OFFERING MEMORANDUM The Shops at 505 LAHAINA, HAWAII 96761 Executive Summary 1
Exclusively Presented By KYLE MATTHEWS CHAIRMAN AND CEO Kyle.Matthews@matthews.com DIR (310) 919-5757 MOB (310) 622-3161 The Shops at 505 OFFERING MEMORANDUM LAHAINA, HAWAII 96761 EL WARNER SVP & NATIONAL DIRECTOR SHOPPING CENTERS El.Warner@matthews.com DIR (310) 579-9690 MOB (858) 752-3078 PATRICK TOOMEY FVP & SENIOR DIRECTOR SHOPPING CENTERS Patrick.Toomey@matthews.com DIR (310) 919-5765 MOB (310) 403-4984 LINDSAY TSUMPES AVP & DIRECTOR SHOPPING CENTERS Lindsay.Tsumpes@matthews.com DIR (310) 579-9691 MOB (310) 880-8418 KEONI FURSSE, CCIM, R(PB) KOKUA REALTY, LLC BROKER OF RECORD Keoni@kokuarealty.com DIR (808) 877-9000 MOB (808) 280-6556
Contents Executive Area Property Financial Summary 4 Overview 7 Overview 13 Overview 19 Executive Summary
Executive Summary Matthews National Retail Investment Group - West is pleased to present the fee simple sale of The Shops at 505, part of the Lahaina Shores Condominium Project, located in historic Lahaina Town on the Hawaiian island of Maui ( Property ). The Shops at 505 offers a once-in-a-lifetime opportunity to acquire one of the few ocean front shopping centers in all of Hawaii. An irreplaceable oceanfront resort retail center located in the heart of West Maui s premier shopping and entertainment district, The Shops at 505 is comprised of ±65,433 SF and is part of the Lahaina Shores Condominium Project. The Shops at 505 has excellent visibility and access, benefiting from 221 linear feet of frontage along Front Street, beach access, and an underground covered parking garage. Home to an array of shops, galleries, boutiques, dining venues, and an upscale beach-side luau that has been located at the property since 1998, the Property is perfectly positioned to cater to the robust tourist market and strong demographic base that it serves. In addition to being a trophy asset, the property exhibits significant increases in income due to the below market rents in place. This property provides both stability and excellent growth while owning the fee interest in the irreplaceable land site. Financial Summary Price Unpriced Property Size (NRA) 65,433 Year Built 1974 Current Occupancy 90.5% Major Tenants Feast at LeLe 15,434 Wyndham Vacation Resorts 14,269 Pacific'o 5,436 Year 1 Operating Data (DCF) Effective Gross Income $2,823,192 Operating Expenses $957,438 Net Operating Income $1,865,754 *Annual Income Growth 6.30% Existing Debt Lender KeyBank National Association Date of Loan March 1, 2015 Maturity Date May 1, 2025 Original Principle Loan Amount $18,850,000 Current Loan Balance (9/16) $18,334,340 Interest Rate 4.18% Amortization 30 Years Annual Debt Service - Amortized $1,103,518 Assumption Fee 1.0% *Excellent annual growth over 10-years. 4 The Shops at 505
Investment Highlihghts The Shops at 505 offers a rare opportunity to invest in a fee simple irreplaceable oceanfront trophy asset located in historic Lahaina town Excellent income growth due to below market rents Prime location on Front Street, the main thoroughfare for Lahaina and one of the most popular tourist shopping and dining destinations in Maui Extremely high barriers to entry for any new product due to the high cost of land and construction as well as political, environmental, and local constraints on commercial development Excellent visibility and convenient access with 221 feet of frontage along Front Street as well as ocean frontage and beach access Affluent demographics with an average household income of over $96,621 in a three-mile radius Population growth projected at nearly 7.6% over the next five years within a 5-mile radius Robust tourism market with visitor arrivals of 1,284,135 YTD through March 2016 Very consistent and durable consumer base Subterranean covered parking garage offers convenient parking for customers and tenants Executive Summary 5
6 The Shops at 505
