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Pieology & Restaurants at Rio Rancho Towne Center II2051 RANCHO VALLEY DRIVE, POMONA, CALIFORNIA 91766
CAPITAL MARKETS | NATIONAL RETAIL PARTNERS | OFFERING MEMORANDUM
Exclusively Marketed by
INVESTMENT ADVISORS
JOHN READ + 1 949 725 8606Lic. 01359444 [email protected]
MEGAN WOOD + 1 949 725 8423Lic. 01516027 [email protected]
CBRE-Newport Beach 3501 Jamboree Rd., Ste 100Newport Beach, CA 92660F + 1 949 725 8545www.cbre.com/nrpwest
JIMMY SLUSHER + 1 949 725 8507 Lic. 01857569 [email protected]
PHILIP D. VOORHEES + 1 949 725 8521Lic. 01252096 [email protected]
KIRK BRUMMER + 1 949 725 8418Lic. [email protected]
NRP-WEST TEAM
Todd GoodmanPreston FetrowKirk Brummer
Philip D. VoorheesJohn Read
Megan Wood
Jimmy SlusherMatt BursonJames Tyrrell
For all of our available listings, please visit:www.cbre.com/nrpwest
INVESTMENT SUMMARYInvestment Highlights
1AREA OVERVIEWCity Overview
County Overview
4PROPERTY OVERVIEW
Parcel MapSite Plan
14TENANT PROFILES
18FINANCIALS
AssumptionsCash FlowRent Roll
20
AERIAL
OWNED BY WATER DISTRICT (M
WD)
RIO RANCHO TOWNE CENTER
MARTIN LUTHER KING JR.MEMORIAL PARK
LEXINGTON ELEMENTARY
FUTURE HOTEL
FUTURE RETAIL±6,300 SF
S. PARK AVENUE
W. LEXINGTON AVENUEWELLSFARGO
LEE NAILSAND SPA
PAMPER NAIL AND SPA
¨
RANCHO VALLEY DRIVE
S. WHIT
E AVENUE
STATE R
OU
TE 71
(63,000 CP
D)
RIO RANCHO ROADRIO RANCHO TOWNE CENTER II
GAREY HIGH SCHOOL (1,674 STUDENTS)
FUTURE RESIDENTIAL DEVELOPMENT
Traffic Counts (CPD Daily Averages)
Interstate 10(at State Route 57)
240,000State Route 57(at Interstate 10)
154,000State Route 60 (at State Route 71)
212,000
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
100% LEASED, LONG TERM STABILITY
• Stable Income with Improving Returns – Net Operating Income is
projected to increase more than $69,000 (26%) over the anticipated hold
period, providing a strong hedge against inflation
• NNN and Admin Fees – Pieology & Restaurants at Rio Rancho Towne
Center II feature NNN leases plus 10% administrative fee recapture,
resulting in few, if any capital responsibilities – Operating costs reside with
the property’s tenants, not the landlord
HIGH IDENTITY LOCATION WITHIN A NEWLY CONSTRUCTED TARGET-SHADOW ANCHORED SHOPPING CENTER
• Central Location – Rio Rancho Towne Center is centrally located along
State Route 71 (63,000 cars per day), serving the communities of
Pomona and Phillips Ranch, in addition to parts of Chino Hills, Diamond
Bar and Chino
• Point of Destination – Located across Rancho Valley Drive from the
recently constructed Rio Rancho Towne Center, a 335,000 SF Target and
Ross Dress for Less-anchored community center spread across 31.85
acres
• Retail Hub – Synergistic surrounding tenant mix satisfies daytime and
evening customer demands. Surrounding tenants include: Target, Ross
Dress for Less, Citiwear, GNC, Panda Express, Golden Corral, Chipotle,
Flame Broiler, Carl’s Jr./Green Burrito, Del Taco, Jersey Mike’s,
T-Mobile, UPS Store, Planet Fitness, Wing Stop and others
Investment Highlights
OWNED BY WATER DISTRICT (M
WD)
RIO RANCHO TOWNE CENTER
MARTIN LUTHER KING JR.MEMORIAL PARK
LEXINGTON ELEMENTARY
FUTURE HOTEL
FUTURE RETAIL±6,300 SF
S. PARK AVENUE
W. LEXINGTON AVENUEWELLSFARGO
LEE NAILSAND SPA
PAMPER NAIL AND SPA
¨
RANCHO VALLEY DRIVE
S. WHIT
E AVENUE
STATE R
OU
TE 71
(63,000 CP
D)
RIO RANCHO ROADRIO RANCHO TOWNE CENTER II
GAREY HIGH SCHOOL (1,674 STUDENTS)
FUTURE RESIDENTIAL DEVELOPMENT
Investment Summary
OFFERING PRICE $5,130,000
CAP RATE 5.25%
NOI $269,346
TOTAL BUILDING AREA 7,875 SF
TOTAL LAND AREA 1.26 Acres (54,885 SF )
LAND COVERAGE RATIO 14.34%
OCCUPANCY 100%
PROPERTY WEBSITE www.nrpwest.com/pieologyrestaurants
I N V E S T M E N T H I G H L I G H T S
1
AFFLUENT, LOS ANGELES COUNTY DEMOGRAPHICS
