Lone Star Steakhouse 18601 DEXTER AVENUE LAKE ELSINORE, CALIFORNIA 92532 OFFERING MEMORANDUM RETAIL INVESTMENT DISPOSITION
18601 DEXTER AVENUE LAKE ELSINORE, CA AFFILIATED BUSINESS DISCLOSURE AND CONFIDENTIALITY AGREEMENT CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an Affiliate ) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the Property ) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum. This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the Owner ), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc. Disclaimer 2014 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners. EXCLUSIVELY LISTED BY MAURICE NIEMAN Senior Vice President Retail Investments Lic. 01050120 +1 949 725 8626 maurice.nieman@cbre.com IAN SCHROEDER Senior Vice President Retail Investments Lic. 01497897 +1 949 725 8576 ian.schroeder@cbre.com
TABLE OF CONTENTS 18601 DEXTER AVE LAKE ELSINORE, CA Section I Section II Section III Tenant Overview Property Overview Property Summary Lease Overview Aerial Maps Survey of Property Photographs Lake Elsinore, CA Area Overview Demographics
TENANT OVERVIEW 18601 DEXTER AVE LAKE ELSINORE, CA Section I Section II Section III Tenant Overview Property Overview Property Summary Lease Overview Aerial Maps Survey of Property Photographs Lake Elsinore, CA Area Overview Demographics
TENANT OVERVIEW About Lone Star Steakhouse Lone Star Steakhouse is a chain of casual dining restaurants that are done up in a Texas Roadhouse theme. They serve a mix of mesquitegrilled steaks, seafood, and salads. The Plano, Texas-headquartered company first opened in 1989 in Winston-Salem, North Carolina. After nearly a quarter century in business, there are currently over 150 Lone Star Steakhouse restaurants in operation across the country. Lone Star Steakhouse is part of a unique category of restaurants that offer higher-quality food and service than other existing chain or independent restaurants. This type of destination restaurant occupies a niche position in the market that provides for dynamic growth by attracting loyal customers. Lone Star went public in 1992 in a $91 million IPO. At the time of its public debut, there were eight Lone Star Steakhouses in operation, each averaging $2.5 million in annual sales. Seven months later, another round of stock offerings raised an additional $41 million, which was used to support expansion of the chain. The company operated as a successful public company for over a decade before being bought out by Dallasbased private equity firm Lone Star Funds in 2006 for $27.35 per share. Following the buyout, Lone Star Steakhouse switched from its Texas roadhouse theme to a more urban-style restaurant, abandoning most of the Texas and cowboy themes in its older restaurants. The current restaurant design is more upscale, with virtually none of the Americana seen in the pre-2006 restaurants. CALIFORNIA FRANCHISEE OF LONE STAR STEAKHOUSE CORPORATE OVERVIEW Type: Private, Franchise Industry: Restaurants Founded: 1995 Products: Burgers, Steak, Seafood, Salad Locations: 4 Corporate Headquarters: Plano, Texas CBRE PAGE 5
PROPERTY OVERVIEW 18601 DEXTER AVE LAKE ELSINORE, CA Section I Section II Section III Tenant Overview Property Overview Property Summary Lease Overview Aerial Maps Survey of Property Photographs Lake Elsinore, CA Area Overview Demographics
PROPERTY SUMMARY Property Highlights The current lease has eight and a half (8.50) years remaining on the initial ten (10) Year term, plus three (3), five (5) year options. Lease structure is double net (NN) with minimal landlord responsibilities. Tenant is responsible for maintaining, repairing, and replacing aspects of the building and property, as well as all utilities, property taxes, and insurances. Landlord is responsible for repairs and replacements to the building constituted as capital expenditures (CAPEX). Ten percent (10%) rental increases every five (5) years. Lake Elsinore Lone Star Steakhouse is a standout location with strong sales, resulting a low rent-to-sales ratio. The lease has a strong guarantee by the California Franchisee of Lone Star Steakhouse, which operates four locations within the state. Lake Elsinore experienced explosive population growth of over 42.00% between 2000-2012. Over the next five years, the population is projected to grow an additional 7.50% to 10.00%. Traffic Counts Cars Per Day Central Avenue @ Dexter Avenue 26,100 Interstate 15 @ Central Avenue 117,000 TOTAL 143,100 Lone Star Steakhouse is located on the major retail corridor at exit 77 off Interstate 15. The property benefits from excellent exposure along the interstate. This section of highway connects Orange County and Riverside County and boasts a traffic count of 117,000 cars per day. Location Overview The subject property is a 6,900 square foot freestanding Lone Star Steakhouse in Lake Elsinore, CA. The building is located on 1.27 acres of land off of Dexter Avenue and is visible from Interstate 15, which has a traffic count of 117,000 cars per day at this location. The building is positioned near the intersection of Interstate 15 and Highway 74/ Riverside Drive, which is a major thoroughfare in the city. The property also features a billboard that generates additional rent. Nearby retailers include LA Fitness, Chevron, Burger King, and Arco. CBRE PAGE 7
