4700 yelm hwy se | lacey, wa - thomas company · proposal and from whom you have obtained an...

4 7 0 0 Y E L M H W Y S E | L A C E Y, WAO LY M P I A , WA M S A

S I N G L E -T E N A N T A B S O L U T E N E T L E A S E | + / - 1 9 . 6 Y E A R S R E M A I N I N G I R E N T I N C R E A S E S

THIS INVESTMENT OFFERING MEMORANDUM

has been prepared by Thomas Company and

does not purport to provide a necessarily accurate

summary of the Property or any of the documents

related thereto, nor do they purport to be all

inclusive or to contained all of the information

which prospective investors may need or desire.

All projections have been developed by Seller,

Thomas Company and designated sources,

and are based upon assumptions relating to the

general economy, competition and other factors

beyond the control of Seller, and therefore are

subject to variation. No representation is made

by Seller or Thomas Company as to the accuracy

or completeness of the information contained

herein, and nothing contain herein, is, or shall be

relied on as a promise or representation as to the

future performance of the Property. Although

the information contained herein is believed

to be correct, Seller and its officers, directors

and employees disclaim any responsibility for

inaccuracies and expect prospective purchasers

to exercise independent due diligence in

verifying all such information. Further, Thomas

Company, Seller and its officers, directors and

employees disclaim any and all liability for

representations and warranties, expressed and

implied, contained in, or omission from the

Investment Offering Memorandum or any other

written or oral communication transmitted or

made available to the recipient. The Investment

Offering Memorandum does not constitute a

representation that there has been a change in

the business or affairs of the Property or Seller

since the date of preparation of the Investment

Offering Memorandum. Analysis and verification

of the information contained in the Investment

Offering Memorandum is solely the responsibility

of the prospective purchaser.

Seller and Thomas Company each expressly

reserve the right, at their sole discretion, to

reject any and all expressions of interest or

offers regarding the Property and/or terminate

discussions with any entity at any time with

or without notice. Seller shall have no legal

commitment or obligation to sell the property

to any entity reviewing the Investment Offering

Memorandum or making an offer to purchase the

Property unless and until such offer is approved

by Seller, a written agreement for the purchase of

the Property has been fully executed, delivered

and approved by Seller and its legal counsel and

any conditions to Seller’s obligations thereunder

have been satisfied or waived. This Investment

Offering Memorandum and the contents are of a

confidential nature. By accepting the Investment

Offering Memorandum, you agree that you will

hold and treat it in the strictest confidence, that you

will not photocopy or duplicate it, that you will not

disclose the Investment Offering Memorandum or

any of the contents to any other entity (except to

outside advisors retained by you if necessary, for

your determination of whether or not to make a

proposal and from whom you have obtained an

agreement of confidentiality) without the prior

written authorization of Seller, and that you will

not use the Investment Offering Memorandum

or any of the contents in any fashion or manner

detrimental to the interest of Seller or Thomas

Company. If you do not have an interest in the

Property at this time, please return the Investment

Offering Memorandum forthwith.

© 2019 Thomas Company

PLEASE CONTACT

JEFFREY S. THOMAS

THOMAS COMPANY

210 Third Avenue South

Suite 5C

Seattle, WA 98104

800.775.3350

[email protected]

THOMASCOMPANY.COM

RENT SUMMARY

Lease Years Annual Rent Monthly Rent Increases

1 $888,438 $74,037

2 $901,765 $75,147 1.50%

3 $915,291 $76,274 1.50%

4 $929,020 $77,418 1.50%

5-10 $942,956 $78,580 1.50%

11-15 $1,013,677 $84,473 7.50%

16-20 $1,089,703 $90,809 7.50%

Options Annual Rent Monthly Rent Increases

1st Term $1,171,431 $97,619 7.50%

2nd Term $1,259,288 $104,941 7.50%

3rd Term $1,353,735 $112,811 7.50%

4th Term FMV FMV FMV





PROPERTY SUMMARY

Price $16,922,628

Cap Rate 5.25%

Building SF 56,199

NOI $888,438

Year Built/Expanded/Renovated 1986/1999/2005

Land/Lot Size 5.51 Acres

LEASE SUMMARY

Lease Type Absolute Triple-Net (NNN) Lease

Tenant Safeway, Inc.

GuarantorAlbertsons Companies Inc., a Delaware Corporation

Roof & Structure Tenant Responsible

Lease Commencement Date 6/28/19

Lease Expiration Date 6/30/39

Lease Term Remaining +/- 19.6 Years

Rental Increases 1.5% Annually in Years 2-5; 7.5% in Years 11 & 16

Renewal Options 8, 5 Year Options (Options 4 - 8 are FMV)

Right of First RefusalCommencing 4 years after the effective date of the Lease. Tenant has 15 days to respond.

