Cross Border Acquisition Of Essential Asset In Core Industrial Park

26 Lorena is an essential facility in Barrie’s main industrial park with immediate access to Hwy 400. 3NP negotiated a head office guarantee on the lease from Omnimax (American owner). 3NP’s unique ability to create a custom solution for the American principals and stake holders, resulted in an above current market cap rate and more attractive acquisition price.

The Challenge

• Cross Border Transaction: Euramax, the Canadian division of Omnimax, was 1 of 13 properties in the portfolio, and the only Canadian asset. Therefore this deal required a strong Canadian partner with knowledge and experience closing US-style “sign and close “ transactions. The sign and close process demanded:
  • Underwriting without a signed Agreement of Purchase and Sale or Lease
  • Managing US currency exposure throughout the negotiation and up to closing
  • “Canadianizing” the Purchase and Sale agreements and the Lease without disturbing the master agreement in the US
• Covid-19 added additional challenges and demanded the entire negotiation process take place “virtually”

Actions Taken And The Results

• Step 1: Mobilized Canadian team and established collaborative process up front with US Partner
• Step 2: Invested in legals (municipal, leasing, acquisition and finance), establishing custom Canadian solution
• Step 3: Given no signed agreement of Purchase and Sale or Lease until date of closing, 3NP leveraged banking relationships to overcome unprecedented situation to secure:
  • Privileged exchange rate
  • Mortgage financing
• Step 4: Committed to US parameters resulting in an improved cap rate and rental increases for Canadian property

Results:
Tenant-Operator secured location with initial term of 20 years, including  3% annual increases in years 1-10, and 2.5% annual increases for years 11-20.