CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum

 
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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy - Poughkeepsie, NY
                          722 Dutches Turnpike
                        Poughkeepsie, NY 12603

Offering Memorandum
CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
presented by
Presented by:

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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy                                                                                                                                                                          Investment Overview

                                                                                                                    Marcus & Millichap is pleased to present a CVS Pharmacy in Poughkeepsie,
                                                                                                                    New York. The subject property is a freestanding 10,125 square-foot building
                                                                                                                    sitting on a 1.75 acre lot. There are eleven years currently remaining on the
                                                                                                                    amended base term with four options to renew. This asset provides and investor
                                                                                                                    the rare ability to acquire a top performing CVS drug store with 5.75% increas-
                                                                                                                    es built in through the remainder of the base term. The lease is backed by CVS
                                                                                                                    Caremark Corporation which operates over 7,000 stores and is publicly traded
                                                                                                                    on the New York Stock Exchange under the symbol “CVS.” CVS Caremark
                                                                                                                    currently has a BBB+ credit rating by Standard & Poor’s.

                                                                                                                    CVS provides integrated pharmacy health care services in the United States for
                                                                                                                    convenience and value. It is the second largest pharmacy chain in the United
                                                                                                                    States with more than 7,600 stores. CVS sells prescription drugs and a wide as-
                                                                                                                    sortment of general merchandise, greeting cards, and convenience foods through
                                                                                                                    their CVS Pharmacy retail stores and online through CVS.com. It also provides
• Investment Grade Tenant, Rated BBB+ by Standard & Poor’s                                                          healthcare services through its more than 600 MinuteClinic medical clinics as
                                                                                                                    well as their Diabetes Care Centers.
• Just Under $11,000,000 in Gross Sales for 2013, Tenant Reports on an An-
nual Basis

• Rare 5.75% Increase in Less than One Year

• 5.75% Increases Every 5 Years During the Base Term

• 11 Years Remain on the Original Lease

• Corporate Guarantee from CVS Corporation

• Nearby Retailers Include Starbucks, AT&T, Panera Bread, Rhinebeck Bank,
Dollar General, Big Lots, Kmart, Burger King, and Walgreens

                              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. References to square footage or
                              age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                              current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap

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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy                                                                                                                                                                             Tenant Overview

                                                                                                               CVS Caremark Corporation, together with its subsidiaries, provides integrated pharma-
                                                                                                               cy health care services in the United States. The company operates through Pharmacy
                                                                                                               Services and Retail Pharmacy segments. The Pharmacy Services segment offers phar-
                                                                                                               macy benefit management services, such as plan design and administration, formulary
                                                                                                               management, discounted drug purchase arrangements, Medicare Part D services, mail
                                                                                                               order and specialty pharmacy services, retail pharmacy network management services,
                                                                                                               prescription management systems, clinical services, disease management, and medical
                                                                                                               spend management services. It serves employers, insurance companies, unions, govern-
                                                                                                               ment employee groups, managed care organizations and other sponsors of health benefit
                                                                                  plans, and individuals under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/
                                                                                  pharmacy, RxAmerica, Accordant, SilverScript, and Novologix names. The Retail Pharmacy segment sells prescrip-
                                                                                  tion drugs, over-the-counter drugs, beauty products and cosmetics, seasonal merchandise, greeting cards, and con-
                                                                                  venience foods, as well as provides photo finishing services. The company also offers infusion and enteral nutrition
                                                                                  services. As of December 31, 2013, it operated 7,660 retail drugstores, 800 MinuteClinic retail health care clinics,
                                                                                  792 CVS/pharmacy stores, 25 retail specialty pharmacy stores, 11 specialty mail order pharmacies, and 4 mail order
                                                                                  pharmacies, as well as online retail pharmacy Websites, CVS.com and Onofre.com.br. The company was founded in
                                                                                  1892 and is headquartered in Woonsocket, Rhode Island.

