Offering Memorandum PIZZA HUT & PENN STATION + UPSIDE 2407 Brownsboro Rd Louisville, KY 40206 1
N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E Confidentiality and Disclaimer The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified 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, PCB's or asbestos, the compliance with 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 Marketing Brochure 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. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. Â 2017 Marcus & Millichap. All rights reserved. Non-Endorsement Notice Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. PIZZA HUT & PENN STATION + UPSIDE Louisville, KY ACT ID Y0530060 2
TABLE OF CONTENTS SECTION INVESTMENT OVERVIEW 01 Offering Summary Regional Map Local Map Aerial Photo FINANCIAL ANALYSIS 02 Tenant Summary Lease Expiration Chart Operating Statement Notes Pricing Detail Acquisition Financing MARKET COMPARABLES 03 Sales Comparables Comparable Shopping Centers MARKET OVERVIEW 04 Demographic Analysis 3
INVESTMENT OVERVIEW 4
EXECUTIVE SUMMARY VITAL DATA YEAR 1 YEAR 2 Price $750,000 CAP Rate 9.66% 11.58% Down Payment 30.7% / $230,250 Net Operating Income $72,427 $86,831 Loan Amount $525,000 Net Cash Flow After Debt Service 4.72% / $10,874 22.50% / $51,814 Loan Type Proposed New Total Return 9.77% / $22,505 27.79% / $63,978 Interest Rate / Amortization Gross Leasable Area (GLA) 4.50% / 25 Years 4,910 SF Price/SF $152.75 Current Occupancy 62.73% Year Built / Renovated 1967 / 2015 Lot Size 0.60 acre(s) MAJOR TENANTS TENANT GLA LEASE EXPIRATION LEASE TYPE Pizza Hut 1,480 2/25/2019 NNN Penn Station 1,600 4/30/2021 NNN OFFERING SUMMARY MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES Long John Silvers 10,213 Norton Healthcare Foundation 9,000 Jewish Hosp Halthcare Svcs Inc 8,125 Jefferson County Board Educatn 5,113 Andy Frain Services Inc 4,766 University of Louisville 4,528 Baptist Hospital East 4,000 California Square 3,900 Ford 3,828 Joseph Gilene President 3,500 Jewish Hospital & St MA 3,452 KFC 2,645 DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2016 Estimate Pop 15,046 87,476 241,246 2016 Census Pop 14,675 85,249 234,884 2016 Estimate HH 7,822 40,969 109,383 2016 Census HH 7,636 39,935 106,455 Median HH Income $40,762 $46,971 $42,130 Per Capita Income $32,124 $35,672 $29,979 Average HH Income $60,982 $74,683 $64,904 # 5
INVESTMENT OVERVIEW OFFERING SUMMARY Marcus & Millichap is pleased to offer this Pizza Hut and Penn Station in a 4,910 square foot retail project in two separate buildings. Pizza Hut is in a stand-alone 1,480 square foot building. The franchisee is one of the largest Pizza Hut franchisees in the Louisville MSA, The back building is a total of 3,430 square feet, with a 1,600 square foot Penn Station East Coast Subs store (also a major multi-unit franchisee) and a vacant bay totaling 1,830 square feet, offering massive upside potential to the new owner. The location in the Clifton Heights area is ideal. It is one of the most walkable sections of the city and is densely populated, with over 86,200 people in a three-mile radius. There is a strong retail presence in the area as well. Just across the street and a bit west is a Kroger-anchored shopping center that dates to 1964, although was recently remodeled and updated. The nearby Pat's Steakhouse has been a Louisville tradition for nearly 60 years, and is considered by many local residents to be the best steakhouse in the city. INVESTMENT HIGHLIGHTS Retail Asset with Upside Potential in Highly-Desirable Clifton Submarket Ingress/Egress Point is Signalized Rear Building Has Recently Had $125,000 of Upgrades Performed Parking Lot is Newly Paved and Striped Strong Vehicle Count (15,000 Vehicles Per Day) Great for a Possible Owner/Occupier 6
