kiddie academy

Transcription

kiddie academy

KIDDIE ACADEMY
LITTLE ELM, TX
OFFERING MEMORANDUM
FILE PHOTO
KIDDIE ACADEMY
LITTLE ELM, TX
CONFIDENTIALITY AND DISCLAIMER
The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be
reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or
entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary,
unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property.
The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not
made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject
property, the future projected financial performance of the property, the size and square footage of the property and
improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal
regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant,
or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this
Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified,
and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation
regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the
information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.
NON-ENDORSEMENT NOTICE
Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this
marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or
sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product,
service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee
information about this listing to prospective customers.
ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR
MARCUS & MILLICHAP AGENT FOR MORE DETAILS.
KIDDIE ACADEMY
LITTLE ELM, TX
NET LEASED DISCLAIMER
Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows:
The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable.
However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap
conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or
representation whatsoever about the accuracy or completeness of any information provided.
As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and
completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute
for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies
any obligation to conduct a due diligence examination of this Property for Buyer.
Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not
represent the current or future performance of this property. The value of a net leased property to you depends on
factors that should be evaluated by you and your tax, financial and legal advisors.
Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of
any net leased property to determine to your satisfaction with the suitability of the property for your needs.
Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors
must request and carefully review all legal and financial documents related to the property and tenant. While the
tenant’s past performance at this or other locations is an important consideration, it is not a guarantee of future success.
Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be
set based on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area.
Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail
to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market,
economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible
for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any
long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or
abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant
considering the location of the property, and Buyer’s legal ability to make alternate use of the property.
By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services
and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or
purchase of this net leased property.
KIDDIE ACADEMY
TABLE OF CONTENTS
Section 1
PRICING AND FINANCIAL ANALYSIS
Section 2
PROPERTY DESCRIPTION
Section 3
RECENT SALES
Section 4
MARKET OVERVIEW
Section 5
DEMOGRAPHIC ANALYSIS
KIDDIE ACADEMY
LITTLE ELM, TX
KIDDIE ACADEMY
LITTLE ELM, TX
FINANCIAL OVERVIEW
Location
Annualized Operating Data
2055 FM 4023
Little Elm, TX 75068
Rent Increases
Price
Down Payment
Rentable Square Feet
Price/SF
$3,161,000
100% / $3,161,000
9,225
$342.66
CAP Rate
7.15%
Year Built
2016
Type of Ownership
Annual Rent
Monthly Rent
$81,295.00
$40,659.00
$6,774.58
$3,388.25
Year 1
$121,955.00
$10,162.92
Years 2-5
$226,012.00
$18,834.33
Years 6-10
$253,226.00
$21,102.17
Years 11-15
$283,669.00
$23,639.08
Option 1
$276,750.00
$23,062.50
Option 2
$304,425.00
$25,368.75
Option 3
Base Rent ($24.50/SF)
$334,868.00
$27,905.67
$226,012
Months 1-9
Months 10-12
Fee Simple
Net Operating Income
Total Return
Rent: Priced on year 2 rent - Seller to credit Buyer differential upon
Tenant Summary
Tenant Trade Name
Ownership
Tenant
Lease Guarantor
Lease Type
Roof and Structure
Lease Term
Kiddie Academy
Private
Franchisee
Franchisee Guarantee
Double Net
Rent Commencement Date
05/01/2016
Lease Expiration Date
04/30/2031
Options
Scaled Security Deposit - $50,000 to benefit of landlord (scaled - see
lease terms)
Roof Warranty - 15 years on materials and 5 years on workmanship.
Seller warranty is 1 year for latent/patent defects.
15 Years
05/01/2016
Increases
COE.
Landlord Responsible
Lease Commencement Date
Term Remaining on Lease
$226,012
7.15% / $226,012
15 Years
Every 5-Yrs
3x5
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. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any
inaccuracies. Marcus & Millichap is a trademark of Marcus & Millichap Real Estate Investment Services, Inc. © 2015 Marcus & Millichap. All
rights reserved.
1
KIDDIE ACADEMY
LITTLE ELM, TX
TENANT OVERVIEW
Property Name
KIDDIE ACADEMY
Property Address
2055 FM 4023
Property Type
Net Leased Child Care
9,225
Tenant Trade Name
Kiddie Academy
Ownership
Private
Tenant
Franchisee
Guarantee
Personal Guarantee
Net Worth
Personal Guarantor Net Worth $333,950
Lease Guarantor
Franchisee Guarantee
Lease Commencement Date
05/01/2016
Rent Commencement Date
05/01/2016
Lease Expiration Date
04/30/2031
Term Remaining on Lease
15 Years
Lease Type
Double Net
Roof and Structure
Landlord Responsible
Lease Term
15 Years
Year 1 Net Operating Income
Increases
Every 5-Yrs
Options to Renew
3x5
No. of Locations
120 Franchised Locations
Headquartered
Maryland
Web Site
www.kiddieacademy.com
Years in the Business
33 +/- Years
Lewisville Lake Beach
rights reserved.
