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CURRENT INVESTMENT PORTFOLIO CASE STUDIES
BR INVESTMENT S A N AFFILIATE OF
1224 Prospect Street, Suite 150
La Jolla, CA 92037
(858) 729 - 18 33 Phone
www.dbigroup.com
WIENERSCHNITZEL ARTESIA- LONG BEACH
3012 East Artesia | Long Beach, CA 90805
Asset/Property
Purchase Price
Annual Net Operating Income
Acquisition Capitalization
Rate
Annual Return to Investors
Primary Lease Expiration Date
Options
Expenses
.28 acre lot subject to a 10 year ground lease with
option to extend
$ 414,881.00
$ 49,930 plus 2% per year annual increase
11.57% - Unleveraged
10.75% - Unleveraged
December 31, 2020
One (1), Five (5) year
Tenant pays CAM, real estate taxes, insurance,
utilities, HVAC, roof
ACQUISITION CASE STUDY
The property was held in a partnership where one party passed and both estates
chose to liquidate. The lease had expired with the base rent at $36,000 per annum.
BR Long Beach LLC negotiated a sales price based on the latest annual Net
Operating Income (NOI). During the due diligence period, BR Long Beach LLC
structured a 10-year renewal at $48,000 per annum plus annual increases based
on an analysis of the gross the sales revenue over the past 5-years. The LLC
acquired the site within 45-days from the execution of the Purchase Agreement
for cash. East Artesia Boulevard is a main thoroughfare and the 91 Freeway exit is
less than ¼ mile from the site. 2012 sales increased by 6.7% over 2011.
John Galardi opened his first hot dog stand, called Der Wienerschnitzel, in 1961.
Galardi Group operates and franchises approximately 350 Wienerschnitzel retail
locations, most co-branded with Tasty Freeze.
2
BURGER KING – PALM SPRINGS
432 S. Indian Canyon Drive | Palm Springs, CA
Asset/Property
Building is 4,196 SF freestanding building with drivethrough lane, the site is 47,598 SF (1.2 acres)
Purchase Price
Term Ground Lease
Ground Lease Payment
Annual Net Operating
Income
Acquisition Capitalization
Rate
Annual Return to Investors
Primary Lease Expiration
Date
Options
Expenses
$ 435,810.00
65-years; Expires 06/16/2041
$16,480 – no increases
$44,600
10.24% - Unleveraged
9.23% - Unleveraged
December 31, 2016
One (1), Twenty (20) year
Tenant pays CAM, real estate taxes, insurance,
utilities, HVAC, roof
ACQUISITION CASE STUDY
The property was the last property held in a charitable remainder trust which the
estate ordered Bank of America (Trustee) to liquidate. This fast-food site has the
only drive-thru in central Palm Springs and is situated on an Indian ground lease
that expires in 2041. It was listed for sale at $685,000. The base rent was $64,820
per annum, which is “below market”. The ground lease payment was $16,480 per
annum, which resulted in a net operating Income (NOI) of $43,600. Burger King
has approved a remodel of the facility for 2015. The option to extend is for 20
years, exercisable in 2016. The property was acquired for $103.86/SF; which is
approximately 50% of building replacement cost. The property was initially
offered at $810,000. The invested capital should be fully recaptured in 8+ years.
3
FRESENIUS MEDICAL CENTER – SEGUIN, TX
757 West Court Street | Seguin, TX
Asset/Property
A 14,400 square foot medical office building on a .95
acre lot. Leased to Fresenius Medical Care for use as
a 16 chair dialysis center.
