Walmart BALLINGER, TX OFFERING MEMORANDUM

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1 OFFERING MEMORANDUM

2 CONFIDENTIALITY AND DISCLAIMER The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. NON-ENDORSEMENT NOTICE Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

3 TABLE OF CONTENTS Section 1 PRICING AND FINANCIAL ANALYSIS Section 2 PROPERTY DESCRIPTION Section 3 DEMOGRAPHIC ANALYSIS

4 PRICING AND FINANCIAL ANALYSIS Walmart

5 PRICING AND FINANCIAL ANALYSIS FINANCIAL OVERVIEW Location 2005 Hutchings Avenue Ballinger, TX Price $1,520,000 Down Payment 40% / $608,000 Rentable Square Feet 29,808 Price/SF $50.99 CAP Rate 8.00% Year Built /Renovated 1987/2016 Lot Size Type of Ownership Tenant Summary Tenant Trade Name Ownership Tenant Lease Guarantor Lease Type Roof and Structure Lease Term Financing 3.47 Acres Fee Simple Walmart Public Corporate Store Corporate Guarantee Double Net Landlord Responsible Three-Year Extension Lease June 27, 1987 Rent Commencement June 27, 1987 Lease Expiration Date June 26, 2020 Term Remaining on Increases Approximately 3.5 Years Options One (1) Two-Year and Three (3) No Annualized Operating Data Rent Increases Annual Rent Monthly Rent Current - June 26, 2017 $94, $7, June 27, June $94, $7, Base Rent ($3.17/SF) $94,491 Percentage Rent $27,111 Net Operating Income $121,602 Debt Service $60,830 Debt Coverage Ratio 2.00 Net Cash Flow After Debt Service 10.00% / $60,772 *Tenant responsible for paying percentage rent annually equal to 0.50% times the amount by which the gross sales in the current year exceed the gross sales from Year 7 of the lease term. The annual percentage rent cannot exceed $1.00 per square foot of leased premises. The percentage rent utilized in this analysis is the average of the actual figures from past periods (period from 2/14-1/16). *Tenant responsible for pro rata share of common area maintenance of the shopping center, up to a maximum cost of $0.15 per square foot of leased premises annually. Tenant has the right, on a non-cumulative basis, to deduct all costs of its pro rata common area maintenance paid from its percentage rent due/owed. *Pricing is based upon Walmart exercising their option which runs from June 27, 2017 to June 26, Expected to exercise the option in April of FIRST TRUST DEED Loan Amount $912,000 Loan Type Proposed New Interest Rate 4.5% Amortization 25 Years Loan information is time sensitive and subject to change. Contact your local Marcus & Millichap Capital Corporation representative. 1

6 PRICING AND FINANCIAL ANALYSIS TENANT OVERVIEW Property Name Walmart Property Address 2005 Hutchings Avenue Ballinger, TX Property Type Net Leased Department Store Rentable Square Feet 29,808 Tenant Trade Name Walmart Ownership Public Tenant Corporate Store Sales Volume $ Billion (2015) Net Worth $ Billion Market Cap Lease Guarantor Corporate Guarantee Credit Rating AA Rating Agency Standard & Poor's Stock Symbol WMT Board NYSE Lease Commencement Date June 27, 1987 Rent Commencement Date June 27, 1987 Lease Expiration Date June 26, 2020 Term Remaining on Lease Approximately 3.5 Years Lease Type Double Net Roof and Structure Landlord Responsible Lease Term Three-Year Extension Options to Renew Options to Terminate Options to Purchase First Right of Refusal One (1) Two-Year and Three (3) Five-Year None None None No. of Locations 11,527+ Headquartered Bentonville, Arkansas Web Site Years in the Business Founded in 1962 Other Concepts Owned Sam's Club *Lessee has the right to expand the floor area of the premises by construction an addition or additions provided that not less than 15 years remain on the term of the lease. If the remaining options to extend the term are not sufficient to cover the 15-year period, lessee has the right to extend the term of this lease for a 15-year period following the commencement of the next succeeding lease year. A new lease rate, incorporating the expanded premises, will be negotiated between the two parties. 2

