TENANTS PASSIVE LEASES, IDEAL FOR LOCAL OR OUT • Old Time Pottery signed a Fifteen (15) Year Lease in 2015 and OF AREA INVESTORS has Two (2), Five (5) Year Options to Extend • Freddy’s Absolute NNN Ground Lease requires Zero Landlord Re- • Freddy’s signed a Ten (10) Year Ground Lease in 2016 and has sponsibilities Four (4), Five (5) Year Options to Extend • Old Time Pottery is on a passive NN Lease with Landlord Respon- • Freddy’s opened 47 new stores in 2019 and currently operates sibilities limited to Roof, exterior walls, concrete floors, and structur- 373 locations across 34 states al components, and HVAC Replacement. • Old Time Pottery operates 43 locations across 11 states and is owned by Comvest Partners ($3.7B+ AUM) HIGHLY VISIBLE & EASILY ACCESSIBLE • 10.22 Years of Weighted Average Lease Term remaining LOCATION • Premier location along Blanding Blvd (64,000 VPD), Orange Park’s BELOW MARKET RENTS | LONG TERM VALUE major thoroughfare, and just north of the major intersection of Blan- CREATION ding Blvd and Kingsley Ave (94,500 VPD) • The Orange Park & Jacksonville Retail Market has experienced • Five (5) ingress/egress points increased demand leading to compressed vacancies and upward • Both tenants have prominent pylon signage along Blanding Blvd pressure on rents. This results in below market rents at the Subject Property, creating tremendous value for a long term investor. DOMINANT RETAIL CORRIDOR | STRONG • Old Time Pottery’s current rent is approximately 55% below market DEMOGRAPHICS • Freddy’s Ground Lease structure results in rent at a fraction of • Attractive Jacksonville MSA Location; Population of 140,914 and today’s market rate (approximately 44% below market) Average Household Income of $83,471 within 5 miles. • 7% Population Growth Estimated over the next 5 years FIXED RENTAL INCREASES | 11% IN NEXT • Neighboring tenants include Publix, Lowe’s, McDonald’s, and TWO YEARS Burger King • Both Tenants’ Leases provide income growth and a hedge against • Located adjacent to Orange Park High School, home to 1,553 inflation with fixed rental increases students • Old Time Pottery’s Lease increases by 11% in Aug-2020 and • Very low 3.6% Vacancy Rate in the Orange Park retail market, increases every Five (5) Years throughout the Primary Term and well below the national average of 4.57% Option Periods • Freddy’s Lease features 10% increases every Five (5) Years throughout the Primary Term and Option Periods; with its next increase in Dec-2021 7 PROPERTY OVERVIEW 380 & 386 Blanding Blvd. Orange Park, FL Tenants Pro Forma NOI* GLA (SF) $469,713 87,380 SF Year Built / Renovated Land Size (Old Time Pottery) 1976 / 2015 9.37 Acres Year Built (Freddy’s) Traffic Counts (@ Intersection) 2016 94,500 CPD Occupancy Parking Stalls 100% 466 *Pro Forma NOI is as of Aug-2020, reflecting Old Time Pottery’s 8 Rental Increase. 9 AREA OVERVIEW ORANGE PARK, FL OVERVIEW The city of Orange Park is located in the northeast corner of Clay County, Florida, and is within driving distance of bustling Jacksonville and its numerous beaches and attractions. The name “Orange Park” is often applied to a wider area of northern Clay County outside the town limits, covering such commu- nities as Lakeside, Fleming Island, Oakleaf Plantation, and Bellair-Meadowbrook Terrace. Living in Orange Park offers residents a dense suburban feel, with most residents owning their homes. Many households are either affiliated with the mil- itary, due to the presence of NAS Jacksonville located less than 6 miles away, or are in the medical field. Orange Park boasts a history and culture all its own, with golf courses, varied lodging options, wedding venues, parks and shopping. DEMOGRAPHICS POPULATION AVERAGE AGE POPULATION 3 MILE 5 MILE 10 MILE 2019 Total Population 58,673 140,914 453,338 2024 Population 63,837 152,175 