ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614 O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com 419 W. Lincoln Highway, Chicago Heights, Illinois OFFERING MEMORANDUM Wilson Center Mall - Strip Center Value-Add Opportunity
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ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
419 W. Lincoln Highway, Chicago Heights, Illinois
OFFERING MEMORANDUM
Wilson Center Mall - Strip CenterVa
lue-Add O
pportunity
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INVESTMENT SUMMARY
MARKET OVERVIEW AND LOCATOR MAP
AREA HIGHLIGHTS AND RETAIL MAP
PROPERTY DESCRIPTION
AERIAL MAP
CURRENT RENT ROLL
CURRENT INCOME STATEMENT
PROFORMA INCOME STATEMENT
SALES COMPARABLES
COSTS TO STABILIZE
VALUE MATRICES
DEMOGRAPHIC INFORMATION
CONFIDENTIALITY AGREEMENT
ACO Commercial is pleased to offer, for sale, 419 W. Lincoln Highway in Chicago Heights, Illinois, a retail center comprised of two improved buildings that contain a total of 29,670 Square feet of Gross Leaseable Area (GLA), set on a land site totaling 98,931 SF. The two buildings were constructed in 1975, and are separated by a large, paved parking lot. The center is currently 57% occupied by a total of nine tenants. The site is zoned B-2 – Limited Business Service District, and is located approximately 24 miles south of the Chicago CBD. Currently the property is secure and professionally managed. This lender-owned asset has high vacancy and deferred maintenance.
ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
The Subject property consists of two freestanding buildings: one single-story building and one two-story building, situated on a two-acre site which includes an asphalt parking lot containing 113 spaces. The buildings are divided into 14 tenant suites ranging from 1,130 SF to 4,100 SF, and are constructed of concrete block and aluminum siding.
Building #1 is a one-story building constructed on a concrete slab consisting of 9,987 SF. Building #2 is a partial one-story and partial two-story building constructed on a concrete slab consisting of 23,502 SF.
The subject property is being offered at a 6.42% cap rate on current income and at a 10.48% cap rate on projected proforma net operating income. As current lease rents escalate and with the execution of new leases, a buyer can expect annual returns to exceed 12.0%.
419 W. LINCOLN HIGHWAY
I N V E S T M E N T S U M M A R YOffering Summary
Price $1,295,000
Current NOI $83,097
Current Cap Rate 6.42%
Gross Leasable Area (GLA) 29,670
Price/SF $43.65
Proforma NOI $181,463
Costs to Stabilize $435,738
Total Cost Basis $1,730,738
Proforma Cap Rate 10.48%
Year Built 1975
Parking 3.8/1,000 SF of GLA
Lot Size 2.27 Acres
Stabilized FinancingLoan Amount $1,211,516
Down Payment $519,221
Loan Type Proposed New
Interest Rate 5.25%
Term 7 Years
Amortization 25 Years
Loan to Value 70%
DSCR 2.08x
Investment Highlights• 10.48% Proforma Cap Rate (6.42% In Place)
• 57% occupancy provides upside through lease up of vacant space
• Many recent capital improvements
• Several long-term tenants (15+ years)
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ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
419 W. LINCOLN HIGHWAY
Located approximately 24 miles from the Chicago Loop, Chicago Heights in well-positioned on IL Route 30/Lincoln Highway, the area’s only east-west thoroughfare for 10 miles. The area is served by two major expressways, Interstate 57 and IL Route 394, each two miles away.
Chicago Heights and its adjacent submarkets have seen very few relevant transactions take place over the last 24 months. Risk appetite is improving for similarly situated properties. There is a shift from almost exclusively REO inventory to stabilized market rate sales transactions. As financing continues to be more attainable for Class C, multi-tenant retail, we have begun to see more stabilized assets enter the market for sale.
The Chicago Heights submarket was hit particularly hard by the economic downturn. Absorption rates in the far-south suburbs of Chicago have been slow to recover from the recession. Vacancy rates in these submarkets remain double those of the Chicago MSA at 14.3%. As a result, occupancy rates remain flat, and competition for tenants among shopping-center owners has put downward pressure on market rents. The vacancy in the subject property is common for similarly situated assets in this market.
M A R K E T O V E R V I E W
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ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
AREA HIGHLIGHTS
• 79,549 residents within 3 miles.
• Over 30,000 vehicles per day pass Subject property along Lincoln Highway.
• Annual consumer spending exceeds $640 million in 3-mile radius trade area.
• Conveniently located one-half mile from IL Route 1 and equidistant from I-57 and IL Route 394 (2 miles)
419 W. LINCOLN HIGHWAY
R E TA I L M A P
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ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
419 W. LINCOLN HIGHWAY
P R O P E R T Y D E S C R I P T I O N
Address 419 W. Lincoln Highway, Chicago Heights, IL 60411
Site Size 2.27 acres
Offering Type Neighborhood strip center
Ingress/Egress Three total curb cuts located on Lincoln Hwy.
