Palestine Town Center

Transcription

1 Capital Markets Investment Properties Palestine Town Center 321 E. SPRING STREET PALESTINE, TEXAS OFFERING MEMORANDUM

2 PALESTINE TOWN CENTER Affiliated Business Disclosure and Confidentiality Agreement CBRE, Inc. operates within a global family of companies with many subsidiaries and/or 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 may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the Property ) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum. This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the Owner ), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved 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 with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc. Table of Contents Executive Summary 1 The Offering Investment Summary Investment Highlights Market and Asset Overview 4 Property Summary Tenant Summaries Location Map Aerial Market Summary Comparables Demographics Financials 14 Rent Roll Estimated Reimbursement Schedule Tenant Notes Income and Expense Analysis Expiration Schedule 2014 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

3 Executive Summary

4 EXECUTIVE SUMMARY The Offering CBRE s Retail Investment Property Group is pleased to present Palestine Town Center ( Property ) a 14,925 square foot shopping center in Palestine, Texas. Shadow to Kroger, the Property is situated at the northwest corner of East Spring Street and North Mallard Street in Downtown Palestine, the county seat of Anderson County. Some nearby area retailers include Kroger, Family Dollar, Dollar General, and Regions Bank. Located in Palestine s Downtown/Old Town area, Palestine Town Center has excellent access and visibility from both East Spring Street and North Mallard Street. There are three points of entry from East Spring Street (US 287) and two points of entry from North Mallard Street (SH 19) as well as convenient cross-access throughout and with Kroger. Property Specifics Price: $1,018,000 Price PSF: $68.21 NOI: $91,597 CAP Rate: 9.00% Occupancy: 83.6% GLA: ± 14,925 SF Land Area: ± 1.29 acres or ± 56,192 square feet Year Built: 1987 Existing Debt: Free and Clear The Property is currently 83.6% occupied leaving 16.4% or 2,450 square feet of retail space available for lease-up. With the Property s close proximity to Palestine Regional Medical Center and Palestine Rehabilitation Hospital, there is an expanded tenant pool supporting medical centers including lab services, medical supplies, uniform stores, or florists. Currently, Palestine Town Center s tenant lineup includes a combination of complementary personal care and service tenants generating steady traffic and promoting cross shopping. Tenants include Western Finance, Preferred Choice Income Tax, Gold Star Finance as well as Angles Hair Studio, Fancy Nails, and Livingston Hearing Aid Center. 2 Palestine Town Center

5 Palestine Palestine is located in East Texas approximately 108 miles southeast of Dallas, 150 miles north of Houston, and less than 50 miles south of Tyler. Two major healthcare facilities Palestine Regional Medical Center and Palestine Regional Rehabilitation Hospital have a combined 500 employees and 50 volunteers as well as more than 80 physicians. The city is a popular tourist destination, as well as home to two college campuses: University of Texas Tyler and Trinity Valley Community College. Palestine s advanced transportation system, natural resources, affordable real estate, and a diversified economy make it a good place for business. Sanderson Farms, Inc. major expansion initiative, creating approximately 1,350 new jobs and $265 million in capital investment Reinstatement of short-haul freight and turnkey transload services at the Texas State Railroad Millions of gallons per day of surplus water available for businesses and residents 352-acre business park with shovel-ready and build to suit sites New real estate search and business ombudsman services offered through Palestine Economic Development Corporation Successful joint city-county property tax abatement program Recognized by Texas Highways magazine as one of the top locations for travel and visitors. 3 Palestine Town Center

6 Market and Asset Overview

7 MARKET AND ASSET OVERVIEW Property Summary ADDRESS: 321 East Spring Street Palestine, Texas Anderson County LEGAL DESCRIPTION: Palestine Town Center Block 1, Lot 2 BUILDING AREA: LAND AREA: CONFIGURATION: ± 14,925 SF ± 1.29 acres or ± 56,192 square feet One, single story building YEAR BUILT: 1987 PARKING: PARKING RATIO: INGRESS/EGRESS: STRUCTURE: ± 79 Surface Spaces ± per 1,000 SF Three points of entry from Spring Street; two points of entry from North Mallard Street; and cross-access with neighboring properties Concrete tilt wall with brick overlay veneer and steel framing AGE OF ROOF: 1986 ROOF COMMENTS: HVAC: TRAFFIC COUNTS: Metal roof, good condition with regular maintenance Individual roof mounted individual HVAC units East Spring Street (EB/WB) ± 9,442 vpd North Mallard Street (NB/SB) ± 15,668 vpd (source CoStar) 5 Palestine Town Center

