SHOPKO 1209 18TH AVE NORTHWEST, AUSTIN, MN 55912 OFFERING MEMORANDUM
CONFIDENTIALITY & DISCLAIMER STATEMENT This Offering Memorandum contains select information pertaining to the business and affairs of Shopko located at 1209 18th Ave Northwest, Austin, MN 55912 ( Property ). It has been prepared by Matthews Real Estate Investment Services. This Offering Memorandum may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Seller or Matthews Real Estate Investment Services. The material is based in part upon information supplied by the Seller and in part upon financial information obtained from sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or warranty, express or implied, as to the accuracy or completweness of this Offering Memorandum or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence. By acknowledging your receipt of this Offering Memorandum for the Property, you agree: 1. The Offering Memorandum and its contents are confidential; 2. You will hold it and treat it in the strictest of confidence; and 3. You will not, directly or indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Seller. Owner and Matthews Real Estate Investment Services expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Offering Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered. If you wish not to pursue negotiations leading to the acquisition of the Property or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Offering Memorandum. A prospective purchaser s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Matthews Real Estate Investment Services or any of their affiliates or any of their respective officers, Directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Offering Memorandum.
SHOPKO 1209 18TH AVE NORTHWEST, AUSTIN, MN 55912 TABLE OF CONTENTS 04. Executive Summary 06. Lease Abstract 08. Property Overview 14. Tenant Overview 16. Area Overview 17. Demographics Kyle Matthews, CCIM Chairman & CEO License No. 01469842 O 310.919.5757 M 310.622.3161 kyle.matthews@matthews.com Lindsay Tsumpes AVP & Director License No. 01954256 O 949.873.0270 M 310.880.8418 lindsay.tsumpes@matthews.com Mark Hulsey Broker of Record License No. 40169559
EXECUTIVE SUMMARY Investment Highlights Great 10.89% cash-on-cash return for an absolute NNN lease with zero landlord responsibilities More than fourteen (14) years remaining on the lease term, providing longterm passive income and security Guaranteed by Specialty Retail Shops Holding Corp. ( SRSHC ) Annual contractual rent increases provide a strong hedge against inflation Shadow anchored by Hy-Vee grocery store, Anytime Fitness, Younkers, and CineMagic 7 movie theatres daily needs and entertainment tenants increase consumer draw to the shopping center The property benefits from the redevelopment of the Oak Park Mall including a brand new 60,000 90,000 Hy-Vee grocery store, a redesigned smaller mall that will house the movie theater and AnyTime Fitness, and a remodeled stand-alone Younkers store Convenient accessibility and signage off of I-90, the main interstate arterial through the city Average household income of nearly $60,000 in a 5-mile radius Close proximity to the corporate headquarters of Austin s largest employer, Hormel Foods Corporation, with more than 400 employees as well as the 80-bed Mayo Clinic Health System In the center of Austin s retail corridor with strong neighboring tenants in the trade area including: Walmart Supercenter, Aldi, Sears Hometown Store, Dollar Tree, Jo-Ann Fabric and Craft Stores, Staples, Hibbett Sports, AutoZone, O Reilly Auto Parts and more 4 Shopko
Executive Summary SHOPKO 1209 18th Ave Northwest Austin, MN 55912 List Price...$7,960,000 CAP Rate - Current...8.00% Cash-on-Cash Return... 10.89% Gross Leasable Area... 90,461 SF Lot Size... ± 9.87 Acres Year Built...1984 Annualized Operating Data Monthly Rent Annual Rent Rent/SF Current $53,098.96 $637,187.50 $7.04 *Annual rent increase: Lesser of 1.25 x CPI or 1.95% every January 1st. Debt Quote Tenant Summary Principle Loan Amount $5,532,200 Loan to Value 69.5% Interest Rate 4.6% Term 10 Years Amortization 25 Years Annual Debt Service $372,775 Loan quote provided by Dean Sparks of Altoma Real Estate Advisors LLC based on market conditions at this time. Actual rates and terms will vary based on market conditions at closing. Please contact Dean at the information below: Phone: (209) 628-5724 Email: dsparks@altomarea.com Tenant Trade Name Shopko Stores Operating Co., LLC Type of Ownership Feel Simple Lease Guarantor Specialty Retail Shops Holding Corp. ( SRSHC ) Lease Type NNN Landlord Responsibility None Lease Dated Upon Execution at Closing Rent Commencement Date 5/19/2016 Lease Expiration Date 12/31/2031 Term Remaining on Lease ± 14.25 Years Increases Lesser of 1.25 x CPI or 1.95% every January 1st Options Two (2), Ten (10) Year Options Matthews Real Estate Investment Services 5
