STARBUCKS DRIVE-THRU · PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business

S T A R B U C K S D R I V E - T H R U1363 HILLCREST ROAD

MOBILE, AL 36695

OFFERING MEMORANDUM

The information contained in the following Marketing Brochure is proprietary and strictly confidential.

It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not

be made available to any other person or entity without the written consent of Marcus & Millichap.

This Marketing Brochure has been prepared to provide summary, unverified information to prospective

purchasers, and to establish only a preliminary level of interest in the subject property. The information

contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has

not made any investigation, and makes no warranty or representation, with respect to the income or

expenses for the subject property, the future projected financial performance of the property, the size and

square footage of the property and improvements, the presence or absence of contaminating substances,

PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the

improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s

plans or intentions to continue its occupancy of the subject property. The information contained in

this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus

& Millichap has not verified, and will not verify, any of the information contained herein, nor has

Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or

representation whatsoever regarding the accuracy or completeness of the information provided. All

potential buyers must take appropriate measures to verify all of the information set forth herein.

NON-ENDORSEMENT NOTICE

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.

Co n f i d e n t i a l i t y a n d D i s c l a i m e r

E X C LU S I V E LY L I S T E D B Y

Broker of RecordEddie Greenhalgh

15 Richard Arrington Jr Blvd N, Suite 300Birmingham, AL 35203

Tel: (205) 510-9200Fax: (205) 510-9110License: 00008-8298

Chad LieberSenior Associate

NEWPORT BEACHTel: (949) 419-3249Fax: (949) 266-5548

[email protected]: IL 475.163385

4 PROPERTY DESCRIPTIONThis information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed 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. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap ACT ID Z0000000

5 PROPERTY DESCRIPTION

THE OFFERING

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed 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. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap ACT ID Z0000000

O F F E R I N G P R I C E

$1,540,000

N E T O P E R A T I N G I N C O M E

$92,400

C A P R A T E

6.00%

Offering Summary

Building Square Feet 1,750 Square Feet

Year Built / Renovated 2006 / 2018

Lot Size 0.57 Acres

Lease SummaryLease Type Double Net

Tenant Starbucks Corporation

Guarantor Corporate

Roof and Structure Landlord Responsible

Primary Term 10 Years

Rent Commencement Date 03/20/2006

Lease Expiration Date 02/28/2027*

Term Remaining 8+ Years

Rental Increases 10% Every Five Years

Renewal Options Four, Five-Year

1363 Hillcrest RoadMobile, AL 36695

*Tenant shall have the right to terminate the lease on 02/28/2022. Should tenant elect to terminate the lease early, tenant shall pay to landlord a fee equal to twelve (12) months of rent.

6 PRICING & FINANCIAL

RENT SCHEDULE INVESTMENT HIGHLIGHTS


Lease Years Annual Rent Monthly Rent Cap Rate

11-15 $92,400 $7,700 6.00%

16-20 $101,640 $8,470 6.60%

Options Annual Rent Monthly Rent Cap Rate

21-25 (Option 1) $111,807 $9,317 7.26%

26-30 (Option 2) $122,990 $10,249 7.99%

31-35 (Option 3) $135,275 $11,273 8.78%

36-40 (Option 4) $148,802 $12,400 9.66%

�� Best-in-Class Corporate Guaranty (BBB+ by S&P)

�� Investment Grade Credit

�� Signalized Hard-Corner Location as Pad Site to Winn-Dixie Grocer

�� Located Kiddie-Corner to Best-in-Class Tenants, CVS and McDonald’s

�� Full Interior Remodel in 2018 Signals Long-Term Commitment from

Tenant

�� Blocks Away from Providence Hospital

�� 10% Rent Increases Every Five Years

�� Dense Presence of National Retailers in Proximity (Winn-Dixie,

McDonald’s, CVS, Wendy’s, Firehouse Subs, Walmart, LongHorn

Steakhouse)

�� 12-Year Operating History

�� Early 10-Year Lease Extension Executed in 2017

�� 35,000 Passing Cars Per Day


INVESTMENT HIGHLIGHTS


Best-In-Class Guaranty & Investment Grade Tenant

»As the largest coffee house brewing company in the world, Starbucks represents the staple of the retail business today. Starbucks has more than 28,000 locations worldwide and currently carries a credit rating of BBB+.

