Kroger EXCLUSIVE (Ground LISTING Lease) Christiansburg, VA Kroger (Ground Lease) Christiansburg, VA Click for Drone Video JONATHAN W HIPP PRESIDENT & CEO (703) 787-4725 jhipp@calkain.com ANDREW FALLON EXECUTIVE MANAGING DIRECTOR (703) 787-4733 afallon@calkain.com CALKAIN.COM 1
Financial Summary 435 N Franklin St Christiansburg, VA 24073 Asking Price $2,300,000 Cap Rate 5.00% Net Operating Income (NOI) $114,999.96 Rent/Month $9,583.33 Land Area 0.29+/- Acres Tenant Name Kroger Crediting Rating S&P : BBB Stock Symbol NYSE: KR Website www.kroger.com Ownership Type Ground Lease Lease Type NNN Landlord Responsibilities None Store Expansion 2016 Lease Term 18.5 Years Rent Commencement November 1, 2015 Rent Schedule Term Increases Annual Rent Monthly Rent Years 1-20 - $114,999.96 $9,583.33 Years 21-25 (Option 1) 10% $126,500.04 $10,541.67 Years 26-30 (Option 2) 10% $139,150.08 $11,595.84 Years 31-35 (Option 3) 10% $153,065.04 $12,755.42 Years 36-40 (Option 4) 10% $168,371.52 $14,030.96 Years 41-45 (Option 5) 10% $185,208.72 $15,434.06 Years 46-50 (Option 6) 10% $203,729.52 $16,977.46 Years 51-55 (Option 7) 10% $224,102.52 $18,675.21 Years 56-60 (Option 8) 10% $246,512.76 $20,542.73 Investment Highlights Long term 20 year ground lease with eight (8), five (5) year option periods 10% rental increases every 5 years throughout option periods Absolute NNN lease no landlord responsibilities Mission critical - Kroger needed ground lease to expand & remodel store after operating for 17 years Population of over 113K within 10 mile radius Over 27,000 VPD pass the site Subject Site Lease Expiration October 31, 2035 Increases Options 10% Every 5 Years in Option Periods Eight (8), Five (5) Year Click for Drone Video 2
Unique Kroger Ground Lease Investment Rare price point and mission critical component of a large store... Attractive Price Point - $2.3M A rare opportunity to acquire and invest in a Kroger grocery store at a price point below replacement cost. Absolute NNN Lease (Ground Lease) A key characteristic to this investment is NNN lease, whereby Kroger owns and is responsible for the building and all maintenance, operating expenses, real estate taxes and insurance. This is truly a passive investment property. Key Component of Store Expansion/Remodel The Christiansburg Kroger is a well-performing store with high sales volume. Accordingly, they needed to expand and remodel the store. In order to do so, they had to ground lease the adjacent shop space (the Subject Property) so that it could be incorporated into the grocery store footprint. Kroger owns the balance of the property and just went through a major renovation and Grand Re-Opening. Blacksburg/Christiansburg MSA The trade area has a population in excess of 113,000 and the MSA is dominated by the presence of Virginia Tech and Radford University. The region has experience tremendous growth over the past 20 years, and continues to be one of the fastest growing areas in Virginia. Virginia Tech is the 3rd largest university in VA, enrolling more than 30,000 students while Radford enrolls another 10,000 students. At the Kroger site, population counts within a 5-mile radius are 33,500 and traffic counts exceed 27,000 VPD. 20 Yr Ground Lease & Long Operating History In 2015, Kroger executed the new 20-year ground lease, which runs through October 31, 2035 and can be extended for eight more 5-year option terms. The rent would increase by 10% in each option. Kroger originally built this store is 2000, and has been operating this location for more than 17 years. Investment Grade Credit Kroger is considered an investment grade tenant based on a BBB rating by S&P. With 2,796 locations, Kroger reported $115.3 Billion in sales for 2016. They are publicly traded on the New York Stock Exchange, NYSE: KR. 3
Tenant Overview About Kroger The Kroger Co. (NYSE:KR) is one of the world s largest grocery retailers, with fiscal 2016 sales of $115.3 billion. The Kroger Co. Family of Stores spans many states with store formats that include grocery and multidepartment stores, discount, convenience stores and jewelry stores. They operate under nearly two dozen banners, all of which share the same belief in building strong local ties and brand loyalty with our customers. Operations Food stores are their primary business and account for approximately 94% of total company sales. The convenience and jewelry stores and manufacturing facilities contribute the remainder of total sales. The information below is current as of March 2, 2017. Kroger operates 2,796 grocery retail stores in 35 states under nearly two dozen banners. Their formats include supermarkets, price-impact warehouse stores, and multi-department stores, which are similar to supercenters, but offer an expanded variety of national brand appeal and general merchandise. Kroger also operates 784 convenience stores under six banners in 19 states. C-stores provide valuable synergies for the rapid expansion of their supermarket fuel centers. 