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 options. 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. THE PETROLEUM REALTY SENIOR MANAGEMENT TEAM 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 parties. 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.