441 Payne Rd, Scarborough, ME 04074 John Gendron, CCIM 2079398500 johnrgendron@gmail.com
REAL ESTATE INVESTMENT DETAILS Analysis Analysis Date August 2016 Property Property Property Address Year Built 1980 441 Payne Rd Scarborough, ME 04074 Purchase Information Property Type Commercial Purchase Price $4,250,000 Fair Market Value $4,250,000 Tenants 2 Total Rentable Sq. Ft. 22,490 Resale Valuation 2.0% (annual appreciation) Resale Expenses 4.0% Financial Information Down Payment $850,000 Closing Costs $25,000 LT Capital Gain 34.00% Federal Tax Rate 35.0% State Tax Rate 7.95% Discount Rate 6.00% Loans Type Debt Term Amortization Rate Payment LO Costs Fixed $3,400,000 25 years 25 years 4.0% $17,946 Income & Expenses Gross Operating Income $300,625 Monthly GOI $25,052 Total Annual Expenses ($17,069) Monthly Expenses ($1,422) Contact Information John Gendron, CCIM 2079398500 johnrgendron@gmail.com page - 2
BIOGRAPHY Professional Bio John R. Gendron is a commercial real estate broker specializing in the selling, leasing and development of all types of commercial properties. He earned the designation of CCIM (Certified Commercial Investment Member) and holds several real estate broker licenses including Maine, New Hampshire, New York, Massachusetts, Florida and Connecticut. He is a past President, Vice President and Treasurer of the York County Board of Realtors, past President of Maine Homebuilders Association, past Director of the State of Maine Realtors Association, past Director of Portland Chamber of Commerce, past Director of Greater Portland Landmarks; past Member of Mercy Hospital Board of Trustees, and past Director of McAuley Residence. page - 3
PROPERTY DESCRIPTION Subject property is located at 441 Payne Rd in Scarborough Maine. Property is 2.78 AC with 2 commercial buildings on site, currently leased to VIP with VIP sublease to O'Reilly's Auto and Cumberland Farms (Ground Lease). Both Tenants are NNN with VIP responsible for 66.25% of CAMS and Cumberland Farms responsible for 33.75% of CAMS. CAMS incurred by tenants are property taxes (building and land), Building Insurance (VIP only), Lawn Care, Snow Removal, Line Striping, and Minor pavement crack filling and patching. Landlord is responsible for: major roof repairs, major drive way repairs, HVAC replacements, and under ground repairs for VIP building only. No Landlord responsible's on Cumberland Farms. VIP building is a metal roof with 1/2 inch pitch and a butler steel building. A small section in the front of the building is a rubber roof put on in 2006. A gutter runs along the entire front of the building. Parking lot for VIP section of the property was redone in 2006. Cumberland Farms section of the parking lot was redone in 2002. Subject property is located at the corner of Payne Rd and Gorham Rd at a signalized intersection. Additionally, a turn lane into the property is located on Payne Rd. This site boost high traffic counts with 19,040 daily average on Payne Rd and 9,910 on Gorham Rd! VIP currently is in their first renewal option with one more five (5) year renewal option, with rent increase, available to extend lease to 2026. Cumberland Farms currently has 6 years remaining on the initial lease term with a rent increase in 2017. Cumberland Farms has three (3) five (5) year renewal options each with rent increases extending the lease to 2037. ** Cumberland Farms has a first right of refusal on the Property. Property is zoned B2- Regional Business **Owner Financing Transaction Average Cap Rate over 10 Years= 7.31% Demographics: Median-Income: Mile 1-290 Mile 1- $75,000 Mile 3-15,555 Mile 3- $58,785 Mile 5-82,888 Mile 5- $53,492 page - 4
PROPERTY PHOTOS VIP/O'Reillys Cumberland Farms VIP/O'Reillys Side View Cumberland Farms Cumberland Farms page - 5
