Burger King, founded in 1954 and headquartered in Miami, Florida, is the second largest fast food hamburger chain (15,000 locations globally) behind McDonald’s.
Burger King’s strong real estate fundamentals coupled with the fact that the nature of the fast food business is internet-proof make Burger King an appealing net lease investment. With a focus on placement in high traffic areas with easy access, Burger Kings occupies solid real estate. The buildings are relatively easy to re-tenant should Burger King level due to the fact that the footprint is smaller, roughly 3,5000 square feet, and the buildings have drive-thru windows, which lends itself favorably to other QSR tenants who may look to back fill the location.
Though the majority of Burger Kings are franchises, not corporately owned, this creates a variety of lease structures as well as various levels of credit, which can both play a role in the value of the asset. However, most Burger Kings have a rent increase built-in. These increases could be annual increases of 1-2% annually or increases every 5-years of anywhere from 5-10% providing protection against inflation. Burger King has both a solid brand recognition as well as solid real estate fundamentals, which further strengthen the appeal of owning these assets. Burger King typically signs NNN leases or ground leases. While ground leases trade at lower caps, the NNN leases are trading inline with our similar QSR concepts.
Whether seeking a 1031 Exchange property of looking to add a STNL asset to ones portfolio, Burger King is a tenant to consider adding to the mix.