EXECUTIVE SUMMARY

SAFEWAY, LACEY, WASHINGTON 3

Executive Summary


Property Overview

4 7 0 0 Y E L M H W Y S E | L A C E Y, VA

Note: Only select retailers shown


Site Map


Note: Only select retailers shown


Lease Abstract


Lease Abstract

Lessor CF ALBERT PROPCO III, LLC, a Delaware limited liability company

Tenant Name Safeway, Inc.

Guarantor ALBERTSONS COMPANIES, INC., a Delaware corporation

Tenant Size (SF) 56,199

Lease Commencement Date 6/28/19

Expiration Date 6/30/39

Lease Term 20 years

Remaining Lease Term (Current-6/27/2039) +/-19.6 years

No. & Term of Options 8 x 5 yr

Contractual Rental Rate (Current-6/27/2020) $888,438

Rent Increase Schedule TERM RENT

6/28/2020-6/30/2021 $901,765 7/01/2021-6/30/2022 $915,291 7/01/2022-6/30/2023 $929,020 7/01/2023-6/30/2029 $942,956

7/01/2029-6/30/2034 $1,013,677 7/01/2034-6/30/2039 $1,089,703 Option 1-3 7.50%Option 4-8 FMV

Lesee Operating Expenses Tenant shall maintain or cause to be maintained, at its sole cost and expense, the Common Area at all times in good and clean condition and repair.

Property Tax Expense Tenant shall be liable for and, to the extent permitted under applicable law, agrees to pay directly to the applicable collecting authority, as they accrue, all taxes.

Property Insurance Tenant shall maintain commercial general and auto liability insurance, insuring it against claims for personal injury, bodily injury or death, and property damage or destruction.

Maintenance & Repairs Tenant must maintain the Leased Premises, structural and non-structural, interior and exterior, in good repair and condition, and will make all structural and non-structural, interior and exterior, foreseen and unforeseen and ordinary and extraordinary changes, replacements, upgrades and repairs which may be required with respect to the Leased Premises.

Estoppel Tenant must deliver to Landlord within fifteen (15) business days after receipt of written request.


KEY DRIVING DISTANCES

Olympia, WA 6.0 miles / 15 mins

Tacoma, WA 30.2 miles / 39 mins

SEATAC 47.7 miles/ 58 mins

Seattle, WA 60.3 miles/ 1h 8 mins


Regional Map



Local Map

Demographics

POPULATION 1 MILE

3 MILES

5 MILES

2000 Total Population 8,472 46,849 100,296

2010 Total Population 13,340 57,752 117,670

2010-2019 Annual Rate 1.58% 1.33% 1.36%

2019-2024 Annual Rate 1.61% 1.35% 1.35%

HOUSEHOLDS

2019 Total Households 6,089 25,383 53,941

2024 Total Households 6,584 27,102 57,674

2010-2019 Annual Rate 1.40% 1.27% 1.35%

2019-2024 Annual Rate 1.58% 1.32% 1.35%

HOUSEHOLD INCOME

2019 Median Household Income $67,434 $75,246 $69,908

2019 Average Household Income $88,907 $102,181 $98,237

1 MILE

3 MILES

5 MILES



Market Overview

O LY M P I A , WA S H I N G T O N

Olympia is the capital of Washington State. It is located 60 miles

southwest of Seattle, the largest city in the Pacific Northwest region.

The city has a population of 49,928, an increase of 9.2% since 2010. The

median household income is $67,347 and the median home price is

$331,000. The city has a gross metro product of $13.4 billion.

Olympia is known for its high quality of life and has been on Livability.

com’s “Top 100 Places to Live” list since 2015. Residents enjoy a variety

of public parks and nature conservation areas. The 600-acre Woodard

Bay Natural Resources Conservation Area contains more than five

miles of Puget Sound waterfront. Olympia is home to five theatrical

companies, a symphony orchestra, and the Olympia Film Society.

Just south of Olympia, the Monarch Contemporary Art Center and

Sculpture Park offers an 5-acre sculpture garden and art gallery.

Olympia is an educational hub and is home to a Washington State

University campus, Evergreen State College, and South Puget Sound

Community College. Residents have high educational attainment: the

vast majority (94.7%) have completed high school, and many have an

undergraduate (35.7%) or a graduate degree (13.6%).

