6s Capital - State of the Business


6s Capital - State of the Business

Last Update: 19 March 2021

Table of Contents

Summary

Credit Tenant Leases


Summary

Aggregate Debt Currently Outstanding

Issuer / Tenant DAI Debt
(MM)
Traditional Debt
(MM)
Grand Total
(MM)
O’Reilly Auto Parts 0 2.44 2.44
Service King 0 3.77 3.77
Wawa 0 9.15 9.15
Total 0 15.36 15.36

Credit Tenant Leases:

Average Time Capital is Deployed from Start to Finish:

Issuer / Tenant Months
O’Reilly Auto Parts 8
Service King 10
Wawa 24

Completed Projects Pending PSA to Divest:

Developer Issuer / Tenant Locations
DevCo1 Wawa 1

Completed Projects Under PSA to Divest:

Developer Issuer / Tenant Locations
DevCo1 Wawa 1

Deal Pipeline for New Construction (subject to change):

Issuer / Tenant
Locations
Estimated Debt Needed
(MM)
O’Reilly Auto Parts 7 $9.45
Service King 2 $5.18
Wawa 1 $3.50
Grand Total 10 $18.13

Deal Pipeline for Refinance / Stabilized Inventory (subject to change):

Issuer / Tenant
Locations
Estimated Debt Needed
(MM)
Grand Total 0 0

Projects Under Construction:

Developer Issuer / Tenant Locations
DevCo1 O’Reilly Auto Parts 2
DevCo1 Service King 1

Issuers / Tenants:

O’Reilly Auto Parts

Founded in 1957, O’Reilly Automotive Inc (NYSE: ORLY) is one of the largest automotive parts retailers in the United States. They serve both the ““do-it-yourself”” customers as well as professional service providers. O’Reilly’s currently has more than 5,500 stores in 47 states, growing by nearly 200 locations annually. Finishing out 2019 with sales reaching $10.15 billion, O’Reilly’s revenues were higher than any year previous in the company’s 60+ year history.

Auto parts store locations continue to be in high demand within the net lease space as there are very few investment grade options that are priced below $2MM. The retail auto parts industry continues to thrive as vehicles on the road remain resilient and “do-it-yourself” car repair is relied upon during a recession.

6s’ Narrative & Risk Assessment:

  • Business model is COVID-19 resistant / recession resistant / Amazon resistant.
  • Risk Assessment: Low

Earnings Highlights:

  • Q2 2020 comparable store sales increase of 16.2%, total sales growth of 19.4%
  • 57% increase in Q2 2020 diluted earnings per share
  • Q2 2020 Net cash provided by operating activities increased $712 million or 84%

Data:

Service King

Founded in 1976, Service King Collision Repair has grown to be one the largest automotive collision repair centers in Texas as well as the US. Service King currently operates in 24 states with 345 locations. Service King currently employs more than 6,000 staff and continues to grow at every level of the organization.

6s’ Narrative & Risk Assessment:

  • Business model is COVID-19 resistant / recession resistant / Amazon resistant.
  • Business model is an operational proxy of auto insurance companies.
  • Risk Assessment: Medium

Data:

  • Market Exit Cap-Rate Average: ~6.25%
  • Credit Rating: Implied shadow rating of B
  • Website: http://www.serviceking.com
  • Ownership: Acquired by Blackstone in 2014

Wawa

Founded in 1803, Wawa’s business model has morphed from the manufacturing and textile business to a full-service foodservice and automotive fuel business. With a large selection of fresh food and beverages, including their own Wawa-branded options, Wawa’s revenue primarily consists of fuel and merchandise sales. As a part of the Forbes Top 25 largest private companies in the United States, Wawa’s 2019 sales for the year totaled $13 billion. In 2019, Wawa had an average of $6MM of revenue per store across their ~900 locations. In addition, total company fuel sales of 2.9 billion gallons were more than doubled the industry standard from the year prior.

6s’ Narrative & Risk Assessment:

  • Business model is COVID-19 resistant / recession resistant / Amazon resistant.
  • Risk Assessment: Low

Data:

  • Market Exit Cap-Rate Average: ~4.73%
  • Credit Rating: Fitch BBB with a stable outlook
  • Website: http://www.wawa.com

Updates:

19 March 2021

6s closed on a deal (O’Reilly as tenant), and borrowed ~1.2MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

18 March 2021

6s has re-financed an existing loan with a new lender (Wawa as tenant).

