investment opportunity | offering memorandum halekuai center

Investment Opportunity | Offering Memorandum

Halekuai Center563-565 Farrington HighwayKapolei, Hawaii

Skip Rotticci CCIMVice President | Oregon+1 503 499 [email protected]

Edward J. Rapoza PBPrincipal Broker| Hawaii+1 808 937 [email protected]

Alex BrostSales | Hawaii+1 541 968 [email protected]

Table of Contents

03 Investment Summary

09 Property Information

13 Tenant Overview

21 Market Overview

26 Comparables

32 Financial Overview

Offering Memorandum

Halekuai Center

Investment Summary

Investment HighlightsHalekuai Center is located at 563-565 Farrington Higway in the city of Kapolei, HI. Built in the year 2001, Halekuai Center is based in an affluent retail trade area with high income residents and is in close proximity to national tenants such as Walmart, Costco, Home Depot, and Target. Halekuai Center is a two story, 4 star retail center sprawling over 28,885 square feet just opposite of the Kapolei Shopping Center and Kaplolie Marketplace anchored by Safeway Supermarket, all creating strong co-tenant synergy.

Halekuai’s strategic positioning offers the following advantages to its occupants:

• Located near the intersection of Farrington Highway and Fort Barrette Road

• Just opposite tothe Kapolei Shopping Center and Kapolie Marketplace

• TheBus stop right in front with frequent stops

• Close proximity to national tenants such as Walmart, Costco, Home Depot, and Target

• High quality national/credit tenants within the center include Texaco, Starbucks, Anytime Fitness, and Jamba Juice

• 2022 Projected Net Operating Income: $1,146,359

• $10.2MM in competitve assumable financing

• Interest Rate at 4.82%

• 4 years remaining on term

• 1% assumption fee

• Excellent “First and Main” location

• High quality, well maintained construction

Halekuai Center Offering Memorandum | Investment Summary | 4

Clockwise from top:

• My Cafe storefront

• 2nd level breezeway

• 2nd level lobby

• My Cafe interior

Property Photos


Walmart

Kapolei Marketplace

Safeway

Halekuai Center

Queen Liliuokalani FWY

Queen Liliuokalani FWY

Farrington Highway

Farrington Highway Fort Barrette Road

Fort Barrette Road

Property Aerial

North


Area Map

North

Pearl City

Honolulu

KapoleiHalekuai Center


Amenities Map

North


Offering Memorandum

Halekuai Center

PropertyInformation

Physical Description

Property Address:563-565 Farrington Highway

Kapolei, HI 96707

Class:B

Year Built:2001

Zoning:BMX-3

Community Business District

Total Building Area:28,885 SF

Gross Land Area: 87,000 SF (30,0650 leased to Texaco)

Leasable:50,650 SF total

25,420 SF building

30,650 SF ground

No. of Floors:2

Construction:Reinforced Concrete

Tenancy:Retail/Office

Occupancy:90.45%

Parking:97 spaces including 4 designated handicapped

3.9:1 parking ratio

Halekuai Center Offering Memorandum | Property Information | 10

Details:

• ALTA/ACSM Land Title Survey Lot 12287, Land Court Application 1069

• Walter P. Thompson, Inc.

North

Site Plan


Floor Plan102104

Star

buck

s

Jam

ba Ju

ice

My

Cafe

The Barber Shop

Tiffany’s Nails

Thai

Lao

Gei

co

Marines

1,444 SF1,281 SF

207

AnytimeFitness

Kapolei Karaoke

Dental Perfections

Family Vision

Divine Rite

Thai Aroma

1,001 SF

Kapolei Karaoke

Second Floor

First Floor


Offering Memorandum

Halekuai Center

TenantOverview

Tenant Descriptions

Photographer(s)/Agency byline here.

Major Tenant

TexacoPublic/Private: Public (NYSE: CVX) Website: texaco.com

Texaco Corporation is an American multinational energy corporation. Texaco is one of the world’s leading integrated energy companies. Texaco Corporation, through its subsidaries, is engaged in petroleum, chemicals, mining, power generation, and energy operations worldwide. Texaco is involved in coal and molybdenum mining operations; cash management and debt financing activities; insurance operations; real estate activities; and energy services, and alternative fuels and technology businesses. The company owns or has stakes in 8,090 gas stations in the US (8,700 outside

the US) that operate mainly under the Chevron and Texaco brands. Texaco also owns 50% of chemicals concern Chevron Phillips Chemical.

