Walgreens Portland, OR

p o r tl

an r d, o

Single Tenant NNN Lease at Prominent Hard Corner 12215 SE Powell Blvd, Portland, OR 97236 [ www.CapitalPacific.com ]

WALGREENS IS A NET-LEASED ASSET WITH EXCELLENT EXPOSURE AND DENSE SURROUNDING POPULATION BASE IN AN URBAN PORTLAND, OREGON LOCATION.

Investment Highlights

The offering provides the opportunity to acquire a freestanding, 13,490 square foot single tenant NNN-leased investment property in Portland, Oregon. The Property is fully leased to Walgreens, an investment-grade tenant issued a BBB credit rating by Standard & Poor’s. Walgreens has 44 years remaining on their initial lease term, with termination options beginning in 2019. Landlord responsibilities are minimal and are exclusive to the building roof, structure, and the cost to replace the parking lot. A portion of the Subject’s land area is also leased for cell tower purposes, further increasing the Property’s cash flow. The Property is situated on a highly-trafficked, hard corner of SE Powell Boulevard and 122nd Avenue within close proximity to downtown Portland and interstate 205. The City of Portland’s Transportation Commission agreed in 2015 to ear mark $17 million to be put toward the planning and repaving of sidewalks, buffered bicycle lanes, and turn lanes off of SE 122nd, including the section of 122nd in front of Walgreens. The offering also benefits from a huge surrounding population base, with over 410,000 residents within a five mile radius.

PRICE: $5,300,000 CAP: 6.75% LEASABLE SF. . . . . . . . . . . . . . . . ±13,490 SF PRICE PER SF. . . . . . . . . . . . . . . . $393 LAND AREA. . . . . . . . . . . . . . . . . ±56,588 SF LEASE TYPE. . . . . . . . . . . . . . . . . .NNN YEAR BUILT. . . . . . . . . . . . . . . . . . 1999 PARKING. . . . . . . . . . . . . . . . . . . . . ±59 spaces or 4.4/1,000 SF ADDRESS: 12215 SE Powell Blvd, Portland, OR 97236

WALGREENS - PORTLAND | 2

Investment Highlights

MINIMAL LANDLORD RESPONSIBILITIES INVESTMENT GRADE TENANT NEIGHBORING POPULATION DRAW Walgreens is located roughly four miles east of the Portland CBD within a denselypopulated, urban location in Southeast Portland. The Property benefits from its location among over 410,000 residents and 158,000 households located within a 5 mile radius.

NATIONAL CREDIT TENANCY Walgreens is an investment-grade tenant with a BBB credit rating according to Standard & Poor’s, and has been a publicly traded company (NASDAQ: WBA) since 1927. Walgreens currently employs over 260,000 employees, and is the 20th largest employer in the United States.

PASSIVE LEASE STRUCTURE This investment opportunity has a passive lease structure, as Walgreens operates on a triple net basis. Landlord responsibilities are exclusive to the building structure, roof, and parking lot replacement. Walgreens is responsible for all other operating costs, requiring minimal management from an owner. Notably, the Landlord has resealed the Subject’s roof within the last two years and the building is well maintained.

ROBUST TRAFFIC COUNTS WITH EXCELLENT INTERSTATE ACCESS The Property is located on a hard corner of two highly trafficked main arterials, SE 122nd and Powell Blvd., with combined daily drive-by traffic rates of over 41,000 vehicles per day. The signalized intersection offers high visibility and ingress-egress points off of both high-capacity roads. Powell Blvd also offers easy access to I-205, which provides excellent local and regional access to the Subject.

