Circle K - jesse-lee.com

C i r c l e K

C i r c l e K

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to

be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person

or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide

summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the

subject property. The information contained herein is not a substitute for a thorough due diligence investigation.

Marcus & Millichap has not 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 of the property, the size and

square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or

asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the

financial condition or business prospects of any tenant, or any tenant’s plans or 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; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein,

nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or

representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers

must take appropriate measures to verify all of the information set forth herein. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR

MORE DETAILS.

C O N F I D E N T I A L I T Y A N D D I S C L A I M E R

C i r c l e K

L o n g B e a c h , C a l i f o r n i a

Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows: The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided. As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer. Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. 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 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 past performance at this or other locations is an important consideration, it is not a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms 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 the intrinsic value of the property and the value of any long-term lease, including 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.

N E T L E AS E D D I S C L A I M E R

C i r c l e K

L o n g B e a c h , C a l i f o r n i a

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. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap 5

T A B L E O F C O N T E N T S

Investment Overview

Investment Overview 7

Concept Overview 8

Pricing and Financial Analysis

Financial Overview 10

Property Overview

Location Overview 12

Aerial Photo 13

Property Photos 14-15

Surrounding Property Photos 16

Regional Map 17

State Map 18

Recent Sales

Recent Sales Comparables 20-21

Demographics

Demographic Report 23

I N V E S T M E N T O V E R V I E W


I N V E S T M E N T O V E R V I E W

TENANT OVERVIEW

The lease is guaranteed by SB Gas and Wash Management, Incorporated, which is a 38-unit c-store, gas station, auto repair, and car wash operator located throughout California. The operator started out as a gas station clerk near the Los Angeles Airport in 1985. By the 1990s, the operator directly oversaw the operations of four gas stations where he would ultimately become a partner. He eventually acquired stations with brands such as Arco, Texaco, 76, and Chevron among others. Up until 2005, the operator owned and/or operator 50 car washes, gas stations and convenience stores. In 2005, he divested all his investment. Since reentering the business in 2009, the operator has owned and operated up to six carwashes, gas stations, and convenience stores. SB Gas and Wash Management, Incorporated was recently formed by the operator after acquiring 12 convenience stores and one gas station from another operator.

INVESTMENT HIGHLIGHTS

20-Year Triple-Net Sale-Leaseback

1.75 Percent Annual Rental Increases

Four, Five-Year Tenant Renewal Options

38-Unit Operator

Industry Veteran, 30 Years of Experience

The subject investment opportunity is a Circle K convenience store and 76-branded gas station located at 701 Redondo Avenue, Long Beach, California. The convenience store was previously unbranded but will be reimaged as a Circle K within the first six months of the lease. The property consists of 1,540 square feet of building space and sits on approximately 0.32 acres of land. Upon the close of Escrow, the tenant will enter into a new, 20-year triple-net lease. Investors will benefit from 1.75 percent annual rental increases from the base rent of $146,903. There are four, five-year tenant renewal options in addition to the 20-year initial term. Circle K Stores, Incorporated (“Circle K”) is a convenience store and gasoline service station operator owned by Alimentation Couche-Tard, the largest convenience store retailer in Canada. For over 63 years, customers have come to recognize the convenience and quality associated with the Circle K brand. Circle K has more than 3,400 convenience stores and gasoline service stations located across the USA. In addition, there are approximately 4,000 international stores across the globe including Japan, Mexico, China, Guam, and 9 other countries operating under the Circle K brand.

INVESTMENT OVERVIEW


C O N C E P T O V E R V I E W

This location is fueled by 76, which is a chain of gas stations and fuel distributor located within the United States. The company was formed in Santa Paula, California by Lyman Stewart, a co-founder of Union Oil Company of California. Today 76 is owned by Phillips 66 Company providing its customers with TOP TIER® gas in more than 1,800 retail fuel sites. In 1997, Union Oil Company of California, dba Unocal, the original owner and creator of the Union 76 sold its western United States refining and marketing operations and the rights to the Union 76 brand for use in refining and marketing operations to Tosco Corporation. In 2001, Tosco was purchased by Phillips Petroleum, which merged with Conoco to form ConocoPhillips in 2002.

ABOUT 76

Circle K’s success in the convenience retailing industry spans more than 60 years. Our roots trace back to 1951 when Fred Hervey purchased three Kay’s Food Stores in El Paso, Texas. Little did anyone know that these stores would serve as the beginning of Circle K - one of the nation’s leading convenience store chains. During the early years, Hervey’s enterprising spirit enabled the company to make its mark in the southwestern part of the United States. He grew the Circle K chain into neighboring New Mexico and Arizona, which has been the company’s home base since 1957. During the next few decades, Circle K grew its retail network through a series of acquisitions, which were incorporated into the Circle K brand. By 1975, there were 1,000 Circle K stores across the US. In 1979, Circle K entered the international market when a licensing agreement established the first Circle K stores in Japan. The company’s growth continued and by 1984 sales had reached $1 billion. In 1999, a franchise program was introduced to support operators looking to build a business with a leading convenience store brand. Now there are more than 7,000 Circle K sites operating in the US and thirteen other countries. Circle K has become one of the most widely recognized convenience store brands, known worldwide for quality products and great customer service.

