Avigilon Aims for Big Profit on Building Sale

By John Honovich, Published on Nov 29, 2016

Just 18 months after agreeing to buy a Vancouver HQ building, Avigilon is now planning to sell it off.

And they are looking to make a killing. Indeed, if their projections are true, they will make far more profits from selling the building than from their video surveillance business this year.

In this note, we look at the move, including feedback from Avigilon and how this move may strengthen Avigilon beyond the potential profits.

Building ******** 

** ***** ****, ******** announced ****** *** ****** ** ******** ********* *** $42 ******* ***.

******** ** ********* ********** and ********* *** ******** with ***** ** **** in ****** ****.

Sale / *********

***, ******** ** ******** to **** *** ********, with * ********* ***** of ~$*** ******* ***. 

*******, ******** ***** ***** to *** *** ******** as **** **** ** leasing ** **** **** the ********* *****.

Profits ********

** ******* ******, *** ******* appear **** - **** 100%. *******, **** ***** to ****** ** ******** on ********* *** ********, which *** $*.* ******* USD *** *** ***** 3 ******** ** **** and *******, *********** ***** until *** ****** **** move-in.

** ******** ***** ****** of ~$** ******* ***, assuming **** *** *** targeted $*** ******* *** purchase *** ********* ** similar ********* ***** *** transaction ***** ** *** deal.

** **********, ********'* *** income *** *** ***** 9 ****** ** **** was **** **** $* million, ** **** ***** be ***** * ****, though ******* ** *** one **** ****** *** potentially ****** ******* ***** expenses.

**** ********

****** *** *******, * sell *** ***** **** Avigilon * **** ******** which **** *** *** to ****** **** (***** has ***** ************* **** the **** *** *****) or *** ** ******** in ***** ******** (*.*., acquisitions).

Bubble *********

********'* ****** ****** ** doing **** ** **** "Vancouver's**** ****** ****** ** in * ****** ** unprecedented ******." ** ** so ****, **** **** it *******. ** ******** *** do **** ** *** out ** ***.

Investor *** ****

******* ********* ******* ** to ******* ********** **** investors. ** *******'* ************ **** *******, ********* *** ******** were ****** ******* **** Avigilon, ******* ** *** falling ***** ***** *** moves **** ****** *** building, ***** **** **** was ** ************* ***** *** detracted **** ***** **** business.

Outlook ******** *** *******

** ******** *** **** a **** **** ***, they ***** *** **** get * ***** ** cash / ******* *** continue ** ******* ********** with *********.

** ******, *** ****** factor **** ** ***** ongoing *********** *******. ********* are ********* ~**% ****** rate *** *** ******* Q4 **** *******, ***** is ***** **** ** but ***** ******* ****** than ********'* ** ******* as **** ** *** industry's. ******* *** ******** is **** ** ***, that **** ****** ******* Avigilon's ***** **** ****** more. 

Comments (13)

I guess money makes money:D

The subject heading had me worried for a bit.

Not the graphic?

:)

Why would anyone pay them what they are asking for?

What kind of renovations could possibly more than double the value of the location?

Even if Vancouver is in a real estate bubble - that valuation is ridiculous.

The more they get on the sale, the more they'll pay in rent ;)

AS I said little more than a week or 2 ago, Avigilon was not primed in achieving increased profits from their video surveillance sales and they had announced nothing earth shattering to increase revenue. They may increase sales but only by decreasing sales prices.

However:

Their CEO may have had a plan up his sleeve to achieve "profits" that he was talking about, and this may have been it all along. " Let's sell a building.

Impressive to investors? Yeah, right.

An article / marketing pitch posted for the building, key points:

It was stripped down to the concrete and then renovated with: 12- to 18-foot ceilings; energy-efficient windows and lighting; modern finishes; new electrical vault systems, HVAC chiller and roof-mounted diesel backup generator; a third elevator and an updating of the existing elevator cabs; a six-storey atrium featuring hanging stairways and overhead causeways; meeting rooms projected into the atrium with decks on top and LED lighting below; a bicycle service and storage room and facilities with lockers and showers.

Other exterior upgrades include: a living green wall on the east side of the building; new concrete finishes; continuous glass awnings on Seymour and Robson streets; and roof screening to improve exterior sightlines for Telus Garden residents. The half-acre site also has 55 parking stalls.

Monday - Seller (Avigilon) closes deal with New Owner

Avigilon: Just look at this atrium, spectacular isn't it! It is actually a symbiotic continuation of the living green wall on the outside. You're just not going to find anything like this on the market, at any price!

New Owner: Yes, we're very impressed. Hmmm... Ok, you've made your point, we'll take it!

Tuesday: New Owner negotiates lease with New tenant (Avigilon)

New Owner: So in a stunning building like this, although the rent might seem high, there is nothing like it on the market. I mean just look at this 6-storey atrium and its symbiotic green wall.

Avigilon: I've seen bigger. And the green wall, it's actually Penicillium digitatumm commonly known as green mold coming from the HVAC, we could never get rid of it...

Anyway, its a colossal waste of space for a sales driven organization, like us. Ax the atrium, kill the mold, double the floor space, halve the rent, and then we'll talk.

Update: The building has been sold for $107.5 million CAD, over their projected $100 million mark. No details were provided on the term of the lease / cost of the lease, etc., which would impact the overall value of the deal.

That's quite a flip.

 

... We are all in the wrong business. =_=

> $65,000,000 profit in 14 months.  Wow.

Maybe they are leasing at triple rate using the building as a credit line ;)

No, not 65 million because they had fairly extensive (tens of millions) in upgrade / build-out costs.

Also, this all in CAD, so 107.5 CAD is 78.5 USD.

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