Good news for sellers: Blue sky values appear strong

It appears blue sky values are back, even at dealerships in distress.

Take two recent examples.

Land Rover Jaguar Anaheim Hills received a "goodwill consideration" of about $4 million when it was sold in September in federal bankruptcy court, said Mike Issa.

Land Rover Jaguar Cerritos got a $5 million "goodwill consideration" in a November deal, said Issa, the California managing principal of Atlanta-based restructuring and advisory firm GlassRatner Advisory & Capital Group. GlassRatner conducted the sale.

Goodwill value and other intangible assets such as customer lists and marketing materials are what dealers call "blue sky.''

The stores, now called Jaguar Land Rover Anaheim Hills and Penske Jaguar Land Rover Cerritos, were sold in separate auctions in bankruptcy court, Issa said.

And the stores' buyers are not new to the game.

Rusnak Auto Group bought Jaguar Land Rover Anaheim Hills, CEO Paul Rusnak said. Rusnak Auto Group, a privately owned dealership group near San Bernardino, Calif., owns 13 dealerships in southern California with 11 luxury franchises.

Rusnak declined to confirm the transaction price, but said what he paid for the store "was worth it." He's selling about 80 new and used vehicles a month at the Anaheim Hills store, Rusnak said.

Roger Penske Jr., president of SoCal Penske Dealer Group in West Covina, Calif., bought Penske Jaguar Land Rover Cerritos. SoCal has 15 franchised retail car dealerships, according to its Web site.

A spokesman for Penske Automotive Group, of which Penske Jr.'s father, Roger Penske, is CEO, said the Penske Jaguar Land Rover Cerritos store is owned by Penske Jr.'s company. Through that spokesman Penske Jr. said, "It was a private transaction" and he declined to comment.

Penske Jr. owns Penske Buick-GMC of Cerritos in that same auto mall, the spokesman for Penske Automotive Group confirms.

Automotive News reported last month that St. Augustine Toyota-Scion commanded a $10 million blue sky value in federal bankruptcy court. The dealership, in St. Augustine, Fla., sold for a total of $18.7 million.

Issa said Toyota stores typically command a higher blue sky value than a brand such as Land Rover Jaguar because Toyota has a much higher volume of vehicle sales and earnings potential.

That's what makes the Land Rover Jaguar deal interesting.

It offers some evidence that if a dealership sells a good brand on the right real estate, it will demand and command a premium price, even if it has been through bankruptcy.

"In this market there are people who want to buy stores and there are a lot of high quality stores to be purchased," Issa said. "So it is a little bit of seller's market for dealerships, even for dealerships that have had some distress."

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