walmart [ www.capitalpacific.com ] neighborhood market [ actual Store] new construction in dense virginia market 5221 Brook Road, Richmond, VA Zandy smith zsmith@capitalpacific.com (415) 274-2707 CA BRE# 01734525 chris kostanecki ck@capitalpacific.com (415) 274-2701 CA BRE# 01002010 ZEB RIPPLE zripple@capitalpacific.com (415) 274-2702 CA BRE# 01242540 chris peters cpeters@capitalpacific.com (415) 274-2703 CA BRE# 01339983 In conjunction with VA Licensed Broker: Read Goode of Divaris Real Estate, Inc. rgoode@divaris.com (804) 335-0554
investment highlights WALMART NEIGHBORHOOD MARKET, RECENTLY OPENED FOR BUSINESS. LOCATED IN RICHMOND - THE VIRGINIA STATE CAPITAL The Neighborhood Market is Walmart s smaller grocery concept, which was launched in 1998, giving customers a more convenient shopping experience than the typical Walmart Supercenter. The Supercenter is typically 160,000 square feet. In contrast, the Neighborhood Market is approximately 40,000 square feet and has a fuel center and a drive-thru pharmacy for increased convenience. Walmart s strategy is to open another 270 of these small-format stores and have a total of 500 operating by early next year. PRICE: $12,365,850 CAP: 5.35% RENTABLE SF...41,117 SF PRICE PER SF...$300.5 LAND AREA...6.23 Acres Lease type...... Modified NNN YEAR BUILT...2015 lease highlights Subject property opened for business on August 12th, 2015 Walmart has signed a 20-year net lease, with the tenant responsible for all triple net reimbursements except for capital replacement items. Please see Lease Summary on page 5 for details. Increases in the option periods of 10% for the first two five-year option terms and 5% for the second two five-year option terms. location highlights Located on the North side of Richmond, VA, approximately 5 miles from the downtown business district, 6 miles from the University of Richmond (4,100 students), and 14 miles from the Richmond International Airport. Provides excellent visibility and access from Brook Road (18,000 VPD) and is located just off the on and off ramp of I-95 (over 104,000 VPD). Dense Retail Area: adjacent to Wawa, Arby s, Taco Bell, and Brook Hill Shopping Center. Within 1 mile of the site are Brook Run Shopping Center, Bank of America Operations Center, Walmart Supercenter, Lowe s, Burger King, Starbucks, Wells Fargo, and Walgreens. Situated in a dense residential market: over 60,000 people within a 3-mile radius and over 215,000 people within a 5-mile radius. Investment summary The combination of strong demographics, a dense retail and residential market, and location within the capital city of Virginia all bode well for this Walmart Neighborhood Market. Walmart stores has a credit rating of AA and their corporate guaranty on the lease make this an attractive investment oppotunity for a sophisticated investor. [ REPRESENTATIVE representative PHOTO photo ] walmart neighborhood market 2
income & expenses PRICE $12,365,850 Capitalization Rate: 5.35% Price Per Square Foot: $300.75 Total Rentable Area (SF): 41,117 Lot Size (Acres): 6.23 STABILIZED INCOME Per Square Foot Scheduled Rent $16.09 $661,573 Effective Gross Income $16.09 $661,573 LESS Per Square Foot Taxes $0.00 Insurance $0.00 Total Operating Expenses $0.00 EQUALS NET OPERATING INCOME $661,573 [ actual property photo ] This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. [ actual property photo ] walmart neighborhood market 3
rent roll TENANT INFO LEASE TERMS RENT SUMMARY Tenant Name Sq. Ft. Term Current Rent Monthly Rent Yearly Rent Monthly Rent/FT Yearly Rent/FT Walmart Neighborhood Market 41,117 8/12/15 8/11/35 $661,573 $55,131 $661,573 $1.34 $16.09 8/12/35 8/11/40 Option 1 $60,644 $727,730 $1.47 $17.70 8/12/40 8/11/45 Option 2 $66,709 $800,503 $1.62 $19.47 8/12/45 8/11/50 Option 3 $70,044 $840,528 $1.70 $20.44 8/12/50 8/11/55 Option 4 $73,546 $882,554 $1.79 $21.46 Totals: 41,117 $661,573 $55,131 $661,573 $1.34 $16.09 This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. [ actual store] walmart neighborhood market 4
Lease Abstract & Critical Dates Tenant Walmart Stores East, LP guarantor Walmart Stores, Inc. date of lease 9/25/2014 rent commencement 8/12/2015 landlord responsibilities first right of refusal Landlord shall be responsible for the cost and expense of maintenance, repair, and replacement of structural components 15 Business Days [ actual store] walmart neighborhood market 5
