Market Analysis for Retail Real Estate

Market Analysis for Retail Real Estate Gary M. Ralston, CCIM, SIOR, CPM, CRE, CLS, CDP, CRX, FRICS Coldwell Banker Commercial Saunders Ralston Dantzler Realty Lakeland, FL 863 877 2828 Gary@SRDcommercial.com

Gary Ralston Gary M. Ralston, CCIM, SIOR, SRS, CPM, CRE, CLS, CDP, CRX, FRICS is a managing partner of Coldwell Banker Commercial Saunders Ralston Dantzler Realty, LLC the premier commercial services provider in Central Florida (Polk County). He is a recognized subject matter expert on retail and commercial properties. His experience includes the complete spectrum of commercial real estate services. In addition, he is a successful real estate developer, investor and group investment sponsor. From the early 1990s through 2004 Gary was the president and a member of the board of directors of Commercial Net Lease Realty, Inc. (NYSE:NNN) the industry leader in single-tenant corporate net-leased real estate. During that time he guided the company's growth from less than $15 million in real estate assets to over $1.5 billion. Gary holds the Certified Commercial Investment Member (CCIM), Society of Industrial and Office Realtors (SIOR), Specialist in Real Estate Securities (SRS), Certified Property Manager (CPM), Counselor of Real Estate (CRE), Certified Leasing Specialist (CLS), Certified Development, Design and Construction Professional (CDP), Certified Retail Property Executive (CRX) and Fellow of the Royal Institute of Chartered Surveyors (FRICS) professional designations. He is also a Florida licensed real estate broker and certified building contractor. Gary is a senior instructor for the CCIM Institute and a member of the board of directors of the CCIM Institute and CCIM Technologies, Inc. He is a Past President of the Florida CCIM Chapter. Gary is a full member of the Urban Land Institute (ULI) and a former Vice Chairman of the Small Scale Development Council. He is a member of the International Council of Shopping Centers (ICSC) and an instructor for the ICSC University of Shopping Centers at Wharton, the ICSC Executive Learning series and RECon Academy. Gary holds a Masters in Real Estate and Construction Management from the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver. In 2007 he was named an adjunct faculty member at the University of Denver, in 2011 he was named an adjunct faculty member at Florida Southern College and in 2013 Gary was named an adjunct faculty member at the University of Florida. He is the co-chair of the Florida Southern College real estate conference. Gary was inducted as a Hoyt Fellow (www.hoyt.org) in 2001. He is a member of the Regional Economic Information Network of the Jacksonville Branch of the Federal Reserve Bank of Atlanta. Gary is recognized as the second most accredited commercial real estate professional in the Nation. SAUNDERS RALSTON DANTZLER

CCIM Real Estate Feasibility Model Market (Demand/Supply) Analysis Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

Real estate is space for people. Space for people to: live in work in shop in, and store things in.

The 15 Fastest Growing States Geographic Area Population Estimate (as of July 1) 2010 2011 2012 2013 2014 2015 2014 2015 % United States 309,346,863 311,718,857 314,102,623 316,427,395 318,907,401 321,418,820 2,511,419 0.79% 1.Texas 25,244,363 25,654,464 26,089,741 26,500,674 26,979,078 27,469,114 490,036 1.82% 2.Florida 18,849,890 19,105,533 19,352,021 19,594,467 19,905,569 20,271,272 365,703 1.84% 3.California 37,334,079 37,700,034 38,056,055 38,414,128 38,792,291 39,144,818 352,527 0.91% 4.Georgia 9,713,454 9,812,280 9,917,639 9,991,562 10,097,132 10,214,860 117,728 1.17% 5.Washington 6,743,060 6,823,229 6,897,292 6,973,281 7,063,166 7,170,351 107,185 1.52% 6.North Carolina 9,558,979 9,651,025 9,747,021 9,845,432 9,940,387 10,042,802 102,415 1.03% 7.Colorado 5,048,254 5,119,480 5,191,731 5,271,132 5,355,588 5,456,574 100,986 1.89% 8.Arizona 6,408,208 6,468,732 6,553,262 6,630,799 6,728,783 6,828,065 99,282 1.48% 9.South Carolina 4,635,894 4,672,733 4,721,341 4,768,498 4,829,160 4,896,146 66,986 1.39% 10.Oregon 3,837,972 3,868,509 3,899,444 3,928,030 3,971,202 4,028,977 57,775 1.45% 11.Virginia 8,025,787 8,110,783 8,193,374 8,267,875 8,328,098 8,382,993 54,895 0.66% 12.Nevada 2,703,440 2,718,819 2,754,874 2,790,366 2,838,281 2,890,845 52,564 1.85% 13.Tennessee 6,356,585 6,398,408 6,455,469 6,496,130 6,547,779 6,600,299 52,520 0.80% 14.Utah 2,775,426 2,816,440 2,856,343 2,903,685 2,944,498 2,995,919 51,421 1.75% 15.New York 19,402,920 19,523,202 19,606,981 19,691,032 19,748,858 19,795,791 46,933 0.24% CA, TX & FL are 27.0% of US population but accounted for 48.1% of growth FL is 6.3% of US population and accounted for 14.6% of growth FL is growing 2.3 times the rate of the US 1,002 people per day I 4 corridor (Orlando, Tampa & Lakeland MSAs) was over 35% of Florida s growth More people means more demand for real estate www.census.gov Gary Ralston, CCIM, SIOR, CPM, CRE, CLS, CDP, CRX, FRICS Gary@SRDcommercial.com 863 877 2828

