CBRE NET LEASE PROPERTY GROUP OFFERING MEMORANDUM. Representative Photo MATTRESS FIRM 910 E DUNDEE ROAD PALATINE, ILLINOIS (CHICAGO MSA)

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1 CBRE NET LEASE PROPERTY GROUP OFFERING MEMORANDUM MATTRESS FIRM 910 E DUNDEE ROAD PALATINE, ILLINOIS (CHICAGO MSA) Representative Photo

2 Actual Construction Photo CONTACTS Chris Bosworth Executive Vice President T chris.bosworth@cbre.com Michael Kaider First Vice President T michael.kaider@cbre.com Brian Pfohl Capital Markets Manager T brian.pfohl@cbre.com Will Pike Executive Vice President T will.pike@cbre.com CBRE, Inc Peachtree Road NE Suite 1400 Atlanta, GA ii

3 Investment Overview The CBRE Net Lease Property Group is pleased to exclusively offer a 4,000-square-foot freestanding Mattress Firm on acres in Palatine, Illinois, a popular upscale bedroom community located approximately 30 miles northwest of Chicago s CBD. Mattress Firm s 10-year net lease with three 5-year options and 10% rent increases every 5 years commenced in August The property is well-located with excellent visibility and multiple access points on the hard corner at the signalized intersection of Dundee Road and Rand Road (Combined Traffic Count: 59,000 VPD), the area s two preeminent thoroughfares. Mattress Firm is also strategically located in a densely developed retail and commercial corridor within a shopping center that is also occupied by Panera Bread and Verizon. The other three corners of the immediate intersection are occupied by more than 850,000 square feet of retail space that is anchored by Walmart, Target, TJ Maxx, HomeGoods, Petco, Aldi, Hobby Lobby and Ross among many others. In all, there is more than 6.8 MSF of retail, 3.4 MSF of industrial, 4.5 MSF of office space and 17,380 multifamily units within a 3-mile radius of the subject property. In addition, the tenant will benefit from upscale, infill demographics with a population and average annual household income of 102,356 people and $99,745, respectively within a 3-mile radius. This investment provides investors with the distinctive opportunity to acquire a high quality net leased asset located in an upscale bedroom community within a densely developed retail corridor in one of the nation s premier MSA s. Investment Summary ADDRESS: PARCEL SIZE: BUILDING SIZE: TOTAL PARKING SPACES: 910 E Dundee Road Palatine, IL Acres 4,000 SF 81 Shared Spaces YEAR BUILT: 2017 PRICE: $2,586,000 NOI: $181,000 CAP RATE: 7.00% DEMOGRAPHICS 1 Mile Pop 1 Mile AHI 3 Mile Pop 3 Mile AHI 5 Mile Pop 5 Mile AHI Traffic Count 29,235 $72, ,356 $99, ,505 $111,081 33,300 VPD on Rand Road 25,700 VPD on Dundee Road 3

