Trump Panama 2nd Quarter Investor Update
Trump Panama PDF as of June 30th, 2010
SAFE HARBOR STATEMENT
This presentation contains forward-looking information that is based on management’s beliefs, assumptions, estimates and projections and reflects our current views with respect to future events. All statements, other than statements of historical facts, included in this presentation are forward-looking statements and involve significant risks and uncertainties. This information is not a guarantee of the Company’s future performance and may change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and you should carefully consider the following factors that could cause actual results to vary from our financial projections, assumptions and other forward-looking statements:
Political, economic and other conditions in Panama and globally;
Delays or unexpected casualties related to the construction of the Trump Ocean Club
International Hotel & Tower, Panama;
Increases in costs and decreases in availability of raw materials; Our limited sales and operating history;
Natural disaster-related losses which may not be fully insurable; Any loss of key personnel;
Our significant transactions with related parties;
Our ability to attract and retain sales executives or real estate brokerage firms; Potential non-performance of contractual obligations by our customers;
Our ability to collect on our receivables and to deliver real estate products to our customers;
Competition in the luxury real estate development industry;
The loss of tax exemptions granted to the project and other changes in applicable tax laws; Changes in interest rates or foreign exchange rates; and
Various other factors that may emerge from time to time.
All financial projections, assumptions and other forward-looking statements contained in this presentation and in the discussions relating to this presentation to be held by the company with the Note holders are qualified in their entirety by these risks, uncertainties and other factors. We disclaim any obligation or undertaking to update publicly or revise any financial projections, assumptions and other forward-looking statement contained in this presentation or in the discussions held by the company relating to this presentation, whether as a result of new information, future events or otherwise. It is not possible for us to predict new factors which may arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors may cause actual results to differ materially from historical results or those contained in any forward-looking statements.
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Quarterly Conference Call for Investors
As of June 30th, 2010
TRUMP PANAMA PROJECT HIGHLIGHTS
Trump Panama Sales from January to July 2010 amounted to US$ 24.8 million without considering the effect of the defaulted units returned to the remaining inventory. This amount includes a second portion of the casino of US$ 10 million, 27 units of a bulk sale for US$ 6.2 million with a repurchase option, as well as Trump Ocean Club sales of other type of units. As per that date, nearly 85% of the building’s units were under contract.
During 2010 and as per July, 26 Trump Ocean Club units were classified as defaulted and returned to the inventory. These units were sold for US$ 14.7 million and the deposits that have been forfeited amount to US$
2.4 million.
For the third quarter of 2010, management forecasts sales for US$ 2.1 million at an average pace of
US$ 0.7 million per month.
Trump Ocean Club Sales during the first seven months of 2010 generated net receivables of US$ 12.2 million which, after deducting collections associated with former sales, decreased the Eligible Receivables balance by US$ 15.2 million to US$ 262.3 million
Upon the closing of the sales of Trump Ocean Club units currently under contract, the Company will receive gross sale proceeds of approximately US$ 260.2 million, excluding the collections of down payments expected for the period from August to December 2010, which are currently projected in US$ 0.6 million.
The available inventory as per July 31st, 2010 (151 units including the wellness center) is currently spread among condominium units (59%), hotel-condominium units (25%) and commercial units, restaurants and office lofts (16%).
As of June 30th, 2010, Newland reported a restricted cash balance of US$ 55.1 million deposited primarily in the CEA and the DSRA. On mid June, Newland was able to replenish the DSRA in accordance with the indenture.
Collections during the first seven months of 2010 amounted to US$ 23.4 million. These funds were used to cover working capital needs and to replenish the Debt Service Reserve Account. Management expects collections of US$ 3.9 million during the third quarter 2010.
Delivery of the different units to owners and the closings of unit purchases are estimated to begin in January 2011 for baylofts, hotel-condominium units, restaurants, offices and commercial spaces and in February 2011 for condominium units.
As stated in the Independent Engineer’s Report issued on July 20th, 2010, project specifications have been successfully maintained.
The project’s safety records remain within the best standards.
