Actual Location Photos. Offering Memorandum. Walgreens Flagship Store Kapiolani Boulevard Honolulu, Hawaii CLICK TO VIEW DRONE VIDEO

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1 Actual Location Photos Offering Memorandum Walgreens Flagship Store 1488 Kapiolani Boulevard Honolulu, Hawaii CLICK TO VIEW DRONE VIDEO

2 Confidential Disclaimer This Confidential Memorandum has been prepared by Stan Johnson Company ( SJC ) and Capital Pacific and is being furnished to you solely for the purpose of your review of the commercial property located at 1488 Kapiolani Boulevard, Honolulu, Hawaii (the Property ). The material contained in this Offering Memorandum shall be used for the purposes of evaluating the Property for acquisition and shall not be used for any purpose or made available to any other person without the express written consent of Stan Johnson Company ( Broker ). By accepting the Confidential Memorandum, you acknowledge and agree that: (1) all of the information contained herein and any other information you will be receiving in connection with this transaction, whether oral, written or in any other form (collectively, the Materials ), is confidential; (2) you will not reproduce the Confidential Memorandum in whole or in part; (3) if you do not wish to pursue this matter, you will return this Confidential Memorandum to SJC or Capital Pacific as soon as practicable together with all other materials relating to the Property which you may have received from SJC or Capital Pacific; and (4) any proposed actions by you which are inconsistent in any manner with the foregoing agreements will require the prior written consent of SJC or Capital Pacific. This Confidential Memorandum has been prepared by SJC and Capital Pacific, based upon certain information pertaining to the Property and any information obtained from SJC and Capital Pacific to assist interested parties in making their own evaluation of the Property is offered on a no representation or warranty provision other than customary warranties of title and is sold on an as-is, where-is basis and with all faults. The material and transaction does not purport to be all inclusive. This Confidential Memorandum contains descriptive materials, financial information and other data compiled for the convenience of parties interested in the Property. The Materials are being delivered by SJC and Capital Pacific to prospective investors with the understanding that it is not all inclusive and that it is qualified in its entirety by independent investigation by prospective investors of those matters which they deem appropriate in evaluating this offering without reliance upon SJC and Capital Pacific, the Broker or any of their respective affiliates or any of the information set out in the Materials. Neither SJC/Capital Pacific, the Broker, nor any of their respective affiliates have independently verified any of the information contained herein or in any of the Materials, and no representations or warranties as to the accuracy or completeness thereof or of any other kind whatsoever are made or intended and none should be inferred. Offered Exclusively By Jim Gibson Regional Director Stan Johnson Company jgibson@stanjohnsonco.com (832) Chris Kostanecki Managing Partner Capital Pacific ck@capitalpacific.com (415) In Association With: Greg Gadd, HI License #12495 SJC and Capital Pacific, for itself and its affiliates of the Property, expressly disclaim any and all liability for statements or representations, express or implied, contained herein or for omissions from the Materials or for any other written, oral or other format of communication transmitted to a prospective investor in the course of its evaluation of the proposed transaction. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. The terms and conditions described herein are subject to change without notice. This Confidential Memorandum does not constitute an offer to accept any investment proposal but is merely a solicitation of interest with respect to the investment described herein. The Confidential Memorandum does not constitute an offer of security. The investment described herein may be financed or withdrawn from the market, without prior notice. By accepting this Confidential Memorandum you agree to release SJC and Capital Pacific and hold it harmless from any kind of claim, expense, or liability arising out of your discovery or purchase of the Property. SJC and Capital Pacific reserve the right to request the return of the Materials at any time. Ownership of the Property reserves the right to negotiate with one or more prospective investors at any time. Page 2 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

