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  Burger King


Average Property & Lease

Average Sale Price$825,000 - $2.0M
CAP Rate (12mo avg)6.61%
NOI$105,000
$/Square Foot$450.00
Building Size3,000 sf
Lot Size1.00 +/- acres
Lease Term20 Year NNN
Escalations7.5% Every 5 years
CREDIT RATING
B3
Moody's
B+
S&P
view credit rating chart
search calkain.com property listings for Burger King  |  view all propery 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 properties are usually supported by strong real estate fundamentals. The underlying asset is typically a 3,000+/- 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 eliminate Landlord responsibilities
  • Non-investment grade credit
  • Franchisee operators
Tenant Description

Burger King restaurants are generally located in high-traffic areas, promoting strong sales. Only McDonld's tops Burger King in the burger segment of the QSR market. 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. Burger King competes with McDonald's Corporation, Wendy's/Arby's Group, Inc, Subway, Yum! Brands, Inc.'s Taco Bell, Pizza Hut and Kentucky Fried Chicken, Applebee's and Chili's Ruby Tuesday.


BURGER KING TREND
CAP Rate

2013 avg: 6.21%

2014 avg: 6.61%

RECENT SALES

Winter Haven, FL

$1,307,000 | 6.5%

San Diego, CA

$2,330,000 | 4.89%

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