OFFERING MEMORANDUM DEL TACO 32439 Gratiot Ave, Roseville, MI 48066 CONTACT US KEVIN J. BAKER Principal kbaker@landmarkcres.com DANIEL H. KUKES Principal dkukes@landmarkcres.com JASON M. GREENSPAN Associate jgreenspan@landmarkcres.com KYLE J. SIMON Associate ksimon@landmarkcres.com 27995 Halsted Road, Suite 150 Farmington Hills, MI 48331 Phone: landmarkinvestmentsales.com
CONFIDENTIALITY DISCLAIMER Landmark Commercial Real Estate Services, Inc. d/b/a Landmark Investment Sales ( BROKER ) has been retained by the Owner to sell the 100% fee simple title of this asset. The Broker is the exclusive agent for the sale of this asset. The Broker has prepared the Property Information with information provided by the Owner, from sources deemed to be reliable. The Potential Purchaser will conduct its own due diligence of The Property, independently and without reliance upon BROKER of the Owner. Information furnished herein, the Offering Memorandum (the OM ) is intended solely for the Potential Purchaser and its affiliates ( Recipients ) for its review of the acquisition of the freestanding Del Taco restaurant located at 32439 Gratiot Ave, Roseville, MI ( Property ). All information in the OM ( Confidential Information ) shall be deemed confidential. Confidential Information shall not include any information which is generally available to the public or which becomes available to the Recipients on a non-confidential basis from a source that is or was under no obligation not to disclose such information. In consideration of Broker and disclosure of the confidential information, the recipient shall not at any time, attempt in any manner to deal directly in any manner or circumvent Broker. Unless otherwise agreed in writing or required by law, the Recipients will not use, disclose, or reveal any Confidential Information for any purpose other than in connection with the proposed transaction to any persons or entities other than those employees, officers, directors, bankers, advisors, representatives, or agents (collectively, Representatives ) who clearly need such access to perform their employment, fiduciary or contractual duties to the Recipient and to actively and directly participate in the evaluation of the Confidential Information. Additionally, Recipients shall not directly contact anyone directly associated with the Property without the express written consent of the Owner or Broker. Recipients agree not to contact or initiate contact with the Tenants, at any time, either directly or indirectly. Unless such approval is specifically granted in written from the Owner or Broker. This agreement shall be governed by the laws of the Michigan, and in any action brought to enforce the terms hereof, Recipients hereby irrevocably consents to jurisdiction and venue in the Circuit Court for the County of Oakland, State of Michigan, or the United States District Court, whichever the Owner may elect. The invalidity or unenforceability of any provision of this agreement as applied to a particular occurrence or circumstance shall not affect the validity of or enforceability of any of the other provisions of this agreement or the applicability of such provisions as the case may be. This agreement shall inure to the benefit of and may be enforced by the Owner and its successors and assigns and shall be binding on the Recipients, its officers, directors, partners, agents, members, representatives and successors in interest. If any portion of this agreement becomes the subject of litigation or arbitration, the prevailing party in such suit or proceeding shall be entitled to reimbursement for its reasonable costs, expenses and attorney s fees incurred, including those incurred in connection with any appeals. A copy of this agreement delivered by facsimile transmission shall be binder on both parties. 2
TABLE OF CONTENTS KEVIN J. BAKER Principal kbaker@landmarkcres.com JASON M. GREENSPAN Associate jgreenspan@landmarkcres.com DANIEL H. KUKES Principal dkukes@landmarkcres.com KYLE J. SIMON Associate ksimon@landmarkcres.com Executive Summary 5 Tenant Profile 7 Offering Summary 8 Market Overview 9 Macomb Mall Site Plan 11 Survey 12 Demographics 13 Our Team 14 3
SUBJECT PROPERTY 4
