2007 annual report aveiro investment corp. - First West Properties

OVERALL PERFORMANCE
Financial Position
Assets
Total assets at June 30, 2007 were $17,149,884, compared to total
assets of $700 at June 30, 2006. Assets increased during the year
fundamentally as a result of the purchase of three properties
which were fi nanced by the issuance of debt and equity.
Property Purchases
DATE DESCRIPTION PURCHASE PRICE
January 2007 Airdrie Land $ 7,750,000
June 2007 Lethbridge Warehouse $ 5,579,409
June 2007 Lethbridge Land $ 1,350,526
Airdrie Land
On August 21, 2006, the Company entered into a purchase and
sale agreement to acquire the Airdrie Land.
The transaction closed on January 1, 2007. At June 30, 2007, the
Airdrie Land purchase increased the total assets of the Company
by $7,971,034, being the cost of the Airdrie Land of $7,750,000
and other costs (including capitalized interest) of $221,034. Prior
to the closing of the acquisition, the Company paid deposits in the
aggregate amount of $1,000,000 in September and October 2006.
On January 1, 2007, at the closing of the transaction, the Company
paid $217,000 in cash, $735,000 by assumption of an existing
fi rst mortgage, $3,078,000 by assumption of an existing second
mortgage and the remaining $2,720,000 by granting a mortgage
bearing interest at the rate of 10% per annum in favor of the seller
(the “Seller”) and repayable by June 30, 2007. The $735,000 fi rst
mortgage bears interest at 7.5% payable quarterly and matures
on May 15, 2009. The second mortgage bears interest at a rate
of 7.5% per annum and is repayable as to three equal principal
payments of $1,026,000 plus applicable interest due on January
16, 2007, October 16, 2007 and April 16, 2008. The payment
due on January 16, 2007 was made in accordance with the loan
agreement. The Company repaid $350,000 of the principal on
the Seller’s mortgage on February 28, 2007 and the remaining
principal balance of $2,370,000 plus interest was repaid in full on
May 23, 2007. John Mackay and Harold Kunik, independent of the
Seller’s owner, were offi cers of the Seller during negotiations to
purchase the Airdrie Land from the Seller. Messrs. Mackay and
Kunik were directors and offi cers of the Company at the time the
Company and the Seller entered into an agreement of purchase
and sale. The transaction terms were determined based on,
among other things, negotiation between the Company and Seller
and an independent third party valuation.
In order to fi nance (i) the acquisition of the Airdrie Land, (ii)
initial planning expenses, (iii) working capital to fund other real
estate acquisitions, and (iv) general and administrative expenses,
the Company initiated a private placement (the “Offering”) of
11,000,000 Common Shares at $1.00 per share. The Offering was
oversubscribed and the Company issued 11,430,000 Common
Shares pursuant to the Offering resulting in net proceeds of
$10,352,694. The Company solicited subscriptions through its
employees and agents and paid a commission of up to 10% of
the gross proceeds and issued compensation warrants entitling
certain employees and agents thereof to acquire 239,067
Common Shares at an exercise price of $1.00 exercisable until
December 31, 2007.
Lethbridge Warehouse
On June 5, 2007 Aveiro entered into an agreement to purchase
the Lethbridge Warehouse at 2821 18th Avenue North in the
Churchill Industrial Park in north Lethbridge, Alberta. The
Lethbridge Warehouse consists of 103,805 square feet of storage
space and 6,400 square feet of offi ce/mezzanine space. At June
30, 2007, the Lethbridge Warehouse purchase had increased the
total assets of the Company by $5,575,780, being the cost of the
Aveiro Investment Corp. | 2007 Annual Report | 17