hobby lobby & planet fitness
TRANSCRIPT
Hobby Lobby &Planet FitnessOREGON CITY, OREGON
REPRESENTATIVE PHOTO
Hobby Lobby & Planet Fitness19003 SOUTH BEAVERCREEK RD, OREGON CITY, 97045
6.25%CAP
$16,340,000PRICE
REPRESENTATIVE PHOTO
PAGE 2
Overview
Hobby Lobby & Planet Fitness
THE OFFERING provides the opportunity to acquire a newly remodeled building occupied by Hobby Lobby and Planet Fitness, both on new 10 year NNN leases. The building, located in Oregon City, is in the highly-desirable daily-needs retail corridor adjacent to the city’s primary highway. The asset is in close proximity to Clackamas Community College and national grocers, including one of the state’s highest-performing Fred Meyer. Oregon City is part of the Portland Metropolitan Area with an incredibly strong and growing economy, including a $60 million Willamette Falls Riverwalk and several new housing developments. The building was previously occupied by a Kmart and quickly backfilled by two strong national brands, remodeled and built-out (and originally constructed) by Deacon Development, an extremely reputable developer.
LEASEABLE SF86,292 SF
LAND AREA7.58 Acres
YEAR BUILT/REMODEL1989/2019
OCCUPANCY 100%
PRICE PER SF $189
PARKING368 Spaces;4.3/1,000 SF
Investment Summary
PAGE 3
Overview
TWO STRONG NATIONAL BRANDS ON NEW 10 YEAR LEASES.
UNDER-SERVED MARKET WITH ZERO BOX VACANCY, LIMITING
ALTERNATIVES FOR COMPETITORS IF NOT ALREADY IN THE MARKET.
FULL BUILD-OUT PROVIDED BY LANDLORD AT THE COST OF
APPROXIMATELY $2 MILLION.
SHADOW-ANCHORED BY ALBERTSONS WITH AN INCOMING PAD.
OREGON CITY DRAWS FROM A LARGE TRADE AREA (BEAVERCREEK,
MOLALLA, AND AREAS TO THE SOUTHEAST).
NEW PLANET FITNESS & HOBBY LOBBY IN DESIRABLE TRADE AREA
REPRESENTATIVE PHOTO
Investment HighlightsPAGE 4
REPUTABLE OPERATOR FOR PLANET FITNESS.
STRONG VISIBILITY PROVIDED VIA ADJACENT HIGHWAY 213, PUSHING
MOST OF THE TRAFFIC ENTERING AND EXITING THE CITY PAST
THE PROPERTY.
PROXIMITY TO DAILY-NEEDS RETAIL, EMPLOYERS, AND CLACKAMAS
COMMUNITY COLLEGE WHICH SERVES OVER 25,000 STUDENTS.
SIGNIFICANT GROWTH OF TRADE AREA WITH INCOMING MASTER
PLANNED DEVELOPMENT.
Investment Highlights
PAGE 5
STOREGROWTH
QUICK STATS
■ 65 STORES ESTIMATED TO OPEN IN 2019
■ 54 NEW STORES OPENED IN 2018
Hobby LobbyHOBBY LOBBY IS THE NATION’S LARGEST PRIVATELY-OWNED ARTS-AND-CRAFTS RETAILER, IN OPERATION SINCE 1972. HOBBY LOBBY HAS GROWN STEADILY WITH OVER 850 STORES.
STORES NATIONWIDE850+
LARGEST PRIVATE COMPANY91st
NUMBER OF U.S. STATES46
IN ANNUAL REVENUE $4.6B
EMPLOYEES48,000
About the TenantsPAGE 6
STOREGROWTH
RANKED #1 IN CUSTOMER SERVICE IN THE FITNESS CATEGORY BY NEWSWEEK
#1
LOCATIONS1,646MEMBERS12M
CORPORATE OWNED 73
FRANCHISEE: BEAVERCREEK FIT, LLCThe Operators of Beavercreek Fit, LLC own and operate at least nine Planet Fitness locations in Oregon and Alaska (under different entities), and have seven-plus years of Planet Fitness franchisee experience. The Operators have Area Development Agreements to operate 12 locations in Oregon, and in early-2019 acquired majority interest of Bravo Fit Australia, developing fitness clubs throughout Australia. The lease benefits from a Corporate Guaranty provided by Citadel Fitness, LLC, and personal guarantees by both operators.
