Newland International Properties Corp., or Trump Ocean Club (“TOCLUB”), released second quarter results in line with the company’s budget, and passed some key milestones. Uncertainty in the market over TOCLUB’s ability to meet the 1.25x Collateralization Ratio (required under its 9.5% Senior Secured Notes due 2014), appears to have been addressed, with management stating on its conference call that the ratio had been reached in August 2008. Additionally, market concern over the collection rate of deposits has somewhat reduced due to comments from the company that its month-of-May collection rate improved to 99% as of the second quarter of 2008 press release, from 80% as of the first quarter press release. This month, Newland International Properties Corp. and Trump International Hotels Management LLC also signed the Hotel Management Agreement for the hotel at the Trump Ocean Club International, solidifying its relationship with Trump.
Despite worsening conditions in the global real estate market, TOCLUB’s sales and receivables as of July 31, 2008 reached US$356.1 million and $271.5 million, respectively. The company also announced price increases of 5-10% in all of its products (despite already capturing a significant premium relative to other projects in Panama) and a new marketing plan for products with higher inventory levels, such as two bedroom residential units. To date, TOCLUB has sold nearly 79% of the project’s units two years before the expected completion in August 2010.
Two key measures of TOCLUB’s work progress considerably improved in the second quarter of 2008; the Schedule Performance Indicator (SPI) and the Cost Performance Indicator (CPI). The SPI, which measures the amount of work completed relative to the original forecast, improved to 102% in second quarter, from 90% in the first quarter. Although still in excess of the budget, the CPI, which calculates the budget relative to actual work costs, improved to 95% in second quarter, from 90% in the first quarter. This improvement illustrates the company’s efforts to secure its future steel needs amid increasing global steel prices.
Liquidity remains strong, with cash and cash equivalents totaling US$197.9 million, mostly comprised of US$172 million in the Construction Escrow Account (CEA) and US$10.5 million in the Debt Service Reserve Account. The company will continue to draw down on the CEA as construction accelerates from its current work on the thirteenth floor (of sixty-six total).
JP Morgan Announces "Trump Ocean Club, Key Project milestones reached"
