autozone - loopnet...financial analysis for fiscal year ending 2016, autozone, inc. reported total...

Representative Photo

AUTOZONE748 NORTH LAKE DRIVE | PRESTONSBURG, KENTUCKY

OFFERING MEMORANDUM

Capital Markets | Investment Properties

AFFILIATED BUSINESS DISCLOSURE AND CONFIDENTIALITY AGREEMENT

CBRE, Inc. operates within a global family of companies with many subsidiaries and 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, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affiliates or their clients may have or express an interest in the property described in this Memorandum (the “Property”), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to disclose to you such Affiliates’ interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act in the best interest of their respective client(s), at arms’ length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will conduct their respective businesses in a manner consistent with the law and all fiduciary duties owed to their respective client(s).

Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property (“Owner”) or CBRE, Inc., and (iv) you will not use any

part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc.

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

This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verified for accuracy, completeness, or fitness for any particular purpose. All information is presented “as is” without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualified prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property’s suitability

for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK.

The Owner expressly reserves 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 at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, definitive purchase and sale agreement delivered by the Owner.

© 2017 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. You should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.

CONTACT US

MIKE PHILBINVice President +1 818 907 4691 [email protected]

SAM ALISONSenior Vice President +1 818 907 4690 [email protected]

AMAR GOLIVice President +1 818 907 4692 [email protected]

IN ASSOCIATION WITH

BRYAN FLAHERTYAssociate+1 502 412 [email protected] Lic. #77845

ROBERT C. SCHWARTZSenior Vice President+1 502 412 [email protected] Lic. #30863

CONTACT US

MIKE PHILIBINVice President +1 818 907 469 [email protected]



Representative Photos

EXECUTIVE SUMMARY

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N E T L E A S E D R E T A I L O P P O R T U N I T Y

THE OFFERING

CBRE is pleased to present to qualified investors the opportunity to purchase the fee simple interest in the property located at 748 North Lake Drive in Prestonsburg, Kentucky (the “Property”) subject to an absolute NNN ground lease with AutoZone Development Corporation, a wholly-owned subsidiary of AutoZone, Inc. (NYSE: AZO).

The +/- 7,500-square-foot building was constructed in 2011 and is 100% occupied by AutoZone. The Property is operating under a 15-year absolute NNN ground lease with nine (9) years of primary term remaining. The lease provides four (4), 5-year renewal periods with attractive rental increases of 10% every five years throughout the base term and extension options.

$1,425,000Offering Price

4.42%Cap Rate

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CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.


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INVESTMENT HIGHLIGHTS

ABSOLUTE NNN GROUND LEASE

The Property is operating under a 15-year absolute NNN ground lease with nine (9) years of primary term remaining and four (4), 5-year renewal options. The lease provides attractive rental increases of 10% every five (5) years throughout the primary term and option periods.

FORTUNE 500 TENANT with STRONG GUARANTEE

AutoZone (NYSE: AZO) is the nation’s leading retailer of automotive replacement parts and accessories with strong historic financial performance. For fiscal year ending 2016, AutoZone, Inc. reported total revenues exceeding $10.6 billion—an increase of 4.4% over fiscal year 2015. The company currently holds an investment-grade S&P credit rating of BBB/Stable. The AutoZone facility in Prestonsburg is guaranteed by Memphis-based developer, AutoZone Development Corporation.

EDUCATIONAL HUB for EAST KENTUCKY

Morehead State University (Prestonsburg campus), Big Sandy Community and Technical College (+/- 5,360 students; +/- 223 employees), and East Kentucky Science Center are less than a mile from the Property; Prestonsburg High School (525+ students) is located across from the street from the AutoZone facility.

PRIMARY RETAIL NODE

Strategically situated along the city’s dominant retail corridor, the Property offers immediate proximity to many national retailers including Walmart Supercenter, Save-A-Lot, Big Lots, Wendy’s, Taco Bell, Dollar General, Home Furniture, Food City, Ace Hardware, and Honda of Prestonsburg, among others. The synergy of the neighboring tenants, surrounding student enrollments, and regional consumer draw help to generate a great deal of traffic to the Property.