http://www.census.gov/quickfacts/ Census Quick Facts

Polk Cities Benchmark Demographics Lake Alfred Fort Meade Auburndale Lake Wales Bartow Haines City Winter Haven Lakeland Polk County Florida USA Population Population estimates, July 1, 2015 20,271,272 321,418,820 Population estimates, July 1, 2014 5,253 5,869 14,518 15,140 18,420 22,072 36,371 102,346 634,638 19,893,297 318,857,056 Population, Census, April 1, 2010 5,015 5,626 13,507 14,225 17,298 20,535 33,874 97,422 602,095 18,801,310 308,745,538 AVG Annual % Change, 2010 to 2014 1.11% 0.89% 1.76% 1.55% 1.53% 1.72% 1.74% 1.18% 1.27% 1.36% 0.78% Age and Sex Persons under 5 years % 7.30% 7.40% 6.60% 7.00% 7.60% 8.80% 6.50% 6.20% 5.90% 5.50% 6.20% Persons under 18 years % 25.20% 25.60% 25.50% 23.80% 25.80% 28.00% 22.30% 21.00% 22.80% 20.40% 23.10% Persons 65 years + over % 16.10% 19.00% 13.90% 23.00% 14.80% 15.00% 22.30% 20.70% 19.50% 19.10% 14.50% Female persons % 51.10% 50.70% 51.70% 52.60% 53.00% 50.60% 53.70% 53.10% 51.00% 51.10% 50.80% Race and Hispanic Origin White alone % 71.30% 68.30% 80.00% 65.00% 67.60% 53.40% 64.70% 70.80% 79.70% 77.80% 77.40% Black or African American % 17.50% 18.20% 12.80% 27.50% 23.70% 27.50% 27.70% 20.90% 15.70% 16.80% 13.20% American Indian and Alaska Native % 0.40% 0.50% 0.40% 0.50% 0.30% 0.50% 0.30% 0.30% 0.60% 0.50% 1.20% Asian % 1.70% 0.30% 1.20% 0.80% 1.10% 1.40% 2.00% 1.80% 1.90% 2.80% 5.40% Native Hawaiian and Other Pacific Islander % 0.00% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.20% Two or More Races % 2.20% 1.90% 2.20% 2.20% 2.50% 2.70% 2.30% 2.70% 2.00% 2.00% 2.50% Hispanic or Latino % 16.00% 26.10% 13.10% 15.60% 14.70% 38.90% 11.00% 12.60% 19.60% 24.10% 17.40% White alone, not Hispanic or Latino % 63.10% 54.20% 71.70% 55.00% 59.10% 31.80% 58.10% 63.10% 62.10% 55.80% 62.10% Population Characteristics and Housing Veterans, 2010 2014 406 334 786 1,208 1,250 1,059 2,945 8,746 50,885 1,538,636 20,700,711 Foreign born persons, % 2010 2014 7.70% 10.00% 11.00% 8.90% 4.90% 22.10% 10.80% 8.70% 10.10% 19.60% 13.10% Housing Housing units, 2010 2014 2,169 2,453 5,670 6,900 7,130 9,076 17,037 48,218 282,730 9,144,250 133,957,180 Owner occupied housing unit rate, 2010 2014 59.40% 69.00% 65.80% 57.60% 63.70% 60.10% 58.50% 55.30% 69.60% 66.10% 64.40% Median value of owner occupied housing units, 2010 2014 $101,200 $71,100 $115,900 $108,300 $95,200 $98,700 $100,300 $109,700 $107,100 $156,200 $175,700 Median selected monthly owner costs w/mortgage, 2010 2014 $1,189 $1,104 $1,313 $1,145 $1,226 $1,172 $1,194 $1,222 $1,217 $1,480 $1,522 Median selected monthly owner costs w/o mortgage, 2010 2014 $493 $359 $374 $454 $426 $422 $422 $440 $397 $469 $457 Median gross rent, 2010 2014 $868 $867 $855 $735 $777 $809 $811 $868 $870 $998 $920 Building permits, 2014 2,559 84,075 1,046,363 Families and Living Arrangements Households, 2010 2014 1,671 1,840 4,633 5,497 5,847 6,769 13,907 39,497 220,556 7,217,508 116,211,092 Persons per household, 2010 2014 3.06 3.11 2.98 2.60 2.88 3.10 2.49 2.42 2.73 2.62 2.63 Living in same house 1 year ago % 0.77% 90.40% 84.00% 74.80% 81.70% 87.70% 81.60% 79.30% 83.70% 83.70% 85.00% Language other than English spoken at home % 14.60% 26.00% 18.50% 19.70% 11.40% 45.60% 18.50% 14.30% 19.30% 27.80% 20.90% Education High school graduate or higher, % age 25 Yrs+, 2010 2014 89.60% 78.10% 81.00% 78.90% 82.70% 71.90% 83.30% 87.60% 83.10% 86.50% 86.30% Bachelor's degree or higher, % age 25 Yrs+, 2010 2014 15.60% 12.00% 14.50% 19.20% 17.00% 14.30% 16.90% 24.70% 18.60% 26.80% 29.30% Health With a disability, under age 65 Yrs, %, 2010 2014 10.40% 8.10% 11.70% 9.60% 11.60% 7.70% 9.80% 10.50% 10.50% 8.50% 8.50% Persons without health insurance < age 65 Yrs % 26.50% 22.60% 23.10% 19.70% 17.20% 35.10% 24.40% 18.50% 23.80% 20.10% 12.00% Economy In civilian labor force, total, % age 16 years+, 2010 2014 63.20% 58.80% 60.90% 53.30% 56.30% 56.80% 53.40% 54.60% 55.90% 59.20% 63.50% In civilian labor force, female, % age 16 years+, 2010 2014 61.30% 50.00% 52.40% 50.00% 52.50% 50.90% 49.00% 49.80% 51.60% 55.00% 58.70% Total accommodation and food services sales, 2007 ($1,000) $19,905 $32,893 $33,555 $23,129 $69,952 $261,091 $699,617 $41,922,059 $613,795,732 Total health care & social assistance, 2007 ($1,000) $3,857 $31,922 $113,898 $177,006 $29,635 $613,452 $1,330,581 $2,613,713 $102,029,316 $1,668,276,808 Total manufacturers shipments, 2007 ($1,000) $568,210 $1,145,684 $279,238 $1,001,515 $7,178,034 $104,832,907 $5,319,456,312 Total merchant wholesaler sales, 2007 ($1,000) $37,040 $502,694 $165,398 $66,840 $57,863 $205,695 $10,346,834 $13,241,719 $221,641,518 $4,174,286,516 Total retail sales, 2007 ($1,000) $59,682 $264,123 $514,993 $430,408 $252,503 $667,524 $2,250,085 $6,420,144 $262,341,127 $3,917,663,456 Total retail sales per capita, 2007 $10,410 $19,302 $36,418 $25,572 $13,574 $20,600 $24,334 $11,195 $14,353 $12,990 Transportation Mean travel time to work (minutes), 2010 2014 26.9 23.8 30.7 21.8 22.6 30.3 22.4 20.9 25.6 26.1 25.7 Income and Poverty Median household income (in 2014 $), 2010 2014 $34,015 $42,377 $40,851 $35,785 $42,551 $33,305 $36,602 $39,238 $43,063 $47,212 $53,482 Per capita income in past 12 months (in 2014 $), 2010 2014 $15,652 $17,805 $18,801 $17,651 $19,285 $14,839 $21,448 $22,449 $21,157 $26,499 $28,555 Persons in poverty % 31.90% 21.20% 18.90% 28.90% 22.10% 27.30% 20.90% 19.30% 18.10% 16.50% 14.80%

