Offering Memorandum Ground Lease Freddy s 10430 N. 28th Drive Frozen Custard Lakewood, Phoenix, AZ CO85029
Confidentiality Agreement The information contained in the following offering memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and it should not be made available to any other person or entity without the written consent of Marcus & Millichap. By taking possession of and reviewing the information contained herein the recipient agrees to hold and treat all such information in the strictest confidence. The recipient further agrees that recipient will not photocopy or duplicate any part of the offering memorandum. If you have no interest in the subject property at this time, please return this offering memorandum to Marcus & Millichap. This offering memorandum has been prepared to provide summary, unverified financial and physical 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, PCBs or asbestos, the compliance with local, 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 offering memorandum 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. Prospective buyers shall be responsible for their costs and expenses of investigating the subject property. ALL SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONTACT THE 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.
exclusively listed Exclusively listed by: Investment Sales: Jamie Medress Senior Vice President Investments PHOENIX OFFICE Tel: (602) 687-6778 Fax: (602) 687-6717 jamie.medress@marcusmillichap.com Mark Ruble First Vice President Investments PHOENIX OFFICE Tel: (602) 687-6766 Fax: (602) 687-6710 mark.ruble@marcusmillichap.com OFFICES NATIONWIDE www.marcusmillichap.com
Table of Contents Offering Summary..................................... 2 Investment Overview................................... 5 Regional Map......................................... 6 Local Map............................................ 7 Aerial Photos........................................ 8-9 Surrounding Property Photos............................. 10 Site Plan............................................. 11 Market Overview...................................... 18 Demographic Summary................................. 19 Financial Summary.................................... 13 Tenant Overview...................................... 14
summarye XECUTIVE
PANERA BREAD GROUND LEASE 10430 N. 28th Drive Phoenix, AZ 85029 OFFERING Offering Price $3,222,200 Down Payment 100% $3,222,200 CAP Rate 4.5% Building Size 4,604 SF Lot Size.85 Acres Year Built 2014 LEASE Lease Type Absolute Triple-Net (NNN) Ground Lease Tenant Panera, LLC Primary Lease Term 15 Years Lease Commencement December 22, 2014 Lease Expiration Date December 21, 2029 Lease Term Remaining 15 Years Options 3, 5 Year Options Increases 10% Every 5 Years performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252 2
description
AERIAL PHOTO
Investment Overview The subject property is located at 10430 N. 28th Drive in Phoenix, Arizona. Currently under construction, is an approximate 4,604-square foot, single-tenant retail building on an estimated.85 acres of land. The property is leased to Panera, LLC on an absolute triple-net (NNN) ground lease with no landlord responsibilities, 10% increases every five years and three, five-year renewal options. (NASDAQ: PNRA) operates 1,800 fast casual restaurants in the United States and Canada. Their menu offers soups, salads, pasta, sandwiches, and bakery items. sits near the entrance of Metro Center Mall and adjacent to Interstate 17, one of the busiest Arizona Freeways which links to all major freeways in the Phoenix Metropolitan Area. The central location of Metro Center makes it a popular destination for locals and visitors alike. Anchored by Sears, Macy s, Dillard s and a brand new 148,000-square foot Walmart Supercenter to open in early 2016. The center also features an additional 125 stores and eateries. Other tenants in the immediate area include Harkins Theatres, Burlington Coat Factory, Michael s, PetSmart, Big 5 Sporting Goods, LA Fitness, Mega Furniture, Barnes & Noble, Guitar Center, Dollar Tree, Jiffy Lube, Ross and more. The subject is positioned in a densely populated area - there are 416,000 residents and 157,000 households within a 5-miles radius of the property. Arizona State University s West Campus and Glendale Community College (40,000 students combined) are just 5 miles away. Investment Highlights Brand New 15-Year Absolute Triple-Net (NNN) Corporate Ground Lease (NASDAQ: PNRA) 10% Rent Increases Every 5 Years Rare Drive Thru Location Corner Location near Entrance of Metro Center Mall - 1.36 Million-Square- Foot Regional Center Phoenix MSA - 416K Residents Within a 5-Mile Radius Located in Major Redevelopment Zone - Surrounded by National Tenants in Prime Retail Corridor 5 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
REGIONAL MAP MAP Williams-Sonoma performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252 6
LOCAL MAP MAP Williams-Sonoma 7 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
