EZ Energy in Leaseback Deal

Up to 17 stations will convert to BP's ampm brand after sale to unnamed REIT

Greg Lindenberg, Editor, CSP

MANSFIELD, Ohio -- As reported in a CSP Daily News Flash earlier this week, EZ Energy USA Inc., a subsidiary of Israeli company EZ Energy Ltd., has signed a letter of intent to sell up to 17 gas stations and convenience stores in the United States to a real estate investment trust (REIT) for up to $20.7 million.

Mansfield, Ohio-based EZ Energy USA will lease back the properties in a 20-year contract, EZ Energy USA vice chairman Oren Zahavi told CSP Daily News. If the company sells all 17 properties, it will pay $1.85 million in annual rent.

Zahavi said that he could not disclose the name of the REIT because of a confidentiality agreement.

The properties were previously purchased from BP Products North America Inc. for $15.5 million, according to a report in Israeli newspaper Globes.

The locations will retain their BP branding, but they will be converted to the oil company's ampm identity, Zahavi said. BP is in the process of converting all of its c-stores to ampms, making it the company's national brand.

EZ Energy is in the process of acquiring an additional 14 sites from BP in the Atlanta market; that deal will be completed in early 2008, said Zahavi. The company currently operates a total of 25 locations.

Earlier this year, EZ Energy's deal to purchase Harper Oil Co. and its 26 On the Ways stores in Springfield, Ill., fell through for unspecified reasons. Zahavi said at the time the company is still very intent on carving a c-store network here in the United States. "We do believe in the long-term viability of the U.S. market, he said. We can give added value specifically by picking above-average locations that would be here even in times of recession."