Update 10/14/16 – Gunpowder Capital has acquired its first self-storage property for $299,000. The fully automated facility in Madoc, Ontario, was purchased through the company’s subsidiary, GP Self Storage. Automation tools are available to handle unit reservations, payments, access to the property and security, according to a press release.
GP is pursuing other self-storage facilities that offer opportunities for the automated platform, the release stated. After conducting due diligence, the company decided not to pursue the second storage property it had intended to acquire.
"We are very pleased to have completed our first self-storage acquisition,” Haber said. “This acquisition complements our recent real estate purchase and provides hard assets and consistent cash flow against our merchant banking business, which can be more cyclical in nature. We continue to look at expanding both of these operations as well as additional business lines that may benefit our stakeholders."
The Madoc transaction included $150,000 in cash, with the remaining balance on a 15-year loan with a 4.1 percent interest rate. The facility is currently generating $33,000 in annual revenue, according to the release.
7/6/16 – Gunpowder Capital Corp., a Toronto-based merchant bank and advisory firm, has formed GP Self Storage Inc. as a division to pursue interests in self-storage. The company has also signed separate purchase agreements to acquire two storage facilities in Ontario, Canada. Gunpowder is still negotiating the financing but has made a refundable deposit of $30,000 toward the properties, according to a press release. The deals are expected to close within the next 45 days.
"We are very pleased to have entered into the agreements to acquire these facilities. As I've previously stated, the corporation strongly believes that real estate provides an excellent long-term investment to its shareholders,” said Paul Haber, chief financial officer. “Unaudited net income for both facilities is currently $59,000 per annum, and the combined return on investment is 8.4 percent, which we feel in these market conditions is a very strong ROI.”
Gunpowder believes it can improve the profitability of the two facilities through renovations and improvements to management, Haber added.
The formation of the self-storage division comes on the heels of launching GP Realty Inc., a division created to pursue interests in other forms of real estate. Gunpowder is in the process of acquiring a residential property in London, Ontario.
Based on their initial acquisition targets, the new divisions are expected to generate $110,000 per year in gross revenue, the release stated. “The business-development team continues to be 'sector agnostic,' and continues to source business-acquisition opportunities that will generate immediate revenue and ROI," said Frank Kordy, interim CEO.
In conjunction with the launch of the self-storage division, the company’s board of directors declared a dividend of $0.20 per outstanding Series A Preferred shares. The dividend is payable on Aug. 6 to shareholders of record on June 30.
Gunpowder Capital invests in private and publicly traded businesses. Listed on the Canadian Securities Exchange, the company also offers financial and executive-level support services.