Every net lease real estate investor needs portfolio properties in which to invest cash. Every investor needs properties that generate cash. And every net lease investment should eventually be a cash generator. The following credit tenants represent the focus of our property inventory.
Walgreen Company, together with its subsidiaries, operates a network of drugstores in the United States. It provides consumer goods and services, pharmacy, and health and wellness services through drugstores, as well as mail, and by telephone and online.
Rite Aid Corporation is a retail drugstore chain in the United States. As of March 3, 2013, it operated 4,623 stores in 31 states across the country and in the District of Columbia. In the company’s stores, it sells prescription drugs and a range of other merchandise, which it calls front end products. During the fiscal year ending March 3, 2013 (fiscal 2013), prescription drug sales accounted for 67.6% of its total sales. Their front end products, accounted for 32.4% of its total sales in fiscal 2013.
Front end products include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, beverages, convenience foods, greeting cards, seasonal merchandise and other everyday and convenience products, as well as photo processing. It offers a variety of products under its private brands. Effective August 5, 2013, Rite Aid Corp acquired Kings Pharmacy East Inc, which owns and operates pharmacy.
Dollar General Corporation DG
Dollar General Corporation is a discount retailer in the United States which offers a selection of merchandise including consumables, seasonal, home products and apparel.
Dollar General is one of the rare companies in the consumer defensive sector with substantial new store roll-out potential.
Fred's, Inc., and subsidiaries sell general merchandise through its retail discount stores and full service pharmacies. Tracing its history back to an original store in Coldwater, Mississippi, which opened in 1947. Today Fred's is headquartered in Memphis, Tennessee, and operates over 700 discount general merchandise stores, including 24 franchised Fred's stores, mainly across the southeastern states.
With a unique store format and strategy that combines the best elements of a discount dollar store, drug store and mass merchant, Fred's stores stock more than 12,000 frequently purchased items that address the everyday needs of its customers. This merchandise includes nationally recognized brand name products, proprietary Fred's label products, and lower-priced,
Advance Auto Parts Inc. AAP
Advance Auto Parts, Inc. is a specialty retailer of automotive after-market parts, accessories, batteries and maintenance items mainly operating within the United States.
Advance is one of the industry’s largest auto-parts retailers, operating more than 4,000 stores in the East and Midwest regions of the United States. The company generates a 40/60 do-it-for-me/do-it-yourself sales mix, but Advance’s proposed acquisition of the DIFM-focused General Parts will add another 1,246 Carquest company-operated stores, 1,418 independent Carquest locations, and 102 Worldpac branches to its store portfolio, shifting the mix to 55-45. The acquisition will also expand Advance’s geographic exposure to the West Coast.
O'Reilly Automotive Inc. ORLY
O'Reilly Automotive Inc is a specialty retailer of automotive after-market parts, tools, supplies, equipment and accessories in the United States, selling its products to both do-it-yourself customers and professional service providers.
In 2008, O'Reilly ORLY solidified its position as one of the top national auto-part retailers by acquiring CSK Auto. This transaction added over 1,300 western stores to O'Reilly's store base, and substantially strengthened the firm's scale advantages. Now, O'Reilly operates over 4,000 stores throughout the United States and made inroads into the Northeast (the one remaining hole in its domestic store base), through its acquisition of VIP Auto at the end of 2012. Unlike its retail focused peers, O'Reilly's roots and core expertise lies in the commercial, or do-it-for-me, or DIFM, market. This market is more fragmented than its do-it-yourself counterpart, and we expect O'Reilly will be one of the industry's main consolidators, due to its commercial expertise and distribution infrastructure lead.
With over 4,000 stores, O'Reilly is the second-largest auto part retailer in the United States. After acquiring over 1,300 CSK Auto stores in 2008, O'Reilly gained a major presence in the Western market. The firm now has a strong nationwide footprint, and has recently gained a small toehold in the Northeast through its acquisition of VIP Auto. O'Reilly started as a commercially focused retailer but has since adopted a dual market approach that also targets do-it-yourself retail customers.
AutoZone, Inc. (AutoZone) is a retailer and a distributor of automotive replacement parts and accessories in the United States. As of August 25, 2012, AutoZone operated 4,685 stores in the United States, including Puerto Rico, and 321 in Mexico. The Company operates in two segments: Auto Parts Stores and Other. The Auto Parts Stores segment is a retailer and distributor of automotive parts and accessories through the Company’s 5,006 stores in the United States, Puerto Rico, and Mexico. The Other category reflects business activities that are not separately reportable, including ALLDATA which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry, and e-Commerce, which includes direct sales to customers through www.autozone.com. During the fiscal year ended August 25, 2012 (fiscal 2012), the Company opened 193 stores and relocated 10 stores.
