Starbucks building purchase for long term income in small metro area
I'm interested in purchasing a recently completed Starbucks on a retail corridor in the small metro area that I live. New, built to suit building with very good access (no shared curb cuts, signal intersection).  It is advertised at a 5.25% cap rate. However, Starbucks has a history of opening and closing locations in our area over the last 10-12 years - in one case putting a new location on the other side of a road where the old one got shut down.

This purchase would be 15-20% of our portfolio and our first NNN lease - we currently own an apartment building and two commercial single tenant buildings where my wife's business is the tenant. We are interested in diversifying into fewer management responsibilities.

What happens to us if Starbucks decides they don't like my side of the street any more?  Are they good tenants? Or do they decide they don't like a location any longer and their legal department makes my life difficult?

Is buying a single NNN lease building even a good idea?

EDIT: I got the lease monday morning in my email (10 years with two 5 year options) and by the time I called the broker in the afternoon with a couple of questions, the Starbucks was under contract to someone else. 
[{"id": "g6ns09e", "text": "Starbucks has revealed how shitty of a tenant they are within the past 6 months. You need to do more research. I wouldn\u2019t touch a Starbucks, especially if the cap starts with a 5% in a \u201csmall metro area.\u201d Doesn\u2019t add up.", "replies": [{"id": "g6qa5oy", "text": "What do you mean by this? Can you give examples?", "replies": [{"id": "g6r3rgh", "text": "https://www.foxbusiness.com/money/starbucks-landlords-astounded-coronavirus-rent-reduction", "replies": [{"id": "g6r58sg", "text": "Seems like they are just reaching out to ask for one, but who\u2019s actually taking the bait? There are many tenants that are doing this just to see if they can pull it off. \n\nI think for the sake of OP, he needs to consider many aspects. If this SBUX he\u2019s talking about is in a good location (e.g. hard corner, part of a well anchored center, good access, strong traffic count, etc.) then I don\u2019t see why rent reduction would be an issue. Drive thrus remain strong through covid.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g6nt4us", "text": "I don't like starbucks. You're paying a ton of money for the underlying real estate like $1000/sqft. I like NNN buildings but not starbucks.", "replies": [], "depth": 1}, {"id": "g6nydaq", "text": "Agree I like NNN but not Starbucks.", "replies": [], "depth": 1}, {"id": "g6o3ctj", "text": "I hate NNN, it\u2019s only worthwhile if you\u2019re a financial engineer and have scale. I also hate Starbucks they are the biggest pain in the ass to work with (I\u2019ve done both franchise deals and traditional leases), they think and act like they walk on water and you have to accept it. If SBUX moves out (or the franchisee - should make sure you know if its corporate owned or not) you now have 2nd gen empty shell space with some restaurant hook ups but no equipment. Hard pass", "replies": [{"id": "g6odh12", "text": "As far as I know Starbucks doesn\u2019t have franchised locations. They have licensed use places like airports and Barnes &amp; Nobles but the one this guy\u2019s talking about is absolutely a corporately owned location.", "replies": [{"id": "g6ot2uu", "text": "I\u2019ve had franchised locations in hotels.", "replies": [{"id": "g6qybj9", "text": "Those are called licensed stores. They license the cafes to use their beans and syrups, and in exchange the cafes can put up signage suggesting they're Starbucks.", "replies": [{"id": "g6qzixm", "text": "I can assure you that I have negotiated franchise agreements with Starbucks on more than one occasion for franchised locations inside of big box hotels, NOT licensed locations. It was a total pain in the ass because franchise law requires someone to have actual operating experience to be the franchise holder. 100% not a license agreement.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g6onxzh", "text": "If you are investing cash, sure! Maybe sell in 5 years with some room left on the lease.\n\nIf borrowing, maybe same philosophy, sell in 5 years and make the lease extension or potential vacancy someone else\u2019s problem.\n\nThese, as I understand, are turnkey investments. You have a corporate guaranteed lease from one of the largest restaurant chains. But as others said, unless it is a prime location, they likely won\u2019t be there in 10 years, so milk it and sell.\n\nCap rate seems right.", "replies": [], "depth": 1}, {"id": "g6oqmaq", "text": "How long is their lease? If new const I\u2019m assuming new lease ~15 years? Be sure to review the lease carefully even if lease is nnn they may for example have certain protections from paying taxes on the new basis or they might have unfavorable rent increases that cut into your yield. I\u2019m currently selling a sbux for a 4.8 cap in a major market so asking 5.25 (and maybe get it for 5.75-6) in a smaller market doesn\u2019t sound crazy but I will agree with others they\u2019re a pain to deal with", "replies": [{"id": "g6pck9c", "text": "They only sign 10 year leases", "replies": [{"id": "g6rdcpt", "text": "Not in my experience I am selling a building with them in a 15", "replies": [{"id": "g6soquw", "text": "That\u2019s incredibly rare. Never seen that before. TIL", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g6oub9u", "text": "The main thing you need to look at is what Starbucks is paying compared to local market rate rent. That's it! If it's way higher than you have big downside risk. If it's at market than you know you can at least rent it to another tenant if they crap out. \n\nUsually these things have inflated rents for the area and Starbucks is notorious for having terms in their favor so it may not be an attractive deal.", "replies": [], "depth": 1}, {"id": "g6ouei9", "text": "Starbucks asking for a year of rent relief at the start of coronavirus should be all the info you need on what they're like as a tenant.\n\nAbsolute pain in the ass because they know they're a draw for traffic and can make unreasonable demands. Its fine for an institutional investor/manager but I would not want to deal with them as a retail investor.\n\n5 cap in a small market seems sus too.", "replies": [], "depth": 1}, {"id": "g6ouffg", "text": "They can\u2019t leave if they signed the lease it\u2019s a Corp guarantee . They would have to pay you in full", "replies": [{"id": "g6r4f3x", "text": "Yeah but then you have an empty building that becomes dilapidated over time. It\u2019s a risk but that\u2019s why you better know damn well how good of a location it is in.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g6pb2tn", "text": "They have the advantage of having an in-house legal department with endless hours to spend on this. \n\nWe did a deal with QuikTrip on lot for a new build, and with our $700/hour attorneys, we ended up giving more concessions than we wanted just to put the deal to bed.", "replies": [], "depth": 1}, {"id": "g6v587z", "text": "I'm curious about the opening and closing of stores.\n\nThese responses are making me nervous.  I'm a small retail investor and recently closed on a brand new SBUX in a suburban location.  10 yr lease with multiple 5 yr options to renew.  \n\nIs there a database that shows % rate of SB not renewing?  I think my location is good bc of the sheer number of rooftops in the area, sunbelt sunshine state, and its in a Publix shopping center.  But having some data would be helpful.", "replies": [], "depth": 1}, {"id": "g8lcan8", "text": "Empty building that you can call another franchise in and they would be happy to go in that new building", "replies": [], "depth": 1}, {"id": "g9iqvjm", "text": "I disagree with what the commenters have said here. EVERY major retail and restaurant tenant demanded rent relief - not just Starbucks. Furthermore, NNN leases are very appealing to investors who are looking for \u201cmailbox money\u201d.  Of course every lease will vary but if it\u2019s a true NNN lease and a newly developed building the landlord has very little exposure to worry about. I am a retail broker in Phoenix and have worked on several Starbucks deals with developers.", "replies": [], "depth": 1}]