European Petroleum Retail Sector Marketview September 2013 CBRE Global Research and Consulting

European Petroleum Retail Sector MarketView September 2013 CBRE Global Research and Consulting

RENTS FUEL VOLUMES SALES BUSINESS CONSUMER STABLE SLOWING DOWN MODERATE GROWTH CONFIDENCE CONFIDENCE

OVERVIEW The West and North European service station networks consolidated further in 2012. Growth was reported in Central and Eastern Europe.

Fuel volumes followed a similar trend. Market Share In this issue Volumes in Western Europe were down by 3.0% on average in 2012 against Major and international oil companies ° Market Overview increasing volumes of 6.6% on average hold approximately 50% of Europe’s ° Country Specific across Central and Eastern Europe. Fuel service stations network according to Sector Performance sales turnover, however, was not greatly Verdict Retail. Their share has fallen by affected by the decline in volumes by 5% since 2009. National and virtue of the rising cost of fuel. As a result Independent networks are expanding their coverage at a faster pace and have ° Austria total fuel sales in some countries at the end of 2012 were either on a par with, or grown by approximately 10% within the ° Belgium in a few cases even higher than, their same period. level of a year ago. Belgium and Supermarkets claimed a major share in ° Bulgaria Denmark were prime examples of rising the UK and France, however, they are not sales levels, in spite of lower volumes of ° Czech Republic dominant across the continent as a fuel sold across both markets. ° Denmark whole. See Chart 3. Fuel volume shares are still ° France Chart 1: Site Count Total dominated by the major oil companies ° Germany 100,000 virtue of licencing and branding ° Hungary 90,000 agreements struck between international 80,000 and independent companies on a local ° Italy 70,000 Total level. 60,000 ° Netherlands 50,000 The share of unmanned stations is NW 40,000 increasing across the continent. It is most ° Norway Europe 30,000 noticeable in weakened and growing ° Poland 20,000 CE economies. Italy’s unmanned stations 10,000 Europe count increased by 20% in 2012. ° Romania 0 Poland’s unmanned sites grew by 57% in ° Slovakia the last four years. 2009 2010 2011 2012 2013 ° Spain Source: Verdict Retail 2013 The growth of alternative fuel is also imminent, by virtue of ° Switzerland networks Service Station Rents were not EU and local legislation. Air Liquide, ° UK compressed by the economic downturn in Daimler, Linde, OMV, Shell, and Total the same way as office and retail rents are reviewing implementation of a and remained stable. This indicates that business model to build a joint strategically located sites can be a nationwide hydrogen refuelling station resilient asset class. Service station network in Germany. investment with a net initial yield of 5% OK, one of Denmark’s leading fuel 1 were reported in the UK. This is distributers, also announced plans to comparable with investment yields of build a number of methanol filling service station investments in other strong stations in line with plans announced by European economies such as Germany, the Danish government to phase out fossil Switzerland and Norway. fuels by 2050. September 2013 September OVERVIEW CONTINUED PETROLEUM RETAIL MARKET VIEW 2013

Carmaker Tesla is developing the concept of a Retail

Europe, Europe, Petroleum Retail | “Supercharger” network of fast-charge stations, which the company says would take 20 minutes to fill a battery with North and West European operators continued improving enough power to drive for 200 miles. their convenience retail offer. Central and Eastern European markets still feature a more basic convenience offer, The future of alternative fuel networks is still hard to forecast. comprising of a smaller shop only. Local customers perceive Leveraging existing fuel networks is a direction prospect service station convenience as expensive and therefore to be operators may consider. avoided at all costs. Attitudes are changing slowly and smaller fuel distributors are beginning to look at enhancing Chart 2: Total number of sites in Europe, 2013 their non-fuel offer to raise their profits. Some smaller fuel distributors in the region are enhancing their non-fuel 12,000 services to increase profits. Polish based Grupa Lotos 10,000 recently announced plans to develop its non-fuel business

MarketView due to decreasing fuel margins. 8,000

6,000 Shell is taking the concept of leveraging its network to a higher level and is currently road testing a new venture in 4,000 Berlin in conjunction with Regus. Seventy service stations are 2,000 being equipped with small office and conference facilities. Regus is creating a global network of business services at 0 non-traditional locations such as transport and retail hubs across Europe. The two companies already have a partnership in France.

Source: Verdict Retail 2012 UK supermarket chain turned fuel operator ASDA rolled out the Click and Collect shopping concept across its portfolio of service stations. 24/7 trading at an easily-accessible 2012/2013 Highlights geographically-widespread network of outlets is a logical A number of international oil companies announced plans platform for the concept. for exiting certain European downstream markets. Delek Another UK supermarket fuel operator, Sainsbury’s, made a Petroleum announced in March 2013 that it is considering pioneering acquisition of six standalone service stations in selling its holdings in Delek Europe. Calcalist financial 2013. The first Sainsbury’s Local service station, not reported that parties interested in Delek’s European portfolio attached to a supermarket, is in operation in Horley, UK. include Russian crude oil producer Rosneft and private equity firms Texas Pacific Group, Apax and Permira. It has All of the major fuel retailers have developed a premium been suggested that the fact that the Delek Group does not fuel offering. Germany, Italy, France, Poland, Spain and the own an oil refinery in Western Europe prompted the decision UK are listed as markets with potential for premium fuel sale to dispose of their downstream portfolio in the region. growth by Verdict . In Dec 2012 Shell acquired Neste Oil’s portfolio of 150 service stations in Poland. Just a few months later, in April Chart 3: Market Share per Fuel Retailer Type 2013 Shell announced that it is considering the divestment of its Italian service station portfolio.

Russian owned LUKOIL Group on the other hand is growing 20% Major its market presence across Europe with recent acquisition 32% activity reported in the Benelux region. The acquisitions International increased the Group’s site count in the region to 228. The 8% National fuel supply for these stations is sourced from the Zeeland Refinery (former TRN) where LUKOIL acquired a 45% stake Supermarket in 2009. Others 23% Esso sold 45 sites in the north of England and North Wales 17% 2 to Euro Garages in a consolidated portfolio deal in early 2013. Esso also sold its Scottish sites to independent forecourt operator MRH in March 2013. Source: Verdict Retail 2012 AUSTRIA 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Austria’s stable economic performance combined with the Shell transferred approximately 30 sites to Julius Stiglechner Europe, Petroleum Retail | need for modernization and consolidation of the existing GmbH (IQ), a medium-sized Austrian company. Under the service station network was reflected in rising demand for new agreement the transferred sites will operate under the primary locations to allow operators to grow fuel volumes. Shell brand for the foreseeable future. Shell’s disposal activity in Austria is likely to continue.

