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CONFIDENTIAL OFFERING MEMORANDUM
3871 Stagg Dr,
Beaumont, TX 77701 PLAZAGATEWAY Click the Icon to View
Exclusive Video Presentation
Vehicles Per Day 140,970
285,862 Total SF | +/- 23.09 Acreswww.dumesfalk.com BOR: Timothy Speck
Renovated 2017 | Not Included
Included13,332 SF | 2 Units
Included26,571 SF | 10 Units
C O N F I D E N T I A L I T Y & D I S C L A M E R
THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE CONSIDERED AN APPRAISAL. This information has been secured
from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are
approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc.
© 2018 Marcus & Millichap. All rights reserved.
The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this
information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about
the accuracy or completeness of any information provided.
As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before completing any
purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation
to conduct a due diligence examination of this Property for Buyer.
Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property. The
value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors.
Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with
the suitability of the property for your needs.
Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors must request and carefully review all legal and financial
documents related to the property and tenant. While the tenant’s past performance at this or other locations is an important consideration, it is not a guarantee of future success.
Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant’s projected sales with little or no record of
actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply
with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and
lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including
the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential
replacement tenant considering the location of the property, and Buyer’s legal ability to make alternate use of the property.
By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost, expense, or liability
arising out of your investigation and/or purchase of this net leased property.
Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or
name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product,
service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.
ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.
PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.
N O N - E N D O R S E M E N T N O T I C E
N E T- L E A S E D D I S C L A I M E R
TABLE OF CONTENTS
01INVESTMENT OVERVIEW
02
03
PRICING & FINANCIAL ANALYSIS
DEMOGRAPHICS & MARKET OVERVIEW
01INVESTMENT
OVERVIEW
5
Building 1
6
Building 1
7
Building 3
Building 2 (Adjacent to Building 1)
Building Location
8
Building 3 (Behind Building 2)
Building Location
9
(Not Included)
(Not Included)
(Not Included)(Not Included)
(Not Included)
(Not Included)
Outpad 2Included | +/- 0.92
Two Outpads (Included) +/- 0.92 Acres Each
Outpad 1Included | +/- 0.92
Baptist HospitalsOf Southeast Texas
Central SeniorHigh School
King Middle School
PathwaysLearning Center
Ozen High School
The Event Centre
56,349 Residents | 100,412 Employees$58,455 Average Household Income
10
Conn’s Corporate Office
Conn’s Warehouse
Christus Southeast Texas – St. Elizabeth
Subject Property
ExxonMobil Refinery2,400 acres | Employees: 2040 people
& 1000 contractors
Harbor Island
SpindletopPark
Lamar University14,103 enrollment1,410 employees
BeaumontIndustrial Area
Art Museum ofSoutheast Texas
Fire Museum of TexasEdison Museum
Knife River Corporation
Baptist Hospitals of Southeast Texas1,620 employees
Ozen High School
Beaumont Country Club
Monsignor KellyCatholic High School
Beaumont MunicipalAthletic Complex
• Texas Home Health America LP• Exxon Mobile Refinery• Memorial Hermann Hospital• Baptist Hospitals of SE Texas• Beaumont Refinery
Lamar UniversityEnrollment: 14,100Ozen High SchoolEnrollment: 1,100Monsignor Kelly High SchoolEnrollment: 450
107,010 Residents | 154,201 Employees$60,091 Average Household Income
11
Subject Property
Christus Southeast Texas – St. Elizabeth
12
265 Miles
02PRICING & FINANCIAL
ANALYSIS
Gateway Plaza
3871 Stagg Dr, Beaumont, TX 77701
DEMOGRAPHICS1-Mile 3-Miles 5-Miles
2017 Estimate Population 4,768 56,349 107,010
2017 Estimate Households 1,753 22,084 41,534
Daytime Population 14,517 100,412 154,201
Average Household Income $47,745 $58,455 $60,091
SITE DESCRIPTION
PRICING DETAIL & OPERATING DATA
Built | Renovated 1956 | 1995, 2004
Gross Leasable Area (GLA) 285,862 SF
Current Occupancy 95.47%
Lot Size +/- 23.09 Acres
Ownership Fee Simple
MAJOR TENANTS
TENANT GLALEASE
EXPIRATIONLEASETYPE
Stage 50,000 01/31/2025 NNN
Conn Appliances 44,750 08/31/2021 NNN
Vista College 38,750 05/30/2020 NNN
Furniture Mart 20,373 12/31/2020 Gross
MAJOR EMPLOYERS
EMPLOYER # OF EMPLOYEES
Texas Home Health America 5,540
Exxon Mobile Refinery 3,040
Memorial Hermann Baptist Hospital 1,759
Baptist Hospital of SE Texas 1,700
Beaumont Refinery 1,545
Dawson Marine 1,000
14
PLAZAGATEWAY
15
RENT ROLL AND TENANT LEASE SUMMARY
15
PLAZAGATEWAY
Bldg.* Tenant NameSquare
Feet
% of
GLA
Lease Dates Annual
Rent
Per SF
Monthly
Rent
Annual
Rent
Changes
On
Changes
To
Lease
Type
Renewal
OptionsComm. Exp.