2018 Remodel at Expense of Starbucks

»The subject location just underwent a full, interior store remodel, typically a $100,000+ expense for the tenant. The 2018 remodel signals long-term commitment and plans for Starbucks to continue operating at this location.

Signalized Hard-Corner Location as Pad to Winn-Dixie

»Starbucks positioned itself perfectly at a four-way stop-lighted corner with three different points of ingress and egress. The location creates convenient entry and exit for cars passing by on Hillcrest or Grelot Road.

35,000 Passing Vehicles Per Day Bodes Well for Drive-Thru User

»Starbucks revenues are heavily dependent on traffic counts, and visibility is the name of the game for high performing drive-thru stores. This location’s 12-year success is likely a result of the 35,000 passing cars per day.

Across Street from McDonald’s & CVS Indicates Strong Demand from Tenants

»In 2014, CVS re-located from an in-line store to the corner across from Starbucks. McDonald’s has occupied their corner since 1992. The presence of these retailers signals that this is a best-in-class corner that is in high tenant demand.

Grocery Outparcel to Winn-Dixie

»In addition to street traffic, Starbucks draws customers from Winn-Dixie shoppers. Winn-Dixie opened in 1997.

Early 10-Year Lease Extended by Starbucks in 2017

»After an initial 10-year lease, Starbucks signed an early extension for another 10 years, as well as committing to a full interior store remodel. This is a long-term location for Starbucks.

10% Rent Increases Every Five Years

»An investor will get the benefit of 10% increases in rent every five years. 10% increases do two things: 1) hedges inflation and 2) increases an investor’s income over time.

8 TENANT INFORMATION

TENANT OVERVIEW


Our stores are a neighborhood gathering place for meeting friends and family. Our customers enjoy quality service, an inviting atmosphere and an exceptional beverage. Our story began in 1971. Back then we were a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market. Today, we are privileged to connect with millions of customers every day with exceptional products and more than 24,000 retail stores in 70 countries. We offer some of the finest coffees in the world, grown, prepared and served by the finest people. Our employees, who we call partners, are at the heart of the Starbucks Experience. We believe in treating our partners with respect and dignity. We are proud to offer two landmark programs for our partners: comprehensive health coverage for eligible full- and part-time partners and equity in the company through Bean Stock.

Tenant Profile

Company: Starbucks Corporation

No. of Locations: 28,000+

Credit Rating: BBB+ (S&P)

Annual Revenue: $22.39 Billion (2017)

Net Worth: $79.10 Billion (+-)

Headquarters: Seattle, WA

Website: www.starbucks.com

Company Recognitions and Awards

One of the “World’s Most Admired Companies” - Fortune2009-2017

One of the “Top 10 Millennial Brands” - Adweek2017

One of the “World’s Most Ethical Companies” - Ethisphere2007-2017

One of the “World’s Most Valuable Brands” - Forbes2013-2017

100% Rating on the Corporate Equality Index Human Rights Campaign Foundation2015-2017

Named a “Top Growing Global Brand” - Interbrand2017

9 IN THE NEWS

STARBUCKS IN THE NEWS


SAN FRANCISCO, CA (September 13, 2018) – Today, Starbucks Coffee Company (NASDAQ: SBUX) announced the “Starbucks Greener Stores” framework and a commitment to design, build and operate 10,000 “Greener Stores” globally by 2025. “Starbucks Greener Stores” framework will be built upon comprehensive performance criteria that help ensure the company’s approach to designing, building, and operating its company-owned stores sets a new standard for green retail. Over the next year, Starbucks will develop an accredited program to audit all existing company-operated stores in the U.S. and Canada against the framework criteria, culminating in 10,000 “Greener Stores” globally by 2025, encompassing existing stores, new builds and renovations. “Starbucks Greener Stores” framework will also be open-sourced to benefit the broader retail industry.

