BURGER KING GRATIOT AVE ROSEVILLE, MI

Transcription

1 OFFERING MEMORANDUM BURGER KING GRATIOT AVE ROSEVILLE, MI Kevin J. Baker Daniel H. Kukes Principal Principal (248) (248) LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248)

2 Investment Highlights 4 Prepared by: Kevin J. Baker Principal (248) kbaker@landmarkcres.com Daniel H. Kukes Principal (248) dkukes@landmarkcres.com Halsted, Suite 150 Farmington Hills, MI Offering Summary 5 Tenant Profile 7 Property Condition 8 Site Plan 10 Macomb Mall Site Plan 12 Micro Aerial 13 Macro Aerial 14 Location Map 15 Market Overview 16 Top Employers 17 Demographics 18 Nation s Restaurant News Article 19 Team Bios 20 LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

3 This Confidential Memorandum has been prepared by Landmark Investment Sales d/b/a Landmark Commercial Real Estate Services, Inc. ( LANDMARK ) and is being furnished to you solely for the purpose of your review of the commercial property located at Gratiot Ave in Roseville, Michigan, further described as a freestanding Burger King building (the Property ). The material contained in this Offering Memorandum shall be used for the purposes of evaluating the Property for acquisition and shall not be used for any purpose or made available to any other person without the express written consent of Landmark Commercial Real Estate Services, Inc. ( Broker ). By accepting the Confidential Memorandum, you acknowledge and agree that: (1) all of the information contained herein and any other information you will be receiving in connection with this transaction, whether oral, written or in any other form (collectively, the Materials ), is confidential; (2) you will not reproduce the Confidential Memorandum in whole or in part; (3) if you do not wish to pursue this matter, you will return this Confidential Memorandum to LANDMARK as soon as practicable together with all other materials relating to the Property which you may have received from LANDMARK; and (4) any proposed actions by you which are inconsistent in any manner with the foregoing agreements will require the prior written consent of LANDMARK. This Confidential Memorandum has been prepared by LANDMARK, based upon certain information pertaining to the Property and any information obtained from LANDMARK to assist interested parties in making their own evaluation of the Property is offered on a no representation or warranty provision other than customary warranties of title and is sold on an as-is, where-is basis and with all faults. The material and transaction does not purport to be all inclusive. This Confidential Memorandum contains descriptive materials, financial information and other data compiled for the convenience of parties interested in the Property. The Materials are being delivered by LANDMARK to prospective investors with the understanding that it is not all inclusive and that it is qualified in its entirety by independent investigation by prospective investors of those matters which they deem appropriate in evaluating this offering without reliance upon LANDMARK, the Broker or any of their respective affiliates or any of the information set out in the Materials. Neither LANDMARK, the Broker, nor any of their respective affiliates have independently verified any of the information contained herein or in any of the Materials, and no representations or warranties as to the accuracy or completeness thereof or of any other kind whatsoever are made or intended and none should be inferred. LANDMARK, for itself and its affiliates of the Property, expressly disclaim any and all liability for statements or representations, express or implied, contained herein or for omissions from the Materials or for any other written, oral or other format of communication transmitted to a prospective investor in the course of its evaluation of the proposed transaction. All summaries and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the actual documents and/or financial statements, which upon request may be made available. The terms and conditions described herein are subject to change without notice. This Confidential Memorandum does not constitute an offer to accept any investment proposal but is merely a solicitation of interest with respect to the investment described herein. The Confidential Memorandum does not constitute an offer of security. The investment described herein may be financed or withdrawn from the market, without prior notice. By accepting this Confidential Memorandum you agree to release LANDMARK and hold it harmless from any kind of claim, expense, or liability arising out of your discovery or purchase of the Property. LANDMARK reserves the right to request the return of the Materials at any time. Ownership of the Property reserves the right to negotiate with one or more prospective investors at any time. LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

4 INVESTMENT HIGHLIGHTS Above Market Rental Increases Lease provides 12.5% increases every five years versus industry standard 7.5%- 10.0% increases. Rare Percentage Rent Lease provides additional rent of 8.5% of gross sales in excess of the natural breakpoint ($1,801,941). Based on sales trend. Tenant has reached breakpoint YTD. Therefore, we project $15,000 of percentage rent in Strong Tenant/Operator GPS Hospitality is a seasoned operator with over 30 years experience in the QSR business and a 196 store operator for Burger King ( Irreplaceable Location The site is located on the pad of Macomb Mall (933,000 SF) which is undergoing a transformative renovation. Macomb Mall has added Dick s Sporting Goods and has signed leases with ULTA, rue21, H&M, Shoe Carnival, Old Navy, Sprint, Bath & Body Works, Potbelly Sandwich Works, Chipotle, and T-Mobile. Strong Historical Sales The store shows a positive trend for the last several years, which indicates the high likelihood of reaching percentage rent threshold and delivering an investor higher yield. Rent to Sales Ratio The rent was originally based on a 8.5% rent to sales ratio. This is considered healthy and widely accepted among industry standards. Absolute Net Lease Zero Landlord responsibilities. LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