3 Purchase Price: Call Broker for Details Cap Rate: Call Broker for Details Investment Summary Stan Johnson Company is pleased to offer for sale to qualified investors a 100% fee-simple Walgreens Flagship Store located at the hard corner of Kapiolani Bouelvard and Keeaumoku Street, in the heart of Honolulu s major retail corridor. The property is in a highly desireable area, across from Ala Moana Center, the world s largest open air mall. The property will benefit from excellent traffic counts, an average household income exceeding $76,000 and over 48 million shoppers in the area annually. The property has +/- 36,058 SF of leasable space that sits on +/ acres, and features a rare, state-of-the-art construction with 96 parking spots (80 of which are dedicated). Construction completed and the store opened earlier this year, and rent is expected to commence in November of 2015 (at closing). Walgreens will be operating under a fifteen (15) year base lease term. This lease features twelve (12) option periods, with 5% rental increases in the first four (4) options and Fair Market Valuein the final eight (8) option periods. The lease is an Absolute NNN with no Landlord responsibilities limited to maintenance, repair and replacement of roof and structure, and capital expenditures related to the parking area throughout the term and option periods. Walgreen Co., a subsidiary of Walgreens Boots Alliance, Inc., (NASDAQ: WBA), had FY2014 (ended August 31, 2014) revenue of $76.39 billion and net income of $2.03 billion. As of August 31, 2014, the company had a net worth of $20.46 billion. Currently, Walgreen Co. holds a BBB/Stable rating by Standard and Poor s and had a market capitalization of $99.3 billion as of September 16, Actual Location Page 3 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

4 sand island Investment Highlights MÃMALA BAY MAGIC ISLAND SALOON DOWNTOWN HONOLULU waikiki BEACH KAHANAMOKU BEACH Best-in-Class Guaranty by Walgreen Co. Walgreen Co is a subsidiary of Walgreens Boots Alliance, Inc. (NASDAQ: WBA). Walgreen Co. holds a BBB/ Stable rating by Standard and Poor s, and had FY2014 (ended August 31, 2014) revenue of $76.39 billion and net income of $2.03 billion WORLD CLASS Investment Opportunity Irreplaceable real estate with below market rents create high intrinsic and residual value. Neighboring the Property is the Ala Moana Center, the world s largest open air mall, which is currently undergoing a $573 million redevelopment and expansion. Ala Moana ranks in the top 10 in salesgenerating malls in the U.S and reports over $1 billion in annual sales Walgreens Flagship Location The Property presents a rare opportunity to own a metropolitan +/- 37,516 square foot Walgreens flagship building at a prime hard corner location with over 48 million shoppers in the area annually Highly Accessible Location with Superior Visibility The Property is in a highly desirable location, across from Ala Moana Center offering a wide retail and entertainment activity and is minutes away from Honolulu s Central Business District. The Property benefits from exceptional traffic counts from Kapiolani Boulevard (40,867 VPD) and Kalakaua Avenue (48,788 VPD) and nearby W H1 Freeway (169,488 VPD) Strong Demographics Population of approximately 239,707 and average household income of $76,722 within a 3-mile radius of the subject Property diamond head Page 4 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

5 Property Overview Lease Summary Tenant: Guarantor: Address: S&P Credit Rating: Rent Commencement: Lease Term: Renewal Terms: Lease Type: Base Rent: Rent Increases: Walgreen of Hawaii, LLC Walgreens Co. (S&P Credit Rating: BBB) 1488 Kapiolani Boulevard, Honolulu, HI BBB Estimated November 2015 (At Closing) Fifteen (15) Years Twelve (12), Five (5) Year Options First Four (4) Options include 5% Rent Increases Final Eight (8) Options at FMV Absolute NNN $4.44 PSF/Month $55.47 PSF/Year Flat in Primary Term; Increases in Option Periods Investment Summary Address: Ownership: 1488 Kapiolani Boulevard, Honolulu, HI Fee Simple Annual NOI: $2,000,000 Store Opening: Early 2015 Building Size: Land Area: +/- 36,058 Leasable SF; +/- 37,516 Total SF +/ Acres Actual Location Photos Page 5 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

6 In the News: Architects Hawaii Garners Top Design Award in National Competition Commercial Property Executive - Walgreens Hawaii flagship store in Honolulu won this year s highest level of recognition in the retail store design category of the International Council of Shopping Centers awards competition for U.S. design and development. Honolulu Architects Hawaii is the gold winner in the retail store design category of the International Council of Shopping Centers 2015 U.S. Design and Development Awards competition for the design of Walgreens Hawaii flagship store. The 36,700-square-foot building is located across from Ala Moana Center in downtown Honolulu, on the corner of Kapiolani Boulevard and Keeaumoku Street, known to many as the corner of Main & Main. Open since February, the store resulted from the redevelopment of a smaller retail unit. Known as Walgreens Keeaumoku Flagship Store, the project marks the drugstore chain s 15th flagship location and 18th store in Hawaii. Its design is locally relevant, paying homage to the Hawaiian culture in a modern and contextually appropriate way, using the Ala Moana region s past a popular fishing area for inspiration. According to the Pacific Business News, Walgreens Keeaumoku will now move to ICSC s VIVA Awards competition that recognizes the real estate industry s most cutting-edge properties, innovative solutions and creative responses to market trends globally. Walgreens recently sold the store along with the adjacent Heald College Building to Los Angeles-based investment bank and wealth management firm Salem Partners for a total of $73.5 million, as first reported by the source. CLICK TO VIEW FULL ARTICLE Actual Location Page 6 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

