The Kase Group Kmart Walla Walla (5).p… · For most of these stores, Kmart retired the "Big...

Sears Holdings Corporate Guarantee (NASDAQ: SHLD) S&P Rated B+ Well Established Location Newly Renovated Building Low Price Per Square-Foot – Below Market Rent Kase Abusharkh Jacob Abusharkh Managing Director Managing Director (925) 348-1844 (925) 736-8405 [email protected] [email protected]

Kmart $3,000,000 – 6.02% CAP

2200 E. Isaacs Avenue, Walla Walla, WA

The Kase Group

The information listed above has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness.

Table of Contents

1 Financial Analysis

Executive Summary

Investment Information

Financial Summary

Rent Roll Summary

2 Additional Information

All Sperry Van Ness® Offices Independently Owned and Operated.

1 . Financial Analysis


Executive Summary KMART

2200 E. Isaacs Avenue

Walla Walla, WA 99362

List Price $3,000,000

Price Per GLA $33.04

Price per S.F. $33.04

CAP 6.02 %

GLA 90,800

Building S.F. 90,800

Percent Occupied 100.00 %

Land Acres 6.94

Kmart (NASDAQ: SHLD) Net Leased Asset

Cross Street N. Wilbur Avenue Tax Parcel Number 360722220001 and 78

Market Washington State Sub Market Walla Walla

Year Built 1973 Year Renovated 2011

Location Class A No. of Buildings 1

HVAC Roof Mounted No. of Parking Spaces 550

Parking Ratio 6/1000 No.Tenants 1

No. Stories 1 Occupancy 100.00 %

Property Descriptions

Construction Quality construction. The structural frame is of steel and concrete block. The exterior walls are also of concrete block. The new roof, which was done in 2009 is a Firestone TPO roof.

Renovation The property was recently updated with some significant renovations. Included in these renovations is a completely new roof. Also, the parking surface has been recently updated. Also recently updated are many other interior and exterior aspects of the building which is a testament to Kmart's commitment to this location.

Parking With its newly updated parking surface, the asset is well parked with 550 spaces yielding a parking ratio of 6 spaces per 1,000 sf of building.

Ingress/Egress The property benefits from excellent ingress and egress with accessibility to and from E. Isaacs Avenue at the north end of the property through three driveways. And there is additional ingress/egress at the rear of the property (south end) via two driveways accessing Tacoma Street.

Major Tenants Kmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. Sears Holding Corporation is publicly traded on the NASDAQ under the ticker symbol "SHLD" and has a Standard and Poor's credit rating of B+ which is investment grade.


Area Walla Walla is the largest city in and the county seat of Walla Walla County, Washington. The population was 31,731 at the 2010 census. Walla Walla is in the southeastern region of Washington, approximately four hours from Seattle and thirteen miles from the Oregon border. Walla Walla is known for its many wineries and it is a popular vacation spot for wine enthusiasts. The subject property sits in Walla Walla's major retail trade area. Adjacent to the asset is the Eastgate Mall. The property sits just south of the Walla Walla Regional Airport. To the west of the property are Walla Walla General Hospital and Saint Mary's Medical Center as well as Whitman College. To the east of the asset is Walla Walla Community College. Major retailers nearby include Staples, Macy's, Safeway, Albertsons, Grocery Outlet, and Bi-Mart.

Property This is a unique opportunity for a single tenant net leased Kmart in Walla Walla, Washington. The asset is subject to a long term net lease with Kmart, a subsidiary of Sears Holdings Corporation (NASDAQ: SHLD). The net lease provides for a passive investment with limited landlord responsibilities. The landlord is responsible for roof, outer walls, and parking lot. The roof is new as of 2009. There is also a leased easement with the Port of Walla Walla for $406/year paid by the landlord. The property was originally built in 1973 and has been a long term performing Kmart location. Kmart has been paying percentage rent on top of the base rent with a six year average of $33,342. The offering further benefits from a low price per square-foot and very low rent per square-foot offering major long term upside potential. This is a truly rare Pacific Northwest retail investment opportunity.


