SUPERVALU DISTRIBUTION CENTER - LoopNet

A CBRE NATIONAL PARTNERS INDUSTRIAL INVESTMENT OPP ORTUNIT Y

SUPERVALU DISTRIBUTION CENTER

INVESTMENT GRADE OFFERING | 20-YEAR 100% ABSOLUTE NET LEASE | SUPERVALU GUARANTYHIGH QUALITY INDUSTRIAL BUILDING TOTALING 986,509 SF FEATURING DESIRABLE COLD STORAGE IMPROVEMENTS

STRATEGIC CENTRAL VALLEY LOCATION

1 9 9 0 P I C C O L I R O A D | S T O C K T O N , C A

IN T RODUC T IONCBRE, Inc., as exclusive advisor to Ownership, is pleased to present the unique opportunity to acquire the fee simple interest in the Supervalu Distribution Center located at 1900 Piccoli Road, Stockton, CA (the “Property”). The property is 100% absolute net leased through May 2038 to Unified Grocers, Inc. (the “Tenant”) with SUPERVALU INC. (B+ / B1 / NYSE: “SVU”) providing a full corporate guaranty. SUPERVALU INC. (“Supervalu” or the “Guarantor”) is one of the largest food wholesalers in the United States and generated $14 billion in annual revenue in FY 2018, with 78% derived from wholesale distribution. SUPERVALU ranked #158 on the Fortune 500 list in 2017. The offering presents the exceptional opportunity to acquire a rare cold storage facility in California’s Central Valley with a long-term absolute net lease to a leading grocery wholesaler. A transaction level investment grade credit rating of “A-” has been obtained for the offering from a Nationally Recognized Statistical Rating Organization (NSRO).

• 20-Year Absolute Net Lease to Leading Grocery Wholesaler

• SUPERVALU INC. Guaranty: S&P: “B+” / Moody's: "B1" / NYSE: “SVU”

• Attractive Escalation Structure with No Landlord Responsibilities (Absolute Net Lease)

• Desirable Cold Storage Improvements• Strong Central Valley Market Dynamics with Steady

Absorption and Low Vacancy of 4.7%• 0% Vacancy Rate for Cold Storage Product in Stockton• 9 Miles from the Port of Stockton, California’s Largest

Port (By Acreage)

OFFER ING SUM M A RY

1 S U P E RVA LU D I S T R I B U T I O N C E N T E R

TH E O F F E R I N GAddress 1990 PICCOLI ROAD, STOCKTON, CA Square Footage 986,509 SFCold Storage SF / % ±84,051 SF / 8.5% Freezer

±77,825 SF / 7.9% Cooler±21,736 SF / 2.2% Cool Dock

±183,612 SF / 18.6% TotalAcreage ±51.76 AcresCoverage 44%Occupancy 100%# of Buildings 1Year Built 1974/renovated 2007Clear Height ±30’Dock High Doors 177Drive-In Doors 7

PROPER T Y OV ERV IE W

The Stockton Supervalu Distribution Center is 100% absolute net-leased with

nearly 20 years of remaining term. The lease features a current annual net rent of

$5.43 million. The high-quality distribution campus totals 986,509 SF and offers

30’ clearance, Stockton Terminal & Eastern (S.T. & E.) rail access, generous

loading & truck court depth, and efficient drive-around access. The building

includes 183,612 SF of cold storage improvements, which are highly desirable in

the Central Valley given the production of food in this market and large Northern

California population.

2E X ECU T I V E SUM M A RY

10 0% L E A SED T O N AT ION A L LY RECOGNI Z ED, COM MI T T ED T EN A N T• The property is 100% absolute NNN leased for 20 years with rent increases throughout

the term to Unified Grocers, Inc. which is guaranteed by SUPERVALU INC.• SUPERVALU INC. is recognized as the largest public grocery wholesaler in the U.S.,

operating primarily in the U.S. with 28 distribution centers serving over 3,000 retailers. The company also operates 197 retail stores under five retail grocery banners.

