single tenant net lease investment overview

Net Lease Investment Services

Single Tenant Net Lease Investment Overview

Fall 2013

2Cassidy Turley Net Lease Investment Services

Big Picture UpdateInvestment activity surged at the close of last year. The looming impact of tax changes brought many sellers back into the market—looking to cash out of their investments before new tax hikes kicked in either at the federal or state level (or both). Since that time, however, investment activity has fallen by roughly 25% and kept a relatively steady pace. The challenge for nearly all asset classes has been the lack of available quality properties for sale. Though investors are slowly ratcheting up their tolerance of risk, it still remains low. As such, demand is highest for core assets regardless of the property type. In the office arena, this is CBD Class A office (preferably in gateway cities). For industrial product, it is modern distribution space—typically single tenant and with long-term leases in place to top credit tenants (in other words, premium industrial net lease properties). In the retail arena, this emphasis on security over yield has focused on trophy shopping centers… or premium net lease investment. Lastly, multifamily product—which has seen the greatest overall improvement in underlying fundamentals of any commercial real estate asset class—has seen a surge in demand for nearly all classes and types, with investment grade properties leading the way and value-add product bringing up the rear.

So where does that leave us in terms of net lease investments? Obviously, a continued investor focus on security over yield is bound to put these assets firmly in the sights of buyers. The challenge, of course, has been in finding available quality product. The gold standard still remains drug store and fast food properties with long-term corporate leases in place to the strongest chains. The reason is simple; most drug store and fast food chains typically operate with longer lease terms—nearly all of the major drug store chains tend to work with 25-year deals to start. The same is true of most major fast food players, but there is more divergence here—particularly when one takes into account the differences between franchisees and corporate users as well as some differences in place between local and regional chains. If lease terms are the driving force behind investor demand (and they largely are), it is only natural that the net lease property type next on the investor food chain are automotive retail buildings. This is because so many of the national chains operate in leases of 15 years or more.

One could continue to follow this logic and make the assumption that freestanding retail buildings with shorter lease terms are not in much demand. But they would be wrong. While the investor emphasis may still be security over risk, the tolerance for risk continues to increase as economic and retail fundamentals improve.

Limited Availability Driving Action for New Net Lease Property Types

While Walgreen’s or McDonald’s might still be at the top of most wish lists, more buyers are seeking net lease investment of any type. This is fueling the rise of interest in a slew of retail types for which there was only minimal net lease activity just a few years ago. This range from health clubs to other freestanding restaurant types outside of the fast food arena, but among the strongest growth has been in the field of dollar stores and convenience stores. That is why we have begun tracking trends for these property types starting

with this issue and have forensically compiled historical stats for these asset classes going back a number of years.

The rise in interest in dollar and convenience stores as a net lease investment types is all about availability. With a shortage of quality available assets in place for virtually every class of net lease investment, these two product types are continuing to see some of the most aggressive expansion in the retail world. We tracked over 1,800 new dollar stores that were opened in the United States last year, with chains like Family Dollar, Dollar General and Dollar Tree all averaging annual unit growth of 300 new stores or more. Dollar General alone opened about 600 stores last

year and should close 2013 with about 635 new locations—in other words, typically two new store openings each day this year. They have been on a 600 new store annual pace going on three years now and expect a similar level of growth in 2014. We estimate just over half of those to be in freestanding retail buildings—in other words, about 350 new net lease opportunities annually from just one user alone. Dollar General tends to look for space ranging from 7,500 to 12,000 square feet and their leases tend to be 15-year deals. Family Dollar hasn’t been far behind and will close this year with as many as 500 new locations. They typically work with ten-year deals and space in the 10,000 square foot range.

Convenience store growth has also been explosive, thanks to industry giant 7 Eleven. They also tend to be a ten-year user and their current expansion has included both convenience store/gas station facilities as well as both standalone and inline retail only stores. Regardless, the chain has been averaging roughly 300 new stores annually for the last couple of years and has plans to keep this rate of growth in 2014. By comparison, though most drug store and fast food chains remain in growth mode, the numbers of new store openings pale by comparison. While restaurant growth is white hot nationally, much of it is being driven by fast casual players who, more often than not, opt for inline space at multitenant centers.

And so while we estimate that deal activity for the traditional net lease property types that we track (single tenant automotive, drug stores and fast food) will close 2013 down roughly 20% to 25% from the levels of activity that we saw last year, overall net lease investment is up. Because of the shorter lease terms in place,

While the investor emphasis may still be security over risk, the

tolerance for risk continues to increase

as economic and retail fundamentals

improve.

Single Tenant Net Lease Investment Overview Fall 2013

www.cassidyturley.com 3

these new asset classes are typically viewed with more risk and have cap rates that reflect that. While we are still seeing prime McDonald’s, Chick Fil-A, CVS or Walgreen’s properties (we would typically define prime for drug store or fast food properties as ideal, urban locations in relatively new construction with long-term leases in place) trading in the 5% or less cap rate range, the equivalent gold standard for dollar stores (new, rural locations in areas with limited competition and long-term leases in place) to Family Dollar or Dollar General are still usually averaging in the 7.0% range.

Again, this all comes down to availability. Investor demand remains strong for all net lease investment types and not just from private investors, who have historically been thought of as the primary drivers for this marketplace. Because of the minimal property management requirements of net lease investment, these properties have always been attractive to buyers looking for stable income streams and minimal headaches. But institutional players continue to play a huge role in driving the marketplace as well.

We continue to see plenty of activity from some key institutional players. Cole Net Lease was bought in October by American Realty Capital Properties (ARCP) for $11.2 billion in a move that makes ARCP the largest institutional net-lease player with a portfolio of over 3,700 properties. Prior to this, both had been active in picking up portfolios over the past year. Cole had a diverse mix of mostly retail net lease in its portfolio before the sale, while ARCP had a strong mix of fast food and dollar stores. Meanwhile, we continue to see strong growth from players like Realty Income (strong with industrial and convenience stores), National Retail Properties (convenience stores), W.P. Carey (all retail) and others. All of these players have helped to boost demand and keep deals flowing. We anticipate that while an interest rate increase in 2014 may have some short-term impact on deal flow—particularly from private investors—that the pipeline from institutional players will only be minimally impacted.

Junior Boxes Reign Supreme as Retailers Shrink Footprints and Store Counts

Ironically, we now see growth in the retailer world limited by two big picture factors. The first is the ongoing subpar performance of the economy. It is getting better each year but middle class consumers are still in frugality mode. Meanwhile, while the luxury shopper is back and luxury retailers are also back in conservative growth mode. That leaves us with the group that has been driving

occupancy growth for most of the past six years; discounters and off-price concepts. Dollar stores certainly fall into this category, but this also includes everything from Big Lots to Costco to grocery chains like Grocery Outlet. And it should come as no surprise that chains would want to straddle both the discount and grocery fence, because the other factor impacting retailer growth is e-commerce. Which is why the strongest levels of retail expansion now are coming from food users—whether grocery or restaurants. For the net lease marketplace, the issue of grocery expansion is a curious one as nearly all of the new concepts that are growing are using smaller

footprints and typically using junior box space. The few exceptions would be continued Superstore growth from Target and Walmart and a few regional players. Meanwhile, many local or regional chains (particularly those that are unionized) are struggling and consolidating. Most of these users have tended to be active with larger footprints of 50,000 square feet or more. For big box net lease investment, this means the smaller the box the much higher the tenancy pool and less risk. The reverse is also true—the bigger the box, the bigger the risk, but also typically the bigger the yield.

Is Industrial the Next Hot Thing?

What is interesting is that we are seeing a retail growth surge from many of the players that we are used to seeing in our malls—but it is in the form of industrial

buildings. Chains like Macy’s, Nordstrom, Walmart, Williams-Sonoma and others are all rushing to keep up with a changing marketplace that has been dictated by Amazon. Amazon currently has about 55 million square feet of distribution center space in the United States. By 2016, they plan to have 90 million square feet. Nearly all of this has been done via build-to-suits as these properties tend to be extremely unique. It is not uncommon for a building that costs $40 to $60 per square foot to build to feature $100 per square foot or more in tenant improvement upgrades for the automation systems required for e-commerce fulfillment. Meanwhile, we are increasingly seeing retailers inking deals for industrial buildings well above the 500,000 square foot mark that can serve both as e-commerce fulfillment and local distribution centers. This trend is only going to escalate in the coming years—we anticipate that e-commerce related industrial could account for as much as 70 million square feet of occupancy growth in the next three years.

The driving force has been Amazon’s push to create same day delivery capabilities, which they are going to start rolling out on a market by market basis in the next year. Retailers understand that this could be a lights out game changer and are rushing to meet that challenge. We have yet to see a significant uptick in demand for

Because of the minimal property management

requirements of net lease investment, these properties

have always been attractive to buyers looking for stable

income streams and minimal headaches. But institutional

players continue to play a huge role in driving the

marketplace as well.


Big Picture Update Continuedsmaller warehousing space for this need, but we will. The goal will be to get away from mega-distribution centers in the middle of the country (where every market may be a two to three day drive) and towards centers that can quickly get goods to the consumers. This will mean that many chains suddenly will need multiple warehousing locations near urban markets to fulfill this need.

Of course, in the meantime, FedEx and UPS have continued to arguably benefit the most from all of this and that is why they remain the gold standard for industrial net lease investment. While overall industrial net lease pricing nationally has averaged in the $40 to $50 range, these facilities have regularly commanded up to $250 per square foot or more. One question hanging over the marketplace is whether Amazon may be creating a massive distribution network not just to deliver the goods they sell on a same day basis, but whether their ultimate goal might be to compete head-to-head with FedEx or UPS in the delivery game. We wouldn’t rule anything out, but we’ll believe that when we see it.

