PREI Takes $150M Investment in Capital Automotive

(To read more on the debt and equity markets, click here.)

MCLEAN, VA-Capital Automotive REIT, a specialty finance company for automotive retail real estate, has gotten a new investor. Representing a group of institutional investors of four individual funds, Parsippany, NJ-based Prudential Real Estate Investors has claimed a portion of the McLean, VA-based REIT with the purchase of $150 million in preferred equity interest.

The investment is related to the merger–approved by CARS common shareholders early last week and then completed by week’s end–in which investors managed by real estate investment management services provider DRA Advisors LLC of New York City acquired CARS in a transaction valued at $3.4 billion.; the price tag on the deal, which included the assumption of series A and B cumulative redeemable preferred shares, consisted of the $38.75 per-common share cash payment totaling $2.3 billion, as well as the assumption of $1.1 billion in existing debt comprised of long-term mortgage and unsecured debt.

“Automobile dealerships are traditionally extremely stable businesses with diverse revenue streams,” Steve Vittorio, a PREI’s capital markets team principal, says. “That stability, combined with CARS’ proven strategy of targeting multi-site, multi-franchise large automotive groups, gives our investors the opportunity to tap into a significant real estate opportunity.” CARS has a portfolio of approximately 360 properties in major metropolitan areas of 32 states. As per CARS’ third quarter 2005 financial results report, the REIT’s real estate investments total more than $2.5 billion. As part of PREI’s investment deal, the company, which is Prudential Financial Inc.’s real estate investment management and advisory division, has the option of expanding its planned $150-million investment by as much as $165 million.