Thursday, December 20, 2018

Revisiting Jinbao Place and Beijing's Luxury Retail District

Jinbao Street is a premier luxury shopping street in Beijing, like Rodeo Drive in Beverly Hills. In its two-block stretch there are three 4 or 5-star hotels and Bentley, Ferrari, Maserati and Mercedes dealerships. In my return this time, I found an Aston-Martin dealership in the lobby of my hotel, The Regent.

Jinbao (translated as “golden treasure”) Street is the best-known destination for Beijing’s wealthiest shoppers.

Seven years ago, I reported on a struggling three-year-old, 40,000 square meter (430,000 square foot) luxury mall known as Jinbao Place which stood largely vacant on this otherwise busy street. Above the second floor in this seven-stories-above-grade mall, almost all the space was vacant. The seventh floor, the restaurant floor, had only a roast duck restaurant.

At that time, I thought the problem was that most luxury retailers had already saturated the Dongdan district that contains Jinbao Street and the famed Wangfujing pedestrian mall, anchored by the newly renovated Beijing APM mall, formerly known as the Sun Dong An plaza. There seemed to be an Omega watch store on almost every block.


What a difference seven years makes, though. I found the Jinbao Place mall to be at stabilized occupancy. I counted three vacancies and a good number of shoppers. This time I dined at a Japanese restaurant, noticing that their lobster dinner was priced at 2500 yuan (about $350).

The famed Wangfujing pedestrian mall, a few blocks west, was at full occupancy, as was the APM mall. This location seems to be at the epicenter of Beijing wealth. The only thing I can witness in several visits to Beijing is its continuing prosperity.

So I was wrong about this one in 2011.

Wednesday, November 14, 2018

Update on the Eminent Domain Case in Seoul











The dependent variable that the valuation algorithm solves for is the price per square meter of land area, not building area, because land in Seoul is worth far more than most buildings on it due to the shortage of land.
Notice that almost every input variable is a dummy variable. Dummy variables are binary variables with the value of 1 or 0, depending upon the presence or absence of a particular condition, such as being “adjacent to a narrow road”.
There are only two quantifiable input variables in this model: the land area and the distance to railways or highway. Missing from this model are so many quantifiable variables such as distance to subway stations, distance to shopping, distance to schools, quality of schools, floor area ratio (ratio of building area to land area), and land slope.






The Korean client’s lawsuit against the private taking ultimately lost in Korean courts, but the treaty between the U.S. and the Republic of Korea mandates an international arbitration for a U.S. citizen.  We expect to be heard at the International Arbitration Centre in Hong Kong.













Sunday, October 21, 2018

Why I Don’t Appraise in Antarctica



























Saturday, September 1, 2018

An Industrial Building Appraisal Done to both USPAP and RICS Red Book Standards















24) The observed condition of the foundation, roof, exterior walls, floors, heating system, plumbing, insulation, electrical service, and all other mechanical and constructions based on a casual inspection only and no detailed inspection was made.  The structures were not checked for building code violations, and it is assumed that all building components meet applicable building codes unless so stated in the report.  

Because no detailed inspection was made, and because such knowledge goes beyond the scope of this appraisal, any observed condition or other comments given in this appraisal should not be taken as a guarantee that a problem does not exist.  Specifically, no guarantee is made as to the adequacy or condition of the foundation, roof, exterior walls, interior walls, floors, heating system, air conditioning system, plumbing, electrical service, insulation, or any other detailed construction matters.  If any interested party were concerned about the existence, condition, or adequacy of any particular building or site component, we would strongly suggest that a construction expert be hired for a detailed investigation."





Monday, August 27, 2018

More Appraisals in British Columbia: How Helpful is USPAP in Preventing Mortgage Fraud?


An applicant for a loan from my client was about to bid on a court-ordered sale of an assortment of foreclosed British Columbian land properties scattered all around the province.  The foreclosing lender had been a victim of mortgage fraud, feebly assisted by a supposedly reputable Canadian appraisal firm. 







Remnants of the disaster 11 years ago at Lake Chehalis


Tuesday, July 24, 2018

Another EB-5 Regional Center Failure: Imperial Regional Center




The goal of the EB-5 regional center was to develop a 78-acre commercial center (“Imperial Center”), in the unincorporated town of Heber, in Imperial County, California, containing over one million square feet of building area, mostly focused on retail, wholesale and food and beverage operations, with a hotel, cinema, and public space. There are 135 Chinese investors who have supplied $67.5 million in funds in order to secure a U.S. green card. The first phase of the center, which was an ARCO gas station and AM/PM Minimart, has been successful.  The second phase consisted mostly of food and beverage operations, including 4 restaurants and a nightclub. All are open now. The third phase has not started, and an aerial map from March 21, 2015 shows no further development since that time more than 3 years ago.


If Imperial Regional Center is not paying its loans or property taxes or contractors, perhaps some of its income is being diverted to the Lo family through Veggie & Tea House.

