starbucks - new 10 year lease 27855 cabot drive, haggerty ... · starbucks corporate recently inked...

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:: Offering Memorandum

PCG Detroit Capital Markets Driving Price and Adding Value through Experience and Market Knowledge

Starbucks - New 10 Year Lease 27855 Cabot Drive, Haggerty Corridor Corporate Park Novi, Michigan 48377

StarbuckS Novi | a f f i l i a t ed bus ine s s D i s c l o su re and con f i den t i a l i t y ag reemen t

CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum.

This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property.

This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner.

Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal

commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property.

The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc.

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.

© 2014 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no

guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only

and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors.

You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

Executive Summary Investment Highlights The Offering Investment Summary Building Details Area Maps Aerial Maps Area Overview Location Overview Demographic Report Rent Comparables Rent Comparable Analysis Rent Comparables Sale Comparables Sale Comparable Analysis Sales Comparables Financials Summary of Financial Assumptions Lease Abstract Tenant Overview Year One Cash Flow

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01 Executive Summary Investment Highlights The Offering Investment Summary Building Details Area Maps Aerial Maps

Investment Highlights

• Brand New Construction, Completed in 2014

• Stabilized Asset, Currently 100 Percent Occupied by Starbucks With a Drive Thru on a Brand New 10 Year Lease

• Excellent Location, Close Proximity to Major Highways Including I-275, I-696, I-96 and M-5

• Traffic Counts Of 34,000+ VPD Along 12 Mile Road

• Direct Frontage Along 12 Mile Road with Close Access to M-5

• Located within the Haggerty Corridor Corporate Park, a Business Park Consisting of over 1.5 MM Square Feet of Flex and Office Uses Including Henry Ford Health System, Magna International, Farmers Insurance and Robert Bosch

• Lease Equipped with Four, Five Year Renewal Options with Increases Each Option Period

• Starbucks Has an S&P Credit Rating of A-

The Offering

CBRE, Inc. has been retained by current ownership as the exclusive marketing advisor for the disposition of the Brand New Starbucks Building at the northwest corner of 12 Mile Road and Cabot Drive in Novi, Michigan. The Summary

Starbucks Corporate recently inked a new 10 year lease for their 2,032 square foot free-standing building on a 0.74-acre parcel. The property is equipped with a drive thru and outdoor seating for this brand new building and the tenant opened for business February, 2014.

Starbucks is on a NNN lease in which they are responsible for reimbursing the landlord for all operating expenses including common area maintenance, property insurance and real estate taxes. However, Starbucks has a maximum reimbursement for the first year of the lease of $5.54 per square foot for CAM, $0.50 per square foot for insurance and $5.00 per square foot for real estate taxes. This additional rent shall not exceed 105 percent over the previous calendar (exclusive of insurance, snow removal and utilities). The landlord is responsible to maintain, repair and make replacements to the subject property including the roof and exterior portions. Additionally, the lease is equipped with four, five year renewal options with rental increases per option period and a notification period of 180 days. The property is ideally located at the entrance to the Haggerty Corridor Corporate Park, a business park consisting of over 1.5 million square feet, located north of 12 Mile Road, east of M-5 and Haggerty Road. This dense demographic has over 175,000 people within a five mile radius, which allows the tenant a strong, neighborhood client base. This asset should continue to appreciate in years to come as more professionals relocate to this outstanding community.

I n V e s T m e n T s U m m A RY

ExecutiveSummary 3STNL - Starbucks

FINANCIAL OVERVIEW

Sales Price $1,498,000

CAP Rate 6.00%

Price Per Square Foot

$737.20

Financing All Cash Transaction

BuILdINg INFORmATION

PropertyStarbucks 27855 Cabot Drive Novi, MI 48377

Building Square Feet (RBA)

2,032 Square Feet

Property Type STNL Free Standing Retail Building with Drive Thru

Year Built 2014

Land Area 0.74 Acres

Type of Ownership

Fee Simple

Current Occupancy

100%


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02 Area Overview Location Overview

A R E A OV E R V I E W

Location Overview

The subject property is along the north side of 12 Mile Road and west of Cabot Drive in Novi, Michigan. The property is just east of the M-5 Connector with excellent access to I-696, I-96 and I-275. The property is located at the entrance to the Haggerty Corridor Corporate Park, a Business Park Consisting over 1.5 MM Square Feet of Flex and Office Uses Including Henry Ford Health System, Magna International, Farmers Insurance and Robert Bosch and more.