But what does all of this mean for the net lease investment world? We have yet to see much in the way of activity for pure e-commerce industrial space, but we expect this to happen. Nearly all of the action, so far, has been in the form of build-to-suits. Yet, users are still leasing most of this space as opposed to purchasing it. So far, the developers and investors that have built these properties have wanted to hold on to them. Terms vary depending on the users, but nearly all of the deals we have tracked have been at least ten-year deals with 20-year leases not all that uncommon. The upside to these properties commanding top dollar is clear—a structure with a long-term lease in place to Amazon would be viewed as bulletproof in terms of credit and stability. The downside, of course, is that these buildings are often so built out for specialty use that backfilling an eventual vacancy may prove to be daunting. Still, we think that we will eventually start to see more of these properties being brought to a marketplace hungry for product. While the immense size and prices involved would rule out most private investors, there are plenty of institutional players that would be more than interested and that would pay top dollar under the right circumstances. Look for industrial net lease investment to heat up significantly in the years ahead.

Looking Ahead

Looking ahead to 2014, barring a completely unforeseen financial collapse, rising interest rates are pretty much a given. The only

question is whether we will see these as early as February or as late as July. Policy issues continue to hang over the economy and reduce economic output. It is unclear if we will see another political dogfight in January/February of 2014 as the issues of government funding and the debt ceiling come back to the forefront, but the possibility of another ugly, protracted debate are high. Regardless, perhaps the most telling recent economic indicator of all is that of personal income growth. The Census Bureau’s September 2013 numbers indicated a strong 0.5% growth in personal income for the second month in a row. Numbers have been slightly positive since February of this year. Assuming this trend continues, it will

sustain the ongoing housing economy and it will also eventually translate into improved consumer spending totals. In other words, this is one of the final missing pieces of economic recovery and if it continues, the Fed will be boosting interest rates before inflation starts to become an issue. While this may cause some short-term growing pains in the investment world, it is ultimately great news. An improved economy will also translate into all of those other things that ultimately are more important to income streams than mere cap rates alone. Better retail sales, more secure tenancy, higher rents all will come as well. But pricing for many net lease investments—particularly those deemed riskier—will likely flatten somewhat.

The key question ahead is whether continued strong investor demand will be enough to offset the increased price of borrowing next year. We anticipate

interest rates to start to climb by April. So long as the climb is not too steep or too fast, we see pricing pressures to gently impact the marketplace starting with the value-adds and properties with less stable occupancy first. The gold standards of net lease investment (FedEx or UPS for industrial; CVS and Walgreens for drug stores; McDonald’s, Chick Fil-A or In-N-Out for fast food) may not see much of a difference at all. In general, however, we anticipate that there will be a period of flat pricing overall—properties with weaker occupancy or other issues will bear the brunt of this while highest-end product will likely still command top dollar. Look for cap rates to remain relatively stable through the end of this year and in Q1 2014. Once debt costs start to increase (we believe in Q2 2014), we anticipate these averages to go up slightly (again, with a couple of key exceptions for strongest product). As for industrial net lease investment, look for institutional demand to climb and for e-commerce related industrial buildings to start to come into play.

The key question ahead is whether continued strong investor demand will be

enough to offset the increased price of borrowing next year. So long as the climb is not too

steep or too fast, we see pricing pressures to gently

impact the marketplace starting with the value-adds

and properties with less stable occupancy first.



ConceptCredit Rating

Typical FootprintTypical Lease Term

MIN SF MAX SF

CVS A2 12,000 18,000 25 Years

Fred's B2 15,000 19,000 15 Years

Rite Aid D2 11,000 17,000 25 Years

Walgreens B1 12,000 17,000 25 Years

National Drug Store Credit Rating



MIN SF MAX SF

Arby's C1 2,000 3,000 20 Years

Burger King C2 2,000 3,000 20 Years

Carl's Jr/Hardees C2 2,000 3,000 20 Years

Checkers NR 1,000 1,500 20 Years

Chick Fil-A A 2,000 3,000 20 Years

Chipotle Mexican Grill

A 2,000 3,000 10 Years

Del Taco NR 1,700 2,500 20 Years

In-N-Out A 2,000 3,000 20 Years

Jack in the Box C2 2,000 2,500 20 Years

McDonald's A 3,000 4,000 20 Years

Panda Express NR 2,000 2,500 10 Years

Popeye's NR 2,500 3,000 20 Years

Starbucks A- 1,500 2,000 10 Years

Steak N Shake B 3,000 3,500 20 Years

Sonic Drive In NR 1,500 2,000 20 Years

Tim Hortons NR 2,000 3,000 20 Years

Wendy's C1 3,000 4,000 20 Years

White Castle 2,000 3,000 20 Years

National Fast Food Credit Rating



MIN SF MAX SF

7-Eleven AA- 2,000 3,000 10 Years

Casey's B1 3,000 4,500 10 Years

Quiktrip NR 4,000 50,000 10 Years

Sheetz NR 5,000 7,000 10 Years

WaWa B 3,000 4,000 10 Years

RaceTrack Petroleum

NR 5,000 6,000 10 Years

National Convenience Store Credit Rating



MIN SF MAX SF

99 Cents Only C2 15,000 20,000 10 Years

Dollar General B1 9,000 12,000 15 Years

Dollar Tree A2 8,000 15,000 10 Years

Family Dollar B1 8,000 10,000 10 Years

National Dollar Store Credit Rating



MIN SF MAX SF

Advance Auto Parts

B2 6,000 8,000 15 Years

AutoZone C1 5,000 8,000 15 Years

Bridgestone/Firestone

NR 7,000 9,000 15 Years

CarMax NR 20,000 40,000 20 Years

Discount Tire Company

NR 7,000 8,000 10 Years

Jiffy Lube NR 1,000 2,500 10 Years

Midas NR 4,000 6,000 10 Years

National Tire & Battery

NR 4,000 9,000 20 Years

O'Reilly Auto Parts

B1 6,000 9,000 20 Years

Pep Boys C2 5,000 10,000 15 Years

Tire Kingdon NR 3,000 6,000 10 Years

Tuffy Auto Service Center

NR 3,000 6,000 10 Years

National Automotive Retail Credit Rating




MIN SF MAX SF

24 Hour Fitness B 15,000 25,000 10 Years

Alco E1 25,000 30,000 10 Years

Aldi NR 15,000 20,000 10 Years

Ashley Furniture NR 30,000 40,000 10 Years

Bed Bath & Beyond

BBB+ 20,000 40,000 10 Years

Best Buy C1 30,000 40,000 10 Years

Big Lots B2 25,000 35,000 10 Years

DSW A2 18,000 23,000 10 Years

Fresh Market A2 18,000 25,000 15 Years

Gold's Gym NR 10,000 45,000 10 Years

HH Gregg B2 25,000 45,000 15 Years

LA Fitness NR 35,000 45,000 15 Years

Marshall's A 30,000 35,000 10 Years

Michael's B 15,000 25,000 10 Years

Nordstrom Rack A- 35,000 45,000 10 Years

Office Depot/Office Max

C2 20,000 25,000 10 Years

Orscheln Farm & House

NR 25,000 45,000 10 Years

PetSmart BB+ 12,000 20,000 10 Years

Planet Fitness NR 18,000 27,000 10 Years

REI B2 20,000 25,000 10 Years

Ross Dress for Less

B1 25,000 35,000 10 Years

Safeway C1 45,000 90,000 20 Years

Sprouts Farmers Markets

B2 20,000 30,000 10 Years

Staples B2 10,000 20,000 10 Years

TJ Maxx B1 25,000 35,000 10 Years

Tractor Supply B2 20,000 27,000 15 Years

Trader Joe's NR 15,000 20,000 15 Years

National Box Users Credit Rating Junior Boxes (20,000 SF - 39,999 SF)



MIN SF MAX SF

Academy Sports C2 65,000 73,000 20 Years

Burlington Coat Factory

B- 60,000 80,000 10 Years

Dick's Sporting Goods

A1 50,000 80,000 10 Years

Giant Eagle NR 50,000 70,000 20 Years

Harris Teeter B1 30,000 60,000 20 Years

Hobby Lobby A 50,000 70,000 15 Years

Kohl's B2 65,000 90,000 20 Years

Kroger B1 50,000 75,000 20 Years

Marsh E2 45,000 65,000 20 Years

Piggly Wiggly NR 25,000 65,000 20 Years

Price Chopper NR 30,000 60,000 20 Years

Publix A2 30,000 60,000 20 Years

Roundy's D2 50,000 70,000 20 Years

Schnuck's NR 45,000 55,000 20 Years

Sports Authority B- 40,000 50,000 10 Years

Stater Brothers D1 40,000 50,000 20 Years

Whole Foods A1 35,000 40,000 20 Years

Winn Dixie NR 40,000 50,000 20 Years

National Box Users Credit Rating Mid Boxes (40,000 SF - 79,999 SF)



MIN SF MAX SF

BJ's Wholesale Club

B 85,000 125,000 20 Years

Cabela's A2 100,000 125,000 20 Years

Costco B1 145,000 160,000 20 Years

Home Depot A2 100,000 110,000 20 Years

Lifetime Fitness NR 100,000 125,000 10 Years

Lowe's B1 100,000 120,000 20 Years

Meijer NR 180,000 210,000 20 Years

Menards NR 100,000 130,000 20 Years

Sam's Club AA 120,000 150,000 20 Years

Target B1 85,000 150,000 20 Years

Walmart A2 125,000 160,000 20 Years

Wegman's BBB+ 120,000 140,000 20 Years

National Box Users Credit Rating Mega Boxes (80,000 SF or more)

7

National Box Users Credit Rating Mid Boxes (40,000 SF - 79,999 SF)

National Box Users Credit Rating Mega Boxes (80,000 SF or more)

7Cassidy Turley Net Lease Investment Services www.cassidyturley.com

Drug Store Retail Trends• So far, we have been able to confirm 32 sales for Q3 2013. We anticipate that the final

deal tally will be in the mid-40s. This compares to 43 deals in Q2 and 30 in Q1 (the year-to-date tally now stands at 105. Last year, we tracked a total of 175 deals. Our estimate is that we will close 2013 with total deal activity down from last year’s levels by about 20%. The limited availability of product remains the greatest challenge facing the marketplace. Investor demand remains extremely strong for drug store properties.