1
Conn Appliances 44,750 15.65% 04/01/2001 08/31/2021 $5.50 $20,510 $246,125 09/01/2021 $268,500 NNN Three, Five-Year
Jason's Deli 4,800 1.68% 09/01/1990 08/30/2022 $11.50 $4,600 $55,200 09/01/2019 $57,600 NNN One, Five-Year
Paris Nail Spa 2,140 0.75% 07/01/2008 08/30/2023 $15.34 $2,736 $32,832 None None Gross None
Mira’s Boutique 3,665 1.28% 12/01/2017 11/30/2019 $12.96 $3,958 $47,491 None None Gross None
Naomi's Fashions 3,000 1.05% 08/01/2011 07/31/2021 $10.00 $2,500 $30,000 None None Gross None
Diamond Fashions 2,486 0.87% 01/01/2019 12/31/2019 $9.65 $2,000 $24,000 None None Gross None
Supreme Beauty 11,388 3.98% 07/01/2000 06/30/2023 $9.48 $9,000 $108,000 07/01/2023 $113,400 Gross One, Five-Year
Dollar Tree 11,325 3.96% 06/01/2004 06/30/2024 $8.75 $8,258 $99,094 07/01/2019 $104,756 NNN None
Texas State Optical 2,300 0.80% 05/01/1992 06/30/2019 $12.50 $2,396 $28,750 07/01/2019 $29,900 NNN One, Two-Year
Rent A Center 4,800 1.68% 08/01/1996 08/31/2019 $14.52 $5,808 $69,696 None None NNN None
Stage 50,000 17.49% 07/01/1971 01/31/2025 $6.50 $27,083 $325,000 02/01/2025 $375,000 NNN One, Five-Year
Furniture Mart 20,373 7.13% 01/01/2018 12/31/2020 $7.36 $12,500 $150,000 01/01/2021 $165,000 Gross Two, Five-Year
Catherine's 4,950 1.73% 06/01/1973 01/31/2022 $10.50 $4,331 $51,975 None None NNN None
Education Futures 38,750 13.56% 01/01/2010 05/30/2020 $7.21 $23,282 $279,387 06/01/2020 $321,292 NNN One, Five-Year
Z C Chinese Restaurant 15,000 5.25% 04/01/2015 04/30/2020 $9.60 $12,000 $144,000 05/01/2020 $158,400 Gross Three, Five-Year
Jerry Nelson's Restaurant (Dark) 18,686 6.54% 04/01/1998 04/30/2020 $9.63 $15,000 $180,000 05/01/2020 Base+CPI Gross Three, Five-Year
2
Church of God 2,118 0.74% 10/01/2012 MTM $9.95 $1,756 $21,073 None None Gross None
Swing Out Civic Club 4,950 1.73% 12/01/2007 MTM $6.56 $2,705 $32,456 None None NNN None
Damel Braiding 1,200 0.42% 02/01/2012 MTM $13.00 $1,300 $15,600 None None NNN None
Beaumont Finance 960 0.34% 06/01/2006 06/30/2020 $15.12 $1,209 $14,512 None None NNN None
Quality/Maxie Nails 1,954 0.68% 04/01/2004 06/30/2020 $13.44 $2,188 $26,262 None None Gross None
Artistic Pleasure Tattoo 1,406 0.49% 03/01/2017 02/28/2019 $9.82 $1,150 $13,800 None None Gross None
Credit Central 2,500 0.87% 10/01/2016 12/31/2019 $10.56 $2,200 $26,400 None None Gross None
Nova Healthcare 6,080 2.13% 01/01/2012 06/30/2022 $10.50 $5,320 $63,840 None None NNN One, Five-Year
3You Only Live Once 6,988 2.44% 01/01/2012 02/28/2020 $10.30 $6,000 $72,000 03/01/2020 $74,160 Gross One, Five-Year
US Imaging 6,344 2.22% 06/01/2001 10/31/2026 $7.53 $3,979 $47,748 11/01/2026 $53,478 NNN One, Five-Year
Farmers Insurance (Parking Easement) N/A N/A 12/01/1996 MTM N/A $200 $2,400 None None Gross None
Pho Seasons (Parking Easement) N/A N/A 10/01/2010 MTM N/A $200 $2,400 None None Gross None
Vacant (Building One) 4,383 1.53%
Vacant (Building One) 3,327 1.16%
Vacant (Building Two) 2,768 0.97%
Vacant (Building Two) 2,635 0.92%
Vacant (Not Leasable) 846 0.30%
Vacant (Remeasure) (1,010) (0.35%)
Total Occupied 272,913 95.47% $184,170 $2,210,041
Total Vacant 12,949 4.53% $0 $0
Total 285,862 100.00% $184,170 $2,210,041
*The Building color tabs represent which building that group of tenants is occupying. (See key on the next page.)
16
Building Key
Building One
Building Two
Building Three
Parking Easement
College Street
So
uth
11
thS
treet
14
0,9
70
VP
D
TENANT OVERVIEW
Stage Stores is a department store company specializing in retailing brand name
apparel, accessories, cosmetics, footwear, and housewares throughout the United
States. The corporate office is located in Houston, Texas. Stage Stores operates 793
stores in 42 states under the Bealls, Palais Royal, Peebles, Stage, Gordmans, and
Goody's nameplates. The company operates stores primarily in Midwestern,
Southeastern, Mid-Atlantic, and New England regions. Stores can be found in shopping
malls and centers or in standalone locations.
ABOUT STAGE STORES
LEASE SUMMARY
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
11/14/2007 – 01/31/2018 $300,000 $25,000 $6.00
02/01/2018 – 01/31/2025 $325,000 $27,083 $6.50
Lease Type Triple-Net (NNN)
Tenant Specialty Retailers, Inc.
