AUTOZONE 566 INLAND CENTER DR., SAN BERNARDINO, CA

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2 AUTOZONE 566 INLAND CENTER DR., SAN BERNARDINO, CA EXCLUSIVE INVESTMENT ADVISOR: Von Karman Avenue Suite 800 Irvine, CA Phone: (949) Fax: (949) Shaun Riley Senior Managing Director (949) R.E. License No The information contained herein has been carefully compiled from sources we consider reliable, and while not guaranteed as to completeness or accuracy, we believe it to be correct as of this date. The proforma revenues and expenses set forth in this brochure do not constitute a representation, warranty, or guaranty of any of the numbers set forth herein or of any economic value attributable to the property or income that may be derived therefrom. Independent estimates of proforma revenues and expenses should be developed before any decision is made on whether to invest in the property.

3 STATEMENT OF CONFIDENTIALITY & DISCLAIMER Faris Lee Investments ( FLI ) has been engaged as the exclusive financial advisor to the Seller in connection with Seller s solicitation of offers for the purchase of the property known as AutoZone, City of San Bernardino, County of San Bernardino, State of California. Prospective purchasers are advised that as part of the solicitation process, Seller will be evaluating a number of factors including the current financial qualifications of the prospective purchaser. Seller expressly reserves the right in its sole and absolute discretion to evaluate the terms and conditions of any offer and to reject any offer without providing a reason therefore. Further, Seller reserves the right to terminate the solicitation process at any time prior to final execution of the Purchase Agreement. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property, and it is not to be used for any other purpose or made available to any other person without the express written consent of Seller or FLI. The material is based in part upon information supplied by the Seller and in part upon financial information obtained by FLI from sources it deems reasonably reliable. Summaries of any documents are not intended to be comprehensive or all-inclusive, but rather only outline some of the provisions contained therein and qualified in their entirety by the actual document to which they relate. No representation or warranty, expressed or implied, is made by the Seller, FLI, or any of their respective affiliates as to the accuracy or completeness of the information contained herein. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence, including engineering and environmental inspections, to determine the condition of the Property and the existence of any potentially hazardous material located at the Property site or used in the construction or maintenance of the building at the Property site. A prospective purchaser s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or FLI or any of their affiliates or any of their respective officers, directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. Prospective purchasers are not to construe the contents of this Offering Memorandum or any prior or subsequent communication from FLI or Seller or their affiliates or any of their respective officers, directors, shareholders, owners, employees, or agents as legal, tax, or other advice. Prior to submitting an offer, prospective purchasers should consult with their own legal counsel and personal and tax advisors to determine the consequences of an investment in the Property and arrive at an independent evaluation of such investment. TABLE OF CONTENTS PROPERTY OVERVIEW 4+ PRICING ANALYSIS 14+ AREA OVERVIEW 20+

4 PROPERTY OVERVIEW

5 INVESTMENT SUMMARY INVESTMENT SUMMARY Faris Lee Investments is pleased to offer for sale the fee simple interest (land & building) in a freestanding, single tenant, NNN leased, AutoZone, located in San Bernardino, CA. AutoZone has operated at this site since 2007 and has recently extended the lease through November In addition, AutoZone is corporately guaranteeing the lease. AutoZone is a publicly traded company (NYSE: AZO) operating approximately 5,872 stores with an approximate shareholder equity of $1.78 Billion and an investment grade credit rating of BBB. LOCATION SUMMARY The subject property is strategically located in the heart of San Bernardino at the signalized, hard corner intersection of Inland Center Drive and W. Mill Street (26,800 combined vehicle per day). W. Mill Street is a major east-west corridor that connects San Bernardino with the rest of the major cities that comprise the vast Inland Empire of Southern California. Additionally, the subject property is near the San Bernardino Freeway / Interstate 215 with over 146,250 vehicles per day. The San Bernardino Freeway / Interstate 215 connects the immediate trade area with the major regional transportation corridors of Interstate 10 and 210. The subject property is located within close proximity to Inland Center Mall (991,300 SF), with national/retailers including: Macy s, Sears, JCPenny, and many more creating strong tenant synergy and identity within the immediate trade area. Furthermore, the site benefits from a population of 344,416 permanent residents with an average household income higher than $52,600 within 5 miles of the subject property. Additionally, the trade area is supported by more than 147,600 daytime employees within a 5-mile radius. PRICING PRICE: $2,400,000 PRICE / SF: $229 NOI: $120,000 CAP RATE: 5.00% CAP RATE AT MARKET RENT: 7.25% Property Overview 5