2
KIDDIE ACADEMY
LITTLE ELM, TX
KIDDIE ACADEMY
LITTLE ELM, TX
INVESTMENT OVERVIEW
Investment Highlights
■ New 2015-2016 Construction Offering a New 15 Year Lease
■ Transferable Roof Warranty in Place - Making the Site a
Virtual NNN Lease
■ Large Security Deposit in Place - Adding Another Layer of
Lease Security Along With Personal Guarantee of Lease (Net
Worth of Operator Over $333,950)
■ Affluent and Growing Community With Average Household
Income Exceeding $97,187, and the Immediate Population
Having Grown by Over 500-Percent
■ Limited National Child Care Competition in Immediate
Area
■ The Site Also Has an 8,700 SF Play Yard as Well - Not
Included in the Square Footage of the Structure
The town of Little Elm is a city in Denton County, Texas (part of the Dallas/Ft Worth MSA). This young, affluent and
professional community benefits from less than 2.5% unemployment in the immediate area, making the community
vibrant, and growing (it is one of the fastest growing municipalities in Texas since 2000).
Nestled along the shores of the Lewisville Lake at the cross roads of Eldorady Parkway and FM 423, including parts of
US Highway 380 this community offers more shoreline than any other city in the Dallas/Ft WOrth region. The region
draws outdoor enthusiasts from all over who like to participate in cable wake boarding, boating, swimming and hiking
along the miles of trails that surround the lake and the adjoining actuaries. Much of the region is made up of single
family custom estate homes, but it also is diverse in nature and offers ample and attractive housing for traditional single
family residents. The area also draws golf enthusiasts as well.
Kiddie Academy Franchisee: The operator of this Kiddie Academy is offering a personal guarantee to the lease in
addition to a $50,000 scalable security deposit. Paul & Myrna Toote are a single unit operator, however they come with
strong childcare experience, and credentials. Myrna Toote, PhD Candidate is a former public school administrator with
over 10 years experience working with children from preschool through 12th grade. She is married and has two
children. Dr. Paul Toote became a doctor of Osteopathic Medicine in 2001 after graduating from University of Health
Sciences College of Osteopathic Medicine of the Pacific where he was both class President as well as keynote speaker at
the Graduating Ceremonies. He has served as an Emergency Medicine Physician at leading hospitals and medical centers
all across Texas. The two of them are more than qualified as community leaders and entrepreneurs to embark in this
venture into opening a franchise of Kiddie Academy.
Kiddie Academy is a 33 year old childcare company with more than 120 franchised locations in 23 states. They service
families with children ranging in age from six weeks to 12 years. The company is growing wherein they plan on opening
30 more units in the coming 24 months and have slated another 25 locations to open over the next five years.
rights reserved.
4
KIDDIE ACADEMY
LITTLE ELM, TX
PROPERTY SUMMARY
The Offering
Property
KIDDIE ACADEMY
Property Address
2055 FM 4023
Site Description
Year Built
2016
9,225
Type of Ownership
Fee Simple
View of Lewisville Lake From the Golf Course, Little Elm, Texas
rights reserved.
5
KIDDIE ACADEMY
LITTLE ELM, TX
AREA MAPS
Local Map
rights reserved.
Regional Map
6
BLACK & WHITE RENDERING/ELEVATION OF SUBJECT SITE
RECENT SALES
KIDDIE ACADEMY
LITTLE ELM, TX
KIDDIE ACADEMY
RECENT SALES
LITTLE ELM, TX
RECENT SALES MAP
1)
2)
3)
4)
KIDDIE ACADEMY
Kiddie Academy - Gainesville VA
Growing Kids Academy - Fredricksburg VA
The Gardner School - Louisville KY
Phoenix Children's Academy - Flower Mound TX
rights reserved.
9
KIDDIE ACADEMY
RECENT SALES
LITTLE ELM, TX
CAP RATE AND PRICE PER SQUARE FOOT
Average Cap Rate
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Subject
Kiddie
Academy
Gainesville
VA
Growing
Kids
Academy
Fredricksburg
VA
The
Gardner
School
Louisville
KY
Phoenix
Children's
Academy
Flower
Mound
TX
Average Price per Square Foot
450.00
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Subject
Kiddie
Academy
Gainesville
VA
Growing
Kids
Academy
Fredricksburg
VA
The
Gardner
School
Louisville
KY
rights reserved.
