TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of...

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OPICS Brokerage, LLC 12121 Wilshire Blvd. Suite 555 Los Angeles, CA 90025 TWO TENANT INVESTMENT OPPORTUNITY 555 W 2nd Street | San Bernardino, CA EXCLUSIVELY MARKETED BY: Fara Raban Lic. 01857257 (310) 873-9568 [email protected] OPICS Brokerage, LLC

Transcript of TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of...

Page 1: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

OPICS Brokerage, LLC 12121 Wilshire Blvd. Suite 555Los Angeles, CA 90025

T W O T E N A N T I N V E S T M E N T O P P O R T U N I T Y5 5 5 W 2 n d S t r e e t | S a n B e r n a r d i n o , C A

EXCLUSIVELY MARKETED BY:

Fara RabanLic. 01857257(310) [email protected]

OPICSBrokerage, LLC

Page 2: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

COntEntS

InVESTMEnT SUMMARY ........ 3Synopsis Investment Highlights

fInAnCIALS ......................... 6Cash Flow Projections Rent Roll Tenant Profiles

PRoPERTY oVERVIEw............ 9Property Description Parcel Map Site Plan

AREA oVERVIEw ..................13City Overview County Overview Demographics

Page 3: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 3

Investment Summary SynopsisOPICS Brokerage, LLC is proud to offer this outstanding two tenant net-leased investment

opportunity featuring Food 4 Less and Ross Dress for Less. Continually operating at this

location since 1988, Food 4 Less has a long established and extremely successful

operating history at the property, evidenced by their multiple lease renewals and

phenomenal store sales (sales are reported). In addition, Food 4 Less has already

excersised their next option period in advance, further signaling the superb strength of this

location for the nationally recognized grocer. Ross joins Food 4 Less as the

property’s second tenant and features a signed 10-year primary term lease. An S&P 500 and

Fortune 500 Company, Ross is the largest off-price apparel and home fashion chain in the U.S.

INVESTMENT SUMMARY

Offering Price $14,000,000Year 1 noI $799,577

occupancy 100%

Price per Square foot $167.14

CAP Rate 5.71%Total GLA 83,760 SF

Total Land Sf 265,716 SF

Total Land Acres 6.10 Acres

Page 4: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 4

RARE Two TEnAnT GRoCERY AnChoRED oPPoRTUnITY

• 100% occupied by Food 4 Less (Kroger Credit: nYSE: KR, market cap of

±$22.57 Billion) and Ross Dress For Less (Ross Credit: nASDAQ:

ROSt, market cap of ±$32.04 Billion).

• Food 4 Less has already exercised their next scheduled optionperiod in advance.

• Both tenants feature “net” leases, allowing all property expenses to be

passed though to tenants.

• Rare opportunity to purchase an established grocery anchor shopping center

at a significant discount to replacement cost (estimated to be over $250 PSF

including land).

STRonG InVESTMEnT fUnDAMEnTALS

• 100% Leased to national credit tenants.

• Food 4 Less has been operating at the center for about 30 years andreports phenomenal store sales (contact broker for details).

• Both Food 4 Less and Ross offer strong remaining primary lease terms and

in-place rent averages just $0.75 PSF NNN.

• Property is offered free and clear of existing financing, allowing a buyer to take

full advantage of historically low interest rate environment.

• Ownership in 2015 spent over $200,000 for Seismic Retrofitting.

PRIME LoCATIon In ESTABLIShED TRADE AREA

• Property is ideally located to cater to the core demographics and ideal

customer base of current tenants, ensuring long-term desirability.

• Immediate access to:

– Interstate 215 (145,000 cars per day – ±0.25 miles west on 2nd St)

– Interstate10 (173,293 cars per day – ±2.50 miles south)

– Interstate 210 (116,156 cars per day – ±2.50 miles north)

• Directly across from the new San Bernardino transit center, featuring bus and

major Metrolink hub.

• Convenient access with multiple points of ingress and egress on all four sides of

the property and two signalized intersections.

• Strong Demographics, with over 359,080 people living within 5 miles.

Low MAnAGEMEnT hASSLE

• two-tenant property provides easy ownership oversight and “net” leases allow all

operating expenses to be passed through to tenants.

