O’Reilly Auto Parts and Advance Auto Parts sold the same products from similar boxes on the same corridors for decades, and both once cleared the investment grade threshold. Advance no longer does. O’Reilly carries BBB/Baa1 and continues to add stores. Advance fell below investment grade at S&P in 2023, has since been cut further to BB, closed about 500 stores and about 200 independent locations under a restructuring plan approved in November 2024, and in the listings we track its median asking cap rate is +125 bps versus O’Reilly’s. The two tenants have become a clear live lesson in what happens on each side of the BBB-/Baa3 cutoff.
This comparison works through both tenants the way the investment grade guide recommends underwriting any net lease credit: rating first, then lease structure, then the real estate itself. For a fallen angel like Advance, that order matters more than usual, because the lease structures can look similar on paper while the credit behind them has diverged sharply.
O’Reilly vs Advance Auto Parts: Head-to-Head Comparison
| Metric | O’Reilly Auto Parts | Advance Auto Parts |
|---|---|---|
| Parent Company | O’Reilly Automotive, Inc. (ORLY) | Advance Auto Parts, Inc. (AAP) |
| S&P / Moody’s Rating | BBB/Baa1 (S&P issuer rating; Moody’s senior notes rating) | BB |
| Stores | 6,541 in 48 U.S. states and Puerto Rico, plus 126 in Mexico and 28 in Canada (June 30, 2026) | 4,311, mainly in the U.S., plus locations in Canada, Puerto Rico and the U.S. Virgin Islands (July 18, 2026) |
| Median asking cap rate | 6.00% | 7.25% |
| Typical Lease Term | Varies; leases with unaffiliated landlords generally have an original term of at least 10 years (2025 10-K) | Varies; facility leases typically have an initial term of 5 to 10 years (2025 10-K) |
| Escalations | Varies; confirm in the lease | Varies; confirm in the lease |
| Guaranty | May carry a corporate guaranty; confirm the tenant and guarantor in the lease | May carry a corporate guaranty; confirm the tenant and guarantor in the lease |
| Building size | Median 7,120 SF across active listings we track (live); domestic stores average about 8,000 SF (2025 10-K) | Median 7,000 SF across active listings we track (live); locations, including hubs, average about 8,100 SF (2025 10-K) |
| Median asking price, active listings we track (live; not sale prices) | $1.82M | $1.40M |
Credit Rating: One Tenant Above the Line, One Below It
O’Reilly is an investment grade credit: S&P rates O’Reilly Automotive, Inc. BBB (issuer credit rating), and Moody’s rates its senior unsecured notes Baa1. The company serves both do-it-yourself customers and professional service providers, which it calls its dual market strategy, and it opened 207 net new stores in 2025 and plans 225 to 235 in 2026, according to its 2025 Form 10-K. Its full credit profile is on the O’Reilly Auto Parts credit rating and cap rate page.
Advance is a fallen angel. S&P cut it below the BBB- investment grade line in 2023 (BBB- as of July 15, 2023 and BB+ as of October 7, 2023, per its Form 10-Q filings), and further downgrades followed; it is now rated BB by S&P (Moody’s: no verified rating). In August 2024 Advance agreed to sell its Worldpac business to an affiliate of the Carlyle Group for $1.5 billion in cash. Its S&P rating remains below the line. The full risk picture is on the Advance Auto Parts credit rating and cap rate page, and both tenants sit in the credit tenant ratings database.
Rating sources. O’Reilly: S&P Global Ratings BBB, Stable, as of August 10, 2026; Moody’s Baa1, Stable, as of August 10, 2026. Ratings checked October 8, 2026. Advance: S&P Global Ratings BB, as of July 10, 2026. Ratings checked October 8, 2026.
| Rating Band | S&P / Moody’s | Where They Sit |
|---|---|---|
| Strong investment grade | BBB+ / Baa1 and above | O’Reilly senior notes at Moody’s: Baa1 |
| Investment grade | BBB / Baa2 | O’Reilly issuer rating at S&P: BBB |
| Investment grade cutoff | BBB- / Baa3 | The line that matters |
| High yield | BB+ / Ba1 and below | Advance Auto Parts: BB (below investment grade at S&P since 2023) |
The underwriting point: a downgrade below the cutoff does not change the terms of an existing lease, but it can affect who will buy the property from you, how lenders size a loan against it, and what exit cap rate to model.
