Net Lease Advisor Tenant Pep boys


  • 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, commonly referred to as Pep Boys, is an automotive service and aftermarket parts chain.

Pep Boys net lease properties typically feature a 15-year NNN leases, providing for either 1.5% annual bumps or 8% rental increases every five (5) years. Pep Boys utilizes a larger building footprint with six (6) to eight (8) service bays attached to the retail storefront. This is important for two reasons. First, with a cost segregation study, landlords are able to capture significant amount of accelerated depreciation. Second, landlords have relatively large buildings and land parcels (17,000-22,000 square foot buildings on approximately 2 acre lots), which offer advantageous options for re-use and/or redevelopment.

Pep Boys is engaged in automotive repair and maintenance, and the sale of automotive tires, parts and accessories. Competitors include Advanced Auto Parts, AutoZone, and O’Reilly Auto Parts. 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.

On 1/23/2017 Pep Boys announced the acquisition of Just Brakes, increasing the number of Pep Boy locations to over 900.

Average Cap Rate
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $2,828,333
NOI $168,000
$/Square Foot $150 - $550
Building SF 5,000 - 20,000
Lot Size 2.05 Acres
Lease Term 15 Years
Escalations Varies
Stock Symbol PBY
Credit Rating
Moody's Ba3
Average Cap Rate Trend
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Griffin, GA 7.50%
Tucson, AZ 6.50%
Dallas, TX 5.75%