OFFERING MEMORANDUM W E N D Y S JACKSONVILLE, FL
2 INVESTMENT OVERVIEW INVESTMENT OVERVIEW Marcus & Millichap is pleased to present Wendy s in Jacksonville, the most populous city in Florida. There are more than eight and a half years remaining on Wendy s absolute net lease, where the tenant is responsible for all expenses associated with the asset. The lease features 7.5 percent rent increases every five years and in all four, five-year extension options. The lease is corporately guaranteed by WEN SOUTH, Limited Liability Company (LLC), a wholly owned subsidiary of Meritage Hospitality Group, Incorporated (Inc). As of January 2017, Meritage Hospitality Group operated 175 Wendy s quick service restaurants, making them one of the largest operators in the system. Meritage consistently ranks in the Mega 99 list of largest multi-unit franchisee organizations, and plans to add an additional 55 Wendy s restaurants to their operations by the end of the first quarter of 2018. The subject property is equipped with a drive-thru and is highly visible along Beach Boulevard, one of the major corridors in Jacksonville. More than 40,500 vehicles pass by this asset daily. This area is also a dense trade region. There is more than 1.2 million square feet of retail within one mile. National credit anchors include Target, Regal Cinemas, and Publix. Wendy s benefits from the strong demographics. There are more than 148,000 residents with an average household income (AHHI) greater than $92,000 within five miles. Additional tenants in the immediate vicinity include: Planet Fitness, FedEx Ship Center, McDonald s, Advance Auto Parts, BB&T, Denny s, Zaxby s, Arby s, Panda Express, Jersey Mike s, Mattress 1 One, Dunkin Donuts, Chick-fil-A, and many more.
3 INVESTMENT OVERVIEW Wendy s in Jacksonville The Most Populous City in Florida Income Tax Free State Absolute-Net Lease Zero Landlord Responsibilities More Than Eight and Half Years Remaining Hedge Against Inflation 7.5 Percent Rent Escalations Every Five Years Corporately Guaranteed by WEN SOUTH, Limited Liability Company (LLC) Wholly Owned Subsidiary of Meritage Hospitality Group, Incorporated (Inc) 175-Unit Wendy s Operator Significant Credit Upgrade Pending Meritage Hospitality Group, Incorporated (Inc) Enter Asset Purchase Agreements to Acquire 55 Additional Wendy s Units Transaction to Close During First Quarter of 2018 Equipped With a Drive-Thru Highly Visible Along Beach Boulevard Major Corridor With More Than 40,500 Vehicles Per Day (VPD) Dense Trade Area More Than 1.2 Million Square Feet of Retail within One Mile Anchored by National Credit: Target, Regal Cinemas, and Publix Significant Capital Projects Along Beach Boulevard Ascho Multi-Use Building $2.2 Million in Combined Construction Permits Strong Demographics Jacksonville Ranked Number Five in America s Fastest Growing Cities (Forbes 2017) More than 148,000 Residents with an Average Household Income (AHHI) Greater Than $92,000 Within Five Miles
4 FINANCIAL OVERVIEW FINANCIAL OVERVIEW PRICE $1,516,758 CAP RATE 6.00% NOI $91,005 PRICE PER SQUARE FOOT $556.40 RENT PER SQUARE FOOT $33.38 YEAR BUILT 1998 APPROXIMATE LOT SIZE 1.0 Acre GROSS LEASEABLE AREA 2,726 TYPE OF OWNERSHIP Fee Simple LEASE GUARANTOR Corporate Guaranty LEASE TYPE Absolute Net ROOF AND STRUCTURE Tenant Responsible
5 LEASE SUMMARY LEASE SUMMARY LEASE COMMENCEMENT DATE 12/21/2006 LEASE EXPIRATION DATE 12/20/2026 LEASE TERM 20 Years ANNUALIZED OPERATING DATA Base Rent Annual Rent Monthly Rent Increases CURRENT 12/20/2021 $91,005 $7,584 12/21/2021 12/20/2026 $97,831 $8,153 7.50% TERM REMAINING 8.5+ Years OPTIONS INCREASES 7.5% Every 5 12/21/2026 12/20/2031 $105,168 $8,764 7.50% OPTIONS TO RENEW OPTIONS TO TERMINATE FIRST RIGHT OF REFUSAL 4, 5-Year None Yes 12/21/2031 12/20/2036 $113,056 $9,421 7.50% 12/21/2036 12/20/2041 $121,535 $10,128 7.50% 12/21/2041 12/20/2046 $130,650 $10,888 7.50%
6 TENANT OVERVIEW TENANT OVERVIEW MERITAGE HOSPITALITY GROUP WENDY S Meritage Hospitality Group, Incorporated (Inc) operates quick-service and casual dining restaurants. The company operates restaurants under the Wendy s, Twisted Rooster, Crooked Goose, Freighters Eatery & Taproom, and Wheelhouse Kitchen & Cocktails brand names. The company was formerly known as Thomas Edison Inns, Incorporated (Inc) and changed its name to Meritage Hospitality Group Incorporated (Inc) in May 1996. Meritage Hospitality Group, Incorporated (Inc) was incorporated in 1986 and is headquartered in Grand Rapids, Michigan. Through its development and acquisition efforts, the Company is one of the nation s largest Wendy s franchisees, operating more than 170 Wendy s restaurants in 2017. Meritage continues to distinguish itself as a leader and innovator in the quick service restaurant segment, striving for best in class results through a performance based culture committed to operational excellence, strategic acquisitions and real estate development. On December 6, 2017, Meritage Hospitality Group, Incorporated (Inc) announced the acquisition of 2 Wendy s restaurants in Virginia and entered into three independent definitive asset purchase agreements to acquire a total of 55 Wendy s restaurants located in the Eastern and Mid-Western United States. The transactions are subject to customary due diligence and standard approvals with closings scheduled to be completed during the