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Case Study: Whataburger, What a NNN Property Investment!

whataburger baytown location

Whataburger, Baytown, TX

August 2019

$2, 650,000

4.78% cap rate

Whataburger – A Profitable Corporate-Backed Lease

What started out as a cold call to a real estate investor turned into a profitable Whataburger NNN ground lease opportunity for him. Westwood Net Lease Advisors’ Mike Kocur did something this Arizona’s buyer’s regular real estate brokers did not – helped find and secure the purchase of this highly successful Whataburger’s land before anyone else could get an offer on the table.

Commercial vs Residential Real Estate

Experienced Investor Benefits from Buyer’s Representative

As Kocur got to know this buyer, he expressed an interest in owning more brand name NNN ground lease investments with corporate-backed guarantees, like his already existing Whataburger property. He also shared that he hadn’t had much luck with his current real estate brokerage finding what he was looking for and was open to Kocur investigating his options.

Westwood Net Lease Advisors’ main focus is on representing buyers and their best interests from the property search to closing, at no cost to the buyers. They have a vast market network and scour the nationwide inventory daily, including many properties that never make it on the open market. As Kocur set out to find the best investment for this buyer’s objectives, he presented many options beyond what his brokers had previously offered, as most typically only promote properties in their inventory.

Why Invest in a NNN Ground Lease?

A ground lease is a land-only rental from 20 to 99 years. The property owner holds the title on the property and the tenant is responsible for all expenses related to the development and improvement of the property; taxes, repair and maintenance, insurance, and financing costs. The landlord reaps a passive, reliable monthly income with no responsibilities, holds fee ownership for financial leverage, and when purchased in a 1031 exchange, may avoid capital gains taxes indefinitely. It’s a great addition to a portfolio that will remain stable in any economy.

commercial real estate partnership

A Near-Perfect NNN Lease Property

Once Kocur located several ideal NNN lease properties, including this Whataburger, he moved fast to let the buyer know what was available. Together, Kocur and his client assessed the Whataburger property, lease, tenant financials, and credit ratings, and realized this location was just what he was looking for – in fact, the entire deal was a near-perfect NNN investment.

  • This location has been in the community for 30 years.
  • In 2018, the QSR moved into a beautiful newly constructed prototype store.
  • The existing lease has 14 years left with 10% increases every 5 years.
  • $125,000 annual NOI the first-fifth years; $151,250 by year fifteen.
  • It offers three 5-year options to extend the lease.
  • This Whataburger is seen by 83,389 vehicles per day.
  • This family-owned corporation operates 820+ nationwide locations.

To Wrap it Up – Investor Gains from Ideal NNN Ground Lease Investment

The client’s offer of 2,650,000 was agreed upon, and with Kocur’s representation and advocacy, the transaction closed quickly. The client is now enjoying responsibility-free monthly income while Kocur keeps an eye out for this client’s next investment opportunity. If you’d like to learn more about NNN investing, contact Mike Kocur today, 314-226-2654, for a no-obligation consultation.

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