Spartanburg Center Spartanburg, SC

offering memorandum.
Spartanburg Center
Spartanburg, SC
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$3,986,000
6.50% CAP Rate
100% Leased Retail Shops
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Starbucks (S&P Rated A-), Sleep Number and
Men’s Wearhouse
New Construction
10 Year Initial Lease Terms for All Tenants
Dense Retail Corridor
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Across from WestGate Mall - Dillard’s, Bed
Bath & Beyond and Dick’s
High Average Household Income of over
$55,000 within One Mile
This property is listed in conjunction with South Carolina-licensed real estate broker South Carolina
Broker of Record David B Zacharia license 87944.
www.maffiateam.com
Disclaimer
Newmark Cornish & Carey (“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.
Table of Contents
Property Information
financial analysis
rent roll
Tenant Information
Site Plan
Aerials
About the Area
Demographics
Property walk-throughs are to be conducted by appointment only. Contact Broker
for additional information.
Vincent Aicale
Vice President
415.373.4057
[email protected]
CA RE License #01728696
Ryan Forsyth
Vice President
916.504.4908
[email protected]
listed in conjunction with Georgia-licensed real estate broker Delta Commercial.
CAThis
REproperty
Licenseis#01716551
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Property Information
The Investment
Location
The subject property offers investors the unique opportunity to
acquire a newly constructed retail center leased to notable, publicly
traded national tenants Starbucks (S&P Rated A-), Sleep Number,
and Men’s Wearhouse. The property benefits from being located in
a highly desirable dense retail location with excellent frontage and
visibility on West Blackstock Road with average daily traffic counts
of 22,605. It is also located across the street from the WestGate
Mall, which is a major regional shopping destination. With this asset,
investors can capitalize on both stable income, with scheduled
increases, and real estate appreciation.
The subject property is located at 210 West Blackstock Road in
Spartanburg, South Carolina.
Property Highlights
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Lot Size
Approximately 1.13 acre, or 49,223 square feet.
Improvements
Construction was completed in September 2014 of a retail building
totaling 8,150 square feet demised into three suites and occupied
by Starbucks with drive-thru, Sleep Number and Men’s Wearhouse.
100% Leased Retail Shops
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Starbucks (S&P Rated A-), Sleep Number and Men’s
Wearhouse (S&P Rated B+)
New Construction
10 Year Initial Lease Terms for All Tenants
Extremely Well Located
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Dense Retail Corridor with over 2.5 Million SF
Across from WestGate Mall - Dillard’s, Bed Bath & Beyond
and Dick’s
First Stand-Alone Drive Thru for Starbucks in Spartanburg
Men’s Wearhouse Added Second Store to WestGate Mall
High Average Household Income of over $55,000 within One
Mile
1
Financial Analysis | Pricing
Projected Gross Revenue
Scheduled Base Rental Revenue
Total Reimbursement Revenue
Effective Gross Revenue
Year 1
Year 6
$261,300
$287,430
$43,417
$50,792
$304,717
$336,910
$22,655
$26,263
$3,000
$3,478
$20,000
$21,649
$45,655
$51,823
$259,062
$285,087
6.50%
7.15%
Annual Expenses
Common Area Maintenance
Insurance
Taxes
Total Operating Expenses
Net Operating Income
CAP Rate
Financing
The property will be delivered free and clear of permanent financing.
Price: $3,986,000 (6.50% Return)
Note
The net income is an estimate and does not provide for all potential costs and expenses
(i.e. maintenance, repair, etc.) that may be require of the owner. Any reserves set forth
herein are merely estimates and not based on any experience, phsycial inspection, or
prior knowledge. All prospective purchasers are strongly advised to make an independent
investigation to determine their estimate of costs and expenses prior to entering into an
agreement to purchase.
2
Financial Analysis | Assumptions
General & Market Leasing Assumptions
General Assumptions
SITE
Analysis Start Date
October-15
Total Rentable Area
8,150 SF
General Inflation per Annum
3%
General Expense Growth per Annum
3%
Real Estate Tax Growth per Annum
2%
General Vacancy Loss
End of Term
None-Actual
Option
3
Financial Analysis | Possible Financing
Financing
The property will be delivered free and clear of permanent financing. A possible new 10-year non-recourse loan may be secured in the amount
of $2,590,900. The loan will have a fixed interest of 4.15% and be amortized over 30 years.
