I have to admit to being a bit unimpressed by this deal. The...

I have to admit to being a bit unimpressed by this deal.
The $1.7m starting lease payments reflect an 8.5% cap rate on the $20m consideration.

A sale figure between $25m and $28m was my initial expectation when the idea was first announced earlier this year.

I guess the relatively muted price they received reflects the fact that there weren't too many natural buyers of this particular property (where I sense the nature of the buildings and structures do not provide much in the way of flexibility for different tenancy arrangements, outside of MCE).

Still, the deal provides much-needed funds to invest in working capital when and if the demand for MCE's products and services recover.

But, as stated before, I don't want to be holding the baby when the next downturn eventuates.

Because this company can't even turn a profit at the bottom of the current cycle, at a time when it is its own landlord. So I shudder to think what the financials will look like when the business has to absorb an additional rental impost as well.

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