HIGH TRAFFIC COUNTS with LIMITED COMPETITION

Located about 120 miles east of Lexington along N Lake Drive/KY Route 321 (+/- 17,350 VPD) near the busy intersection of KY Routes 114 and 23 (combined traffic counts of +/- 28,391 VPD), the Property is centrally situated at the hub of five major highways and just minutes from the downtown area.

LIMITED COMPETITION with STRONG DEMAND

The AutoZone facility is strategically positioned with limited direct competition; there is only one true alternative auto parts retailer, Advance Auto Parts (constructed in 1991), in the immediate market area. All other AutoZone branches are more than ten miles away. In addition, limited land availability in the surrounding Floyd County markets make Prestonsburg the prime location for commercial/industrial activity.


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Tenant: AutoZone

Lessee: AutoZone Development Corporation

Lease Type: Absolute NNN Ground Lease

Property Address: 748 North Lake Drive, Prestonsburg, Kentucky 41653

Building Size (SF): +/- 7,500 SF

Year Constructed: 2011

Land Acreage: +/- 0.699 AC

Rent Commencement: June 1, 2011

Term Expiration: May 31, 2026

Primary Term: Fifteen (15) Years

Renewal Options: Four (4), 5-year periods

Rental Increases: 10% every 5 years (primary term and options)

Property Type/Use: Retail; Automotive Part Sales

Permitted Use: General Retail

Sublet/Assignment: Landlord Consent Required

Roof: Tenant Responsibility

Parking: Tenant Responsibility

Structure: Tenant Responsibility

Taxes and Insurance: Tenant Responsibility

HVAC: Tenant Responsibility

Utilities: Tenant Responsibility

Alternations and Improvements: Tenant Responsibility

Estoppel:Tenant or Landlord may request the other party provide an es-toppel at any time, but not more than three times per year, and the receiving party will comply within 20 days of receipt.

You are solely responsible for independently verifying the information in this confidential memorandum.

ANY RELIANCE ON IT IS SOLELY AT YOUR OWN RISK.

LEASE ABSTRACT

TERM LEASE START - END DATE ANNUAL RENTRENTAL

INCREASES

Primary Term:Current – 5/31/2021 $63,000 -

6/21/21 – 5/31/2026 $69,300 10%

Option 1: 6/21/2026 – 5/31/2031 $76,230 10%

Option 2: 6/21/2036 – 5/31/2041 $83,853 10%

Option 3: 6/21/2046 – 5/31/2051 $92,238 10%

Option 4: 6/21/2056 – 5/31/2061 $101,462 10%

RENT ROLL


TENANT OVERVIEW

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TENANT OVERVIEW

AutoZone, Inc. (NYSE: AZO) is the nation’s leading-retailer and a leading distributor of automotive replacement parts and accessories in the United States. Operating for more than 37 years, the company has grown to 5,814 US and international locations (as of fiscal year ending 2016). Each AutoZone branch carries an extensive product line for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and nonautomotive products. AutoZone was founded in 1979 and is headquartered in Memphis, Tennessee.

FINANCIAL ANALYSIS

For fiscal year ending 2016, AutoZone, Inc. reported total revenues exceeding $10.6 billion, an increase of 4.4% over prior year, and an operating margin of 19.4%. The company is one of the top performing retailers in the country.

GROWTH STRATEGY

Hubs and Mega Hubs: In 2000, AutoZone opened its first hub store with the objective of adding more unique products to the local marketplace. At the end of fiscal 2016, the company operated 182 hub stores across the US and has created a subset of hubs (mega hubs) which carry even more inventory than traditional hubs.

Distribution Center Network: The company continues to aggressively invest in its distribution center (“DC”) network, with additional domestic DCs expected to open in the next three years. In 2017, AutoZone expects to expand its current weekly deliveries (1,900 stores) to another approximate 1,000 US units.

Footprint Expansion: In fiscal year 2016, AutoZone expanded its domestic store base by 156 stores across 50 states. In addition, the company increased presence in Mexico by 42 units ending with 483 locations.

Digital Integration: AutoZone significantly expanded its Internet offerings via autozone.com and autoanything.com in fiscal 2017. In 2017, the company will continue to focus on digital integration—both increasing its online product offerings and improving the shopping experience.


AutoZone, Inc. is an investment-grade credit tenant (S&P: BBB; Moody’s: Baa1) and one of the top performing retailers in the country.

