CRUNCH FITNESS

CRUNCH FITNESS
Simi Valley, Ca
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$8,495,000
NEW 10 YEAR NNN LEASE
PROVEN FITNESS LOCATION
10% RENT INCREASES EVERY 5 YRS
TENANT TI’S UP TO $800K
TENANT PAYS CAM DIRECT-EZ MGT
DEMO’S AVE HH INCOME $100k+
Marketing by:
BD Holdings, Inc
Robert Crider
(760) 809-4055
ADDRESS: [email protected] / 1125 CAMINO DEL MAR “D” DEL MAR, CA 92014
CRUNCH FITNESS
Simi Valley, CA
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SUBJECT PHOTOS
Parking Western View towards Mall
CRUNCH FITNESS
Simi Valley, CA
SUBJECT PHOTOS
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CRUNCH FITNESS
Simi Valley, CA
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CONFIDENTIALITY AND DISCLOSURE AGREEMENT
This Offering Memorandum (“OM”) contains select information pertaining to the business and affairs of
Crunch Fitness located at 2655 Erringer Road, Simi Valley, CA (“Property”). It has been prepared by
BD Holdings, Inc. This OM may not be all-inclusive or contain all of the information a prospective
purchaser may desire. The information contained in this OM is confidential and furnished solely for the
purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or
made available to any other person without the written consent of Seller or BD Holdings, Inc. The material
is based in part upon information supplied by the Seller and in part upon financial information obtained
from sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or
warranty, express or implied, as to the accuracy or completeness of this OM or any of its contents and no
legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their
own projections and form their own conclusions without the reliance upon the material contained herein
and conduct their own due diligence.
By acknowledging your receipt of this OM for the Property, you agree:

The OM and its contents are confidential:

You will hold it and treat it in the strictest of confidence; and

You will not, directly or indirectly, disclose or permit anyone to disclose this OM or its contents in
any fashion or manner detrimental to the Interest of the Seller.
Owner and BD Holdings, Inc. expressly reserve the right, at their sole discretion, to reject any and all
expressions of interest or offers to purchase the “Property” and to terminate discussions with any person or
entity reviewing this “OM” or make an offer to purchase the “Property” unless and until a written agreement
for the purchase and sale of the “Property” has been fully executed and delivered.
If you wish not to pursue negotiations leading to the acquisition of the Property or in the future you
discontinue such negotiations, then you agree to purge all materials relating to this Property including this
OM.
A prospective purchaser’s sole and exclusive rights with respect to this prospective transaction, the
Property, or information provided herein or in connection with the sale of the Property shall be limited to
those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In
no event shall a prospective purchaser have any other claims against Seller or BD Holdings, Inc. or their
affiliates or any of their respective officers, Directors, shareholders, owners, employees, or agents for any
damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the
Property.
This OM shall not be deemed to represent the state of affairs of the Property or constitute an indication that
there has been no change in the state of affairs or the Property since the date of this Memorandum.
CRUNCH FITNESS
Simi Valley, CA
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HIGHLIGHTS
 A+ REAL ESTATE–STABLE–STRONG RETURN–RENT INCREASES–EZ MGT
 Property History - This property has operated continuously as a health/fitness
center since it was a build to suit 35 years ago. The prior tenant was profitable.
Current tenant ownership purchased the gym intending to capitalize on the existing
4,000 members, younger demographics of the area average age is 36, with high
household average income over $100K and the Crunch Brand. Crunch has added
approximately 1,000 new members in the past few months.
 Tenant – Principals of Simi Valley Fitness, LLC dba Crunch Fitness, have decades
of fitness operation experience, formerly the President of 24 Hour Fitness. The
management currently operates 20+/- Crunch Branded gyms in the Los Angeles
area.
 Security/Personal Guarantees – The majority owner of the tenant/entity
personally guarantees the rent, and included two of his other entities/gyms. Lease
Guarantor was previously President of 24 Hour Fitness.
 Lease – New 10 year NNN lease, starting 11/1/2015. There are 2-5 five year options
with 12 to 18 months’ notice to exercise. Requires minimal to zero property
management.
 Rental Increase – 10% rental increases every 5 years including options.
 Location – Main & Main off of Hwy 118 (Immediately off Hwy off ramp), on
Erringer and Simi Town Center Way. Simi Town Center Way is one of two, East or
West, main entrances to the only mall in Simi Valley “Simi Valley Town Center”.
 Demographics – 1/3/5 mile rings all exceed $100,000+ household average incomes.
Population within a mile exceeds 16,000, and the average age of 36 is lower than
national average. A younger higher income population.
