Wendy's Sale-Leaseback - OFFERING MEMORANDUM - NNN Properties
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Wendy’s Sale-Leaseback
9556 US Highway 31 South, Interlochen, MI
OFFERING MEMORANDUM
EXCLUSIVE NET–LEASE OFFERING
Table of Contents Financial Overview Investment Highlights & Overview Lease Summary Concept Overview Location Overview Location Highlights & Overview Surrounding Aerial Map Property Photos Surrounding Area Photos Demographics
FINANCIAL OVERVIEW
9556 US Highway 31 South, Interlochen, MI
Price: $2,016,807 | 5.95% | Rent: $120,000
PROPERTY DESCRIPTION
Property Wendy’s HIGHLIGHTS
Property Address 9556 US Highway 31 South Brand New 20-Year Triple-Net (NNN) Sale-Leaseback
City, State, ZIP Interlochen, MI
Remodel Completed 2017
Estimated Construction Completion Remodel Completed 2017
Building Size (SF) ~2,467 Rent Escalations | Lesser of CPI or Five Percent Increases Every
Lot Size (Acres) 2.44 Five Years
Type of Ownership Fee Simple
Meritage Hospitality | Growing 210+ Unit Operator / Guarantor
THE OFFERING Six (6), Five (5) - Year Option Periods
Price $2,016,807
CAP Rate 5.95%
Annual Rent $120,000
Rent / SF $48.64
LEASE SUMMARY
Property Name Wendy’s Sale-Leaseback
Property Type Net-Leased Restaurant
Ownership Public (OTCQX:MHGU)
Tenant / Guarantor Meritage Hospitality
Lease Term 20 Years
Lease Commencement Upon Close of Escrow
Lease Expiration 20 Years from Close of Escrow
Lease Term Remaining 20 Years
Lease Type Triple Net (NNN)
Roof & Structure Tenant Responsible
Options to Renew Six, Five-Year Options
Rental Increases Lesser of CPI or 5% Every 5 Years
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. References to square footage or age are approximate. Buyer must verify the information
and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a
service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap 33
INVESTMENT SUMMARY FINANCIAL OVERVIEW
Marcus & Millichap is pleased to present the exclusive listing for a Wendy's Sale-
Leaseback located at 9556 US Highway 31 South in Interlochen, MI. The ANNUALIZED OPERATING DATA
Franchisee, Meritage Hospitality Group has been in the Wendy's system for
nearly 40 years and operates 210 plus units throughout eight states. Meritage Initial Annual Rent $120,000
Hospitality Group is the nation's only publicly-traded "Wendy's Old Fashioned Rental Escalations Lesser of Change in CPI or 5% Every Five Years
Hamburgers" restaurant franchisee. This lease will be backed by 210 plus
Meritage Hospitality Group Wendy's locations.
RENT SCHEDULE
This site underwent a remodel at the cost of the tenant/ operator that is a Lease Year Annual Rent Monthly Rent
requirement by Wendy’s corporate for operators to renew their franchise Year 1 $120,000 $10,000
agreement. This process brings the site up to date and gives it the fresh/clean Year 2 $120,000 $10,000
look that Wendy’s brand is striving for. The estimated cost of this reimage is
Year 3 $120,000 $10,000
$800,000 - $1,200,000.
Year 4 $120,000 $10,000
The tenant will enter into a brand new, 20-year triple-net (NNN) sale-leaseback, Year 5 $120,000 $10,000
with absolutely no landlord responsibilities, upon the close of escrow. The Year 6 $126,000 $10,500
building is comprised of approximately 2,467 square feet and sits on 2.44 acres of Year 7 $126,000 $10,500
land. The lease be subject to rent increases every five years equal to the lesser of
Year 8 $126,000 $10,500
5 percent or the change in the consumer price index (CPI) over the previous five
years. The lease will also be subject to six, five-year tenant renewal options. Year 9 $126,000 $10,500
Year 10 $126,000 $10,500
Year 11 $132,300 $11,025
Year 12 $132,300 $11,025
Year 13 $132,300 $11,025
Year 14 $132,300 $11,025
Year 15 $132,300 $11,025
Year 16 $138,915 $11,576
Year 17 $138,915 $11,576
Year 18 $138,915 $11,576
Year 19 $138,915 $11,576
Year 20 $138,915 $11,576
Actual Site Photo CAP Rate 5.95%
Purchase Price $2,016,807
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. References to square footage or age are approximate. Buyer must verify the information
and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a
service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap 44
CONCEPT OVERVIEW
ABOUT WENDY’S TENANT OVERVIEW
MHGU As of
Meritage Hospitality Group is the nation's only
Wendy’s is an American international fast food chain (OTCQX) 5/1/2017
publicly-traded "Wendy's Old Fashioned
restaurant founded by Dave Thomas on November Hamburgers" restaurant franchisee (OTCQX: MHGU). Price: $14.45
15, 1969, in Columbus, Ohio. The company moved its There are 210+ Meritage Hospitality Group Wendy's
headquarters to Dublin, Ohio on January 29, 2006. As locations. Meritage Hospitality Group is one of the Market Cap: $89M
of 2016, Wendy’s is the world's number three nation’s premier restaurant operators, with