Area Overview Lahaina Overview Often called the jewel in the crown of Maui, Lahaina town is the second most visited spot on Maui, after its beaches. Though the town can be found in the county of Maui, Lahaina has made its own mark and has established a distinction, which makes for easy recall. Today, it is bustling with tourists visiting the shops, activities, restaurants and world renowned hotels and resorts. It is the art capital of the Pacific and its main thoroughfare, Front Street, is one of a kind. Lahaina is the largest census-designated place in West Maui, Hawaii, and the gateway to the famous Ka anapali and Kapalua beach resorts to its north. Compared to other towns and villages, the area of Lahaina covers an expanse of Maui, about a total of 18.1 square kilometers, from Honokohau to Olowalu. During the tourist season, the population can swell to nearly 40,000 people. Demographics Population 1 Mile 3 Miles 5 Miles 2021 Projection 6,160 14,044 15,818 2016 Estimate 5,760 13,136 14,703 2010 Census 5,275 12,055 13,306 Growth 2016-2021 6.95% 6.91% 7.58% Growth 2010-2016 9.19% 8.97% 10.50% Growth 2000-2010 62.03% 36.26% 43.74% Households 1 Miles 3 Miles 5 Miles 2021 Projection 2,186 4,340 5,092 2016 Estimate 2,044 4,045 4,715 2010 Census 1,886 3,667 4,206 Growth 2016-2021 6.93% 7.29% 8.00% Growth 2010-2016 8.42% 10.29% 12.10% Lahaina is also home to the primary harbor in West Maui, and is where the majority of West Maui fishing, snorkeling and whale watching tours depart. Cruise ships ferry passengers for day-trips from their anchor further out in deeper water and this is also where the Moloka i and Lana i ferries depart. Due to the booming tourist industry of Lahaina, residents enjoy living a good life, balanced between modernity and simplicity. Income 1 Miles 3 Miles 5 Miles 2016 Est. Average Household Income $82,930 $96,621 $103,789 2016 Est. Median Household Income $63,619 $73,334 $77,093 Area Overview 7
Lahaina Economy Lahaina is a historic town that has been transformed into a Hawaiian hot spot. Once the capital of the Hawaiian Kingdom in the early nineteenth century, Lahaina was also a historic whaling village during the whaling boom of the mid-1800 s. Though the town can be found in the county of Maui, Lahaina has made its own mark and has established a distinction, which makes for easy recall. Today, it is bustling with tourists visiting the shops, activities, restaurants and world renowned hotels and resorts. It is the art capital of the Pacific and its main thoroughfare, Front Street, is one of a kind. Lahaina is the largest census-designated place in West Maui, Hawaii, and the gateway to the famous Ka anapali and Kapalua beach resorts to its north. Compared to other towns and villages, the area of Lahaina covers an expanse of Maui, about a total of 18.1 square kilometers, from Honokohau to Olowalu. During the tourist season, the population can swell to nearly 40,000 people. Maui, Hawaii Maui is the second largest island of Hawaiian and the county of Maui, and is home to some 155,000 residents and over 2.5 million visitors per year. Maui consists of four islands; Maui, Molokai, Lanai and Kaho olawe. Also known as the Valley Isle for its large fertile isthmus between its northwestern and southeastern volcanoes, Maui is known for its pristine beaches and endless fun and relaxation. Maui is home to spectacular hotels, timeshares, restaurants, shopping, and the beautiful resort towns. The two major industries on Maui are agriculture and tourism. Government research groups and high technology companies have discovered that Maui has a business environment favorable for growth in those sectors as well. FAIRMONT KEA LANI RESORT Maui Fast Facts Maui is made up of approximately an area of 727 square miles. There are more than 80 beaches in Maui. Maui s population has increased by 20.9% from 2000 to 2010. Maui is the third-most populous of the Hawaiian Islands. 8 The Shops at 505 3 airports provide scheduled flights to Maui. Maui s major exports are coffee, Macadamia nuts, papaya, tropical flowers, sugar, pineapple.
