OFFERING MEMORANDUM

Sonic120 W. Broadway I West Memphis, AR

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OFFERING MEMORANDUM

™

TA B L E O F C O N T E N T S

EXECUTIVE SUMMARY4FINANCIAL OVERVIEW6

TENANT OVERVIEW8AREA OVERVIEW10

E X C L U S I V E LY L I S T E D B Y

FVP & Senior Director

Gary.Chou@matthews.comDIR (310) 919-5827MOB (714) 928-8016 LIC # 01911222 (CA)

g a r y c h o uAssociate

k e v i n c h a n g

Kevin.Chang@matthews.comDIR (310) 919-5828MOB (951) 616-8918LIC # 01976724 (CA)

B R O K E R O F R E C O R D

LIC # PB00069947j e s s i c a D e a r n l e y

E X E C U T I V E S U M M A R Y

I N V E S T M E N T H I G H L I G H T S

STABILIZED, GROWING CASH FLOW• Long-Term Stabilized Income – 20+ years left on the original lease

term; 2 (Two), 5 (Five) year options – There are scheduled 5% increases every 5 years, hedging against inflation!

• Absolute NNN Investment – ZERO landlord responsibilities with maintenance, taxes and insurance paid by tenant for the landlord – Ideal for out of state investors looking for passive income

• Fantastic Store-Level Economics – This store has been performing well above the national average for Sonic and is continuing to experience strong sales growth

• Fee Simple Ownership – Landlord will be able to depreciate the improvements over 39 years – Great for sheltering income!

• Strong Commitment to Location – Franchisee plans to upgrade menus, credit card systems and POS systems later this year

RELIABLE RETAIL LOCATION• Less than 1-Mile from High School – Sonic is located just down the

street from the Academies of West Memphis High School which is home to over 1,100 students – Ideally located to capture lunch and

dinner time business • Strong Retail Corridor – Nearby national tenants include Dollar

General, Subway, Walgreens, Fidelity National Bank, Captain D’s and O’Reilly Auto Parts – Store benefits from virtually zero competition in the area!

SEASONED OPERATOR OF AN EXCELLENT BRAND• Seasoned Operator – Franchisee has been operating Sonic Drive-

Ins for over 35 years and currently has 2 high performing units under management – Both stores rank in the top 10% of the chain in sales

• Excellent Unit Level Economics – New lease will have a healthy rent to sales ratio and investors can find additional confidence in the store knowing that this site ranks in the top 100 out of 3,557 stores in sales for the chain as of December 2016

• Reliable Growing Brand – Sonic Drive-In has been operating since 1953. In 2016 system same-store sales increased by 2.6% – the sixth consecutive year of positive same-store sales. Net growth of 31 stores in 2016 – the strongest in seven years

4 Matthews Real Estate Investment Services

E X E C U T I V E S U M M A R Y

Tenant Summary

Tenant Trade Name Sonic

Type of Ownership Fee Simple

Lease Guarantor Franchisee

Lease Type NNN

Roof and Structure Tenant Responsible

Original Lease Term 20 Years

Lease Commencement COE

Rent Commencement COE

Lease Expiration TBD

Term Remaining 20 Years

Increases 5% Every 5 Years

Options Two (2), 5-Year Options

S o n i c120 W. BroadwayWest Memphis, AR 72301

List Price ................................................................................................................. $2,845,000 CAP Rate - Current ..........................................................................................................6.25%Gross Leasable Area ...............................................................................................± 1,433 SF Lot Size .................................................................................................................± 0.85 Acres Year Built / Year Renovated ...............................................................................1988 / 1997**Information to be confirmed

Annualized Operating DataMonthly Rent Annual Rent Rent/SF Cap Rate

Years 1-5 $14,813.33 $177,760 $124.05 6.25%

Years 6-10 $15,554.00 $186,648 $130.25 6.56%

Years 10-15 $16,331.70 $195,980 $136.76 6.89%

Years 16-20 $17,148.29 $205,779 $143.60 7.23%

O1: Years 21-25 $18,005.70 $216,068 $150.78 7.59%

O2: Years 26-30 $18,905.98 $226,872 $158.32 7.97%

5Sonic I West Memphis, AR

P R O P E R T Y O V E R V I E W

6 Matthews Real Estate Investment Services

P A R C E L M A Pt h e o f f e r i n g

Property Name Sonic

Property Address 120 W. Broadway

West Memphis, AR 72301

Assessor’s Parcel Number 392-004000-000

Site DescriptionNumber of Stories OneGross Leasable Area (GLA) ± 1,433 SFYear Built / Renovated 1988 / 1997*Lot Size ± 0.85 Acres (37,026 SF) Type of Ownership NNNParking 36 Surface SpacesParking Ratio 25.12 : 1,000 SFLandscaping ProfessionalTopography Generally Level