 Surrounding Activity – Simi Valley Town Center is in the process of an $87
million renovation, with a revitalization of tenants. There are 160 residential units
and 40 condo units in planning for development directly behind Simi Valley Town
Center.
CRUNCH FITNESS
Simi Valley, CA
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Executive Summary
The Offering:
Crunch Fitness - Single Tenant building totaling 26,000 SF on 2.54
Acres of land.
Property
Address:
2655 Erringer Road
Simi Valley, CA 93065
s:
Location:
Simi Valley, California on the North West Corner of Erringer Rd. &
Simi Town Center Way, within Ventura County.
Sales Price:
$8,495,000
Terms:
Cash or Cash to New Loan. Proposed loan: 55% LTV 3.5% fixed for
5 years, 25 year amortization, due in 5 years or adjust every 5 years
for the term of the loan. Loan quote July 2016.
Cap Rate:
5.90%
NOI:
$501,400 (includes reserves)
Leveraged
Cash on Cash
5.77% (Cash after Debt)
Leveraged
Return
8.89% (Cash and 1st Year Principal)
Price/SQFT:
$326.73
Occupancy:
100%
Building Size:
 26,000 SF – SINGLE TENANT
Land Area:
2.54 acres
Years Built:
1980
CRUNCH FITNESS
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Simi Valley, CA
Surrounding
Tenants:
Demographics:
Adjacent Mall: Macy’s, Studio Movie Grill, Apple Store, Wings and
Things, California Pizza Kitchen, Victoria’s Secret, Larsen’s Grill,
Jamba Juice, Starbucks, New York & Company, Tilly’s, and various
other shops. Von’s is approximately 2 blocks away.
Estimated 2015
1 Mile
Population (EST 2015)
16,673
Population (2010 Census) 16,109
% Change (2000 to 2010) 16.13%
Avg. HH Income 2000: $103,549
3 Mile
83,128
80,468
11.92%
$101,012
5 Mile
123,765
119,792
11.03%
$103,581
Source: nielsen
Traffic Counts:
Erringer & Parkway 118
Erringer & Simi Town Center Way
120,600 ADT
NA ADT
Source CALTRANS & City of Simi Valley
Access:
Two curb cut entrances ingress/egress one on Simi Town Center Way
& one on Jefferson directly into the center. Erringer and Simi Town
Center is a signalized Intersection.
Parking:
Parking Ratio of 7.9/1000 SF (190 total spaces).
Surrounding
Developments:
Simi Valley Town Center is directly west of the subject property and
is the largest mall/ town center in Simi Valley featuring more than
637,728 sq ft of retail space. They have begun a $87 million dollar
project to further improve the town center by adding additional
parking, a movie theater, signage and other high quality tenants into
the center.
Uses &
Tenant:
The subject property has operated continuously as a health/fitness
center since it was built. The prior tenant was profitable and had 4,000
members. The new tenant intends to capitalize on the existing
membership along with the young demographics of the area with high
household average income. Since taking over, Crunch has added
approximately 1,000 new members since taking over. New owner
principals operate 20+/- Crunch gyms in the Los Angeles area.
CRUNCH FITNESS
Simi Valley, CA
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The Property:
The Crunch Fitness Building was a build to suit for Oakridge Athletic
Center in 1980. The property is built on approximately 2.54 acre lot
which has more than 190 parking spaces, 4 tennis courts (tennis courts
converted to fitness fields, Basket Ball, and Volley Ball) and an inground swimming pool. The structure, a 26,000 free standing building,
was constructed for the use of a single tenant as a health and athletic
club. The site has multiple access points, on both Jefferson Way and
Simi Town Center Way, and has a highly visible corner location.
A NEW ROOF OVERLAY WAS COMPLETED FEB. 2016
Location:
Dynamic location at main entrance to the only Simi Valley Mall at the
Northwest corner of Erringer Road and Simi Town Center Way, several
hundred feet north of US-118 in Simi Valley, California. Simi Valley is
the third-largest city in Ventura County and is known as the “key to the
county”. The City provides easy access to many of California’s major
freeways including the I-5, 405 and the 118 which runs right through
the city. Just 30 miles northwest of Los Angeles, Simi Valley covers 43
square miles. Simi Valley resides in the Eponymous Valley of Ventura
County in between Los Angeles and Santa Barbara. Over the next 5
years almost 30,000 new residents are expected to call Ventura County
home, pushing the county population to 870,200.
Incorporated in 1969, Simi Valley is home to two major Industries;
Machinery & Tools, and Metals, having 69 and 51 firms, respectively,
located in the city.
