FILE PHOTO OFFERING MEMORANDUM The Habit Burger Grill Escondido, CA San Diego-Carlsbad MSA www.preservewestcapital.com
TABLE OF CONTENTS PROPERTY HIGHLIGHTS 1 PROPERTY INFORMATION 2 TENANT INFORMATION 3 SITE PLAN 4 AERIALS 5 ABOUT THE AREA 7 DEMOGRAPHICS 9 Disclaimer Michael Maffia ( Broker ) has been retained on an exclusive basis to market the property described herein ( Property ). Broker has been authorized by the Seller of the Property ( Seller ) to prepare and distribute the enclosed information ( Material ) for the purpose of soliciting offers to purchase from interested parties. More detailed financial, title and tenant lease information may be made available upon request following the mutual execution of a letter of intent or contract to purchase between the Seller and a prospective purchaser. You are invited to review this opportunity and make an offer to purchase based upon your analysis. If your offer results in the Seller choosing to open negotiations with you, you will be asked to provide financial references. The eventual purchaser will be chosen based upon an assessment of price, terms, ability to close the transaction and such other matters as the Seller deems appropriate. The Material is intended solely for the purpose of soliciting expressions of interest from qualified investors for the acquisition of the Property. The Material is not to be copied and/or used for any other purpose or made available to any other person without the express written consent of Broker or Seller. The Material does not purport to be all-inclusive or to contain all of the information that a prospective buyer may require. The information contained in the Material has been obtained from the Seller and other sources and has not been verified by the Seller or its affiliates. The pro forma is delivered only as an accommodation and neither the Seller, Broker, nor any of their respective affiliates, agents, representatives, employees, parents, subsidiaries, members, managers, partners, shareholders, directors, or officers, makes any representation or warranty regarding such pro forma. Purchaser must make its own investigation of the Property and any existing or available financing, and must independently confirm the accuracy of the projections contained in the pro forma. Seller reserves the right, for any reason, to withdraw the Property from the market. Seller has no obligation, express or implied, to accept any offer. Further, Seller has no obligation to sell the Property unless and until the Seller executes and delivers a signed agreement of purchase and sale on terms acceptable to the Seller, in its sole discretion. By submitting an offer, a purchaser will be deemed to have acknowledged the foregoing and agreed to release Seller and Broker from any liability with respect thereto. Property walk-throughs are to be conducted by appointment only. Contact Broker for additional information. Michael Maffia Managing Partner 415.373.4060 mike@preservewc.com CA RE License #01340853 Putnam Daily Partner - Brokerage Division 415.445.5107 putnam@preservewc.com CA RE License #01750064 www.preservewestcapital.com
PROPERTY HIGHLIGHTS Property Highlights Brand New 10-Year NNN Lease to The Habit (NASDAQ:HABT) Scheduled 10% Rental Escalations Every 5 Years Highly-Functional Footprint with Double Drive-Thru Component Excellent Access and Visibility In Primary Retail Corridor Combined AADT of 120,500 Adjacent to Downtown Escondido Brand New 2018 Construction Neighbors Numerous Major Retail Centers Nearby Anchor Tenants Include Costco, Target, Walmart, Smart & Final Extra, and more Robust Demographics in Surrounding Area Average Household Income of $82,470 Within 5 Miles of Site Median Home Value of $446,337 Approximately 2 Miles from Palomar Medical Center Escondido s Largest Employer 2,700 Employees Only Designated Trauma Center in Northern San Diego County Part of San Diego-Carlsbad MSA Population of 3.3 Million 2nd Largest MSA by Population in California 2016 GDP of $215 Billion Approximately 30 Miles from Downtown San Diego FILE PHOTO PRESERVE WEST CAPITAL 1
PROPERTY INFORMATION PRICE $3,950,000 4.00% Return SITE RENDERING Location The property is located at 720 North Centre City Parkway in Escondido, California. Lot Size Approximately 0.33 acres, or 14,401 square feet. Improvements Construction is expected to be completed in September 2018 of a 2,874 square foot retail building with a double drive-thru component for The Habit Burger Grill. Lease Leased to The Habit Restaurants, LLC for 10 years from an anticipated rent commencement date of October 16, 2018 at an initial annual rent of $158,015. There are three (3) five-year options to renew the lease. Rent is to increase by 10% in year 6 and at the start of each option period. The lease is net with tenant responsible for taxes, insurance, maintenance, and proportionate share of common area maintenance, including reasonable reserves for building painting, parking lot repair and maintenance, capital assets, and landscaping, capital expenditures amortized over the useful life of the item, and a management or administration fee of up to 10% of common area maintenance costs. Increases in controllable CAM costs are not to increase by more than 5% annually on a non-cumulative basis. Net Annual Income Years Annual Rent Return 1-5 $158,015 4.00% 6-10 $173,817 4.40% 11-15 (Option 1) $191,198 4.84% 16-20 (Option 2) $210,318 5.32% 21-25 (Option 3) $231,350 5.86% Financing This property will be delivered free and clear of permanent financing. PRESERVE WEST CAPITAL 2
