8:30 am, May 30, 2020
Pendragon CEO Bill Berman has told Car Dealer Magazine the sale and leaseback of its Porsche Centre Stockport was a ‘standalone decision’.
The troubled dealer group announced yesterday to the Stock Market that it had raised £10.5m from the sale of the Stockport Porsche dealership.
The move is at odds with Berman’s comments in a recent Car Dealer Live interview where he revealed he didn’t agree with the sale and leaseback deals the group did in 2006.
He said they were ‘decisions and things that made sense at the time’ but if he had a ‘time machine’ he would go back and do it differently.
The latest lease deal has a market rent of £665,000 a year, and the gross asset value for the property is £9.8m.
The money will be welcomed by the group at a time the industry is battling with a return to work following the coronavirus pandemic lockdown.
On the latest sale, Berman told Car Dealer Magazine: ‘The sale and lease back was pre-planned from last year, on a site where we had bought the land and then invested in building the showroom, this was done in order to release capital to reinvest in the business.
‘This is a standalone decision, and not part of a larger programme.’
The sale was made to Al Mana Property International Ltd. The terms of the agreement will see the retail group retain the use of the property under a 15-year lease.
Pendragon Sabre Ltd, which is a wholly owned subsidiary, has security of tenure, with Pendragon as the lease guarantor.
Berman is acutely aware that the 2006 sale and leaseback deal means leases will be due to expire in the near future and could cost Pendragon dearly.
When asked during his Car Dealer Live interview – which you can watch above – whether this could mean closing dealerships or relocating, Berman said ‘it’s going to be all those and more’.
He added: ‘Those leases have, with the normal increases, outrun their usefulness and put us in a position where it makes it hard to compete. Some of those expire in 2025, some in 2031, and we’re working through those with the landlord.
‘If you can’t get the right deal and it doesn’t make sense, you have to make the best business decision. You make decisions based on the circumstances that you’re in and then have to live with them and adjust accordingly.’
Video: Pendragon CEO Bill Berman talks to Car Dealer
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