“Simply put, sustainable coffee, served sustainably is our aspiration,” said Kevin Johnson, president and ceo of Starbucks. “We know that designing and building green stores is not only responsible, it is cost effective as well. The energy and passion of our green apron partners has inspired us to find ways to operate a greener store that will generate even greater cost savings while reducing impact.”

SEATTLE, WA (June 19, 2018) – Starbucks Corporation (NASDAQ: SBUX) today announces a set of strategic priorities and corresponding operational initiatives to accelerate growth and create long-term shareholder value.

Starbucks details three strategic priorities to regain revenue and earnings momentum:

Accelerating growth in the U.S. and China, the company’s targeted long-term growth marketsThe company’s streamlining initiatives will enable greater agility in adapting more quickly to changes in consumer preferences. This includes accelerating product innovation around core beverages while leveraging the growing tea and refreshment category, as well as consumer behavior trends towards health and wellness.

Expanding and leveraging the global reach of the brand through the Global Coffee AllianceStarbucks continues to make progress toward closure of the Global Coffee Alliance transaction with Nestlé to accelerate and grow the global reach of Starbucks brands in Consumer Packaged Goods (CPG) and Foodservice, adding opportunity for another 5 million points of presence in 189 countries.

Sharpening the focus on increasing shareholder returnsWith the execution of the company’s strategic priorities expected to improve the return profile of the business, the company now expects to return approximately $25 billion in cash to shareholders in the form of share buybacks and dividends through FY20. This represents a $10 billion increase from the cash return target announced on November 2, 2017.

Starbucks is intensifying its focus on G&A efficiency, with plans to partner with an external consultant to drive speed and leverage best practices in identifying areas of opportunity. The company expects to provide more detailed plans in conjunction with the company’s Q3 FY18 earnings call.


PROPERTY PHOTOS



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LOCAL & REGIONAL MAP



SITE PLAN

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Grelot Road37,000 CPD N

SITE PLAN KEY

Parcel Outline:

Land Area: 0.57 Acres

Leaseable Area: 1,750 Sq Ft

Ingress/Egress:


15 LOCATION DESCRIPTION

LOCATION OVERVIEW

Starbucks is located in Mobile, Alabama, with a population of 190,000 people as of 2017. It is the third largest city in Alabama and has a metropolitan population of 412,000 people. The property is located on Hillcrest Road, a busy North-South thoroughfare.

Retailers in immediate proximity to Starbucks include Wendy’s, Krispy Kreme, T-Mobile, Buffalo Wild Wings, Publix, Walgreens, Winn-Dixie, Walmart, Waffle House, McDonald’s, CVS, Firehouse Subs, and many more. The drive-thru property features phenomenal ingress and egress, with two points of access on Hillcrest Road and one point of access on Grelot Road.

The campus of the University of South Alabama sits just 3-miles from the property and creates convenience for both students and staff that pass by the restaurant to and from the classroom. The large Christ United Methodist Church is also located within walking distance to the property and provides a great stop for worshipers before and after Sunday morning services.


16 MARKET OVERVIEW

LOCATION OVERVIEW


ECONOMY

Shipbuilding, steel and chemical companies drive the growth of the metro’s manufacturing industry. The entry of Airbus to the metro has elevated the aerospace sector, which is also occupied by ST Aerospace and Continental Motors. Education-related positions are numerous, with the Mobile County Public School System and the University of South Alabama representing the metro’s top employers. Tourism provides a $1 billion economic impact annually to the region. Infirmary Health Systems leads a trio of larger medical systems that employ more than 1,000 people. The metro is home to the only Stage II and III cancer center between Houston and Tampa.

