Automotive Properties Real Est Invt TR Q4 Earnings Call Highlights

Key Points

• Acquisition-driven growth—the REIT acquired 13 properties (~CAD 200 million), including its first U.S. assets, driving full-year rental revenue up 8.5% and Q4 property rental revenue up 19.3%, with AFFO per unit rising to CAD 0.998 for the year and CAD 0.251 in Q4.
• Balance-sheet and interest-rate actions—management boosted borrowing capacity by about CAD 140 million, extended maturities, and fixed ~87% of debt via swaps and mortgages (new swaps at ~4.45–4.59%), while debt-to-gross-book-value stood at 49.9%, supporting further acquisitions.
• U.S. expansion and portfolio strategy—the REIT is pursuing a diversified U.S. footprint (including a pending $16 million Rivian facility in Vista, CA expected in H1 2026) but will continue to target traditional dealership assets, with EV-related tenants expected to remain a small portion of rent exposure.

Automotive Properties Real Est Invt TR TSE: APR.UN highlighted a year of acquisition-driven growth in its 2025 fourth-quarter and year-end results call, pointing to higher rental revenue, rising cash net operating income (NOI), and improving adjusted funds from operations (AFFO) per unit. Management also discussed recent and pending acquisitions, including additional expansion in the United States, and provided an update on its financing and interest-rate risk management strategy.

Acquisition activity drove 2025 growth

Chief Executive Officer Milton Lamb said 2025 was an “instrumental year” for the REIT, driven by the acquisition of 13 automotive properties, including the trust’s first three properties in the United States. The acquisitions totaled approximately CAD 200 million and helped support a distribution increase that took effect in August 2025.

For the full year, Lamb said property rental revenue increased 8.5% compared to 2024, while cash NOI rose 8.4%. AFFO per unit (diluted) increased to CAD 0.998 from CAD 0.932.

With many acquisitions completed in the second half of the year, management emphasized that fourth-quarter results showed a faster growth rate. Lamb said fourth-quarter property rental revenue rose 19.3% year-over-year, cash NOI increased 18.6%, and AFFO per unit (diluted) increased to CAD 0.251 from CAD 0.232. He also noted that a CAD 57.1 million equity offering in the quarter used to help finance acquisitions had an impact on fourth-quarter AFFO per unit, though AFFO per unit still increased by nearly CAD 0.02.

Same-property NOI increased modestly on rent escalators

Management attributed same-property performance to contractual rent escalators, including fixed or CPI-adjusted annual rent increases. Lamb said same-property cash NOI increased 1.9% in the fourth quarter and 2.1% for the full year.

Quarterly financial results: revenue, NOI, AFFO, and payout ratio

Chief Financial Officer Andrew Kalra reported that fourth-quarter property rental revenue increased to CAD 27.9 million from CAD 23.4 million a year earlier. He attributed the change primarily to acquisitions completed during and after the prior year’s fourth quarter and contractual rent increases, partially offset by reduced rent after the sale of the REIT’s Kennedy Lands property in October 2024.

Kalra said total cash NOI for the quarter was CAD 23.2 million, while same-property cash NOI was CAD 19.6 million, representing increases of 18.6% and 1.9%, respectively, compared to the prior-year quarter.

Interest expense and other financing charges were CAD 7.5 million, up CAD 1.9 million from the fourth quarter of 2024, reflecting additional debt used for acquisitions and higher interest rates. General and administrative expenses were CAD 1.8 million, down CAD 0.4 million year-over-year.

Net income and other comprehensive income was CAD 13.9 million versus CAD 12.0 million in the prior-year quarter. Kalra said the increase was primarily due to higher NOI and changes in non-cash fair value adjustments for interest rate swaps, partially offset by higher interest costs, changes in non-cash fair value adjustments for investment properties and for Class B LP units and unit-based compensation, and a foreign exchange loss of CAD 1.0 million.

FFO and AFFO increased 20.4% and 18.4% year-over-year, respectively. On a per-unit basis, FFO (diluted) was CAD 0.259, up from CAD 0.236, and AFFO per unit was CAD 0.251, up from CAD 0.232.

The REIT paid distributions of CAD 11.32 million, or CAD 0.206 per unit, implying an AFFO payout ratio of 82.1% versus 86.6% in the prior-year quarter. Kalra said the improvement reflected the impact of acquisitions and contractual rent increases, partially offset by the Kennedy Lands sale and the higher monthly cash distribution implemented in August 2025.

