ABSOLUTE NNN MCDONALD'S GROUND LEASE · 2017. 5. 16. · ABSOLUTE NNN MCDONALD'S GROUND LEASE 286...

NET LEASE PROPERTY GROUP | SINGLE TENANT INVESTMENT OFFERING

OFFERING MEMORANDUM

ABSOLUTE NNN MCDONALD'S GROUND LEASE

286 57TH AVENUE NE | FRIDLEY (MINNEAPOLIS MSA), MN 55432

2 | MCDONALD'S :: FRIDLEY, IL

AFFILIATED BUSINESS DISCLOSURE & CONFIDENTIALITY AGREEMENT

CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related

entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses

including, but not limited to, brokerage services, property and facilities management,

valuation, investment fund management and development. At times different Affiliates may

represent various clients with competing interests in the same transaction. For example, this

Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell

Crow Company. Those, or other, Affiliates may express an interest in the property described

in this Memorandum (the “Property”) may submit an offer to purchase the Property and may

be the successful bidder for the Property. You hereby acknowledge that possibility and agree

that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the

involvement of any Affiliate in the sale or purchase of the Property. In all instances, however,

CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described

in this Memorandum and will not act in concert with or otherwise conduct its business in a

way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but

rather will conduct its business in a manner consistent with the law and any fiduciary duties

owed to the client(s) it represents in the transaction described in this Memorandum.

This is a confidential Memorandum intended solely for your limited use and benefit in

determining whether you desire to express further interest in the acquisition of the Property.

This Memorandum contains selected information pertaining to the Property and does not

purport to be a representation of the state of affairs of the Property or the owner of the Property

(the “Owner”), to be all-inclusive or to contain all or part of the information which prospective

investors may require to evaluate a purchase of real property. All financial projections and

information are provided for general reference purposes only and are based on assumptions

relating to the general economy, market conditions, competition and other factors beyond

the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other

information provided and made herein are subject to material variation. All references

to acreages, square footages, and other measurements are approximations. Additional

information and an opportunity to inspect the Property will be made available to interested and

qualified prospective purchasers. In this Memorandum, certain documents, including leases

and other materials, are described in summary form. These summaries do not purport to be

complete nor necessarily accurate descriptions of the full agreements referenced. Interested

parties are expected to review all such summaries and other documents of whatever nature

independently and not rely on the contents of this Memorandum in any manner.

Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or

representatives make any representation or warranty, expressed or implied, as to the accuracy

or completeness of this Memorandum or any of its contents, and no legal commitment or

obligation shall arise by reason of your receipt of this Memorandum or use of its contents;

and you are to rely solely on your investigations and inspections of the Property in evaluating

a possible purchase of the real property.

The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions

of interest or offers to purchase the Property, and/or to terminate discussions with any entity at

any time with or without notice which may arise as a result of review of this Memorandum. The

Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum

or making an offer to purchase the Property unless and until written agreement(s) for the

purchase of the Property have been fully executed, delivered and approved by the Owner and

any conditions to the Owner’s obligations therein have been satisfied or waived.

By receipt of this Memorandum, you agree that this Memorandum and its contents are of

a confidential nature, that you will hold and treat it in the strictest confidence and that you

will not disclose this Memorandum or any of its contents to any other entity without the prior

written authorization of the Owner or CBRE, Inc. You also agree that you will not use this

Memorandum or any of its contents in any manner detrimental to the interest of the Owner

or CBRE, Inc.

© 2017 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.

INVESTMENT OVERVIEW | 3

OFFERING MEMORANDUM

TABLE OF CONTENTS

Investment Overview.....................................4

Property Overview.........................................8

Market Overview.........................................14

ABSOLUTE NNN MCDONALD'S GROUND LEASE

286 57TH AVENUE NE | FRIDLEY, MN 55432

GEOFFREY HARRIS+1 602 735 [email protected]

FINANCING CONTACT:

MICHAEL KAIDERNNN SpecialistFirst Vice President+1 630 573 [email protected]

ERIC SHEAFFERLocal Licensee+1 612 336 [email protected]

PRIMARY CONTACTS:

mailto:geoffrey.harris%40cbre.com?subject=

mailto:michael.kaider%40cbre.com?subject=

mailto:eric.sheaffer%40cbre.com%20?subject=


CBRE is pleased to exclusively present the tremendous opportunity to acquire fee

interest in a new, modern prototype absolute NNN McDonald’s ground lease

located in Fridley, a north suburb of Minneapolis, MN. The lease has 16 years

and 6 months of term remaining, zero landlord responsibilities, and strong 10%

rent bumps every 5 years, at below market rent.

