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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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.