hamburger chain in terms of locations (behind operation located in Florida, Georgia, Michigan, Price/ Earnings: 13.62
McDonald's and Burger King), with more than 6,500 of North Carolina, South Carolina, Ohio, Oklahoma and
its Wendy's Old Fashioned Hamburger eateries in the Virginia. Meritage is headquartered in Grand Rapids, Year Range: $9.70 –
US and about 29 other countries. Michigan, operating with a workforce of ~6,300 $14.90
employees. The Company has ~5.9 million (basic) Shares 5.46M
The Wendy's chain offers made-to-order burgers and common shares outstanding. Outstanding:
fries as well as such alternative menu items as baked
Company Five Year Outlook Dividend: $0.2
potatoes, chili, and salads. The chain is known for its
square hamburgers, sea salt fries and the Frosty, a The Company released its business plan for 2017-
form of soft serve ice cream mixed with frozen Ex. Dividend March 6,
2021 which, it believes, will result in significant sales Date 2017
starches. About 1,400 of the restaurants are owned by and earnings growth over the next five-years.
the company, while the rest are franchised. Wendy's Management is preparing for a major capital YTD 29.60%
and its affiliates employ more than 47,000 people in Performance
investment and earnings cycle driven by Wendy’s
its global operations. In fiscal year 2015, the firm had acquisitions, renovations and new restaurant
$1.9 billion (USD) in company revenue. development.
The Company continues to seek
Wendy’s franchise opportunities
where it can add value using its
operating acumen, systems and
restaurant development expertise.
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. References to square footage or age are approximate. Buyer must verify the information
and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a
service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap 55
Meritage Reports Definitive Agreements to Acquire 69 Wendy’s CONCEPT OVERVIEW
Restaurants Located Across Five States
Feb 09, 2017
OTC Disclosure & News Service
GRAND RAPIDS, Mich., Feb. 09, 2017 (GLOBE NEWSWIRE) -- Meritage Hospitality Group Inc. (OTCQX:MHGU), one of the nation’s
premier restaurant operators, today announced it has entered into three independent definitive asset purchase agreements to acquire
a total of 69 Wendy’s restaurants located in the Midwest and Mid-Atlantic states. The transactions are subject to customary due
diligence and standard approvals. The three transactions are scheduled to be completed during the first and second quarters of 2017.
Chief Executive Officer Robert Schermer, Jr., stated, “We are inspired by the opportunity to expand our Wendy’s footprint into these
new market areas. The consummation of these three transactions will represent the completion of nineteen Wendy’s acquisitions in
the past eight years and are consistent with our stated investment strategy of 'profitable growth' within the Wendy’s franchise system.
We intend to systematically integrate each of these Wendy’s restaurants into our unique web-based operating & accounting platform,
followed by a long-term remodeling program designed to modernize the Wendy’s restaurants and enhance the guest experience. We
look forward to welcoming the addition of 2,100 new employees to Meritage this spring,” added Schermer.
The Company expects the 69 restaurants to add approximately $90 million in annual sales and be accretive to earnings.
Company 2017 Outlook: Robust Sales & Earnings Growth Ahead
The Company’s initial 2017 financial targets will be updated at the end of the second quarter to reflect the impact of the acquisitions,
which we anticipate will be accretive to sales and earnings growth going forward.
Meritage Hospitality Group is one of the nation’s premier restaurant operators, with 181 restaurants in operation located in Florida,
Georgia, Michigan, North Carolina, South Carolina, Ohio, Oklahoma and Virginia. Meritage is headquartered in Grand Rapids, Michigan,
operating with a workforce of approximately 6,200 employees. The Company has approximately 5.9 million (basic) common shares
outstanding. The Company’s public filings can be viewed at www.otcqx.com, under the stock symbol MHGU, or the Company’s
website www.meritagehospitality.com.
SAFE HARBOR STATEMENT
Certain information in this news release, particularly information regarding future economic performance and finances, and plans,
expectations and objectives of management, constitutes forward-looking statements. Factors set forth in our Safe Harbor Statement,
in addition to other possible factors not listed, could affect the Company’s actual results and cause such results to differ materially
from those expressed in forward-looking statements. Please review the Company’s Safe Harbor Statement
at http://www.meritagehospitality.com.
