135 Talcottville Rd Vernon, CT 06066 Offering Memorandum
NON- ENDORSEMENT AND DISCLAIMER NOTICE 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. STARBUCKS ANCHORED CENTER - VERNON, CT Vernon, CT ACT ID Y0560294
Laurie Ann (LA) Drinkwater, CCIM First Vice President Investments Director, National Retail Group Net Leased Properties Group BOSTON OFFICE Office: (617) 896-7230 Cell: (860) 287-0568 LaurieAnn.Drinkwater@marcusmillichap.com License: CT: REB.0751880, MA: 147511, RI: B 16787 Seth J. Richard First Vice President Investments Director, National Retail Group Net Leased Properties Group MANHATTAN OFFICE Office: (212) 430-5164 Cell: (860) 287-4624 Seth.Richard@marcusmillichap.com License: CT: 0764595, NY 10401275108, MA 149700
TABLE OF CONTENTS SECTION INVESTMENT OVERVIEW 01 Offering Summary Location Overview Regional Map Local Map Aerial Photo Property Photo FINANCIAL ANALYSIS 02 Pricing Detail Tenant Summary MARKET COMPARABLES 03 Sales Comparables MARKET OVERVIEW 04 Market Analysis Demographic Analysis
INVESTMENT OVERVIEW 4
EXECUTIVE SUMMARY Price Down Payment Gross Leasable Area (GLA) Price/SF Current Occupancy Year Built / Renovated Lot Size VITAL DATA YEAR 1 $4,650,500 CAP Rate 5.50% 100% / $4,650,500 Net Operating Income $255,780 Net Cash Flow 5,286 SF After Debt Service 5.50% / $255,780 $879.78 Total Return 5.50% / $255,780 100.0% 2016 2.4 acre(s) MAJOR TENANTS TENANT GLA LEASE EXPIRATION LEASE TYPE Starbucks 1,950 6/30/2026 NNN Spring Mobile 1,800 6/30/2026 NNN Farmington Bank 1,536 6/30/2036 NNN Ground OFFERING SUMMARY MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES Echn 3,605 Manchester School District 1,100 Manchester Memorial Hospital 1,000 Journal Inquirer 840 Paradigm Precision 791 Town of Vernon 701 Rockville General Hospital Inc 580 US Post Office 526 Manchester Healthcare Inc 500 Medco Health Services Inc 430 Manchester Community College 406 Osram Sylvania Inc 377 DEMOGRAPHICS 1-Miles 3-Miles 5-Miles 2016 Estimate Pop 4,899 47,242 110,566 2016 Census Pop 4,883 47,231 110,490 2016 Estimate HH 2,134 20,162 46,658 2016 Census HH 2,126 20,113 46,499 Median HH Income $78,113 $73,179 $68,326 Per Capita Income $42,684 $40,172 $37,253 Average HH Income $97,936 $93,920 $88,066 # 5
INVESTMENT OVERVIEW OFFERING SUMMARY Marcus and Millichap is pleased to present the Starbucks Anchored Center located at 135 Talcottville Road, Vernon CT. The subject property is a 5,286 square-foot shopping center comprised of two buildings on a 2.4 acre lot. The newly constructed center is anchored by Starbucks, and also features Spring Mobile and a freestanding Farmington Bank branch. Starbucks has signed a new 10-year NNN lease, with 10% increases every five years. Spring Mobile, a GameStop subsidiary and AT&T Authorized Retailer, is also on a new 10-year NNN lease and features 2% annual increases. Farmington Bank has over $2.8 Billion in assets and 26 locations throughout Connecticut and Massachusetts. The Bank is on a new 20-year NNN Ground Lease with $3,000 annual increases in the first five years, and 10% increases every five years thereafter. Bank deposits at this location have increased nearly 300% year over year. Starbucks is equipped with a full service drive-thru, and Farmington Bank features two drive-thru banking lanes. The subject property benefits from its location in a dense trade area along Route 83, which provides exposure to over 30,000 vehicles per day. The subject is also just off I-84 which sees traffic counts over 98,000 vehicles per day on average. The subject property sits at a traffic signal directly across from a CVS Pharmacy and a Stop & Shop supermarket anchored center, and is up the street from Tri-City Plaza; a Price Chopper supermarket