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July 07, 2010: Tremont Fair, Inc.issued the following Update to Shareholders:
Summary
– Sales of property under Company management expected to be completed within 30 to 60 days
– Renewed commitment to the Company’s business model
– Capital raising efforts; new investor; additional investments
– Cost containment measures; CEO to suspend salary until further notice and forgive accrued salary
– Measures to address stock liquidity and trading volume
Dear Shareholders:
I’d like to share with you our latest developments at Tremont since the last shareholder communication in May.
Reiteration of Company’s Business Model
After a review of current market conditions, the Company renewed its commitment to the core business model of investing in distressed multi-family properties. We believe Tremont is currently the only publicly traded “pure play” on the distressed multifamily market.
Tremont identifies, evaluates, purchases, rehabs and renovates, and manages multifamily properties in the Southwestern United States. The average property size the Company looks at is 200-300 apartment units, though it may look at properties that are larger or smaller than that.
The Company sets up an individual limited partnership for each project, each with its own set of investors. Tremont acts as the general partner to each limited partnership, thereby controlling the project.
Tremont receives multiple streams of revenue from each project, including property management fees, construction management fees, asset acquisition and disposition fees and project refinancing fees. The Company also shares in the upside on the project through its carried interest in the project. This carried interest is typically 20% of the capital gains arising at the project level.
This is consistent with Tremont’s strategy to remain asset-light but focused heavily on cash flow. This model will allow the Company to experience rapid growth and a high return on investment. This will also allow it to potentially offer dividends to our common stock holders in the not-too-distant future.
Tremont has utilized this model since 2003 in successfully turning around over 30 distressed multifamily properties. Of particular note is that not a single project failed to provide positive returns to investors, even though some properties were bought near the market high in 2007 and sold near market lows in 2008 and 2009. This is testimony to the conservative manner in which the Company purchases and values these properties.
Capital Raising
– In May 2010, Tremont received a capital infusion from an investor in a private placement.
– The Company is in discussions with other potential investors, both at the Company level and for the Company-managed partnerships. Tremont expects to have at least one other investment closed before the end of the year.
– The properties currently managed are in the process of being sold, with the sales expected to close within the next 30 to 60 days. Several of the investors in these properties have indicated a commitment to invest their proceeds from the sales into properties to be managed and controlled by the Company.
Cost Containment Measures
In order to minimize the Company’s cash burn rate, Tremont recently undertook an in-depth review of its current operating expenses.
– Effective immediately, I have agreed to suspend my salary until further notice. My salary has been accrued since the reorganization in 2009, and I have not taken any salary in cash or stock thus far. Further, I am waiving all of my accrued but unpaid salary. These steps will result in immediate savings at an annualized rate of $120,000 to the Company as well as a one-time gain of approximately $100,000 from the forgiveness of the accrued salary, which will be reflected in the second quarter financial results.
– The Company’s current lease for office space expires in July 2010, and it has negotiated a one-year lease in the same suite at reduced cost. This move will lead to savings of approximately $25,000 over the 2010-2011 lease period.
– Along with other cost containment measures, the Company expects to generate savings at an annualized rate of approximately $250,000.
Liquidity in TMTF Common Stock
Liquidity and trading volume have presented challenges to Tremont’s ability to raise capital. . It has nevertheless been in active discussion with market makers and brokers, educating them on our business. It has had a positive response thus far, and the Company expects both these issues to be addressed once it adds new properties under the Tremont umbrella.
We are excited about the opportunities ahead, and look forward to sharing our successes with you in the coming months. Our primary goal, as always, is building the Company’s operations so that we may continue to create value for our shareholders. We thank you for your continued support.
Cyrus J Boga
CEO
About Tremont Fair, Inc.
Tremont Fair focuses on identifying, acquiring, rehabilitating, and renovating multifamily properties primarily in Texas and Arizona. It intends to refinance and/or sell its properties once they are stabilized.
SOURCE: Tremont Fair, Inc.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Tremont Fair, Inc Issues Letter to Shareholders is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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