walmart neighborhood market

Transcription

1 walmart neighborhood market Representative Photo new construction in dense retail corridor 3419 Orange Ave NE, Roanoke, VA For more info on this opportunity please contact: ZANDY SMITH ZEB RIPPLE CHRIS KOSTANECKI CHRIS PETERS (415) CA BRE# (415) CA BRE# Capital Pacific collaborates. Click here to meet the rest of our San Francisco team. (415) CA BRE# (415) CA BRE# In conjuction with: Read Goode of Divaris Real Estate, Inc. (804)

2 WALMART NEIGHBORHOOD MARKET, CURRENTLY UNDER CONSTRUCTION IN ROANOKE, VA The Neighborhood Market is Walmart s smaller grocery concept which was launched in 1998 and gives customers a more convenient shopping experience than the typical Walmart Supercenter. The Supercenter is typically 160,000 square feet and in contrast the Neighborhood Market is approximately 40,000 square feet and has a fuel center and a drive-thru pharmacy for increased convenience. Walmart s strategy is to open another 270 of these small-format stores and have a total of 500 operating by early next year. Investment Highlights PRICE: $12,088,000 CAP: 5.00% RENTABLE SF... 41,117 SF PRICE PER SF... $ LAND AREA Acres LEASE TYPE Modified NNN YEAR BUILT LEASE HIGHLIGHTS The building is currently under construction with a completion date and delivery to Walmart in February Walmart has signed a 20-year net lease with the tenant responsible for all triple net reimbursements except for capital replacement items. Please see Lease Summary page for details. The lease has increases in the option periods of 10% for the first two five-year option terms and 5% for the second two fiveyear option terms. This is a rare opportunity to invest in a net lease asset with a Standard & Poor s credit rating of AA, one of the highest rated retail tenants available to the investment community. LOCATION HIGHLIGHTS This Walmart Neighborhood Market is located at 3419 Orange Ave NE, Roanoke, VA. It is a heavily trafficked retail corridor and is surrounded by numerous national and regional retail tenants. While not included in the Investment Offering, Denny s and KFC are outparcels to the subject property. In the immediate vicinity are McDonalds, Wells Fargo, Goodwill, BB&T, Burger King, Wendy s, SunTrust, and Advance Auto Parts. Subject property is located in a dense residential market. Directly southwest are Glade Creek and Hickory Woods, which are upscale communities and home to 400 Class A apartments. Vinton, VA, located two miles away, is a town of 8,000 and in the next several years downtown Vinton will be undergoing changes to make the downtown area more vibrant and active. The town is applying for over $1 million to invest in the downtown area. INVESTMENT SUMMARY The combination of the strong demographics of Roanoke as well as strong growth prospects should make this a successful location for Walmart and its Neighborhood Market and in turn make this a successful real estate investment. The location, coupled with the rare AA-rated corporate guaranty from Walmart Stores and long term net lease should make this a successful investment for the sophisticated investor. Representative Photo WALMART NEIGHBORHOOD MARKET 2

3 Representative Photo Core Characteristics COMMERCIAL HUB COMMERCIAL HUB translates to JOBS & ECONOMIC STABILITY Roanoke is the largest city in southwest Virginia and the Roanoke MSA has more than 300,000 people. The City of Roanoke is known as the commercial hub of southwest Virginia as its central location allows for access to most areas in the Southeast and mid-atlantic within one day. It is home to headquarters of companies such as Advance Auto Parts and Carilion Health System, as well as many colleges such as Roanoke College which was ranked as #2 up-and-coming Liberal Arts College by US News and World Report. STRONG ECONOMIC FUNDAMENTALS Roanoke prides itself on quality of life and has recently been recognized with some recent national recognition awards, such as: Roanoke was given the Outstanding Achievement Award in the 2014 City Livability Awards Program by the US Conference of Mayors. (2014) Roanoke was named one of America s Best Small Cities on the Rise by Smarter Travel (2014) The 100 Best Fleets in North America Contest included Roanoke as one of the Top 100 Fleets in North America, out of 38,000 Fleets in US and Canada. (2014) USA Today named Roanoke Valley as one of the 10 Best Bike-friendly Cities in the country (2014) Roanoke was named a Top 10 Digital City by Center for Digital Government (2013) Next Great Neighborhood: Downtown Roanoke by Southern Living (2013) WALMART NEIGHBORHOOD MARKET 3

