How To Buy A Burger Restaurant In Texas

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1 offering memorandum. Pollo Tropical Ground Lease Adjacent to In-N-Out San Marcos, TX (Austin MSA) $3,383, % CAP Rate New Fixed No Adjacent Burger Brand Located Close Excellent Interstate 20-Year Absolute NNN Ground Lease 10% Increases Every Five Years Landlord Responsibilities to Brand New In-N-Out New 2016 Construction in One of the Fastest Growing Cities in the Nation Proximity to Texas State University 38,000+ Students Corner Location with Great Visibility & Easy Access 35 & Aquarena Springs Collective 139,000 AADT FILE PHOTO This property is listed in conjunction with Texas-licensed real estate broker Delta Commercial.

2 Disclaimer Newmark Cornish & Carey ( Broker ) has been retained on an exclusive basis to market the property described herein ( Property ). Broker has been authorized by the Seller of the Property ( Seller ) to prepare and distribute the enclosed information ( Material ) for the purpose of soliciting offers to purchase from interested parties. More detailed financial, title and tenant lease information may be made available upon request following the mutual execution of a letter of intent or contract to purchase between the Seller and a prospective purchaser. You are invited to review this opportunity and make an offer to purchase based upon your analysis. If your offer results in the Seller choosing to open negotiations with you, you will be asked to provide financial references. The eventual purchaser will be chosen based upon an assessment of price, terms, ability to close the transaction and such other matters as the Seller deems appropriate. The Material is intended solely for the purpose of soliciting expressions of interest from qualified investors for the acquisition of the Property. The Material is not to be copied and/or used for any other purpose or made available to any other person without the express written consent of Broker or Seller. The Material does not purport to be all-inclusive or to contain all of the information that a prospective buyer may require. The information contained in the Material has been obtained from the Seller and other sources and has not been verified by the Seller or its affiliates. The pro forma is delivered only as an accommodation and neither the Seller, Broker, nor any of their respective affiliates, agents, representatives, employees, parents, subsidiaries, members, managers, partners, shareholders, directors, or officers, makes any representation or warranty regarding such pro forma. Purchaser must make its own investigation of the Property and any existing or available financing, and must independently confirm the accuracy of the projections contained in the pro forma. Seller reserves the right, for any reason, to withdraw the Property from the market. Seller has no obligation, express or implied, to accept any offer. Further, Seller has no obligation to sell the Property unless and until the Seller executes and delivers a signed agreement of purchase and sale on terms acceptable to the Seller, in its sole discretion. By submitting an offer, a purchaser will be deemed to have acknowledged the foregoing and agreed to release Seller and Broker from any liability with respect thereto. Table of Contents Property Information 1 Tenant Information 2 Site Plan 3 Aerials 4 About the Area 7 Demographics 9 Property walk-throughs are to be conducted by appointment only. Contact Broker for additional information. Michael Maffia Executive Vice President mmaffia@newmarkccarey.com CA RE License # Putnam Daily Vice President pdaily@newmarkccarey.com CA RE License #

3 Property Information Location The property is located at the southwest corner of Interstate 35 and Aquarena Springs Drive in San Marcos, Texas. Lot Size Approximately 1.13 acres, or 49,375 square feet. Only the land is for sale. Improvements Construction will be completed in June 2016 of an approximately 3,548 square foot quick-service restaurant building with drive thru component for Pollo Tropical. The improvements are being built and will be owned by the tenant. Upon expiration or termination of the lease, title to all such improvements shall become vested in landlord. The improvements are not for sale. Parking Approximately 62 parking spaces are available on site. Lease Leased to Pollo Operations, Inc. for 20 years from an estimated rent commencement date on September 15, 2016, at an initial annual rent of $169,147. There are four five-year options to renew the lease. The annual rent increases by 10% every five years throughout the initial term and option periods. The lease is net, with the tenant responsible for taxes, insurance, and all maintenance. Tenant shall not be required to perform any item of maintenance, repair and/or replacement to the roof, plumbing system, mechanical systems, electrical system, foundation, HVAC, and structural portions of the premises, the cost of which may exceed $50,000 during the last two years of the initial term or during the last two years of any option year. Net Operating Income Year Annual Rent Return 1-5 $169, % 6-10 $186, % $204, % $225, % (Option 1) $247, % (Option 2) $272, % (Option 3) $299, % (Option 4) $329, % Price: $3,383,000 (5.00% Return) Right of First Refusal Tenant shall have the right of first refusal to purchase the property on the same terms and conditions as those of any bona fide offer received by the landlord within 15 days after receiving notice of such offer. Financing The property will be delivered free and clear of permanent financing. Note The above income is an estimate and does not provide for all potential costs and expenses (i.e., maintenance, repair, etc.) that may be required of the owner. Any reserves set forth herein are merely estimates and not based on any experience, physical inspection, or prior knowledge. All prospective purchasers are strongly advised to make an independent investigation to determine their estimate of costs and expenses prior to entering into an agreement to purchase. 1

