extremely rare for walgreens€¦ · walgreens pharmacy #11197 ann arbor, michigan • ~18 year nnn...

Walgreens Pharmacy #11197 Ann Arbor, Michigan

• ~18 Year NNN with extremely rare rent increase in primary term (3 years from now)

• Rare rental increase at every 5 year option period

• Just two miles from University of Michigan and Michigan Stadium

• Non-recourseloangenerates7%returnoncashwith$4.9MMcashdown($346,774 net annual cash flow)

• 50,000 cars per day at intersection

• Well positioned in major retail corridor

• True NNN lease with no management responsibilities

• Walgreens corporate, investment grade credit guarantees the rent

DeerfieldPartnersJohn GiordaniArt Griffith(888) [email protected]

$10,800,000

5.85%Cap Rate

Rent Increases!Extremely Rare for Walgreens


DeerfieldPartnersJohn Giordani • Art Griffith(888) 258-7605 • [email protected]

This is a rare opportunity for an investor to acquire a Walgreens drugstore property with rent increases scheduled in the lease.While99outof100Walgreens leasesareflat for the lifeof the lease, thislease has rent increases providing for appreciation of future value. See below for the scheduled rent increases.

Investment SummaryPrice $10,800,000

CAP Rate 5.85%Avg. NNN Rent $631,656

Years Guaranteed ~ 18 years

Demographic Snapshot

Residents Average Income

1 Mile Radius 12,631 $92,168

3 Mile Radius 85,707 $89,258

5 Mile Radius 146,562 $96,831

Site Info & Neighboring RetailersThis Walgreens is located at the signalized intersection of StadiumAvenue,JacksonAvenue,andSouthMapleRoad.The intersectionseesaveragedailytrafficof50,000vehicles.The site is only two miles from the University of Michigan campus andTheBigHouse,MichiganStadium.Theothercornersatthisintersection are occupied by two shopping centers Maple Village (240,000 square foot shopping center) and Westgate Center (180,000 square foot shopping center), as well as numerous localandregionalretailers.

Rent Schedule (Guaranteed Years)

Starts EndsYears

RemainAnnual

NNN RentPercentage

Increase10/1/2017 9/30/2018 18 $615,000 5.69%

10/1/2018 9/30/2019 17 $615,000

10/1/2019 9/30/2020 16 $615,000

10/1/2020 9/30/2021 15 $634,988 3.25%

10/1/2021 9/30/2022 14 $634,988

10/1/2022 9/30/2023 13 $634,988

10/1/2023 9/30/2024 12 $634,988

10/1/2024 9/30/2025 11 $634,988

10/1/2025 9/30/2026 10 $634,988

10/1/2026 9/30/2027 9 $634,988

10/1/2027 9/30/2028 8 $634,988

10/1/2028 9/30/2029 7 $634,988

10/1/2029 9/30/2030 6 $634,988

10/1/2030 9/30/2031 5 $634,988

10/1/2031 9/30/2032 4 $634,988

10/1/2032 9/30/2033 3 $634,988

10/1/2033 9/30/2034 2 $634,988

10/1/2034 9/30/2035 1 $634,988

18 Year Avg. Annual Rent $631,656

CAP on Average Rent 5.85%

Asking Price $10,800,000

CAP Rate on 2020 Rent 5.88%



Existing Loan Must Be Assumed

Non-Recourse CMBS Loan 10 Year Fixed Rate Loan 10 Years Interest Only Loan amount is $5.86M Rate is 4.816% Start date 3/14/2017 Loan due 3/13/2027 in amount of $5.86M

MetricsPurchase Price $10,800,000

Less Loan Amount ($5,860,000)

