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Good morning. Welcome to the Automotive Properties REIT 2020 Fourth Quarter and Year-End Financial Results Conference Call and Webcast. My name is Colin, and I'll be your conference operator today. [Operator Instructions] Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risk, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risk, uncertainties and assumptions related to forward-looking information, please refer to the REIT's latest MD&A and Annual Information Form, which are available on SEDAR. Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Again, please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures.This call is being recorded on Wednesday, March 24, 2021. I would now like to turn the conference over to Milton Lamb. Please go ahead, Mr. Lamb.
Thank you, Colin. Good morning, everyone, and thank you for joining us. With me on today's call is Andrew Kalra, our Chief Financial Officer. We generated solid growth in our key performance measures in the fourth quarter and throughout 2020 despite the unprecedented disruption caused by the COVID-19 pandemic. In comparison to Q4 last year, our property rental revenue grew 5.3%, cash NOI increased by 8.3%, and AFFO was up 25.6%. AFFO per unit increased to $0.214 from $0.202. Our growth reflects the impact of our property acquisitions, contractual rent increases across our portfolio and strong rent collection. We collected 100% of our contractual base rent in the quarter, excluding 2% of the rent that is subject to rent deferral agreements with our tenants. Repayments of these rent deferral amounts has already commenced. And in total, we collected approximately 97% of our contractual base rent for 2020, with the remaining subject to deferral agreements. As at year-end, the remaining tenant deferral rent receivable was approximately $2.3 million. All amounts remaining deferred under the deferral agreements are due to be paid no later than the end of 2021. Our focus on maintaining a strong liquidity position throughout the pandemic has enabled us to effectively manage through the crisis and to selectively capitalize on growth opportunities. During 2020, we completed the acquisitions of a BMW dealership in Regina for a purchase price of $11.35 million and an Acura dealership in North Vancouver, BC for $17.5 million and an automotive property in Laval, Québec that we subsequently leased and improved for an all-in amount of $13.5 million, which -- this property is now tenanted by Tesla Canada as a service center. Subsequent to year-end, on March 1, we completed the acquisition of Alexis dealership property in Laval, Québec. We satisfied the purchase price on this acquisition by issuing approximately 1.37 million trust units of the REIT or the equivalent of $14.8 million to the Dilawri Group, increasing their effective interest in the REIT to approximately 28.1%, which demonstrates the continued commitment to the REIT's success.As at year-end, we had a strong financial position and liquidity position with a Debt to GBV of 43.2%, $59.4 million of undrawn capacity under our credit facilities and non-unencumbered properties with an aggregate value of approximately $150.5 million. Including our most recent property acquisition, Lexus Laval, we now have 10 unencumbered properties with an aggregate value of $165 million. We remain well positioned to continue to manage through the pandemic and look at strong acquisition opportunities.As you know, as a result of the government-mandated business restrictions due to COVID-19, several of our tenants, automotive dealership businesses, were either temporarily closed or operated at a limited capacity from approximately late March to late May. Further, the heightened public health concerns resulted in delayed automotive purchasing and servicing decisions by consumers, which significantly impacted dealership operators in Q2, including those that were permitted to remain open or partially open. By the end of May 2020, our tenants were fully open for business and the pent-up consumer demand resulted in a rebound in auto sales and an increase in service work performed by the automotive dealerships. As dealership resumed their business, we saw the industry's ability to adapt to the evolving consumer preferences and for -- and more immediate concerns related to COVID-19. Dealerships have enhanced their online presence and e-commerce options to facilitate consumer purchasing decisions and providing curbside pickup and drop-off options, combined with the essential service of vehicle maintenance. These adaptations have enabled our dealers to streamline their business, resulting in greater efficiencies and profitability. These adaptations have also positioned dealers to better tolerate the most recent round of mandated partial closures and restrictions that were reinstated for auto dealerships across Canada in November of 2020.According to Statistics Canada, new automotive sales in Canada for the year ending December 31, 2020, were down approximately 20.8% compared to 2019, mainly as a result of the effect of COVID-19 in Q2. Overall, this is much improved from the 38.7% decline for the 5 months ending May 31, 2020, during the first wave of the pandemic. We believe this easing in sales declines reflects the impact of pent-up consumer demand and the successful business adaptations made by our automotive dealers to facilitate consumer purchasing and servicing decisions. It reflects the resiliency of the Canadian automotive dealership industry as a whole. According to Stats Canada, automotive retail industry sales totaled $151 billion in 2020, down just 9% from 2019. This figure represents approximately 25% of Canada's overall retail sales of products and merchandise. Because of our solid financial position, we're able to offer our tenants support in the form of limited rent deferrals during the first wave of the pandemic. Due to the strong second-half performance in 2022, we've had no further request for any support from our tenants, and the deferred amounts are being paid back as scheduled. This reflects the resiliency of our tenants who represent many of Canada's leading automotive dealership groups.At this point, I'd now like to turn it over to Andrew Kalra to review our financial results, and position in more detail. Andrew?
