CHICAGO—Cap rates in the net lease casual dining restaurantsector increased 25 bps points to 6.0% in the first quarter of 2017when compared to the first quarter of 2016, according to a newreport from the Boulder Group, a net lease firmbased in Northbrook, IL. These tenants have become more popularwith retail operators in the past few years because, unlike manyoutlets, they can't be harmed by e-commerce. But an increase in thenumber of franchisee-backed restaurants helped push up caprates.
Investors consider corporate-backed restaurants to be a bettercredit risk. Casual dining restaurant properties withcorporately-guaranteed leases had cap rates of 5.75%, whilefranchisees were priced 50 bps higher at 6.25%, Boulder found. AndIn the first quarter of 2017, franchisee backed casual diningrestaurants accounted for 49% of the overall supply of casualdining restaurants, compared to 31% one year ago.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
