Advance Auto Parts - Tenant Overview

Updated:

January 24, 2024

Auto - Parts

Tenant Description

Advance Auto Parts, Inc., established in 1932, has grown to become a leading provider of automotive aftermarket parts in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Mexico, and various Caribbean Islands. The company operates 4,972 stores and 311 Worldpac branches, serving both professional installers and do-it-yourself customers, with an additional 1,318 independently owned Carquest-branded stores.

Founded by Arthur Taubman in 1932, Advance Auto Parts has undergone significant expansion over the years. Major growth milestones include the acquisition of Western Auto in 1998, Carport Auto Parts in 2001, and a regional auto parts chain with 671 stores in 2001. The most transformative acquisition was General Parts International in 2013, which made Advance the largest automotive aftermarket parts provider in North America. In November 2023, Advance Auto Parts announced plans to sell its WORLDPAC and Carquest Canada divisions as part of a cost-cutting move, indicating a strategic shift to streamline its operations and focus on core strengths.

Strategically, Advance Auto Parts has been focused on growth, margin expansion, and shareholder returns. The company emphasizes a strong ownership culture, valuing diversity, equity, and inclusion, which has been instrumental in attracting and retaining talent. Their growth strategy hinges on ensuring the availability of the right parts at the right time, supported by owned brands like DieHard® and Carquest. They are the only auto parts retailer offering same-day delivery within three hours, exemplifying their commitment to customer service.

Margin expansion is another key focus, achieved by eliminating waste, improving execution, and leveraging technology. This strategy has driven sales growth in their owned brands, which have surpassed $1 billion in retail sales. Financially, Advance Auto Parts has maintained a robust approach to capital allocation, even during the pandemic, by raising dividends and announcing a one-billion-dollar share repurchase authorization.

In summary, Advance Auto Parts presents as a formidable and strategically evolving player in the automotive aftermarket parts industry. With a robust store network, a commitment to customer service, and a focus on financial stability, the company stands out as an attractive and reliable tenant in the commercial real estate market. Their expansive store network, innovative service models, and strategic initiatives to streamline operations and grow margins demonstrate their potential as a valuable tenant for landlords and investors in the commercial real estate sector.

Average Asking Cap Rate

6.38%

3 mo avg (510 properties)

Typical Investment/Lease

Average Sale Price

$1,711,600

Rent

$102,426

$/Square Foot

$150 - $350

Building SF

6,550 - 8,000

Approx. Store Count

4,972

Lease Term

10 Years

Escalations

6% - 8% Every 5 Years

Stock Symbol

AAP

Credit Quality

S&P:

BB+

Average Asking Cap Rate Trend

5.40%

2022

5.85%

2023

Reflect only properties with long-term lease.

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