7 Walgreens Boots Alliance Overview Walgreens Boots Alliance (Nasdaq: WBA) is the first global pharmacy-led, health and wellbeing enterprise in the world. The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years. The company employs over 370,000 people and has a presence in more than 25 countries; it is the largest retail pharmacy, health and daily living destination in the USA and Europe. Including its equity method investments, Walgreens Boots Alliance is the global leader in pharmacy-led, health and wellbeing retail with over 13,100 stores in 11 countries. The company includes the largest global pharmaceutical wholesale and distribution network with over 350 distribution centers delivering to more than 200,000 pharmacies, doctors, health centers and hospitals each year in 19 countries. In addition, Walgreens Boots Alliance is the world s largest purchaser of prescription drugs and many other health and wellbeing products. Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7, Botanics and Soap & Glory. The creation of Walgreens Boots Alliance provides an opportunity to further accelerate the development of a fully integrated, global platform for the future to provide innovative ways to address health and wellness challenges. The company is well positioned to expand customer offerings in existing markets and become the health and wellbeing partner of choice in emerging markets. Company: No. of Retail Locations: Credit Rating: Stock Symbol: company profile Walgreens Boots Alliance 13,100 (as of 2/2015) S&P: BBB/Stable WBA (Nasdaq) Employees: 370,000 Website: Fortune Magazine: Top 5 World s Most Admired Companies (March 2015) Forbes: 165th out of 2000 Largest Global Public Companies (May 2015) Walgreens is largest drugstore chain in the U.S. The company had fiscal 2014 sales of more than $76 billion. Founded with a single store in Chicago in 1901, Walgreens is today continuing to build a seamless customer experience through its more than 8,200 drugstores and its digital businesses that include Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com. Company: No. of Retail Locations: Credit Rating: tenant profile Walgreen Co. 8,232 (as of 2/2015) S&P: BBB/Stable Total Revenue: $77.6 Billion (as of 11/30/14) Net Worth: $20.6 Billion (as of 11/30/14) Year Founded: 1901 Headquarters: Website: Current Store Growth Plans: Stores in Fiscal Million Customers Visit Walgreens Stores Daily Deerfield, Illinois Page 7 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

8 Walgreens Boots Alliance Merger This merger brought together Walgreens, the largest drugstore chain in the U.S., Boots, the forerunner in the European Pharmacy Retail Market, and Alliance Healthcare, the world s most prominent pharmaceutical wholesaler and distributer. The potential for streamlining and synergic relationships is estimated to increase the firms value by $650 million in By combining some of the largest pharmaceutical firms in the world into one entity, which is now the largest purchaser of pharmaceuticals in the world, WBA will be able to combat the rising cost of pharmaceuticals and dominate the market. By sharing a wholesaler, technology, and a multitude of other corporate costs between the other subsidiaries of WBA, Walgreens is poised to become more efficient and profitable. In conjunction with the merger, Walgreens pledged to cut costs by $1 billion by the end of 2015, as well as increase earnings per share by 7.1% quarterly. The merger prompted Moody s to downgrade WBA to a Baa2, and S&P to downgrade WBA to a BBB. This was prompted by the large amount of debt that Walgreens took on in order to finance the purchase of Boots Alliance. Walgreens stock fell from around $72 per share to about $60 per share when the firm purchased the remaining 55% of Boots Alliance. However, since then, the stock has steadily increased. Immediately before and after the merger, the stock stayed steady at $76 per share and today it is $86 per share. As a part of a threeyear merger plan, Walgreens entered into a purchase and option agreement to acquire the outstanding shares Alliance Boots Pursuant to the purchase and option agreement Walgreens purchased a 45% stake in Alliance Boots in exchange for $6.7 billion and announced a long-term, strategic partnership with Alliance Boots As a part of rolling out the Boots brand across the U.S., Boots skincare brand No7 debuted in Walgreens stores. The purchase and option agreement was amended to permit the exercise of the call option to acquire the remaining 55% of Alliance Boots beginning on Aug 5. Walgreens exercised the call option to acquire the remaining portion of Alliance Boots Walgreens Boots Alliance became the successor of Walgreen Co. pursuant to a reorganization of Walgreens into a holding company structure. Walgreens became a wholly owned subsidiary of Walgreens Boots Alliance. Existing shares of Walgreens common stock were converted into shares of Walgreens Boots Alliance on a one-for-one basis. The transaction to acquire the remaining 55% of Alliance Boots GmbH for about $15.3 billion was completed following completion of the reorganization. Walgreens shareholders approved both proposals with an approximately 97% affirmative vote. June 2012 Aug 2012 nov 2012 aug 2014 dec 2014 Page 8 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

