Gas Station CPI Portfolio

Patrick Campbell shares how he acquired a portfolio of gas stations as part of his post-exit investment strategy.

"I bought 19 gas stations in North and South Carolina. There was a patriarch of a family who had built up a portfolio of about 120 stations. He passed away, and the trust or estate was selling them off in blocks because they had a tax bill coming up from the inheritance.

This started with Nick Huber and Mitchell Balbridge talking to me about tax implications. If your partner is a real estate professional, your passive losses become active losses and offset active gains. I had gains from selling my company that I could offset with depreciation from the gas stations. Using round numbers - if I buy $10M of gas stations, I can take $8M in depreciation to offset those gains.

We closed around December 23rd to get it done by year-end. They're triple net leases, so we don't manage or handle any operations. They're owned by a big company, corporate-backed. The total investment was $30M with cap rates around 5.5%. What made the deal great was all the rent increases were based on CPI and written in the early 2000s. So with recent inflation, when these rent increases go into effect, the increase in rent is pretty significant. We're cash flowing definitely over $1M a year on these."