Question-and-Answer Session
Operator
Certainly, thank you sir. (Operator instructions). Our first questions will be coming from Andrew Brausa with Banc of America Securities. Please go ahead.
Andrew Brausa – Banc of America Securities
Hey guys. How’s it going? I wanted to ask you, on the forward guidance of cash flow, and I apologize if I missed it, what default rates are you assuming on your tower product going forward?
Jim Dietz
We have made some adjustments to our default expectations based on the recent experience that we’ve had in some of the towers we don’t expect much of a change and some of the towers we expect a bit more of a change. For example, the Watermark up in New Jersey we expect very little change, while in Bal Harbour also relatively little change. We thing that’s a very unique asset and the contract holders there have a significant amount of built in gain. Oceanside B is a little less certain but it’s also a little further out, so the data is less certain. I think we’ve raised the average to something in the mid to high teens overall expectation.
Andrew Brausa – Banc of America Securities
Alright. Given the importance of One Bal Harbour to the cash flow and potential (inaudible) payment focus, your assumptions there, can you put a number around what your assumptions there are for defaults?
Jim Dietz
I don’t think we want to give out the faults per building. I think that’s one of the hesitations that I have here, just as the real estate downturn was partially a self fulfilling prophecy, I don’t want to create yet another self fulfilling prophecy, out expectation is that the fault rate will be low at One Bal Harbour, lower than the average that I just stated and I want to point out that there have been some commentators that have said while they might do okay on the condo because those are really great units in the hotel they’re all investors. We expect high default rate. I think that’s illogical and inconsistent with our experience at Singer Island resort. At Singer Island we had a great deal more condo hotel units. It’s a less desirable location from a hotel perspective. Miami Beach is probably the most desirable location from a Hotel perspective in virtually the whole world, and our view of the condo hotel is the purchaser is a long term oriented investor. They understand that they’ll make a purchase of real estate, which is, of course, what we’re selling. We’re simply selling real estate. They’re making sort of their own analysis and concluding that makes sense from a cash flow or investment perspective. Our view is that they’re looking forward to the revenue that will come from the hotel occupancy, so we don’t think there’s a higher default rate there.
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