The Shops at Greenwood Village

Transcription

1 The Shops at Greenwood Village 9600 East Arapahoe Road, Greenwood Village, CO Investment Offering Memorandum May Broad Street Realty, LLC l 1

2 Table of Contents Investment Summary Acquisition Rationale.. - Value Creation Strategy. Location 06 - Demographics and Economic Summary... Property Overview Property Condition & Environmental Site Plan Tenant Mix Competitive Retail Market Retail Trade Equity Investment Financial Summary 21 About Broad Street 23 Non-Binding Equity Reservation Form Broad Street Realty, LLC l 2

3 Investment Summary Broad Street Realty, LLC (the Manager ) is pleased to offer you the opportunity to invest in The Shops at Greenwood Village, a 209,953 square foot neighborhood shopping center located in Greenwood Village, CO. The shopping center is highly visible and located on Arapahoe Road, one of the premier retail thoroughfares within the southern Denver market with 65,000 vehicles passing daily. The property consists of five multi-tenant buildings containing 69 tenants, and is anchored by Natural Grocer s Vitamin Cottage and the United States Postal Service. (References throughout this document to we, us or our are references to the Manager.) We have contracted to buy The Shops at Greenwood Village ( Greenwood Village, the Property or the Center ) at an attractive price and cap rate which is well below replacement cost, due in part to the existing CMBS debt that must be assumed. Even though we were not the high bidder, Broad Street Realty was selected as the buyer given our expertise with CMBS loan assumptions, where over the last four years we have successfully executed three CMBS loan assumptions within our portfolio. Currently, 45% of the Center square footage has been occupied by the same tenants for over ten years, creating lower than average in-place rents of $14.16 PSF. We plan on aggressively marketing and investing in tenant improvements in order to lease-up vacant inline space and replace several below-market tenants closer to Southeast Retail market rent level of $19.83 PSF. quarters of 2014 and 2015, and is continuing to grow due to high projected population growth and demand within the 1-mile site radius (2016 data not yet released). Furthermore, low interest rates and robust local residential market support the increase in spending. The Center s strong location and real estate fundamentals give us confidence in the security of this investment, while current vacancy and opportunities for tenant repositioning provide upside potential. We project an equity IRR of 17.1% and an equity multiple of 1.8x over a 4.5 year hold, providing prospective investors with an attractive value-add return. Greenwood Village thrives because of its strong location that is heavily trafficked and supported by an affluent and densely populated area within the southern Denver region. In Greenwood Village, demand for retail goods and services grew 2.1% between the 4th 2017 Broad Street Realty, LLC l 3

4 Investment Summary Acquisition Rationale Shopping Center Location Anchor Square Feet Sale Price psf Cap Rate Sale Date Kipling Marketplace Littleton, CO Safeway 90,124 $12,450,000 $ % 08/07/14 Woodlawn Center Littleton, CO Family Dollar 92,654 $10,000,000 $ % 05/21/15 Hampden Villa Shopping Center Aurora, CO Vitamin Cottage 96,100 $13,000,000 $ % 12/15/14 Towne Center at Brookhill Westminster, CO Bed Bath and Beyond 84,448 $14,750,000 $175 NA 06/13/13 Marston Park Plaza Littleton, CO The Tile Shop 100,690 $17,485,000 $ % 02/25/15 Average $ % The Shops at Greenwood Village Greenwood Village, CO Vitamin Cottage 209,953 $24,400,000 $ % The purchase price for Greenwood Village is $24,400,000 or $116 per square foot, which represents an ingoing capitalization rate of 9.0% on the first year s anticipated net operating income. Accounting for closing costs, leasing costs, and projected capital expenditures, the total initial investment is $27,700,000 or $131 per square foot. Based on recent comparable sales for shopping centers in the Denver market area (please see the chart above) we are purchasing Greenwood Village at a very attractive price. Several factors make the Greenwood Village price particularly attractive. First, the Los Angeles, California based seller recently shifted their focus away from Colorado, and is hoping to sell all of their non- California assets. The seller is a small family owned real estate company that purchased the Property back in In an effort to realign their portfolio and recognizing that the CMBS loan assumption with an above market interest rate will result in lower than average leverage for assets of this type, the seller is willing to sell Greenwood Village at a discount. Second, the debt markets have improved since the Greenwood Village loan origination in 2011 and the interest rate of the loan at 6.14% is not competitive in today s market, where achievable interest rates are around 4.5%. In addition to the rate of the loan, the assumable loan amount only levers the property up to 60% of total costs, which is lower than would typically be available in current debt markets, or 65% to 70%. Since the overall debt is somewhat challenging and requires assumption of a CMBS loan, we are in a position to acquire Greenwood Village at a significant discount, as the pool of bidders was significantly smaller than expected. Over the last four years, we have successfully executed three CMBS loan assumptions and are intimately familiar with CMBS requirements and the bureaucratic assumption process Broad Street Realty, LLC l 4