AERIAL MAP page - 6
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Traffic Count Map - Close Up 441 Payne Rd, Scarborough, Town of, Maine, 04074 2 441 Payne Rd, Scarborough, Town of, Maine, 04074 Rings: 1, 2, 3 mile radii Prepared by Esri Latitude: 43.62147 Longitude: -70.35067 Source: 2016 Kalibrate Technologies August 01, 2016 2016 Esri Page 1 of 1
DEMOGRAPHICS Population Characteristic 1 Mile 3 Mile 5 Mile AGES 0-4 N/A 607 3,591 AGES 5-9 N/A 821 4,599 AGES 10-14 N/A 808 4,393 AGES 15-19 N/A 845 4,413 AGES 20-24 N/A 837 4,523 AGES 25-29 N/A 816 4,735 AGES 30-34 N/A 794 5,093 AGES 35-39 N/A 801 5,574 AGES 40-44 N/A 863 6,081 AGES 45-49 N/A 923 6,332 AGES 50-54 N/A 946 6,210 AGES 55-59 N/A 891 5,742 AGES 60-64 N/A 796 4,945 AGES 65-69 N/A 675 4,020 AGES 70-74 N/A 538 3,049 AGES 75-79 N/A 420 2,279 AGES 80-84 N/A 328 1,641 AGES 85+ N/A 508 2,756 Race Characteristic 1 Mile 3 Mile 5 Mile Non Hispanic White N/A 11,933 74,118 Population Black N/A 318 2,526 Population Am In/AK Nat N/A 2 50 Household Income 1 Mile 3 Mile 5 Mile Median Household Income N/A $55,072 $52,782 < $10000 N/A 290 2,971 $10000-$14999 N/A 321 2,331 $15000-$19999 N/A 253 1,757 $20000-$24999 N/A 206 1,926 $25000-$29999 N/A 369 1,989 $30000-$34999 N/A 330 1,569 $35000-$39999 N/A 369 1,795 $40000-$44999 N/A 285 1,632 $45000-$49999 N/A 336 1,698 $50000-$60000 N/A 659 3,204 $60000-$74000 N/A 614 3,516 $75000-$99999 N/A 615 4,262 $100000-$124999 N/A 327 2,347 $125000-$149999 N/A 228 1,808 $150000-$199999 N/A 177 1,420 > $200000 N/A 111 984 Characteristic Housing 1 Mile 3 Mile 5 Mile Housing Units N/A 5,400 35,588 Occupied Housing Units N/A 5,139 33,534 Owner Occupied Housing Units N/A 3,169 17,752 Renter Occupied Housing Units N/A 1,970 15,782 Vacant Housing Units N/A 261 2,054 page - 9
EXECUTIVE SUMMARY ACQUISITION COSTS Purchase Price, Points and Closing Costs $4,275,000 Investment - Cash $877,000 First Loan $3,400,000 INVESTMENT INFORMATION Purchase Price $4,250,000 Price per Tenant $2,125,000 Price per Sq. Ft. $188.97 INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $300,625 Total Vacancy and Credits $0 Operating Expenses ($17,069) Net Operating Income $283,555 Debt Service ($215,357) Cash Flow Before Taxes $68,198 Total Interest (Debt Service) ($134,529) Depreciation and Amortization ($63,813) Taxable Income (Loss) $85,214 Tax Savings (Costs) ($36,599) Cash Flow After Taxes $31,599 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 7.78% Optimal Internal Rate of Return (yr 5) 12.73% Debt Coverage Ratio 1.32 Capitalization Rate 6.67% Gross Income / Square Feet $13.37 Gross Expenses / Square Feet ($0.76) Operating Expense Ratio 5.68% page - 10
FINANCIAL INDICATORS Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Rent Multiplier 14.42 14.67 14.76 15.05 15.35 15.58 15.45 15.55 15.86 16.18 Capitalization Rate 6.67% 6.69% 6.78% 6.78% 6.78% 6.81% 7.01% 7.10% 7.10% 7.10% Cash On Cash Return b/t 7.78% 7.86% 8.31% 8.29% 8.28% 8.45% 9.42% 9.87% 9.86% 9.84% Cash On Cash Return a/t 3.60% 3.62% 3.71% 3.53% 3.34% 3.25% 3.61% 3.66% 3.44% 3.07% Debt Coverage Ratio 1.32 1.32 1.34 1.34 1.34 1.34 1.38 1.40 1.40 1.40 Gross Income per Sq. Ft. $13.37 $13.40 $13.59 $13.59 $13.59 $13.66 $14.05 $14.24 $14.24 $14.24 Expenses per Sq. Ft. ($0.76) ($0.76) ($0.77) ($0.78) ($0.78) ($0.79) ($0.81) ($0.81) ($0.82) ($0.83) Net Income Multiplier 15.29 15.56 15.65 15.97 16.29 16.54 16.38 16.49 16.83 17.17 Operating Expense Ratio 5.68% 5.71% 5.69% 5.73% 5.77% 5.80% 5.73% 5.72% 5.76% 5.81% Loan To Value Ratio 76.57% 73.16% 69.79% 66.44% 63.11% 59.82% 56.54% 53.28% 50.05% 46.83% Footnotes: b/t = before taxes; a/t = after taxes page - 11
