Cumberland Farms Inc. is selling 61 convenience store properties through a structured sale process to be managed by Matrix Capital Markets Group Inc.
Cumberland owns the real estate at all of the sites and leases them to third party tenants under triple net lease agreements. These tenants operate independent convenience stores and other retail businesses at the locations.
While the stores are a steady source of income for Cumberland, owning the real estate at these independently operated locations no longer fits with Cumberland’s strategic growth plans, it is looking to sell the assets to redeploy the capital in other areas of its business.
The stores are spread out in various markets along the East Coast. The offering includes three stores in Connecticut, five in Delaware, 10 in Florida, 12 in Massachusetts, three in New Hampshire, eight in New Jersey, 14 in New York, two in Pennsylvania, and four in Rhode Island.
Thirty-four of the stores currently sell motor fuels, primarily unbranded. Cumberland currently supplies fuels to most of these locations, excluding the stores in Florida. For those locations where Cumberland currently supplies fuels, the store operators are not required to purchase fuels from Cumberland going forward and can choose their own fuels supplier after closing. Nineteen of the properties have additional retail space leased to other tenants such as restaurant franchisees, beauty care salons, etc. under triple net lease agreements. The average building size is approximately 3,100 square feet, and the average convenience store size is approximately 2,200 square feet.
Several of the stores provide opportunities for buyers interested in operating the stores after closing since the remaining lease durations for the current tenants are all short term and several leases have already expired or may be terminated if the property is sold. The average remaining tenant lease duration for the stores is approximately 2.7 years including option periods for those sites where further options exist for the current tenant. There are currently seven stores that can be operated by the buyer by the end of 2010, and another 17 stores can be operated by the purchaser in 2011.
The stores also present excellent opportunities for real estate investors or fuel distributors seeking to purchase the real estate and continue to collect rent from current and future tenants and potentially supply fuel to the locations. The stores have provided stable annual rent income averaging approximately $3,215,000 per year, and the existing tenants are motivated to renew their leases as they have a significant investment in their current businesses at the locations. Cumberland has not pursued lease extensions with existing operators for some time due to the fact that these assets are not long term strategic assets for the company. The short lease durations provide flexibility for the
new owners.
This sale process allows buyers of all types to participate as bids can be submitted for individual stores or for multiple stores. Offers on the stores are due on Oct. 29, 2010, but Cumberland will consider accepting offers prior to the deadline.
Matrix has assembled an online data room containing all of the information required to evaluate a potential purchase of these properties including pictures and maps of all the stores, sales procedures, store level profit and loss statements related to Cumberland’s ownership of these properties, tenant leases, UST documents, and other relevant information. To receive access to the online data room and for more information on the stores and the sale process, visit Matrix’s Web site: http://www.matrixenergyandretail.com/sale_details.php?sale=52 or contact Vance Saunders or Sean Dooley (804) 591-2037 or (410) 752-3833 ext. 4.