Rent Increases (Option) February 1, 2025 - $375,000
Guarantor Corporate
Ticker NYSE: SSI
Rent Commencement July 1, 1971
Lease Expiration January 31, 2025
Lease Term Remaining Six Years
Original Lease Term Fifteen Years
Renewal Options One, Five-Year
C.AM. Reimburses over 2007 Base Year - $2.75/SF Total
Real Estate Taxes Reimburses over 2007 Base Year - $2.75/SF Total
Insurance Reimburses over 2007 Base Year - $2.75/SF Total
Early Termination Tenant can terminate lease at any point that sales are below $75/SF
RENT SCHEDULE
17
#291 on Forbes List of America’s Best EmployersCheck Website here: https://www.forbes.com/companies/stage-stores/#3a5b76506a16
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
02/01/2025 – 01/31/2030 $375,000 $31,250 $7.50
OPTION SCHEDULE
790+ LOCATIONS
HEADQUARTERED INHouston, TX
FOUNDED1988
14,500+ EMPLOYEES
Conn's Inc. is an American furniture, mattress, electronics and appliance store chain
headquartered in The Woodlands, Texas, United States. The chain has stores in
Alabama, Arizona, Colorado, Georgia, Kansas, Louisiana, Mississippi, Nevada, New
Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia.
Within Texas Conn's has stores in Greater Houston, the Dallas/Fort Worth Metroplex,
Greater San Antonio, Greater El Paso, Greater Corpus Christi, Southeast Texas, and
South Texas.
ABOUT CONN’S HOMEPLUS
110+ LOCATIONS
HEADQUARTERED INThe Woodlands, TX
FOUNDED1934
2,800+ EMPLOYEES
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
04/01/2001 – 03/31/2006 $156,625 $13,052 $3.50
04/01/2006 – 11/30/2016 $190,187 $15,849 $4.25
08/16/2016 – 08/31/2021 $246,125 $20,510 $5.50
RENT SCHEDULE
18
Learn More About Conn’s HomePlus at The Website Below:Visit Safelite.com - https://ir.conns.com/
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
09/01/2021 – 08/31/2026 $268,500 $22,375 $6.00
09/01/2026 – 08/31/2031 $313,248 $26,104 $7.00
09/01/2031 – 08/31/2036 $358,000 $29,833 $8.00
OPTION SCHEDULE
LEASE SUMMARYLease Type Triple-Net (NNN)
Tenant CAI, LP.
Rent Increases (Option) September 1, 2021 - $268,500
Guarantor Corporate
Ticker NASDAQ: CONN
Rent Commencement April 1, 2001
Lease Expiration August 31, 2021
Lease Term Remaining Over Two Years
Original Lease Term Ten Years
Renewal Options Three, Five-Year
C.AM. Pro-rata Share
Real Estate Taxes Pro-rata Share
Insurance Pro-rata Share
TENANT OVERVIEW
TENANT OVERVIEW
For more than 30 years, Vista College has been helping students get the training they
need to pursue work in their chosen fields. They offer two ways for you to learn: online
and on-campus. Their mission is: “To provide high-quality, specialized career
preparation or enhancement to meet and cope with technological changes resulting in
employment and career success.”
ABOUT VISTA COLLEGE
6 ACCREDITEDPROGRAMS
HEADQUARTERED INEl Paso, TX
FOUNDED2004
MORE THAN4,701 STUDENTS
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
01/01/2010 – 12/31/2011 $124,368 $10,364 $7.21*
01/01/2012 – 05/30/2020 $279,384 $23,282 $7.21
RENT SCHEDULE
19
Recognized as One of the 2017 Top Military Friendly Schools in the U.S.Check Website here: https://www.vistacollege.edu/vista-experience/about/
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
06/01/2020 – 05/30/2025 $321,292 $26,774 $8.29
OPTION SCHEDULE
LEASE SUMMARYLease Type Triple-Net (NNN)
Tenant Education Futures Group, LLC.
Rent Increases (Option) June 1, 2020 - $321,292
Guarantor Corporate
Ticker N/A
Rent Commencement January 1, 2010
Lease Expiration May 30, 2020
Lease Term Remaining Over One Year
Original Lease Term Five Years
Renewal Options One, Five-Year
C.AM. Reimburses Pro-rata Share, 3% CAP on CAM Expenses
Real Estate Taxes Pro-rata Share
Insurance Pro-rata Share
*Rent/SF is the same for both term periods due to the tenant expanding their SF from 17,250 to 38,750 on 6/17/2011.
TENANT OVERVIEW
Since 1998, Furniture Mart has been committed to delivering the best prices, best
selection and best service to each of the communities they serve. Their mission is to
be a market leader in home furnishings by providing a pressure-free shopping
experience and immediate availability of merchandise, while exceeding the
expectations of every customer. Owned and operated in Louisiana and Texas,
Furniture Mart is the fastest growing furniture chain in the region, now with nine
locations. Furniture Mart specialize in a wide assortment of furniture, including
bedrooms, living rooms, dining rooms, children's furniture and mattresses, as well as a
large variety of accessories to complete your interior design.
ABOUT FURNITURE MART
9+ LOCATIONS
HEADQUARTERED INGretna, LA
FOUNDED1998
95% In-StockShowroom Merchandise
20
Find Out More About the Fastest Growing Furniture Store in the RegionVisit Furnituremarts.com - https://www.furnituremarts.com/
LEASE SUMMARYLease Type Gross
Tenant Furniture Mart, LLC.