http://www.bls.gov/eag/ BLS Economy at a Glance

Retail Interesting Facts WMT is almost 10% of US non-automotive retail sales (44, 45, less 4411) Top 100 retailers 266,580 stores Less than 15% of total number of stores Almost 50% of total US non-automotive retail sales

2014 Top 100 US Retailers www.stores.org

Retail Business Life Cycle DECLINE MATURITY EXPANSION INNOVATION SALES IN $ OR VOLUME TIME

US Retail Sales Year Total 2006 $3,397,735,000,000 2007 $3,531,986,000,000 2008 $3,601,565,000,000 2009 $3,394,672,000,000 2010 $3,542,177,000,000 2011 $3,783,417,000,000 2012 $3,934,396,000,000 2013 $4,042,085,000,000 2014 $4,187,265,000,000 2015 $4,239,368,000,000 Retail Trade & Food Services, less Auto http://www.census.gov/retail

NAICS Kind of Business 2014 Retail and food services sales, total 5,271,913 Retail sales and food services excl motor vehicle and parts 4,214,375 Retail sales, total 4,700,701 Retail sales, total (excl. motor vehicle and parts dealers) 3,643,163 GAFO(1) 1,250,543 441 Motor vehicle and parts dealers 1,057,538 442 Furniture and home furnishings stores 101,158 443 Electronics and appliance stores 107,281 444 Building mat. and garden equip. and supplies dealers 328,517 445 Food and beverage stores 668,723 446 Health and personal care stores 298,548 447 Gasoline stations 533,375 448 Clothing and clothing access. stores 253,691 451 Sporting goods, hobby, book, and music stores 87,717 452 General merchandise stores 663,091 453 Miscellaneous store retailers 120,385 454 Nonstore retailers 480,677 722 Food services and drinking places 571,212 7221 Full service restaurants 245,588 7222 Limited service eating places 256,450 7224 Drinking places 22,042

Retail Business Trends Consumer is trading down / recession retail Wal-Mart Dollar stores Warehouse clubs

Retail Business Trends Consumer is trading down / recession retail Wal-Mart Dollar stores Warehouse clubs Convenience & Value Efficiency Who took Circuit City s business? The internet??

