Exposition MarketplaceOffering Memorandum
Broker: Eric TreibatchBroker Corp ID No. 01187117(818) 708-0888 [email protected]
Agent: Josh MarkowitzLicense No. CA 01978248(818) 708-0888 [email protected]
Executive SummaryInvestment Data.......................... 2Investment Overview................... 4Investment Highlights ..................5
Property DescriptionProperty Details.............................7Redevelopment Zone....................8Area Maps................................9-10Site Plan......................................11Parcel Map..................................12
Financial OverviewRent Roll...................................................142017 Projected Income & Expense..........15Assumptions & Financing.........................1610 Year Projection ....................................17Tenant Summaries ...................................18
Comparable PropertiesRecent Sales .....................................20-211 Mile Rent Survey.............................22-23
Market OverviewDemographic Summary......................... 25
The information contained in this Marketing Brochure is strictly confidential and is intended to be reviewed only by the party receiving it from Ophir Management Services. This information should not be made available to any other person without the written consent of Ophir Management Services. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers and to establish only a preliminary interest in the subject property. The information in this Marketing Brochure is not a substitute for a thorough due diligence investigation. Ophir Management Services makes no warranty or representation with respect
to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, the compliance with State and Federal regulations, the physical condition of the improvements, or
the financial condition or business prospects of any tenants, including tenants’ plans or intentions to continue occupancy at the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Ophir Management Services has not verified, and will not
verify, any of the information contained herein. Ophir Management Services makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information contained herein.
Table of Contents
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Exposition Marketplace1001 West Martin Luther King Jr. Boulevard LA, CA 90037
Price $28,250,000
CAP – Current 5.6%
Current Occupancy 98%
Gross Leasable Area 52,332 SF
Year Built/Renovated 1965/2003
Lot Size 141,135 SF
Financing CMBS Loan AssumptionInterest Rate 3.85%Interest Only through August 2020Due in 2025Principal Balance $15,680,000
Vital Data
NOI CAP
2017 $1,579,275 5.59% $975,125 7.76% 7.76%
2018 $1,610,570 5.70% $1,006,420 8.01% 8.01%
2019 $1,657,141 5.87% $1,052,991 8.38% 8.38%
2020 $1,740,232 6.16% $1,136,082 9.04% 9.04%
2021 $1,797,942 6.36% $915,510 7.28% 9.54%
2022 $1,851,962 6.56% $969,530 7.71% 10.05%
2023 $1, 946,769 6.89% $1,064,337 8.47% 10.90%
2024 $1,991,906 7.05% $1,109,474 8.83% 11.36%
2025 $2,158,908 7.64% $1,276,476 10.15% 12.78%
2026 $2,217,872 7.85% $1,335,440 10.62% 13.36%
2027 $2,324,697 8.23% $1,442,265 11.47% 14.31%
Cash Flow
Cash-on-Cash Return
See Assumptions and Financing Details on Page 16
Executive Summary - Investment Data
Return on Investment
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3
• Ophir Management Services has been selected to exclusively market for sale the Exposition Marketplace, a 52,332 square foot multi-tenant Shopping Center located in the heart of Downtown Los Angeles. With extremely dense demographics, the Subject Property sits on approximately 2.78 acres of land adjacent to the Los Angeles Memorial Coliseum and steps from the University of Southern California (USC). In addition to the recent arrival of the LA Rams, Exposition Marketplace also benefits from the Hoover Expansion Redevelopment Project, a special area of Los Angeles that receives financial support from The City for the development of commercial and residential projects.
• The New Owner has the opportunity to assume a non-recourse, Interest Only CMBS loan at 3.85% interest, as opposed to new debt, which is available at approximately 5.00% interest. These incredible loan terms allow the New Owner to maximize Cash-on-Cash return.
• Major tenants include Carl’s Jr., Payless Shoe Source, Sherwin Williams, Little Caesars, T-Mobile, Metro PCS and Nix Neighborhood Lending (Kinecta Federal Credit Union). 71% of Tenants have been in this location for at least 10 years.