• The national average price on the drug store deals we have tracked in Q3 2013 quarter was $367 per square foot. This compares to an average of $390 per square foot in Q2 and $366 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. The general trend, however, is one of increasing pricing as economic and commercial real estate fundamentals continue to improve. The trend of rising prices will slow or flatten once we see interest rate hikes next year.

• The average capitalization rate for deals that closed in Q3 2013 was 6.9%. This compares to an average of 6.8% in Q2 and a reading of 6.7% exactly one year ago. While this metric has been climbing, the primary factor behind this has been the larger number of Rite Aid locations that have been selling lately.

• Typically we see CVS and Walgreen’s properties with long-term leases in place trading in the 5% to 6% range depending on other factors like quality of building, strength of location and/or market. While Rite Aid’s financial situation has improved slightly over the past year, they still have the weakest credit of the three. Most Rite Aid deals we see are trading in the 7% or higher range, with 8% being the norm in most markets.

• Cap rates will likely increase by the final half of 2014 as interest rates rise, however, continued intense competition for drug store opportunities will mean less of an uptick for these properties—particularly first-tier options.

Top Drug Store Deals

Rite AidNew York, NYPrice: $6,500,000Cap Rate: 6.0%

WalgreensNorth Miami, FLPrice: $11,000,000Cap Rate: 6.0%

CVSNoblesville, INPrice: $8,465,603Cap Rate: 6.1%

Walgreen’sLos Angeles, CAPrice: $13,600,000Cap Rate: 5.3%

Single Tenant Drug Store Properties Average Cap Rate & Sale Price (PSF) Trend

$100

$150

$200

$250

$300

$350

$400

$450

$500

5%

6%

7%

8%

9%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Cap Rate Average Price PSF

Source: Cassidy Turley BT Commercial Research, Costar, Real Capital Analytics

Single Tenant Drug Store PropertiesAverage Cap Rate & Sale Price (PSF) Trend

Source: Cassidy Turley Northern California Research, Costar, Real Capital Analytics




8

Property Total SF Sale Date Sale Price Price PSF Cap Rate

CVS 1075 Broadway Street, Saugus, MA 14,693 02/2013 $9,361,000 $637 6.9%

Walgreens 30 W Ridge Pike, Limerick, PA 14,820 05/2013 $7,000,000 $472 6.4%

Rite Aid 4900 Broadway, New York, NY 9,200 05/2013 $6,500,000 $707 6.0%

Walgreens 1093 N. Main Street, Dayville, CT 14,820 02/2013 $6,420,000 $433 6.0%

Rite Aid 869 2nd Avenue, Troy, NY 14,673 05/2013 $6,175,000 $421 8.9%

CVS 3016 Route 940, Mount Pocono, PA 13,225 09/2013 $5,100,000 $386 7.1%

CVS 1321 Allegheny Street, Jersey Shore, PA 10,125 03/2013 $3,800,000 $375 6.7%

Rite Aid 331 Main Street, Nashua, NH 15,086 02/2013 $3,262,533 $216 8.5%

Rite Aid 2501 Saw Mill Boulevard, Pittsburgh, PA 10,908 01/2013 $3,139,752 $288 10.9%

Rite Aid 78 N. Broad Street, Norwich, NY 10,908 01/2013 $2,555,000 $234 9.0%

National Single Tenant Drug Store MarketUS Northeast Region Select Major Sale Transactions


Walgreens 15050 Biscayne Boulevard, North Miami, FL 14,550 03/2013 $11,000,000 $756 6.0%

Walgreens 3188 Highway 278 NW, Covington, GA 14,820 02/2013 $8,075,000 $545 6.3%

CVS 4001 W. William Cannon Drive, Austin, TX 12,900 07/2013 $7,429,250 $576 5.2%

CVS 10000 Jefferson Davis Parkway, Fredericksburg, VA

12,900 02/2013 $6,970,000 $540 6.5%

Walgreens 231 E. Dixon Boulevard, Shelby, NC 14,820 06/2013 $6,875,100 $464 5.9%

Walgreens 3028 Clairmont Avenue, Birmingham, AL 13,076 04/2013 $6,829,270 $522 5.8%

Walgreens 2427 Springs Road NE, Hickory, NC 14,820 02/2013 $6,796,875 $459 6.4%

CVS 24795 Pinebrook Road, Chantilly, VA 12,840 08/2013 $6,700,000 $522 5.8%

CVS 1820 US Highway 1, Rockledge, FL 11,970 06/2013 $6,700,000 $560 6.0%

Rite Aid 2005 Maple Street, Rome, GA 14,673 06/2013 $5,152,100 $351 8.0%

National Single Tenant Drug Store Market US Southern Region Select Major Sale Transactions


www.cassidyturley.com 99Cassidy Turley Net Lease Investment Services


Walgreens 1050 Waukegan Road, Northbrook, IL 14,500 05/2013 $11,779,661 $812 5.9%

Walgreens 1145 Main Street, Antioch, IL 14,820 03/2013 $8,607,231 $581 6.7%

CVS 14575 Mundy Drive, Noblesville, IN 12,900 01/2013 $8,465,603 $656 6.1%

Walgreens 985 N. Arlington Avenue, Indianapolis, IN 14,490 04/2013 $7,517,355 $519 6.1%

Walgreens 7045 S. Pulaski Rd, Chicago, IL 12,329 09/2013 $6,000,000 $487 6.8%

Walgreens 419 E. Michigan Avenue, Ypsilanti, MI 13,650 01/2013 $5,600,000 $410 6.4%

Rite Aid 3362 Navarre Avenue, Oregon, OH 14,565 06/2013 $5,585,000 $383 8.5%

Walgreens 6320 E. Main Street, Reynoldsburg, OH 15,120 06/2013 $5,400,000 $357 7.9%

Walgreens 7864 Hamilton Avenue, Cincinnati, OH 17,110 05/2013 $5,097,744 $298 6.7%

CVS 30920 A Southfield Road, Southfield, MI 13,314 06/2013 $4,758,000 $357 5.9%

National Single Tenant Drug Store Market US Midwest Region Select Major Sale Transactions


Walgreens 1050 N. Highlands Avenue, Los Angeles, CA 13,387 05/2013 $13,600,000 $1,016 5.3%

Walgreens 718 91st Street, Lake Stevens, WA 15,361 04/2013 $9,294,605 $605 6.0%

Walgreens 9800 S. Estrella Parkway, Goodyear, AZ 14,820 06/2013 $9,094,000 $614 5.8%

Walgreens 495 E. Holt Avenue, Pomona, CA 13,680 04/2013 $8,250,000 $603 5.9%

CVS 4990 S. Arizona Avenue, Chandler, AZ 13,013 07/2013 $7,913,500 $608 6.0%

Walgreens 28516 N. El Mirage Road, Peoria, AZ 14,820 03/2013 $7,600,000 $513 6.3%

Rite Aid 39155 Washington Street, Palm Desert, CA 17,272 08/2013 $7,150,000 $414 7.3%

Walgreens 750 N. Virginia Street, Reno, NV 15,067 08/2013 $6,500,000 $431 6.0%

Rite Aid 17615 140th Ave SE, Renton, WA 16,280 07/2013 $6,645,000 $408 8.4%

Walgreens 10601 E. Alameda Avenue, Aurora, CO 14,783 10/2013 $5,833,800 $395 6.0%

National Single Tenant Drug Store Market US West Region Select Major Sale Transactions




Fast Food Retail Trends• So far, we have been able to confirm 38 sales for Q3 2013. We anticipate that the final

deal tally will be in the low 50s. This compares to 57 deals in Q2 and 31 in Q1 (the year-to-date tally now stands at 126. Last year, we tracked a total of 213 deals. Our estimate is that we will close 2013 with total deal activity down from last year’s levels by about 15%. The limited availability of product remains the greatest challenge facing the marketplace. Investor demand remains extremely strong for fast food properties.

• The national average price on the fast food deals we tracked in Q3 2013 was $441 per square foot. This compares to an average of $455 per square foot in Q2 and $401 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. The general trend, however, is one of increasing pricing as economic and commercial real estate fundamentals continue to improve. The trend of rising prices will slow or flatten once we see interest rate hikes next year.

• The average capitalization rate for deals that closed in Q3 2013 was 6.9%. This compares to an average of 6.5% in Q2 and a reading of 7.0% exactly one year ago.

• In general, we are seeing first-tier fast food properties moving with cap rates below the 6% mark nationally, though we have seen some top quality assets (great location in strong market) with the most desirable long-term tenancy in place (McDonald’s., Chick fil-A, In-N-Out, etc.) trade with caps heading into the 4% range. Second-tier fast food properties are averaging in the 6% - 8% rate nationally with some regional variations based upon the strength of the local marketplace. Third-tier and/or value-add fast food properties are generally trading with cap rates above the 8% mark everywhere, with triple digit caps not uncommon in weaker trade areas.

• Cap rates will likely increase by the final half of 2014 as interest rates rise, however, continued intense competition for first-tier fast food opportunities will mean less of an uptick for these properties.