anchored center also housing such retail giants as HomeGoods, TJ Maxx, Staples, Harbor Freight Tools, GNC, and more. Additional area retailers include Bank of America, United Bank, Kmart, Sally Beauty Supply, AutoZone, Goodyear, Meineke, Town Fair Tire, Citgo, Mobil, Dunkin Donuts, McDonalds, Burger King, Taco Bell, KFC, and many others. The subject is also in close proximity to The Mansions at Hockanum Crossing, a 700 unit luxury apartment community. The surrounding area shows excellent demographics, with a population over 110,000 and an average household income over $86,000 within a five-mile radius. Average household income is even stronger in the immediate one-mile radius at over $96,000. The offering presents the rare opportunity to acquire a newly constructed, long-term retail asset with a strong tenant mix and minimal landlord responsibility. INVESTMENT HIGHLIGHTS NNN Starbucks Anchored Center New Construction with 10 & 20 Year Lease Terms Strong Tenant Mix Starbucks Over 25,000 Locations Spring Mobile GameStop Subsidiary Farmington Bank $2.8 Billion in Assets, Deposits Increased Nearly 300% Year Over Year. Exposure to Over 30,000 Vehicles Per Day Along Route 83 Nearby I-84 Traffic Counts Over 98,000 Vehicles Per Day on Average Area Retailers Include Stop & Shop, Price Chopper, CVS Pharmacy, HomeGoods, TJ Maxx, Staples, Harbor Freight Tools, GNC, Bank of America, Sally Beauty Supply, AutoZone, Goodyear, Mobil, Dunkin Donuts, McDonald s, Burger King, Taco Bell, KFC, and Many Others Close Proximity to The Mansions at Hockanum Crossing 700 Unit Luxury Apartment Community Population Over 110,000 and AHHI Over $86,000 in Five-Mile Radius AHHI Over $96,000 in One-Mile Radius # 6
PROPERTY OVERVIEW OFFERING SUMMARY Vernon is a celebrated place to live and work. From its beautiful parks and lakes, to its vast trails and historic homes and buildings, Vernon has it all. With a resident population of nearly 30,000 and occupying only 18.03 square miles, Vernon combines a balanced appreciation of history and a strong economic base for growth, both residential and commercial. Located 15 minutes east of the Connecticut capital of Hartford, and 25 miles from the city of Springfield, Massachusetts, the Town of Vernon is strategically placed in New England's Knowledge Corridor with close proximity to some of the top colleges and universities in the county, including University of Connecticut and Trinity College. With its easy access to several state routes as well as Interstate 84, Vernon is a diversified community. Because of its locale, Vernon provides homeowners the opportunity to enjoy suburbia, while enjoying a short commute to either Hartford or Springfield business districts. Vernon is a full service local government, offering a wide range of benefits for its residents including public education, extensive parks and recreational opportunities, police, fire, emergency medical services to name a few. The Town of Vernon government seeks to practice a management philosophy of continuous improvements. # 7
PROPERTY STARBUCKS NAME ANCHORED CENTER - VERNON, CT PRICING AND LOCATION VALUATION TENANT SUMMARY OVERVIEW MATRIX 135 Talcottville Rd, Vernon, CT 06066 CLOSE PROXIMITY TO: # 8
REGIONAL MAP 9
LOCAL MAP 10
AERIAL PHOTO 11
PROPERTY PHOTO 12
FINANCIAL ANALYSIS 13
PRICING DETAIL FINANCIAL ANALYSIS (1) (2) (3) NNN Ground Comments (1) 10% Increases Every Five Years. Tenant has Right to Terminate starting End of Year 6. Requires 120 Day Notice. Results in $131,658 in breakup fees to landlord. (2) 2% Annual Increases Through Base and Options. Rent for last year of each Option shown. (3) $3,000 Annual Increases in the First Five Years, and 10% Increases Every Five Years Thereafter. Farmington Bank on NNN Ground Lease. Ground Lease Total SF is 3,468. 14
