Automotive Properties Real Estate Investment Trust · TSX:APR.UN
Automotive Properties Real Estate Investment Trust — Investor Presentation (May 2023)
28 slides from Automotive Properties Real Estate Investment Trust's investor presentation, May 2023
Slide 1: Consolidating Canada's Automotive Dealership Properties
Consolidating Canada’s Automotive Dealership Properties Investor Presentation May 2023
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS Certain statements contained in this presentation constitute forward-looking information within the meaning of applicable securities legislation. Forward-looking information may relate to the REIT’s future outlook and anticipated events or results and may includ
Slide 3: Capital Market Profile (TSX: APR.UN)
Capital Market Profile (TSX: APR.UN) Investment properties: Recent price: $11.25 1 REIT Units: 39.73 million $1.17 billion 2 Market capitalization: Class B Units: 9.33 million Total return: $552 million 1 IPO to May 12, 2023: 105.6% 3 Annualized distribution Yield ¹ Debt to GBV 2 LTM AFFO Payout Rat
Slide 4: REIT Overview
REIT Overview High-quality portfolio of automotive properties in metropolitan markets across Canada Audi Queensway (GTA) GLA by metro (March 31, 2023) Porsche Vancouver (GVA) Ottawa Edmonton 9.3% 6.2% Greater Toronto Area 22.8% Greater Montreal Area 22.4% Remaining Portfolio Vancouver 21.8% 7.1% Cal
Slide 5: Strong Lead Tenants
Strong Lead Tenants Tesla ▪ 75+ automotive dealerships, ▪ Leading global electric vehicle maker ▪ 82 automotive dealerships, ▪ One of the largest automotive representing ~35 brands with largest market capitalization of representing ~28 brands dealership groups in North any automotive company America
Slide 6: Managing Inflation
Managing Inflation REIT Structure and Strategy to Mitigate Inflation • Interest rate swaps and mortgages (as at Mar. 31, 2023) • Weighted average interest rate swap and mortgage term of 5.5 years • 94% of debt fixed through interest rate swaps and mortgages • Contractual rent increases, including CP
Slide 7: Canadian Automotive Dealership Industry
»Canadian Automotive Dealership Industry Retail Sales 176 188 ($billions) 83 83 83 87 92 96 94 88 96 100 105 113 122 132 146 160 162 165 151 ~25% Auto industry’s proportion of Canada’s overall retail sales of products and merchandise in 2022 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201
Slide 8: Strong Auto Dealership Performance
Strong Auto Dealership Performance Stock Performance (December 31, 2019 to May 16, 2023) 400% 350% • Sales have rebounded from lows in spring of 2020 300% • Many dealers generating record earnings 250% 200% ̶ Rapid cost reduction achieved due to high variable cost component 150% • Profit margins per
Slide 9: Automotive Dealership Group Profit Centres
Automotive Dealership Group Profit Centres Average revenue / profit % contribution per business segment for major North American automotive dealership groups¹ Parts, service and repair Finance and Insurance New vehicle sales Used vehicle sales 10% 20% 30% 40% 50% Percentage of total revenue (average
Slide 10: Automotive Industry Developments & Evolution
Automotive Industry Developments & Evolution • New entrants expected into NA market from Asia • Consumer buying habits being met by enhanced dealership e-commerce offerings and curbside pick-up and service • Electric vehicles – low penetration, but gradually increasing • EV registrations comprised 5
Slide 11: Growth
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Slide 12: Further Opportunity to Consolidate Highly Fragmented Industry
Further Opportunity to Consolidate Highly Fragmented Industry Proportion of Canada’s ~ 3,500 Auto Dealerships 10 Dealership Groups: Approximately 12% of the Canadian Market 2 by Size of Ownership Group 1 Company Dealerships % of Total Dilawri Group (3) 74 2.1% AutoCanada(3) 64 1.8% Go Auto(3) 54 1.5
Slide 13: January 2023 Acquisitions
January 2023 Acquisitions 187,421 sq. ft. of GLA / 21.7 acres • Acquisition of six properties in Quebec (four in GMA / two in Sorel Tracy) from separate third parties for aggregate purchase price of $98.5 million • Affiliates of Groupe Olivier Capital are the operating tenants • long-term, triple-ne
