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Automotive Properties (TSE:APR.UN)
TSX:APR.UN
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Automotive Properties
(TSX:APR.UN)
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Rating:71Outperform
Price Target:
C$13.00
▲(13.84% Upside)
Action:ReiteratedDate:03/06/26
The score is primarily held back by financial factors: increased leverage and weaker 2025 free cash flow despite steady growth and strong margins. Offsetting this, technicals are supportive (price above key moving averages with positive momentum), valuation is appealing for income (high yield with a moderate P/E), and the latest earnings call reinforced improving AFFO per unit and liquidity, tempered by higher interest expense and sector/tenant risks.
Positive Factors
Contracted rental income
The business collects contracted base rent under long-term leases with recoveries for expenses, creating predictable, recurring cash flow. This lease structure supports stable FFO/AFFO and distribution coverage over the medium term, reducing earnings volatility tied to short-term demand swings.
Revenue and NOI expansion
Consistent top-line and NOI growth, with same-property cash NOI rising modestly, signals durable underlying demand and pricing power in automotive retail real estate. Contractual fixed/CPI rent increases enhance organic income growth and support sustainable AFFO per unit expansion into 2026.
Strong liquidity and acquisition capacity
Material undrawn revolver capacity, unencumbered assets and expanded borrowing headroom provide durable balance-sheet optionality for acquisitions or to absorb shocks. This capital flexibility supports selective growth and distribution stability without immediate reliance on distress financing.
Negative Factors
Rising interest costs and leverage
A meaningful increase in interest expense from higher debt and market rates reduces net income and AFFO margins. Elevated leverage raises refinancing and coverage risk if rates remain higher, compressing cash available for reinvestment or distributions over the medium term.
Decline in free cash flow
A sharp drop in free cash flow weakens the REIT's near-term cash cushion and reduces internal funding for capex, tenant improvements or distributions. This increases reliance on external financing or equity raises and limits resilience to cyclical tenant or market stress.
Tenant concentration and EV capex risk
Structural EV-related tenant capex needs and concentration from new U.S. tenants create medium-term execution risk. Tenant investments or shifting dealer economics can pressure rents, require landlord-funded upgrades or delay redevelopment, affecting long-term property income and valuation drivers.
Automotive Properties (APR.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$619.64M
Dividend Yield8.08%
Average Volume (3M)41.22K
Price to Earnings (P/E)12.4
Beta (1Y)0.45
Revenue Growth3.80%
EPS Growth-6.93%
CountryCA
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Specialty
Share Statistics
EPS (TTM)0.28
Shares Outstanding54,259,403
10 Day Avg. Volume92,408
30 Day Avg. Volume41,215
Financial Highlights & Ratios
PEG Ratio-0.31
Price to Book (P/B)0.77
Price to Sales (P/S)5.44
P/FCF Ratio10.29
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$12.92Price Target Upside13.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)1.02
Revenue Forecast (FY)C$115.23M
Automotive Properties Business Overview & Revenue Model
Company DescriptionAutomotive Properties REIT is an unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT's portfolio currently consists of 64 income-producing commercial properties and one development property, representing approximately 2.5 million square feet of gross leasable area, in metropolitan markets across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Québec. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties.
How the Company Makes MoneyAutomotive Properties generates revenue primarily through long-term lease agreements with automotive dealerships. The company earns rental income from these leases, which are typically structured as net leases where tenants are responsible for property-related expenses. This model provides predictable and stable cash flow. Key revenue streams include base rent and additional income from property management services. Significant partnerships with leading automotive brands enhance the company's portfolio quality and tenant stability, contributing to its earnings. Additionally, the REIT may benefit from property appreciation and strategic acquisitions that expand its asset base and revenue potential.
Automotive Properties Earnings Call Summary
Earnings Call Date:Mar 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Positive
Overall the call conveyed a positive operational and financial momentum: solid acquisition activity (including U.S. entry), double-digit Q4 growth in revenue and NOI, meaningful per-unit AFFO/FFO improvements, strengthened liquidity and proactive interest-rate hedging. Key risks flagged include higher interest expense from additional leverage and rate increases, non-cash fair value/closing cost impacts, a rent reduction from a prior asset sale, some FX and non-cash adjustments, and ongoing market/regulatory uncertainty tied to the auto sector and EV transition. Management emphasized selective deployment, expanded acquisition capacity and expectation of benefiting from a full year of 2025 acquisitions in 2026.Q4-2025 Updates
Positive Updates
Acquisitions and U.S. Entry
Completed 13 property acquisitions in 2025 (including first 3 U.S. properties) for an aggregate purchase price of approximately $200 million; Q4 deployments of ~$57.3 million in Greater Montreal; Jan 1, 2026 acquisition of a Hyundai dealership for $13.25 million; waived conditions on Vista, CA (Rivian tenant) for USD 16 million, expected to close H1 2026 — expanding geographic footprint and pipeline (Canada, U.S., heavy equipment vertical).