W Broadway ± 20,000 ADT

*Information to be confirmed

7Sonic I West Memphis, AR

T e n a n t m a p

Matthews Real Estate Investment Services8

T E N A N T O V E R V I E W

9Sonic I West Memphis, AR

Property Name Sonic Drive-In

Ownership Public

Revenue (2016) $606.320 million

Net Income (2016) $64.067 million

Year Founded 1953

No. of Locations ± 3,557

No. of Employees ±9,620

Headquartered Oklahoma City, OK

Website www.sonicdrivein.com

TENANT OVERVIEWFor more than 60 years, SONIC, America’s Drive-In has built a dominant position in the drive-in restaurant business. They did so by sticking to what made drive-ins so popular in the first place: made-to-order American classics, signature menu items, speedy service from friendly Carhops and heaping helpings of fun and personality. The company operates 3,557 restaurants in 45 US states. With a dynamic history, SONIC surges forward while specializing in fresh, made-to-order meals that you can’t get anywhere else. Today, SONIC is the largest chain of drive-in restaurants in America. As a business, they continue to thrive, maintaining strong real sales growth, industry-leading customer frequency and high returns for stockholders.

COMMUNITY INVOLVEMENT

For over 15 years, SONIC’s community giving programs have been focused on advancing education and educational opportunities for youthes. Each fall, SONIC conducts “Limeades for Learning”, a large fundraising event supporting teacher’s projects across the nation.

A R E A O V E R V I E W

M e m p h i s M e t r o p o l i ta n S tat i s t i c a l A r e a

10 Matthews Real Estate Investment Services

Memphis is a city in the southwestern corner of Tennessee and the county seat of Shelby County. With a population of about 700,000 Memphis is the largest city in Tennessee, the largest city on the Mississippi River, and the third largest city in the greater Southeastern United States.

The city’s central geographic location has been strategic to its business development. The economic base is diverse and its status as a good business base is on the rise—the city is headquarters for retailer AutoZone and FedEx Corporation, and International Paper is relocating its headquarters from Connecticut. It is also known as a good base for smaller and especially minority owned businesses. Located on the Mississippi River and intersected by five major freight railroads and two Interstate Highways, I-40 and I-55, Memphis is ideally located for commerce in the transportation and shipping industry. Its access by water was key to its initial development, with steamboats plying the Mississippi river. Railroad construction strengthened its connection to other markets to the east and west.

Memphis is a pilgrimage for those wanting to visit the birthplace of the blues, soul and of rock ‘n’ roll. On Beale Street, W.C. Handy put down on paper the first written blues music. Elvis, Roy Orbison, Jerry Lee Lewis and Johnny Cash all recorded at the historic Sun Records, which is now a museum. Graceland, the second most-visited home in America, welcomes visitors from around the world who yearn for a peek into the life of “the King.” A general resurgence in the popularity of blues has brought new life to Memphis as a tourist attraction. The historic Beale Street neighborhood provides music entertainment opportunities for residents and tourists.

11Sonic I West Memphis, AR 11

HOUSEHOLDS 1 Mile 3 Mile 5 Mile

2022 Projection 2,966 9,819 14,234

2017 Estimate 3,029 10,034 14,387

2010 Census 3,156 10,510 14,799

2000 Census 3,074 10,936 13,201

INCOME 1 Mile 3 Mile 5 Mile2017 Est. Average Household Income $45,020 $49,266 $56,747

d e m o g r a p h i c s

POPULATION 1 Mile 3 Mile 5 Mile

2022 Projection 7,201 25,361 37,513

2017 Estimate 7,410 26,173 38,068

2010 Census 7,860 28,065 39,515

2000 Census 7,699 29,925 36,363

w e s t M e m p h i s , A RWest Memphis is the largest city in Crittenden County, AR. It is part of the Memphis Metropolitan area and is located directly across from the Mississippi River from Memphis. Primarily because of its central location and transportation infrastructure, West Memphis has become a hub for distribution and assembly operations. Healthcare has become a large component of the city’s business with Crittenden Regional Hospital, numerous clinics and nursing homes located in town.

