Offering Memorandum Walgreens Ground...

Walgreens Ground LeaseCherokee South Plaza9500 Antioch Road | Overland Park, Kansas 66212

Rare Ground Lease w/10% Rent Bumps every 5 Years

Offering Memorandum

SW

Subject Property

Stan Johnson Company303 East Wacker Drive | Suite 1111 Chicago, IL 60601 P: +1 312.240.0127 | F: +1 312.240.0158stanjohnsonco.com

Offered Exclusively by

In Association With:Chad ByerlyKS Lic. #BR00236011

Confidentiality and Restricted Use Agreement

Brad Feller Senior [email protected] P: +1 312.240.0194

Isaiah Harf [email protected] P: +1 312.777.2437

Blaise Bennett [email protected] P: +1 312.777.2449

Brandon Duff Regional Director

This 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The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with any number of interested parties at any time.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.

Table of Contents

Section 1 - Investment Summary

The Offering........................................................................................................................6

Investment Highlights....................................................................................................7

Pricing and Property Overview................................................................................8

Lease Abstract...................................................................................................................9

Rent Roll & Income Statement................................................................................10

Strip Map...............................................................................................................................11

Section 2 - Property Overview

Site Plan................................................................................................................................13

Cherokee South Plaza..................................................................................................14

Section 3 - Tenant Overview

Walgreens Boots Alliance Organizational Chart.........................................16

Walgreens Boots Alliance Overview...................................................................17

Retail Pharmacy USA Overview.............................................................................18

Walgreens - Rite Aid Merger....................................................................................19

Section 3 - Market & Location Overview

Regional Map.....................................................................................................................21

Location Overview.........................................................................................................22

Aerial View……...................................................................................................................23

Demographics.........................................................................................................……..24

Subject Property Photos

Investment SummarySection One

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Subject Property

Section 1 • Walgreens • Overland Park, KS • 6

The OfferingStan Johnson Company is pleased to exclusively offer for sale to qualified investors, the opportunity to purchase a 100% fee simple interest in the Walgreens ground lease property located at 9500 Antioch Road in Overland Park, Kansas (the “Property”). Located roughly 15 miles southwest of downtown Kansas City and near the Interstate 35/Interstate 435 interchange, the Property benefits from its position on the hard corner of two primary arterials of Overland Park with a combined traffic count of over 54,000 vehicles per day.

The Property is fully leased by Walgreen Co. (WBA), operating under a 60-year lease term that runs through December 2069, with the option to terminate with 6 months’ notice starting January 1, 2030, and every five years thereafter. The initial term through December 2029 is referred to as the “Base Lease Term,” and today, there are over 13 years of base term remaining.

The Property is a 14,820 SF retail drugstore, complete with drive-thru facilities and surface parking for roughly 84 vehicles. Built in 2009, it is the anchor outparcel of the Cherokee South Plaza shopping center at the southwest corner of West 95th Street and Antioch Road. Cherokee South Plaza is a 111,294 square-foot neighborhood retail center that serves a trade area of over 45,150 people. The center recently underwent a major redevelopment that included new building facades, a repaved parking lot and new signage. This, in addition to the new Hy-Vee built directly across Antioch Road, has both increased traffic and spurred further investment in the immediate vicinity.

Walgreens’ lease is Absolute NNN with no landlord responsibility, and features rare rental increases throughout the base term and effective option periods. A 10% rental increase will take effect January 2020 and additional 10% increases will continue every fifth anniversary thereafter.

Walgreen Co., a subsidiary of Walgreens Boots Alliance, Inc., (NASDAQ: WBA), had FY2015 (ended August 31, 2015) revenue of $103.44 billion and net income of $4.22 billion. As of February 29, 2016, the company had total assets of $66.39 billion and net worth of $29.51 billion. Currently, Walgreen Co. holds a BBB/Negative rating by Standard and Poor’s and has a market capitalization of $87.42 billion.

Subject Property

9500 Antioch Road | Overland Park, Kansas 0 - 1 mi. 0 - 3 mi. 0 - 5 mi.

2015 Population: 11,662 101,227 258,229

2015 Average HH Income: $60,790 $74,698 $84,882


Investment HighlightsRare Walgreens Rental EscalationsLease features rental escalations of 10% on January 1, 2020 and every five years thereafter, an extremely rare attribute for Walgreens properties.

