MAIN SAINT HELENA CALIFORNIA STREET 801 SINGLE TENANT NET LEASED INVESTMENT OPPORTUNITY IN THE WORLD-RENOWNED NAPA VALLEY Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number 01385740 ( HFF ) HFF - 1
THE OFFERING HFF has been engaged as Exclusive Advisor to extend to qualified investors the opportunity to acquire the 100% fee-simple interest in 801 Main Street (the Property ) located in St. Helena, California. The Property is an 18,090 square foot Class A, net-leased investment opportunity that is 100% leased to Franciscan Vineyards. Highly regarded as the premier wine producer based in St. Helena, Franciscan Vineyards is a wholly owned subsidiary of Constellation Brands (NYSE: STZ), and 801 Main Street currently serves as the headquarters for the Fine Wines Division of Constellation Brands. As the largest winemaker and one of the top overall alcohol producers in the world, Constellation Brands currently boasts a $23 billion market cap and a BB+ S&P credit rating, providing strong in-place cash flow backed by a credit-worthy corporate tenant. Additionally, there is substantial upside opportunity, as there is the ability to include 6,000 square feet to the total rentable square footage, as well as add additional square footage to the Property according to the current FAR. As such, 801 Main Street represents a pride of ownership asset located in the coveted downtown St. Helena market, with management free in-place cash flow and strong upside potential. PROPERTY SUMMARY PROPERTY SUMMARY TENANT SUMMARY Address 801 Main Street, St. Helena, CA Tenant Franciscan Vineyards APN 009-180-035 Industry Premium Wine Production Size 18,090 SF (not including ~6,000 SF of mezzanine space) Percent Leased 100% Year Built 1945 Years Renovated 2002 & 2006 Parking 89 Spaces (3.7:1,000 including mezzanine) Site Area 2.32 Acres Zoning SC (Service Commercial) Headquarters 1178 Galleron Road, St. Helena, CA Parent Company Constellation Brands (NYSE: STZ) Constellation Brands Market Cap* $23 Billion Constellation Brands S&P Credit Rating BB+ Constellation Brands Employees 6,300 Occupancy 18,090 SF (100%) Current FAR 0.24 (includes mezzanine level) Employees at the Property 84 Buildable FAR 0.50 % of Employees Within 10-Mile Radius > 50% *As of April 9, 2015 HFF - 2
INVESTMENT HIGHLIGHTS SINGLE TENANT NET LEASED INVESTMENT STRATEGIC DOWNTOWN ST. HELENA LOCATION PRIDE-OF-OWNERSHIP CURB APPEAL SUBSTANTIAL TENANT INVESTMENT SIGNIFICANT UPSIDE POTENTIAL HIGH TENANT RETENTION PROBABILITY CASH FLOW BACKED BY CREDIT TENANT LEASE SUMMARY Tenant Franciscan Vineyards Occupancy 18,090 SF (100%) Date First Occupied June 24, 2002 Original Lease Term Extension Options 66 Months Two 5-Year Options (First Option Exercised) Current Expiration Date December 31, 2017 NET LEASED INVESTMENT BACKED BY CREDIT TENANT 801 Main Street is 100% leased to Franciscan Vineyards, a premium wine producer based in St. Helena with history back to its founding in 1972. In 2005, Franciscan Vineyards was strategically acquired by Constellation Brands in an effort to continue their focus on expanding Constellation s portfolio of premium wine, beer, and spirit products. Today, Constellation Brands portfolio is comprised of a growing number of premium brands, including Robert Mondavi, Clos du Bois, Simi, Svedka Vodka, Corona Extra, and Modelo Especial. Traded on the New York Stock Exchange under the symbol STZ, Constellation Brands boasts a $23 billion market capitalization and an S&P credit rating of BB+ (as of April 2015), providing strong in-place cash flow backed by a credit-worthy tenant. 801 Main Street currently serves as the headquarters for the Fine Wines Division of Constellation Brands. HFF - 3
AERIAL FACING NORTHEAST DOWNTOWN ST. HELENA - AMENITIES Creative Wine Concepts Grocery Stores 1 Sunshine Foods 16 WF Giugni & Son Grocery 17 Model Bakery 32 Sportsgo 33 Cameno Cinema MAIN STREET DOWNTOWN ST. HELENA David Fulton Winery 2 Safeway Restaurants 3 Market 4 Tra Vigne 5 Gott's Roadside 6 Goose and Gander 7 That Pizza Place 8 Villa Corona 9 Sogni Di Dolci 10 Gillwoods Café 11 Cook 12 La Condesa 13 Archetype 14 St. Helena Bistro 18 Ana's Cantina Shopping/Entertainment 19 Napa Valley Vintage Home 20 Pearl 21 Mario's 22 Footcandy 23 Reeds 24 Goodman's 25 Pennyweight 26 Steve's Hardware 27 Palladium 28 St Helena Olive Oil Co. 29 Woodhouse Chocolate 30 Olivier 34 Dennis Rae Fine Art 35 Aerena Galleries 36 Martin Design 37 David's 38 Bison 39 St. Helena Wine Center 40 Orin Swift 41 AF Jewelers 42 Romance 43 Christopher Hill Gallery 44 Cricket 45 Thorn Hill Tasting Room 46 ACRES 47 FLATS 15 Terra 31 Tamber Bey Vineyards MAIN STREET Merryvale Vineyard Bello Family Vineyards 801 MAIN SAINT HELENA CALIFORNIA STREET 24,100 Cars Per Day Long Meadow Ranch ST. HELENA HIGHWAY CHARTER OAK AVE Cliff Family Winery HFF - 4
