Walgreens offering memorandum - 3101 e. 10th Street greenville, north Carolina 27858 - Ackerman & Co.
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offering memorandum
Walgreens
3101 E. 10th Street
Greenville, North Carolina 27858
CONFIDENTIAL INFORMATION
INFORMATION NOT WARRANTED
This Offering Memorandum and any subsequent manner detrimental to the interest of Owner. Photocopy
evaluation material you may be provided (collectively or other duplication is strictly prohibited.
known as the “Offering Memorandum”) is intended
solely for your limited use in considering whether THE OFFERING MEMORANDUM SHALL NOT BE
to pursue negotiations to acquire Walgreens (the DEEMED TO REPRESENT THAT STATE OF AFFAIRS
“Property”) located in Greenville, North Carolina. The OF THE PROPERTY OR CONSTITUTE AN INDICATION
Property is being marketed for sale by Ackerman & Co. THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS
(“Broker”). OR AFFAIRS OF THE PROPERTY SINCE THE DATE OF
PREPARATION OF THE OFFERING MEMORANDUM.
The Offering Memorandum contains brief, selected
information pertaining to the business and affairs of the The information provided in the Offering Memorandum
Property and has been prepared by Broker. It does not, has been gathered from sources that are deemed
however, purport to be all-inclusive or to contain all of reliable, but the Broker does not warrant or represent
the information that a prospective purchaser may desire. that the information is true or correct. Prospective
Broker makes no representation or warranty, express offerors are advised to verify information independently.
or implied, as to the accuracy or completeness of the The Offering Memorandum is not to be construed as an
Offering Memorandum or any of its contents, and no offer or as any part of a contract to sell the property.
legal liability is assumed to be implied with respect
thereto. Furthermore, the inclusion or exclusion in the Offering
Memorandum of information relating to asbestos or
By acknowledgment of your receipt of the Offering any other hazardous, toxic or dangerous chemical item,
Memorandum you agree that the Offering waste or substance (hereinafter collectively referred to
Memorandum and its contents are confidential, that as “Waste”) relating to the Property shall in no way be
you will hold and treat it in the strictest of confidence, construed as creating any warranties or representations,
that you will not directly or indirectly disclose, or permit expressed or implied by the Broker as to the existence
anyone else to disclose, the Offering Memorandum or nonexistence or nature of Waste in, under or on the
or its contents to any other person, firm, or entity Property, it may create significant legal and/or economic
(including, without limitation, any principal for whom obligations upon the Owner, lessee and/or other holders
you have been engaged), without prior written of interest in the Property or a part thereof and you are
authorization of Owner or Broker and that you will not hereby advised to obtain professional assistance such
use or permit to be used the Offering Memorandum as from a consultant, engineer and/or attorney prior to
or its contents to be copied or used in any fashion or taking an interest in the Property or a part thereof.
Walgreens Table Of Contents
01 EXECUTIVE SUMMARY 03 market Overview
Investment Summary Greenville, N.C. Market Overview
Location and Demographics Competitive Property Map
Property Photographs and Aerials Detailed Demographics
Property Overview
04 Financial Overview
02 TENANT Overview Financial Summary
Tenant Overview Cash Flow Projections
Site Plan Summary of Prospective Cash Flows
Contacts
JASON POWELL, CCIM ANDREW MURPHY SPENCER COAN BILL MITCHELL
Vice President, Investment Sales Senior Vice President, Investment Sales Financial Analyst Director
Ackerman & Co. Ackerman & Co. Ackerman & Co. iCAP Realty Advisors
770.913.3952 770.913.3950 678.993.2927 404.946.6919
jpowell@ackermanco.net amurphy@ackermanco.net scoan@ackermanco.net wmitchell@icaprealty.com
01
EXECUTIVE SUMMARY
Investment Summary
Location and Demographics
Property Photographs and Aerials
Property Overview
Walgreens
01 Executive Summary net leased walgreens 5
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 Mature Retail Submarket/Quality Demographics: The subject
renewal options. This institutional quality asset is located in an affluent Walgreens is located on the corner of E. 10th Street and Greenville
location in Greenville. The asset is fee simple, and is being offered with Boulevard in Greeneville, NC. This area is a very mature location with
attractive, assumable, non-recourse debt. 31,000 VPD and such retailers as McDonalds, Dunkin’ Donuts, Burger
King, Food Lion, Quiznos, and Jackson Hewitt. In addition, the population
Investment Highlights: 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
Stable Cash Flow: The asset will provide a long-term, steady cash flow estimated household income is roughly $55,000.
