Devine and Leightons

David Devine, who founded the Devine development company, no longer owns part of it. He sold out as part of a legal dispute involving a long time personal assistant. Devine developed lower quality high rise apartments, primarily sold to offshore and interstate investors. David Devine has established Metro Property Group, and is back in business building large highrise buildings with small apartments in B-grade locations. David Devine, and his marketing manager Ken Woodley (also ex-Devine) both live in very large apartments not built by Devine.

David Devine recently has been critical Leightons who owns 49% of Devine. Extract from The Australian:

"In February 2007, Leighton paid $94.7m for a 40 per cent stake in Devine but the two groups fell out during the GFC.

"At Devine, they weren't interested in the fundamentals of the business. They just thought you do it and it happens," Mr Devine said. "I have a lot of respect for Wal King but I can't say the same for the other Leighton representatives on the Devine board while I was there."

A Leighton spokesman said Mr Devine's comments were no longer relevant to Leighton and its investment in Devine.

"Mr Devine would be better placed to look at his own performance and that of Devine when he was there rather than a company that he no longer has anything to do with," he said."

Albert Street

Photo of Albert Street, showing M on Mary and Festival Towers. Note that these buildings will be impacted if and when the small 6 story building in the front of the photo is demolished and a new high rise is built on that site. See here, and here.

Madison Heights Bowen Hills

Metro Property Development and Pearls are marketing a 29 level high rise off the plan in Bowen Hills. The development is called Madison Heights Bowen Hills.

Metro is a recently formed company by David Devine and Ken Woodley. Both are ex-Devine (a listed company controlled by Leightons). Devine has a reputation for building low end apartment complexes. Pearls is an Indian development company.

The Madison Heights development has 182 studio/one bedroom apartments and 104 two bedroom apartments. This gives a total of 286 apartments. However, there are only 204 car parks. So taking into account visitor car parking, about 100 apartments will not have a car park. The development is in an industrial area, on Campbell Street, opposite the Courier Mail printing site, with good views of the hospital and inner-city bypass. There are no amenities around, so a car is needed.

The apartments are tiny. For example, an example two bedroom apartment is 70 sqm, including a 4 sqm balcony. (It is hard to call 4 sqm a balcony -- that is smaller than a bathroom.) Typically, I would not recommend a two bedroom which is less than 85 sqm internally, and even that is small. A good two bedroom should be at least 90 sqm internally. For comparison, you can buy modern two bedroom apartments that are 110 sqm internal.

And pricing is not cheap. A two bedroom, two bathroom which is 73 sqm internally plus a 4 sqm balcony on a low floor is listed for sale at $548,000. This is outrageous. This is over $7,000 a sqm.

Compare this two bedroom apartment in River City, a Devine building (developed by David Devine and Woodley). It is not a great quality building, and it is a few years old, but there is no reason to think Madison Heights will be any better. It is located on Albert Street in the city -- a much better location. It is 76 sqm internal plus 13 sqm balcony, with views of the Botanic Gardens. It has one car park, and is being sold furnished, for "offers over $450,000". So if it sells at $450,000, that will be $5,056 a sqm.

Take care!

Devine Half Year Results

Extracts from presentation to investors:

• Strong market response to Hamilton Harbour project with third tower sales progressing well
• Hamilton Harbour (Towers One & Two) construction advancing well, with construction of third tower targeted for mid-2011 commencement
• Hamilton Harbour has continued to attract strong sales and enquiry with: - 92% of apartments in the first two stages at unconditional contract status, and 49% of Stage 3 now sold and unconditional
• Hamilton Harbour Tower One is progressing well with structural cycles completing verticals up to floor 14 and slabs up to floor 12
• Tower Two is close to entering structural cycles which will see the structure advance noticeably from this point in the coming months
• First apartments expected to be completed by December 2011

• New opportunity secured; 107 apartment project in Teneriffe, Brisbane CBD fringe (Commercial Road - 107 apartments (1 and 2 bedroom only), marketing to commence in second half of 2011)
• New project signals Devine’s ability to apply high density residential capabilities to mid-scale, medium density opportunities

Mosaic The Valley

Leightons has released a new representative image for the Mosaic The Valley apartment project on Ann Street. It is much blander with less greenery than previously visioned. The building appears to be closer to road, as the footpaths are narrower. The new image is above. The old image is below, and an older view is located here.

