tractor supply – hohenwald, tn€¦ · broker of record nashville office license: tn 307629....

OFFERING MEMORANDUM

TRACTOR SUPPLY – HOHENWALD, TN608 E Main Street • Hohenwald, TN 38462

Representative Photo

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe 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

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Non-Endorsement NoticeMarcus & 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.

TRACTOR SUPPLY - HOHENWALD TN

Hohenwald, TN

ACT ID ZAA0560520

2

Jody McKibbenBroker of Record Nashville OfficeLicense: TN 307629

TABLE OF CONTENTS

SECTION

3

FINANCIAL ANALYSIS

INVESTMENT OVERVIEW

MARKET OVERVIEW

01

02

03

3



4

FINANCIAL

ANALYSIS

#

OFFERING SUMMARY

#5

OFFERING SUMMARYOffering

Asking Price

Cap Rate

Net Operating Income

Property Specifications

Property Address

Rentable Area

Land Area

Year Built

Guarantor

Lease Type

Landlord Responsibilities

Increases

Original Lease Term

Term Remaining

Options

Rent Commencement

Lease Expiration

$1,527,000

5.50%

$84,000

608 E Main Street, Hohenwald, TN 38462

30,595 SF

2.89 Acres

1987

Corporate Guarantee

NN

Roof & Structure

2% Increase Every Five Years throughout Base Term

15 Years

15 Years

Two 5-Year Options

1/1/2009

10/31/2034




Terms Available Under Confidentiality – Contact Listing Agents

PRICING AND VALUATION MATRIX

PROPERTY NAMECVS PHARMACY



6

PRICING AND VALUATION MATRIXPRICING AND VALUATION MATRIX



PROPERTY NAME

6

OFFERING SUMMARY

Lease Term Rental Rates

TENANT NAME SQUARE FEET LEASE START LEASE END INCREASE MONTHLY ANNUALLY OPTIONS

Tractor Supply 30,595 1/1/2009 10/31/2034 $7,000 $84,000

2 (5-Year); 17% Inc. at Beg. of 1st Opt. and

1% Inc. at Beg. of 2nd Opt.

11/1/2024 $7,140 $85,680

11/1/2029 $7,282 $87,384

NN Lease | Corporate Guarantee | Long-Term Lease | 2% Rental Increases

• The Lease is guaranteed by Tractor Supply Company

• New 15-year extension as of November 1, 2019• 2% increases every five years throughout base

term• Two 5-year options with 17% increase at

beginning of first period; 1% increase at beginning of second period

• Over $75,000 invested in capital improvements over the past 5 years

Central Location | Excellent Visibility & Frontage | National Retailers in Surrounding Market

• Centrally located on East Main Street (Highway 412) boasting over 10,500 vehicles per day

• 77 miles south west of Nashville• Retailers in the area include Walmart, Dollar Tree,

Dollar General, Citizens Bank, AutoZone, O’Reilly Auto Parts, McDonald’s, Subway, Sonic, Hardee’s, Pizza Hut, and others


Terms Available Under Confidentiality – Contact Listing Agents


7

INVESTMENT

OVERVIEW

TENANT SUMMARY

#




PROPERTY NAME

8

TENANT SUMMARY

COMPANY TYPE

SubsidiaryPARENT

Tractor Supply Co.# OF LOCATIONS

1,940

2018 REVENUE

$7.91 B2018 ASSETS

$3.06 BSTOCK TICKER

TSCOCREDIT RATING

S&P: BBB

Tractor Supply Companytractorsupplyco.com

Tractor Supply Company (TSC) does awhole lot more than its name might suggest.Besides providing agricultural machine parts,TSC offers animal feed, fencing, powertools, riding mowers, work clothing, and petsupplies, as well as tools for gardening,irrigation, welding, and towing. TSC offersboth name-brand merchandise and its owncrop of private-label goods. The companyhas nationwide scope, operating more than1,850 stores in some 49 US states under theTractor Supply Company, Del's Farm Supply,and Petsense banners. Stores areconcentrated in rural areas and near largecities to cater to full- and part-time farmers,ranchers, and contractors. TSC also sellsonline.


