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7-Eleven Fast Tracking North Carolina

Revisiting Tar Heel State as deal for 12 stores adds to 55-unit Sam's Mart acquisition

WILKESBORO, N.C. -- 7-Eleven Inc.--continuing its re-entry into North Carolina begun earlier this year with the acquisition of 55 Sam's Mart convenience stores in the greater Charlotte market--is acquiring 12 Fast Track c-stores in the Tar Heel State from FAW Cos.

The news comes as a franchisee has put a portfolio of 11 7-Eleven leases up for sale in Michigan for an asking price of approximately $18.9 million, a Raymond James/CSP Daily News Flash reported on Tuesday.

And as reported in a second news flash on Tuesday, 7-Eleven confirmed the Fast Track deal, which has not yet officially been announced. Spokesperson Margaret Chabris told CSP Daily News that the acquisition would be announced this week.

The companies are not disclosing the terms of the deal. FAW executives did not respond to a request for comment by press time.

7-Eleven will rebrand the stores from December through early February, according to a report in The Winston Salem-Journal.

The stores are located in Clemmons, Kernersville, Lewisville and Winston-Salem, said the report.

The chain opened its first stores in North Carolina in the mid-1960s, but left the state in 1988 when it exited several markets nationwide as part of a leveraged buyout, Scott Drake, 7-Eleven's vice president of finance and communications, told the newspaper. "We re-entered the North Carolina area after a long absence earlier this year when we acquired 55 Sam's Mart locations."

He indicated that expansion in the state would continue. "Once we have re-entered a market, we will continue to look for opportunities to both grow our presence and to also locate local entrepreneurs who have an interest in becoming franchisees for us," Drake said.

Wilkesboro, N.C.-based FAW, dba Fast Track Convenience Stores, is a chain of 27 c-stores operating in the Piedmont and Foothill sections of North Carolina. WISCO Diversified Management Co. is the managing company for the stores.

Separately, an undisclosed private partnership is selling a single-tenant, corporate ground lease portfolio of 11 Michigan 7-Eleven locations, listed at $18.9 million.

The assets are strategically located in desirable markets throughout Michigan, some of which show high-income demographics and 20% to 40% population growth in recent years.

The stores are located in Howell (2,485 square feet); Shelby Township (3,430 square feet); Macomb (3,470 square feet); Chesterfield (3,000 square feet); Romulus (4,138 square feet); Romulus (2,900 square feet); Warren (2,424 square feet); Warren (2,174 square feet); Clinton Township (3,000 square feet); Lenox Township (3,215 square feet); and Shelby Township (2,915 square feet).

The properties are primarily hard-corner or main-on-main intersections, with dominant exposure to state-recognized thoroughfares and intersections. Each site has the added functionality of onsite fuel dispensers for increased drive-up traffic and revenue draw, coupled with the "cachet of the 7-Eleven brand," said real-estate investment services firm Marcus & Millichap Real Estate Investment Services, which is representing the seller.

"This is a rare opportunity to purchase a 100% occupied portfolio of 11 recently built stores with corporate-backed simple ground leases, all delivered free and clear and all located in high-traffic, high-exposure locations within densely populated areas. The leases all carry a rating of AA- from Standard & Poor's, and with 10% rent increases every five years--except for one lease that has 12.5% increases--plus option periods, this portfolio represents a conservative and reliable revenue stream," Simon Jonna of Marcus & Millichap said.

"These individual locations were stringently hand-picked for performance and viable operational histories. The occupying tenant, 7-Eleven, is on record with one of the highest lease renewal rates in the industry," said Marcus & Millichap's Raymond Jonna.

Simon Jonna added, "This offering combines the security of quality freestanding prototypical real-estate with long-term growth potential via its ground lease, the most secure form of ownership today."

The store leases range from four to 10 years and nearly all the sites were built between 1998-2003, besides one Warren store built in 1968, added a report by The Detroit News.

Dallas-based 7-Eleven operates, franchises or licenses more than 9,400 7-Eleven stores in North America. Globally, there are some 48,100 7-Eleven stores in 16 countries. During 2011, 7-Eleven stores worldwide generated total sales close to $76.6 billion.

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