Halekuai Center Offering Memorandum | Tenant Overview | 14

Tenant Descriptions

Major Tenant

Starbucks Public/Private: Public (NASDAQ: SBUX)Website: starbucks.com

Starbucks Corporation, doing business as Starbucks Coffee, is an American global coffee company and coffeehouse chain based in Seattle, Washington. The world’s #1 specialty coffee retailer, Starbucks has more than 27,000 retail stores in about 65 countries. The outlets offer coffee drinks and food items, as well as roasted beans, coffee accessoreis and teas. Starbucks operates more than 10,000 of its own shops, which are located mostly in the US, while licensees and franchisees operate roughly 9,575 units worldwide (primarily in shopping centers and airports). In addition, Starbucks markets its coffee through grocery stores, food service customers, and licenses its brand for other food and beverage products.

Major Tenant

Anytime FitnessPublic/Private: PrivateWebsite: anytimefitness.com

Anytime Fitness is a 24-hour health and fitness club. The company operates over 2,400 franchised locations in 19 countries. Anytime Fitness was founded by Jeff Klinger, Dave Mortensen and Chuck Runyon in 2002. Anytime Fitness headquarters are in Hastings, Minnesota. To the general public, the company offers memberships to boutique fitness centers. Open 24 hours a day, 365 days a year. Anytime Fitness prides itself on providing its members with convenient fitness options and friendly, personal service in well-maintained facilities which feature top-quality exercise equipment. Gyms are now open in all 50 states, Canada, Mexico, Australia, New Zealand, England, Scotland, Ireland, Grand Cayman, Poland, the Netherlands, Spain, Qatar, India, Chile, Japan, Singapore, Malaysia and the Philippines. All franchised gyms are individually opened and operated.

Major Tenant

Jamba JuicePublic/Private: Public (NASDAQ: JMBA)Website: jambajuice.com

Jamba, Inc. owns and franchises Jamba Juice stores though its wholly-owned subsidiary, Jamba Juice Company. As of January 2017, there were 857 store locations globally. There were 258 Company-owned and operated stores and 551 frachise-operated stores in the United States, and 48 franchise-operated international stores. Jamba Juice Company expanded the Jamba brand by direct selling of consumer packaged goods (CPG) and licensing its trademarks. CPG products for at-home enjoyment are also available online, through select retailers across the nation and in Jamba Outlets. .


Tenant DescriptionsTenant

Tiffany’s NailsFull-service nail salon, state license massage therapy, and sale of related retail products

Tenant

Kapolei KaraokeKaraoke room rental

Tenant

Kapolei KaraokeKaraoke room rental

Tenant

Family VisionOptometry office: sports vision, vision therapy, retail optics, and lens lab

Tenant

Dental PerfectionsDental office

Tenant

Hair CaveMen’s barbershop including retail sales of hair products

Tenant

My CafeSit down restaurant/cafe

Tenant

Thai LaoSit down restaurant

Tenant

Hanks Tax ServiceTax preparation

Tenant

GEICOInsurance

Tenant

US MarinesUS Marines recruiting office

Tenant

Devine RiteTattoo parlor

Tenant

Thai Aroma Massage TherapyMassage spa


Lease Abstract: Texaco

Base RentFrom To Monthly

1-15-2001 1-14-2006 $9,500.00

1-15-2006 1-14-2011 $10,925.00

1-15-2011 1-14-2016 $12,563.75

1-15-2016 1-14-2021 $14,448.31

1-15-2021 1-14-2026 $20,582.73

1-15-2026 1-14-2031 $23,582.74

Operating Costs:

Property Taxes Land pro rata share of land area, Utilities. Common areas not including Retail building interior and exterior areas. 2021 flat rate $1,648.22 per month increasing by 5% each year thereafter for the term.

Operating Cost Share:

Per original lease document. First year $700.00 per month increasing at the rate of 5% every year thereafter for the term of the lease. 2021 current CAM rate $1,648.00 per month

Use:

Service Station/Car Wash/Convenience Store

Assignment & Subletting:

Assignment and Subletting only with Sublessor’s written consent.