5 Investment Summary Value Creation Strategy We have three main strategies for creating value and investor returns at the Center. 1) Extend Vitamin Cottage or re-tenant based on robust demand Vitamin Cottage s lease expires in August 2018 with no options to renew. Conversations with Vitamin Cottage suggest that they have strong sales and that they like the southeast Denver market. We believe that with aesthetic/capital improvements, more intensive leasing efforts on the Center s vacant space, and Broad Street's hands on approach, we can entice Vitamin Cottage to stay at the Center. However, if Vitamin Cottage does vacate, robust demand and limited junior anchor space supply in the Denver Southeast retail market, suggest that we can quickly backfill the space with a quality tenant. Recent conversations with local leasing teams and retailers indicate that a number of anchor and junior anchor users are actively seeking space in the area, which is home to a number of prominent national retailers. Market rents for this type of space range from $14-18 NNN, compared to the current Vitamin Cottage rent of $13.80 NNN 3) Invest in capital improvements and aesthetics We plan to invest in Greenwood Village by modestly improving the aesthetics of the Center, including improving signage, improving landscaping, introducing a new vibrant color scheme, sealcoating the parking lot, and roof repairs. Our experience with similar shopping centers in our portfolio suggests that these types of improvements enhance a center s appeal and results in increased leasing activity among existing and potential retail tenants. 2) Lease-up vacancy to market occupancy and rent levels We believe that Greenwood Village is situated in a prime retail location within close proximity to the Denver Tech Center, a number of major office parks, hotels, core retail and residential communities. The Center is currently 16% vacant, while the surrounding trade vacancy rate is 4.3% in competing centers. This gives us an opportunity to add value and increase cash flow through lease-up of the currently available 19,800 SF of in-line retail and 1,800 SF of community office space. We plan on achieving market occupancy levels by deploying more robust tenant improvements and leasing funds, as well as leveraging our deep tenant relationships and leasing experience. Broad Street has had a brokerage presence in Denver since 2013, which includes a number of experienced retail leasing professionals who have worked in the Denver market for several years. Also, because of the long tenure of many of the tenants (45% of the square footage has been occupied by the same tenants for ten years or more) the average Property rental rate is $14.16 compared to the Denver Southeast Retail market level of $ As leases roll we hope to renew or replace tenants at closer to the market rent levels, enhancing investor returns and the value of the Property Broad Street Realty, LLC l 5

6 Location Address: 9600 East Arapahoe Road, Greenwood Village, CO County: Arapahoe Traffic Counts: 65,000 (Intersection of Arapahoe Road and Dayton Street) The Shops at Greenwood Village is located in the Southeast Retail submarket of Denver, CO and is one quarter mile from a major interchange with Interstate 25. The site is situated on the prominent retail thoroughfare of Arapahoe Road, enjoying 65,000 vehicles passing each day. The Denver South area has great access to mass transit including six light rail stops located within the region. The property is approximately 1 mile from the Arapahoe at Village Center Station, which includes light rail and bus transportation, as well as an 818 space park-and-ride structured parking lot. Bus no. 66 is located at the Property corner of Arapahoe Road and Dayton Street, providing convenient access for mass transit users. Lastly, nine access points of ingress and egress serve the Center from the surrounding roads, including a signalized intersection and dedicated left turning lane that provides customers convenient access. The Denver Tech Center is a 7 minute drive north on I-25 from the site and home to a number of prominent fortune 500 companies. Approximately 81,000 daytime employees are located within three miles of the Center. The area is supported by a number of full and limited service hotels including a Sheraton, Marriott and Hampton Inn, further supporting retail in the region. In addition, Centennial Airport, which supports both international and domestic flights, is located 7 minutes south of the site on I-25, and surrounded by 23 individual business parks. Also, Denver International Airport is located 30 minutes north of the Denver Tech Center. Denver south is a densely populated and burgeoning region that is supported by a number of expansion projects including the Southeast Light Rail Extension Project and the I-25 Arapahoe Interchange Reconstruction Project. When completed in summer 2018, the Reconstruction Project will improve traffic flow and add an additional lane for commuters on Arapahoe Road. All access points and turning lanes to the Shopping Center will not be affected by the Project. As of April 2017, the project is estimated to be 50% complete and tracking ahead of schedule Broad Street Realty, LLC l 6

