ROOK
TENANT REPRESENTATION · REAL ESTATE DEAL ANALYSIS & FINANCIAL MODELING
Tenant Representation — Full-Service Restaurant, Wynwood
Tortuga Roja Hospitality, LLC · Unit 2 · Miami, Florida · Site selection, occupancy-cost analysis and lease economics
§1 · Engagement Highlights
Seven findings that decided the recommendation
The county is tight; the submarket is not. Miami-Dade retail vacancy 3.0% and rents +2.6% in a quarter, against Wynwood/Design District vacancy widening from 6.5% to 9.7%. All the negotiating leverage lives in that gap.
The trophy site is the second-worst deal. Site A generates the highest revenue in the set — $4,507,188 — and returns 17.3% on capital against a 28% hurdle. Revenue does not survive a $490,950 occupancy cost.
The cheapest rent is the worst business. Site C clears a 7.90% rent factor at a negotiated rent and returns 4.87% on capital, because a ratio whose numerator and denominator both collapse looks healthy while the business dies.
Infrastructure is worth more than address. The recommended site's existing hood, 2,000-gallon interceptor, 2" gas service and 800A three-phase panel remove $320,760 of construction — larger than the $273,000 TI allowance.
Menu pricing power has stopped. Miami food-away-from-home CPI rose 0.2% over the twelve months to June 2026 against 3.4% all-items. A rent that is 8% too high cannot be priced out of.
Two independent tests set the ceiling. An 11.0% EBITDA-margin test and a 28% cash-on-cash test; the lower binds at $330,706 of total occupancy — 7.60% of revenue, $55.92/SF base.
The signed deal clears everything. $55.00/SF, 2.75% escalations, 5 months abated, $65/SF TI: a 7.50% rent factor, 11.10% restaurant-level margin and 28.45% cash-on-cash.
Recommended base rent
$55.00
per SF NNN, vs. $64.00 asking
Rent factor at signing
7.50%
inside the 7–8% casual-dining band
Cash-on-cash
28.45%
on $1,698,100 net capital · hurdle 28%
§2 · The Requirement
A concept translated into criteria a broker can be held to
Tortuga Roja Hospitality (fabricated) operates one 2,400 SF, 88-seat modern-Caribbean restaurant in Coral Gables — trailing-twelve revenue $2.61M at a 12.4% restaurant-level margin. Unit 2 is a larger, bar-forward, courtyard-anchored version of the same concept, targeted at Wynwood. The operator will personally guarantee, is contributing roughly $1.70M of net capital after allowance, and must open before the 2027–28 winter season.
The requirement profile was written before any space was toured, and every candidate is scored against it rather than against the others. That sequence is the whole discipline: a requirement that cannot be falsified cannot be used to reject a site.
Layout program — 4,200 SF interior
| Zone | SF | Basis |
|---|---|---|
| Interior dining | 2,050 | 112 seats at 18 SF/seat |
| Bar and lounge | 520 | 24 bar seats + service well |
| Kitchen, prep, dish, walk-ins | 1,180 | 28.1% of interior — scratch kitchen floor |
| Restrooms, office, storage | 450 | Two ADA groups, receiving |
| Interior total | 4,200 | |
| Exclusive courtyard | 1,250 | 54 seats at 22 SF/seat |
| Total controlled area | 5,450 |
Why the band is 3,800–4,500 SF
Below 3,800 SF the program fails on the kitchen, not the dining room. A 28% back-of-house ratio is the floor for this menu; squeezing it to 22% to preserve seats produces a kitchen that cannot execute the covers the model requires, and the revenue breaks at the source.
Above 4,500 SF it fails on rent. Every incremental square foot carries roughly $69.50 of annual occupancy cost at the target rate, and the marginal seats do not fill on a Tuesday.
Outdoor area is a hard requirement. The courtyard carries 54 of 190 seats — 28% of capacity — at $2,185 per seat of improvement cost against $8,713 per interior seat. It is the cheapest revenue the tenant will ever build.
Daypart targets set the site test. Dinner carries 72.2% of the revenue model. The site must perform at 8:30 PM on a Thursday — which is why an hours-of-operation restriction is treated as an absolute deal-breaker rather than a negotiable term, and why a daytime-office trade area is mis-specified for this concept no matter how good the daytime population looks.
