OFFERING MEMORANDUM Net Lease CVS Portfolio - Ackerman … … · Houston, TX Las Vegas, NV Blanchester, OH Meza, AZ Dunedin, FL Riverview, FL OFFERING MEMORANDUM Net Lease CVS Portfolio

Houston, TXLas Vegas, NV

Blanchester, OHMeza, AZ

Dunedin, FLRiverview, FL

OFFERING MEMORANDUM

Net Lease CVS Portfolio

This Offering Memorandum and any subsequent evaluation material you may be

provided (collectively known as the “Offering Memorandum”) is intended solely for

your limited use in considering whether to pursue negotiations to acquire the CVS

Portfolio (the “Properties”) located in Houston, Texas, Las Vegas, Nevada, Blanchester,

Ohio, Meza, Arizona, Dunedin, Florida and Riverview, Florida. The Properties are being

marketed for sale by Ackerman & Co. (“Broker”).

The Offering Memorandum contains brief, selected information pertaining to

the business and affairs of the Property and has been prepared by Broker. It does

not, however, purport to be all-inclusive or to contain all of the information that a

prospective purchaser may desire. Broker makes no representation or warranty, express

or implied, as to the accuracy or completeness of the Offering Memorandum or any of

its contents, and no legal liability is assumed to be implied with respect thereto.

By acknowledgment of your receipt of the Offering Memorandum you agree that the

Offering Memorandum and its contents are confidential, that you will hold and treat it

in the strictest of confidence, that you will not directly or indirectly disclose, or permit

anyone else to disclose, the Offering Memorandum or its contents to any other person,

firm, or entity (including, without limitation, any principal for whom you have been

engaged), without prior written authorization of Owner or Broker and that you will

not use or permit to be used the Offering Memorandum or its contents to be copied

or used in any fashion or manner detrimental to the interest of Owner. Photocopy or

other duplication is strictly prohibited.

THE OFFERING MEMORANDUM SHALL NOT BE DEEMED TO REPRESENT THAT STATE

OF AFFAIRS OF THE PROPERTY OR CONSTITUTE AN INDICATION THAT THERE HAS

BEEN NO CHANGE IN THE BUSINESS OR AFFAIRS OF THE PROPERTY SINCE THE DATE

OF PREPARATION OF THE OFFERING MEMORANDUM.

The information provided in the Offering Memorandum has been gathered from

sources that are deemed reliable, but the Broker does not warrant or represent that

the information is true or correct. Prospective offerors are advised to verify information

independently. The Offering Memorandum is not to be construed as an offer or as any

part of a contract to sell the property.

Furthermore, the inclusion or exclusion in the Offering Memorandum of information

relating to asbestos or any other hazardous, toxic or dangerous chemical item, waste or

substance (hereinafter collectively referred to as “Waste”) relating to the Property shall

in no way be construed as creating any warranties or representations, expressed or

implied by the Broker as to the existence or nonexistence or nature of Waste in, under

or on the Property, it may create significant legal and/or economic obligations upon

the Owner, lessee and/or other holders of interest in the Property or a part thereof and

you are hereby advised to obtain professional assistance such as from a consultant,

engineer and/or attorney prior to taking an interest in the Property or a part thereof.

INFORMATION NOT WARRANTED

Table of Contents

01 Executive Summary Investment Profile Portfolio Locations Investment Highlights Offering Summary Tenant Overview

02 Property Photo Lease Abstract Loan Abstract Area Map Demographics Aerial

JASON POWELL, CCIM Vice President, Investment Sales 770.913.3952 [email protected]

ACKERMAN & CO. 10 Glenlake Parkway South Tower, Suite 1000 770.913.3900 | ackermanco.com

CVS Investment Portfolio

Executive Summary Investment Profile Property Locations Investment Highlights Offering Summary Tenant Overview

01

Houston, TX

Riverview, FL

Dunedin, FL

Mesa, AZ

Blanchester, OH

Las Vegas, NV

CVS Investment Portfolio 5

Ackerman & Co.’s Retail Investment Sales Team is pleased to exclusively present for sale a portfolio of six (6) absolute net-leased CVS properties located across four different geographic regions in the United States. Each property includes an absolute net lease structure with zero landlord responsibilities. The portfolio offering includes a zero cash flow (ZCF), assumable, non-recourse, debt structure whereby each loan is scheduled to fully amortize within the contractual lease term.