Leased Premises:

Texaco Station

Square Footage:

Convenience Store/Car Wash-4004 square feet Pad- 30,650 square feet

Effective/Execution Date:

July 15, 2000

Commencement Date:

180 days after Subleased premises are ready for occupancy- Assumed Commencement Date January 15, 2001- First Rental Period 1/15/2001-1/14/2006.

Rent Commencement Date:

18 months following the Effective Date- October 14, 2002.

Expiration Date:

January 14, 2031

Security Deposit:

$0.00

Renewal Option:

Four 5-year options to renew the lease with minimum 120 days maximum 360 days prior written notice. Rate to be by agreement or appraisal.

Holdover:

Should Tenant remain in the premises after the expiration of the lease, tenancy becomes month to month and the rate shall be double the amount of rent at expiration.


Lease Abstract: Starbucks


11-1-2018 10-31-2019 $5,803.40

11-1-2019 10-31-2020 $5,977.51

11-1-2020 10-31-2021 $6,156.83

Market Leasing Assumptions

11-1-2021 10-31-2022 $6,187.50

11-1-2022 10-31-2023 $6,373.13

11-1-2023 10-31-2024 $6,564.48

11-1-2024 10-31-2025 $6,761.56

11-1-2025 10-31-2026 $6,964.38

Leased Premises:

Suite 101

Square Footage:

1,375 Square Feet

Commencement Date:

Aug 28, 2001. First Amendment Jul 8,2011. Second Amendment Oct. 22, 2014.

Expiration Date:

Sept. 30, 2011, extended to Oct 31, 2014. Expires Oct 31, 2024

Security Deposit:

$0.00

Renewal Option:

Fair Market Rent after October 31, 2024

Holdover:

Should Tenant remain in the premises after the expiration of the lease, the new rent shall be 150% of then current rent.

Operating Costs:

The rental structure is triple net (NNN) with taxes, insurance and maintenance paid as separate line item expense. No Ground Lease reimbursement from Starbucks.

Admin capped at 15%


Per original lease document. Lease states 5.2644%. First Amendment states 5.3226%

Use:

Retail Coffee


Tenant may transfer all or part of its interest to the following types of entities without prior consent of the Landlord: an affiliate of Tenant, any business which is consolidated or merged with Tenant, any business entity that is acquired.


Lease Abstract: Anytime Fitness


6-1-2019 11-30-2019 $0.00

12-1-2019 7-31-2024 $9,000.00

8-1-2024 7-31-2029 $9,900.00

8-1-2029 7-31-2034 $10,890.00

Leased Premises:

Suite 201

*As per 2019 Amendment tenant has 5 assigned parking spaces as long as they are not in default of the terms of the lease.

Square Footage:

4,500 Square Feet

Commencement Date:

January 10, 2014

Expiration Date:

January 31, 2029

Security Deposit:

$10,387.69

Renewal Option:

One five year. Option rent at $10,890.00 per month. Notice given 360 days prior to expiration.

Operating Costs:

The rental structure is triple net (NNN) with taxes, insurance, and maintenance paid as separate line item expense. 17.47% of Building expenses, and 5.17% of all other expenses. Controllable costs capped at 3% increases annually. No cap on ground rent, property taxes, insurance premiums, and utilities.

Holdover:

Should Tenant remain in the premises after the expiration of the lease, the new rent shall be 150% of the then current rent.


Per original lease document. Lease states 17.47% building expenses, 5.17% of all other common area expenses.

Use:

Gym, Fitness studio, personal training.




Lease Abstract: Jamba Juice


11-1-2018 10-31-2019 $5,751.00

11-1-2019 10-31-2020 $6,038.55

11-1-2020 10-31-2021 $6,159.32

Market Leasing Assumptions

11-1-2021 10-31-2022 $5,751.00

11-1-2022 10-31-2023 $5,923.53

11-1-2023 10-31-2024 $6,101.39

11-1-2024 10-31-2025 $6,284.57

11-1-2025 10-31-2026 $6,473.07


Per original lease document. Lease states 5.0258%. Restated at 1,278 sq. ft. as 4.96%.

Use:

Retail sale of blended drinks, juices, and related items.



Leased Premises:

Suite 101A

Square Footage:

1,278 Square Feet

Commencement Date:

Aug 28, 2001. First Amendment May 31,2011. Second Amendment Nov 1, 2011.

Expiration Date:

Oct 31, 2011, extended to Oct 31, 2016. Expires Oct 31, 2021.

