Mattress Firm Montgomery, AL

offering memorandum.
Mattress Firm
Montgomery, AL
80,660 AA
/ AL-2
71
DT
Tayl
or R
d
41,870 AAD
T
®
36,550 AADT
tChase Loop
Eas
670
46,
The Shoppes at EastChase
DT
AA
tCh
Eas
Berry
hill Rd
y
Pkw
ase
The Plaza at EastChase
File Photo
$2,387,000
7.75% CAP Rate
12-Year Net Lease
••New
Increases Every 5 Years
••10%
••2012 Construction
to The Shoppes at Eastchase
••Pad
Proximity to Auburn University
••Close
Montgomery
••Adjacent to Interstate 85
This property is listed in conjunction with Alabama-licensed real estate broker Thomas E. Newton.
www.maffiateam.com
Confidentiality & Disclosure
Cornish & Carey Commercial Newmark Knight Frank (“Broker”) has been retained on an exclusive basis to market the property
described herein (“Property”). Broker has been authorized by the Seller of the Property (“Seller”) to prepare and distribute the enclosed information (“Material”) for the purpose of soliciting offers to purchase from interested parties. More detailed financial, title
and tenant lease information may be made available upon request following the mutual execution of a letter of intent or contract to
purchase between the Seller and a prospective purchaser. You are invited to review this opportunity and make an offer to purchase
based upon your analysis. If your offer results in the Seller choosing to open negotiations with you, you will be asked to provide financial references. The eventual purchaser will be chosen based upon an assessment of price, terms, ability to close the transaction and
such other matters as the Seller deems appropriate.
The Material is intended solely for the purpose of soliciting expressions of interest from qualified investors for the acquisition of
the Property. The Material is not to be copied and/or used for any other purpose or made available to any other person without the
express written consent of Broker or Seller. The Material does not purport to be all-inclusive or to contain all of the information that
a prospective buyer may require. The information contained in the Material has been obtained from the Seller and other sources and
has not been verified by the Seller or its affiliates. The pro forma is delivered only as an accommodation and neither the Seller, Broker, nor any of their respective affiliates, agents, representatives, employees, parents, subsidiaries, members, managers, partners,
shareholders, directors, or officers, makes any representation or warranty regarding such pro forma. Purchaser must make its own
investigation of the Property and any existing or available financing, and must independently confirm the accuracy of the projections
contained in the pro forma.
Seller reserves the right, for any reason, to withdraw the Property from the market. Seller has no obligation, express or implied, to
accept any offer. Further, Seller has no obligation to sell the Property unless and until the Seller executes and delivers a signed agreement of purchase and sale on terms acceptable to the Seller, in its sole discretion. By submitting an offer, a purchaser will be deemed
to have acknowledged the foregoing and agreed to release Seller and Broker from any liability with respect thereto.
Property walk-throughs are to be conducted by appointment only. Contact Broker for additional information.
Michael Maffia
Senior Managing Director
415.445.5144
[email protected]
Lic #01340853
Putnam Daily
VP/Transaction Manager
415.445.5107
[email protected]
Lic #01750064
901 Mariners Island Boulevard, Suite 120 • San Mateo, CA 94404 • Tel 415.373.4060 • Fax 415.373.4060 • www.maffiateam.com
Table of Contents
•Property Information........................................................................................................................1
•Tenant Information.......................................................................................................................... 2
•About the Area................................................................................................................................ 3
•Site Plan......................................................................................................................................... 4
•Aerials............................................................................................................................................ 5
•Location Maps................................................................................................................................ 7
•Demographics.............................................................................................................................. 10
Property Information
Location
The property is located on a pad to The Shoppes at EastChase on EastChase Loop adjacent to Boardwalk Burgers in
Montgomery, Alabama.
Lot Size
Approximately 1.32 acres, or 57,500 square feet.
