offering memorandum - loopnet · 2019. 12. 21. · real estate taxes source/notes 2018 actual...

FREDERICKSBURG, VA

OFFERING MEMORANDUM

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Executive Summary

Financial Analysis

Market Overview

Property Details

02. Executive Summary03-05. Investment Overview

08. Rent Roll09. Site Plan10. Assumptions11. Schedule of Cash Flow12. Lease Expirations

13-15. Tenant Summaries16-20. Lease Abstracts21. Regional Map22. Competition Map23-24. Aerial Photographs

25-26. Demographic Summary27-29. Market Overview

EXCLUSIVELY LISTED BY:DEAN ZANGSENIOR MANAGING DIRECTORNATIONAL RETAIL GROUP WASHINGTON, D.C.

Tel: (202) 536-3754Fax: (202) [email protected] Licenses: MD 665335 VA 0225239201

ARTER’S

DAVID CROTTSDIRECTORNATIONAL RETAIL GROUP WASHINGTON, D.C.

Tel: (202) 536-3757Fax: (202) [email protected] Licenses: DC SP8374073 VA 0225208906 MD 652010

LEASING AND PROPERTY MANAGEMENT CONTACT:

GEORGE BOOSALISPRESIDENTBOOSALIS PROPERTIESOffice: +1(703) 494-7691 Cell: +1(703) [email protected]

JOSH EINFIRST VICE PRESIDENTNATIONAL RETAIL GROUP WASHINGTON, D.C.

Tel: (202) 536-3726Fax: (202) [email protected] Licenses:MD 643676 DC SP98371724

HILL KANELLOSASSOCIATENATIONAL RETAIL GROUP WASHINGTON, D.C.

Tel: (202) 536-3759Fax: (202) [email protected] Licenses: MD 663020

OCCUPANCY MAJOR TENANTS

100%

EXECUTIVE SUMMARY

MARKET

PRICE PSF

ADDRESS

27 South Gateway Dr, Fredericksburg, VA 22406

Fredericksburg, VAWashington, D.C. MSA

40,617 SF

TOTAL GLA

THE OFFERING

Price $9,200,000

Cap Rate 8.00%

Price PSF $234

Net Operating Income $737,066

Total GLA 40,617

Lot Size 3.92 Acres

Occupancy 100%

Year Built 2007

Parking Spaces 193$227

2 • EXECUTIVE SUMMARY

DEMOGRAPHICS 1-Miles 3-Miles 5-Miles

Population 2,629 35,721 81,943

Households 988 13,235 30,485

Average HH Income $84,620 $91,963 $99,994

Median HH Income $58,407 $63,570 $71,800

Per Capita Income $31,794 $34,079 $37,822

Traffic Counts38,000 VPD on Warrenton Road (U.S. 17)

133,000 VPD on I-95

(SHADOW ANCHOR)

INVESTMENT OVERVIEWMarcus & Millichap, on behalf of ownership, is pleased to exclusively offer for sale

Carter’s Crossing, a 40,617-square-foot Target shadow-anchored shopping center in

Fredericksburg, Virginia in the Washington, DC metropolitan area. The property,

developed in 2007, thrives from the presence of a 114,000-square-foot Target and is

attached to a high-performing PetSmart location. Other tenants include national chains

Anytime Fitness and T-Mobile as well as local destinations Aladin’s Bar & Grill, Polaris

Dance Institute and Valley Dental Care.

Carter’s Crossing is currently 100 percent leased. PetSmart is an original tenant and recently

took its first 5-year option without any inducement. PetSmart is often found adjacent to

Target, as the pet retailer views Target as a regional draw consistent with shopping habits

of PetSmart’s targeted consumer profile. This location has a thriving grooming service

which is internet-proof.

The property is at the northwest quadrant of a significant highway interchange; Interstate

95, the major north-south thoroughfare on the East Coast, and Warrenton Road (U.S. 17),

which connects Downtown Fredericksburg with growing southwest Stafford County. The

Property has three different signage locations including two large pylons, an indication of

the property’s landmark nature.

EXECUTIVE SUMMARY • 3

The retail shopping destination is complemented by other destination uses and drivers which

make for a highly successful retail location. Pohanka Honda is adjacent with a massive 9.89-acre

dealership that is part of the large 17-location Pohanka dealership network. Manheim Auto

Auctions sits directly behind the property. It is the world’s largest automobile auction company

with global trade volume exceeding $57 billion annually. McLane Company has a major grocery

and food service distribution facility and is home to more than 500 employees. GEICO Direct has

a regional campus less than three miles to the northwest on Warrenton Road and employs more

than 4,000 people.

The Fredericksburg area has seen massive 58 percent population growth since the 2000 Census

with additional 10 percent growth projected from 2017 to 2020. Nearly 82,000 people live within

five-miles of the property, which is projected to grow over 89,000 by 2023. The community has

grown because of employers like GEICO and Mary Washington Health Care expanding in town,

and Federal government agencies growing around Quantico.

Interstate-95 through Fredericksburg sees more than 133,000 vehicles per day, a truly astonishing

level of traffic through this major East Coast corridor for both regional commuters and vacationers

and weekenders traveling the Mid-Atlantic. More than 38,000 vehicles travel Warrenton Road in

front of Carter’s Crossing every day.

