starbucks coffee · yy south hesperia is an underserved starbucks market: the subject property is...

HESPERIA, CALIFORNIAOFFERING MEMORANDUM

• NEW 10-YEAR NNN LEASE • 10% INCREASES EVERY 5 YEARS • NEW 2017 CONSTRUCTION •

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OFFERING MEMORANDUMHESPERIA, CALIFORNIA

EXCLUSIVELY LISTED BY:

Jeff Lefko [email protected] | BRE #01942025

Bill AsherExecutive Vice [email protected] | BRE #01318078

TABLE OF CONTENTS:

Offering Summary 3

Investment Highlights 4

Location Highlights 5

Lease Summary 6

Site Plan / Parcel Map 7

Aerial Overviews 8

Regional Map 10

Tenant Profile 11

Area Overview 12

Demographics 15

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STARBUCKS COFFEE AT HESPERIA GATEWAY CENTRE

The information contained herein has been obtained from sources we deem reliable. We cannot assume responsibility for its accuracy.

LOCATION

Single-Tenant Starbucks Drive-Thru

SEQ Ranchero Road & Interstate-15

Hesperia, CA 92344

OFFERING SUMMARY

Price: $3,475,000

Current Net Operating Income (NOI): $139,000

Capitalization Rate: 4.00%

Oct. 2022 Net Operating Income (NOI): $152,900

Oct. 2022 Capitlization Rate: 4.40%

Net Rentable Area: 2,000

Year Built: 2017

Lot Size (Acres): 0.81

FINANCING SUMMARY

All Cash or Cash to New Financing

(Contact Hanley Investment Group for Further Details)

OFFERING SUMMARY

https://goo.gl/maps/LV7L9TW7tyx

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INVESTMENT HIGHLIGHTS

yy New Single-Tenant Corporate Starbucks Drive-Thru:

yο New 10-year lease with 10% rental increases every 5 years (no kick-out clause)

yο Four 5-year options at 10% rental increases

yο New 2017 construction; Starbucks opened on October 13, 2017

yο Starbucks store sales are approximately 50% greater in locations that have a drive-thru

yο Corporate guaranteed investment grade credit lease (NASDAQ: SBUX; S&P: A-); Starbucks has over 26,500 stores in 75 countries

yy Excellent Accessibility, Identity, and High Visibility Location Along Interstate 15:

yο The property will benefit from a large pylon sign along Interstate 15 visible at the north and southbound exit/entrance

yο Hundreds of thousands of commuters travel along Interstate 15 daily; average daily traffic counts of approximately 108,000 cars per day

yο Interstate 15 is a major arterial connecting Riverside and San Bernardino Counties to the greater High Desert and Las Vegas

yy Located at the Last Freeway Exit Before U.S. Route 395 Interchange: The subject property is ideally situated approximately 1-mile South of the U.S. Route 395 exit, the beginning of a well-traveled route that runs over 1,300 miles north through four states with major destination cities including Mammoth Lakes, Carson City, and Reno

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LOCATION HIGHLIGHTS

yy South Hesperia is an Underserved Starbucks Market: The subject property is the only Starbucks in a 3-mile radius and one of only two Starbucks drive-thru locations in a 7-mile radius

yy Ranchero Road Infrastructure Development: In 2015, the City of Hesperia completed a $60 million Interchange Bridge on Interstate 15 at Ranchero Road in order to handle the increase in traffic in the area as well as an $18 million street widening project that will widen 5 miles of roadway from two to four lanes from the I-15 east to the Ranchero Road Undercrossing

yy Extremely High Growth Location:

yο The population of Hesperia has grown more than 10% since 2010 and the city noted a 35% increase in single-family residential permits between 2000 and 2015

yο Over 22,000 planned homes to be built over the next 10 years in a 5-mile radius of the subject property, including the approved Tapestry Project, a 16,000-home master-planned community situated on over 9,300 acres of land

yy Affluent Master-Planned Communities Surrounding the Subject Property: Oak Hills Community is located less than 1 mile from the subject property and is made up of young professionals that have an average household income of more than $85,000

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LEASE SUMMARY

LEASE SUMMARY (1)