4,000+
2016201520142013 2017 2018(EST.)
1,6461,5181,3131,124
918749
PROJECTED GROWTH
Planet Fitness has seen steady growth from being an early mover in the low cost gym format.
Planet Fitness
MORE THAN 1,000 ADDITIONAL COMMITTED STORE OPENINGS WITH APPROXIMATELY 600 COMMITTED OVER THE NEXT THREE YEARS.
About the Tenants
PAGE 7
SAN FRANCISCO PREMIUM OUTLETS
DEACON DEVELOPMENT is a preeminent commercial development firm based out of Portland, Oregon, with major developments located along the West Coast. Deacon specializes in the development of complex retail, healthcare, and multifamily construction and offers major renovation and T.I. work. The Portland MSA footprint is shaped in large part by Deacon Development and their affiliate, Deacon Construction, as Deacon Construction has built a handful of noteworthy Portland retail developments including a New Seasons, the Hotel Eastlund, and VillaSport. Furthermore, they constructed a number of West Coast trophy buildings, including the San Francisco Premium Outlets and creative office developments in Bellevue and San Francisco.
Deacon Development
About the DeveloperPAGE 8
VILLASPORT
HOTEL EASTLUND
DEACON CONSTRUCTION BUILT THE HOBBY LOBBY & PLANET FITNESS BUILDING IN 1989, AND DID THE FULL BUILD-OUT
AND RENOVATION IN 2019.
About the Developer
PAGE 9
MAJOR RETAILAlbertsons Bi-Mart Burgerville Coastal Farm & RanchDollar TreeDutch Bros. Coffee FedEx Fisherman’s Marine & Outdoor
Fred Meyer Goodwill Grocery Outlet Home Depot Jack in the Box Jimmy John’s JoAnn Fabrics KFC Market of ChoiceMcDonald’s
Regal Cinemas Rite AidSafeway StarbucksShari’s Café & Pies Taco Bell Walgreens Wendy’s Winco
NEW DEVELOPMENTSAbernethy Place Mixed-UseEdgewater at the CoveMaplelane RoadWillamette Falls Riverwalk
TOTAL 1-MILE 3-MILES 5-MILES
Businesses 389 1,597 2,959
Employees 5,289 16,509 26,452
Population 8,578 45,082 97,289
KEY 1-MILE 3-MILES 5-MILES
BusinessSummary
Clackamas Community College has an estimated enrollment of 25,000 students, with new students joining every year.
CLACKAMAS COMMUNITY COLLEGE
Surrounding RetailPAGE 10
119,000VPD
70,600VPD
41,210VPD
HOBBY LOBBY & PLANET FITNESS
205
213
CLACKAMASCOMMUNITY
COLLEGE
WILLAMETTE FALLS
ZEROBOX VACANCY
THOSE ENTERING AND EXITING OREGON CITY
PRIMARILY USE HWY 213, CONNECTING TO I-205,
RATHER THAN CROSSING THE RIVER.
TrafficFlow
NEAREST HOBBY LOBBY TO THE
SOUTH IS 47 MILES AWAY
BEAVERCREEK RD
BEAVERCREEK HEALTH CLINIC
WILLAMETTEFALLS
RIVERWALK
EDGEWATERAT THECOVE
ABERNETHYMIXED-USE
MAPLELANEROAD
CLACKAMAS COUNTY
BUILDINGPERMITS
DEPT. OF HUMAN
SERVICES
OREGONCITY
CHAMBER OF
COMMERCE
OPENED 2018
Surrounding Retail
PAGE 11
WILLAMETTE FALLS RIVERWALK is a $60 million development plan that was unveiled in 2017. These plans will feature promenades along the southern banks of the Willamette River, giving the local public and visitors an up-close experience of one of Oregon’s most significant features, which hasn’t had public access in over 150 years.
