19/11/2020 - 15:01

Eagers Automotive in $30m property buy

19/11/2020 - 15:01

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Australia’s largest automotive dealer is planning a major restructure of its Perth properties, buying three from the Wheatley-Prater family and exiting six others.

Eagers Automotive in $30m property buy
Eagers is paying about $12.5 million for a site on Scarborough Beach Road in Osborne Park. Photo: Google Street View

Australia’s largest automotive dealer is planning a major restructure of its Perth properties, buying three from the Wheatley-Prater family and exiting six others.

Brisbane-based Eagers Automotive plans to pay a total of $30.2 million for three properties in Osborne Park.

They are currently owned by private companies Automotive Properties and APPL Properties, which are led by executive chair Michelle Prater, who is also a non-executive director of Eagers.

The properties were accumulated by Ms Prater’s father Vern Wheatley and grandfather Syd Wheatley, who founded Automotive Holdings Group (AHG).

The planned purchase comes one year after Eagers completed its acquisition of AHG, which leased its car yard properties.

Eagers, by contrast, has traditionally owned most of its car yard properties and is gradually shifting AHG’s portfolio to its preferred model.

About 10 per cent of its WA portfolio will be freehold after the proposed purchases, indicating there is scope for a lot more restructuring.

It plans to pay $12.58 million for 460 Scarborough Beach Rd, which is leased by Eagers subsidiary Giant Autos.

Eagers intends to pay $5 million for 72 Pollard St, Glendalough, which also houses car yards facing onto Scarborough Beach Rd.

The lease on these two properties runs to 2033.

The third property, at 345 Scarborough Beach Rd, is to be purchased for $12.7 million.

This 14,900-square metre site was vacated by wholly-owned subsidiary North City in June 2020.

Eagers said it intended to build 4-5 auto showrooms and a large workshop on the property.

This would allow it to exit six leases on other properties mostly expiring in 2021 and 2022.

It noted the other properties were not leased from Ms Prater’s companies but did not provide further details.

Eagers said it would save about $3.7 million per year by existing the eight leases.

As Ms Prater is a director of Eagers and has an interest in the three properties, the purchase needs to be approved by Eagers shareholders.

Details of the acquisitions were included in a notice of meeting sent to Eagers shareholders earlier this month.

The material sent to shareholders noted that an independent valuer concluded the purchase price for the three properties was equal to or less than market value.

Chairman Tim Crommelin also noted that Eagers Automotive had obtained $1.38 million in rental relief under leases from Ms Prater’s companies, following the onset of COVID.

Ms Prater told Business News that after the sale, Eagers would continue to lease several substantial properties from her family companies.

This included car yards on Wanneroo Rd, Wangara.

She said the sales would free up capital, allowing her family to explore other opportunities, but added she was “a little bit cautious” in light of continuing uncertainty surrounding COVID and China trade relations.

The proposed $30 million purchase comes one month after Eagers completed the acquisition of the Big Rock Toyota property in Balcatta.

This was one of eight properties across Australia it agreed to buy from Charter Hall for $105 million.

Earlier this month, Eagers agreed to pay $76 million to Charter Hall for another property in Sydney.

Eagers strategy is opposite to that of Perth-based DVG Automotive Group, which is majority owned by Japanese company IDOM Inc.

Early this year, DVG sold a portfolio of 17 Perth properties to a fund managed by GDI Property Group for $98 million.

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