Cash Flow
Year 1
Price
Loan Amount (65% LTV)
Equity
$3,986,000
<$2,590,900>
$1,395,100
Year 6
Net Income
$259,062
$285,087
Debt Service
<151,133>
<151,133>
Cash Flow
$107,929
$133,954
7.74%
9.60%
CoC Return
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File: Spartanburg Shops ARGUS
Property Type: Retail
Portfolio:
Date: 6/5/15
Time: 3:36 pm
Financial Analysis | Cash Flow Projection
Ref#: ACC
Page: 1
Schedule Of Prospective Cash Flow
In Inflated Dollars for the Fiscal Year Beginning 10/1/2015
For the Years Ending
Year 1
Sep-2016
Year 2
Sep-2017
Year 3
Sep-2018
Year 4
Sep-2019
Year 5
Sep-2020
Year 6
Sep-2021
Year 7
Sep-2022
Year 8
Sep-2023
Year 9
Sep-2024
Year 10
Sep-2025
POTENTIAL GROSS REVENUE
Base Rental Revenue
$261,300
$261,300
$261,300
$261,300
$283,973
$287,430
$287,430
$287,430
$287,430
$312,365
261,300
261,300
261,300
261,300
283,973
287,430
287,430
287,430
287,430
312,365
20,843
2,945
19,629
21,491
3,036
20,040
22,157
3,129
20,458
22,845
3,227
20,885
23,553
3,325
21,321
24,286
3,429
21,765
25,038
3,534
22,220
25,815
3,644
22,684
26,616
3,756
23,157
27,442
3,871
23,640
43,417
44,567
45,744
46,957
48,199
49,480
50,792
52,143
53,529
54,953
Total Potential Gross Revenue
304,717
305,867
307,044
308,257
332,172
336,910
338,222
339,573
340,959
367,318
Effective Gross Revenue
304,717
305,867
307,044
308,257
332,172
336,910
338,222
339,573
340,959
367,318
OPERATING EXPENSES
Common Area Maintenance
Insurance
Real Estate Tax
22,655
3,000
20,000
23,335
3,090
20,400
24,035
3,183
20,808
24,756
3,278
21,224
25,498
3,377
21,649
26,263
3,478
22,082
27,051
3,582
22,523
27,863
3,690
22,974
28,699
3,800
23,433
29,560
3,914
23,902
45,655
46,825
48,026
49,258
50,524
51,823
53,156
54,527
55,932
57,376
259,062
259,042
259,018
258,999
281,648
285,087
285,066
285,046
285,027
309,942
$259,062
$259,042
$259,018
$258,999
$281,648
$285,087
$285,066
$285,046
$285,027
$309,942
Scheduled Base Rental Revenue
EXPENSE REIMBURSEMENT REVENUE
Common Area Maintenance
Insurance
Real Estate Tax
Total Reimbursement Revenue
Total Operating Expenses
Net Operating Income
Cash Flow Before Debt Service
& Taxes
Note: Analysis assumes tenants exercise their first option.
5
Rent Roll
Suite
Tenant
Sq. Ft.
Monthly
Rent PSF
Annual
Rent PSF
Annual
Rent
Term
Rent
Commence.
Date
Lease
Expiration
Date
Rental
Increase
Date(s)
Rental
Increase
Amount(s)
Options
End of Term
Assumption
Option
100 A
Starbucks
1,850
$2.96
$35.51
$65,700
10 yrs.
1/12/2015
2/28/2025
3/1/2020
$72,270
4 @ 5 yrs.
Opt. 1: $79,488
Opt. 2: $87,444
Opt. 3: $96,192
Opt. 4: $105,804
120 C
Sleep
Number
2,400
$3.00
$36.00
$86,400
10 yrs.
9/12/2014
11/30/2024
11/1/2019
$95,040
2 @ 5 yrs.
Opt. 1: $104,544
Opt. 2: $115,008
Option
110 B
Men's
Wearhouse
$120,120
3 @ 5 yrs.
Opt. 1: $132,132
Opt. 2: $145,353
Opt. 3: $159,861
Option
3,900
$2.33
Leased
8,150
100%
Vacant
0
0%
TOTAL
8,150
100%
$28.00
$109,200
10 yrs.
9/17/2014
9/30/2024
9/1/2020
$261,300
Starbucks: Tenant shall have the right to terminate the lease during the initial term as of the Early Termination Date. The Early Termination Date shall be any date
on or after last day of the 60th month of the term. Tenant must give landlord written notice no less than 120 days before the early termination date.
