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TORONTO, March 26, 2019 /CNW/ - Automotive Properties Real
Estate Investment Trust (TSX: APR.UN) (the "REIT") announced today that it has entered into agreements to purchase two automotive
dealership properties in Winnipeg, Manitoba from AutoCanada Inc. (TSX: ACQ) ("AutoCanada") for a
total purchase price of approximately $23.95 million (the "Transaction"), excluding closing
costs.
The two dealership properties included in the Transaction are the McNaught Cadillac Buick GMC automotive dealership property
(the "McNaught GM Property") and the St. James Volkswagen automotive dealership property (the "St. James VW Property"). The
additions of the McNaught GM Property and the St. James VW Property are expected to be accretive to the REIT's run-rate Adjusted
Funds from Operations ("AFFO")¹ per unit on a leverage-neutral basis.
"We are pleased to enter our second property acquisition transaction with AutoCanada, one of Canada's largest automotive retailers. We look forward to expanding our portfolio into the metropolitan
Winnipeg market with these high-quality assets and further diversifying our tenant base," said
Milton Lamb, President and CEO of the REIT.
The McNaught GM Property includes a 56,641 square foot full-service General Motors dealership facility that was built in 2003,
with extensive renovations completed in 2015. The McNaught GM Property occupies approximately 5.6 acres of land within the
Waverley Automall in southwestern Winnipeg, with convenient access to major highways in an area
of substantial commercial development. Upon closing of the Transaction, an affiliate of AutoCanada will be the operating tenant
of the McNaught GM Property and will enter into a 19-year, triple-net lease with the REIT. The lease will include a contractual
annual rent increase after the first year of the lease term, based on the Manitoba Consumer Price Index ("Manitoba CPI").
The REIT has agreed to fund capital development expenses for the McNaught GM Property up to a maximum of $3.0 million, expected to be undertaken by the end of 2021. In return for the development funds, the tenant
will pay an incremental monthly rental amount based on the amount of development expenses incurred calculated at not less than
the capitalization rate of the property purchase price, for the duration of the lease term, plus annual Manitoba CPI escalations
thereafter.
The St. James VW Property includes a 39,494 square foot, full-service Volkswagen dealership facility built in 2004 / 2005. The
St. James VW Property occupies approximately 3.9 acres of land located at 670 Century Street, in close proximity to the
Winnipeg International Airport and CF Polo Park, Manitoba's
largest shopping centre, with convenient access to the TransCanada Highway. Upon closing of the Transaction, an affiliate of
AutoCanada will be the operating tenant of the St. James VW Property and will enter into a 19-year, triple-net lease with the
REIT. The lease will include a contractual annual rent increase after the first year of the lease term, based on the Manitoba
CPI.
The REIT has agreed to fund capital development expenses for the St. James VW Property up to a maximum of $3.5 million, expected to be undertaken by early 2020. In return for the development funds, the tenant will pay
an incremental monthly rental amount based on the amount of development expenses incurred calculated at the capitalization rate
of the property purchase price, for the duration of the lease term, plus annual Manitoba CPI escalations thereafter.
AutoCanada Holdings Inc. will provide an indemnity to the REIT in respect of the lease obligations for both the McNaught GM
Property and the St. James VW Property. The REIT will finance the Transaction through draws on its revolving credit facilities
and through the expansion of one of its credit facilities, which the REIT will facilitate by using the McNaught GM Property and
the St. James VW Property as security. The Transaction is expected to close later this month, subject to customary closing
conditions. The REIT may close on one of the properties in advance of closing on the second property if closing conditions
are satisfied on one property before conditions are satisfied on the other property.
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. The
REIT's portfolio currently consists of 54 income-producing commercial properties and one development property, representing
approximately two million square feet of gross leasable area, in metropolitan markets across Ontario, Saskatchewan, Alberta,
British Columbia and Québec. Automotive Properties REIT is the only public vehicle in
Canada focused on consolidating automotive dealership real estate properties. For more
information, please visit: www.automotivepropertiesreit.ca
(1) Non-IFRS Financial Measure
This news release contains a financial measure which is not defined under IFRS and may not be comparable to similar
measures presented by other real estate investment trusts or enterprises. AFFO is a key measure of earnings performance used by
real estate businesses. This measure is not defined by IFRS and does not have a standardized meaning prescribed by IFRS, and
therefore should not be construed as an alternative to net income or cash flow from operating activities calculated in accordance
with IFRS. The REIT believes that AFFO is an important measure of economic earnings performance and is indicative of the REIT's
ability to pay distributions from earnings. The IFRS measurement most directly comparable to AFFO is net income. Please refer to
the REIT's MD&A most recently filed on SEDAR for further discussion of this non-IFRS financial measure.
Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable securities legislation,
which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as
"will", "intends", "anticipates" and "expected". Forward-looking information includes statements regarding the Transaction, the
timing of closing of one or both of the properties and the timing of the REIT's funding of the tenants' future capital
development expenses. Forward-looking information is based on a number of assumptions and is subject to a number of risks and
uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from
those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not
limited to, the failure to successfully close the Transaction on the terms described, or at all, the failure of the Transaction
to be accretive to the REIT's run-rate AFFO on a leverage-neutral basis and the factors discussed under "Risks and
Uncertainties" in the REIT's management's discussion and analysis ("MD&A") most recently filed on SEDAR (www.sedar.com) and in the REIT's current annual information form, which is available on SEDAR. The REIT does
not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or
otherwise, except as expressly required by applicable law. This forward-looking information speaks as of the date of this news
release.
SOURCE Automotive Properties Real Estate Investment Trust
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