319 fine jewelry stores under names like Fred Meyer Jewelers and Littman Jewelers. This is a high-margin business with good cash flow. Kroger is the only major U.S. supermarket company to operate an economical three-tier distribution system. Kroger also operates 38 food production or manufacturing facilities producing high quality private-label products that provide value for customers and enhanced margins for Kroger. Kroger operates 1,445 supermarket fuel centers, which are a natural addition to their one-stop-shopping strategy. Kroger s 2,255 pharmacies, located in their combination food and drug stores, provide high quality services at everyday low prices. Tenant Snapshot # of Grocery Stores 2,796+ Stock Symbol NYSE: KR 2016 Sales $115.3 BILLION 4
Distance To: Blacksburg, VA Roanoke, VA Raleigh, NC Richmond, VA Washington, DC 6.6 miles 36 miles 182 miles 211 miles 263 miles Kroger (Ground Lease) Christiansburg, VA Location Overview Washington, DC 81 Blacksburg, VA Roanoke, VA Christiansburg, VA Richmond, VA Subject Site Norfolk, VA Raleigh, NC 5
435 N Franklin St Christiansburg, VA Kroger (Ground Lease) Christiansburg, VA Christiansburg High School Franklin St 27,000 VPD Subject Site Christiansburg Elementary School Christiansburg Primary School Depot St NW Town Hall of Christiansburg Christiansburg Library 6
435 N Franklin St Christiansburg, VA Kroger (Ground Lease) Christiansburg, VA Revelation Reptiles Gas Station Subject Site Wades Ln Gates Flowers & Gifts Franklin St 27,000 VPD 7
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Location Overview Blacksburg, VA 6.6 miles apart Subject Site Radford, VA 8.5 miles apart Christiansburg, VA 81 11
Demographics Radius 3 Miles 5 Miles 10 Miles Population 2016 Population 22,196 33,522 113,885 2021 Population 22,854 34,513 117,834 2010-2016 Annual Rate 0.59% 0.63% 0.77% 2016-2021 Annual Rate 0.59% 0.58% 0.68% 2016 Male Population 47.9% 48.3% 51.1% 2016 Female Population 52.1% 51.7% 48.9% 2016 Median Age 37.2 37.5 26.2 Households 2016 Total Households 9,367 14,128 42,995 2021 Total Households 9,658 14,558 44,650 2010-2016 Annual Rate 0.61% 0.63% 0.73% 2016-2021 Annual Rate 0.61% 0.60% 0.76% 2016 Average Household Size 2.34 2.33 2.35 Median Household Income 2016 Median Household Income $51,086 $49,263 $42,531 2021 Median Household Income $47,493 $45,156 $40,071 Average Household Income 2016 Average Household Income $62,176 $61,371 $61,371 2021 Average Household Income $65,315 $64,287 $61,371 2016-2021 Annual Rate 0.99% 0.93% 0.75% Per Capita Income 2016 Per Capita Income $26,644 $26,481 $22,874 2021 Per Capita Income $27,994 $27,718 $23,797 2016-2021 Annual Rate 0.99% 0.92% 0.79% 12
Christiansburg, VA Christiansburg - Blacksburg - Radford Metro area. This tri-city area, really a cluster of several small towns, is best known as home of the 25,000-student, 2600-acre campus of the Virginia Polytechnic Institute (better known as Virginia Tech). Christiansburg is the fourth largest town in Virginia with a community steeped in history. Surrounded by Virginia Tech, Radford University, two major hospitals and the I-81 corridor, Christiansburg has a unique ability to serve diverse collegiate, commercial and professional industries, while still maintaining the vibe of a small town. Christiansburg is the county seat of Montgomery County in Virginia. This tricity area, really a cluster of several small towns, is best known as home of the 25,000-student, 2600-acre campus of the Virginia Polytechnic Institute (better known as Virginia Tech). Blacksburg, population 40,000, is the largest of the small triangle of towns including Christiansburg, Radford, Merrimac and Fairlawn. The area and Blacksburg in particular combines small-town feel and college-town amenities with a mountain setting, outdoor recreation, and proximity to Roanoke and its excellent arts, commerce, and health care amenities. With a growing festival scene, a new farmers market and a renewed commitment to revitalization, we re all about bringing people together. Virginia Tech is especially known for its sports programs, bringing much excitement especially in fall and winter. Virginia Tech is not the only game in town, however the state-supported, 10,000-student Radford University brings a college presence to Radford as well. While some big-city services and amenities are missing, the blend of available features and cost of living are attractive. Some might not like the isolation, particularly from air services, characteristic of many western Virginia locations. Some in Blacksburg may find the Virginia Tech presence a bit overwhelming at times. Kroger (Ground Lease) Christiansburg, VA Market Overview 13