• With $12.5 billion in fiscal 2017 revenue, SUPERVALU ranks #158 on the Fortune 500 list. The company has grown revenue to $14.1 billion in FY 2018, an increase of nearly 30% over FY 2017, and anticipates FY 2019 sales to increase roughly 9%-11%.

• SUPERVALU has exhibited stable margins, with gross profit in the 10%-14% range and adjusted EBITDA in the 3%-4% range.

• The company has entered into a multi-year contract with Instacart, an e-commerce, same-day grocery delivery company through four of its retail banners; Cub Foods; Shop ‘n Save; Farm Fresh and Shoppers Food & Pharmacy.

UNF I ACQUIS I T ION• On July 26, 2018, SUPERVALU entered into a definitive agreement to be acquired

for $2.9 billion by United Natural Foods, Inc. (“UNFI”), a leading distributor of natural, organic and specialty foods as well as non-food products in the U.S. and Canada.

• UNFI’s largest customer, Whole Foods, accounts for approximately 33% of its revenue and UNFI has a long-term contract with Whole Foods that matures in 2025.

HIGH QUA L I T Y BU IL D ING FE AT URES INCL UDING COL D S T OR AGE• The high quality industrial building totals 986,509 SF and offers 30’ clear heights, 177

dock high doors and 7 drive-in doors. • The site is approximately 52 acres with highly desirable, concrete truck courts and

can accommodate parking for 131 cars and 320 trailers with an attractive 44% coverage ratio.

• The property features ±84K SF of Freezer and ±78K SF of Cooler, which appeals to a variety of food users. These improvements command higher rents.

• Easy truck access with two entrances along Piccoli Rd. & Wilcox Rd. and drive-around capability.

• The property is rail served, with 7 rail doors and a S. T. & E. rail spur along the south edge of 1900 Piccoli Road.

The opportunity is offered at a price significantly below replacement cost, estimated at approximately $123 PSF.

E XCEL L EN T M A RK E T DY N A MIC S• Extremely strong industrial market demand with continued rent growth.• Tenant demand remains strong in the Central Valley with 3.1 MSF net

absorption during the first half of 2018, 3.8 MSF in 2017 and 3.9 MSF in 2016. The biggest limitation for absorption has been available supply. This has driven 44% of all new product since 2015 to be partially or fully pre-leased prior to construction completion.

• California has the second lowest per capita supply of cold storage product compared to the rest of the U.S., translating into high demand for this product in both Northern and Southern California.

There is currently zero vacant cold storage product in Stockton and the lack of new, quality freezer/cooler buildings in the market will help to drive a pricing premium.


N E XT B I G TR E N D : E - COMM E RC E P E N ETR ATI O N I N G ROC E RY SALE S

CBRE RESE A RCH FOREC A S T S T H AT T HE U.S . INDUS T R I A L COL D S T OR AGE BA SE W IL L NEED T O GROW BY 19.4% BY 2024 T O ACCOM MODAT E T HE PRED IC T ED R ISE IN ONL INE GROCERY S A L ES . C A L I FORNI A IN PA R T ICUL A R IS SE V ERELY UNDERSUPPL IED IN COL D S T OR AGE PRODUC T (PER C A P I TA) , A ND T HE S T OCK T ON M A RK E T CURREN T LY H A S Z ERO VAC A NC Y IN COL D S T OR AGE PRODUC T. T HE SUPERVA L U D IS T R IBU T ION CEN T ER’S DES IR A BL E COL D S T OR AGE IMPROV E MEN T S PRESEN T A N E XCEL L EN T IN V ES TMEN T P O ISED FOR S T RONG FU T URE REN T GROW T H.