Retail Trade Sales Total and E Commerce 2015 Total E commerce 1 Q 1,153,584,000 80,451,000 2 Q 1,171,458,000 84,019,000 3 Q 1,184,473,000 87,225,000 4 Q 1,184,753,000 89,078,000 Total 4,694,268,000 340,773,000 7.26% E commerce % Not adjusted for food (NAICS 722) and auto http://www.census.gov/retail/

Summary Demographics 2015 Population 318,536,439 2015 Households 120,746,349 2015 Median Disposable Income $43,530 2015 Per Capita Income $28,597 NAICS Demand Supply Retail Gap Leakage/Surplus Number of Industry Summary (Retail Potential) (Retail Sales) Factor Businesses Total Retail Trade and Food & Drink 44-45,722 $4,855,692,880,416 $4,855,692,879,787 $629 0.0 2,654,834 Total Retail Trade 44-45 $4,390,213,371,559 $4,390,213,371,306 $253 0.0 1,880,800 Total Food & Drink 722 $465,479,508,857 $465,479,508,481 $376 0.0 774,034 NAICS Demand Supply Retail Gap Leakage/Surplus Number of Industry Group (Retail Potential) (Retail Sales) Factor Businesses Motor Vehicle & Parts Dealers 441 $1,001,048,457,576 $1,001,048,457,744 -$168 0.0 237,402 Automobile Dealers 4411 $818,410,890,094 $818,410,890,253 -$159 0.0 112,377 Other Motor Vehicle Dealers 4412 $117,770,290,369 $117,770,290,272 $97 0.0 39,154 Auto Parts, Accessories & Tire Stores 4413 $64,867,277,113 $64,867,277,219 -$106 0.0 85,871 Furniture & Home Furnishings Stores 442 $131,378,635,268 $131,378,634,826 $442 0.0 99,048 Furniture Stores 4421 $79,889,287,978 $79,889,287,840 $138 0.0 47,690 Home Furnishings Stores 4422 $51,489,347,290 $51,489,346,986 $304 0.0 51,358 Electronics & Appliance Stores 443 $228,115,430,846 $228,115,430,942 -$96 0.0 118,177 Bldg Materials, Garden Equip. & Supply Stores 444 $209,040,507,938 $209,040,508,826 -$888 0.0 161,238 Bldg Material & Supplies Dealers 4441 $183,449,404,596 $183,449,405,259 -$663 0.0 129,193 Lawn & Garden Equip & Supply Stores 4442 $25,591,103,342 $25,591,103,567 -$225 0.0 32,045 Food & Beverage Stores 445 $821,154,899,957 $821,154,900,198 -$241 0.0 237,930 Grocery Stores 4451 $716,061,966,803 $716,061,966,883 -$80 0.0 143,152 Specialty Food Stores 4452 $58,840,409,512 $58,840,409,554 -$42 0.0 54,634 Beer, Wine & Liquor Stores 4453 $46,252,523,642 $46,252,523,761 -$119 0.0 40,144 Health & Personal Care Stores 446,4461 $271,681,597,230 $271,681,596,997 $233 0.0 141,953 Gasoline Stations 447,4471 $295,982,777,737 $295,982,777,882 -$145 0.0 99,934 Clothing & Clothing Accessories Stores 448 $232,253,989,800 $232,253,989,566 $234 0.0 239,061 Clothing Stores 4481 $161,025,683,336 $161,025,683,132 $204 0.0 159,461 Shoe Stores 4482 $28,814,811,881 $28,814,812,259 -$378 0.0 30,043 Jewelry, Luggage & Leather Goods Stores 4483 $42,413,494,583 $42,413,494,175 $408 0.0 49,557 Sporting Goods, Hobby, Book & Music Stores 451 $125,129,724,556 $125,129,724,372 $184 0.0 127,401 Sporting Goods/Hobby/Musical Instr Stores 4511 $102,408,809,840 $102,408,809,749 $91 0.0 103,319 Book, Periodical & Music Stores 4512 $22,720,914,716 $22,720,914,623 $93 0.0 24,082 General Merchandise Stores 452 $777,975,428,782 $777,975,428,404 $378 0.0 90,877 Department Stores Excluding Leased Depts. 4521 $580,012,433,980 $580,012,433,787 $193 0.0 33,016 Other General Merchandise Stores 4529 $197,962,994,802 $197,962,994,617 $185 0.0 57,861 Miscellaneous Store Retailers 453 $197,152,569,242 $197,152,568,914 $328 0.0 292,053 Florists 4531 $8,910,583,776 $8,910,583,951 -$175 0.0 36,160 Office Supplies, Stationery & Gift Stores 4532 $39,338,506,534 $39,338,506,587 -$53 0.0 70,048 Used Merchandise Stores 4533 $19,756,413,599 $19,756,413,151 $448 0.0 63,280 Other Miscellaneous Store Retailers 4539 $129,147,065,333 $129,147,065,225 $108 0.0 122,565 Nonstore Retailers 454 $99,299,352,627 $99,299,352,635 -$8 0.0 35,726 Electronic Shopping & Mail-Order Houses 4541 $71,009,144,976 $71,009,145,242 -$266 0.0 15,877 Vending Machine Operators 4542 $4,990,710,762 $4,990,710,635 $127 0.0 6,794 Direct Selling Establishments 4543 $23,299,496,889 $23,299,496,758 $131 0.0 13,055 Food Services & Drinking Places 722 $465,479,508,857 $465,479,508,481 $376 0.0 774,034 Full-Service Restaurants 7221 $255,015,776,155 $255,015,775,700 $455 0.0 467,063 Limited-Service Eating Places 7222 $184,599,469,755 $184,599,469,678 $77 0.0 236,836 Special Food Services 7223 $9,259,595,714 $9,259,595,689 $25 0.0 22,710 Drinking Places - Alcoholic Beverages 7224 $16,604,667,233 $16,604,667,414 -$181 0.0 47,425

