offering memorandum walgreens - ackerman & co.€¦ · walgreens is a national leader in...

Walgreensoffering memorandum

3101 e. 10th Streetgreenville, north Carolina 27858

This Offering Memorandum and any subsequent

evaluation material you may be provided (collectively

known as the “Offering Memorandum”) is intended

solely for your limited use in considering whether

to pursue negotiations to acquire Walgreens (the

“Property”) located in Greenville, North Carolina. The

Property is being marketed for sale by Ackerman & Co.

(“Broker”).

The Offering Memorandum contains brief, selected

information pertaining to the business and affairs of the

Property and has been prepared by Broker. It does not,

however, purport to be all-inclusive or to contain all of

the information that a prospective purchaser may desire.

Broker makes no representation or warranty, express

or implied, as to the accuracy or completeness of the

Offering Memorandum or any of its contents, and no

legal liability is assumed to be implied with respect

thereto.

By acknowledgment of your receipt of the Offering

Memorandum you agree that the Offering

Memorandum and its contents are confidential, that

you will hold and treat it in the strictest of confidence,

that you will not directly or indirectly disclose, or permit

anyone else to disclose, the Offering Memorandum

or its contents to any other person, firm, or entity

(including, without limitation, any principal for whom

you have been engaged), without prior written

authorization of Owner or Broker and that you will not

use or permit to be used the Offering Memorandum

or its contents to be copied or used in any fashion or

manner detrimental to the interest of Owner. Photocopy

or other duplication is strictly prohibited.

THE OFFERING MEMORANDUM SHALL NOT BE

DEEMED TO REPRESENT THAT STATE OF AFFAIRS

OF THE PROPERTY OR CONSTITUTE AN INDICATION

THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS

OR AFFAIRS OF THE PROPERTY SINCE THE DATE OF

PREPARATION OF THE OFFERING MEMORANDUM.

The information provided in the Offering Memorandum

has been gathered from sources that are deemed

reliable, but the Broker does not warrant or represent

that the information is true or correct. Prospective

offerors are advised to verify information independently.

The Offering Memorandum is not to be construed as an

offer or as any part of a contract to sell the property.

Furthermore, the inclusion or exclusion in the Offering

Memorandum of information relating to asbestos or

any other hazardous, toxic or dangerous chemical item,

waste or substance (hereinafter collectively referred to

as “Waste”) relating to the Property shall in no way be

construed as creating any warranties or representations,

expressed or implied by the Broker as to the existence

or nonexistence or nature of Waste in, under or on the

Property, it may create significant legal and/or economic

obligations upon the Owner, lessee and/or other holders

of interest in the Property or a part thereof and you are

hereby advised to obtain professional assistance such

as from a consultant, engineer and/or attorney prior to

taking an interest in the Property or a part thereof.

CONFIDENTIAL INFORMATIONINFORMATION NOT WARRANTED

01 eXeCuTiVe SummarY investment Summary Location and demographics Property Photographs and aerials Property overview

02 TenanT oVerView Tenant overview Site Plan

03 markeT oVerView greenville, n.C. market overview Competitive Property map detailed demographics

04 finanCiaL oVerView financial Summary Cash flow Projections Summary of Prospective Cash flows

ConTaCTS

JASON POWELL, CCIMVice President, Investment Sales

Ackerman & [email protected]

ANDREW MURPHY Senior Vice President, Investment Sales


SPENCER COANFinancial Analyst


BILL MITCHELLDirector

iCAP Realty [email protected]

Table Of ContentsWALgREENs

Walgreens

eXeCuTiVe SummarY investment Summary Location and demographics Property Photographs and aerials Property overview

01

net leased walgreens 5

Square Footage: 14,560 Sf

Acreage: 1.25 acres

Occupancy: 100%

Offering Price: $5,741,935

Debt Structure: assumable, non-recourse

In-place NOI: $385,000

Leveraged Cash-on-Cash 7.75%

INVEsTMENT sUMMARY

INVESTMENT SUMMARY

Ackerman & Co.’s Investment Sales team is pleased to exclusively present for sale an absolute net-leased Walgreens located in Greenville, North Carolina. The Walgreens property was built in 2005 and has over 18 years remaining on its initial lease term. The building totals 14,560 SF and provides investors with long term stable cash flow.

