LAKE ELSINORE, Calif. – Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm has arranged the sale of a single-tenant Chili’s Grill & Bar at Lake Elsinore Marketplace, a 144,034-square-foot shopping center anchored by Costco, Lowe’s, Grocery Outlet, PetSmart and Dollar Tree.
The sale price was $2,608,000, representing a 5.00% cap rate. Hanley Investment Group has sold $383 million in retail properties in the Inland Empire in the last 36 months including nine retail properties at Lake Elsinore Marketplace valued at $24 million in the last 15 months.
Hanley Investment Group Executive Vice Presidents Kevin Fryman and Bill Asher represented the seller, Pacific Castle, based in Irvine, California. The buyer was a private investor from Orange County, California, represented by Dhanesh Solanki of KW Commercial in Brea, California.
Built in 2005 on a one-acre parcel and renovated in 2019, the 6,300-square-foot pad building occupied by Chili’s is located at 29233 Central Avenue in Lake Elsinore. This sale represents the ninth pad building Hanley Investment Group has sold at Lake Elsinore Marketplace including single-tenant net lease drive-thru properties for a Starbucks, Popeyes, Wendy’s, Del Taco and Panda Express plus a single-tenant Valvoline and Wells Fargo, and a multi-tenant pad building occupied by Navy Federal Credit Union, iBrows Threading Salon, Submarina and Juice It Up!
“We procured an all-cash, 1031 exchange buyer based in Southern California and negotiated a quick contingency period and short escrow to close by year end,” said Fryman. “Despite the restaurant’s indoor dining being closed due to COVID-related restrictions, the buyer recognized the long-term strength of the tenant at this location including an early lease extension that was impressively executed after the initial stages of the pandemic.”
Fryman added, “This sale represents the rare sale of a sit-down restaurant in the Inland Empire during COVID-19 market conditions. Only three other sit-down restaurants traded hands in this region in 2020 but they were much earlier in the year; a Buffalo Wild Wings in Chino Hills, which sold in early April 2020, according to CoStar, was the next most recent sit-down restaurant to sell.”
“A break-up strategy that targets private, non-institutional investors in order to appeal to the largest buyer pool continues to be an effective way to maximize value at a community shopping center that has multiple parcels, particularly single-tenant pads and small multi-tenant pad buildings,” said Asher.
Chili’s has had a 15-year operating history at Lake Elsinore Marketplace and has been an original tenant at the shopping center. The tenant recently exercised its five-year option early in 2020 and conducted an exterior remodel in 2019, showing its continued commitment to the site.
Chili’s absolute triple-net lease has a corporate guarantee with parent company Brinker International, Inc. (NYSE: EAT), one of the world’s leading casual dining restaurant companies. Based in Dallas, Texas, as of September 23, 2020, Brinker owned, operated, or franchised 1,660 restaurants under the names Chili’s® Grill & Bar (1,607 restaurants) and Maggiano’s Little Italy® (53 restaurants).
According to Asher, “Delivery and takeout business has more than doubled for Chili’s since the start of the pandemic.”
On December 16, 2020, Brinker International reported that Chili’s continues to outpace the casual dining industry and grow market share. According to the most recent third-party data from Knapp-Track, Chili’s comparable restaurant sales have been on average more than 12% points better than comparable restaurant sales for the casual dining industry during its second quarter, and Chili’s comparable restaurant traffic has been on average approximately 16% points better than comparable restaurant traffic for the casual dining industry for the same period.
Brinker continues to maintain adequate operating liquidity with total available liquidity of approximately $646 million as of December 11, 2020, including revolver availability of approximately $593 million and cash of approximately $53 million.
The roll out of It’s Just Wings has helped Brinker sales. Wyman Roberts, CEO and president of Dallas-based Brinker International Inc., said in October 2020 that It’s Just Wings, introduced systemwide in late June 2020, is on track to meet the first-year target of $150 million in sales with its exclusive DoorDash partnership.
In the last nine months, despite COVID-19 lockdowns and impact, Hanley Investment Group has sold various other sit-down restaurants including a Red Robin in Sioux City, Iowa, and Buffalo Wild Wings in Mountain Home, Arkansas.