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1 September 212 Site count CBRE MarketView European Petroleum Retail Sector September 212 OVERVIEW Quick stats Hot Topics International Companies may sell assets in eastern Europe Impact from recently introduced legislation in Italy Remediation Costs Increase by 8% Operators growing unmanned stations site count In this issue Fuel Volume Rents Market Overview Country Specific Sector Performance Austria Belgium Bulgaria Czech Republic Denmark France Germany Hungary Italy Netherlands Norway Poland Slovakia Switzerland UK Market Consolidation The last 12 months have witnessed a continuing service station consolidation throughout Europe. 4,573 service stations have closed across Europe since 27, according to Datamonitor s 212 Service Station Retailing database. The countries most affected include Italy, France, and the UK, where approximately 1,25, 1,2, and 85 service stations respectively have been shut over the same period. This reduction can be attributed to the trend among large oil companies such as Shell, ExxonMobil, BP, and TOTAL to divest their less profitable sites as they rationalize their downstream assets to pursue more profitable activities further upstream. OMV has also recently reported screening of its Refining & Marketing portfolio for optimization across Eastern Europe; namely The Czech Republic, Hungary, Slovakia, Bulgaria, Bosnia and Herzegovina. Declining Fuel Volumes Soaring petrol prices and a tender economic environment throughout Europe have led to declining fuel volumes at the pump. Volumes have fallen by,55% in the first half of 212. This trend has been prevalent across the continent since 29, albeit some country exceptions such as Belgium, Germany, Italy, Norway and Poland exist where fuel volumes remain consistently resilient. Financing Constraints Small scale property sales have been quiet as sellers have been scarce. Smaller operators are struggling to pay the prices seen over the last few years, which is a result, in part, of the market and constraints in the loan finance sector. Cash financed deals have become the preferred choice by many vendors. Inability to secure funding has led to an increase in independent operators willing to take leases instead of purchasing sites outright. Swapping sites has emerged across the more mature markets, as a means of portfolio optimization allowing new site acquisition and volume retention or even volume increase with favourable terms for both parties involved. Operational Service Station and Fuel volume behaviour H , 137, 136, 135, 134, 133, 132, 131, Across 16 European Markets Average Volume Million Litres million litres Page 1 212, CBRE Ltd 212, CBRE Ltd

2 September 212 Average Rent per site in Euros equivalent Remediation costs have increased by 8% year on year since H1 211 Decommissioning costs often being on par with sale price has made site owners reluctant to sell. They have retained their service stations instead. Expanding retail offer as a means to increase profitability. Consistently aggressive fuel pricing by supermarket chains emerging across Europe has also meant that independent and oil company sites within the geographical sphere of influence of a supermarket forecourt are increasingly less attractive to operate. They have also typically seen greater fall in volume and with margins constantly under threat, the performance of their forecourt stores and other profit streams are increasingly important in order to keep them operating viably. Convenience store redevelopment and refurbishment programmes are key initiatives for major and independent operators alike aiming to provide an improved customer experience and make their average to high volume sites more attractive. Fuel retailers are turning to unmanned sites As a cost effective way to reduce operational expenditure whilst retaining volumes. At the beginning of 211 there were 1,234 unmanned service stations in Europe; a 7.7% share of all service stations across the continent. The number of unmanned service stations has increased by 447 since 28; an increase of 4.6%. Verdict research forecasts that by 213 there will be 1,616 unmanned sites in Europe; further increase of 3.7%. Countries with increasing unmanned site count include Austria, Belgium, Denmark, France, Italy and Switzerland. Volatile Rents Service station rents are volatile in response to local market conditions and closely linked to covenant strength. The current average rents are summarised in the table below: Average site rents and volumes per country H1 212 Average Rent Average Volume 1, 5. 9, 4.5 8, 7, 6, 5, 4, 3, 2, 1, Average Volume per site. Page 2 212, CBRE Ltd