HIGH TENANT RETENTION PROBABILITY Due to the substantial tenant co-invest on specialized improvements within the structure, limited relocation alternatives, high barriers to entry, and strategic location in downtown St. Helena, there is a high likelihood that Franciscan Vineyards will remain in the Property well beyond the lease expiration in December 2017. In fact, Constellation Brands studied relocation alternatives in San Francisco and Napa County and ultimately determined that their current location in St. Helena was ideal for these very reasons. LIMITED RELOCATION OPTIONS Within the St. Helena office market, there are currently only three office buildings other than 801 Main Street that could accommodate an 18,000+ square foot tenant. Each of these buildings is an inferior quality and location to 801 Main Street. In addition, these buildings are 100% leased, providing zero relocation options for Constellation Brands within the St. Helena market. STRATEGIC DOWNTOWN ST. HELENA LOCATION St. Helena is strongly tied to the viticulture industry, as the region s economy is inextricably linked to the world-renowned wines that are produced in this region. As such, 801 Main Street is an ideal location for the Fine Wines Division of Constellation Brands, a company that is focused on producing and distributing premium wines internationally. 801 Main Street s location in downtown St. Helena allows for employee access to a number of restaurants, shops, and other walkable amenities all within a block of the Property. HIGH BARRIERS TO ENTRY 801 Main Street benefits from extremely high barriers-to-entry and limited potential future competition due to a lack of available sites for development, limited office supply in St. Helena, and a challenging entitlement process. In fact, the communities of Napa County actively prevent additional land from being developed, placing an emphasis on conservation and a slow growth mentality. SUBSTANTIAL CAPITAL INVESTMENT BY TENANT The Property was completely renovated by the Franciscan Vineyards in 2002 and 2006 to accommodate their needs, including offices, conference rooms, wine tasting areas, and an entire mezzanine floor, demonstrating substantial capital investment of over $2 million (>$110 PSF). HFF - 5
SIGNIFICANT VALUE-ENHANCEMENT OPPORTUNITIES 801 Main Street offers investors a number of near and long-term value-creation elements that will substantially enhance the net operating income and value of the Property. Add Square Footage to Rentable Square Footage The Property is currently leased as 18,090 square feet, even though Franciscan Vineyards built approximately 6,000 square feet of additional square footage for a mezzanine level. As the landlord is not charging for this space, this additional square footage could be included towards the total rentable square footage in the lease for the current or future tenant, thereby increasing the base rent for the Property substantially. Build Additional GLA On The Property Per current zoning and buildable FAR, the opportunity exists to build additional gross leasable area on the Property, as the current site only utilizes 0.24 FAR (including the mezzanine space) whereas the buildable FAR is 0.50. The Property s current zoning of Service Commercial allows for a wide range of potential uses including, but not limited to, residential, retail, and office uses. Please see Chapter 17.52 of the city of St. Helena zoning code for additional information on the specific types of uses that are allowed in the Service Commercial (SC) district. Miscellaneous Parking Revenue Currently, the owner of the Long Meadow Ranch Tasting Room and Farmstead Restaurant pays the Landlord of 801 Main Street for parking on a month-to-month basis. The opportunity exists to structure a longer term agreement with the operator of these nearby businesses and create a more secure cash flow for the long term. DISCOUNT TO REPLACEMENT COST Rising construction costs, limited land supply in the immediate trade area, and restrictive development regulations pose high barriers to entry that will continue to limit new supply, and will result in continued rental growth for 801 Main Street in the near and long-term. This limited downside risk allows the landlord to compete effectively in the long-term leasing market. FREE AND CLEAR INVESTMENT OFFERING 801 Main Street will be made available free and clear of existing financing, presenting an investor with the opportunity to capitalize on historically low interest rates and favorable market financing terms. HFF - 6
AERIAL FACING SOUTH SILVERADO TRAIL DOWNTOWN NAPA 12 MILES / 16 MINS 17 MILES / 25 MINS NAPA OAKVILLE Cakebread Winery Robert Mondavi Winery SAN FRANCISCO SACRAMENTO 65 MILES / 1 HR 14 MINS 70 MILES / 1 HR 28 MINS Alpha Omega Winery Franciscan Estate Raymond Winery Grgich Estate Whitehall Lane Winery Corison Winery V. Sattui Winery Heitz Wine Cellar ST. HELENA HIGHWAY MAIN STREET Dean & Deluca HALL Wines Sutter Home Winery Inc Salvestrin Vineyards 24,100 Cars Per Day St. Helena High School Long Meadow Ranch Farmstead at Long Meadow Ranch Merryvale Vineyards Cliff Family Winery Bello Family Vineyards 801 MAIN SAINT HELENA CALIFORNIA STREET DOWNTOWN ST. HELENA HFF - 7
MAIN SAINT HELENA CALIFORNIA STREET INVESTMENT SALES ADVISORS DANNY REDDIN Associate Director 415-276-6089 dreddin@hfflp.com CA Lic. #01946495 NICHOLAS BICARDO Managing Director 415-276-6923 nbicardo@hfflp.com CA Lic. #01380524 BRANDON ROGOFF Senior Real Estate Analyst 415-276-6939 brogoff@hfflp.com CA Lic. #01949914 CAPITAL MARKETS ADVISOR JORDAN ANGEL Director 415-276-6942 jangel@hfflp.com CA Lic. #01419993 2015 Holliday Fenoglio Fowler, L.P. HFF (NYSE: HF) operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF offers clients a fully integrated national capital markets platform including debt placement, investment sales, advisory services, structured finance, private equity, loan sales and commercial loan servicing. Holliday Fenoglio Fowler, L.P. ( HFF ) has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses, and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change. HFF - 8 100 California Street, Suite 720 San Francisco, California 94111 hfflp.com