12505 & 12515 Aurora Avenue N., Seattle, WA 98133
www.orioncp.com
JACK IN THE BOX/KRISPY KREME
Ground Lease Investment
Scott Clements
David Butler
P
206.445.7664
P
206.445.7665
C
206.793.1074
C
425.890.7919
E
sclements@orioncp.com
E
dbutler@orioncp.com
12505 & 12515 Aurora Ave N., Seattle, WA 98133
table of contents
1 EXECUTIVE SUMMARY/investment highlights
2 site overview
3
Tenant overview
4
valuation analysis
5
market overview
6 DEMOGRAPHICS
The information contained herein was obtained from sources believed reliable, however, ORION Commercial Partners LLC makes no guarantees, warranties, or representations as to the completeness or
accuracy thereof. The presentation of this property is submitted subject to errors, omissions, change of price or conditions prior to sale or lease, or withdrawal without notice.
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 2
executive summary
Investment Highlights
Offering Price
$4,650,000
Cap Rate
5.44%
NOI
$253,125
Total Building Area
6,974 SF
Total Land Area
61,195 SF
Price Per Square Foot
$75.98
Year Built
2003
THE OFFERING
ORION Commercial Partners is excited to offer for sale the Jack in
the Box and Krispy Kreme Absolute NNN Ground Lease Investment
located at 12505 Aurora Avenue N. in Seattle, WA.
Built in 2003 on a corner pad site fronting Lowe’s, this 2-tenant
ground lease benefits from strong traffic counts and high density just
minutes from downtown Seattle.
This rare “in-city” opportunity provides the passive investor with
stabilized upside via rental increases every five years with no landlord
responsibilities.
Krispy Kreme is midway through its first of three renewal options
while Jack in the Box has approximately eight years remaining in their
initial 20-year lease term.
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 3
investment highlights
»
Absolute NNN Ground Lease
»
Tenant Strength
Both Jack in the Box and Krispy Kreme are responsible
for any and all expenses associated with the property.
Buildings shall become the property of the owner upon
expiration of the leases and all subsequent options.
Founded in 1951, Jack in the Box, Inc. operates over 2,200
quick serve restaurants in 21 states and Guam. In 2014
the sales were over $1.49 billion.
Krispy Kreme Doughnuts, Inc. operates over 1,000 stores
in the U.S. and Canada. In 2014 the sales were over
$460 million. KremeWorks Washington, LLC operates
10 locations in Washington, Oregon, Hawaii and British
Columbia.
»
Strong Demographics
Located within the Seattle city limits, there are over 27,000
people living within 1 mile of the subject property and
over 148,000 people within a 3 mile radius. Additionally
this property falls within a major retail corridor with over
45,000 VPD passing by the subject property.
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 4
Site Overview: photos
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 5
SITE overview: parcel map
Aurora Ave N 36,869 VPD
Parcel # 192604-9432
9,046 VPD
N 125th St
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 6
SITE overview: REtail aerial
Lake
Washington
Jackson
Park Golf
Course
17,461 VPD
N 125th St
9,046 VPD
Haller
Lake
Northwest
Hospital
t
hS
15t
N1
Linden Ave N
N 130th S
t
Ingraham
High School
Northgate
Mall
Stone Ave N
36,869 VPD
Aurora Ave N
SUBJECT
PROPERTY
eN
Linden Av
Bitter
Lake
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 7
tenant overview
about Jack in the box
Property Name
Jack in the Box
Property Address
12505 Aurora Avenue N., Seattle, WA
Property Type
Ground Lease Quick Serve Restaurant
Rentable Square Feet
2,674 SF
Tenant Trade Name
Jack in the Box, Inc.
Ownership
Public
Tenant
Corporate Store
2014 Annual Revenue
1.49 Billion
Stock Symbol
JACK
Board
NASDAQ
Rank QSR Top 50
16
Founded in 1951, Jack in the Box Inc. is a restaurant company that operates
and franchises Jack in the Box® restaurants and—through a wholly owned
subsidiary—Qdoba Mexican Grill® restaurants in a combined 47 states plus the
District of Columbia and Canada.
Jack in the Box is among the nation’s leading fast-food hamburger chains,
with more than 2,200 quick-serve restaurants in 21 states and Guam. As the
first major hamburger chain to develop and expand the concept of drive-thru
dining, Jack in the Box has always emphasized on-the-go convenience, with
approximately 85 percent of the half-billion guests served annually buying
food at the drive-thru or for take-out. In addition to drive-thru windows, most
restaurants have indoor dining areas and are open 18-24 hours a day.