Tenant Trade Name                   CVS Caremark Corporation
Property Type                               Net Leased Drug Store
Net Income (2013)                                         $4.60 Billion
Total Revenue (2013)                                  $126.76 Billion
Credit Rating                                                       BBB+
Rating Agency                                      Standard & Poor’s
Stock Symbol                                                          CVS
Board                                                               NYSE

Number of Locations                                                7,660+
Headquarters                                          Woonsocket, RI
Website                                                   www.cvs.com/
Years in the Business                                          122 Years

                        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. References to square footage or
                        age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                        current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap

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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy                                                                                                                                              Pricing and Financial Analysis

Offering Summary
Purchase Price                                               $3,345,000
CAP Rate                                                            5.79%
GLA                                                            10,125 SF
Lot Size                                                      1.75 Acres
Price/SF (Suggested)                                       $330.43 / SF
Year Built                                                          2000*

Vital Data
Current Rent                                                   $193,893
Reserves ($0.15 / Sq. Ft)                                      $1,518.75
Net Operating Income                                           $192,375
Lease Type                                                  Double-Net
Lease Term (Amended)                                             25 Years
Lease Commencement                                            7/24/2000
Lease Expiration                                              1/31/2026
Lease Term Remaining                                             11 Years
Increases                                                              Yes
Options                                      Four Five-Year Options

Annualized Operating Data   Annual Rent             Monthly Rent
Current Rent                $193,893.75                $16,157.81
Lease Years 16-20           $205,031.25                $17,085.94
Lease Years 21-25           $216,776.25                $18,064.69
1st Option                  $201,749.70                $16,812.48
2nd Option                  $207,866.25                $17,322.19
3rd Option                  $214,102.24                $17,841.85
4th Option                  $220,522.50                $18,376.88

                                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. References to square footage or
                                age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                                current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap

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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy                                                                                                                                                                                    Retail Aerial

               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. References to square footage or
               age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
               current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap

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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy                                                                                                                                                         Recent Sales Comparables

Property: 1605 Telegraph Rd, Wilmington, DE                                                                       Property: 1080 Falmouth Rd, Centerville, MA

 Close of Escrow:        2/28/2014                                                                                    Close of Escrow:                                2/26/2014

 Sale Price:             $6,995,000                                                                                   Sale Price:                                    $5,860,000

 CAP Rate:                   5.58%                                                                                    CAP Rate:                                             5.84%

 GLA:                     13,509 SF                                                                                   GLA:                                              9,750 SF

 Year Built:                   2012                                                                                   Year Built:                                             2004

Property: 16 Boston Rd, Chelmsford, MA                                                                            Property: 1980 East Big Beaver Rd, Troy, MI

 Close of Escrow:        1/31/2014                                                                                    Close of Escrow:                                6/19/2013

 Sale Price:             $4,346,000                                                                                   Sale Price:                                    $5,185,000

 CAP Rate:                   5.75%                                                                                    CAP Rate:                                             5.75%

 GLA:                     13,013 SF                                                                                   GLA:                                            12,900 SF

 Year Built:                   2012                                                                                   Year Built:                                             2008

                            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. References to square footage or
                            age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                            current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2014 Marcus & Millichap

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CVS Pharmacy - Poughkeepsie, NY - 722 Dutches Turnpike Poughkeepsie, NY 12603 Offering Memorandum
CVS Pharmacy                                                                                                                                                         Recent Sales Comparables

Property: 599 Bell Tavern Boulevard, Downington, PA                                                               Property: 800 Main Avenue, De Pere, WI

  Close of Escrow:         2/7/2014                                                                                   Close of Escrow:                              12/27/2013

  Sale Price:            $7,322,321                                                                                   Sale Price:                                    $4,545,000

  CAP Rate:                  5.60%                                                                                    CAP Rate:                                             5.60%

  GLA:                    13,160 SF                                                                                   GLA:                                            13,222 SF

  Year Built:                  2012                                                                                   Year Built:                                             2012

Recent Sales Map:                                                                                                   Average CAP Rate: 5.69%

                            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. References to square footage or
                            age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                            current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2014 Marcus & Millichap

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CVS Pharmacy                                                                                                                                                                                                    Area Overview

                                 About Poughkeepsie
                                 the City of Poughkeepsie, is a city in the state of New York,
                                 United States, which serves as the county seat of Dutchess
                                 County. Poughkeepsie is located in the Hudson Valley
                                 midway between New York City and Albany. The name
                                 derives from a word in the Wappinger language, roughly
                                 U-puku-ipi-sing, meaning “the reed-covered lodge by the
                                 little-water place,” referring to a spring or stream feeding
                                 into the Hudson River south of the present downtown
                                 area.