4 In the News WHY WALMART SUDDENLY THINKS SMALLER IS BETTER WALTER LOEB - FORBES - JUNE 16, 2014 At the end of the 2014 fiscal year (January 2014), Walmart had 3285 Supercenters in the United States that vary in size from 180,000 square feet to 230,000 square feet. They also had 508 discount stores that were around 140,000 square feet, smaller than the supercenters because they sell very little food. There were also, according to Walmart s annual report, 407 even smaller units of which 359 are the Walmart Neighborhood Market concept. These stores average around 43,000 square foot in size and have been around since A previous Walmart management team assured me that, while they liked the concept, Walmart customers preferred the larger assortment in the superstores and discount stores. Despite management s lukewarm endorsement at that time, every year a few more units were added. Well, things have changed. The convenience of quick shopping has become front and center. Today there is a real focus at Walmart on smaller stores. Two hundred new Neighborhood Market units will open this year. That is a tremendous ramp-up in the expansion plans and the new Walmart management team is suggesting there could be thousands in five years. Yikes! Thousands! What has happened? Why now? Two hundred new Neighborhood Market units will open this year. Certainly Doug McMillon, Walmart s new CEO, wants to show domestic growth. He is stressing that the customer wants the convenience of a quick shopping trip to a Market Place. I can add that he probably has learned from the omnipresence of small stores and bodegas throughout the US, and the world, as well as the rapid expansion of Nordstrom s Rack, that the consumer likes small stores and it is easier to find locations for these compact units. I could visualize entry into urban centers like New York City, Chicago, Los Angeles or Dallas, as well as expansion into new suburban areas. The stores will be close to where customers live and want to shop. The stores carry food, full pharmacies, fuel, and some general merchandise. Right now there are also twenty-one 12,000 square foot Walmart Express stores with fresh produce, meats and dairy as well as a pharmacy. Management has indicated that they will add 100 of these pint-size units this year. This is a fast growing chain, and I suspect that, like rabbits these units will multiply very quickly this decade. They are even easier to find locations for around the United States than the larger (but still small) Neighborhood Markets. Walmart To Go is the newest test store and that is in Bentonville, Arkansas, Walmart s HQ town. It is only 5,000 square feet in size and features coffee and cold refreshments as well as snacks. It is a modified convenience store selling fresh food, some prepared meals, some grocery, and a few general merchandise items such as movies and seasonal items for Easter, Mother s or Father s Day. The store will carry only 3,500 SKU s (stock keeping units). Judith McKenna former COO of ASDA is now in charge of small store rollout. She will lead the introduction of yet another innovative idea for Walmart a 15,000 square foot Internet grocery pick-up center. This new concept will also be tested in Bentonville, AR and is modeled after an ASDA concept in the United Kingdom. This drive through concept will assemble grocery orders placed online and deliver them to cars in as many as 30 drive-up lanes. I think the news of these new initiatives is exciting and at the same time challenging. They will certainly create a greater competitive environment throughout the United States. However, they will only be successful if new supply chains are created. The new concepts have to be watched closely in order to assure profitable growth. Walmart s customer service in large stores has been uneven and the rapid growth of these new concepts demand a cadre of dedicated associates that are ready to serve customers on less bureaucratic terms. When I saw the first Neighborhood Market stores they were truly entrepreneurial enterprises. That has to come back. This year, Walmart will add 115 supercenters, 35 to 40 units will be renovations and expansions, while 75 to 80 will be new stores. That is about 17 Million square feet of additional selling space. This is still the engine that will drive total sales for this behemoth. It will still be the focus of the company. However, as I analyze the competitive retail scene the addition of 300 new small Walmart units that will add about 1 million additional square footage of selling space. However, Walmart is not the only retailer adding capacity to the US market. The strength of Internet sales will be a factor pressuring stores. With the opening of Alibaba s 11Main.com and the announced opening of Primark in Boston in late 2015, there is much to worry about. Walmart will continue to be a competitive leader defending its share of market, but the new competitors will create a worrisome war-like environment in the second half of this decade. WALMART NEIGHBORHOOD MARKET 4

