Arby's - New Prototype - Millco Investments
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Q1/2018 Scheduled Remodel Representative Photo
Arby’s - New Prototype Confidential Offering Memorandum
2500 North Highway 190 | Covington, LA 70433
Brand New Remodel Scheduled for Q1 2018 | New 20-Year Absolute NNN Lease | 5.00% Rental
Increases Every 5 Years | Experienced Operator
Offered
Exclusively by Table of Contents
Brad Feller Investment Overview Location Overview
Senior Director The Offering..…………………………………………..…..……4 Strip Map….……...……………................……………………11
bfeller@stanjohnsonco.com Investment Highlights…...……….………....…………...5 Location Overview..………..….……………………………12
Rent Roll & Income Statement.......………….….…6 Regional Map..…..……….....…………………………………13
Isaiah Harf Lease Abstract......................................................7 Photos............................…..………………….……………14
Director
iharf@stanjohnsonco.com Tenant Overview….…...............................…………..8 Demographics................................................……15
+1 312.777.2437 Remodel Case Study.............................…………....9
Andy Gatchell
Associate Director
agatchell@stanjohnsonco.com
Confidentiality and Restricted Use Agreement
Jack Klister This Confidential Offering Memorandum (“COM”) is provided by Stan Johnson Company (“SJC”), solely for your consideration
Analyst of the opportunity to acquire the commercial property described herein (the “Property”). This COM may be used only as stated
herein and shall not be used for any other purpose, or in any other manner, without prior written authorization and consent of SJC.
jklister@stanjohnsonco.com
This COM does not constitute or pertain to an offer of a security or an offer of any investment contract. This COM contains
descriptive materials, financial information and other data compiled by SJC for the convenience of parties who may be interested
Brandon Duff in the Property. Such information is not all inclusive and is not represented to include all information that may be material to
Regional Director an evaluation of the acquisition opportunity presented. SJC has not independently verified any of the information contained
herein and makes no representations or warranties of any kind concerning the accuracy or completeness thereof. All summaries
bduff@stanjohnsonco.com
and discussions of documentation and/or financial information contained herein are qualified in their entirety by reference to the
actual documents and/or financial statements, which upon request may be made available. An interested party must conduct its
own independent investigation and verification of any information the party deems material to consideration of the opportunity,
In Association With
or otherwise appropriate, without reliance upon SJC.
Jeff Matulis
LA Broker #BROK0995697340-ASA The Property may be financed or withdrawn from the market without notice, and its owner(s) reserve(s) the right to negotiate with
any number of interested parties at any time. The Property is offered and sold by its owner(s) as is, where is, and with all faults,
without representation or warranty of any kind except for any customary warranties of title.
BY ACCEPTING THIS COM, YOU AGREE THAT: (1) all information contained herein, and all other information you have received or
may hereafter receive from SJC relating to the Property, whether oral, written or in any other form (collectively, the “Information”),
Stan Johnson Company is strictly confidential; (2) you will not copy or reproduce, and claim as your own without attribution to SJC, all or any part of
303 East Wacker Drive | Suite 1111 this COM or the Information; (3) upon request by SJC at any time, you will return and/or certify your complete destruction of
all copies of this COM and the Information; (4) for yourself and all your affiliates, officers, employees, representatives, agents
Chicago, Illinois 60601 and principals, you hereby release and agree to indemnify and hold harmless SJC all of its affiliates, officers, employees,
P: +1 312.240.0127 | F: +1 312.240.0158 representatives, agents and principals, from and with respect to any and all claims and liabilities arising from or related to the
receipt or use of this COM and/or any other Information concerning the Property; (5) you will not provide this COM or any of the
Information to any other party unless you first obtain such party’s acceptance and approval of all terms, conditions, limitations
stanjohnsonco.com and agreements set forth herein, as being applicable to such party as well as to you; and (6) monetary damages alone will not
be an adequate remedy for a violation of these terms and that SJC shall be entitled to equitable relief, including, but not limited
to, injunctive relief and specific performance, in connection with such a violation and shall not be required to post a bond when
obtaining such relief.
Subject Property
Section One
Investment Overview
Remodel Representative Photo
The Offering
Stan Johnson Company, on behalf of ownership, is pleased to exclusively offer for sale
the opportunity to acquire the 100% fee-simple interest in the commercial property Price: $1,889,764 Cap: 6.35%
located at 2500 North Highway 190 in Covington, Louisiana (“the Property). Following a
complete remodel scheduled for Q1 2018, the Property will be leased to Miracle Restaurant Offering Summary
Group, LLC doing business as Arby’s Restaurant. The Tenant will operate under a 20-year,
Offering Price $1,889,764
absolute NNN lease with 5.00% rental escalations every five (5) years.
