Nobody will need to be reminded that since the middle of last month the world's financial system has been in chaos. There is probably no major development project anywhere in the world which is not affected in some way by the current turmoil and it will not surprise anyone to hear that Port St. George is no exception. However, the effect the crisis is having on Port St. George is minimal by comparison with the devastation being caused to other projects.

There are two major reasons for this. Firstly, Port St. George has no external borrowings. The project has been funded to date entirely from our own resources and the revenue we have generated. Consequently we are not under pressure from any lending institution. Further, we have cash resources on deposit sufficient to continue to make progress with the project during these turbulent times.

Secondly, although the formation of the joint venture we have negotiated to take the development forward has been delayed due to the present turmoil, it remains on course. In their own words, contained in a letter dated 22nd October 2008, our proposed joint venture partners state, "We have been working on this project with you for over a year now and we remain as committed to its success as we were at the start. Tremendous progress has been made which will ultimately make for a more successful project to the benefit of all concerned."

So, although the present situation is an inconvenience (to quote again from the letter referred to above, "...no one could have predicted the unprecedented economic conditions which now prevail which will inevitably cause some delay...") the longer term future of the Port St. George development is not threatened by recent events. In the longer term the arrangements for the funding of Port St. George remain unchanged and the future of the development is not in doubt.

Right to Buy Window.

The delay referred to above obviously has an effect on all aspects of the project. The final Master Planning session has been delayed and it is now expected to take place during the first quarter of 2009. Subsequently the timing of the 60 day Right to Buy window will be affected and our best estimate is now that the window will open during the third quarter of 2009.

Hotel Operator.

Our agents Jones Lang LaSalle have been successful in securing a number of competing proposals from major hoteliers for the branding and management of the hotel to be constructed at Port St. George. Work is currently underway to select the correct hotelier and to negotiate acceptable terms with them. We are more confident than ever that we shall secure a major, high end, operator for the hotel to complement the top level designers and operators that will work on the other aspects of the project. Whilst negotiations are in progress we are bound by the terms of the Non-Disclosure Agreements we have entered into with the various hotel chains, so we are unable to name any of the operators we are speaking to, but we can confirm that they are all of the calibre that we originally set out to attract. Although we expect that it will take some weeks yet to conclude the negotiations, please be assured that we will make an announcement regarding which hotelier we shall be working with as soon as possible once those negotiations are concluded.

Environmental Management Plan.

Progress continues with the Environmental Management Plan (EMP) which will set out the way in which we shall be implementing the development using the highest standard of environmental practices. A very constructive meeting was held last month at the offices of the BEST Commission (BEST), the Bahamas Government's environmental agency, attended by the Director of BEST and members of his staff, Curly, Jon, our Bahamian lawyers, Sean B. Callender & Company, our environmental consultants, Islands By Design and our environmental engineers, ATM. Subsequent to that meeting proposed Terms of Reference for the EMP have been submitted to BEST and we anticipate feedback thereon very shortly.

Good news for European owners of Stella Maris property.

Most of our European clients bought their property at Stella Maris when the exchange rate was around $2.00 = £1.00 or $1.55 = €1.00. The recent strengthening of the dollar has seen it return to more usual rates against the pound and also improve considerably against the euro. This means that the value in sterling or euro terms of Stella Maris property has increased considerably. As an example, let's consider the value of a $200,000 plot:

At $2.00 = £1.00 it would be worth £100,000
At $1.60 = £1.00 it would be worth £125,000 an increase of 25%

At $1.55 = €1.00 it would be worth €129,032
At $1.36 = €1.00 it would be worth €147,058 an increase of almost 14%