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TRANSCRIPT
Offering Memorandum
Walgreens 5721 Airport Road | Santa Fe, New Mexico 87507
20+ Years of Remaining Term | 2011 Build-to-Suit Construction | Dense Retail Trade Area | Strong Sales Absolute NNN Lease | Limited Competition | Highly Accessible w/Hard Corner Location
Page 2 Walgreens | Santa Fe, New Mexico
Confidential DisclaimerThis Confidential Memorandum has been prepared by Stan Johnson Company (“SJC”) and is being furnished to you solely for the purpose of your review of the commercial property located at 5721 Airport Road, Santa Fe, New Mexico 87507 (the “Property”). The material contained in this Offering Memorandum shall be used for the purposes of evaluating the Property for acquisition and shall not be used for any purpose or made available to any other person without the express written consent of Stan Johnson Company (“Broker”).
By accepting the Confidential Memorandum, you acknowledge and agree that: (1) all of the information contained herein and any other information you will be receiving in connection with this transaction, whether oral, written or in any other form (collectively, the “Materials”), is confidential; (2) you will not reproduce the Confidential Memorandum in whole or in part; (3) if you do not wish to pursue this matter, you will return this Confidential Memorandum to SJC as soon as practicable together with all other materials relating to the Property which you may have received from SJC; and (4) any proposed actions by you which are inconsistent in any manner with the foregoing agreements will require the prior written consent of SJC.
This Confidential Memorandum has been prepared by SJC, based upon certain information pertaining to the Property and any information obtained from SJC to assist interested parties in making their own evaluation of the Property is offered on a no representation or warranty provision other than customary warranties of title and is sold on an “as-is, where-is” basis and with all faults. The material and transaction does not purport to be all inclusive. This Confidential Memorandum contains descriptive materials, financial information and other data compiled for the convenience of parties interested in the Property. The Materials are being delivered by SJC to prospective investors with the understanding that it is not all inclusive and that it is qualified in its entirety by independent investigation by prospective investors of those matters which they deem appropriate in evaluating this offering without reliance upon SJC, the Broker or any of their respective affiliates or any of the information set out in the Materials. Neither SJC, the Broker, nor any of their respective affiliates have independently verified any of the information contained herein or in any of the Materials, and no representations or warranties as to the accuracy or completeness thereof or of any other kind whatsoever are made or intended and none should be inferred.
SJC, for itself and its affiliates of the Property, expressly disclaim any and all liability for statements or representations, express or implied, contained herein or for omissions from the Materials or for any other written, oral or other format of communication transmitted to a prospective investor in the course of its evaluation of the proposed transaction. 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. The terms and conditions described herein are subject to change without notice.
This Confidential Memorandum does not constitute an offer to accept any investment proposal but is merely a solicitation of interest with respect to the investment described herein. The Confidential Memorandum does not constitute an offer of security. The investment described herein may be financed or withdrawn from the market, without prior notice. By accepting this Confidential Memorandum you agree to release SJC and hold it harmless from any kind of claim, expense, or liability arising out of your discovery or purchase of the Property. SJC reserves the right to request the return of the Materials at any time. Ownership of the Property reserves the right to negotiate with one or more prospective investors at any time.
Page 3 Walgreens | Santa Fe, New Mexico
Table of Contents
Section 1: About the Investment
Investment Summary 6
Investment Highlights 7
Pricing & Property Overview 8
Rent Roll & Income Statement 9
Site Plan 10
Section 2: Tenant Overview
Lease Abstract 12
Tenant Overview 13
Section 3: Location Information
Area Maps 15
Location Overview 16
Retail Map 17
Demographics 18
Offered Exclusively By
Brandon Duff Regional Director
[email protected] +1 312.240.0162
Brad Feller Senior Director
[email protected] +1 312.240.0194
Isaiah Harf Associate Director
[email protected] +1 312.777.2437
In Association with
Britton Burdette, NM Lic. #19068
Stan Johnson Company 303 East Wacker Drive | Suite 1111
Chicago, Illinois 60601 P: +1 312.240.0127 | F: +1 312.240.0158
Page 4 Walgreens | Santa Fe, New Mexico
Subject Property Photos
Section 1:About the Investment
Actual Location
NE
Page 6 Walgreens | Santa Fe, New Mexico
Subject Property Photos
Investment Summary Stan Johnson Company is pleased to exclusively offer for sale to qualified investors, the opportunity to purchase a 100% fee-simple interest in the Walgreens property located on the northwest corner of Airport Road and Jemez Road in Santa Fe, New Mexico (the “Property”). The Property is roughly seven miles southwest of downtown Santa Fe, sandwiched between Veterans Memorial Highway and U.S. Highway 85. It is one of only five Walgreens in all of Santa Fe and the only retail pharmacy in the southwest portion of the city.