Thanks, Milton. Good morning, everyone. Our property rental revenue for the quarter totaled $19.1 million. The 5.3% increase from Q4 2019 reflects growth from our properties acquired during and subsequent to Q4 last year and contractual annual rent increases. Total cash NOI and same-property cash NOI for the quarter increased to $15.5 million and $13.9 million, respectively, reflecting increases of 8.3% and 1.2% compared to Q4 a year ago. Growth in cash NOI was primarily attributable to acquisitions, while growth in same-property cash NOI primarily reflects contractual rent increases.G&A expenses for the quarter were approximately 7.8% of cash NOI compared to 13.8% in Q4 last year. Higher G&A expense in Q4 last year reflects the costs associated with the internalization of the REIT's management and operations in December 2019.Net income for the quarter was $30.2 million compared to net income of $3.9 million in Q4 last year. The increase was primarily due to an increase in NOI and fair value adjustments for Class B LP units, DUs and IDUs and investment properties, partially offset by fair value adjustments for interest rate swaps.In the first quarter of 2020, we increased the discount rates for our entire portfolio -- property portfolio by approximately 30 basis points primarily due to the economic impact of COVID-19. This past quarter, we subsequently decreased discount rates by approximately 20 basis points primarily due to a lessening of the adverse impact of COVID-19 on our tenants. The decrease in discount rates and NOI increases generated from the investment properties resulted in a fair value increase of $27.1 million in Q4 2020. The fair value adjustments for 2020 reflect the following factors. We increased the valuation inputs in 2020 for our entire portfolio by approximately 10 basis points primarily due to the economic impact of COVID-19, the increase in valuation inputs resulted in a fair value decrease in 2020. Tesla took occupancy of the previously classified development property in Laval during the quarter, which resulted in a fair value increase. We renewed the lease with the tenant occupying our property on Jane Street in Vaughan, Ontario in Q4 for an additional 5-year period resulting in a fair value increase and NOI increases from investment properties resulted in a fair value increase for 2020. The overall capitalization rate to the REIT's entire portfolio was 6.7% as at December 31, 2020, down from 6.9% at the end of Q3 2020 and a 10 basis point increase from year-end 2019.FFO and AFFO for the quarter increased by 25.1% and 25.6%, respectively, compared to Q4 last year. FFO per unit diluted was $0.233 in the quarter compared to $0.22 in Q4 last year. AFFO per unit was $0.214, up from $0.202 in Q4 a year ago. This growth was primarily due to contractual -- due to properties acquired during and subsequent to Q4 a year ago and contractual rent increases. The REIT declared and paid total distributions of $9.6 million to unitholders, representing an AFFO payout ratio of 93.9% in Q4 2020 compared to total distributions of $8 million to unitholders in Q4 last year, representing an AFFO payout ratio of 99.6%.As Milton noted earlier, at the year-end 2020, we have a strong financial and liquidity position with a Debt to GBV of 43.2%, $59.4 million of undrawn credit facilities and non-encumbered properties with a value of approximately $150.5 million providing us with additional financial flexibility. We had $396 million outstanding on our credit facilities at quarter end with an effective weighted average interest on debt of 3.76%. We have well-balanced level of annual maturities, and our weighted average interest rate swap is 5.9 years, up from 5.2 at the end of Q3 2020, reflecting adjustments the REIT made late in 2020, including blending and extending the maturity of 2 of our interest rate swaps under Facility 1 in the amount of approximately $26.4 million for a term of 10 years and extending the maturity of one of our swaps under Facility 2 in the amount of approximately $10.4 million for a term of 10 years.I'd like to turn the call back to Milton for closing remarks. Thank you very much.
