, johnrgendron@gmail.com 450 Baxter Blvd. Portland, ME 04103 207-939-8500 (p) 866-246-0114 (f) www.gendroncommercial.com
Table of Contents Real Estate Investment Details... 3 Biography... 4 Property Description... 5 Property Photos... 6 Maps and Aerials... 7 Executive Summary... 8 Cash Flow Analysis... 9 Annual Property Operating Data... 11 Financial Indicators... 13 Property Equity Analysis... 15 Equity vs. Debt... 16 Attachment 1... Attachment
Real Estate Investment Details ANALYSIS Analysis Date October 2013 PROPERTY Property Property Address Rite Aid-Lewiston PURCHASE INFORMATION Property Type Commercial Purchase Price $1,600,000 Fair Market Value $1,600,000 Tenants 1 Total Rentable Sq. Ft. 7,128 Resale Valuation 2.0% (annual appreciation) Resale Expenses 4.0% FINANCIAL INFORMATION Down Payment $640,000 Closing Costs $10,000 LT Capital Gain 15.00% Federal Tax Rate 35.0% Discount Rate 6.00% LOANS Debt Term Amortization Rate Payment LO Costs Fixed $960,000 20 years 20 years 5.5% $6,604 INCOME & EXPENSES Gross Operating Income $140,348 Monthly GOI $11,696 Total Annual Expenses ($8,517) Monthly Expenses ($710) CONTACT INFORMATION johnrgendron@gmail.com The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting, tax or other professional area before making any decisions. page 3 of 16
Biography PROFESSIONAL BIO John R. Gendron is a commercial real estate broker specializing in the selling, leasing and development of all types of commercial properties. He earned the designation of CCIM (Certified Commercial Investment Member) and holds several real estate broker licenses including Maine, New Hampshire, New York, Massachusetts, Florida and Connecticut. He is a past President, Vice President and Treasurer of the York County Board of Realtors, past President of Maine Homebuilders Association, past Director of the State of Maine Realtors Association, past Director of Portland Chamber of Commerce, past Director of Greater Portland Landmarks; past Member of Mercy Hospital Board of Trustees, and past Director of McAuley Residence. page 4 of 16
Property Description *Rite Aid Corporation is a retail drugstore chain in the United States. The Company operates its drugstores in 31 states across the country and in the District of Columbia. As of February 28, 2009, it operated 4,901 stores. In its stores, the Company sells prescription drugs and an assortment of other merchandise, which it calls front-end products. During the fiscal year ended February 28, 2009 (fiscal 2009), prescription drug sales accounted for 67.2% of its total sales. The Company offers approximately 28,000 frontend products, which accounted for the remaining 32.8% of its total sales during fiscal 2009. Front end products include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, beverages, convenience foods, greeting cards, seasonal merchandise, and other everyday and convenience products, as well as photo processing. It offers approximately 3,300 products under the Rite Aid private brand. Rite-Aid has reported sales of $25.9 billion in the last 12 months and has remained the third largest pharmacy in the United States behind CVS and Walgreens. The lease is a rare base combined with percentage rent (2.0% of gross annual sales). The lease consists of 3 five year renewal options left. Currently in the first of the last three renewal options with a five year period of (6/1/2012-5/31/2017). The lease expiration date is 5/31/2027. Land Area: 1.11 Acres Gross SF of 10,692 ( included is 3,564 sf of basement space) page 5 of 16
Rite Aid-Lewiston Property Photos Property Photos page 6 of 16
Maps and Aerials Site Aerial page 7 of 16
