O’Reilly Auto Parts shares the top auto parts credit ratings with AutoZone (BBB/Baa1) and currently offers one of the clearer bond-to-NNN premiums in the sector. In August 2026 O’Reilly priced $500 million of 5.050% senior notes due 2031 to yield 5.055%, about 95 basis points below the median asking cap rate of about 6.0% on the active O’Reilly NNN listings we track (middle half 5.4% to 6.5%, as of October 2, 2026). Bond yields have risen since: the ICE BofA BBB US Corporate Index effective yield climbed from 5.60% on August 10 to 6.19% on October 1, 2026 (FRED). If the notes moved with the index, they would yield roughly 5.65% today, leaving a premium of roughly 35 basis points at the median. The lease is backed by the same company when O’Reilly Automotive, Inc. is the tenant or guarantor.
For the full multi-company spread comparison, see the bond-to-NNN spread analysis. For the complete O’Reilly tenant analysis, see the O’Reilly Auto Parts Credit Rating and NNN Cap Rate page.
O’Reilly Credit Profile
| Metric | Details |
|---|---|
| S&P Rating / Outlook | BBB |
| Moody’s Rating / Outlook | Baa1 |
| Investment Grade Status | Investment Grade |
| Ticker | NASDAQ: ORLY |
| US Store Count | 6,541 incl. Puerto Rico (June 30, 2026) |
| Annual Sales | $17.78 billion (2025) |
The Spread: O’Reilly Bonds vs. NNN
| Metric | ORLY Corporate Bond | ORLY NNN Property |
|---|---|---|
| Yield / Cap Rate | 5.06% at pricing (Aug. 10, 2026); roughly 5.65% if it tracked the BBB index to Oct. 1, 2026 | ~6.0% median asking (5.4% to 6.5% middle half) |
| Nominal Spread vs. Bond | Baseline | About +95 bps vs. the yield at pricing; roughly +35 bps vs. the index-adjusted estimate (about -20 to +85 bps across the middle half) |
| Minimum Investment | $2,000 face minimum, then $1,000 increments, per the notes’ prospectus supplement (bought through a broker) | $1.39M to $2.45M (middle half of asking prices) |
| Liquidity | Tradable on business days through a broker; individual issues can trade thinly | Often weeks to months to market and close |
| Income Taxation | Ordinary income (up to ~45.8% combined in our model) | Partly sheltered by building depreciation when the investor owns the building (land is not depreciable) |
| 1031 Exchange Eligible | No | Yes |
| Depreciation Deduction | None | 39-year straight line on the building, plus cost segregation; none on a ground lease |
| Appreciation Potential | Returns par at maturity | Real estate value can rise or fall |
| Typical Lease Structure | N/A (debt instrument) | Net lease; O’Reilly’s 10-K says leases with unaffiliated landlords generally have an original term of at least 10 years; confirm term, tenant entity and guaranty |
Bond yield at pricing for O’Reilly’s 5.050% senior notes due 2031 (August 10, 2026) is from O’Reilly’s SEC filings. The index-adjusted estimate adds the 0.59 percentage point rise in the ICE BofA BBB US Corporate Index effective yield from August 10 to October 1, 2026 (FRED); it is an estimate, not a quote, and secondary market yields change daily. NNN cap rates and prices are asking figures across active O’Reilly listings tracked by InvestmentGrade.com as of October 2, 2026. The ~45.8% combined rate assumes the 37% top federal rate (IRC Section 1(j)), the 3.8% net investment income tax (IRC Section 1411), and about 5% state tax. Tax rows are general information, not advice: nonresidential buildings are depreciated straight line over 39 years (IRC Section 168(b)(3) and (c)), land is not depreciable (Treas. Reg. 1.167(a)-2), straight-line depreciation taken on the building is generally taxed at up to 25% on a taxable sale (IRC Section 1(h)(1)(E)), depreciation on components reclassified as personal property through cost segregation can be recaptured as ordinary income on a taxable sale (IRC Section 1245(a)), and only real property held for business or investment qualifies for a 1031 exchange (IRC Section 1031(a)(1)). This is not investment advice.
Why Auto Parts Offers a Compelling Spread
O’Reilly carries BBB/Baa1 ratings, and its bonds price accordingly: the August 2026 five-year notes came at 65 basis points over Treasuries, a 5.055% yield. Its NNN properties list at a median asking cap rate near 6.0%. Corporate yields have risen since the notes priced, which has narrowed that premium to an estimated 35 basis points or so at the median.