Regional Map KAUAI NIIHAU OAHU MOLOKAI LANAI MAUI HAWAII MAUI Local Map Executive Area Summary Overview 99
Maui Tourism Maui continues to dominate the neighbor-island tourism market and has consistently led the other counties in the rate of job growth and per-capita income. Today, the County has approximately 4,700 business establishments, which, when combined with Federal, State, and County jobs, provides about 71,600 wage and salary jobs. FRONT STREET SHOPS Maui was the first of the neighbor islands to attract large-scale resort development as the islands transitioned from a plantation-based economy to one based on tourism. People from all over the world also come to Maui to enjoy surfing, kite surfing, windsurfing, snorkeling and whale watching. Maui attracts visitors from around the world, but U.S. mainland and Canada visitors are the most frequent. Around 2.5 million tourists visit Maui each year generating US$3.5 billion. Front Street Lahaina s famous Front Street remains is the main thoroughfare for Lahaina. Front Street has a great assortment of hundreds of shops all along one convenient stretch of pedestrian-friendly road: inexpensive shops selling souvenirs all the way to high-end, elegant art galleries. The streets are lined with great restaurants, shopping, art galleries and plenty of sight seeing. Front Street, was named one of the Top 10 Greatest Streets in America. And the county of Maui takes added measures to preserve and care for the heritage of the area. You won t find any billboards or flashy neon signs in this historic strip, but instead painted wooden signs and crabs scattering across the salty wet rocks. 10 The Shops at 505
Local Developments NEW AFFORDABLE HOUSING COMING TO LAHAINA KAHOMA VILLAGE Kahoma Village will be a total of 203 units spread throughout the 21.56 Acre parcel located in the heart of Lahaina. Kahoma Village will have sustainable green design features, 1.75 acres of parks and all within minutes of walking distance to the beach, grocery store, or Shops at 505 A RESORT CELEBRATING THE ISLAND S RICH HISTORY WESTIN NANEA OCEAN VILLAS Scheduled to open in 2017, The Westin Nanea Ocean Villas is ideally located on Ka anapali Beach in Maui and will feature 390 luxurious villas and a variety of worldclass resort amenities, including an expansive lagoon-style pool and a beach bar. Situated on a 26-acre property which includes a ten-acre public park, The Westin Nanea Ocean Villas will be designed by local architects and infused with a variety of Hawaiian design elements. Area Overview 11
12 The Shops at 505
Property Overview Physical Description Property Name The Shops at 505 Address 505 Front Street Location 505 Front St, Lahaina, HI 96761 Cross Street Shaw Street Square Footage (GLA) ±65,433 Land Area ±43,041 SF (±0.99 Acres) APN(s) 2-4-6-002-007-300 Year Built / Renovated 1974 Zoning H-2 Hotel District Number of Stories 2 Parking Spaces 123 Property Overview 13
LAHAINA GATEWAY LAHAINA CANNERY MALL KAHOMA VILLAGE DEVELOPMENT 203 HOUSING UNITS THE OUTLETS OF MAUI OLD LAHAINA CENTER` REGAL CINEMAS LAHAINA HARBOR SUBJECT PROPERTY LAHAINA RECREATION CENTER PARK 14 The Shops at 505
FRONT STREET Property Overview 15
