TACO BELL 50060 Harrison Street Coachella, CA 92236pabloproperties.com/TacoBell/Taco Bell -...

RARE 25-YEAR LEASE - SOUTHERN CALIFORNIA (PALM SPRINGS)

TACO BELL50060 Harrison StreetCoachella, CA 92236

The information contained in the following offering memorandum is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and it should not be made available to any other person or entity without the written consent of Marcus & Millichap. By taking possession of and reviewing the information contained herein the recipient agrees to hold and treat all such information in the strictest confidence. The recipient further agrees that recipient will not photocopy or duplicate any part of the offering memorandum. If you have no interest in the subject property at this time, please return this offering memorandum to Marcus & Millichap.

This offering memorandum has been prepared to provide summary, unverified financial and physical information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCBs or asbestos, the compliance with local, state and federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this offering memorandum has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Prospective buyers shall be responsible for their costs and expenses of investigating the subject property.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONTACT THE MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

confidentiality agreement

Pablo RodriguezSenior AssociateTel: (909) [email protected] License: 01870757

exclusively listed byKevin BoeveSenior Vice President InvestmentsTel: (909) [email protected] License: 01247016

contentsExecutive SummaryInvestment Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Tenant Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4

Financial OverviewFinancial Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7

Property DescriptionAerial Maps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10Regional Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Market OverviewLocation Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

DemographicsMap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Summary Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

executive summary

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap ACT ID X0080803 2

Marcus & Millichap is pleased to present for sale a brand new Taco Bell fast food restaurant in the city of Coachella, California. This oversized lot with 0.93 acres is located on the southeast corner of Harrison Street and Avenue 50. The lease features an initial term of 25-years with four, five-year options to extend. The lease rate increases 10% every five years during the initial lease term and during each option period. The subject property is located on Harrison Street, one block west of Highway 86 and three miles from Interstate 10 which creates great regional access to the property. Major retailers in the area include: Dollar Tree, Save A Lot Food Stores, and Family Dollar in the Coachella Shopping Center located directly west of the subject; Walgreens and McDonald’s surround the subject property on the North and South side and 99 Cents Only, Planet Fitness, and Cardena’s Market to the southwest of the subject property. Food 4 Less, Fallas Discount Stores, Wells Fargo, Rent-A-Center, and Also’s in the Gateway Center to the northwest of the subject.

The Coachella Valley has seen tremendous growth over the past fifteen years and the subject neighbor-hood is no exception. The population within a three-mile radius of the subject has grown 64.2% since 2010 and is forecast to grow 15.9% by 2018. New housing development in the area has been focused on the construction of single-family residences, with the percentage of home ownership increasing from 49.8% in 2010 to 57.3% in 2013. The median household income has grown by 2.2% since 2000 and is forecast to increase 13.4% by 2018.

overview

Brand New Long Term Lease | 25-Year Initial Term With Four, Five-Year Options to Extend

Seasoned Operator With Exclusive Experience Operating Taco Bells in the Desert, 12 Current Locations

This Site is Recognized as the No. 1 Retail Location in the Southeastern Part of the Coachella Valley

Stellar and Growing Traffic Counts Over 28,800 Cars Per Day

Priced Below Replacement Cost

Strategically Positioned Between Walgreens and McDonald’s

investment highlights

financial overview

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap ACT ID X0080803 4

financial overviewlocation50060 Harrison StreetCoachella, CA 92236

siteThe subject property has frontage along Harrison Street.

square footageThe building square footage is 2,100 square feet and the lot size is 0.93 acres.

year builtThe property was built in 2016.

traffic countsThe intersection of Harrison Street and Avenue 50 receives 28,800 cars per day.

taco bell overview

5 This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap ACT ID X0080803

Taco BellTaco Bell Corp., a subsidiary of Yum! Brands, Inc. (NYSE: YUM), is the nation’s leading Mexican-inspired quick service restaurant (QSR) brand. From breakfast to late night, Taco Bell serves made-to-order and customizable tacos and burritos, among other choices, and is the first QSR restaurant to offer American Vegetarian Association (AVA)-certified menu items. Taco Bell and its more than 350 franchise organiza-tions proudly serve over 42 million customers each week through 7,000 restaurants across the nation, as well as through its mobile, desktop and delivery ordering services. Overseas, Taco Bell has over 250 restaurants, with plans to add 2,000 more restaurants internationally within the next decade. The brand encourages its fans to “Live Mas” and connects with them through sports, gaming and new music via its Feed The Beat® music program. Taco Bell also provides education opportunities and serves the commu-nity through its nonprofit organization, the Taco Bell® Foundation™, and connects fans with their passions through programs such as the Live Mas Scholarship program. In 2016, Taco Bell was named as one of Fast Company’s Top 10 Most Innovative Companies in the World.

