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walgreens1002 Highway 25 N | Buffalo, MN

OFFERING MEMORANDUM

™

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exclusively listed by

™

BILL PEDERSeNSENIOR ASSOCIATE

Bi l l .Pedersen@matthews.comDIR (949) 432-4501MOB (831) 246-0646LIC # 01975700 (CA)

Mark HulseyBROKER OF RECORDLIC # 40169559 (MN)

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table of contents

04 | INVESTMENT HIGHLIGHTS

05 | financial overview

06 | Lease Abstract

08 | tenant overview

13 | area overview

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• Long-Term Lease Over 18.5 years of lease term remaining

• Absolute NNN Zero Landlord Responsibilities

• Buffalo Hospital Less than one mile Buffalo Hospital

• Strong Demographics Over 6% population increase in the 1-mile since 2010

• Prototype Store Format Most recent prototype store format with drive-thru

• • • •

• Retail Synergy Nearby national retail tenants include Walmart, Murphy USA, Target, KFC, O’Reilly Auto Parts, Domino’s, Arby’s, Subway, and McDonald’s.

• Lack of Drug Store Competition There are no Rite Aids in the state of Minnesota, the closest CVS is over 12.5 miles away, and there are no other Walgreens in Buffalo.

• Nationally Recognized Investment Grade Tenant Lease is fully guaranteed by Walgreens Co. (S&P’s Rated BBB). the company is ranked #17 on the Fortune 500, for 2017.

• High Traffic Counts Located at the signalized intersection of Highway 55 and Highway 25 with over 33,000 VPD.

INVESTMENT HIGHLIGHTS

24

18.5YEARS

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Walgreens1002 Highway 25 NBuffalo, MN 55313List Price ................................................................................................................................ $9,573,000

CAP Rate - Current .......................................................................................................................5.50%Gross Leasable Area .............................................................................................................± 14,490 SF Lot Size ..................................................................................................................................± 2.01 Acres Year Built/Renovated .......................................................................................................................... 2011

TENANT SUMMARY

Tenant Trade Name Walgreens

Type of Ownership Fee Simple

Lease Guarantor Corporate

Lease Type Absolute NNN

Roof and Structure Landlord Responsible

Original Lease Term 75 Years

Rent Commencement Date 10/17/2011

First Termination Options 10/31/2036

Lease Expiration Date 10/1/2086

Term Remaining on Lease ± 18.55 Years

Increases None

Options 50x1

ANNUALIZED OPERATING DATA

financial overview

Walgreens Annual Rent Monthly Rent Rent/SF Cap Rat

Current $526,515.96 $43,876.33 $36.34 5.50%

Options $526,515.96 $43,876.33 $36.34 5.50%

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lease abstract

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Tenant: WALGREEN CO., a Illinois corporation

Tenant Address: 104 Wilmont Rd., Deerfield, IL 60015

Property Address: 1002 MN-25, Buffalo, MN 55313

Walgreens Store Number 15124

Lease Effective Date: March 23, 2011

Rent Commencement: October 17, 2011

Lease Expiration: May 1, 2003

Original Lease Term: 75 years

Termination Options: Tenant shall have the right and option, at Tenant's election, to terminate this Lease effective as of the last day of the three hundredth (300th) full calendar month of the Term, or effective as of the last day of an month thereafter.

First Termination Date: October 31, 2036

Termination Options Tenant shall have the right and option, at Tenant's election, to terminate this Lease effective as of the last day of the three hundredth (300th) full calendar month of the Term, or effective as of the last day of an month thereafter.

First Termination Date: October 31, 2036

Percentage Rent: Tenant shall furnish to Landlord a statement of the total amount of Gross Sales and the amount of percentage rent due, if an, for each lease year.

Parking Lot Tenant, at Tenant's sole cost and expense, shall maintain, repair and replace the parking areas of the Leased Premises.

Repairs Tenant, at Tenant's sole cost and expense, shall maintain the Leased Premises and make all necessary repairs and replacements, whether interior or exterior, to all parts of the same (including roof and structure).

