Consolidating Canadas Automotive Dealership Properties Investor - PowerPoint PPT Presentation

Consolidating Canada’s Automotive Dealership Properties Investor Presentation June 2019

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 include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the REIT or the real estate or automotive dealership industry are forward-looking statements. The REIT has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs, including that the Canadian economy will remain stable over the next 12 months, that tax laws remain unchanged, that conditions within the automotive dealership real estate industry and the automotive dealership industry generally, including competition for acquisitions, will be consistent with the current climate, that the Canadian capital markets will provide the REIT with access to equity and/or debt at reasonable rates when required and that the Dilawri Organization will continue its involvement with the REIT. Although the forward-looking statements contained in this presentation are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known an d unknown risks and uncertainties, many of which are beyond the REIT’s control, that may cause the REIT’s or the industry’s actual results, performance, achievements, prospects and opportunities i n future periods to differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements made in this presentation relate only to events or information as of the date of this presentation. Except as required by law, the REIT and Dilawri undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Please refer to “Forward - Looking Statements” in the REIT’s regulatory filings . NON-IFRS MEASURES This presentation makes reference to certain non- IFRS measures. Funds from operations (‘‘FFO’’), adjusted funds from operations (‘‘AFFO’’), net operating income (‘‘NOI’’), cash net operating income (‘‘Cash NOI’’) and Same Property cash operating income (“Same Property Cash NOI”) are key measures of performance used by management and real estate businesses. However, such measures are not defined by IFRS and do not have standardized meanings prescribed by IFRS. The REIT believes that AFFO is a key measure of economic earnings performance and is indicative of the REIT’s ability to pay distributions from earnings, while FFO, NOI and Cash NOI are important measures of operating performance and the performance of real estate properties. The IFRS measurement most directly comparable to FFO, AFFO, NOI and Cash NOI is net income. Please refer to “Non - IFRS Measures” in the REIT’s regulatory filings. 1

REIT Overview High-quality portfolio of dealership properties in metropolitan markets across Canada Ottawa / Greater Greater Greater Edmonton Calgary Kitchener-Waterloo Regina Winnipeg Kingston Vancouver Area Toronto Area Montreal Area +180 acres 57 Long-term, triple-net leases with contractual annual rent escalators of commercially-zoned Representing 32 global manufacturers / brands income-producing properties urban real estate 2.1 million 86% Tesla square feet of Gross Leasable exposure to VECTOM Area (“GLA”) markets CANADA’S ONLY PUBLIC VEHICLE CONSOLIDATING AUTOMOTIVE DEALERSHIP PROPERTIES 2

Capital Market Profile (TSX: APR.UN) Recent price: $10.53¹ Investment properties: REIT Units: 21.8 million 1 $797 million 2 Market capitalization : Class B Units: 9.93 million 3-year total return: 30 % 2 $334 million 1 Annualized distribution Yield¹ Q1 2019 AFFO Payout Ratio 2018 tax treatment 85% Return of Capital $0.804 / unit 7.6% 82.7% 15% Interest income Analyst coverage (1) As at May 27, 2019 (2) As at March 31, 2019 3

» Canadian Automotive Dealership Industry 1 Retail Sales 162 160 146 ($billions) 27% 132 122 113 105 100 96 96 94 92 87 88 83 83 83 78 74 Auto industry’s proportion of 70 65 Canada’s overall retail sales of products and merchandise in 2018 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Canadian New Motor Vehicle Sales (# of units sold, 2018 and 2017) 2.04 Million 1,000,000 Motor vehicle unit 800,000 sales in Canada in 2018 600,000 2017 400,000 2018 2nd Highest 200,000 Annual unit sales in Canadian history 0 Atl. Provinces QC ON MB SK AB BC & Territories (slight ~2% decline from record pace in 2017) (1) Source: Statistics Canada THE AUTOMOTIVE RETAIL SALES INDUSTRY IS CANADA’S LARGEST RETAIL SEGMENT 4

