POPEYES SALE-LEASEBACK EXCLUSIVE NET - LEASE OFFERING
OFFERING Representative Photo MEMORANDUM 1315 E. Hackberry St., Salem, IN 47167 Confidentiality and Disclaimer
Marcus & Millichap hereby advises all prospective purchasers of properties, including newly-constructed facilities or newly- income or expenses for the subject property, the future projected Net Leased property as follows: acquired locations, may be set based on a tenant’s projected financial performance of the property, the size and square sales with little or no record of actual performance, or footage of the property and improvements, the presence or The information contained in this Marketing Brochure has been comparable rents for the area. Returns are not guaranteed; the absence of contaminating substances, PCB’s or asbestos, the obtained from sources we believe to be reliable. However, tenant and any guarantors may fail to pay the lease rent or compliance with State and Federal regulations, the physical Marcus & Millichap has not and will not verify any of this property taxes, or may fail to comply with other material terms of condition of the improvements thereon, or the financial information, nor has Marcus & Millichap conducted any the lease; cash flow may be interrupted in part or in whole due to condition or business prospects of any tenant, or any tenant’s investigation regarding these matters. Marcus & Millichap makes market, economic, environmental or other conditions. Regardless plans or intentions to continue its occupancy of the subject no guarantee, warranty or representation whatsoever about the of tenant history and lease guarantees, Buyer is responsible for property. The information contained in this Marketing Brochure accuracy or completeness of any information provided. conducting his/her own investigation of all matters affecting the has been obtained from sources we believe to be reliable; intrinsic value of the property and the value of any long-term however, Marcus & Millichap has not verified, and will not verify, As the Buyer of a net leased property, it is the Buyer’s lease, including the likelihood of locating a replacement tenant if any of the information contained herein, nor has Marcus & responsibility to independently confirm the accuracy and the current tenant should default or abandon the property, and Millichap conducted any investigation regarding these matters completeness of all material information before completing any the lease terms that Buyer may be able to negotiate with a and makes no warranty or representation whatsoever regarding purchase. This Marketing Brochure is not a substitute for your potential replacement tenant considering the location of the the accuracy or completeness of the information provided. All thorough due diligence investigation of this investment property, and Buyer’s legal ability to make alternate use of the potential buyers must take appropriate measures to verify all of opportunity. Marcus & Millichap expressly denies any obligation property. the information set forth herein. to conduct a due diligence examination of this Property for Buyer. By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services and hold it NON-ENDORSEMENT NOTICE Any projections, opinions, assumptions or estimates used in this harmless from any kind of claim, cost, expense, or liability arising Marketing Brochure are for example only and do not represent out of your investigation and/or purchase of this net leased Marcus & Millichap Real Estate Investment Services, Inc. the current or future performance of this property. The value of a property. (“M&M”) is not affiliated with, sponsored by, or endorsed by any net leased property to you depends on factors that should be commercial tenant or lessee identified in this marketing package. evaluated by you and your tax, financial and legal advisors. CONFIDENTIALITY AND DISCLAIMER The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or Buyer and Buyer’s tax, financial, legal, and construction advisors The information contained in the following Marketing Brochure is endorsement by, said corporation of M&M, its affiliates or should conduct a careful, independent investigation of any net proprietary and strictly confidential. It is intended to be reviewed subsidiaries, or any agent, product, service, or commercial listing leased property to determine to your satisfaction with the only by the party receiving it from Marcus & Millichap and should of M&M, and is solely included for the purpose of providing suitability of the property for your needs. not be made available to any other person or entity without the tenant lessee information about this listing to prospective written consent of Marcus & Millichap. This Marketing Brochure customers. Like all real