STRONG TRADE AREA CO-TENANCY The trade area is a dynamic mix of convenience and destination retailers, restaurants, medical and professional offices. Anchoring Walgreens is a Safeway grocery store situated across SE Powell Boulevard, driving daily traffic to the immediate area and offering excellent co-tenancy. Adventist Medical Center, a 302-bed community hospital is roughly two miles northwest of the Property. The proximity to the medical center drives further pharmacy demand in the trade area. WALGREENS - PORTLAND | 3

About Walgreens

BBB INVESTMENT GRADE CREDIT STANDARD & POOR’S

1927

EMPLOYER IN THE USA

IPO DATE (NASDAQ: WBA)

260,000+ APPROXIMATE NUMBER OF EMPLOYEES

$76.4B $72.2B $71.6B

2014

TOTAL LOCATIONS

20th LARGEST

2013

ACROSS 50 STATES AND PUERTO RICO

2012

8,215

REVENUE

WALGREENS - PORTLAND | 4

Retail ADDITIONAL RETAIL Ace Hardware AT&T Baskin-Robbins Big Lots Big 5 Sporting Goods Burger King Burgerville Carl’s Jr

MALL 205 Chuck E. Cheese’s Cricket Wireless Dairy Queen Denny’s Dutch Bros Coffee Fred Meyer Goodwill Jiffy Lube

KFC McDonald’s MetroPCS O’Reilly Auto Parts Papa John’s Pizza Petco Plaid Pantry Rite Aid Pharmacy

Safeway Sherwin-Williams Starbucks Subway Taco Bell 7-Eleven

AT&T FedEx Great Clips Home Depot Olive Garden Panda Express Red Robin Sleep Train

SE STARK ST

SE 122ND AVE

ADVENTIST MEDICAL CENTER

164,300 DAILY SE DIVISION ST 18,500 DAILY

WALGREENS

205

18,500 DAILY

LL BLVD

SE POWE

26 27,705 DAILY

Sport Clips Starbucks Supercuts Target T-Mobile Verizon 24 Hour Fitness

PLAZA 205 Big Lots Denny’s Dollar Tree HomeTown Buffet Jack in the Box OfficeMax Old Chicago

Aerial $17 million in improvements to SE Powell Blvd have been added to Portland’s transportation plan. Among the planned improvements are sidewalks, buffered bicycle lanes and a center turn lane. Planning ($1.2 million) is scheduled in 2016, right-of-way acquisition ($6.5 million) in 2017 and construction ($9.3 million) in 2018.

CLICK HERE FOR MORE INFO

WALGREENS

27,705 DAILY

SE POWELL BLVD

18,500 DAILY

SE 122ND AVE WALGREENS - PORTLAND | 6

Site Plan

CELL TOWER

SE 124th Ave

SE 122nd Ave

DRIVE-THRU

27,705 DAILY SE Powell Blvd

SITE PLAN KEY PARCEL OUTLINE: LAND AREA:

±56,588 SF

BUILDING AREA:

±13,490 SF

PYLON SIGN: NOT A PART: CELL TOWER:

18,500 DAILY

PYLON SIGN

Q

HAS THERE BEEN AN ENVIRONMENTAL STUDY OF THE PROPERTY?

A: Yes. In 2007 a Phase I Environmental Site Assessment was conducted by LandAmerica Commercial Services to determine environmental conditions of the Property, using generally accepted ESA industry standards. The Phase I Assessment determined there is no evidence of RECs (Recognized Environmental Conditions) in connection with the Property and concluded that no further investigation is needed.

INGRESS/EGRESS: Site Plan Not To Scale

WALGREENS - PORTLAND | 7

Financial Summary

PRICE

$5,300,000

Capitalization Rate:

6.75%

Price Per Foot:

13,490 Square Feet

NET OPERATING INCOME SUMMARY SCHEDULED INCOME Scheduled Rent: Other Scheduled Rent:* Equals: Effective Gross Income

$393

Per SF $25.50 $1.13 $26.63

1/1/2016

$344,004 $15,180 $359,184

Per SF

Less: OPERATING EXPENSES CAMS Property Taxes Insurance Reserves Total Operating Expenses

$0.10 $0.10

Equals: NET OPERATING INCOME

NNN NNN NNN $1,349 ($1,349) $357,835

*Additional income received via cell tower on-site

Q

DOES WALGREENS REPORT SALES? A: Yes, Walgreens reports annual sales at year-end. Please contact Capital Pacific for more information.