§3 · Market State
A tight county and a loosening submarket
South Florida retail, Q2 2026
| County | Vacancy | Asking rent | Net absorption |
|---|---|---|---|
| Miami-Dade | 3.0% | $42.50/SF | +378,795 SF |
| Broward | 4.3% | $27.67/SF | −102,436 SF |
| Palm Beach | 4.0% | $30.14/SF | +148,769 SF |
Colliers Q2 2026, released July 16, 2026, via Commercial Observer. Miami-Dade also carried >1.3M SF under construction. Retrieved 2026-08-06.
Wynwood restaurant rents
| Segment | Rate / level |
|---|---|
| Wynwood overall average | high $60s – low $80s/SF |
| Wynwood prime streets | $100+/SF |
| Food & beverage | $60–$70/SF NNN |
| Fitness | $70–$80/SF NNN |
| Wynwood/Design District vacancy | 9.7%, from 6.5% y/y |
| Design District rent | ~5× Wynwood |
| Lincoln Road rent | ~30% above Wynwood |
| Coconut Grove rent | ~10–15% above Wynwood |
CoStar and Dwntwn Realty Advisors, reported by The Real Deal, December 12, 2025. Retrieved 2026-08-06.
The divergence is the deal. Wynwood is running roughly three times the county's vacancy rate — not because demand failed (the district takes 10.3 million visits a year) but because a rezoning-driven development wave delivered a large volume of podium retail into a district whose short-run absorption capacity is finite. For this tenant that divergence is worth about $9.00/SF of base rent, or $43,425 a year. It is the difference between a $64 asking rent and a $55 signed rent.
Two cost conditions that shaped the underwrite
Food away from home CPI
+0.2%
12 months to June 2026 vs. +3.4% all items · BLS
Miami energy index
+14.1%
12 months to June 2026 · drives the NNN load
Florida minimum wage
$15.00
eff. 9/30/2026 · tipped direct $11.98 · FRLA
Costs are escalating on a published schedule and revenue is not. There is no operational recovery available for a rent that is eight percent too high, which is why the entire package is built to get the number right on day one rather than to plan a fix.
§4 · Trade Area
Who is actually in the room
| Geography | Population | Households | Median HH income | Median age | Non-family HH |
|---|---|---|---|---|---|
| Tract 28 — Wynwood core | 1,353 | 551 | $45,324 | 38.9 | 65.2% |
| Tract 26 — Wynwood Norte | 6,114 | 2,905 | $84,258 | 37.1 | 58.8% |
| Tract 27.02 — east edge | 7,715 | 3,337 | $105,035 | 33.2 | 57.5% |
| Trade area | 15,182 | 6,793 | $91,306 | — | 58.7% |
| City of Miami | 459,745 | 194,821 | $62,462 | 39.3 | 46.8% |
| Miami-Dade County | 2,738,356 | 975,411 | $71,753 | 40.7 | 32.1% |
U.S. Census Bureau, ACS 2020–2024 5-year estimates (B01003, B01002, B11001, B19013), retrieved 2026-08-06 via Census Reporter. The $91,306 trade-area figure is a household-count-weighted blend of three tract medians — disclosed as an approximation, not a true trade-area median.
Income index vs. City
146
$91,306 vs. $62,462 city median
Non-family households
58.7%
25 pts above the county — weeknight diners
Average daily visitors
28,219
10.3M annual visits ÷ 365 · Wynwood BID
The non-family household share is the criterion that predicts performance. Fifty-nine percent single-person and non-family households is the demographic signature of a market that eats out on weeknights and drinks at the bar rather than the table. It is the direct justification for a 24-seat bar program against the 12 seats the Coral Gables store carries — and for a beverage mix of 32% rather than 29%.
Supporting the trade area is the visitor economy: Miami-Dade welcomed 28.3 million visitors in 2025, spending $22.7 billion — up 4.1% year over year — for $32.2 billion of total economic impact and more than 216,000 jobs (Greater Miami CVB, released June 4, 2026). That base is what makes destination-district restaurant volumes possible in this market, and it is also the source of the volatility the sensitivity analysis stresses at −20%.
