1. business and industrial

SCHLOTZSKY’S
& CINNABON
Offering
Summary
204 SOUTHEAST GEORGIA AVENUE
SWEETWATER, TEXAS
Strong
Operating
History
Investment Highlights
New 20-Year Absolute Triple Net Lease. Upon close of escrow, the
tenant will enter into a new 20-year absolute triple net lease with four
5-year options including 5% rent increases every five years in both
the primary and option periods. The tenant will be responsible for
all real estate taxes, insurance, maintenance, and casualty damage.
There are absolutely zero landlord responsibilities, presenting an
investor with consistent cash flow and no management obligations.
Franchisee with a Strong Operating History. This Schlotzsky’s and
Cinnabon property has been in the same location in Sweetwater,
Texas for over 18 years. Since opening in 1996, store sales have
increased an average of 4.98% on an annual basis. Over the past two
years annual store sales have increased by 18%. Average store sales
are estimated to be over 40% higher than the average Schlotzsky’s
franchise. This franchisee also operates a corporate certified
Schlotzsky’s catering business.
Strong Underlying Economic Fundamentals. Under the new lease
term, the initial rent will be set at a low ratio of 5% of projected year
one sales and over the primary term the unleveraged cash-on-cash
return for an investor will be 7.54%. In 2012, the tenant invested over
$100,000 in a corporate reimage of both the interior and exterior of
the building, demonstrating strong confidence in both the business
and the underlying real estate location.
Well-Established Corporate Parent. FOCUS Brands, Inc., the parent
corporation of both Schlotzsky’s and Cinnabon, is a privately held
company based in Atlanta, Georgia founded originally in 1934 as
Carvel Holding Corp. Today, FOCUS Brands operates over 4,500
bakeries, restaurants, and cafés in the United States, the District of
Columbia, Puerto Rico, and 63 foreign countries. FOCUS Brands,
Inc. also operates the brand names of Moe’s Southwest Grill, Carvel,
Auntie Anne’s Pretzels, McAlister’s Deli, and Seattle’s Best Coffee.
West Texas Crossroads Location. Sweetwater, Texas is the county
seat of Nolan County and is located on heavily travelled Interstate 20.
I-20 connects Sweetwater with the commercial markets in Abilene (45
minutes), Dallas-Fort Worth (3 hours), Midland-Odessa (1.5 hours),
and Lubbock (2 hours). Sweetwater’s location places it on top of the
© 2015 The Greysteel Company LLC. All rights reserved.
Cline Shale, once estimated to be the nation’s largest underground
petroleum formation encompassing a 10-county area on the eastern
edge of Texas’ Permian Basin oil field. Sweetwater’s economy is also
bolstered by investments in wind energy with one of the world’s
largest wind farms spread along miles of nearby mesas.
Prime Retail Corridor. The Property sits at a lighted intersection in
the heart of Sweetwater’s commercial corridor. In addition to being
convenient to I-20 off-ramps, the intersection services a high volume
of north-south traffic departing I-20 and heading to and from Austin.
Surrounding national retailers include Walmart, Kmart, McDonald’s,
Wendy’s, Taco Bell, 7-Eleven, Aaron Rents, Tractor Supply, Verizon
Wireless, and CATO Fashions. Numerous hotels also serve the
immediate area including LaQuinta Inn, Best Western, and Hampton
Inn. Within a quarter mile is Rolling Plains Memorial Hospital, the
largest regional hospital in the county, which is currently undergoing
a $25 million dollar expansion.
Offering
PRICING METRICS
Price
$1,000,000
Cap Rate
7.00%
Net Operating Income
$70,000
Lease Abstract
Tenant
Schlotzsky’s - Cinnabon Franchisee
Lease Type
NNN
Roof and Structure
Tenant
Drive-Thru
Yes
Lease Commencement Date
Close of Escrow
Term Remaining on Lease
20 Years
Increases
5% Every 5 Years
7735 Old Georgetown Road, Suite 301
Bethesda, MD 20814
P. 202.280.2722
www.greysteel.com
Washington, D.C. • Dallas-Fort Worth, TX • Baltimore, MD • Philadelphia, PA
TX License No: 9003203
CONTACT
Henry Schuldinger
Senior Investment Associate
hschuldinger@greysteel.com
P. 202.280.2731
TRANSACTION TEAM
CAPITAL MARKETS
Henry Schuldinger
Senior Investment Associate
Richard Seybolt
Analyst
Joyce Swain
Analyst
Matt Schwartz
CEO
Giovanni Dustin
Analyst
Anne Elizabeth Martin
Production Associate
Gil Neuman
Managing Director
Mark Bittenbender
Director
Greysteel, seller, and their respective representatives make no representations or warranties, express or implied, regarding the accuracy or completeness of the information in this Offering
Summary. Prospective purchasers shall be responsible for performing their own independent due diligence with respect to a possible transaction. This offering is subject to prior placement,
withdrawal, cancellation or modification without notice.
© 2015 The Greysteel Company LLC. All rights reserved.