AutoZone has been the most efficient operator among the specialized auto parts retailers. The firm has benefited from superior scale and "sticky" customers who rely on the retailer when purchasing maintenance and failure auto parts. Because of the necessity of auto parts transactions, demand has been consistent throughout numerous economic cycles, allowing AutoZone to generate steady returns on invested capital well above 20% for the majority of the last decade. We believe AutoZone's scale and valuable proprietary brands, combined with the firm's industry-leading position in the attractive DIY auto parts retail market, create a narrow economic moat that should allow the company to generate excess economic returns over the foreseeable future.
AutoZone is the leading after-market auto part retailer for do-it-yourself customers in the United States. The DIY market targets older vehicles that are no longer covered by manufacturer warranties. As of November 2012, AutoZone operated over 4,700 domestic, 320 Mexican, and 1 Brazilian store. The firm also runs more than 3,000 commercial centers in domestic outlets, which deliver auto parts to professional garages, dealers, and service stations. AutoZone owns and sells ALLDATA, automotive repair software, to professional repair shops.
The hallmark of every sound investment portfolio is diversification. The following are additional net lease categories with different price points and corporate credit ratings.
Publix Super Markets, Inc.
Publix Super Markets, Inc. and its wholly owned subsidiaries are in the primary business of operating retail food supermarkets in Florida, Georgia, Alabama, South Carolina and Tennessee. The Company sells grocery, including dairy, produce, deli, bakery, meat and seafood health and beauty care, general merchandise, pharmacy, floral and other products and services. The Company’s lines of merchandise include a range of nationally advertised and private-label brands, as well as unbranded merchandise, such as produce, meat and seafood. The Company receives the food and non-food products it distributes from many sources. These products are delivered to the supermarkets through Company distribution centers or directly from the suppliers.
Kroger Company operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores throughout the United States.
Kroger is one of the largest retailers in the U.S. The company operates more than 2,400 supermarkets, 750 convenience stores, and 325 jewelry stores in 31 states. In addition to its namesake banner, Kroger operates several other banners including Ralphs, Fred Meyer, King Soopers, Fry’s, and Food 4 Less. Kroger also announced its intention to acquire Harris Teeter Supermarkets, Inc., which is subject to regulatory and shareholder approval. If it closes, the deal will increase Kroger’s store base by approximately 8% and revenues by 4%.
ALDI keeps it cheap so shoppers can, too. How has discount food retailer ALDI Group become one of the world's biggest grocery chains, running more than 9,800 stores worldwide? By offering deeply discounted prices on more than 1,400 popular food items (a typical grocery store has 30,000). ALDI (short for "Albrecht Discounts") buys inexpensive land mostly on city outskirts, builds simple warehouses, employs a modest staff, and carries mostly (95%) private-label items, displaying them on pallets rather than shelves.
ALDI has more than 1,200 stores in 30-plus US states, but Germany (where ALDI has about 4,300 stores) accounts for about two-thirds of sales. ALDI was co-founded by brothers Karl and the late Theo Albrecht.
McDonald's Corporation MCD
McDonald's Corporation franchises and operates McDonald's restaurants in the food service industry. The Company and its franchisees purchase food, packaging, equipment and other goods from numerous independent suppliers.
McDonald's generates revenue through company-owned restaurants, franchise royalties, and licensing pacts. Restaurants offer a uniform value-priced menu, with some regional variations. As of June 2013, there were 34,700 locations in 120 countries, including 28,100 franchisee/affiliate units and 6,600 company units. McDonald's Plan to Win is a multifaceted approach to increase sales and profitability, including menu variety and beverage choices, efficient operations, extended hours, everyday affordability, and restaurant reinvestment.
Old Country Store, Inc. CBRL
Cracker Barrel Old Country Store, Inc., is engaged in the operation and development of the Cracker Barrel Old Country Store® concept. It mainly offers home-style country cooking featuring many of its own recipes that emphasize authenticity and quality.
Cracker Barrel Old Country Store, Inc. is principally engaged in the operation and development of the Cracker Barrel Old Country Store concept (Cracker Barrel). As of September 18, 2012, the Company operated 620 stores in 42 states. None of its stores is franchised. The Company’s restaurants, which generated approximately 80% of its total revenue during the fiscal year ended August 31, 2011 (fiscal 2012) offers home-style country cooking featuring many of its own recipes. Breakfast items can be ordered at any time throughout the day and include juices, eggs, pancakes, bacon, country ham, sausage, grits, and a variety of biscuit specialties, such as gravy and biscuits and country ham and biscuits. On December 31, 2011, Cracker Barrel Old Country Store, Inc., merged with CBOCS, Inc.