Purchase Price
$ 1,280,000
Annual Net Operating
Income
Acquisition Capitalization
Rate
Annual Return to
Investors
Primary Lease Expiration
Date
Options
$
Expenses
Tenant pays CAM, real estate taxes, insurance,
utilities, HVAC
Landlord pays roof, HVAC over $1,500/year
Expenses Offset
122,136
9.96% - Unleveraged
8.8% - Unleveraged
December 16, 2016
Two (2), Five (5) year
ACQUISITION CASE STUDY
The property was a lender REO of US Bank. The lease had less than 7 years
remaining on the primary term. The property, situated on the main thoroughfare
in Seguin Texas is ¼ mile from Texas Lutheran University and other commercial
businesses. The property was listed for sale at $1,400,000.00. The base rent was
$122,136 with fixed increases in 2014 and 2016. BR Seguin LLC negotiated a sales
price based on the latest annual Net Operating Income (NOI). Fresenius currently
has prepared plans to expand the facility by an additional eight (8) dialysis
stations & recently completed that expansion. Fresenius has invested over $1.0 M
in capital improvements to the facility since 2009. The LLC acquired the site within
60 days from the execution of the Purchase Agreement for cash.
4
FRESENIUS MEDICAL CARE OF KNOXVILLE
1740 Western Avenue | Knoxville, TN 37921
Asset/Property
10,440 SF freestanding building built in 2001 on 1.07
+/- acres of commercially zoned land.
Purchase Price
Annual Net Operating Income
$2,490,000.00
$209,740.00 ($17,478.00 per month/$1.67 per
month NNN)
8.34% - Unleveraged
7.82 % - Unleveraged
May 31, 2019
Two (2), Five (5) year
Tenant pays CAM, real estate taxes, insurance,
utilities, HVAC
Landlord pays roof, HVAC over $1,500/year.
Acquisition Capitalization Rate
Annual Return to Investors
Primary Lease Expiration Date
Options
Expenses
Expenses Offset
ACQUISITION CASE STUDY
The property is surrounded by numerous healthcare facilities, a medical center,
and several hospitals. The property was listed for sale at $2,595,650. Fresenius
has invested over $1.2 M in capital improvements to the facility and added over
$100,000 in remodeling and parking lot repairs, sealing and striping. The LLC
acquired the site within 60 days from the execution of the Purchase Agreement for
cash.
Fresenius Medical Care is the world's largest, integrated provider of products and
services for individuals with chronic kidney failure, a condition that affects more
than 2.2 million individuals worldwide. Through its network of 3,160 dialysis
clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius
Medical Care provides dialysis treatment to 257,916 patients around the globe.
Fresenius Medical Care is also the world's largest provider of dialysis products,
such as hemodialysis machines, dialyzers and related disposable products. The
lease had less than 7 years remaining on the primary term.
The lease is
guaranteed by Fresenius Medical Care Holdings, Inc. with a 2012 reported sales in
excess of $8.024 Billion.
5
EYE SURGERY CENTER OF TULSA
7191 S. Yale Avenue | Tulsa, Oklahoma
Asset/Property
Purchase Price
Annual Net Operating Income
Acquisition Capitalization Rate
Annual Return to Investors
Primary Lease Expiration Date
Options
Expenses
7,032 SF +/- free-standing building located on 0.8
Acres of commercially zoned land. The building was
constructed in 1999
$2,480,000.00 ($352.67/SF)
$235,572 ($19,631.00 per month/$2.79 per month
NNN) 3.0% Annual Increases beginning 12/1/15
9.5% - Unleveraged
9.0% - Unleveraged
November 30, 2019
Two (2), Five (5) year
Tenant pays CAM, real estate taxes, insurance,
utilities, HVAC, roof
ACQUISITION CASE STUDY
The subject property is 100% leased to Eye Surgery Center of Tulsa with over 6
years remaining on the Lease. The physicians at Eye Surgery Center of Tulsa are in
a Joint Venture Partnership with AmSurg (51%), a nationally recognized leader in
the development, management and operation of outpatient surgery centers. The
property is located just ½ miles from the St. Francis Hospital medical campus in a
major medical corridor. Other nearby tenants include: Health Zone, Snap Fitness,
Eastern Oklahoma Ear Nose & Throat, Tulsa Family Dental, Endodontic Specialists,
Oklahoma Podiatric Med Association, Warren Place, Laurete, and Shadow
Mountain Behavioral Health System among several others.
The Tulsa OK Ophthalmology ASC, LLC is in a partnership with AmSurg, a
nationally recognized operator. AmSurg is partners with more than 1,500
physicians at more than 220 outpatient surgery centers across the United States.
