Automotive Properties Real Estate Investment Trust has struck a multimillion-dollar deal to sell a pair of adjoining Toronto-area dealership properties, as redevelopment work rapidly transforms the neighbourhood surrounding the six-acre site.
The company said on July 29 that a subsidiary of the Dilawri Group agreed to purchase the land at the intersection of Kennedy Road and Unionville Gate in Markham, Ont. for $54 million, plus an unquantified additional payment if the property is rezoned successfully.
Markham Honda, which is owned by Dilawri, is currently located on the east end of the site. Markville Ford Lincoln occupied the west side before a recent move to a nearby location on Highway 7.
The Markham neighbourhood known as Unionville is undergoing major changes, with a series of residential and commercial development projects under way or planned in the immediate vicinity of the dealership properties. The auto retail site is also next door to the new York University Markham Campus that will open to students this fall.
Automotive Properties REIT is a publicly traded company, though closely affiliated with the Dilawri Group. The dealership group that owns 80 franchised stores across Canada held a 31.4-per-cent stake in the REIT as of the end of May.
Automotive Properties REIT owns the land under 77 dealerships in Toronto, Ottawa, Montreal, Vancouver, Calgary and Edmonton, leasing the sites to prominent franchised dealers. Dilawri Group locations account for about half the total. Other tenants include AutoCanada, Lithia Motors, Go Auto and Tesla.
Company CEO Milton Lamb said the sale will let the real estate company benefit from the expected redevelopment of the property without “incurring any development risk.”
“Many of our properties are located in urban areas that are experiencing intensification and therefore represent opportunities to work with our tenants to crystalize significant incremental value for our unitholders,” he said in a release.
Details about what redevelopment plans Dilawri Group has for the location were not shared.
Because of Automotive Properties REIT’s close ties to the dealership group, a set of independent trustees met to weigh the impact of the deal on the real estate company and review separate property appraisals before approving the transaction.
The deal is expected to close within the next 18 months. Automotive Properties REIT plans to use the proceeds from the sale to pay down debt.
