Circle K TENANT OVERVIEW


Net Lease Advisor Tenant Circle K

Pros

  • Investment grade corporate guaranty
  • Strong intrinsic real estate, usually located at a highly trafficked intersection
  • Fully passive NNN lease with periodic rental increases
  • Advantageous accelerated depreciation on improvements due to nature of tenant's business

Cons

  • Environmental concerns over petroleum products, although tenant fully indemnifies landlord
  • Smaller sites pose hurdles for potential redevelopment

Tenant Description

Circle K has been a successful convenience store operator for over 60 years.

Circle K is a highly sought after net lease C-store tenant. Investors are attracted to their fully passive NNN leases which are backed by an investment grade corporate guarantee from the parent company Alimentation Couche-Tard Inc. Circle K stores also feature strong intrinsic real estate as they are almost always located at highly trafficked intersections. Furthermore, because many Circle K stores feature gasoline, investors can take advantage of accelerated depreciation on building improvements.

Couche-Tard has over 8,000 convenience store across North America operating under one of their various brands. As of January 29,2017, the Couche-Tard network consists of 2,766 stores in Europe and licensing agreements add another 1,700 stores around the globe.

The parent company of Circle K - Alimentation Couche-Tard Inc. - is the largest independent convenience store operator (regardless of petroleum integration) in terms of number of company-operated stores in North America. Couche-Tard is a Canadian company with annual revenues of over $44.93 billion and services some 25 million customers each week. It has four main store brands: Couche-Tard, Kangaroo Express, Mac's and Circle K. Recently, Couche-Tard acquired Topaz, Ireland’s largest convenience and fuel retailer. Couche-Tard is making a continuous effort to rebrand all of their existing locations under the Circle K banner, except for the Couche-Tard retail brand locations in the Province of Quebec due to specifics of that market.

Average Cap Rate
5.75%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $4,315,000
NOI $248,113
$/Square Foot $400 - $800
Building SF 2,000 - 4,500
Lot Size 0.5 - 1.0 Acres
Lease Term 15 - 17 Years
Escalations 8.5% Every 5 Years
Stock Symbol N/A
Credit Rating
S&P BBB
Moody's Baa2
Average Cap Rate Trend
7.12%
2015
6.65%
2016
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Montgomery, AL 6
Phoenix, AZ 5.56%