Conf iden t i a l Of fe r ing Memorandum

1700 High S t ree t

De lano , CA 93215

Smart & Final15+ Years Remaining | NNN Lease | Corporate Guarantee

2Smart & Final – Delano, CA

The OfferingJLL is pleased to offer for sale the fee-simple interest in a Smart & Final (the “Property” or “Asset”) located in Delano, California. The Property is tenanted by Smart and Final Stores LLC on a corporate

guaranteed triple-net lease with over 15 years of primary lease term remaining. The lease features 7.50% rent escalations every five years throughout the primary term and in each of the three, five-year

renewal options. Smart & Final’s operating history at the Property spans over 35 years, reflecting the strength and success of this location as well as company’s commitment to serve the Delano community.

The Asset offers investors the opportunity to acquire successful grocery chain on a long-term lease with below market rent and absolutely zero landlord responsibilities.

Investment Highlights

Long-Term NNN Lease with Corporate GuaranteeSmart & Final Stores LLC has over 15 years of primary term remaining on a corporate guaranteed triple-net lease with absolutely zero landlord responsibilities and 7.50% rent escalations every five years

throughout the primary term and in each of the three, five-year renewal options.

Strong Tenancy with Long Operating HistorySmart & Final has operated at this location for more than 35 years, reflecting the tenant’s commitment to this location and to the Delano community. Smart & Final is a California-based food retailer that

operates over 300 grocery and foodservice stores and achieved $4.57 billion in sales in 2017.

Prime Location in Delano Retail CorridorThe Property is located in Delano Village Shopping center along Cecil Avenue, a retail thoroughfare featuring national tenants such as Walgreens, 99 Cent Only, True Value, O’Reilly Auto Parts, Starbucks andMcDonald’s. California Route 99 is located 0.5 miles west of the Property and Delano High School is located 0.5 miles east of the Property, providing exposure to the area’s major traffic drivers.

3Smart & Final – Delano, CA

Close Proximity to California Route 99The Property is strategically located just 0.5 miles east of California Route 99, a highly-trafficked North-South state highway connecting Bakersfield

to Sacramento.

Low In-Place RentThe tenant pays low in-place rent of $8.95 per square foot, ultimately increasing the likelihood that the tenant will commit to this location long term

while offering a low purchase price.

Committed TenantSmart & Final has served the Delano community at this location for over 35 years, indicating the company’s long-lasting success and commitment to

the Property.

Recently Renovated PropertyThe Property underwent extensive renovations in 2014.

PROPERTY SUMMARY

Location1700 High Street

Delano, CA 93215

Purchase Price / PSF $5,555,832 / $167

Cap Rate 5.35%

NOI* / PSF $297,237 / $8.95

Building Size + / - 33,200 SF

Year Built / Renovated 1986 / 2014

Site Size + / - 3.37 acres

Ownership Interest Fee Simple

Tenant Smart & Final Stores LLC

Lease Type Absolute NNN

Remaining Lease Term 15.8 years (as of August 2018)

Lease Expiration 6/30/2034

Rent Escalations 7.50% every 5 years

Renewal Options 3 x 5-year options

*Based on 2019 rent escalation

RENT SCHEDULE

Year Annual Base Rent Rent PSF

Primary Term

7/1/2014 – 6/30/2019 $276,500 $8.33

7/1/2019 – 6/30/2024 $297,237 $8.95

7/1/2024 – 6/30/2029 $319,530 $9.62

7/1/2029 – 6/30/2034 $343,495 $10.35

Renewal Options

Option 1: 7/1/2034 – 6/30/2039 $369,257 $11.12

Option 2: 7/1/2039 – 6/30/2044 $396,951 $11.96

Option 3: 7/1/2044 – 5/30/2049 $426,723 $12.85

4Smart & Final – Delano, CA

5Smart & Final – Delano, CA

S m a r t & F i n a lSmart & Final Stores, Inc. operates more than 300 grocery and foodservice stores under the “Smart & Final,” “Smart & Final Extra!” and “Cash &

Carry Smart Foodservice” banners in California, Oregon, Washington, Arizona, Nevada, Idaho and Utah, with an additional 15 stores in Northern

Mexico operated through a joint venture.

For years, Smart & Final banner stores were known as the “smaller, faster warehouse store,” primarily focused on providing customers with club-

size items. Throughout its evolution, it has remained committed to adapting to the changing needs of the neighborhoods it serves, most notably

through its 2008 introduction of Smart & Final Extra! stores. Uniquely positioned to offer time-and-money savings for both household and

business customers, Smart & Final Extra! stores include expanded fresh and frozen products, organic and natural products, bulk foods, oven-

roasted chicken and many other items sold in convenient sizes. In addition, all Smart & Final stores continue to offer 50% more club-size items

than a traditional club store, with no membership fee required.

