INVESTMENT OPPORTUNITY

KENTUCKY FRIED CHICKEN

OFFERED AT: $1,950,000 | 5.64% CAP

180 N WHITE MOUNTAIN RD SHOW LOW, AZ KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• TABLE OF CONTENTS ••

Confidentiality & Disclaimer Lee & Associates hereby advises all prospective purchasers of Net-Leased Investment property as follows: EXECUTIVE SUMMARY The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. However, Lee & 4 Executive Summary Associates has not and will not verify any of this information, nor has Lee & Associates conducted any investigation regarding these 5 Investment Highlights matters. Lee & Associates makes no guarantee, warranty or representation whatsoever about the accuracy or completeness of any 6 Rent Roll information provided. 7 Lease Abstract As the Buyer of an investment 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. Lee & Associates expressly denies any obligation to conduct a due diligence examination PROPERTY INFORMATION of this Property for Buyer. Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only 9 Location Maps and do not represent the current or future performance of this property. The value of an investment property to you depends on factors 10 New KFC Design 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 investment property to determine to your satisfaction with the 11 Aerials 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 TENANT OVERVIEW and carefully review all legal and financial documents related to the property and tenant. While the tenant’s past performance at this 17 Tenant Profile 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 AREA INFORMATION 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 19 About Show Low or in whole due to market, economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is 20 Demographics 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 Lee & Associates and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or purchase of this investment property.

Arizona Market Expert Ryan Barr Ryan Bennett Al Apuzzo Sean Bishop, CCIM Principal Principal Principal Principal 760.448.2446 760.448.2449 760.448.2442 602.954.3774 [email protected] [email protected] [email protected] [email protected]

This property is listed in conjunction with Lee & Associates Arizona Commercial RE Services, LLC (AZ BRO17922000) for out of state licensing purposes.

PAGE 2 EXECUTIVE SUMMARY KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• EXECUTIVE SUMMARY ••

-- OFFERING SUMMARY -- -- PROPERTY OVERVIEW --

Sale Price: $1,950,000 Lee & Associates is pleased to exclusively offer for sale to qualified investors the opportunity to purchase a 100% fee- simple interest (land & building) in a Kentucky Fried Chicken (“KFC”) property located at 180 N. White Mountain Rd in Show Cap Rate: 5.64% Low, Arizona. There are 18 years remaining on KFC’s 20-year absolute triple-net (NNN) lease with (4) five-year renewal options. The lease features rent increases of 8% every five (5) years throughout the Primary term and the Option Periods. NOI: $110,000 Kentucky Fried Chicken (“KFC”), is the world’s most popular chicken restaurant chain with over 20,500 KFC outlets in more Tenant: TJ KFC Group dba KFC (See Pg 16) than 125 countries and territories around the world. Headquartered in Louisville, Kentucky, KFC is owned by Yum! Brands, Inc., which also owns Pizza Hut and Taco Bell and reported a company revenue of $6 billion in 2016. Guarantor: Argonaut Food Partners, LLC The property is leased to TJ KFC Group, LLC dba Kentucky Fried Chicken. The lease also comes with separate guaranty Price / SF: $763 from Argonaut Food Partners, LLC (“AFP”). AFP operates 82 restaurants in 12 U.S. States and boasts a successful 24-year operating history with KFC’s parent company YUM Brands. They are a preferred growth partner with Kentucky Fried Lease Term: 20 Yrs (18 Remaining) Chicken and have been named the #1 operator by KFC Corporate the past 4 years (see page 16). Year Built: 1985 / Full Ext & Int Remodel 2019 Built in 1985, the Property consists of a 2,554 square foot retail building that sits on an approximately 24,394 square foot parcel. The operator is planning an extensive exterior and interior building remodel to reflect the most current Kentucky Building Size: 2,554 SF Fried Chicken Corporate brand specification (see page 10). A building remodel typically provides that location with a 10% Lot Size: 24,394 SF spike in unit level sales. The remodel is scheduled to be completed prior to the start of 2020. Current gross sales at this location are strong and trending upward (sales figures available by request). Lease Type: Absolute Triple-Net (NNN) The subject property is located along White Mountain Rd/SR 260, which is the main corridor carrying travelers/commuters LL Responsibilities: None through Show Low to the White Mountains and beyond to Phoenix & Flagstaff. The site offers excellent visibility to 19,000 cars per day. The town of Show Low, which is the largest city in the White Mountains of northeastern Arizona and one of the fastest growing cities in northern Arizona. Show Low is also the business hub and marketing center of the area, and is recognized for its abundant water supply, dynamic workforce, competitive power rates and modern telecommunications infrastructure.