4 Investment Highlights Premier Tenancy: Mattress Firm currently operates over 3,500 company-owned and franchised locations across 49 states and has the largest geographic footprint in the United States among multi-brand mattress retailers. On August 8, 2016, South African-based Steinhoff International Holdings (Moody s: Baa3, Market Capitalization: $20.8 billion) announced it had entered into a definitive merger agreement with Mattress Firm under which Steinhoff would acquire Mattress Firm. The transaction closed on September 16, 2016 for $3.8 billion. The acquisition created the world s largest multi-brand/multinational mattress retail distribution network. Long-term Net Lease with Attractive Increases: 10-year net lease with three 5-year options to renew commenced in August. The Lease includes 10% rent increases every 5 years. New Construction: The property is newly constructed as a build-to-suit for Mattress Firm and opened for business in August Excellent Access/Visibility: Site is well-located with excellent visibility and multiple access points on the hard corner at the signalized intersection of Dundee Road and Rand Road (Combined Traffic Count: 59,000 VPD), the area s two preeminent thoroughfares. Strategic Location: Mattress Firm is strategically positioned within a densely developed retail and commercial corridor. The other three corners of the immediate intersection are occupied by more than 850,000 square feet of retail space that is anchored by Walmart, Target, TJ Maxx, HomeGoods, Petco, Aldi, Hobby Lobby and Ross among many others. Dominant Retail Corridor: 6.8 MSF of retail, 3.4 MSF of industrial, 4.5 MSF of office space and 17,380 multifamily units within a 3-mile radius The immediate retail corridor is further enhanced by the presence of numerous high quality retail developments anchored by retailers such as: Apple, Whole Foods, Crate & Barrel, Jewel-Osco, Mariano s, Trader Joe s, Floor & Decor, Bed Bath & Beyond, Best Buy and Old Navy to name a few. Dynamic Infill Demographics: 3-mile population of 102,356 and average household income of $99,745. Built-In Customer Base: The site is within walking distance to more than 10,000 homes and Palatine High School (Enrollment: 2,715 students), providing Mattress Firm with a substantial built-in customer base. Hub for New Development: The area is experiencing an influx of new development highlighted by the construction of the 180,000-squarefoot Kildeer Village Square Shopping Center which will be occupied by Nordstrom Rack, Nike, DSW, Forever 21 and Sierra Trading Post (3 miles northwest of the site on Rand Road). In addition, REVA Development is building a new 236-unit multifamily complex, which will be completed in summer of 2017 in the same corridor. Palatine Submarket: Palatine is one of Chicago s most popular and densely populated bedroom communities offering easy access to Chicago via car or train, a bustling business district, dozens of parks and abundance of shops, restaurants and numerous quality housing options, making it an ideal place to live. The Chicago economy is a a foundational element of Palatine, influencing its diversity and strong growth. Chicago MSA Advantage: As the country s 3rd largest MSA (Population: 9.55 million), Chicago s robust business climate, central geographic location, diversified economy and abounding human resources lend to its prominent position as a world-class city in terms of finance, international trade, manufacturing, transportation, culture and the arts. Chicago s leisure and hospitality industry also thrives as a result of perpetually increasing tourism (52 million annual visitors). 4

5 CBRE NET LEASE PROPERTY GROUP WALMART SUPERCENTER SAM S CLUB BUFFALO GROVE HIGH SCHOOL & OFFICE IAL R T INDUS OFFICE & INDUSTRIAL WALMART NATIONAL 0 VPD 94,00 53 Y A W HIGH BANK BRANCH DU RESTAURANTS.COM CORPORATE OFFICE ND EE WINDHAVEN CONDOMINIUMS: 350 UNITS RO AD -2 5, 70 0 VP D BOURBON SQUARE APARTMENTS: 612 UNITS FALCON PARK RECREATION CENTER RAND GROVE VILLAGE APARTMENTS: 212 UNITS D 00 VP 3 3, ND AD O R -3 RA 5

6 CBRE NET LEASE PROPERTY GROUP BRENTWOOD APARTMENTS: 216 UNITS WALMART NATIONAL BANK BRANCH PALATINE HIGH SCHOOL LINCOLN ELEMENTARY SCHOOL N S CK HI AD RO 0 VPD DUNDEE ROAD - 25,70 STARBUCKS 30 79,7 MIDTOWN ATHLETIC CLUB VP ND D RA RO AD FOXFIRE CONDOMINIUMS: 294 UNITS -3 3,3 00 VP D RAND GROVE VILLAGE APARTMENTS: 212 UNITS INDUSTRIAL 6

7 CBRE NET LEASE PROPERTY GROUP KEY OWNED ALSO FOR SALE BY CBRE S U 12 D AN (R )- RD 00,3 33 D VP IL 68 (DUNDEE RD) - 25,700 VPD WALMART 7