Security Deposit:

$0.00

Renewal Option:

Fair Market Rent after October 31, 2021.

Holdover:

Should Tenant remain in the premises after the expiration of the lease, the new rent shall be 150% of then current rent.

Operating Costs:

The rental structure is triple net (NNN) with taxes, insurance and maintenance paid as separate line item expense. No Ground Lease reimbursement from Jamba Juice.

Admin capped at 15%


Offering Memorandum

Halekuai Center

MarketOverview

Kapolei OverviewKapolei is located on Oahu’s south shore, about 25 miles (40 km) west of downtown Honolulu. In the past, the land where Kapolei is now located was agricultural land, used

for sugarcane and pineapple production. Today, Kapolei is rapidly growing and already has a population of 15,186 and the median age of 34. Jobs are expected to double in

the next 20 years. The town is being developed as an urban center, second to Honolulu. The popula-tion is projected to increase nearly 64% over the next two decades. In

fact, much of the islands growth is occurring in the Ewa Plain and the area around Kapolei.

In 2002, Pacific Business News reported that Kapolei had the second highest median income on the island of Oahu, at $62,303. Sperlings’s Best Places reports Kapolei

median income of $70,129, compared to the national average of $42,350. Nearly one household in five has income exceeding $100,000, with a home ownership rate of 70%.

The median home value in Kapolei is $521,600. Kapolei home values have gone up 6.1% over the past year and Zillow predicts they will rise 1.8% within the next year.

The median list price per square foot in Kapolei is $367, which is lower than the Honolulu Metro average of $455. The median price of homes currently listed in Kapolei is

$545,000 while the median price of homes sold is $486,250. The median rent price in Kapolei is $2,500, which is higher than the Honolulu Metro Median of $2,000.

Located near Kapolei is also an industrial area, the Campbell Industrial Park featuring a deep-water port, and Barbers Point Naval Air Station, with its Kalaeloa Airport. One

attraction near Kapolei is Wet’n’Wild Hawaii, a 25-acre open air water park featuring many water slides, pools and hot tubs. Near Kapolei is Ko Olina, an upscale resort

community. The man-made Ko Olina Lagoons feature nice beach coves and a sheltered area for swimming. Kapolei also has a small but growing contingent of private

schools, including college prep Island Pacific Academy in the city of Kapolei, The American Renaissance Academy of Kapolei, and Seagull schools for pre-school and K-2. Two

public school complexes serve the Kapolei region – the Kapolei Complex for Kapolei and Makakilo, and the Campbell Complex for Ewa Beach communities. Upper division

schools provide a continuum of post-second-ary education at Leeward Community College, University of Hawaii West Oahu, and The University of Phoenix.

Halekuai Center Offering Memorandum | Market Overview | 22

Kapolei Demographics

Business & Employment 1 Mi 2 Mi 3 Mi

Total Business 501 949 1,295

Total Employees 7,768 14,327 21,130

White Collar 67% 64% 65%

Blue Collar 18% 19% 19%

Services 16% 17% 16%

Unemployment Rate 18.3% 18.5% 18.5%

Population 1 Mi 2 Mi 3 Mi

Current 12,622 37,152 47,935

5 Year 13,419 38,765 49,775

Median Age 35.8 33.7 34.2

Married 51.5% 50.5% 52.6%

College Degree 29% 30% 31%

Some College 34% 35% 35%

High School Graduate 29% 29% 28%

No High School Diploma 7% 6% 6%

Households 1 Mi 2 Mi 3 Mi

Current $3,631 10,568 13,643

5 Year $3,906 10,921 14,131

Avgerage Size 3.44 3.47 3.45

Median Household Income

$97,397 $102,305 $103,871

Median Home Value $576,710 $580,606 $599,372

Owner Occupied Housing Units

70.6% 68.3% 68.0%


Wet ’n’ Wild Hawaii

University of Hawaii

Kalaeloa Airport

Campbell Industrial Park

Aulani Disney Resort

Ko Olina Lagoons

Surrounding Attractions

Halekuai Center


Honolulu, located on the southern coast of Oahu in Hawaii, is the state’s

largest, best-known and capital city. The Hawaiian Islands were first discovered by

British captain James Cook in 1778 and annexed as a US territory by President

McKinley in 1898. The capital of the Kingdom of Hawaii since 1845, Honolulu

became the commercial hub of the Pacific and a strategic military center thanks

to its geography (Honolulu in Hawaiian means “sheltered bay”). In the early 1900s,

the US Navy established a Pacific headquarters at Honolulu’s Pearl Harbor; Japan’s

bombing of Pearl Harbor in 1941 brought the US into World War II. The US Army

soon built Schofield Barracks in the mountains of Central Oahu. After the War,

these bases expanded, making the military an important part of the city’s economy.

