JANESVILLE MALL

I-90 (62,274 VPD)

M I LT

ON A V E (2

7, 6 9 8

V P D)

HUMES RD (18,600 VPD)

Subject Property

Offering Memorandum

Salvation Army Family Store 2717 Milton Avenue | Janesville, Wisconsin 53545 Brand New 10-Year Lease | Below Market Rent | Relocation Site - Tenant Commitment to Location

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Confidential Disclaimer

Offered Exclusively by

This Confidential Memorandum has been prepared by Stan Johnson Company (“SJC”) and is being furnished to you solely for the purpose of your review of the commercial property located at 2717 Milton Avenue in Janesville, Wisconsin (the “Property”). The material contained in this Offering Memorandum shall be used for the purposes of evaluating the Property for acquisition and shall not be used for any purpose or made available to any other person without the express written consent of Stan Johnson Company (“Broker”).

Brandon Duff Regional Director

By accepting the Confidential Memorandum, you acknowledge and agree that: (1) all of the information contained herein and any other information you will be receiving in connection with this transaction, whether oral, written or in any other form (collectively, the “Materials”), is confidential; (2) you will not reproduce the Confidential Memorandum in whole or in part; (3) if you do not wish to pursue this matter, you will return this Confidential Memorandum to SJC as soon as practicable together with all other materials relating to the Property which you may have received from SJC; and (4) any proposed actions by you which are inconsistent in any manner with the foregoing agreements will require the prior written consent of SJC.

Brad Feller Senior Director

This Confidential Memorandum has been prepared by SJC, based upon certain information pertaining to the Property and any information obtained from SJC to assist interested parties in making their own evaluation of the Property is offered on a no representation or warranty provision other than customary warranties of title and is sold on an “as-is, where-is” basis and with all faults. The material and transaction does not purport to be all inclusive. This Confidential Memorandum contains descriptive materials, financial information and other data compiled for the convenience of parties interested in the Property. The Materials are being delivered by SJC to prospective investors with the understanding that it is not all inclusive and that it is qualified in its entirety by independent investigation by prospective investors of those matters which they deem appropriate in evaluating this offering without reliance upon SJC, the Broker or any of their respective affiliates or any of the information set out in the Materials. Neither SJC, the Broker, nor any of their respective affiliates have independently verified any of the information contained herein or in any of the Materials, and no representations or warranties as to the accuracy or completeness thereof or of any other kind whatsoever are made or intended and none should be inferred. SJC, for itself and its affiliates of the Property, expressly disclaim any and all liability for statements or representations, express or implied, contained herein or for omissions from the Materials or for any other written, oral or other format of communication transmitted to a prospective investor in the course of its evaluation of the proposed transaction. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. The terms and conditions described herein are subject to change without notice. This Confidential Memorandum does not constitute an offer to accept any investment proposal but is merely a solicitation of interest with respect to the investment described herein. The Confidential Memorandum does not constitute an offer of security. The investment described herein may be financed or withdrawn from the market, without prior notice. By accepting this Confidential Memorandum you agree to release SJC and hold it harmless from any kind of claim, expense, or liability arising out of your discovery or purchase of the Property. SJC reserves the right to request the return of the Materials at any time. Ownership of the Property reserves the right to negotiate with one or more prospective investors at any time.

[email protected] +1 312.240.0162

[email protected] +1 312.240.0194 WI Lic # 57176-90

Isaiah Harf Associate Director [email protected] +1 312.777.2437

Stan Johnson Company 303 East Wacker Drive | Suite 1111 Chicago, Illinois 60601 P: +1 312.240.0127 | F: +1 312.240.0158 stanjohnsonco.com

Table of Contents Section I - About the Investment The Offering............................................................................................................................................. 5 Investment Highlights.......................................................................................................................... 6 Pricing & Property Overview............................................................................................................7

Section II - Property & Tenant Overview Tenant Overview.................................................................................................................................... 9 “Big Box” Facility Description....................................................................................................... 10 Strip Map....................................................................................................................................................11 Site Plan.....................................................................................................................................................12 Property Summary..............................................................................................................................13 Rent Schedule & Income Statement...........................................................................................14

Section III - Market & Location Overview Regional Map..........................................................................................................................................16 Location Overview...............................................................................................................................17 Subject Property Photos...................................................................................................................18 Surrounding Retail Photos...............................................................................................................19 Demographics...................................................................................................................................... 20