Single Tenant Fast Food Properties Average Cap Rate & Sale Price (PSF) Trend

$200

$250

$300

$350

$400

$450

$500

$550

$600

4%

5%

6%

7%

8%

9%

10%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



Single Tenant Fast Food PropertiesAverage Cap Rate & Sale Price (PSF) Trend


Top Fast Food Deals

McDonald’sMelville, NYPrice: $3,025,000Cap Rate: 4.4%

Taco BellPensacola, FLPrice: $2,700,000Cap Rate: 6.5%

Burger KingChicago, ILPrice: $2,300,000Cap Rate: 6.5%

Carl’s Jr.Redondo Beach, CAPrice: $3,200,000Cap Rate: 4.5%


National Single Tenant Fast Food Market US Northeast Region Select Major Sale Transactions


McDonald's 729 Walt Whitman Road, Melville, NY 2,317 03/2013 $3,025,000 $1,306 4.4%

Taco Bell 1050 2nd Street, Manchester, NH 3,378 02/2013 $2,297,800 $680 N/A

Burger King 133 Macy Street, Amexbury, MA 4,873 07/2013 $2,234,394 $459 N/A

Taco Bell 13609 Crayton Boulevard, Hagerstown, MD 2,675 08/2013 $1,824,795 $682 6.6%

Chipotle 3580 Horizon Boulevard, Trevose, PA 2,193 03/2013 $1,800,000 $821 5.5%

McDonald's 174 Hoosick St, Troy, NY 3,915 01/2013 $1,579,411 $403 4.1%

Five Guys Burgers & Fries

720 Loucks Rd, York, PA 2,715 04/2013 $1,385,000 $510 5.6%

Burger King 330 Pompton Avenue, Cedar Grove, NJ 2,307 05/2013 $995,000 $431 6.0%

Taco Bell 1922 Empire Boulevard, Webster, NY 2,220 06/2013 $700,000 $315 8.1%

KFC 451 Foxon Boulevard, New Haven, CT 2841 06/2013 $625,000 $220 4.6%

National Single Tenant Fast Food MarketUS Southern Region Select Major Sale Transactions


McDonald's 1302 W. Fairbanks Avenue, Winter Park, FL 4,150 04/2013 $2,926,800 $705 4.1%

Taco Bell 305 S. New Warrington Road, Pensacola, FL 2,782 06/2013 $2,700,000 $971 6.5%

McDonald's 1473 Hudson Bridge Road, Stockbridge, GA 4,504 05/2013 $2,555,000 $567 4.5%

McDonald's 822 Highway 17 N., Little River, SC 4,623 06/2013 $2,385,000 $516 4.2%

McDonald's 9414 W. Northlake West Drive, Charlotte, NC 4,300 08/2013 $2,320,000 $540 4.5%

Bojangle's 7897 E. Brainerd Road, Chattanooga, TN 3,808 07/2013 $2,150,000 $565 7.8%

Wendy's 4849 Bill Gardner Parkway, Locust Grove, GA 3,300 02/2013 $2,020,000 $612 7.2%

Hardee's 4360 Atlanta Highway, Loganville, GA 2,726 06/2013 $2,016,000 $740 6.3%

Jack in the Box 1765 W. Mount Houston Road, Houston, TX 2,900 02/2013 $1,975,000 $681 6.5%

Wendy's 365 W. 78th Road, Hialeah, FL 3,183 07/2013 $1,845,000 $580 6.1%




12

National Single Tenant Fast Food Market US Midwest Region Select Major Sale Transactions


Burger King 3141 S. Ashland Boulevard, Chicago, IL 2,897 07/2013 $2,300,000 $794 6.5%

Wendy's 1202 S. Jeffers Street, North Platte, NE 2,640 01/2013 $2,062,000 $781 7.9%

Culver's 501 Pingree Road, Crystal Lake, IL 4,587 01/2013 $1,990,000 $434 10.7%

Wendy's 3140 S. Rochester Road, Rochester Hills, MI 2,915 07/2013 $1,748,500 $600 8.0%

Hardee's/Green Burrito 4201 S. 11-159, Glen Carbon, IL 2,505 07/2013 $1,654,736 $661 6.3%

Burger King 1255 N. 21st Street, Newark, OH 3,500 06/2013 $1,610,000 $460 5.3%

Arby's 1501 E. Morgan Street, Kokomo, IN 3,276 04/2013 $1,494,212 $456 8.5%

Burger King 1510 N. Bridge Street, Yorkville, IL 2,500 05/2013 $1,400,000 $560 N/A

McDonald's 630 N. Route 83, Bensenville, IL 3,503 07/2013 $1,395,000 $398 5.3%

McDonald's 1617 Bartlett Avenue, Evansville, IN 3,900 02/2013 $1,200,000 $308 4.7%

National Single Tenant Fast Food MarketUS West Region Select Major Sale Transactions


Carl's Jr. 2100 Artesia Boulevard, Redondo Beach, CA 2,739 02/2013 $3,200,000 $1,168 4.5%

Burger King 1964 N. Broadway, Santa Maria, CA 2,408 06/2013 $2,946,828 $1,224 5.1%

Carl's Jr./Green Burrito 222 N. Euclid Street, Fullerton, CA 7,348 02/2013 $2,710,000 $369 4.5%

Jack in the Box 1191 S. Mt. Vernon Avenue, Colton, CA 2,600 09/2013 $2,455,000 $944 5.5%

Burger King 6401 Balboa Avenue, San Diego, CA 4,078 04/2013 $2,330,000 $571 4.9%

Jack in the Box 770 Ramona Expressway, San Jacinto, CA 2,850 05/2013 $2,250,000 $789 5.1%

McDonald's 8556 Blue Diamond Road, Las Vegas, NV 3,736 10/2013 $2,183,908 $585 4.4%

Chipotle 1525 S. Yuma Palms Parkway, Yuma, AZ 4,200 04/2013 $2,040,000 $486 7.2%

Carl's Jr. 2211 S. Havana Street, Aurora, CO 3,024 02/2013 $1,750,000 $579 6.5%

Wendy's 1127 E. Florence Boulevard, Casa Grande, AZ 2,500 08/2013 $1,043,500 $417 5.8%


www.cassidyturley.com

Dollar Store Retail Trends• This is the first report in which we are including dollar stores as one of the net lease

asset classes that we track. As a triple net investment, this product really has only come into its own in the last few years thanks to aggressive expansion from dollar store chains at a time in which there has been strong demand for net lease investments but a limited supply of other single-tenant retail asset types. Some have questioned whether demand for dollar stores will be as strong once the overall economy improves to near “normal” levels. However, a number of key demographic factors (including the widening income gap) and the continued frugality of U.S. consumers would seem to ensure that dollar store retailers will remain in demand for now.

• The national average price on the dollar store deals we tracked in Q3 2013 was $157 per square foot. This compares to an average of $158 per square foot in Q2 and $140 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. The general trend, however, is one of increasing pricing as economic and commercial real estate fundamentals continue to improve. The trend of rising prices will slow or flatten once we see interest rate hikes next year.


• Due to the fact that most new dollar store leases are ten year deals, we see higher caps here typically than what we see for longer term fast food or drug store deals—despite relatively solid credit from nearly all of the major players. Generally, dollar stores are perceived as being most stable in rural or tertiary markets, though strong locations within primary or secondary markets are also in high demand from investors.

• Cap rates will likely increase by the final half of 2014 as interest rates rise, however, continued intense competition for first-tier fast food opportunities will mean less of an uptick for these properties.

Top Dollar Store Deals

Dollar GeneralManchester, NHPrice: $1,895,000Cap Rate: 7.4%

Dollar GeneralFort Myers, FLPrice: $1,956,603Cap Rate: 7.0%

Family DollarNew Baltimore, MIPrice: $1,519,000Cap Rate: 7.7%

Dollar TreeInglewood, CAPrice: $3,525,000Cap Rate: 6.3%

Single Tenant Dollar Store Properties Average Cap Rate & Sale Price (PSF) Trend

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Single Tenant Dollar Store PropertiesAverage Cap Rate & Sale Price (PSF) Trend





14


Dollar General 116 E. Center St, Manchester, CT 12,000 08/2013 $1,895,000 $158 7.4%

Dollar General 233 S. Bohemia Ave, Cecilton, MD 12,382 01/2013 $1,735,000 $140 7.4%

Dollar General 1406 N. High St, Millville, NJ 8,640 05/2013 $1,360,000 $157 8.0%

Dollar General 4402 State Route 981, Avonmore, PA 9,100 02/2013 $1,276,000 $140 7.2%

Family Dollar 4269 US Highway 11, De Kalb Junction, NY 8,000 02/2013 $1,042,700 $130 8.3%

Dollar General 557 Broad St, Waverly, NY 9,100 01/2013 $640,000 $70 8.4%

Dollar General 41 W. Main Street, Fonda, NY 6,494 08/2013 $590,000 $91 9.7%

National Single Tenant Dollar Store MarketUS Northeast Region Select Major Sale Transactions


Dollar General 3409 Dr. Martin Luther King Blvd, Fort Myers, FL 9,100 06/2013 $1,956,603 $215 7.0%

Fred's Super Dollar 5590 Barksdale Blvd, Bossier City, LA 16,799 06/2013 $1,920,000 $114 9.0%

Dollar General 2331 N. Highway 231, Panama City, FL 9,100 07/2013 $1,897,230 $208 6.5%

Family Dollar 951 Doyle Rd, Deltona, FL 9,600 05/2013 $1,700,000 $177 7.8%

Dollar General 15449 O'Neal Rd, Gulfport, MS 9,100 09/2013 $1,663,752 $183 7.0%

Dollar General 6134 Broad St, Douglasville, GA 9,100 04/2013 $1,570,000 $173 7.0%

