NY investor pays $7.45M for 'trophy asset' I-Drive Red Lobster site, seeks more

A New York-based private investor paid more than $7.45 million on Thursday for a Red Lobster location on International Drive he calls his new "trophy property," and is pursuing more triple-net retail assets in Greater Orlando. 

Located at 5936 International Dr., the 1.77-acre parcel features a Red Lobster restaurant built in 1974 with 7,766 square feet of conditioned area. It lies just north of Universal Orlando's former Wet 'n Wild site where two new large resort hotels will be built in 2018

"We've been trying to get something in Orlando for a while now, but the pickings are slim and we weren't seeing great returns. But this was a trophy location, I feel like this was a homerun," buyer Mark Fischler told GrowthSpotter on Friday. "Now that I've broken the ice in Orlando this will not be our last purchase there." 

The seller was an affiliate of San Francisco-based private equity firm Golden Gate Capital, which paid more than $5.54 million for the property in late June

Golden Gate Capital owns the Red Lobster brand and its related assets, having paid $2.1 billion in 2014 to buy the chain from Darden Restaurants. When it bought this I-Drive property, the then-tenant and landlord signed a new lease through July 2039 with four extension options of five years. 

Golden Gate also raised Red Lobster's contracted rent for the property by 35 percent or more. That increased the property's valuation to a capitalization rate of 5.25 percent, though Fischler paid a cap rate of 5.4 percent -- over asking price -- because the location was worth it to him.

"I was prepared to go into the 4s on (cap rate), and was willing to pay whatever it took for this trophy location," Fischler said. 

Fischler owns and manages a family trust portfolio of mainly NNN-leased, single-tenant retail properties and mixed-use buildings in New York and Florida, and is a commercial developer of retail properties in New York City. 

He has admittedly been "riding the coattails" of Golden Gate Capital in its sell-off of Red Lobsters and other restaurant properties in the past year. 

"I'm one of the first guys who combed through (Golden Gate's) properties for opportunity, and I wanted this one in Orlando out of all the markets, it was the no. 1 location for Red Lobster as far as I'm concerned," Fischler said. "When this one came up for sale, I raised my hand and paid whatever they asked." 

Glen Kunofsky of Marcus & Millichap's National Retail Group have been helping Fischler coordinate his asset acquisition search. 

In recent months Fischler has bought six Bob Evans locations in Florida from Golden Gate Capital, he said, and is under contract for more. The company completed its purchase in early May of the 523-unit Bob Evans restaurant division from Bob Evans Farms, Inc., for a reported $565 million. 

Fischler said his family will be building a home in Lighthouse Point, which is motivating him to seek more NNN-leased retail properties in Florida. However, he favors high elevation areas that won't be prone to future flooding.

"This Red Lobster asset is like a bearer bond, I've already gotten offers to sell to other people. But I'm not in the market for flipping, we'll hold these long-term for our family." 

Have a tip about Central Florida development? Contact me at bmoser@growthspotter.com, (407) 420-5685 or @bobmoser333. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.

Copyright © 2018, GrowthSpotter
64°