3 Site count MARKET TRENDS COUNTRY OVERVIEW AUSTRIA The Austrian service station network continued its trend of decline in site count numbers. There were 85 fewer sites in January 212 than in January 21. 3, 2,9 2,8 2,7 2,6 2,5 2, High Growth >3% The top five oil companies have maintained a network share status quo over the last few years, with the only shake up being Esso Petroleum exiting the market in 211 and selling all of its 173 sites to Eni-branded Agip. 3% 2% 1% % Convenience retail is developing in Austria and several supermarket chains took the opportunity of entering into joint ventures with oil companies. BP confirmed that Rewe Group s Merkur supermarket arm is working on a pilot project aiming at a possible cooperation at petrol stations. At present, the 132 shops at 15 BP-owned stations are supplied by wholesaler Lekkerland. Despite an increase in fuel consumption in 21, fuel volumes have followed a downward trend. We expect total fuel volume sales to maintain a downward trend until the end of 213. Rising oil prices led to a significant increase in observed pump prices. The average price of petrol and diesel increased by 13.3% and 13.4%, respectively. Plans were announced by Austrian Economy Minister Reinhold Mitterlehner to set up a system for a "price corridor" valid for periods with heavy vehicle traffic such as weekends and holidays so as to restrict Austria s service stations from charging more than the average price they posted seven to ten days before the busy period Rewe Group s Billa has also been delivering food to ConocoPhillips Jet stations since 27. There are plans to roll out the scheme to all Jet locations. Jet Billa Stop & Shop stores were considered the most up-and-coming brand in the Austrian service station industry according to a consumer survey carried out by Market Agent in 211. Shell Austria entered into a cooperation with SPAR - Austrian Commodity Trade in 212 with plans for more than 5 sites to be rebuild and branded as Spar Express by 212. The number of budget service stations and unmanned sites is on the rise in Austria: Aldi-controlled Hofer has decided to install its own petrol station concept, Diskont, across Austria after running a six-month trial at three Hofer store car parks in the Salzburg area. Hofer, together with its petrol station operator, Free Energy Traiding GmbH (FE), have since set up a further 27 Diskont stations. OMV is also expanding its low-cost service range Avanti to 5 sites across the country Page 3 212, CBRE Ltd September 212

4 September 212 Site count BELGIUM Medium growth 2% - 3% There are approximately 3, petrol stations in Belgium of which more than half belong to International petroleum groups and the rest to independent retailers. The increase in the price of oil in 211 coupled with there simply being too many service stations in Belgium has kept fuel volumes low. 25% 2% 15% 1% 5% % 4, 3,8 3,6 3,4 3,2 3, ,8. Fuel retailers in Belgium have a well developed shop offer. Shops exist on 68% of the total number of service stations. The major fuel retailers have well developed own -branded shops: Esso has a Snack & Shop retail outlet at over 7% of its service stations and Texaco s GO Shops cover over 77% of Delek s Texaco-branded portfolio. Q8 has a partnership with Delhaize for its Shop n Go stores which operate on 61% of Q8-branded service stations. There has been a lot of activity from the top oil companies in Belgium with Esso divesting approximately 2% of their portfolio by end of 212. In Q3 211 Shell also announced large scale disposal plans which, however, will not be put in action due to a strategy change towards growth/sustainability in 212. Similarly Texaco (Delek) is also acquiring sites. Independent operators are also growing their portfolios by adding new to industry sites some examples are Pollet, Octa+ and Maes. Lukoil entered the market in the second half of 211 by signing an agreement with Verolma Group to acquire 13 filling stations. It also reached an agreement with NGM Group to acquire another eight service stations, bringing its total network to 18 sites Shell has a partnership with Carrefour Express for convenience retail shops in certain sites. At 17.8% Belgium has a low penetration of unmanned sites. However, the number of unmanned sites has increased by 6% since 28, so it is a concept that is being explored. As the reduction in the total number of manned service stations continues, with closures from smaller independent companies, the number of unmanned stations on the other hand is expected to grow. Q8 and Dats 24, for instance, are expanding their unmanned networks at present. Octa+ opened up their first unmanned site in Page 4 212, CBRE Ltd