5 RENT SCHEDULE Years Option Period 1 Option Period 2 Annual Base Rent 1-5 $153, *(current) 6-10 $171, $192, $215, $241, $269, $302, $338, *Base Rent does not include Percentage Rent PERCENTAGE RENT Annual Percentage Rent: Equal to 8.5% in excess of breakpoint Breakpoint Year 1-5: $1,801,941 Payment Schedule: Monthly installments paid on 15 th of every month in lease year in which breakpoint is exceeded Proj. Year 1 Percentage Rent: $15,000 LEASE DETAILS Lease Term: Remaining Lease Term: Lease Type: Landlord Responsibilities: 20 years years Absolute net None Rent Commencement: 7/15/2015 Lease Expiration: 6/30/2035 Tenant: GPS Hospitality Partners III, LLC Financials: Unit level and entity level Financial Reporting: Annually within 30 days of end of lease year PRICING Price: $2,784,818 Cap Rate: 5.50% Effective Cap Rate: 6.04%* *projection based on 2015 percentage rent PROPERTY DETAILS Year Built: 2006 Rentable Square Feet: 2,943 SF Land Area: 0.62 acre Ownership: Fee Simple Taxes: Tenant pays Repairs & Maintenance: Tenant pays Insurance: Tenant pays LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

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7 TOM GARRETT GPS Hospitality Partners III, LLC Tom Garrett is a seasoned Quick Service Restaurant operator with over 30 years experience having served as both CEO of Arby s Restaurant Group and President of RTM Restaurant Group. Garrett has deep experience as a consolidator, acquiring and turning around underperforming franchisees. In 2012, Garrett entered the Burger King system by forming GPS Hospitality, LLC to acquire 42 company-owned Burger King restaurants in Atlanta, Georgia, establishing a strong platform for growth. Today he operates 196 Burger King restaurants in multiple states. GPS Hospitality Partners III, LLC includes 60 Burger King stores with a healthy equity position and balance sheet. BURGER KING Burger King Worldwide is a Delaware corporation that franchises and operates fast food hamburger restaurants, principally under the Burger King brand. Since the company s founding as a single restaurant in Miami, Florida in 1954, they have grown to and become the world s second largest fast food hamburger restaurant chain as measured by the total number of restaurants. As of December 31, 2013, the Burger King system consisted of 14,000 restaurants in over 98 countries and U.S. territories worldwide. Burger King generates revenues from three sources: (1) retail sales at Company restaurants; (2) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; and (3) as property income derived from properties they lease or sublease to their franchisees. Approximately 99% of current restaurants are franchised and they have a higher percentage of franchise restaurants to Company restaurants than their major competitors. They believe that their high percentage of franchise restaurants provides them with a strategic advantage because the capital required to grow and maintain the Burger King system is funded primarily by franchisees. In 2010, 3G Capital, along with its partner, Berkshire Hathaway, purchased Burger King Corporation, making it a privately-held company. They eventually merged the company with Canadian based chain Tim Hortons under the Canadian based parent company, Restaurant Brands International. LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

8 Property Description: Address: Freestanding Burger King restaurant Gratiot Ave Roseville, MI Building Square Footage: 2,943 SF Occupancy: 100% Land Area: 0.62 acre Tax Parcel: Year Built: 2006 Zoning: B-3 (General Business) Trade Area Statistics 1 MILE 2 MILE 3 MILE 2015 Population: 11,824 49, , Households: 5,194 21,560 48, Avg. HH Income: $52,400 $55,998 $57, Median HH Income: $43,649 $46,868 $47, Total Businesses: 463 2,116 4, Total Employees: 5,877 23,027 40,455 Traffic Counts: Gratiot Ave = 66,400 CPD Masonic Blvd = 26,944 CPD

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12 MACOMB MALL 933,000 SF New Leases: Dick s Sporting Goods ULTA Old Navy H&M rue21 Shoe Carnival Potbelly AT&T Chipotle Payless Shoes Champs Sports Visionworks Bath & Body Works

