Aurora Cannabis wants to sell one of the largest and most expensive greenhouses ever built for growing marijuana, but a potential buyer may face additional costs to complete the project.
The company has not set a price, but rather offers entertaining deals.
Aurora has invested a total of 260 million Canadian dollars ($205 million) in a massive 1.7 million square foot complex in Medicine Hat, Alberta. This is evident from publicly available promotional materials, which list Toronto-based Colliers International as the financial advisor and listing agent for the partially completed property.
However, the additional cost could be several million dollars if the buyer completes the greenhouse for its original purpose – a modern greenhouse for medical purposes – and perhaps less if it is completed for non-cannabis use.
The list is the latest example of large Canadian producers’ widespread retreat from massive cannabis greenhouses last year, which grossly overspent on grow space between 2017 and 2019.
Many of these greenhouse projects, whether built or acquired through mergers and acquisitions, have resulted in millions of dollars in direct property losses for licensed Canadian growers and billions of dollars in inventory write-offs, reports Marijuana Business Daily.
The Alberta Greenhouse promotional brochure address is the same as the Aurora Sun structure.
Aurora, which effectively closed Aurora Sun Greenhouses last year, is putting the property on the market without the opening demand price, MJBizDaily has learned. Such a movement is used to determine the price of an asset in a volatile market.
Aurora looks for a quick takedown.
As described in the brochure, the targeted closing is late in the second or early in the third quarter of this year.
Aurora’s test procedures
The decision came nearly a year after Aurora accepted a bid to buy a large greenhouse in Exeter, Ont. for about half of the C$17 million and a third of the original purchase price.
In a statement emailed to MJBizDaily, the spokesperson said Aurora is continuously and thoroughly evaluating the company’s corporate network to ensure it is suitable for our business now and in the near future.
In response to recent changes in the industry and our strategic commitments, the company has announced that it will indefinitely cease operations at Aurora Sun in Medicine Hat, Alberta, according to the press release.
We actively promote the installation of alternative uses. No further details are available at this time as this process is still in its early stages.
The main 1.4 million square foot building and a 285,000 square foot addition are for sale.
The structures are located on 72 acres.
Multiple call options
According to the brochure, the seller – in this case Aurora – is open to a wide range of possible transaction structures and forms of quid pro quo to maximize value.
This includes, but is not limited to, the complete sale of one or both buildings for cash or other consideration, the sale of a portion of the interest to a partner, or the lease of the complex.
The Medical Hat greenhouse is still unfinished, although considerable capital has already been invested in the project.
The facility will require additional investment to complete, but that amount will be determined by the intended buyers, Matt Rachiele, managing director of Colliers, told MJBizDaily via email.
We have received a very preliminary indication from the engineer that the completion of the entire facility will be less than 10% of the total cost of the work for some non-cannabis uses, but more than the original intent would have been for some non-cannabis uses.
Six of the 37 bays in the main building are complete, and six others are partially completed, Rachiele said.
Although the building and associated equipment were originally intended as a state-of-the-art greenhouse for medical purposes, they could easily be used for a much wider range of possible applications, according to the grant document.
Matt Lamers is the international editor of Marijuana Business Daily in the Toronto area. He can be contacted at [email protected].
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