• More than 18,700 people in a 1-mile radius, with an Average
Household Income exceeding $80,000 per year
• More than 150,800 people in a 3-mile radius, with an Average
Household Income exceeding $75,600 per year
• More than 342,500 people in a 5-mile radius, with an Average
Household Income exceeding $77,500 per year
PRIDE OF OWNERSHIP ASSET AND IDEAL 1031 EXCHANGE UPLEG
• Recent Construction – Newly built Los Angeles County retail property
• Coupon Clipper – Long term, NNN leased investment, plus
administrative recapture provides for minimal management and out of
pocket obligations
• Pride of Ownership, Internet Resistant Asset – You cannot eat a
custom pizza or freshly baked pastry online!
• No Existing Financing – Delivered free and clear of debt permitting an
investor to purchase for cash or obtain new financing at desired LTV
and terms
INTERNET RESISTANT TENANCY
• 100% Restaurant Uses – “Quick Casual” and take out restaurants
like Pieology, Little Caesar’s and Corky’s provide a strong bulwark
against internet competition. Dining experiences cannot be
replicated online, and benefit from internet delivery services like
DoorDash and GrubHub
• You Cannot Do This Online! – The property’s location in Rio Rancho
Towne Center provides a retail experience, featuring dining, fitness,
beverage and service options
LOW MANAGEMENT HASSLE
• High Quality NNN Asset – New Construction (2016) strip center with
NNN leases provide for limited management obligation
• Long Term Leases – Recent, long term leases (Corky’s - 10 years;
Pieology – 10 years) plus options, eliminating near term leasing
responsibility
• Recently Constructed, High Quality Asset – High quality, newly built
retail center with no deferred maintenance, limiting an investor’s
near term capital requirements
Investment Highlights (CONTINUED)
I N V E S T M E N T H I G H L I G H T S
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS2
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
I N V E S T M E N T H I G H L I G H T S
3
The city of Pomona is located on the eastern border of Los
Angeles County and encompasses approximately 22 square
miles. Located in the heart of the Greater Los Angeles Basin,
Pomona is bordered by the San Gabriel Valley and the Inland
Empire. Of the 88 incorporated cities in Los Angeles County,
Pomona ranks as the fifth largest city with just over 154,000
residents. Incorporated in 1888, Pomona is connected to
downtown Los Angeles and downtown Riverside by the
Metrolink as well as the 10, 57, 60, 71 and 210 Freeways.
Pomona is serviced by Ontario Airport which is located just 12
miles from the city center and is also proximate to John Wayne
Airport, Long Beach Airport and Los Angeles International
Airport (LAX).
Pomona is the site of the Fairplex, which hosts the L.A.
County Fair, and the NHRA Auto Club Raceway at Pomona
(formerly known as Pomona Raceway) home to the Circle K
Winternationals, Auto Club Finals and other races including
the O’Reilly Street Machine and Muscle Car Nationals and the
NMCA Flowmaster West Street Car Series. The L.A. County
Fair is the fourth largest fair in the US (per visitors) and the
largest in California, attracting more than 1.4 million people
annually, additionally the facility is used year-round to host
a variety of educational, commercial, and entertainment
City Overview
A R E A O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS4
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
shows such as trade and consumer shows, conventions, and
sporting events. These events include Barretts horse sales,
the Grand National Roadster Show, L.A. Roadster Show, the
Pomona Swap Meet & Classic Car Show 7 times per year and
the year-round home to the Wally Parks NHRA Museum.