Thanks, Andrew. We will continue to carefully monitor the impact of the pandemic on our business and prioritize a strong liquidity position while selectively evaluating potential acquisition opportunities to drive AFFO per unit. Our focus will remain on preferred markets, property location, automotive brand and the financial strength of the dealer operators and OEMs. We expect to see industry consolidation to continue to gain momentum in the second half of '21 and into 2022.We are well-positioned financially to switch gears as the pace of consolidation resumes. The automotive dealership industry is an essential business and has demonstrated strong resiliency through a difficult period. We benefited from strong relationships with some of Canada's largest dealership groups, and we believe our current tenant group will be the leaders in the future consolidation of Canada's automotive dealership businesses, which should present attractive opportunities for us to further strengthen our tenant partnerships and continue to build our portfolio and unitholder value.At this point, I'd like to open it up for questions. Please go ahead.
[Operator Instructions] Your first question comes from Mark Rothschild from Canaccord Genuity.
Just following up on the change in cap rate for IFRS. Are there any transactions in the market to base it on the appraisers that you guys had to look at? And also, to what extent does interest rates impact that? And your commentary seems more just on the profitability of the way the tenants are operating.
It kind of goes back to the comments I made in Q2, Q3, and this is partially because as you can argue I was too close to the ground with specific assets in my past life as a broker. When you have rent deferral agreements, I believe investors look at that through a different lens as far as tenant strength. So as we went in and gave rent deferrals, we increased our cap rate by 20 and then another 10, so 30 basis points. As we're working through, our tenants are paying 100% of their rent and now paying back their deferrals. We certainly believe that, that removed the concern that any investor would have, which is certainly part of the appraisal mandate. So therefore, we reduced it. There has not been a lot of transactions to evidence either the increase in cap rates or the reduction in cap rates that we just took. Interest rates, yes, we didn't get to have the win as interest rates went down. And so as a result, it's certainly something we consider dramatically when we're looking at new acquisitions, and we will as we move forward. But at this point, it was more on the back of our tenants' strength in rent payment.
Okay. And on the -- in the commentary, you also spoke about building up the unencumbered pool and having some assets unencumbered. To what extent is that part of the long-term strategy? Or do you view this as just an asset to use to fund acquisitions -- to raise money to fund acquisitions and allow leverage to rise from here?
A bit of bucket A and a bit of bucket B. We certainly like to use existing assets to do financing when we do new acquisitions. It makes short-timed acquisitions a lot easier if we're not trying to finance them at the same time. And we have the luxury to do that, which I think provides: a, more efficiency and probably better cost of funds; and b, yes, we certainly like to have some unencumbered properties. It just adds flexibility as we go forward. And as you can see, we've slowly but surely been moving down our GBV -- sorry, our Debt to GBV.
Your next question comes from Brad Sturges from Raymond James.
Just on the Laval acquisition, you just closed it. Can you comment on perhaps the cap rate range that transaction would have occurred in?
I could be cheeky and say 0, because we acquired a vacant property. So -- but with the ability to, obviously, during due diligence, establish and execute a lease with Tesla certainly helped. It would be above a cap rate where we just walked in and bought something already tied up and in place. But it's tough to comment on the exact cap rate. We certainly believe that this is an interesting facility, both because we like dealing with Tesla, but also because this is more of a service and distribution facility than it is a typical auto dealership retail property.
I guess just on the back of that and more towards your comments about resuming consolidation of the -- within the sector. Now that there's a date for the federal budget, like do you see that as a motivating factor for some of the private owners to make a decision and make a move at perhaps ahead of any change to capital gains inclusion rates?
Short answer is, you would think they would and they may. But it seems that they're very much focused on establishing what a normalized profit margin is. Because last year, certainly Q2, they went down dramatically and then throughout the full year, from everything we're seeing with either AutoCanada or U.S. operators that are public or even just conversations we're having, everyone ended up -- not everyone, but most dealers ended up in a very good place. So establishing that seems to be the bigger focus. But to your point, it would be pretty interesting for people to look at the capital gains, inclusion. Some of the comments I've heard is that they haven't done it twice, so why would they do it now. I don't know if I agree with that. And then the third point I would say is, if they do delay and there is an increase in capital gains inclusion, in a weird way that may help us on the unit transaction side, because if we can -- if they can take units as currency, that will certainly help them with that whole capital gains inclusion and also income recapture. So there may be a back-end benefit to it as well.