8 Location Map PALESTINE TOWN CENTER 6 Palestine Town Center

9 Aerial Avenue A E. Spring St. N. Mallard St. N. Church St. 7 Palestine Town Center

10 Aerial Walmart Walmart Distribution Center Crocket Road Bon Appetit E. Spring St. 8 Palestine Town Center

11 Site Plan N Tenant Avenue A U.S. Highway 84 - Spring Road A 107B 113 Kroger Fuel Station NAP Kroger NAP Mallard St. Tenant Suite Size USA Donut 101 1,800 Pending Lease Fancy Nails 113 1,250 Preferred Choice Income Tax Gold Star Finance 129 1,750 TX State Low Cost Insurance 133 1,500 Tenant Suite Size Livingston Hearing Aid Center Angles Hair Studio 139 1,500 Available 121 2,450 Western Finance 107A 1,100 Pending Lease 107B 1,325 9 Palestine Town Center

12 Market Summary - Palestine, Texas PALESTINE OVERVIEW The City of Palestine is located in east Texas in Anderson County and was founded in Palestine is located at the intersection of U.S. Highways 79 and 287, at the center of the county, some 108 miles southeast of Dallas and 150 miles north of Houston. The town originally thrived off the transportation of goods down the Trinity River, and then in the 1870 s, Palestine saw a significant increase in population and economic growth with the arrival of the railroad industry. POPULATION AND POPULATION GROWTH A population of 18,192 people the City of Palestine population declined 2.73% from 2010 and is projected to decline another 0.25% to 17,147 people by The current year median age for Palestine is 34, while the average age is 36. The racial composition of Palestine, Texas is currently estimated to be: 61.1% are White alone, 23.0% are Black or African American alone, 0.6% are American-Indian alone, 1.1% are Asian alone, 0.1% are Native Hawaiian and Other Pacific Islander alone, 11.0% are some other race, and 3.2% are two or more races. Sources: Claritas and InfoUSA ECONOMY The City of Palestine continues to have a strong Union Pacific Railroad presence as Palestine is an ideal location for distribution to Texas, Louisiana, Arkansas, and Oklahoma. It is centered just over two hours from Dallas and Houston, Texas and Shreveport, Louisiana. In the 1980 s, Walmart built their first distribution center outside of their home state of Arkansas because of Palestine s central location. That distribution center still operates today as one of only seven Fashion Distribution Centers in the U.S. The successful operations of that center led Walmart to build a second distribution center in Palestine in Source: City of Palestine. EDUCATION Palestine Independent School District (PISD) and Westwood Independent School District (WISD), primarily serves the City of Palestine. As of the Fall of 2014 PISD has 3,678 students and WISD has 1,700 students across a total of 10 schools. There are an estimated 6,802 households in the Lufkin area which represents a -2.8% growth over During the next five years households are projected to grow -0.3%. WORKFORCE In Palestine, Texas the current workforce stands at 6,980 and the population over the age of 16 is 13,566. Currently 45% of the workforce is in white collar jobs, 29.4% are in service and farm jobs, and 25.63% is in Blue Collar jobs. Current unemployment stands at 5.9%. The estimated median household income in Palestine is currently over $35,585 and is projected to grow -16.0% over the next five years. 10 Palestine Town Center

