Kentucky Fried Chicken - NNN Properties

OFFERING MEMORANDUME X C L U S I V E N E T – L E A S E O F F E R I N G

Kentucky Fried Chicken

600 Paterson Plank Road, Union City, New Jersey

Operated by KBP Foods – Largest KFC Operator in the Country581 Locations in 23 States

Subject Property

Financial Overview• Offering Terms• Lease Summary• Lease Summary• Concept Overview • Guarantor Overview

Property Overview• Location Highlights• Surrounding Area Map• Location Overview• Property Photos• Surrounding Area Photos

Demographics• Population • Income• Employment

Table of Contents

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Property Name Kentucky Fried Chicken

Address 600 Paterson Plank Road

City, ST, ZIP Union City, New Jersey 07087

Price $2,728,421

CAP Rate 4.75%

Base Annual Rent $129,600

Building Size 2,800 SF

Lot Size 0.46 Acres

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 theinformation 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 InvestmentServices is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus &Millichap 3

Offering Terms Investment Highlights

➢ Largest KFC Operator in the Country | 600 Unit CorporateGuaranty: This location is operated by KBP Foods. KBP is thelargest KFC operator nationally, operating 581 restaurants in 23states. The lease has a full corporate guaranty from KBP Foods.

➢ Located Just Two Miles West of New York City

➢ Long Term Triple-Net (NNN) Lease: The tenant is subject to a 20-Year triple-net (NNN) lease with 16 years remaining. The leasehas no landlord responsibilities and four, five-year renewaloption.

➢ Strong Brand Recognition: KFC serves more than 12 millioncustomers each day in more than 115 countries and territoriesaround the world. KFC operates more than 19,500 restaurants inthe Unites States and internationally.

Investment Overview

Marcus & Millichap is pleased to present the Kentucky Fried Chicken located at600 Paterson Plank Road in Union City, NJ. The building consists ofapproximately 2,800 square feet of building space and is situated onapproximately 0.46 acres of land. The tenant is subject to a 20-Year triple-net(NNN) lease with 16 years remaining. The base rent is $129,600 with 8 percentrental increases every five years. There are four, five-year renewal options inaddition to the initial term.

Based in Louisville, Kentucky, KFC Corporation is the franchisor of the world’smost popular chicken restaurant chain. KFC has been serving customerscomplete, freshly prepared family meals since 1952. KFC serves more than 12million customers each day in more than 115 countries and territories around theworld. KFC operates more than 19,500 restaurants in the Unites States andinternationally.

KBP Foods operates 581 restaurants in 23 states, making them the largest KFCOperator in the United States. Corporate Revenues in 2017 were over $500M.KBP Foods has been named one of the top 100 Private Companies & CorporateReport 100 Fastest Growing Companies by Ingram's in June 2015. In May of2016, KBP Foods acquired 91 additional KFC and Taco Bell locations in severalstates as one of the largest YUM! Brands operators. In 2017, KBP acquired anadditional 78 KFC locations in Texas, Illinois, and Kansas.

Price NOI CAP Rate

$2,728,421 $129,600 4.75%

Financial Summary

4This 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 theinformation 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 InvestmentServices is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2013 Marcus &Millichap

Lease Summary Annualized Operating Data

Property Name Kentucky Fried Chicken

Property Type Net Leased Quick Service Restaurant

Ownership Fee Simple

Tenant FQSR, LLC: 600 Locations

Lease Term 20 Years

Lease Commencement June 3rd, 2014

Lease Expiration June 2nd, 2034

Lease Term Remaining 16 Years

Lease Type Absolute Triple-Net (NNN)

