Petroleum Realty Announces $300 Million Joint Venture With Lehman Brothers

Real estate executives David J. Glimcher of Columbus, Stephen H. Bittel of

Miami seek to take lead in sale/leaseback financing to independently owned gas

stations, convenience stores and other petroleum-related properties nationwide

Jun 09, 1999, 01:00 ET from Petroleum Realty Investment Partners, L.P.

    COLUMBUS, Ohio, June 9 /PRNewswire/ -- Petroleum Realty Investment
 Partners, L.P., co-founded by real estate executives David J. Glimcher of
 Columbus and Stephen H. Bittel of Miami, has secured an initial $300 million
 credit facility through Lehman Brothers, it was announced today.  Under a
 joint venture agreement between the two firms, Petroleum Realty's goal is to
 acquire and provide financing to a majority of the country's estimated 175,000
 independently owned gas stations, convenience stores and other
 petroleum-related properties.
     "The opportunity here is vast," highlighted Petroleum Realty Chairman and
 CEO David Glimcher.  "Historically, most independent retail petroleum
 properties have been financed locally through traditional banking
 relationships.  This approach has restricted owners' ability to maximize their
 expansion opportunities.  Petroleum Realty plans to provide full-service
 financing -- including standard mortgage loans as well as alternative
 financing arrangements ranging from construction lending to equipment leasing.
 Virtually all of our sale/leaseback business will be petroleum industry-
 oriented, while our lending will be predominantly focused on petroleum-based
 businesses as well."
     "Petroleum Realty's ultimate objective is to become the one-stop financial
 services organization of choice for this market.  The $300 million secured
 credit facility provided through Lehman Brothers represents our initial
 funding source with which we expect to pursue and close a significant number
 of deals going forward.  We are also actively seeking other interested parties
 who share our vision and wish to participate in this unique and exciting
 business opportunity," Glimcher added.
     Petroleum Realty maintains offices in Columbus, Ohio; Tysons Corner,
 Virginia; and Miami, Florida.
     Noted Glimcher:  "We've assembled a highly energized team with an
 unsurpassed track record and over 80 years of collective real estate
 experience plus more than a century of combined petroleum industry expertise.
 Petroleum Realty will be the first company to focus exclusively on providing
 financing solutions to petroleum industry jobbers, dealers and operators.  Our
 acquisition team is spearheaded by professionals with broad-based, corporate-
 level petroleum industry backgrounds.  We speak our clients' language and
 understand the issues unique to this industry, such as environmental
 considerations pertaining to the handling and disposal of petroleum products,
 and the significant costs and liabilities associated with underground gasoline
 storage tanks."
     Industry Data Underscores Opportunity
     The petroleum industry is a vast, fragmented market undergoing
 consolidation amid oil company mergers such as BP/Amoco, Exxon/Mobil, and
 Texaco/Shell, with these newly combined entities being forced to divest
 significant numbers of gas station properties under U.S. antitrust provisions.
 This has contributed to the need for an industry-focused firm to provide
 customized sale/leaseback, debt financing, equipment leasing, construction
 loans, and other funding options to many of the estimated 175,000 owners of
 standalone gas stations as well as other properties which sell gas or oil --
 particularly convenience stores -- but also including certain types of
 restaurants, car washes and oil change centers.  Petroleum Realty anticipates
 that approximately 85 to 90 percent of these properties will meet its
 acquisition and/or financing criteria.
     Sale/leaseback financing can enable owners of such properties to generate
 superior returns on their invested capital.  One analysis published in the
 February 1999 issue of the trade magazine Convenience Store Decisions
 estimated a typical average annual cash-on-cash return for a property sold
 after 15 years of 36.5 percent under a lease scenario, versus 31.3 percent
 under a similar purchase scenario.
     Industry data for convenience stores selling gas underscores the magnitude
 of the opportunity.  According to the National Association of Convenience
 Stores, the total investment cost in a new urban convenience store averaged
 $1.2 million, a 6.2 percent decrease from 1996.  There were an estimated
 95,700 convenience stores in the U.S. in 1997, a 1.6 percent increase over the
 prior year.  Total motor fuel sales at convenience store locations in the U.S.
 increased 3.2 percent in 1997 to $83.8 billion, or more than the $72.4 billion
 in total in-store sales, which grew just 2.4 percent.
     Convenience stores are in the forefront of capital investments and
 innovations contributing to enhanced gas sales.  One example is the
 introduction of radio frequency identification devices for automatic credit