5 Site count BULGARIA Fuel volumes are following a downward trend, largely due to recent increases in the price of oil. The number of service stations is also considered to be unsustainable based on current trading. Datamonitor forecasts further fall in fuel volumes into ,2 3,1 3, 2,9 2,8 2,7 2,6 2,5 High Growth >3% Rompetrol has also announced its intention to open ten new sites and expand its network further. 2.% 16.% 12.% 8.% 4.%.% There are service station shops at 67.8% of sites in Bulgaria. Furthermore the count is steadily increasing. Despite the relatively high number of shops, convenience retailing is currently developing in maturity in Bulgaria. The top five fuel retailers by fuel volume sales account for less than 3% of all sites in Bulgaria. The remaining sites are operated by independent operators. A mere 1.3% of sites, amounting to 42 service stations, are located on the motorway, with over a quarter operating under the LUKOIL brand. Despite the market saturation of service stations, 211 saw a new entry represented by GAZPROM NEFT via Naftna Industria, a Serbian entity called NIS Petrol. NIS acquired 15 sites from independent operators and are looking to expand further At present OMV offer the most developed shop format across the network with its Viva stores, offering fast food restaurants and open plan stores with toiletries, confectionery, as well as newspapers and cigarette stands. Shell, which has McDonalds as a preferred partner in fast food convenience is also planning to release its Deli2Go project; a fresh food and drink brand. LUKOIL is in the meantime in negotiations with Burger King. LUKOIL is also the only fuel retailer operating unmanned service stations; 23 in total Page 5 212, CBRE Ltd September 212

6 September 212 Site count CZECH REPUBLIC Medium growth 2% - 3% Despite a drop in fuel demand by 7.3% since 21 the number of service stations in the Czech Republic is growing. 25% 2% 15% 1% 5% % 4, 3,5 3, 2,5 2, 1,5 1, 5 Austrian oil and gas group OMV is considering selling its refineries and filling stations in some Eastern European countries including the Czech Republic in order to boost some of its more profitable natural gas production units. Polish state-controlled oil firm PKN Orlen SA has expressed interest in buying some 22 filling stations owned by OMV AG according to Polish media sources. The value of the transaction could reach EUR164 million; the daily says. PKN Orlen, however, refused to comment With its growing service station network and expanding retail presence the Czech Republic presents oil companies and retailers alike with joint venture opportunities. Major oil companies have large shop networks but no significant partnerships with specialist retailers. OMV and Shell, for example, operate shops under their Viva and Select banners, respectively, but have not formed partnerships with any specialist convenience retailer at this time. Cepro EuroOil whose convenience offer is not very well developed could be another attractive joint venture opportunity for retailers. However, some big retailers are currently expanding their presence in the country. Tesco is one such example. The Czech Republic is one of its key target markets for expansion and Tesco has started opening their smaller format Tesco Express stores in the country. At present Tesco has 18 own branded service stations at its hypermarkets. However, with the acquisition of 128 Zabka and Koruna stores, they represent a potentially lucrative target for major oil companies in the Czech Republic, with potential for network expansion. Rewe Group, operating its Billa and Penny chains in the country, is also looking to expand. Given their track record with Jet in Austria they also present an attractive joint venture opportunity Page 6 212, CBRE Ltd