A S DE M A ND FOR ONL INE DEL I V ERY OF COL D A ND FROZ EN FOODS GROW S, SO W IL L T HE NEED FOR L A S T M IL E , COL D S T OR AGE FAC I L I T I ES .

T O TA L REQUIRE MEN T OF 175 MSF OF A DDI T ION A L DC SPACE – MUCH W IL L BE FREE Z ER /COOL ER

T O TA L REQUIRE MEN T OV ER T HE NE X T DEC A DE

$1 B I LLI O NE - COM MERCE S A L ES

1. 2 5 M S FDIS T R IBU T ION SPACE

175 M S FFOOD/GROCERY SPACE

6 0 0 M S F S TA NDA RD DC SPACE

Cold storage does not face the same competition and cycles as seen in the warehouse distribution

market. People need to eat and it has been proven that consumption increases during recessionary periods.

K E Y DR I V ERS- Food is the largest single retail category – $2 trillion market (with 20% of each

paycheck going to food)

- Grocery represents nearly 40% of all food sales – $700 billion

- 20% e-commerce penetration in grocery sales – $140 billion


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R EG I O NAL M AP

SUPERVALU DISTRIBUTION CENTER

S T R AT EGIC D IS T R IBU T ION LOC AT ION• The Supervalu Distribution Center offers immediate access to State Route 99 which

connects to SR-4, the “Crosstown Freeway,” and I-5.• Both the Union Pacific and Burlington Northern Santa Fe have new “state-of-the-art”

intermodal yards within 4-6 miles of the property.• The property is ±9 miles from the Port of Stockton and ±77 miles from the Port of Oakland.• The site is also near three airports: Oakland and Sacramento International Airports,

and Stockton Metropolitan Airport (just 8 miles away).• The Central Valley provides easy access to the Bay Area and Western U.S.

population centers.• Some of the quality tenants in this submarket include Staples, Trader Joes, FedEx,

Bed, Bath & Beyond, and Quaker Oats.• The Supervalu Distribution Center is only ±87 miles from San Francisco.


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SUPERVALU DISTRIBUTION CENTERSUPERVALU DISTRIBUTION CENTER


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OFFICE1990 PICCOLI ROAD

2080 WILCOX ROAD

S T & E RAILS T & E RAIL

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S ITE P L AN


SUPERVALU DISTRIBUTION CENTER1 9 9 0 P I C C O L I R O A D | S T O C K T O N , C A

© 2018 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. 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.

Offering integrated real estate capital markets solutions from strategy to execution—delivered by a seamless national partnership

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GLOBAL INDUSTRIAL & LOGISTICSJack Fraker

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NORTH CENTRALMike CaprileRyan BainZach Graham

WESTDarla LongoBarbara PerrierRebecca Perlmutter FinkelBrett HartzellEric CoxGina Christen

DEBT & STRUCTURED FINANCEVal AchtemeierScott LewisSteve RothSteve Kundert

WWW.CBRE.COM/NP

T E A M L E A DSBarbara Perrier

CBRE | Vice ChairmanLic. 00969169

+1 213 613 [email protected]

Rebecca Perlmutter Finkel, CFACBRE | Senior Vice President

Lic. 01838624+1 310 922 5237

[email protected]

Darla LongoCBRE | Vice Chairman/Managing Director

Lic. 00639911+1 909 418 2105

[email protected]

Guy PonticielloCBRE | Managing Director


Maury Vanden EykelCBRE | Senior Director


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CBRE | Senior Vice PresidentLic. 00880761


DEB T & S T RUC T URED F IN A NCE Val Achtemeier

CBRE | Debt & Structured FinanceExecutive Vice President

Lic. 01868169+1 213 613 3109

[email protected]

DARLA LONGOBARBARA PERRIER

BRETT HARTZELLREBECCA PERLMUTTER FINKEL

ERIC COXGINA CHRISTEN

NATIONAL PARTNERS WEST

SUPERVALU DISTRIBUTION CENTER - LoopNet

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