APACHE SHOPPES 1200 16TH STREET SW | ROCHESTER, MINNESOTA - Transwestern
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I N V E S T M E N T O PP O R T U N I T Y | G R O C E RY– A N C H O R E D C E N T E R APACHE SHOPPES 1200 16TH STREET SW | ROCHESTER, MINNESOTA
2 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales T R ANSWESTERN C HI CAG O PAUL B A RI L E JA N I C E S EL L I S 200 West Madison Street Managing Director Managing Director Suite 3300 312.881.7020 312.881.7024 Chicago, IL 60606 paul.barile@transwestern.com janice.sellis@transwestern.com
3
Executive Summary 5 Property Overview 23
Offering Summary Property Overview
Investment Highlights Site Plan
Key Property Statistics
Location Tenancy Overview 27
Demographics Summary of Primary Tenants
Tenancy Overview
Overview Map Financial Overview 31
Aerial View 10-Year Cash Flow
General Assumptions
Area and Market Overview 11 Real Estate Taxes
Minnesota Overview Rent Roll
Rochester Overview Lease Encumbrance Schedule
Rochester Retail Market & Map
Table of Contents
4 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
CONFIDENTIALIT Y & CONDITIONS
Transwestern (the “agent”) has been engaged as the exclusive agent for the sale of Apache Shoppes in Rochester, The seller will be responsible for any commission due the agent in connection with a sale of the property.
Minnesota (the “Property”), by the Owner (the “seller”). Each prospective purchaser will be responsible for any claims for commissions by any other broker or agent in
connection with a sale of the property if such claims arise from acts of such prospective purchaser or its broker/
The property is being offered for sale in an “as-is, where-is” condition and the seller and the agent make no agent. Any Buyer’s Agent must provide a registration signed by the prospective investor acknowledging said
representations or warranties as to the accuracy of the information contained in this information package. agent’s authority to act on its behalf.
The enclosed materials include highly confidential information and are being furnished solely for the purpose
of review by prospective Purchasers of the interest described herein. Neither the enclosed materials, nor any ENVIRONMENTAL MATTERS
information contained herein, are to be used for any other purpose, or made available to any other person All parties to real estate transactions should be aware of the health liability and economic impact of
without the express written consent of the seller. Each recipient, as a prerequisite to receiving the enclosed environmental factors on real estate. Agent does not conduct investigations or analysis of environmental matters
information, should be registered with Transwestern as a “Registered Potential Investor” or as “Buyer’s Agent” and accordingly, urges its clients to retain qualified environmental professionals to determine whether hazardous
for an identified “Registered Potential Investor”. The use of this Offering Memorandum and the information or toxic wastes or substances (such as asbestos, PCBs and other contaminant or petrol-chemical products stored
provided herein is subject to the terms, provisions and limitations of the confidentiality agreement furnished by in underground tanks) or other undesirable materials or conditions are present in the property and if so, whether
the agent prior to delivery of this information package. any health danger or other liability exists. Such substances may have been used in the construction or operation
of the buildings or may be present as a result of the previous activities at a Property. Depending upon past,
The enclosed materials are being provided solely to facilitate the prospective investor’s own due diligence for current and proposed uses of the property, it may be prudent to retain an environmental expert to conduct a site
which it shall be fully and solely responsible. The material contained herein is based on information and sources investigation and/or building inspection.
deemed to be reliable, but no representation or warranty, express or implied, is being made by the agent or
the seller or any of their respective representatives, affiliates, officers, employees, shareholders, partners Various federal, state and local authorities have enacted laws and regulations dealing with the use, storage,
or directors, as to the accuracy or completeness of the information contained herein. Summaries contained handling, removal, transport and disposal of toxic or hazardous wastes and substances. If hazardous or toxic
herein of any legal or other documents are not intended to be comprehensive statements of the terms of such substances exist or are contemplated to be used at a Property, special governmental approvals or permits may be
documents, but rather only outlines of some of the principal provisions contained therein. Neither the agent required. In addition, the cost of removal and disposal of such materials may be substantial. Consequently, legal
nor the seller shall have any liability whatsoever for the accuracy or completeness of the information contained counsel and technical experts should be consulted where these substances are or may be present. Agent makes
herein, or any other written or oral communications, or information transmitted, or made available, or any action no representation and assumes no obligation regarding the presence or absence of toxic or hazardous waste or
taken, or decision made by the recipient with respect to the property. Interested parties are to make their substances or other undesirable materials on or about any Property ultimately sold. It is solely the responsibility
investigations, projections and conclusions without reliance upon the material contained herein. of the potential investor to conduct investigations to determine the presence of such materials.
The seller reserves the right, at its sole and absolute discretion, to withdraw the property from being marketed RADON GAS
for sale at any time and for any reason. The seller and the agent each expressly reserve the right, at their sole Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities
and absolute discretion, to reject any and all expressions of interest or offers regarding the property and/or to may present health risks to persons who are exposed to it over time. Additional information regarding radon and
terminate discussions with any entity at any time, with or without notice. This Offering Memorandum is made radon testing may be obtained from your county public health unit.
subject to omissions, corrections or errors, change of price or other terms and prior sale or withdrawal from the
market without notice. The agent is not authorized to make any representations or agreements on behalf of the THE AMERICANS WITH DISABILITY ACT
seller. The Americans with Disabilities Act is intended to make many business establishments equally accessible to
persons with a variety of disabilities; modifications to real Property may be required. State and local laws also
The seller shall have no legal commitment or obligation to any interested party reviewing the enclosed materials, may mandate changes. Agent is not qualified to advise you as to what, if any, changes may be required now, or in
performing additional investigation and/or making an offer to purchase the property unless and until a binding the future. Prospective investors should consult their attorneys and qualified design professionals for information
written agreement for the purchase of the property has been fully executed, delivered and approved by the regarding these matters.
seller and any conditions to the seller’s obligations there under have been satisfied or waived.
