(Bloomberg)—Ares Management Corp. is buying Capital Automotive LLC, a net-leasing business for car dealerships, from Brookfield Property Partners LP with funds managed by its alternative credit and real estate units.
The transaction, valued at $3.8 billion, closes a deal that has been in the works for two years. Bloomberg News first reported that Brookfield was eying a sale of the business in March 2020. Last September, Ares announced it would be accelerating its net-lease investments and offerings.
A representative for Brookfield declined to comment on the sale.
Founded in 1998 as Capital Automotive Real Estate Services Inc., the company provides financing options to business operators based in the U.S. and Canada that need support for facility renovations, upgrades and expansions. The McLean, Virginia-based firm has a portfolio of more than 250 real estate assets through long-term triple net leases. According to its website, the landlord for automotive dealerships has completed more than $6 billion in property acquisitions since its inception.
“I’m excited to be partnering with the team at Ares and believe that together we will be well positioned to take advantage of the expanding opportunity set in the net lease market,” Capital Automotive President and Chief Executive Officer Jay Ferriero said.
Brookfield Property, a real estate affiliate of Brookfield Asset Management Inc., acquired Capital Automotive in 2014 from DRA Advisors LLC in a deal that reportedly valued the company at $4.3 billion. DRA had taken the business private in 2005.
For Ares, this acquisition builds on the private equity firm’s initiative to further expand its net-lease activities. Over the past 15 months, including the purchase of Capital Automotive, the PE giant has invested upwards of $7.2 billion in more than 1,200 real-estate assets spanning retail, industrial and office properties.
“We believe that our ability to apply a hybrid real estate and credit lens to assess opportunities is a key differentiator,” said David Roth, a partner and co-head U.S. real estate at Ares. “This is an area of the market that plays to Ares’ strengths as a platform given the different disciplines that are in constant collaboration.”
As part of a broader initiative at Ares, the firm said it, alongside alternative credit portfolio managers, donates a portion of the carried interest from some funds to global health and education charities.
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