Cash Required $4,940,000

Avg Net Annual Cash Flow $346,774

Avg Cash on Cash 7.02%

Loan to Value 54%

Net Cash Flows to Buyer

YEAR START ENDANNUAL

RENT

ANNUAL DEBT

SERVICE

NET ANNUAL

CASH FLOWRETURN

ON CASH

1 10/1/2017 9/30/2018 $615,000 ($282,218) $332,782 6.74%

2 10/1/2018 9/30/2019 $615,000 ($282,218) $332,782 6.74%

3 10/1/2019 9/30/2020 $615,000 ($282,218) $332,782 6.74%

4 10/1/2020 9/30/2021 $634,988 ($282,218) $352,770 7.14%

5 10/1/2021 9/30/2022 $634,988 ($282,218) $352,770 7.14%

6 10/1/2022 9/30/2023 $634,988 ($282,218) $352,770 7.14%

7 10/1/2023 9/30/2024 $634,988 ($282,218) $352,770 7.14%

8 10/1/2024 9/30/2025 $634,988 ($282,218) $352,770 7.14%

9 10/1/2025 9/30/2026 $634,988 ($282,218) $352,770 7.14%

10 10/1/2026 3/13/2027 $634,988 ($282,218) $352,770 7.14%

Total Net Cash Flow = $3,467,740 7.02%

!1



About the Site & Neighboring RetailersThis Walgreens is located at the southeast corner of the signalized intersection of Stadium Avenue, Jackson Avenue,andSouthMapleRoad.Theintersectionseesaveragedailytrafficof50,000vehicles.ThesiteisonlytwomilesfromtheUniversityofMichigancampusandTheBigHouse,MichiganStadium.

The other corners at this intersection are occupied by two shopping centers Maple Village (240,000 square foot shopping center) and Westgate Center (180,000 square foot shopping center), as well as numerous localandregionalretailers.

Brixmor Property Group recently added three new anchor tenants to Maple Village shopping center across thestreetfromthissite.SteinMart,SierraTradingPostandHomeGoodsnowoccupy76,232squarefeetofspacepreviouslyoccupiedbyKmart.Allstoresarenowopenforbusinessandhaveincreasedtrafficinthisretailcorridor,benefitingthisWalgreenssite.



Complete Rent Schedule With Option Periods

Starts Ends YearsAnnual

NNN RentPercent Increase Return

Today - 2020 10/1/2017 9/30/2020 3 $615,000

2020 - 2035 10/1/2020 9/30/2035 15 $634,988 3.25% 5.88%

Option 1 10/1/2035 9/30/2040 5 $644,830 1.55% 5.97%

Option 2 10/1/2040 9/30/2045 5 $654,825 1.55% 6.06%

Option 3 10/1/2045 9/30/2050 5 $664,974 1.55% 6.16%

Option 4 10/1/2050 9/30/2055 5 $675,282 1.55% 6.25%

Option 5 10/1/2055 9/30/2060 5 $685,748 1.55% 6.35%

Option 6 10/1/2060 9/30/2065 5 $696,378 1.55% 6.45%

Option 7 10/1/2065 9/30/2070 5 $707,171 1.55% 6.55%

Option 8 10/1/2070 9/30/2075 5 $718,133 1.55% 6.65%

Option 9 10/1/2075 9/30/2080 5 $729,264 1.55% 6.75%

Option 10 10/1/2080 9/30/2085 5 $740,567 1.55% 6.86%

Total NNN Rental Income $45,955,668

Average Annual Rent $675,819

Asking Price $10,800,000

NNN Rent GrowthToday - 2020

2020 - 2035

Option 1

Option 2

Option 3

Option 4

Option 5

Option 6

Option 7

Option 8

Option 9

Option 10 $740,567$729,264

$718,133

$707,171$696,378

$685,748

$675,282$664,974

$654,825

$644,830$634,988

$615,000



Property Details and Lease SummaryAddress 2355 Jackson Avenue, Ann Arbor, MI 48103

Year Built 2010Building Size 13,650 Square Feet

Lot Size 1.71acresTenant Walgreens (NASDAQ:WBA)

Rent Start Date September 3, 2010Lease End Date September 30, 2085

Options to Terminate Tenantmayterminateeveryfive(5)years,withsixmonthsnotice,afterthe300thmonth(September30,2035).