In addition to the remaining 18+ year term, Walgreens has 10 five-year renewal options. This institutional quality asset is located in an affluent location in greenville. The asset is fee simple, and is being offered with attractive, assumable, non-recourse debt.

Investment Highlights:

Stable Cash Flow: The asset will provide a long-term, steady cash flow to ownership. Due to the favorable assumable debt structure (Interest Only); the leveraged cash-on-cash return is much higher than it would be with market debt. In addition, an investor enjoys the advantage of the lease having five-year renewal terms, as opposed to the one-year renewal structure found in many other Walgreens leases.

Excellent Physical Quality: Recently constructed, this property will require little, if any capital improvements over the term, and due to the absolute NNN reimbursement structure, the cost of any capital improvements are borne by Walgreens.

Superior Credit Tenant: Walgreens came into existence in 1901 and presently has 8,046 drugstores in the United states and Puerto Rico. In 2010, Walgreens reported $67,400,000,000 in gross sales, which is 6.4% higher than calendar year 2009. Currently, Walgreens has a total of 244,000 employees and standard & Poor’s has rated Walgreens A.

Mature Retail Submarket/Quality Demographics: The subject Walgreens is located on the corner of E. 10th street and greenville Boulevard in greeneville, NC. This area is a very mature location with 31,000 VPD and such retailers as McDonalds, Dunkin’ Donuts, Burger King, Food Lion, Quiznos, and Jackson Hewitt. In addition, the population within a three-mile radius is roughly 50,000 people and has an expected growth rate over the next five years of 2.50%. In addition, the 2010 estimated household income is roughly $55,000.

01 Executive Summary


95

85

40 70

17

74

64

87

Plymouth

Greenville

Chapel Hill Raleigh

Elizabethtown

Wilmington

Henderson

Walgreens3101 E. 10th StrEEtGrEEnvillE, north Carolina 27858

Source: 2010 MPSI Systems Inc. d.b.a. DataMetrix®

TraffiC CounTS

31,000 vEhICLES Per daY on greenViLLe BouLeVard

28,000 vEhICLES Per daY on eaST 10Th STreeT

DEMOgRAPHIC sUMMARY

1 MILE 3 MILES 5 MILES

Population Estimate 2010 8,839 48,062 89,294

Total households 4,191 19,506 36,811

Average household Income $38,489 $53,985 $54,723

The subject Walgreens, located in Greenville, NC, was built in 2005 and is in excellent physical condition. The drug store fronts E. 10th Street and Greenville Boulevard and has two points of ingress / egress on the site. The site offers ample parking and good visibility off Third Street. In 2010, total population estimate within 5 miles was 89,294 and average household income within the 5 miles was estimated to be $54,723.

LOCATION AND DEMOGRAPHICS



3101 e. 10Th STreeTgreenViLLe, norTh CaroLina 27858

PROPERTY PHOTOS



East 10th Street

Greenville Bouleva

rd

28,000 vEhICLES Per daY.

31,00

0 vEh

ICLE

S Per

daY.

PROPERTY AERIAL



PROPERTY OVERVIEW

address: 3101 e. 10th Streetgreenville, north Carolina 27858

County: Pitt

municipality: City of greenville

Building Size: 14,560 Sf / one-story Building

Land area 1.25 acres

Parcel id: 68148

Year Built: 2005

Construction: masonry, Steel

Zoning: Cg

Parking: approximately 58 spaces

Signage: Pylon sign at the intersection of 10th Street and greenville Blvd. and two building-mounted signs (one on each side)

Street frontage: 251 feet along 10th Street and 232 feet along greenville Boulevard

access: There are points of ingress/egress via 10th Street and greenville Boulevard

