Optimizing Sale Leaseback to recapitalize Tenant
16715 Hymus Blvd is a prestige office and industrial facility located in close proximity to Montreal-Trudeau airport and 25 minutes to downtown Montreal; built new in 2004 consisting of +/- 21,000 SF of office space and +/- 45,000 SF of fully air conditioned & temperature-controlled warehouse. The Tenant had spent over 1.3M dollars in 2018 on mission critical utility. Tenant capital improvements included: new 2nd floor state of art offices, HVAC (2), increase of parking area to 143 spots with Attractive 28’ Foot Clear Height “White” quality warehouse & assembly space.
- Tenant had allocated significant capital to purchase of land included with corporate acquisition.
- In combination with the capital improvements – over invested in real estate – effectively tying up significant working capital constraining the business.
- As public company needed to create accretive structure to avoid any negative impact on earnings and covenants.
Actions Taken And The Results
- Restructured lease elements and financing to mitigate tax impact for Target and optimize accretive aspects on sale leaseback.
- Worked with municipality to optimize value of location and secured its value in industrial park and employee access.
- Currently active investment – annual distributions 6% cash on cash to date with 100% tax shield.
- Estimated IRR of project 12-15%.
3NP Asset Management21 Hawarden Cr.
Toronto, ON M5P 1M6