Regional Map / About Ann ArborAnnArboristhecountyseatofWashtenawCounty.ItisthesixthlargestcityinMichigan.TheAnnArborMetropolitan Statistical Area (MSA) includes all of Washtenaw County, which had a population of 344,791 asof2010.AnnArborishometotheUniversityofMichigan,oneoftheforemostre-searchuniversitiesin the United States. The university shapes Ann Arbor’s economy significantly as it employs about40,000workers, includingabout 12,000 in themedical center. Thecity’s economy is alsocenteredonhightechnology,withseveralcompaniesdrawntotheareabytheuniversity’sresearchanddevelopmentmoney,andbyitsgraduates.Hightech,healthservicesandbiotechnologyareothermajorcomponentsofthecity’seconomy;numerousmedicaloffices,laboratories,andassociatedcompaniesarelocatedinthecity.Automobilemanufacturers,suchasGeneralMotorsandVisteon,alsoemployresidents.TheAnnArborareaisthestate’srarejewel:asmall,friendlytownwithbig-citysophistication;aworld-classeducationalandhigh-techresearchcenternestledinaquintessentialcollegetown;aclose-knitcommunityofcharmingneighborhoodswitharichmixofcultures.



Site Plan



About Walgreens Boots AllianceWalgreensBootsAllianceisthefirstglobalpharmacy-led,healthandwellbeingenterpriseintheworld.Ourpurposeistohelppeopleacrosstheworldleadhealthierandhappierlives. Walgreens Boots Alliance was created through the combination of Walgreens and Alliance Boots inDecember2014.Thistransactionbroughttogethertwoleadingcompanieswithiconicbrands,complementary geographic footprints, shared values and a heritage of trusted healthcare services throughpharmaceuticalwholesalingandcommunitypharmacycare,datingbackmorethan100years.

The Company, with a presence in more than 25 countries, employs over 370,000 people and is the largestretailpharmacy,healthanddailylivingdestinationintheUSAandEurope.

TheCompany’ssize,scale,andexpertisewillhelpustoexpandthesupply,andaddresstherisingcostof,prescriptiondrugsintheUSAandworldwide.

Byleveragingtheseadvantagesandopportunities,aswellasthefullbenefitofourbestpracticesandexpertise,WalgreensBootsAlliancewillbepositionedtocreatesubstantialincrementalefficiency,synergyandgrowthopportunities.

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 wellnesschallenges.OurCompanyiswellpositionedtoexpandcustomerofferingsinexistingmarketsandbecomethehealthandwellbeingpartnerofchoiceinemergingmarkets.



Walgreens Boots Alliance -- Segment Structure

8

Walgreens Boots Alliance – Segment Structure

The largest retail pharmacy chain in Europe

A leading global pharmaceutical wholesaler

and distributor

A leading drugstore chain in the USA

The first global pharmacy-led, health and wellbeing enterprise in the world



Walgreens Boots Alliance -- Retail Pharmacy USA DivisionTheRetailPharmacyUSADivision’sprincipalretailpharmacybrandsareWalgreensandDuaneReade.Together,theyformthelargestdrugstorechainintheUSA.

As of August 31, 2016, this Division operated 8,175 retail drugstores in 50 states, the District of Columbia,PuertoRicoandtheUSVirginIslands.Approximately76%ofthepopulationoftheUSAliveswithinfivemilesofaWalgreens.

The company sells prescription and non-prescription drugs, as well as general merchandise, including householditems,convenienceandfreshfoods,personalcare,beautycare,photofinishingandcandy.They provide customers with convenient, omni-channel access to consumer goods and services, pharmacy,andhealthandwellnessservicesincommunitiesacrossAmerica.