Rent Increases (Option) January 1, 2021 - $165,000
Guarantor N/A
Ticker N/A
Rent Commencement January 1, 2018
Lease Expiration December 31, 2020
Lease Term Remaining Nearly Two Years
Original Lease Term Three Years
Renewal Options Two, Five-Year
C.AM. Does not reimburse Pro-rata Share
Real Estate Taxes Does not reimburse Pro-rata Share
Insurance Does not reimburse Pro-rata Share
Early Termination Tenant can terminate lease after 15 months with 6 months notice
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
01/01/2018 – 12/31/2020 $150,000 $12,500 $7.36
RENT SCHEDULE
YEAR ANNUAL RENT MONTHLY RENT RENT/SF
01/01/2021 – 12/31/2025 $165,000 $13,750 $8.10
01/01/2026 – 12/31/2030 $181,500 $15,125 $8.91
OPTION SCHEDULE
21
PRICING DETAIL & OPERATING DATA
Gateway Plaza3871 Stagg Drive, Beaumont, TX 77701
List Price $25,500,000
CAP Rate 7.15%
Price/SF $89
Net Operating Income $1,823,343
Gross Leasable Area (GLA) 285,862 SF
Occupancy 95.47%
Scheduled Base Rental Income $2,210,041
Expense Reimbursement Income
CAM $50,545
Insurance $47,888
Real Estate Taxes $159,466
Management Fees $32,563
Total Reimbursement Income $290,461
Effective Gross Revenue $2,500,502
Less: Operating Expenses ($677,159)
Net Operating Income $1,823,343
Less: Debt Service (Interest Only) ($637,056)
Net Cash Flow After Debt Service 11.86% $1,186,287
Operating Expenses Current Per/SF
Co
mm
on A
rea
Main
tenance
Electric/ Gas $20,982 $0.07
Water/ Sewer $521 $0.00
Trash Removal $3,087 $0.01
Landscaping $11,561 $0.04
Grounds Maintenance $23,825 $0.08
General R&M $37,233 $0.13
Contract Labor $10,640 $0.04
Pest Control $2,222 $0.01
Total CAM Expenses $110,070 $0.39
2017 Insurance Premiums $104,285 $0.36
2018 Real Estate Taxes* $347,266 $1.21
Management Fee (3% of EGR) $74,038 $0.26
Est. Reserves $41,500 $0.15
Total Expenses $677,159 $2.37
CURRENT OPERATING DATA
Loan Type Assumption
Master Servicer Wells Fargo
Start Date March 19, 2015
Maturity Date April 6, 2025
First Principal & Interest Payment May 6, 2020
Original/ Current Loan Amount $15,500,000
Interest Rate 4.11%
Interest Only Period | Term | Amortization (Years) 5 |10 | 35
IO Debt Service (Monthly/ Annual) $53,088/ $637,056
LOAN INFORMATION
PLAZAGATEWAY
THE OFFERING
*2018 taxes based on assessed value of $12,418,530
22
ARGUS MODEL PLAZA
GATEWAYSoftware: ARGUS Ver. 15.0.1.26
File: Gateway Plaza V2
Property Type: Retail
Portfolio:
Date: 1/12/19
Time: 5:04 pm
Ref#: AYP
For the Years Ending
Potential Gross Revenue
Base Rental Revenue
Absorption & Turnover Vacancy
Scheduled Base Rental Revenue
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Apr-2020 Apr-2021 Apr-2022 Apr-2023 Apr-2024 Apr-2025 Apr-2026 Apr-2027 Apr-2028 Apr-2029 Apr-2030
$2,224,268 $2,527,748 $2,586,729 $2,610,809 $2,617,821 $2,681,189 $2,893,834 $2,968,173 $3,022,619 $3,075,216 $3,134,790(20,812) (127,213) (12,384) (3,050) (25,722) (66,858) (17,151) (3,367) (120,481)
2,203,456 2,400,535 2,574,345 2,610,809 2,614,771 2,655,467 2,826,976 2,951,022 3,022,619 3,071,849 3,014,309
Expense Reimbursement Revenue
Electric/ Gas (CAM) 9,827 12,914 14,116 14,524 15,666 16,075 16,128 16,767 17,194 17,526 18,048
Water/ Sewer (CAM) 245 322 349 360 389 401 398 416 428 436 448
Trash Removal (CAM) 1,447 1,899 2,078 2,137 2,307 2,363 2,373 2,464 2,532 2,579 2,655
Landscaping (CAM) 5,416 7,115 7,777 8,001 8,631 8,855 8,885 9,238 9,476 9,656 9,942
Ground Maintenance (CAM) 11,163 14,662 16,029 16,492 17,792 18,250 18,315 19,038 19,526 19,899 20,496
General R&M (CAM) 17,442 22,914 25,046 25,776 27,800 28,520 28,618 29,756 30,516 31,101 32,030
Contract Labor (CAM 4,985 6,550 7,156 7,368 7,946 8,151 8,179 8,503 8,721 8,887 9,152
Pest Control (CAM) 1,039 1,368 1,495 1,539 1,661 1,702 1,709 1,776 1,823 1,856 1,910
Insurance 48,851 64,181 70,153 72,194 77,871 79,877 80,157 83,332 85,473 87,104 89,709
Taxes 162,674 230,700 252,495 259,675 278,967 286,046 287,366 298,358 305,892 311,754 320,873
Management Fee 33,717 49,929 58,798 60,252 64,537 66,334 68,163 73,100 75,027 76,025 77,379
Reserves
Total Reimbursement Revenue 296,806 412,554 455,492 468,318 503,567 516,574 520,291 542,748 556,608 566,823 582,642
Total Potential Gross Revenue
Effective Gross Revenue
Operating Expenses
Electric/ Gas (CAM)
Water/ Sewer (CAM)
Trash Removal (CAM)
Landscaping (CAM)
Ground Maintenance (CAM)
General R&M (CAM)
Contract Labor (CAM
Pest Control (CAM)
Insurance
Taxes
Management Fee
Reserves
Total Operating Expenses
Net Operating Income
Debt Service
Interest Payments
Principal Payments
Total Debt Service
Leasing & Capital Costs
Tenant Improvements
