Walgreens - Santa Maria, CA

Walgreens - Santa Maria, CA 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. NON-ENDORSEMENT NOTICE Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. 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 RECENT SALES Section 4 MARKET OVERVIEW Section 5 DEMOGRAPHIC ANALYSIS

PRICING AND FINANCIAL ANALYSIS Walgreens - Santa Maria, CA

PRICING AND FINANCIAL ANALYSIS FINANCIAL OVERVIEW Location 707 North Broadway Santa Maria, CA 93454 Price $6,307,000 Down Payment 100% / $6,307,000 Rentable Square Feet 14,490 CAP Rate 5.85% Year Built 2001 Lot Size Type of Ownership 1.34 Acres Fee Simple Annualized Operating Data Rent Increases Annual Rent Monthly Rent Years 1-20 $369,000.00 $30,750.00 Base Rent ($25.47/SF) $369,000 Net Operating Income $369,000 Total Return 5.85% / $369,000 Santa Maria, CA Tenant Summary Tenant Trade Name Ownership Tenant Lease Guarantor Lease Type Roof and Structure Lease Term Walgreens Public Corporate Store Corporate Guarantee Double Net Landlord Responsible 20 Years Lease Commencement Date 08/01/2001 Rent Commencement Date 04/05/2002 Lease Expiration Date 07/31/2061 Term Remaining on Lease Increases Options 6 Years Percentage Rents 8x5 1

PRICING AND FINANCIAL ANALYSIS TENANT OVERVIEW Property Name Walgreens - Santa Maria, CA Property Address 707 North Broadway Santa Maria, CA 93454 Property Type Net Leased Drug Store Rentable Square Feet 14,490 Tenant Trade Name Walgreens Ownership Public Tenant Corporate Store Lease Guarantor Corporate Guarantee Stock Symbol Formerly WAG / WBA NASDAQ Board Formerly NYSE / 2015 NASDAQ Lease Commencement Date 08/01/2001 Rent Commencement Date 04/05/2002 Lease Expiration Date 07/31/2061 Term Remaining on Lease 6 Years Lease Type Double Net Roof and Structure Landlord Responsible Lease Term 20 Years Increases Percentage Rents Options to Renew 8x5 First Right of Refusal Walgreens Corp Headquartered 10 Day ROFR Deerfield, IL Web Site www.walgreens.com 2

PRICING AND FINANCIAL ANALYSIS TENANT OVERVIEW Walgreen's is the nation's #1 drugstore chain operates some 8,300 mostly freestanding Walgreens stores in all 50 US states, the District of Columbia, the Virgin Islands, and Puerto Rico. Prescription drugs account for about two-thirds of sales; the rest comes from general merchandise, over-the-counter medications, cosmetics, and groceries. Most Walgreens stores offer drive-through pharmacies and one-hour photo processing. After years of at-home acquisitions and nibbles in Europe, in 2014 the company fully acquired the Swiss-based Alliance Boots to form Walgreens Boots Alliance, of which it is a subsidiary. Change in Company Type: On the last day of 2014, Walgreen took full ownership of European drugstore chain Alliance Boots for more than $15 billion in cash and stock. The deal created a network of nearly 13,000 stores across two dozen countries, with Walgreen Co. becoming a subsidiary of newly formed Walgreens Boots Alliance. Operations: Walgreen's drugstores specialize in the retail sale of prescription and non-prescription drugs and general merchandise. General merchandise includes convenience and fresh foods, household items, personal care, beauty care, photofinishing and candy. Prescription drugs represent nearly 65% of total sales, general merchandise represented more than 25% of total sales, and non-prescription drugs represented another 10% of total sales. Walgreen's online outlets include: Walgreens.com, Beauty.com, drugstore.com, SkinStore.com, and VisionDirect.com. The company also operates more than 400 Healthcare Clinic and provider practice retail offices around the country. Geographic Reach: Walgreens operates 8,300 locations across the US, the District of Columbia, the US Virgin Islands, and Puerto Rico. Financial Performance: Fiscal 2014 (ends August) was a milestone year for Walgreen, which posted record-setting revenues of nearly $76.4 billion. The historic growth for 2014 was due to new store sales and an increase in comparable drugstore sales over the prior year. Mergers and Acquisitions: In late 2013, looking to strengthen its presence in the fast-growing North Carolina market, Walgreen acquired regional chain drug operator Kerr Drug. The transaction, which included Kerr Drug's 76 retail drugstores, its specialty pharmacy business, and a distribution center, excluded Kerr Drug's long-term care pharmacy business. In its biggest acquisition ever, the pharmacy chain in 2012 bought a 45% stake in Swiss-based drugstore-chain company Alliane Boots for $6.7 billion. Alliance Boots has more than 3,330 health and beauty retail stores in 11 countries; its pharmaceutical wholesale businesses cater to pharmacies, doctors, and hospitals from some 370 distribution centers in 21 countries. In 2014 Walgreen bought the remaining 55% stake. Closer to home, Walgreen in September 2012 acquired $825-million-in-sales Stephen L LaFrance Holdings, a regional drugstore operator with 144 stores under the USA Drug, Super D Drug, May's Drug, and Drug Warehouse banners, among others, in the about a half a dozen states mostly in the mid-south. 3

