"MAIN STREET SHOPPING CENTER"
EXCLUSIVELY MARKETED BY: Mark Thomas Office: 408.553.6135x18 Cell: 408.499.2891 Licence #00994287 email@example.com OFFERING MEMORANDUM MAIN STREET SHOPPING CENTER A SaveMart-anchored neighborhood shopping center in Salinas, CA MAIN STREET SHOPPING CENTER 2 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP DISCLOSURE STATEMENT The information contained in the following marketing brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Retail Real Estate Group and should not be made available to any other person or entity without the written consent of Retail Real Estate Group. This marketing brochure has been prepared to provide a summary; unverified information to prospective buyers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Retail Real Estate Group has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this marketing brochure has been obtained from sources we believe to be reliable; however, Retail Real Estate Group has not verified, and will not verify, any of the information contained herein, nor has Retail Real Estate Group conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT MARK THOMAS WITH RETAIL REAL ESTATE GROUP FOR MORE DETAILS. 3 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP INVESTMENT SUMMARY Offering Price $8,350,000 Investment Strategy Capitalization Rate 7.2% The center features extremely limited, CY 2011 Projected NOI $600,967 anchored, small shop space in protected trade Ownership Fee Simple area without vacancies. Building Area 51,055 Square Feet Center features 22,367 square feet of small Land Area 4.94 Acres (215,186 Square Feet) tenant shop space with modern bay Parking (Approximate) 230 stalls dimensions. Fifteen (15) tenants are in the Occupancy 97% center. Price Per SF Building $164 Per Square Foot Save Mart anchor space is 50% below market, Average Rent $SF $1.08 PSF Per Month providing both stability and potential up-side— Anchor (Save Mart) $.46 PSF Per Month potential to re-tenant Save Mart space with Restaurants (5) $1.99 PSF Per Month upscale market. Service (8) 1.76 PSF Per Month 97% occupancy throughout the current 2011 Cash Flow Plus Principle $350,535 recession. Well-managed with seasoned Reduction tenants. Balanced mix of restaurants and service tenants paying current market rent or less. Anchor tenant is responsible for its roof. Existing Financing Summary Well maintained with over $370K of recent Outstanding Balance $3,852,841 (Sept 2010) owner investment into property for new Interest Rate 6.5% parking lot, roofing, backflow devices & cages, Loan Maturity September 1, 2012 and retail shell for vacant space. Assumption Fee 1% Directly across from high volume CVS that dominates the local drugstore market. 4 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP CITY OF SALINAS AERIAL Main Street Shopping Center 5 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP TENANT AND MARKET SUMMARY Main Street Shopping Center Tenants Tenant Total $ PSF No. Rent% of Ave Term Category SF Rent/Month Total Anchor (Save 28,688 $.046 1 24% 32 years Mart) Restaurants & 11,379 $1.99 5 41% 7 years Quick Service Service Retail 10,988 $1.76 9 35% 13 years Total Tenants 51,055 15 100% Trade Area Profile 1.5-Mile Radius South Salinas Trade Save Mart Supermarket Area Population 30,596 34,784 Daytime Employees 25,343 Unemployment Rate 5.78% (2010) Ave HH Income $72,426 $97,524 Traffic Count 35,000 Cars Per Day — S. Main Street Competing Properties Anchor SF Shop SF Occupied South Salinas Plaza 46,987 4,927 100% The Plaza 29,543 14,803 100% Star Center 23,000 30,000 100% Smalley’s Roundup 6 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP STARBUCK’S COFFEE — MAIN STREET SHOPPING CENTER 7 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP MAJOR TENANTS Save Mart Save Mart operates 244 stores in Northern California and Northern Nevada, with estimated sales of $4.9 billion. It Supermarket acquired 132 stores from Albertsons LLC early in 2007, a move that doubled the chain’s store count from 124 to 256. About half of the locations house in-store pharmacies. Its