ZERO CASH FLOW LEASEHOLDS | WALGREENS PORTFOLIO · 2019-08-24 · 209 Payne Street Dallas, Texas 75207 Scott Giese 214-597-2873 [email protected] Kyle Woo 214-402-8026

ZERO CASH FLOW LEASEHOLDS | WALGREENS PORTFOLIO

Madison Creek Investments (“MC”) is pleased to present the enclosed information on the property leased to Walgreens (the “Properties”).

All information contained herein is to be considered strictly confi dential. Our presentation of this material is intended for your use as a principal and potential purchaser of the Property. Your acceptance of this memorandum is an indication of your agreement to hold the contents of this memorandum in the strictest confi dence and that you will not disclose information contained herein, in whole or in part, to any other parties without the prior written authorization from MC.

The information presented in this Memorandum has been prepared by MC and does not purport to provide a necessarily accurate summary of the Property or any documents related thereto, nor does it purport to include all the information that a prospective purchaser may need to make a decision regarding the purchase of the Property. Although the information contained herein is believed to be correct, no representation has been made by MC regarding the accuracy or completeness of the information or the future performance of the Property. Analysts and verifi cation of the information contained herein is solely the responsibility of the prospective purchaser.

© 2019 Madison Creek Investments

Madison Creek Investments209 Payne StreetDallas, Texas 75207

Scott [email protected]

Kyle [email protected]

TABLE OF CONTENTS

EXECUTIVE SUMMARY

The Offering twoThe Portfolio threeThe Loans threeThe Leases four

PORTFOLIO OVERVIEW

Tenant Overview fourProperty Overview fourDemographics five

WALGREENS PORTFOLIO | ONE

Each property is 100% leased to Walgreens through a bondable triple net lease that is guaranteed by the Walgreen Company and provides that there will be no rent abatement of Landlord responsibilities whatsoever. The tenant is responsible for all costs to operate, maintain and repair the property including taxes, insurance, and assessments.

The portfolio offers the investor flexibility to satisfy a range of debt and equity exchange needs due to the highly leveraged structure and low percentage of required equity.

After closing, the investor can extract its excess equity from the transaction free of tax liability per the paydown re-advance feature contained in the debt documents.

In addition, the mortgage interest deduction and depreciation of the improvements may generate passive losses that the investor may use to offset passive gains from other investment to potentially reduce the investors overall tax liability.

The properties are available as a portfolio only.

THE OFFERING

Madison Creek Investments is pleased to offer two (2) zero

cash flow Walgreens leasehold retail properties with inplace,

fully amortizing, assumable, zero cash flow debt financing.

Properties are located in California.

TWO | WALGREENS PORTFOLIO

EXECUTIVE SUMMARY

THE PORTFOLIO

LOAN BALANCE $6,214,531

PERCENT OVER THE LOAN 17.50%

EQUITY REQUIRED $1,087,542

PORTFOLIO PURCHASE PRICE $7,302,073

OWNERSHIP Leasehold (building interest only)

THE LOANS

LOAN BALANCE $6,214,531 (as of 09.25.2019)

BALLOON BALANCE $0 (Fully Amortizing Loan)

MATURITY DATE 11.25.2039

INTEREST RATE 4.46%

PAY-DOWN/RE-ADVANCE Borrower can utilize the

pay-down/re-advance feature

LEASE SUMMARY

GUARANTOR Walgreens Corporation

INITIAL LEASE TERM 25 years

LEASE COMMENCEMENT November 7, 2014

LEASE EXPIRATION July 2084

LANDLORD RESPONSIBILITIES None. The Tenant is responsible for all

repair and maintenance of the property,

including the roof and structure.

TERMINATION OPTIONS Beginning November 2039

WALGREENS PORTFOLIO | THREE

PORTFOLIO OVERVIEW

Store # Square Address Year Built NOI/Debt Service Debt Amount Estimated Purchase Footage (as of 09.2019) Down Price Payment

12915 8,400 7195 Broadway, Lemon Grove, CA 2013 $274,990 $3,653,308 $639,329 $4,292,637

12547 13,690 2011 N. Riverside Ave., Rialto, CA 2009 $192,787 $2,561,223 $463,964 $3,025,180

TOTAL $6,214,531 $1,087,543 $7,302,074

TENANT OVERVIEW

Walgreens is headquartered in Deerfi eld, Illinois and is the second largest drugstore chain in the U.S., with more than 8,100 stores in all 50 states, the Distric of Columbia, Puerto Rico, and the U.S. Virgin Islands. In addition, the company operates more than 400 in-store and work site health and wellness centers that offer immunizations, prevention and wellness programs, as well as treatments for minor injuries, illnesses and skin conditions, which manages and monitors ongoing health conditions.

