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Messages - kexcoin

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Todays the day of launch and Kexgill have been nominated for Best Landlord of the year again!


Thank you for the clarification. One more.. If half the profit is being used to buy more property should the 19% tax be calculated on the full amount? Apologies if this is a naive question.

Yes that's correct. As you can see from the table, the Net profit has tax taken from the full sum. The remaining profit after tax is then split 50% for the buy back / burn and 50% for reinvestment in property which increases the portfolio size and the size of the buy back for the following quarter / year.

I notice in the financial model document that you have calculated the rent increase based on the previous years gross return which in turn is calculated from the property value including property inflation.

As far as I can see this would give a rent increase of 3% over the rate of property inflation (6%) giving 9+%. Was this intentional?

Yes this was intentional. Obviously rents and property inflation are not a straight or linear line and tend to go up in "steps and stairs". We have used a low level for property price inflation as mentioned in the documents and rents generally outstrip property price inflation. For example, there are restrictions on student property in a number of towns (look up Article 4) which means while the value of the property could be seen to increase in line with national and local price inflation, rents can go up considerably more depending on supply and demand. Again our 3% airs on the cautious side.

Hello Kexcoin!  Did I read somewhere that you were going to post a model analysis here on  I quickly read through the thread and didn't see it.  Please excuse if I missed it.

They have been completed and will be available shortly.

We are pleased to announce that the kexcoin token will be accepted as payment towards rents in all Kexcoin and Kexgill group properties, available from the moment the ICO finishes. By giving kexcoin a usage as a commodity we hope to expand the transaction volume and liquidity of the token, with the aim to roll out this payment system across other student service providers.

Thanks for your quick response. You've been so very patient!

Yes I see my mistake. You said that the yield increases over time because rents go up but of course the yield is calculated on the original purchase price not the current market value of the property. Would you say that rent prices are pretty much following the property value increase over time? IE rents go up by the same % as the property value or do they outstrip even that?

No problem, happy to help!
You like the impossible questions don't you? Look at it this way:

1) A standard landlord would set their return rate depending on the value of the property that they purchased and the amount that they pay back to the banks (through interest rates set over and above the Bank of England base rate / LIBOR). We don't have to do this and are much more free / unaffected by interest rate rises. Individual Landlords would be free to accept the return rate that they see fit and the market price / return could be very much competitor dependent.
2) Each year we would still look for the same return. For example, if we purchased property in Year 1 we would be looking for gross returns (obviously as high as possible) but lets say 15%. In year 25 we would still be looking for the same return (or higher - market dependent). Obviously by year 25 the return rate on the year 1 property would be huge as it would be commanding the same rents as the property purchased in year 25 but the purchase price would be significantly smaller (like for like).
3) Like Bitcoin property prices go through steep rises in price and sudden falls in price however, this is usually over a much longer time frame and is therefore not volatile in the same respect. Rent prices tend to increase with property prices but not necessarily with the falls in price.

In answer to your question, rent prices do tend to go up with property prices and they can also outstrip this.

Thanks for your assistance so far. I am trying to estimate what the total property portfolio could be after 30 years.

With the current price of bitcoin of around £3300, if all kexcoins sell in the ICO at the minimum price that gives a portfolio of around £70m

Given a gross yield of 11%, costs at 27.5% of yield and rent increases of 4% p/a I've calculated a total portfolio value after 30 years of just over £600m

I just wanted to check, am I way off or is this in line with your forecasts?

While it is impossible to tell the future, your figures are certainly possible. Some research into property price inflation over the past 30 years may show that this is on the low side. Also researching some of the properties that Kexgill have owned for more than 30 years and sold recently would project figures far in excess of your figure.

WOW. That makes things really interesting.

I'm trying to figure out what the formula is for what you have described above. As far as I can tell it is....

Myshare = ((myICOKexQty + myKexQtyPostBB) / (TotalICOKex + TotalPostBBKex))  X (PropertyIncrease / 2)

Is that right?

Yes this would be correct as long as your TotalICOKex + TotalPostBBKex excludes the kexcoin held by the core team or the contingency.