9


TENANT SUMMARY

#

LOCATION OVERVIEWTENANT SUMMARYPRICING AND VALUATION MATRIX

PROPERTY NAMECITIZENS BANK


PROPERTY NAME

10

PROPERTY OVERVIEW

Location

Located in

Hohenwald, Tennessee

Access

East Main Street

Less than 80 miles from Nashville, Tennessee

Traffic Counts

East Main Street

(US Highway 412)10,500 Cars Per Day

Year Built Zoning

1987 C-3

Corridor Commercial District

Parcel

Acres: 2.89

Square Feet: 125,900


#

608 E Main Street, Hohenwald, TN 38462

LOCATION OVERVIEWTENANT SUMMARYPRICING AND VALUATION MATRIX

PROPERTY NAMETRACTOR SUPPLY - HOHENWALD TN


PROPERTY NAMETRACTOR SUPPLY - HOHENWALD TN

11

REGIONAL AND LOCAL MAP

AERIAL PHOTOTRACTOR SUPPLY - HOHENWALD TN

12


13

MARKET

OVERVIEW

MARKET OVERVIEW

NASHVILLEOVERVIEW

14

Known as the epicenter of country music, the Nashville metro containsa population of nearly 2 million within 14 counties: Davidson, Smith,Macon, Williamson, Cheatham, Sumner, Dickson, Robertson, Cannon,Rutherford, Hickman, Trousdale, Maury and Wilson. Davidson is themost populous county with 707,000 people and is home to Nashville,the capital city, which has 680,000 residents. The metro is located inthe north-central portion of the state of Tennessee in what is known asthe Central Basin. The Cumberland River, which snakes through theregion, adds to the local economic base and enhances Nashville’squality of life. The metro has a strong multimodal infrastructure networklinking the metro to markets around the world.

MARKET OVERVIEW

METRO HIGHLIGHTS

MUSIC INDUSTRY CAPITALThe metro is well known as a central location for the country music industry, which provides many local jobs and supports a large hospitality sector.

DIVERSIFYING ECONOMYOther major industries in the metro include healthcare, government, automotive manufacturing, publishing, insurance and finance.

ROBUST POPULATION GROWTHThe population will increase at a faster pace than the nation over the next five years.


MARKET OVERVIEW

ECONOMY§ The entertainment and country music capital houses a number of venues such as Ryman

Auditorium, Grand Ole Opry, Country Music Television and Music Row.§ Low tax burdens and incentives for businesses attract companies to the region and are

assisting in diversifying the economy. § Fortune 500 companies headquartered in the region include: HCA Holdings, Dollar General,

Community Health Systems, Envision Healthcare, LifePoint Health, Delek US Holdings and Tractor Supply Co.

SHARE OF 2018 TOTAL EMPLOYMENT

MAJOR AREA EMPLOYERS

Vanderbilt University and Medical Center

The Kroger Co.

Community Health Systems

Saint Thomas Health

Nissan North America

HCA Healthcare

Asurion

Electrolux Home Products

Cracker Barrel Old Country Store, Inc.

Randstad * Forecast

15

MANUFACTURING8%

GOVERNMENT

HEALTH SERVICESEDUCATION AND

+OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

19%AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL ANDBUSINESS SERVICES

2%INFORMATION

17%

4%

12% 11% 7%

15%


MARKET OVERVIEW

DEMOGRAPHICS

SPORTS

EDUCATION

ARTS & ENTERTAINMENT

§ The metro is expected to add nearly 132,000 people over the next five years,

resulting in the formation of approximately 59,000 households.

§ A median home price slightly below that of the nation has allowed 65 percent of

households to own their home, compared with 64 percent for the U.S.

§ Roughly 32 percent of residents age 25 and older hold bachelor’s degrees; of those

residents, 11 percent also have obtained a graduate or professional degree.

While music may be in Nashville’s blood, Music City has a lot more to offer, including

performing arts, history, cuisine, professional sports, education institutions, natural beauty

and Southern charm. Music is alive not only at the Grand Ole Opry, but also at the Ryman

Auditorium, Fontanel Mansion, Schermerhorn Symphony Center and the Tennessee

Performing Arts Center. For country music fans, there is the Country Music Hall of Fame

and Museum. Performing arts include the Nashville Ballet, Nashville Symphony, Nashville

Opera Association, Tennessee Repertory Theatre, Nashville Children’s Theatre and the

ACT 1 (Artists’ Cooperative Theatre). Museums in the metro include the Tennessee State

Museum, the Vanderbilt University Fine Arts Gallery and Frist Center for the Visual Arts.

QUALITY OF LIFE

16

* Forecast

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s

Analytics; U.S. Census Bureau


36.4

2018MEDIAN AGE:

U.S. Median:

38.0

$60,600

2018 MEDIAN HOUSEHOLD INCOME:

U.S. Median:

$58,800

1.9M

2018POPULATION:

Growth2018-2023*:

6.9%

744K

2018HOUSEHOLDS:

8.0%

Growth2018-2023*:

2018 Population by Age

0-4 YEARS

7%5-19 YEARS

19%20-24 YEARS

7%25-44 YEARS

29%45-64 YEARS

26%65+ YEARS

13%

MARKET OVERVIEW


17

Strong Tailwinds Continue to Propel Healthy Economy; New Tax Law May Encourage Investors to Refine Strategies

Tax reform powers economic acceleration. The new tax law has invigorated economicgrowth, boosting consumption and business investment. With optimism running high,many companies have generated new jobs, dropping the national unemployment ratebelow 4 percent. A tightening job market has supported increased wage growth,expanding personal disposable income more than 2 percentage points above the 10-year average to 5.4 percent. Because of this, core retail sales have benefited, rising byan average of 5.6 percent in May and June. The convergence of these factors hasresulted in accelerated economic growth that climbed above 4 percent.