7 Location 2017 Broad Street Realty, LLC l 7

8 Location Demographic and Economic Summary Radius 1 Mile 3 Mile 5 Mile Population 2021 Projection 11,782 81, , Estimate 10,733 74, , Census 8,905 64, ,165 Growth % 9.33% 9.63% Growth % 15.41% 13.74% 2016 Population by Hispanic Origin 2016 Population 1,324 10,733 5,538 74,536 21, ,913 White 9, % 65, % 203, % Black % 1, % 10, % Am. Indian & Alaskan % % 1, % Asian % 4, % 15, % Hawaiian & Pacific Island % % % Other % 1, % 6, % U.S. Armed Forces Households 2021 Projection 5,085 34, , Estimate 4,638 31,311 99, Census 3,871 26,944 87,363 Growth % 9.45% 9.72% Growth % 16.21% 14.19% Owner Occupied 2, % 20, % 64, % Renter Occupied 2, % 11, % 35, % 2016 Households by HH Income 4,637 31,310 99,758 Income: <$25, % 2, % 10, % Income: $25,000 - $50, % 4, % 17, % Income: $50,000 - $75, % 5, % 17, % Income: $75,000 - $100, % 4, % 14, % Income: $100,000 - $125, % 3, % 11, % Income: $125,000 - $150, % 2, % 7, % Income: $150,000 - $200, % 3, % 9, % Income: $200, % 4, % 12, % 2016 Avg Household Income 2016 Med Household Income $100,977 $75,776 $119,406 $92,709 $108,919 $83, Broad Street Realty, LLC l 8

9 Property Overview Property Condition Greenwood Village consists of four single-story buildings and one multi-story building, all of which were constructed in 1980 and renovated in 2012 with all new stucco facades. Our understanding from conversations with property management and current ownership is that the property, while aesthetically bland, has been very well maintained and no significant capital improvements should be necessary in the near future. Approximately 85% of the roof was replaced in 2015, which includes a 20-year transferrable warranty expiring in We have commissioned a property condition report to be provided prior to closing. During due diligence, our property management professionals conducted a thorough walk-through and inspection of vacant units and all common areas. Overall, the Property is in good physical condition from our initial assessment and, in addition to annual capital reserves, we have budgeted $600,000 for minor capital expenditures work and non recoverable capex associated with an in-place site development plan as part of our underwriting. Environmental As part of our due diligence, Phase I and Phase II environmental reports have been ordered and completed. We received the results and engaged third party environmental consultants ERO Services to review the report, and ERO has given their recommendation to move forward with our purchase of the shopping center. Furthermore, closing is contingent upon satisfactory results of the Phase II third-party recommendations. Supplementary, future on-site investigations by our personnel and consultants should help provide additional comfort as to the environmental condition of the Center Broad Street Realty, LLC l 9

10 Property Overview Site Plan Broad Street Realty, LLC l 10

11 Property Overview Site Plan Name Suite Type Size (SF) Retail GLA Total GLA Pride Liquors 6800 Retail 2, % 1.3% The Award & Sign Company 6801 Retail 4, % 1.9% Damage Factory, LLC 6806 Retail % 0.5% Fastest Labs 6810 Retail 1, % 0.5% A Team Taekwondo, Inc Retail 5, % 2.8% Vacant 6816 Retail 2, % 1.4% Tech Center Computers 6819 Retail 1, % 0.8% Best Paw 6823 Retail % 0.2% Rocky Mountain Blueprinting 6827 Retail 2, % 1.1% Vacant 6828 Retail 3, % 1.8% Amigos Mexican Food 6831 Retail 2, % 1.0% A and J Enterprises Pack & Ship 6833 Retail 1, % 0.9% VIP Exhibits 6835 Retail 1, % 0.9% Vacant 6836 Retail 1, % 0.9% Four Leaf Chopped Salads 6840 Retail 1, % 0.9% Vacant 6852 Retail 2, % 1.1% Pellow Family Chiropractic 6854 Retail 1, % 0.8% Vacant 6870 Retail 2, % 1.4% New Bakery 6880 Retail % 0.4% Tu Pinless 6881 Retail % 0.3% Vacant 6883 Retail 2, % 1.3% Milano Coffee Retail 1, % 0.8% Invintions Retail 5, % 2.8% Massage / Health Spa Retail 1, % 0.6% Yolanda's Taco Retail 1, % 0.7% Pollo Lima Retail 1, % 0.8% Vacant Retail 2, % 1.1% South Denver Primary Care Retail 3, % 1.7% Schlotsky's/Cinnabon Retail 3, % 1.8% Volcano Asian Cuisine Retail 3, % 1.8% Sahara Middle East Cuisine Retail 3, % 1.5% Havana Auto Parts Retail 7, % 3.7% Title Boxing Club Retail 6, % 3.3% The Sportsbook Bar & Grill Retail 5, % 2.8% Blimpie Subs Retail 1, % 0.7% Mesquite Grill Retail 1, % 0.9% Vitamin Cottage Natural Grocer Retail 13, % 6.4% Zoup! Retail 2, % 1.0% Paradise Indian Cuisine Retail 2, % 1.0% Ink it Over Retail % 0.3% Pro Nails Retail 1, % 0.5% Jabo's Bar-Be-Q Retail 2, % 1.3% Advanced Design Salon Retail 1, % 0.6% Signal Graphics Retail 2, % 1.2% Smash Burger Retail 2, % 1.0% Headed West 19672B Retail 2, % 1.0% Colorado Coin 19676A Retail 1, % 0.5% Dance Kailaidescope 19676B Retail 2, % 1.2% United Custom Tailor 19678A Retail 1, % 0.6% Continental Cleaners 19678B Retail 3, % 1.6% The Award & Sign Company 19682A Retail 2, % 1.3% Salon Centric, Inc C Retail 1, % 0.6% Vacant 19696A Retail % 0.4% United States Postal Service Retail 24, % 11.6% Hale Pet Door 6848A Retail % 0.3% Tuesday Morning, Inc Retail 9, % 4.4% Total Retail SF 176, % 83.9% Vacant 19, % 9.5% Occupied 156, % 74.5% Name Suite Type Size (SF) Office GLA Total GLA Vacant Office 1, % 0.5% Farmer's Insurance Office 2, % 1.1% Conference Room Office % 0.3% Sport Clips Area Office Office 1, % 0.7% Epic Escape Game Office 2, % 1.2% National Institute for Change Office 1, % 1.0% Fiber Technologies Office % 0.3% Christensen, Tyng, & Hjelmstad Office 2, % 1.0% Fairway Independent Mortgage Office 2, % 1.0% Steckleberg Office Office % 0.1% Vacant Office % 0.1% Buddy Cox Enterprises Office 1, % 0.6% Johnson Financial and Capital Office 1, % 0.6% BizFerret A Office % 0.2% Hasemeyer Insurance C Office % 0.2% JWA Technologies D Office % 0.2% Vacant E Office % 0.2% Total Office SF 19, % 9.3% Vacant 1, % 0.9% Occupied 17, % 8.5% Name Suite Type Size (SF) Storage GLA Total GLA The Award & Sign Company 6815 Storage % 0.4% Vacant 6821 Storage % 0.4% Vacant 6825 Storage % 0.4% Vacant 6838/1-4 Storage 3, % 1.7% Victoria Anderson 6838/5 Storage % 0.4% Pellow Family Chiropractic 6838/6 Storage % 0.4% Sahara Mataam, Inc. 6838/7 Storage % 0.4% Vacant 6838A Storage 1, % 0.6% Vacant 6838B Storage 1, % 0.6% Vacant 6838C Storage 1, % 0.6% Vacant 6838D Storage 1, % 0.6% Vacant 6848B Storage % 0.4% Total Storage SF 14, % 6.7% Vacant 10, % 5.1% Occupied 3, % 1.7% Total Retail + Office + Storage SF 209, % 100.0% Vacant 32, % 15.4% Occupied 177, % 84.6% 2017 Broad Street Realty, LLC l 11

