Gilbran launches property service
29 January 2008
Joint equity scheme aimed at helping distressed businesses.

Up to 230 car dealerships and £350bn worth of automotive properties are at risk over the coming months as economic conditions worsen in the UK.

The combination of falling capital values and tightening credit conditions are expected to hit the motor retail sector hard.

Automotive real estate firm Gilbran has launched a new bank orientated joint equity scheme aimed at businesses in the market that are concerned about distressed assets.

Nigel Smith, managing director of Gilbran, said the programme could lead to “the rebirth of a property”.

Through the joint asset recovery scheme Gilbran either purchases the real estate or acquires a percentage stake in the property portfolio and, for an annual management fee, takes responsibility for managing the property asset.

Smith said Gilbran is in a better position than banks to take charge of such properties, due to its particular focus.

“The overriding principle is understanding the business you’re dealing with – the manufacturer, the franchise and the pressures involved,” he said.

“The banks are not experts in the automotive business, so the idea is that Gilbran would come in and provide that necessary expertise.”

Smith added that dealers taking part in the scheme would put manufacturers’ minds at rest, being assured that a struggling business site would not be sold to residential developers or other retail brands.

“This is absolutely a concern, and is very frustrating for the manufacturers,” said Smith.  “While dealers may not feel they’re making enough in certain key areas, manufacturers don’t want to lose that point of representation.

“That’s where we come in – we can provide a nice warm soft place for the property to land.”

Smith said Gilbran also helps businesses ont eh brink of going bust by taking on another more successful site in the dealer group.

By taking on a stronger part of the business, Gilbran claims it can assure the bank gets its proportion of the business back, and help the individual sites by benefiting the business as a whole.

Equity share property scheme launched for dealers
28 January 2008
Automotive real estate company Gilbran has launched an “equity share property scheme” which the company says will allow dealers to own an equity stake in their sites, without having to make an initial outlay of funds.

Under the terms of the scheme, the dealer and Gilbran together set up a 50-50 joint venture agreement, with Gilbran providing the funds to purchase the site and pay for its development via a loan. The dealer pays Gilbran rent in lieu of interest on the loan, and after 10 years the net equity of the premises is split equally between the two parties.

Nigel Smith, managing director of Gilbran said: “We believe this Equity Share Scheme provides motor dealers with a significant competitive advantage, allowing them to secure new retail sites and gain an ownership stake in the premises, without having to find any up-front finance themselves.

“We believe that the Equity Share Scheme is unique to the motor industry and provides dealer groups and individual entrepreneurs with the opportunity to build and expand their dealership portfolios with minimal financial risk to themselves or their businesses,” he added.

In the case that a dealership wants to sell its stake in the JV, Gilbran undertakes to buy back the stake and either charge the dealer a commercial rent, or look for new tenants if the dealer decides to leave the premises.
 
 

Gilbran hopes to spread risk of property assets
25 January 2008
Automotive property specialist Gilbran is offering financial instutions the chance to offset risks in stakes in dealerships as the credit squeeze tightens

The new scheme will run alongside one already in place that gives motor dealers who own freeholds the chance to reduce investments if they are concerned about a dip in property values.

Gilbran calculates that up to 230 dealerships and automotive real estate worth as much as £350 million could be at risk because of falling capital values.

The forecast is based on a survey of trends.

Gilbran owns motor trade premises in many parts of the UK and represents both dealers and car manufacturers.

The company launched a joint equity scheme as the Royal Institution of Chartered Surveyors issued a gloomy report.  It said December was the worst month for the UK housing market since the aftermath of the last recession in 1992.

Nigel Smith, Gilbran managing director, said: “Lower home values have an impact on consumer spending, and that affects dealers’ profitability.”

Smith expects some banks to seek help in managing their property assets during the credit squeeze as attitudes to risks harden.  Gilbran is offering an equity share scheme so that banks and other financial institutions can remove motor retail properties from their balance sheets.

No bank has yet used the scheme, said Smith, but Gilbran is willing to purchase properties or take a stake, with the two sides agreeing an equity share.

“We have the property management skills to ensure premises remain in use as dealerships,” says Smith.  “That will enable a bank to share it eh capital growth, coming from a recovery in the market.”

Car Dealers at risk of £350m property loss
15 January 2008
Up to 230 dealerships threatened by credit crunch

Up to 230 car dealerships and £350m of automotive real estate are at risk over the coming months as economic conditions worsen in the UK.

The combination of falling capital values and tightening credit conditions are expected to hit the automotive retail sector hard, according to Gilbran.

To help the industry adapt to the new business environment, the automotive real estate firm has launched a new bank orientated joint equity scheme aimed at dealers in the market that are concerned about distressed assets.

Equity scheme

Through the joint asset recovery scheme, Gilbran either purchases the real estate or acquires a percentage stake in the property portfolio and, for an annual management fee, takes responsibility for managing the property asset.

The bank or other property owner and Gilbran then agree a split in the equity share gain in the property going forward.

“We believe this provides an intelligent response to the issues caused by the credit crisis and consequent transitional pressures on property prices and the profitability of the dealers,” said Nigel Smith, Gilbran managing director.

“The initial discussions we have had with both banks and automotive dealers convince us this scheme will be widely welcomed.”

Car Dealers urged to exercise financial caution
25 October 2007
Motor Trader Car sales to be hit by financial market turmoil.

Ongoing economic uncertainty will impact on the sector.

Automotive real estate company Gilbran has advised dealers to review their financing arrangements and reconsider business goals during the ongoing “credit crunch”.

“The recent turmoil in the credit markets will almost certainly filter through to hit consumer confidence and ultimately impact on dealers' businesses,” said Gilbran's managing director Nigel Smith.

As well as affecting sales, an increase in interest costs will make it harder for dealers to raise money for future business plans through banks or the capital markets, the company said.

"Reduce exposure" Smith continued: “Going into these uncertain times, dealers need to ensure that their house is in order.

“Where possible deleverage and reduce exposure to short term interest rates, consider alternatives to bank financing, and make sure that operational premises are being held and run in the most efficient way.”

Steve Bailey, director of operations and finance from Gilbran, said the company would advise dealers to lease their properties or take part in joint venture arrangements.

Joint ventures would enable dealers to operate under a lease while benefiting from any increase in the value of their property.

Bailey also said that dealers should take advantage of opportunities that arise during this period when many businesses are either afraid or financially unable to do so.

Both extending the reach of a business and investing in development have been recommended by Gilbran.

“It could be expansion, or it could be just making what you've got better,” said Bailey.