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Rite Aid4117 Kitsap Way | Bremerton, WA 98312
Offering Memorandum
Actual Location
Stan Johnson Company10333 Richmond Avenue | Suite 740 Houston, Texas 77042 P: +1 832.476.3440
stanjohnsonco.com
Marc Peeler Associate [email protected]
Jim Gibson Regional [email protected]
Todd Moore [email protected]
Marshall Thompson [email protected]
Jaime Patteson Research [email protected]
Jason Marshall [email protected]
In Association With: Marc Barber, WA Lic. #25779
Offered Exclusively by
Confidentiality and Restricted Use AgreementThis Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC.
This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This COM contains descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested in the Property. Such information is not all inclusive and is not represented to include all information that may be material to an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. An interested party must conduct its own independent investigation and verification of any information the party deems material to consideration of the opportunity, or otherwise appropriate, without reliance upon SJC.
The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time. The Property is offered and sold by its owner(s) as is, where is, and with all faults, without representation or warranty of any kind except for any customary warranties of title.
BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”), is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees, representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when obtaining such relief.
Subject Property
Offering Memorandum • Rite Aid • Bremerton, WA 3
The OfferingStan Johnson Company is pleased to present to qualified investors a Rite
Aid Pharmacy located in Bremerton, Washington, the largest city on the
Kitsap Peninsula and directly 60 minutes west of Downtown Seattle.
The Subject Property is operating under a twenty (20) year term that
features six (6), five (5) year options with 3% rental increases in each
option period.
The Subject Property will thrive from its signalized, hard corner location
of Kitsap Way and National Avenue North (combined 49,734 VPD),
just east of the highly-trafficked intersection of Kitsap Way and State
Highway 3 (combined 97,461 VPD). The Subject Property also benefits
from the area’s excellent demographics, large customer base and
population growth potential, as the population currently is 102,260 within
a 5-mile radius of the Subject Property. Kitsap Way is one of the major
thoroughfares in Bremerton and is a main commercial thoroughfare,
featuring many national businesses including WinCo Foods, Starbucks,
Subway, McDonald's, O'Reilly Auto Parts, Ace Hardware, Burger King,
Jack in the Box and many more. Located 5 minutes away from the
Subject Property is the Naval Base Kitsap, a U.S. Navy base located on
the Kitsap Peninsula and the third-largest Navy base in the United States
with 13,000 active-duty personnel, 13,000 Department of Defense (DoD)
civilian employees and 10,000 contractors.
The lease is guaranteed by Rite Aid Corporation (NYSE: RAD). Rite Aid is
the third largest drug store chain in the United States with 4,561 locations.
Rite Aid has seen a strong financial turnaround in recent years based
on both the transformation of stores into neighborhood destinations
for health and wellness, and cost control initiatives that include closing
underperforming stores and refinancing existing debt. Rite Aid has seen
their stock price jump over 700% since the end of 2011, and their S&P
credit rating was recently upgraded to “B” from “B-” due to better than
expected earnings and increasing sales and profit levels.
Purchase Price: $8,085,937Cap Rate: 6.40%
Pricing Overview
Offering Price: $8,085,937
Cap Rate: 6.40%
NOI: $517,500
Property Overview
Property Type: Retail, Drug Store
Building Size: ± 17,272 SF
Land Size: ± 2.57 Acres
Guarantor: Rite Aid Corporation (NYSE: RAD)
Primary Term: Twenty (20) Years
Lease Type: NN
Bremerton Overview
2016 Population: 39,520
Nearest Metro: Seattle, Washington
County: Kitsap County
Largest Employer: Naval Base Kitsap (Approx. 36,000 employees)
Trade Area Overview
2016 Population: 102,260 (5-mile radius of Subject Property)
2016 Average HHI: $66,816 (5-mile radius of Subject Property)
Combined Immediate VPD: 106,461 VPD
Total Businesses: 4,139 (5-mile radius of Subject Property)
Offering Memorandum • Rite Aid • Bremerton, WA 4
Investment HighlightsRite Aid Corp. (NYSE: RAD) is the third largest drugstore chain in the United States. FY2015 financials indicate the strength of Rite Aid with a 745% year-over-year increase in Net Income from FY2014 and more than a 700% increase in stock price since the end of 2011. Further, S&P upgraded Rite Aid’s credit rating from “B-” to “B” on better-than-expected earnings and belief in continued increases in sales and profit levels.
