OFFERING MEMORANDUM
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. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.
NET LEASED DISCLAIMER Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows: The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided. As the Buyer of a net leased property, it is the Buyer s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer. Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. Buyer and Buyer s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs. Like all real estate investments, this investment carries significant risks. Buyer and Buyer s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant s past performance at this or other locations is an important consideration, it is not a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer s legal ability to make alternate use of the property. By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property.
TABLE OF CONTENTS Section 1 PRICING AND FINANCIAL ANALYSIS Section 2 PROPERTY DESCRIPTION Section 3 MARKET OVERVIEW Section 4 DEMOGRAPHIC ANALYSIS
PRICING AND FINANCIAL ANALYSIS Rite Aid
PRICING AND FINANCIAL ANALYSIS FINANCING Existing Financing Loan Type Free and Clear 1
PRICING AND FINANCIAL ANALYSIS FINANCIAL OVERVIEW Location 4434 Tennessee 58 Chattanooga, TN 37409 Price $3,313,600 Down Payment 100% / $3,313,600 Rentable Square Feet 10,908 Price/SF $303.78 CAP Rate 9.20% Year Built 2000 Lot Size Type of Ownership 1.84 Acres Fee Simple Annualized Operating Data Rent Increases Annual Rent Monthly Rent Years 1-20 $304,846.00 $25,403.83 Option 1 $310,300.00 $25,858.33 Option 2 $315,754.00 $26,312.83 Option 3 $321,208.00 $26,767.33 Option 4 $326,662.00 $27,221.83 Base Rent ($27.95/SF) $304,846 Net Operating Income $304,846 Total Return 9.20% / $304,846 Tenant Summary Tenant Trade Name Ownership Tenant Lease Guarantor Lease Type Roof and Structure Lease Term Rite Aid (Former Eckerd) Public Corporate Store Corporate Guarantee Double Net Landlord Responsible 20 Years Lease Commencement Date 03/21/2002 Rent Commencement Date 03/21/2002 Lease Expiration Date 03/20/2021 Term Remaining on Lease Increases Options Eight Years During Option Periods Four Five-Year 2
PRICING AND FINANCIAL ANALYSIS TENANT OVERVIEW Property Name Rite Aid Property Address 4434 Tennessee 58 Chattanooga, TN 37409 Property Type Net Leased Drug Store Rentable Square Feet 10,908 Tenant Trade Name Rite Aid (Former Eckerd) Ownership Public Tenant Corporate Store Sales Volume 2013 Sales $25.39 Billion Net Worth $3.17 Billion Market Value Lease Guarantor Corporate Guarantee Credit Rating B- Rating Agency Standard & Poor's Stock Symbol RAD Board NYSE Lease Commencement Date 03/21/2002 Rent Commencement Date 03/21/2002 Lease Expiration Date 03/20/2021 Term Remaining on Lease Eight Years Lease Type Double Net Roof and Structure Landlord Responsible Lease Term 20 Years Increases During Option Periods Options to Renew Four Five-Year No. of Locations 4,600+ Headquartered Camp Hill, PA Web Site www.riteaid.com Years in the Business 86 Years Ranked third strongest national drug store chain behind Walgreens and CVS Ranked Number 113 Fortune 500 in May 2013 Ranked Number 113 Fortune 1000 in May 2013 Member of Russell 2000 Index in June 2013 3
PROPERTY DESCRIPTION Rite Aid
PROPERTY DESCRIPTION INVESTMENT OVERVIEW Investment Highlights Located at the Signalized Southeast Corner of Shelbourne Drive and State Highway 58 Signage is Visible from Both Entrances Drive Thru 57 Dedicated Parking Spaces [Located at the signalized intersection of Shelbourne Drive and State Highway 58 with visible signage from both entry points into the service lane. The site has a drive thru and 57 dedicated parking spaces. Other retailers in the immediate area include Title Max, Rent-a-Center, Verizon, Bi-Lo, Cupids Hot Dogs, Sonic Drive Thru, Waffle House, Walgreens, and Valvoline. Chattanooga State Community College is located just 2.4 miles from the Rite Aid, and Miller-Motte Technical College is located just 2.4 miles from the site. Tennessee Temple University is located 5.4 miles from the site and and Chattanooga College of Medicine is located just 4.9 miles from the site. The site is adjacent to Booker T Washington State Park, which provides a natural barrier to entry into the region. Additionally, Prentice Cooper State Forest and Wildlife Management Area is located just to the west, also prohibiting further commercial development into the region. Chattanooga is the fourth largest city in the State of Tennessee. Chattanooga lies 135 miles southeast of Nashville, TN and about 120 miles to the northeast of Huntsville, AL. The city abuts the Georgia border and is where three major interstate highways meet (I-24, I-75 and I-59). Chattanooga is home to the University of Tennessee at Chattanooga (UTC) and Chattanooga State Community College. 5
PROPERTY DESCRIPTION PROPERTY SUMMARY The Offering Property Rite Aid Property Address 4434 Tennessee 58 Chattanooga, TN 37409 Site Description Year Built 2000 Rentable Square Feet 10,908 Lot Size 1.84 Acres Type of Ownership Fee Simple 6
PROPERTY DESCRIPTION AREA MAPS Local Map Regional Map 7
PROPERTY DESCRIPTION SITE PLAN the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any 8
PROPERTY DESCRIPTION AERIAL PHOTO the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any 9
MARKET OVERVIEW Rite Aid