PROPERTY OVERVIEW OFFERING SUMMARY The property consists of two buildings totaling 4,910 square feet. The Pizza Hut building is a stand-alone building consisting of 1,480 square feet. The other building totals 3,430 square feet and is divided into two bays. One bay is occupied by Penn Station East Coast Subs (1,600 square feet) and the other bay is currently vacant (1,830 square feet). The property is located in Clifton Heights, which is east of downtown Louisville and is in a mature part of the city with residential development dating back into the 1860s. It is considered an eclectic neighborhood, and is popular for restaurants, antique shops, and art galleries. Over one-third of the area's residents are collegeeducated, which is a much-higher rate than the city overall. The current owners have performed significant upgrades to the property since 2015 -- the rear building has a new roof, new facade, new exterior insulation, and new glass. The electricity in the building is all new. Both parking areas have been resurfaced. # 7
PROPERTY SUMMARY THE OFFERING Property 2407 Brownsboro Road Price $750,000 Property Address 2407 Brownsboro Rd, Louisville, KY SITE DESCRIPTION Year Built/Renovated 2015 Gross Leasable Area 4,910 SF Lot Size 0.60 acre(s) OFFERING SUMMARY PROPOSED FINANCING First Trust Deed Loan Amount $525,000 Loan Type Proposed New Interest Rate 4.50% Amortization 25 Years Loan Term 5 Years Loan to Value 70% Debt Coverage Ratio 2.07 8
REGIONAL MAP 9
LOCAL MAP 10
AERIAL PHOTO 11
AERIAL 2 12
FINANCIAL ANALYSIS 13
TENANT SUMMARY FINANCIAL ANALYSIS 14
TENANT SUMMARY FINANCIAL ANALYSIS 12 15
OPERATING STATEMENT FINANCIAL ANALYSIS 16
NOTES FINANCIAL ANALYSIS 17
PIZZA HUT & PENN STATTION + UPSIDE PRICING DETAIL FINANCIAL ANALYSIS 18
ACQUISITION FINANCING MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIES MMCC our fully integrated, dedicated financing arm is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms. We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options. Our dedicated, knowledgeable experts understand the challenges of financing and work tirelessly to resolve all potential issues to the benefit of our clients. Closed 1,651 debt and equity financings in 2016 National platform operating within the firm s brokerage offices $5.1 billion total national volume in 2016 Access to more capital sources than any other firm in the industry WHY MMCC? Optimum financing solutions to enhance value Our ability to enhance buyer pool by expanding finance options Our ability to enhance seller control Through buyer qualification support Our ability to manage buyers finance expectations Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file 19
MARKET COMPARABLES 20
SALES COMPARABLES MAP 2407 BROWNSBORO ROAD (SUBJECT) 1 2 3 Rex Centre 1781 Sharkey Way South Elkhorn Village SALES COMPARABLES 21