Parent CompanyYum! Brands, Inc., based in Louisville, Kentucky, has nearly 43,000 restaurants in 135 countries and territo-ries and is one of the Aon Hewitt Top Companies for Leaders in North America. The Company’s restaurant brands – KFC, Pizza Hut and Taco Bell – are the global leaders of the chicken, pizza, and Mexican-style food categories. Worldwide, the Yum! Brands system opens over six new restaurants per day on average, making it a leader in global retail development.

Since its spin-off from PepsiCo in 1997, Yum! Brands has become a truly global company going from ap-proximately 20 percent of profits coming from outside the U.S. to almost 65 percent in 2015. We’re proud to be the worldwide leader in emerging markets with nearly 17,000 restaurants, nearly twice as many as the nearest competition. With about 2.5 restaurants per million people in the top 10 emerging markets, compared to 57 restaurants per million in the U.S.

Opening a Taco BellStart-up costs, which include construction expenses and a $45,000 franchise fee, average between $1.2 million and $2.5 million, according to the company. The costs are slightly lower — between $175,000 and $1.4 million — for franchisees to acquire an existing Taco Bell restaurant. Because initial costs are so high, Taco Bell requires potential franchisees to have a minimum net worth of $1.5 million and at least $750,000 in liquid assets. Once the restaurant is up and running, the company charges an ongoing royalty fee equal to 5.5% of gross sales. If successful, the restaurant will bring in annual sales of at least $1.4 million, which is what the average Taco Bell restaurant generated last year, according to QSR magazine.

Founded 1962Type SubsidiaryParent Company Yum! Brands Inc.Ticket Symbol YUMRevenue US $1.98 Billion (2015)Number of Locations 6,407Number of Employees 175,000+Headquarters Downey, California, U.S Website www.tacobell.com

taco bell in the news

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2011 Marcus & Millichap ACT ID X0080803

6

Quesarito Rush: Taco Bell Plans to Hire 100,000 Workers Over Next 6 YearsTaco Bell announced that it plans to hire 100,000 workers over the next six years. The hiring surge is part of a plan to take its restaurant count to 9,000 (from the current 6,500) and its sales to $15 billion by 2022. Taco Bell currently employs 210,000 people across its company-owned and franchised stores. In 2015, the chain recorded $9 billion in sales.

Fast food and fast casual restaurants have faced a challenging consumer environment in 2016, to say the least, with deflation in food commodity prices making grocery shopping more appealing and the ugly presiden-tial campaign supposedly making eating out less appealing. Taco Bell, however, has largely resisted succumbing to this trend; its same-store sales grew 3 percent during the third quarter of 2016, and system sales jumped 5 percent.

Parent of Taco Bell, KFC, Pizza Hut Tops 2Q Profit ForecastsYum Brand Inc. shares jumped in extended trading Wednesday after the parent company of Taco Bell, KFC, and Pizza Hut reported a better-than- expected profit for its second quarter.

The results come as Louisville, Kentucky-based Yum prepares to split off its China unit later this year into a separate company. China has been a critical region for Yum, which is a dominant player in the country’s fast-food industry with more than 5,000 KFC locations.

The company earned $339 million or 81 cents per share, for the period. Earnings, adjusted for non-recurring gains, were 75 cents per share. That topped market expectations of 74 centers per share, according to ana-lysts polled by Zacks Investment Research.

The Three ‘C’s of Taco BellThe Taco Bell brand is centered on three ‘C’s. “You have to be current, you have to be creative, and you have to have a cause,” said Brian Niccol. chief executive officer of Taco Bell.

This strategy among others has helped drive five years of same-store sales growth for the Mexican fast-food chain. The brand already has grown well beyond $9 billion, up from $7 billion in 2011.