Roof & Structure Tenant Responsible

Options to Renew Four- Five Year

Rental Increases 8% Every Five Years

Lease YearAnnual

Rent Monthly

Rent

June 3rd , 2018 - June 2nd 2019 $120,000 $10,000

June 3rd , 2019 - June 2nd 2020 $129,600 $10,800

June 3rd , 2020 - June 2nd 2021 $129,600 $10,800

June 3rd , 2021 - June 2nd 2022 $129,600 $10,800

June 3rd , 2022 - June 2nd 2023 $129,600 $10,800

June 3rd , 2023 - June 2nd 2024 $129,600 $10,800

June 3rd , 2024 - June 2nd 2025 $139,968 $11,664

June 3rd , 2025 - June 2nd 2026 $139,968 $11,664

June 3rd , 2026 - June 2nd 2027 $139,968 $11,664

June 3rd , 2027 - June 2nd 2028 $139,968 $11,664

June 3rd , 2028 - June 2nd 2029 $139,968 $11,664

June 3rd , 2029 - June 2nd 2030 $151,165 $12,597

June 3rd , 2030 - June 2nd 2031 $151,165 $12,597

June 3rd , 2031 - June 2nd 2032 $151,165 $12,597

June 3rd , 2032 - June 2nd 2033 $151,165 $12,597

June 3rd , 2032 - June 2nd 2034 $151,165 $12,597

Annual Rent $129,600

CAP Rate 4.75%

Price $2,728,421

* Seller will credit Buyer the difference in rent between the closing date & rent increase date

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Kentucky Fried Chicken (KFC) is a fast food restaurant chain thatspecializes in fried chicken and is headquartered in Louisville, Kentucky,United States. It is the world's second largest restaurant chain (asmeasured by sales) after McDonald's, with almost 20,000 locationsglobally in 123 countries and territories as of December 2015. Thecompany is a subsidiary of Yum! Brands, a restaurant company that alsoowns the Pizza Hut and Taco Bell chains.

KFC was founded by Harland Sanders, an entrepreneur who began sellingfried chicken from his roadside restaurant in Corbin, Kentucky, duringthe Great Depression. Sanders identified the potential of therestaurant franchising concept, and the first "Kentucky Fried Chicken"franchise opened in Utah in 1952. KFC popularized chicken in the fast foodindustry, diversifying the market by challenging the established dominanceof the hamburger. By branding himself as "Colonel Sanders", Harlandbecame a prominent figure of American cultural history, and his imageremains widely used in KFC advertising..KFC was one of the first fast food chains to expand internationally, openingoutlets in Canada, the United Kingdom, Mexico, and Jamaica by the mid-1960s. The chain continued to expand overseas and in 1987 KFC becamethe first Western restaurant chain to open in China. The chain has sinceexpanded rapidly in China, which is now the company's single largestmarket.

KFC's original product is pressure fried chicken pieces, seasoned withSanders' recipe of 11 herbs and spices. The constituents of the reciperepresent a notable trade secret. Larger portions of fried chicken areserved in a cardboard "bucket", which has become a well known featureof the chain since it was first introduced by franchisee Pete Harman in1957. Since the early 1990s, KFC has expanded its menu to offer otherchicken products such as chicken fillet burgers and wraps, as wellas salads and side dishes, such as French fries and coleslaw, desserts,and soft drinks

➢ Kentucky Fried Chicken is

headquartered in Louisville,

Kentucky. KFC has over 19,500

locations in more than 115

counties and territories.

➢ KFC is the world’s second largest

restaurant chain after McDonald’s

measured by sales, and the

world’s most popular chicken

brand.

➢ KFC Corp. is a subsidiary of Yum!

Brands, which also owns Pizza

Hut and Taco Bell. Yum! Brands

has almost 42,000 restaurants in

more than 125 countries and

territories, making it one of the

world’s largest restaurant

companies.

Concept Overview:

About Kentucky Fried Chicken

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Consistently ranked among the 10 fastest-growing restaurantcompanies in the United States, KBP Foods now operates morethan 600 KFC, Taco Bell and Long John Silver’s restaurants in 14states. In 2016, it added 93 locations, making it the biggestacquisition year yet, and landed on Ingram’s Corporate Reportof the 100 fastest-growing companies list for the fourth time.KBP has grown to become one of the largest YUM! Brandsfranchisees in the United States, boasting more than 7,000employees and upwards of $400 million in annual revenue.

➢ KBP Foods operates 581

restaurants in 23 states and has

Regional Vice Presidents in every

major geographical region. Our

Corporate Office and Restaurant

Support Center are located in

Overland Park, KS.

➢ KBP Foods has been named one

of the top 100 Private Companies

& Corporate Report 100 Fastest

Growing Companies

➢ The success KBP Foods has had

with growth through acquisition

is directly correlated to diligent

selection criteria, prudent and

responsible capital structure and

industry leading operational

talent. Ultimately giving our

people significant opportunity to

growth themselves personally,

professionally and financially.