Store number: 2453

drive-through Pharmacy

Yes

health Center no

Store hoursof operation: monday - Sunday, 8 am - 10 Pm



903

43

11

33

1143

13

13

264

264

264

33

903

S Charles Blvd

E Fire Tower Rd

Pottertown Road

E 10th St

E 10th St

Pitt-GreenvilleAirport

East Carolina UniversityW

Arlington Blvd

S M

emor

ial D

r

Greenville Blvd

W 5th StE 1st St

Stantonsburg Rd

W 5th St

Greenville Blvd SW

Dickinson Ave

E Fire To

wer R

d

Pactolus Hwy

S Ev

ans

St

AREA MAP



Walgreens

TenanT oVerView Tenant overview Site Plan

02


TENANT SUMMARY

SiZeone-Story Building

SQuare fooTage14,560

LeaSe eXPiraTion2030

waLgreenS

Founded in 1901, Walgreens currently operates over 8,000 drugstore chains across the United states and Puerto Rico. Walgreens is a national leader in providing prescription and non-prescription drugs and household consumer products. With an s&P credit rating of A, Walgreens is consistently regarded as one of the most financially sound organizations in the United states. Innovations such as store layout remodeling and in-store health centers have allowed Walgreens to consistently outperform its competitors with regard to earnings per share, revenue growth, net income growth, and cash flow from operations. In 2010, Walgreens posted its unprecedented 36th straight year of record sales and earnings. In April of 2010, to increase their presence in New York City, the largest pharmacy market in the United states, Walgreens acquired longtime New York-Based pharmacy chain Duane Reade. The acquisition included 257 drug stores and two distribution centers. In June of 2011, Walgreens again showed their ability to innovate and expand their customer base by acquiring major online pharmacy provider Drugstore.com. Most analysts believe superior operations and customer service will allow Walgreens to continue their domination in the rapidly growing drugstore industry.

Walgreen CO (NYsE: WAg) s&P Rating: A Headquarters: Deerfield, IL UsA store Locations: 8,046Year Founded: 1901Employees: 244,0002010 Revenue: $67.42 B

www.walgreens.com

02 Tenant Overview


SITE PLAN

One-story masonry/steel14,560 sF58 parking spaces

gRE

ENV

ILLE

BO

ULE

VARD

02 Tenant Overview

Walgreens

markeT oVerView greenville, north Carolina Competitive Property Survey detailed demographics

03


In 2010 Greenville was listed as the 10th largest city in the state of North Carolina. Greenville has established itself as a regional hub for healthcare, education, and sports. The city has consistently ranked as a top city nationally by highly-regarded publications in several categories.

strong Recognition

In 2008, Forbes magazine ranked greenville, NC 8th nationally as a “Best place for Business and Careers” and, in 2010, the magazine ranked greenville as 24th in the nation for mid-city business growth and development. greenville was named by America’s Promise Alliance as one of the nation’s “100 Best Communities for Young People” in 2008 and 2010. In 2004, greenville was named as a sportstown UsA by sports Illustrated and the National Parks and Recreation Association.

steady growth

Pitt County has shown consistent growth with ten-year growth increases exceeding 20% since to 1980. greenville’s location allows easy access to the Carolina coast and nearby Research Triangle. The city’s balance of both manufacturing and non-manufacturing employment brings a wide array of young people to the area.

03 Market OverviewGREENVILLE, NORTH CAROLINA

PITT COUNTY HIsTORICAL gROWTH

1980 1990 2000 2010

POPU

LATI

ON

GRO

WTH

(in th

ousa

nds)

90,1

46

0

20

40

60

80

100

120

140

160

180

108,

480

Since the 1980s, Pitt Countyhas grown from 90,146 residents to more than 168,148 residents.