How does Taco Remain current? “Our food has to stay current,” Mr. Niccol said during parent com-pany Yum! Brands’ investor and analyst conference on Oct. 11. “So, some things that we have ac-complished: We have reduced sodium by 15% since 2008; we will get to 25% reduction by 2025. Actually, on Nov. 17, we will be 100% cage-free eggs across our system. And by Jan. 1, 2017, all our chicken will no longer have human crossover antibiotics.”

“These aren’t things that are going to define us, but these are things that we are doing quietly be-cause it keeps the food current with young people, and it is the right thing to do.”

Efforts to be creative play out in social media initiatives, including the launch of a Snapchat lens that generated record impressions on the platform, drawing 48 million unique users.

The third ‘C’ [is] cause. “We have this Live Mas scholarship program... It is really around rewarding kids for their passion. So it is not an academic scholarship or an athletic scholarship; it is all about finding your passion and then rewarding you for that passion.”

Beyond the three ‘C’s, Taco Bell is focused on leading the industry in value and innovation. Forth-coming menu items include the Naked Chicken Chalupa, Crispy Chicken Chips, Double Stacked Tacos and Quesalupa 2.0, in flavors including Volcano and Bacon Club.

Other initiatives under way at Taco Bell include the opening of contemporary new formats, includ-ing walk-up and container stores, and the addition of beer and wine in several locations.

“...the store in Wicker Park we are selling beer and wine, 20% of the sales are going through drinks, which is pretty powerful,” Mr. Niccol said.

Taco Bell continues to expand domestically and internationally, with 6,975 U.S. restaurants and another 300 units in 22 countries. By 2022, the company expects to operate more than 8,000 locations in the United States and more than 1,000 units in 40 countries.

financial overview


annualized operating dataRent Increases Annual Rent Monthly RentRent Commencement $72,000.00 $6,000.00Year 06 - Year 10 $79,200.00 $6,600.00Year 11 - Year 15 $87,120.00 $7,260.00Year 16 - Year 20 $95,832.00 $7,986.00Year 21 - Year 25 $105,415.20 $8,784.60Option 1: Year 26- Year 30 $115,956.72 $9,663.06Option 2: Year 31 - Year 35 $127,552.39 $10,639.37Option 3: Year 36 - Year 39 $140,307.63 $11,692.30Option 4: Year 40 - Year 44 $154,338.39 $12,861.53Base Rent ($34.29/SF) $72,000Net Operating Income $72,000Total Return 4.45% / $72,000

pricingProperty Name Taco BellProperty Address 50060 Harrison Street

Coachella, CA 92236Price $1,617,000Cap Rate 4.45%Price Per Square Foot $770Gross Leasable Area 2,100 SFYear Built 2016Lot Size 0.93 Acres

tenant summaryTenant Trade Name Taco BellLease Type Ground LeaseRoof and Structure Tenant ResponsibleLease Term 25 YearsLease Commencement Date August 26, 2016Rent Commencement Date February 28, 2016Lease Expiration Date August 26, 2041Term Remaining on Lease 25 YearsIncreases 10% Every 5 YearsOptions Four, Five-Year Options

financingFIRST TRUST DEEDLoan Amount $900,000Interest Rate 5-Year Fixed Rate/Term at 4.550%Amortization 30 YearsBroker Origination Fee 1.00%Prepayment Penalty NoLender Legal Fees NoSurvey No, unless Title requires it

property description


McDonald’s

subject property

HARRISON STREET & AVENUE 50

28,800+ CPD

HARRISON STREET

AVENUE 50

Taco Bell is Strategically Located Between Two Fortune 500 Tenants - Walgreens & McDonald’s


10

gateway center

coachella shopping center

CESAR CHAVEZELEMENTARYSCHOOL

planet fitness

McDonald’s

subject property

Future Retail Planned

Location is the Epicenter of Retail for the City of Coachella


McDonald’s

Sold to Private Investor in 2013 for $2,000,000



Walgreens

Smart & Final


Coachella Plaza


Coachella Shopping Center

market overview


Highway 111 is a state highway in the U.S state of California. It is the main north/south state highway and retail corridor through the Coachella Valley, a part of the Colorado Desert in the southeastern corner of the state and famous as a resort destination. It runs from the U.S-Mexico border crossing to Interstate 10 at White Water. Highway 111 links virtually every desert resort city in the Coachella Valley.

