3965 Washington Blvd South Ogden, UT 84403 OFFERING MEMORANDUM 1
E X C L U S I V E L Y L I S T E D B Y Brett Jones Associate Associate Member National Retail Group Salt Lake City Office Tel: (801) 736-2651 Fax: (801) 631-9540 brett.jones@marcusmillichap.com License: UT 9761802-SA00 Matthew Porter Senior Associate Associate Member - National Retail Group Salt Lake City Office Tel: (801) 736-2638 Fax: (801) 736-2610 matthew.porter@marcusmillichap.com License: UT 7770209-SA00 Tod Jones Senior Associate Associate Director - National Retail Group Salt Lake City Office Tel: (801) 736-2619 Fax: (801) 736-2610 tod.jones@marcusmillichap.com License: UT 5450617-SA00
EXECUTIVE SUMMARY OFFERING SUMMARY INVESTMENT HIGHLIGHTS South Washington Plaza 3965 Washington Blvd. South Ogden, UT Pro-Forma YEAR 2 Price $1,150,000 CAP Rate 9.17% 9.17% Gross Leasable Area (GLA) 10,060 SF Net Operating Income $105,499 $105,499 Price/SF $114.31 Net Cash Flow After Debt Service 15.66% / $72,034 15.66% / $72,034 Current Occupancy 55% Total Return 15.66% / $72,034 15.66% / $72,034 PROPOSED FINANCING First Trust Deed Loan Amount $690,000 Loan Type Bridge Loan Interest Rate 4.85% Amortization 25 Years Loan Term 5 Years Loan to Value 60% Debt Coverage Ratio 3.15 SITE DESCRIPTION Number of Stories 1 Year Built/Renovated 1990 Gross Leasable Area 10,060 SF Ownership Fee Simple Lot Size 0.82 AC Parking 51 Parking Stalls Parking Ratio 5/1000 SF Access Points Multiple 9.17% Pro-Forma CAP Shadow Anchor - Planet Fitness (Not a Part) Long Tenant History Great Upside with 45.3% Vacancy Excellent Visibility with Pylon Signage Located Just East of Newgate Mall with over 725,000 SF of Retail Floor Space 25,430 AADT on Washington Blvd. Over 160,000 Residents in a 5-Mile Radius Nearby Tenants Include: Costco, Walgreens, Shopko, Staples, Lowe's, and McDonald's DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2017 Estimate Pop 12,732 84,494 160,041 2017 Estimate HH 4,529 31,029 56,928 Median HH Income $46,239 $51,867 $55,587 Average HH Income $57,595 $68,023 $68,333 SUITE # TENANT NAME BLDG. % OF LEASE LEASE REMAINING ANNUAL ANNUAL CAM Sq. Ft. GLA START EXPIRES TERM RENT RENT/ INCOME (Years) SQ. FT. 100 Vacant 2,000 19.9% N/A N/A N/A $24,000 $12.00 $4,600 300 Karate 1,000 9.9% 9/1/02 9/30/22 4.2 $2,300 400 Massage & Spa 900 8.9% 3/11/15 2/28/20 1.6 * Full Rent $2,070 500 Vacant 1,500 14.9% N/A N/A N/A $18,000 Roll $12.00 $3,450 Available 600 Sunsationail 1,200 11.9% 4/19/93 6/30/21 3.0 $2,760 Upon 700 Hoffman Cleaners 1,200 11.9% 6/1/86 MTM MTM Request $2,760 800 Menz Cutz 1,200 11.9% 12/31/16 1/31/19 0.6 $2,760 900 Vacant 1,060 10.5% N/A N/A N/A $12,720 $12.00 $2,438 10,060 Occupied GLA: 55% Unoccupied GLA: 45% $117,367 $11.76 $23,138.00 # 3
OPERATING STATEMENT FINANCIAL ANALYSIS SUITE # TENANT NAME BLDG. % OF LEASE LEASE REMAINING ANNUAL ANNUAL CAM Sq. Ft. GLA START EXPIRES TERM RENT RENT/ INCOME (Years) SQ. FT. 100 Vacant 2,000 19.9% N/A N/A N/A $24,000 $12.00 $4,600 300 Karate 1,000 9.9% 9/1/02 9/30/22 4.2 $2,300 400 Massage & Spa 900 8.9% 3/11/15 2/28/20 1.6 * Full Rent $2,070 500 Vacant 1,500 14.9% N/A N/A N/A $18,000 Roll $12.00 $3,450 Available 600 Sunsationail 1,200 11.9% 4/19/93 6/30/21 3.0 $2,760 Upon 700 Hoffman Cleaners 1,200 11.9% 6/1/86 MTM MTM Request $2,760 800 Menz Cutz 1,200 11.9% 12/31/16 1/31/19 0.6 $2,760 900 Vacant 1,060 10.5% N/A N/A N/A $12,720 $12.00 $2,438 10,060 Occupied GLA: 55% Unoccupied GLA: 45% $117,367 $11.76 $23,138.00 INCOME APPROACH OCCUPIED ACTUAL RENTS: $62,647 POTENTIAL RENT AFTER LEASING $54,720 ACTUAL CAM RECEIVED $12,650 POTENTIAL CAM AFTER LEASING $10,488 TOTAL GROSS POTENTIAL INCOME $140,505 (Less) General Vacancy Allowance 5.00% ($5,868.35) EFFECTIVE GROSS INCOME $134,637 EXPENSES: Management Fee 4.46% ($6,000) CAM (Taxes, Insurance, Etc.) 17.19% ($23,138) TOTAL EXPENSES 21.64% ($29,138) PRO-FORMA