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Tenant Profile: Advance Auto Parts (AAP)

August 28, 2018

 

Headquartered in Roanoke, VA, Advance Auto Parts (AAP) along with its subsidiaries, Autopart International, Carquest, and Worldpac, make up one of the leading auto parts providers in North America. AAP operates 5,189 stores of which AAP is the largest brand in the group with 4,273 locations.  AAP caters to both repair professionals and “Do-it-Yourself” (DIY) customers. More then half (58%) of the companies sales were to professionals while the remaining (42%) were from those DIY customers fixing a domestic or imported vehicle.

 

Why are AAP properties a “Buy”? The properties that are leased to AAP offer investors the opportunity to acquire an asset with returns near or above the net lease average (5.5% - 6.0%) and also a corporate level guarantee from a tenant with investment grade credit. (S&P rates AAP as BBB- and Moody’s rates AAP as Baa2).  Furthermore, the price point is appealing to the private investor as over the last 12-month average prices for these assets have been around $1.7m - $1.8m per property.

 

Size and location are two additional points that make AAP an attractive asset for investors.  AAP stores are typically located in desirable locations along major retail corridors. The size of these buildings, typically 6,000- 8,500 square foot box, makes the property easy to re-tenant. These properties do not have any environmental risk unlike some other auto concepts. 

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Lcasano@raemcapital.com

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