Additionally the city and surrounding areas have hosted television series
such as Little House on the Prairie and M*A*S*H and the city’s
neighborhoods were also featured in Steven Spielberg’s E.T. the ExtraTerrestrial movie. According to crime statistics from the FBI, Simi
Valley is the seventh safest city in the U.S. and a study done by the
University of Vermont names Simi Valley as the fifth happiest city in
the U.S.
CRUNCH FITNESS
Simi Valley, CA
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FINANCIAL ANALYSIS
PURCHASE PRICE:
Capitalization Rate:
Approximate Rentable Square Feet:
Down Payment:
Proposed Loan:
$8,495,000
5.90%
26,000 SF
$3,822,750
45 %
55%
$4,672,250
ACTUAL 2016
GROSS RENTAL INCOME:
Reimbursed expenses:
Total Income:
Less: Reserve - ($.10 /SF)
Gross Operating Income:
Less: NNN Expenses:
Net Operating Income:
$504,000
NNN
$504,000
$2,600
$501,400
NNN
$501,400
All Cash - Cash on Cash
$501,400 (5) 5.90%
New Proposed Debt
Mortgage Payment
Cash on Cash with Debt
Principal Reduction
Total Return with Debt
$2
$220,715
5.77%
$119,054
$339,769 (6) 8.89%
(1)
(2)
(3)
(4)
Notes: (1) Rental income is based on initial lease rent of $41,333.34 and 60 monthly payments of $1,666.66
as part of the purchase (10% rent increase every five years are based on the combined starting rent plus the
note payment) (2) Tenant is 100% responsible for Tax, Ins, and CAM per the lease (except roof
replacement, Seller completed a new overlay Feb 2016 and will transfer roof warranty). (3) Underwritten
with $.10 per SF reserve (4) Tenant manages CAM for the property and Landlord does not collect
management fee unless Landlord takes over management of CAM (5) Cash on cash return is based on an
all cash offer. (6) Return is based on Cash flow and 1st year principal reduction with the proposed debt:
Lender quote June 2016; loan amount of 55% of purchase price ($4,672,250) with a five year fixed rate of
3.%, amortized over 25 years, due in 5 years or consecutive 5 year terms with rate adjustment each term
**Loan terms are subject to change with the market, mortgage broker contact information to be provided
upon request.
CRUNCH FITNESS
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Simi Valley, CA
RENT ROLL
Tenant
% SF
Leased
SF
Rent
Comm.
CRUNCH
Increase
100%
26,000
OPTIONS
First
Second
First Year
Annualized
Lease
Term
Rent
Per SF
Year
Rent
Per
Month
NNN
Rent
Increases
Renewal
Options
11/1/15
11/1/20
10/31/20 $19.38
10/31/25 $21.32
$42,000
$46,200
Yes
Yes
10%
10%
2/5 year
11/1/25
11/1/30
10/31/30 $23.45
10/31/35 $25.80
$50,820
$55,902
Yes
Yes
10%
10%
5 year
5 year
1/1/16
12/31/16 $19.38
$504,000
Note: Simi Valley Fitness, LLC, dba Crunch Fitness/UFC Gym purchased the Oakridge Athletic
club, as part of the purchase and new lease, a portion of the first five years rent includes $1,666
per month as a note towards the purchased athletic club. The initial term of the lease is 10 years
with 10% rent increases every five years including options. There are two five year option.
CRUNCH FITNESS
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Simi Valley, CA
LEASE ABSTRACT
Tenant
Simi Valley Fitness, LLC, a California limited liability company, dba
Crunch Fitness/UFC Gym
Guarantee
Curtis Harman, Robin Harman, Northridge Health Fitness LLC, and
Worldwide Fitness Solutions, Inc.
Original Term
10 Years (11/1/2015-10/31/2025)
Options
Two, Five (5) Year Options.
Bldg. Size
26,000 Square Feet
Current Rent
Lease Years 1-5
Lease Years 6-10
Options
Option Period
Lease Years 11-15
Lease Years 16-20
Term
$SF
Annual
$19.38
$21.32
10/29/1915-10/31/2020
11/01/2020-10/31/2025
Rent/
Month
$42,000
$46,200
Rent/Yr
Total Rent
$504,000
$554,400
$2,520,000
$2,772,000
Two, Five Year (notice period between 12 and 18 months)
Term
11/1/2025-10/31/2030
11/1/2030-10/31/2035
$SF/Yr
$23.45
$25.80
Rent/
Month
$50,820
$55,902
Rent/Yr
Total Rent
$609,840
$670,824
$3,049,200
$3,354,120
Security Deposit
$46,200.00
CAM
Tenant pays all expenses directly in connection with the operation,
maintenance, repair and replacement of the Common Area. Landlord
has the right to take over if necessary (Landlord is obligated to replace
the roof at such time as it has become obsolete – meaning it is no
longer cost effective to repair any damage or when the damage is so
substantial as to require replacement in the opinion of Landlord’s
roofing contractor *a new roof overlay was completed Feb 2016))
Expenses & Utilities
Tenant pays ALL utilities.
