ABOUT US

Automotive Properties REIT (TSX: APR.UN) is an unincorporated open-ended real estate investment trust focused on investing in high quality automotive dealerships properties in strategic Canadian urban markets. The primary objectives of the REIT are to provide Unitholders with stable, sustainable and growing cash distributions, and to enhance and expand the REIT’s asset portfolio in order to maximize Unitholder value.

The REIT’s portfolio currently consists of 33 properties on over 100 acres located in the Greater Vancouver Area, Edmonton, Calgary, Regina, the Greater Toronto Area and Montreal. The properties encompass over one million square feet of gross leasable area, and are occupied by retail automotive dealerships, service centres and ancillary businesses. The automotive dealership businesses represent the largest, most recognizable global automotive brands ranging from mass market vehicle brands through to the ultra-luxury segment, with a focus on European and Asian brands.

Automotive Properties’ lead tenant is The Dilawri Group, the largest automotive dealership group in Canada. Building on a strong track record of development and active management, the Dilawri generated revenue of approximately $2.4 billion in 2016. Automotive Properties REIT benefits from its strategic relationship with the Dilawri Group and its ability to expand its dealership footprint across the country.

The Canadian automotive retail industry had sales of approximately $134 billion in 2016.

The automotive retail industry is Canada’s largest retail segment, accounting for approximately 25% of overall retail sales and 6.7% of Canada’s GDP in 2016.

Automotive Properties REIT’s portfolio is currently comprised of 32 properties on over 100 acres, representing over one million square feet of gross leasable area, located in long-term growth markets across Canada.

Overview

Automotive Properties REIT (TSX: APR.UN) is an open-ended, growth-oriented real estate investment trust, offering exposure to a unique real estate asset class. The REIT is focused on owning and acquiring automotive dealerships properties in long-term growth markets in Canada.

Canada’s automotive retail industry is characterized by strong industry fundamentals. At approximately 6.7% of GDP in 2016¹, the automotive retail industry is the largest component of retail sales and merchandise in Canada. Industry sales totalled a record $134 billion in 2016¹ (25% of Canada’s overall retail sales of products and merchandise¹). From 2011 to 2016, automotive retail sales increased at a compound annual growth rate of 6.1%¹. In addition to robust sales performance, automotive dealerships have demonstrated stable profitability. Since 2007, the weighted average gross profit margin for publicly listed automotive dealership groups in North America has averaged 15.7% and remained within a band ranging from 14.9% to 17.1%².

The REIT’s property leases are structured as triple-net leases under which the tenant is responsible for all costs relating to repair and maintenance, realty taxes, property insurance, utilities and all non-structural capital improvements. The portfolio has a weighted average lease term of more than 13 years and leases include contractual fixed rent increases.

These strong fundamentals and an attractive leasing profile support the stability of Automotive Properties REIT’s Unitholder distributions. The REIT currently pays monthly cash distributions to Unitholders of $0.067 per Unit, representing $0.80 per Unit on an annualized basis.

Strategy and Objectives

The primary strategy of the REIT is to create long-term value for Unitholders by generating sustainable tax-efficient cash flow and capital appreciation. The primary objectives of the REIT are to:

  • provide Unitholders with stable, predictable and growing monthly cash distributions on a tax-efficient basis;
  • maximize long-term Unitholder value by enhancing the value of the REIT’s assets; and
  • expand the REIT’s asset base while also increasing adjusted funds from operations (AFFO) per unit.

Management intends to grow the value of the REIT’s real estate portfolio while also increasing AFFO per Unit through accretive acquisitions and steady growth in rental rates. The REIT is leveraging its strategic arrangement with the Dilawri Group to acquire properties from the Dilawri Group that meet the REIT’s investment criteria. The REIT is also well-positioned to capitalize on significant acquisition opportunities presented by third parties due to the fragmented nature of the market. Management intends to focus on obtaining new properties which have the potential to contribute to the REIT’s ability to generate stable, predictable and growing monthly cash distributions to Unitholders. Subsequent to its initial public offering in July 2015, the REIT has completed seven acquisitions worth $101 million. Three of those transactions, worth $48.2 million, were with third party dealership tenants.

 

 

  1. Statistics Canada
  2. Weighted average of the gross profit margins for AutoCanada Inc., AutoNation Inc., Penske Automotive Group Inc., Group 1 Automotive Inc., Sonic Automotive Inc., Asbury Automotive Group Inc., Lithia Motors, Inc., and CarMax Inc., based on management’s review of publicly available information.


