A number of Frisch's Big Boy stores are set to close in Ohio, Kentucky and Indiana for failing to pay rent to a landlord that owns thousands of similar retail-occupied sites across the country.
The Enquirer looked into Frisch's Orland-based property owner, NNN Reit Inc, which recently brought eviction lawsuits against "more than 20" locations in the region. Here's what we know:
Who is NNN Reit Inc?
NNN Reit is a 40-year-old publicly traded real estate investment trust firm that owns 3,548 properties in the United States. It specializes in owning a diverse range of free-standing, income-producing retail stores, restaurants, offices, apartment complexes and more, in which small investors can hold equity.
NNN Reit has been on the New York Stock Exchange for decades (also under old names) and its outstanding shares are currently worth $8.75 billion.
The name "NNN" refers to the real estate term "triple net lease" under which a commercial tenant is responsible for all its operating costs. This may include property taxes, building repairs, utilities and insurance, among other things. Triple net leases are often used as financial buffers for landlords of chain retail or restaurants like Frisch's.
What companies rent from NNN Reit?
Among its 375 tenants, its top stores with the highest return are:
The company also owns Walgreens and other convenience stores.
When did it buy Frisch's?
In 2015, NNN Reit (formerly known as National Retail Properties) bought 19 Frisch's restaurants in the Cincinnati region, along with others across the country, in what's known as a sale-leaseback transaction. The $47 million deal allowed Frisch's to sell its stores, relieve the burden of ownership and immediately create a long-term leasing structure with the new owner.
In sale-leaseback transactions, the buyer (NNN Reit) wins in the long run: By buying a piece of property that already generates income and then annually increasing the rent, they get a significant return on investment at a relatively low risk.
How many Frisch's does it own?
NNN Reit currently owns 66 Frisch's properties, according to its website. Frisch's CEO James Walker told The Enquirer in July that the restaurant chain runs or franchises 88 sites across the region, but its website listed only 76 locations.
While the long-term lease under NNN Reit allows Frisch's to continue operating, the downside is that restaurant revenues don't always keep up with rising rent. The Enquirer reported that these 12 regional locations are facing eviction.
This story was updated to add a video.
This article originally appeared on Cincinnati Enquirer: Who is Frisch's Big Boy's landlord, and what else does it own?