Automotive Dealership Group Profit Centres Average percentage contribution to total profit per business segment for major North American automotive dealership groups¹ Parts, service and repair 41.7% Finance and Insurance 24.9% New vehicle sales 21.4% Used vehicle sales 12.0% 0 5 10 15 20 25 30 35 40 45 Percent of Total Profit (Average) (1) Chart data is derived from the public disclosure of Auto Canada, Lithia, Penske Automotive, AutoNation, Group 1 Automotive, and Sonic Automotive for the year ended December 31, 2017 AUTOMOTIVE DEALERSHIP GROUPS ARE WELL POSITIONED TO PERFORM IN ALL CYCLES 5

Growth

2018-19 Summary • Six acquisitions, comprising 16 automotive dealerships, and one expansion, adding >700,000 sq. ft of GLA, for a combined purchase price of approximately $232 million • Geographic diversification with expansion to Ottawa, Kingston, Winnipeg and Kitchener-Waterloo • Added four new multi-dealership tenants to portfolio and representation of new automotive brands – Subaru, Lexus and Tesla • Completed $55 million equity offering at $10.80 per Unit • Extended and increased credit facilities CONTINUED GEOGRAPHIC, BRAND AND TENANT DIVERSIFICATION 7

Acquisition Growth (July 2015 IPO to Present) 60 2,300,000 • 31 properties and one expansion • $399.2 million combined purchase price 55 2,100,000 Gross Leasable Area (square feet) • Added ~1.2 million square feet of GLA to 50 1,900,000 portfolio Number of Properties • Acquisitions indirectly funded by three 45 1,700,000 fully-subscribed equity offerings totaling 40 1,500,000 ~$141.5 million • Increased brand, geographic and tenant 35 1,300,000 diversification 30 1,100,000 • Enhanced capital market liquidity • Accretive to AFFO per Unit 25 900,000 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 Properties Gross Leasable Area 8

Acquisitions with Leading Dealership Tenants Porsche Centre / Go Mazda Ericksen Infiniti, Southtown Hyundai, Kentwood Ford Jaguar Land Rover Edmonton, AB Edmonton, AB Edmonton, AB March 2017 December 2017 December 2015 $8.0 million $23.2 million for three-property portfolio $23.0 million McNaught Cadillac Buick GMC BMW Laval Sherwood Park VW St. James Volkswagen Montreal, QC Edmonton, AB Winnipeg, MB Winnipeg, MB March 2019 September 2018 September 2018 March 2019 $55.5 million for $55.5 million for $24 million for $24 million for two-property portfolio two-property portfolio two-property portfolio two-property portfolio 9 Dealership Portfolio Ottawa & Kingston, ON Tesla KW (service centre) December 2018 Kitchener-Waterloo, ON $101.4 million for 303,817 SF across 6 properties February 2018 occupied by 9 dealerships, and 5 properties $7.5 million designated for ancillary dealership services Pfaff Audi Brimell Toyota Vaughan, ON Scarborough, ON September 2016 December 2018 $17.2 million $26.0 million 9

Acquisitions with Dilawri as Operating Tenant Mazda des Sources Heritage Honda Dorval, QC Calgary, AB December 2017 April 2017 $8.0 million $23.6 million Barrie Volkswagen Audi Barrie Barrie, ON Barrie, ON March 2017 January 2016 $8.9 million $11.1 million Mercedes-Benz West Island St. Bruno Audi & Volkswagen Dollard-des-Ormeaux, QC St. Bruno, QC December 2016 December 2016 $20.3 million $14.3 million Toyota Woodland Country Hills Volkswagen Montreal, QC Calgary, AB December 2015 June 2018 $7.2 million $18.0 million 10

Executing on Portfolio Diversification & Growth At July 2015 IPO March 31, 2019 K-W 0.9% Ottawa / Kingston 14.2% Regina 18% GTA 29.0% Edmonton 8.1% GTA 46% Markets > GVA 18% (By GLA) GMA 14.8% Regina 8.6% GVA 7.2% Calgary 18% Calgary 12.7% Winnipeg 4.5% Tesla 0.9% MAG 14.2% AutoCanada 13.7 % Tenants > Dilawri 60.5% Dilawri 100% (By GLA) Go Auto 4.9 % Pfaff 3.2% Drive Auto 2.6% $797 million Investment Properties > $357.6 million Market capitalization > $334 million 1 $180.0 million 11 (1) As at May 27, 2019