Mosaic is being developed by Leighton, which owns about half of Devine and is a constructing Hamilton Harbour with Devine.

Mosaic was launched in October 2009. It has 212 apartments, most of which are relatively small. Advertised today as 1 bedrooms starting at $365,000 and two bedroom starting at $540,000. No pool.

Looking at Devine

The AFR reports today that Leighton Holdings is considering selling its under performing investments such as it 49% shareholding in property developer Devine.

See also Reuters and The Australian

New Apartment Projects In Brisbane

This is my list of actual and pending apartment projects in inner city Brisbane.

1. Macrossan Apartments, located behind Skyline and the Admiralty buildings. Not river front. 37 levels. Full floor apartments on higher levels -- 3 bedrooms plus study, about 250 sqm internal, with small balcony. High level of finishes. Expensive. See typical floor plan. The main bedroom looks right into Skyline -- not much privacy here. The apartment on level 26 will be auctioned (by the developer it seems) on 3 March 2011. The building is complete, but it seems that less than half the apartments have sold.

2A. Soleil, by Meriton. Next door to Macrossan, and also behind Skyline, is Soleil. Currently under construction. Over 400 apartments; 74 floors. Currently at about level 55. The developer will keep the management rights; and will keep ownership of a large number of apartments on higher floors. This, in my opinion, creates many issues for owners, so take care. Will be settled in stages, with lower floors settling first. This is a B grade development in my view.

Photos of Soleil under construction: Photo of Soleil, Macrossan and Skyline; photo of the 3 Admiralty buildings, River Place, Skyline, with Macrossan to the side and Soliel growing from behind above Skyline.

2B. Infinity, by Meriton. Located in the Roma Street area, behind but to tower over Evolution. 77 floors of apartments, so this will be a massive height for Brisbane, but the actual floor plate is not that large. Currently in off the plan sales - see brochure. The hole for the carpark has been dug, but the building itself is not yet under construction. With 2 bedroom apartments starting at $590,000, this looks to be expensive. Again, the developer will keep the management rights and a number of apartments in the building, so take care.

3. Sunland's "Carrington" development on corner of Alice Street and Albert Street. This development recently received Council approval. 47 floors of high end apartments. Will cast shadow over Botanical Gardens, which is not good for the public. If you read all the controversy about Q1 on the Gold Coast, I hope that Sunland does a better job on its first Brisbane apartment building. The AFR reports that construction will start when 50% of the 257 apartments have been pre-sold.

4. Devine's proposed development, on the corner of Margaret Street and Albert Street, at 30 Albert Street. This is right behind the Sunland development mentioned above. A development application was lodged on Christmas Eve, 2010, so this will be some way off. 37 floors, 420 apartments, 1 and 2 bed apartments only. Looks like another Charlotte Towers.

5. The Midtown, on Charlotte Street, opposite Charlotte Towers. Currently in pre-sales; demolition has started onsite. One and two bedroom apartments. 29 floors of apartments.

6. The Chelsea and Madison on Mayne, by Metro Property Developments. These apartment buildings are both in Bowen Hills, and contain 286 and 242 apartments. Metro is associated with David Devine and Ken Woodley, both ex-Devine. Their most recent development was Charlotte Towers, where (as reported elsewhere in this blog) capital growth has been on average about 1% and many purchasers off the plan have lost money. So if they follow the same approach, the developers will profit, but not the initial purchasers. It is interesting to read this. These apartments do not have development approval. (Metro is also planning on Brooklyn on Brookes, in the Valley. (Also, Richmond at Bowen Hills by another developer.)

7. Mosaic in the Valley, still waiting for development approval. 20 floors, about 250 apartments. Currently being sold off-the-plan.

8. McLachlan & Ann in the Valley. 234 apartments, currently being sold off the plan.

9. Kevlin Grove Urban Village: A bunch of apartment buildings under construction, including 3 buildings by Pradella (branded as Urban Edge); and Edenview; and Binary Apartments.

10. SouthPoint at SouthBank. 20 floors.

11. Newstead River Park - about 15 apartment buildings planned, with Mirvac completing "Pier" shortly, and "Park" in presales. FKP plans to build The Gasworks.