Main Level Site Plan Unit Tenant SF 120-122 Betty's Beach Café 2,853 120-122 118-119 115-117 115-117 112/114 115-117, 118-119 Feast at LeLe 14,269 112,114,114O Pacific'o 5,436 107 Joelle C. Gallery 921 103, 103-A, 105, 106 Gallerie 505 2,683 101-102 Vacant 1,819 123-124 125-126 139/140 142 135A 135B 138 137 136 106 105 107 BATHROOM & STORAGE 132-134 Whalers General Store 2,970 129-130 Spankys 3,090 127-128, 135A- B, 136-138, Wyndham Vacation Resorts 15,434 125-126 Vacant 1,680 123, 124 Goofy Foot Surf School 1,091 142 Vacant 590 139-140 Maui Ocean Sports 685 127-128 103/103A OCCUPIED VACANT 129 130 132-134 101/102 16 The Shops at 505
Unit Tenant SF Upper Level Site Plan 212,213-214, 215, 215B, 216, 216-A, 219-A, 219-B, 232, 233, 234 Wyndham Vacation Resorts 15,434 206 Erica Pilch 1,161 204-A, 204-B, 215A Feast at LeLe 14,269 215A 212-214 203 Mina Massage 591 202 Dr. Sunjata Bhatia, DDS 1,044 201 Nancy Emerson School of Surfing 475 215-219B 228 Maui Lashes 384 230 Queen Lili'uokalani Children's Center - Queen Lili 867 227 Ryan Carney 416 226 Vacant 351 225-A Vacant 430 225-B DaKine Fine Art Gallery 542 224-B Goofy Foot Surf School 1,091 224-A Republic Parking Northwest Inc. 257 224 Maui Pineapple Tours, LLC 213 224-C Vacant 130 220B 220A 221 222 231 1 A-2.2 235 232-234 206 205 204-B 204-A 221-222 The Friends of Moku'ula 1,320 220-B, 220- B-1 Theatre Theatre Maui 459 223 203 231 Soular Tattoo and Piercing 1,397 224C 223 Vacant 905 235 Management Office 310 229 Lisa Newman 424 224B 224A 225A 225B 226 227 228 229 230 201 202 220-A Coastline Limousine 236 224 OCCUPIED VACANT Property Overview 17
18 The Shops at 505
Financial Overview Rent Roll Unit Tenant Lease Start Lease End SF % of GLA Contract Rental Rate Rent PSF Year Month Year Month 120-122 Betty's Beach Café Dec-08 Nov-24 2,853 4.4% $136,944 $11,412 $48.00 $4.00 115-117, 118-119, 204-A, 204-B, 215A Feast at LeLe Feb-14 Dec-23 14,269 21.8% $343,932 $28,661 $24.10 $2.01 112,114,114O Pacific'o Feb-91 Jan-21 5,436 8.3% $271,652 $22,638 $49.97 $4.16 Dec-2017 Dec-2019 Dec-2021 Feb-2017 Feb-2018 Feb-2019 Feb-2020 Feb-2021 Feb-2022 Feb-2023 Feb-2017 Feb-2018 Feb-2019 Feb-2020 Rent Increases $145,500 $159,192 $166,044 $354,252 $364,872 $375,828 $387,096 $398,712 $410,676 $422,664 $277,080 $282,624 $288,276 $294,048 Annual Recovery Recovery Per Area Options $47,392 $16.61 2x5 yrs $78,339 $5.49 2x5 yrs $106,144 $19.53 1x5 yrs 107 Joelle C. Gallery Jul-99 May-18 921 1.4% $24,878 $2,073 $27.01 $2.25 Jan-2017 $25,620 $17,985 $19.53 None 103, 103-A, 105, 106 Gallerie 505 Jul-08 Jun-19 2,683 4.1% $35,736 $2,978 $13.32 $1.11 April-2017 April-2018 July-2018 $38,604 $42,900 $45,036 $52,387 $19.53 1x5 yrs 101-102 Vacant 1,819 2.8% $92,769 $7,731 $51.00 $4.25 $36,696 $20.17 None 132-134 Whalers General Store Nov-00 Oct-20 2,970 4.5% $142,560 $11,880 $48.00 $4.00 129-130 Spankys Nov-11 Oct-21 3,090 4.7% $58,044 $4,837 $18.78 $1.57 127-128, 135A-B, 136-138, 212,213-214, 215, 215B, 216, 216-A, 219- A, 219-B, 232, 233, 234 Wyndham Vacation Resorts Aug-13 Jul-20 15,434 23.6% $370,416 $30,868 $24.00 $2.00 Nov-2016 Nov-2017 Nov-2018 Nov-2019 Nov-2016 Nov-2017 Nov-2018 Nov-2019 Nov-2020 Aug-2017 Aug-2018 Aug-2019 $146,844 $151,116 $155,736 $160,380 $61,380 $64,716 $68,040 $71,364 $74,700 $388,932 $401,976 $425,976 $49,337 $16.61 1x5 yrs $51,329 $16.61 2x5 yrs $254,572 $16.49 1x5 yrs 125-126 Vacant 1,680 2.6% $85,680 $7,140 $51.00 $4.25 $33,891 $20.17 None Financial Overview 19