LEGAL & TAX MATTERS
By taking possession of and reviewing the information contained herein, the recipient agrees that (a) the With respect to legal or tax issues pertaining to the acquisition and/or ownership of the property, Agent is not
enclosed materials and their contents are of a highly confidential nature and will be held and treated in the qualified to provide advice on such matters. Prospective purchasers should consult with their advisors on these
strictest confidence and shall be returned to the agent or the seller promptly upon request; and (b) the recipient and other related matters. The recipient of this Offering Memorandum shall not rely on any information contained
shall not contact employees or tenants of the property directly or indirectly regarding any aspect of the enclosed herein with respect to these or any other matters. The seller and the agent make no representation or warranties
materials or the property without the prior written approval of the seller or the agent; and (c) no portion of on any such matters.
the enclosed materials may be copied or otherwise reproduced without the prior written authorization of the
seller or the agent or as otherwise provided in the Confidentiality and/or Registration Agreement executed and
delivered by the recipient(s) to Transwestern.
5 Executive Summary
6 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
OFFERING SUMMARY
Transwestern is pleased to exclusively offer for sale Apache Shoppes (the “Property”), a 60,780-square-foot (“SF”) grocery-anchored retail center located in Roch-
ester, Minnesota. The Property provides investors with stable in-place cash flow and is 100 percent leased with high quality tenants including Trader Joe’s, Chuck E.
Cheese’s, Erik’s Bikes and Verizon Wireless.
INVESTMENT HIGHLIGHTS
• 100 percent leased to high quality tenants on long–term leases
KEY PROPERTY STATISTICS
• Grocery-anchored by Trader Joe’s — the only specialty grocer in
1200 16th Street SW
Rochester Location
Rochester, MN 55902
• Trader Joe’s is one of the most successful and profitable retailers in the
country with average store sales exceeding $1,700 per square foot Size 60,780 SF
• Rochester is home to the Mayo Clinic — a 150-year-old world-renowned Occupancy 100%
medical institution that attracts over 2.7 million annual visitors to Over 50,000 cars per day on
Traffic Counts
Rochester, has an economic impact of over $9.6 billion in the State of Highway 52 and 16th Street
Minnesota and is the largest non-profit in the country
• Strong economy — Rochester enjoys one of the lowest unemployment
rates in the country — currently 3.2 percent, well below the national
average of 5.5 percent
• Property is situated at the No. 1 retail location in Rochester, across
from the 750,000 SF Apache Mall. This market draws from a trade area
of up to 35 miles and has a consumer base of 274,000 with an average
household income of $78,000
• Excellent visibility from Highway 52 (over 40,000 cars per day)
• Convenient ingress/egress with a signalled entrance and adjacent
access to Highway 52
• Strong retail market — with most major retailers present, there is virtually
no vacancy in the Rochester retail market
• Rochester economy is only poised to improve through the Destination
Medical Center initiative. This $6 billion public–private initiative is
projected to place into Rochester 2,850 housing units, 1,380 hotel
rooms and 6.8 million SF of health care facilities
Executive Summary 7
L O C AT I O N
Apache Shoppes is located in Rochester, Minnesota, three miles southwest of downtown. The Property is situated at the dominant retail location in Rochester and is
directly across from the GGP-owned Apache Mall, which is anchored by Macy’s, Scheels, Herbergers, JC Penney and Barnes & Noble. In addition to catering to the
nearby affluent neighborhoods to the west and southwest, this retail market draws consumers from up to 35 miles away due to the presence of the mall.
DEMOGRAPHICS
3 Mile 5 Mile 10 Mile 35 Mile
2014 Population 54,985 96,396 133,551 273,553
2014 Average Household Income $79,435 $84,388 $88,484 $78,016
% of Owner Occupied Housing 60.3% 65.4% 69.4% 71.0%
White Collar Population 66.0% 67.1% 68.2% 61.3%
SUMMARY OF PRIMARY TENANTS
Apache Shoppes features strong national anchors Trader Joe’s and Chuck E. Cheese’s, plus
a diverse line-up of small shops suites including Verizon Wireless, Erik’s Bike Shop, UC Nails,
Cook’s Pantry, Terraloco, Fantastic Sam’s and Zzest Café & Bar.
TENANT SF EXPIRATION
Trader Joe’s 15,960 1/31/2021
Erik’s Bike Shop 15,259 7/31/2022
Chuck E. Cheese’s 14,520 9/30/2021
Verizon Wireless 2,890 7/31/2018
Downtown Rochester
8 -24 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
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Executive Summary 9
AERIAL VIEW
Mayo Clinic
14th AVE SW
Apache Mall
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10 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales Downtown Rochester & Mayo Clinic
11 Area & Market Overview
12 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
AREA & MARKET OVERVIEW
State of Minnesota
Located in the upper Midwest, Minnesota is the 12th largest state in the country and is a major regional eco-
nomic hub. The state is known for its high quality of life and is among the best educated and wealthiest in Minnesota is consistently recognized for its
the country. economy and quality of life.