The city benefits from excellent transportation connections. It is

located on Interstate 5, which runs from Mexico to Canada via San

Diego, Los Angeles, Sacramento, Portland, and Seattle. Amtrak, the

national passenger rail system, links Olympia to Seattle, Vancouver,

Portland, Sacramento, Emeryville, and Los Angeles. Olympia’s award-

winning Intercity Transit provides bus service within the Olympia-

Lacey-Tumwater area with connections to regional bus and commuter

rail services. The fleet runs entirely on biodiesel fuel and is composed

of about 20% biodiesel-electric hybrid buses.Boats in a marina on the waterfront in OlympiaOlympia, WA Skyline

Olympia, Washington, State Capitol


L A C E Y, WA S H I N G T O N

Lacey is a city located just 5 miles east of Olympia, the capital of Washington State. It is a part of the Olympia-Tumwater metro area. The city has a population of

46,655, which has grown 15.7% since 2010. The average household income is $77,355 and the average home price is $294,778.

Lacey is home to a diverse range of businesses, including retail stores, distribution centers, a large retirement community, a major mushroom farm, and

International Paper’s corrugated container facility. Lacey is also home to Saint Martin’s University, Charter College and Thurston County’s largest school district,

North Thurston Public Schools.

Lacey was the twelfth city to be designated an official “Green Power Community” by the U.S. Environmental Protection Agency for its use of renewable energy

sources. The city has received the “Tree City, USA” designation from the National Arbor Day Foundation every year since 1991.


Market Overview (continued)

Albertsons is a food and drug retailer headquartered in Boise, Idaho. It is the

3rd-largest private company and 2nd-largest supermarket chain in the United

States. The company’s divisions and subsidiaries operate stores under the

banners Albertsons, Acme, Bristol Farms, Grocery Warehouse, Jewel, Jewel-

Osco, Max Foods, Osco Drug, Safeway, Sav-on Drugs, Shaw’s, Star Market,

Super Saver, and meal kit company Plated. Albertsons also owns O Organics,

the nation’s largest brand of USDA-certified organic products. Albertsons is

one of the largest retail employers in the country, providing approximately

275,000 jobs. It serves approximately 34 million customers per week.

As of 2019, Albertsons operates 2,269 retail stores with 1,740+ pharmacies,

397 associated fuel centers, 23 dedicated distribution centers, six fulfilment

centers for its meal kit subsidiary Plated, and 20 manufacturing facilities.

Albertsons operates in 35 states and 122 cities, and is ranked #1 or #2 by

market share in 66% of them. Albertsons offers home delivery in 11 of the

top 15 U.S. markets. The company has pushed back against competitors like

Amazon by increasing fast delivery options through Instacart and expanding

Drive Up and Go pickup services to 250 stores in 2018.

The company launches over 500 new items every year. Albertsons has over

12 million loyalty rewards members and one of the largest data sets in the

food and drug retail industry. In 2018, The Albertsons Foundation donated

over $44 million to charitable causes.

COMPANY HISTORY AND GROWTHAlbertsons was founded in 1939 by Joe Albertson, as Albertson’s Food Center.

The store was billed as “Idaho’s largest and finest food store” in advertisements,

boasting a footprint approximately eight times as large as the average grocery

store of that era. Albertson’s put its focus on one-stop shopping with in-store

specialties such as a bakery and ice-cream shop.

By 1947, the retailer was operating six stores in Idaho. In the 1950s, the chain

expanded into Washington, Utah, Oregon, and Montana, and built its first

distribution facility. Albertson’s moved into its sixth state, Wyoming, in 1961,

and opened its 100th store in 1962. In 1964, the company broke into the

California market by acquiring Greater All American Markets, based in Los

Angeles. In the late 1960s, the company continued to expand by merging

with grocery chains in northern California and purchasing stores in Colorado,

as well as constructing new units in its existing markets. Albertson’s ended the

decade with more than 200 stores in operation and annual sales of over $400

million. The company also set in place its remodeling program, focusing on

a consistent schedule of expanding and upgrading existing stores to avoid

obsolescence.

In 1970, the company partnered with Skaggs Drug Centers, Inc. to jointly

finance and manage six jumbo combination food-and-drug stores in Texas,

pioneering the first superstore concept. The combination shops were up to

25,000 feet larger than average grocery stores at the time, and carried higher-

margin convenience items such as cosmetics, perfumes, pharmacy products,

camera supplies, and electrical equipment in addition to grocery offerings.

By 1974, sales reached $852.3 million, with net earnings of $8.9 million. In

A L B E R T S O N S


Tenant Overview

1977, Albertson’s and Skaggs amicably dissolved their partnership, splitting

the assets. In 1979, the company’s first warehouse stores were opened. The

company continued to grow steadily through the 1980s, opening its first fully

mechanized distribution center in 1988 and having enough infrastructure to

handle its own distribution by 1990. In 1992, Albertson’s acquired 74 Jewel

Osco food-and-drug stores in Texas, Oklahoma, Arkansas, and Florida from

American Stores Company, formerly Skaggs.