4 Tenant Information Pollo Operations, Inc., a subsidiary of Fiesta Restaurant Group, Inc., owns and operates the Pollo Tropical restaurant chain which specializes in the cuisine of the Caribbean. Its restaurants serve grilled chicken that is marinated with tropical spices and fruit juices, along with such Caribbean side dishes as fried bananas, yucca, and black beans and rice. It also offers salads and dessert items. The chain is headquartered in Kendall, Miami-Dade County, Florida. It owns and operates more than 160 locations in the United States (Florida, Georgia, Tennessee, and Texas) plus four licensed units located on college campuses in Florida. The company has more than 30 franchised locations in Puerto Rico, the Bahamas, Costa Rica, Dominican Republic, Ecuador, Honduras, Panama, Trinidad & Tobago, Venezuela, and Guatemala. The first Pollo Tropical restaurant opened in 1988 in Miami, Florida and has been expanding since with a recently new market design for all of its new restaurants, while existing stores will see a remodel by end of Fiesta Restaurant Group, Inc. plans to open a total of 30 to 34 Pollo Tropical restaurants and up to four Taco Cabana restaurants in Fiesta Restaurant Group, Inc. owns, operates and franchises the Pollo Tropical and Taco Cabana restaurant brands with more than 320 company-owned and operated restaurants and more than 49 franchised restaurants in the U.S., Puerto Rico, the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad & Tobago, Venezuela, and Guatemala. The brands specialize in the operation of fastcasual, ethnic restaurants that offer distinct flavors with broad appeal at a compelling value. Both brands feature made-fromscratch cooking, fresh salsa bars, drive-thru service and catering. Fiesta common stock is traded on the NASDAQ Global Select Market under the symbol FRGI. For the fiscal year ended January 3, 2016, Fiesta Restaurant Group, Inc. reported revenue of $687 million with net income of $38.54 million and total stockholder equity of $ million. Year over year sales from 2014 to 2015 increased by 7.80%. For additional information, see and FILE PHOTO 2

5 Site Plan AQUARENA SPRINGS DRIVE DRIVE THRU DRIVE THRU DRIVE THRU DRIVE THRU DRIVE THRU DRIVE THRU 3,548 SF INTERSTATE 35 FRONTAGE ROAD BURGER 3

6 Aerial South View Dezavala Elementary Owen Goodnight Middle School /(107,000 AADT) BURGER Aquarena Springs Dr (32,0000 AADT) 4

7 Aerial Southwest View Hernandez Elementary Dezavala Elementary Owen Goodnight Middle School Hays County Government Center /(107,000 AA DT ) Texas State University Bobcat Stadium ) DT A 0A Texas State Track and Field Texas State- San Marcos Golf Course 0 Texas Department of Public Safety as in pr n are g r sd (3 0 2,0 Travis Elementary u Aq BURGER San Marcos Rehabilitation & Health 5

8 Aerial West View DOWNTOWN San Antonio Hays County Government Center Hernandez Elementary Texas State University Strahan Coliseum Bobcat Stadium Texas State- San Marcos Golf Course Travis Elementary Aquarena Springs Dr (32,0000 AADT) Texas State Track and Field Post Rd /(107,000 AADT) BURGER Texas Department of Public Safety 6

9 About the Area General Overview San Marcos is situated roughly 30 miles southwest of Austin and 45 miles northeast of San Antonio on Interstate 35. In 2014, the population was estimated to be 58,892, a 7.9% increase from San Marcos is considered to be one of the fastest growing cities in the nation the U.S. Census Bureau named San Marcos the fastest growing city in the United States in 2013 and Although the majority of San Marcos lies in Hays County (and San Marcos is the county seat), small portions of the city extend into neighboring Caldwell and Guadalupe counties. While the Hays and Caldwell county portions are part of the Austin-Round Rock Metropolitan Statistical Area (MSA), the small portion in Guadalupe County is part of the San Antonio MSA. The 2014 U.S. Census Estimate placed the population of the Austin- Round Rock MSA at over 2 million people, making it the 35th largest metropolitan area in the nation while boasting the 16th largest GDP per Capita. The greater Austin area is well known for its concentration of high-tech companies. Interstate 35 connects San Antonio with Austin and is also the major transportation corridor connecting Mexico, the United States, and Canada. Furthermore, San Marcos is only minutes away from Interstate Highway 10, the vital transportation link between the east and west coasts. As a result of its proximity to both major interstates, three motor freight carrier terminals are located in San Marcos serving several motor freight lines. San Marcos has expansive rail service offering both cargo and passenger service. Union Pacific Railroad operates one of the nation s major railfreight systems, linking the Pacific Coast and the Texas Gulf Coast with other major U. S. cities. San Marcos has two rail sidings for shipping and receiving cargo and piggyback and switching services are available in nearby San Antonio. San Marcos is a thriving city that fosters a business-friendly environment and implements lower taxes than nearby cities. The city has partnered with new and existing businesses to help facilitate the expansion or renovation of existing structures and to build new facilities. The city offers various types of incentives that are designed to help fill a financial gap associated with a small business development or to help attract a large employee-intensive development to expand or locate in San Marcos. The City remains committed to working with private development on projects that will generate economic growth and jobs for the region.