EXECUTIVE SUMMARY PROPERTY DETAILS Address: Lot Size: Tenant: PRICING 32439 Gratiot Ave, Roseville, MI 0.63 acre DT Venture, LLC Price: $1,883,333 Square Footage: 2,945 SF Cap Rate: 6.00% In-Place NOI: $113,000 INVESTMENT HIGHLIGHTS STRONG OPERATOR DT Venture, LLC owns five (5) Del Taco locations in Michigan and will be opening two more locations in the near future. The operator is TEAM Schostak Family Restaurants which owns over 100 restaurants including Applebee s, Olga s Kitchen, and MOD Pizza. DT Venture, LLC financials are available upon request. IRREPLACEABLE LOCATION Del Taco is situated along Gratiot Avenue (57,300 cpd) on the pad of the Macomb Mall (933,000 SF). The mall has been recently revitalized with tenant signings of Dick s Sporting Goods, ULTA Beauty, rue21, H&M, Shoe Carnival, Old Navy, Sprint, Bath & Body Works, Chipotle, Potbelly, and T-Mobile. STRONG RETAIL TRADE AREA The site is surrounded by success stories of strong sale volumes including multiple big-box, junior-box, quick serve restaurants, and sit-down restaurants. Inquire with broker for specific volumes. DENSE, IN-FILL, AND GROWING DEMOGRAPHICS The immediate trade area features over 113,300 people in a 3-mile radius earning average household incomes exceeding $66,800/year. This is an ideal demographic for Del Taco as evidenced by their historical sales. RENT-TO-SALES RATIO The rent is based on an 8.75% rent-to-sales ratio, a ratio considered healthy and widely acceptable according to industry standards. 5
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TENANT PROFILE TENANT DT Venture, LLC owns five Del Taco locations (soon to be seven) in Michigan. The operator is TEAM Schostak Family Restaurants. TEAM Schostak Family Restaurants TEAM Schostak currently operates over 100 restaurants across the following brands: Del Taco, Applebee s, MOD Pizza, and Olga s Kitchen. In operation since the early 1980 s, TEAM Schostak has significantly expanded and diversified its portfolio across different restaurant concepts which at one point also included 60 Burger King Restaurants. TEAM Schostak currently operates five Del Taco restaurants (soon to be seven) in the metro-detroit area. http://teamschostak.com/ Del Taco Del Taco offers a unique variety of both Mexican and American favorites such as burritos and fries, prepared fresh in every restaurant's working kitchen with the value and convenience of a drive-thru. Del Taco's menu items taste better because they are made with quality ingredients like fresh grilled chicken and carne asada steak, hand-sliced avocado, handgrated cheddar cheese, slow-cooked beans made from scratch, and new creamy Queso Blanco. Founded in 1964, today Del Taco serves more than three million guests each week at its more than 550 restaurants across 14 states. DEL TACO OVERVIEW Market Cap: $531.4M Sales (2016): $434M Net Income (2016): $20.9M Revenues (2016): $452M Website: https://www.deltaco.com/ 7
OFFERING SUMMARY PROPERTY DETAILS Year Built: 2006 Land Area: 27,234 SF Rentable Square Feet: 2,945 SF Ownership: Fee simple Taxes: Tenant pays Insurance: Tenant pays CAM: Tenant pays Landlord Responsibilities: None RENT SCHEDULE YEAR ANNUAL PSF 1-5 $113,000 $38.37 6-10 $121,475 $41.25 11-15 $130,586 $44.34 Option 1: Years 16-20 $140,380 $47.67 Option 2: Years 21-25 $150,908 $51.24 Option 3: Years 26-30 $162,226 $55.09 Option 4: Years 31-35 $174,393 $59.22 Option 5: Years 36-40 $187,473 $63.66 Option 6: Years 41-45 $201,533 $68.43 LEASE DETAILS Original Lease Term: Remaining Lease Term: Lease Type: Lease Expiration: Tenant: Guarantor: 15 years 15 years Absolute net 15 years from closing (COE) DT Venture LLC DT Venture LLC 8
MARKET OVERVIEW INCREDIBLE REAL ESTATE Del Taco is situated along Gratiot Ave (57,300 CPD) with exceptional visibility and frontage. Located at the outlot of Macomb Mall (933,000 SF) which has undergone a massive renovation and transformation. DENSE, IN-FILL, AND GROWING DEMOGRAPHICS The immediate trade area features over 113,300 people in a 3-mile radius earning average household incomes exceeding $66,800/year. This is an ideal demographic for Del Taco as evidenced by their historical sales. STRONG TENANT DEMAND The Macomb Mall (Gratiot corridor) trade area is experiencing significant revitalization and demand from tenants. The following tenants have signed new leases: Dick s, ULTA, H&M, Old Navy, rue21, Potbelly, Chipotle, AT&T, and Party City, to name a few. STRONG RETAILER/RESTAURANT VOLUMES Site is surrounded by success stories of strong sale volumes including multiple big box, junior box, quick serve restaurants, and sit-down restaurants. Inquire with broker for specific volumes. 9
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MACOMB MALL SITE PLAN MACOMB MALL 933,000 SF New Leases: Dick s Sporting Goods ULTA Old Navy H&M rue21 Shoe Carnival Potbelly AT&T Chipotle Payless Shoes Champs Sports Visionworks Bath & Body Works 11
SURVEY 12