5 EXCELLENT RETAIL LOCATION This location benefits from nearby residential density of more than 42,866 households within a 5 mile radius and proximity to the shopping centers Valley View Crossing, Valley View Mall, Lake Drive Plaza, and East Vinton Plaza. ALT 220 TOWNE SQUARE SHOPPING CENTER dal ver Clo Road e ROANOKEBLACKSBURG REGIONAL AIRPORT ra ve nu en E RICHMOND 0 He James Breckinridge Middle School Plantation Road NE y wa igh eh Le VALLEY VIEW MALL NW 46 r rge be rsh d Roa 22 ALT 0 Ch all en ge 625 E en u en VALLEY VIEW CROSSING v ea g an Or E tn g Kin ALT Orange Avenue NW , e tre S LY AI D LAKE DRIVE PLAZA EAST VINTON PLAZA Herman L. Horn Elementary RIVER PARK 24 Fallon Park Elementary 24 E Vir ginia 24 Aven ue WALMART NEIGHBORHOOD MARKET 5

6 Income & Expense PRICE $12,088,000 Capitalization Rate: 5.00% Price Per Square Foot: $ Total Rentable Area (SF): 41,117 Lot Size (Acres): 6.40 STABILIZED INCOME Per Square Foot Scheduled Rent $14.70 $604,420 Effective Gross Income $14.70 $604,420 AERIAL OF CONSTRUCTION SITE LESS Per Square Foot Taxes $0.00 Insurance $0.00 SIGNALIZED INTERSECTION Total Operating Expenses $0.00 EQUALS NET OPERATING INCOME $604,420 This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. WALMART NEIGHBORHOOD MARKET 6

7 Rent Roll TENANT INFO LEASE TERMS RENT SUMMARY Tenant Name Sq. Ft. Term Current Rent Monthly Rent Yearly Rent Monthly Rent/ FT Yearly Rent/ FT Walmart Neighborhood Market 41,117 3/4/15 3/3/35 $604,420 $50, $604,420 $1.23 $ /4/35 3/3/40 Option 1 $55,405 $664,862 $1.35 $ /4/40 3/3/45 Option 2 $60,946 $731,348 $1.48 $ /4/45 3/3/50 Option 3 $63,993 $767,915 $1.56 $ /4/50 3/3/55 Option 4 $67,193 $806,311 $1.63 $19.61 Totals: 41,117 $604,420 $50,368 $604,420 $1.23 $14.70 This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. CONSTRUCTION SITE AS OF 8/29/2014 WALMART NEIGHBORHOOD MARKET 7

8 Lease Abstract & Critical Dates TENANT Wal-Mart Stores East, LP GUARANTOR Wal-Mart Stores, Inc. DATE OF LEASE June 24, 2014 ESTIMATED DELIVERY TO TENANT February 9, 2015 ESTIMATED RENT COMMENCEMENT March 4, 2015 LANDLORD RESPONSIBILITIES Landlord shall be responsible for the cost and expense of maintenance, repair and replacement of structural components FIRST RIGHT OF REFUSAL 15 Business Days WALMART NEIGHBORHOOD MARKET 8

9 Walmart Neighborhood Market Representative Photos WALMART STORES, INC. WAS RANKED #1 IN FORTUNE 500 (2013 & 2014) AND #1 IN INTERBRAND S MOST VALUABLE U.S. RETAIL BRANDS ABOUT WALMART NEIGHBORHOOD MARKET Walmart Neighborhood Market is a chain of grocery stores launched by Walmart in With over 350 Neighborhood Markets in the United States, they feature a wide variety of products, including fresh produce, deli foods, fresh meat and dairy items, health and beauty aids, one-hour photo and traditional photo developing services, drive-through pharmacies, stationery and paper goods, pet supplies, and household chemicals. Walmart Neighborhood Markets were originally designed to create easier parking, less crowded aisles and quicker checkouts than Walmart Supercenters. Walmart is the world s biggest retailer and also the largest employer with over 2.2 million full- and part-time workers worldwide, including more than 1.4 million in the U.S. It is feared giant for its sheer size and pricing power. With more than $469 billion in total revenues, Walmart is known for its low pricing and wide selection of goods. The company has 11,302 stores under 71 banners in 27 countries; and ecommerce Websites in 10 countries. Walmart has become the undisputed king of retailing and is ranked #1 in Fortune 500 Companies. NUMBER OF LOCATIONS 11,000+ FISCAL YEAR 2014 SALES $476 BILLION S&P RATING AA WALMART NEIGHBORHOOD MARKET 9