Current NOI $120,000
The complete remodel of the Property will bring it in line with Arby’s “Inspire” design
Current Tenant Miracle Restaurant Group d/b/a Arby's
platform, the first major overhaul to the Arby’s design in almost two decades. The new
design takes the traditional deli feel Arby’s has long been known for and gives it a more Property Type Quick Service Restaurant
contemporary look. Features of the remodel include subway tiles, wood elements and
a new color palette that includes bold geometric shapes and chalkboard drawings.
Upgrades will also include Energy-Star compliant food service equipment and extensive Property Overview
LED lighting technology. Other Arby’s locations that have undergone the “Inspire” Location 2500 North Hwy 190 | Covington, LA 70433
renovation have seen an average increase in sales of nearly 20% since re-opening. The
Total Building Size +/- 2,175 SF
remodel will be completed by May 2018.
Year Built/Renovated 2008 / 2018
The Property is located along US Highway 190, the main retail thoroughfare of Covington
Lot Size +/- 0.67 Acres
that sees more than 62,411 vehicles per day. Fellow tenants in the nearby area include
Chase Bank, Walmart Neighborhood Market, Autozone, CVS, and many more. Arby’s will Lease Term Remaining 20 years
serve a trade area of more than 85,702 people with an average household income of Rental Increases 5.00% Every 5 Years
$104,872 within a 5-mile radius.
Lease Type Absolute NNN
Miracle Restaurant Group, LLC (MRG) is an Arby’s franchisee whose portfolio includes Parking 24 Spaces
28 restaurants across five states – Illinois, Indiana, Louisiana, Mississippi and Texas. The
company was founded in 2005 by Donald Moore, the current President and CEO, along
with a group of financial investors. Arby’s Restaurant Group, Inc. is the franchisor of Demographics
the Arby’s brand and ownership is split between Roark Capital Group (81.5%) and The
0 - 1 mi. 0 - 3 mi. 0 - 5 mi.
Wendy’s Company (18.5%). As of December 31, 2016, Arby’s operated 956 company
owned restaurants and 2,448 franchised units across 48 states and 5 countries. 2017 Population 4,426 39,516 85,702
2017 Total Households 1,546 14,923 32,269
2017 Average HH Income $121,473 $114,746 $104,872
Arby’s • Covington, LA • 4
Unique Property Attributes
Investment Highlights
Brand New Brand New 20-Year Lease Term
20-YEAR Upon the sale of the Property, Arby’s will operate under a 20-year lease term, allowing an investor to fully
take advantage of a long-term stream of cash flows through 2038.
Lease
Absolute NNN Lease Structure
Absolute NNN The lease will be absolute NNN, with zero Landlord responsibilities, making this a truly passive investment.
LEASE STRUCTURE
Favorable Rental Escalations
Base rent will increase 5.00% every 5 years and will provide a significant hedge against future inflation
5.00% Increase
along with boosting the overall cash flow of the asset.
EVERY 5 YEARS Upcoming Store Renovation
The Property is a former Taco Bell, and will be fully renovated to the latest Arby’s store layout. This shows
the loyal commitment of the Tenant to long-term success at this location.
Complete Store Renovation
Experienced Operator
Scheduled for Q1 2018 The lease is guaranteed by Miracle Restaurant Group, a 28-unit Arby’s franchisee with more than 12 years
of experience.
Experienced Operator Prime Location along US-190
28 5
locations The Property boasts strong visibility along US-190 (Tammany Parkway), a heavily trafficked roadway
across States that sees more than 62,411 vehicles per day. This is the main retail thoroughfare in Covington that is
accessed via I-12 (56,740 vehicles per day).
Affluent Local Demographics
62K+ Day
Vehicles Per
Covington residents living within a 1-mile radius of the Property have an average household income of
$121,473.
