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OFFERING MEMORANDUM UT PHYSICIANS PLAZA 3610 Stagg Dr, Beaumont, TX 77701 Click the Icon or Visit https://vimeo.com/269695326/99f115dda9 to View Exclusive Video Presentation Broker of Record: Timothy Speck
CONFIDENTIALITY & DISCLAMER THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE CONSIDERED AN APPRAISAL. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved. NON-ENDORSEMENT NOTICE Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. N E T- L E A S E D D I S C L A I M E R The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided. As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies any obligation to conduct a due diligence examination of this Property for Buyer. Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not represent the current or future performance of this property. The value of a net leased property to you depends on factors that should be evaluated by you and your tax, financial and legal advisors. Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any net leased property to determine to your satisfaction with the suitability of the property for your needs. Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant. While the tenant’s past performance at this or other locations is an important consideration, it is not a guarantee of future success. Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be set based on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area. Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant considering the location of the property, and Buyer’s legal ability to make alternate use of the property. By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this net leased property.
TABLE OF CONTENTS 01 INVESTMENT OVERVIEW 02 PRICING & FINANCIAL ANALYSIS 03 DEMOGRAPHICS & MARKET OVERVIEW
UT PHYSICIANS PLAZA INVESTMENT HIGHLIGHTS 100 Percent Occupied UT Physicians & Safelite AutoGlass 75 Percent Occupied By UT Physicians | State of Texas Credit (NNN) Both Triple-Net Leases with Management Reimbursed Renovated in 2017 | No Deferred Maintenance Located Off Interstate-10 with Over 140,000 VPD 5
The Event Centre Central Senior High School Baptist Hospitals Of Southeast Texas King Middle School SUBJECT PROPERTY Pathways Learning Center Ozen High School 56,237 Residents | 100,203 Employees $57,260 Average Household Income 11
Beaumont Country Club Knife River Corporation Fire Museum of Texas Edison Museum Art Museum of Southeast Texas Beaumont Industrial Area Baptist Hospitals Harbor Island Beaumont Municipal of Southeast Texas Athletic Complex 1,620 employees ExxonMobil Refinery SUBJECT PROPERTY 2,400 acres | Employees: 2040 people Monsignor Kelly & 1000 contractors Catholic High School Lamar University 14,103 enrollment Ozen High School 1,410 employees Spindletop Park Lamar University • Texas Home Health America LP Enrollment: 14,100 Ozen High School • Exxon Mobile Refinery Enrollment: 1,100 • Memorial Hermann Hospital Monsignor Kelly High School 105,694 Residents | 153,637 Employees • Baptist Hospitals of SE Texas Enrollment: 450 $59,981 Average Household Income • Beaumont Refinery 12
265 Miles 13
02 PRICING & FINANCIAL ANALYSIS
UT PHYSICIANS PLAZA PRICING DETAIL & OPERATING DATA DEMOGRAPHICS 1-Mile 3-Miles 5-Miles 2017 Estimate Population 4,835 56,237 105,694 2017 Estimate Households 1,769 22,049 40,908 Daytime Population 15,245 100,203 153,637 Average Household Income $44,015 $57,260 $59,981 MAJOR EMPLOYERS EMPLOYER # OF EMPLOYEES Click Here to View Exclusive Video Presentation Texas Home Health America LP 5,540 https://vimeo.com/269695326/99f115dda9 Exxon Mobile Refinery 3,040 Memorial Hermann Baptist Hospital 1,759 THE OFFERING Baptist Hospital of SE Texas 1,700 Beaumont Refinery 1,545 3610 Stagg Drive, Beaumont, TX Dawson Marine Inc 1,000 MAJOR TENANTS SITE DESCRIPTION LEASE LEASE TENANT GLA EXPIRATION TYPE Built | Renovated 1968 | 2017 University of Texas Physicians 12,000 06/30/2027 NNN Gross Leasable Area (GLA) 15,744 SF Safelite AutoGlass 3,744 05/31/2021 NNN Current Occupancy 100% Lot Size +/- .92 Acres Ownership Fee Simple 15
