Salt Lake City MSA. Property is located in Salt Lake City, adjacent to upper middle income southwestern suburbs. Direct Walmart outparcel. 300,000 residents within a 5 mile radius, and part of a high growth area. Corporate store that was renovated in 2012. O’Reilly is rated BBB (investment grade) by S&P and has a current market cap of $23 billion. Replaceable rent at $16.87psf given building is similar size to fast casual restaurants.
A triple net lease (triple–Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the three “nets”) on the property in addition to any normal fees that are expected under the agreement (rent, utilities, etc.)
High demand from tenants. This demand remains strong as newer types of retailers have emerged and compete for the prime visibility and easy access (Urgent Care Centers and ER Centers, Dental Care, Wireless Carrier Stores).
Tenants desire the visibility as well as the control over their real estate. The building and signage reflects the retailers brand and image. Whereas in a shopping center a retailer would only get to put up a sign on the building, in a freestanding building the entire building is designed by the retailer. High visibility builds brands.
Majority of NNN retailers are national or regional tenants that have meticulous site selection criteria models (they know where they want to be which is why they sign the longer term leases and invest in their properties the way they do)