Guarantor Overview:

About KBP Foods

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This KFC is located at 600 Paterson Plank Road in Union City, NewJersey. Union City is a city in Hudson County, New Jersey just twomiles west of New York City via the Lincoln Tunnel. The city is part ofthe New York Metropolitan area which has an estimated populationof 22,214,083.

➢ Located Just Two Miles West of New York City

➢ Union City is Part of the New York City MSA withApproximately 24,000,000 People

➢ Great Demographics: 540,000 People Within a Three-Mile Radius and 1,600,000 People Within a Five-MileRadius of the Subject Property

➢ KFC is Located in a Dense Urban Infill, Consisting ofShopping Centers, National and Local Tenants, NumerousSingle Family Residences, Apartment Communities, andUniversities, all Within Close Proximity to the SubjectProperty


Location Highlights Location Overview

Surrounding Retail and Points of Interest

The subject property is well-positioned along a dense retail corridorhome to an array of national, regional, and local brands. The propertyis adjacent to a Wells Fargo and a CVS Pharmacy. The property is alsoin front of the Thomas A Edison Elementary School. Additional retailin the immediate area includes: Bravo Supermarket, Rite Aid,AutoZone, Metro PCS, and Payless Shoe Source, just to name a few.Within a mile to the west of Union City are U.S. Route 1, Route 9,Route 3, and the New Jersey Turnpike. The city is bisected by NewJersey Route 495, a vehicular cut built in conjunction with the LincolnTunnel. The Bergenline Avenue Station of the Hudson-Bergen LightRail is located at 49th Street near the city line with West New Yorkand North Bergen. New Jersey Transit bus service transportation isavailable to points in Hudson, Bergen, and Passaic counties and tothe Port Authority Bus Terminal in Midtown Manhattan.

Traffic Counts and Demographics

There are approximately 515,000 people within a three-mile radiusand 1,518,500 people within a five-mile radius of this KFC. Theproperty is situated on the hard corner of Paterson Plank Road and6th Street area. The subject property is located near the intersectionof Patterson Plank Road and John F. Kennedy Blvd experiences strongcombined counts of over 55,000 vehicles per day.

New York, New YorkUnion City, New Jersey is located just two miles west of New York City. NewYork City is home to the Empire State Building, Times Square, Statue ofLiberty and other iconic sites, New York City is a fast-paced, globallyinfluential center of art, culture, fashion and finance. The city’s 5 boroughssit where the Hudson River meets the Atlantic Ocean, with the islandborough of Manhattan at the “Big Apple's" core.

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Clio, MI

ADTC 63,000

ADTC 14,723

ADTC 55,000


SURROUNDING AREA MAP


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17This 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 bearsall 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. © 2013 Marcus & Millichap

PopulationIn 2014, the population in your selected geography is 1,578,339. The populationhas changed by 10.77% since 2000. It is estimated that the population in your areawill be 1,630,640 five years from now, which represents a change of 3.31% fromthe current year. The current population is 48.31% male and 51.68% female. Themedian age of the population in your area is 36.1, compare this to the Entire USaverage which is 37.3. The population density in your area is 20,062.67 people persquare mile.

IncomeIn 2014, the median household income for your selected geography is $76,802,compare this to the Entire US average which is currently $51,972. The medianhousehold income for your area has changed by 44.07% since 2000. It is estimatedthat the median household income in your area will be $90,400 five years fromnow, which represents a change of 17.70% from the current year.

EmploymentIn 2014, there are 2,073,642 employees in your selected area, this is also knownas the daytime population. The 2000 Census revealed that 78.33% of employeesare employed in white-collar occupations in this geography, and 21.50% areemployed in blue-collar occupations. In 2014, unemployment in this area is 7.10%.In 2000, the average time traveled to work was 32.0 minutes.

1-Mile 3-Mile 5-Mile

2010 93,521 514,028 1,518,487

2014 97,549 538,955 1,578,340

2019 100,369 561,804 1,630,640

POPULATION

3-Mile 5-Mile 10-Mile

Average $88,212 $108,020 $129,297

Median $57,851 $65,496 $76,802

2014 HOUSEHOLD INCOME

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Employer # of Employees

UBS Financial Services 5,000

Goldman Sachs & Co, Inc. 3,800

United States Parcel Service 2,200

TOP EMPLOYERS IN HUDSON COUNTY

Kentucky Fried Chicken - NNN Properties

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