Dollar General 13807 N. Main Street, Jacksonville, FL 9,026 04/2013 $1,546,730 $171 6.7%

Family Dollar 2711 Getwell Rd, Memphis, TN 8,320 01/2013 $1,495,954 $180 8.5%

Dollar General 9940 Route 643, Hurley, VA 12,480 05/2013 $1,482,581 $119 7.0%

Family Dollar 10747 Homestead Rd, Houston, TX 8,320 04/2013 $1,477,311 $178 8.1%

National Single Tenant Dollar Store MarketUS Southern Region Select Major Sale Transactions




Family Dollar 12299 S. Pulaski St, Alsip, IL 8,222 04/2013 $1,800,000 $219 9.6%

Family Dollar 37040 Green St, New Baltimore, MI 8,000 06/2013 $1,519,000 $190 7.7%

Family Dollar 225 W. Main St, Crosby, MN 9,500 07/2013 $1,150,112 $121 8.0%

Dollar General 226 S. Somonauk Rd, Cortland, IL 8,833 01/2013 $1,120,000 $127 7.1%

Dollar General 811 E. McDevitt Avenue, Jackson, MI 9,000 08/2013 $1,106,000 $123 8.0%

Dollar General 24199 1st Ave, Siren, WI 9,026 08/2013 $1,105,000 $122 7.7%

Dollar General 1001 W. Walnut Ave, Frankfort, IN 9,014 02/2013 $962,000 $107 8.0%

Family Dollar 8154 Main St, Birch Run, MI 9,500 07/2013 $958,878 $101 8.0%

Family Dollar 1432 S. Main St, Rockford, IL 9,180 08/2013 $855,000 $93 9.6%

Dollar General 12421 Hayes Street, Detroit, MI 13,478 08/2013 $841,500 $62 8.9%

National Single Tenant Dollar Store Market US Midwest Region Select Major Sale Transactions


Dollar Tree 811 N. La Brea Ave, Inglewood, CA 12,221 05/2013 $3,525,000 $288 6.3%

Dollar General 5090 S. Maryland Pkwy, Las Vegas, NV 12,380 10/2013 $3,267,815 $264 6.0%

Dollar Tree 1895 Howe Ave, Sacramento, CA 12,928 04/2013 $2,350,000 $182 6.9%

Dollar General 1335 W. Ajo Way, Tucson, AZ 9,100 05/2013 $1,790,000 $197 6.8%

Family Dollar 5167 E. Belmont Ave, Fresno, CA 8,320 04/2013 $1,620,000 $195 6.9%

Dollar General 1742 N. Ruthrauff Rd, Tucson, AZ 9,100 06/2013 $1,587,000 $174 7.2%

Family Dollar 300 N. Village Wy, Dewey, AZ 8,320 05/2013 $1,422,000 $171 7.9%

Family Dollar 1685 E. Cottonwood St, Cottonwood, AZ 9,180 07/2013 $1,410,000 $154 8.5%

Family Dollar 4915 E. Desert Inn Rd, Las Vegas, NV 10,187 04/2013 $1,206,000 $118 7.8%

Family Dollar 347 W. Carr Ave, Cripple Creek, CO 8,050 04/2013 $1,003,000 $125 8.0%

National Single Tenant Dollar Store Market US West Region Select Major Sale Transactions


Single-Tenant Automotive Retail Trends• The national average price on the automotive deals we tracked in Q3 2013 was $137

per square foot. This compares to an average of $133 per square foot in Q2 and $126 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. The general trend has been one of pricing increases as underlying economic and retail real estate fundamentals have improved. The pace of these pricing increases, however, is likely to slow heading into 2014. Rising interest rates next year will eventually flatten pricing as the price of borrowing increases and cap rates climb.


• Because automotive leases tend to be shorter in length than the ones we see for drug stores or fast food—typically averaging 10 to 15-year terms, depending on the user—we see slightly higher cap rates in general for this asset class.

• The gold standard for single-tenant automotive investment deals remain corporate leases to strong, national credit players like Jiffy Lube, Firestone, O’Reilly Automotive and Pep Boys. This is assuming, of course, that the location itself is a strong asset and that there is a long-term lease in place. Regardless, we continue to see strong investor demand even for properties leased by weaker credit tenants assuming other positive attributes are in place.

• Cap rates will likely increase by the final half of 2014 as interest rates rise, however, continued intense competition for single-tenant automotive retail opportunities will mean less of an uptick for these properties—particularly first-tier options.

Single Tenant Automotive Properties Average Cap Rate & Sale Price (PSF) Trend

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Single Tenant Automotive PropertiesAverage Cap Rate & Sale Price (PSF) Trend


Top Automotive Deals

Pep BoysNashua, NHSale Price: $4,734,756Cap Rate: 7.6%

FirestoneBaltimore, MDSale Price: $3,800,000Cap Rate: 6.8%

National Tire & BatteryCountryside, ILSale Price: $2,700,000Cap Rate: 7.7%

MeinekeCosta Mesa, CAPrice: $1,625,000Cap Rate: 6.5%


17Cassidy Turley Net Lease Investment Services www.cassidyturley.com 17

National Single Tenant Automotive Market US Northeast Region Select Major Sale Transactions


Pep Boys 274 Amherst Street, Nashua, NH 19,300 01/2013 $4,734,756 $245 7.6%

Pep Boys 331 Crooked Lane, King of Prussia, PA 10,000 08/2013 $1,500,000 $150 N/A

STS Tire & Auto Center 2150 Route 33, Hamilton, NJ 6,955 05/2013 $1,300,000 $187 N/A

Little Neck Auto Care Center 47 Little Neck Parkway, Little Neck, NY 3,500 04/2013 $1,200,000 $343 6.5%

Garden State Auto Medix 965 Rahway Avenue, Union, NJ 3,760 05/2013 $775,000 $206 N/A

National Single Tenant Automotive Market US Southern Region Select Major Sale Transactions


Sears Auto Center 160 N. New Hope Road, Gastonia, NC 8,000 05/2013 $5,330,500 $666 N/A

Firestone 6581 Eastern Avenue, Baltimore, MD 8,500 01/2013 $3,800,000 $447 6.8%

Pep Boys 950 Hooks Street, Clermont, FL 14,360 06/2013 $3,300,000 $230 7.6%

Pep Boys 830 SE Military Dr, San Antonio, TX 22,737 04/2013 $2,635,000 $116 7.7%

Christian Brothers Automotive 22120 Highway 290, Cypress, TX 4,921 08/2013 $2,289,000 $465 7.3%

National Single Tenant Automotive Market US Midwest Region Select Major Sale Transactions


Firestone 590 E. Roosevelt Road, Lombard, IL 8,500 04/2013 $4,178,000 $492 6.8%

National Tire & Battery 9850 Joliet Road, Countryside, IL 11,142 03/2013 $2,700,000 $242 7.7%

Tire Discounters 1544 Georgesville Road, Columbus, OH 6,000 07/2013 $1,682,500 $280 8.2%

Advanced Auto Parts 1135 E. Division Street, Diamond, IL 6,125 02/2013 $1,639,100 $268 7.1%

Tire Discounters 960 S. Shannon Street, Van Wert, OH 7,000 06/2013 $1,506,860 $215 8.0%

National Single Tenant Automotive MarketUS West Region Select Major Sale Transactions


Ramona Tire 1488 E. 2nd Street, Beaumont, CA 4,990 07/2013 $2,495,000 $500 6.0%

Christian Brothers Auto 14755 E. Arapahoe Road, Aurora, CO 4,945 10/2013 $2,410,000 $487 7.0%

Jiffy Lube 4500 Clayton Street, Concord, CA 4,170 07/2013 $2,016,100 $483 6.3%

Meineke 2049 Harbor Boulevard, Costa Mesa, CA 5,431 05/2013 $1,625,000 $299 6.5%

Jiffy Lube 2517 S. El Camino Real, San Mateo, CA 4,060 06/2013 $1,580,000 $389 6.4%

Jiffy Lube 1209 N. Dysart Road, Avondale, AZ 2,134 10/2013 $1,310,000 $614 8.2%

Autozone 7659 E. Guadelupe Road, Mesa, AZ 5,399 04/2013 $850,000 $157 5.9%




Gas Station / Convenience Store Trends• The national average price on the convenience store/gas station deals we tracked in

Q3 2013 was $662 per square foot. This compares to an average of $702 per square foot in Q2 and $638 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. There are also large disparities in pricing depending upon geography both in terms of local market pricing, but also in terms of urban versus suburban or rural pricing. It is not uncommon for deals above $1,000 per square foot in urban markets. The general trend, however, is one of increasing pricing as economic and commercial real estate fundamentals continue to improve. The trend of rising prices will slow or flatten once we see interest rate hikes next year.

• Deal activity this year has been extremely strong in the southeastern United States with robust trading activity in both the Florida and Texas markets. California, Arizona and Nevada are the western markets that have seen the most trading activity so far in 2013.


• Cap rates for convenience store/gas stations have consistently averaged lowest for corporate owned locations, particularly for 7 Elevens and those of major chain operators, regardless of the banner they operate under. Individual franchises, on the other hand, are largely a matter of individual credit and length of remaining lease.

