KIPP GSTETTENBAUER, CCIMSenior Vice President | [email protected] | Lic. #01405420
RYAN T. KING, CCIMVice President | [email protected] | Lic. #01885401
OFFERING MEMORANDUM
PETSMART & DISCOUNT TIRENEW 10-YEAR PETSMART NNN LEASE & NEW DISCOUNT TIRE 25-YEAR GROUND LEASE WITH BRAND NEW CONSTRUCTION
H STREET
Traffic Count
48,000 ADT
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ANNUAL OPERATING DATAPRICING
LIST PRICE: $11,193,000
NET OPERATING INCOME: $559,650
OPERATING EXPENSES
ANNUAL RENT: $559,650
TAXES: NNN
INSURANCE: NNN
CAM: NNN
NET OPERATING INCOME: $559,650
THE OPPORTUNITYWe are pleased to offer to qualified investors a two (2) tenant opportunity in an exceptional location adjacent to Costco and brand new anchor Walmart that is scheduled to open in June 2017. PetSmart signed a 10-year lease triple net lease featuring a ten percent (10%) rental increase every five years throughout the initial term and four 5-year options. Discount Tire signed a 25-year ground lease featuring a ten percent (10%) rental increase every five years throughout the initial term and four 5-year options.
OVERVIEWPRICE: $11,193,000
CURRENT OCCUPANCY: 100%
NET SQUARE FOOTAGE: 24,786 SF
YEAR BUILT (UNDER CONSTRUCTION):
1993/Remodeled in 2016
Brand New (2017)
LOT SIZE: 116,740 SF
NET OPERATING INCOME: $559,650
CAP RATE: 5.0%
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LEASE TYPE: NNN Lease
BUILDING SIZE: 17,386 SF
LEASE COMMENCEMENT: December 2016
LEASE EXPIRATION: December 2026
GRAND OPENING: December 2016
INITIAL TERM: 10 Years
BASE RENT: $434,650 (Years 1-5)
INCREASES: $478,115 (Years 6-10 with 10% Rental Bump)
CREDIT RATING: B+ S&P Rating
OPTIONS: (4) 5-Year Options (10% Increases Every 5 Years)
LEASE TYPE: Absolute NNN Ground Lease
BUILDING SIZE: 7,400 SF
LEASE COMMENCEMENT: Estimated May 2018
LEASE EXPIRATION: Estimated April 2043
GRAND OPENING: Estimated May 2018 (or sooner)
INITIAL TERM: 25 Years
BASE RENT: $125,000 (Years 1-5*)
INCREASES: 10% Rental Bump Every 5 Years
CREDIT RATING: B+ S&P Rating
OPTIONS: (4) 5-Year Options (10% Increases Every 5 Years)
*Rent shall be prorated at the close of escrow leading up to May 2018
TOTAL NOI $559,650
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INVESTMENT HIGHLIGHTSCorporate Signature Strength
» Discount Tire - 900 stores in the United States with an annual revenue of $3.9 billion dollars
» PetSmart - 1,352 stores in the United States with an annual revenue of $8.7 billion dollars
Location, Location, Location
» Just minutes from Downtown San Diego and the San Diego Harbor, located in the highly desirable, wealthy community of Eastlake
» Excellent Retail Anchor Location adjacent to very high producing Costco and Home Depot
» High geographical barriers to entry due to Pacific Ocean & Mexico
» Surrounded by dense residential and strong demographic fundamentals
Excellent Access and Visibility
» Located along East H Street a major thoroughfare in the South Bay with close proximity to Interstate 805
» Within a 5-mile radius include the Sharp Chula Vista Medical Center, Southwestern College, Bonita Vista High School, and numerous schools
» Excellent visibility at the forefront of the premier retail center in the South Bay
Long Term Net Lease – Stable Income
» Discount Tire Ground Lease for 25 years
» PetSmart NNN Lease for 10 years
» Premier Tenants in the commercial real estate investment world
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COMMUNITY OF EASTLAKEBetween 1979 -1981 the H.G. Fenton Company hired Cadillac Fairview Homes West of Newport Beach to plan, zone, and develop 3,200 acres of land just south of San Diego in the City of Chula Vista.
877 East H Street is located within the Rancho Del Rey Master Planned Community about one mile east from Interstate 805. H Street is the primary corridor and the gateway arterial connecting the upper-class Eastlake neighborhoods to coastal Chula Vista and the greater downtown San Diego neighborhoods. Rancho Del Rey is one of Chula Vista’s premier neighborhoods and is adjacent to Southwestern College and surrounding residential areas.
EASTLAKE HAS BEEN VOTED SAN DIEGO’S BEST NEW HOME COMMUNITY IN THE SAN DIEGO UNION TRIBUNE READER’S POLL EVERY YEAR SINCE 1997.
