Dooma Wendschuh Founders Update August 18, 2017
Sorry… long update this week. Although it was another insanely busy week at Province, two events stood out for me:
Firstly, while negotiations are ongoing for the facility we looked at in Brantford, we toured a facility in St. Mary which was fully half the price per square foot of the cheapest other facility we’ve looked at. It would be something we would share with our prospective LP partner. The building was just under contract but fell out due to issues with the buyer. It is larger than Province and our prospective LP partner collectively need and has two tenants; one locked in until 2019, the other until 2021. Collectively they pay about $1,000,000 per year and there is a chance to slightly raise their rent in the lease agreements. The price is $9 Million but could be lower. The owner is looking to sell quickly. Of course we don’t want to buy a building, at least not with the funds we’ve raised to date, but we’ve met a few investors who might buy it and lease to us, or buy it for us with a lease-to-own option and an equity kicker. My wife, who as many of you know is pretty involved in the Canadian Real estate business thinks that since this is such a steal, and with the building fully rented, finding a buyer should be pretty easy.
Secondly, we have been having some trouble with one of our outsource partners. It’s not a huge deal and we can continue our R&D program with them, but these issues are slowing down our progress. With some of our new hires, we now have the skill set to move the R&D they are doing for us in-house. We just don’t have a sufficiently sized space with appropriate power in which to set up the equipment. Also, while we have aggressively been looking for a location for our brewery, our plan was to move into it very slowly over the next 3 years and to have an arrangement with our LP partner such that we only paid for space we were actually using. So for example, for the first 6 months or so we were planning to only pay rent on about 2,000 SF. If we move this aspect of the R&D in-house, we’d need to immediately take down about 12,000 SF and bear additional CAPEX. However, if we were able to lock in a location and in-house this aspect of R&D, we would be able to bring certain products to market quicker and realize greater upside.
We’re doing a cost benefit analysis, but it’s a big decision and would love feedback and folks to bounce ideas off of. I realize most of you won’t have seen this update by then, but on Monday August 21, we will hold a call with Province Founders, our R&D team, and members of our Advisory Board to collect feedback on the best way to move forward. If anyone has ideas or wants to jump on the phone and hear what we’re thinking, or give feedback, please reach out to me at any time.