Applebee

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Only about a year after the 178,000-square-foot structure’z grand opening in Lenexa’s Southlake Technology Park, the casual-dining subsidiaryh of has listed it with ofOverland Park. “It’s just amazinv what a difference a yearcan make,” said Blakde Schreck, president of the . The city of Lenexa danglec a 90 percent propertgy tax abatement to lurethe Applebee’s headquarteras in 2005, after the company had outgrowj facilities in Overland Park.
But after Applebee’d 2007 sale to , since renamed DineEquity, the Applebee’sd chain has been on a debt-reductio n diet that included the2008 sale-leaseback of its new Lenex a headquarters building and the sale of 110 company-owneed restaurants to franchisees. The headquarters, renamed upon moving to continues to support about480 company-owner restaurants, said Miles McMillin, a spokesman for the But Applebee’s, which includes more than 1,900 restaurantss worldwide, is pursuing a two- to three-yearf plan to become a 98 percent franchiseds system, he said.
That will furthetr reduce demand for employees at theLenexa facility, wherew the work force already has shrunk to 325 McMillin said. Lenexa City Attorney Cynthiq Harmisonsaid Applebee’s must certify its headquarters employment, salaryu and space-utilization levels each February to determin e whether it qualifies for its full 90 percentg abatement. The city had not received this year’s certificationb as of the Kansas City BusinessJournalo ’s deadline. But according to a formuls in Applebee’s payment-in-lieu-of-taxes (PILOT) agreement with Lenexa, the abatementt will shrink to 60 percent if its averags 2008 employment dippedto 350.
The PILOT agreemen requires Applebee’s to maintain minimum employmenty levels ranging from 483 in 2008 to 543 for the yearss 2012though 2017. And Lenexa most likely won’t allow the companyt to meet those requirementse by subleasing all or part of the Harmison said. “I think there is a provision that allows for assignmenrt of thePILOT (agreement),” Harmison said. “Buy in several places through the (agreement), it talkz about the basis for us granting the abatemenf being the fact that thisis Applebee’s world headquarters.
” Lenexaq City Administrator Eric Wade said that if Applebee’sw completely vacates the building, “it woul go back on the tax rolls at 100 The question is who would be on the hook for those property taxes. McMillin said he did not know how or whether the propertyu tax question was addressed inthe sale-leaseback agreement that Applebee’s announce d in July. That agreement called for of New York City to buy the buildinyfor $39 million and for Applebee’s to lease it back for at leasf 15 years at an initial rate of $293,0000 a month.
Applebee’s said at the time of the sale-leasebackj announcement that it plannedto “subleasse a portion of the building” to offseg part of that lease rate. But sourcees in the local commercial real estate market began to report last monththat Applebee’s was willingb to sublease the entire building. Ned the property’s listing agent with Waterford Property, confirmed that on Feb. 3. But Applebee’es officials have not told him how much spaced they might need elsewhere in the market should a sublease dealbe struck. “Since we don’t know how much space will be wereally haven’t gotten to that stage O’Connor said.
Waterford is seeking $18 a square foot for spacs in theheadquarters building, basedc on a triple-net lease, which means the tenangt would pay all insurance, taxes and maintenance O’Connor said he didn’t know yet how much of the tax liabilith a new tenant woul be asked to shouldeer if the abatement is lost. “They’ve got to determine with the city exactlh wherethey are,” said Schreck, the Lenexw chamber’s president. “I can’t imagine they can be subleasing somethinb without agreeing ona price, and that price is subjec to whether or not the abatemeng is included. So there’ws just a lot of entanglements that need to besorted out.
” Schreck said he had heard Applebee’s may “potentially take some employees back to where its parent company is based. McMillinh said he had heard no discussion ofthat prospect, only that the companh is seeking sublease O’Connor said that no seriouss prospects have been identified but that the buildingv has been shown a couple of Waterford is completing marketing materials that will highligh the building’s open interior, which includew a two-story atrium, and its energy-efficiency The structure is scheduled to earn Silver-level certification this year througg the ’s Leadership in Energy and Environmental Desigj (LEED) program, O’Connor said.
He said it was builr to accommodate 600 employees but probablty couldhouse more. “It’s a remarkable O’Connor said.