Capital Automotive REIT Shells Out $4.7-Mil in Sale-Leaseback of Momentum Properties

HOUSTON-Capital Automotive REIT has taken control of two properties from the Momentum Automotive Group, paying $4.7 million as part of $39.6 million in second-quarter transactions for the McLean, VA-based operation. The Houston properties consist of a franchised BMW dealership plus acreage for a previously acquired Volvo dealership.

Capital Automotive currently leases eight properties to Momentum, which operates franchises on the parcels. The operating franchises are Audi, BMW, Jaguar, Land Rover, Porsche, Saab, Volkswagen and Volvo.

Consideration for the acquisitions totals about $1.9 million in operating partnership units (at an average price of $14.41 per unit), $1.6 million in permanent financing and the remainder from a combination of funds drawn down from the company’s short-term credit facilities and cash on hand. The company plans to replace the short-term debt with permanent financing in the fourth quarter. The average initial lease term for the acquisitions is 16.2 years, with multiple renewal options.

The REIT is targeting operators of multi-site, multi-franchised automotive dealerships and related businesses. The second-quarter closings also include five sale-leaseback properties that had been owned by Sonic Automotive Inc. and its affiliates in Alabama, Florida, North Carolina and Texas. The aggregate sale price is $18.3 million for the sites, which include Chevrolet, Honda and Volvo franchises and a state-of-the-art body shop. The sale-leaseback represents a $75-million commitment to Sonic during the second quarter. Capital Automotive currently leases 65 properties to Sonic that had been bought for about $261.6 million. The Capital Automotive-Sonic transactions in the second quarter also include $3.1 million for facility improvements on previously acquired properties.

Also on the buy list is a wholesale vehicle auction property from Auction Broadcasting Co. in Indianapolis for $9.5 million and a property for a satellite used car sales lot from Auffenberg Automotive Group in O’Fallon, IL for $3.7 million.

As of Oct. 10, Capital Automotive owns 240 properties with an asset value of $989 million, consisting of 356 franchises in 27 states. An estimated 71% of its holdings are situated in the nation’s top 50 automotive markets. The properties are leased under long-term, triple net leases with an average term of 13.4 years. The company has finalized deals with 15 of the country’s leading 100 dealer groups, 14 of which are now tenants that generate an estimated 66% of Capital Automotive’s annualized rental revenues.