2007 annual report aveiro investment corp. - First West Properties

Lethbridge Warehouse of $5,500,000 and other costs of $79,409
less accumulated amortization of $3,629.
Aveiro initially entered into a 10 year lease with a U.S. based
plastic container manufacturer to lease approximately 42,274
square feet at closing of the transaction. Subsequent to June 30,
2007, Aveiro entered into a 2 year lease with a leading Canadian
agricultural business for the remaining square footage in the
Lethbridge Warehouse. These leases provide the Company with
rental revenue (net of operating costs) of $776,000 per annum.
The acquisition of the Lethbridge Warehouse was fi nanced by
way of new mortgage fi nancing in the amount of $3,625,000 (the
“Warehouse Mortgage”) and the remainder by cash at closing. The
Warehouse Mortgage has a term of 5 years and bears interest at
prime + 1% and is repayable as to interest only for six months and
thereafter as to principal and interest. The Warehouse Mortgage
may be repaid at any time without penalty.
Lethbridge Land
On June 5, 2007 Aveiro entered into an agreement to purchase
the Lethbridge Land also in the Churchill Industrial Park. The
Lethbridge Land was purchased for $1,331,900 excluding closing
costs. At June 30, 2007, the Lethbridge Land purchase had
increased the total assets of the Company by $1,350,527, being
the cost of the Lethbridge Land of $1,331,900 and other costs of
$18,627.
The Lethbridge Land is currently zoned “I-G General Industrial”
and is located at 1820 – 31 Street in the Churchill Industrial Park
approximately one and a half blocks from the north Lethbridge
Smartcentre which is currently under construction. Management
believes that there is the potential to add value to the Lethbridge
Land through the land use planning process.
The acquisition of the Lethbridge Land was fi nanced by way of
new mortgage fi nancing in the amount of $665,950 (the “Land
18 | Aveiro Investment Corp. | 2007 Annual Report
Mortgage”) and the remainder in cash. The Land Mortgage has
a term of 18 months and bears interest at prime + 1% and is
repayable as to interest only over a period of 18 months. The Land
Mortgage may be repaid at any time without penalty.
Equipment Purchases
During the year the Company purchased equipment of $54,143
to support its operations. The equipment purchases included
computer hardware of $22,395, offi ce equipment of $30,873 and
computer software of $875.
Cash
At June 30, 2007 the Company had $1,930,423 in cash. Subsequent
to the year end, the Company completed a private placement of
3,000,000 Common Shares at $1.50 per share resulting in net
proceeds of approximately $4,065,000. The cash position at the
date of this MD&A is approximately $5,900,000.
Liabilities
Total liabilities were $7,408,764 on June 30, 2007. Of this amount,
$7,077,950 are mortgages secured by the properties purchased
during the year. Liabilities at June 30, 2006 consists of accounts
payable totaling $6,349.
The $7,077,950 of mortgages payable consists of four mortgages.
The Land Mortgage comprises of a fi rst mortgage and demand
promissory note for $665,950, which note can only be demanded
on default or if in the opinion of the bank there has been a change
in the business, fi nancial condition, operations or conduct of the
Company which will adversely affect either the Company or the
Company’s ability to fulfi ll its obligations or the bank’s security.
The note bears interest at prime plus 1% per annum (an effective
rate of 7% as at June 30, 2007), with interest payable monthly,
secured by land having a net book value of $1,350,527 and is to be
repaid on December 13, 2008.