MARKET OVERVIEW Chattanooga is the fourth largest city in the state of Tennessee and is the seat of Hamilton County. Located in southeastern Tennessee, it sits on the Chickamauga and Nickajack Lakes which are both parts of the Tennessee River. Chattanooga abuts the Georgia border and is where three major interstate highways meet (I-24, I-75 and the I-59). The city is surrounded by the mountain ranges of the Appalachians. The official nickname of the city is the Scenic City, and is a haven for outdoor activities. Chattanooga is home to the University of Tennessee with 11,429 undergraduate students and Chattanooga State Community College. Chattanooga's Largest Employers Access America Transport BlueCross Blue Sheild Coca-Cola Bottling Covenant Transport Craftworks Brewery & Restaurants Cigna 11
DEMOGRAPHIC ANALYSIS Rite Aid
DEMOGRAPHIC ANALYSIS DEMOGRAPHIC REPORT 1 Mile 3 Miles 5 Miles 2000 Population 5,416 30,172 90,606 2010 Population 4,907 29,811 93,054 2012 Population 5,046 30,258 94,489 2017 Population 4,999 29,851 94,289 2000 Households 2,148 12,166 37,223 2010 Households 2,124 11,824 37,149 2012 Households 2,192 12,043 37,883 2017 Households 2,206 12,012 38,231 2012 Average Household Size 2.34 2.46 2.34 2012 Daytime Population 2,048 25,092 85,286 2000 Median Housing Value $321,303 $98,349 $80,637 2000 Owner Occupied Housing Units 45.13% 47.30% 49.21% 2000 Renter Occupied Housing Units 39.62% 40.03% 39.98% 2000 Vacant 14.60% 12.64% 10.70% 2012 Owner Occupied Housing Units 43.33% 41.44% 43.77% 2012 Renter Occupied Housing Units 45.60% 45.42% 43.45% 2012 Vacant 11.07% 13.13% 12.78% 2017 Owner Occupied Housing Units 43.83% 41.35% 43.56% 2017 Renter Occupied Housing Units 45.82% 45.43% 43.31% 2017 Vacant 10.35% 13.22% 13.13% $ 0 - $14,999 28.5% 27.9% 23.8% $ 15,000 - $24,999 18.5% 18.9% 16.8% $ 25,000 - $34,999 13.6% 13.4% 13.3% $ 35,000 - $49,999 11.9% 10.5% 12.9% $ 50,000 - $74,999 11.6% 11.9% 15.0% $ 75,000 - $99,999 9.2% 7.9% 8.2% $100,000 - $124,999 3.2% 3.0% 3.8% $125,000 - $149,999 0.6% 1.6% 2.0% $150,000 - $199,999 0.9% 1.3% 1.4% $200,000 - $249,999 0.7% 1.3% 1.1% $250,000 + 1.5% 2.4% 1.8% 2012 Median Household Income $27,245 $27,287 $31,766 2012 Per Capita Income $19,750 $20,897 $21,671 2012 Average Household Income $45,242 $51,999 $52,406 Demographic data 2012 by Experian. 13
DEMOGRAPHIC ANALYSIS SUMMARY REPORT Geography: 5 Miles Population In 2012, the population in your selected geography was 94,489. The population has changed by 4.28% since 2000. It is estimated that the population in your area will be 94,289 five years from now, which represents a change of -0.21% from the current year. The current population is 48.1% male and 51.8% female. The median age of the population in your area is 36.0, compare this to the U.S. average which is 37. The population density in your area is 1,096.18 people per square mile. Households There are currently 37,883 households in your selected geography. The number of households has changed by 1.77% since 2000. It is estimated that the number of households in your area will be 38,231 five years from now, which represents a change of 0.91% from the current year. The average household size in your area is 2.33 persons. Income In 2012, the median household income for your selected geography is $31,766, compare this to the U.S. average which is currently $53,535. The median household income for your area has changed by -2.95% since 2000. It is estimated that the median household income in your area will be $35,878 five years from now, which represents a change of 12.94% from the current year. The current year per capita income in your area is $21,671, compare this to the U.S. average, which is $28,888. The current year average household income in your area is $52,406, compare this to the U.S. average which is $75,373. Race & Ethnicity The current year racial makeup of your selected area is as follows: 64.90% White, 27.96% African American, 0.51% Native American and 0.99% Asian/Pacific Islander. Compare these to U.S. averages which are: 72.20% White, 12.65% African American, 0.96% Native American and 5.01% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 6.49% of the current year population in your selected area. Compare this to the U.S. average of 16.55%. Housing The median housing value in your area was $80,637 in 2000, compare this to the U.S. average of $110,781 for the same year. In 2000, there were 20,511 owner occupied housing units in your area and there were 16,665 renter occupied housing units in your area. The median rent at the time was $410. Employment In 2012, there are 85,286 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 56.9% of employees are employed in white-collar occupations in this geography, and 43.0% are employed in blue-collar occupations. In 2012, unemployment in this area is 6.78%. In 2000, the median time traveled to work was 19.1 minutes. Demographic data 2012 by Experian. 14
DEMOGRAPHIC ANALYSIS POPULATION DENSITY Demographic data 2012 by Experian. Number of people living in a given area per square mile. 15
DEMOGRAPHIC ANALYSIS EMPLOYMENT DENSITY Demographic data 2012 by Experian. The number of people employed in a given area per square mile. 16
DEMOGRAPHIC ANALYSIS AVERAGE HOUSEHOLD INCOME Demographic data 2012 by Experian. Average income of all the people 15 years and older occupying a single housing unit. 17
OFFERING MEMORANDUM Exclusively Listed By: Lior Regenstreif First Vice President Investments Encino Office License: CA: 01267761 Tel: (818)212-2730 Fax: (818)212-2710 Lior.Regenstreif@marcusmillichap.com www.marcusmillichap.com/liorregenstreif Anne Williams Broker Marcus & Millichap REIS of Memphis License: TN: 255603 Tel: (901)620-3600 Fax: (901)620-3610 Offices Nationwide www.marcusmillichap.com