MOBILE DEMOGRAPHICS

POPULATION 1 MILE 3 MILES 5 MILES

2010 Population 11,492 70,507 135,114

2016 Population 11,369 70,884 136,125

2021 Population 11,197 70,906 136,706

2010 Households 5,571 30,180 55,109

2016 Households 5,579 30,525 55,873

2021 Households 5,609 30,907 56,670

2016 Average Household Size 2.03 2.28 2.39

2016 Daytime Population 13,065 79,560 155,294

2016 Median Household Income $53,489 $51,926 $51,403

2016 Per Capita Income $36,444 $31,760 $29,794

2016 Average Household Income $74,172 $73,319 $72,066

MOBILE OVERVIEW

Mobile County is on the Alabama coast, partially bordered by Mobile Bay and the Gulf of Mexico. Known for its live oak-lined streets, the metro is a Gulf Coast cultural center that boasts a concentration of historic architecture, neighborhoods and museums. Additionally, the metro hosts Alabama’s only deep-water port and a growing manufacturing industry. It is the third largest metro in the state with 416,000 residents.


LEASE ABSTRACT


Tenant Obligations

»Tenant at its’ expense, shall keep the premises and its interior, non-structural components in good order and repair, including maintaining all plumbing, HVAC. Electrical and lighting facilities and equipment, and the store front, doors, and plate glass.

Landlord Obligations

»

Except for repairs, maintenance and replacements to the premises and the building for which tenant is responsible under “Tenant’s Obligations” and “Common Area Operating Expenses”, Landlord shall maintain, repair and make replacements to the premises and building necessary, including replacement and maintenance of roof, roof membrane, roof systems, foundation, exterior walls, interior structural walls, all structural components of the premises, the maintenance and repair of all parking areas, sidewalks and landscaping and drainage systems located outside the premises.

Real Estate Taxes

» Landlord shall pay property taxes in advance each tax year and shall be subject to reimbursement from the tenant in the form of monthly additional rent payments.

Property Insurance

»Tenant shall obtain and keep in full force and effect liability and property insurance. Landlord shall obtain and keep in full force and effect its’ own form of liability and property insurance, which costs shall be reimbursed and reconciled by the tenant through monthly additional rent payments.

Reconciliation

»For each calendar year of the term, within 90 days after the end of each calendar year, Landlord shall furnish to tenant a statement including supportive documentation, setting forth Landlord’s actual costs for operating expenses, real property taxes and Landlord’s insurance for year by category and amount.

Operating Expenses

»Operating expenses shall mean the reasonable and necessary out-of-pocket costs and expenses actually paid in any calendar year directly attributable to common area maintenance. Common areas shall mean all portions of the property outside of the interior of the building including landscaped areas, parking lots and sidewalks.

Tenant’s Additional Rent Payment

»Tenant shall pay to Landlord as additional rent, tenant’s pro-rata share of operating expenses, Landlord’s insurance and Landlord’s real property taxes (collectively known as annual additional rent). 30 days prior to each calendar year, Landlord shall furnish to tenant a written statement setting forth the amount Landlord will pay for operating expenses, real property taxes, Landlords insurance, Landlord’s estimate of annual and monthly additional rent.

Exclusions from Operating Expenses

»

The following expenses are not considered operating expenses and will not be subject to tenant’s reimbursement: the cost of any capital addition, repair or replacement to the building or property, expenses which the Landlord will be reimbursed by another source including any item covered by warranty, expenses for the defense of Landlord’s title to the property, structural repairs and replacements, depreciation and amortization of the building or financing costs including interest and principal amortization of debts, costs of improving property to comply with environmental laws, costs to correct any original design flaws, any repair necessitated by condemnation, fire, windstorm or other insured casualty or hazard, leasing commissions, attorney or accounting fees in connection with tax contests. An administration fee can be applied however reimbursement shall by tenant shall not exceed 10% of the total operating expenses for the given calendar year.

Documents

STARBUCKS DRIVE-THRU · PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business