03 March 2021

6s has entered into a PSA to divest a project (Wawa as tenant).

31 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor (a publicly traded REIT), with an expected exit cap rate.

22 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor (a publicly traded REIT), with an expected exit cap rate. 6s has also been granted a $10MM guidance line with an FDIC-regulated bank.

18 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor, with an expected exit cap rate.

10 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor, with an expected exit cap rate.

02 December 2020

6s has entered into a PSA to divest a project (while the project is still under construction, O’Reilly as tenant).

01 December 2020

Updated our forward guidance for upcoming transactions. 6s has entered into a PSA to divest a project (while the project is still under construction, Service King as tenant). One of the projects under construction should receive its C.O. next week.

09 November 2020

6s closed on a deal (O’Reilly as tenant), and borrowed ~1.25MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

19 October 2020

6s closed on a deal (Service King as tenant), repaid the senior loan, and sold the project to an investor (~5.4MM), with an expected exit cap rate.

09 October 2020

6s has entered into a multi-project PSA to divest four projects (1-Completed & 3-Under Construction).

25 September 2020

6s closed on a deal (Service King as tenant), repaid the senior loan, and sold the project to an investor (~4.9MM), with an expected exit cap rate.

Also 25 Sept 2020, 6s closed on a deal (Service King as tenant) and borrowed ~3.8MM from a bank. Construction for this new project starts on Monday. Project duration is targeted for ~10 months.


Disclaimer: All information contained herein is unaudited and for informational purposes only. Copyright © 2020-2021. All rights reserved.

19 Likes

Matt congrats on closing the O’Reilly deal.

Just a few questions here:

  1. I been meaning to ask–what is the meaning of the acronym “PSA”?
  2. The portfolio of 6s Capital will be limited to Wawa, Service King, and O’Reilly Auto Parts?
  3. Is there a public website that we can access to see Commercial RE deal flow? (not sure if such is public information)
  4. If the recent Pfizer news of a vaccine for the current pandemic comes into fruition and we get more clarity of the overall economy, how much more business will 6s Capital gain in 2021? Or, the pace/forecast will remain the same?
1 Like

Purchase Sale Agreement

Definitely No. Those are just the ones on deck right now.

For 6s, the pipeline private, per se, until the deals are basically certain. If too much information is in the public realm, then deals fall apart.

For the market in general, loopnet.com is a decent place for real-estate in general.

The forecast will absolutely expand. The constraint will be ensuring enough equity is raised at LendCo (and of course the debt ceiling).

2 Likes

Very good news. Hope Maker can get 6s Capital over the line by the end of the year.

1 Like

01 December 2020

Updated our forward guidance for upcoming transactions. 6s has entered into a PSA to divest a project (while the project is still under construction, Service King as tenant). One of the projects under construction should receive its C.O. next week.

6 Likes

10 December 2020
6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor, with an expected exit cap rate.

9 Likes

18 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor, with an expected exit cap rate.

4 Likes

Can you provide the community more colour on what is the difference between the December 10, and December 18 transactions? Were they in the same location/region, same value amount, was it a construction loan, etc.

If possible.

1 Like

two different locations. both were new construction developments. different locations. expected cap rate

1 Like

22 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor (publicly traded REIT), with an expected exit cap rate. 6s has also been granted a $10MM guidance line with an FDIC-regulated bank.

5 Likes

31 December 2020

6s closed on a deal (O’Reilly as tenant), repaid the senior loan, and sold the project to an investor (publicly traded REIT), with an expected exit cap rate.

Happy new year!

4 Likes

No holiday time for 6s capital! Well done!!

4 Likes

03 March 2021

6s has entered into a PSA to divest a project (Wawa as tenant).

3 Likes

18 March 2021

6s has re-financed an existing loan with a new lender (Wawa as tenant).

8 Likes

19 March 2021

6s closed on a deal (O’Reilly as tenant), and borrowed ~1.2MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

4 Likes