ABOUT THE TENANT FILE PHOTO The Habit currently has more than 200 locations across 11 states. The Habit Burger Grill (NASDAQ:HABT), commonly known as The Habit, is one of the fastest growing fast-casual dining chains in the U.S.. The chain specializes in hamburgers, salads, sandwiches, shakes, and french fries, and was founded in Santa Barbara, CA in 1969. The Habit is known for its charburgers, prepared over an open flame, and fast, friendly service. Initially, the restaurant s growth was limited to the Los Angeles area, but following its acquisition in 2007 by private equity firm KarpReilly it grew to more than 100 locations. The company now has more than 209 locations across 11 states, as well as international restaurants in China and the United Arab Emirates. In recent years, the company has pursued opening new locations in spaces with drive-thru components, noting that drivethru equipped locations generate higher revenue and increased return on investment than other comparable new restaurant locations. Though the company primarily operates company-owned restaurants, the company has begun to franchise additional locations, fueling additional growth. As of December 2017, the company s compound annual growth rate of the number of restaurant locations was 29.8%. Since 2009, average per-restaurant sales have grown more than 50% to nearly $2 million per location for fiscal year 2017. For the first quarter of 2018, the company reported revenue of $91.9 million, a 17% increase year-over-yearand total stockholder s equity of $145.4 million. PRESERVE WEST CAPITAL 3
SITE PLAN WEST MISSION AVENUE DOUBLE DRIVE THRU 2,874 SF CENTRE CITY PARKWAY
NORTHWEST VIEW Ci ty Pk w y (3 5, 40 0 A A DT ) Ronald P Ce nt re AERIAL W Miss ackard P kwy (57,0 ion Ave 00 AAD T) (28,10 0 AAD T)
ABOUT THE AREA General Overview Escondido (population 151,613) is a city in the northern portion of San Diego county, approximately 30 miles from downtown San Diego. The city was incorporated in 1888 and is one of the oldest in the region. Interstate 15 links the city to San Diego in the South and Temecula in the north, while State Highway 78 provides access to Carlsbad, Oceanside, and Interstate 5. San Diego county is the second-most populous county in California and fifth-most populous county in the U.S., with a population of approximately 3,337,685. The city is part of the San Diego-Carlsbad Metropolitan Statistical Area and the San Diego-Tijuana international metropolitan conurbation, the largest shared between the U.S. and Mexico by population and the fifth-largest international metropolitan area in the world. The region benefits from vibrant trade between the region, and the San Diego area has grown to become a vibrant international economic hub. The region had a gross domestic product of $215.3 billion in 2016, ranking 16th in the U.S.. In addition to its close proximity to Mexico, the region is also home to the Port of San Diego, one of the highest volume ports in the U.S. with more than 3 million tons of cargo annually and total export value of $18.1 million for the region. The region also benefits from the secondlargest quantity of cruise ship traffic in California, generating $2 million in revenue annually. The region is home to numerous colleges and universities, including University of California San Diego, San Diego State University, and the University of San Diego. SITE Other major components of the San Diego regional economy include military/defense, technology, biomedical research, life sciences, aerospace, cybersecurity, manufacturing, shipbuilding, unmanned systems, and more. The region is home to the largest concentration of military assets in the world and the largest military workforce in the country, representing one out of every five jobs in the region and contributing an estimated $25.2 billion to the regional economy. The area also benefits from a robust tourism industry, with more than 35 million visitors to the region annually. The city is home to numerous major research institutes and scientific startups, with scientific research and development contributing more than $14.4 billion to the local economy. Hightech startups are also a prominent component of the local economy, with more than $1.3 billion in annual venture capital investments in the region. Major companies operating in the region include Boeing, Lockheed Martin, Honeywell, Northrop Grumman, Planck Aerosystems, Broadcom, Samsung, Peregrine Semiconductor, General Atomics, ESET North America, Sentek Global, Booz Allen Hamilton, FICO, Raytheon, General Dynamics, Eli Lilly, Genentech, Thermo Fisher Scientific, Johnson & Johnson, Pfizer, GlaxoSmithCline, Hunter Industries, WD-40, Qualcomm, Intuit, and more.