7 PROPERTY DESCRIPTION Walmart

8 PROPERTY DESCRIPTION INVESTMENT OVERVIEW Investment Highlights Double-Net Lease to Walmart, Strong Sales/Percentage Rent Location - Less than 1.00% Rent-to-Sales Corporate Guarantee (AA Credit Rating - Standard & Poor's) Minimal Landlord Responsibility Minimal Retail Competition Within the City of Ballinger or the Surrounding Area Committed to Site - Walmart has been in Operation at this Location Since 1987 High-Visibility Along Hutchings Renovated in 2016 Walmart is located at 2005 Hutchings Avenue in Ballinger, Texas, about 35 miles from San Angelo, via US-67 South. The 29,808-square foot building was constructed in 1987 and is situated on 3.47 acres of land. The building has been leased to Walmart since 1987 and the current double-net lease runs through June of Walmart also has one twoyear and three five-year options remaining, with the anticipated date of the recent option being exercised in April of Approximately 4.82 acres of land situated directly to the right of Walmart will soon undergo retail development. Several neighboring tenants include Golden Chick, Family Dollar, Stripes C-Store, First Community Federal Credit Union, Citibank, John Deere, Tractor Supply Store, Texas Health & Home Services Commission, and the USDA. Also, the Ballinger Healthcare & Rehabilitation Center is located immediately to the left of Walmart, as well as a Sonic Drive- In. Nearby hospitality stops include the Executive Inn, Budget Inn, and Ballinger Inn. The Beefmasters Steakhouse, as well as the Texas Venue BBQ & Grill, are local restaurant hotspots for visitors and lastly, the Crockett County Museum is a historical tourist attraction in town. Wal-Mart Stores, Inc., doing business as Walmart, is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores and grocery stores. Headquartered in Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated on October 31, As of February 29, 2016, Walmart has approximately 11,527 stores in 27 countries, under a total of 72 banners. Walmart is the world's largest company by revenue, according to the Fortune Global 500 list in 2014, and is the biggest private employer in the workforce with more than 2.2 million employees. Ballinger is a city in and the county seat of Runnels County, Texas. The population was 3,767 at the 2010 census. Ballinger is at the junction of U.S. highways 67 and 83 and State Highway 158, 36 miles northeast of San Angelo in south central Runnels County. The Colorado River and Elm Creek converge there, and the Atchison, Topeka and Santa Fe Railway runs through the town. Ballinger was established when the Gulf, Colorado and Santa Fe Railway built westward out of Brownwood in Runnels City, the original county seat, campaigned for selection as the new railroad terminal but could not compete with the superior water supply offered at the future site of Ballinger, five miles to the south. 4

9 PROPERTY DESCRIPTION BALLINGER The City of Ballinger was Established in 1886 by the Santa Fe Railroad and today Ballinger is a Home Rule Municipal Government. We the citizens of Ballinger, Texas, in order to establish a Home Rule Municipal Government, provide for the future progress of our city and obtain more fully the benefits of local self-government do hereby adopt this Home Rule Charter in accordance with the statutes of the State of Texas. The city s Home Rule Charter was adopted at an election held on April 2,

10 PROPERTY DESCRIPTION PROPERTY SUMMARY The Offering Property Property Address Walmart 2005 Hutchings Avenue Ballinger, TX Site Description Year Built/Renovated 1987 / 2016 Rentable Square Feet 29,808 Lot Size 3.47 Acres Type of Ownership Fee Simple 6

