Harbor Freight Tools Single Tenant NNN Offering Memorandum Brand New 10 Year Lease 5035 SE 82nd Ave Portland OR 97266 Lisa LaManna Principal Broker Marshall Proehl Broker Chase McPherson Broker Jay Fetherston Broker Jim Pate Broker 503-764-1723 O 971-400-6021 C 503-422-2580 503-208-5524 503-936-1100 503-764-1724 lisa@patelamanna.com marshall@patelamanna.com chase@patelamanna.com jay@patelamanna.com jim@patelamanna.com
Table Of Contents Executive Summary The Offering...3 Asset Summary.....4 Location Map & Aerial Photo...5 Parcel Map.6 Property Overview Property Description.7 Site Plan.....8 Interior Plan...9 Market Overview Portland Area Overview....10 Retail Market Overview......10 Tenant Profile Tenant Summary....11 Financials Financial Summary....12 Lease Summary.....13 Harbor Freight Tools Portland, OR Page 2
Executive Summary The Offering As the exclusive agent to the Owner, Pate LaManna Commercial is pleased to offer a highly desirable investment opportunity in Portland, OR. Harbor Freight Tools (HFT), in a fee simple interest, is a redevelopment of an existing asset with a brand new, single tenant, NNN 10 year lease. HFT has locations in 46 states and reported a 2012 revenue of 1.91 billion dollars. It currently holds a B+ credit rating from Standard & Poor s. Price $4,100,000 Cap Rate 6.36% NOI $260,700 Building Size ± 21,725 SF Year Built 1969, Renovated in 2014 Lot Size Interest Property Tours ± 57,370SF Fee Simple Lisa LaManna 971-400-6021 Marshall Proehl 503-422-2580 Chase McPherson 503-208-5524 Located at 5035 SE 82nd Ave Portland, Oregon, this offering is a 21,725 square foot building on 1.3 acres. With its prime location immediately adjacent to Fred Meyer, a Kroger operation and local favorite, close proximity to many other national retailers, and a growing, secure income stream, this asset is an ideal single tenant NNN investment. Harbor Freight Tools Portland, OR Page 3
Executive Summary Asset Summary National Credit Tenant Standard & Poor s Rates Harbor Freight at B+. At 1.91 billion in annual revenue, Harbor Freight has over 500 stores in 46 states. Brand New Lease Harbor Freight represents a brand new 10 year NNN lease which is estimated to commence in July 2014. Fred Meyer Shadow Anchored The proximity to Fred Meyer, which is a dominant national credit tenant, serves as a strong, drawing power and will be a value add for Harbor Freight s consumers. Location - A superb location close to one of the city s busiest intersections at the corner of SE 82nd Avenue and SE Foster Road which has an average daily count of over 95,000 vehicles. Additionally the property is surrounded by an abundance of single and multi-family residential development. The asset is also located in an established retail trade area with close proximity to restaurants and entertainment uses. Building Layout The property is well served as a single tenant retail building. However given the size and shape of the building, it also lends itself well to a multi-tenant use for maximum flexibility. Demographics The total population within a 3-mile radius is over 180,000 with over 71,000 households. The average household income within a 3-mile radius is around $50,000. These demographics match the Harbor Freight target consumer. Debt Free With the property being offered debt free, it makes the process of acquisition for new ownership much easier and more attractive. Lents Redevelopment Plan Local government is supportive of redevelopment in the Lents Neighborhood Urban Renewal plan. The district is designed to bring urban renewal to the area. Harbor Freight Tools Portland, OR Page 4
Executive Summary Location & Aerial Photo Harbor Freight Tools Portland, OR Page 5
Executive Summary Parcel Map Harbor Freight Tools Portland, OR Page 6
Property Overview Property Description Property Tenant Address Parcel Number (APN) Zoning Type of Ownership Building Area Lot Size (AC) Harbor Freight Tools 5035 SE 82nd Ave Portland, Multnomah County, Oregon 97266 R214036 Exd Central Employment Fee Simple 21,725 SF 57,370 SF Year Built 1969, Renovated in 2014 Foundation Exterior Roof Concrete Concrete Block Built Up Material *Not actual photo but representative of Harbor Freight HVAC Rooftop Mounted (2014) Fire Protection / Security Flood Zone Fire Alarm and Sprinkler Systems The Property is in an SFHA. Harbor Freight Tools Portland, OR Page 7
Property Overview Site Plan
Property Overview Interior Plan
Market Overview Portland Area Overview The Portland Metropolitan Statistical Area (MSA) straddles two states and encompasses five counties. The Portland MSA is a strategic center of trade and commerce due to its coastal access and river highways. At its center, the city of Portland provides an inviting environment for both businesses and residents. A skilled workforce, strong infrastructure and access to Pacific Rim markets, forms an attractive investment destination while unlimited recreation options and the region s environmental consciousness provide a high quality of life for residents. Strategic planning enables Portland to undergo population increases and infrastructure expansion while maintaining the city s position as an inviting urban area, both in terms of commerce and livability. The Portland MSA is located 175 miles south of Seattle and 650 miles north of San Francisco. The area is bisected by the Columbia River, which also acts as the state boundary between Oregon and Washington. According to 2010 Census, The Portland Metropolitan Area is Oregon s largest with a population of nearly 3 million. The city of Portland itself accounted for nearly 600,000 of this figure. Portland was ranked #5 by Bloomberg Business Week in America s