488,093 140,914 37.7 Pop Growth 2019–2024 1.8% 1.6% 1.5% Average Age 40.0 37.7 37.7 HOUSEHOLDS AVERAGE HH INCOME 2019 Total Households 22,932 52,371 176,201 HH Growth 2019-2024 1.1% 1.0% 0.9% Average Household Income $76,308 $83,471 $83,169 $83,471 11 LOCAL AERIAL TUESDAY MORNING PLAZA Blanding Blvd. (64,00 VPD) Loch Rane Blvd. Kingsley Ave. (30,500 VPD) THE 224 PARK ORANGE PARK HIGH SCHOOL PINETREE (1,553 Students) PLAZA 21 12 COMPETITION AERIAL ) D P V 0 0 0 , 4 6 ( . d lv B g in d an Bl 13 RETAIL MARKET OVERVIEW The Orange Park and Jacksonville retail market has seen strong demand from retail ten- 7.4M SF ants chasing heightened consumer spending in the metro area. This increased demand Total SF Retail has led to compressed vacancies and upward pressure on rents. The Jacksonville MSA retail market encompasses nearly 98 million square feet of retail space with a total vacancy rate of 3.9% and market rent of $17.91. Rents have grown 3.6% 5.1% in the past 12 months. However, rents remain a bargain compared to peer Florida Vacancy Rate metros. Strong absorption numbers in the first half of 2019 benefitted from major tenants leas- ing anchor spaces, including: Regal Cinemas (87,532 SF), Publix (48,397 SF), Beau- ty Depot (47,084 SF), Burlington (39,985 SF), Sprouts Farmers Market (30,000 SF), 152,000 SF Lucky’s Market (30,000 SF), Petco (18,000 SF), Aldi’s (18,000 SF) and others. Addition- 12 Month ally, Sprouts plans to open another location in Jacksonville at the start of 2020. Absorption Jacksonville appears poised for continued strength and growth due to its busi- ness-friendly environment, relative affordability, and strong demographic factors which have boosted Jacksonville’s skilled labor pool, bringing job growth to the region. Some of the metro’s largest employers include a mix of financial companies and healthcare $18.26/SF facilities including Baptist Health, Mayo Clinic, and Wells Fargo. However, as a large Na- Market Rent/SF val hub, Jacksonville’s largest employer is the Naval Air Station’s ports with over 30,000 (Total Retail) combined personnel. Duval County’s public-school system and the City of Jacksonville add another 25,000 employees to the area. The area has also won multiple significant business expansions in recent years. The BELOW MARKET RENTS $8.00 - $12.00 Mayo Clinic recently announced over 300,000 SF of expansion taking place over the Market Rent/SF next five years, which will bring hundreds of new jobs and, along with the clinic’s recent Old Time Pottery ($4.50/SF/Yr) (Anchor) and Freddy’s ($28.75/SF/Yr) are investment of over $300 million, will push it closer to its goal of being the premier medi- ORANGE PARK RETAIL STATS RETAIL ORANGE PARK both paying well below market cal center in the Southeast. Amazon’s recent completion of building two new fulfillment rents for buildings in their respec- centers totaling over 3 million square feet in the metro is expected to bring about 2,500 tive categories, providing long jobs to the city by the end of 2019. term stability and opportunity for income growth for the Landlord. $51.00 Market Rent/SF (QSR Pad) 14 Source: CoStar PROPERTY DESCRIPTION 16 SITE PLAN BANK OF AMERICA & PACIFIC DENTAL BANK OF AMERICA & PACIFIC 439 Spaces 84,180 SF Drive Thru Lanes 3,200 SF PROPERTY DESCRIPTION PROPERTY 27 Spaces oulevard (64,000 VPD) B landing B Zaxby’s Area (Not a Part) Loch Rane Boulevard Parcel Line 17 TENANT OVERVIEW • Number of Locations: 43 (11 States) • Number of Locations: 373 Nationwide (34 States) • Company Type: Private • 47 New Stores Opened in 2019 • Headquarters: Murfreesboro, TN • Company Type: Private • Parent Company: Comvest Partners (www.comvest.com) • Website / Franchisee Website: www.freddysusa.com / www.scoopingsmiles.com Old Time Pottery is a discount home decor store with a multitude of product lines.