Automotive Realty Trust of America has filed a registration statement for a $152 million initial public offering.
Automotive Realty Trust of America, known as ARTA, is a Dallas-based automotive real-estate investment trust, or REIT, with 17 founding dealers. It would be the second automotive REIT to go public.
A real-estate investment trust buys real properties (land and buildings) from business owners in exchange for cash and/or stock, then signs a long-term lease with the business owners.
ARTA intends to offer 7.6 million shares of stock for $19 to $21 per share, according to the registration statement, which was filed April 20 with the Securities and Exchange Commission. Based on a $20 stock price, the executive officers and founding dealers would own about 52 percent of the company.
ARTA has applied to be listed on the New York Stock Exchange under the symbol RTA.
Upon the close of the public offering, the REIT will acquire 67 dealership properties from 17 dealers for a total of $334,485,328. The dealerships are in California, Colorado, Florida, Maryland, Ohio, Tennessee, Texas and Virginia.
ARTA intends to purchase dealership properties throughout the country. The dealerships must demonstrate operating cash flow covering more than twice the initial lease payment.
The leases generally will be for 10 years with renewal options of five to 10 years. In addition to rent, the dealer pays all operating costs of the property, as well as taxes, utilities, insurance, repairs and maintenance.
The founding dealers can buy back the properties when the leases expire.
ARTA also plans to acquire more real estate from the founding dealers as they expand their operations. One of the founding dealers is Houston-based Sterling McCall Group, which is also one of the founding dealer groups for Group 1 Automotive Inc., a Houston-based chain of dealerships that went public late last year.
Jack Tompkins, the founder of ARTA, is chairman of the board and trust manager for the company. Tompkins was managing director of Raintree Capital Co. LLC and Raintree Equity Advisors LLP, a merchant banking firm in Houston.
Two of the founding dealers also will serve as trust managers - Nelson Bowers II, CEO of the Bowers Group of Chattanooga, Tenn., and Norman Braman, chairman of the Braman Group of Palm Beach, Fla.