Elevated Treasury rates placing upward pressure on yields. A booming economybrings with it inflationary risk, prompting the Federal Reserve to tighten monetarypolicy. The single-tenant net-leased retail sector may be substantively impacted by amore disciplined monetary approach as assets are typically responsive to the 10-yearTreasury due to their bondlike parallels. This will coalesce with other componentssuch as brand, location and lease terms when determining going-in cap rates. Forexample, dollar store yields can vastly differ as a number of these assets are in rurallocations, providing potential for higher returns. Conversely, yields for conveniencestores and quick-service restaurants typically maintain a much smaller range due totheir tempered sensitivity to key determinants of cap rates.

* Forecast** Through June

Over the past year, transaction velocity eased modestly as investorsawaited details on the new tax law. With much of that uncertainty nowrelieved, sales activity could accelerate. Furthermore, decreased taxes onpass-through entities could lead to repositioning efforts, bringing moreassets online and elevating market liquidity.

The 1031 exchange was retained in the new tax law, remaining acommonly used practice for single-tenant net-leased investors. Investorsfavor this tax provision to swap out management-intensive assets forproperties that involve a more passive approach while deferring the capitalgains tax.

Under the new tax law, sale-leasebacks have become an increasinglypopular tactic. With new restrictions on business interest deductibility, someretailers are selling the real estate in which they operate to investors, thenleasing it back to maximize deductions. This process opens the door forreinvestment into existing assets and investment into future plans as morecapital would be available.

Investment Highlights

MARKET OVERVIEW


18

New Tax Law Provides Spark to Investors;

Sale-Leaseback Opportunities Could Increase

New provisions, preservation of old ones may boost investor sentiment. Changes to the tax code, as well as the

retention key provisions like tax-deferred exchanges, real estate depreciation and mortgage interest deduction should

keep investor sentiment high for single-tenant net-leased retail assets. Additionally, new pieces to the tax code should

further boost the appeal of these relatively passive investments. For example, the new 20 percent pass-through

deduction enables some active investors using an entity such as an LLC to boost after-tax yields. However, this

deduction comes with restrictions based on income and asset base but offers strong potential for those who qualify.

Additionally, bonus depreciation is a temporary provision allowing investors to increase their current cash flow by

immediately expensing personal property in real estate assets acquired after Sept. 27, 2017.

Changes to tax law could inspire owner/users to seek sale-leasebacks. The most influential change to the tax code on

the single-tenant net-leased retail sector may be new restrictions on business interest deductions. This provision could

encourage companies to utilize sale-leasebacks as they shape their real estate strategies around lease expenses that

remain fully deductible. For owner/users, selling the real estate in which they operate to investors and then leasing it

back from them could maximize profitability, as well as unlock equity for reinvestment into current operations and funds

for potential expansion plans. Also, the previous tax law allowed companies to deduct all of their interest expenses on

their taxes, but the new provisions restrict the deductibility of business interest for companies with gross receipts in

excess of $25 million. Now, interest totaling just 30 percent of earnings before taxes, depreciation and amortization can

be deducted on taxes, further incentivizing companies to pursue sale-leasebacks.

* Through July** Forecast

MARKET OVERVIEW


19

Solid Fundamentals Aided by New Concepts

Rents benefit from thinned construction pipeline. Available space in the single-tenant net-leased sector will contract for

the ninth consecutive year, pushing national vacancy down to 4.3 percent in 2018. Even though demand remainsstrong, construction will continue to taper this year, completing 36 million square feet. The percentage of single-tenantconstruction is reduced for the second year in a row as developers step back construction. With limited retail property

completions, rent gains should be strong this year, advancing 4.2 percent to $21.18 per square foot. This increase wellexceeds the previous five-year average of 3.2 percent.

Retailer strategies change to match consumer needs. Convenience continues to emerge as a common theme in the

single-tenant net-leased retail sector as several types of retailers have adopted this concept to drive foot traffic andsales. For example, drugstores have improved their product selection by including items historically purchased atconvenience stores and grocery stores. This strategy has also helped these retailers improve front-store sales and hold

a greater edge over online pharmacies. Additionally, dollar stores have added convenience to their affordable productmix by offering instant-consumption items, such as grab-and-go sandwiches and beverage bars.

