the issenberg britti group of marcus & millichap - 3411 s florida...

3411 S Florida Ave, Lakeland, FL 33803

15-Year Corporate Absolute-Net (NNN) Ground Lease - with IncreasesOFFERING MEMORANDUM

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ACTUAL PROPERTY PHOTO

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CON F I DE N T I A L I T Y A N D DI S C L A I M E R

The 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 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. All potential buyers must take appropriate measures to verify all of the information set forth herein.

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

Marcus & Millichap Real Estate Investment Services, Inc. (“M&M”) is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of M&M, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of M&M, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

NON-ENDORSEMENT NOTICE

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOURMARCUS & MILLICHAP AGENT FOR MORE DETAILS.

N E T L E A S E DI 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.

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.

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.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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TABLE OF CONTENTS EXECUTIVE SUMMARY......................... FINANCIAL ANALYSIS.........................

RESEARCH..........................................

DEMOGRAPHIC ANALYSIS..................

EXECUTIVE SUMMARY

7This 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. © 2014 Marcus & Millichap X 0 3 9 0 3 6 1

Cheddar’s | Lakeland, FloridaEXECUTIVE SUMMARY

Marcus & Millichap is pleased to present a premier net-leased offering, which benefits from all of the qualities that make for a trophy real estate investment: stellar location, outstanding tenant guarantee, long term lease with robust increases, and zero management.

This Cheddar’s is a brand new ground lease, allowing an investor to passively collect income while also offering the security that the tenant is committed to the site by virtue of its having invested the money to construct the building. Cheddars signed a 15-Year lease, with Four - Five Year options, and an Eight percent increase in year Six, and a 10 Percent rent increase in Year 11. This offering comes with a corporate guaranty, and is built on an oversized, 2.6 Acre lot.

Cheddar’s is located in Lakeland, Florida, a growing city, best known as the home of Publix Grocery’s corporate headquarters. The property is situated in a commercial node on South Florida Avenue, just 1,000 feet from the Polk Expressway, with over 37,000 cars passing daily. The property shares a lighted intersection with a Super Walmart, a brand new, 90 room hotel, Verizon, Smoothie King, Chipotle, Hooters, and IHOP. Immediately south of the Walmart is Merchants Walk, a power center anchored by Hobby Lobby, Stein Mart, Marshalls, and Ross Dress For Less. Just Two miles away is Lakeside Village, a 610,000 square foot mall anchored by Kohl’s, Belk, Books-A-Million, and a Cobb Theater enhanced with an Imax, the only one in 30 miles.

Given its location, lease structure, tenant strength, and stability, this investment would make

a fantastic addition and any investor’s portfolio. Investment Highlights

■■ Zero Management, Ground Lease Investment

■■ Corporate Guarantee | Darden Restaurants (NYSE:DRI) agreed to acquire all 165 Cheddar’s Scratch Kitchen locations. Darden holds an investment grade credit rating of (S&P: BBB)

■■ Unmatched Location across Street from Super Walmart

■■ Lighted Intersection

■■ Neighbors Include Brand New Hotel, Hooters, IHOP, Verizon, Chipotle

■■ Excellent Demos: Five Mile Population Greater then 137,000; and Average Household Income Greater then $60,000

■■ 37,000 Cars Daily

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. © 2014 Marcus & Millichap X 0 3 9 0 3 6 1

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Cheddar’s | Lakeland, FloridaFINANCIAL SUMMARY

RENT INCREASES MONTHLY RENT ANNUAL RENT

Year 1-5 $11,541.67 $138,500.00

Year 6-10 $12,466.67 $149,600.00

Year 11-15 $13,716.67 $164,600.00

Option 1 (Year 16-20) $14,966.67 $179,599.99

Option 2 (Year 21-25) $16,330.58 $195,966.94

Option 3 (Year 26-30) $17,818.78 $213,825.41

Option 4 (Year 31-35) $19,442.61 $233,311.32

Base Rent ($17.12/SF) $138,500

Net Operating Income $138,500

Total Anual Return 4.65% / $138,500

ANNUALIZED OPERATING DATAList Price $2,978,494.00Cap Rate 4.65%

Lot Size 2.6 +/- AC

Store Size 8,092 SF

Price/SF (GLA) $368 SF

Year Built 2016

Type of Ownership Leased Fee / Ground Lease

Property Type Net Leased Restaurant

CHEDDAR’S 3411 South Florida Avenue Lakeland, FL 33803

PROPERTY RENT DATA

10This 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. © 2014 Marcus & Millichap X 0 3 9 0 3 6 1