The premium reflects what a bondholder does not take on: a single store’s location, the cost of re-leasing if that store closes, a sale process that can take weeks to months, and property-level due diligence. The median O’Reilly listing we track is about 7,200 square feet of building on about 0.84 acres (October 2, 2026). A bondholder, by contrast, holds a claim on a company with $17.78 billion of 2025 sales and 33 consecutive years of comparable store sales growth through 2025.
For investors who see O’Reilly’s business as internet-resistant (customers often need parts immediately and value in-person expertise), the NNN premium represents extra income on a credit the bond market already prices as solid investment grade, in exchange for real estate risks the investor can underwrite site by site.
O’Reilly vs. AutoZone: The Auto Parts Spread Comparison
O’Reilly and AutoZone are the two highest-rated auto parts NNN tenants, with the same S&P and Moody’s ratings. Their recent five-year bonds priced within about 10 basis points of each other (O’Reilly 5.055% in August 2026; AutoZone 4.971% in July 2026), and if both had tracked the ICE BofA BBB index to October 1, 2026, they would yield roughly 5.65% (O’Reilly) and 5.72% (AutoZone) (FRED), an estimate rather than a quote. The difference is in the NNN market: AutoZone’s median asking cap rate in our tracked listings is about 5.5% versus about 6.0% for O’Reilly (October 2, 2026). More AutoZone listings are ground leases, but the gap is the same on listings identified as not being ground leases (5.5% versus 6.0%). That gives O’Reilly the wider bond-to-NNN premium today, roughly +35 basis points at the median versus roughly -20 for AutoZone on index-adjusted yields.
O’Reilly’s 5.050% notes due 2031 priced to yield 5.055% in August 2026, about 95 basis points below the median asking cap rate of about 6.0% on the active O’Reilly listings we track (October 2026). Corporate yields have risen since: if the notes tracked the ICE BofA BBB index, they would yield roughly 5.65% today, leaving a premium of roughly 35 basis points at the median. After tax, a fee simple owner can shelter part of the income with building depreciation, while bond interest is fully taxable; a ground lease owner gets no building depreciation.
Auto parts demand is driven largely by repair needs. When a car breaks down, the owner often needs the part the same day, not in two days via shipping. O’Reilly’s network of 6,695 stores (June 30, 2026) provides same-day, in-person access to parts plus services such as loaner tools and knowledgeable counter staff that e-commerce does not easily replicate. This demand pattern supports both the bond credit and the durability of its leases.
O’Reilly’s 10-K says its leases with unaffiliated landlords generally have an original term of at least 10 years, with renewals at O’Reilly’s option, and provide for a fixed base rent and tenant payment of certain taxes, insurance, and maintenance. The bond is a senior unsecured obligation of O’Reilly Automotive, Inc. The underlying credit is the same company only when O’Reilly Automotive, Inc. is the tenant or guarantor, and the claims differ: a bondholder is an unsecured creditor for the full principal, while a landlord owns the real estate but has a claim for future rent after a lease rejection in bankruptcy that is capped under Section 502(b)(6) of the Bankruptcy Code.
1031 Buyer Shortcut: O’Reilly as an Investment Grade Yield Alternative
O’Reilly can sit in the 1031 short list when a buyer wants stronger auto-parts credit without paying McDonald’s-style trophy pricing. Before identifying a deal, compare the actual lease obligor and guarantor, store-level residual value, and lease term against the 1031 tenant-selection framework.
Benchmark next: 2026 NNN cap rates | AutoZone bonds vs NNN | NAPA / Genuine Parts bonds vs NNN
Considering O’Reilly NNN?
We source O’Reilly Auto Parts NNN properties nationally. On the majority of transactions, there is no separate fee to you as the buyer.
Find It: O’Reilly NNN with long lease terms, with the tenant entity and any guaranty confirmed.
Fund It: BBB/Baa1 credit can support competitive NNN financing terms.
Exit It: buyers for O’Reilly NNN properties, including 1031 exchange buyers.
Exchange It: 1031 exchange into O’Reilly NNN with deadline-driven execution.
Benchmark O’Reilly Before Paying for the Credit
O’Reilly NNN buyers are paying for an investment grade BBB/Baa1 auto parts credit, but the right price still depends on cap rate, lease term, rent level, and replacement-market depth. Compare any O’Reilly offering against current 2026 NNN cap rates by tenant credit quality, then use the 1031 tenant-selection framework to separate enterprise credit strength from store-level residual value.
Next reads: O’Reilly credit rating and NNN cap rate | AutoZone bonds vs. NNN | NAPA / Genuine Parts bonds vs. NNN | investment grade tenant ratings
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