denny's - corporate ground lease · fl broker of record fort lauderdale office tel: (954)...
TRANSCRIPT
Offering Memorandum
DENNY'S - CORPORATE GROUND LEASE4541 Hypoluxo Rd • Lake Worth, FL 33463POTENTIAL VALUE-ADD (SEE P. 7)
N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E
Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap Real
Estate Investment Services of Florida, Inc. ("Marcus & Millichap") and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This
Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The
information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with
respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the
presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the
financial condition or business prospects of any tenant, or any tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing
Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus
& Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided.
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Services, Inc. © 2018 Marcus & Millichap. All rights reserved.
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commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.
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PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.
DENNY'S - CORPORATE GROUND LEASE
Lake Worth, FL
ACT ID Z0510166
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Ryan NeeFL Broker of Record
Fort Lauderdale Office
Tel: (954) 245-3450
Fax: (954) 245-3410
License: FL BK3154667
N E T L E A S E D D I S C L A I M E R
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.
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PROPERTY SUMMARY
OFFERING SUMMARY
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NOTES: After discussions with Corporate Denny’s regarding their 60-day first Right of Refusal, it is believed that they are not likely to exercise their option to
purchase and the response time is expected to be much shorter than 60 days.
DENNY'S - CORPORATE GL (VALUE ADD POTENTIAL)
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OFFERING SUMMARY
NOTE: SEE PAGE 7 FOR VALUE-ADD DETAILS.
OFFERING SUMMARY
Price $1,788,343
Net Operating Income $86,538
Capitalization Rate – Current 4.84%
Price / SF $627.49
Rent / SF $30.36
Lease Type NNN
Gross Leasable Area 2,850 SF
Year Built / Renovated 1997 / 2016
Lot Size 0.86 acre(s)
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EXECUTIVE SUMMARY
OFFERING SUMMARY
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FINANCINGLoan Amount $1,073,006
Loan Type Financed - New Loan
Loan to Value 60.00%
Interest Rate / Amortization 5.20% / 25 Years
Annual Loan Payment $76,780
DENNY'S - CORPORATE GL (VALUE ADD POTENTIAL)
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DENNY'S - CORPORATE GL (VALUE ADD POTENTIAL)
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OFFERING SUMMARY
MAJOR EMPLOYERS
EMPLOYER # OF EMPLOYEES *
US Post Office 1,901
Walmart 949
City of Boynton Beach 945
Palm Beach State College 938
Home Depot The 870
Western Beef Lake Worth LLC 813
Target 554
National Mentor Holdings Inc 512
National Assemblers 501
RC Aluminum Industries Inc 493
Highlight Realty Network 450
Walgreens 444
DEMOGRAPHICS
1-Miles 3-Miles 5-Miles
2017 Estimate Pop 14,835 125,743 334,232
2010 Census Pop 13,565 115,029 307,372
2017 Estimate HH 4,602 46,581 131,673
2010 Census HH 4,269 43,146 122,802
Median HH Income $59,750 $55,167 $47,171
Per Capita Income $22,949 $26,547 $26,490
Average HH Income $73,952 $71,379 $66,959
* # of Employees based on 5 mile radius
NOTE: SEE PAGE 7 FOR VALUE-ADD DETAILS.
DENNY'S - CORPORATE GROUND LEASE
OFFERING SUMMARY
▪ Corporately Guaranteed Ground Lease
▪ Outlot to Walmart Supercenter
▪ Adjacent to Hypoluxo Village Shoppes, a 78,223 SF Retail Plaza
▪ Denny’s Recently Exercised their Last 5-Year Option Demonstrating Commitment to
the Site Through October 15th, 2023
▪ 2017 Estimated Population 334K within 5 Miles of Site
▪ Successful Denny's Location Since 1998
▪ Florida is an Income Tax-Free State
▪ Property offers potential upside in rent increase when lease ends in 5 years.
