CAPITAL MARKETS RETAIL INVESTMENT SALES OFFERING MEMORANDUM 2902 E FLORENCE AVENUE HUNTINGTON PARK, CA 90255
EXCLUSIVELY MARKETED BY ALEX KOZAKOV First Vice President +1 213 613 3031 Lic. 01416489 alex.kozakov@cbre.com HEATHER GARRETT Operations Manager +1 213 613 3367 Lic. 01940192 heather.garrett@cbre.com MAXX COHEN Associate +1 213 613 3117 Lic. 01928768 maxx.cohen@cbre.com PATRICK WADE First Vice President +1 213 613 3071 Lic. 01454690 patrick.wade@cbre.com ALEX BERGESON Associate +1 213 613 3029 Lic. 01434076 alex.bergeson@cbre.com TABLE OF CONTENTS Investment Overview Financial Analysis Area Overview Tenant Overview Demographics Disclaimer This valuation analysis or broker opinion of value is not an appraisal and has not been performed in accordance with the Uniform Standards of Professional Appraisal Practice. Neither you, nor any third parties, may rely on this analysis for any tax purposes, estate work, litigation, lending or any other matter other than your direct use in connection with a contemplated transaction. the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. PAGE 2
AERIAL OVERVIEW PAGE 3
LOCATION MAP PAGE 4
INVESTMENT OVERVIEW PROPERTY SUMMARY ADDRESS: BUILDING SIZE: 7-Eleven Strip Center 2902 E Florence Avenue Huntington Park, CA 90255 3,956 SF* PRICE: $1,645,000 CURRENT CAP RATE: 6.05% PRICE/SF: LAND AREA: $415.82/SF 11,860 SF** CURRENT OCCUPANCY: 73.18% YEAR BUILT: 2004 NUMBER OF UNITS: 2 INVESTMENT HIGHLIGHTS 2-Unit Strip Center at Attractive Price Point New 7-Eleven Build-Out on New 10-Year NNN Lease Several Recent Capital Improvements to Building, Parking Lot, and Monument Sign Delivered Free & Clear of Debt - Ability to Secure New Financing or Purchase All-Cash Strong Year 1 Income (6.05% Cap Rate) Built in 2004 and Professionally Maintained - Low Deferred Maintenance Strategic Retail Location One of the Densest Populations in All of Southern California: Over 1 Million People in a 5-Mile Radius Signalized Intersection with Over 32,000 Cars/Day Desirable Huntington Park Retail Center with Good Access and Parking Within Blocks of Numerous National Retailers Strong Foot and Vehicular Traffic PARKING: 12 Spaces PARKING RATIO: 3.03\1,000 RSF APN: 6212-002-001 TRAFFIC COUNTS: 32,775: Florence Avenue & Arbutus Avenue 31,732: Florence Avenue & Stafford Avenue *Per Landlord Rent Roll; Tax Assessor shows Rentable SF of 4,134 SF **Per Landlord Rent Roll; Tax Assessor shows Lot Size of 11,934 SF PAGE 5
OFFERING SUMMARY CBRE is pleased to offer 2902 E Florence Avenue, a 7-Eleven-anchored strip center in Huntington Park. Built in 2004, the property is a 2-unit, low-management strip center consisting of 3,956 rentable SF. 7-Eleven signed a new, 10-year lease in December 2013, which offers a stabilized current income stream. The seller will guarantee the rent of the vacant unit for one year at market rents, which will yield over a 6% year 1 cap rate. PARCEL MAP Several recent capital improvements have been made to the center, including a new slurry coat and striping of the parking lot, exterior paint, a new monument sign, new storefront glass, and a new brick paver apron. The investment opportunity will be delivered free and clear of debt - allowing investors to obtain new financing or purchase all-cash. The center is strategically located at the corner of Florence Avenue and Mountain View Avenue - a highly trafficked signalized intersection with over 32,000 vehicles/ day. The center boasts good ingress and egress, and benefits from an unparalleled population density, with over 1 million people in a 5- mile radius. PAGE 6