12 Property Overview Tenant Mix The Shops at Greenwood Village features a strong and diverse mix of 69 national and successful local tenants, led by anchor tenants Vitamin Cottage and the United States Postal Service. Approximately 45% of the tenants have occupied the Center for more than a decade. Number of Employees: 3,352 FY2016 Net Sales Revenue: $705.5M Number of Locations: 126 Vitamin Cottage Natural Foods Markets, Inc. (NYSE: NGVC) is a locally (Colorado) based health food chain founded in The company currently operates 126 stores in 19 states, with continued expansion plans. 15 new store locations are expected to open in fiscal years 2017 throughout Arkansas, Arizona, Colorado, Iowa, Oregon, Texas, Utah, and Washington. Natural Grocers specializes in the sale of natural and organic products in their store formats ranging from 6,000 to 15,000 square feet. The firm has a 107,000 square foot bulk food repackaging facility and distribution center in Golden, CO. The company was taken public in July, 2012 and is listed on the NYSE. Their total comparable store gross sales increased 5.6% in 2014, 5.9% in 2015, and 1.4% in Additionally, their Net Sales increased 13% from FY 2015 to FY 2016 ($624M in 2015 to $705M in 2016); Gross Profits increased by 14% over the same period. The Natural Grocers has been a tenant at the Shops at Greenwood Village since 1998 and is Vitamin Cottage s first store, which further suggests that this location is meaningful to their history, reinforcing their intent to continue operations at this location Broad Street Realty, LLC l 12

13 Property Overview Tenant Mix Number of Employees: 621,837 FY2016 Revenue: $70.4B The USPS currently occupies 24,395 SF of flex retail space at the Property and has been a tenant there since 1986 (31 Years), They recently extended their lease for an additional five years through August, We believe that this location does very well, serving as a centralized distribution hub for the entire Denver South region. USPS has 100 employees at the Property and has significantly customized their space and the site to fit their operational needs, including a dedicated mail drop-off lane on South Dayton Street, and a secure on-site overnight parking area for up to 90 postal delivery trucks. We believe that they intend to continue operations at the Center for the long term. Number of Locations: 35, Broad Street Realty, LLC l 13