CRUNCH FITNESS
Simi Valley, CA
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Taxes & Insurance
Tenant pays 100% of their pro rata share of Property Taxes (Land prorata share is 86%). Tenant Pays 100% of insurance (Full replacement
cost, minimum $2,000,000 Aggregate Liability, 12 month business
interruption, minimum $1,000,000 workers comp, etc.)
Management
Tenant pays management per operating expenses
Maintenance Duties
Tenant shall, at its sole cost (i) maintain, repair, replace, and repaint
in first class condition, all portions of the premises. (Per paragraph 10
of the lease – only exclusion is the roof replacement if it is obsolete
and no longer effective to repair)
Continuous Use
9:00 am to 8:00 pm up to 24 hours. Non operation after 15 days is a
default (excluding remodels & destruction).
Radius Clause
Tenant is restricted from opening another location within 5 miles.
Assignment
Requires written consent of the Landlord, and is not to be
unreasonably withheld. Tenant must deliver at least 30 days’ notice
and $1,000 admin fee. Delivery of all documentation per paragraph
32.2 of the lease (summary: Tenants assignment agreement, assignee
financials, background, credit worthiness, etc.). Assignment does not
release tenant from liability.
Comments
Simi Valley Fitness “Crunch” acquired Oak Ridge Athletic Club as of
November 1, 2015 and a new 10 year NNN lease executed. Oak Ridge
Athletic Club served the community and operated profitably at this
location for in excess of 35 years. The tenant is obligated per the lease
to invest a minimum of $300,000 towards tenant improvements.
CRUNCH FITNESS
Simi Valley, CA
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TENANT PROFILE
Simi Valley Fitness, LLC dba Crunch Fitness/UFC gym. Curtis & Robin Harman own the
majority interest. Curtis was previously the President of 24 Hour Fitness, and operates 20+/Crunch branded gyms in the Los Angeles area. There are two additional minor ownership
interests: an affluent Fitness innovator, and a professional sports player.
The Brand - Crunch Fitness was founded in 1989 by former stockbroker Doug Levine. Crunch
has approached fitness with the mission of making exercise fun. Accomplishing this mission meant
doing away with traditional notions of what a ‘serious’ workout should be. Crunch was able to
achieve this goal by collaborating with a highly creative group of fitness instructors with a wide
range of expertise and the result was the development of challenging programming with a
completely fresh slant. Offerings like Hip-Hop Aerobics, Co-Ed Action Wrestling and Cyked
Yoga Cycling were introduced and, along with others, became the embodiment of this new
approach.
Headquartered in New York City, and co-owned by New Evolution Ventures (NeV) and privateequity firm Angelo Gordon, Crunch serves over 400,000 members with both corporately owned
and franchised locations (Crunch Essential) in cities throughout the U.S. and in Australia. Crunch’s
co-owner, New Evolution Ventures (NeV), has a two-decade plus record of success in delivering
superior returns on investment, specializing in the acquisition, development and operations
management of both domestic and international fitness endeavors. Founded in 2008 by Mark
Mastrov, Jim Rowley and Mike Feeney and following a strategic partnership with Vision Capital
in 2011, the current team of NeV professionals is setting industry-wide standards one brand at a
time. Operations have spanned over 20 countries worldwide and included hundreds of facilities.
In 2013 Keith Worts was promoted from president of Crunch Fitness to company CEO, while
former CEO Jim Rowley was moved to chairman of the board of Crunch. Since 2013 Wort and
(NeV) have successfully expanded from 59 to 138 domestic locations. Crunch continues to expand
across the U.S. and around the globe.
CRUNCH FITNESS
Simi Valley, CA
PARCEL MAP
SUBJECT
NAP
Note: “NAP” is a separate parcel and not a part of the offering. Crunch Fitness has a
coterminous lease and options for the parcel that is not a part. Subject parcel is approximate
2.54 acres and the “NAP” parcel is approximately 1.41 acres.