PAGE 4 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• INVESTMENT HIGHLIGHTS ••

KENTUCKY FRIED CHICKEN • GLOBALLY RECOGNIZED TENANT EXCELLENT VISIBILITY & SIGNAGE ALONG WHITE MOUNTAIN RD/SR 260 Kentucky Fried Chicken (“KFC”), is the world’s most popular chicken restaurant chain The subject property is located along White Mountain Rd/SR 260, which is the main with over 20,500 KFC outlets in more than 125 countries and territories around the corridor carrying travelers/commuters through Show Low to the White Mountains world. Headquartered in Louisville, Kentucky, KFC is owned by Yum! Brands, Inc., and beyond to Phoenix and Flagstaff and offers excellent visibility & signage to which also owns Pizza Hut and Taco Bell and reported a company revenue of $5.8 19,000 cars per day. billion in 2017. STRONG RETAIL SYNERGY WITH NEARBY RETAILERS/BUSINESSES STRONG LEASE GUARANTY FROM 82-UNIT OPERATOR ARGONAUT FOOD The subject property has excellent retail synergy with neighboring retailers including PARTNERS, LLC McDonald’s, Pizza Factory, Chase Bank, Cattlemen’s Steakhouse, White Mountain The lease comes with a strong guaranty from Argonaut Food Partners, LLC (“AFP”). Donuts, Domino’s Pizza, Little Caesar’s, Jiffy Lube and more. AFP operates 82 restaurants in 12 U.S. States and boasts a successful 24-year LOCATED IN SHOW LOW, ONE OF THE FASTEST GROWING CITIES IN NORTHERN operating history with KFC’s parent company YUM Brands. They are a preferred ARIZONA growth partner with Kentucky Fried Chicken and have been named the #1 operator by KFC Corporate the past 4 years (see page 16). The subject property is located in the town of Show Low, which is the largest city in the White Mountains of northeastern Arizona and one of the fastest growing cities FULL EXTERIOR/INTERIOR BUILDING REMODEL PLANNED FOR LATE 2019 | in northern Arizona. Show Low is the business hub and marketing center of the area, STRONG UNIT LEVEL SALES and is recognized for its abundant water supply, dynamic workforce, competitive The operator is planning an extensive exterior and interior building remodel to power rates and modern telecommunications infrastructure. reflect the most current Kentucky Fried Chicken Corporate brand specification. A building remodel typically provides that location with a 10% spike in unit level sales. PROXIMITY TO WHITE MOUNTAINS AND APACHE/SITGREAVES NATIONAL The remodel is scheduled to be completed prior to the start of 2020. Current gross FOREST sales at this location are strong and trending upward (sales figures available by Show Low is the gateway to Arizona’s White Mountains, the Apache/Sitgreaves request). National Forest, and the Fort Apache Reservation. The area offers hiking and biking LONG TERM ABSOLUTE NNN LEASE • 8% RENT INCREASES EVERY 5 YEARS and is world famous for its world class hunting and fishing opportunities. Ski buffs INCLUDING OPTIONS trek to Arizona’s premier skiing destination, Sunrise Park Resort, located just 36 miles from town. The original 20-year lease has 18 years remaining and features 8% rent increases every 5 years in the Primary term as well as throughout the (4) 5 year Option Periods. In addition, the absolute triple-net (NNN) lease provides an investor with zero landlord responsibilities.

PAGE 5 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• RENT ROLL ••

PRIMARY TERM - 8% Increases Every 5 Years

TENANT SIZE (SF) LEASE START LEASE END ANNUAL RENT RENT/MO $/SF/YR $/SF/MO

KFC 2,554 11/1/2017 10/31/2022 $110,000.00 $9,166.67 $43.06 $3.59

11/1/2022 10/31/2027 $118,800.00 $9,900.00 $46.51 $3.87

11/1/2027 10/31/2032 $128,304.00 $10,692.00 $50.23 $4.18

11/1/2032 10/31/2037 $138,568.32 $11,547.36 $54.25 $4.52

OPTION PERIODS - (4) 5-YEAR OPTIONS - 8% Increases Every 5 Years

OPTION PERIOD LEASE START LEASE END ANNUAL RENT RENT/MO $/SF/YR $/SF/MO

Option 1 11/1/2037 10/31/2042 $149,653.78 $12,471.15 $58.60 $4.88

Option 2 11/1/2042 10/31/2047 $161,626.08 $13,468.84 $63.28 $5.27

Option 3 11/1/2047 10/31/2052 $174,556.16 $14,546.35 $68.34 $5.70

Option 4 11/1/2052 10/31/2057 $188,520.65 $15,710.05 $73.81 $6.15

PAGE 6 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• LEASE ABSTRACT ••

Property Taxes Lessee shall promptly pay when due all real property taxes assess or levied against the Leased Premises and shall provide written notice of such payment to Lessor.