Today, 76 is owned by a much larger company, Phillips 66. Phillips 66 was formed in 2011, when ConocoPhillips announced their intent to separate the company’s upstream and downstream businesses into two stand-alone, publically traded corporations, with the intent of maximizing shareholder value. The repositioning of ConocoPhillips became complete, and Phillips 66 debuted as an independent downstream energy company with refining, marketing, midstream and chemicals businesses operating across the globe. The new independent company began trading on the New York Stock Exchange on May 1, 2012 under the ticker PSX. In the United States, Phillips operates and supplies Conoco-Phillips, Phillips 66- and 76-branded stations. In addition to other assets, Phillips owns 15 refineries with a net crude oil capacity of 2.2 million barrels per day, from which it supplies nearly 10,000 branded marketing outlets. Phillips has an enterprise value of nearly $49 billion and a market cap of $48 billion. The company has approximately 13,500 employees worldwide and active in more than 45 countries. Phillips 66 is ranked No. 6 on the Fortune 500 list and No. 19 on the Fortune Global 500 list as of 2014.

ABOUT PHILLIPS 66 | NYSE: PSX

ABOUT CIRCLE K

P R I C I N G A N D F I N A N C I A L A N A LY S I S


F I N A N C I A L O V E R V I E W

FINANCIAL OFFERING SUMMARY

C i r c l e K 7 0 1 R e d o n d o A v e n u e ,

L o n g B e a c h , C a l i f o r n i a 9 0 8 0 4

Property Circle K

Property Address701 Redondo Avenue

Long Beach, CA 90804Price $2,176,341Rent $146,903CAP Rate 6.75%Rentable Square Feet 1,540Price/SF $1,413.21Year Built 1964Lot Size 0.32 Acres Ownership Fee Simple

Tenant Trade Name Circle KOwnership PrivateTenant SB Wash & Gas ManagementLease Type Triple Net (NNN)Roof and Structure Tenant ResponsibleLease Guaranty Private GuarantyLease Term 20 YearsLease Commencement Close of EscrowRent Commencement Close of EscrowLease Expiration Date 20 Years From COERental Increases 1.75% AnnuallyRenewal Options Four, Five-Year Options

PROPERTY SUMMARY

TENANT SUMMARY

Rent Increases Annual Rent Monthly RentYear 1 $146,903 $12,241.92Year 2 $149,474 $12,456.15Year 3 $152,090 $12,674.13Year 4 $154,751 $12,895.93Year 5 $157,459 $13,121.61Year 6 $160,215 $13,351.24Year 7 $163,019 $13,584.88Year 8 $165,871 $13,822.62Year 9 $168,774 $14,064.52Year 10 $171,728 $14,310.64Year 11 $174,733 $14,561.08Year 12 $177,791 $14,815.90Year 13 $180,902 $15,075.18Year 14 $184,068 $15,338.99Year 15 $187,289 $15,607.43Year 16 $190,567 $15,880.56Year 17 $193,902 $16,158.47Year 18 $197,295 $16,441.24Year 19 $200,748 $16,728.96Year 20 $204,261 $17,021.72

Annual Rent $146,903CAP Rate 6.75%Price $2,176,341

ANNUALIZED OPERATING DATA

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P R O P E R T Y O V E R V I E W S

P R O P E R T Y O V E R V I E W

This Circle K-branded convenience store and 76-branded gas station is located at 701 Redondo Avenue in Long Beach, California. Long Beach is a city in Los Angeles County, on the Pacific Coast. The city is the second largest in the Greater Los Angeles Area and a principal city of the Los Angeles-Long Beach-Santa Ana metropolitan area. There is a population of over 263,000 within a 3-mile radius of the property and over 426,000 within five miles. The subject property is situated at the corner of Redondo Avenue and East 7th St, which experiences traffic counts of approximately 36,000 vehicles per day, providing a consistent flow of consumers to this property. The property is well-positioned in a highly active commercial corridor that harbors a great deal of both local and national retailers. This Circle K is across the street from a Chevron and Starbucks. Retailers and quick-service restaurants located within 5 minutes of the property include: 7-Eleven, McDonald’s, Sherwin-Williams, Walgreens, Rite Aid, Goodwill, OneWest Bank, Subway, Pizza Hut, and KFC. Jefferson Leadership Academies is located in the immediate vicinity of the property and enrolls over 900 students. Slightly further east is Woodrow Wilson Classical High School enrolling approximately 4,100 students. California State University, Long Beach is located just two miles east of the property and enrolls over 35,500 students. The Port of Long Beach is the United States' second busiest container port and one of the world's largest shipping ports. The city also maintains a large oil industry with wells located both underground and offshore. Manufacturing sectors include those in aircraft, car parts, electronic and audiovisual equipment, and home furnishings. It is also home to headquarters for corporations including Epson America, Molina Healthcare, and SCAN Health Plan.