Here are a few recent accolades received:
The state of Minnesota is home to approximately 5.5 million residents and is the second northernmost state, • No. 1 Best State to do Business by CNBC
after Alaska. The largest cities in the state are Minneapolis, St. Paul, Rochester, Bloomington and Duluth. (6/2015)
• No. 8 Best Higher Education by Smart Asset
Economy
(2/2015)
Minnesota enjoys a diverse economy with very low unemployment. As of May 2015, unemployment in Min- • No. 9 Best State for Business by Forbes (11/2014)
nesota was 3.8 percent, which is the fifth lowest in the country and well below the national average of 5.5 • No. 2 Friendliest State toward Innovation by the
percent. Harvard Business Review (12/2014)
Companies are drawn to the area’s highly educated workforce – a result of a stellar K-12 program plus out- • No. 8 Best State Economy by Business Insider
(2015)
standing higher education (ranked No. 8 in the nation for best higher education) – as well as the area’s low
cost of living, infrastructure, technology and business friendly environment. • No. 2 Best State for Quality of Life by Forbes
(11/2014)
The state is home to twenty-five Fortune 1000 companies as well as the largest private company in the coun-
• No. 1 Best State (based on income, employment,
try (Cargill) and the largest non-profit in the country (Mayo Clinic).
home ownership, poverty, education and life
expectancy) by Politico (1/2015)
Education
• No. 7 Richest State (based on income, GDP and
taxes per capita) by Forbes (2014)
One of the drivers of the highly educated workforce is the strong university system throughout the state of
Minnesota. The state supports a network of public universities and colleges, including 32 institutions in the • No. 5 Best Run State by USA Today (12/2014)
Minnesota State Colleges and Universities System and five major campuses of the University of Minnesota.
It is also home to more than 20 private colleges and universities, six of which rank among the nation’s top
100 liberal arts colleges, according to U.S. News & World Report. Overall the state is ranked No. 8 in the nation for higher education according to Smart Asset.
Health and Quality of Life
Minnesota is consistently ranked high on quality of life and is considered one of the healthiest major metros in the nation. The people of Minnesota have a high rate of
participation in outdoor activities; the state is ranked No. 1 in the percentage of residents who engage in regular exercise. Minnesotans have low rates of premature
death, infant mortality, cardiovascular disease and occupational fatalities, long life expectancies and a high rate of health insurance. Medical care is provided by a
comprehensive network of hospitals and clinics, headed by two institutions with international reputations — The Mayo Clinic and the University of Minnesota Medical
School.Area & Market Overview 13
Transportation
Minnesota has the fifth-largest highway system in the nation. Principal transporta-
tion corridors radiate from the Minneapolis–St. Paul metropolitan area. The major
Interstate highways are I-35, I-90 and I-94, with I-35 and I-94 passing through the
Minneapolis–St. Paul metropolitan area and I-90 going east-west through Roch-
ester along the southern edge of the state.
Major airports in the state include the Minneapolis–St. Paul International Airport
(MSP), Rochester International Airport (RST) and Duluth International Airport
(DHL). Together these three airports serve nearly 35 million passengers annually
with 131 nonstop markets, including 116 domestic and 14 international markets.
Sports and Recreation
Minnesota has professional men’s teams in all major sports. It is home to the Min-
nesota Vikings of the National Football League, the Minnesota Twins of Major
League Baseball, the Minnesota Timberwolves of the National Basketball Asso-
ciation and the National Hockey League’s Minnesota Wild.
Outdoor Recreation
Minnesotans participate in high levels of physical activity and many of these ac-
tivities are outdoors. The strong interest of Minnesotans in environmentalism
has been attributed to the popularity of these pursuits. In the warmer months,
these activities often involve water. Weekend and longer trips to family cabins
on Minnesota’s numerous lakes are a way of life for many residents. Activities
include water sports such as water skiing, which originated in the state, boating,
canoeing and fishing. More than 36 percent of Minnesotans fish, second only to
Alaska. Fishing does not cease when the lakes freeze; ice fishing has been around
since the arrival of early Scandinavian immigrants. Minnesotans have learned to
embrace their long, harsh winters in ice sports such as skating, hockey, curling
and broomball and snow sports such as cross-country skiing, alpine skiing, snow-
shoeing and snowmobiling. Their state and national forests and the seventy-two
state parks are used year-round for hunting, camping and hiking.
Mayo Clinic14 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
2015 FORTUNE 1000 COMPANIES HEADQUARTERED IN MINNESOTA
Ranking Company
14 UnitedHealth Group
36 Target
69 CHS Inc.
72 Best Buy Co., Inc.
98 3M Company
138 U.S. Bancorp
164 Supervalu Inc.
171 General Mills, Inc.
203 Land O’Lakes, Inc.
213 Ecolab Inc.
225 C.H. Robinson Worldwide, Inc.
247 Ameriprise Financial, Inc.
255 Xcel Energy Inc.
310 Hormel Foods Corporation
320 The Mosaic Company
333 Thrivent Financial for Lutherans
466 St. Jude Medical, Inc.
570 The Valspar Corporation
574 Polaris Industries, Inc.
602 Securian Financial Group, Inc.
617 Patterson Companies, Inc.
650 Fastenal Company
873 Donaldson Company, Inc.
963 The Toro Company
Downtown Rochester 979 H.B. Fuller CompanyArea & Market Overview 15 Fortune 1000 Companies headquartered in Minnesota
16 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales Mayo Clinic
Area & Market Overview 17
Rochester Overview
Located in southeast Minnesota, 85 miles south of Minneapolis, Rochester is the third largest city in the state after Minneapolis and St. Paul, with a population of more
than 210,000 in the metropolitan area. The city encompasses nearly 40 square miles and is one of the state’s fastest growing municipalities. Despite Minnesota’s
reputation for cold weather, Rochester enjoys an average of 200 sunny days a year and an average summer high of 84 degrees. During the winter months, the city
benefits from an extensive skyway system for pedestrians in the downtown area.
