NEW YORK — Asbury Automotive Group Inc., one of the largest automotive retail and service companies in the U.S., has announced that several of its subsidiaries have closed on the acquisition of 32 real estate properties in Florida, North Carolina, Virginia, Georgia, Arkansas and Texas from affiliates of AutoStar Realty Operating Partnership, L.P. Asbury currently operates retail dealerships, service centers or related facilities at these locations. Prior to the transaction, Asbury leased these properties on a long-term basis from AutoStar. The total purchase price was approximately $200 million, 75% of which was financed through mortgage borrowings, and the remainder through internal resources.
"These properties represent over one quarter of our dealerships and we are pleased to be in a position to control our own destiny with them," said Charles R. Oglesby, President and CEO. "Ownership of this real estate provides us greater flexibility in terms of renovations, relocations, and dispositions."
Craig T. Monaghan, Asbury's Senior Vice President & CFO, commented, "This deal is based on simple economics; we have replaced higher cost off-balance sheet obligations with lower cost mortgage debt. In addition, these properties were subject to periodic rent increases which would have made them even more costly in the future. We expect the transaction will reduce our financing costs by approximately 150 basis points, with annual earnings per share accretion of approximately $0.02."
Mr. Oglesby concluded, "This exciting transaction presented itself just prior to Craig Monaghan joining Asbury. Our ability to close this substantial deal in such short order is a testament to his experience and knowledge of our industry, as well as the great team working with him."