NAICS Kind of business 2014 Retail gross margin as a percentage of sales, total 27.7% Total (excl. motor vehicle and parts dealers) 30.4% GAFO¹ 33.9% 441 Motor vehicle and parts dealers 18.3% 4411 Automobile dealers 15.0% 4413 Automotive parts, access., and tire stores 44.4% 442 Furniture and home furnishings stores 46.7% 443 Electronics and appliance stores 30.7% 444 Building mat. and garden equip. and supplies dealers 34.5% 4441 Building mat. and supplies dealers 35.2% 445 Food and beverage stores 27.6% 4451 Grocery stores 26.9% 4453 Beer, wine, and liquor stores 28.8% 446 Health and personal care stores 29.8% 4461 Health and personal care stores 29.8% 44611 Pharmacies and drug stores 24.7% 447 Gasoline stations 12.5% 448 Clothing and clothing access. stores 45.0% 4481 Clothing stores 44.5% 44811 Men's clothing stores 51.6% 44812 Women's clothing stores 49.3% 44814 Family clothing stores 38.1% 4482 Shoe stores 46.9% 451 Sporting goods, hobby, book, and music stores 42.1% 4511 Sporting goods, hobby, and musical instrument stores 42.1% 452 General merchandise stores 26.9% 4521 Department stores 33.3% 45211 Department stores 33.3% 452111 Department stores (except discount dept. stores) 37.2% 452112 Discount dept. stores 31.1% 4529 Other general merchandise stores 24.7% 45291 Warehouse clubs and supercenters 22.9% 45299 All other gen. merchandise stores 36.3% 453 Miscellaneous store retailers 47.8% 454 Nonstore retailers 39.5% 4541 Electronic shopping and mail order houses 39.0%

Shopping Center Characteristics

www.icsc.org

2015 ICSC Research Retail SF Calculations 7,551,571,244 SF Shopping Centers 43.2% Shopping Center % 17,470,557,061 Total Retail SF 318,536,439 US population 23.71 SF/person shopping centers 54.85 SF/person total retail

11,100 SF Tuffy Auto Service Center High Profile LEGOLAND Corridor Retail 6930 Cypress Gardens Boulevard, Winter Haven, FL 33884 6,000 SF local space Community Southern Bank (shadow anchor) Key intersection CVS McDonalds 7 Eleven Almost 40,000 people within 10 minutes For Lease For Lease on the way to LEOGLAND Florida David Goffe 863 648 1528 DGoffe@SRDcommercial.com Gary Ralston, CCIM 863 877 2828 Gary @SRDcommercial.com

Market Analysis - Location Market (Demand/Supply) Analysis Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

Regional Location Map Orlando Tampa

Location Map Lakeland Winter Haven

Hierarchy of Roads Interstate Highways limited access, parkways, tolls roads, etc. US Highways State Roads County Roads Streets

Location Map Lakeland Winter Haven US 17 US 27

10,200 cars/day Market Area/Linkages & Traffic Counts 16,100 cars/day cars/day 26,500 cars/day 19,400 11,000 cars/day 38,000 cars/day 35,000 cars/day 29,500 cars/day 11,500 cars/day 29,000 cars/day 20,500 cars/day 33,500 cars/day 6 miles 4,500 cars/day

Market Area 6 miles

Market Area/Trade Area Two Walmarts and two grocery stores means there are two trade areas 6 miles

LEGOLAND/Cypress Gardens Blvd Trade Area 11,500 cars/day 11,500 cars/day 29,000 cars/day Regional HQ 3 miles

LEGOLAND Florida/Cypress Gardens Blvd Trade Area Location of subject property Regional HQ Available 3 miles

Market Analysis - Demand Market (Demand/Supply) Analysis Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