• Cap rates will likely increase by the final half of 2014 as interest rates rise, however, continued intense competition for first-tier fast food opportunities will mean less of an uptick for these properties.Single Tenant Gas Station/Convenience

Store Properties Average Cap Rate & Sale Price (PSF) Trend

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Single Tenant Gas Station / Convenience Store PropertiesAverage Cap Rate & Sale Price (PSF) Trend


Top Gas Station / Convenience Store Deals

7-ElevenSan Diego, CAPrice: $3,700,000Cap Rate: 5.1%

7-ElevenSunrise, FLPrice: $4,775,000Cap Rate: 5.3%

BPPittsburgh, PAPrice: $1,675,000Cap Rate: 5.3%

Kwik TripBaraboo, WIPrice: $1,053,000Cap Rate: 10.0%


National Single Tenant Gas Station / Convenience Store Market US Northeast Region Select Major Sale Transactions


Mobil 2001 Barlow Ave, Bronx, NY 1,941 07/2013 $6,350,000 $3,272 N/A

Mobil 2474 Flatbush Ave, Brookkyn, NY 2,108 10/2013 $3,500,000 $1,660 N/A

7-Eleven 175 W. Sunrise Hwy, Lindenhurst, NY 2,640 06/2013 $3,000,000 $1,136 5.6%

Sheetz 809 E, Main St, Girard, PA 6,483 08/2013 $2,400,000 $370 6.0%

Mobil 1501 5th Ave, Bay Shore, NY 1,453 02/2013 $2,100,000 $1,445 N/A

Exxon 75 Route 17, Ramsey, NJ 4,102 05/2013 $2,030,293 $495 N/A

BP 2269 Noblestown Rd, Pittsburgh, PA 2,186 05/2013 $1,675,000 $766 5.3%

BP 8136 Ohio River Blvd, Pittsburgh, PA 2,660 01/2013 $1,480,000 $556 5.9%

Shell 103 Taunton Rd, Medford, NJ 1,305 01/2013 $1,025,000 $785 11.0%

Pik Qwik 138 Main St, Thomaston, ME 2,274 09/2013 $550,000 $242 12.0%

National Single Tenant Gas Station / Convenience Store MarketUS Southern Region Select Major Sale Transactions


Quiktrip 9020 S. Tryon Rd, Charlotte, NC 4,527 03/2013 $4,799,000 $1,060 7.3%

7-Eleven 9998 Sunset Strip, Sunrise, FL 5,576 04/2013 $4,775,000 $856 5.3%

WaWa 8049 E. Colonial Dr, Oralndo, FL 5,636 06/2013 $2,844,827 $505 5.8%

Sunoco 600 S. Courtenay Pkwy, Merritt Island, FL 2,353 04/2013 $2,809,105 $1,194 7.5%

Exxon 3501 Grapevine Mills Pkwy, Grapevine, TX 4,297 07/2013 $2,713,846 $632 6.5%

7-Eleven 1701 State Highway 276, Rockwell, TX 3,000 03/2013 $2,330,000 $777 5.7%

Circle K 1801 S. Tamiani Tr, Sarasota, FL 4,121 09/2013 $2,325,000 $564 5.9%

7-Eleven 6340 Mechanicsville Tpke, Mechanicsville, VA 3,162 06/2013 $2,243,000 $709 6.0%

Exxon 1101 Annapolis Rd, Odenton, MD 2,230 05/2013 $1,570,500 $704 5.4%

BP 4592 N. Valdosta Blvd, Valdosta, GA 3,000 02/2013 $1,120,000 $373 8.8%




20

National Single Tenant Gas Station / Convenience Store Market US Midwest Region Select Major Sale Transactions


7-Eleven 5402 E. Superior Dr, Duluth, MN 1,309 08/2013 $2,200,000 $1,681 N/A

SuperAmerica 7525 N. Brooklyn Blvd, Monneapolis, MN 5,456 05/2013 $2,144,848 $393 N/A

7-Eleven 26 W. Main St, Lexington, OH 2,700 04/2013 $2,040,000 $756 5.9%

BP 20420 Chagrin Blvd, Shaker Heights, OH 2,827 05/2013 $1,948,625 $689 N/A

BP 1201 Omniplex Dr, Cincinnati, OH 2,262 05/2013 $1,865,000 $824 N/A

Kwik Trip 602 W. Pine St, baraboo, WI 3,254 02/2013 $1,053,000 $324 10.0%

7-Eleven 11202 Midland Blvd, St. Louis, MO 2,640 09/2013 $956,760 $362 7.5%

7-Eleven 2425 S. Big Bend Blvd, St. Louis, MO 2,460 03/2013 $800,000 $325 5.8%

White Hen Pantry 210 W. Fullerton Ave, Addison, IL 2,520 02/2013 $405,000 $161 8.0%

Kum & Go 1401 Court St, Sioux City, IA 2,625 05/2013 $177,810 $68 8.4%

National Single Tenant Gas Station / Convenience Store MarketUS West Region Select Major Sale Transactions


7-Eleven 7807 Balboa Ave, San Diego, CA 2,200 03/2013 $3,700,000 $1,682 5.1%

7-Eleven 8925 S. Las Vegas Blvd, Las Vegas, NV 3,000 05/2013 $3,000,000 $1,000 6.8%

Shell 26721 Rancho Pkwy, Lake Forest, CA 4,000 07/2013 $2,915,000 $729 5.0%

7-Eleven 11945 Peoria St, Henderson, CO 3,000 09/2013 $2,150,000 $717 5.6%

7-Eleven 2471 S. 7200 W, Salt Lake City, UT 3,000 08/2013 $2,025,000 $675 5.7%

Arco 18025 Magnolia St, Fountain Valley, CA 1,246 03/2013 $1,850,000 $1,485 3.2%

Shell 1810 Main St, Colorado Springs, CO 3,000 06/2013 $1,730,000 $577 7.3%

7-Eleven 4500 NE St, Johns Rd, Vancouver, WA 3,889 04/2013 $1,565,000 $402 5.8%

Circle K 5685 S. Eastern Ave, Las Vegas, NV 2,358 04/2013 $1,450,000 $615 5.5%

Circle K 965 W. Baseline Rd, Tempe, AZ 2,781 02/2013 $1,107,700 $398 6.5%



Big Box Retail Trends—Junior Box Properties (20,000 – 39,999 SF)• The national average price on the junior box deals we tracked

in Q3 2013 was $148 per square foot. This compares to an average of $118 per square foot in Q2 and $105 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. The general trend, however, is one of increasing pricing as economic and commercial real estate fundamentals continue to improve. The trend of rising prices will slow or flatten once we see interest rate hikes next year.

• Junior boxes remain the strongest segment of the big box market, simply because they have the largest potential tenant pool and we continue to see aggressive expansion from key users such as smaller format grocery, off-price apparel and discounters. We expect this trend to continue as larger box users continue to shrink formats—particularly those making the transition from mid-box floorplates to more nimble junior box footprints.

• Virtually all of the big box vacancy overhang leftover from the early days of the recession has been backfilled in the 20,000 to 40,000 square foot range. This is certainly the case for Class A properties, where few vacancies remain, and demand from tenants is starting to spur development once again.


• Cap rates will likely increase by the final half of 2014 as interest rates rise, however, continued intense competition for first-tier opportunities (the best locations with long-term leases in place to the strongest national credit tenants) will mean less of an uptick for these properties.

Big Box Retail Trends—Mid-Box Properties (40,000 – 79,999 SF)• The average price on the mid-box deals we tracked in Q3 2013

was $131 per square foot. This compares to an average of $122 per square foot during Q2 a metric of $140 per square foot exactly one year ago. The general trend has been one of pricing generally holding its own with Class A space posting increases while Class B and C properties continue to struggle with a competitive environment. Expected interest rate hikes next year will likely have a negative impact on pricing as the cost of borrowing increases.

• The average capitalization rate on mid-box deals that closed during the third quarter was 7.9%. This reflects a slight increase from the average cap rate of 7.5% posted in Q2, but a decrease from the 8.1% average that was in place one year ago. This number had been decreasing thanks to the fact that the pool of distressed mid-boxes had slowly been shrinking. However, the movement has been minimal with tenant credit remaining the primary determinant.

• While most of the big box vacancy overhang leftover from the early days of the recession has been backfilled in the 40,000 to 80,000 square foot range throughout the nation’s Class A shopping centers, there remain issues for Class B and C space—particularly in tertiary or rural markets.


Big Box Retail Properties Mid-Boxes (40,000 to 80,000 SF)

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Big Box Retail Properties Junior Boxes (20,000 to 40,000 SF)


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• The average price on mega-box deals we tracked in Q3 2013 was $88 per square foot. This compares to last quarter’s average of $70 per square foot and a reading of $75 per square foot exactly one year ago. These metrics, of course, only reflect what actually has sold. The general trend has been one of pricing generally holding its own. Class A space has posted modest gains but Class B and C properties continue to struggle. Expected interest rate hikes next year will likely have a negative impact on pricing as the cost of borrowing increases.

• Mega-box tenancy remains an issue impacting the volatility of this sector of the marketplace. At one end of the scale, we continue to see new Target and Walmart Supercenters being developed and those properties are the gold standard of mega box net lease retail. On the other hand, department stores are generally focusing on building their discount concepts or e-commerce presence and huge questions remain as to the future health of major users like Sears and JCPenney. The pool of tenants is shrinking and though we are likely to see minor improvement from some user types, the overall trend is one of shrinking mega-box usage.

• There are some larger user types that we expect to see more active in 2014 as the housing market continues to rebound. So long as personal income levels continue the current trend of moderate increases, the housing market should continue its recovery next year despite the fact that interest rates will likely tick up slightly. This will eventually translate into more demand for housing related retail like D-I-Y stores and furniture retailers who typically operate in this size range. However, the increases in rental demand will be modest at best before 2015.

• The average capitalization rate on closed mega-box deals in Q3 2013 was 7.5%. This compares to an average cap rate of 6.2% last quarter and 7.3% exactly one year ago. These averages, however, are a bit misleading and mask the substantial bifurcation that remains in the marketplace. In general, top properties with the best occupancy are moving at 7.0% cap rates or below, but nearly everything else is trading above—often significantly above—that rate. The problem is that most troubled properties are not moving at all, which is why the average numbers appear to reflect cap rate compression when that is only modestly the case for top-tier assets.