12. Northshore Hamilton (many developers, with a large number of apartments planned), Hamilton Reach (in presales) and Hamilton Harbour (three apartment buildings by Devine, currently under construction) and Portside by Multiplex (one building under construction, at least one more planned); and Rivana (by Citimark).

13. Rive at Albion/Breakfast Creek (under construction, but flooded). Two towers of apartments.

14. Waters Edge at West End. Developed by Pradella. (stage one complete; stage two under construction). Basement and pool area flooded.

15. FKP's The Milton at Milton. Was in off the plan sales. Display flooded.

16. The Capitol Apartments, South Brisbane. Currently in off-the-plan sales.

17. Yungaba Apartments, Kangaroo Point. Currently in construction, but delayed due to floods.

18. Montague West End - site flooded, and website not active.

19. The Apple, in the CBD. Small building on 1 bedroom apartments.

20. Belise, St Paul's Terrace, in the Valley. In presales, off the plan.

More Details from Colliers Apartment Report

A post below mentioned the Colliers September 2010 Brisbane Apartment report. See "Why Are Colliers Optimistic". Some more details:

See this report:

Lachlan Walker, Colliers International project management & research - residential, says the Brisbane apartment market is in a similar position in the property cycle as it was more than a decade ago, where the market was looking more positive and just a few years from a major property boom, following a substantial period of depressed market conditions.

"The resounding theme for the September 2010 quarter is that the Brisbane Apartment market has made strong progress in recovering from the effects of the GFC," he says.

"It has been a difficult two years since the impacts of the declining US economy impacted the Australian property market, however the most recent quarter has seen the strongest rate of sale for the Brisbane market since 2004."

The report revealed that there were 425 unconditional sales of new apartments within Brisbane's Inner Ring, encompassing the five kilometre radius from the CBD, representing an increase of 21 per cent per cent from the 276 sales recorded in the June 2010 quarter. This brings the total unconditional sales for the 2010 year to-date to 977 transactions for Brisbane's Inner Ring, 182 more transactions than recorded for the entire 2009 calendar year. It must be noted that 32 per cent or 135 of the 425 unconditional sales were recorded in Laing O'Rourke's new residential release, M & A, in Brisbane's Fortitude Valley.

Other strong performers were FKP's The Milton to be developed by FKP which registered 68 unconditional sales for the three month period, as well as Devine's Riverside Hamilton and Aria Property Group's Station 16, which saw 41 and 42 sales respectively.

Bowen Hills

There will be a large number of new apartment projects in Bowen Hills. This area is close to the city and the Royal Brisbane Hospital, but does not have much else going for it.

Some example developments selling off the plan include

• The Chelsea, 195 apartments, being co-developed by David Devine (now that he has left Devine)
• Code, 132 apartments
• Belise, 200 apartments
• Richmond Apartments, 107 apartments

Alice Street Development by Sunland

The developer of the world's tallest residential tower Q1 on the Gold Coast has unveiled plans to build a $250-million luxury apartment tower in Brisbane's CBD. Sunland Group has lodged its proposal for the 44-storey Carrington Tower opposite the Botanical Gardens at 140 Alice Street, after acquiring a small slice of neighbouring land that currently houses a small apartment building.

The tower - said to be encased with a pewter glass wall with a subtle gold tint - will be built on the site of Devine's former French Quarter which was flattened by the global financial crisis in 2008.

Carrington Tower will be Sunland's first foray in the Queensland residential market since the completion of Q1 and Circle on Cavill at Surfers Paradise almost five years ago. Sunland Group managing director Sahba Abedian has hailed the design by Wood/Marsh as the developer's finest piece of architecture to be produced in the company's 27 years.

The facade of Carrington Tower will flow down to create a canopy over the lobby.

"We will be looking to create a very sculptural, iconographic tower that will really mark the entry into Brisbane from the southside of the city.

"It's a curvilinear building that really personifies the feminine form. If you look at the building it actually drapes out at the base that is not dissimilar to a beautiful dress - that's really the intent behind the tower."

Mr Abedian said he was confident Brisbane City Council would approve the tower by mid-2011, as it could potentially have an unprecedented amount of innovative sustainable design features, including solar panels incorporated into the louvres and blinds to capture and reuse energy.

"As we know the Baby Boomers are moving into retirement and lifestyle choices are changing ... and we hope to cater for these individuals," Mr Abedian said.