Sleep Number: Tenant shall have the one time right to terminate the lease if tenant’s annual gross sales are less than $1,500,000 for the 12 month period starting
on the first day of the 49th month of the term and ending on the last day of the 60th month.
Men’s Wearhouse: Tenant has the right to terminate lease early if tenant’s aggregate gross sales during the Measuring Period do not exceed $1,350,000. Tenant
must give landlord not less than 90 days prior written notice to landlord, which notice may be given at any time during the period commencing with the 1st day
of the 57th full calendar month following the rent commencement date, and ending on the last day of the 63rd full calendar month following the rent commencement date. The Measuring Period means the first day of the 49th month following the rent commencement date and ending on the last day of the 60th month.
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Tenant Information
Starbucks Corporation operates as a
roaster, marketer, and retailer of specialty
coffee worldwide. Its stores offer coffee
and tea beverages, packaged roasted
whole bean and ground coffees, single
serve products, and juices and bottles water. The company’s stores
also provide fresh food offerings; ready-to-drink beverages; and
various food products, including pastries, and breakfast sandwiches
and lunch items, as well as beverage-making equipment and
accessories. In addition, it licenses the rights to produce and
distribute Starbucks branded products to The North American
Coffee Partnership with the Pepsi-Cola Company, as well as licenses
its trademarks through licensed stores, grocery, and national food
service accounts. The company offers its products under the
Starbucks, Teavana, Tazo, Seattle’s Best Coffee, Starbucks VIA,
Starbucks Refreshers, Evolution Fresh, La Boulange, and Verismo
brand names. Starbucks is the largest coffeehouse company in
the world ahead of UK rival Costa Coffee, with 21,536 stores in 64
countries and territories, including 12,218 in the United States, 1,716
in China, 1,330 in Canada, 1,079 in Japan and 808 in the United
Kingdom. Starbucks Corporation was founded in 1985 and is based
in Seattle, Washington. Starbucks Corporation’s common stock
trades on the NASDAQ Global Select Market (“NASDAQ”) under the
symbol “SBUX”.
For the quarter ended March 29, 2015, Starbucks Corporation
reported revenue of $4.563 billion with net income of $495 million
and total stockholder equity of $6.008 billion. As of June 10, 2015
market capitalization was $79 billion. Starbucks is rated “A-” by
Standard & Poor’s.
Select Comfort Corporation is a U.S.based manufacturer that designs,
manufactures, markets and supports a
line of adjustable-firmness mattresses
featuring air-chamber technology, branded
the SLEEP NUMBER bed, as well as bases and bedding accessories.
The company was founded more than 20 years ago and is based in
Minneapolis, Minnesota. In addition to its Minnesota headquarters,
Select Comfort has manufacturing and distribution facilities in
South Carolina and Utah. As of 2015, the company employed 3,098
people and operated approximately 460 stores across the United
States. Select Comfort Corporation’s common stock trades on
the NASDAQ Global Select Market (“NASDAQ”) under the symbol
“SCSS”.
For the quarter ended April 4, 2015, Select Comfort Corporation
reported revenue of $349.8 million with net income of $28.79
million and total stockholder equity of $270.25 million. As of June
10, 2015 market capitalization was $1.63 billion.
The Men’s Wearhouse, Inc. is a specialty
retailer of men’s suits and a provider of
tuxedo rental product in the United States
and Canada. It operates in two segments:
retail, which offers its products and
services through its four retail merchandising brands and Internet
websites. The company’s corporate apparel segment provides
corporate clothing uniforms and work wear to workforces. As
of January 31, 2015, the Company operated a total of 1,758 retail
stores, with 1,635 stores in the United States and Puerto Rico, as
well as 123 stores in Canada. The company operates its retail stores
in the United States, the District of Columbia and Puerto Rico
under the brand names of Men’s Wearhouse, Men’s Wearhouse
and Tux, Jos. A. Bank and K&G. Its Canadian stores are operated
under the brand name of Moores in 10 provinces. The company
has corporate offices in the Westchase area of Houston, Texas, and
executive offices in Fremont, California. The Men’s Wearhouse, Inc.
is publicly traded on the New York Stock Exchange (“NYSE”) under
the symbol “MW”.
