545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM1 Investment Summary
Brian PetersonCBRESenior Vice President209-476-2907Lic [email protected]
545 E. Cleveland Street Stockton, California
Steve WhiteCBREVice President209-476-2906Lic [email protected]
Single Tenant NNN Leased Medical Office Building
545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM2 Investment Summary
AFFILIATED BUSINESS DISCLOSURECBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum.
CONFIDENTIALITY AGREEMENTThis is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property.
This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner.
Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property.
The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/ or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived.
By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confidential nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc.
If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.
545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM3 Investment Summary
4 Investment Summary & Lease Summary
5 Base Rent Schedule
6 Tenant Summary
7 Property Summary
8 Location Highlights & Demographics
9 Medical Services
10 Site Map
11 Map
TABLE OF CONTENTS
545 E Cleveland St • Stockton, CA
545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM4 Investment Summary
Tenant RAI Care Centers of Northern California I, LLCLease Guarantor Fresenius Medical Care Holdings, Inc.Annual Rent $165,401.00 NNNLease Term 10 yearsOptions to Extend Term Three 5 year options at FMVBase Rent Increase 3% annuallyRent Commencement May 1, 2020Rentable Size ±7,813 Sq. Ft.
INVESTMENT SUMMARY LEASE SUMMARY
Purchase Price $2,850,000.00CAP RATE* 5.80%Title Fee SimpleBuilding Size ±8,127 Sq. Ft.
*Based on NOI effective May 1, 2020
PROPOSED IMPROVEMENT PLAN
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545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM
BASE RENT SCHEDULE
5 Base Rent Schedule
INITIAL LEASE TERM Annual Base Rent CAP Rate Year 1 $165,401 5.80%
Year 2 $170,402 5.95%
Year 3 $175,480 6.13%
Year 4 $180,715 6.31%
Year 5 $186,184 6.50%
Year 6 $191,731 6.70%
Year 7 $197,513 6.90%
Year 8 $203,451 7.10%
Year 9 $209,545 7.32%
Year 10 $215,795 6.50% (Residual Cap)
545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM
TENANT SUMMARY
Fresenius Medical Care is the world’s leading provider of products and services for people with chronic kidney failure. Fresenius cares for more than 342,000 patients in their global network of more than 4,000 dialysis clinics. At the same time, they operate 42 production sites in more than 20 countries, to provide dialysis products such as dialysis machines, dialyzers and related disposables. One of two dialysis machines worldwide is made by Fresenius Medical Care. In 2018, Fresenius performed approximately 50 million dialysis treatments. Fresenius Medical Care’s mission is to deliver care that improves the quality of life of every patient, every day, setting the standard by which others in the healthcare industry are judged.
• Sales/Revenue of $18.3 billion (2018)
• Operating cash flow of $4.174 billion
• Total Assets of $29.112 billion (2018)
• Moody’s Credit Rating Baa3
• Fresenius Medical Care (NYSE: FMS)
* Per 2018 Annual Report for Fresenius Medical Care converted to USD
* You are solely responsible for independently verifying the information in this Memorandum.
ANY RELIANCE ON THE INFORMATION IS SOLELY AT YOUR OWN RISK.
6 Tenant Summary
PROPERTY SUMMARY
7 Property Summary
545 E Cleveland Street is well positioned in central Stockton between I-5 and Hwy 99 to serve the City’s growing population. Originally built in 1982, the building is to be substantially renovated as part of the planned tenant improvement work and features a fresh 10 year lease term with the nations leading kidney care provider, inclusive of a corporate guarantee.
The property is located two blocks north of St. Joseph’s Hospital and just off of N California Street, the County’s largest medical service corridor. The ±8,127 SF building is 100% leased on a NNN basis to Fresenius Medical Care with rent commencing May 1, 2020. The building sits on a ±.54 acre parcel and includes a parking ratio of 5 stalls per 1,000 SF of building area.
8 Location Highlights
LOCATION HIGHLIGHTS
Stockton is home to a population of nearly 315,000 and is the San Joaquin County seat. It is the 13th largest city in California and is situated along the San Joaquin Delta waterway which connects the San Francisco Bay as well as the Sacramento and San Joaquin Rivers. Stockton is located 60 miles east of San Francisco and 45 miles south of Sacramento, the state capitol.
San Joaquin County has one of the fastest growing economies in California with an employment growth rate of 10% for the period of 2013-2016. The proximity to the Bay Area and Sacramento population centers is a major attraction to logistics companies and fulfillment centers such as Amazon, Ashley Furniture, Costco West Coast Depot and Tesla among many others. The county is California’s largest producer of wine grapes and generates over $3 billion in annual revenue from the production of walnuts, almonds, cherries, pears and tomateos.
Population 313,110 – Stockton City Limits759,314 – San Joaquin County
Annual Population Growth Rate .81% from 2019-2024Median Age 32.1Avg. Household Income $73,898Median Household Income $51,927Median Housing Cost $282,308Owner Occupied Housing 92.4%Renter Occupied Housing 45.3%Education High school – 58.2%
Bachelor or Higher – 18.6%
CITY OF STOCKTON, CALIFORNIA DEMOGRAPHICS
Population – White – 34.2%Race Hispanic – 43.1%
Other – 22.5%Asian – 22.6%Multi Race – 7.5%African American – 11.8%American Indian – 1%
Employment Office & Sales – 24.5%Production & Transportation – 17.2%Service – 9.6%Professional – 10.2%Management & Finance – 8.7%Construction & Maintenance – 13.1%
9 Medical Services
SAN JOAQUIN COUNTY’S LARGEST MEDICAL SERVICE CORRIDOR
George K. WeverBuilding
SITE
University Park
St. Joseph’s Medical Center- Dignity Health
Stockton Cardiology Medical Group
Healthcare Clinical Laboratories
Alpine Orthopaedic
Stockton Pathology
San Joaquin Behavioral Health
Satellite Dialysis
Vibra Healthcare (Under Construction)
Dignity Health
Hanger, Central California Surgery
Stockton PACE
CSU Stanislaus- Stockton Campus
Quest DiagnosticsDignity Health
10 City of Stockton Aerial
SITE MAP
545 E. Cleveland Street | Stockton, CA | OFFERING MEMORANDUM11 Investment Summary
© 2019 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. Any projections, opinions, or estimates are subject to uncertainty. The information may not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. 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. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.
Brian PetersonCBRESenior Vice President209-476-2907Lic [email protected]
Steve WhiteCBREVice President209-476-2906Lic [email protected]