Section I:

About the Investment

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The Offering Stan Johnson Company is pleased to exclusively offer for sale to qualified investors, the opportunity to purchase a 100% fee simple interest in the Salvation Army Family Store property located at 2717 Milton Avenue in Janesville, Wisconsin (the “Property”). The Property is strategically located adjacent to the Milton Avenue and Humes Road intersection, and is in close proximity to Interstate 90, offering strong visibility with a combined daily traffic count of 108,572 VPD. The Property is a 15,720 square foot retail store originally constructed in 1993 as a build-to-suit for ALDI. It was recently remodeled for The Salvation Army who is relocating from a nearby location as the company continues to make a strong push to upgrade their real estate to stay competitive with Goodwill. Salvation Army is opening a Family Store, which takes on a TJ Maxx concept with both new and secondhand goods. The full renovation included a new roof, a new HVAC system, a full interior buildout and the addition of a drive-up canopy, as well as the sealing and striping of the parking lot. The new store will open in summer 2016. Salvation Army will be operating under a brand new 10 year lease, followed by two, five-year renewal option periods. The lease features a $1.05/SF rental increase at the beginning of year six in the base lease term and $1.00/SF rental increases at the beginning of each option period. The Property offers excellent residual value and below market rent of roughly $9.00 PSF, well below replacement cost. Additionally, the modified gross lease structure represents an opportunity to secure a stable cash flow stream from a reliable tenant. The Property benefits from being located directly across from the 68-tenant, 627,000+ square foot Janesville Mall in Janesville’s primary retail corridor that also includes numerous national and regional retailers, including Toys R Us, Menards, Target, Walmart Supercenter, Sam’s Club, Shopko, Hobby Lobby and Woodman’s, as well as dozens of national restaurant chains. For Fiscal Year ended September 30, 2014, The Salvation Army (in the U.S.), reported total revenue of more than $4.1 billion, net income of $469.0 million and total assets in excess of $15.3 billion. It is the 2nd largest charity in the United States and the only charity to offer services in every ZIP code in the United States. The Salvation Army operates 7,618 centers in communities across the United States. These include food distribution, disaster relief, rehabilitation centers, anti-human trafficking efforts, and a wealth of children’s programs. Salvation Army is a taxexempt 501(c) (3) organization, and contributions are deductible for Federal Income Tax Purposes to the extent permitted under Section 170(b)(2) for corporations.

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Subject Property Photo

Section 1 • Salvation Army Family Store • Janesville, WI • 5

Investment Highlights Corporate Lease w/2nd-Largest Charity Salvation Army is the 2nd-largest charity in the United States, reporting more than $4.1 billion of revenue for FY2014 (ended September 30, 2014). Tenant Commitment to Location Salvation Army is relocating from a nearby location and investing in the renovation of the Property, demonstrating strong belief in the retail strength and long-term viability of the location. Newly Renovated Property Property is a former ALDI and is undergoing a full renovation that includes a new roof, a new HVAC system, a full interior buildout and the addition of a drive-up canopy, as well as the sealing and striping of the parking lot. Brand New 10-Year Lease w/Rental Escalations Tenant is entering into a brand new 10-year lease that features an approximate 10% rental increase at the start of Year 6, as well as increases at the start of each of two, five-year renewal options. Superior Residual Value & Replaceable Rent Property offers excellent residual value and below market rent of roughly $9.00 PSF. Dense Retail Corridor Property is located directly across from the 627k+ SF Janesville Mall and is surrounded by numerous national and regional retailers, including Toys R Us, Menards, Target, Walmart Supercenter, Sam’s Club, Shopko, Hobby Lobby and Woodman’s, as well as dozens of national restaurant chains. Ideal Demographics Demographics are well-suited to support the Salvation Army, with a population of 67,478 and average household income of $63,951 within 5-miles. Highly Visible, Highly Accessible Property is located adjacent to the Milton Avenue and Humes Road intersection, and is in close proximity to Interstate 90, offering a combined daily traffic count of 108,572 VPD. Subject Property Photos

Section 1 • Salvation Army Family Store • Janesville, WI • 6

Pricing Overview Salvation Army Family Store Offering Price:

$1,527,129

Offering Cap Rate:

