OFFERING MEMORANDUM Click the Icon or Visit View Exclusive Video Presentation to WALMART SHADOW ANCHORED SHOPPING CENTER 1906 8th St NW Austin, MN 55912
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TABLE OF CONTENTS Section 1 INVESTMENT OVERVIEW Section 2 FINANCIAL ANALYSIS Section 3 MARKET OVERVIEW
INVESTMENT OVERVIEW 4
INVESTMENT OVERVIEW OFFERING SUMMARY INVESTMENT HIGHLIGHTS Walmart Shadow Anchored Shopping Center Strong Historical Occupancy 94 Percent Occupied Strong Tenant Mix Anchored by Maurices 37 Percent Increase in Median Household Income Situated Near US Route-218 and Interstate-90 The Dumes Falk Group of Marcus & Millichap is please to bring to market The Shoppes at Austin, a Walmart Shadow Anchored Shopping Center comprised of 20,140- square-feet in Austin, Minnesota. Austin is a county seat of Mower County and located 98-miles south of Minneapolis the largest city in Minnesota. The subject property was constructed in 2007 is positioned near US Route-218 and Interstate-90 on approximately 1.6 acres with great signage, visibility and multiple points of ingress and egress. The Shoppes at Austin is currently 94 percent leased with almost all tenants under triple-net leases except for Allstate Insurance and El Patron Mexican Grill. There is one 1,200-square-feet vacant unit which of realizable vacancy upside. Leasing up this unit at market rent under a triple-net lease could potentially add an additional $26,000 to the NOI. The national and regional tenants include Maurices, Fantastic Sam s, Allstate Insurance, GameStop and Cricket Wireless. Five of the seven tenants have occupied space since the building was constructed. The tenant base consists of a complimentary mix of local, regional and national tenants that supplies the city s consumers with a wide range of products and services to meet the needs of its residents. These needs include restaurants, clothing, mobile communication, insurance and a hair salon. This Walmart Shadow Anchored Shopping Center benefits from being positioned off of Interstate-90 near US-27, a four-lane US highway with a signalized intersection and dedicated turn lanes into the development. Along with the Walmart Supercenter, additional traffic drivers within the corridor include Runnings of Austin, Caribou Coffee, Jimmy John s, O Reilly, Holiday Inn, Applebee s, Culver s and Dollar Tree. Adjacent to the Walmart Supercenter is a 359,990-square foot center anchored by Hy-Vee, Shopko, and CineMagic 7. Following the closing of the out-of-date Oak Park Mall, Hy-Vee bought out the massive center and has since renovated the building that officially opened in May of 2017. Riverland Community College is a two-three year college that has roughly 4,000 students and is positioned on the other side of I-90. Located less than 1.5-miles southeast is The Hormel Institute. Founded in 1942, Hormel Institute is a biomedical research center that is a division of the University of Minnesota and receives significant support from the Mayo Clinic down the road. Austin also has a strong food processing base as well as agriculture and retail businesses. The most notable being the fortune 500 company Hormel Foods Corporation and Quality Pork Processors, combining for a total of 2,455 employees and located next to The Hormel Institute. Headquartered in the city of Austin, Hormel is mostly known for supplying the brands Spam, Skippy and Muscle Milk. Additionally, the Austin Municipal Airport is positioned on 278 acres and handles roughly 25,420 aircraft operations a year. This Walmart Shadow Anchored Shopping Center has seen strong historical occupancy and a prominent location within the growing market provides it the ability to continue to be an integral part of the shopping center community for residents and travelers alike. # 5