PROPERTY DESCRIPTION Walgreens - Santa Maria, CA

PROPERTY DESCRIPTION INVESTMENT OVERVIEW Investment Highlights Strong In-Fill Suburban Location With Strong Traffic Counts: Over 26,000 Vehicles Pass in front of the Site Daily Population Density Exceeds 120,252 Within a Five-Mile Radius From Site Limited Landlord Obligations Isolated to Roof and Structure Repair and Replacement Strong and Increasing Store Sale - Better Than National Average Appealing Option Periods (a Rarity in Today's Lease Structure) - Eight Five-Year Options Six Years Remaining on Original Twenty Year Lease Located in the midst of picturesque Santa Barbara County, the site is located at the southwest signalized intersection of Alvin and Broadway, in Santa Barbara County is the sleepy bed room community of Santa Maria. It is approximately 120 miles northwest of Los Angeles. The city of Santa Maria is known for its wine industry and Santa Maria-style BBQ. Sunset Magazine called Santa Maria "The West's Best BBQ Town". Agriculture plays an important role in the city's economy. It is home to an increasing number of vineyards, wineries and wine makers and is centrally located to both Santa Ynez and Foxen Canyon (Santa Barbara's wine country). Other crops surrounding Santa Maria are strawberries, wine grapes, celery, lettuce, peas, squash, cauliflower, spinach, and beans. The oil industry also has a presence in the region: the Orcutt oil Field was discovered in 1902 and by 1957 there were 1,775 oil wells in operation in the Santa Maria Valley, producing more than $640(m) worth of oil. Other national retailers in the immediate area include: McDonalds, Wells Fargo, Pizza Hut, Vons, Sears, Bath & Body Works, Edwards Theatre, Big 5 Sporting Goods, Fallas Discounter, Macy's. Broadway Discount Center, Subway, 7- Eleven, 99-Cents Only Store, a Chevron Station, and a Dollar Tree. A Best Western Motel flanks the neighborhood. The area is predominantly residential with regional and national retail peppering the surrounding areas. The region continues to grow, having expanded in population by 29 percent since 2000, which is no more evident than at the El Camino Junior High School, and Alvin Elementary School which continues to grow in student body population. 6

PROPERTY DESCRIPTION PROPERTY SUMMARY The Offering Property Property Address Walgreens - Santa Maria, CA 707 North Broadway Santa Maria, CA 93454 Site Description Year Built 2001 Rentable Square Feet 14,490 Lot Size 1.34 Acres Type of Ownership Fee Simple Store hours from 7AM to Midnight Drive Thru 7