4 • EXECUTIVE SUMMARY

• • Destination Shopping Center Anchored by PetSmart, Shadow-Anchored by Target

• • PetSmart Sales Are Whispered to Be Strong; Major Pet Grooming Component to Store

• • Institutional Quality Development, Curb Appeal

• • Merchandised with Seasoned Destination Tenants: Anytime Fitness, Polaris Dance Studio, Valley Dental

• • Interstate-95 Visibility and Signage – Over 133,000 Vehicles Per Day

• • 58% Population Growth In Fredericksburg Since 2000

INVESTMENT HIGHLIGHTS

EXECUTIVE SUMMARY • 5

MAJOR EMPLOYERS IN FREDERICKSBURG

5,000+ Employees

4,000+ Employees

1,000+ Employees

2,000+ Employees

1,500+ Employees

6 • FINANCIAL ANALYSIS

FINANCIAL ANALYSIS • 7

Tenant SF GLA % Lease Start Lease Expire Base Rent Rent/SF Increase Date Increase Amount Options Lease Type

Anytime Fitness 5,000 12.3% 3/13/2014 10/31/2024 $84,000 $16.80 11/1/2020 Annually by 2% 1x6 PRS CAM, Tax, Ins

Aladin's Bar & Grill 2,526 6.2% 8/31/2012 7/31/2022 $48,332 $19.13 8/1/2019 Annually by 3% - PRS CAM, Tax, Ins

Paris Nails 1,500 3.7% 2/24/2006 3/31/2022 $18,460 $12.31 4/1/2020 Annually by 3% - PRS CAM, Tax, Ins

PetSmart 20,140 49.6% 1/7/2008 3/31/2023 $433,010 $21.50 4/1/2023 $1 PSF Increase 2x5 PRS CAM, Tax, Ins; less Mgmt and Alarm/Fire Inspection

Polaris Dance Institue 7,047 17.3% 6/1/2016 5/31/2022 $94,359 $13.39 6/1/2019 Annually by 3% 1x5 PRS CAM, Tax, Ins

T-Mobile 1,954 4.8% 1/1/2017 3/31/2023 $30,058 $15.38 2/1/2020 Annually by 3% 1x5 PRS CAM, Tax, Ins

Valley Dental Care, PLLC 2,450 6.0% 7/1/2017 12/31/2028 $36,236 $14.79 1/1/2020 Annually by 2% 2x5 PRS CAM, Tax, Ins

Target - Not A Part 114,000 - - - - - - - - PRS Pylon Sign Maintenance & Electricity

Total Occupied 40,617 100%

Total Vacant 0 0%

Total SF 40,617 100% $744,455

RENT ROLL


LEASING PLANTenant SF GLA %

Anytime Fitness 5,000 12.3%

Aladin's Bar & Grill 2,526 6.2%

Paris Nails 1,500 3.7%

PetSmart 20,140 49.6%

Polaris Dance Institue 7,047 17.3%

T-Mobile 1,954 4.8%

Valley Dental Care, PLLC 2,450 6.0%

Target - Not A Part 114,000 -

Total Occupied 40,617 100%

Total Vacant 0 0%

Total SF 40,617 100%

Paris Nails

Polaris Dance

Anytime

Fitness

T-Mobile

Valley Dental

Aladin’s

Shadow Anchor/NAP


GLOBALAnalysis Start Date 7/1/2020Vacancy Factor 5% excluding Anytime Fitness, PetSmart, T-Mobile and Valley DentalReal Estate Taxes Source/Notes 2018 Actual ExpenseOperating Expense Source 2018 Actual ExpensesManagement Fee ActualNon Reimbursable $0.15 PSFCapital Reserve $0.15 PSFInflation Rate 3.00%Market Rent Growth 3.00%

ASSUMPTIONS


YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 112020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

INCOME

Base Rental Revenue $757,470 $765,957 $779,387 $803,122 $812,322 $821,770 $831,035 $843,601 $861,977 $868,563 $881,845

Absorption & Turnover Vacancy $0 ($5,021) ($8,933) $0 $0 $0 ($9,817) ($32,471) $0 $0 ($19,039)

Scheduled Base Rental Revenue 757,470 760,936 770,454 803,122 812,322 821,770 821,218 811,130 861,977 868,563 862,806

Expense Reimbursement Revenue 129,580 132,081 135,918 141,602 145,842 150,223 152,214 152,071 164,152 169,076 170,241

Target OEA/Pylon 3,946 4,064 4,186 4,312 4,441 4,575 4,712 4,853 4,999 5,149 5,303

General Vacancy (10,686) (5,915) (2,308) (11,641) (11,990) (12,350) (2,756) 0 (13,181) (13,395) (13,614)

Total Revenue 880,310 891,166 908,250 937,395 950,615 964,218 975,388 968,054 1,017,947 1,029,393 1,024,736

EXPENSES

CAM 45,831 47,205 48,622 50,080 51,582 53,131 54,723 56,364 58,057 59,799 61,590

Management Fee 18,425 18,978 19,547 20,134 20,738 21,360 22,001 22,661 23,340 24,041 24,762

Real Estate Taxes 62,571 64,448 66,382 68,373 70,424 72,537 74,713 76,954 79,263 81,641 84,090

Insurance 6,378 6,570 6,767 6,970 7,179 7,394 7,616 7,844 8,080 8,322 8,572

Target OEA/Pylon 3,946 4,064 4,186 4,312 4,441 4,575 4,712 4,853 4,999 5,149 5,303

Non-Recoverable 6,093 6,275 6,464 6,657 6,857 7,063 7,275 7,493 7,718 7,949 8,188

Total Expenses 143,244 147,540 151,968 156,526 161,221 166,060 171,040 176,169 181,457 186,901 192,505

NET OPERATING INCOME 737,066 743,626 756,282 780,869 789,394 798,158 804,348 791,885 836,490 842,492 832,231

Tenant Improvements 0 0 10,065 0 0 0 0 32,568 0 0 12,500

Leasing Commissions 0 0 14,790 0 0 0 0 72,098 0 0 44,979

CapX 6,093 6,275 6,464 6,657 6,857 7,063 7,275 7,493 7,718 7,949 8,188

Total Capital Expenses 6,093 6,275 31,319 6,657 6,857 7,063 7,275 112,159 7,718 7,949 65,667

CASH FLOW BEFORE DEBT SERVICE $730,973 $737,351 $724,963 $774,212 $782,537 $791,095 $797,073 $679,726 $828,772 $834,543 $766,564