10 Site Plan SITE PLAN KEY PARCEL OUTLINE: LAND AREA: 6.40 ACRES NOT A PART BUILDING AREA: 41,117 SF Springtree Drive NE ALT DRIVE THRU PHARMACY Orange Avenue NE FUELING STATION 653 King Street NE Site Plan Not To Scale WALMART NEIGHBORHOOD MARKET 10

11 Photos SIGNALIZED INTERSECTION SURROUNDING RETAILERS DENSE RETAIL AND RESIDENTIAL AREA WITH TRAFFIC COUNTS EXCEEDING 39,000 VPD WALMART NEIGHBORHOOD MARKET 11

12 Regional Map TRAFFIC COUNTS IN EXCESS OF 39,000 VPD ON ORANGE AVENUE Roanoke Location WALMART NEIGHBORHOOD MARKET Orange Ave NE Roanoke 1 Hr 10 Min 56 Miles lynchburg Richmond REPRESENTATIVE PHOTO WALMART NEIGHBORHOOD MARKET 12

13 Location & Demos ROANOKE, VA OVERVIEW Roanoke is the largest municipality in Southwest Virginia, and is the principal municipality of the Roanoke Metropolitan Statistical Area (MSA), which had a 2010 population of 308,707. It is composed of the independent cities of Roanoke and Salem, and the counties of Botetourt, Craig, Franklin and Roanoke. Bisected by the Roanoke River, Roanoke is the commercial and cultural hub of much of Southwest Virginia and portions of Southern West Virginia. Roanoke s economy developed around the Norfolk and Western Railroad, with a strong emphasis on manufacturing. Roanoke was formerly the headquarters of Norfolk and Western Railway until its merger with the Southern Railway created the Norfolk Southern Railway in Norfolk Southern continues to operate its marketing headquarters and some maintenance facilities in Roanoke. Wachovia Bank, then known as First Union, acquired Roanoke based Dominion Bank in 1993 and maintains an operations and customer service center in Roanoke. The city is the health care and retail hub of a large area, driving the expansion of Carilion Health System and Valley View Mall. Advance Auto Parts is headquartered in Roanoke and has expanded through the acquisition of other chains to become one of the largest auto parts retailers in the country. POPULATION 2013 HOUSEHOLD INCOMES 1-Mile 3-Mile 5-Mile ,703 41, , ,700 41, , ,719 42, ,847 1-Mile 3-Mile 5-Mile Average $55,615 $55,060 $53,598 Median $45,545 $42,707 $39,909 TOP EMPLOYERS IN ROANOKE COUNTY Employer # of Employees* Roanoke County Schools 2,328 Wells Fargo Operations Center 1,200 County of Roanoke 1,000 Kroger 800 *Approximate WALMART NEIGHBORHOOD MARKET 13

14 A unique HUMAN RESULTS-DRIVEN client experience THE CAPITAL PACIFIC EXPERIENCE - OUR DAILY COMMITMENT TO OUR CLIENTS [ ] REPRESENTATIVE PHOTO ZANDY SMITH zsmith@capitalpacific.com (415) CA BRE# CHRIS KOSTANECKI ck@capitalpacific.com (415) CA BRE# ZEB RIPPLE zripple@capitalpacific.com (415) CA BRE# CHRIS PETERS cpeters@capitalpacific.com (415) CA BRE# In conjuction with: Read Goode of Divaris Real Estate, Inc. rgoode@divaris.com (804) Copyright 2014 [Capital Pacific Real Estate Brokerage Company]