offering memorandum aaron’s autozone€¦ · must take appropriate measures to verify all of the...

Subject Property

Offering Memorandum

Rifle, Colorado

AARON’S & AUTOZONE

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

CONFIDENTIALITY AND DISCLAIMER

NON-ENDORSEMENT NOTICE

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. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services© 2017. All rights reserved.

SUBJECT PROPERTY

Tenant Square Feet

Annual Rent

RentPSF

Lease Commence

Lease Expiration Term Option

PeriodsNext

IncreaseIncrease Amount

AutoZone 7,086 $75,997 $10.73 5/1/2013 4/30/2023 10 Years 4, 5-Year Options 5/1/2023 $83,597

Aaron’s 8,760 $120,000 $13.70 COE 10 Years from COE 10 Years 4, 5-Year

Options Year 11 $132,000

Totals 15,846 $195,997

AutoZone shall have the right to terminate the lease after the fifth lease year expires by furnishing landlord written notice to such election in the event AutoZone’s gross sales do not exceed $1.4 million during the fifth year of the lease. In the event AutoZone elects to terminate, they must exercise said termination right within six months following expiration of the fifth year of the lease. In the event AutoZone exercises said option to terminate, they shall pay to landlord a six month rent penalty. In the event AutoZone terminates the lease, Seller will agree to guarantee the rent through April 30, 2023.


FINANCIAL OVERVIEW

Aaron’s | AutoZone710 Wapiti Avenue, Rifle, Colorado 81650

Price: $2,703,400Cap Rate: 7.25%Rentable Square Feet: 15,846Net Operating Income: $195,997*Price/Square Foot: $170.60Land Area: 1.09 AcresYear Built: 2012

*NOI is based upon the rent increase from AutoZone in May, 2018

Aaron’s is a Sale-Leaseback with 10 Percent Rent Bumps in Each Renewal

Period


RENT SCHEDULES

Base Term Monthly Annual Rent PSF

Current-4/30/2018: $5,757 $69,089 $9.755/1/2018-4/30/2023: $6,333 $75,997 $10.73

Option Periods Monthly Annual Rent PSF

5/1/2023-4/30/2028: $6,966 $83,597 $11.805/1/2028-4/30/2033: $7,663 $91,957 $12.985/1/2033-4/30/2038: $8,429 $101,152 $14.275/1/2038-4/30/2043: $9,273 $111,268 $15.70

Base Term Monthly Annual Rent PSF

Years 1-10 from COE: $10,000 $120,000 $13.70

Option Periods Monthly Annual Rent PSF

Option 1, Years 11-15: $11,000 $132,000 $15.07Option 2, Years 16-20: $12,100 $145,200 $16.58Option 3, Years 21-25: $13,310 $159,720 $18.23Option 4, Years 26-30: $14,641 $175,692 $20.06

*Current NOI is based upon the rent increase from AutoZone in May, 2018

Aaron’s has 10% Rent Bumps in

Each Renewal Period

AutoZone has 10% Rent Bumps Every Five Years

in Base Term and Option Periods

INVESTMENT HIGHLIGHTSInvestment Highlights• 15,846-Square Foot Multi-Tenant Property, 100 Percent Occupied by

Two National Tenants• Aaron’s is a Franchise Guarantee, Sale-Leaseback and Lease will Run 10

Years from Close of Escrow• Both Tenants have Four, Five-Year Renewal Options• Aaron’s has 10 Percent Rent Bumps in Each Renewal Period• AutoZone has 10 Percent Bumps Every Five Years in Base Term and

Option Periods

Location Highlights• Conveniently Located off Interstate 70, the Major Roadway Which Runs

Through the Area and Connects Rifle to Denver, the Capital of Colorado• Surrounding National Retailers Including Walmart Supercenter,

Mattress Firm, Rent-A-Center, McDonald’s, Sonic Drive-in, Starbucks, Taco Bell and Many More

• Over 60,000 Residents in Growing Trade Area; Retail Hub Serving Several Surrounding Cities

• Across from Grand River Hospital, Just Underwent $18 Million Expansion• Three Miles from Colorado Mountain College, More Than 6,000 Students• Four Miles from Garfield County Regional Airport• Colorado is in the Top Ten Fastest Growing States

Tenant Highlights• AutoZone is the Leading Retailer and a Leading Distributor of Automotive

Replacement Parts and Accessories in the United States• AutoZone has 5,226 Stores in 50 States Plus the District of Columbia and

Puerto Rico, and 458 Stores in Mexico• Smith Group, Aaron’s Franchisee, Operates 10 Aaron’s Locations in

Four States, as well as Four Tire Stores• Aaron’s is North America’s Leader in the Sales and Lease Ownership of

Household Necessities • Aaron’s has More Than 1,860 Company-Operated and Franchised Stores

in 47 States and Canada


TENANT SUMMARY


AutoZone sells auto and light truck parts, chemicals and accessories through 5,226 AutoZone stores in 50 states plus the District of Columbia and Puerto Rico in the U.S., and 458 stores in Mexico, 25 IMC branches and eight stores in Brazil for a total count of 5,717.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each AutoZone store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, and public sector accounts. IMC branches carry an extensive line of original equipment quality import replacement parts.