AERIAL CHOLLA MIDDLE SCHOOL W PEORIA AVENUE McDonald s ROSE MOFFORD SPORTS COMPLEX Walgreens OPENING EARLY 2016 CORTEZ HIGH SCHOOL performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252 8
AERIAL N 28TH DRIVE W PEORIA AVENUE 65,000+ CPD Burger King METRO PLAZA OPENING EARLY 2016 9 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
SURROUNDING PHOTOS performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252 10
SITE PLAN 11 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
analysis
Financial Summary Price $3,222,200 Down Payment 100% $3,222,200 Cap Rate 4.50% Net Cash Flow 4.50% $145,000 Building Size 4,604 SF Lot Size.85 Acres Year Built 2014 LEASE Lease Type Absolute Triple-Net (NNN) Ground Lease Tenant Panera, LLC Roof & Structure Tenant Responsible Primary Lease Term 15 Years Lease Commencement Date December 22, 2014 Lease Expiration December 21, 2029 Effective Lease Term Remaining 15 Years Rental Increases 10% Every 5 Years Renewal Options 3, 5 Year Options ANNUALIZED OPERATING LEASE YEARS ANNUAL RENT CAP RATE 12/22/2014-12/21/2019 $145,000 4.50% 12/22/2019-12/21/2024 $159,500 4.95% 12/22/2024-12/21/2029 $175,450 5.44% OPTION YEARS ANNUAL RENT CAP RATE 12/22/2029-12/21/2034 $192,995 5.98% 12/22/2034-12/22/2039 $212,295 6.58% 12/22/2039-12/22/2044 $233,524 7.24% BASE RENT $145,000 Net Operating Income $145,000 Total Return 4.50% $145,000 13 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
Tenant Overview With the single goal of making great bread broadly available to consumers across America, freshly bakes more bread each day than any bakery-cafe concept in the country. Every day, at every location, trained bakers craft and bake each loaf from scratch, using the best ingredients to ensure the highest quality breads. Panera Bread bakery-cafes showcase the art and craft of bread making, helping customers truly appreciate and enjoy a great loaf of bread by studying its crust, crumb and craft. Panera Bread understands that great bread makes great meals, from made-to-order sandwiches to tossed-to-order salads and soup served in bread bowls. The legacy began in 1981 as Au Bon Pain Co., Inc. Founded by Louis Kane and Ron Shaich, the company prospered along the east coast of the United States and internationally throughout the 1980s and 1990s and became the dominant operator within the bakery-cafe category. In 1993, Au Bon Pain Co., Inc. purchased Saint Louis Bread Company, a chain of 20 bakery-cafes located in the St. Louis area. The company then managed a comprehensive re-staging of Saint Louis Bread Co. Between 1993 and 1997 average unit volumes increased by 75%. Ultimately the concept s name was changed to. In May 1999, all of Au Bon Pain Co., Inc. s business units were sold, with the exception of, and the company was renamed. Since those transactions were completed, the company s stock has grown thirteen-fold and over $1 billion in shareholder value has been created. In 2007, purchased a majority stake in Paradise Bakery & Café, a Phoenix-based concept with over 70 locations in 10 states (predominantly in the west and southwest). The Company purchased the balance of Paradise in June 2009. Headquarters Sunset Hills, MO Stock Symbol NASDAQ: PNRA Locations 1,800 Website www.panerabread.com performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252 14
overview
AERIAL PHOTO
Location Overview Metrocenter Mall Metrocenter Mall is adjacent to Interstate 17, one of the busiest freeways in Arizona that links to all major freeways in the Phoenix MSA. The center offers and an expansive offering of retailers and restaurants, and its central location makes it a favorable destination for both residents and visitors. The mall accommodates three anchors including Sears, Macy s and Dillard s. The mall is adding a brand new 148,000-square-foot Walmart Supercenter, expected to open in early 2016, that will act as an additional anchor. Metrocenter also offers more than 125 specialty stores and restaurants, including Bath and Body Works, a 12 screen Harkins Theatre, Victoria s Secret, Hot Topic, The Children s Place, GNC and Torrid. A $32 million renovation was done on the mall in 2007 that included a major revitalization of the interior and exterior of the center, along with the addition of a children s play area, community room and upgrade of the food court. Arizona State University s West Campus and Glendale Community College are located 5 miles from the center, providing 40,000 college students in the immediate area. Total Square Feet: 1,364,932 Anchors: Macy s, Sears, Dillards and Walmart (Opening early 2016) Property Type: Regional Built: 1973 - Renovated in 1993 & 2005-2007 17 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