estate investments, this investment carries significant has been prepared to provide summary, unverified information risks. Buyer and Buyer’s legal and financial advisors must request to prospective purchasers, and to establish only a preliminary ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE and carefully review all legal and financial documents related to level of interest in the subject property. The information CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE the property and tenant. While the tenant’s past performance at contained herein is not a substitute for a thorough due diligence DETAILS. this or other locations is an important consideration, it is not a investigation. Marcus & Millichap has not made any investigation, guarantee of future success. Similarly, the lease rate for some and makes no warranty or representation, with respect to the
1315 E. Hackberry St., Salem, IN 47167 Table of Contents
Representative Photo Investment Highlights PRICE: $1,519,158 | CAP: 6.00% | RENT: $91,149
About the Investment ✓ Brand New 20-Year Sale-Leaseback ✓ Triple Net (NNN) Lease with Zero Landlord Responsibilities ✓ Attractive Rental Increases of One Percent (1.0%) Annually Beginning in Year 11 ✓ Six (6) Tenant Renewal Periods of Five (5) Years Each About the Location ✓ Dense Retail Corridor| Walmart, Family Dollar, Dollar General, CVS Pharmacy, Goody’s, Tractor Supply & Co., Goodwill, Arby’s, KFC, Wendy’s, Domino’s, Subway, Taco Bell ✓ Positive Real Estate Fundamentals | Less Than Two Miles From St. Vincent Salem Hospital| 25-Bed, Critical Access Health Care Facility ✓ Strong Academic Presence | Less Than Two Miles From Salem High School | More Than 600 Students Enrolled Representative Photo ✓ Strong Traffic Counts | E. Hackberry Street and N. Main Street | 11,049 and 18,577 Vehicles Per Day Respectively ✓ Compelling Location Fundamentals | Within 40 Miles of Louisville, Kentucky About the Tenant / Brand ✓ Tenant on the Lease is Frayser Quality, LLC | Operates 60+ Popeyes and Rapidly Growing ✓ Lease Guaranteed by New CFH, LLC | 230-Unit Entity | New CFH, LLC is a wholly owned subsidiary of Carrols Restaurant Group, Inc. ✓ Carrols Restaurant Group is One of the Largest Restaurant Companies and Franchisee’s in the United States | 1,000+-Unit Operator ✓ Strong Track Record With Proven Operational Expertise ✓ In May 2019, Carrols Merged With Cambridge Franchise Holdings LLC, Acquiring 165 Burger Kings and 58 Popeyes Restaurants in 10 Southeastern and Southern States
Representative Photo
Popeyes – Salem, IN 4 Financial Analysis PRICE: $1,519,158 | CAP: 6.00% | RENT: $91,149
PROPERTY DESCRIPTION RENT SCHEDULE Property Popeyes Lease Year(s) Annual Rent Monthly Rent Rent Escalation (%) Property Address 1315 East Hackberry Street Year 1-10 $91,149 $7,596 - City, State, ZIP Salem, IN 47167 Year 11 $92,061 $7,672 1.00% Estimated Store Opening 2019 Year 12 $92,982 $7,748 1.00% Estimated Building Size 2,255 SF Year 13 $93,911 $7,826 1.00% Lot Size +/- 1.25 Acres Year 14 $94,851 $7,904 1.00% Type of Ownership Fee Simple Year 15 $95,799 $7,983 1.00% THE OFFERING Year 16 $96,757 $8,063 1.00% Purchase Price $1,519,158 Year 17 $97,725 $8,144 1.00% CAP Rate 6.00% Year 18 $98,702 $8,225 1.00% Annual Rent $91,149 Year 19 $99,689 $8,307 1.00% Year 20 $100,686 $8,390 1.00% LEASE SUMMARY Property Type Net-Lease Quick-Service Restaurant INVESTMENT SUMMARY Tenant / Guarantor Frayser Quality, LLC / New CFH, LLC Marcus & Millichap is pleased to present this exclusive listing for a Ownership Type Public (NYSE: TAST) Popeyes located at 1315 East Hackberry Street in Salem, IN. The subject Original Lease Term 20 Years from COE property opened in July 2019 and consists of roughly 2,255 square feet of Lease Commencement Upon Close of Escrow building space on approximately a 1.25 acre parcel. This investment Lease Expiration 20 Years from COE opportunity is subject to a brand new 20-year Triple-Net (NNN) sale- leaseback with zero landlord responsibilities. The lease will commence Lease Term Remaining 20.0 Years upon the close of escrow and will be subject to six (6), five (5) year tenant Lease Type Triple-Net (NNN) renewal options. The initial annual rent will be $91,149 and is scheduled to Roof & Structure Tenant Responsible increase by one percent (1.00%) annually starting in year 11 and Rental Increases 1.0% Annually Starting Year 11 continuing throughout the base term and option periods. In each option Options to Renew Six (6), Five (5)-Year Options period the rent will increase by one percent (1.00%) annually in years 1 through 3 and the rent will remain flat in years 4 and 5. The lease will be guaranteed by New CFH, LLC, a wholly owned subsidiary of Carrols Restaurant Group, Inc. New CFH, LLC is currently a 230-unit entity.