The property is an outparcel to Fridley Market, a 146,367 SF shopping center

anchored by Cub Foods, which drives a very high volume of traffic to the area.

The center is highly visible from Interstate 694 and Highway 47 (University Avenue

NE). Traffic counts are 149,000 and 41,500 along Interstate 694 and Highway

47, respectively. The property also benefits from a strategic neighborhood

location in proximity to the area housing stock which features a growing and

affluent population base.

McDonald's (NYSE: MCD) is the world's leading fast-food retailer by sales with

more than 36,000 restaurants in over 100 countries serving 46 million customers

each day. McDonald's is rated BBB+/Stable by Standard & Poor's and had 2015

sales of more than $25.4 billion; the US accounts for some 30% of total sales.

THE OFFERING

INVESTMENT OVERVIEW | 5

FINANCIAL OVERVIEW

LEASE YEARS ANNUAL MONTHLY

Current to 11/30/2023 $80,012.04 $6,667.67

12/1/2023 to 11/30/2028 $87,999.96 $7,333.33

12/1/2028 to 11/21/2033 $96,800.04 $8,066.67

Option 1: Year 21 to 25 $106,479.96 $8,873.33

Option 2: Year 26 to 30 $117,128.04 $9,760.67

Option 3: Year 31 to 35 $128,840.76 $10,736.73

Option 4: Year 36 to 40 $141,724.92 $11,810.41

Option 5: Year 41 to 45 $155,897.40 $12,991.45

Option 6: Year 46 to 50 $171,487.08 $14,290.59

Offering Price $2,000,000

Cap Rate 4.0%

Rent $80,012.04

Lease Structure Absolute NNN Ground Lease

Land Area +/- 0.72 Acres

Building Size 4,361 SF

Year Built 2013

Tenant McDonald's USA, LLC

Original Lease Term 20 Years

Term Remaining 16 Years 6 Months

Lease Commencement August 12, 2013

Rent Commencement November 22, 2013

Lease Expiration November 21, 2033

Rental Increases 10% in base term and renewal options

Renewal Options Six 5-Year options

Landlord Responsibilities None

MCDONALD'S RENT SCHEDULE


INVESTMENT HIGHLIGHTS

• Exceptional Opportunity: The opportunity to acquire fee interest in a long term absolute NNN McDonald’s ground lease. The property is

located in Fridley, Minnesota, approximately 6.5 miles north of the Minneapolis Central Business District.

• Investment Grade Tenant: Rated BBB+/Stable by Standard & Poor’s, McDonald’s is one of the most well-known and valuable brands in the

world.

• Long Term Commitment: The 20 year ground lease has 16 years and 6 months of term remaining with zero landlord responsibilities and

10% rental increases in both the base term and all six option periods.

• Strong Grocery Anchored Center: McDonald’s is located on an outparcel within Fridley Market, a 145,121 SF shopping center that was

redeveloped in 2014. The center is anchored by a 62,592 SF Cub Foods which is owned by SuperValu (NYSE: SVU; B+ Rating) and holds the number

one grocer market share position in the Minneapolis MSA. Tenants within Fridley Market include Duluth Trading Company, Teppanyaki Grill, Fridley

Liquors, Caribou Coffee, Pancheros Mexican Grill, Sprint, and Great Clips.

• Irreplaceable Location: The property has excellent visibility from Interstate 694. The interstate has a full interchange with Highway 47

(University Avenue NE) facilitating convenient access to the center. Traffic counts are 149,000 and 41,500 along Interstate 694 and Highway 47,

respectively. The Property is also located in an established trade area and includes national retailers such as Target, Menard’s, The Home Depot, CVS

Pharmacy, Petco, and Goodwill. Additionally, a 124 room WoodSpring Suites Hotel is currently being constructed between Cub Foods and Interstate

694.

