OFFERING MEMORANDUM LILBURN CENTER W/ CELL TOWER Killian Hill Rd SW Lilburn, GA 30047

Transcription

1 OFFERING MEMORANDUM LILBURN CENTER W/ CELL TOWER 1025 Killian Hill Rd SW Lilburn, GA

2 N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E 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. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. Â 2017 Marcus & Millichap. All rights reserved. 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 toprospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. LILBURN CENTER W/ CELL TOWER Lilburn, GA ACT ID Y

3 TABLE OF CONTENTS SECTION INVESTMENT OVERVIEW 01 Offering Summary Regional Map Local Map Aerial Photo FINANCIAL ANALYSIS 02 Tenant Summary Lease Expiration Chart Operating Statement Notes Pricing Detail Acquisition Financing MARKET OVERVIEW 03 Market Analysis Demographic Analysis 3

4 INVESTMENT OVERVIEW 4

5 EXECUTIVE SUMMARY OFFERING SUMMARY VITAL DATA YEAR 1 YEAR 2 Price $1,034,000 CAP Rate 7.00% 8.00% Loan Type Gross Leasable Area (GLA) All Cash 13,200 SF Net Operating Incom e Net Cash Flow After Debt Service $72,390 $82, % / $72, % / $82,693 Price/SF $78.33 Total Return 7.00% / $72, % / $82,693 Current Occupancy 90.91% Year Built / Renovated 1988 Lot Size 0.84 acre(s) MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES State Farm Insurance 2,046 COLUMBIA HCA 1,500 North Amrcn Thea Photographers 945 Kroger 941 Walmart 896 Target 627 Kaiser Permanente Snellvile 593 Home Depot The 480 Lowes 300 Rehab South 300 Springleaf Finance Corporation 300 Experian Info Solutions Inc 272 DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2016 Estimate Pop 5,640 60, , Census Pop 5,246 55, , Estimate HH 1,867 20,717 61, Census HH 1,737 19,010 56,121 Median HH Income $86,604 $73,780 $63,426 Per Capita Income $34,498 $31,711 $27,457 Average HH Income $104,194 $92,735 $83,239 # 5

6 OFFERING SUMMARY INVESTMENT OVERVIEW Marcus & Millichap is pleased to present this Lilburn Strip Center with a Cell Tower. It is a 13,200 SF multi-tenant retail center that is currently 91% occupied. The property is two levels with Ground Level a ccess to all suites. Five suites are street level front side and four are on the lower level ba ckside. Some of the tenants have been in the center long term and one of the new tenants is putting in significant money towards Tenant Improvement showing commitment to the space. There is a rare Cell Tower on the property that is currently on a Ground Lease to Verizon. There are over 7 years remaining on the 30 year Ground Lease. The rent is well below market for a Cell Tower and there is significant upside in the ability to generate at least 3x the current rent or more when the lease expires or with a renegotiation. There is a pending LOI for the Cell Tower that would increase the income by $13,000 immediately, and then have 50% profit sharing after the lease is renegotiated. INVESTMENT HIGHLIGHTS 91% Occupied 13,200 SF Two Level Strip Center Low Price Point Low Price Per SF RARE Cell Tower on property Ground Leased to Verizon w/ over 7 Years Remaining Value-Add with Vacancy and Cell Tower Ground Lease at well Below Market Rent Future opportunity to increase Cell Tower Rent 3x or more with new lease negotiation Pending LOI on Cell Tower would increase income $13,000 immediately 6

7 OFFERING SUMMARY PROPERTY SUMMARY THE OFFERING Property Lilburn Center w/ Cell Tower Price $1,034,000 Property Address 1025 Killian Hill Rd SW, Lilburn, GA Assessors Parcel Number Zoning C2 SITE DESCRIPTION Number of Stories 2 Stories with Ground Level Access to both Year Built/Renovated 1988 Gross Leasable Area Ownership Fee Simple Lot Size 0.84 acre(s) 7

