Ottoman Fund Board Meeting

 INVESTMENT PROPOSAL
LUXURY VILLA, APARTMENT AND
HOTEL DEVELOPMENT, KAZIKLI,
MILAS
April 2008 1
LUXURY VILLA, APARTMENT AND HOTEL DEVELOPMENT,
KAZIKLI, MILAS
This is an opportunity to acquire the Fund’s interest in a luxury residential villa, apartment and hotel development project situated in the pristine coastal setting of Kazikli, in the Milas district of Turkey. Tourist development in the Bodrum Peninsula, with its enviable climate and stunning coastal scenery, has expanded in recent years as result of rising demand from both Turkish and international visitors. The area surrounding Kazikli, which is located only 34 km from Bodrum‐Milas International airport, has become increasingly popular, with demand for real estate growing significantly. The Kazikli site benefits from coast line to the Aegean Sea on both sides and the adjacent properties are undeveloped making it a compelling development opportunity for a unique luxury villa and hotel resort with private mooring facilities in a natural bay setting of outstanding beauty. The Kazikli project has been developed as a 50:50 joint venture with the Ado Group, a leading and well respected supplier of building materials in the region. 2
INVESTMENT SUMMARY
Project Overview: •
Total Gross Area: 274,522 sqm •
Total Net Land Area: 197,960 sqm •
Construction Area: 76,000 sqm •
Gross Sellable residential area: 70,390 sqm •
Net Sellable residential area: 56,053 sqm •
Hotel Area: 14,703 sqm 3
Site Usage: •
Total of 530‐550 units. •
330 Luxury Villas (some with private boat moorings) sizes 75 to 350 sqm. •
100‐120 hotel rooms with access to shared pool facilities. •
World class spa facility. •
Supporting restaurants, leisure and social facilities. Project Status: •
50% share of the site, comprising 8 contiguous parcels of land, acquired from the Ado Group by the Fund’s wholly owned Turkish subsidiary OSMANLI YAPI 2 in March 2007. •
Clear unencumbered freehold legal title acquired for the entire site. •
Required zoning plans obtained from the local authorities – increase obtained in permitted building density from 49,000 sqm to 74,000 sqm (51% increase in buildable area). •
Tourism Investment Certificate received. •
Submission of project information to Mugla Environmental Agency complete. Certificate received confirming no further environmental permissions required. •
Master plan and concept design process completed by Atelier Xavier Bohl, who has an excellent reputation from his work on Port Alacati, Marina Limassol and Larnaca. •
Detailed architectural design and application drawings being undertaken by Xavier Bohl and local architect Cengiz Eren. •
Engineer Application Drawings to be completed in May 2008. 4
MASTER PLAN
FINANCIAL OVERVIEW
Key Financial Assumptions: •
Assumes no leverage •
Domestic sales: 50% •
International Sales Payment Structure: 30% down payment; 70% at the completion •
Targeted investment period: 36 months •
Construction period: 22 months •
Sales period: 36 months •
VAT: 18% •
Corporate Tax: 20% •
Sales Costs: 7% 5
Hotel Operation Assumptions: •
Assets: Spa, Restaurant, Meeting Room, Front of House and Back of House •
Occupancy: 50% •
ADR: $300 •
Total Room Nights Available: 360 •
Number of Hotel Units: 120 •
Exit: Hotel will be sold at the end of year 6 at 7x EBITDA i.e. $35m (operating profit of $5m) Financial Results: IRR Sensitivity Analysis: Built
Costs
per sqm
41.2%
$1,100
$1,200
$1,300
Sales Price per sqm
$2,500
$3,000
34.7%
50.1%
29.7%
44.0%
25.4%
38.9%
$3,500
67.3%
60.3%
53.7%
Sales Price per sqm
$2,500
$3,000
151.5%
264.6%
119.9%
203.6%
96.4%
163.1%
$3,500
391.9%
353.4%
269.6%
ROI Sensitivity Analysis: Built
Costs
per sqm
184.2%
$1,100
$1,200
$1,300
6
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Oc 11
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Au -12
gJa 12
nJu 13
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vAp 13