Phoenix
Children's
Academy
Flower
Mound
TX
10
KIDDIE ACADEMY
RECENT SALES
LITTLE ELM, TX
RECENT SALES
KIDDIE ACADEMY
2055 FM 4023
Rentable Square Feet:
9,225
Sales Price:
$3,161,000
Year Built:
2016
Down Payment:
$3,161,000
CAP Rate:
7.15%
Price/SF:
$342.66
Subject Property
Comments
New Construction, New lease, Expanding Region and Industry. Strong Guaranty on Lease
Kiddie Academy - Gainesville VA
1
13980 Estate Manor Drive
Gainesville, VA 20155
Close of Escrow:
10/01/2015
Sales Price:
$4,595,000
Rentable SF:
10,530
Down Payment:
100%
Year Built:
2012
CAP Rate:
7.15%
Price/SF:
$436.00
Comments
Had been listed at a 6.55% cap rate on a 20-year lease.
Growing Kids Academy - Fredricksburg VA
2
9807 Jefferson David Highway
Fredericksburg, VA 22407
Close of Escrow:
On Market
Sales Price:
$4,725,000
Rentable SF:
10,530
Down Payment:
100%
Year Built:
2012
CAP Rate:
6.68%
Price/SF:
$448.00
Comments
15 year lease with 12 years remaining on base term of lease.
rights reserved.
11
KIDDIE ACADEMY
RECENT SALES
LITTLE ELM, TX
RECENT SALES
The Gardner School - Louisville KY
3
9401 Mill Brook Drive
Louisville, KY 40223
Close of Escrow:
01/09/2015
Sales Price:
$3,486,000
Rentable SF:
9,400
Down Payment:
100%
Year Built:
2006
CAP Rate:
7.23%
Price/SF:
$371.00
Comments
Single unit operator/franchisee. 12 years remaining on 15 year lease at time of sale.
Phoenix Children's Academy - Flower Mound TX
4
5601 Timber Creek Road
Flower Mound, TX 75028
Close of Escrow:
04/07/2014
Sales Price:
$1,800,000
Rentable SF:
8,491
Down Payment:
100%
Year Built:
2002
CAP Rate:
7.38%
Price/SF:
$212.00
Comments
Corporate Guaranteed lease with 14 years remaining on base term at time of closing.
rights reserved.
12
MARKET OVERVIEW
KIDDIE ACADEMY
LITTLE ELM, TX
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS-FORT WORTH
Market Highlights
High population growth
■ Dallas/Fort Worth’s population growth from 2010
to 2014 ranks among the highest in the U.S. for a
major metro.
Heavy concentration of headquarters
■ The Metroplex is home to 18 Fortune 500
companies and many regional headquarters.
High median household income
■ The annual median household income in
Dallas/Fort Worth, at $57,700, is well above the
U.S. median of $52,000.
Geography
Centrally located in the southern portion of the United
States, Dallas/Fort Worth is one of the largest metros in
the nation, stretching across 9,300 square miles in
northern Texas. The eastern portion of the Metroplex is
situated in the Blackland Prairie region, so named for its
fertile black soil. This area is dotted with man-made
lakes, as well as streams, creeks and rivers. The western
portion of the Metroplex falls within the Fort Worth
Prairie. Much of this former ranchland sits atop a
natural oil field and the Barnett Shale geological
formation.
Dallas-Fort Worth-Arlington Metro
rights reserved.
14
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS-FORT WORTH
Metro
The Dallas/Fort Worth Metroplex is the fourth-largest
metro in the nation and is composed of 12 counties,
with an aggregate of nearly 6.9 million residents.
Population growth in the region was tremendous during
the past decade, outpacing most U.S. metros. The
population of the Metroplex is forecast to expand 1.5
percent per year through 2019.
Largest Cities in Metro by Population
Infrastructure
The region’s transportation network is continually
evolving. To improve traffic flow, freeways are being
expanded and miles are added to tollways and turnpikes.
Dallas
Fort Worth
Arlington
Plano
Garland
Irving
1,271,000
795,100
383,400
274,500
238,700
231,500
Recent projects include LBJ Freeway and the Sam
Rayburn Tollway (121). Dallas Area Rapid Transit
(DART) operates buses and an 85-mile light-rail system
that serve Dallas and surrounding cities. Trinity Railway
Express is a commuter rail that connects Dallas, Fort
Worth and the Dallas/Fort Worth International
Airport.
