Vancouver, B.C., July 4, 2016, For Immediate Release – Diversified Royalty Corp. (TSX: DIV) (the “Corporation” or “DIV”) and Sutton Group Realty Services Ltd. (“Sutton”) announced today that effective July 4, 2016, the Sutton royalty pool (the “Sutton Royalty Pool”) has been adjusted to increase the number of agents in the Sutton Royalty Pool from 5,185 to 5,400 agents.
The addition of 215 new agents to the Sutton Royalty Pool will generate additional royalty revenue for the Corporation of approximately $150,000 per annum, which increases at a fixed rate of 2% per year. Effective July 1, 2016, the Sutton monthly royalty rate increased from $56.25 per agent to $57.375 per agent, such increase representing the 2% annual contractual increase in the Sutton royalty rate for 2016.
The consideration for the additional royalty revenue is approximately $1.0 million, and is calculated using a 7.5% discount of the estimated net royalty revenue added to the Sutton Royalty Pool. The discount rate used is intended to ensure that the addition of agents to the Sutton Royalty Pool in exchange for DIV common shares (“Common Shares”) is accretive to DIV’s shareholders. The consideration is paid in the form of Common Shares on the basis of the 20-day volume weighted average closing price of the Common Shares for the period ended May 24, 2016. Based on a weighted average closing price of $2.2926 per Common Share for such period, the consideration payable for the additional royalty revenue was paid to Sutton in the form of 455,392 Common Shares.
DIV has received conditional approval from the TSX for the listing of the 455,392 Common Shares issued to Sutton. The listing of these Common Shares is subject to DIV fulfilling all of the requirements of the TSX on or before August 5, 2016.
The Sutton Royalty Pool is adjusted annually on July 1 (the “Sutton Adjustment Date”) to add the number of qualified agents at December 31 in excess of the number of agents in the Sutton Royalty Pool on the day immediately preceding the Sutton Adjustment Date. For further details with respect to the manner in which annual adjustments of the Sutton Royalty Pool occur and the agreements underlying the procedures therefor, see DIV’s Annual Information Form dated March 29, 2016, a copy of which is available on SEDAR at http://www.sedar.com.
July 2016 Cash Dividend
DIV is pleased to announce that its board of directors has approved a cash dividend of $0.01854 per Common Share for the period of July 1, 2016 to July 31, 2016, which is equal to $0.2225 per Common Share on an annualized basis. The dividend will be paid on July 29, 2016 to shareholders of record on July 15, 2016.
DIV currently has a dividend reinvestment plan (the “DRIP”) in place. The DRIP allows eligible holders of Common Shares to reinvest their cash dividends paid in respect of their Common Shares in additional Common Shares, which, at the Corporation’s election, will be issued from treasury or purchased on the open market. If the Corporation elects to issue Common Shares from treasury, such Common Shares will be purchased under the DRIP at a 3% discount to the volume weighted average of the closing price for the Common Shares on the TSX for the five trading days immediately preceding the relevant dividend payment date. The Corporation may, from time to time, in its sole discretion, change or eliminate the discount applicable to Common Shares issued from treasury.
To be eligible to participate in the DRIP, holders of Common Shares must be resident in Canada. Participation in the DRIP does not relieve shareholders of any liability for taxes that may be payable in respect of dividends that are reinvested in new Common Shares under the DRIP. Shareholders should consult their tax advisors concerning the tax implications of their participation in the DRIP having regard to their particular circumstances.
The full text of the DRIP is available under the “Investor Relations” section of the Corporation’s website located at https://diversifiedroyaltycorp.com and on Computershare’s website located at http://www.investorcentre.com. Eligible beneficial shareholders who wish to participate in the DRIP should contact their investment advisor, bank or brokerage firm to enroll in the DRIP. Eligible registered shareholders may enroll online at Computershare’s web portal located at http://www.investorcentre.com.
Shareholders should carefully read the complete text of the DRIP before making any decisions regarding participation in the DRIP.
Q2 2016 Earnings Release Date
DIV will release earnings results for the three and six months ended June 30, 2016, following the closing of regular trading on the Toronto Stock Exchange on August 15, 2016.
About Diversified Royalty Corp.
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors.
DIV currently owns the Franworks, Sutton, and Mr. Lube trademarks. Franworks operates mid-tier casual neighborhood pub restaurants under the Original Joe’s, State & Main, and Elephant & Castle brands across Canada and in select US markets and generates approximately $225 million of gross sales annually. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada with approximately 7,900 agents and 200 offices across Canada. Mr. Lube is the leading quick lube service business in Canada with 169 locations across Canada and approximately $200 million of annual system sales.
DIV is currently paying a dividend and expects to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. DIV expects to pay a predictable and stable dividend to shareholders and increase the dividend as cash flow per share increases allow.
Forward Looking Statements
Certain statements contained in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “intend”, “may”, “will”, ”project”, “should”, “believe”, “confident”, “plan” and “intends” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specifically, forward-looking statements in this news release include, but are not limited to, statements made in relation to: the amount of additional royalty revenue that will be generated from the addition of 215 agents to the Sutton Royalty Pool; the listing of 455,392 Common Shares on the TSX; the amount and timing of the July 2016 dividend to be paid to DIV’s shareholders; the timing of the release of DIV’s earnings results for the second quarter of 2016; DIV’s corporate objectives; and DIV’s expectation that it will pay a predictable and stable dividend to shareholders and increase the dividend as cash flow per share increases allow. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events, performance, or achievements of DIV to differ materially from those anticipated or implied in such forward-looking statements. DIV believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct. In particular there can be no assurance that: Sutton will continue make royalty payments in the amounts and at the times required, or at all; final TSX approval will be received for the listing of 455,392 Common Shares issued to Sutton; DIV will be able to achieve any of its corporate objectives; DIV will make monthly dividend payments to the holders of its common shares; or keep the DRIP in place. Given these uncertainties, readers are cautioned that forward-looking statements included in this news release are not guarantees of future performance, and such forward-looking statements should not be unduly relied upon. These statements speak only as of the date of this news release. DIV undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
In formulating the forward-looking statements contained herein, management has assumed that business and economic conditions affecting DIV and Sutton will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, general levels of economic activity and regulations. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect.
All of the forward-looking statements made in this news release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, DIV.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
Additional information relating to the Corporation and other public filings, is available on SEDAR at www.sedar.com.
President and Chief Executive Officer
Chief Financial Officer and VP Acquisitions