SCHEDULE OF CASH FLOW


LEASING EXPIRATION SCHEDULE

Tenant Expiration Date GLA Available 1 2 3 4 5 6 7 8 9 10

Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Sep-27 Sep-28 Sep-29

Paris Nails 3/31/2022 1,500 1,500

Polaris Dance Institute 5/31/2022 7,047 7,047

Aladin's Bar & Grill 7/31/2022 2,526 2,526

PetSmart 3/31/2023 20,140 20,140

T-Mobile 3/31/2023 1,954 1,954

Anytime Fitness 10/31/2024 5,000 5,000

Valley Dental Care 12/31/2028 2,450 2,450

Total Available/Expiring 0 0 0 11,073 22,094 0 5,000 0 0 0 2,450

% Expiring 0.0% 0.0% 27.3% 54.4% 0.0% 12.3% 0.0% 0.0% 0.0% 6.0%

Cumulative % Available/Expiring 0.0% 0.0% 0.0% 27.3% 81.7% 81.7% 94.0% 94.0% 94.0% 94.0% 100.0%

Building Total 40,617


TENANT INFORMATIONTarget Corporation is the eighth-largest retailer in the

United States, and a component of the S&P 100 and S&P

500 Index. The Company sells a broad range of household

goods, food and pet supplies, apparel and accessories,

electronics, decor, and other items under national brands

as well as owned and exclusive brands. Target and its

larger grocery-carrying incarnation, SuperTarget, have

carved out a niche by offering more upscale, trend-driven

merchandise than rivals Wal-Mart and Kmart.

The company also offers pharmacy and clinic services

in its stores through an operating agreement with CVS

Pharmacy. As of February 2, 2019, the company operated

1,844 stores throughout the United States. Target reported

$75.35 Billion in revenue for FY 2019 and is ranked No.

39 on the 2018 Fortune 500 list of the largest United States

corporations by total revenue. Target Corporation was

founded in 1902 and is headquartered in Minneapolis,

Minnesota.

2019 REVENUE $75.3 B

HEADQUARTERS Minneapolis, MN

NO. OF EMPLOYEES 360,000+

NO. OF LOCATIONS 1,844

YEAR FOUNDED 1902

STOCK SYMBOL/CREDIT RATING TGT : A

$

(SHADOW ANCHOR)


TENANT INFORMATIONFounded in 1986, PetSmart, Inc. is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. PetSmart employs approximately 56,000 associates and operates more than 1,650 pet stores in the United States, Canada, and Puerto Rico as well as more than 200 in-store PetSmart PetsHotel dog and cat boarding facilities.

PetSmart has addressed growing threats from internet sales by providing unique pet services including training, pet grooming, boarding, PetSmart Doggie Day Camp and in-store pet adoptions. In May 2017, PetSmart acquired Chewy.com for $3.35 billion, a leading online retailer of pet food and products in the U.S., which operates as an independent subsidiary. Chewy.com had been one of the fastest-growing e-commerce sites, registering nearly $2 billion in revenue in 2017. At the time, this was the largest acquisition of a U.S. e-commerce company. Company online sales are estimated to be in $1.1 to $1.3 billion range.

PetSmart continues to operate counter to the retail trends seen over the last year as it continues to expand its store count. In 2017 the Company added 66 stores on top of the 73 in 2016. The top 25 pet stores, including PetSmart and Petco, had store growth of 11.5% in 2017.

Analysts view PetSmart’s long-term strategy positively as it establishes its online sales channels, expands its stores and in-store services and addresses its debt situation. EBITDA is estimated to be I excess of $1 billion.

OWNERSHIP Private

HEADQUARTERS Phoenix, Arizona

NO. OF EMPLOYEES 53,000

NO. OF LOCATIONS 1,650+

YEAR FOUNDED 1986


OWNERSHIP Private

HEADQUARTERS Phoenix, Arizona

NO. OF EMPLOYEES 53,000

NO. OF LOCATIONS 1,650+

YEAR FOUNDED 1986

As the most popular dance studio in the Fredericksburg, Polaris Dance Institute current has over 200 students and they are constantly adding new company dancers. They offer many plays and shows for the community throughout the year. Being located in Carter’s Crossing has proven to be beneficial to not only the dance studio and parents but also the other tenants. Parents love the convenience of being able to drop off their kids at dance class and run their errands at the various other tenants at Carter’s Crossing.

With over 65.5 million customers in the US alone, T-Mobile is a leader in the mobile phone industry. They provide wireless voice, messaging, and data services. Their location at Carter’s Crossing is a strong operator with several other locations in area with regional sales volume of over $50M. T-Mobile has proven to be an excellent asset to the Center and easy to manage

With 800 members and more joining daily, Anytime Fitness is another tenant that brings a lot of traffic to Carter’s Crossing. They are a 24-hour health and fitness club that makes healthy living accessible to everyone. Aladin benefits from Anytime Fitness being in the Center as many members will eat there after working out.

Valley Dental is a full-service dental clinic that offers general and specialized dental services. Their location at Carter’s Crossing is one of 8 and they are looking to expand in the Fredericksburg area.

Aladin Mediterranean Bar & Grill at the Center is currently one of two locations. They have a very strong base of loyal customers that keep them busy. They offer family style meals that can be shared with friends. They have an outdoor seating area that is always busy during the spring, summer, and fall.

Paris Nails is a popular nail salon in the Fredericksburg area. They are family owned and operated and have been a tenant of Carter’s Crossing for over 10 years. Besides manicures and pedicures, they also offer other beauty services.

polarisdance.com

S&P: BB+ | 20,100+ LOCATIONS tmobile.com

4,000+ LOCATIONS anytimefitness.com

8 LOCATIONS valleydental.com

2 LOCATIONS aladinsrestaurant.com

TENANT INFORMATION

ARTER’SC crossing


WASHINGTON D.C.WASHINGTON D.C.