85,702 Population
$104,872 Avg HHI
within 5 miles
Arby’s • Covington, LA • 5
Rent Roll
Building Lease Rent Schedule Renewal
Tenant Lot Size Lease Type
Size Term Period Years Monthly Base Rent Annual Base Rent Rent PSF Increase Options
1-5 $10,000 $120,000 $55.17 -
6-10 $10,500 $126,000 $57.93 5.00%
Base
11-15 $11,025 $132,300 $60.83 5.00%
16-20 $11,576 $138,915 $63.87 5.00%
Absolute 4 x 5 Year
0.67 Acres 2,175 SF 20 years
NNN Options
Option 1 21-25 $12,155 $145,861 $67.06 5.00%
Miracle
Option 2 26-30 $12,763 $153,154 $70.42 5.00%
Restaurant
Group, LLC
Option 3 31-35 $13,401 $160,811 $73.94 5.00%
Option 4 36-40 $14,071 $168,852 $77.63 5.00%
Income Statement
Investment Year 1 2 3 4 5 6 7 8 9 10
Year Ending 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Revenue
Arby’s Rental Income $120,000 $120,000 $120,000 $120,000 $120,000 $126,000 $126,000 $126,000 $126,000 $126,000
Total Revenue $120,000 $120,000 $120,000 $120,000 $120,000 $126,000 $126,000 $126,000 $126,000 $126,000
Cash Flow Before Debt Service $120,000 $120,000 $120,000 $120,000 $120,000 $126,000 $126,000 $126,000 $126,000 $126,000
Arby’s • Covington, LA • 6
Lease Abstract
Tenant Miracle Restaurant Group, LLC
Trade Name Arby's Restaurant
Address 2500 North Highway 190 | Covington, LA 70433
Building Size (SF) 2,175
Lot Size (Acres) 0.67
Year Built/Remodeled 2008 / 2018
Lease/Rent Commencement Upon Sale of Property
Lease/Rent Expiration 20th Anniversary of the Rent Commencement Date
Base Lease Term 20 Years
Base Lease Term Remaining 20 Years
Current Annual Base Rent $120,000
Rental Increases 5.00% Every 5 Years
Renewal Options 4 x 5 Year Options
Renewal Notice 180 Days
Renewal Option Increases 5.00% Per Option
Lease Type Absolute NNN
Landlord Responsibilities None
Parking 24 Spaces
Property ID St. Tammany Parish: 106-010-5317
Ownership Interest Fee Simple
Encumbrances None; Delivered free & clear
Representative Photos - New “Inspire” Concept Scheduled for Q1 2018 Remodel
Arby’s • Covington, LA • 7
Arby’s Tenant Overview
Parent Company Profile
Tenant Profile
Arby’s Restaurant Group, Inc. (Arby’s) is the first nationally franchised sandwich restaurant brand Tenant Miracle Restaurant Group, LLC
and the second largest quick-service sandwich chain in the U.S. with more than 3,400 restaurants
Type Franchisee
worldwide, servicing 48 states and 5 countries (U.S., Canada, Turkey, United Arab Emirates, and Qatar).
As of December 31, 2016, there were 956 company-owned restaurants and 2,448 franchised units. No. of Locations 28
Areas Served IL, IN, LA, MS, TX
Founded in Boardman, OH in 1964 by Forrest and Leroy Raffel, the Arby’s brand purpose is to
Founded 2005
“inspire smiles through delicious experiences.” Arby’s accomplishes this by celebrating the art of
Meatcraft™ with a variety of high-quality proteins and innovative, crave-able sides, such as curly fries Headquarters Mandeville, LA
and Jamocha shakes. Arby’s Fast Craft™ restaurant services feature a unique blend of quick-serve
Website www.miraclerestaurantgroup.com
speed combined with the quality and made-for-you care of fast casual. Besides its classic Roast Beef
and Beef ‘n Cheddar sandwiches, Arby’s recently introduced the Smokehouse Brisket Sandwich,
which has quickly become its most successful offering. Arby’s Restaurant Group, Inc. is the franchisor Corporate Profile
of the Arby’s brand and is headquartered in Atlanta, Georgia. Atlanta-based private equity firm,
Roark Capital Group, acquired the company in July 2011 and owns 81.5% of the company, while The Roark Capital Group (81.5%)
Parent Company
Wendy’s Company owns the other 18.5%. Other restaurant companies in the Roark Capital Group The Wendy's Company (18.5%)
portfolio include Auntie Anne’s, Carl’s Jr/Hardees, Cinnabon, Jimmy John’s, Moe’s Southwest Grill,
DBA Arby's Restaurant Group, Inc.
Naf Naf Grill, among several others.
Company Type Private
Tenant Tenant Business Fast Casual Restaurant
Founded 1964
Miracle Restaurant Group, LLC (MRG) is an Arby’s franchisee, currently operating 28 units across
five states, including locations in Illinois, Indiana, Louisiana, Mississippi and Texas. The company was Headquarters Atlanta, GA
founded in 2005 by Donald Moore, the current President and CEO, along with a group of financial
No. of Locations Approx. 3,400
investors. The company is headquartered in Mandeville, Louisiana.