Leasing Commissions
Total Leasing & Capital Costs
Cash Flow After Debt Service
But Before Taxes
2,500,262 2,813,089 3,029,837 3,079,127 3,118,338 3,172,041 3,347,267 3,493,770 3,579,227 3,638,672 3,596,951
2,500,262 2,813,089 3,029,837 3,079,127 3,118,338 3,172,041 3,347,267 3,493,770 3,579,227 3,638,672 3,596,951
20,982 21,402 21,830 22,266 22,712 23,166 23,629 24,102 24,584 25,075 25,577
521 531 542 553 564 575 587 598 610 623 635
3,087 3,149 3,212 3,276 3,341 3,408 3,476 3,546 3,617 3,689 3,763
11,561 11,792 12,028 12,269 12,514 12,764 13,020 13,280 13,546 13,816 14,093
23,825 24,302 24,788 25,283 25,789 26,305 26,831 27,367 27,915 28,473 29,043
37,233 37,978 38,737 39,512 40,302 41,108 41,930 42,769 43,624 44,497 45,387
10,640 10,853 11,070 11,291 11,517 11,747 11,982 12,222 12,466 12,716 12,970
2,222 2,266 2,312 2,358 2,405 2,453 2,502 2,552 2,603 2,655 2,709
104,285 106,371 108,498 110,668 112,881 115,139 117,442 119,791 122,186 124,630 127,123
347,266 354,211 361,296 368,521 375,892 383,410 391,078 398,899 406,877 415,015 423,315
75,008 84,393 90,895 92,374 93,550 95,161 100,418 104,813 107,377 109,160 107,909
41,500 42,330 43,177 44,040 44,921 45,819 46,736 47,670 48,624 49,596 50,588
678,130 699,578 718,385 732,411 746,388 761,055 779,631 797,609 814,029 829,945 843,112
1,822,132 2,113,511 2,311,452 2,346,716 2,371,950 2,410,986 2,567,636 2,696,161 2,765,198 2,808,727 2,753,839
635,500 631,713 623,230 614,392 605,186 595,595 941,873 928,780 914,949 900,337
203,042 211,525 220,362 229,569 239,160 232,107 245,200 259,031 273,643
635,500 834,755 834,755 834,754 834,755 834,755 1,173,980 1,173,980 1,173,980 1,173,980
134,510 318,995 106,641 23,164 323,253 876,975 117,741 127,477 161,672 799,819
29,180 60,674 22,063 5,490 63,239 156,281 24,281 23,790 30,558 207,250
163,690 379,669 128,704 28,654 386,492 1,033,256 142,022 151,267 192,230 1,007,069
$1,022,942 $899,087 $1,347,993 $1,511,962 $1,508,541 $1,189,739 $360,400 $1,380,159 $1,439,951 $1,442,517 $1,746,770==========
==================================================================================================== ===========
Schedule Of Prospective Cash Flow
In Inflated Dollars for the Fiscal Year
Beginning 5/1/2019
23
ARGUS MODEL PLAZA
GATEWAY
For the Years Ending
Sources Of Capital
Net Operating Gains
Debt Funding Proceeds
Initial Equity Contribution
Net Proceeds from Sale
Defined Sources Of Capital
Required Equity Contributions
Total Sources Of Capital
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Apr-2020 Apr-2021 Apr-2022 Apr-2023 Apr-2024 Apr-2025 Apr-2026 Apr-2027 Apr-2028 Apr-2029
$1,822,132 $2,113,511 $2,311,452 $2,346,716 $2,371,950 $2,410,986 $2,567,636 $2,696,161 $2,765,198 $2,808,727
15,500,000 17,230,285
10,000,000
37,214,041
27,322,132 2,113,511 2,311,452 2,346,716 2,371,950 2,410,986 19,797,921 2,696,161 2,765,198 40,022,768
13,206,603
$27,322,132 $2,113,511 $2,311,452 $2,346,716 $2,371,950 $15,617,589 $19,797,921 $2,696,161 $2,765,198 $40,022,768
=========== =========== =========== =========== =========== =========== =========== =========== =========== ===========Uses Of Capital
Property Purchase Price $25,500,000
Total Debt Service 635,500 834,755 834,755 834,754 834,755 834,755 1,173,980 1,173,980 1,173,980 1,173,980
Tenant Improvements 134,510 318,995 106,641 23,164 323,253 876,975 117,741 127,477 161,672
Leasing Commissions 29,180 60,674 22,063 5,490 63,239 156,281 24,281 23,790 30,558
Retirement & Penalties 14,396,342 16,220,304
Defined Uses Of Capital 26,299,190 1,214,424 963,459 834,754 863,409 15,617,589 2,207,236 1,316,002 1,325,247 17,586,514
Cash Flow Distributions 1,022,942 899,087 1,347,993 1,511,962 1,508,541 17,590,685 1,380,159 1,439,951 22,436,254
Total Uses Of Capital $27,322,132 $2,113,511 $2,311,452 $2,346,716 $2,371,950 $15,617,589 $19,797,921 $2,696,161 $2,765,198 $40,022,768
=========== =========== =========== =========== =========== =========== =========== =========== =========== ===========
Unleveraged Cash On Cash Return
Cash to Purchase Price 6.50% 6.80% 8.56% 9.20% 9.19% 7.94% 6.02% 10.02% 10.25% 10.26%
NOI to Book Value 7.10% 8.12% 8.83% 8.97% 9.05% 9.07% 9.30% 9.71% 9.91% 9.99%
Cash to Purchase Price & Costs 6.50% 6.80% 8.56% 9.20% 9.19% 7.94% 6.02% 10.02% 10.25% 10.26%
Leveraged Cash On Cash Return
Cash to Initial Equity 10.23% 8.99% 13.48% 15.12% 15.09% -132.07% 175.91% 13.80% 14.40% 14.43%
Unleveraged Annual IRRLeveraged Annual IRR
10.95%16.99%
Schedule Of Sources & Uses Of Capital
Equity is Based on Property Value, Leverage and Operating Requirements
Software: ARGUS Ver. 15.0.1.26File: Gateway Plaza V2
