OFFERING MEMORANDUM FEDEX GROUND DISTRIBUTION FACILITY · offering memorandum fedex ground distribution facility ... offering memorandum fedex ground distribution facility chattanooga,

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NET LEASE GROUP

O F F E R I N G M E M O R A N D U M

FEDEX GROUND DISTRIBUTION FACILITYCHATTANOOGA, TENNESSEE

3 Investment Offering & Highlights

4 Property Description, Lease Summary & Returns

5 Site Plan / Floor Plan

7 FedEx Ground Package System, Inc.

8 Aerials / Location / Area Maps

13 Chattanooga, Tennessee

Transportation

Economy

Higer Education

Demographics

15 Confidentiality & Disclaimer

DOUGLAS LONGYEAR +1 415 677 0458

[email protected] Lic #00829911

ANDREW BOGARDUS+1 415 677 0421


CHRISTOPHER SHELDON+1 415 677 0441


DAVID MCGAHREN+1 615 301 2810


NET LEASE GROUP

O F F E R I N G M E M O R A N D U M

FEDEX GROUND DISTRIBUTION FACILITYCHATTANOOGA, TENNESSEE

FEDEX GROUND, CHATTANOOGA, TN / 3

Investment Offering & HighlightsThe Offering

• A new 237,000± sq. ft. FEDEX GROUND distribution building located in Chattanooga, Tennessee to be completed February 2017.

• Price: $33,470,900 – 6.10% Return

• Highest return for a new FedEx Ground with a 15 year lease term.

Location

• Excellent exposure and access to Interstate 75.

• Located near the Volkswagen auto assembly plant, a large Amazon fulfillment center, America Tire Distributors distribution building, Gestamp manufacturing building and Plastic Omnium manufacturing building.

Real Estate

• New construction.

• Fully automated material handling system paid for by FedEx.

• High ratio of dock high truck doors to the building square footage.

• High parking capacity for cars, trucks and trailers.

Chattanooga Economy

• Diversified economy with service, manufacturing and distribution companies like Unum Provident Corp., a Fortune 500 service company, Volkswagen, Amazon.com, BASF, DuPont, Invista, Komatsu, and Plantronics.

• Headquarters location for the Tennessee Valley Authority, the largest utility in the U.S.

• University of Tennessee at Chattanooga with approximately 15,000 students, faculty and administrators. Universities are excellent economic stabilizers and enhancers because companies are attracted to them by their engineering faculty and graduates.

Tenant

• E-Commerce: FedEx Ground is a leading ground shipper of small packages

• Credit: FedEx Ground’s parent, FedEx Corporation has an S&P BBB bond rating

4 / CUSHMAN & WAKEFIELD

Property Description, Lease Summary & Returns

PROPERTY DESCRIPTION

Address 5076 Summit Spring WayChattanooga, Tennessee

Lot Size 60± acres

Building

Completion Scheduled to be completed early February 2017

Size 237,000± square feet

Building Site Coverage 9.06%

Construction Pre-engineered metal building

Office Area Approximately 5%

Clear Height 30'

Dock Doors 69

Drive in Doors 7

Parking Stalls

Tractors 72

Dollies 72

Trailers 294

Vans 80

Cars 527 (2.21 car stalls / 1,000 sq. ft. of bldg. area)

Other Features • Secured Fence• Tenant’s package handling system

(paid for by tenant)

LEASE SUMMARY

Premises Site & Building

Tenant FedEx Ground Package System, Inc.

Term 15 Years

Commencement Completion (Scheduled to be February 1, 2017)

Expiration January 31, 2032

Rent Commencement Completion (Scheduled to be February 1, 2017)

Annual Rent $2,041,723.00

Expenses NN*

Renewal Options Two Five-Year Terms with the following rents:

1st Renewal: $2,245,895.30

2nd Renewal: $2,358,190.07

* The tenant is responsible for all property real estate taxes, property insurance, tenant’s liability insurance, and maintenance of the yard, parking, drive and hard surfaced areas. The landlord is responsible for maintenance of the structural portions of the building including the foundation, roof, exterior walls and floor slabs.