AmSurg revenues for the first six months of 2012 were $461.8 million. The
acquisition is a solid investment at an above market capitalization rate.
6
TACO BELL - GLENDALE
4402 W. Glendale Avenue | Glendale, AZ 85301
Before
After
Asset/Property
Purchase Price
Annual Net Operating Income
Redevelopment
Total Acquisition Cost
Acquisition Cap Rate
Redevelopment Capitalization
Rate
Primary Lease Expiration Date
Options
Expenses
1,536 SF freestanding building with drive through
$567,500.00
$69,852.00 ($5,821.00 per month/$3.79 per month
NNN)10% increase each 5-years
$170,000.00 ($110.68/SF). Completion is scheduled
for July, 2013
$737,500.00
12.8% - Unleveraged
9.25% - Unleveraged
December 31, 2019
Three (3), Five (5) year
Tenant pays CAM, real estate taxes, insurance,
utilities, HVAC, roof
ACQUISITION CASE STUDY
The site was placed in escrow with no lease in place. During the due diligence
period, we negotiated a new lease and committed to a renovation for the 1970s
era building. This Taco Bell location has been a solidly performing store for 30+
years. The seller did not have the capital to renovate the facility and the tenant
was not eager to spend over $250,000 on the site. The total acquisition cost
includes full exterior remodel (3Q/2013); the franchisee is paying for the new
interior upgrade package.
The operator is a very successful Phoenix based franchisee with 117 YUM brand
units. The store franchise agreement extends through 2019 and will be renewed
for additional 10-years. Once redeveloped, the unit will be fully ADA compliant and
look like a new Taco Bell outlet. The site is located in “fast food corridor” on
Glendale Avenue with excellent demographics for a fast food restaurant. The 2012
sales are below historic highs but recovering annually.
The new exterior will
compliment YUM branding programs.
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DEL TACO
4449 East Sunset Road | Henderson, NV 89014
Asset/Property
Purchase Price
Annual Net Operating Income
Acquisition Cap Rate
Primary Lease Expiration Date
Options
Expenses
Annual Return to Investors
Loan
1,922 SF building with drive-through facility on
0.55 acres. The building was built in 1992, is
referenced as APN: 178-05-101-003, and has
Community Commercial (CC) zoning.
$740,000.00 ($385.00/SF)
$71,069 ($5,922.42 per month/$3.08 per month
NNN) 3.0% Annual Increases beginning 12/1/14.
9.5%
December 31, 2015
One (1), Five (5) year at FMV
Tenant pays CAM, taxes, insurance, utilities,
HVAC, roof.
9.1%
None
ACQUISITION CASE STUDY
The Green Valley Ranch property is 100% leased to Del Taco Inc, the parent
company, the second largest Mexican restaurant chain in the world. Green Valley
is an upscale neighborhood of Henderson, Nevada. The community development is
8,400 acres on the southeast part of the Las Vegas Valley. Extenuating
circumstances caused the Seller must liquidate. The seller financed this site with a
$1.3M loan in December 2003. The purchase price is 57% of the 2003 loan. The
tenant sales have deteriorated since the beginning of the 2007 recession;
revenues in the past two reporting years were between $750,000 and $775,000 or
9.5% of gross revenues. The 250,000 s.f. + development across the street was
vacated in 2009 in anticipation of the development of a casino and hotel. That
project was rejected. The center is in the initial stages of a renovation and
remerchandising program, the Galaxy Theater complex with stadium seating
opened 4-months ago. The adjacent Taco Bell is closing, and those customers are
expected to be captured by Del Taco increasing sales by at least 30%.
8
VACANT SKY HARBOR REO
228 South 24th Street| Phoenix, AZ 85034
Before
After
Asset/Property
Purchase Price
Projected Annual Net Operating
Income
Projected Capital Cost
Restrictive Covenant
Stabilized Cap Rate
Primary Lease Expiration Date
Options
Expenses
Annual Stabilized Return to
Investors
Projected IRR in year 3
1,638 s.f. building, on 0.43 +/- acres of A-2
(Airport Industrial/Commercial zoned land. APN
#: 115-08-090-A.
