WILLOW CREEK TOWN CENTER

Transcription

1 OFFERING MEMORANDUM WILLOW CREEK TOWN CENTER 1001, 1007, 1011 E. BIDWELL STREET FOLSOM, CALIFORNIA Capital Markets Investment Properties 1

2 Contents EXECUTIVE SUMMARY 1 PROPERTY OVERVIEW 2 FINANCIAL 3 FOLSOM & SACRAMENTO OVERVIEW 4 MARKET TRENDS 5 INVESTMENT CONTACT LOCAL MARKET CONTACTS RANDY GETZ Executive Vice President Lic randy.getz@cbre.com RICK MARTINEZ Senior Vice President Lic rick.martinez@cbre.com JOSH SCHMIDT Vice President Lic josh.schmidt@cbre.com CBRE, Inc. 500 Capitol Mall Suite 2400 Sacramento, CA

3 1 EXECUTIVE SUMMARY

4 The Offering CBRE, Inc. is pleased to offer for sale the shops component of a highly successful neighborhood retail complex known as Willow Creek Town Center. It is located at the busy intersection of Blue Ravine Road and E. Bidwell Street in Folsom, Sacramento County, California, where the combined average daily traffic is in excess of 33,000 vehicles. Among the tenants leasing space in the two parcels included in this offering are Chipotle, Firehouse Subs, and Anytime Fitness. Other tenants in the center serving as strong traffic generators include CVS Pharmacy, Wells Fargo, Dick s Sporting Goods, IHOP, Golden 1 Credit Union, Habit Burger, and Wingstop. Shops E BIDWELL ST ADT 20,649 Bank BLUE RAVINE RD ADT 12,419 Shops 4

5 tr S ma to Na The Property is within a cluster of 11 shopping centers on E. Bidwell Street, Folsom s primary retail corridor. Nearby national tenants include Target, Walmart, Kohl s, Jo-Ann Stores, O Reilly Auto Parts, Petco, Office Depot, Save Mart, Walgreen s, Elliott s Natural Foods, Raley s Supermarket, Lowe s, and Les Schwab Tire Center. Bidw ell S tree t EB idw ell St re et R iley Street Walmart Bid we ll ve R il e y S Blue Rav ine R oad ri nd n Gle Willow Creek Town Center u Bl vin a er ad o er tr e et 5

6 Willow Creek Town Center occupies approximately 10.3 acres at the southwest corner of the intersection. The entire center totals 115,748 square feet; the three buildings that contain the shops included in this offering total 24,800 square feet. All the non-owned parcels reimburse their pro rata share of common area expenses plus an administrative fee. The eight parcels that make up WCTC are owned by seven different entities. The shop spaces that comprise this offering are located on two of those parcels, one in the northwest corner (parcel -008) and the other on the south side of the Center (parcel -003). The CC&Rs designate the owner of parcel -003 as manager of Willow Creek Town Center - responsible for overseeing the maintenance of the common areas. The owner of this parcel receives the administrative fees paid by most tenants in addition to reimbursement of actual common area expenses. N MAP NOT TO SCALE 6

7 E BIDWELL ST The Center benefits from high visibility and excellent ingress/egress with two driveways on Blue Ravine Rd. and two on E. Bidwell, one of which collects traffic from a dedicated left turn pocket for westbound traffic. The pads are generally positioned on the perimeter with Wells Fargo occupying the hard corner. The two shop pads are located at the north and south edges of the Center. Parking is plentiful and the asset is clean, well-maintained and attractive. Folsom is a community of approximately 70,000 people in east Sacramento County. It is one of the region s most affluent communities with annual household income within three miles averaging in excess of $118,000. It is a community characterized by executive homes, outstanding schools, and a strong emphasis on parks and youth sports programs. The Folsom/El Dorado Hills submarket in which Willow Creek Town Center is located reported one the the region s lowest vacancy rates at 6.9%. In 2016 the Folsom/ EDH submarket led the Sacramento market in new retail leasing with 215,000 square feet of net absorption. For comparison, Rocklin was second with 36,000 square feet. The Folsom/EDH submarket is also a regional leader, along with West Sacramento/Davis, in average asking rent at $2.06 per square foot, nnn. BLUE RAVINE RD 7

8 Offering Summary PROPERTY TYPE Retail PROPERTY NAME Willow Creek Town Center ADDRESS 1001, 1007, and 1011 E. Bidwell Street Folsom, California NET RENTABLE AREA 24,800 CURRENT OCCUPANCY 86% OFFERING PRICE $8,442,000 ($340 psf) CAPITALIZATION RATES Current income: 6.36% Stabilized income: 7.22% ANNUAL YIELDS (ARGUS DCF) Unleveraged: 10.94% Leveraged: 18.14% YEAR BUILT Circa 1990 PARKING The number of parking spaces in the center totals 569 for an overall ratio of 4.95:1000 sf. All parcels in the center are subject to the CC&Rs and a Reciprocal Parking and Easement Agreement that allows shared parking throughout the Center. 8

9 Investment Highlights Offered for sale are two parcels containing three retail buildings totaling 24,800 square feet within a 97%-leased neighborhood center called Willow Creek Town Center (WCTC) in Folsom, California. The asset is priced at $8,442,000 which equates to $340 per square foot and a going-in capitalization rate of 6.36% on income in place, and 7.22% on stabilized income. If debt is utilized as modeled in our 10-year discounted cash flow analysis (Argus) the projected annual return is 18.14%. Folsom, one the region s fastest growing and most affluent communities, is 15 miles east of Sacramento and has a population of 70,000. National tenants in Subject Property include Chipotle, Anytime Fitness, and Firehouse Subs. Shadow-anchor tenants on other parcels within the center include Dick s Sporting Goods, Wells Fargo, CVS Pharmacy, IHOP, Habit Burger, Wingstop, and Golden 1 Credit Union. The Center enjoys a high-visibility corner location at a busy intersection, with aggregate average daily traffic of 33,068 vehicles. Folsom is an affluent community, with household income within three miles of Subject averaging $111,682. The Folsom/El Dorado Hills trade area is strong with 5.6 million square feet of retail space and 6.9% vacancy. The center features a synergistic mix of tenants offering goods, services, and food. Net operating income per square foot is robust, with NNN leases plus administrative fees received from most tenants, including those on other WCTC parcels. Across E. Bidwell Street is a thriving power center anchored by Target, Home Goods, JoAnn, Lowe s, and Trader Joe s. 9