UT PHYSICIANS RENT ROLL AND TENANT LEASE SUMMARY PLAZA Tenant Name (Lease Type) Square Pro-Rata Lease Lease Annual Monthly Annual Base Rent Base Rent Tenant Tenant Description Feet Share Commence Expiration Rent/ SF Base Rent Base Rent Changes On Changes To Option Terms University of Texas Physicians 12,000 76.22% 07/01/2017 06/30/2027 $20.00 $20,000 $240,000 None None Four, Five-Year UT Physicians CAM: Reimburses pro-rata share, 6% cap on increases (excluding utilities & snow removal) (Opt. 1) 07/01/2027 $288,000 Years 11-15 +/- 1,500 Clinicians | Over 80 Taxes: Reimburses pro-rata share (Opt. 2) 07/01/2032 $312,000 Years 16-20 medical specialties and subspecialties, provides multi- Insurance: Reimburses pro-rata share (Opt. 3) 07/01/2037 $336,000 Years 21-25 specialty care. UT Physicians Management: Management expense cannot exceed 4% of gross rental income (Opt. 4) 07/01/2042 $360,000 Years 26-30 help patients needing urgent, highly complex care. Other: None Safelite AutoGlass 3,744 23.78% 06/01/2011 05/31/2021 $12.00 $3,744 $44,928 None None One, Five-Year Safelite Fulfillment, Inc. CAM: Reimburses pro-rata share, 2% cap on increases (excluding utilities & snow removal) (Opt. 1) 06/01/2021 $48,672 Years 11-15 +/- 720 Locations | Over 70 Taxes: Reimburses pro-rata share years of service, Safelite knows auto glass and have Insurance: Reimburses pro-rata share grown to be the largest auto Management: Management expense cannot exceed 5% of total common area expenses glass specialist in the United States. Other: None Total Occupied 15,744 100.00% $23,744 $284,928 Total Vacant 0 0.00% $0 $0 Totals 15,744 100.00% $23,744 $284,928 16 16
TENANT OVERVIEW ABOUT UT PHYSICIANS With more than 1,500 clinicians certified in more than 80 medical specialties and subspecialties, UT Physicians provides multi-specialty care for the entire family. UT Physicians helps patients needing urgent, highly specialized or complex care and also provides high-quality, wellness-oriented primary care for routine illnesses and maintenance of good health. Affiliated with the John P. and Kathrine G. McGovern Medical School at The University of Texas Health UT Physicians among the Science Center at Houston (UTHealth), UT Physicians health care providers are internationally recognized for leading-edge medical research and treatment. Many are among the Woodward-White Woodward-White “Best “Best Doctors in America.” UT Physicians and McGovern Medical School are national leaders in research, education and clinical excellence. Doctors in America.” Check Website here: https://www.utphysicians.com/about/ LEASE SUMMARY Lease Type Triple-Net (NNN) Tenant Rent Increases University of Texas Physicians (Opt. 1) 07/01/2027 - $288,000 80+ Guarantor Corporate SPECIALTIES Rating AAA (Moody’s) Rent Commencement July 1, 2017 Lease Expiration June 30, 2027 Lease Term Remaining Over Nine Years HEADQUARTERED IN Original Lease Term Ten Years Renewal Options Four, Five-Year University of Texas RENT SCHEDULE YEAR ANNUAL RENT MONTHLY RENT RENT/SF 07/01/2017 – 06/30/2027 $240,000 $20,000 $20.00 FOUNDED OPTION SCHEDULE 1972 YEAR ANNUAL RENT MONTHLY RENT RENT/SF 07/01/2027 – 06/30/2032 $288,000 $24,000 $24.00 07/01/2032 – 06/30/2037 $312,000 $26,000 $26.00 MORE THAN 07/01/2037 – 06/30/2042 $336,000 $28,000 $28.00 07/01/2042 – 06/30/2047 $360,000 $30,000 $30.00 1,500 CLINICIANS 17
TENANT OVERVIEW ABOUT SAFELITE With more than 70 years of service, Safelite knows auto glass. Safelite was founded at a single location in Wichita, Kansas in 1947 and has grown to become the largest auto glass specialist company in the United States with more than 720 locations nationwide. On Average, Safelite Provides From front and rear windshields to side glass, we’re proud to serve 6 million customers every year. Whatever your auto glass needs may be, there’s a good chance we can fix Over 1.5 Million Windshields it through repair or replacement. a Year to More Than 6 Million LEASE SUMMARY Satisfied Customers Visit Safelite.com - https://www.safelite.com/ Lease Type Triple-Net (NNN) Tenant Safelite Rent Increases (Opt. 1) 06/01/2021 - $48,672 Guarantor Corporate 720+ Ticker Private LOCATIONS Rent Commencement June 1, 2011 Lease Expiration May 31, 2021 HEADQUARTERED IN Lease Term Remaining Nearly Three Years Original Lease Term Ten Years Columbus, OH Renewal Options One, Five-Year RENT SCHEDULE YEAR ANNUAL RENT MONTHLY RENT RENT/SF 06/01/2011 – 05/31/2021 $44,928 $3,744 $12.00 FOUNDED 1947 OPTION SCHEDULE YEAR ANNUAL RENT MONTHLY RENT RENT/SF 06/01/2021 – 05/31/2025 $48,672 $4,056 $13.00 12,500+ EMPLOYEES 18