8 LOCAL MAP 8

9 AERIAL PHOTO Subject Property 9

10 FINANCIAL ANALYSIS 10

11 TENANT SUMMARY FINANCIAL ANALYSIS Notes: 1. Square footage of suites is estimated. 2. Suites G J are on the backside of the center at a Lower Level 3. Suites G, I, J are leased by New Bethel Ministries but were leased separately. G and I are month to month and J runs to Suite B is vacant and For Lease 5. Suite C is leased by Killian Hill Tax Income. They have been in the center over 15 years and recently extended. 6. Suite D is leased by Vital Salon Studio. They have been in the center over 10 years, but the business was sold to a new owner inmarch Suite E was recently leased to a multi-unit Nail Salon operator for 5 years. They put significant Tenant Improvements themselves. 8. The Cell Tower on the property is on a 30 Year Ground Lease with Verizon with 7 Years remaining. 9. The current income is $6,912 annually, but there is a pending LOI to increase that $13,000 annually for the remaining lease. Then a 50% profit share would be in place. 11

12 TENANT SUMMARY FINANCIAL ANALYSIS 12

13 OPERATING STATEMENT FINANCIAL ANALYSIS 13

14 PRICING DETAIL FINANCIAL ANALYSIS Notes: 1. The Pricing is based on a blended CAP of the Retail and Cell Tower. 2. The Retail is valued at $861, % CAP 3. The Cell Tower is valued at $172, % CAP 4. The pending LOI for an additional $13,000 for the Cell Tower increased the blended CAP to 8.25% immediately. 14

15 ACQUISITION FINANCING MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIES MMCC our fully integrated, dedicated financing arm is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms. We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options. Our dedicated, knowledgeable experts understand the challenges of financing and work tirelessly to resolve all potential issues to the benefit of our clients. Closed 1,651 debt and equity financings in 2016 National platform operating within the firm s brokerage offices $5.1 billion total national volume in 2016 Access to more capital sources than any other firm in the industry WHY MMCC? Optimum financing solutions to enhance value Our ability to enhance buyer pool by expanding finance options Our ability to enhance seller control Through buyer qualification support Our ability to manage buyers finance expectations Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file 15

16 MARKET OVERVIEW 16

17 ATLANTA OVERVIEW MARKET OVERVIEW The Atlanta metro encompasses 29 counties in northwestern Georgia. With few natural barriers to limit development, tremendous population growth over the past decade expanded the metro s borders and the region now has a population of roughly 5.7 million people. Over the next five years the region is expected to add nearly 500,000 residents. Meanwhile, new redevelopment projects in the downtown and midtown sections of Atlanta present a vast array of housing, entertainment and retail opportunities that are enticing residents back into the city and providing options for people moving to the metro. METRO HIGHLIGHTS HEAVY CONCENTRATION OF CORPORATE HEADQUARTERS Atlanta ran ranks fifth in the nation in the number of Fortune 500 headquarters with 17 companies, including UPS, Delta Airlines and Coca-Cola. STRONG EMPLOYMENT GAINS The metro ranks among the highest in the nation for job growth. Nearly 400,000 jobs were added in the last four years. LOW COST OF LIVING AND DOING BUSINESS ATTRACTS EMPLOYERS A pro-business environment and affordability helped Atlanta rise to second in the nation in job creation last year. 17

18 MARKET OVERVIEW ECONOMY Gross metropolitan product (GMP) and retail sales progress above national levels. The area serves as a financial hub for the Southeast. The Federal Reserve Bank of Atlanta and SunTrust Bank are housed locally. Many companies favor Atlanta for low corporate taxes, its pro-business climate and access to national and global markets. Among the many corporate headquarters are Home Depot, Aflac and Turner Broadcast Co. Other major firms include NCR, Mercedes Benz, Porsche and State Farm. MAJOR AREA EMPLOYERS Delta Airlines The Home Depot AT&T WellStar Health Systems UPS Northside Hospital Piedmont Healthcare Children s Healthcare of Atlanta Cox Enterprises Bank of America * Forecast SHARE OF 2016 TOTAL EMPLOYMENT 6% MANUFACTURING 19% PROFESSIONAL AND BUS INES S SERVICES 12% GOVERNMENT 11% LEISURE AND HOSPITALITY 6% FINANCIAL ACTIVITIES 22% + 12% 4% 3% TRADE, TRANS PORTATION CONS TRUCTION EDUCATION AND INFORMATION AND UTILITIES HEALTH SERVICES 4% OTHER S ERVICES 18