7.00%

Year 1 Cash Flow:

$106,899

Tenant:

The Salvation Army (d/b/a: Salvation Army Family Store)

Ownership Interest:

Fee Simple

Encumbrances:

None, Delivered Free & Clear

Property Overview 2717 Milton Avenue | Janesville, WI 53545 Property Description:

Salvation Army Family Store

Square Footage:

+/- 15,720 SF

Land Area:

+/- 0.71 Acres

Year Built / Renovated:

1993 / 2016

Drive-Thru:

Drive-Up Canopy

Property ID:

Rock County: 0218300046

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Section 1 • Salvation Army Family Store • Janesville, WI • 7

Section II:

Property & Tenant Overview

Subject Property Rendering

Tenant Overview The Salvation Army is a Christian church and international charitable organization, structured in a quasi-military fashion. It is the 2nd-largest charity in the United States with over $4 billion of annual revenues, and is the single largest provider of social services of its kind and the only to offer services in every ZIP code in the United States. The organization reports a worldwide membership of over 1.5 million, consisting of soldiers, officers and adherents known as Salvationists. It is present in 127 countries and provides services in 175 different languages, including running charity shops and operating homeless shelters, in addition to providing and offering personal hygiene products, disaster relief and humanitarian aid to developing countries. For administrative purposes, The Salvation Army divides itself geographically into territories, which are then sub-divided into divisions. In larger areas, both regional and area commands are introduced as sub-divisions of divisions. Each territory has a territorial headquarters and each division has a divisional headquarters, all of which follow orders from The Salvation Army’s International Headquarters in London. In the United States, there are six separate corporations that comprise four territories: (a) National Headquarters – New Jersey corporation; (b) The Salvation Army World Service Office – District of Columbia corporation; (c) Central Territory – Illinois corporation; (d) Eastern Territory – New York corporation; (e) Southern Territory – Georgia corporation; and (f) Western Territory – California corporation. The four territories listed above comprise 7,619 units of operation throughout the United States, including Puerto Rico, Guam, the Republic of the Marshall Islands and the Federated States of Micronesia. The Salvation Army is well-known for its network of thrift stores, or charity shops, which raise money for the organization’s rehabilitation programs. Stores sell donated used items such as clothing, housewares and toys, and revenues are used help those struggling with alcohol and drug abuse. Adult Rehabilitation Centers, known as ARCs, are found in many global locations, are work and Bible-based, offer residential facilities and operate with the 12-step program. Of the 7,619 centers of operation, 1,226 are thrift stores and 141 are rehabilitation centers.

The organization is perhaps most-recognizable for its Red Kettle campaign. One may find volunteers and employees ringing bells and singing Christmas carols on street corners and in front of businesses during the Christmas season to inspire passersby to place donations of cash and checks inside red kettles. In 2014, the campaign garnered more than $144 million in donations. For Fiscal Year ended September 30, 2014, The Salvation Army (in the United States, as defined above), reported total revenue of more than $4.1 billion, net income of $469.0 million and total assets in excess of $15.3 billion. It is a tax-exempt 501(c)(3) organization and contributions are tax-deductible.

TENANT PROFILE Company:

The Salvation Army

Tenant Business:

501(c)(3) Charitable Organization

Total US Facilities:

7,619

Total Personnel:

58,601

FY2014 Total Revenue:

$4.111 billion

FY2014 Net Income:

$469.027 million

FY2014 Total Assets:

$15.329 billion

Founded:

1865

Website:

www.salvationarmy.org www.salvationarmyusa.org

*FY2014 ended Sep 30, 2014

Section II • Salvation Army Family Store • Janesville, WI • 9

Salvation Army Facility Description LOCATION Salvation Army is located at 2717 Milton Avenue the city of Janesville in the county of Rock and the state of Wisconsin PROPERTY TYPE Single-Tenant Retail ZONING B-2 (Community Shopping Center) PROPERTY PARCEL ID Rock County: 0218300046 YEAR BUILT / RENOVATED 1993 / 2016 BUILDING SIZE +/- 15,720 SF

