hello seeker, i have just released property club report to fellows and fellowettes of gold citadel, and it says
August 2nd, 2009
Re: Status and Financial Statement
Dear shareholders,
Financial Reporting
Attached please find our unaudited 2009 quarter 2 income statement and end-of-period balance sheet as of June 30th, 2009, and revised Gold Bunker Proforma.
[edit: also included is a presentation done by others on the Central-Southside MTR and redevelopment plans]
The major changes from the March Financial Proforma are:
(i) A bunch of accounting treatment adjustments (depreciation, agent commission treatment, and major repairs, all marked in bold italic underlined font) I have yet to fathom, none of which affect cash balance in bank, and I will simply wait for eventual audited financial statement to make definitive.
Operations
(i) While we had 3 vacant units at xyz Street for April – June, we have leased out 2 of the 3 vacant units to a company as staff dormitory starting July, the revenue from which are reflected in forward projections. Starting in July our monthly revenue will be rolling in at pace of xxx,xxx/month;
(ii) We now have only one vacant unit in the portfolio (3/F, xyz Street);
(iii) The wall at abc industrial has been properly repaired and reinforced; and
(iv) We may lose the tenant at Main Street upon lease anniversary, and if and when so, expect to be able to engage with replacement tenant relatively quickly given the characteristics.
Financial
(i) The company has on balance x,xxx,xxx as at the end of June 2009 growing at approximately xxx,xxx per month;
(ii) All shareholders of the Company have expressed the same sentiment regarding compounding Company portfolio based on cash on hand plus prudent borrowing. The Directors and attending shareholders (all present or represented, except one who had in any case given me his proxy to vote as I saw fit) at the annual dinner decided to allow the Company to borrow up to XX million to invest in suitable opportunities that may arise.
Investment
We intend to make an offer this coming Monday for an industrial unit in XXX Industrial where the Company already has 4 units leased to the baking business. The new opportunity at xxx/sqft should be purchasable at 4.16% yield in line with current market. Should we be successful in acquiring the unit, we intend to borrow X million but with option to completely pay off the loan at any time after the first 12 months.
(i) Yes, we did buy the earlier 4 units in XXX Industrial at HK$ 1,340 / sqft only in August 2008, and the current market price is between HK$ 1,700 and HK$ 2,000 / sqft;
(ii) And yes, the market rent is about 19% more dear than we are obligated to rent our existing 4 units to the baking business; and
(iii) Oh, and the area continues to improve, construction and destruction are starting to happen, and please check out the attached master plan meant for completion by 2015, and do keep in mind that HK is efficient in carrying out plans.
Hope
Our xxx (cost basis) portfolio of absolutely cheap real estate, earning a gross yield of 4.38%, all in path of redevelopment and on tap for rejuvenation, can be valued between 25 to 80% higher using market range of capitalization rates of 2.5 to 3.5%;
The general HK rule of thumb policy of pegging government-led eminent domain acquisition at the price of 7-years young equivalent-use building in neighborhood gives us a comfortable floor at maybe double to triple our cost basis should such forced sale, however unlikely, happen;
And so we steadily earn, meticulously save, mathematically compound, while we patiently anticipate more likely private party acquirers to make multiple offers once the frenzy starts, sending our ordained take to 4, 5 or 6x our earlier give.
By then perhaps the severely undervalued HK$ (according to Economist, -42% relative to US$) would be revalued to reflect true worth, and so allow us a win-win outcome.
Observations
The management view of the complicated situation is that
(i) Well selected HK real estate could should and probably would outperform equity shares and bond issues around the planet, and is blessedly under the protection of the traditional form of British Common Law (as opposed to the deformed edition used in Britain and mutilated variation practiced in America) sort, even as the island is monetarily situated at the juncture of USA fiat money inflation and spending and China fiat money savings and investment;
(ii) We welcome quantitative easing, debt monetization, fiat money inflation, and are generally well positioned to benefit from such tides and their back wash to Hong Kong;
(iii) Our cash, when so positioned as we have, is not only yielding, but also enhanced by substantial enough upside in alignment with the forces accompanied by birthing cries of kingdoms and dying anguish of empires; and
(iv) When and if price inflation is successfully ignited around the world, we would be in good enough position to view, be awed and shocked, and to reflect and wonder.
In summary, we are pleased enough regarding the progress of the 30 months young experiment that was timely, and now seem to be robust even during the onset of the once in so many generation econo-financial tsunami that may still devolve into a monetary big bang. No matter, we have been and are blessed, and let us count our blessings in another 3 months’ time.
Best, TJ
|