10 Area Overview Folsom is an incorporated city in eastern Sacramento County with a population of roughly 70,000 people. Most of its residents are well-educated, household incomes and residential values are high, and its schools are known for academic excellence. With more than 6,000 employees, Intel s eight-building campus continues to headline the local economy. Regional Light Rail was extended to serve Folsom 15 years ago at the insistence of its forward-looking city government. The Harris Center for the Arts, a stateof-the art performance venue on the campus of Folsom Lakes Community College, annually stages more than 400 events that draw 150,000 people from throughout the region. The city s success in creating a family-oriented community, with a strong emphasis on schools and well-equipped parks and sports centers, has attracted a number of high-quality employers. Intel is the City s single largest employer. Other national and international companies with a major presence in Folsom include Kaiser Permanente, International Business Systems, Cardinal Health, VPD, Inc., Gekkeikan Sake, Kikkoman Foods, Inc., Verizon Wireless, Wachovia Securities, AFLAC Insurance, Wells Fargo Corporate Offices, and Morgan Stanley Dean Witter. The Sacramento market as a whole is experiencing increased attention from investors that have not heretofore acquired in this market. The publicity surrounding the new Downtown Sports and Entertainment complex and the explosion of new growth and development it spawned, combined with Sacramento s low unemployment rate, are creating opportunities for sellers and investors. Well-located and leased retail investments are especially in demand. The Folsom/El Dorado Hills submarket in which Willow Creek Town Center is located reported one the the region s lowest vacancy rates at 6.9%. In 2016 the Folsom/EDH submarket led the Sacramento market in new retail leasing with 215,000 square feet of net absorption. For comparison, Rocklin was second with 36,000 square feet. The Folsom/EDH submarket is also a regional leader, along with West Sacramento/Davis, in average asking rent at $2.06 per square foot, nnn. 10

11 2 PROPERTY OVERVIEW

12 Property Summary NAME ADDRESS COUNTY PARCEL NUMBERS AND LAND AREA ZONING Willow Creek Town Center (a portion of) 1001, 1007, 1011 E. Bidwell St., Folsom, California Sacramento : E. Bidwell St. (±1.01 Ac) : 1001 E. Bidwell St. (±0.64 Ac) C-2 PD YEAR BUILT FLOOD ZONE SEISMIC FOUNDATION Zone X, not within a special flood hazard area per Flood Zone Panel C0117H dated 8/16/12 The subject property is not in a seismic Special Studies Zone as defined by the Alquist-Priolo Earthquake Fault Zone Act. Concrete slab ROOF Flat, built-up. Replaced in 2014 with 60-mil TPO membrane HVAC SECURITY/FIRE PARKING / RATIO Roof-mounted package units Wet pipe system 569 total (4.95:1,000 sf). 124 on Subject parcels. ADA / CAPITAL IMPROVEMENTS Since 2014 current ownership has invested more than $300,000 in capital improvements, including ADA and parking lot ($190,000); new roofs for 1001, 1007 and 1011 ($97,700); trash enclosure ($47,200); and painting ($34,000). 12

13 Site Description Willow Creek Town Center is at the southwest corner of E. Bidwell St. and Blue Ravine Rd., two of Folsom s busiest thoroughfares. According to the City of Folsom, daily traffic on E. Bidwell St. averages 20,649 vehicles, and on Blue Ravine Rd. the average is 12,419. Access is excellent with a total of five driveways three on E. Bidwell and two on Blue Ravine. The center consists of eight parcels whose multiple owners maintain the common areas cooperatively, with the owner of parcel designated in the CC&Rs as the center manager. The table below lists all the parcels in the Center with its acreage, ownership, and key tenants in the building on that parcel. The two parcels included in this offering are shaded in yellow. The CC&Rs stipulate that the owner of parcel -003 manages the entire center and is entitled to receive the administrative fees set forth in the leases. PARCEL # ADDRESS ACREAGE TENANT(S) OWNERSHIP E. Bidwell St Dick s Sporting Goods RMP Properties, LLC E. Bidwell St. 1.7 CVS Pharmacy Longs Drug Stores/CVS Pharmacy * 1007 E. Bidwell St Anytime Fitness & Shops Pacific Castle Willow Creek, LLC E. Bidwell St Golden 1 Credit Union Geissler, Larson E. Bidwell St Habit Burger/Wingstop Cheong & Miao E. Bidwell St Wells Fargo Wells Fargo Bank E. Bidwell St IHOP MAXG, LLC E. Bidwell St Chipotle, Firehouse Subs & Shops Pacific Castle Willow Creek, LLC *CC&Rs designate owner of this parcel as Center Manager Included in this offering Not a part of the offering, but subject to administrative fees per the leases. 13

14 Site Plan BLUE RAVINE RD ADT 12,419 Bank E BIDWELL ST ADT 20,649 Nail Salon Cleaners Martial Arts Hair Salon Escape Room ±2,400 SF (divisible) ±1,080 SF Donuts CA Grills Vape NOT TO SCALE -- ALL DIMENSIONS ARE APPROXIMATE. 14