9 Walgreens Boots Alliance Organizational Chart Walgreens Boots Alliance Retail Pharmacy USA Retail Pharmacy International Pharmaceutical Wholesale Duane Reade (New York) Walgreens (all 50 States) Alliance Healthcare Benavides (Mexico) Ahumada (Chile) Boots (Europe) Page 9 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

10 Location Overview Honolulu is the state capital and the most populous city in the U.S. state of Hawaii. It is the county seat of the City and County of Honolulu. Hawaii is a major tourist destination and Honolulu, situated on the island of Oahu, is the main gateway to Hawaii and a major gateway into the United States. The city is also a major hub for international business, military defense, as well as famously being host to a diverse variety of east-west and Pacific culture, cuisine, and traditions. Honolulu is both the westernmost and the southernmost major American city. For statistical purposes, the U.S. Census Bureau recognizes the approximate area commonly referred to as City of Honolulu (not to be confused with the City and County ) as a census county division (CCD). Honolulu is a major financial center of the islands and of the Pacific Ocean. The population of Honolulu CCD was 390,738 at the 2010 census, while the population of the consolidated city and county was 953,207. Economy Honolulu is the retail center of Hawaii that caters to everyone. Retail options range from large international retailers to small, local boutiques. The city has long been a top destination among both locals and tourists that are looking to shop. The project site is located in the Ala Moana district which borders the Waikiki and Honolulu submarkets. The O ahu retail market consists of approximately 17.9 million square feet in ten different submarkets. The island s retail vacancy rate stands at a low 3.8% with the average triple net asking rents (excluding Waikiki) standing at $4.03 per square foot. The increasing residential development on the island is a good sign for the growth of its retail market. In addition, CBRE projects that the average triple net asking rents for new leases in the Ala Moana Center, which is directly across the street from our Property, will average closer to $20 per square foot going forward. Waikiki View from Diamond Head Aloha Stadium Hawaii State Capitol Building Downtown Honolulu Honolulu Waterfront Page 10 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

11 Ala Moana Center Expansion and Nearby Developments Ala Moana Center has recently embarked on a $573 million expansion on the Ewa (west) end of the center where the former Sears store once stood. This project will include the opening of Hawaii s first Bloomingdale s department store, as well as additional dining and entertainment options and 200,000 square feet of inline retailers. In addition, Nordstrom will be relocating from its existing 211,000 square foot store to a new, smaller 186,000 square foot space. Ala Moana Center tenants generate $2.06 billion dollars in annual revenue. DEVELOPMENT Description ONE Ala Moana ONE Ala Moana, located directly across from the Property above the existing Nordstrom store, is an exclusive 23-story residential tower offering 206 one-, two- and three-bedroom condominium homes ranging in size from 760 to 4,100 square feet. In addition to exceptional interiors, the building will feature an exclusive service, amenity and concierge package unique to Hawaii. Park Lane Ala Moana Additionally, General Growth Properties, the owner of the shopping center, and a development partner have begun construction on Park Lane Ala Moana, a $300 million ultra-luxury residential condominium project on the ocean side of the mall. The project is planned for 215 units ranging in size from 850 square feet units to 6,000 square feet. The spacious and linear layout of these units provide a unique product type different than any other units offered in the market today. Ward Village Our Kakaako A few blocks away from the Property, Ward Village is also undergoing intensive redevelopment plans led by the Howard Hughes Corporation. The master plan includes 20 mixed-use high-rise towers to be developed over the next 15 to 20 years. Construction has begun on the first two luxury high-rise condominiums, Anaha and Waiea. Howard Hughes Corporation has also recently been awarded a 45-year management contract to operate the adjacent Kewalo Basin, and is expected to revitalize the harbor with $20 million in improvements. There are plans for a new 50,000 square foot flagship Whole Foods store, plus another 12,000 square feet of retail and more than 700 parking spaces, in the former Nordstrom Rack space at Ward Village. The new store will be the company s largest location in Hawaii and be a part of a mixed-use development. The nearby master-planned community of Kakaako is undergoing a major growth spurt. A majority of the activity is occurring on a nine block area owned by Kamehameha Schools. The plan is referred to as Our Kakaako. The master plan includes a wide range of housing development including low-rise residences, high-rise towers, workforce housing, open green spaces, networked walking pass and unique one-of-a-kind retail experiences. Salt at our Kakaako, which is currently under construction, will provide unique pedestrian experiences with open space and an eclectic mix of local retailers and restaurants. The Our Kakaako project is located along Ala Moana Boulevard with its main intersection at Cooke Street. A rail station has been planned for the Kakaako neighborhood. Page 11 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

