TIC PROPERTY - SAN ANTONIO, TEXAS
10715 Bandera Road San Antonio, TX
Total Purchase Price - $5,729,350
80% Assumable Loan - $4,583,500
- Building Size 14,600 square feet
- Lease Expiration February 28, 2039
- NOI $351,174
- S&P Rating BBB+
CVS is obligated to pay all taxes and assessments with respect to the property and is requried to maintain the insurance coverage specified in the lease.
10715 Bandera Road San Antonio, TX
San Antonio is the second-largest city in the state of Texas and the seventh-largest city in the United States with a population of 1.3 million.
Zero-Coupon
This property is considered a “zero-coupon” real estate ownership opportunity as there is an assumable, non-recourse loan already in place and, by design, “zero” cash flow will be produced. Instead, the lease payments go directly to repaying the loan. At the end of the initial lease term you own the property free and clear.
Some of the lease specifics are:
- Lease guarantor: CVS Caremark Corporation
- Date of lease commencement: September 1, 2013
- Initial term expiration date: January 31, 2039
- Options to extend lease: Ten 5- year options
- Lease type: Absolute Net Lease (NNN)
Property Summary
- Address 10715 Badera Road, San Antonio, TX
- Tenant CVS #10217
- S&P Rating BBB+
- Building Size 14,600 square feet
- Lease Expiration February 28, 2039
- Renewal Options Ten 5-year renewal options
- NOI $351,174
- Lease Type Bond
- Approximate Purchase Price $5,729,350
- Approximate Note Balance $4,583,500
- Total Equity Required (over debt) $1,145,850
- Loan To Value 80%
- % Equity 20%
- Maturity 2/28/2039
- Debt Service $351,174
- Minimum Ownership 25% ($286,460 equity)
Location
San Antonio is the second-largest city in the state of Texas and the seventh-largest city in the United States with a population of 1.3 million. It was the fastest growing of the top 10 largest cities in the United States from 2000-2010. The city is home to one of the largest military concentrations in the United States. The defense industry in San Antonio employs over 89,000 and provides a $5.25 billion impact to the city’s economy. San Antonio is also home to five Fortune 500 companies including Valero Energy Corp, Tesoro, Clear Channel Communications, USAA, and NuStar Energy.
Self-Amortizing Financing
The monthly debt service under the loan is equal to the montly base rent under the lease and CVS pays the monthly base rent directly to the lender.
By structuring the loan with a monthly debt service payment equal to the monthly base rent, a high loan-to-value ratio can be achieved, while also fully amortizing the loan within the intial term of the lease. Although no cash flow is available, investors do earn a yield on their investment due to the principal repayment of the loan.
The Tenant
Through its integrated offerings across the entire spectrum of pharmacy care, CVS is uniquely positioned to provide greater access, to engage plan members in behaviors that improve their health and to lower overall health care costs for health plans, plan sponsors, and their members. CVS Caremark is a market leader in mail order pharmacy, retail pharmacy, specialty pharmacy, retail clinics and is a leading provider of Medical Part D Prescription Drug Plans. As one of the country’s largest pharmacy benefits managers (PBMs), CVS provides access to a network of more than 64,000 pharmacies. As of December 31, 2012, CVS operated 7,508 locations.
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