UT PHYSICIANS PLAZA PRICING DETAIL & OPERATING DATA CURRENT OPERATING DATA Scheduled Base Rental Income $284,928 Expense Reimbursement Income CAM $5,161 Insurance $13,062 Real Estate Taxes $11,803 Management Fees $12,598 Total Reimbursement Income $42,624 Effective Gross Revenue $327,552 Less: Operating Expenses ($42,624) Net Operating Income $284,928 List Price $4,320,000 Operating Expenses Current Per/SF Common Area Utilities $1,116 $0.07 Maintenance CAP Rate 6.60% Price/SF $274 Landscaping $1,837 $0.12 General R&M $2,208 $0.14 Net Operating Income $284,928 Total CAM Expenses $5,161 $0.33 Gross Leasable Area (GLA) 15,744 SF Insurance Premiums $13,062 $0.83 Built | Renovated 1968 | 2017 Real Estate Taxes $11,803 $0.75 Lot Size +/- .92 Acres Management Fee (4% of EGR) $12,598 $0.80 Ownership Fee Simple Total Expenses $42,624 $2.71 19
03 DEMOGRAPHIC & MARKET OVERVIEW
5 Miles 3 Miles 1 Mile UT PHYSICIANS PLAZA 21
UT PHYSICIANS PLAZA DEMOGRAPHIC & MARKET OVERVIEW POPULATION 1 Miles 3 Miles 5 Miles HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 Miles ▪ 2022 Projection Total Average Household Retail Expenditure $48,752 $53,229 $55,593 Total Population 4,749 55,868 105,304 ▪ Consumer Expenditure Top 10 Categories ▪ 2017 Estimate Housing $12,904 $14,018 $14,583 Total Population 4,835 56,237 105,694 Transportation $10,042 $10,607 $11,115 ▪ 2010 Census Shelter $6,879 $7,379 $7,698 Total Population 4,795 55,918 104,928 Food $5,324 $5,819 $6,115 ▪ 2000 Census Utilities $3,480 $3,658 $3,769 Total Population 4,951 59,082 104,125 Health Care $3,334 $3,746 $3,854 ▪ Current Daytime Population Personal Insurance and Pensions $3,331 $4,116 $4,514 2017 Estimate 15,245 100,203 153,637 Entertainment $1,663 $1,972 $2,069 HOUSEHOLDS 1 Miles 3 Miles 5 Miles Household Furnishings and Equipment $1,256 $1,508 $1,581 ▪ 2022 Projection Apparel $1,179 $1,307 $1,378 Total Households 1,777 22,256 41,398 POPULATION PROFILE 1 Miles 3 Miles 5 Miles ▪ 2017 Estimate ▪ Population By Age Total Households 1,769 22,049 40,908 2017 Estimate Total Population 4,835 56,237 105,694 Average (Mean) Household Size 2.52 2.49 2.50 Under 20 28.81% 27.42% 28.20% ▪ 2010 Census 20 to 34 Years 20.62% 20.72% 22.22% Total Households 1,788 22,177 40,960 35 to 39 Years 6.59% 6.04% 6.06% ▪ 2000 Census 40 to 49 Years 11.02% 11.09% 11.05% Total Households 1,762 23,307 40,856 50 to 64 Years 17.15% 19.30% 18.83% ▪ Occupied Units Age 65+ 15.80% 15.44% 13.62% 2022 Projection 1,777 22,256 41,398 Median Age 35.41 36.49 34.67 2017 Estimate 2,007 25,289 46,492 ▪ Population 25+ by Education Level HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2017 Estimate Population Age 25+ 3,133 36,971 67,274 ▪ 2017 Estimate Elementary (0-8) 10.38% 7.55% 6.13% $150,000 or More 2.01% 5.47% 6.53% Some High School (9-11) 11.32% 10.11% 9.18% $100,000 - $149,000 5.04% 7.97% 8.67% High School Graduate (12) 34.13% 31.54% 31.34% $75,000 - $99,999 8.40% 8.12% 8.29% Some College (13-15) 26.57% 24.32% 24.71% $50,000 - $74,999 16.06% 14.29% 15.34% Associate Degree Only 4.30% 4.84% 5.53% $35,000 - $49,999 11.74% 13.70% 13.93% Bachelors Degree Only 5.69% 13.37% 14.81% Under $35,000 56.76% 50.46% 47.23% Graduate Degree 3.22% 6.65% 6.87% Average Household Income $44,015 $57,260 $59,981 Created on May 2018 Median Household Income $31,220 $34,641 $37,429 Per Capita Income $16,453 $22,678 $23,577 Source: © 2017 Experian 22
