RITE AID. Investment Property Offering $2,522, Trade Street, Henderson, NC Offering Highlights

Transcription

1 Investment Property Offering $2,522,293 RITE AID 201 Trade Street, Henderson, NC Presented By: Kase Abusharkh 252 Abigail Circle Danville, CA (925) Offering Highlights New 20 Year Absolute Net Lease Zero Landlord Responsibilities Excellent Sales History S&P Rated B Credit 01/28/2009

2 Table of Contents 1 Financial Analysis Executive Summary Investment Information Rent Roll Summary 2 Additional Information

3 1. Financial Analysis

4 RITE AID Executive Summary 201 Trade Street Henderson, NC List Price $2,522,293 Price Per GLA $ Price per S.F. $ CAP 7.85 % GLA 14,735 Building S.F. 14,735 Percent Occupied % Rite Aid (NYSE: RAD) Cross Street No. Stories 1 Market Henderson Sub Market Henderson Building Class A Location Class A No. of Buildings 1 HVAC Yes Corner No No.Tenants 1 Property Descriptions Parking The asset is adequately parked. Traffic Counts Traffic counts are strong. Ingress/Egress Excellent Ingress and egress from Cooley Street. Major Tenants Rite Aid (NYSE: RAD) is a retail pharmacy chain, operating over 5,000 stores in 31 states and the District of Columbia. Rite Aid is the largest drugstore chain on the East Coast and the third largest drugstore chain in the U.S. The company is publicly traded on the New York Stock Exchange under the ticker RAD. Rite Aid began in 1962 as a single store opened in Scranton, Pennsylvania called Thrifty Discount Center. After several years of growth, Rite Aid adopted its current name and debuted as a public company in Rite Aid is headquartered in Camp Hill, a suburb of Harrisburg, Pennsylvania. Rite Aid reported total sales of USD $16.5 billion in fiscal As of 2005, its market capitalization was about $2.08 billion. Rite Aid is a Fortune 500 company. Rite Aid has a Standard & Poor s Rating B. Area Henderson is a city in Vance County, North Carolina, United States. The population was 16,095 at the 2000 census. It is the county seat of Vance County[3]. Property This offering is the rare opportunity for an investor to acquire an absolute net leased Rite Aid asset with a new 20 year lease. The lease term is 20 years with a 10% bump every 10 years. The lease is net and provides for zero landlord responsibilities. The lease provides for eight five year options.

5 Investment Information RITE AID 201 Trade Street Henderson, NC Listing Price $2,522,293 Current CAP 7.85 % Year Ten CAP 8.63 % Price Per S.F. $ GLA 14,735 Building S.F. 14,735 Percent Occupied % Estimated Annualized Operating Data Current Year Ten Net Operating Income $198,000 $217,800 Highlights New 20 Year Absolute Net Lease Zero Landlord Responsibilities Excellent Sales History S&P Rated B Credit

6 Rent Roll Summary Space Number Tenant Name Start Date End Date Occupied S.F. Vacant S.F. Annual Rent S.F. Occupied Rent Vacant Rent % of Total Escalations / Options / Comments 1 Rite Aid 5/13/2008 6/1/ ,735 $13.44 $198,000 $ % 10% increases every 10 years. Eight 5 year options to renew. Total 14,735 $198,000 $ % Potential Annual Income $198,000 Total S.F. 14,735 Avg. Annual Per S.F. $13.44 S.F. Vacancy (%) Rent Vacancy (%)