Thecompany’swebsites,whichincludeWalgreens.comanddrugstore.com,receiveanaverageofapproximately60millionvisitspermonth.Integratedwithane-commerceplatform,theWalgreensmobileapplicationallowscustomerstorefillprescriptionsthroughscantechnology,receivetextmessagesalertingwhenarefillisdueandotherfront-endfunctionality,suchasphotoandshoppingfeatures.

Infiscal2016,prescriptiondrugsaccountedfor67percentofsales,whileretailproductswere33percent.Overall,WBAfilledapproximately740.1millionprescriptionsinfiscal2016.

2nd Quarter 2017 Financial Performance – Retail Pharmacy USA



Walgreens Drugstores Nationwide by State



Walgreens Income Statements Trailing 5 Years



Demographics - 1 Mile Radius

Demographic and Income Profile2355 Jackson Ave, Ann Arbor, Michigan, 48103 Prepared by EsriRing: 1 mile radius Latitude: 42.28049

Longitude: -83.77929

AreaStateUSA

Trends 2017-2022Trends 2017-2022

Ann

ual R

ate

(in

perc

ent) 2.5

2

1.5

1

0.5

0Population Households Families Owner HHs Median HH Income

20172022

Population by AgePopulation by Age

Perc

ent

16

14

12

10

8

6

4

2

00-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

2017 Household Income 2017 Household Income

<$15K8.8%

$15K - $24K7.7%

$25K - $34K7.6%

$35K - $49K11.8%

$50K - $74K18.7%

$75K - $99K12.8%

$100K - $149K16.1%

$150K - $199K8.7%

$200K+7.9%

2017 Population by Race2017 Population by Race

Perc

ent

70

60

50

40

30

20

10

0White Black Am. Ind. Asian Pacific Other Two+

2017 Percent Hispanic Origin: 5.7%

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2017 and 2022.

September 13, 2017

©2017 Esri Page 2 of 6



Demographics - 1 Mile RadiusDemographic and Income Profile2355 Jackson Ave, Ann Arbor, Michigan, 48103 Prepared by EsriRing: 1 mile radius Latitude: 42.28049


Summary Census 2010 2017 2022Population 12,147 12,631 12,996Households 5,615 5,814 5,973Families 2,840 2,891 2,948Average Household Size 2.16 2.17 2.17Owner Occupied Housing Units 3,312 3,327 3,410Renter Occupied Housing Units 2,303 2,486 2,563Median Age 36.8 38.3 39.0

Trends: 2017 - 2022 Annual Rate Area State NationalPopulation 0.57% 0.21% 0.83%Households 0.54% 0.23% 0.79%Families 0.39% 0.11% 0.71%Owner HHs 0.49% 0.22% 0.72%Median Household Income 2.86% 1.58% 2.12%

2017 2022 Households by Income Number Percent Number Percent

<$15,000 510 8.8% 478 8.0%$15,000 - $24,999 447 7.7% 401 6.7%$25,000 - $34,999 442 7.6% 382 6.4%$35,000 - $49,999 685 11.8% 596 10.0%$50,000 - $74,999 1,085 18.7% 1,036 17.3%$75,000 - $99,999 742 12.8% 798 13.4%$100,000 - $149,999 937 16.1% 1,107 18.5%$150,000 - $199,999 508 8.7% 610 10.2%$200,000+ 457 7.9% 563 9.4%

Median Household Income $67,079 $77,226Average Household Income $92,168 $106,139Per Capita Income $43,127 $49,591

Census 2010 2017 2022 Population by Age Number Percent Number Percent Number Percent