The business community has easy access to major
commercial centers around the globe via Dallas/Fort
Worth International Airport, home to American
Airports
■ Dallas/Fort Worth International Airport
■ Dallas Love Field Airport
■ 13 smaller airports
Major Roadways
■ Interstates 20, 30, 35, 45, 635 and 820
■ Toll roads, turnpikes
Rail
■ Freight - Union Pacific, BNSF, Kansas City
Southern
■ Passenger - Trinity Railway Express, Amtrak
■ Light rail - DART
Airlines; Dallas Love Field, home to Southwest Airlines;
Port
■ International Inland Port of Dallas
and Alliance Airport. The Metroplex’s strategic location
The Dallas/Fort Worth Metroplex is:
on Interstate 35 and the NAFTA Superhighway, its
■
■
■
■
intermodal facilities, and the International Inland Port
of Dallas, ensure its status as a national distribution hub
200 miles from Austin
230 miles from Houston
880 miles from Denver
925 miles from Chicago
for years to come.
* Forecast
Sources: Marcus & Millichap Research Services, U.S. Census
Bureau, Experian
rights reserved.
15
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS-FORT WORTH
Economy
The Dallas/Fort Worth economy continues to evolve.
Companies migrating to the area are attracted by warm
weather, no state income tax, and a right-to-work labor
policy. These qualities, combined with an educated
workforce, diverse population and low housing costs,
have led to extraordinary growth in the Metroplex and
will continue to draw new businesses. Economic
expansion will be further fueled by a rise in financial
services and high-tech companies.
Dallas/Fort Worth is home to 18 Fortune 500
companies in diverse economic sectors, including
energy, food, healthcare services, telecommunications,
and retail. Some top names are ExxonMobil, American
Airlines Group, Fluor, AT&T, Kimberly-Clark and
JCPenney. There is also a high concentration of
privately
held
companies
headquartered
locally.
Recently, Toyota announced plans to move its North
American headquarters to Plano by 2017.
Dallas/Fort
Worth’s
central
location
and
vast
intermodal facilities have elevated the Metroplex to the
pre-eminent
distribution hub for the burgeoning
Southwest. Trade and transportation companies provide
roughly one-fifth of total employment and infuse
billions of dollars each year into the local economy.
* Forecast
Sources: Marcus & Millichap Research Services, Bureau of
Economic Analysis, Moody's Analytics, U.S. Census Bureau,
Fortune
rights reserved.
16
KIDDIE ACADEMY
LITTLE ELM, TX
MARKET OVERVIEW
DALLAS-FORT WORTH
Labor
Dallas/Fort Worth is one of the nation’s largest employment markets, with more than 3.2 million jobs. The
Metroplex fared better than most of the nation during the past five years with nearly 400,000 positions added, and
local employers are forecast to create more than 450,000 jobs through the end of 2019. Employment growth can
be attributed to the continuation of north-to-south migration; the Metroplex’s quality of life; lack of state income
taxes, which has attracted employees; and pro-business climate, which has drawn both businesses and workers.
Dallas was one of the few metros that boasted multiple expanding employment sectors through the worst years of
the recent recession. Through 2019, all business sectors are expected to add employees. During this period, the
rapidly growing education and health services sector, which comprises 12 percent of total payrolls, will expand at a
fast clip of 3.5 percent annually.
The trade, transportation and utilities sector is the largest employment segment and is a major economic driver in
the region. The sector provides 21 percent of all jobs, employing nearly 672,400 workers, and is forecast to grow
1.8 percent annually through 2019.
Over the next five years, the growing construction sector is forecast to register a gain of 3 percent, as development
accelerates to accommodate the area’s expanding population and economy.
* Forecast
Sources: Marcus & Millichap Research Services, BLS, Moody's Analytics
rights reserved.
17
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS-FORT WORTH
Employers
Dallas/Fort Worth has evolved from a commoditiesbased economy to a high-tech and telecommunications
hub, as well as a haven for corporate headquarters.
There are 18 Fortune 500 companies and more than 40
Fortune 1000 businesses housed in the area.
Two major airlines are headquartered locally. American
Airlines operates out of Dallas/Fort Worth International
Airport, and Southwest Airlines operates from Dallas
Love Field.
Major Employers
Progressive Corp.
Texas Instruments is one of the primary employers of
The Cleveland Clinic
high-tech workers. The majority of technology-based
University Hospital Cleveland
companies in the region are smaller firms.
Sherwin-Williams Co.
MetroHealth System
KeyCorp
Telecommunications and financial services are growing
Case Western Reserve University
industries. Most of the major telecom companies
Parker Hannifin Corp.
maintain offices in the region, and State Farm recently
Swagelock Co.
signed the area's largest lease in history and will be
Lincoln Electric Holdings, Inc.
consolidating offices when its massive new headquarters
is completed at the end of 2015.
Lockheed Martin Corp., based in Fort Worth, anchors
the defense-related manufacturing sector. Other major
defense firms include Bell Helicopter Textron Inc. and
Raytheon Co. The latter is underway on a sizeable new
headquarters in Richardson.
Gas exploration and extraction from the Barnett Shale
formation has produced an energy sector that includes
companies such as ExxonMobil, Fluor and Atmos
Energy. Short-term gains in this segment will likely be
affected by the reduced price of oil.