PROPERTY DESCRIPTION AREA MAPS Local Map Regional Map 8

Broadway Discount Ctr Alvin Elem School El Camino Junior High School

RECENT SALES Walgreens - Santa Maria, CA

RECENT SALES RECENT SALES MAP 1) 2) 3) 4) Walgreens - Santa Maria, CA Walgreens - Henderson NV Walgreens - Chicago, IL Walgreens - Knoxville, TN Walgreens - Odessa, TX 11

RECENT SALES CAP RATE AND PRICE PER SQUARE FOOT Average Cap Rate 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Subject Walgreens - Henderson NV Walgreens - Chicago, IL Walgreens - Knoxville, TN Walgreens - Odessa, TX Average Price per Square Foot 700.00 600.00 500.00 400.00 300.00 200.00 100.00 0.00 Walgreens - Henderson NV Walgreens - Chicago, IL Walgreens - Knoxville, TN Walgreens - Odessa, TX 12

RECENT SALES RECENT SALES Walgreens - Santa Maria, CA 707 North Broadway Santa Maria, CA 93454 Rentable Square Feet: 14,490 Sales Price: $6,307,000 Year Built: 2001 Down Payment: $6,307,000 CAP Rate: 5.85% Subject Property 1 Walgreens - Henderson NV 1360 West Horizon Ridge Parkway Henderson, NV 89012 Close of Escrow: 02/11/2015 Sales Price: $7,823,000 Rentable SF: 15,120 Down Payment: 100% Year Built: 2001 CAP Rate: 5.76% Price/SF: $517.39 Comments 20 year NN Lease with eight five-year options and seven-years remaining on day of closing. 2 Walgreens - Chicago, IL 4385 South Archer Avenue Chicago, IL 60632 Close of Escrow: On Market Sales Price: $6,923,362 Rentable SF: 15,120 Down Payment: 100% Year Built: 2001 CAP Rate: 5.65% Price/SF: $457.89 13

RECENT SALES RECENT SALES 3 Walgreens - Knoxville, TN 5320 Clinton Highway Knoxville, TN 37912 Close of Escrow: On Market Sales Price: $9,043,000 Rentable SF: 14,112 Down Payment: 100% Year Built: 2000 CAP Rate: 5.85% Price/SF: $640.80 4 Walgreens - Odessa, TX 1305 West University Boulevard Odessa, TX 79764 Close of Escrow: On Market Sales Price: $5,811,965 Rentable SF: 15,120 Down Payment: 100% Year Built: 2001 CAP Rate: 5.85% Price/SF: $384.39 14

MARKET OVERVIEW Walgreens - Santa Maria, CA

SANTA BARBARA COUNTY MARKET OVERVIEW (Santa Barbara County) The largest city in Santa Barbara County is Santa Maria. The local economy is driven mostly by engineering, petroleum extraction, diatomaceous earth mining, wine making, agriculture and education. Nestled at the foot of the Santa Ynez Mountains and abutting the central coast of the Pacific, this picturesque and majestic landscape is both rich in vistas but also a destination for travelers far and wide. Santa Maria is located approximately 120 miles northwest of Los Angeles city limits. Sunset Magazine called Santa Maria 'The West's Best BBQ Town". Home to the Chumash people for several thousand years the Native Americans made their homes on the slopes of the surrounding hills among the oaks on the banks of the Santa Maria River. Other than oil mining, agriculture plays an important role in the city's economy. The area is home to several vineyards, wineries and wine makers and is part of the famous Santa Barbara wine country. The region is also home to the harvesting of strawberries, cauliflower, spinach,broccoli and beans. The largest employers in Santa Maria are: Vandenberg Air Force Base, Santa Maria School District, Marian Regional Medical Center and Allan Hancock College. 16

