Hong Kong – A property transaction in the US could leave flexible foamer Sinomax $6m better off. The money will fund working capital.
Sinomax owns Sinomax East, which plans to buy, sell and lease back the land in LaVergne, Tennessee. This where the company's US factory is located.
Currently Sinomax East leases 505,000 sq ft (4.7 ha) of land in LaVergne. The lease enables it to buy the land at its value when the lease was agreed. Sinomax East plans to pay its current landlord $20.8m in cash for the land.
Sinomax filed details of the transaction with the Hong Kong stock exchange. This explains that the purchase price 'is considerably below the prevailing market price of comparable properties in the vicinity.'
Sinomax will then sell the land for $33m, to another, unnamed property investment company based in Delaware. According to the filing, Sinomax does not believe any of its shareholders are involved in the purchasing company.
After accounting for the cost of the lease back agreement, Sinomax expects to make around $6m on the transaction.
Sinomax has agreed to lease back the land for 10 years at $3.384/sq ft/year. This is $1.7m/year for the whole site. The lease agreement foresees that the rent will increase by 2.5%/year.