supermarkets and warehouse stores operate under the Save Mart Supermarkets, S-Mart, Lucky, and FoodMaxx names. Original lease with Lucky Stores in 1978 has a percentage rent clause. The UPS Store Mail Boxes Etc. offers The UPS Store for all your UPS needs. A subsidiary of the parcel delivery giant, Mail Boxes Etc. is a leading franchisor of postal, shipping, document, and business services retail centers operating primarily under The UPS Store name. Its approximately 4,800 locations in the US, Puerto Rico, and Canada offer copying and printing, mailboxes, office supplies, packaging, parcel shipping, and other postal and business products and services. Customers include small and home-based businesses, traveling businesspeople, and consumers. Store has been in the center since 1993. Starbuck’s Coffee Starbucks Corporation operates over 21,000 locations, with annual sales of over $10.2 billion. Starbuck’s Coffee has been a tenant in the center since spring of 2002. In 2009, Starbuck’s extended their term until 2017 by exercising a five year option early. The location has always exceeded their expectations, and their final 5 year option beginning in 2017 is at Fair Market Value but not less than prior years rent. Round Table Pizza Round Table Pizza operates a chain of about 500 family-oriented pizza parlors located primarily in the western US as well as in Asia and the Middle East. The pizzerias are known for the colorful names given to menu items, including Guinevere's Garden Delight and Montague's All Meat Marvel. Round Table also serves sandwiches, salads, and appetizers. Franchisee Perpetual Pepperoni, Inc. has two other locations and has been a tenant since 1993. Consistently high sale volume. Subway Sandwiches The Subway chain of sandwich shops is the second-largest quick-service restaurant chain behind McDonald's. It boasts more than 32,000 locations in 90 countries, with more US locations than the Golden Arches. Virtually all Subway restaurants are franchised and offer such fare as hot and cold sub sandwiches, turkey wraps, and salads. Subway is new to the center (spring 2010) and has a lease structured to increase dramatically over the next 3 years and then go to Fair Market Value for option periods. Franchisee operator has 15 locations. Smalley’s Roundup Founded in 1975 and recently relocated to Main Street Shopping Center. The restaurant has been very successful in its new location and is regarded as a community staple. Voted ‘Best BBQ of Monterey County’ by California Reader’s Choice, Monterey Life and Coast Weekly’s Readers Poll. 8 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP SHOPPING CENTER SITE PLAN 9 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP TENANT ANALYSIS Tenant SF Monthly Rate Years Expiration Rental Options Reimburse 2010 Scheduled 2011 Scheduled Rental PSF Tenant Date Increases Rent Rent Anchor – Save Mart 28,688 $13,333 0.46 32 Yrs 07/01/14 % Rent 6X5 NNNN $160,000 $160,000 Restaurant-Food 11,379 $22,660 1.99 $271,920 $275,211 Starbuck’s Coffee 1,560 $4,134 2.65 8 Yrs 05/31/17 15% (2012) 1 X 5 (FMV) NNN $49,608 $49,608 Subway 1,400 $1,750 1.25 1 Yr 05/31/15 3% yr 4 3 X 5 (FMV) NNN $21,000 $23,450 Cold Stone 1,454 $2,763 1.90 6 Yrs 03/31/14 12% (2014) 1 X 5 ($2.13) NNN $33,156 $33,156 Creamery 1 Round Table Pizza 2,415 $4,003 1.66 17 Yrs 05/31/13 CPI (2011) 1 X 5 (FMV) NNN $48,036 $48,877 Smalley’s Roundup 4,550 $10,010 2.20 2 Yrs 06/30/14 15% (2014) 2X5 NNN $120,120 $120,120 Service-Retail 10,988 $19,321 1.76 $231,858 $237,758 2 Verizon 540 $1,445 2.68 8 Yrs 09/03/11 CPI (3-6%) NONE NNN $17,340 $17,629 1 The UPS Store 1,650 $2,591 1.57 17 Yrs 10/14/15 CPI NONE NNN $31,092 $32,647 Ideal Cleaners 2,138 $3,459 1.62 26 Yrs 05/31/13 CPI (3-6%) 1 X 5 (FMV) NNN $41,508 $41,767 1 C Gallery Hair 750 $1,407 1.88 16 Yrs 05/31/14 CPI NNN $16,884 $17,011 l JC Nails 1,000 $1,800 1.80 6 Yrs 08/30/14 CPI 3-6% 1 X 5 (FMV) NNN $21,600 $21,600 e Wilson Water a 1,560 $2,500 1.60 1 Yr 07/31/12 SCHED 1 X 3 (FMV) IDUS GRS $30,000 $32,500 n Loboso & 1,100 $1,867 1.70 1 Yr 01/21/14 3% Sched 1 X 5 (FMV) NNN $22,404 $22,440 e Associates r Medicine 900 $1,890 2.10 32 Yrs 12/31/10 NONE NONE NNN $22,680 $23,814 2 s Shoppe Vacant (Pending) 1,350 $2,362 1.75 $28,350 $28,350 TOTAL 51,055 $55,314 1.08 $663,778 $672,969 1 CPI increases of 1.5% in 2011 2 Renewals at 3% in 2011 10 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP FINANCIAL OVERVIEW Revenues CYR 2011 Gross Potential Rent 672,968 Expense Reimbursements 243,464 Total Gross Revenue 916,433 Vacancy (5%) 43,418 Effective Gross Revenue 873,015 Operating Expenses Non-Reimbursable (est.) 5,500 Common Area 133,084 Management Fee (4%) 26,919 Property Insurance 11,918 Property Tax 94,627 Total Operating Expense 272,048 Net Operating Expense (NOI) 600,967 Annual Debt Service - Existing Loan Interest 250,432 Principle 75,715 Cash Flow After Debt 274,820 Sale Price 7.2% 8,350,000 Existing Loan 3,852,841 Cash Requires 4,497,159 cash on cash 6.11% Cash + Principle on cash 7.79% 11 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP PARCEL MAP 12 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP AREA SUMMARY South Salinas Market Competing Shopping Centers The Valley South Salinas, the area extending The Salinas Valley sits between the south from Market Street in the down Gabilan and Santa Lucia mountain town area out to Blanco Road features ranges and follows the Salinas River to four anchored shopping centers. the Monterey Bay. Salinas is located 20 Adjacent to Main Street Shopping miles northeast of Monterey, 55 miles Center is The Plaza Shopping Center south of San Jose, 101 miles south of anchored by CVS/Pharmacy. The CVS San Francisco and 325 miles north of Los store is a top tier volume store operating out of 29,543 Square feet The Plaza Angeles. The moderate climate is ideal, Shopping Center with an average temperature of 68 without a drive through. Tenants CVS/Pharmacy degrees and Mediterranean-like featured in the center include weather in the summer. Salinas was GameStop, Jamba Juice, and Radio recently named the city with the best Shack. Main Street climate in the United States and Canada Two blocks away, across Blanco Road, Shopping Center in "Cities Ranked and Rated," a book is South Salinas Plaza anchored by a Save Mart Star Center comparing 400 cities. This picturesque 46,987 square foot Nob Hill grocery Shopping Center valley is speckled with hundreds of store. The grocery Store is dominant, Star Market growers, shippers, wineries and and is one of the top volume grocery thousands of other businesses that stores in Monterey county. South support the vitality of active Salinas Shopping Center has only three communities. additional small tenants, a 2,400 Square foot Mexican restaurant, a Lifestyle & Population Wienerschnitzel, and a coffee kiosk. The strong economy of the local Across South Main Street from South agriculture industry is partnered with a Salinas Plaza is the Star Center relaxed lifestyle to create a high quality Shopping Center, an older center of life in the Salinas Valley. Salinas is the anchored by the independent Star seat of Monterey County, with a Market, Kragen Auto, and McDonald’s. South Salinas Plaza population of 152,677; The population The Star Market is family owned and is Nob Hill Grocery Store of Monterey County is 425,102. Salinas approximately 23,000 Square Feet. is the regional shopping area with an auto center, and a number of shopping malls. 13 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP AREA SUMMARY Monterey-Salinas Route 68 Corridor State Route (SR) 68 stretches 20 miles between Salinas and Pacific Grove. It is part of the De Anza Trail, a route that once linked all of California’s mission settlements during the Spanish Colonial era. CalTrans had plans to turn SR 68 into a freeway in the 1950s and 1960s, but environmental concerns stopped the expansion. As of 2006, the route carried 26,000 vehicles a day. Many of these trips are generated by 14,500 residents who now live in the Speckles, Toro Park, San Benancio and Corral de Tierra districts. This historic and beautiful area inspired John Steinbeck’s short stories and California-based