WALGREENS ALISO VIEJO, CA Overvie offering memorandum
INVESTMENT OVERVIEW Marcus & Millichap is pleased to present this rare Walgreens with rent increases over the base term in Aliso Viejo, California; which is eight miles east of Laguna Beach. Walgreens signed a 20-year absolute-net lease in 2008 with 5 percent rent increases every 10 years. There are currently 11 years remaining and zero landlord responsibilities. The lease is backed by a corporate guaranty from Walgreen Co, which was ranked number 17 on the Fortune 500 list as of June 2017. The company registered $117.3 billion across more than 8,200 locations in 2016. The subject property is situated at the signalized, hard corner intersection of Aliso Creek Road and Enterprise. The intersection sees more than 49,000 vehicles per day. This Walgreens Pharmacy benefits from being less than 500 feet from Hoag Health Urgent Care and Medical Office Building. Additionally, this asset is situated within the 227,000-square foot Aliso Viejo Commons shopping center, which features national tenants such as Lowes Home Improvement and Trade Joe s. Directly adjacent to the subject property is the Aliso Viejo Town Center. This 486,000-square foot power center is anchored by the Edwards Aliso Viejo Stadium Movie Theatre, which has 20 screens and one IMAX theatre. Additional anchors feature TJ Maxx and HomeGoods, PetSmart, and Ralphs Fresh Fare. The asset also benefits from strong demographics. There are more than 284,000 people with an average household income greater than $121,000 within five miles. Aliso Niguel High School is less than two miles from the subject property. This 3,000-student high school was ranked among the top 5 percent of high schools in the United States by Newsweek in 2016. 2 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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2016 Marcus & Millichap. Activity ID:
INVESTMENT HIGHLIGHTS Walgreens With Rare 5 Percent Rent Increases Every 10 Years in Aliso Viejo, California Less Than Eight Miles East of Laguna Beach Absolute-Net With More Than 11 Years Remaining Zero Landlord Responsibilities Corporate Guaranty NASDAQ: WBA Number 17 on Fortune 500 (June 2017) Standard & Poor (S&P): BBB Signalized, Hard Corner Intersection of Enterprise and Aliso Creek Road More Than 46,000 Vehicles Per Day (VPD) Pad Site to Commons at Aliso Viejo Shopping Center 227,000-Square Feet of Retail Anchored by Strong National Credit Trade Joe s, and Michael s Directly Adjacent to Hoag Health Center 36,000-Square Foot Medical Office and Urgent Care Building Less Than Half Mile From Vantis Apartments Brand New Construction 435-Unit Luxury Apartment Complex Featuring Two Pools, Two Spas, Fitness Center, and More Outstanding Demographics within Five- Mile Radius More Than 284,000 People With an Average Household Income Greater Than $121,000
FINANCIAL OVERVIEW PRICE $14,200,000 26531 ALISO CREEK RD ALISO VIEJO, CA 92656 CAP RATE 4.66% NOI $661,500 DEBT SERVICE $439,446 NET CASH FLOW AFTER DEBT SERVICE $222,054 CASH ON CASH RETURN 3.27% PRICE PER SQUARE FOOT $1,060.81 RENT PER SQUARE FOOT $49.42 YEAR BUILT 2003 APPROXIMATE LOT SIZE 2.02 Acres GROSS LEASEABLE AREA 13,386 TYPE OF OWNERSHIP Fee Simple LEASE GUARANTOR Corporate Guaranty 4 LEASE TYPE ROOF AND STRUCTURE Absolute-Net Responsible 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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2016 Marcus & Millichap. Activity ID:
LEASE SUMMARY LEASE COMMENCEMENT DATE 11/21/2008 LEASE EXPIRATION DATE 11/30/2028 LEASE TERM TERM REMAINING 20 Years 11+ Years INCREASES 5% Every 10 Years OPTIONS TO RENEW OPTIONS TO TERMINATE OPTIONS TO PURCHASE 5, 10-Year & 1, 5-Year None None FIRST RIGHT OF REFUSAL None 5 ASSUMABLE LOAN BANK/SERVICER NAME Morgan Stanley Capital Holdings, Limited Liability Company LOAN BALANCE $7,400,000 LOAN COMMENCEMENT 5/1/2013 MATURITY DATE 4/1/2023 AMORTIZATION TERM I/O 5 Years, 30-Year Amortization 5 Years 10 Years CASH FLOW SUMMARY Year NOI Debt Cash on Principal Cash Flow Service Cash Balance 2018 $632,625 $439,446 $193,179 2.84% $7,400,000 2019 $661,500 $439,446 $222,054 3.27% $7,276,336 2020 $661,500 $439,446 $222,054 3.27% $7,147,248 2021 $661,500 $439,446 $222,054 3.27% $7,012,499 2022 $661,500 $439,446 $222,054 3.27% $6,871,840 2023 (Maturity Year) $661,500 $439,446 $222,054 3.27% $6,725,012 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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2016 Marcus & Millichap. Activity ID:
TENANT OVERVIEW Founded in 1901, Walgreens Boots Alliance, Incorporated is the nation s largest drugstore chain. Charles R. Walgreen built the chain from a single drugstore where he created his own drug products. By 1919 there were 20 stores, and in 1927 the Company went public. Three years later, the store count was well over 500. Today, Walgreen operates over 8,200 stores in all 50 states, DC, Puerto Rico and the United States Virgin Islands. More than 400 of its stores offer medical services through its Healthcare Clinics. Additionally, the Company operates digital businesses that include: Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com. In October 2015, Walgreens Boots Alliance announced an agreement to acquire all outstanding shares of Rite Aid for $9.00 per share in cash, for a total enterprise value of about $17.20 billion, including