Dilawri Group of Companies, Canada’s largest car dealership group, is creating the Automotive Properties Real Estate Investment Trust to own and acquire Canadian auto dealership properties.
“We want to take advantage of the consolidation that’s going to take place within the auto dealership world,” said president and chief executive officer Milton Lamb, who informed RENX the REIT is in a blackout period and can’t reveal much more than what’s in the preliminary prospectus it has filed in respect of its initial public offering.
Looking to raise $75 million
The last REIT IPO to list on the Toronto Stock Exchange was Canadian Tire Corporation’s CT Real Estate Investment Trust (CTC-T, CTC.A-T), which raised $263.5 million in October 2013, according to data compiled by Bloomberg.
On closing, Automotive Properties’ initial portfolio of 26 income-producing commercial properties will represent approximately 958,000 square feet of gross leasable area primarily centred in and around Vancouver, Calgary, Regina and Toronto.
The initial locations represent all of the REIT-suitable properties currently owned by Dilawri Group, which leases another 31 dealership properties, and Dilawri Group will be the REIT’s only tenant at closing.
REIT will be a first for Canada
Automotive Properties will be the only publicly listed vehicle in Canada exclusively focused on auto dealership properties.
Capital Automotive REIT (CARS) in the United States has exclusively supported auto dealers since 1997 and its stock was publicly traded on NASDAQ through December 2005 when it completed a privatization with DRA Advisors LLC. CARS was acquired by Brookfield Property Partners (BPY.UN-T) and its institutional partners in October 2014.
CARS has assisted auto dealer groups in growing their organizations, acquiring new locations, upgrading existing facilities, constructing new stores and facilitating estate planning and partner buyouts.
“It has been done before and been successful before,” said Lamb, who joined Dilawri Group in April after nearly eight years as senior vice-president of Colliers International’s national investment team.
Dilawri Group has more than 2,500 employees and had combined revenues of approximately $1.6 billion and adjusted earnings before interest, taxes, depreciation, and amortization of approximately $75 million for the 2014 fiscal year.
The company has opened or acquired an average of five new auto dealerships in each of the last five years, including two to three properties. Twelve of Automotive Properties’ 26 initial properties were either opened or acquired by Dilawri Group within the last five years.