REGIONAL MAP

Within a 5-mile radius, the population is expected to grow

by 4.30% over the next 5 years to 102,590

35K

X4.30%

30K

VPD

An average of 30,000 vehicles per day drive by Emmet Street N

The population within a three-mile radius is over 35,000 people ARTER’SC crossing

16 • PROPERTY DESCRIPTION

COMPETITIVE RETAIL MAP

SHOPPING CENTER ANCHOR TENANT ADDRESS CENTER GLAOCCU-PANCY

INLINE SPACE AVAILABLE RENTAL RATEDISTANCE FROM

SUBJECT

Carter's Crossing Target (Shadow)

25 S Gateway Dr, Fredericksburg, VA 40,617 100% - -

Gateway Strip Chipole 28 South Gateway Dr, Fredericksburg, VA 9,560 100% - $31/NNN 0.2 Miles

Plantation Crossing 752 Warrenton Rd, Fredericksburg, VA 16,700 100% - $20-28/ NNN 1.1 Miles

The Shops at England Run Goodwill (Dark) 736 Warrenton Rd, Fredericksburg, VA 59,850 26% 36,815 SF Anchor; 1,600 SF;

2,400 SF $8/NNN Anchor; $16-$21/NNN 1.1 Miles

Aldi 1030 Warrenton Rd., Fredericksburg, VA 17,000 2.2 Miles

Celebrate Virginia North Giant 564 Celebrate Virginia Pkwy, Fredericksburg, VA 140,057 83% Check with DC $19-$23/NNN 2.3 Miles

Lidl 1175 Warrenton Rd, Fredericksburg, VA 38,280 - - 2.8 Miles

Stafford Lake Village Walmart 11 Village Pkwy, Fredericksburg, VA 225,000 - - 2.9 Miles

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PROPERTY DESCRIPTION • 17

38,000 VPDW

ARRENTON RD

McDonald’sMcDonald’s

Plantation Crossing

S GATEWAY DR

133,000 VPD

HOV LANES

(Expansion Underway)

38,000 VPDWARRENTON RD

133,000 VPD

S GATEWAY DR McDonald’sMcDonald’s

Common Area All Common Area improvements shall be repaired or replaced with materials at least equal to the quality of the materials being repaired or replaced so as to maintain the architectural and aesthetic harmony of the Shopping Center as a whole. Such operation, maintenance and repair obligation shall include but not be limited to the following: (A.) Drive and Parking Areas. Maintaining all paved surfaces and curbs in a smooth and evenly covered condition, including, without limitation, replacement of base, skin patch, resurfacing and resealing. (B.) Debris and Refuse. Periodically removing papers, debris, filth, refuse, ice and snow (2” on surface), including vacuuming and broom-sweeping at least 5 times per week, but in any event to the extent necessary to keep the Common Area in a first-class, clean and orderly condition; provided,however, that trash and/or garbage removal from a Party’s Building shall not be considered a Common Area Maintenance Cost (defined below) since such removal obligation is covered by Section 4.3.1. All sweeping shall be at appropriate intervals during such times as shall not interfere with the conduct of business or use of the Common Area by Permittees. (C.) Directional Signs and Markers. Maintaining, cleaning and replacing any appropriate directional, stop or handicapped parking signs or markers; restriping parking lots and drive lanes at least every 24 months, but in any event as necessary to maintain parking space designation and trafficdirection; and keeping clearly marked fire lanes, loading zones, no parking areas and pedestrian cross-walks. (D.) Lighting. Maintaining, cleaning and replacing Common Area lighting facilities, including light standards, wires, conduits, lamps, ballasts and lenses, time clocks and circuit breakers, illuminating the Common Area pursuant to Section 5.2.1; provided however, exterior Building lighting fixtures, including any lighting fixtures associated with a canopy or otherarchitectural feature forming a part of such Building, shall be considered a part of such Building, and the maintenance and replacement of such fixtures, and the cost of illumination, shall be the obligation of the Party upon whose Tract such fixtures are located. (E.) Landscaping. Maintaining and replacing all landscape plantings, trees and shrubs in an attractive and thriving condition, trimmed and weed-free; maintaining and replacing landscape planters, including those adjacent to exterior walls of Buildings; providing water for landscape irrigation through a properly maintained system, including performing any seasonal (start up and/or winterization) maintenance thereto, and any modifications to such system to satisfy governmental water allocation or emergency requirements. If any Party or Occupant requires “special” landscaping (i.e. flowers, shrubs, trees, etc.) beyond the standard landscaping requirements for the remainder of the Shopping Center, or if landscaping additions/modifications are required as a result of a Building addition, expansion or remodel, the cost of installation, replacement andmaintenance of such special or required landscaping shall be borne solely by such Party or Occupant, as the case may be, and shall not be included in Common Area Maintenance Costs. (F.) Obstructions. Keeping the Common Area free from any obstructions, including those caused by the sale or display of merchandise, unless such obstruction is permitted under the provisions of this OEA. (G.) Sidewalks. Maintaining, cleaning and replacing sidewalks, including those adjacent and contiguous to Buildings. Sidewalks shall be steam cleaned at least monthly and pressure washed periodically in the interim, shall be swept at appropriate intervals during such time as shall not interfere with the conduct of business or use of the Common Area, and shall be cleared of ice or snow (after each snow fall of 2” or more). (H.) Security Measures. Providing security measures, including personnel, for the Common Area, if reasonably required. (I.) Traffic. Supervising traffic at entrances and exits to the Tract and within the Tract as conditions reasonably require in order to maintain an orderly and proper traffic flow.Notwithstanding anything contained herein to the contrary, each Party shall have the obligation to operate, maintain, and repair, at its sole cost and expense. Prior to Operator commencing any operation and/or maintenance duties, Operator shall obtain, and thereafter maintain during the period of such operation and/or maintenance performance, the insurance required by Section 5.4.4. Commencing on the earlier of thirty (30) days prior to the date specified by the Occupant of the Target Tract that it intends to open for business with the general public, or the date the Approving Parties designate in writing, Operator shall operate and maintain (i) the Common Area of the Shopping Center in accordance with the requirements of Section 4.2.1, exclusive of any replacement of “capital” improvements due to ordinary wear and tear, which replacement shall be the responsibility of the Party owning the affected Tract.In lieu of Operator’s profit, administrative, indirect and overhead costs, Operator shall bepermitted to charge an amount (“Administration Fee”) computed by multiplying the CommonArea Maintenance Costs (exclusive of utility charges, and the portion of single purpose, nonrecurring expenditures that exceed $25,000) by seven percent (7%).