Location Overview Phoenix MSA The Phoenix MSA is located within both Maricopa and Pinal Counties. The MSA includes 31 incorporated cities and 24 unincorporated towns and cities. When ranked according to annual growth over the past 10 years, the Phoenix MSA contains six of the top 100 fastest-growing cities in the nation, including Chandler, Gilbert, Glendale, Mesa, Peoria and Scottsdale. Phoenix is: 175 miles from Nogales (Mexican border) 350 miles from San Diego 370 miles from Los Angeles 1,060 miles from Dallas As one of the primary beneficiaries of the massive shift in the U.S. population from northern to southern MSAs, Phoenix will have little difficulty finding enough workers; the challenge, though, will be in attracting high-paying jobs. Phoenix claims four Fortune 500 headquarters: Avnet, Phelps Dodge, Allied Waste Industries and US Airways Group. Tourism, high-tech manufacturing, healthcare and defense dominate the Phoenix economy, and the area s longterm outlook remains healthy. High-tech manufacturing has been a powerful economic driver in the Phoenix economy for the past two decades. The area s relatively low cost of doing business has encouraged several manufacturers to remain in the area despite the trend toward moving production offshore. With 20 hospitals and a major medical research center (The Mayo Clinic in Scottsdale), it is clear that healthcare is a critical industry to the Phoenix economy. After sustaining large losses in 2000 and 2001 due to heavy competition and aggressive pricing, HMOs and other health services providers have raised premiums, turned profitable and stopped reducing staff. Office-using employment in the metro accounts for 25 percent of total employment, or more than 500,000 jobs, which exceeds the nation s. Over the next few years, Phoenix will average a 2.5 percent increase per year. Market Highlights High population growth The Phoenix MSA is one of the fastest-growing markets in the country with 2.2 percent average annual population growth forecast over the next five years. Large high-tech manufacturing base Intel Corpl, Motorola Inc., Honeywell and others have large Phoenix operations. High median household income The median household income in Phoenix is 6% above the national level. One international airport Phoenix/Sky Harbor International Airport $72 million daily economic impact 9th busiest airport in the United States Phoenix is often described as a great place to live. It offers a lower cost of living than other metro areas its size, a moderate climate and a wide variety of recreational and cultural activities. The cost of living index for Phoenix is 99.8 (U.S. average = 100), an especially interesting score given that the cost of living tends to increase proportionally with population size. The low cost of utilities (92 percent of the national average) accounts for most of the lower overall score. The Phoenix region boasts almost 300 days of sunshine annually, low humidity and very mild winters. In addition to hiking, camping and boating, sports enthusiasts can enjoy one of the most complete lineups of major league teams found in any city, including teams in all four of the major sports. The city also has more than 150 golf courses and over 1,000 tennis courts. Phoenix has more than 40 museums and more than 150 art galleries, and is home to both the world-famous Heard Museum and Frank Lloyd Wright s Taliesin West. The recently completed Dodge Theater in downtown Phoenix has been playing to packed houses and attracts major touring performances. More than 277,000 students are enrolled in institutions of higher learning in Phoenix, including Arizona State University, University of Phoenix, six other private universities and 10 community colleges. ASU s W.P. Carey School of Business is ranked in the top 10 percent of undergraduate business programs in the nation. MARKETN OVERVIEW performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT IDV0070252 18
Demographic Summary Population 1-Mile 3-Miles 5-Miles 2018 Projection 13,258 156,794 414,223 2013 Estimate 13,553 157,806 416,148 2000 Census 13,729 158,697 417,610 2010 Census 13,165 153,137 403,925 2013 Daytime Population 12,196 46,356 117,233 Households 1-Mile 3-Miles 5-Miles 2016 Projections 5,969 58,875 157,708 2013 Estimate 6,049 58,657 156,741 2000 Census 6,312 60,067 158,837 2010 Census 5,880 56,942 152,177 2013 Income 1-Mile 3-Miles 5-Miles $200,000 or More 1.19% 2.12% 2.82% $150,000 - $199,999 1.33% 1.72% 2.23% $100,000 - $149,999 7.16% 9.28% 10.11% $75,000 - $99,999 9.71% 11.25% 11.20% $50,000 - $74,999 17.58% 19.63% 18.89% $35,000 - $49,999 18.85% 17.24% 16.33% $25,000 - $34,999 13.68% 13.79% 12.60% $15,000 - $24,999 14.85% 12.23% 12.41% $10,000 - $14,999 6.41% 5.04% 5.46% Under $9,999 9.22% 7.70% 7.96% Average Household Income $51,162 $59,544 $63,190 Median Household Income $38,525 $44,556 $45,236 Per Capita Income $22,862 $22,278 $23,945 19 performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2013 Marcus & Millichap ACT ID V0070252
exclusively listed Exclusively listed by: Investment Sales: Jamie Medress Senior Vice President Investments PHOENIX OFFICE Tel: (602) 687-6778 Fax: (602) 687-6717 jamie.medress@marcusmillichap.com Mark Ruble First Vice President Investments PHOENIX OFFICE Tel: (602) 687-6766 Fax: (602) 687-6710 mark.ruble@marcusmillichap.com OFFICES NATIONWIDE www.marcusmillichap.com