POMONA TOP EMPLOYERS
Rank Employer # of Employees
1 Pomona Valley Hospital 3,078
2 Pomona Unified School District 2,902
3 California State Polytechnic University 2,612
4 Fairplex 954
5 Casa Colina Rehabilitation Center 817
6 City of Pomona 689
7 Verizon 596
8 County of Los Angeles Department of Social Services 400
9 First Transit 348
10 Inland Valley Care & Rehab 339
Source: Comprehensive Financial Report, Pomona
LA County Fair
A R E A O V E R V I E W
5
Pomona is home to a number of colleges and universities
including: California State Polytechnic University (Cal-Poly),
and Western University of Health Sciences. Cal-Poly Pomona
is one of only two polytechnic universities in the 23 California
State University campus system. The Western University
of Health Sciences main campus in Southern California is
among the most thriving enterprises in the Pomona and
San Gabriel Valleys. The Pomona campus helped transform
downtown Pomona into a thriving mix of retail, commercial,
and educational enterprises.
City Overview (CONTINUED)
Source: Esri
Pomona California
2016 Estimated Population 154,345 38,986,171
2020 Projected Population 159,523 40,718,391
2010 Census Population 149,058 37,253,956
2010-2016 Annual Population Growth Rate 0.56% 0.73%
2016-2021 Annual Population Growth Rate 0.66% 0.87%
2016 Estimated Median Age 30.30 35.80
2016 Estimated Households 39,532 13,029,292
2021 Projected Households 40,744 13,549,437
2010 Census Households 38,477 12,577,498
2010-2016 Annual Household Growth Rate 0.43% 0.57%
2016-2021 Annual Household Growth Rate 0.61% 0.79%
2016 Estimated Average Housing Value $348,563 $518,280
2016 Estimated Households 39,532 13,029,292
2016 Estimated Average Household Income $65,154 $90,812
2021 Estimated Average Household Income $70,398 $98,876
POMONA DEMOGRAPHICS
Cal-Poly Pomona
A R E A O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS6
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
AERIAL
LOCAL MAP
A R E A O V E R V I E W
7
Los Angeles County is the most populous county in the country
with over 18 million people spread over a land area the size
of Maine. Thirty of LA’s suburbs have populations of 80,000 or
more. Los Angeles County is home to one of the most educated
labor pools in the country, offering a labor force of more than
5 million. Los Angeles County’s continued economic growth,
in contrast to other areas of the state and nation, is due to its
growing population, diverse economy and abundant, well-trained
workforce.
Los Angeles County is served by one of the largest freeway
networks in the country, providing direct access to the five
neighboring counties of Orange, Riverside, San Bernardino, Kern,
and Ventura. Los Angeles County’s extensive freeway network
facilitates the movement of people and freight throughout the
region, the state, and the nation.
Los Angeles International Airport (LAX) serves Los Angeles
County and is the seventh busiest passenger airport in the
world and third busiest in the US serving nearly 74.9 million
passengers per year. Along with its 742 daily flights, LAX ranks
14th in the world and fifth in the US in air cargo processed. It is
supplemented by its proximity to Ontario International Airport in
the City of Ontario (San Bernardino County), Burbank Airport in
Burbank (Los Angeles County), John Wayne Airport in Santa Ana
(Orange County), and Long Beach Airport (Los Angeles County).
County Overview
Santa Monica
LA County Fair
J. Paul Getty Museum
A R E A O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS8
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
Located on the southern coast of California, Los Angeles County
covers 4,084 square miles and includes San Clemente and Santa
Catalina islands. The county is comprised of approximately 88
vibrant and diverse cities hosting more than 244,000 business
establishments—the greatest concentration in the state.
County Overview (CONTINUED)
Perishing Square
Source: Esri
LOS ANGELES COUNTY DEMOGRAPHICS
2016 Estimated Population 10,147,765
2020 Projected Population 10,479,488
2010 Census Population 9,818,605
2010-2016 Annual Population Growth Rate 0.53%
2016-2021 Annual Population Growth Rate 0.65%
2016 Estimated Median Age 35.40
2016 Estimated Households 3,321,508
2021 Projected Households 3,416,966
2010 Census Households 3,241,204
2010-2016 Annual Household Growth Rate 0.39%
2016-2021 Annual Household Growth Rate 0.57%
2016 Estimated Average Housing Value $576,890
2016 Estimated Households 3,321,508
2016 Estimated Average Household Income $85,730
2021 Estimated Average Household Income $93,392
A R E A O V E R V I E W
9
Los Angeles County has a Gross Domestic Product (GPD) of
approximately $544 billion, placing it among the top 20 economies
in the world–higher than Switzerland, Sweden, and Saudi Arabia. Of
its 244,000 businesses, there are more minority and women-owned
businesses than any other county in the nation. Los Angeles County
is also the nation’s top international trade and manufacturing center.
