Bangkok Reports

Hi, Mr. G.

Please flush some of the waste from your Inbox. I need to send you a PM but you're at capacity.

Thanks!

[QUOTE=Phordphan;1701046]This showed up today, from Sunbelt Asia

Do these numbers make any sense to anybody? Selling for less than 1 year's sales? Fully 50% of a year's profit will vanish in June with the next key money payment (assuming that the key money will be due with the new lease)? Is the writing on the wall?[/QUOTE]The owner is selling for annual net profit x 3, rounding up to 17.5 to open the negotiations.

The lease is up June of this year. Only a moron would buy the business without a new lease in place. What will the key money and rent be on the new lease? Surely the key money and monthly lease payments will go up. So it will cost a lot more than 17.5 upfront. If the key money goes up to 4 M and the rent up to 500 K, and I bet they will be much more than that, you're looking at 22 M for the business, the new lease and the 1st month rent. Plus I don't know what the norm is in Bangkok, but I bet more than one month rent has to be paid up at the time of signing. Then the new owner will want to do some refurbishing to get the new establishment spruced up, figure on some new FF&E, and there's working capital. How much does that come to? 25 M? More? How close do you want to cut it?

Let's look at the revenue side. Currently it pulls in over 21 M. What does over 21 M mean? If it was even 1 K more the ad probably would have read over 21.1 M. So figure on 21 M. The current annual net profit is 5. 8 M, but if rent goes up 100 K per month that alone pulls the profit down to 4. 6 M; that's if the gross and all the other expenses don't change. Let's say the new owner is really good, works his ass off and can up the gross about 10% to 23 M. Assume the operating expenses only increase by the same 10%. The profits would go up to 6. 3 M. If you could increase that 2% a year in the second and third years of the lease at the end of three years you'd have made 19.3 M in net profits. You'd have recouped maybe 60% of your up front costs and can look forward to negotiating a new lease with another increase in the key money and the monthly rent. Maybe at the end of the second lease you can recoup the other 40%, so now you're even right? Wrong! Don't forget the time value of money. Six years from now 25 M is worth a lot less than 25 M, so you're still behind. And if you believe these pie in the sky assumptions you probably also believe in the Easter Bunny.

Alternatively, how much would you have in 6 years if you put that 25 M into some quality securities?

Maybe the would be owner figures he can drink for free and fuck all the female employees. Of course this means he's stupid, lazy and not working very hard. Not likely that business model will improve the bottom line.

Better off investing that money and spending the income off the investment on hookers and Leos.

[QUOTE=Phordphan;1701065]Hi, Mr. G.

Please flush some of the waste from your Inbox. I need to send you a PM but you're at capacity.

Thanks![/QUOTE]Hi Phord,

Thanks for the head's up! Waste has been flushed and all ready to go.

[QUOTE=Phordphan;1701037]If left to the free market, rents will reach an equilibrium and stabilize. When, and if, vacancies become too high the price will drop. If an owner consistently has 100% occupancy then the rents are too low.

Between rising prices for commercial real estate (hardly unique to BKK lately), the drastic decrease in the female talent pool, and the change in the type of tourist who visits the LOS (read: fewer customers), I think the A-Go-Go business model is no longer viable. Using Stick's numbers, Underground / Voodoo would have to sell about 150 drinks (at 150 baht each) per day, simply to pay the rent. That may be possible in a consistently busy bar, but these days? Obviously Underground couldn't do it. Who will be the next to fold?

If the NEP starts to empty out, all other things being equal, the rents will drop. But, should that happen, my money's on the owners selling the joint, lock, stock and barrel, to a developer.[/QUOTE]Phord, when you start factoring in money laundering and other forms or corruption then the idea of a free market kind of goes out the window. I think that is true for many businesses here not just the naughty nightlife.

[QUOTE=PaulKausch;1701066]. . . . How much does that come to? 25 M? More? How close do you want to cut it?

. . . Better off investing that money and spending the income off the investment on hookers and Leos.[/QUOTE]Agree with everything you said Paul and Phord.

25 M baht is chicken feed to some of these corporations and individuals who live in another stratosphere to you, me and most guys on ISG.

In the Philippines some of the politicians and tycoons throw around millions of pesos as though it is monopoly money. I am sure it is exactly the same in Thailand. The former PM's families probably spend 25 M per week as petty cash on travel and luxury items.

If one of these tycoons wants to take over the NEP lease and turn it into something other than gogo bars then that is game set match.