6 PROPERTY SPECIFICATIONS PROPERTY SPECIFICATIONS Rentable Area: 10,500 SF Ownership: Fee Simple (Land & Building) SF Land Area: 0.66 Acres Guaranty: Corporate Year Built: 1986 / 2007 (Rehab) Tenant: AutoZone Zoning: CG - General Commercial Credit Rating: S&P: BBB Address: 566 Inland Center Drive, San Bernardino, CA Access: There are two (2) access points, one (1) along Inland Center Drive and one (1) along West Mill Street. Improvements: There is approximately 10,500 SF of existing building area. Parking: A reciprocal parking and access agreement is place between the subject property and the property at 580 Inland Center Drive occupied by Harbor Freight tools. TRAFFIC COUNTS (COSTAR) Inland Center Drive: 14,800 W. Mill Street: 12, Freeway 146,250 PARCEL NUMBERS PARCEL ACRES SQUARE FEET ,880 PARCEL MAP VEHICLES PER DAY Property Overview 6

7 INVESTMENT HIGHLIGHTS CORPORATE GUARANTY BY INVESTMENT GRADE NATIONAL TENANT - AUTOZONE (NYSE: AZO) Company Type: Public (NYSE: AZO) Fiscal Year-End: August 2016 Employees: 49, Revenue: $10.64 Billion 2016 Net Income: $1.24 Billion 2016 Assets: $8.60 Billion 2016 Equity: $1.78 Billion S&P Credit Rating: BBB CORPORATE GUARANTOR - S&P BBB - INVESTMENT GRADE TENANT The investor will be able to obtain attractive low-interest rate financing, thereby enhancing the return on investment Provides stability and security of income stream for the investor TRIPLE NET (NNN) LEASE / FEE SIMPLE OWNERSHIP Minimal landlord obligations to maintain land or building Ease of management All recurring expenses are paid by tenant Ideal investment property for 1031 exchange investor EARLY LEASE RENEWAL IN 2015/ STRONG HISTORICAL OCCUPANCY AutoZone has operated at this location since 2007 and signed an early lease renewal in 2015, thereby demonstrating a strong-level of commitment to this location Approximately 8 years remaining on the lease IDEAL TRADE AREA DEMOGRAPHICS FOR AUTOZONE More than 344,400 permanent residents with an annual household income of approximately $52,600 and more than 147,600 total daytime employees within a 5-mile radius of the subject property RARE HUB STORE LOCATION CATERING TO BOTH CORPORATE AND INDIVIDUAL CUSTOMERS The size of the store allows AutoZone to provide an expanded inventory to cater to its corporate customers such as auto repair facilities and automobile dealerships. Within the store, AutoZone operates a separate counter exclusively for corporate customers The access to Interstate 215 (north/south) and nearby Interstate 10 (east/ west) creates an ideal location for this Hub store as the corporate customer is typically located outside of the traditional trade area and requires the part supplier to be located near a major freeway interchange with ease of accessibility to and from the freeway This store concept provides AutoZone a competitive advantage over other auto parts retailers in the trade area BELOW MARKET RENT / LONG-TERM VALUE UPSIDE Recent lease comparables in the immediate area show a comparable average rent for similar-sized retail stores at $1.38 PSF compared to $0.95 PSF for the subject property (31% below market rent.) Provides an investor potential upside when the rental rate at the subject property is moved to a market rent Property Overview 7