§5 · Site Criteria
The infrastructure and licensing thresholds, and how each was derived
| Criterion | Threshold | Derivation |
|---|---|---|
| Grease interceptor | 1,500 gal min | 190 seats × 2.5 gal/meal × 1.25 waste × 2.5 storage = 1,484 gal |
| Type I exhaust | 3,600 CFM min | 18 LF hood × 200 CFM/LF wall canopy; makeup air 80% |
| Natural gas | 1,200 MBH | 1,134 MBH connected load + diversity; 2" at 2 psi |
| Electrical | 600A min, 800A spec | 150 kW ÷ (208V × 1.732) = 416A; ×125% continuous |
| HVAC | 28 tons min | 4,200 SF at 1 ton/150 SF — 2.7× an office loading |
| Kitchen clear height | 11'-0" min | 18" ductwork + sprinkler + lighting under structure |
| Outdoor area | 700 SF min | Exclusive, at grade, no ROW crossing |
Liquor licensing — the hard screen
| Rule (City of Miami) | Distance |
|---|---|
| From another alcohol licensee | 1,500 ft |
| From a residential district | 500 ft |
| From a church | 300 ft |
| From a school | 1,000 ft |
GrayRobinson, "What Real Estate Brokers Need to Know About Alcohol-Related Uses," subject to multiple exceptions by area and establishment type. Retrieved 2026-08-06.
4COP-SFS thresholds — cleared with margin
| Statutory minimum | Required | Concept |
|---|---|---|
| Floor area | 2,000 SF | 4,200 SF — 2.10× |
| Seats | 120 | 190 — 1.58× |
| Food share of gross revenue | 51% | 68% — 1.33× |
Post-SB 1262 / HB 639 (2023). The special-restaurant route avoids buying a quota license on the open market.
Why a separation failure is fatal rather than expensive. A site requiring a discretionary exception is not a cheaper site — it is a different transaction with a four-to-seven-month discretionary approval in the middle of it. A landlord will grant a 90-day licensing contingency; no landlord holds a space for seven months against an approval that may fail. That is why exclusion is absolute rather than priced.
§6 · The Four Candidates
All sites, addresses, buildings and landlords are fabricated
| A — Calderón Ironworks | B — The Lorca Annex | C — Fábrica 27 | D — Bayline Row | |
|---|---|---|---|---|
| Location | Wynwood core, primary spine | Wynwood, off-spine side street | Wynwood Norte, west edge | Edgewater, tower base |
| Condition | Cold dark shell, never occupied | 2nd-generation restaurant, dark since Nov 2025 | Raw warehouse | Cold shell, partial stub-outs |
| Interior / outdoor SF | 4,050 / 900 | 4,200 / 1,250 | 4,400 / 600 | 3,850 / 700 |
| Seats | 171 | 190 | 162 | 148 |
| Asking base rent | $92.00 | $64.00 | $46.00 | $85.00 |
| NNN load | $19.00 | $14.50 | $11.00 | $24.00 |
| TI allowance | $40/SF | $65/SF | $35/SF | $75/SF |
| Grease interceptor | None | 2,000 gal existing | None | 1,000 gal — FAIL |
| Type I exhaust | None | 18 LF / 5,000 CFM | None | Capped 3,500 CFM — FAIL |
| Natural gas | $95k / 22-wk extension | 2" @ 2 psi in place | None | 4" stub |
| Electrical | 400A — $138k upgrade | 800A 3-phase | 200A single-phase | 1,200A 480V |
| Kitchen clear height | 16'-0" | 11'-2" | 18'-0" | 10'-4" — FAIL |
| Alcohol separation | 1,610 ft — clear | 1,720 ft — clear | 640 ft — FAIL | 2,140 ft — clear |
| Use restrictions | None | None | None | 22:30 kitchen close, no music |
| Permit-to-CO | 22 weeks | 17 weeks | 30+ wks plus exception | 24 weeks |
Green = meets or exceeds the requirement-profile threshold. Red = fails or must be purchased. Site D fails four separate hard criteria and is technically disqualified before any economic analysis is run.