13 Rent Comparables Property GLA Year Built/ Renovated Current Occupancy Major Tenants Available SF Asking Rent NNN Palestine Town Center 321 East Spring Street Palestine, Texas 15, % USA Donut, Fancy Nails, Gold Star Finance, Livingston Hearing Aids, Angler Hair Studio 2,450 $8.00-$10.00 $ Palestine Shopping Center East Spring Street Palestine, Texas 37, % Family Dollar, Customer's Choice, Texas Family Protective Services, Beauty & Gifts 14,205 $ $6.00 $ Palestine Retail Center 419 Old Elkhart Road Palestine, Texas 10, % Verizon, Sports Clips, Little Caesars, Family Smiles, Wright Insurance, Magic Nails & Sp 0 $ $18.00 $ Palestine Plaza Retail Center Crockett Road Palestine, TX 119, / % Beal's, Dollar Tree, CiCi's Pizza, Pro-Cuts, Hibbett Sports, Snap Fitness, Rent-A-Center 0 $12.00-$17.00 $ Palestine Place 2025 Crockett Road Palestine, TX 21, % Sherwin Williams, Andy's Tobacco, OneMain Financial, Beltone Hearing Aids 0 $12.00-$15.00 $ S. Loop 256 Palestine, TX 15, % The Cash Store, Cato, GameStop, Subway 0 $ $18.00 $ Palestine Town Center

14 Rent Comparables Layout ID:L01 MapId: CBRE Limited. Data TeleAtlas, Google, AerialExpress, DigitalGlobe, Landiscor, USGS, i-cubed. The information contained herein (the Information ) is intended for informational purposes only and should not be relied upon by recipients hereof. Although the Information is believed to be correct, its accuracy, correctness or completeness cannot be guaranteed and has not been verified by either CBRE Limited or any of its affiliates (CBRE Limited and its affiliates are collectively referred to herein as CBRE ). CBRE neither guarantees, warrants nor assumes any responsibility or liability of any kind with respect to the accuracy, correctness, completeness, or suitability of, or decisions based upon or in connection with, the Information. The recipient of the Information should take such steps as the recipient may deem appropriate with respect to using the Information. The Information may change and any property described herein may be withdrawn from the market at any time without notice or obligation of any kind on the part of CBRE. The Information is protected by copyright and shall be fully enforced. 12 Palestine Town Center

15 Demographics ONE-MILE RADIUS FIVE-MILE RADIUS TEN-MILE RADIUS 2014 Estimated Population 5,872 22,479 30, Projected Population 5,817 22,517 31,059 POPULATION 2010 Census Population 6,073 23,017 31, Census Population 5,754 21,355 28,571 Growth % -2.34% -1.94% Growth % 0.17% 0.61% 2014 Estimated Median Age Estimated Average Age Estimated Households 2,039 8,506 11,712 HOUSEHOLDS 2019 Projected Households 2,013 8,527 11, Census Households 2,118 8,708 11, Census Households 2,113 8,166 11,026 Growth % -2.33% -1.93% Growth % 0.26% 0.71% 2014 Est. Average Household Size Est. Median Household Income $32,114 $36,107 $37,810 INCOME 2019 Prj. Median Household Income $26,575 $30,073 $30, Cen. Median Household Income $25,087 $29,873 $30, Est. Average Household Income $45,535 $49,849 $51, Estimated Per Capita Income $15,810 $18,862 $19, Estimated Housing Units 2,458 9,814 13, Estimated Occupied Units 2,039 8,506 11,712 HOUSING 2014 Estimated Vacant Units 420 1,309 1, Est. Owner Occupied Units 1,146 5,498 8, Est. Renter Occupied Units 893 3,007 3, Est. Median Housing Value $90,856 $90,712 $91, Est. Average Housing Value $110,078 $113,870 $116, Palestine Town Center

