Advance Auto Parts

Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. The company offers batteries and battery accessories, belts and hoses, brakes and brake pads, chassis and climate control parts, clutches and drive shafts, engines and engine parts, exhaust systems and parts, hub assemblies, ignition components and wired, radiators and cooling parts, starters and alternators, and steering and alignment parts. It also offers AC chemicals and accessories, air fresheners, antifreeze and washer fluids, electrical wires and fuses, electronics, hand and specialty tools, lighting products, performance parts, sealants, adhesives and compounds, tire repair accessories, vent shades, mirrors and exterior accessories, washes, waxes and cleaning supplies, and wiper blades, as well as floor mats, seat covers, and interior accessories.

In addition, the company offers air filters, fuel and oil additives, fuel filters, grease and lubricants, motor oils, oil filters, part cleaners and treatments, and transmission fluids for engine maintenance. Further, it offers battery and wiper installation, battery charging, check engine light reading, video clinic, oil and battery recycling, loaner tool program, and electrical system testing services. Additionally, the company sells its products online through AdvanceAutoParts.com and Worldpac.com.

It serves do-it-for-me and do-it-yourself customers, as well as independently-owned operators. As of December 31, 2016, the company operated 5,062 stores and 127 WORLDPAC branches; and served approximately 1,250 independently owned Carquest branded stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada, as well as Mexico and the Bahamas, Turks and Caicos, the British Virgin Islands, and the Pacific Islands. Advance Auto Parts, Inc. was founded in 1929 and is headquartered in Roanoke, Virginia.

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S&P Rating: BBB-

S&P Outlook: Stable

Moody Rating: Baa2

Moody Outlook: Stable

Typical Lease Characteristics

Lease Term: 10-15 Years Years

Lease Type: NN (Landlord responsbible for roof and structure

Lease Increases: Usually during Option periods

Lease Extensions: 2-3 (5) Year Options

Lease Guarantor: Corporate

Tenant Overview

Having a realitively strong credit rating makes this tenant an strong investment candidate, however long term feasibilty of their business model remains to be seen given the continued pressure from ecommerce. Regardless, AAP continues to expand its store network in both new and existing markets to grow its commercial and DIY customer base. In a move that created the largest automotive aftermarket parts provider in North America and surpassed rival AutoZone in sales, AAP acquired privately-held General Parts International, a distributor and supplier of original equipment and aftermarket replacement products for commercial markets operating under the CARQUEST and WORLDPAC brands.

The company has also been moving into the commercial market in recent years. To better serve commercial customers, AAP has added more parts from key manufacturers to its inventory and expanded its workforce with parts professionals, delivery drivers, and sales representatives.

Positives:

  • Public Company, Credit Rated
  • Footprint allows for adaptive reuse
  • Typically Long term leases with increases

Negatives:

  • NN leases make landlord responsible for roof and structure
  • Competitive Industry Sector
  • Susceptible to economic trends and pressures

Market Snapshots:

On Market Ranges:

# of Properties in set: 44

Price: $1,176,060 - $1,498,070Average: $1,400,067

PPSF: $170 - $230Average: $202

Year Built: 1960 - 2017Average: 2000

CAP Rate Range: 6.75% - 8.17%Average: 7.10%

Size range: 4,600 sq ft - 12,350 sq ft Average: 7,012 sq ft

Last 12 Month Range:

# of Properties in set: 62

Price: $1,517,940 - $2,065,110Average: $1,765,049

PPSF: $223 - $283Average: $246

Year Built: 1960 - 2017Average: 2006

CAP Rate Range: 6.35% - 7.42%Average: 6.68%

Size range: 4,840 sq ft - 19,800 sq ft Average: 7,291 sq ft

Advance Auto Parts Company Profile

Headquarters Information

Roanoke, VA

Founded in 1932

Company type: Public

Stock Ticker: AAP

Sector: Auto Parts Store

Industry: Auto Parts Retail

# of Employees: 41,000

S&P Rating: BBB-

S&P Outlook: Stable

S&P Rating: Baa2

Moody Outlook: Stable


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Advance Auto Parts Stock Keys

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