Sleep Train - Capital Pacific

Sleep Train
Murrieta, CA
[ REPRESENTATIVE PHOTO ]
Murrieta,
C
A
New Construction Net Lease
With Mattress Firm, Inc.
39535 Avenida Acacias, Murrieta, CA 92563
[ www.CapitalPacific.com ]
SLEEP TRAIN IS A CORPORATE-BACKED BUILD-TOSUIT ASSET LOCATED WITHIN AN EXPLODING
GROWTH AREA.
Investment Highlights
The offering provides the opportunity to acquire a brand new built-tosuit Sleep Train on a NNN lease located in Murrieta, CA. Sleep Train has
executed a long term 11-year lease with an estimated rent commencement
date of December 15, 2016. The lease provides rent escalations of 10% at the
beginning of the seventh lease year and at the beginning of each five-year option period.
The Property benefits from its location within a dense, affluent residential base. Murrieta is
experiencing a surge in new housing developments, with roughly 2,300 new homes having been
built between 2014 and 2015, and numerous new residential and multifamily developments
planned or currently under construction.
Sleep Train was acquired in 2014 by the largest mattress retailer in the U.S., Mattress Firm Inc.,
which operates a combined total of 3,500 stores across the nation. Mattress Firm Holding Corp.
has S&P and Moody’s ratings of B+ and B1 respectively.
PRICE: $3,645,000
CAP: 6.00%
LEASABLE SF. . . . . . . . . . . . . . . . ±6,997 SF
LAND AREA. . . . . . . . . . . . . . . . . ±38,332 SF
LEASE TYPE. . . . . . . . . . . . . . . . . .NNN
YEAR BUILT. . . . . . . . . . . . . . . . . . 2016
LEASE TERM. . . . . . . . . . . . . . . . . 11 Years
DELIVERY DATE . . . . . . . . . . . . . . September 20, 2016
RENT COMMENCEMENT. . . . . . December 15, 2016
PARKING. . . . . . . . . . . . . . . . . . . . ±28 Spaces or 4.0/1,000 SF
ADDRESS:
39535 Avenida Acacias, Murrieta, CA 92563
[ REPRESENTATIVE PHOTO ]
SLEEP TRAIN - MURRIETA | 2
Core Characteristics
NEW CONSTRUCTION BUILD-TO-SUIT PROPERTY
The Tenant signed an 11-year lease with built-in rent growth of 10% after
the 6th lease year and at the beginning of each, five-year option period. The
Premises is currently under construction and is being built-to-suit for Sleep
Train with an expected turnover date on September 20, 2016 and an expected
rent commencement of December 15, 2016.
CREDIT RATED TENANT WITH CORPORATE GUARANTEE
Sleep Train has a Standard and Poor’s credit rating of “B+” with a stable outlook.
Moody’s recently upgraded their credit rating for Mattress Firm Holding Corp. to
B1. Mattress Firm Inc., the primary operating subsidiary of Mattress Firm Holding
Corp., is the guarantor on the Subject’s lease.
FEW LANDLORD RESPONSIBILITIES
The Premises is net-leased to Sleep Train, with Landlord responsibilities limited
to replacement of the roof, monument sign, and building structure. The Tenant
is responsible for all remaining operating expenses associated with the Property,
including routine maintenance and repair of the roof and monument sign.
AFFLUENT HIGH GROWTH TRADE AREA
The Property benefits from an affluent demographic base with average household
incomes of $95,918 within a dense surrounding residential base of 184,608 residents living
within a five-mile radius. The population of Murrieta is set to increase by 8% in the next five
years, which will continue to spur the high number of new residential developments within
the growth area. Between 2014-2015, roughly 2,300 new homes were built to accommodate
the growing population.
PRIMARY LOCATION WITHIN FURNITURE RETAIL CORRIDOR
Numerous furniture stores are located within this center creating a critical mass of furniture
retail that generates an unusually large trade area for the shopping center. The Property’s
location on the entrance road to this shopping center provides it with the most accessible,
visible location among the furniture retailers in the center. Traffic flow and visibility will be
increased as Clinton Keith Road (the primary east-west arterial linking Interstates 15 and 215)
is scheduled to be extended to connect Interstate 215 to Highway 79. This will result in traffic
bring driven west from Highway 79 and French Valley along Clinton Keith Road toward the
immediate trade area of Sleep Train. Please refer to Page 4 for more information.