• AttractiveDemographicsProfile:The primary trade area for McDonald’s reaches approximately two miles to the north, south, and east

and approximately one mile to the Mississippi River to the west. Within a two-mile radius of the property are 44,727 residents with an average household

income of $65,277. The Medtronic world headquarters is less than one mile east of the center.

INVESTMENT OVERVIEW | 7 INVESTMENT OVERVIEW | 7


PROPERTY OVERVIEW


PROPERTY DESCRIPTION | 9

CORPORATE OVERVIEWTenant Name McDonald's USA, LLC

Tenant Ownership Public

Stock Symbol MCD

Board NYSE

S&P Rating BBB+/Stable

Locations 36,000+

Corporate Headquarters Oak Brook, Illinois

Website www.mcdonalds.com

TENANT OVERVIEWMcDonald's (NYSE: MCD) is the world's leading fast-

food retailer by sales with more than 36,000

restaurants in over 100 countries serving 46 million

customers each day. Most of its outlets are free-

standing units, but McDonald's also has many quick-

service kiosk units located in airports and retail areas.

The company is one of the world's most well-known

and valuable brands and holds a leading share in the

globally branded quick service restaurant segment of

the informal eating-out market in virtually every country in which they do business.

McDonald's had 2015 sales of more than $25.4 billion; the U.S. is the largest market in

the McDonald’s system and accounts for over 30% of global revenue.


REGIONAL MAP



LOCATOR MAP



SITE PLAN

Flood Zone Disclosure: According to flood hazard maps published by the FEMA the site is within Zone C as indicated on Community Map Panel No. 270013004B, dated March 2, 1981, an area determined to be outside the 500-year floodplain determined to be outside the 1% and 0.2% annual chance floodplain.

PROPERTY DESCRIPTION | 13 PROPERTY DESCRIPTION | 13


MARKET OVERVIEW


MARKET OVERVIEW | 15

MINNEAPOLIS MSA

The Minneapolis/St. Paul/Bloomington MN-WI Metropolitan Area, or simply the Twin Cities, includes 11

counties in Minnesota as well as two counties in Wisconsin, situated in the central–eastern portion of

Minnesota near the Wisconsin border. The total population of the MSA currently exceeds 3.5 million,

making it the 16th most populous MSA in the country.

POPULATION TRENDS

The MSA as a whole has seen consistent growth over the past several years, a trend that is projected

to continue. Population of the MSA has increased from more than 3 million at the 2000 Census, to an

estimated current population of more than 3.5 million. It is projected that the MSA population will top 3.7

million by the year 2021.

EMPLOYMENT BASE

While, at one time, manufacturing was the Twin Cities’ major industry, the services industry currently

accounts for the largest share of employment in the Minneapolis/St. Paul MSA. The diversified labor pool,

drawing from the healthcare, financial, and technology sectors among others, helps to maintain a very

strong level of employment in the Minneapolis area.

The unemployment rate has historically been lower than both the state and national figures. As of December

2016, unemployment rates were 3.6% for the Minneapolis MSA, 3.9% for Minnesota, and 4.7% for the

nation.

The Minneapolis MSA is home to 17 Fortune 500 companies, contributing to the area’s stable employment

level. The large presence of such firms is indicative of the strength of the local support network and general

business climate. Due to its economic diversification, the Minneapolis/St. Paul metropolitan area tends to

be subject to fewer seasonal and cyclical peaks and valleys than many “one-industry” cities.

