Will Icahn’s Acquisition of Pep Boys Affect the Net Lease Market?
Activist investor Carl Icahn has won the bidding war for Pep Boys, beating out Bridgestone Corp. to claim the Philadelphia-based automotive aftermarket chain. The deal is valued at roughly $1 billion—a staggering number when compared to the $800 the Pep Boys founders initially invested in 1921.
The automotive aftermarket sector represents a significant portion of the net lease market, and it’s unclear how Icahn’s acquisition of Pep Boys could impact that market. According to the most recent Net Lease Market Report from The Boulder Group, a real estate investment services firm, these types of properties remain in high demand among investors because there are limited investment grade options priced below $2 million, other than dollar stores. Investors seek to acquire auto parts stores for residual value as they are typically constructed as vanilla boxes, which are easier to re-tenant in the event the tenant vacates.