Automotive Properties Real Estate Investment Trust says it has agreed to buy Audi Barrie’s property in Innisfil, Ont., for approximately $11.1 million.
The deal represents a cap rate of 7.1 per cent. It is also the third purchase agreement for the REIT in recent weeks along with Toyota Woodland in Quebec and the Go Auto-owned Porsche Centre and Jaguar Land Rover Edmonton.
Audi Barrie is a newly constructed, 25,000-square foot dealership owned by the Dilawri Group. It sits on 3.1 acres in a commercial corridor neighbouring other luxury dealerships in Innisfil, near Barrie.
Audi Barrie was one of the three development properties owned by the Dilawri Group at the time of the REIT's initial public offering in July.
“Pursuant to the strategic alliance agreement entered into with the Dilawri Group at closing of the REIT's IPO, the REIT has a right of first offer to acquire any REIT-suitable properties from the Dilawri Group's property development pipeline,” the company said in a release.
Audi Barrie will enter into a 19-year lease with the REIT on closing of the acquisition on the same terms as the leases entered into at closing of the IPO.
“We look forward to adding Audi Barrie, a brand new luxury dealership property, to our portfolio. Audi Barrie's long-term lease will be triple-net with a contractual 1.5 pre cent annual rent escalator,” explained Milton Lamb, president and CEO of Automotive Properties REIT.
“This transaction further advances our strategy of levering our relationship with the Dilawri Group to grow our portfolio in support of generating increased cash available for unitholder distributions.”
The REIT intends to fund the purchase of the real estate underlying Audi Barrie through a new mortgage with a Canadian chartered bank and a draw on its existing revolving credit facility.
It is expected to close later this month, subject to customary financing and closing conditions.