aerial located off Highway I-95, with traffic counts of over 104,000 VPD Belmont GOLF COURSE 2 1 301 Lakesid e Aven 95 ue ILY DA ad 000 18, rook Ro 95 B 161 Dominion Academy Wilmer Avenue mb art on 2 10 Du 4,0 00 DA ILY BROOKHILL AZALEA SHOPPING CENTER Ro ad Azalea Avenue 1 New Community School ue RICHMOND CITY CENTER ad 95 n ayne Ave Chamberl Brook Ro 95 Real School 1 301 Henderson Middle School John Marshall High School walmart neighborhood market 6
site plan 104,000 DAILY 95 Wilmer Avenue Wilmer Avenue West Seminary Avenue Site Plan Key Parcel outline: Building Area: 41,117 sf Brook Road NOT A PART LAND Area: 6.23 AC Ingress/Egress: Ladd Street 18,000 DAILY FUEL SERVICE BROOKHILL-AZALEA SHOPPING CENTER NOT A PART Site Plan Not To Scale walmart neighborhood market 7
photos excellent visibility and access from Brook road, which has 18,000 VPD walmart neighborhood market 8
in the news Why Walmart Suddenly Thinks Smaller Is Better Walter loeb - forbes - june 16, 2014 At the end of the 2014 fiscal year (January 2014), Walmart had 3285 Supercenters in the United States that vary in size from 180,000 square feet to 230,000 square feet. They also had 508 discount stores that were around 140,000 square feet, smaller than the supercenters because they sell very little food. There were also, according to Walmart s annual report, 407 even smaller units of which 359 are the Walmart Neighborhood Market concept. These stores average around 43,000 square foot in size and have been around since 1998. A previous Walmart management team assured me that, while they liked the concept, Walmart customers preferred the larger assortment in the superstores and discount stores. Despite management s lukewarm endorsement at that time, every year a few more units were added. Well, things have changed. The convenience of quick shopping has become front and center. Today there is a real focus at Walmart on smaller stores. Two hundred new Neighborhood Market units will open this year. That is a tremendous ramp-up in the expansion plans and the new Walmart management team is suggesting there could be thousands in five years. Yikes! Thousands! What has happened? Why now? Two hundred new Neighborhood Market units will open this year. Certainly Doug McMillon, Walmart s new CEO, wants to show domestic growth. He is stressing that the customer wants the convenience of a quick shopping trip to a Market Place. I can add that he probably has learned from the omnipresence of small stores and bodegas throughout the US, and the world, as well as the rapid expansion of Nordstrom s Rack, that the consumer likes small stores and it is easier to find locations for these compact units. I could visualize entry into urban centers like New York City, Chicago, Los Angeles or Dallas, as well as expansion into new suburban areas. The stores will be close to where customers live and want to shop. The stores carry food, full pharmacies, fuel, and some general merchandise. Right now there are also twenty-one 12,000 square foot Walmart Express stores with fresh produce, meats and dairy as well as a pharmacy. Management has indicated that they will add 100 of these pint-size units this year. This is a fast growing chain, and I suspect that, like rabbits these units will multiply very quickly this decade. They are even easier to find locations for around the United States than the larger (but still small) Neighborhood Markets. Walmart To Go is the newest test store and that is in Bentonville, Arkansas, Walmart s HQ town. It is only 5,000 square feet in size and features coffee and cold refreshments as well as snacks. It is a modified convenience store selling fresh food, some prepared meals, some grocery, and a few general merchandise items such as movies and seasonal items for Easter, Mother s or Father s Day. The store will carry only 3,500 SKU s (stock keeping units). Judith McKenna former COO of ASDA is now in charge of small store rollout. She will lead the introduction of yet another innovative idea for Walmart a 15,000 square foot Internet grocery pick-up center. This new concept will also be tested in Bentonville, AR and is modeled after an ASDA concept in the United Kingdom. This drive through concept will assemble grocery orders placed online and deliver them to cars in as many as 30 drive-up lanes. I think the news of these new initiatives is exciting and at the same time challenging. They will certainly create a greater competitive environment throughout the United States. However, they will only be successful if new supply chains are created. The new concepts have to be watched closely in order to assure profitable growth. Walmart s customer service in large stores has been uneven and the rapid growth of these new concepts demand a cadre of dedicated associates that are ready to serve customers on less bureaucratic