Shannondale Developments: The Shanley Street Decision

In 2019, Shannondale Developments looked at purchasing the former industrial factory at 152 Shanley Street in Kitchener, Ontario. Nic Tyers, one of the co-owners of Shannondale and Ian Pinchin, the development manager, saw an opportunity and developed an Agreement of Purchase and Sale (APS), working through many challenges to ultimately secure the purchase. The case outlines the situation leading up to the decision to acquire the property and the many challenges they faced as they went through the potential acquisition process. The case challenges students to try to understand the numbers behind the purchase of this environmentally challenged site and to use them to make the decision whether to purchase it.

After working through the case and completing the assignment questions, students should be able to conduct the following tasks:<ul><li>Gain insight into the complexities of purchasing a brownfield property. Each brownfield situation is unique in terms of its level of contamination, market supply and demand, physical geography, and the political jurisdiction in which it is located, but all brownfields are all more complicated than clean properties. No case can highlight all of the possible issues, but this case considers the nature and costs of the cleanup, the governmental processes required, the risks associated, and the potential market returns of buying properties that are shunned by other purchasers.</li><li>Aside from the brownfield issues, this case requires a relatively detailed discounted cash flow analysis, making projections well into the future beyond the clean-up and construction periods, into market predictions for revenue and expenses and exit cap rates, to come to net present value (NPV) and internal rate of return (IRR) projections.</li><li>This case also gets into some more nuanced issues involved in purchasing commercial real estate, such as the conditions in an APS, uncooperative vendors, unresolved liens, escrow accounts on closing, and government development incentives (both for brownfield sites and otherwise).</li></ul>

• Real Estate
• Development
• Multi-family
• Brownfield
• Remediation