Highway 111area overview

Palm Springs29 Miles

Los Angeles133 Miles

San Diego165 Miles

Newport Beach127 Miles

Coachella, CA

Coachella is located in the massively expanding Riverside County which became the 10th most popu-lous county in the U.S. This expansion is in part to the vivid scenery, lush golf courses, excellent dining, and vibrant nightlife that combine to create a resort experience. The Coachella Valley is made up of nine distinct cities including Palm Springs, Palm Desert, Rancho Mirage, Indian Wells, La Quinta, Desert Hot Springs, Indio, and Coachella. These diverse municipalities merge into one exciting experience. Indio is the closest in relation to the city of Coachella and is one of the fastest growing cities in the Coachella Valley. The increasing popularity of the Coachella Valley Music and Arts Festival and Stage-coach Music Festival, both held at Empire Polo Club, have contributed to much of the city’s current size. Millions of people come here annually for a host of additional events, including the Riverside County Fair and National Date Festival, Southwest Arts Festival, and International Tamale Festival.

distance to and from property

36,100+Employees

175,000+Residents

(Within Five- Mile Radius of Subject Property)

9,950+Enrolled Students (College of the Desert)

34,000+Households

(Within Five- Mile Radius of Subject Property)

$72,065Average Household Income

$6.4BTotal Palm Springs Area Economic Impact

The Coachella Valley Music and Arts Festival is an annual festival held at the Empire Polo Club in Indio, California. Coachella show-cases popular and established musical artists, as well as emerging artists and reunited groups. Coachella is one of the largest, most famous, and most profitable music festivals in the United States.

Coachella Valley Music and Arts Festival

demographics

1 MILE

3 MILES

5 MILES


Subject Property

1 MILE 3 MILES 5 MILES2016 Population 17,544 93,409 175,7202016 Households 3,843 21,305 46,6322016 Average Household Size 4.47 3.81 3.292014 Daytime Population 1,805 17,491 36,162

2016 Owner Occupied Housing Units 60.81% 54.08% 64.49%2016 Renter Occupied Housing Units 39.19% 45.92% 35.51%2016 Vacant 4.07% 13.17% 19.90%

2016 Median Household Income $37,005 $37,604 $47,1992014 Per Capita Income $9,919 $13,938 $21,8362016 Average Household Income $45,237 $53,364 $72,065


16

Demographic data © 2016 by Experian/Applied Geographic

5-mile radius of propertypopulationIn 2016, the population in the area is 154,869. The population has changed by 59.57% since 2000. It is estimated that the population in the area will be 175,720 five years from now, which represents a change of 13.46% from the current year. The current population is 49.40% make and 50.59% female. The median age of the population in the area is 37.3, compare this to the entire U.S. average which is 37.3. The population density in the area is 1,005.97 people per square mile.

householdsThere are currently 46,632 households in the area. The number of households has changed by 73.81% since 2000. It is estimated that the number of households in the area will be 53,564 five years from now, which represents a change of 14.86% from the current year. The average household size in the area is 3.29 persons.

incomeIn 2016, the median household income for the area is $47,198, compare this to the entire U.S. average which is currently $51,972. The median household income for the area has changed by 29.58% since 2000. It is estimated that the median household income in the area will be $54,837 five years from now, which represents a change of 16.18% from the current year.

The current year per capita income in the area is $21,836, compare this to the entire U.S. average, which is $28,599. The current year average household income in the area is $72,065, compare this to the entire U.S. average which is $74,533.

race & ethnicityThe current year racial makeup of your selected area is as follows: 59.81% White, 1.70% Black, 0.07% Native American and 1.86% Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander.

People of Hispanic origin are counted independently of race. People of Hispanic origin make up 70.82% of the current year population in your selected area. Compare this to the Entire US average of 17.13%.

housingIn 2000, there were 16,829 owner-occupied housing units and 10,000 renter-occupied housing units in the area. The median rent at the time was $461.

employmentIn 2016, there were 36,161 employees in the area, this is also known as the daytime population. The 2000 Census revealed that 40.80% of employees are employed in white-collar occupations in this geography, and 59.01% are employed in blue-collar occupations. In 2016, unemployment in this area is 12.33%. In 2000, the average time traveled to work was 22.0 minutes.

Pablo RodriguezSenior AssociateTel: (909) [email protected] License: 01870757

exclusively listed byKevin BoeveSenior Vice President InvestmentsTel: (909) [email protected] License: 01247016

TACO BELL 50060 Harrison Street Coachella, CA 92236pabloproperties.com/TacoBell/Taco Bell -...

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