ROCKWOOD P L A Z A April 2018 Nick Kassab, a licensed real estate broker in the state of Oregon, along with Holliday Fenoglio Fowler, L.P. (collectively HFF ).
THE OFFERING HFF, as an exclusive advisor, is pleased to offer the opportunity to acquire Rockwood Plaza, a 92,677 squarefoot, multi-tenant shopping center. The center is located on SE Division Street, the major thoroughfare that connects Portland to the rapidly growing city of Gresham, immediately benefiting from high daily traffic counts and positioned directly on the future eastbound Division TriMet MAX line slated to begin construction in 2018 and offer service in 2021. Anchored by Planet Fitness and Dollar Tree, Rockwood Plaza s value-oriented tenancy caters perfectly to the area s rising demographics, satisfying shoppers daily-needs and limiting ownership s risk exposure with a rent roll in industries that are inherently resistant to the growing threat of e-commerce. Since 2013, ownership has invested over $2.1 million in the property, improving roofing, façades, and delivering quality tenant improvements. Rockwood Plaza offers new ownership significant value creation optionality including leasing upside, the ability to mark Dollar Tree to market in 2021, the opportunity to spinoff Pub 181 and Black Rock Coffee at lower cap rates, and the ability to convert 3,407 RSF to NNN rents by vacating or negotiating with the Asian Food Mart. PROPERTY SUMMARY Property Address: 2400 SE 182nd Ave Portland, OR 97233 46.4% Leased to National Retailers $11,900,000 Price Land Size: 7.99 Acres 6.22 per 1,000 Parking Ratio 87.4% Occupied 8.04% Projected Year 1 Cap Rate 1962 Year Built 2012 Year Renovated 92,677 Rentable Square Feet 5.13 Weighted Average Lease Term $956,188 Projected Year 1 NOI $11.71 PSF Average In-Place Rents 2
INVESTMENT SUMMARY Value-oriented tenancy anchored by Dollar tree & Planet Fitness. Significant mark-tomarket opportunity when Dollar Tree Rolls in June 2021. Rising neighborhood with several development projects slated to re-energize the sub market. Long term commitment from POIC, Planet Fitness, World Class Acupuncture & Black Rock Coffee. 153,910 Population in a 3-mile radius with 6.92% Projected growth by 2022. Numerous valueenhancement opportunities to drive NOI growth. Prominent intersection & frontage along SE Division Street & SE 182nd with traffic counts of 24,433. Average in-place rents more than 15% below market. Located directly on future division transit TriMet stop. Over $2.1 million invested in the property since 2013. Daily needs center resistant to competition from e-commerce. 8.00% 5 Year Projected CAGR. 3
TENANCY SUMMARY 17 Ticker Symbol S&P Credit Rating Fortune Rank Market Cap NYSE: PLNT BB- N/A $3.716 Billion 1.7 million new net members added in 2017 16 210 additional locations opened in 2017 11.6% growth in same store sales in 2017 1 2 3&4 5 6A 6B 7 8 9 10 15 14 13 12B 12A 11 Ticker Symbol NASDAQ: DLTR S&P Credit Rating BB+ Fortune Rank #136 Market Cap $22.523 Billion More than 13,000 stores in 40 states 5.7% Increase in sales over previous quarter While a price war among big retailers like Walmart and Kroger has impacted the prices of groceries and household items, Dollar Tree remains relatively unscathed due to its ability to operate smaller store sizes and deliver a wide variety of products starting at $1. 4
TENANCY SUMMARY Tenant Area (SF) % of GLA #01 04 POIC 16,398 18% #05 Rice Kitchen/TinTin 6,000 6% #06 A VACANT 2,710 3% #06 B Working Class Acupuncture 3,298 4% #07 Asian Food Mart 3,407 4% #08 Planet Fitness 20,964 23% #09 VACANT 6,121 7% #10 Dollar Tree 22,025 24% #11 Deli Barn 1,640 2% #12 A Metro PCS 740 1% #12 B CT Wireless 921 1% #13 Posh Nails 840 1% #14 Sam's Barber Shop 320 0% #15 VACANT 1,200 1% #16 Gresham Laundry 1,694 2% #17 Pub 181 4,399 5% Outpad Black Rock Coffee Outpad Outpad 5.1% CAGR in revenue industry-wide since 2009. Rockwood Plaza is 46.4% occupied by credit tenants and has a rent roll that perfectly caters to the area s demographics. Lower-to-mid priced health clubs have historically been resilient in downturns. The U.S. Health club industry reached an est. $27.6 billion in revenue in 2016. 5
SIGNIFICANT VALUE-ADD Opportunities Ability to Spin Off Black Rock Coffee Black Rock Coffee can be placed on its own parcel and sold to a private investor at a lower cap rate. Leasing Upside Suite #2240B, #2360 & #2434 are currently vacant and can be leased up at market rents to drive NOI. Ability to Spin Off Pub 181 Pub 181 is already on its own parcel and can be spun-off to an owner-user upon expiration in 2020. Convert 3,407 RSF Space to NNN Rent The Asian Food Mart is currently on a month to month gross lease. New ownership will have the option to renew at triple net market rent or lease up the space at market rent. Mark Dollar Tree to Market June 2021 Capture additional revenue by lifting Dollar Tree s $7.25 NNN rent to market. Affordable Aesthetic Improvements Low-cost upgrades including additional landscaping and the re-striping of the parking lot will improve the overall feel and quality of the center, attracting shoppers and national tenants alike. Opportunity to Backfill Dollar Tree with Grocer Dollar Tree has no remaining options and can be combined with the adjacent vacant space to deliver a 28,146 SF box perfect for a grocer when Dollar Tree rolls in June 2021.