LEASE RENT ROLL Suite Tenant Start Date Expire Date RSF $/RSF Annualized Rent Tenant Improvements Commissions Renewal Term Renewal Increase Notes VIP 07/01/2016 06/30/2026 19,250 $12.50 $240,625 $0.00 $0.00 1 year $0.00 Cumberland Farms 07/01/2016 06/30/2037 3,240 $18.52 $60,000 $0.00 $0.00 1 year NA page - 12
CASH FLOW ANALYSIS Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 GROSS SCHEDULED INCOME $300,625 $301,458 $305,625 $305,625 $305,625 $307,229 $316,083 $320,250 $320,250 $320,250 Total Operating Expenses ($17,069) ($17,202) ($17,404) ($17,525) ($17,648) ($17,806) ($18,111) ($18,325) ($18,459) ($18,595) NET OPERATING INCOME $283,555 $284,256 $288,221 $288,100 $287,977 $289,423 $297,972 $301,925 $301,791 $301,655 Loan Payment ($215,357) ($215,357) ($215,357) ($215,357) ($215,357) ($215,357) ($215,357) ($215,357) ($215,357) ($215,357) NET CASH FLOW (b/t) $68,198 $68,899 $72,863 $72,743 $72,619 $74,066 $82,615 $86,567 $86,434 $86,298 Cash On Cash Return b/t 7.78% 7.86% 8.31% 8.29% 8.28% 8.45% 9.42% 9.87% 9.86% 9.84% NET OPERATING INCOME $283,555 $284,256 $288,221 $288,100 $287,977 $289,423 $297,972 $301,925 $301,791 $301,655 Depreciation ($63,813) ($66,592) ($66,592) ($66,592) ($66,592) ($66,592) ($66,592) ($66,592) ($66,592) ($63,829) Loan Interest ($134,529) ($131,236) ($127,808) ($124,242) ($120,529) ($116,666) ($112,645) ($108,460) ($104,105) ($99,573) TAXABLE INCOME (LOSS) $85,214 $86,428 $93,820 $97,267 $100,855 $106,165 $118,735 $126,872 $131,094 $138,253 Income Taxes ($36,599) ($37,121) ($40,296) ($41,776) ($43,317) ($45,598) ($50,997) ($54,492) ($56,305) ($59,380) CASH FLOW (a/t) $31,599 $31,778 $32,568 $30,967 $29,302 $28,468 $31,618 $32,076 $30,129 $26,918 Cash On Cash Return a/t 3.60% 3.62% 3.71% 3.53% 3.34% 3.25% 3.61% 3.66% 3.44% 3.07% Footnotes: b/t = before taxes;a/t = after taxes page - 13
ANNUAL PROPERTY OPERATING DATA Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $300,625 $301,458 $305,625 $305,625 $305,625 $307,229 $316,083 $320,250 $320,250 $320,250 GROSS SCHEDULED INCOME $300,625 $301,458 $305,625 $305,625 $305,625 $307,229 $316,083 $320,250 $320,250 $320,250 GROSS OPERATING INCOME $300,625 $301,458 $305,625 $305,625 $305,625 $307,229 $316,083 $320,250 $320,250 $320,250 Expenses Property Management Fee ($6,012) ($6,029) ($6,113) ($6,113) ($6,113) ($6,145) ($6,322) ($6,405) ($6,405) ($6,405) Replacement Reserves ($2,000) ($2,000) ($2,000) ($2,000) ($2,000) ($2,000) ($2,000) ($2,000) ($2,000) ($2,000) Legal ($310) ($316) ($323) ($329) ($336) ($342) ($349) ($356) ($363) ($370) Accounting ($1,735) ($1,770) ($1,805) ($1,841) ($1,878) ($1,916) ($1,954) ($1,993) ($2,033) ($2,073) Repairs & Maintenance ($3,762) ($3,837) ($3,914) ($3,992) ($4,072) ($4,154) ($4,237) ($4,321) ($4,408) ($4,496) HVAC Compressor ($3,250) ($3,250) ($3,250) ($3,250) ($3,250) ($3,250) ($3,250) ($3,250) ($3,250) ($3,250) TOTAL OPERATING EXPENSES ($17,069) ($17,202) ($17,404) ($17,525) ($17,648) ($17,806) ($18,111) ($18,325) ($18,459) ($18,595) NET OPERATING INCOME $283,555 $284,256 $288,221 $288,100 $287,977 $289,423 $297,972 $301,925 $301,791 $301,655 page - 14
LOAN ANALYSIS Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 LOAN 1 Debt Service Analysis Principal Payments $80,829 $84,122 $87,549 $91,116 $94,828 $98,691 $102,712 $106,897 $111,252 $115,785 Interest Payments $134,529 $131,236 $127,808 $124,242 $120,529 $116,666 $112,645 $108,460 $104,105 $99,573 Total Debt Service $215,357 $215,357 $215,357 $215,357 $215,357 $215,357 $215,357 $215,357 $215,357 $215,357 Principal Balance Analysis Beginning Principal Balance $3,400,000 $3,319,171 $3,235,050 $3,147,501 $3,056,385 $2,961,557 $2,862,866 $2,760,153 $2,653,256 $2,542,004 Principal Reductions $80,829 $84,122 $87,549 $91,116 $94,828 $98,691 $102,712 $106,897 $111,252 $115,785 Ending Principal Balance $3,319,171 $3,235,050 $3,147,501 $3,056,385 $2,961,557 $2,862,866 $2,760,153 $2,653,256 $2,542,004 $2,426,219 page - 15