LEASE ABSTRACT - TARGET OEA


Common Area Maintenance Cost Breakdown

A. To the Developer Tract: 28.1%B. To the Target Tract; 71.9%

In the event an existing Tract is divided, the Party causing such division shall, at its expense, prorate the allocation of Common Area Maintenance Costs and the Administration Fee attributable to the original Tract between the newly created Tracts, file a recorded declaration confirming such allocation and deliver a copy of such declaration to Operator and each other Party. Each Party shall pay to the Operator in equal monthly payments, in advance, the share of the Common Area Maintenance Costs and the Administration Fee attributable to such Party’s Tract based either upon the amount set forth in the approved Budget or, if a Budget is not approved, then the lesser of the amount set forth in the unapproved Budget or the monthly payment established for such Party for the prior year.

Target shall have the right, upon giving not less than sixty (60) days written notice to Operator, to take-over and assume the maintenance of the Common Area upon the Target Tract. Following the effective date of such take-over and assumption, Target shall maintain the Common Area on its Tract, and shall pay all costs and expenses incurred in connection therewith; provided, however, Operator shall continue to (i) maintain the Common Utility Lines of the Shopping Center, including any detention/retention ponds, regardless of location, (ii) maintain the Common Area security program, if any, and (iii) maintain any Sign upon which a Target panel is attached other than Monument Sign A which will be maintained by Target. Upon such take-over and assumption, Target shall be released from the obligation to contribute towards Common Area Maintenance Costs for the balance of the Common Area, except with respect to those functions identified above for which continued participation is mandatory or elected.

Uses The Shopping Center shall be used only for retail sales, offices, Restaurants or other commercial purposes permitted by this OEA. “Business Office” shall mean an office which does not provide services directly to consumers; “Retail Office” shall mean an office which provides services directly to consumers, including but not limited to financial institutions, real estate, stock brokerage and title companies, travel and insurance agencies, and medical, dental and legal clinics. No more than ten percent (10%) of the total Floor Area on the Developer Tract may be used for Retail Office and/or Business Office purposes.

Without limiting the generality of the foregoing, the following uses shall not be permitted to the extent set forth below: Typical noxious uses

LEASE ABSTRACT - TARGET OEA CONT.


Guarantor PetSmart, Inc. Lease Type NNNPremises (GLA) 20,140 SFOptions Three 5-Year TermsLandlords Obligations Landlord shall at its sole cost and expense (except to the extent covered by Landlord’s insurance) and not as a part of Common Area Costs except as otherwise

provided herein: repair all damage to the Premises or Common Area caused by subsidence or other structural or latent defects; maintain in good condition and repair and replace, if reasonably necessary, the roofing, canopy, gutters, downspouts, wiring, plumbing, pipes, conduits and equipment which serve the Premises but are not located within the interior thereof and all structural portions of Tenant’s Building, which shall include without limitation the foundations; exterior walls (but not exterior doors); columns; store front (excluding plate glass); floor slab; roof structure and all elements supporting the floor or roof; remove debris, ice and snow from the sidewalks and loading areas within the Common Areas and make all repairs and changes to the Premises or Common Area.

Tenant’s Obligations Tenant will be responsible for maintenance and repair of all parts of the HVAC system, except that Landlord will be responsible for all necessary repairs or replacements thereof, other than routine maintenance, (i) for the period from the Delivery Date to that date which is one (1) year after the Commencement Date or (ii) in the case of coils, heat exchangers, compressors, motors or other moving parts, for a period of five (5) years from and after the Commencement Date. Landlord shall retain any applicable warranties relating to the HVAC system to the extent necessary to fulfill Landlord’s obligations in this Section. Tenant shall enter into and maintain throughout the Term, at Tenant’s sole cost and expense, a commercially reasonable HVAC maintenance contract and shall, upon written request, provide a copy of same to Landlord.

