Offering Memorandum AVANCE Houston - LoopNet...in 1998, AVANCE Houston moved full steam ahead from...

AVANCE Houston 2702 Aldine Westfield Road | Houston, TX 77093

Offering Memorandum

Subject Property

AVANCE • Houston, TX 2

Stan Johnson Company10333 Richmond Ave | Suite 740 Houston, TX 77042 P: +1 832.476.3440 stanjohnsonco.com

Offered Exclusively by

Confidentiality and Restricted Use AgreementThis Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC.

This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This COM contains descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested in the Property. Such information is not all inclusive and is not represented to include all information that may be material to an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. An interested party must conduct its own independent investigation and verification of any information the party deems material to consideration of the opportunity, or otherwise appropriate, without reliance upon SJC.

The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time. The Property is offered and sold by its owner(s) as is, where is, and with all faults, without representation or warranty of any kind except for any customary warranties of title.

BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”), is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees, representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when obtaining such relief.

Albert Muller Associate [email protected] +1 832.457.8561

TX Lic# 459937

About the InvestmentSection One

Subject Property


Demographics

0-1 mile 0-3 miles 0-5 miles

2018 Population 13,023 123,840 325,666

2018 Total Households 3,571 36,480 103,580

2018 Average HH Income $43,471 $47,053 $58,070

The OfferingStan Johnson Company, on behalf of ownership, is pleased to offer the opportunity to acquire a fee-simple building, 100% leased to AVANCE

Houston.

The ± 15,500 SF building is located in Houston, Texas in the “Northeast

Near” submarket area. AVANCE Houston is operating under a brand new

twelve (12) year lease featuring two and one-half percent (2.5%) rent

increases every thirty months or two and a half (2.5) years during the

lease term. AVANCE Houston is greatly benefiting from the tremendous

demographics (2018 population of 325,666+ within a 5-mile radius).

AVANCE was established in San Antonio in 1973, while the Houston

chapter began operations in 1988. AVANCE Houston conducted the

first early childhood education programs with parenting and toy-making

classes in a garage and provided home visits for Houston’s at-risk Hispanic

community. After receiving an RST grant from the Office of Head Start

in 1998, AVANCE Houston moved full steam ahead from that point by

expanding its service delivery model, target population, and community

service areas. AVANCE is now one of the leading providers of Early Head

Start and Head Start services in the Houston area.

For the past 30 years, AVANCE Houston has served over 100,000 families.

AVANCE Houston celebrated its 30th anniversary in 2018. The Houston

community continues to grow and expand and AVANCE is committed to

embracing this growth.

Offering Summary

Current NOI $213,900

Current Tenant AVANCE Houston

Property Type Freestanding Child Care Center

Property Summary

Location 2702 Aldine Westfield Road | Houston, TX 77093

Total Building Size (SF) ± 15,500

Lot Size (Acres) ± 1.29 Acres (approximately)

Base Lease Term/Remaining 12 Years / 11 Years

Rental Increases 2.5% Every 30 Months

Year Built 2007

Lease Type NNN Lease

Price: $3,000,000 Cap Rate: 7.00%


Investment HighlightsIdeal Business Model Location The Property is located in the Northeast Near Submarket of Houston. There are 103,000 households within a 5-mile radius. The demographics are an exact target fit for the business model.

New Long-Term LeaseThe Property is operating under a new twelve (12) year lease term. The lease observes two and one half percent (2.5%) rent increases every thirty (30) months or every two and one half (2.5) years throughout the term.

Minimal Landlord ResponsibilitiesThe landlord will benefit from the very passive NNN expense structure of the lease. Landlord is responsible for roof, foundation and walls.

US Department of Health and Human Services FundingAVANCE is part of the Federal Head Start, a program of the United States Department of Health and Human Services that provides comprehensive early childhood education, health, nutrition, and parent involvement services to low-income children and their families.

Budget and fundingThe 2011 federal budget for Head Start was $8.1 billion. 85% was to be devoted to direct services and no more than 15% on administration, serving approximately one million students. The 2018 funding for programs under the Head Start Act was nearly $9.9 billion, an increase of $610 million over the fiscal year (FY) 2017 funding level. Avance Houston received over $25 million in Federal funding in 2018.

