SALT LAKE CITY, UT--(Marketwire - October 21, 2008) - Nexia Holdings, Inc. (OTCBB: NXHD)
reported that its President Richard Surber has developed a new strategy for
the real estate operations of the company. This material was also filed
with the SEC in an 8-K by the Company on October 8, 2008.
Summary of Real Estate Acquisition Strategy
Nexia's plans for growing its real estate portfolio and creating value for
its shareholders will center on a concept that we will call "real estate
backed securities." The plan is to capitalize upon large portfolios of
residential real estate held by banks, individuals, corporations or other
entities as a result of subprime or other foreclosed loans.
Nexia's management understands that many of these distressed properties
have been devalued as result of a tight credit markets and numerous other
factors. Investors with cash are in the driver's seat. These investors
can purchase large swaths of properties for pennies on the dollar. But,
how can they recoup their initial investment in order to increase the
velocity and power of their hard earned cash? By getting their cash back
as soon as possible and redeploying the cash as many times as possible
while the markets for these properties are severely depressed.
Typically, the only exit strategies a hard money type real estate investor
has is to:
1. Quickly resell the properties
2. Obtain bank financing or other financing to pull their capital out of
the properties
3. Lease or rent the properties which may require additional capital to
rehabilitate the properties
4. Provide seller financing
None of the options above, by themselves, are good quality options. In
fact, properties in the Midwest and other difficult regions in the U.S.
cannot be moved out quickly with a nice rate of return. Obtaining bank
financing for properties that have been foreclosed upon is next to
impossible given the tighten credit conditions. The probability of quickly
reselling these properties on a massive scale is not viable, if credit is
not available to the average American. Leasing the properties or providing
seller financing is a good option but requires cash being tied up for years
until the economy turns around. There are many questions and no certainty
as to when this will occur.
The potential for massive returns can be created while hedging risk through
a system whereby the holder of this real estate sells the real estate in
exchange for a stated value Preferred Security while maintaining a lien on
the real estate for their initial investment plus a reasonable rate of
return.
The investor, through Nexia, has all of the options above, plus an
additional exit strategy: selling sufficient securities to recoup their
initial capital plus gain a reasonable rate of return on their investment.
Under the new rules enacted by the Securities and Exchange Commission,
after a non-affiliate has been at risk for over six months they can look to
the public markets to liquidate their securities. In other words, six
months after Nexia purchases the properties the seller may convert their
preferred stock into shares of common stock in a controlled and incremental
fashion. This would give the seller the option liquidate their shares and
convert their holding to cash.
The question becomes why would anyone want to buy shares in a small cap
company like Nexia? Individual investors that are looking for a home run
have the opportunity for tremendous upside potential which is not typically
available in highly priced securities. Nexia's goal is to aggressively
build its balance sheet and cash flows so that it becomes a serious real
estate concern. Once Nexia's market cap exceeds $75M and its net worth
exceeds $5M many regulatory doors open up. The risk to reward benefit
becomes apparent to individual investors who seek an incredible upside
potential.
A strong liquid market for Nexia's common stock will attract even greater
interest. Nexia can then look to hedge funds, broker dealers and the
public at large to become market participants. Many of these small firms
may be interested in buying the preferred shares at a discount to their
stated value which will speed the process of recouping the cash that was
initially laid out by the bold investor that bought the bank owned real
estate. This will allow the same investors to quickly reinvest their cash
and potentially repeat the entire process and reap even greater rewards
because the size of the transactions will become larger and potentially
more lucrative.
Money soon begets more money. Liquidity begets more liquidity. The
common stock of Nexia becomes very attractive to investors because the
initial purchase of the properties was at depressed prices while times were
tough. Nexia's cash flows are preserved and used to improve, lease, and
sell the properties at appropriate levels and times. Remember, Nexia in
the initial stages of this process will only lay out nominal sums of cash
to initially acquire the properties while the real estate market is
depressed. Its balance sheet has the potential to grow exponentially. The
credit crunch will ease and Nexia only needs to stay the course until it is
able to look to bank financing and other sources of traditional financing
to further improve its cash position.
Right now very few people know that Nexia exists. Nexia is in the process
of branding itself and marketing its current products. Nexia has already
partnered with Clearvision, Inc. to brand its name. In addition, Nexia is
looking to promoters to spread the word about the opportunities that Nexia
will present on a large-scale basis. Nexia is not looking to Wall Street
for money. It is looking to Main Street. It is giving potentially
millions of ordinary people the opportunity to invest a little and gain a
lot.
All of the people being kicked out their homes will need affordable
housing, which Nexia can provide, since its properties will not be
encumbered with large debt to service.
This is the formula for acquiring millions of dollars in residential real
estate and partnering up with construction companies and outside management
firms. This transaction is a win for the banks that need to get the excess
inventories off their books and a win for small investors that invest into
Nexia's common stock in a responsible fashion.
Since Nexia is a holding company, it will be looking for other non-real
estate projects to further diversify itself. We have succeeded in the
salon industry since November 2005 selling Aveda™ products and salon
services at Landis Lifestyle Salons and we anticipate adding more locations
to further our success. For more information on Nexia Holdings, Inc. and
its diverse holdings go online to www.nexiaholdings.com.
Richard Surber in commenting on the first agreement entered into pursuant
to the new strategy offered the following statement: "I am optimistic that
this acquisition will be the first of many that can be acquired using this
method. Nexia can buy highly leveraged properties at great prices in
anticipation of the inevitable turn around in the real estate markets in
the coming years. I believe it is possible to build a $100M plus portfolio
of properties given the current market conditions with very little or no
upfront cash outlay."
About Nexia Holdings, Inc.
Nexia Holdings, Inc. (OTCBB: NXHD), headquartered in Salt Lake City, Utah,
is a diversified holdings company with operations in real estate, health &
beauty, and fashion retail. Nexia owns a majority interest in Landis
Lifestyle Salon, www.landissalons.net, a hair salon built around the
world-class AVEDA™ product line. Through its Style Perfect, Inc.
subsidiary, Nexia owns the innovative retail and design firm Black
Chandelier and its related brands. Black Chandelier currently operates one
retail location and online store at www.blackchandelier.com. For more
information, visit http://www.nexiaholdings.com.
Nexia strongly encourages the public to read the above information in
conjunction with its Form 10-K for December 31, 2007 and the subsequent
quarters of 2008. Nexia's disclosures can be viewed at
www.nexiaholdings.com and www.sec.gov.