[ REPRESENTATIVE PHOTO ]
SLEEP TRAIN - MURRIETA | 3
DEVELOPMENT GROWTH
New Developments
PLANNING PHASE
1
KAISER PERMANENTE HOSPITAL (OPENS IN 2023)
2
MITCHELL CROSSING
3
MURRIETA HILLS
4
SIZE: 37-ACRES
ADDRESS: CORNER OF ANTELOPE AND KELLER RD.
SIZE: 230 MULTI-FAMILY UNITS WITH 80 SINGLE-FAMILY HOMES
ADDRESS: CORNER OF CLINTON KEITH RD/I-215 INTERCHANGE
SIZE: 750 SINGLE-FAMILY HOMES
ADDRESS: CORNER OF KELLER RD AND I-215
THE TRIANGLE (HOTEL, OFFICE & RETAIL SPACE)
SIZE: 64-ACRES
ADDRESS: CONFLUENCE OF I-15 AND I-215
UNDERWAY
5
6
1
Many new developments are underway
within the growth area of Murrieta, with
an estimated 2,300 homes built in 20142015 and several major commercial and
retail projects in development. There are
an estimated 17 single and multi-family
developments either recently completed
or underway, including a 64-acre asset
recently approved for development at the
confluence of two major highways that will
include office, retail and a brand new hotel.
3
The City has added several positions to the
planning department for the first time in
the last 7-8 years to accommodate the large
number of building permit applications
received, which have seen a significant
uptick in the last three years.
2
11
215
GOLDEN CITY
SIZE: 500 SINGLE-FAMILY HOMES
LOCATION: EAST OF LOMA LINDA MEDICAL CENTER
CLINTON KEITH RD
7
MAHOGANY HILLS
8
MARRIOT COURTYARD
S
LO
OS
RD
AM
AL
Sleep
Train
15
FUTURE CLINTON
KEITH RD & HIGHWAY
79 CONNECTION
CLINTON KEITH RD &
LOS ALAMOS RD
CONNECTION
CARMAX
SIZE: 38-ACRES
ADDRESS: CORNER OF MADISON AND GUAVA ST.
6
5
79
9
SIZE: 500 SINGLE-FAMILY HOMES
ADDRESS: 30163 MAHOGANY ST.
SIZE: 210-ROOM
ADDRESS: 25407 MADISON AVE.
MEADOWLARK
12
8
4
10
7
CLINTON KEITH ROAD EXTENSION
11
PACIFIC LANDING APARTMENTS (COMPLETED 2015)
SIZE: 325 MULTI-FAMILY UNITS
ADDRESS: 36125 CREIGHTON AVE.
Clinton Keith Road is the main east-west
arterial linking Interstates 15 and 215
and is heavily congested as Murrieta
has become a more popular place to
live and shop. To accommodate the
increasing traffic, Clinton Keith Road is
scheduled to be extended to connect
I-215 with Highway 79, to the east. This
connection will drive traffic west from
French Valley toward the immediate
trade area.
12
WALMART (COMPLETED MID-2014)
Expected Completion: 7/1/2017
SIZE: 10-ACRES
ADDRESS: 41200 MURRIETA HOT SPRINGS RD.
CLICK HERE FOR MORE INFO
9
SIZE: 109 SINGLE-FAMILY HOMES
ADDRESS: 37837 MOCKINGBIRD AVE.
