Advance Auto Parts
1112 East Eldorado Street
Decatur, IL
Seller Financing Available 12% ROE
Contact: Mark Goldberg (630) 954-7395 mgoldberg@midamericagrp.com Tom Fritz (630) 261-6952 tfritz@midamericagrp.com
ONE PARKVIEW PLAZA • NINTH FLOOR OAKBROOK TERRACE, ILLINOIS 60181-4713 (630) 954-7300 • FAX (630) 954-7304 www.midamericagrp.com
Advance Auto Parts Decatur, IL
TABLE OF CONTENTS
CONDITIONS OF OFFERING ......................................................3 INVESTMENT HIGHLIGHTS .......................................................5 FINANCIAL INFORMATION .......................................................6 INVESTMENT SUMMARY ..........................................................7 PROPERTY SUMMARY ...............................................................8 TENANT OVERVIEW .................................................................10 PROPERTY PHOTOS...................................................................11 AERIALS .......................................................................................12 LOCATION MAPS .......................................................................14 DEMOGRAPHICS ........................................................................15
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Advance Auto Parts Decatur, IL
CONDITIONS OF OFFERING
Offering Memorandum and Legal Liability The Offering Memorandum (“The Memorandum”) is intended solely for the limited use of The Potential Purchaser in considering whether to pursue negotiations to acquire Advance Auto Parts in Decatur, IL (“The Property”). The Memorandum, prepared by Mid-America Real Estate Corp. (“MAREC”), contains information pertaining to the operation of The Property and does not purport to be all-inclusive or to contain all the information which The Potential Purchaser may desire. The Memorandum is being delivered with the understanding that The Potential Purchaser will conduct its own analysis and investigation of The Property, independently and without reliance upon MAREC, The Owner or The Memorandum and based on such documents, information and other matters as The Potential Purchaser, in its sole discretion, deems appropriate in evaluating a purchase of The Property. In furnishing The Memorandum, MAREC and/or The Owner reserve(s) the right to request the return of The Memorandum (including all copies or partial copies), or any other information provided, at any time. Neither The Owner nor MAREC or any of their officers, employees or agents make any representation or warranty, expressed or implied, as to the accuracy or completeness of The Memorandum or any oral or written communication transmitted from MAREC and/or The Owner to The Potential Purchaser and no legal liability is assumed or to be implied with respect thereto. By accepting The Memorandum, The Potential Purchaser agrees that The Memorandum’s contents and any other information pertaining to The Property and provided to The Potential Purchaser are confidential and proprietary; that The Memorandum and the information contained therein or provided is the property of The Owner and/or MAREC; that it will hold and treat The Memorandum and information provided in the strictest of confidence; that it will not, directly or indirectly, disclose or permit anyone else to disclose The Memorandum’s contents without prior written authorization; and, that it will not use or permit to be used The Memorandum or The Memorandum’s contents in any fashion or manner detrimental to the interest of The Owner or MAREC or in violation of the obligation to maintain such information and The Memorandum in strict confidence. However, The Potential Purchaser may disclose such confidential information to its employees, auditors, financial advisors, directors and/or counsel to whom it is reasonably necessary for purposes of evaluating The Property provided all reasonable precautions are taken to safeguard the information and parties are informed of the need to maintain the information as confidential. The Potential Purchaser agrees that photocopying or other duplication of information provided by The Owner and/or MAREC is strictly prohibited. The Owner expressly reserves the right, at its sole discretion, to reject any or all proposals or expressions of interest in The Property and to commence, participate in, or terminate discussions with any party at any time with or without notice. The Potential Purchaser acknowledges that The Owner has no obligation to discuss or agree to the sale of The Property. Notwithstanding that The Potential Purchaser and The Owner may reach one or more oral understandings or agreements on one or more issues that are being discussed, neither party shall be bound by any oral agreement of any kind and no rights, claims, obligations or liabilities of any kind, either express or implied, shall arise or exist in favor of or be binding upon either party except to the extent expressly set forth in a written agreement signed by both parties. The Memorandum shall not be deemed a representation of the state of affairs of The Property nor constitute an indication that there has been no change in the business or affairs of The Property since the date of its preparation. The Potential Purchaser agrees not to contact the tenants, leasing brokers or property management staff of The Property in connection with its review of The Property without prior approval of The Owner. Any and all questions related to The Memorandum or The Property must be directed to MAREC. In the event The Potential Purchaser decides not to pursue the acquisition of The Property, The Potential Purchaser agrees to return The Memorandum and all copies (including partial copies) to the appropriate representative of MAREC.
