Long-standing Mills 50 Business Acquired by Private Equity Firm
Sale Details
The property housing the Octopus Car Wash, located at 1401 N. Mills Ave, was sold to New York-based private equity firm Andover Properties for $4.75 million on September 19, 2024.
Sellers and History
The property was previously owned by Sherman and Marly Williams, who purchased it in 1998 for $530,000. The car wash has changed hands at least three times since it was built in 1965.
Attractiveness to Private Equity
Car washes have become a highly sought-after asset class for private equity firms due to their attractive financial profiles. Joe Ramsberger, a retail broker with CBRE, noted that top private equity firms are actively buying car washes due to their high net operating income (NOI).
Reasons for Attractiveness
Andover Properties highlighted several reasons why car washes are attractive investments:
- Localized goods with no threat from e-commerce.
- Recurring revenue through customer subscription models.
- Low capital expenditures (capex) requirements.
- Attractive yield profile.
- Favorable depreciation and bonus depreciation tax treatment.
Speculation on Future Plans
Ramsberger speculated that Andover might rebrand the stand-alone location under a larger chain, although this is purely speculative.
Market Context
Private equity spending on car washes has slowed in recent months, with larger firms acquiring smaller ones. This trend is described as the big guys swallowing all the little guys.
Real Estate Market Comparison
Only two other buildings have sold on the same stretch of Mills Avenue between Colonial Drive and Princeton Street in 2024, with an average sale price of $781 per square foot, according to CoStar Group.
Andover Properties’ Focus
Andover Properties is focused on buying car washes around the country, particularly in the Southeast region.