City of Novi

Novi continues to be one of the fastest growing cities in michigan. The city consists of 31+/- square miles in the southwestern portion of Oakland County, and is just twenty-five minutes from downtown Detroit and 29 miles northeast of the center of Ann Arbor. Novi offers many solid advantages, combining an outstanding blend of highly visible land development opportunities in both high-tech and industrial areas. Novi is well connected to highway, rail and air transportation.

Industry, retail and a vibrant suburban environment happily coexist within the city limits. Since 1969, Novi’s economy has steadily grown, and with vibrant economic conditions, the area has enjoyed many professional employment opportunities.

Oakland County

Oakland County is part of the Detroit metropolitan area, though the actual city of Detroit is located in neighboring Wayne County, south of 8 Mile Road. Oakland County is also home to Oakland University, a large public institution that straddles the Auburn Hills and Rochester Hills border. Metro Detroit’s suburbs are among the most affluent in the nation. Oakland County is the fourth wealthiest county in the United states among counties with more than one million people.

Oakland County, home to a mix of urban and rural communities, with its 30 downtown areas and many scenic natural settings, provides a high quality of life for any lifestyle. Countless outdoor recreation opportunities are available including: 3 ski areas, 27 public fishing sites, over 60 public golf courses, more than 1468 lakes and approximately 89,000 acres of public recreation

AreaOverview 10STNL - Starbucks

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CBRE Global Research and Consulting

© 2013, CBRE, Inc.

Detroit RetailMarketView

MARKET CONTINUES POSITIVE TREND HEADING INTO 2014

Quick Stats

Hot Topics

According to the National Retail Federation (NRF), Holiday sales increased 3.8% to $601.8 billion

The Renewable Fuel Standard program, created under the EPAct of 2005, generated $433 million in economic activity for rural areas in Michigan

Michigan looks to add *130,000 jobs over the next two years, with over 30,000 occurring within the professional and business services sector

Michigan auto employment has increased 31% between 2009 & 2013 highlighted by $760 million dollars of investment in manufacturing plants

The U.S. has gained nearly *7.4 million jobs back since the economic downturn as of November 2013

Economy 101Michigan’s unemployment rate increasedto 8.8% as of November 2013, which ispartly a function of people gainingconfidence to re-enter the workforce. Overthe next two years, Michigan expects togain over *130,000 jobs yielding a 7.3%unemployment rate by 2015, according toUniversity of Michigan economists.Specifically, the professional and businessservices segment can expect to add*30,000 jobs, whereas the auto andhealthcare segments can expect to add*7,000 jobs.

The latest Michigan Retail Index showedNovember Sales to be sluggish after agood October, reporting a performanceindex of 46.7 in comparison to an index of54.8 in October. Looking ahead, slightlyless than one-third of retailers expect salesto increase through February. The Index ofConsumer Sentiment, reported byThomson Reuters and the University ofMichigan, increased to 82.5 in Decemberfrom 75.1 in the previous month due to anoptimistic viewpoint of the economy.

Rental rate, vacancy trend positive The Detroit Metropolitan retail marketvacancy rate declined by 50 basis points(bps) to 9.6% in Q4 2013. Althoughmarket fundamentals are improving at atepid pace, retailer activity should pick upheading into 2014. The average askinglease rate increased by $0.13 to $13.90in Q4 2013.

