VICTORVILLE – The land, building and lease for Red Lobster, located at the Mall of Victor Valley, is available for purchase at $6 million. The absolute net lease agreement allows the owner to collect $358,957 annually for rent while Red Lobster is responsible for all property related expenses including the rent, taxes, insurance, and building maintenance.
According to Red Lobster shareholder, Thai Union Group, the parent company suffered a $47.1 million loss in 2022 from its holdings in the restaurant chain. Thai Union’s annual report said Red Lobster suffered from the impact of the Omicron variant of Covid-19, plus high inflation, slowed consumer spending and threatened supply chains.
Although the 25% shareholder suffered the loss, Thai Union Group still considers Red Lobster a valuable opportunity. The group said Red Lobster is looking to increase prices to combat inflation, trim expenses and introduce new menu items.
The sale of the Red Lobster, located at 12180 Amargosa Rd, Victorville, does not include the business. The acquisition is for the fee simple interest (land and building) and absolute triple net lease.
Absolute Net Lease
Absolute net leases require no landlord responsibility for expenses, making them attractive to investors who desire a passive income stream. Other expense structures require the landlord to pay for some or all the building expenses. Absolute net leases require the tenant to pay these expenses directly.
According to the listing real estate company Sands Investment Group, the Red Lobster sits on an out parcel to the Victor Valley Mall that is 663,995 square feet. Nearby tenants include Kohl’s, Walmart Supercenter, Best Buy, Hobby Lobby, and Party City. There are over 16 years left on the lease agreement with 5 four year options to extend.
The cap rate for the investment is 5.85%.
A lower cap rate is generally associated with a safer or less-risky investment. A higher cap rate is associated with more risk. Many financial advisors feel that a high cap rate is better — a good cap rate is between 5% and 10%.
The listing says the lease has a 2% annual rental increase during the initial term and option periods. The rent increase provides a growing Net Operating Income (rent), and hedge against inflation.
The property has been on the market for 21 days.
For more information about the Red Lobster net lease for sale visit https://www.crexi.com/properties/1140580/california-red-lobster