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.
INVESTMENT SUMMARY
Excellent Physical Quality: Recently constructed, this property will
require little, if any capital improvements over the term, and due to Square Footage: 14,560 SF
the absolute NNN reimbursement structure, the cost of any capital Acreage: 1.25 acres
improvements are borne by Walgreens. Occupancy: 100%
Offering Price: $5,741,935
Superior Credit Tenant: Walgreens came into existence in 1901 and
presently has 8,046 drugstores in the United States and Puerto Rico. In Debt Structure: Assumable, non-recourse
2010, Walgreens reported $67,400,000,000 in gross sales, which is 6.4% In-place NOI: $385,000
higher than calendar year 2009. Currently, Walgreens has a total of Leveraged Cash-on-Cash 7.75%
244,000 employees and Standard & Poor’s has rated Walgreens A.
01 Executive Summary net leased walgreens 6
LOCATION AND DEMOGRAPHICS
The subject Walgreens, located in Greenville, NC,
was built in 2005 and is in excellent physical Henderson
85
condition. The drug store fronts E. 10th Street and 95
Greenville Boulevard and has two points of ingress
/ egress on the site. The site offers ample parking Chapel Hill Raleigh
Plymouth
64
and good visibility off Third Street. In 2010, total Greenville
17
population estimate within 5 miles was 89,294 and
average household income within the 5 miles was 87
estimated to be $54,723. 40
70
Walgreens
3101 E. 10th Street
Greenville, North Carolina 27858
DEMOGRAPHIC SUMMARY
Elizabethtown
1 MILE 3 MILES 5 MILES
74
Population Estimate 2010 8,839 48,062 89,294
Wilmington
Total Households 4,191 19,506 36,811
Traffic counts
Average Household Income $38,489 $53,985 $54,723
31,000 vehicles per day on greenville Boulevard
28,000 vehicles per day on East 10th Street
Source: 2010 MPSI Systems Inc. d.b.a. DataMetrix®
01 Executive Summary net leased walgreens 7
PROPERTY PHOTOS
3101 E. 10th Street
Greenville, North Carolina 27858
01 Executive Summary net leased walgreens 8
PROPERTY AERIAL
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01 Executive Summary net leased walgreens 9
PROPERTY OVERVIEW
Address: 3101 E. 10th Street
Greenville, 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 Yes
Pharmacy
Health Center No
Store Hours
of Operation: Monday - Sunday, 8 AM - 10 PM
01 Executive Summary net leased walgreens 10
AREA MAP
Pa c
tolu
sH
wy
Pitt-Greenville
Airport
11
W 13
5t
h
St
E1
st S
264
W 5th St t
33 Walgreens
Stantons 3101 E. 10th Street
burg Greenville, North Carolina 27858
R d E 10th
903 St
East Carolina
13 University
W
ns St
Ar
lin
on
t g
Bl
S Eva
vd E
10
264
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Green
ville Blvd
t
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43
S Memoria
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Gree 11 t
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Blvd 43
SW
E Fire Tower Rd
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To
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Fi
E02
TENANT Overview
Tenant Overview
Site Plan
Walgreens02 Tenant Overview net leased walgreens 12
TENANT SUMMARY
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
SIZE the United States. Innovations such as store layout remodeling and in-store health centers have allowed Walgreens to
One-Story Building 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
SQUARE FOOTAGE 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
14,560
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
LEASE EXPIRATION
will allow Walgreens to continue their domination in the rapidly growing drugstore industry.
2030
Walgreen CO (NYSE: WAG)
S&P Rating: A
Headquarters: Deerfield, IL USA
Store Locations: 8,046
Year Founded: 1901
Employees: 244,000
2010 Revenue: $67.42 B
www.walgreens.com02 Tenant Overview net leased walgreens 13
SITE PLAN
VARD
LE BOULE
GREENVIL
One-story
masonry
14,560 S /steel
58 parkin F
g spaces03
MARKET Overview
Greenville, North Carolina
Competitive Property Survey
Detailed Demographics
Walgreens03 Market Overview net leased walgreens 15
GREENVILLE, NORTH CAROLINA
PITT COUNTY
historical GROWTH
In 2010 Greenville was listed as the 10th largest city in
the state of North Carolina. Greenville has established
180
160
168,148
itself as a regional hub for healthcare, education, and
140
sports. The city has consistently ranked as a top city
POPULATION GROWTH (in thousands)
133,719
120
nationally by highly-regarded publications in several
100
categories.