Business Sustainability DemographicsLocated in one of the most dense population areas of Houston, the Property boasts ideal demographics that support the tenant’s business model; there is a population of 325,666 within a 5-mile radius, with ideal average household incomes and demographic cross-section.

Unique Property Attributes

325,666+Population within 5 miles

HEAD START LONG-TERM PROGRAM

Head Start is one of the longest-running programs attempting to

address the effects of systemic poverty in the United States by intervening to

aid children.

Rare NNN Lease

Families served by AVANCE Houston100,000+

households within 3-miles

103,580+

StrategicLocation

Visibility & Accessibility

34K+ VPDInterstate 69

13K+ VPDHardy Toll Rd

AVANCE • Houston, TX 6Subject Property

Property OverviewSection Two


Lease AbstractTenant AVANCE Houston, Inc.

Property Address 2702 Aldine Westfield Road, Houston, TX 77093

Building Size (SF) ± 15,500 SF

Playground Size (SF) ± 5,000 SF

Lot Size (Acres) ± 1.29 AC

Building Use Childcare

Construction Steel & SIP frame, masonry exterior

Ownership Type Fee Simple

Lease Commencement 6/1/2018

Rent Commencement 6/1/2018

Lease Term 12 years

Expiration Date 5/31/2030

Term Remaining 11 Years

Annual Rent $213,900

Rent Increases See Schedule

Expenses NNN

Termination Option Only if Tenant has total loss of funding from the Federal Department of Health and Human Services

Miscellaneous Tenant is occupying 100% of the buildingSubject Property

Rent ScheduleMonths Annual Rent Rent/SF/YR Monthly Rent Escalation

5/31/18 - 11/30/20 $213,900 $13.80 $17,825 2.50%

12/1/20 - 5/31/23 $219,248 $14.15 $18,271 2.50%

6/1/23 - 11/30/25 $224,729 $14.50 $18,727 2.50%

12/1/25 - 5/31/27 $230,347 $14.86 $19,196 2.50%

6/1/27 - 5/31/30 $236,106 $15.23 $19,675 2.50%


Hardy Toll Rd (± 13,631 VPD)

Interstate 69(±34,436 VPD)

Interstate 45(± 56,890 VPD)

Shoreham Apartments

Roderick Paige Elementary Scarborough

Elementary

James Berry Elementary

Jens

en D

r

Inte

rsta

te 6

9 H

OV

Har

dy

Toll

Rd

Interstate 45

Burbank Middle School

Houston MSTC High School

Tidwell Rd

Burbank Elementary

KIPP Dream Prep


Tenant InformationSection Three

Subject Property


Tenant OverviewAVANCE is a non-profit organization that has been serving the needs of low-income families since its founding in Texas in 1973. They are dedicated to serving the hardest-to-reach population, and to empowering families with the skills and knowledge they need to break the cycle of poverty.

The company is a United Way Agency, and operates with the assistance of allocations from the United Way organization. Through federal funding, AVANCE is able to offer their Early Head Start, Head Start, Fatherhood, Healthy Marriage and Workforce programs. Private donations have allowed the company to provide the Parent-Child Education Program and Adult Education programs.

AVANCE works with families through a proven two-generation, family engagement approach that combines early childhood development and parenting education. The cornerstone of their programs is the Parent-Child Education Program (PCEP), a national model of early intervention that focuses on the welfare of children, families and the community, and that they are all mutually reinforcing.

AVANCE also offers programs that feature additional resources designed to fully prepare students to transition to college and to help adults prepare for the workforce.

AVANCE Overview

No. of Locations 20 Locations

Tenant Business Retail Education

Headquarters San Antonio, TX

Website https://www.AVANCEhouston.org/

Head Start

3,984

Adult Education

246

Parent-Child Education Program

198

Early Head Start/CCP

1,178

Healthy Marriage

716+

AVANCE QUICK FACTS


Child Care Industry OverviewCompetitive Landscape

The U.S. child care services industry includes about 54,000 commercial facilities with combined annual revenue of $21 billion, plus about 21,000 facilities run by nonprofit organizations with combined annual revenue of about $12 billion. The industry has experienced tremendous growth as more mothers enter the workforce, necessitating daily child care. In 2017, 65% of mothers with children under the age of 6 participated in the workforce in the U.S., according to the Bureau of Labor Statistics.

