offering memorandum - loopnet...fy2016, rite aid corporation increased total revenue by 16%, from...

Rite Aid4117 Kitsap Way | Bremerton, WA 98312

Offering Memorandum

Actual Location

Stan Johnson Company10333 Richmond Avenue | Suite 740 Houston, Texas 77042 P: +1 832.476.3440

stanjohnsonco.com

Marc Peeler Associate [email protected]

Jim Gibson Regional [email protected]

Todd Moore [email protected]

Marshall Thompson [email protected]

Jaime Patteson Research [email protected]

Jason Marshall [email protected]

In Association With: Marc Barber, WA Lic. #25779

Offered Exclusively by

Confidentiality and Restricted Use AgreementThis Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC.

This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This COM contains descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested in the Property. Such information is not all inclusive and is not represented to include all information that may be material to an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. An interested party must conduct its own independent investigation and verification of any information the party deems material to consideration of the opportunity, or otherwise appropriate, without reliance upon SJC.

The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time. The Property is offered and sold by its owner(s) as is, where is, and with all faults, without representation or warranty of any kind except for any customary warranties of title.

BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”), is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees, representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when obtaining such relief.

Subject Property

Offering Memorandum • Rite Aid • Bremerton, WA 3

The OfferingStan Johnson Company is pleased to present to qualified investors a Rite

Aid Pharmacy located in Bremerton, Washington, the largest city on the

Kitsap Peninsula and directly 60 minutes west of Downtown Seattle.

The Subject Property is operating under a twenty (20) year term that

features six (6), five (5) year options with 3% rental increases in each

option period.

The Subject Property will thrive from its signalized, hard corner location

of Kitsap Way and National Avenue North (combined 49,734 VPD),

just east of the highly-trafficked intersection of Kitsap Way and State

Highway 3 (combined 97,461 VPD). The Subject Property also benefits

from the area’s excellent demographics, large customer base and

population growth potential, as the population currently is 102,260 within

a 5-mile radius of the Subject Property. Kitsap Way is one of the major

thoroughfares in Bremerton and is a main commercial thoroughfare,

featuring many national businesses including WinCo Foods, Starbucks,

Subway, McDonald's, O'Reilly Auto Parts, Ace Hardware, Burger King,

Jack in the Box and many more. Located 5 minutes away from the

Subject Property is the Naval Base Kitsap, a U.S. Navy base located on

the Kitsap Peninsula and the third-largest Navy base in the United States

with 13,000 active-duty personnel, 13,000 Department of Defense (DoD)

civilian employees and 10,000 contractors.

The lease is guaranteed by Rite Aid Corporation (NYSE: RAD). Rite Aid is

the third largest drug store chain in the United States with 4,561 locations.

Rite Aid has seen a strong financial turnaround in recent years based

on both the transformation of stores into neighborhood destinations

for health and wellness, and cost control initiatives that include closing

underperforming stores and refinancing existing debt. Rite Aid has seen

their stock price jump over 700% since the end of 2011, and their S&P

credit rating was recently upgraded to “B” from “B-” due to better than

expected earnings and increasing sales and profit levels.

Purchase Price: $8,085,937Cap Rate: 6.40%

Pricing Overview

Offering Price: $8,085,937

Cap Rate: 6.40%

NOI: $517,500

Property Overview

Property Type: Retail, Drug Store

Building Size: ± 17,272 SF

Land Size: ± 2.57 Acres

Guarantor: Rite Aid Corporation (NYSE: RAD)

Primary Term: Twenty (20) Years

Lease Type: NN

Bremerton Overview

2016 Population: 39,520

Nearest Metro: Seattle, Washington

County: Kitsap County

Largest Employer: Naval Base Kitsap (Approx. 36,000 employees)

Trade Area Overview

2016 Population: 102,260 (5-mile radius of Subject Property)

2016 Average HHI: $66,816 (5-mile radius of Subject Property)

Combined Immediate VPD: 106,461 VPD

Total Businesses: 4,139 (5-mile radius of Subject Property)


Investment HighlightsRite Aid Corp. (NYSE: RAD) is the third largest drugstore chain in the United States. FY2015 financials indicate the strength of Rite Aid with a 745% year-over-year increase in Net Income from FY2014 and more than a 700% increase in stock price since the end of 2011. Further, S&P upgraded Rite Aid’s credit rating from “B-” to “B” on better-than-expected earnings and belief in continued increases in sales and profit levels.

