Brookfield to Weigh $5 Billion Sale of Capital Automotive

(Bloomberg) -- Brookfield Property Partners LP is weighing a sale of auto dealership landlord Capital Automotive, which could fetch about $5 billion including debt, according to people with knowledge of the matter.

The real estate giant is interviewing advisers ahead of a potential sale, said the people, who asked not to be identified because the matter is private.

A representative for Brookfield Property declined to comment. A spokesperson for Capital Automotive didn’t immediately respond to a request for comment.

Brookfield Property, an affiliate of Brookfield Asset Management Inc., acquired Capital Automotive in 2014 from DRA Advisors LLC in a deal that valued the company at $4.3 billion, according to filings. DRA had taken Capital Automotive private in 2005.

Capital Automotive, based in McLean, Virginia, focuses on sale-leasebacks, or deals where it takes ownership of properties linked to car dealerships and leases them to the business owner.

The company, which also provides financing for renovations and expansions, has made more than 400 real estate acquisitions, totaling over $6 billion across 41 U.S. states and Canada since its inception in 1998, according to its website.

A real estate investment trust, many of Capital Automotive’s lease agreements are structured as a so-called net lease. That means tenants pay for other costs beyond rent, including maintenance, taxes and insurance.

The net lease sector has swung into favor in the U.S. amid low interest rates. Net-lease focused Essential Properties Realty Trust Inc. has risen 50% in the past year while Spirit Realty is up 25%, far outpacing the S&P 500 Index’s 7% gain.

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