• Ownership upkeep and recent property improvements have avoided any deferred

maintenance issues.

INVESTMENT SUMMARY

Investment Highlights

Page 5: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 5INVESTMENT SUMMARY

E STREET

2n

D STR

EET

Rapid Transit Center and Metrolink Station

Page 6: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 6FINANCIALS

SUMMARY

Pricing Summary Propery SpecificationsPurchase Price $14,000,000 Year Built 1972Cap Rate 5.71% Total Rentable Area 83,760 SFPurchase Price / SF $167.14 Occupancy 100%

Potential Loan ScenarioLoan Amount $9,100,000Down Payment $4,900,000LTV 65.00%Rate MarketAmortization/Term 30/10

OPERATING CASH FLOW Year 12013

REVENUEFood 4 Less Base Rent 582,320Ross Base Rent 188,141Expense Reimbursement Revenue 281,966

Effective Gross Revenue 1,052,428

OPERATING EXPENSESCAM 116,182Insurance 10,720Property Taxes 155,064

Total Operating Expenses (281,966)

Net Operating Income $770,461

All Cash Return 6.35%FINANCING (Proposed)

Less Loan Payment (494,247)Leveraged Cash Flow $276,214

Leveraged Cash on Cash Return 7.59%

[1] Real estate taxes reassessed @ 1.3082%

Fiscal year commences June 1

SUMMARY / CASH FLOW

*No assumable financing in place -buyer may pay all cash or secure new loan.

VALUATION ANALYSIS - Food 4 Less/Ross555 W. 2nd St - San Bernardino, CA

Matt BurnettVice President

CBRE Private Capital Group909.418.2098

[1]

SUMMARY

Pricing Summary Propery SpecificationsPurchase Price $12,133,250 Year Built 1972Cap Rate 6.35% Total Rentable Area 83,760 SFPurchase Price / SF $144.86 Occupancy 100%

Potential Loan ScenarioLoan Amount $8,493,275Down Payment $3,639,975LTV 70.00%Rate 4.13%Amortization/Term 30/10

Year 12018

REVENUE611,436Food 4 Less Base Rent [1]

Ross Base Rent 188,141Expense Reimbursement Revenue 325,686

Effective Gross Revenue 1,125,263

OPERATING EXPENSES121,48812,270

191,928Total Operating Expenses (325,686)

Net Operating Income $799,577

All Cash Return 5.45%

[1] Rent based on Food 4 Less as of Feb-2019, with Buyer credit at escrow closing.

[2] Real estate taxes reassessed @ 1.3082%

OPERATING CASH FLOW Fiscal year commences September 1

SUMMARY / CASH FLOW

*No assumable financing in place - buyermay pay all cash or secure new loan. Callbroker for details.

VALUATION ANALYSIS - Food 4 Less/Ross555 W. 2nd St - San Bernardino, CA

Matt BurnettVice President

CBRE Private Capital Group909.418.2098

CAMInsurance Property Taxes [2]

Property Cash Flow

Page 7: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 7

Square Recovery

Feet Pro-rata Begin End Begin Monthly PSF Annually PSF Type

58,232 69.52% Feb-1988 Jan-2024 Current $48,526.67 $0.83 $582,320.00 $10.00

Feb-2019 $50,953.00 $0.88 $611,436.00 $10.50

Feb-2024 Jan-2029 Future $53,379.33 $0.92 $640,552.00 $11.00

25,528 30.48% Feb-2011 Jan-2022 Current $15,678.45 $0.61 $188,141.36 $7.37

Feb-2022 Jan-2027 Future $16,742.11 $0.66 $200,905.36 $7.87

Feb-2027 Jan-2032 Future $17,805.78 $0.70 $213,669.36 $8.37

Feb-2032 Jan-2037 Future $18,870.28 $0.74 $226,443.36 $8.87

Feb-2037 Jan-2042 Future $19,931.36 $0.78 $239,176.36 $9.37

83,760 100% $66,631.45 $0.75 $779,577 $8.94

[1] Original lease expired 1/31/2009. Food 4 less is in it's 2nd option period and has already exercised its 3rd option starting Feburary 1, 2019.[2] Pricing based on Food 4 Less rent as of Feb-2014, with Buyer credit.