Jack in the Box pioneered a number of firsts in the quick-serve industry,
including menu items that are now staples on most fast-food menu boards,
like the breakfast sandwich and portable salads. Today, Jack in the Box offers a
selection of distinctive, innovative products targeted at the fast-food consumer,
including hamburgers, specialty sandwiches, salads and real ice cream shakes.
Hamburgers represent the core of the menu, including the signature Jumbo
Jack®, Sourdough Jack®, Ultimate Cheeseburger and the 100% Sirloin Burger.
And, because value is important to fast-food customers, the company also
offers value-priced products on “Jack’s Value Menu,” including tacos, chicken
nuggets, a chicken sandwich and the Breakfast Jack®.
In addition to offering high-quality products, Jack in the Box recognizes that an
increasing number of quick-serve customers also want the ability to customize
their meals. Whether that means forgoing the bun and sauce in favor of a lowcarb burger, or substituting ingredients to create the exact mix of flavors to
suit an individual’s personal tastes, customers have that flexibility at Jack in the
Box. “We don’t make it ‘til you order it®.” So, regardless of the order, each meal
is served hot and fresh to customers.
Based in San Diego, Jack in the Box Inc. has more than 22,000 employees.
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 8
tenant overview
about Krispy Kreme
Krispy Kreme Doughnuts, Inc. is an American global doughnut company and
coffeehouse chain based in Winston-Salem, North Carolina. In 1937 Krispy
Kreme founder Vernon Rudolph bought a yeast-raised recipe from a New
Orleans chef, rented a building in what is now historic Old Salem in WinstonSalem, NC, and began selling to local grocery stores. The delicious scent of
cooking doughnuts drifted into the streets, and passers-by stopped to ask
if they could buy hot doughnuts. So, he cut a hole in an outside wall and
started selling hot Original Glazed doughnuts directly to customers on the
sidewalk. Special business ordering from churches, schools, clubs and other
organizations took an upswing in 1955, and has grown steadily. Using the Fund
Raising Plan to sell doughnuts has enabled many schools to buy uniforms and
take school trips. The Plan has also helped organizations buy air conditioners,
pianos, and libraries for schools. It has helped to fund scholarship programs.
This Krispy Kreme is owned and operated by Kremeworks, LLC. Today,
Kremeworks operates 10 Krispy Kreme doughnut shops in Washington,
Oregon, Hawaii and British Columbia. Kremeworks LLC was formed in 2001 and
established as a joint venture with Krispy Kreme Doughnuts, Inc. Kremeworks,
LLC’’s franchise opened with record breaking success in Issaquah, Washington
on October 30, 2001.
Krispy Kreme began a phase of rapid expansion in the 1990s, opening stores
outside the southeastern United States where most of their stores were
located. Then, in December 2001, Krispy Kreme opened its first store outside
the U.S. in Mississauga, Ontario, Canada, just outside Toronto. Since 2004,
Krispy Kreme has rapidly expanded its international operations, now including
almost 100 stores in Mexico alone.
Krispy Kreme proudly announced the launch of its Krispy Kreme Signature
Coffee Blends at participating U.S. and Canada locations. Three specially
crafted coffee blends “WORTHY” of its one-of-a-kind doughnuts. This also
opened the door for speciality coffee blends. In September 25, 2013, Krispy
Kreme announced their expansion into Colombia, the first South American
country that Krispy Kreme will have presence at.
Products are sold in Krispy Kreme stores, grocery stores, convenience
stores, gas stations, Wal-Mart, Target and Shaws stores in the United States.
Internationally, doughnuts are sold in Loblaws supermarkets, Petro-Canada
gas stations, and as freestanding stores in Canada, along with BP Service
Stations and BP Travel Centres and 7-Eleven stores in Australia. In the United
Kingdom, Tesco supermarkets, Tesco Extra, and most Tesco service stations
carry Krispy Kreme products. Service stations Moto, Welcome Break & Road
Chef also carry self-service cabinets.
On February 24, 2015, Krispy Kreme opened its 1,000th shop in Kansas City,
Kansas. The first customer received one dozen of free donuts per week for a
year.
