Family Dollar is a chain of general merchandise discount stores. In 2015, Dollar Tree successfully acquired Family Dollar and together they operate 14,835 discount stores across 48 states and the District of Columbia. This united entity operates two banners, Dollar Tree, a true dollar store, offering all products for $1, while their other banner, Family Dollar, carries merchandise with a variety of price points, generally under $10.
A typical Family Dollar store’s inventory will vary depending on size, location, and merchandising initiatives but the products they carry can typically be broken down into four groups: consumables, home products, apparel and accessories, and seasonal and electronics. Consumable merchandise, which includes food, health and beauty aids, household chemicals, paper products, and other similar products, account for the largest percentage sales.
Net Lease Overview
Family Dollar has a strong corporate guarantee, investor friendly leases, and an attractive price point for investors.
Dollar Tree, Family Dollar’s parent company, recently received a credit rating upgrade by Moody’s and S&P. This upgrade puts Dollar Tree/Family Dollar at the ‘investment grade’ level.
Family Dollar had a mix of double net and triple net properties trade over the last 12 months, however, most of the newer properties have a 15-year, corporate-backed triple net lease. These new leases will also feature 10% rental increases, usually at the start of each option but some begin during lease year 11. These leases offer investors a long term and passive investment with a hedge against inflation.
Investors can expect to purchase Family Dollar assets at a price point below $2 million. Over the last 12 months, the average sales price for Family Dollar has been $1,534,000.
Family Dollar has been trading at a higher cap rate than its counterparts as well as the STNL average.