Poughkeepsie is known as “The Queen City of the Hudson.” Poughkeepsie is the principal
city of the Poughkeepsie–Newburgh–Middletown metropolitan area, which includes all of
Dutchess and Orange counties. It was originally settled in the 17th century by the Dutch
and became New York’s second capital shortly after the American Revolution. It was char-
tered as a city in 1854. Major bridges in the city include the Poughkeepsie Bridge, a former
railroad bridge now serving as a public walkway, which opened on October 3, 2009, and
the Mid-Hudson Bridge, a major thoroughfare built in 1930 that carries U.S. Route 44 over
the Hudson.
                                                                                                                            Economy
                                                                                                                            IBM has a large campus in Town of Poughkeepsie, once referred to as IBM’s “Main Plant,”
                                                                                                                            although much of the workforce has been moved elsewhere in the company. The site once
                                                                                                                            built the IBM 700/7000 series of computers as well as the IBM 7030 Stretch computer
                                                                                                                            and later IBM mainframes. The RS/6000 SP2 family of computers, which came to fame
                                                                                                                            after one of them won a chess match against world chess master Garry Kasparov, were also
                                                                                                                            manufactured by IBM Poughkeepsie. In October 2008, IBM’s Poughkeepsie facility was
                                                                                                                            named “Assembly Plant of the Year 2008” by the editors of Assembly Magazine. Poughkeep-
                                                                                                                            sie remains IBM’s primary design and manufacturing center for its newest mainframes and
                                                                                                                            high-end Power Architecture servers, and it is also one of IBM’s major software development
                                                                                                                            centers for z/OS and for other products.

                                                                                                                            Until 1972, Poughkeepsie was home to the Smith Brothers cough drop factory. The Smith
                                                                                                                            Brothers’ grave site is in Poughkeepsie Rural Cemetery.

                                                                                                                            The Poughkeepsie Journal is the third-oldest active newspaper in the United States.

                                        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. References to square footage or
                                        age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                                        current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap

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CVS Pharmacy                                                                                                                                                                            Demographic Report

Population                                    1-Mile                5-Miles                10-Miles                  Population                                                             1-Mile                5-Miles               10-Miles
2000 Population                                   7,862                54,481                   94,167               $0 - $14,999                                                               9.4%                  15.8%                   11.8%
2010 Population                                   5,372                57,971                   99,579               $15,000 - $24,999                                                          9.3%                  10.1%                     8.4%
2013 Population                                   5,359                57,894                   99,667               $25,000 - $34,999                                                          8.4%                    9.6%                    9.0%
2018 Population                                   5,618                59,437                 101,478                $35,000 - $49,999                                                        11.2%                   11.4%                   11.1%
Household                                     1-Mile                5-Miles                10-Miles                  $50,000 - $74,999                                                        22.9%                   16.4%                    16.7%
2000 Households                                   2,027                20,769                   34,118               $75,000 - $99,999                                                        23.2%                   15.9%                   16.5%
2010 Households                                   2,213                21,839                   35,821               $100,000 - $124,999                                                        7.6%                    8.5%                  10.4%
2013 Households                                   2,202                21,802                   35,850               $125,000 - $149,999                                                        2.9%                    5.2%                    6.6%
2018 Households                                   2,291                22,511                   36,804               $150,000 - $199,999                                                        3.4%                    4.6%                    6.1%
2012 Average Household Size                         2.37                   2.46                     2.52             $200,000 - $249,999                                                        0.8%                    1.2%                    1.5%
2012 Daytime Population                           4,846                31,708                   49,710               $250,000 +                                                                 1.2%                    1.4%                    1.9%
2000 Median Housing Value                  $126,226                $116,312                 $140,807                 2012 Median Household Income                                          $62,398                 $54,161                  $63,736
2000 Owner Occupied Housing Units             51.41%                  45.91%                   56.25%                2012 Per Capita Income                                                $34,375                 $27,534                  $29,611
2000 Renter Occupied Housing Units            53.02%                  47.39%                   38.36%                2012 Average Household Income                                         $70,975                 $69,809                  $79,489
2000 Vacant                                     5.20%                   6.68%                    5.34%
2013 Owner Occupied Housing Units             46.53%                  49.32%                   59.16%
2013 Renter Occupied Housing Units            53.47%                  50.68%                   40.84%
2013 Vacant                                     6.55%                   9.00%                    7.81%
2018 Owner Occupied Housing Units             45.53%                  49.39%                   59.21%
2018 Renter Occupied Housing Units            54.47%                  50.61%                   40.79%
2018 Vacant                                     6.50%                  9.31%                    8.16%