About Calkain Who Are We? We are a national commercial real estate firm that provides consulting and brokerage services to both private and institutional clientele with an expertise on triple net lease investments. We pride ourselves on being a world class leader by providing our clients a full array of commercial real estate investment brokerage and asset management solutions, including advisory, research, estate planning and wealth management. We have built solid relationships throughout our decades of experience and innovation, implementing long-term allocation within the context of each client s particular risk tolerance and identifying how best to acquire and dispose of income producing properties for each entities specific set of investment criterion. At Calkain, our foresight and past performance are leading the net lease investment industry. Our History Like most success stories, Calkain was formulated from humble beginnings. Jonathan W. Hipp, President and CEO, took the initiative to build upon his decades of experience and performance and left a large international brokerage firm to become an independent and innovative leader within the triple net lease investment community. Armed with a sole employee and a single office, the firm has grown exponentially since its infancy in 2005. $11.5 Billion in Closed Transactions With the growth in staff, seasoned professionals have been attracted to Calkain s model of innovation, entrepreneurship and the fostering of long-lasting and meaningful relationships. Industry experts have joined Calkain in the hopes of implementing the skills they have honed in complementary aspects of real estate investment. Through a tremendous endeavor, tireless hours have been committed to continually prove that Calkain is America s Net Lease Company. Its countless accolades received from the world s leading business publications, including Forbes, Fortune and the New York Times have confirmed that Calkain is a true leader in triple net lease investing services. Client Testimonial USRA has worked with Calkain on numerous occasions. They have always been meticulous in their work ethic, providing superior service and extremely prompt attention to our needs. I highly recommend them. Jack Genende, Partner U.S. Realty Advisors, LLC. (USRA) $350 Million in Active Listings JONATHAN W HIPP PRESIDENT & CEO (703) 787-4725 jhipp@calkain.com ANDREW FALLON EXECUTIVE MANAGING DIRECTOR (703) 787-4733 afallon@calkain.com CALKAIN.COM 14
Contact Us Corporate Headquarters Washington, DC 12930 Worldgate Drive Suite 150 Herndon, VA 20170 T: (703) 787-4714 F: (703) 787-4783 Tampa 400 N. Tampa Street Suite 2660 Tampa, FL 33602 T: (813) 282-6000 F: (813) 282-6098 South Florida 200 SW 1st Avenue Suite 880 Fort Lauderdale, FL 33301 T: (954) 302-7365 Atlanta 111 Village Parkway, Building 2 Suite 202 Marietta, GA 30067 T: (404) 900-5629 Boston 101 Federal Street Suite 1900 Boston, MA 02110 T: (617) 261-8584 CALKAIN.COM DISCLAIMER: The information contained in this document is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Calkain and its subsidiaries, and should not be made available to any other person or entity without the written consent of Calkain. This document has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property(s). The information contained herein is not a substitute for a thorough due diligence investigation. Calkain and its subsidiaries have not made any investigation, and make no warranty or representation, with respect to the income or expenses for the subject property(s), the future projected financial performance of the property, the size and square footage of the property(s) 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(s). The information contained in this document has been obtained from sources we believe to be reliable; however neither Calkain and its subsidiaries nor the Seller have verified, and will not verify, any of the information contained herein, nor has Calkain and its subsidiaries or the Seller conducted any investigation regarding these matters and make 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.