Quarterly Conference Call for Investors
As of June 30th, 2010
TRUMP PANAMA FINANCIAL HIGHLIGHTS
The following chart summarizes the key financial statistics related to the development of the Trump Ocean
Club as of July 31st, 2010:
| US$ m illion | De ce mbe r 31st | De ce mbe r 31st | Decembe r 31st | As ofMarch 31st | Ma y 31st | June 30th | July 31st |
|
2007 |
2008 |
2009 |
2010 |
2010 |
2010 |
2010 |
|
| Sa le s | 294,4 | 375,3 | 413,7 | 428,7 | 423,9 | 432,2 | 423,8 |
| Eligible Receiva bles | 229,1 | 280,6 | 277,5 | 282,7 | 269,5 | 269,7 | 262,3 |
| Client‘s Deposits | 58,4 | 94,0 | 129,8 | 136,6 | 150.8 | 152,4 | 153,2 |
| Construction disburse ments | 15,1 | 74,2 | 161,1 | 175,5 | 194,4 | 199,7 | 207,1 |
| Ba la nce on CEA | 201,2 | 142,1 | 55,6 | 41,2 | 49,2 | 43,9 | 36,5 |
| Adj. Withdraw al Ratio | 12,20 | 3,60 | 1,69 | 1,58 | 1,51 | 1,50 | 1,51 |
| Adj. Colla te ra lization Ratio | 1,04 | 1,28 | 1,26 | 1,28 | 1,51 | 1,50 | 1,46 |
1 Re ceivables
CR
(1.25
Investment Acc)
( x%
Value of Unsold Units)
220,000,000
DSRA (Pr incipal Re serve)
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Quarterly Conference Call for Investors
As of June 30th, 2010
TRUMP PANAMA TOTAL SALES AND EXPECTED SELLOUT
The following is the breakdown of total units sold and expected total Sellout as per July 31st, 2010:
Sold as of Dec 31st
Sold as of July 31st,
% Sold as of July
Total Sellout Available
2009
2010
2010
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Trump Ocean Club Units Sold by Product Offering Units (US$ Million) Units US$ Million Units (US$ Million) Units (US$ Million) Units (US$)
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Residential condominium units:
One bedroom units Two bedroom units Three bedroom units
Three bedroom com bo units
Penthous e units
Curve units
Bay lofts
Subtotal
Hotel condominium units: One bedroom s uite units Curve units
Studio units
Subtotal
Total residential and hotel units
Other products: Com m ercial units Res taurants
Office lofts
Total Comercial Space
Mem bers hips
Subtotal
Wellnes s Center
Cas ino
Total sellout
Current sellout amounts to US$ 530.1 million which includes a bulk sale of US$ 6.1 million of an inventory valued at US$ 16.9 million at current commercial prices (25% discount over list price). If Newland executes the repurchase option, the sellout will increase in the amount of $10.8 million to US$ 540.9 million.
s
Trump Ocean Club Sales Development
Sales as of July 31st, 2010 amounted to US$ 423.8 million, including memberships. Of this figure US$ 366
million correspond to sales of
residential and hotel condominium units and US$ 12.2 million to
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membership fees. The remaining US$ 45.7 million correspond to commercial spaces (restaurants, commercial units, offices and two thirds of the Casino). Total sales up to July, 2010, represent 79.9% of the total actual sellout in US dollars and 85.7% of total saleable units.
During 2010 the project has been able to sell 41 residential and commercial units for US$ 14.8 million (including membership fees) within the period from January to July 2010, at an average pace of US$ 2.1 million per month. Besides these units a second portion of the casino was sold for US$ 10.0 million, adding a total of US$ 24.8 million for the period. The following chart shows the sales development on a quarterly basis, cumulative sales per type of unit and the effect of the defaulted units returned to the inventory:
Total available inventory as of July 31st, 2010, after returning the defaulted units, is represented mainly in
Baylofts, Curve Units, Two Bedroom units and Commercial units totaling 151 units.
Residential and Hotel Unit Sales
A total of 878 hotel and residential units had been sold up to July 31st, 2010. This represents 87.5% of total inventory for these types of unit. During 2010, a total of 40 residential units (US$ 13.7 million) were sold.
Available inventory of Trump Ocean Club as per July 31st, 2010, after returning the defaulted units to the inventory, includes 89 residential condominium units and 37 hotel condominium units.
Other Products
Availability of other products as per July 31st, 2010, includes 20 commercial spaces, 4 restaurants on the casino level and the Wellness Center.
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Quarterly Conference Call for Investors
As of June 30th, 2010
Units Defaulted and Returned to Inventory
During 2010 a total of 26 units were defaulted and returned to the inventory as they did not comply with the payment commitment that it was established for them. Total sales value of these units was of US$
14.7 million and total forfeited deposits amount to US$ 2.4 million.
Prices
Along the year 2010, prices have been affected by different discounts according to commercial conditions on each specific deal, such as number of units included (bulk sales).
For 2010, price list for available units continues to be affected by a 25% average price cut. Additional discounts may also be granted depending on each individual deal (number of units or payment terms).
As a result of applying a 25% discount, total projected sellout value is US$ 495.3 million, excluding the casino and the wellness center.
