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INVESTMENT OPPORTUNITY FORMER HY-VEE BUILDING 3405 OAK V IEW DRIVE

OMAHA, NEBRASKA 68137

EXECUTIVE SUMMARY

Opportunity: An opportunity to participate in the acquisition and repurposing of the former Hy-Vee facility, located on the perimeter of the Oak View Mall, Omaha, Nebraska. The promoter and General Manager Mr. Kevin Hooker, President and co-owner of Elite Cheer.

Background: Kevin Hooker, President, Elite Cheer

As some of you may or may not know – Elite Cheer (present name), roots of the Company, were initiated 20 years ago while we were attending the University of Nebraska and what we call circumstances (injury, invite, opportunity and now career). Elite Cheer has grown significantly and evolved many times during this time frame. The most evident is the facilities. Starting from a school gymnasium, renting a 4,600 square foot facility with 30 students and to constructing and owning our own 16,000 square foot building where we currently run around 900 athletes. We have reached a new level at our presently facility, where we are all falling over ourselves in the practice room, parking, small observation room, where we feel expansion of our facility is necessary to safely operate. Once again we are looking at expanding. An opportunity arose from an


off market facility containing approximately 63,200 square feet, which would more than accommodate our parking needs, and our future growth. Obviously, we are not looking to occupy the entirety of this facility (approximately 63,200 square feet); our plan is to acquire the facility and repurpose into a multi-tenant facility, of which we would use immediately 27,000 sf this space or 43% of the building. The remainder would be rented. Marketing efforts are presently underway. We have met with several investors as well as interested potential tenants. Our desire is to establish a group of individuals like yourself that share similar philosophies and the mission of enhancing the lives of children along with teaching them life skills to achieve a greater confidence, leadership and physical fitness to achieve success in their future endeavors and this venture will include a return on your investment. Thank you. I would like to know if there would be an interest in learning more about this valuable and profitable project, this team and something great. Kevin Hooker President / Founder Elite Cheer Inc.

Analysis and Research: Along with our Analyst, Project Manager, Co-developer, Mr. James R. Pearson, Broker & Investment Analyst of Berkshire Hathaway Ambassador Real Estate-Commercial Division, we have assembled meaningful data from the marketplace that reflects the current economic conditions and from which we have interpreted and formulated proposals for product mix, unit size, amenities and the relationship between the potential public service areas, retail space and parking. All our efforts to date are contextual and are what we see as is most appropriate for the market and the proposed project. Our analysis includes, how we looked at pricing and amenities as a primary reference to how the design and concept would take shape, space configuration, tenant mix, the income potential, amenities, estimated costs of construction, and the establishment of the team. I know it is the desire of the team to create a plan and concept that will generate a quick and immediate response along with acceptance by the Market. From our research and market conditions we feel this is especially good timing for the start of this development. The project will build a good foundation with the acquisition, models, and feasibilities that will produce a pride in ownership, above average yields, a professional work space that will generate a high interest from the public and acceptance from the general retail market. The results indicated that the project is economically feasible, acceptance by the market, compatible with the existing successful retail facilities adjoining and in the Mall area.

The following is the summary and highlights of our analysis:

Physical Description: Real estate is located in the Southwest quadrant at 3405 Oak View Drive, Omaha, Nebraska 68137. Site contains approximately 6.6 Acres or 283,140 square feet and is improved with 63,200 square foot retail service facility. The building is square in shape and for the most part all services were performed on a single level, with the exception of a small area used for offices, utility meters, and roof access that a second floor was built. Property was acquired in approximately 1993 and the improvements built by Hy-Vee Food Stores and used exclusively for Hy-Vee Grocers. There was a small amount of square footage sub leased to outside


concerns (Banks, specialty foods, etc.), as a convenience to their customers. This facility was vacated by the grocery operations with a move to a new neighborhood multi-tenant facility which they are the anchor and control. They have continued to utilize this facility as storage for special orders, overstock, and equipment. The building is temperature controlled, completely winterized, with all unused electrical panels cut, and is security monitored. Located within, the Oak-View Mall perimeter ring, on the north side of Oak View Drive, (facing the Sears side of the Mall). The Property is at street grade to Oak View Drive with a gentle slope to the south, leveling off at the building. Front elevation faces the North, adjoining a concrete parking lot and road way system surrounds the entirety of the building. Two dock high loading docks are located in the rear of the building on the east elevation.