HonoluluMarket Overview

Business & Employment 1 Mi 2 Mi 3 Mi

Total Business 6,631 12,645 16,286

Total Employees 93,450 178,326 243,412

White Collar 68% 68% 66%

Blue Collar 14% 14% 14%

Services 18% 18% 20%

Unemployment Rate 18.4% 19.1% 19.6%

Population 1 Mi 2 Mi 3 Mi

Current 45,061 134,188 220,166

5 Year 46,720 136,951 223,421

Median Age 46.9 46.7 43.8

Married 45.8% 45.4% 44.3%

College Degree 40% 38% 36%

Some College 27% 26% 27%

High School Graduate 20% 23% 23%

No High School Diploma 12% 13% 13%

Households 1 Mi 2 Mi 3 Mi

Current 21,510 59,008 87,412

5 Year 22,245 60,047 88,507

Avgerage Size 2.02 2.22 2.4

Median Household Income

$59,804 $59,306 $60,713

Median Home Value $598,404 $599,345 $631,290

Owner Occupied Housing Units

35.7% 37.5% 38.0%

Demographics


Offering Memorandum

Halekuai Center

Comparables

Lease Comparables

North

# Property Location Retail SF Rental RateOperating Expenses Term

Lease Start Date

Lease End Date TI Allowance

Free Rent(Months)

1 Kealanani Plaza - Suite A-10091-650 Farrington HWYKapolei, HI 96707

1,296 SF $4.60NNN

$0.83 120 5/1/2018 4/30/2028 $19,440.00 5

2 Kealanani Plaza - Suite C-15091-650 Farrington HWYKapolei, HI 96707

1,500 SF $4.40NNN

$0.83 120 5/1/2018 4/30/2028 $37,500.00 5

3 Kealanani Plaza - Suite A-12091-650 Farrington HWYKapolei, HI 96707

1,035 SF $4.50NNN

$0.83 30 4/1/2018 3/31/2023 0 4

Halekuai Center

1 Kealanani Place

2 Kapolei Commons

3 The Marketplace at Kapolei

4 Kapolei Village Center

5 Ko Olina Station

6 Kapolei Parkway Shops

7 Ace Center at Kapolei

1

2

4

3

5

6

7


Lease Comparables


Lease Start Date


Free Rent(Months)

4 Kealanani Plaza Suite B11091-650 Farrington HWYKapolei, HI 96707

950 SF $4.75NNN

$0.83 60 5/1/2017 4/30/2022 $7,125.00 3

5 Kealanani PlazaSuite B-130 91-650 Farrington HWY Kapolei, HI 96707

1,500 SF $4.25NNN

$0.83 125 11/1/2016 1/31/2027 $45,000.00 3

6 Kealanani Plaza 91-650 Farrington HWY Suite: C-100 Kapolei, HI 96707

1,339 SF $5.00NNN

$0.83 123 8/1/2016 10/31/2026 0 3

7 Kealanani Plaza 91-650 Farrington HWY Suite: A-130 Kapolei, HI 96707

971 SF $4.60NNN

$0.83 62 8/1/2016 9/30/2021 0 2

8 Kapolei Commons Suite: 230 4450 Kapolei Parkway Kapolei, HI 96707

10,000 SF $3.67NNN

$0 120 12/1/2017 11/30/2017 0 0

9 The Marketplace at Kapolei Suite: B1-C 590 Farrington HWY Kapolei, HI 96707

12,000 SF - 0 36 5/1/2017 4/30/2020 0 0

10 Kapolei Village CenterSuite B-2 4850 Kapolei parkway Kapolei, HI 96707

1,025 SF $5.69NNN

$1.31 60 8/1/2017 7/31/2022 0 0

11 Ko Olina Station Suite 1-10892-1047 Olani Street Kapolei, HI 96707

1,277 SF $3.75NNN

$1.69 60 10/1/2016 9/30/2021 $89,390.00 0


Lease Comparables


Lease Start Date


Free Rent(Months)

