The AP Eagers Ltd (ASX: APE) share price is up more than 1% in reaction to its ASX announcement today.
A.P. Eagers is Australia’s oldest listed automotive retail group, it has been going for over a century. It operates automotive dealerships across Queensland, South Australia, New South Wales, Victoria, Northern Territory and Tasmania. It has over 4,500 employees.
Why AP Eagers Shares Are Higher Today
The car dealership business announced that it is selling three of its properties at 11 Evelyn Street, 7 Cresswell Street and 79 Breakfast Creek Road to Marquette Property Group for a combined price of $55.5 million.
AP Eagers will continue to operate its businesses from the properties after the properties have settled, it will enter into a 7-year lease-back arrangement.
The sale of the three properties will make a profit before tax of $24 million, although it will be recognised over the seven years with an annual contribution of $3.4 million.
The CEO of AP Eagers Martin Ward said: “The sale of these properties is a key step in the execution of AP Eagers’ ‘Next100’ future growth strategy.”
He went on to say that the money will be used for purposes such as paying down debt and strengthen the balance sheet.
This seems like a smart move on behalf of AP Eagers, but I think the car dealership sector faces difficulties in the short term because of Australian house prices and in the longer term from automated cars. The shares mentioned in the free report below may prove to be better ideas.
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