§7 · Weighted Scoring Model
Weights fixed before the sites were seen; they sum to 100
| Criterion | Weight | A | wtd | B | wtd | C | wtd | D | wtd |
|---|---|---|---|---|---|---|---|---|---|
| 1 Occupancy economics | 22 | 2 | 44 | 9 | 198 | 3 | 66 | 1 | 22 |
| 2 Revenue / trade-area draw | 18 | 9 | 162 | 8 | 144 | 3 | 54 | 5 | 90 |
| 3 Infrastructure readiness | 16 | 2 | 32 | 9 | 144 | 1 | 16 | 7 | 112 |
| 4 Net capital at risk after TI | 12 | 2 | 24 | 9 | 108 | 3 | 36 | 4 | 48 |
| 5 Entitlement & licensing | 12 | 6 | 72 | 8 | 96 | 2 | 24 | 7 | 84 |
| 6 Outdoor seating capture | 8 | 6 | 48 | 9 | 72 | 5 | 40 | 6 | 48 |
| 7 Access, parking, transit | 7 | 8 | 56 | 7 | 49 | 5 | 35 | 8 | 56 |
| 8 Co-tenancy & adjacency | 5 | 9 | 45 | 8 | 40 | 3 | 15 | 6 | 30 |
| Weighted total (of 1,000) | 100 | 483 | 851 | 286 | 490 | ||||
| Normalized score / Rank | 48.3 · 3rd | 85.1 · 1st | 28.6 · 4th | 49.0 · 2nd |
The distribution is the point. Site B wins by 36 points, and it wins because it scores 8 or better on six of eight criteria while no other candidate scores 8 or better on more than three. A site that is merely good at one thing — Site A's revenue, Site D's building, Site C's rent — cannot beat a site that is good at everything that costs money.
§8 · Unit Economics
Building EBITDAR before a dollar of rent is charged
Revenue build — services × covers × check
| Daypart | Svc | Covers | Check | Revenue |
|---|---|---|---|---|
| Dinner (Tue–Sun) | 312 | 148 | $68 | $3,139,968 |
| Weekend brunch | 104 | 118 | $44 | $539,968 |
| Weekday lunch | 156 | 58 | $32 | $289,536 |
| Bar-only / late | 260 | 30 | $29 | $226,200 |
| Private events | 24 | — | $6,500 | $156,000 |
| Stabilized revenue | $4,351,672 |
75,296 covers ex-events · blended check $55.72 · $1,036 per interior SF · $798 per SF including the courtyard.
P&L to EBITDAR
| Line | Amount | % of rev |
|---|---|---|
| Cost of goods sold | $1,208,894 | 27.78% |
| Total labor | $1,556,875 | 35.78% |
| Prime cost | $2,765,769 | 63.56% |
| Other operating expense | $776,512 | 17.84% |
| EBITDAR — before rent | $809,390 | 18.60% |
Prime cost sits inside the published 55–65% benchmark band (WhippleWood 2026, citing NRA 2026 and BLS). Labor built at the post-September-2026 Florida wage floor.
The equation that grades every site
Full-service restaurants carry a large fixed base — management salaries, G&A, insurance, entertainment and half of R&M total $612,045 and do not fall when revenue does. Isolating them gives:
EBITDAR(Revenue) = Revenue × 0.326631 − $612,045
where 0.326631 = 1 − ($2,930,237 variable cost ÷ $4,351,672 revenue). Check: $4,351,672 × 0.326631 − $612,045 = $809,390. The operating leverage is severe: a 32.6% revenue shortfall produces a 57.2% EBITDAR shortfall. That is why cheap rent is not a strategy.
EBITDAR(Revenue) = Revenue × 0.326631 − $612,045
where 0.326631 = 1 − ($2,930,237 variable cost ÷ $4,351,672 revenue). Check: $4,351,672 × 0.326631 − $612,045 = $809,390. The operating leverage is severe: a 32.6% revenue shortfall produces a 57.2% EBITDAR shortfall. That is why cheap rent is not a strategy.
