Fresh off its recognition as a TSX Venture 50 winner for 2015, Vancouver-based Parkit Enterprise Inc. has set out to supercharge its growth south of the border with a joint venture and planned institution financing deal of about $150 million US.
Parkit, headed by aviation industry vet and chief executive officer Rick Baxter, already owns two parking lot properties in the United States and expects that it can grow quickly in what today can be characterized as a fragmented industry dominated by small operators.
“Right now we have two assets, one in Denver and the other in Oakland – the value of those is close to $60 million,” said Baxter. “But we want to grow out in a larger joint venture about a $500-million platform and that is where the upside capital appreciation will be.”
The Vancouver company expects the equity deal to raise the $150 million will attract U.S. institutional investors that specialize in alternative investments such as parking.
The Parkit CEO expects the company can reach the $500-million mark in “three to five years, depending on the size of the acquisitions that we make and what we are seeing once we are going into deployment mode.”
The fall of the loonie against the U.S. dollar should not be a factor with regard to the financing deal and in fact could prove a major boon to Parkit’s Canadian shareholders, Baxter said.
“We are meeting with U.S. capital pools so luckily we are going to be deploying U.S. capital. All the distributions are coming out of our current assets are U.S. dollars, so that has been a big win for our investors.”
Parkit sees the opportunity the fragmented airport parking business represents, but realized early in its existence it needed a domestic partner for the venture to make sense when it came to identifying potential acquisitions.
Last year, it struck a deal with U.S. parking lot operator Propark America to create a parking acquisition entity, Parking Real Estate, LLC. Through that company, the two firms secured their first deal: a 14-acre off-airport facility at the Oakland International Airport.
“It is definitely a fragmented industry, so those relationships are important,” said Baxter. “Knowing the industry and being in the industry is important so that is why we have partnered with experts in that field.”
Baxter was brought on by initial investors in what became Parkit. He has an airline industry background, having run an commuter aviation business for most of his career in British Columbia.
“It is all about yield and occupancy (in airlines) which is what we are driving in the parking sector as well.
“I have been learning about parking, really enjoying it. All of these assets that we are buying are small, little operating businesses which I really enjoy learning about.”
From the early days, Baxter worked with Propark executives to learn the business and assembled a management team with investment and real estate backgrounds.
The group includes:
* Patrick Bonney, vice-president of corporate development (most recently co-founder and CIO of two private equity real estate platforms in Tokyo);
* Chief financial officer Simon Buckett (most recently VP of finance at Wurldtech Security Technologies Inc.);
* Director Robert Emri (also president of Vancouver real estate investment firm Emri Group);
* Director Pace Goldman (a Bay Street investment industry vet who has raised in excess of $1 billion of new equity capital for more than 20 publicly traded real estate companies, according to Parkit);
* and Joel Dumaresq, director, another longtime investment industry player who is also executive chairman and CFO of TSX-V listed Taipan Resources, Inc.
Assets and accolades
In September, Parkit acquired Expresso Airport Parking in Oakland for US$18.6 million, giving it a capitalization rate of 8.9 per cent on trailing 12-month net operating income of US$1.65 million. That deal was funded with a new US$13.2 million first mortgage.
The fixed-rate loan bears interest at 5.4%, amortizes over 30 years and matures in 2019. US$5 million debt financing announced on Sept. 5, and US$400,000 in cash completed the transaction.
Parkit and Propark also jointly built and operate Canopy Airport Parking, a 46-acre parking facility five miles from Denver International Airport. It boasts 4,200 stalls of premium indoor valet, canopy-style covered, and open surface parking, 14 biodiesel and CNG shuttle buses and is powered using advanced sustainable energy technologies including solar, geothermal, and wind power with LEED Gold certification.
Parkit placed third in the Diversified Industries category on the TSX Venture 50 for 2015.
The TSX Venture 50 is an annual ranking of the top 10 companies listed on the TSX Venture Exchange, in each of five major industry sectors (Mining; Oil & Gas; Technology and Life Sciences; Diversified Industries; and Clean Technology) determined by equal weighting of the following measures: market capitalization growth, share price appreciation, trading volume and analyst coverage.