Wendy's Sale-Leaseback - OFFERING MEMORANDUM - NNN Properties
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Wendy’s Sale-Leaseback
5189 US Highway 10, Ludington, MI
Representative Photo
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 Demographics
FINANCIAL OVERVIEW
5189 US Highway 10, Ludington, MI
Price: $2,181,818 | 5.50% | Rent: $120,000
PROPERTY DESCRIPTION
Property Wendy’s HIGHLIGHTS
Property Address 5189 US Highway 10 Brand New 20-Year Triple-Net (NNN) Sale Leaseback
City, State, ZIP Ludington, MI, 49431
Seller Will Commit To A Remodel
Building Size (SF) 2,545
Lot Size (Acres) 1.71 Rent Escalations | Lesser of CPI or Five Percent Increases Every
Type of Ownership Fee Simple Five Years
Meritage Hospitality | Growing 210+ Unit Operator / Guarantor
THE OFFERING
Price $2,181,818 Six (6), Five (5) - Year Option Periods
CAP Rate 5.50%
Annual Rent $120,000
Rent / SF $47.15
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 5189 US Highway 10 in Ludington, MI. The Franchisee, ANNUALIZED OPERATING DATA
Meritage Hospitality Group has been in the Wendy's system for nearly 40 years
Initial Annual Rent $120,000
and operates 210 plus units throughout eight states. Meritage Hospitality Group
Rental Escalations Lesser of Change in CPI or 5% Every Five Years
is the nation's only publicly-traded "Wendy's Old Fashioned Hamburgers"
restaurant franchisee. This lease will be backed by 210 plus Meritage Hospitality
Group Wendy's locations. RENT SCHEDULE
Lease Year Annual Rent Monthly Rent
The tenant/operator will commit to remodel this site at their own cost, which is a Year 1 $120,000 $10,000
requirement by Wendy’s corporate for operators to renew their franchise $120,000 $10,000
agreement. This process would bring the site up to date and give it the fresh/ Year 2
clean look that Wendy’s brand is striving for. The estimated cost of this remodel Year 3 $120,000 $10,000
is $800,000 - $1,200,000. Year 4 $120,000 $10,000
Year 5 $120,000 $10,000
The tenant will enter into a brand new, 20-year triple-net (NNN) sale-leaseback,
Year 6 $126,000 $10,500
with absolutely no landlord responsibilities, upon the close of escrow. The
building is comprised of approximately 2,545 square feet and sits on 1.71 acres of Year 7 $126,000 $10,500
land. The lease will be subject to rent increases every five years equal to the Year 8 $126,000 $10,500
lesser of 5 percent or the change in the consumer price index (CPI) over the $126,000 $10,500
Year 9
previous five years. The lease will also be subject to six, five-year tenant renewal
Year 10 $126,000 $10,500
options.
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
CAP Rate 5.50%
Purchase Price $2,181,818
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 Retailers in the Surrounding Area Include:
Walmart, Lowe’s, Walgreens, Aldi, Family Dollar, The
Home Depot, and AutoZone
Spectrum Health Ludington Hospital | Within One
Mile of Subject Property
ADTC 19,714 Features High Visibility and Ease of Access
Downtown Ludington | Two Miles from Subject
Property
MAJOR EMPLOYERS
EMPLOYER # OF EMPLOYEES *
Spectrum Health Ludington Hosp 446
Walmart 350
Whitehall Industries 350
Jackson Pandrol Inc 300
Indian Summer Cooperative Inc 250
Great Openings 234
Meijer 193 200
Tendercare of Ludington 199
Home Depot The 190
West Shore Esd 175
Great Lakes Castings LLC 160
Lowes 158
* # of Employees based on 5 mile radius
7
5189 US Highway 10, Ludington, MI AERIAL
8
This Wendy’s property is located at 5189 U.S. Highway 10 in Ludington, Michigan.
LOCATION OVERVIEW
Ludington is a harbor town located on Lake Mighigan at the mouth of the Pere
Marquette River. It is the county seat of Mason County. Ludington is 96 miles northwest
of Grand Rapids.
Surrounding Retail and Points of Interest
The subject property is well-positioned, benefiting from its close proximity to many
major national and local retailers. Major national tenants in the surrounding area
include: Walmart, Lowe’s, Walgreens, The Home Depot, Meijer, Aldi, GameStop, Family
Dollar, AutoZone, Peebles, Dollar General, Pizza Hut, Jimmy John’s, Little Caesars Pizza,
McDonald’s, and Taco Bell. This Wendy’s property benefits from its close proximity to
Spectrum Health Ludington Hospital, which is approximately one mile from the
property. Spectrum Health Ludington Hospital is a general medical and surgical hospital,
offering a full range of health care services. Ludington State Park Campgrounds is
located approximately 10 miles away from the subject property, attracting tens of
thousands of tourists and campers annually. Scottville Elementary School is six miles
from the property and has over 300 students enrolled annually. Downtown Ludington is
two miles from the subject property.
Traffic Counts and Demographics
There are approximately 11,780 individuals residing within a three-mile radius and
more than 15,284 individuals residing within a five-mile radius. The subject property is
located on U.S. Highway 10. U.S. Highway 10 experiences average daily traffic counts of
roughly 19,714 vehicles.
Ludington, Michigan
Ludington is the fifth-most-populous tourist city in Michigan. Many people come to the
city year round for recreation, including boating and swimming on Lake Michigan,
Hamlin Lake, and other smaller inland lakes, as well as hunting, fishing and camping.
Ludington is the home port of the SS Badger, a vehicle and passenger ferry with daily
service in the summer across Lake Michigan to Manitowoc, Wisconsin. During the
summer, the city hosts a few large events, including one of the largest Gus Macker
basketball tournaments which attracts over 35,000 spectators. Ludington’s downtown
retail is focused on the city’s tourism and includes art galleries, antique stores, clothing
stores and jewelry stores. Midwest Living magazine voted the Ludington State Park the
number one state park in the Midwest, with seven miles of Lake Michigan shoreline.
9Demographics
1 Mile 3 Miles 5 Miles
5 Miles
POPULATION
2021 Projection 994 12,075 15,691
2016 Estimate 908 11,879 15,400
2010 Census 893 11,821 15,298
2000 Census 645 11,455 14,900
3 Miles
INCOME
Average $45,507 $49,392 $52,905
Median $37,508 $38,254 $41,243
Per Capita $20,383 $20,807 $22,384
1 Mile HOUSEHOLDS
2021 Projection 446 5,043 6,587
2016 Estimate 396 4,909 6,414
2010 Census 391 4,898 6,404
2000 Census 267 4,710 6,143
HOUSING
2016 $109,389 $124,679 $137,633
EMPLOYMENT
2016 Daytime Population 2,294 16,322 19,177
2016 Unemployment 7.16% 6.59% 6.54%
2016 Median Time
18 16 17
Traveled
RACE & ETHNICITY
White 92.05% 92.33% 93.10%
Native American 0.00% 0.00% 0.00%
African American 0.56% 1.15% 1.04%
Asian/Pacific Islander 1.46% 0.85% 0.77%
10Marcus & 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
Soutfield, MI 48076
Tel: (248) 415-2600
Fax: (248) 352-3813
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