Auto Store Properties

O'Reilly Automotive Inc. (NasdaqGS: ORLY), operates as a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The company stores sell a selection of brand name and private label products for domestic and imported automobiles, vans, trucks to do-it-yourself customers and professional installers. As of December 31, 2009 it operates 3,421 stores. The company was founded in 1957 and is headquartered in Springfield, MO.

O'Reilly Auto Parts almost doubled in size with the mid-2008 acquisition of CSK Auto, and effectively acquired a major presence on the West Coast. Thru this $500 Million plus acquisition O'Reilly purchased over 1,300 CSK stores, located in 22 different states. Checker's Auto Parts, Schuck's Auto Supply, Kragen, and Murray's Discount Auto all fully transitioned to the O'Reilly operations, with many having been re-branded to the O'Reilly name.

Recently, in 2008 O'Reilly partnered with NASCAR in order to capture the sales of race fans, which are believed to spend more on automotive parts than the general public. O'Reilly is now the official auto parts store of NASCAR and sponsors numerous races throughout the country.

Similar to the analyst opinions for both AutoZone and Advance Auto Parts, the outlook for O'Reilly Automotive Inc. is a positive one due to the current consumer trends and economic atmosphere. Recently O'Reilly Auto announced that their first quarter, fiscal year 2010 sales totaled $1.28 billion, which represents a 10% increase for the same period a year ago. Additionally, they were pleased to report that comparable same store sales increase by 6.9%, and diluted earnings per share were up by 52%.

O'Reilly Auto Part stores are typically designed and built having a footprint in the 6500-7000 square foot range. O'Reilly structures their leases in mainly one way; having a 20 year NNN lease as well as occasionally a 20 year ground lease. They typical 20 year NNN lease includes usually a 5-7% rental rate increase in year 11 on the primary lease. This lease also includes three (5) year renewal option with 10% rent bumps at each option period. During the peak in 2007 and 2008, O'Reilly Auto Parts properties traded in the high 6% to the low 7% cap rate range. Currently O'Reilly Auto Parts are coming to the market in the high 7% cap rate range and trading in the low 8% cap rate range.

The O'Reilly Auto Parts Market