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RENT ROLL TENANT GLA PRO- RATA BEGIN END MONTHLY RENT/SF MONTHLY RENT ANNUAL RENT PSF ANNUAL RENT INCREASES LEASE TYPE OPTIONS 7-Eleven 2,895 SF 73.18% 1/14 12/23 $2.20/SF $6,369 $26.40/SF $76,428 10% start of year 6 and ea. option NNN 4, 5-year options Seller Rent Guarantee* 1,061 SF 26.82% COE 1 Year $2.10/SF $2,228.10 $25.20/SF $26,737 N/A NNN N/A TOTAL 3,956 SF 100% $103,165 *Seller will provide a one-year rent guarantee of the vacant unit at the close of escrow at $2.10/SF/month rent, plus NNN reimbursements of $0.90/SF/month, for a total of $3.00/SF/month; or $3,183/month, $38,196/year. PAGE 9
FINANCIAL ANALYSIS: INCOME & EXPENSES PRE-TAX CASH FLOW ANALYSIS CURRENT IN PLACE Base Rent Occupied* $103,165 NNN Expense Reimb. (NNN Leases) 100% $40,298 Admin Recapture (10% of CAMs) 5.00% $765 Gross Potential Income $144,229 Operating Expenses Real Estate Taxes (Based on Sale Price) 1.40% ($23,030) Insurance (Actual) ($1,961) CAM s (Actual) Repairs & Maintenance ($2,700) Trash ($3,772) Pest Control ($468) Landscaping ($1,848) House Electric ($1,285) Parking Lot/Sweep ($2,472) Steam Cleaning ($1,812) Water ($950) Total CAM s ($15,307) Total Reimbursable Expenses ($40,298) Management Fee (Projected) 3.0% ($4,327) TOTAL EXPENSES ($44,625) NET INCOME $99,604 *Includes Seller Rent Guarantee PAGE 10
FINANCIAL SUMMARY FINANCIAL SUMMARY BASED ON LIST PRICE Purchase Price $1,645,000 Rentable SF Price/Rentable SF 3,956 SF $415.82/SF CURRENT Base Rent $103,165 Expense Reimbursements $41,064 Gross Potential Rent $144,229 Total Expenses ($44,625) Net Income $99,604 Cap Rate 6.05% PAGE 11
AREA OVERVIEW Huntington Park, CA Located in Los Angeles County, the city of Huntington Park had a total of 61,348 people (according to the 2010 census). Named for prominent industrialist Henry Huntington, Huntington Park was incoporated as a streetcar suburb for workers in the rapidly expanding industries southeast of downtown Los Angeles. Today, the city benefits from excellent demographics, with the average household income over $45,000 and serves as a major retail area for working-class residents of southeastern Los Angeles County. PAGE 12
TENANT PROFILE DEMONSTRATED HISTORY OF SUCCESS ON SIMILAR ASSIGNMENTS Tenant: 7-Eleven Inc. LEASE ABSTRACT Tenant Website: www.7-eleven.com # of Locations: 8,000 + Headquarters: Dallas, TX PROPERTY: 2902 E Florence Avenue, Huntington Park, CA 90255 TENANT: GUARANTOR: LEASE TYPE: 7-Eleven, Inc. 7-Eleven, Inc. NNN COMMENCEMENT DATE: January 1, 2014 7-Eleven, Inc. is the world s largest operator, franchisor, and licensor of convenience stores with more than 50,000 outlets. Based in Dallas, Texas, 7-Eleven operates, franchises, or licenses over 8,000 stores in North America and more than 37,000 stores in 16 countries. The company started in 1927 and was purchased by Autozon in the 1990s. In 1998, it was purchased by the Japanese corporation Ito-Yokado, its largest franchisee. Ito-Yokado formed Seven & I Holdings Co., and 7-Eleven became its subsidiary in 2005. In 2007, Seven & I Holdings announced that it would be expanding their American operations with an additional 1,000 7-Eleven stores in the United States. EARLY TERMINATION: USES & RESTRICTIONS: 7-Eleven can terminate the lease, one time, at the end of the 5th year with a minimum 180 days advance notice and payment of $44,583 (7 months base rent). May be used up to twenty-four hours per day for retail sale, rental or provision of merchandise and services customarily sold, rented, or provided from time to time, at stores operated or franchised by Tenant or at supermarkets or grocery markets of any type and character operated within the supermarket or grocery industry. No other occupant of the center shall operate a business that provides or offers for sale or rent: packaged lunch meats, prepared sandwiches and foods; grocery items; beer and wine for off premise consumption; newspapers, magazines, paperback books; cigarettes and tobacco products; coffee or donut shop.