Rochester is an affluent, well-educated, white-collar community, with over 85 percent of the workforce employed in white-collar jobs and nearly half of all residents
holding a bachelor or advanced degree. Rochester was recently ranked the 31st most affluent community, out of 942, in the country by the Business Journals, a study
which took into account incomes and housing values.
The stable economy in Rochester is dominated by the presence of the Mayo Clinic and its supporting businesses. In addition to the thriving medical industry, Roch-
ester enjoys a diverse economy with hospitality, technology, agriculture and bio-business industries playing an important part of the local economy. As a result of
this diversity and stability, the city enjoys a low unemployment rate of 3.2 percent (as of May 2015), well below the national average of 5.5 percent.
Major Economic Drivers and Employers
The local economy is dominated by the presence of the Mayo Clinic — which employs 32,000 and brings 2.7 million visitors each year. Other major employers in
Rochester include IBM, Rochester Public Schools, Olmsted County, Olmsted Medical Center, McNeilus Truck and Charter Communications.
Mayo Clinic forms the core of Rochester’s economy as the largest employer and economic generator. However, outside of medical, the area enjoys a diverse econo-
my that includes hospitality, technology, agriculture, education, manufacturing and bio-business industries.
IBM Rochester stands as the area’s second largest employer and the state’s largest information technology employer. The IBM Rochester manufacturing, engineer-
ing and educational complex campus was completed in 1958 and has grown
considerably since then, currently occupying 3.6 million square feet, making TOP ROCHESTER EMPLOYERS
it the largest IBM facility under one contiguous roof. The main mission of IBM
# Employer # of Employees
Rochester is to develop, manufacture and support IBM eServer business com-
puters. 1 Mayo Clinic 32,271
2 IBM 2,740
In addition to IBM, other technology companies in Rochester include Bench- 3 Rochester Public Schools 2,657
mark Electronics, an electronics manufacturing services provider; Kardia
4 Olmsted Medical Center 1,339
Health Systems, a medical software and service provider and Metafile Informa-
tion System; a developer of management software applications. 5 Olmsted County 1,217
6 Charter Communications 1,061
Hospitality is the second largest industry in Rochester, after service/medical 7 McNeilus Truck & Manufacturing 1,050
and supports the Mayo-driven tourism. In total, the city includes nearly 5,000
hotel rooms, a significant number for a city of this size. All major national hotel 8 City of Rochester 841
brands are represented in Rochester and the number of hotel rooms continues 9 Crenlo 701
to grow. In 2014, a Saudi investment firm purchased the downtown Associated 10 Kahler Hospitality Group 680
Bank building with plans to tear it down and construct a five-star hotel.18 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
Agriculture is the third largest industry in the area, driven by the 1,400 working farms in Olmsted County. There are multiple dairy farms in the area including Kemps,
Associated Milk Producers and Pace Dairy Food. Seneca Foods has a large vegetable packing facility in the area which processes primarily peas and corn. In ad-
dition, a subsidiary of the global Irish company Kerry Group, maintains a production plant in Rochester that specializes in fermented ingredients, found in breads,
meats and other processed foods.
Manufacturing also plays a part in the local economy with nearly 150 manufacturing firms in the Rochester area. The largest firms in this category include Crenlo, a
metal enclosure maker, Benchmark Electronics and McNeilus Truck & Manufacturing.
The Mayo Clinic
The Mayo Clinic was founded in 1864 as a medical practice by Dr. William Worrall Mayo and has since grown
into the largest non-profit in the country and one of the leading medical institutes in the world. The Mayo MAYO CLINIC AWARDS AND RANKINGS:
Clinic employs over 35,000 people and draws an average of 2.7 million visitors to Rochester annually. In total,
• No. 1 Overall Hospital in the United States by
the clinic’s economic impact on the state exceeds $9.6 billion. Excluding the state government, the Mayo U.S. News & World Report (2015- Mayo Clinic has
Clinic is the largest employer in Minnesota. been at or near the top of this list since the list’s
inception)
The Mayo Clinic specializes in treating difficult cases through tertiary care and spends over $500 million per
• No. 1 Best Overall Hospital by CNN (2014)
year on research. The clinic is consistently ranked one of the leading medical institutes in the world.