MARKET OVERVIEW

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MARKET OVERVIEW

Prestonsburg is a city located in East Kentucky, approximately 120 miles east of Lexington. Serving as the county seat of Floyd County, the city benefits from its strategic position at the apex of five major highways—US 23 North; US 23 South; KY Route 80; KY Route 3; and KY Route 114 (Mountain Parkway).

ECONOMY: The East Kentucky economy continues to be reliant upon natural resource extraction industries and supporting businesses for high-wage jobs. Market prices for natural gas have risen slightly resulting in some strengthening of this sector in the region. While economic conditions and coal as well as natural gas markets continue to be cyclical, the energy industry is projected to become one of the major clusters for the foreseeable future due to the amount of those natural resources that remain in the ground. These conditions are cause for taking a closer look at the industry sectors in order to maximize the resources and maintain jobs in the region through alternative approaches that may include value-added products.

TOURISM: Tourism development also continues as one of the leading sectors in the region. Continued interest in ATV trail development has occurred over the past year with multi-county initiatives underway that would support trails similar in nature to West Virginia’s and Virginia’s efforts. Additional multi-use trails have been put into place in Prestonsburg.

RETAIL SNAPSHOT: Two cities in the region have the highest retail sales per capita in the state (2007). In addition, retail and service remain among the largest employment sectors in East Kentucky.

AUTOMOTIVE HUB: Kentucky has emerged as a top state for automotive manufacturing. In April 2017, Toyota Motor Manufacturing Kentucky, Inc. (“TMMK”), Toyota’s largest plant globally, announced a $1.33 billion overhaul to increase manufacturing flexibility—representing the company’s long-term commitment and desire to the region and state.

Kentucky’s automotive industry includes 500-plus facilities, employing more than 100,000 people full-time.

NATURAL RESOURCES: East Kentucky has an abundance of outdoor recreation and activities—which attract significant tourism and support the infrastructure for technology to the region. Notable economic drivers include Breaks Interstate Park (boasts the nation’s deepest gorge east of the Grand Canyon); Natural Bridge State Park; Jenny Wiley State Park (+/- 3 miles); and StoneCrest Golf Course (+/- 1.5 miles).

HEALTHCARE: Healthcare is the fastest-growing industry sector in the region; nearly 10,000 individuals are employed as doctors, surgeons, cardiologist technicians, registered nurses, and other medical fields throughout the area’s nine counties.

EDUCATION: University of Pikeville; Big Sandy Community and Technical College (+/- 5,360; +/- 223 employees; +/- 1 mile); Morehead State University (Prestonsburg campus - +/- 1 mile), and East Kentucky Advanced Manufacturing Institute. Additionally, Alice Lloyd College and Sullivan University have campuses within the region. MSU’s main campus is just an hour from the area.

Breaks Interstate Park

Kentucky has emerged as a top state for automotive manufacturing. In April 2017, Toyota Motor Manufacturing Kentucky, Inc. (“TMMK”), Toyota’s largest plant globally, announced a $1.33 billion overhaul to increase manufacturing flexibility—representing the company’s long-term commitment and desire to the region and state.

Kentucky’s automotive industry includes 500-plus facilities, employing more than 100,000 people full-time.

+ Fast Company’s Top 10 Most Innovative Companies in the World, 2016

KY ROUTE 23 (+/- 14,435 VPD)

KY ROUTE 114 (+/- 13,956 VPD)

N LAKE DR/KY ROUTE 231 (+/- 17,350 VPD)

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INDUSTRIAL CORRIDOR

ARCHER PARK

WALMART SUPERCENTER

Prestonsburg High School525+ students

Big Sandy Community and Technical College+/- 5,360 students; +/- 233 employees

+/- 1 mile

DOWNTOWN PRESTONSBURG

CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.

CONTACT US

MIKE PHILBINVice President +1 818 907 4691 [email protected]



Capital Markets | Investment Properties


IN ASSOCIATION WITH

BRYAN FLAHERTYAssociate+1 502 412 [email protected] Lic. #77845

ROBERT C. SCHWARTZSenior Vice President+1 502 412 [email protected] Lic. #30863

autozone - loopnet...financial analysis for fiscal year ending 2016, autozone, inc. reported total...

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