Best 50 Cities to Live In. According to Corporate Knights, Portland was tied for the Greenest City in America. Portland is known for its Urban Growth Boundary - a regional barrier established to prevent urban sprawl and preventing overdevelopment. Portland residents have a high level of education with over 1/3 of the population having a bachelor s degree or greater. The Portland MSA has one of the most accessible transportation systems in the nation with an average commute time of 27 minutes for residents. TriMet, the public transportation service in the Portland MSA, is a national leader carrying more people than any other U.S. transit system its size with almost 100 million rider trips in 2011. The region s sense of place and community, mild climate, abundant recreational and cultural activities, excellent school systems and affordability all make Portland a great place to call home. Retail Market Overview The Portland Retail Market contains 23,521,000 total square feet of space and has a current vacancy rate of 8.4%. Overall, vacancy rates continue to decline while contract rental rates continue to strengthen. There is an abundance of new retailers locating within the Portland MSA. New retailers include Wal-Mart, Natural Grocers & Orchard Supply Hardware. Expanding (existing) retailers include LA Fitness, Planet Fitness, Sportsman s Warehouse & Petco, to name a few. Other smaller footprint retailers such as MOD Pizza, Jimmy Johns, Potbelly, Jersey Mikes, Firehouse Subs and Subway remain very active and competitive for space and Starbucks is pushing their drive-thru concept into the market as well. Other non-traditional service commercial tenants include ZoomCare, Doctor s Express, Pacific Dental, Aspen Dental & Gentle Dental. These non-retailers have been crowding into shopping centers as new space becomes available. Finally, other food concepts such as Panda Express, Cafe Yumm, & Buffalo Wild Wings continue to seek new locations as well. Harbor Freight Tools Portland, OR Page 10
Tenant Profile Tenant Summary Harbor Freight Tools is a privately-held company that retails tools and accessories. The company was founded in 1977 by Allan Smidt and is currently headquartered in Calabasas, CA. Harbor Freight Tools started as a small, family-owned business with a commitment to provide working people with quality tools at low prices. Harbor Freight currently offers more than 7,000 tools and accessories at a quality that matches or exceeds competing brands, but at prices that are up to 80% cheaper. Today, Harbor Freight serves over 20 million customers and is continuing to grow. The company is still family owned and operated and maintains its original goal of delivering a wide variety of tools at affordable prices. The company also continues to experience sustained revenue growth. Since 2007 and through the economic downturn, Harbor Freight grew its annual revenue from 1.25 billion to approximately 1.91 billion and employs over 11,000 associates nationwide. It currently holds a B+ credit rating from Standard & Poor s. Harbor Freight Tools Portland, OR Page 11
Financials Financial Summary Size (SF) 21,725 Lease Year Contract Rent $/SF Year 1-5 $260,700 $12.00 Year 6-10 $286,770 $13.20 Option 1 $315,447 $14.52 Option 2 $346,948 $15.97 Option 3 $381,708 $17.57 Option 4 $419,944 $19.33 $/SF Total Potential Gross Income $12.00 $260,700 Recoveries (est.) $45,000 Effective Gross Income $14.07 $305,700 Less Expenses Property Taxes (est.) -$42,000 Insurance (est.) -$3,000 NOI $12.00 $260,700 Cap Rate Price $/SF 6.36% $4,100,000 $188.72 Harbor Freight Tools Portland, OR Page 12
Financials Lease Summary Harbor Freight Tools Portland, OR Page 13
Confidentiality and Disclosure Statement The information provided in this Offering Memorandum is deemed to be confidential. Through Pate LaManna Commercial (PLC),The Owner has agreed to permit The Purchaser to receive and review certain non-public documents and information relating to the asset owned by the Owner, or an affiliate thereof (the Asset ) including confidential, proprietary, financial, property, and economic information (collectively, the Offering Memorandum or OM ). All data in this OM has been obtained from sources, whether public or private, which PLC and The Owner deem to be reliable but is not guaranteed. The information is not intended to be comprehensive but intended to assist the Purchaser in evaluating the Asset. The Purchaser agrees that its intended use for the value conclusions expressed herein are for their own internal decision making processes solely. The Purchaser acknowledges and agrees that the Broker makes no representations or warranties, whether express or implied, in fact or in law, with respect to the content, accuracy or completeness of any part of the OM. The Purchaser shall have no recourse against the Broker, its advisors, counsel or associates in the event of any errors or omissions regarding the OMor any other matter. Should additional information be presented to the broker relating to the property, the broker reserves the right to amend the conclusion reported herein. Exclusively Prepared By: Lisa LaManna Principal Broker Jim Pate Broker Jay Fetherston Broker Pate LaManna Commercial 503-764-1723 O 971-400-6021 C 503-764-1724 503-936-1100 901 NE Glisan Street, Suite 150 Portland, OR 97232 lisa@patelamanna.com OR License 200706166 jim@patelamanna.com OR License 201107058 jay@patelamanna.com OR License 201207855 2375 130 th Avenue NE Marshall Proehl Broker Chase McPherson Broker Bellevue, WA 98005 503-422-2580 503-208-5524 marshall@patelamanna.com chase@patelamanna.com OR License 201201045 OR License 200901109 www.patelamanna.com Page 14