PROPERTY PHOTOS 6
PROPERTY PHOTOS 7
SITE PLAN 8
WALMART SHADOW ANCHORED SHOPPING CENTER LOCAL AERIAL LOCAL MAP 27,077 Residents 11,134 Homes 30,879 Employees $62,008 Average Household Income Riverland Community College Enrollment: 4,015 Austin High School Enrollment: 1,290 Pacelli High School Enrollment: 313 Hormel Foods Quality Pork Processor Mayo Clinic Health Systems Riverland Community College YMCA of Austin Kavt-FM Austin International Paper Austin Utilities 9
REGIONAL PHOTO 10
FINANCIAL ANALYSIS 11
EXECUTIVE SUMMARY OFFERING SUMMARY MAJOR EMPLOYERS Click Here to View Exclusive Video Presentation https://vimeo.com/227448084/a079fa19de THE OFFERING Property Walmart Shadow Anchored Shopping Center Property Address 1906 8 th Street NW, Austin, MN 55912 SITE DESCRIPTION Built 2007 Gross Leasable Area 20,140 SF Current Occupancy 94.04% Lot Size +/- 1.6 Acre(s) Ownership Fee Simple MAJOR TENANTS TENANT GLA LEASE EXPIRATION LEASE TYPE Maurices 4,500 06/30/2018 NNN EMPLOYER # OF EMPLOYEES Hormel 1,355 Quality Pork Processors Inc 1,100 Mayo Clinic Health System-Austin 650 Walmart 325 Hy Vee 1027 300 Mower County Historical Society 250 Cedar Valley Services Inc 200 Target 200 Mower County Extension 186 Riverland Community College Austin 173 Post Bulletin Company LLC 160 Neveln Elementary School 150 DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2016 Estimate Pop 6,739 25,346 27,077 2016 Census Pop 6,678 25,177 26,931 2016 Estimate HH 2,851 10,440 11,134 2016 Census HH 2,809 10,328 11,030 Average HH Income $63,954 $61,357 $62,008 12 #
TENANT SUMMARY FINANCIAL ANALYSIS Tenant Name Square Feet % Bldg Share Comm. Lease Dates Exp. Annual Rent per Sq. Ft. Total Rent Per Month Total Rent Per Year Changes on Changes to Lease Type Renewal Options Maurices 4,500 22.34% 03/13/2007 06/30/2018 $10.75 $4,031 $48,375 07/01/2018 $49,500 NNN Three, Five-Year Terms Fantastic Sam's 1,440 7.15% 08/01/2006 06/30/2018 $14.00 $1,680 $20,160 None None NNN None Allstate Insurance 1,200 5.96% 10/01/2014 03/31/2020 $11.00 $1,100 $13,200 None None Gross None Cricket Wireless (MobileLink) 1,200 5.96% 04/04/2017 07/31/2020 $12.00 $1,200 $14,400 08/01/2020 $15,120 NNN Two, Three-Year Terms El Patron Mexican Grill 4,000 19.86% 01/19/2007 12/31/2022 $12.75 $4,250 $51,000 None None Gross None China Star 5,000 24.83% 04/23/2007 09/30/2021 $10.00 $4,167 $50,000 None None NNN None GameStop #3861 1,600 7.94% 02/07/2007 07/31/2019 $14.00 $1,867 $22,400 None None NNN None Vacant 1,200 5.96% Total Occupied 18,940 94.04% Total Vacant 1,200 5.96% Total 20,140 100.00% $18,295 $219,535 13
OAKLEY PROPERTY WALMART STATION SHADOW NAMEBUILDING ANCHORED SHOPPING CENTER PRICING AND TENANT VALUATION SUMMARY MATRIX General Information Maurices Maurices outfits the young women of small-town America. The chain sells dress, work, and casual apparel for 17 to 34-year-olds at more than 950 specialty retail and outlet stores in some 45 US states, Canada, and online. It sells clothing under the Maurices and Studio Y brands, as well as perfume, hats, gloves, and other accessories. The company focuses on small markets with populations of 25,000 to 150,000 people, which offer fewer shopping options than larger cities. Most of its stores are situated around major discount retailers and department stores. Founded in 1931 by Maurice Tenant Name Maurices Lease Commencement March 13, 2007 Lease Expiration June 30, 2018 Gross Leasable Area (GLA) 4,500 SF Original Term Five Years Option Term Three, Five-Year Terms Pro Rata Share of Project 22.34% Headquarters Duluth, MN Website www.maurices.com Base Rent Lease Years Annual