14 Property Overview Tenant Mix Number of Employees: 3,000+ Tuesday Morning Corporation (Nasdaq: TUES) is a leading offprice retailer specializing in selling deeply discounted, upscale decorative home accessories, housewares, seasonal goods and famous-maker gifts. Tuesday Morning has been a tenant at the Center since August, 2009 and currently operates on a Month-to- Month basis. Local brokers indicate that store sales at this location are lackluster and it appears that they are not a good fit for the local demographic. Releasing this space to an appropriate retailer will be a priority. FY2016 Sales: $956.4M Number of Locations: 769 Number of Employees: Not Reported FY2016 Revenue: Not Reported Number of Locations: 4 Havana Auto Parts (operating in partnership with NAPA Auto Parts) has 4 Colorado locations. Three of the locations are located in Aurora, CO, with the 4th at the subject property. Havana Auto Parts has an inventory of more than 1,000,000 quality parts and accessories, provided by NAPA products. Their inventory also includes a large portion of imports. Their products offer nationwide warranties through the NAPA brand. It is interesting that 40% of their sales are through the retail portion of their store, while 60% of their sales are wholesale out the back door to auto repair shops and dealerships Broad Street Realty, LLC l 14

15 Property Overview Tenant Mix Hazemeyer Insurance Johnson Financial & Capital Neighborhood Office Tenants: The site includes a number of second story office tenants as well as some ground level flex/office tenants. Total office space represents 19,596 SF of tenant space, representing about 9% of the total site square footage. Recently an escape room concept, Epic Escape Game, has signed a lease for approximately 2,500 SF of space bringing vacancy from 22% to about 9%. We believe that with our local leasing knowledge and increased leasing funds that we can improve vacancy to around 5%. Current users include legal office, financial advisors, technology companies, accounting companies and insurance providers. Our in-house leasing brokers will seek to capitalize on the rapid growth of the start-up community in the South Denver region and will continue to bring in other similar local and neighborhood office tenants. Storage: The site also includes 14,117 SF of storage space, representing 6% of total site SF. This space is 75% vacant; however, we feel that it serves as suitable storage space and we will continue to lease as such. We have underwritten storage conservatively at $5 PSF and included a long lead time lease-up schedule when considered within our analysis. Steckleberg Law Office 2017 Broad Street Realty, LLC l 15

16 Property Overview Tenant Mix - Key Tenant Summary In addition to the key tenants identified below, the Center benefits from a number of diverse and complimentary tenants including alcohol, a winery, fitness, medical, and numerous national and local restaurants. Local traffic from the tech center makes Greenwood Village an extremely popular destination during both day and night time operations, but especially during the lunchtime rush. The Center is also supported by many of the immediate onsite office users making for a convenient lunchtime and after work location for the many restaurant tenants. Lease Term Rental Rates Annual Tenant Type Space Size (SF) Begin End Annual PSF Escalations Options US Postal Service Government Retail 24,395 May-86 Aug-21 $250,056 $10.25 None None Natural Grocers Vitamin Cottage Grocery Retail 13,520 Sep-98 Aug-18 $186,576 $13.80 $.10/SF per year None Tuesday Morning Hardgood Retail Retail 9,185 Aug-09 MTM $90,013 $9.80 None (2) 5-yr options Havana Auto Parts Automobile Retail 7,779 Dec-12 Dec-22 $97,238 $12.50 $1.50/SF on 12/18 and 12/21 (2) 5-year option Title Boxing Club Fitness Retail 6,847 Aug-12 Feb-18 $77,029 $11.25 $.50/SF per year The Sportsbrook Bar & Grill Restaurant Retail 5,890 Jun-09 Aug-24 $76,629 $ % per year Volcano Asian Cuisine Restaurant Retail 3,840 Oct-16 Sep-26 $84,480 $ % per year Invintions - A Creative Winery Wine Retail 5,853 Mar-10 May-20 $80,409 $13.74 $0.93/SF on 12/17 South Denver Primary Care Hospital Retail 3,474 Jul-14 Nov-21 $84,790 $ % per year Schlotsky's/Cinnabon Restaurant Retail 3,718 Feb-11 Jan-21 $100,386 $27.00 $1.00/SF per year Zoup! Restaurant Retail 2,108 Aug-12 May-21 $52,735 $ % per year Smash Burger Restaurant Retail 2,085 Mar-08 Mar-18 $44,807 $ % per year Farmer's Insurance Christensen, Tyng & Hjelmstad, P.C. Fairway Independent Mortgage (1) 5-year option (1) 5-year option (2) 5-yr options (1) 5-year option (2) 5-yr options (2) 3-year options (2) 5-year options (1) 5-year option Professional Services Office 2,302 Oct-11 Sep-17 $32,009 $ % per year (2) 5-year options Professional Services Office 2,199 Dec-99 Dec-21 $30,962 $14.08 $.30/SF per year None Professional Services Office 2,053 Jun-15 Oct-18 $24,636 $12.00 $1.00/SF per year None 2017 Broad Street Realty, LLC l 16

