Purchase Agreement Signed; Due Diligence Period To Begin
A purchase agreement was signed by both parties on Friday, May 13, 2022. As of May 16 the due diligence materials have not yet been received from the seller, so the 60-day due diligence period has not yet begun. Due diligence will include:
● Inspections of environmental conditions, soil, well, septic, and other systems
● The likelihood of receiving required permits
● Verifying that any existing infrastructure supports our needs with the potential for appropriate expansion
● A beginning design concept and working punch list of development steps with estimated costs
● An understanding of the impact this will have on current staff workload and its potential impact on executing our current program plan
● An understanding of support from the local community
A group of board members, staff, and 10 guests with deep ties to MBOTMA toured the property on Saturday, May 14.
The property address is 23315 Beroun Crossing Road, Hinckley, MN 55037 – between Pine City and Hinckley. The property is a former dairy farm. 159 acres, approximately two-thirds open and one-third wooded.
A site visit opportunity will be set up for MBOTMA members. Apart from that event, please do not go on the property. If you want to view the property from the road, please note that GPS may misdirect you. Follow these directions:
● I-35 to the Hwy 14 / Beroun exit between Pine City and Hinckley
● Turn east on Hwy 14, which is Beroun Crossing Road
● Continue straight for approximately 2 miles. Go through the intersection at Cross Lake Road, then the property is on the left.
● Purchase price: $1 million
● Earnest money: $20,000
● Down payment anticipated: $200,000
● Mortgage terms: We have provided financial information to two bankers. Now that the purchase agreement is signed, we can begin discussions about available interest rates and terms. Running various scenarios, financing between $800,000-$875,000, at 4.5%-5%, over 30 years, the annual mortgage payments would be in the neighborhood of $49,000-$56,500 per year. We have used $60,000 in the cash flow projection to be conservative.
● The bank will conduct their own appraisal of the property to determine fair market value, and will require 20% down payment. At a purchase price of $1,000,000, the down payment is $200,000, which we have in the bank, thanks to the efforts of our Executive Director and Events Manager in securing the Shuttered Venue Grant.
● There are many opportunities to generate revenue with this property. Current rental opportunities on the property, plus applying the rent we currently pay to ERM starting year 3, mostly covers the mortgage on this property. Holding smaller events, until the land is ready for our largest, will help fund improvements, along with an aggressive capital campaign made up of many sources.
More details, including photos of the property and a 5-year cash flow projection, can be seen in the presentation. (Please note that the aerial photo showing details of the buildings includes a house that is no longer present on the site.)