7 Site count DENMARK Five companies account for 95% of Denmark s entire service station network. The majors portfolios have been contracting since 26, reducing the entire network by 5% since this time. This consolidation, however, is accompanied by a consistent slump in fuel volumes. Consumption decreased by 5.8% in 29. A further decline in site count of approximately 1% is anticipated in 213 in an effort to grow volumes by disposing of secondary locations. The numbers of smaller and unmanned sites are growing off the back of the majors consolidation, with Others market share increasing by 47 sites in 212. OK s entire network is comprised of unmanned sites. Uno-X is the second largest unmanned operator in Denmark ,15 2,1 2,5 2, 1,95 1, Medium growth 2% - 3% % 2% 15% 1% 5% % 65% of all sites in Denmark are unmanned; the highest rate in Europe. The market is predominantly shaped by Uno-X and OK, which jointly account for 75% of all unmanned service stations in Denmark. Converting above-average fuel sales volume, as well as manned sites in remote and less populated areas into unmanned ones present an opportunity for operators looking to capitalise on the existing assets. The number of unmanned forecourts is likely to increase further in 213. Shop penetration in Denmark is rather low, with shops present at approximately 32% of the total number of service stations. Ongoing joint ventures are strong: A prime example is Shell s partnership with Reitan Group; the Shell / 7-Eleven format with approximately 267 service stations operating across the Nordic region as part of a joint venture. Q8 has developed the Qvik to Go store format offering convenience products and a range of food on the go. The large proportion of unmanned sites across the Q8 portfolio makes them a less likely convenience retailing partner. Low shop penetration, established joint ventures and local legislation restricting petrol companies from offering discounts on common goods limits the scope for new partnerships. 15 Sites with hop 1 5 Page 7 212, CBRE Ltd September 212

8 September 212 Site count FRANCE Medium growth 2% - 3% The continued market consolidation has consistently increased average fuel volumes in France. Verdict research, however, predicts a decline in fuel spend of approximately 2.4% by 213. Further decline in site count is therefore also expected. ExxonMobil. ExxonMobil will seek to strike similar deals with other firms for its network of about 7 service stations in France. 2% 15% 1% 5% % 16, 14, 12, 1, 8, 6, 4, 2, France historically pioneered hypermarket service stations in Europe in the mid 196 s, forcing a great deal of independent operators out of the market. They have also squeezed oil companies; more so than in any other European market. Although Total still owns the largest service stations portfolio, supermarkets dominate the service station market in France, with Carrefour, Intermarché, Système U and Leclerc combined commanding a total volume share of 33.2%. Indeed, four out of the five top companies in the market are grocers Despite the supermarket fuel retailers stronghold the French service station convenience retail market continues to be dominated by oil companies, due to the fact that supermarket-branded fuel outlets do not feature shop offers. The top three retailers rank in the following order: TOTAL with a market share of over 6% in forecourt convenience retail, followed by Esso and BP, with market shares in the region of 1% each. The average sales value per shop in France is 67,76 indicative of the strong turnover of sites featuring a shop in France. The service station convenience retail market in France is forecast to grow at an annual rate of 2.9% for the next two years according to DataMonitor research, which also indicates that around 45% of all service station visitors buy a non-fuel product with a reasonably high average spend at around 1 per trip. At present only 8.6% of the service station network is unmanned. However, the share has been gradually increasing over recent years. In Q1 212 ExxonMobil agreed to sell 46 of its petrol service stations in France to Israel s Delek Group. Delek would continue to operate the stations under the Esso brand and the stations would continue to be supplied by Page 8 212, CBRE Ltd

9 Site count GERMANY Market consolidation has led to fuel volume spreading and fundamentally increasing across the remaining sites. Volumes followed a downward trend in 211 and continued to do so in 212. This trend is expected to continue into 213 according to DataMonitor s research. 15,4 15,2 15, 14,8 14,6 14,4 14,2 14, 13,8 High Growth >3% The top five fuel companies account for 5.9% of the national service station network and 72.% of fuel volume sales. 25% 2% 15% 1% 5% % Favourable shop trading regulations for petrol stations have led to a high proportion of fuel outlets with a shop. They represent almost 94.8% of all service stations. Germany s convenience retail offer is among the most sophisticated in Europe, complete with grocery products and food services. In some cases they offer online stores. Although site consolidation is expected to continue, Aral has announced plans to grow their service station network by 15 sites by 217, primarily through partnerships with dealers. Other majors who have recently acquired a high number of sites are Shell and Orlen, who acquired 4 and 56 service stations respectively from TOTAL and OMV in Most fuel retailers have either partnered with local grocers or have their own shop brand. BP owned Aral s shop brand Petit Bistro features at almost all Aral fuel outlets and accounts for over a quarter of all convenience shop sales in Germany. Aral hos an online store offer. Shell has developed a convenience store concept branded under the Break Time banner, which focuses on food services. This is a new concept to the German market. Launched across 28 stores initially, Shell are introducing the concept to a further 4 outlets throughout 212. Esso, TOTAL, Avia and Jet also have large service station shop networks. are not a new concept to the German market. However, their site count has been fairly stable and mainly attributed to smaller independent operators. 15,5 1,5 5,5 5 Page 9 212, CBRE Ltd September 212