• UHC Quality Leadership Award (2012)
Destination Medical Center • Leapfrog Top Hospitals
Destination Medical Center is a $6 billion economic development initiative created to sustain Rochester • Leapfrog Top Hospital Safety Score
and Minnesota as a global medical destination and grow Rochester as a magnet community attracting the • America’s 100 Best Companies to Work for by
highest caliber healthcare and medical professionals from across the globe. Over the next twenty years, Des- Fortune (2003-2015)
tination Medical Center is projected to have 320,000 square feet of shops, restaurants and entertainment
venues, 2,850 housing units, 1,380 hotel rooms and 6.8 million square feet of health care facilities. The initia-
tive is a public-private between Minnesota, the City of Rochester, Olmsted County, the Southeast Minnesota
Region and the Mayo Clinic. ROCHESTER AWARDS AND RANKINGS:
• 31st Most Affluent Community, out of 942, in the
Education nation by Bizjournals.com (8/2014)
• No. 2 Best Places to Live (small/mid-size cities) by
Post-secondary education opportunities in Rochester include the University of Minnesota-Rochester, Wi-
Livability (2015)
nona State University-Rochester, Rochester Community & Technical College and the Mayo School of Health-
Related Sciences. • No. 1 Happiest Mid-Sized Cities in America by
Movoto (2/2014)
The University of Minnesota- Rochester is the newest campus of the prestigious University of Minnesota sys- • No. 23 Best Places for Business and Careers by
tem. The campus was formally established in 2006 and recently announced plans to expand their Rochester Fortune (7/2014)
location with a new 10-acre campus that will be located at the southern end of downtown. The $60 million
• America’s 100 Best Companies to Work for by
structure will contain 120,000 SF of classrooms, labs, offices and retail space, which will allow the enrollment
Fortune (2003-2015)
to nearly double over the next ten years.Area & Market Overview 19
20 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
Retail Market
Rochester has a healthy retail market that includes the presence of most national retailers, but is not overbuilt like other towns of its size. Most of the retail is situated
on the southwest side of the town, where Apache Shoppes is located. The only other significant retail in Rochester is a Walmart and Target anchored center located
on the north side of town. The strength of the market is shown through the absence of significant vacancies.
The main retail area in Rochester is centered around the upscale Apache Mall, a 750,000 SF GGP-owned mall that is anchored by JCPenney, Macy’s, Barnes & Noble,
Herbergers and a newly opened Scheels, which was formerly a Sears location. Apache Mall draws customers from up to 35 miles away since it is the only mall in the
area and the closest competitive mall is located 75 miles to the north in suburban Minneapolis.
The retail surrounding the Apache Mall includes Apache Shoppes, located directly across the street to the south, as well as several grocery-anchored and power
centers populated by national and regional retailers. There is virtually no retail vacancy in this market. This retail location draws customers from 25-35 miles away
due to the presence of best-in-class national retailers whose next closest locations are 50-70 miles away, including TJ Maxx, Home Goods, Dick’s Sporting Goods,
Trader Joe’s and Bed, Bath & Beyond.
Significant Area Retail Centers
# PROPERTY ADDRESS RSF YEAR BUILT OCC. MAJOR TENANTS
Apache Shoppes 1200 16th St. SW 60,780 2005 100% Trader Joe's., Chuck E. Cheese’s
Macy's, JC Penney, Scheels, Herberger’s, Barnes & Noble,
1 Apache Mall 1201 12 th St. SW 750,000 1969 99%
Forever 21
2 Barclay Square 1300 Salem Rd. SW 140,000 1985 100% TJ Maxx, Home Goods, Party City
3 Windsor Plaza 500 Crossroads Dr. SW 79,303 1998 98% Hy-Vee
4 Crossroads Shopping Center 1201 S. Broadway 191,517 1963 87% Blast Fitness, Hancock Fabrics, OfficeMax, Pier One
5 Broadway Commons 20-80 25th St. SE 297,128 2001 98% Kohl's, Bed Bath & Beyond, DSW, Michaels, Sports Authority
6 Shoppes on Maine 4603 Maine Ave. SE 550,000 2008 96% Lowe's, Super Target, Dick's, Old Navy, Petsmart55th St NW
Area & Market Overview 21
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CR-822 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
23 Property Overview
24 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
PROPERT Y OVERVIEW
Apache Shoppes is a 60,780 SF grocery anchored center located in Rochester, Minnesota. The Property includes two one-story buildings. The larger building, lo-
cated on the west side of the parcel, totals 45,739 SF and is fully leased to Trader Joe’s, Chuck E. Cheese’s and Erik’s Bike Shop. The smaller building, located on the
east side of the parcel, totals 15,041 SF and is fully leased to Cook’s Pantry, Terraloco Running & Yoga, Verizon Wireless, UC Nails, Fantastic Sam’s and Zzest Cafe &
Bar. The Property enjoys excellent visibility from both Highway 63 and 16th Street SW, which host a combined traffic count in excess of 50,000 cars per day.
Location 1200 16th Street SW, Rochester, MN
Size 60,780 SF
Land Area 6.42 acres
% Leased 100%
Year Built Late 1980s (Renovated in 2005 & 2010)
Parking 261 spaces (4.3 per 1,000 SF)
Zoning B4 (General Commercial District)
Access Signalled entrance on 16th Street SW
Fire Safety Wet-pipe fire sprinkler system
Monument signs located on Highway 63 and 16th Street
Signage
SW
Structural framing is composed of interior steel columns
with reinforced concrete footing or geopiers and beams
Construction
or girders with open web joists. Exterior walls are painted
reinforced concrete tilt-wall panels.