Absolute NNN Ground Lease StructureProperty offers investors a passive investment with no landlord responsibility throughout the base lease term or option periods.

13+ Years Base Lease Term RemainingWalgreens base lease term runs through December 2029, offering investors the opportunity for long-term cash flow.

Outstanding Residual ValuesAnnual rent PSF of $15.86 is below market, providing for an investment with very high and very attractive residual value.

Walgreen Co. Guaranty Walgreen Co. is a subsidiary of Walgreens Boots Alliance, Inc. (NASDAQ: WBA) and is currently rated BBB/Negative by Standard and Poor’s. WBA had FY2015 revenue of $103.44 billion and net income of $4.22 billion.

Rare Overland Park Destination Retail OpportunityLocated 15 miles from downtown Kansas City, the Property is within a dense retail trade area that includes a large roster of national and regional retailers, eateries and hotels, as well as the 1.5 million square-foot Oak Park Mall.

Outstanding Hard Corner Location w/High VisibilityProperty is located on the hard, signalized intersection of West 95th Street and Antioch Road with a combined traffic count of 54,199 VPD.

Heavily Trafficked Suburban PositionProperty is located immediately northeast of both the I-35 and I-435 interchange and the U.S. 69 and I-435 interchange with combined daily traffic counts in excess of 187,350 VPD.

Premier DemographicsProperty benefits from population in excess of 258,200 and average household income of $84,882 within a 5-mile radius.

Subject Property Photos


Pricing Overview

Property Overview

Walgreens GL | Cherokee South Plaza

Offering Price: $5,000,000

Offering Cap Rate:4.70% Current Cap Rate

5.17% as of January 2020

Current Annual Rent: $235,000

Tenant/Guarantor: Walgreen Co.

Ownership Interest: Fee Simple in Ground

Encumbrances: None, Delivered Free & Clear

9500 Antioch Road | Overland Park, KS 66212

Property Description: Free-Standing Retail Drugstore

Year Built: 2009

Building Size (SF): +/- 14,820 SF

Lot Size (Acres): +/- 1.67 Acres

Parking: +/- 84 Spaces

Drive-Thru: Yes

Property ID: Johnson County: NP09820000 0001A

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Walgreens Overland Park, KS

Tenant/Guarantor: Walgreen Co.

Lease/Rent Commencement: December 22, 2009

Lease/Rent Expiration: December 31, 2029*

Base Lease Term: 20 Years*

Base Lease Term Remaining: Approx. 13.5 Years*

Current Annual Base Rent / PSF: $235,000 / $15.86 PSF

Rental Increases: 10% increase effective 1/1/2020 & every 5 years thereafter

Effective Option Periods: 8, 5-Year Options*

Renewal Notice: 6 Months

Lease Type:Absolute NNN (Tenant to pay Pro Rata Share of CAM** for Shopping Center, plus 100% of the real estate taxes for its parcel.)

Pro Rata Share: 14.66%***

Landlord Responsibility: None

Ownership Interest: Fee Simple in Ground

Lease Abstract

Subject Property Photo

*This Walgreens lease has a lease term of 60 years through December 31, 2069, with the Tenant to retain the option to terminate at the conclusion of the last day of the 240th month (Year 20), 300th (Year 25), 360th (Year 30), 420th (Year 35), 480th (Year 40), 540th (Year 45), 600th (Year 50), and 660th (Year 55), with six (6) months’ notice. Years 1-20 is referred to as the “Base Lease Term” and each of the subsequent years as “Effective Option Periods.”

**CAM includes a 10% Administrative Charge (exclusive of Real Estate Taxes and Insurance Premiums).

***Pro Rata Share calculated by dividing the size of the Leased Premises (73,976 SF) by the size of the Shopping Center (504,550 SF).


