Overview

Hubilu Venture Corporation is a startup enterprise that commenced operations on March 5, 2015. The company is a real estate consulting, asset management, and business acquisition company that specializes in acquiring student housing income properties and development/business opportunities located near the Los Angeles area.

During 2024, Hubilu closed on a total of six new properties in the Los Angeles area, bringing their total properties under management to thirty. However, a significant tenant that was responsible for 64% and 63% of Hubilu’s revenues during 2024 and 2023, respectively, terminated their contracts. The company is actively seeking new tenants to fulfill their occupancy rate goals.

Critical Accounting Policy and Estimates

Hubilu’s financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. The most significant accounting estimates include the appropriate carrying value of certain assets and liabilities. Management evaluates these estimates and judgments on an ongoing basis, and they are based on historical experience and various other factors believed to be reasonable under the circumstances.

Results of Operations for the Year Ended December 31, 2024, compared to the year ended December 31, 2023

Years Ended December 31	2024	2023	Increase / (Decrease)
Rental revenue	$2,232,412	$1,885,985	$346,427
Operating expenses:
General and administrative	$265,863	$110,084	$155,779
Salaries and benefits	$87,500	$69,100	$18,400
Utilities	$30,504	$47,624	$(17,120)
Professional fees	$138,876	$91,171	$47,705
Property taxes	$228,268	$191,018	$37,250
Repairs and maintenance	$143,280	$435,282	$(292,002)
Depreciation	$215,006	$197,759	$17,247
Total operating expenses	$1,109,297	$1,142,038	$(32,741)
Net operating income	$1,123,115	$743,947	$379,168
Other income (expense):
Dividends expense	$(26,020)	$(25,949)	$71
Interest expense	$(1,209,530)	$(993,330)	$216,200
Loss on early extinguishment of debt	$(73,802)	$-	$73,802
Total other income (expense)	$(1,309,352)	$(1,019,279)	$290,073
Net loss	$(186,237)	$(275,332)	$(89,095)

Rental Revenue Hubilu’s rental revenues increased by 18% in 2024 compared to 2023, primarily due to acquiring six new properties that were rented out over various dates in 2024.

General and Administrative Expenses General and administrative expenses increased by 142% in 2024 compared to 2023, primarily due to increased property acquisitions in the current year.

Salaries and Benefits Salaries and benefits increased by 27% in 2024 compared to 2023, due to more time spent on activities by Hubilu’s vice president, who is the company’s only compensated employee.

Utilities Utilities decreased by 36% in 2024 compared to 2023, primarily due to increased occupancy rates in 2024 that resulted in fewer unreimbursed utilities.

Professional Fees Professional fees increased by 52% in 2024 compared to 2023, primarily due to increased accounting fees incurred as Hubilu expanded operations during the current year.

Property Taxes Property taxes increased by 20% in 2024 compared to 2023, primarily due to acquiring six new residential properties during 2024.

Repairs and Maintenance Repairs and maintenance decreased by 67% in 2024 compared to 2023, due to extensive repairs and maintenance on properties incurred in the prior year that did not need to be replicated in the current year.

Depreciation Depreciation increased by 9% in 2024 compared to 2023, primarily due to increased building and capital improvements resulting from the acquisition of six new properties during 2024.

Other Income (Expense) Other expenses increased in 2024 compared to 2023, primarily due to higher interest expense and a loss on the early extinguishment of debt.

Net Loss Hubilu’s net loss decreased by 32% in 2024 compared to 2023, primarily due to less repairs and maintenance on properties and increased rental revenue resulting from the acquisition of six new properties, partially offset by increased finance costs.

Liquidity and Capital Resources

As of December 31, 2024, Hubilu had current assets of $14,262 and current liabilities of $2,596,857, resulting in negative working capital of $2,582,595. The company’s cash flows from operating activities increased in 2024 compared to 2023, primarily due to increased rental revenues. However, Hubilu used more cash in investing activities in 2024 to purchase six new properties.

Hubilu has financed its operations primarily through debt financing and the sale of equity securities. The company will need to obtain additional financing to fund its operations and continue implementing its business plan. Hubilu’s ability to continue as a going concern is dependent on its ability to raise additional capital and achieve sustainable revenues and profitable operations.

Debt Financing

Hubilu has obtained various mortgage financings and refinancings to acquire and maintain its properties. The company has first and second position notes with lenders such as Investor Mortgage Finance, LendingOne, Churchill Funding I, and Center Street Lending, as well as second position notes with Belladonna Lily Investments.

Concentrations

One customer accounted for 64% and 63% of Hubilu’s revenues in 2024 and 2023, respectively. That client has since terminated all their leases, and Hubilu is in the process of renovating and renting out those properties to new tenants.