The offering includes complete fee simple ownership and geographical diversification with the six locations: Houston, TX, Las Vegas, NV, Blanchester, OH, Mesa, AZ, Riverview, FL, and Dunedin, FL. Four of the six properties are located in “state income tax free” states. The existing debt structure at our asking price requires approximately 15.30% in equity.

INVESTMENT PROFILE

TOTAL OFFERING PRICE: $20,373,493

TOTAL EQUITY REQUIREMENT: $3,107,368 (15.30%)

TOTAL NOI: $1,753,163

CAP RATE: 8.60%

INITIAL TERM LEASE EXP. DATE: 1/31/2029

DEBT STRUCTURE: Assumable/Non-Recourse

LOAN MATURITY: 10/10/2025

CVS RENT HOLIDAY: Yes, 11/1/2025-12/31/2028

BALLOON PAYMENT: NONE (Self-Amortizing Loans)

PORTFOLIO LOCATIONS

EXECUTIVE SUMMARY


INVESTMENT HIGHLIGHTS

Superior Locations in Major Markets – The drugstores within this portfolio are all well-located, corner sites, with superior demographics when compared to the national averages. Four of the six properties feature submarkets with approximately 100,000 people within a three mile radius of the respective site. The “average” five-mile radius population count within the portfolio is approximately 215,000 people. According to Costar, the average household income (3 mile radius) within the portfolio is $68,290, roughly 8% above the national average. The median household income within the portfolio (1 mile radius) was $56,316 in 2012, roughly 10% above the national average.

Low Equity Requirement – the ZCF structure enables an investor to utilize the tenant’s investment grade tenant with a high leverage, non-recourse, self-amortizing loan. With an equity requirement of only 15.30%, it also allows an investor to purchase a premier drugstore tenant using a significantly lower amount of equity than what is usually required.

Fully Amortizing Assumable Loans – this offering includes a twenty-two (22) year self-amortizing loan which means the debt on the property is scheduled to be completely paid off from the CVS rental payments in year twenty-two (22) of the twenty-five (25) year initial lease term for CVS.

Absolute Net Lease – this offering includes an absolute net lease structure with zero landlord responsibilities. All expenses, including, but not limited to, repairs to the building, roof, and parking lot are borne by CVS.

Remaining Lease Term – the initial twenty-five year (25 year) lease term commenced in 2003, therefore, 40% of the “zero cash flow” period has already lapsed and there are fifteen years (15) until the properties are projected to produce full cash flow unencumbered by debt.

Long-term “bond style” Investment – this structure fits well for 1031 exchange needs and estate planning goals – ideal asset with which to form a trust.

Benefits of Tax Deductions – the ZCF structure enables qualified investors to take deductions for depreciation and interest and offset other income using a relatively small amount of equity.

Low Purchase Price PSF and High Cap Rate – this offering includes a purchase price per square foot that is significantly lower than most of the recently sold CVS and Walgreens stores built during this timeframe. Furthermore, the overall cap rate is approximately 2.0%+ higher than market free and clear CVS stores providing a hedge against future market cap rate increases.

Superior Credit Tenant – Originated in 1963, CVS is the second largest U.S. Pharmacy and presently has over 7300 drugstores in the United States and Puerto Rico. Currently, CVS has a BBB+ Investment grade rating from Standard & Poor’s with a market capitalization value of approximately $61BB.


OFFERING SUMMARY

LOCATION LEASE START DATE

LEASE END DATE

CURRENT NOI

CURRENT LOAN

BALANCE (12/10/2013)

CURRENT 467 LOAN BALANCE

(12/1/2013)

TOTAL DEBT PURCHASE PRICE

EQUITY REQUIREMENT EQUITY %

CVS - Houston, TX 9/10/2003 1/31/2029 $257,533 $2,165,396 $372,037 $2,537,433 $2,994,170 $456,737 15.30%CVS - Las Vegas, NV 9/10/2003 1/31/2029 $346,466 $2,913,171 $478,227 $3,391,398 $4,001,849 $610,000 15.30%CVS - Blanchester, 9/10/2003 1/31/2029 $160,693 $1,353,411 $255,873 $1,609,284 $1,898,955 $289,671 15.30%CVS - Mesa, AZ 9/10/2003 1/31/2029 $315,996 $2,656,973 $444,077 $3,101,050 $3,659,239 $558,189 15.30%CVS - Dunedin, FL 9/10/2003 1/31/2029 $378,777 $3,184,841 $560,318 $3,745,159 $4,419,287 $674,128 15.30%CVS - Riverview, FL 9/10/2003 1/31/2029 $293,698 $2,469,479 $411,871 $2,881,350 $3,399,993 $518,643 15.30%