15 3 FINANCIAL

16 Financial Summary The asset is being offered for sale with a price of $8,442,000 which equates to a going-in capitalization rate of 6.36%. If debt is utilized and the asset is held and then sold as modeled in our 10- year discounted cash flow analysis, the overall annual return is a projected 18.14%. A copy of our Argus DCF analysis will be available for qualified prospective purchasers who have Argus software and sign the Confidentiality Agreement. On the following pages we present additional details on the financial performance of the asset. Two available spaces are being actively marketed. The center generates NOI of $21.65 per square foot as it sits. Stabilized, the projected NOI is $24.57psf, with an estimated capitalization rate of 7.22%. Price $8,442,000 Net Rentable Area 24,800 Price/SF $340 Potential Financing: Type Proposed Interest Rate 4.50% Principal Amount $5,487,300 65% Down Payment $2,954,700 Amortization (years) 30 Years Due 10 Estimated Monthly Payment $27,803 Estimated Annual Payment $333,640 Occupancy 86% 95% In-Place Stabilized Scheduled Gross Income $537,211 $620,731 plus expense reimbursements $320,787 $358,527 Adjusted Scheduled Gross Income $857,998 $979,258 less 5% vacancy and collection n/a ($48,963) Effective Gross Income $857,998 $930,296 less Operating Expenses ($321,074) ($321,074) Net Operating Income $536,925 $609,222 per square foot $21.65 $24.57 Estimated Annual Debt Service ($333,640) ($333,640) Pre-Tax Cash Flow $203,284 $275,581 Initial Capitalization Rate 6.36% 7.22% Argus unleveraged IRR % Argus leveraged IRR % 16

17 Rent Roll The rent roll shows both tenants and spaces in the offered parcels (shaded in gold), and tenants on other parcels in the center (not shaded) that reimburse expenses and pay fees to the owner of parcel in accordance with the CC&Rs. The reimbursement amounts are from the Argus analysis and include the administrative fees where applicable. Annual rents shown are for the 12 months commencing November 1, 2017 including scheduled rent increases BLDG./SUITE TENANT LEASE TERM RENTABLE SQ. FT. START END MONTHLY CURRENT BASE RENT PER SQ. FT. EST. EXPENSE RECOVERY ESCALATIONS Firehouse Subs 1,800 Dec-14 Dec-24 $4,488 $2.49 $55,198 nnn $18,980 Jan-18 $4,622 $2.57 2x5-yr. fmr 7.3% 1.6% Smokeless Smoking 1,200 May-14 May-20 $3,300 $2.75 $40,095 nnn $12,653 Jun-18 $3,399 $2.83 none 4.8% 1.0% No. California Grills 1,950 Jul-15 Jul-20 $4,448 $2.28 $53,773 nnn $20,560 Aug-18 $4,581 $2.35 1x5-yr. fmr 7.9% 1.7% The Donut Shop 1,250 Sep-10 Feb-19 $2,595 $2.08 $31,766 nnn $13,178 Mar-18 $2,673 $2.14 none 5.0% 1.1% Chipotle 3,400 Mar-01 Mar-26 $10,540 $3.10 $126,480 nnn $35,847 Apr-21 $11,866 $3.49 1x5-yr. fmr 13.7% 2.9% Anytime Fitness (1) 3,200 Jul-12 Nov-22 $3,680 $1.15 $47,680 nnn $30,807 Dec-17 $4,000 $1.25 1x5-yr. fmr 12.9% 2.8% Escape Room 3,300 Apr-17 Apr-19 $3,960 $1.20 $48,444 nnn $34,793 Apr-18 $4,092 $1.24 1x2-yr. fmr 13.3% 2.9% Hair for Less 900 Jul-16 Jul-21 $1,854 $2.06 $22,415 nnn $9,487 Aug-18 $1,910 $2.12 1x5-yr. fmr 3.6% 0.8% Red Line Martial Arts 1,920 Aug-14 Aug-24 $3,776 $1.97 $45,539 nnn $20,248 Sep-18 $3,889 $2.03 2x5-yr. fmr 7.7% 1.7% Willow Creek Cleaners (1) 1,500 May-12 Jun-22 $3,408 $2.27 $41,308 nnn $13,752 Jul-18 $3,511 $2.34 1x5-yr. fmr 6.0% 1.3% Folsom Nails 900 Jan-11 Dec-20 $1,993 $2.21 $24,515 nnn $9,487 Jan-18 $2,053 $2.28 none 3.6% 0.8% 1003-NAP Dick's (Sav-Mart) (1) 52, CAM only - $58, % 1005-NAP CVS Pharmacy (1) 18, CAM only - $20, % 1009-NAP IHOP 4, CAM only - $4, % 1113-NAP Wells Fargo 7, CAM only - $8, % 1115-NAP Miao Trust (Habit/Wild Wings) 3, CAM only - $4, % 1117-NAP Golden 1 Credit Union 4, CAM only - $4, % ANNUAL Subtotal Leased 21,320 $44,042 $2.07 $537,211 $320, % 97.0% Available( 2) 1,080 Mo. 6 $2,160 $2.00 $25,920 nnn $11, % 0.9% Available (2) 2,400 Mo. 3 $4,800 $2.00 $57,600 nnn $26, % 2.1% Subtotal Available 3,480 $6,960 $83,520 $37, % 3.0% Total Project 24,800 $51,002 $620,731 $358, % 100.0% 1. Most tenants pay a 15% administrative fee on CAMs. Exceptions: Willow Creek Cleaners pays no admin. fee; Anytime Fitness pays 5%; Dick s and CVS pay 10%. 2. Reimbursement for these available spaces are from year-two of the Argus analysis. LEASE TYPE DATE NEW MO. RENT PER SQ. FT. NO. X TERM OPTIONS OPTION RENT SHOPS PRO RATA CENTER PRO RATA 17