* Forecast
Sources: Marcus & Millichap Research Services, Moody's
Analytics, BLS
rights reserved.
18
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS-FORT WORTH
Demographics
Dallas/Fort Worth’s population has grown significantly
since 2000 with the addition of nearly 1.7 million
people, placing the metro among the largest in the
nation. Over the next five years, the population is
expected to grow by more than 500,000 residents.
The Metroplex’s phenomenal population growth is
fueled by strong natural increases, as well as the nation’s
north-to-south migration. The region will continue to
benefit from companies and people moving to the
South for more favorable weather and economic
prospects. The Metroplex remains relatively young; the
median age, at 34.0 years, is well below that of 37.4
years for the nation. Citizens aged 65 years and older
account for just 9.4 percent of the region’s population.
Unlike many other fast-growing Sun Belt metros,
Dallas/Fort Worth boasts high educational attainment.
Approximately 84 percent of residents age 25 years and
older have earned a high school diploma, and 31
percent have attained a bachelor’s degree.
The median household income sits at $57,700 per year,
above the U.S. median of $52,000 annually. Housing
prices are relatively low compared with many other
cities nationwide, which has afforded 62 percent of
households homeownership.
* Forecast
Sources: Marcus & Millichap Research Services, AGS, Experian,
Moody's Analytics, U.S. Census Bureau
rights reserved.
19
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS-FORT WORTH
Quality Of Life
The Metroplex provides residents with an unparalleled
lifestyle at a reasonable cost. The region continually
ranks high for its affordability when compared with
other large metros.
A temperate climate provides ample opportunities for
sports enthusiasts to enjoy the outdoors. The region has
150 public and private golf courses, as well as several
reservoirs. Dallas/Fort Worth hosts professional teams
in baseball, football, hockey and basketball.
Dallas/Fort Worth is not only recognized for its sports
teams’ accomplishments, but also for its cultural
institutions. There are more than 150 museums and art
galleries,
including
the
internationally
renowned
Kimbell Art Museum, Perot Science Museum and
Modern Art Museum of Fort Worth.
Metroplex residents are proximate to nationally
recognized health centers: Parkland Memorial Hospital,
Baylor University Medical Center and Texas Health
Harris Methodist Hospital Fort Worth. Four medical
schools also contribute to Dallas/Fort Worth’s excellent
healthcare providers.
The University of Texas at Dallas, Southern Methodist
University, Texas Christian University, and the
University of Texas at Arlington are among the many
institutions of higher learning located in the Metroplex.
* Forecast
Sources: Marcus & Millichap Research Services, National
Association of Realtors, Moody's Analytics, U.S. Census Bureau
The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or
implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including
estimates and forecasts, were used and may be subject to revision.
rights reserved.
20
KIDDIE ACADEMY
MARKET OVERVIEW
LITTLE ELM, TX
DALLAS
Value-Add Retail Plays Available Amid Growing Buyer Pool
The Dallas/Fort Worth metro’s diverse economy and steady job market will bode well for retail property
operations in the coming months. Employment throughout the region is diverse, and several sectors account for
10 percent or more of total jobs. Large companies are expanding or have begun relocating operations in the
market, including Toyota, Liberty Mutual, State Farm and Raytheon, which will attract additional corporate
moves to the North Dallas area. This portion of the metro has had heightened commercial real estate activity for
the past several years and builders have nearly 1.2 million square feet of retail space planned nearby. Just north of
Fort Worth, developers recently purchased a 260-acre parcel in Northlake, part of the massive AllianceTexas
master-planned project. Approximately 3 million square feet of industrial space is planned for the site near the
new FedEx and UPS ground hubs, and the project is sure to bring new logistics and distribution companies to the
area, boosting employment and further propelling consumer confidence in the region.
New capital is moving into the Metroplex, expanding the buyer pool and contributing to an increase in
transaction velocity through the remainder of the year. While local buyers will continue to dominate multi-tenant
sales, out-of-state investors, including international players, are growing their portfolios in the market. These
buyers target stable, well-located assets for safety plays with first-year yields in the low- to mid-6 percent range.
Some will target Class B properties yielding returns 50 to 100 basis points higher. Local investors, meanwhile,
continue to chase value-add deals. Investors who have had difficulty achieving lease-up are now choosing to divest,
bringing new opportunities to the market for buyers to create value. These assets are selling on a price per square
foot basis, ranging widely depending on rents and tenancy. Single-tenant assets, however, remain in high demand
and investors are scouring the Metroplex for deals. As builders complete projects through the remainder of the
year, new investment opportunities will appear.
2015 Annual Retail Forecast
Employment: Area firms will add 82,000 workers during 2015, an annual growth rate
of 2.5 percent. This falls slightly from the robust growth achieved in 2014 when
employers grew payrolls 4.1 percent, or by 130,000 jobs.