Improvements
An approximately 5,000 square foot retail building was recently completed for Mattress Firm with turnover to the tenant
occurring on August 20, 2012. There is ample parking on site, with approximately 37 parking spaces.
Lease
Leased to Mattress Firm, Inc., and guaranteed by Mattress Holding Corp., for approximately 12 years from December 18,
2012, to August 31, 2024, at an initial annual rent of $185,000. There are two five-year options to renew the lease. The
rent increases by 10% every five years throughout the initial term and as outlined in the option periods. The lease is net,
with the tenant responsible for taxes, insurance, and some maintenance. The landlord is responsible for maintaining and
replacing the roof and structure.
Net Annual
Income
Years
1-5
6-10
11-12
13-15 (Option 1)
16-17 (Option 1)
18-22 (Option 2)
Price
$2,387,000 (7.75% Return)
Financing
The property will be delivered free and clear of permanent financing.
Annual Rent
$185,000
$203,500
$223,850
$223,850
$232,800
$256,100
Return
7.75%
8.53%
9.38%
9.38%
9.75%
10.73%
1
Tenant Information
Since its founding in 1986, Mattress Firm has grown to become one of the largest and most successful specialty bedding
companies in the world. The company currently operates and franchises 729 locations (as of January 31, 2012) with plans
to continue to grow. In the last three years, Mattress Firm has made six acquisitions, moved into five new markets, and
opened more than 200 stores, gaining market share during the economic downturn.
The tenant’s parent company, Mattress Firm Holding Corporation, had its initial public offering on November 23, 2011,
and is now traded on the Nasdaq stock exchange under the ticker symbol “MFRM.” The offering generated net proceeds
of approximately $110 million, after deducting the underwriting discount and estimated offering-related costs. The
company used the majority of the net proceeds to repay portions of its outstanding debt. After other uses of net proceeds
in the offering, approximately $15 million remained available to the company for working capital and general corporate
purposes. Furthermore, in connection with the offering, portions of the company’s outstanding debt were converted into
shares of common stock at the $19 per share offering price. As a result of the IPO, the Company reduced its outstanding
debt, and related interest accrued thereon, in the aggregate amount of $188.0 million. The IPO was very well received;
shares were initially offered at $19 per share and are currently trading at $42.47 per share (as of April 12, 2012).
For the fiscal year ended January 31, 2012, Mattress Firm Holding Corporation reported revenue of $703.9 million,
representing a 42.5% increase over the previous fiscal year. Net income was $34.4 million and total stockholders’ equity
was $224.3 million.
On April 10, 2012, Mattress Firm announced the signing of a purchase agreement for all of the equity interests of Mattress
Giant for approximately $47 million in cash. The company expects the transaction to be completed during its second
fiscal quarter ending July 31, 2012. In a separate transaction, the company acquired 55 stores from Mattress Giant in the
Atlanta, St. Louis, and Minneapolis markets in November 2011, and has substantially completed the integration of those
stores. Upon closing of the pending acquisition, the company expects to operate approximately 180 additional Mattress
Giant stores in Texas and Florida, which represent the two largest states in which Mattress Firm currently operates. The
acquisition is expected to advance the company’s market-level profitability model that is centered on the benefits of
increasing its “relative market share” in a given market.
2
About the Area
Site
Information
The property is easily accessible from Interstate 85 at Exit 9 (Taylor Road / Alabama Route 271 South) approximately eight
miles east of downtown Montgomery. The 2010 traffic counts on Interstate 85 east and west of Exit 9 were 46,670 AADT
and 80,660 AADT, respectively. The 2010 traffic count on Taylor Road / Alabama Route 271 south of Interstate 85 was
41,870 AADT (ALDOT).
