offering memorandum.
Panera Bread and Noodles & Company
Chico, CA
CHICO MALL
th St
E 20
MP
ON RA
(20,9
31 A
AD
T)
$6,472,000
4.75% CAP Rate
10-Year Net Leases to
••New
National Tenants
Rental Escalations every
••10%
Five Years
New Construction
••Brand
Component for
••Drive-Thru
Panera Bread
to Chico Mall
••Outparcel
in Dense Retail Corridor
••Located
Access from State
••Convenient
Highway 99 (70,000 AADT)
••Near Chico State University
OF
FR
AM
P
www.maffiateam.com
Disclaimer
Newmark Cornish & Carey (“Broker”) has been retained on an exclusive basis to
market the property described herein (“Property”). Broker has been authorized
by the Seller of the Property (“Seller”) to prepare and distribute the enclosed
information (“Material”) for the purpose of soliciting offers to purchase from
interested parties. More detailed financial, title and tenant lease information may
be made available upon request following the mutual execution of a letter of intent
or contract to purchase between the Seller and a prospective purchaser. You are
invited to review this opportunity and make an offer to purchase based upon your
analysis. If your offer results in the Seller choosing to open negotiations with you,
you will be asked to provide financial references. The eventual purchaser will be
chosen based upon an assessment of price, terms, ability to close the transaction
and such other matters as the Seller deems appropriate.
The Material is intended solely for the purpose of soliciting expressions of interest
from qualified investors for the acquisition of the Property. The Material is not to be
copied and/or used for any other purpose or made available to any other person
without the express written consent of Broker or Seller. The Material does not
purport to be all-inclusive or to contain all of the information that a prospective
buyer may require. The information contained in the Material has been obtained from
the Seller and other sources and has not been verified by the Seller or its affiliates.
The pro forma is delivered only as an accommodation and neither the Seller, Broker,
nor any of their respective affiliates, agents, representatives, employees, parents,
subsidiaries, members, managers, partners, shareholders, directors, or officers,
makes any representation or warranty regarding such pro forma. Purchaser must
make its own investigation of the Property and any existing or available financing,
and must independently confirm the accuracy of the projections contained in the
pro forma.
Seller reserves the right, for any reason, to withdraw the Property from the market.
Seller has no obligation, express or implied, to accept any offer. Further, Seller has
no obligation to sell the Property unless and until the Seller executes and delivers
a signed agreement of purchase and sale on terms acceptable to the Seller, in
its sole discretion. By submitting an offer, a purchaser will be deemed to have
acknowledged the foregoing and agreed to release Seller and Broker from any
liability with respect thereto.
Table of Contents
Property Information
financial analysis
rent roll
Tenant Information
Site Plan
Aerials
About the Area
Demographics
1
3
5
6
7
8
12
14
Property walk-throughs are to be conducted by appointment only. Contact Broker
for additional information.
Michael Maffia
Senior Managing Director
415.445.5144
mmaffia@newmarkccarey.com
CA RE License #01340853
Putnam Daily
Vice President
415.445.5107
pdaily@newmarkccarey.com
CA RE License #01750064
www.maffiateam.com
Property Information
The Investment
The subject property is a retail development that is 100% leased
to national tenants, Panera Bread and Noodles & Company. The
property benefits from two new 10-year leases, a drive-thru
component, and being located in a highly desirable retail location
outparcel to the Chico Mall. Chico Mall is the only enclosed regional
mall within a 45-mile radius. With excellent arterial exposure along
East 20th Street and convenient accessibility from State Highway
99 (70,000 AADT), this is a well located net leased investment in
an established retail corridor near Chico State University. With this
asset, an investor will capitalize on both real estate appreciation and
scheduled increases in income.
Property Highlights
••
••
••
••
••
••
••
••
••
New 10-Year Net Leases to National Credit Tenants
10% Rental Escalations Every Five Years
Brand New Construction
Drive-Thru Component for Panera Bread
Outparcel to Chico Mall
Chico Mall is the Only Enclosed Regional Mall within a 45 Mile
Radius
Located in Dense Retail Corridor
Convenient Access from State Highway 99 (70,000 AADT)
Near Chico State University
Progress Photo (Week Ending September 26, 2015)
1
Property Information
Location
Leases
The property is located at 1910 East 20th Street in Chico, California.