TOTAL $17,265,674 $20,373,493 $3,107,368 15.30%

INVESTMENT PROFILE

TOTAL OFFERING PRICE: $20,373,493

TOTAL EQUITY REQUIREMENT: $3,107,368 (15.30%)

TOTAL NOI: $1,753,163

CAP RATE: 8.60%

INITIAL TERM LEASE EXP. DATE: 1/31/2029

DEBT STRUCTURE: Assumable/Non-Recourse

LOAN MATURITY: 10/10/2025

CVS RENT HOLIDAY: Yes, 11/1/2025-12/31/2028

BALLOON PAYMENT: NONE (Self-Amortizing Loans)


TENANT OVERVIEW

CVS – www.cvs.com

CVS Caremark Corporation (NYSE: CVS) operates as a pharmacy services company in the United States. Founded in1967, it is the nation’s second largest Pharmacy company. The company’s Pharmacy Services segment provides a range of pharmacy benefit management services, including mail order pharmacy services, specialty pharmacy services, plan design and administration, formulary management, and claims processing; and drug benefits to eligible beneficiaries under the Federal Government’s Medicare Part D program. This segment primarily serves employers, insurance companies, unions, government employee groups, managed care organizations and other sponsors of health benefit plans, and individuals. As of December 31, 2012, CVS had over 7,525 retail locations and operated 44 retail specialty pharmacy stores, 13 specialty mail order pharmacies, and 4 mail service pharmacies located in 45 states, Puerto Rico, Brazil, and the District of Columbia. This segment operates business under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/pharmacy, CarePlus, RxAmerica, Accordant, and TheraCom names. For the fiscal year ended December 31, 2012, CVS Caremark Corporation reported revenue of over $123 billion with net income of $3.884 billion.

Caremark Corporation Common (NYSE: CVS) S&P Rating: BBB+Headquarters: Woonsocket, Rhode Island USAStore Locations: 7,525Year Founded: 1963Employees: 201,0002012 Revenue: $123Bwww.info.cvscaremark.com

LEASE TYPE: NNN

LEASE EXPIRATION: 1/31/2029

TOTAL SF (PORTFOLIO): 69,826

TOTAL ACERAGE 8.89 (PORTFOLIO):

CVS Investment Portfolio

Property Photo Lease Abstract Loan Abstract Area Map Demographics Aerial

02

LEASE ABSTRACT

Tenant: CVS/Caremark Corporation

Lease Structure: Absolute NNN

Ownership Type: Fee Simple

Building: 12,125 SF

Land Area: 1.49 Acres

Year Built: 2003

Rent Commencement: 9/10/2003

Lease Expiration: 1/31/2029

Annual Rent: $257,533

Rent Holiday: Yes, 3 years

Renewal Options: Ten (10) x Five (5) year

LOAN ABSTRACT

Current Loan Balance (12/10/2013): $2,165,396

Current 467 Loan Balance (12/1/2013): $372,037

Total Loan Balance: $2,537,433

Interest Rate: 6.20%

Loan Start Date: 9/12/2003

Loan End Date: 10/10/2025

Amortization: 22 years

Annual Debt Service: $257,533

Recourse: Non-Recourse

Balloon Payment: None, self-amortizing


19715 TOMBALL PARKWAY, HOUSTON, TX 77070

Offering Price: $2,994,170

Equity Requirement: $456,737

In-Place Cap Rate: 8.60%

Houston

Beaumont Hwy

Hard

y Toll Rd

W Mt Ho uston Rd

Westpark Tollway

69

69

10

610

45

69

290

10

90

45

249

N

William P.Hobby Airport

8

8

6

6

35

225

146

George Bush Intercontinental

Airport

146

288

36

99 99

CVS PHARMACY19715 TOMBALL PARKWAYHOUSTON, TEXAS 77070


AREA MAP - 19715 TOMBALL PARKWAY, HOUSTON, TX 77070


DEMOGRAPHICS - 19715 TOMBALL PARKWAY, HOUSTON, TX 77070

Source: Claritas, Market + Main, Inc., U.S. Census Bureau

DETAILED DEMOGRAPHICS 1 MILE 3 MILES 5 MILES2013 Estimated Population 8,525 98,399 261,9982018 Projected Population 9,707 108,195 286,3532010 Census Population 7,783 92,706 248,0282000 Census Population 5,057 68,425 183,142Growth 2010 - 2013 9.53% 6.14% 5.63%Growth 2013 - 2018 13.87% 9.95% 9.30%2013 Estimated Median Age 35.7 36.8 36.12013 Estimated Households 3,845 38,355 94,5232018 Projected Households 4,398 42,118 102,9242010 Census Households 3,499 36,236 90,0952000 Census Households 1,961 25,112 64,7982013 Estimated Average Household Size 2.20 2.56 2.772013 Estimated Median Household Income $68,020 $67,975 $69,3442013 Estimated Average Household Income $85,128 $92,454 $92,6632013 Estimated Housing Units 4,300 41,505 101,3732013 Estimated Owner Occupied Units 1,631 23,393 64,866

