Fallas (Net Leased Big Box Building)

Fallas (Net Leased Big Box Building)
580 N. 11th Avenue Hanford, CA 93230
Dave Lucas
Email: [email protected]
Phone: (415) 274.7390
Gregg Steele
Email: [email protected]
Phone: (415) 274.2706
Chris Kostanecki
Email: [email protected]
Phone: (415) 274.2701
www.capitalpacific.com
Zeb Ripple
Email: [email protected]
Phone: (415) 274.2702
Chris Peters
Email: [email protected]
Phone: (415) 274.2703
Fallas
580 N. 11th Avenue - Hanford, CA 93230
Purchase Price:
Cap Rate:
Total Rentable Area:
Price Per Square Foot:
Lot Size (approximate):
Year Built:
$1,930,000
7.00%
19,300 Square Feet
$100.00
2.05 Acres
1994
Capital Pacific is pleased to present for sale a freestanding, single tenant Fallas Paredes net-leased
building.
The property is located in the Hanford Towne Centre at the high traffic intersection of North 11th
Avenue and Lacey Blvd. in the geographic center of Hanford. The center is anchored by Orchard
Supply Hardware, 99 Cent Only and Staples. An additional 35,000 SF anchor space is currently
vacant although it has garnered the interest of national tenants. Once leased, it will add to the
overall draw and traffic at the center. The center has excellent access on both Lacey Ave and North
11th Ave, with several curb cuts and multiple dedicated left turn lanes into the center. The center
has a regional draw with the 99 Cent Only anchor and pulls from the smaller towns in the area
surrounding Hanford.
J&M Sales, Inc., operating at the subject property since 2005 under the Factory 2 U brand, has
recently executed a brand new ten year lease and will operate as a Fallas Discount Store. The lease
is guaranteed by FP Stores, Inc., the parent company and the majority owner of Fallas Discount
Stores and Fallas Paredes stores nationally. They have invested in improvements and upgrades to the
store within the last five years and were committed to signing a new long term lease at the subject
property. The lease includes a sales threshold volume of $2,500,000 which the tenant is tracking to
beat in the current calendar year and has exceeded in previous years.
Investment:
• Brand new 10 year lease with 12% bump in year five and three five year options
• Very good intrinsic buy at $100 price per square foot
• Fallas Paredes (FP stores, Inc. guarantor) has been in the location since 2005 under Factory 2
U flag and is converting to Fallas Paredes – established location
• Hanford Towne Centre is located it the geographic center of Hanford
• The center has co-tenants including OSH Hardware, Staples, 99 Cent Only, Starbucks, Citibank,
Baja Fresh, Sizzler, Round Table, Carls Jr. and others
• Fallas Paredes/Factory 2 U has monument signage on North 11th Ave
• In-fill location in Hanford
Lease:
• New 10 year lease with 12% bump every 5 years
• Double Net – Roof and Structure are landlord responsibility
• Corporate guaranty by F&P Stores, Inc., a California Corporation
COPYRIGHT © 2010. ALL USE, DISCLOSURE AND/OR REPRODUCTION NOT SPECIFICALLY AUTHORIZED IS PROHIBITED. ALL RIGHTS RESERVED. Capital Pacific (“Agent”) has presented this confidential Investment Memorandum to assist the recipient in evaluating the “Property” and it is intended for your use only. This confidential material contains brief,
selected information pertaining to the Property and shall not be considered all-inclusive or unchanged since the date of preparation. No warranty as to the accuracy or completeness is expressed or implied. The information has been received from sources believed to be reliable but is not guaranteed. Agent disclaims all liabilities in connection
with any inaccuracies or incompleteness. The Buyer should independently verify each item of information and have the same reviewed by its tax advisor and/or legal counsel. The Buyer agrees that (a) the materials are of a highly confidential nature and will be held in the strictest confidence or shall be returned to Agent upon request; (b) the Buyer
shall not contact any property manager, employee or tenant of the Property regarding the enclosed materials or the Property, without prior approval of Agent; and (c) the Buyer understands and agrees that Agent represents the seller and not the Buyer. Neither the seller nor Agent shall have any obligation to pay any commission, finder’s fee, or other
compensation to any broker or other person dealing with the Buyer. The Buyer may provide information to persons retained for the purpose of evaluating the Property after first obtaining a signed confidentiality agreement from such persons to keep such information confidential. The Buyer shall defend, indemnify and hold harmless the seller, Agent
and its affiliates from and against any claims, demands, damages, liabilities, costs or expenses, including reasonable attorneys’ fees, relating to any claim for a commission, finder’s fee or other compensation by any broker or other person dealing with the Buyer. The Property is being sold on an “as-is, where-is” and “with all faults” basis. - 2010
Fallas - Financials
Income/Expense
Rent Roll
Price:
$1,930,000
Price Per Square Foot:
Sq. Ft.