0 - 4 751 6.2% 697 5.5% 715 5.5%5 - 9 690 5.7% 704 5.6% 692 5.3%10 - 14 615 5.1% 661 5.2% 675 5.2%15 - 19 575 4.7% 596 4.7% 619 4.8%20 - 24 839 6.9% 834 6.6% 825 6.3%25 - 34 2,281 18.8% 2,168 17.2% 2,216 17.1%35 - 44 1,731 14.2% 1,815 14.4% 1,856 14.3%45 - 54 1,711 14.1% 1,609 12.7% 1,601 12.3%55 - 64 1,651 13.6% 1,700 13.5% 1,589 12.2%65 - 74 697 5.7% 1,175 9.3% 1,392 10.7%75 - 84 427 3.5% 452 3.6% 600 4.6%

85+ 180 1.5% 221 1.7% 216 1.7%Census 2010 2017 2022

Race and Ethnicity Number Percent Number Percent Number PercentWhite Alone 9,822 80.9% 9,998 79.2% 10,294 79.2%Black Alone 1,086 8.9% 1,122 8.9% 1,152 8.9%American Indian Alone 35 0.3% 38 0.3% 38 0.3%Asian Alone 542 4.5% 682 5.4% 698 5.4%Pacific Islander Alone 5 0.0% 5 0.0% 5 0.0%Some Other Race Alone 185 1.5% 223 1.8% 231 1.8%Two or More Races 472 3.9% 562 4.4% 577 4.4%

Hispanic Origin (Any Race) 573 4.7% 719 5.7% 741 5.7%Data Note: Income is expressed in current dollars.


September 13, 2017







AreaStateUSA

Trends 2017-2022Trends 2017-2022

Ann

ual R

ate

(in

perc

ent)

2.22

1.81.61.41.2

10.80.60.40.2


20172022


Perc

ent

242220181614121086420

0-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+


<$15K17.2%

$15K - $24K8.9%

$25K - $34K8.4%

$35K - $49K10.3%

$50K - $74K14.7%

$75K - $99K10.0%

$100K - $149K13.7%

$150K - $199K7.6%

$200K+9.2%


Perc

ent

70

60

50

40

30

20

10

0White Black Am. Ind. Asian Pacific Other Two+



September 13, 2017




Demographics - 3 Mile RadiusDemographic and Income Profile2355 Jackson Ave, Ann Arbor, Michigan, 48103 Prepared by EsriRing: 3 mile radius Latitude: 42.28049





<$15,000 5,843 17.2% 5,914 16.7%$15,000 - $24,999 3,023 8.9% 2,868 8.1%$25,000 - $34,999 2,863 8.4% 2,645 7.5%$35,000 - $49,999 3,513 10.3% 3,208 9.0%$50,000 - $74,999 4,998 14.7% 4,889 13.8%$75,000 - $99,999 3,405 10.0% 3,739 10.5%$100,000 - $149,999 4,668 13.7% 5,549 15.6%$150,000 - $199,999 2,590 7.6% 3,009 8.5%$200,000+ 3,126 9.2% 3,672 10.3%



0 - 4 2,955 3.7% 2,803 3.3% 2,933 3.3%5 - 9 3,028 3.8% 2,805 3.3% 2,776 3.1%10 - 14 3,027 3.8% 3,031 3.5% 2,880 3.2%15 - 19 9,880 12.4% 10,130 11.8% 10,262 11.5%20 - 24 18,599 23.3% 20,568 24.0% 20,697 23.2%25 - 34 12,995 16.3% 14,208 16.6% 15,568 17.4%35 - 44 7,615 9.5% 7,432 8.7% 7,891 8.8%45 - 54 7,934 9.9% 7,615 8.9% 7,265 8.1%55 - 64 7,285 9.1% 7,946 9.3% 7,881 8.8%65 - 74 3,471 4.3% 5,563 6.5% 6,675 7.5%75 - 84 2,133 2.7% 2,327 2.7% 3,145 3.5%

