Automotive Properties Real Estate Investment Trust · TSX:APR.UN
Automotive Properties Real Estate Investment Trust — Investor Presentation (September 2023)
30 slides from Automotive Properties Real Estate Investment Trust's investor presentation, September 2023
Slide 1: Consolidating Canada's Automotive Dealership Properties
Consolidating Canada’s Automotive Dealership Properties Investor Presentation SEPTEMBER 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: Driving Real Estate Forward
Driving Real Estate Forward Vision To be the net lease real estate partner of choice for the automotive service and retail community Mission Invest in premier properties in growing metropolitan markets to deliver durable and growing cash flow underpinned by long-term real estate appreciation ESSENTI
Slide 4: Capital Market Profile
Capital Market Profile (TSX: APR.UN) Investment properties: Recent price: $10.40 1 REIT Units: 39.73 million $1.18 billion 2 Market capitalization: Class B Units: 9.33 million Total return: $510 million 1 IPO to August 15, 2023: 112.5% 3 Annualized distribution Yield ¹ Debt to GBV 2 LTM AFFO Payout
Slide 5: Essential Retail on Prime Urban Land
Essential Retail on Prime Urban Land • Tripled assets from < $400 million to ~ $1.2 billion since 2015 IPO • Prime urban properties supported by GDP and population growth, intensification, and higher and better use scenarios 77 249 acres income-producing properties of commercially-zoned urban real e
Slide 6: Quality Tenants
Quality Tenants • Long-term triple net leases with multi dealership indemnification and Tesla • Defensive income (100% occupancy / no bad debt write-offs) supported by underlying land value appreciation • Embedded growth with contractual annual set or CPI-linked escalations Tesla ▪ Leading global el
Slide 7: Essential Automotive Service & Retail
Essential Automotive Service & Retail
Slide 8: Essential Retail - Automotive Dealership Industry
Essential Retail - Automotive Dealership Industry Retail Sales 176 188 ($billions) 113 122 132 146 160 162 165 151 Auto ~ 25% 96 96 100 105 83 83 83 87 92 94 88 Other Auto industry’s proportion of Retail Canada’s overall retail sales of products and merchandise in 2022 2002 2003 2004 2005 2006 2007
Slide 9: Strong Auto Dealership Performance
Strong Auto Dealership Performance Stock Performance (December 31, 2019 to August 15, 2023) 400% • Many dealers generating record 350% earnings 300% ̶ Rapid cost reduction achieved due 250% to high variable cost component 200% • Profit margins per unit sold being 150% enhanced through: 100% ̶ Techno
Slide 10: 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 11: 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% 18.3% 11.3% Manufacturer / B
Slide 12: Automotive Industry Developments & Evolution
Automotive Industry Developments & Evolution • New entrants from Asia entering NA market • 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 5.6% o
Slide 13: Stability & Performance
Stability & Performance “a >, ~ 7 Mutomotive Properties REIT NN
Slide 14: Stable Growth Platform
Stable Growth Platform 5.3 years 4.18% 91% ~ 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 10.3 years 2.4% 100% 45.1% Weighted average Q2 2023 Same Property
Slide 15: Strong Leasing Profile
Strong Leasing Profile 1 • Triple-net leases with weighted average term of • Fixed 1.5% annual rent escalator for the 36 Dilawri properties 10.3 years over the next 2.9 – 16.5 years • Leases are indemnified by multi-brand, multi- • For 2024, leases with uncapped CPI-related adjustments will location
Slide 16: Debt Strategy
Debt Strategy • 91% of debt fixed through swaps and mortgages • Flexible financing structure (ability to expand, rotate assets and repay or renew) • Strong support from diversified lender base Principal Effective Fixed Rate of Amount withdrawn against At June 30, 2023 ($000s) Maturity Repayment Amou