Leased to Panera, LLC for 10 years from an anticipated rent
commencement date in January 2016 at an initial annual rent of
$197,400. Panera Bread has three additional five year options.
The annual rent increases by 10% every five years throughout the
initial term and option periods. The lease is net, with the tenant
responsible for its pro-rata share of taxes, insurance, and common
area maintenance. The tenant is not responsible for capital
expenditures related to the structure and foundation. The tenant
is also responsible for a 15% administrative fee on common area
expenses, excluding insurance and taxes.
Lot Size
Approximately 0.91 acres, or 40,000 square feet.
Improvements
Construction completed in September 2015 of an approximately
7,600 square foot retail building demised into an approximately
4,700 square foot suite for Panera Bread with a drive-thru
component and an approximately 2,900 square foot suite for
Noodles & Company. There is ample parking on site.
Panera, LLC is assigning its interest under the lease to Flynn
Restaurant Group. Flynn Restaurant Group is acquiring the
rights to those Panera Bread locations from Sacramento north
to the Oregon border. Panera, LLC shall not be released from its
obligations to pay rental and other amounts provided for under the
lease and convenant against further assignment or other transfer or
subletting.
Leased to Noodles & Company for 10 years from an anticipated
rent commencement date in January 2016 at an initial annual rent
of $110,200. Noodles & Company has two five-year options to
renew the lease. The annual rent increases by 10% every five years
throughout the initial term and option periods. The lease is net with
the tenant responsible for its pro-rata share of taxes, insurance,
and common area maintenance. The tenant is not responsible for
capital expenditures related to the roof, structure and foundation,
except as follows - tenant is not responsible for the replacement
of the roof that occurs during the initial term or more frequently
than once every 10 years. The tenant is also responsible for a 10%
administrative fee on common area expenses, excluding insurance
and taxes.
Progress Photo (Week Ending September 26, 2015)
2
Financial Analysis | Pricing
Projected Gross Revenue
Year 1
Year 6
$307,600
$338,360
$17,480
$20,264
Insurance - $1.09
$8,284
$9,603
Taxes @ 1.1%
$71,183
$78,591
Management
$2,400
$2,782
Total Reimbursement Revenue
$99,347
$121,817
Total Potential Gross Revenue
$406,947
$449,600
Effective Gross Revenue
$406,947
$449,600
$17,480
$20,264
Insurance - $1.09
$8,284
$9,603
Taxes @ 1.1%
$71,182
$78,591
Management @ 15% of CAM
$2,622
$3,040
$99,568
$111,498
$307,379
$338,102
4.75%
5.22%
Schedule Base Rental Revenue
Expense Reimbursement Revenue
Common Area Maintenance - $2.30
Annual Expenses
Common Area Maintenance - $2.30
Total Operating Expenses
Net Operating Income
CAP Rate
Progress Photo (Week Ending September 26, 2015)
Price: $6,472,000 (4.75% CAP Rate)
Financing
The property will be delivered free and clear of permanent financing.
Note: The above net income is an estimate and does not provide for all potential
costs and expenses (i.e. maintenance, repair, etc.) that may be required of the
owner. Any reserves set forth herein are merely estimates and not based on any
experience, physical inspection, or prior knowledge. All prospective purchasers
are strongly advised to make an independent investigation to determine their
estimate of costs and expenses prior to entering into an agreement to purchase.