Okay. And so from your perspective today, what's your expectations for that pace of M&A activity to occur over the course of the year? Will it be more of a gradual increase at this point? Or do you see a catalyst to change that pace?
And I'm going back to 2008, 2009 GFC. I found everything went quiet and then suddenly the light switch turned on and everything was incredibly busy on the acquisition side. I think we need to see some of the M&A occur to print what the new kind of structure multiple, how they're working out normalized revenue will occur. And then I think you're going to see significant activity. So I think it's going to be more -- there's a catalyst where there's some prints and then significant momentum that occurs after that.
Our next question comes from Jonathan Kelcher from TD Securities.
First question, just following up on Mark's question on the fair value increase. How much of that in Q4 was related to the change in cap rates versus the increase you got from renewing the lease in Vaughan?
I would say it was more 3 parts. I mean the math is pretty easy to figure out on the 20 basis points. So I'll let you guys do that. On the other 2, both -- it's a 15-year lease that came up for renewal that they've renewed, which will commence in middle of this -- in Q2 of this year. So that certainly helps. And then the other aspect is when you can buy a vacant building and insert a tenant, there is a nice value gain there as well. So it's really the 3 components plus, to a lesser extent, there's a fourth component, which is just the gradual rent increase that we have throughout the lease portfolio.
Okay. Fair enough. I guess, and just switching gears, it looks like you changed tenant groups at a couple of your locations in Edmonton and Kingston. Can you maybe give us some color on that and on the new dealership groups that took over?
Well, one of them, you'll see specific wording that we have to use, which is a luxury automotive deal -- sorry, the luxury automotive brand. So we can't announce who that is until they're up and occupying. And that was just a situation where we knew 2 tenants that wanted to -- sorry, the 2 tenants, and one of them wanted to expand and one of them certainly made sense when we got to knock on the door to help them out on a termination. So we terminated one lease and then carried on with another with a very -- obviously, a very strong group. And on the second one, I think it was more -- well, it was more of a portfolio deal. We can't talk too much about the tenants, but it's the point. They're a very seasoned strong operator. We know them. We like them. So we certainly welcome them into our tenant group.
Okay. And you have to give approval for those -- for both of those?
Yes.
Okay. And then on the one in Edmonton, is there any CapEx that you're putting in there? Or is it...
Well, obviously, I'll step back. One of them was not an assignment. One of them was a termination. So as a result, yes, we wouldn't have done the termination if we weren't comfortable with the new tenant coming in. The other one is an assignment, and they do have the right to do that as long as we have a soft approval on that. But to remove the indemnification, we'd have to approve, and that has not been done yet. But we certainly like the new tenant that's in there as well.
Okay. So just to be clear, the Kingston one was an assignment and the Edmonton one was a termination and a new lease?
Termination and new lease, yes.
Yes. Okay. Are you going to get any lease termination income?
There was the deferral -- outstanding deferral amounts that kind of moved forward. And beyond that, we're going to get a longer term. So there's not a termination penalty, none.
Okay. And do you have to put -- are you putting any capital into that one?
That was part of the termination agreement. So there's some costs on the transaction, but the actual capital would -- is being supplied by the previous tenant.
Okay. And the rent stays the same or?
Rent stays the same.
Your next question comes from [Lee Chen] from IA Capital.
Just a couple of quick questions for me. Just in regards to overall debt, so it's gone down. I was wondering if you can comment whether if you guys are comfortable at this level? Or is the goal still to push the Debt to GBV to over 50%? Do you have a time frame for that?
We're certainly comfortable at this level, but I certainly believe that we will -- as the acquisition -- M&A world opens up again and we will recommence further acquisitions, we'll certainly get up to the -- we anticipate getting up to that 50% early -- low 50s, and we remain comfortable with that as it's a very carefree portfolio.
For sure. And just also for me, so recently, there's been some news regarding some major carmakers providing some sort of projected time line for going 100% electric. So are you seeing your dealerships accelerating their plans to update their infrastructure for electric cars? Have they had any -- have they made any changes to like the business growth plans because of those news?