133,

719

168,

148


employer Location Product employment established union

dSm (2 plants) greenville Chemicals 1,100 1997 no

naCCo materials handling group greenville Lift Trucks 1,100 1974 no

alliance one international farmville Tobacco Processing 850 1907 Yes

The roberts Co., inc. winterville metal fabrication 500 1978 no

aSmo greenville of nC greenville Small electric motors 410 1995 no

MAJOR gREENVILLE AREA EMPLOYERs - MANUFACTURINg

employer Location Product employment established union

Pitt County memorial hospital greenville health care 7,868 1997 no

Pitt County university greenville education 5,455 1907 no

Pitt County Public Schools greenville education 3,111 1885 no

County of Pitt greenville government administration 968 1760 no

Pitt Community College greenville education 861 1961 no

City of greenville greenville government administration 743 1956 no

Physicians east greenville medical Care 500 1965 no

greenville utilities Commission greenville Public utilities 435 1905 no

MAJOR gREENVILLE AREA EMPLOYERs - NON-MANUFACTURINg

03 Market OverviewGREENVILLE, NORTH CAROLINA, CONT’D.


903

43

11

33

1143

13

13

264

264

264

33

903

S Charles Blvd

E Fire Tower Rd

Pottertown Road

E 10th St

E 10th St

Pitt-GreenvilleAirport

East Carolina UniversityW

Arlington Blvd

S M

emor

ial D

r

Greenville Blvd

W 5th StE 1st St

Stantonsburg Rd

W 5th St

Greenville Blvd SW

Dickinson Ave

E Fire To

wer R

d

Pactolus Hwy

S Ev

ans

St

CVS Pharmacy1895 e. fire Tower rd.

CVS Pharmacy3116 e. 10th St.

walgreens103 greenville Blvd. Se

rite aid Pharmacy2098 e. fire Tower rd. walgreens

2105 e. fire Tower rd.

rite aid Pharmacy1401 Charles Blvd.

rite aid Pharmacy3012 e. 10th St.

3-MILE RADIUs

03 Market OverviewCOMPETITIVE PROPERTY MAP (3 MILES)


net leased walgreens 1803 Market Overview

demograPhiCS 1 miLe 3 miLeS 5 miLeS

2010 estimated Population 8,839 48,062 89,294

2015 Projected Population 9,752 51,833 97,841

2000 Census Population 7,386 40,936 74,967

1990 Census Population 5,625 35,584 60,025

growth 2000 - 2010 1.77% 1.58% 1.72%

growth 2010 - 2015 1.99% 1.52% 1.85%

2010 estimated median age 24.8 26.2 29.0

Total Businesses 227 2,210 3,812

Total employees 2,090 22,077 50,445

2010 estimated households 4,191 19,506 36,811

2015 Projected households 4,638 21,344 40,857

2000 Census households 3,482 16,462 29,952

1990 Census households 2,630 13,678 22,701

growth 2000 - 2010 1.82% 1.67% 2.03%

growth 2010 - 2015 2.05% 1.82% 2.11%

2010 estimated average household Size 2.09 2.19 2.26

2010 estimated median household income $26,857 $40,063 $41,987

2015 Projected median household income $30,557 $46,363 $49,021

2000 Census median household income $20,573 $29,755 $31,774

1990 Census median household income $20,801 $22,506 $23,766

2010 estimated average household income $38,489 $53,985 $54,723

2010 estimated Per Capita income $18,744 $22,927 $23,563

2010 estimated housing units 4,720 23,225 43,098

2010 estimated occupied units 88.80% 83.90% 85.40%

2010 estimated Vacant units 11.20% 16.00% 14.60%

2010 estimated owner occupied units 25.90% 39.10% 41.70%

2010 estimated renter occupied units 62.90% 44.80% 43.70%

2010 estimated median housing Value $115,432 $124,729 $117,749

DETAILED DEMOGRAPHICS

Walgreens

finanCiaL oVerView financial Summary Cash flow Projections Summary of Prospective Cash flows

04


FINANCIAL SUMMARY

finanCiaL oVerView

sales Price $5,741,935

square Feet 14,560

Price Per sF $394.36

Leverage Cash-on-Cash 7.75%

FinancingMust Assume Existing

Non-recourse Financing

LeaSe deTaiLS

Commencement Date 2/1/2005

End Date 1/31/2030

Lease Term 25 Years

Term Remaining Approximately 18 Years

Annual Rent $385,000

Rent Per square Foot $26.44

Lease Type NNN

Options Ten (10) x Five (5) Year

04 Financial Overview

BuiLding informaTion

Address3101 E. 10th street

greenville, NC 27858

Property Type single-tenant Retail

Year Built 2005

Parcel size 1.3 Acres

Type of Ownership Fee simple

Current Occupancy 100%

eXiSTing finanCiaL TermS

Existing Financing Must be Assumed

Original Loan Amount $3,000,000

Current Loan Amount (As of 9/1/11)

