Dollar General

Tenant Description

Dollar General is one of the largest Dollar Store Chains in the US. It is a publicly traded company that started in 1939 by J.L. Turner in Kentucky. They essentially operate as mini Wal-Mart’s in smaller rural towns. Build to suit developers are very active with this tenant, and these are typically high cap rate, low price point deals. 1031 Buyer are attracted to these deals because of the strong corporate guarantee and long term lease.

Older stores tend to be NN+ leases where the landlord is responsible for roof and structure, while newer construction stores are typically built out in smaller markets, the stores built in the early 2000’s are more dense locations.

Dollar General stores average approximately 9,100 square feet of selling space and approximately 70% of the stores are located in towns of 20,000 or fewer people.

What To Look For When Buying A Dollar General

If DG vacates, what can you do with the building?  Is the land in this area cheap enough that the risk is high for DG to build a new store and not renew the lease with you? What are the other retailers nearby? Are there chances of new competition coming in?   Is the area already over served or is Dollar General filling a need due to excess retail demand?

What We Like About Dollar General

These deals are some of the highest cap rates you can find for a Corporate Guarantee lease. New construction stores are built with a 15 Year Lease and generally go above a 7% Cap Rate (Unless in CA, TX, or FL)

Competition

Dollar Tree is the largest competitor in the sector. They acquired Family Dollar back in July 2015 https://www.familydollar.com/corporate/news/newsjuly2015 

What Is Sold In A Dollar General

Clothing, cleaning supplies, home decor, health & beauty aids, pet supplies, toys, seasonal items, and grocery

Dollar General Website

https://www.dollargeneral.com/

Corporate Office Location

100 Mission Ridge – Goodlettsville, Tennessee 37072

Fast Facts

As of January 2019, Dollar General operates over 16,000 retail locations and employs over 135,000 people.

Dollar General was ranked #123 on the Fortune 500 list in May 2018

Stock Price
Tenant News
Average Cap Rate Trend
6.75%
2019
7.00%
2020
12 mo avg with 10+ yr lease term (*Please Note Data Points Are Not Exact Figures*)
Average Sale Data & Lease Structure
Average Sale Price$1,250,000
Avg. Annual Rent$90,000
Average Price/SF$175/SF
Typical Lease TypeTriple Net
Typical Lease Term 15 Years
Typical Lease EscalationsNone
Credit Rating
S&PBBB Stable
Moody'sBaa2 Positive