85+ 1,015 1.3% 1,280 1.5% 1,313 1.5%Census 2010 2017 2022

Race and Ethnicity Number Percent Number Percent Number PercentWhite Alone 62,407 78.1% 64,510 75.3% 67,196 75.3%Black Alone 4,880 6.1% 5,094 5.9% 5,281 5.9%American Indian Alone 214 0.3% 240 0.3% 247 0.3%Asian Alone 8,872 11.1% 11,553 13.5% 12,083 13.5%Pacific Islander Alone 25 0.0% 31 0.0% 31 0.0%Some Other Race Alone 866 1.1% 1,050 1.2% 1,091 1.2%Two or More Races 2,674 3.3% 3,229 3.8% 3,356 3.8%

Hispanic Origin (Any Race) 3,425 4.3% 4,365 5.1% 4,552 5.1%Data Note: Income is expressed in current dollars.


September 13, 2017







AreaStateUSA

Trends 2017-2022Trends 2017-2022

Ann

ual R

ate

(in

perc

ent)

2.22

1.81.61.41.2

10.80.60.40.2


20172022


Perc

ent

18

16

14

12

10

8

6

4

2

00-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+


<$15K14.2%

$15K - $24K8.4%

$25K - $34K8.4%

$35K - $49K10.8%

$50K - $74K15.1%

$75K - $99K10.0%

$100K - $149K14.4%

$150K - $199K8.0%

$200K+10.8%


Perc

ent

7065605550454035302520151050

White Black Am. Ind. Asian Pacific Other Two+



September 13, 2017










<$15,000 8,466 14.2% 8,562 13.7%$15,000 - $24,999 5,001 8.4% 4,765 7.7%$25,000 - $34,999 5,016 8.4% 4,595 7.4%$35,000 - $49,999 6,426 10.8% 5,913 9.5%$50,000 - $74,999 9,016 15.1% 8,887 14.3%$75,000 - $99,999 5,968 10.0% 6,554 10.5%$100,000 - $149,999 8,611 14.4% 10,046 16.1%$150,000 - $199,999 4,773 8.0% 5,485 8.8%$200,000+ 6,443 10.8% 7,472 12.0%



0 - 4 6,143 4.5% 5,828 4.0% 6,070 4.0%5 - 9 6,376 4.7% 5,931 4.0% 5,814 3.8%10 - 14 6,296 4.6% 6,339 4.3% 6,035 4.0%15 - 19 14,745 10.8% 15,152 10.3% 15,320 10.0%20 - 24 23,987 17.5% 26,618 18.2% 26,713 17.5%25 - 34 22,214 16.2% 23,713 16.2% 25,616 16.8%35 - 44 14,773 10.8% 14,714 10.0% 15,697 10.3%45 - 54 15,676 11.4% 14,936 10.2% 14,240 9.3%55 - 64 13,869 10.1% 15,499 10.6% 15,544 10.2%65 - 74 6,981 5.1% 10,831 7.4% 12,946 8.5%75 - 84 4,250 3.1% 4,720 3.2% 6,279 4.1%

85+ 1,747 1.3% 2,281 1.6% 2,420 1.6%Census 2010 2017 2022

Race and Ethnicity Number Percent Number Percent Number PercentWhite Alone 101,797 74.3% 104,510 71.3% 108,848 71.3%Black Alone 9,414 6.9% 9,779 6.7% 10,181 6.7%American Indian Alone 362 0.3% 401 0.3% 415 0.3%Asian Alone 19,206 14.0% 24,343 16.6% 25,405 16.6%Pacific Islander Alone 51 0.0% 58 0.0% 58 0.0%Some Other Race Alone 1,439 1.0% 1,737 1.2% 1,809 1.2%Two or More Races 4,790 3.5% 5,734 3.9% 5,975 3.9%

Hispanic Origin (Any Race) 5,688 4.2% 7,171 4.9% 7,486 4.9%Data Note: Income is expressed in current dollars.


September 13, 2017


extremely rare for walgreens€¦ · walgreens pharmacy #11197 ann arbor, michigan • ~18 year nnn...

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