OFFERING MEMORANDUM ADVANCE AUTO PARTS, INC. · 2016. 7. 12. · Advance Auto Parts / Port Arthur,...

O F F E R I N G M E M O R A N D U M

ADVANCE AUTO PARTS, INC.PORT ARTHUR, TEXAS

NET LEASE GROUP

ANDREW BOGARDUS+1 415 677 0421

[email protected] Lic #00913825

CHRISTOPHER SHELDON+1 415 677 0441


CHRISTINA CAMPANELLA+1 415 677 0456


JOHN NICHOLSON, SIOR+1 713 345 1430


SUBJECT PROPERTY

3 Investment Offering & Highlights

4 Investment Overview

5 Site Plan

6 Advance Atores Company, Inc.

7 Advance Auto Relationship Letter

8 Aerial / Local Map

10 Port Arthur, Texas

Economy

Transportation & Demographics

12 Confidentiality & Disclaimer

O F F E R I N G M E M O R A N D U M

ADVANCE AUTO PARTS, INC.PORT ARTHUR, TEXAS

ANDREW BOGARDUS+1 415 677 0421


CHRISTOPHER SHELDON+1 415 677 0441


CHRISTINA CAMPANELLA+1 415 677 0456


JOHN NICHOLSON, SIOR+1 713 345 1430


SUBJECT PROPERTY

Advance Auto Parts / Port Arthur, TX / 3

Investment Offering & Highlights

The Offering

• A 7,000± square foot freestanding ADVANCE AUTO PARTS retail store leased to Advance Stores Company, Inc., for 15 years (8 years remaining) thru March 31, 2024

• Price: $858,000 - 7.00% Cap Rate

• Existing assumable financing in place

Real Estate / Area Strengths

• Located along highly traversed Route – 87 / Gulfway Drive, one of the main north-south retail thoroughfares running through Port Arthur

• Dense suburban retail location near Walgreens, Dunkin’ Donuts, Church’s Chicken and Family Dollar

Lease / Tenant

• Largest auto parts retailer

• S&P rated “BBB” investment grade credit

• Limited landlord responsibilities - landlord responsible for structure only

• Rent increases during two 5-year options

• Strong display of Tenant commitment to location with 16 year operating history and new 8 year lease extension

Advance Auto Parts / Port Arthur, TX / 3SUBJECT PROPERTY


Investment Overview

Location

4601 Gulfway Drive, Port Arthur, Texas, 90 miles east of Houston, Texas

Lot Size

Approximately 0.9178 acres – ±39,979 square feet

Improvements

Completed in 2000, a 7,000± square foot freestanding ADVANCE AUTO PARTS retail store with ample on-site parking

Lease

Recently extended lease to ADVANCE STORES COMPANY, INC., for an additional 8 years and 3 months beginning January 1, 2016 through March 31, 2024 at a net annual rent of $60,060. The lease is NN with Landlord responsible for repairs and replacement of roof, structure, parking lot and 50% of any cost for significant repairs or replacement of HVAC system. There are two 5-year renewals options at approximately 11.5% increase in the first option period and 5.25% increase in the second option period.

Annual Rent

Price: $858,000 - 7.00% Cap Rate

Price Per Square Foot $122.57

Rent Per Square Foot $8.58 net per year – $0.72 net per month

Assumable Financing

Buyer to assume the existing life insurance loan of $483,000 as of August 1, 2016 at an interest rate of 4.42% with 19 year amortization, with annual debt service of $37,606, all due and payable on December 1, 2019. There is a one point assumption fee.*

CURRENT - 3/24

Price : $858,000 Net Income: $60,060

Loan: $483,000 Debt Service: $37,606

Cash Required: $375,000 Cash Flow: $22,454

Cash on Cash Return: 6.00%

* Contact broker for further details

Lease Years Annual Rent Return

Current - 03/31/2024 $60,060 7.00%

04/01/2024 - 03/31/2029 (Option 1) $67,060 7.82%

04/01/2029 - 03/31/2034 (Option 2) $70,560 8.22%

±7,000 SQ. FT.

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GULFWAY DRIVE

Site Plan

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Advance Stores Company, Inc.