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $1,610,000 Investment - Cash $655,000 First Loan $960,000 INVESTMENT INFORMATION Purchase Price $1,600,000 Price per Tenant $1,600,000 Price per Sq. Ft. $224.47 INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $140,348 Total Vacancy and Credits $0 Operating Expenses ($8,517) Net Operating Income $131,831 Debt Service ($79,245) Cash Flow Before Taxes $52,586 Total Interest (Debt Service) ($52,123) Depreciation and Amortization ($25,167) Taxable Income (Loss) $54,541 Tax Savings (Costs) ($19,089) Cash Flow After Taxes $33,497 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 8.03% Optimal Internal Rate of Return (yr 7) 10.36% Debt Coverage Ratio 1.66 Capitalization Rate 8.24% Gross Income / Square Feet $19.69 Gross Expenses / Square Feet ($1.19) Operating Expense Ratio 6.07% page 8 of 16
Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 GROSS SCHEDULED INCOME $140,348 $141,645 $142,994 $144,397 $145,856 $146,882 $146,964 $147,043 $147,118 $156,786 Total Operating Expenses ($8,517) ($8,582) ($8,650) ($8,720) ($8,793) ($8,844) ($8,848) ($8,852) ($8,856) ($9,339) NET OPERATING INCOME $131,831 $133,063 $134,344 $135,677 $137,063 $138,038 $138,116 $138,191 $138,262 $147,447 Loan Payment ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) NET CASH FLOW (b/t) $52,586 $53,818 $55,100 $56,433 $57,819 $58,793 $58,871 $58,946 $59,018 $68,202 Cash On Cash Return b/t 8.03% 8.22% 8.41% 8.62% 8.83% 8.98% 8.99% 9.00% 9.01% 10.41% NET OPERATING INCOME $131,831 $133,063 $134,344 $135,677 $137,063 $138,038 $138,116 $138,191 $138,262 $147,447 Depreciation ($25,167) ($26,263) ($26,263) ($26,263) ($26,263) ($26,263) ($26,263) ($26,263) ($26,263) ($26,263) Loan Interest ($52,123) ($50,593) ($48,977) ($47,270) ($45,466) ($43,561) ($41,548) ($39,421) ($37,175) ($34,802) TAXABLE INCOME (LOSS) $54,541 $56,207 $59,105 $62,145 $65,334 $68,214 $70,305 $72,506 $74,824 $86,382 Income Taxes ($19,089) ($19,672) ($20,687) ($21,751) ($22,867) ($23,875) ($24,607) ($25,377) ($26,189) ($30,234) CASH FLOW (a/t) $33,497 $34,146 $34,413 $34,682 $34,952 $34,918 $34,264 $33,569 $32,829 $37,969 Cash On Cash Return a/t 5.11% 5.21% 5.25% 5.29% 5.34% 5.33% 5.23% 5.13% 5.01% 5.80% Footnotes: b/t = before taxes;a/t = after taxes page 9 of 16
Cash Flow Analysis Description Year 11 Year 12 Year 13 Year 14 Year 15 GROSS SCHEDULED INCOME $176,047 $176,114 $176,178 $176,220 $177,395 Total Operating Expenses ($10,302) ($10,306) ($10,309) ($10,311) ($10,370) NET OPERATING INCOME $165,745 $165,808 $165,869 $165,909 $167,025 Loan Payment ($79,245) ($79,245) ($79,245) ($79,245) ($79,245) NET CASH FLOW (b/t) $86,500 $86,564 $86,625 $86,664 $87,780 Cash On Cash Return b/t 13.21% 13.22% 13.23% 13.23% 13.40% NET OPERATING INCOME $165,745 $165,808 $165,869 $165,909 $167,025 Depreciation ($26,263) ($26,263) ($26,263) ($26,263) ($25,174) Loan Interest ($32,295) ($29,647) ($26,849) ($23,894) ($20,771) TAXABLE INCOME (LOSS) $107,187 $109,899 $112,757 $115,752 $121,080 Income Taxes ($37,515) ($38,465) ($39,465) ($40,513) ($42,378) CASH FLOW (a/t) $48,985 $48,099 $47,160 $46,151 $45,402 Cash On Cash Return a/t 7.48% 7.34% 7.20% 7.05% 6.93% Footnotes: b/t = before taxes;a/t = after taxes page 10 of 16
Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $140,348 $141,645 $142,994 $144,397 $145,856 $146,882 $146,964 $147,043 $147,118 $156,786 GROSS SCHEDULED INCOME $140,348 $141,645 $142,994 $144,397 $145,856 $146,882 $146,964 $147,043 $147,118 $156,786 GROSS OPERATING INCOME $140,348 $141,645 $142,994 $144,397 $145,856 $146,882 $146,964 $147,043 $147,118 $156,786 Expenses Property Management Fee ($7,017) ($7,082) ($7,150) ($7,220) ($7,293) ($7,344) ($7,348) ($7,352) ($7,356) ($7,839) Replacement Reserves ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) TOTAL OPERATING EXPENSES ($8,517) ($8,582) ($8,650) ($8,720) ($8,793) ($8,844) ($8,848) ($8,852) ($8,856) ($9,339) NET OPERATING INCOME $131,831 $133,063 $134,344 $135,677 $137,063 $138,038 $138,116 $138,191 $138,262 $147,447 page 11 of 16
