STARBUCKS - GROUND LEASE

[Pages:19]STARBUCKS - GROUND LEASE

SHOREWOOD, MN

OFFERING MEMORANDUM

AFFILIATED BUSINESS DISCLOSURE AND CONFIDENTIALITY AGREEMENT

CBRE, Inc. operates within a global family of companies with many subsidiaries and 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, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affiliates or their clients may have or express an interest in the property described in this Memorandum (the "Property"), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to disclose to you such Affiliates' interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act in the best interest of their respective client(s), at arms' length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will conduct their respective businesses in a manner consistent with the law and all fiduciary duties owed to their respective client(s).

Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property ("Owner") or CBRE, Inc., and (iv) you will not use any part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc.

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return it to CBRE, Inc.

the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verified for accuracy, completeness, or fitness for any particular purpose. All information is presented "as is" without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualified prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property's suitability for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK.

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 at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, definitive purchase and sale agreement delivered by the Owner.

This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of

? 2018 CBRE, Inc. All Rights Reserved.

INVESTMENT SUMMARY

STARBUCKS | SHOREWOOD, MN

PRICE

OVERVIEW

HIGHLIGHTS

$2,655,000 4.50% CAP Rate

ADDRESS 19285 Highway 7 Shorewood, MN 55331

APN 2511723410048

NET OPERATING INCOME $119,500

BUILDING/LOT SIZE 2,325 SF/0.829 Acres

YEAR BUILT 2019

TYPE OF OWNERSHIP Fee Simple

CBRE is pleased to present this freestanding ground lease with Starbucks Coffee on the border of Minnetonka, Minnesota. This investment is an absolute triple net (NNN) ground lease with Starbucks (S&P "BBB+" investment grade rating) for an initial fifteen year term. The lease features rare ten percent rent increases every five years and requires no landlord responsibilities.

This location benefits from having convenient access and excellent visibility on the "going-to-work" side of Highway 7, a major traffic corridor into and out of the Twin Cities metro. Highway 7 has a limited number of controlled, four-way stops west of Interstate 494, and this Starbucks is located on one of them. This location is also situated just minutes away from Lake Minnetonka, a major recreational lake for metro inhabitants, and is surrounded by some of the highest household incomes in the metro. Within 1 to 3 miles the average household income exceeds $150,000 and this zip code is the fifth wealthiest in the state. This site is on a frontage road that leads to Minnetonka High School: a top-ranked school that has a 2019 enrollment of over three thousand students.

++ Absolute NNN Ground Lease -- No Landlord Responsibilities Translates to Ease of Management

++ Investment-Grade Tenant -- "BBB+" Rating

++ Rare Ten Percent Rent Increases Every Five Years

++ Wealthy Suburb with Household Income Exceeding $150k

++ Located on Frontage Road Leading to Minnetonka High School -- Over 3,000 Students

++ Highway 7 is the Main Artery to Lake Minnetonka from Twin Cities Core -- Located on the "To-Work" Side of Highway 7

INVESTMENT SUMMARY

STARBUCKS | SHOREWOOD, MN

LEASE SUMMARY

Tenant Lease Commencement (Estimated) Lease Expiration Gross Leasable Area (SF) Lease Term Remaining Renewal Options Lease Guarantor Lease Type

RENT SCHEDULE

Rent State Date 6/1/2019 [CURRENT]

6/1/2024 6/1/2029 6/1/2034 [OPTION 1] 6/1/2039 [OPTION 2] 6/1/2044 [OPTION 3] 6/1/2049 [OPTION 4] 6/1/2054 [OPTION 5]

Rent End Date

5/31/2024 5/31/2029 5/31/2034 5/31/2039 5/31/2044 5/31/2049 5/31/2054 5/31/2059

Starbucks 6/1/2019 15 Years from Lease Commencement

2,325 15 Years and 2 Months

Five 5-Year Options Corporate

Ground Lease

Annual Rent

$119,500 $131,450 $144,595 $159,055 $174,960 $192,456 $211,702 $232,872

Per SF

$51.40 $56.54 $62.19 $68.41 $75.25 $82.78 $91.05 $100.16

TENANT SUMMARY

STARBUCKS | SHOREWOOD, MN

TENANT SUMMARY

Ownership Tenant Consolidated Net Revenues (2018) Lease Guarantor No. of Locations Headquartered Years in the Business Website

Public ("SBUX" NASDAQ) Starbucks Corporation $24.7 Billion Corporate 28,218 (2018) Seattle, WA 48

Since 1971, Starbucks has been committed to ethically sourcing and roasting high-quality arabica coffee. Today Starbucks operates stores around the world and

have expanded offerings to include pastries, premium teas, and other treats in addition to its coffee. Customers use Starbucks as a location to network, meet, or

work. Starbucks and Nestle agreed in August 2018 to a global licensing deal, granting Nestle the perpetual rights to market Starbucks Consumer Packaged

Goods and Foodservice products globally, outside of the company's coffee shops.

"Coffee is one of the fastest growing

Q1 fiscal 2019 results reported consolidated net revenues up 9% to a record of $6.6 billion, partially

beverage categories globally and our over

attributed to organizational efforts to streamline the business model and focus on strategic initiatives that

350,000 partners around the world who

position Starbucks for long-term growth. Global comparable store sales in the same quarter increased by wear the green apron are now serving 100

4% and opened 541 new stores, for a new store total of 29,865 locations; over two-thirds of store openings

occurred outside of the United States.

million customer occasions a week."

- "Starbucks Outlines Growth Agenda and Announces Expansion of Starbucks Delivers in U.S. and China at 2018 Investor Conference",

12/13/18

NEIGHBORHOOD SUMMARY

STARBUCKS | SHOREWOOD, MN

ON THE SHORES OF LAKE MINNETONKA

One of a cluster of affluent and boat-centric communities on the shores of Lake Minnetonka, the City of Shorewood is part of the former Excelsior township, an area first rising to prominence in the mid-19th century as a vacation destination

for Minneapolis residents to escape the hustle of urban life. To facilitate transportation of residents from Minneapolis to the lake, the Twin City Rapid Transit Company extended a railcar system in 1905 that ran all the way from

downtown Minneapolis, through what is now Shorewood, to the heart of old Excelsior's downtown district. In 2016 Shorewood was reported to be the richest town in the state.

Today, Shorewood and the surrounding townships of Greenwood, Excelsior, and Deephaven remain

as a getaway for Twin Cities denizens, but people now rely on Highway 7 as the main traffic artery

into and out of Lake Minnetonka's vicinity. At the heart of Lake Minnetonka is the area's roots in

the tourism industry. Each summer the lake sees thousands of visitors who drive to its shores to

swim, fish, boat, and socialize. In the winter, ice fishermen arrive to take advantage of the

EXCELSIOR - DEEPHAVEN - GREENWOOD - SHOREWOOD

season.

MARKET SUMMARY

STARBUCKS | SHOREWOOD, MN

THE MIDWEST'S THIRD-LARGEST ECONOMIC CENTER

Abundantly rich in water, boasting a strong performing arts and music industry, and regarded as a global city with integral links to the worldwide economy, Minneapolis is the largest city in the state of Minnesota. The city and its surrounding region, including neighboring capital city of St. Paul, is the primary business and financial hub between Chicago and Seattle.

Five Fortune 500 companies have headquarters within city limits, including Target, U.S. Bancorp, Xcel Energy, Ameriprise Financial, and Thrivent Financial. Rounding out the well-diversified economic base is a park system which as been called the best-designed, best-financed, and best-maintained in the country. 16.6% of Minneapolis today is comprised of city parks.

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