NET OPERATING INCOME $105,499 Long Term Debt Service $48,404.04 Net Cash Flow after Debt Service $57,095 PRO FORMA MARKET VALUE - INCOME APPROACH: CAP Rate PRO FORMA MARKET VALUE 8.00% $1,318,733 PRICE ADJUSTMENTS FOR VACANCY & LEASING EXPENSES: Leasing Agent Commission (6% on 3 years) $6,610 Tenant Improvement Costs ($20 per SF) $61,200 ACTUAL LEASING COSTS: $67,810 Risk Factor + Rent & CAM Loss - (12 Months) $100,924 TOTAL PRICE REDUCTION: $168,734 MARKET VALUE AFTER VACANCY ADJUSTMENTS Pro-Forma CAP Current CAP MARKET VALUE AFTER VACANCY & LEASING EXPENSES 9.17% 4.54% $1,150,000 4
Washington Blvd. - 25,430 AADT Wall Ave. 32,085 AADT SOUTH WASHINGTON PLAZA AERIAL PHOTO Walgreens McDonalds SUBJECT PROPERTY 5
AERIAL PHOTO 6
REGIONAL MAP 7
MARKET OVERVIEW 8
OGDEN-CLEARFIELD OVERVIEW The Ogden-Clearfield metro is situated in northern Utah between the Wasatch Mountains and the Great Salt Lake, and it consists of Weber, Davis and Morgan counties. The metro contains 659,000 residents with more than 345,600 in Davis County. Ogden is the most populous city, containing 87,700 citizens. The Salt Lake City metro borders to the south and the state of Idaho is to the north. METRO HIGHLIGHTS STRATEGIC LOCATION Strategically located for highway, rail and air access, Ogden sits at the crossroads of the CANAMEX shipping corridor. MARKET OVERVIEW MILITARY PRESENCE The Hill Air Force Base has an annual economic impact of $3.4 billion with nearly 25,500 personnel within the base. POPULATION GROWTH The expanding economy will help push population growth above the U.S. average. The metro is forecast to gain 45,000 additional people over the next five years. ECONOMY Ogden is an important distribution hub, located along the transcontinental railroad system. It is a national center for east-west rail traffic. Ogden s roots in the railroad industry have expanded into military and manufacturing. Hill Air Force Base, home of the Ogden Air Logistics Center, is a major driver of the economy as the area s largest employer. The center offers engineering and logistics management for aircrafts worldwide. A significant location in the metro is the redeveloped Business Depot Ogden. The center provides 6.5 million square feet of industrial and office space to tenants such as Nutraceutical, Fresenius USA Manufacturing, ICON Health and Fitness, Petersen Inc. and Kenco Logistic Services. DEMOGRAPHICS 2017 POPULATION: 659K Growth 2017-2022*: 6.8% 2017 HOUSEHOLDS: 210K Growth 2017-2022*: 9.2% 2017 MEDIAN AGE: 31.5 U.S. Median: 37.8 2017 MEDIAN HOUSEHOLD INCOME: $68,500 U.S. Median: $56,300 * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 1
MARKET OVERVIEW SALT LAKE CITY METRO AREA Escalated Household Growth, Construction Garner Investor Interest Robust tenant demand produces bolstered rent gains. Employment growth in Salt Lake City remains considerably higher than the national rate, though it will experience a slight slowdown this year. The tech sector leads job creation as Snapchat, Carta and Recursion begin to open new offices along the Wasatch Front during 2018. The labor pool s expansion results in notable climbs in population growth and household formation, both exceeding national levels. As demographic trends remain strong, retailers flock to Salt Lake City this year, prompting construction to reach the highest figure since 2012 when over 2.2 million square feet was delivered. The largest development is Mountain View Village in Riverton, a massive mixed-use development that includes more than 700,000 square feet of retail space. The project also encompasses a hotel and office space. Amid heightened construction activity, metro vacancy will rise this year, pushing the rate over 5 percent. Salt Lake City logs strong rent growth for the fourth consecutive year despite an increased amount of available space. The