** Forecast

MARKET OVERVIEW

20

Cap rates shown above are representative of transactions that closed in the past year ending in June. Actual yields will vary by locations, tenant, lease terms and other considerations. Locations sourced from CreditNtell for public companies and company websites for private companies.

* For transactions closed in past year ending in JuneSources: CoStar Group, Inc.; CreditNtell; company sources

Brand Locations

Auto Parts

Bridgestone/Firestone 2,200O'Reilly Auto Parts 5,019AutoZone 6,003Advance Auto Parts 5,183Pep Boys 980Dollar StoresDollar General 14,534Dollar Tree/Family Dollar 14,835General RetailWalmart 11,718Sherwin-Williams 4,620AT&T 16,000Verizon Wireless 2,330Office Depot/Max 1,378Convenience Stores7-Eleven 8,707Circle K 1,481QuikTrip 762Wawa 780PharmaciesCVS 10,091Walgreens 8,100Quick-Service RestaurantsDairy Queen 6,400Starbucks 27,339McDonald's 37,241Yum Brands 45,084Burger King 24,707Wendy's 6,634Fast CasualChili's 1,674Darden Restaurants 1,769Red Lobster 705Bloomin’ Brands 1,489Applebee's 1,756Ruby Tuesday 560


MARKET OVERVIEW


21

Fed watchful as economic surge raises inflationary pressure. Strengthened hiring amid exceptionally low unemployment levels have boosted wage growth, placing upward

pressure on inflation. Amid this trend coupled with rising trade protectionism and tariffs, the Federal Reserve appears determined to head off inflation risk by continuing its quarterlyincreases of the overnight rate. These actions are lifting short-term interest rates while the 10-year Treasury rate remain range bound near 3.0 percent. Should the 10-year remain

steadfast, Fed tightening could create an inverted yield curve in which short-term rates rise above long-term rates. Although this event has preceded every recession of the past 50

years, many economists suggest such an inversion this year could be an exception to the rule. Because of distortions caused by regulatory changes and quantitative easing, thisinversion could be different. Nonetheless, the Fed’s stated path does raise recessionary risk levels because it could weigh on confidence levels and restrain spending by

consumers and businesses, thus slowing economic growth.

* Through July 20** As of Aug. 17

Capital MarketsLenders Pursue Deals as Capital Plentiful;Caution Enforcing Underwriting

10-Year Treasury still “sticky” at 3 percent. After surging at the beginning of the year, the 10-year Treasury has been range bound near 3.0 percent. To create some headroom for

its escalation of short-term rates, the Fed has tried to exert upward pressure on long-term interest rates by unwinding its balance sheet. This quantitative tightening has had littleinfluence, particularly as foreign investors have enjoyed a yield premium relative to their native 10-year rates.

Potential rapid interest rate escalation a downside risk. Although capital remains plentiful, lending could tighten quickly for a short period if interest rates rise rapidly. As experiencedin late 2016 when the 10-year rose by more than 80 basis points in 60 days, and again at the beginning of 2018 when there was a 60-basis-point surge, market liquidity could

tighten if rates jump. Considering this has happened twice in the last two years, borrowers will likely benefit by taking a cautious approach with their lenders and lock in financing

quickly.

2018 Capital Markets Outlook

MARKET OVERVIEW

PROPERTY NAME

MARKETING TEAMDEMOGRAPHICS

22


Population 1 Mile 3 Mile 5 Mile2018 Estimated Population 492 5,295 8,238

2023 Projected Population 483 5,316 8,387

Population Growth 2018 - 2023 -0.37% 0.08% 0.36%

Average Age 40.1 40.9 41.4

Households 1 Mile 3 Mile 5 Mile2018 Estimated Households 184 2,137 3,244

Projected Household Growth 2018 - 2023 -0.11% 0.36% 0.67%

Average Household Income $46,445 $46,618 $49,476

Average Household Size 2.50 2.40 2.50

2018 Average Vehicles Per Household 2.00 2.00 2.00

Housing 1 Mile 3 Mile 5 MileMedian Home Value $69,892 $76,456 $86,590

Median Year Built 1976 1974 1978

MARKET OVERVIEW

E X C L U S I V E L Y L I S T E D B Y :

Laurie Ann (L.A.) Drinkwater, CCIM

Senior Vice President Investments

Senior Director - National Retail GroupBoston Office

Tel: (617) 896-7230

Fax: (866) 262-3242

[email protected]

Licenses: CT REB.0751880, MA 147511, RI B 16787

Seth J. Richard

First Vice President Investments

Senior Director – National Retail Group

Manhattan OfficeTel: (212) 430-5164Fax: (866) 262-3242

[email protected]: CT RES- 0764595, NY 10401275108, MA 149700


tractor supply – hohenwald, tn€¦ · broker of record nashville office license: tn 307629....

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