Red Lobster TENANT OVERVIEW


Net Lease Advisor Tenant Red Lobster

Pros

  • Absolute NNN leases
  • Annual increases
  • No franchisee

Cons

  • Newly formed private company
  • Low comparable data

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 May 1, 2017, there are over 700 Red Lobster stores throughout the US and Canada.

Average Cap Rate
5.86%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $4,864,742
NOI $285,074
$/Square Foot $550 - $700
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 N/A
Average Cap Rate Trend
5.82%
2016
5.92%
2017
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Lynnwood, WA 6.26%
Westland, MI 6.05%
Oak Ridge, TN 5.75%