Walgreens provides consumer goods, pharmacy, and wellness services through its retail drugstores, direct mail, telephone, and online platforms. The company sells prescription and non-prescription drugs and general merchandise including household products, convenience and fresh foods, personal care, beauty care, photo fi nishing, as well as home medical equipment, contact lenses, vitamins, supplements and other health and wellness solutions. Walgreens also provides specialty pharmacy services for managing complex and chronic health conditions.

In fi scal year 2016, Walgreens fi lled 928 million prescriptions (including immunizations). With stores located within fi ve miles of approximately 76 percent of Americans, and through popular online offerings and its award-winning mobile app, Walgreens interacts with 10 million customers per day.

Traded on the NASDAQ under the ticker WBA (S&P: BBB), Walgreens reported annual revenues of $118.2 billion and net income of $4.1 billion for fi scal year 2017.

T E N A N T S U M M A R Y

GUARANTOR WALGREEN CO.

HEADQUARTERS DEERFIELD, ILLINOIS

STOCK SYMBOL WBA

CREDIT RATING BBB

BUSINESS RETAIL PHARMACY

LOCATIONS 8,110+

ANNUAL REVENUE $118.2 BILLION

NET INCOME $4.1 BILLION

EARNINGS/SHARE (TTM) $4.27

WEBSITE WALGREENS.COM

FOUR | WALGREENS PORTFOLIO

WALGREENS PORTFOLIO | FIVE

LOCATION OVERVIEW | LEMON GROVE, CALIFORNIA

LEASE SUMMARY

STREET ADDRESS 7195 BROADWAY, LEMON GROVE, CA

STORE NUMBER 12915

LAND AREA (ACRES) 0.87

BUILDING SIZE (SQ. FT.) 8,400

YEAR BUILT 2013

LEASE GUARANTOR WALGREEN CO.

LEASE COMMENCEMENT NOVEMBER 7, 2014

LEASE EXPIRATION OCTOBER 31, 2087

FIRST TERMINATION OPTION NOVEMBER 30, 2039

LEASEHOLD ANNUAL RENT $247,990

LANDLORD RESPONSIBILITIES NONE WHATSOEVER

RENT HOLIDAY NONE

GROUND LEASE COMENCEMENT AUGUST 18, 2009

GROUND LEASE EXPIRATION OCTOBER 31, 2087

ANNUAL GROUND RENT $320,000

FIRST TERMINATION OPTION OCTOBER 31,2037

LOAN SUMMARY

LOAN BALANCE (AS OF 09/30/2019) $3,653,308

INTEREST RATE 4.46%

LOAN MATURITY DATE NOVEMBER 25, 2039

D E M O G R A P H I C S

1M 2M 3M

Total Population 21,623 229,131 571,134

Median Houshold 64,036 62,489 67,478Income

Percentage of 38.2% 36.0% 37.4%Population 45+

LOCATION OVERVIEW | RIALTO, CALIFORNIA

LEASE SUMMARY

STREET ADDRESS 2011 N RIVERSIDE AVENUE, RIALTO, CA

STORE NUMBER 12547

LAND AREA (ACRES) 1.45

BUILDING SIZE (SQ. FT.) 13,690

YEAR BUILT 2009

LEASE GUARANTOR WALGREEN CO.

LEASE COMMENCEMENT NOVEMBER 7, 2014

LEASE EXPIRATION JULY 31, 2084

FIRST TERMINATION OPTION NOVEMBER 30, 2039

LEASEHOLD ANNUAL RENT $192,787

LANDLORD RESPONSIBILITIES NONE WHATSOEVER

RENT HOLIDAY NONE

GROUND LEASE COMENCEMENT JUNE 3, 2008

GROUND LEASE EXPIRATION JULY 31, 2084

ANNUAL GROUND RENT $250,000

FIRST TERMINATION OPTION JULY 31,2029

LOAN SUMMARY

LOAN BALANCE (AS OF 09/30/2019) $2,561,223

INTEREST RATE 4.46%

LOAN MATURITY DATE NOVEMBER 25, 2039

D E M O G R A P H I C S

1M 2M 3M

Total Population 14,892 115,325 359,931

Median Houshold 67,561 55,318 56,256Income

Percentage of 32.0% 30.8% 31.0%Population 45+

SIX | WALGREENS PORTFOLIO

209 Payne Street | Dallas, Texas 75207214.597.2873

madison-creek.com