Aurora Cannabis plans to unload one of the largest and most expensive greenhouses used to grow cannabis in history, but any potential buyer may be busy to get more spending so that the project can be successfully completed.
According to publicly available promotional materials, Aurora has invested 260 million Canadian dollars (205 million US dollars) “all-inclusive” into the 1.7 million square foot complex in Medicine Hat, Alberta, where the company will headquarter Colliers International, located in Toronto, is listed as a financial advisor and the listing agent for partially completed real estate.
However, if the purchaser completes the original use of the greenhouse (“as a state-of-the-art medical-grade greenhouse facility”), it may require millions of dollars in additional expenditure, and if it is completed for non-cannabis use, it may require less expenditure .
The listing is the latest example of the large-scale withdrawal of Canada’s largest producer from large-scale cannabis greenhouses in the past year, and the producer has greatly exceeded the arable land space between 2017 and 2019.
According to the “Cannabis Business Daily” report, many of these greenhouse projects, whether built through mergers and acquisitions or completed through mergers and acquisitions, eventually caused Canadian licensed producers to directly suffer a total of millions of dollars in real estate losses and accrued billions of dollars. The inventory write-down.
The address on the Alberta Greenhouse brochure matches the address used by the Aurora Sun structure.
MJBizDaily learned that Aurora effectively terminated the use of the Aurora Sun greenhouse last year, and it is bringing the property to the market without the “discovery price” problem of asking prices. This will help determine asset prices in volatile markets.
According to the brochure, “target completion” is listed as the end of the second quarter to the beginning of the third quarter of this year.
The move comes one year after Aurora accepted its offer for a large greenhouse in Exeter, Ontario, and the bid is about half of its C$17 million listing price and one-third of the original purchase price.
In an email statement to MJBizDaily, a spokesperson noted that Aurora “continuously reviews the company’s operating network to ensure that it is suitable for our current and short-term business.”
The statement continued: “In response to the latest changes in the industry and our strategic requirements, the company announced that it will indefinitely suspend operations at Aurora Sun in Medicine Hat, Alberta.”
“We are actively promoting alternative uses of the facility. There is no more detailed information at this time because the process is still in its early stages.”
For sale is a 1.4 million square foot main building and a 285,000 square foot auxiliary building.
According to the brochure, the seller (Aurora in this case) is “open to a wide range of potential transaction structures and forms of consideration to maximize value.”
“This will include, but is not limited to, the direct sale of one or two buildings in cash or other forms of consideration; the sale of part of the equity to a partner; or the lease of a complex.”
Although a lot of money has been invested, Medicine Hat’s greenhouse is still unfinished.
“Additional capital expenditure is required to complete the facility, but the cost will be determined by the buyer’s intended use,” Colliers International managing director Matt Rachiele told MJBizDaily via email.
“We have received very preliminary guidance from the engineers. So far, the cost of completing all facilities for certain non-marijuana uses may be far less than 10% of the expenditure, but to exceed its original intended purpose, it must spend a lot of money.”
Rachiele said that six of the 37 bays of the main building have been completed and the other six have been partially completed.
The promotional document said: “Although it was originally intended to be completed as an advanced medical-grade greenhouse facility, the building and related equipment can easily be used for a wider range of potential uses.”
Matt Lamers is the international editor of Cannabis Business Daily, based near Toronto. You can contact him via [Email Protection].
I hope someone will delve into why the size of the Canadian cannabis market is so overestimated. Can illegal (unlicensed) growth or excessive taxation explain some of the problems?
I would love to see Canada export cannabis to Illinois. The greedy parasites there charge a lot and profit from their customers. They lack ethics or business ethics. Creatures like this should be imprisoned.
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Post time: Mar-25-2021