Rent Monthly Rent Annual Rent/SF 03/01/2007 06/30/2013 $47,250 $3,938 $10.50 07/01/2013 06/30/2018 $48,375 $4,031 $10.75 Base Rent Lease Years Annual Rent Monthly Rent Annual Rent/SF 07/01/2018 06/30/2023 $49,500 $4,125 $11.00 07/01/2023 06/30/2028 $54,000 $4,500 $12.00 07/01/2028 06/30/2033 $58,500 $4,875 $13.00 Labovitz as a single shop in Duluth, Minnesota, the company is owned by apparel retailer Ascena Retail (formerly Dress Barn). Expense C.A.M. Real Estate Tax Insurance Management Co-Tenancy Lease Summary Tenant reimburses pro-rata share, 5% cap on prior year ff(excluding snow removal and utilities) Tenant reimburses pro-rata share Tenant reimburses pro-rata share Tenant does not reimburse pro-rata share Tenant has a Co-Tenancy clause with Walmart Occupancy Tenant has a minimum occupancy of 50% 14#
Common Area Maintenance (CAM) WALMART SHADOW ANCHORED SHOPPING CENTER PRICING DETAIL FINANCIAL ANALYSIS PRICING & FINANCING Price $2,230,000 Cap Rate Price/SF 8.00% $111 Net Operating Income $178,354 Loan Type Proposed New Down Payment 25% / $557,500 Loan Amount $1,672,500 Interest Rate / Amortization 4.50% / 25 Years Debt Coverage Ratio 1.60 Operating Data Current Scheduled Base Rental Income $219,535 Expense Reimbursement Income CAM $31,524 Insurance $6,315 Real Estate Taxes $37,962 Management Fees $5,940 Total Reimbursement Income $81,741 Effective Gross Revenue $301,276 Less: Operating Expenses ($122,922) Net Operating Income $178,354 Debt Service ($111,556) Net Cash Flow After Debt Service 11.98% $66,799 Principal Reduction $37,051 Total Return 18.63% $103,850 Operating Expenses Current Per/SF Electric $4,624 $0.23 Trash Removal $14,537 $0.72 Snow Removal $11,700 $0.58 Landscaping $6,500 $0.32 Parking Lot Sweeping $7,095 $0.35 General Repairs & Maintenance $1,752 $0.09 Total CAM $46,208 $2.29 2016 Insurance Premiums $9,256 $0.46 2017 Real Estate Taxes $55,644 $2.76 Management Fee (4.0% of EGR) $11,813 $0.59 Total Expenses $122,922 $6.10 15
MARKET OVERVIEW 16
5-Miles 8 DEMOGRAPHICS 3-Miles 1-Mile 17
PROPERTY WALMART SHADOW NAME ANCHORED SHOPPING CENTER Created on July 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 6,758 25,523 27,249 2016 Estimate Total Population 6,739 25,346 27,077 2010 Census Total Population 6,678 25,177 26,931 2000 Census Total Population 6,526 24,301 26,161 Current Daytime Population 2016 Estimate 7,746 29,125 30,879 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 2,884 10,576 11,270 2016 Estimate Total Households 2,851 10,440 11,134 Average (Mean) Household Size 2.38 2.38 2.39 2010 Census Total Households 2,809 10,328 11,030 2000 Census Total Households 2,791 10,260 10,974 Occupied Units 2021 Projection 2,884 10,576 11,270 2016 Estimate 3,008 11,070 11,815 HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $150,000 or More 3.87% 3.85% 3.92% $100,000 - $149,000 10.53% 10.44% 10.37% $75,000 - $99,999 12.29% 11.38% 11.64% $50,000 - $74,999 22.30% 20.58% 20.84% $35,000 - $49,999 15.93% 14.90% 14.96% Under $35,000 34.20% 38.02% 37.41% Average Household Income $63,954 $61,357 $62,008 Median Household Income $49,876 $47,040 $47,606 Per Capita Income $27,221 $25,548 $25,759 MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 Miles Total Average Household Retail Expenditure $66,463 $64,994 $65,343 Consumer Expenditure Top 10 Categories Housing $17,312 $17,005 $17,066 Transportation $11,604 $11,413 $11,491 Shelter $9,835 $9,703 $9,730 Food $7,344 $7,220 $7,248 Personal Insurance and Pensions $5,828 $5,665 $5,708 Health Care $4,892 $4,779 $4,818 Utilities $3,637 $3,576 $3,592 Entertainment $3,154 $3,083 $3,104 Cash Contributions $1,849 $1,737 $1,751 Household Furnishings and Equipment $1,827 $1,777 $1,788 