Automotive Properties Real Estate Investment Trust announced it would spend $17.2 million to buy the Pfaff Audi dealership property in Vaughan, Ont.
The deal, expected to close sometime in October, will see the dealership just north of Toronto added to the growing stable of properties in Canada’s only automotive-focused REIT.
The addition of this property is expected to be immediately accretive to the REIT’s adjusted funds from operations on a per unit basis.
“Pfaff Audi will be a strong addition to the REIT,” said Milton Lamb, president and CEO of Automotive Properties REIT.
“Not only does it bring another great Audi property to our portfolio, it complements our strong presence in the key GTA market. This transaction is also noteworthy in that the tenant is the highly-regarded Pfaff Automotive Partners, one of Canada’s leading automotive groups, thereby continuing to diversify our tenant base. Two-thirds of the capital we have deployed in our four acquisitions since our IPO have resulted in new, third-party tenancies.”
Pfaff Audi was built in 2006 and sits on three acres of land on Jane Street just south of Rutherford Road. The 69,000-square foot facility is adjacent to Vaughan Mills, one of the largest shopping centres in Canada.
The REIT said it is assuming the current triple net lease on the property, which has a remaining initial term of approximately 4.75 years, following which there are two five-year renewal options available to the tenant, with renewal rents based on the greater of market rates and the then existing lease rate.
“The REIT intends to satisfy the purchase price primarily through a new $14.6 million revolving credit facility with a major Canadian chartered bank, which will bear interest at the bankers acceptance rate plus 150 basis points,” the company said in a release.
The balance of the purchase price is expected to be satisfied by cash on hand or draw on the REIT’s existing credit facility.
Automotive Properties REIT has made a big splash in its first year in market. The current portfolio of 29 income producing commercial properties represents approximately 1.1 million square feet of gross leasable area in Ontario, Saskatchewan, Alberta, British Columbia and Québec.