Wells Fargo Bank Ground Lease OFFERING MEMORANDUM Houston, Texas Net Lease Investment Services Andrew Bogardus +1 415 677 0421 andy.bogardus@cushwake.com CA LIC #00913825 Christopher Sheldon +1 415 677 0441 chris.sheldon@cushwake.com CA LIC #01806345 Christina Campanella +1 415 677 0456 christina.campanella@cushwake.com NY LIC #10401243503 John Nicholson, SIOR +1 713 345 1430 john.nicholson@cushwake.com TX LIC #487559 www.thinknnn.com
Net Lease Investment Services Disclaimer The information contained in this marketing brochure ( Materials ) is proprietary and confidential. It is intended to be reviewed only by the person or entity receiving the Materials from Cushman & Wakefield ( Agent ). The Materials are intended to be used for the sole purpose of preliminary evaluation of the subject property/properties ( Property ) for potential purchase. The Materials have been prepared to provide unverified summary financial, property, and market information to a prospective purchaser to enable it to establish a preliminary level of interest in potential purchase of the Property. The Materials are not to be considered fact. The information contained in the Materials is not a substitute for thorough investigation of the financial, physical, and market conditions relating to the Property. The information contained in the Materials has been obtained by Agent from sources believed to be reliable; however, no representation or warranty is made regarding the accuracy or completeness of the Materials. Agent makes no representation or warranty regarding the Property, including but not limited to income, expenses, or financial performance (past, present, or future); size, square footage, condition, or quality of the land and improvements; presence or absence of contaminating substances (PCB s, asbestos, mold, etc.); compliance with laws and regulations (local, state, and federal); or, financial condition or business prospects of any tenant (tenants intentions regarding continued occupancy, payment of rent, etc). A prospective purchaser must independently investigate and verify all of the information set forth in the Materials. A prospective purchaser is solely responsible for any and all costs and expenses incurred in reviewing the Materials and/or investigating and evaluating the Property. By receiving the Materials you are agreeing to the Confidentiality and Disclaimer set forth herein. Wells Fargo Bank i
Net Lease Investment Services Investment Offering & Highlights The Offering Approximately 0.955 acre of land, ground leased to WELLS FARGO BANK for 20 years (10 years remaining) beneath a 4,064± square foot freestanding bank branch with 5 drive-thru lanes. The improvements were built and are owned by the tenant. Price: $5,970,000 5.25% Cap Rate Lease / Tenant Wells Fargo Bank is ranked #30 on the Fortune 500 For the three quarters ending September 30, 2015 Wells Fargo Bank had revenues of $67.2 billion, net income of $17.2 billion and a total stockholders equity of $193 billion S&P rated A+ 20 year ground lease (10 years remaining) Rental increases of 10% every 5 years Real Estate / Area Strengths Outparcel to Target anchored shopping center Outstanding visibility and access from Cypress Creek Parkway (FM 1960) Average daily counts of 58,629 vehicles per day Major northwest Houston retail corridor Average household incomes of $92K within a 1-mile radius Walmart Wells Supercenter Fargo Bank ii
Wells Fargo Bank Ground Lease Net Lease Investment Services Table of Contents Disclaimer Investment Offering & Highlights i ii Investment Overview 1 Wells Fargo Bank 2 Site Plan 3 Aerials 4 Area Map 6 Houston, Texas 7 Economy 9 Colleges and Universities 9 Transportation 9 Demographics 10 Andrew Bogardus +1 415 677 0421 andy.bogardus@cushwake.com CA LIC #00913825 Christopher Sheldon +1 415 677 0441 chris.sheldon@cushwake.com CA LIC #01806345 Christina Campanella +1 415 677 0456 christina.campanella@cushwake.com NY LIC #10401243503 John Nicholson, SIOR +1 713 345 1430 john.nicholson@cushwake.com TX LIC #487559 Wells Fargo Bank iii
Net Lease Investment Services Investment Overview Location 6907 Cypress Parkway (FM 1960), Houston, Texas Part of the Target anchored Champions Shopping Center and in close proximity to the Willowbrook Mall. Lot Size Approximately 0.955 acre 41,622± square feet Only the land is for sale. Improvements Completed in April 2006, a 4,064± square foot freestanding WELLS FARGO BANK branch with 5 drive-thru lanes and ample onsite parking. The improvements were built and are owned by the tenant. The improvements are not for sale. Ground Lease Ground leased to WELLS FARGO BANK, for 20 years from April 2006 until April 2026 (10 years remaining). The current annual rent of $286,000 increases by 10% to $314,600 in April 2016 and again by 10% in April 2021. The lease is net with the tenant responsible for taxes, insurance and all maintenance including roof and structure. The landlord is responsible to carry $2 million of landlord liability insurance; over and above what the tenant covers. There are three 5-year renewal options with 10% rental increases each option period. Annual Rent Investment Years Annual Rent Price: $5,970,000 5.25% Cap Rate Possible Financing The property may be purchased free and clear of permanent financing, or a possible lender will loan $3,000,000 at approximately 4% interest with a 25-year amortization schedule and a 10-year due date. Annual payments will be approximately $190,021. Cash Flow Analysis (Landlord Insurance) Annual Net Income Return Current - 10 $286,000 - - - 11-15 $314,600 ($1,200) $313,400 5.25% 16-20 $346,060 ($1,200) $344,860 5.78% 21-25 (Option 1) $380,666 ($1,200) $379,466 6.36% 26-30 (Option 2) $418,733 ($1,200) $417,533 6.99% 31-35 (Option 3) $460,606 ($1,200) $459,406 7.70% Years 1-5 Years 6-10 Price : $5,970,000 Net Income: $313,400 $344,860 Loan: $3,000,000 Debt Service: $190,021 $190,021 Cash Required: $2,970,000 Cash Flow: $123,379 $154,839 Cash on Cash Return: 4.15% 5.21% Wells Fargo Bank 1
