Jonathan Hipp
There are many forces driving Dollar General to be an investor's current pick in the net lease world. As of August 13, 2016, Dollar General operates 13,000 stores in 43 states with plans to open 900 more stores this year and 1,000 more in 2017. In order to support this expansion, the company plans to hire 10,000 employees this fall.
A majority of their locations have absolute-triple-net leases in place. The lease term is generally 15 years with stated option periods of 5 years each with rental increases ranging from 5-10% when an option is exercised. The national average cap rates for Dollar General was 6.90% in Q3 2016, a decrease of 40 bps since Q2 2016. This was a result of many new build-to-suit transactions, which closed during the quarter. Dollar General cap rates have steadily decreased since Q2 2014 as shown in the chart below.
Dollar General is also in the process of opening two new distribution centers. One in Jackson, GA is currently under construction and the second distribution center in Janesville, WI with plans to hire 550 workers.
On another positive note, Moody's upgraded Dollar General's unsecured rating from Baa3 to Baa2 with a positive outlook. Meanwhile, Dollar General still holds its investment grade rating of BBB from S&P.
Dollar General closed its last trading session at $68.69. The market capitalization of the company stands at $19.28 Billion with a 52-week high of $96.88 and 52-week low of $59.75. Even with recent price volatility, Wall Street analysts see shares for Dollar General climbing in the coming 6-12 months.
These positive developments make Dollar General an attractive investment opportunity and we've seen this reflected in our activity this year.
Hear from the net lease sector's top leaders as they explore current and emerging trends and provide their outlook for continued success in this space. Join us at RealShare Net Lease West on Nov. 1 and 2, where you'll meet the top owners, investors, brokers and financiers in the net lease and sale-leaseback community. Learn more.
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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.
