Pollo Tropical Ground Lease

pollo Tropical ground lease

high growth houston suburb new outparcel to huge upscale kroger marketplace [ Actual site]

“operating results are among the best” (see page 11) 15-year ground lease With10% increases [ www.CapitalPacific.com ] Billions of dollars of industrial expansions currently underway nearby 6202 Garth Rd, Baytown, Texas, 77521 Listing Team PROperty Summary Contact Info Newly built pollo Tropical, outparcel to Kroger in Baytown, TX (Houston Suburb). Baytown is one of the most vibrant areas in Houston with billions of RICK SANNER dollars in construction projects underway, by major corporate ownerships [email protected] | (415) 274-2709 (see page 4) The tenant is adding 32 units per year, and according to the CEO, CA BRE# 01792433 Pollo Tropical is a “unique, once-in-a-generation brand”. (see page 11) bob SANNER kroger opened March 16th and it is a “Kroger Marketplace,” the company’s [email protected] | (415) 274-2717 largest andBob facie Sannerst concept. it includes gourmet foods, deli, bakery, fresh CA BRE# 00869657 flowers, [email protected] home decor. www.kr |og (415)er .274-2717com/topic/kroger-marketplace CA BRE# 00869657 Aaron Susman PRICE: $2,300,000 [email protected] | (415) 481-0377 CA BRE# 01961568 CAP: 5.00% In Conjuction With TX Licensed Broker: Peter Ellis lot size ...... 0.97 AC [email protected] | (210) 325-7578 rentable sf...... 42,253 SF YEAR BUILT ...... 2016 Capital Pacific collaborates. Click here to meet the rest of our San Francisco team. Current Rent...... $115,000 Lease Expiration. . . . . 2031 Tenant is estimated to open in June, 2016

[ Actual site] pollo tropical | 2 core characteristics

15-year absolute net Ground lease Pollo This is a highly trafficked area with 25,000+ vehicles per day passing Tropical in a high growth houston suburb directly in front of the subject property, plus 82,000+ along I-10 (located 5 minutes north). property highlights • Located on the main retail corridor in Baytown, TX This freestanding restaurant pad is located within the brand new Baytown Marketplace, which is anchored by a 123,000 SF Kroger Marketplace, which • Only freestanding QSR pad directly in front of Kroger opened March 16, 2016. Kroger Marketplace is Kroger’s largest and most • See pages 10 and 11 for more information about Pollo Tropical upscale concept, with this location being open from 5am to 1am. The shopping center includes an additional 68,700 SF of retail, which will include Marshalls, PetSmart, Ulta Beauty, Mattress Firm, Supercuts, GNC, Lease Pacific Dental, Jimmy Johns and UPS. 15-year lease; rental increases of 10% every 5 years and in the option Baytown Marketplace is located adjacent to Academy Sports & Outdoors, periods Panera Bread, Firehouse Subs, and Carls Jr. All expenses are administered directly by tenant Across the street, on the northeast corner of Garth Road and Hunt Road, is Baytown Plaza, a 145,000 SF neighborhood center anchored by Kohl’s, Michaels and Pier One Imports. Co-tenants include Shoe Carnival, Boot Barn, Olive Garden, Buffalo Wild Wings, Gamestop, Subway, AT&T and Verizon Wireless. major suburb houses some of the largest petrochemical The subject property is just two minutes from San Jacinto Mall, a large facilities in the USa with multiple huge expansions regional shopping mall. This mall was sold in July, 2015 and will be partially torn down and redeveloped as an open-air retail complex. The three anchor currently underway (see page 4) stores, Macy’s, JC Penney and Sears, will remain.

[ Actual site] pollo tropical | 3 Billions of dollars of new baytown projects Baytown and the surrounding area are home to some of America’s largest petrochemical Baytown Development projects plants, the largest employers being Exxon Mobil and Chevron Phillips. Petroleum-based ingredients are the major components of the petrochemicals produced here. The big price drop in natural gas has made a huge difference for these companies. First, ethane, a derivative of natural gas, is a direct ingredient to make ethylene. Ethylene is the most commonly produced petrochemical, used as the “root chemical” to make plastics, resins, adhesives, etc. Second, to process (or “crack”) this ethane into ethylene necessitates that it be heated to extremely high temperatures using whatever fuel is most economic, which is natural gas. Both the above companies are under construction on multi-billion-dollar ethane crackers in Baytown. These huge facilities provide thousands of construction jobs and up to 1,500 permanent positions. These permanent petrochemical positions require a great deal of skill, are often dangerous, and highly paid. According to a reputable source, the average blue- collar Texas worker in this industry earns $100,000. See article links below for more info: ExxonMobil Chemical Company Begins Multi-Billion Dollar Expansion Project in Baytown, TX Cheveron Phillips Chemical breaks ground on ethane cracker

$400 million air products and chemicals baytown plant In early January, Air Products and Chemicals, Inc. announced it would build a $400 million plant that will be completed in 2018. It will produce hydrogen and carbon monoxide, which will be shipped by pipeline.

