Hello ACF Mike, your Fedex will go down, perhaps in a few hours time, or days, or weeks, but not outside of 2004, to below the beginning of year imagination, is my guess.
The house that you sold too early will be inflated much more by the end of 2004.
... and then, after all that, what will happen will not be a surprise.
Stocks down, dollar down, houses down (but higher than when you sold, of course), and ... oh, you know about the demographic smack.
I am down just a tiny bit in % terms ... as of today ... 2.94% on NAV basis, but only because I do not revalue my real estate holdings as I ought to ...
Following up to these posts
Message 20124191 <<May 13th, 2004>>
Message 19781668 <<February 8th, 2004>>
... I could not wait to tell you what is now the case, as I am notified by e-mail ...
QUOTE
To : xxxxxxx Investors
From : Anthony xxxxxxxx / Samuel xxxxxxx
Re : Class A June 2004 Quarterly Report
It has been a very good quarter for us indeed.
xxx SHANGHAI STREET
We are also pleased to announce that we have sold Ground Floor, xxx Shanghai Street on 7 May 2004 for HK$11,380,000. (see Appendix 1). We purchased this property on 16 October 2002. The book cost of this property is HK$4,347,000. We decided to sell this property because it is very small and is peripheral to our portfolio. The current tenant has not paid rent for the past 3 months and was illegally operating a mah-jong parlour inside the shop. The Completion date of this sale is 10 August 2004. We will do an IRR performance audit after the Completion; then we will distribute the money back to the shareholders once the audit is finalized.
OTHER PROPERTIES
During the first quarter of 2004, we have been receiving various unsolicited offers for all our properties:
Property Purchase Price Unsolicited Offer
xxx Shanghai Street HK$ 35.5 million HK$60 million
xxx-xxx Reclamation Street HK$ 17.5 million HK$32 million
xxx-xxx Nathan Road HK$ 86.0 million HK$150 million
A recent offer on xxx-xxx Nathan Road is attached for your reference (see Appendix 2). We have not entertained these offers as we believe it is pre-mature to cash-in at this time. We still stay true to our stated strategy of holding until a couple of years after the completion of Langham Place to maximize profits. All our shops are fully let (see Appendix 3). However, one of the tenants, Shop 6 at no. xxx Shanghai Street, has been slow in paying rent. We are taking legal action to collect past due rent and to enforce timely rental payment. In actual fact, we would like to remove this tenant because his lease term is the only one which does not coincide with the others. All the other leases at no. xxx Shanghai Street is expiring at the same time in February next year, at which time we intend to renovate the premises. The renovation will be easier to implement if this particular tenant leaves.
Wishing you all the best.
Anthony xxxxxxx / Sam xxx
Class B June 2004 Quarterly Report
It has been a very good quarter for us indeed.
THE RESTAURANT BUILDING
Something unexpectedly happened which is extremely favorable to us. The tenant of our Nathan Road / Shantung Street property (the restaurant) decided to terminate the lease. This tenant was "inherited" from the former owner and was paying HK$550,000 per month rental. The lease tenancy was until September 2005, and that tenant had option to renew for 3 more years at the new rate of HK$660,000 per month.
As mention in our previous reports, the current market rental should be above HK$700,000 per month. Their option to renew the lease at a future date, at a low pre-agreed rental would have negatively impacted the value of this property. In order to amicably settle this matter with the restaurant tenant, we agreed with the tenant to give one month's rental deposit back to them so that they can pay their restaurant staff's salaries. We kept the balance of the original 3-month deposit, hence forfeiting in our favour the equivalent of 2 month's deposit.
We are extremely lucky that we got back possession of the premises without any legal action. This was a tenant who repeatedly gave us trouble in rental collection. Normally in Hong Kong, it takes a minimum of 4 to 5 months' legal proceedings to remove a tenant who is habitually delinquent in paying rent and to get back vacant possession of the premises. We saved a tremendous amount of time and money!
Adhering to our original plan, we propose to renovate the external wall of this building before we lease it out again. We want to improve the building's facade by changing the external windows or by installing a curtain wall (below are some sample photos). We believe we can increase the value of the building by doing the renovation. We are presently discussing this project with 2 architectural firms to get their quotation of the work.
The renovation work will probably cost around HK$3.5 to HK$4 million. It will take approximately 6 to 7 months and the timing of the completion would coincide with the opening of Langham Place. Langham Place is due to open in October this year.
We believe that once the renovation work is finished and Langham Place is opened, we can command a higher rental (and sales price)!
We will inform you in due course regarding the renovation project. To fund the renovation, we may need to Call the remaining balance of 10% commitment from Class B participants. This Call is not yet confirmed as we are exploring the possibility of a renovation loan against the increased / appreciated valuation of this property. If a Call is made, this event will not affect or concern the Class A participants as they have already contributed-in a 100% of their respective Commitments.
We have just received an unsolicited offer, a copy of which is attached for your reference. We have not entertained this offer as we believe it is pre-mature to cash-in at this time. We still stay true to our stated strategy of holding until a couple of years after the completion of Langham Place to maximize profits.
Wishing you all the best.
Anthony xxxxxxx / Sam xxxxxxx
UNQUOTE
So, all in all, all is quite well.
Yours truely, Jay Chen
P.S.
Oops, Malcolm will vouch for me, the California house that he and his wife visited, owned by me, was bought inexpensive, back in 1986, ridiculously priced when Malcolm visited, and is insanely priced now. I tend to forget details when tallying :0) |
