Fast-growing c-store roll-up Yesway just secured an additional $235 million of
equity that could precede more acquisitions, but also fund some aggressive
raze-and-rebuids across its portfolio.

Yesway is owned by private equity firm Brookwood Financial Partners, and that
company raised the money via a private placement. In total, Brookwood has
raised over $642 million for the Yesway affiliate and has also presided
over$237 million in sale-leaseback proceeds.

Last year, Yesway tripled its size with the purchase of Southwestern chain
Allsup's and has devoted much of its time to integrating the 300 stores in that
portfolio. Company-operated stores now include sites in Iowa, Kansas, Missouri,
Nebraska, New Mexico, Oklahoma, SouthDakota, Texas and Wyoming.

"Since founding Yesway approximately five years ago and acquiring the Allsup's
convenience store chain last November, we have been extremely pleased with our
integration efforts and how well the company has performed," noted Tom Trkla,
Yesway's CEO. "As part of our integration of Allsup's, we have identified
over$135 million in real estate capital projects within the portfolio,
including razing and rebuilding 27 existing Allsup's stores, performing
targeted upgrades to over 100 additional Allsup's stores, converting several
existing Yesway stores in Texas to the Allsup's brand, significantly upgrading
many of our existing Yesway branded stores and adding new to market stores in
communities which we have determined could benefit from an Allsup's store."

Under the direction of Allsup family members, the chain has already completed
over 100 raze and rebuilds and has increased store size from an average 2,400
square feet to over 4,800 square feet. In addition to more merchandise, many
stores have increased the number of diesel and gasoline fueling stations.

Yesway's parent company, BW Gas & Convenience Retail, is headquartered in Fort
Worth, Texas, and now boasts 402 stores. Plans are to grow the portfolio to
over 500 c-stores in selected regions of the U.S. over the next several years.

Last year, CEO Tom Trkla told OPIS that "Wall Street would love to see some
more public c-store retailers," and OPIS data suggests that 2020 will be a
record year for average fuel profits in most sections of the country. While the
oil business has suffered from the wellhead to the refinery, the downstream
retail portion has done quite well, despite the loss of volumes related to
COVID-19.

In addition to Yesway's plans for an eventual IPO, the GPM chain (which now
includes Empire Petroleum) will trade publicly later this year. A special
purpose acquisition company led by former Speedway head Tony Kenny is also
looking to roll up fragmented stores, and there are several other private
equity chains that have quietly put together networks of 40-200 stores with
dedicated capital to bigger and more levered deals.

The fast-growing EG Group is also believed to be eyeing an eventual public
debut with a broad basket of international assets.

The Allure of the Rural and Suburban

Yesway's target companies to date have tended to come in markets that are rural
or bordering on the suburban. Trkla told OPIS last year that was a purposeful
strategy. Demand destruction during the COVID-19 pandemic has been much more
dire in urban and suburban communities, and c-stores in areas that appeal to
commuters have been among the hardest hit.

Yesway's reliance on a more rural geography suggests that fewer competitors
will come and there should be few instances where Yesway shares an intersection
with two or three competitors.

Wall Street analysts suggest that chains need to achieve the scale of about 500
or more stores with annual EBITDA in the $150 million range before launching an
IPO.

--Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly,
michael.kelly3@ihsmarkit.com



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