• Largest Tenant (Howdy Bargain Center) is paying below market rents ($1.65/SF), allowing for major potential future upside.
• Exposition Marketplace is on the Northwest Corner of West Martin Luther King, Jr. Boulevard and Vermont Avenue. This location has fantastic visibility and generates average daily combined traffic counts that exceed 65,000 vehicles per day.
• Due to its location, Exposition Marketplace has historically been fully occupied and was consistently occupied throughout the recent recession. Ninety Seven Percent (97%) of the Total Square Footage has been Fully Occupied for Ten or More Years. Net Operating Income and Cash-on-Cash return is projected to continue to grow. Additionally, the new Owner has the possibility of leasing to a recycling center and billboard pending city/state approval.
• In 2016 Exposition Marketplace collected additional income of over $30,000 from event parking. This number is expected to grow as Los Angeles welcomes another Team and becomes more sports oriented.
• This heavily trafficked location, combined with very dense demographics, will afford the new Owner the opportunity to enjoy a cash-flowing property, in a prime area of Downtown Los Angeles, that is projected for future growth and continued success.
Executive Summary - Investment Overview
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• Densely Populated Trade Area
• Take advantage of 3.85% Interest 10-Year Financing, as opposed to new debt, available at approx. 5.00%
• Over 65,000 Vehicles per Day
• Stable Tenancy and High Historical Occupancy – Consistently Occupied through Recent Recession. In over 10 years only 3,300 square feet have become vacant and was leased in less than 90 days
• Tenants include Carl’s Jr., Payless ShoeSource, Sherwin Williams, Little Caesars, Metro PCS, T-Mobile, Nix Neighborhood Lending (32% Square Footage)
• 71% of Tenants have been in this location at least 10 years
• Adjacent to USC & Los Angeles Memorial Coliseum – 2016 event parking revenue exceeded $30,000
• Extensive Façade & Property Renovation in 2003
• Benefits from Hoover Expansion Redevelopment Project
• New roof 2016, new cameras and new LED lights
Executive Summary - Investment Highlights
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Property Exposition Marketplace
Address 1001 W. Martin Luther King Jr. Blvd Los Angeles, CA 90037
GLA 52,332 SF
Year Built/Renovated 1965/2003
Zoning [Q] C-2
APN 5037-026-017, 018
General Information
Property Description – Property Details
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Property Description –Redevelopment Zone
OVERVIEWExposition Marketplace falls within the Hoover Expansion Redevelopment Project. Hoover is a 574 acre area located just southwest of downtown Los Angeles. Established in 1966 over 165 acres, the original project has grown and expanded to cover one of the densest areas of Los Angeles County.
HISTORYThe Hoover Expansion Redevelopment Project was established in 1966 in the Hoover region of Downtown Los Angeles. The plan called for the expansion of USC and the development of both commercial and residential facilities. These goals required the acquisition of land, demolition of existing structures, and upgrading of major infrastructure.
ACCOMPLISHMENTS Since inception, the Agency has assisted in the construction of more than 1,023 residential units for families, seniors, and university students. The Agency has also assisted in commercial developments including the University Village community shopping center, the Adams/Vermont Shopping Center, and hotels and office buildings. The Agency also assisted the City of Los Angeles’ Department of Transportation in many improvements including landscape medians. In addition, a 130,000 square foot Family Service Center was completed in 2001.
THE FUTUREThe Hoover Expansion Redevelopment Project remains a priority for the City of Los Angeles. The Agency continues to actively support development. Property Owners in this region will continue to benefit from the promotion of a thriving business environment and residential community.