Mattress Firm is located on a pad to The Shoppes at EastChase, a regional outdoor fashion center plaza. Adjacent to The
Shoppes is The Plaza at EastChase, a power center. The Shoppes and Plaza opened in 2002 and currently feature more
than 730,000 square feet of retail space anchored by Dillard’s, Target, Kohl’s, Ross, Earth Fare, Books-A-Million, World
Market, and PetSmart. This burgeoning outdoor shopping center is Montgomery’s most desirable retail location. Tenants
in the immediate vicinity of Mattress Firm include Red Robin, Ruby Tuesday, Arby’s, Wendy’s, Chick-fil-A, Sonic, LifeWay,
and Chili’s.
Auburn University Montgomery or Auburn Montgomery, the metropolitan branch of one of the largest universities in the
South, is located in the northwest quadrant of Interstate 85 and Alabama Route 271. The university’s enrollment includes
approximately 5,500 undergraduate and graduate students, in addition to more than 10,000 continuing education
students. Campus housing is limited, with 85% to 90% of students living off campus.
General
Overview
Montgomery is the second-largest city in the state with a population of 205,764 according to the 2010 U. S. Census. The
city is located southeast of the center of the state. Montgomery is nationally known for its many historic and cultural landmarks and events such as the Alabama State Capitol, Dexter Avenue King Memorial Church, First White House of the Confederacy, Montgomery Bus Boycott, Hank Williams Memorial, Alabama War Memorial and Alabama Shakespeare Theater.
The city attracted the first electric street car system and Wright Brothers (Orville & Wilbur) first school for powered flight.
Today, Montgomery is the home of both Maxwell and Gunter Air Force Bases. Montgomery’s fifteen colleges, universities,
and military schools provide world-class educational opportunities.
In 2004, Montgomery a large economic development contract when Hyundai Motors Manufacturing Alabama built its
$1.4 billion automotive plant. The Montgomery location became Hyundai’s first assembly and manufacturing plant in the
United States. It employs over 3,000 team members and currently produces the next generation Sonata sedan and Santa
Fe sport utility vehicle. Montgomery has long had large metal fabrication and lumber production sectors. Due to its location along the Alabama River and extensive rail connections, Montgomery has and continues to be a regional distribution
hub for a wide range of industries. Today, the city’s Gross Metropolitan Product is $12.15 billion, representing 8.7% of the
Gross State Product of Alabama. As of January 2011, Montgomery’s largest employers were Maxwell-Gunter Air Force Base
(12,280 employees), the State of Alabama (9,500), Montgomery Public Schools (4,524), Baptist Health (4,300), Hyundai
Motor Manufacturing Alabama (2,700), Alfa Insurance (2,568), the City of Montgomery (2,500), Jackson Hospital & Clinic
(1,300), Rheem Water Heaters (1,147), and Regions (977).
3
Eas
tCh
ase
Loo
p
Taylor Road / AL-271
Site Plan
am
R
n
o It
p
85
O
5,000 SF
4
36,550 AAD
T
Aerial | North View
DT
46,670 AA
®
EastCha
se
Lo
80,660 AADT
op
se Pkwy
Cha
t
s
Ea
Tay
lor
R
d/
AL271
ill R
d
ryh
Ber
41,8
70 A
ADT
The Shoppes at EastChase
Tayl
or R
d
/ AL-2
