Lithia Motors said Friday it will sell an 11.9-acre parcel off Crater Lake Highway to longtime company vice chairman Dick Heimann for $4.1 million.
In a Securities and Exchange Commission filing, Lithia said the land to the north of its Dodge dealership on Grumman Drive is part of a planned auto mall where several dealerships, including Lithia-owned stores, will be relocated.
Heimann intends to relocate the Medford BMW, Nissan and Volkswagen stores, which are 80 percent owned by him and 20 percent owned by Lithia, to the new location.
"We were out of space and had some old buildings that needed to be upgraded," Heimann said. "It didn't make sense to spend a lot of money doing that when we could bring them together in the Oregon Auto Mall."
Heimann said he expects to break ground next February or March for his three dealerships plus Lithia Honda.
"The plan is to be in by the end of 2014," he said.
Lithia Motors bought the property in the 1990s with an eye on the auto mall model that has been developed in many parts of the country. But shortly after the Dodge store was opened in September 2007, the nation plunged into recession. The rest of the project was put on hold as the company sold off about 15 percent of its holdings.
Now Lithia is growing once more, and the mall again makes sense, Heimann said.
"We used an independent appraisal to determine the sale price for the unimproved land," Lithia said in its filing. "The transaction will result in a gain to the company of $2.5 million."
The auto retailer's board determined the transaction would benefit the company by attracting more potential purchasers to a single location and was on terms no less favorable to Lithia than the terms it could have obtained from an unaffiliated party, according to the filing.
Lithia also added to its Central Valley holdings in California.
The auto retailer said it acquired Fresno Lincoln Volvo in Fresno. The Lincoln franchise will be relocated to its Ford store and the company's present Mazda franchise will move alongside Fresno Volvo. The acquisition adds $15 million in estimated annual revenue for Lithia, the company said in a news release.
The nation's ninth-largest auto retailer has more than 90 stores in 11 states and has reported billion-dollar revenues for the past two quarters.
The purchase will add to Lithia's locations on Blackstone Avenue in Fresno, where the company operates Ford, Nissan, Hyundai, Subaru and Mitsubishi franchises.
The company announced the addition of two stores in Stockton, Calif., in recent weeks, and deals for dealerships in Lodi, Calif., are expected to close soon.
"The addition of a luxury nameplate to supplement our existing domestic and import brands, while unlocking synergies with our Ford franchise, is attractive," said Bryan DeBoer, president and chief executive officer. "Additionally, the new location we acquired will be another prime site in Fresno to sell new and used vehicles."
In other matters, Lithia reported in a SEC filing it paid the O'Brien Auto Group $31.8 million for its BMW, Honda and Volkswagen dealerships in Salem. The sales prices were not previously announced.
The auto retailer also said it has reached a settlement stemming from two lawsuits, filed in 2006 and 2007 and later consolidated, against Lithia Chrysler Jeep of Anchorage.
In June 2013, the parties agreed to mediate the claims, Lithia reported. The mediation resulted in a settlement agreement with the plaintiffs under which Lithia estimates it will pay $3.8 million to settle all claims and legal fees. The agreement has to be approved by the court.
Lithia announced a third-quarter dividend of 13 cents per share for its Class A and Class B common stock, amounting to $3.4 million, to be paid on Nov. 22 to shareholders of record on Nov. 8.
Follow reporter Greg Stiles on Twitter @GregMTBusiness, and read his blog at www.mailtribune.com/Economic Edge.