Cap Rates: Asking Cap Rates on Active Listings
| Tenant | S&P / Moody’s | Median asking cap rate | Middle half of listings | Listings | Median vs. 10-year Treasury |
|---|---|---|---|---|---|
| AutoZone | BBB / Baa1 | 5.35% | 4.95% to 5.80% | 27 | +11 bps |
| O'Reilly Auto Parts | BBB / Baa1 | 6.00% | 5.50% to 6.50% | 27 | +76 bps |
| Advance Auto Parts | BB / n/a | 7.25% | 6.44% to 8.00% | 72 | +201 bps |
Active listings InvestmentGrade.com tracks with an asking cap rate (stated in the listing, or computed from its stated income and price when no rate is stated), listings last observed October 12, 2026. Asking cap rates are not closed-sale cap rates. The middle half is the range from the 25th to the 75th percentile of listings. The 10-year Treasury yield is 5.24% as of October 1, 2026 (FRED series DGS10). Ratings are the agency ratings in our ratings database for the entity shown, which may be a parent company; the rating type (for example issuer, senior unsecured debt, long-term debt or revenue bond ratings) varies by company and is shown on each tenant page. A rating applies to a lease only if the rated entity signs or guarantees it, so confirm the tenant and any guarantor in the lease. n/a means no verified rating is on file.
The table shows asking cap rates on active listings InvestmentGrade.com tracks, not closed sales. Within each tenant, asking cap rates can vary with remaining lease term, rent increases, location and property condition, so compare individual listings rather than relying on a tenant median.
In the listings we track, Advance’s median asking cap rate is +125 bps versus O’Reilly’s. As of October 8, 2026, the full ranges of asking cap rates on the two tenants’ active listings overlap, meaning some Advance listings ask lower cap rates than some O’Reilly listings. The listings are not matched pairs, so the overlap does not show how buyers weigh tenant credit against real estate quality. For Advance, the specific store’s sales, trade area and remaining term matter, because the company closed 522 stores in fiscal 2025.
Lease Structure: Similar Paper, Different Probabilities
Lease terms vary by deal: O’Reilly says its leases with unaffiliated landlords generally have an original term of at least 10 years with renewals at its option, and Advance says the initial term of its facility leases is typically five to ten years, with renewal options typically at five-year intervals (2025 Form 10-K filings). The boxes are similar in size: O’Reilly’s domestic stores average about 8,000 square feet and Advance’s locations about 8,100 square feet. Confirm the term, rent increases, and any guaranty in each lease. The similar businesses make credit differences useful to compare, but lease terms, location and property condition also affect pricing.
The difference is behavioral. O’Reilly’s total store count rose every year from 2016 to 2025, from 4,829 to 6,585, according to the ten-year data in its 2025 Form 10-K. Advance closed 522 stores in fiscal 2025, about 11% of the 4,788 it operated at the end of 2024, which shows how quickly lease decisions (renewal, assignment, or rejection in a downside scenario) can become live questions. In a bankruptcy, a rejected lease leaves the landlord with a damages claim that is capped under Section 502(b)(6) of the Bankruptcy Code (11 U.S.C. 502(b)(6)), so a buyer of Advance paper should underwrite the specific store’s sales, the corridor, and the re-leasing market rather than relying on any guaranty alone. See why parent company credit and lease obligor risk are separate questions on any guaranteed lease.
Real Estate: Growth Footprint vs Rationalized Footprint
O’Reilly’s 6,541 U.S. and Puerto Rico stores (June 30, 2026) span densely and less densely populated markets; the company says most of its stores are freestanding buildings or prominent end caps on or near major traffic thoroughfares, generally close to its professional service provider customers, and that they are destination stores rather than relying on traffic from neighboring retail (2025 Form 10-K). New store openings create new leases, but the remaining term on any offered property varies, so check it listing by listing.
Advance’s footprint shrank in fiscal 2025, when it opened 39 stores and closed 522, and has been roughly stable in 2026, with nine openings and three closures in the 28 weeks to July 18, 2026. Closing lower-volume stores may help the economics of the stores that remain, but a buyer still has to judge whether a specific store will stay open. If a store goes dark, re-leasing depends on the site, the corridor and local demand from other parts retailers, service users or other tenants, so assess re-leasing prospects for the specific property.
