RPG delivers high quality appraisals of retail petroleum outlets/convenience stores to numerous stakeholders, including lending institutions and property owners.  Our work philosophy was developed through experience gained over many years by appraising thousands of these properties.  Our philosophy is to deliver to our clients appraisal reports that are consistently accurate and among the best in the business for this property type.  The factors that set apart our work product from other appraisal firms are discussed below.

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Valuations are Based on Profit Potential

First and foremost, RPG undertakes every assignment by thinking like buyers and sellers of this property type do – profit potential drives value for a given location, period.  Buyers and sellers, brokers, and all competent appraisers know this.  With the exception of long-term leased facilities to national credit tenants, RPG analyzes every store on the basis of potential gross profit and net profit/EBITDA.  Many appraisers employ a traditional price per square foot methodology, effectively treating a gas station/c-store as if it were a general commercial property.  This technique is inappropriate as it fails to properly account for any intangible component of value that may exist with respect to the subject or the comparables.  In addition, it cannot isolate the vastly differing external factors (level of existing competition, submarket demographics, etc.) that comprise the environments within which the subject and the comparables operate.

Accurate Projections of Gross Profit

How does an appraiser accurately estimate gross profit?  This task is straightforward when several years of accurate detailed operating history is available.  However, when little or no actual historical data is available, accurately forecasting a store’s profit potential is extremely difficult without the proper tools and experience.  Complications also arise when operating history does not reflect competent, aggressive, and fully capitalized management.  Another factor to consider is whether or not the operating data provided is a true reflection of a facility’s actual historical performance.  This is where our decades of experience is immeasurable.  Our analysts’ knowledge derived from poring over thousands of store financials coupled with RPG’s proprietary projection models take much of the guesswork out of less-than-ideal written or verbal operating history.  The projection models are driven by a large database of facilities for which operating history is known, with a unique scoring system for the subject and all data points that asks the questions that are truly most relevant to a given store/location’s success or failure.  We also attempt to contact every property’s fuel supplier to verify operating history or to assist in projecting stabilized gallonage when actual historical data is unavailable or reflects less than fully competent management.  Our goal is to get to the bottom of a store’s true profit potential based on property-specific and external factors.

Revenue Comparables for Ancillary Profit Centers

In addition to fuel and inside sales, many c-stores have ancillary owner-operated profit centers such as delis, car washes, branded or unbranded QSRs, etc.  Some going concerns also boast abnormally strong other income subcategories like lottery commissions, state-sanctioned gaming revenue, check cashing, etc.  RPG maintains an extensive database of revenue comparables that provide concrete support for ancillary profit center performance forecasts.

Component-Specific Cost Comparables from Actual Development Projects

In addition to employing published construction cost secondary data, RPG also maintains an extensive database of primary cost comparables obtained during recent appraisals of proposed retail petroleum outlets/c-stores.  Actual recent property type-specific development cost estimates serve as an added layer of support when estimating accurate costs for a gas station/c-store’s various physical components (site improvements, building, canopy, petroleum equipment, and inside equipment).

Current and Property-Specific Industry Overviews

We believe users of our reports deserve to see current industry trends that affect a property’s value.  For example, the precipitous drop in oil prices during the second half of 2014 has brought about big changes in the operation of this property type, thereby materially affecting going concern values.  RPG pulls numerous data points from the most relevant industry sources, some of which are submarket-specific, as part of every assignment.  The latest national, state, and local industry trends are always reflected in every report we issue.

Detailed Analysis of Submarket Supply and Demand

Every one of our assignments begins with a determination of the primary trade area within which a facility must operate.  This is determined based on demographics within an appropriate drive time.  Additional considerations such as transient patronage resulting from proximity to an Interstate highway, or increased business as a result of daytime employment in the area are also considered.  The quantity, quality, and fuel pricing strategies of existing competition within (and in cases outside) the primary trade area are carefully analyzed and presented in detail, as level of competition arguably imposes the greatest influence on value of any property-specific or external factor.  Too much existing competition, the presence of one or more aggressive hypermarketers, or lengthy fuel pricing 'wars' among existing nearby competitors can destroy an otherwise healthy business operation.  Traffic counts, supporting development, and additional traffic generators in the area represent additional success factors for a given location.

Proper Valuation of Rental Space

Many c-stores/gas stations feature attached or freestanding rental space in the form of general commercial/retail/office bays, detached general rental space, emissions inspection bays, third-party hand car wash operations, mini-storage units behind the primary improvements, etc.  We consider the contributory value of rental components separately, treating them as the retail or office space they are rather than simply including rental income with the going concern’s other income.  We also survey the market area to determine market rent and an appropriate absorption period for vacant rental space.  Finally, we consider the fact that rental units that have remained unleased for years may not contribute to value at all, and in cases may detract from overall facility appeal.  This methodology is most appropriate, as it mirrors the thinking of any potential purchaser.

User-Friendly Appraisal Reports

Our clients have spoken regarding report readability and we have listened.  Our reports follow a logical progression from the macro to the property-specific, and all analyses and calculations are well explained and easy to follow.  In addition, almost every exhibit typically found in an appraisal report’s addenda is presented within the body of our report, right where it is being discussed.  This results in no page flipping back and forth from the body of the report to the addenda.


Reasonable Fees, Competitive Timing, and Prompt Service

Because we are a smaller firm with lower overhead than big shops, we are consistently able to provide quality work for a very reasonable and competitive fee.  Our nimble size also allows us to closely monitor workload, resulting in competitive turn times.  Although our clients appreciate our reasonable fees and favorable turn times, they like our obsession with timeliness and ability to be reached even more.  Any of our existing clients will tell you that we are never late in submitting assignments.  If we cannot deliver we simply do not bid.  And unlike larger firms, our clients can pick up the phone and reach a principal (who is also the analyst/report author) right away.  We enjoy talking with our clients about our work and will field any questions or provide revisions in very short order.

A Myriad of Valuation Scenarios

We can easily handle fee simple, leased fee, and leasehold ownership situations, as well as proposed construction and proposed renovations, profit centers to be added, etc.  For proposed facilities we render an As Is value as well as prospective values upon completion of the proposed improvements and upon stabilization of sales (and in some cases occupancy).  We always conduct a supplementary fee simple analysis, even for leased stores.  We feel we have failed to serve our client if contract rent sustainability is not determined.  General commercial appraisers always determine if contract rents are consistent with market levels when appraising traditional commercial property types.  Why should contract rent for c-stores/gas stations automatically be assumed sustainable indefinitely?  Simply capitalizing net income based on any lease in place fails to make this determination.  A property’s performance potential ultimately determines if contract lease terms can be sustained.