EXCLUSIVELY LISTED INVESTMENT OFFERING SAN DIEGO INVESTMENT OPPORTUNITY 3202-3222 UNIVERSITY AVENUE Presented By: JASON STUART PONGSRIKUL Managing Principal Direct: 619.297.0055 x 302 jp@pharmapropertygroup.com CA DRE Lic. 01918332 NICK PRICE Senior Vice President Direct: 619.297.0055 x 303 np@pharmapropertygroup.com CA DRE Lic. 01773111 CHRIS BARRY Associate Direct: 619.297.0055 x 305 cb@pharmapropertygroup.com CA DRE Lic. 2018350 Pharma Property Group 5328 Banks Street, Suite B San Diego, CA 92110 619.297.0055 www.pharmapropertygroup.com
Property Overview 3202-3222 UNIVERSITY AVENUE 3202-3222 UNIVERSITY AVENUE Year Built: 2006 Lot Size: 50,655 Square Feet Building Size: 15,150 Square Feet Tenants: Walgreens & Starbucks Net Leases Investment Highlights STABLE INCOME Rental income is guaranteed by Walgreens and Starbucks. Both Walgreens (S&P BBB) and Starbucks (S&P A) parent companies are an investment grade, Fortune 500 Companies. Walgreens has over 8,000 locations and Starbucks has over 25, 000 locations. STRONG SALES Walgreens is reporting strong sales at this location above $3.3M annually. Walgreens has a percentage rent clause in their lease. Starbucks does not report sales, but they renewed the lease twice at escalated rents. LONG TERM WALGREENS & STARBUCKS LEASES Walgreens has a 70 year triple net lease starting in 2006. This lease allows for a right to terminate after 20 years. Walgreens also reserves the right to terminate every five years thereafter. Starbucks has a lease starting 2006 with four 5-year options to renew with escalating rents. Starbucks has already exercised two 5-year options to extend beginning February 2017. The Starbucks lease has a 3% increase in March of 2022. ANNUAL INCOME Walgreens Annual Rent: $519,999.96* Starbucks Annual Rent: $59,940.00, with a three percent (3%) increase in year 5. Combined Annual Rent: $579,939.96 LEASE TYPE Walgreens - Absolute NET Lease No Landlord responsibilities whatsoever. Starbucks - NET Lease Landlord responsible for roof and structure. TRAFFIC COUNTS The property is located at the signalized hard corner of University Avenue and Lincoln Avenue with combined traffic counts of 27,142 vehicles per day. The store is only one block from the Interstate 805 with daily traffic counts of over 180,000. *Walgreens percentage rent is approximately 2% of gross sales (excluding food and prescriptions), plus 0.5% of food and prescriptions, except for third party prescriptions. SOLID DEMOGRAPHICS The average household income in a one-mile radius is $65,947, in a three-mile radius it is $72,539 and $75,387 in a five mile radius. Total one-mile population count is 52,440, in a three-mile radius it is 277,112 and 611,379 in a five-mile radius. 24 HOUR STORE & STRATEGIC LOCATION This Walgreens is open 24 hours which speaks to the strength of its location and is reflected in the sales totals. The Walgreens also has a drive-thru which is open until 9PM. There is a CVS on the adjacent corner making this a strategic location for both Walgreens and CVS. TRENDING NORTH PARK NEIGHBORHOOD This dual-tenant building is uniquely leased by two nationally renowned tenants in North Park, one of San Diego s most densely populated and trending neighborhoods due to high end local eateries, craft breweries and easy freeway access. Located right off Interstate 805, this is the entry point to multiple neighborhoods in the area making this Walgreens and Starbucks a natural place to stop and shop, with easy parking which is rarely found in the North Park area. The large footprint of the commercially zoned lot and location makes the land extremely valuable for future development. page 2
