On October 4, 2023, Diversified Royalty Corp. (DIV) recently announced the acquisition of trademarks and certain other intellectual property from BarBurrito Restaurants Inc., adding an eighth royalty stream to its portfolio. The transaction, valued at $108 million, involved a $72 million cash payment at closing and additional considerations, including a $36 million promissory note. The cash portion was funded through a combination of DIV's existing acquisition facility, cash on hand, and new senior credit facilities.

The acquisition, completed by DIV and its subsidiary BARB Royalties Limited Partnership, sees DIV licensing the BarBurrito Rights back to BarBurrito for 99 years. In return, DIV will receive an initial annual royalty of $8.3 million, increasing by 4% annually for seven years, then fluctuating based on BarBurrito's gross sales. This arrangement is expected to contribute 12% to DIV's pro-forma adjusted revenue and increase DIV’s tax pools by approximately $108 million.

BarBurrito, with over 260 locations in Canada, will continue its operations under existing management, including an advisory role from DIV’s CFO at board meetings. The deal is part of DIV's strategy to diversify its portfolio with royalties from multi-location businesses and franchisors.

DIV's board approved an increase in its annual dividend policy from 24.0 cents per share to 24.5 cents per share, effective November 1, 2023. This reflects a pro-forma payout ratio of approximately 84.7%, with DIV intending to pay down the Acquisition Facility through cash flows, debt refinancings, or capital market transactions.