Property Name
Krispy Kreme
Property Address
12505 Aurora Avenue N., Seattle, WA
Property Type
Ground Lease Quick Serve Restaurant
Rentable Square Feet
4,300 SF
Tenant Trade Name
Kremeworks, LLC
Ownership
Public
Tenant
Franchise
2014 Annual Revenue
460 Million
Stock Symbol
KKD
Board
NYSE
Rank QSR Top 50
34
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 9
financials
Rent roll
TENANT
SIZE
RENT
COMMENCEMENT
DATE
EXPIRATION
DATE
MONTHLY
RENT
ANNUAL RENT
OPTIONS
RENT INCREASES
Jack in the Box
2,674 SF
06-30-2003
06-30-2023
$8,437.50
$101,250.00
(2) 5 year options with
fixed increases (see chart
below).
11.2% every 5 years
Krispy Kreme
4,300 SF
06-01-2003
05-31-2018
Rental Increase
06/30/18 - 06/30/23
$9,492.19/month
$113,906.25/year
Option 1
06/30/23 - 06/30/28
$10,678.71/month
$128,144.53/year
Option 2
06/30/28 - 06/30/33
$12,013.55/month
$144,162.60/year
$12,656.25
$151,875.00
(2) 5 year options with
fixed increases (see chart
below).
11.2% every 5 years
Option 2
06/01/18 - 05/31/23
$14,238.28/month
$170,859.36/year
Option 3
06/01/23 - 05/31/28
$16,018.07/month
$192,216.84/year
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 10
valuation analysis
Valuation Analysis: Jack in the box/krispy kreme, seattle, wa
Price:
Proposed Down Payment:
$4,650,000
30.00%
Current Cap Rate:
$1,395,000
5.44%
Loan Information
Proposed First Loan Amount:
Interest Rate:
Approximate Net Rentable SF:
6,974 sf
Ammortization:
Approximate Lot Size:
61,195 sf
Annual Debt Service:
Year Built:
2003
Loan Maturity:
Cost Per Net Rentable SF:
$3,255,000
4.50%
25
$ (217,108)
Ten Years
$75.98
Rent Per Net Rentable SF:
$4.13 NNN
2015 Annualized Data
Estimated 2015 Operating Expenses
Gross Potential Rental Income:
$253,125
Real Estate Taxes (2015):
Tenant Paid
Plus Recaptured Operating Expenses:
$60,000
Insurance:
Tenant Paid
Repairs:
Tenant Paid
-
Less Vacancy and Credit Loss:
Gross Operating Income:
$313,125
Maintenance:
Tenant Paid
Less Operating Expenses:
$60,000
Utilities:
Tenant Paid
Net Operating Income:
$253,125
Management/Admin:
Tenant Paid
Less Annual Debt Service:
Pre-Tax Cash Flow:
$ (217,108)
* 2.58%
Plus Principal Reduction:
Pre-Tax Return:
7.75%
$36,017
Total Non-Recaptured Expenses:
$72,108
Total Property Expenses: est.
$108,125
Property Expenses/Net RSF:
$60,000
$8.60
* as a percent of down payment
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 11
market overview
about seattle
Seattle is a coastal seaport city and the seat of King County, in the state of
Washington. With an estimated 652,405 residents as of 2013, Seattle is the
largest city in both the State of Washington and the Pacific Northwest region of
North America and, as of July 2013, the fastest-growing major city in the United
States. The Seattle metropolitan area of around 3.6 million inhabitants is the
15th largest metropolitan area in the United States. The city is situated on a
narrow isthmus between Puget Sound (an inlet of the Pacific Ocean) and Lake
Washington, about 100 miles south of the Canada–United States border.
Seattle is the region’s commercial and transportation hub and the center of
manufacturing, trade, and finance. Its important diversified industries include
aircraft, lumber and forest products, fishing, high technology, food processing,
boat building, machinery, fabricated metals, chemicals, pharmaceuticals, and
apparel.
Seattle also has a dining scene that features acclaimed local chefs and
internationally recognized cuisine. The city is extremely multicultural and is
influenced by the Pacific Rim in art and architecture. The city offers residents a
pace of life that can be either relaxed or fast paced and entrepreneurial. Seattle
is home to many successful startup businesses such as Microsoft, Starbucks,
Eddie Bauer, Nintendo, Amazon.com, and REI.
Seattle’s economy is driven by a mix of older industrial companies, and “new
economy” Internet and technology companies, service, design and clean
technology companies. The city’s gross metropolitan product was $231 billion
in 2010, making it the 11th largest metropolitan economy in the United States.
