Lower Price! Busy Absentee Owner Gas Station & Convenience Store-Suburb in North Denver CO
May 29th we have lowered the price again to $450K plus inventory.
The trailing 12 months from April 1 2019 to March 31 2020 had 2.75M in revenues and earnings of 167K. The first quarter of 2020 through March was better in both revenues and earnings than the first quarter of 2019. The 2019 earnings were 153K from 2.7M in revenue. April and May were a little slower than normal but the last week of May has returned to almost normal revenues and the station has re-opened on Sundays as of Memorial Weekend.
A spill was found leading to an Corrective Action Plan, “CAP”, plan that was submitted to the State of Colorado this April with an approval expected sometime in June from the state of Colorado. The station gets to operate as normal through this process and the cost to fix this is being handled by the current lease holder and the “Superfund”. To be clear, the new buyer will not have any responsibility related to the cost of this cleanup. The remediation will require a 8′ by 12′ shed on the North side of the convenience store which should not disrupt the business(except partially when they install it). The lease for the Gas Station is a sublease and a condition of the transfer of the remaining lease is that an amendment is added transferring any future liability in the running of the station and convenience store to the new owner. This is traditional and normal.
The landlord is offering a new lease effective Sept 1st(end of current lease) which will start at 4K per month which is below the current market rate. I have looked at the other gas/convenience stores for sale and I have not found one with such a low multiple on earnings OR on a corner OR in an area that is seeing the growth of Denver Metro moving toward it virtually guaranteeing that it will grow in traffic steadily over time.
The reason this is still available is that the SBA will consider a loan on this until Colorado has signed off on the remediation plan which is expected in June starting what is typically a 60 day period before funding and a new lease needs to be signed by July 31st. We have had this under a LOI for 675K plus inventory but that buyer needed a bank so the timing with the lease didn’t match up for bank financing; therefore, we are looking for a buyer that doesn’t need an SBA loan. The buyer could do a home equity or other type of loan that has a 45 day or less time frame(not SBA). We have lowered the price(a lot) to attract a cash buyer AND the Seller will carry up to 30% for a qualified buyer. He is in his late 70’s and is fully retiring. This is great cash flow for a buyer at this price. Jeff
Gas Station and Convenience Store
Same owner since the mid 1970’s who has been absentee for 25 years. He has had the same store manager since the mid 1990’s who will stay and continue to manage the store if the new owner would like him to. He is selling because he needs to fully retire.
This is a location driven business that provides steady revenues and earnings which is both sustainable and will not change the day after the ownership transfer. This business has 70,000 in FF & E that is included.
An owner can change the products in the convenience store and price them as they would like. The only exception to this is the lottery. His current license only allows him to sell fermented malt beverages which includes beer, wine coolers, spiked seltzers, etc. In order to sell other alcoholic beverages so the new buyer would need to surrender your current license and apply for one that would allow you to sell other alcoholic beverages. Most gas station convenience stores only carry beer so no changes are needed except the transfer of the license. Since the change in the beer strength allowed as of January 1st 2019, their beer revenue has doubled. Expanding this is a potential area of future growth. Plus, traffic has steadily increased over the years. It is on a corner lot that is an area north of Denver which is being developed. They are at a 4 way stop sign which will be a traffic light at some point. You can see this clearly on Google Maps. The suburbs are getting very close to them already.
The company has virtually no advertising budget and the owner believe this business can be more profitable with a new owner who could give it more attention. The Sales price is now 450K plus inventory which is less than 3 times the earnings plus inventory. Gas Station/Convenience stores typically sell for 4 times the adjusted EBITDA. His cost of inventory for the store runs between 48K and 57K depending on the season and fuel between 4K and 24K depending on the date of their last shipment.
The buyer can be absentee with no specific experience is necessary. The current owner and manager can train the new owner quickly.
The current agreement with the nationally branded gas station is up in less than two years but the Seller believes that all buyers will choose to extend that contract which will be the Buyers choice. The real estate lease is up August 31st of 2020 and a buyer will need a new lease for which the negotiations have already started at 4K/month with a COLA for 10 years with a chance for 15 years plus.
Location: Suburb North of Denver, CO