unique new dollar general

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1 unique new dollar general unemployment rate of approximately 2% the only investment grade dollar store NNN Dollar General in tax-free state within a high growth msa rent increases in base term 1001 S. Main Street, Lennox, SD [ ]

2 PROperty Summary NEW NNN DOLLAR GENERAL IN A SUBURB OF SIOUX FALLS, SOUTH DAKOTA. SIOUX FALLS (MSA OF 250,000) IS THE LARGEST CITY IN THE TAX-FREE STATE OF SOUTH DAKOTA. It has been one of the fastest-growing MSA s for decades and has had one of the lowest unemployment rates in the country. PRICE: $1,372,000 CAP: 6.50% RENTABLE SF... 9,100 SF LOT SIZE Acres LEASE TYPE... NNN YEAR BUILT LEASE START DATE... 1/31/2016 Listing Team Contact Info John Andreini jandreini@capitalpacific.com (415) CA BRE# RICK SANNER rsanner@capitalpacific.com (415) CA BRE# Capital Pacific collaborates. Click here to meet the rest of our San Francisco team. DOLLAR GENERAL 2

3 core characteristics PROPERTY HIGHLIGHTS The site is in the fast growing town of Lennox, 21 miles southwest of Sioux Falls (see demographics on page 10). LOW UNEMPLOYMENT As reported for the month of September, unemployment here is just 2.2% (see page 11). For comparison, a sampling of other unemployment rates: Sioux Falls, 2.6%; South Dakota, 3%, USA, 5.1%. INVESTMENT GRADE CREDIT Dollar General s credit is BBB- and the company s credit rating has been raised four times since Dollar General has a better credit rating than both of its large competitors. STRONG TENANT During fiscal 2014, Dollar General opened about 700 new stores and will open about the same in fiscal year Dollar General has more stores (12,198+) than any other dollar store in the country and is currently the largest dollar store chain. In the six years since going public in late 2009, the Dollar General stock price has about tripled (from $21 to $63) LEASE HIGHLIGHTS A new fifteen year NNN lease (to commence January 2016) with increases in the base term and also in the options DOLLAR GENERAL 3

4 income & expense PRICE $1,372,000 Price Per Square Foot: $151 Capitalization Rate: 6.50% Total Rentable Area (SF): 9,100 Lot Size (AC): 1.37 STABILIZED INCOME Per Square Foot Scheduled Rent $9.80 $89,184 Effective Gross Income $9.80 $89,184 LESS Per Square Foot Taxes NNN $0.00 Insurance NNN $0.00 Total Operating Expenses NNN $0.00 EQUALS NET OPERATING INCOME $89,184 This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. Representative Photo DOLLAR GENERAL 4

5 Site plan S. Main Street LIGHTED SIGN SITE PLAN KEY PARCEL OUTLINE: LAND AREA: BUILDING AREA: INGRESS/EGRESS: 1.37 AC 9,100 SF 44 This site plan is a rendering that has been created based on sources we believe to be reliable, however we make no representations or warranties, expressed or implied, as to the accuracy of the rendering. Buyer must verify the information and bears all risk for any inaccuracies. DOLLAR GENERAL 5

6 Aerial th Street SIOUX FALLS Lennox High School th Street 17 S Main Street 466th Avenue Lennox Elementary-02 E 5th Avenue W 5th Avenue Lennox Middle School S Elm Street LENNOX AREA MUSEUM H&R BLOCK THE BANK OF LENNOX THE BEAUTY SHOP EXCHANGE INSURANCE AGENCY ALLIED INSURANCE LENNOX CITY HALL FLOWERS BY BOB LENNOX DENTAL CLINIC THE LENNOX INDEPENDENT BEAMER S PUB TIMELESS FITNESS SUNNY SIDE LAUNDROMAT/ CAR WASH AL S MOTORCYCLE SHOP 278th Street E Boynton Avenue W Boynton Avenue DOLLAR GENERAL 6

7 Rent roll TENANT INFO LEASE TERMS RENT SUMMARY Tenant Name Sq. Ft. Term Current Rent Monthly Rent Yearly Rent Monthly Rent/FT Yearly Rent/FT Dollar General 9,100 1/31/2016 1/30/2026 $89,184 $7,432 $89,184 $0.82 $9.80 1/31/2026 1/30/2031 $7,655 $91,860 $0.84 $10.09 Option 1 1/31/2031 1/30/2036 $8,420 $101,040 $0.93 $11.10 Option 2 1/31/2036 1/30/2041 $9,262 $111,144 $1.02 $12.21 Option 3 1/31/2041 1/30/2046 $10,188 $122,256 $1.12 $13.43 Option 4 1/31/2046 1/30/2051 $11,207 $134,484 $1.23 $14.78 Totals: 9,100 $89,184 $7,432 $89,184 $0.82 $9.80 This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies. DOLLAR GENERAL 7