Tomball Pkwy

Cypresswood Dr

140,000 VEHICLES PER DAY

19,267 VEHICLES

PER DAY


AERIAL - 19715 TOMBALL PARKWAY, HOUSTON, TX 77070

CVS PHARMACY19715 TOMBALL PARKWAYHOUSTON, TEXAS 77070

LEASE ABSTRACT




Building: 10,890 SF

Land Area: 1.47 Acres

Year Built: 2002






LOAN ABSTRACT












3270 SOUTH BUFFALO DRIVE, LAS VEGAS, NV 89147




Las Vegas

Nor

thsh

ore

Rd

N S

imm

ons

St

N

Com

mer

ce St

Las V

egas

S

trip

573

N Rancho Dr

W Craig Rd

15

15

15

215

515

95

95

95

93

93

N

159

159

160 146

595

596

596

599 147

612

582 564

604

S N

ellis

Blv

d

Lake Mead Blvd

St Rose

Pkwy

S D

ecat

ur B

lvd

Bruce Woodbury Bel

tway

592

MaCarran International

Airport

CVS PHARMACY3270 SOUTH BUFFALO DRIVELAS VEGAS, NV 89147


AREA MAP - 3270 SOUTH BUFFALO DRIVE, LAS VEGAS, NV 89147


DEMOGRAPHICS - 3270 SOUTH BUFFALO DRIVE, LAS VEGAS, NV 89147



29,301 VEH

ICLES PER D

AY



AERIAL - 3270 SOUTH BUFFALO DRIVE, LAS VEGAS, NV 89147

S B

uffa

lo D

r

CVS PHARMACY3270 SOUTH BUFFALO DRIVELAS VEGAS, NEVADA 89147

W Desert Inn Dr

LEASE ABSTRACT




Building: 10,050 SF

Land Area: 1.02

Year Built: 2003






LOAN ABSTRACT












610 CHERRY STREET, BLANCHESTER, OH 45107




Cincinnati

Cherry StP

leas

ant A

ve

Reading R

d

Montgomery Rd

Kellogg Rd

River Rd

52

127

275

275

275

75

75

71

71

75

129

74

52

50

42

22

27

126 52

74

126

27

50

50

68

68

N

32

131

3

9

18

338

28

48

GreaterCincinnati

Airport

CVS PHARMACY610 CHERRY STREETBLANCHESTER, OH 45107


AREA MAP - 610 CHERRY STREET, BLANCHESTER, OH 45107


DEMOGRAPHICS - 610 CHERRY STREET, BLANCHESTER, OH 45107


DETAILED DEMOGRAPHICS 1 MILE 3 MILES 5 MILES2013 Estimated Population 3,795 5,893 10,1952018 Projected Population 3,736 5,829 10,1132010 Census Population 3,833 5,933 10,2392000 Census Population 3,921 5,796 9,357Growth 2010 - 2012 1.01% 1.20% 0.90%Growth 2012 - 2017 0.30% 0.70% 0.70%2013 Estimated Median Age 38.9 39.3 39.72013 Estimated Households 1,470 2,250 3,7742018 Projected Households 1,458 2,238 3,7462010 Census Households 1,475 2,254 3,7892000 Census Households 1,493 2,186 3,4512013 Estimated Average Household Size 2.53 2.57 2.672013 Estimated Median Household Income $37,492 $39,933 $44,7672013 Estimated Average Household Income $45,082 $47,817 $53,0702013 Estimated Housing Units 1,651 2,505 4,1642013 Estimated Owner Occupied Units 987 1,585 2,885

