No Cash Acquisitions

We had an excellent large asset offered for sale. Owned by a successful non-profit, it had everything for the discriminating buyer: excellent dining facilities, beautiful well-appointed motel rooms, cabins, and a land-lease section with privately owned homes and cottages, all on a beautiful long beach. Pride of ownership was written all over it. The project was owned free and clear and enjoyed two separate registered titles.

Potential buyers were impressed, except for one or both of two things: the location sat just outside comfortable driving range, and few buyers had the financial ability to take on such a project.

What to do?

It was determined that the seller had both the tools and the motivation to think outside the box and act as the catalyst for a transaction that would benefit everyone.

The ultimate buyer

Through the meet-and-greet process, we determined that one particular buyer fit the profile of an entity that could benefit greatly from owning this asset. They needed the facility immediately. They had absolutely no cash. They owned a property in another jurisdiction that had suffered extensive fire damage and was now effectively vacant land, with the insurance proceeds already absorbed. And they had recently negotiated a sale agreement for that vacant land, for cash, with a closing date far in the future.

The transaction

We pieced together a transaction along these lines: approximately 70 percent as a seller take-back mortgage, and approximately 30 percent taken as an exchange of the buyer's vacant land, with the ultimate purchase agreement assigned.

The seller converted a hard-to-sell property into income and a closing. The buyer acquired the facility it needed with no cash. Everyone received a benefit they could not have reached waiting for a conventional deal.