10 About the Area Site Information The subject property is ideally located at the southwest corner of Aquarena Springs Drive (32,000 AADT) and Interstate 35 (107,000 AADT) approximately two miles west of downtown San Marcos. The property is easily accessible at this signalized intersection, as it benefits from its ingress/egress from both Aquarena Springs Drive and Interstate 35 Frontage Road (26,000 AADT), with its highly visible signage viewed by more than a collective average of 165,000 vehicles per day from the intersection. The property s excellent location in a highly travelled node provides substantive consumer draw to the immediate area, as is evident by the several national food users in proximity, such as McDonald s, Wendy s, Sonic Drive-In, Subway, Popeyes, IHOP, and Logan s Roadhouse, among others. Additionally, In-N- Out is set to open its first location in Hays County at the parcel directly adjacent to Pollo Tropical, further contributing to the traffic flow to the area. Two blocks south of the property is Springtown Center, which is currently undergoing renovations; the center will include new tenants such as Gold s Gym and The Spot, a dine-in movie theater. Endeavor Real Estate Group has invested more than $27 million to renovate the entire Springtown Center, with the project expected for completion in late Prominent educational institutions in the area include Texas State University, which is located approximately one mile west of the property along Aquarena Springs Drive. The university has over 36,000 students enrolled, with over 30,000 students living off campus, which is a strong generator of business for surrounding businesses. Since its establishment in 1899, Texas State University has grown to become the largest institution in the Texas State University System and the fourthlargest university in Texas. The campus consists of 245 buildings on 492 acres of land. The university consistently supplies local employers with an ample, and well-educated workforce. Near Texas State University are a number of residential projects lined up for development, such as Paso Robles (3,450 dwellings), La Cima (2,000 dwellings), Highpoint Communities (1,845 dwellings), South End (750 dwellings). Other recent new development includes the 230,000 square foot Hays County Government Center approximately four miles southwest of the property.

11 Demographics I-35 & Aquarena Springs Dr, San Marcos, TX mile 3 miles 5 miles 2010 Total Population 10,717 39,349 56, Total Population 11,883 43,610 63, Total Population 13,749 49,041 72, Annual Rate 2.96% 2.38% 2.54% 2015 $32,943 $38,608 $47, $37,632 $43,793 $53, $145,370 $152,957 $173, $214,103 $208,904 $226,012 Population Summary Travis Elementary Texas State University Golf Course Aq ua p as n re 000 AADT) Dr (32, s g rin Average Household Income BURGER SPRINGTOWN CENTER Median Home Value Strahan Coliseum Quail Creek Golf Club ) DT /( 0 00, 7 10 A A /( 32,0 00 Major Employers in San Marcos, TX # of Employees Texas State University 2,780 Prime Outlets San Marcos 2,100 Tanger Factory Outlet Center 1,540 San Marcos CISD 1,114 Hays County 850 Hunter Industries 650 Central Texas Medical Center 650 HEB Distribution Center 578 City of San Marcos 517 Telenetwork Partners, LTD 500 AA DT ) 9

12 EQUAL HOUSING Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords. Information About Brokerage Services efore working with a real estate broker, you should Bknow that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner s agent by entering into an agreement with the owner, usually through a written - listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner s agent anything the buyer would not want the owner to know because an owner s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer s agent anything the owner would not want the buyer to know because a buyer s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee s records. Buyer, Seller, Landlord or Tenant Date Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a question or complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas or OPPORTUNITY 01A TREC No. OP-K

13 FILE PHOTO 901 Mariners Island Boulevard, Suite 120 San Mateo, CA Michael Maffia Executive Vice President CA RE License # Putnam Daily Vice President CA RE License #