Popeyes – Salem, IN 5 Concept & Guarantor Overview
About Popeyes
Founded in 1972, Popeyes is the world’s second largest quick service chicken concept as measured by total number of restaurants (only behind KFC). As of December 31, 2018, Popeyes owned or franchised a total of 3,102 restaurants. Popeyes restaurants are quick service restaurants that distinguish themselves with a unique “Louisiana” style menu featuring spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice and other regional items. Popeyes was acquired on March 27, 2017 for a total consideration of $1.7 billion by Restaurant Brands International (NYSE: QSR).
Fun Facts: ➢ Global Leadership in Chicken Segment - One of the largest players Representative Photo with rapidly-growing market share ➢ Unique, Highly-Differentiated Brand - Internationally-recognized Louisiana heritage since 1972 New CFH, LLC ➢ Highly-Attractive Unit Economics - >$1.4mm ARS and strong New CFH, LLC (“NCFH”) is a 230-Unit entity, and wholly owned subsidiary franchisee EBITDA margins of Carrols Restaurant Group, Inc. NCFH currently operates 165 Burger King restaurants under Nashville Quality, LLC as well as 58 Popeyes ➢ Nearly Fully-Franchised Business Model - 98% franchised, leading locations under Frayser Quality, LLC. NCFH acquired Carolina Quality, LLC to healthy margins and cash flow (“CQL”) in 2014 as a platform to execute a growth strategy in the Burger ➢ Significant Expansion Opportunity in the U.S. - Consistent track King system. At the time of the acquisition, CQL was a Burger King record of successful growth across the country franchisee operating 22 restaurants across five states. Since the ➢ International Growth Acceleration - Numerous development acquisition NCFH has grown the business significantly and currently agreements signed in last few years operates in states such as Alabama, Arkansas, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, Tennessee, and Virginia.
Popeyes – Salem, IN 6 Parent Company Overview: Carrols, LLC
GREAT FOOD COMES FIRST General Information Every day, more than 11 million guests visit BURGER KING® restaurants around the world. And they do so because our restaurants are known for serving high- Address Oakville, ON quality, great-tasting, and affordable food. Founded in 1954, BURGER KING® is Website http://www.rbi.com the second largest fast food hamburger chain in the world. The original HOME OF THE WHOPPER®, our commitment to premium ingredients, signature Stock Ticker QSR (NYSE) recipes, and family-friendly dining experiences is what has defined our brand Current Price* $75.46 for more than 50 successful years. 52 Week High/Low $78.26/ $50.20 #2 Fast Food Hamburger Chain, Globally Carrols, LLC *As of August 20, 2019 • More than $16 billion in annual system-wide sales, and nearly 350,000 Carrols, LLC is Burger King’s largest franchisee and has operated BURGER KING® team members, worldwide. The concept has a market capitalization of restaurants since 1976. As of April 30, 2019, the Company completed the roughly $10 billion. acquisition of 221 additional BURGER KING® and Popeyes restaurants in 10 Southern and Southeastern states. Carrols, which operates 1,010 Burger King Global Brand Presence | Fully – Franchised and 55 Popeyes restaurants in 23 states following the acquisition, is the largest Business Model franchisee of Restaurant Brands International, Inc. Carrols LLC’s direct parent company, Carrols Restaurant Group, INC. (Nasdaq: TAST), is one of the only • Nearly 14,000 restaurants in 100+ countries. QSR industry-leading EBITDA publicly traded companies solely controlling Burger King Franchises and one of margins the largest restaurant companies and franchisee’s in the United States.