TEAM

Milton Lamb / Andrew Kalra

milton_lamb_bio

Milton Lamb

President and Chief Executive Officer

Milton Lamb is President and Chief Executive Officer of Automotive Properties REIT. With over 26 years of experience in the Canadian commercial real estate industry, Mr. Lamb has achieved a track record of successful commercial real estate transactions, development projects, and joint ventures totaling over $2.5 billion. Mr. Lamb has worked with the largest global real estate service companies including CBRE, Jones Lang Wootton (now known as JLL) and, most recently, Colliers International as Senior Vice President, a position he held from 2007 until joining Dilawri Real Estate Group as President in 2015. During his tenure at Colliers International, Mr. Lamb was Chair of the National Investment Services from 2008 to 2013, represented Canada on Colliers Global Investment Services and Colliers Investment Services Group (USA) for seven years. Mr. Lamb is a registered real estate broker and sole proprietor of Bream Realty Limited registered with the Real Estate Council of Ontario . Mr. Lamb is a mentor for NAIOP Developing Leaders, a past director and Co-Chair of Government Relations of NAIOP Toronto (2014, 2015), Mr. Lamb has been active with Big Brother Big Sisters Toronto including serving as a past Board Member.

andrew_kalra_bio

Andrew Kalra

Chief Financial Officer

Andrew Kalra is Chief Financial Officer of Automotive Properties REIT and has over two decades of experience in finance, 13 years of which have centred on the automotive industry. Mr. Kalra joined the Dilawri Group in 2014 to serve as the Vice President, Finance. Prior to his tenure at the Dilawri Group, Mr. Kalra was with Mazda Canada as Senior Director of Finance and Business Strategy for 12 years. Previously Mr. Kalra held senior financial positions in public companies including Nortel Networks Inc. and Walt Disney Canada, as well as at a Canadian chartered accounting firm. Mr. Kalra holds a Bachelor of Commerce from the University of Toronto and a CPA, CA designation.

Kapil Dilawri / Janet Graham / Stuart Lazier / James Matthews / John Morrison

Kapil Dilawri

Chair of the Board

Kapil Dilawri is co-founder of Dilawri Group of Companies. Over the last 30 years Mr. Dilawri has been instrumental in growing the Dilawri Group from a single dealership in Regina to the largest automotive dealership group in Canada. Mr. Dilawri remains active in strategic initiatives and business operations of the Dilawri Group. In 2002, Mr. Dilawri co-founded the Dilawri Foundation, a charitable organization committed to giving back to Canada by supporting medical research, hospitals, children and their families.

Janet Graham

Trustee

Janet Graham has served in the role of Managing Director of IQ Alliance Incorporated, a Toronto-based real estate advisory services firm, since August 2002. Previously, Ms. Graham was an independent consultant delivering real estate related financial advisory services to major corporate clients. Ms. Graham’s background also includes senior positions at a Canadian chartered bank and its affiliated investment bank where she specialized in corporate finance and corporate lending to real estate and other companies. Ms. Graham is a member of the Board of Trustees and Chair of the Audit Committee of Milestone Apartments Real Estate Investment Trust, and a member of the Board of Directors and Chair of the Audit Committee of Sienna Senior Living Inc. Ms. Graham has held numerous Board and Audit Committee positions for real estate companies and REITS including Toronto Waterfront Revitalization Corporation, Altus Group Limited, Partners Real Estate Investment Trust, IPC US Real Estate Investment Trust and Crystal River Capital, Inc. Ms. Graham has a Bachelor of Applied Science from Guelph University and a Master of Business Administration from York University and holds a CPA, CA designation.

Stuart Lazier

Trustee

Stuart Lazier is a partner, co-founder and Chief Executive Officer of Fiera Properties Limited and has more than 30 years of experience as a leader in real estate management and investment. Prior to his tenure at Fiera Properties, Mr. Lazier was Managing Partner of Enterprise Property Group, which he merged with O&Y Properties to form O&Y Enterprise, managing over 110 million square feet and assets of more than $20 billion. Between 2001 and 2009, Mr. Lazier co-founded KingSett Capital, now one of Canada’s leading real estate fund managers. In addition to assisting with KingSett’s strategic leadership, Mr. Lazier was responsible for the company’s operations, leasing, and portfolio value optimization. He was also a member of Investment and Advisory Boards overseeing three growth funds with 60 investments valued at $3 billion. Mr. Lazier has served as Board member and Chair of Covenant House Toronto, Chair of the Real Estate Committee for the Toronto United Way, Vice Chair of the Board of Governors at Upper Canada College and Chairman of the Build Toronto Board of Directors. He is currently a director of a number of private companies and non-profit organizations. Mr. Lazier holds an MBA from the Richard Ivey School of Business at the University of Western Ontario.

