Automotive Properties Real Estate Investment Trust · TSX:APR.UN
Automotive Properties Real Estate Investment Trust — Investor Presentation (January 2023)
28 slides from Automotive Properties Real Estate Investment Trust's investor presentation, January 2023
Slide 1: Consolidating Canada's Automotive Dealership Properties
Consolidating Canada’s Automotive Dealership Properties Investor Presentation January 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: $12.69 1 REIT Units: 39.73 million $1.09 billion 2 Market capitalization: Class B Units: 9.33 million Total return: $622 million 1 IPO to Jan. 3, 2023: 118.8% 3 Annualized distribution Yield ¹ Debt to GBV 2 YTD AFFO Payout Rat
Slide 4: REIT Overview
REIT Overview High-quality portfolio of automotive properties in metropolitan markets across Canada Audi Queensway (GTA) GLA by metro (Jan. 4, 2023) Porsche Vancouver (GVA) Long-term, triple-net leases with contractual rent escalators 76 220 + acres income-producing properties of commercially-zoned
Slide 5: Canadian Automotive Dealership Industry
»Canadian Automotive Dealership Industry Retail Sales 176 ($billions) 78 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 2021 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 6: 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 7: Strong Lead Tenants
Strong Lead Tenants Tesla ▪ 75 automotive dealerships, ▪ Leading global electric vehicle maker ▪ 72 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 8: Strong Auto Dealership Performance
Strong Auto Dealership Performance Stock Performance (December 31, 2019 to January 3, 2023) 400% 350% • Sales have rebounded from lows in spring of 2020 300% • Many dealers generating record earnings 250% ̶ Rapid cost reduction achieved due to high variable 200% cost component 150% • Profit margins
Slide 9: Managing Inflation
Managing Inflation REIT Structure and Strategy Mitigate Inflation • Interest rate swaps and mortgages (as at Sept. 30, 2022) • Weighted average interest rate swap and mortgage term of 4.9 years • 90% of debt fixed through interest rate swaps and mortgages • Contractual rent increases • Fixed annual
Slide 10: Growth
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Slide 11: 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 12: 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 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 Markets > (By GLA) Tenants > Dilawri 100% Dilawri 58.9% (as at Sept.30, 2022) Base Rent Dilawri 100% Investment Properties > $357.6 million $1.1 billion¹ Market capitalization > $180.0 million $622 million² (1) As at Jan. 4, 2023 (plus acqu
Slide 16: Stability
Stability
Slide 17: Stable Growth Platform
Stable Growth Platform 4.9 years 3.80% 90% ~ 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 10.8 years 2.2% 100% 41.2% Weighted average Q3 2022 Same Property
Slide 18: Strong Leasing Profile
Strong Leasing Profile 1 • Triple-net leases • Weighted average term of 10.8 years • 96% of leases are indemnified by multi-brand, multi- • Fixed 1.5% annual rent escalator for the 36 Dilawri location operators / OEM (e.g. AutoCanada, Dilawri properties over the next 3.5 – 17.5 years Group, Go Auto,
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 9.8% Ultra Luxury4 6.2% Luxury3 39.6% Asia 48.3% Europe 41.8% Mass Market2 54.2% 16.3% 12.1% Manufacturer / Br
Slide 20: Debt Strategy
Debt Strategy • As at Sept. 30, 2022, the REIT had cash on hand of ~$0.3 million, undrawn credit facilities of $69.9 million and 10 unencumbered properties valued at ~$121.0 million • $75.5 million of undrawn credit facilities as at November 10, 2022 • In April 2022, the REIT extended the maturity o
Slide 21: Performance
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Slide 22: Q3 2022 Financial Review
Q3 2022 Financial Review Cash NOI ($000s) FFO ($000s) 17,217 Same Property 15,992 11,791 Cash NOI $0.234 11,626 $0.237 per Unit per Unit (diluted) (diluted) 2.2% 85.9% 84.8% Payout Ratio Payout Ratio Q3 2021 Q3 2022 Q3 2021 Q3 2022 AFFO ($000s) Debt to GBV 11,008 11,288 40.1% 41.2% $0.221 $0.227 per
Slide 23: YTD 2022 Financial Review
YTD 2022 Financial Review ($000s, except per unit amounts Nine months ended Nine months ended Variance and payout ratios) September 30, 2022 September 30, 2021 Revenue from investment properties $ 61,960 $ 58,438 6.0% Cash NOI 51,270 48,257 6.2% Same property Cash NOI1 48,085 46,984 2.3% FFO 35,739
Slide 24: Investment Highlights
Investment Highlights • Solid growth in key performance metrics in Q3 / YTD 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 diversi
Slide 25: Appendix
Appendix 7 Automotive Properties REIT “\.
Slide 26: APR.UN Price Performance
APR.UN Price Performance 12 months ended Jan. 4, 2023 January 2022 July 2022 January 2023 25
Slide 27: Strong Majority Independent Board
Strong Majority Independent Board Name & Domicile Principal Occupation Kap Dilawri, Chair Co-Founder, Vice President and Secretary of the Dilawri Group Ontario, Canada Patricia Kay Former Senior Vice President, Dealer Finance – Bank of America Merrill Lynch Massachusetts, United States Milton Lamb P
Slide 28: Dilawri Group
Dilawri Group Dilawri 5-Year Historical Revenues ($millions) $3,800 $3,800 • REIT has the first right to acquire from Dilawri $3,400 development and acquisition pipeline $2,810 $3,000 o Historically, Dilawri has, on average, opened or acquired five new automotive dealerships per year, including two
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