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Advance Auto Parts Decatur, IL
CONDITIONS OF OFFERING (CONTINUED)
Representation The Potential Purchaser understands and agrees that MAREC is not representing The Potential Purchaser in this Proposed Sale. MAREC is only representing The Owner in this Proposed Sale. Americans with Disabilities Act The United States Congress has enacted the Americans With Disabilities Act. Among other things, this act is intended to make business establishments equally accessible to persons with a variety of disabilities. As such, modifications to real property may be required. State and local laws also may mandate changes. Neither The Owner nor MAREC is qualified to advise The Potential Purchaser as to what, if any, changes may be required now, or in the future. The Potential Purchaser should consult the attorneys and qualified design professionals of its choice for information regarding these matters. Neither The Owner nor MAREC can determine which attorneys or design professionals have the appropriate expertise in this area. Hazardous Materials Disclosure Various construction materials may contain items that have been or may in the future be determined to be hazardous (toxic) or undesirable and as such may need to be specifically treated, handled or removed. Due to prior or current uses of The Property or the area, there may be hazardous or undesirable metals, minerals, chemicals, hydrocarbons or biological or radioactive items (including electric and magnetic fields) in soils, water, building components, above or below-ground containers or elsewhere in areas that may or may not be accessible or noticeable. Such items may leak or otherwise be released. Neither The Owner nor MAREC has expertise in the detection or correction of hazardous or undesirable items. Expert inspections are necessary. Current or future laws may require clean up by past, present and/or future owners and/or operators. It is the responsibility of The Potential Purchaser to retain qualified experts to detect and correct such matters. Cooperating Broker Policy Neither The Owner nor MAREC will pay a brokerage fee to, or share a brokerage commission with The Potential Purchaser, or a related and/or affiliated party to such purchaser, attempting to act as a cooperating broker. In addition, neither The Owner nor MAREC will pay a brokerage fee to, or share a brokerage commission with, a cooperating broker representing The Potential Purchaser. However, notwithstanding the issue of commission, The Potential Purchaser may retain the brokerage representative of its choice. All cooperating broker inquiries should be directed to the appropriate MAREC representative. Remedies If there is a breach or threatened breach of any provision of these Conditions of Offering, The Owner and/or MAREC shall be entitled to seek redress by court proceedings in the form of an injunction restraining The Potential Purchaser without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy and/or a decree for specific performance without any bond or other security being required. Nothing herein shall be construed as prohibiting The Owner and/or MAREC from pursuing any other remedies at law or in equity, which it may have. If The Owner and/or MAREC is involved in a court proceeding to enforce the covenants contained in these Conditions of Offering and The Owner and/or MAREC prevails in such litigation, The Potential Purchaser shall be liable for the payment of The Owner and/or MAREC’s reasonable attorneys’ fees, court costs and ancillary expenses together with such other and further relief as available under any applicable statute.
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Advance Auto Parts Decatur, IL
INVESTMENT HIGHLIGHTS
• • Seller Financing Available – Seller will structure financing for up to 60% of purchase price that yields a 12% return on equity. Secure Income Stream – Advance Auto Parts (NYSE: AAP) has over 3,200 stores and 43,000 employees with 2007 Total Revenue of $4.844B, Net Income of over $238M, Stockholders Equity of over $1.023B and an S&P rating of BB+/negative. Strong Customer Base – With a high demand for auto parts in the area, the subject property is located among light industrial facilities and as a destination retail location for automotive parts. Easy Access – Easily accessible via three curb cuts on the NWC of the signalized intersection of Highway 36 (20,600 VPD) and Jasper St (14,300 VPD). Highway 36 links downtown Decatur to the airport and the eastern suburbs. Demographics – With 50,880 employees and a population of 81,239 within 5 miles of the site, the subject property is located in a high density area surrounded by rooftops. The Tate and Lyle plant, located just east of the property has approximately 700 employees. Low Maintenance Responsibilities – Under the NN lease, the Tenant is responsible for the majority of the maintenance of the property, including the roof. Landlord has minimal responsibility including the slab, foundation, and structure, as well as maintaining its own general liability insurance policy. Long Term Lease – There are 12 years remaining with three 5-year renewal options. Rent increases 5% every 5 years starting October 1, 2015 continuing throughout the options. New Eldorado Streetscape – The city of Decatur is spending $2M in redeveloping Eldorado St just west of the subject property to be completed summer 2009. Plans call to extend this project east past the subject site and to improve the corridor’s building facades over the next 5 years.