Current average list prices on remaining inventory are detailed in the table below:
Average Are a Average Price
(pe r Unit) (US$ dollars )
Type Av Sq Mt Av Sq Ft Per Unit Per SqMt Per Sq Ft
Residential Condominium Units
One Bedroom Units 97 1.048 430.425 4.419 411
Two Bedroom Units 154 1.655 566.965 3.687 342
Three Bedroom Units 185 1.992 846.656 4.574 425
Three Bedroom Combo
Condo Curve 146 1.577 566.738 3.869 359
Bayloft Studio 114 1.227 537.348 4.714 438
Hotel Condominium Units
One Bedroom Suite Units 106 1.141 637.500 6.015 559
One Bedroom Curve Units 79 847 539.475 6.859 637
Studio Units 49 531 330.375 6.703 623
Commercial Space
Commerce T.1 120 1.294 820.743 6.826 634
Restaurants 246 2.646 1.492.673 6.072 564
Offices
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Quarterly Conference Call for Investors
As of June 30th, 2010
RECEIVABLES
Total eligible receivables as of July 31st, 2010 amounted to US$ 262.3 million. Sales activity during the first seven months of the year generated net receivables (after down payments) of US$ 12.2 million, which, together with the unsold units priced at 50% of list price, contributed to maintain the adjusted collateralization ratio above 1.25x level as required by the indenture. After deducting the collections associated with former sales different from the ones of the period, eligible receivables had a decrease of US$ 15.2 million when compared to December 2009. This decline was the effect of a higher pace of collections with respect to the generation of receivables associated with new sales.
COLLECTIONS
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As per July 31st, 2010, the company had received a total of US$ 153.2 million in client’s deposit as shown in the chart below:
| Sales as ofJuly 30th, 10 2006 | 2007 | 2008 | 2009 | 2010 (July) | Client‘sDeposits | % Paid/Sold | ||
| Condo-Hotel Units | 366,0 | 27,2 | 29,9 | 30,7 | 30,7 | 20,2 | 138,7 | 37,9% |
| Offices | 12,1 |
- |
- | 2,8 | 2,2 | 1,6 | 6,6 | 54,8% |
| Commercial Space |
9,3 |
- |
1,2 | 1,7 | 1,4 | 1,0 | 5,3 | 57,3% |
| Restaurants |
4,2 |
- |
- | 0,4 | 1,0 | 0,1 | 1,5 | 35,4% |
| Casino | 20,0 |
- |
- | - | 0,5 | 0,5 | 1,0 | 5,0% |
| Membership | 12,2 |
- |
- | - |
- |
- |
- |
0,0% |
| Total | 423,8 | 27,2 | 31,1 | 35,6 | 35,8 | 23,4 | 153,2 | 36,2% |
| US$ million | ||||||||
Collections during the period January – July 2010 amounted to US$ 23.4 million, providing enough funds to cover working capital needs and to successfully replenish the Debt Service Reserve Account in mid June 2010.
Current down payment rate is 36.2%, which is relative high as compared to other real estate projects and therefore reduces substantially the default risk at closing.
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Quarterly Conference Call for Investors
As of June 30th, 2010
CONSTRUCTION STATUS
A key milestone achieved since the last conference call is the successful completion of the concrete structure. Upcoming new challenges include the installation of all windows glazing in the balcony area, the closing-off of the facade in the wing atriums, and the completion of finishes work in all public areas. Following is a brief update on the construction schedule and construction costs.
Schedule
Because the Trump Ocean Club is a mixed use project, the construction team is focused in obtaining the Occupancy Permits, to be granted by the Panamanian authorities in two phases: (i) Occupancy Permits for the baylofts, hotel condominium units, restaurants, offices and commercial spaces by mid November,
2010 and (ii) Occupancy Permits for residential units by mid December 2010. Critical activities that affect said due dates are the commissioning of the elevators (especially the condo elevators), the operation of all life protection systems and the operation of the MEP systems. Once these permits are obtained, the closing process and the delivery of units will begin. The finishes work, which is a key activity for the delivering of units, is described below.
Concrete Structure
Early in the month of July 2010, the concrete structure was successfully topped-off. Over 130,000 cubic meters of concrete, 21,000 tons of steel and over 5 million feet of post-tensioning cable were placed by approximately 600 men over a period of 38 months. Remaining work to be completed includes the so called “pinnacle” or “cap”. This separate steel structure will rise approximately 18 meters above the roof level. Aside from the aesthetical value it will add to the envelope of the overall structure, the “pinnacle” will conceal HVAC equipment located in the roof level. The installation of this structure was awarded to a local subcontractor and work will be completed by November 2010.