Insurance Lessee shall be responsible for payment of all insurance coverage on the Property.

Utilities Lessee shall be responsible for payment of all utility bills used on the Leased Premises.

Landlord Repairs/Maintenance None

Tenant Repairs/Maintenance Lessee shall be responsible for all costs and operating expenses on the Leased Premises and, except as otherwise provided herein, each and every obligation that may arise or be related to the Leased Premises shall be performed by Lessee at its sole cost and expense. Termination Right N/A

Right of First Offer/Right of First Refusal N/A

Estoppel Certificate Upon the request by Lessor, Lessee will execute, acknowledge, and deliver to Lessor an estoppel certificate or other statement in writing certifying the terms of the Lease.

PAGE 7 PROPERTY INFORMATION KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• LOCATION MAPS ••

PAGE 9 BRAND STRATEGY SITE DESIGN EXTERIOR DESIGN INTERIOR DESIGN BUILDING SYSTEMS RESOURCES KFC PROTOTYPE COMPARISONS 180 N White MountainKB 20-17 Rd, Show Low, AZ 85901 •• NEW KFC DESIGN ••

KB 20-17 (Base Scope Prototype)

PAGE 10 KB 20-17 Base Scope Only

1.3 Prototype Comparisons | 04/2018 KFC Playbook October 2018 | 9 Ì.)&&3URSULHWDU\ &RQoGHQWLDO,QIRUPDWLRQ'R1RW&RS\RU'LVWULEXWH KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• OVERHEAD VIEW ••

ACCESS

Drive Thru

ACCESS 260

ACCESS N. WHITE MOUNTAIN RD (19,000 CPD)

260

PAGE 11 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• LOOKING NORTH ••

Show Low Creek

NAVAJO COUNTY SNOWY RIVER MOTEL SHERIFF’S OFFICE E DEUCE OF CLUBS DOWNTOWN 9 MOTEL E DEUCE OF CLUBS 260 THUNDERBIRD MOTEL

CHURCH OF 260 FUTURE RETAIL LATTER DAY SAINTS DEVELOPMENT

N WHITE MOUNTAIN RD (19,000 CPD)

HIGH LAND BUSINESS CENTER

260

PAGE 12 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• LOOKING EAST ••

SHOW LOW REGIONAL AIRPORT US SOCIAL SECURITY ADMINISTRATION

E DEUCE OF CLUBS

DOWNTOWN 9 MOTEL

FUTURE RETAIL DEVELOPMENT

HIGH LAND BUSINESS CENTER

260 N WHITE MOUNTAIN RD (19,000 CPD) 260

MILLSTONE PROFESSIONAL PLAZA WESTERN CARPET & TILE

PAGE 13 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• LOOKING SOUTH ••

PINETOP-LAKESIDE

260 NIKOLAUS HOMESTEAD PARK

260 JEFFERSON ACADEMY OF ADVANCED LEARNING

WESTERN CARPET & TILE

HIGH LAND BUSINESS CENTER

N WHITE MOUNTAIN RD (19,000 CPD)

260

PAGE 14 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• LOOKING WEST ••

TORREON GOLF CLUB SHOW LOW PRIMARY SCHOOL 260 SHOW LOW JUNIOR HIGH SCHOOL 77 SHOW LOW HIGH SCHOOL NORTHLAND PIONEER COLLEGE MOUNTAIN OAKS TIMBER MESA FIRE & SHOW LOW APARTMENTS MEDICAL STATION POLICE DEPT

NIKOLAUS HOMESTEAD NAVAJO COUNTY ELEMENTARY SCHOOL JUSTICE COURT NAVAJO COUNTY PLANNING & SHOW LOW BUILDING CITY HALL 260 NAVAJO COUNTY SHERIFF’S OFFICE SHOW LOW E DEUCE OF CLUBS PUBLIC LIBRARY CHURCH OF LATTER DAY SAINTS

