OFFERING MEMORANDUM PEP BOYS AUTO E Sahuaro Dr Scottsdale, AZ. Pep Boys Auto, Scottsdale, AZ 1

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1 OFFERING MEMORANDUM PEP BOYS AUTO E Sahuaro Dr Scottsdale, AZ Pep Boys Auto, Scottsdale, AZ 1

2 CONTENTS EXECUTIVE SUMMARY FINANCIAL OVERVIEW TENANT OVERVIEW 05 PROPERTY OVERVIEW 08 AREA OVERVIEW EXCLUSIVELY LISTED BY CHRISTOPHER LASKERO Associate DIR (214) MOB (858) LIC # (TX) BRADEN CROCKETT Associate VP & Director Braden.Crockett@matthews.com DIR (214) MOB (714) LIC # (CA) DON MORTENSEN BROKER OF RECORD LIC # LC Offering Memorandum

3 EXECUTIVE SUMMARY INVESTMENT HIGHLIGHTS PROPERTY NN Lease Structure Minimal Landlord Responsibilities Roughly 7.5 Years remaining with Three (3), Five (5) Year Options Strong 7.5% Rent Increase coming up in 2020 bringing the cap rate from a 6% to a 6.79% at list price 10% Rent Increases Every 5 Years Great Hedge Against Inflation 25+ Year Operating History at this specific location Efficient 10-Bay Store Footprint Allows tenant to maximize capacity while minimizing fixed costs Strong Corporate Guarantee Icahn Automotive operates approximately 1,900 locations across the country Pep Boys recently acquired the operations of 15 Advanced Auto Service & Tire sites located throughout the Metropolitan Phoenix area LOCATION Ideally Positioned in the Palo Verde Square Shopping Center Strong Presence of anchor tenants drawing traffic to the location Located roughly 0.5 miles away from Ancala Village Shopping with retail tenants including Safeway, Dollar Tree, Jiffy Lube, Chase Bank, Taco Bell, Arby s, Starbucks and Dunkin Donuts. Nearby additional tenants include Albertsons, McDonald s, Walgreens, Chevron, and Domino s Pizza. Affluent Demographics - Average Household Incomes exceeding $128,000 in a 3-Mile Radius Traffic Counts along N. 114th St. are ±21,500 VPD and along E. Shea Blvd are ±39,000 VPD Fantastic population growth of over 9.5% over the past 5 years within a 1-Mile Radius and an expected average population growth of 7.47% within a 1,3, and 5 Mile Radius over the next 5 Years TENANT In December of 2015, The Pep Boys Manny, Moe & Jack of Delaware, Inc. was acquired by Carl Icahn s Icahn Enterprises L.P. for an excess of $1 billion dollars Since Icahn s acquisition, Pep Boys has added more than 1,000 new locations with acquisitions of Just Brakes, Precision Tune Auto Care, AAMCO, Advanced Auto Service & Tire, Mathis Tire & Auto and more Icahn Automotive operates approximately 1,900 locations owned and franchise service locations in 49 US states and Puerto Rico being one of the longestrunning and world s largest automotive retail chains Pep Boys Auto, Scottsdale, AZ 3

4 FINANCIAL OVERVIEW PEP BOYS AUTO E Sahuaro Dr Scottsdale, AZ List Price... $1,963,200 CAP Rate - Current % Gross Leasable Area... ± 6,559 SF Lot Size...± 0.6 Acres Year Built Annualized Operating Data Monthly Rent Annual Rent CAM Net Rent Rent/SF Cap Current- 1/31/2020 $10, $123,948 $6,156 $117,792 $ % 2/1/2020-1/31/2025 $11, $133,248 $6,797 $126,451 $ % Option 1 $12, $146,573 $7,504 $139,069 $ % Option 2 $13, $161,230 $8,285 $152,945 $ % Option 3 $14, $177,353 $9,147 $168,206 $ % Tenant Summary 4 Offering Memorandum Tenant Trade Name Pep Boys Auto Type of Ownership Fee Simple Lease Guarantor Corporate Lease Type NN Roof and Structure Landlord Responsible Original Lease Term 15 Years Rent Commencement Date 9/1/2017 Lease Expiration Date 1/31/2025 Term Remaining on Lease ± 7.5 Years Increases 10% Increases in Options Options Three, 5-Year Options