COMPLETED
10
CREEKSIDE VILLAGE
SIZE: 182 CONDOMINIUMS
ADDRESS: WHITEWOOD RD & MURRIETA HOT SPRINGS RD
15
Los Angeles
Area Intel & Demos
81 Miles
1 Hr, 17 Min
Palm Springs
1, 3, & 5 MILE RADIUS DEMOGRAPHICS*
2015 HOUSEHOLD INCOMES
Median Average
POPULATION
2010
2015 2020
Murrieta
1-Mile3-Mile5-Mile
$67,735 $72,043 $77,620
$86,776 $91,235 $95,811
$95K+
1-Mile3-Mile5-Mile
16,217 94,149 170,855
17,040 97,504 183,203
17,931 102,127 197,272
8%
66 Miles
1 Hr, 2 Min
AVERAGE
INCOME
San Diego
PROJECTED
POPULATION
GROWTH
*All demographic data excludes the sizable seasonal resident population
as well as the subsequent increase in average household incomes.
MURRIETA, CA
Murrieta is one of the fastest-growing cities in California, making
up part of the Murrieta-Temecula-Menifee urban area in close
proximity to San Diego, Los Angeles, and Orange Counties.
Murrieta is a relatively new city, officially established in 1991, with
a growing population. The city experienced a 133.7% increase
in population between years 2000-2010, driving continued
residential development in the city.
Murrieta is conveniently located at the confluence of I-15 and I-215
freeways, providing housing for residents commuting to jobs in
larger, neighboring cities. Along with the exponential growth
Murrieta has experienced, commercial growth has followed
with upscale retail, hotels, healthcare facilities, and research and
development/medical technology firms.
The City began as a connection point for the railroad’s
transcontinental route in the 1800s and experienced an economic
boom after I-15 was built in the 1980s, connecting the city to
larger neighboring cities and spurring rapid development growth
as the population continued to increase.
78 Miles
1 Hr, 13 Min
SLEEP TRAIN
5-Mile
radius
3-Mile
radius
1-Mile
radius
MURRIETA TOWN CENTER
Retail
VILLAGE WALK PLAZA
Babies "R" Us
Bed Bath & Beyond
BevMo!
David's Bridal
Famous Footwear
Guitar Center
Jenny Craig
Jerome's Furniture
Office Depot
Petco
Sally Beauty Supply
Sports Authority
Style For Less
Verizon
9 Round Fitness
SURROUNDING RETAIL
Mor Furniture for Less
O'Reilly Auto Parts
Ortho Mattress
Payless ShoeSource
PetSmart
Pizza Hut
Popeyes
Savers
Sit 'n Sleep
Sonic Drive-In
Staples
Stater Bros. Markets
Subway
Taco Bell
Target
U-Haul
UPS Store
Walgreens
Walmart
YMCA
Buffalo Wild Wings
Dick's Sporting Goods
El Pollo Loco
Harbor Freight Tools
Sam's Club
Circle K
Gentle Dental
McDonald's
RD
KS
OA
NIA
ETHAN
FURNITURE
D
OS
R
M
AL
A
LO
S
15
SOUTHWEST HEALTHCARE
SYSTEM
93,000 DAILY
180,000 DAILY
Walgreens
Wendy's
Yogurtland
24 Hour Fitness
PLAZA LAS BRISAS
Sleep Train
215
Murrieta Academy of
Music
Ross
Sizzler
Toys "R" Us
MURRIETA PLAZA
23,000 DAILY
FOR
CVS
Denny's
Ethan Furniture
Goodwill
Home Depot
IHOP
In-N-Out Burger
Jack in the Box
Kohl's
LA Fitness
Lowe's
McDonald's
CAL
I
Albertsons
Applebee's
Ashley Furniture
AT&T
AutoZone
Best Buy
Big Lots
Burger King
Carl's Jr
Chick-fil-A
Chipotle
Chuck E. Cheese's
Brass & Bass
Burlington Coat
Factory
CosmoProf
Del Taco
Dollar Tree
Mobil
State Farm
Subway
Aerial
D
SR
LOS
O
LAM
A
S RD
14,7000 DAILY
LAS BRISA
23,000 DAILY
Sleep Train
ETHAN
FURNITURE
215
AVENIDA ACACIAS
19,200 DAILY
93,000 DAILY
1,2000 DAILY
About Sleep Train
B+
3,500+
STANDARD & POOR'S
CREDIT RATING
UPGRADED
SEPTEMBER 2015
MATTRESS FIRM INC. & FRANCHISED
STORES ACROSS 48 STATES
320
B1
MOODY'S INVESTORS
SERVICE RATING
UPGRADED IN 2015
NEW OR ACQUIRED
STORES IN PREVIOUS
YEAR
$3.5B
PROFORMA SALES
OVER LAST 12 MONTHS
ABOUT
With more than
3,500 companyoperated and
franchised stores across 48 states, Mattress Firm
Holding Corp. (MFRM) has the largest geographic
footprint in the United States among multi-brand
mattress retailers. Founded in 1986, Houston-based
MFRM is the nation's leading specialty bedding
retailer with over $3.5 billion in sales over the past 12
months. MFRM, through its family of brands, including
Mattress Firm and Sleep Train, offers a broad selection
of both traditional and specialty mattresses, bedding
accessories and other related products from leading
manufacturers, including Sealy, Tempur-Pedic, Serta,
Simmons, Stearns & Foster, and Hampton & Rhodes.