The Subject Property is operating under a twenty (20) year term that features six (6), five (5) year options with 3% rental increases in each option period.

The immediate trade area features many national businesses including WinCo Foods, Starbucks, Subway, McDonald's, O'Reilly Auto Parts, Ace Hardware, Burger King, Jack in the Box and many more.

The Subject Property will thrive from its signalized, hard corner location of Kitsap Way and National Avenue North (combined 49,734 VPD) and large customer base (102,260 within a 5-mile radius of the Subject Property).

The Tenant is operating under a NN lease with landlord responsibilities limited to roof and structure.

Located 5 minutes away from the Subject Property is the Naval Base Kitsap, a U.S. Navy base located on the Kitsap Peninsula and the third-largest Navy base in the United States with 13,000 active-duty personnel, 13,000 DoD civilian employees

and 10,000 contractors.


Lease AbstractTenant: Rite Aid Pharmacy

Property Address: 4117 Kitsap Way Bremerton, WA

Year Built: 2007

Building Size: ± 17,272 SF

Lot Size: ± 2.57 Acres

Rent Commencement: January 31, 2007

Base Lease Term: Twenty (20) Years

Term Remaining: Approximately Ten (10) Years

Annual Rent: $517,500

Rent Increases: 3% Bumps in Option Periods

Renewal Options: Six (6), Five (5) Year Options

Landlord Responsibilities: NN - Roof & Structure

Rent ScheduleLEASE YEAR INCREASE ANNUAL RENT RPSF

Years 1-20 - $517,500 $29.96

OPTION PERIODS

Years 21-25 10% $569,250 $32.95

Years 26-30 10% $626,175 $36.25

Years 31-35 10% $688,792 $39.87

Years 36-40 10% $757,671 $43.86

Years 41-45 10% $833,438 $48.25

Years 46-50 10% $916,781 $53.07 Subject Property Photos


Tenant OverviewRite Aid Corporation (NYSE: RAD) is one of the Nation’s leading drugstore chains with 4,561 stores in 31 states, and a strong presence on both the East and West coasts. The company was established in 1968 and is headquartered in Camp Hill (Harrisburg), Pennsylvania. Rite Aid Corporation (“Rite Aid”) sells prescription drugs and a range of other merchandise, including over-the-counter medication, health and beauty aids, personal care items, cosmetics, household items, greeting cards, seasonal merchandise, and other everyday convenience products. Rite

Aid also offers various photo processing services in its stores.

FINANCIAL ANALYSIS

Rite Aid has seen a strong turnaround in recent years based on both the transformation of stores into neighborhood destinations for health and wellness, and cost control initiatives that include closing underperforming stores and refinancing existing debt. Thus far, this strategy has produced great results and has been well received by the market. Rite Aid Corp. has seen their stock price jump over 700% since the end of 2011, and their S&P credit rating was recently upgraded to “B” from “B-” due to better-than-expected earnings and increasing sales and profit levels. Standard & Poor’s believes continued store remodels and the success of Rite Aid’s customer loyalty program should continue to drive customer traffic. In FY2016, Rite Aid Corporation increased total revenue by 16%, from $26.53 billion in FY2015 to $30.74 billion. The company also earned net income of $165.47 million and maintained a net worth of $581.43 million, up from $57.06 million in FY2015.

RITE AID CORPORATION COMPANY PROFILE

No. of Locations: 4,561

Type (Exchange): Public (NYSE: RAD)

Credit Rating: B

Total Revenue: $30.74 billion

Net Income: $165.47 million

Net Worth $581.43 million

Market Cap (12/5/16): $8.46 billion

Website: www.riteaid.com

COMPANY GROWTH

Strategic Merger: On October 27, 2015, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and Rite Aid announced that they had entered into a definitive agreement under which WBA would acquire all outstanding shares of Rite Aid for $9.00 per share in cash for a total enterprise value of approximately $17.2 billion, including acquired net debt.

Walgreens Boots Alliance (NASDAQ: WBA) is the first global pharmacy-led health and wellbeing enterprise in the world. The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care dating back more than 100 years. Walgreens Boots Alliance operates more than 13,200 stores in 11 countries, and employs over 400,000 people. The company currently holds an S&P

credit rating of BBB.