ADVANCE STORES COMPANY, INCORPORATED, the major subsidiary of ADVANCE AUTO PARTS, INC. (NYSE: “AAP”), is the second-largest retailer of automotive aftermarket parts, parts, accessories, batteries, and maintenance items in the U.S. Advance operates 5,171 AAP stores, 122 Worldpac branches, and served approximately 1,300 independently owned Carquest branded stores in the United States, Puerto Rico, the Virgin Islands and Canada. Advance employs approximately 73,000 Team Members.

For the fiscal year ended January 2, 2016, Advance Auto Parts, Inc., reported revenues of $9.7 billion, a net earning of $473 million, and total stockholders’ equity of $2.46 billion.

For the three months ended March 31, 2016, AAP reported revenues of $2.98 billion, a net earning of $158 million, and total stockholders’ equity of $2.63 billion.

Advance Auto Parts is rated “BBB” (investment grade) by Standard & Poor’s.

Advance Auto Parts, Inc., through its subsidiaries, operates as a retailer of automotive aftermarket parts, accessories, batteries, and maintenance items to do- it-yourself (DIY) and do-it-for-me customers (DIFM).

• DIY — Do It Yourself: Individual consumers who come to the store to purchase the merchandise and who, typically, work on their own vehicles.

• DIFM — Do It for Me: Auto repair professionals and service shops working on an individual’s vehicle, who usually order by phone, fax, or e-mail. Many service shops order daily from the store for same- or next-day delivery.

Strong DIFM sales depend upon a good distribution/inventory system. If the ordered item is in stock, there is next-day availability to the ultimate consumer; if not; the objective is to ship from an AAP warehouse overnight, providing second-day delivery. To that end, AAP has developed a system of warehouses, such that any parts order placed by a given store will be delivered the next morning. To achieve these efficiencies, there are different sizes of highly computerized warehouses, all within an overnight drive of every store.

In January 2005 Forbes Magazine published its list of best-managed companies in America, one in each of 26 industries (financial, chemical, etc.). Advance Auto Parts was named the best-managed retail company in the U.S. In December 2004 AAP was added to those stocks constituting the Standard & Poor’s MidCap 400.

The actual tenant, Advance Stores Company, Incorporated (“Advance Stores”), is a wholly owned subsidiary of Advance Auto Parts, Inc. (AAP). Advance Stores contains all or essentially all the operating revenues, operating expenses, operating assets, and operating liabilities of the parent company, AAP. The 2007 annual report to the SEC, the “10-K report,” contains the following statement:

“ADVANCE AUTO PARTS, INC., CONDUCTS ALL OF ITS OPERATIONS THROUGH ITS WHOLLY-OWNED SUBSIDIARY, ADVANCE STORES COMPANY.”

The parent, AAP, is not on the lease. See attached letter from AAP dated March 31, 2009.

Website: http://shop.advanceautoparts.com

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Area Map

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GULFWAY DRIVE

15,730CARS PER DAY

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Area MapThe subject property is located along Gulfway Drive at the intersection of Green Avenue in the neighborhood of Griffin Park in Port Arthur, TX. Gulfway Drive is one of the main north-south thoroughfares that spans the town and runs parallel to Sabine Lake, the body of water which empties out into the Gulf of Mexico 20 miles south.

Other tenants nearby the site are: Walgreens, Popeyes, Subway, Happy Donuts, Tequilla Mexicana, Family Dollar, Payless Shoesource, H-E-B, along with many other local eating establishments, grocery stores, beauty salons, churches, schools, etc.

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Port Arthur, TexasPort Arthur is a city on the Easter Coast of Texas along the border of Louisiana and the Gulf of Mexico. The population in the city is approximately 54,135 people and is recognized as both a seaport and center of a large network of oil refineries. Port Arthur is situated along Sabine Lake which empties into the Gulf of Mexico, and the Rainbow Bridge across the Neches River connects Port Arthur to Bridge City.

Port Arthur is approximately 22 miles southeast of Beaumont, 90 miles east of Houston, 133 miles west of Lafayette, LA, and 264 miles west of New Orleans, LA.



Port Arthur, Texas (cont)

ECONOMYThe economy in Port Arthur is based on energy production and exportation through the Port of Port Arthur Seaport. The city’s location on the Gulf International Coastway and approximately 90 miles east of Houston makes it ideal for large scale production and trade companies.

