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TORONTO, Dec. 30, 2021 /CNW/ - Automotive Properties Real Estate Investment Trust (TSX: APR.UN) ("Automotive Properties REIT" or the "REIT") announced today that it has entered into agreements with a dealership group to purchase two automotive dealership properties in Quebec (the "Properties") for a combined purchase price of $23.4 million. The Properties consist of Sherbrooke Honda, located at 2555 / 2615 King Street West in Sherbrooke and Magog Honda, located at 2390 / 2400 Sherbrooke Street in Magog. The addition of the Properties is expected to be immediately accretive to the REIT's Adjusted Funds from Operations ("AFFO")¹ per unit on a leverage-neutral basis.
The Sherbrooke Honda property consists of a 26,990 square-foot, full-service Honda dealership facility, renovated in 2014, that is situated on 1.7 acres of land along a commercial corridor on King Street West (Route 112). The Sherbrooke Metropolitan Area has a population of approximately 212,000, representing the fourth largest metropolitan area in Quebec. On closing, the operating tenant of Sherbrooke Honda will enter into a 15-year, triple-net lease with the REIT that includes a contractual annual rent increase based on the Quebec Consumer Price Index, and no less than 1.5%, after year one of the lease term.
The Magog Honda property consists of two buildings totaling 56,195 square-feet, including a full-service Honda dealership facility built in 2006 with expansions completed in 2009 and 2011, and a used car and service facility, built in 2008. Magog Honda is situated on 6.5 acres of land along a commercial corridor at the intersection of Autoroute 55 and Route 112 in close proximity to Sherbrooke. On closing, the operating tenant of Magog Honda will enter into a 15-year, triple-net lease with the REIT that includes a contractual annual rent increase based on the Quebec Consumer Price Index, and no less than 1.5%, after year one of the lease term.
The REIT has also exercised its Right of First Refusal and entered into an agreement to purchase approximately 2.15 acres of land at 20257 Langley Bypass in Langley, British Columbia from a third party, that is subject to a land lease paid by the operator of the Acura Langley dealership, an affiliate of the Dilawri Group, and an existing tenant of the REIT. The land lease matures on June 30, 2032. The purchase price for the land was approximately $15.1 million (the "Acura Langley Land and Lease Acquisition").
"The acquisition of the Sherbrooke Honda and Magog Honda properties will increase our footprint in Quebec and expand our relationships with leading dealership groups," said Milton Lamb, President and CEO of the REIT. "The transaction involving Acura Langley enables us to consolidate ownership of the land and building and the related leases, thereby further enhancing the value of our property portfolio in the Greater Vancouver Area."
The REIT expects to close the acquisitions of the Properties and the Acura Langley Land and Lease Acquisition in January 2022, subject to customary closing conditions, and fund their respective purchase prices by drawing on its revolving credit facilities. The Acura Langley Land and Lease Acquisition was unanimously approved by the REIT's independent trustees.