Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm has completed the sales of 10 net-leased investments occupied by Valvoline in Kansas and Missouri to 10 separate buyers. The individual sales represented a total of 26,000 square feet for a combined value of $17.3 million.
“We maximized value by executing individual sales of 10 Valvoline locations to 10 separate private investors, rather than selling as a portfolio,” said Jeff Lefko, executive vice president of Hanley Investment Group. “As a result, the blended cap rate for the individual sales was approximately 5.15%, while institutional buyers were 75 to 100 basis points higher in cap rate if the assets were sold all together.”
Lefko adds, “The sales strategy also allowed the seller the ultimate flexibility to stagger each sale and 1031 exchange into several well-located properties over a longer period of time instead of having to do it all at once.”
Hanley Investment Group, in association with Ferguson Properties based in Kansas City, Missouri, represented the seller, an Arizona-based private investor who was the prior operator of the locations in nine of the 10 transactions. The single-tenant Valvoline-occupied properties were located in Overland Park, Olathe, Mission and Wichita, Kansas; and three in Kansas City, Missouri and another in Raytown, Missouri. Hanley Investment Group, in association with Ferguson Properties, also represented the same Arizona-based seller in the sale of a 3,360-square-foot, two-tenant investment property occupied by Valvoline and Papa Murphy’s in Independence, Missouri.
In the 10th transaction, Hanley Investment Group, in association with ParaSell, Inc., represented a different seller in the sale of a single-tenant Valvoline-occupied property in Kansas City, Missouri. The seller was a private investor based in Kansas City and the buyer was based in Overland Park.
Lefko said, “We procured multiple offers for each Valvoline property in a short period of time of formally approaching the market. The combination of the smaller price points, long-term operating histories at each location, and the new absolute triple-net lease structures were extremely attractive attributes to net-leased buyers in the marketplace.”
Valvoline Inc. (NYSE: VVV) is a leading worldwide marketer and supplier of premium branded lubricants and automotive services, with sales in more than 140 countries. Valvoline is the No. 2 chain by number of stores in the United States under the Valvoline Instant Oil ChangeSM brand and the No. 3 chain by number of stores in Canada under the Valvoline Great Canadian Oil Change brand. In Q1 2023, sales from continuing operations of $332.8 million grew 16%, while system-wide same-store sales increased 11.9%. Net store additions totaled 31 (23 company-operated and eight franchised), bringing total system-wide stores to 1,746 with a continued focus on its long-term goal of 3,500+ store count.
This is Hanley Investment Group’s second major non-sale leaseback, auto-service portfolio sold as individual net-leased investments in the last 24 months. Previously, the firm arranged the sales of eight single-tenant, net-leased investments for a combined total value of $20.71 million occupied by Louetta Automotive and Tire Service (now operating as Sun Auto Tire and Service) in the Houston metro area, Texas. Like the Valvoline transaction, the Louetta operator was purchased by a larger corporate entity, but the operator retained the real estate as part of the business transaction.
“There are many occasions where a multi-unit retailer owns their own real estate and sells their business to a larger (better credit) operator and, as part of the transaction, the retailer gets to keep the real estate with a new long-term lease in place (with the larger operator),” Lefko said. “In this situation, the real estate is often at its peak value the day the business transaction closes. We work with owners and advise them on how to accomplish their goals by maximizing the value of their real estate portfolio, selling certain locations and keeping others as a long-term hold. The sales of Valvoline and Louetta Automotive and Tire Service centers are a great example of this sale strategy.”
Lefko adds, “There is also the advantage for the seller of facilitating multiple, smaller 1031 exchanges instead of having to sell and trade out of the entire retail portfolio at the same time. By selling off each location individually, the seller not only maximizes the value on the overall sale of the portfolio, but has more time to individually secure the right 1031 exchange reinvestment property from each sale. This was the case for both portfolio sales.”
Hanley Investment Group has sold 54 auto repair and service center investments in the last 48 months, valued at $150 million.