Market Summary

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Price                                   $924,999

Cap Rate                            6.74%

NOI                                     $62,370

Rentable SF                       4,000 SF

Price per SF                       $231.25

Year Built                            2013

Lot Size                               .55 Acres

Description

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Marcus & Millichap is pleased to present Subway/Carolyn's Mega Slots in Decatur, Illinois. The property was developed as a two-tenant, 4,000 square foot building in 2013. The franchise owner relocated from a nearby location because he saw the potential of increasing his sales with the addition of a drive-through lane and also capitalizing on the size of building the site would hold, allowing him to take on other tenants. The Subway's corporate-backed lease is for 2,300 square feet. The additional 1700 square feet is leased to Carolyn's Mega Slots, owned by Achille Foster.

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This investment opportunity functions as a single-tenant property. The developer and Subway franchisee will lease back the entire 4,000 square foot building and be responsible for all of the expenses plus manage the additional 1,700 square foot suite. This is an absolute net lease on the entire property with zero landlord responsibilities. The investment is a 15 year base term with three, five year options. The franchisee will also receive an ten percent increase in rent, every five years.

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The developer/franchisee, a high net worth individual, will sign a personal guarantee for the entire property. He has 20 years of experience in the restaurant business and develops many of his own properties. He currently operates 11 Subway stores, one Sonic store with another in development.

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This investment offers a higher return than other comparable Subways. At a listing cap rate of 6.74 percent versus 5.25-5.75 percent cap rate and a lower price per square foot of $231 versus $329 plus per square foot.

To keep the real estate taxes at the current level, the owner will be selling the limited liability company that holds the property. This does not affect a buyer's ability to effect a 1031 Exchange.

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This is a great property with a drive through, with a good operator that has been in the restaurant business for 30 years with 11 Subway locations and 1 Sonic in Decatur (This operator just sold the Sonic real estate in Decatur- Sale Leaseback closed July 2021 at a 6.15% cap on a 20 year lease-sold the LLC). Seller is offering a personal guarantee with an approximate net worth of $11M.