Rich Heritage | Stable, Reliable Long-Term Burger King Worldwide, Inc. Ownership Founded in 1954, Burger King® is the second largest fast food hamburger chain • Founded in 1954 with deep ties to the Miami Community. Burger King has in the world. The original Home of the Whopper, the Burger King® system been actively managed by 3G since 2010. operates in approximately 14,000 locations serving more than 11 million guests daily in 100 countries and territories worldwide. Approximately 100 percent of 3G Capital Burger King® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. 3G Capital is a global investment firm focused on long-term value, with a particular emphasis on maximizing the potential of brands and businesses. The Restaurant Brands International firm and its partners have a strong history of operational excellence, board Restaurant Brands International is one of the world's largest quick service involvement, deep sector expertise, and an extensive global network. 3G Capital restaurant companies with approximately $23 billion in system sales and over works in close partnership with management teams at its portfolio companies 18,000 restaurants in 100 countries. Restaurant Brands International owns two and places a strong emphasis on recruiting, developing and retaining top-tier of the world’s most prominent and iconic quick service restaurant brands – Tim talent. In October 2010, 3G Capital completed the acquisition of Burger King®, Hortons® and Burger King®. These independently operated brands have been one of the most widely-recognized consumer brands in the world. serving their respective guests, franchisees, and communities for over 50 years.
Popeyes – Salem, IN 7 https://www.qsrmagazine.com/news/carrols-restaurant-group-acquires-220-restaurants-through-merger In Recent News: Merger Details Carrols Restaurant Group (TAST) Acquires 221 Restaurants and Expand into Popeyes Brand Through Merger with Cambridge Franchise Holdings “This is a transformational transaction for our Company,” said Dan Accordino, Chairman and CEO of Carrols. “It further strengthens our position in the Burger King system and provides us the opportunity to continue executing our Burger King acquisition and expansion strategy. Cambridge also brings a strong, growing second brand in Popeyes to Carrols’ portfolio, and they have demonstrated strong returns on new restaurant development in their geographies. We look forward to partnering with them as we work to improve returns for our stockholders through additional, diversified alternatives for future growth and effective capital allocation.”
Carrols Restaurant Group, Inc. announced that on April Dan Accordino, chairman and CEO of Carrols, says, 9 percent PIK Series C Convertible Preferred Stock that 30, 2019 it completed the acquisition of 165 Burger “This transaction is an exciting growth catalyst for will be convertible into approximately 7.45 million King and 55 Popeyes restaurants from Cambridge Carrols. We believe it strengthens our position in the shares of Carrols common stock. The conversion of the Franchise Holdings, LLC in 10 Southern and Burger King system by providing us the opportunity to preferred stock will be subject to a vote of Carrols’ Southeastern states. Carrols, which operates 1,010 continue executing our acquisition and expansion stockholders to occur at the Company’s 2019 Annual Burger King and 55 Popeyes restaurants in 23 states strategy, and adds Popeyes, a growing brand that Meeting of Stockholders and will automatically convert following the acquisition, is the largest franchisee of further enhances our expansion alternatives. We also into common stock upon stockholder approval of such Restaurant Brands International, Inc. (the franchisor of believe that we have the potential to improve the conversion. All shares issued to Cambridge are subject Burger King, Popeyes, and Tim Hortons). performance of the Cambridge restaurants and to to a two-year restriction on sale or transfer subject to leverage their footprint and development team as we certain limited exceptions. On a fully-diluted, as-if As previously announced, Carrols has also entered into launch the next phase of growth for the benefit of converted basis after giving effect to both the an Area Development and Remodeling Agreement with Carrols’ shareholders.” conversion of the Cambridge and BKC convertible Burger King Corporation that pre-approves the preferred stocks to common stock, Cambridge would Company for continued growth through both Concurrent with the transaction, Carrols refinanced all hold an approximate 24 percent equity interest in the acquisitions and new restaurant development. Under of Carrols and Cambridge’s indebtedness and entered Company. There was no cash consideration