Real Estate Taxes: Tenant to pay all real estate taxes

Insurance: Tenant to carry casualty and liability insurance.

Utilities: Tenant shall pay when due all bills for water, sewer rents, sewer charges, heat, gas, phone and electricity used in the Building or on the Leased Premises.

Tenant Assignment and Subletting: Tenant's interest may be assigned, or may sublet a portion of the Leased Premises, without Landlord's consent, provided that an such assignment be only to a corporation or other entity which is subsidiary to or affiliated with Tenant.

Right of First Refusal: Tenant has option to purchase property within 21-days of the receipt of a bona fide offer

Estoppel: Tenant to deliver within 30-days of request

LEASE ABSTRACT

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tenant overview

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Company Name Walgreen Co.

Parent Company Trade Name Walgreens Boots Alliance, Inc. (NASDAQ: WBA)

Ownership Public

Revenue $76.39B

Net Income $1.93B

No. of Locations ± 8,300

No. of Employees ± 253,400

Headquartered Deerfield, Illinois

Website www.walgreens.com

Year Founded 1901

The nation’s #1 drugstore chain, Walgreens, operates close to 8,300 stores in all 50 US states, the District of Columbia, the Virgin Islands and Puerto Rico. Prescription drugs are the focus of the company as they account for close to two-thirds of sales; the rest comes from general merchandise, over-the-counter medications, cosmetics and groceries. Most locations offer drive-through pharmacies and one-hour photo processing, which separates them from the competition.

Walgreens’ overall value proposition differentiates it from competitors in valuable ways. Specifically, a focus on health gives Walgreens a competitive advantage over other pharmacies. By putting health at the forefront of all aspect of the business and reducing customers’ shopping time, Walgreens has achieved placement in a league of its own as the competition aims their focus on things such as convenience, design, or low prices.

Walgreens focuses on customer need and satisfaction. For example, the curbside pick-up service stemmed from the needs of working mothers who don’t have the time to go into the store and shop. Creating loyalty amongst patrons is a priority for the company as it keeps them coming back and spending money.

TENANT OVERVIEW WALGREENS HEALTH FOCUS MARKETING STRATEGY

WALGREENS OVERVIEW

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the offeringPROPERTY NAME WALGREENS

Property Address 1002 Highway 25 NBuffalo, MN 55313

Assessor’s Parcel Number 103-060-002010

SITE DESCRIPTION

Number of Stories One

Year Built/Renovated 2011

Gross Leasable Area (GLA) ± 14,490 SF

Lot Size ± 2.01 Acres (87,555 SF)

Type of Ownership NNN

Parking Spaces ± 64 Surface Spaces

Landscaping Professional

Topography Generally Level

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Central A

ve ± 17,00

0 A

DT

Hwy 55 ± 21,000 ADT

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demographicsPOPULATION 1 Mile 3 Mile 5 Mile

2023 Projection 6,576 19,277 22,120

2018 Estimate 6,323 18,543 21,351

2010 Census 5,938 17,418 20,203

POPULATION GROWTH 1 Mile 3 Mile 5 Mile

Growth 2018 - 2022 4.00% 3.96% 3.60%

HOUSEHOLDS 1 Mile 3 Mile 5 Mile2023 Projection 2,630 7,119 8,174

2018 Estimate 2,526 6,830 7,860

2010 Census 2,360 6,367 7,355

HOUSEHOLD GROWTH 1 Mile 3 Mile 5 Mile

Growth 2018 - 2022 4.12% 4.23% 4.00%

INCOME 1 Mile 3 Mile 5 Mile2018 Est. Average Household Income $70,169 $86,926 $90,114

area overview

Buffa lo i s a charming town an hour outs ide of Minneapol i s . The smal l community has everyth ing f rom suburban amenit ies , enterta in ing downtown area , and var ious large reta i l . The town i s convenient ly located in between Highway 55 and Highway 25, which a l lows easy access to Minneapol i s . Buffa lo has many lakes , t ra i l s , and nat iona l forest that prov ide count less outdoor act iv i t ies . The town i s a n ice , peacefu l p lace with a lot to offer.