ROOFS
Section Size Type Year Installed
Thermoplastic-
West Building 49,800 SF 2000
Polyolefin (TPO)
Thermoplastic-
East Building 15,200 SF 2005
Polyolefin (TPO)Property Overview 25
SITE PL AN
APACHE MALL
750,000 SF
Anchored by Macy’s, Herberger’s,
Scheels and JC Penney
16th STREET SW
HIGHWAY 63
Zzest Outdoor
4 5 6 7 8 9
Zzest Cafe
Patio
1
Fantastic
Verizon Wireless
Bar
UC Nails
&
Sam’s
Cook’s Pantry
Terraloco Running
& Yoga
Com mon 2
Dock
3
SUITE TENANT SIZE (SF)
1 Trader Joe’s 15,960 SF
2 Erik’s Bike Shop 15,259 SF
3 Chuck E. Cheese’s 14,520 SF
4 Cook’s Pantry 3,000 SF
5 Terraloco Running & Yoga 3,775 SF
6 Verizon Wireless 2,890 SF
7 UC Nails 1,232 SF
8 Fantastic Sam’s 1,294 SF
9 Zzest Cafe & Bar 2,850 SF26 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
27 Tenancy Overview
28 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
SUMMARY OF PRIMARY TENANTS
Apache Shoppes features strong, national anchors Trader Joe’s and Chuck E. Cheese’s
TENANT SF EXPIRATION
plus a diverse line-up of small shops suites including Verizon Wireless, Erik’s Bike Shop,
UC Nails, Cook’s Pantry, Terraloco, Fantastic Sam’s and Zzest Café & Bar. Trader Joe’s 15,960 1/31/2021
Erik’s Bike Shop 15,259 7/31/2022
Trader Joe’s Chuck E. Cheese’s 14,520 9/30/2021
Trader Joe’s is a privately held chain of specialty grocery stores with 457 locations Verizon Wireless 2,890 7/31/2018
in 38 states throughout the country. Trader Joe’s is considered a leading retailer and
achieves sales of over $1,750 per square foot, significantly higher than any of its com-
petitors. Approximately 80 percent of the store’s products are under its private label
name, and it is known for a wide selection of high-quality, low priced wine. The com-
pany is headquartered in Monrovia, California. There is only one Trader Joe’s location
in Rochester. The next closest location is in suburban Minneapolis, over 80 miles away.
Erik’s Bike Shop
Erik’s is a specialty bike shop with 22 stores in Minnesota and Wisconsin. The store’s
products and services focus on bicycling, snowboards, downhill skis, skateboards and
pro scooters. The company was founded 38 years ago by Erik Saltvold in Richfield, Min-
nesota and today is headquartered in Bloomington, Minnesota. The chain has been in
a growth mode over the past several years and has doubled its store count since 2006.
Erik’s has only one Rochester location.
Chuck E. Cheese’s
Chuck E. Cheese’s is a chain of family restaurant and entertainment centers. Each lo-
cation features arcade games and amusement rides, with a menu consisting of pizza,
sandwiches, wings and a salad bar. The company, owned by Apollo Global Manage-
ment, is headquartered in Irving, Texas and operates 577 locations nationwide. Chuck
E. Cheese’s has only one Rochester location.
Verizon Wireless
Verizon Wireless Communications, Inc. is a global leader in delivering broadband and
other wireless and wireline communications services to consumer, business, govern-
ment and wholesale customers. As the nation’s largest wireless company, Verizon Wire-
less serves 109 million retail connections and operates more than 1,700 retail locations
in the United States. Verizon Wireless is wholly owned by Verizon Wireless Commu-
nications, Inc. and is headquartered in Basking Ridge, New Jersey. Verizon Wireless
Communications is rated BBB+ with a stable outlook by Standard & Poors.Tenancy Overview 29 Zzest Café & Bar Zzest is an upscale bar and restaurant featuring farm to table cheese, charcuterie, chef tasting menus, deserts, quality wine and craft cocktails. Zzest is very highly regarded and is ranked No. 15 out of 241 restaurants in Rochester on tripadvisor.com. Cook’s Pantry Cook’s Pantry sells a well curated selection of cookware, bakeware, cutlery, kitchen electrics, tools, gadgets and other items for home chefs. In addition, the store offers cooking classes and knife sharpening. There are two Cook’s Pantry locations; Roches- ter and another in Siren, Wisconsin. TerraLoco TerraLoco is an active lifestyle shop specializing in running, walking, casual and profes- sional footwear and apparel. TerraLoco, short for Terrestrial Locomotion, was founded in 2012 and is locally owned. The store has been voted a top Running Store of the Year by Competitor Magazine Fantastic Sam’s Fantastic Sam’s is a chain of haircut and beauty salons in the United States and Canada. With over 1,250 locations, it is one of the largest full-service salon chains in the United States. Each store is a franchise and independently owned. Fantastic Sam’s provides hair care services for the entire family, presenting customers with unexpected quality, service and style, at a fantastic price. UC Nails UC Nails is a full service nail salon offering manicures and pedicures.