12 Kapolei Parkway ShopsSuite 105338 Kamokila BoulevardKapolei, HI 96707

1,309 SF $4.75NNN

$1.22 60 10/1/2016 9/30/2021 0 0

13 Ace Center at KapoleiSuite B-2480 Kamokila BoulevardKapolei, HI 96707

1,810 SF $3.19 $0.52 60 11/1/2016 10/3/2021 0 0

14 Kapolei Village CenterSuite 4044850 Kapolei ParkwayKapolei, HI 96707

675 SF $5.00NNN

$1.48 90 2/15/2016 8/14/2023 $20,250.00 6

15 Kapolei Village CenterSuite 3044850 Kapolei ParkwayKapolei, HI 96707

1,130 SF $4.85NNN

0 64 1/15/2016 5/14/2021 0 0


Sale Comparables

North

2

4

6

5

3

Halekuai Center

2 Kenrock Building

3 2470 S. King St

4 Ko Olina Station

5 Eha Building

6 Pearlridge Center

7 Fairway Shops at Kaanapali

7

Oahu

Maui


Sale Comparables

# Property Location Year Built Price Building SF PSF Fee/GL Sold Date

1 Halekuai Center563-565 Farrington HWYKapolei, HI

2001 Call for offer 28,885 + 4,004 - Ground Lease TBD

2 Kenrock Building1400 Kapiolani BlvdHonolulu, HI 96814

1949 $22,266,000.00 30,041 $741 Fee Simple Feb-2017

3 Building2470 S. King StHonolulu, HI 96826

1955 $20,000,000.00 31,279 $639 Ground Lease Mar-2017

4 Ko Olina Center92-1046 Olani StKapolei, HI 96707

2009 $17,922,857.00 30,600 $585.71 Ground Lease Mar-2017

5 Eha Building92-1049 Olani StKapolei, HI 96707

2009 $10,856,800.00 18,536 $585.71 Ground Lease Mar-2017

6 Pearlridge Center98-1015 Moanalua RdAieha, HI 96701

2013 $6,501,463.00 15,558 $417.89 Ground Lease Mar-2017

7 Fairway Shops at Kaanapali2580 Kekaa DrLahaina, HI 96761

2001 $13,970,000.00 35,491 $393.62 Ground Lease Jul-2017


Offering Memorandum

Halekuai Center

FinancialOverview

Pricing & Financial Summary

Operations (Year 1)

Effective Gross Revenue $2,164,278

Operating Expenses $1,017,919

Net Operating Income $1,146,359

Cash Flow before Debt Service $984,365

Cash Flow after Debt Service $353,315

Leveraged Returns

Cash to Initial Equity (Year 1) 5.89%

Discount Rate 10%

Present Value $20,445,108

IRR 17.88%

Property Halekuai Center

Property Address 563-565 Farrington Highway, Kapolei, HI

Property Size 87,000/30,650 Leased to Texaco

Offering Price Market Rate - Call for pricing guidance

Operating Income Year One $1,146,359

Building Size 56,060 SF

Construction Year 2001

Lot Size 87,000 SF

No. of Parking Spaces 97 (3.9:1 parking ratio)

Halekuai Center Offering Memorandum | Financial Overview | 33

Cash FlowYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

For the Years Ending Jul-2022 Jul-2023 Jul-2024 Jul-2025 Jul-2026 Jul-2027 Jul-2028 Jul-2029 Jul-2030 Jul-2031

RENTAL REVENUE

Potential Base Rent 1,405,333 1,403,463 1,430,077 1,431,640 1,494,778 1,554,223 1,589,673 1,624,949 1,673,164 1,733,753

Absorption & Turnover Vacancy -6,006 0 -1,587 0 0 0 0 0 0 0

Free Rent -24,638 0 0 -27,992 -21,219 -39,861 0 0 -32,450 -24,599

Total Rental Revenue 1,374,690 1,403,463 1,428,489 1,403,648 1,473,559 1,514,362 1,589,673 1,624,949 1,640,714 1,709,155

OTHER TENANT REVENUE

Percentage Rent 23,495 27,212 30,077 31,901 31,952 34,427 36,543 37,640 38,769 39,932

Total Expense Recoveries 854,796 914,326 936,747 1,026,609 1,130,277 1,170,055 1,199,605 1,229,094 1,267,220 1,315,656