Tenant: Starbucks

Lease Commencement: October 13, 2017

Lease Expiration: October 12, 2027

Lease Type: NN

Net Operating Income: $139,000

Net Rentable Area: 2,000

Rental Increases: 10% Every 5 Years

Renewal Options: See Note 1

Property Taxes: Tenant Responsibility

Insurance: Tenant Responsibility

Common Area Maintenance: Tenant Responsibility

Roof and Structure: Landlord Responsibility

NOTES

(1) Four 5-Year @ 10% Increases Each Option

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SITE PLAN / PARCEL MAP

N

RANCHERO ROAD

FASHION WAY

RAN

CHER

O R

OA

D E

XIT

140

MA

RIPOSA

ROA

D

SIGN

DRIVE-THRU DRIVE-THRU CAR WASH

FREEWAY PYLON SIGN

STREET PYLON SIGN

SIGN

ENTRY MONUMENT SIGN

SIGN

FUTURERETAIL

PROPERTY PARCEL

APN: 0357-561-72

SUBJECT PROPERTY

NOT A PART

HESPERIA GATEWAY CENTRE

(cont'd)

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AERIAL OVERVIEWS

108,000 CPD

RANCHERO ROADSUBJECTPROPERTY2018 Estimated Completion

74' APPROVED FREEWAY VISIBLE PYLON SIGNAGE

RANCHERO ROAD I-15 FREEWAY INTERCHANGE

yy Interchange Bridge added

yy Street widened from 2 to 4 lanes

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AERIAL OVERVIEWS

N

OAK HILLS HIGH SCHOOL- 2,400 STUDENTS -

FUTURE RESIDENTIAL

DEVELOPMENT

COMMERCIAL DEVELOPMENT

TAPESTRY MASTER PLANNED COMMUNITY

- 15,000 ENTITLED HOMES-- 9,365 ACRES -

HESPERIA COMMERCE CENTER- 225 ACRE INDUSTRIAL PROJECT-

- UNDER CONSTRUCTION -- 3.5 MILLION SF -

108,000 C

PD

2016 DEMOGRAPHICS

Population:1-Mile Radius 8343-Mile Radius 9,4175-Mile Radius 33,498

Household Income:1-Mile Radius $94,9283-Mile Radius $91,5595-Mile Radius $78,716

SUBJECTPROPERTY

OAK HILLS COMMUNITY- AHHI: $85,000 -

- AVERAGE HOME PRICE: $375,000 -

RANCHERO ROAD

RANCHERO ROAD INFRASTRUCTURE DEVELOPMENT

In 2015, the City of Hesperia completed a $60 million Interchange Bridge on Interstate 15 at Ranchero Road in order to handle the increase in traffic in the area as well as an $18 million street widening project that will widen 5 miles of roadway from two to four lanes from the I-15 east to the Ranchero Road Undercrossing.

LOCATED AT LAST EXIT BEFORE I-15 AND ROUTE 395 SPLIT

The subject property is ideally situated approximately 1-mile South of the U.S. Route 395 exit, the beginning of a well-travelled route that runs over 1,300 miles north through four states with major destination cities including Mammoth Lakes, Carson City, and Reno.

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REGIONAL MAP

SUBJECTPROPERTY

N

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TENANT PROFILE

Starbucks Corporation (NASDAQ: SBUX, S&P: A) is the premier roaster, marketer, and retailer of coffee in the world, operating 26,736 stores in a total of 75 countries. The company has 13,249 corporate-operated stores, almost all of which are leased. These stores are predominantly located in the U.S., while internationally the company uses a licensing approach to grow its brand. Starbucks reported most recent annual revenue of approximately $21 billion in 2016 and employs 191,000. The company expects to add roughly 2,100 net new stores to its portfolio in 2017, while projecting total revenue increases of nearly 10% along with mid-single-digit comparable store growth.

As part of its long-term growth strategy, Starbucks plans to open 12,000 new stores globally and 3,400 in the U.S. by 2021. The new stores will boost Starbucks' unit count by 50%. Perhaps its greatest opportunity lies in China where it currently operates 2,800 stores and is opening more than one store per day in the country. Starbucks has stated that it remains on track to open more than 5,000 stores in China by 2021.

The company, despite being very well-established in a plethora of markets, has been able to significantly outperform industry-level revenue growth in recent years. Thanks to continued expansion efforts, increases in average ticket values, and an innovative product-mix, Starbucks has been able to keep top-line sales growth in the double-digits, while industry averages have, at times, gone as low as -3%.