8 INVESTMENT HIGHLIGHTS CONT. REGIONAL RETAIL CORRIDOR / DIVERSE TRADE AREA WITH NATIONAL ANCHOR TENANT PRESENCE Subject property is within close proximity to Inland Center Mall (991,300 SF)anchored by JCPenny, Macy s, and Sears. Other nearby tenants within the trade area include Harbor Freight Tools, Chevron, Target, Arby s, Jack-in-the-Box, Carls Jr., Kia, Toyota, Nissan, CVS, Subway, Big Lots, and many more. The subject property benefits from strong tenant synergy in the trade area LOCATED JUST OFF INTERSTATE 215 FREEWAY The property is located just off the Interstate 215 (146,250 vehicles per day), which connects the immediate trade area with the major regional transportation corridors of the Interstate 10 and 210 Convenient access to Interstate 215 at the on and off ramps of both Inland Center Drive and W. Mill Street provide tremendous accessibility and enables AutoZone to operate in an expanded trade area LOCATED NEAR SIGNALIZED, HARD CORNER INTERSECTION The property is ideally located near the signalized, hard corner intersection of Inland Center Drive and W. Mill Street with a combined traffic count of 26,800 Strong street visibility on W. Mill Street and Inland Center Drive Convenient access from both W. Mill Street and Inland Center Drive. Representative Photo Property Overview 8

9 AERIAL VIEW Property Overview 9

10 LOCATION MAP Property Overview 10

11 AERIAL VIEW Property Overview 11

12 PHOTOS ADJACENT TENANT Property Overview 12

13 SITE PLAN MONUMENT SIGN Monument Sign W. Mill Street Inland Center Drive SITE PLAN NOT TO SCALE S. E Street Property Overview 13

14 PRICING ANALYSIS

15 LEASE COMPARABLES Property Location 1 Premiere Urgent Care 284 E. Highland Avenue Executed Rent: SF Leased Sign Date Rent Paid (mo.) Rent Paid (yr.) San Bernardino, CA ,626 Mar-16 $1.58 NNN $18.96 NNN 2 Market Square Emporium W. Baseline Street Executed Rent: SF Leased Sign Date Rent Paid (mo.) Rent Paid (yr.) San Bernardino, CA ,000 Jan-16 $1.50 NNN $18.00 NNN 3 $1 Smart 112 W. 40th Street Executed Rent: SF Leased Sign Date Rent Paid (mo.) Rent Paid (yr.) San Bernardino, CA ,440 Aug-16 $1.25 NNN $15.00 NNN 4 Options for Youth N. Riverside Avenue Executed Rent: SF Leased Sign Date Rent Paid (mo.) Rent Paid (yr.) Rialto, CA ,000 Jul-16 $1.25 NNN $15.00 NNN 5 Sherman Williams 265 W. Mill Street Executed Rent: SF Leased Sign Date Rent Paid (mo.) Rent Paid (yr.) San Bernardino, CA ,400 Jan-16 $1.30 NNN $15.60 NNN Average of Recently Executed Lease Comps: Subject Property: 5,093 SF $1.38 PSF/Mo $16.51 PSF/Yr. 10,500 SF $0.95 PSF/Mo $11.40 PSF/Yr. Pricing Analysis 15

