Triple net franchise properties

[John Boby]

El Pollo Loco Ground Lease is safe?

[Joel Owens]

Safe is in the eye of the beholder for return.

You paying all cash for the ground lease? What kind of cap rate are you trying to get? How many years left on the primary lease term for the land? Any early termination clauses in the lease? Does the tenant disclose sales? If so how are they reported and monthly with annual or just annual?

Is this is a corporate lease, large franchisee, small franchisee? Is guarantee corporate only or personal as well? What is the net worth and liquidity of the restaurant owner backing the lease? Are the current location sales at, above, or below the national average for this store concept? What are the annual rent increases 1,2%? Does rent go up every year or is it blocked to go up 6% at one time 3 years from now or 10%?

Any tenant buyout option on the land or a ROFR for the land and what is the price and terms and deadline to act? 

If you are not paying all cash then how many years left on the lease and other factors will decide how much down you have to put.

Lot's and lots of things you have to watch out for on NNN properties. Get a commercial broker to help you out. I help clients nationwide. Nevada has plenty of single tenant NNN properties to choose from depending on your price range. Multi -tenant strip centers are harder to land a good cap rate on there.