Billions of dollars in new 500,000 sf baytown industrial development A developer has just begun construction in Baytown on the first of three 500,000 SF industrial spec development projects to buildings. bring increased prosperity 200-acre mixed use development in baytown to Baytown Another developer has announced a major 200-acre mixed use project in Baytown. It will include single family, apartments, hotels, retail, and offices; and the developer intends to begin this year. The November Houston Chronicle article on this development stated “Extensive petrochemical plant construction is underway, miles of rail line are being laid, and the [2016)] opening of [the] expanded Panama Canal is raising the prospect of more prosperity for [Baytown].” [ surrounding retail] pollo tropical | 4 aerial across the street from 145,000 sf kohl’s, michaels & pier one imports anchored center

Dr. Antonio Bañuelos Elementary Victoria Walker Elementary SAN JACINTO MALL

Harlem Elementary

10 N Main Street 82,340 DAILY 10

W Cedar Bayou Lynchburg Road

Alamo Elementary Baytown Jr. High School 330

Garth Road Baytown BAYTOWN 25,380 DAILY Christian AIRPORT Academy

N Main Street BAYTOWN VILLAGE

E Cedar Bayou Lynchburg Road

Crockett Ross S. Sterling Elementary High School

GOOSE CREEK COUNTRY CLUB

Rollingbrook Drive Massey Tompkins Road

Garth Road

10 N Main Street HOUSTON 146 San Jacinto Drive Cedar Bayou Jr. High School 146 pollo tropical | 5 income & expense

PRICE $2,300,000 Price Per Square Foot: $54.43 Capitalization Rate: 5.00% Total Rentable Area (SF): 42,253 Lot Size (AC): 0.97 STABILIZED INCOME Per Square Foot Scheduled Rent $2.72 $115,000 Effective Gross Income $2.72 $115,000 LESS Per Square Foot Taxes NNN $0.00 Insurance NNN $0.00 Total Operating Expenses NNN $0.00 EQUALS NET OPERATING INCOME $115,000

*The building within the premises is 3,400 square feet

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.

[ Actual site]

pollo tropical | 6 rent roll

TENANT INFO LEASE TERMS RENT SUMMARY

Current Monthly Yearly Monthly Yearly Tenant Name Sq. Ft. Term Rent Rent Rent Rent/FT Rent/FT

Pollo Tropical 42,253 (A) 1 (B) 5 $115,000 $9,583 $115,000 $0.23 $2.72

6 10 $10,542 $126,500 $0.25 $2.99

11 15 $11,596 $139,150 $0.27 $3.29

Option 1 16 20 $12,755 $153,065 $0.30 $3.62

Option 2 21 25 $14,031 $168,371 $0.33 $3.98

Option 3 26 30 $15,434 $185,208 $0.37 $4.38

Option 4 31 35 $16,977 $203,729 $0.40 $4.82

Option 5 36 40 $18,675 $224,102 $0.44 $5.30

Totals: 42,253 $115,000 $9,583 $115,000 $0.23 $2.72 (A) The building within the premises is 3,400 square feet (B) Lease start is estimated for June, 2016

[ surrounding retail] pollo tropical | 7 site plan Kroger opened in March and Pollo Tropical is estimated to open in June

Hunt Road

KROGER FUEL STATION

houston

Garth Road 25,380 DAILY Lease pending 10 J & J ASIAN CAFE I-10 pollo tropical | 8 site plan

Site Plan Key

Parcel outline: Land Area: 42,253 SF Building Area: 3,400 sf Ingress/Egress:

kroger Houston marketplace

I-10 10

Garth Road 25,380 DAILY pollo tropical | 9 tenant overview

[ REPRESENTATIVE PHOTO ] [ REPRESENTATIVE PHOTO ]