31 Financial Overview
32 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
10-Year Cash Flow
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
FOR THE YEARS ENDING
DEC-16 DEC-17 DEC-18 DEC-19 DEC-20 DEC-21 DEC-22 DEC-23 DEC-24 DEC-25
Potential Gross Revenue
Base Rental Revenue 791,828 808,526 821,945 830,672 835,223 850,296 865,875 873,709 879,522 883,007
Absorption & Turnover Vacancy (5,713) (6,180) (18,537) (18,302) (3,311)
Scheduled Base Rental
791,828 808,526 821,945 830,672 829,510 844,116 865,875 855,172 861,220 879,696
Revenue
Expense Reimbursement
483,887 498,819 514,152 530,121 544,255 560,977 581,074 591,572 614,141 654,209
Revenue
Effective Gross Revenue 1,275,715 1,307,345 1,336,097 1,360,793 1,373,765 1,405,093 1,446,949 1,446,744 1,475,361 1,533,905
Operating Expenses
Insurance 9,863 10,159 10,464 10,778 11,101 11,434 11,777 12,131 12,495 12,869
Repairs & Maintenance 30,874 31,800 32,754 33,737 34,749 35,792 36,865 37,971 39,111 40,284
Payroll 16,474 16,968 17,477 18,001 18,541 19,098 19,671 20,261 20,869 21,495
Operations 3,173 3,269 3,367 3,468 3,572 3,679 3,789 3,903 4,020 4,141
Cleaning Parking Lot Sweeping 9,641 9,930 10,228 10,535 10,851 11,176 11,512 11,857 12,213 12,579
Cleaning 6,860 7,066 7,278 7,496 7,721 7,952 8,191 8,437 8,690 8,950
Landscaping 7,872 8,108 8,352 8,602 8,860 9,126 9,400 9,682 9,972 10,272
Snow/Salt 70,037 72,138 74,302 76,531 78,827 81,192 83,628 86,137 88,721 91,382
Waste Removal Contract 15,316 15,776 16,249 16,736 17,238 17,756 18,288 18,837 19,402 19,984
Electricity 7,336 7,556 7,782 8,016 8,256 8,504 8,759 9,022 9,293 9,571
Water & Sewer 6,438 6,631 6,830 7,034 7,245 7,463 7,687 7,917 8,155 8,399
Fire Alarms Monitoring/
1,839 1,894 1,951 2,009 2,069 2,131 2,195 2,261 2,329 2,399
Charges
Management Fee 38,271 39,220 40,083 40,824 41,213 42,153 43,408 43,402 44,261 46,017
Real Estate Tax 358,218 368,964 380,033 391,434 403,177 415,272 427,730 440,562 453,779 467,393
Total Operating Expenses 582,212 599,479 617,150 635,201 653,420 672,728 692,900 712,380 733,310 755,735
Net Operating Income 693,503 707,866 718,947 725,592 720,345 732,365 754,049 734,364 742,051 778,170
Leasing & Capital Costs
Tenant Improvements 5,852 6,146 13,728 14,250 12,863
Leasing Commissions 3,696 3,882 7,586 7,875 7,109
Reserve 9,391 9,672 9,962 10,261 10,569 10,886 11,213 11,549 11,896 12,252
Total Leasing & Capital Costs 9,391 9,672 9,962 10,261 20,117 20,914 11,213 32,863 34,021 32,224
Net Cash Flow 684,112 698,194 708,985 715,331 700,228 711,451 742,836 701,501 708,030 745,946Financial Overview 33
General Assumptions
Analysis Start 1/1/2016
Square Footage 60,780
General Inflation Rate 3%
Recoveries Most tenants pay their pro-rata share of CAM and taxes as further detailed on the rent roll
Expenses Based on 2015 budget and year-to-date actuals
Management Fee 3.0% of gross revenues
Capital Reserves $0.15/SF
Real Estate Taxes
The Property falls under the taxing jurisdiction of Olmsted County, Minnesota
YEAR ASSESSED VALUE TAX PAYABLE
where taxes are billed in two installments in May and October. Investors should
make their own determinations regarding real estate taxes. The property tax 2015 $9,468,800 $347,784
ID for the property is 64.10.14.000577. The increase in assessed value for 2015
2014 $7,780,900 $286,808
is currently under appeal.34 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
Rent Roll
RENT/
SUITE TENANT SIZE (SF) LEASE BEGIN LEASE END RENT DATE ANNUAL RENT RECOVERIES
SF
1 Trader Joe's 15,960 7/27/2010 1/31/2021 $15.00 $239,400.00 Pro-rata CAM and taxes with a 10%
1/1/2016 $15.50 $247,380.00 admin fee; Increase in controllable
CAM limited to lesser of CPI or 3%
5-year option 2/1/2021 $16.00 $255,360.00
annually
5-year option 2/1/2026 $16.50 $263,340.00
5-year option 2/1/2031 $17.00 $271,320.00
5-year option 2/1/2036 $17.50 $279,300.00
2 Erik's Bike Shop 7,950 3/1/2012 7/31/2022 $8.42 $66,958.56 Pro-rata CAM and taxes with a 10%
3/1/2016 $8.58 $68,230.56 admin fee; Increase in controllable
CAM limited to 4% annually
3/1/2017 $8.74 $69,502.56
3/1/2018 $8.91 $70,854.00
3/1/2019 $9.08 $72,205.56
3/1/2020 $9.25 $73,557.00
3/1/2021 $9.42 $74,908.56
5-year option 8/1/2022 $9.59 $76,260.00
8/1/2023 $9.76 $77,592.00
8/1/2024 $9.93 $78,963.00
8/1/2025 $10.10 $80,314.56
8/1/2026 $10.27 $81,666.00
5-year option 8/1/2027 $10.44 $83,017.56
8/1/2028 $10.61 $84,369.00
8/1/2029 $10.78 $85,720.56
8/1/2030 $10.95 $87,072.00
8/1/2031 $11.12 $88,423.56
2-S Erik's (Storage Space) 7,309 3/1/2012 7/31/2022 $0.82 $6,000.00 None- full gross lease
5-year option 8/1/2022 $0.82 $6,000.00
5-year option 8/1/2027 $0.82 $6,000.00
3 Chuck E. Cheese’s 14,520 8/30/2010 9/30/2021 $11.33 $164,500.00 Pro-rata CAM and taxes; CAM
5-year option 10/1/2021 $12.46 $180,950.00 increases limited to 5% annually
5-year option 10/1/2026 $13.71 $199,045.00
5-year option 10/1/2031 $15.08 $218,950.00
5-year option 10/1/2036 $16.59 $240,844.00Financial Overview 35
Rent Roll (Cont.)