Rent Roll, continued Unit 123, 124, 224-B Tenant Goofy Foot Surf School Lease Start Lease End SF % of GLA Contract Rental Rate Rent PSF Year Month Year Month May-01 Apr-21 1,091 1.7% $22,212 $1,851 $20.36 $1.70 May-2017 May-2018 May-2019 May-2020 Rent Increases $22,887 $23,568 $24,283 $25,008 Annual Recovery Recovery Per Area Options $18,122 $16.61 None 142 Vacant 590 0.9% $30,090 $2,508 $51.00 $4.25 $10,131 $17.17 None 139-140 Maui Ocean Sports Jan-10 Dec-19 685 1.0% $14,385 $1,199 $21.00 $1.75 206 Erica Pilch Jan-16 Mar-19 1,161 1.8% $14,628 $1,219 $12.60 $1.05 203 Mina Massage Feb-15 Mar-15 591 0.9% $8,156 $680 $13.80 $1.15 202 201 Dr. Sunjata Bhatia, DDS Nancy Emerson School of Surfing Nov-11 Oct-21 1,044 1.6% $21,924 $1,827 $21.00 $1.75 Jan-05 Nov-19 475 0.7% $9,408 $784 $19.81 $1.65 Jan-2017 Jan-2018 Jan-2019 Jan-2017 Jan-2018 April-2017 April-2018 April-2019 April-2020 Nov-2016 Nov-2018 Nov-2019 Dec-2016 Dec-2017 Dec-2018 $14,796 $15,204 $15,612 $16,812 $17,652 $8,365 $8,652 $8,936 $9,149 $25,056 $28,188 $31,320 9,732 $10,068 $10,416 $11,380 $16.61 None $22,670 $19.53 None $9,818 $16.61 1x5 yrs $20,384 $19.52 2x5 yrs $7,891 $16.61 1x3 yrs 228 Maui Lashes Mar-14 Sep-17 384 0.6% $5,411 $451 $14.09 $1.17 March-2017 $5,568 $5,586 $14.55 None 230 Queen Lili'uokalani Children's Center - Queen Lili Jul-09 Sep-17 867 1.3% $10,716 $893 $12.36 $1.03 None $14,402 $16.61 None 227 Ryan Carney Sep-15 Oct-20 416 0.6% $4,992 $416 $12.00 $1.00 Nov-2016 Nov-2017 Nov-2018 Nov-2019 $5,148 $5,292 $5,436 $5,640 $6,912 $16.62 1x5 yrs 226 Vacant 351 0.5% $5,265 $439 $15.00 $1.25 None $7,081 $20.17 None 225-A Vacant 430 0.7% $6,450 $538 $15.00 $1.25 None $7,618 $17.72 None 225-B 224-A 224 DaKine Fine Art Gallery Republic Parking Northwest Inc. Maui Pineapple Tours, LLC Jun-16 Sep-17 542 0.8% $7,480 $623 $13.80 $1.15 None $8,804 $16.24 None Sep-15 Sep-17 257 0.4% $5,726 $477 $22.28 $1.86 None $4,269 $16.61 None Sep-15 Sep-17 213 0.3% $2,939 $245 $13.80 $1.15 None $4,160 $19.53 None 20 The Shops at 505
Rent Roll, continued Unit Tenant Lease Start Lease End SF % of GLA Contract Rental Rate Rent PSF Year Month Year Month Rent Increases Annual Recovery Recovery Per Area Options 224-C Vacant Jul-14 Sep-17 130 0.2% $2,730 $228 $21.00 $1.75 None $2,623 $20.18 None 221-222 220-B, 220-B-1 231 The Friends of Moku'ula Theatre Theatre Maui Soular Tattoo and Piercing Feb-99 Nov-17 1,320 2.0% $0 $0 $0.00 $0.00 None $302 $0.23 None Nov-07 Feb-18 459 0.7% $5,508 $459 $12.00 $1.00 None $105 $0.23 None Nov-10 Sep-22 1,397 2.1% $12,573 $1,048 $9.00 $0.75 Oct-2016 Oct-2017 Oct-2018 Oct-2019 Oct-2020 Oct-2021 $16,764 $17,280 $17,820 $18,600 $19,164 $19,740 $23,205 $16.61 1x5 yrs 223 Vacant 905 1.4% $13,575 $1,131 $15.00 $1.25 None $18,256 $20.17 None 235 Management Office 310 0.5% $3,840 $320 $12.39 $1.03 None None None 229 Lisa Newman Nov-15 Dec-18 424 0.6% $5,088 $424 $12.00 $1.00 220-A Coastline Limousine Nov-2016 Nov-2017 $5,340 $5,616 $7,046 $16.62 None Dec-11 Nov-17 236 0.4% $3,060 $255 $12.97 $1.08 Dec-2016 $3,204 $3,921 $16.61 None Occupied Totals - In Place 59,218 90.5% $1,538,367 $128,197 $25.98 $2.16 $924,502 $15.61 Vacant Totals 6,215 9.5% 240,399 20,033 $38.68 $3.22 18,256 $2.94 Totals 65,433 100.0% $1,778,766 $148,231 $27.18 $2.27 $942,758 $14.41 "1. We have assumed MTM tenants will renew through the first year of the analysis period. 2. We have assumed Queen Lili'uokalani Children's Center - Queen Lili will extend through the first year of the analysis period. The contractual lease expires 6/2017. 3. We have assumed DaKine Fine Art will extend through the first year of the analysis period. 4. We have assumed Theatre Theatre Maui extends through 2/2018. 5. We have assumed Maui Lashes will extend through the first year of the analysis period. The contractual lease expires 3/2017. 6. We have assumed Maiu Pineapple Tours will extend through the first year analysis period. 7. We have assumed Republic Parking Northwest will extend through the first year of the analysis period. The contractual lease expires 8/2017. 8. Percentage rents based on current and historical sales for the tenant. " ` Financial Overview 21