5 TENANT OVERVIEW Tenant Company Name Parent Company Trade Name Ownership Pep Boys Auto Parts and Services The Pep Boys - Manny, Moe & Jack Icahn Enterprises L.P. Private No. of Locations ±1,900 Headquartered Website Philadelphia, Pennsylvania Year Founded 1921 Philadelphia-based Pep Boys has operations in 47 US states and Puerto Rico. Major markets for the company include California, Florida, Pennsylvania, and Texas, home to nearly half of its stores. Pep Boys also has warehouses in California, Georgia, Texas, Indiana, New York, and Pennsylvania. An automotive paradise for do-it-yourselfers, Pep Boys stock about 25,000 car parts and accessories, including tires, and combined, operate more than 7,500 service bays for vehicle repairs, inspections, and parts installations. It also offers credit and parts delivery to commercial customers, such as repair shops, fleet operators, schools, and municipalities. Founded in 1921 by Philadelphians Manny, Moe, and Jack, Pep Boys was acquired by billionaire investor Carl Icahn s Icahn Enterprises in February In late 2015, Pep Boys found itself the target of a bidding war between Japanese tire company Bridgestone and activist investment firm Icahn Enterprises. After originally accepting an $835 million offer from Bridgestone, the auto parts retailer eventually agreed to a $1 billion-plus purchase by Icahn (which completed in February 2016). The investment firm plans to combine Pep Boys with the Auto-Plus chain, which it acquired earlier in Pep Boys Auto, Scottsdale, AZ 5

6 PROPERTY DESCRIPTION THE OFFERING Property Name Property Address Assessor s Parcel Number Pep Boys Auto E Sahuaro Dr Scottsdale, AZ C Site Description Number of Stories One Year Built 1992 Gross Leasable Area (GLA) ± 6,559 SF Lot Size ± 0.59 Acres Type of Ownership NN PARCEL MAP Oceanside Blvd ± 31,792 N Frank Lloyd Wright Blvd ±21,000 ADT College Blvd ± 40,116 E Sahuaro Drive 6 Offering Memorandum

7 SURROUNDING TENANTS Pep Boys Auto, Scottsdale, AZ 7

8 area AREA overview OVERVIEW SCOTTSDALE, ARIZONA Scottsdale is a city in the eastern part of Maricopa County, Arizona, adjacent to the Greater Phoenix Area. The city is known for its spa resorts and golf courses. Every year Scottsdale is rated amongst the nation s most desirable communities to live, visit, and do business in. The city boasts a vibrant downtown area which is home to more than 90 restaurants, 320 retail shops, and more than 80 art galleries. The downtown area is known for historic homes with an Old West flair, quaint bistros and charming shops selling turquoise jewelry and handicrafts in Old Town Scottsdale. Just a short car ride away from Scottsdale lies downtown Phoenix, Arizona s urban hub and the epicenter of fun things to do in the area. As the state s capital, Phoenix fields teams in all four major professional sports leagues and is home to the Phoenix Convention Center as well as the Arizona State University downtown campus. 8 Offering Memorandum

9 DEMOGRAPHICS TOP EMPLOYERS POPULATION 1 Mile 3 Mile 5 Mile 2022 Projection 11,170 43,029 98, Estimate 10,504 40,753 93, Census 9,691 37,978 86, Census 9,095 39,971 82,322 Growth % 7.31% 8.39% Growth % 5.58% 6.01% HOUSEHOLDS 1 Mile 3 Mile 5 Mile 2022 Projection 5,288 19,184 45, Estimate 4,956 18,068 42,982 Growth % 8.43% 9.39% Growth % 6.18% 6.58% INCOME 1 Mile 3 Mile 5 Mile 2017 Est. Average Household Income ECONOMY $112,698 $136,328 $129,164 Tourism in Scottsdale is a huge influence on the local economy accounting for 39% of the city s workforce. The city attracts over 7.5 million visitors each year providing an economic impact of over $3.1 billion. Scottsdale alone is home to over 70 resorts and hotels largely catering to the high-end, white-collar demographic. Scottsdale comes in at #4 in having the most AAA Five- Diamond hotels and resorts in the United States. Having close to 360 days of warm weather and sunshine is a major factor in the tourism appeal. Often referred to as Snowbirds, several retired individuals have a second home in the area where they spend the winter in order to get away from cold weather. In addition to tourism, Scottsdale is home to numerous high-technology firms such as Motorola Research and Development and Medical Operations. A large number of regional and national companies house their headquarters in the city. Pep Boys Auto, Scottsdale, AZ 9