Additionally, AutoZone sells automotive hard parts, maintenance items, accessories and non-automotive products through their website, and accessories and performance parts through www.autoanything.com, and their commercial customers can make purchases through www.autozonepro.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone reported net sales of $3.5 billion for its fourth quarter ended August 26, 2017, an increase of 3.3 percent from the fourth quarter of fiscal 2016. Domestic same store sales, or sales for stores open at least one year, increased 1.0 percent for the quarter.

Net income for the quarter increased 1.7 percent over the same period last year to $433.9 million, while diluted earnings per share increased 6.8 percent to $15.27 per share from $14.30 per share in the year-ago quarter. As previously reported, the Company adopted a new accounting standard on August 28, 2016, related to stock option exercises. Excluding the $0.09 net benefit for the quarter from the adoption of this new standard, adjusted EPS increased by 6.1 percent to $15.18 per share.

For the fiscal year ended August 26, 2017, sales were $10.9 billion, an increase of 2.4 percent from the prior year, while domestic same store sales were up 0.5 percent for the year. Operating profit increased 1.0 percent on an operating margin of 19.1 percent. For fiscal 2017, net income increased 3.2 percent to $1.3 billion.

Smith Group is based out of Cortez, Colorado. The company operates 10 Aaron’s locations in four states in the intermountain west, where they also operate four tire stores as well. They opened their first location 12 years ago and have enjoyed the strength and success of the Aaron’s system that has fueled the company’s growth.

About Smith Group

TENANT SUMMARY

Aaron’s (NYSE: AAN), a leading omnichannel provider of lease-purchase solutions was founded in 1955, has been publicly traded since 1982, and owns the Aarons, Progressive Leasing and HELPcard brands.

Aaron’s engages in the sales and lease ownership and specialty retailing of furniture, consumer electronics, home appliances and accessories through its more than 1,860 company-operated and franchised stores in 47 states and Canada as well as its e-commerce platform Aarons.com. Progressive Leasing, a virtual lease-to-own company, provides lease-purchase solutions through approximately 19,000 retail locations in 46 states. Dent-A-Med, Inc., d/b/a the HELPcard, provides a variety of second-look credit products that are originated through a federally insured bank.

Aaron’s is the leader in sales and lease ownership of household necessities in North America - brand name furniture, appliances, electronics and computers. Compare our business model and results to any other franchise system:• Ranked 21 in Entrepreneur magazine’s Franchise 500 out of

thousands of franchise concepts. Ranked number three by Forbes among Top 20 “Franchise for the Buck”

• More than 2,000 showrooms across the U.S. and Canada• 57 years of consistent, reliable financial results• A New York Stock Exchange traded company—AAN


TENANT SUMMARY

Spencer Smith may be quiet and unassuming but don’t let that fool you. On the inside he’s a savvy business operator who has been successful with multi-units and multi-brands and has earned his success by following “the program” and the Golden Rule. The 2013 winner of Multi-Unit Franchisee Magazine’s Role Model MVP Award, he says following the program is a simple, yet powerful concept.

“Years ago, I read an article about franchising and some of the mistakes people make,” says Smith. “I gleaned from that article that when you buy into a franchise, you’re buying into doing business that particular way. If you have to be a maverick and reinvent the wheel all the time, both you and the franchisor will be frustrated. When I look at a potential franchise, I ask myself: ‘Am I fully on board with doing business the way they’re doing business?’ If not, I keep looking.”

Smith, a staunch family man who grew up working in his father’s tire store and on the family farm, disputes the notion that to diligently follow the franchise system is to work without innovation or entrepreneurship.

Pathway To Success: Spencer Smith follows the System and Gets Results

“There’s a difference between being entrepreneurial and being someone who wants to be very creative. For me, I was looking for the best system out there, one that was financially viable and would grow rapidly and create opportunities for others. That was my original litmus test,” he says, and he found that at Aaron’s. “At the end of the day, I wanted to create not just minimum wage jobs, but careers for our associates.”

His innovation has taken the form of several employee reward and compensation programs. “We offer so many competitions and reward programs that it takes an associate a full six months on the job before they realize just how many competitions there are at the company and corporate level,” he says. “It’s almost impossible for them not to win something.”

Also part of Smith’s litmus test was finding a franchise with units that were closed on Sundays. “That was important to me personally for religious reasons. It is fully up to associates if they want to take advantage of that, but I wanted to make the opportunity available.”