8 Lease Summary PROPERTY NAME: TENANT: Mattress Firm Mattress Firm Inc. RENT COMMENCEMENT: 8/12/2017 LEASE EXPIRATION: 8/31/2027 LEASE TERM REMAINING: LEASE TYPE: INITIAL TERM RENT: 10 years NN Lease Years 1-5: $181,000 Years 6-10: $199,100 RENT INCREASES: 10% in Year 6 OPTIONS: OPTION RENT: OPTION RENT INCREASES: TAXES: Three 5-year options Option 1: $219,010 Option 2: $240,911 Option 3: $265,002 10% in each option Tenant shall pay prior to delinquency all taxes assessed against and levied upon the trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. Tenant agrees to pay to Landlord each month during the term of this Lease, Tenant s Share of all Property Taxes (32.28%) levied upon the Premises for that year, which Property Taxes shall be prorated for any portion of the tax year which is prior or subsequent to the term of this Lease. Landlord shall estimate such taxes and Tenant shall pay one-twelfth thereof monthly in advance, together with the payment of Minimum Monthly Rent. INSURANCE: REPAIRS & MAINTENANCE: CAM: Tenant shall obtain and keep in force during the term of this Lease commercial general liability insurance. Such insurance shall have minimum limits of not less than $1,000,000 on account of bodily injuries and property damage per occurrence, and $2,000,000 annual aggregate coverage. Tenant may, provide liability coverage in excess of the minimum $2,000,000 requirement on substantially equivalent terms and conditions, and shall provide Umbrella Excess Liability insurance, on an occurrence basis, that applies in excess of the required general liability, and which insures against bodily injury, property damage, personal injury, and advertising injury claims with limits of $3,000,000 each occurrence and general aggregate. Throughout the term of this Lease, Landlord shall keep the Premises insured against loss or damage by fire, earthquake and such other perils as are now or may hereafter be comprehended in the term All- Risk coverage in an amount equal to 100% of the full replacement value. Landlord shall also maintain commercial general liability insurance insuring the Common Areas and Landlord against liability arising out of the ownership of Landlord s Property with limits as determined by Landlord in its commercially reasonable discretion, but in any event with at least $1,000,000 on account of bodily injuries and property damage per occurrence and $2,000,000 annual aggregate coverage. Tenant reimburses the Landlord for the cost of the premiums for all commercially reasonable levels of liability, property, casualty and other property insurance maintained by Landlord in connection with Landlord s Property, including commercially reasonable deductibles not to exceed $25,000 in any lease Year. Tenant agrees at all times to maintain the interior, non-structural portions of the Premises and all portions thereof, at its sole cost and expense, in good condition and repair, including but not limited to, HVAC systems, and all electrical, plumbing and mechanical and other systems within and exclusively benefiting the Premises, lighting facilities and equipment within the Premises, all interior fixtures, interior non-load bearing walls, ceilings, floors, windows, all doors, plate glass, and signs located on the Premises. If Tenant is required to replace the HVAC during the last 2 years of the term, Tenant shall be reimbursed by Landlord for the unamortized cost of such replacement beyond the Lease Term. Landlord shall repair and maintain in good condition and repair, structural walls and systems and components thereof, exterior walls and foundations of the building, the roof, roof structure and roof membrane, and sidewalks adjacent to the Premises, all Common Areas, and other systems, equipment and components (including the gutters, downspouts, exterior painting, wiring, plumbing, pipes, conduits and equipment which serve the Premises but are not located within the interior thereof, except for the exterior HVAC units and associated systems and components exclusively serving the Premises, which shall be the responsibility of Tenant). Subject to Tenant s reimbursement, Landlord shall maintain the Common Areas in good condition and repair. Tenant shall pay as Additional Rent, Tenant s Share (32.28%) of all Expenses arising out of or incurred in connection with the Premises. Expenses shall include, all reasonable costs of every kind and nature which Landlord shall pay or become obligated to pay which are incurred in connection with the operation, repair, maintenance, use, and replacement of the Common Areas, in neat, clean, good order and condition. The following (among other items) shall be excluded from expenses: (i) capital expenditures; (ii) management fees in excess of 10% of Total Expenses (CAM and Insurance only); (iii) costs for Landlord s insurance premiums in excess of $25,000. In addition, Tenant s share of Expenses shall not increase by more than 5% per year excluding Expenses attributable taxes, insurance, utilities, snow/ice removal, and trash services, provided however every 5 years commencing with the 6th lease year, Tenant s share of Expenses shall be reset to the lower of (i) Tenant s share of actual Expenses incurred by Landlord for such Lease Year, or (ii) the amount Tenant s Share of Expenses would be for such Lease Year if Expenses for the immediately preceding 5 year period had been subject to a 5% per year cumulative cap. Per the REA, the owner of the Panera Parcel is responsible for performing certain CAM items and will be reimbursed by the owner of the Verizon Parcel for their pro rata share of these expenses. 8