Flight to quality continues to trend as retailers try to out-position their competitors and increase same-store sales. Lack of quality space may lead to an increase in developments, which was also supported by the increase of land acquisitions in 2013. With large amounts of tertiary space available U.S., major retailers like Kroger are looking to backfill these opportunities as a part of their aggressive growth strategy, and other retailers will most likely follow suit.

Outlet malls expand footprintThe dynamics surrounding the positioning of outlet malls are drastically changing. In the past, landlords required retailers to sign agreements preventing them from opening discount stores within a certain trade area, but these restrictions are being lifted allowing for a surge of new developments. That being said, it is reported that 11 new outlet malls opened across the U.S. in Q4 2013. This product type is very attractive to developers and is one of the few assets that are frequently built speculatively due to low development costs and strong store sales. Growth-oriented chains seeking new locations are looking to outlet malls to establish a new demographic of customers that are “value –conscious” . Major retailers like Saks Fifth Avenue, Nordstrom and Bloomingdales are looking to increase their footprint in the discount market space, and in some measure will use the expanding footprint of outlet malls to help solidify growth.

Q4 2013

Q4 2013 QoQ YoY

Vacancy 10.1%9.6%

Lease Rate $13.77$13.90

Construction 704,000 SF

Chart 1: Direct Vacancy Rate vs. Net Asking Rate$13.90Net Asking Rates

Direct Vacancy Rate 9.6%

10.33% 10.38% 10.06%10.76%

9.61%

$13.90

$13.77

$13.61$13.39

$13.39

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4.00%

6.00%

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10.00%

12.00%

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

$13.10$13.20$13.30

$13.40$13.50$13.60$13.70

$13.80$13.90$14.00

U.S. Unemployment Rate7.0% 6.7%

Michigan Unemployment Rate8.7% 8.8%

Metro Detroit Unemployment Rate9.8% 9.3%

Source: CBRE Research, Q4 2013

* Indicates an approximation

*The arrows are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period.

MArk E t r E pOr t

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Table #1: Market Statistics

Submarket Market Size Vacancy Rate % Net Asking Rate

Auburn Hills 2,785,858 1.0% $25.03

Birmingham 378,084 15.0% $22.51

Bloomfield-West Bloomfield 1,615,813 12.0% $18.74

Central Oakland 1,687,987 13.2% $13.09

Central Wayne 1,348,206 1.1% $11.77

Dearborn 1,578,974 5.5% $16.55

Detroit 2,592,356 22.3% $7.12

Eastern Macomb 1,449,889 9.0% $14.26

Farmington Hills 1,203,222 13.4% $13.49

Genesee-Lapeer 3,779,652 8.1% $10.02

Livingston 1,642,611 6.2% $15.38

Livonia 1,716,823 17.3% $13.40

NE Wayne 1,391,939 15.3% $22.23

Northern Macomb 2,066,545 10.3% $12.63

Novi 1,326,599 12.7% $20.00

Out of Area 177,176 3.8% $12.00

Rochester Hills 2,312,047 7.8% $25.39

Saginaw-Bay 1,945,200 16.4% $8.14

SE Oakland 2,669,023 8.7% $14.68

SE Wayne 1,350,752 17.5% $16.90

Shelby Twp 1,253,860 3.5% $13.24

Southern Macomb 1,823,485 2.7% $13.74

Southfield 1,238,238 5.4% $14.84

Sterling Heights-Warren 2,896,066 13.7% $20.13

Taylor-Southgate 1,662,509 6.2% $11.87

Troy 2,058,315 7.7% $14.63

Washtenaw 2,835,581 8.0% $11.54

Western Oakland 1,134,027 5.2% $17.62

Western Wayne 1,722,120 7.0% $16.25

TOTAL 51,642,957 9.6% $13.90


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Chart 2: Unemployment

Chart 3: Average Asking Lease Rates

Chart 4: Vacancy Rate

The average asking lease rate for retail space in the Detroit Metropolitan area improved to close 2013 posting a rate of $13.90 NNN, which is up from the $13.77 NNN figure set in Q3 2013. Looking ahead, lease rates should continue to ascend and more national tenants should seek out Detroit as destination for business.