Portfolio metrics, 2025 fair value adjustments, and financing actions

Kalra said the cap rate applicable to the portfolio was 6.75% at year-end, essentially flat quarter-over-quarter. He noted that the CAD 6.8 million fair value adjustment for the year was primarily related to the write-off of closing costs, including land transfer taxes associated with acquisitions.

On leverage, the REIT ended the year with a debt-to-gross book value (GBV) ratio of 49.9%, which management said provided additional acquisition capacity.

Kalra also outlined steps taken to manage interest-rate exposure and extend maturities:

• During the quarter, the REIT renewed or entered into CAD 25 million of floating-to-fixed interest rate swaps for five to six years at a rate “or under 4.5%.”
• The non-revolving portion of Facility 3 was increased by CAD 40 million and its maturity extended to March 2028 at the same credit spread.
• Subsequent to year-end, the REIT entered into additional floating-to-fixed swaps within Facility 3 totaling CAD 45 million for terms of five to seven years, with interest rates between 4.45% and 4.59%.
• The revolving portion of Facility 1 was increased by CAD 25 million and its maturity extended from June 2027 to June 2029.

Kalra said that as of the date of the MD&A, the REIT’s borrowing capacity under its three credit facilities increased by an aggregate CAD 140 million and maturities were extended. He added that the REIT had a “well-balanced” maturity profile, with less than CAD 40 million of swaps maturing over the next 12 months, and a weighted average remaining interest rate term and mortgages of 4.1 years at year-end. As of March 4, management said 87% of debt was fixed through interest rate swaps and mortgages.

Liquidity included approximately CAD 102.3 million of undrawn revolving capacity and 10 unencumbered properties valued at approximately CAD 130.2 million.

Recent deals, U.S. expansion, and market commentary

In the fourth quarter, Lamb said the REIT deployed approximately CAD 57.3 million to acquire four dealership properties in Greater Montreal. These included a portfolio of three properties in Dorval (Subaru, Honda, and Volkswagen) leased to affiliates of Dilawri, and a Honda dealership in Île-Perrot leased to an affiliate of Groupe AutoForce. Lamb said the Île-Perrot property added to a six-property portfolio acquired in the third quarter, also tenanted by affiliates of Groupe AutoForce.

After year-end, the REIT acquired a 40,000-square-foot Hyundai dealership on six acres in Quebec City on January 1 for CAD 13.25 million. Lamb also said the REIT recently waived conditions for the purchase of a property at 328 Corporate View in Vista, California for $16 million. The site is a 60,000-square-foot Rivian delivery and service facility on approximately 3.7 acres, leased under a midterm net lease with contractual fixed annual rent increases and renewal options. Management expects the acquisition to close in the first half of 2026 and to fund it by drawing on revolving credit facilities.

In Q&A, Lamb said pricing has “normalized” after what he described as elevated pricing levels during and just after COVID. He said the REIT is seeing potential to buy properties in the “6.5% to low 7%” range and place financing in the “mid 4%,” supporting opportunities the REIT finds attractive. He said the REIT remains selective and highlighted markets such as Florida, California, and Montreal.

Asked about U.S. strategy, Lamb said Tesla and Rivian properties are not the REIT’s “sole strategy,” and that management still expects to pursue traditional dealership properties as well, aiming for a diversified U.S. portfolio over time. In response to a question about rent exposure, Lamb said Rivian would represent “under 5%” of net rents after the Vista transaction closes.

Management also discussed market selection, reiterating a focus on metropolitan areas with GDP and population growth and noting interest in the Southeast as well as markets across Arizona, Texas, and California. Lamb also provided an update on the Pfaff Audi space in Vaughan, describing it as “early days” and a “balancing act” between continuing leasing income and potential higher-and-better-use value, adding that in the current market “you’re not getting paid for the density.”

On broader industry trends, Lamb characterized the EV transition as a gradual shift over “15 to 25 years,” and said it could increase demand for automotive-zoned real estate. He added that traditional dealerships will need service and delivery capabilities across internal combustion engine, hybrid, and EV vehicles.

About Automotive Properties Real Est Invt TR TSE: APR.UN

Automotive Properties Real Estate Investment Trust is an unincorporated open-ended real estate investment trust focused on investing in high-quality Canadian automotive properties tenanted by automotive dealership groups and automotive brands ranging from mass-market to ultra-luxury. The company holds a portfolio of best-in-class properties located in strategic Canadian urban markets across Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec. 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 to maximize Unitholder value.

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