Pricing Building 3202-3222 UNIVERSITY AVENUE List Price: $12,887,466 (4.50% CAP) Price/SF: $850,65 Price/SF Land: $254.41 Walgreens Annual Income: $519,999.96 Starbucks Annual Income: $59,940.00 Combined Annual Income: $579,939.96 Combined Monthly Income: $48,328 Combined Rent/SF: $38.27 Tenant: WALGREENS (NYSE: WAG) Landlord Income: CORPORATE GUARANTEE Credit Rating: INVESTMENT GRADE, BBB (S&P) Lease Overview Lease Type: ABSOLUTE NET LEASE No landlord responsibilities whatsoever. Lease Term: 70 YEAR LEASE WITH RIGHT TO TERMINATE AFTER 20 YEARS AND EVERY 5 YEARS THEREAFTER. 8 YEARS 10 MONTHS REMAINING ON THE INITIAL TERM Lease Commencement: NOVEMBER 1, 2006 Next Right to Terminate: NOVEMBER 1, 2026 Annual Rent: $519,999.96 Monthly Rent: $43,333.33 Rent / Square Foot: $34.32 Building Square Footage: 15,150 Walgreens Square Footage: 13,650 Starbucks Square Footage: 1,500 Land Square Footage: 50,655 Year Built: 2006 Lease Overview Tenant: STARBUCKS (NYSE: SBUX) Landlord Income: CORPORATE GUARANTEE Credit Rating: INVESTMENT GRADE, A (S&P) Lease Type: NET LEASE Landlord responsible for roof and structure. Lease Term: 9 YEARS REMAINING WITH AN ADDITIONAL TWO (5-YEAR) RENEWALS Lease Commencement: NOVEMBER 10, 2006 Next Renewal Period: MARCH 1, 2027 Annual Rent: $59,940 Monthly Rent: $4,995 Rent / Square Foot: $39.96 Rent Schedule TERM dates RENT Initial Term 11/10/06-11/30/11 $3,975 Initial Term 12/1/11-2/28/17 $4,455 First Renewal (Exercised) 3/1/17-2/28/22 $4,995 Second Renewal (Exercised) 3/1/22-2/28/27 $5,595 Third Renewal 3/1/27-2/28/32 $6,270 Fourth Renewal 3/1/32-2/28/34 $7,020 page 3
3202-3222 UNIVERSITY AVENUE RESIDENTIAL AREAS UNIVERSITY AVENUE - ±24,000 CARS PER DAY SUBJECT PROPERTY RESIDENTIAL AREAS ±180,000 CARS PER DAY TRENDING NORTH PARK NEIGHBORHOOD This dual-tenant building is uniquely leased by two nationally renowned tenants in North Park, one of San Diego s most densely populated and trending neighborhoods due to high end eateries, craft breweries and easy freeway access. Located right off Interstate 805, this is the entry point to multiple neighborhoods in the area making this Walgreens and Starbucks a natural place to stop and shop, with easy parking which is rarely found in the North Park area. The large footprint of the commercially zoned lot and location makes the land extremely valuable for future development. page 4
Location Aerial 3202-3222 UNIVERSITY AVENUE pacific ocean SEA WORLD MISSION BAY PA R K NAVAL AIR STATION NORTH ISLAND SAN DIEGO INTERNATIONAL AIRPORT SAN DIEGO ZOO NORTH PARK downtown san diego BALBOA PARK SUBJECT PROPERTY Location Overview San Diego is a worldwide tourist destination. Beaches, SeaWorld, San Diego Zoo, conventions and a thriving culture lure visitors from around the globe. Tourists pour billions of dollars into the local economy helping to fuel job growth, development, and tax revenue. The employment profile is diverse and includes one of the most tech-friendly environments in the country. Household incomes continue to grow above the rate of inflation and are now near $80,000. Government, education, health services, professional and business services continue to be among the top performing industries. San Diego, is a major city in California and the seat of San Diego County. Adjacent to the Pacific Ocean in Southern California, San Diego is approximately 120 miles south of Los Angeles and immediately adjacent to the border with Mexico. San Diego is the eighth-largest city in the United States and second-largest in California. San Diego is known for its mild year-round climate, natural deep-water harbor, extensive beaches, association with the US Navy, and recent emergence as a healthcare and biotechnology development center. San Diego is the economic center of the region as well as the San Diego Tijuana metropolitan area. San Diego's main economic engines are military and defense-related activities, tourism, international trade, and manufacturing. SAN DIEGO SUBJECT PROPERTY page 5