Lease Expiration Schedule Income & Expenses Year In Place Total $/SF Income Rental Income $1,564,235 $26.41 Percentage Rent $264,772 $4.47 Other Income $167,723 $2.83 Expense Reimbursements $826,462 $13.96 Effective Gross Income $2,823,192 $47.67 Expenses Real Estate Taxes $110,575 $1.87 Property Insurance $99,455 $1.68 CAM/R&M $684,401 $11.56 Management $56,464 $0.95 EGI (%) 2.00% Non-Reimbursable Expenses 6,543 $0.11 Operating Expenses $957,438 $16.17 Net Operating Income $1,865,754 $31.51 Year Ending Sq. Ft. Annual % of Total Aggregate % of Total 1 Aug-17 0 0.00% 0.00% 2 Aug-18 8,231 13.78% 13.78% 3 Aug-19 4,028 6.74% 20.52% 4 Aug-20 15,899 26.61% 47.13% 5 Aug-21 9,173 15.35% 62.48% 6 Aug-22 3,897 6.52% 69.00% 7 Aug-23 1,397 2.34% 71.34% 8 Aug-24 17,122 28.66% 100.00% 9 Aug-25 0 0.00% 100.00% 10 Aug-26 0 0.00% 100.00% 11 Aug-27 0 0.00% 100.00% Total 59,747 100.00% 10-Year Rollover 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1 2 3 4 5 6 7 8 9 10 11 22 The Shops at 505 *The property exhibits a strong lease expiration schedule that will help increase NOI as tenants roll to higher markets rents.
Assumptions Analysis Period Cash Flow Projection Begin Date September 1, 2016 Holding Period for Net Present Value 10 Years Area Measures Net Rentable Area in SF 65,433 General Projection Assumptions Cost of Living Growth per Annum 3.00% General Expense Growth per Annum 3.00% Real Estate Tax Growth per Annum 3.00% Market Rent Growth per Annum 3.00% Exit Cost of Sale 1.00% Leasing Assumptions - Shops and Restaurants Market Rent $14.00 - $42.00/SF/Yr Renewal Probability 75.00% Downtime 6 Months Tenant Improvement Allowance $10/SF Leasing Commissions 6.00% Free Rent None Escalations 3.00% Operating Expenses NNN Term 3-10 Years Financial Overview 23
Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending Aug-2017 Aug-2018 Aug-2019 Aug-2020 Aug-2021 Aug-2022 Aug-2023 Aug-2024 Aug-2025 Aug-2026 Aug-2027 Potential Gross Revenue Base Rental Revenue $1,760,851 $1,853,252 $1,933,607 $2,032,011 $2,271,673 $2,346,749 $2,426,544 $2,726,610 $2,970,269 $3,077,846 $3,165,016 Absorption & Turnover Vacancy -196,616-18,703-4,285-5,342-13,238-12,531-31,737-27,591-69,533-190,496-26,379 Base Rent Abatements 0-1,440-1,485-1,550-1,597 0 0 0 0 0 0 Scheduled Base Rental Revenue 1,564,235 1,833,109 1,927,837 2,025,119 2,256,838 2,334,218 2,394,807 2,699,019 2,900,736 2,887,350 3,138,637 Percentage Rent 264,772 271,194 277,863 284,910 293,599 302,682 311,998 151,514 64,708 63,424 66,649 Expense Reimbursement Revenue 826,462 988,774 1,040,290 1,077,034 1,104,472 1,133,309 1,166,042 1,210,336 1,224,652 1,239,336 1,382,841 Parking 140,000 147,000 154,350 162,068 170,171 178,679 187,613 196,994 206,844 217,186 228,045 Storage 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 Other Rental Income 19,270 19,848 20,444 21,057 21,689 22,339 23,009 23,700 24,411 25,143 25,897 Misc. Inc 5,453 5,617 5,785 5,959 6,137 6,322 6,511 6,707 6,908 7,115 7,328 Total Potential Gross Revenue 2,823,192 3,268,632 3,429,752 3,579,425 3,856,283 3,981,027 