Price: $33,470,900 - 6.10% Return

ANNUAL RENT

Investment Years Annual Rent Return

1 - 15 $2,041,723.00 6.10%

16 - 20 (Option 1) $2,245,895.30 6.71%

21 - 25 (Option 2) $2,358,190.07 7.05%

28'/33' TRAILER ....................... 15953' TRAILER .............................135DOUBLES ................................. 4TRACTOR ................................ 72DOLLY ...................................... 72VAN .......................................... 80AUTOMOBILE TOTAL ............. 527

STANDARD ................... 517HANDICAP .................... 10

MA

TCH

LIN

ES

EE

C-9

BOLLARD LAYOUTFOR STAIRS (TYP)

SCALE: 1" = 5'

NO. OF EMPLOYEES537 - 1ST SHIFT430 - 2ND SHIFT967 - TOTAL

ALLOWABLE NO. OF PARKING SPACES484 - MIN (967/2)726 - MAX (484 X 1.5)

REQ'D NO OF HANDICAP SPACES11 - 537 X 0.02

ANCHORENGINEERING

REVISEDFEDEX GROUNDCHATTANOOGA, TN DATE

SCALE

SHEET

JOB NO.

3601 Spring Hill Business ParkSuite 200Mobile, Alabama 36608Telephone - 251.478.7223Telecopier - 251.478.3508www.saad.com

09/01/2016

15-0052

24

1" = 50'

C-8

Feet1" = 50'

100500 25

BOLLARD LAYOUTFOR CONDENSER (TYP)

SCALE: 1" = 5'

23

MA

TCH

LIN

ES

EE

C-8

INSET: SECURITY BUILDING AREASCALE: 1" = 20'

ANCHORENGINEERING

REVISEDFEDEX GROUNDCHATTANOOGA, TN DATE

SCALE

SHEET

JOB NO.

3601 Spring Hill Business ParkSuite 200Mobile, Alabama 36608Telephone - 251.478.7223Telecopier - 251.478.3508www.saad.com

09/01/2016

15-0052

24

1" = 50'

C-9

3

Feet1" = 50'

100500 25

237,000± SQ. FT.

OFFICE

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Site Plan DOORS

DRIVE-IN DOORS ..................... 7

DOCK DOORS .......................... 69

PARKING

28’ / 33’ TRAILER ..................... 159

53’ TRAILER .............................. 135

DOUBLES .................................. 4

TRACTOR .................................. 72

DOLLY ....................................... 72

VAN ........................................... 80

AUTOMOBILE TOTAL ............... 527

STANDARD ......................... 517

HANDICAP ......................... 10

LEGEND

= PACKAGE HANDLING SYSTEM= DELIVERY TRUCK= DELIVERY VAN

237,000± SQ. FT.

7 DRIVE-IN DOORS

69 DOCK DOORS


Floor Plan

FEDEX GROUND, CHATTANOOGA, TN / 7REPRESENTATIVE PHOTOGRAPH

FedEx Ground pays for the package sorting and handling conveyor system.

FedEx Ground Package System, Inc.


y FedEx Ground is one of North America’s two largest small-package ground delivery services for E-Commerce.

y FedEx Ground and its subsidiary FedEx SmartPost shipped an average of 7,526,000 packages per day in fiscal year 2016.

FEDEX GROUND PACKAGE SYSTEM, INC., the Property’s tenant, is one of North America’s leading providers of business-to-business and business-to-consumer ground small-package delivery service FedEx Ground is FedEx Corporation’s most profitable division. FedEx Ground has a network of more than 575 distribution hubs and local pickup-and-delivery terminals located throughout the United States and Canada.

The FedEx 2016 annual report (May 31, 2016 yearend) indicates that the FedEx Ground segment had revenues of $16.574 billion, which was 27.6% above the 2015 level, and operating income of $2.276 billion, which reflected a 4.8% year over year increase.

FEDEX CORPORATION (NYSE: FDX), the tenant’s parent, provides customers and businesses worldwide with the broadest portfolio of transportation, logistics and e-commerce services. FedEx corporation’s four subsidiaries are listed above to the right.

Subsidiary Business Revenues*Operating

Profit*

FedEx Express Overnight air delivery $26,451 $2,519

FedEx Ground Small package ground delivery

$16,574 $2,276

FedEx Freight LTL, large items, intermodal, & custom critical

$6,200 $426

FedEx Services Retail package drop off stores

$1,593 Not reported

* (in millions)

For the fiscal year ended May 31, 2016, FedEx reported record revenues of $50.365 billion and net income of $1.820 billion.

On May 25, 2016, FedEx acquired TNT Express for approximately $4.9 billion. The acquisition combines the strengths of the companies – the world’s largest air express network and an unparalleled European road network, which will expand the existing FedEx portfolio and reshape the global transportation and logistics industry.