Property Photos 3202-3222 UNIVERSITY AVENUE WALGREENS FRONTAGE ON UNIVERSITY AVENUE AND access to parking LEADING TO WALGREENS DRIVE-THRU WALGREENS & STARBUCKS FRONTAGE ON UNIVERSITY AVENUE STARBUCKS FRONTAGE ON UNIVERSITY AVENUE WALGREENS DRIVE-THRU FRONTING 32ND STREET Building parking with access on university ave. and bancroft st. page 6
NORTH PARK Demographic Snapshot 2017 Estimate 3202-3222 UNIVERSITY AVENUE Total Population Total Households Average Age 52,440 1 Mile 277,112 3 Miles 611,379 5 Miles 23,512 1 Mile 118,346 3 Miles 229,531 5 Miles 35.50 1 Mile 36.00 3 Miles 35.70 5 Miles Average Household Inc 2017 Daytime Employment 2017 $65,947 $72,539 $75,387 8,908 149,858 414,292 1 Mile 3 Miles 5 Miles 1 Mile 3 Miles 5 Miles Disclaimer: This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage, age, distances, lot size, store opening dates, demographic information, aerial information, tenant information & store operating information are approximate. Buyer and their representatives understands that Walgreens tenant information was gathered by sources deemed to be reliable including Walgreens public quarterly and annual reports. Demographic information was provided by Nielsen Information Systems. By accepting this package, buyer and their representatives must verify the information and bears all risk for any inaccuracies. page 7
3202-3222 UNIVERSITY AVENUE Company Summary * Tenant History Walgreens, headquarteredd in Deerfield, IL, is the largest drug retailing chain in the United States with more than 8,175 stores in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Walgreens built out its national platform through its corporate real estate department heavily during the 1990 s continuing through the mid 2000 s. By 2012, Walgreens had opened its 8,000th store and later that year the company made a bold move by purchasing a 45% interest in Alliance Boots, a leading international pharmacy-led health and beauty group. Two years later, Walgreens exercised its option to purchase the remaining 55% of the Switzerland based Alliance Boots to merge and create a new holding company named Walgreens Boots Alliance(NASDAQ: WBA). This transaction brought together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years. Today, Walgreens is part of the Retail Pharmacy USA division of Walgreens Boots Alliance. The company sells prescription and non-prescription drugs and general merchandise including household products, convenience and fresh foods, personal care, beauty care, photo finishing, as well as home medical equipment, contact lenses, vitamins, supplements and other health and wellness solutions. Walgreens also provides specialty pharmacy services for managing complex and chronic health conditions. In addition to these in-store offerings, the company operates digital businesses that include Walgreens.com, Drugstore.com, Beauty.com, SkinStore.com, and VisionDirect.com. *Walgreens company information received from Walgreens investor relations. tenant profile Guarantor: Walgreens Boots Alliance, Inc. Ownership: Public Stock Symbol (NASDAQ): WBA Credit Rating (S&P): BBB Business: Retail Pharmacy Locations: 8,175 Annual Revenue: $117.35 Billion Market Capitalization: $71.25 Billion Headquarters: Deerfield, IL Website: www.walgreens.com page 8