The Property is fully leased by Walgreen Co. (WBA), operating under a seventy-five (75) year lease term with the option to terminate with 6 months’ notice after the 25th year and every five years thereafter. Years 1-25 are referred to as the “Base Lease Term” and today there are over 20 years of base term remaining. Following this initial term, Walgreens has ten Effective Option Periods of five years each. Walgreens’ lease is absolute NNN with no landlord responsibilities for maintenance, repair or replacement. Current annual rent is $400,000, or $24.23 PSF, and is flat throughout the term.
The Property is located in a dense retail corridor that includes the Santa Fe Place Mall, a 570K SF enclosed mall anchored by Dillard’s, JCPenney, Sears and Sports Authority and features over 80 stores and services. It is the largest mall in Northern New Mexico and the fourth-largest in the state. Other national tenants that surround the mall include Target, Sam’s Club, Best Buy, Lowe’s, Regal Cinemas, Sprouts, Albertsons, TJ Maxx, Staples, Michael’s and PetSmart, as well as numerous restaurants, hotels and financial service retailers.
Walgreen Co., a subsidiary of Walgreens Boots Alliance, Inc., (NASDAQ: WBA), had FY2014 (ended August 31, 2015) revenue of $103.44 billion and net income of $4.22 billion. As of August 31, 2015, the company had a net worth of $30.86 billion. Currently, Walgreen Co. holds a BBB-/Stable rating by Standard and Poor’s and had a market capitalization of $83.04 billion as of February 4, 2016.
Page 7 Walgreens | Santa Fe, New Mexico
Investment Highlights
Walgreen Co. Guaranty – Walgreen Co. is a subsidiary of Walgreens Boots
Alliance, Inc. (NASDAQ: WBA) and is currently rated BBB-/Stable by Standard and
Poor’s. WBA had FY2015 revenue of $103.44 billion and net income of $4.22 billion.
20+ Years of Base Term Remaining – Walgreens base lease term runs through
February 2036 and features 10, 5-year options, offering investors the opportunity
for long-term cash flow.
Absolute NNN Lease Structure – Lease features zero landlord responsibilities for
maintenance or repair of the Property throughout the term and option periods.
Strong Performing Location w/Above Average Sales – Store sales at Property
are well above average for Walgreens. Please contact broker for further details.
High Residual Property Value & Large Lot – Property has a total lot size of over
2 acres and benefits from extremely strong underlying residual values due to the
location, quality of construction and maintenance of the Property.
Dense Retail Trade Area – Property is within dense retail trade area that includes
the Santa Fe Place Mall and an impressive roster of national retailers, restaurants
and hotels.
Strong Demographics – Property benefits from population in excess of 74,141
and average household income of $61,904 within a 5-mile radius.
Extended Hours & Drive-Thru Pharmacy – Store is open until midnight and
features drive-thru pharmacy.
