Diversified Royalty Corp. Expands Cheba Hut Royalty by $7.2M

Event summary

  • Diversified Royalty Corp. (DIV) acquired a $0.9M annualized incremental royalty from Cheba Hut for $7.2M, effective April 1, 2026.
  • The new royalty adds $75,000 per month to Cheba Hut’s existing payments, with annual increases tied to U.S. CPI + 1.5% or 3.5%.
  • Cheba Hut was first added to DIV’s portfolio in June 2025, with this deal reflecting its growth and store-level economics.
  • DIV aims to enhance cash flow per share through accretive royalty purchases and dividend growth.

The big picture

DIV’s acquisition of an incremental royalty from Cheba Hut underscores its strategy of securing predictable, growing royalty streams from franchisors. The deal reflects Cheba Hut’s expansion and strong store-level economics, aligning with DIV’s goal of enhancing cash flow per share. This move comes amid broader trends in the royalty investment space, where diversified streams are increasingly valued for stability and growth potential.

What we're watching

Royalty Growth
How Cheba Hut’s expansion will impact DIV’s royalty income and whether it meets coverage tests for future increases.
Dividend Strategy
Whether DIV can sustain and grow its monthly dividends as it integrates new royalty streams.
Market Dynamics
The pace at which DIV can acquire additional royalties to diversify its portfolio further.