INVESTMENT HIGHLIGHTS
The subject property is a rare, corporately guaranteed ground lease of a Denny's Classic Diner, ideally situated as an outlot to a Walmart Supercenter in Lake Worth, FL.
Having been in this location since 1998, Denny's recently exercised their last 5-year option demonstrating commitment to site through October 15th, 2023. The current
operator subleases from corporate Denny’s and is an experienced franchisee of the Denny's concept.
In addition to the Walmart Supercenter, the property is adjacent to Hypoluxo Village Shoppes, a 78,223-square foot plaza anchored by Western Beef Supermarket;
McDonalds; Chase Bank and Dollar Tree. Other retailers in the immediate area include Checkers, Dunkin Donuts, Jiffy Lube, Subway, Publix Pharmacy and TD Bank.
Lake Worth is a city located in central Palm Beach County, Florida. It is a principal city of the Miami metropolitan area, which was home to an estimated 6,012,331 people in
2015. 2017 estimates for the subject property show a population of 15K within 1-mile, 125K within 3-miles and 334K within 5-miles.
This Denny's location is located near the intersection of Hypoluxo Road and Military Trail both of which feature more than 30,000 vehicles per day.
Given the fact that this property is an outlot to Walmart with other strong retailers in the immediate area, has direct access and visibility to two streets with 30,000+ VPD and
334K people within 5 miles, you will find it difficult to find a better located Denny’s.
With a lease ending in 5 +/- years for such a desirable location such as this, it provides the buyer with long term security along with upside for future rent increases.
NOTE: SEE PAGE 7 FOR VALUE-ADD DETAILS
INVESTMENT OVERVIEW – POTENTIAL VALUE-ADD OPPORTUNITY
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DENNY'S - CORPORATE GROUND LEASE
OFFERING SUMMARY
▪ Corporately Guaranteed Ground Lease
▪ Outlot to Walmart
▪ Denny’s Recently Exercised their Last 5-Year Option Demonstrating Commitment to
the Site Through October 15th, 2023
▪ Successful Denny's Location Since 1998
▪ Rent escalation plus the possibility of acquiring the building resulting in additional
rent provide significant upside potential in this outstanding Denny’s location.
▪ Major traffic and retail corridor.
INVESTMENT HIGHLIGHTS
It is important to note that this Denny’s location offers the potential for significant upside at the termination of the lease. At lease termination, if Corporate Denny’s does not
renew the lease (call with questions on this), the building becomes the property of the landlord and could potentially result in a substantial increase in rent since the current
lease is a ground lease only. Keep in mind that the current operator is a franchisee and not Corporate Denny’s. A scenario where Corporate Denny’s does not renew the
lease and a new long term lease is signed with the existing operator at a substantially increased rent is entirely possible. Please see lease details below:
Excerpt from Lease: TENANT’S IMPROVEMENTS
Tenant shall have the right, but not the obligation, to construct, reconstruct, alter or other improvements on or about the Premises at any time and from time to
time during the term of the lease with Landlord’s prior consent. Any such buildings or improvements shall be considered property throughout the term. Any
improvements and fixtures attached to and a part of the Premises at the expiration or sooner termination of this Lease shall become the property of the Landlord
at that time.
All furniture, trade fixtures, equipment, signs, trade dress and other personal property on the Premises shall remain Tenant’s sole property and shall removed by
Tenant within 30 days after the scheduled expiration or earlier of this Lease.
To summarize, if Corporate Denny’s does not renew at the end of the lease term and the franchisee signs a long term lease, the building still becomes the property of the
landlord, with the likelihood of increased rent as a result.
In addition, current market comps suggest that rent for comparable properties is currently in the $35 - $50 psf range. Rent for this Denny’s location is currently at $30.36 psf
by building size suggesting there is opportunity for significant rent increase at market rate rent when the lease expires.