The Subject Property is operating under a twenty (20) year term that features six (6), five (5) year options with 3% rental increases in each option period.
The immediate trade area features many national businesses including WinCo Foods, Starbucks, Subway, McDonald's, O'Reilly Auto Parts, Ace Hardware, Burger King, Jack in the Box and many more.
The Subject Property will thrive from its signalized, hard corner location of Kitsap Way and National Avenue North (combined 49,734 VPD) and large customer base (102,260 within a 5-mile radius of the Subject Property).
The Tenant is operating under a NN lease with landlord responsibilities limited to roof and structure.
Located 5 minutes away from the Subject Property is the Naval Base Kitsap, a U.S. Navy base located on the Kitsap Peninsula and the third-largest Navy base in the United States with 13,000 active-duty personnel, 13,000 DoD civilian employees
and 10,000 contractors.
Offering Memorandum • Rite Aid • Bremerton, WA 5
Lease AbstractTenant: Rite Aid Pharmacy
Property Address: 4117 Kitsap Way Bremerton, WA
Year Built: 2007
Building Size: ± 17,272 SF
Lot Size: ± 2.57 Acres
Rent Commencement: January 31, 2007
Base Lease Term: Twenty (20) Years
Term Remaining: Approximately Ten (10) Years
Annual Rent: $517,500
Rent Increases: 3% Bumps in Option Periods
Renewal Options: Six (6), Five (5) Year Options
Landlord Responsibilities: NN - Roof & Structure
Rent ScheduleLEASE YEAR INCREASE ANNUAL RENT RPSF
Years 1-20 - $517,500 $29.96
OPTION PERIODS
Years 21-25 10% $569,250 $32.95
Years 26-30 10% $626,175 $36.25
Years 31-35 10% $688,792 $39.87
Years 36-40 10% $757,671 $43.86
Years 41-45 10% $833,438 $48.25
Years 46-50 10% $916,781 $53.07 Subject Property Photos
Offering Memorandum • Rite Aid • Bremerton, WA 6
Tenant OverviewRite Aid Corporation (NYSE: RAD) is one of the Nation’s leading drugstore chains with 4,561 stores in 31 states, and a strong presence on both the East and West coasts. The company was established in 1968 and is headquartered in Camp Hill (Harrisburg), Pennsylvania. Rite Aid Corporation (“Rite Aid”) sells prescription drugs and a range of other merchandise, including over-the-counter medication, health and beauty aids, personal care items, cosmetics, household items, greeting cards, seasonal merchandise, and other everyday convenience products. Rite
Aid also offers various photo processing services in its stores.
FINANCIAL ANALYSIS
Rite Aid has seen a strong turnaround in recent years based on both the transformation of stores into neighborhood destinations for health and wellness, and cost control initiatives that include closing underperforming stores and refinancing existing debt. Thus far, this strategy has produced great results and has been well received by the market. Rite Aid Corp. has seen their stock price jump over 700% since the end of 2011, and their S&P credit rating was recently upgraded to “B” from “B-” due to better-than-expected earnings and increasing sales and profit levels. Standard & Poor’s believes continued store remodels and the success of Rite Aid’s customer loyalty program should continue to drive customer traffic. In FY2016, Rite Aid Corporation increased total revenue by 16%, from $26.53 billion in FY2015 to $30.74 billion. The company also earned net income of $165.47 million and maintained a net worth of $581.43 million, up from $57.06 million in FY2015.
RITE AID CORPORATION COMPANY PROFILE
No. of Locations: 4,561
Type (Exchange): Public (NYSE: RAD)
Credit Rating: B
Total Revenue: $30.74 billion
Net Income: $165.47 million
Net Worth $581.43 million
Market Cap (12/5/16): $8.46 billion
Website: www.riteaid.com
COMPANY GROWTH
Strategic Merger: On October 27, 2015, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and Rite Aid announced that they had entered into a definitive agreement under which WBA would acquire all outstanding shares of Rite Aid for $9.00 per share in cash for a total enterprise value of approximately $17.2 billion, including acquired net debt.
