We are pleased to report that we have sold 538 St. Clair Ave. West and the transaction is scheduled to close on August 18th, 2022. The asset was sold for $13,025,000 plus a density bonus. We paid $4.5MM for this site in 2019. We believe that the density bonus holds significant value especially in the hands of our buyer who is exceptionally skilled at zoning land. The density bonus payment is to be made 30 days after final site plan approval (which will probably take about 1.5 to 2 years) and is to be secured by a charge against the property. We anticipate that the purchaser will submit its initial zoning application close to the closing date of our sale.
This sale was concluded on a base case of a 28-storey development. Before the Pandemic, our professional consultants advised us that this site permitted about 15 storeys as of right and that a 17-storey development would most likely meet approval. Our blue-sky target value at the time was about $10MM. The ground shifted over the past two years with Ontario Provincial government initiatives pushing the City to fast track and significantly increase density approval for building sites near major transit hubs such as ours. Our purchaser intends to apply for 34 or 35 storeys. We will continue to assist the developer through the relationship we have fostered with the real estate arm of the Archdiocese of Toronto who own the St. Alphonsus Catholic Church on the West side of our building. By negotiating a reduction to the setback between the new building and the existing Church heritage asset, we can significantly improve the floor plate size of the new development and add significant value for our partnership through our density bonus agreement.
After closing, we intend to retire the total debt of $6.3MM in this fund, make a distribution to catch up your cumulative priority return and to return a portion of your capital. Details will follow shortly after closing. In the face of current economic headwinds, we are pleased to have successfully sold this asset at top dollar while continuing to participate in any future potential upside through the density bonus agreement.
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