The Rochester and Auburn Hills submarkets reported the highest lease rates in Metro Detroit, averaging $25.39 NNN and $25.03 NNN, respectively. The Detroit retail submarket reported the lowest average asking in Q4 2013 averaging $7.12 NNN, however, this is a $0.12 improvement from the previous quarter.

The average asking lease rates for Free Standing buildings decreased to $11.67. Community/ Neighborhood asking lease rates increased by $0.13 to $12.33NNN, whereas the lease rates for Strip/Inline centers decreased by $0.31.

The Metro Detroit Retail market posted an overall vacancy rate of 9.6% in Q4 2013, which is a 50 bps decrease from the previous quarter. The Auburn Hills submarket reported the lowest vacancy rate at 1.0%, whereas the Detroit submarket posted the highest vacancy rate at 22.2%.

The Northern Macomb submarket saw the largest decrease in its vacancy rate decreasing by 3.3%. The Birmingham submarket has the largest increase in vacancy reporting a 3.1% increase, which in-part, was attributed to underrepresented availability in previous quarters.

0%2%5%7%9%

12%14%16%

2010 2011 2012 2013 YTD

MichiganUnited States

8.8%6.7%

Detroit 9.3%

Michigan’s unemployment rate increased by 10 basis points to 8.8% in Q4 2013, however, this figure is still 20 bps lower than the year-over-year figure. The state can expect to add over 130,000 jobs in the next two years yielding a 7.3% unemployment rate by 2015, according to University of Michigan economists.

The national unemployment rate decreased 30 bps to 6.7%. Additionally, non-farm payroll employment increased by 203,000 in the month of November. Significant employment increases were reported in several segments: transportation and warehousing, health care, manufacturing and professional and business services. Conversely, the federal government continued jobs cuts reporting a net loss of 7,000 jobs

$0.00

$3.00

$6.00

$9.00

$12.00

$15.00

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

Community/NeighborhoodStrip/InlineFree Standing

$12.33$15.39$11.67

0%

5%

10%

15%

20%

25%

30%

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

12.1%Community/NeighborhoodStrip/InlineFree Standing

25.5%

8.3%



Source: Bureau of Labor Statistics, Nov. 2013

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CONTACTSFor more information about this Local MarketView, please contact:

Global Research and Consulting

This report was prepared by the CBRE U.S. Research Team which forms part of CBRE Global Research and Consulting – a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe.

Disclaimer

Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE Global Chief Economist.

John A. Latessa, Jr.Senior Managing DirectorEastern DivisionCBRE2000 Town Center, Suite 500Southfield, MI 48075t: +1 248 353 5400e: [email protected]

Nick AhernResearch Analyst Detroit ResearchCBRE2000 Town Center, Suite 500Southfield, MI 48075t: +1 248 936 6853e: [email protected]

Detroit ResearchBrandon CarnegieResearch Analyst Detroit ResearchCBRE2000 Town Center, Suite 500Southfield, MI 48075t: +1 248 351 2054e: [email protected]

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03 Rent Comparables Rent Comparable Analysis Rent Comparables

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

1 2 3 4 5 6 7 8 9 10 11

$37.35

$78.00

$34.75

$53.84 $53.43

$46.20

$37.13 $35.39

$57.21

$49.31

$73.42

Average Rental Rates

Subject Current Rate $43.75 per SF

Comp Average Rate $50.55 per SF

The average rental rate for newer Starbucks retail buildings is $50.55 per square foot, compared to the subject

property, who is currently operating at a rental rate of $43.75 per square foot.