CAM Manner and Period of Operation: Landlord shall maintain, operate, repair and replace, or cause to be maintained, operated, repaired and replaced, the Common Area and all exterior portions of the Shopping Center in an economical and efficient manner according to the highest reasonable standard for retail shopping centers of similar age and character in the metropolitan area where the Premises are located and in full compliance with all applicable laws, codes, ordinances, regulations, Federal, state or local environmental standards and building and health codes, including but not limited to: keeping the Common Area properly drained, reasonably free of water, ice, snow, mud, sand, rubbish and other obstructions and in a neat, clean, orderly and sanitary condition; maintaining adequate trash receptacles for Common Area refuse (but not for trash or other refuse of any tenant or occupant within the Shopping Center) and periodically collecting and removing all such Common Area refuse; maintaining signs, markers, painted lines and other means and methods of pedestrian and vehicular traffic control; exterior painting of Improvements (including Tenant’s Building but excluding any buildings within the Shopping Center owned by retailers) as and when reasonably required as a result of peeling, flaking, stains or discolorations, vandalism or otherwise, and on a uniform basis throughout the Shopping Center; repairing and replacing paving, curbing and sidewalks; maintaining all planting and landscaped areas and all storm sewerage and drainage utilities and other utilities. Tenant’s Proportionate Share: Tenant acknowledges that, pursuant to the terms of Section 4.2.7 of the OEA, an Operator (as defined in the OEA) shall at all times notwithstanding a party’s election to self-maintain the Common Areas within its parcel, be responsible for the maintenance of the Common Elements (as hereinafter defined) for the Development. Landlord shall be liable for a proportionate share thereof (“Landlord’s Share”) as set forth in Section 4.2.4 of the OEA. Landlord’s Share of the cost of maintaining the Common Elements (the “Common Elements Costs”) shall be no more than 28.1 % of the total costs of said items. As used herein Common Elements shall mean (i) the Common Utility Lines of the Shopping Center, including any detention/retention ponds, regardless of location, (ii) the Common Area security program, if any.Common Area Costs: The reasonable expenses of maintaining, operating and repairing the Common Area including only those items pertaining to the Common Area which are required to be performed by Landlord in Section 6.1 or this Section 6.6 (the “Common Area Costs”): repairs; replacements (subject to the limits in the following paragraph), lighting; cleaning; sweeping; trash removal; ice and snow removal; restriping; landscape maintenance; the reasonable allocable share of employment costs of personnel for work performed at the Shopping Center and on-site personnel reasonably necessary to directly accomplish the foregoing; and other reasonable costs of maintaining the Common Area in a clean and safe condition; plus an administrative fee not to exceed seven percent (7%) of the Common Area Costs, which shall exclude, for purpose of calculating the amount of the Administrative Fee, (a) the costs of utility service for the Common Areas, (b) any amounts paid or reimbursed to Tenant pursuant to Sections 6.9, (c) the Common Element Costs (as defined in Section 6.5) and (d) the Administrative Fee. In addition to the items listed above, but subject to the exclusions contained above, Common Area Costs shall include the Common Elements Costs provided such costs are non-duplicative and are calculated and pro-rated as provided above in Section 6.5; and further provided that the administration fee in connection with the Common Elements Costs shall in no event exceed seven percent (7%).

LEASE ABSTRACT - PETSMART


Estimated Payments & Annual Adjustments: Prior to the beginning of each calendar year during the Term of the Lease, Landlord shall provide to Tenant an estimate of the Common Area Costs for such year together with a breakdown of such calculation in reasonable detail and in a form consistent with prior years to allow comparison. Such estimated Common Area Costs shall not exceed the previous year’s actual Common Area Costs by more than five percent (5%).

Co-Tenancy Landlord and Tenant agree that the Initial Co-Tenant shall be Target.If at any time during the Term the Initial Co-Tenant (or “Comparable Replacement Tenant”, as hereinafter defined) ceases operating for a period in excess of thirty (30) days and such cessation is not due to a cause specified in Section 26.2 of the Lease, then Tenant may elect to pay, in lieu of Base Rent, Alternate Rent as set forth below until such time as the Initial Co-Tenant (or a Comparable Replacement Tenant) reopens its store to the public. In addition, in the event that any such condition referenced in the first sentence of this Section 4 shall continue for a period of one (1) year from and after the violation first commenced, Landlord shall give Tenant written notice that it must elect, by written notice given to Landlord within thirty (30) days of receipt of Landlord’s notice, either (i) to terminate the. Lease; or (ii) to resume the payment of Base Rent, pursuant to Section D of the Fundamental Lease Provisions, either such election to be effective upon the date set forth in Tenant’s notice which date shall be no less than thirty (30) days after the date of Tenant’s notice. If Tenant fails to make an election within said thirty-day period, then Tenant shall be deemed to have elected to resume payment of Base Rent effective as of the sixtieth (60th) day following the date of Landlord’s notice. In the event that Tenant elects to terminate the Lease, Landlord shall pay to Tenant a termination fee (calculated as per Section 4.4 of the Lease) in an amount equal to the cost of Tenant’s unamortized leasehold improvements. For purposes of this Section, the term “Comparable Replacement Tenant” shall mean a national chain which shall have a net worth of at least $50,000,000, shall have been operating for at least 5 years, shall have at least 25 stores and shall occupy at least 90% of the Gross Floor Area occupied by the applicable Initial Co-Tenant.

Operating Covenant After opening should Tenant, or a permitted assignee or subtenant, cease to conduct business at the Premise for a period in excess of one hundred twenty (120) consecutive days, for reasons other than casualty, condemnation, remodeling (not to exceed thirty (30) days), or as otherwise permitted under this Lease, Landlord shall have the right to recapture the Premises and to terminate this Lease by giving Tenant ninety (90) days prior written notice of its intention to do so.

Alternate Rent Notwithstanding the foregoing, in the event that Tenant opens for business in the Premises and the Rent Commencement Co-Tenancy Requirement set forth in Exhibit I is not satisfied, then the Commencement Date shall occur provided, however until the Rent Commencement Co-tenancy Requirement is satisfied, Tenant shall pay in lieu of the Base Rent specified in Section D of the Fundamental Lease Provisions, the lesser of (i) Base Rent specified in Section D of the Fundamental Lease Provisions, or (ii) three percent (3%) of Tenant’s Gross Sales, in each month that the Rent Commencement Co-Tenancy Requirement has not been met (the “Alternate Rent”).

Permitted Use The Premises may be used (i) for the operation of “Tenant’s Primary Business” as defined in Section 2 of Exhibit G or (ii) for any lawful retail purpose except those uses prohibited in Exhibit G and (iii) for ancillary office and storage uses incidental to any permitted primary use in clause (i) or (ii) above. Landlord represents and warrants that it has obtained and agrees to maintain in full force and effect all necessary zoning, variances, permits or other public and private approvals or consents to allow the use of the Premises for any part of Tenant’s Primary Business including, specifically but not in limitation, veterinary clinics and hospitals, boarding (but only to the extent not prohibited under the OEA as set forth in Exhibit G-2), pet day care, animal training and obedience classes (conducted indoors only), pet adoption and grooming services, as well as retail purposes generally.