Lease Abstract - Shopko Tenant: Guarantor: Address: Size: Shopko Stores Operating Co. LLC Specialty Retail Shops Holding Corp. ("SRSHC") 1209 18th Avenue Northwest Austin, MN 55912 ± 90,461 SF Rent Commencement: 5/19/2016 Lease Expiration: 12/31/2031 Renewal Options: Required Advance Notice of Exercise Options: Two (2), Ten (10) Year Options One hundred twenty (120) days prior to the end of the initial Term of this Lease Current Rent: $637,187.50 Rent Increases: The lesser of 1.25 x CPI or 1.95% annually every January 1 Net Lease: This Lease is a triple net lease and all costs, expenses and obligations relating to the Premises shall be paid by Tenant Real Estate Taxes: Insurance: Utilities: Tenant Assignment and Subletting: Right of First Refusal: Tenant agrees to pay real estate taxes and assessments levied or assessed against the property during the term Tenant shall maintain All-Risk insurance for the building for 100% of its reasonable replacement value. Tenant shall also maintain General Liability Coverage of no less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in aggregate. See Lease for other insurance policies required due to the location of the Premises. Tenant to contract and pay all utilities Tenant Shall have the right to assign the Lease, or to sublet the whole or any part of the Premises provided the Landlord's consent None 6 Shopko
Matthews Real Estate Investment Services 7 Matthews Real Estate Investment Services 7
PROPERTY OVERVIEW Shopko 8 Shopko
Physical Description Property Name Shopko Property Address 1209 18th Ave Northwest Austin, MN 55912 Assessor s Parcel Number 34-521-0120 Zoning B-2, Commercial Business District Site Description Number of Stories One Year Built 1984 Gross Leasable Area (GLA) ± 90,461 SF Lot Size ± 9.87 Acres Type of Ownership Fee Simple Parking ± 450 Surface Spaces Parking Ratio 4.97 : 1,000 SF Landscaping Professional Topography Generally Level Construction Foundation Framing Exterior Parking Surface Roof Concrete Slab Metal Painted CMU Asphalt Flat Matthews Real Estate Investment Services 9
Aerial 18th Ave NW ± 7,000 ADT Oak Park Mall Redevelopment Site I-90 ± 18,000 ADT 10 Shopko
Regional Map Matthews Real Estate Investment Services 11
Tenant Map 12 Shopko
Bird s Eye I-90 ± 18,000 ADT Oak Park Mall Redevelopment 13 Shopko Matthews Real Estate Investment Services 13
TENANT OVERVIEW 14 Shopko
TENANT OVERVIEW Shopko Stores focuses on a select product range across US small and rural areas. The company operates more than 320 stores, including about 135 Shopko discount stores and about 180 Shopko Hometown shops (formerly Pamida stores) in more than 20 states across the Midwest, Mountain, and Pacific Northwest regions. The company also sells goods online. Shopko offers a large selection of many retail categories, it pushes popular, high-margin categories such as casual apparel, health and beauty aids, and housewares. Most Shopko stores have optical centers and pharmacies. The company is owned by Sun Capital Partners. Tenant Shopko Company Name Sun Capital Partners, Inc. Ownership Private No. of Locations ± 330 No. of Employees ± 23,000 Headquartered Green Bay, WI Website www.shopko.com Year Founded 1961 Source: hoovers.com Matthews Real Estate Investment Services 15
AREA OVERVIEW Austin, MN Located in Mower County in southern Minnesota, it is about a two hour drive south of Minneapolis and St. Paul. Also known as SPAM Town USA, Austin is home to the headquarters of the factory that makes most of North America s SPAM tinned meat: Hormel Foods Corporation. Additionally, the Hormel Institute, a leading cancer research institution operated by the University of Minnesota, is also based in Austin. Recently, Austin has undergone notable developments, including the construction of a new courthouse, jail and intermediate school and the redevelopment of the Oak Park Mall. The city is currently taking initiatives to make the downtown business district more of a destination, which has been aided by the relocation of the Spam Museum to Main Street. Oak Park Mall Redevelopment In October 2015, the Austin Port Authority unanimously approved plans to redevelop the Oak Park Mall, headed by Idaho-based company Hy-Vee. The Hormel Foundation provided Austin with a $3.5 million grant to purchase the property. While Hy-Vee will get a majority of the land, the Port Authority will keep two lots for future development and the previous Hy-Vee property. Hy-Vee sees good growth potential in Austin and is building a new 60,000 to 90,000 square foot grocery store at the former Oak Park Mall site. A redesigned, smaller mall will house the CineMagic 7 movie theater and the AnyTime Fitness whereas the Younkers will become a standalone store. Austin, MN Top Employers # Employer 1 Hormel Foods 2 Quality Pork Processors 3 Mayo Clinic Health System 4 Austin Public Schools 5 Hy-Vee 6 Cedar Valley Services 7 Bellisio Foods 8 Mower County 16 Shopko 16 Shopko
Demographics Population 5-Mile 15-Mile 30-Mile 2021 Projection 27,887 39,740 141,225 2016 Estimate 27,424 39,274 139,040 2010 Census 27,173 39,246 138,129 2000 Census 26,417 39,033 134,222 Growth 2016-2021 1.69% 1.19% 1.57% Growth 2010-2016 0.92% 0.07% 0.66% Growth 2000-2010 2.86% 0.55% 2.91% Households 5-Mile 15-Mile 30-Mile 2021 Projection 11,349 16,128 57,590 2016 Estimate 11,182 15,933 56,502 2010 Census 11,121 15,915 55,766 2000 Census 11,063 15,785 53,156 Growth 2016-2021 1.49% 1.22% 1.93% Growth 2010-2016 0.55% 0.12% 1.32% Growth 2000-2010 0.52% 0.83% 4.91% Income 5-Mile 15-Mile 30-Mile 2016 Est. Average Household Income $59,786 $63,846 $67,396 2016 Est. Median Household Income $45,024 $49,613 $54,270 Matthews Real Estate Investment Services 17
Kyle Matthews, CCIM Chairman & CEO License No. 01469842 O 310.919.5757 M 310.622.3161 kyle.matthews@matthews.com Lindsay Tsumpes AVP & Director License No. 01954256 O 949.873.0270 M 310.880.8418 lindsay.tsumpes@matthews.com Mark Hulsey Broker of Record License No. 40169559