Property Type: RetailPortfolio:
Date: 1/12/19Time: 5:04 pm
Ref#: AYP
CONTACT LISTING AGENT FOR ARGUS FILE
03DEMOGRAPHIC & MARKET
OVERVIEW
Population
4,768
Population
56,349
Population
107,010
Employees
14,517
Employees
100,412
Employees
154,201
26Source: © 2017 Experian
DEMOGRAPHIC & MARKET OVERVIEW
POPULATION 1 Miles 3 Miles 5 Miles▪ 2022 Projection
Total Population 4,699 55,967 106,641
▪ 2017 Estimate
Total Population 4,768 56,349 107,010
▪ 2010 Census
Total Population 4,714 56,044 106,173
▪ 2000 Census
Total Population 4,824 59,026 104,928
▪ Current Daytime Population
2017 Estimate 14,517 100,412 154,201
HOUSEHOLDS 1 Miles 3 Miles 5 Miles▪ 2022 Projection
Total Households 1,764 22,285 42,056
▪ 2017 Estimate
Total Households 1,753 22,084 41,534
Average (Mean) Household Size 2.55 2.49 2.50
▪ 2010 Census
Total Households 1,765 22,210 41,542
▪ 2000 Census
Total Households 1,771 23,289 41,180
▪ Occupied Units
2022 Projection 1,764 22,285 42,056
2017 Estimate 1,986 25,284 47,222
HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles▪ 2017 Estimate
$150,000 or More 2.55% 5.76% 6.55%
$100,000 - $149,000 6.14% 8.29% 8.72%
$75,000 - $99,999 9.80% 8.29% 8.36%
$50,000 - $74,999 16.63% 14.37% 15.46%
$35,000 - $49,999 11.59% 13.60% 13.92%
Under $35,000 53.29% 49.69% 46.98%
Average Household Income $47,745 $58,455 $60,091
Median Household Income $32,953 $35,272 $37,669
Per Capita Income $17,940 $23,137 $23,684
HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 MilesTotal Average Household Retail Expenditure $51,754 $53,951 $55,780
▪ Consumer Expenditure Top 10 Categories
Housing $13,602 $14,190 $14,626
Transportation $10,651 $10,727 $11,159
Shelter $7,227 $7,462 $7,723
Food $5,649 $5,901 $6,137
Personal Insurance and Pensions $3,744 $4,226 $4,539
Utilities $3,621 $3,696 $3,777
Health Care $3,544 $3,809 $3,860
Entertainment $1,798 $2,008 $2,076
Household Furnishings and Equipment $1,375 $1,535 $1,587
Cash Contributions $1,266 $1,438 $1,461
POPULATION PROFILE 1 Miles 3 Miles 5 Miles▪ Population By Age
2017 Estimate Total Population 4,768 56,349 107,010
Under 20 28.75% 27.31% 28.21%
20 to 34 Years 20.86% 20.58% 22.28%
35 to 39 Years 6.67% 6.02% 6.07%
40 to 49 Years 11.14% 11.10% 11.05%
50 to 64 Years 17.01% 19.44% 18.81%
Age 65+ 15.59% 15.53% 13.57%
Median Age 35.28 36.69 34.62
▪ Population 25+ by Education Level
2017 Estimate Population Age 25+ 3,094 37,126 68,126
Elementary (0-8) 9.26% 7.44% 6.08%
Some High School (9-11) 10.42% 9.91% 9.11%
High School Graduate (12) 33.43% 31.04% 31.31%
Some College (13-15) 27.94% 24.26% 24.72%
Associate Degree Only 4.21% 4.89% 5.56%
Bachelors Degree Only 7.00% 13.94% 14.87%
Graduate Degree 3.70% 6.90% 6.91%
Created on December 2018
PLAZAGATEWAY
27
DEMOGRAPHIC & MARKET OVERVIEW
Source: © 2017 Experian
Income
In 2017, the median household income for your selected geography is
$37,669, compare this to the US average which is currently $56,286.
The median household income for your area has changed by 16.76%
since 2000. It is estimated that the median household income in your
area will be $43,942 five years from now, which represents a change
of 16.65% from the current year.
The current year per capita income in your area is $23,684, compare
this to the US average, which is $30,982. The current year average
household income in your area is $60,091, compare this to the US
average which is $81,217.
Population
In 2017, the population in your selected geography is 107,010. The
population has changed by 1.98% since 2000. It is estimated that the
population in your area will be 106,641 five years from now. The
current population is 47.97% male and 52.03% female. The median
age of the population in your area is 34.62, compare this to the US
average which is 37.83. The population density in your area is
1,363.44 people per square mile.
Households
There are currently 41,534 households in your selected geography.
The number of households has changed by 0.86% since 2000. It is
estimated that the number of households in your area will be 42,056
five years from now, which represents a change of 1.26% from the
current year. The average household size in your area is 2.50 persons.
Employment
In 2017, there are 154,201 employees in your selected area, this is
also known as the daytime population. The 2000 Census revealed
that 58.73% of employees are employed in white-collar occupations
in this geography, and 41.33% are employed in blue-collar
occupations. In 2017, unemployment in this area is 9.72%. In 2000,
the average time traveled to work was 20.00 minutes.