Big Box Retail Properties Mid-Boxes (40,000 to 80,000 SF)


$50

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



Mega Box Retail PropertiesAverage Cap Rate & Sale Price (PSF)

Big Box Retail Trends—Mega-Box Properties (80,000 SF +)



National Single Tenant Big Box Retail Market US Northeast Region Select Major Sale Transactions

Property Total SF Sale Date Sale Price Price PSFCap Rate

Junior Boxes (20,000 - 40,000 SF)

La-Z-Boy 233 Buckland Hills Dr, Manchester, CT 24,670 04/2013 $7,750,000 $314 8.3%

Crème de la Crème Learning Center 794 US Highway 202, Bridgewater, NJ 21,555 05/2013 $6,900,000 $320 8.6%

Maybrook Travel Center 125 Neelytown Rd, Montgomery, NY 37,889 07/2013 $5,750,000 $152 7.3%

Tractor Supply 2970 Route 940, Mount Pocono, PA 24,727 02/2013 $5,490,000 $222 7.1%

PetSmart 420 Home Dr, Pittsburgh, PA 26,040 05/2013 $3,458,997 $133 N/A

Mid-Boxes (40,000 - 80,000 SF)

PetSmart/Bob's Discount Furniture 114 Commerce Wy, Woburn, MA 56,566 07/2013 $17,600,000 $311 N/A

ShopRite 709 Central Ave, Albany, NY 65,000 06/2013 $16,732,586 $257 N/A

LA Fitness 1600 E. Ridge Rd, Rochester, NY 45,000 09/2013 $10,300,000 $229 N/A

Toys R Us 2819 Kennedy Blvd, North Bergen, NJ 41,477 06/2013 $9,025,000 $218 8.0%

LA Fitness 3000 Lincoln Pl, Greensburg, PA 45,000 01/2013 $8,800,000 $196 N/A

Mega-Boxes (80,000 SF +)

Multiplex Cinemas 750 W. Sunrise Hwy, Valley Stream, NY 85,586 04/2013 $22,500,000 $263 N/A

BJ's Wholesale Club 5 Ward St, Revere, MA 120,224 09/2013 $16,400,000 $136 N/A

BJ's Wholesale Club 1785 Airport Rd, Allentown, PA 112,230 09/2013 $10,600,000 $94 8.1%

Costco 325 Promenade Blvd, Bridgewater, NJ 136,570 02/2013 $7,511,350 $55 N/A

Lowe's 1605 Macedon Pkwy, Macedon, NY 139,410 08/2013 $6,565,000 $47 N/A

Top Big Box Retail Transactions

LA-Z-BOYManchester, CTSale Price: $7,750,000Cap Rate: 8.3%

Tractor SupplyMount Pocono, PASale Price: $5,490,000Cap Rate: 7.1%

Toys R UsNorth Bergen, NJSale Price: $9,025,000Cap Rate: 8.0%

BJ’s Wholesale ClubAllentown, PASale Price: $10,600,000Cap Rate: 8.1%


National Single Tenant Big Box Retail Market US Southern Region Select Major Sale Transactions

Property Total SF Sale Date Sale Price Price PSFCap Rate

Junior Boxes (20,000 - 40,000 SF)

Whole Foods 12150 Biscayne Blvd, North Miami, FL 36,000 07/2013 $19,800,000 $550 N/A

Staples 2121 Biscayne Blvd, Miami, FL 20,388 05/2013 $17,375,000 $852 5.3%

The Container Store 8460 Parkwood Boulevard, Plano, TX 23,286 05/2013 $7,950,000 $341 8.2%

Ashley Furniture 1201 S. Earl Rudder Frwy, College Station, TX 35,000 06/2013 $5,900,000 $169 8.5%

Fresh Market 3285 Robinhood Dr, Winston-Salem, NC 21,028 03/2013 $4,640,000 $221 7.3%

Mid-Boxes (40,000 - 80,000 SF)

Academy Sports 455 Norman Rd, Valdosta, GA 71,680 05/2013 $9,790,000 $137 7.5%

Gander Mountain 1523 Vann Dr, Jackson, TN 65,000 09/2013 $8,000,000 $123 8.7%

Winn Dixie 4701 Center Point Rd, Pinson, AL 58,037 01/2013 $6,305,300 $109 7.8%

Hobby Lobby 2987 Watson Blvd, Warner Robins, GA 55,000 01/2013 $5,250,000 $95 8.4%

Belk 997 Bullsboro Dr, Newnan, GA 66,412 06/2013 $4,900,000 $74 N/A


Walmart 3274 Inner Perimeter Rd, Valdosta, GA 179,958 05/2013 $15,105,000 $84 6.2%

Reasor's 446 S. Elm St, Jenks, OK 81,014 09/2013 $11,400,000 $141 8.0%

Lowe's 1836 US Highway 78 E, Oxford, AL 135,197 07/2013 $11,250,000 $83 7.8%

Lowe's 2470 Whiskey Rd, Aiken, SC 135,197 08/2013 $10,600,000 $78 7.5%

Kohl's 1301 Beaver Creek Commons Dr, Apex, NC 101360 04/2013 $7,265,000 $72 6.4%


StaplesMiami, FLSale Price: $17,375,000Cap Rate: 6.3%

Fresh MarketWinston-Salem, NCSale Price: $4,640,000Cap Rate: 7.3%

Academy SportsValdosta, GASale Price: $9,790,000Cap Rate: 7.5%

Lowe’sAiken, SCSale Price: $10,600,000Cap Rate: 7.5%




Junior Boxes (20,000 - 40,000 SF)

Tractor Supply 1801 Milwaukee Ave, Burlington, WI 22,670 02/2013 $4,180,000 $184 7.2%

Best Buy 1600 Center Rd, Avon, OH 30,814 03/2013 $3,975,000 $129 6.5%

Gander Mountain 5114 W. Holiday Dr, Peoria, IL 31,080 09/2013 $3,575,000 $115 9.3%

Fresh Market 3033 S.Halsted St, Chicago, IL 20,500 01/2013 $3,500,000 $171 N/A

OfficeMax 2950 5th Ave S, Fort Dodge, IA 23,516 05/2013 $2,995,000 $127 N/A

Bank of America 510 N. Penn Ave, Independence, KS 25,962 06/2013 $600,000 $23 6.7%

Mid-Boxes (40,000 - 80,000 SF)

Kittle's Factory Outlet 9810 Carney Dr, Fishers, IN 62,015 07/2013 $5,300,000 $85 8.5%

Cub Foods 350 McHenry Rd, Buffalo Grove, IL 56,192 05/2013 $4,100,000 $73 N/A

Econo Foods 1000 W. Sharon Ave, Houghton, MI 49,618 08/2013 $3,300,000 $67 8.5%

Big Lots 5112 Miller Rd, Flint, MI 40,000 06/2013 $2,287,500 $57 8.8%

Pamida 174 James Robertson Dr, Gladwin, MI 42,128 04/2013 $2,000,000 $47 10.8%


Home Depot Otswego Plaza, Plainwell, MI 96,801 05/2013 $13,389,430 $138 6.2%

Kohl's 13900 Aklrich Ave S, Burnsville, MN 102,412 01/2013 $12,830,000 $125 6.3%

Kohl's 1400 Lawson Dr, Howell, MI 88,000 03/2013 $12,441,188 $141 6.8%

BJ's Wholesale Club 6924 Frank Ave NW, North Canton, OH 108532 02/2013 $10,771,900 $99 7.9%

K-Mart 1825 N. State Route 19, Fremont, OH 172655 05/2013 $4,150,000 $24 23.8%

National Single Tenant Big Box Retail Market US Midwest Region Select Major Sale Transactions


Best BuyAvon, OHSale Price: $3,975,000Cap Rate: 6.5%

Gander MountainPeoria, ILSale Price: $3,575,000Cap Rate: 9.3%

Big LotsFlint, MISale Price: $2,287,500Cap Rate: 8.8%

Kohl’sBurnsville, MNSale Price: $12,830,000Cap Rate: 6.3%


Property Total SF Sale Date Sale PricePrice PSF

Cap Rate

Junior Boxes (20,000 - 40,000 SF)

Office Depot 4900 25th Ave NE, Seattle, WA 29,691 07/2013 $13,744,690 $463 5.0%

Tractor Supply 1131 W. Pacheco Blvd, Los Banos, CA 21,680 03/2013 $5,500,000 $254 7.3%

Ralph's 950 N. La Brea Ave, Inglewood, CA 34,035 02/2013 $5,100,000 $150 5.4%

Big Lots 17510 N. 75th Ave, Glendale, AZ 34,827 01/2013 $5,001,500 $144 7.3%

Tractor Supply 8540 E. Eastridge Rd, Prescott Valley, AZ 22,000 08/2013 $3,807,634 $173 N/A

Mid-Boxes (40,000 - 80,000 SF)

Whole Foods 230 Bay Pl, Oakland, CA 57,218 02/2013 $41,400,000 $724 N/A

Hobby Lobby 27200 Alicia Pkwy, Laguna Niguel, CA 77,867 09/2013 $15,100,000 $194 5.7%

Dick's Sporting Goods 1030 Green Acres Rd, Eugene, OR 60,122 03/2013 $13,725,000 $228 7.0%

Walmart Neighborhood Market 1189 E. March Ln, Stockton, CA 54,159 05/2013 $8,574,900 $158 6.0%

