Henday Centre, a neighbourhood retail centre in Innisfail, Alberta, with 78,233 square feet of leaseable space, sold to local investor Brookstone Investment Corp. on March 31 for $11.25 million.
Occupancy averages 95 per cent, with key tenants IDA Pharmacy and Dollarama ensuring stable, long-term cash flow for Brookstone, whose portfolio of commercial assets now totals $50 million.
The vendor, Sundance Capital Corp., upgraded and retenanted the property on acquiring it in partnership with the original owners in 2007, transforming it from a half-vacant mall into one with positive cash flow returning 23 per cent per year. Any appreciation in value was a bonus, one Sundance realized with the sale to Brookstone delivering “a significant return on their original investments.”
Brookstone acquired Henday Centre using a combination of $8.75 million in cash (partially financed by a traditional mortgage) as well as $2 million in convertible preferred shares yielding a 5 per cent annual dividend and $500,000 in subordinated debentures at 8.25 per cent annually over 60 months, with monthly payments.
“The sellers, prioritizing post-sale income and tax benefits, opted for this blend, including a Section 85 rollover for tax deferral,” Brookstone reported. “This innovative use of securities as currency enabled a win-win outcome, offering sellers steady income and real estate exposure while fueling Brookstone’s growth.”
Brookstone anticipates using a similar model in future transactions to boost its commercial portfolio to $100 million in the coming years, maintaining a compounded annual growth rate above 20 per cent.