UT PHYSICIANS PLAZA DEMOGRAPHIC & MARKET OVERVIEW Population Race and Ethnicity In 2017, the population in your selected geography is 105,694. The The current year racial makeup of your selected area is as follows: population has changed by 1.51% since 2000. It is estimated that the 37.11% White, 46.90% Black, 0.05% Native American and 3.79% population in your area will be 105,304 five years from now. The Asian/Pacific Islander. Compare these to US averages which are: current population is 47.97% male and 52.03% female. The median 70.42% White, 12.85% Black, 0.19% Native American and 5.53% age of the population in your area is 34.67, compare this to the US Asian/Pacific Islander. People of Hispanic origin are counted average which is 37.83. The population density in your area is independently of race. 1,346.67 people per square mile. People of Hispanic origin make up 17.09% of the current year population in your selected area. Compare this to the US average of 17.88%. Households Housing There are currently 40,908 households in your selected geography. The median housing value in your area was $100,842 in 2017, The number of households has changed by 0.13% since 2000. It is compare this to the US average of $193,953. In 2000, there were estimated that the number of households in your area will be 41,398 24,475 owner occupied housing units in your area and there were five years from now, which represents a change of 1.20% from the 16,380 renter occupied housing units in your area. The median rent at current year. The average household size in your area is 2.50 persons. the time was $386. Income Employment In 2017, the median household income for your selected geography is In 2017, there are 153,637 employees in your selected area, this is $37,429, compare this to the US average which is currently $56,286. also known as the daytime population. The 2000 Census revealed The median household income for your area has changed by 16.26% that 58.76% of employees are employed in white-collar occupations since 2000. It is estimated that the median household income in your in this geography, and 41.29% are employed in blue-collar area will be $43,618 five years from now, which represents a change occupations. In 2017, unemployment in this area is 9.75%. In 2000, of 16.54% from the current year. the average time traveled to work was 20.00 minutes. The current year per capita income in your area is $23,577, compare this to the US average, which is $30,982. The current year average household income in your area is $59,981, compare this to the US average which is $81,217. Source: © 2017 Experian 23
UT PHYSICIANS PLAZA DEMOGRAPHIC & MARKET OVERVIEW BEAUMONT OVERVIEW The Beaumont metro is located in East Texas off the Gulf of Mexico and is one of the nation’s largest petrochemical refining areas. It shares borders with the Houston metro to the west and the Lake Charles market METRO HIGHLIGHTS in Louisiana to the east. The metro consists of the counties of Newton, PORT ACTIVITY Hardin, Jefferson and Orange and contains 413,000 people. The cities of The Port of Beaumont contributes to significant economic activity in the region. Beaumont, Port Arthur and Orange are known as the Golden Triangle. It is one of the nation’s largest seaports based on tonnage. Beaumont is the most populous city with 119,500 residents, followed INDUSTRIAL AND MANUFACTURING SECTORS Port Arthur with 55,500. Large industrial facilities in the area include the Exxon Mobil refinery and chemical plants for Goodyear and DuPont. CORPORATE HEADQUARTERS Corporate headquarters represent a variety of industries and include companies such as Jason’s Deli. ECONOMY ▪ Energy-sector activities play a significant part in the metro’s economy. Companies represented in the area include Gulf Oil, Humble Oil, Magnolia Petroleum Co. and Exxon Mobil. The area is home to a large portion of the nation’s refining capacity. ▪ Aside from corporate headquarters and the energy industry, large employers represent diverse employment sectors and generate large staff counts. These include Conn’s, Lamar University, Christus St. Elizabeth Hospital and Memorial Baptist Hospital. ▪ The Sabine-Neches Waterway ranks among the top in the U.S. in terms of commercial military outload and is one of the nation’s largest waterway by cargo volume. DEMOGRAPHICS 2017 2017 2017 2017 MEDIAN POPULATION: HOUSEHOLDS: MEDIAN AGE: HOUSEHOLD INCOME: 414K 153K 37.1 $43,400 Growth Growth U.S. Median: U.S. Median: 2017-2022*: 2017-2022*: 0.7% 2.2% 37.8 $56,300 * Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau 24