Buffalo, MN

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M i n n e a p o l i s , M NMinneapolis is the larger of the Twin Cities, the largest city in the state of Minnesota. The Twin Cities, made up of Saint Paul and Minneapolis create the second-largest economic center in the Midwest, only behind Chicago. Minneapolis contains the fifth-highest concentration of Fortune 500 companies in the country. The abundance of lakes create the beautiful park system that make residents proud to call this city home. The city has attractions for all types of people. From the nightlife scene in downtown, Craft brews and art exhibits in Northeast Minneapolis, the streets of the North Loop has Minnesota Twins fans parading to and from Target field, and Uptown accommodates various outdoor ventures along the lakes and trails. There is always something to do in the city of Minneapolis.

31.7MEDIAN AGE

394,424

$50,767POPULATION

MEDIAN HOUSEHOLD INCOME

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The Minneapolis economy relies on several industries including commerce, finance, rail and trucking services, and healthcare. It is the second largest economic center in the Midwest, after Chicago. Other smaller components that help contribute to the city’s economy are publishing, milling, food processing, graphic arts, education, and more. MaMN new businesses are moving into the area and see potential for growth.

Currently, Minneapolis is headquarters for five Fortune 500 corporations: Target, U.S. Bancorp, Xcel Energy, Ameriprise Financial, and Thrivent Financials. Some of the largest employers in the downtown area include Target, Wells Fargo, Capella Education CompaMN, and more. Several foreign companies have been moving into Minneapolis such as Accenture, Canadian Pacific, and Voya Financial.

The city was named the “Top Tech City” in the US because of their advancement in transportation solutions, medical trials, energy conservation, and university research. The area has been developing rapidly and is always looking on how they can enhance an area or field for the better.

Economy

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Minneapolis is home to five professional sports teams. The most successful team is the Minnesota Lynx. They are part of the Women’s National Basketball Association and are a dominating force within the league. They have made it to the WNBA finals multiple times and have won the finals four times. The Minnesota Timberwolves are in the National Basketball Association and have called Minnesota home since 1989. The Minnesota Vikings (NFL) and the Minnesota Twins (MLB) have played in Minnesota since 1961.

The Minnesota Vikings have a strong fan base and have gone to the Super Bowl several times. The Minnesota Twins are a force to be reckoned within major league baseball. They have won 10 division titles, 3 American League Pennants, the World Series twice. The Minnesota United FC is a Major League Soccer team that will be incorporated in 2017.

Sports

Minneapolis has had a large influence on the arts as well. The city holds several museums such as the Walker Art Center, the Minneapolis Institute of Art, and The Weisman Art Museum that portrays maMN different types of visual art. The large museums also work within specific institutes and universities that teaches students high-levels of art.

Culture

Minneapolis holds a special place for all genres of music. Prince was born in Minneapolis and credits the city for the influence it had on his music and career. The city has maMN different schools and programs that focus on music. The Minnesota Orchestra was once named “the greatest orchestra in the world” by The New Yorker. They have received several Grammy nominations and are amazing performers. The area is known as an epicenter of folk, funk, and alternative rock music. When walking the streets, different types of music echo throughout.

Music

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The Minneapolis-Saint Paul metropolitan statistical area is built around the Mississippi, Minnesota, and St. Croix rivers. The area is often known as the Twin Cities. The MSA holds 16 counties, 218 cities, and is the 16th largest metropolitan region in the U.S. Although they are often considered jointed cities, each city has defined borders. Minneapolis is known as a modern city with skyscrapers, while Saint Paul is more family oriented with neighborhoods. The area has a rich culture that is seen throughout the area. Whether you are looking for a great night out or a good place to raise a family, the Minneapolis-Saint Paul MSA has everything.