The Subject Property is located in Hoover Expansion Area 3
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Property Description – Redevelopment Zone
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Property Description – Area Maps
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Property Description – Area Maps
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Property Description – Site Plan
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Northwest Corner of West Martin Luther King, Jr. Boulevard and
Vermont Avenue
Property Description – Parcel Map
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13
Accelerated through June 2017
Financial Overview – Rent Roll
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Unit Tenant Sq. Ft.Lease
From
Lease
ExpireRent/SqFt Rent NNN/SqFt NNN Total/SqFt Total Rent
Increase
DateIncreases Options
1001 Carls Jr. 2,214 10/15/1985 10/31/2026 5.92$ 13,112$ 0.70$ 1,547$ 6.62$ 14,659$ 9/1/2021 FIXED 2x5 Yr FMV
1009 Kinecta Financial 2,500 12/15/1985 12/31/2019 3.25$ 8,125$ 0.79$ 1,952$ 4.04$ 10,077$ N/A N/A NONE
1013 Fashion Today 2,000 5/1/1993 4/30/2018 3.13$ 6,266$ 0.78$ 1,562$ 3.91$ 7,828$ 2/1/2017 Ann 4% 2x5 Yr FMV
1017 Lucky Spin Laundry 3,500 10/7/1998 8/31/2024 2.00$ 6,986$ 0.69$ 2,424$ 2.69$ 9,410$ 8/1/2019 FIXED 2x5 Yr FIXED
1021 Payless ShoeSource 3,000 11/1/1985 10/31/2019 2.67$ 8,000$ N/A N/A 2.67$ 8,000$ N/A FIXED NONE
1029 C & J Beauty Supply 6,005 8/1/2002 12/31/2022 1.73$ 10,410$ 0.78$ 4,692$ 2.51$ 15,102$ 1/1/2018 Ann 3% 1x5 Yr FMV
1025 Howdy Bargain Center 10,147 12/1/2004 10/31/2019 1.65$ 16,743$ 0.78$ 7,934$ 2.43$ 24,677$ 11/1/2019 15% each 5 Yrs 1X5 Yr COLA
1000 SBA Communications 620 10/31/2005 10/31/2035 7.41$ 4,597$ N/A N/A 7.41$ 4,597$ 11/1/2017 Ann 4% NONE
1007 Platinum Spa 2,484 3/2/2007 2/28/2022 2.33$ 5,788$ 0.79$ 1,962$ 3.12$ 7,750$ 3/1/2018 Ann 2.5% NONE
3981-5 Sherwin-Williams 3,228 6/22/2007 7/1/2017 3.03$ 9,781$ 0.68$ 2,208$ 3.71$ 11,989$ 7/1/2017 FIXED 2x5 Yr FIXED
1019 Kings Foodtown Market 5,500 1/1/2017 11/31/2026 1.64$ 9,030$ 0.79$ 4,345$ 2.43$ 13,375$ 12/1/2026 FIXED 2x5 Yr FIXED
1005 Little Caesars 1,604 3/16/2009 3/31/2019 3.44$ 5,520$ 0.67$ 1,079$ 4.11$ 6,599$ 4/1/2019 FIXED 2x5 Yr FIXED
1023 Smokin' Gifts 1,760 12/31/2010 12/31/2017 2.22$ 3,900$ 0.25$ 440$ 2.47$ 4,340$ 1/1/2018 Ann 4% 1x5 Yr FMV
1027 Panda King Restaurant 1,440 4/1/1989 3/31/2019 4.00$ 5,755$ 0.78$ 1,125$ 4.78$ 6,880$ 4/1/2018 Ann 5%-7% NONE
1015 Metro PCS 1,600 1/20/2009 1/31/2019 2.67$ 4,269$ 0.78$ 1,248$ 3.45$ 5,517$ 2/1/2018 Ann 4-5% NONE
1017A Family Insurance Sales 1,330 2/1/2014 8/28/2017 2.70$ 3,596$ 0.78$ 1,039$ 3.49$ 4,635$ 8/28/2017 Ann 4% 1x3 Yr CPI min 4%
1011 T Mobile 2,400 5/15/2014 7/31/2019 3.17$ 7,597$ 0.78$ 1,874$ 3.95$ 9,471$ 7/1/2017 N/A 2x5 Yr FMV
RECYC VACANT 1,000
PARKLOT Louie Locksmith 11/9/1993 MTM N/A 600$ N/A N/A N/A 600$ MTM MTM N/A