Demand is driven primarily by growth in the youth population, and secondarily by employment and income. Recognition of the importance of early education is also driving demand for high-quality care. The profitability of individual child care facilities depends on good marketing, reputation, and efficient operations, as well as how saturated the local market is. Large companies have economies of scale in advertising and administration. Smaller companies can compete effectively in local markets by owning convenient locations. Source: http://www.hoovers.com

• Recession Resistant | Industry-wide sales grew by over 6% between 2008 and 2012, in contrast to a national dip of 5% during 2009.

• Fragmented | The top 50 companies generate less than 20% of the income, with many small companies competing in the marketplace.

• Growing | Changing demographics, namely an increase in working mothers, is fueling fast, necessity-based growth in the industry.

• Secure | An increasing emphasis on early education, trends towards companies paying for their employees' child care, and increasing numbers of working mothers are causing the child care industry to flourish.

Subject Property

Subject Property

Location OverviewSection Four


Downtown Houston, TX

Location OverviewHouston is a city in and the county seat of Harris County in the state of Texas. It is the most populous city in Texas and the fourth most populous city in the United States. As of 2014, the city had a population of 2,239,000, representing a 7.5% increase since 2000 and continuing a trend in population growth in

every decade since record-keeping began in 1850. Houston is the main component of the Houston-Woodlands-Sugar Land Metropolitan Statistical Area that

stretches across nine counties and includes a population of over six and a half million, making it the fifth most populated MSA in the country.

Relative to other major U.S. markets, Houston continues to display solid fundamentals with projected positive growth that outperforms the nation. The city

has one of the strongest economies in the country, derived from the city’s ability to retain its position as the center of the world’s energy industry, maintain

conservative construction levels, diversify its economic base and enjoy rising employment and continuous population growth. Offering an unsurpassed pro-

business environment, Houston is one of the least-expensive major cities to conduct business in and features a stable, yet dynamic economy.

Houston’s economy is rooted in a broad industrial base in sectors such as energy, manufacturing, healthcare, aeronautics, and transportation. It is the top U.S.

market for exports, recently passing New York City, and in 2012, the Houston-Woodlands-Sugar Land MSA GDP was $449 billion, the fourth largest of any

metropolitan area in the United States. In fact, only 26 other countries have a GDP exceeding that of the Houston metro area.

As of 2013, 24 Fortune 500 companies were headquartered in Houston. Only New York City can claim more with over 50. Some of these companies include

Phillips 66, ConocoPhillips, Enterprise Products Partners, Sysco, Plains All American Pipeline, Halliburton, Baker Hughes, National Oilwell Varco, Apache,

Marathon Oil and Waste Management, among others. Other major employers include Memorial Hermann Healthcare, Continental Airlines, the University of

Texas Anderson Cancer Center, ExxonMobil, Shell Oil, Kroger and The Methodist Hospital.

Houston is frequently awarded and recognized as the tremendous city it is. In 2012, the city was ranked #1 for paycheck worth by Forbes. Moreover, in 2013, it

was identified as America’s top city for employment creation, as well as designated by the U.S. Bureau of Statistics as the #1 city for job creation as it was not

only the first major city to regain all jobs lost during the economic downturn, but after the crash, more than two jobs were added for every one lost.


N

DemographicsPopulation 1 mile 3 miles 5 miles

2018 Population 13,023 123,840 325,666

2023 Population 13,664 128,946 347,235

2010-2018 Annual Rate 1.01% 0.68% 0.81%

2018-2023 Annual Rate 0.97% 0.81% 1.29%

Households 1 mile 3 miles 5 miles



2010-2018 Annual Rate 0.87% 0.53% 0.75%

2018-2023 Annual Rate 0.85% 0.70% 1.24%

Household Income 1 mile 3 miles 5 miles

2018 Average Household Income $43,471 $47,053 $58,070


Property Photos


Aerial Photos


Interior Photos

going beyond

The information contained herein was obtained from sources believed reliable, however, Stan Johnson Company makes no guaranties, warranties or representations as to the completeness thereof. The presentation of this property for sale, rent or exchange is submitted subject to errors, omissions, change of price or conditions, or withdrawal without notices.

