NEW YORK CITY—Brookfield Property Partners is acquiring Capital Automotive LP from DRA Advisors LLC in a deal valued at $4.283 billion. An industry source familiar with the matter confirms a Reuters report that the specialty finance company for the auto industry will launch $400 million in debt facilities to help fund the transaction, which also includes the assumption of all existing debt.
McLean, VA-based Capital Automotive, which provides sale-leaseback capital to help car dealers upgrade their facilities and acquire new ones, has more than $3.5 billion invested in more than 450 dealerships in 37 states. It was launched in 1997 as a REIT and co-founded by David S. Kay, now president of American Realty Capital Properties. DRA took Capital Automotive private for a reported $3.4 billion in 2005.
Michael Souers, a credit analyst with Standard & Poor’s, said in a report issued Thursday afternoon that BPY is expected to control Capital Automotive through an investment fund, similarly to how it was managed under DRA Advisors. A BPY spokeswoman declined to comment on the reported transaction.
S&P is maintaining a “stable” outlook for Capital Automotive, which formerly traded on NASDAQ under the CARS ticker. “The stable outlook reflects our expectation that improving automotive sales and strong tenant rental coverage will continue to provide CARS with a stable base of rental income,” according to S&P’s report. “While the added debt incurred by this financial transaction results in somewhat more aggressive leverage metrics, we expect CARS to deleverage slightly over the coming few years.”
A Fried Frank Harris Shriver & Jacobson team that includes real estate partner Joshua Mermelstein; corporate partners Stewart Kagan and David Shaw; executive compensation and employee benefits partner Donald Carleen; litigation partner Gregg Weiner; tax partner Brian Kniesly; antitrust and competition special counsel Alyson Redman; and environmental special counsel David Zilberberg is advising BPY on the transaction. Reuters reported Thursday that the deal is expected to close in the fourth quarter.