Arby's is returning to the securitization market with seven-year bonds backed by the sponsor's existing and future franchise agreements, company-owned restaurant royalties, rental income on fee-owned properties and other intellectual property.
The sponsor, which last tapped the market for $290 million in 2000, now plans to offer $650 million in securities under Arby's Funding – Series 2015-1. Barclays is the lead manager.
Kroll Bond ratings Agency assigned preliminary 'BBB' ratings to $600 million of seven-year, fixed-rate bonds and 'BBB' ratings to $50 million of variable funding notes with a five-year initial term and the option of a two-year extension
The initial collateral in the transaction relates to 3,335 Arby's restaurant locations. The weighted average seasoning of each restaurant location is approximately 21.9 years, with the average remaining term of the franchise agreement of approximately 11.9 years. Historically, Arby's has averaged over $3 billion in annual sales system-wide.
Approximately 97.6% of annualized sales are derived from locations within the United States; the remaining 2.4% of annualized sales are from locations outside of the United States, in Canada, Turkey and Qatar.
Arby's is best known for its slow-roasted and freshly sliced roast beef sandwiches, “deli-inspired” sandwiches, curly fries, and Jamocha shakes.
The sponsor has undergone a number of ownership and organizational changes since its first trip to the securitization market in November 2000. In 2005, Arby’s acquired RTM Restaurant Group, the single largest Arby’s Franchisee at the time, which operated 775 locations; and in 2008 the sponsor merged with Wendy’s International to form Wendy’s/Arby’s Group. Arby’s came under its current ownership in 2011, when it was purchased by affiliates of Roark Capital Group. Roark Capital specializes in franchised and multi-unit business models in the retail, restaurant and consumer services sectors.
Roark Capital has acquired 45 franchise/multiunit brands, which currently generate $18 billion in annual system-wide revenues from approximately 20,000 locations located in 50 states and 75 countries.