Company Type: Public (NASDAQ:SBUX)S&P Rating: A (Investment Grade)Locations: 26,736Website: www.starbucks.com

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HIGH DESERT GATEWAY I & II

Hesperiayy Located in Southern California’s Inland Empire in the Victor Valley Region

yο Victor Valley is made up of a collection of desert cities including, Victorville, Apple Valley, and Hesperia, and has a combined population of nearly 433,000

yy 90 miles from Los Angeles; ideal location for industrial, distribution, and manufacturing operations

yy Located just minutes from the Cajon Pass, providing a minimal commute time to the other major job centers to the south including Ontario, San Bernardino, and Riverside

yy Substantial population growth over the past few decades

yο 44.1% population growth from 2000 to 2010, compared to San Bernardino county (21.5%) and the state of California (11.8%)

yο 10% population growth since 2010

yο More than 400 major firms moving into the County over the past several years

yο Hesperia could add up to 80,000 residents in the next 30 years

INFRASTRUCTURE DEVELOPMENT

yy In 2015, the City completed a $60 million Interchange Bridge at Ranchero Road in order to handle the increase in traffic in the area

yy Ranchero Road Widening

yο $18 million project that will widen 5 miles of roadway from two to four lanes from the I-15 east to the Ranchero Road Undercrossing; under construction and scheduled to be completed this year

COMMERCIAL DEVELOPMENT

yy More than 100,000 square feet of retail development is currently planned or under construction

yy Hesperia Commerce Center

yο 225-acre, 3.5 million square foot industrial project located in southwest Hesperia west of the I-15 and north of the Ranchero interchange

yο The development consists of 34 industrial warehouse and office buildingsHESPERIA COMMERCE CENTER

HESPERIA CIVIC PLAZA PARK

AREA OVERVIEW

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TAPESTRY PROJECT - RECREATION CENTER

TAPESTRY PROJECT - ENTRY

WEST MAIN VILLAS - CLUB HOUSE

WEST MAIN VILLAS - HOME

yy Ranchero Marketplace Development

yο Only property zoned for a retail center along the Ranchero Road corridor

yο Plans in place for a retail neighborhood center anchored by supermarket and drugstore

yο Approved residential expansion plans in place on adjacent parcel

yο Located off the new I-15 Interchange Ranchero Road exit on the northeast corner of Ranchero Road and Tamarisk Avenue

yy High Desert Gateway I & II

yο 57.2 acres; 569,000 square foot community shopping center

yο Located on the west side of the I-15, just north of the new Ranchero Road Interchange

yο Phase I has been completed; tenants include Famous Footwear, Leslie’s Pools, Planet Fitness, Super Target, and Golden Corral

yο Phase II is currently under construction, some of the first tenants include Jimmy John’s, Fatburger, Starbucks, a Shell gas station, and 5-Star nails

yy New grocery-anchored center at the NEC of Main Street and Escondido Avenue

yο ALDI supermarket, Les Schwab Tire Center, and Wendy’s; will be completed this year

RESIDENTIAL DEVELOPMENT

yy Tapestry Project

yο Master-planned community; 15,660+ homes and 1.4 million SF of commercial and retail space

yο The project will be constructed in phases over 25 to 30 years and could boost the city’s population by up to 80,000

yο Phase I of the project is expected to break ground by 2019, which will bring 1,884 homes and up to 500 jobs to southeast Hesperia

yy West Main Villas/Mesa Linda Apartments

yο Located near the corner of Main Street and Mesa Linda Avenue, east of Highway 395

yο Opened August 2017

yο 200 high-end apartments; condo-style duplexes; single-family neighborhood design

AREA OVERVIEW

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yy The Villas

yο Part of the West Main Villas development, the Villas is a 55-plus senior community, located east of the I-15 on Avenal Street, east of Mariposa Road

yο Opened August 2017; sold out before it opened

yο The 96-unit gated community sits on just under 10 acres will include 4 two-story buildings with 24 units each

yy Sorrento Homes

yο 40-home tract located off Maple Avenue and Palm Street

yο Nearly sold out

yο Ideal location – 3 miles from Interstate 15 and between the new off ramp at Ranchero Road and Main Street

yο Sorrento is also building another 18-home project near the corner of Ranchero Road and Danbury Avenue, on the south side of Hesperia; nearly completed

yy Cedar Heights Community

yο New 29-home residential development located on Polk Court, north of Ranchero Road

yο Features one and two-story homes, open floor plans, and energy efficient amenities

yy Mixed-Use Senior Living Community Development

yο New mixed-use senior living community on the north side of Main Street; currently under construction

yο The project includes an 84-condominium facility, a 131-unit assisted living building, a 300- person adult day care center, and a pad for a 4,000 square foot retail building