Total Other Tenant Revenue 878,292 941,538 966,824 1,058,510 1,162,229 1,204,482 1,236,149 1,266,734 1,305,989 1,355,588

Total Tenant Revenue 2,252,981 2,345,001 2,395,314 2,462,158 2,635,788 2,718,844 2,825,822 2,891,683 2,946,703 3,064,743

PARKING REVENUE

Total Other Revenue 19,200 19,776 20,369 20,980 21,610 22,258 22,926 23,614 24,322 25,052

Potential Gross Revenue 2,272,181 2,364,777 2,415,683 2,483,139 2,657,397 2,741,102 2,848,748 2,915,297 2,971,025 3,089,794

VACANCY & CREDIT LOSS

Total Vacancy & Credit Loss -107,903 -118,239 -119,276 -124,157 -132,870 -137,055 -142,437 -145,765 -148,551 -154,490

Effective Gross Revenue 2,164,278 2,246,539 2,296,407 2,358,982 2,524,528 2,604,047 2,706,310 2,769,532 2,822,474 2,935,305


Cash FlowYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

For the Years Ending Jul-2022 Jul-2023 Jul-2024 Jul-2025 Jul-2026 Jul-2027 Jul-2028 Jul-2029 Jul-2030 Jul-2031

OPERATING EXPENSES

Buildings R&M 34,419 35,452 36,515 37,611 38,739 39,901 41,098 42,331 43,601 44,909

Building 176,059 181,341 186,781 192,384 198,156 204,101 210,224 216,530 223,026 229,717

Utilities 238,308 245,457 252,821 260,406 268,218 276,264 284,552 293,089 301,881 310,938

Parking Lot & Grounds 236,740 237,601 238,488 239,402 271,548 272,517 273,516 274,544 275,603 312,580

Management Fee 92,883 96,363 98,553 101,256 108,085 111,479 115,789 118,544 120,895 125,648

Taxes 214,437 220,870 227,496 234,321 241,351 248,591 256,049 263,730 271,642 279,792

Insurance 19,073 19,645 20,235 20,842 21,467 22,111 22,774 23,457 24,161 24,886

Other Owner Expenses(non-recoverable)

6,000 6,180 6,365 6,556 6,753 6,956 7,164 7,379 7,601 7,829

Total Operating Expenses 1,017,919 1,042,909 1,067,254 1,092,778 1,154,316 1,181,920 1,211,166 1,239,606 1,268,411 1,336,298

Net Operating Income 1,146,359 1,203,630 1,229,152 1,266,203 1,370,211 1,422,127 1,495,144 1,529,926 1,554,063 1,599,007

LEASING COSTS

Tenant Improvements 44,730 0 15,358 46,845 98,510 51,855 0 17,804 54,306 114,201

Leasing Commissions 117,264 0 0 43,534 43,488 130,097 0 0 50,467 91,094

Total Leasing Costs 161,994 0 15,358 90,379 141,998 181,952 0 17,804 104,774 205,295

Cash Flow Before Debt Service 984,365 1,203,630 1,213,794 1,175,825 1,228,213 1,240,175 1,495,144 1,512,122 1,449,289 1,393,712

DEBT SERVICE

Total Debt Service 631,050 631,050 631,050 631,050 631,050 631,050 631,049 631,050 631,050 631,050

Cash Flow After Debt Service 353,315 572,580 582,744 544,775 597,163 609,125 864,095 881,072 818,239 762,662


Sources and UsesYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Sources Of CapitalNet Operating Gains 1,146,359 1,203,630 1,229,152 1,266,203 1,370,211 1,422,127 1,495,144 1,529,926 1,554,063 1,599,007Debt Funding Proceeds 10,000,000 0 0 0 0 0 0 0 0 0Initial Equity Contribution 6,000,000 0 0 0 0 0 0 0 0 0Net Proceeds From Sale 0 0 0 0 0 0 0 0 0 25,287,979Defined Sources Of Capital 17,146,359 1,203,630 1,229,152 1,266,203 1,370,211 1,422,127 1,495,144 1,529,926 1,554,063 26,886,986Required Equity Contributions 0 0 0 0 0 0 0 0 0 0Total Sources Of Capital 17,146,359 1,203,630 1,229,152 1,266,203 1,370,211 1,422,127 1,495,144 1,529,926 1,554,063 26,886,986

