Best Buy TENANT OVERVIEW


Pros

  • Strong national brand
  • Owning Best Buy can provide yield in a "yield starved environment"

Cons

  • Downsizing stores nationwide
  • Increasing competition from online retailers
  • Recent leadership changes within company makes future less certain

Tenant Description

Best Buy Co., Inc. (NYSE: BBY) is an American public company that is a specialty retailer of consumer electronics in the United States, accounting for 19 percent of the market.

In 2012 Best Buy implemented their “Renew Blue” strategic plan. “Renew Blue” has led to an increase in net earnings from $532 million in 2014, to $1.23 billion in 2017. These financial results caused Standard & Poor’s Rating Service to upgrade Best Buy from a BB+ rating to BBB- with a Stable Outlook going forward.

Best Buy is an attractive net leased asset because of the locations of their stores, over 70% of the population lives within 15 minutes of a Best Buy Store. These large retail stores have strong potential as another Big-Box store if Best Buy were to vacate. The large generic interior layout would translate easily into any other large retail configuration.

Headquartered in Richfield, Minnesota, Best Buy also operates in Puerto Rico, Mexico, Canada and China. The company's subsidiaries include CinemaNow, Geek Squad, Magnolia Audio Video, Pacific Sales, and, in Canada operates under both the Best Buy and Future Shop label. Together these companies operate more than 1,500 stores, domestically and internationally with close to 125,000 employees. In addition, the company operates over 100 Best Buy Express Automated Retail stores or "ZoomShops", operated by Zoom Systems, in airports and malls around the US.

finviz dynamic chart for  BBY
Average Cap Rate
8.29%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $4,300,000
NOI $788,005
$/Square Foot $229
Building SF 30,000 - 56,000
Lot Size 4 - 5 Acres
Lease Term 10 - 20 Years
Escalations Varies
Stock Symbol BBY
Credit Rating
S&P BBB-
Moody's Baa1
Average Cap Rate Trend
7.25%
2015
8.17%
2016
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Mishawaka, IN 8.17%
Duluth, GA 7.25%