Tenant Description
Dollar General is one of the largest and fastest-growing dollar store chains in the United States, offering deep discounts on a wide array of products. From a net lease perspective, Dollar General is appealing due to its low price points, consistent sales record, and aggressive corporate expansion strategy in a growing market segment. The company’s extensive network and strong brand recognition make it a stable and attractive tenant for net lease investors.
Attractive Lease Structures and Property Features
Dollar General's new store model typically spans approximately 9,100 square feet on one acre of land, accommodating a minimum of 30 parking spaces. These properties are strategically located along retail corridors with high visibility and full ingress/egress, ensuring good traffic flow and accessibility. The higher cap rates and lower price points associated with Dollar General net lease properties result in a larger pool of qualified buyers, enhancing liquidity and investment appeal.
All Dollar General net leases come with a corporate guarantee, adding an extra layer of security for investors. Newly built Dollar General properties generally feature triple net (NNN) leases with initial terms of 15 years. These leases often include 10% rent bumps every five years and in option periods, making them highly sought-after for passive investment, especially for out-of-state investors. Many of the new stores are subject to build-to-suit arrangements, ensuring that the properties meet specific operational needs from the outset.
Older Dollar General stores typically feature double net (NN) leases, where the landlord is responsible for the roof and structure, often resulting in higher cap rates. These properties may have shorter lease terms, usually around 10 years, but still offer strong investment potential due to the established presence of Dollar General in these locations.
Strong Corporate Backing and Market Presence
Dollar General, founded in 1939 by J.L. Turner in Kentucky, is a publicly traded company with a long history of growth and profitability. The chain offers a broad selection of merchandise, including consumables, seasonal items, home products, and apparel, catering to a wide customer base. The stores are designed with a low-cost, no-frills approach, featuring limited maintenance capital, low operating costs, and a focused merchandise offering across a broad range of categories.
A significant advantage of investing in Dollar General properties is their location strategy. Approximately 70% of the stores are situated in towns with populations of 20,000 or fewer, ensuring a strong local customer base and reduced competition from larger retail chains. This focus on smaller markets has been a key driver of Dollar General’s sustained growth and market penetration.
