Chevron puts 61 of 70 stations up for sale

Advertiser Staff

Chevron Hawai'i, the state's largest gasoline retailer, has offered to sell 61 of its 70 Chevron stations to the dealers who run those stations.

At an annual meeting of Chevron station dealers last week, Chevron said it wanted to exit the property management businesses by selling the 61 stations that it leases out. The nine other Chevron stations are operated by the company.

Selling the stations "is a more efficient model," said Chevron spokesman Albert Chee. For years, Chevron expanded by buying land, building a station and leasing it to a dealer.

"We now find if the individual operators own the assets, it is more efficient for them and more efficient for us. We get out of property management and the real estate business, which is not our specialty," Chee said.

Chevron dealers said buying station real estate from the oil company has been sought by operators in the past, but that land values and station revenue would determine how many buy now.

"It's uncertain," said Barnaby Robinson, operator of Chevron stations in Kahala and the Airport area. "It all boils down to whether a site can support itself. A lot of dealers are going to be looking long and hard at their facilities."

Robinson figures the fee simple property under his Kahala station is worth anywhere from $1.5 million to $2 million. "You have to sell an awful lot of gas to pay for that property," he said.

Mike Kitagawa, a Chevron dealer on Maui, said he sees opportunity to expand his business if Chevron makes him a good offer. "Given the right price I would very seriously consider buying it," he said.

Chee said the proposal to sell the stations to dealers is voluntary.

"No one is being forced or coerced into doing this," he said, adding that dealers who do not want to buy the property can continue to lease. Chevron does not plan to close any of the stations.

Chevron closed four stations, three on O'ahu and one on the Big Island, last year.

Those stations were on leasehold land and the lease was near its end, Chee said.

The change in station ownership is not likely to affect gasoline prices, Chee said. Chevron dealers set their own retail prices, and Chevron charges all dealers the same wholesale price for gas.

Last year, a 1997 state law that limited the rent that oil companies can charge service-station owners was ruled unconstitutional by a federal judge.

After the rent cap was struck down, the Legislature passed a gasoline price cap which is scheduled to take effect in 2004. It would tie Hawai'i prices to prevailing prices on the West Coast.