We didn't see borders. We saw an opportunity to demonstrate our collaboration across regions.
|
Location (City) |
Asset Type |
Transaction Date |
Size (Sqm) |
Value (USD) |
|
Nanaimo |
Retail (Regional shopping centre) | September 2020 | approx. 68,800 | $150 million |
Services provided:
- Colliers Asia: Acquisition
- Colliers Canada: Divestment
Buyer: Central Walk (Barbados) Holding Ltd
Seller: Ivanhoe Cambridge
The Challenge
- Pricing and commercial terms
- Financing structure
- COVID-19 related disruption
An example of an international cross-border acquisition which was complicated by cultural differences in business practices. This created a wide gap between the vendor and acquirer in terms of price negotiation, communication, and contract provisions.
The original deal, which encompassed two malls, was agreed in late February 2020 , but collapsed following the outbreak of COVID-19 in mid-March. Commercial banks in Canada stopped all discussion of debt financing for the acquisition.
As a result of the disruption and uncertainty created by COVID-19, the acquirer considered withdrawing from the deal.
The Strategy
Seamless collaboration between Colliers International offices.
The Colliers Hong Kong and Vancouver offices worked seamlessly to overcome the inertia in the entire transaction process. The key strategy was to dilute conceptual differences by highlighting neutral international practices to ensure fairness and equitability for both vendor and acquirer.
Additionally, Colliers worked to structure different financing solutions, including trust financing and full equity payment, to overcome the lack of debt financing available.
The Solution
Colliers proposed:
- The acquirer to first procure one mall with its own equity, which made part of the deal happen; and
- Re-negotiating commercial terms to reflect the disruption to rental income due to COVID-19.
Colliers employed a divide-and-rule approach by negotiating with each party separately, as opposed to direct negotiations. This allowed both sides more space and time to consider options.
The Result
The acquirer successfully procured one mall out of two in the original deal, securing a discount from the price originally agreed.
The vendor achieved its objective of divesting an asset that it had the mandate and timeline pressure to exit.
The transaction is a significant case study of collaboration between two Colliers offices in separate regions, represented by Dominic Chung from Colliers Hong Kong and Morgan Dyer from Colliers Canada.
Connect with our Capital Markets and Investment Services experts today to find out how you can maximise the potential of your next real estate investment.
Read more of our client success stories and case studies here.
