Automotive Properties REIT has agreed to sell a 50 per cent interest in a Vaughan, Ont., automotive dealership to Dilawri Group for $16 million while retaining ownership of the other half.

The 68,874-square-foot property sits on 2.98 acres at 9088 Jane St., near Vaughan Mills mall. The transaction implies a $32-million value for the entire property.

Automotive Properties said the sale is being completed at a premium to the property’s IFRS value, meaning Dilawri is paying more for its stake than the value at which the real estate is carried on the REIT’s financial statements. The company did not disclose the size of the premium.

A Dilawri affiliate will occupy the property as a full-service automotive dealership under a new 16-year triple-net lease. The lease also includes a landlord redevelopment option.

The transaction is expected to close by the end of September, with rent payments beginning Dec. 1. The existing tenant has notified Automotive Properties that it intends to leave when its lease expires around Sept. 1.

The new agreement also removes a near-term leasing risk for the REIT. Automotive Properties said that following the Vaughan transaction and other recent renewal activity, it will have no material lease expirations until 2028.

The Vaughan dealership was built in 2006 and has historically operated as Pfaff Audi. Automotive Properties acquired the property for $17.2 million in 2016.

The REIT owns 95 income-producing commercial properties totalling approximately 3.5 million square feet across Canada and the United States.

Pictured: The Vaughan dealership property at 9088 Jane St., shown in an image from Automotive Properties REIT’s 2016 acquisition announcement.