$3,000,000

Amortization schedule Interest Only

Interest Rate 5.75%

Maturity Date 2/1/2035

Optional Prepayment Date 2/1/2020

Extended Rate (2020-2035) 7.75%

Recourse Requirement Non-recourse


CASH FLOW PROJECTIONS

Fiscal Year ending - november 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

CY 2012

Potential Gross Revenue $/SF/

Base Rental Revenue $26.44 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000 $385,000

Scheduled Base Rental $26.44 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000

Total Potential Gross $26.44 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000

Vacancy Loss 0.00 0 0 0 0 0 0 0 0 0 0 0 0 0

Effective gross revenue $26.44 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000

Net operating Income $26.44 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000

Operating Cash Flow $26.44 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000 385,000

Financing

Debt Service (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500) (172,500)

Cash Flow After Debt $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500 $212,500

Leverage Summary

Leveraged Cash-on-Cash Return

7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75%

Leveraged Cash-on-CashReturn (Cumm Average)

7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75%

Debt Coverage Ratio 2.23 2.23 2.23 2.23 2.23 2.23 2.23 2.23 2.23 2.23 2.23 2.23 2.23


eXiSTing aSSumaBLe deBT TermS

Loan Terms*

Original Balance (02/01/05) $3,000,000

Principal Balance (09/01/11) $3,000,000

Assumption Fee 0.00%

Balance at Maturity (02/01/35) $3,000,000

Fixed Interest Rate 5.75%

Annual Debt service Payment $172,500

Optional Prepayment Date 2/1/2020

Extended Int. Rate (2020-2035) 7.75%

[1] No vacancy loss has been assumed for this analysis.

[2] The weighted average downtime has been rounded to the nearest whole month.

*The existing note is interest only and has an optional prepayment date on 02/01/2020. From 2020 through the note’s maturity date, the purchaser can maintain the loan at a guaranteed interest rate of 7.75%. This analysis assumes that an extension of the current rate can be attained, and the terms will continue as they are today throughought the remainder of the analysis.

General Property Notes


SUMMARY OF PROSPECTIVE CASH FLOWS

Loan renewaL SCenario Through 2/2035

Initial Investment (Return on initial equity) $2,741,935

Initial Lease Term

End of Year 1 $212,500 7.75%

End of Year 2 $212,500 7.75%

End of Year 3 $212,500 7.75%

End of Year 4 $212,500 7.75%

End of Year 5 $212,500 7.75%

End of Year 6 $212,500 7.75%

End of Year 7 $212,500 7.75%

End of Year 8 $212,500 7.75%

End of Year 9* $152,500 5.56%

End of Year 10 $152,500 5.56%

End of Year 11 $152,500 5.56%

End of Year 12 $152,500 5.56%

End of Year 13 $152,500 5.56%

End of Year 14 $152,500 5.56%

End of Year 15 $152,500 5.56%

End of Year 16 $152,500 5.56%

End of Year 17 $152,500 5.56%

End of Year 18 $152,500 5.56%

Total Cash Flow (with loan extension through initital lease term) $3,325,000

First Renewal Option

Year 1 - 2031 $152,500 5.56%

Year 2 - 2032 $152,500 5.56%

Year 3 - 2033 $152,500 5.56%

Year 4 - 2034 $152,500 5.56%

Year 5 - 2035 $152,500 5.56%

Total Cash Flow (with loan extension through initital lease term) $3,987,500


[*] Loan can be paid off without penalty at EOY 9. This model assumes the current loan is extended through 2/2035 with the 7.75%

Notes

© 2011 Ackerman & Co. All rights reserved.

FOR MORE INFORMATION, PLEASE CONTACT:JaSon PoweLL, CCim | Vice President, investment Sales

770.913.3952 [email protected]

andrew murPhY | Senior Vice President, investment Sales 770.913.3950 [email protected]

offering memorandum walgreens - ackerman & co.€¦ · walgreens is a national leader in...

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