10 September 212 Site count HUNGARY High Growth >3% The Hungarian service station network is growing. According to an article published online by the Reuters - Austrian oil and gas group, OMV is considering selling its refineries and filling stations in some Eastern European countries including Hungary in order to boost some of its more profitable natural gas production units. OMV, however, have not formally confirmed this statement and have increased their portfolio in 211, albeit marginally by adding four new sites. 1,8 1,7 1,6 1,5 1,4 1, % 3.% 2.% 1.%.% Diesel prices have spiked in Hungary since the government raised excise tax in November 211 by 13 forints a litre, adding an additional strain to the declining fuel volumes. Volumes are forecast by DataMonitor to remain low until 213. The increasing price of Hungarian fuel has introduced the concept of fuel tourism with Hungarians close to the border with Austria nipping across to fill up. A gas station owner in the Austrian border town of Nickelsdorf has reported to index.hu fuel sales of 3, litres of fuel to Hungarians per day. The top five petroleum retailers account for 61.4% of the country s entire service station network With shop penetration of over 8%, Hungary offers lucrative partnership opportunities for convenience retailers. Although four of the major companies have a reasonable shop offer, with Shell Select, OMV Viva and Agip Ciao operating their own shop, none of the major oil companies have yet partnered with a specialist retailer. Retail co-operatives dominate the Hungarian convenience retail space. Co-op Hungary and Real Hungaria are two of the major retail co-operatives in Hungary. With their large networks of members and affiliates they are potential contenders for convenience retailing joint ventures. Tesco is also expanding its smaller format stores in both urban and rural areas. They have at present leased 51 of their own branded service stations to Shell for a term of 15 years in Page 1 212, CBRE Ltd

11 Site count ITALY Declining site count has led to fuel volume spreading and fundamentally increasing across the remaining sites. Volumes followed a downward trend in 211 and 212. This is expected to continue into 213 based on DataMonitor research. 23,5 23, 22,5 22, 21,5 21, 2,5 Medium growth 2% - 3% % 25.% 15.% 5.% -5.% Less than a third of the service stations in Italy feature a shop. The low proportion is partially a result of retail regulations promoting the opening of small to mediumsized stores which is hindering the growth of large format stores. As a result the retail market in Italy is fragmented, with a high proliferation of small and medium-sized stores. Big retailers are now looking to overcome regulatory hurdles and are considering service stations as a potential growth channel. For example Carrefour has teamed up with Agip for the opening of Carrefour Express stores across Agip s fuel retail network. Carrefour alone owns.1% of the fuel volume sold in Italy. Italy is viewed as a prime European market by the majors and despite the market consolidation there have been no bulk exits. New companies are entering the country. Lukoil added ten sites new to industry in 211for example. 8.9% of the network operates under the top five service station brands Retailers consortium Retitalia has also recently acquired 66 sites from Esso with the intention of retaining the sites within the sector. There was also a period of uncertainty on the market in anticipation of the Liberalisation Decree, passed by Italian parliament on 24th March 212. The new legislation, aimed at improving competition within various sectors, allows dealers to buy up to 5% of their oil demand in the market and no longer be subjected to exclusive tie agreements, thus making them competitive with white pumps. Dealers will also be able to sell food, drinks, newspapers and cigarettes. Constraints relevant to the creation of fully automated stations will be removed, with the only exception of urban areas which will likely see an increase in unmanned site count in the near future Page , CBRE Ltd September 212