| Site | Revenue | EBITDAR | EBITDAR margin |
|---|---|---|---|
| A — Calderón Ironworks | $4,507,188 | $860,188 | 19.09% |
| B — The Lorca Annex | $4,351,672 | $809,390 | 18.60% |
| C — Fábrica 27 | $2,933,840 | $346,268 | 11.80% |
| D — Bayline Row | $3,278,780 | $458,939 | 14.00% |
§9 · The Rent Ladder
Maximum supportable and walk-away rent, derived from the P&L
Test 1 — operating margin
Max occupancy = EBITDAR − (target margin × revenue)
= $809,390 − (0.110 × $4,351,672)
= $809,390 − $478,684 = $330,706 (7.60%)
= $809,390 − (0.110 × $4,351,672)
= $809,390 − $478,684 = $330,706 (7.60%)
Test 2 — return on invested capital
Net operator capital = $1,971,100 project cost − $273,000 TI = $1,698,100
Required EBITDA = 0.28 × $1,698,100 = $475,468
Max occupancy = $809,390 − $475,468 = $333,922 (7.67%)
Required EBITDA = 0.28 × $1,698,100 = $475,468
Max occupancy = $809,390 − $475,468 = $333,922 (7.67%)
The binding answers
MAXIMUM SUPPORTABLE = min($330,706, $333,922) = $330,706
= 7.60% of revenue = $78.74 per interior SF all-in
Less NNN $60,900 ÷ 4,825 rent-equivalent SF = $55.92/SF base rent
The margin test binds, by $3,216 — so TI beyond $65/SF converts to return rather than to rent capacity, which is exactly why it should be taken.
= 7.60% of revenue = $78.74 per interior SF all-in
Less NNN $60,900 ÷ 4,825 rent-equivalent SF = $55.92/SF base rent
The margin test binds, by $3,216 — so TI beyond $65/SF converts to return rather than to rent capacity, which is exactly why it should be taken.
WALK-AWAY = min($417,740 margin floor, $401,846 capital floor) = $401,846
= 9.23% of revenue = $95.68 per interior SF all-in = $70.66/SF base rent
The capital test binds: the operator runs out of return before it runs out of margin, which is the correct order for a personally-guaranteed single-unit expansion.
= 9.23% of revenue = $95.68 per interior SF all-in = $70.66/SF base rent
The capital test binds: the operator runs out of return before it runs out of margin, which is the correct order for a personally-guaranteed single-unit expansion.
The negotiating ladder
| Position | Occupancy | Rent factor | Base rent | EBITDA | Margin | Cash-on-cash |
|---|---|---|---|---|---|---|
| Opening offer | $297,325 | 6.83% | $49.00 | $512,065 | 11.77% | 30.2% |
| Target — recommended | $326,275 | 7.50% | $55.00 | $483,115 | 11.10% | 28.45% |
| Maximum supportable | $330,706 | 7.60% | $55.92 | $478,684 | 11.00% | 28.2% |
| Landlord asking | $369,700 | 8.50% | $64.00 | $439,690 | 10.10% | 25.9% |
| Walk-away | $401,846 | 9.23% | $70.66 | $407,544 | 9.37% | 24.0% |
The gap between the ask and the ceiling is $8.08/SF, or $38,986 a year. That is what the negotiation is actually about — and it is roughly one quarter of the value of the infrastructure already installed in the building, which is the tenant's principal argument for the concession.
TI allowance valued against buildout
| Measure | Value | Note |
|---|---|---|
| Total construction cost | $1,304,100 | $310.50 per interior SF |
| TI allowance | $273,000 | $65.00/SF — 20.93% of construction, 13.85% of project cost |
| TI amortized at 8% over 10 years | $40,685/yr | = $8.43 per rent-equivalent SF |
| Landlord's economic rent net of TI | $46.57/SF | $55.00 face less $8.43 — the number to say out loud at the table |
| Infrastructure credit (hard cost avoided) | $433,000 | Hood $128k + gas $95k + electrical $138k + interceptor $62k + HVAC $96k, less $86k rooftop reserve |
| Grossed up for design and contingency | $497,950 | The building is worth more to this tenant than the landlord's check |
§10 · Rejection Logic
Why the other three lose — the load-bearing part of the file
Site A — Calderón Ironworks
Score 48.3 · REJECT
Highest revenue in the set: $4,507,188. Rejected on capital, not on rent. A cold dark shell requires a $95k gas extension, a $138k service upgrade, a $62k interceptor and a complete hood system — $1,624,860 of construction against Site B's $1,304,100, on 150 fewer square feet. Net capital $2,129,860. Negotiated 12% off ask to $81/SF the rent factor is still 9.79%, above walk-away, and cash-on-cash reaches only 19.66%. To clear the hurdle Site A would need $41.53/SF — a 54.9% discount. Its $155,516 revenue lead converts into a $64,377 EBITDA deficit.
