Hutchison Ports entitlement

As a shareholder in Hutchison Whampoa (HK:13), I received a small allocation of units in Hutchison Ports which will be listed in Singapore later this month. The cut off for applications was today (so it was a good thing that my flight back from New York was not further delayed).

Although it required a physical visit to the nearest BOCHK office to fill in some paperwork and the amount of money involved was much less than my usual minimum investment, my view was that the investment was attractive and, trivial as it was, was worth doing. Since the issue was non-renouncable, I didn't have the option of selling my entitlement. My choice was to either let the entitlement lapse or take it up.

I will see where the price settles after listing but in the interests of avoiding investments which are too small to be meaningful, will either buy more or sell in the short term.

Rent review completed

One of my leases expires next week. I have negotiated a 16% increase in rent for a fixed two year term (no break clause). I have also agreed to leave the two months bond at the same amount as the previous lease.

The increase is less than the current market rent (which would suggest a 25% or greater increase), but I have accepted a smaller increase because:

1. the tenant managed to convince me that he would leave (and downsize) if I insisted on anything higher. Even a one month vacancy would be enough to negate the gain of getting to market rates if the agent's commission was taken into account;

2. the absence of a break clause is of value as it defers the risk of a future vacancy by 11 months. The only thing more important than cash flow is a predictable and reliable cash flow;

3. the tenant has been a prompt payer of rent who does not impose on my time. I like tenants like this.

Visiting New York

I have just returned from my third visit to New York. I really really like that city. Of course, as a short term visitor staying in the better areas, it's easy to find experiences to enjoy.

In between work related commitments, we took in three shows on Broadway, spent some time in the Metropolitan Museum of Art (nowhere close to being sufficient), visited the Guggenheim, took in a slow walk through Central Park and ate too much.

A few observations:

• Shoes made in China are cheaper in New York (even with the NY sales tax) than in Hong Kong.
• The city did not feel busy. Maybe my comparisons are off, but for the most part it does not feel as busy as Hong Kong.
• Food portions in restaurants are huge.
• Service standards are better than Europe (an admittedly low threshold) but not as good as most places in Asia.
• We noticed that some places added 15% to the bill as a mandatory tip while other left it to our discretion (with 15% or more being expected). The former nearly caught us out the first time - we came close to double tipping.

The only negative was the 19 hour delay on the return flight with Cathay. These things happen but turn a long tiring journey into a really exhausting experience. That said, the cabin crew really did everything that could be expected on the service front.

Hopefully we will go again next year.