About DIV

Overview

  • Diversified Royalty Corp (“DIV” or the “Company”) is engaged in the business of acquiring top-line royalties from well-managed, multi-location businesses and franchisors in North America (“Royalty Partners”) and intends to diversify into several industries.
  • DIV is a TSX-listed public company (TSX-DIV).
  • DIV is currently paying an annual dividend of $0.2225 per common share.
  • As part of its strategy, DIV typically purchases the trademarks of the companies it negotiates royalty agreements with.
  • DIV’s typical royalty structure allows its Royalty Partners the benefit of:
    • maintaining full operational control of their business;
    • participating meaningfully in the growth of their company; and
    • tax deductibility of royalty payments.
  • DIV’s strategy typically includes having a General Security Agreement over the Royalty Partners’ business to protect DIV’s interests.
  • By making accretive acquisitions, DIV expects to increase its dividend over time as cash flow per share increases allow.
  • On September 26th, 2014, DIV acquired its first royalty – a 6% top-line royalty from Franworks Franchise Corp. (“Franworks”).
  • Franworks owns and operates three distinct restaurant brands: Original Joe’s, State & Main and Elephant & Castle.
  • DIV closed a $34.5 million bought deal in November 2014.
  • On June 19th, 2015, DIV acquired its second royalty – an initial annual royalty of $3.5 million from Sutton Group Realty Services Ltd. (“Sutton”).
  • DIV closed a $115.0 million bought deal in August 2015.
  • On August 19th, 2015, DIV acquired its third royalty – an initial annual royalty of $12.5 million from Mr. Lube Canada Limited Partnership (“Mr. Lube”).
  • On November 27th, 2016, DIV sold the trademarks and rights related to the Franworks indirectly to Cara Operations Limited (“Cara”) for $90.0 million and cancellation of 8,992,187 common shares.

Efficiency and scalability

  • DIV receives royalties from its Royalty Partners and typically monitors their business through board representation.
  • DIV has low overhead relative to its revenue base and expects to dividend substantially all of its available cash flow.
  • DIV expects it can increase its revenue base while maintaining its current management structure.

Corporate Governance