Automotive Properties to buy 11 properties for $101.3M
AUTOMOTIVE PROPERTIES Real Estate Investment Trust has entered into an agreement to acquire a portfolio of 11 properties from a privately held automotive dealership group, subject to a leaseback, for a combined purchase price of approximately $101.3-million. The portfolio includes six properties that are exclusively occupied by nine automotive dealerships and five properties designated for ancillary dealership services, representing a total gross leasable area (GLA) of approximately 303,817 square feet located on approximately 29.7 acres. Upon closing of the acquisition, the REIT’s GLA will increase by approximately 18 per cent and the portfolio will consist of 54 income-producing properties. Nine of the properties are located in the Ottawa, Ont., metropolitan area and two properties are located in Kingston, Ont. Ottawa and Kingston represent two new metropolitan markets for the REIT.
“This is our largest property acquisition to date and we look forward to adding a major new tenant group to our portfolio,” said Milton Lamb, president and chief executive officer of the REIT. “The acquisition marks our entry into the Ottawa market, effectively positioning us in another major Canadian metropolitan area. In addition to enhancing the REIT’s geographic and tenant diversification, we are adding representation of two more major automotive brands to our portfolio — Subaru and Lexus — bringing the total number of brands represented in our property portfolio to 31.”
Upon closing of the acquisition, the respective operators of each of the automotive dealerships and the related non-retail dealership properties will enter into long-term, triple net leases with the REIT with terms ranging from 17 to 20 years. The leases include contractual 1.0-per-cent annual rent increases for the first five years of the lease terms. Thereafter, the annual rents will increase in accordance with the Ontario Consumer Price Index. The leases will be indemnified by MAG Holdings LP (operating as Mierins Automotive Group) a private entity that owns and operates 10 dealerships.
(See APR.UN Table 1 on page 25)
The REIT will finance the acquisition purchase price through draws on its credit facilities. In conjunction with the acquisition, two of the REIT’s senior lenders have agreed to increase the amount available under the REIT’s credit facilities by $110.0-million, secured by properties included in the acquisition and two other previously unencumbered properties. The REIT has completed its due diligence in connection with the acquisition and expects to close the acquisition in December, 2018, subject to customary closing conditions and approval by the Competition Bureau.
About Automotive Properties Real Estate Investment Trust Automotive Properties REIT is an unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT’s portfolio currently consists of 42 income-producing commercial properties, representing approximately 1.7 million square feet of gross leasable area, and one development property, in metropolitan markets across Ontario, Saskatchewan, Alberta, British Columbia and Quebec. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties.
We seek Safe Harbor.
Kapil Dilawri, Louis Marie Forbes, Stuart Lazier, James Whitney Matthews, John Rennie Morrison
(APR) Shares: 21,796,552