R E N T C O M PA R A B L E A N A LY S I S

rentComparables 16STNL - Starbucks

Property Name & Address Year BuiltSize (SF)

Annual RentRent per

SF Term Remaining

Comments

1

Starbucks & Potbelly Sandwich Shop 1717 Sout Rural Road Tempe, AZ 2013 4,500 $168,095 $37.35 10

Both tenants are on 10 year net leases with no rental escalations. Both leases are equipped with three, five-year renewal options.

2

Starbucks 1307 S Milton Rd Flagstaff , AZ 2006 2,200 $171,600 $78.00 3

There were 3 years remaining on the lease at the time of sale. The new owner is currently working on a 5 year renewal with the tenant.

3

Starbucks 9721 NE 119th Way Kirkland, WA 2002 2,533 $88,020 $34.75 15

The property was convereted to a Starbucks in March 2013 in which they executed a 15 year lease.

4

Starbucks 185 Spencer Street Manchester , CT 1984 1,950 $104,994 $53.84 9

Starbucks signed a 10 year renewal in 2012, they have been at the property since 2003.

5

Starbucks 6277 Commerce Boulevard Rohnert Park, CA 2013 1,700 $90,825 $53.43 10

Starbucks executed a new 10 yar lease at $54.85 per square foot with a 10% rental increase in year six.

6

Starbucks 6021 Stanford Ranch Road Rocklin , CA 2006 2,300 $106,260 $46.20 9

Starbucks is on a 15 year lease that commenced July, 2006. The lease is equipped with rental escalations.

7

Starbucks Ground Lease 1845 Southfield Road Lincoln Park, MI 2008 1,750 $64,978 $37.13 16

The proprety is on a ground lease to Starbucks through May, 2028. The leas is equipped with escalations of 10% every five years plus four, five-year renewal options.

Sold Comparable Averages 2,419 $48.67 10

8

Starbucks 7779 Highway 72 W Madison , Al 1965 2,458 $87,000 $35.39 10

Starbucks has shown their commitment to the site having recently extended their lease for an additional ten years.

9

Starbucks 1400 N Happy Valley Road Nampa, ID 2014 1,920 $109,846 $57.21 10

This is a brand new 10 Year corporate lease with Starbucks Corporation. The lease is equipped with 10% increases every five years and four, five-year renewal options.

10

Starbucks 6201 North Fry Road Katy, TX 2013 1,800 $88,757 $49.31 10

New 10-year Starbucks corporate net lease with 10 percent rent increase in year six.

11

Starbucks 9809 Campo Road Spring Valley , CA 2013 1,642 $120,548 $73.42 10

New 10-year Starbucks corporate net lease with 10 percent rent increase in year six with no kick out clause.

On Market Comparable Averages 1,955 $53.83 10

All Comparable Averages 2,375 $50.55 10

Starbucks Rent Summary

R E N T C O M PA R A B L E S

rentComparables 17STNL - Starbucks

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04 Sale Comparables Sale Comparable Analysis Sales Comparables

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

1 2 3 4 5 6 7 8 9 10 11 12

6.57%

5.25%

5.72%

4.89%

7.60%

5.25%

6.00%

5.53%

6.35%

5.50% 5.35%

4.15%

Average Cap Rate Sale Comparables

Subject Cap Rate 6.00%

All Comp Average Cap Rate 5.69%

The brand new Starbucks Building in Novi, Michigan is currently being offered at a cap rate of 6.00%, compared to

the comparables show, which are currently at a cap rate average of 5.69%.

S A L E C O M PA R A B L E A N A LY S I S

SaleComparables 19STNL - Starbucks

$50

$250

$450

$650

$850

$1,050

$1,250

$1,450

$1,650

$1,850

1 2 3 4 5 6 7 8 9 10 11 12

$1,769

$712

$1,364

$711 $708

$1,018

$770

$671

$557

$1,040

$922

$1,769

Average Price per SF Sale Comparables

Subject Price $732

per SF

All Comp Average $980

per SF

With an average price per square foot of $980 for comparable single tenant net leased Starbucks building sales, the

subject property, priced at $737 per square foot, is priced in line with the market average.