terms. When I saw the first Neighborhood Market stores they were truly entrepreneurial enterprises. That has to come back. This year, Walmart will add 115 supercenters, 35 to 40 units will be renovations and expansions, while 75 to 80 will be new stores. That is about 17 Million square feet of additional selling space. This is still the engine that will drive total sales for this behemoth. It will still be the focus of the company. However, as I analyze the competitive retail scene the addition of 300 new small Walmart units that will add about 1 million additional square footage of selling space. However, Walmart is not the only retailer adding capacity to the US market. The strength of Internet sales will be a factor pressuring stores. With the opening of Alibaba s 11Main.com and the announced opening of Primark in Boston in late 2015, there is much to worry about. Walmart will continue to be a competitive leader defending its share of market, but the new competitors will create a worrisome war-like environment in the second half of this decade. walmart neighborhood market 9
tenant overview [ REPRESENTATIVE PHOTO ] [ REPRESENTATIVE PHOTO ] About walmart neighborhood market Walmart Neighborhood Market is a chain of grocery stores launched by Walmart in 1998. There are over 350 Neighborhood Markets in the United States featuring a wide variety of products, including fresh produce, deli foods, fresh meat and dairy items, health and beauty aids, one-hour photo and traditional photo developing services, drive-through pharmacies, stationery and paper goods, pet supplies, and household chemicals. Walmart Neighborhood Markets were originally designed to create easier parking, less crowded aisles and quicker checkouts than Walmart Supercenters. total locations 11,000 + 2014 REVENUE $476 BILLION GROSS REVENUE $120 MILLION AA Investment Grade Standard & Poor s Walmart is the world s biggest retailer and also the largest employer with over 2.2 million full- and part-time workers worldwid (more than 1.4 million just in the U.S.). It is a feared giant for its sheer size and pricing power. The company has $469 billion in total revenues and 11,302 stores under 71 banners in 27 countries. There are also ecommerce Websites in 10 countries. It is no wonder Walmart has become the undisputed king of retailing and is ranked #1 in Fortune 500 Companies. www.walmart.com walmart STORES, INC. WAS RANKED #1 on the FORTUNE 500 list (2013 & 2014) AND #1 IN INTERBRAND S MOST VALUABLE U.S. RETAIL BRANDS list walmart neighborhood market 10
regional map Richmond is located along the james river and is the center of the richmond msa philadelphia baltimore washington dc 1 hr 53 min 109 miles 2 hr 57 min 152 miles richmond charlotte walmart neighborhood market 11
location location About richmond, VA Richmond is the capital of the Commonwealth of Virginia and is located along the James River. Richmond is also the center of the Richmond Metropolitan Statistical Area, which has a population of 1.26 million. Richmond also serves as the county seat of Henrico County. In recent years, Richmond has been awarded many accolades such as the 49th spot on Forbes.com 2012 list of Best Places for Business & Careers. Additionally, U.S. News/Travel listed Richmond as the 6th Best U.S. Historic Destination and the 17th Best Affordable U.S. Destination for 2012. Richmond s economy is primarily driven by law, finance, and government. Multiple Fortune 500 companies, including Dominion Resources and MeadWestvaco, are headquartered Richmond, with additional companies spread throughout the MSA. Population 1-Mile 3-Mile 5-Mile 2010 7,327 68,135 215,132 2015 7,472 70,431 224,406 2020 7,767 73,784 236,130 2015 Household incomes 1-Mile 3-Mile 5-Mile Average $61,873 $57,030 $64,125 Median $40,000 $40,024 $42,007 Top Employers in Richmond Employer # of Employees* Capital One Financial Corp. 11,491 VCU Health System 9,053 HCA Inc. 7,325 Bon Secours Richmond 6,852 walmart neighborhood market 12
A unique HUMAN RESULTS-DRIVEN client experience The capital pacific experience - our daily commitment to our clients [ www.capitalpacific.com ] [ REPRESENTATIVE PHOTO ] Zandy smith zsmith@capitalpacific.com (415) 274-2707 CA BRE# 01734525 chris kostanecki ck@capitalpacific.com (415) 274-2701 CA BRE# 01002010 ZEB RIPPLE zripple@capitalpacific.com (415) 274-2702 CA BRE# 01242540 chris peters cpeters@capitalpacific.com (415) 274-2703 CA BRE# 01339983 In conjunction with VA Licensed Broker: Read Goode of Divaris Real Estate, Inc. rgoode@divaris.com (804) 335-0554 Copyright 2015 [Capital Pacific Real Estate Brokerage Company]