The Star Ford Lincoln dealership on the “Brand Boulevard of Cars” in Glendale is getting a $10 million makeover. The business is set to break ground on a 50,000-square-foot showroom and service department later this month. For the last eight months, the dealership, owned by Star Auto Group of Glendale, has been working in temporary locations. “We’re running out of three different places,” said Alex Tamez, general manager of the dealership. “There were some issues with customers here and there, but we’ve worked through it and it’s been business as usual.” The move represents a major upgrade for the dealership, which operated out of buildings dating from the late 1950s that were in dire need of modernization. “The buildings were a huge eyesore and not well maintained at all. This isn’t going to be the Taj Mahal, but it’s a huge improvement,” Tamez said. Star Auto Group took out a construction loan to finance the upgrade. The property, which Star took over from Glendale Dodge in February of last year, also was unusual. The 100,000-square-foot lot at 1101 S. Brand Blvd. was divided into a 20,000-square-foot showroom on the northeast side of the property, where the dealership is still partially operating; two tiny shack-like structures in the center, where service customers were brought in and used cars were sold; and a 15,000-square-foot service and parts building. All but the showroom were torn down, but even it will be torn down when all the new work is completed in about 14 months. Hassan Haghani, director of community development in Glendale, said the city is looking forward to the project’s completion. “They’re completely upgrading and that’s definitely a good thing for us at the city,” he said. “We’re always interested in the beautification of our city, but if there’s a positive side effect in sales, that’s even better.” Star Auto Group also operates the Mazda dealership a few blocks down. The two dealerships sell a total of about 2,000 cars a year, said Tamez, who expects the new construction will give the Lincoln dealership a boost. “People will always gravitate to a nice setting,” Tamez said. “It’s still all about service, but we do expect a nice lift from it.” American Homes For the second time in less than three months, American Homes 4 Rent has completed a secondary stock offering to fund acquisitions. Both offerings were priced at $25 a share and paid 5 percent quarterly dividends, with possible conversion to common stock in a few years. Between the two, the Agoura Hills company raised more than $200 million. But its most recent $100 million offering last month was a bit different. It gave investors the chance to profit from what is one of the most challenging aspects of the company’s business as a renter of single-family homes: the rising cost of buying more homes. The preferred shares include a provision allowing their liquidation value to rise above $25 depending on the appreciation of home prices in the company’s top 20 markets, as determined by the federal Housing Finance Agency’s House Price Index. Anthony Paolone, a research analyst at JP Morgan Chase & Co. in New York, said the maneuver allowed American Homes to keep its financing costs at 5 percent at a time when corporate borrowing costs are on the rise. “They’re trying to find positive leverage for their shareholders,” he said. “They are willing to give some of the home price appreciation to the preferred investors in exchange for lower upfront cash payments.” The real estate investment trust has voracious cash needs given its structure and business model. As a REIT, it must return 90 percent of its net income to shareholders and so relies on borrowing and debt to expand its portfolio, which now totals about 20,000 homes. What’s more, the homes are often vacant or in poor condition, which can mean extensive rehab costs. And it can routinely take several months for a tenant to be placed. “For any big real estate company that wants to get bigger, you have the same problem. You want your assets to go up in value, but you also want to acquire more assets at attractive prices,” said Paolone, who rates the company a “buy” with an $18 price target. “What’s positive here is that they’re gradually rolling out a capital plan.” The stock closed up 3 cents, or a fraction of a percent, to $16.57 on Jan. 8. Staff Reporter Elliot Golan can be reached at (818)316-3123 or [email protected].
Glendale Dealership to Introduce New Model