18 Expenses Expenses for the property are separated into two categories, one for the entire center shared with the owners and tenants on the parcels that are not a part of this offering, and the expenses for just the two parcels included in the offering. SF 2017 ARGUS INPUT POST SALE 115,748 Shared Center CAM Expenses Cleaning 19,632 19,632 19,632 Util.-Elec. Pkg. lot lights 12,908 12,908 12,908 Util.-Irrigation water 9,935 9,935 9,935 Insurance-Gen. liability 4,029 4,029 4,029 Landscaping 37,060 37,060 37,060 Pkg. lot sweeping 7,116 7,116 7,116 General maintenance 7,470 7,470 7,470 Steam cleaning 13,296 13,296 13,296 Pest control 1,044 1,044 1,044 Pkg. lot -elec. Repairs 3,600 3,600 3,600 Subtotal 116, , ,090 24,800 Shops CAM Expenses Util.electric 4,152 4,152 4,152 Util.-water 19,031 19,031 19,031 Util.-Trash/sewer 36,832 36,832 36,832 Prop. Insurance 5,209 5,209 5,209 Management fee 35,707 35,707 38,372 R&M-Building 5,365 5,365 5,365 Fire/Life safety 1,920 1,920 1,920 Ad valorem taxes 48, % 94,103 Direct assessments - none $0 Subtotal 156, ,984 Total 273, ,074 18

19 Argus Assumptions The table below sets forth the key assumptions used in our 10-year discounted cash flow analysis (Argus ). Market rent varies by space but can be viewed in the Argus Presentation Rent Roll included herein. ANALYSIS TERM AND STARTING DATE: Ten years commencing November 2017 INFLATION RATES: General: 3.0% Market rent: 3.0% Operating expenses: 3.0% Property taxes: 2.0% CURRENT MARKET RENT: Varies by space; see Argus MLAs. Range is from $15.00 psf/year to $42.00 psf/year, NNN. OPERATING EXPENSES: Based on 2017 budget for both Shared CAMs and Shops-only CAMs. Property tax estimate based on post-sale reassessment. EXPENSE REIMBURSEMENTS Most tenants pay a 15% administrative fee on CAMs. See rent roll footnotes for details. Current: NNN. Future: NNN. VACANCY ABSORPTION: Two shop spaces are available. Analysis assumes one leases in January 2018 and the other in April 2018 for five-year terms with five months free, TI allowance of $5.00-$7.50 psf, and 6.0% leasing commission. ROLLOVER ASSUMPTIONS Renewal probability: 75% Options: Assumes options to extend are exercised. Months dark: 4 Starting rent: 100% of fair market rent when the lease commences. Escalations: Assumes rent is increased annually by 3%; Chipotle by 12.6%/5 years. T.I. Allowance: $5 per square foot on new leases; none on renewals. Concessions: None Term length: 5 years. Leasing commissions: 6% of base rent on the first five years of term; 3% on the next five years. MINIMUM STABILIZED VACANCY: Natural as leases roll. DEBT / REFINANCING: 65% loan-to-value; 25-year amortization, due in 10 years; 4.5% interest rate. REVERSION: Terminal capitalization rate: 6.60% Present value discounting method: Annually, midpoint on cash flow, endpoint on sale. Costs of Sale: 3% of reversion price. 19

20 Argus Reports: Property Summary TIMING & INFLATION Reporting Period: November 1, 2017 to October 31, 2027; 10 years Inflation Month: Analysis Start General Inflation Rate: 3.00% PROPERTY SIZE & OCCUPANCY Property Size: 115,748 Square Feet Alternate Size: 24,800 Square Feet Number of rent roll tenants: 17 Total Occupied Area: 112,268 Square Feet, 96.99%, during first month of analysis SPACE ABSORPTION Space 117 1,080 Square Feet, leasing from 4/18 to 4/18 1 lease per month, 1,080 SqFt per lease Space 124 2,400 Square Feet, leasing from 1/18 to 1/18 1 lease per month, 2,400 SqFt per lease GENERAL VACANCY Method: Percent of Potential Gross Revenue Rate: 5.00% DEBT FINANCING Number of Notes: 1 Beginning Principal Balance: $5,487,300 Average Year 1 Interest Rate: 4.50% PROPERTY PURCHASE PRICE: $8,442,000 RESALE: Resale Method: Capitalize Net Operating Income Cap Rate: 6.60% Cap Year: Year 11 Commission/Closing Cost: $379,841 Net Cash Flow from Sale: $7,886,790 PRESENT VALUE DISCOUNTING Discount Method: Annually (Midpoint on Cash Flow/Endpoint on Resale) Unleveraged Annual IRR: 10.94% at $8,442,000 Leveraged Annual IRR: 18.14% at $8,442,000 20