UT PHYSICIANS PLAZA DEMOGRAPHIC & MARKET OVERVIEW HOUSTON METRO AREA Post-Hurricane Recovery Boosts Retail Spending, Draws Investors Local residents rebuilding after floods, sales rise. Economic growth is returning to Houston as the metro emerges from the damage created by Hurricane Harvey and struggles stemming from the decline in energy prices in previous years. In 2018, job additions will rise, with local organizations creating more positions than the previous three years combined. Strengthening employment and recovery efforts related to the hurricane will provide an additional boost to retail consumption this year, and retail sales are expected to rise faster than the national pace. Local households replacing goods lost during the flooding will help lift spending, while residents temporarily relocating to assist with rebuilding efforts raise sales at restaurants, grocery stores and other needs-based retailers. As a result, retailers continue to expand in the metro this year, and grocers such as Kroger and H-E-B will open multiple locations on the west and north sides of Houston. Fitness centers, dollar stores, plus numerous restaurant and entertainment options will open this year, helping keep vacancy 60 basis points below the 10-year average. Development in West Houston attracts investors. The increasingly diverse propelled the Houston retail segment in recent years, keeping buyers interested in the local market. The metro is poised for an increase in trading volume this year, however, as staffing in the oil and gas industry has stabilized and new opportunities are presented in western submarkets. This side of the metro will receive an influx of new properties as development continues along the Grand Parkway. Grocery-anchored retail centers are in high demand, often trading in the mid-6 percent area. Meanwhile, strip-center assets with service-oriented tenants pique buyer interest, often changing hands in the low-7 percent span. Properties in West Houston submarkets such as Katy, Sugar Land out toward the Grand Parkway, and up to The Woodlands will draw strong buyer demand this year. * Forecast Sources: Marcus & Millichap Research Services; BLS; CoStar Group, Inc. 25
UT PHYSICIANS PLAZA DEMOGRAPHIC & MARKET OVERVIEW HOUSTON METRO AREA 2018 Market Forecast NRI Rank Higher vacancy than a large share of markets plus slow rent gains pull 30, down 4 places Houston down four spots this year. Employment Employers will create 75,000 positions in 2018 following the addition of up 2.5% 45,000 jobs in 2017. Construction Delivery volume slows after the completion of nearly 5.6 million square feet 2.9 million sq. ft. in 2017. Sugar Land and Conroe each welcome more than 400,000 square feet of new supply in 2018. Vacancy Vacancy rises for a second year, reaching 6.0 percent in 2018 as 2 million up 20 bps square feet of retail space is absorbed. Rent The average asking rent advances to $17.12 per square foot, increasing for up 1.5% a second consecutive year. Investment Retail assets in heavily flooded areas of Houston could be value-add targets this year. Owners in these locales may choose to dispose of properties in lieu of renovating, while others may divest as some tenants are unable to reopen stores. * Forecast Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics 26
UT PHYSICIANS PLAZA www.dumesfalk.com EXCLUSIVELY LISTED BY: RYAN K. ROEDERSHEIMER Associate Director - National Retail Group Cincinnati Office Tel: (513) 878-7796 Fax: (513) 878-7710 ryan.roedersheimer@marcusmillichap.com Licenses: OH SAL.2015004880 JOEL M. DUMES Senior Vice President Investments Senior Director - National Retail Group Cincinnati Office Tel: (513) 878-7720 Fax: (513) 878-7710 joel.dumes@marcusmillichap.com Licenses: OH SAL.2003013045, KY 63818 STANTON R. FALK First Vice President Investments Senior Director - National Retail Group Cincinnati Office Tel: (513) 878-7721 Fax: (513) 878-7710 stanton.falk@marcusmillichap.com Licenses: OH SAL.2012001364 Broker of Record: Timothy Speck
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