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. Buyer must verify the information and bears all risk for any inaccuracies.

10/15/2015

[ www.CapitalPacific.com ]


WALGREENS - PORTLAND | 8

Rent Roll

Rent Roll RENT SUMMARY

TENANT INFO

TERM

Size

Date

Monthly Rent

Annual Rent

PSF

13,490

8/7/1999

$28,667

$344,004

$25.50

Tenant Name Walgreens Occupancy Date :

8/7/1999

Lease Expiration :

8/31/2059

Lease Notes Comments: Walgreens has exclusive use of typical drug store services exercised within 500 ft of Property and has Right of First Refusal to determine if they wish to purchase property or not within 45 days of receiving copy of official offer from Landlord. Tenant has Option to terminate lease every 5 years with 12 months notice beginning in 2019. Lease is NNN - Tenant is responsible for all utilities, Property Taxes/Insurance, and other operating costs inclusive of parking lot maintenance (not replacement), HVAC, and landscaping. Landlord is responsible for building structure, roof, and the cost to replace the parking lot. Tenant is responsible for Percentage rent of 2% of Gross Sales excluding food and prescription, and 0.5% of food and prescription only if those annual amounts are greater than the annual rent amount, with a cap in place. Current Totals:

13,490

$28,667

$344,004

$25.50

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. Buyer must verify the information and bears all risk for any inaccuracies.

Q

WHAT ARE THE TERMS AND AGREEMENTS OF THE CELL TOWER ON SITE?

TENANT AT&T SUBLESSEE

Crown Castle

PREMISES

1,750 SF of land area

COMMENCEMENT DATE 10/24/1996 EXPIRATION DATE 12/31/2017 RENT

$1,265/month with 15% increases for each additional five-year extension.

OPTIONS

Four of five, five-year extensions remain. Next scheduled increase is effective 1/1/2018 at the monthly rate of $1,455.

MAINTENANCE

Tenant is responsible for maintaining Premises in good condition and repair.

PERMITTED USE

Placement and maintenance of a cell tower with acknowledgement that Tenant may repair or replace antenna or equipment at any time.

TERMINATION RIGHTS At any time within 30 days written notice by tenant and one-year written notice by Landlord.

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. Buyer must verify the information and bears all risk for any inaccuracies. This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed [ www.CapitalPacific.com ] or10/15/2015 implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies.


WALGREENS - PORTLAND | 9

Featured Photos

3

Hard corner location with access & visibility from two primary arterials

[ PYLON SIGN ON SE POWELL BLVD ]

3

[ INTERSECTION OF SE POWELL BLVD & SE 122ND AVE ]

[ FRONTAGE ALONG SE Powell Blvd ]

WALGREENS - PORTLAND | 10

Portland Metro URBAN GROWTH BOUNDARY (UGB) Portland constrains its development to a tight ring around Portland’s center. This has led to the re-development of a large portion of downtown, a number of mid-rise and high-rise developments, and an overall increase in housing and business density. UGB’s limitations on development have also led to increased property values over the years.

HIGHLY DIVERSIFIED ECONOMY & SKILLED WORKFORCE Leading economic drivers are renewable energy, technology, health care, and professional services. High tech employment is responsible for the employment of 72,100 people (7.2% of labor force). 30% of workers have a bachelor’s degree. Home of Intel, Nike, and Adidas America.

LOW COST OF DOING BUSINESS CNBC ranked Oregon 19th for cost of doing business.

IN-MIGRATION In a 2013 survey, United Van Lines ranked Oregon as the #1 state for in-migration.

