Martin Clark <[email protected]> wrote:
>If BW had managed in the past to set up sufficient real estate to
>generate enough expected income to run the waterways, what would have
>happened now, in the depths of a recession, where their income from
>property has dropped below the expected levels? How would the shortfall
>have been made up?
Most (almost all?) of the recent "losses" on real estate shown in BW's
books are the result of revaluing the properties it (still) holds. In
other words, they are bookkeeping losses ("uncrystallised"), not
requirements that BW has to make up by paying in cash. In most cases,
BW is still receiving rents on those properties it has leased out.
As a result, the cash that it has to spend, derived from its real
estate operations, has been (relatively) little affected by the
recession.
So, in your hypothetical, BW would still have the cash it needs to
cover its maintenance costs. Its profits on sales (and its capital
available for reinvestment) would fall for a while, though, as I
suspect it has the sense to delay disposals until the market recovers.
So there isn't really a "shortfall".
Adrian
Adrian Stott
07956-299966
