The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the activity in the National Net Lease Auto Parts Market.

1. www.bouldergroup.com
THE NET LEASE
AUTO PARTS REPORT
MARCH 2015
Q4 2013 Q4 2014 Basis Point
Tenant (Previous) (Current) Change
Advance Auto Parts 7.20% 7.00% -20
AutoZone 6.00% 5.98% -2
O’Reilly Auto Parts 6.00% 5.95% -5
MEDIAN ASKING PRICE
AUTO PARTS STORE PROPERTIES
MEDIAN ASKING CAP RATES
Median Median Price
Tenant Asking Price Per Foot
Advance Auto Parts $1,280,000 $183
AutoZone $1,431,500 $202
O'Reilly Auto Parts $1,780,436 $246
Percentage
Tenant of Market
Advance Auto Parts 59.0%
AutoZone 15.7%
O’Reilly Auto Parts 25.3%
AUTO PARTS STORE PROPERTIES
VS. RETAIL NET LEASE MARKET
MARKET OVERVIEW
Cap rates for the single tenant net leased auto parts store sector
increased by three basis points from the fourth quarter of 2013 to
the fourth quarter of 2014 to 6.25%. The auto parts sector, for the
purpose of this report, is defined as Advance Auto Parts, Auto Zone
and O’Reilly Auto Parts as they account for the highest percentage
of transactions of properties tenanted by auto parts retailers. The
primary reason for the insignificant change in cap rates during a period
which overall retail cap rates declined by 35 basis points is due to the
increased supply of vintage properties with shorter term leases. In the
fourth quarter of 2014, Advance Auto Parts properties with less than
10 years remaining on their leases made up 69% of all Advance Auto
Parts properties on the market.
Auto part store properties remain in high demand among net lease
investors as there are limited investment grade options priced below $2
million outside of dollar stores. Additionally, investors seek to acquire
auto parts stores for residual value as they are typically constructed
as vanilla boxes which are easier to re-tenant in the event the tenant
vacates.
In the fourth quarter of 2014, the supply of net leased auto parts store
increased by 22%. Auto part retailers continue their expansion plans
and opened more than 500 stores in 2014. Despite the combined 500
new store openings in 2014, the supply of new construction auto part
stores only made up 21% of the sector. This can best be attributed to
the fact that the auto part retailers own an increasingly high percentage
of their locations. Furthermore, owners of properties with shorter term
leases have added supply to the market to take advantage of the
low cap rate environment as the consensus of net lease participants
believe that the market strongly favors sellers.
The retail industry continues to thrive as consumer demand for auto
parts stores is increasing due to aging vehicles on the roads. A recent
report by R.L. Polk & Co. and IHS Automotive shows that the average
age of vehicles on the road has increased to 11.5 years. Additionally,
the amount of vehicles over 12 years old is expected to increase 15%
by 2019.
Transaction volume in the auto parts sector should remain strong as
investors have a positive outlook of the fundamentals of the auto parts
industry. Recently constructed properties with long term leases should
continue to be in the highest demand as these assets are the most
sought after amongst 1031 buyers due to their lower absolute price
point. Auto parts store properties with shorter lease terms located
in areas with strong real estate fundamentals also remain in high
demand.
PERCENTAGE OF AUTO PARTS STORES
ON THE MARKEY BY TENANT
Q4 2013 Q4 2014
Tenant (Previous) (Current)
Auto Parts 6.22% 6.25%
Market 6.85% 6.50%
Auto Parts Premium (bps) 63 25

2. www.bouldergroup.com
THE NET LEASE
AUTO PARTS REPORT
MARCH 2015
MEDIAN ASKING CAP RATE BY LEASE TERM
REMAINING
Years Remaining Advance Auto Parts AutoZone O'Reilly Auto Parts
18-20 N/A N/A 5.75%
15-17 5.80% 5.55% 5.90%
10-14 6.25% 5.95% 6.10%
6-9 7.08% 6.65% 6.75%
Under 5 7.75% 7.00% 7.95%
SELECT SINGLE TENANT AUTO PARTS STORES SALES COMPARABLES
Lease Term
Sale Date Tenant City State Price Price S.F. Cap Rate Remaining
Dec-14 Advance Auto Parts Franklin TN $2,325,000 $332 6.71% 8
Jan-15 Advance Auto Parts Pflugerville TX $2,280,000 $330 6.00% 15
Dec-14 AutoZone Rome GA $2,182,000 $295 5.50% 15
Jan-15 AutoZone San Bernardino CA $1,800,000 $171 7.04% 3
Nov-14 O'Reilly Auto Parts Greenville SC $1,788,000 $247 5.80% 19
Oct-14 Advance Auto Parts Chittenango NY $1,650,000 $242 7.49% 8
Nov-14 O'Reilly Auto Parts Federal Heights CO $1,500,000 $214 6.20% 12
Sep-14 O'Reilly Auto Parts Hendersonville NC $1,486,000 $218 6.38% 20
Dec-14 AutoZone Wauchula FL $1,400,000 $207 6.21% 11
Oct-14 Advance Auto Parts New Braunfels TX $1,370,000 $223 7.03% 10
Jul-14 AutoZone (GL) Phoenix AZ $1,370,000 -- 5.26% 15
Jul-14 Advance Auto Parts Cleveland TN $1,300,000 $185 8.78% 4
Dec-14 O'Reilly Auto Parts Elgin IL $1,297,000 $170 6.86% 8
Dec-14 O'Reilly Auto Parts Blackstone VA $1,296,000 $202 6.38% 20
Aug-14 O'Reilly Auto Parts Monahans TX $975,000 $152 6.76% 14

3. www.bouldergroup.com
THE NET LEASE
AUTO PARTS REPORT
MARCH 2015
WEST
MOUNTAIN
MIDWEST
SOUTH
NORTHEAST
NORTHEAST
SOUTH
MIDWEST
MOUNTAIN
WEST
6.45%
6.01%
6.10%
6.50%
5.50%
AUTO PARTS STORE MEDIAN ASKING CAP RATES

4. www.bouldergroup.com
THE NET LEASE
AUTO PARTS REPORT
MARCH 2015
FOR MORE INFORMATION
AUTHOR
John Feeney | Vice President
john@bouldergroup.com
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@bouldergroup.com
Jordan Kaufman | Vice President
jordan@bouldergroup.com
© 2015. 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.
Zach Wright | Research Analyst
zach@bouldergroup.com
CONTRIBUTORS
COMPANY COMPARISON
Advance Auto Parts AutoZone O’Reilly Auto Parts
Credit Rating BBB- (Stable) BBB (Stable) BBB+ (Stable)
Market Cap $11 billion $20 billion $21 billion
Revenue $9 billion $9 billion $7 billion
2014 Stores Built 140 190 200
Number of Stores 3,835 5,391 4,311
Typical Lease Term 15 year primary term with
fifteen years of options
20 year primary term with
twenty years of options
20 year primary term with
fifteen years of options
Typical Rent Increases Not in primary, 5% increases in
option periods
Not in primary, 10% increase in
option periods
10% in lease year 11 and
each option period