TNT Express is one of the world’s largest express delivery companies. On a daily basis, TNT Express delivers close to one million consignments ranging from documents and parcels to palletised freight. The company offers road and air delivery services in Europe, the Middle East and Africa, Asia-Pacific and the Americas. TNT Express made ±$7.6 billion in revenue in 2015.

As of this offering’s publication, FedEx Corporation had an investment grade S&P bond rating of “BBB.”

FedEx Corporation does not guarantee the tenant’s lease obligations.

Website: www.fedex.com

REPRESENTATIVE PHOTOGRAPH

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CHATTANOOGA

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APISON PIKE

Site LocationThe FedEx Ground distribution building is situated on the east side of Chattanooga in the southeast quadrant of the intersection of Interstate 75 and Apison Pike Road. Just to the west of the FedEx property is the Volkswagen auto assembly plant, a large Amazon fulfillment center, America Tire Distributors distribution building, Gestamp manufacturing building and Plastic Omnium manufacturing building.

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TENNESSEE

KENTUCKY

WESTVIRGINIA

ILLINOIS

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SOUTHCAROLINA

NORTHCAROLINA

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SUBJECT FEDEX GROUND

FEDEX GROUND LOCATIONS

LEGEND

Regional Map

CHATTANOOGA

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Chattanooga, Tennessee

Chattanooga is the fourth-largest city in the U.S. state of Tennessee, with a population of approximately 173,778. It is the seat of Hamilton County which has a population of approximately 351,220. Chattanooga is part of the Chattanooga Tennessee-Georgia MSA which covers Tennessee counties Hamilton, Marion and Sequatchie and Georgia counties Catoosa, Dade and Walker. The MSA has a population of approximately 544,559.

TRANSPORTATIONHighways - Chattanooga is a central transportation hub with Interstate 24 connecting it to Nashville 133 miles to the northwest, Interstate 75 connecting the city to Knoxville 112 miles to the northwest, Interstate 75 connecting the area to Atlanta 118 miles to the southeast and Interstate 59 tying it into Birmingham 147 miles to the southwest.

Railroads - Chattanooga is served by two Class I railroads, CSX Transportation and Norfolk Southern. These railroads have a total of three yards in the area. Norfolk Southern also maintains a large repair shop in Chattanooga.

Air - The Chattanooga Metropolitan Airport (CHA) offers flights to various domestic destinations via regional and national airlines including Allegiant Airlines, American Eagle, Delta Connection, and US Airways Express.

ECONOMYChattanooga’s economy includes a diversified and growing mix of manufacturing and service industries. Items and goods produced in the area include automobiles, processed foods, iron and steel products, textiles, apparel, cosmetics, pharmaceuticals, clay products, furniture, machinery, paper, petroleum products.

Notable Chattanooga businesses include Access America Transport, BlueCross BlueShield of Tennessee, CBL & Associates, The Chattanooga Bakery, Chattem, the world’s first Coca-Cola bottling plant, Coker Tire, U.S. Xpress Inc., Covenant Transport, Double Cola, CraftWorks Restaurants & Breweries, Luken Communications, Miller & Martin, and Unum Provident Corp., a Fortune 500 service company. The city also hosts large branch offices of Cigna, AT&T, T-Mobile USA, and UBS.

Notable companies that have manufacturing or distribution facilities in the city include Alstom, Amazon.com, BASF, DuPont, Invista, Komatsu, Rock-Tenn, Plantronics, Domtar, Norfolk Southern, Ferrara Candy Company (manufacturer of Brach’s candies), Alco Chemical, Colonial Pipeline, and Buzzi Unicem. The William Wrigley Jr. Company has a prominent presence in Chattanooga, the sole site of production of Altoids breath mint products since 2005.

VolkswagenIn May 2011, Volkswagen Group of America started production at its new Chattanooga Assembly Plant. This plant cost $1 billion and encompasses 1,400 acres. It serves as the group’s North American manufacturing headquarters. The plant has created approximately 3,200 jobs at the plant and lead to 9,500 jobs at indirect suppliers. The plant reportedly manufactures the Passat and the CrossBlue (from late 2016).

Tennessee Valley Authority (TVA)The city is the headquarters for the Division of Power of the Tennessee Valley Authority (TVA), the largest utility in the United States. TVA is a federal corporation that works to develop the natural resources of the Tennessee Valley. Chattanooga is in an enviable position: both electricity and natural gas are readily available at very reasonable rates. Water supplies are also plentiful and sewage treatment has considerable excess capacity to support industrial expansion. In addition, TVA and its power distributors offer a growth credit program that provides significant savings to new commercial and industrial customers requiring a large capacity.