Construction: Contractors will increase inventory 1 percent this year as they add 3.2
million square feet of retail space to stock. This is up from the 2.9 million square feet
of space delivered last year and the largest annual addition since 2009.
Vacancy: Rising demand for retail space in the metro, and construction that still hasn’t
matched peak levels achieved prior to the recession, will facilitate net absorption of 5
million square feet and a decline of 60 basis points annually as vacancy reaches 6.2
percent at year end. In 2014, vacancy fell 30 basis points.
Rents: Average asking rent growth will slow from last year as fewer quality spaces are
available to market. The average asking rent for the Metroplex will reach $14.60 per
square foot on an annual growth rate of 2.6 percent by year end. In 2014, the average
rights reserved.
21
KIDDIE ACADEMY
LITTLE ELM, TX
MARKET OVERVIEW
DALLAS
Economy
■ Metroplex employers added 26,300 workers during the three-month period ending in June, combining with
the previous three quarters for a 114,100 expansion in payrolls for the year. In the previous annual time frame,
firms generated 109,400 positions.
■ A diversified economy allowed gains during the last year to be spread through several major industries,
including professional and business services, education and health services, and trade, transportation and
utilities, each adding more than 20,000 jobs in the last 12 months.
■ Strong job growth in the Metroplex and the diversified nature of the economy continue to support strong
consumer spending. As a result, retail sales grew 3.2 percent in the last 12 months.
■ Outlook: Area firms will add 82,000 workers to staffs during 2015, an annual growth rate of 2.5 percent.
Construction
■ Builders completed nearly 3 million square feet of retail space during the last 12 months, increasing stock 0.9
percent. Approximately 630,000 square feet of space completed during the period was multi-tenant retail space,
while the remainder consisted of single-tenant buildings.
■ The largest project completed year to date was the 1.9 million-square-foot Nebraska Furniture Mart. The
building consists of 560,000 square feet of retail and showroom space, while the remainder is warehouse. The
store is part of a larger 3.9 million-square-foot mixed-use project known as Grandscape that will include
additional retail, entertainment and dining establishments.
■ Currently 2.3 million square feet of retail space is underway in the Metroplex, with an additional 2.1 million
square feet of projects in the planning pipeline. Large developments, including Trinity LeftBank in Fort Worth
and Blade Parks in Euless, are moving forward with construction.
■ Outlook: Contractors will increase inventory 1 percent this year as they add 3.2 million square feet of retail
space to stock. This is up from the 2.9 million square feet of space delivered last year and the largest addition
since 2009.
* Forecast
Sources: BLS; CoStar Group, Inc.
rights reserved.
22
KIDDIE ACADEMY
LITTLE ELM, TX
MARKET OVERVIEW
DALLAS
Vacancy
■ Vacancy tumbled 60 basis points in the last 12 months to 6.9 percent in the second quarter. Net absorption for
the period was just under 4.9 million square feet. At multi-tenant retail centers, vacancy shed 70 basis points,
reaching 8.3 percent at midyear.
■ Overall, retail vacancy fell 60 basis points in Dallas during the past four quarters, reaching 7.2 percent.
Demand remained strong for multi-tenant centers in the area as vacancy dipped to 8.7 percent, a 60-basispoint decline from one year ago.
■ In Fort Worth, retail vacancy dropped 80 basis points year over year to 6.2 percent in June. However, vacancy
at multi-tenant retail centers in this portion of the market only dropped 40 basis points to 7.4 percent.
■ Outlook: Rising demand for retail space in the metro, and construction that still hasn’t matched peak levels
achieved prior to the recession, will facilitate net absorption of 5 million square feet and a decline of 60 basis
points annually as vacancy reaches 6.2 percent at year end.
Rents
■ As vacancy constricts across the Metroplex, the amount of quality space left on the market is waning,
contributing to slow rent growth so far this year. Year over year in the second quarter, the average asking rent
ticked up 0.1 percent to $14.60 per square foot.
■ Average retail rents in Dallas realized a 0.7 percent increase in the last 12 months, reaching $15.06 per square
foot. At multi-tenant center, the average rent climbed 0.6 percent to $14.20 per square foot, while a 0.8
percent uptick pushed the average single-tenant rent to $15.73 per square foot.
■ In Fort Worth, average asking rents dropped slightly from one year ago, slipping 1.3 percent annually to
$13.07 per square foot. Multi-tenant centers in the area experienced a steep decline of 6.5 percent in the
average rent, falling to $13.13 per square foot. Meanwhile, an advance of 1.6 percent brought the average
single tenant asking rent to $13.03 per square foot.