3
Financial Analysis | Cash Flow Projection
Panera Bread and Noodles & Company
Cash Flow Projection
Newmark Cornish & Carey
Year:
Begins:
Ends:
1
Jan-2016
Dec-2016
2
Jan-2017
Dec-2017
3
Jan-2018
Dec-2018
4
Jan-2019
Dec-2019
5
Jan-2020
Dec-2020
6
Jan-2021
Dec-2021
7
Jan-2022
Dec-2022
8
Jan-2023
Dec-2023
9
Jan-2024
Dec-2024
10
Jan-2025
Dec-2025
7,600
$3.37
$13.10
$3.37
$13.40
$3.37
$13.71
$3.37
$14.02
$3.37
$14.34
$3.71
$14.67
$3.71
$15.01
$3.71
$15.35
$3.71
$15.71
$3.71
$16.07
$
$1
$307,600
$307,600
$307,600
$307,600
$307,600
$338,360
$338,360
$338,360
$338,360
$338,360
$372
307,600
307,600
307,600
307,600
307,600
338,360
338,360
338,360
338,360
338,360
372
Expense Reimbursement Revenue
CAM - $2.30
Insurance - $1.09
Taxes @ 1.1%
Management
17,480
8,284
71,183
2,400
18,004
8,533
72,606
2,471
18,544
8,789
74,058
2,545
19,100
9,052
75,539
2,622
19,674
9,324
77,050
2,701
20,264
9,603
78,591
2,782
20,872
9,891
80,162
2,865
21,498
10,189
81,766
2,951
22,143
10,494
83,401
3,040
22,808
10,808
85,070
3,131
23
11
86
3
Total Reimbursement Revenue
99,347
101,614
103,936
106,313
108,749
111,240
113,790
116,404
119,078
121,817
124
Total Potential Gross Revenue
406,947
409,214
411,536
413,913
416,349
449,600
452,150
454,764
457,438
460,177
496
Effective Gross Revenue
406,947
409,214
411,536
413,913
416,349
449,600
452,150
454,764
457,438
460,177
496
Operating Expenses
CAM - $2.30
Insurance - $1.09
Taxes @ 1.1%
Management @ 15% of CAM
17,480
8,284
71,182
2,622
18,004
8,533
72,606
2,701
18,545
8,788
74,058
2,782
19,101
9,052
75,539
2,865
19,674
9,324
77,050
2,951
20,264
9,603
78,591
3,040
20,872
9,892
80,163
3,131
21,498
10,188
81,766
3,225
22,143
10,494
83,401
3,321
22,807
10,809
85,069
3,421
23
11
86
3
Total Operating Expenses
99,568
101,844
104,173
106,557
108,999
111,498
114,058
116,677
119,359
122,106
124
307,379
307,370
307,363
307,356
307,350
338,102
338,092
338,087
338,079
338,071
371
STATISTICS
Net Rentable Area in SF
Avg Base Rental Revenue PSF/mo.
Total Operating Expenses PSF/yr.
Potential Gross Revenue
Base Rental Revenue
Scheduled Base Rental Revenue
NET OPERATING INCOME
Ja
De
4
Rent Roll
Tenant
Sq. Ft.
Monthly
Rent
PSF
Annual
Rent
PSF
Annual
Rent
Rent
Commence.
Date
Term
Lease
Expiration
Date
Rental
Increase
Date(s)
Rental
Increase
Amount(s)
Options
End-of-Term
Assumptions
Lease
Structure
Option
NNN + 15%
admin. fee on
CAM
Option
NNN + 10%
admin. fee on
CAM
Panera
Bread
4,700
$3.50
$42.00
$197,400
10 yrs.
1/1/2016
12/31/2025
1/1/2021
$217,140
3 @ 5 yrs.
Opt. 1: $238,854
Opt. 2: $262,730
Opt. 3: $289,003
Noodles &
Company
2,900
$3.17
$38.00
$110,200
10 yrs.
1/1/2016
12/31/2025
1/1/2021
$121,220
2 @ 5 yrs.
Opt. 1: $133,342
Opt. 2: $146,653
Leased
7,600
100.00%
Vacant
0
0.00%
TOTAL
7,600
100.00%
General Assumptions
General Assumptions
Analysis Date
Jan-15
Total Rentable Area
7,600
Total Area for CAM Reimbursement
7,600
General Inflation per Annum
3.00%
General Expense Growth per Annum
3.00%
Real Estate Tax Growth per Annum
2.00%
Management Fee
General Vacancy Loss
15% of CAM
None
5
Tenant Information
Panera Bread Company owns, operates,
and franchises retail bakery-cafes in the
United States and Canada. Panera Bread
Company is traded on the NASDAQ under
the ticker “PNRA” with a Market Cap of
$5.21 Billion at trading at $193 per share
as of September 25, 2015. The company operates through three
segments: Bakery-Cafe Operations, Franchise Operations, and
Fresh Dough and Other Product Operations. The operates bakerycafes under the Panera Bread, Saint Louis Bread Co., and Paradise
Bakery & Café names that offer fresh baked goods, made-to-order
sandwiches, soups, salads, pasta dishes, custom roasted coffees,
and other complementary products through on premise sales, as
well as provides catering services. The company also supplies fresh
dough, produce, tuna, cream cheese, and proprietary sweet goods
items. As of December 30, 2014, the company operated 1,880
company-owned and franchise-operated bakery-cafe locations in
45 states, the District of Columbia, and Ontario. As of December 30,
2014, there were 21 Company-owned and one franchised operated
delivery hubs with an additional 11 locations expected to open by
year-end 2015. Panera Bread serves nearly 7.8 million customers
per week system-wide. Panera Bread is continuing to expand
nationwide with 105-115 cafes slated to open in 2015. The company
was formerly known as Au Bon Pain Co., Inc. and changed its name
to Panera Bread Company in August 1998. Panera Bread Company
was founded in 1981 and is headquartered in St. Louis, Missouri. As
of 2014 year end, Panera Bread Company had total revenue of $2.53
Billion for both corporate and franchisee operated stores.