71
41,870 AAD
T
DT
80,660 AA
Aerial | West View
®
36,550 AADT
tChase Loop
Eas
670
46,
The Shoppes at EastChase
DT
AA
The Plaza at EastChase
y
Pkw
ase
tCh
Eas
Berry
hill Rd
Location Map
Site
Location Map
Site
Location Map
Site
Market Profile
Demographics
Eastchase Loop
Montgomery, AL
Mattress Firm Montgomery AL
36117 (MONTGOMERY), AL
Rings: 1, 3, 5 mile radii
Latitude: 32.35932
Longitude: -86.17012
1 mile
3 miles
5 miles
2000 Total Population
3,750
34,613
76,210
2000 Group Quarters
2010 Total Population
280
4,966
533
40,316
2,599
84,836
Population Summary
2015 Total Population
2010-2015 Annual Rate
Household Summary
2000 Households
5,407
42,388
87,909
1.72%
1.01%
0.71%
1,308
14,788
31,159
2000 Average Household Size
2010 Households
2.65
1,814
2.30
17,542
2.36
35,565
2010 Average Household Size
2015 Households
2.61
1,991
2.27
18,518
2.31
37,073
2015 Average Household Size
2010-2015 Annual Rate
2.60
1.88%
2.26
1.09%
2.30
0.83%
1,021
9,509
20,468
3.05
1,371
3.04
1,486
3.05
1.62%
2.89
11,165
2.85
11,733
2.84
1.00%
2.94
22,863
2.89
23,643
2.89
0.67%
2000 Housing Units
Owner Occupied Housing Units
Renter Occupied Housing Units
Vacant Housing Units
1,359
86.6%
9.7%
3.7%
15,850
59.2%
34.1%
6.8%
33,318
62.3%
31.2%
6.5%
2010 Housing Units
Owner Occupied Housing Units
Renter Occupied Housing Units
Vacant Housing Units
1,895
84.2%
11.5%
4.3%
19,063
61.1%
31.0%
8.0%
38,447
62.1%
30.4%
7.5%
2015 Housing Units
Owner Occupied Housing Units
Renter Occupied Housing Units
Vacant Housing Units
2,086
83.7%
11.7%
4.6%
20,237
61.6%
29.9%
8.5%
40,298
62.2%
29.8%
8.0%
$76,198
$79,750
$78,717
$54,385
$63,161
$63,489
$49,935
$57,216
$58,896
$185,402
$227,606
$257,901
$142,779
$168,457
$189,446
$115,419
$143,215
$162,450
$38,387
$42,069
$42,166
$30,159
$35,593
$36,249
$26,158
$30,572
$31,307
37.4
39.9
40.6
35.1
37.4
37.7
34.9
37.0
37.3
2000 Families
2000 Average Family Size
2010 Families
2010 Average Family Size
2015 Families
2015 Average Family Size
2010-2015 Annual Rate
Housing Unit Summary
Median Household Income
2000
2010
2015
Median Home Value
2000
2010
2015
Per Capita Income
2000
2010
2015
Median Age
2000
2010
2015
Data Note: Household population includes persons not residing in group quarters. Average Household Size is the household population divided by total households.
Persons in families include the householder and persons related to the householder by birth, marriage, or adoption. Per Capita Income represents the income received by
all persons aged 15 years and over divided by the total population. Detail may not sum to totals due to rounding.
Source: U.S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015.
10
Market Profile
Demographics
Eastchase Loop
Montgomery, AL
Mattress Firm Montgomery AL
36117 (MONTGOMERY), AL
Rings: 1, 3, 5 mile radii
Latitude: 32.35932
Longitude: -86.17012
1 mile
3 miles
5 miles
Household Income Base
<$15,000
1,334
4.7%
14,652
8.9%
31,065
10.0%
$15,000 - $24,999
$25,000 - $34,999
2.0%
7.6%
8.3%
11.6%
10.3%
12.6%
$35,000 - $49,999
$50,000 - $74,999
12.1%
22.6%
16.9%
20.8%
17.2%
22.1%
$75,000 - $99,999
15.1%
13.4%
12.1%
$100,000 - $149,999
$150,000 - $199,999
19.4%
8.6%
12.8%
3.8%
10.5%
2.7%
2000 Households by Income
$200,000+
7.9%
3.5%
2.5%
$103,626
$70,662
