Cap rates for auto parts stores increased slightly in Q4 2018 compared to Q4 2017. Advance Auto Parts properties made up over half of auto parts properties on the market and had significantly higher asking cap rates than AutoZone and O'Reilly Auto Parts properties. Transaction volume declined in 2018 for the auto parts sector while remaining flat for the overall net lease market. Auto parts stores remain attractive investments due to their relatively low price points and investment grade tenants.

1. www.bouldergroup.com
THE NET LEASE AUTO PARTS REPORT
Q4
2018
Q4 2017 Q4 2018 Basis Point
Tenant (Previous) (Current) Change
Advance Auto Parts 6.75% 6.75% 0
AutoZone 5.62% 5.47% -15
O'Reilly Auto Parts 5.94% 5.80% -14
Median Median Price
Tenant Asking Price Per Foot
Advance Auto Parts $1,351,250 $199
AutoZone $1,795,632 $263
O'Reilly Auto Parts $1,879,000 $255
PERCENTAGE OF AUTO PARTS STORES
ON THE MARKET BY TENANT
Percentage
Tenant of Market
Advance Auto Parts 56.3%
AutoZone 24.1%
O’Reilly Auto Parts 19.6%
AUTO PARTS STORES PROPERTIES VS.
RETAIL NET LEASE MARKET
MARKET OVERVIEW
Cap rates for the single tenant net leased auto parts store sector
increased by 7 basis points from the fourth quarter of 2017 to the fourth
quarter of 2018 to 6.26%. The auto parts sector, for the purpose of
this report, is defined as Advance Auto Parts, AutoZone and O’Reilly
Auto Parts as they account for the highest percentage of single tenant
transactions of properties occupied by auto parts retailers. Despite the
increase in cap rates, the median lease term remaining for the net
leased auto parts sector increased by an additional year. The increase
in cap rates can be primarily attributed to the high concentration of
Advance Auto Parts properties on the market. The median asking
cap rate for Advance Auto Parts is significantly higher than its peers;
O’Reilly Auto Parts and AutoZone.
The majority of the sector is comprised ofAdvanceAuto Parts properties
which experienced no change in their cap rates when compared to one
year ago (6.75%). Conversely, cap rates for AutoZone and O’Reilly
Auto Parts properties compressed by 15 and 14 basis points to 5.47%
and 5.80% respectively. Transaction volume for the net leased auto
parts store sector declined by approximately 13% in 2018 when
compared to 2017. The decline in transaction volume can be attributed
to investor concern that Amazon could impact brick and mortar auto
part locations. Inversely, the overall net lease market saw transaction
volume increase by approximately 4%.
As the current auto fleet in the United States continues to age, demand
for auto parts from consumers, garages and service stations should
continue to grow. The 2018 Lang Aftermarket iReport, confirms that
the average age of vehicles on the road increased to 12 years.
The low absolute price point of properties within the net lease auto
parts store sector make these investments attractive to investors.
Outside of dollar stores, there is a limited supply of net leased
properties available under $2 million leased to investment grade rated
tenants. Furthermore, auto parts stores are typically located in primary
and secondary markets and their typical store footprint makes them
easier to re-tenant.
Transaction volume in the auto parts sector should remain similar to
2018 as investors continue to seek properties with investment grade
tenants at lower price points. Auto parts store properties with shorter
lease terms located in areas with strong real estate fundamentals also
remain in high demand among buyers seeking higher yields.
Q4 2017 Q4 2018
Tenant (Previous) (Current)
Auto Parts 6.19% 6.26%
Market 6.07% 6.25%
Spread (bps) +12 +1
AUTO PARTS STORE PROPERTIES
MEDIAN ASKING PRICE
AUTO PARTS STORE PROPERTIES
MEDIAN ASKING CAP RATES

2. www.bouldergroup.com
THE NET LEASE AUTO PARTS REPORT
Q4
2018
AUTO PARTS STORES MEDIAN ASKING CAP RATES
WEST
MOUNTAIN
MIDWEST
SOUTH
NO
RTHEAST
6.22%
6.00%
6.41%
6.45%
5.30%
WEST
MOUNTAIN
MIDWEST
SOUTH
NO
RTHEAST

3. www.bouldergroup.com
THE NET LEASE AUTO PARTS REPORT
Q4
2018
SELECT SINGLE TENANT AUTO PARTS STORES SALES COMPARABLES
MEDIAN ASKING CAP RATES BY LEASE TERM
REMAINING
Years
Remaning Advance Auto Parts AutoZone O’Reilly Auto Parts
Under 5 7.75% 7.00% 7.05%
6-9 7.00% 6.28% 6.60%
10-14 6.22% 5.60% 6.08%
15-17 5.85% 5.35% 5.70%
18-20 N/A 5.25% 5.30%
Lease Term
Sale Date Tenant City State Price Price S.F. Cap Rate Remaining
Nov-18 O'Reilly Auto Parts Tamarac FL $2,825,000 $379 5.47% 20
Aug-18 Advance Auto Parts Okatie SC $2,645,000 $379 5.75% 10
Dec-18 Advance Auto Parts Cary NC $2,200,000 $317 6.75% 5
Nov-18 O'Reilly Auto Parts Spanish Fort AL $2,155,500 $299 5.70% 20
Oct-18 AutoZone Chesterfield MI $1,819,000 $238 6.35% 10
Sep-18 Advance Auto Parts Austin TX $1,750,000 $250 7.68% 5
Sep-18 AutoZone Lakewood WA $1,600,000 $296 5.23% 10
Sep-18 Advanace Auto Parts Pueblo CO $1,480,000 $218 6.75% 11
Sep-18 Advanace Auto Parts Palmview TX $1,300,000 $186 10.80% 3
Oct-18 O'Reilly Auto Parts Defuniak Springs FL $1,125,000 $212 6.15% 13
Nov-18 O'Reilly Auto Parts Monahans TX $1,050,000 $164 6.28% 10

4. www.bouldergroup.com
THE NET LEASE AUTO PARTS REPORT
Q4
2018
© 2019. The Boulder Group. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. We have not verified the
information and we make no guarantee, warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose
nor under any circumstances shall any of the above information be deemed legal advice or counsel. Reliance on this information is at the risk of the reader and The Boulder Group expressly
disclaims any liability arising from the use of such information. This information is designed exclusively for use by The Boulder Group clients and cannot be reproduced, retransmitted or
distributed without the express written consent of The Boulder Group.
AUTO PARTS STORES COMPANY COMPARISONS
Advance Auto Parts AutoZone O’Reilly Auto Parts
Credit Rating BBB- (Stable) BBB (Stable) BBB+ (Stable)
Market Cap $13 billion $22.9 billion $27.7 billion
Revenue $9.37 billion $11.2 billion $8.98 billion
Number of Stores 5,200 6,000 5,147
Typical Lease Term 15 year primary term with
fifteen years of options
15 or 20 year primary term with
twenty years of options
20 year primary term with
twenty years of options
FOR MORE INFORMATION
John Feeney
Senior Vice President
john@bouldergroup.com Scott Harris | Senior Analyst
scott@bouldergroup.com
Jeff Weil | Analyst
jeff@bouldergroup.com
CONTRIBUTORS
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@bouldergroup.com
AUTHOR