17 Competitive Retail Market Southeast Retail Submarket Vacancy Rate: 4.3% Quoted Rental Rates: $19.83 Retail fundamentals in the market area continue to remain strong. Denver s continued economic improvement throughout 2016 and 2017 has led to a stronger retail market. Positive net absorption of 81,000 SF of retail space was recorded over the last 12 months in the southeast retail market, with Fitness, quick-serve restaurants, grocery and health/medical centers were the primary drivers of leasing activity. Continued evidence of this includes grocer King Soopers which is actively looking for space to accommodate their marketplace concept with a 125,000 SF footprint. Arapahoe Road in front of Greenwood Village is a primary retail corridor located within close proximity to the Denver Tech Center. Many national anchor retailers have a presence in the immediate area including Target, King Soopers, Lowe s, Home Depot, Safeway, Sprouts Farmers Market, Trader Joes, Whole Foods, TJ Maxx, and Marshalls, as well as a number of car dealerships. Competition in the area will remain high with retailers looking to expand their footprint. The Southeast submarket has one of the lowest vacancy rates in the Denver region. The submarket retail vacancy rate has remained at historical lows, despite several new retail projects coming online at the end of Asking rents have increased by 6% per square foot in the Southeast Retail submarket year-over-year from the first quarter of 2016 to the first quarter of Current retail activity leaders boutique grocers, restaurants/fast casual, fitness users and medical retailers are expected to continue driving demand throughout The delta between the Center s occupancy rate (84.6%) and the submarket s (95.7%) can be improved with our more significant tenant improvement allowances than those offered by the current owner, and an aggressive leasing program to attract retailers that are reportedly already actively seeking space in the region Broad Street Realty, LLC l 17

18 Competitive Retail Market ❸ ❹ ❼ ❺ ❷ ❶ ❻ Map ID Center Name/Location The Shops at Greenwood Village 9600 E Arapahoe Road Year Built/ Renovated Key Tenants In-Line Asking Rates Center RBA/ GLA Total Available Space (SF) Percent Leased Distance (Mi) 1980 / 2012 Vitamin Cottage, USPS $ $18.00 NNN 209,953 32, % Time (Min) ❶ ❷ ❸ ❹ ❺ ❻ ❼ Arapahoe Market Place E Arapahoe Rd Heritage Place 7375 E Arapahoe Rd Belleview Square 4910 South Yosemite Street Cherry Hills Marketplace 5910 S University Blvd Arapahoe Village E Arapahoe Rd Target and Shops at Target 6767 S Clinton Street The Orchards S Holly Street 1989 Sprouts Farmer's Market, The Tile Shop $ $20.00 NNN 170,355 4, % Safeway $ $16.00 NNN 131,248 11, % King Soopers, Hallmark Creations $ $20.00 NNN 119,363 1, % TJ Maxx, Trader Joes $ $22.00 NNN 196,834 2, % / 1991 King Soopers, Prestige Fitness $ $18.00 NNN 152,707 2, % Target, Payless Shoes $ $26.00 NNN 116,842 1, % King Soopers $ $23.00 NNN 114,247 11, % TOTAL / AVERAGE 1,001,596 24, % 2017 Broad Street Realty, LLC l 18

19 Competitive Retail Market Retail Trade Retail Sales Retail sales in the Denver South region reported moderate growth through the fourth quarter of Additionally, the City of Greenwood Village reported growth of $4.8M between the fourth quarters of 2014 and 2015, increasing 2.1%. Total industry growth during the same period grew from $461.5M to $512.3M, approximately 11.0%. Retail sales are expected to continued to increase in the submarket, driven by anticipated population and employment growth. Colorado department of revenue has not yet released 2016 retail trade area statistics, however, we expect continued moderate growth. Consumer Confidence Greenwood Village Retail Trade Sales ($000) by Industry, Fourth Quarter 2015 Greenwood Village Q4FY2014 Q4FY2015 MV/Parts 51,822 55,931 Furniture 3,614 3,891 Elect/Appliance 7,490 11,028 Bldg/Nursery 14,428 14,850 Food/Beverage 40,678 48,468 Health Care 2,605 2,545 Gas Stations 5,670 4,963 Clothing 18,708 15,859 Sports/Hob 4,883 4,809 Gen Merch * * Misc Stores 26,865 10,418 Non-Store * * Retail Trades 234, ,420 All Industries 461, ,309 * Data is non-disclosable for taxpayer confidentiality. Source: Colorado Dept. of Revenue Employment continues on its expansionary path in the Denver market. Unemployment in the Arapahoe county is currently at 3.3%, while Colorado is slightly higher at 3.6%, both well below the national average. Retail continues to grow as Denver consumers remain highly optimistic about the market. The retail sector continues to benefit from low interest rates and a strengthening residential market, which has supported an increase in consumer spending. The Mountain region consumer confidence index ended at for March 2017 compared to the US index at Historically, Colorado and the mountain region trend higher than the national average for consumer confidence Broad Street Realty, LLC l 19