Fallas
19,300 9/1/2011 8/31/2016 $11,258
$100.00
Down Payment: (100%)
$1,930,000
Capitalization Rate:
7.00%
Total Rentable Area:
19,300
Lot Size (Acres):
2.05
Year Built:
1994
Stabilized Income
$7.00
Effective Gross Income
12.00% $12,609 $151,312
7.84%
9/1/2021 8/31/2026 Option 1 12.00% $14,122 $169,466
8.78%
9/1/2026 8/31/2031 Option 2 12.00% $15,817 $189,803
9.83%
95% of FAIR MARKET RENT
$135,100
$135,100
Per Square Foot
Taxes
NNN
Tenant Paid
Insurance
NNN
Tenant Paid
Landlord Paid
Equals: Net Operating Income
Return
7.00%
9/1/2031 8/31/2036 Option 3
Less:
Roof & Structure
Yearly
Rent
$11,258 $135,100
9/1/2016 8/31/2021
Per Square Foot
Scheduled Rent
Term
Current
Monthly
Increases
Rent
Rent
Tenant
$135,100
Current Totals: 19,300
$11,258 $135,100
Note: Tenant does have the right to terminate the lease any time within ninety days after the completion of the
fifth lease year provided sales are below the gross sales threshold of $2,500,000. Tenant has had sales of above
$2,500,000 in the past and is currently tracking to do over this amount this year.
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. Buyer must verify the information and bears all risk for any inaccuracies.
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Fallas - Tenant Information
J&M Sales, Inc.
Company Type:
Sales (mil): Private
233.5
J&M Sales, Inc., established in 1993 is a family-owned chain of clothing retail stores that grew from the National Stores, Inc. brand. National Stores, Inc. was
established in 1962 and grew from a single store in downtown Los Angeles to more than 200 convenient locations in five states: California, Texas, Arizona, New Mexico
& Nevada.
J&M Sales, Inc. off-price stores include: Fallas Paredes, Fallas Discount Stores, Fallas Kid Stores and Factory 2U. The stores offer a big selection of quality brand name
and private label clothing for men, ladies, boys, girls, juniors, infants and toddlers along with lingerie, shoes and home decor.
The Fallas brand buys closeouts from manufacturers and sells them for much less value than department stores such as Target and Sears. The stores cater to the
Hispanic American community and are conveniently located in power strips, specialty centers and downtown areas.
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Fallas - Lease Abstract
General Lease Details
Lease Date:
August 30, 2011
Expiration:
August 29, 2021
Renewal:
Base Rent
Tenant has three (3) five-year options to extend
Start Date 90 Days after commencement
Entire term & renewals
Security Deposit: None
Pro Rata Share: 9.15%
$ Per Month
$135,100 per year, payable monthly
Due Date:
Late Fee:
1st of the month
10 day grace after the 1st, then 5% late fee (Section 24.7).
$135,100
Years 1 - 5
$151,312
Years 6 - 10
$169,454
Years 11 - 15
$189,719
Years 16 - 20
95% of FMV
Years 21 - 25
12% increase every 5 years for first 20 yrs.; 95% of fair market value in years 21-25
Note: Tenant does have the right to terminate the lease any time within ninety days after the completion of the fifth lease year provided sales are below the gross sales
threshold of $2,500,000.
Rental Increase:
Sales Threshold
Additional Rent:
Property Taxes: Section 8.2: Tenant to pay all taxes assessed against the Premises. However Tenant shall not be required to pay increases in taxes resulting in a change of ownership more than
once in any 5 year period.
Landlord's Maintenance. Roof and structure, cap ex; Common Areas
Responsibilities:
Insurance: Tenant required to carry insurance that covers: public liability and property damage, tenant improvements and personal property. Tenant also to reimburse landlord for insurance
expenses
Common Area: Section 8.1b - Tenant's share of Center CAM Costs shall be 100% of those that pass through to the Landlord.