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6
$ in thousands
Cumulative Cash Position: $40,000
$30,000
$20,000
$10,000
$0
($10,000)
($20,000)
($30,000)
7
KEY SELLING POINTS
Advanced Project Status •
Master plan and concept design work is completed. •
Zoning applications are fully completed. •
Environmental clearance obtained. Strong Sales Proposition •
Positioned in a spectacular pristine coastal location with superb views of the Aegean Sea and surrounding mountains and benefiting from stunning sunsets. •
Excellent Mediterranean climate with low humidity. •
Availability of private boat moorings key attraction to high end purchasers. •
Close proximity to Bodrum‐Milas International airport and proposed world class golf course, Vita Park. •
2 km from Kazikli village restaurants offering bayside dining. Support, Market Know‐How •
Key local officials and contacts supporting the project. •
Ado Group’s strong influence and reputation in the region and network of key contacts beneficial in securing required approvals promptly. 8
MARKET COMPARABLES
Comparable Land Sale Prices LOCATION AREA (m²) SALES PRICE USD* COMMENTS PRICE (USD/m²) KIYIKISLACIK 113,000 17,691,729 50% hotel, 35% villa zoning. peninsula 157 70 KIYIKISLACIK 2,200,000 154,000,000 Sea front location. zoning plans are ready KIYIKISLACIK 2,274,000 113,700,000 15% density, max floor: 2 50 KAZIKLI 25,000 1,250,000 15% density, max floor: 2 50 118 KIYIKISLACIK 114,000 13,500,000 Residential zoning, 30% density, unique location, peninsula. KIYIKISLACIK 890,525 62,336,750 Situated on Mandalya bay 70 Comparable Villa and Apartment Prices PROJECT NAME SALES PRICE* USD TYPE REGION AREA (m²) Port Alaçatı I Attached house Alaçatı 70 339,990 Port Alaçatı I Attached house Alaçatı 140 560,000 Port Alaçatı II Villa/Channel House Alaçatı 293 732,500 Port Alaçatı II Attached house Alaçatı 141 324,300 Port Alaçatı II Apartment Alaçatı 75 165,000 Villa/Channel House Göcek 116 719,200 Port Göcek * VAT inclusive. 9
COMMENTS Sea view, without indoor finishing, social area, 100% of units sold Sea view, without indoor finishing, social area, 100% of units sold Sea view, without indoor finishing, social area, 30% of units sold Sea view, without indoor finishing, social area, 30% of units sold Sea view, without indoor finishing, social area, 30% of units sold Sea view, without indoor finishing, social area, 305 of units sold PRICE (USD/m²) 4,857 4,000 2,500 2,300 2,200 6,200 SAMPLE DESIGN PERSPECTIVES FOR KAZIKLI PROJECT
10
11
12
Kazikli Mugla
Project Name
Ownership
Start of Construction
Construction Period (months)
Delay in Construction (months)
Sales Start
Sales Period (months)
Delay in Sales (months)
Construction Area
Sellable Area
Costs / sqm
Total Construction Costs
Sales / sqm
Sales
Domestic Sales
Land Investment
End of Construction
End of Sales Period
Kazikli Mugla
50%
October 08
22.0
0.0
November 08
36.0
0.0
75,871.2
70,390.2
1,200.0
$91,045.4
$2,900.0
$204,131.6
50%
$22,348.2
August 10
November 11
Kazikli Mugla
30%
70%
2008
Total
$102,066
$30,620
$71,446
$59,179
($91,045)
$172,265
VAT Paid
VAT Received
Accumulated VAT
Net VAT Payable
18.0%
18.0%
$16,388
($36,744)
Real Estate Registration Tax
Stamp Tax
Sales Costs
Net Revenue before Land Costs
Land Cost Allocation
Profit Before Tax
Accrued Corporate Tax
Net Profit
1.5%
0.75%
7.0%
USD '000
Local Sales
International Sales Deposits
International Final Payment
Hotel Revenue
Total Construction Costs
Net Proceeds Before Taxes
($20,356)
20.0%
($1,531)
($1,531)
($7,145)
$141,703
($22,348)
$119,354
($23,887)
$95,467
Cash Flow to Investor
Investment
Net Revenue before Land Costs
Corporate Tax
Debt (Paydown) / Draw
Net Cash Flow Before Carry
Carry
Net Cash Flow
Cumulative Cash Flow
($11,174)
$70,851
($11,943)
$0
$47,734
($8,807)
$38,927
Net Cash to Investor
Maximum Cash Requirement
IRR
$38,927
$21,132
41.2%
2008