Subject Property
SW
Page 8 Walgreens | Santa Fe, New Mexico
Pricing Overview
5721 Airport Road | Santa Fe, New Mexico 87507
Offering Price: $7,760,000
Offering Cap Rate: 5.15%
Current Annual Rent: $400,000
Tenant / Guarantor:Walgreen Co. (S&P Rated: BBB/Stable)
Ownership Interest: Fee Simple
Encumbrances: None, Delivered Free & Clear
Property OverviewProperty Type: Free Standing Retail Pharmacy
Building Size (SF): +/- 16,510 SF
Land Area (Acres): +/- 2.35 Acres
Year Built: 2011
Parcel ID: Santa Fe County: 910020463
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Page 9 Walgreens | Santa Fe, New Mexico
Rent Roll & Income Statement
Income Statement
Investment Year 0 1 2 3 4 5 6 7 8 9 10
Revenue:
Rental Income: $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Total Revenue: $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Cash Flow Before Debt Service: $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Tenant Bldg. SF Lease Term Rent Commencement Year Monthly
Base RentAnnual Base
RentAnnual Rent
PSFRental
Increase Lease Type Renewal Type
Walgreen Co. 16,510 25 Years 3/1/2011 1-25 $33,333 $400,000 $24.23 None Absolute NNN 10, 5-Year Options
Rent Roll
*20+ Years of Base Lease Term Remaining
Subject Property
Page 10 Walgreens | Santa Fe, New Mexico
Site PlanAERIAL PHOTO Walgreens
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 or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap ACT ID W0070224
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 or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap ACT ID W0070224
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SITE PLAN
Walgreens
Section 2:Tenant Overview
Actual Location
SE
Page 12 Walgreens | Santa Fe, New Mexico
Lease Abstract
Tenant/Guarantor: Walgreen Co. (S&P Rated: BBB/Stable)
Property Address: 5721 Airport Road; Santa Fe, NM 87507
Building Size (SF): +/- 16,510 SF
Lot Size (Acres): +/- 2.348 Acres
Year Built: 2011
Lease/Rent Commencement: March 1, 2011
Lease/Rent Expiration*: February 28, 2036
Base Lease Term*: 25 Years
Base Lease Term Remaining: Approx. 20 Years
Current Annual Base Rent: $400,000
Current Annual Base Rent PSF: $24.23 PSF
Rental Increase: None
Effective Option Periods*: 10, 5-Year Options
Renewal Notice: 6 Months
Lease Type: Absolute NNN
Landlord Responsibility: None
Ownership Interest: Fee Simple
Right of First Refusal: Tenant has 21 days to respond after Bona Fide Offer is presented
Percentage Rent**:2.0% of Gross Sales excluding sale of food items and prescriptions and 0.5% of Gross Sales of food items and prescriptions (refer to lease for details)
Drive-Thru: Yes
Parking: +/- 87 Surface Spaces
Property ID: Santa Fe County: 910020463
Encumbrances: None, Delivered Free & Clear
Walgreens - Santa Fe, NM
*This Walgreens lease has a lease term of 75 years through February 28, 2086, with the Tenant to retain the option to terminate at the conclusion of the last day of the 300th month (Year 25), and every 60th month thereafter, with six (6) months’ notice. Years 1-25 is referred to as the “Base Lease Term” and each of the subsequent five years as “Effective Option Periods.”
Page 13 Walgreens | Santa Fe, New Mexico
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.
The company employs over 370,000 people and has a presence in more than 25 countries; it is the largest retail pharmacy, health and daily living destination in the USA and Europe. Including its equity method investments, Walgreens Boots Alliance is the global leader in pharmacy-led, health and wellbeing retail with over 13,100 stores in 11 countries. The company includes the largest global pharmaceutical wholesale and distribution network with over 350 distribution centers delivering to more than 200,000 pharmacies, doctors, health centers and hospitals each year in 19 countries. In addition, Walgreens Boots Alliance is the world’s largest purchaser of prescription drugs and many other health and wellbeing products.
Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7, Botanics and Soap & Glory.
COMPANY PROFILE
Company: Walgreens Boots Alliance
No. of Retail Locations: 13,100 (as of 2/2015)
Credit Rating: S&P: BBB-/Stable
Stock Symbol: WBA (Nasdaq)
Employees: 370,000
Website: www.walgreensbootsalliance.com
The creation of Walgreens Boots Alliance provides an opportunity to further accelerate the development of a fully integrated, global platform for the future to provide innovative ways to address health and wellness challenges. The company is well positioned to expand customer offerings in existing markets and become the health and wellbeing partner of choice in emerging markets.
Walgreens Boots Alliance Overview
TENANT PROFILE
Company: Walgreen Co.
No. of Retail Locations: 8,232 (as of 2/2015)
Credit Rating: S&P: BBB-/Stable
Total Revenue: $103.44 Billion (as of 8/31/15)
Net Worth: $30.86 Billion (as of 8/31/15)
Year Founded: 1901
Headquarters: Deerfield, Illinois
Website: www.walgreens.com
Current Store Growth Plans: 60-120 Stores in Fiscal 2015
6.2 Million Customers Visit Walgreens Stores Daily
Fortune Magazine: Top 5 World’s Most Admired Companies (March 2015)
Forbes: 165th out of 2000 Largest Global Public Companies (May 2015)
Walgreens is largest drugstore chain in the U.S. The company had fiscal 2014 sales of more than $76 billion. Founded with a single store in Chicago in 1901, Walgreens is today continuing to build a seamless customer experience through its more than 8,200 drugstores and its digital businesses that include Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com.