MARKET OVERVIEW


MINNEAPOLIS / ST. PAUL MSA

FORTUNE 500 COMPANIES

RANK COMPANY REVENUE ($ BILLIONS)

6 United Health Group $157.1

38 Target $73.8

71 Best Buy $39.8

84 CHS $34.6

93 3M $30.3

131 U.S. Bancorp $21.5

160 Supervalu $17.8

161 General Mills $17.6

206 Ecolab $13.6

208 C.H. Robinson Worldwide $13.5

215 Land O'Lakes $13.2

232 Ameriprise Financial $12.2

257 Xcel Energy $11.0

304 Hormel Foods $9.3

316 Mosaic $8.9

318 Thrivent Financial for Lutherans $8.8

465 St. Jude Medical $5.5

Source: Fortune.com


MARKET OVERVIEW | 17 MARKET OVERVIEW | 17


TOP EMPLOYERS—PRIVATE

RANK COMPANYNUMBER OF EMPLOYEES

RANK COMPANYNUMBER OF EMPLOYEES

1 TARGET 31,035 11PARK NICOLLET HEALTH SERVICES

8,342

2 ALLINA HEALTH SYSTEM 27,150 12 HORMEL FOODS CORP. 8,256

3 UNIVERSITY OF MINNESOTA 25,680 13 MEDTRONIC INC. 8,000

4 HEALTH PARTNERS 22,340 14 BEST BUY CO. INC. 8,000

5 FAIRVIEW HEALTH SYSTEM 21,000 15 SUPERVALU INC. 7,900

6 WELLS FARGO & CO. 20,000 16THOMPSON REUTERS NORTH AMERICAN LEGAL

7,400

7 3M CO. 15,894 17 HEALTH EAST 7,391

8 UNITED HEALTH GROUP 13,977 18HENNEPIN COUNTY MEDICAL CENTER

6,458

9 U.S.BANCORP 11,590 19 CARGILL INC. 5,500

10 DELTA AIRLINES 9,700 20 XCEL ENERGY 5,430


PROPERTY DESCRIPTION | 19 PROPERTY DESCRIPTION | 19


MCDONALD'S DEMOGRAPHIC MAP

MARKET OVERVIEW | 21

MARKET DEMOGRAPHICS POPULATION 1 MILE 2 MILES 3 MILES

2016 Population 9,613 44,727 98,905

2021 Projection 9,798 45,852 101,797

DAYTIME EMPLOYEES 8,605 21,173 54,761

INCOME

2016 Avg. HH Income $58,983 $65,277 $70,867

2016 Median HH Income $47,565 $51,076 $55,784

Households with Income >$75K 25.0% 31.3% 35.9%

2021 Projected Avg. HH Income $62,890 $70,554 $78,128

AVERAGE AGE 38.0 38.6 38.6

EDUCATIONAL ATTAINMENT

Associate’s Degree 9.0% 8.4% 8.9%

Bachelor’s Degree 13.8% 17.6% 19.0%

Master’s Degree 4.8% 5.5% 6.5%

Professional or Doctorate Degree 1.8% 2.3% 2.5%

Total College Degrees 29.4% 33.8% 36.9%

HOUSEHOLDS 4,090 17,961 39,000

AVG. HOME VALUE $188,359 $186,813 $195,013

DEMOGRAPHIC HIGHLIGHTS WITHIN 2 MILES

44,727 total population

31.3% income $75K—$500K

21,173 daytime employees

33.8% college degrees

38.6 average age

$65,277 avg. HH income

17,961 households

$186,813 avg. home value

PRIMARY TRADE AREA OVERVIEW


© 2017 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE,

Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any

projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction

to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent

investigation of the property to determine to your satisfaction the suitability of the property for your needs.

PRIMARY CONTACTS:

MICHAEL KAIDERNNN SpecialistFirst Vice President+1 630 573 [email protected]

ERIC SHEAFFERLocal Licensee+1 612 336 [email protected]

GEOFFREY HARRIS+1 602 735 [email protected]

FINANCING CONTACT


mailto:michael.kaider%40cbre.com?subject=

mailto:eric.sheaffer%40cbre.com%20?subject=

mailto:geoffrey.harris%40cbre.com?subject=

ABSOLUTE NNN MCDONALD'S GROUND LEASE · 2017. 5. 16. · ABSOLUTE NNN MCDONALD'S GROUND LEASE 286...

Documents

Transcript of ABSOLUTE NNN MCDONALD'S GROUND LEASE · 2017. 5. 16. · ABSOLUTE NNN MCDONALD'S GROUND LEASE 286...