BURGER KING. MOUNT Vernon, WA. Absolute Net Single-Tenant Asset With 21-Year Remaining Term Freeway Dr, Mount Vernon, WA, 98273

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1 BURGER KING MOUNT Vernon, WA Mount Vernon, WA Absolute Net Single-Tenant Asset With 21-Year Remaining Term 1812 Freeway Dr, Mount Vernon, WA, 98273

2 BURGER KING MOUNT VERNON PRICE: $2,400,000* CAP: 5.90% Burger King Mount Vernon is an absolute netleased asset with 21-years remaining and strong store sales in this location. This franchised location benefits from a successful multi-unit operator with over 30 years of industry experience. Burger King has a 37-year tenure at the Property and underwent an extensive renovation of the Premises in LEASABLE SF.... ±3,943 SF PRICE PER SF.... $609 LAND AREA... ±38,591 SF YEAR BUILT (Remodeled 2015) LEASE EXPIRATION.... 5/9/2039 PARKING.... ±46 Spaces or 11.7/1,000 SF *Based on rental income in 2019 plus percentage rent payments. Percentage rent based on 8.5% of the average sales over Difference in current rental payments will be subject to an escrow holdback. ADDRESS: 1812 Freeway Dr, Mount Vernon, WA, BURGER KING - MOUNT VERNON 2

3 Core Characteristics 21-YEARS REMAINING STORE PERFORMANCE PROVIDES UPSIDE ABSOLUTE NET LEASE WITH 23-YEAR REMAINING TERM The Property currently operates with an absolute net ground lease, which will terminate in May A new 20-year lease (fee simple) will commence in June The new lease term will keep the absolute net expense structure in place and provide an investor with no landlord responsibilities for the entire term. CONSISTENT STORE SALES PROVIDE STABILITY AND UPSIDE Burger King has consistently exhibited strong store sales in this location. Healthy rent to sales ratios give stability while a nearly 8% increase in 2017 sales exhibits strong growth. The current sales growth following the store remodel provides potential yield upside. Contact Capital Pacific for more details regarding store sales. HIGHLY VISIBLE LOCATION WITH STRONG TRAFFIC COUNTS The Property is located within one block of a main Interstate 5 off-ramp and among several major retailers including a Lowe s Home Improvement and a Walmart store within close proximity. The location benefits from a strong trade area draw to these national retailers and is exposed to over 70,000 vehicles per day from Interstate 5. ESTABLISHED TENANCY WITH EXTENSIVE UPGRADES The site has operated as a quick service hamburger restaurant for over 37 years since In 2015, Burger King renovated the interior, exterior and sidewalk areas to enhance the visitor experience and increase sales volumes moving forward. SUCCESSFUL MULTI-UNIT FRANCHISEE The Burger King franchisee at the Property currently operates five Burger King locations in Skagit and Whatcom counties and has 30+ years of industry experience with Burger King. Additionally, the franchisee has personally guaranteed the rent and additional rent payments for a 10-year period. BURGER KING - MOUNT VERNON 3

4 Quick Stats About the FRANCHISEE $4.05B FOUNDED IN YEARS OF EXPERIENCE 2015 SALES MIAMI, FL LOCATIONS IN SKAGIT & WHATCOM COUNTIES IN FAST FOOD INDUSTRY 15,000+ LOCATIONS IN 100 COUNTRIES BURGER KING BURGER KING - MOUNT VERNON 4

5 Retail Corridor CASCADE MALL CASCADE MALL AMC Theatres Applebee s Chuck E. Cheese s David s Bridal Dollar Tree JCPenney Macy s OfficeMax Outback Steakhouse Popeyes Red Robin Sleep Country T.J.Maxx Target THE OUTLET SHOPPES AT BURLINGTON 5 FOR A FULL LIST OF RETAILERS, CLICK HERE THE OUTLET SHOPPES AT BURLINGTON Coach Factory Eddie Bauer Filson Gap Outlet Jones New York lululemon athletica Nike Nine West Pendleton Puma Vitamin World BURLINGTON CROSSINGS FOR A FULL LIST OF RETAILERS, CLICK HERE BURLINGTON CROSSING Ashley Furniture Bed Bath and Beyond Best Buy Five Guys Burger Kohl s Men s Warehouse Old Navy Olive Garden PetSmart Ross Dress For Less Starbucks 71,000 DAILY ADDITIONAL SURROUNDING RETAILERS 5 Ace Hardware Arby s AutoZone Burger King Burlington Coat Factory Cascade Place Chipotle Costco Denny s Dick s Sporting Goods Discount Tire Dollar Tree Fred Meyer Goodwill Grocery Outlet IHOP Jiffy Lube JoAnn Fabrics KFC Lowes NAPA Auto Parts Panda Express Panera Bread PetSmart Rite Aid Safeway Shari s Restaurants Starbucks Subway Taco Bell Taco Del Mar Taco Time Walmart Supercenter Wendy s BURGER KING BURGER KING - MOUNT VERNON 5