DEMOGRAPHICS DESCRIPTION 1 MILE 3 MILE 5 MILE POPULATION HOUSEHOLDS RACE INCOME BUSIN ESS 2017 Estimated Population 11,621 113,353 264,698 2022 Projected Population 12,068 116,289 271,476 2010 Census Population 11,429 111,153 259,531 2000 Census Population 11,727 113,835 265,912 Projected Annual Growth 2017 to 2022 0.8% 0.5% 0.5% Historical Annual Growth 2000 to 2017-0.1% - - 2017 Estimated Households 5,161 48,701 113,018 2022 Projected Households 5,428 50,702 117,666 2010 Census Households 4,951 46,832 109,524 2000 Census Households 5,034 46,974 110,423 Projected Annual Growth 2017 to 2022 1.0% 0.8% 0.8% Historical Annual Growth 2000 to 2017 0.1% 0.2% 0.1% 2017 Est. White 77.4% 80.6% 80.1% 2017 Est. Black 16.2% 13.7% 13.9% 2017 Est. Asian or Pacific Islander 2.2% 2.3% 2.7% 2017 Est. American Indian or Alaska Native 0.4% 0.3% 0.3% 2017 Est. Other Races 3.8% 3.0% 2.9% 2017 Est. Average Household Income $63,197 $66,890 $70,796 2017 Est. Median Household Income $49,504 $52,389 $54,981 2017 Est. Per Capita Income $28,071 $28,818 $30,394 2017 Est. Total Businesses 506 4,059 9,139 2017 Est. Total Employees 6,797 43,036 90,013 13
OUR TEAM KEVIN J. BAKER PRINCIPAL kbaker@landmarkcres.com Kevin Baker is a Principal and Co-Founder of Landmark Investment Sales. Kevin specializes in the sale of retail shopping centers and single tenant net lease investment properties across all property types. He currently represents some of the nation s largest institutional funds, private equity funds, and high net worth investors in listing investment properties all over the country. Since 2010, Kevin has closed deals totaling over 6,500,000 SF valued at over $750,000,000. Prior to 2010, Kevin worked extensively at Landmark as a broker specializing in tenant representation and landlord representation completing in excess of 100 lease & sale transactions. Kevin joined Landmark in 2005 as a Sales Associate. Prior to Landmark, Kevin attended Michigan State University and University of Michigan-Dearborn where he studied finance. Kevin began his real estate career in 2001 when he founded Baker Real Estate Holdings, specializing in acquisition and management of a student housing portfolio at Michigan State University. DANIEL H. KUKES PRINCIPAL dkukes@landmarkcres.com Daniel Kukes is a Principal and Co-Founder of Landmark Investment Sales. Daniel specializes in the sale of retail shopping centers, medical office, and single tenant net lease investment properties across all property types. He currently represents some of the nation s largest institutional real estate funds, private equity group, and high net worth investors in acquiring and listing investment properties all over the country. Since 2010, Daniel has closed deals totaling over 6,500,000 SF valued at over $750,000,000. Daniel joined Landmark in 2009 as an Associate Broker. He began his real estate career at NAI Farbman where he focused on shopping center leasing and retail tenant representation. After five years at NAI Farbman, Daniel joined DAP Investments as a partner responsible for retail development, acquisitions and leasing. While there, he developed several single tenant and shopping center projects in Michigan and Illinois. Daniel is a graduate of Michigan State University with a Bachelor of Arts degree in Pre-Law & Society. JASON GREENSPAN ASSOCIATE jgreenspan@landmarkcres.com Jason Greenspan graduated from the University of Michigan in 2012 with a Bachelor of Arts degree in Political Science and Sociology. Jason also received a Juris Doctor in 2015 from Michigan State University College of Law where he concentrated in business and corporations. He passed the Michigan Bar Examination in July 2015. Starting in 2011, and while in law school, Jason interned at Landmark Investment Sales identifying, sourcing, and underwriting investment grade properties. With law school behind him and six years of experience in real estate investment sales, Jason has participated in the closing of over $100,000,000 and continues to source investment opportunities across the country. Jason specializes in the representation of buyers and sellers of institutional grade single tenant properties, high profile unanchored retail centers, grocery anchored centers, and power centers. KYLE J. SIMON ASSOCIATE ksimon@landmarkcres.com Kyle Simon graduated from Michigan State University with a Bachelor of Arts degree in Professional Writing and received his Juris Doctor degree from the Michigan State University College of Law in 2017. He passed the Michigan Bar Examination in July 2017. While in law school he concentrated on securities regulation and mortgage finance. His capstone work on the topics of CMBS and Dodd-Frank won him the Honigman Securities Law Writing Competition featured at the Midwest Securities Law Institute. Kyle began at Landmark in 2014 as an intern of the Investment Sales team. During his tenure, he sourced thousands of investment grade medical and retail real estate contacts across the United States. Demonstrating exceptional drive, Kyle earned a full-time brokerage position at Landmark following his academic career. 14