ABOUT THE AREA SITE Site Information The subject property is prominently situated with excellent visibility and access near the signalized intersection of West Mission Avenue (28,100 AADT) and Centre City Parkway (35,400 AADT) just one block from its junction with Ronald Packard Parkway (57,000 AADT). The site benefits from robust demographics with a population of 218,875 within a five mile radius. Average household income within five miles of the site is $82,470, and median home value within that radius is $446,337. The property benefits from a strong retail location within a growing development along Escondido s primary retail corridor adjacent to downtown Escondido. The site neighbors numerous retail centers, including Civic Center Plaza, with tenants including Smart & Final Extra!, PetSmart, dd s Discounts, and Regal Cinemas, and Escondido Square Shopping Center, with Stater Bros, Dollar Tree, and more. Other major retail tenants neighboring the site include Walgreens, Target, CVS, Rite Aid, Costco, Walmart, Lowe s Home Improvement, Vons, Albertsons, The Home Depot, Petco, ROSS, Dick s Sporting Goods, Michaels, Staples, BevMo!, Pier 1 Imports, Harbor Freight Tools, Dollar Tree, and more. In addition, the site is located in close proximity to numerous major employers, all of which drive additional traffic to the site. Palomar Medical Center, Escondido s largest employer with nearly 2,700 employees and the only designated trauma center in northern San Diego County, is located just 2.2 miles from the site. The property is also located approximately half a mile from the California Center for the Arts, another major employer within the city. The site additionally neighbors the Kaiser Permanente Escondido Medical Center and numerous government buildings and local attractions. The property also neighbors Classical Academy High School and Lincoln Elementary School, drawing additional traffic from students, parents, and teachers to the site.
DEMOGRAPHICS 720 N Centre City Pkwy Escondido, CA 92025 Top Employers in Escondido Palomar Medical Center 2,659 2017 POPULATION 218,875 MEDIAN HOME VALUE $446,337 AVG. HOUSEHOLD INCOME $82,470 Escondido Union School District 1,960 City of Escondido 1,027 Escondido Union High School District 842 Bergelectric 802 Population Summary 1 Mile 3 Miles 5 Miles 2010 Total Population 26,276 142,205 204,978 2017 Total Population 28,056 151,268 218,875 2022 Total Population 29,379 157,700 228,753 2017-2022 Annual Rate 0.93% 0.84% 0.89% Average Household Income 2017 $49,458 $71,194 $82,470 Home Depot 350 Nordstrom, Inc. 320 Toyota of Escondido 312 Vons Grocery Stores 249 California Center for the Arts 220 2022 $55,168 $80,368 $92,708 Median Home Value 2017 $314,176 $396,133 $446,337 2022 $380,791 $465,706 $526,424 PRESERVE WEST CAPITAL 8
BUILDING CAPITAL WITH CONFIDENCE FILE PHOTO Michael Maffia Managing Partner 415.373.4060 mike@preservewc.com CA RE License #01340853 Putnam Daily Partner - Brokerage Divison 415.445.5107 putnam@preservewc.com CA RE License #01750064 411 Borel Avenue, Suite 650 San Mateo, CA 94402 D 415.373.4063 F 415.737.6018 www.preservewestcapital.com