novels. Corral de Tierra is an upscale community seven miles from Salinas and ten miles from Monterey. Travel to Salinas is efficient, while travel to Monterey is congested. Average Household Income for the Monterey-Salinas Corridor is $131,591. There are no shopping centers in the area. 14 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP SHOPPING CENTER RENOVATIONS 15 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP PROPERTY DETAILS Property Description: The property is was constructed in 1978, and was renovated with slate finishing to exterior services, a channel signage program, exterior paint, and new parking lot in beginning in 2008. The center consists of three retail buildings—a 4,550 square foot restaurant pad building, an 11,475 square foot shop’s building containing eleven tenants, and a 32,176 square foot grocery store building that contains 3,488 square feet of shop space for two tenants. Location: 1190 – 1150 S. Main Street, Salinas, California. South Main Street becomes State Route 68, the Salinas-Monterey highway two blocks south of the property at Blanco Road. This area, of approximately four blocks, is the Monterey gateway to Salinas, and contains key retail tenants serving the trade area. Quality retail property is limited and protected from further development. State Route 68 connects upscale customers and this property, and the employment base in Salinas. In addition to the city’s population of 152,677, more than 425,102 Californians live within Monterey County. State Route 68 is also the historic De Anza trail of 1776. Property Highlights: The well-designed development features small shop space ranging from 540 Square feet to 2,400 square feet and a grocery anchor. Tenant mix includes many brand names such as Starbuck’s, Verizon, Subway, Cold Stone Creamery, UPS and Round Table Pizza. And typically is 100% leased. Save Mart Grocery Stores operates a former Albertson store that does not have a pharmacy component. While the area demographics have changed since the original Albertson opened in 1978, the store still has solid sales volumes, and significantly below market rent. Recent Upgrades: Over $371,000 of upgrades have been recently completed, including a new parking lot, replacement of back-flow valves, a new roof over a portion of the one building. HVAC has periodically been replaced as tenants have moved into the center. Lease Protections: The lease with Save Mart includes tenant responsibility for roof and HVAC repair and replacement. Shop tenant leases contain minimal exclusives. Minimal Property Taxes Current property taxes are $56,914.30 with an assessed value of $4,919,537. The sale of the property will result in Increase: approximately an additional $38,000 of property tax, pro-rated to tenants at an additional $.06 per square foot per month. 16 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP PROPERTY DETAILS Parking: Approximately 230 retail spaces. Land Area: Two parcels combining for 4.94 acres, or approximately 215,186 Square feet of land. Assessor’s Parcel 002-914-004 & 002-914-005 Number: Traffic Count: Approximately 32,000 cars per day on South Main Street. Trade Area: Within a one and a half mile radius of the center, 30,596 people reside with an Average Household Income of $72,530 and a Daytime population of 25,343 (2010). The effective trade area however extends down State Route 68 including the communities of Spreakles, Toro Park, San Bernancio, and Corral de Tierra. Driving to South Salinas from these communities is more convenient than driving to Monterey. Salinas is also well retailed north of Market Street, creating an effective trade area population of 34,784 with an average Household Income of $97,524. Available Seller’s Owner’s Operating Statements Documents: Tenant Lease Documents Natural Hazard Disclosure Report Environmental Reports Preliminary Title Report Information contained herein has been obtained from sources we deem reliable. We cannot, however, assume responsibility for its accuracy. Mark G. Thomas 17 MAIN STREET SHOPPING CENTER | RETAIL REAL ESTATE GROUP