availability of portfolio repositioning forges investor interest. Historically, local buyers, as well as investors from coastal markets seeking higher yields, found a number of opportunities within the city limits of Salt Lake City, a trend that should persist in 2018. Properties in the State Street corridor, extending from University Boulevard to the Lincoln Highway, lure many out-of-state investors seeking projects boasting high-traffic locations. Here, multi-tenant assets average initial returns in the low-7 percent realm. The Sugar House neighborhood, an area headlined by a notable nightlife scene, will be a primary target for investors. In this locale, cap rates sit in the high-6 to mid-7 percent range. In-state buyers remain focused on multitenant options in communities near South Valley Regional Airport, where first-year yields are typically in line with the metro average, approximately 7 percent. * Forecast Sources: Marcus & Millichap Research Services; BLS; CoStar Group, Inc. 10
MARKET OVERVIEW SALT LAKE CITY METRO AREA 2018 Market Forecast NRI Rank 7, up 2 places Strong growth in retail sales and healthy rent gains push Salt Lake City up two ranks. Employment up 2.2% Salt Lake City organizations staff 27,300 employees this year with tech companies leading the way. Last year, 25,900 workers were staffed. Construction 1.4 million sq. ft. The metro reports a increase in development activity this year following a 2017 total of 1.1 million square feet. Vacancy up 50 bps Another year of below-trend absorption and rising completions result in a 50-basis-point climb, putting the rate at 5.5 percent. Last year, vacancy rose 100 basis points. Rent up 4.7% This year the average asking rent pushes up to $15.88 per square foot. Last year, lease rates increased 3.2 percent. Investment Investors will direct their attention to new mix-used developments in Riverton and Sandy, presenting opportunities to capitalize on the surging population and diversify their portfolios. * Forecast Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics 11
PROPERTY SOUTH WASHINGTON NAME PLAZA Created July 2018 POPULATION 1 Miles 3 Miles 5 Miles 2022 Projection Total Population 12,513 85,599 164,245 2017 Estimate Total Population 12,732 84,494 160,041 2010 Census Total Population 12,341 80,064 150,696 2000 Census Total Population 12,177 76,829 138,112 Current Daytime Population 2017 Estimate 11,553 113,727 179,570 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2022 Projection Total Households 4,537 32,240 59,766 2017 Estimate Total Households 4,529 31,029 56,928 Average (Mean) Household Size 2.80 2.67 2.75 2010 Census Total Households 4,360 29,235 53,409 2000 Census Total Households 4,390 26,996 47,987 Occupied Units 2022 Projection 4,537 32,240 59,766 2017 Estimate 4,713 32,765 59,412 HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2017 Estimate $150,000 or More 4.54% 6.84% 5.76% $100,000 - $149,000 5.75% 10.67% 11.96% $75,000 - $99,999 12.44% 13.32% 14.76% $50,000 - $74,999 23.24% 20.66% 22.35% $35,000 - $49,999 17.53% 13.76% 14.38% Under $35,000 36.52% 34.74% 30.78% Average Household Income $57,595 $68,023 $68,333 Median Household Income $46,239 $51,867 $55,587 Per Capita Income $20,515 $25,192 $24,459 MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 Miles Total Average Household Retail Expenditure $61,652 $67,440 $69,961 Consumer Expenditure Top 10 Categories Housing $14,818 $15,579 $16,001 Transportation $9,631 $10,435 $10,787 Shelter $8,907 $9,304 $9,522 Food $6,301 $6,698 $6,929 Personal Insurance and Pensions $4,943 $5,878 $6,289 Health Care $4,191 $4,686 $4,893 Cash Contributions $3,258 $3,954 $4,260 Utilities $2,930 $3,096 $3,198 Entertainment $2,915 $3,461 $3,653 Household Furnishings and Equipment $1,415 $1,564 $1,619 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2017 Estimate Total