S A L E C O M PA R A B L E A N A LY S I S


Property Name & Address Sale Date Year BuiltSize (SF)

Sale Price Sale Price/SF

Cap Rate

Term Remaining

Comments

1

Starbucks 2010 West Guadalupe Rd Mesa, AZ 8/22/2013 2012 800 $1,415,000 $1,769 6.57% 9

The subject is an approximate 800-square foot, single-tenant retail building with a drive-thru on approximately 29,664 square feet of land. The existing NN lease is an original 10 year corporate lease (approximately 9 years remaining) with Starbucks.

2

Starbucks & Potbelly Sandwich Shop 1717 South Rural Road Tempe, AZ 7/1/2013 2013 4,500 $3,201,800 $712 5.25% 10

Both tenants are on 10 year net leases with no rental escalations. Both leases are equipped with three, five-year renewal options.

3

Starbucks 1307 S Milton Rd Flagstaff , AZ 6/12/2013 2006 2,200 $3,000,000 $1,364 5.72% 3

There were 3 years remaining on the lease at the time of sale. The new owner is currently working on a 5 year renewal with the tenant.

4

Starbucks 9721 NE 119th Way Kirkland, WA 5/1/2013 2002 2,533 $1,800,000 $711 4.89% 15

The property was converted to a Starbucks in March 2013 in which they executed a 15 year lease.

5

Starbucks 185 Spencer Street Manchester , CT 5/1/2013 1984 1,950 $1,381,500 $708 7.60% 9

Starbucks signed a 10 year renewal in 2012, they have been at the property since 2003.

6

Starbucks 6277 Commerce Boulevard Rohnert Park, CA 3/1/2013 2013 1,700 $1,730,000 $1,018 5.25% 10

Starbucks executed a new 10 year lease at $54.85 per square foot with a 10% rental increase in year six.

7

Starbucks 6021 Stanford Ranch Road Rocklin , CA 10/1/2012 2006 2,300 $1,771,000 $770 6.00% 9

Starbucks is on a 15 year lease that commenced July, 2006. The lease is equipped with rental escalations.

8

Starbucks Ground Lease 1845 Southfield Road Lincoln Park, MI 8/1/2012 2008 1,750 $1,175,000 $671 5.53% 16

The property is on a ground lease to Starbucks through May, 2028. The leas is equipped with escalations of 10% every five years plus four, five-year renewal options.

Sold Comparable Averages 2,217 $965 5.85% 10

9

Starbucks 7779 Highway 72 W Madison , Al On Market 1965 2,458 $1,370,079 $557 6.35% 10

Starbucks has shown their commitment to the site having recently extended their lease for an additional ten years.

10

Starbucks 1400 N Happy Valley Road Nampa, ID On Market 2014 1,920 $1,997,200 $1,040 5.50% 10

This is a brand new 10 Year corporate lease with Starbucks Corporation. The lease is equipped with 10% increases every five years and four, five-year renewal options.

11

Starbucks 6201 North Fry Road Katy, TX On Market 2013 1,800 $1,659,000 $922 5.35% 10

New 10-year Starbucks corporate net lease with 10 percent rent increase in year six.

12

Starbucks 9809 Campo Road Spring Valley , CA On Market 2013 1,642 $2,904,762 $1,769 4.15% 10

New 10-year Starbucks corporate net lease with 10 percent rent increase in year six with no kick out clause.

13

Starbucks 5260 Grant Creek Road Missoula , MT On Market 2004 1,605 $1,174,000 $731 5.75% 10

Starbucks has operated at this store for 10 years and just signed a 10 year extension.