60,000 RESIDENTS IN TRADE AREA

AERIAL


Burger KingMcDonald’s

25,000Daily

6,000+ STUDENTS

LOCAL & REGIONAL MAPS


LOCATION OVERVIEW


• Conveniently Located off Interstate 70, the Major Roadway Which Runs Through the Area and Connects Rifle to Denver, the Capital of Colorado

• Surrounding Retailers Including Walmart, Mattress Firm, Rent-A-Center, McDonald’s, Sonic Drive-in, Starbucks, Taco Bell and Many More

• Over 60,000 Residents in Growing Trade Area; Retail Hub Serving Several Surrounding Cities

• Across from Grand River Hospital, Just Underwent $18 Million Expansion

• Three Miles from Colorado Mountain College, with More Than 6,000 Students

• Four Miles from Garfield County Regional Airport• Colorado is in the Top Ten Fastest Growing States

Rifle, Colorado | Garfield CountyThe city of Rifle is located in Garfield County and is a regional center of the cattle ranching industry located along Interstate 70 and the Colorado River just east of the Roan Plateau, which dominates the western skyline of the town.

Colorado is in the top ten fastest growing states, with Rifle listed as 57 of 99 Gorgeous Places in Colorado and Rifle Gap State Park has been listed as number five in the top nine Colorado Summer Cool Downs. With beautiful scenery and tons of recreational opportunities in the area including hunting, fishing, camping, horseback riding, mountain climbing and biking, Rifle is a small but fast-growing community.

A major part of Colorado’s history and future is in oil shale, which is fine-grained sedimentary rock from which oil can be extracted. The state of Colorado contains about 1.3 million barrels of oil per acre on average. These are the richest deposits of oil shale in the United States, and probably the world.The Green River Formation is located throughout western Colorado, eastern Utah and southwestern Wyoming, with 80 percent of the recoverable oil shale in the Formation located in Colorado’s Piceance Basin, just north of Rifle. Most projections confirm that approximately 600-800 billion barrels of oil are recoverable from the shale in these three states. Therefore, these 784,000 acres potentially contain up to 640 billion barrels of oil.

Other commercially viable deposits of oil shale are located in the Sand Wash Basin of Moffat County in far Northwestern Colorado – not far from Rifle. Large international energy companies such as Shell, Chevron, Exxon-Mobil, Total (France), Enefit (Estonia), and Petrobras (Brazil) are working on various technologies to extract the resource in Colorado.

DEMOGRAPHICS

POPULATION 3 MILES 5 MILES 10 MILES2010 Population 11,090 12,121 17,7862016 Population 11,337 12,394 18,2252021 Population 12,364 13,497 19,9622016 Male Population 5,762 6,329 9,3112016 Female Population 5,576 6,065 8,9142016 Median Age 32.9 33.3 34.5

RACE & ETHNICITY 3 MILES 5 MILES 10 MILESAmerican Indian, Eskimo 1.2% 1.2% 1.1%Asian 0.5% 0.5% 0.5%Black 0.7% 0.8% 0.7%Hawaiian/Pacific Islander 0.1% 0.1% 0.1%White 80.4% 80.6% 81.9%Other 13.8% 13.6% 12.6%Multi-Race 3.2% 3.2% 3.1%Hispanic Ethnicity 30.8% 30.3% 28.7%Not of Hispanic Ethnicity 69.2% 69.7% 71.3%

HOUSEHOLDS 3 MILES 5 MILES 10 MILES2010 Households 3,810 4,170 6,1832016 Households 3,895 4,268 6,3492021 Households 4,261 4,663 6,978

HOUSEHOLD INCOME 3 MILES 5 MILES 10 MILES2010 Avg Household Income $67,386 $68,825 $72,0502016 Avg Household Income $66,950 $68,550 $71,9222021 Avg Household Income $76,480 $78,205 $82,0742010 Med. Household Income $61,053 $61,713 $61,7912016 Med. Household Income $60,084 $61,036 $61,4122021 Med. Household Income $71,886 $72,725 $73,8482010 Per Capita Income $23,415 $23,998 $25,3042016 Per Capita Income $23,254 $23,904 $25,2982021 Per Capita Income $26,583 $27,290 $28,910


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The Wolfe Retail Group of Marcus & Millichap specializes in the sale of single-tenant properties and shopping centers and has successfully assisted clients in selling approximately 450 separate commercial properties with a market value exceeding $1.15 billion. Having closed sales in more than 40 states, our track record is evidence that we are one of the premier brokerage teams in the United States.

With our experience and background in various fields such as law and finance, we have proved to be invaluable to our clients, earning their trust and exceeding their expectations while best assisting them in their real estate transactions.

Marcus & Millichap (NYSE: MMI) has established itself as a leading and expanding investment real estate company with nearly 1,500 brokers in 78 markets throughout the United States and Canada. The foundation of our investment sales is the depth of our local market knowledge. Our 44-year history of maintaining investor relationships in local markets enables us to be the best information source and transaction service provider in North America.

About Marcus & Millichap

The Wolfe Retail Group

has sold approx. 450 properties

in more than 40 states

Barry M. WolfeSenior Managing Director Investments

[email protected](954) 245-3493

Alan LipskySenior Associate


Catie JacksonMarketing Coordinator


Angelica LinaresTransaction Coordinator


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offering memorandum aaron’s autozone€¦ · must take appropriate measures to verify all of the...

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