Although the market for real estate investment trusts is down, another auto dealer REIT plans to go public this year.
Mar Mar Realty Trust of Charlotte, N.C., plans to promote its services at the National Automobile Dealers Association convention next week. Mar Mar is a sister company to Sonic Automotive Inc., one of the fastest-growing publicly held dealership groups in the country. But the REIT is a separate company and plans to keep at arm's length from the dealership chain.
'We have a strategic relationship with Sonic,' says Mark Iuppenlatz, COO for Mar Mar. 'But we are not the 'Sonic' REIT. We share a chairman and founder in Bruton Smith. The commonality stops there. Our portfolio includes non-Sonic assets, and we expect that portion of our portfolio to grow rapidly.'
The company plans to buy dealerships, auto parts stores, service centers and properties of other automotive-related businesses, according to a revised prospectus filed with the Securities and Exchange Commission late last year.
The prospectus says Mar Mar plans to sell 10 million shares to the public at about $15 per share, for a total $150 million offering price.
Mar Mar, which has applied for a listing on the New York Stock Exchange under the symbol 'MMF,' would not comment on what percentage of the company would be offered for sale to the public.
The offering will be used to cover the REIT's first acquisitions, which include - in 11 states - 30 dealership properties, 36 Advance Auto Parts Store properties and one collision repair property.
Just one of a handful of automotive REITs is publicly traded. An initial public offering is important to a REIT because the trusts need capital to acquire real estate.
REITs buy property from business owners for cash or shares in the REIT. The REIT then leases the property to the business owner, who continues to do business at the location.
Mar Mar believes its strategic relationship with Sonic will help it grow by providing a steady source of real estate.
Sonic looks forward to using the REIT to fuel expansion. 'In each of our deals, we are acquiring the real estate,' says Scott Smith, president of Sonic. 'We have the ability to continuously feed the REIT.'
And the REIT has not had to wait for the initial public offering market to turn around so that it could raise capital. The company has arranged a $150 million line of credit through Ford Motor Credit Co.
Said Iuppenlatz: 'We haven't made a big public splash, but we are certainly planning to do that. We have been actively trying to pursue opportunities.'