LOCATION HIGHLIGHTS Intersection Experiences Approximately 36,000 Vehicles

Daily

Located Along a Retail Corridor of Major National and Local Tenants

Densely Populated Area with Over 263,000 Residents Within Three Miles of the Property

Only Minutes Away from the Pacific Coast, and 30 Minutes South of Downtown Los Angeles

LOCATION OVERVIEW


S U R R O U N D I N G A R E A P H O T O

WOODROW WILSON CLASSICAL HIGH SCHOOL (4,100 STUDENTS)

JEFFERSON LEADERSHIP ACADEMIES (910 STUDENTS)

P R O P E R T Y P H O T O S


P R O P E R T Y P H O T O S


S U R R O U N D I N G P R O P E R T Y P H O T O S


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P R O P E R T Y O V E R V I E W S


S A L E S C O M P A R A B L E S

RECENT SALES COMPS SUBJECT PROPERTY

7 6 | L o s A n g e l e s , C A | 5 - Y e a r L e a s e

Price: $1,250,000 Sale Date: 9/17/13

CAP Rate: 6.48% Square Feet: 1,583

Term Remaining: 1.5 Years Tenant: Franchisee

Q u i k T r i p | P h o e n i x , A Z | 2 0 - Y e a r L e a s e

Price: $4,905,345 Sale Date: 12/6/13


Term Remaining: 18 Years Tenant: Corporate

C i r c l e K | L o n g B e a c h , C A | 2 0 - Y e a r S a l e - L e a s e b a c k

Price: $2,176,341 Sale Date: N/A


Term Remaining: 20 Years Tenant: Franchisee


S A L E S C O M P A R A B L E S

RECENT SALES COMPS

7 - E l e v e n | O r m o n d B e a c h , F L | 2 0 - Y e a r L e a s e

Price: $1,475,000 Sale Date: 9/5/14


Term Remaining: 4 Years Tenant: Corporate

7 - E l e v e n | W e s t W e l b o u r n e , F L | 2 0 - Y e a r L e a s e

Price: $2,425,000 Sale Date: 1/3/2014


Term Remaining: N/A Tenant: Corporate

C i r c l e K | S a i n t J o h n s , A Z | 1 0 - Y e a r L e a s e

Price: $1,070,000 Sale Date: 3/4/14


Term Remaining: 8.5 Years Tenant: Corporate

M A R K E T O V E R V I E W A N D D E M O G R A P H I C S

SUMMARY REPORT Geography: 5 Miles Population In 2013, the population in your selected geography was 426,294. The population has changed by 1.91% since 2000. It is estimated that the population in your area will be 427,005 five years from now, which represents a change of 0.16% from the current year. The current population is 48.7% male and 51.2% female. The median age of the population in your area is 36.1, compare this to the U.S. average which is 37. The population density in your area is 7,320.06 people per square mile. Households There are currently 164,087 households in your selected geography. The number of households has changed by 3.09% since 2000. It is estimated that the number of households in your area will be 166,005 five years from now, which represents a change of 1.16% from the current year. The average household size in your area is 2.54 persons. Income In 2013, the median household income for your selected geography is $54,332, compare this to the U.S. average which is currently $53,535. The median household income for your area has changed by 39.46% since 2000. It is estimated that the median household income in your area will be $63,481 five years from now, which represents a change of 16.83% from the current year. The current year per capita income in your area is $31,662, compare this to the U.S. average, which is $28,888. The current year average household income in your area is $81,391, compare this to the U.S. average which is $75,373. Race & Ethnicity The current year racial makeup of your selected area is as follows: 52.85% White, 10.68% African American, 0.73% Native American and 13.90% Asian/Pacific Islander. Compare these to U.S. averages which are: 72.20% White, 12.65% African American, 0.96% Native American and 5.01% Asian/Pacific Islander. Housing The median housing value in your area was $219,858 in 2000, compare this to the U.S. average of $110,781 for the same year. In 2000, there were 71,898 owner occupied housing units in your area and there were 87,205 renter occupied housing units in your area. The median rent at the time was $588. Employment In 2013, there are 174,240 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 62.8% of employees are employed in white-collar occupations in this geography, and 37.1% are employed in blue-collar occupations. In 2013, unemployment in this area is 6.09%. In 2000, the median time traveled to work was 24.3 minutes.

D E M O G R A P H I C S U M M A R Y R E P O R T


C i r c l e K

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Circle K - jesse-lee.com