Revenue and NOI Growth
Property rental revenue increased 8.5% year-over-year for the full year and rose 19.3% in Q4 (Q4 revenue $27.9M vs $23.4M prior-year Q4); total cash NOI up 8.4% FY and 18.6% in Q4 (Q4 total cash NOI $23.2M); same-property cash NOI up 1.9% in Q4 and 2.1% for the full year, supported by contractual fixed/CPI rent increases.
FFO/AFFO and Per-Unit Improvement
FFO and AFFO increased by 20.4% and 18.4% respectively in Q4 YoY; AFFO per unit diluted increased to $0.998 for the year from $0.932 and Q4 AFFO/unit rose to $0.251 from $0.232; distributions paid $11.32M ($0.206/unit) with AFFO payout ratio improving to 82.1% from 86.6% a year ago; implemented a 2.2% increase to unitholder distributions effective August 2025.
Strong Liquidity and Capital Capacity
Debt-to-GBV of 49.9% at year-end; approximately $102.3M of undrawn capacity under revolving credit facilities; 10 unencumbered properties with aggregate value of ~$130.2M; borrowing capacity under three credit facilities increased by ~$140M (trailing 12 months) and maturities extended — providing acquisition capacity.
Active Interest-Rate Hedging and Extended Facilities
Entered/renewed swaps: $25M during quarter and $45M subsequent to quarter (terms 5–7 years at ~4.45%–4.59%); increased non-revolving Facility 3 by $40M and revolver by $25M and extended maturities — 87% of debt fixed as of March 4, 2026, and weighted average interest term remaining 4.1 years, reducing interest-rate exposure.
Operational and Balance Metrics
Cap rate at year-end 6.75% (essentially flat QoQ); G&A expenses reduced to $1.8M in Q4 (down $0.4M YoY); net income and other comprehensive income $13.9M in Q4 vs $12.0M prior-year Q4; 100% rent collection since IPO over 10 years.
Negative Updates
Higher Interest Expense from Increased Debt and Rates
Interest expense and other financing charges for Q4 were $7.5M, a $1.9M increase YoY driven by additional debt to fund acquisitions and higher market interest rates; equity offering ($57.1M) in the quarter impacted Q4 AFFO per unit dilution.
Fair Value Adjustments and One-Time Closing Costs
Reported a $6.8M fair value adjustment for the year primarily related to write-offs of closing costs, including land transfer taxes associated with new acquisitions, which reduced reported profits and partially offset acquisition benefits.
Lease Revenue Reduction from Asset Disposition
Sale of the Kennedy Lands property (Oct 2024) reduced rental revenue comparatives and partially offset the contribution from new acquisitions.
Non-Cash and FX Impacts
Net income was partially offset by changes in non-cash fair value adjustments for investment properties and Class B LP units and unit-based compensation, plus a foreign exchange loss of $1.0M in the quarter.
Market/Regulatory and Concentration Risks
Management noted ongoing market pricing normalization and a 'cost of capital' hangover tied to USMCA/autos uncertainty; U.S. expansion introduces tenant concentration risk (Rivian/Tesla exposure — management expects Rivian to remain under 5% of net rents pro forma) and geographic/market selection remains important.
Tenant Capex Risk from EV Transition and Property-Specific Uncertainty
EV transition will require tenant investment in service/delivery capabilities (incremental capex over time); specific asset (Pfaff/Audi Vaughan) under review with trade-offs between holding for leasing income vs pursuing higher-and-better-use redevelopment — creating near-term uncertainty on monetization/timing.