19 MARKET OVERVIEW DEMOGRAPHICS The local population is projected to exceed 6.2 million people during the next five years, after adding roughly 500,000 residents. Nearly 200,000 households will be created by 2021, generating the need for additional housing options. A skilled workforce includes nearly 35 percent of residents age 25 and older with a bachelor s degree, above the national level. SPORTS 2016 Population by Age 7% 0-4 YEARS 21% 5-19 YEARS 7% YEARS 29% YEARS 26% YEARS 11% 65+ YEARS EDUCATION 2016 POPULATION: 5.7M Growth *: 8.5% 2016 HOUSEHOLDS: 2.1M Growth *: 9.1% 2016 MEDIAN AGE: 35.9 U.S. Median: MEDIAN HOUSEHOLD INCOME: $58,500 U.S. Median: $54,500 QUALITY OF LIFE The Atlanta metro features a surging business environment and modern infrastructure while providing entertainment and attractions. Affordable housing in the outer perimeters lowers the average cost of living. The metro has several acclaimed cultural institutions, including Zoo Atlanta and the High Museum of Art. More than 30 institutions of higher learning call Atlanta home, including Emory University, Georgia Institute of Technology and Spelman College. Outdoor and sports enthusiasts will find plenty to enjoy. Mild weather year-round beckons residents to hike, paddle and bike on the many trails in and around Atlanta. Atlanta is home to professional sports franchises in the NFL, MLB, NBA and WNBA. ARTS & ENTERTAINMENT * Forecast S ources: Marcus & Millichap Research S ervices; BLS ; Bureau of Econom ic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 19

20 ATLANTA METRO AREA MARKET OVERVIEW Unwavering Employment Growth Supports Atlanta s Development Spike Stout retail demand fuels robust absorption as population growth boosts consumer spending. The addition of more than 350,000 jobs over the past four years has reduced metro unemployment to a 10-year low and fueled population expansion, with Atlanta s populace swelling by more than 100,000 residents over the past 12 months. Corporate expansions by financial, technological, healthcare and retail-related companies will sustain strong in-migration and rental development, underpinning demand for retail space. As retailers scramble for space, vacancy will reach a cycle-low level, supporting a second consecutive year of rent growth following a span of nominal increases preceded by asking rate depreciation. Peaking residential development spurs retail deliveries. The creation of new households in the Atlanta metro will nearly double the national pace and a high percentage of these households are in the suburbs. To keep pace with rising demand for stores and restaurants, retail construction will heighten this year. Groceryanchored centers will account for a portion of the larger-scale completions as Kroger, Sprouts, Publix and Whole Foods all expand their footprints. Dollar General is also in expansion mode, opening six stores. Retail 2017 Outlook 3.6 million sq. ft. will be completed 40 basis point decrease vacancy 3.2% increase in asking rents Construction: Development reaches an eight-year high in The 1 million-square-foot Suwanee Gateway in Gwinnett represents the largest delivery. Vacancy: Pre-leasing and healthy tenant demand lowers vacancy to 6.2 percent, with nearly 4.6 million square feet absorbed this year. Rents: The average asking rent in the metro will climb to $14.50 per square foot after registering a 4.5 percent advance in the previous year. * Cap rates trailing 12 m onths through 2Q17; 10-year Treasury rate through Aug. 21. Sources: CoStar Group, Inc.; Real Capital Analytics Investment Trends Buyers in the sub-$5 million tranche are dominating transaction velocity in Atlanta. Restaurants and fast-food establishments remain a popular target, particularly in high-traffic locations with residential growth. Depending on locale and tenant, these properties trade at mid-4 to mid-6 percent yields. Out-of-state investors maintain a significant presence in the metro, most notably California and New York-based firms. These buyers target Gwinnett, North Cobb County and South Atlanta, eyeing recently built assets with 4 percent minimum yields. Local buyers remain active in the sub-$2 million space, attracted to listings in Roswell/Alpharetta and Central Atlanta, the latter a popular locale for smaller storefront retail trades. Stout investor demand for retail properties in Atlanta placed upward pressure on prices during the previous 12 months. Metrowide, the average price climbed 8.3 percent to $315 per square foot. 20

