SAN ANTONIO—Convenience-store operator CST Brands Inc. said Wednesday that its board had authorized exploration of a sale-leaseback strategy that would reduce the company's cost of capital while also funding future growth. The company has been evaluating alternative financial structures since this past spring.

"We expect this innovative structure will free up substantial capital that will enhance the company's ability to pursue its strategic growth initiatives," says Kim Lubel, CST's chairman, CEO and president. She adds that the real estate venture will give shareholders an opportunity to unlock additional long-term value from "potential upside in the company's ownership interest in the real estate venture."

CST expects the SLB strategy to boost its new-store ROI from unleveraged returns of 15% to over 30%. Recently constructed stores are expected to provide the venture's foundation initially; CTS has opened more than 100 locations since the beginning of 2014, with plans to open 120 more over the next two years and a total of 350 over the next five years, a construction pipeline with an estimated value of up top $1.2 billion.

RBC Capital Markets has been retained as financial advisor to CST in connection with the potential transaction. The company expects to announce a venture partner in the second quarter of this year.

Spun off from Valero Energy Corp. in May 2013, CST operates more than 1,900 stores across the US and Canada, including more than 600 in Texas. In addition, CST owns the general partnership of CrossAmerica Partners LP, an Allentown, PA-based distributor of branded petroleum products that owns or leases more than 800 of the 1,200 sites to which it distributes motor fuels.