VILLAGE WALK TOWER VIEW OF EASTLAKE OLYMPIC TRAINING CENTER
BACHELORS DEGREE & UP
20,098MEDIAN AGE
32.41
POPULATION
82,943AVERAGE HH INCOME
$105,389AVERAGE HH SIZE
3.46
NO OF HOUSEHOLDS
24,057
SOURCE: HTTP://WWW.POINT2HOMES.COM
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Bonita VistaHigh SchoolBonita VistaHigh School
SouthwesternCollege
SouthwesternCollege
Sharp Chula VistaMedical Center
Sharp Chula VistaMedical Center
805
Terra NovaPlaza
Terra NovaPlaza
STREETH
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(NAP)
SITE PLAN
8 |
BASE RENT SCHEDULELEASE TERMSYEARS 1-5: $125,000.00 PER ANNUM
YEARS 6-10: $137,500.00 PER ANNUM
YEARS 11-15: $151,250.00 PER ANNUM
YEARS 16-20: $166,375.00 PER ANNUM
YEARS 21-25: $183,012.50 PER ANNUM
OPTIONS TO RENEWFOUR (4) CONSECUTIVE PERIODS OF FIVE (5) YEARS
RENT SHALL INCREASE BY TEN PERCENT (10%) FOR EACH RENEWAL TERM THEREAFTER.
LEASE TERMSFIRST RENEWAL TERM (YEARS 26-30): $201,313.75 PER ANNUM
SECOND RENEWAL TERM (YEARS 31-35): $221,445.13 PER ANNUM
THIRD RENEWAL TERM (YEARS 36-40): $243,589.64 PER ANNUM
FOURTH RENEWAL TERM (YEARS 41-45): $267,948.60 PER ANNUM
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“ Building customer relationships has allowed Discount Tire to become a leader in the industry. Our continual growth not only provides opportunities for employee advancement, but allows more customers to remain confident when choosing us for all of their tire and wheel needs.”
1960
ABOUT DISCOUNT TIREDiscount Tire Company, owned by The Reinalt-Thomas Corporation is an American tire and wheel retailer chain operating in the United States.
Discount Tire was founded in 1960, in Ann Arbor, Michigan, by Bruce T. Halle. After a couple of false starts in other businesses, Halle decided to go into business on his own. Discount Tire grew to over 200 stores by 1990, opened its 500th store in 2002, and grew to over 900 stores in 29 states by 2015.
Discount Tire grew from a one-man operation into the largest independent tire and wheel retailer in the world. Its growth has been largely attributed to the company’s focus on reasonable prices, customer service, and its satisfaction guarantee. Halle understood that for a company to excel in a commodity market, product differentiation was a non-starter. However, improving the customer experience could greatly improve the brand’s value.
Discount Tire has a revenue of $3.9 billion.
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BASE RENT SCHEDULELEASE TERMSYEARS 1-5: $434,650.00 PER ANNUM
YEARS 6-10: $478,115.00 PER ANNUM
OPTIONS TO RENEWFOUR (4) CONSECUTIVE PERIODS OF FIVE (5) YEARS
RENT SHALL INCREASE BY TEN PERCENT (10%) FOR EACH RENEWAL TERM THEREAFTER.
LEASE TERMSFIRST RENEWAL TERM (YEARS 11-15): $525,926.50 PER ANNUM
SECOND RENEWAL TERM (YEARS 16-20): $578,519.15 PER ANNUM
THIRD RENEWAL TERM (YEARS 21-25): $636,371.07 PER ANNUM
FOURTH RENEWAL TERM (YEARS 26-30): $700,008.17 PER ANNUM
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“We love pets and we believe pets make us better people. PetSmart will be the trusted partner to pet parents and pets
in every moment of their lives.”
1987
ABOUT PETSMARTPetSmart, is a retail chain operating in the US, Canada, and Puerto Rico engaged in the sale of specialty pet supplies and services such as dog grooming and training, boarding facilities and daycare. PetSmart also offers a varied selection of animals for sale and adoption.
PetSmart was founded in 1986 and opened its first two stores in August 1987 under the name PetFood Warehouse in the Phoenix area. In 1989, the name and logo changed from PetFood Warehouse to PetSmart. PetSmart continued to grow and in 1993 went public.
In 1994, PetSmart formed PetSmart Charities, Inc., a nonprofit organization dedicated to ending euthanasia and finding homes for homeless pets. PetSmart.com made its debut in July 1995. In early 2000, PetSmart remodeled most of its stores in a plan they called “Eagle,” which changed many stores from a front-half storefront/back-half warehouse feel to an all-over standard retail market. In August 2005, the company announced that it was re-branding its name from PetsMart to PetSmart. This move, which stressed “Smart” over “Mart,” was designed to announce its evolution from a pet store to a solutions-oriented company.
As of October 2014, PetSmart operated approximately 1,352 stores and various locations with PetSmart’s PetsHotels, and Doggie Day Camps. Certain locations also share space with their corporate partner, Banfield Pet Hospital.
In December 2014, PetSmart was fully acquired by BC Partners for a price of $8.7 billion.