Well, you've certainly seen it with Tesla. They've been rolling out and getting more physical locations. And we certainly -- we've got them on 2 existing leases that have been announced, and we're certainly happy to be part of that transition. When it comes to brands, yes, we're expecting to see a lot of brands leaned towards both -- when they're talking about -- if you're talking about VW et cetera, they're talking about not doing new engines, but they will tweak their existing. So it's not that they're stopping the manufacturing, they're stopping to create engineering new engines. But we're certainly going to see EV become more and more of the cars on the road. And as a result, you're going to have to see a bit more infrastructure. That infrastructure, for the most part, is going to be charging stations. And that's a whole other topic because you need charging stations both at the dealerships and certainly, infrastructure overall within the kind of general community. So we're certainly watching that closely. But most of these dealerships can adapt very quickly to adding EV charging stations and to be able to do service in the existing facilities for EV.
Your next question comes from Matt Logan from RBC.
Just following up on Mark's question with regards to your fair value marks. As we start to see the balance of the deferrals get paid back over the course of 2021, would it be fair to assume that your IFRS cap rate might also return to the 6.6% range that was recorded in 2019?
In 2020, we talked about both COVID and Alberta. And that was certainly on the 20 basis points, one in Q2 was a comment on both. I certainly like where interest rates are. I certainly believe that all indications are the rent payments are going to continue and the deferrals are going to continue. So we certainly -- we're comfortable moving it to the 6.7%. As we carry on in the year, we'll have to make kind of the next decisions going forward, but we certainly like what we see ahead of us.
And maybe changing gears to the Lexus Laval acquisition. I believe it was Brad that asked about the cap rate, and you'd made some comments on Tesla. Could you give us a sense for what...
Yes. Okay. Sorry, Brad. All right.
Can you talk about the Lexus Laval cap rate where that might fall in your, say, 6.6% to 7% range?
Yes. With the lower interest rates combined with the ability to do this in units, I love that strip along Chomedey. We actually also have the Laval BMW operated by AutoCanada. That strip is surrounded by some very good kind of mid-density residential and some very high-quality retail auto dealerships. So it would be definitely at the lower end. The lower end we've been talking about for the last year tends to be about 6.25% to about 7.5% is what we're seeing in the market, and the 7.5% certainly would not be in in the Toronto, Montreal, Vancouvers of the world. They'd be in Kitchener-Waterloo type or Kingstons of the world.
I appreciate the commentary. And maybe in terms of Dilawri, is there anything else in their pipeline that you could see being vended into the REIT over the next year or 2?
That's always a question we get. And it's always an answer we don't have until it occurs. I think they are, like any other dealership group, affected by, as I said, someone -- not someone, but printing kind of the most recent deals. There is a bit of the gap between the buyers and sellers right now. So we expect that gap to close. And once that does, it will set the new benchmarks, and we'll see some significant activity overall, and Dilawri has always been a player in that.
So I guess the short answer would be they have some assets on the books that would be of interest, but we'll have to wait and see where some of the transactions fall over the next year to get a better sense on pricing.
Well, no, sorry. So the -- outside of the Mercedes-Benz Vancouver portfolio, which is heart of Vancouver and at a cap rate that certainly is not accretive, they still continue, and even with those assets, to provide us with, under the strategic alliance offer, an opportunity to buy. So my comments were more geared towards as and when and if they acquire new dealerships, that's when we'd see the pipeline.
Makes sense. Last question for me, and maybe this is one for Andrew, just in terms of where you're seeing indicative rates these days. Could you give us a general sense for the ballpark for financing on new acquisitions?
Yes. Swap rates, indicative rates all-in with our $150 million, 10-year money is about 3.5%, 3.6%. Now on the other side, mortgage rates are about 25 to 30 basis points lower for the same term. So different dynamics going on in the marketplace at this point in time. But rates still at low levels, and we continue to monitor as we did in December with our swaps, extending them on a considerable amount of -- with a 10-year term overall. So we're taking advantage where we can, and we continue to monitor.
And the new mortgage rollover in Barrie as well.
Yes. And small mortgage that we did in Barrie had a really good rate as well and a 7-year term.
Your next question comes from Himanshu Gupta from Scotiabank.