Site count vs. average fuel volume Historic site count Site Count Average Fuel Volume 2,850 2.60 700 2,800 2.55 Average volume per site 2,750 600

2.50 (millionlitres) 2,700 500 MarketView 2,650 2.45 2,600 2.40 400 Site count Site 2,550 2.35 2011 2,500 300 2,450 2.30 2012 2,400 2.25 200 2009 2010 2011 2012 2013 2014F 100 Source: Verdict Retail 2013 0

Market Share Source: Verdict Retail 2013

Service station site count declined by 3.0% to 2,515 in 2012. The decline in service stations is set to continue in Retail 2013. Service station retail is still developing in Austria. The top five oil companies in Austria accounted for over 60% of the national network, with OMV still in the lead Merkur, Austria’s top supermarket chain and part of the accounting for 18% of all service stations. Rewe-Group, formally entered into an agreement with BP in 2012. The new venture is named “Merkur inside”. The JET was the only operator in the top five companies that Rewe-Group is already represented at about 125 Jet petrol increased its network in 2012. stations in the country. They plan to open roughly 80 new establishments between now and the end of 2014 as part of the “Merkur inside” partnership.

Market Share per number of sites SPAR is continuing the implementation of the “SPAR Express” operation in partnership with Shell Austria. Shell plans to Turmol open 50 “Spar-Express” sites. Avia 4% 4% Jet IQ Shell is expanding its convenience retail service further by 4% 6% Others* offering “Integrated Cash Management” services across its 19% network. Shell teamed up with Easybank as the banking partner and Wincor Nixdorf as the technology partner to Genol equip their stations with ATM POS terminals. The new facility 8% will allow customers not only to withdraw cash but to profit OMV Shell 18% from automated deposits on site. An estimated total of 125 10% Shell stations in Austria will be equipped with the new terminals by the end of 2013. Agip BP 14% 13% The Hofer Supermarket chain, controlled by Aldi Sud, and Free Energy Trading GmbH (FE) added 20 self-service 3 Source: Verdict Retail 2013 stations at Hofer sites bringing the total number of FE 3 locations to 47.

Austria’s unmanned service station network has increased by 68% over the last year bringing the total count of unmanned stations to 412. September 2013 September BELGIUM PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Europe, Europe, Petroleum Retail | Despite economic uncertainty, service station rents and land In 2012 ExxonMobil divested 44 sites acquired by G&V, one values both increased in 2012. Belgium is expected to of Belgium’s largest independent petrol operators. G&V will remain static in 2013, before seeing growth of around 0.8% be ExxonMobil branded and will continue to sell ExxonMobil in 2014, marginally below the Eurozone average. products.

ExxonMobil announced that in Q4 of 2013 the rest of their Site count vs. average fuel volume network will be sold to multiple operators. G&V will acquire Site Count Average Fuel Volume an additional package of 24 sites in the Flanders area. Average Average volume Average siteper volume siteper 3,300 2.10 Average volume Average siteper volume siteper Maes Oil, a Belgian independent operator, will expand their existing network with 30 Esso branded sites in the Antwerp (million (million litres)(million litres) 2.08 (million litres)(million litres) 3,250 area. Belgian Carpark and Carwash Operator Uhoda will 2.06 MarketView 3,200 acquire the remaining 16 sites in the east of Belgium. 2.04 3,150 At the start of 2013 Delek Group announced they are Site count Sitecount Site Site count Sitecount Site 2.02 examining the possibility of selling all or part of the company 3,100 2.00 holdings in their subsidiary Delek Europe BV. Delek Benelux, 3,050 1.98 which acquired Texaco’s Benelux portfolio in 2008, owns 2009 2010 2011 2012 2013 2014F 276 service stations in Belgium. Interest in Delek’s downstream portfolio has been reported by Rosneft and Source: Verdict Retail 2013 private equity groups Apax, Texas Pacific Group and Permira. It is worth noting that Delek negotiated lower rents Market Share in the first five years of acquiring Texaco’s stations. The increase in rent levels is expected to result in increase in rent Despite a decline in fuel consumption, total fuel sales values upon rent review at their leasehold interests. grew by 16.1% by virtue of increased fuel pricing. Verdict predicts that total fuel volume sales will grow by the end of Russian owned LUKOIL Group is growing its market 2013 which is expected to result in increased fuel related presence in Belgium. Recent acquisition activity increased profits. the Group’s site count in the region to 228 (180 Belgium, 46 The Netherlands, 2 Luxembourg). The fuel supply for 54% of the service stations in Belgium were owned by the these filling stations is sourced from the Zeeland Refinery top five companies in 2012. (former TRN) where LUKOIL owns a 45% stake. Market share per number of sites Historic site count Hypermarkets Jet (Lukoil) 5% 1,600 6% 1,400 1,200 Shell 1,000 8% Others* 800 2011 35% 600 2012 Esso 400 9% 200 0

Texaco(Delek) 9% Q8 Total Source: Verdict Retail 2013 12% 16%

Source: Verdict Retail 2013 Retail The total number of service stations in Belgium declined by 4 International supermarket operators are entering the 1.1% in 2012 to 3,175 sites. The number of sites is expected petroleum retail market. British Tesco and French Carrefour to decrease further in 2013. The trend is expected to are prime examples. Belgian Colruyt (DATS), Cora and continue until 2015. Makro (Metro Group) also run their own fuel pumps at some 19.1% of all sites in Belgium are unmanned, up by 5% on of their sites. Although they own a relatively small share of 2011/2012 site count levels. the Belgian service station market, it should be noted that these retailers could be potential candidate buyers for service-stations divested by large international petroleum groups. BULGARIA 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

The last 12 months have been turbulent for the Bulgarian Romanian oil company Rompetrol opened ten new petrol Europe, Petroleum Retail | economy. The overturning of the Bulgarian government in stations in Bulgaria in 2012, bringing Rompetrol’s outlets in May 2013 was followed by continuous public unrest on the the country to 70. streets of the country’s capital. It is no surprise that there is less transparency into the market than there has been in According to Rompetrol management, there is increased previous years and developments within the industry are interest from owners of smaller, independent fuel stations in difficult to forecast. Bulgaria to join the Romanian business as franchise partners, meaning its network in the country could expand Site count vs. average fuel volume even further. Rompetrol’s appeal to the independents is governed by Site Count Average Fuel Volume

Average volume per site recent Bulgarian legislation which is driving the smaller fuel MarketView 3,200 1.00 merchants out of the market. One way for them to survive in 0.90 3,100 0.80 (millionlitres) the current climate is by striking a partnership with large fuel retailers. 3,000 0.70 0.60 2,900 0.50 Greek-owned fuel retailer EKO Bulgaria plans to expand its