The Port of Seattle, which also operates Seattle–Tacoma International Airport, is
a major gateway for trade with Asia and cruises to Alaska, and is the 8th largest
port in the United States in terms of container capacity. Though it was affected
by the Great Recession, Seattle has retained a comparatively strong economy,
and remains a hotbed for start-up businesses, especially in green building and
clean technologies: it was ranked as America’s No. 1 “smarter city” based on its
government policies and green economy. February 2010, the city government
committed Seattle to becoming North America’s first “climate neutral” city, with
a goal of reaching zero net per capita greenhouse gas emissions by 2030.
forwarder Expeditors International of Washington (#428). Other Fortune
500 companies popularly associated with Seattle are based in nearby Puget
Sound cities. Warehouse club chain Costco (#22), the largest retail company
in Washington, is based in Issaquah. Microsoft (#35) is located in Redmond.
Weyerhaeuser, the forest products company (#363), is based in Federal Way.
Finally, Bellevue is home to truck manufacturer Paccar (#168). Other major
companies in the area include Nintendo of America in Redmond, T-Mobile US in
Bellevue, Expedia Inc. in Bellevue and Providence Health & Services — the state’s
largest health care system and fifth largest employer — in Renton. The city has a
reputation for heavy coffee consumption; coffee companies founded or based
in Seattle include Starbucks, Seattle’s Best Coffee, and Tully’s. There are also
many successful independent artisanal espresso roasters and cafés.
Prior to moving its headquarters to Chicago, aerospace manufacturer
Boeing (#30) was the largest company based in Seattle. Its largest division
is still headquartered in nearby Renton, and the company has large aircraft
manufacturing plants in Everett and Renton, so it remains the largest private
employer in the Seattle metropolitan area.
Major redevelopment of the South Lake Union neighborhood is underway, in
an effort to attract new and established biotech companies to the city, joining
biotech companies Corixa (acquired by GlaxoSmithKline), Immunex (now part
of Amgen), Trubion, and ZymoGenetics. Vulcan Inc., the holding company of
billionaire Paul Allen, is behind most of the development projects in the region.
Still, very large companies dominate the business landscape. Four companies
on the 2013 Fortune 500 list of the United States’ largest companies, based on
total revenue, are headquartered in Seattle: Internet retailer Amazon.com (#49),
coffee chain Starbucks (#208), department store Nordstrom (#227), and freight
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 12
Demographics
seattle Demographics
Radius
1 Mile
3 Mile
5 Mile
Population:
Radius
1 Mile
3 Mile
5 Mile
Households:
2019 Projection
24,370
169,144
391,404
2019 Projection
11,402
74,846
171,112
2014 Estimate
22,320
156,455
363,327
2014 Estimate
10,490
69,415
158,972
2010 Census
20,492
148,796
347,708
2010 Census
9,826
66,876
153,568
Growth 2014-2019
9.18%
8.11%
7.73%
Growth 2014-2019
8.69%
7.82%
7.64%
Growth 2010-2014
8.92%
5.15%
4.49%
Growth 2010-2014
(0.47%)
(0.50%)
(0.69%)
1,632
10,900
20,952
Owner Occupied
4,937
39,093
87,412
Renter Occupied
5,553
30,322
71,560
16,042
118,288
285,678
2014 Avg Household Income:
$68,699
$84,110
$90,428
1,744
8,554
13,847
2014 Med Household Income:
$49,487
$64,565
$67,533
270
1,642
2,994
2014 Households by Household Inc.:
2,982
19,702
42,611
Less than $25,000
2,886
13,313
29,284
96
547
1,024
$25,000 - $50,000
2,406
14,181
31,443
1,187
7,722
17,174
$50,000 - $75,000
1,953
12,210
26,516
$75,000 - $100,000
955
8,785
19,699
$100,000 - $125,000
872
6,929
15,986
$125,000 - $150,000
543
5,146
11,050
$150,000 - $200,000
457
4,698
12,107
$200,000+
418
4,154
12,886
2014 Population by Hispanic Origin
2014 Population by Race:
White
Black or African American
American Indian and Alaska Native
Asian
Hawaiian and Pacific Islander
Other Race
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 13
demographics
demographic ring - 1, 3, 5 Miles
1 Mile
3 Miles
5 Miles
Jack in the Box/Krispy Kreme | ORION Commercial Partners | 14