DEMOGRAPHIC ANALYSIS Walgreens - Santa Maria, CA

DEMOGRAPHIC ANALYSIS SUMMARY REPORT Geography: 5 miles Population In 2014, the population in your selected geography is 110,104. The population has changed by 29.56% since 2000. It is estimated that the population in your area will be 117,165 five years from now, which represents a change of 6.41% from the current year. The current population is 50.48% male and 49.51% female. The median age of the population in your area is 28.9, compare this to the Entire US average which is 37.3. The population density in your area is 1,401.40 people per square mile. Households There are currently 30,656 households in your selected geography. The number of households has changed by 23.31% since 2000. It is estimated that the number of households in your area will be 32,758 five years from now, which represents a change of 6.85% from the current year. The average household size in your area is 3.46 persons. Income In 2014, the median household income for your selected geography is $49,960, compare this to the Entire US average which is currently $51,972. The median household income for your area has changed by 33.49% since 2000. It is estimated that the median household income in your area will be $58,261 five years from now, which represents a change of 16.61% from the current year. The current year per capita income in your area is $18,475, compare this to the Entire US average, which is $28,599. The current year average household income in your area is $65,806, compare this to the Entire US average which is $74,533. Race & Ethnicity The current year racial makeup of your selected area is as follows: 56.09% White, 1.61% Black, 0.16% Native American and 5.44% Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 69.62% of the current year population in your selected area. Compare this to the Entire US average of 17.13%. Housing In 2000, there were 14,549 owner occupied housing units in your area and there were 10,310 renter occupied housing units in your area. The median rent at the time was $620. Employment In 2014, there are 34,121 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 42.49% of employees are employed in white-collar occupations in this geography, and 57.42% are employed in blue-collar occupations. In 2014, unemployment in this area is 8.79%. In 2000, the average time traveled to work was 23.5 minutes. Demographic data 2012 by Experian. 18

DEMOGRAPHIC ANALYSIS DEMOGRAPHIC REPORT 1 Mile 3 Miles 5 Miles 2000 Population 31,887 73,217 84,982 2010 Population 35,180 91,990 107,290 2014 Population 36,165 94,450 110,105 2019 Population 36,846 100,089 117,166 2000 Households 8,266 20,605 24,860 2010 Households 8,617 24,160 29,647 2014 Households 8,913 24,996 30,657 2019 Households 9,124 26,581 32,759 2014 Average Household Size 3.86 3.63 3.47 2014 Daytime Population 6,816 25,018 34,121 2000 Owner Occupied Housing Units 44.56% 51.82% 56.77% 2000 Renter Occupied Housing Units 52.47% 45.05% 40.23% 2000 Vacant 2.97% 3.13% 3.00% 2014 Owner Occupied Housing Units 37.82% 47.59% 52.41% 2014 Renter Occupied Housing Units 62.18% 52.41% 47.59% 2014 Vacant 2.35% 1.84% 1.97% 2019 Owner Occupied Housing Units 37.11% 47.71% 52.42% 2019 Renter Occupied Housing Units 62.89% 52.29% 47.58% 2019 Vacant 2.37% 1.73% 1.88% $ 0 - $14,999 15.5% 12.5% 11.4% $ 15,000 - $24,999 15.7% 12.8% 11.6% $ 25,000 - $34,999 13.6% 12.5% 11.9% $ 35,000 - $49,999 15.1% 15.4% 15.1% $ 50,000 - $74,999 19.3% 20.6% 20.4% $ 75,000 - $99,999 10.2% 12.1% 12.7% $100,000 - $124,999 4.9% 6.3% 7.5% $125,000 - $149,999 2.5% 3.1% 3.8% $150,000 - $199,999 2.3% 2.6% 3.2% $200,000 - $249,999 0.4% 0.8% 0.8% $250,000 + 0.6% 1.4% 1.5% 2014 Median Household Income $39,858 $46,806 $49,961 2014 Per Capita Income $13,166 $16,512 $18,475 2014 Average Household Income $52,697 $61,769 $65,806 Demographic data 2012 by Experian. 19

DEMOGRAPHIC ANALYSIS POPULATION DENSITY Demographic data 2012 by Experian. Number of people living in a given area per square mile. 20

DEMOGRAPHIC ANALYSIS EMPLOYMENT DENSITY Demographic data 2012 by Experian. The number of people employed in a given area per square mile. 21

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. 22

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