Real Property Taxes Landlord’s Obligation to Minimize: Landlord shall contest Real Property Taxesby appropriate means when reasonable to do so and upon the request of Tenant and at least 65% of the tenants of the Shopping Center (collectively the “Majority Tenants”). Upon written request from the Majority Tenants, Landlord shall contest any increase in Real Property Taxes which results in a five percent (5%) annual increase over the Real Property Taxes for the previous fiscal period and the reasonable out-of-pocket costs incurred by Landlord in connection with such contest shall be paid by the Majority Tenants in accordance with their respective percentages of the total Gross Floor Area of the Majority Tenants (unless successful, then the costs shall be allocated among all tenants to the extent of the reduction in taxes resulting from the contest) within thirty (30) days of receipt by Tenant of a statement describing the costs incurred by Landlord.

LEASE ABSTRACT - PETSMART CONT.


Assignment & Subletting Tenant shall have the right to assign this Lease or sublet all or any portion of the Premises without the consent of Landlord for any lawful retail use that does not violate any of the restrictions contained in Exhibit G and provided that any subletting does not divide the Premises into more than two (2) subleased premises. Tenant may without the consent of Landlord assign or transfer its rights hereunder to Tenant’s parent, subsidiary or affiliated entity, or for collateral purposes, or in connection with any merger, consolidation or sale or transfer of substantially all of Tenant’s stores in the metropolitan area where the Premises are located, and may grant licenses or subleases to concessionaires which provide services or sell merchandise within or from the Premises as part of the normal business of Tenant (“Exempt Transfers”). No such assignment or subletting by Tenant shall relieve Tenant of liability hereunder for the full payment of Base Rent, Common Area Costs, Real Property Taxes and Insurance Costs according to the terms of this Lease unless Landlord and the transferee materially modify Tenant’s obligation(s) hereunder and/or the transferee (or its guarantor) has (x) a net worth in excess of $200,000,000.

Prior to offering the entire Premises for assignment or all or any portion thereof which together with any previously sublet area exceeds ten thousand (10,000) square feet for subletting, excluding Exempt Transfers, Tenant shall inform Landlord of its intention to do so, and Landlord may, for a period of thirty (30) days thereafter, elect to terminate this Lease. If Landlord elects to terminate this Lease, Landlord shall pay Tenant a Termination Fee determined in accordance with the provisions of Section 4.4 above (“Recapture & Termination Payment)”.

Exclusive (Exhibit G) As used in the Lease, the term “Tenant’s Primary Business” shall mean the retail sale of (i) pets (including, but not limited to, fish, birds, reptiles, dogs, cats and other small animals), (ii) pet food, pet accessories and other products relating to pets and animals, including equestrian products and apparel related thereto,(iii) services related to pets and animals, such as grooming, boarding, pet day care, animal training and obedience classes, pet adoption and veterinary services, (iv) products relating to nature and the environment, and (v) educational products and services related to any of the foregoing, and office and storage uses incidental to the foregoing.

LEASE ABSTRACT - PETSMART CONT.


DEMOGRAPHIC SUMMARY

INCOME 1 MILE 3 MILES 5 MILES

2018 Housing Income$150,000 or More 11.56% 14.82% 17.48%

$100,000 - $149,000 13.73% 15.65% 17.84%$75,000 - $99,999 12.64% 12.60% 12.89%$50,000 - $74,999 22.20% 17.91% 16.05%$35,000 - $49,999 16.91% 13.26% 12.67%

Under $35,000 22.95% 25.76% 23.06%Average Household Income $84,620 $91,963 $99,994 Median Household Income $58,407 $63,570 $71,800 Per Capita Income $31,794 $34,079 $37,822

POPULATION 1 MILE 3 MILES 5 MILES

2023 Projection 2,880 39,688 89,7162018 Estimate 2,629 35,721 81,9432010 Census 2,255 30,623 71,1822000 Census 1,610 18,626 51,840Current Daytime Population 3,910 53,189 105,600

HOUSEHOLDS 1 MILE 3 MILES 5 MILES

2023 Projection 1,116 15,008 33,7602018 Estimate 988 13,235 30,4852010 Census 845 11,092 25,9192000 Census 520 7,547 19,670

POPULATION PROFILE 1 MILE 3 MILES 5 MILES

Population By Age2018 Estimate Total Population 2,629 35,721 81,943

Under 20 25.81% 29.48% 27.56%20 to 34 Years 27.30% 24.51% 22.50%35 to 39 Years 7.93% 6.65% 6.44%40 to 49 Years 10.37% 11.45% 12.38%50 to 64 Years 13.56% 14.89% 17.41%

Age 65+ 15.02% 13.03% 13.69%Median Age 33.35 32.2 34.94

Population 25+ by Education Level 2018 Estimate Population Age 25+ 1,743 21,622 52,007

Elementary (0-8) 2.84% 1.93% 2.03%Some High School (9-11) 8.65% 6.20% 6.17%

High School Graduate (12) 28.16% 25.84% 25.72%Some College (13-15) 21.80% 23.44% 21.92%

Associate Degree Only 6.48% 7.29% 7.48%Bachelors Degree Only 17.83% 19.89% 20.63%

Graduate Degree 12.96% 14.67% 15.29%

MARKET OVERVIEW • 25

DEMOGRAPHIC SUMMARY

Geography: 5 Miles

Source: © 2018 Experian

POPULATION

In 2018, the population is 81,943. The population has changed by 58.07% since 2000. It is estimated that the population will be 89,716 five years from now, which represents a change of 9.49% from the current year. The current population is 47.71% male and 52.29% female. The median age of the population is 34.94, compared to the US average which is 37.95. The population density is 1,042.18 people per square mile.