 card payment at the fuel dispenser.  Others include actions that have been
 ongoing for several years such as offering ATM access and multiple payment
     Total profits for convenience stores rose 2.8 percent in 1997 to
 $2.5 billion -- the third highest level in history -- driven primarily by
 better gross margins and volume on gas sales, with pretax profits as a percent
 of total sales unchanged from the prior year at 1.6 percent.  Per store,
 average 1997 gas sales were $1.2 million, gross margin dollars were $135,500
 at a gross profit margin of 11.3 percent, compared to 10.7 percent in 1996.
     David J. Glimcher - Chairman & CEO
     David Glimcher, 46, is President of the David J. Glimcher Company, a real
 estate development organization headquartered in Columbus, Ohio.  From 1994 to
 1998, he served as President and Chief Executive Officer of Glimcher Realty
 Trust, a large national Real Estate Investment Trust and New York Stock
 Exchange-listed company which, under his leadership, diversified into one of
 the country's most successful acquirors of retail properties in several market
 segments.  His career spans more than 20 years of senior management experience
 with the Glimcher Company, including President from 1994 to 1997 and Vice
 President from 1972 to 1987, with responsibility for operations, leasing,
 acquisitions and development.  David Glimcher continues to serve on the Board
 of Trustees of Glimcher Realty Trust and is the son of Chairman and Founder
 Herb Glimcher.
     Stephen H. Bittel - President & COO
     Stephen Bittel, 42, is Chairman of Terranova Corporation, a Miami-based
 full service real estate organization founded in 1980.  Terranova specializes
 in third party asset management, development and redevelopment of major real
 estate projects, real estate finance and tenant representation.  The firm
 represents numerous tenants in the acquisition of new locations and/or the
 disposition of excess space and is currently involved with a portfolio of
 nearly 7 million square feet.  He is a member of the Florida Bar Association
 and a Licensed Real Estate Broker.
     Michael D. Baskin - Senior V.P. - Acquisitions & Operations
     Michael Baskin, 57, is the President of PetroConsulting, Inc. of Tysons
 Corner, Virginia.  PetroConsulting is the first company dedicated exclusively
 to assisting independent gasoline marketers in developing properties,
 obtaining financing and negotiating contracts with developers, oil companies
 and lending institutions.  PetroConsulting's clients include national
 companies such as Jack In The Box restaurants, a division of Foodmaker, Inc.
 Baskin previously served as an executive with Mobil Oil Corporation where he
 gained extensive experience in retail, wholesale and oil change locations.  As
 Gasoline Planning Manager for Mobil's U.S. marketing division, he helped
 develop key strategies in the areas of capital budgets, gasoline volume
 growth, credit card expansion, market entries and withdrawals.  He has more
 than 30 years' experience in the gasoline marketing industry.
     Richard Ihlendorf - Senior V.P. & CFO
     Richard Ihlendorf, 47, is the Chief Financial Officer of the David J.
 Glimcher Company, a real estate development organization with headquarters in
 Columbus, Ohio.  He was previously a partner with Coopers & Lybrand L.L.P. and
 has over 20 years of public accounting experience.  During his career he has
 advised numerous companies on tax and accounting strategies in the public
 marketplace.  He is a member of the AICPA, the Ohio Society of CPAs, and the
 Ohio Bar Association.
     About Petroleum Realty Investment Partners
     Petroleum Realty Investment Partners, L.P. has entered into a joint
 venture agreement with Lehman Brothers focused on the sale leaseback business
 in the petroleum industry.  Lehman, as lender, has provided the joint venture
 with a $300 million credit facility to purchase gas stations, convenience
 stores and related entities.  Petroleum Realty will provide loan originations
 through Lehman as a separate program.
     Petroleum Realty seeks to become the one-stop finance provider of choice
 to the independent retail gas station and petroleum-related property sector,
 offering the following services:  1) sale leaseback financing; 2) mortgage
 loan financing; 3) equipment financing; and 4) third party construction loan
 services.  Mortgage financing will be originated through Lehman while
 equipment financing and construction loans will be provided through third
     About Lehman Brothers
     Lehman Brothers is a global investment bank with leadership positions in
 corporate finance, advisory services, municipal finance and fixed income and
 equity sales, trading and research.  Lehman Brothers serves the financial
 needs of corporate, government and institutional clients, and high-net-worth
 individuals through offices in major financial centers worldwide.
     For more information, contact Becky Shrigley, Communications Manager
 of Petroleum Realty Investment Partners at 614-224-4777.

SOURCE Petroleum Realty Investment Partners, L.P.