You might say this company helps people get their fill of chicken sandwiches. Chick-fil-A operates the second largest fast-food chain that specializes in chicken menu items, with some 1,700 restaurants in about 40 states. The chain is popular for its breaded chicken sandwiches and waffle fries, as well as other menu items such as chicken salads, chicken strips, and chicken nuggets. Most of its outlets are freestanding units that offer drive-through service as well as dine-in seating. The company also has a significant number of mall-based stores.
DineEquity, Inc. owns and operates two restaurant concepts: Applebee's in the bar and grill segment of the casual dining category of the restaurant industry, and IHOP in the family dining category of the restaurant industry.
DineEquity, Inc. owns franchise and operate two restaurant concepts: Applebee's Neighborhood Grill & Bar, (Applebee's), in the bar and grill segment of the casual dining category of the restaurant industry, and International House of Pancakes (IHOP), in the family dining category of the restaurant industry. As of December 31, 2012, the franchise operations segment consisted of 2,011 restaurants operated by Applebee's franchisees in the United States, one United States territory and 15 foreign countries and 1,569 restaurants operated by IHOP franchisees and area licensees in the United States, two United States territories and five foreign countries.
Tractor Supply Company is an operator of retail farm and ranch stores in the United States. The Company operates retail stores under the names Tractor Supply Company and Del’s Farm Supply and operate a Website under the name TractorSupply.com. The Company's stores are located in towns outlying metropolitan markets and in rural communities, and offer a selection of merchandise, which include equine, pet and small animal products, including items necessary for their health, care, growth and containment; hardware, truck, towing and tool products; seasonal products, including lawn and garden items, power equipment, gifts and toys; maintenance products for agricultural and rural use, and work/recreational clothing and footwear. The Company operates at farm and ranch retail sales segment, both at its retail locations and online.
Tractor Supply is an operator of retail farm and ranch stores. The Company supplies the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle, as well as tradesmen and small businesses.
Aspen Dental Management, Inc. is a private dental services company offering business management and lab services. Aspen Dental Management, Inc. provides dental services that include general dentistry, crowns and bridges, periodontics, denture lab, restoration and treatment, cosmetic dentistry, and emergency dental care services. Aspen Dental Management, Inc. also offers their dentists an opportunity to run their own practices with full marketing, business and operational support.
Aspen Dental provides support center teams in the areas of marketing, accounting, human resources, insurance operations, information technology, and training and development. Aspen Dental Management, Inc. has one of the largest networks of dental care providers in the United States with more than 300 offices in 22 states. Aspen Dental Management, Inc. was founded in 1981 and is based in East Syracuse, New York.
Fresenius Medical Care AG & Co KGaA is a Germany-based holding and kidney dialysis company, operating in the fields of dialysis products and dialysis services. Its dialysis business is vertically integrated, providing dialysis treatment at its own dialysis clinics and supplying these clinics with a range of products. In addition, the Company sells dialysis products to other dialysis service providers. The Company operates in two business segments: North America and International. The North America segment consists of Renal Therapy Group and Fresenius Medical Services. The International segment consists of Europe and Latin America and one Asia-Pacific unit. During the year ended December 31, 2010, the Company's subsidiary, U.S. Vascular Access Holdings, LLC, completed the acquisition of National Vascular Care Inc.; it acquired a total of 168 existing clinics, and acquired Gambro AB’s peritoneal dialysis (PD) business. The Company has a total of 1000 subsidiaries worldwide.
DaVita HealthCare Partners Inc.
DaVita HealthCare Partners Inc operates kidney dialysis centers and provides related lab services mainly in dialysis centers and in contracted hospitals across the United States. It also operates other ancillary services and strategic initiatives.
DaVita is the world's second-largest dialysis provider with most of its 2,100 clinics based in the U.S. The company treats nearly 166,000 patients with end-stage renal disease. In 2012 a deal valued at nearly $4.4 billion, DaVita merged with HealthCare Partners, one of the largest physician group managers in the U.S., that now represents approximately 25% of consolidated revenue. HCP coordinates care for nearly 461,000 commercial lives among 1,600 physicians, 6,500 specialists, and 111 hospitals primarily in California, Florida, and Nevada.
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