$110,000.00 ($67.15.00/SF)
$19,656 ($1,638.00 per month/$1.00 per month
NNN) 3.0% Annual Increases beginning
05/01/2014.
$35,000.00 (Parking lot, landscaping, roof).
No breakfast restaurants for 50-years from 2007.
13.4%
TBD
TBD
Tenant to pay CAM, taxes, insurance, utilities,
HVAC, roof.
12.5%
20.65%
ACQUISITION CASE STUDY
The building was a former Waffle House, front pad to Motel 6, and converted
to office with a substantial SBA loan in 2007/2008. Wells Fargo Bank
foreclosed on the property on September 15, 2011 following a write-down of
the loan to $197,500.00. The property was marketed since that time at prices
as high as $250,000.00. Following an extensive market study, BR Investments
determined that the building would rent for $1.00/s.f./month NNN
($12.00/annum). The lease-up period was determined to be 6-9 months.
Capital improvements would be minimal given the extensive remodeling of the
interior by the previous tenants that include handicapped restrooms, showers,
tile floors, two (2) executive offices, reception area, and large common work
area with kitchen facilities. The building is located at the west end of the Sky
Harbor International Airport runway on 24th Street, ½ mile from the car rental
center and less than ¼ mile from the I-10 freeway and Light Rail. The parking
area is significant with 20+ spaces or 1/81 s.f. of building area. The property
is the front pad to Motel 6 and adjacent to Sterling Hotels.
9
FRESENIUS MEDICAL CARE – SAGINAW RIVERSIDE
920 North Niagara Street | Saginaw, MI 48602
Asset/Property
Purchase Price
Annual Net Operating Income
Acquisition Cap Rate
CAPEX Reserve
Primary Lease Expiration Date
Options
Expenses
12,211 SF freestanding condominium building
on a 1.63 acre lot. Riverfront Commercial
(RC) zoning. Property represents 73 percent
of the entire condominium.
$490,000.00 ($40.12/SF) (includes legal,
title, ALTA survey, acquisition fee).
$98,838 ($8,236.50 per month/$0.67 per
month NNN)
19.77%
$210,000.00 ($17.20/s.f.)
October 15, 2016
Three (3), Five (5) year at FMV
Tenant pays CAM, taxes, insurance, utilities,
HVAC, roof.
14.0 %
Annual Return to Investors after
CAPEX
Loan
None
ACQUISITION CASE STUDY
The Saginaw Fresenius Medical Care facility at Riverside is an opportunistic
purchase. The original listing price was $900,000.00. The property fell out of
escrow 3 consecutive times due to the inability of the buyer to extend the lease
term or finance the property. Due to our contacts within Fresenius and
understanding of the capital investment required to relocate, we acquired the
site. The rational was based on several factors: 1) FMC Riverside is strategically
located near two medical centers, major surface streets, and the Interstate 75
and 675, 2) the facility is one of largest FMC facilities in State of Michigan with 32
beds, 3) FMC is currently running two shifts per day Monday through Saturday
equating to 300+ procedures per week, and 4) the purchase price of $42.00/SF is
75% below replacement cost for building and property. Other factors include:
excess land with only 17% coverage and the current annual rent is approximately
$9.00/SF NN which is below market rent for the MSA. The investment strategy is
to remodel the facility and site with retained capital and renew tenant for an
extended term.
10
ADVANCE AUTO PARTS
1551 South Township | Pittston PA 18640
Asset/Property
Purchase Price
Annual Net Operating Income
Acquisition Cap Rate
Excess land
Primary Lease Expiration Date
Options
Expenses
Annual Return to Investors
Annual Sales 2010-2012
7,000 SF commercial building (2001) on 1.37
Acres (11.71% coverage). Zoning: General
Commercial
$760,234.00 ($108.57/SF)
$65,000.00 NNN
8.55%
Provides numerous re-use/expansion options.