PROPERTY PIZZA HUT & NAME PENN STATION + UPSIDE SALES MARKETING COMPARABLES TEAM SALES COMPARABLES 2407 BROWNSBORO ROAD 2407 Brownsboro Rd, Louisville, KY, 40206 REX CENTRE 2730 N Fairfield Rd, Beavercreek, OH, 45431 1 1781 SHARKEY WAY 1781 Sharkey Way, Lexington, KY, 40511 2 rentpropertyname1 rentpropertyname1 rentpropertyname1 Tenants Lease Type Asking Price: $750,000 Pizza Hut NNN Price/SF: $152.75 Penn Station NNN CAP Rate: 9.66% Year Built: 1967 Close Of Escrow: Tenants 5/15/2016 Supercuts NNN Sales Price: $1,027,154 Sprint NNN Price/SF: $145.90 Year Built: 1995 Lease Type Close Of Escrow: Tenants 10/4/2016 Firehouse Subs Sales Price: $1,015,000 Orange Leaf Yogurt Price/SF: $169.17 Year Built: 2011 Lease Type Annual Per SF rentpropertyaddress1 Income $91,055 $18.54 rentpropertyaddress1 rentpropertyaddress1 Expenses $18,628 $3.79 NOI $72,427 $14.75 Occupancy 62.73% 22
PROPERTY PIZZA HUT & NAME PENN STATION + UPSIDE SALES MARKETING COMPARABLES TEAM SALES COMPARABLES SOUTH ELKHORN VILLAGE 4379 Old Harrodsburg Rd, Lexington, KY, 40513 3 rentpropertyname1 rentpropertyname1 rentpropertyname1 Close Of Escrow: Tenants 8/19/2016 El Charro NNN Sales Price: $884,003 Brick Oven Pizza NNN Price/SF: $151.58 Year Built: 2006 Lease Type rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 23
COMPARABLE 8 SHOPPING CENTERS 2407 BROWNSBORO ROAD (SUBJECT) 1 2 3 Cliffside Plaza Brownsboro Plaza Clifton Kroger Center 4 7 8 9 10 11 12 13 14 15 16 17 18 20 24
PROPERTY PIZZA HUT & NAME PENN STATION + UPSIDE COMPARABLE SHOPPING MARKETING CENTERS TEAM 2407 BROWNSBORO ROAD 2407 Brownsboro Rd, Louisville, KY, 40206 CLIFFSIDE PLAZA 1961 Brownsboro Rd, Louisville, KY, 40206 1 BROWNSBORO PLAZA 1977 Brownsboro Rd, Louisville, KY, 40206 2 rentpropertyname1 rentpropertyname1 rentpropertyname1 Total GLA Available SF Asking Rent/SF 4,910 SF 1,830 SF $1 Total GLA Available SF Asking Rent/SF 19,334 SF 0 SF Total GLA Available SF Asking Rent/SF 12,434 SF 0 SF YEAR BUILT: 1967 MAJOR TENANTS Pizza Hut Penn Station OCCUPANCY: 100% YEAR BUILT: 1976 MAJOR TENANTS Family Dollar Papa John's OCCUPANCY: 100% YEAR BUILT: 1978 MAJOR TENANTS Little Caesar's Pizza Subway rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 25
PROPERTY PIZZA HUT & NAME PENN STATION + UPSIDE COMPARABLE SHOPPING MARKETING CENTERS TEAM CLIFTON KROGER CENTER 2202 Brownsboro Rd, Louisville, KY, 40206 3 rentpropertyname1 rentpropertyname1 rentpropertyname1 Total GLA Available SF Asking Rent/SF 45,627 SF 0 SF OCCUPANCY: 100% YEAR BUILT: 1964 MAJOR TENANTS Kroger rentpropertyaddress1 rentpropertyaddress1 rentpropertyaddress1 26
MARKET OVERVIEW 27
PROPERTY PIZZA HUT & NAME PENN STATION + UPSIDE Created on September 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 15,093 87,038 241,503 2016 Estimate Total Population 15,046 87,476 241,246 2010 Census Total Population 14,675 85,249 234,884 2000 Census Total Population 14,608 87,470 236,591 Current Daytime Population 2016 Estimate 15,542 130,447 403,716 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 7,902 41,026 110,248 2016 Estimate Total Households 7,822 40,969 109,383 Average (Mean) Household Size 1.86 2.01 2.09 2010 Census Total Households 7,636 39,935 106,455 2000 Census Total Households 7,486 40,543 106,533 Occupied Units 2021 Projection 7,902 41,026 110,248 2016 Estimate 8,403 44,096 119,164 HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $150,000 or More 4.17% 7.38% 5.58% $100,000 - $149,000 9.40% 11.22% 9.84% $75,000 - $99,999 8.44% 10.10% 9.70% $50,000 - $74,999 16.81% 16.79% 16.49% $35,000 - $49,999 16.78% 14.09% 14.28% Under $35,000 43.20% 38.37% 42.69% Average Household Income $60,982 $74,683 $64,904 Median Household Income $40,762 $46,971 $42,130 Per Capita Income $32,124 $35,672 $29,979 MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 Miles Total Average Household Retail Expenditure $53,122 $56,745 $54,119 Consumer Expenditure Top 10 Categories Housing $13,416 $14,231 $13,762 Transportation $10,882 $11,465 $10,803 Shelter $6,833 $7,164 $6,973 Food $6,333 $6,649 $6,398 Personal Insurance and Pensions $3,934 $4,544 $4,165 Utilities $3,632 $3,797 $3,702 Health Care $3,409 $3,890 $3,746 Entertainment $2,300 $2,417 $2,284 Household Furnishings and Equipment $1,482 $1,558 $1,467 Apparel $1,458 $1,622 $1,527 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 15,046 87,476 241,246 Under 20 16.67% 20.05% 22.15% 20 to 34 Years 30.71% 25.05% 24.88% 35 to 39 Years 7.22% 6.75% 6.35% 40 to 49 Years 11.40% 12.22% 11.71% 50 to 64 Years 20.03% 21.60% 20.35% Age 65+ 13.98% 14.34% 14.57% Median Age 36.61 38.56 37.24 Population 25+ by Education Level 2016 Estimate Population Age 25+ 11,430 63,973 168,910 Elementary (0-8) 2.94% 2.18% 2.58% Some High School (9-11) 3.96% 5.59% 7.73% High School Graduate (12) 17.24% 18.44% 23.17% Some College (13-15) 21.33% 20.05% 21.91% Associate Degree Only 6.08% 6.06% 6.27% Bachelors Degree Only 27.07% 26.12% 21.87% Graduate Degree 21.03% 21.05% 15.69% Source: 2016 Experian 28
PROPERTY PIZZA HUT & NAME PENN STATION + UPSIDE MARKETING DEMOGRAPHICS TEAM Population In 2016, the population in your selected geography is 15,046. The population has changed by 3.00% since 2000. It is estimated that the population in your area will be 15,093.00 five years from now, which represents a change of 0.31% from the current year. The current population is 48.36% male and 51.64% female. The median age of the population in your area is 36.61, compare this to the US average which is 37.68. The population density in your area is 4,784.10 people per square mile. Race and Ethnicity The current year racial makeup of your selected area is as follows: 81.46% White, 11.87% Black, 0.01% Native American and 2.83% 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 3.50% of the current year population in your selected area. Compare this to the US average of 17.65%. Households There are currently 7,822 households in your selected geography. The number of households has changed by 4.49% since 2000. It is estimated that the number of households in your area will be 7,902 five years from now, which represents a change of 1.02% from the current year. The average household size in your area is 1.86 persons. Housing The median housing value in your area was $166,029 in 2016, compare this to the US average of $187,181. In 2000, there were 3,402 owner occupied housing units in your area and there were 4,085 renter occupied housing units in your area. The median rent at the time was $431. Income In 2016, the median household income for your selected geography is $40,762, compare this to the US average which is currently $54,505. The median household income for your area has changed by 23.82% since 2000. It is estimated that the median household income in your area will be $46,877 five years from now, which represents a change of 15.00% from the current year. Employment In 2016, there are 4,979 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 68.50% of employees are employed in white-collar occupations in this geography, and 31.61% are employed in blue-collar occupations. In 2016, unemployment in this area is 4.73%. In 2000, the average time traveled to work was 19.00 minutes. The current year per capita income in your area is $32,124, compare this to the US average, which is $29,962. The current year average household income in your area is $60,982, compare this to the US average which is $78,425. Source: 2016 Experian 29
8 DEMOGRAPHICS 30