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 6,739 25,346 27,077 Under 20 27.29% 27.50% 27.33% 20 to 34 Years 19.48% 19.46% 19.16% 35 to 39 Years 6.14% 5.68% 5.66% 40 to 49 Years 11.61% 11.40% 11.46% 50 to 64 Years 18.24% 18.42% 18.70% Age 65+ 17.22% 17.56% 17.70% Median Age 37.59 37.64 38.08 Population 25+ by Education Level 2016 Estimate Population Age 25+ 4,449 16,738 17,946 Elementary (0-8) 5.22% 6.03% 5.86% Some High School (9-11) 7.51% 8.28% 8.13% High School Graduate (12) 29.11% 31.07% 31.43% Some College (13-15) 23.32% 22.76% 23.03% Associate Degree Only 12.74% 10.69% 10.74% Bachelors Degree Only 15.36% 13.21% 12.94% Graduate Degree 5.75% 5.76% 5.71% Source: 2016 Experian 18
PROPERTY WALMART SHADOW NAME ANCHORED SHOPPING CENTER MARKETING DEMOGRAPHICS TEAM Population In 2016, the population in your selected geography is 27,077. The population has changed by 3.50% since 2000. It is estimated that the population in your area will be 27,249.00 five years from now, which represents a change of 0.64% from the current year. The current population is 49.65% male and 50.35% female. The median age of the population in your area is 38.08, compare this to the US average which is 37.68. The population density in your area is 343.95 people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 83.45% White, 5.06% Black, 0.24% Native American and 3.05% Asian/Pacific Islander. Compare these to US averages which are: 70.77% White, 12.80% Black, 0.19% Native American and 5.36% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 15.51% of the current year population in your selected area. Compare this to the US average of 17.65%. Households There are currently 11,134 households in your selected geography. The number of households has changed by 1.46% since 2000. It is estimated that the number of households in your area will be 11,270 five years from now, which represents a change of 1.22% from the current year. The average household size in your area is 2.39 persons. Housing The median housing value in your area was $96,209 in 2016, compare this to the US average of $187,181. In 2000, there were 8,282 owner occupied housing units in your area and there were 2,692 renter occupied housing units in your area. The median rent at the time was $336. Income In 2016, the median household income for your selected geography is $47,606, compare this to the US average which is currently $54,505. The median household income for your area has changed by 37.35% since 2000. It is estimated that the median household income in your area will be $57,072 five years from now, which represents a change of 19.88% from the current year. Employment In 2016, there are 12,036 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 49.97% of employees are employed in white-collar occupations in this geography, and 50.00% are employed in blue-collar occupations. In 2016, unemployment in this area is 4.23%. In 2000, the average time traveled to work was 17.00 minutes. The current year per capita income in your area is $25,759, compare this to the US average, which is $29,962. The current year average household income in your area is $62,008, compare this to the US average which is $78,425. Source: 2016 Experian 19
P R E S E N T E D B Y Joel Dumes Senior Vice President Investments Senior Director - National Retail Group Cincinnati Office Tel: (513) 878-7720 Fax: (513) 878-7710 joel.dumes@marcusmillichap.com Licenses: OH SAL.2003013045, KY 63818 Stan Falk First Vice President Investments Senior Director - National Retail Group Cincinnati Office Tel: (513) 878-7721 Fax: (513) 878-7710 stanton.falk@marcusmillichap.com License: OH SAL.2012001364 Broker of Record: Craig Patterson www.marcusmillichap.com