12 September 212 Site count NETHERLANDS Despite declining fuel volumes, the Dutch network grew in 211. However, petroleum companies are progressively optimizing their networks and aiming to regain fuel volumes. Therefore we expect further decline in site count through 212 and ,4 4,2 4, 3,8 3,6 3,4 3,2 Medium growth 2% - 3% The decline in sites is likely to be attributable to smaller, independently owned sites that are often poorly located, and therefore most at risk from declining fuel sales. Despite the strengthening environmental regulations and high entrance costs the last few years have seen a few new market entrants. LUKOIL Belgium N.V., the most recent market entrant (a member of LUKOIL Group), has recently acquired 46 filling stations in the Netherlands from Verolma Group. The top five fuel retailers in the Netherlands by volume account for 49.% of all service stations in the country. Shell is the market leader by share of fuel volumes, accounting for 26.2% of all fuel sold in the Netherlands. BP is the second retailer by fuel volume. 3.% 25.% 2.% 15.% 1.% 5.%.% Only 55.5% of service stations feature a shop in the Netherlands. Although the total number of service stations has increased, the number of forecourt shops has not kept pace with the growth rate. Between 26 and 29 over a third of all new service stations were unmanned and did not feature a forecourt shop. The general convenience retail sector in the country, however, is experiencing a revival and large companies such as Albert Heijn, the largest food and grocery retailer in the Netherlands expanding their convenience formats fast. Competition is thus increasing. Their stores have an average area of 75-15sq m, long opening hours and are located at high traffic locations Page , CBRE Ltd

13 Site count NORWAY The past five years have witnessed a consistent reduction in site count, predominantly within major oil company networks, which in turn has led to stabilising fuel volumes. 2, 1,95 1,9 1,85 1,8 1,75 1,7 1,65 1,6 The top four companies by fuel volume market share continued divesting sites in 211. Best Stasjon stands out among the independent fuel retailers, entering the top five companies in Norway. Their volume share, however, is yet to make the top five list. The big news for 212 is the acquisition of 96.72% of Statoil s shares by Canadian based retail giant Alimentation Couche-Tard Inc through its wholly owned subsidiary Couche-Tard Norway AS Low growth <2% % 3.% 25.% 2.% 15.% 1.% 5.%.% Norway has the highest shop penetration across the Nordic region with a rate of 71%. However, shop count is declining in line with site consolidation. The number of unmanned service stations on the other hand has continued to increase, particularly in remote areas. Despite that, the proportion of unmanned sites in Norway is quite low in comparison to other Scandinavian countries, such as Denmark (65.1%) and Finland (52.8%). The Shell / Reitan Group (Shell/ 7-Eleven format) is one of the most popular joint ventures in the Nordics. It was awarded International Convenience Retailer of the year in 211. The store format includes a food and beverage range, offering a choice of fresh foods, high quality selfservice coffee and a wide range of soft drinks. Core convenience categories include news and magazines, confectionery, tobacco, ice-cream, groceries, electronic top-up services and lottery. The format also features car accessories and a branded car wash. Statoil has developed an own brand retail concept and is therefore also an unlikely candidate for a convenience retailing partnership Page , CBRE Ltd September 212

