• Long Term Corporate Net Leased Walgreens in Trophy Infill San Francisco
Location with 11 Years Remaining
– Tenant Extending Lease Early, Demonstrating High Commitment to Site
– Rare 10% Rental Escalation at Option
– Walgreens Boots Alliance is Rated BBB by S&P
– Ranked 17 in the Fortune 500
• Ideal Inner Richmond Location
– Clement Street Corridor Becoming Hip Retail Hub with Numerous Quality
Restaurants, Shops and Bars
• Excellent Access and Visibility Adjacent to Junction of Prominent Arterials
– Combined AADT of 124,247 at Geary and Park Presidio Intersection
Adjacent to Site
• Dense, Affluent Demographics
– Average Household Income of $135,488 Within 3 Miles of Site
– 7th Most Affluent County in the U.S.
– Median Home Price Has Increased 14.5% In First 2 Quarters of 2018
– Total Daytime Population of 1,005,266 within a Five Mile Radius
• Strong Intrinsics in Market Where Demand for Real Estate far Exceeds Supply
– Rare Corporate Net Lease Asset Given City Restrictions on New “Chain
• Irreplaceable Infill Site in Second-Most Densely Populated City in the U.S.
• San Francisco is at the Heart of the Bay Area Economic Hub
– GDP of $820.9 Billion within San Jose-San Francisco-Oakland Combined
– Major Companies Headquartered in San Francisco Include Salesforce,
Dropbox, PG&E, Yelp, Twitter, Uber, Lyft, Mozilla, Airbnb, and more
• Neighbors Numerous Major Medical Centers, Drawing Additional Traffic to Site
– Kaiser Permanente, Sutter Health, & UCSF Hospitals and Medical
Campuses all within 2 Miles of Site
• Less than One Mile from The Presidio, Golden Gate Park, de Young Museum,
and California Academy of Sciences
– California Academy of Sciences and de Young Museum Draw Nearly 2.5
Million Visitors a Year
• 1.4 Miles from University of San Francisco Campus – Enrollment of 11,080
Leased to Walgreen Co. for 60 years from July 20, 2002 through August 31, 2062,
at an current annual rent of $555,000. Tenant originally had the right to terminate
the lease with twelve months’ notice in year 20, but has recently signed a lease
amendment extending the lease for an additional 8 years, with tenant’s first right
to terminate the lease occurring in year 28 on July 31, 2030 and every five years
thereafter. Rent is to increase by 10% in year 29.
The lease is net with tenant responsible for taxes, insurance, and maintenance,
excluding roof and structure. Though the tenant reimburses for the portion of HOA
fees attributable to insurance, they do not reimburse the full HOA fee, resulting in
annual slippage of approximately $19,580.
The tenant pays the higher of fixed rent or percentage rent. This lease has the
standard Walgreens percentage rent clause. The percentage rent is calculated as
2% of general sales and 0.5% of food and prescription sales (excluding third-party
prescription plans), minus real estate taxes and insurance costs.
Notwithstanding the above, it is unlikely Walgreens will ever pay percentage
rent, for this store or any other store. The calculated percentage rent excludes
prescriptions covered by insurance, HMO’s, or Medicare, and is thus far too difficult
This property will be delivered free and clear of permanent financing.
A possible non-recourse loan is available at approximately 50% loan to value
fixed for 10 years interest only at a 4.25% interest rate. Other attractive
Right of First Refusal
Walgreens has waived its right of first refusal for 12 month period through
March 2020. Following this period, Walgreens shall have the right of first
refusal to purchase the property on the same terms and conditions of those
of any bona fide offer received by the landlord within thirty (30) days of
notice of such offer.
The consolidated City and County of San Francisco is home to 852,469 residents
(2014 estimate) and is the second-largest city in the San Francisco Bay Area, behind
San Jose. With nearly 18,187 people per square mile, San Francisco is the secondmost densely populated city in the U.S., second only to New York City. It is ranked as
the seventh most affluent county in the U.S. by personal income. San Francisco is the
traditional focal point of the San Francisco Bay Area, and is a principal city of the San
Jose-San Francisco-Oakland Combined Statistical Area, the second largest combined
statistical area in California and the fifth largest in the U.S., with a gross domestic
product of $820.9 billion.
Strong high-tech employment and a high concentration of major companies and
industries has resulted in a high concentration of wealth and significant population and
economic growth. The technology industry draws many highly qualified international
workers to the region, with net foreign migration of more than 22,200 annually.
Though the San Francisco bay area region represents only 1.19% of California’s land
area and 7.8% of the population, it represents 15.3% of GDP, 50% of initial public
offerings, 54.5% of patent registrations, and 71.5% of venture capital activity in the
state. Job growth both within and outside of the technology sector has been strong,
with more than 47,000 new jobs added to the region in 2017 and unemployment at
2.1% within San Francisco. Recent legally mandated increases in the minimum wage,
as well as the region’s consistent economic growth, have contributed to rising average
wages within San Francisco as compared to the greater Bay Area.
Growth in the region has been a boon to real estate demand, driving historically low
vacancy rates and substantial increases in value. Median home prices increased by
7.2% in 2017, and price increases are exacerbated by limited available housing stock.
In the first six months of 2018, housing prices have risen even higher, with a $205,000
increase, approximately 14.5%, in San Francisco’s median housing price, the largest
six month price gain in more than 25 years. Approximately 68,000 new residential
units, primarily multi-family developments, are in the construction and development
pipeline, as well as more than 4 million square feet of new commercial and retail
The region is home to numerous colleges and universities, including the University
of California Berkeley, University of California Santa Cruz, Stanford University, Santa
Clara University, San Jose State University, San Francisco State University, and more.
The area boasts above-average levels of academic attainment, particularly due to
the high concentration of technology-related jobs in the area. The area is also home
to numerous federal research facilities including the NASA Ames Research Center,
located within the larger Moffett Federal Airfield, Lawrence Livermore National
Laboratory, and the Stanford Linear Accelerator center.