December 31, 2018
2- 5-year at Fair Market Value (FMV)
Tenant pays CAM, taxes, insurance, utilities,
HVAC, roof
8.12%
Over $1.0 M (5.98% rent/sales ratio)
ACQUISITION CASE STUDY
The Advanced Auto Parts in Pittston, PA is a corporate operated store (NYSE: AAP).
This location has a lease with five years remaining on term plus two 5-year option
periods. AAP has occupied this “build-to-suit” facility for 13 years. The purchase
price ($108.00/SF) is 25% below replacement cost for this freestanding building.
The capitalization rate is 100 basis point higher (price is 13% lower) than similar
national AAP sales comparables. The location on State Route 11 is in short
proximity to I-81 & I-476. Building design with excess land provides numerous reuse or expansion possibilities.
The Big K and Walgreens Center is located directly across the freeway from the
site on Route 11. The AAP store is less than one mile to Avoca Regional Airport.
The property was originally acquired in 2002 for $1,200,000.00; the owner sold
the property in order to acquire another multi-property portfolio.
11
ADVANCE AUTO PARTS (AAP) 1406 W. Grantham Street, Goldsboro, NC 27530 Asset/Property
7,000 SF commercial building (2001) on
1.18 Acres (13.62% coverage).
Zoning: General Commercial
$962,500.00 ($137.50/SF)
$80.500.00 NNN
8.36%
Provides re-use/expansion options.
December 31, 2016, renewal proposal
received during the escrow period for a 5year additional term, expiration December
31, 2021.
2 - 5-year at Fair Market Value (FMV).
CAM, taxes, insurance, utilities, HVAC, roof
repairs, parking lot.
7.69% (includes CAPEX reserve for roof
and structure for year 1).
Over $1.3 M (6.2% rent/sales ratio)
Purchase Price
Annual Net Operating Income
Acquisition Cap Rate
Excess land
Primary Lease Expiration Date
Options
Expenses paid by Tenant
Annual Return to Investors
Annual Sales 2010-2012
ACQUISITION CASE STUDY
The corporate lease with 2.5 years remaining on current option was exercised
in 2012. AAP is a Fortune 500 company with 4,500 locations in USA. AAP has
occupied this build to suit facility since October 2001. The purchase price
($137.50/SF) is 20% below estimated development replacement cost. The
contract rent of $11.50/SF annually is 25% below market rent of $15.00/SF.
Located on heavily traveled Grantham Street (Route 70) with proximity to Little
River Square (120,000 SF) and is adjacent to local retailers Food Lion, Tractor
Supply, Dollar General, McDonalds and a Honda dealership. CAPEX
improvements performed by AAP in 2013 included building and pylon signage,
painting and interior remerchandising.
The owner originally acquired the
property as part of a portfolio and is liquidating for estate purposes.
12
GOODYEAR TIRE AND RUBBER COMPANY Goodyear Auto Center 1615 Wells Road, Orange Park, FL 32073 Asset/Property
5,800 SF commercial building (1999)
on .92 Acres (14.5 % coverage).
Zoning: General Commercial
$856,600.00 ($147.69/SF)
$73,500.00 NNN
8.58%
Provides re-use/expansion options.
April 30, 2019
2 - 5-year. 5% rental increase each 5
years during the option periods.
CAM, taxes, insurance, utilities, HVAC,
roof repairs, parking lot repairs.
7.86%
Over $1.2 M (6.7% rent/sales ratio)
Purchase Price
Annual Net Operating Income
Acquisition Cap Rate
Excess land (.42 acres)
Primary Lease Expiration Date
Options
Expenses paid by Tenant
Annual Return to Investors
Annual Sales 2010-2012
ACQUISITION CASE STUDY
Goodyear is a Fortune 500 Company and S&P 500 component. This is a
corporate lease with nearly five years remaining on five 5-year option period.
Goodyear Tire and Rubber has occupied this “build-to-suit” facility for 15 years.