21 Argus Reports: Cash Flow Schedule Of Prospective Cash Flow In Inflated Dollars for the Fiscal Year Beginning 11/1/2017 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 FOR THE YEARS ENDING OCT-2018 OCT-2019 OCT-2020 OCT-2021 OCT-2022 OCT-2023 OCT-2024 OCT-2025 OCT-2026 OCT-2027 OCT-2028 Potential Gross Revenue Base Rental Revenue $621,215 $640,376 $659,385 $687,904 $709,870 $726,920 $744,131 $761,502 $803,680 $839,662 $859,601 Absorption & Turnover Vacancy (20,465) (6,509) (7,133) (13,614) (16,476) (7,583) (20,584) (20,528) (8,994) (23,998) Base Rent Abatements (35,053) Scheduled Base Rental Revenue 565, , , , , , , , , , ,603 Expense Reimbursement Revenue 348, , , , , , , , , , ,359 Total Potential Gross Revenue 914,377 1,000,073 1,028,610 1,055,104 1,109,684 1,113,553 1,155,198 1,166,444 1,216,607 1,289,585 1,324,962 General Vacancy (26,277) (43,820) (44,654) (39,822) (55,484) (40,025) (50,556) (38,767) (41,329) (55,935) (43,450) Effective Gross Revenue 888, , ,956 1,015,282 1,054,200 1,073,528 1,104,642 1,127,677 1,175,278 1,233,650 1,281,512 Operating Expenses WCTC-Cleaning 19,632 20,221 20,828 21,452 22,096 22,759 23,442 24,145 24,869 25,615 26,384 WCTC-Pkg. lot lights 12,908 13,295 13,694 14,105 14,528 14,964 15,413 15,875 16,351 16,842 17,347 WCTC- Irrigation water 9,935 10,233 10,540 10,856 11,182 11,517 11,863 12,219 12,585 12,963 13,352 WCTC- Insurance, gen. liabilit 4,029 4,150 4,274 4,403 4,535 4,671 4,811 4,955 5,104 5,257 5,415 WCTC-Landscaping 37,060 38,172 39,317 40,496 41,711 42,963 44,252 45,579 46,946 48,355 49,806 WCTC-Pkg. lot sweeping 7,116 7,329 7,549 7,776 8,009 8,249 8,497 8,752 9,014 9,285 9,563 WCTC-General maintenance 7,470 7,694 7,925 8,163 8,408 8,660 8,920 9,187 9,463 9,747 10,039 WCTC-Steam cleaning 13,296 13,695 14,106 14,529 14,965 15,414 15,876 16,352 16,843 17,348 17,869 WCTC-Pest control 1,044 1,075 1,108 1,141 1,175 1,210 1,247 1,284 1,323 1,362 1,403 WCTC-Pkg. lot elec. repairs 3,600 3,708 3,819 3,934 4,052 4,173 4,299 4,428 4,560 4,697 4,838 SHOPS-Util. electricity 4,152 4,277 4,405 4,537 4,673 4,813 4,958 5,106 5,260 5,417 5,580 SHOPS-Water 19,031 19,602 20,190 20,796 21,420 22,062 22,724 23,406 24,108 24,831 25,576 SHOPS-Trash, sewer 36,832 37,937 39,075 40,247 41,455 42,698 43,979 45,299 46,658 48,057 49,499 SHOPS-Property insurance 5,209 5,365 5,526 5,692 5,863 6,039 6,220 6,406 6,599 6,797 7,000 SHOPS-Management 35,524 38,250 39,358 40,611 42,168 42,941 44,186 45,107 47,011 49,346 51,260 SHOPS-R&M Building 5,365 5,526 5,692 5,862 6,038 6,220 6,406 6,598 6,796 7,000 7,210 SHOPS-Fire/life safety 1,920 1,978 2,037 2,098 2,161 2,226 2,293 2,361 2,432 2,505 2,580 Ad Valorem prop. taxes 94,103 95,985 97,905 99, , , , , , , ,140 Total Operating Expenses 318, , , , , , , , , , ,861 Net Operating Income 569, , , , , , , , , , ,651 Debt Service Interest Payments 245, , , , , , , , , ,018 Principal Payments 88,523 92,589 96, , , , , , , ,622 Origination Points & Fees 54,873 Total Debt Service 388, , , , , , , , , ,640 Leasing & Capital Costs Tenant Improvements 23,400 1,609 1,591 5,736 3,478 3,478 4,843 8,075 2,446 9,408 Leasing Commissions 27,133 7,804 8,552 16,322 13,592 15,254 24,681 24,612 10,783 28,773 Total Leasing & Capital Costs 50,533 9,413 10,143 22,058 17,070 18,732 29,524 32,687 13,229 38,181 Cash Flow After Debt Service $130,827 $284,708 $302,825 $313,023 $364,261 $357,342 $376,909 $379,359 $412,772 $478,895 $797,470 But Before Taxes ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== 21

22 Argus Reports: Resale & IRR YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 FOR THE YEARS ENDING OCT-2018 OCT-2019 OCT-2020 OCT-2021 OCT-2022 OCT-2023 OCT-2024 OCT-2025 OCT-2026 OCT-2027 Resale Amount Gross Proceeds from Sale $12,661,379 Commissions & Adjustments (379,841) Net Proceeds From Sale 12,281,538 Outstanding Debt Retirement Total Principal Balances (4,394,748) Net Resale Proceeds After Debt $7,886,790 ====== ====== ====== ====== ====== ====== ====== ====== ====== ======= Unleveraged Annual IRR 10.94% Leveraged Annual IRR 18.14% 22

23 Argus Reports: Presentation Rent Roll Presentation Rent Roll & Current Term Tenant Summary As of Nov-2017 for 115,748 Square Feet (includes non-owned property that reimburses CAM charges) TENANT NAME FLOOR RATE & AMOUNT CPI & CURRENT MONTHS PCNT DESCRIPTION OF IMPRVMNTS COMMSSNS ASSUMPTION ABOUT TYPE & SUITE NUMBER SQFT PER YEAR CHANGES CHANGES PORTERS WAGE TO TO OPERATING EXPENSE RATE RATE SUBSEQUENT TERMS LEASE DATES & TERM BLDG SHARE PER MONTH ON TO MISCELLANEOUS ABATE ABATE REIMBURSEMENTS AMOUNT AMOUNT FOR THIS TENANT 1 Firehouse Subs $29.92 Jan-2018 $ See method: Std. - - Option Retail, Suite: 101 1,800 $53,856 Jan-2019 $31.74 NNN+15% See assumption: Dec-2014 to Dec % $2.49 Jan-2020 $32.69 $2.50 Rent 121 Months $4,488 Jan-2021 $33.67 Jan-2022 $34.68 Jan-2023 $35.72 Jan-2024 $ Firehouse Subs $29.92 Jan-2018 $ See method: Std. - - Option Retail, Suite: 101 1,800 $53,856 Jan-2019 $31.74 NNN+15% See assumption: Dec-2014 to Dec % $2.49 Jan-2020 $32.69 $2.50 Rent 121 Months $4,488 Jan-2021 $ Firehouse Subs $ See method: Std. - - Market Excluded from analysi 1,800 $0 NNN+15% See assumption: Jan-2030 to Dec % $0.00 $2.50 Rent 60 Months $0 2 Smokeless Smoking $33.00 Jun-2018 $ See method: Std. - - Market Retail, Suite: 102 1,200 $39,600 Jun-2019 $35.01 NNN+15% See assumption: May-2014 to May % $2.75 $2.75 rent 73 Months $3,300 3 Northern California G $26.57 Aug-2017 $ See method: Std. - - Option Retail, Suite: 103 1,950 $51,819 Aug-2018 $28.19 NNN+15% See assumption: Jul-2015 to Jul % $2.21 Aug-2019 $29.04 $2.50 Rent 61 Months $4,318 3 Northern California G $32.54 Aug-2021 $ See method: Std. - - Market Option, Suite: 103 1,950 $63,454 Aug-2022 $34.52 NNN+15% See assumption: Aug-2020 to Jul % $2.71 Aug-2023 $35.56 $2.50 Rent 60 Months $5,288 Aug-2024 $ The Donut Shop $24.91 Mar-2018 $ See method: Std. - - Market Retail, Suite: 105 1,250 $31,140 NNN+15% See assumption: Sep-2010 to Feb % $2.08 $2.50 Rent 102 Months $2,595 (continued on next page) 23

