GPM Secures $1B Sale Leaseback Commitment from Oak Street

Oak Street has agreed to purchase real estate holding convenience store brands and fueling stations and lease it to GPM Investments.

Under the agreement, ARKO Corp.’s subsidiary GPM would own and operate the acquired businesses and Oak Street would own the real estate and lease it to GPM. Oak Street will commit up to $1 billion to the program for one year.

GPM, the seventh-largest convenience store chain in the US, has executed 18 acquisitions since 2011. In the process, it has grown the company to almost 3,000 sites with more than 10,000 employees operating in 33 states and Washington DC.

“The C-store space has been a space that did really well during the pandemic under that essential retail label,” says Jonathan Hipp, head of US Net Lease Group at Avison Young. “C stores have always done well. “So I think this is another strong, smart, strategic capital deployment for Oak Street.”

While there is talk of electric cars making gas stations obsolete, this deal shows that the convenience store model has life, even if it may adjust a little by adding charging stations.

“Gas isn’t going away tomorrow,” Hipp says. “Not everybody can afford to or is going to convert [to electric] immediately.”

GPM company says this agreement further demonstrates the company’s continued commitment to aggressive growth.

“We believe that working with Oak Street will allow us to be a more attractive acquirer and add additional flexibility as we structure acquisitions,” said Arie Kotler, president and CEO of GPM, in a prepared statement. 

Camille Renshaw, CEO and co-founder of B+E Net Lease, expects owners of essential retail to aggressively seek acquisition opportunities.

“Corporate tenants who were deemed ‘essential’ during COVID—such as convenience stores, groceries and QSRs—thrived,” she says. “These companies are now shoring up their balance sheets in order to buy competitors. They are well-positioned within their segment and thinking opportunistically as we emerge from the pandemic.”

Renshaw expects that net lease property investors will see most real estate associated with corporate M&A activity come to market in the form of sale-leasebacks. “Due to the recent surge in net lease buyer activity that has compressed cap rates, strong companies such as ARKO are able to maximize their sales proceeds while maintaining relatively low rents, further enhancing their balance sheets,” she says.