6 Aerial 71,000 DAILY 11,000 DAILY FREEWAY DR BURGER KING BURGER KING - MOUNT VERNON 6

7 Site Plan SITE PLAN KEY PYLON SIGN LAND AREA ±38,591 SF LEASABLE SF PARCEL OUTLINE ±3,943 SF DRIVE-THRU DRIVE-THRU SUBJECT TRASH/RECYCLE PYLON SIGN INGRESS/EGRESS FREEWAY DR 11,000 DAILY Site Plan Not To Scale BURGER KING - MOUNT VERNON 7

8 Featured Photos BURGER KING - MOUNT VERNON 8

9 Financial Summary PRICE $2,400,000 Capitalization Rate: 5.90% NET OPERATING INCOME SUMMARY SCHEDULED INCOME Per SF Scheduled Rent: 5/10/2019 $30.43 $120,000 Percentage Rent:* $5.33 $21,000 Equals: Effective Gross Income $35.76 $141,000 Less: OPERATING EXPENSES Per SF CAMS NNN Property Taxes NNN Insurance NNN Total Operating Expenses NNN - Equals: NET OPERATING INCOME $35.76 $141,000 *Based average sales volumes for 2015, 2016 and 2017 multiplied by a percentage rent of 8.5%. 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. BURGER KING - MOUNT VERNON 9

10 Rent Roll TENANT INFO TERM RENT SUMMARY Tenant Name Size Date Monthly Rent Annual Base Rent Annual % Rent Annual Total XR Foods, LLC dba Burger King 3,943 Current $3,325 $39,898 $10.12 Occupancy Date : 5/10/1979 Lease Expiration : 5/9/2039 5/10/2019 $11,750 $120,000 $21,000 $141,000 $30.43 PSF Lease Notes Option 1 5/10/2039 $11,750 $120,000 $21,000 $141,000 $35.76 Option 2 5/10/2044 $11,750 $120,000 $21,000 $141,000 $35.76 Option 3 5/10/2049 $11,750 $120,000 $21,000 $141,000 $35.76 Option 4 5/10/2051 $11,750 $120,000 $21,000 $141,000 $35.76 Comments: Lease is an Absolute Net with no Landlord responsibilities. Starting in May 2019 monthly rent is the greater of $10,000 or 8.5% of Tenant's monthly sales. Alongside base rent, Tenant pays monthly percentage rent in an amount of 8.5% of monthly reported sales beyond a natural breakpoint starting in May Tenant has a Right of First Refusal to purchase the Premises for 30 days after Landlord receives an offer deemed acceptable. Lease has a personal guarantee for a period of 10 years from the lease commencement date. The Primary lease is assigned to the Landlord, NW Acquisitions from Joel and Barbara Douglas, and the sublease is assigned to the tenant, XR Foods, Inc. from Bruce and Kathy Broderick. Upon expiration of the sublease on 5/9/2019, XR Foods, Inc. will lease directly from NW Acquisitions, LLC. Capitalized income is based on rental income as of 5/10/2019. The difference in total rent between the date of the sale and 5/9/2019 will be held back at escrow, an amount of approximately $120,000. Current Totals: 3,943 $3,325 $39,898 $10.12 his 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. 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. BURGER KING - MOUNT VERNON 10

11 Lease Abstract PERCENTAGE RENT 8.5% of gross sales over a natural breakpoint. Percentage rent begins to pass through in May of PREMISES/TERM TENANT: XR Foods, INC (Sublessee until 2019, then will become sole Lessee) LANDLORD: NW Acquisitions LEASE TYPE: Absolute NNN LEASE EXPIRATION: May 9, 2039 OPTION PERIODS: Tenant has four, five-year options to extend. If Tenant elects not to extend they must notify the Landlord of the pending termination no later than 270 days before expiration. LESSEE EXPENSE OBLIGATION Tenant is responsible for all operating expenses including taxes, insurance, utilities and all maintenance and repair of the Premises. RIGHT OF FIRST REFUSAL Tenant shall have the right of first refusal to purchase the Property within 30 days of Landlord receiving an offer to purchase the Property. PERSONAL GUARANTEE Lease is personally guaranteed by persons with a substantial interest in the Tenant operation for a period of 10 years. BASE RENT DATES MONTHLY ANNUAL PSF Current Lease Current - 5/9/19 $3,325 $39,898 $10.12 New Lease 5/10/19 5/9/39 $10,000 $120,000 $30.43 Option 1 5/10/39 5/9/44 $10,000 $120,000 $30.43 Option 2 5/10/44 5/9/49 $10,000 $120,000 $30.43 Option 3 5/10/49 5/9/54 $10,000 $120,000 $30.43 Option 4 5/10/54 5/9/59 $10,000 $120,000 $30.43 BURGER KING - MOUNT VERNON 11