14 September 212 Site count POLAND Site count is growing rapidly in line with fuel volume. According to DataMonitor s forecast, fuel volumes will continue to increase in 213 in line with an expected increase in site count. 6,95 6,9 6,85 6,8 6,75 6,7 6,65 6,6 Poland s PKN Orlen is the leading fuel retailer by number of sites, total fuel volume share, number of motorway sites, and number of sites with a shop. The top five companies by market share account for 65.7% of total fuel volume sales in Poland Medium growth 2% - 3% % 3.% 25.% 2.% 15.% 1.% 5.%.% The proportion of sites with shop is approximately 6%; an almost 1% increase since 25. The top four companies by network share (PKN Orlen, BP, Grupa Lotos and Shell) have been continuously increasing the number of shops at their branded service stations. Trading restrictions on public holidays have prompted large supermarket chains to look into opening smallformat stores at petrol stations, which are exempt from these regulations. As a result, chains such as Intermarche and Tesco, with 17 and 26 own-brand service stations at their hypermarkets respectively, are trialling smaller format stores. Carrefour has opened convenience stores under the 5 Minut banner at three BP-branded service stations, while Spar Polska has also opened its Spar Express convenience stores at PKN Orlen and Bliskabranded service stations. Other leading retailers in Poland currently expanding their convenience offer and likely to be interested in a joint venture with an oil retailer are Zabka, Lewiatan and Euro Sklep. Zabka has already reportedly been in discussions with some fuel retailers for joint-venture opportunities. In line with a trend across the continent Polish fuel retailers are increasing the count of their unmanned sites, with Neste, Statoil and Intermarche leading the way Page , CBRE Ltd

15 Site count SLOVAKIA Site count grew in 211, albeit by four sites only. During the same period fuel volumes dipped slightly. Datamonitor expects total fuel volume sales to rise by 1.2% over 212 and , Medium growth 2% - 3% % 3.% 25.% 2.% 15.% 1.% 5.%.% The forecourt penetration in Slovakia is extremely high at 94.3%. Four out of the five top companies by fuel market share have shops at all of their sites. Slovnaft and Jurki sell own-brand consumer goods at their shops. OMV, Shell and Agip together account for 3% of the country s service station shop network and operate their own shop brands. These are Viva, Select and Ciao respectively. None of them have convenience retail partners at present. The top five fuel retailers in Slovakia account for 66.6% of the entire Slovak service station network, with 29% of all service stations in the country operating under the Slovnaft brand. Slovnaft s network share may be increasing in line with the recent announcement from Austrian oil and gas group OMV that as part of its downsizing strategy in Eastern Europe it is considering selling its filling stations in Slovakia. Slovnaft has indicated interest. However, no formal statements have been made by either company. Retailers are showing renewed interest in the convenience retail landscape. COOP Jednota (Slovakia s market food and grocery retail leader) is currently optimising its portfolio with a focus on its smaller format stores. Tesco, which has 16 own branded service stations, is planning to expand its smaller format stores. It is also the only fuel retailer in Slovakia to operate unmanned service stations Page , CBRE Ltd September 212

16 September 212 Site count SWITZERLAND Low Growth <2% Switzerland s service station network has not been consolidating at the same fast pace as the rest of its DACH neighbours and, as a result, fuel volumes have systematically lagged behind. 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 3,65 3,6 3,55 3,5 3,45 3,4 3, Switzerland s petrol station convenience stores have been experiencing a boom in development, in part because they can keep longer hours and are open Sundays and bank holidays, when food stores are closed. Larger format store developments are increasing. As part of its acquisition strategy Swiss supermarket chain COOP has expressed interest towards shops with sales areas larger than 5 sqm. Switzerland features a market exit and a new entry at the same time after the State Owned Oil Company of Azerbaijan (SOCAR) signed an agreement to buy ExxonMobil s Swiss affiliate, Esso Schweiz, through its local division SOCAR Energy Switzerland in Q SOCAR acquired Esso s entire network of 63 owned sites. At present the sites are still operating under the Esso brand for a transition period planned to run until Q3 of 212. COOP is also expanding, adding new to industry sites in-line with their convenience offer strategy The number of Migrolino shops at petrol stations is about to increase due to a deal with SOCAR Energy Switzerland (SOCAR), which is operating over 17 former Esso service stations in the country. Migrolino, which is owned by food retailer Migros, and SOCAR have signed a franchise contract deal that allows Migrolino to rebrand 55 existing former ESSO shops into Migrolino stores. Migrolino has currently 175 shops in Switzerland. Their network will grow to 23 stores. Migros also has a partnership with Shell of approximately 11 stations of which 59 are Migrolino-branded and 51 Shell-branded. All feature a Migrolino shop. Switzerland also has a developed unmanned network with 56.5% (2,48) of all sites falling within this format Page , CBRE Ltd