LOCATION & SUBMARKET Overview Oregon Trail Shopping Center 219,228 RSF 90.0% Occupied KEY DEVELOPMENTS RE-ENERGIZING THE SUBMARKET Hood Shopping Center 106,177 RSF 100% Occupied Gresham Square Shopping Center 138,398 SF 87.0% Occupied DOWNTOWN GRESHAM Gresham Town Fair 264,615 RSF 84.0% Occupied Rockwood Rising - (1.2 Miles North) Slated to break ground in 2018, Rockwood Rising will deliver spaces for local entrepreneurs, manufacturing and tech companies as well as access to healthy, local and affordable grocery stores and restaurants. The development will deliver a vibrant neighborhood center with a public plaza to host music, a farmer s market and other events throughout the day. N Gresham Station Shopping Center 341,186 RSF 93.8% Occupied Rockwood Rising 1.2 Miles Rockwood Plaza Shopping Center 92,677 RSF 87.4% Occupied Miller & Main Master Development SE Division Street 24,433 VPD Division Crossing 104,121 RSF 92.3% Occupied SE 182ND Avenue 22,494 VPD TriMet s New Eastbound Division Transit Project Miller & Main Master Development - (2.5 Miles East) A local developer acquired the entire block between N Main Avenue, NE Third Street and NW Miller Avenue for master plan development in Gresham. Currently in negotiations with four Portland breweries, the plan includes renovations to transform the block into modern tenant space offering outdoor seating as well as a multi-use structure with retail, office and residential space. Construction is set to begin in 2021. TriMet s New Eastbound Division Transit Project The $175 million Division Transit Project will further integrate downtown Portland and Gresham along SE Division Street by adding 40 enhanced stations between Union Station and Gresham Central Transit Center. The project, now led by TriMet, will begin construction in 2018 with service starting in 2021. GRESHAM RETAIL SUB MARKET 325 Existing Retail Properties $288 Million Invested Over the Last 24 Months DEMOGRAPHICS (3 / 5-Mile Radius) $61,000 /$63,350 Average. Household Income 66,240 /137,590 Daytime Employees 4,000,000 SF Inventory ZERO Under Construction 153,910 /311,511 Population 6.92% /6.82% Projected Growth by 2022 4.90% Direct Vacancy $233,000 /$245,000 Average. Home Value
SURROUNDING GROCERS Grocery Void Analysis 3.6 Miles 3.7 Miles 2.7 Miles 0.9 Miles 3.1 Miles 2.9 Miles 0.8 Miles 1.1 Miles 1.4 Miles ROCKWOOD PLAZA Investors will have the ability to upgrade Rockwood Plaza to a grocery-anchored center in June 2021. Dollar Tree currently has no remaining options and can be combined with the adjacent vacant suite to form a 28,146 SF grocer box when the tenant rolls in June 2021. 1.9 Miles With a minimum of 10 regional and national grocers absent from this fast-growing submarket, the options for selecting a grocery tenant to anchor the center. 8
ROCKWOOD P L A Z A INVESTMENT ADVISORS Nick Kassab Senior Director (503) 265-5083 nkassab@hfflp.com Bryan Ley Managing Director (310) 407-2120 bley@hfflp.com DEBT ADVISORS Casey Davidson Managing Director (503) 224-5566 cdavidson@hfflp.com Liz Helmer Real Estate Analyst (503) 256-5097 lhelmer@hfflp.com Jeff Hodson Real Estate Analyst (503) 417-5596 jhodson@hfflp.com Judy Boyd Senior Associate (206) 576-0036 jboyd@hfflp.com Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, HFF ), HFF Securities L.P. and HFF Securities Limited (collectively, HFFS ) ATLANTA DALLAS MIAMI PHOENIX SAN FRANCISCO are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 24 offices and are a leading provider of commercial real estate and capital AUSTIN DENVER NEW JERSEY PHILADELPHIA SEATTLE markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets BOSTON HOUSTON NEW YORK CITY PITTSBURGH TAMPA platform including debt placement, investment sales, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan CAROLINAS INDIANAPOLIS ORANGE COUNTY PORTLAND WASHINGTON, D.C. servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF. CHICAGO LOS ANGELES ORLANDO SAN DIEGO LONDON