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Ares buys net-leasing firm from Brookfield in $3.8B deal

(Bloomberg)—Ares Management Corp. is buying Capital Automotive LLC, the 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 was first to report that Brookfield was eyeing a sale of the business in March 2020. Last September, Ares announced that it would accelerate its net-lease investments and offerings.

A representative for Brookfield declined to comment on the sale.

Capital Automotive Real Estate Services Inc. As established in 1998, the company provides financing options to business operators based in the US and Canada that require support for facility renovation, upgrades and expansion. 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 homeowner for the automotive dealership has completed more than $6 billion in asset acquisitions since its inception.

Jay Ferriero, President and CEO of Capital Automotive, said, “I am excited to partner with the team at Ares and believe that together we will be well positioned to take advantage of the growing opportunities in the net lease market. “

Brookfield Property, a real estate affiliate of Brookfield Asset Management Inc., acquired Capital Automotive from DRA Advisors LLC in 2014, reportedly valuing the company for $4.3 billion. DRA privatized the business 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, the PE giant has invested more than $7.2 billion in more than 1,200 real estate assets spanning retail, industrial and office properties, including the purchase of Capital Automotive.

“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 of US Real Estate at Ares. “This is an area of ​​the market that plays to Ares’s strengths as a platform, given the various disciplines in constant collaboration.”

As part of a broader initiative in Ares, the firm said, along with alternative credit portfolio managers, donates a portion of the interest made from certain funds to global health and education charities.

© 2022 Bloomberg LP

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