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PETSMART IS ACQUIRING CHEWY.COM FOR $3.35 BILLION IN THE LARGEST E-COMMERCE ACQUISITION EVER
PetSmart has agreed to make the biggest e-commerce acquisition in history, putting a deal in place to snatch up fast-growing pet food and product site Chewy.com for $3.35 billion, according to multiple sources familiar with the deal.
The deal is a huge one by any standard — bigger than Walmart’s $3.3 billion deal for Jet.com last year — and especially for a retail company like PetSmart, which was itself valued at only $8.7 billion when private equity investors took it over in 2015.
But Chewy.com has been one of the fastest-growing e-commerce sites on the planet, registering nearly $900 million in revenue last year, in what was only its fifth year in operation. The company had been a potential IPO candidate for this year or next, but was taken out by its brick-and-mortar competitor before that. It was not profitable last year.
Chewy was founded in 2011 by Ryan Cohen and Michael Day, and built a cult following for its excellent customer service, large selection and fast shipping. It had quietly raised at least $236 million in venture capital from investors including Volition Capital, T. Rowe Price and BlackRock.
Its under-the-radar status was probably aided by the fact that it was headquartered in Fort Lauderdale, Fla., and not in a big e-commerce market like New York, Los Angeles or Seattle. But it did have a big name in the industry as chairman: Mark Vadon, who also co-founded Blue Nile and Zulily.
The deal seems like the type of bet-the-company acquisition by a traditional retailer that commerce-focused venture capitalists have been betting on for some time. While Walmart’s acquisition of Jet.com was a huge deal by e-commerce standards, it represented just a fraction of Walmart’s market value. Silicon Valley investors are surely hoping more will follow in PetSmart’s path, as brick-and-mortar retailers struggle to adapt to the impact of changing shopping behaviors.
PetSmart is owned by a group of private equity investors led by BC Partners.
SOURCE: DEL REY, JASON. “PETSMART IS ACQUIRING CHEWY.COM FOR $3.35 BILLION IN THE LARGEST E-COMMERCE ACQUISITION EVER.”
RECODE, 18 APR. 2017, HTTPS://WWW.RECODE.NET/2017/4/18/15339208/PETSMART-CHEWY-ACQUISITION-PRICE-3-35-BILLION
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Otay Lakes Road
RANCHO DEL REY
OTAY RNACH
EASTLAKE
OTAY RANCH
BONITA
Recreate PMS
Traffic Count48,000 ADT
Traffic Count121,800 ADT
East
H S
tree
t
Traffic Count118,231 ADT
BONITA
Otay Lakes Road
RANCHO DEL REY
EASTLAKE
STREETH
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66 MI
84 MI
Distance 110 MI
251 MI
453 MI
465 MI
Laguna BeachPalm Springs
Los Angeles Las Vegas San FranciscoSacramento
Number of Unhealthy Air Quality Days for Older Adults & Children Selected Counties of California, 2012
Riverside Sacramento San Diego Santa Clara Los Angeles Imperial Orange
135105
42
2322
8 3
How We Compare
San Diego
San Antonio
Atlanta
Miami
Riverside
$9.2BTOURISM
$34M
VISITORSANNUALLY
16.9MHOSPITALITY
STAYS
9.4MAIRLINE
PASSENGERS
$323MVEHICLE
TRANSPORATION
TOP 5 TOURISM EMPLOYMENT
1.30
1.26
1.16
1.12
1.13
Up two spots from last year, San Diego beat out startup hubs like Dallas & San Francisco.
Source: Inc’s RANKED #5Top 10 Cit ies for Fast
Growth CompaniesHow We CompareNumber of unhealthy air quality days for older adults & children. Selected countries of California, 2012
Num
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of U
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Sel
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San
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135
105
42
2322
83
How
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˚70Average Daily Temperature
3,055SUNSHINE HOURS
877 EAST H STREET / 19 H
| 15SAN DIEGO OVERVIEW/ 20
SAN DIEGO BY THE NUMBERS
Because of San Diego’s proximity to Mexico, the region is becoming increasingly bi-cultural, and the city is one of the most ethnically and culturally diverse places in the nation. More than 1,000 languages are spoken by San Di-ego residents who have come from all parts of the world to live here.
The median age of San Diego’s population is 35.6, with over ¼ under the age of 20 and only 11% over 65.
4747 Executive Drive, Suite 800, San Diego, CA 92121 • 858.453.0505 • 858.408.3976 Fax • Lic #01991785 | www.voitco.com
Licensed as Real Estate Brokers by the CA Bur of Real Estate. The information contained herein has been obtained from sources we deem reliable. While we have no reason to doubt its accuracy, we do not guarantee it. ©2017 Voit Real Estate Services, Inc. All Rights Reserved. Real People. Real Solutions.® is a registered trademark of Voit Real Estate Services.
KIPP GSTETTENBAUER, CCIMSenior Vice President | [email protected] | Lic. #01405420
RYAN T. KING, CCIMVice President | [email protected] | Lic. #01885401
