Over the past 5-years, Hannover House has paid over $212,000 in cumulative "rent" (lease) payments for the principal office / warehouse property in Springdale, AR. This size and quality of property could have been purchased for about $150,000, instead of leased on a monthly basis.
HHSE management are considering the benefits of purchasing a property in N.W. Arkansas for our primary location and distribution center space (about 8,500 sq. feet). We would like some shareholder feedback as to whether or not there is a consensus that it's better to BUY the facility, or to continue RENTING and paying each month to a third party?
From a cash flow standpoint, with a 20% down payment on a $150,000 property (and a 15 year note at 7%), the monthly payments would be about $1,097... which is about 1/3 the amount we're already paying out each month in "rent."
Timing wise, such a move would likely need to be delayed until September, as the VODWIZ consumer launch, the Cannes Film Festival and the principal photography of "Legend of Belle Starr" this summer all take priority. The managerial distraction of a major move - even just "down the street" would be an unnecessary distraction until the fall season is underway. But the idea of not "burning" rent every month, but instead "building equity" is worth considering...
Send your thoughts on this subject to: Leigha@HannoverHouse.com
