INVESTMENT OVERVIEW Investment Highlights Priced Below Replacement Cost at $76.26 Per Square Foot 8.0% Capitalization Rate; Rental Increase in July 2013; 13% Cash on Cash Tenant has Occupied Building Since 1998; Can be Converted Back to Retail Tenant has Exercised Two Renewals; 200 Employees at Site 3% Annual Rental Increases Until End of Term; No Options Part of Pine Grove Square Shopping Center; Separately Deeded Retail Rents are at $12.00 to $17.00 Per Square Foot Below Market Rent at $5.67 Per Square Foot USIS is in endcap retail space that used to be an Ames Department Store, and is a part of Pine Grove Square, a 144,126 square foot grocery anchored shopping center, with Country Market, Rite Aid Pharmacy and Dollar Tree as the anchor tenants. Small shop space in the center rents for $12 to $16 per square foot, and mid-size space ranges from $9 to $12 per square foot. Country Market, the grocery anchor, reportedly does in excess of $625 per square foot in sales. First National Bank, which is on a pad directly in front of USIS, has over $60,000,000 in deposits, which is phenomenal given the population and average income. There is no vacancy in the center. Seller believes USIS will negotiate a renewal based on their large presence in the Grove City area with this site and two other facilities. However, an alternative exit strategy would be to convert the space back to retail and lease it at retail market rates, which are more than double the rent currently being paid. Retailers in the area have expressed interest in the building as it is a part of Pine Grove Square and could be end cap space with a drive through among other retail uses. NOTE: THIS OFFERING DOES NOT INCLUDE PINE GROVE SQUARE. PRIOR TO CLOSING, OWNER WILL PROVIDE SATISFACTORY EVIDENCE OF A SUBDIVISION OR OTHER FORM OF LEGAL SEPARATION OF THE USIS BUILDING, ANY LAND THAT RUNS WITH IT, AND RECIPROCAL EASEMENTS OR AGREEMENTS, IF ANY. 1
TENANT & LEASE OVERVIEW Property Name USIS AT PINE GROVE SQUARE Property Address 201 Pine Grove Square Grove City, PA 16127 Property Type Net Leased Miscellaneous Rentable Square Feet 49,110 Tenant Trade Name Ownership Tenant Lease Guarantor Credit Rating Rating Agency Stock Symbol U.S. Investigation Services, Inc. Private Corporate Store Corporate Guarantee Not Rated; Privately Held N / A N / A Lease Commencement Date 10/22/2003 Rent Commencement Date 10/22/2003 Lease Expiration Date 06/30/2017 Term Remaining on Lease In Five Year Option Lease Type Double Net Roof and Structure Landlord Responsible Lease Term 14 Years Increases Annual Options to Renew Options to Terminate Options to Purchase First Right of Refusal No. of Locations Headquartered Web Site N / A Falls Church, Virginia www.usis.com USIS provides services under more than 100 contracts. It is the largest commercial provider of background investigations to the federal government. It has more than 6,000 employees providing services in all 50 states and U.S. territories and overseas. USIS offers a variety of adjudication support, including background checks, litigation support, records support, investigative analytics and biometric services, as well as customized solutions that help government clients manage records, information and documents. Learn more at www.usis.com. 2
TENANT PROFILE - CORPORATE OVERVIEW Altegrity, Inc., is the parent and holding company of USIS, the largest commercial provider of background investigations for the federal government; Kroll Advisory Solutions, the global leader in risk mitigation and response; HireRight, a global commercial employment background and drug screening supplier to more than one-third of the Fortune 500; and Kroll Ontrack, a global provider of ediscovery, data recovery and data backup technology and services. Headquartered in Falls Church, Virginia, Altegrity has approximately 10,500 employees in 30 countries. USIS was established in July 1996 as a result of the privatization of the investigative branch of the Office of Personnel Management (OPM), a federal agency. In conjunction with the privatization, USIS was awarded a five-year contract with OPM to provide security clearance background investigations to more than 95 federal agencies. USIS has 100 federal contracts today. Headquartered in Falls Church, Va., the company has more than 6,000 employees who support business operations in all 50 states, U.S. territories, and overseas. The company's original name, when privatized, was US Investigations Services, Inc. The name was selected to reflect the nature of the company's work at that time-essentially a company that provided security clearance background investigations work under a contract with OPM. The company was rebranded in 2006 and the name shortened to USIS. The decision to re-brand was based on the much wider scope of securityrelated screening and background solutions provided by the company to government and commercial clients. USIS provides a wide range of security solutions to its many government and commercial customers. The company is committed to being the leading provider of screening and security-based information and service solutions to its customers in the government, law enforcement and first responder, commercial, and litigation support markets. The company is committed to understanding the needs of its customers and providing higher quality, better value solutions faster than its competitors. USIS uses a combination of proprietary IT technology, extensive secure databases, and its highly committed workforce to set it apart from the competition. USIS specializes in providing information and security services to government agencies and commercial enterprises. Headquartered in Falls Church, Virginia, USIS delivers background screening and risk management solutions that not only protect national security, but also support and help empower decision-makers the world over. Since 1996, USIS has been the leading provider of background investigations to the federal government. Along with its focus on protecting national security, USIS is also a preeminent source of comprehensive litigation