Oak View Mall is one of 15 centers in the Omaha, Papillion, and Council Bluffs market containing a total of 9,617917 gross leasable areas (average per center 641,194 square feet). Oak View Mall is the second largest Mall (1.17 million square feet, not counting perimeter retail), behind the Mall of the Bluffs being first with (1.4 million square feet) and Westroads Mall at (1.14 million square feet). Oak View and Westroads are considered Super Regional Malls. See attachments for a detail list of all Malls by rank, type, and a listing of the retail shops at those centers. The residential population in a one mile radius of the area is 8,857, three mile 88,534 and 5 mile 223,403 with 3,626 households and a median household income of $71,037 (1 mile), 86,972 (3 mile) and $89,467 within a (5 mile) radius. In summary, the subject is well located within an established mixed-use. The neighborhood


is about 97% developed. Demographics of the area are included in attachments. All goods, services, utilities and municipal services are available in the neighborhood and adjoining areas. The local economy is stable and continued steady growth is predicted for the neighborhood and the general area.

Aerial of Oak View Mall Construction consists of a steel frame skeleton, cream brick, tilt up grooved reinforced concrete wall, stucco and glass aluminum frame store front. Roof is a built up membrane over corrugated steel floor deck system, with roof drains to prevent water collection (goes to sanitary). Floor decking is composed of concrete, with some area of tile and wood. Sanitation is below grade, utilities (gas, water, and electric) are distributed within the building above grid. Access to the upper mezzanine is via one service elevator and stair core located in the front of the building. Stairwells are located along the North front and east front of the building.

Site is irregular in shape and has a gentle slope downward from the North to the South. Site has approximately 375 feet of frontage along Oak View Drive and approximately 1,071 of depth containing 6.6 acres or 287,713 square feet. Access to the site is via a private drive from Oak View Drive The building at present is near renovation ready with all assets of the store are near completion of being removed and interior cleaned. No environmental or toxic evidence exists within the facility. Preliminary plans are proposed to revitalize the structure with 9 retail bays, ranging in size from 1,200 – 30,000 square feet. Bays will be turned over to the new tenants in a white wall finish with mechanical and rough stub in for plumbing provided. All utilities are available and connected. All will be separately metered. Concrete surface parking stalls parking stalls for 422 striped full size parking stalls for a 6.8/1000 parking ratio. Parking drive lanes are separated by planter islands and are lighted by typical parking lot lights. All green space on the property including all planter islands are sprinklered.


Site Plan This preliminary design has been configured to obtain the maximum efficiency of GSF to NRA (94%) and to attract a greater variety of size and type of tenants/ businesses to this center. Spaces would range from 1,200 sf to 30,000 square feet.

View of Site Schematic


Architects Schematic on North

(top) and

East Elevations

Rendition of Interior – Nine potential bays UNIT 1 2 3 4 5 6 7 8 9 10 TOTAL M AXIMUM

SQUARE FEET 27,603 1,583 2,190 1,650 1,750 6,000 8,300 10,380 1,200 2,540 SPACES/ SF

U SE M AIN TENANT RETAIL RESTAURANT RETAIL BAKERY RESTAURANT STUDIO PHYSICAL THERAPY O FFICE C OMMON 63,200


The above are the schematics and site layout presented to the City of Omaha Planning Department, with a few minor exceptions they have approved the above plan within the guidelines of the present zoning of Mixed Use. In addition, we will have an option to add future pad sites up to an approximate 20,000 square feet for additional retail, etc. We will at all times retain a minimum of 4 stalls per 1,000 square feet of GSF. The present ratio exceeds 6 stalls per 1,000 GSF. The above number of 20,000 sf is max; the amount of GSF add-on is a factor of the 4:1 ratio and exposure of the main facility to the street (Oak View Drive).

