Jack in the Box | 7% Cap | 19+ Yrs | Abs NNN
New 19+ Yr Term | Very Strong Sales | 100+ Unit Operator
Marketing description
Ideal QSR Location | Located at a signalized intersection adjacent to Safeway, Walmart, Starbucks, McDonald’s, O’Reilly Auto, and more.
Outstanding Unit Sales | More than 50% above system-wide average. While QSR sales across the industry have softened in recent years, this location has maintained positive growth for the last three years in a row.
35+ Years of Passive Returns | A new 19+ year sublease with the franchisee will commence at the close of escrow, with three options of five years each following that. That sublease is absolute NNN, with the subtenant covering all operating costs and responsibilities for the entire parcel. The leasehold buyer is earning a 7 cap (plus increases) in a totally passive position.
Exceptional Value | At a 7 cap, with 10% increases every 5 years, the effective annual return is close to 8% per year over the term of the ground lease (including options).
Conservative Economics | 8.5% rent to sales and rent coverage of nearly 4x.
Investment highlights
Northmarq is pleased to offer for sale the leasehold interest in this Jack in the Box property in Safford, AZ. The property consists of a roughly 2,800-square-foot freestanding Jack in the Box building situated on a ground-leased parcel of roughly 2/3 of an acre. This interest is leasehold in nature, meaning the buyer will take ownership of the building and improvements, but the use of the land is granted by an existing ground lease, to which the buyer will become the ground tenant at the close of escrow. All costs and operating responsibilities of that ground lease are passed through to the subtenant (Jack in the Box) via the absolute NNN sublease, making this a completely passive investment for the buyer. Please see page 12 for an infographic depiction of the structure. The subtenant, Rucker Restaurants, is a successful franchisee of both Jack in the Box and Denny’s, with over 100 restaurants in total and over 15 years of track record as a franchisee. Leasehold sale leaseback has been part of their business model since 2018. This location is a very strong one for both the franchisee and for the brand, with sales exceeding brand average by a significant margin. Financial information will be provided for serious buyers subject to a non-disclosure agreement.
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