52,332 2.49 130,074$ 0.68$ 35,432$ 3.16$ 165,506$ TOTAL/AVERAGE
Financial Overview – 2017 Projected Income & Expense
Base Rent $1,560,889
NNN Collected $587,090
Additional Income $73,948
Income
CAM $225,404
Insurance $10,953
Property Tax $353,125
Non CAM/Other Tax $6,343
Management Fee $46,827
Expenses
GROSS INCOME $2,221,927
TOTAL EXPENSES $642,651
Notes:• Additional Income includes Parking Lot Event Income, Temporary Storage Income, Additional
Rent Income, Late Fee Income & NSF Fee Income based on Actual 2016 P&L.• Expenses Based on 2016 Actual Expenses plus New Property Tax post Reassessment at Asking
Price.• NNN Collected reflects Actual 2016 NNN Collected plus New Tax passed through to all Tenants
except Payless ShoeSource and projected 2016 CAM Reconciliation• Abnormal and/or one time expenses excluded. Request P&Ls from Listing Agents.
NET OPERATING INCOME $1,579,275
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Assumptions
• Start of Analysis: 6/2017
• End of Analysis: 6/2027
• Additional Income & CAM Rec Increases 3%/Yr
• NNN Collected Increases 2%/Yr
• NNN Collected reflects 2016 Actual NNN Collected plus New Tax passed through
to all Tenants except Payless ShoeSource (94.3% Square Footage)
• Operating Expenses Increases 2%/Yr
• Real Estate Taxes based on Listing Price
• Management Fee: 3% of Base Rent
• Actual Vacancy: 2% (applied throughout projection)
Financing
• Assumes CMBS Loan Principal Balance $15,680,000; Interest Rate 3.853%; 30 Yr Amortization;
Interest Only until August 2020; Due in 2025; Contact Listing Agents for Details
• Cash-on-Cash Return Calculated as (Net Cash Flow after Debt Service but Before Taxes)/(Down
Payment)
• Return on Investment accounts for Principal Reduction
• Assumes Down Payment of $12,570,000 with Assumption of $15,680,000 Principal Balance on
CMBS Loan
• Assumes Refinance at Same Loan Terms upon Due Date (2025)
• 1.00% Loan Assumption Fee not included (one time expense)
Financial Overview –Assumptions & Financing
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Financial Overview – 10 Year Projection
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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
ANNUAL GROSS POTENTIAL RENT 1,560,889$ 1,590,796$ 1,635,921$ 1,717,507$ 1,773,648$ 1,826,035$ 1,919,142$ 1,962,509$ 2,127,669$ 2,184,717$ 2,289,548$
Additional Income & CAM Rec 101,948$ 105,007$ 108,157$ 111,402$ 114,744$ 118,186$ 121,732$ 125,383$ 129,145$ 133,019$ 137,010$
NNN Collected 559,090$ 570,272$ 581,677$ 593,311$ 605,177$ 617,280$ 629,218$ 642,218$ 655,063$ 668,164$ 681,527$
ANNUAL EFFECTIVE GROSS INCOME 2,221,927$ 2,266,074$ 2,325,755$ 2,422,219$ 2,493,569$ 2,561,501$ 2,670,499$ 2,730,110$ 2,911,877$ 2,985,900$ 3,108,085$
Operating Expenses 642,651$ 655,504$ 668,614$ 681,987$ 695,627$ 709,539$ 723,730$ 738,204$ 752,969$ 768,028$ 783,388$