The following elements favor the acquisition and repurposing of the former Hy-Vee building into a multi-tenant mixed use facility. 

The subject site is located in Southwest Omaha at 3405 Oak View Drive. Neighborhood boundaries are Center Street on the North, Industrial on the South, 120th Street on the east and 144th Street on the West. This neighborhood has a mixture of uses, including commercial, office, and residential, multifamily and light industrial.

Area is approximately 97% built up, West Center Road is the major East/West artery in this area. One Hundred Thirty Second Street, 144th Street and 168th Street are the major North/South arteries in this neighborhood. Traffic counts exceeding 40,000 on a daily basis.

There are two interstate interchanges close to the subject, one is located at the interchange of I-680 and Center Street, and the second is at I-680 and Pacific Street. Both are about 1 2/3 miles east of the subject neighborhood.

The major retail development in the vicinity of the neighborhood is the Super Regional Oakview Mall. (Nebraska’s largest Indoor Mall), opened in 1991 (renovated in 2013) and containing 870,323 square feet anchored by four national credit (Dillard’s, Jcpenney, Sears, and Younkers), along with other national retail tenants, which take up the remainder of the Mall interior space. In addition, there is an additional approximate 450,000 square feet of retail, medical, restaurant, sports, and entertainment around the perimeter of the Mall.

Oak View Mall is one of 15 centers in the Omaha, Papillion, and Council Bluffs market containing a total of 9,617917 gross leasable areas (average per center 641,194 square feet). Oak View and Westroads are considered Super Regional Malls.

Analysis of shopping Centers within a one mile radius of the subject property, contained 158 shopping centers and 540 stores that were built in a time frame of 1965 thru 2012 (average 1985), with a buildable area of 4,549,288, average 23694 square foot per center, situated on 740 acres or 32,224,555 sf, 4.89 to 1 average parking ratio, with rents ranging from a low of $6.17 to $24.00 psf base rents, based on a NNN basis, and an average 93% occupancy.

Site is irregular in shape and has a gentle slope downward from the North to the South. Site has approximately 375 feet of frontage along Oak View Drive and approximately 1,071 of depth containing 6.6 acres or 287,713 square feet. Access is via a private drive from Oak View Drive (lighted intersection) to a concrete parking lot containing 422 striped full size parking stalls for a 6.8/1000 parking ratio. Parking drive lanes are separated by planter islands and are lighted by typical parking lot lights. All green space on the property including all planter islands is sprinklered.

Site is improved with a one story (22 ft. ceiling height) 61,929 square foot sprinklered building formerly utilized by Hy-Vee Food Store. Doug Halverson, Land and Space Planner, developed an interior plan determining the functionality of the building and the conversion to a Multi-tenant facility. Olson and Associates researched and inspected 100% of the building for proper engineering and structural support, not one element of concern.

A possible Phase ll of the project is the add-on of an additional 20,000 square feet to the site, which has been approved. Planning is currently underway for this addition, future expansion is determined by absorption and tenant mix.

Analysis of 158 shopping Centers and 540 stores within a one mile radius of the subject property, that were built in a time frame of 1965 thru 2012 (average 1985), with a buildable area of 4,549,288, average 23,694 square foot per center, situated on 740 acres or 32,224,555 sf, 4.89 to 1 average parking ratio, with rents ranging from a low of $6.17 to $24.00 psf base rents, based on a NNN basis, and an average 93% occupancy and average base rent of $15.63/sf were reviewed for the determination of rents to be estimated for the subject property.


Economics and feasibility were derived from the present market status. Which resulted in the following income and yield advantages. 

Conservative rental income numbers obtained and proven from Market; Acceptable cash flows aftermarket financing which provided acceptable debt service coverage ratios (1.56:1), low breakeven (70%), and acceptable yields (first year simple cash on cash (10.25%)), and 17.67% after tax, capital gains,

A requested loan based on cost (75%) $4,998,156.00, to value percentage is less than 68%

Values exceeding $7.4 million formulated from the low side of market rents, and estimated profit of $2.8 million at sale at year 5; and at year 10 of approximately $4.2 million profit.