PORTLAND MSA TOP 20 EMPLOYERS COMPANY Intel US Federal Government Providence Health & Services Oregon Health & Science State of Oregon Kaiser Permanente Northwest Legacy Health System Fred Meyer City of Portland Nike Portland Public Schools Multnomah County Wells Fargo Portland State University US Bank Beaverton School District PeaceHealth Southwest Portland Community College Vancouver School District Evergreen Public Schools SOURCE: PORTLAND BUSINESS JOURNAL

± EMPLOYEES 17,500 17,500 15,239 14,616 14,200 11,881 10,436 10,237 8,558 8,000 6,266 5,616 4,617 4,353 4,000 3,905 3,300 3,255 3,200 3,100

2.31 million PORTLAND MSA POPULATION

23rd LARGEST METRO AREA IN THE US

$79,377 AVERAGE HH INCOME

JIFFY LUBE - PORTLAND | 11

Area Intel & Demos

POPULATION

2010 2015 2020

CLOSE PROXIMITY TO MEDICAL CENTER The Property is located approximately two miles from the Adventist Medical Center, a 302 bed community hospital to the northwest. The hospital drives much of the local business and has created a strong market in the area, with nearby pharmacies being a necessity.

1-Mile 27,105 28,321 29,833

3-Mile 5-Mile 165,973 395,425 171,942 410,059 180,016 429,707

2015 HOUSEHOLD INCOMES Median Average

1-Mile 3-Mile $37,035 $43,488 $49,712 $57,179

5-Mile $50,342 $65,651

SEATTLE 5 Miles

WALGREENS

170 Miles 3 Miles

1 Mile

Portland

110 Miles

eugeneWALGREENS - PORTLAND

| 12

Lease Abstract

PREMISES/TERM TENANT Walgreens SQUARE FEET 13,490 SF RENT COMMENCEMENT 8/7/1999 EXPIRATION 8/31/2059 (With standard 5 year options to terminate after the initial 20 year term)

BASE RENT

MAINTENANCE

PERCENTAGE RENT

Tenant is responsible for all maintenance and repair of the parking lot, landscaping, building interior HVAC. Landlord responsible for all capital items, building structure, exterior repairs, roof, and utility lines. Landlord most recently had roof resealed two years ago as part of routine roof maintenance. Upon the cancellation or expiration of the AT&T lease, Landlord shall improve the AT&T Premises in a manner acceptable to Tenant and the AT&T Premises shall become a part of the Leased Premises.

8/7/1999 – 8/31/2059 $28,667/month

Tenant pays percentage rent equal to 2% of gross sales (excluding food and prescription) and 0.5% of gross sales of food and prescription items (excluding Third Party Prescription Plans) only if those percentages exceed the total rent amount for the year. Percentage Rent and Base Rent combined shall not exceed $688,000 in any given year.

RIGHT OF FIRST REFUSAL If Landlord receives a bona fide offer to purchase, tenant has the option within forty-five (45) days after receipt to purchase the premises.

ASSIGNMENT AND SUBLETTING Tenant may discontinue operations at any time and assign and sublet their lease interest without landlord approval to a subsidiary, person, or corporation.

LANDLORD TERMINATION RIGHTS Tenant shall have the right and option to terminate this Lease effective after the last day of the 20th year of the Term and every five years thereafter. If Tenant chooses to elect this option, Tenant shall notify Landlord with 12 months prior notice.

EXCLUSIVE USE No property within 500 feet of the Subject Property owned or controlled directly or indirectly by Landlord may be used for general drug store purposes – pharmacy, health/ beauty products, beverages, photofinishing, sale of greeting cards, etc. WALGREENS - PORTLAND | 13

THE CAPITAL PACIFIC EXPERIENCE - OUR DAILY COMMITMENT TO OUR CLIENTS [ www.CapitalPacific.com ]

DAVID GELLNER

KEVIN ADATTO

MICHAEL HORWITZ

SCOTT FRANK

SEAN MACK

SEAN TUFTS

[email protected] | (206) 913-2842

[email protected] | (503) 675-8383

PETER DUNN

[email protected] | (503) 607-0197

[email protected] | (503) 675-7726

[email protected] | (503) 675-8378

[ Copyright © 2015 Capital Pacific LLC ]

[email protected] | (503) 675-8381

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