Representative Photo

Bremerton is a city in Kitsap County, Washington, with a population of 39,520 as of the 2015 State Estimate, making it the largest city on the Kitsap Peninsula. Bremerton is home to Puget Sound Naval Shipyard and the Bremerton Annex of Naval Base Kitsap. The city is connected to Downtown Seattle by a 60-minute ferry route, which carries both vehicles and walk-on passengers along a 17-mile sailing route to Seattle.

The popular Blackberry Festival is held annually during Labor Day weekend on the waterfront boardwalk to celebrate everything Blackberry. Local residents, shopkeepers and growers bring their Blackberry ice creams, pastries, pies, jams, jellies, candies, and even ciders and wines to this annual event. Free entertainment includes music by local musicians and entertainers performing throughout the three-day festival, the Berry Fun Run and the Blackberry Criterium Bike Race. Bremerton National Airport sponsors the annual Blackberry Festival Fly-In with shuttle service provided by Kitsap Transit to the festival.

Naval Base Kitsap (approximately 5 miles east of the Subject Property) is the third-largest U.S. Navy base located on the Kitsap Peninsula in Washington state. It was created in 2004 by merging the former Naval Station Bremerton with Naval Submarine Base Bangor. The Mission of Naval Base Kitsap is to serve as the home base for the Navy’s fleet throughout West Puget Sound and to provide base operating services, including support for both surface ships and Fleet Ballistic Missile and other nuclear submarines having their home ports at Bremerton and Bangor. Naval Base Kitsap employs approximately 36,000 active-duty personnel, DoD civilian employees and contractors.

Location Overview

NAVAL BASE KITSAP BREMERTON, WA

OLYMPIC COLLEGE BREMERTON, WA

DOWNTOWN BREMERTON, WA

GOLD MTN GOLF BREMERTON, WA

Notable Landmarks

BREMERTON INDUSTRIAL CORRIDOR

COCA-COLABREMERTON BOTTLINGTACOMA SCREW PRODUCTSNORTH COAST ELECTRICPIONEER BUILDERS SUPPLY COBROTHERS POWERSPORTSPARATRANSIT SERVICESLEE SCHAWB TIRE CENTER

NAVAL BASE KITSAP - BREMERTON

U.S. NAVAL BASE13,000 ACTIVE-DUTY PERSONNEL13,000 DOD CIVILIAN EMPLOYEES10,000 CONTRACTORS

NAVY YARD HWY (28,621 VPD)

NAVY YARD HWY (57,000 VPD)

KITSAP WAY (40,461 VPD)

Seattle

102,260

2016 Population within a 5-mile radius of the

Subject Property

$66,816

2016 Average HHI within a 5-mile radius of the

Subject Property

97,461

97,461 VPD Trade Area Traffic Count

(Highway 3 & Kitsap Way)


Demographics

4117 Kitsap Way, Bremerton, Washington, 98312 0 - 1 mile 0 - 3 miles 0 - 5 miles

Population

2016 Population 8,702 53,275 102,260

2021 Population 8,951 54,524 104,629

2010-2016 Annual Rate 0.52% 0.77% 0.63%

2016-2021 Annual Rate 0.57% 0.46% 0.46%

Households

2016 Total Households 3,832 21,171 40,036

2021 Total Households 3,962 21,800 41,177

2010-2016 Annual Rate 0.76% 0.61% 0.62%

2016-2021 Annual Rate 0.67% 0.59% 0.56%

Median Household Income

2016 Median Household Income $42,780 $47,205 $52,642

Average Household Income

2016 Average Household Income $54,718 $59,886 $66,816

going beyond

The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notices.

Stan Johnson Company10333 Richmond Avenue | Suite 740Houston, Texas 77042P: +1 832.476.3440 | F: +1 832.476.3449

stanjohnsonco.com

Marc PeelerAssociate [email protected]

Jim GibsonRegional [email protected]

Todd [email protected]

Marshall Thompson [email protected]

Jaime PattesonResearch [email protected]

Jason [email protected]

In Association With: Marc Barber, WA License #25779

Offered Exclusively by

offering memorandum - loopnet...fy2016, rite aid corporation increased total revenue by 16%, from...

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