The attorney writing the complaint for the cheated investors is Jing Wang, Esq., Kingswood Law, Diamond Bar, California. 




Thursday, June 21, 2018

Another Budding EB-5 Scandal in California's San Gabriel Valley



An attorney retained me at the request of a skeptical investor in this EB-5 project sponsored by the America FX Regional Center, LLC, approved as an EB-5 regional center in 2016, well after it was understood that there was an ethical crisis in the EB-5 regional center industry. I was supplied with an initial Offering Memorandum, dated 6/1/16, and a restated Offering Memorandum dated 4/24/17 for the project "FX Boutix Duarte EB-5 Lender".


The goal of the offering was to develop a 318-room FX Boutix hotel across from the City of Hope, one of America’s top ten cancer research centers, in the middle-class Los Angeles suburb of Duarte, California. The total project floor and parking area was to be 445,000 square feet. So far, they have received more than $53 million from 96 Chinese investors, but have never received development approval for their oversized project, and the development application was withdrawn several weeks ago, according to City Planner Jason Golding.

The principals of this EB-5 regional center are Sherry Ho and Alvin Tzuen-chung Ho, former chairman of the Chinese hotel firm FX Hotels Group. He is also known as Hou Zunzhong, depending upon whether the name is pronounced in the Mandarin or Taiwanese dialect. The FX Hotels Group is a hotel corporation traded on the Taipei Stock Exchange, but with almost all its hotels based in the People’s Republic of China. This corporation has lost 95% of its share value since the beginning of 2014. As of today’s closing share price of 3.05 Taiwanese New Dollars (worth about 10 U.S. cents), this company’s market capitalization is equivalent to about 6.3 million U.S. dollars. One Asian stock analyst joked that FX’s only success was taking Taiwanese money and dumping it into bottomless pits in China.

Here’s the chart action in recent years, and consider that one U.S. dollar is approximately equal to 30 Taiwan New Dollars.

It seemed that the Mr. and Mrs. Ho misled investors in the America FX Regional Center by stating that Mr. Ho’s family owned the FX Hotels Group and that FX Hotels Group was interested in foreign development. Most of FX Hotels Group is owned by other Chinese hotel corporations such as Furama and Fu Lihua. Almost all FX hotels are in China.


The second Offering Memorandum for America FX Regional Center has no mention of Mr. Ho or any affiliation with the FX Hotels Group. This might be because Mr. Ho was fired in spectacular fashion at an FX shareholders’ meeting on 3/28/17, after another year of losses, which was video recorded and published on the China Times web site, including police called in to quell Mr. Ho. http://www.chinatimes.com/realtimenews/20170406001317-260410  He had not been notified in advance that he was going to be replaced on the spot by the leading shareholders.

Perhaps this news was behind Mr. Ho’s ouster:

“FX Hotels Group Inc. Auditor Raises 'Going Concern' Doubt
Mar 31 17
FX Hotels Group Inc. filed its Annual on Mar 31, 2017 for the period ending Dec 31, 2016. In this report its auditor, Deloitte and Touche LLP, gave an unqualified opinion expressing doubt that the company can continue as a going concern.”

Meanwhile, a new, restated Offering Memorandum for the America FX Regional Center was published less than a month after his ouster, and there is a disclaimer that investors should not expect FX Hotels Group to manage the property.

The most outrageous inaccuracy in the Offering Memorandum, stated on page 2, is the claim that the hotel would be built across the street from the City of Hope Medical Center, which includes a 217-room hospital with 40 extra rooms for visiting family members. Most patients are cancer patients.

The City of Hope is actually located 1.2 miles from the location of the hotel project, as measured in the Google Map below. The gold and red colors along the route indicate traffic bottlenecks due mainly to shoppers patronizing Wal-Mart and Home Depot in the immediate area.

Visiting investors must have instead been shown the closed Santa Teresita hospital across the street behind the discount retail center anchored by “Dollar Tree” and “Smart and Final” stores, shown in the top photo. Santa Teresita surrendered its surgical/acute care license in 2004, and the 5-story building in the background is composed of offices and vacant space, but there is also an adjacent 131-room senior care home.

The architect's drawing seem to have no compatibility with the L-shaped site, as seen below:









In terms of locational advantages, this project is also a miss because it is not located on the Gold Line light rail system serving the San Gabriel Valley, including a stop for the City of Hope. The nearest west stop on the Gold Line, Arcadia Station, includes several all-suite hotels such as Springhill Suites, Hilton Garden, 2 Extended Stay Americas, Residence Inn and Doubletree, all with a better restaurant selection than Duarte offers. Visiting families would not need to rent a car or deal with the Duarte traffic jams associated with Walmart and Home Depot. The subject hotel project, on the other hand, is not located on the light rail line.

So, there should be 96 Chinese investors asking, “Where’s our money?”

The actual City of Hope
The attorney writing the complaint for the cheated investors is Jing Wang, Esq., Kingswood Law, Diamond Bar, California. She also successfully litigated against the California Investment Immigration Fund, also previously reported on this blog.