Company Guidance
Management said they expect to benefit from the full-year impact of 2025 acquisitions and see continued growth in AFFO per unit as they enter 2026 with solid momentum, noting the 13 properties acquired in 2025 for ~$200M (including Q4 deployments of ~$57.3M and a $57.1M equity raise), a Jan 1 Quebec deal for $13.25M and a pending Vista, CA purchase for USD 16M expected to close in H1 2026 funded from revolver. Key 2025 metrics referenced as the baseline: full-year AFFO/unit diluted $0.998 (up from $0.932), Q4 AFFO/unit $0.251 (from $0.232), Q4 property rental revenue $27.9M (+19.3% YoY), Q4 cash NOI $23.2M (+18.6%), same-property cash NOI +1.9% (Q4) and +2.1% (FY), distribution increase of 2.2% in 2025 with Q4 distributions $0.206/unit (AFFO payout 82.1% vs 86.6% prior), portfolio cap rate 6.75%, debt-to-GBV 49.9%, WALT of debt ~4.1 years, 87% of debt fixed, $102.3M undrawn revolver, 10 unencumbered properties worth ~$130.2M, trailing 12‑month added borrowing capacity of ~$140M, and recent swaps of $25M at ≤4.5% and $45M at 4.45–4.59%.Automotive Properties Financial Statement Overview
Summary
Solid underlying profitability and steady revenue growth, but earnings visibility is reduced by year-to-year margin volatility, a step-up in leverage in 2025, and a notable decline in free cash flow that weakens near-term cash cushion.Income Statement
Revenue shows steady expansion over time (2025 up ~4.6% year over year, following modest growth in 2024), and profitability is strong with consistently high gross profitability. That said, net profitability and operating profitability are volatile year-to-year (notably lower net margin in 2025 versus 2024), which reduces earnings quality/visibility despite generally solid margins.73
Positive
Balance Sheet
The balance sheet looks reasonably supported by equity (debt-to-equity under 1.0 in 2025), and total assets have grown. However, leverage has trended higher recently (total debt increased meaningfully in 2025), while returns on equity have moderated from prior peaks—suggesting incremental balance-sheet risk and less efficient equity returns versus earlier years.66
Positive
Cash Flow
Cash generation remains positive with free cash flow matching operating cash flow, and cash flow covers earnings in the periods shown. The key concern is the sharp decline in free cash flow in 2025 (down ~29.6% year over year) alongside a much lower cash coverage level versus 2024, pointing to weaker near-term cash conversion and less cushion.61
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 101.83M | 93.88M | 92.48M | 82.86M | 78.22M |
| Gross Profit | 85.88M | 79.33M | 78.41M | 70.58M | 67.08M |
| EBITDA | 70.93M | 96.78M | 75.47M | 77.61M | 101.00M |
| Net Income | 44.58M | 72.00M | 50.99M | 119.67M | 122.38M |
Balance Sheet | |||||
| Total Assets | 1.40B | 1.19B | 1.19B | 1.09B | 1.05B |
| Cash, Cash Equivalents and Short-Term Investments | 657.00K | 336.00K | 298.00K | 396.00K | 474.00K |
| Total Debt | 638.06M | 502.24M | 535.08M | 434.89M | 420.58M |
| Total Liabilities | 675.57M | 527.33M | 653.91M | 572.87M | 591.28M |
| Stockholders Equity | 720.78M | 663.40M | 539.99M | 520.94M | 460.37M |
Cash Flow | |||||
| Free Cash Flow | 53.84M | 75.91M | 74.27M | 64.55M | 62.21M |
| Operating Cash Flow | 53.84M | 75.91M | 74.27M | 64.55M | 62.21M |
| Investing Cash Flow | -168.58M | 21.38M | -110.42M | -24.74M | -24.87M |
| Financing Cash Flow | 115.06M | -97.26M | 36.06M | -39.88M | -37.18M |
Automotive Properties Technical Analysis
Positive
11.42
Price Trends
11.38
Positive
11.06
Positive
10.98
Positive
Market Momentum
0.03
Positive
46.61
Neutral
12.04
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:APR.UN, the sentiment is Positive. The current price of 11.42 is below the 20-day moving average (MA) of 11.58, above the 50-day MA of 11.38, and above the 200-day MA of 10.98, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 46.61 is Neutral, neither overbought nor oversold. The STOCH value of 12.04 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:APR.UN.
Automotive Properties Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | C$472.66M | 8.66 | 10.04% | 6.56% | 4.53% | 197.86% | |
71 Outperform | C$619.64M | 12.42 | 6.58% | 8.08% | 3.80% | -6.93% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
60 Neutral | C$638.15M | -3.53 | 7.26% | 3.87% | -1.21% | ― | |
58 Neutral | C$780.80M | -43.31 | 5.70% | 3.50% | -17.89% | ― | |
57 Neutral | $735.81M | 6.27 | 7.32% | 8.07% | 0.41% | 78.32% |
* Real Estate Sector Average
TSE:APR.UN
Automotive Properties
11.42
1.72
17.73%
TSE:DRM
DREAM Un Cl A
18.70
-0.73
-3.76%
TSE:PLZ.UN
Plaza Retail REIT
4.28
0.73
20.67%
TSE:MI.UN
Minto Apartment Real Estate Investment Trust
17.42
4.28
32.52%
TSE:NXR.UN
Nexus Real Estate Investment
7.58
1.17
18.18%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.