11 PROPERTY DESCRIPTION PROPERTY PHOTOS 7

12 PROPERTY DESCRIPTION PICTURE PAGE 1 8

13 PROPERTY DESCRIPTION PICTURE PAGE 2 9

14 PROPERTY DESCRIPTION AREA MAPS Local Map 10

15 PROPERTY DESCRIPTION AERIAL PHOTO 11

16 DEMOGRAPHIC ANALYSIS Walmart

17 DEMOGRAPHIC ANALYSIS DEMOGRAPHIC REPORT 1 Mile 3 Miles 5 Miles 2000 Population 213 4,709 4, Population 204 4,293 4, Population 199 4,230 4, Population 197 4,144 4, Households 67 1,753 1, Households 61 1,645 1, Households 60 1,623 1, Households 59 1,590 1, Average Household Size Daytime Population 52 1,382 1, Owner Occupied Housing Units 58.11% 64.67% 64.37% 2000 Renter Occupied Housing Units 14.39% 18.85% 18.79% 2000 Vacant 27.50% 16.48% 16.84% 2014 Owner Occupied Housing Units 82.30% 73.36% 73.67% 2014 Renter Occupied Housing Units 17.70% 26.64% 26.33% 2014 Vacant 31.41% 18.95% 19.35% 2019 Owner Occupied Housing Units 82.29% 73.15% 73.46% 2019 Renter Occupied Housing Units 17.71% 26.85% 26.54% 2019 Vacant 32.17% 19.28% 19.70% $ 0 - $14, % 25.8% 25.2% $ 15,000 - $24, % 14.4% 14.3% $ 25,000 - $34, % 14.2% 14.5% $ 35,000 - $49, % 12.6% 12.7% $ 50,000 - $74, % 14.9% 14.9% $ 75,000 - $99, % 6.6% 6.7% $100,000 - $124, % 6.2% 6.3% $125,000 - $149, % 3.0% 2.9% $150,000 - $199, % 1.3% 1.3% $200,000 - $249, % 0.5% 0.6% $250, % 0.6% 0.7% 2014 Median Household Income $39,681 $32,770 $32, Per Capita Income $22,873 $18,266 $18, Average Household Income $74,536 $46,624 $47,400 Demographic data 2012 by Experian. 13

18 DEMOGRAPHIC ANALYSIS SUMMARY REPORT Geography: 5 miles Population In 2014, the population in your selected geography is 4,439. The population has changed by % since It is estimated that the population in your area will be 4,351 five years from now, which represents a change of -1.98% from the current year. The current population is 48.58% male and 51.41% female. The median age of the population in your area is 42.9, compare this to the Entire US average which is The population density in your area is people per square mile. Households There are currently 1,704 households in your selected geography. The number of households has changed by -7.55% since It is estimated that the number of households in your area will be 1,669 five years from now, which represents a change of -2.05% from the current year. The average household size in your area is 2.48 persons. Income In 2014, the median household income for your selected geography is $32,964, compare this to the Entire US average which is currently $51,972. The median household income for your area has changed by 21.21% since It is estimated that the median household income in your area will be $37,919 five years from now, which represents a change of 15.03% from the current year. The current year per capita income in your area is $18,569, compare this to the Entire US average, which is $28,599. The current year average household income in your area is $47,400, compare this to the Entire US average which is $74,533. Race & Ethnicity The current year racial makeup of your selected area is as follows: 81.97% White, 2.99% Black, 0.04% Native American and 0.42% Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 35.17% of the current year population in your selected area. Compare this to the Entire US average of 17.13%. Housing In 2000, there were 1,427 owner occupied housing units in your area and there were 416 renter occupied housing units in your area. The median rent at the time was $262. Employment In 2014, there are 1,431 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 47.93% of employees are employed in white-collar occupations in this geography, and 51.89% are employed in blue-collar occupations. In 2014, unemployment in this area is 6.39%. In 2000, the average time traveled to work was 18.1 minutes. Demographic data 2012 by Experian. 14

19 DEMOGRAPHIC ANALYSIS POPULATION DENSITY Demographic data 2012 by Experian. Number of people living in a given area per square mile. 15

20 DEMOGRAPHIC ANALYSIS EMPLOYMENT DENSITY Demographic data 2012 by Experian. The number of people employed in a given area per square mile. 16

21 DEMOGRAPHIC ANALYSIS AVERAGE HOUSEHOLD INCOME Demographic data 2012 by Experian. Average income of all the people 15 years and older occupying a single housing unit. 17

22 DEMOGRAPHIC ANALYSIS TRAFFIC COUNTS Traffic Count data 2012 by TrafficMetrix. All rights reserved. Two-way, average daily traffic volumes. * Traffic Count Estimate 18

23 OFFERING MEMORANDUM Collin Kraft Associate Member, Net Leased Properties Group Dallas Office License: TX: Tel: (972) Fax: (972) Offices Throughout the U.S. and Canada