The company has seen five consecutive years of sales growth, including $4.57 billion in sales in 2017, marking a 5.3 percent growth in sales

from the previous fiscal year. Based on the company’s second quarter report, sales as of July 2018 were up 4.4 percent from the previous year,

on pace for another year of sales growth.

COMPANY OVERVIEW

Company Smart & Final Stores, Inc.

Type Public (NYSE: SFS)

Credit Rating (Moody’s) B3

Founded 1871

Headquarters Commerce, CA

Employees (2017) 10,000+

Number of Locations 300+

Revenue (FY2017) $4.57 billion

Assets (FY2017) $1.81 billion

Market Cap (2018) $508 million

$3.21$3.53

$3.97$4.34

$4.57

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

2013 2014 2015 2016 2017

Net

Sale

s (

Bill

ions)

Fiscal Year

Net Sales

2 Q 20 1 8 H i g h l i g h t s• Net sales increased 4.4% to $1.1 billion with a comparable store sales increase of 1.3%

• Gross margin increased 4.6% to $169.7 million

• Adjusted EBITDA increased 2.5% to $49.3 million

• Net income of $6.6 million or $0.09 per share

• Adjusted net income of $11.4 million or $0.16 per share

6Smart & Final – Delano, CA

Aerial and Retai l Map

The Asset is located in the Delano Village Shopping Center, proximate to a variety of national and local retailers along Cecil Avenue. Delano High School is only a few blocks east of the Asset and drives significant traffic to the immediate area. The Asset is located just off of California Route 99, a highly trafficked North-South state highway connecting Bakersfield to Sacramento.

7Smart & Final – Delano, CA

Delano Overview

Delano is a city located in Kern County, located 30 miles northwest of Bakersfield, California. Delano is part of the central valley

and Bakersfield MSA, where agriculture is the primary industry. Kern County is also the most productive oil producing county and

fourth most productive agricultural county in the United States. The population has risen over the past decade by over 35 percent

from 41,925 to 56,925. Delano is the second largest city in Kern County behind Bakersfield. The Bakersfield MSA has a population

of 839,361 residents.

The subject property is in a strong retail location on High Street and Inyo Street in the Delano Village Shopping Center within close

proximity to California Route 99, a highly trafficked North-South state highway connecting Bakersfield to Sacramento. National and

local retail stores in the immediate area include Walgreens, 99 Cent Only, True Value, O’Reilly Auto Parts, Starbucks and

McDonald’s.

Loc at ion Hig hl ightsPrime Location in Delano Retail CorridorThe Property is located in Delano Village Shopping center along Cecil Avenue, a retail thoroughfare featuring national tenants such as

Walgreens, 99 Cent Only, True Value, O’Reilly Auto Parts, Starbucks and McDonald’s. California Route 99 is located 0.5 miles west of

the Property and Delano High School is located 0.5 miles east of the Property, providing exposure to the area’s major traffic drivers.

Densely-Populated Consumer BaseThere are over 21,000 residents within a one mile-radius of the Asset, offering excellent exposure to a densely-populated consumer

base in immediate proximity.

DEMOGRAPHICS

1-MILERADIUS

3-MILERADIUS

5-MILERADIUS

POPULATION

2023 Projection 22,607 47,166 57,423

2018 Estimate 21,900 45,711 55,936

2018 Number of Households 5,424 10,966 11,123

2018 - 2023 Projected Growth 3.2% 3.2% 2.7%

Age 0 - 14 28.3% 27.7% 22.9%

Age 15 - 24 17.3% 17.5% 18.0%

Age 25 - 44 27.4% 27.6% 32.6%

Age 45 - 64 18.4% 18.7% 19.1%

Age 65+ 8.6% 8.4% 7.2%

ESTIMATED HH INCOME

Less than $35,000 46.7% 43.3% 43.4%

$35,000 - $49,999 16.9% 16.2% 16.2%

$50,000 - $74,999 17.3% 17.8% 17.7%

$75,000 - $99,999 9.1% 10.0% 10.0%

More than $100,000 10.0% 12.7% 12.7%

Average Estimated HH Income $50,645 $53,956 $53,950

Median HH Income $37,162 $39,905 $39,878

Delano Marketplace

Delano Marketplace is a recently-delivered, major retail development in the city. The Super Regional Center meets the current

retail demand in the surrounding region, which includes several cities located within a 15-mile radius. The Delano Marketplace

adds to the local employment within the City of Delano as well as the northern Kern County region. With a total land area of 45

acres, the project boasts over 300,000 square feet of commercial retail, with a majority of the space designed for big box national

retailer anchors with a lifestyle shopping center that will feature a movie theatre, bowling alley and other community retail

amenities. The major retailers in the shopping center are Walmart and Ross Dress for Less.