On Market Comparable Averages 1,885 $1,004 5.42% 10

All Comparable Averages 2,141 $980 5.69% 10

Starbucks Sales Summary

S A L E C O M PA R A B L E S


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05 Financials Summary of Financial Assumptions Expense Estimates Tenant Overview Year One Cash Flow

F I N A N C I A L OV E R V I E W

FINANCIAL OVERVIEW

Sales Price $1,498,000

Down Payment-Proposed Financing

All Cash

Price Per Square Foot $737.20

CAP Rate 6.00%

Financing All Cash Transaction

BuILdINg INFORmATION

AddressStarbucks 27855 Cabot Drive Novi, MI 48377

Building Square Feet 2,032 Square Feet

Property TypeSTNL Free Standing Retail Building with Drive Thru

Year Built 2014

Land Area 0.74 Acres

Type of Ownership Fee Simple

Current Occupancy 100%

Delivery Date February 24, 2014

RENTAL RATE

Annual Rent Rent per SF

Years 1 - 10 $88,900 $43.75

The lease is equipped with four, five year renewal options with annual rental increases a with notification period of 180 days.

Option One $91,440 $45.00

Option Two $95,504 $47.00

Option Three $99,568 $49.00

Option Four $103,632 $51.00

LEASE TERm

Commencement Date

3/1/2014 (Estimated)

Expiration Date 2/28/2024 (Estimated)

Term Remaining 10 Years

Lease Type

NNN, tenant responsible for reimbursing for real estate taxes, insurance and common area maintenance as well as an administrative or management fee not to exceed 10% of the operating expenses.

Financials 23STNL - Starbucks

L E A S E A B S T R AC T

LEASE ABSTRACT

Tenant Name Starbucks Corporation

Initial Lease Terms 3/1/2014 - 2/28/2024 (Estimated)

Years Remaining on Current Term

10 years

Rental Escalations None

Lease Type NNN

Real Estate Taxes

Tenant agrees to pay to landlord as additional rent all real estate taxes on a monthly basis. Tenant’s pro rata share for real estate taxes from the rent commencement date through the end of the first full calendar year shall not exceed $5.00 per square foot of gross leasable area in the Premises. Furthermore, there is a Property Tax protection clause, stating that if the landlord sells or transfers the Building or the Property, or if a change of ownership occurs and as a direct result the real Property Taxes increase, Tenant shall not be obligated to pay any portion of such increase becoming due during the Initial Term.

Operating Expenses and Administrative/Management Fee

Tenant shall pay to landlord as additional rent, all costs incurred by the Landlord with respect to the operating the property. Tenant’s pro rata share of Operating Expenses form the Rent Commencement date through the end of the first full calendar year only shall not exceed $5.45 per square foot of gross leasable area in the premises. Additionally, following the first full calendar year of the term, shall not exceed 105%, on a non-cumulative basis (exclusive of insurance, snow removal and utilities). Tenant to pay for an administrative or management fee up to 10% of operating expenses.

Landlord’s Obligations

Landlord shall maintain, repair and make replacements to the Premises (including the Exterior Areas). Landlord shall, at its sole cost and expense, make the repairs and replacements and perform such work. Such repairs, replacement and maintenance shall include (a) upkeep of the roof, roof membrane and roof systems, and (b) the maintenance and repair of all parking areas, sidewalks, landscaping and drainage systems on the Property.

Option to renew

Tenant shall have the right to extend the term for four additional periods of five years each. The tenant shall provide notice of not later than 180 days.Option 1: $45.00 per SFOption 2: $47.00 per SFOption 3: $49.00 per SFOption 4: $51.00 per SF


