General Energy Selling Portfolio

Puts 67 retail sites worth $49 million in nine states on the block

Greg Lindenberg, Editor, CSP

DAVIE, Fla. -- General Energy Corp. recently put its portfolio of 67 gas stations up for sale, CSP Daily News has learned. The $49 million portfolio is broken down into seven smaller subportfolios based on the properties' locations on distribution routes. They include 15 locations in Florida, 14 locations in Georgia, 10 locations in Tennessee, three locations in Virginia, 10 locations in Minnesota and Wisconsin, seven locations in Ohio and eight locations in Pennsylvania and West Virginia.

Davie, Fla.-based General Energy has retained Marcus & Millichap Real [image-nocss] Estate Investment Services to sell the portfolio. Adam Kristol, a Fort Lauderdale, Fla.-based associate with the National Office & Industrial Properties Group of Marcus & Millichap and Ronnie Issenberg, a retail and land specialist in the Miami office of Marcus & Millichap, are representing the seller. "General Energy has hired us to dispose of its entire portfolio of service stations, about half of which are currently operating. The portfolio presents a dealer or distributor with the unique opportunity to acquire service stations with distribution and licensing already in place," said Issenberg.

"The General Energy [properties] are still on the market because it is being offered in whole or in part. We have been negotiating several contracts of sale with different buyers. So significant portions of it are hard, some are going hard shortly and the rest are still being marketed," Kristol told CSP Daily News. The sale "has been ongoing since the end of 2008 and really ramped up in January," he added. "It is probably about a third sold now."

General Energy is primarily a developer of retail strip malls and single-tenant properties, Kristol said. Hector Vinas, the principal of the company, began buying gas station and convenience store properties about 10 years ago and became a jobber. Over time, he acquired nearly 100 sites, and "the market changed dramaticallymargins slipped, cost for dealers skyrocketed and ultimately the market crashed. The company not having the necessary infrastructure or desire to manage the growth of the fuel sales side of the business, which requires real hands-on participation, and a coordinated sales effort to increase supply, they decided to move out of the business.... They don't have the arms and legs out there to carefully manage a difficult, cash-oriented business."

He added, "They could put their capital to work more productively elsewhere."

The regulatory climate in Florida is also a factor in Generl Energy's decision to sell the sites, said Kristol. As previously reported in CSP Daily News, hundreds of gas stations around the state may be forced to shutdown because of new insurance and environmental regulations that require them to have a double-walled underground gasoline storage tank by the end of the year for groundwater and water table protection. Even though the new tank deadline is not until Dec. 31, 2009, insurers have already begun cutting off station owners who will not or cannot upgrade to the new tanks, which can cost up to $400,000. (Click here for previous coverage.)

In Kristol's estimation, as many as one in eight of the state's stations will close or cease pumping gasoline by the end of the year because of this situation. "The number of stations requiring tank replacement is extraordinary," he said. Florida has between 8,000 and 9,000 retail gasoline outlets, with approximately 50,000 USTs.