24 Argus Reports: Presentation Rent Roll (continued) Presentation Rent Roll & Current Term Tenant Summary As of Nov-2017 for 115,748 Square Feet (includes non-owned property that reimburses CAM charges) TENANT NAME FLOOR RATE & AMOUNT CPI & CURRENT MONTHS PCNT DESCRIPTION OF IMPRVMNTS COMMSSNS ASSUMPTION ABOUT TYPE & SUITE NUMBER SQFT PER YEAR CHANGES CHANGES PORTERS WAGE TO TO OPERATING EXPENSE RATE RATE SUBSEQUENT TERMS LEASE DATES & TERM BLDG SHARE PER MONTH ON TO MISCELLANEOUS ABATE ABATE REIMBURSEMENTS AMOUNT AMOUNT FOR THIS TENANT 5 Chipotle $37.20 Apr-2021 $ See method: Std. - - Option Retail, Suite: 106 3,400 $126,480 NNN+15% See assumption: Mar-2001 to Mar % $3.10 $3.50 Rent 301 Months $10,540 5 Chipotle $ See method: Std. - - Market Option, Suite: 106 3,400 $183,136 NNN+15% See assumption: Apr-2026 to Mar % $4.49 $3.50 Rent 60 Months $15,261 6 Anytime Fitness $13.80 Dec-2017 $ See method: Std - - Option Retail, Suite: 109 3,200 $44,160 Dec-2018 $15.45 NNN+5% See assumption: Jul-2012 to Nov % $1.15 Dec-2019 $15.91 $1.25 Rent 125 Months $3,680 Dec-2020 $16.39 Dec-2021 $ Anytime Fitness $17.43 Dec-2023 $ See method: Std - - Market Option, Suite: 109 3,200 $55,782 Dec-2024 $18.49 NNN+5% See assumption: Dec-2022 to Nov % $1.45 Dec-2025 $19.05 $1.25 Rent 60 Months $4,649 Dec-2026 $ Escape Room $14.40 Apr-2018 $ See method: Std. - - Option Retail, Suite: 114 3,300 $47,520 NNN+15% See assumption: Apr-2017 to Apr % $1.20 $1.25 Rent 25 Months $3,960 7 Escape Room $15.68 May-2020 $ See method: Std. - - Market Option, Suite: 114 3,300 $51,744 NNN+15% See assumption: May-2019 to Apr % $1.31 $1.25 Rent 24 Months $4,312 8 Hair for Less $24.00 Aug-2017 $ See method: Std. - - Option Retail, Suite: $21,600 Aug-2018 $25.46 NNN+15% See assumption: Jul-2016 to Jul % $2.00 Aug-2019 $26.23 $2.00 Rent 61 Months $1,800 Aug-2020 $ Hair for Less $26.81 Aug-2022 $ See method: Std. - - Market Option, Suite: $24,132 Aug-2023 $28.45 NNN+15% See assumption: Aug-2021 to Jul % $2.23 Aug-2024 $29.30 $2.00 Rent 60 Months $2,011 Aug-2025 $30.18 (continued on next page) 24