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15 STERLING HEIGHTS MT. CLEMENS BLOOMFIELD HILLS TROY BIRMINGHAM MADISON HEIGHTS WARREN ROSEVILLE ST. CLAIR SHORES SOUTHFIELD ROYAL OAK DETROIT GROSSE POINTE LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

16 INCREDIBLE REAL ESTATE Burger King is situated along Gratiot Ave (66,400 CPD) with exceptional visibility and frontage. Located at the outlot of Macomb Mall (933,000 SF) which is undergoing a massive renovation and transformation. DENSE, IN-FILL, AND GROWING DEMOGRAPHICS The immediate trade area features over 108,000 people in a 3-mile radius earning average household incomes exceeding $57,700/year. This is an ideal demographic for Burger King as evidenced by their historical sales. STRONG TENANT DEMAND The Macomb Mall (Gratiot corridor) trade area is experiencing significant revitalization and demand from tenants. The following tenants have signed new leases: Dick s, ULTA, H&M, Old Navy, rue21, Potbelly, Chipotle, AT&T, and Party City, to name a few. STRONG RETAILER/RESTAURANT VOLUMES Site is surrounded by success stories of strong sale volumes including multiple big box, junior box, quick serve restaurants, and sit-down restaurants. Inquire with broker for specific volumes. LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.

17 Company Number of Employees General Motors 12,668 Chrysler Group LLC 10,406 U.S. Government 6,671 Ford Motor Company 4,135 St. John Providence Health System 3,558 Henry Ford Health System 3,328 Utica Community Schools 2,711 Macomb County 2,218 General Dynamics Land Systems 2,079 McLaren Macomb 1,561

18 DESCRIPTION 1 MILE 2 MILE 3 MILE POPULATION HOUSEHOLDS RACE 2015 Estimated Population 11,824 49, , Projected Population 12,219 51, , Census Population 11,613 49, , Census Population 11,960 50, ,886 Projected Annual Growth 2015 to % 0.5% 0.6% Historical Annual Growth 2000 to % -0.1% -0.2% 2015 Estimated Households 5,194 21,560 48, Projected Households 5,449 22,506 50, Census Households 4,881 20,649 46, Census Households 4,926 20,625 46,550 Projected Annual Growth 2015 to % 0.9% 0.9% Historical Annual Growth 2000 to % 0.3% 0.3% 2015 Est. White 76.0% 79.4% 81.8% 2015 Est. Black 17.9% 15.3% 13.3% 2015 Est. Asian or Pacific Islander 1.8% 1.9% 1.7% 2015 Est. American Indian or Alaska Native 0.3% 0.3% 0.3% 2015 Est. Other Races 4.0% 3.0% 2.8% INCOME BUSIN ESS 2015 Est. Average Household Income $52,400 $55,998 $57, Est. Median Household Income $43,649 $46,868 $47, Est. Per Capita Income $23,020 $24,252 $25, Est. Total Businesses 463 2,116 4, Est. Total Employees 5,877 23,027 40,455