7 2. Additional Information

8 Actual Site Photo

9 Aerial Photo

10 Location Map

11 Property Overview Criteria Location Roadway Visibility/Signage Access Physical Condition (Interior) Physical Condition (Exterior and parking lot) Local RE Environment Position in Market / Contiguous Properties Alternate Uses Comment The property is located on a free-standing parcel at the corner of Trade St. and Dabney Rd., just north of Interstate 85 and south of Rt Dabney Rd. is a four-lane, highly traveled commercial thoroughfare with center turning lanes. Trade St. is a twolane secondary roadway. The property has one pylon sign located on Dabney Rd. that is highly visible when traveling both north and south. There are three separate building-mounted signs: one on the north side of the building, one on the south side of the building and one on the west side of the building. The property has two points of ingress/egress from Trade St. Trade St. can also be accessed from Rt. 158 via a new extension of Trade St. to the east of the subject property. The interior of the building shows well. It is clean and appears to be well maintained. The facility offers a onehour photo, a food mart and a pharmacy drive-thru. The property appeared to be recently built and well maintained. Overall the parking lot appeared in good condition. The property has a drive-thru. Landscaping appeared to be well maintained. The local real estate market services the greater community and is stable and growing. New speculative development is occurring directly east of the subject site, while a new Lowe s and Staples are situated just beyond Rt. 158 to the north of the subject site. The real estate in the market can be categorized as first generation and is predominantly retail, although some industrial/flex properties were observed to the northeast. Some of the larger retailers in the immediate market include: Sears, JC Penney, Wal-Mart, Ashley Furniture, Lowe s and Staples. The property is adequately situated within the immediate market. Contiguous properties include: North: Lowe s and Staples; East: Chick-Fil-A, Payless Shoes, Bo Jangles, Wendy s, Sonic Burger; Southeast: (south of I-85) a Family Dollar, Sherwin Williams, Blockbuster, Food Lion, BP gas station, KFC and a McDonalds; South: a Shell gas station, Taco Bell, Ashley Furniture, Holiday Inn, Go-Cart racing, Pizza Hut, Golden Corral and a new seafood restaurant; West: (north of Rt. 158) are two separate apartment complexes, followed by Jehovah s Witnesses. South of Rt. 158 is a Ford Dealership, a Piano & Organ store, a small retail strip center, followed by the Henderson Square Mall. Retail bank, restaurant.

12 Tenant Overview Rite Aid (NYSE: RAD) is a United States retailer and pharmacy chain, operating over 5,000 stores in 31 states and the District of Columbia. Rite Aid is the largest drugstore chain on the East Coast and the third largest drugstore chain in the U.S. The company is publicly traded on the New York Stock Exchange under the ticker RAD. Rite Aid began in 1962 as a single store opened in Scranton, Pennsylvania called Thrif D Discount Center. After several years of growth, Rite Aid adopted its current name and debuted as a public company in Rite Aid is headquartered in Camp Hill, a suburb of Harrisburg, Pennsylvania. Rite Aid reported total sales of USD $16.5 billion in fiscal As of 2005, its market capitalization was about $2 billion. Rite Aid is a Fortune 500 company. The first store opened in September Through acquisitions and new stores, Rite Aid quickly expanded into 5 northeast states by The chain was officially named Rite Aid Corporation in 1968 and made its debut on the American Stock Exchange. It moved to the New York Stock Exchange in Just ten years after its first store opened, Rite Aid operated 267 locations in 10 states. It was named the third largest drugstore in the United States by 1981; shortly thereafter, 1983 marked a sales milestone of $1 billion. A 420-store acquisition along the east coast expanded Rite Aid's holdings beyond 2,000 locations. Among the companies acquired was Baltimore, Maryland's Read's Drug Store. Rite Aid acquired twenty-four Hooks Drug stores from Revco in 1994, selling nine of those stores to Perry Drug Stores, a Michigan-based pharmacy chain. One year later, the 224-store Perry chain itself was acquired by Rite Aid. The 1,000-store West Coast chain Thrifty PayLess was later acquired in The acquisition of Thrifty PayLess included the Northwest-based Bi-Mart membership discount stores, which was sold off in Acquisitions of Harco, Inc. and K & B Inc. brought Rite Aid into the Gulf Coast area. General Nutrition Companies (GNC) and Rite Aid formed a partnership in January 1999, bringing GNC mini-stores within the Rite Aid pharmacies. A partnership with drugstore.com in June 1999 allowed customers of Rite Aid to place medical prescription orders online for same-day, in-store pickup. Beginning in March 2005, Rite Aid introduced Living More, a seniors' loyalty program; offering 10% off of prescription drugs purchased with cash, generic products, as well as other items. Additional benefits also include discounts on certain days of the week, as well as unadvertised sales on merchandise. This program is very similar to the former Revco program which was called "Senior Shoppers"; Rite Aid attempted to purchase Revco in This might be attributed to the fact that Revco's former Vice President of Marketing, James Mastrian, now holds the same position at Rite Aid.