WILLAMETTE FALLS RIVERWALK
New DevelopmentsPAGE 12
EDGEWATER AT THE COVE is a new waterfront multifamily development featuring 244 apartment units, 6,500 SF of retail space, and a recreational building for tenants. The building was constructed in 2018 and is located north of the subject property, directly across I-205.
BEAVERCREEK ROAD CONCEPT PLAN is currently going through zoning and code changes. The Property will feature 453 acres of commercial, residential, green space, and an employment campus. The plan has been curated to craft a multi-use community linking Clackamas Community College, Oregon City High School, and adjacent neighborhoods.
ABERNETHY PLACE MIXED-USE DEVELOPMENT is a prospective 181-unit multifamily development with 9,500 square feet of retail and a 99-room 5-story hotel. The development will likely deliver in 2022 and is located north of the subject property, just south of I-205.
MAPLELANE ROAD is a prospective 120-unit multifamily development located directly north of the subject property and will likely deliver in 2022.
OTHER OREGON CITYDEVELOPMENTS
ABERNETHY PLACE - HOTEL
New Developments
PAGE 13
TRAI
LS E
ND
HW
Y
S BEAVERCREEK RD
368 SPACES;4.3/1,000 SF
7.58ACRES
30,040VPD
41,210VPD
86,292LEASEABLE SF
NEW PADDEVELOPMENT
Site PlanPAGE 14
SITE PLAN NOT TO SCALE
ABBY’S LEGENDARY
PIZZANEW PADDEVELOPMENT
The Seller has leased-back a portion of the land for the purpose of developing a pad. The Buyer of the Hobby Lobby and Planet Fitness Offering will be the owner of the entire parcel, subject to a 99-year Ground Lease for the pad site, paying $1 annually. Please contact Capital Pacific for detailed terms of the Ground Lease.
PadConstruction
PARCEL OUTLINE
ESTIMATED PAD LAND AREA
PAGE 15
This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies.
Income & Expense
PRICE $16,340,000CAPITALIZATION RATE 6.25%PRICE PER FOOT $189
CASH FLOW SUMMARYSCHEDULED INCOME PER SFBase Rent for the Period of: 1/1/2020 - 12/31/2020 $11.83 $1,021,094
Total Effective Gross Income (EGI) $11.83 $1,021,094
OPERATING EXPENSES PER SFCAMS NNN
Property Taxes NNN
Insurance NNN
Management Fee NNN
Total Operating Expenses NNN
NET OPERATING INCOME $11.83 $1,021,094
8/29/2019 [ <www.CapitalPacific.com> ]
LoanSummary
LOAN TO VALUE: 65%-70%
INTEREST RATE: 4.25%
TERM: 10 YEARS
AMORTIZATION: 25 YEARS
LOAN QUOTE PROVIDED BY:
DAVID SCHAFFER
MELVIN MARK CAPITAL GROUP
P: 503-546-4780
Financial SummaryPAGE 16
Rent Roll
10/1/2019 - 9/30/2029 Lease Type: NNN
28,556 Pro-Rata: 33.09%
MONTHLY BASE RENT % INCREASE ANNUAL
RENT PSF
10/1/19 $39,383 $472,602 $16.55
10/1/24 $43,310 10.0% $519,719 $18.20
1 10/1/2029 $47,641 10% $571,691 $20.02
2 10/1/2034 $52,405 10% $628,860 $22.02
12/1/2019 - 11/30/2029 Lease Type: NNN
57,736 Pro-Rata: 66.91%
MONTHLY BASE RENT INCREASE PSF ANNUAL
RENT PSF
12/1/19 $45,708 $548,492 $9.50
12/1/24 $48,113 $0.50/SF $577,360 $10.00
1 12/1/2029 $50,519 $0.50/SF $606,228 $10.50
2 12/1/2034 $52,925 $0.50/SF $635,096 $11.00
3 12/1/2039 $55,330 $0.50/SF $663,964 $11.50
86,292 OCCUPIED 100.00%
$85,091
TOTAL SF
TOTAL RENT/MONTH
Comments: Tenant has 3, 5-year Options that automatically extend unless Tenant provides 180 day's notice prior to the start of the next option to not extend.