About Pollo Tropical(See also the following page) Pollo Tropical, a member of Fiesta Restaurant Group, Inc. (NASDAQ: FRGI), is a restaurant chain headquartered in Miami, Florida. Specializing 2015 Revenue in Caribbean cuisine, Pollo Tropical is best known for its marinated and $367 Million grilled chicken and various side dishes such as black beans and rice. The NUMBER OF LOCATIONS restaurant offers made-from-scratch cooking, fresh salsa bars, drive-thru 190 service, and catering. Pollo Tropical operates about 190 locations domestically and internationally. Within the U.S., Pollo Tropical owns and operates all of its restaurants, with the exception of “institutional” locations such as airports www.pollotropical.com and universities. FRGI owns one other restaurant chain: Taco Cabana. Total sales of FRGI are about $687 million, with net worth of $244 million. Pollo Tropical provides about 53% of the total sales but about 63% of the total profits of FRGI. Net income for FRGI in 2015 was $38.5 million. The market cap for FRGI is about $824 million. SEE NEXT PAGE

pollo tropical | 10 tenant overview continued

[ REPRESENTATIVE PHOTO ]

Important news from pollo tropical On February 24,2016, the parent company, FRGI (see previous page) issued an important - and quite positive - news release. The headquarters of Pollo Tropical will move immediately to a suburb of Dallas from Miami. The announcement also stated that the strategic decision has been made to “spin-off” the slower-growing and less profitable Taco Cabana brand into a separate company, within the next two years. Thus, the only unit remaining within FRGI would be Pollo Tropical; moreover, FRGI would then change its corporate name to “Pollo Tropical.” Therefore, at that time, the tenant here, instead of being, as it is now, the larger of two subsidiaries of a public company, would become itself a public company. In the spin-off, shareholders of FRGI would be issued shares of a to-be-formed company, “Taco Cabana”. These shareholders would then own shares in two public companies: Taco Cabana and (the newly-renamed) Pollo Tropical. Just after this announcement, the stock price of FRGI rose about 8%. In the press release of February 24, the CEO stated: www.pollotropical.com “Pollo Tropical is a unique, once-in-a generation brand and it has been our growth engine” “The Pollo Tropical brand has delivered operating metrics and results which are considered among the best in the fast casual segment.” “With Pollo [Tropical], we like the position we’re in.” By way of accentuating the growth differential, FRGI announced that, in 2015, it opened just two Taco Cabanas. But it opened 32 Pollo Tropicals in 2015, and anticipates opening about the same in 2016. SEE PREVIOUS PAGE pollo tropical | 11 demographics & regional map 82,340 DAILY

Population 3-Mile 5-Mile 2010 38,660 92,314 2015 42,751 99,633 2020 47,280 108,157

2015 Household incomes 3-Mile 5-Mile Average $66,541 $65,412

Large Employers in Baytown

Employer # of Employees* ExxonMobil 3,800 GCCISD 3,000 Houston Methodist San Jacinto Hospital 1,700 Covestro (manufacturer of high-tech polymers) 1,100 houston baytown City of Baytown 800 Chevron Phillips 800 31 min *Approximate 26 miles

pollo tropical | 12 location

About Baytown, tx

Baytown is within Harris County 26 miles east of downtown Houston. Located within the Houston-The Woodlands-Sugar Land metropolitan area, Baytown lies along State Highway 146 and Interstate 10. It is at the mouth of the San Jacinto River on Galveston Bay and is the fourth- largest city within the Houston metropolitan area. Baytown had an estimated population of 76,000 in 2014.

The centerpieces of Baytown’s economy are three industrial districts that primarily support petroleum and petrochemical processing. The anchors of the business community are Exxon Mobil, Covestro, and Chevron Phillips. In addition, Baytown is home to Cedar Crossing Industrial Park, which has attracted many top-tier companies 4th largest city in houston MSA with significant operations. The park is considered the world’s fifth largest industrial park and the largest on the Gulf Coast.

This area is served by Lee College, a two-year junior college. Baytown is also served by the Goose Creek Consolidated Independent School District. The district has 14 elementary schools, 5 junior highs, 3 high schools, a career center, and two alternative centers for education.

There are billions of dollars of construction on-going right now in Baytown (see page 4 for details).

pollo tropical | 13 [ Actual site] A unique HUMAN The capital pacific experience - our daily commitment to our clients RESULTS-DRIVEN client experience [ www.CapitalPacific.com ]

Rick Sanner Bob Sanner Capital Pacific collaborates. Click here to [email protected] | (415) 274-2709 [email protected] | (415) 274-2717 meet the rest of our San Francisco team. CA BRE# 01792433 CA BRE# 00869657 chris kostanecki zeb ripple John Andreini Dave lUcas Aaron Susman chris peters [email protected] | (415) 481-0377 [email protected] | (415) 274-2703 zandy smith joe caccamo CA BRE# 01961568 CA BRE# 01339983 Gregg Steele Jack Navarra Karla Zens In conjuction With TX licensed broker: Peter Ellis | [email protected] | (210) 325-7578 [ Copyright © 2016 Capital Pacific ]