If approved by the council, Carrington Tower will be one of only a few buildings in Brisbane, including Riparian and The Grosvenor, designed for owner-occupiers. Mr Abedian said Carrington Tower would boast of the facilities of a hotel, including a 24-hour concierge.

"We believe there is strong demand for these environments," he said.

One-bedroom apartments with a study are expected to sell for about $500,000 and sub-penthouses $3 million.

Although Harry Triguboff's twin-tower residential development on Herschell and Adelaide streets is near completion and the abandoned Vision tower site on Mary Street may also be resurrected by developers Billbergia, Mr Abedian said he was confident there was room in the Brisbane market for Carrington Tower.

"We have a strong track record and we also have a very strong client base that I have no doubt will be very excited when we launch this project," Mr Abedian said.

"The testament of our capabilities is the proof of our projects through from Q1 to Circle on Cavill and Palazzo Versace."

Brisbane Times

Devine Hamilton

The Australian Financial Review included an advertisement last week stating that Devine had received construction finance for Hamilton Harbour.

Devine has also started to market a new building on the same site, Riverside Hamilton.

No Finance Yet for Hamilton Harbour

Devine still has not obtained finance for its Hamilton Harbour development. The AFR reports that it could take up to two months of further negotiations for Devine to obtain finance. The average price of all apartments sold in this development to 31 December 2009 is just less than $520,000 per apartment. For the first tower, the average price is $539,000 per apartment.

From a report to shareholders this week:

"The company’s mixed-use Hamilton Harbour joint venture with Leighton Properties also continues to progress well with over 90% of the first stage being sold by 31 December 2009 with 233 apartments representing $125.6 million in sales.

Following the success of the first stage, the second stage residential tower was released to the market in October 2009 and this has resulted in total sales to date for the two stages of 377 apartments worth $196.6 million with 317 of these sales unconditional with 10% deposit paid. Devine together with its joint venture partner, Leighton Properties, continue to progress securing funding for the construction phase and are confident that this will be achieved."

Devine

The Courier Mail has recently published two stories relating to David Devine, founder and major shareholder of Devine Ltd. One story showed Mr Devine living in a penthouse in Kangaroo Point (not built by Devine). The story in today's paper was not flattering.

Two days ago, there was a story titled "Devine sues former employee over espionage claims" which started "Devine Industries Pty Ltd is suing the former personal assistant of founding..." Links on other websites include the summary: "TWO of Queensland's biggest construction firms are in a legal battle involving claims of commercial espionage, fraud and embezzlement of more than $500,000."

The Courier Mail has removed this story from its website and did not include today's story on its website. I wonder why?

The link to the story that has been taken down is:http://www.news.com.au/couriermail/story/0,23739,26553326-952,00.html

"Devine Ltd said is not a party to a case before the Supreme Court being reported in the media, but rather Devine Industries Pty Ltd, a privately-owned entity by David Devine.

The company was responding to the media articles published in The Courier Mail and The Herald Sun." See Business Spectator.

See also http://comsecllc.blogspot.com/2010/01/devine-sues-former-employee-over.html

Here is a link to the Court file.

Interestingly, both David Devine (currently listed as managing director of Devine) and Ken Woodley, marketing director and also a major shareholder, do not live in Devine built buildings. According to RP Data, Mr Devine lives in a penthouse apartment in a building at 55 Darragh Street, Kangaroo Point that is over 1000 sqm in floor area, has 4 bedrooms, 4 bathrooms, 4 car parks - that he paid $2.5M in 1998. Mr Woodley lives in a subpenthouse in a Mirvac building, Quay West on Alice Street in Brisbane.

(Photo of Ken Woodley, on the right.)

A few years ago, both Mr Devine and Mr Woodley started legal actions to change the body corporate fees that they paid for their homes. They were successful in having their body corporate fees decreased. As a result, the body corporate fees for the owners of smaller, less expensive apartments in these buildings increased.

Charlotte Towers For Sale

Following on from the post listing Charlotte Towers apartments that sold in 2009, I noticed that there are a huge number of 1 bedroom apartments currently listed for sale in this building. Most do not have a car park. In my view, a one bed in Charlotte Towers without a car park is worth about $305,000 to $325,000, depending on floor and view. There are a number of other buildings in the city area where there are no apartments for sale at all.