first quarter of 2018. Wendy s is an American international fast food chain restaurant founded by Dave Thomas on November 15, 1969, in Columbus, Ohio. The company moved its headquarters to Dublin, Ohio on January 29, 2006. As of 2016, Wendy s is the world s number three hamburger chain in terms of locations (behind McDonald s and Burger King), with more than 6,500 of its Wendy s Old Fashioned Hamburger eateries in the US and about 29 other countries. The Wendy s chain offers made-to-order burgers and fries as well as such alternative menu items as baked potatoes, chili, and salads. The chain is known for its square hamburgers, sea salt fries and the Frosty, a form of soft serve ice cream mixed with frozen starches. As of July 2, 2017, the Wendy s restaurant system was comprised of 6,564 restaurants, of which 331 were owned and operated by the Company. Wendy s operates in 30 countries and U.S. territories. In fiscal year 2016, the firm had $1.4 billion (USD) in company revenue. TENANT PROFILE TENANT TRADE NAME OWNERSHIP TENANT LEASE GUARANTOR NUMBER OF LOCATIONS HEADQUARTERED WEB SITE Wendy s Franchisee WEN SOUTH, Limited Liability Company (LLC) Wholly Owned Subsidiary of Meritage Hospitality Group, Incorporated (Inc) 175+ Units Grand Rapids, Michigan www.meritagehospitality.com/home SALES VOLUME $235-Million (January 2017) NET WORTH $26-Million (January 2017)
7 DEMOGRAPHICS DEMOGRAPHICS 1-Mile 3-Mile 5-Mile POPULATION 2000 Population 7,165 58,666 121,512 2010 Population 6,957 64,406 137,453 2017 Population 7,014 69,601 148,242 2022 Population 7,313 73,462 157,246 1-Mile 3-Mile 5-Mile HOUSEHOLDS 2000 Households 2,852 24,307 48,188 2010 Households 2,882 27,752 55,416 2017 Households 2,888 29,889 59,733 2022 Households 3,008 31,537 63,412 1-Mile 3-Mile 5-Mile HOUSEHOLD (HH) INCOMES 2017 Average HH Income $93,148 $92,619 $92,434 2017 Median HH Income $67,233 $67,322 $66,618 2017 Per Capita Income $38,353 $39,774 $37,246
8 JACKSONVILLE, FLORIDA ABOUT JACKSONVILLE JACKSONVILLE TOP EMPLOYERS Jacksonville, located in the northeast corner of Florida, is the state s most populated city and the nation s largest city by contiguous area. Named after Andrew Jackson, the city was settled in 1816 and incorporated in 1832. Destroyed during the Civil war, Jacksonville was rebuilt, becoming a major industrial city and a transportation hub. Three US Navy installations are in the area. Today, Jacksonville is a growing city of around 750,000, with a young population and a strong economy that is diversified among technical, manufacturing and service industries. JACKSONVILLE CULTURE In addition to warm weather and sunshine, the Jacksonville area offers many recreational events and cultural opportunities. Jacksonville s beach communities consist of Atlantic Beach, Neptune Beach and Jacksonville Beach along 50 miles of shoreline, offering sport fishing, boating and water sport activities. The area is home to the Professional Golfers Association, the World Golf Village and the World Golf Hall of Fame. The Association of Tennis Professionals is also based in the area. Sports teams include the Jacksonville Suns, a minor league baseball team, and the Jacksonville Jaguars of the NFL. EverBank Field hosts the TaxSlayer.com Gator Bowl, and the annual matchup between Florida and Georgia. Cultural opportunities include the Museum of Science & History, Cummer Museum of Art, Mandarin Museum & Historical Society and the Museum of Contemporary Art Jacksonville. The symphony, theater, ballet and arts festivals, such as the Annual Jazz Festival, anchor a packed social and cultural calendar. Other sites of interest include the Jacksonville Zoo and the Jacksonville Landings, a mix of retail and restaurants along the St. Johns River. No. Business Name 1. Jacksonville Naval Air Station 2. Mayo Clinic 3. Mayport Naval Station 4. Blue Cross Blue Shield of Florida 5. CSX 6. Baptist Health System 7. Citibank 8. Fidelity National Financial 9. Winn-Dixie 10. Bank of America Corp. JACKSONVILLE ECONOMY Once rooted in its military bases, the commercial port and paper mills, the Jacksonville economy has begun to diversify. The metro is home to three Fortune 500 companies: Fidelity National Information Services, Fidelity National Financial and CSX. The city has developed a large financial services sector, led by Bank of America, Fidelity National and Citibank. The professional and business services sector has also risen in importance, accounting for 16 percent of total employment. In addition, Jacksonville has an emerging industrial base in medical products research and manufacturing. JAXPORT provides a $26.9 billion annual economic impact to the Jacksonville metro. More than 8 million tons of cargo pass through the port each year and the development of cruise ship service will promote further expansion. Facilities at the port are being expanded to handle the larger ships that will pass through the widened Panama Canal. The military remains a large part of the economy, with two naval facilities and more than 25,000 people employed locally. Many of the naval personnel who retire from the military stay in the area because of its affordable housing.
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.
W E N D Y S JACKSONVILLE, FL 14447 BEACH BOULEVARD JACKSONVILLE, FLORIDA 32250 BROKER OF RECORD: RYAN NEE MARCUS & MILLICHAP LICENSE: BK3154667