Dilawri REIT completes $75M initial public offering
Dilawri Group of Companies — the largest dealer group in Canada — announced this week that the Automotive Properties Real Estate Investment Trust has completed its initial public offering of 7.5 million trust units at a price of $10 per unit.
It was announced earlier this summer that Dilawri, who currently touts 57 dealerships across the county, had created the REIT, which will focus on speeding up consolidation and acquiring dealerships in Canada and potentially the U.S.
Dealership consolidation has been on the mind of many in the industry as the dealership population ages, with many choosing to sell to third-parties, such as the larger dealer groups like Dilawri, AutoCanada and others, rather than organize succession plans.
This first public offering is the culmination of a preliminary prospectus for an initial public offering reported in June.
“Management believes the REIT will represent a unique alternative for automotive dealership operators considering a sale or recapitalization of their business, as the REIT will be the only publically listed vehicle in Canada exclusively focused on automotive dealership properties,” the company said in the regulatory filing earlier this year.
According to this week’s release, the offering raised gross proceeds of $75 million, and the trust units began trading Wednesday on the Toronto Stock Exchange. TD Securities Inc. and Canaccord Genuity Corp. are the co-lead underwriters in the offering.
It was also announced that in connection with the closing, the REIT used the proceeds of the public offering — as well as the drawdowns under the REIT’s credit facilities — to acquire through Automotive Properties Limited Partnership, from subsidiaries of Dilawri or entities related to the company, 26 income-producing dealerships. The total purchase price came to approximately $354.2 million.
The 26 properties include stores such as Porsche Centre Vancouver and Calgary BMW, and represents approximately 958,000 square feet of gross leasable area in Ontario, Saskatchewan, Alberta and British Columbia, the release stated.
“Affiliates of, and entities related to, Dilawri are the REIT's only tenants as of closing, occupying approximately 87 percent of the REIT's gross leasable area, and will be its most significant tenants for the foreseeable future,” the release stated.
Upon closing, Dilawri, together with its subsidiary 2243718 Ontario Inc., indirectly owns, controls or directs an approximate 57.0 percent effective interest in the REIT.
Dilawri has explained to the REIT that its current intention it to retain a significant interest in the REIT for the foreseeable future and may purchase additional securities of the REIT in the future. That said, the company has no present intention to do so.
Furthermore, in connection with the closing, Dilawri has entered into a number of agreements with the REIT, entities related to Dilawri and other parties, including an underwriting agreement, a voting trust agreement, an escrow agreement and an exchange agreement.
See below for the full list of Automotive Properties REIT Dealerships:
British Columbia: Porsche Centre Vancouver (Vancouver) Audi Sales Downtown Vancouver (Vancouver) Infiniti Vancouver (Vancouver) North Vancouver Nissan Infiniti (North Vancouver) Burrard Acura (Vancouver) Langley Acura (Langley)
Alberta Locations: Hyundai Gallery (Calgary) Calgary Honda (Calgary) Distinctive Collection (Calgary) Calgary BMW (Calgary)
Saskatchewan Locations: Regina Honda (Regina) Regina Hyundai (Regina) Honda Used Car and Regina Collision Centre (Regina) Dilawri Acura (Regina) Dilawri BMW (Regina) Triple 7 Chrysler (Regina) Dilawri Nissan Infiniti (Regina) Dilawri Mitsubishi (Regina)
Ontario Locations: Dixie Auto Mall (Mississauga) Oakville Honda (Oakville) Meadowvale Honda (Mississauga) Frost Chevrolet Buick GMC Cadillac (Brampton) Bolton Toyota (Bolton) Markham Honda and Ford (Markham) Agincourt Mazda (Toronto) Markham Acura (Markham)