HOME  |  ABOUT  |  NET LEASE 101  |  CONTACT  |  SUBSCRIBE



7-Eleven
Advance Auto Parts
Affordable Dentures
ALDI
Applebee's
Arby's
Ashley Furniture
AutoZone
Bank of America
BankUnited
BB&T Bank
Best Buy
BMO Harris Bank
Bojangles'
Burger King
Captain D's
Chase Bank
Chick-fil-A
Chipotle
Church's Chicken
Circle K
Cracker Barrel
CVS
Dairy Queen
DaVita
Dollar General
Dollar Tree
Dunkin' Donuts
Family Dollar
FedEx
Fred's Super Dollar
Fresenius Medical Care
Hardee's
Hobby Lobby
IHOP
KFC
Kohl's
Mattress Firm
McDonald's
Napa Auto Parts
O'Reilly Auto Parts
Panera Bread
PDQ
Pep Boys Auto
PNC Bank
Red Lobster
Rite Aid
Sheetz
Shell Oil
Sherwin-Williams
Starbucks
Steak 'n Shake
SunTrust
Taco Bell
TD Bank
Tractor Supply Co.
Verizon
Walgreens
Walmart
Wawa
Wegmans
Wendy's
Zaxby's
  Pep Boys Auto


Average Property & Lease

Average Sale Price$3,170,000
CAP Rate (12mo avg with 10+ lease term)6.16%
NOI$193,419
$/Square Foot$200.00
Building Size20,700 sf
Lot Size2.05 +/- acres
Lease Term15 Year NNN
Escalations1.5% Annually
CREDIT RATING
BB+
S&P
Ba3
Moody's
view credit rating chart
View Net Lease Property Listings at CALKAIN.COM Last Updated: September 26, 2016
Net Lease Advisor Overview

Pep Boys is beginning to see results from their strategic cost-cutting measures, which should improve the strength of their credit rating. Pep Boys generally preferred to purchase their real estate, however over the past two years Pep Boys sold a large number of their stores through sale-leaseback transactions, using the proceeds from the sale to pay down corporate debt. Using sale-leaseback transactions, Pep Boys has generally signed 15-year absolute net leases, providing for either 1.5% annual bumps or 8% rental increases every 5-years.

Pep Boy leases are absolute net leases, while Advance Auto generally signs a net lease that provides for the Landlord to be responsible for the maintenance of the roof and structure of the building. Generally speaking, Pep Boys utilizes a larger building footprint with six to eight service bays attached to the retail storefront. This is important for two reasons: 1) with a cost segregation study, Landlords are able to capture significant amount of accelerated depreciation and 2) Landlords have relatively large buildings and land parcels (17,000-22,000 sf buildings on a 2+ acre lots), which offer advantageous options for re-use and/or redevelopment.
 

Pros

Cons

  • Annual rent increases
  • Strengthening financials
  • Re-use opportunity for large footprint
  • Often located on prime real estate — hard to replace automotive zoning
  • Non-investment grade
  • Often located in middle-to-low income areas
  • Tough competition
Tenant Description

The Pep Boys - Manny, Moe & Jack is an automotive service and retail chain. The Company is engaged in automotive repair and maintenance, and the sale of automotive tires, parts and accessories. Competitors include Advanced Auto Parts and AutoZone.

The Pep Boy store product line includes tires, batteries; new and remanufactured parts for domestic and import vehicles; chemicals and maintenance items; fashion, electronic and performance accessories, and a limited amount of select non-automotive merchandise for automotive do-it-yourself customers, such as generators, power tools, personal transportation products, and canopies.


PEP BOYS AUTO TREND
CAP Rate

2014 avg: 6.50%

2015 avg: 6.46%

RECENT SALES

Clayton, NC

$1,542,000 | 7%

Nashua, NH

$4,734,756 | 7.6%

MORE INFO
www.pepboys.com
Google Finance: PBY
Google News: PBY