Slide 14: Acquisition Growth (July 2015 IPO to Present)
Acquisition Growth (July 2015 IPO to Present) • 52 properties acquired / four property expansions / two property divestitures • ~$694 million deployed • Added ~1.8 million square feet of GLA to portfolio • Acquisitions indirectly funded by six fully-subscribed equity offerings totaling ~$409.5 milli
Slide 15: Portfolio Diversification & Growth
Portfolio Diversification & Growth At July 2015 IPO Current Ottawa Regina Edmonton 9.3% 18% 6.2% Greater Toronto Area 22.8% Markets > Toronto Vancouver 46% Greater Montreal Area (By GLA) 18% 22.4% Remaining Portfolio Vancouver 21.8% Calgary 7.1% Calgary 18% 10.4% Tenants > Base Rent Dilawri 100% Dil
Slide 16: Stability
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Slide 17: Stable Growth Platform
Stable Growth Platform 5.5 years 4.18% 94% ~ 80% Weighted average Weighted average Portion of total debt at exposure to VECTOM interest rate swap term fixed interest rate fixed interest rates¹ markets1 and mortgage remaining¹ on debt¹ 10.7 years 2.4% 100% 45.2% Weighted average Q1 2023 Same Property
Slide 18: Strong Leasing Profile
Strong Leasing Profile 1 • Triple-net leases • Weighted average term of 10.7 years • Leases are indemnified by multi-brand, multi-location • Fixed 1.5% annual rent escalator for the 36 Dilawri operators / OEM (e.g. AutoCanada, Dilawri Group, Go properties over the next 3.2 – 16.8 years Auto, Lithia
Slide 19: Manufacturer / Brand Diversification
Manufacturer / Brand Diversification Manufacturers by Region Brands by Market Segment (% of Base Rent from Dealership Properties)1 (% of Base Rent from Dealership Properties)1 North America 17.3% Ultra Luxury4 4.3% Luxury3 42.6% Asia 44.5% Europe 38.3% Mass Market2 53.1% 18.5% 11.5% Manufacturer / B
Slide 20: Debt Strategy
Debt Strategy • As at Mar. 31, 2023, the REIT had cash on hand of ~$0.1 million, undrawn revolving credit facilities of $52.4 million and four unencumbered properties valued at ~$61.5 million • $82.0 million of undrawn credit revolving facilities and four unencumbered properties valued at ~$61.5 mil
Slide 21: Performance
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Slide 22: Q1 2023 Financial Review
Q1 2023 Financial Review Cash NOI ($000s) FFO ($000s) Same Property 18,846 11,949 12,029 16,941 Cash NOI $0.240 $0.241 per Unit per Unit (diluted) (diluted) 2.4% 83.8% 83.4% Payout Ratio Payout Ratio Q1 2022 Q1 2023 Q1 2022 Q1 2023 AFFO ($000s) Debt to GBV 45.2% 11,362 11,409 41.6% $0.228 $0.229 per
Slide 23: 2022 Financial Review
2022 Financial Review ($000s, except per unit amounts 12 months ended 12 months ended Variance and payout ratios) December 31, 2022 December 31, 2021 Revenue from investment properties $ 82,861 $ 78,218 5.9% Cash NOI 68,533 64,225 6.7% Same property Cash NOI1 64,155 62,706 2.3% FFO 46,748 46,529 0.5
Slide 24: Investment Highlights
Investment Highlights • Solid growth in key performance metrics in 2022 • Canadian automotive dealership industry proving its resilience as an essential business with strong sales and service levels • Dealers have lowered operating expenses and leveraged e-commerce offerings • APR’s diversified lead
Slide 25: Appendix
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Slide 26: APR.UN Price Performance
APR.UN Price Performance 12 months ended May 16, 2023 May 16, 2023: $11.25 May 2022 November 2022 May 2023 25
Slide 27: Strong Majority Independent Board
Strong Majority Independent Board Name & Domicile Principal Occupation Kap Dilawri, Chair Co-Founder and President of the Dilawri Group Ontario, Canada Patricia Kay Former Senior Vice President, Dealer Finance – Bank of America Merrill Lynch Massachusetts, United States Milton Lamb President & CEO o
Slide 28: Dilawri Group
Dilawri Group Dilawri 5-Year Historical Revenues ($billions) $4.1 • REIT has the first right to acquire from Dilawri $3.8 $3.8 $3.4 development and acquisition pipeline $3.0 o Historically, Dilawri has, on average, opened or acquired five new automotive dealerships per year, including two to three a
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