4M per year in revenue @14% operating margin (last qtr results annualized) Property in Canada has an option for the tenant to buyout @10M in 2022..and we know inflation and property values have increased above avg most recently...so no reason to think it is worth less than in the buyout option
That being said...this CEO will figure out a way to keep this in trips ...I have faith in him
To help flesh out the Canadian property valuation. Looks like the CEO, per the Q3 press release" plans to structure the Canadian property the same as ARIA. Both will be "off balance sheet" structures. To me that pretty much means business as usual, real "investors" own the assets and earnings while traders of this stock pay for the debt and expenses. The coming deal is likely intended to move from the mortgage that needs to be dealt with to investors. Wouldn't surprise me if they spin it in a press release before the end of the year and a new batch of PR chasers gobble up the dilutive shares once the table is set.
The $10 million figure is the maximum stated if the current tenant wanted to exercise the purchase option. The 5 year lease ends in February with an option to extend up to 3 more 5 year terms. The net operating earnings from the leased property is actually more than that for ARIA. Yes, they make more from that leased property than from the much ballyhooed ARIA deal this past quarter.
That facility is mortgaged and according to the latest quarterly and the $3.8 million mortgage is due in the next 12 months.
Leonite was given $700K in Series “A” Redeemable Preferred shares of CCH, Cranberry Cove Holdings, Ltd. They receive an annual 10% dividend.
Again, traders need to keep in mind that Ethema (GRST) is a self described “investment holding” company with 2 employees. The ownership details across the board for this company is very difficult to unwind and impossible without looking at multiple filings. One thing that is certain in every deal is that debt and expenses are what the virtual share printing press if for.
Greenestone Muskoka Treatment Facility The Greenestone Muskoka Treatment Facility is located in Bala, Ontario at 3571 Highway 169. The property is 43 acres in size and contains approximately 48,000 square feet of buildings. The property is owned by Ethema’s wholly owned Canadian subsidiary CCH and has been leased to the new owner of the Muskoka Clinic for a term of five years, which ends on February 28, 2022. The Lease gives the tenant an option to extend for three additional five (5) year terms, an option to purchase the property at any time for a purchase price of $7,000,000 in the first thirty six (36) months of the term and thereafter at a purchase price increased by $1,500,000 for each successive year up to a maximum of $10,000,000, and a right of first refusal in the event of a sale to a third party.
On July 19, 2017, CCH, a wholly owned subsidiary, closed on a loan agreement in the principal amount of CDN$5,500,000. The loan is secured by a first mortgage on the premises owned by CCH located at 3571 Muskoka Road 169, Bala, Ontario. The loan bears interest at the fixed rate of 4.2% with a 5-year primary term and a 25-year amortization. The Company has guaranteed the loan and the Company’s chief executive officer and controlling shareholder also has personally guaranteed the Loan. CCH and the Company have granted the Lender a general security interest in its assets to secure repayment of the Loan. The loan is amortized with monthly installments of CDN $29,531.
On July 12, 2020, the company entered into a debt extinguishment agreement with Leonite whereby the following occurred:
1. The total amount outstanding under the note, including principal and interest was reduced to $150,000
2. $700,000 of the note was converted into Series A Redeemable Preferred shares in the Company’s subsidiary, Cranberry Cove Holdings, accruing dividends at 10% per annum.
"…The Company has also made the decision to move forward with the purchase of the property at 950 Evernia Street, West Palm Beach, Florida. The purchase will be an off-balance sheet structure whereby the Company will be the General Partner in a limited partnership which will use debt and equity from Limited partners as the structure to own the property. This will eliminate the need to raise equity in Ethema directly and as the General Partner, Ethema will still benefit from the ownership of the property. Ethema also plans to implement the same structure for its Canadian property which will also improve the Balance sheet. The U.S. limited partnership will be raising $1,500,000 in equity and the Canadian limited partnership will be raising CDN$1,500,000 in equity. Investors interested in participating in the offering may contact the Company CEO for investment disclosure documents. The Company will also be making these disclosures available on its website. … " …
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