CONTACT: Robert E. Schermer, Jr., CEO Meritage Hospitality Group Inc. (616) 776-2600
Copyright © 2017 GlobeNewswire. All Rights Reserved
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. References to square footage or age are approximate. Buyer must verify the information
and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a
service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus & Millichap 66
LOCATION OVERVIEW
Parma Heights, OH
HIGHLIGHTS
Major National Tenants in Surrounding Area Include:
Dollar General, Tom’s Food Markets, Ric’s Food
Markets, Chemical Bank, Cicero’s Pizza
ADTC 16,375
Affluent Surrounding Community | Average
Household Incomes Exceeds 64,663 within a 3-Mile
Radius
Positive Real Estate Fundamentals | Positioned on
Hard Corner of Signalized Intersection
Features High Visibility and Ease of Access
MAJOR EMPLOYERS
EMPLOYER # OF EMPLOYEES *
ICA 475
Cherry Growers Inc 125
Summerfield Homes 98
Blair Elementary School 95
Probuild Company LLC 75
H Cox & Son Inc 65
Rics Food Center 53
Silver Lake Elementary School 52
Cherryland Electric Coop 50
Westwoods Elementary School 45
Preferred Manufactured Hm Brks 36
Britten Woodworks Inc 32
* # of Employees based on 5 mile radius
7
9556 US Highway 31 South, Interlochen, MI AERIAL
8
This Wendy’s property is located at 9556 U.S. Highway 31 South in Interlochen,
LOCATION OVERVIEW
Michigan. Interlochen is an unincorporated community within Grand Traverse County,
Michigan. Traverse City is approximately 13 miles northeast of Interlochen.
Surrounding Retail and Points of Interest
The subject property is well-positioned in a retail corridor, benefitting from its
proximity to national and local tenants. Tenants in the surrounding area include: Dollar
General, Tom’s Food Markets, Ric’s Food Markets, Chemical Bank, and Cicero’s Pizza.
Interlochen Center for the Arts, a world renowned arts schools with more than 70,000
alumni including Ed Helms and Sean Young, is located approximately two miles away
from this Wendy’s location. Ellis Lake Resort, a small resort with private access to Ellis
Lake, is one mile from the property. Interlochen Golf Club is positioned within one mile
of the subject property. Grand Traverse Mall is approximately ten miles from the
subject property. Grand Traverse Mall has over 100 stores and is anchored by Macy’s,
T.J. Maxx, Target, and JCPenney. Cherry Capital Airport is approximately 14 miles from
this Wendy’s property.
Traffic Counts and Demographics
The Wendy’s property has 5,730 individuals residing within a three-mile radius and
15,314 individuals residing within a five-mile radius. The subject location is positioned
on U.S. Highway 31 South. U.S. Highway 31 South experiences average daily traffic
counts of 16,375 vehicles.
Traverse City, Michigan
Traverse City is the county seat of Grand Traverse County. It is the largest city in the 21-
county Northern Michigan region. The city is the largest producer of tart cherries in the
United States. For this reason, Traverse City is the host of the National Cherry Festival,
attracting approximately 500,000 visitors annually. The surrounding countryside
produces grapes and is one of the centers of wine production in the Midwest. Tourism,
during the summer and winter, is another key industry. In 2009, TripAdvisor named
Traverse City the number two small town travel destination in the United States. The
Traverse City area features a variety of natural attractions, including freshwater
beaches, vineyards, downhill skiing areas and numerous forests. In 2012, the city was
listed among the ten best places to retire in the United States by U.S. News. The
region’s only airport, Cherry Capital Airport, is located in Traverse City. Cherry Capital
Airport served more than 430,000 passengers from August 2015 to July 2016.