3202-3222 UNIVERSITY AVENUE Locations by State CA 633 OR 76 WA 135 NV 82 ID 39 UT 48 MT 13 WY 10 CO 159 AZ 244 NM 72 ND 1 SD 14 NE 57 KS 69 TX 713 OK 114 MN 152 IA 70 MO 212 AR 81 LA 158 WI 225 IL 598 MS 76 MI 228 IN 190 TN 252 AL 113 KY 95 OH 247 GA 203 WV 16 PA 123 SC 114 VA 140 NC 268 NY 469 VT 3 NH 31 NJ 197 MD 85 DC 8 ME 14 RI CT 25 92 DE 64 MA 163 FL 831 HI 20 PR 120 AK 12 US VIRGIN ISLANDS 1 Alabama 113 Idaho 39 Mississippi 76 Oklahoma 114 West Virginia 16 Alaska 12 Illinois 598 Missouri 212 Oregon 76 Wisconsin 225 Arizona 244 Indiana 190 Montana 13 Pennsylvania 123 Wyoming 10 Arkansas 81 Iowa 70 Nebraska 57 Rhode Island 25 Puerto Rico 120 California 633 Kansas 69 Nevada 82 South Carolina 114 US Virgin Islands 1 Colorado 159 Kentucky 95 New Hampshire 31 South Dakota 14 Connecticut 92 Louisiana 158 New Jersey 197 Tennessee 252 Delaware 64 Maine 14 New Mexico 72 Texas 713 Washington DC 8 Maryland 85 New York 469 Utah 48 Florida 831 Massachusetts 163 North Carolina 268 Vermont 3 Georgia 203 Michigan 228 North Dakota 1 Virginia 140 Hawaii 20 Minnesota 152 Ohio 247 Washington 135 *Nationwide locations as of August 31, 2016 Note: Walgreens also operates specialty and institutional pharmacies. Walgreens Take Care Health Systems subsidiary manages more than 400 Healthcare Clinics at select Walgreens drugstores. Total 8,175* page 9
3202-3222 UNIVERSITY AVENUE Company Summary * Tenant History Starbucks Corporation is an American global coffee company and Italian-style coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with approximately 25,734 in 67 countries, including Argentina, Aruba, Australia, Austria, Bahamas, Bahrain, Belgium, Bolivia, Brazil, Brunei, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Curacao, Cyprus, Czech Republic, Denmark, Egypt, El Salvador, Finland, France, Germany, Greece, Guatemala, Hong Kong, Hungary, India, Indonesia, Ireland, Japan, Jordan, Korea, Kuwait, Lebanon, Macau, Malaysia, Mexico, Monaco, Morocco, Netherlands, New Zealand, Norway, Oman, Panama, Peru, Philippines, Poland, Portugal, Puerto Rico, Qatar, Romania, Russia, Saudi Arabia, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, United Kingdom, United States and Vietnam. Starbucks locations serve hot and cold beverages, whole-bean coffee, microground instant coffee, full-leaf teas, pastries, and snacks. Most stores also sell pre-packaged food items, hot and cold sandwiches, and items such as mugs and tumblers. Many of the company s products are seasonal or specific to the locality of the store. tenant profile Guarantor: Starbucks Corporation Ownership: Public Stock Symbol (NASDAQ): SBUX Credit Rating (S&P): A Business: Retail Coffee Shop Locations: 25,734 (as of 1/1/2017) Annual Revenue: $22.4 Billion Market Capitalization: $82.94 Billion Headquarters: Seattle, WA Website: www.starbucks.com *Starbucks company information received from Starbucks investor relations. page 10
3202-3222 UNIVERSITY AVENUE Investment Property Recap Lease Overview Tenant: Walgreens (NYSE: WAG) Starbucks (NYSE:SBUX) Landlord Income: Corporate Guarantee 3202-3222 UNIVERSITY AVENUE Year Built: 2006 Total Lot Size: 50,655 Square Feet Total Building Size: 15,150 Square Feet Pricing Credit Rating: Walgreens - BBB (S&P) Starbucks - A (S&p) Lease Type: Walgreens - Absolute NET Lease No Landlord responsibilities whatsoever. Starbucks - NET Lease Landlord responsible for roof and structure. Lease Term: Walgreens - 70 year lease, right to terminate after 20 years and every 5 years thereafter. 8 years 10 months remaining on the initial term. Starbucks - Starbucks has a lease starting in 2006 with four 5-year options to renew with escalating rents. Starbucks has already exercised two 5-year options to extend beginning February 2017. Price: $12,887,466 Cap Rate: 4.50% Total Monthly Income: $48,328 Total Annual Income: $579,939 page 11
5328 Banks Street, Suite B San Diego, California 92110 P 619.297.0055 Fax: 619.839-3763 www.pharmapropertygroup.com JASON STUART PONGSRIKUL Managing Principal Direct: 619.297.0055 x302 jp@pharmapropertygroup.com CA DRE Lic. 01918332 NICK PRICE Senior Vice President Direct: 619.297.0055 x303 np@pharmapropertygroup.com CA DRE Lic. 01773111 CHRIS BARRY Associate Direct: 619.297.0055 x305 cb@pharmapropertygroup.com CA DRE Lic. 2018350 EXCLUSIVELY LISTED INVESTMENT OFFERING 3202-3222 UNIVERSITY AVENUE