CHICAGO—As reported in GlobeSt.com yesterday, sellers of quick service restaurants have benefitted from the extraordinary demand in both restaurants and net lease properties that has pushed down cap rates to 6.0%. But the properties in the sector most in demand remain the corporate-owned locations and those operated by large, experienced franchisees.
For example, a high net worth individual from New York just purchased a single tenant net leased Burger King property located at 2345 S. Pulaski Rd. in Chicago for $2,385,000. Heartland Midwest LLC, a wholly owned subsidiary of Heartland Food Corp., the second largest Burger King franchisee in the US, guarantees the lease. The sale was brokered by the Boulder Group, a net leased investment firm in suburban Chicago.
Burger King occupies the entire 2,980-square-foot building at a multi-tenant shopping center anchored by Advance Auto Parts and DaVita Dialysis. It was developed in 2009 and sits at the intersection of S. Pulaski Rd. and 24th St. Burger King’s original 20-year lease does not expire until in December 2029 and features 5% rental escalations every five years throughout the primary term and renewal option periods.
Randy Blankstein and Jimmy Goodman of Boulder represented the seller, a Chicago-based private partnership, in the transaction.
“Core market single tenant properties with solid real estate fundamentals continue to be in the greatest demand,” says Blankstein, president of Boulder. Goodman, a partner of Boulder, adds “properties with rental escalations throughout the lease term are at the forefront of investor demand because they provide investors with an inflationary hedge.”