50% Interest in Philadelphia Gas Staion for Sale

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50% Interest in Philadelphia Gas Staion for Sale

Bart Sklar
Investor · Cherry Hill, NJ · Member since 2015 · 45 posts · 1 vote

Hi,

I have inherited a 50% share of a gas station worth 2m. in Philly.

Does anyone have any ideas how I could use that to obtain financing for my buy and hold business.

Thanks

Bart

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Danny N.
FLL · Member since 2016 · 98 posts · 20 votes
9y

Look your gas station for $2M no offense is a bad deal at best you're talking a 3% NNN cap rate. I own alot of gas stations, I have one where the tenant pays me $12,300/mo in rent and I have it listed for $2.75M and thats double the rent you have and in a high traffic area of 50,000 CPD. You're selling just the property right, not the business?

Either way even at a high 5% cap rate your stake is more like $630k and realistically being in that business myself I'd say your stake is worth more like $400-500k. I own some really big stores, the kind of store you're talking about isn't even a large store from the price you're mentioning.

Im assuming under 2 acres and under 5000 sq ft store? Business wise I assume the guy doesn't even sell 100k gallons a month at that price? Under $100k/mo grocery sales?

Sunoco isn't one of the brands people want when buying stores: shell,exxon,chevron are what the big buyers want, I own multiple shell myself and I wouldn't touch a sunoco,valero,7-11, etc

Best of luck but the cap rates your mentioning just dont work with a gas station. 3% is more like a walgreens in a super prime location, not a sunoco gas station

Why not just have the tenant arrange the financing since he knows what the business is worth, surely he would pay more than anyone else. I've owner financed to tenants in the past when sales weren't probably, you get a higher interest rate and they're willing to pay more + you have a history together. I think that may be your best option. You really can't value 20 years of rent the way you are bc in 20 years $2,650 will be peanuts, its already not much today, the time value of money has to be discounted drastically when doing future valuations.

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  • Joseph King
    Louisville, KY · Member since 2015 · 209 posts · 58 votes
    10y

    Can you not simply just sell your shares? Or do you want to keep. 

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    You can sell your shares as there are liquidation companies but they will not give full value. Also there are loans out there where you might could access part of your equity to pull out for investing etc.

    If you no longer want to own the property then you could sell out to the other shareholder already in place. They would likely give the most for it versus an outsider looking in. Partial ownership is tough because you do not likely have total control of the asset in your situation. 

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  • Bart Sklar
    OP
    Investor · Cherry Hill, NJ · Member since 2015 · 45 posts · 1 vote
    10y

    Thanks Guys,

    Good information. Do you know of any liquidation companies or individuals who would be interested? The gas station pays me $2600 a mo. and my cousin gets the same ,so its a steady income from a tenant who's been there 50 years. I am just looking for working capital.

    Thanks

    0Reply
  • Joel Soforenko
    Real Estate Lender · East Longmeadow, MA · Member since 2009 · 176 posts · 21 votes
    9y

    Bart,  If the Tenant wants to purchase the property, an SBA Loan will allow him up to 90% of the purchase price.  If you and your partner wanted to hold 10%, the Tenant may be able to purchase with 5% down payment.

    I would be happy to speak with you and the tenant if this is an option which will work for you.

    0Reply
  • Danny N.
    FLL · Member since 2016 · 98 posts · 20 votes
    9y

    Look your gas station for $2M no offense is a bad deal at best you're talking a 3% NNN cap rate. I own alot of gas stations, I have one where the tenant pays me $12,300/mo in rent and I have it listed for $2.75M and thats double the rent you have and in a high traffic area of 50,000 CPD. You're selling just the property right, not the business?

    Either way even at a high 5% cap rate your stake is more like $630k and realistically being in that business myself I'd say your stake is worth more like $400-500k. I own some really big stores, the kind of store you're talking about isn't even a large store from the price you're mentioning.

    Im assuming under 2 acres and under 5000 sq ft store? Business wise I assume the guy doesn't even sell 100k gallons a month at that price? Under $100k/mo grocery sales?

    Sunoco isn't one of the brands people want when buying stores: shell,exxon,chevron are what the big buyers want, I own multiple shell myself and I wouldn't touch a sunoco,valero,7-11, etc

    Best of luck but the cap rates your mentioning just dont work with a gas station. 3% is more like a walgreens in a super prime location, not a sunoco gas station

    Why not just have the tenant arrange the financing since he knows what the business is worth, surely he would pay more than anyone else. I've owner financed to tenants in the past when sales weren't probably, you get a higher interest rate and they're willing to pay more + you have a history together. I think that may be your best option. You really can't value 20 years of rent the way you are bc in 20 years $2,650 will be peanuts, its already not much today, the time value of money has to be discounted drastically when doing future valuations.

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    Walgreens trade at 5 to 6 caps and not 3 caps.

    Here is a company that buys shares. Research at your own risk. 

    http://www.quickliquidity.com/

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  • Danny N.
    FLL · Member since 2016 · 98 posts · 20 votes
    9y

    Sure on average, but if you have an incredibly prime location its lower, there's a chick fil a here in houston brand new, in a very prime location asking 3.75%

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    Chick Fil A and Mcdonald's go in the 4's for cap rate. Restaurant versus pharmacy is different. Mcdonald's and Chick Fil A have rent increases in primary term as cap rate is blended up.

    Even in great locations pharmacy is not at 3 caps. I look at over a thousand flyers and OM's a week and know the areas in Texas. The prime locations for pharmacies are in the 5's for newly minted leases. Rent is flat for the full term of the primary lease ( occasionally you will see one with rent increases but they dropped the cap rate below market so blended cap is the same or less than buying one with flat rent). That might be one in a thousand that does that. In prime areas even though cap rate stays in 5's the price point is much higher as rent per sq ft climbs. So in New York the pharmacy could be 12 million in urban core versus 6 million in Austin, Texas. It's all about how much rent pharmacy will pay versus how much sales per sq ft they think they will do per month and annually.     

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  • Bart Sklar
    OP
    Investor · Cherry Hill, NJ · Member since 2015 · 45 posts · 1 vote
    9y

    Thanks for all the response , it is a very prime location in Philly and I believe it is grandfathered in as the only gas station allowed in the area,  We would use the cash to expand our buy and hold business. I don't want to sell it ,but we need the money to grow our business.

    ( From Moderator: Any selling of property or asking for offers needs to go in the marketplace section for which you need to be a Pro or Plus member). 

    Thanks again

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