21 ATLANTA METRO AREA MARKET OVERVIEW 2Q17-12-Month Trend EMPLOYMENT CONSTRUCTION VACANCY RENTS increase in total 3.5% employment Y-O-Y Atlanta employers added 93,400 positions over the past year, up from the 83,100 jobs created in the prior period. Strong hiring during the past four years has expanded the metro s employment base by 14 percent, reducing unemployment to 4.6 percent as of midyear. The professional and business services sector led recent hiring as 34,500 higher-paying positions were added. 2.3 million square feet completed Y-O-Y Delivery volume heightened during the last 12-month period, outpacing the 1.5 million square feet added to inventory in the prior year. Developers brought 500,000 square feet of retail online in both North Cobb County and farther east to Georgia 400. More than 2 million square feet of retail is under construction with completions scheduled into basis point decrease in vacancy Y-O-Y More than 3.8 million square feet of retail space was absorbed in the last four quarters, reducing the vacancy rate to 6.3 percent. In the previous year, vacancy also fell 60 basis points. Minimal completions in Central Atlanta coupled with healthy demand slashed vacancy 160 basis points to 5.1 percent. 3.5% increase in the average asking rent Y-O-Y Tightening vacancy is driving rent growth, with the average rate rising during the past 12 months to $14.08 per square foot. During the previous year, a 1.5 percent increase was registered. Central Atlanta and Central Perimeter, home to 5 percent vacancy, posted strong rent growth over the past year, with rates up 28.2 percent and 20.2 percent, respectively. * Forecast 21

22 ATLANTA METRO AREA Demographic Highlights 2017 JOB GROWTH* Metro 3.2% U.S. Average 1.4% 2Q17 MEDIAN HOUSEHOLD INCOME Metro $63,388 U.S. Average $58,672 FIVE-YEAR POPULATION GROWTH** 640,850 or 2.2% Annual Growth U.S. 0.7% Annual Growth 2017 RETAIL SALES PER MONTH $3,881 Per Household U.S. $3,785 $1,425 Per Person U.S. $1,454 FIVE-YEAR HOUSEHOLD GROWTH* 256,000 or 2.4% Annual Growth U.S. 1.1% Annual Growth RETAIL SALES FORECAST** Metro 27.1% U.S. 21.1% * Forecast ** Submarket Trends Lowest Vacancy Rates 2Q17 Submarket Vacancy Rate Y-O-Y BasisPoint Change MARKET OVERVIEW Asking Rent Y-O-Y% Change Coweta County 3.6% -90 $ % Buckhead 4.3% -10 $ % Sales Trends Central Perimeter 4.9% -50 $ % Diverse Buyer Pool Drives Pricing, Competition For Newer Assets Multi-Tenant: The number of multi-tenant sales was limited by a lack of available listings during the past 12 months, as owners opted to hold centers amid historically low vacancy. Single-Tenant: Investor demand for single-tenant properties continues to swell, with recent transaction activity up more than 50 percent year over year. Sub-$2 million assets drive deal flow. Outlook: Strong retail fundamentals will sustain robust sales activity, with out-ofstate investors in heavy pursuit of assets in northern suburbs. Central Atlanta 5.1% -160 $ % North Cobb 5.8% -40 $ % West Metropolitan 5.8% -80 $ % South Cobb 6.1% -50 $ % South Metropolitan 6.4% 10 $ % Georgia % 120 $ % NE Atlanta Outlying 6.5% -80 $ % Gwinnett 6.7% -150 $ % Overall Metro 6.3% -60 $ % * Trailing 12 m onths through 2Q17 Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics 22

23 ATLANTA METRO AREA MARKET OVERVIEW Capital Markets Monetary polic y in transition. Despite the Fed raising its benchmark short-term rate three times in seven months and signaling another rise before the end of the year, long-term rates have remained stable. The yield on the 10-year U.S. Treasury bond remained in the low- to mid-2 percent range throughout the second quarter of The Federal Reserve wants to normalize monetary policy and, in addition to rate hikes, will likely start paring its balance sheet. Sound economy a balancing act for Fed. With unemployment hovering in the low-4 percent range, the lowest level since 2007, the Federal Reserve will remain vigilant regarding a possible rapid increase in inflation if wage growth takes off. Additionally, business confidence and job openings are near all-time highs. Businesses finally have the assurance to expand their footprints after years of tepid growth following the Great Recession. The Fed, however, must now balance economic growth and job creation against wage growth and inflationary pressures. Underwriting discipline persists; ample debt capital remains. Overall, leverage on acquisition loans has continued to reflect disciplined underwriting, with LTVs typically ranging from 60 percent to 70 percent for most retail properties. At the end of2016, the combination of increasing rates, conservative lender underwriting and fiscal policy uncertainty encouraged some investor caution that slowed deal flow, a trend that has extended into A potential easing of regulations on financial institutions, though, could liberate additional lending capacity and nominallyhigher interest rates mayalso encourage additional lenders to participate. * Forecast Sources: CoStar Group, Inc.; Real Capital Analytics 23