Reversion Net Operating Income: Net Operating Income Terminal Cap Rate

Year 5 $ 549,889.00

$

7.40%

Gross Sales Price Selling Costs

Year 10 598,934.00 7.40%

$ 7,427,115.00 3% $ 222,813.00 $ 7,204,301.00

$ $

8,089,542.00 3% 242,886.00 7,846,856.00

$ 4,391,275.00 $ 1,666,052.00

$ $

3,631,584.00 1,666,052.00

$ 1,146,974.00 $ 2,813,026.00

$ $

2,549,220.00 4,215,272.00

Annual Cash Flow After Debt Service-Yr. 5

$

216,513.00

Net Sales Price Remaining Mortgage

$ $

7,846,856.00 4,391,275.00

Return of Equity

$

1,666,052.00

Original First Mortgage Balance: Remaining First Mortgage Balance Return Of Equity

Selling Costs Net Sales Price ($4,998,156.00)

Capital Gain Net Cash Proceeds

$

Five Year Leveraged IRR Analysis

Five Year Leveraged IRR (Less Equity) After Tax + Capital Gains

17.67 % 57.87%

Assumptions & Analysis:

Table 1.2

Assumes terms of 25 year amortization with a ten year balloon, at an interest rate of 4.5%, 75% LTV and a debt service coverage of 1.25:1, 1% fee payable to Lender. Loan to Value is based on Cost.

Table 1.3

Tax Bracket (38%), Cap Gain Rate (20%), sales cost (6%), yield (12%), term (10 years) and depreciation (39.5 years).

Table 1.4

Inflation (ranged from 1.5% – 3%), Present Value (7.5% - 9%), Sensitivity (4% - 10%), Expense Increase annually (1.75%), increase in rents annually (1% year one and 2 % thereafter), Vacancy (7% year 1, 5% thereafter), and management fee of 5%.

Table 1.5:

Configuration of space sf, mix, projected rents, and gross potential income.

Table 1.6:

Projection of Income and Expense over Ten years.

Table 1.7

Results of income and expense. Forecasted operating expense ranged from $3.74 sf (year 1) to a high of $4.29 sf (year 10).

Table 1.8

Opinion of Value at various capitalization rates. 6% - 9%; $9.2 mil - $6.1 million


Max Loan to Cost

$4,998,156.00

75%

Equity: Owner

$1,666,052.00

25%

Total Costs

$6,664,208.00

100%

Investment Summary Present PV Max Loan @ 75% of NPV

$

7,496,684.00

$

5,497,955.00

Max. loan at Cost

$

4,998,156.00 $ 333,376.00 $ 187,886.00

Debt Service Annual Cash Flows (average) Debt Coverage Ratio Avg. Break-even Occupancy Avg. Simple Cash on Cash

1.56 70% 12.92%

Table 1.9

Determining current capitalization rate for project.

Table 1.10

Sensitivity Analyses. Based on Occupancy, rental rate, and interest rates.

Table 1.11

Various valuation methods via Mortgage Equity, NOI Capitalized, Mortgage Constant, DCR technique and Ackerson Method.

Table 1.12

Estimate of Cost of Revitalization.

Table 1.13

Amortization & Sinking Fund Factor

Conclusions of Analysis: Attachment A:

Net Present Value Economics (10 years)

Attachment B:

Investment Analysis - Yields

Attachment C:

Amortization

Attachment D:

Market Analysis – Determining Estimate of Rents

Attachment E:

Cost breakdown of project.

Analytics, Yield determinations and Investment Performa provided by: James R. Pearson, Broker, RELUE, CREIA, Commercial Investments Division Manager Prudential/Berkshire Hathaway Ambassador Real Estate 13340 California Street Omaha, Ne 68154 402-708-2829 James.pearson@prudentialambassador.com


Executive Summary Final November 20th  

Iconic repurposing of a single purpose facility into a general purpose multi-tenant retail center, located within the rim of a super regiona...

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