Simmons Beautyrest, Serta, King Coil, Stearns & Foster
and more.
Mattress Firm acquired Sleepy's in February 2016 in a
$780 Million purchase. Sleepy's is a privately-owned
fourth-generation company with over 1,050 retail
locations in 17 states and the District of Columbia,
spanning from Maine to South Carolina and available
nationally through www.sleepys.com. Throughout
Sleepy's over 58-year history, the company has
remained committed to providing sleep comfort
and expertise with its highly trained Mattress
Professionals and an extensive selection of top
brands, including Tempur-Pedic, Sealy Posturepedic,
Together, this will create the nation's first border-toborder, coast-to-coast specialty bedding retailer. The
company will operate approximately 3,500 stores and
have combined pro forma sales of over $3.5 Billion
over the last 12 months.
SLEEP TRAIN - MURRIETA | 8
In The News
STEINHOFF TO BUY MATTRESS FIRM FOR $3.8 BILLION INCLUDING DEBT
August 8, 2016 - cnbc.com
South African retailer Steinhoff International will buy Mattress Firm, the largest specialty
bedding retailer in the United States, for $3.8 billion which includes debt, both companies
said on Sunday.
Steinhoff said it will pay $64 per share, a premium of about 115 percent to Mattress
Firm's Friday close in a deal that will create the world's largest mattress retail distribution
company. The boards of both firms have approved the deal, the companies said in a
statement.
Founded in 1986, Mattress Firm has approximately 3,500 stores across 48 states with 80
distribution centers. In February, the company solidified its position as a leader in the U.S.
mattress retail market when it completed its $780 million acquisition of HMK Mattress,
the holding company of Sleepy's. Sleepy's was the second-largest specialty mattress
retailer in the U.S. with over 1,050 stores in 17 states in the Northeast, New England, the
Mid-Atlantic and Illinois.
The deal with Steinhoff is subject to completion of a successful tender offer for Mattress
Firm's shares. The transaction is expected to close in the third quarter of 2016, the
companies said.
Steinhoff is a German-listed $22 billion furniture conglomerate led by South African retail
mogul Christo Wiese who is also Steinhoff's chairman and largest shareholder.
Steinhoff, which owns brands in Africa, Australia, the U.K. and across Europe, last month
agreed to pay nearly $800 million for British-based discount chain Poundland after two
previous attempts to expand in Europe fell through this year.
The Mattress Firm Holding deal would give Steinhoff access to the growing U.S. market,
and help diversify its operations and guard against possible repercussions following
Britain's June vote to leave the European Union.
Markus Jooste, chief executive officer of Steinhoff, said the deal "will allow Steinhoff to
not only enter the U.S. market with an industry leading partner and a national supply
chain, but it will also expand Steinhoff's global market reach in the core product category
of mattresses."