Premium and Enhance Marketing 2,600 8.76% $8.31 $1,800 $21,600 1
NEW TENANT 4,100 13.82% $12.50 $4,271 $51,250 2
NEW TENANT 1,130 3.81% $12.50 $1,177 $14,125 2
NEW TENANT 2,180 7.35% $12.50 $2,271 $27,250 2
NEW TENANT 3,065 10.33% $12.50 $3,193 $38,313 2
NEW TENANT 2,315 7.80% $12.50 $2,411 $28,938 2
Total/Average 29,670 100% $12.52 $17,373 $371,387
Adjustments to Gross Potential IncomeVacancy/Collection Loss 15.00% ($55,708) 2
Effective Gross Income $10.64 $315,679ExpensesReal Estate Taxes ($2.86) ($84,904) 3
Electric ($0.13) ($3,955) 1
Water and Sewer ($0.19) ($5,562) 1
Insurance ($0.38) ($11,269) 1
Repairs and Maintenance ($0.17) ($5,000) 2
Snow Removal ($0.06) ($1,800) 2
Management Fee 5.00% ($0.63) ($18,569) 2
Reserves/Replacements 1.00% ($0.11) ($3,157) 2
TOTAL EXPENSES ($4.52) ($134,216)
NET OPERATING INCOME $181,463
1. Actual figures from owner increased by 3.0%2. ACO Commercial Estimate based on market averages for comparable properties.3. From County website
419 W. LINCOLN HIGHWAY
P R O F O R M A I N C O M E S TAT E M E N T
Proforma Cash FlowGross Potential Income $371,387
Vacancy/Collection Loss ($55,708)
Effective Gross Income $315,679
Total Expenses ($134,216)
Net Operating Income $181,463
Debt Service $87,120
Debt Coverage Ratio 2.08
Net Cash Flow After Debt Service $94,343
Net Cash Flow After Debt Service % 25.40%
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ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
Address 3353-3359 S. Chicago Road, South Chicago Heights
18100-18130 S. Halsted Street, Homewood, IL
1401 Western Ave., Chicago Heights, IL
Sale Date 6/9/17 6/15/16 5/1/18
Sale Price $1,000,000 $1,230,000 $1,250,000
Gross Leasable Area (SF) 16,224 21,000 13,943
Price/SF $61.64 $58.57 $89.65
Cap Rate 8.00% N/A 0.00%
Occupancy 71.0% 52.4% 0.0%
Lot Size (SF) 37,801 54,406 47,480
Year Built / Renovated N/A 1972 1997
Anchor Tenants Aaron’s, Hair Cuttery, and P’s Nail Salon Endodontic and Periodontics Dentists N/A
Description
The buyer was a private real estate investment partnership based in New York City and Los Angeles. Includes 43
parking spaces.
The buyer will occupy 10,000 square feet of the building with their Beauty and Cosmetic store and the expected open date was October 2016. The re-maining 11,000 square feet will continue to be used
by the long term tenant Endodontic and Periodontics Dentists. Includes 63 parking spaces.
Former Walgreens location; includes 66 parking spaces.
419 W. LINCOLN HIGHWAY
C O M PA R A B L E S A L E S
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ACO Commercial Realty, Inc. • 2502 N. Clark Street • Suite 200 • Chicago, IL 60614O: 312-638-9950 • F: 312-546-4776 www.acocommercial.com
Acquisition Acquisition Costs to Total Cost Total Cost Basis Equity Down Mortgage Debt Service Cash Cash/CashPrice Price Per Stabilize Basis At Per Square Creation Payment (5 Years) 25 YRS Flow Return
2018 Population by Hispanic Origin 4,335 16,040 22,704
Households:2023 Projection 4,536 28,377 62,889
2018 Estimate 4,549 28,630 63,253
2010 Census 4,468 29,182 63,767
Owner Occupied 2,830 19,547 45,751
Renter Occupied 1,719 9,083 17,501
2018 Avg Household Income $55,767 $71,178 $75,283
2018 Med Household Income $44,888 $53,958 $58,444
2018 Households by Household Inc:Income less than $25,000 1,429 7,433 13,929
Income $25,000 - $50,000 1,182 5,936 13,442
Income $50,000 - $75,000 830 5,070 11,327
Income $75,000 - $100,000 436 3,680 8,794
Income $100,000 - $125,000 411 2,647 5,743
Income $125,000 - $150,000 101 1,284 3,460
Income $150,000 - $200,000 52 1,385 4,003
Income $200,00 + 108 1,195 2,556
Source: CoStar
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419 W. LINCOLN HIGHWAY
This 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 419 W. Lincoln Highway, Chicago Heights, Illinois. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Owner or the Property, 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 ACO Commercial Realty, 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. Neither the Owner nor ACO Commercial Realty, 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.
The Owner expressly reserves 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 your acceptance and review 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 ACO Commercial Realty, 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 ACO Commercial Realty, Inc.
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.
If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to ACO Commercial Realty, Inc.