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Monday, June 4, 2012

Is Now the Right Time to Sell Your Store?

Source: CSP Daily News
By Steve Holtz

CHICAGO -- With the majority of major-oil retail selloffs generally complete, real-estate and financial advisors in the convenience store industry see a new phase of merger and acquisition activity nearing.

"The next phase for the industry is going to be further consolidation within the jobber network," John Sartory, managing director and principal of Petroleum Capital & Real Estate LLC, West Friendship, Md., told CSP Daily News recently. "If you're a small to midsized jobber or somebody that is looking to exit from the industry and you're waiting for the right time, now would be the time to do it."

Sartory said his outlook is driven by both the wrap up of the major-oil selloffs and trends within the financial market.

"All of the major-oil activity is over, so probably you can get a lot more attention, if you've got a smaller package, from the bigger players than you would have while they were bidding on the Exxon or Shell assets," he said. "Secondly, the credit market is still tight ... but it is better [than it has been] and interest rates are low."

Sartory said funding is available for those who want to buy but conditional. "You've got to be preapproved, and you've got to come up with a structure of private equity or a decent down payment. [With that], people that are large enough can acquire other sites."

And what kind of assets can potential buyers expect to find?

"If you were, say, a jobbership and you have no heir apparent and you maybe have 30 or 40 sites and maybe you're doing less than 50 million gallons, I think now would be the time to consider selling," Sartory said.

Dennis Ruben, executive managing director of NRC Realty & Capital Advisors, Chicago, generally agreed with Sartory.

"Retailers who are relatively small are feeling the competitive pressures that they cannot compete with the big players," he told CSP Daily News. "And I believe that somebody that's got 25 to 75 sites, ? you probably have to sell. There are exceptions to the rule, but ? I think you're going to see a lot of people say, 'I don't know how I can compete with The Pantrys of the world or the Casey's'."

Ruben also anticipates many of those retailers who bought the major-oil assets--those sold off over the past five years by BP, ExxonMobil and ConocoPhillips, among others--will enter a new phase of their business strategies.

"Some of those who bought from the o