16 Financials

17 Rent Roll Rent Roll Palestine Town Center Lease Dates Minimum Rent Recoveries Total % of Tenant Suite GLA % Start End Annual Monthly PSF Annual PSF Revenue Revenue USA Donut 101 1, % 03/12 02/18 $16,200 $1,350 $9.00 $6,170 $3.43 $22, % Pending Lease % 11/14 10/16 $4,500 $375 $6.00 $2,571 $3.43 $7, % Fancy Nails 113 1, % 04/13 12/15 $10,620 $885 $8.50 $4,285 $3.43 $14, % [2] Preferred Choice Income Tax % 10/03 MTM $9,000 $750 $12.00 $2,571 $3.43 $11, % Gold Star Finance 129 1, % 06/13 06/16 $10,500 $875 $6.00 $5,999 $3.43 $16, % TX State Low Cost Insurance 133 1, % 10/06 09/15 $13,500 $1,125 $9.00 $5,142 $3.43 $18, % Livingston Hearing Aid Center % 05/14 04/17 $6,000 $500 $8.00 $2,571 $3.43 $8, % Angles Hair Studio 139 1, % 09/14 08/17 $10,500 $875 $7.00 $5,142 $3.43 $15, % Available 121 2, % - - $0 $0 $0.00 $0 $0.00 $0 0.00% Western Finance 107A 1, % 09/11 08/16 $9,900 $825 $9.00 $3,771 $3.43 $13, % Pending Lease 107B 1, % 11/14 10/16 $9,275 $773 $7.00 $4,542 $3.43 $13, % Total Count / GLA 11 14, % Totals $99,995 $42,762 $142, % Occupied 10 12, % Available 1 2, % Total Avg Rent / GLA , % Notes: [1] Static analysis information obtained from the September 2014 Rent Roll and the 2013 Income Statement. [2] Analysis assumes Preferred Choice Income Tax will remain as tenant on a month to month basis. Actual expiration date was 09/ Palestine Town Center

18 Estimated Reimbursement Revenue Estimated Reimbursement Revenue Palestine Town Center CAM Management Fee Insurance Real Estate Taxes Total Recovery Tenant Suite GLA % Monthly PSF Monthly PSF Monthly PSF Monthly PSF Monthly PSF USA Donut 101 1, % $270 $1.80 $57 $0.38 $20 $0.14 $166 $1.11 $514 $3.43 Pending Lease % $113 $1.80 $24 $0.38 $9 $0.14 $69 $1.11 $214 $3.43 Fancy Nails 113 1, % $188 $1.80 $40 $0.38 $14 $0.14 $115 $1.11 $357 $3.43 Preferred Choice Income Tax % $113 $1.80 $24 $0.38 $9 $0.14 $69 $1.11 $214 $3.43 Gold Star Finance 129 1, % $263 $1.80 $56 $0.38 $20 $0.14 $162 $1.11 $500 $3.43 TX State Low Cost Insurance 133 1, % $225 $1.80 $48 $0.38 $17 $0.14 $139 $1.11 $428 $3.43 Livingston Hearing Aid Center % $113 $1.80 $24 $0.38 $9 $0.14 $69 $1.11 $214 $3.43 Angles Hair Studio 139 1, % $225 $1.80 $48 $0.38 $17 $0.14 $139 $1.11 $428 $3.43 Available 121 2, % $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 Western Finance 107A 1, % $165 $1.80 $35 $0.38 $13 $0.14 $102 $1.11 $314 $3.43 Pending Lease 107B 1, % $199 $1.80 $42 $0.38 $15 $0.14 $122 $1.11 $378 $3.43 Totals 14, % $1,871 $398 $142 $1,153 $3,563 Notes: [1] Analysis assumes all in-place tenants reimburse net of Common Area Maintenance, Management Fee, Insurance, and Real Estate Taxes. A thorough review of the final 2013 CAM Reconciliations is necessary to enhance these projections. 16 Palestine Town Center

19 Tenant Notes Tenant Notes Palestine Town Center Base Rental Increases Option Notes Tenant Suite GLA Date PSF Renewal Notes USA Donut 101 1,800 One 5-year renewal FMV not to exceed a 7% increase Tenant: Ngoun (Richard) Lay Chhor LL right to terminate with 180 days notice [2] Pending Lease Fancy Nails 113 1,250 One 3-year renewal FMV Tenant: Minh Hang Tran, Individually LL right to terminate with 90 days notice [2] Preferred Choice Income Tax Tenant: Cecilia Kennedy LL right to terminate with 90 days notice [2] Gold Star Finance 129 1,750 One 3-year renewal FMV Tenant: Gold Star Finance Inc. LL right to terminate with 90 days notice [2] TX State Low Cost Insurance 133 1,500 Tenant: TSLC, LLC Guarantor: Dennis M. Morris LL right to terminate with 180 days notice [2] Livingston Hearing Aid Center Angles Hair Studio 139 1,500 09/15 09/16 $8.00 $9.00 Tenant: William J. Rogers, Jr. Available 121 2,450 Western Finance 107A 1,100 Tenant: Western-Shamrock Corporation Lessee has the right to terminate with 30-days notice if legislation changes and tenant can no longer operate. Pending Lease 107B 1,325 Totals 14,925 Notes: [1] Tenant notes per Lease review. [2] LL has the right to terminate the Leases in the Property if LL decides to raze/demolish improvements. 17 Palestine Town Center