acquired net debt. After failure to obtain Federal Trade Commission approval, Walgreens announced in June 2017 to formally end the merger agreement, and will instead pay $5-Billion to purchase 2,186 Rite Aids, which has been approved as of the second quarter of 2017. After the new transaction closes, the company will convert most of those Rite Aids to the Walgreens brand. Walgreens expects the new transaction to be modestly accretive to adjusted diluted net earnings per share in the first full year after the initial closing and expects to realize more than $400 million in cost savings within three to four years, primarily from procurement, cost savings and other operational issues. TENANT PROFILE 7 TENANT TRADE NAME OWNERSHIP TENANT LEASE GUARANTOR NUMBER OF LOCATIONS 8,175+ Walgreens Boots Alliance, Incorporated Public Corporate Store Corporate Guarantee SALES VOLUME $117.3-Billion (2016) NET WORTH $30.2-Billion (2016) CREDIT RATING RANK BBB Number 17 on Fortune 500 (June 2017) 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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2016 Marcus & Millichap. Activity ID:
8 ABOUT ALISO VIEJO Located in the heart of Southern California, Orange County s land area covers 790 square miles, bordering the counties of Los Angeles, San Diego, Riverside and San Bernardino. Elevations range from sea level at the coast to 5,687 feet at Santiago Peak in the Saddleback Mountains. The City of Aliso Viejo is a master planned community that was developed to contain a balance between residential neighborhoods, community parks, facilities and schools as well as an appropriate mix of business, office and retail uses. The City is home to the headquarters of several large corporations and the community features ample employment opportunities and extensive recreational facilities. The City also enjoys access to the Orange County trail system. Wood Canyon Wilderness Park is home to many rare and endangered plants and animals, along with mature oaks, sycamore and elderberry trees and year-round streams. An abundance of parks and trails, cultural and recreational activities and youth sports programs further enhance the quality of life for a community with a vision to ensure long-term viability. ALISO VIEJO HISTORY : Aliso Viejo became Orange County s 34th City on July 1, 2001, yet it s a community grounded in a rich history that echoes other south Orange County cities. The ultimate vision for Aliso Viejo was to feature neighborhoods that mix homes, workplaces, stores and services. A transit-friendly, energyconscious and land-conserving community, Aliso Viejo was to foster a sense of community by creating a friendlier streetscape, quality infrastructure like parks, schools and new roads, shopping close to home, community services and neighbors that genuinely feel connected to the community and to one another in some fashion. In February of 1995, the Self-Governance Subcommittee of Governmental Affairs, an offshoot of the Aliso Viejo Community Association (AVCA), which was the first community-wide property owner s association of its kind in the state, began its push to make Aliso Viejo a city. Two years later, Aliso Viejo Cityhood 2000 was born. In March of 1999, Aliso Viejo Cityhood 2000 launched a petition drive to put the question of cityhood to a community vote. On March 6, 2001, voters (more than 90 percent) overwhelmingly decided to make Aliso Viejo a city. 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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a trademark of 2016 Marcus & Millichap. Activity ID:
1 Mile 3 Mile 5 Mile 1 Mile 3 Mile 5 Mile 1 Mile 3 Mile 5 Mile 2010 Population 24,565 117,404 264,961 2010 Households 10,031 48,458 101,832 2017 Population 25,418 125,094 284,769 2017 Households 10,404 50,915 107,775 2022 Population 26,268 129,945 296,249 2022 Households 10,760 52,781 111,863 2017 Average HH Income 2017 Median HH Income 2017 Per Capital Income $117,225 $115,349 $121,835 $94,677 $88,710 $93,922 $47,982 $46,949 $46,110
MARCUS & MILLICHAP HEREBY ADVISES ALL PROSPECTIVE PURCHASERS OF NET LEASED PROPERTY AS FOLLOWS: The information contained in this ing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided. As the Buyer of a net leased property, it is the Buyer s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This ing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer. Any projections, opinions, assumptions or estimates used in this ing Brochure are for example only and do not represent the current or future performance of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. Buyer and Buyer s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs. Like all real estate investments, this investment carries significant risks. Buyer and Buyer s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant s past performance at this or other locations is an important consideration, it is not a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer s legal ability to make alternate use of the property. By accepting this ing Brochure you agree to release Marcus & Millichap Real Estate Services and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property.
WALGREEN S ALISO VIEJO, CALIFORNIA 26531 ALISO CREEK RD ALISO VIEJO, CA 92656 BROKER OF RECORD: RAMON KOCHAVI MARCUS & MILLICHAP SAN FRANCISCO, CA LICENSE: 31PA1159742