MEP Systems
The installation of all technical systems is advancing satisfactorily and according to schedule. The installation and commissioning of all MEP systems as well as all elevators is scheduled for December 15th,
2010. Critical activities which require special attention include: the installation of condominium elevators,
the installation of HVAC equipment in the roof level, and the project’s permanent connection to the city’s main power network. All the material required to complete these activities is currently on site and work is under strict supervision by independent teams of highly qualified professionals.
Finishes Work
For purposes of planning and control of execution, finishes work is subdivided into four independent work areas: (i) Bayloft and Condominium, (ii) Hotel, (iii) Public Areas and (iv) Exterior Facade.
Bayloft and Condominium: Work in the Bayloft is well advanced and approaching completion. Pending work includes: installation of wood doors in all private units and installation of FF&E and general work in the penthouse level. Work in the Condominium is currently on level 61 and approaching the last floor. Critical work still pending includes the installation of all millwork above level 36 and the installation of interior glazing in all bathroom areas. Opcorp has recently expressed concern over the untimely delivery of millwork and possible delays in its installation. The millwork subcontractor has recommitted to new delivery dates and has also introduced additional manpower to address all work. Delivery of interior glazing is expected for the month of August 2010 and installation in all units is expected by November 2010.
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Quarterly Conference Call for Investors
As of June 30th, 2010
Hotel: Work in the hotel is also approaching completion. Pending work includes installation of: millwork (wood doors, closets and case goods), interior glazing and carpet in the corridors. The interior glazing and carpet will be delivered in the month of September and the material will be installed by late October. Opcorp has also expressed concern over the untimely deliveries of millwork for this area. Material is now expected on site on September 15, and work is scheduled for completion by November 15.
Public Areas: Finishes work for all public areas is advancing as expected. All wall partitions and technical systems have been installed, and material for wall finish and floor finish will be delivered in the month of August. Work in these areas will be completed by November 15.
Exterior Façade: Work in the façade has made substantial progress. Work in the platform façade facing the front street will be completed in the month of October 2010 and work in the interior atrium between levels 16 and 61 will be completed by November 2010.
FF&E and OS&E
Purchase Orders for all FF&E are currently being placed by our Purchasing Agent. Material is expected on site between October and December 2010.
KPI Schedule as of June 30th, 2010
The Schedule Variance (SV) and the Schedule Performance Indicator (SPI)2 for the period ending on
June 30th, 2010 are as follows:
Schedule Performance Index
Earned Value EV 165,278,145
Planned Value PV 171,792,538
Schedule Variance SV = EV – PV -6,514,393
SPI EV / PV 0.96
US$ dollars
The negative Schedule Variance and a Schedule Performance Indicator lower than one, indicate that the dollar value of work in place is lower than originally planned. This condition is primarily due to delays in the installation of millwork, specialties and FF&E. Regarding specialties and FF&E installation, the General Contractor has purposely postponed this activity in order to avoid theft and damage. These activities are not time consuming and the delay will not affect project completion. The critical delay up to date is the installation of millwork in the hotel guestrooms, and in a minor scale, the installation of millwork in residential units. If the subcontractor complies with their commitments, Opcorp should be able to install all material before the completion deadlines.
Costs
The contract between Newland International Properties and Opcorp International was adjusted in the month of May 2010 to reflect the increase in cost reported in previous Conference Calls. The current value of the contract is US$ 266.0 million, of which US$ 238.9 million correspond to construction costs and US$
27.1 million correspond to construction and management fixed fees.
2 For definitions of KPI, please refer to the Offering Memorandum: Management’s Discussion and Analysis of Financial Conditions.
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Quarterly Conference Call for Investors
As of June 30th, 2010
As of June 30th, 2010 the value of work in place was US$ 165.3 million, outstanding payments in advance were US$ 28.5 million, and value of material stored on site was US$ 13.4 million.
KPI Costs as of June 30th, 2010
The Cost Variance and the Cost Performance Indicator (CPI) corresponding to work in place up to June
30th, 2010 are as follows:
Cost Performance Index
| Earned Value | EV | 165,278,145 |
| Actual Cost | AC | 166,437,454 |
| Cost Variance | CV = EV – AC | -1,159,310 |
| CPI | EV / AC | 0.99 |
| US$ dollars |
The negative Cost Variance and a Cost Performance Indicator lower than one, indicate that the cost of work in place was slightly higher than estimated. This additional cost is primarily due to additional labor costs incurred in order to expedite the completion of concrete structure and elevator installation activities.