So just on the recent acquisition, Lexus Laval's property and not Tesla Laval, would you say the cap rate was pretty much at pre-pandemic levels?
At the later pre-pandemic levels as interest rates down, it would be at a similar number, yes.
It will be very similar. Okay. And I mean, in terms of -- are you making any changes to how you underwrite or price new acquisitions? I mean given that -- I mean you have seen 2020 now. Is there any changes to how you're approaching new acquisitions?
I mean we're certainly looking at the effect of the interest rates, and you could argue that's another 25 to 50 basis points. But it really is about we're not missing out on acquisitions right now. There's just a bit of a lull with the buy/sell gap that's occurring. Interestingly, last time, we saw interest rates creep up a bit is when dealers were more active in the disposition side. Free money is free money, and we don't tend to hand out free money. So it's -- we're certainly looking at interest rates and how they're going to affect our acquisitions. But we like where interest rates are, and we are comfortable in the major markets that we're focused on.
Got it. And I also -- in terms of looking into the tenant, I mean are you looking or asking for better covenants now, better rent coverage or more disclosures than you would have agreed to in the past or not point changes there?
No, because we looked at that previously. I mean it's one of the reasons why we were able to get through Q2 by working with tenants on a partial deferral as opposed to an abatement or rent-free or whatever you want to call it. No, we tend to like to look at our tenants from the day that we did the IPO. So it's certainly something we continue to do, and we certainly continue to improve it as we go just in how we look at things and we learn things. But it's always been something we wanted to and continue to focus on.
Got it. And then maybe on the same lines, I mean that lease termination at Edmonton, and just to clarify, there was no lease termination income associated with that termination. So just wondering, are there...
The only thing would have been if there was deferral outstanding and that got paid upfront. So it's an acceleration of any deferral amount owed on that. Otherwise, there was no additional amount.
Okay. And my question was more about the lease agreement per se. I mean do you have the lease termination embedded in your lease contracts? I mean if one of the auto dealership wants to walk away, I mean, what's the contractual lease termination income payment is due to the landlord?
Well, a, it was Q1. So it wouldn't be in the Q4. But b, no, the termination agreement is a termination agreement. So we would have to look to the new tenant. But the new tenant commenced the same day the previous tenant -- before we signed the termination on the previous tenant.
Got it. Okay. And then just sticking to the recent tenant activity, I'm looking at the Dixie Road property in Mississauga. I think Nissan truck moved out. Is the property now vacant? But that doesn't impact your cash flow because it's indemnified by Dilawri. Is that...
Yes. So Nissan announced that they were closing down truck locations. So as a result, that's now being used -- it's still being rented by Dilawri, and they're using it for ancillary purposes. So we will -- it's a recently renovated and upgraded building. We certainly continue to get our rent. But yes, Nissan truck, they stopped...
Yes. Just to mention, it's a one lease. Yes. It's the one lease with Dilawri for the Auto Mall.
It's a sublease.
Yes. Yes. Yes. So we're fully collected on that.
Yes. And I think the same property Hyundai also, right? I mean, the ancillary property, which Hyundai has occupied previously?
Yes. There's been movement within the mall, and that's been a normal practice. And -- but overall, Dilawri is the main tenant, and what they choose to do on a sublet, that's their decisions.
Yes, including relocating KIA and a new Harley-Davidson moving in one of locations. So as Andrew said, there continues to be movement.
Awesome. And then Harley-Davidson moved into that, I think, Toyota dealership. Was there any renovation done for them or any CapEx from the REIT side?
From the REIT side, no. There was certainly money put into it by Dilawri because they've -- if you drive by it, when you get on your Harley, you can see that they've certainly upgraded it.
Awesome. Okay. And maybe last question, just on the rent collection. I think $2.3 million outstanding as of 31st December. Is the plan still to receive everything by the end of the year?
Yes. And everyone's current on that. So we're still feeling confident.
Correct. Yes.
Your next question comes from Tal Woolley from National Bank Financial.
I wanted to talk just a bit about with the sort of the advent of Stellantis, is there any sort of scuttlebug out there about Chrysler? What they're planning to do with retail square footage? Do you think it might shake some assets loose as they sort of work through integrating the companies?
