Tony Cange | April 2016 Chief Executive Officer Report
2015 was my first full year with the Company and we are committed to bringing increasing dividends going forward. Your board has laid some important groundwork for this to happen. In 2015 we deployed capital into sound income producing investments in Arizona. Recently as noted in the financial statements, SNAI closed on a second commercial property in Phoenix. These two investment properties have a stable tenant base and should bring healthy earnings to the Company in 2016 and beyond.
Both properties consist of approximately 40,000 rentable square feet and combined the properties have an 83% occupancy rate. We hope to reinvest earnings to expand the commercial real estate portfolio to diversify the real estate holdings and grow this line of business for the Corporation.
SNAI is now in a fully taxable situation. Corporate income taxes which include state income taxes are 39%. Real Estate can be a good way to enjoy positive cash-flow and we are able to take advantage of tax differed savings through depreciation expense. In addition to this new business line, SNAI’s management has been working with our tax accountants to mitigate our tax burden to the fullest extent possible.
One of these methods is accelerated depreciation on our current property, plant and equipment. This deferment essentially kicks the tax payment down the road. This is evident in the total taxes paid in 2015 versus the amount reflected on the income statement. SNAI recorded income tax expense of $402,000 however it only paid $197,000,the difference gets deferred to a later date and then the company can take advantage of potential tax saving vehicles. The Board and SNAI management will work with SNAI’s tax accountants to look at other ways the Company can save on income taxes.
As previously mentioned the hotel had a stellar year with regard to net income, not only did revenue increase but our new management has created several efficiencies to help control costs. Also with the new lobby refresh and added emphasis on customer service, the hotels Trip Advisor rating has increased in 2015. (Trip Advisor is a travel website company that provides reviews of travel-related content.) In 2015 the Hotel received many positive comments about staff and the hotel quality. We are very proud to have increased the hotel’s ranking from number #12 in Anchorage to as high as #5 in 2015.
SNAI lands are such a prize asset, the Board has instituted a land protection policy for management to carry out. In addition to making it easier for people to obtain permits to access the lands, the policy calls for posting additional no trespassing signs and providing more education to the public about our lands. SNAI management also keeps the board apprised of projects that will potentially affect our lands including the Susitna-Watana Hydroelectric Project studies, 17b easements, and the potential for commercial development of some of the lands in Homer.
SNAI management continues to work hard to grow the company, increase net income and provide dividends to our shareholders.