In 1999 Albertson’s acquired American Stores Company entirely in an $11.7

billion deal, absorbing 288 combination stores, 514 supermarkets, and 783

stand-alone drugstores. In 2002, the company dropped the apostrophe

from its name in marketing materials. In 2004, Albertsons expanded to New

England by acquiring the Shaw’s and Star Markets chains for about $2.5 billion.

In 2006, Albertsons, Inc., was reorganized as Albertsons LLC and sold to AB

Acquisition LLC (a Cerberus Capital Management–led consortium). In 2013, the

company bought back the majority of its former stores which had been sold

to SuperValu. In 2015, AB Acquisition announced it would change its name

to Albertsons Companies Inc. In the same year, the company completed

its acquisition of publicly-traded Safeway for $9.2 billion. It also acquired

73 stores from A&P for its Acme banner and 35 stores from Haggen for its

Albertsons banner during fiscal 2015, and acquired an additional 29 stores

from Haggen during fiscal 2016. Albertsons opened 15 new stores in fiscal

2016 and 28 in fiscal 2017. In 2019, Albertsons opened a new 100,000 square-

foot experience-focused flagship store featuring scratch-made bakery items,

meats smoked and roasted in house, a live lobster tank, an oyster bar and an

on-site dietitian to offer wellness advice.

FINANCIALSAt the end of fiscal year 2018, Albertsons reported sales of $60.5 billion (an increase of 1.0%). Gross profit margin increased to 27.9% during fiscal 2018 compared to 27.3% during fiscal 2017. Net income was $131.1 million during fiscal 2018 compared to net income of $46.3 million during fiscal 2017.

Adjusted EBITDA was $2.7 billion, or 4.5% of sales, during fiscal 2018 compared to $2.4 billion, or 4.0% of sales, during fiscal 2017. The increase in adjusted EBITDA primarily reflects the company’s improvements in shrink expense, higher fuel margins, and the realization of the company’s cost reduction initiatives.

OPERATING PLAYBOOKAlbertsons operates its stores according to its well-implemented operating playbook, which covers every major facet of store-level operations. The playbook is based on the key concepts of delivering “full, fresh, friendly and clean” stores and superior customer service. The stores operate under the company’s rigorous G.O.L.D. Program (Grand Opening Look Daily) which focuses on appealing fresh displays, well-stocked shelves, and brightly lit departments.

Albertsons has responded to increased demand for natural and organic products by expanding its offering of private label “own brands” such as Open Nature and O Organics. O Organics hit $1 billion in sales in 2018 and the company plans to expand the offering by 50%, adding 500 new products to the line. Albertsons’ portfolio of USDA-certified organic products is one of the largest and fastest growing in the industry. The company’s decentralized operating structure enables its divisions to offer products that are responsive to local tastes and preferences.

The company maintains price competitiveness through systematic price investment to drive customer traffic and basket size. It also uses loyalty programs, including just for U, MyMixx and fuel-based rewards programs, as well as its strong own brand assortment, to improve customer perception of its value proposition.


Tenant Overview (continued)

Tenant Overview - National Footprint

Own Brands

2,250+retail stores

$60.5 Bannual sales as

FYE 2018

34 Mcustomers per

week

395fuel stations

1,740+in-store

pharmacies

23+distribution

centers

20food and

beverage plants

500 newitems launched

every year

$2.74 Badj. EBITDAin FY 2018

Four exclusive

billion-dollarbrands

Approximately

5.5 Mpatients

Experienced management with

32 yearsin retail (avg.)

Home delivery in11 of the top 15

U.S. markets (as of 9/8/18)

One of the largest retail employers, providing

approximately

275,000jobs

We operate in35 states

including Washington, D.C.


Tenant Overview - Company Banners

Top 10 US Food Retailers 2018 | Grocery Sales (Sales in billions)

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$100

$75

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$43 $34$25 $22 $17 $16 $15 $11

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JEFFREY S. THOMAS

THOMAS COMPANY

210 Third Avenue South | Suite 5C

Seattle, WA 98104

800.775.3350

[email protected]

Exclusively Marketed By

INVESTMENT SALES • ADVISORY SERVICES • SALE LEASEBACKS • DEBT PLACEMENT

PLEASE CONTACT

THOMASCOMPANY.COM

4700 yelm hwy se | lacey, wa - thomas company · proposal and from whom you have obtained an...

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