NET OPERATING INCOME 1,579,275$ 1,610,570$ 1,657,141$ 1,740,232$ 1,797,942$ 1,851,962$ 1,946,769$ 1,991,906$ 2,158,908$ 2,217,872$ 2,324,697$
Debt Service 604,150$ 604,150$ 604,150$ 604,150$ 882,432$ 882,432$ 882,432$ 882,432$ 882,432$ 882,432$ 882,432$
NET CASH FLOW 975,125$ 7,006,420$ 1,052,991$ 1,136,082$ 915,510$ 969,530$ 1,064,337$ 1,109,474$ 1,276,476$ 1,335,440$ 1,442,265$
CAP Rate 5.59% 5.70% 5.87% 6.16% 6.36% 6.56% 6.89% 7.05% 7.64% 7.85% 8.23%
Cash on Cash 7.76% 8.01% 8.38% 9.04% 7.28% 7.71% 8.47% 8.83% 10.15% 10.62% 11.47%
Return on Investment 7.76% 8.01% 8.38% 9.04% 9.54% 10.05% 10.90% 11.36% 12.78% 13.36% 14.31%
Carl’s Jr. is a fast food restaurant chain operated by CKE Holdings, Inc. with locations primarily in the Western and Southwestern United States. Founded in 1941, the popular restaurant chain quickly expanded and is branded as both Carl’s Jr. and Hardee’s. CKE has over 3,664 franchised or company-operated Carl’s Jr. and Hardee’s in 44 states and 38 countries.
Payless ShoeSource Inc. is an American discount footwear retailer headquartered in Topeka, Kansas. Payless is a privately held company owned by Golden Gate Capital and Blum Capital Partners. Payless has over 4,496 locations worldwide.
Little Caesars Pizza is the third-largest pizza chain in the world behind Pizza Hut and Domino’s Pizza. Located in Detroit, Michigan, Little Caesars operates franchises internationally. Little Caesars was founded in 1959 and sold its first franchise in 1962. Today, Little Caesars Pizza is the fastest growing pizza chain in the United States.
Metro PCS is a prepaid wireless service in the United States that is part of T-Mobile US, Inc. T-Mobile is a publicly traded company and merged with Metro PCS in 2013.
The Sherwin-Williams Company is an American Fortune 500 Company headquartered in Cleveland, OH. Sherwin-Williams specializes in the manufacture, distribution, and sale of paints, coatings and related products to commercial and retail customers. In 2016, Sherwin-Williams announced the acquisition of the Valspar Corporation for approximately $9 Billion. The acquisition is expected to close early 2017.
Financial Overview – Tenant Summaries
HOWDY BARGAINCENTER
Howdy Bargain Center is a general merchandise store founded in 2005 and owned privately by Howdy Bargain Corp, headquartered in Los Angeles. Howdy Bargain Center has two Los Angeles locations and one Orange County location.
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Nix Neighborhood Lending offers financial services from payday cash advances, personal loans, check cashing, insurance services, money transfers, auto registration and several other financial services. With 35 branches across Southern California, Nix was purchased in 2007 by Kinecta Federal Credit Union, a leading credit union with over $3.6 billion in assets.
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MajorTenants
Carl’s Jr.