LEASE OVERVIEW Property Summary Lease Summary Purchase Price: $2,400,000 Down Payment: 100% Rentable Square Feet: 6,900 Price/SF: $347.83 CAP Rate: 6.00% Open Date 2008 Year Built: 2008 Trading As: Tenant/Guarantor: Lease Type: Roof & Structure: HVAC: Insurances & Utilities: CAM & Parking: Lone Star Steakhouse California Franchisee of Lone Star Steakhouse Double Net (NN) Tenant Responsibility / Landlord Responsible for CAPEX Tenant Responsibility Tenant Responsibility / Pays Directly Tenant Responsibility / Pays Directly Lot Size: 1.27 Acres Property Taxes: Tenant Responsibility / Pays Directly Parking: 87 Lease Term: 10 Years Type of Ownership: Fee Simple Annual Base Rent (Current): $ 135,000.00 Parcel Number: 377-080-084 Annual Rent/SF: $19.57 Percentage Rent 6% of Gross Sales Over $2,250,000 Lease Commencement Date: September 5, 2012 Lease Years Annual Rent Years 1-5 $135,000.00 Years 6-10 $148,000.00 Years 11-15* $163,350.00 Years 16-20* $179,685.00 Years 21-25* $197,653.50 Lease Expiration Date: September 30, 2022 Term Remaining: 8.50 Years Renewal Options: 3-5 Year Options Increases: 10% Every Five (5) Years ROFR: Tenant Does Not Have a ROFR Billboard Rent 25% of the Gross Annual Income Received from the Billboard Structure. (Three Year Average: $ 9,200) Lease Notes: (1) Landlord shall be responsible, at Landlord s sole cost and expense, for any repairs to or replacements of any aspect of the Building (excluding all windows and doors, but including the cost of correcting defects in the construction of the Building) that, under generally accepted accounting principles as consistently applied in the real estate industry, are properly classified as capital expenditures. CBRE PAGE 8
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LAKE ELSINORE, CA 18601 DEXTER AVE LAKE ELSINORE, CA Section I Section II Section III Tenant Overview Property Overview Property Summary Lease Overview Aerial Maps Survey of Property Photographs Lake Elsinore, CA Area Overview Demographics
LAKE ELSINORE, CA Area Overview Lake Elsinore is a city in western Riverside County, California. The 41.7 square mile city sits on Lake Elsinore, the largest natural freshwater lake in Southern California, and is bordered to the west by the Elsinore Mountains. The city is divided into eleven districts, each of which has its own unique geography, culture, and history, making Lake Elsinore a very diverse and culturally rich city. As of the 2010 census, Lake Elsinore s population was just under 59,000. Lake Elsinore was originally settled in the 1800 s as a spot for rancheros and trappers to camp and water their animals. It was mostly cattle fields and ranches until the 1880s, when the California Southern Railroad built a line through the area that linked San Bernardino and San Diego counties. The city remained small for the next century, until rapid population growth in the mid-2000s altered the appearance and image of Lake Elsinore from a small lakeside town to a bedroom community of upper middle-class professionals. Nowadays, many of the formerly open hillsides have been converted into housing tracts. City Quick Facts Trade Area Population: 55,288 Median H.H. Income: $57,781 Number of Households: 14,788 Homeowner Vacancy Rate: 4.6% Median Age: 29.8 Unemployment Rate: 10.5% The top employers in the city are the Lake Elsinore Outlets (1,169 employees) and the Lake Elsinore Unified School District (1,060). The city s Visitors Bureau has been making efforts recently to expand tourism in the area. Three motels have been built within the city limits to accommodate tourists who come to Lake Elsinore to attend the city s various events and enjoy the lake and its attractions. CBRE PAGE 15
DEMOGRAPHICS POPULATION 1-MILE 3-MILE 5-MILE Estimated Population (2013) 3,304 34,473 80,865 Census Population (2010) 3,057 32,784 77,212 Projected Population (2018) 3,660 37,067 86,564 Historical Annual Growth 2000-2010 58.56% 42.24% 40.53% 2010-2013 8.07% 5.15% 4.73% Projected Annual Growth 2013-2018 10.80% 7.53% 7.05% HOUSEHOLDS 1-MILE 3-MILE 5-MILE Estimated Households (2013) 1,145 9,753 24,159 Census Households (2010) 1,055 9,295 23,161 Projected Households (2018) 1,276 10,486 25,837 Historical Annual Growth 2000-2010 52.46% 31.08% 32.27 2010-2013 8.59% 4.93% 4.31% Projected Annual Growth 2013-2018 11.36% 7.52% 6.94% INCOME STATISTICS 1-MILE 3-MILE 5-MILE 2013 Avg. Household Income $72,736 $64,347 $68,482 2013 Median Household Income $62,407 $52,671 $55,299 2013 POPULATION BY RACE 1-MILE 3-MILE 5-MILE White 53.8% 55.8% 61.5% Black or African American 5.9% 5.0% 4.3% Asian 9.2% 5.7% 4.5% Pacifi c Islander 0.2% 0.3% 0.3% American Indian and Alaska Native 0.8% 1.0% 1.0% Some Other Race Alone 23.9% 25.9% 22.6% Two or More Races 6.2% 6.4% 5.8% 2013 EST. POPULATION HISPANIC OR LATINO BY ORIGIN 1-MILE 3-MILE 5-MILE Not Hispanic or Latino 48.3% 42.9% 50.5% Hispanic or Latino: 51.7% 57.1% 49.5% Cuban: 1.5% 0.8% 0.5% Mexican: 88.2% 86.7% 87.5% Other: 8.8% 11.6% 10.5% Puerto Rican: 1.5% 1.0% 1.5% 2013 MEDIAN AGE 1-MILE 3-MILE 5-MILE Male 30.51 29.31 31.34 Female 31.78 30.77 32.61 2013 AVERAGE AGE: 1-MILE 3-MILE 5-MILE Male 32.16 31.44 33.17 Female 33.60 32.78 34.15 CBRE PAGE 16
CBRE EXCLUSIVE AGENTS :: Maurice Nieman Senior Vice President Retail Investments Lic. 01050120 +1 949 725 8626 maurice.nieman@cbre.com :: Ian Schroeder Senior Vice President Retail Investments Lic. 01497897 +1 949 725 8576 ian.schroeder@cbre.com :: CBRE, Inc. 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 www.cbre.com