Site C — Fábrica 27
Score 28.6 · REJECT
Cheapest rent in the set — and the worst business. Fails separation twice: a licensed taproom 640 ft away against a 1,500-ft rule, and a residential district 410 ft away against 500 ft. Two discretionary exceptions, four to seven months, no landlord will hold it. And the economics fail independently: at a negotiated $39/SF the rent factor is 7.90% — inside the benchmark band — yet EBITDA is $114,568 on $2,354,300 of capital: 4.87% cash-on-cash. A ratio whose numerator and denominator both collapse looks healthy while the business dies.
Site D — Bayline Row
Score 49.0 · REJECT
Best building, worst deal. Four hard requirement failures: a 1,000-gal interceptor with no room to enlarge, a shared exhaust shaft capped at 3,500 CFM, 10'-4" kitchen clear height, and a structural slab with coring restrictions. Then the condo declaration — kitchen close 22:30, no amplified music — removes $193,820 from the two highest-margin lines. Then a $24.00/SF NNN load, 28% of the tenant's entire supportable occupancy before any base rent. Result: a 13.71% rent factor and 2.88% cash-on-cash.
The decision table — every candidate at a realistically negotiated rent
| A @ $81 | B @ $55 | C @ $39 | D @ $75 | |
|---|---|---|---|---|
| Discount from ask | 12.0% | 14.1% | 15.2% | 11.8% |
| Total occupancy | $441,450 | $326,275 | $231,700 | $407,400 |
| Rent factor | 9.79% | 7.50% | 7.90% | 12.43% |
| Restaurant-level EBITDA | $418,738 | $483,115 | $114,568 | $51,539 |
| EBITDA margin | 9.29% | 11.10% | 3.91% | 1.57% |
| Net capital at risk | $2,129,860 | $1,698,100 | $2,354,300 | $1,786,580 |
| Cash-on-cash | 19.66% | 28.45% | 4.87% | 2.88% |
| vs. 28% hurdle | FAIL | PASS | FAIL | FAIL |
| VERDICT | REJECT | RECOMMEND | REJECT | REJECT |
§11 · Total Occupancy Cost
Ten years, all-in, at negotiated rents
| Measure | A | B — recommended | C | D |
|---|---|---|---|---|
| Year-1 base rent | $364,500 | $265,375 | $183,300 | $315,000 |
| Year-1 NNN | $76,950 | $60,900 | $48,400 | $92,400 |
| Abatement value | $91,125 | $110,573 | $61,100 | $157,500 |
| TI allowance | $162,000 | $273,000 | $154,000 | $288,750 |
| 10-yr nominal cash occupancy | $4,942,398 | $3,611,301 | $2,583,995 | $4,496,302 |
| NPV @ 9.0%, net of TI | $2,927,419 | $1,978,052 | $1,459,956 | $2,505,461 |
| Net effective rent /SF | $86.17 | $54.38 | $39.62 | $74.37 |
| 10-yr restaurant-level EBITDA vs. B | B ahead $643,770 | — | B ahead $3,685,470 | B ahead $4,315,760 |
Site B costs $1,331,097 less in nominal occupancy over ten years than Site A, produces $643,770 more restaurant-level EBITDA, and needs $431,760 less capital. That is the deal in one line. And Site C's $2,583,995 — the cheapest in the set by $1,027,306 — is attached to a business that generates $3,685,470 less EBITDA over the same ten years on $656,200 more capital. Occupancy cost is a number to minimize subject to a constraint, and the constraint is that the site has to be able to produce revenue.
Ten-year nominal cash occupancy. Bar length is proportional to Site A. Cheapest is not best — see §10.