9
PROPERTY PHOTO
10SURROUNDING AREA PHOTO
11Demographics
5 Miles
1 Mile 3 Miles 5 Miles
POPULATION
2021 Projection 1,444 6,350 18,264
2016 Estimate 1,311 5,968 17,330
2010 Census 1,231 5,620 16,384
3 Miles
2000 Census 955 5,070 15,081
INCOME
Average $67,339 $69,833 $66,044
Median $54,625 $55,886 $54,444
Per Capita $23,650 $26,445 $25,062
1 Mile
HOUSEHOLDS
2021 Projection 508 2,413 6,933
2016 Estimate 460 2,257 6,565
2010 Census 429 2,115 6,189
2000 Census 328 1,832 5,492
HOUSING
2016 $183,903 $192,038 $172,779
EMPLOYMENT
2016 Daytime Population 706 3,639 9,742
2016 Unemployment 5.96% 5.86% 5.56%
2016 Median Time
25 25 24
Traveled
RACE & ETHNICITY
White 96.15% 96.13% 94.63%
Native American 0.07% 0.06% 0.04%
African American 0.36% 0.31% 0.37%
Asian/Pacific Islander 0.43% 0.49% 0.62%
12Marcus & Millichap hereby advises all prospective purchasers be set based on a tenant’s projected sales with little or no asbestos, the compliance with State and Federal regulations,
of Net Leased property as follows: record of actual performance, or comparable rents for the the physical condition of the improvements thereon, or the
area. Returns are not guaranteed; the tenant and any financial condition or business prospects of any tenant, or any
The information contained in this Marketing Brochure has guarantors may fail to pay the lease rent or property taxes, or tenant’s plans or intentions to continue its occupancy of the
been obtained from sources we believe to be reliable. may fail to comply with other material terms of the lease; cash subject property. The information contained in this Marketing
However, Marcus & Millichap has not and will not verify any of flow may be interrupted in part or in whole due to market, Brochure has been obtained from sources we believe to be
this information, nor has Marcus & Millichap conducted any economic, environmental or other conditions. Regardless of reliable; however, Marcus & Millichap has not verified, and
investigation regarding these matters. Marcus & Millichap tenant history and lease guarantees, Buyer is responsible for will not verify, any of the information contained herein, nor
makes no guarantee, warranty or representation whatsoever conducting his/her own investigation of all matters affecting has Marcus & Millichap conducted any investigation regarding
about the accuracy or completeness of any information the intrinsic value of the property and the value of any long- these matters and makes no warranty or representation
provided. term lease, including the likelihood of locating a replacement whatsoever regarding the accuracy or completeness of the
tenant if the current tenant should default or abandon the information provided. All potential buyers must take
As the Buyer of a net leased property, it is the Buyer’s property, and the lease terms that Buyer may be able to appropriate measures to verify all of the information set forth
responsibility to independently confirm the accuracy and negotiate with a potential replacement tenant considering the herein.
completeness of all material information before completing location of the property, and Buyer’s legal ability to make
any purchase. This Marketing Brochure is not a substitute for alternate use of the property. NON-ENDORSEMENT NOTICE
your thorough due diligence investigation of this investment
opportunity. Marcus & Millichap expressly denies any By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services, Inc.
obligation to conduct a due diligence examination of this Marcus & Millichap Real Estate Investment Services and hold it (“M&M”) is not affiliated with, sponsored by, or endorsed by
Property for Buyer. harmless from any kind of claim, cost, expense, or liability any commercial tenant or lessee identified in this marketing
arising out of your investigation and/or purchase of this net package. The presence of any corporation’s logo or name is
Any projections, opinions, assumptions or estimates used in leased property. not intended to indicate or imply affiliation with, or
this Marketing Brochure are for example only and do not sponsorship or endorsement by, said corporation of M&M, its
represent the current or future performance of this property. CONFIDENTIALITY AND DISCLAIMER affiliates or subsidiaries, or any agent, product, service, or
The value of a net leased property to you depends on factors commercial listing of M&M, and is solely included for the
that should be evaluated by you and your tax, financial and The information contained in the following Marketing purpose of providing tenant lessee information about this
legal advisors. Brochure is proprietary and strictly confidential. It is intended listing to prospective customers.
to be reviewed only by the party receiving it from Marcus &
Buyer and Buyer’s tax, financial, legal, and construction Millichap and should not be made available to any other ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.
advisors should conduct a careful, independent investigation person or entity without the written consent of Marcus & PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR
of any net leased property to determine to your satisfaction Millichap. This Marketing Brochure has been prepared to MORE DETAILS.
with the suitability of the property for your needs. provide summary, unverified information to prospective
purchasers, and to establish only a preliminary level of interest
Like all real estate investments, this investment carries in the subject property. The information contained herein is
significant risks. Buyer and Buyer’s legal and financial advisors not a substitute for a thorough due diligence investigation.
must request and carefully review all legal and financial Marcus & Millichap has not made any investigation, and
documents related to the property and tenant. While the makes no warranty or representation, with respect to the
tenant’s past performance at this or other locations is an income or expenses for the subject property, the future
important consideration, it is not a guarantee of future projected financial performance of the property, the size and
success. Similarly, the lease rate for some properties, including square footage of the property and improvements, the
newly-constructed facilities or newly-acquired locations, may presence or absence of contaminating substances, PCB’s orTHE NNN PRO GROUP
MI Broker of Record
Steven Chaben
MM REIS, Inc
Two Towne Square, Suite 450
Soutfield, MI 48076
Tel: (248) 415-2600
Fax: (248) 352-3813
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