Net Lease Investment Services Wells Fargo Bank The tenant, WELLS FARGO BANK ( WFB ), a 100%-owned subsidiary of WELLS FARGO & CO. (NYSE: WFC), provides personal and commercial banking services. Wells Fargo & Co. is headquartered in San Francisco, California. Wells Fargo & Co. is a diversified financial services company with operations around the world. In late 2008 Wells Fargo & Co. bought Wachovia Bank, which increased its assets to above $1 trillion. For a time, Wachovia Bank operated as a legally separate entity from Wells Fargo Bank. Both were wholly-owned subsidiaries of WFB. Then, in March 2010, Wachovia Bank was merged into Wells Fargo Bank (see lease assignment paragraph below). WELLS FARGO BANK HAS AN A+ RATING FROM STANDARD & POOR S. In December, 2009, the tenant repaid, with the government s permission, its TARP funds, so it is no longer subject to the same level of government scrutiny. For more information, visit www.wellsfargo.com. LEASE ASSIGNMENT This was originally a Wachovia branch. With the merger of Wachovia Bank into Wells Fargo Bank in March 2010, this is now a true Wells Fargo lease. The paperwork documenting this, from Wells Fargo and from the U.S. Comptroller of the Currency, is available on the internet. Wachovia Bank no longer legally exists. For the three quarters ended September 30, 2015, revenues of the tenant were $67.2 billion, with a net income of $17.2 billion and stockholder s equity of $193 billion. Wells Fargo Bank 2
Site Plan CYPRESS CREEK ROAD (FM 1960) Drive Thru ATM Wells Fargo Bank 3
Site Location This Wells Fargo Bank branch is an outparcel to the Target anchored StoneBridge at Champions Shopping Center, on highly traveled Cypress Creek Parkway (FM1960), just east of Cutten Road, in northwest Houston. Traffic counts on FM 1960 is over 100,000 cars per day. The site has excellent access and visibility, just minutes from I -45, Sam Houston Parkway and SH249. (FUTURE) CUTTEN ROAD National tenants in the area include Wal-Mart Supercenter, Sam s Club, Costco, Best Buy, Sports Authority Burlington Coat Factory, PetSmart, Pier One Imports, Ashley Furniture, REI, and Office Depot, to name a few. CYPRESS CREEK PARKWAY (FM 1960) 58,629 CARS PER DAY S Wells Fargo Bank 4
Site Location (cont.) CYPRESS CREEK PARKWAY The property is situated amongst a high concentration of residential neighborhoods that are in the immediate area. Located on a high traffic retail corridor with numerous restaurants and entertainment venues, the site is one mile from Methodist Willowbrook Hospital and 12 miles from George Bush Intercontinental Airport. METHODIST WILLOWBROOK HOSPITAL COMMONS AT WILLOWBROOK Adjacent to the subject property is Willowbrook Mall, a 1,390,000 square foot regional shopping mall with over 160 retail stores. Anchor tenants include Macy s, Dillard s, JCPenney, and Sears. WILLOW CHASE FASHION CENTER 249 TOMBALL PARKWAY WILLOWBROOK MALL Across from Willowbrook Mall is the Commons at Willowbrook, a 458,030 sf power center anchored by national retailers Academy Sports, Michael s, Bed Bath Beyond, Marshall s, Ross, and OfficeMax. This trade area is a major retail corridor of the northwest Houston. It targets 954,920 residents in the northwestern Greater Houston region, which is projected to increase to 1,104,755 residents within 5 years. MILES ROAD N GESSNER ROAD WILLOWBROOK PLAZA CUTTEN ROAD N Wells Fargo Bank 5
Area Map GEORGE BUSH INTERCONTINENTAL AIRPORT (IAH) N Wells Fargo Bank 6
Houston, Texas Houston is the fourth most populous city in the United, and the most populous city in the U.S. state of Texas. According to the 2010 U.S. Census, the city had a population of over 2.1 million people. Houston is the seat of Harris County and the economic center of Houston The Woodlands-Sugar Land, the fifthlargest metropolitan area in the U.S. with over 6 million people. N Wells Fargo Bank 7
Houston, Texas (cont.) Rated as a global city, Houston s economy has a broad industrial base in energy, manufacturing, aeronautics, and transportation. It is also leading in health care sectors and building oilfield equipment. The Port of Houston ranks first in the United States in international waterborne tonnage handled and second in total cargo tonnage handled. It is home to many cultural institutions and exhibits, which attract more than 7 million visitors a year to the Museum District. Houston has an active visual and performing arts scene in the Theater District and offers year-round resident companies in all major performing arts. Net Lease Investment Services Downtown Houston Wells Fargo Bank 8