HOUSEHOLDS There are currently 30,485 households in your selected geography. The number of households has changed by 54.98% since 2000. It is estimated that the number of households will be 33,760 five years from now, which represents a change of 10.74% from the current year. The average household size is 2.57 persons.

INCOME In 2018, the median household income is $71,800, compared to the US average which is currently $58,754. The median household income has changed by 44.55% since 2000. It is estimated that the median household income will be $82,533 five years from now, which represents a change of 14.95% from the current year. The current year per capita income is $37,822, compared to the US average, which is $32,356. The current year average household income is $99,994, compared to the US average which is $84,609.

RACE AND ETHNICITY The current year racial makeup is as follows: 67.57% White, 19.24% Black, 0.09% Native American and 3.18% Asian/Pacific Islander. Compare these to US averages which are: 70.20% White, 12.89% Black, 0.19% Native American and 5.59% Asian/Pacific Islander. People of Hispanic origin are counted independently of race and make up 10.72% of the current year population. Compare this to the US average of 18.01%.

HOUSING The median housing value was $330,755 in 2018, compared to the US average of $201,842. In 2000, there were 11,383 owner occupied housing units and there were 8,287 renter occupied housing units. The median rent at the time was $620.

EMPLOYMENT

In 2018, there are 46,073 employees, this is also known as the daytime population. The 2000 Census revealed that 65.84% of employees are employed in white-collar occupations, and 34.20% are employed in blue-collar occupations. In 2018, unemployment is 4.59%. In 2000, the average time traveled to work was 37 minutes.

JOBS

26 • MARKET OVERVIEW

WASHINGTON, D.C. OVERVIEWWashington, D.C., is located on the Potomac River, just inland from the Chesapeake Bay. In

addition to the District of Columbia, the Washington, D.C., metro encompasses 22 counties

and jurisdictions. Nearly 20 percent of the District is parkland managed by the U.S. National

Park Service. Areas surrounding the District of Columbia include portions of Maryland,

Virginia and West Virginia. The District and inner-ring suburbs are densely populated.

Washington, D.C., is the largest city in the metro with a population of 680,000 people. The

remaining population centers are much smaller; only Arlington and Alexandria have more

than 150,000 residents.

METRO HIGHLIGHTS

HIGHLY SKILLED WORKFORCENearly half of all local residents age 25 and older have earned a bachelor’s degree or higher, well above the U.S. level of 30 percent.

STRONG JOB AND POPULATION GROWTHEmployment gains contribute to population growth that outpaces the national average. Nearly 325,000 additional people are expected through 2023.

DIVERSIFYING ECONOMYJobs in professional services now outnumber federal government positions.


THE WASHINGTON, D.C. ECONOMYThe economy of the Washington, D.C., metro is one of the largest in the nation and is home to numerous Fortune 500 companies, including Leidos Holdings, DXC Technology, AES, Danaher, Discovery, NVR and Hilton Worldwide.

Employment is primarily focused on government, lobbying, defense contracting, data processing and news reporting.

A sizable hospitality sector employs roughly 346,000 workers and supports more than 20 million annual visitors to the region’s vast array of attractions.

SHARE OF 2017 TOTAL EMPLOYMENT

MANUFACTURING

2%PROFESSIONAL &

BUSINESS SERVICES

23%HOSPITALITY

10%GOVERNMENT

21%FINANCIAL

5%

TRADE, TRANSPORTATION

& UTILITES

12%CONSTRUCTION

5%INFORMATION

2%EDUCATION & HEALTH

13%OTHER

6%+

MAJOR AREA EMPLOYERS

George Washington University

Fannie Mae

Federal Bureau of Investigation

Lockheed Martin

Georgetown University

Capital One Financial Corp.

Smithsonian Institution

Medstar Health

CSC Corp.

Joint Base Andrews * Forecast

28 • MARKET OVERVIEW

WASHINGTON, D.C. DEMOGRAPHICS

QUALITY OF LIFEThe Washington, D.C., metro is one of the most dynamic in the U.S. It is the seat of the United States government. The region has a cosmopolitan air and is a destination for visitors from across the nation and around the world, containing numerous prominent public buildings and landmarks. It is home to many of the nation’s leading media outlets, think tanks and universities. Washington, D.C., also has extraordinary museums, theaters and restaurants that are patronized by visi-tors and an affluent local population. Educational opportunities abound in the metro area’s many institutions of higher learning. Prominent universities include George Washington University, American University, Georgetown University and the University of Maryland.

* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Econom ic Analysis; Experian; Fortune; Moody’s Analytics; U.S . Census Bureau

More than 156,000 households are expected to be formed through 2023.

The median home price of $430,000 is well above the national median and contributes to a homeownership rate of 63 percent, slightly below the national rate of 64 percent.

Nearly 24 percent of residents age 25 and older hold a graduate or professional degree compared with 11 percent for the nation.

2018 POPULATION BY AGE

7%0-4 YEARS

19%5-19 YEARS

6%20-24 YEARS

29%25-44 YEARS

26%45-64 YEARS

12%66+ YEARS

SPORTS

EDUCATION

ARTS&ENTERTAINMENT

2018 POPULATION

6.2MGROWTH 2017-2022

5.3%

2018 HOUSEHOLDS

2.3MGROWTH 2017-2022

6.7%

2018 MEDIAN AGE

36.9US MEDIAN:

38

2018 MEDIAN HOUSEHOLD INCOME

$96.4KUS MEDIAN:

$58.8K


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. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2016 Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & 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 CONTACT THE MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

CONFIDENTIALITY AGREEMENT

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. © 2017 Marcus & Millichap

VA BOR: Bryn Merrey - 0225215804Activity ID:

offering memorandum - loopnet · 2019. 12. 21. · real estate taxes source/notes 2018 actual...

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