Important update
After listening to the community we have great news to announce!
In addition to the buy back and burn policy we are now also offering a profit share to anyone who takes part in the ICO or that holds Kexcoin at the end of the buy back / burn period. If you do both, you benefit twice!
So how will it work?
When the ICO ends, we will take a snap shot (within 48hrs of ending) of all of the accounts that hold Kexcoins on the bitshares network making note of the account and the sum of Kexcoin held.
The ICO will be deemed to have ended either by selling out of Kexcoin or reaching the end date (14.59 UTC 14th October 2017).
In order to qualify you must hold Kexcoin on account at the time of this snapshot.
You hold Kexcoin at the end of the buy back / burn period (again a snap shot will be taken).
If you hold Kexcoin at the point of both snapshots you will benefit twice.
What is the profit share?
The profit share will be calculated as 50% of the increase in property value from the initial purchase price.
Simple example - if £50m of property is initially purchased and by the end of the buy back period the said property is valued at £110m the sum paid back to ICO participants and Kexcoin holders at the end of the buy back period would be £30m (£110m - 50m = £60m x 50% = £30m) Please note taxes and costs of sale would be deducted.
How will this be distributed?
The number of Kexcoin sold at the ICO and the number held at the end of the buy back period will be added together and the profit share will be divided equally by this number. It will then be paid to the accounts noted on the snapshots.

This is our thanks to all that support us and participate in the project.

Thank you for the clarification. Would you be able to give a rough estimate of that setup cost either as % of the ICO receipts or a £ figure?

A rough estimate would be around 3% for Legals, valuations, finders fee (if property comes through an agent), small improvements etc.
In addition to this there is then SDLT (stamp duty / land tax) that is 4%, so 7% in total as an estimate. These costs would vary depending on the size of the property purchased. These figures are also taken into account / included when calculating the gross return.

Are these costs included in the 25-30% of gross figure you gave me earlier?

I think you have some confusion as to the day to day running costs against the actual set up.
In order to begin the project we need to purchase the properties. There are a number of costs to doing this such as legals ect. We would regard these as set up costs and should be seen as one off costs.
Once the properties are purchased they then start to generate a profit and require management / costs which we referred to earlier. These costs are ongoing as you would expect.
The percentage return that we generate on a certain property will depend upon both of these costs (set up costs and ongoing costs). Gross profits would take into account the one off costs and net profit would take into account the management / reoccurring costs.

A few more questions..

1. The buyback ends after 30 years but 30 years from when?.. the ICO, the first buy back etc. Will there be 120 buybacks in total?
2. Is ALL the money from the ICO put into property purchase or will there be other expenses that come from it?
3. 50% of profit is put back into buying property, but how long on average does it take for that profit to start generating revenue?

Thanks in advance.

1. The 30 years would start from the end of the ICO on the 14th October. We aim to perform the first buy back within 3 to 6 months so there would be somewhere in the region of 120-119.
2. No, that's unrealistic / impossible. There will be other costs such as legal fees, searches, property improvement and other business expenses that will need to be covered before profit is generated. This being said, these costs would be regarded as small / minor compared to the bigger picture.
3. This all depends on the property that we purchase and the size of it. If it is tenanted when we make the purchase then it generates income immediately.

Can you elaborate on this?

Over the 30 year buy back period we expect all/most of the property to appreciate substantially in value with inflation etc. What if we split this property price inflation 50/50. It would be one huge payout. Makes the token sale more appealing?

We're looking at the idea of offering a bounty at the end of the 30 year buyback. Is this something that the community would approve of? I would assume so but I'd love to hear your feedback?

How will you prevent conflict of interests? E.g. when you find a good property that you would like to buy... how can we be sure that you will buy it for Kexcoin and not Kexgill?

Both companies will be purchasing property going forward. There are lots of factors as to who would purchase but let me first point out, there are more than enough properties for both companies.
Should the token sale be successful then the main aim would be for Kexcoin to spend the funds as quickly as possible, while still being diligent and mindful of a good deal.
The main restricting problem is finance. Financing property through banks is a very slow process. As an example a recent large transaction made by Kexgill took almost a year to finalise and complete on. This being the case, if a deal was time dependant then it is likely that Kexcoin would take it as we could move quickly. Also cost of the property being sold would be a factor. Potentially Kexcoin will be able to purchase much larger projects or even companies, where as Kexgill are limited as to the amount that they can borrow from the bank. Later down the line this would likely be the inverse as Kexcoin would only be able to buy smaller projects from generated profits.

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