10 SCOTTSDALE at a glance SCOTTSDALE COMMUNITY COLLEGE 134,516 HOUSING UNITS IN SCOTTSDALE Ranked as the 6th best community college in the country, SCC has some of the top educational offerings along with affordable tuition. For the third consecutive time, SCC is among only 150 community colleges to be eligible for the biennial $1 million Aspen Prize for Community College Excellence. $112,698 Scottsdale Community College contributed to the $7.3 billion in economic impact added by the Maricopa Community Colleges as a whole. For every dollar that a student spends on a Maricopa Community College education, that student gets back $4.20 in higher future income making their average rate of return 16.6%. MEDIAN HOUSEHOLD INCOME OVER 50% OF SCOTTSDALE ADULTS HAVE A BACHELOR S DEGREE OR HIGHER THIRD HEALTHIEST CITY IN THE U.S. 10 Offering Memorandum

11 CONFIDENTIALITY & DISCLAIMER STATEMENT This Offering Memorandum contains select information pertaining to the business and affairs of Pep Boys Auto located at E Sahuaro Drive, Scottsdale, AZ ( Property ). It has been prepared by Matthews Real Estate Investment Services. This Offering Memorandum may not be all-inclusive or contain all of the information a prospective purchaser may desire. The information contained in this Offering Memorandum is confidential and furnished solely for the purpose of a review by a prospective purchaser of the Property. It is not to be used for any other purpose or made available to any other person without the written consent of Seller or Matthews Real Estate Investment Services. The material is based in part upon information supplied by the Seller and in part upon financial information obtained from sources it deems reliable. Owner, nor their officers, employees, or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of this Offering Memorandum or any of its contents and no legal liability is assumed or shall be implied with respect thereto. Prospective purchasers should make their own projections and form their own conclusions without reliance upon the material contained herein and conduct their own due diligence. By acknowledging your receipt of this Offering Memorandum for the Property, you agree: 1. The Offering Memorandum and its contents are confidential; 2. You will hold it and treat it in the strictest of confidence; and 3. You will not, directly or indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or manner detrimental to the interest of the Seller. Owner and Matthews Real Estate Investment Services expressly reserve the right, at their sole discretion, to reject any and all expressions of interest or offers to purchase the Property and to terminate discussions with any person or entity reviewing this Offering Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase and sale of the Property has been fully executed and delivered. If you wish not to pursue negotiations leading to the acquisition of the Property or in the future you discontinue such negotiations, then you agree to purge all materials relating to this Property including this Offering Memorandum. A prospective purchaser s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in connection with the sale of the Property shall be limited to those expressly provided in an executed Purchase Agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or Matthews Real Estate Investment Services or any of their affiliates or any of their respective officers, Directors, shareholders, owners, employees, or agents for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an indication that there has been no change in the state of affairs of the Property since the date this Offering Memorandum. Pep Boys Auto, Scottsdale, AZ 11

12 EXCLUSIVELY LISTED BY CHRISTOPHER LASKERO Associate DIR (214) MOB (858) LIC # (TX) BRADEN CROCKETT Associate VP & Director Braden.Crockett@matthews.com DIR (214) MOB (714) LIC # (CA) DON MORTENSEN BROKER OF RECORD LIC # LC Pep Boys Auto E Sahuaro Dr Scottsdale, AZ 12 Offering Memorandum