Base rent is flat for years 1-10,

Option

Lease Term Base Rent

Tenant

TOTALS/AVG:

Tenant is in 2nd option period, and has already exercised next option through Jan. 2024.

Rental Increases / Options

NNN + 10%

Admin

Food 4 Less

Option

Ross NNN + 5%

Admin

VALUATION ANALYSIS - Food 4 Less/Ross555 W. 2nd St - San Bernardino, CA

Matt BurnettVice President

CBRE Private Capital Group909.418.2098

[1] [2]

FINANCIALS

Rent Roll

Page 8: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 8

Public Company: Subsidy of Kroger Co.

Website: www.food4less.com

no. of Locations: ±145 (Food 4 Less)

±2,800 (Kroger)

2017 Sales: $122.7 Billion (Kroger)

S&P Credit Rating: BBB (Kroger)

Public Company: Ross Stores

Website: www.rossstores.com

no. of Locations: ±1,622

2017 Sales: $14.13 Billion

S&P Credit Rating: A-

Tenant Profiles

FINANCIALS

fooD 4 LESS

Food 4 less is a national warehouse store grocery chain that was founded in 1977 and is a

subsidy owned by Kroger Co – the country’s largest grocery store chain. It is a price impact

“no-frills, low cost” grocery store that features a wide selection of grocery, health and beauty

care items, quality meat, seafood, poultry, dairy, baked goods and fresh produce items. Kroger

currently operates ±145 Food 4 Less stores in California, Illinois, Indiana, nebraska and

nevada.

Kroger is the country’s largest grocery store chain, the second largest general retailer by

revenue and fourth largest retailer in the world. With more than 2,800 locations, Kroger offers a

store format for nearly every kind of shopper, operating under banner names that include

Kroger, Food 4 Less, Ralphs, Fred Meyer, Fry’s, QFC, and Dillons.

RoSS DRESS foR LESS

Ross Stores, Inc. is an S&P 500, Fortune 500 and nasdaq 100 (ROSt) company headquartered

in Pleasanton, California, with fiscal 2017 revenues of $14.13 billion. The Company

operates Ross Dress for Less® (“Ross”), the largest off-price apparel and home fashion

chain in the United States with 1,622 locations in 37 states, the District of Columbia and Guam.

Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear

and home fashions for the entire family at everyday savings of 20% to 60% off department and

specialty store regular prices. the Company also operates 213 dd’s DISCOUntS® in 16 states.

Page 9: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 9

PRoPERTY ADDRESS

555 West 2nd Street

San Bernardino, CA 92401

LoCATIon DESCRIPTIon

the Property is located at the Southwest corner of 2nd

Street and E Street in San Bernardino, California just east

of the I-215 in the City of San Bernardino – San Bernardino

County.

BUILDInG AREA

two (2) retail buildings totaling approximately 84,120

square feet of rentable space.

PARCEL

this property consists of one single parcel containing

approximately 6.1 Acres and 265,716 square feet of land

area.

Address Parcel Acres

555 W. 2nd Street 0134-371-10 6.10

ZonInG

this shopping center is zoned general commercial by the

city of San Bernardino.

PARKInG

the property contains approximately 326 parking spaces,

providing for a parking ratio of 4 spaces per 1,000 square

feet of leasable area.

ACCESS

There are five direct points of access to the property and

reciprocal easements with the adjacent properties providing

additional points of entry. the property is easily accessible

from the I-215, I-10, and I-210 freeways.

YEAR BUILT

the property was originally built in 1973, and was partially

remodeled with the addition of Ross in 2010.

Ownership in 2015 spent over $200,000 for Seismic Retrofitting.

PROPERTY OVERVIEW

Property Description

Page 10: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 10

Site Plan

PROPERTY OVERVIEW

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58,232 SF25,528 SF

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FOOD 4 LESS | ROSS DRESS FOR LESS | 11LOCATION

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3 MiLeS

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FOOD 4 LESS | ROSS DRESS FOR LESS | 12

Over 359,080 people within 5 miles.