Minneapolis-Saint Paul MSA

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confidentiality disclaimer and agreement

This Offer ing Memorandum conta ins se lect informat ion perta in ing to the bus iness and af fa i rs of Walgreens located at 1002 Highway 25 N, Buffalo, MN 55313 (“Property”) . It has been prepared by Matthews Rea l Estate Investment Serv ices . Th is Offer ing Memorandum may not be a l l- inc lus ive or conta in a l l of the informat ion a prospect ive purchaser may des i re . The informat ion conta ined in th is Offer ing Memorandum is conf ident ia l and furn ished so le ly for the purpose of a rev iew by a prospect ive purchaser of the Property. It i s not to be used for aMN other purpose or made ava i lab le to aMN other person wi thout the wr i t ten consent of Se l ler or Matthews Rea l Estate Investment Serv ices . The mater ia l i s based in part upon informat ion supp l ied by the Se l ler and in part upon f inanc ia l informat ion obta ined f rom sources i t deems re l iab le . Owner, nor the i r of f icers , employees , or agents makes aMN representat ion or warranty, express or impl ied , as to the accuracy or completeness of th is Offer ing Memorandum or aMN of i t s contents and no lega l l i ab i l i ty i s assumed or sha l l be impl ied w i th respect thereto . Prospect ive purchasers shou ld make the i r own pro ject ions and form the i r own conc lus ions w i thout re l iance upon the mater ia l conta ined here in and conduct the i r own due d i l igence.

By acknowledg ing your rece ipt of th is Offer ing Memorandum for the Property, you agree:

1 . The Offer ing Memorandum and i ts contents are conf ident ia l ;

2 . You wi l l ho ld i t and t reat i t in the st r ictest of conf idence; and

3. You wi l l not , d i rect ly or ind i rect ly, d i sc lose or permit aMNone e lse to d isc lose th is Offer ing Memorandum or i t s contents in aMN fash ion or manner detr imenta l to the interest of the Se l ler.

Owner and Matthews Rea l Estate Investment Serv ices express ly reserve the r ight , at the i r so le d i scret ion, to re ject aMN and a l l express ions of interest or of fers to purchase the Property and to terminate d iscuss ions w i th aMN person or ent i ty rev iewing th is Offer ing Memorandum or making an offer to purchase the Property un less and unt i l a wr i t ten agreement for the purchase and sa le of the Property has been fu l ly executed and de l i vered.

If you w ish not to pursue negot iat ions lead ing to the acqu is i t ion of the Property or in the future you d iscont inue such negot iat ions , then you agree to purge a l l mater ia l s re lat ing to th is Property inc lud ing th is Offer ing Memorandum.

A prospect ive purchaser ’ s so le and exc lus ive r ights w i th respect to th is prospect ive t ransact ion, the Property, or informat ion prov ided here in or in connect ion w i th the sa le of the Property sha l l be l imited to those express ly prov ided in an executed Purchase Agreement and sha l l be sub ject to the terms thereof . In no event sha l l a prospect ive purchaser have aMN other c la ims aga inst Se l ler or Matthews Rea l Estate Investment Serv ices or aMN of the i r a f f i l i a tes or aMN of the i r respect ive off icers , Directors , shareholders , owners , employees , or agents for aMN damages , l i ab i l i ty, or causes of act ion re lat ing to th is so l ic i tat ion process or the market ing or sa le of the Property.

Th is Offer ing Memorandum sha l l not be deemed to represent the state of af fa i rs of the Property or const i tute an ind icat ion that there has been no change in the state of af fa i rs of the Property s ince the date th is Offer ing Memorandum.

1 9 | W a l g r e e n s - B u f f a l o , M N

exclusively listed by

™

BILL PEDERSeNSENIOR ASSOCIATE

Bi l l .Pedersen@matthews.comDIR (949) 432-4501MOB (831) 246-0646LIC # 01975700 (CA)

Mark HulseyBROKER OF RECORDLIC # 40169559 (MN)