Net Lease Profile: Autozone
This investment grade auto parts retailer remains strong, with a stable credit-rating outlook and a growing market share. As a net lease retail property, AutoZone has benefited from adverse economic conditions as new car purchases remain low and auto owners perform "do-it-yourself repairs".
Possessing the highest credit rating among the top auto parts retailers allows AutoZone an ability to command a premium for their net lease sites. AutoZone has agreed to a number of different lease structures, including ground leases and fee simple sales. Ground lease locations are commonly structured on a 15-year term, with 10% rental increases every 5 years. An AutoZone fee simple sale is typically structured with a 20-year triple net lease. The prototypical design and footprint of an AutoZone is a rectangular building (approx. 7,000 SF) situated on 0.80 - 1.15 acres of land. These parcels can provide future up-development opportunity depending on location. Free standing AutoZone locations can be pad sites within larger shopping centers, while other locations are situated as independent mid-block land parcels. Since AutoZone stores are destination locations, they do not need to be Main & Main premier locations. This allows AutoZone to establish lower rents and subsequent purchase prices just under $1M for ground leases and $1.5M - $2.5M for fee simple sites.
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