LINK TO ARTICLE
SLEEP TRAIN - MURRIETA | 9
[ REPRESENTATIVE PHOTO ]
Site Plan
SITE PLAN KEY
PARCEL OUTLINE:
LEASABLE AREA:
AD
±38,332 SF
ING R
O
LAND AREA: ±6,997 SF
INGRESS/EGRESS:
AVENIDA ACACIAS
EXIST
TRASH/RECYCLE:
SHOPPING CENTER
ENTRANCE ROAD
EXISTING ROAD
Site Plan Not To Scale
SLEEP TRAIN - MURRIETA | 10
Financial Summary
PRICE
$3,645,000
Capitalization Rate:
Price Per Foot:
6.00%
6,997 Square Feet
NET OPERATING INCOME SUMMARY
SCHEDULED INCOME
Scheduled Rent:
12/15/2016
Equals: Effective Gross Income
$521
Per SF
$31.25
$31.25
Less: OPERATING EXPENSES
CAMS
Property Taxes
Insurance
Total Operating Expenses
Equals: NET OPERATING INCOME
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.
$218,656
$218,656
Per SF
NNN
NNN
NNN
NNN
$218,656
SLEEP TRAIN - MURRIETA | 11
Rent Roll
Rent Roll
RENT SUMMARY
TENANT INFO
TERM
Tenant Name
Size
Date
Monthly Rent
SLEEP TRAIN
6,997
12/15/2016
12/15/2022
$18,221
$20,046
Option 1
12/15/2027
Option 2
12/15/2032
Occupancy Date :
9/20/2016
Lease Expiration :
12/14/2027
Percent
Increase
Annual Rent
PSF
Cap Rate
$218,656
$31.25
6.00%
10.0%
$240,557
$34.38
6.60%
$22,046
10.0%
$264,557
$37.81
7.26%
$24,250
10.0%
$291,005
$41.59
7.98%
Lease Notes
Comments: NNN lease corporate-backed by Mattress Firm, Inc. Rent commencement is the earlier to occur of 120 days after turnover date of 9/20/2016, or date Tenant opens for
business. Tenant is responsible for 100% of Property Taxes, insurance, utilities, and common area operating expenses, including roof and monument sign maintenance. Landlord is
responsible for roof and monument sign replacement, as well as building structure and utility lines from the parking lot up to the Building.
Current Totals:
6,997
$18,221
$218,656
$31.25
6.00%
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.
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.
SLEEP TRAIN
BETHEL- MURRIETA
JUNCTION || 12
12
Lease Abstract
TAXES
All real estate taxes shall be paid entirely by the Tenant to the taxing authority.
PREMISES/TERM
BUILDING SF:
LEASE TYPE:
TURNOVER DATE:
RENT COMMENCEMENT: TERM: GUARANTOR: ±6,997 SF
NNN
9/20/2015
12/15/2016
11 Years
Mattress Firm, Inc.
INSURANCE
Tenant is responsible for full reimbursement of Special Perils property insurance
to Landlord and for maintaining an All Risk policy directly with insurer, covering
fire, theft, vandalism, etc.
UTILITIES
Tenant is responsible for payment of all utilities used at the Premises.
TENANT’S OBLIGATIONS
BASE RENT
120 day rent-free grace period following turnover date of 8/15/16.
Term
9/20/2016 - 12/14/2016
12/15/2016-12/14/2022 12/15/2022-12/14/2027
Monthly Rent
$0.00
$18,221
$20,046 Annual Rent
$0.00
$218,656
$240,557
OPTION PERIODS
Term
Monthly Rent
12/15/2027-12/14/2032$22,046
12/15/2032-12/14/2037 $24,250 Annual Rent
$264,557
$291,005
Tenant is responsible for the routine maintenance and repair of the roof,
monument sign, and all non-structural portions of the Premises, including
parking areas and landscaping.
LANDLORD’S OBLIGATIONS
Landlord is responsible for the replacement of the roof and monument sign,
and the repair and replacement of the building structure and utility lines from
the parking lot up to the building.
ASSIGNMENT/SUBLETTING
Tenant may not assign or sublease any interest in the Premises without prior
written consent of the Landlord.
SLEEP TRAIN - MURRIETA | 13
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client experience
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SCOTT FRANK
[email protected] | (503) 675-8383
OR BRE# 980400138
SEAN TUFTS
[email protected] | (206) 743-8468
WA BRE# 74057
CHRIS PETERS
[email protected] | (415) 274-2703
CA BRE# 0133983
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