12. Related Party Transactions

We sometimes pay to and/or receive fees from Penske Corporation and its affiliates for services rendered in the normal course of business, or to reimburse payments made to third parties on each other’s behalf. These transactions are reviewed periodically by our Audit Committee and reflect the provider’s cost or an amount mutually agreed upon by both parties. During 2017, 2016, and 2015, Penske Corporation and its affiliates billed us $6.2 million, $6.9 million, and $6.7 million, respectively, and we billed Penske Corporation and its affiliates $159 thousand, $148 thousand, and $101 thousand, respectively, for such services. As of December 31, 2017 and 2016, we had $58 thousand and $98 thousand of receivables from, and $0.7 million and $0.8 million of payables to, Penske Corporation and its subsidiaries, respectively.

On September 7, 2017, we acquired an additional 5.5% ownership interest in PTL, a leading provider of transportation services and supply chain management, from GE Capital for approximately $239.1 million in cash. At the same time, Mitsui, our second largest shareholder, acquired an additional 10.0% ownership interest in PTL at the same valuation. After the transaction, PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui. GE Capital no longer owns any ownership interests in PTL. In connection with this transaction, the PTL partners agreed to amend and restate the existing partnership agreement among the partners, which among other things, provides us with specified partner distribution and governance rights and restricts our ability to transfer our interests. We and Mitsui were granted additional governance rights as part of the transaction. In addition, the partnership now has a six member advisory committee (previously seven member) and we continue to be entitled to one of the six representatives. We continue to have the right to pro rata quarterly distributions equal to 50% of PTL’s consolidated net income and we expect to continue to realize significant cash tax savings.

We continue to be able to transfer our directly owned interests with the unanimous consent of the other partners, or if we provide the remaining partners with a right of first offer to acquire our interests, except that we may transfer up to 9.02% of our interest to Penske Corporation without complying with the right of first offer to the remaining partner. We and Penske Corporation have previously agreed that (1) in the event of any transfer by Penske Corporation of their partnership interests to a third party, we will be entitled to “tag-along” by transferring a pro rata amount of our partnership interests on similar terms and conditions, and (2) Penske Corporation is entitled to a right of first refusal in the event of any transfer of our partnership interests, subject to the terms of the partnership agreement. Additionally, PTL has agreed to indemnify the general partner for any actions in connection with managing PTL, except those taken in bad faith or in violation of the partnership agreement.

The partnership agreement continues to allow Penske Corporation, beginning December 31, 2017, to give notice to require PTL to begin to effect an initial public offering of equity securities, subject to certain limitations, as soon as practicable after the first anniversary of the initial notice, and, beginning in 2025, we and Mitsui continue to have a similar right to require PTL to begin an initial public offering of equity securities, subject to certain limitations, as soon as reasonably practicable. The term of the partnership agreement was amended as part of the transaction to be indefinite.

In 2017, 2016, and 2015, we received $52.4 million, $21.7 million, and $13.8 million, respectively, from PTL in pro rata cash dividends. In 2014, we formed a venture with PTL, Penske Commercial Leasing Australia. This venture combines PTL’s fleet operations expertise with our market knowledge of commercial vehicles to rent heavy-duty commercial vehicles in Australia. This venture is accounted for as an equity method investment as discussed in Note 2.

In December 2017, we sold our 31% ownership interest in Penske Vehicle Services, an automotive fleet management company, to PTL for a purchase price of $19.2 million. We previously accounted for this venture as an equity method investment.

In September 2016, PTG completed the sale of certain assets to PTL, a related party. The assets sold consisted of approximately 300 vehicles, together with the associated full-service truck leasing and truck rental contracts with various PTG customers. PTL purchased these assets at fair value, which exceeded our carrying value for these assets, for a total purchase price of approximately $17.0 million.

Joint Venture Relationships

From time to time we enter into joint venture relationships in the ordinary course of business, pursuant to which we own and operate automotive dealerships together with other investors. We may also provide these dealerships with working capital and other debt financing at costs that are based on our incremental borrowing rate. As of December 31, 2017, our automotive joint venture relationships were as follows:


Location	Dealerships	Ownership Interest
Fairfield, Connecticut	Audi, Mercedes-Benz, Sprinter, Porsche	80.00	% (A) (B)
Greenwich, Connecticut	Mercedes-Benz	80.00	% (A) (B)
Northern Italy	BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo	84.00	% (B)
Aachen, Germany	Audi, Maserati, SEAT, Skoda, Volkswagen	68.00	% (B) (D)
Frankfurt, Germany	Lexus, Toyota, Volkswagen	50.00	% (C)
Barcelona, Spain	BMW, MINI	50.00	% (C)
Tokyo, Japan	BMW, MINI, Rolls-Royce, Ferrari, ALPINA	49.00	% (C)

(a)

An entity controlled by one of our directors, Lucio A. Noto, owns a 20% interest in this joint venture.

(b)

Entity is consolidated in our financial statements.

(c)

Entity is accounted for using the equity method of accounting.

(d)

In February 2018, we acquired an additional 7.4% ownership interest in this joint venture and now own 75.4%.

Additionally, we are party to non-automotive joint ventures including our investments in Penske Commercial Leasing Australia (28%) and PTL (28.9%) that are accounted for under the equity method, as more fully discussed in Note 2.