The city lies at the point where two of the nation’s most heavily travelled interstate highways, Interstate 40 and Interstate 55, intersect with the Mississippi River (a major cargo waterway) and large rail-lines operated by BNSF and Union Pacific. Cable Television, Internet and Digital Phone is provided by Comcast. AT&T provides Phone and Internet Service. Major operations include distribution centers for retailers such as Family Dollar Stores and manufacturers such as Ciba Chemicals. Continuing nearly $40 million in expenditures in West Memphis since 1998, Ciba Specialty Chemicals began construction of a new $1.3 million, 7,000-square-foot laboratory facility in December 2003, which was completed in June 2004.

This Offer ing Memorandum contains select informat ion pertaining to the business and af fa i rs of Sonic located at 120 W. Broadway, West Memphis, AR 72301 (“Property”) . I t has been prepared by Matthews Retai l Advisors. This Offer ing Memorandum may not be al l - inclusive or contain a l l of the informat ion a prospect ive purchaser may desire. The informat ion contained in th is Offer ing Memorandum is conf ident ia l and furnished solely for the purpose of a review by a prospect ive purchaser of the Property. I t is not to be used for any other purpose or made avai lable to any other person without the wri t ten consent of Sel ler or Matthews Retai l Advisors. The mater ia l is based in part upon informat ion suppl ied by the Sel ler and in part upon f inancial informat ion obtained from sources i t deems rel iable. Owner, nor their of f icers , employees, or agents makes any representat ion or warranty, express or impl ied, as to the accuracy or completeness of th is Offer ing Memorandum or any of i ts contents and no legal l iabi l i ty is assumed or shal l be impl ied with respect thereto. Prospect ive purchasers should make their own project ions and form their own conclusions without rel iance upon the mater ia l contained herein and conduct their own due di l igence.

By acknowledging your receipt of th is Offer ing Memorandum for the Property, you agree:

1 . The Offer ing Memorandum and i ts contents are conf ident ia l ;

2 . You wi l l hold i t and treat i t in the str ictest of conf idence; and

3. You wi l l not , d i rect ly or indirect ly, d isclose or permit anyone else to disclose this Offer ing Memorandum or i ts contents in any fashion or manner detr imental to the interest of the Sel ler.

Owner and Matthews Retai l Advisors expressly reserve the r ight , at their sole discret ion, to reject any and al l expressions of interest or of fers to purchase the Property and to terminate discussions with any person or ent i ty reviewing this Offer ing Memorandum or making an of fer to purchase the Property unless and unt i l a wr i t ten agreement for the purchase and sale of the Property has been ful ly executed and del ivered.

I f you wish not to pursue negot iat ions leading to the acquis i t ion of the Property or in the future you discont inue such negot iat ions, then you agree to purge al l mater ia ls relat ing to th is Property including this Offer ing Memorandum.

A prospect ive purchaser ’s sole and exclusive r ights with respect to th is prospect ive t ransact ion, the Property, or informat ion provided herein or in connect ion with the sale of the Property shal l be l imited to those expressly provided in an executed Purchase Agreement and shal l be subject to the terms thereof. In no event shal l a prospect ive purchaser have any other c la ims against Sel ler or Matthews Retai l Advisors or any of their af f i l iates or any of their respect ive of f icers , Directors , shareholders, owners, employees, or agents for any damages, l iabi l i ty, or causes of act ion relat ing to th is sol ic i tat ion process or the market ing or sale of the Property.

This Offer ing Memorandum shal l not be deemed to represent the state of af fa i rs of the Property or const i tute an indicat ion that there has been no change in the state of af fa i rs of the Property s ince the date this Offer ing Memorandum.

C O N F I D E N T I A L I T Y & D I S C L A I M E R S T A T E M E N T

Wendy’s I Grand Rapids, MI 13

SonicWest Memphis, AR

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E X C L U S I V E LY L I S T E D B Y

FVP & Senior Director

Gary.Chou@matthews.comDIR (310) 919-5827MOB (714) 928-8016 LIC # 01911222 (CA)

g a r y c h o uAssociate

k e v i n c h a n g

Kevin.Chang@matthews.comDIR (310) 919-5828MOB (951) 616-8918LIC # 01976724 (CA)

B R O K E R O F R E C O R D

LIC # PB00069947j e s s i c a d e a r n l e y