Scottsdale AZ

Property Acquired: Single Tenant Thai Food Restaurant w/ Drive Thru

Location

Average daily traffic count of 90,000 + cars per day (cpd) at the hard corner and 41,000 cpd directly in front of the property. Population studies show over 18,000 people in a 1-mile radius and 48,000 people within a 5-minute drive. The average household income is over $79,000/year. The trade area is improving as new development is active and the leasing market shows very little vacancy.

Deal Story

The property was occupied by a two-unit operator of Thai food restaurants in the greater Phoenix market area and there were 4 years remaining on the existing lease. Because of the limited financial strength of the tenant and the short lease term, the property was unattractive to passive, single tenant investors. KJF Partners’ analysis of the market revealed the existing tenant was paying a below market rate for a restaurant building with a drive-thru in this location. KJF negotiated a better than market return because of the perceived tenant risk and short lease term by offering an all-cash purchase with a short closing time frame.

Result

Upon the termination of the existing tenant lease, KJF Partners instituted an aggressive marketing campaign which produced a strong, regional, Mexican food operator with a substantial guarantee. We executed a new, 10-year NNN lease at a substantially higher rate and, as of the time of this writing, our investors were receiving an attractive, double-digit return on their invested capital and a value increase of approximately 87% above our total project costs.