Room Store 555 N. Litchfield Rd, Goodyear, AZ 50,046 03/2013 $6,210,155 $124 N/A


Sam's Club 7817 Park Meadows Dr, Lone Tree, CO 129,715 09/2013 $17,617,000 $136 6.3%

Room Store 1661 S. Alma School Rd, Mesa, AZ 120,026 03/2013 $6,000,000 $50 10.4%

Fred Meyer's 10201 SE 240th St, Kent, WA 167,146 06/2013 $13,338,000 $80 N/A

National Single Tenant Big Box Retail Market US West Region Select Major Sale Transactions


Office DepotSeattle, WASale Price: $13,744,690Cap Rate: 5.0%

Ralph’sInglewood, CASale Price: $5,100,000Cap Rate: 5.4%

Hobby LobbyLaguna Niguel, CASale Price: $15,100,000Cap Rate: 5.7%

Sam’s ClubLone Tree, COSale Price: $17,617,000Cap Rate: 6.3%


Single Tenant Industrial Properties Average Cap Rate & Sale Price (PSF) Trend

$0

$15

$30

$45

$60

$75

$90

4%

5%

6%

7%

8%

9%

10%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



Single Tenant Industrial PropertiesAverage Cap Rate & Sale Price (PSF) Trend


Industrial Investment Trends• The average price on the deals we tracked in Q3 2013 was $49 per square foot. This

compares to $48 per square foot in Q2 and $47 per square foot exactly one year ago. However, there can be a wide divergence of price depending upon the type of industrial space. Modern distribution space with long-term leases in place to top logistics users routinely trade well above the $100 per square foot mark in nearly every major market (we’ve tracked a couple of FedEx deals above $250 per square foot), but pricing for older commodity warehouse tends to fall well below these averages.

• Pricing is on the upswing but this is being driven by modern distribution product. In many markets, older warehousing space is only now beginning to show signs of rental rate growth following years of declining and then flat rents. Fundamentals continue to recover at a rapid clip, with occupancy growth for the industrial sector far outpacing that of office or retail. However, much of this has been driven by e-commerce build-to-suits for users like Amazon. Regardless, vacancies are falling for older properties as well and rents are poised to grow.

• While we anticipate the trend of rising prices to continue heading into 2014, the likelihood of increased interest rates by midyear might derail this trend. We anticipate that average metrics will slow or flatten, although modern distribution facilities will likely still post increases.

• We have yet to see many e-commerce related properties come to market, but these may well be the next hot commodity for investors. While these tend to be highly specialized buildings (it is not uncommon for structures that cost $40 to $60 per square foot to build to feature $100 per square foot or more in tenant improvements), they also tend to have long lease terms in place.

• The average capitalization rate for deals that closed in Q3 2013 was 7.6%. This compares to an average of 7.3% in Q2 and a reading of 7.5% exactly one year ago. Cap rates will increase by the final half of 2014 as interest rates rise, however, modern distribution facilities will see less of an uptick.

Industrial Investment Deals

Pearson EducationCranbury, NJPrice: $98,000,000Cap Rate: 7.0%

MitsubishiSuwanee, GAPrice: $38,000,000Cap Rate: 5.8%

RubbermaidKent, OHPrice: $34,900,000Cap Rate: 7.5%

FedExSan Diego, CAPrice: $14,100,000Cap Rate: 5.2%


28Cassidy Turley Net Lease Investment Services www.cassidyturley.com 28

National Single Tenant Industrial Market US Northeast Region Select Major Sale Transactions


Pearson Education 258 Prospect Plains Rd, Cranbury, NJ 886,875 09/2013 $98,000,000 $111 7.0%

Barnes & Noble 1 Barnes & Noble Wy, Monroe Township, NJ 1,145,200 02/2013 $83,000,000 $72 7.5%

Mohawk Distribution Center 698 Route 46, Teterboro, NJ 616,992 06/2013 $81,000,000 $131 6.1%

BJ's Warehouse 309 Dulty's Ln, Burlington, NJ 633,436 07/2013 $43,250,000 $68 7.4%

Talbots 175 Kenneth Welch Dr, Lakeville, MA 555,000 05/2013 $36,743,057 $66 N/A

FedEx 456 Sullivan Ave, South Windsor, CT 224,061 01/2013 $32,200,000 $144 6.4%

Ollie's Bargain Market Distribution Center

3300 Espresso Wy, York, PA 603,000 03/2013 $31,671,000 $53 6.7%

Xpedx 261 River Rd, Clifton, NJ 230,953 02/2013 $26,811,000 $116 5.0%

Lehigh Group Distribution Center

2834 Schoeneck Rd, Macungie, PA 270,000 06/2013 $16,550,000 $61 6.5%

FedEx 550 Delancy St, Newark, NJ 52,000 07/2013 $15,000,000 $288 5.6%

National Single Tenant Industrial Market US Southern Region Select Major Sale Transactions


United Natural Foods 17901 E. 40th Ave, Aurora, CO 553,757 09/2013 $46,350,000 $84 7.2%

Braun Medical 7400 Hazard Ave, Westminster, CA 258,506 04/2013 $26,700,000 $103 5.4%

FedEx 33104 25th Ave, Kettleman City, CA 84,927 06/2013 $21,466,000 $253 7.4%

Natural Selection Foods 3701 S. Avenue 3, Yuma, AZ 220,000 10/2013 $17,850,000 $81 8.0%

Watkins Sheperd Trucking 13827 Carmenita Rd, Santa Fe Springs, CA 206,030 08/2013 $15,025,000 $73 7.5%

PODS Enterprises 1650 N. Kraemer Blvd, Anaheim, CA 122,600 04/2013 $14,300,000 $117 6.5%

FedEx 1650 47th St, San Diego, CA 76,822 08/2013 $14,100,000 $184 5.2%

Internal Revenue Service 1973 Rulon White Blvd, Ogden, UT 100,000 05/2013 $12,625,000 $126 8.6%

Dimension One Spas 2611 Business Park Dr, Vista, CA 128,531 02/2013 $10,145,000 $79 10.0%

Raley's Distribution Center3925 Seaport Boulevard, West Sacramento, CA

135,885 10/2013 $9,675,000 $71 10.2%



National Single Tenant Industrial MarketUS Midwest Region Select Major Sale Transactions


Quaker Oats 9101 Orly Dr, Indianapolis, IN 1,119,915 07/2013 $60,623,063 $54 N/A

Rubbermaid 212 Progress Blvd, Kent, OH 811,200 01/2013 $34,900,000 $43 7.5%

Sears Logistics Services 1600 N. Boudreau Rd, Manteno, IL 1,400,000 03/2013 $24,000,000 $17 N/A

Case New Holland Distribution Center

300 E. Pence Rd, Cameron, MO 500,000 06/2013 $23,500,000 $47 7.2%

Liz Claiborne 8741 Jacquemin Dr, West Chester, OH 601,065 08/2013 $21,000,000 $35 8.0%

Sears Logistics Services 901 Canterbury Rd, Shakopee, MN 1,100,000 09/2013 $17,000,000 $15 N/A

FedEx 4600 Poth Rd, Columbus, OH 217,627 04/2013 $16,675,000 $77 7.5%

Gannett 8751 N. Zachary Ln, Maple Grove, MN 192,924 03/2013 $14,400,000 $75 8.6%

FedEx 2900 SW Brookside Dr, Grimes, IA 186,088 03/2013 $11,400,000 $61 7.9%

Penda Corporation 2344 W. Wisconsin Dt, Portage, WI 272,000 01/2013 $9,965,789 $37 9.6%

National Single Tenant Industrial Market US West Region Select Major Sale Transactions


United Natural Foods 17901 E. 40th Ave, Aurora, CO 553,757 09/2013 $46,350,000 $84 7.2%

Braun Medical 7400 Hazard Ave, Westminster, CA 258,506 04/2013 $26,700,000 $103 5.4%

FedEx 33104 25th Ave, Kettleman City, CA 84,927 06/2013 $21,466,000 $253 7.4%

Natural Selection Foods 3701 S. Avenue 3, Yuma, AZ 220,000 10/2013 $17,850,000 $81 8.0%

Watkins Sheperd Trucking 13827 Carmenita Rd, Santa Fe Springs, CA 206,030 08/2013 $15,025,000 $73 7.5%

PODS Enterprises 1650 N. Kraemer Blvd, Anaheim, CA 122,600 04/2013 $14,300,000 $117 6.5%

FedEx 1650 47th St, San Diego, CA 76,822 08/2013 $14,100,000 $184 5.2%

Internal Revenue Service 1973 Rulon White Blvd, Ogden, UT 100,000 05/2013 $12,625,000 $126 8.6%

Dimension One Spas 2611 Business Park Dr, Vista, CA 128,531 02/2013 $10,145,000 $79 10.0%

Raley's Distribution Center3925 Seaport Boulevard, West Sacramento, CA

135,885 10/2013 $9,675,000 $71 10.2%

30



About Cassidy Turley Cassidy Turley is a leading commercial real estate services provider with more than 3,600 professionals in more than 60 offices nationwide. The company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2011, manages 455 million square feet on behalf of institutional, corporate and private clients and supports more than 28,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside of North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit www.cassidyturley.com for more information about Cassidy Turley.

Andy BogardusSan Francisco415.677.0421Andy.Bogardus@ cassidyturley.com

Our Net Lease Services team understands the complexities and dynamics of the Net Lease marketplace. Our national platform is managed by an advisory committee composed of industry leaders from across the country.

Please contact any of the following advisory committee members for more information on Cassidy Turley Net Lease Investment Services.

Visit www.cassidyturley.com for more information on the full range of Cassidy Turley commercial real estate services.

Chuck KleinSan [email protected]

Garrick BrownDirector of ResearchSan Francisco 916.329.1558 [email protected]

For more information regarding this report, contact:

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