DATE
OPTIONS
Comments: Tenant has a 10-month Base Rent abatement not reflected in Analysis. Tenant has 2, 5-year Options to be exercised with 180 day's notice; rent to adjust to FMR, not to exceed 10% - Analysis reflects 10% increases. Lease has a Personal and Corporate Guaranty.
PLANET FITNESSLease Term:
Size (SF):
RENT SUMMARY
HOBBY LOBBYLease Term:
Size (SF):
RENT SUMMARY
DATE
OPTIONS
8/29/2019 [ <www.CapitalPacific.com> ]
RentRoll
Financial Summary
PAGE 17
Lease Provisions
TENANT Planet Fitness (Beavercreek Fit, LLC)
PERSONAL GUARANTY Charles Tanner Halton, Daniel Afrasiabi
CORPORATE GUARANTY Citadel Fitness, LLC
Planet Fitness
EXCLUSIVE USE Health club and tanning salon; does not apply to Tenants that receive less than 15% of gross revenue from such use.
FINANCIAL REPORTINGLandlord may request a financial operating statement no more than once per year from Lessee and guarantors.
T.I. ALLOWANCELandlord to provide a T.I. allowance in the amount of $20/SF ($571,120) in addition to $160,000, to be paid after Landlord receives copies of all invoices and lien waivers from parties providing work; Tenant to provide these items monthly to Landlord, and such payment will be made within 30 days after the later of the date Tenant provides Landlord with a Certificate of Occupancy, and the date Tenant opens for business.
ASSIGNMENTTenant may not assign or sublease without Landlord’s prior consent, not to be unreasonably withheld, excluding a bona fide franchisee.
Lease AbstractPAGE 18
CAMSTenant reimburses their prorata share of all common area maintenance expenses to Landlord, including reimbursement of a management fee based on Landlord’s total gross income. Controllable CAM (excludes taxes, insurance, utilities, snow removal, security) is capped at a 5% increase annually.
TAXESTenant reimburses their prorata share to Landlord.
INSURANCETenant reimburses their prorata share of Landlord’s liability and property insurance policies, and maintains their own general liability policy.
UTILITIESTenant is responsible for direct payment of all utilities servicing their space.
Maintenance &Repair
Expenses
TENANT’S OBLIGATIONSLandlord is responsible for HVAC repairs and or replacement exceeding $1,000 per occurrence, the building foundation, roof and structure.
HVACTenant to reimburse Landlord’s cost of the maintenance, repair, and replacement of the HVAC; Landlord is required to perform preventive maintenance services, to be reimbursed through CAMs.
LANDLORD’S OBLIGATIONSLandlord is responsible for repairs needed to the building structure, roof, exterior walls, foundation, and utility lines up to the point of entry.
Lease Abstract
PAGE 19
TENANT Hobby Lobby (Hobby Lobby Stores, Inc.)
Hobby Lobby
Lease Provisions
EXCLUSIVE USE Art/craft supplies; excluding TJX or retailers that derive less than 5% of gross sales from such use.
ASSIGNMENTTenant may assign or sublease without Landlord’s prior consent, yet if such assignment or sublease is not to an affiliated company or franchisee, Landlord may terminate this lease within 30 days of receiving notice from Tenant.
USES PERMITTED BY TENANT FOR PARCELRetail stores, financial institutions, service shops, professional offices, health club, or fitness center.
Lease AbstractPAGE 20
CAMSTenant reimburses their prorata share of all common area maintenance expenses to Landlord, including an Administrative Fee in lieu of Management based on 10% of their prorata share of controllable CAM. Controllable CAM (excludes taxes, insurance, utilities, snow removal) is capped for Tenant’s first full year at $59,468.08, and capped at a 3% increase annually thereafter.
