Mountain Express REIT emerges as seller in recent SQRL deal

Dive Brief:

All 210 convenience stores acquired by SQRL Holdings last month were previously leased by Mountain Express Oil, which terminated all operations as part of its Chapter 7 bankruptcy in August, a source familiar with the matter confirmed.
Blue Owl Capital, a real estate investment trust (REIT), owned these locations and made the sale to SQRL, the source confirmed. Blue Owl is the parent company of Oak Street Capital, which had financially supported Mountain Express’ rapid growth back in 2021.
The deal marked one of the largest acquisitions made in the c-store industry this year, and expanded SQRL’s footprint to more than 350 stores across 14 states.

Dive Insight:

SQRL did not disclose the seller of these 210 stores at the time of the acquisition, though it noted that they came from a single source. The price of the transaction has not been disclosed.

The acquired stores are located in Missouri, Oklahoma, Texas, Wisconsin, Ohio, Pennsylvania, Alabama, Arkansas, Louisiana and Mississippi, the source said. SQRL also operates stores in Florida, Kansas, North Carolina and Tennessee.

For Blue Owl and Oak Street, the deal represents some financial return for stores that may have been under duress the past several months amid Mountain Express’ tumultuous bankruptcy proceedings.

According to court documents, in June 2021, Oak Street entered into a $1 billion agreement to help finance Mountain Express’ acquisitions of c-stores and travel centers via sale-leaseback transactions. Over the next year, Oak Street funded Mountain Express’ acquisitions of 286 properties for an aggregate purchase price of over $825 million through over 60 separate sale-leaseback deals, court documents show.

Mountain Express filed for Chapter 11 bankruptcy protection this past March. Then in August, a proposed sale to Arko Corp. — which also receives financing from Oak Street via Blue Owl — fell through, and the fuel and convenience retailer shifted to Chapter 7 bankruptcy, thus commencing the liquidation of its assets and terminating all operations.