The purchase price ($147.00/SF) is 26% below estimated freestanding
building replacement cost ($200.00/SF). The contract rent of $12.67/s.f. is
well below market rent of $20.00/s.f. The site is located in close proximity to
the south gate to Naval Air Station Jacksonville, near I-295, and nearby
retailers Sweet Tomatoes, Burger King, Steak and Shake, Chili’s, Sonic, Arbys,
Marriott Courtyard. The property was appraised on May 24, 2012 for
$1,050,0000.00. The owner sold in order to invest in another opportunity and
pay off the maturing mortgage. The property value was appraised at
$1,050,000.00 in 2012.
13
FRESENIUS MEDICAL CARE – WARNER ROBINS 118 Osigian Boulevard | Warner Robins, GA 31088 Asset/Property Purchase Price Annual Net Operating Income Rent Increases Acquisition Capitalization Rate Annual Return to Investors Primary Lease Expiration Date Options Expenses Expenses Offset 6,600 SF freestanding medical building built in 1997 on an 88,862 SF lot (7.43% coverage) $1,575,000 ($238.63/s.f.) $130,295.00 -­‐ $10,857.93 per month ($1.65 per month NNN) Two percent (2%) annually 8.25 % 7.75 % after reserves, tax prep, legal & miscellaneous fees December 31, 2017 Two (2), Five (5) year Tenant pays CAM, real estate taxes, insurance, utilities, HVAC Landlord pays roof, HVAC over $1,500/year ACQUISITION CASE STUDY
The FMC Warner Robins is a beautiful well-located facility with excess land for
expansion in the within the Warner Robins Metropolitan Statistical Area. Fresenius
Medical Care has occupied this “build-to-suit” facility for 17 years, and has the
FMC regional office and training center in the adjacent office building. The facility
is operating near capacity with over 340 procedures per week. The purchase price
($238.63/SF) is significantly below replacement cost for this building with
improvements estimated to be 350.00/SF. The contract rent of $1.65/SF NNN is
18% below market rent of $2.00/SF NNN. The building is located in a business
park to the rear a Target anchored power center and within ¼ mile of the regional
center named Houston County Galleria. The property was originally acquired in
1997 for $1,100,000.00. The most recent CAPEX improvements included new 40
year roof in 2013 and HVAC unit in 2013. The octogenarian owner sold due to poor
health and estate planning.
14
ARBY’S 2522 Woodville Rd., Northwood, OH 45619 Asset/Property Purchase Price Annual Net Operating Income Rent Increases Acquisition Capitalization Rate Annual Return to Investors Primary Lease Expiration Date Options Expenses Expenses Offset 3,282 SF freestanding fast food building built in 1995 (2010) on a .69 acre or 30,056 SF lot (10.92 % coverage) $470,000 ($137.00/SF) $40,000.00 -­‐ $12.18/SF ($1.02 per month NNN) Fixed 5-­‐year Option: #1 -­‐ 2015 $45,980.82; #2 -­‐2020 $52,873.02; #3 -­‐2025 $60,848.28; #4 -­‐ 2029 $69,972.24 8.51 % 7.47 % at close; 8.46 % in 2015 upon option exercise, after reserves, tax prep, legal & miscellaneous fees December 31, 2015 Four (4), Five (5) year Tenant pays CAM, real estate taxes, insurance, utilities, HVAC None ACQUISITION CASE STUDY
The Arbys, located in Northwood (Toledo) OH is a very unique opportunity to
acquire the land subject to an Arbys corporate (RTM Operating Company, LLC )
ground lease with 1 1/2 years remaining on term. The tenant has occupied this
facility for nearly 20 years (1994) and completed an exterior and interior
renovation in 2010. The purchase price of $137.00/SF is 70% below estimated
replacement cost of $450.00/SF with the contract rent of $12.19/SF annually 48%
below market rent of $24.00/s.f. NNN. The pad is located on out parcel pad to the
40 acre, Great Eastern Shopping Center (141,692 SF) and adjacent to McDonalds,
Dollar General, Super Dollar Tree, Loan Max, and Sally Beauty. The owner, CA New
Plan Acquisition Fund, LLC, sold the property to lower basis to position Great
Eastern Shopping Center for redevelopment.
15