12 Q & A with Capital Pacific Q: IS THE CAP RATE BASED ON THE RENT BEGINNING IN MAY 2019? A: Yes, the cap rate is based on the NOI beginning in May 2019 when the initial lease term converts to the new 20-year lease at $120,000 annually. The NOI will also include percentage rent based on the average sales volumes between The sale will provide an escrow holdback for the difference in rent between the date of the sale and May 9, 2019, approximately $120,000. Q: DOES BURGER KING PAY PERCENTAGE RENT? A: Yes, the tenant has a percentage rent of 8.5% of gross sales over a natural breakpoint that will begin to take effect in May Store sales in this location are strong and will likely yield consistent additional rental income. Please contact Capital Pacific for details. IS THIS A GROUND LEASE? A: The building is currently operated under a ground lease that will be converted into a fee simple agreement concurrent with the commencement of the new term in Q: DOES TENANT HAVE A FIRST RIGHT TO PURCHASE THE PROPERTY? A: Yes, the tenant has the first right of refusal to purchase the Premises. If the seller receives an offer acceptable to them, the tenant will have 30 days to exercise their option to purchase. Q: WHAT IMPROVEMENTS HAVE BEEN MADE TO THE BUILDING SINCE CONSTRUCTION? A: In 2015, the current operator completed a renovation of the building exterior, interior and sidewalk areas. The construction included new facades on the building exterior and re-paving and striping of the parking areas as well as the sidewalk areas. The interior also underwent renovation inclusive of dining room and restroom updates. BURGER KING - MOUNT VERNON 12

13 Area Insight & Demos POPULATION 1-Mile 3-Mile 5-Mile ,590 37,846 54, ,741 39,451 56, ,182 41,024 58, HOUSEHOLD INCOMES 1-Mile 3-Mile 5-Mile Average $66,737 $67,106 $68,259 Median $50,254 $54,868 $56,950 CANADA 52 MILES Bellingham 29 MILES 5 Miles Mt Vernon 3 Miles BURGER KING 1 Mile 62 MILES seattle BURGER KING - MOUNT VERNON 13

14 Mount Vernon OVERVIEW Mount Vernon is the largest city (12.61 square miles) in Skagit County intersected by Interstate 5 just one hour north of Seattle between Everett and Bellingham. Mount Vernon lies on the banks of the Skagit River and was first settled in 1870 as a logging town. Although the early economy of Mount Vernon and Skagit Valley was led by logging and then farming, the current economy in the Skagit Valley is led by the manufacturing and retail industries. ENVIRONMENT Mount Vernon is known for its spectacular natural environment. The city is world famous for its annual Tulip Festival, as the local climate provides millions of tulips grown in the Skagit Valley. The Tulip Festival attracts over one million annual visitors. OVERVIEW Mount Vernon is the regional center for finance, technology, cultural, legal, health care, education and government. Mount Vernon offers a vibrant mix of office, retail, restaurants and professional services on the shores of the Skagit River. MOUNT VERNON S LARGEST EMPLOYERS COMPANY ± EMPLOYEES Skagit Valley Hospital 1,700 Skagit Valley College 1,100 Mount Vernon School District 1,000 Skagit County 684 Draper Valley Farms 403 WalMart 400 City of Mount Vernon 229 SKAGIT COUNTY SKAGIT COUNTY S LARGEST EMPLOYERS COMPANY ± EMPLOYEES Skagit Regional Health 2,000 Mount Vernon School District 1,000 Shell Puget Sound Refinery 726 Island Hospital 718 Janicki Industries 695 Skagit County Government 636 Swinomish Casino % CURRENT UNEMPLOYMENT BURGER KING - MOUNT VERNON 14

15 DAVID GELLNER (206) SEAN TUFTS (206) MICHAEL HORWITZ (503) SEAN MACK (503) SCOTT FRANK (503) KEVIN ADATTO (503) PETER DUNN (503) [ Copyright 2017 Capital Pacific LLC ]