Investment Information KMART 2200 E. Isaacs Avenue Walla Walla, WA 99362

Listing Price $3,000,000

Current CAP 6.02 %

Price Per S.F. $33.04

Price Per GLA $33.04

GLA 90,800

Building S.F. 90,800

Percent Occupied 100.00 %

Land Acres 6.94

Estimated Annualized Operating Data Current

Scheduled Income $148,000

Projected Percentage Rent $33,000

Gross Operating Income $181,000

Less Expenses $406

Net Operating Income $180,594

Highlights

Sears Holdings Corporate Guarantee (NASDAQ: SHLD)

Net Lease Structure - Passive Investment

Newly Renovated Building - Low Price/SF & Rent/SF

S&P Rated B+ Investment Grade Credit


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Rent Roll Summary Tenant Name Start Date End Date Occupied

S.F. Annual

Rent S.F. Occupied

Rent % of Total

Escalations / Options / Comments

Kmart 11/1/1973 10/31/2019 90,800 $1.98 $180,000 100.0 % Tenant has eleven 5 year options to renew. Bast rent is $148,000. Annual income includes $32,000 in percentage rent. Additional Percentage Rent of Gross Sales: $6,095,000 - $10,600,000: 1.0% $10,600,000 - $13,250,000: 0.5% $13,250,000+: 0.25%

Total 90,800 $180,000 100.0 %


2 . Additional Information


Tenant Overview

Kmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and Target, with stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam (which houses the world's largest Kmart). Kmart operates some 1390 stores including 1,361 discount stores, averaging 92,000 SF, and 29 Super Centers, averaging 165,000 SF.

Kmart became known for its "Blue Light Specials." They occurred at surprise moments when a store worker would light up a mobile police light and offer a discount in a specific department of the store. The phrase "attention Kmart shoppers" also entered into the American pop psyche, appearing in films and other media such as Troop Beverly Hills, Six Days Seven Nights, Beetlejuice, and Dawn of the Dead.

Kmart also exists in Australia and New Zealand, although it now has no relation to the American stores except in name, after U.S. equity in the Australian business was purchased in the late 1970s.

Sebastian S. Kresge, the founder of the company that would become Kmart. In 1912, Kresge incorporated the S.S. Kresge Corporation with eighty-five stores. The company was first listed on the New York Stock Exchange on May 23, 1918. By 1924, Kresge was worth approximately $375,000,000 (in 1924 dollars; around $5,000,000,000 in 2009 dollars) and owned real estate of the approximate value of $100,000,000. Early century growth remained brisk, with 257 stores in 1924 growing to 597 stores operating in 1929. Kresge retired as president in 1925. The Great Depression reduced profitability and resulted in store closings, with the number reduced to 682 in 1940. Post-war retailing saw many changes in shopping patterns with many customers moving out of the cities into the suburbs. The Kresge Company followed them and closed and merged many urban stores so that by 1954 the total number of stores in the US had declined to 616.

Under the leadership of executive Harry B. Cunningham, S.S. Kresge Corp. opened the first Kmart store on March 1, 1962, in Garden City, Michigan, just a few months before the first Wal-Mart opened. This store is still in operation today. A total of eighteen Kmart stores opened that year. Kmart Foods, a now defunct chain of Kmart supermarkets, opened in that same decade. Company founder Kresge died on October 18, 1966.

On November 17, 2004, Kmart announced its intention to purchase Sears, Roebuck and Company. As a part of the merger, the Kmart Holdings Corporation would change its name to Sears Holdings Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. In 2005, the company began renovating some Kmart stores and converting them to the Sears Essentials format, only to change them later to Sears Grands.

Kmart started remodeling stores to the "Orange" prototype in 2006. The typical white and blue interior of the stores was changed to orange and brown, and shelf heights were lowered to create better sightlines. The remodeled stores contain an appliance department with Kenmore Appliances and most have hardware departments that sell Craftsman tools, which prior to the merger had been exclusive to Sears stores. Some auto centers have been converted to Sears Auto Centers. 280 stores as of 2009 have been remodeled to this new prototype. For most of these stores, Kmart retired the "Big Kmart" logo and replaced it with the current logo. In some of the larger stores the old logo is still in use.