Net Lease Investment Services Houston, Texas (cont.) Economy Houston is recognized worldwide for its energy industry particularly for oil and natural gas as well as for biomedical research and aeronautics. Renewable energy sources wind and solar are also growing economic bases in Houston. The ship channel is also a large part of Houston s economic base. The Houston area is the top U.S. market for exports, surpassing New York City in 2013, according to data released by the U.S. Department of Commerce s International Trade Administration. In 2012 the Houston-Sugar Land-Baytown area recorded $110.3 billion in merchandise exports. Petroleum products, chemicals, and oil and gas extraction equipment accounted for approximately two-thirds of the metropolitans area s exports last year. The top three destinations for exports were Mexico, Canada, and Brazil. The Houston area is a leading center for building oilfield equipment. Much of Houston s success as a petrochemical complex is due to its busy ship channel, the Port of Houston. The port ranks first in the United States in international commerce, and is the tenth-largest port in the world. The Houston Sugar Land Baytown MSA s gross domestic product (GDP) in 2010 was $385 billion, larger than Austria s, Argentina s or South Africa s GDP. Only 21 countries other than the United States have a gross domestic product exceeding Houston s regional gross area product. Mining, which in Houston consists almost entirely of exploration and production of oil and gas, accounts for 26.3% of Houston s GAP, up sharply in response to high energy prices and a decreased worldwide surplus of oil production capacity; followed by engineering services, health services, and manufacturing. Colleges and Universities Four separate and distinct state universities are located in Houston. The University of Houston is a nationally recognized Tier One research university, and is the flagship institution of the University of Houston System. The third-largest university in Texas, the University of Houston has nearly 40,000 students on its 667 acre campus in southeast Houston. Several private institutions of higher learning are located within the city. Rice, with a total enrollment of slightly more than 6,000 students, is widely recognized as one of the top twenty universities in the nation, and has a number of distinguished graduate programs and research institutes such as the James A. Baker Institute for Public Policy. The university s undergraduates are among the most select in the nation. Transportation Highways Houston is surrounded by a hub-and-spoke freeway structure serviced by multiple loops. Interstate 610 (I-610) encircles downtown Houston, the medical center, and many core neighborhoods. Interstates 10 (I-10) and 45 (I-45) bisect Houston and provides the city with access to San Antonio to the west and New Orleans to the east via I-10 and Galveston to the south and Dallas/Fort Worth to the north via I-45. Rail The Metropolitan Transit Authority of Harris County (METRO) provides public transportation in the form of buses, light rail, and lift vans. Amtrak, the national passenger rail system, provides service three times a week to Houston via the Sunset Limited (Los Angeles New Orleans), which stops at a train station on the north side of the downtown area. Cycling Houston has the largest number of bike commuters in Texas with over 160 miles of dedicated bikeways. A new Bicycle sharing system known as Houston B-Cycle currently operates 29 different stations in downtown and neighboring areas. Air Houston is served by three airports: George Bush Intercontinental Airport (IAH) is the primary airport serving the Greater Houston metropolitan area, located 23 miles north of downtown Houston. IAH provides nonstop service to 116 domestic and 70 international destinations and has over 700 daily departures. William P. Hobby Airport (HOU) operates primarily small to mediumhaul domestic flights. Ellington Airport (EFD), a former U.S. Air Force base, is used by the military, government, NASA, and general aviation sectors. Wells Fargo Bank 9
Net Lease Investment Services Houston, Texas (cont.) Demographics 2015 Summary 1 mile 3 miles 5 miles Population 8,651 97,90 291,013 Households 4,317 37,093 100,382 Families 2,257 24,727 73,461 Average Household Size 2.00 2.64 2.89 Owner Occupied Housing Units 1,641 20,311 61,898 Renter Occupied Housing Units 2,676 16,782 38,484 Median Age 37.7 35.2 34.4 Median Household Income $64,348 $67,857 $69,610 Average Household Income $92,949 $90,328 $90,442 Project 2020 Summary Population 9,408 105,466 313,010 Households 4,688 39,953 108,008 Families 2,438 26,503 78,680 Average Household Size 2.01 2.63 2.89 Owner Occupied Housing Units 1,743 21,558 65,638 Renter Occupied Housing Units 2,944 18,395 42,370 Median Age 37.3 35.6 35.0 Median Household Income $77,548 $79,169 $80,212 Average Household Income $103,853 $100,546 $101,382 Trends: 2015-2020 Annual Rate Population 1.69% 1.49% 1.47% Households 1.66% 1.50% 1.48% Families 1.55% 1.40% 1.38% Owner Households 1.21% 1.20% 1.18% Median Household Income 3.80% 3.13% 2.88% Walmart Wells Supercenter Fargo Bank 10