Why You Haven’t Heard From Us
First, an explanation about why you haven’t heard from us since we sent our 2013 annual report last June.

Securing commercial real estate often entails a great deal of unpredictability as to which site opportunities, how long it will take to negotiate a viable deal with a landowner and what the final outcome will be. Commercial real estate acquisition, including institutional financing and closing on a sale or lease, can take anywhere from six to 24 months. This is especially the case in West Oakland, where the upswing in the Bay Area real estate market (check out KQED’s Boomtown series about the economic issues affecting our region) has lead to an increase in unrealistic expectations of property values among landowners.

The rising cost of real estate in West Oakland, in combination with a limited number of viable commercial sites in the neighborhood and, in some cases, significant blight and contamination issues, has increased the complexity of securing a site and made it difficult to predict a timetable for when we’ll reach a successful deal with a landowner.

This being the case, I decided that, rather than sending updates that would, frankly, not provide substantively new information about the status of our project, we’d focus on working with our partners to secure a location and provide an update once we’ve reached a meaningful milestone. Please trust that, while you haven’t heard from us in the last six months, we have been working very hard and that the process is going as well as possible given the constraints we’re faced with and the objectives we’re committed to achieving.

Why It’s Taking A While To Secure A Site
Some of the reasons for why it’s taking longer to secure a site than we anticipated are addressed above: speculative landowners, inflated land prices, a limited number of viable commercial sites, and land contamination issues. But I want to emphasize that an uncompromising focus on one of our primary objectives – securing the absolute best possible location for our store – is a key contributor to the prolonged amount of time.

While I certainly would have liked for it to have not taken as long to secure a site, I have no reservations about taking the extra time necessary to secure the right location that produces the best long-term results for our company’s performance, for Shareholder financial returns and for making a positive impact and creating real value for the West Oakland community. This kind of focus, and the time it takes, is consistent with best practices of successful retail companies. To underscore this point, here’s a statement from one of our advisors and potential development partners, David Greensfelder, of Greensfelder Commercial Real Estate, who is a seasoned retail and commercial real estate development executive:

“After having run corporate real estate functions for national retailers and developing retail real estate for over 25 years, I can assure you that PCM’s discipline in insisting on the right location, even if that means waiting for a seemingly long time for it to become available at a workable price, is absolutely the right approach. Waiting many months and even years is not unusual, especially for daily needs, convenience-oriented retailers for whom the difference of a city block, or even the corner on an intersection, can make all the difference. Choosing the wrong spot or making the wrong deal is a decision the venture will have to work against forever.”

Simply put, the time it’s taking to secure a location is worth it. I ask for your continued patience and trust as a Shareholder in supporting our efforts to secure a site that will produce the best possible long-term social and financial results for all of our Stakeholders.

Where We Stand In Securing a Site
A key next step that was highlighted in our 2013 annual report was to secure a partnership with a real estate developer to assist in securing a site. After meeting with numerous developers, we decided that the East Bay Asian Local Development Corporation (EBALDC) would be an ideal partner as a well-established Oakland-based nonprofit community development organization with 40 years of experience. In addition to its expertise in the financing and development of community real estate assets, we were drawn to the EBALDC’s mission to build healthy, vibrant and safe neighborhoods and its focus on bringing critical services that help low-income families lead healthy, stable and fulfilling lives.

A partnership with EBALDC was formalized in July 2014, in which the organization would act as PCM’s “Financial and Site Acquisition Consultant”. In this capacity, EBALDC would serve to assist in our site search and evaluation, formulate offers to landowners and negotiate with them. EBALDC would also assist in securing financing for the acquisition of the property and for construction or remodeling of a building.

With the assistance of a real estate broker from Transwestern who was recruited by EBALDC, we have reached out to nine landowners since the summer and have submitted offers on three priority sites that are located along the West Grand Avenue corridor. Negotiations for two of these sites have been ongoing since the summer. Negotiations for the third site began in January. Two of these negotiations are for the purchase of the site, while the third negotiation is for a long-term lease.

While these negotiations are at various stages, all three continue to progress and to look promising. I’m confident and optimistic that, with the assistance of EBALDC and our broker, we’ll reach an agreement with at least one of these landowners.

EBALDC’s assistance, along with that of another partner, HomeGrown Advisors, has generated new interest from community development financial institutions (CDFIs) that are utilizing New Market Tax Credits and/or funding through the Federal Healthy Food Financing Initiative (HFFI) to provide below market-rate financing to food retail projects in underserved communities. These potential funders are aware of our project’s status and continue to engage with us as we work through the process of negotiating and securing a location for our store. We’re working with EBALDC and HomeGrown Advisors to continuously revise and refine our financial pro formas and financial strategy in order to best position our request for financing once we’ve reached a formal agreement with a landowner. While financing from these institutions isn’t guaranteed, the prospect of securing financing from them appears to be strong and will likely become stronger once we have site control.

When You’ll Hear From Us Again
We’ll continue to hold off on sending updates until we’ve reached a meaningful milestone or have other news that’s worthy of conveying to our Shareholders. My hope is that you’ll be hearing from us in the next couple of months with good news about our progress or success in securing a location for our store in West Oakland.

Whether it’s the next update your receive or a subsequent one, I very much look forward to the occasion when you get an email from us with the subject line “We Have A Site!”