25 Argus Reports: Presentation Rent Roll (continued) Presentation Rent Roll & Current Term Tenant Summary As of Nov-2017 for 115,748 Square Feet (includes non-owned property that reimburses CAM charges) TENANT NAME FLOOR RATE & AMOUNT CPI & CURRENT MONTHS PCNT DESCRIPTION OF IMPRVMNTS COMMSSNS ASSUMPTION ABOUT TYPE & SUITE NUMBER SQFT PER YEAR CHANGES CHANGES PORTERS WAGE TO TO OPERATING EXPENSE RATE RATE SUBSEQUENT TERMS LEASE DATES & TERM BLDG SHARE PER MONTH ON TO MISCELLANEOUS ABATE ABATE REIMBURSEMENTS AMOUNT AMOUNT FOR THIS TENANT 9 Red Line Martial Arts $22.91 Sep-2017 $ See method: Std. - - Option Retail, Suite: 118 1,920 $43,992 Sep-2018 $24.31 NNN+15% See assumption: Aug-2014 to Aug % $1.91 Sep-2019 $25.04 $2.00 Rent 121 Months $3,666 Sep-2020 $25.79 Sep-2021 $26.56 Sep-2022 $27.36 Sep-2023 $ Red Line Martial Arts $29.37 Sep-2025 $ See method: Std. - - Option Option, Suite: 118 1,920 $56,394 Sep-2026 $31.16 NNN+15% See assumption: Sep-2024 to Aug % $2.45 Sep-2027 $32.10 $2.00 Rent 60 Months $4,700 Sep-2028 $ Red Line Martial Arts $34.05 Sep-2030 $ See method: Std. - - Market Option, Suite: 118 1,920 $65,376 Sep-2031 $36.12 NNN+15% See assumption: Sep-2029 to Aug % $2.84 Sep-2032 $37.21 $2.00 Rent 60 Months $5,448 Sep-2033 $ Willow Creek Cleaners $26.47 Jul-2017 $ See method: Std - - Option Retail, Suite: 120 1,500 $39,708 Jul-2018 $28.08 NNN See assumption: May-2012 to Jun % $2.21 Jul-2019 $28.92 $2.25 Rent 122 Months $3,309 Jul-2020 $29.79 Jul-2021 $ Willow Creek Cleaners $30.99 Jul-2023 $ See method: Std - - Market Option, Suite: 120 1,500 $46,490 Jul-2024 $32.88 NNN See assumption: Jul-2022 to Jun % $2.58 Jul-2025 $33.87 $2.25 Rent 60 Months $3,874 Jul-2026 $ Folsom Nails $26.57 Jan-2018 $ See method: Std. - - Market Retail, Suite: $23,916 Jan-2019 $28.19 NNN+15% See assumption: Jan-2011 to Dec % $2.21 Jan-2020 $29.04 $2.25 Rent 120 Months $1, Dick's Sporting Goods $ See method: Mod - - Market Retail, Suite: ,755 $0 NNN+10% See assumption: Aug-2017 to Jul % $0.00 $2.50 Rent 180 Months $0 (continued on next page) 25

26 Argus Reports: Presentation Rent Roll (continued) Presentation Rent Roll & Current Term Tenant Summary As of Nov-2017 for 115,748 Square Feet (includes non-owned property that reimburses CAM charges) TENANT NAME FLOOR RATE & AMOUNT CPI & CURRENT MONTHS PCNT DESCRIPTION OF IMPRVMNTS COMMSSNS ASSUMPTION ABOUT TYPE & SUITE NUMBER SQFT PER YEAR CHANGES CHANGES PORTERS WAGE TO TO OPERATING EXPENSE RATE RATE SUBSEQUENT TERMS LEASE DATES & TERM BLDG SHARE PER MONTH ON TO MISCELLANEOUS ABATE ABATE REIMBURSEMENTS AMOUNT AMOUNT FOR THIS TENANT 13 CVS Pharmacy-CAM $ See method: Mod - - Market Retail, Suite: ,970 $0 NNN+10% See assumption: Aug-2017 to Jul % $0.00 $2.50 Rent 180 Months $0 14 IHOP-CAM $ See method: Mod - - Market Retail, Suite: ,004 $0 NNN+15% See assumption: Aug-2017 to Jul % $0.00 $2.50 Rent 180 Months $0 15 Wells Fargo-CAM $ See method: Mod - - Market Retail, Suite: ,708 $0 NNN+15% See assumption: Aug-2017 to Jul % $0.00 $2.50 Rent 180 Months $0 16 Miao Trust/Habit-CAM $ See method: - - Market Retail, Suite: ,507 $0 Shared Net+15% See assumption: Aug-2017 to Jul % $0.00 $2.50 Rent 180 Months $0 17 Golden 1 CU-CAM $ See method: - - Market Retail, Suite: ,004 $0 Shared Net+15% See assumption: Aug-2017 to Jul % $0.00 $2.50 Rent 180 Months $0 S1 Space 117 $24.30 Apr-2019 $ % See method: Std. $5.00 $7.84 Market Retail, Suite: Mo 6 1,080 $26,241 Apr-2020 $25.78 NNN+15% 6.00% See assumption: Apr-2018 to Aug % $2.02 Apr-2021 $26.55 $5,400 $8,464 $2.00 Rent 65 Months $2,187 Apr-2022 $27.35 Apr-2023 $28.17 S2 Space 124 $24.12 Jan-2019 $ % See method: Std. $7.50 $7.78 Market Retail, Suite: Mo 3 2,400 $57,884 Jan-2020 $25.59 NNN+15% 6.00% See assumption: Jan-2018 to May % $2.01 Jan-2021 $26.35 $18,000 $18,669 $2.00 Rent 65 Months $4,824 Jan-2022 $27.15 Jan-2023 $27.96 Total Occupied SqFt 112,268 Total Available SqFt 3,480 26

27 4 FOLSOM & SACRAMENTO OVERVIEW

28 Folsom and Sacramento Overview Folsom has always been one of the Sacramento region s most desirable communities in part because of the diverse and abundant shopping opportunities provided by its thriving retail market. The City s population of 70,000 is well-educated, household incomes and home values are high, and its schools are known for academic excellence. With more than 6,000 employees, Intel s seven-building campus is the crown jewel of Folsom s economy. The City pushed hard during the late 1990s to have Sacramento s Regional Transit light rail system extended to Folsom. In 2005, following several years of construction, the light rail station at Sutter Street in Historic Folsom was the first to open, and commuters quickly embraced the convenience and low-cost of rail as an alternative to daily freeway commuting. Folsom Lake College enrolls approximately 8,000 students who are served by a full-time faculty of 84 including ten counselors, 185 part-time faculty, 72 classified staff, and nine administrators. The college offers more than 30 Associate of Arts or Science degree options and 30 certificate alternatives to choose from. In 2011 the Folsom Lake College Visual and Performing Arts Center, since renamed the Harris Center for the Arts, opened to the public. The center is a first-class performance venue that includes an 850-seat fully-equipped main theater, a 200-seat city stage, and a 100-seat recital hall. The Center costs approximately $42.3 million to build and hosts more than 400 public events attracting in excess of 150,000 patrons annually. The city s success in creating a family-oriented community with a particular emphasis on schools and well-equipped parks and sports centers, has attracted a number of high-quality employers. Intel is the City s single largest employer. Other national and international companies with a major presence in Folsom include Kaiser Permanente, International Business Systems, Cardinal Health, VPD, Inc., Gekkeikan Sake, Kikkoman Foods, Inc., Verizon Wireless, Wachovia Securities, AFLAC Insurance, Wells Fargo Corporate Offices, and Morgan Stanley Dean Witter. With smart planning, good city management, a rich history, well-equipped and maintained parks, high quality commercial and residential developments, a growing job base, and an emphasis on family values, Folsom has attracted large numbers of well-educated young families from all over Northern California. And while many still work in Sacramento, Folsom is increasingly a city whose residents enjoy local employment and a lifestyle free of commuting. Historic Rainbow Bridge across the American River 28