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Advance Auto Parts Decatur, IL
FINANCIAL INFORMATION
Net Lease Pro-Forma (unleveraged return) OFFERING PRICE: $ 1,526,624 CAP RATE: 8.50% INCOME THROUGH 9/30/2015 (7 YEARS): $ 130,463 STRUCTURAL RESERVE: $ (700) NOI: $ 129,763 *ANNUAL YIELD: 8.50% INCOME THROUGH 9/30/2020 (5 YEARS): $ 136,986 STRUCTURAL RESERVE: $ (700) NOI: $ 136,286 *ANNUAL YIELD: 8.93% *AVERAGE ANNUAL YIELD (12 YEARS): 8.68%
* Seller will structure financing for up to 60% of purchase price that yields a 12% return on equity.
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Advance Auto Parts Decatur, IL
INVESTMENT SUMMARY
Location: 1112 East Eldorado Street Decatur, IL Advance Stores Company, Incorporated ARIC/Prairieland IV, LLC Commencement Date Agreement dated March 29, 2006. State Land Rental Agreement dated August 1, 2005. Lease dated July 13, 2005. Building Size: Lot Size: Year Built: 7,000 sf 38,333 sf (0.88 acres) 2005
Tenant: Landlord: Documents:
Premises:
Term:
12 Years Remaining September 29, 2005 - September 30, 2020 Term 9/29/2005 - 9/30/2015 10/1/2015 - 9/30/2020 Annual $ 130,463 $ 136,986 Monthly Rent PSF $ 10,871.92 $ 18.64 $ 11,415.50 $ 19.57
Rent:
Renewal Options:
3 five-year options. Each option shall automatically renew unless Tenant shall give Landlord 180 days written notice of its election not to extend the lease prior to the expiration of the term. 5% every five years starting October 1, 2015 Term 10/1/2020 - 9/30/2025 10/1/2025 - 9/30/2030 10/1/2030 - 9/30/2035 Annual $ 143,836 $ 151,027 $ 158,578 Monthly $ 11,986.33 $ 12,585.58 $ 13,214.83 Rent PSF $ 20.55 $ 21.58 $ 22.65
Rental Increase: Renewal Rent:
Percentage Rent:
Tenant shall pay to Landlord 2.5% of Tenant's Gross Sales in excess of the applicable breakpoint for each calendar year. Term 9/29/2005 - 9/30/2015 10/1/2015 - 9/30/2020 10/1/2020 - 9/30/2025 (option 1) 10/1/2025 - 9/30/2030 (option 2) 10/1/2030 - 9/30/2035 (option 3) Breakpoint Level $ 5,218,522 $ 5,479,440 $ 5,753,438 $ 6,041,078 $ 6,343,118
Breakpoints:
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Advance Auto Parts Decatur, IL
PROPERTY SUMMARY
LEASE OVERVIEW The primary lease term is 15 years and commenced September 29, 2005 with 12 years remaining. Rent increases 5% every five years beginning October 1, 2015 and continues through each of the 3 five-year renewal options. The lease is NN with Landlord responsible for the slab, foundation, and structure (excluding exterior painting), as well as a general commercial liability insurance policy. Tenant is responsible for roof and pays utilities, taxes, and its own property insurance and general commercial liability policies.
PROPERTY OVERVIEW The subject property contains an approximate 7,000 sf retail building situated on 0.88 acres on the NWC of the signalized intersection of Highway 36 (20,600 VPD) and Jasper Street (14,300 VPD) in Decatur, IL. The property has 40 parking spaces and is easily accessed via three curb cuts, two on Highway 36 (Eldorado Street) and one on Illinois Street. There is an additional curb cut (not currently being used) on the north side of the property along Illinois Street that can be beneficial for future redevelopment of the site. Highway 36 is the major east/west retail corridor linking downtown Decatur (west of the site) to the airport (east of the site) and the surrounding suburbs. The city of Decatur was recently granted $2M to complete a streetscape project enhancing the downtown section of Highway 36 just west of the site. This project (Spring 2009 start - Summer 2009 completion) will consist of road repaving, brick sidewalks, and new landscaping and benches. The city is also in the application stages for additional funding to extend the project east past the site through 20th Street. In addition, the comprehensive plan calls for improving Highway 36 building facades to enhance the city’s main corridor over the next 5 years, making the area more attractive for future development. The subject property is located among light industrial facilities and is a destination retail location for automotive parts. This strategic placement specifically targets the Advance Auto store clientele. Tate and Lyle, a soybean processing plant, is located just east of the subject property and has approximately 700 employees alone. National retailers near the subject property include Burger King, Meineke, Subway, Domino’s Pizza, Cash America, O’Reilly Auto Parts, Wing Zone, H&R Block, CarQuest, Pennzoil, and McDonalds.
