Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of Colin Sebastian from Lazard Capital Markets. Please proceed.
Colin Sebastian – Lazard Capital Markets
Good evening and thanks for taking my questions. First of all, I was hoping you can provide a little more context on the Q4 guidance. If I do the math – if I am doing the math correctly, it looks like you are assuming roughly a 50% decline in primary agency services over last year and that’s holding the consulting and secondary segments flat sequentially from Q3. So does – first of all, does that sound about right?
Li-Lan Cheng
That’s about right, yes.
Colin Sebastian – Lazard Capital Markets
Okay. And you are assuming –
Li-Lan Cheng
It’s all driven by – it’s all driven by the amount of GFA for which we can recognize revenue.
Colin Sebastian – Lazard Capital Markets
Okay. And you are assuming obviously that the recent freezing up of the market based on the lack of clarity on mortgages will continue through the end of the year?
Li-Lan Cheng
No, we are not assuming it will continue through the end of the year, but in the most – I guess the – in the most pessimistic scenario, if we don’t see a pick up in the speed or pace at which we can recognize – so that’s what we are saying. I guess I will say the low end of our range roughly correspond to that kind of scenario which means that so far the pace at which we – the mortgage agreements have been signed, it gets maintained for the second half of this quarter without major pickup.
Colin Sebastian – Lazard Capital Markets
Okay. And could you talk a little more specifically about the pipeline, which I understand is still very strong but perhaps either in terms of the quantity of the projects that you have in the pipeline or perhaps how quickly your partners will be able to ramp development once the market does start.
Xin Zhou
[interpreted] Yes. The – roughly speaking, the total amount of GFA that we have signed if you add all of the GFA’s that either are included in all of our contracts over the next roughly five years, that number exceeds 50 million square meters. And it’s between 50 million square meters and 60 million square meters. The amount – of this amount, the number of GFA that developers plan to sell for 2009 is somewhere between 20 million square meters and 25 million square meters. Now, it will depend on how much of that can be absorbed by the market. Will obviously depend on the – how well the market recovers, but I think – it’s fairly safe to say the amount that we expect to sell for next year will be greater than what we consult for this year.
- To read the full transcript on Seeking Alpha, click here »