Walgreens Boots Alliance (NASDAQ: WBA) is the first global pharmacy-led health and wellbeing enterprise in the world. The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care dating back more than 100 years. Walgreens Boots Alliance operates more than 13,200 stores in 11 countries, and employs over 400,000 people. The company currently holds an S&P
credit rating of BBB.
Representative Photo
Bremerton is a city in Kitsap County, Washington, with a population of 39,520 as of the 2015 State Estimate, making it the largest city on the Kitsap Peninsula. Bremerton is home to Puget Sound Naval Shipyard and the Bremerton Annex of Naval Base Kitsap. The city is connected to Downtown Seattle by a 60-minute ferry route, which carries both vehicles and walk-on passengers along a 17-mile sailing route to Seattle.
The popular Blackberry Festival is held annually during Labor Day weekend on the waterfront boardwalk to celebrate everything Blackberry. Local residents, shopkeepers and growers bring their Blackberry ice creams, pastries, pies, jams, jellies, candies, and even ciders and wines to this annual event. Free entertainment includes music by local musicians and entertainers performing throughout the three-day festival, the Berry Fun Run and the Blackberry Criterium Bike Race. Bremerton National Airport sponsors the annual Blackberry Festival Fly-In with shuttle service provided by Kitsap Transit to the festival.
Naval Base Kitsap (approximately 5 miles east of the Subject Property) is the third-largest U.S. Navy base located on the Kitsap Peninsula in Washington state. It was created in 2004 by merging the former Naval Station Bremerton with Naval Submarine Base Bangor. The Mission of Naval Base Kitsap is to serve as the home base for the Navy’s fleet throughout West Puget Sound and to provide base operating services, including support for both surface ships and Fleet Ballistic Missile and other nuclear submarines having their home ports at Bremerton and Bangor. Naval Base Kitsap employs approximately 36,000 active-duty personnel, DoD civilian employees and contractors.
Location Overview
NAVAL BASE KITSAP BREMERTON, WA
OLYMPIC COLLEGE BREMERTON, WA
DOWNTOWN BREMERTON, WA
GOLD MTN GOLF BREMERTON, WA
Notable Landmarks
BREMERTON INDUSTRIAL CORRIDOR
COCA-COLABREMERTON BOTTLINGTACOMA SCREW PRODUCTSNORTH COAST ELECTRICPIONEER BUILDERS SUPPLY COBROTHERS POWERSPORTSPARATRANSIT SERVICESLEE SCHAWB TIRE CENTER
NAVAL BASE KITSAP - BREMERTON
U.S. NAVAL BASE13,000 ACTIVE-DUTY PERSONNEL13,000 DOD CIVILIAN EMPLOYEES10,000 CONTRACTORS
NAVY YARD HWY (28,621 VPD)
NAVY YARD HWY (57,000 VPD)
KITSAP WAY (40,461 VPD)
Seattle
102,260
2016 Population within a 5-mile radius of the
Subject Property
$66,816
2016 Average HHI within a 5-mile radius of the
Subject Property
97,461
97,461 VPD Trade Area Traffic Count
(Highway 3 & Kitsap Way)
Offering Memorandum • Rite Aid • Bremerton, WA 10
Demographics
4117 Kitsap Way, Bremerton, Washington, 98312 0 - 1 mile 0 - 3 miles 0 - 5 miles
Population
2016 Population 8,702 53,275 102,260
2021 Population 8,951 54,524 104,629
2010-2016 Annual Rate 0.52% 0.77% 0.63%
2016-2021 Annual Rate 0.57% 0.46% 0.46%
Households
2016 Total Households 3,832 21,171 40,036
2021 Total Households 3,962 21,800 41,177
2010-2016 Annual Rate 0.76% 0.61% 0.62%
2016-2021 Annual Rate 0.67% 0.59% 0.56%
Median Household Income
2016 Median Household Income $42,780 $47,205 $52,642
Average Household Income
2016 Average Household Income $54,718 $59,886 $66,816
going beyond
The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notices.
Stan Johnson Company10333 Richmond Avenue | Suite 740Houston, Texas 77042P: +1 832.476.3440 | F: +1 832.476.3449
stanjohnsonco.com
Marc PeelerAssociate [email protected]
Jim GibsonRegional [email protected]
Todd [email protected]
Marshall Thompson [email protected]
Jaime PattesonResearch [email protected]
Jason [email protected]
In Association With: Marc Barber, WA License #25779
Offered Exclusively by