■ Outlook: The average asking rent for the Metroplex will reach $14.60 per square foot on an annual growth rate
of 2.6 percent by year end.
* Forecast
Source: CoStar Group, Inc.
rights reserved.
23
KIDDIE ACADEMY
LITTLE ELM, TX
MARKET OVERVIEW
DALLAS
Single-Tenant Sales Trends**
■ Sales of single-tenant assets ticked up slightly during the past 12 months when compared with transaction
velocity in the prior year. Deal volume grew significantly in Central Dallas and north Dallas suburbs, while
investors also concentrated on Central Fort Worth and the Mid-Cities.
■ The average price per square foot increased 4 percent during the last year, reaching $295 in June amid rising
buyer competition. Service stations, banks, fast-food and restaurant establishments yield the highest prices,
with many trading well above $500 per square foot depending on many factors.
■ An increase in buyer competition resulted in cap rates compressing 20 basis points to the mid- to high-6
percent range. Initial yields for single-tenant properties in the metro contracted as low as 4 percent for some
well-located assets with national credit tenants.
■ Outlook: Single-tenant properties will remain in high demand as investors seek safety plays in the Metroplex.
As new construction remains primarily focused on single-tenant assets in the near future, opportunities for
investment will remain bright.
Multi-Tenant Sales Trends**
■ Transaction velocity dipped marginally in the last four quarters, though not due to a lack of interested buyers.
Properties in central and northern Dallas remain in high demand, as well as Central Fort Worth and the MidCities.
■ A growing buyer pool is intensifying bidding on multi-tenant assets in the metro. In the trailing 12-month
period ending in June, the price per square foot for multi-tenant assets in the Metroplex grew 9 percent to
$243.
■ Cap rates can vary greatly throughout the Metroplex, ranging from the mid-6 percent area for well-located,
stable assets to nearly 200 basis points higher for assets in need of repositioning.
■ Outlook: International investors are plunging millions of dollars into the Dallas/Fort Worth commercial real
estate market, heating up competition for assets across the metro. These buyers will focus on stable, welllocated shopping centers for safety plays.
** Trailing 12-month period through 2Q
Sources: CoStar Group, Inc.; Real Capital Analytics
rights reserved.
24
KIDDIE ACADEMY
LITTLE ELM, TX
MARKET OVERVIEW
DALLAS
Capital Markets
■ Several macroeconomic headwinds, including the strong dollar and lower energy prices, have recently dropped
the yield on the 10-year U.S. Treasury to the low-2 percent range. Despite weakness abroad, U.S. economic
data remains robust as existing home sales hit levels not seen since 2006 and retail sales growth indicates a
willingness by consumers to spend in areas beyond the essentials. Additionally, jobless claims are just above a
41-year low and more than 200,000 positions have been created in 14 of the last 16 months, providing further
evidence of broad strength in the labor market.
■ The Federal Open Market Committee has committed to a policy of “lower for longer” as it assuages fears
surrounding a possible interest rate increase this fall. The initial policy rate change is expected to be just 25
basis points, the first hike since 2006, with measures remaining accommodative for several years.
■ Life insurance firms are underwriting with terms of up to 25 years for retail loans. Their 10-year pricing ranges
between 4 and 4.25 percent with average LTVs from 60 to 65 percent. Meanwhile, CMBS lenders are offering
10-year terms at rates between 4.4 and 4.65 percent, with LTVs at 75 percent. Commercial banks are also
active in the sector, generally offering shorter-term loans from 3.75 to 4.75 percent for 70 percent leverage.
Floating bridge loans for stabilized assets will require LTVs of 70 percent and price with a spread between 250
and 425 basis points over LIBOR, while value-add transactions will be underwritten at 80 percent LTV (60-65
percent of cost) with a 300- to 475-basis-point spread.
■ Total CMBS issuance reached $52 billion by the end of the second quarter, representing a sizable uptick from
last year. More than $600 billion in CMBS is expected to come to market during the next few years as precrisis loans come due, prompting owners to renegotiate their capital structure at much lower interest rates.
Many of these owners may choose to list their assets instead, providing investors an opportunity to place capital
in highly sought-after markets.
Local Highlights
■ Strong demand for housing the metro is facilitating new home construction and multifamily construction starts
rose 10 percent during the last four quarters while single-family housing starts soared nearly 57 percent. New
retail construction will chase rooftops in order to meet the needs of nearby residents.
■ Hiring remains strong in the metro and the unemployment rate dipped 120 basis points in the last 12 months
to 3.8 percent. The unemployment rate is down 480 basis points since the recession and the most recent
annual decline pushed the rate below 4 percent for the first time since early 2000.
■ Natural resources and mining employment slipped 1,800 positions during the last 12 months amid declining
oil and gas prices. However, this sector is just 1 percent of the metro’s total employment number, representing
minimal exposure to the current statewide slump.
rights reserved.