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Advance Auto Parts Decatur, IL
PROPERTY SUMMARY (CONTINUED)
AREA OVERVIEW Decatur, known as the “Heart of Illinois” is the capital of Macon County, located in central Illinois. The city is situated 178 miles from Chicago, 135 miles from St. Louis, and 171 miles from Indianapolis. Major transportation is provided via Interstate 72 and US Highways 51 and 36. Downtown Decatur is one of central Illinois’ most attractive business districts, while the area is well known for its industrial, agricultural processing and manufacturing strengths. Top area employers include Archer Daniels Midland, Caterpillar, Inc, Decatur Memorial Health Systems, United Parcel Service, Inc, Millikin University, Akorn Incorporated, and the corporate headquarters for ADM, the leading agricultural processor and ethanol producer in the US. Various restaurant and retail hotspots have started a revival in downtown Decatur. The Hickory Point Mall (825,330 sf owned by CBL & Associates) is anchored by Bergner’s, JC Penney, Kohl’s, Sears and Von Maur. The Colonial Mall is anchored by Dillard’s, Sears, JC Penney, Victorias Secret, and American Eagle. Other retailers in the area include Best Buy, Circuit City, Barnes and Noble, Marshall’s, Kohl’s, Sam’s Club, Costco, Lowe’s, The Home Depot, Office Depot, and Staples. Total retail sales for the city were approximately $100.8mm. The retail market is expected to grow with the completion of a $50mm shopping center anchored by Target and other national retailers including Old Navy, Ross, Petsmart, Rack Room Shoes, and Rue 21.
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Advance Auto Parts Decatur, IL
TENANT OVERVIEW
ADVANCE AUTO PARTS Advance Auto Parts, Inc (NYSE: AAP) is a leader in the automotive aftermarket industry with more than 75 years of experience. The company operates as a specialty retailer of automotive parts, accessories, and maintenance items for do-it-yourself and do-it-for-me customers. The stores offer replacement parts, accessories, maintenance items, batteries, and automotive chemicals for cars and light trucks, including pickup trucks, vans, minivans, and sport utility vehicles. Advance Auto is the second-largest automotive aftermarket retailer in the United States based on sales and store count. The company has over 3,200 stores and 43,000 employees operating in two segments, Advance Auto Parts (AAP) and Autopart International (AI). The AAP segment operates stores that offer a range of automotive replacement parts. As of December 29, 2007, this segment operated 3,153 stores within the United States, Puerto Rico, and the Virgin Islands under the trade names Advance Auto Parts, Advance Discount Auto Parts, and Western Auto. The AI segment operates stores that offer replacement parts for both domestic and imported cars and light trucks to the commercial market, as well as to warehouse distributors and jobbers in North America. As of December 29, 2007, this segment operated 108 stores. The company, formerly known as Advance Stores Company, Inc, was founded in 1929 and is based in Roanoke, Virginia. For year ending 2007, Advance Auto had Total Revenue of $4.844 billion, Net Income of over $238 million, and Stockholders Equity of over $1.023 billion. Total revenues for the year ending 2007 increased 4.94% over 2006. Advance Auto Parts, Inc has an S&P rating of BB+/negative.
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Advance Auto Parts Decatur, IL
PROPERTY PHOTOS
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Advance Auto Parts Decatur, IL
AERIALS
SITE
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Advance Auto Parts Decatur, IL
AERIALS (CONTINUED)
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Advance Auto Parts Decatur, IL
LOCATION MAPS
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Advance Auto Parts Decatur, IL
DEMOGRAPHICS
2008 Population 2008 Households 2008 Average Household Income 2008 Number of Employees 2008 Median Age
Radius from Subject 1 Mile 3 Miles 10,459 57,155 4,299 25,749 $ 31,149 $ 45,207 11,612 39,991 31.10 37.00
5 Miles 81,239 36,312 $ 51,008 50,880 39.20
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