1, 2, 3 mile radius 5 & 10 min drive time

Why 1, 2, 3 mile radius Benchmark Demographics we determined that the trade area was 3 miles so the radius from the site would be about 2 miles or so. Reviewing 1 and 3 mile radius provides additional context for analyst observations and would help understand immediate area surrounding subject (1 mile radius) and any changes in characteristics between 2 and 3 mile radius. Why 5 and 10 minute drive times. 10 minutes is the standard limit of retail trade areas for most retail lines of trade. Some such as home improvement, warehouse clubs, etc. are a large trade area. 5 mile radius or even more and 15 minute or so drive time. A comparison map showing 1, 2, 3 mile radius and 5 and 10 minute drive time helps analyst to zero in on best geography to use for analysis. Determination of a more precise trade area is conducted using a target user/specific retail line of trade. For example a determination of a trade area for a drug store would look at ½ the distance to the next competing point of supply to help define the trade area geography.

Trade Area Displaced Sales 11,500 cars/day Additional Retail Demand LEGOLAND Florida 1,700 employees State Farm Regional HQ 2,000 employees Carlton Arms 1,000 apartments 11,500 cars/day 29,000 cars/day Regional HQ 3 miles

LEGOLAND Florida, the largest LEGOLAND Park in the world, is a 150 acre interactive theme park with more than 50 rides, shows and attractions, restaurants, shopping, a breathtaking botanical garden and the LEGOLAND Water Park all geared to families with children ages 2 to 12. http://florida.legoland.com/en/

Estimated 2 million annual visitors. 152 room 4 story hotel opened May 2015

Site & Building Market (Demand/Supply) Analysis Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

Neighborhood Aerial 29,000 cars/day

Site Characteristics Access Multiple points of access including signalized intersection

Site Plan

Site Plan Lake Ruby Shoppes: 67 parking spaces Bank: 41 parking spaces

Proposed Drive Thru

Building Details 30 FT x 50 FT bays are very flexible and offer excellent frontage exposure No building characteristics deficiency 30 50 1,500 SF

Floor Plan

Lake Ruby Shoppes Retail Space

Political & Legal Market (Demand/Supply) Analysis Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

Sec. 21 45. C 3 Highway commercial. (a) Future land use classification: Commercial Retail. (b) The C 3 highway business district is intended to apply to arterial streets and trafficways where business establishments primarily not of a neighborhood or community service type may properly be located to serve large sections of the City. Such businesses generally require considerable ground area, do not cater directly to pedestrians and need a conspicuous and accessible location convenient for motorists. (c) Additional development standards: (1) Development site shall be large enough to accommodate all required parking, stormwater management and other standards and facilities. (Ord. No. O 00 09, Art. 2 (2.02.03.12), 4 24 00; Ord. No. O 08 42, 5, 5 12 08) https://www.municode.com/library/fl/winter_haven/codes/code_of_ordinances?nodeid=ptiicoor_ch21unladeco_artiirespdi_div2zodi_s21 34AG

Legal Restrictions Contained in Lease

Market Analysis - Supply Market (Demand/Supply) Analysis Analysis of the competing properties in the trade area Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

Tuffy Locations in Polk County Strategic location between other Tuffy stores in Polk

Comparable Properties for Market Rent

1 Proposed

Shoppes of Cypress Landing SW of Cypress Gardens Blvd and US Highway 27, Lake Wales, FL 33859 Prop ID: 2043722 288,798 SF Neighborhood Center Proposed Project rents are quoted at $18 to $24/NNN

2 $35/SF Proposed

Unsophisticated owner seeking above market rental rates $20/SF

Parcel Map

Tenants

Parcel Map

7 Project is immediately South of former K mart.. i.e., Phase II of Winter Haven Square

Attachments from Xceligent

Former Kmart Parcel Map

8 55,000 SF 55,000 SF 9.8 Subject property is commercial condo as a result information is not clearly presented. Property operation and management is fragmented.

Parcel Map

Unsophis[cated owner project has been condominiumized access and exposure issues can t see shops from street Asking rent $12 to $15/SF

9 This is the subject property of the case study

6906 Cypress Gardens Blvd Parcel Map pin s_address ' 272907000000034370 6906 CYPRESS GARDENS BLVD acres_gis sqn_htd mrkt_lnd 1.65 11,100 733,176 bldg mrkt_tot sale1_date sale1_amt o_name1 550,947 1,284,123 2/22/08 1,150,000 METEOR LLC

10 $15/SF

Parcel Map

Project not visible from street fronts on Walmart parking lot has been foreclosed Out of town owner/manager Asking $15/SF

Comparable Rent Conclusions Existing vacant space with comparable building characteristics small bay (less than 70 FT bay depth) $15 to $20/SF Conclusion > asking price for Lake Ruby Shoppes $15/SF end cap w/drive thru $12.50/SF interior units $13.50/SF end cap You can outperform the market as to occupancy you cannot outperform the market as to rent