Race and Ethnicity
The current year racial makeup of your selected area is as follows:
37.17% White, 46.89% Black, 0.05% Native American and 3.81%
Asian/Pacific Islander. Compare these to US averages which are:
70.42% White, 12.85% Black, 0.19% Native American and 5.53%
Asian/Pacific Islander. People of Hispanic origin are counted
independently of race.
People of Hispanic origin make up 16.98% of the current year
population in your selected area. Compare this to the US average of
17.88%.
Housing
The median housing value in your area was $101,230 in 2017,
compare this to the US average of $193,953. In 2000, there were
24,689 owner occupied housing units in your area and there were
16,491 renter occupied housing units in your area. The median rent at
the time was $386.
PLAZAGATEWAY
28
DEMOGRAPHIC & MARKET OVERVIEW
OVERVIEW
BEAUMONT
The Beaumont metro is located in East Texas off the Gulf of Mexico and
is one of the nation’s largest petrochemical refining areas. It shares
borders with the Houston metro to the west and the Lake Charles market
in Louisiana to the east. The metro consists of the counties of Newton,
Hardin, Jefferson and Orange and contains 413,000 people. The cities of
Beaumont, Port Arthur and Orange are known as the Golden Triangle.
Beaumont is the most populous city with 119,500 residents, followed
Port Arthur with 55,500.
▪ Energy-sector activities play a significant part in the metro’s economy. Companies represented in
the area include Gulf Oil, Humble Oil, Magnolia Petroleum Co. and Exxon Mobil. The area is home to
a large portion of the nation’s refining capacity.
▪ Aside from corporate headquarters and the energy industry, large employers represent diverse
employment sectors and generate large staff counts. These include Conn’s, Lamar University,
Christus St. Elizabeth Hospital and Memorial Baptist Hospital.
▪ The Sabine-Neches Waterway ranks among the top in the U.S. in terms of commercial military
outload and is one of the nation’s largest waterway by cargo volume.
DEMOGRAPHICS
ECONOMY
METRO HIGHLIGHTS
* Forecast
Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau
PORT ACTIVITY
The Port of Beaumont contributes to significant economic activity in the region.
It is one of the nation’s largest seaports based on tonnage.
INDUSTRIAL AND MANUFACTURING SECTORS
Large industrial facilities in the area include the Exxon Mobil refinery and
chemical plants for Goodyear and DuPont.
CORPORATE HEADQUARTERS
Corporate headquarters represent a variety of industries and include
companies such as Jason’s Deli.
414K
2017POPULATION:
153K
2017HOUSEHOLDS:
37.1
2017MEDIAN AGE:
$43,400
2017 MEDIAN HOUSEHOLD INCOME:
U.S. Median:
37.8U.S. Median:
$56,3002.2%
Growth2017-2022*:
0.7%
Growth2017-2022*:
PLAZAGATEWAY
29
DEMOGRAPHIC & MARKET OVERVIEW
Rebouding employment, healthy demographics encourage Houston retail
market. While many other major metros’ growth cycles are beginning to slow down,
Houston is ramping back up. The decline in energy prices placed pressure on the
local oil and gas industry in the middle of a national economic expansion. As a result,
employment gains were virtually flat for two years as additions in other sectors
mitigated losses at energy firms and related companies. Job creation in the metro
began to strengthen during 2017, and growth continue to improve again this year,
attracting new residents to the metro. With the market returning to expansion mode,
retail tenant demand strengthens from last year at a time when deliveries remain near
a cyclical peak.
Households replacing damaged goods help boost retail spending. Thousands of
residents are still dealing with repairs and replacing household goods in the metro
following the flooding from Hurricane Harvey. This helped boost spending in the
metro at its fastest pace since 2014, and a stronger rate of growth is expected again
this year. Retail developers continue to bring a healthy amount of new space online in
the metro to meet rising tenant demand, and while vacancy rises this year, the
development pipeline begins to thin and vacancy remains healthy through the end of
this year.
• Houston’s ability to rebound from uncertain economic times and perils has
made it an attractive market in which to invest, with yields averaging 50 to
100 basis points higher than most major markets across the country. Rising
interest rates, and the local economy back in growth mode, could prompt
additional demand as buyers search for higher-yielding opportunities.
• Unanchored strip centers are performing well and attracting strong investor
interest throughout the metro. Properties with small shop space and a good
mix of service-related retailers are in highest demand. Cap rates for these
assets average between 6.5 percent and 7.5 percent depending on property
age, location and tenant credit.
• Strip center assets in western areas of the metro, such as Sugar Land, Katy
and up to The Woodlands, are in high demand and often trading for a
premium, with prices averaging $40 to $60 per square foot more than the
metro average.
Retail 2018 Outlook
HOUSTON METRO AREA
4.4 million sq. ft.
will be completed
3.3% increase in
asking rents
20 basis point
increase in vacancy
Construction:
Asking rent advances at a healthy clip to
$17.63 per square foot. Last year, the
average increased 4.4 percent.
Vacancy rises to 5.9 percent in 2018 as the
absorption of more than 3.6 million square
feet of retail space falls short of supply
additions this year.
* Cap rates trailing 12 months through 1Q18; 10-Year Treasury up to March 29, 2018
Sources: CoStar Group, Inc.; Real Capital Analytics
Retail deliveries in Houston during 2018 will
be one of the highest in the country and
remain in line with the previous five-year
average.
Vacancy:
Rents:
Investment Trends
Houston Employment Rising Again,
Attracts Residents and Retailers
PLAZAGATEWAY
30
DEMOGRAPHIC & MARKET OVERVIEW
• A gain of more than 26,000 employees in the professional and business services sector helped propel a 64,000-job increase in Houston’s total employment during the past 12 months.
