Automotive Properties Real Estate Investment Trust says it has entered into a definitive agreement to purchase the real estate underlying Go Auto Group’s Porsche Centre and Jaguar Land Rover Edmonton.
The deal is valued at $23 million representing a cap rate of 6.6 per cent.
The 44,800-square foot facility is currently home to two dealerships and marks the second deal for the newly minted REIT following a deal announced last week for Toyota Woodland in Quebec.
“This is an important milestone for us, as the transaction represents the REIT's first acquisition of a dealership property with a third party dealer as tenants, and adds Land Rover Jaguar as a new brand in our portfolio,” said Milton Lamb, president and CEO of Automotive Properties REIT.
“These top-tier dealerships, owned by Go Auto, one of Canada's leading operators, also represents our first property in Edmonton, further expanding the REIT's geographic footprint, while also enhancing the luxury brand segment of our property portfolio.”
Built in 2014, Porsche Centre and Jaguar Land Rover Edmonton sit on an attractive commercial corridor at 17007 111th Avenue N.W. in Edmonton.
On closing of the transaction, the Go Auto tenants will enter into a 17-year triple-net lease with the REIT.
Go Auto is one of Canada's largest dealership groups with 40 automotive dealerships located in Alberta, British Columbia and the Northwest Territories.
“We are delighted to enter into this transaction with Automotive Properties REIT,” said Jared Preistner, president of Go Auto.
“By selling the real estate underlying these dealerships, we are capitalizing on a unique opportunity to monetize value and redeploy the funds in our core business − the ownership and operation of leading automotive dealership businesses.”
Lamb says the REIT will fund the purchase through a combination of a new $15 million mortgage with a Canadian chartered bank and a draw on its credit facility. The REIT has completed its diligence in connection with this acquisition and closing is expected to occur before the end of the year, subject to customary closing conditions.
The REIT also announced that it has completed its previously announced acquisition of Toyota Woodland in Montréal. That deal was worth approximately $7.2 million.
The Dilawri Group entered into a 16-year lease with the REIT in respect of this property.
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 of 27 income producing commercial properties represents approximately 1 million square feet of gross leasable area in 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.