Website www.arbys.com
Arby’s • Covington, LA • 8
Arby’s Remodel Case Study
Covington, LA
The Concept
Arby’s Restaurant Group Inc., which operates or franchises nearly 3,400 Arby’s The new design is part of a larger trend for Arby’s restaurants: The company
restaurants worldwide unveiled a new Inspire restaurant design and format in 2014, has aimed to promote the brand as a step above quick-service restaurant (QSR)
with a multi-year plan to roll out franchised development and remodeling activity. concepts like McDonald’s and Burger King and slightly under the trendy fast-
casual space popularized by Chipotle Mexican Grill —a space Arby’s calls “fast
The new design, which features a contemporary look and improved guest
crafted.”
experience, is developed to deliver fast-casual aesthetics while employing QSR
economics. The Inspire design features a new color palette, communal tables, In January 2017, Arby’s reported same-store sales grew 3.8% in 2016, helping
contemporary lighting and new finishes, including the incorporation of wood boost system-wide sales to $3.6 billion from $3.5 billion in 2015. The chain said
and subway tiling. The kitchen’s production line has also been revamped to it was “on track” toward reaching its goal of $4 billion in system-wide sales by
improve efficiency. the end of 2018. It also reported that it opened 60 new restaurants, resulting in
restaurant count growth for the first time in nearly a decade.
Newly remodeled restaurants thus far have seen average sales increases
exceeding 20 percent, according to the company.
Before After
Section Two
Location Overview
Remodel Representative PhotoNORTHSHORE
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Arby’s • Covington, LA • 11Location Overview
Covington is a city in and the parish seat of St. Tammany Parish,
Louisiana. Located at a fork of the Boque Falaya and Tchefuncte River
in southeastern Louisiana, the City is 41 miles north of New Orleans.
Covington is home to more than 10,300 residents and is part of the
New Orleans-Metaire-Kenner MSA, which has an estimated population
of 1,251,849.
Covington has also established itself as a regional tourist destination. The
Abita Brewing Company - Covington, LA
city provides recreational opportunities and numerous special events
that attract thousands of visitors annually. Additionally, Covington has
an abundance of popular restaurants and boutique shops. The Covington
Three Rivers Art Festival is a major regional festival that attracts up to
50,000 visitors each November to view fine art and crafts displayed
outdoors along six blocks of Columbia Street, from the Landing to the
former City Hall in downtown. Special care has been taken to ensure
the conservation of Covington’s historic homes and buildings while also
allowing for the modernization of its infrastructure.
New Orleans is home to one of the largest and busiest ports in the
world, and the Metropolitan New Orleans Area is a center of the maritime
industry. The New Orleans region accounts for a significant portion of
the nation’s oil refining and petrochemical production, and it serves as
a white collar corporate base for onshore and offshore petroleum and
University of New Orleans
natural gas production.
New Orleans is also a center for higher learning, with over 50,000
students enrolled in the region’s eleven two- and four-year degree
granting institutions. Tulane Unversity, a top 50 research university,
is located in New Orleans’ Uptown neighborhood. Metropolitan New
Orleans is a major regional hub for the health care industry and boasts
a small, globally competitive manufacturing sector. The center city
possesses a rapidly growing, entrepreneurial creative industries sector,
and is, of course, renowned for its cultural tourism.
New Orleans
Arby’s • Covington, LA • 12Regional Map
Baton Rouge
Pensacola
New Orleans
N
Arby’s • Covington, LA • 13Inspire Concept Representative Photos
Arby’s • Covington, LA • 14Demographics
2500 North Highway 190 | Covington, LA 70433 0-1 mi. 0-3 mi. 0-5 mi.
Population
2017 Population 4,426 39,516 85,702
2022 Population 4,725 42,228 92,005
2000-2010 Annual Rate 1.85% 2.27% 2.14%
2010-2017 Annual Rate 1.09% 1.12% 1.47%
2017-2022 Annual Rate 1.32% 1.34% 1.43%
2017 Median Age 42.2 42.0 40.9
Households
2017 Total Households 1,546 14,923 32,269
2022 Total Households 1,650 15,970 34,704
2000-2010 Annual Rate 2.03% 2.80% 2.61%
2010-2017 Annual Rate 1.14% 1.21% 1.34%
2017-2022 Annual Rate 1.31% 1.37% 1.47%
2017 Average Household Income $121,473 $114,746 $104,872
N
Arby’s • Covington, LA • 15Offered Exclusively by
Brad Feller
Senior Director going beyond
bfeller@stanjohnsonco.com
Isaiah Harf
Director
iharf@stanjohnsonco.com
+1 312.777.2437
Andy Gatchell
Associate Director
agatchell@stanjohnsonco.com
Jack Klister
Analyst
jklister@stanjohnsonco.com
Brandon Duff
Regional Director
bduff@stanjohnsonco.com
In Association With
Jeff Matulis
LA Broker #BROK0995697340-ASA
Stan Johnson Company
303 East Wacker Drive | Suite 1111
Chicago, IL 60601
P: +1 312.240.0127 | F: +1 312.240.0158
stanjohnsonco.com
The information contained herein was obtained from sources believed reliable, however,
Stan Johnson Company makes no guaranties, warranties or representations as to the
completeness thereof. The presentation of this property for sale, rent or exchange is
submitted subject to errors, omissions, change of price or conditions, or withdrawal
without notices.You can also read
