lowe`s triple-net corporate guaranty

CONTACT:
Jon Adamo
407-650-3654
[email protected]
LOWE’S TRIPLE-NET
CORPORATE GUARANTY
6055 North Figarden Drive
Fresno, CA
Jon Adamo
407-650-3654
[email protected]
Investment Summary
INVESTMENT OVERVIEW
•
Long term NNN lease (17+ years)
•
Corporate Guaranty with Lowe’s (NYSE: LOW)
•
10% rent growth every 5 years
•
Building was extensively renovated at a cost of
$3 MM
The property was originally built in 1995 as an Albertson' s supermarket. In
2011-2012 the building was extensively renovated for Orchard at a total
expense of $3M, converting the building to Orchard' s new prototype.
Orchard Supply executed a 19-year NNN lease in April 2012. In August 2013
it was announced Lowe' s Home Improvement would acquire the 72-store
chain with a strong foundation in California. Lowe' s strategy was to take
advantage of the rebound in the housing market, particularly noticeable in
heavily populated California, and to play catch up to its rival Home Depot. At
the time of the transaction Lowe's had only 110 stores in California out of its
total 1,750 North American stores while rival retailer Home Depot had 233.
Additionally, Orchard' s network of stores is predominantly located in highdensity, infill markets, and very challenging and costly for newcomers to
break into. In one fell swoop Lowe's was able to get access to Orchard' s
prime real estate properties without having to spend the time and
resources to build a presence on its own.
INVESTMENT HIGHLIGHTS
Price
Cap Rate
Current Annual Rent
Rent Per SF
Rent Increases
$13,363,000
5.00%
$668,000
$13.54
10% every 5 years
Next Rent Increase
5/1/2017
Lease Term Remaining
17+ years
Lease Commencement
April 2012
Renewal Options
Landlord Responsibilities
Building Size
Land Area
Lease Type
Lease Guaranty
Credit Rating
Four - 5 year options
None
49,300 SF
4.67 Acres
NNN (Absolute)
Lowe's Companies, Inc.
A- / Stable
Property Overview
Jon Adamo
407-650-3654
[email protected]
Orchard Supply is located at the northwest quadrant of North Figarden
Drive and West Bullard Avenue in Fresno, CA. The site is located in the
northwest portion of the City of Fresno and is a neighborhood-type
location. The property is the anchor of a shopping center that contains
approximately 30,000 square feet of additional retail space, including O'
Reilly Auto, Subway, Pizza Hut, H&R Block, Carl' s Jr., and Advance
America. Walgreens, AutoZone and Family Dollar are among the other
retailers in the immediate trade area. Traffic counts at this intersection
are approximately 30,000 vehicles per day. The trade area population,
defined as those living within 1.5 miles, is 35,000 with an average
household income of $75,000. The nearest Home Depot is 2.0 miles
southeast of the subject location, while the nearest Lowe's is 6.0 miles
northeast of the subject. The closest Orchard Supply is 5.2 miles to the
east along Blackstone Avenue.
Aerial
Jon Adamo
407-650-3654
[email protected]
Aerial
Jon Adamo
407-650-3654
[email protected]
Site Plan
Jon Adamo
407-650-3654
[email protected]
Jon Adamo
407-650-3654
[email protected]
Tenant/Guarantor Overview
TENANT PROFILE
GUARANTOR PROFILE
•
70+ locations in California
•
1,825 locations in US, Mexico and Canada
•
Purchased by Lowe’s in 2013
•
Investment grade credit – S&P : A-
Orchard Supply Hardware (OSH) is an American retailer of
home improvement and gardening products. Headquartered in
San Jose, California, Orchard Supply Hardware has dozens of
locations throughout California, with expansions into Oregon.
The company, which started as a non-profit cooperative in
1931 and later as a for-profit corporation, was acquired by
Sears in 1996. After a brief period as a public company in
2012–13, OSH was purchased by Lowe's and is operated as a
subsidiary.
The concepts that made Orchard Supply Hardware a successful
hardware retailer continue today. With over 45,000 items,
modern, easy-to-shop stores and acclaimed customer service,
Orchard Supply Hardware maintains the same simple retail
philosophy developed long ago, "Take good care of our
customers and they will take good care of you."
Lowe's Companies, Inc. operates as a home improvement
retailer. It offers products for maintenance, repair, remodeling,
and home decorating. The company provides home
improvement products under the categories of plumbing;
appliances; tools and outdoor power equipment; lawn and
garden; fashion electrical; lumber; seasonal living; paints;
home fashions, storage, and cleaning; flooring; millwork;
building materials; hardware; and cabinets and countertops..
The company serves homeowners and renters consisting of doit-yourself (DIY) and do-it-for-me (DIFM); and commercial
business customers comprising construction trade, and
maintenance and repair organizations. As of November 20,
2013, it operated 1,825 stores in the United States, Canada,
and Mexico. The company also offers its products through
online sites, such as Lowes.com, Lowes.ca, and ATGstores.com.
Lowe's Companies, Inc. was founded in 1946 and is based in
Mooresville, North Carolina.
Executive Summary
OSH - Fresno, CA
6055 N Figarden Dr, Fresno, California, 93722, OSH - Fres...
Rings: 1.5, 3, 5 mile radii
1.5 miles
Prepared by Matthew Williams
Latitude: 36.823180260
Longitude: -119.8706133
3 miles
5 miles
Population
2000 Population
2010 Population
2013 Population
2018 Population
2000-2010 Annual Rate
2010-2013 Annual Rate
2013-2018 Annual Rate
2013 Male Population
2013 Female Population
2013 Median Age
25,175
33,491
34,279
35,761
2.90%
0.72%
0.85%
48.1%
51.9%
32.3
75,094
94,892
97,566
102,309
2.37%
0.86%
0.95%
48.3%
51.7%
33.7
161,885
190,838
193,589
200,380
1.66%
0.44%
0.69%
48.6%
51.4%
32.6
In the identified area, the current year population is 193,589. In 2010, the Census count in the area was 190,838. The rate of change since
2010 was 0.44% annually. The five-year projection for the population in the area is 200,380 representing a change of 0.69% annually from
2013 to 2018. Currently, the population is 48.6% male and 51.4% female.
