New York City and McLean, Va. — Ares Management Corp. (NYSE: ARES) has acquired Capital Automotive LLC, a McLean-based firm that specializes in the sale-leaseback of car dealerships under new triple-net leases. Ares purchased the company through its alternative credit strategy division and real estate group for $3.8 billion. The seller was a private real estate fund managed by Brookfield Asset Management (NYSE: BAM).
Capital Automotive owns more than 250 real estate assets in the United States and Canada that are structured under long-term, triple-net leases to various car dealers. The names and locations of the properties were not disclosed.
Ares purchased Capital to expand and diversify its net-lease investment strategy.
Including the recent investment in Capital Automotive, Ares’ funds have invested in over 1,200 real estate assets totaling approximately $7.2 billion of gross asset value in North America and Europe over the past 15 months. These net lease investments include retail, industrial and office properties leased to tenants with varying credit profiles. Ares’ real estate group had approximately $41.2 billion of assets under management as of year-end 2021.
Ares Management’s stock price closed on Thursday, Feb. 17 at $79.01 per share, up from $52.02 a year ago, a nearly 52 percent jump.
Founded in 1998, Capital Automotive acquires new and used automobile retailing sites and related business such as storage lots, body shops, auto auctions, heavy truck, motorcycle and RV locations.
Car dealers looking to expand or reallocate have used this sale-leaseback strategy to access capital. Initial base lease terms are generally 20 years, according to the company’s website. Over its 24-year history, Capital Automotive has invested more than $6 billion in acquisitions across 41 states and Canada representing more than 45 automotive brands.
— John Nelson