No. I mean we're watching which brands might come over from Europe within that merger. And it seems like they're going to be mostly focused on trucks. And if you look at our portfolio, we don't have a lot of them. So it's certainly more interesting when we look into the market on acquisitions. I've certainly looked at ones that almost literally have a Chrysler across the street from a Chrysler, and we didn't buy them. But I think what we're seeing is some new brands coming up as well and knocking on doors to try to get existing premises, existing dealers -- sorry, existing dealership facilities. So it will be really interesting to see how that unfolds. One of the things we like about our portfolio is it has the zoning, and there continues to be a number of brands out there who are looking for greater and greater footprint. So we certainly are watching Chrysler, but we're more watching that on, what does that mean for opportunities? What does that mean overall? I would have loved to see some of their European cars come over. But certainly, they do well in the truck market.
Okay. And then I guess my other question, too, is like if you feel that transaction activity might be still a little cool here for a while. You've also had some large shareholders emerge in your stock. Has the Board ever thought about conducting a strategic review at this point?
We tend to be -- not sure why we would at this point. We certainly look at -- when we do a strategy session every year in the beginning of the summer, and then I follow one at the end of the year, I'm just making sure that everything is going as planned and making sure we're setting out new strategies -- maintaining the strategic vision going forward. Our discussions with TWC have always been, as an investor, similar discussions than we would have with any other institutional high-worth investor.
Okay. But no start out review or anything like that has really been contemplated at this time?
Outside of the normal course business strategy and how we want to grow and continue doing what we're doing, no.
Your next question comes from Sairam Srinivas from Cormark Securities.
At this point, most of my questions have already been taken. So I guess I'm kind of lurching around for questions right now. But generally, probably I hate to bring this up probably just going back to that Edmonton lease that kind of got terminated. Ericsson was probably the one dealership there. Apart -- I think there are a couple of, I think, 4 other properties which have non-Dilawri dealership groups there. So I mean, like, do you see any discussions going forward in terms of any of those leases coming up for assignment or any of those discussions? Or any insight there?
No. I mean, a, it's -- they're fully leased. So we received a call, and we certainly worked with both groups. But we're not aware of anything else along those lines, but that would be directly the tenant's business, for a lack of a better phrase. So no, we wouldn't be aware of anything that was certainly an opportunity that we were glad to help with, but that does not mean that, that's going to be a movement into Edmonton and certainly not with that tenant group.
Your next question comes from Joanne Chen from BMO Capital.
Maybe not to drill too much on the acquisition front. But Milton, you mentioned you're looking for that catalyst for the M&A. What are you guys thinking right now in terms of what that catalyst would be? Is it kind of the reopening and the pace of vaccinations or some other factors that are -- that you think will really kick-start everything?
I think the early -- or late 2020, early 2021, I may have delayed things a bit. No one's in any rush, especially on the buy side. So I think the reopening certainly can assist on that. I would also point out, past years, we've always talked about dealers contemplate in the first quarter and seem to be very transaction-heavy in the fourth quarter. So that probably dovetails with both.
Okay. That makes sense. And maybe just one -- another one for me on a more general industry question. There was an article out actually today on The Wall Street Journal that, in the U.S., the auto dealerships can't keep up with new model given supply chain problems related to the chip shortages. And so some dealers are shifting with the new vehicle, buyers use car lot, but even that's not satisfying all the demand. Could you maybe comment to what you're hearing from the dealers on the supply front here in Canada?
Yes. I mean it's a different reason, but it's a similar effect than you saw in the back half of 2020 when there were supply issues across many aspects of the -- well, overall retail market, including the dealership world. And if you take a look at Penske, AutoCanada, AutoNation, a number of the large U.S. or Canadian groups, their comment is being revenues are flat to down, profits are up. So it's interesting when you talk about it for manufacturers. That certainly has an effect for dealers. They make sure that they stick to their sticker price because they know if you don't buy the car that they have someone else that will because there's a shortage of cars out there as opposed to in 2018, 2019, when there was a lot of inventory pushed onto the lots and pushed onto dealers, which they wanted to get off the lots. So it's an interesting up and down, less product but higher margins. So it will be interesting to see how that unfolds, but it normally means profits, it's just how great the profits are. And that's what we like to see as our tenants making profits because then we know we're getting our rent paid.
[Operator Instructions] It appears there are no further questions at this time. Please proceed.
That's great. Thank you for joining us. Everyone, have a good day.
Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.