Mr. Milton Lamb reports
AUTOMOTIVE PROPERTIES REIT TO ACQUIRE VOLKSWAGEN DEALERSHIP PROPERTY IN CALGARY FOR $18.0 MILLION
Automotive Properties Real Estate Investment Trust has entered into an agreement to purchase the Country Hills Volkswagen dealership property in Calgary, Alta., for a purchase price of approximately $18-million. The addition of the Property is expected to be accretive to the REIT's Adjusted Funds from Operations ("AFFO") Superscript 1 on a per unit basis.
The Property includes a newly-built 34,646 square-foot, full-service Volkswagen dealership facility operated by a Dilawri Group ("Dilawri") company. The Property is located on approximately 4.7 acres at 11380 Stonehill Drive NE, just north of the Calgary International Airport, with convenient access from the Deerfoot Trail Highway and in close proximity to substantial commercial development. Upon closing of the acquisition, Country Hills Volkswagen will be the operating tenant and will enter into an 18-year, triple-net lease with the REIT. The lease includes a contractual 1.5% annual rent increase after year one and is indemnified by a Dilawri company.
As part of the purchase consideration, the REIT will issue 480,522 trust units of the REIT("Units") to Dilawri valued at approximately $5.0 million, based on a price of $10.4047 per Unit, which represents the volume-weighted average closing price of Units for the 20 trading days ended May 2, 2018. The REIT intends to satisfy the remaining $13.0 million of the purchase price from cash on hand and through draws on its credit facilities. The REIT's independent trustees unanimously approved the acquisition and issuance of Units. The REIT has completed its diligence in connection with this acquisition, which included receipt of an arm's length appraisal supporting, among other things, the purchase price. Closing is expected to occur later this month, subject to customary closing conditions.
The REIT funded the recently completed dealership facility expansion at its Frost Chevrolet Buick GMC Cadillac dealership property in Brampton, Ontario. The expansion added 7,706 square-feet of gross leasable area ("GLA") to the dealership facility's existing 35,504 square-feet of GLA for a cost of approximately $2.0 million that results in an annual rent increase effective June 1, 2018. Frost Chevrolet Buick GMC Cadillac, the operator of the dealership, has exercised an early lease renewal and extended the duration of the existing lease term to 2033. The REIT paid for the expansion through cash on hand and draws on its revolving credit facility.
About Automotive Properties REIT
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. Currently, the REIT's portfolio consists of 39 income-producing commercial properties, representing approximately 1.4 million square feet of gross leasable area, and one development property in metropolitan markets across Ontario, Saskatchewan, Alberta, British Columbia and Quebec.
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