7,509 VEHICLES

PER DAY

Cherry St


AERIAL - 610 CHERRY STREET, BLANCHESTER, OH 45107

CVS PHARMACY610 CHERRY STREETBLANCHESTER, OH 45107

LEASE ABSTRACT




Building: 14,000 SF

Land Area: 1.39

Year Built: 2003






LOAN ABSTRACT












6015 EAST BROWN ROAD, MESA, AZ 85205




W Bell Rd

W Carefree Hwy

N Scottsdale Rd

S Ellsworth Rd

N Pow

er Rd

N

17

10

10

101 87

202

202

303

51 60

60

87

88

74

Phoenix-MesaGateway

Airport

Phoenix Sky Harbor International

Airport

Tonto National Forest

McDowell Mountain

Regional Park

Scottsdale

PhoenixMesa

CVS PHARMACY6015 EAST BROWN ROADMESA, ARIZONA 85205


AREA MAP - 6015 EAST BROWN ROAD, MESA, AZ 85205


DEMOGRAPHICS - 6015 EAST BROWN ROAD, MESA, AZ 85205


DETAILED DEMOGRAPHICS 1 MILE 3 MILES 5 MILES2013 Estimated Population 13,877 86,685 220,5842018 Projected Population 13,997 88,905 227,7242010 Census Population 13,894 85,789 217,3032000 Census Population 14,638 80,112 196,742Growth 2010 - 2013 -0.12% 1.04% 1.51%Growth 2013 - 2018 0.87% 2.56% 3.24%2013 Estimated Median Age 46.9 49.7 43.62013 Estimated Households 5,953 38,536 90,5662018 Projected Households 6,074 39,711 93,6972010 Census Households 5,895 37,967 89,0022000 Census Households 5,679 33,871 77,0262013 Estimated Average Household Size 2.31 2.22 2.422013 Estimated Median Household Income $46,037 $39,938 $43,3962013 Estimated Average Household Income $56,748 $51,947 $58,2622013 Estimated Housing Units 6,885 50,103 115,0392013 Estimated Owner Occupied Units 4,622 27,978 66,721

N R

ecke

r Rd

E Brown Rd


AERIAL - 6015 EAST BROWN ROAD, MESA, AZ 85205

CVS PHARMACY6015 EAST BROWN ROADMESA, ARIZONA 85205


12,3

52 V

EHIC

LES

PER

DA

Y

LEASE ABSTRACT




Building: 11,707 SF

Land Area: 1.52

Year Built: 2003






LOAN ABSTRACT












2175 MAIN STREET, DUNEDIN, FL 34698




Tampa Rd

4th St N

N

275

275

4

75

75

600

60

589

92

584

19

19A

19

688

597

St. Petersburg

Tampa

19A

275

Tampa International

Airport

41 301

CVS PHARMACY2175 MAIN STREET, DUNEDIN, FLORIDA 34698


AREA MAP - 2175 MAIN STREET, DUNEDIN, FL 34698


DEMOGRAPHICS - 2175 MAIN STREET, DUNEDIN, FL 34698



N B

elch

er R

d

Main St

21,0

00 V

EHIC

LES

PER

DA

Y


AERIAL - 2175 MAIN STREET, DUNEDIN, FL 34698

CVS PHARMACY2175 MAIN STREETDUNEDIN, FLORIDA 34698


LEASE ABSTRACT




Building: 11,054 SF

Land Area: 2

Year Built: 2003






LOAN ABSTRACT












10013 MCMULLEN ROAD, RIVERVIEW, FL 33569




4th St N

N

275

275

4

75

75

600

60

589

92

584

19

19A

19

688

597

St. Petersburg

Tampa

19A

275

301 41

600

41B

301

Tampa International

Airport

CVS PHARMACY10013 MCMULLEN ROAD RIVERVIEW, FLORIDA 33569


AREA MAP - 10013 MCMULLEN ROAD, RIVERVIEW, FL 33569


DEMOGRAPHICS - 10013 MCMULLEN ROAD, RIVERVIEW, FL 33569



McM

ulle

n R

d

Boyette Rd

9,47

2 VE

HIC

LES

PER

DAY


AERIAL - 10013 MCMULLEN ROAD, RIVERVIEW, FL 33569

CVS PHARMACY10013 MCMULLEN ROADRIVERVIEW, FLORIDA 33569


© 2013 Ackerman & Co. All rights reserved.

FOR MORE INFORMATION, PLEASE CONTACT:

JASON POWELL, CCIM Vice President, Investment Sales 770.913.3952 [email protected]

Documents

OFFERING MEMORANDUM Net Lease CVS Portfolio - Ackerman … … · Houston, TX Las Vegas, NV Blanchester, OH Meza, AZ Dunedin, FL Riverview, FL OFFERING MEMORANDUM Net Lease CVS Portfolio