16 RENT ROLL Tenant AutoZone Size (SF) Current Monthly Monthly Rent Current Annual Annual Rent Rental Increases CAM Recovery Increase Monthly Monthly Annual Annual Increase Rent $/SF Rent $/SF Date Rent $/SF Rent $/SF Type 10,500 $10,000 $0.95 $120,000 $11.43 Flat NNN 5/25/ / Lease Start Lease Expires Lease Options 3 (5-Year) $11,000 Option $12,100 Option $13,310 TENANT SYNOPSIS AUTOZONE AutoZone is the second largest retailer of aftermarket automotive parts and accessories in the United States behind Advance Auto Parts. AutoZone, Inc. retails and distributes automotive replacement parts and accessories. It offers various products for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. As of February 28, 2017, the company operated 5,346 stores in the United States, including Puerto Rico; 491 stores in Mexico; 9 stores in Brazil; and 26 International Motor Corporation branches. AutoZone, Inc. was founded in 1979 and is based in Memphis, Tennessee Company Type: Public (NYSE: AZO) 2016 Revenue: $10.64 Billion Locations: 5, Assets: $8.60 Billion 2016 Employees: 49, Equity: $1.78 Billion 2016 Net Income: $1.24 Billion S&P Rating: BBB Fiscal Year End: August Website: Pricing Analysis 16

17 TRANSACTION SUMMARY Financial Information Lease Type: NNN Price: $2,400,000 Price/SF: $229 Tenant is responsible for taxes, insurance, and CAM. Landlord is responsible for roof and structure. Property Specifications Rentable Area: 10,500 SF Land Area: 0.67 Acres Year Built: 1986/2007 Address: 566 Inland Center Drive San Bernardino, CA APN: Ownership: Fee Simple (Land & Building) Tenant: AutoZone Guaranty: Corporate Estimated Operating Information In-Place At Market Rent Gross Potential Rent $120,000 $173,880 Plus Recapture NNN NNN Effective Gross Income $120,000 $173,880 Less Expenses (NNN) (NNN) Net Operating Income $120,000 $173,880 Cap Rate: 5.00% 7.25% *Market Rent assumed to be $1.38 NNN PSF. Pricing Analysis 17

18 LEASE ABSTRACT Tenant and Landlord Information Lease Type (Ground/Lease): Lease Tenant (signing entity): AutoZone Parts, Inc. 2nd Amendment, P.1 Doing Business As (Business Name): AutoZone Lease, P.1 Guarantor: AutoZone, Inc. Exhibit F & 2nd Amendment, P.6 Landlord: AZONE SB I, LLC 2nd Amendment, P.1 Address/Suite #: 566 Inland Center Drive, San Bernardino, CA Lease, P.1 Witnesseth Lease Dates, Term and Premises Lease Execution Date: 5/25/2007 Lease, P. 1 Lease Commencement Date: 5/25/2007 Lease, P.37 Rent Commencement Date: 10/1/2007 (Estimated) Lease, Sec. 4, 6 & 2nd Amendment Term: 8 Years & 2 Months (Extension from original 10-year term) 2nd Amendment, Sec. 2 Expiration Date: 11/ nd Amendment, Sec. 2 Premises RSF: 10,500 SF Lease, Sec. 3 Pro Rata Share of Parking Lot & Landscaping: 21% 1st Amendment, Sec. A Rent and Additional Rent Current Rent and Escalations: $10,000 / year 2nd Amendment, Sec. 2 Flat Rent Abatements: None - Options and Terms: 3 (5-Year) Options 2nd Amendment, Sec. 3 Option 1: $11,000 Option 2: $12,100 Option 3: $13,310 Tenant Improvement Allowance: None - Percentage Rent: None - Gross Sales (reporting): None - Section Pricing Analysis 18