• $365,000
• $369,000
• $389,000
• $400,000
• $350,000
• $365,000
• $400,000
• $440,000 with car
• $370,000
• the list goes on and on

Take Care!

Charlotte Towers Sales in 2009

Charlotte Towers, at 128 Charlotte Street, Brisbane has had over 40 sales in 2009, which is almost one a week. Most of the owners are investors who do not live in the building. The building has one and two bedroom apartments. Some do not have carparks.

• Lot 502, sold in June for $522,500
• Lot 603, sold in May for $410,000
• Lot 604, sold in April for $317,000
• Lot 701, sold in March for $345,000
• Lot 704, sold in March for $305,000
• Lot 807, sold in September for $450,000
• Lot 1005, sold in March for $295,000
• Lot 1107, sold in March for $450,000
• Lot 1202, sold in June for $480,000
• Lot 1203, sold in April for $437,000
• Lot 1502, sold in May for $480,000
• Lot 1503, sold in June for $445,000
• Lot 1508, sold in July for $473,000
• Lot 1510, sold in March for $325,000
• Lot 1609, sold in October for $358,000
• Lot 1703, sold in February for $450,000
• Lot 1706, sold in February for $325,000
• Lot 2006, sold in October for $328,000
• Lot 2101, sold in October for $420,000
• Lot 2107, sold in September for $495,000
• Lot 2210, sold in January for $312,000
• Lot 2302, sold in March for $468,000
• Lot 2307, sold in May for $490,000
• Lot 2308, sold in February for $485,000
• Lot 2310, sold in July for $346,000
• Lot 2408, sold in April for $495,000
• Lot 2501, sold in June for $418,000
• Lot 2604, sold in July for $348,000
• Lot 2608, sold in August for $492,500
• Lot 2708, sold in May for $490,000
• Lot 3007, sold in February for $485,000
• Lot 3302, sold in August for $320,000
• Lot 3310, sold in February for $358,000
• Lot 3401, sold in July for $355,000
• Lot 3412, sold in May for $360,000
• Lot 3811, sold in September for $347,000
• Lot 4110, sold in April for $433,000
• Lot 4112, sold in August for $463,000
• Lot 4209, sold in April for $425,000
• Lot 4308, sold in February for $717,000

Sunland buys Devine's French Quarter

Sunland Group will make its first foray into Brisbane's apartment tower market after acquiring a parcel of land in the CBD. The developer has acquired nearly half of the French Quarter site from Devine, and will seek planning permission for a tower that will feature about 200 upmarket apartments. Devine has sold several other assets in recent months.

Article from Gold Coast News

"But while one landmark disappears, another emerges, with Sunland planning to build an 'icon' on the 2067sqm site.

Company managing director Sahba Abedian said the tower would feature 200 luxury apartments, including two and three bedrooms and sub-penthouses, aimed for the baby-boomer market.

He said a development application would be lodged with Brisbane City Council within six months."

Take Care Buying Off the Plan

If you believe the sales agents hired by developers who sell apartments in Brisbane off-the-plan, you can't go wrong. Sign today, but don't pay for a few years. Population growth. Depreciation benefits. Get is early to choose the best apartment. Early buyers will get the best price. There will be a price rise soon, so sign today!

But there are huge risks:

• the building may never start, and so the deposit is tied up for years
• the apartment may look different to what you expect, or have a worse view
• there could be development next door, impacting your view and the location
• the developer could onsell the development, and so you end up buying from someone other than who you signed with
• the apartment may be up to 5% smaller than set out in the marketing plans
• the quality may be different to what you expect.

However, the biggest risk is that you pay the wrong price. You are trying to guess tomorrow's price today. And let me tell you, prices do go down. In addition, you are paying for the developers marketing and sales costs, which is often more than 5% of the the purchase price. So you are 5% behind before you start.

Let's look at some examples of buildings marketed off-the-plan to see how the purchasers did.