§12 · Ten-Year Cash Flow
Recommended terms — $55.00/SF, 2.75% escalation, 5 months abated, $65/SF TI
| LY | Base $/SF | Base rent | Abatement | NNN | % rent | Cash occupancy | Revenue | Rent factor |
|---|---|---|---|---|---|---|---|---|
| 1 | $55.00 | $265,375 | ($110,573) | $60,900 | $0 | $215,702 | $3,829,471 | 5.63% |
| 2 | $56.51 | $272,673 | — | $63,031 | $0 | $335,704 | $4,177,605 | 8.04% |
| 3 | $58.07 | $280,171 | — | $65,238 | $0 | $345,409 | $4,351,672 | 7.94% |
| 4 | $59.66 | $287,876 | — | $67,521 | $0 | $355,397 | $4,460,464 | 7.97% |
| 5 | $61.30 | $295,793 | — | $69,884 | $0 | $365,677 | $4,571,975 | 8.00% |
| 6 | $62.99 | $303,927 | — | $72,330 | $0 | $376,257 | $4,686,275 | 8.03% |
| 7 | $64.72 | $312,285 | — | $74,862 | $0 | $387,147 | $4,803,432 | 8.06% |
| 8 | $66.50 | $320,873 | — | $77,482 | $0 | $398,355 | $4,923,517 | 8.09% |
| 9 | $68.33 | $329,697 | — | $80,194 | $0 | $409,890 | $5,046,605 | 8.12% |
| 10 | $70.21 | $338,763 | — | $83,000 | $0 | $421,764 | $5,172,771 | 8.15% |
| Total | $3,007,432 | ($110,573) | $714,442 | $0 | $3,611,301 |
Net effective rent
$3,007,432 contract base − $110,573 abatement − $273,000 TI = $2,623,859
÷ (4,825 SF × 10 years) = $54.38/SF net effective
Average contract rent is $62.33/SF — 13.3% above the Year-1 face. Net effective is only $0.62 below the face rate, which is the honest reading: the escalations claw back most of what the concession package gives away.
÷ (4,825 SF × 10 years) = $54.38/SF net effective
Average contract rent is $62.33/SF — 13.3% above the Year-1 face. Net effective is only $0.62 below the face rate, which is the honest reading: the escalations claw back most of what the concession package gives away.
Percentage rent never triggers
Six percent over a natural breakpoint (base rent ÷ 6%) from lease year six. LY6 breakpoint $5,065,449 against $4,686,275 of projected sales; LY10 breakpoint $5,646,057 against $5,172,771. The concept must outperform the model by 8–9% before a dollar is owed — and if it does, the operator will be glad to pay it. A natural breakpoint is the correct concession; an artificial one is not, and should be refused.
The rent-factor drift is the term risk. Base rent escalates at 2.75%, the NNN load at 3.5%, revenue at 2.5% — so the rent factor moves from 7.94% in LY3 to 8.15% in LY10, pushing the last three years above the 7.60% ceiling. At 3.0% revenue growth instead of 2.5%, LY10 lands at 7.88%. The whole ten-year escalation exposure is worth about half a point of annual revenue growth — and with Miami food-away-from-home CPI at +0.2%, that half point has to come from covers, not price. The courtyard is the reason it can.
§13 · Sensitivity
What the deal survives, and what it does not
Restaurant-level EBITDA margin
| Base rent ↓ / Revenue → | $3,481,338 (−20%) | $3,916,505 (−10%) | $4,351,672 (base) | $4,786,839 (+10%) |
|---|---|---|---|---|
| $49.00 | 6.54% | 9.44% | 11.77% | 13.67% |
| $52.00 | 6.13% | 9.07% | 11.43% | 13.36% |
| $55.00 ★ | 5.71% | 8.71% | 11.10% | 13.06% |
| $58.00 | 5.29% | 8.34% | 10.77% | 12.76% |
| $61.00 | 4.88% | 7.97% | 10.44% | 12.46% |
| $64.00 ask | 4.46% | 7.60% | 10.10% | 12.15% |
Rent factor — green ≤ 7.60% ceiling, red > 9.23% walk-away
| Base rent ↓ / Revenue → | −20% | −10% | Base | +10% |
|---|---|---|---|---|
| $49.00 | 8.54% | 7.59% | 6.83% | 6.21% |
| $55.00 ★ | 9.37% | 8.33% | 7.50% | 6.82% |
| $61.00 | 10.20% | 9.07% | 8.16% | 7.42% |
| $64.00 ask | 10.62% | 9.44% | 8.50% | 7.72% |
The bad case is what the nine dollars buys. At the recommended $55.00, a 20% revenue miss produces a 9.37% rent factor and $198,793 of restaurant-level EBITDA — an 11.7% cash-on-cash return. Bad, not fatal. The same miss at the landlord's $64.00 produces a 10.62% rent factor and $155,368 of EBITDA — 9.2% cash-on-cash. The negotiation does not buy a better good year; it buys 250 basis points of survival in the bad one.