19 LEASE ABSTRACT CONT. Expense Recovery/Non-Recovery and Responsibilities Property Taxes: Tenant reimburses Landlord for all taxes Lease, Sec. 6 (b) (3) Property Tax Cap: None - Insurance: Utilities: Tenant shall directly pay to insurance provider for demised premises. Landlord must carry insurance for Common Area provided that all premiums and deductibles incurred shall be CAM charges. Tenant agrees to pay for all utilities for which Landlord provides separate metering. Landlord shall pay for all such utilities consumed by Tenant that are not separately metered, which shall constitute a CAM charge. Tenant shall pay for all utility hook-up, capital recovery and other fees or connection charges for utility service. Lease, Sec. 27 (a) & (b) Lease, Sec. 25 CAM: Tenant agrees to pay for all CAM charges. Charges are the sum of all Lease, Sec. 9 (a) expenses incurred by Landlord and 21% of CAM charges as defined in the REA. Landlord shall maintain common areas and any signage for the Entire Premises. Management Fees/ Admin Fees: Admin Fee: 10% of CAM excluding Taxes and Insurance Premiums. Expense Caps: None - Miscellaneous Co-Tenancy: None - Termination Right: None - First Right of Refusal/Right of First Offer: None - Documents Reviewed: Lease, 1st Amendment, 2nd Amendment, 1st REA, 2nd REA Abstractors Notes: Landlord shall maintain structural elements including roof structures, supports (but not membrane), foundations and structural supports, structural components within exterior walls, and slab. Lease, Sec. 24 (a) Pricing Analysis 19

20 AREA OVERVIEW

21 SAN BERNARDINO OVERVIEW FAST FACTS RETAIL & RESTAURANTS CORPORATE HEADQUARTERS TOP SCHOOLS NEARBY ATTRACTIONS SAN BERNARDINO IS A DIVERSE AND GROWING CITY. The city of San Bernardino is the 15th largest city in the state of California. Industrial growth in San Bernardino With increasing growth in the logistics industry and increasing sales in E-commerce, San Bernadino has grown into an industrial powerhouse. Since 2011, the logistics industry has added 53,000 jobs in the region alone. Additionally, the demand for warehousing space for E-commerce companies has sparked the construction of many flex/ industrial buildings. In 2017 alone, there is estimate 4.3 million square feet of industrial/ flex space under contruction with companies such as Amazon creating megawarehouses in the region. Population 213,000 residents SAN BERNARDINO COUNTY IS HOME TO OUTSTANDING SHOPPING/ DINING Chino Spectrum Marketplace Over 1,059,700 square feet of retail including restaurants and a diverse selection of shops Montclair Place Over 1,529,360 SF of retail situated on 72 acres. The store has a variety of shops such as Nordstrom, Macy s, and many other national tenants Ontario Mills Over 1,645,790 SF of retail attracting more than 28 million annual visitors. Victoria Gardens This mixed-use town center boasts over 1,816,800 SF of premier dining, entertainment, and retail. McDonalds San Bernardino is home to the first original McDonalds restaurant, which was founded in Although this restaurant is no longer in operation, it now has become a Mcdonalds museum. A NUMBER OF TOP COMPANIES MAKE SAN BERNARDINO COUNTY THEIR CORPORATE HEADQUARTERS Stater Bros. Founded in 1936, Stater Bros. has served Southern California for 81 years. This grocery store chain made San Bernardino its home in 2008 moving into it s 2.3 million square foot office and distribution center. ICEE Company ICEE Company is a division of J & J Snack Food Corporation. The company produces frozen carbonated beverages available in a variety of soda and fruit flavors. The company has been in business for over 50 years. Esri Esri is the producer for one of the most powerful mapping and spatial analytics software. They produce geographic information systems and geodatabased management applications for its customers, which include 75% of fortune 500 companies, 7000 colleges and universities, and many more. SAN BERNARDINO ENJOYS ACCESS TO SEVERAL HIGHLY-RANKED COLLEGES AND UNIVERSITIES Cal State University San Bernardino Founded in 1962, Cal State San Bernardino has over 17,700 undergraduate students. It was ranked #61 for best regional universities West by US & World News. University of Redlands University of Redlands is a private institution that was founded in Today, the university has over 3,400 students and is ranked 12 for best regional universities by US & World News. Loma Linda University Loma Linda University is the Seventh-day Adventist educational health-sciences institution with more than 4,500 students. San Bernardino Valley College San Bernardino Valley College enrolls over 12,000 students each year. The college has over 130 accredited programs for its students. SOME OF SOUTHERN CALIFORNIA S BEST ATTRACTIONS CAN BE FOUND NEAR SAN BERNARDINO San Manuel Stadium Home of the minor league team the Inland Empire 66ers, San Manuel Stadium boasts 5,000 seats and grass seating accommodating several thousand fans per game. Big Bear Mountain Resort Big Bear is one of Southern California s few mountain resorts offering world-class snowboarding, skiing, sledding, hiking, and mountain biking. The resort attracts millions of visitors each year. Mountain High Resort Mountain High Resort is one of the few mountain resorts in Southern California with 290 skiable acres for its patrons. Joshua Tree National Park Joshua Tree became a national park in The park protects more than 800 archeological sites, 160 historic structures, and 5 cultural landscapes. Area Overview 21

