When looking to raise cash for expansion or other purposes, a dealer has a number of alternatives, including selling its real estate and leasing it back to the dealerships through CARS’ sale-leaseback transaction. This transaction allows the dealer to access the capital currently invested in dealership real estate and reinvest it in higher returning investments, while still maintaining long-term site control for the dealerships’ operations.
From an estate-planning standpoint, a sale-leaseback transaction may allow the dealer to redistribute equity locked up in the real estate among multiple family members without disturbing dealership operations. Monetizing the real estate also allows dealers to diversify their family’s exposure from the automotive industry.
Additionally, should the dealer desire to sell the real estate and operations, our experience shows that a higher overall value may be realized by selling the real estate and the operations separately.