Site in Search of User Recap Finding Tenants Aggregation Contiguous or adjacent user combines current space with subject resulting in synergy increased value Gap analysis who is missing Benchmark Demographics RetailMarket Place Profile report Who is represented in market area but not trade area Trading Places... tenants already in market/trade area With inferior site characteristics (visibility, access, etc.) Need different building characteristics... larger/smaller space, less bay depth/more width Financial Lower rent/occupancy cost Potential owner vs tenant (in some situations)

Summary Demographics 2015 Population 18,609 2015 Households 7,927 2015 Median Disposable Income $44,746 2015 Per Capita Income $29,055 NAICS Demand Supply Retail Gap Leakage/Surpl Number of Industry Summary (Retail (Retail Sales) Factor Businesses Total Retail Trade and Food & Drink 44- $299,458,492 $276,464,981 $22,993,511 4.0 86 Total Retail Trade 44-45 $271,548,242 $256,723,036 $14,825,206 2.8 58 Total Food & Drink 722 $27,910,249 $19,741,945 $8,168,304 17.1 28 NAICS Demand Supply Retail Gap Leakage/Surpl Number of Industry Group (Retail (Retail Sales) Factor Businesses Motor Vehicle & Parts Dealers 441 $66,246,930 $99,381,639 -$33,134,709-20.0 8 Automobile Dealers 4411 $52,812,608 $96,309,099 -$43,496,491-29.2 5 Other Motor Vehicle Dealers 4412 $9,278,623 $1,121,980 $8,156,643 78.4 1 Auto Parts, Accessories & Tire Stores 4413 $4,155,698 $1,950,560 $2,205,138 36.1 3 Furniture & Home Furnishings Stores 442 $8,412,032 $0 $8,412,032 100.0 0 Furniture Stores 4421 $4,940,660 $0 $4,940,660 100.0 0 Home Furnishings Stores 4422 $3,471,372 $0 $3,471,372 100.0 0 Electronics & Appliance Stores 443 $11,135,892 $863,528 $10,272,364 85.6 2 Bldg Materials, Garden Equip. & 444 $12,906,211 $3,160,378 $9,745,833 60.7 5 Bldg Material & Supplies Dealers 4441 $11,189,461 $1,367,038 $9,822,423 78.2 1 Lawn & Garden Equip & Supply Stores 4442 $1,716,750 $1,793,340 -$76,590-2.2 4 Food & Beverage Stores 445 $49,423,669 $49,593,184 -$169,515-0.2 8 Grocery Stores 4451 $43,796,518 $47,863,349 -$4,066,831-4.4 5 Specialty Food Stores 4452 $3,575,663 $1,729,835 $1,845,828 34.8 2 Beer, Wine & Liquor Stores 4453 $2,051,489 $0 $2,051,489 100.0 0 Health & Personal Care Stores 446,44 $16,989,896 $12,084,800 $4,905,096 16.9 7 Gasoline Stations 447,44 $19,289,857 $2,971,550 $16,318,307 73.3 2 Clothing & Clothing Accessories 448 $13,868,161 $3,200,769 $10,667,392 62.5 7 Clothing Stores 4481 $9,966,498 $2,464,636 $7,501,862 60.3 5 Shoe Stores 4482 $1,702,431 $0 $1,702,431 100.0 0 Jewelry, Luggage & Leather Goods 4483 $2,199,232 $736,133 $1,463,099 49.8 2 Sporting Goods, Hobby, Book & Music 451 $6,520,272 $1,131,198 $5,389,074 70.4 3 Sporting Goods/Hobby/Musical Instr 4511 $4,780,074 $1,131,198 $3,648,876 61.7 3 Book, Periodical & Music Stores 4512 $1,740,198 $0 $1,740,198 100.0 0 General Merchandise Stores 452 $47,390,047 $81,587,195 -$34,197,148-26.5 6 Department Stores Excluding Leased 4521 $34,326,580 $78,242,414 -$43,915,834-39.0 2 Other General Merchandise Stores 4529 $13,063,467 $3,344,780 $9,718,687 59.2 4 Miscellaneous Store Retailers 453 $12,585,830 $2,590,482 $9,995,348 65.9 10 Florists 4531 $543,668 $117,281 $426,387 64.5 1 Office Supplies, Stationery & Gift 4532 $2,332,955 $860,431 $1,472,524 46.1 4 Used Merchandise Stores 4533 $1,104,177 $164,991 $939,186 74.0 2 Other Miscellaneous Store Retailers 4539 $8,605,030 $1,447,780 $7,157,250 71.2 4 Nonstore Retailers 454 $6,779,444 $0 $6,779,444 100.0 0 Electronic Shopping & Mail-Order 4541 $5,280,754 $0 $5,280,754 100.0 0 Vending Machine Operators 4542 $156,106 $0 $156,106 100.0 0 Direct Selling Establishments 4543 $1,342,584 $0 $1,342,584 100.0 0 Food Services & Drinking Places 722 $27,910,249 $19,741,945 $8,168,304 17.1 28 Full-Service Restaurants 7221 $15,724,915 $10,753,186 $4,971,729 18.8 18 Limited-Service Eating Places 7222 $10,385,313 $8,878,610 $1,506,703 7.8 9 Special Food Services 7223 $464,907 $75,061 $389,846 72.2 1 Drinking Places - Alcoholic Beverages 7224 $1,335,114 $0 $1,335,114 100.0 0