For the recent quarter ended June 30, 2015, Panera Bread Company
reported total revenue of $676.66 million and net income of $41.93
million, with a total stockholder equity of $736.18 million.
Panera, LLC, the entity behind the lease, operates as a subsidiary of
Panera Bread Company.
Flynn Restaurant Group, the assignee under the lease, is one of the
50 largest food service companies in the United States, with over
666 restaurants and $1.4 billion in annual sales. The company owns
and operates 481 Applebee’s restaurants and 185 Taco Bell and
associated YUM! Brands restaurants. The company employs 36,000
people across 28 states.
For more information, visit www.flynnrestaurantgroup.com
Noodles & Company is a fast casual
restaurant that offers international and
American noodle dishes, as well as
soups, salads, pasta and sandwiches.
Headquartered in Broomfield, Colorado,
Noodles & Company was founded in
1995 by Aaron Kennedy as what was a simple concept and now
has grown from $300,000 in revenues in 1996 to $403.7 million
in 2014. Noodles & Company went public in 2013 and is traded
on the NASDAQ under the ticker “NDLS”. Within a day following
Noodles & Company’s IPO on June 27, the stock price doubled.
Fast Company and The Daily Beast called it “the hottest IPO of
the year” and compared it to Chipotle’s IPO. As of September 25,
2015, the stock is trading at $14.74 per share with a Market Cap of
$418.17 million. The number of Noodles & Company locations grew
three-fold from the beginning of the financial crisis of 2007 to 2013,
reaching 339 locations. As of July 1, 2014, the company had 410
locations, including franchises, in 31 states.
For the recent quarter ended June 30, 2015, Noodles & Company
reported total revenue of $115.23 million and net income of $3.06
million, with a total stockholder equity of $140.12 million.
For more information, visit www.noodles.com.
For more information, please visit www.panerabread.com.
6
Site Plan
2,902 SF
AY
HW
G
HI
99
DRIVE
THRU
4,698 SF
O
N
RA
P
M
STREET
H
T
0
2
T
S
EA
7
Aerial | Close-Up View
CHICO MALL
2
t(
S
h
0t
2
E
MP
ON RA
T)
D
A
1A
3
0,9
OF
FR
AM
P
Aerial | Northwest View
Chico
Municipal
Airport
Bidwell Junior
High School
CHICO MALL
AA
DT
)
Chico
Community
Park
(1
3,
75
0
E 20th St (20,931
AADT
)
Fo
re
st
Av
e
CHICO CROSSROADS
Pleasant Valley
High School
T)
AD
0A
,00
70
/(
California State
University
Chico
Aerial | West View
CHICO CROSSROADS
California State
University
Chico
DOWNTOWN
Chico
Community
Park
E
20
th
St
(2
0,
93
1A
AD
T)
)
/ (70,000 AADT
For
est
Ave
(13
,75
0
AA
DT
)
CHICO MALL
Aerial | South View
E 20th St (20,931 AA DT)
Fo
re
st
Av
e
(1
3
,7
50
AA
DT
)
CHICO CROSSROADS
CHICO MALL
/(
70
,0
00
AA
DT
)
About the Area
General Overview
Chico is the most populous city in Butte
County, with a population of 88,077 as of
2013. The Chico Metropolitan Area (MSA)
encompasses a population of nearly 212,000
and nearby cities included in the MSA are
Paradise and Oroville. As a rich cultural,
economic, and educational center of the
northern Sacramento Valley, the population
of Chico has grown by 46% since 2000.