Section 3:Location Overview
Actual Location
W
Page 15 Walgreens | Santa Fe, New Mexico
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Page 16 Walgreens | Santa Fe, New Mexico
Santa Fe is the capital of New Mexico and the seat of Santa Fe County. It is the fourth-largest city in the state with a population in 2012 of 69,204. It is the principal city of the Santa Fe Metropolitan Statistical Area and a part of the larger Albuquerque-Santa Fe-Las Vegas, NM Combined Statistical Area, which in 2014 had populations of 148,164 and 904,587, respectively. The population has been steadily growing with at least double-digit increases every decade since 1910.
Santa Fe was laid out by Spanish settlers according to the “Laws of the Indies,” which defined how towns should be established according to King Philip II. The fundamental principal was that the town be built around a central plaza. This design is still visible today, as is the Spanish Pueblo Revival style of the buildings that feature flat roofs and stucco exteriors.
State government is the biggest element of the Santa Fe economy, employing a workforce of nearly 20,000. Tourism is also a major contributor as visitors are attracted year-round by the climate and related outdoor activities, as well as the cultural activities of the city and the region.
Roughly a 45-minute drive south of the city is the Los Alamos National Laboratory or LANL. This lab was established in 1943 as a secret, centralized facility to coordinate the scientific research of the Manhattan Project. It remains the only lab in the United States where classified work toward the design of nuclear weapons has been undertaken besides the Lawrence Livermore National Laboratory in California.
Economic development efforts by the city are currently focused in seven industries: Arts and Culture, Design, Hospitality, Conservation Technologies, Software Development, Publishing and New Media and Outdoor Gear and Apparel. Secondary targeted industries include health care, retiree services and food & beverage.
Major employers in Santa Fe County beyond the state government include the Los Alamos National Laboratory, Christus St. Vincent Regional Medical Center, federal and city government, Santa Fe Public Schools, Santa Fe Community College, Peters Corp. and the Hilton Buffalo Thunder Resort & Casino.
Santa Fe Community College
Los Alamos National Laboratory
Cathedral of St. Francis Santa Fe Central Plaza
Location Overview
Page 17 Walgreens | Santa Fe, New Mexico
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SANTA FE COUNTRY CLUB
SANTA FE PLACE
COLLEGE OF SANTA FE
SOUTHWESTERN COLLEGE
CERRILLOS RD (46,650 VPD)
VETERANS MEM
ORIAL H
WY
I-25 (27,926 VPD)
AIRPORT RD (26,300 VPD)
RODEO RD
Subject Property
Page 18 Walgreens | Santa Fe, New Mexico
Demographics 5721 Airport Road | Santa Fe, NM 87507 0 - 1 mi. 0 - 3 mi. 0 - 5 mi.
Population
2015 Population 14,575 42,507 74,141
2020 Population 14,977 44,322 77,371
2000-2010 Annual Rate 1.08% 2.30% 1.87%
2010-2015 Annual Rate 0.87% 1.20% 0.61%
Households
2015 Total Households 4,840 16,198 29,898
2020 Total Households 5,014 17,110 31,549
2000-2010 Annual Rate 1.16% 2.72% 2.46%
2010-2015 Annual Rate 1.04% 1.51% 0.86%
Race and Ethnicity
2015 White Alone 63.7% 67.9% 71.2%
2015 Black Alone 1.2% 1.1% 1.2%
2015 American Indian/Alaska Native Alone 2.6% 2.5% 2.7%
2015 Asian Alone 1.1% 1.3% 1.4%
2015 Pacific Islander Alone 0.1% 0.1% 0.1%
2015 Other Race 27.1% 23.0% 19.4%
2015 Two or More Races 4.3% 4.1% 4.0%
2015 Hispanic Origin (Any Race) 82.2% 73.0% 65.3%
2015 Average Household Income $48,864 $57,447 $61,904
2015 Per Capita Income $16,480 $21,942 $25,244 N
Stan Johnson Company 303 East Wacker Drive | Suite 1111
Chicago, Illinois 60601 P: +1 312.240.0127 | F: +1 312.240.0158
www.stanjohnsonco.com
Brandon Duff Regional Director
[email protected]+1 312.240.0162
Brad Feller Senior Director
[email protected]+1 312.240.0194
In Association withBritton Burdette, NM Lic. #19068
Isaiah Harf Associate Director
[email protected]+1 312.777.2437
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 notice.