T E N A N T OV E R V I E W

TENANT INFORmATION

Tenant Name Starbucks Corporation

Tenant Ownership Public

Stock Symbol NASDAQ:SBUX

Credit Rating A-, Standard & Poor’s

North America Headquarters

Seattle, Washington

Sales $10.7 Billion

Net Worth $945 Million

Website www.starbucks.com

Company Profile

Starbucks Corporation is a roaster, marketer and retailer of coffee operating in 60 countries. The Company purchases and roasts coffees that it sells, along with handcrafted coffee, tea and other beverages and a variety of fresh food items, through Company-operated stores. It also sells a variety of coffee and tea products and licenses its trademarks through other channels, such as licensed stores and national foodservice accounts. As of September 30, 2012, it operated 9,405 Company-operated stores and 8,661 licensed stores. It has four segments: Americas; Europe, Middle East and Africa (EMEA); China/Asia Pacific (CAP), and Channel Development. In addition to its flagship Starbucks brand, the Company’s portfolio also includes Tazo Tea, Seattle’s Best Coffee, Starbucks VIA Ready Brew, Starbucks Refreshers beverages and the Verismo System by Starbucks. In February 2013, Tata Coffee Ltd and the Company inaugurated a roasting and packaging plant in Karnataka. In the Americas, 351 licensed stores were opened in fiscal 2012, and 81 licensed stores were closed in fiscal 2012. In EMEA, 139 licensed stores were opened in fiscal 2012, and 38 licensed stores were closed in fiscal 2012. In CAP, 354 licensed stores were opened in fiscal 2012, and 60 licensed stores were closed in fiscal 2012. In fiscal 2012, 279 Company-operated stores were opened in the Americas and 45 stores were closed in fiscal 2012. In EMEA, 27 Company-operated stores were opened in fiscal 2012, and 17 stores were closed in 2012. In CAP, 161 Company-operated stores were opened in 2012, and 7 stores were closed in fiscal 2012. The Company generates its revenues through Company-operated stores, licensed stores, consumer packaged goods (CPG) and foodservice operations. Revenue from Company-operated stores accounted for 79% of total net revenues in fiscal 2012.

Revenues from foodservice accounted 4% of total net revenues in fiscal 2012. The Company sells Starbucks and Seattle’s Best Coffee whole bean and ground coffees, a selection of Tazo teas, Starbucks VIA Ready Brew, and other coffee and tea related products to institutional foodservice companies that service business and industry, education, healthcare, office coffee distributors, hotels, restaurants, airlines and other retailers. It also sells its Seattle’s Best Coffee through arrangements with national accounts.


IncomeYear One

6/2014 - 5/2015Per Month Per SF

Base Rent

100% 2,032 SF $88,900 $7,408 $43.75Total Base Rent $88,900 $7,408 $43.75

Scheduled Base Rental Revenue $88,900 $7,408 $43.75

Expense Reimbursement RevenueCommon Area Maintenance $10,160 $847 $5.00Real Estate Taxes $10,160 $847 $5.00Insurance $508 $42 $0.25Administration / Management Fees $1,016 $85 $0.50

Total Expense Reimbursement Revenue $21,844 $1,820 $10.75

Gross Potential Income $110,744 $9,229 $54.50

Vacancy 0.00% $0 $0 $0.00

Effective Gross Income $110,744 $9,229 $54.50

Operating Expense Estimates Common Area Expenses

Common Area Maintenance $10,160 $847 $5.00Real Estate Taxes $10,160 $847 $5.00Insurance $508 $42 $0.25

Total Common Area Expenses (Estimates) $20,828 $1,736 $10.25

Management Fee 0% EGR $0 $0 $0.00

Replacement Reserves $0.00 per SF $0 $0 $0.00

Total Expenses $20,828 $1,736 $10.25

Net Operating Income $89,916 $7,493 $44.25

Starbucks Brand New 10 year Lease 3/2014 - 2/2024

CAP Rate

Starbucks

Year One Cash Flow Estimates

Price $1,498,000$1,498,000

Assumes All Cash Transaction

Downpayment - All Cash Rentable Square FeetPrice per Square Foot

2,032$737.206.00%

Y E A R O N E C A S H F LO W

Financials 26STNL - Starbucks Financials

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For More Information, Please Contact:

: : Bill O’Connor Senior Vice President

248.351.2045 [email protected]

© 2014 CB Richard Ellis, Inc. The information contained in this document has been obtained from sources believed reliable. While CB Richard Ellis, Inc. does not doubt its accuracy, CB Richard Ellis, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

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