Tenant SF Lease Term

Rent Commencement

Rent ScheduleLease Type

Renewal Type

Period Dates Monthly Base Rent

Annual Base Rent

Annual Base Rent

PSF

Rental Increase

Walgreen Co.14,820

SF20 Years

December 22, 2009

Base

12/22/2009 – 12/31/2019 $19,583 $235,000 $15.86 -

Absolute NNN

8, 5-Year Options

1/1/2020 – 12/31/2024 $21,542 $258,500 $17.44 10.0%

1/1/2025 – 12/31/2029 $23,696 $284,350 $19.19 10.0%

Option 1 1/1/2030 – 12/31/2034 $26,065 $312,785 $21.11 10.0%

Option 2 1/1/2035 – 12/31/2039 $28,672 $344,064 $23.22 10.0%

Option 3 1/1/2040 – 12/31/2044 $31,539 $378,470 $25.54 10.0%

Option 4 1/1/2045 – 12/31/2049 $34,693 $416,317 $28.09 10.0%

Option 5 1/1/2050 – 12/312054 $38,162 $457,949 $30.90 10.0%

Option 6 1/1/2055 – 12/31/2059 $41,979 $503,743 $33.99 10.0%

Option 7 1/1/2060 – 12/31/2064 $46,176 $554,118 $37.39 10.0%

Option 8 1/1/2065 – 12/31/2069 $50,794 $609,529 $41.13 10.0%

Income Statement

Investment Year 0 1 2 3 4 5 6 7 8 9 10

Revenue

Rental Income $235,000 $235,000 $235,000 $246,750 $258,500 $258,500 $258,500 $258,500 $271,425 $284,350

Total Revenue $235,000 $235,000 $235,000 $246,750 $258,500 $258,500 $258,500 $258,500 $271,425 $284,350

Cash Flow Before Debt Service $235,000 $235,000 $235,000 $246,750 $258,500 $258,500 $258,500 $258,500 $271,425 $284,350

Rent Roll

*Assumes Year 1 starts 7/1/2016


OAK PARK MALL

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HIGH SCHOOL

THOMAS S. STOLL

MEMORIAL PARK

BROOKRIDGEGOLF & FITNESS

SHAWNEEMISSION SOUTH

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Property OverviewSection Two

Subject Property


Site Plan

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CHEROKEE SOUTH


Cherokee South Plaza is a 111,294 square-foot neighborhood retail center located at the southwest corner of West 95th Street and Antioch Road in Overland Park, Kansas. It is one mile from U.S. Route 69, two miles from Interstate 435 and three miles from Interstate 35. Surrounded by dense residential development, the center is a destination location for the community, serving a trade area of over 45,150 people.

In recent years, Cherokee South Plaza has undergone a major redevelopment, including new building facades, a repaved parking lot, new building and site signage, high-impact landscaping and high-intensity lighting. These improvements, as well as a new 85,000 square-foot Hy-Vee directly across from the center with numerous outlots already open and currently under development, stimulate traffic to the area.

CHEROKEE SOUTH

Rendering of Cherokee South Plaza redevelopment

Cherokee South Plaza before redevelopment

Cherokee South Plaza after redevelopment

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Tenant OverviewSection Three

Subject Property


Walgreens Boots Alliance Organizational Chart

Walgreens Boots Alliance

Retail Pharmacy USA

Retail Pharmacy International

Pharmaceutical Wholesale

Alliance Healthcare

Ahumada (Chile)Benavides (Mexico) Boots (Europe)

Walgreens (all 50 States)

Duane Reade

(New York)


Walgreens Boots Alliance (Nasdaq: WBA) is the first global pharmacy-led, health and wellbeing enterprise in the world. The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years.

The company employs over 370,000 people and has a presence in more than 25 countries; it is the largest retail pharmacy, health and daily living destination in the USA and Europe. Including its equity method investments, Walgreens Boots Alliance is the global leader in pharmacy-led, health and wellbeing retail with over 13,100 stores in 11 countries. The company includes the largest global pharmaceutical wholesale and distribution network with over 350 distribution centers delivering to more than 200,000 pharmacies, doctors, health centers and hospitals each year in 19 countries. In addition, Walgreens Boots Alliance is the world’s largest purchaser of prescription drugs and many other health and wellbeing products.

Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7, Botanics and Soap & Glory.