CEDAR HEIGHTS COMMUNITY

SORRENTO HOMES

THE VILLAS

AREA OVERVIEW

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DEMOGRAPHICS

1-Mile 3-Mile 5-MilePopulation

2021 Projection 1,012 11,777 40,3972016 Estimate 834 9,417 33,4982010 Census 816 9,214 32,3272000 Census 403 3,842 16,339Growth 2000-2010 102.48% 139.82% 97.85%Growth 2010-2016 2.21% 2.20% 3.62%Growth 2016-2021 21.34% 25.06% 20.60%

Households2021 Projection 320 3,403 11,6312016 Estimate 260 2,710 9,5782010 Census 255 2,654 9,2592000 Census 133 1,222 5,205Growth 2000-2010 91.73% 117.18% 77.89%Growth 2010-2016 1.96% 2.11% 3.45%Growth 2016-2021 23.08% 25.57% 21.43%

2016 Est. Population by Single-Classification RaceWhite Alone 597 6,181 19,724 Black or African American Alone 35 506 2,027 American Indian and Alaska Native Alone 9 103 402 Asian Alone 28 368 1,353 Native Hawaiian and Other Pacific Islander Alone 4 44 124 Some Other Race Alone 129 1,785 8,046 Two or More Races 30 422 1,759

2016 Est. Population by Ethnicity (Hispanic or Latino)Hispanic or Latino 321 4,108 16,725 Not Hispanic or Latino 513 5,309 16,773

2016 Est. Average Household Income $94,928 $91,559 $78,716

The information contained herein does not purport to provide a complete or fully accurate summary of the Property or any of the documents related thereto, nor does it purport to be all-inclusive or to contain all of the information which prospective buyers may need or desire. All financial projections are based on assumptions relating to the general economy, competition, and other factors beyond the control of the Owner and Broker and, therefore, are subject to material variation. This Marketing Package does not constitute an indication that there has been no change in the business or affairs of the Property or the Owner since the date of preparation of the information herein. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective buyers.

Neither Owner nor Broker nor any of their respective officers, Agents or principals has made or will make any representations or warranties, express or implied, as to the accuracy or completeness of this Marketing Package or any of its contents, and no legal commitment or obligation shall arise by reason of the Marketing Package or its contents. Analysis and verification of the information contained in the Marketing Package is solely the responsibility of the prospective buyer, with the Property to be sold on an as is, where-is basis without any representations as to the physical, financial or environmental condition of the Property.

Owner and Broker expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the Property and/or terminate discussions with any entity at any time with or without notice. Owner has no legal commitment or obligations to any entity reviewing this Marketing Package or making an offer to purchase the Property unless and until such sale of the Property is approved by Owner in its sole discretion, a written agreement for purchase of the Property has been fully delivered, and approved by Owner, its legal counsel and any conditions to the Owner’s obligations thereunder have been satisfied or waived.

This Marketing Package and its contents, except such information which is a matter of public record or is provided in sources available to the public (such contents as so limited herein called the Contents), are of a confidential nature. By accepting this Marketing Package, you unconditionally agree that you will hold and treat the Marketing Package and the Contents in the strictest confidence, that you will not photocopy or duplicate the Marketing Package or any part thereof, that you will not disclose the Marketing Package or any of the Contents to any other entity (except in the case of a principal, who shall be permitted to disclose to your employees, contractors, investors and outside advisors retained by you, or to third-party institutional lenders for financing sought by you, if necessary, in your opinion, to assist in your determination of whether or not to make a proposal) without the prior authorization of the Owner or Broker, and that you will not use the Marketing Package or any of the Contents in any fashion or manner detrimental to the interest of the Owner or Broker.

CONFIDENTIALITY AGREEMENT

HESPERIA, CALIFORNIA

EXCLUSIVELY LISTED BY:

Bill AsherExecutive Vice [email protected] | BRE #01318078

Jeff Lefko [email protected] | BRE #01942025

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starbucks coffee · yy south hesperia is an underserved starbucks market: the subject property is...

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