In July 2009, Sears Holdings opened its first Sears-branded appliance store inside a Kmart. The 4,000 SF store-within-a-store opened inside the former garden department of a Birmingham Kmart.

In November 2009, Kmart reported its first year-over-year sales increase of 0.5% since 2005, and only the second such increase since 2001.

Sears Holding Corporation is publicly traded on the NASDAQ under the ticker symbol "SHLD" and has a Standard and Poor's credit rating of B+ which is investment grade.

For more information, please visit www.kmart.com and www.searsholdings.com.


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Actual Site Photo


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Aerial Photo


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Location Map


Demographics Report 2200 E. Isaacs Avenue Walla Walla, WA 99362

1.00 Mile Ring

3.00 Mile Ring

5.00 Mile Ring

POPULATION 1990 Population 8,422 28,906 39,000

2000 Population 8,787 31,068 43,183 2009 Population 9,134 31,842 45,647 % Population Change 1990-2000 4.33 % 7.48 % 10.73 %

2014 Total Population 9,455 33,309 48,183 % Population Change 2000-2009 3.95 % 2.49 % 5.71 % % Population Change 2009-2014 3.51 % 4.61 % 5.56 % 2014 Total Households 3,838 12,108 18,215 % Households Change 2000-2009 7.21 % 7.73 % 11.14 % % Households Change 2009-2014 2.46 % 3.45 % 4.53 % 2009 Household Income $200,000-$249,999 4 7 10 2009 Household Income $250,000-$499,999 7 45 53 2009 Household Income $500,000+ 0 0 0 2009 Average Household Size 2.42 2.41 2.37 2009 Total Owner Occupied Housing Units 2,076 6,797 10,378 2009 Total Renter Occupied Housing Units 1,661 4,905 7,040 2009 Total Daytime Population 7,553 34,001 46,572 2009 Total Daytime Work Population 3,562 17,857 24,391 2009 Total Establishments 437 1,935 2,607

HOUSEHOLDS 1990 Households 3,384 10,691 14,468

2000 Households 3,494 10,864 15,678 2009 Households 3,746 11,704 17,425 % Households Change 1990-2000 3.25 % 1.62 % 8.36 %


2009 RACE AND ETHNICITY White Population 8,050 26,731 38,862

Black Population 72 782 974 American Indian/Alaska Native Population 126 435 497 Asian/Hawaiian/Pacific Islander Population 146 570 884 Other Population (Incl 2+ Races) 739 3,324 4,429

2009 Hispanic Population 1,244 6,035 7,750 2009 Non-Hispanic Population 7,890 25,807 37,897

INCOME 2009 Per Capita Income $20,049 $19,303 $20,658

2009 Median Household Income $34,136 $36,927 $36,931 2009 Average Household Income $48,885 $52,517 $54,116

2009 HOUSEHOLD INCOME DISTRIBUTION Household Income < $10,000 343 1,066 1,476

Household Income $10,000-$14,999 262 971 1,413 Household Income $15,000-$19,999 308 987 1,529 Household Income $20,000-$24,999 410 1,008 1,536 Household Income $25,000-$29,999 295 744 1,085 Household Income $30,000-$34,999 307 796 1,228 Household Income $35,000-$39,999 209 725 1,153 Household Income $40,000-$44,999 183 701 1,245 Household Income $45,000-$49,999 199 613 1,007 Household Income $50,000-$59,999 531 1,313 1,773 Household Income $60,000-$74,999 395 1,481 2,129 Household Income $75,000-$99,999 190 975 1,352 Household Income $100,000-$124,999 51 147 272 Household Income $125,000-$149,999 43 87 110 Household Income $150,000-$199,999 7 37 54

The Kase Group Kmart Walla Walla (5).p… · For most of these stores, Kmart retired the "Big...

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