I returned from Cambodia last night and visited NEP. I was accompanied by a friend who last visited Nana about twelve years ago and was leaving Bangkok for Canada in early morning. It's not my favorite place to go but agreed to cruise through as my friend wanted to see the changes from his prior visit and the current action. For one thing, I guess Nana was also a ping pong venue twelve years ago so he wanted to see a show though explained this has not been part of the complex for quite a few years.

We were both appalled by the number of lady boy bars. How many are there -- five or so now? Not to mention the LB's that are slipped into the lineup of regular girlie bars without informing novice customers, some of whom may not know the finer points of telling the difference between actual girls. I also pointed out the recently closed Underground, which even though a LadyBar, brought a certain energy to that corner of the complex. It sure seemed dead in that area now. The other noticeable aspect was a lot of the girls from the go go bars seem really young and immature. Watching them hanging around outside their respective bars was like watching junior high kids in a playground during recess. After I explained about the current bar fine structure, long time vs. Short term, general pricing for girls, coyote concept etc. , my friend was ready to leave. He found the whole place boring and ridulously expensive, and I concurred. We never went into any of the bars except for taking a peek inside.

In my view, this complex is doomed. I see a large condo building and complimentary retail stores going in here within the next few years and further gentrification of the entire street over time. With all the upscale malls nearby, it seems unlikely another full scale mall would be built.

Nigh, the end is near.

[QUOTE=RedKilt;1701140]Agree with everything you said Paul and Phord.

25 M baht is chicken feed to some of these corporations and individuals who live in another stratosphere to you, me and most guys on ISG.

In the Philippines some of the politicians and tycoons throw around millions of pesos as though it is monopoly money. I am sure it is exactly the same in Thailand. The former PM's families probably spend 25 M per week as petty cash on travel and luxury items.

If one of these tycoons wants to take over the NEP lease and turn it into something other than gogo bars then that is game set match.[/QUOTE]

[QUOTE=Phordphan;1701046]This showed up today, from Sunbelt Asia:

[I]This popular Nana area bar is in a prime location and has been in business for 12 years with the current owner in place for much of that time. The busy bar is open daily from 11 am to 2 am and has five full time and thirty part time employees with a monthly payroll of 163,000 baht.

The bar has big screen TVs and music to keep bar patrons entertained. The rent on the bar is 404,000 baht while key money is 3 million baht every 3 years. The lease expires in June of 2015 but is renewable every 3 years. The business takes in over 21 million baht annual with a net profit of 5.8 million baht.

The business has great growth potential based on its key location and a motivated owner could see profits rise.

The owner is selling as he is retiring and returning to his home country.

ASKING PRICE: 17.5 million baht[/I]

Do these numbers make any sense to anybody? Selling for less than 1 year's sales? Fully 50% of a year's profit will vanish in June with the next key money payment (assuming that the key money will be due with the new lease)? Is the writing on the wall?[/QUOTE]That means the owner already got word on the increase in rent and the key money increase. He wants out now.

[QUOTE=Tomasb;1701146]In my view, this complex is doomed. I see a large condo building and complimentary retail stores going in here within the next few years and further gentrification of the entire street over time. With all the upscale malls nearby, it seems unlikely another full scale mall would be built. Nigh, the end is near.[/QUOTE]Good riddance! Soi 4 has become such an eyesore. Would be great to get rid of all the day drunks.

[QUOTE=Phordphan;1701046]This showed up today, from Sunbelt Asia:

[I]This popular Nana area bar is in a prime location and has been in business for 12 years with the current owner in place for much of that time. The busy bar is open daily from 11 am to 2 am and has five full time and thirty part time employees with a monthly payroll of 163,000 baht.

The bar has big screen TVs and music to keep bar patrons entertained. The rent on the bar is 404,000 baht while key money is 3 million baht every 3 years. The lease expires in June of 2015 but is renewable every 3 years. The business takes in over 21 million baht annual with a net profit of 5.8 million baht.

The business has great growth potential based on its key location and a motivated owner could see profits rise.

The owner is selling as he is retiring and returning to his home country.

ASKING PRICE: 17.5 million baht[/I]

Do these numbers make any sense to anybody? Selling for less than 1 year's sales? Fully 50% of a year's profit will vanish in June with the next key money payment (assuming that the key money will be due with the new lease)? Is the writing on the wall?[/QUOTE]Guys,

Before anybody seriously considers to get involved into this business I recommend to read the piece below and do some further research into this direction:

[URL]http://www.andrew-drummond.com/2015/02/thailands-boiler-room-operations-part-1.html[/URL]

There are 3 major players out of this environment around the Nana lease; one has not been seen for a while now, another one (owning a number of bars there) died a few weeks ago in the North of Thailand and a third one was forced out of business some years ago.

