Seller Financing 4.75% Interest Only
Twist Capital Team of Colliers is pleased to present the fee simple interest in a freestanding O'Reilly Auto Parts at the hard corner of Ward Road and Parkway Drive in Salyersville, Kentucky, the seat of Magoffin County. The store was built to suit for O'Reilly in 2021 as the company's current prototype and is subject to a 15-year corporate guaranteed lease with about 10 years of primary term remaining, a 6% rental increase in July 2031, and 6% increases at the start of each of the four 5-year renewal options.
The offering is priced at $1,842,000, a 5.75% capitalization rate on current net operating income of $105,904. The seller will carry 50% of the purchase price at 4.75% interest only for 5 years. Those terms do not exist in today's lending market and they change the return profile of this deal entirely.
Investment highlights
Seller Financing Below Market: The seller will finance 50% of the purchase price at 4.75%, interest only, for 5 years. The seller financing delivers a 6.75% cash on cash return from day one, rising to 7.44% at the July 2031 rent increase.
Investment Grade Corporate Guaranty: The lease is guaranteed by O'Reilly Automotive Stores Inc., rated BBB by S&P, with more than 6,500 stores across 48 states and Mexico and more than three decades of consecutive same store sales growth.
Counter Cyclical Demand: When new car sales slow, the existing fleet ages and parts demand rises. Auto parts retail performs through downturns, serving both do it yourself customers and professional installers.
2021 Prototype Construction: Built to suit for O'Reilly in 2021. A 15-year commitment in a county seat trade area tells you how the tenant underwrites this location.
Scheduled Rental Growth: A 6% increase arrives in July 2031, inside the first five years of ownership, followed by 6% increases at the beginning of each of the four 5 year options. The yield on the asking price reaches 7.69% at the final option rent.
Low Rent Basis: Current rent of $14.66 per square foot provides a conservative occupancy cost for a modern freestanding retail box with long term alternative use potential.
Hard Corner in the County Seat: The site controls the hard corner of Ward Road and Parkway Drive, the primary retail corridor serving Salyersville, with approximately 10,340 vehicles per day and nearby national retailers including from Walgreens, Dollar General, Family Dollar and IGA.