Revenue is the bigger lever, which is exactly why the trophy-site logic is seductive. Moving base rent across the entire negotiable range — $64 to $49 — changes the base-case margin by 167 basis points. Moving revenue 10% changes it by 196 to 239. Site A's revenue advantage of $155,516 is genuinely worth more than three dollars of rent. It is still swamped by $115,175 of additional annual occupancy cost and $431,760 of additional capital.
What could make this wrong
The revenue build is the largest exposure. $1,036 per interior square foot is a strong number and the entire structure scales off it. If stabilized revenue lands at $3.8M, EBITDAR falls to $629,153, the capital test binds at $153,685 of supportable occupancy, and the recommended rent is unsupportable by more than a factor of two. A live engagement replaces the cover model with the operator's own POS history and a mobile-location trade-area draw study.
The 28% hurdle is a policy choice, not a market fact. At a 20% hurdle the capital test stops binding entirely and the margin test alone sets the ceiling at $330,706. At 35% the capital test binds at $215,055 — a $31.95/SF base rent — and no site in the candidate set clears. The hurdle should be set by the client, in writing, before the analysis is run.
The infrastructure credit is asserted, not engineered. The $433,000 of avoided hard cost assumes the existing hood, interceptor, gas and electrical services are code-compliant, adequately sized and serviceable. Each is a condition of the LOI rather than an assumption of the model — and if the rooftop units fail early or the hood needs replacement rather than rebalancing, $224,000 of the credit evaporates and the capital-test ceiling falls by $12.99/SF.
§14 · Recommended Terms & Risk
The LOI position and what has to be diligenced
Recommended LOI terms — Site B
| Term | Position |
|---|---|
| Premises | 4,200 SF interior + 1,250 SF exclusive courtyard |
| Rent-equivalent area | 4,825 SF (courtyard at 50%) |
| Term / options | 10 years; two 5-year options at 95% of FMR, floored and capped |
| Base rent Year 1 | $55.00/SF (ask $64.00) |
| Escalation | 2.75% (landlord ask 3.5% — worth $105,786 over the term) |
| Free rent | 8-month fixturization + 5 months abated after RCD |
| TI allowance | $65/SF = $273,000, tenant-controlled, 3 draws, offset right |
| NNN | $14.50/SF; 4% cumulative cap on controllable CAM; 18-month audit right |
| Percentage rent | None LY1–5; 6% over natural breakpoint LY6+ |
| Security deposit | 3 months, burning down to 2 at year 2 and 1 at year 4 |
| Guaranty | Capped good-guy; burns 12→9→6 months, terminates year 7 |
| Exclusive use | No other full-service restaurant, bar or tavern in the property |
| Contingencies | 30-day DD; permit; Certificate of Use; DERM GDO; 4COP-SFS; CO |
Risk register
| Risk | Mitigant |
|---|---|
| Menu pricing power flat (+0.2% y/y, BLS) | Revenue underwritten on covers and mix, not price; rent factor set at 7.50% not 8%+ |
| Wynwood supply wave deepens | Directionally favorable to a tenant; competitive risk met with the lowest occupancy cost in the set |
| NNN escalates above 3.5% | 4% cumulative cap on controllable CAM; audit right; exclusion list |
| Revenue misses the model | 20% stress leaves 11.7% cash-on-cash; 30-day diligence contingency |
| Rooftop units (2016 vintage) fail | $86,000 replacement reserve carried; 12-month landlord warranty in LOI |
| Lapsed DERM GDO permit | Reinstatement made a delivery condition, not a tenant cost |
| Prior operator failed in the space | Written disclosure of the circumstances required within 10 days |
| Parking license not assignable | Assignment and co-terminous term made a condition of the lease |
| Permit schedule slips past winter season | 2nd-gen fit-out within existing use classification: 17 weeks vs 22–30 |
Recommendation. Issue a non-binding Letter of Intent on Site B — The Lorca Annex, 85 NW 25th Street (fabricated address), Wynwood — opening at $49.00/SF, targeting $55.00/SF, never signing above $55.92/SF, and walking at $70.66/SF regardless of what else is offered. At the target, total occupancy is $326,275 against $4,351,672 of stabilized revenue: a 7.50% rent factor, an 11.10% restaurant-level margin, and a 28.45% return on $1,698,100 of the operator's capital.