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  Burger King


Average Property & Lease

Average Sale Price$1,818,861
CAP Rate (12mo avg)6.08%
NOI$103,812
$/Square Foot$520.00
Building Size3,500 sf
Lot Size0.5 - 1.0 +/- acres
Lease Term10 - 15 Years
Escalations7.5% Every 5 years
CREDIT RATING
B+
S&P
N/A
Moody's
view credit rating chart
view calkain.com property listings
Net Lease Advisor Overview

Only trailing McDonald's in terms of sales, Burger King is a solid net lease investment property. For a non-investment grade net lease tenant, Burger King provides stability in an uncertain market.

Similar to other quick-service restaurant (QSR) operators, Burger King prefers locations in high traffic areas with superior access. Accordingly, net lease Burger King locations are usually supported by strong real estate fundamentals. The underlying asset is typically a 3,500+/- SF building with a drive-thru window, situated on 0.5 - 1.0 acre of land. It is important to note that Burger King franchises the majority of their locations, while only 15% of Burger King locations are corporate-operated. Therefore, there are a number of various lease agreements and guarantors operating under the Burger King banner. Corporate-backed leases have been trending towards ground leases of 10 - 15 years in length with rent increases of 8% - 10% every 5 years. Franchise guaranteed lease terms vary, as do their respective cap rates based on perceived credit-worthiness of the operator. However, if a site has high quality real estate and strong sales, some leases have been known to offer annual rent increases or percentage rent.  

Pros

Cons

  • Brand recognition & preferred locations
  • NNN lease eliminates Landlord responsibilities
  • Non-investment grade credit
  • Franchisee operators
Tenant Description

Burger King has been in business for 50 years and is the second largest fast-food chain in the world. Burger King owned or franchised a total of 15,003 Burger King restaurants in approximately 100 countries and U.S. territories worldwide. Of these restaurants, 14,927 were franchised (approximately 100%) and 76 were company-owned.

Burger King generates revenues from three sources: retail sales at Company restaurants; franchise revenues, and property income from restaurants that BKH leases or subleases to franchisees.

In 2014, Restaurant Brands International Inc formed to serve as the indirect parent of Tim Hortons and its consolidated subsidiaries and Burger King Worldwide and its consolidated subsidiaries. Since 2010, the Burger King brand has increased annual net restaurant growth by approximately four times, reaching 631 net new units in 2015 from 173 new units in 2010 and making it one of the fastest growing QSRs in the world. Burger King plans to offer remodel incentives to U.S. franchisees during 2016 for a modern image.


BURGER KING TREND
CAP Rate

2016 avg: 6.18%

2015 avg: 6.05%

RECENT SALES

Crystal Lake, FL

$1,650,000 | 5.91%

LaFollette, TN

$1,700,000 | 5.89%

MORE INFO
www.bk.com
Google Finance: BKW
Google News: BKW