Los Angeles is recognized worldwide as a leader in entertainment,
health sciences, business services, aerospace, and international
trade. While Hollywood and the Southern California beach culture
are part of the collective image of Los Angeles, the city also boasts
more museums than any other city in the US and some of the best
hotels in the world.
Los Angeles County possesses a diverse economic base,
boasting a number of Fortune 500 companies headquartered
in the county, including the Walt Disney Company, Edison
International, Health Net, and Jacobs Engineering Group to name
a few (see chart on page 13). Key factors positively influencing
the region’s economic position include increased local media
production by the entertainment industry, a continuing expansion
of import flows, and growth in aerospace, homeland security,
and in the private business sector. Los Angeles County’s well
educated labor pool, numerous universities, appealing climate,
and world-class infrastructure will enable Greater Los Angeles to
continue to be a world leader in economic and cultural influence.
County Overview (CONTINUED) KEY JOBS IN LOS ANGELES COUNTY
ENTERTAINMENT
162,850
EDUCATION
91,730
BUSINESS SERVICES
162,850
FINANCE SERVICES
55,180
TRADE
163,600
HOSPITALITY & TOURISM
63,750
FASHION
65,510
Downtown LA
Port of Los Angeles
Union Station
Source: www.chooselacounty.com
A R E A O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS10
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
INTERESTING FACTS ABOUT LOS ANGELES COUNTY
• Los Angeles County has more than 80 stage theaters and
300 museums.
• The Port of Los Angeles is the busiest in the US and one of
the busiest in the world.
• The Los Angeles five-county region, which includes Los
Angeles, Riverside, Ventura, Orange, and San Bernardino
counties has a population of over 18 million.
• If the five-county Los Angeles area were a state it would be
the fourth largest in the United States.
• If Los Angeles County were a nation, it would have the 19th
largest economy in the world.
• Los Angeles is regarded as the entrepreneurial capital of the
world with nearly twice as many small businesses than any
other similarly-sized region of the United States.
County Overview (CONTINUED)
Warner Brothers StudiosUniversity City Walk
Dolby Theatre
Magic Mountain
A R E A O V E R V I E W
11
Rodeo Drive
Madame Tussauds
Griffith Observatory
California Science Center
12
A R E A O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
7
6
8 5
3 10
2
12
4
11
9
13
14
15
1
REGIONAL MAP
COMPANY LOCATION RANK
1 The Walt Disney Company Burbank 61
2 DirecTV El Segundo 98
3 Occidental Petroleum Corporation Los Angeles 116
4 Amgen Inc. Thousand Oaks 154
5 Edison International Rosemead 222
6 Jacobs Engineering Group Inc. Pasadena 237
7 Health Net, Inc. Woodland Hills 254
8 Reliance Steel & Aluminum Los Angeles 299
9 AECOM Technology Corporation Los Angeles 332
10 Oaktree Capital Group, LLC Los Angeles 354
11 CBRE, Inc. Los Angeles 363
12 Molina Healthcare, Inc. Long Beach 393
13 Avery Dennison Corporation Glendale 398
14 Mattel, Inc. El Segundo 403
15 Live Nation Entertainment Beverly Hills 404
FORTUNE 500 COMPANIES IN LOS ANGELES COUNTY
Source: http://fortune.com/fortune500
EMPLOYER REVENUE
The Walt Disney Co $48B
Ingram Micro Inc. $44B
DirecTV $32B
Qualcomm Inc. $26B
Amgen Inc. $19B
TOP EMPLOYERS IN LOS ANGELES COUNTY (BY REVENUE)
Source: http://www.latimes.com/business/la-fi-mo-biggest-socal-companies-20130514-photogal-lery.html
REGIONAL MAP
A R E A O V E R V I E W
13
LOCATION2051 Rancho Valley Drive
Pomona, California 91766
LAND AREAThe subject site consists of 54,885
SF of land area (1.26 Acres).
BUILDING AREAThe subject site consists of 7,875 SF
of building area.
FRONTAGE & ACCESSThe subject is visible from State
Route 71 and accessed through
one (1) access point on Rio Rancho
Road and three (3) access points on
Rancho Valley Drive.
ADJACENT PROPERTIES
North: Rio Rancho Towne Center
II is bordered to the north
by Rio Rancho Towne
Center Phase I.
East: Rio Rancho Towne Center
II is bordered to the east by
the remaining portions of
Rio Rancho Towne Center
and Pomona AutoCenter
beyond that.
South: Rio Rancho Towne Center
II is bordered to the south
by SR-71.
