MARKET OPPORTUNITIES
INVESTMENT AND MARKET OPPORTUNITIES
Opportunity Goals:
- Critical to attack opportunity with significant size / commitment
- Establish Leadership in Growing Market Segment
- Profit from Prudent Opportunity Selection
KA Enterprises’ primary investment and market opportunities coincide with our unique expertise. KA’s ability to successfully locate, select, acquire, develop, operate, manage and lease Gas Stations, Retail Properties and High-End Residential Estates extends to all Real Estate and Private Equity opportunities. Due to the current market dislocations including the financial, real estate and business environment present excellent opportunities for experienced investors like us.
KA is focused on producing Conservative bond equivalent like returns for investors by capitalizing upon:
- The current market dislocations resulting in ability to acquire well priced conservative real estate assets, and
- Reduced buyer competition due to constrained availability of financing and economic uncertainty.
KA’s goal is to take advantage of the current opportunities and generate conservative income-oriented returns for our investors.
THE RIGHT MOMENTS FOR GASOLINE STATION & RETAIL PROPERTIES
The Gasoline Station business is a very fragmented market. The majority of operators are small operators with less than 5 stations. This provides an excellent opportunity for a Private Equity style consolidation event that KA is poised to undertake.
At KA, our acquisition considerations for Gas Stations include:
- Corner lots with high traffic counts
- 1 acre or larger parcels
- Opportunity to build “Mega Sites”
- Demographics of the Area
- City plans and 5-10 year forecast for area i.e., freeway access, zoning change, eminent domain, etc.
Corner lots allow KA to build “Mega Sites” with many different revenue streams besides gasoline it such as a carwash, convenience store and quick service restaurants. However, more importantly it allows KA to operate a successful business while the actual real estate itself appreciates over time. This makes the current environment greatly beneficial for KA since it operates Gas Stations of any brand of fuel. The use of different brands by KA allows KA to normalize profit margins because different brands are constantly trying to be lowest cost in fuel which allows KA to strive while benefiting from price wars amongst the brands.
GEOGRAPHIC OPPORTUNITIES
The current investment focus of KA geographically is the Southern and Northern California real estate markets for Gas Station, Retail Properties and High-End Residential Estates. Due to the substantial geographic, demographic, and economic barriers limiting competition, and the lack of operators with substantial capital in this unique marketplace, these vast California markets appear to be an ideal target market.
KA prefers to invest in a geography where it has an established footprint. However, our investment philosophy, strategy and targeted asset classes allow for greater geographic diversification. We have a defined investment market mandate and focus daily on managing, reviewing, and expanding our portfolio. We have operated in California and Nevada for over 20 years and weathered many economic, regional, business, and real Estate cycles. Before entering any new market, we would conduct a thorough practical study and consider the geographic merits before making any investments. At the point of investment we will weigh the portfolio impact of any expansion and any concentration risks that may materialize. Gasoline Overview KA Enterprises’ core business is the operation of retail properties and wholesale distribution of motor fuels to consumers and other non-affiliated gas stations. KA uses different flagship fuel brands such as Chevron, 76, Shell, Arco and its own independent brand Encon to distribute motor fuels. Brand recognition allows the customer to identify with a type of service, product and price point that makes the customer want to continue using that brand. KA uses brand recognition as a competitive advantage and as a driving force for increasing customer base.
On a straight fuel distribution level, having mixed brands diversifies and hedges against swings in the prices of oil and distillate markets. The use of different brands by KA allows KA to maintain relatively high profit margins due to the volatility and competition between the major oil refiners who are constantly trying to maintain the lowest cost fuel supply, and this allows KA to benefit from these price wars.
KA understands the principles of average daily traffic flow. The site selection is the number one priority when choosing a gas station. The selection of a high volume impacted corner lot is the difference between having a good convenience store and the best convenience store in an area. Major supermarkets have been using these principles for years. That is the reason why the supermarkets strategy always has their stores built in the middle or on the corner of very busy highways. KA has taken this approach to Gas Stations which has allowed KA’s facilities to have above average volume and sales. mega MART is KA’s proprietary brand of convenience store.