The creation of Walgreens Boots Alliance provides an opportunity to further accelerate

COMPANY PROFILE

Company: Walgreens Boots Alliance

No. of Retail Locations: 13,100 (as of 8/31/2015)

Credit Rating: S&P: BBB

Stock Symbol: WBA (Nasdaq)

Employees: 370,000+

Website: www.walgreensbootsalliance.com

the development of a fully integrated, global platform for the future to provide innovative ways to address health and wellness challenges. The company is well positioned to expand customer offerings in existing markets and become the health and wellbeing partner of choice in emerging markets.

Walgreens Boots Alliance Overview

TENANT PROFILE

Company: Walgreens

No. of Retail Locations: 8,182 (as of 8/31/2015)

Credit Rating: S&P: BBB

Total Revenue: $103.44 Billion (as of 8/31/15)

Net Worth: $29.51 Billion (as of 2/29/16)

Year Founded: 1901

Headquarters: Deerfield, Illinois

Website: www.walgreens.com

Current Store Growth Plans: 60-120 Stores in Fiscal 2015

6.2 Million Customers Visit Walgreens Stores Daily

Fortune Magazine: Top 5 World’s Most Admired Companies (March 2015)

Forbes: 165th out of 2000 Largest Global Public Companies (May 2015)

Walgreens is the largest drugstore chain in the US. The company had fiscal 2015 sales of more than $103.4 billion. Founded with a single store in Chicago in 1901, Walgreens is today continuing to build a seamless customer experience through its 8,182 drugstores and its digital businesses that include Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com.


Retail Pharmacy USA Overview

The Retail Pharmacy USA Division’s principal

retail pharmacy brands are Walgreens and

Duane Reade. Together, they form the largest

drugstore chain in the USA. As of August 31, 2015,

the division operated 8,173 drugstores across all

50 states, the District of Columbia, Puerto Rico

and the US Virgin Islands. As of August 2015,

approximately 76% of the population of the USA

lives within five miles of a Walgreens.

The division sells prescription and non-

prescription drugs, as well as general

merchandise, beauty care and photofinishing.

They provide customers with convenient, omni-

channel access to consumer goods and services,

pharmacy, and health and wellness services in

communities across America. They also offer

products and services through mail, telephone

and online, and provide specialty pharmacy and

respiratory services, as well as retail clinics.

Prescription drugs are the largest product

class, followed by general merchandise and

nonprescription drugs.

The division has more than 74,000 healthcare

service providers, including pharmacists,

pharmacy technicians, nurse practitioners and

other health related professionals. Through

them, they expect to continue to play a growing

role in government and employer efforts to

control escalating healthcare costs.

Product ClassPercentage of Sales (at 8/31/14)

Pharmacy: 66%

Retail: 34%

Total 100%

August 31, 2015, compared to 8,309

locations (8,207 drugstores) a year earlier.

Prior year’s locations included 91 infusion

and respiratory services facilities in which

a majority interest was sold in fiscal 2015.

Pharmacy sales increased by 8.2% in fiscal 2015

and represented 66.1% of the division’s total sales.

Comparable pharmacy sales increased 9.3% in

fiscal 2015. The effect of generic drugs, which

have a lower retail price, replacing brand name

drugs reduced prescription sales by 1.8% and

reduced division total sales by 1.0%. Adjusted

to 30-day equivalents, the division filled 894

million prescriptions in 2015. Third party sales,

where reimbursement is received from managed

care organizations, government and private

insurance, were 96.8% of prescription sales.

Retail sales increased 1.9% in fiscal 2015

and were 33.9% of the division’s total sales.

Comparable retail sales increased 1.5%. The

increase in comparable retail sales in fiscal

2015 as compared to fiscal 2014 was primarily

attributed to an increase in basket size partially

offset by lower customer traffic.

The Retail Pharmacy USA Division’s strategy is designed to further

transform the traditional drugstore by offering ultimate convenience,

driving the best customer loyalty, and delivering extraordinary customer

and patient care. They seek to expand product and service offerings across

new channels and markets where, in addition to stores, customers and

patients can utilize health system pharmacies, Walgreens.com, mobile applications and social media sites.