24 PROPERTY LILBURN CENTER NAME W/ CELL TOWER Created on December 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 5,623 62, , Estimate Total Population 5,640 60, , Census Total Population 5,246 55, , Census Total Population 5,015 52, ,484 Current Daytime Population 2016 Estimate 4,013 51, ,821 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 1,907 21,909 64, Estimate Total Households 1,867 20,717 61,117 Average (Mean) Household Size Census Total Households 1,737 19,010 56, Census Total Households 1,615 17,857 51,256 Occupied Units 2021 Projection 1,907 21,909 64, Estimate 1,867 20,788 61,930 HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $150,000 or More 14.11% 12.31% 9.72% $100,000 - $149, % 20.52% 17.58% $75,000 - $99, % 16.34% 14.59% $50,000 - $74, % 17.91% 19.65% $35,000 - $49, % 12.65% 14.05% Under $35, % 20.26% 24.41% Average Household Income $104,194 $92,735 $83,239 Median Household Income $86,604 $73,780 $63,426 Per Capita Income $34,498 $31,711 $27,457 MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 Miles Total Average Household Retail Expenditure $68,387 $63,242 $59,623 Consumer Expenditure Top 10 Categories Housing $17,299 $16,263 $15,547 Transportation $9,720 $9,167 $8,898 Shelter $9,416 $8,889 $8,563 Personal Insurance and Pensions $8,277 $7,303 $6,617 Food $7,206 $6,691 $6,360 Health Care $5,763 $5,124 $4,558 Utilities $4,271 $4,121 $4,016 Entertainment $2,667 $2,496 $2,366 Apparel $2,493 $2,206 $2,012 Cash Contributions $2,402 $2,089 $1,847 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 5,640 60, ,570 Under % 26.15% 28.46% 20 to 34 Years 13.17% 15.22% 17.84% 35 to 39 Years 4.24% 5.34% 6.54% 40 to 49 Years 15.54% 15.41% 15.15% 50 to 64 Years 26.47% 24.57% 21.01% Age % 13.30% 11.01% Median Age Population 25+ by Education Level 2016 Estimate Population Age 25+ 3,873 41, ,345 Elementary (0-8) 2.27% 2.29% 4.22% Some High School (9-11) 3.51% 5.21% 6.44% High School Graduate (12) 18.52% 22.33% 24.12% Some College (13-15) 19.99% 19.93% 19.97% Associate Degree Only 9.57% 9.14% 9.33% Bachelors Degree Only 28.93% 25.40% 22.94% Graduate Degree 15.41% 14.04% 11.36% Source: 2016 Experian 24

25 PROPERTY LILBURN CENTER NAME W/ CELL TOWER MARKETING DEMOGRAPHICS TEAM Population In 2016, the population in your selected geography is 5,640. The population has changed by 12.46% since It is estimated that the population in your area will be 5, five years from now, which represents a change of -0.30% from the current year. The current population is 48.09% male and 51.91% female. The median age of the population in your area is 45.11, compare this to the US average which is The population density in your area is 1, people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 64.43% White, 16.47% Black, 0.01% Native American and 14.38% Asian/Pacific Islander. Compare these to US averages which are: 70.60% White, 12.83% Black, 0.19% Native American and 5.43% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 5.41% of the current year population in your selected area. Compare this to the US average of 17.77%. Households There are currently 1,867 households in your selected geography. The number of households has changed by 15.60% since It is estimated that the number of households in your area will be 1,907 five years from now, which represents a change of 2.14% from the current year. The average household size in your area is 2.94 persons. Housing The median housing value in your area was $227,427 in 2016, compare this to the US average of $190,673. In 2000, there were 1,575 owner occupied housing units in your area and there were 40 renter occupied housing units in your area. The median rent at the time was $923. Income In 2016, the median household income for your selected geography is $86,604, compare this to the US average which is currently $55,159. The median household income for your area has changed by 1.41% since It is estimated that the median household income in your area will be $96,922 five years from now, which represents a change of 11.91% from the current year. Employment In 2016, there are 1,383 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 79.70% of employees are employed in white-collar occupations in this geography, and 20.95% are employed in blue-collar occupations. In 2016, unemployment in this area is 3.69%. In 2000, the average time traveled to work was minutes. The current year per capita income in your area is $34,498, compare this to the US average, which is $30,249. The current year average household income in your area is $104,194, compare this to the US average which is $79,207. Source: 2016 Experian 25

26 8 DEMOGRAPHICS 26