* EXPIRATION DATE: December 31, 2023 LEASE TERM: Ten (10) years, together with four 5-year options to extend UTILITIES & MANAGEMENT: Tenant pays its Pro Rata Share of all charges for gas, electricity, sewer, water, heat, light, power, telephone, refuse & trash collection. Management fee reimbursement is limited to 5% of the common area expenses. RENTABLE SF: 2,895 SF TAXES: There is no Prop 13 protection. Tenant pays its pro-rata share of real estate taxes. Tenant pays all taxes levied upon its personal property located on the premises. RENEWAL OPTIONS: LANDLORD REPAIRS: Roof, foundation, and structural soundess of building. SCHEDULED RENT INCREASES: *Options 10/2013-10/2018: $6,369/month; $76,428/yr 10/2018-10/2023: $7,006/month; $84,072/yr 10/2023-10/2028*: $7,707/month; $92,479/yr 10/2028-10/2033*: $8,477/month; $101,727/yr 10/2033-10/2038*: $9,325/month; $111,900/yr INSURANCE listing landlord as an additional insured. *For additional information regarding use restrictions, please contact agent. PAGE 13
DEMOGRAPHICS ONE-MILE RADIUS THREE-MILE RADIUS FIVE-MILE RADIUS 2013 Estimated Population 69,565 416,925 1,064,906 2018 Projected Population 70,771 427,993 1,095,619 RACE HOUSING INCOME HOUSEHOLDS POPULATION 2010 Census Population 69,150 411,836 1,050,197 2000 Census Population 71,852 407,741 1,021,329 Growth 2010-2013 0.60% 1.24% 1.40% Growth 2013-2018 1.73% 2.65% 2.88% 2013 Estimated Median Age 30.09 28.51 28.78 2013 Estimated Average Age 32.29 31.08 31.42 2013 Estimated Households 17,354 98,163 256,336 2018 Projected Households 17,769 100,977 264,074 2010 Census Households 17,149 96,794 252,586 2000 Census Households 17,348 94,593 245,077 Growth 2010-2013 1.19% 1.41% 1.48% Growth 2013-2018 2.39% 2.87% 3.02% 2013 Est. Average Household Size 3.99 4.23 4.10 2013 Est. Median Household Income $34,894 $35,233 $34,107 2018 Prj. Median Household Income $35,156 $35,536 $34,391 2000 Cen. Median Household Income $30,049 $28,579 $27,484 2013 Est. Average Household Income $45,231 $44,800 $44,320 2013 Estimated Per Capita Income $11,283 $10,548 $10,668 2013 Estimated Housing Units 18,022 102,901 271,798 2013 Estimated Occupied Units 17,354 98,163 256,336 2013 Estimated Vacant Units 669 4,738 15,462 2013 Est. Owner Occupied Units 5,523 33,124 89,493 2013 Est. Renter Occupied Units 11,831 65,039 166,844 2013 Est. Median Housing Value $274,809 $262,762 $265,108 2013 Est. Average Housing Value $298,357 $282,674 $288,199 White Population 37,185 (53.5%) 186,894 (44.8%) 424,366 (39.9%) Black Population 498 (0.7%) 24,688 (5.9%) 124,039 (11.6%) Asian Population 410 (0.6%) 2,102 (0.5%) 9,177 (0.9%) Hispanic Population 67,742 (97.4%) 383,557 (92.0%) 907,203 (85.2%) Two or More Races Population 2,484 (3.6%) 15,942 (3.8%) 39,746 (3.7%)
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estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management, and development. At Memorandum (the Property ) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the Owner ), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered, and approved by the Owner and any conditions to the and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If, after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc. DISCLAIMER 2013 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. on this document are the property of their respective owners. 2/13 PMC0004481 PAGE 17
EXCLUSIVELY MARKETED BY ALEX KOZAKOV First Vice President +1 213 613 3031 Lic. 01416489 alex.kozakov@cbre.com HEATHER GARRETT Operations Manager +1 213 613 3367 Lic. 01940192 heather.garrett@cbre.com PATRICK WADE First Vice President +1 213 613 3071 Lic. 01454690 patrick.wade@cbre.com ALEX BERGESON Associate +1 213 613 3029 Lic. 01434076 alex.bergeson@cbre.com MAXX COHEN Associate +1 213 613 3117 Lic. 01928768 maxx.cohen@cbre.com 400 S. Hope Street, 25th Floor Los Angeles, CA 90071