$63,210
1,813
17,540
35,565
3.4%
1.2%
6.5%
4.7%
7.7%
6.2%
$25,000 - $34,999
$35,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000+
Average Household Income
4.7%
12.5%
23.9%
17.3%
19.5%
8.1%
9.3%
$108,914
9.1%
17.5%
23.6%
13.1%
16.2%
4.7%
4.7%
$81,601
9.8%
20.0%
24.5%
12.2%
13.1%
3.3%
3.3%
$71,943
2015 Households by Income
Household Income Base
<$15,000
$15,000 - $24,999
$25,000 - $34,999
$35,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000+
Average Household Income
1,991
3.1%
1.1%
4.7%
10.5%
27.6%
15.5%
21.2%
7.5%
8.8%
$107,560
18,517
6.0%
4.1%
8.9%
14.6%
28.0%
12.1%
16.9%
4.8%
4.6%
$82,742
37,073
7.3%
5.5%
9.8%
16.7%
29.2%
11.4%
13.6%
3.3%
3.2%
$73,161
1,161
0.3%
7.2%
28.5%
21.1%
22.5%
14.4%
4.2%
1.7%
9,381
0.8%
23.4%
29.8%
21.3%
14.3%
7.4%
2.2%
0.9%
20,767
6.1%
33.1%
29.3%
14.8%
9.9%
5.0%
1.4%
0.4%
$237,816
$182,399
$147,393
134
88.8%
11.2%
5,362
97.8%
2.2%
10,358
97.9%
2.1%
$689
$752
$534
$564
$523
$549
Average Household Income
2010 Households by Income
Household Income Base
<$15,000
$15,000 - $24,999
2000 Owner Occupied Housing Units by Value
Total
<$50,000
$50,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $299,999
$300,000 - $499,999
$500,000 - $999,999
$1,000,000 +
Average Home Value
2000 Specified Renter Occupied Housing Units by Contract Rent
Total
With Cash Rent
No Cash Rent
Median Rent
Average Rent
Data Note: Income represents the preceding year, expressed in current dollars. Household income includes wage and salary earnings, interest dividends, net rents,
pensions, SSI and welfare payments, child support, and alimony. Specified Renter Occupied Housing Units exclude houses on 10+ acres. Average Rent excludes units
paying no cash.
Source: U.S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015.
11
Market Profile
Demographics
Eastchase Loop
Montgomery, AL
Mattress Firm Montgomery AL
36117 (MONTGOMERY), AL
Rings: 1, 3, 5 mile radii
Latitude: 32.35932
Longitude: -86.17012
1 mile
3 miles
5 miles
3,752
34,615
76,212
5.9%
6.2%
6.7%
6.3%
6.7%
6.4%
10 - 14
15 - 24
6.7%
14.6%
6.2%
14.1%
6.6%
14.5%
25 - 34
35 - 44
12.6%
17.2%
16.6%
17.1%
15.9%
16.4%
45 - 54
17.6%
15.5%
14.5%
55 - 64
65 - 74
10.0%
5.4%
8.8%
5.0%
8.7%
5.7%
75 - 84
85 +
3.0%
0.9%
2.8%
0.9%
3.4%
1.0%
77.1%
77.2%
76.1%
4,967
40,316
84,833
6.1%
6.7%
7.3%
12.6%
9.0%
16.4%
16.6%
13.5%
6.9%
3.6%
1.3%
76.5%
6.5%
6.4%
6.5%
13.0%
13.5%
15.5%
15.3%
12.1%
6.4%
3.4%
1.3%
77.0%
6.5%
6.4%
6.4%
13.4%
14.2%
14.5%
14.6%
11.8%
6.6%
4.0%
1.6%
76.9%
5,405
6.0%
6.8%
7.3%
13.2%
9.2%
15.4%
15.9%
12.5%
8.5%
3.8%
1.4%
76.0%
42,385
6.5%
6.5%
6.7%
13.0%
13.6%
15.1%
14.3%
11.4%
8.0%
3.5%
1.3%
76.6%
87,907
6.5%
6.4%
6.5%
13.2%
14.2%
14.4%
13.4%
11.7%
8.1%
4.0%
1.6%
76.8%
46.0%
54.0%
47.8%
52.2%
48.2%
51.8%
46.7%
47.9%
48.4%
53.3%
52.1%
51.6%
47.1%
48.1%
48.6%
52.9%
51.9%
51.4%
2000 Population by Age
Total
0-4
5-9
18 +
2010 Population by Age
Total
0-4
5-9
10 - 14
15 - 24
25 - 34
35 - 44
45 - 54
55 - 64
65 - 74
75 - 84
85 +
18 +
2015 Population by Age
Total
0-4
5-9
10 - 14
15 - 24
25 - 34
35 - 44
45 - 54
55 - 64
65 - 74
75 - 84
85 +
18 +
2000 Population by Sex
Males
Females
2010 Population by Sex
Males
Females
2015 Population by Sex
Males
Females
12
Source: U.S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015.