Site count Site 0.40 filling station network through franchising and announced 2,800 0.30 that it is currently in advanced discussions with several local 2,700 0.20 companies. EKO Bulgaria is also seeking anti-trust 0.10 clearance for plans to acquire its Dobrich-based peer Vista 2,600 0.00 Oil. EKO Bulgaria, part of the Hellenic Petroleum group, 2009 2010 2011 2012 2013 2014F currently has a share of approximately 9% on the local fuel retailing market and plans to raise it to 13% by 2015. Source: Verdict Retail 2013 After entering the market in 2011 NIS Petrol, owned by Market Share Serbia's Naftna Industrija Srbije (NIS), acquired 14 filling stations in 2012. NIS Petrol plans to acquire the fuel 27% of service stations in Bulgaria are operated by the top retailing assets of Varna-based Rekar and Varna Petrol five fuel retailers. Group, Plovdiv-based Emko-M, Silistra-based Silgrans and Pazardzhik-based Neftotrans 2000. NIS is planning to The total number of service stations in Bulgaria declined by become an important stakeholder in the regional fuel 1.1% to 3,106. retailing market by the end of 2013. Petrol Bulgaria has the largest service station network, with 354 sites, which makes up 11.4% of all service stations in Historic site count Bulgaria. The majority of service stations (over 60%) in 2,500 Bulgaria are operated by smaller independent retailers. 2,000

Market share per number of sites 1,500 2011 1,000 Rompetrol 2012 2% 500 Petrom (OMV) 3% Eko Elda 0 9% (Hellenic) 9%

Source: Verdict Retail 2013 LUKOIL 7% Retail

Petrol Bulgaria Bulgaria’s convenience retail offer is basic and as such ripe 5 11% 5 Others* with potential to develop. Supermarkets have not yet entered 64% the service station market widely and therefore an opportunity exists to develop the concept.

LUKOIL remained the only company operating unmanned stations in 2012. Source: Verdict Retail 2013 September 2013 September CZECH REPUBLIC PETROLEUM RETAIL MARKET VIEW 2013

Overview

Europe, Europe, Petroleum Retail | The Czech Parliament recently approved an amendment to Verdict predicts that fuel consumption will decline further in the law on fuel distribution. This amendment has the 2013. However, they are also forecasting a recovery in fuel potential to reduce the number of fuel distribution firms in volumes sold in 2014. the country by as much as 50% of the current 1,850 firms, according to Cepro (Czech state-owned fuel retailer and oil Historic site count storage company). The amendment proposes an obligation on all new fuel distribution firms to pay CZK 20 million 2,500 (approximately EUR 769,539 or USD 1 million) as a deposit in order to operate in the country. Providing the Czech 2,000 President signs the amendment, it would be effective as of 1 October 2013. 1,500 MarketView 2011 Site count vs. average fuel volume 1,000 2012 Site Count Average Fuel Volume 3,750 1.40 Average volume per site 500 1.35 3,700 (millionlitres) 0 1.30 3,650 1.25 3,600 1.20 Site count Site Source: Verdict Retail 2013 3,550 1.15 3,500 1.10 2012/2013 Transactional Highlights 2009 2010 2011 2012 2013 2014F Hungarian oil company MOL purchased Czech fuel retailers Source: Verdict Retail 2013 Bohemia Realty and Pap Oil expanding its network of petrol stations in the Czech Republic by 124 to a total of 149, Market Share including 25 units controlled by MOL's subsidiary Slovnaft Ceska. This transaction has made MOL the fifth largest The five leading fuel retailers by fuel sales account for 29% company by site count in the country. Reportedly MOL is of the Czech service station network, with the largest group seeking to expand further to a 10% share of the market in operating under the Benzina (PKN Orlen) brand and the near future. Anton Molnar, a spokesman for MOL's accounting for 9.1% of all sites. Slovnaft unit announced interest in the Czech state-owned The number of fuel retail sites increased by 0.6% in 2012. fuel retailer and oil storage company Cepro.

Total fuel consumption in the Czech Republic continued to OMV, Agip and Robin Oil are each considering reducing fall by 0.7% in 2012 to 4,496.6 million litres, compared their presence in the Czech Republic, whilst Russia's LUKOIL, with 4,528 in the previous year. The trend is observed as a is considering expansion. result of increasing fuel prices. Reuters reported in 2013 that Czech downstream oil group Unipetrol has held talks with OMV about buying the Austrian group's Czech service station network. Neither Unipetrol, nor Market share per number of sites OMV have formally commented on these plans.

Hypermarkets Johannes Vetter, an OMV spokesman, announced in an Agip 2% (Eni) Robin Oil LUKOIL 2% 1% interview to Reuters that OMV do not intend to leave the 4% Czech market as they consider it one of their most integrated MOL 4% markets.

Shell Retail 5% Cepro EuroOil 9% The Czech Republic is seeing an increasing emphasis on OMV improving the convenience store offer at service stations. 6 6% Benzina AS Others (PKN Orlen) LUKOIL invited international designers Minale Tattersfield to 62% 9% design their Prague network upgrade. The new look was implemented at LUKOIL’s Barrandov service station in Source: Verdict Retail 2013 Prague. The new design will create a state-of-the-art offer with a strong focus on own-brand and partner-branded food-to-go and self-serve coffee.

Supermarket chain SPAR announced plans to grow its franchise network in the Czech Republic. DENMARK 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Despite pressured volumes and an increasing number of OK, the owner of Denmark’s largest service station network, Europe, Petroleum Retail | discount supermarkets, applying pressure on service station has expressed its eagerness to support the government’s shop operators, the market is still saturated and has seen initiative to phase out fossil fuels by 2050. OK has less activity over the last 12 months than any of its suggested that their existing network can be utilized for the neighbours. purpose of selling a cleaner fuelling solution.

Oil companies are focused on primary areas around the The company has announced plans to build a methanol larger cities and are still operating a company owned filling station, based on a conventional station operating platform. A shift to dealer owned platforms is noticeable in model. OK will partner with HAMAG, a station secondary and tertiary areas. manufacturer, and Serenergy, manufacturer of the fuel cells used inside Ecomove’s QBEAK vehicles. OK has not Rents and land values are reported as stable.

announced the total number of stations they are planning to MarketView build. It is also unclear whether they will utilize their existing network or acquire new sites for the purpose. Site count vs. average fuel volume

Site Count Average Fuel Volume Average volume per site 2,020 1.75 Historic site count 2,010 (millionlitres) 2,000 1.70 800 1,990 1,980 1.65 700 1,970 600 Site count Site 1,960 1.60 1,950 500 1,940 1.55 400 2011 2009 2010 2011 2012 2013 2014F 300 2012 200 Source: Verdict Retail 2013 100 0 Market Share

The number of service stations in Denmark declined by only Source: Verdict Retail 2013 0.25% in 2012 to 1,998 sites. 90% of all service stations in Denmark are operated by the top five fuel retailers. Retail

With fuel prices increasing, despite falling volumes, the As of 1st of October 2012 the Act on Closing Hours was value of total fuel sold increased by 10.8% from 2011 relaxed further allowing supermarkets and other shops to levels. Verdict predicts that fuel volumes will decline further extend their hours of operation. Operators have expressed by 1.6% until 2014. mixed sentiments towards the impact this will have on operations. Manned sites with shops will have the opportunity to develop their convenience offer further. The Market share per number of sites operational expenditure associated with the Act may see

Jet (Statoil) more conversions from manned platforms to unmanned for Others* 4% operators whose primary focus is not on convenience retail. 6% Unmanned sites in Denmark make up more than two-thirds of the entire network.

Q8 OK In line with the new Act, Denmark is already recording 12% 33% improved service station convenience retail offers, stronger focus on quality foods (to-go) and improvement of the “coffee-to-go” offer. Each petrol company is seeking to SFR establish its own branded offer on the market both with 7 15% regards to convenience retail and quality fuel supply. 7 Uno-X (YX Energi) Shell 15% 15%

Source: Verdict Retail 2013 September 2013 September FRANCE PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Europe, Europe, Petroleum Retail | Continuous market consolidation has had a positive impact Delek France announced the sale of its BP branded network over the remaining operators, allowing them to increase fuel in 2012. The transaction is expected to complete in early volume. 2014. This activity is aligned with the Delek Group announcement in 2012 that the Group intends to focus on France boasts one of the most developed service station its exploration activity. retail offers across the continent on a par with Germany and the UK. At the same time Delek acquired ExxonMobil’s West Atlantic network of 44 sites in May 2013. Site count vs. average fuel volume Historic site count Site Count Average Fuel Volume Average volume per site MarketView 13,000 3.60 5,000

12,500 3.50 (millionlitres) 4,000 12,000 3.40 3,000 11,500 3.30 2011

Site count Site 2,000 11,000 3.20 2012 1,000 10,500 3.10 2009 2010 2011 2012 2013 2014F 0

Source: Verdict Retail 2013 Source: Verdict Retail 2013 Retail Market Share In order to compete with the supermarkets’ petroleum retail The top three fuel brands accounted for 56% of the French dominance, major oil companies have had to rethink their service station network, with Total-branded sites comprising service offer. 34.3% of the national network. At the end of 2011 Total came up with the total access The total number of service stations in France declined by concept, combining low prices and premium Total-branded 2.1% to 11,798 sites in 2012. Verdict predicts the number fuels and services. The total access network is expected to of sites in France will fall by further 2.5%. comprise of:

Supermarkets dominate the service station market in France, ° around 300 Total-branded outlets, selected for their with Intermarché, Système U, Carrefour, and Leclerc ability to handle high traffic volume combined commanding a total fuel sales share of 47.2%. ° all Elf-branded service stations, which already deploy a Market share per number of sites low-cost strategy, but thanks to the total access concept will now be able to offer products and services, such as Geant Casino Agip (Eni) Shell Excellium fuels and GR cards, previously only available Other 2% 1% 1% Hypermarkets at Total service stations. 3% Auchan 3% BP (Delek) US-based Burger King has partnered with the Italian catering 3% company Autogrill to open two locations in France. The units Leclerc Total will open in 2013. The first site is expected to open at the 5% Systeme U 34% 6% Marseilles’ Provence Airport with the other at a motorway service station near Reims in the Champagne region. Esso 6% The partnership with Autogrill will also see the opening of Burger King outlets in Switzerland and Poland. The Carrefour 9% arrangement will see more stores open in airports, service Inrermarche stations and train stations. 8 Others* 13% 13% Delek are implementing the “Go The Fresh Way” concept, Source: Verdict Retail 2013 incorporating fresh sandwich shops and car wash across their network. Three sites were launched in May 2013, 22 more are expected by 2014. GERMANY 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview Germany is expanding its hydrogen filling stations network from 15 to 50 by 2015. Air Liquide, Daimler, Linde, OMV, Service stations were among the few real estate asset classes Shell, and Total are working on implementing a business Europe, Petroleum Retail | that were barely impacted by the economic downturn. Their model to build nationwide hydrogen refuelling station rents remained stable throughout the year. A great majority network in Germany. The objective of this initiative is to of the German service station network is privately owned. prepare for the planned launch of fuel cell electric vehicles Leased sites are considered a long-term investment which and build up the country’s hydrogen refuelling station explains why the sector generally witnesses less activity and/ network infrastructure. or noticeable fluctuation in rents typical for office or retail investments in a failing market. 2012/2013 Transactional Highlights

Fuel prices increased in Germany along with the rest of No major merger or acquisition activity was reported in Europe, however, consumption of fuel also increased. Germany in 2012. Verdict predicts that fuel consumption will continue to grow

in 2014. PKN Orlen, Poland’s largest retailer and refiner, is aiming to MarketView buy petrol stations in Germany and expand its Star brand in Site count vs. average fuel volume Europe. They are looking for takeover candidates in Bavaria to complement its existing network in Germany. At present Site Count Average Fuel Volume PKN has a market share of approximately 4% in the country. 14,500 3.95 Average volume per site 14,450 3.90 (millionlitres) 14,400 Historic site count 14,350 3.85 5,000 14,300 3.80 4,500 Site count Site 14,250 3.75 4,000 14,200 3,500 14,150 3.70 2009 2010 2011 2012 2013 2014F 3,000 2,500 Source: Verdict Retail 2013 2,000 2011 Market Share 1,500 2012 1,000 The big three petroleum companies Aral, Shell and Esso 500 continued their consolidation strategy. They are focusing on 0 high volume stations and improving the non-fuel related offer at their stations. Source: Verdict Retail 2013 Total continued to expand in Germany. They increased their portfolio in 2012 from 969 up to 1,007 stations (+ 3.9 %). Retail

Tamoil Owned HEM announced plans to expand its network Network owners in Germany are leveraging their strategic across Northern Germany by 100-150 sites over the next ten location to add income. Shell is currently road testing a new years. concept in Berlin in conjunction with Regus. 70 service stations are being equipped with small office and conference facilities. Regus is creating a global network of Market share per number of sites business services at non-traditional locations such as transport and retail hubs across Europe. Tamo OMV Hypermarkets Agip (Eni) il / 2% 0.28% Germany’s Service Station network features a highly 3% HEM developed convenience offer. As reported previously, most Star 3% 4% fuel retailers have either partnered with local grocers and supermarket chains or have their own shop brand. However, Jet German station operators have come up with the following 5% Others* Avia 32% pioneering enterprise aimed at indulging motorists even 5% further. 9 9 Total Ralf Mehlmann opened his first “Tank & Cut” in Konstanz at 7% the start of the year. The concept allows customers to fill up Esso their tank, get their car washed, grab something to eat – 9% Aral and also get a haircut. Ten additional locations should open Shell 17% this year and 100 more planned for in 2014. Watch this 15% space. Source: Verdict Retail 2013 September 2013 September HUNGARY PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Europe, Europe, Petroleum Retail | Rental levels and sale prices seemed to stabilize in 2012 Shell closed 17 sites in 2012 and 14 in 2013. after a significant drop was reported in previous years. Announcements were made earlier this year that more sites Rental interest remained focused on prime urban locations will either close or sell in the near future. OMV closed ten whilst sales occurred in regional and motorway locations. sites in 2012 with 170 remaining.

The market is forecast to stabilize further in 2013 according MOL closed four sites in 2012. to a statement by MOL Hungary. 'White stations' (stations free of supply tie, which can negotiate the price at which they buy fuel) like Oil! and Site count vs. average fuel volume Dallas have been expanding, taking over stations divested Site Count Average Fuel Volume by the major operators. 1,720 2.80 Average volume per site MarketView 1,700 2.70 (millionlitres) Historic site count 1,680 2.60 700 1,660 2.50 1,640 600 Site count Site 2.40 1,620 500 1,600 2.30 400 2009 2010 2011 2012 2013 2014F 2011 300 2012 Source: Verdict Retail 2013 200

100 Market Share 0 The top five fuel retailers by fuel volume sales accounted for 61% of the Hungarian service station network in 2012. MOL Source: Verdict Retail 2013 accounted for 22% of the national network.

All big oil companies have been downsizing and optimising Retail their retail networks. Verdict predicts that the number of service stations in Hungary will decline by 1.2% in the Service operators reported decreasing shop turnover in foreseeable future. 2012, attributed to higher fuel prices. According to the Hungarian Office of Statistics convenience store turnover Agip announced that they will be evaluating the declined by 2% in 2012. It is expected that the recently performance of their portfolio in 2013 with a view to introduced tobacco concession regulation will affect service optimising performance. station turnover negatively. The government’s decision for tobacco products to be sold only at authorized shops has Market share per number of sites meant that many stations would lose a chunk of their turnover. For instance, out of MOL’s 360 stations in LUKOIL AS24 Hungary, only 25 won a concession to sell tobacco under 5% 0.01 the new legislation. MOL has announced that it is looking for tobacco concession winner partners to set shop at 200 of their locations. OMV 11% Hypermarket chain Auchan, which operates service stations Others* under its own brand, announced plans to build more Esso 36% 9% stations at its existing hypermarkets, including the seven Cora stores they acquired in 2012.

Shell 10 14% MOL 22%

Source: Verdict Retail 2013 ITALY 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Investor confidence improved in the first half of 2013 as Major oil companies disposed of marginal sites to smaller Europe, Europe, Petroleum Retail | investment in Italian real estate exceeded €2 billion, an operators at regional level. ExxonMobil sold 63 sites in the increase of 16% compared to the same period in 2012. north-east of Italy to privately owned independent company Reteitalia. The service stations will remain ExxonMobil The industrial & logistics sectors accounted for 7% of the branded. total investment volume in the first six months of 2013. Despite improving investor interest, rents in Italy followed a White pumps ( stations free of supply tie, which can downward trend in the last 12 months. negotiate the price at which they buy fuel) numbers are steadily increasing. At a count of approximately 2,700 sites at the beginning of 2013, they represent 12% of the entire Site count vs. average fuel volume market. Site Count Average Fuel Volume

Average volume per site In April 2013 Shell announced that it was considering the 22,500 2.16 MarketView sale of its Retail, Aviation, Supply and Distribution 2.14 22,000 (millionlitres) Downstream businesses in Italy. Although several major 2.12 parties have indicated interest in the portfolio no offers have 21,500 2.10 been confirmed. 2.08 Site count Site 21,000 2.06 Historic site count 20,500 2.04 5,000 2009 2010 2011 2012 2013 2014F 4,500 4,000 Source: Verdict Retail 2013 3,500 3,000 Market Share 2,500 2011 2,000 The number of service stations in Italy declined marginally in 2012 1,500 2012 by 0.3% to a total of 21,585 sites. Site numbers are 1,000 expected to decline further by approximately 2% according 500 to Verdict. 0 Fuel consumption weakened by 5.6% during 2012 and is predicted to fall by a further 1% in 2013. Source: Verdict Retail 2013 Retail

Market share per number of sites Carrefour opened its first urban Carrefour Express store inside a Shell service station in the centre of Milan. A Others* Carrefour Express motorway site is also in service on a site 2% near Bologna. Tarmoil/HEM 9% Shell 6% The successful launch of their recent initiative is reportedly Eni (Agip) considered the start of a fruitful partnership by both 22% companies. Esso 11% Smaller fuel distributors in Italy are beginning to look at improving their non-fuel offer in order to grow their profits. API (API-IP) The high cost of absorbing fuel discounts has made fuel Q8 20% retailing unprofitable and almost impossible for small 13% distributors to sustain on its own. Focussing on non-fuel TotalERG retail has proven successful in other markets, such as Poland 16% for example, where Grupa Lotos recently announced plans to develop the non-fuel aspect of its business due to falling Source: Verdict Retail 2013 11 fuel margins. 11

Italy's independent service station operators are expected to mirror the trend set by their counterparts in markets such as the UK and Germany, and partner with well-known food and convenience retail operators, in order to attract customers. September 2013 September NETHERLANDS PETROLEUM RETAIL MARKET VIEW 2013

Overview

The Dutch service station network decreased by 6% in line LUKOIL, the latest market entrant, completed the rebranding Europe, Europe, Petroleum Retail | with failing fuel volumes. Verdict expects the number of of all 46 service stations they acquired from Verolma Group service stations to consolidate further by approximately 6%. in 2011. Verdict forecasts that fuel consumption in the Netherlands is also expected to decline. 2012/2013 Transactional Highlights

Lower fuel volume sales in 2012 resulted in pressured rents. At the start of 2013 Delek Group announced they were 2012 rent reviews witnessed rent reductions which is great examining the possibility of selling all or part of the company news for occupiers able to take advantage of the market holdings in the subsidiary Delek Europe BV. Delek Europe conditions, but not so good for landlords basing their initiated its "footprint" through its wholly owned subsidiary, expectations of return on investment on market growth. Delek Benelux, through the purchase of 870 Texaco gas Rents are, however, reported to be stabilising gradually. stations and 410 convenience stores in the Benelux area.

MarketView Third parties have been invited to submit bids to buy Delek Site count vs. average fuel volume Europe BV. Delek own approximately 429 stations in the Netherlands. An article in the Calcalist Financial reported Site Count Average Fuel Volume 4,400 2.90 that the company was in talks with select bidders to sell its Average volume per site European operations for €800 million ($1.06 billion). 4,200 2.80 2.70 Calcalist said those interested included Russian crude 4,000 (millionlitres) 2.60 producer Rosneft and private equity firms Texas Pacific 3,800 2.50 Group, Apax and Permira. 3,600 2.40 Site count Site 2.30 3,400 2.20 Historic site count 3,200 2.10 2009 2010 2011 2012 2013 2014F 1,400 Source: Verdict Retail 2013 1,200

Market share 1,000

Shell had the largest network of service stations, capturing 800 15% of the entire Dutch service station network. This was 2011 followed by Texaco, with 11.8% of the service station 600 market, and total, with 11.6%. 2012 400

Shell also retained its position as the largest fuel retailer by 200 fuel volume share, accounting for 27% of all fuel volume sales, followed by BP, with a 13% share, and Texaco, with 0 10.8%. Source: Verdict Retail 2013

Market share per number of sites Retail

Q8 (Kuwait) Gulf Brand Oil Service stations are improving their convenience retail offer 3% 3% 1.67% Tamoil as a means of attracting clients and growing fuel volumes. 4% Income generation initiatives such as Shell’s “2theloo” Others* 16% partnership are adding opportunities to grow service stations Avia profits. “2theloo” offers refreshing restroom facilities, with a 7% range of toiletries, gifts and gadgets for sale. Family Shell restrooms for parents with kids are available at some outlets. Tinq (Gulf) 15% 7%

Esso 12 9% Texaco (Delek) 12% BP 10% Total 12%

Source: Verdict Retail 2013 NORWAY 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview Europe, Europe, Petroleum Retail | The residential real estate market in Norway is growing, Total fuel volume sales in Norway declined by 2.4% creating opportunities for alternative use site divestments of compared to 2011 levels . service stations in densely populated areas. 2012/2013 Transactional Highlights Continued service station network consolidation therefore provides developers and property investors a choice of 2012 was defined by the takeover of Statoil Fuel and Retail prime location sites to bid for and convert. (SFR), the former retail arm of Norwegian oil giant Statoil ASA, by Canadian based retail giant Alimentation Couche- Tard Inc.

Site count vs. average fuel volume With SFR, Couche-Tard took control of 2,300 service

Site Count Average Fuel Volume stations in Scandinavia, the Baltic states and Poland, as well MarketView 1,850 2.10 as a dozen fuel storage terminals, located along key spots Average volume per site 2.00 on the European coastline. SFR's real estate assets alone are 1,800 1.90 (millionlitres) estimated to be worth at least 10 billion kroner ($1.7 billion). 1,750 1.80 1.70 Site count Site 1,700 1.60 Historic site count 1,650 1.50 2009 2010 2011 2012 2013 2014F 500 450 Source: Verdict Retail 2013 400 350 Market Share 300 250 2011 In 2012 the number of service stations in Norway was 200 1,750, down by 27 sites or 1.5% compared to 2011. 2012 150 The top five fuel operators accounted for 91% of all service 100 stations in the country. 50 0 Three of the top five each divested sites in 2012. Shell’s network reduced most significantly by 9.2% equating to a Source: Verdict Retail 2013 net loss of 42 outlets between 2011 and 2012. Verdict forecasts service station numbers will decline further to Retail approximately 1,690 sites. There is an increasing trend for improving the “grab and go” food offer as well as growing preference for healthy Market share per number of sites food options served across Norwegian forecourt shops. Jet (St1) 2% Service station shop sales are under pressure due to strong competition from grocery chain stores such as Kiwi, Others* 7% Bunnpris, Rimi etc. which benefit from longer opening hours. Best SFR Stasjo 26% n 7%

Esso 16%

Uno-X Energi Shell 24% 13 18% 13

Source: Verdict Retail 2013 September 2013 September POLAND PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Europe, Europe, Petroleum Retail | The Polish service station network continued to grow Grupa Lotos, Poland’s fourth biggest fuel retailer announced throughout 2012. Poland is one of the most active fuel retail intentions of growing their portfolio to 400 sites. Their markets across the continent, attracting a lot of attention particular interest is acquiring family owned companies with from international oil companies and supermarket chains. several stations, creating an opportunity for smaller enterprises to grow as part of the Lotos Group.

Shell took over the entire Neste Oil filling station network in Site count vs. average fuel volume Poland for a reported €80 million. The transaction, expected Site Count Average Fuel Volume to complete in 2013, will add 105 unmanned stations to 6,900 3.30 Average volume per site Shell’s portfolio. Petrol Plaza (15-12-2012) reports that 6,850 3.25 Neste Polska generated €250 million in sales in 2011. PKN (millionlitres)

MarketView 6,800 3.20 Orlen and Grupa Lotos both bid for the portfolio. 3.15 6,750 3.10 Automated station operator Momo announced plans for 6,700 Site count Site 3.05 growing its network and branching out into manned service 6,650 3.00 stations. They plan to expand within West Europe in 2014. 6,600 2.95 At the same time Poland's fifth biggest petrol station network 2009 2010 2011 2012 2013 2014F owner, Couche-Tard Inc owned Statoil, announced it is considering putting their portfolio in the country up for sale. Source: Verdict Retail 2013 According to Polish daily Dziennik Gazeta Prawna the most likely buyer is Russia's LUKOIL. Neither company has made an official statement. Market share

Despite rising fuel prices, growing fuel demand in Poland Historic site count led to 3.2% increase in fuel volume sales in 2012. Verdict Retail predicts that fuel volumes will continue to grow. 4,000 3,500 The top five operators accounted for 50% of service station numbers in 2012. PKN Orlen still dominates the market 3,000 owning approximately a quarter of the entire network. 2,500 According to Verdict the total number of service stations in 2,000 2011 Poland is expected to grow further by 2.4% by 2015. 1,500 2012 1,000 Market share per number of sites 500 0 Hypermarkets LUKOIL 2% 2% Source: Verdict Retail 2013 Grupa Lotos Statoil 6% 5% Retail BP 6% The French independent retailer Intermarché announced Others* Shell plans to open 30 new stores in Poland. It will expand its 46% 7% petrol station offer across its existing network of supermarkets in the country. The retailer will be piloting the Intermarché Express format in Warsaw and other large cities PKN Orlen on sites with sale areas of 500 square metres and more. 26% Burger King is also expanding its presence in the country in conjunction with its partnership with Italian catering 14 Source: Verdict Retail 2013 company Autogrill. ROMANIA 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights Europe, Petroleum Retail |

Total fuel consumption in Romania declined by 5% in 2012. LUKOIL is the only operator displaying signs of Verdict Retail estimates that fuel consumption in Romania consolidation. The oil company divested 27 sites in will decline by a further 1.5% by the end of 2014. 2011/2012. The majority of their sites are positioned on motorways. The total number of service stations in Romania also declined by 2.7%. Verdict Retail suggests the network will GAZPROM entered the market in 2012. It is expected that contract by additional 1.8% to approximately 1,962 sites. they will add 50 new sites to the network by the end of 2013. At present there are 12 GAZPROM sites. Site count vs. average fuel volume

Historic site count MarketView Site Count Average Fuel Volume Average volume per site 800 2,050 2.8 700 2.7 (millionlitres) 2,000 2.6 600 1,950 2.5 500 2.4 400 Site count Site 2011 1,900 2.3 300 2012 1,850 2.2 200 2009 2010 2011 2012 2013 2014F 100

Source: Verdict Retail 2013 0

Market share Source: Verdict Retail 2013

The top five fuel retailers in Romania account for approximately 60% of the entire network. Petrom has the Retail largest coverage, accounting for 20% of the national network. 73% of all stations feature a convenience retail offer, however, the public perception is that these shops are generally more expensive and they are used out of necessity Market share per number of sites rather than convenience.

Supermarkets have not yet entered the service station market Agip (Eni) widely and therefore an opportunity exists to develop the 2% concept. OMV(Petrom) 8% MOL 7%

Others* 35% Esso 9%

LUKOIL 15% Petrom 20%

Source: Verdict Retail 2013 15 15 September 2013 September SLOVAKIA PETROLEUM RETAIL MARKET VIEW 2013

Overview

Europe, Europe, Petroleum Retail | The number of service stations in Slovakia has been growing LUKOIL and Shell are both expanding their portfolios, continuously since 2009. Verdict forecasts the network will following in Slovnaft’s footsteps. OMV is consolidating its increase by 2.9% in the foreseeable future. network and have suggested that they may be exiting Slovakia altogether in the near future.

2012/2013 Transactional Highlights Site count vs. average fuel volume As a smaller market Slovakia has not had any major activity. Site Count Average Fuel Volume Only single site transactions took place in the last 12 735 2.90 Average volume per site months. 730 2.80 (millionlitres) 725 2.70 MarketView 720 2.60 Historic site count 715 2.50 Site count Site 710 250 705 2.40 700 2.30 200 2009 2010 2011 2012 2013 2014F 150 Source: Verdict Retail 2013 2011 100 2012

Market share 50 Slovakia is one of Europe’s smallest markets, yet it features stable fuel volumes, compared to some of the bigger and 0 more developed markets. After increasing by 11.6% at the Source: Verdict Retail 2013 start of 2011, total fuel volumes increased further in 2012 by 1.6%. Verdict estimates that total fuel volume sales will continue to grow off the back of the expanding network.

Two-thirds of all service stations in Slovakia are operated by Retail the top five fuel retailers. Slovnaft have the largest service Tesco continued expanding its smaller format sites in 2012. station network, equating to 30% of the entire market. It also remained the only unmanned sites operator in Slovakia with 17 sites, run exclusively by Tesco.

Market share per number of sites 681 sites feature a convenience shop, which is approximately 94% of the entire network. However, growth of retailers expanding their share on the market has not Tesco LUKOIL 3% 2% been significant in the last 12 months.

Jurki 9% Slovnaft Esso 30% 9%

OMV 14%

Others* 31% 16 Source: Verdict Retail 2013 SPAIN 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

The economic downturn, increasing unemployment and The last major investment deal was reported in 2011 when Europe, Petroleum Retail | strict austerity measures led to general lack of market Eroski sold 28 petrol stations on a sale and leaseback basis confidence in 2012. Rents and freehold values weakened in to AXA for €55,000,000. all property sectors. Spanish borrowing costs, however, stabilized in the second half of 2012 leading to a more Following the 2011 sale, Eroski are reportedly considering positive outlook in 2013 and forecasts of economic the sale and leaseback of a further 20-30 petrol stations in improvement. order to obtain more liquidity. It is unlikely that Repsol and Cepsa, will undertake a similar exercise. Their low debt 2012 austerity measures impacted the petroleum industry levels enable them to obtain cheaper financing and the with the introduction of a new sales tax on Determined volumes associated with such transactions have minimal Hydrocarbons (or the ‘Centimo for Health’ tax), allowing effect on their balance sheets. Major activity in the sector is

regional authorities to introduce their own tax on petrol therefore expected to be focused on supermarket or MarketView sales. Biofuels, which previously enjoyed tax exemption, independent operators facilities in the foreseeable future. were also taxed in the new budget announced in June 2012. In 2012 only one private investor purchase was reported of an individual petrol station in Madrid for €2,000,000. Site count vs. average fuel volume The main merger in 2012 was Cepsa’s purchase of 100% of Site Count Average Fuel Volume Chevron España shares. Cepsa took over Chevron’s fuel 10,500 3.50 Average volume per site business, including 64 Texaco petrol stations in the Canary 3.00

(millionlitres) Islands, where Cepsa is now a major operator. 10,000 2.50 2.00 9,500 Historic site count 1.50

Site count Site 1.00 9,000 4,000 0.50 8,500 0.00 3,500 2009 2010 2011 2012 2013 2014F 3,000 2,500 Source: Verdict Retail 2013 2,000 2011 1,500 2012 Market share 1,000 The top five companies in Spain make up 68% of all service 500 stations. The total number of service stations in Spain 0 continued to grow by 0.7% to 10,309 sites in 2012. Despite the difficult economic conditions the service station network is expected to increase further. Source: Verdict Retail 2013

Fuel consumption in Spain followed a downward trend which started in 2010. Volumes declined by 5.8% to 25,760 Retail million litres in 2012. In July 2013 Repsol announced that it was planning to introduce Campsa Express, their new low cost petrol station Market share per number of sites brand, to the market. The Campsa Express concept will be completely unmanned and will not feature a convenience Hypermarkets Meroil Avia store. Repsol has piloted the new project across ten service 4% 2% 1% Shell (Disa) stations and are assessing their performance before 4% Galp implementing the new model widely. 6%

Repsol BP 35% 17 7% 17

Cepsa 16%

Others 26% Source: Verdict Retail 2013 September 2013 September SWITZERLAND PETROLEUM RETAIL MARKET VIEW 2013

Overview 2012/2013 Transactional Highlights

Despite a favourable economic forecast declining fuel Following the acquisition of Esso Switzerland, reported in Europe, Europe, Petroleum Retail | volumes and increasing pressure on pricing were reported in 2012, SOCAR, the State Oil Company of Azerbaijan, took 2012. In addition to that, an estimated 2,200 inhabitants over a retail network consisting of 170 filling stations, per service station compared to Germany’s 5,670 customers including a division specializing in fuel marketing for per service station indicate that consolidation activity will industry and wholesale clients. continue. BP Switzerland estimates that a quarter of the stations in the country are unprofitable. SOCAR also took over the Wangen-Olten gas filling stations, a number of filling stations and joint ventures In 2013 the Swiss Parliament announced plans for a fuel tax specializing in aircraft fuelling at Geneva and Zurich airports increase. If allowed, this legislation will press margins further and the Swiss Provision and Supply Company that controls and potentially put an end to “fuel tourism” across stations joint ventures managing terminals and pipelines. The above in close border proximity. activity has meant that SOCAR now has a 7% fuel volume

MarketView share and approximately 5% site count of service stations Site count vs. average fuel volume they operate and own.

Site Count Average Fuel Volume No other major portfolio activities have been reported. 3,650 1.96 Average volume per site 1.95 3,600 (millionlitres) 1.94 Historic site count 3,550 1.93 3,500 800 1.92 Site count Site 700 3,450 1.91 600 3,400 1.90 500 2009 2010 2011 2012 2013 2014F 400 2011 300 2012 Source: Verdict Retail 2013 200 100 Market Share 0

The top five operators by fuel volume share accounted for Source: Verdict Retail 2013 63% of the Swiss service station network. BP has the largest volume share at 14%, but only the third largest network in Retail site count. In December 2012 the Swiss Parliament passed an The Avia-branded network is the largest in terms of sites in amendment to the Employment Law Act 1964, extending the Switzerland, accounting for 20% of sites nationwide. hours of operation of convenience shops at stations located on motorways or main roads with high-volume traffic. The Market share per number of sites previously mandatory opening hours system meant that staff on petrol stations were only allowed to sell items covering SOCAR Others* immediate travellers’ needs (e.g. newspapers, coffee, soft 5% 4% COOP drinks, sandwiches), while the sale of all other items (beer 6% and chips among others) was prohibited between the hours Avia 19% of 1:00am and 5:00am and on Sundays. The recent regulatory amendment will enable shops at motorway Agip stations to remain open at night and on Sundays, offering 8% the full range of convenience store products. A public vote Agrola Migrol set for the autumn of 2013 will decide whether late opening 12% 8% hours can be extended across shops on the entire network. Ruedi Russel BP If allowed this move would pave the way for operators 9% 11% growing their fuel sales through an improved convenience 18 Shell 9% offer. Convenience retail is reportedly one of the few retail sectors in Switzerland reporting growth in 2012, with Tarmoil / HEM retailers such as Migrolino, Co-op Pronto, Avec, Volg and 9% Agrola leading the growth trend.. Source: Verdict Retail 2013 UNITED KINGDOM 2013 September PETROLEUM RETAIL MARKET VIEW 2013

Overview The Supermarkets’ share of the sector climbed from 39% to

46.6% of fuel volume sold in a year in the UK, with greater Europe, Petroleum Retail | 2012 fuel volumes were stable. A decline of only 1.1% was concentration on the market of fewer, bigger sites owned by reported against 2011 levels and 6% against 2002. Average the supermarkets. This trend is set to continue. fuel prices grew in 2012. 2012/2013 Transactional Highlights One significant difference to the previous year was the number of sites changing their operational model from The majority available sites are low quality stock as a result Company Owned to Dealer Owned. 166 conversions were of the major operators continuing to rationalise their reported in 2012 in contrast to only 19 in 2011. More than portfolios such that they only retain the most profitable sites. 70 Esso and Rontec sites converted to the DOCO (Dealer Owned Company Operated) model. 13 Shell and six BP Esso sold 45 sites in the north of England, Yorkshire and sites also moved into the dealer sector. North Wales to Euro Garages in early 2013. Fuel will continue to be supplied by Esso, while the shops will be re- MarketView Petrol station planning rules may be eased to encourage branded to SPAR. growth on UK motorways. Government has announced plans to make service station opening “easier and quicker” In March 2013 Esso sold its Scottish sites to indie forecourt on England’s motorways and major roads. It is yet to be operator MRH. seen whether these plans will materialize and what Irish operator Petrogas, has plans to acquire 17 new difference, if any, this will make to the service station properties in 2013 and expand further beyond 2014/2015. network. 23 BP sites, mainly in the south, came to the market in Site count vs. average fuel volume 2013. The sale of the sites will mark the final stage of the disposal of BP’s downstream network in UK. The BP brand Site Count Average Fuel Volume will remain visible through a network of dealer operated and

9,400 3.90 Average volume per site franchised properties. 9,200 3.80

9,000 3.70 (millionlitres) 8,800 3.60 Historic site count 8,600 3.50 3,000 Site count Site 8,400 3.40 8,200 3.30 2,500 8,000 3.20 2,000 2009 2010 2011 2012 2013 2014F 1,500 2011 1,000 Source: Verdict Retail 2013 2012 500 Market Share 0

The oil company owned sector now has less than 35% of the Source: Verdict Retail 2013 total sites and is also down to less than 27.5% market share by fuel volume sold. Retail Sainsbury’s acquired leases for six standalone stations. The Market share per number of sites first Sainsbury’s Local, not attached to a supermarket, is in operation in Horley. Offers have been invited for the sale of Sainsburys Asda 3% Morrisons 2.25% the investment in the remaining five sites. Jet 3% 4% SPAR UK and Harvest Energy teamed up to launch a SPAR- Murco/EP Others* branded forecourt concept, designed to offer convenience 5% 20% retailers a competitive fuel supply deal with an advanced Tesco shop offer. 6% Supermarket chain NISA also plans to convert ten of its 130 GB Oils 19 Shell 19 14% stores to offer a service station facility. 10% Morrisons continued growing their re-branded convenience Esso BP chain, Morrisons M Local. The acquisition of six former HMV 10% Texaco 13% and 49 Blockbuster stores, makes them a prime candidate 9% for potential joint ventures. Source: Verdict Retail 2013 September 2013 September WE COVER…

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Global Research and Consulting This report was prepared by the CBRE EMEA Petroleum and Automotive Team in conjunction with CBRE EMEA Research Team which forms part of CBRE Global Research and Consulting – a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe.

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