19 Jonathan Maze Mon, Company credits remodels, menu and marketing for improvement Same-store sales increased 6.7 percent at Burger King in the second quarter in the chain s best quarterly performance in nearly a decade, parent company Restaurant Brands International said on Monday. Those results include 7.9 percent same-store sales growth in the U.S. and Canada, best for the brand in nine years, RBICEODaniel Schwartz said on the company s earnings call Monday. He said that the DESCRIPTION sales strength comes from a four-pillar plan involving improvements 1 MILE in the 2 company s MILE 3 menu, MILE marketing, operations and reimaging. We re seeing strength across multiple dayparts, Schwartz said. We really attribute this to our four-pillars plan, and driving consistent execution on that plan. Sales in the second quarter ended June 30 were strong at both concepts owned by Oakville, Ontario-based Restaurant Brands International. Tim Hortons global same-store sales rose 5.5 percent in the second quarter, including 5.4 percent in its home Canadian market and 7 percent in the U.S. Total revenues in the quarter fell 9 percent to $1.04 billion from $1.06 billion in the same period a year ago before 3G Capital, the owner of RBI, engineered a merger of the two chains, Tim Hortons and Burger King, in December Net income fell nearly 70 percent to $9.6 million, or 5 cents per share, from $31.3 million or 15 cents a year ago. On an adjusted basis, profits rose 27 percent to $143 million from $112 million. Burger King s sales continue to build on the chain s momentum. Same-store sales have risen for nine quarters as the company has taken some market share in the U.S. It has also expanded aggressively in international markets. Burger King has 14,528 restaurants worldwide after adding 141 locations in the period, all but 11 in international markets. The chain has used a menu strategy of fewer, more impactful products, Schwartz said, which has helped improve sales even while avoiding operational complexity that has been dogging the company s primary competitor, McDonald s Corp. For instance, the company s A1 Hearty Mozzarella Bacon Cheeseburger has only one new item added to the kitchens, Schwartz said. The lack of operational complexity is helping operators make products faster. To the extent that we ve improved on a number of products simple, high-selling, profitable products that translates to better speed, Schwartz said. But he added that the company could improve that speed and is working toward that end. There is an opportunity to improve speed and give customers a better drive-thru experience, Schwartz said. There will be a whole lot to come for many years on that front. By focusing on those simple items, and increasing sales in the process, Burger King has made things more profitable for operators. Though executives wouldn t provide specifics on how profitable franchisees have been, they did say that those profits are at historic levels. This has been the strongest cash flow quarter in many, many years, Schwartz said. Franchisees are making stronger returns, they have better cash flow than ever before. That, he said, has an impact on the brand as a whole. The company has been reimaging more restaurants 40 percent of the brand s U.S. locations have been reimaged, the company said. Reimaged stores generate higher sales. The more profitability restaurants can generate, the more they can reinvest, the more they can reimage, Schwartz said. That continues our positive momentum, of delivering a great guest experience. The return of "The King" The marketing recently included a return of Burger King s The King at places like the Kentucky Derby and the Mayweather-Pacquiao fight, and lately in some television ads. Those appearances generated 1 billion media impressions, Schwartz said. But he added that the return of The King doesn t mean Burger King is going to return to its male-centric advertising message. If you go back in time, our marketing message had narrowed a bit, despite the fact that our guest base is everyone, Schwartz said. We ve broadened our message so it s much more inclusive and reflects who our guest base is. There s no silver bullet to driving sales growth. As far as The King goes, you saw The King make a few appearances this quarter. We re pleased with the amount of attention he was able to attract from the world, so stay tuned. As for Tim Hortons, the brand continued to increase sales both in the U.S. and in its home market of Canada. The company has 4,776 locations after adding 52 locations, mostly in Canada. The chain didn t add any locations in the U.S. which RBI calls a must-win market. But Schwartz preached patience, noting that unit economics are improving and the company and is working operators to develop new units. Five years ago, Burger King was only growing a couple hundred units a year, Schwartz said. It took us a year to learn the business, set up the right master franchise joint venture partners, and then we started to see the benefit of unit growth. Expect us to take time on the Tim Hortons business both in the U.S. and internationally as we meet with prospective partners. It ll take some time. It doesn t happen overnight. Source URL:

20 Kevin Baker is a Principal and Co-Founder of Landmark Investment Sales. Kevin specializes in the sale of retail shopping centers and single tenant net lease investment properties across all property types. He currently represents some of the nation s largest institutional funds, private equity funds, and high net worth investors in listing investment properties all over the country. Since 2010, Kevin has closed deals totaling over 5,000,000 SF valued at over $450,000,000. Prior to 2010, Kevin worked extensively at Landmark as a broker specializing in tenant representation and landlord representation completing in excess of 100 lease & sale transactions. Kevin joined Landmark in 2005 as a Sales Associate. Prior to Landmark, Kevin attended Michigan State University and University of Michigan-Dearborn where he studied finance. Kevin began his real estate career in 2001 when he founded Baker Real Estate Holdings, specializing in acquisition and management of a student housing portfolio at Michigan State University. kbaker@landmarkcres.com Daniel Kukes is a Principal and Co-Founder of Landmark Investment Sales. Daniel specializes in the sale of retail shopping centers, medical office, and single tenant net lease investment properties across all property types. He currently represents some of the nation s largest institutional real estate funds, private equity group, and high net worth investors in acquiring and listing investment properties all over the country. Since 2010, Daniel has closed deals totaling over 5,000,000 SF valued at over $450,000,000. Daniel joined Landmark in 2009 as an Associate Broker. He began his real estate career at NAI Farbman where he focused on shopping center leasing and retail tenant representation. After five years at NAI Farbman, Daniel joined DAP Investments as a partner responsible for retail development, acquisitions and leasing. While there, he developed several single tenant and shopping center projects in Michigan and Illinois. Daniel is a graduate of Michigan State University with a Bachelor of Arts degree in Pre-Law & Society. dkukes@landmarkcres.com LANDMARK COMMERCIAL REAL ESTATE SERVICES, INC HALSTED RD SUITE 150 FARMINGTON HILLS, MI (248) The information contained herein was obtained from sources believed reliable; however, Landmark Commercial Real Estate Services, Inc. makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.