West: Rio Rancho Towne Center
II is bordered to the west
by SR-71 and adjacent
future developments.
BUILTThe subject was constructed in
2016.
FREEWAY TRAFFIC COUNTSInterstate 10
(at State Route 57) .......................240,000
State Route 57
(at Interstate 10) ..............................154,000
State Route 60
(at State Route 71) .........................212,000
State Route 71 ....................................63,000
ZONINGAccording to the city of Pomona the
subject site is currently zoned as
C-4 highway commercial.
Property Overview (CONTINUED)
P R O P E R T Y O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS14
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
PARCEL MAP
P R O P E R T Y O V E R V I E W
15
OWNED BY WATER DISTRICT (MWD)
FUTURE RETAIL±6,300 SF
RIO RANCHO TOWNE CENTER
FUTURE HOTEL
STATE ROUTE 71 (63,000 CPD)
RIO RANCHO ROAD
RANCHO VALLEY DRIVE
PAMPER NAIL AND SPA
¨
W. LEXIN
GTO
N
AVENU
E
WELLSFARGO
LEE NAILSAND SPA
RIO RANCHO TOWNE CENTER II
FUTURE RESIDENTIAL
DEVELOPMENT
16
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
RIO
RA
NC
HO
RO
AD
CORONA FREEWAY ROUTE 71
S WH
ITE AVEN
UE
FUTURE RETAIL6,300 SF
FUTURE HOTEL
RANCHO VALLEY DRIVE
SITE PLAN
¨
Target is located adjacent toRio Rancho Towne Center Phase II
PAMPER NAIL AND SPA
P R O P E R T Y O V E R V I E W
17
CORKY’S KITCHEN & BAKERYCorky’s is a Southern California based homestyle
American cuisine, full-service restaurant chain that
has 10 locations in the Inland Empire and Riverside
County. With memories of his Grandmother “Corky”,
Mike Towles and his wife Jennifer, have re-created
those same memories with homestyle breakfast,
lunch and dinner. Corky’s proudly features
homemade pies, baked fresh daily with the
finest ingredients and flaky crust. The restaurant
also offers an assortment of fresh baked goods,
including cookies, muffins and other homemade
desserts.
Website: www.corkyskitchenandbakery.com
Ownership: Private
Locations: 10
Headquarters: Alta Loma, CA
PIEOLOGYPieology is an artisan-style, casually upscale,
build-your-own pizza parlor that has endless
combinations of pies. Customers get the option to
choose from three different kinds of crusts, seven
sauces, six cheese options, seven meats, and
sixteen veggie toppings, which can be finished
with an option of five drizzles, such as pesto or fiery
buffalo sauce. in 2015, Pieology was named the
country’s fastest-growing restaurant chain by food
consultancy Technomic.
Website: www.pieology.com
Ownership: Private
Locations: 137
Headquarters: Rancho Santa Margarita, CA
LITTLE CAESARSLittle Caesars Pizza, known for its HOT-N-
READY pizza and famed Crazy Bread, is
the largest carryout-only pizza chain in the
world with locations in all 50 states and 18
countries and territories worldwide. Named
“Best Value in America” for the eighth year in
a row, Little Caesars products are made with
quality ingredients, such as fresh, never frozen,
mozzarella and Muenster cheese, dough made
fresh daily in every store and sauce made from
farm fresh crushed tomatoes.
Website: www.littlecaesars.com
Ownership: Private
Locations: 4,301
Headquarters: Detroit, MI
18
T E N A N T O V E R V I E W
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
T E N A N T O V E R V I E W
19
F I N A N C I A L S
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS20
Assumptions
Notes: All market rent rates are stated on calendar-year basis.
[1] General Vacancy Loss factor includes losses attributable to projected lease-up, rollover downtime, and fixturing downtime. The following tenants are excluded from this loss factor for current and option terms only: Little Caesars.
[2] Capital Reserves do not inflate during the term of the analysis.
[3] Operating Expenses are based on the 2017 Budget, less any owner-specific expenses. Assumes a 15% OEA Administrative Fee.
[4] Real Estate Taxes have been reassessed at the estimated purchase price based on a millage rate of 1.171179% plus special assessments of $5,000.
[5] Rent Abatement includes NNN charges as well as base rent.