Tenant Responsibilities: Tenant shall obtain, at its expense, a contract for the repair and maintenance of the air conditioning and heating system. Unless the need for repair was caused by the negligence
or willful misconduct of Tenant or its agents or employees, Tenant's obligation for maintenance of the HVAC system shall be limited as follows: (i) Tenant's cost for a single repair
shall not exceed $2,500.00; (ii) Tenant's cost of repairs shall not exceed $5,000 in any twelve (12) month period, and (iii) Tenant shall not be required to replace the HVAC. HVAC
costs which exceed the foregoing limitations shall be borne by Landlord.
MAINTENACE, REPAIRS & IMPROVEMENTS
Common Areas:
Common Area Restrictions:
Section 7.1 - defined as parking areas, roadways, walkways, driveways, delivery areas, landscaped areas, public restrooms and other areas, facilities and improvements for the
convenience and use of tenants and their employees and customers.
Section 7.1 - Landlord agrees to maintain or cause to be maintained all Common Areas
Section 7.2 - Landlord has sole discretion over the manner and method of operation, maintenance, service and repair of the Common Areas.
Section 7.3 - Tenant shall not overburden parking lot nor consistently use more than their pro rata share of parking
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Fallas - Photographs
Not A Part
Not A Part
6
Fallas - Aerial
Close Aerial
35,000 SF
(Leasing Activity)
7
Fallas - Aerial
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County Jail
Kings County
Special Education
11th Ave
Kings County Dr
12 th Ave
Hanford West
High School
Hanford Community
Medical Center
W Lacey Blvd
Hanford
Shopping Mall
7th St
Adventist
Medical Center
6th St
198
8
Bi-Lo
Fallas- Aerial
- Local & Regional Maps
Subject Property
Subject Property
9
Fallas - Location Overview
Hanford, CA
Hanford is a city in Kings County, California located just 30 miles from Fresno. With an annual 3% growth rate,
Hanford has grown from 41,000 people in 2000 to roughly 53,000 in 2009 with an expected population of
71,000 by 2020. Acting as a major trading center for surrounding areas, Hanford serves as a lively port for many
agricultural needs and yields high daily traffic. The retail sector is also growing with taxable sales of USD $414.7
million reported in 2002, up by 4.6% from 2001.
Top Employers in Kings County
Employer
# of Employees (Approx.)
Del Monte Food
1400
On December 11, 2007, the Hanford City Planning Commission approved construction of a plant that is expected
to produce 60 million gallons (227 million liters) of ethanol per year for use as a gasoline additive and alternative
fuel for vehicles. Most of the feedstock will be corn shipped from the Midwest. The proposed plant would be
operated by Great Valley Ethanol LLC and is expected to open in 2010.
JG Boswell Company
1200
Adventist Health
890
Leprino Foods - West
327
Major employers within the city of Hanford in 2006 included the Kings County government with 1,041 employees,
the Adventist Health System with 857, the Hanford Elementary School District with 520, the Del Monte tomato
cannery with 435 year-round and 1,500 seasonal employees and Marquez Brothers International, Inc., makers
of Hispanic cheese and other dairy products. Many Hanford residents work for other nearby employers such as
NAS Lemoore, the U.S. Navy’s largest master jet base located 15.5 mi WSW of Hanford and for the California
Department of Corrections and Rehabilitation which operates three state prisons in Kings County.
Marquez Brothers
306
Kings County Courthouse in Hanford, CA
Demographics
Population
2000 Population
2010 Population
2015 Population (Projection)
2010 Income
2010 Average Household Income
2010 Median Household Income
1 Mile:
11,735
12,752
13,093
3 Miles:
47,738
57,572
61,459
5 Miles:
53,476
64,258
68,559
$49,539
$35,598
$60,496
$47,000
$59,810
$46,428
For more information:
www.capitalpacific.com
TM
Dave Lucas
Email: [email protected]
Phone: (415) 274.7390
Gregg Steele
Email: [email protected]
Phone: (415) 274.2706
Zeb Ripple
Email: [email protected]
Phone: (415) 274.2702
Chris Peters
Email: [email protected]
Phone: (415) 274.2703
Chris Kostanecki
Email: [email protected]
Phone: (415) 274.2701
10