DRIVE-THRU Drive Up Canopy OWNERSHIP INTEREST & LEASE TYPE Fee Simple Ownership Interest & Modified Gross Lease PARKING Total Spaces: 115 (Parking lot is by Easement) Parking Ratio: 7.3 per 1,000 SF Patched/Sealed/Striped in 2016 ACCESS Property has three points of access – Lodge Drive on the northeast, Milton Avenue on the southeast and Woodlane Drive on the northwest UTILITIES & SERVICES Water:

The Janesville Water Utility

LAND AREA +/- 0.71 Acres

Sewer:

The Janesville Water Utility

Electricity:

Alliant Energy

IMPROVEMENTS Asphalt parking lot, concrete curbs and sidewalks, landscaping, parking lot lighting and concrete pads in some dock areas

Gas:

Alliant Energy

ROOF Flat, Newly Replaced with 15 year warranty EXTERIOR Brick/Masonry STREET FRONTAGE 162’ on Milton Avenue

HVAC Heat/AC PKGS 1 ton per 400 sq. ft TRAFFIC COUNTS TABLE Thoroughfare

Vehicles Per Day

Milton Avenue:

27,698 VPD

Humes Road:

18,600 VPD

I-90:

62,274 VPD

Total

108,572 VPD

SIGNAGE Pylon Signs on both Milton Avenue and Lodge Drive STRUCTURE Steel Frame

Subject Property Photos Section II • Salvation Army Family Store • Janesville, WI • 10

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Site Plan

Section II • Salvation Army Family Store • Janesville, WI • 12

Property Summary LEASE DETAILS Tenant:

The Salvation Army

D/B/A:

Salvation Army Family Store

Lease Commencement:

May 19, 2016

Rent Commencement:

August 19, 2016

Lease/Rent Expiration:

August 31, 2026

Base Lease Term:

10 Years

Annual Base Rent / PSF:

$141,480 / $9.00 PSF

Rental Increases:

$1.05 PSF Increase at Start of Year 6

Renewal Option Periods:

2, 5-Year Options

Renewal Notice:

270 Days

Option Rental Increases:

$11.00 PSF at start of 1st Option $12.00 PSF at start of 2nd Option

Lease Type:

Modified Gross

EXPENSE ALLOCATION Landlord

Maintenance & Repair:

• • • •

Structure Signage Foundation Roof

Tenant • Snow removal • Landscaping • Storefront entry & donation drop-off doors • HVAC systems ($1,000/occurrence cap; $2,000/year cap) • •

Utilities:

•

Electricity for pylon sign

• •

Real Estate Taxes:

Landlord to pay all Real Estate Taxes

None •

SITE DESCRIPTION Property Address:

2717 Milton Avenue; Janesville, WI 53545

Building Size (SF):

+/- 15,720 SF

Land Area (Acres):

+/- 0.71 Acres

Year Built / Renovated:

1993 / 2016

Drive-Thru:

Drive-Up Canopy

Property ID:

Rock County: 0218300046

Ownership Interest:

Fee Simple

Insurance:

Water & sewer Garbage & trash removal Electricity for exterior façade signage All other utility services consumed on Premises

Extended coverage protection against loss by fire or casualty.

•

Commercial General Liability insurance (including Personal Injury Liability insurance & Contractual Liability insurance) Property Insurance

Section II • Salvation Army Family Store • Janesville, WI • 13

Rent Schedule Rent Schedule Tenant

The Salvation Army

SF

15,720 SF

Lease Term

Rent Commencement

10 Years

August 19, 2016

Period

Monthly Base Rent

Annual Base Rent

Annual Base Rent PSF

Rental Increase

Years 1-5

$11,790

$141,480

$9.00

-

Years 6-10

$13,166

$157,986

$10.05

11.67%

Years 11-15 (Option 1)

$14,410

$172,920

$11.00

9.45%

Years 16-20 (Option 2)

$15,720

$188,640

$12.00

9.09%

Lease Type

Renewal Type

Modified Gross

2, 5-Year Options

*Lease estimated to commence on April 1, 2016, with Rent to commence 90 days after.