Cheddar’s | Lakeland, FloridaTENANT LEASE ABSTRACT

Tenant Trade Name Cheddar’s Casual Cafe

Tenant Corporate Store

Ownership Private

Guarantor Corporate Guarantee

Sales Volume 438.3 Million

Lease Type Absolute Net

Lease Term 15 Years

Lease Commencement Date June 15, 2016

Rent Commencement Date June 15, 2016

Expiration Date of Base Term June 31, 2031

Roof & Structure Maintenance Tenant Responsible

Increases Increases Every Five Years

Options Four (Five Year) Options

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. © 2014 Marcus & Millichap X 0 3 9 0 3 6 1

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Aerial details Cheddar’s | Lakeland, FloridaLOCAL AERIAL

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. © 2014 Marcus & Millichap

Site Plan

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Cheddar’s | Lakeland, FloridaSITEPLAN AERIAL


Site Plan

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Cheddar’s | Lakeland, FloridaSITEPLAN AERIAL 2


Regional Map

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Cheddar’s | Lakeland, FloridaREGIONAL MAP

Tenant Overview


ABOUT CHEDDAR’S CORPORATION

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Irving, Texas-based Cheddar’s Casual Cafe Inc. was founded in 1979 as a casual-dining restaurant focused on neighborhood clientele, scratch-kitchen food preparation and value-oriented pricing. The company now has more than 165 company-owned and franchised locations in 28 states. Cheddar’s units are typically 8,000 Square feet and seat 288 guests.

Cheddar’s ranked Number one in value in the Nation’s Restaurant News/WD Partners’ 2014 Consumer Picks survey.

Cheddar’s | Lakeland, FloridaTENANT OVERVIEW

Cheddar’s | Lakeland, Florida

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Tenant Overview


Darden Restaurants Inc. gained the most in more than three years after topping earnings estimates and agreeing to buy Cheddar’s Scratch Kitchen, giving the owner of Olive Garden a fresh source of growth.

Darden announced plans on Monday to purchase the chain for $780 million in cash from private equity firms L Catterton and Oak Investment Partners. Cheddar’s has 165 locations across 28 states and would become Darden’s third-biggest brand.

The plan is to squeeze tens of millions in savings from the merger and use it to boost earnings by as much as 12 cents a share in 2018. Cheddar’s brings a brand with high volume per restaurant, and its “made from scratch” food focus may help appeal to consumers seeking more wholesome options. For Darden, the transaction seems like a “well-priced deal,” said Oppenheimer analyst Brian Bittner.

“The accretive Cheddar’s acquisition is smart use of the company’s cash position,” he said in a report.

The shares gained as much as 9 percent to $82.36 in New York trading. That’s the biggest intraday gain since October 2013 and vaults Darden into record territory. As of Monday’s close, the stock was up 3.9 percent this year.

Olive Garden’s Gain

Third-quarter earnings were $1.32 a share, excluding some items. That topped the $1.27 average estimate for the period, which ended Feb. 26. Same-store sales gained 1.4 percent at Olive Garden, its flagship chain. An-alysts had estimated a 0.4 percent increase, according to Consensus Metrix.

The Orlando, Florida-based company also boosted its earnings outlook for

DARDEN SURGES AFTER AGREEING TO BUY CHEDDAR’S, BEATING VIEWS

March 27, 2017 | Leslie Patton | Bloomberg

the year. It now expects $3.95 to $4 a share, with same-store sales increasing about 1.5 percent.

Investors are betting the acquisition will help reinvigorate a company whose various restaurants are seeing uneven growth. Darden’s Olive Garden has been outpacing some of its other chains, including LongHorn Steakhouse and Capital Grille.

Darden expects to generate $20 million to $25 million in pretax savings from the merger by fiscal 2019. The goal of adding 12 cents a share to earnings next year excludes the initial costs of the integration, the company said.

Cheddar’s, founded in 1979, sells dishes such as pasta, sirloin steaks, grilled catfish and baby-back ribs. It also has a bar with cocktails, beer and wine. Each location averages $4.4 million a year, Darden said.

FULL ARTICLE...

