Outameni may be NHT worst investment ever !

NHT board members last week said, the Outameni investment is a very good deal and maybe the entities best investment ever, so let’s examine this claim.

The Jamaica Observer today published the valuation of the property and we will tear it apart to see if the chairman claim of immediate profit of $100m is even realistic.

The land we are told is worth $12,739,700  . I believe they could claim this amount in  a sale

Great house – $58,496,800.  They maybe able to claim 75%  to this amount if someone really wants to preserve the great house which is over 300 years old. Great house $43.87m

Building where shows are done – $79,836,500

Display area – $79,037,800    

Walkways – $39,516,000

Unless one wants to continue the same concept, most of the above would be worth less than 30% of the stated value above, with the walkway having zero value.

So buildings, display area may fetch $47.66m

Other buildings – $8,211,400  – 50% its value

Juice bar – $1,770,600 – 30% of value 

Jerk centre – $1,714,000 – 30% of value 

Games room – $2,751,200  –  30% of value

Washrooms – $1,330,600 –  Retain its value

Security post – $64,700 – Retain its value

Ticket office – $198,000 – zero value

Total value for the above $57.3m

Addiotnal stuff

Building one – $1,000,700 –   30% of its value 

Building two – $3,389,700 – 30% of its value 

Building three – $273,200 – 30% of its value

Building four – $58,400    – 30% of its value 

Tanks – $5,082,000  – 50% of its value 

Land development – $15,246,000  – zero 

Total value  $31.57m 

So a investor who have have an interest i purchasing this property would not spend more than

$31.57 +$57.3+$47.66+$43.87+$12.74  = $193.14 m 

This means the NHT is likely to suffer a gross profit  in the region of  $13.14m if they were to sell this today.

Seller has responsibility for transfer tax, which is  5% of the sale price = $9.66m

Stamp duty @ 4% =  $7.73m

Transfer tax and stamp duty =  $17.39m.

Total proceeds from sale = $193.14 – $17.39 = $175.75m

Net profit = $175.75 – $180 = -$4.25m ! ( negative sign means a net loss)

The buildings are architectural designed as a heritage facility and so if one is planning to teardown the buildings and make high end housing, you would not pay more that 30 cents in the dollar, given the land price is only worth $12.7m

Worst of all NO ONE may be willing to spend that extra near $200m, which they could not recover, so all the above may be a mute point and the country may have just thrown $180m down the drain.

That is what the NHT chairman and its board calls a good investment, this must be the comrade way of doing things.

Its no wonder the country does not seem to prosper, bad decision, that the decision make is convinced is good.

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