GLOBAL AVAILABLE SPACE LEASING SECOND GENERATION LEASING
Analysis Period Occupancy and Absorption Retention Ratio 75%
Commencement Date September 1, 2017 Projected Available at 9/1/17 0 SF
End Date August 31, 2027 Currently Available as of 6/1/17 0 SF Financial Terms
Term 10 Years Percentage Available at 6/1/17 0.00% 2017 Monthly Market Rent $3.00 - $3.40 PSF
Rent Adjustment 3.00% Annually
Area Measures Lease Term 5 Years
Building Square Feet (SF) 7,875 SF EXPENSES Expense Reimbursement Type NNN (No Mgmt) + 10% Ad
Growth Rates Operating Expense Source 2017 Budget [3] Tenanting Costs
Consumer Price Index (CPI) 3.00% Rent Abatements [5]
Other Income Growth Rate 3.00% Management Fee (% of EGR) 4.00% New 3 Month(s)
Operating Expenses 3.00% Renewal 0 Month(s)
Real Estate Taxes 2.00% Real Estate Taxes Reassessed Yes [4] Weighted Average 0.75 Month(s)
Market Rent Growth Millage Rate 1.171179%
CY 2018 - 3.00% Special Assessments (Estimated) $5,000 Tenant Improvements ($/SF)
CY 2019 - 3.00% New $30.00 PSF
CY 2020 - 3.00% Renewal $6.00 PSF
CY 2021 - 3.00% Weighted Average $12.00 PSF
CY 2022 - 3.00%
CY 2023 - 3.00% Commissions [5]
CY 2024 - 3.00% New 6.00%
CY 2025 - 3.00% Renewal 1.20%
CY 2026 - 3.00% Weighted Average 2.40%
CY 2027+ - 3.00%
Downtime
General Vacancy Loss 5.00% [1] New 6 Month(s)
Weighted Average 2 Month(s)
Capital Reserves (CY 2017 Value) $0.25 PSF [2]
Bruce Francis + 1 602 735 1781 Lic. BK-0018505 [email protected]
Shaun Moothart +1 949 509 2111Lic. [email protected]
CBRE Debt & Equity Finance (DEF) is a division of CBRE Inc. In the US, DEF represents approximately 300 lenders including: banks, life insurance companies, pension funds, CMBS lenders and a variety of other lending sources. DEF also acts as a correspondent for over 200 life insurance companies. The Quote above is an approximation of available terms.
For customized Debt Quotations, please contact:
FINANCING
MARKET LOAN
Loan Funding (as of Jul-17) $3,078,000
Loan-To-Price 60.00%
Funding Date Sep-17
Maturity Date Aug-27
Loan Term 10.0 Years
Amortization Period 30 Years
Initial Interest Only Period (If Any) 24 Months
Interest Rate 4.25%
Origination Fee on Initial Loan Funding 1.00%
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
F I N A N C I A L S
21
F I N A N C I A L S
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS22
Cash FlowFiscal Year 9/17-8/18 9/18-8/19 9/19-8/20 9/20-8/21 9/21-8/22 9/22-8/23 9/23-8/24 9/24-8/25 9/25-8/26 9/26-8/27 9/27-8/28
Physical Occupancy 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Overall Economic Occupancy [1] 95.80% 95.80% 95.80% 95.76% 95.80% 95.80% 95.80% 95.80% 95.76% 95.80% 95.80%
Total Operating Expenses PSF Per Year $18.65 $19.07 $19.50 $20.03 $20.55 $21.02 $21.49 $21.98 $22.58 $23.17 $22.64
REVENUES CY 2018$/SF/MO [2]
Scheduled Base Rent
Gross Potential Rent $3.11 $294,154 $294,154 $294,154 $314,548 $328,977 $328,977 $328,977 $328,977 $351,879 $368,025 $368,025
Absorption & Turnover Vacancy 0.00 0 0 0 0 0 0 0 0 0 0 0
Base Rent Abatements 0.00 0 0 0 0 0 0 0 0 0 0 0
Total Scheduled Base Rent 3.11 294,154 294,154 294,154 314,548 328,977 328,977 328,977 328,977 351,879 368,025 368,025
Expense Reimbursements 1.49 140,349 143,721 147,188 150,741 154,383 158,126 161,966 165,903 169,948 172,349 171,479
