RE:Re: DownsviewIf Bombardier needs fast cash...it should just learn how to sell some planes and trains...profitably!!
The fire at Bombardier has been extinguished…no need for any more fire sales of the company or its assets. Downsview for less than $1 billion would be another fire sale. Real estate assets have saved many companies from bankruptcy. In regards to Bombardier's Downsview real estate situation, the property is worth considerable more than $1 billion. Also, Bombardier retaining a 50% partnership (combined with Caisse as the financing partner) would be a very good "side hustle" that would generater real estate revenues for Bombardier in perpetuity. Yes, the street expects Bombardier to leave money on the table because there are serious issues at Bombardier regarding governance, share class structure etc. These issues need to be resolved quickly…or people like you will continue pushing for the incineration of Bombardier as a company. bbdbinvestor145 wrote: JMHO.
There are many opinions here on this site as to what the Bomber should do with Downsview.
But the only opinion that matters is that of Bombardier.
I think Bombardier wants to sell it outright to a developer to rezone and build it.
Opinion:
i)I like the developer/builder JV to maximize profit.
ii)I like the outright sale for quick cash.
Both of these ideas are sound. But they carry timing decissions.Time is a fickle thing. The time for the JV would the longest, but the most profitable, and the riskiest. The outright sale is cash right now, upon closing. It may be a lot less than the JV but it’s immediate.
There was a third option for the Bomber.
They could have started the development process a year to 2 years ago and right now things would have been a lot clearer. They could have applied to get a residential development on the site to the city of Toronto a couple of years back when they knew they wanted to move the Q and Global operations out. Residential is the best use for this site.
What this application would have done is. It would have given the land greater value since the risk would have been taken of the land the buyer. If the Bomber was smart enough to have started this process already. They would have made $2 billion selling it outright today. Whereas now the best they could hope for is $1 billion for an outright sale. They could have even done better if they took it a step further in the development process. But they’re not developers so I wouldn’t recommend it. Just rezoning to residential or bringing the land closer to rezoning by the application to rezone, would have given the land greater value to a builder/developers in the city.
Now my only suggestion is to take the money and run.
Why?
Because they’ll find someone in the city to buy it for a good price, and Bombardier has it's money now. The city needs residential land. What Bombardier should do now on the sale is take a mortgage back on this size sale , so they could maximize the profit. By doing this, they would sell it for much higher and they would get their money in two payments 2 years apart. This is good because we all know the Bomber can’t manage money well. By taking a mortgage back they would also get 4-5% interest on it , and they would facilitate a faster sale because the developers /builders won’t have a hard time financing a deal of such magnitude.
Cheers
145