as part of the terms of the agreement, Carrols’ right of first into a $550 million secured senior credit facility which the transaction. In conjunction with the merger, Alex refusal assigned to it by BKC has been expanded to includes a $425 million Term Loan B facility due 2026 Sloane and Matt Perelman, the Co-Founders of allow for the acquisition of 500 additional Burger King that bears interest at LIBOR + 3.25 percent and was Cambridge, have joined the Carrols Board of Directors. restaurants. Carrols has also assumed Cambridge’s issued at an OID of 99.5. Use of proceeds included (i) existing Popeyes Development Agreement and its refinancing Carrols’ existing 8 percent notes, (ii) paying “Matt and I are excited to join the Carrols Board and ROFR for Popeyes restaurant acquisitions in Tennessee off Cambridge’s indebtedness, and (iii) paying certain support the next phase of the Company’s growth. We and Kentucky. As part of these agreements, Carrols has fees and expenses related to the financing and the believe that Carrols’ strong management team, agreed to develop 200 new Burger King and 70 Cambridge transaction. The secured senior credit efficient financing structure, partnership with RBI and Popeyes restaurants over the next six years, and to facility also included a $125 million, undrawn five-year compelling capital allocation plan provide for a long remodel or upgrade a number of its Burger King revolving credit facility that will be used to execute runway to enhance shareholder value,” says Alex restaurants (or restaurants to be acquired) to the Carrols’ growth initiatives as needed. Sloane, co-founder of Cambridge Franchise Holdings. Burger King of Tomorrow image over the same period. Total consideration to Cambridge included (i) Carrols believes these development agreements approximately 7.36 million shares of Carrols common provide it with a significant expansion runway for both stock (a 16.6 percent equity interest) and (ii) shares of brands. Popeyes – Salem, IN 8 Surrounding Area Property Address: 1315 E. Hackberry St., Salem, IN 47167
Popeyes – Salem, IN 9 Property Photo
Subject Property
Popeyes – Salem, IN 10 Property Photo
Subject Property
Popeyes – Salem, IN 11 Surrounding Area Photos
Popeyes – Salem, IN 12 Surrounding Area Photos
Popeyes – Salem, IN 13 Location Overview Property Address: 1315 E. Hackberry St., Salem, IN 47167 The subject investment property is situated on E. Hackberry Street, which boasts average daily traffic counts exceeding 11,049 vehicles respectively. E. Hackberry Street intersects with N. Main Street, which brings an additional 18,577 vehicles into the immediate area on average daily. There are more than 10,178 individuals residing within a five-mile radius of the property and more than 19,500 individuals within a ten-mile radius. The average household income within a five-mile radius is $54,087.
The subject property benefits from being well-positioned in a dense retail corridor benefitting from its close proximity to several national and local tenants. Major national tenants include: Walmart, Family Dollar, Dollar General, CVS Pharmacy, Goody’s, Tractor Supply & Co., Goodwill, Arby’s, KFC, Wendy’s, Domino’s, Subway, Taco Bell, as well as many more. Located less than 2 miles ADTC: 11,049 from the subject property is St. Vincent Salem Hospital. St. Vincent Salem Hospital is a 25-bed critical access health care facility with a 24/7 emergency department. This Popeyes location is located less than two miles from Salem High School where more than 600 students are enrolled.
Salem is a city in Washington Township, Washington County, Indiana. Salem is primarily an agricultural community, surrounded by typical Indiana forests and farmland and small bodies of water. The primary crops grown in the area are corn and soybeans. Salem is also home to Salem Speedway, one of the top sporting attractions in the surrounding area. The track was first built in 1947 and ADTC: 18,577 many legendary sprint drivers of the last half century have since raced there. Major employers in Salem include GKN Sinter Metals, Flexcel, Peerless Gears, Blue River Wood Products, St. Vincent Salem Hospital, Blue River Services, and Hoosier Precast. Salem is home to the Salem Municipal Airport. The airport services general aviation aircraft and the Oregon Army National Guard. It is made up of two jet runways, with a project underway to extend its runways to 4,000 feet. There are several key industry sectors in Washington County, Indiana. These include advanced manufacturing, lumber & hardwood products, and health care & medical services. The county is particularly strong in manufacturing as manufacturing employment percentages in Washington County are higher than the average for the State of Indiana.
