Sunday, September 26, 2010

Cumberland Farms Offering 61 Net Leased Convenience Stores Along East Coast

Convenience Store News - September 21, 2010

Cumberland Farms Inc. will sell 61 convenience store properties through a structured sale process to be managed by Matrix Capital Markets Group Inc.

Cumberland Farms owns the real estate at these sites, and leases them to third party tenants through triple net lease agreements, under which the tenants operate independent convenience stores and other retail businesses, according to a release by Matrix.

Bids can be submitted for individual stores or for multiple stores, and offers are due Oct. 29, 2010, but Cumberland will consider accepting offers prior to the deadline.

While the stores are a steady source of income for Cumberland, owning the real estate at the 61 independently operated locations no longer fits with Cumberland's strategic growth plans, according to the release. Cumberland will use the capital from the sale to redeploy in other areas of their business.

The stores are located along the East Coast, and includes three stores in Connecticut; five in Delaware; 10 in Florida; 12 in Massachusetts, three 3 in New Hampshire; eight in New Jersey; 14 in New York, two in Pennsylvania; and four in Rhode Island.

Of the stores, 34 currently sell motor fuels, which are primarily unbranded. Cumberland currently supplies fuels to most of these locations, excluding stores in Florida. Going forward, buyers of the Cumberland-supplied sites are not required to purchase fuels from the company, and can choose their own fuel supplier after closing, according to Matrix.

In addition, 19 of the properties have additional retail space leased to other tenants such as restaurant franchisees, beauty care salons, and other businesses, under triple net lease agreements. The average building size is approximately 3,100 square feet, with the average convenience store size being approximately 2,200 square feet.

Matrix also noted the remaining lease durations for current tenants are short term, while others leases are 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. There are currently seven stores that can be operated by the buyer by the end of 2010, while an additional 17 stores can be operated by the purchaser in 2011.

Stores included in the sale provide income averaging approximately $3.21 million per year, and existing tenants are motivated to renew leases, according to the release. Cumberland has not pursued lease extensions with existing operators, as the assets are not long term strategic assets for the company, according to Matrix.

Matrix assembled an online data room containing site information, sales procedures and other relevant information. To gain access to the online area, a confidentiality agreement must be completed and returned by Matrix via fax at (804) 780-0191, or completed online at Sphere: Related Content

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