Dilawri’s REIT picks Montreal for 1st purchase
After releasing its first financial results report in November, Automotive Properties Real Estate Investment Trust, also known as the REIT, announced this week it is acquiring a dealership property in Montreal for $7.2 million.
Established this past June by the Dilawri Group of Companies, the focus of the trust is speeding up consolidation and acquiring dealerships in Canada and potentially the U.S.
The trust has agreed to purchase he real estate of Toyota Woodland, a 50,000-square-foot Toyota dealership facility in Montreal.
The purchase of over $7 million represents a cap rate of approximately 7.3 percent, management said.
This is the first purchase to be undertaken by the REIT with the Dilawri Group via the strategic alliance agreement decided with the dealer group at the closing of the REIT’s initial public offering.
As such, the Dilawri Group will be the operating tenant of Toyota Woodland and will enter into a 16-year lease with the REIT when the deal closes, which is expected to occur before the end of the year.
The store was built in 2007 and 2008 and is located within a commercial area at 1000-1039 Woodland Avenue.
"Montreal is a new market entry for the REIT, further diversifying our geographic presence. We are pleased to establish a foothold in Canada's second largest urban market with this recently constructed, best-in-class dealership," said Milton Lamb, president and chief executive officer of the REIT. "Consistent with our existing property portfolio, Toyota Woodland's long-term lease is triple-net and has an annual 1.5 percent fixed rent escalator, thereby further enhancing our stable cash flows."
Outlining how the REIT will pay for the purchase, management plans to use a combination of cash on hand from the exercise of the over-allotment option by the underwriters in the REIT's IPO and a draw on its credit facility.
"In addition to the acquisition opportunities available to the REIT through the Dilawri Group, we remain focused on building the REIT's third party acquisition opportunities. We are targeting prime automotive dealership properties in urban markets across Canada that can further enhance our brand and geographic diversification and grow cash available for distribution to our unitholders," Lamb concluded.