The Bond-to-NNN Pivot: Investment Grade Yield vs High Yield Spread
O’Reilly is an active investment grade bond issuer. In August 2026 it priced $1.6 billion of senior notes with coupons of 4.800% (due 2029), 5.050% (due 2031) and 5.550% (due 2037), according to its Form 8-K (event date August 10, 2026). Those coupons were set at issue and are not the notes’ current market yields. The median asking cap rate on active O’Reilly listings we track is 6.00% (listings observed through October 12, 2026). An asking cap rate is not a sale result, and it excludes financing, taxes and capital costs; the property owner also takes on property risk that a noteholder does not. An owner of the building can claim depreciation (IRC 167 and 168; land is not depreciable), a property held for investment or business use may qualify for a 1031 exchange if the exchange rules are met (IRC 1031), and the owner keeps any residual real estate value. The full comparison, with after-tax math, is on the O’Reilly Auto Parts bonds vs NNN page.
Advance’s debt is rated below investment grade; in August 2025 the company issued $1.95 billion of senior notes with coupons of 7.000% (due 2030) and 7.375% (due 2033), according to its 2025 Form 10-K. For Advance, the notes give exposure to the company’s credit without single-store risk, while a property owner holds real estate whose value, if the store closes, depends on the site and the re-leasing market.
Which NNN Investment Fits Your Goals in 2026?
Consider O’Reilly if you want investment grade auto parts credit (BBB/Baa1) and a growing store count, where the offered property has a suitable remaining lease term; underwrite each property and lease on its own. The median asking price of active O’Reilly listings we track is $1.82M; asking prices are not sale prices.
Consider Advance only if you are explicitly pricing high-yield credit risk and can underwrite the specific store. The right Advance property, a high-volume survivor on a dominant corridor bought at a cap rate that fully prices the credit, can outperform if the turnaround holds. But it is not a core investment grade holding, and it should not be priced or financed like one.
O’Reilly has stronger corporate credit, while either property still requires lease and real-estate underwriting. The pairing is a clear illustration of why the BBB-/Baa3 line is the line that matters.
O’Reilly vs Advance Auto Parts: Frequently Asked Questions
Is O’Reilly or Advance Auto Parts a better NNN investment?
Neither is better for every buyer. O’Reilly has the stronger corporate credit (BBB/Baa1, investment grade) and had 6,541 U.S. and Puerto Rico stores at June 30, 2026; the median asking cap rate on its active listings we track is 6.00%. Advance Auto Parts has been below investment grade at S&P since 2023 (currently BB), and the median asking cap rate on its active listings we track is 7.25%.
Either property still requires lease and real-estate underwriting, and Advance fits investors who are deliberately pricing high-yield credit risk.
Is Advance Auto Parts still investment grade?
No. S&P rates Advance Auto Parts, Inc. BB, below the BBB- investment grade cutoff; S&P first cut it below investment grade in 2023 (BB+ as of October 7, 2023, per its Form 10-Q). Moody’s: no verified rating. Status in our ratings database: not investment grade.
What credit rating does O’Reilly Auto Parts carry?
S&P rates O’Reilly Automotive, Inc. BBB (Stable) (issuer credit rating), and Moody’s rates its senior unsecured notes Baa1 (Stable). Status in our ratings database: investment grade. Sources: S&P Global Ratings BBB, Stable, as of August 10, 2026; Moody’s Baa1, Stable, as of August 10, 2026. Ratings checked October 8, 2026.
How do Advance Auto Parts and O’Reilly asking cap rates compare?
In the active listings we track, the median asking cap rate is 7.25% for Advance and 6.00% for O’Reilly. Asking cap rates reflect many factors, including tenant credit, remaining lease term, rent, location and property condition, and these listings are not matched pairs, so the gap cannot be attributed to credit alone.
S&P rates Advance BB, below investment grade, and the company closed about 500 stores and about 200 independent locations under a restructuring plan approved in November 2024, so store-level closure risk is part of underwriting any Advance property.
What happens to an NNN lease if Advance Auto Parts closes the store?
Where Advance or an Advance guarantor is obligated on the lease, closing a store does not by itself end the rent obligation. Rent on a closed (dark) store generally continues unless the lease ends under its own terms or by agreement, or is rejected in a bankruptcy (11 U.S.C. 365(a)).
Whether an assignment releases Advance depends on the lease; in a bankruptcy, assigning an assumed lease relieves the estate of liability for later breaches (11 U.S.C. 365(k)). Confirm the tenant entity and any guaranty in each lease, since a corporate guaranty is not shown on every listing we track.
A dark store may remain subject to rent obligations, but payment, recovery and renewal depend on the lease and tenant. Buyers should underwrite store-level sales and the corridor’s re-leasing market before acquiring any Advance property.
Weighing an investment grade tenant against a higher-yield fallen angel? Our team tracks asking cap rates, credit changes and live inventory across major NNN tenants. Request a buyer consultation and we will build a tenant-by-tenant comparison for your exchange timeline.
