FCPT's Strategic Acquisition of a Bojangles Property: A High-Yield Opportunity in a Resilient Retail Sector

In the evolving landscape of commercial real estate, triple net (NNN) leases have emerged as a cornerstone of risk-mitigated, income-generating investments. Four Corners Property Trust's (FCPT) recent acquisition of a Bojangles property for $2.2 million—priced at a 7.1% cap rate—exemplifies how strategic NNN acquisitions in the restaurant sector can deliver long-term value while insulating investors from operational volatility. This move aligns with FCPT's broader 2025 strategy of targeting high-quality, brand-backed assets, and it underscores the growing appeal of NNN leases in a market where traditional commercial real estate faces headwinds.

Bojangles: A Creditworthy Tenant in a Resilient Sector

Bojangles, a subsidiary of Inspire Brands (parent to Arby's, Dunkin', and Jimmy John's), operates over 816 locations across 15 U.S. states, with 90% franchised and 10% corporate-owned. Its 2022 revenue of $1.2 billion and net income of $23 million highlight its financial stability, while its franchise model ensures a steady revenue stream through initial fees and 5% royalty payments. The company's expansion plans—100+ new units in 2023 and beyond—further solidify its growth trajectory.

For real estate investors, Bojangles' NNN lease structure is particularly compelling. The typical 15-year lease with 2–4 five-year renewal options, coupled with annual rent escalations of 1.25–1.5% or 7–10% every five years, creates a predictable income stream. FCPT's recent acquisition, with six years remaining on the lease, benefits from these terms while leveraging Bojangles' brand strength and Inspire Brands' financial backing.

The NNN Advantage: Risk Mitigation in a Volatile Market

The restaurant real estate sector, particularly franchise-backed NNN properties, has demonstrated resilience amid macroeconomic uncertainties. Unlike traditional commercial real estate, NNN leases transfer property taxes, insurance, and maintenance costs to the tenant, shielding landlords from rising operating expenses. This structure is especially valuable in 2025, as elevated interest rates and inflationary pressures strain operators' debt costs, prompting more franchisees to pursue sale-leaseback transactions.

Cap rates in the NNN sector have climbed to 6.76% by Q4 2024, reflecting investor demand for high-quality tenants with strong credit profiles. Bojangles' position as a national brand with a diversified franchise network and Inspire Brands' operational support positions it as an ideal tenant. In contrast, independent operators face higher marketing and supply chain costs, making them less attractive for risk-averse investors.

FCPT's Strategic Positioning and Sector Trends

FCPT's 2025 acquisition spree—$84 million in Q2 alone and $344 million over the past year—demonstrates its focus on capitalizing on favorable market conditions. The Bojangles property, located in a strong Tennessee retail corridor, aligns with the company's emphasis on prime locations and long-term lease stability. By targeting tenants like Bojangles, FCPT minimizes default risks while benefiting from rent escalations that hedge against inflation.

The broader real estate landscape further supports NNN investments. While office and retail sectors grapple with declining occupancy and rising costs, NNN leases offer a counterbalance. Franchise restaurants, driven by digital ordering and delivery growth, continue to demand optimized physical locations. Bojangles' investment in self-service kiosks and digital enhancements also aligns with industry trends, ensuring its relevance in a shifting consumer landscape.

Risks and Considerations

Despite its strengths, Bojangles lacks a public credit rating, necessitating a closer look at its financials and Inspire Brands' influence. Competitive pressures in the QSR space and potential market saturation could impact unit-level profitability. However, the company's geographic diversification—expanding into Phoenix and the Midwest—and Inspire's cross-brand synergies mitigate these risks.

For investors, due diligence remains critical. Monitoring franchise performance, lease renewal rates, and macroeconomic trends will be essential. Yet, the NNN structure inherently limits exposure to property-related risks, making it a robust choice for passive income seekers.

Conclusion: A High-Yield, Low-Risk Proposition

FCPT's acquisition of the Bojangles property encapsulates the potential of NNN leases in the restaurant sector. With a 7.1% cap rate, long-term lease terms, and a tenant backed by Inspire Brands, the investment offers a compelling blend of yield and stability. As cap rates rise and traditional CRE sectors falter, NNN properties like this one are poised to deliver consistent returns.

For investors seeking to balance growth and security, FCPT's strategy—targeting high-credit tenants in resilient industries—provides a blueprint for navigating 2025's economic uncertainties. The Bojangles acquisition is not just a single transaction but a testament to the enduring value of NNN real estate in a dynamic market.