13 Early in 2005, the UAW announced that its members' prescriptions would be filled through mail order. This decision by the union disproportionately affected Rite Aid as it has predominant market strength where the UAW has its highest union density nationally. In July 2005, Rite Aid completed its acquisition of Shelley's Pharmacy, a chain pharmacy in Philadelphia. On August 23, 2006, the Wall Street Journal announced that Rite Aid would be buying the Eckerd Pharmacy and Brooks Pharmacy chains (Brooks Eckerd Pharmacy) from the Quebec-based Jean Coutu Group for US$3.4 billion, and merging the two chains into one dominant pharmacy system. The company's shareholders overwhelmingly approved the merger on January 18, 2007.[2] After some store closures and the conversion of the two chains to Rite Aid is complete, the deal will make Rite Aid the dominating drug store retailer in the Eastern U.S., and secures its place as the third largest drug retailer nationwide. Similar to what CVS has gone through in Chicagoland after its purchase of Albertson's drug store chains, the deal has left Rite Aid with some locations in close proximity to each other. (Only 23 store locations nationally were sold off to Walgreens, The Medicine Shoppe, or independent owners in order to meet federal regulations.) In many situations, especially Pennsylvania where both chains were dominant and had roots in those states (Rite Aid originated in Scranton, while Eckerd has roots in Western Pennsylvania via Erie for itself and Pittsburgh for converted Thrift Drug locations), there are now two Rite Aids as close as right next door to each other. Rite Aid had sold some locations to J.C. Penney's Thrift Drug chain in the mid-1990s shortly before J.C. Penney's acquisition of Eckerd, and had also sold all of their Massachusetts stores to Brooks in 1995, bringing some existing Eckerds and Brooks that were once Rite Aids full circle. Because Eckerd was previously owned by J.C. Penney, Eckerd stores accepted J.C. Penney charge cards. Since the merger, all Rite Aids accept J.C. Penney charge cards revenues were reported at $27 Billion For more information about Rite Aid, please visit their website at

14 Sales Comparables Comparable Transaction Analysis Sale Date Tenant Address City State CAP Sale Price NOI SF $/SF NOI/SF Rite Aid Comparables 26-Dec-08 Rite Aid 1080 Bald Hill Road Warwick RI 7.35% 2,780, ,330 10,800 $ $ Dec-08 Rite Aid 14 Cider Hill Road York ME 7.63% 6,050, ,615 14,680 $ $ Oct-08 Rite Aid Nutt Road and Kimberton Road Phoenixville PA 7.92% 5,550, ,560 11,180 $ $ Oct-08 Rite Aid 305 Highway 64 West Lexington NC 7.65% 2,840, ,260 14,335 $ $ Sep-08 Rite Aid 4001 Battleground Avenue Greensboro NC 7.44% 4,270, ,688 13,824 $ $ Jul-08 Rite Aid 685 N. Main Street Greensburg PA 7.60% 5,400, ,400 14,564 $ $ Jun-08 Rite Aid 302 W Main St. Hartford MI 7.87% 1,570, ,559 10,167 $ $ Jun-08 Rite Aid 8 Gayle Drive Berkeley Springs WV 7.75% 1,570, ,675 11,348 $ $ Mar-08 Rite Aid 325 S. Main Street Burgettstown PA 7.85% 1,652, ,682 11,005 $ $ Feb-08 Rite Aid 335 Main Street Greenville PA 7.23% 4,400, ,120 11,157 $ $ Jan-08 Rite Aid 1470 Tittabawassee Road Kochville Township MI 7.16% 3,850, ,660 14,564 $ $ Jan-08 Rite Aid 5 East Main Street Nanticoke PA 7.64% 3,225, ,390 11,060 $ $22.28 Mean 7.59% $3,596,417 $272,162 12,390 $ $21.70 High 7.92% 6,050, ,615 14,680 $ $39.32 Low 7.16% 1,570, ,675 10,167 $ $10.72 The information listed above has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness