It took dozens of site visits across eight states in eight days this spring for John Oliver and Peter Stark to double the size of their real estate firm’s portfolio.
But the schlepping, which Oliver joked was like a Homeric Odyssey, was worth it.
Their company, Battle Monument Group, closed on the purchase of 44 Dollar General stores for a total of $41 million. The April deal came a few weeks after the firm had acquired another 21 Dollar General stores for $14.5 million.
Those hauls brought the downtown Richmond-based based firm’s total portfolio to 115 properties in 20 states. More than 100 of those are leased to Dollar General and all of them have been acquired over the last seven years.
Oliver and Stark, who own Battle Monument with Mike Brumagin, hit the road in Oliver’s SUV to cover more than 6,000 miles around the Deep South, checking out the various properties.
“You wouldn’t want to be in that truck with me and Peter, but it was fun at the same time. I laugh every time I think about it,” Oliver said, reminiscing about the trip. “We sang a lot of old songs together and laughed at ourselves.”
The stores are mostly concentrated in Florida, Mississippi, Texas, Alabama and Kentucky, Oliver said, adding that each portfolio was purchased from two different sellers.
Oliver said they previously had made a run at the 44-store portfolio. “We weren’t quite large enough to take it three years ago and we had to just accept that,” he said. “When it surfaced again, we jumped on it with everything we had.”
Battle Monument found out about the separate 21-store portfolio in a bit of a different way.
“We got a postcard in our lap from a broker, who was reaching out to anybody to buy these 21 properties,” Oliver said. “We said, ‘You know what, we can do that one, too.’”
The deals were financed by Southern Community Bank, a local offshoot of Tennessee’s Sevier County Bank that arrived in Richmond earlier this year.
Oliver said the broader real estate investment market has started to take notice of dollar stores in small towns as investments, but that it’s still going to be Battle Monument’s niche.
“The market has awakened a little bit to the value fundamentals of these properties,” he said. “The prices are a little more aggressive and cap rates are compressing a little bit. But they’re still a bargain from our perspective because interest rates have come down and the value is there.”
He said it’s less practical for larger institutions to invest only $800,000 to $1 million per store, something that’s not a challenge for smaller groups like Battle Monument. “We’re pretty good at it and we’re not afraid of going on a 6,000-mile road trip,” Oliver said, laughing.
Battle Monument is funding the new deals in part with investor capital. Last summer it opened a pair of capital raises seeking a total of $35 million.
The larger raise, which sought $25 million, has been completed, Oliver said. The smaller fund has raised $4 million of the $10 million it’s seeking.
“We didn’t anticipate this but the larger fund has been extremely well-received. The smaller fund is doing better than expected as well, but when you’re taking money in smaller chunks it takes longer to fill in,” Oliver said.
The larger fund was initially targeted at institutional investors, but Oliver said they shifted that approach.
“We ended up finding a way to appeal to individual investors on the larger fund as well, doing things like adjusting the minimum investment for a few months. People came at us in droves,” he said.
In the near term, Oliver said, they’re organizing the 65 new stores that they bought in the last roughly 60 days. Come fall, he said, they’re planning to open another fund and will continue to search for properties.