Popeyes – Salem, IN 14 Local Map Property Address: 1315 E. Hackberry St., Salem, IN 47167
Popeyes – Salem, IN 15 Regional Map Property Address: 1315 E. Hackberry St., Salem, IN 47167
INDIANA
Popeyes – Salem, IN 16 Demographics Property Address: 1315 E. Hackberry St., Salem, IN 47167
3 Miles 5 Miles 10 Miles Population Trends: 2024 Projection 7,406 9,936 18,947 2019 Estimate 7,456 9,994 19,002 10 Miles 2010 Census 7,742 10,336 19,376 2019 Population Hispanic Origin 93 120 257 Population by Race (2019): White 7,266 9,762 18,607 Black 56 64 98 Am. Indian & Alaskan 20 25 44 5 Miles Asian 34 41 59 Hawaiian & Pacific Island 0 0 2 3 Miles Other 80 102 192 Household Trends: 2023 Projection 3,033 4,008 7,369 2018 Estimate 3,052 4,030 7,390 2010 Census 3,162 4,163 7,536 Owner Occupied 2,079 2,882 5,593 Renter Occupied 973 1,148 1,797 Average Household Income (2019) $51,794 $53,898 $56,569 Households by Household Income (2019): <$25,000 881 1,065 1,738 $25,000 - $50,000 890 1,152 2,208 $50,000 - $75,000 649 891 1,610 $75,000 - $100,000 343 509 927 $100,000 - $125,000 139 209 471 $125,000 - $150,000 48 59 176 $150,000 - $200,000 75 112 189 Median Household Income (2019): $42,486 $44,693 $46,437
Popeyes – Salem, IN 17 Market Overview City: Salem | County: Washington | State: Indiana
Salem is a city in Indiana and is located just under 40 miles from Louisville, Kentucky. Louisville is located on the falls of the Ohio River in northwest Kentucky and is the state’s most populous city. Louisville is the county seat of Jefferson County and has a metro population of roughly 1,284,848. Louisville, since its origin, has been heavily linked to the shipping and cargo industries. However, in the recent past, Louisville has expanded its economy across several industries. Healthcare is the second leading industry, behind logistics. Humana, one of the largest insurance companies is headquartered in Louisville.
In addition to a growing economy, Louisville is home to a very diverse cultural scene that includes international cuisine, fine and performing arts, and music. Louisville continues to grow as a economic and cultural epicenter for Kentucky. Additionally, Churchill Downs, the site for the Kentucky Derby, is located in Louisville. The racetrack has a capacity of roughly 170,000 people. In 2010, the KFC Yum! Center opened its door. The Yum! Center is a multi-purpose sports arena that is home to the Louisville Cardinals men's basketball team, and other events such as concerts and conventions. The Louisville International Airport flies over 3.7 million passengers per year. Worldport® hub is UPS’s largest facility and is located in Louisville. Worldport turns over 130 aircraft and processes 1.6 million packages per day. Major Employers Employer Estimated # of Employees Tecumseh Peerless Gear Mch Div 500 GKN Sinter Metals LLC 240 Salem Community School Distict 200 Peerless Gear 180 Jeans Extrusions Inc 155 St Vincent Salem Hospital Inc 143 Kimball Office 140 Transportation Indiana Dept 132 Jay C Food Stores 00086 115 Ruler 205 113 Louisville, Kentucky Quality Concrete 100
Popeyes – Salem, IN 18 EXCLUSIVE NET LEASE OFFERING
Josh Caruana Marcus & Millichap 600 East 96th Street Suite 500 Indianapolis, IN 46240 Tel: (317) 218-5300 1315 E. Hackberry Street, Salem, Indiana 47167 Fax: (317) 218-5310 License: IN: RB14034355