Several large projects involving energy infrastructure exist in the area, the two largest being the Golden Pass and Sabine Pass LNG terminals. Golden Pass LNG Terminal is a joint venture formed by affiliates of three of the world’s largest and most experienced oil and gas companies: Qatar Petroleum (70%), ExxonMobil (17.6%) and ConocoPhillips (12.4%). Among the largest terminals in the world, the Golden Pass LNG Terminal is capable of importing approximately 2 billion cubic feet of natural gas per day through its dual berth ship docks. Sabine Pass LNG terminals, owned by Cheniere, is among the leading companies in North America strategically pursuing the development of LNG terminals. The Company is currently developing onshore LNG export terminals and related natural gas pipelines along the U.S. Gulf Coast. Both projects have brought cumulative investments of over $2 billion to the Port Arthur area and employ thousands of local citizens.

Motiva Enterprises’ Port Arthur refinery is now the largest in the United States, with a crude capacity of 600,000 barrels per day. The facility has access to multiple major crude oil and product pipelines, which transport gasoline, diesel, kerosene and jet fuel to the East Coast, Midwest, Central Texas and the Southeast Texas area. The refinery also operates the largest single lube plant in the US, producing lubricant base oils that are sold to Shell Lubricants and a variety of industrial companies. Valero has a large refinery in Port Arthur as well which has undergone several expansions.

TRANSPORTATIONHighway

Port Arthur is located off of US Hwy 96. Hwy 96 provides direct access to Interstate 10 (I-10) just outside of Beaumont, TX, approximately 20 miles north of Port Arthur. I-10 provides the city with direct access to Houston to the west and Lafayette, Baton Rouge and New Orleans (via I-12) to the east.

Air

The nearest international airport is George Bush Intercontinental Airport (IAH) in Houston, TX approximately 90 miles west of Port Arthur.

DEMOGRAPHICS

2016 SUMMARY 3 MILES 5 MILES 7 MILES

Population 50,019 69,228 96,943Households 18,114 26,352 37,587Families 12,414 17,399 25,099Average Household Size 2.75 2.60 2.56Owner Occupied Housing Units 11,772 15,679 23,373Renter Occupied Housing Units 6,342 10,673 14,214Median Age 35.6 36.4 37.2Median Household Income $38,169 $38,974 $42,877Average Household Income $52,180 $54,736 $58,261


Confidentiality and DisclaimerThe information contained in this marketing brochure (“Materials”) is proprietary and confidential. It is intended to be reviewed only by the person or entity receiving the Materials from Cushman & Wakefield (“Agent”). The Materials are intended to be used for the sole purpose of preliminary evaluation of the subject property/properties (“Property”) for potential purchase.

The Materials have been prepared to provide unverified summary financial, property, and market information to a prospective purchaser to enable it to establish a preliminary level of interest in potential purchase of the Property. The Materials are not to be considered fact. The information contained in the Materials is not a substitute for thorough investigation of the financial, physical, and market conditions relating to the Property.

The information contained in the Materials has been obtained by Agent from sources believed to be reliable; however, no representation or warranty is made regarding the accuracy or completeness of the Materials. Agent makes no representation or warranty regarding the Property, including but not limited to income, expenses, or financial performance (past present, or future); size, square footage, condition, or quality of the land and improvements; presence or absence of contaminating substances (PCB’s, asbestos, mold, etc.); compliance with laws and regulations (local, state, and federal); or, financial condition or business prospects of any tenant (tenants’ intentions regarding continued occupancy, payment of rent, etc). A prospective purchaser must independently investigate and verify all of the information set forth in the Materials. A prospective purchaser is solely responsible for any and all costs and expenses incurred in reviewing the Materials and/or investigating and evaluating the Property.

By receiving the Materials you are agreeing to the Confidentiality and Disclaimer set forth herein.

Advance Auto Parts / Port Arthur, TX / 12SUBJECT PROPERTY

OFFERING MEMORANDUM ADVANCE AUTO PARTS, INC. · 2016. 7. 12. · Advance Auto Parts / Port Arthur,...

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