9. INVESTMENT PROPERTIES

12 Months Ended

Jun. 30, 2018

Notes to Financial Statements

INVESTMENT PROPERTIES

The following table presents the Company’s investment properties in China as of June 30, 2018. The exchange rate is based on the market rate as of June 30, 2018.

		Investment			Investment
		Amount			Amount
	Investment Date	(RMB)			(U.S. Dollars)
Purchase of Property I – MaoYe	4-Jan-08		5,554			894
Purchase of Property II – JiangHuai	6-Jan-10		3,600			580
Purchase of Property III – FuLi	8-Apr-10		4,025			648
Currency translation			—			(131	)
Gross investment in rental properties			13,179			1,991
Accumulated depreciation on rental properties	30-Jun-18		(5,596	)		(845	)
Net investment in properties – China			7,583			1,146

The following table presents the Company’s investment properties in China as of June 30, 2017. The exchange rate is based on the exchange rate as of June 30, 2017 published by the Monetary Authority of Singapore. 

		Investment			Investment
		Amount			Amount
	Investment Date	(RMB)			(U.S. Dollars)
Purchase of Property I – MaoYe	4-Jan-08		5,554			894
Purchase of Property II – JiangHuai	6-Jan-10		3,600			580
Purchase of Property III – FuLi	8-Apr-10		4,025			648
Currency translation			—			(178	)
Gross investment in rental properties			13,179			1,944
Accumulated depreciation on rental properties	30-Jun-17		(4,937	)		(728	)
Net investment in properties – China			8,242			1,216

The following table presents the Company’s investment properties in Malaysia as of June 30, 2018 and June 30, 2017. The exchange rate is based on the exchange rate as of June 30, 2015 published by the Monetary Authority of Singapore. 

		Investment			Investment
		Amount			Amount
	Investment Date	(RM)			(U.S. Dollars)
Reclassification of Penang Property I	31-Dec-12		681			181
Gross investment in rental property			681			181
Accumulated depreciation on rental property	30-Jun-15		(310	)		(83	)
Reclassified as “Assets held for sale”	30-Jun-15		(371	)		(98	)
Net investment in rental property - Malaysia			—			—

Rental Property I - MaoYe

In fiscal 2008, TTCQ purchased an office in Chongqing, China from MaoYe Property Ltd. (“MaoYe”), for a total cash purchase price of RMB 5,554, or approximately $894. TTCQ identified a new tenant and signed a new rental agreement (653 square meters at a monthly rental of RMB 39, or approximately $6) on August 1, 2015. This rental agreement provides for a rent increase of 5% every year on January 31, commencing with 2017 until the rental agreement expires on July 31, 2020. TTCQ signed a new rental agreement (451 square meters at a monthly rental of RMB 24, or approximately $4) on February 1, 2018. This rental agreement provides for a rent increase of 6% from the second year of the contract onwards until the rental agreement expires on January 31, 2021.

Property purchased from MaoYe generated a rental income of $99 and $102 for the years ended June 30, 2018 and 2017, respectively.

Rental Property II - JiangHuai

In fiscal year 2010, TTCQ purchased eight units of commercial property in Chongqing, China from Chongqing JiangHuai Real Estate Development Co. Ltd. (“JiangHuai”) for a total purchase price of RMB 3,600, or approximately $580. TTCQ rented all of these commercial units to a third party until the agreement expired in January 2012. TTCQ then rented three of the eight commercial units to another party during the fourth quarter of fiscal year 2013 under a rental agreement that expired on March 31, 2014. Currently all the units are vacant and TTCQ is working with the developer to find a suitable buyer to purchase all the commercial units. TTCQ has yet to receive the title deed for these properties; however, TTCQ has the vacancies in possession with the exception of two units, which are in the process of clarification. TTCQ is in the legal process to obtain the title deed, which is dependent on JiangHuai completing the entire project. In August 2016, TTCQ performed a valuation on one of the commercial units and its market value was higher than the carrying amount.

Property purchased from JiangHuai generated a rental income of nil for both the years ended June 30, 2018 and 2017.

Rental Property III – FuLi

In fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing FuLi Real Estate Development Co. Ltd. (“FuLi”) to purchase two commercial properties totaling 311.99 square meters (“office space”) located in Jiang Bei District Chongqing. Although TTCQ currently rents its office premises from a third party, it intends to use the office space as its office premises. The total purchase price committed and paid was RMB 4,025, or approximately $648. The development was completed, and the property was handed over during April 2013 and the title deed was received during the third quarter of fiscal 2014.

The two commercial properties were leased to third parties under two separate rental agreements, one of which expires in April 2019 and provides for a rent increase of 5% every year on May 1, commencing in 2017 until the rental agreement expires on April 30, 2019 and the other of which expired in March 31, 2018 and provides for a rent increase of 5% every year on April 1, commencing in 2016 until the rental agreement expires on March 31, 2018. Management is actively looking for a suitable tenant.

Property purchased from FuLi generated a rental income of $40 and $50 for the years ended June 30, 2018 and 2017, respectively.

Summary

Total rental income for all investment properties (Property I, II and III) in China was $139 for the year ended June 30, 2018, and $152 for the same period in the prior fiscal year.

Depreciation expenses for all investment properties in China were $102 and $98 for the years ended June 30, 2018 and 2017, respectively.