Population 12,732 84,494 160,041 Under 20 31.20% 29.17% 30.38% 20 to 34 Years 28.07% 25.36% 24.37% 35 to 39 Years 7.30% 6.77% 7.15% 40 to 49 Years 9.78% 10.70% 10.90% 50 to 64 Years 12.99% 15.63% 15.49% Age 65+ 10.66% 12.38% 11.70% Median Age 30.17 32.13 32.06 Population 25+ by Education Level 2017 Estimate Population Age 25+ 7,725 52,827 99,175 Elementary (0-8) 5.21% 5.18% 3.93% Some High School (9-11) 9.25% 7.34% 7.21% High School Graduate (12) 31.04% 28.20% 30.11% Some College (13-15) 26.54% 25.50% 27.16% Associate Degree Only 8.88% 8.10% 8.67% Bachelors Degree Only 12.31% 16.03% 15.10% Graduate Degree 4.68% 8.22% 6.54% Source: 2017 Experian 12
PROPERTY SOUTH WASHINGTON NAME PLAZA MARKETING DEMOGRAPHICS TEAM Population In 2017, the population in your selected geography is 12,732. The population has changed by 4.56% since 2000. It is estimated that the population in your area will be 12,513.00 five years from now, which represents a change of -1.72% from the current year. The current population is 51.01% male and 48.99% female. The median age of the population in your area is 30.17, compare this to the US average which is 37.83. The population density in your area is 4,045.72 people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 75.15% White, 2.02% Black, 0.31% Native American and 1.06% Asian/Pacific Islander. Compare these to US averages which are: 70.42% White, 12.85% Black, 0.19% Native American and 5.53% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 30.45% of the current year population in your selected area. Compare this to the US average of 17.88%. Households There are currently 4,529 households in your selected geography. The number of households has changed by 3.17% since 2000. It is estimated that the number of households in your area will be 4,537 five years from now, which represents a change of 0.18% from the current year. The average household size in your area is 2.80 persons. Housing The median housing value in your area was $133,515 in 2017, compare this to the US average of $193,953. In 2000, there were 3,112 owner occupied housing units in your area and there were 1,278 renter occupied housing units in your area. The median rent at the time was $495. Income In 2017, the median household income for your selected geography is $46,239, compare this to the US average which is currently $56,286. The median household income for your area has changed by 27.39% since 2000. It is estimated that the median household income in your area will be $53,874 five years from now, which represents a change of 16.51% from the current year. Employment In 2017, there are 5,317 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 51.15% of employees are employed in white-collar occupations in this geography, and 49.30% are employed in blue-collar occupations. In 2017, unemployment in this area is 5.70%. In 2000, the average time traveled to work was 22.00 minutes. The current year per capita income in your area is $20,515, compare this to the US average, which is $30,982. The current year average household income in your area is $57,595, compare this to the US average which is $81,217. Source: 2017 Experian 13
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E X C L U S I V E L Y L I S T E D B Y Brett Jones Associate Associate Member - National Retail Group Salt Lake City Office Tel: (801) 736-2651 Fax: (801) 736-2610 brett.jones@marcusmillichap.com License: UT 9761802-SA00 Matthew Porter Senior Associate Associate Member - National Retail Group Salt Lake City Office Tel: (801) 736-2638 Fax: (801) 736-2610 matthew.porter@marcusmillichap.com License: UT 7770209-SA00 Tod Jones Senior Associate Associate Director - National Retail Group Salt Lake City Office Tel: (801) 736-2619 Fax: (801) 736-2610 tod.jones@marcusmillichap.com License: UT 5450617-SA00 www.marcusmillichap.com 15