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Brookfield automotive property REIT plans $568.1M securitization

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A real estate investment trust owned by Brookfield Property Partners (NYSE: BPY) specializing in property sale-leaseback deals with automotive-related businesses is marketing $568.1 million in bonds backed by triple-net lease revenues.

McLean, Va.-based Capital Automotive LLC is planning to sell six classes of senior and subordinate notes via Goldman Sachs, secured by a pool of 44 commercial automotive properties – primarily franchised dealerships – leased to 26 dealer groups in 20 states and four Canadian provinces.

The notes will be issued from Capital Automotive’s CARS-MTI master trust through six special-purpose entities. S&P Global Ratings has assigned preliminary AAA ratings to the Class A-1 and A-2 tranches totaling $221.7 million, an A rating to the $297.9 million in Class A-3/A-4 notes and a BBB to the Class B-1/B-2 notes adding up to $48.5 million.

The deal is the first from the CARS-MTI shelf since its 2016-1 Series, an original $470 million net-lease mortgage notes issuance that remains outstanding.

Earlier this year, Capital Automotive priced a $1.36 billion asset-backed transaction from its CARS-DB4 shelf that has currently active notes series dating back to 2014.

The CARS-MTI Series 2020-1 notes involve car dealerships that have entered into sales-leaseback transactions with Capital Automotive that raise funds potentially used for business expansion, property upgrades or new construction/acquisition activity. The leases typically have long terms of 15-20 years, with multiple five- and 10-year renewal options, according to S&P, and require obligors to cover all maintenance, taxes and insurance on the properties under the agreements' triple-net terms.

The CARS MTI portfolio has “demonstrated stable performance” since the COVID-19 pandemic began in early March, S&P’s presale report published Tuesday stated. The portfolio has no delinquencies and limited rent deferrals, with no more than 0.3% of scheduled rent deferred. All but one lessee has paid back the deferred rent.

S&P estimates the issuer’s debt-service coverage ratio at 1.97x.

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