4,093,562 4,291,960 4,432,059 4,443,468 4,853,429 General Vacancy 0-80,095-99,510-102,887-98,799-103,254-88,107-97,261-122,169-2,976-113,190 Effective Gross Revenue 2,823,192 3,188,537 3,330,242 3,476,538 3,757,484 3,877,773 4,005,455 4,194,699 4,309,890 4,440,492 4,740,239 Operating Expenses HVAC 14,984 15,433 15,896 16,373 16,864 17,370 17,891 18,428 18,981 19,550 20,137 Elevator 6,695 6,896 7,103 7,316 7,536 7,762 7,995 8,234 8,481 8,736 8,998 Fire Life Safety 5,069 5,221 5,378 5,539 5,706 5,877 6,053 6,235 6,422 6,614 6,813 Insurance 99,455 102,439 105,512 108,677 111,938 115,296 118,755 122,317 125,987 129,766 133,659 Janitorial 172,892 178,079 183,421 188,924 194,592 200,429 206,442 212,635 219,014 225,585 232,352 Landscape 4,406 4,539 4,675 4,815 4,959 5,108 5,261 5,419 5,582 5,749 5,922 Management Fees 56,464 63,771 66,605 69,531 75,150 77,555 80,109 83,894 86,198 88,810 94,805 General and Administrative 6,708 6,909 7,116 7,329 7,549 7,776 8,009 8,249 8,497 8,752 9,014 Repairs and Maintenance 68,001 70,041 72,143 74,307 76,536 78,832 81,197 83,633 86,142 88,726 91,388 Security 106,488 109,683 112,973 116,362 119,853 123,449 127,152 130,967 134,896 138,943 143,111 Taxes 110,575 113,892 117,309 120,828 124,453 128,187 132,032 135,993 140,073 144,275 148,604 Utilities 299,158 308,133 317,377 326,898 336,705 346,806 357,210 367,926 378,964 390,333 402,043 Non-recoverable Expenses 6,543 6,740 6,942 7,150 7,365 7,585 7,813 8,047 8,289 8,538 8,794 Total Operating Expenses 957,438 991,776 1,022,450 1,054,049 1,089,206 1,122,032 1,155,919 1,191,977 1,227,526 1,264,377 1,305,640 Net Operating Income 1,865,754 2,196,761 2,307,792 2,422,489 2,668,278 2,755,741 2,849,536 3,002,722 3,082,364 3,176,115 3,434,599 24 The Shops at 505
Financial Overview 25
CONFIDENTIALITY & DISCLAIMER STATEMENT This Teaser contains select information pertaining to the business and affairs of Shops at 505 located at 505 Front Street, Lahaina, HI 96761 ( Property ). It has been prepared by Matthews Retail Advisors. This Teaser may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Teaser is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Seller or Matthews Retail Advisors. The material is based in part upon information supplied by the Seller and in part upon financial information obtained from sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of this Teaser or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence. By acknowledging your receipt of this Teaser for the Property, you agree: 1. The Teaser and its contents are confidential; 2. You will hold it and treat it in the strictest of confidence; and 3. You will not, directly or indirectly, disclose or permit anyone else to disclose this Teaser or its contents in any fashion or manner detrimental to the interest of the Seller. Owner and Matthews Retail Advisors expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Teaser or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered. If you wish not to pursue negotiations leading to the acquisition of the Property or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Teaser. A prospective purchaser s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Matthews Retail Advisors or any of their affiliates or any of their respective officers, Directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. 26 This Teaser shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Teaser. The Shops at 505
Confidentiality Agreement 27