3NP’s Investment Strategy In Action
3060 West Sand Lake Blvd is a free-standing Logan’s Roadhouse casual dining restaurant in Orlando off the Florida Turnpike. In a prime location, the property is shadow anchored by Walmart and Lowe’s supercenters. 3NP’s principals identified an opportunity to apply 3NP’s investment strategy by acquiring the property from a restructuring vendor, right-sizing the lease for the tenant-operator and delivering superior investment returns for investors, creating a win-win-win result.
3NP’s strategy and thesis was validated via Logan’s restructuring process – i.e. an underperforming restaurant became a positive contributor by right-sizing the lease. The property was profitably sold in 2015.
- In 2013, the economic backdrop for both the landlord (Inland) and tenant-operator (Logan’s Roadhouse) was challenged. Inland was in the midst of a multi-billion dollar restructuring and the restaurant on site had not yet undergone a recovery.
- The smaller size of the deal was also challenging – navigating the layers of two large organizations to execute a sub $5M transaction required tenacious effort.
- 3NP’s principals purchased the property for fair market value of USD $2.6M seizing an opportunity to assist (i) the vendor in a quick and efficient manner and (ii) the tenant-operator by right-sizing and extending the lease.
Actions Taken And The Results
- 3NP’s principals provided expeditious, creative solutions for the vendor and offered a fair market price for the real estate with a quick closing period, saving the vendor time and headaches.
- Upon acquiring the property, the lease was re-opened, extended from 14 to 20 years, and rents were right-sized to put the restaurant’s financials in-line with industry metrics.
- Logan’s emerged from Chapter 11 having closed 34 stores. The successful application of 3NP’s strategy repositioned a mediocre restaurant into a much stronger positive net contributor for Logan’s and a potential liability became an asset.
- The property was sold for $3.9M in 2015.