Net Lease Industry

Lowest
Cap Rate

3.65%

Lowest cap rate over past 24 months

Average
Cap Rate

4.95%

12 mo avg with 5+ yr lease term

Overview
With around 350 of its restaurants franchised, there are a mixture of different lease arrangements with varying operators behind the Taco Bell name. Given this fact, net lease investors will often see variable terms associated with capitalization rates and the strength of the individual franchisee and its real estate. The most common agreements are twenty year leases with four 5-year options to renew, and ten percent rent increases approximately every five years. Standard building sizes tend to be around 1800-200 square feet in dimension, and usually sit on half an acre to one and one half acre lot.
Average Property & Lease
Average Sale Price $1,675,000 - $2,650,000
Average NOI $75,000 - $135,000
Building SF 2,000 - 2,600
Lease Term 20 Years
Escalations Varies
Stock Symbol NYSE:YUM
CREDIT RATING
S&P

BB
Moody's

Ba3
TENANT DESCRIPTION

Taco Bell is a leading QSR (quick service restaurant) specializing in Mexican fast foods and was the first to offer AVA (American Vegetarian Association) approved meals. With their tasty combinations of tacos, burritos, and ready-to-go dishes, they are now on track to hit eight thousand new retail locations by 2023. This may further lead to an economy-boosting, one hundred thousand new jobs across the United States.

Statistics show Taco Bell surpasses forty two million people on a weekly basis, with currently almost seven thousand stores in operation nationwide. This extends to include their integrated delivery technologies for smartphones and computer order placements.

The original Taco Bell was first opened in Downey, California, who then negotiated a deal with PepsiCo Inc. to sell 868 locations to them. This resulted in the Yum! Brand, now ranked near 200 on the Fortune 500 list and includes the likes of Kentucky Fried Chicken, Pizza Hut, and others. Yum! Brand recently reported gross sales figures of an estimated thirteen billion back in 2012.

PROS
  • NNN leasing with substantial rent increase
  • Branding and marketing consistency
  • High capitalization rate
CONS
  • Graded non-investment status
  • Statistical reviews recommended per franchisor and property
  • Sales data not always present
COMPANY QUICK STATS
Founded 1962
Headquarters Irvine, California
Number of Locations 7,072
Revenue $1.988 B
Company Website https://www.tacobell.com
Key Principal Mark King
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