Devine is selling Hamilton Harbour like hot cakes. Let's see their track record. Here are some example resales for Charlotte Towers, their most recent Brisbane apartment development. I have looked at typical midlevel apartments:

Apt 2003 - purchased Jan 05 for $444K, resold July 08 for $425K

Apt 2210 - purchased Dec 04 for $333K, resold Jan 09 for $312K

Apt 2302 - purchased March 07 for $483K, resold March 09 for $468K

Apt 2307 - purchased Sept 06 for $497K, resold May 09 for $490K

Apt 2308 - purchased Sept 05 for $501K, resold Feb 09 for $485K

Apt 2410 - purchased Dec 04 for $351K, resold March 08 for $310K

Apt 2608 - purchased Sept 04 for $508K, resold Aug 09 for $492.5K

Apt 2703 - purchased March 06 for $492K, resold Feb 08 for $461K

Apt 2908 - purchased Feb 05 for $508K, resold Nov 08 for $485K

Keep in mind the the purchasers paid stamp duty of between $5,000 and $15,000 and agents fees to sell the apartment of roughly $12,000, then you can see that many of the off-the-plan purchasers lost more than $30,000, after holding for 3 to 5 years.

Another example is FKP's Vue apartments, at 92 Quay Street, Brisbane.

Apt 1106 - purchased Oct 04 for $400K, resold July 07 for $368K

Apt 1205 - purchased Oct 04 for $475K, resold July 07 for $440K

Apt 2008 - purchased Jan 05 for $504K, resold Aug 08 for $480K

Apt 2409 - purchased June 06 for $535K, resold Feb 09 for $445K

So take extreme care building off the plan, as you may end up paying too much for something that you don't like or want.

Hamilton Harbour Update

"Strong pre-sales of residential units in Hamilton Harbour stage 1 with 89% of 257 units now sold. (This project is also a JV with Leighton Properties) ... Hamilton Harbour and King George Central forecast to commence later this calendar year subject to finance being secured."

Devine Annoucement

"SALES LEVELS ACHIEVED ON STAGE 1 OF THE HAMILTON HARBOUR MIXED-USE RESIDENTIAL, COMMERCIAL AND RETAIL DEVELOPMENT HAVE EXCEEDED OUR EARLIER EXPECTATIONS. ... TOGETHER WITH LEIGHTON PROPERTIES WE HAVE NOW COMMENCED THE PROCESS OF SECURING FUNDING FOR THE CONSTRUCTION PHASE AND, GIVEN THE HIGH LEVEL OF PRESALES ACHIEVED, ARE CONFIDENT OF ACHIEVING THIS TO ALLOW CONSTRUCTION TO COMMENCE SHORTLY."

AGM Speech

New Apartment Developments in Brisbane

There are very few new apartment developments in inner city Brisbane under construction and nearing completion. This is good news for owners of existing apartments, as the number of apartments available for sale will not increase dramatically in the next few years. This is my list:

• Evolution - completed last year, overpriced, developer trying to sell remaining apartments
• Vision - developer in bankruptcy situation - unclear if this will proceed, and if so, in what form
• Trilogy - on hold
• Meriton's Soliel - under construction
• Meriton's Herschel Street highrise - advertised by Meriton as coming soon
• Devine's Hamilton Harbour - not in inner city - construction to commence January 2010, maybe Devine's last apartment project in Brisbane
• Rive at Breakfast Creek - construction commencing
• Waters Edge at West End - first stage: ground works commencing
• Riverpoint at West End - first stage under construction
  
• Code at Bowen Hills
• Multiplex's Promenade at the Hamilton shipping terminal
• Mirvac's Waterfront at Newstead
• Macrossan Towers, under construction, one apartment per floor
• Yungaba at Kangaroo Point, about to start pre-sales in the next month
• Mosaic, in the Valley, in presales

Developer's Profit Margins and Marketing Costs

It is interesting to review the information Devine has published regarding its French Quarter development, that it is in the process of selling. It gives a good idea as to developer profit margins and costs of new apartment developments, such as French Quarter. (The information was not password protected at first, now it is, so you will have to trust me on this.)

For the "Carrington" Building (268 apartments, with 302 car parks).

Revenue for residential apartments - $11,400 per sqm, totalling $411M
Revenue from selling management rights - $2.45M

Total Development costs, including land value at $49M and construction costs at $177M = $310M

Profit - $85M

Interestingly, marketing & commission costs are $22M.
("Marketing Costs allowance 2.0% of Gross Sales Revenue. Commissions of 3.0% of Gross Sales Revenue with 50% paid on unconditional contracts & 10% deposit held.")

So, for a 2 bed, 2 bath apartment (110sqm in size), the average price would have been $1.2M. Of this, about $350,000 is profit, and $60,000 approx is marketing costs and commission for the sales agent.