James Matthews

Trustee

James Matthews has served as Chief Financial Officer of the Dilawri Group since 2007 and has served in the capacity of Chief Financial Officer for other Dilawri Group companies, and as a member of the Management Board of the Dilawri Group. During his tenure with the Dilawri Group, Mr. Matthews has played a key role in acquisition transactions, business operations, developments and redevelopments, and financing activities. Previously Matthews’ held senior positions with industry-leading companies including Chief Financial Officer of W.K. Buckley Limited, VP Finance with KIK Custom Products Inc., and Regional Controller for Rogers Communications Inc. (cablevision division). Mr. Matthews holds a Bachelor of Administration in Finance and Economics from the University of Western Ontario and a CPA, CA designation.

John Morrison

Lead Independent Trustee

John Morrison currently serves as President and Chief Executive Officer of Choice Properties Real Estate Investment Trust. Mr. Morrison has over 35 years’ experience in the commercial real estate industry, primarily in the retail asset class. Prior to his tenure at Choice Properties, Mr. Morrison was President and Chief Executive Officer of Primaris Retail Real Estate Investment Trust from 2009 to 2013. Previously Mr. Morrison was President, Real Estate Management, at Oxford Properties Group, where he was responsible for the performance of its domestic portfolio. Mr. Morrison is a past Trustee of the International Council of Shopping Centres, currently serves on a number of its committees and is Divisional Vice President for Canada. He is also former Vice Chairman of the Urban Land Institute Toronto District Council. Mr. Morrison is a Director of the Institute of Corporate Directors and is currently Chairman of the Ryerson University Real Estate Advisory Committee.

Governance

Automotive Properties REIT benefits from the active oversight of a seasoned Board whose Members offer diverse professional experience that spans the automotive industry, commercial real estate, corporate governance, finance and accounting. The mandate of the Board is to provide governance and stewardship to the REIT and its business for the benefit of all REIT stakeholders.

COMMITTEES AND MEMBERSHIP

Audit CommitteeJanet Graham, Chair
Stuart Lazier
John Morrison
Governance, Compensation and Nominating CommitteeStuart Lazier, Chair
Janet Graham
John Morrison

POLICIES AND CHARTERS

Audit Committee

The Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities in relation to the integrity of the Trust’s financial statements; the Trust’s compliance with legal and regulatory requirements as they relate to its financial statements; the qualifications, independence and performance of the Trust’s external auditor (the ‘‘Auditor’’); the enterprise risk management process; internal control over financial reporting and disclosure controls and procedures; assessing conflicts of interest between the Trust, its Chief Financial Officer and Dilawri; and performing the additional duties set out in this Charter or otherwise delegated to the Audit Committee by the Board. The Audit Committee has direct communication channels with the Chief Financial Officer and the Auditor to discuss and review such issues as the Audit Committee may deem appropriate.

The Board shall appoint a minimum of three trustees to be members of the Audit Committee, a majority of whom shall be residents of Canada within the meaning of the Income Tax Act (Canada). The members of the Audit Committee shall be selected by the Board on recommendation of the Governance, Compensation and Nominating Committee of the Trust and shall be selected based upon the following: each member shall be an independent trustee; and each member shall be financially literate.

Governance, Compensation and Nominating Committee

The role of the Governance, Compensation and Nominating Committee is to review, oversee and evaluate the corporate governance, compensation and nominating policies of the REIT including: (i) regularly assessing the effectiveness of the Board, each of its committees and individual Trustees; (ii) overseeing the recruitment and selection of candidates as Trustees of the REIT, other than the candidates nominated by Dilawri; (iii) organizing an orientation and education program for new Trustees; (iv) considering and approving proposals by the Trustees to engage outside advisors on behalf of the Board as a whole or on behalf of the Independent Trustees; (v) reviewing and making recommendations to the Board concerning any change in the number of Trustees composing the Board; (vi) considering questions of management succession; (vii) administering any unit purchase plan of the REIT and any compensation incentive programs; (viii) assessing the performance of management of the REIT; (ix) reviewing and approving the compensation paid by the REIT, if any, to the officers of the REIT; (x) overseeing the Administration Agreement and the duties of the President and Chief Executive Officer of the REIT to ensure the appropriate supervision and management of any potential conflicts of interest between the REIT’s President and Chief Executive Officer, the REIT and Dilawri; and (xi) reviewing and making recommendations to the Board concerning the level and nature of the compensation payable to Trustees and officers of the REIT.

The Governance, Compensation and Nominating Committee will at least three Trustees, a majority of whom are persons determined by the REIT to be Independent Trustees and a majority of whom will be residents of Canada within the meaning of the Income Tax Act (Canada).