TUCSON, Ariz. -- One of the many ways convenience-store operators create deals or reinvigorate their chains is though the help of REITs, or real-estate investment trusts, which are involved in many sale-leaseback deals that have transpired in recent years.
Earlier this month, American Realty Capital Properties (ARCP), New York, purchased 24 gas stations and c-stores from Reay's Ranch Investors, Tucson, Ariz., for almost $40 million. The deal involved Western Refining Inc., El Paso, Texas, which will lease the properties and manage the stores under its Giant brand.
ARCP leased an additional seven locations to Western Refining for a total of 31 new locations for their company to operate.
In its upcoming March cover story, CSP magazine investigates the buy-sell frenzy currently surging through the channel, with an examination of the major players including traditional consolidators, master-limited partnerships (MLPs) and even midsized players looking to get larger.
While not necessarily influencing the management or vision of the c-store retail offer, REITs like ARCP are playing a larger role in providing the capital and liquidity necessary for chains to grow.
"REITs are basically lenders who buy property and lease it back to the operators," said Denny Ruben, executive managing director, NRC Realty & Capital Advisors, Scottsdale, Ariz. "They have a preference of operator, based on the strength of the lease, which includes the management team and cash flow to cover rent."
Some of the major reasons operators use REITs include refinancing existing debt, to help fund acquisitions or to build more stores.
Recalling an acquisition in Florida, Ruben told CSP Daily News that buyers built the future sale (to a REIT) of the property it was bidding on into the purchase, effectively using REIT funds to help finance the deal.
A REIT like Getty Realty Corp., Jericho, N.Y., is exclusively into c-stores, while other companies such as National Retail Properties, Orlando, Fla., Spirit Realty Capital, Scottsdale, Ariz., and Realty Income Corp., Escondido, Calif., are players in the channel but are more diversified.
ARCP is a self-managed commercial REIT focused on investing in single-tenant, freestanding commercial properties, the company said.
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