PROPERTY STARBUCKS NAME ANCHORED CENTER - VERNON, CT TENANT PROFILE Starbucks Corporation CREDIT RATING: A2 www.fdreports.com www.creditntell.com April 02, 2017 Address General Information Phone 206-447-1575 Website www.starbucks.com 2401 Utah Avenue, South, Seattle, Washington, 98134, United States President & Chief Executive Officer Chief Financial Officer Chairman Key Personnel Kevin R. Johnson Scott H. Maw Howard schultz Store Base Store Count 26,161 TTM Sales $21,976,100,000 Financial Markets Stock Ticker SBUX Current Price $53.49 as of 8/9/17 52 Week High/Low $64.87 / $50.84 Wake up and smell the coffee -- Starbucks is everywhere. The world's #1 specialty coffee retailer, Starbucks has more than 25,000 coffee shops in 75 countries. The outlets offer coffee drinks and food items, as well as roasted beans, coffee accessories, and teas. Starbucks operates more than 12,700 of its own shops, which are located mostly in the US, while licensees and franchisees operate roughly 12,375 units worldwide (including many locations in shopping centers and airports). In addition, Starbucks markets its coffee through grocery stores, food service customers, and licenses its brand for other food and beverage products. Fiscal Year Ended October 02, 2016 15
TENANT PROFILE Spring Mobile Farmington Bank General Information General Information Tenant Name Spring Mobile Tenant Name Farmington Bank Website www.springmobile.com Website www.farmingtonbankct.com Parent Company GameStop Corp. Headquartered Farmington, CT Headquartered Salt Lake City, UT Rentable Square Feet 1,535 SF Rentable Square Feet 1,800 SF Lease Expiration 6/30/2036 Lease Expiration 6/30/2026 No. of Locations 26 No. of Locations 1,500+ GameStop Corp., a Fortune 500 company, is a global family of specialty retail brands that makes the most popular technologies affordable and simple. GameStop operates more than 7,000 stores across 14 countries. The company s consumer product network includes Spring Mobile, the largest authorized dealer of AT&T wireless services. Spring Mobile was founded in 2001 in Salt Lake City, Utah. First Connecticut Bancorp, Inc. is the holding company for Farmington Bank, a wellregarded community bank in Connecticut and western Massachusetts. Farmington Bank, established in 1851, is known for its personalized customer service, diversified consumer and commercial product offerings and strong ties to the communities it serves throughout central Connecticut. The Farmington Bank Community Foundation, the charitable arm of First Connecticut Bancorp, Inc., provides ongoing financial support fo 16
MARKET COMPARABLES 17
8 SALES COMPARABLES MAP STARBUCKS ANCHORED CENTER - VERNON, CT (SUBJECT) 1 2 3 4 5 Starbucks Anchored Center - Old Saybrook, MA Starbucks Anchored Center - Latham, NY Starbucks Anchored Center - Hopkington, MA Starbucks - Broomall, PA Bank of America - Windsor, CT SALES COMPARABLES 18
PROPERTY STARBUCKS NAME ANCHORED CENTER - VERNON, CT SALES COMPARABLES SALES COMPS AVG SALES COMPARABLES Average Cap Rate 6.0 Avg. 5.48% 5.4 4.8 4.2 3.6 3.0 2.4 1.8 1.2 0.6 0.0 Starbucks Anchored Center - Vernon, CT Starbucks Anchored Center - Old Saybrook, MA Starbucks Anchored Center - Latham, NY Starbucks Anchored Center - Hopkington, MA Starbucks - Broomall, PA Bank of America - Windsor, CT 19