20 Equity Investment Existing Loan As previously mentioned, the Center is currently secured by an existing and assumable non-recourse CMBS loan in the amount of $16,425,000. The loan bears an interest rate of 6.14% with 30-year amortization, and at the time of closing, will have 5 years remaining on the term. We have projected a 4.5-yr hold due to the term of the loan, which is subject to defeasance and a sizable penalty if paid off before the end of the term. While the size of the loan does not provide the leverage we typically try to achieve (up to 70% LTV), it does provide for a very substantial equity cushion and thus reduced downside risk. Equity Schedule We signed a purchase contract with the seller on September 15, 2016 and have been working through an extended due diligence period. On March 31, 2017 our feasibility and due diligence period expired and we are officially hard under our purchase contract. We have successfully reviewed all 3rd party inspections, tenant interviews, and performed a number of detailed financial analyses on the property. We currently have $300,000 deposit with the seller and are diligently pursuing closing with the lender. Closing is expected to be on or about July 1, The delayed closing date is primarily due to the loan assumption, as the lender has requested ample time for loan approval. We expect to call for equity funds in mid-june. Equity Offering Terms The total equity investment for Greenwood Village is $11,300,000 of which we have already raised $5,000,000 in the form of preferred equity from a respected institutional equity partner. This leaves us with a balance of $6,300,000 to raise in a Class B syndicated equity pool. The preferred equity will initially earn an 8% annual return, with limited upside capped at a 13.5% IRR. As a result, this leaves the Class B equity an opportunity to increase returns and capture a much larger portion of the upside upon sale. The Class B investors will receive an annual return of 8%, paid quarterly, along with a 50% share of the residual thereafter. The in-place cash flow is sufficient to begin paying the 8% returns immediately, and assuming a sale in 2021, the IRR (internal rate of return) to the equity is projected to be 17.1%, with an equity multiple of 1.8x (meaning the property is projected a total return of 1.8 times the original investment) and an average annual cash-on-cash return of at least 8.0%. More detailed information is included below in the Financial Summary. Please note that such projections are based upon assumptions made by the Manager regarding future events, including various assumptions concerning projected operating revenues, offset by estimated operating expenses, financing costs and capital expenditures. There can be no assurance that actual events will correspond with these assumptions or that actual results will correspond with these projections Broad Street Realty, LLC l 20

21 Financial Summary Sources and Uses Sources of Funds Value per RSF % of Total Investment Senior Debt $16,425,517 $ % Class A Preferred Equity $5,000,000 $ % Class B Equity $6,300,000 $ % Total Sources $27,725,517 $ % Uses of Funds Value per RSF % of Total Investment Acquisition Costs $25,550,517 $ % Leasing Reserves $1,100,000 $ % CapEx Reserves $600,000 $ % Cash Reserves $475,000 $ % Total Uses $27,725,517 $ % Entity LLC The Shops at Greenwood Village FORECASTED STATEMENT OF CASH FLOWS AND SOURCES AND USES OF FUNDS Year 0 Year 1 Year 2 Year 3 Year 4 year ending 30-Jun Jun Jun Jun Jun-21 Sources of Cash: NOI - 2,175,025 2,172,410 2,482,591 2,567,756 Capital Contributions: Mezzanine 5,000,000 Equity Partner (Class A) - Investors (Class B) 6,300,000 Interest Earned - Total Loan Proceeds (incl Interest accrual) 16,425,517 Reserves Drawdown - 575, , , ,250 Total Sources of Cash 27,725,517 2,750,248 2,839,076 3,265,157 2,735,006 Uses of Cash: Property Purchase 25,537,413 Leasing & Capital Costs Tenant Improvements - 157, , , ,142 Leasing Commissions - 74,418 78, ,430 79,930 Structural Reserves - 31,493 31,493 31,493 31,493 Asset Management - 68,693 67,208 74,260 76,702 Initial CapEx - 200, , ,000 - Debt Service & Financing Fees - 1,299,929 1,299,929 1,299,929 1,299,929 Reserve Funding 2,188, Uses of Cash Before Distributions 27,725,518 1,832,507 1,851,005 2,254,884 1,645,196 Cash Flow Available for Distribution to Investors - 917, ,071 1,010,273 1,089,810 Distribution Cash Flow: Class A Preferred Equity - 414, , , ,723 Class B - Equity Member Returns - 504, , , ,000 Class B - Equity Member Paydown Managing Members Cash returned at sale Total LLC Distributions - 918, ,909 1,011,186 1,090,723 TOTAL EQUITY DISTRIBUTION - 504, , , ,000 CASH FLOW PER $100,000 UNIT INITIAL INVESTMENT - 8,000 8,000 8,000 8,000 Yield on Net Outstanding Capital 8.00% 8.00% 8.00% 8.00% 2017 Broad Street Realty, LLC l 21