LOCATION

Page 13: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

FOOD 4 LESS | ROSS DRESS FOR LESS | 13

CITY of SAn BERnARDIno

San Bernardino is a steadily growing community of over 216,995

people, and the 17th largest city in the state by population. the

City of San Bernardino is one of the oldest communities in the

State of California, incorporated in 1857 it soon afterward

became an important trading hub in Southern California, the city

has since grown steadily due largely to its supply of affordable

and quality family housing, as well as its close proximity to major

metropolitan areas.

the City also serves as a key hub for the railroad, trucking and distribution industry, with major

companies such as BNSF, Yellow Freight Systems, Pacific Motor Trucking, Kohl’s, Mattel, Pep

Boys, Stater Bros. Markets and Amazon.com all operating major distribution centers in the city.

InLAnD EMPIRE

the Inland Empire, comprised of Riverside and San Bernardino Counties, is the largest region

of Southern California. With a population of more than 4,000,000 people this region is also

larger than 24 of the 50 U.S. states. Its borders span from the Orange and Los Angeles

County lines on the west, more than 100 miles east to the “low desert” communities of Palm

Springs, La Quinta, and Rancho Mirage. It also runs nearly 150 miles from north to south,

from the state-line border with nevada in the north, to the southern-most city in the region,

temecula. the Inland Empire market saw a population surge in the late 1990’s and early

2000’s, following the demand for affordable family housing, and is still growing today. this

robust market is also in close proximity to major Southern California airports, ports, and train

routes which makes it an ideal location for not only retail, but industrial distribution as well.

AREA OVERVIEW

1 MiLe 3 MiLeS 5 MiLeS

POPU

LAtI

On

2013 Estimated Population 12,716 141,688 359,080

2018 Projected Population 13,536 147,610 372,725

2010 Census Population 12,204 138,329 351,544

2000 Census Population 11,431 122,883 317,828

Growth 2010-2013 4.19% 2.43% 2.14%

Growth 2013-2018 6.45% 4.18% 3.80%

1 MiLe 3 MiLeS 5 MiLeS

HO

USE

HO

LDS

2013 Estimated Households 3,640 36,673 101,110

2018 Projected Households 3,931 38,216 104,859

2010 Census Households 3,433 35,811 99,153

2000 Census Households 3,283 34,164 96,108

Growth 2010-2013 6.03% 2.41% 1.97%

Growth 2013-2018 7.97% 4.21% 3.71%

1 MiLe 3 MiLeS 5 MiLeS

InC

OM

E

2013 Estimated Households 3,640 36,673 101,110

– Income Less than $15,000 1,564 8,910 19,000

– Income $15,000 to $24,999 647 6,534 15,073

– Income $25,000 to $34,999 445 5,612 14,068

– Income $35,000 to $49,999 459 5,694 16,531

– Income $50,000 to $74,999 316 5,639 18,637

– Income $75,000 to $99,999 129 2,437 8,950

– Income $100,000 to $149,999 74 1,559 6,306

– Income $150,000 to $199,999 6 168 1,511

– Income $200,000 to $499,999 1 106 916

– Income $500,000 and over 1 13 118

2013 Est. Average Household Income $27,313 $38,922 $48,326

2018 Prj. Average Household Income $27,368 $39,026 $48,575

DEMoGRAPhICS

Page 14: TWO TENANT INVESTMENT OPPORTUNITY · Public Company: Subsidy of Kroger Co. Website: no. of Locations: ±145 (Food 4 Less) ±2,800 (Kroger) 2017 Sales: $122.7 Billion (Kroger) S&P

Confidentiality AgreementCONFIDENTIALITY AGREEMENTThis is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property.

This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and OPICS Brokerage, LLC. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner.

Neither the Owner or OPICS Brokerage, LLC, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property.

The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Ownerʼs obligations therein have been satisfied or waived.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or OPICS Brokerage, LLC. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or OPICS Brokerage, LLC.

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to OPICS Brokerage, LLC.

OPICS Brokerage, LLC 12121 Wilshire Blvd. Suite 555Los Angeles, CA 90025

EXCLUSIVELY MARKETED BY:

Fara RabanLic. 01857257(310) [email protected]

OPICSBrokerage, LLC