WESTERN CARPET & TILE

MILLSTONE PROFESSIONAL PLAZA

260 N WHITE MOUNTAIN RD (19,000 CPD) 260

PAGE 15 TENANT OVERVIEW KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• TENANT PROFILE ••

ABOUT THE LEASE GUARANTOR | ARGONAUT FOOD PARTNERS, LLC (Financials Available Upon Request) The subject property is operated by an experienced franchisee, with locations in AZ, CA, OR, MT, NM, MN, SD, ID, WY, ND, CO, and WA. The subject property is leased to TJ KFC Group, LLC, dba Kentucky Fried Chicken on a long-term absolute triple-net (NNN) lease. ARGONAUT FOOD PARTNERS, LLC • 82 Total Stores Operated in 12 States • Preferred Growth Partner with KFC Corporate • Franchisee has 24 Years Experience with YUM! Brands • #1 Operator by KFC Corp. in Past 4 Years

KFC / YUM! BRANDS, INC. OVERVIEW KFC is a subsidiary of YUM! Brands, Inc. (NYSE: YUM), the largest restaurant company in the world with KFC, Pizza Hut, Taco Bell, and WingStreet under its umbrella of fast-food and fast-casual brands. Yum! Brands, Inc., based in Louisville, Kentucky, has over 43,500 restaurants in more than 135 countries and territories and is one of the Aon Hewitt Top Companies for Leaders in North America. In 2017, Yum! Brands was named among the top 100 Best Corporate Citizens by Corporate Responsibility Magazine. The Company’s restaurant brands – KFC, Pizza Hut and Taco Bell – are the global leaders of the chicken, pizza and Mexican-style food categories. Worldwide, the Yum! Brands system opens over six new restaurants per day on average, making it a leader in global retail development.

Yum! Brands is ranked number 494 on the Fortune 500 list, with revenues exceeding $5.8 billion in 2017.

PAGE 17 AREA INFORMATION KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• ABOUT SHOW LOW ••

ABOUT SHOW LOW Show Low was named after a marathon poker game played between two early settlers. They decided there wasn’t enough room for both of them in the community and agreed to let a game of cards decide who was to get the 100,000 acre ranch and who was to move on. According to the story, one of them said, “If you can show low, you win.” The other one turned up the deuce of clubs and replied, “show low it is.” Show Low got its name from that card game and Show Low’s main street is named “Deuce of Clubs” in remembrance.

Show Low is now the largest city in the White Mountains of northeastern Arizona and is one of the fastest growing cities in northern Arizona. Show Low is also the business hub and marketing center of the area. The city proper has a population of about 11,000 residents, but, Show Low’s trade area population numbers over 130,000. Seasonal spikes in the population from tourism activity and the second home market causes the trade area population to swell to well over 150,000. Show Low is experiencing dynamic growth as its population has increased over 41% since 2000.

Show Low's economy is diverse, with major industries consisting of healthcare, retail, distribution, telecommunications, energy, and aeronautics. Major employers include Summit Healthcare Regional Medical Center, the State of Arizona, Northland Pioneer College, Show Low Unified School District, Walmart, and Frontier Communications.

Show Low is the gateway to Arizona’s White Mountains and the recreational activities it has to offer. The area is famous for its world class hunting and fishing opportunities. Skiing buffs can take advantage of Arizona’s premier skiing destination, Sunrise Park Resort, located a short 36 miles from Show Low and offering 65 runs and 10 chair lifts.

Show Low is rich in natural resources and is primed for investment. Because it is surrounded by 2 million acres of National Forests, Show Low is very proactive in forest management and has a virtually endless supply of available biomass for manufacturing of value-added forest products. Show Low is also located in close proximity to one of the largest potash deposits in North America and sits atop one of the largest aquifers in the western United States. The lands around Show Low are also favorable to solar and wind power generation.

PAGE 19 KFC 180 N White Mountain Rd, Show Low, AZ 85901 •• DEMOGRAPHICS MAP ••

POPULATION 1 MILE 5 MILES 10 MILES

Total population 1,621 14,377 27,021

Median age 40.1 41.0 41.9

Median age (male) 39.9 40.9 40.7

Median age (Female) 40.4 41.3 42.4

HOUSEHOLDS & INCOME 1 MILE 5 MILES 10 MILES

Total households 668 5,968 11,032

# of persons per HH 2.4 2.4 2.4

Average HH income $49,666 $50,588 $54,874

Average house value $174,309 $174,225 $197,771

* Demographic data derived from 2010 US Census

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