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Quarterly Conference Call for Investors
As of June 30th, 2010
FINANCIALS
Summary of Balance Sheet as per June 30th, 2010
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Ba lance Sheet
Total assets
Total liabilities
Equity
US$ m illion
Total assets increased by US$ 50.8 million when compared to December 31st, 2009, totaling US$ 442.8 million as per June 30th, 2010. This is mainly the result of the increase of US$ 74.6 million in the project account over the previous period, a decrease of US$ 13.7 million in advances to contractors and a reduction in restricted cash of US$ 11.5 million.
Total liabilities as per June 30th, 2010 rose US$ 23.8 million. This is mainly the result of the increase in customer deposits over the previous year, from US$ 129.8 million on December 31st, 2009, to US$ 152.4 million on June 30th, 2010.
Due to the Developer’s contribution of approximately US$ 27 million which was received on May, 2010, Newland’s equity increased from US$ 31.2 million in March 31st, 2010 to US$ 58.2 million in June 30th,
2010.
Liquidity – Capital Resources Results and Projections
The Company’s liquidity position as per June 30th, 2010 was represented in cash of US$ 55.1 million. For the first semester of 2010, restricted cash decreased by US$ 11.5 million (US$ 66.5 million in December
31st, 2009 to US$ 55.1 million in June 30th, 2010). The former is the net effect of the increase in
construction work, the coverage of working capital needs and the infusion of the aforementioned party’s equity.
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Quarterly Conference Call for Investors
As of June 30th, 2010
Liquidity results for the first semester 2010 and third quarter projections are shown in the table below:
2010
Totals
Projected Sales
Col l ecti ons
Pre-i denti fi ed s a l es
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Other Cas h Infl ows
Jan Feb Mar April May Jun Jul Aug Sep 1Q 2Q 3Q
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For the third quarter 2010, total projected sales amount to US$ 2.1 and total expected collections amount to US$ 3.9 million. Expected sales and collections, together with current cash balances, will allow Newland to pay the coupon on November 15th, 2010 and to cover the projected operational costs of the
project for the quarter by using the working capital withdrawals permitted in the indenture.
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Quarterly Conference Call for Investors
As of June 30th, 2010
LEGAL MATTERS
Compliance with Newland’s obligations under all agreements included in the OM
At present, Newland complies with all its obligations under the main agreements defined in the OM with respect to the design, development, construction, commercialization and operation of the TOC project. Additionally, Newland has fulfilled all of its obligations under the Indenture and the Co-Trustee Agreements.
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Quarterly Conference Call for Investors
As of June 30th, 2010
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Annex 1: Financial Statements
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Accounts receivable, related company -
Quarterly Conference Call for Investors
As of June 30th, 2010
Annex 1: Financial Statements
Newland International Properties, Corp.
(Subsidiary 100% of Ocean Point Development, Corp.)
Statement of Cash Flows
For the quarters ended June 30th, 2010 and 2009
Cash flows from the Operating Activities
2010 2009
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Net changes in assets and liabilities
Decrease (Increase) in Advances to Contractor B/. 13.737.545 B/. (6.014.937) (Increase) Decrease in Accounts Receivable (291.663) 150.287
Increase in Costs of Project in Progress (74.603.825) (41.717.389) Increase in Deferred Expenses (1.142.069) (1.438.140) Decrease in Accounts Receivable, Related Parties - 235.096 (Decrease) Increase in Accounts Payable, Suppliers 294.870 266.868
Decrease in Employment Liabilities and Accruals 1.640 (6.242)
Increase in Interest on Bonds Payable
Increase de Client Deposits Received 22.631.745 20.375.694 (Decrease) Increase in Accounts Payable, Related Parties 922.251 (557.393) Cash used in operations (38.449.506) (28.706.156)
Cash flows from investment activities
Increase in Equity 26.971.842 - Redemption (placement) of Restricted Cash
provided by (used in) investment – net 11.477.664 28.706.156
Net Cash from investment activities 38.449.506 28.706.156 (Decrease) Increase in cash – -
Cash at the beginning of the year 1.850 105.402
Cash at the end of the year B/. 1.850 B/. 105.402
Quarterly Conference Call for Investors
As of June 30th, 2010
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Annex 1: Financial Statements
Newland International Properties, Corp.
(Subsidiary 100% of Ocean Point Development, Corp.)
Statement of Changes of Stockholder´s Equity
June 30th, 2010, December 31st, 2009
Capital Paid:
2009 2008
Balance at beginning and end of the year
B/. 31.245.160
B/. 31.245.160
Equity Contribution
B/. 26.971.842
B/. -
Balance at year’s end and total shareholders’ equity.
B/. 58.217.002
B/. 31.245.160
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