For the quarter ended January 31, 2015, The Men’s Wearhouse, Inc.
reported revenue of $928.36 million and total stockholder equity of
$969.79 million. As of June 10, 2015 market capitalization was $2.83
billion.
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Site Plan
1,850 SF
3,900 SF
2,400 SF
WEST BLACKSTOCK AVENUE
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About the Area
General Overview
SITE
Spartanburg is the largest city in and the county
seat of Spartanburg County, South Carolina and
the 12th largest city by population in the state.
Spartanburg has an estimated population of 37,013
and the Spartanburg Metropolitan Statistical Area,
corresponding to Spartanburg County and Union
County has a population of 316,997. Spartanburg
is located 98 miles northwest of Columbia, South
Carolina, 80 miles west of Charlotte, North Carolina,
and about 190 miles northeast of Atlanta, Georgia.
Within the past decade, developers and community
leaders have spearheaded an effort to revitalize
Spartanburg’s downtown commercial district. This
has resulted in a remodeling of Morgan Square, the
restoration of a number of historic structures and
the relocation of several businesses and company
headquarters to the downtown vicinity. Some of these
new developments include a nine-floor, 240-room
Marriott, the headquarters of Advance America, and
the headquarters of QS/1 Data Systems. The world
headquarters of Denny’s restaurants is also located
in downtown Spartanburg. Numerous other smaller
businesses such as RJ Rockers Brewing Company have
also moved downtown as a result of this communitywide effort.
The economy of Spartanburg benefits from the BMW
manufacturing facility located in the western end of
Spartanburg County. As part of an expansion project
announced in March 2008, the plant will add about
1,200,000 square feet of assembly space, and it will
become the home of the next-generation X3 SAV.
Spartanburg is also home to the world headquarters
and research facility for Milliken & Company. With over
12,000 associates located at more than 60 facilities
worldwide, Milliken is one of the largest privately held
textile and chemical manufacturers in the world.
About the Area
Site Information
SITE
The subject property is located on West Blackstock
Road in Spartanburg, South Carolina, across the
street from WestGate Mall, which contains anchor
tenants such as Dillard’s, Bed Bath & Beyond, and
Dick’s Sporting Goods. In addition to being located
adjacent to WestGate Mall, the property benefits
from being surrounded by complimentary retailers
such as Walmart, Costco, The Home Depot, Lowe’s,
PetSmart, Toys “R” Us, Office Depot, Jo-Ann
Fabric and Craft, Burlington Coat Factory, Harbor
Freight Tools, Best Buy, Panera Bread, Chickfil-A, Olive Garden, Chipotle, Buffalo Wild Wings,
Red Lobster and Ruby Tuesday. The property is
located just off the intersection of West Blackstock
Road (18,200 AADT) and West O Ezell Boulevard
(34,100 AADT), which are both major thoroughfares
running through Spartanburg. The property is
located a block from Interstate 26/The Downtown
Spartanburg off ramp, which has an AADT of
44,600. The demographics surrounding the site
are attractive with nearly 83,000 people within a
5-mile radius and an average household income of
approximately $55,500 within a 1 mile radius.
Demographics
210 W Blackstock Rd, Spartanburg, SC 29301
1 Mile
3 Miles
5 Miles
2010 Total Population
4,673
40,952
82,850
2015 Total Population
4,811
42,519
84,978
2020 Total Population
4,956
44,154
87,447
0.60%
0.76%
0.57%
2015
$55,528
$54,716
$54,062
2020
$62,107
$61,728
$60,736
2015
$124,008
$128,714
$128,141
2020
$135,397
$149,930
$150,861
2015
$21,874
$21,094
$21,063
2020
$24,442
$23,813
$23,655
Population Summary
2015-2020 Annual Rate
Average Household Income
Median Home Value
Per Capita Income
SITE
Top Employers - Spartanburg, SC
Employees
Spartanburg Regional
5,719
Spartanburg County
1,450
Spartanburg County School District 7
1,210
Walmart
750
American Credit Acceptance
750
City of Spartanburg
492
Wofford College
483
QS/1 Headquarters
428
Denny's Corporation
278
Spartanburg County Social Services
253
14
901 Mariners Island Boulevard, Suite 120
San Mateo, CA 94404
Vincent Aicale
Vice President
415.373.4057
[email protected]
CA RE License #01728696
Ryan Forsyth
Vice President
916.504.4908
[email protected]
CA RE License #01716551
www.maffiateam.com