Payless Shoes
Little Caesar’s
SherwinWilliams
SUBJECT PROPERTY: Exposition Marketplace1001 W. Martin Luther King, Jr. Blvd. Los Angeles, CA 90037
Asking Price: $28,250,000
CAP: 5.59%
Price/SF: $539.82
Price/SF Land: $200.16
Gross Leasable Area: 52,332 SF
Occupancy: 98%
Year Built/Renovated: 1956/2003
MajorTenants
BaekjeongRestaurant
QuartersKorean BBQ
Sake House
Fashion Rialto
COMP 1: Chapman Plaza3451 W. 6th St. Los Angeles, CA 90020
Close of Escrow: July 1, 2016
Sale Price: $30,000,000
CAP: 4.00%
Price/SF: $600.00
Price/SF Land: $437.50
Gross Leasable Area: 50,000 SF
Occupancy: 97.6%
Year Built/Renovated: 1929/1990
Comparable Properties – Recent Sales
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MajorTenants
Crunch Fitness
Trader Joe’s
Chipotle
Jersey Mike’s
MajorTenants
Grocery Outlet
Dollar Tree
Papa John’s
Quiznos
COMP 2: The Knolls Shopping Center4250 Long Beach Blvd. Long Beach, CA 90807
Close of Escrow: October 4, 2016
Sale Price: $29,150,000
CAP: 4.60%
Price/SF: $560.24
Price/SF Land: $183.43
Gross Leasable Area: 52,031 SF
Occupancy: 100%
Year Built/Renovated: 2000/2016
Comparable Properties – Recent Sales
COMP 3: Sun Valley Marketplace 8908-36 Glenoaks Blvd. Sun Valley, CA 91352
Close of Escrow: October 25, 2016
Sale Price: $12,125,000
CAP: 4.60%
Price/SF: $387.73
Price/SF Land: $120.93
Gross Leasable Area: 31,272 SF
Occupancy: 94.0%
Year Built/Renovated: 1958
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SUBJECT PROPERTY: Exposition Marketplace1001 W. Martin Luther King, Jr. Blvd. Los Angeles, CA 90037
Date Surveyed: 2016
Occupancy: 98%
Average Rent/SF: $2.49
Gross Leasable Area: 52,332 SF
Available SF: 1,000 SF
Lease Type: NNN
Use: Retail
MajorTenants
Carl’s Jr.
Payless
Little Caesar’s
SherwinWilliams
COMP 1: Smart & Final Anchored Center3607-29 S. Vermont Ave. Los Angeles, CA 90007
Date Surveyed: 2016
Occupancy: 92.72%
Asking Rent/SF: $4.00
Gross Leasable Area: 26,448 SF
Available SF: 1,926 SF
Lease Type: NNN
Use: Retail
MajorTenants
Smart & Final
Citibank
Taco Bell
Supercuts
Comparable Properties – 1 Mile Rent Survey
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COMP 2: Retail Shopping Center4360 S. Figueroa St. Los Angeles, CA 90037
Date Surveyed: 2016
Occupancy: 88.03%
Asking Rent/SF: $3.00
Gross Leasable Area: 29,236 SF
Available SF: 3,500 SF
Lease Type: NNN
Use: Retail
COMP 3: Retail/Restaurant Building3844 South Figueroa St. Los Angeles, CA 90037
Date Surveyed: 2016
Occupancy: 0.00%
Asking Rent/SF: $3.55
Gross Leasable Area: 1,128 SF
Available SF: 1,128 SF
Lease Type: NNN
Use: Retail/Restaurant
Comparable Properties – 1 Mile Rent Survey
Major Tenants
Ross
Rite Aid
Coin Laundry
Major Tenants
Philly CheeseSteak (former)
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Exposition Marketplace is located in the Exposition Park neighborhood of Downtown Los Angeles. Just steps from the University of Southern California (USC) and the Los Angeles Memorial Coliseum, Exposition Marketplace is in one of the busiest parts of Los Angeles.
The Exposition Park neighborhood is a densely populated region with 33,458 people in only 1.85 square miles, among the highest densities for Los Angeles County.
This location benefits most from dense population, corner location, and proximity to both USC and the Los Angeles Memorial Coliseum.
USCDowntown LA LA Memorial Coliseum
Demographic Information: Exposition Park Neighborhood
Population 56.1% Latino, 38.1% Black, 2.2% White, 1.6% Asian, 2.0% Other
Median Household Income
$33,999
Median Age 26 Years Old
Average Household Size
3.3 People
Density 16,819 People per Square Mile
Market Overview – Demographic Summary
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Broker: Eric TreibatchBroker Corp ID No. 01187117(818) 708-0888 [email protected]
Agent: Josh MarkowitzLicense No. CA 01978248(818) 708-0888 [email protected]