support services in the legal services market. Company Highlights Has nearly 2,300 credentialed field investigators-the largest team in North America-and more than 2,000 additional highly trained professionals cleared for work on classified projects and programs. Performed nearly 2 million investigations for government agencies in 2011 Uses secure, proprietary IT systems to conduct its investigation processes ensuring information security and real-time tracking of performance. Provides compliance and investigation services that combat fraud, waste and abuse in the health care industry Provides customized records, information, and document management solutions for the federal government, including the U.S. Securities and Exchange Commission, Department of Justice, Department of Homeland Security, Federal Deposit Insurance Corporation, and more. Provides litigation support that includes drafting motions and briefs, conducting legal research, supporting discovery, and assisting in trial or negotiation preparations. 3
TENANT PROFILE - IN THE NEWS USIS Awarded U.S. Citizenship and Immigration Services Contract by Department of Homeland Security FALLS CHURCH, Va., - US Investigations Services Professional Services Division, Inc. (USIS PSD), a subsidiary of US Investigations Services, LLC (USIS), the largest commercial provider of background investigations to the federal government, has been awarded a prime contract by the Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS), to provide biometric capture services in support of applications for a variety of immigration benefits and U.S. citizenship. The indefinite-delivery/indefinite-quantity contract is for one base year with four one-year options and has a potential value of $889 million over a five-year period. Under the terms of this contract, USIS PSD will perform biometric capture services at more than 130 Application Support Centers located across all 50 U.S. states and in U.S. territories. The USIS team is proud of our proven experience in supporting a variety of federal agencies in their adjudication of applications and claims and our continuing vital role in homeland security, said Michael Roberts, company representative, USIS PSD. Our reputation as a leading provider of background investigations and other services that support federal agencies as they adjudicate claims and applications was key to our success in winning this contract, said Mr. Roberts. We are firmly committed to providing USCIS with biometric capture services that support and enhance their operations and the national security of the United States. 4
FINANCIAL OVERVIEW Location 201 Pine Grove Square Grove City, PA 16127 Price $3,745,000 Down Payment 25% / $936,250 Rentable Square Feet 49,110 Price/SF $76.26 CAP Rate 7.98% Year Built /Renovated 1988/2003 Lot Size Type of Ownership 5.44 Acres Fee Simple Annualized Operating Data Rent Increases Annual Rent July 2014 $307,836.00 July 2015 $317,071.00 July 2016 $326,583.00 Base Rent ($6.09/SF) $298,870 Net Operating Income $298,870 Debt Service $168,735 Debt Coverage Ratio 1.77 Net Cash Flow After Debt Service 13.90% / $130,135 Principal Reduction $71,570 Total Return 21.54% / $201,705 Tenant Summary Tenant Trade Name Ownership U.S. Investigation Services, Inc. Private Not inlcuded in the calculation of GLA is a mezzanine area of 7,482 SF Tenant Corporate Store Lease Guarantor Corporate Guarantee Lease Type Double Net Roof and Structure Landlord Responsible Lease Term 14 Years Lease Commencement 10/22/2003 Rent Commencement 10/22/2003 Lease Expiration Date 06/30/2017 Term Remaining on In Five Year Option Increases Annual Options FIRST Financing TRUST DEED Loan Amount $2,808,750 Loan Type Proposed New Interest Rate 3.5% Amortization Program 25 Years Bank Loan to Value 75% The Interest Rate is based upon 250 bps over the five year swap rate of 0.98% (as of March 21, 2013). Loan information is time sensitive and subject to change. For more information, contact: Loan information is John Banas of Marcus & Millichap Capital Corporation {Tel No.: 215-531-7091; jbanas@marcusmillichap.com] time sensitive and subject to change. 5
PROPERTY DESCRIPTION LOCATION OVERVIEW Grove City, a borough in Mercer County, Pennsylvania, is approximately 50 miles north of Pittsburgh, and is part of the Youngstown Warren Boardman, OH-PA Metropolitan Statistical Area. It is the home of Grove City College, a private conservative Christian liberal arts college; General Electric; Instron; USIS; George G. Howe Co.; and a number of small businesses. Historically a traditional industrial center, Grove City has manufactured locomotive engines, carriages, gas engines, foundry products, and motor trucks. Over the years, Grove City has maintained a small town atmosphere appealing to family life. Recreational facilities and medical facilities are readily available. Grove City has recently completed a revitalization of the downtown district designed to foster economic development. This involved a lengthy beautification initiative targeting the business district, which included the installation of two large community-based murals. The downtown area is composed mainly of small businesses, specialty shops, banking institutions and other service providers. The Wendell August Forge was added to the National Register of Historic Places in 1996, but destroyed by fire in 2010. Grove City is also home to the Grove City Premium Outlets, one of the top outlet malls of the United States. It is famous for attracting customers from outside the state and from Canada primarily due to the lack of sales tax on clothing in Pennsylvania. The USIS space is the former Ames Department store, which was the anchor store at Pine Grove Square. Retail tenants at Pine Grove include Country Market, Rite Aid Pharmacy, Dollar Tree, and Sears. Adjacent to the property is a Walmart store. National and credit tenants in the immediate trade area include BI-LO, AutoZone, Dairy Queen, Aldi and Dollar General. The site is in close proximity to Grove City Medical Center as well as the local high school and college. 7