Retail Pharmacy USA 2015 Financial Highlights

The Retail Pharmacy USA Division, whose

principal retail pharmacy brands are Walgreens

and Duane Reade, had fiscal 2015 sales of

$81.0 billion, an increase of 6.0% over fiscal

2014. Total sales increased primarily due to

higher comparable store sales, which were

up 6.4% in fiscal 2015. The division operated

8,182 locations (8,173 drugstores) as of


Walgreens-Rite Aid Merger• On Oct 27th, 2015, both parties entered into a definitive agreement for Walgreens Boots Alliance to purchase all outstanding shares of Rite Aid stock. Walgreens

agreed to a purchase of Rite Aid stock at $9.00 per share (totaling $9.4 billion in cash). Including the assumption of net debt, the deal gave Rite Aid a total enterprise value of $17.2 billion.

• At the time of purchase, Rite Aid had approximately 4,600 stores in 31 states and the District of Columbia with fiscal annual revenues of $26.5 billion. It is estimated that with the purchase of Rite Aid, Walgreens Boots Alliance will go from a 31% market share in the drug store market to an estimated 41% market share.

• Pending approval from the Federal Trade Commission (FTC), the transaction is projected to close in the 2nd half of 2016. The deal must be approved by both the FTC and Rite Aid’s shareholders. The FTC is currently in the process of reviewing the terms of the merger.

Change in Walgreens/Rite Aid Combined Store Count, Post Merger


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Market & Location OverviewSection Four

Subject Property


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Gypsy Market, Kansas City, MO

Kansas City Skyline

Overland Park, Kansas traces its roots back to 1905 with the arrival of its founder William B. Strang Jr., who platted subdivisions, including one named “Overland Park,” along a military roadway.

Strang envisioned a self-sustaining, well planned “park-like” community that had strong commerce, quality education, vibrant neighborhoods, convenient transportation and accommodating recreational facilities - all amenities that today, make Overland Park one of the best places to live and grow up.

Before Strang’s death in 1921, he established several housing developments, an interurban railroad and an airfield. Remnants of his interurban line remain today as do his limestone car barn at 79th and Santa Fe Drive (home to Traditions Furniture), and his Carriage House in Santa Fe Commons Park, 8045 Santa Fe Drive (home to the Overland Park Historical Society).

On May 20, 1960, Overland Park was incorporated as a first-class city with a population of 28,085. The nationally-recognized city now encompasses 73.33 square miles of Johnson County in suburban Kansas City, and has more than 175,000 residents, making it the second most populous city in Kansas.

Kansas City is the third largest city behind Overland Park in the state of Kansas and is the county seat of Wyandotte County. The city was incorporated in 1886 and for 73 years was governed by a three-member elected Board of Commissioners. In August of 1982, the city held an election and voters approved a change in the form of city government. Under the Charter Ordinance No. 84 the city changed to a seven-member, Mayor-Council-Administrator form of government in April, 1983.

Location Overview

Overland Park Clocktower and Plaza Oak Park Regional Shopping Mall


Overland Park Population (within 5 miles):

258,229

Oak Park Mall

Glenwood Business District

Brookridge Golf & Fitness

Town Center Plaza

I-435 (133,596 VPD)

US 69 (78,295 VPD)

I-35 (152,679 VPD)


Demographics 9500 Antioch Road | Overland Park, Kansas 0 - 1 mi. 0 - 3 mi. 0 - 5 mi.

Population

2015 Population 11,662 101,227 258,229

2020 Population 12,108 104,668 266,252

2010-2015 Annual Rate 0.33% 0.29% 0.27%

Households

2015 Total Households 5,661 46,023 114,659

2020 Total Households 5,899 47,786 118,604

2010-2015 Annual Rate 0.49% 0.44% 0.40%

2015 Average Household Income $60,790 $74,698 $84,882

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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.

Stan Johnson Company303 East Wacker Drive | Suite 1111Chicago, IL 60601P: +1 312.240.0127 | F: +1 312.240.0158

stanjohnsonco.com

Brad FellerSenior [email protected]+1 312.240.0194

Isaiah [email protected] +1 312.777.2437

Blaise [email protected]: +1 312.777.2449

Brandon DuffRegional Director

In association with:Chad ByerlyKS Lic. #BR00236011

Offered Exclusively by

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