TOTAL GROSS REVENUE 4.60 434,503 437,875 441,342 465,289 483,360 487,103 490,943 494,880 521,827 540,374 539,504
General Vacancy Loss (0.19) (18,260) (18,403) (18,551) (19,721) (20,310) (20,469) (20,633) (20,800) (22,117) (22,701) (22,663)
EFFECTIVE GROSS REVENUE 4.40 416,243 419,472 422,791 445,568 463,050 466,634 470,310 474,080 499,710 517,673 516,841
OPERATING EXPENSES
CAM (0.66) (62,410) (64,282) (66,211) (68,197) (70,244) (72,350) (74,520) (76,756) (79,058) (81,431) (83,873)
Management Fee (NR) (0.18) (16,650) (16,779) (16,912) (17,823) (18,522) (18,665) (18,812) (18,963) (19,988) (20,707) (20,674)
Insurance (0.02) (1,950) (2,008) (2,069) (2,131) (2,195) (2,260) (2,329) (2,399) (2,470) (2,545) (2,621)
Real Estate Taxes (0.70) (65,887) (67,105) (68,347) (69,614) (70,906) (72,224) (73,569) (74,940) (76,339) (77,766) (71,090)
TOTAL OPERATING EXPENSES (1.55) (146,897) (150,174) (153,539) (157,765) (161,867) (165,499) (169,230) (173,058) (177,855) (182,449) (178,258)
NET OPERATING INCOME 2.85 269,346 269,298 269,252 287,803 301,183 301,135 301,080 301,022 321,855 335,224 338,583
CAPITAL COSTS
Tenant Improvements 0.00 0 0 0 0 0 0 0 0 0 0 0
Leasing Commissions 0.00 0 0 0 0 0 0 0 0 0 0 0
Capital Reserves (0.02) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969)
TOTAL CAPITAL COSTS (0.02) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969) (1,969)
OPERATING CASH FLOW $2.83 $267,377 $267,329 $267,283 $285,834 $299,214 $299,166 $299,111 $299,053 $319,886 $333,255 $336,614
[1] This figure takes into account vacancy/credit loss, absorption vacancy, turnover vacancy, and base rent abatements.
[2] Based on 7,875 square feet.
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
F I N A N C I A L S
23
Cash Flow (CONTINUED)
Fiscal Year 9/17-8/18 9/18-8/19 9/19-8/20 9/20-8/21 9/21-8/22 9/22-8/23 9/23-8/24 9/24-8/25 9/25-8/26 9/26-8/27 9/27-8/28
ACQUISITION & RESIDUAL SALE
Purchase Price ($5,130,000) 0 0 0 0 0 0 0 0 0 0
Tenant Improvements 0 0 0 0 0 0 0 0 0 0 0
Leasing Commissions 0 0 0 0 0 0 0 0 0 0 0 All CashIRRNet Residual Value [3] 0 0 0 0 0 0 0 0 0 0 5,389,113
CASH FLOW BEFORE DEBT ($5,130,000) $267,377 $267,329 $267,283 $285,834 $299,214 $299,166 $299,111 $299,053 $319,886 $5,722,368 6.04%
MARKET LOAN [4]
Loan Funding / Payoff 3,078,000 0 0 0 0 0 0 0 0 0 (2,594,141)
Loan Fees (30,780) 0 0 0 0 0 0 0 0 0 0 LeveragedIRRAnnual Debt Service 0 (130,815) (130,815) (181,703) (181,703) (181,703) (181,703) (181,703) (181,703) (181,703) (181,703)
CASH FLOW AFTER DEBT ($2,082,780) $136,562 $136,514 $85,580 $104,131 $117,511 $117,463 $117,408 $117,350 $138,183 $2,946,524 8.16%
NOI Return 5.25% 5.25% 5.25% 5.61% 5.87% 5.87% 5.87% 5.87% 6.27% 6.53%
UNLEVERAGED Cash Return 5.21% 5.21% 5.21% 5.57% 5.83% 5.83% 5.83% 5.83% 6.24% 6.50%
LEVERAGED Cash Return [5] 6.65% 6.65% 4.20% 5.09% 5.74% 5.73% 5.73% 5.73% 6.73% 7.37%
Rolling - All Cash IRR N/M N/M 1.70% 3.75% 4.19% 4.48% 4.69% 5.52% 5.94% 6.04%
Rolling - Leveraged IRR N/M N/M N/M 2.56% 3.77% 4.56% 5.11% 7.07% 7.98% 8.16%
[3] Net Residual Value is calculated by dividing Year 11 NOI by the Residual Cap Rate of 6.00% and applying a 4.50% Cost of Sale.
[4] Market Debt based on 60% Loan-to-Value, 4.25% Interest Rate, 30-Year Amortization, 24 Months Interest Only and 1.00% Loan Fee.
[5] Leveraged Cash Return is based on NOI less debt service divided by equity including costs to stabilize.