17 Site count UNITED KINGDOM The rate of site closure in the UK continues, however, it is at a slower pace than previous years and operators remain reasonably confident about long term trading prospects as fuel consumption is expected to continue rising until 213 according to Datamonitor. 1,5 1, 9,5 9, 8,5 8, 7,5 Low Growth <2% % 16.% 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% Over 8% of service stations in the UK feature a shop. Aggressive fuel pricing from supermarkets continue to put pressure on independent retailers and oil companies. Performance of their forecourt shops and other profit streams have been crucial to ensuring their viability. Both major and independent operators have entered into joint ventures or developed their own convenience offer. Good examples are the BP Connect Wild Bean Cafe and their Marks and Spencer relationship. BP also launched their new convenience retail concept, BP Essentials, for its dealer-owned service stations in June 211. The number of supermarkets and independents has continued to grow, with supermarkets accounting for 13% of the total site count and 35% of fuel volume. Indicative of supermarket dominance in the UK, Tesco amounts to 15% of the total fuel volume. 211 witnessed French major TOTAL exiting the market and selling 492 sites to Rontec, a newly formed Independent operator. Rontec then sold 254 sites in a back to back deal to Shell. Both companies have subsequently carried out portfolio optimisation and site rationalisation projects. Esso is another major oil company selling parts of its UK portfolio Along with Esso expanding their partnership with Tesco under the Tesco Express format, which features the fuel retail under Esso s branding and the convenience store branded as Tesco Express, Shell is also exploring a partnership with Waitrose through which the supermarket chain s products are available on two pilot Shell forecourts. In sync with their bigger competitors the independents are also creating relationships with the smaller supermarket groups such as Budgens, SPAR and Costcutter. Less than 1% of service stations in the UK are unmanned, with supermarket fuel retailers Tesco and Asda leading the way by introducing unmanned sites to their portfolios Page , CBRE Ltd September 212

18 September 212 APPENDIX A Independent Operators Breakdown** Austria Belgium Czech Republic Bulgaria Germany Hungary Page , CBRE Ltd

19 Italy Netherlands Poland Slovakia Switzerland United Kingdom Page , CBRE Ltd September 212

20 September 212 SOURCE This report was prepared by the Petroleum and Automotive department which forms part of CBRE Global Corporate Services in conjunction with CBRE Global Research and Consulting. Although the study focuses on 15 countries across Europe, this report is not an exhaustive representation of CBRE Ltd s global capability. RENTAL DATA METHODOLOGY Rents analysis carried out for the purpose of this report is based on a data set of 4,161 sites across the 15 countries featured in this review. It is an indication of average rent levels. It is not a definitive representation of rental amounts, which may vary greatly. The data sample used excludes motorway and ground lease sites. OTHER MARKET SHARE OPERATORS *Other operators for the purposes of this report include smaller, independent enterprises. Appendix A identifies independent operators and their site count per country where comprehensive data is available. ** Appendix A - Independent Operators Breakdown does not represent an exhaustive list of all independent operators per country. It is merely an indication of those well known to CBRE Ltd. For more information regarding the MarketView, please contact Simon Galway Executive Director, Petroleum & Automotive St Martin s Court 1 Paternoster Row London, EC4M 7HP t: +44 () e: [email protected] Mira Dabkova Assistant Surveyor, Petroleum & Automotive St Martin s Court 1 Paternoster Row London, EC4M 7HP t: +44 () e: [email protected] Disclaimer CBRE Limited (CBRE) confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE Global Chief Economist. Page 2 212, CBRE Ltd