Use of CapitalProperty Purchase Price 16,000,000 0 0 0 0 0 0 0 0 0Total Property Purchase Price 16,000,000 0 0 0 0 0 0 0 0 0Total Debt Service 631,050 631,050 631,050 631,050 631,050 631,050 631,049 631,050 631,050 631,050Tenant Improvements 44,730 0 15,358 46,845 98,510 51,855 0 17,804 54,306 114,201Leasing Commissions 117,264 0 0 43,534 43,488 130,097 0 0 50,467 91,094Debt Retirement 0 0 0 0 0 0 0 0 0 8,089,727Defined Uses Of Capital 16,793,044 631,050 646,408 721,429 773,048 813,002 631,049 648,854 735,824 8,926,072Cash Flow Distributions 353,315 572,580 582,744 544,775 597,163 609,125 864,095 881,072 818,239 17,960,915Total Uses Of Capital 17,146,359 1,203,630 1,229,152 1,266,203 1,370,211 1,422,127 1,495,144 1,529,926 1,554,063 26,886,986

Unleveraged Cash on Cash ReturnCash to Purchase Price 6.15% 7.52% 7.59% 7.35% 7.68% 7.75% 9.34% 9.45% 9.06% 8.71%NOI to Book Value 7.09% 7.45% 7.60% 7.78% 8.35% 8.57% 9.01% 9.21% 9.30% 9.45%Leveraged Cash on Cash ReturnCash to Initial Equity 5.89% 9.54% 9.71% 9.08% 9.95% 10.15% 14.40% 14.68% 13.64% 12.71%

Unleveraged Annual IRR 11.23%Leveraged Annual IRR 17.88% * Results displayed are based on Forecast data only


Scheduled Lease ExpirationTenant Rent Roll as of Jan-2021

Tenant Name Suite Lease Type Tenant Size (SF) Lease Start Date Expiration Date

Starbucks 101 Retail 1,375 11/1/2020 10/31/2021Jamba Juice 101A Retail 1,278 11/1/2020 10/31/2021

My Café 101B Retail 1,116 1/1/2020 12/31/2021Vacant 102 Retail 1,444 N/A N/AThai Lao 103 Retail 1,200 4/1/2020 3/31/2025Hanks Tax Service 104 Retail 1,281 4/23/2020 4/22/2021GEICO 105 Retail 1,658 2/1/2020 4/30/2025US Marines 106 Retail 937 7/21/2009 7/20/2024Hair Cave 107 Retail 1,512 3/1/2021 11/30/2025Tiffany's Nails 108 Retail 997 9/1/2016 8/31/2021Anytime Fitness 201 Retail 4,500 6/1/2019 7/31/2034Thai Aroma Massage Therapy 202 Retail 1,300 6/1/2021 5/31/2026Kapolei Karaoke 202A Retail 1,660 2/1/2020 1/31/2022Kapolei Karaoke 203 Retail 780 2/1/2020 1/31/2022Family Vision 205 Office 1,226 5/1/2020 4/30/2022Dental Perfections 206 Office 1,175 5/1/2020 4/30/2022Vacant 207 Retail 1,001 N/A N/ADevine Rite 208 Retail 970 5/1/2020 4/30/2022IES-Texaco Texaco Pad Retail 3,130 1/15/2001 1/14/2031Honolulu Disposal Serv. TrashPad Other 0 8/1/2021 7/31/2036


Call for Offers August 17, 2021

Selection of Finalist August 19, 2021

Best and Final August 20-24, 2021

Buyer Identification August 24, 2021

PSA Negotiation August 25 - September 1, 2021

Due Dilligence September 1 - October 1, 2021

Completion of Due Dillegence October 1, 2021

Closing Period October 1 - 31, 2021

Closing Date November 3, 2021

Transaction Timeline


November 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

September 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Transaction Timeline

September 1 - October 1

• Due Diligence

August 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

August 17

• Call for Offers

August 19

• Selection of Finalist

August 24

• Buyer Identification

August 20 - 24

• Best and Final Offer

August 25 - September 1

• PSA Negotiation

October 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

October 1

• Completion of Due Dilligence

October 1 - 31

• Closing Period

November 3

• Closing


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Investment Opportunity | Offering Memorandum

Halekuai CenterFarrington HighwayKapolei, Hawaii

investment opportunity | offering memorandum halekuai center

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