9 Surrounding Uses 9

10 Tenant Overview Mattress Firm currently operates over 3,500 company-owned and franchised locations across 49 states and has the largest geographic footprint in the United States among multi-brand mattress retailers. The Houston-based company, through the brands Mattress Firm, Sleepy s and Sleep Train, offers a broad selection of both traditional and specialty mattresses, bedding accessories and other related products from leading manufacturers such as Serta, Simmons, Tempur-Pedic, Sealy, Stearns & Foster, King Coill and Hampton & Rhodes. ACQUISITION On August 8, 2016, South African-based Steinhoff International Holdings (Moody s: Baa3, Market Capitalization: $20.8 billion) announced it had entered into a definitive merger agreement with Mattress Firm under which Steinhoff would acquire Mattress Firm. The transaction closed on September 16, 2016 for $64.00 per share (Total Transaction Price: $3.8 billion). Subsequent to the completion of the transaction, Mattress Firm was removed from NASDAQ and became a wholly-owned subsidiary of Steinhoff, which is listed on the Frankfurt Stock Exchange. The acquisition created the world s largest multibrand/multi-national mattress retail distribution network. Steinhoff International Holdings has operations in 30 countries and deals primarily in furniture and household goods, which are sold under 40 different brands. Representative Photo 10

11 Palatine Submarket Overview Located approximately 30 miles from Chicago s Central Business District and 14 miles from O Hare International Airport, Palatine is a popular upscale bedroom community. The Chicago economy is a a foundational element of Palatine, influencing its diversity and strong growth. Palatine is well established with a variety of commercial, light industrial, and office space. The community has over 2,520 businesses that employ over 25,000 people. Palatine residents can easily navigate through the community and the surrounding Chicago MSA via major highways that serve the area: US Routes 12 (Rand Road) and 14 (Northwest Highway), Interstate 290/Illinois Route 53, Interstate 90, and Interstate 294. Metra s commuter rail service also provides convenient public transportation with a station located in downtown Palatine. This provides an easy route to Chicago, allowing residents to benefit from the employment, cultural, and recreation opportunities within the city. Communities that border the community include Arlington Heights, Deer Park, Inverness, Schaumburg, and Rolling Meadows. DEMOGRAPHICS Palatine is located within a 15-square mile land area and home to an estimated 70,400 residents and 27,630 households making it the 18th largest community within Illinois. Palatine has an affluent demographic profile with an average household income of $98, % and 27.1% higher than the Illinois and national averages, respectively. Palatine residents are also highly educated with 50.3% of the population age 25 and over earning at least a Bachelor s degree and over 50% of households earn more than $75,000. The average home value within the community is $323,425. ECONOMY Major employers within Palatine include Community Unit School District 15, Township High School District 211, United States Postal Service, and Community College District 512. The Palatine business district continues to grow and in total the community has over 30 shopping areas to meet every need. CULTURE & RECREATION Palatine has numerous parks and recreation activities for residents to enjoy. In addition to bicycling/hiking paths, golf courses, and forest preserves, facilities within the community include Birchwood Recreation Center, Falcon Park Recreation Center, and the Community Center which include fitness centers, gymnasiums, indoor tracks, and batting cages. Area parks feature picnic areas, tennis courts, sand volleyball, disc golf, and basketball among other activities. 11

12 Chicago MSA Overview As the country s 3rd largest MSA (Population: 9.55 million), Chicago s robust business climate, central geographic location, diversified economy and abounding human resources lend to its prominent position as a world-class city in terms of finance, international trade, manufacturing, transportation, culture and the arts. Chicago s leisure and hospitality industry also thrives as a result of perpetually increasing tourism (52 million annual visitors). One of Chicago s biggest commercial advantages is its diversified economy and deep labor pool. With no single emphasis on any one business sector or industry, Chicago s economy is like a well-balanced portfolio and is better equipped than most cities to weather a slowdown in any particular industry. The Chicago MSA has a highly diversified economic base and is home to more than 400 major corporate headquarters, including 33 Fortune 500 headquarters. 12

