Challenge

Positioned in the heart of West Los Angeles on nearly four acres, the property featured a 93,000 square foot state-of-the-art car dealership with rooftop parking and a 246,000 square foot used auto and repair facility. The seller of this generational piece of real estate was a private family office that had owned the site for over half a century. The decision to sell came down to each individual wanting to go their separate ways due to estate planning. Additionally, the sellers wanted to take advantage of the remarkable market, which amplified the ability to execute on the assignment. The tenant, Sonic Automotive, currently operated the dealership and had 11 years of term remaining on the lease. The property’s rarity presented Matthews™ with the opportunity to market and negotiate this unique sale on behalf of the client.

Strategy

The goal was to provide the highest level of service to the client through industry knowledge, real-time marketing execution, and negotiation expertise. The deal team recognized early on that Matthews™ would be casting a vast net on the deal as the investment opportunity as it spoke to many different buyer groups, including, but not limited to, high net-worth family office, syndicators, developers, hedge funds, public REITs, and foreign investor groups. Consequently, the pricing strategy included pitching to local and national buyer communities through a bidding process.

The property had a significant amount of redevelopment potential, which was included when pitching to different buyer groups. A new transit line, the Purple Line, is in the process of being built and is projected to be completed by 2027. A large portion of the $9 billion Purple Line will run beneath Wilshire Boulevard, extending westward for nine miles adding several new stations. The city is preparing the TNP, which proposes a variety of land use and zoning changes for areas surrounding the stations. The property’s parcels are forecast to be re-zoned to allow for greater development.

Results

Matthews™ received over two dozen qualified offers with several interested groups separating themselves throughout the bid process. Demand for this property was generated to such a high extent that a market record price and low cap rate were, in many ways, inevitable. The buyer of the Mid-Wilshire property was also a family office in Los Angeles who came in with an institutional capital partner. The four acres on Wilshire Blvd with this much long-term opportunity was a unique find in today’s market. Therefore, it took a unique buyer who was able to afford the record setting pricing yet had capital that was patient enough to wait for the current lease to expire. Matthews™ successfully executed the $70 million sale of the Beverly Hills BMW. At the time of the sale, this trophy asset broke records as the highest price ever reported for an auto dealership in Los Angeles.