A Case Study in Unlocking Commercial Property Value – Bowmanville Plaza

A Case Study in Unlocking Commercial Property Value – Bowmanville Plaza

Posted on: April 22, 2016

At MSR Holdings, we acquire commercial real estate investment properties where we can unlock significant value and which are poised to benefit from economic recovery. Our investors benefit from both immediate cash flow and an increase in capital appreciation.

While we expect capital appreciation to occur over time, there are several methods by which we actively unlock an investment property’s hidden value. Doing so is central to our investment philosophy.

Project Bowmanville started with the acquisition of a commercial plaza in Bowmanville, Ontario. Post Project and at de-acquisition, we were able to unlock its potential value and generate significant ROI for our investors over a 6 year span.

The Opportunity

BowmanvilleBowmanville Plaza was a fully leased commercial plaza in the busy Greater Toronto Area in Ontario, Canada.

Through our due diligence process, we determined this property offered three major opportunities to achieve a high ROI for our investors:

  1. The Cap Rate on purchase was 10%, which we knew would fall due to our analysis of the current market situation.

How does Cap Rate affect the value of commercial real estate? Watch our explanatory video for a detailed explanation.

  1. Upgrading the current tenant class would increase the value of the asset.
  2. The plaza was located in an area that was poised for growth.

Having met our investment criteria and showing potential for exceptional returns, we purchased Bowmanville Plaza for our investors in November 2009.

The Process

Our immediate focus was to bring in higher paying tenants, which we implemented as the property’s leases came up for renewal or ended.

We achieved significant profit through the complementary factors of:

  • Decreasing Cap Rate over time
  • Increase in rents
  • Profits from net operating income
  • Mortgage pay down

The Result

The decreasing Cap Rate coupled with higher paying tenants added over $381,000 to the value of the plaza.

Over the 6 year period during which we held the property, it increased in value by 45% and our investors realized a 205% ROI.

  • Original investment: $325,125
  • Total return: $666,302
  • Annual ROI: 34%

Through our proven approach to commercial real estate investment, we are able to unlock the potential of investment properties like the Bowmanville Plaza, and in turn, increase their value to achieve exceptional returns for our investors.

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MSR Holdings Inc. acquires exclusive commercial real estate investment opportunities in the U.S. and Canada, currently focusing on Orlando, Florida. Contact us today to discuss becoming one of our select investors.

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