The acquisition of the site, on Church Street at Dundas Street East, raised a few eyebrows not because of the price itself, $73 million, but for how much the value had escalated in four years since it had been purchased by Couche-Tard as part of a portfolio acquisition. It had been valued at about $4 million during the portfolio purchase.

Graywood raised $100 million from Canadian financial institutions, pension plans, family offices and high-net-worth individuals for Graywood Fund IX Limited Partnership. That’s on top of the $495 million raised through the company’s first eight funds.

“That amount of equity has been stretched quite a bit further through partnering with other folks,” Graywood president and chief executive officer Stephen Price told RENX.

241 Church St. acquisition

The Church Street property is the current home of an Esso gas station and Circle K variety store at 241 Church St., at the northeast corner of Dundas. The current use of the property is a key factor in the valuation when it was acquired in 2016 compared to today.

“Whenever you buy a large portfolio of assets, there’s an allocation of value for accounting purposes that’s driven by more factors than just the inherent value of any one parcel,” Price explained. “Effectively, they were buying it as an operating business and the vendor was selling it as an operating business, not as a development site.”

Fast forward four years to Couche-Tard’s sale of the site.

“There wasn’t a valuation based on development density, which is the normal course for acquiring development land in any city. Our valuation was quite an attractive value relative to other competing sites and in fact we were able, as a result of the uncertainty in the market, to negotiate a more favourable price from the original price that we had tied the site up at.

“So on first glance it may appear to be a significant appreciation in value, and it certainly would be a significant appreciation in book value on the part of the vendor. But in the context of who they bought it from, how they bought it and what they were buying, it was not a development site but an operating gas station site.

“That explains the difference.”