Fast Internet ServiceEPB, also known as the Electric Power Board of Chattanooga, is an electricity distribution and telecommunications company owned by the city of Chattanooga. In 2010, EPB was the first company in the United States to offer 1 Gbit/high-speed internet, over 200 times faster than the national average. On October 15, 2015, Chattanooga implemented the world’s first community-wide 10-gig Internet service, available to all of EPB’s 175,000 homes and businesses. Before the initial project, journalists from The New York Times reported, “only Hong Kong and a few other cities in the world offer such lightning-fast service, and analysts say Chattanooga will be the first in the United States to do so.”


Chattanooga, Tennessee (cont)

HIGHER EDUCATIONThe University of Tennessee at Chattanooga (“UTC”) is the second largest campus of the University of Tennessee System, with a student population of over 10,000. Chattanooga is also home to a branch of the University of Tennessee College of Medicine, which provides medical education to third and fourth year medical students, residents, and other medical professionals in southeast Tennessee through an affiliation with Erlanger Health System.

Rankings• Best of Southern Living Magazine featured a article titled “10 Cities

You Will Absolutely Love (and Your Budget Will Appreciate, Too)”, which named Chattanooga as number one.

• U.S News and World Report of 2013 Best Colleges Guide ranked UTC as number 14 on their list of colleges that offer their students the best value.

• CNN Travel says the city is a “regional gem” with “literally dozens of attractions packed along the city’s downtown riverfront.”

• A journalist for Southern Living wrote, “few cities have reinvented themselves over the past few decades as successfully as Chattanooga,” and “[Chattanooga] now shines as one of the most family-friendly, outdoorsy spots in the South.”

DEMOGRAPHICS

2016 Summary 10 miles 20 miles 30 miles

Population 243,627 597,785 805,168

Households 96,932 234,058 309,679

Families 64,091 155,631 210,373

Average Household Size 2.47 2.49 2.54

Owner Occupied Housing Units 61,592 147,462 198,000

Renter Occupied Housing Units 35,339 86,595 111,680

Median Age 41.0 39.9 39.5

Median Household Income $49,739 $44,915 $43,183

Average Household Income $68,153 $63,429 $60,803

2021 Summary 10 miles 20 miles 30 miles

Population 255,377 622,517 834,890

Households 101,142 242,786 320,067

Families 66,508 160,374 216,055

Average Household Size 2.48 2.50 2.55

Owner Occupied Housing Units 64,357 152,555 204,135

Renter Occupied Housing Units 36,785 90,231 115,931

Median Age 41.9 40.9 40.6

Median Household Income $55,101 $50,622 $48,133

Average Household Income $74,584 $69,206 $66,255

Confidentiality & DisclaimerThe information contained in this marketing brochure (“Materials”) is proprietary and confidential. It is intended to be reviewed only by the person or entity receiving the Materials from Cushman & Wakefield (“Agent”). The Materials are intended to be used for the sole purpose of preliminary evaluation of the subject property/properties (“Property”) for potential purchase.

The Materials have been prepared to provide unverified summary financial, property, and market information to a prospective purchaser to enable it to establish a preliminary level of interest in potential purchase of the Property. The Materials are not to be considered fact. The information contained in the Materials is not a substitute for thorough investigation of the financial, physical, and market conditions relating to the Property.

The information contained in the Materials has been obtained by Agent from sources believed to be reliable; however, no representation or warranty is made regarding the accuracy or completeness of the Materials. Agent makes no representation or warranty regarding the Property, including but not limited to income, expenses, or financial performance (past present, or future); size, square footage, condition, or quality of the land and improvements; presence or absence of contaminating substances (PCB’s, asbestos, mold, etc.); compliance with laws and regulations (local, state, and federal); or, financial condition or business prospects of any tenant (tenants’ intentions regarding continued occupancy, payment of rent, etc). A prospective purchaser must independently investigate and verify all of the information set forth in the Materials. A prospective purchaser is solely responsible for any and all costs and expenses incurred in reviewing the Materials and/or investigating and evaluating the Property.

By receiving the Materials you are agreeing to the Confidentiality and Disclaimer set forth herein.

DOUGLAS LONGYEAR +1 415 677 0458


ANDREW BOGARDUS+1 415 677 0421


CHRISTOPHER SHELDON+1 415 677 0441


DAVID MCGAHREN+1 615 301 2810


NET LEASE GROUP

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OFFERING MEMORANDUM FEDEX GROUND DISTRIBUTION FACILITY · offering memorandum fedex ground distribution facility ... offering memorandum fedex ground distribution facility chattanooga,