13 Chicago MSA Overview Chicago is an economic powerhouse and its top employers represent a broad range of industries, from drugstores to manufacturers and airlines. Due to the growing numbers of both Fortune 500 companies and large private companies that call the city home, Chicago has become a hub of international business activity. Total international trade in the Chicago area has increased 25 percent to $188 billion since 2008 led by exports in medical supplies, pharmaceutical products, and industrial machinery. This robust growth in trade has led to over $40 billion in direct investment in Chicago and the presence of over 1,500 foreign-based companies in the metro area. PORT OF CHICAGO ACCESS The Chicago metropolitan region provides convenient access to the Port of Chicago, the leading intermodal container handler in the Western Hemisphere, with more than twice the volume of Los Angeles and more than five times that of New York. In fact, it is the world s largest intermodal container handler after Hong Kong and Singapore. FORTUNE 500 COMPANIES IN THE CHICAGO MSA TRANSPORTATION Employer Revenues ($M) Chicago is one of the primary transportation hubs in the United States. Chicago is home to O Hare International Airport, the 3rd busiest airport in the nation. According to the Chicago Department of Aviation, in 2016 the airport serviced nearly 78 million passengers to and from 208 destinations around the world via more than 48 passenger carriers. Chicago is also home to Midway International Airport, which serviced more than 22 million passengers via five passenger carriers to 75 destinations in the US, Mexico, Jamaica, the Dominican Republic and Canada. Several major interconnected expressways and interstate highways pass though the Chicago area. Interstates 80, 88 and 290 are the main east/west routes. Interstates 55 and 57 provide access to the south and southwestern suburban areas. Communities to the north and northwest are accessed via Interstates 90 and 94. North/south travel between the western suburbs is facilitated by Interstates 294 and 355. Walgreens Boots Alliance $103,444 Boeing $96,114 Archer Daniels Midland $67,702 United Continental Holdings $37,864 Allstate $35,653 Mondelez International $29,636 Exelon $29,447 McDonald s $25,413 Sears Holdings $25,146 US Foods Holding $23,128 AbbVie $22,859 Source: World Business Chicago 13

14 Chicago MSA Overview CHICAGO, THE NATION S LOGISTICS HUB Chicago is known as one of the most important logistics and transportation hubs in the United States. With superior access to all major modes of transportation and its central location proximity to the largest metropolitan areas in the country, it has long been a sough after location for distribution hubs. WHY CHICAGO? Chicago has a strong, globally diverse economy larger than that of many countries Chicago s industry mix most closely matches that of the nation, with no single industry employing more than 20% of the workforce Chicago is one of the most cost-effective cities in the world for doing business, ahead of New York and Los Angeles, according to KPMG Chicago s affordable cost of living and world-class cultural and recreational opportunities make it an excellent value for the city s vibrant and diverse workforce Chicago is a central transportation hub with direct flights between more than 200 cities worldwide, and direct connections to six major U.S. Interstates Chicago is hub of international business activity, with more than 1,800 foreign-based companies and more than $100 billion in foreign direct investment CHICAGO ACCOLADES Top 10 Most Competitive City for Business in the World (The Economist Intelligence Unit) Top 10 Best City for Building Wealth (Bankrate.com, October 2015) #1 Top Metro in the U.S. for Corporate Investment (Site Selection, March 2016) #1 North American city for foreign direct investment (IBM, Global Location Trends) #2 Top Metro in the United States for the Number of Fast Growing Small Businesses (Inc List, 2015) 14

15 Affiliated Business Disclosure & Confidentiality Agreement CBRE, Inc. 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 services, 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 waythat 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 the Property (the Owner ), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond 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 respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use 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 sobligations 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 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 thecurrent 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. 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. 15

16 Actual Construction Photo CONTACTS Chris Bosworth Executive Vice President T chris.bosworth@cbre.com Michael Kaider First Vice President T michael.kaider@cbre.com Brian Pfohl Capital Markets Manager T brian.pfohl@cbre.com Will Pike Executive Vice President T will.pike@cbre.com CBRE, Inc Peachtree Road NE Suite 1400 Atlanta, GA