The city also provides for excellent outdoor
recreational activities due to the Sierra
Nevada mountains lying to the east and the
presence of Bidwell Park, one of the country’s
25 largest municipal parks.
California State University – Chico is the main
driver of the local economy. Education, health
and social services industries are the top
employing sectors in the city followed closely
by retail trade. In the past few decades,
retail trade has had a growing presence in
Chico. The city has developed into becoming
a regional retail shopping destination, with
many national retailers flocking to open
stores in Chico, including Target, Kohl’s,
Forever 21, Best Buy, and Walmart.
About the Area
Site Information
The subject property is situated along East 20th Street
(20,931 AADT) outparcel to the Chico Mall within a dense
retail corridor approximately three miles east of downtown
Chico. Conveniently accessible from State Highway 99
(70,000 AADT), the property is accessible via the East
20th Street exit for both southbound and northbound
travelers. The property benefits from its location outparcel
to Chico Mall – the flagship retail shopping destination in
the area. Chico Mall is a 528,397 square foot regional mall
that was developed in 1988. It features over 70 stores and
services and is anchored by Forever 21, J.C. Penney, Sears
and Dick’s Sporting Goods. The mall underwent a floor to
ceiling renovation in 2012 that significantly bettered the
aesthetic of the property. Other outparcel pads are tenanted
by Chipotle, Taco Bell, Chili’s, and Carl’s Jr. Adjacent east of
Chico Mall across Forest Avenue is WinCo Foods and the
offices for UnitedHealth Group, which is one of the largest
employers in Chico.
Directly across from the subject property is a shopping
center anchored by Target, Big Lots, and Toys “R” Us. Pier
1 Imports, AT&T, Jack in the Box, Olive Garden and Red
Lobster occupy the pad sites on the periphery of the center.
Adjacent to the south of here along State Highway 99 is
Walmart with In-N-Out Burger and Krispy Kreme outparcels.
Southwest of the subject property across State Highway
99 is Chico Crossroads, a 264,335 square foot regional
power center anchored by Food Maxx Supermarket,
Evan’s Furniture and Bed Bath & Beyond. Costco occupies
the parcel across Chico Crossroads. West of the subject
property at the southwest intersection of East 20th Street
and Forest Avenue is Pheasant Run Shopping Center, which
is anchored by Best Buy, Staples and Old Navy. Other
national credit tenants within the center include Starbucks,
Aaron Brothers and Famous Footwear.
In addition to the abundance of retail in the immediate area,
California State University – Chico is in close proximity to
the subject property. Springfield Manor is also nearby and
is a gated community for those over the age of 55 and is
recognized as one of the finest senior parks in Northern
California. California State University – Chico is the second
oldest campus in the 23-campus California State University
system and has approximately 17,300 students enrolled. The
university is one of the leading drivers of the local economy.
Demographics
1 Mile
3 Miles
5 Miles
2010 Total Population
10,675
61,791
96,426
2015 Total Population
10,774
62,816
98,122
2020Total Population
10,903
63,677
99,796
2015-2020 Annual Rate
0.24%
0.27%
0.34%
2015
$52,885
$56,118
$59,304
2020
$59,651
$63,827
$67,741
2015
$241,016
$274,701
$277,809
2020
$247,348
$289,083
$293,856
Population Summary
Average Household Income
Median Home Value
Top Employers in Chico, CA
# of Employees
California State - Chico
1,000-4,999
Enloe Medical Center
1,000-4,999
Lifetouch
500-999
YRC
500-999
Build.com
250-499
Butte County Behavioral Health
250-499
Butte Community Insurance Agency
250-499
National Heritage Insurance Company
250-499
United Healthcare
250-499
14
901 Mariners Island Boulevard, Suite 120
San Mateo, CA 94404
Michael Maffia
Senior Managing Director
415.445.5144
mmaffia@newmarkccarey.com
CA RE License #01340853
Putnam Daily
Vice President
415.445.5107
pdaily@newmarkccarey.com
CA RE License #01750064
www.maffiateam.com