One of the key factors within the forecourt property sector in 2010 has been the continued lack of available bank funding, according to Calum Campbell, partner Petroleum & Roadside Services at chartered surveyor Graham & Sibbald.
"The availability of funding first started to tighten in 2008 as a direct result of the ’credit crunch’," he explained. "And although the squeeze on funding was not initially as severe as that witnessed in other areas of the property market, there has been a noticeable contraction during 2010." Campbell added that lower loan-to-value ratios had also been introduced by a number of the principal lenders so potential purchasers would have to inject more of their own cash into any acquisition.
"This overall squeeze on the availability of funding has limited the pool of potential purchasers in the market with many purchasers’ expansion aspirations being suppressed by their bank’s lending criteria," said Campbell.
"The industry has traditionally been very capital intensive with operators not only having to fund the site purchase itself, but the working capital tied up in both wet and dry stock. In addition, operators need to fund the security required for their fuel thus, with the high levels of capital required, any increase in the cost of finance inevitably has an adverse impact upon an operator’s returns and in turn their ability to commit to further acquisitions."