Oubre, who said he owns six other franchised dealerships, said Legacy’s funding helped him complete the acquisition of the store Infiniti awarded.

Owning the dealership property is “very similar to having frozen capital in the parts department, having frozen capital in your used-car curtailments and other areas of the dealership,” Oubre said. “You basically have frozen capital in your real estate that you can’t deploy for a return.”

Some banks also have begun to contact the company in what Marcelle described as “syndicate” deals, where banks looks for a firm like Legacy Automotive to invest in deals with higher price tags.

And some dealers have inquired about Legacy Automotive partnering and investing in actual dealerships, similar to what a company such as Franchise Equity Partners may do, but it hasn’t yet, Marcelle said. That could come, but for now, Legacy’s buy-sell involvement is with the real estate.

“You couldn’t ask for a better landlord,” Dennis said. “As far as the terms of the lease, they’re very standard, no surprises. It was a quick and easy closing; they really know the industry.”

Dennis & Co. opted to sell properties to Legacy Automotive that house its Kia of West Nyack store in New York, which it acquired in 2016, and a Chrysler-Jeep-Dodge-Ram dealership in Clifton Park, N.Y., which it purchased in August 2022 from James Zappone.

‘A little more aggressive’

Dennis said he understands that some dealers prefer to own their land and buildings, but in his opinion, sale-leasebacks offer a favorable way for dealers hungry to grow and “find efficiencies of scale and generate that cash.”

“We have the opportunity to purchase operating companies for dealerships,” Dennis said. “It’s a little more aggressive, but it’s important for dealers that are looking to continue to grow to leverage that cash flow, that cash and equity, rather than sit on it for a long term.”

For Dennis, it’s about having more options. His group operates a dozen franchised dealerships and is in negotiations to acquire another store.

Dennis said he is considering using some of the money he gleaned from the property sales to Legacy Automotive to help with the pending acquisition.

“Legacy provided us an opportunity to release capital and generate liquidity that supports our acquisitions, but it isn’t critical — it just made it easier,” Dennis said.