25
KIDDIE ACADEMY
LITTLE ELM, TX
KIDDIE ACADEMY
LITTLE ELM, TX
DEMOGRAPHIC REPORT
1 Mile
495
793
1,266
1,474
3 Miles
7,409
29,012
34,708
43,462
5 Miles
14,979
74,688
89,879
114,895
2000 Households
2010 Households
2014 Households
2019 Households
160
271
444
522
2,493
9,338
11,201
13,972
5,077
24,048
29,182
37,042
2014 Average Household Size
2.76
3.06
3.07
2014 Daytime Population
139
2,534
8,505
2000 Owner Occupied Housing Units
2000 Renter Occupied Housing Units
2000 Vacant
73.48%
18.16%
8.36%
78.16%
14.39%
7.45%
80.06%
13.09%
6.85%
2014 Vacant
69.27%
30.73%
2.02%
82.64%
17.36%
0.42%
86.83%
13.17%
0.27%
2019 Vacant
68.79%
31.21%
1.19%
82.81%
17.19%
0.30%
87.12%
12.88%
0.19%
4.1%
4.5%
10.2%
14.0%
22.4%
17.1%
10.7%
8.0%
4.8%
1.3%
2.9%
4.5%
4.9%
7.4%
11.8%
22.5%
19.7%
13.3%
7.6%
4.5%
1.5%
2.4%
4.7%
4.1%
7.1%
10.3%
20.9%
18.7%
14.3%
8.5%
6.1%
2.0%
3.3%
2014 Median Household Income
2014 Per Capita Income
$68,568
$31,552
$73,832
$29,022
$78,662
$31,964
2014 Average Household Income
$89,889
$89,927
$98,386
2000 Population
2010 Population
2014 Population
2019 Population
$ 0 - $14,999
$ 15,000 - $24,999
$ 25,000 - $34,999
$ 35,000 - $49,999
$ 50,000 - $74,999
$ 75,000 - $99,999
$100,000 - $124,999
$125,000 - $149,999
$150,000 - $199,999
$200,000 - $249,999
$250,000 +
Demographic data © 2012 by Experian.
rights reserved.
27
KIDDIE ACADEMY
LITTLE ELM, TX
SUMMARY REPORT
Geography: 5 miles
Population
In 2014, the population in your selected geography is 89,879. The population has changed by 500.05% since 2000. It is estimated
that the population in your area will be 114,894 five years from now, which represents a change of 27.83% from the current year.
The current population is 49.09% male and 50.90% female. The median age of the population in your area is 32.9, compare this to
the Entire US average which is 37.3. The population density in your area is 1,144.42 people per square mile.
Households
There are currently 29,182 households in your selected geography. The number of households has changed by 474.75% since 2000.
It is estimated that the number of households in your area will be 37,041 five years from now, which represents a change of 26.93%
from the current year. The average household size in your area is 3.07 persons.
Income
In 2014, the median household income for your selected geography is $78,661, compare this to the Entire US average which is
currently $51,972. The median household income for your area has changed by 33.92% since 2000. It is estimated that the median
household income in your area will be $90,814 five years from now, which represents a change of 15.44% from the current year.
The current year per capita income in your area is $31,964, compare this to the Entire US average, which is $28,599. The current
year average household income in your area is $98,385, compare this to the Entire US average which is $74,533.
Race & Ethnicity
The current year racial makeup of your selected area is as follows: 73.41% White, 12.15% Black, 0.07% Native American and 4.63%
Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and
5.02% Asian/Pacific Islander.
People of Hispanic origin are counted independently of race. People of Hispanic origin make up 18.65% of the current year
population in your selected area. Compare this to the Entire US average of 17.13%.
Housing
In 2000, there were 4,363 owner occupied housing units in your area and there were 713 renter occupied housing units in your area.
The median rent at the time was $491.
Employment
In 2014, there are 8,505 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed
that 62.49% of employees are employed in white-collar occupations in this geography, and 36.84% are employed in blue-collar
occupations. In 2014, unemployment in this area is 5.30%. In 2000, the average time traveled to work was 38.2 minutes.
rights reserved.
28
KIDDIE ACADEMY
LITTLE ELM, TX
POPULATION DENSITY
Number of people living in a given area per square mile.
rights reserved.
29
KIDDIE ACADEMY
LITTLE ELM, TX
EMPLOYMENT DENSITY
The number of people employed in a given area per square mile.
rights reserved.
30
KIDDIE ACADEMY
LITTLE ELM, TX
AVERAGE HOUSEHOLD INCOME
Average income of all the people 15 years and older occupying a
single housing unit.
rights reserved.
31
KIDDIE ACADEMY
LITTLE ELM, TX
OFFERING MEMORANDUM
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