Red Lobster TENANT OVERVIEW


Net Lease Advisor Tenant Red Lobster

Pros

  • Absolute NNN leases
  • Annual increases
  • No franchisee

Cons

  • Newly formed private company
  • Weakened Credit Rating

Tenant Description

Red Lobster is a casual dining restaurant focused on seafood.

Red Lobster makes an attractive net lease investment. A major draw to Red Lobster for investors is the longer than average lease, 20 - 25 years, on an absolute NNN basis. Rental increases vary, however most leases offer a 2% annual rent bumps along with four (4), five-year options.

Red Lobster, a casual-dining seafood restaurant was founded in 1968 by Bill Darden. The first store was in landlocked Lakeland, Florida. Red Lobster then was backed by General Mills, which helped the restaurant's rapidly multiply from coast to coast. In 2014, Darden Restaurants, Inc. sold Red Lobster to Golden Gate Capital.

In early days, Red Lobster only served lobster, snow crab, and jumbo shrimp. Today, they serve Cheddar Bay Biscuits, wild-caught seafood, fresh fish, and fresh Maine lobster prepared by certified grill masters on their signature wood-fire grills.

As of April 1, 2019, there are over 700 Red Lobster stores throughout the US and Canada.

Average Cap Rate
5.74%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $5,137,633
NOI $295,268
$/Square Foot $570 - $730
Building SF 7,000 - 9,000
Lot Size 1 - 2 Acres
Lease Term 20 - 25 Years
Escalations 2% Annually
Stock Symbol N/A
Credit Rating
S&P N/A
Moody's Caa1
Average Cap Rate Trend
5.65%
2019
5.75%
2020
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Port Richey, FL 6.10%
Oakhurst, NJ 5.40%
JAcksonville, FL 5.50%