12 Retail Market Overview Current and planned capital expenditures by both the government and the private sector are often indicators of the long term economic health of a state. The island of O ahu has planned on investing close to $3.9 billion in infrastructure from 2014 to 2019 with many private parties looking to invest in the state s development as well. The following is a summary of some of the major developments in the area. Oahu s retail market consists of over 15.8 million square feet of shopping center space, and is one of the largest submarkets with over 4.1 million square feet of inventory. With most of the high-rise condominium projects are situated near the Property, the urban core has the most densely populated area in Hawaii. General Growth Properties, the owner of the Ala Moana Center (the world s largest open-air mall with 2.2 million square feet of retail), is currently leading a $573.2 million redevelopment which is expected to further drive consumer traffic in the area and bring new tenants to the shopping center. The redevelopment of the property is expected to be completed by late Tourism contributes a large portion of the retail sales for the Honolulu market. Honolulu s boom is driven by U.S. customers and Japanese customers, remarked William Taubman, COO of Taubman Centers, Inc., a Michigan-based real estate investment trust that is currently building a $465 million International Market place mall, anchored by a Saks Fifth Avenue store near the Walgreens flagship store. The beachfront shopping street attracts an average of 50,000 people a day. The Kapiolani Corridor is such an extremely important thoroughfare that the first phase of the rail line will end at the Ala Moana station. From the station, express and local bus services will be offered into Waikiki every few minutes. Hawaii Convention Center Ala Moana Center Kahanamoku Beach High Rise Construction near Subject Property Page 12 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

13 Actual Location Photos Page 13 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

14 Actual Location Photos Page 14 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

15 theodore high school national memorial cemetery-pacific DOWNTOWN HOnolulu punahou school university of hawaii mckinley high school kapiolani blvd (40, 8 w h1 67 vpd ) fw y (169, 4 88 vpd ) ala moana center hawaii convention center kahanamoku lagoon iolani school ave ua kalaka (48 magic island lagoon ala wai boat harbor 8,78 ) vpd waikiki beach Page 15 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

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17 DEMOGRAPHICS 8 Kapiolani Blvd Honolulu, Hawaii Miles 0-3 Miles 0-5 Miles Population 2020 Population 80, , , Population 75, , , Population 64, , , Annual Growth 6.79% 5.13% 4.43% Annual Growth 16.35% 7.88% 4.59% Households 2020 Households 40, , , Households 37,836 98, , Total Households 33,685 92, , Annual Growth 6.14% 4.94% 4.43% Annual Growth 12.32% 6.44% 4.14% 2015 Population by Race and Ethnicity 2015 White Alone 18,241 51,094 62, Black Alone 1,454 4,067 5, American Indian/Alaska Native Alone Asian Alone 40, , , Pacific Islander Alone 4,768 16,222 26, Other Race 10,817 35,873 49,643 Average Household Income 2015 Average Household Income $69,066 $76,722 $83, Median Household Income $52,582 $57,295 $61,768 Page 17 Walgreens Flagship Store Honolulu, HI THE NET LEASE AUTHORITY

18 Jim Gibson Regional Director Stan Johnson Company (832) Chris Kostanecki Managing Partner Capital Pacific (415) In Association With: Greg Gadd, HI License #12495