While many retailers are going bankrupt, closing stores or canceling expansion, 7-Eleven [image-nocss] is aggressively growing and plans to add about 200 to 250 new stores nationwide this year, it said. The company is franchising its U.S. stores and is expanding through organic growth, acquisitions and its Business Conversion Program.
"7-Eleven is an investment-grade tenant in expansion mode during challenging economic times," said Dan Porter, vice president of real estate for the Dallas-based convenience retailer. "Our objective is to partner with property owners to determine how we both can succeed for the long term and survive these difficult market conditions through lease restructurings, lease renewal negotiations and new site development."
In an effort to align rent expense with current market rates, 7-Eleven has begun a formal review of all leased stores in its real estate portfolio. The company expects to enter into discussions with property owners to negotiate terms and restructure lease agreements where discrepancies between rental rates and current rent values exist.
"This is prudent business practice during these unusual economic times," said Porter. "Through our analysis, we believe we will discover solutions that will assist in getting our store rents in line with current conditions and allow us to develop new stores in our key markets."
Additionally, 7-Eleven's real-estate development team, which it said has tripled in size since 2006, is evaluating sites for new development opportunities with landlords who may be experiencing lease defaults or retail flight by their current tenants.
"7-Eleven is a bright spot amid the gloom of retail retrenching." said Porter. "We aren't just negotiating improved rental rates. 7-Eleven can fill the void at once-vibrant locations that are going vacant. The money we save by moving rents to market values will support our efforts to build new locations, and bring more jobs, taxes and commerce to communities."
The project will include analyzing fair-market values for 7-Eleven's retail sites and negotiating lease terms, when appropriate, in line with current commercial rental rates.
In an effort to align rent expense with current market rates, CBRE, on behalf of 7-Eleven, has begun a formal review of all leased stores in its real-estate portfolio. CBRE's team will be led by senior vice presidents Mike Friedman and Will Evans from the Dallas office. Friedman has worked with 7-Eleven for more than 20 years.
"This is prudent business practice for any retailer during these unusual economic times, particularly with the footprint that 7-Eleven has nationwide," said Friedman. "Through our analysis, we believe we will discover solutions that will assist 7-Eleven in reducing its overall operating expense."
Los Angeles-based CBRE is a leading commercial real-estate services firm that offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting.
7 Eleven operates, franchises or licenses approximately 7,800 7-Eleven stores in North America. Globally, it operates, franchises or licenses more than 36,000 stores in 15 countries. During 2008, 7-Eleven stores worldwide generated total sales of more than $53.7 billion.
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