108,480
80
90,146
60
Strong Recognition
40
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 20
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 0
and 2010. In 2004, Greenville was named as a Sportstown USA by Sports Illustrated and 1980 1990 2000 2010
the National Parks and Recreation Association.
Steady Growth
Pitt County has shown consistent growth with ten-year growth increases exceeding 20% Since the 1980s, Pitt County
since to 1980. Greenville’s location allows easy access to the Carolina coast and nearby has grown from 90,146 residents
Research Triangle. The city’s balance of both manufacturing and non-manufacturing to more than 168,148 residents.
employment brings a wide array of young people to the area.03 Market Overview net leased walgreens 16 GREENVILLE, NORTH CAROLINA, CONT’D. major greenville area employers - manufacturing 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 - non-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
03 Market Overview net leased walgreens 17
COMPETITIVE PROPERTY MAP (3 MILES)
Pa c
tolu
sH
wy
Pitt-Greenville
Airport
11
W 13
5t
h
St
E1
st S
264
W 5th St t Rite Aid Pharmacy
3012 E. 10th St. 33
Stantons
burg
R d E 10th CVS Pharmacy
903 St 3116 E. 10th St.
East Carolina
13 University
W
ns St
Ar
lin
on
t g
Bl S Eva E
vd
10
Rite Aid Pharmacy 264
th S
Green
1401 Charles Blvd. ville Blvd
t
l Dr
43
Walgreens
S Memoria
Av 3101 E. 10th Street
e
264
on
S
ns Greenville, North Carolina 27858
ki
Ch
Dic
a
rle d
s
903 Roa 33
Bl wn
vd erto
Gree 11 tt
nville Po
Blvd 43
SW
E Fire Tower Rd
Rite Aid Pharmacy
Walgreens 2098 E. Fire Tower Rd. Walgreens
3- M
103 Greenville Blvd. SE 2105 E. Fire Tower Rd.
ILE
d
rR
RA
we
CVS Pharmacy
To
Us re
DI
Fi 1895 E. Fire Tower Rd.
E03 Market Overview net leased walgreens 18 DETAILED DEMOGRAPHICS 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
04
FINANCIAL Overview
Financial Summary
Cash Flow Projections
Summary of Prospective Cash Flows
Walgreens04 Financial Overview net leased walgreens 20
FINANCIAL SUMMARY
FINANCIAL OVERVIEW Lease details
Sales Price $5,741,935 Commencement Date 2/1/2005
Square Feet 14,560 End Date 1/31/2030
Price Per SF $394.36 Lease Term 25 Years
Leverage Cash-on-Cash 7.75% Term Remaining Approximately 18 Years
Must Assume Existing Annual Rent $385,000
Financing
Non-recourse Financing Rent Per Square Foot $26.44
Lease Type NNN
Options Ten (10) x Five (5) Year
BUILDING INFORMATION
3101 E. 10th Street
Address
Greenville, NC 27858
existing financial terms
Property Type Single-tenant Retail
Existing Financing Must be Assumed
Year Built 2005
Original Loan Amount $3,000,000
Parcel Size 1.3 Acres
Current Loan Amount
Type of Ownership Fee Simple $3,000,000
(As of 9/1/11)
Current Occupancy 100% 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-recourse04 Financial Overview net leased walgreens 21
CASH FLOW PROJECTIONS
Fiscal Year Ending -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
November 30
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
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%
Cash-on-Cash Return
Leveraged Cash-on-Cash
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%
Return (Cumm Average)
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% General Property Notes
Balance at Maturity (02/01/35) $3,000,000
[1] No vacancy loss has been assumed for this analysis.
Fixed Interest Rate 5.75%
[2] The weighted average downtime has been rounded to the nearest whole month.
Annual Debt Service Payment $172,500
Optional Prepayment Date 2/1/2020 *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
Extended Int. Rate (2020-2035) 7.75% current rate can be attained, and the terms will continue as they are today throughought the remainder of the analysis.04 Financial Overview net leased walgreens 22
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
Notes
[*] 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%For more information, please contact: JASON POWELL, CCIM | Vice President, Investment Sales ANDREW MURPHY | Senior Vice President, Investment Sales 770.913.3952 jpowell@ackermanco.net 770.913.3950 amurphy@ackermanco.net © 2011 Ackerman & Co. All rights reserved.
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