Sonic TENANT OVERVIEW


Pros

  • Absolute NNN leases
  • High visibility
  • Low price point

Cons

  • Franchisee operators
  • Difficult to retenant

Tenant Description

Sonic is the largest chain of drive-in restaurants.

A Sonic property can be an attractive net lease tenant because of their low price point, triple net leases, and strong rental increases. Sonics typically operate in 1,500 square foot buildings. This small footprint keeps the price lower than most other net lease properties but can make it difficult to retenant. Sonic typically signs triple net leases, both fee simple and ground leases, which relieve the owner of any landlord responsibilities. The leases will typically feature rental increases during the primary term of the lease but the increases will vary from location to location.

Sonic first opened in Shawnee, OK and revolutionized the ordering process by placing speakers curbside, allowing customers to place orders without leaving their cars. In 1991, Sonic went public under the ticker SONC. Today, Sonic has 3,593 locations across 45 states. Sonic is growing rapidly, with 66 new locations opening during 2017. Sonic features a highly diverse menu, ranging from breakfast burritos to cheeseburgers to specialty drinks to ice cream.

Average Cap Rate
6.15%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $1,521,055
NOI $93,545
$/Square Foot $1,014
Building SF 1,500
Lot Size 0.75 - 1.5 Acres
Lease Term 15 - 20 Years
Escalations Varies
Stock Symbol SONC
Credit Rating
S&P N/A
Moody's N/A
Average Cap Rate Trend
6.50%
2017
6.16%
2018
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Atlanta, GA 6.15%
Kilgore, TX 6.75%
Conifer, CO 5.50%