Financial Analysis Market (Demand/Supply) Analysis Financial Analysis Site in search of User User in search of Site Goals and Objectives Alternatives/Decision Criteria Go/No Go Decision Points Location, Site & Building Analysis Political & Legal Analysis

Parcel Data Developer paid $1,150,000 for land and then built site and buildings investment approximately $3,000,000 pin s_address ' 272907000000034370 6906 CYPRESS GARDENS BLVD acres_gis sqn_htd mrkt_lnd 1.65 11,100 733,176 bldg mrkt_tot sale1_date sale1_amt o_name1 550,947 1,284,123 2/22/08 1,150,000 XXXXXXXXX

Tuffy Lease Info

Tuffy Associates Corp. Tuffy Associates Corp. www.tuffy.com is a franchisor of automotive repair facilities that perform complete automotive repair, including brakes, exhaust, front end, steering, suspension, alignment, tires, air conditioning, engine diagnostics, batteries, and other automotive products and services. The Company offers franchises under two brands: Tuffy Tire & Auto Service Centers and Car X Auto Service. The company s 349 retail outlets (about 85% are franchised) have combined revenue approaching $250 million and are located in 20 states primarily in the midwestern and southeastern United States. Tuffy was founded in 1970 and is headquartered in Toledo, OH. Lease is with franchisor Tuffy Associates Corp.

Owner APOD

Leasing Plan 6906 6912 6918 6924 6930

APOD Income Statement Pro forma Assumptions: Tuffy rent as per rent roll info Local space $15/SF for end cap with drive thru $13.50 to $12.50/SF for 3 other units Vacancy & Collection 1 local space will be vacant for 6 months each year (use average rent) CAM Tuffy @ $5.50/SF Local @ $4.50/SF Operating Expenses Fixed Expenses Taxes @ $26,434 Insurance @ $5,500 Expenses monthly Utilities water/sewer, dumpster @ $450 Lawn @ $400 Electricity @ $50 Stormwater @ $30 Maintenance/repairs @ $100 Property management @ 5% Miscellaneous @ $35

APOD Income Statement Pro forma Projected Rent is below market rate Increase NOI 46%

Cap Rate Analysis

Pro forma Income Statement

The Rest of the Story Leased entire building to Steak N Shake Increased loan by $300,000 and equity by $50,000 to cover drive thru (constructed by landlord) and tenant improvements, etc. Value at 7.5% cap rate = $3.3 million Investment strategy... Enjoy cash flow for next 15 years and add to estate... pass along to children

LEGOLAND/Cypress Gardens Blvd Trade Area 11,500 cars/day 11,500 cars/day 29,000 cars/day Regional HQ 3 miles

Revised Site Plan with drive thru

Annual Property Operating Data GROSS INCOME Tenant Address BLDG SF $/GLA Rent Tuffy Associates 6906 Cypress Gardens Blvd 5,100 $27.21 138,780.00 $29.66 151,272.00 $32.33 164,880.00 $35.24 179,724.00 $35.24 179,724.00 $35.24 179,724.00 Tuffy Associates 6906 Cypress Gardens Blvd $29.66 151,272.00 Steak & Shake 6912 Cypress Gardens Blvd 6,000 16.03 96,180.00 16.83 100,989.00 17.67 106,038.45 Gross Potential Revenue 11,100 247,452 Collection Loss/Add'tl Vacancy (not applicable) Effective Rental Income/Gross Operating Income/NOI $22.29 247,452

Revised Sources & Uses Sources: Equity 600,000 additional Equity 50,000 Equity total 650,000 Revised Mortgage Loan 1,950,000 Total Sources of Funds 2,600,000 Uses: Purchase of Property 2,150,000 Acquisition Costs 8,350 Leasing Costs 63,075 Loan Costs 24,525 subtotal 95,950 Additional Tenant Improvement 350,000 Reserve 4,050 Total Uses 2,600,000 Loan 1,950,000 Term Years 15 Rate 4.60% Pmt/ADS 15,081.22 180,975 NOI 247,452 ADS (180,975) Cash Flow Before Taxes 66,477 Equity 650,000 Cash on Cash 10.2%

Course Evaluation Please Complete Your Evaluation Now. 1. Take Out Your Smartphone or Tablet 2. Go to survey.icsc.org/2016recon 3. Select this course: Retail Real Estate Market Analysis

Interest Rates and Capitalization Rates

www.rcanalytics.com 135

10 Year Treasury Rate http://www.multpl.com/10 year treasury rate

Board of Governors of the Federal Reserve System Selected Interest Rates (Daily) H.15 https://www.federalreserve.gov/releases/h15/update/#fn10

Board of Governors of the Federal Reserve System Selected Interest Rates (Daily) H.15 1.67% 10 YR UST 0.29% Inflation Indexed 10 YR 1.38% Annual Inflation 10 Yrs https://www.federalreserve.gov/releases/h15/update/#fn10