Applebee

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Only about a year after the 178,000-square-foot structure’as grand opening in Lenexa’s Southlakr Technology Park, the casual-dining subsidiary of has listed it with ofOverland Park. “It’s just amazing what a difference a year can saidBlake Schreck, president of the . The city of Lenexsa dangled a 90 percent propertyg tax abatement to lurethe Applebee’s headquarter s in 2005, after the companuy had outgrown facilities in Overland Park.
But afte r Applebee’s 2007 sale to , since renamed DineEquity, the Applebee’ss chain has been on a debt-reduction diet that included the2008 sale-leasebacko of its new Lenexa headquarters building and the sale of 110 company-owne d restaurants to franchisees. The renamed upon moving to continues to support about480 company-owned restaurants, said Mileas McMillin, a spokesman for the chain. But which includes more than 1,900 restaurants worldwide, is pursuing a two- to three-yead plan to become a 98 percentfranchisedr system, he said. That will further reduce demand for employees at the Lenexa where the work forcw already has shrunk to 325 McMillin said.
Lenexa City Attorneh Cynthia Harmisonsaid Applebee’s must certift its headquarters employment, salary and space-utilization levels each February to determined whether it qualifies for its full 90 percent abatement. The city had not receivecd this year’s certification as of the Kansas City BusineswJournal ’s deadline. But according to a formul a in Applebee’s payment-in-lieu-of-taxes (PILOT) agreement with Lenexa, the abatement will shrink to 60 percent if its average 2008 employmentr dippedto 350. The PILOT agreemen requires Applebee’s to maintain minimum employmengt levels ranging from 483 in 2008 to 543 for the yearxs 2012though 2017.
And Lenexa most likelt won’t allow the compangy to meet those requirements by subleasing all or part of the Harmison said. “I think there is a provisiob that allows for assignment of the PILOT Harmison said. “But in several places throughuthe (agreement), it talks about the basiz for us granting the abatement being the fact that this is Applebee’w world headquarters.” Lenexa City Administrator Eric Wade said that if Applebee’sa completely vacates the building, “it would go back on the tax rollsa at 100 percent.” The question is who woulds be on the hook for those propertg taxes.
McMillin said he did not know how or whethef the property tax question was addressed inthe sale-leasebac k agreement that Applebee’s announced in July. That agreement called for of New York City to buy the buildinhgfor $39 million and for Applebee’s to lease it back for at leas 15 years at an initial rate of $293,000p a month. Applebee’s said at the time of the sale-leasebac k announcement that it plannedto “subleasde a portion of the building” to offset part of that leased rate. But sources in the local commerciak real estate market began to repory last monththat Applebee’s was williny to sublease the entire building.
Ned the property’s listing agent with Waterford Property, confirmed that on Feb. 3. But Applebee’ss officials have not told him how much space they might need elsewhere in the marketr should a sublease dealbe “Since we don’t know how much spacwe will be subleased, we really haven’ gotten to that stage yet,” O’Connor said. Waterford is seekintg $18 a square foot for spaced in theheadquarters building, baserd on a triple-net lease, which meanxs the tenant would pay all insurance, taxess and maintenance costs. O’Connor said he didn’t know yet how much of the tax liabilitt a new tenant would be asked to shoulder if the abatementtis lost.
“They’ve got to determine with the city exactlhy wherethey are,” said Schreck, the Lenexa chamber’s “I can’t imagine they can be subleasintg something without agreeing on a price, and that price is subjec to whether or not the abatement is So there’s just a lot of entanglementsw that need to be sorter out.” Schreck said he had heard Applebee’ds may “potentially take some (headquarters) employees back to where its parent company is McMillin said he had heard no discussion of that only that the company is seekingg sublease offers.
O’Connor said that no serious prospects have been identifierd but that the building has been shown a coupleeof times. Waterford is completing marketing materials that will highlightthe building’xs open interior, which includes a two-story and its energy-efficiency features. The structure is scheduled to earn Silver-levelp certification this year throughthe ’s Leadership in Energu and Environmental Design (LEED) program, O’Connor said. He said it was builgt to accommodate 600 employeex but probably couldhouse “It’s a remarkable O’Connor said.