Median Age
The median age in this area is 32.6, compared to U.S. median age of 37.3.
Race and Ethnicity
2013 White Alone
59.6%
57.2%
54.9%
2013 Black Alone
8.5%
8.6%
8.0%
2013 American Indian/Alaska Native Alone
1.2%
1.3%
1.6%
2013 Asian Alone
9.7%
10.7%
9.7%
2013 Pacific Islander Alone
0.1%
0.2%
0.2%
14.4%
16.2%
20.0%
2013 Other Race
2013 Two or More Races
2013 Hispanic Origin (Any Race)
6.6%
5.7%
5.6%
35.7%
38.0%
43.0%
Persons of Hispanic origin represent 43.0% of the population in the identified area compared to 17.4% of the U.S. population. Persons of
Hispanic Origin may be of any race. The Diversity Index, which measures the probability that two people from the same area will be from
different race/ethnic groups, is 83.8 in the identified area, compared to 62.1 for the U.S. as a whole.
Households
2000 Households
9,497
26,944
58,948
2010 Households
12,118
32,740
66,423
2013 Total Households
12,303
33,421
66,937
2018 Total Households
12,762
34,866
68,937
2000-2010 Annual Rate
2.47%
1.97%
1.20%
2010-2013 Annual Rate
0.47%
0.64%
0.24%
2013-2018 Annual Rate
0.73%
0.85%
0.59%
2.78
2.91
2.88
2013 Average Household Size
The household count in this area has changed from 66,423 in 2010 to 66,937 in the current year, a change of 0.24% annually. The five-year
projection of households is 68,937, a change of 0.59% annually from the current year total. Average household size is currently 2.88,
compared to 2.86 in the year 2010. The number of families in the current year is 47,133 in the specified area.
Data Note: Income is expressed in current dollars
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2013 and 2018. Esri converted Census 2000 data into 2010 geography.
February 04, 2014
©2014 Esri
Page 1 of 2
Executive Summary
OSH - Fresno, CA
6055 N Figarden Dr, Fresno, California, 93722, OSH - Fres...
Rings: 1.5, 3, 5 mile radii
1.5 miles
Prepared by Matthew Williams
Latitude: 36.823180260
Longitude: -119.8706133
3 miles
5 miles
Median Household Income
2013 Median Household Income
2018 Median Household Income
2013-2018 Annual Rate
Average Household Income
$57,385
$67,551
3.32%
$58,327
$69,439
3.55%
$50,884
$57,313
2.41%
2013 Average Household Income
2018 Average Household Income
2013-2018 Annual Rate
Per Capita Income
$74,563
$84,479
2.53%
$79,725
$90,973
2.67%
$69,642
$79,442
2.67%
$26,715
$30,104
2.42%
$27,411
$31,102
2.56%
$24,153
$27,394
2.55%
2013 Per Capita Income
2018 Per Capita Income
2013-2018 Annual Rate
Households by Income
Current median household income is $50,884 in the area, compared to $51,314 for all U.S. households. Median household income is
projected to be $57,313 in five years, compared to $59,580 for all U.S. households
Current average household income is $69,642 in this area, compared to $71,842 for all U.S households. Average household income is
projected to be $79,442 in five years, compared to $83,667 for all U.S. households
Current per capita income is $24,153 in the area, compared to the U.S. per capita income of $27,567. The per capita income is projected to
be $27,394 in five years, compared to $32,073 for all U.S. households
Housing
2000 Total Housing Units
2000 Owner Occupied Housing Units
2000 Owner Occupied Housing Units
2000 Vacant Housing Units
2010 Total Housing Units
2010 Owner Occupied Housing Units
2010 Renter Occupied Housing Units
2010 Vacant Housing Units
2013 Total Housing Units
2013 Owner Occupied Housing Units
2013 Renter Occupied Housing Units
2013 Vacant Housing Units
2018 Total Housing Units
2018 Owner Occupied Housing Units
2018 Renter Occupied Housing Units
2018 Vacant Housing Units
9,852
5,879
3,619
354
13,022
6,772
5,346
904
13,264
6,670
5,634
961
13,753
7,013
5,749
991
28,040
18,650
8,293
1,097
34,956
21,073
11,667
2,216
35,895
20,902
12,519
2,474
37,469
21,972
12,893
2,603
62,062
35,755
23,194
3,113
71,304
37,736
28,687
4,881
72,795
36,930
30,007
5,858
75,657
38,606
30,331
6,720
Currently, 50.7% of the 72,795 housing units in the area are owner occupied; 41.2%, renter occupied; and 8.0% are vacant. Currently, in
the U.S., 56.4% of the housing units in the area are owner occupied; 32.3% are renter occupied; and 11.3% are vacant. In 2010, there
were 71,304 housing units in the area - 52.9% owner occupied, 40.2% renter occupied, and 6.8% vacant. The annual rate of change in
housing units since 2010 is 0.92%. Median home value in the area is $185,651, compared to a median home value of $177,257 for the U.S.
In five years, median value is projected to change by 1.83% annually to $203,260.
Data Note: Income is expressed in current dollars
Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2013 and 2018. Esri converted Census 2000 data into 2010 geography.
February 04, 2014
©2014 Esri
Page 2 of 2