• Strong job gains resulted in a 120-basis-point drop in the metro’s unemployment rate, which reached 4.5 percent in the first quarter, near the decade low.
EMPLOYMENT
• Approximately 1 million square feet of retail space came online in the first quarter, with deliveries concentrated in the North Houston suburb of Conroe.
• Space underway is concentrated in the southwest portion of the metro, where nearly 800,000 square feet of space is under construction. Sugar Land will gain more than 300,000 square feet of space this year.
CONSTRUCTION
• Absorption stumbled during the third quarter of 2017 as retailers dealt with the aftermath of Hurricane Harvey, resulting in supply additions outpacing demand over the last year and pushing up vacancy to 5.7 percent.
• The CBD, Inner Loop and North Houston submarkets recorded increases in vacancy of 100 basis points or more over the past four quarters.
VACANCY
• The average asking rent advanced to $17.20 per square foot over the past year, slowing from the 6.7 percent pace of growth achieved over the previous 12-month span.
• Despite a 240-basis-point increase in vacancy last year, rent growth in the CBD was strong. The average surged more than 25 percent during the past year to $24.27 per square foot.
RENTS
HOUSTON METRO AREA
increase in the average asking rent Y-O-Y
1.6%basis point increase in vacancy Y-O-Y40square feet
completedY-O-Y
5.1 millionincrease in total employment Y-O-Y
2.1%
1Q18 - 12-Month Trend
* Forecast
PLAZAGATEWAY
31
DEMOGRAPHIC & MARKET OVERVIEW
Buyers Target Houston for Larger Yield Spreads Amid Rising Interest Rate Environment
Outlook: Strong retail property operationsand a favorable economic outlook willsustain healthy demand for Houston areaproperties.
Vacancy
Rate
Y-O-Y
BasisPoint
Change
SubmarketAsking
Rent
Y-O-Y%
Change
Austin County 1.6% -960 $12.00 35.3%
Northeast 4.4% 30 $17.49 6.4%
Inner Loop 4.6% 100 $26.18 10.1%
West 5.0% 30 $20.93 1.8%
East 5.5% 70 $13.96 6.3%
Northwest 5.7% 30 $18.66 9.5%
Southeast 5.7% -20 $14.34 1.8%
Southwest 6.2% 20 $15.04 -2.5%
CBD 6.3% 240 $24.27 25.3%
South 6.3% 60 $15.98 -2.3%
North 6.7% 140 $13.64 -14.8%
Overall Metro 5.7% 40 $17.20 1.6%
Submarket Trends
Lowest Vacancy Rates 1Q18
Sales Trends
• Multi-Tenant: Sales activity is increasing as confidence in Houston returns, and the
average price grew 3.6 percent to nearly $214 per square foot. Cap rates for these
properties averaged 7.7 percent.
• Single-Tenant: Net leased retail assets changed hands for an average price of $256
per square foot over the past 12 months, with cap rates in the low-7 percent area.
* Trailing 12 months through 1Q18 over previous time period
Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics
* Forecast **2017-2022
HOUSTON METRO AREA
PLAZAGATEWAY
32
DEMOGRAPHIC & MARKET OVERVIEW
• Fed raises benchmark interest rate, plans additional increases. The Federal Reserveincreased the federal funds rate by 25 basis points in late March, raising the overnight lendingrate to 1.5 percent. While the Fed noted the inflation outlook moderated recently, an upgradedeconomic forecast including tax cuts and a regulation rollback strengthened growthprojections through 2020. As a result, the Fed has guided toward at least two more rate hikesthis year, while setting the stage for up to four increases in 2019.
• Lending costs rise alongside Fed rate increase. As the Federal Reserve lifts interest rates,lenders will face a rising cost of capital, which may lead to higher lending rates for investors.However, greater competition for loan demand has prompted some lenders to absorb somecost increases. While higher borrowing costs may prompt buyers to seek higher cap rates, thepositive economic outlook should boost rent growth above inflation over the coming year.
• The capital markets environment remains highly competitive. While the Federal Reservehas committed to tightening policy, other major central banks have maintained easing policies.The downward pressure on rates from foreign central banks is counteracting greatereconomic growth and wider government deficits, keeping demand for fixed-incomeinvestments stable. Loan pricing resides in the mid-4 percent range with maximum leverage of70 percent. Portfolio lenders will require loan-to-value ratios closer to 65 percent with interestrates, depending on term, in the high-3 to mid-4 percent range. The passage of tax reform andrising fiscal stimulus will keep the U.S. economy growing strongly this year, while limited newconstruction and steady absorption will contain office vacancy near 14 percent.
* Through May 1st
Sources: CoStar Group, Inc.; Real Capital Analytics
Capital Markets
HOUSTON METRO AREA
PLAZAGATEWAY
Broker of Record: Timothy Speck
RYAN K. ROEDERSHEIMERAssociate Director - National Retail Group
Cincinnati Office
Tel: (513) 878-7796
Fax: (513) 878-7710
Licenses: OH SAL.2015004880
STANTON R. FALKFirst Vice President Investments
Senior Director - National Retail Group
Cincinnati Office
Tel: (513) 878-7721
Fax: (513) 878-7710
Licenses: OH SAL.2012001364
EXCLUSIVELY LISTED BY:
www.dumesfalk.com
JOEL M. DUMESSenior Vice President Investments
Senior Director - National Retail Group
Cincinnati Office
Tel: (513) 878-7720
Fax: (513) 878-7710
Licenses: OH SAL.2003013045, KY 63818
PLAZAGATEWAY
