50% Interest in Philadelphia Gas Staion for Sale

[Bart Sklar]

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

[Danny N.]

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.