Slide 17: Q2 2023 Financial Review
Q2 2023 Financial Review Cash NOI ($000s) FFO ($000s) Same Property 12,075 18,933 11,999 17,100 Cash NOI $0.241 $0.241 per Unit per Unit (diluted) (diluted) 2.4% 83.4% 83.4% Payout Ratio Payout Ratio Q2 2022 Q2 2023 Q2 2022 Q2 2023 AFFO ($000s) Debt to GBV 45.1% 11,415 11,490 41.2% Increase reflects
Slide 18: First Half 2023 Financial Review
First Half 2023 Financial Review ($000s, except per unit amounts Six months ended Six months ended Variance and payout ratios) June 30, 2023 June 30, 2022 Revenue from investment properties $ 45,815 $ 41,269 11.0% Cash NOI 37,814 34,040 11.1% Same property Cash NOI1 33,140 32,367 2.4% FFO 24,104 23,
Slide 19: Growth
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Slide 20: Portfolio Diversification & Growth
Portfolio Diversification & Growth At July 2015 IPO Current Ottawa Regina Edmonton 9.2% 18% 6.1% Greater Toronto Area 22.4% Markets > Toronto Vancouver 46% Greater Montreal Area (By GLA) 18% 23.7% Remaining Portfolio Vancouver 21.4% Calgary 6.9% Calgary 18% 10.2% Tenants > Base Rent Dilawri 100% Dil
Slide 21: Acquisition Growth (July 2015 IPO to Present)
Acquisition Growth (July 2015 IPO to Present) • 53 properties acquired / four property expansions / two property divestitures • ~$702 million deployed • Added ~1.9 million square feet of GLA to portfolio • Acquisitions indirectly funded by six fully-subscribed equity offerings totaling ~$409.5 milli
Slide 22: 2023 Acquisitions
2023 Acquisitions January: 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-net leases with contractual annual rent
Slide 23: 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 12.6% of the Canadian Market 2 by Size of Ownership Group 1 Company Dealerships % of Total Dilawri Group (3) 78 2.2% AutoCanada(3) 65 1.9% Steele Automoti
Slide 24: Embedded Growth
Embedded Growth REIT lease structure and strategy to drive Same Property NOI • Contractual set rent increases and CPI-linked adjustments • Leases with CPI adjustments represent ~27% of base rent in 2023 • For 2024, leases with uncapped CPI-related adjustments represent ~26% of base rent, and an addi
Slide 25: Sample Urban Properties - 2022 Demographics
Sample Urban Properties - 2022 Demographics Radius Average Household Income 5-Year 10-Year Property (3 KM) Average (2022) Population Growth Population Growth Hyundai Honda, Gallery $136,498 11.33% 11.33% Audi Vaughan $126,499 12.02% 12.02% Average population Markham Acura $118,524 10.79% 10.79% 230k
Slide 26: Investment Highlights
Investment Highlights • Canadian automotive service and retail is an essential business • High-quality portfolio of properties located in commercial corridors in growing metropolitan markets across Canada (~80% VECTOM) • Debt strategy / structure reduces exposure to interest rate increases • Long-te
Slide 27: Appendix
~~. Appendix <> 7 Automotive Properties REIT
Slide 28: APR.UN Price Performance
APR.UN Price Performance 12 months ended September 25, 2023 September 2022 April 2023 September 2023 27
Slide 29: Strong Majority Independent Board
Strong Majority Independent Board Name & Domicile Principal Occupation Kap Dilawri, Chair Co-Founder and President of the Dilawri Group Ontario, Canada Patricia Kay Former Senior Vice President, Dealer Finance – Bank of America Merrill Lynch Massachusetts, United States Milton Lamb President & CEO o
Slide 30: Dilawri Group
Dilawri Group Dilawri 5-Year Historical Revenues ($billions) $4.1 • REIT has the first right to acquire from Dilawri $3.8 $3.8 $3.4 development and acquisition pipeline $3.0 • Historically, Dilawri has, on average, opened or acquired five new automotive dealerships per year, including two to three a
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