Market Profile
Demographics
Eastchase Loop
Montgomery, AL
Mattress Firm Montgomery AL
36117 (MONTGOMERY), AL
Rings: 1, 3, 5 mile radii
Latitude: 32.35932
Longitude: -86.17012
1 mile
3 miles
5 miles
2000 Population by Race/Ethnicity
Total
3,751
34,613
76,210
84.1%
12.5%
74.2%
21.3%
69.2%
27.0%
American Indian Alone
Asian or Pacific Islander Alone
0.2%
2.5%
0.2%
2.6%
0.3%
1.9%
Some Other Race Alone
Two or More Races
0.2%
0.5%
0.6%
1.1%
0.5%
1.1%
Hispanic Origin
0.9%
1.8%
1.7%
Diversity Index
29.0
42.5
46.6
White Alone
Black Alone
2010 Population by Race/Ethnicity
Total
4,966
40,316
84,837
75.4%
19.5%
64.8%
29.0%
59.7%
35.0%
0.2%
3.6%
0.2%
3.3%
0.3%
2.5%
0.4%
0.9%
2.0%
41.6
1.0%
1.6%
3.4%
52.8
0.9%
1.6%
3.1%
54.9
2015 Population by Race/Ethnicity
Total
White Alone
Black Alone
American Indian Alone
Asian or Pacific Islander Alone
Some Other Race Alone
Two or More Races
Hispanic Origin
Diversity Index
5,406
70.5%
23.4%
0.2%
4.2%
0.5%
1.1%
2.7%
47.6
42,388
60.3%
32.5%
0.2%
3.8%
1.2%
1.9%
4.3%
56.7
87,909
55.4%
38.5%
0.3%
2.9%
1.0%
1.8%
3.9%
57.8
2000 Population 3+ by School Enrollment
Total
Enrolled in Nursery/Preschool
Enrolled in Kindergarten
Enrolled in Grade 1-8
Enrolled in Grade 9-12
Enrolled in College
Enrolled in Grad/Prof School
Not Enrolled in School
3,637
2.8%
1.8%
10.4%
5.1%
9.9%
2.9%
67.1%
32,823
2.4%
1.3%
10.6%
5.1%
7.7%
3.2%
69.7%
72,901
2.2%
1.3%
11.5%
5.6%
7.1%
2.7%
69.7%
3,345
0.8%
1.4%
13.2%
17.4%
5.3%
38.8%
23.1%
27,200
1.0%
3.2%
16.3%
21.2%
6.2%
31.3%
20.9%
57,015
1.6%
4.6%
19.1%
23.1%
6.7%
27.1%
17.9%
White Alone
Black Alone
American Indian Alone
Asian or Pacific Islander Alone
Some Other Race Alone
Two or More Races
Hispanic Origin
Diversity Index
2010 Population 25+ by Educational Attainment
Total
Less Than 9th Grade
9th to 12th Grade, No Diploma
High School Graduate
Some College, No Degree
Associate Degree
Bachelor's Degree
Graduate/Professional Degree
Data Note: Persons of Hispanic Origin may be of any race. The Diversity Index measures the probability that two people from the same area will be from different
race/ethnic groups.
Source: U.S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015.
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