Albert MullerAssociate Director [email protected] TX License #459937

Stan Johnson Company10333 Richmond Avenue | Suite 740Houston, Texas 77042 P: 832.476.3440

stanjohnsonco.com

11-2-2015

TYPES OF REAL ESTATE LICENSE HOLDERS: A BROKER is responsible for all brokerage activities, including acts performed by sales agents sponsored by the broker. A SALES AGENT must be sponsored by a broker and works with clients on behalf of the broker.

A BROKER’S MINIMUM DUTIES REQUIRED BY LAW (A client is the person or party that the broker represents): Put the interests of the client above all others, including the broker’s own interests; Inform the client of any material information about the property or transaction received by the broker; Answer the client’s questions and present any offer to or counter-offer from the client; and Treat all parties to a real estate transaction honestly and fairly.

A LICENSE HOLDER CAN REPRESENT A PARTY IN A REAL ESTATE TRANSACTION:

AS AGENT FOR OWNER (SELLER/LANDLORD): The broker becomes the property owner's agent through an agreement with the owner, usually in a written listing to sell or property management agreement. An owner's agent must perform the broker’s minimum duties above and must inform the owner of any material information about the property or transaction known by the agent, including information disclosed to the agent or subagent by the buyer or buyer’s agent.

AS AGENT FOR BUYER/TENANT: The broker becomes the buyer/tenant's agent by agreeing to represent the buyer, usually through a written representation agreement. A buyer's agent must perform the broker’s minimum duties above and must inform the buyer of any material information about the property or transaction known by the agent, including information disclosed to the agent by the seller or seller’s agent.

AS AGENT FOR BOTH - INTERMEDIARY: To act as an intermediary between the parties the broker must first obtain the written agreement of each party to the transaction. The written agreement must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker's obligations as an intermediary. A broker who acts as an intermediary: Must treat all parties to the transaction impartially and fairly; May, with the parties' written consent, appoint a different license holder associated with the broker to each party (owner and

buyer) to communicate with, provide opinions and advice to, and carry out the instructions of each party to the transaction. Must not, unless specifically authorized in writing to do so by the party, disclose:

ᴑ that the owner will accept a price less than the written asking price;ᴑ that the buyer/tenant will pay a price greater than the price submitted in a written offer; andᴑ any confidential information or any other information that a party specifically instructs the broker in writing not to

disclose, unless required to do so by law.

AS SUBAGENT: A license holder acts as a subagent when aiding a buyer in a transaction without an agreement to represent the buyer. A subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first.

TO AVOID DISPUTES, ALL AGREEMENTS BETWEEN YOU AND A BROKER SHOULD BE IN WRITING AND CLEARLY ESTABLISH: The broker’s duties and responsibilities to you, and your obligations under the representation agreement. Who will pay the broker for services provided to you, when payment will be made and how the payment will be calculated.

LICENSE HOLDER CONTACT INFORMATION: This notice is being provided for information purposes. It does not create an obligation for you to use the broker’s services. Please acknowledge receipt of this notice below and retain a copy for your records.

Information About Brokerage Services Texas law requires all real estate license holders to give the following information about

brokerage services to prospective buyers, tenants, sellers and landlords.

.

Designated Broker of Firm License No. Email Phone

Licensed Supervisor of Sales Agent/Associate

License No. Email Phone

Licensed Broker /Broker Firm Name or Primary Assumed Business Name

License No. Email Phone

Regulated by the Texas Real Estate Commission Information available at www.trec.texas.gov IABS 1-0

Date Buyer/Tenant/Seller/Landlord Initials

Sales Agent/Associate’s Name License No. Email Phone

SJCO-Holdings, LLC 9003332 918-494-2690

James Gibson 392926 918-494-2690

Offering Memorandum AVANCE Houston - LoopNet...in 1998, AVANCE Houston moved full steam ahead from...

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