PROPERTY STARBUCKS NAME ANCHORED CENTER - VERNON, CT SALES MARKETING COMPARABLES TEAM SALES COMPARABLES STARBUCKS ANCHORED CENTER - VERNON, CT 135 Talcottville Rd, Vernon, CT, 06066 STARBUCKS ANCHORED CENTER - OLD SAYBROOK, CT 15-19 Main Street, Old Saybrook, CT, 06475 1 STARBUCKS ANCHORED CENTER - LATHAM, NY 549 Troy Schenectady Rd, Latham, NY, 12110 2 rentpropertyname1 rentpropertyname1 rentpropertyname1 Tenants Lease Type Asking Price: $4,650,500 Starbucks NNN Price/SF: $879.78 Spring Mobile NNN CAP Rate: 5.50% Farmington Bank NNN Ground Year Built: 2016 Tenants Lease Type Close Of Escrow: 5/23/2017 Starbucks NNN Sales Price: $2,030,466 Ben & Jerry's NNN Price/SF: $313.01 CAP Rate: 5.50% Year Built: 1940 Tenants Lease Type Close Of Escrow: 5/4/2017 Starbucks NNN Sales Price: $3,100,000 Mayfield Jewelers NNN Price/SF: $771.72 CAP Rate: 6.00% Year Built: 2003 Annual Per SF rentpropertyaddress1 Income $255,780 $48.39 NOI $255,780 $48.39 Occupancy 100.0% NOTES rentpropertyaddress1 NNN Starbucks Anchored Center. Exact Lease Terms Unknown. Population and AHHI in 1 / 5 Mile Radius - 2,400+ / 25,000+ and $74,000+ / $87,000+ NOTES rentpropertyaddress1 NNN Starbucks Anchored Center. Both tenants 10 Years Remaining. Population and AHHI in 1 / 5 Mile Radius - 6,200+ / 153,000+ and $61,000+ / $57,000+ 20
PROPERTY STARBUCKS NAME ANCHORED CENTER - VERNON, CT SALES MARKETING COMPARABLES TEAM SALES COMPARABLES STARBUCKS ANCHORED CENTER - HOPKINGTON, MA 85 W Main St, Hopkinton, MA, 01748 3 STARBUCKS - BROOMALL, PA 2200 W Chester Pike, Broomall, PA, 19008 4 BANK OF AMERICA - WINDSOR, CT 1045 Kennedy Road, Windsor, CT, 06095 5 rentpropertyname1 rentpropertyname1 rentpropertyname1 Tenants Lease Type Close Of Escrow: 2/25/2016 Starbucks NNN Sales Price: $5,025,000 IM Wireless NNN Price/SF: $676.31 Uni Bank NNN CAP Rate: 5.74% Nail Salon NNN Year Built: 2015 Tenants Lease Type Close Of Escrow: 12/20/2016 Starbucks NNN Sales Price: $3,360,000 Price/SF: $1,600.00 CAP Rate: 5.00% Year Built: 2016 Tenants Lease Type Close Of Escrow: 4/5/2017 Bank of America NNN Sales Price: $3,100,000 Price/SF: $666.67 CAP Rate: 5.15% Year Built: 2007 rentpropertyaddress1 NOTES NNN Starbucks Anchored Center. Starbucks 9+ Years Remaining, IM Wireless 4+ Years Remaining, UniBank 15 Years Remaining, Nail Salon 15 Years Remaining. Population and AHHI in 1 / 5 Mile Radius - 1,900+ / 56,000+ and $175,000+ / $141,000+ NOTES rentpropertyaddress1 NNN Starbucks. 10 Years Remaining. Population and AHHI in 1 / 5 Mile Radius - 11,600+ / 290,000+ and $102,000+ / $106,000+ NOTES rentpropertyaddress1 NNN Ground Leased Bank of America. 12 Years Remaining. Population and AHHI in 1 / 5 Mile Radius - 2,200+ / 55,000+ and $96,000+ / $92,000+ 21
MARKET OVERVIEW 22
HARTFORD OVERVIEW The Hartford metro is located in the state of Connecticut and houses the state capitol in Hartford and the University of Connecticut in Storrs. The area is known nationally for its role as a focal point for the American insurance industry. Overall, the region has a diverse economic background including aerospace, hydrogen/fuel cell technology, laser manufacturing and healthcare industries. Collectively over a half million people are employed in local industries. METRO HIGHLIGHTS MARKET OVERVIEW EDUCATIONAL ATTAINMENT Nearly 36 percent of residents age 25 and older hold a bachelor s degree, while more than 15 percent also hold a graduate or professional degree HIGH-INCOME HOUSEHOLDS More higher-income households compared with the U.S. allow a larger number of people to own a house, resulting in a 67 percent rate of homeownership. CULTURALLY DIVERSE The Hartford region is home to more than 150 local arts, cultural and heritage organizations and local athletics including the UConn Huskies and the Travelers Championship PGA Tournament. ECONOMY A large number of notable financial services and insurance companies are located in the metro including Aetna, the Hartford, the Phoenix Cos. and Travelers Insurance. Hartford is a center for medical care, research and education. The city of Hartford includes Hartford