                               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. References to square footage or
                               age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                               current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2014 Marcus & Millichap

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CVS Pharmacy                                                                                                                                                                             Demographic Report

Population:                                                                                                          Race & Ethnicity:
In 2013, the population in your selected geography was 99,667. The popu-                                             The current year racial makeup of your selected area is as follows: 69.87%
lation has changed by 5.84% since 2000. It is estimated that the population                                          White, 17.17% African American, 0.45% Native American and 4.32%
in your area will be 101,478 five years from now, which represents a change                                          Asian/Pacific Islander. Compare these to U.S. averages which are: 72.20%
of 1.81% from the current year. The current population is 48.2% male and                                             White, 12.65% African American, 0.96% Native American and 5.01%
51.7% female. The median age of the population in your area is 35.8, com-                                            Asian/Pacific Islander.
pare this to the U.S. average which is 37. The population density in your area
is 1,261.85 people per square mile.                                                                                  People of Hispanic origin are counted independently of race. People of His-
                                                                                                                     panic origin make up 12.78% of the current year population in your selected
Households:                                                                                                          area. Compare this to the U.S. average of 16.55%.
There are currently 35,850 households in your selected geography. The num-
ber of households has changed by 5.07% since 2000. It is estimated that the                                          Housing:
number of households in your area will be 36,804 five years from now, which                                          The median housing value in your area was $140,807 in 2000, compare
represents a change of 2.66% from the current year. The average household                                            this to the U.S. average of $110,781 for the same year. In 2000, there were
size in your area is 2.52 persons.                                                                                   20,276 owner occupied housing units in your area and there were 13,829
                                                                                                                     renter occupied housing units in your area. The median rent at the time was
Income:                                                                                                              $610.
In 2013, the median household income for your selected geography is
$63,736, compare this to the U.S. average which is currently $53,535.                                                Employment:
The median household income for your area has changed by 33.84% since                                                In 2013, there are 49,710 employees in your selected area, this is also known
2000. It is estimated that the median household income in your area will be                                          as the daytime population. The 2000 Census revealed that 63.4% of employ-
$74,209 five years from now, which represents a change of 16.43% from the                                            ees are employed in white-collar occupations in this geography, and 36.5%
current year.                                                                                                        are employed in blue-collar occupations. In 2013, unemployment in this area
                                                                                                                     is 7.20%. In 2000, the median time traveled to work was 18.8 minutes.
The current year per capita income in your area is $29,611, compare this
to the U.S. average, which is $28,888. The current year average household
income in your area is $79,489, compare this to the U.S. average which is
$75,373.

                                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. References to square footage or
                                age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the
                                current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2014 Marcus & Millichap

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presented by    Mike James
Presented by:
                Associate Vice President
                Investments
                p: 818.212.2755
                f: 818.212.2710
                mike.james@marcusmillichap.com
                License: CA 01869890

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