RENT/
SUITE TENANT SIZE (SF) LEASE BEGIN LEASE END RENT DATE ANNUAL RENT RECOVERIES
SF
4 Cook's Pantry 3,000 5/1/2013 11/30/2018 $21.00 $63,000.00 Pro-rata CAM and taxes with a 15%
12/1/2015 $22.00 $66,000.00 admin fee; Increase in controllable
expenses limited to 5% annually
12/1/2016 $23.00 $69,000.00
12/1/2017 $24.00 $72,000.00
5-year option 12/1/2018 $24.50 $73,500.00
12/1/2019 $24.75 $74,250.00
12/1/2020 $25.00 $75,000.00
12/1/2021 $25.25 $75,750.00
12/1/2022 $25.50 $76,500.00
5 Terraloco Running & Yoga 3,775 8/29/2012 2/28/2023 $16.45 $62,098.75 Pro-rata CAM and taxes with a 15%
9/1/2017 $18.10 $68,327.50 admin fee; Increase in controllable
expenses limited to 3% annually
5-year option 3/1/2023 $19.91 $75,160.25
6 Verizon Wireless 2,890 1/1/2006 7/31/2018 $24.20 $69,938.00 Pro-rata CAM and taxes with a 10%
5-year option 8/1/2018 $26.62 $76,931.80 admin fee; Increase in controllable
CAM limited to 5% annually
7 UC Nails 1,232 8/1/2012 9/30/2020 $21.00 $25,872.00 Pro-rata CAM and taxes with a 15%
10/1/2016 $22.00 $27,104.00 admin fee; Increase in controllable
CAM limited to 5% annually
10/1/2017 $23.00 $28,336.00
10/1/2018 $23.69 $29,186.08
10/1/2019 $24.40 $30,060.80
8 Fantastic Sam's 1,294 4/4/2011 8/31/2016 $24.00 $31,056.00 Pro-rata CAM and taxes with a 15%
5-year option 9/1/2016 $27.60 $35,714.40 admin fee
9 Zzest Café & Bar 2,708 7/8/2009 10/31/2024 $16.56 $44,844.48 Set CAM payment of $588.99/month
11/1/2016 $19.15 $51,858.24 and set tax payment of $1,089.97/
month
11/1/2017 $19.52 $52,860.12
11/1/2018 $19.89 $53,862.12
11/1/2019 $20.26 $54,864.12
11/1/2020 $20.63 $55,866.00
11/1/2021 $20.99 $56,840.88
11/1/2022 $21.36 $57,842.88
11/1/2023 $21.73 $58,844.88
9-S Zzest Café & Bar - Storage 142 9/1/2012 10/31/2017 $20.00 $2,840.00 Pro-rata CAM and taxes with a 15%
admin fee
Total SF Occupied 60,780 100%
Total SF Vacant 0%
Total Property SF 60,78036 An Exclusive Investment Offering | www.transwestern.com/ChicagoRetailInvestmentSales
Lease Encumbrance Schedule
TENANT TYPE RIGHTS/OPTIONS
Four five-year renewal options; Rent increases every five years based on the percentage change in the CPI index for the previous five
Renewal Option
year period, not to exceed $0.50/SF (Analysis assumes $.50/SF bumps for each period)
Trader Joe's
Exclusive Use Grocery or alcohol for off-premises consumption
Renewal Option Four five-year renewal options at the market rent (Analysis assumes 10% bumps for each period)
Chuck E. Cheese’s Pizza (as primary business), an arcade or game room, a business primarily providing physical play activities for children, or the use of
Exclusive Use
kiddie rides or games
Renewal Option One five-year renewal option at the rate shown on the rent roll
Terraloco Running & Yoga Exclusive Use High-end lifestyle specialty store selling yoga, running, walking, casual and fashion footwear
Termination Option At the end of the 60 th month if sales are less than $1,800,000 and upon payment of a termination fee in the amount of $37,750
Renewal Option One five-year renewal option at the rate shown on the rent roll
Verizon Wireless In the event the adjacent space (currently occupied by UC Nails) becomes vacant, Tenant has the first right to lease the space at the
Right of First Refusal
same rental rate as provided in Tenant's lease
Renewal Option One five-year renewal option at the rate shown on the rent roll
Fantastic Sam's
Exclusive Use Haircutting salon providing haircuts for $30 or less
Termination Option Effective 11/1/2019 upon payment of a termination fee of $16,000
Zzest Café & Bar
Exclusive Use Gourmet food sales for off premises consumption and restaurant dining (Trader Joe’s is permitted)
Renewal Option Two five-year renewal options at the rate shown on the rent roll
Exclusive Use Sale and repairs of bicycles, skateboards and snowboards
Erik's Bike Shop At the end of the 60 th month with 180 days notice and payment of unamortized construction costs - however, this termination option
Termination Option
can be cancelled at Landlord's election on or before June 19, 2016 upon the payment of a $100,000 fee
Co-Tenancy Trader Joe's
Renewal Option One five-year renewal option at the rate shown on the rent roll
Cook's Pantry
Exclusive Use Retail sale of kitchen equipment and supplies
Nail Salon including pedicures, manicures, acrylic nails, manicure tools, nail gemstones, toe rings, ankle bracelets, nail accessories,
UC Nails Exclusive Use
nail gifts and UC Nail gift certificatesFinancial Overview 37
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