Income Statement Investment Year

1

2

3

4

5

6

7

8

9

10

Rental Income

$141,480

$141,480

$141,480

$141,480

$141,480

$157,986

$157,986

$157,986

$157,986

$157,986

Total Revenue

$141,480

$141,480

$141,480

$141,480

$141,480

$157,986

$157,986

$157,986

$157,986

$157,986

CAM

$5,514

$5,569

$5,624

$5,681

$5,738

$5,795

$5,853

$5,911

$5,970

$6,030

Insurance

$1,800

$1,818

$1,836

$1,855

$1,873

$1,892

$1,911

$1,930

$1,949

$1,969

RET (Common Area)

$8,094

$8,175

$8,257

$8,339

$8,423

$8,507

$8,592

$8,678

$8,765

$8,852

RET (Parcel)

$19,173

$19,365

$19,559

$19,754

$19,952

$20,151

$20,353

$20,556

$20,762

$20,970

Total Operating Expenses

$34,581

$34,927

$35,276

$35,629

$35,985

$36,345

$36,708

$37,075

$37,446

$37,821

Cash Flow Before Debt Service

$106,899

$106,553

$106,204

$105,851

$105,495

$121,641

$121,278

$120,911

$120,540

$120,165

Revenue

Expenses*

*CAM, Insurance and Common Area RET expenses grown at 1% annually. Parcel RET grown 1% annually from 2015 total tax of $18,983.44.

Section II • Salvation Army Family Store • Janesville, WI • 14

Section III:

Market & Location Overview

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Section III • Salvation Army Family Store • Janesville, WI • 16

Location Overview Janesville is a city in southern Wisconsin. It is the county seat of Rock County and the principal municipality of the Janesville, Wisconsin MSA. As of the 2010 census, the city had a population of 63,575. Janesville is known as Place.” Its 2,590-acre park improved parks, as well as courses, and nature trails. highest acreages per capita

“Wisconsin’s Park system includes 53 boat launches, golf This is one of the in Wisconsin.

Janesville, WI

A two-year community college, the University of Wisconsin–Rock County, located on the southwest side of Janesville, is part of the University of Wisconsin System (14,000+ student enrollment). A two-year technical college, Blackhawk Technical College, is located midway between Janesville and Beloit; Blackhawk also offers degree programs through Upper Iowa University. Businesses headquartered in Janesville include Blain’s Farm and Fleet, a three-state retail chain; Woodman’s Food Market, a regional supermarket chain that built its first store in Janesville; Swing’n’Slide, a maker of wood-andplastic playground equipment; Hufcor (formerly Hough Shade Company), a manufacturer of room dividers that markets internationally; and Gray’s Brewing, maker of boutique beers and soft drinks.

Janesville, WI - Rotary Botanical Gardens

The largest employers in the region include Mercy Health System, Janesville School District, Rock County, City of Janesville, W.W. Grainger, Seneca Foods, Wal-Mart/Sam’s Club, J.P. Cullen and Sons, SSI Technologies and Prent Corporation.

Janesville, WI Water Tower

Section IV • Salvation Army Family Store • Janesville, WI • 17

Downtown Janesville, WI

Subject Property Photos

Section III • Salvation Army Family Store • Janesville, WI • 18

Surrounding Retail Photos

Section III • Salvation Army Family Store • Janesville, WI • 19

Demographics 2717 Milton Avenue | Janesville, Wisconsin 53545

0 - 1 mi.

0 - 3 mi.

0 - 5 mi.

Population 2015 Population

4,655

46,455

67,478

2020 Population

4,684

46,687

67,788

2000-2010 Annual Rate

-0.11%

0.50%

0.47%

2010-2015 Annual Rate

0.04%

0.00%

0.00%

2015-2020 Annual Rate

0.12%

0.10%

0.09%

2015 Total Households

2,102

19,301

27,484

2020 Total Households

2,113

19,426

27,660

2000-2010 Annual Rate

-0.20%

0.77%

0.71%

2010-2015 Annual Rate

0.13%

0.15%

0.15%

2015-2020 Annual Rate

0.10%

0.13%

0.13%

2015 Average Household Income

$47,833

$64,615

$63,951

Households

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Section III • Salvation Army Family Store • Janesville, WI • 20

Offered Exclusively by Brandon Duff Regional Director [email protected] +1 312.240.0162

going beyond

Brad Feller Senior Director [email protected] +1 312.240.0194 WI Lic # 57176-90

Isaiah Harf Associate Director [email protected] +1 312.777.2437

Stan Johnson Company 303 East Wacker Drive | Suite 1111 Chicago, IL 60601 P: +1 312.240.0127 | F: +1 312.240.0158 stanjohnsonco.com

The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notices.