8 Tenant overview REPRESENTATIVE PHOTO DOLLAR GENERAL IS THE COUNTRY S LARGEST SMALL-BOX DISCOUNT RETAILER ABOUT DOLLAR GENERAL Dollar General (NYSE: DG) is a chain of more than 12,198 discount stores in 43 states, primarily in the South, East, Midwest, and Southwest. Offering basic household items, such as cleaning supplies, health and beauty aids, apparel, and food. It targets low-, middle-, and fixed-income shoppers. Although it has the word dollar in its name, Dollar General is not solely a dollar store. Dollar General offers goods sold at set price points ranging from under a dollar to $60. Some of its higher end items include over-the-counter medicines, seasonal products, pet products, prepaid cell phones and accessories, and automotive supplies. The company has grown into the country s largest small-box discount retailer. Stores are often located in small towns off the radar of giant discounters. One of Dollar General s main advantages is that it offers prices as low or lower than Walmart but in more convenient locations. Dollar General has more stores than any other retailer and is easily the largest dollar store chain. The company ranks 164th within the Fortune 500 list. Fiscal 2014 revenues exceeded $18.9 billion with a net income of $1.07 billion, and net worth of $5.7 billion. COMPANY TYPE: PUBLIC (NYSE: DG) 2014 SALES $18.9 BILLION S&P 500 CREDIT RATING BBB- (See next page) 2014 FORTUNE 500 #164 NUMBER OF STORES 12,198+ DOLLAR GENERAL 8

9 tenant credit rating THE THREE LARGEST DOLLAR STORE CHAINS, RANKED BY 2014 REVENUE, ARE: 1 2 DOLLAR GENERAL FAMILY DOLLAR ABOUT THE STRONG DOLLAR GENERAL CREDIT RATING In July, 2015, Family Dollar was acquired by Dollar Tree and ceased to be a public company. Dollar Tree took on billions of dollars of debt to acquire Family Dollar, and that negatively impacted the credit rating of both of these companies. Moreover, Family Dollar, as a subsidiary of Dollar Tree, will no longer issue separate financial statements. The best known rating agency, Standard & Poor s, downgraded Family Dollar in July, with Dollar Tree having already been downgraded. 3 DOLLAR TREE The combined Dollar Tree-Family Dollar entity will have approximately the same amount of revenue as Dollar General, but more debt, hence the lower credit rating. Dollar General is now the only dollar store chain with an investment grade rating. Dollar General has been credit-upgraded four times since going public in DOLLAR GENERAL 9

10 location & demographics 14,900 DAILY ABOUT LENNOX, SD Lennox is located in Lincoln county, 21 miles southwest of Sioux Falls. The 2010 population was 2,111 for Lennox and 44,828 for Lincoln County. The county has been ranked as one of the top 10 fastest growing counties in the country in terms of growth in population and housing. Unemployment here is only 2.2% (see page 11). Lennox s coordinator of economic development, via a phone interview on November 17, stated that: 1. This will be the only national dollar store in Lennox. Lennox has very few places to purchase national Dollar General type goods; a lot of residents must shop in Sioux Falls even for basic, non-food items. He feels the store will be extremely successful. 2. Since there are strong employers in Lennox (2.2% unemployment), a reasonable number of people do a reverse commute from Sioux Falls to their jobs in Lennox. Lennox needs more housing and attempts are being made to attract residential builders. POPULATION 1-Mile 3-Mile 5-Mile ,156 2,538 3, ,299 2,710 3, ,512 2,963 3,722 LENNOX 2015 HOUSEHOLD INCOMES 1-Mile 3-Mile 5-Mile Average $64,377 $66,651 $69,090 Median $60,013 $61,656 $63,055 (Sou The forecast growth rates from 2010 to 2020 are in excess of 16% for the 1, 3, and 5-mile radii. DOLLAR GENERAL 10

11 sioux falls, sd ABOUT SIOUX FALLS, SD As Reported for the Month of September Unemployment Rates are Quite Low: Lennox (site): 2.2% Sioux Falls: 2.6% South Dakota: 3.0% USA: 5.1% Sioux Falls is the strongest and largest area economically in the state. State law is favorable for financial companies, in particular credit card operations. Major Sioux Falls employers include: Wells Fargo, Citibank, Capital One, Cigna, and Esurance. There are also four significant hospitals, which serve a wide area around the city. The airport offers non-stop service to about ten destinations, the busiest routes being to Minneapolis, Chicago, and Denver. Sioux Falls has a population of 160,000+ within the city limits, and an MSA of about 250,000. Sioux Falls is the largest city in the state, and population growth has always been outstanding. The growth rate here is among the highest in the country. DECADE ENDING GROWTH % % % % % % % % % % % % DOLLAR GENERAL 11

12 A unique HUMAN RESULTS-DRIVEN client experience THE CAPITAL PACIFIC EXPERIENCE - OUR DAILY COMMITMENT TO OUR CLIENTS [ ] JOHN ANDREINI jandreini@capitalpacific.com (415) CA BRE# BOB SANNER bsanner@capitalpacific.com (415) CA BRE# RICK SANNER rsanner@capitalpacific.com (415) CA BRE# CHRIS PETERS cpeters@capitalpacific.com (415) CA BRE# Capital Pacific collaborates. Click here to meet the rest of our San Francisco team. CHRIS KOSTANECKI DAVE LUCAS ZANDY SMITH JACK NAVARRA ZEB RIPPLE JOE CACCAMO GREGG STEELE KARLA ZENS [ Copyright 2015 Capital Pacific ]