October 28, 2007

DirectSites, Inc Purchases Office Building

DirectSites and GiftCards.com
DirectSites Inc., owner of GiftCards.com LCC , has purchased the Carpenters Council office building at 495 Mansfield Ave. for $1.2 million, according to records filed with the Allegheny County property records. While the exact detail of the transaction is not available to us to analyze thoroughly, we can safely assume that DirectSites is experiencing strong organic growth in order to obtain financing for or to purchase a $1 million property out right. The 19,200 square foot office building is located in Green Tree, Pennsylvania and sold for roughly $63 per square foot, which is a substantial sum.

On DirectSite’s website, they proclaim that they are self funded and profitable. We assume profitable enough to purchase a $1.05 million building. Granted GiftCards.com is just one segment of DirectSites’ business operations. A quick examination of GiftCards.com reveals that they sell Visa debit gift cards issued by First Gulf Bank. As with most bank prepaid gift cards, there are numerous fees associated with. The fees associated with GiftCards.com Visa gift card are as follows:

  • $4.95-$6.95 to purchase gift card includes USPS shipping.
  • $2.50 monthly maintenance fee at the first six months.
  • $0.35 per purchase transaction or balance inquiry.
  • $5.00 to replace lost or stolen card.
  • $7.00 to cash out remaining balance on expired gift cards, if balance is $25 or less.
  • 3% of amount for foreign transactions plus $2.00 flat fee per transaction.

In addition, specifically designated GiftCards.com gift cards with Cirrus or InterLink network symbol on the bank can be utilized to withdraw cash from an ATM and its own set of fees:

  • $3.25 for each domestic ATM withdrawal.
  • $5.00 for each international ATM withdrawal.
  • $1.00 for ATM balance inquiry.
  • $0.50 for PIN based transactions.
  • $150.00 maximum ATM withdrawal per day.

Yesterday, we estimated that US Bank generated more than $60 million in fees by selling 10 million US Bank Visa gift cards in a little over one year. If GiftCards.com’s volume is only a fraction of US Bank’s, the revenue is still significant to propel DirectSites with purchasing their new office building.

Carpenters Council Sells Office Bldg. for $1.2M [CoStar Group]

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