Diversified Royalty Secures 10-Year AIR MILES Royalty Boost with BMO Guarantee
Event summary
- Diversified Royalty's AIR MILES® royalty terms amended to a fixed $3.925M annual payment, growing at 2.42% annually starting February 1, 2027.
- BMO guarantees the royalty payments under the new agreement.
- AM LP gains the right to monetize AIR MILES® trademarks from February 1, 2032, while Air Miles can buy out the remaining license term for the net present value of future payments.
- Royalty payments had declined to $3.2M in 2025 due to sponsor losses, now increasing by over 20% with the amendment.
The big picture
The amendment transforms DIV's weakest-performing royalty into a stable, high-yield asset, reflecting broader trends in loyalty program consolidation and financial guarantee mechanisms. With BMO's backing, the deal underscores the strategic value of intellectual property in the loyalty space, particularly as traditional programs face declining sponsor participation.
What we're watching
- Royalty Performance
- Whether the 2.42% annual growth rate will keep pace with inflation and maintain the royalty's status as one of DIV's strongest.
- Monetization Options
- How AM LP might leverage the right to sell or license AIR MILES® trademarks from 2032, given BMO's transition to a new loyalty program.
- Dividend Strategy
- The impact of the guaranteed royalty payments on DIV's ability to sustain and grow its monthly dividends.
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