Wendy's Sale-Leaseback - OFFERING MEMORANDUM - NNN Properties
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Wendy’s Sale-Leaseback
17010 Harper Avenue, Detroit, Michigan
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 Property Photos Surrounding Area Photos Demographics
FINANCIAL OVERVIEW
17010 Harper Avenue, Detroit, MI
Price: $2,090,909 | 5.50% | Rent: $115,000
PROPERTY DESCRIPTION
Property Wendy’s HIGHLIGHTS
Property Address 17010 Harper Avenue Brand New 20-Year Triple-Net (NNN) Sale Leaseback
City, State, ZIP Detroit, MI, 48224
Estimated Construction Completion Committed To Remodel
Seller Will Commit To A Remodel
Building Size (SF) 2,201 Rent Escalations | Lesser of CPI or Five Percent Increases Every
Lot Size (Acres) 0.24 Five Years
Type of Ownership Fee Simple
Meritage Hospitality | Growing 210+ Unit Operator / Guarantor
THE OFFERING Six (6), Five (5) - Year Option Periods
Price $2,090,909
CAP Rate 5.50%
Annual Rent $115,000
Rent / SF $52.25
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 17010 Harper Avenue in Detroit, MI. The Franchisee, ANNUALIZED OPERATING DATA
Meritage Hospitality Group has been in the Wendy's system for nearly 40 years
Initial Annual Rent $115,000
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 $115,000 $9,583
requirement by Wendy’s corporate for operators to renew their franchise $115,000 $9,583
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 $115,000 $9,583
is $800,000 - $1,200,000. Year 4 $115,000 $9,583
Year 5 $115,000 $9,583
The tenant will enter into a brand new, 20-year triple-net (NNN) sale-leaseback,
Year 6 $120,750 $10,063
with absolutely no landlord responsibilities, upon the close of escrow. The
building is comprised of approximately 2,201 square feet and sits on 0.25 acres of Year 7 $120,750 $10,063
land. This Wendy’s property is was constructed in 1983. The lease will be subject Year 8 $120,750 $10,063
to rent increases every five years equal to the lesser of 5 percent or the change in $120,750 $10,063
Year 9
the consumer price index (CPI) over the previous five years. The lease will also be
Year 10 $120,750 $10,063
subject to six, five-year tenant renewal options.
Year 11 $126,788 $10,566
Year 12 $126,788 $10,566
Year 13 $126,788 $10,566
Year 14 $126,788 $10,566
Year 15 $126,788 $10,566
Year 16 $133,127 $11,094
Year 17 $133,127 $11,094
Year 18 $133,127 $11,094
Year 19 $133,127 $11,094
Year 20 $133,127 $11,094
CAP Rate 5.50%
Purchase Price $2,090,909
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
HIGHLIGHTS
Strong Demographics | Population Within a Five-Mile
Radius is More Than 297,109
Strong Traffic Counts | Harper Avenue and Interstate-
94 | Traffic Counts in Excess of 167,871 and 159,806
Vehicles Respectively
ADTC 159,806
Eastland Center | 88-Store Shopping Mall | Located
Within Three Miles of Subject Property
St. John Hospital and Medical Center | One Mile From
Subject Property | 772 Bed General Medical and
Surgical Hospital
ADTC 167,871
MAJOR EMPLOYERS
EMPLOYER # OF EMPLOYEES *
St John Hospital and Med Ctr 2,095
Bon Secours Cottage Hlth Svcs 1,540
Universal Dedicated Inc 969
St John Northeast Cmnty Hosp 900
Chryslr-Jffrson Assembly Plant 670
Cassens Transport Company 600
McDonalds 588
Fire Department 586
US Post Office 573
Kroger 559
Fire Department Engine 46 523
Fire Department Engine 60 523
Detroit, MI * # of Employees based on 5 mile radius
7
17010 Harper Ave, Detroit, MI AERIAL
8
This Wendy’s property is located at 17010 Harper Avenue in Detroit, Michigan. Detroit
LOCATION OVERVIEW
is the most populous city in Michigan, the fourth-largest city in the Midwest and the
largest city on the United States-Canada border. It is the seat of Wayne County, the
most populous county in the state.
Surrounding Retail and Points of Interest
Major national tenants in the surrounding area include: Rite Aid, Walgreens, Family
Dollar, Subway, McDonald’s, and Popeyes. This Wendy’s property benefits from its
close proximity to Pointe Plaza Shopping Center, which is approximately two miles from
the property. Retailers in Pointe Plaza Shopping Center include: LA Fitness, Barnes &
Noble, Buddy’s Pizza, and GNC. Eastland Center, an enclosed mall, is located three miles
from this Wendy’s property. The mall has 88 stores and is anchored by Target, Shoppers
World and Burlington Coat Factory. The mall area also includes a Lowe’s, Family Dollar
and The Home Depot. St. John Hospital and Medical Center, a general medical and
surgical hospital, is approximately one mile from the subject property. St. John Hospital
and Medical Center has 772 beds and more than 50 medical and surgical specialties.
Traffic Counts and Demographics
The Wendy’s property benefits from strong demographics with 155,101 individuals
residing within a three-mile radius and 297,109 individuals residing within a five-mile
radius. The property is located on Harper Avenue which has average daily traffic counts
of over 167,871 vehicles. This Wendy’s property is also in close proximity to Interstate-
94. Interstate-94 experiences exceptional traffic counts of over 159,806 vehicles per
day.
Detroit, Michigan
The city is a major port on the Detroit River and the Detroit Metropolitan Airport is
among the most important hubs in the United States. The City of Detroit anchors the
second-largest economic region in the Midwest, behind Chicago, and the thirteenth-
largest in the United States. Several major companies are based in the city including
three Fortune 500 companies. The most heavily representative sectors are automotive
manufacturing, finance, technology, and health care. Major companies in the city
include General Motors, Quicken Loans, Ally Financial and Little Caesars. In the 2010s,
several initiatives were taken by Detroit’s citizens and new inhabitants to improve the
cityscape by renovating and revitalizing neighborhoods. Downtown Detroit has held an
increased role as a cultural destination in the 21st century, with the restoration of
several historic theatres and entertainment venues, high-rise renovations, new sports
stadiums and a riverfront revitalization project.
9
PROPERTY PHOTO
10PROPERTY PHOTO
11SURROUNDING AREA PHOTO
12Demographics
1 Mile 3 Miles 5 Miles
5 Miles POPULATION
2021 Projection 22,921 146,500 283,355
2016 Estimate 23,637 152,768 294,161
2010 Census 24,648 158,184 301,177
2000 Census 28,805 200,792 378,962
3 Miles
INCOME
Average $51,126 $71,024 $62,418
Median $40,505 $44,750 $40,858
Per Capita $17,755 $25,819 $23,468
1 Mile
HOUSEHOLDS
2021 Projection 7,938 53,389 106,872
2016 Estimate 8,179 55,350 110,056
2010 Census 8,535 57,284 112,713
2000 Census 10,210 69,672 135,602
HOUSING
2016 $67,099 $97,860 $84,894
EMPLOYMENT
2016 Daytime Population 14,721 118,036 231,748
2016 Unemployment 10.05% 9.87% 10.58%
2016 Median Time
30 29 28
Traveled
RACE & ETHNICITY
White 12.60% 34.80% 39.52%
Native American 0.01% 0.01% 0.01%
African American 84.27% 61.35% 56.23%
Asian/Pacific Islander 0.54% 1.21% 1.35%
13Marcus & 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 4
Soutfield, MI 48076
Tel: (248) 415-2600
Fax: (248) 352-3813
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