TENANT RESEARCH

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https://www.bloomberg.com/news/articles/2017-03-27/olive-garden-owner-to-acquire-cheddar-s-chain-for-780-million

Cheddar’s | Lakeland, Florida


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Cheddar’s | Lakeland, FloridaDEMOGRAPHICS

DEMOGRAPHIC STUDIES

POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection

Total Population 10,167 66,325 145,541

2016 Estimate


2010 Census


2000 Census


Current Daytime Population

2016 Estimate 11,671 81,323 172,548

HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection

Total Households 4,513 28,046 56,409

2016 Estimate


Average (Mean) Household Size 2.23 2.31 2.49

2010 Census


2000 Census


Occupied Units

2021 Projection 4,513 28,046 56,409

2016 Estimate 4,758 30,140 60,066

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate

$150,000 or More 4.37% 4.98% 4.63%

$100,000 - $149,000 9.49% 9.18% 9.66%

$75,000 - $99,999 10.39% 10.34% 10.84%

$50,000 - $74,999 21.08% 19.49% 18.73%

$35,000 - $49,999 16.77% 16.07% 15.51%

Under $35,000 36.61% 38.53% 39.37%

Average Household Income $65,879 $64,936 $63,892

Median Household Income $46,672 $45,517 $44,739

Per Capita Income $29,120 $27,629 $25,075

HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 MilesTotal Average Household Retail Expenditure $54,561 $54,571 $54,739

Consumer Expenditure Top 10 Categories

Housing $15,665 $15,684 $15,646

Shelter $9,465 $9,463 $9,482

Transportation $9,238 $9,310 $9,445

Food $6,397 $6,387 $6,444

Personal Insurance and Pensions $4,654 $4,621 $4,702

Health Care $3,730 $3,772 $3,691

Utilities $3,615 $3,633 $3,642

Entertainment $2,209 $2,255 $2,265

Apparel $1,265 $1,262 $1,260

Cash Contributions $1,250 $1,228 $1,150

POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age

2016 Estimate Total Population 9,792 65,354 140,080

Under 20 21.62% 23.55% 25.60%

20 to 34 Years 21.02% 20.38% 19.73%

35 to 39 Years 5.61% 5.21% 5.44%

40 to 49 Years 12.50% 11.85% 12.36%

50 to 64 Years 19.32% 19.40% 19.68%

Age 65+ 19.93% 19.63% 17.19%

Median Age 41.46 40.77 39.31

Population 25+ by Education Level

2016 Estimate Population Age 25+ 7,024 45,043 94,088

Elementary (0-8) 1.89% 3.12% 4.13%

Some High School (9-11) 5.47% 7.21% 9.03%

High School Graduate (12) 30.39% 32.26% 33.88%

Some College (13-15) 23.05% 20.10% 19.25%

Associate Degree Only 7.40% 8.41% 7.91%

Bachelors Degree Only 19.69% 18.40% 16.80%

Graduate Degree 11.86% 9.95% 8.20%

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20This 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. © 2014 Marcus & Millichap

RACE AND ETHNICITY The current year racial makeup of your selected area is as follows: 84.07% White, 7.35% Black, 0.16% Native American and 1.84% Asian/Pacific Islander. Compare these to US averages which are: 70.77% White, 12.80% Black, 0.19% Native American and 5.36% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 14.08% of the current year population in your selected area. Compare this to the US average of 17.65%.

HOUSING The median housing value in your area was $147,828 in 2016, compare this to the US average of $187,181. In 2000, there were 2,648 owner occupied housing units in your area and there were 1,473 renter occupied housing units in your area. The median rent at the time was $533.

EMPLOYMENT In 2016, there are 4,843 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 68.64% of employees are employed in white-collar occupations in this geography, and 30.45% are employed in blue-collar occupations. In 2016, unemployment in this area is 5.15%. In 2000, the average time traveled to work was 20.00 minutes.

POPULATIONIn 2016, the population in your selected geography is 9,792. The population has changed by 8.08% since 2000. It is estimated that the population in your area will be 10,167.00 five years from now, which represents a change of 3.83% from the current year. The current population is 46.46% male and 53.54% female. The median age of the population in your area is 41.46, compare this to the US average which is 37.68. The population density in your area is 3,120.24 people per square mile.

HOUSEHOLDS There are currently 4,315 households in your selected geography. The number of households has changed by 4.73% since 2000. It is estimated that the number of households in your area will be 4,513 five years from now, which represents a change of 4.59% from the current year. The average household size in your area is 2.23 persons

INCOMEIn 2016, the median household income for your selected geography is $46,672, compare this to the US average which is currently $54,505. The median household income for your area has changed by 13.68% since 2000. It is estimated that the median household income in your area will be $53,989 five years from now, which represents a change of 15.68% from the current year. The current year per capita income in your area is $29,120, compare this to the US average, which is $29,962. The current year average household income in your area is $65,879, compare this to the US average which is $78,425.

GEOGRAPHY: 1 MILE

Cheddar’s | Lakeland, FloridaDEMOGRAPHICS

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Regional MapSite PlanTenant Overview

the issenberg britti group of marcus & millichap - 3411 s florida...

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