Annual Property Operating Data Description Year 11 Year 12 Year 13 Year 14 Year 15 Rental Income $176,047 $176,114 $176,178 $176,220 $177,395 GROSS SCHEDULED INCOME $176,047 $176,114 $176,178 $176,220 $177,395 GROSS OPERATING INCOME $176,047 $176,114 $176,178 $176,220 $177,395 Expenses Property Management Fee ($8,802) ($8,806) ($8,809) ($8,811) ($8,870) Replacement Reserves ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) TOTAL OPERATING EXPENSES ($10,302) ($10,306) ($10,309) ($10,311) ($10,370) NET OPERATING INCOME $165,745 $165,808 $165,869 $165,909 $167,025 page 12 of 16
Financial Indicators Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Rent Multiplier 11.63 11.75 11.87 11.99 12.11 12.27 12.51 12.75 13.00 12.44 Capitalization Rate 8.24% 8.32% 8.40% 8.48% 8.57% 8.63% 8.63% 8.64% 8.64% 9.22% Cash On Cash Return b/t 8.03% 8.22% 8.41% 8.62% 8.83% 8.98% 8.99% 9.00% 9.01% 10.41% Cash On Cash Return a/t 5.11% 5.21% 5.25% 5.29% 5.34% 5.33% 5.23% 5.13% 5.01% 5.80% Debt Coverage Ratio 1.66 1.68 1.70 1.71 1.73 1.74 1.74 1.74 1.74 1.86 Gross Income per Sq. Ft. $19.69 $19.87 $20.06 $20.26 $20.46 $20.61 $20.62 $20.63 $20.64 $22.00 Expenses per Sq. Ft. ($1.19) ($1.20) ($1.21) ($1.22) ($1.23) ($1.24) ($1.24) ($1.24) ($1.24) ($1.31) Net Income Multiplier 12.38 12.51 12.64 12.76 12.89 13.05 13.31 13.57 13.83 13.23 Operating Expense Ratio 6.07% 6.06% 6.05% 6.04% 6.03% 6.02% 6.02% 6.02% 6.02% 5.96% Loan To Value Ratio 57.16% 54.32% 51.47% 48.62% 45.75% 42.87% 39.98% 37.07% 34.15% 31.20% Footnotes: b/t = before taxes; a/t = after taxes page 13 of 16
Financial Indicators Description Year 11 Year 12 Year 13 Year 14 Year 15 Gross Rent Multiplier 11.30 11.52 11.75 11.98 12.14 Capitalization Rate 10.36% 10.36% 10.37% 10.37% 10.44% Cash On Cash Return b/t 13.21% 13.22% 13.23% 13.23% 13.40% Cash On Cash Return a/t 7.48% 7.34% 7.20% 7.05% 6.93% Debt Coverage Ratio 2.09 2.09 2.09 2.09 2.11 Gross Income per Sq. Ft. $24.70 $24.71 $24.72 $24.72 $24.89 Expenses per Sq. Ft. ($1.45) ($1.45) ($1.45) ($1.45) ($1.45) Net Income Multiplier 12.00 12.24 12.48 12.72 12.89 Operating Expense Ratio 5.85% 5.85% 5.85% 5.85% 5.85% Loan To Value Ratio 28.23% 25.23% 22.20% 19.15% 16.05% Footnotes: b/t = before taxes; a/t = after taxes page 14 of 16
Property Equity Analysis $1,900,000 $1,710,000 $1,520,000 $1,330,000 $1,140,000 $950,000 $760,000 $570,000 $380,000 $190,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Legend Initial Equity Equity (loan reduction) Equity (appreciation) page 15 of 16
Equity vs. Debt $1,900,000 $1,710,000 $1,520,000 $1,330,000 $1,140,000 $950,000 $760,000 $570,000 $380,000 $190,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Legend Equity Loan Principal Balance page 16 of 16
- Lewiston Maine 3-5 Year Lease Renewals Base rent and % rent 6/1/12-5/31/13 6/1/13-5/31/14 6/1/14-5/31/15 6/1/15-5/31/16 6/1/16-5/31/17 6/1/17-5/31/18 6/1/18-5/31/19 6/1/19-5/31/20 6/1/20-5/31/21 6/1/21-5/31/22 6/1/22/5/31/23 6/1/23-5/31/24 6/1/24-5/31/25 6/1/25-5/31/26 6/1/26-5/31/27 Base Rent $107,921.52 $107,921.52 $107,921.52 $107,921.52 $107,921.52 $148,931.17 $148,931.17 $148,931.17 $148,931.17 $148,931.17 $178,718.04 $178,718.04 $178,718.04 $178,718.04 $178,718.04 4% Rent $32,000.00 $33,280.00 $34,611.20 $35,995.65 $37,435.47 - $2,076.76 - $1,993.69 - $1,913.94 - $1,837.38 - $1,763.89 - $1,693.33 - $1,625.60 - $1,560.57 - $1,498.15 - $1,438.22 Total Annually 139,921.52 141,201.52 $142,532.72 $143,917.17 $145,356.99 $146,854.41 $146,937.48 $147,017.23 $147,093.79 $147,167.28 $177,024.71 $177,092.44 $177,157.47 $177,219.89 $177,279.82 Volume Projection 5,596,860.80 5648060.8 $5,701,308.80 $5,756,686.72 $5,814,279.76 $5,874,176.52 $5,877,499.33 $5,880,689.24 $5,883,751.54 $5,886,691.35 $7,080,988.37 $7,083,697.70 $7,086,298.66 $7,088,795.57 $7,091,192.61 $41,009.65 $29,786.87 Total 15 Year income $2,333,774.44 $38,932.89 83.0704 79.7476 76.5576 73.4952 70.5556 67.7332 $65.02 62.4228 59.926