F I N A N C I A L S
CAPITAL MARKETS/NATIONAL RETAIL PARTNERS24
Rent RollSquare
Feet% of
Property
Lease Term Rental Rates RecoveryType
Market Assumption /Market RentSuite Tenant Name Begin End Begin Monthly PSF Annually PSF
2051-200A Little Caesars 1,260 16.00% Aug-2016 Aug-2021 Current $4,032 $3.20 $48,384 $38.40 NNN (No Mgmt) Option+ 10% Ad $3.20 NNN (Restaurant)
Notes:Tenant has three (3) - five (5) year options at 12% increase over prior rent for each of the first two (2) options and FMV for the 3rd option (two modeled below). Tenant has a 5% cap on controllables (assumed not hitting, not modeled).
Sep-2021 Aug-2031 FUTURE $4,511 $3.58 $54,130 $42.96 NNN (No Mgmt) MarketOPTION Sep-2026 $5,053 $4.01 $60,631 $48.12 + 10% Ad $3.20 NNN (Restaurant)
Notes:Assumed tenant exercises two (2) - five (5) year options with no leasing costs.
2051-200B Pieology 1,612 20.47% May-2016 May-2026 Current $5,481 $3.40 $65,770 $40.80 NNN(No Mgmt) Option Jun-2021 $6,029 $3.74 $72,347 $44.88 +10% Ad (95%) PIE $3.40 NNN (Restaurant)
Notes:Tenant has two (2) - five (5) year options at 10% increase over prior rent and FMV, respectively (first option modeled below). Tenant has a 5% cap on controllables (not hitting, not modeled).
Jun-2026 May-2031 FUTURE $6,632 $4.11 $79,581 $49.37 NNN(No Mgmt) MarketOPTION +10% Ad (95%) PIE $3.40 NNN (Restaurant)
Notes:Assumed tenant exercises one (1) - five (5) year option with no leasing costs.
2051-230 Corky’s Kitchen 5,003 63.53% Nov-2015 Oct-2025 Current $15,000 $3.00 $180,000 $35.98 NNN(No Mgmt) Option& Bakery Nov-2020 $16,877 $3.37 $202,521 $40.48 +10% Ad (95% GLA) $3.00 NNN (Restaurant)
Notes:Tenant has four (4) - five (5) year options at 12.5% increase over prior rent for each option (modeled below). Tenant has a 5% cap on controllables (assumed not hitting, not modeled).
Nov-2025 Oct-2045 FUTURE $18,984 $3.79 $227,813 $45.54 NNN(No Mgmt) MarketOPTION Nov-2030 $21,359 $4.27 $256,304 $51.23 +10% Ad (95% GLA) $3.00 NNN (Restaurant)
Nov-2035 $24,027 $4.80 $288,323 $57.63 Nov-2040 $27,029 $5.40 $324,344 $64.83
Notes:Assumed tenant exercises four (4) - five (5) year options with no leasing costs.
TOTALS / AVERAGES 7,875 $24,513 $3.11 $294,154 $37.35 OCCUPIED SF 7,875 100.0%AVAILABLE SF 0 0.0%TOTAL SF 7,875 100.0%
PIEOLOGY & RESTAURANTS AT RIO RANCHO TOWNE CENTER II
D I S C L A I M E R
25
AFFILIATED BUSINESS DISCLOSURE
CBRE operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage service s, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum.
CONFIDENTIALITY AGREEMENT
This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property.
This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the property or the owner of all Property (the”Owner”), to be all-inclusive or to contain all or part of the information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors being the control of the Owner and CBRE,Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc., nor any of their respectful directors, officers, Affiliates or representatives make an representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.
DISCLAIMER
© 2017 CBRE, Inc. The information containing in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property, The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.
Pricing in this Offering Memorandum may not be accurate at any given point in time as market conditions including capitalization rates and other value indicators change frequently. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property.
Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.
CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the Property of their respective owners.
© 2017 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.
CBRE, and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.
Exclusively Marketed by
INVESTMENT ADVISORS
JOHN READ + 1 949 725 8606Lic. 01359444 [email protected]
KIRK BRUMMER + 1 949 725 8418Lic. [email protected]
CBRE-Newport Beach | 3501 Jamboree Rd., Ste 100 | Newport Beach, CA 92660 | F + 1 949 725 8545 | www.cbre.com/nrpwest
JIMMY SLUSHER + 1 949 725 8507 Lic. 01857569 [email protected]
MEGAN WOOD + 1 949 725 8423Lic. 01516027 [email protected]
PHILIP D. VOORHEES + 1 949 725 8521Lic. 01252096 [email protected]