20 Income and Expense Analysis Income and Expense Analysis [1] INCOME Palestine Town Center % of In-Place PSF EGR Base Rent $99,995 $ % Percentage Rent $0 $ % Total Rental Revenue $99,995 $ % Expense Reimbursements CAM Recoveries $22,457 $ % Management Fee Recoveries $4,771 $ % Insurance Recoveries $1,702 $ % Real Estate Tax Recoveries $13,832 $ % Total Expense Reimbursements $42,762 $ % Total Other Revenue $0.00 $ % Total Gross Revenue $142,757 $ % Effective Gross Revenue (EGR) $142,757 $ % OPERATING EXPENSES Common Area Maintenance Repairs and Maintenance $6,604 $ % Repairs & Maintenance-Electrical $692 $ % Electricity $2,339 $ % Water $5,901 $ % Parking Lot Repair $175 $ % Cleanup $4,799 $ % Canopy & P/L Lights $532 $ % Exterminating $435 $ % Trash Disposal $4,091 $ % Landscape Maintenance $1,299 $ % Total Common Area Maintenance $26,867 $ % Income and Expense Analysis [1] Palestine Town Center % of In-Place PSF EGR INCOME Management Fee $5,708 $ % Total Insurance Base Rent $2,036 $99,995 $0.14 $ % 70.0% Percentage Rent $0 $ % Total Real Estate Taxes $16,549 $ % Total Rental Revenue $99,995 $ % Total Recoverable Expenses $51,160 $ % Expense Reimbursements Total Non-Recoverable Expenses $0 $ % CAM Recoveries $22,457 $ % Total Operating Management Expenses Fee Recoveries $51,160 $4,771 $3.43 $ % 3.3% Net Operating Insurance Income Recoveries $91,597 $1,702 $6.14 $ % 1.2% Real Estate Tax Recoveries Net Operating Income (Variance) Total Expense Reimbursements Capitalization Rate $13,832 $42, % $0.93 $ % 30.0% Total Cash-on-Cash Other Revenue Return [2] 17.21% $0.00 $ % Total Gross Revenue $142,757 $ % Effective Notes: Gross Revenue (EGR) $142,757 $ % [1] Expense information obtained from the 2013 Income Statement. Management Fee is OPERATING EXPENSES included at an estimated 4% of EGR. Real Estate Taxes are per the most recent assessed Common value and Area millage Maintenance rates from the Anderson County Appraisal District. Analysis does not incorporate the Repairs Texas and Margin Maintenance Tax and assumes a buyer will consult $6,604 their tax $0.44 advisor to assess 4.6% their exposure to this expense. Repairs & Maintenance-Electrical $692 $ % [2] Cash on Cash Return based on market loan assumptions. Electricity $2,339 $ % Water $5,901 $ % Parking Lot Repair $175 $ % Cleanup $4,799 $ % Canopy & P/L Lights $532 $ % Exterminating $435 $ % Trash Disposal $4,091 $ % Landscape Maintenance $1,299 $ % Total Common Area Maintenance $26,867 $ % 18 Palestine Town Center

21 Expiration EXPIRATION Schedule SCHEDULE Palestine Town Center Suite Tenant Expiration Available MTM Available - 2, Preferred Choice Income Tax MTM TX State Low Cost Insurance 09/15 1, Fancy Nails 12/15 1, Gold Star Finance 06/16 1, A Western Finance 08/16 1, Pending Lease 10/ B Pending Lease 10/16 1, Livingston Hearing Aid Center 04/ Angles Hair Studio 08/17 1, USA Donut 02/18 1,800 Total Expiration Area 2, ,750 4,925 2,250 1,800 0 Percent of Total Center 0.00% 5.03% 0.00% 18.43% 33.00% 15.08% 12.06% 0.00% 19 Palestine Town Center

22 Capital Markets Investment Properties CBRE Exclusive Agents JENNIFER PIERSON Senior Vice President BETH PIERSON Senior Associate CAMERON DEPTULA Associate