Dollar General TENANT OVERVIEW


Net Lease Advisor Tenant Dollar General

Pros

  • Absolute NNN lease
  • Lower price point
  • High visibility and good access

Cons

  • Tertiary market locations
  • Some NN leases make landlord responsible for at least roof and structure

Earnings Highlights

Earnings Summary
  • Net sales increased 8.4%; same-store sales increased 4.0%
  • Cash flows from operations of $1.1 Billion

Tenant Description

Dollar General is one of the largest dollar store chains in the US, offering deep discounts on a wide array of products.

From a net lease point of view, Dollar General is appealing given its lower price points, respectable sales record, and corporate expansion strategy in a growing market segment. Dollar General's new store model is approximately 9,100 square feet on 1.00 acre of land to accommodate a minimum of 30 parking spaces. Dollar General net lease properties have high visibility and full ingress/egress along retail corridors with good traffic. Higher cap rates and lower price points result in a larger pool of qualified buyers.

All Dollar General net leases have a corporate guarantee and typically new stores are NNN with 15-year initial terms. Newly built Dollar General properties have lease terms that usually include 10% bumps every five (5) years and in options, making it a sought-after passive investment deal for out-of-state investors. A significant portion of the new stores are subject to build-to-suit arrangements.. Older stores generally are NN where the landlord is responsible for roof and structure and have higher cap rates. These older stores with NN leases can be subject to shorter terms, usually 10-year leases.

Dollar General is a publicly traded company that started in 1939 by J.L. Turner in Kentucky. Dollar General offers a broad selection of merchandise, including consumables, seasonal, home products and apparel.

The stores generally feature a low-cost, no frills building with limited maintenance capital, low operating costs, and focused merchandise offering within a broad range of categories. 70% of the stores are located in towns of 20,000 or fewer people.

As of 9/28/2019 Dollar General operates 16,000 stores across 44 states. Dollar General plans to expand to 46 states by 2020

Average Cap Rate
6.81%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $1,342,205
NOI $95,591
$/Square Foot $135 - $150
Building SF 9,000 - 10,000
Lot Size 1.0 Acres
Lease Term 10 - 15 Years
Escalations In Option Periods
Stock Symbol DG
Credit Rating
S&P BBB
Moody's Baa2
Average Cap Rate Trend
7.09%
2018
7.08%
2019
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Orrstown, PA 6.88%
Wagner, SD 6.79%
Clarkesville, GA 7.35%