ABOUT CAF

What is CAF?

Capital Automotive Financial, LLC (“CAF”) is the premier provider of unique equity capital structures for Dealers, Chief Executive/Operating Officers, and General Managers, collectively, our “Dealer Partner’s”, strategies, facilitating dealership growth, brand diversification, and/or succession.

Led by industry veteran Richard Kotzen, CAF is a partnership between Capital Automotive Real Estate Services, Inc. (“CARS”), a leading provider of real estate financing to the retail automotive industry and Two Sigma Private Investment (“TSPI”), the private investments division of Two Sigma Investments.

The partnership between CARS, TSPI and Richard Kotzen pairs leaders with significant industry expertise and relationships with a flexible capital base that can deliver customized equity solutions to the dynamic needs of the retail automotive industry.

CAF will provide flexible, patient equity capital that is unique as compared to traditional financing structures available in the market today.

Who is Richard Kotzen?

Richard is the CEO of CAF and was previously a partner at Crowe Horwath LLP, an accounting and consulting firm, where he was one of the leaders in the firm’s Retail Dealerships Group, providing financial advisory services to dealerships. He has more than 35 years of experience in buy-sell transaction structuring in the retail automotive industry.

Who is CARS?

CARS has provided custom real estate financing options to the retail automotive industry since 1998.

CARS assists dealers in growing their organizations, acquiring new locations, upgrading existing facilities, constructing new stores, and facilitating estate planning.

Who is TSPI?

Two Sigma Private Investments (“TSPI”) is the private markets investment division of Two Sigma Investments, LP (“Two Sigma”). TSPI focuses on developing and executing private investment opportunities that provide diversifying sources of return for its investors. Investing largely on behalf of the proprietary capital of Two Sigma, TSPI employs a principal mindset, using its flexible capital base to create investment opportunities with the potential for asymmetric risk-rewards. TSPI has developed particular expertise in building business platforms with experienced operators and strategic partners across several industries including financial services, transportation and resources. The TSPI team is comprised of professionals with significant institutional private investment experience who also benefit from the strength of the Two Sigma platform.

Where is CAF headquartered?

CAF is co-located located in the CARS office in McLean, Virginia, where CARS also has over 40 professionals. TSPI is located in New York City and will support the investment decisions and deployment of capital.

How was CAF formed?

As OEMs scaled back their dealer development programs, the CAF founders believed that an opportunity existed to provide financing capital to the next generation of Dealer Partners. CARS and the professionals of TSPI, who have known each other for over 10-years, began and discussing this need a number of years ago and started working together to build the CAF platform. Together, they approached Richard, with whom Jay Ferriero (CEO of CARS) has had a professional relationship for over 20 years, to lead the CAF business. Richard has also worked with TSPI for several years as well providing professional consulting and advisory services on a number of opportunities prior to joining CAF.

WHY CAF

How does CAF differ from other Private Equity Firms, Family Funds and Investment Associations also seeking to invest in the retail automotive sector?

CAF has a number of powerful advantages to our competitors, (1) Richard Kotzen, a financial professional who has focused his career on the retail automotive industry and has participated in over $4 billion of enterprise buy/sell transactions, (2) the CAF partnership with CARS, which provides 19 years of retail automotive real estate leadership, including a team with financial backgrounds experienced in analyzing retail dealership operations, and (3) TSPI, our founding investor, which offers patient capital, an understanding of successful investments in the retail automotive industry, and an experienced investment team to assist CAF.

CAF’s investment team experience will enable faster deal cadence, successful navigation of common challenges encountered by other Wall Street buyers, and the implementation of appropriate deal structures based on the OEM approval process.

CAF will be the ‘one-stop-shop’ for equity and real estate financing solutions that dealers have been looking for to facilitate their growth goals and visions.

CAF anticipates recycling its return on invested capital into future retail automotive investments. In comparison to many “Wall Street” firms, CAF’s capital is long-term and ever-greening.

How would you define CAF investment platform culture and goals?

CAF will be a fully aligned partner, both financially and strategically. Interaction between Dealer Partners and CAF will be led by CEO Richard Kotzen.

Richard will take a hands-on approach in financial analysis and underwriting during the evaluation of prospective transactions.

Post close, Richard will work in an advisory capacity with dealers to facilitate their growth goals and vision and provide board-level operational and strategic advice to enable Dealer Partners to realize their maximum enterprise potential.

How would you define CAF investment platform culture and goals?

CAF’s goal is to modernize the OEM Dealer Development programs for successful approvable Dealer Partners with track records of strong retail automotive operations and the desire to grow and diversify their dealership platforms or participate for the first time in ownership with the ability to attain 100% ownership, if desired.

CAF expects that Dealer Partners will either increase their ownership over-time or pursue follow-on transactions, using their portion of distributable cash flow from ownership and additional equity capital from CAF to execute growth transactions.

INVESTMENT OBJECTIVE / TARGET CRITERIA

How are key operating decisions made at the Dealer Partner level?

We value the track record and experience of our Dealer Partners, and look to partner with the best operators in the industry.  Dealer Partners will continue to make day-to-day operating decisions at the dealership level.  CAF will hold customary key governance rights, such as approval over acquisitions, divestitures, and incurrence of debt over certain thresholds.

How do I finance my real estate?

Each dealership transaction will be evaluated by CAF and the Dealer Partner, to implement the best ownership structure for the dealership real estate. Although we believe CAF, through our partnership with CARS, offers attractive real estate financing solutions, the ownership structure of real estate will be evaluated on a case-by-case basis . In general, CAF anticipates achieving greater returns on invested capital when an appropriate portion of real estate is purchased by CARS.