22 SAN BERNARDINO FAST FACTS POPULATION GROWTH SINCE % PREDICTED JOB GROWTH OVER THE NEXT 10 YEARS 38.69% RECENT JOB GROWTH IN SAN BERNARDINO 3.44% AUTO CLUB SPEEDWAY Auto Club Speedway is a two-mile, low banked, D-shaed oval asphalt track, located in the city of Fontana in San Bernardino County. The speedway is comprised of a total of 568 acres in total land area, and the track itself is 130 acres. Auto Club Speedway was formally known as the California Speedway, and has hosted NASCAR racing since The track also hosts other events such as drag racing, Formula 1, motorcycles racing, and much more. The speedway has a grandstand capacity of more than 68,000 seats, 28 skyboxes, and can hold up to 122,000 guests. Since, the track s construction, it also has been featured in a number of films including: Charlie s Angels, Herbie: Fully Loaded, and Bucket List. The track also was part of a parody in Pixar s film Cars. HOME APPRECIATION IN THE LAST 12 MONTHS 10.30% MEDIAN HOME VALUE $229,000 AVERAGE COMMUTE TIME 25 Mins SOUTHERN CALIFORNIA LOGISTICS AIRPORT (SCLA) The Southern California Logistics Airport (SCLA) is a public airport located in the city of Victorville, approximately 20 miles north of San Bernardino. The airport was the former George Air Force base, before it s public usage. The 5,000 acre complex includes a fully operational commercial airport, aviation services hun, and industrial park. From 1999 to present, SCLA has recieved more than 15,300 tons of air cargo. Area Overview 22

23 DEMOGRAPHICS DESCRIPTION ( 1 MILE 3 MILE 5 MILE POPULATION 2017 Estimated Population 7, , , Projected Population 7, , , Census Population 7, , , Census Population 6, , ,060 Projected Annual Growth 2017 to % 0.8% 0.8% Historical Annual Growth 2000 to % 1.0% 0.9% 2017 Median Age HOUSEHOLDS 2017 Estimated Households 2,028 37,830 98, Projected Households 2,128 39, , Census Households 1,901 35,432 92, Census Households 1,897 33,906 89,937 Projected Annual Growth 2017 to % 0.9% 0.8% Historical Annual Growth 2000 to % 0.7% 0.6% RACE AND ETHNICITY 2017 Estimated White 49.1% 41.9% 42.8% 2017 Estimated Black or African American 8.3% 11.5% 13.2% 2017 Estimated Asian or Pacific Islander 2.3% 5.1% 6.4% 2017 Estimated American Indian or Native Alaskan 1.5% 1.4% 1.2% 2017 Estimated Other Races 38.7% 40.0% 36.4% 2017 Estimated Hispanic 80.9% 73.7% 65.1% INCOME BUSINESS 2017 Estimated Average Household Income $36,338 $43,498 $52, Estimated Median Household Income $30,295 $36,081 $44, Estimated Per Capita Income $10,191 $12,198 $15, Estimated Total Businesses 1,107 5,525 11, Estimated Total Employees 10,814 75, , Estimated Employee Population per Business Estimated Residential Population per Business Area Overview 23

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