TAXESTenant reimburses their prorata share to Landlord.
INSURANCETenant reimburses their prorata share of Landlord’s liability and property insurance policies, and maintains their own general liability and personal property policy.
UTILITIESTenant is responsible for direct payment of all utilities servicing their space.
Maintenance &Repair
Expenses
TENANT’S OBLIGATIONSTenant is responsible for all maintenance and repair to the interior of the premises, including all mechanical, electrical, and plumbing systems from the point of entry, including HVAC maintenance, repair, and replacement; if Tenant is responsible for any capital expenses in the last two years of the lease, Landlord will reimburse such expense to Tenant.
LANDLORD’S OBLIGATIONSLandlord is responsible for repairs needed to the building structure, roof, exterior walls, foundation, and utility lines up to the point of entry.
Lease Abstract
PAGE 21
Q: HAS THERE BEEN ANY ENVIRONMENTAL TESTING PERFORMED AT THE PROPERTY?
A: Yes, a Phase I ESA was performed by GeoDesign in March 2018, and no Recognized Environmental Conditions (RECs) were identified, and no further testing was required. Q
& A
Q: IS THERE A ROOF WARRANTY?
A: Yes, the current roof is new and has a 15-year remaining warranty.
Q: WHO OCCUPIED THE PROPERTY PRIOR TO THE CURRENT TENANTS?
A: A Kmart previously occupied the building, and was quickly backfilled by Hobby Lobby and Planet Fitness.
Q: ARE THERE CC&RS OVERSEEING THE GREATER SHOPPING CENTER?
A: Yes, CC&Rs are in place for the greater shopping center, including the Subject Property, Albertsons, and all seven pad buildings. The CC&Rs permit cross-easement access across and through all parcels for vehicle and pedestrian access, and shared parking.
Albertsons is the Maintenance Director and is responsible for the maintenance and repair of the common areas alongside maintaining liability insurance; each parcel owner is billed their prorata share on an annual basis.
Questions & AnswersPAGE 22
ConstructionTimeline
$2M in Renovations Invested for
Landlord Work and an
additional $1M for Tenant Build-Out
REPRESENTATIVE PHOTO
FALL 2018Leases Inked
WINTER - SPRING 2019Landlord Build-Out
SUMMER 2019Tenant Build-Out
FALL 2019Grand Opening
Construction
PAGE 23
Oregon City,Oregon
OREGON CITY is located on the Willamette River near the southern limits of the Portland MSA. The city was the first to be incorporated west of the Rocky Mountains and was the last stop on the Oregon Trail in the 1840’s. Oregon City was once a city dominated by forestry and lumber and paper mills, and is now home to several technology and manufacturing companies. Beyond the growing tech sector and tourism push created by the renovation of Willamette Falls, Oregon City is largely a bedroom community for the tech and industry hub of nearby Portland.
LocationPAGE 24
KEY 5 MINS 10 MINS 15 MINS
POPULATION
5 MINS 10 MINS 15 MINS
2010 12,816 61,507 160,300
2019 14,833 67,993 175,865
2024 15,931 72,265 186,496
2019 HH INCOME
5 MINS 10 MINS 15 MINS
Average $88,329 $93,228 $99,109
Median $71,551 $76,164 $77,112
DriveTime
12 MILES27 MINS
Portland,Oregon
108 MILES1 HR 45 MINS
Eugene,Oregon
DistanceTo
Location
PAGE 25
Contact Us
We’d love to hearfrom you.
The information in this Executive Summary has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. All rights reserved to Capital Pacific, LLC.
SEAN [email protected]: 503.675.8378
KEVIN [email protected]: 503.675.7726
SCOTT [email protected]: 503.675.8383
MICHAEL [email protected]: 503.675.8381
PETER [email protected]: 503.607.0197
MICHAEL [email protected]: 503.210.4069
LANCE [email protected]: 503.607.0207
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REPRESENTATIVE PHOTO