POTENTIAL VALUE ADD OPPORTUNITY
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TENANT SUMMARY
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Fiscal Year Ended December 27, 2017
Denny's Corporation
CREDIT RATING: C2 www.fdreports.com | www.creditntell.com | December 27, 2017
Feel like getting slammed for breakfast? The home of the Grand Slam Breakfast, Denny's is one
of the leading full-service, family-style restaurant chains in the US, with more than 1,710 of its
signature eateries located across the country. Typically open 24 hours a day, the chain is best
known for its menu of breakfast items, including eggs, pancakes, and combination plates carrying
such names as All-American Slam, Lumberjack Slam, and the aforementioned Grand Slam
Breakfast. Denny's also serves standard American fare (burgers, sandwiches, steak) for lunch
and dinner. The company owns and operates about 165 of its restaurants, while the rest are
franchised or operate under licensing agreements.
PRICING AND VALUATION MATRIX
PROPERTY NAMEDENNY'S - CORPORATE GROUND LEASE
PRICING AND VALUATION MATRIX
PROPERTY NAMEDENNY'S - CORPORATE GROUND LEASE
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TENANT SUMMARY
General Information
Address203 East Main Street , Spartanburg, South Carolina, 29319, United States
Phone 864-597-8000
Website www.dennys.com
Store Base
Store Count 1,735
TTM Sales $529,169,000
Key Personnel
Chairman Debra L. Smithart-Oglesby
Chief Financial Officer Mark Wolfinger
President & CEO John C. Miller
Financial Markets
Stock Ticker DENN
Current Price $15.70 as of 5/11/18
52 Week High/Low $17.75 / $10.87
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4541 Hypoluxo Rd, Lake Worth, FL 33463
LOCATION OVERVIEWTENANT SUMMARYPRICING AND VALUATION MATRIX
PROPERTY NAMEDENNY'S - CORPORATE GROUND LEASE
PRICING AND VALUATION MATRIX
PROPERTY NAMEDENNY'S - CORPORATE GROUND LEASE
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REGIONAL AND LOCAL MAP
AERIAL PHOTO
DENNY'S - CORPORATE GROUND LEASE
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SUBJECT PROPERTY(334K PEOPLE WITHIN 5 MILES)
Hypoluxo Center (26,920 sf mixed use plaza)
PROPERTY PHOTO
DENNY'S - CORPORATE GROUND LEASE
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SUBJECT PROPERTY(334K PEOPLE WITHIN 5 MILES)
PROPERTY PHOTO
DENNY'S - CORPORATE GROUND LEASE
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MARKETING TEAM
Source: © 2015 Experian
PROPERTY NAME
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CREATED ON MAY 11, 2018
LOCATION OVERVIEWTENANT SUMMARYPRICING AND VALUATION MATRIX
PROPERTY NAMEDENNY'S - CORPORATE GROUND LEASE
PRICING AND VALUATION MATRIX
PROPERTY NAMEDENNY'S - CORPORATE GROUND LEASE
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DEMOGRAPHICS
1 Miles 3 Miles 5 Miles
POPULATION
2022 Projection 17,308 136,212 353,071
2017 Estimate 14,956 125,743 334,232
2010 Census 13,678 115,029 307,372
2000 Census 8,422 91,612 260,364
INCOME
Average $73,882 $71,379 $66,959
Median $59,725 $55,167 $47,171
Per Capita $22,969 $26,547 $26,490
HOUSEHOLDS
2022 Projection 5,470 51,122 141,701
2017 Estimate 4,648 46,581 131,673
2010 Census 4,312 43,146 122,802
2000 Census 2,876 36,234 108,831
HOUSING
2017 $214,817 $189,706 $169,771
EMPLOYMENT2017 Daytime Population
9,933 104,412 277,165
2017 Unemployment 5.63% 5.74% 6.20%
2017 Median Time Traveled
30 28 28
RACE & ETHNICITY
White 52.93% 65.12% 66.18%
Native American 0.01% 0.05% 0.07%
African American 31.72% 21.06% 20.73%
Asian/Pacific Islander
5.94% 3.84% 2.56%