September 16, 2002

News Release

Financial Statements/Audit Report
Report on Compliance /Internal Controls

Guam Rental Corporation 5th Consecutive Year of Profits

The Guam Rental Corporation (GRC) completed its 5th consecutive year of profits with a profit of $141 thousand in fiscal year 2001. Audited financial statements issued by the accounting firm J. Scott Magliari and Co. show that GRC increased earnings by $17,000 from $124,000 in fiscal year 2000. Net earnings were $99,000 in 1999, $164,000 in 1998 and $112,000 in 1997 (see graph below). GRC has cumulative earnings of $1.6 million. GRC operates under the same management as the Guam Housing Corporation.

GRC promotes the general welfare of the residents of Guam by providing low cost rental housing to qualifying individuals. GRC’s primary sources of revenues are rental units in the Lada Gardens and Guma As Atdas complexes, which it owns and operates.

GRC ‘s balance sheets show assets of $11.3 million. However, a large part of that figure is in donated property of $5.23 million. The valuation of $5.23 million was recorded in 1994 and was based on the intended use and future development of 34.8 acres into a 96-unit rental complex. Because of Guam’s economic recession, the project has since been downsized to a 24-unit project. Consequently the $5.23 million valuation may be overstated in today’s depressed real estate market.

GRC was able to pay in advance $264,000 on its 3% long-term note owed to the Guam Housing Corporation to help alleviate GHC’s cash flow problems. GRC also paid $144,000 to Guam Housing in the form of a management fee. In 2000 the management fee paid Guam Housing was $159,000.

Tenant and other receivables increased to $132,000 from $83,000 in 2000. Due to slowness in the collection of rents, the reserve for bad debts increased by $40,000 to $68,000, again reflective of Guam’s economic recession.