Many Nana bars will be on the market soon. In the past year there were developments that changed the power structure in this district, and the situation has not stabilized yet. For those who still want to get involved my prayers:

[B]Forgive them for they know not what they do.[/B]


Giotto

[QUOTE=TwoTimeTed;1701165]That means the owner already got word on the increase in rent and the key money increase. He wants out now.[/QUOTE]That's most likely not correct!

The Nana master lease changed ownership on 01.07. 2012 - and the sub-leases were massively increased that time. They nearly doubled in some cases. Some bar owners were forced out of business, others gave up because they did not see any chance of profitability any more.

The situation in Nana is also not easy after certain well-known events. It will not be easy to increase the lease further.


Giotto

Guys,

I'm seeing a lot of negative talk about Nana, Soi cowboy. I'm planning to go with some friends in a few weeks. Can some veterans recommend some good mongering spots?

I initially had Nana & Soi Cowboy planned, but now I'm not so sure.

Any feedback / suggestions / advice would be greatly appreciated.

Thanks!

[QUOTE=Euhno;1701383]Guys,

I'm seeing a lot of negative talk about Nana, Soi cowboy. I'm planning to go with some friends in a few weeks. Can some veterans recommend some good mongering spots?

I initially had Nana & Soi Cowboy planned, but now I'm not so sure.

Any feedback / suggestions / advice would be greatly appreciated.

Thanks![/QUOTE]I would still keep those on my list. I was there in Jan / Feb 2015 (a few months ago). Not bad compared to where I come from, you can't get tail that cheap and with abundance.

These guys on here are belly aching because prices have risen and quality has suffered since the days they've fist landed on the scene. Understandable. But if each of them were to look back at their own countries and compare prices, Thailand still a bargain. When the day comes it is not a bargain, Thailand will become a ghost town, but in the meantime, its still good. Go to Nana, go to Soi Cowboy, have fun, go ahead and be the 2 week millionaire.

[QUOTE=Giotto;1701372]Guys,

Before anybody seriously considers to get involved into this business

Giotto[/QUOTE]Your experience certainly makes your opinion very credible.

I don't think anyone who posted on the topic thinks buying a bar in or near Nana Plaza is prudent.

[QUOTE=Euhno;1701383]Guys,

I'm seeing a lot of negative talk about Nana, Soi cowboy. I'm planning to go with some friends in a few weeks. Can some veterans recommend some good mongering spots?

I initially had Nana & Soi Cowboy planned, but now I'm not so sure.

Any feedback / suggestions / advice would be greatly appreciated.

Thanks![/QUOTE]Go to both. If you've never been to either it will be new and interesting. The guys complaining are comparing what they are like today to what they were like in the good ol' days, and you can never beat them good ol' day.

I also recommend you visit a couple of the oilies. Bamboo, Cherry, Mango, Snow White and Tulip are worth checking out. I also recommend checking out Annie's for a soapy, and Dr BJ's Nuru and Dr BJ's Salon. Bamboo, Annie's and the Dr BJ's establishments are relatively close to the Nana BFS station. Cherry, Mango and Snow White are close to the Phrom Phong BTS station. Tulip is at the Thong Lo BTS station. You can find information about all of these on this forum.

[QUOTE=TwoTimeTed;1701460]I would still keep those on my list. I was there in Jan / Feb 2015 (a few months ago). Not bad compared to where I come from, you can't get tail that cheap and with abundance.

These guys on here are belly aching because prices have risen and quality has suffered since the days they've fist landed on the scene. Understandable. But if each of them were to look back at their own countries and compare prices, Thailand still a bargain. When the day comes it is not a bargain, Thailand will become a ghost town, but in the meantime, its still good. Go to Nana, go to Soi Cowboy, have fun, go ahead and be the 2 week millionaire.[/QUOTE]The relevant comparison may not be between Thailand and one's home country. It may be between Thailand and other countries one might visit. For example, [I]for mongering[/I] there is at least a good argument Jakarta is better than Thailand these days. Or maybe the Philippines (although I haven't visited it so don't really know).

It is sort of like what happened with Brazil a few years back when the real was very strong, and, prices became very high. I began running into quite a few men I had initially met in Brazil traveling in Asia rather than Brazil.

That said, Thailand still has its attractions, but its attractiveness as a mongering location has diminished a bit lately. And that is particularly true for Nana and Soi Cowboy (I agree with Paul's suggestions about alternate places to go; I would add that although the service is generally not good there, it might round out the experience to visit a place like Nataree (for eye candy) or some other (non-Annie) soapie).