22 Financial Summary Sale and Waterfall Analysis Entity LLC The Shops at Greenwood Village SCHEDULE OF EFFECT OF A HYPOTHETICAL SALE OF COMPANY ASSETS AND DISSOLUTION OF THE COMPANY ON 6/30/2021 Hypothetical Sale Proceeds 34,178,052 Less: Selling Expenses (854,451) Net Sale Proceeds 33,323,600 Less: Permanent Mortgage Curtailment (15,148,095) Distributable Proceeds from Sale 18,175,505 Year 0 Year 1 Year 2 Year 3 Year 4 Total Cash Flows 30-Jun Jun Jun Jun Jun-21 Class B Net CF (6,300,000) 504, , ,000 9,724,159 Net Cash Returns 4,936,159 Distributed IRR 17.1% Equity Multiple 1.8x Distributable Proceeds for Investor 18,175,505 Return of Capital: Return of Mezzanine Capital 5,000,000 Return of Class A Net Invested Capital - Return of Class B Net Invested Capital 6,286,895 Return to Managing Member (BSR) - Return to Managing Member (Outside Investor) Excess Cash Flow Available for Distribution 6,888,610 Allocation of Excess Cash Flow: Class A Preferred Equity 1,022,084 Class B Equity 2,933,263 Broad Street Realty Managing Member 2,933,263 Total Proceeds: Class A Preferred Equity 6,022,084 Class B Equity 9,220,159 Broad Street Realty Managing Member 2,933,263 Total Distribution 18,175, Broad Street Realty, LLC l 22

23 About Broad Street Broad Street is a market-leading national commercial real estate services firm that delivers cost-effective solutions for office, industrial and retail clients. The company has extensive experience in tenant representation, landlord representation, property acquisition and disposition, real estate development, finance, strategic consulting, property management and asset management. Broad Street has a strong presence and long track record of success and maintains offices in Washington, DC, Maryland, Virginia and Colorado. Broad Street was founded in 2002 by Michael Jacoby, based in Bethesda, and Tom Yockey, based in Denver, who have over 60 years of combined experience in commercial real estate. Over their 18 years of working together, they have executed transactions totaling more than 30 million square feet of real estate, including over $500 million of total capitalization. The number of Broad Street team members at founding was four and has grown to 48 in four office across the US and continues to grow. For its substantial real estate asset portfolio, Broad Street raises equity through syndications that include a deep pool of long standing loyal investors and creates joint ventures with both high net worth individuals and institutional investors Broad Street Realty, LLC l 23

24 RESERVATIONS Reservations IF YOU DESIRE TO MAKE AN INVESTMENT IN THE SHOPS AT GREENWOOD VILLAGE, PLEASE COMPLETE THE ATTACHED NON- BINDING RESERVATION FORM AT THE END OF THIS MEMORANDUM AND RETURN IT TO: NIKI BRICKEY AT OR BY FAX AT (301) WE WOULD LIKE TO RECEIVE INVESTMENT RESERVATIONS BY JUNE 15, 2017, AND RECEIVE FUNDS ALONG WITH SIGNATURE PAGES BY JUNE 30, CLOSING IS ESTIMATED BETWEEN JULY 15, AND JULY 30, WE ARE GENERALLY REQUIRING A MINIMUM INVESTMENT OF ONE-HALF UNITS ($50,000) BUT A LIMITED NUMBER OF ONE- QUARTER UNITS ($25,000) WILL BE MADE AVAILABLE AT OUR DISCRETION. ADDITIONAL LLC DOCUMENTATION AND PROPERTY INFORMATION WILL BE CIRCULATED TO THE INVESTORS PRIOR TO FUNDING. THANK YOU FOR CONSIDERING THIS INVESTMENT WITH BROAD STREET. IF YOU HAVE ANY FURTHER QUESTIONS PLEASE CONTACT TOM OR MIKE. TOM YOCKEY (303) X 3009 TYOCKEY@BROADSTREETLLC.NET MICHAEL JACOBY (301) MJACOBY@BROADSTREETLLC.NET 2017 Broad Street Realty, LLC l 24

25 BSV GREENWOOD INVESTORS LLC A COLORADO LIMITED LIABILITY COMPANY NON BINDING EQUITY RESERVATION The undersigned Subscriber(s) hereby subscribes to contribute to the Company: Please enter the number of units Class B Equity One $100,000 One-Half $50,000 One-Quarter $25,000 Manner in which units are to be held: Individual Ownership Joint Tenants Tenants in Common Trust Name Qualified Retirement Plan Other REGISTER UNIT(S) AS: (Name used for tax returns/k 1/1099) Printed Name of Primary Subscriber Printed Name of Secondary Subscriber Signature of Primary Subscriber Date Signature of Secondary Subscriber Date Address City State Zip Phone- Home Phone- cell ACCEPTED BY: BSV GREENWOOD INVESTORS LLC BY: Broad Street Ventures, LLC, Manager By: Thomas M. Yockey, President