29 Demographics: Willow Creek Town Center POPULATION HOUSEHOLDS HOUSEHOLD INCOME HOUSING UNITS EDUCATION PLACE OF WORK 1-MILE RADIUS 3-MILE RADIUS 5-MILE RADIUS 2017 Population - Current Year Estimate 16,692 81, , Population - Five Year Projection 17,496 86, , Population - Census 15,695 75, , Population - Census 11,851 59, , Annual Population Growth Rate 0.85% 1.04% 0.93% Annual Population Growth Rate 0.95% 1.08% 0.99% 2017 Households - Current Year Estimate 6,702 28,543 52, Households - Five Year Projection 6,980 30,062 54, Households - Census 6,380 26,524 49, Households - Census 4,659 20,104 38, Annual Household Growth Rate 0.68% 1.02% 0.84% Annual Household Growth Rate 0.82% 1.04% 0.92% 2017 Average Household Size Average Household Income $95,620 $118,766 $125, Average Household Income $109,190 $133,981 $140, Median Household Income $76,600 $98,395 $100, Median Household Income $84,387 $105,831 $107, Per Capita Income $39,932 $44,539 $46, Per Capita Income $45,261 $49,607 $51, Housing Units 6,871 29,271 54, Vacant Housing Units % % 1, % 2017 Occupied Housing Units 6, % 28, % 52, % 2017 Owner Occupied Housing Units 2, % 19, % 38, % 2017 Renter Occupied Housing Units 3, % 9, % 14, % 2017 Population 25 and Over 11,395 57, ,542 HS and Associates Degrees 5, % 26, % 49, % Bachelor's Degree or Higher 5, % 27, % 48, % 2017 Businesses 815 3,034 4, Employees 8,725 40,648 53,327 29

30 5MARKET TRENDS

31 Market Trends The Sacramento commercial market as a whole is experiencing increased attention from investors that have not heretofore acquired in this market. The publicity surrounding the new Downtown Sports and Entertainment complex and the explosion of new growth and development it spawned, combined with Sacramento s low unemployment rate, are creating opportunities for sellers and investors. Well-located and leased retail investments are especially in demand, attracting multiple offers when priced correctly and widely exposed in the market. Sacramento s already healthy retail market has continued to improve in Vacancy is down 20 basis points to 9.1% since the end of 2016, and many submarkets are reporting vacancy numbers well below that average. Net absorption has been positive for eight of the last nine quarters, and totaled just under 100,000 square feet in 2Q Approximately 1.4 million square feet of new retail space is under construction. Most of this, more than one million square feet, is in Merlone Geier s Delta Shores 800-acre master planned project which is located east of I-5 south of Cosumnes River Drive. First stores are scheduled to open in Fall The Folsom retail submarket contains 27 shopping centers and just under 5.6 million square feet of retail space, much of which has been constructed in the last 15 years. Folsom Premium Outlets contains 554,000 square feet and is 100% leased to 87 (mostly national) retailers. The 600,000 square foot Palladio opened in Despite opening at the beginning of a recession, Palladio was successful in attracting Whole Foods to a highly-visible space at the south end of the center. Leasing activity thereafter has been steady and, according to CoStar, the center has leased nearly 500,000 square feet to date including a 16-screen cinema and a new deluxe cinema serving premium food and adult beverages. The Folsom/El Dorado Hills submarket in which Willow Creek Town Center is located reported one of the region s lowest vacancy rates at 6.9%. In 2016 the Folsom/EDH submarket led the Sacramento market in new retail leasing with 215,000 square feet of net absorption. For comparison, Rocklin was second with 36,000 square feet. The Folsom/EDH submarket is also a regional leader, along with West Sacramento/Davis, in average asking rent at $2.06 per square foot, nnn. FOLSOM LAKE Willow Creek Town Center 31

32 AFFILIATED BUSINESS DISCLOSURE CBRE, Inc. operates within a global family of companies with many subsidiaries and 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, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affiliates or their clients may have or express an interest in the property described in this Memorandum (the Property ), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to disclose to you such Affiliates interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act in the best interest of their respective client(s), at arms length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will conduct their respective businesses in a manner consistent with the law and all fiduciary duties owed to their respective client(s). CONFIDENTIALITY AGREEMENT Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property ( Owner ) or CBRE, Inc., and (iv) you will not use any part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return it to CBRE, Inc. DISCLAIMER This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verified for accuracy, completeness, or fitness for any particular purpose. All information is presented as is without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualified prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property s suitability for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK. The Owner expressly reserves 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 at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, definitive purchase and sale agreement delivered by the Owner. COPYRIGHT NOTICE 2017 CBRE, Inc. All Rights Reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. You should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. 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. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited

33 INVESTMENT CONTACT LOCAL MARKET CONTACTS RANDY GETZ Executive Vice President Lic RICK MARTINEZ Senior Vice President Lic JOSH SCHMIDT Vice President Lic CBRE, Inc. 500 Capitol Mall Suite 2400 Sacramento, CA