Hospital, the Institute of Living, Connecticut Children's Medical Center, and Saint Francis Hospital & Medical Center. The University of Connecticut enrolls more than 32,000 students. Other notable companies with significant operations in the metro include chemical and consumer goods company Henkel, locally headquartered technology firm United Technologies Corp. and media giant ESPN, which is also headquartered in the metro. DEMOGRAPHICS 2016 POPULATION: 1.2M Growth 2016-2021*: 2% 2016 HOUSEHOLDS: 475K Growth 2016-2021*: 2.6% 2016 MEDIAN AGE: 40.5 U.S. Median: 37.7 2016 MEDIAN HOUSEHOLD INCOME: $69,300 U.S. Median: $57,200 * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody s Analytics; U.S. Census Bureau 23
8 DEMOGRAPHICS 24
PROPERTY STARBUCKS NAME ANCHORED CENTER - VERNON, CT Created on August 2017 POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection Total Population 5,251 48,923 113,372 2016 Estimate Total Population 4,899 47,242 110,566 2010 Census Total Population 4,883 47,231 110,490 2000 Census Total Population 3,938 43,095 103,070 Current Daytime Population 2016 Estimate 4,221 44,650 101,166 HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection Total Households 2,335 21,164 48,185 2016 Estimate Total Households 2,134 20,162 46,658 Average (Mean) Household Size 2.31 2.32 2.35 2010 Census Total Households 2,126 20,113 46,499 2000 Census Total Households 1,591 17,601 42,774 Occupied Units 2021 Projection 2,335 21,164 48,185 2016 Estimate 2,289 21,332 49,455 HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate $150,000 or More 12.49% 11.20% 9.54% $100,000 - $149,000 20.86% 19.20% 17.88% $75,000 - $99,999 17.07% 16.25% 15.88% $50,000 - $74,999 15.60% 18.32% 18.55% $35,000 - $49,999 11.36% 12.36% 13.19% Under $35,000 20.88% 20.58% 23.02% Average Household Income $97,936 $93,920 $88,066 Median Household Income $78,113 $73,179 $68,326 Per Capita Income $42,684 $40,172 $37,253 MARKETING DEMOGRAPHICS TEAM HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 Miles Total Average Household Retail Expenditure $84,982 $84,742 $82,963 Consumer Expenditure Top 10 Categories Housing $23,692 $23,488 $23,066 Transportation $15,338 $15,372 $14,938 Shelter $14,124 $14,113 $13,946 Food $8,710 $8,597 $8,387 Personal Insurance and Pensions $7,301 $7,356 $7,102 Health Care $5,227 $5,049 $4,851 Utilities $4,995 $4,941 $4,834 Entertainment $3,505 $3,432 $3,359 Cash Contributions $3,226 $3,131 $2,967 Education $2,303 $2,330 $2,259 POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age 2016 Estimate Total Population 4,899 47,242 110,566 Under 20 20.08% 21.28% 22.47% 20 to 34 Years 18.36% 21.16% 22.39% 35 to 39 Years 5.65% 5.92% 6.34% 40 to 49 Years 13.16% 12.69% 12.92% 50 to 64 Years 21.90% 21.63% 20.90% Age 65+ 20.87% 17.32% 14.96% Median Age 44.63 41.40 39.01 Population 25+ by Education Level 2016 Estimate Population Age 25+ 3,633 34,074 78,106 Elementary (0-8) 1.26% 1.33% 1.86% Some High School (9-11) 3.91% 4.25% 5.12% High School Graduate (12) 29.13% 25.66% 26.34% Some College (13-15) 17.49% 18.89% 19.34% Associate Degree Only 7.07% 10.13% 9.43% Bachelors Degree Only 22.62% 22.50% 22.24% Graduate Degree 17.66% 16.67% 15.05% Source: 2016 Experian 25
Laurie Ann (LA) Drinkwater, CCIM First Vice President Investments Director, National Retail Group Net Leased Properties Group BOSTON OFFICE Office: (617) 896-7230 Cell: (860) 287-0568 LaurieAnn.Drinkwater@marcusmillichap.com License: CT: REB.0751880, MA: 147511, RI: B 16787 Seth J. Richard First Vice President Investments Director, National Retail Group Net Leased Properties Group MANHATTAN OFFICE Office: (212) 430-5164 Cell: (860) 287-4624 Seth.Richard@marcusmillichap.com License: CT: 0764595, NY 10401275108, MA 149700