Standard & Poor’s recently raised Dollar General’s credit rating from double-B-plus to triple-B-minus, making the company officially investment grade with a stable outlook.
S&P commented, "The upgrade reflects our expectations for continued healthy sales and EBITDA growth while debt levels remain relatively stable in 2012 and 2013,”
From a net lease point of view, Dollar General is appealing given its lower price points, respectable sales record, and corporate expansion strategy in a growing market segment. Dollar General's new store model is approximately 9,100 SF on 1.00+/- acre of land to accommodate a minimum of 30 parking spaces. DG net lease properties have high visibility and full ingress /egress along retail corridors with good traffic. The average cap rate for a net lease Dollar General is between 8.50% - 9.25%, meaning the average net leased Dollar General is priced below $1.0M. Higher cap rates and lower price points result in a larger pool of qualified buyers.
All Dollar General net leases have a corporate guarantee and typically have either 10 or 15 year initial terms. Escalations and landlord responsibilities vary, but Dollar General's net lease terms usually include bumps in lease year 11, while holding the landlord responsible for at least roof and structure. Dollar General went public on November 13, 2009 in what was called "the largest retail-store IPO in at least 15 years" by Wall Street veterans. At that offering Dollar General raised $716 million, its stock ended at $22.73, up 8% from its IPO price of $21.00.
View a full profile of Dollar General here.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