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CRUNCH FITNESS
Simi Valley, CA
TENANT PLANNED IMPROVEMENTS
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CRUNCH FITNESS
Simi Valley, CA
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TENANT PLANNED IMPROVEMENTS
NOTE: THE DIAGRAMS ABOVE WERE DISPLAYED INSIDE THE LOBBY. BOTH FIRST AND SECOND FLOOR WILL HAVE VARIOUS
IMPROVEMENTS; FIRST FLOOR WILL BE REDESIGNED TO HAVE ALL CARDIO AND KEEP TWO RACQUET BALL COURTS.
SECOND FLOOR WILL BE ALL WEIGHTS. TENNIS COURTS HAVE ALREADY BEEN CHANGED TO FOOTBALL FIELD, TRAINING
ZONE, AND CP3 BASKET BALL COURT.
CRUNCH FITNESS
Simi Valley, CA
MAPS
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CRUNCH FITNESS
Simi Valley, CA
MAPS CONTINUED
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CRUNCH FITNESS
Simi Valley, CA
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SUBJECT PHOTOS
Freeway off-ramp to property
Hard Corner – Freeway Entrance
View towards Hwy Exit & Hard Corner
Simi Valley Town Center
Simi Town Center Way at Erringer
Macy’s
Parking Western View towards Mall
Figure 1
CRUNCH FITNESS
Simi Valley, CA
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SIMI VALLEY SUMMARY
The City of Simi Valley is the 3rd largest city in Ventura
County and is known as the “key to the county”. The City is
located in the Eponymous Valley and offers easy access to
many of California’s major freeways including the I-5, 405
and the 118 which runs right through the city. Simi Valley is
situated in the furthest southeast pocket of Ventura County
and is just 30 miles from Downtown Los Angeles.
Incorporated in 1969, Simi Valley is home to two major
Industries; Machinery & Tools, and Metals, having 69 and 51 firms, respectively, located in the
city. Simi Valley has also been the site of many major pop-culture events over the years. The city
and surrounding areas have hosted television series such as Little House on the Prairie, Gun
Smoke and M*A*S*H. The city is known by film makers too with locations and credits for
numerous films throughout the city, including city’s neighborhoods featured in Steven Spielberg’s
iconic E.T. the Extra-Terrestrial movie. According to crime statistics from the FBI, Simi Valley is
the seventh safest city in the U.S. and a study done by the University of Vermont names Simi
Valley as the fifth happiest city in the U.S.
The city has an estimated current population of 127,116, based on the 2010 population of 124,239.
1 Mile
3 Mile
5 Mile
*Numbers based off of 2655 Erringer Road (Subject Site) as the center
Over the next 5 years almost 30,000 new residents are expected to call Ventura County home,
pushing the county population to 870,200. The household incomes in all three rings are over
$100,000 and substantially exceeds the national average. The demographics are largely a dense
population with outstanding higher income.
CRUNCH FITNESS
Simi Valley, CA
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CONTINUED SUMMARY
Upcoming Developments
The Simi Valley Town Center
Located just down the road (0.4 miles to
the west) of the subject property, The
Simi Valley Town Center is the largest
Mall/Town Center in Simi Valley.
Ground has recently been broken on an
$87-million
dollar
redevelopment
project that will make considerable
improvements to the Town Center.
These will consist primarily with the
reconversion of a current building into a
movie theater for a new tenant Studio
Movie Grill (a dine-in theater), as well
as the addition of the new tenant Buffalo
Wild Wings. The project will also largely be aimed at fixing the parking situation, which currently
only provides space in the front of the town center. The project will open up the back of the center to
parking which will provide easy access to the restaurants and Movie Theater situated in the rear of the
mall. Additionally, two new digital signs will be placed on the 118 Freeway, which will display the
names of the center’s retailers and should greatly improve visibility for the mall. In combination with
all of these improvements the owners, Alberta Development Partners LLC, also seek to bring in various
new high quality tenants into some of the spaces.
North Canyon Residential Development
On the vacant land just behind the Simi Valley
Town Center plans are being reviewed by
Ventura County for North Canyon Ranch, a
large residential development project
proposed by SVJV Partners, LLC. The project
plans to build 160 single family residences and
some 40 condos on the undeveloped land and
should bring in some 600-800 new residents
into this living area. The developers aim to
break ground in mid-2016.
CRUNCH FITNESS
Simi Valley, CA
DEMOGRAPHICS MAP
1 MILE / 3 MILE / 5 MILE
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CRUNCH FITNESS
Simi Valley, CA
NEW ROOF PHOTOS
COMPLETED
FEBRUARY 2016
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