Eagers Automotive Limited has struck a deal with Charter Hall to buy for $76.25 million a property in Castle Hill, Sydney, NSW which it currently leases for a Holden and Hyundai dealership.
The acquisition will be funded through a through a previously announced loan facility provided by Toyota Financial Services (TFS) and is scheduled to complete in January 2021.
Eagers Automotive says the Castle Hill property is in a prime location on the corner of Victoria Avenue and Windsor Road, but it is poorly configured and under-utilised, comprising three extra-large showrooms, 67 associated service bays and a number of outdated factory units.
The retailer plans to reconfigure the 43,000 square metre site over the coming years to optimise the property’s footprint to accommodate up to 8 automotive brands while also relocating the Sydney-based operations of EasyAuto123 and Carlins to the site.
Eagers Automotive says the acquisition will significantly reduce expenses, delivering a $15 million benefit before taking into account any new franchises or the operating efficiencies that can be achieved at the site under its Next100 strategy.
It says the relocation of EasyAuto123 and Carlins will save a further $2 million in annualised external rent.
In addition to the Castle Hill acquisition, Eagers Automotive Limited will hold a general meeting on December 4 to approve the further acquisition of three Western Australia properties that it leases which are associated with director Michelle Prater.
The properties include an 8217 square metre site at 460 Scarborough Beach Road, Osborne Park which is currently tenanted by Osborne Park Hyundai.
The second property is a 6521 square metre site at 72 Pollard Street, Glendalough which currently tenanted by the AHG trade parts centre.
The third property is a 14,931 square metre site at 345 Scarborough Beach Road, Osborne Park which is currently vacant but was the former home of the North City Holden dealership.
Funding for the acquisition of these three properties will come from the previously arranged $50 million credit approval from Volkswagen Financial Services, for real estate loans to pursue its property strategy. This facility will be utilised to pay up to 100% of the consideration and stamp duty.
Eagers Automotive says the acquisition of the three properties will allow it to immediately exit two leases, and in the short term exit a further six leases, thereby saving property occupations costs of $3.7 million a year. It expects to complete the acquisition in mid-January 2021.
Join the conversation