Delano Marketplace served as a catalyst for future development in the Delano community. The Grapevine project is currently

underway, and includes a 328,500 square foot shopping center as well as a 432-unit multifamily community. This commercial

center will create 1,664 jobs and stimulate the local economy while the living community will draw a larger consumer base and

boost the local population.

8Smart & Final – Delano, CA

B a ke r s f i e l d , C A

As part of the metropolitan center of the Central Valley, Bakersfield serves primarily

as an agricultural and oil industry hub. Companies in those industries with

headquarters based in the Bakersfield MSA include Bolthouse Farms, Grimmway

Farms, Sun World and Area Energy. While agriculture and oil business continue to be

important elements in the local economy, Bakersfield’s economy has diversified to

include other industries including aerospace, mining, manufacturing, distribution and

food processing. The Bakersfield MSA ranks in the top 60 largest metropolitan areas

in the United States.

RETAIL MARKET STATISTICS(As of 2Q2018)

MARKET SUBMARKET

Bakersfield Kern County

# of Buildings 2,939 131

Total Inventory (SF) 31,546,065 1,032,213

Total Vacancy 5.6% 3.1%

YTD Net Absorption (SF) 292,090 58,910

Delano Retail Submarket

Delano has over one million square feet of retail, and the local retail market achieves a healthy and steadily declining

vacancy rate of 3.1%. Asking rents have gradually increased from $12 per square foot to $17 per square foot over the

past two years. Over 58,000 square feet of positive net absorption over the past year reflects the strong demand for

retail space in the Delano market.

The Asset’s proximity to California Route 99 and Delano High School creates an ideal market for national retailers with

convenient accessibility to the area’s largest traffic drivers. Positioned along Cecil Avenue’s retail thoroughfare,

numerous national retailers surround the Property and include: Walgreens, 99 Cent Only, True Value, O’Reilly Auto

Parts, Starbucks and McDonald’s.

Delano Marketplace

Delano Marketplace has had a substantial impact on the local retail market. The addition of major national

retailers such as Target, Walmart, Home Depot and Ross Dress for Less has led to the development of more

retail properties and multifamily communities. Grapevine Villa and The Vineyard are two major multifamily

developments currently underway in Delano, and these projects will add hundreds of multifamily homes, over

300,000 square feet of new retail and more than 1,600 jobs in the Delano community, ultimately stimulating the

local economy.

Source: CoStar

Delano Marketplace

62

https://www.jllproperty.us/net-lease/

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Irvine, CA 92614

Your Resource for Net Lease Investment Offerings

Primary Sales Contact:

JONES LANG LASALLE AMERICAS, INC.

The material in this Offering Memorandum is confidential, furnished solely for the purpose of considering the “AS IS” acquisition of 9305 Mission Gorge Road (the “Property” or “Asset”) located in the State of California. The information is not to be used for any other purpose or to be made available to any other person without theexpress written consent of Agent on behalf of Owner. The material is based, in part, upon information supplied by Owner and, in part, upon information obtained by Agent from sources they deem to be reliable. Summaries contained herein of any legal documents are not intended to be comprehensive statements of the terms of suchdocuments, but rather only outlines of some of the principal provisions contained therein. No warranty or representation, expressed or implied, is made by Owner, Agent or any of their respective related agents or entities as to the accuracy or completeness of the information contained herein. Prospective investors should make their owninvestigations, projections and conclusions regarding the Property. It is expected that prospective investors will conduct their own independent due diligence concerning the Asset, including such engineering and environmental inspections as they deem necessary to determine the condition of the Property and the existence or absence ofany potentially hazardous materials used in the construction or maintenance of the Asset. No representations, expressed or implied, are made as to the foregoing matters by the Owner, Agent or any of their respective officers, employees, affiliates and/or agents.

Jason Gribin+1 213 239 6130jason.gribin@am.jll.com

Adam Friedlander+1 949 296 3648adam.friedlander@am.jll.com

Michael Bower+1 312 228 3019michael.bower@am.jll.com

Analyst Support:

Secondary Sales Contact: