Saraya Real Estate MENA Fund

Transcription

1
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
The Real Estate Sector
29
The Tourism Sector
34
Country Snapshots
39
Fund Manager Profile
44
Property Adviser Profile
50
2
What is Saraya?
“We take LOCATIONS & turn them into DESTINATIONS”
Saraya is a regional real estate developer and asset manager
Saraya’s
Vision
To create a series of unique, world-class communities in the Middle East and North
Africa (MENA) region, that satisfy the demands of regional and international visitors,
and offer distinctive living and/or working environments to residents.
To establish a series of unique real estate, hospitality and leisure communities
around the MENA region, which focus on locations with high growth potential
To create distinguished environments, where people enjoy living, working, visiting,
and entertaining
Saraya’s
Mission
To be the leading Developer and Asset Manager of these communities
To maximize value for investors, enhance domestic economies and benefit local
communities
To capitalize on the development and construction expertise of Saudi Oger
3
Saraya Projects

Saraya has a number of projects in the pipeline (“Saraya Projects”) that span
the MENA region.

The current countries of focus for Saraya are: Jordan, the UAE, Oman, and
Lebanon.

The Saraya Aqaba Project was launched in 2005. It received a positive
response from investors as well as tenants, and is on target to officially open
in 2009.

Investment opportunities exist in future Saraya Projects.
4
Saraya Aqaba – A Bird’s Eye View
55
Saraya Aqaba – Highlights
Founders
Saraya Jordan
Social Security Corporation
Arab Bank plc
Aqaba Development Corporation
Project Description
Land: 610,000 square meters (sqm)
Built Up Area: Approx. 650,000 sqm
Additional Beachfront: 1.5 km
Residential Units: 14 Villas, 90 Townhouses, and
500 Apartments, 100% of which are already
reserved, with deposits paid
Board Members
A 9-member Board of Directors, chaired by
Sheikh Saad Rafic Al-Hariri
Board seats distributed as follows:
9 3 Seats for Saraya Jordan
9 2 Seats for Social Security Corporation
9 1 Seat for each of Arab Bank, Aqaba
Development Corporation, Export &
Finance Bank, and Dubai International
Capital
Estimated project cost: US$700 million
Mobilisation: January 2005
Includes five hotels all of which are 5-star and
above; 3 hotels to be operated by Jumeirah
International and 2 hotels by Starwood
Asteco is the sales agent for the residential and
retail components
Saraya Aqaba will employ over 3,000 individuals
during construction (2006-2009), and 6,000 after
opening (2009 onwards)
6
Pipeline – Saraya Islands (RAK)
Mixed-use resort announced on September 14, 2005
1.0 million sqm island, off the coast of Ras Al-Khaimah, UAE
Will include a range of 5-star hotels, lavish residences, cultural sites and
commercial venues
Construction expected to start by the end of 2006
Grand opening expected in 2010
77
Pipeline – Saraya Dead Sea
Mixed-use resort expected to be announced in 2006
1.730 million sqm plot of land on the northern shore of the Dead Sea (65
km west of Amman, Jordan)
Will include 5-star hotels, lavish residences, an 18 hole golf course and a
9-hole practice course
Construction expected to start in 2007
Grand opening expected in 2011
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Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
9
Fund Overview
The Fund
A closed-end, Bahrain incorporated fund that invests in real estate and tourism
projects, primarily in the Middle East and North Africa (MENA) region through
direct equity investment
Objective
The Fund aims at generating income and capital gains from investing primarily
in Saraya real estate and tourism projects (“Saraya Projects”), in addition to
other projects in a number of jurisdictions in the MENA region
Target IRR
The Fund targets an Internal Rate of Return of 17%
Target Size
The Fund is seeking to raise US$250 million by issuing 2,500 units worth
US$100,000 each. Saraya Holdings, Limited and the Arab Bank plc are
providing seed capital of US$25 million each, for a total of US$50 million
Locations of Focus
Initially, the Fund will seek investments in Saraya Projects in Jordan, the UAE,
Oman, and Lebanon. In addition, investment opportunities will be pursued in
other MENA countries, as well as outside the region
Fund Manager
Atlas Investment Group (Atlas), a wholly owned subsidiary of the Arab Bank plc
and its Investment Banking arm
Property Adviser
Saraya Real Estate Development Group (SDG)
10
Fund Structure
Auditor:
Ernst & Young
Custodian, Admin, &
Registrar:
Gulf Clearing Co.
Placement Agents
Fund Company
Fund Manager: Atlas
Saraya Real Estate MENA
Fund
Property Adviser: SDG
Unit
Holders
Arab Bank
Saraya
Holdings
Sponsors/
Seed Capital Providers
11
Management of the Fund
A 6-member Board of Directors retains final
decision making power
A highly qualified team is spearheading the Fund,
combining real estate and tourism experience, as
well as financial management expertise
Atlas will run the daily affairs of the Fund
As Property Adviser, SDG will provide technical
opinion to the Fund Manager
An Advisory Board may be created to provide
additional guidance to the Fund on a range of
matters
Board of Directors
Ali Kolaghassi
Board Member
Atlas Investment Group
Omar Masri
Global Head of Investment Banking
Arab Bank
Eyad Mashal
Head of Asset Management
Talal Samhouri
Fund Manager
Oussama Kabbani
Managing Partner
Millennium Developments
Jawdat Halabi
Global Head of Private Banking
Arab Bank
12
Decision Making Process
Board of Directors
5. Investment Decision
4. Investment
Recommendation
Atlas: Fund Manager
3. In-Depth Analysis
Potential
Investment
2. Technical
Advice
SDG : Property Adviser
1. Business Plan
13
Management Team
Directors
Ali Kolaghassi
Jawdat Halabi
Oussama Kabbani
Vice Chairman and CEO of Saraya Holdings,
Limitied
Global Head of Private Banking at Arab Bank
Managing Partner of Millennium Development
International, Beirut, Lebanon
Board Member of Atlas Investment Group
Senior Adviser to the President and Chairman
of Saudi Oger Ltd., Sheikh Saad Al-Hariri
Board Member, Abdali Investment &
Development
Managing Director
Omnia Holdings
and
Board
Member,
Holds a Bachelor’s degree in International
Business from George Washington University
and undertook postgraduate studies in
political science
Previously was with National Commercial
Bank in Jeddah, where he held a number of
senior positions, that last of which was Head
of Private Banking
Held various positions in corporate banking at
Saudi American Bank and Saudi Hollandi
Bank
Holds a B.Sc. in Industrial Engineering from
Texas A&M University
Previously Head of the Town Planning and
Urban
Management
Department
at
SOLIDERE, and Senior Urban Designer at
the Boston Redevelopment Authority
Taught at the Boston Architecture Center
Author of “Prospects for Lebanon: the
Reconstruction of Beirut”, published in 1992
Attended the Wharton Executive Development
Program and the Stanford Executive Program
Directors and Fund Managers
Omar Masri
Eyad Mashal
Founder and Managing Director of Atlas
Investment Group and Global Head of
Investment Banking at Arab Bank
Previously a Fund Manager at Foreign &
Colonial Emerging Markets Ltd. in London
Board Member, Arab National Bank (Saudi
Arabia)
Director, Arab Bank Europroperty Fund
Member of DIFX Practitioner Committee
(Dubai)
Holds a B.B.A. in Finance from George
Washington University, and attended Finance
and Accounting courses at The Wharton
School at the University of Pennsylvania
Head of Asset
Investment Group
Talal Samhouri
Atlas
Fund Manager in the Asset Management
Division at Atlas Investment Group
Former board member in a number of private
and public companies, and worked on various
private equity transactions
Previously a Financial Advisor at American
Express Financial Advisors in the US
Management
at
Previously a Financial Analyst at the Central
Bank of Jordan
Holds an MBA and a B.Sc. in Accounting and
Business Administration with honors from the
University of Jordan
He is a CFA Charterholder and a level 3
candidate for the CMT program
Holds an MBA in Finance from the University
of Memphis, and a Bachelor’s degree in
Accounting and Business Administration from
the University of Jordan
He is a CFA Charterholder
14
Property Adviser Team
Property Adviser: SDG
Nasser Massoud: Managing Director
Previously management consultant & financial advisor
(PricewaterhouseCoopers and Concept Realization). With PWC he
was a leading practitioner in their Real Estate and Capital
Programme Management Group, and in Project Finance (PFI)
Worked on deals worth in excess of US$2 billion
Construction industry experience with Kier and Ove Arup and
Partners
Masters in Finance LBS; Masters in Construction Economics &
Management UCL; BSc in Civil Engineering UCL; Chartered
Engineer; Member of Institute of Civil Engineers; Fellow of the
Chartered Institute of Arbitrators; Visiting Fellow at UCL
Hilal Abuzeid: VP- Finance
20-year, wide-ranging experience in debt & equity financing,
corporate restructuring & valuation, privatization, money & capital
market investment, treasury and banking operations, and economic
research.
Previously Executive VP of Jordinvest, supervising the operations of
the Corporate Finance, Capital Markets and Asset Management
Departments
Established and managed Cairo Amman Bank’s Research and
Investment Management Department for 11 years
Held posts in the Investment and Foreign Debt Sections of the
Central Bank of Jordan’s Foreign Banking Operations Department
BSc in Civil Engineering and MSc in Finance from Texas Tech
University; International Securities Markets Association (ISMA)
Certificate holder
Elias Moubayed: VP- Development & Construction
Bassam Talhouni: VP- Asset Management
Extensive experience in architecture and urban design, including
large scale urban and mixed-use projects, private and institutional
development, land use planning, infrastructure implementation,
planning regulations and design guidelines
More than 25 years’ experience in project management and real
estate investment
Before joining Saraya, he held the post of VP for Development at
Damac Properties in Dubai.
Prior to that, he was GM of Abdul Latif Real Estate Investment Co. in
Saudi Arabia, and Technical Director at Zara Investment (Holding)
Co. in Jordan
Possesses in-depth knowledge of real estate investment, due
diligence,
valuation, appraisal, acquisition and profit maximization
Lectured extensively and published a book and many articles on
project appraisal and management
BSc, MSc and PhD degrees in Project Management and Building
Economics, all from the UK
15
Prior to joining Saraya, he was an Associate at the international
architecture firm Skidmore, Owings and Merrill, LLP (SOM) for six
years.
Previously held the post of Head of Town Planning Section at
‘SOLIDERE’ in Beirut, Lebanon
Bachelor of Architecture degree from University of Toronto; Master of
Architecture in Urban Design degree from Harvard University
Investment Strategy and Approach
Site Features
Investment Objective
The Fund aims at capitalising on the positive
economic developments across the MENA
region in general, and on the growth of the real
estate and tourism sectors in particular, through
direct investment in real estate and tourism
projects.
UnderDeveloped
High Growth
Potential
Low
Competition
Determining Investment Approach
Investment Approach 1
Developing real estate and tourism investment
projects; i.e. ‘green-field’ projects
Investment
Approach 1
Investment
Approach 2
Acquiring existing, income producing, and/or
distressed real estate property
Making the Investment
Investing in listed real estate securities
Exiting the Investment
16
Investment Strategy and Approach
Real Estate Project Development Process
Strategize
Develop concepts
and strategies
Originate &
Secure
The conceptproject, site, and
services
Develop
Business
Opportunity
Market study,
business plan,
and design
Raise
Funds
Determination of
size and fund
sources
Fund’s Entry
Execute
Actual
construction of
project
Realize
Value
Sales, asset
management, and
maintenance
Fund’s Exit
17
Origination and Pipeline
The Fund already has three projects in the pipeline:
RAK: Saraya Islands
Jordan: Saraya Dead Sea
Oman: work in progress
Project origination is conducted by
Property Adviser
Fund Manager:
Real Estate team
Arab Bank team &
Project Partners
18
Investment Assessment and Valuation
The Fund Manager will conduct in-depth analysis on every potential investment in order to assess its
feasibility and ability to meet the Fund’s objectives, by primarily using the Discounted Cash Flow (DCF)
approach, along with other valuation techniques.
Discounted Cash Flow
Forecasting cash flows to arrive at the fair value and optimal capital structure
Income generated
Operating expenses
Investments required
Construction period
Taxes
Financing needs
Exit price
Discount rate
Cost Approach
Potential
Sales Comparison Approach
For existing property, land value plus
the replacement cost of the property
Investment
Considers prices
investors for similar
the same area to
Fund does not
acquiring property
paid by other
properties within
ensure that the
overpay when
Income Approach
For income-generating property, total
value based on future income stream
19
Exit and Value Realisation
The Fund will consider in advance the exit strategies available for each investment.
The most common exit strategies include:
Trade Sale
Initial Public Offering
Put Option
Selling the Fund’s stake to a
strategic or financial investor
An IPO for a Project
on a MENA
stock exchange
Arranging a put option at the
time of investment to ensure
the sale of the Fund’s shares
20
Investment Restrictions
The Fund Manager will not make any investment which could expose the Fund to unlimited liability.
The maximum equity allocation to listed real estate and/or tourism company securities will be 25% of
the total commitment.
The maximum equity allocation to any single direct investment will be 20% of the total commitment.
The maximum equity allocation to any single MENA country will be 40% of the total commitment.
The Fund may invest up to 25% of the total commitment outside the MENA region.
The Fund may borrow to finance a direct investment, on a case-by-case basis, up to 75% of the value
of such a direct investment.
21
IRR and Sensitivity Analysis
The Fund Manager is targeting a 17% IRR. The following matrix highlights the Fund’s expected IRR under
different scenarios:
Project’s IRR
Cost of leverage
8.0%
9.0%
10.0%
18.0%
21.50%
20.98%
20.47%
16.0%
19.06%
18.54%
18.03%
15.0%
17.85%
17.33%
16.81%
Other assumptions:
• Leverage ratio is 50%
• Leverage duration is 5 years
• Exit price is at a “Project’s IRR” return per annum
22
Advantages of Investing in the Fund
A geographically diversified real estate portfolio
Ability to invest in future Saraya Projects on the same terms as the founders, but without a lock-up period
Taking advantage of opportunities beyond the Saraya Projects
Fair evaluation and assessment of investment opportunities by the Fund Manager
Represented on the board of each Saraya Project
23
Fund Terms
Fund Structure
Closed-end, Bahrain incorporated company
Target Size
US$250 million
Fund Sponsors
Arab Bank plc and Saraya Holdings, Limited
Minimum Commitment
US$500,000 per subscriber
Fund Manager
Closing Date
Upon the discretion of the Fund Directors
Property Adviser
Saraya Real Estate Development Group
Fund Term
8 years from closing date, extendable by three
1-year periods
Placing Agent
Administrator
Gulf Clearing Company B.S.C.
Registrar
Custodian
Auditor
Ernst & Young
Investment Period
4 years from the Closing Date
Management Fee
2% per annum of committed capital
Carried Interest
20% of the Fund’s return upon reaching a hurdle rate of
10% per annum
Front End Charge
Up to 2% of committed capital
24
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
25
Significant Regional Developments
Political Developments
New Generation of
Leaders
Introduction of
Democracy
Freedom of the Press
Advancing Towards
Peace in Palestine
and Iraq
Improved Political
Environment in
North Africa
Legal Reforms
Economic Developments
Investment Promotion
Infrastructure
High Oil Prices
Allowing Foreign
Ownership of Real Estate
Repatriation of Capital
from Abroad
Capital Market Laws
Low Interest Rate
Environment
Introduction of
Mortgage Laws
Specialized Regulatory
Bodies (Banking,
Insurance and Telecom)
Reforming Tax Laws
Privatization Drive
Trade Reforms
Enhanced Competition
Incorporating
Family Businesses
26
Impact of Regional Developments
Political
Developments
Legal Reforms
Economic
Developments
High GDP
Growth Rates
Higher per capita income and higher
disposable income leading to better quality
of life.
Economic
Diversification
Starting to shift away from oil-related
sectors. Real estate, construction, and
telecom sectors are expanding.
Real Estate
Boom
Stimulated by favourable demographics,
growth in real estate is leading to growth in
other sectors including cement, steel,
banking, and insurance.
Enhanced
Tourism
Activity
Higher standards of living and higher
incomes are leading to increased regional
leisure and business tourism.
Capital Market
Performance
Good corporate performance and high
liquidity levels resulting in impressive
returns at regional stock markets.
27
27
Future Economic Growth Drivers
Continued high oil prices
Real GDP Growth Rates
6%
Abundance of liquidity
Relatively low interest rate and inflation rate
environment
Regional economic liberalization and
diversification
5%
4%
3%
2%
1%
0%
2004
Healthy IPO and privatization pipelines
Mega projects in real estate,
2005F
MENA
leading companies
Strengthened corporate governance
Solid corporate earnings
Favourable demographics
Industrial Countries
World
Source: The World Bank
petrochemicals, LNG, and energy sectors
Regional and international expansion of
2006F
MENA Region Inflation Rate
5%
Low inflation rate environment is expected to be sustained
4%
3%
2%
1%
0%
Greater Arab Free Trade Area initiative
2002
2003
Source: The World Bank
2004
2005F
2006F
28
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
29
Real Estate Sector Overview
The real estate sector moves in cycles that lag the macro-economy; i.e. expected to outperform during
economic downturns.
Real estate investment returns have historically exerted low or negative correlation with stock and bond
returns; i.e. an effective asset class for portfolio diversification.
The Real Estate Cycle
2. Expansion
Value or
Occupancy/
GDP
Growth
3. Hyper Supply
Performance
Lag
1. Recovery
4. Recession
Real estate cycle
Economic cycle
Time
Source: Legg Mason Wood Walker, Inc. and Atlas
MENA region’s
position in each
cycle
30
Real Estate Sector Overview
Country
Infrastructure
Saudi
Arabia
Further development in
power, water
desalination, and road
network
UAE
Most emirates are
underdeveloped, with
Dubai being the most
advanced
Commercial
Real Estate
Residential
Real Estate
Tourism
Shortage of high quality
facilities
Not a concern yet, but
expected to experience a
shortage in the near future
Developing various new
sites as part of the
National Tourism
Development Plan
Numerous developers in
Dubai and Abu Dhabi; lack
of adequate facilities in
other emirates
Dubai close to saturation,
leading to spill over to
other emirates
A hub for business
tourism; focusing on
themed large scale
projects
Oman
Inadequate
transportation, and
power shortages
Limited capacity and high
growth potential
Fragmented and old; a
number of major projects
are under way; foreign
ownership restrictions
Expanding cultural and
eco-tourism in the
southern region
Jordan
Improving, but many
areas outside Amman
are underdeveloped
Mostly small and old; major
projects are under
construction
Small scale projects, with
large scale projects
gaining ground
Aqaba, Dead Sea, and
Petra are being
developed, but require
larger investment
Lebanon
Basic utilities require
upgrading
Modern commercial
facilities and shopping
malls are being introduced
Underserved as there is
high demand for high-end
housing from regional
investors
More facilities are needed
to accommodate
increasing tourists
Egypt
Old and requires repair;
new urban areas are
being developed outside
of Cairo
Fragmented market;
limited initiatives in
constructing new and
modern facilities
The majority being of poor
quality; high growth
potential as the population
is young
Room for improvement in
historical sites; focus on
developing the Red Sea
coastline
31
31
Market Forces
Demand Side
The MENA real estate sector is one of the most active and
lucrative sectors as the region is embarking on a new era
of development that is redefining its economic landscape.
Favourable Demographics
Improved Standards of Living
Increased Business Activity
Increasing Regional Tourism
Introduction of Mortgage Loans
20%
Construction and Real Estate Sectors' Contribution to GDP
(2004)
Supply Side
15%
High Liquidity Levels
10%
Low Interest Rate Environment
5%
Land Available for Development
0%
Qatar
Kuwait
Jordan
UAE
Oman
Egypt
Increasing Property Prices and Rent
Source: Corresponding countries’ central banks
32
Real Estate Sector – Growth Drivers
MENA Population Growth Rate
4%

High GDP growth rates

Continued high oil prices feeding liquidity
into regional economies
High growth rates indicate potential increase in demand
2.7%
3%
2.3%
2.3%
2.3%
2%

Increased lending– mortgage loans
1%

2000
2001
2002
2003
Low interest rate environment
Source: Arab Monetary Fund

High population growth rates
1-Year Deposit Interest Rate Trend for Selected Countries
10%

High birth rates
8%

Increase in expatriates
6%
Rates are increasing, but are still
low compared to historical levels
Average Rate
4%

Growth in the tourism sector
2%
0%
1998
1999
Jordan
2000
2001
Saudi Arabia
2002
Kuwait
Source: Corresponding countries’ central banks
2003
2004
2005
Oman
33
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
34
Tourism Sector Overview
Tourism is proving to be one of the major growth
sectors. The MENA region remains the world’s fastest
growing region in terms of tourist arrivals, due to:
In Mn
International Tourist Arrivals in MENA
60
%
th = 59
0 Gro w
1
0
2
–
2000
50
40
34
35
2000
2001
54
48
40
38
30
Improving standards of living
Government spending on tourism
20
10
0
Emergence of tourist resorts
2002
2003
2004
2010F
Source: World Tourism Organization and Atlas estimates
Rising preference for regional destinations
Increase in number of hotels and other facilities
Global Market Share in International Tourist Arrivals
100%
Growth of business tourism
80%
Infrastructure developments (transportation
networks, etc.)
60%
Improved marketing of the region as a tourist
destination
20%
Relatively good weather all-year-round
2%
1%
19%
3%
1%
16%
19%
4%
14%
6%
5%
19%
19%
59%
54%
52%
3%
1%
40%
0%
1995
Europe
East Asia and Pacific
2004
MENA
2010
Americas
South Asia
Africa
Source: World Tourism Organization and Atlas estimates
35
MENA Occupancy Rates and Revenue Per Room
US$
2004 witnessed a major increase in hotel
80%
occupancy rates and in average revenue per
60%
available room, after several years of lacklustre
40%
40
performance, which could mark the start of a
20%
20
significant up-trend in the sector.
68%
72%
64%
66%
73
60
59
80
66%
62
59
0%
60
0
2000
2001
2002
Avg Annual Room Occupancy
2003
2004
Avg Revenue Per Available Room
Source: HVS International Research
MENA Tourism Receipts
US$ Billion
30
growth, as the contribution of the tourism sector
26.8
7%
wth = 5
04 Gro
0
2
–
0
200
Tourism receipts also witnessed significant
20
17.1
17.1
17.3
2000
2001
2002
18.6
is becoming more significant to regional
10
economies.
0
Source: World Tourism Organization
2003
2004
36
Lebanon: strong potential for
Beirut to become a prime
beach resort destination
Jordan: areas in Amman are
being revamped. Opportunities
present in high growth areas –
Aqaba and Dead Sea
Qatar: plans to boost
leisure tourism through
beach resorts, shopping
centres, and sports events
RAK: strong business
and tourism drive.
Abu Dhabi: Initiative to
develop the emirate’s
tourism sector
Egypt: further development on the
Red Sea coastline. Expanding
hotel room capacity. Target is to
double arrivals by 2015
Saudi Arabia: various
tourist areas are being
developed across the
country. Religious tourism
is on a constant rise
Oman: home to a
beautiful long coastline
with high potential for
eco-tourism
37
Tourism Sector – Growth Driver
Introduction of different types of tourism (cultural,
religious, eco-tourism)
Rising income levels
Improved quality and number of tourist facilities
(hotels, etc.)
Emergence of new destinations
Low inflation rates
Relative political stability
Country
No. of
Proposed
Hotels
No. of
Proposed
Rooms
Bahrain
12
3,555
Egypt
22
6,994
Jordan
7
3,100
Kuwait
9
1,895
Lebanon
12
2,546
Oman
7
3,914
Qatar
13
4,754
Saudi Arabia
18
4,252
Syria
9
1,985
UAE
56
19,905
Total
165
52,900
Elimination of barriers via tourism promotion policies
Source: HVS International Research
38
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
39
UAE Snapshot
The UAE has one of the highest population
growth rates in the world.
Government initiatives boosted real estate and
infrastructure sectors beyond the Emirate of
Dubai.
Increasing demand for quality residential units
and leisure facilities.
US$1.6 billion worth of real estate projects
launched by the government of Ras Al
Khaimah, along with several mega tourism
projects in the pipeline.
US$ Mn
In Mn
Basic Tourism Statistics
1,500
6.0
5.5
1,400
(in per cent)
2003A
2004A
2005F
2006F
Real GDP Growth
11.3
8.5
5.6
4.2
Inflation Rate
3.1
4.6
6.0
4.5
Population Growth
5.3
7.5
9.3
6.4
Source: IMF and EIU
AED Mn
Domestic Output of Real Estate and Construction Sectors
60,000
50,000
5.0
1,300
40,000
4.5
1,200
1,100
1,000
4.0
30,000
3.5
20,000
3.0
2000
2001
Tourism Receipts (US$)
2002
2003
Tourist Arrivals
10,000
2001
2002
2003
2004
Source: Central Bank of UAE
40
Jordan Snapshot
The construction boom started in 2003, but
was initially limited to small-scale projects.
New real estate projects are of a much larger
scale, with mega residential, commercial, and
resort projects currently under development.
Strong interest from regional investors in the
real estate sector, as obstacles to foreign
ownership have been eliminated.
Amman, Aqaba, and the Dead Sea are
attracting the bulk of the investment.
The industrial zones segment is witnessing
further expansion.
US$ Mn
900
(in per cent)
2003A
2004A
2005F
2006F
Real GDP Growth
4.1
7.7
5.0
5.5
Inflation Rate
1.6
3.4
3.7
5.3
Population Growth
3.8
1.8
-
-
Source: IMF and EIU
In Mn
5.0
Number of Building Permits
30,000
4.0
800
25,000
3.0
700
20,000
2.0
600
1.0
500
0.0
2000
2001
2002
2003
2004
Tourist Arrivals
15,000
10,000
2000
2001
2002
2003
2004
Source: Central Bank of Jordan
41
Oman Snapshot
Oman is lagging behind the region in real
estate development.
A decree was issued in late 2004 allowing
freehold ownership of real estate by foreigners
in designated integrated tourism development
areas, which is luring investors.
Freehold properties will be offered in certain
areas of Oman.
A number of large scale projects are
underway, including Barr Al Jissah, The Wave,
and Al Sawadi tourism projects.
Strong potential for tourism in Oman, a sector
that is virtually untapped.
US$ Mn
In Mn
(in per cent)
2003A
2004A
2005F
2006F
Real GDP Growth
1.9
4.5
3.8
6.2
Inflation Rate
0.2
0.8
1.9
1.1
Population Growth
4.0
3.9
3.7
3.6
Source: IMF and EIU
RO Mn
250
1.0
800
200
0.9
750
150
0.8
100
0.7
50
0.6
0
0.5
Domestic Output of Real Estate and Construction Sectors
700
650
600
550
2000
2001
2002
Tourist Arrivals
500
2001
2002
2003
2004
Source: Central Bank of Oman
42
Lebanon Snapshot
Increasing demand for high-end luxury
housing and recreational facilities from Arab
nationals and expatriates.
(in per cent)
Real estate sector is regaining attractiveness.
Real GDP Growth
Real estate in Lebanon is mainly dollar based,
which eliminates foreign currency risk.
Inflation Rate
2003A
2004A
2005F
2006F
5.0
6.0
-
3.0
1.3
3.0
2.0
2.0
-
-
2.9
-
Source: EIU and AMF
Population Growth
Potential in retail sector, as shopping malls
and international retail chains are being
introduced.
Source: IMF and EIU
The success of the ‘Solidere’ project
uncovered the potential of mega projects.
US$ Mn
In Mn
1,300
1.3
1,200
1.2
1.1
1,100
1.0
1,000
Mn. Sq. Mt.
Construction Permits
10
9
8
0.9
900
0.8
800
7
0.7
700
0.6
600
0.5
2000
2001
2002
2003
2004
Tourist Arrivals
6
5
2000
2001
2002
2003
2004
Source: Central Bank of Lebanon
43
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
44
Arab Bank Group
Propelled by a 75-year history and a network exceeding 400 branches in more than 30
countries, the Arab Bank enjoys an unmatched distribution capability and local
market knowledge compared to regional counterparts
It is one of the principal financial institutions in the Middle East, with total assets
exceeding US$30 billion and assets under management worth US$5 billion
The Largest Arab Banking Network
45
45
Atlas, a wholly-owned subsidiary of the Arab Bank plc and its investment banking arm, is one of the
oldest, full-fledged investment banking firms in the MENA region, celebrating its 10th year anniversary.
Arab Bank is one of the largest financial institutions in the Arab World.
Atlas boasts an integrated set of professional investment services in the fields of:
Asset Management
Brokerage
Corporate Finance
Research
One of the leading Asset Managers in the region.
With invaluable experience from renowned regional and international institutions, Atlas’ 75-person team
is one of the most qualified in the MENA region. It includes one of the largest numbers of CFA
(Chartered Financial Analyst) charter holders and MBA graduates.
46
Atlas Asset Management
Mission
To provide professional investment management solutions to institutions and
individuals
Scope
Specialized in investing in the MENA region, in both equity and fixed income
instruments
Presence
Headquartered in Amman with offices in Dubai
Client Base
A regional client-base that includes prominent institutional clients as well as high
net-worth individuals
Assets Under
Management
The Arab Bank has more than US$5 billion of assets under management
allocated to a number of products, including the Europroperty Fund. Atlas
manages the bank’s MENA investment activities
Team
A highly qualified team will be assigned to the Fund, which includes five CFA
charterholders and one Chartered Market Technician (CMT) Level 3 candidate,
of whom five are also Masters degree holders
47
47
Atlas Asset Management
A Wide Range of Products
Discretionary
Managed Accounts
Constructing and managing “tailor-made” investment portfolios in accordance
with a predetermined set of investment guidelines. Underlying investments are
made in the MENA region as well as internationally
Arab Bank
MENA Fund
An open-ended mutual fund that invests in the equity and fixed income markets
of the MENA region through a diversified asset allocation strategy
Islamic MENA Fund
A unique
product
that
offers anof
opportunity
to invest in regional capital markets
A
Wide
Range
Products
utilizing a “Shari’ah” compliant approach. Scheduled for launch in February
2006
Saraya Real Estate
MENA Fund
A US$250 million closed-end, Bahrain incorporated fund that invests in
real estate and tourism projects in the region through direct equity
investment
Private Equity
Investing in Jordanian private companies through “The Jordan Fund”,
a US$50 million private equity fund that Atlas co-manages with Foursan Group
and Deutsche Bank
48
48
MENA Equities Track Record
Superior overall performance of the MENA equity portfolio
150%
138.3%
130%
110%
91.6%
90%
72.3%
70%
55.9%
50%
30%
10%
-10%
52.0%
40.9%
25.4%
-2.1%
7.3%
0.6%
2001
2002
2003
Atlas MENA Equity Portfolio
2004
2005
AMF Composite Index
Annualized Holding Period Return
Atlas MENA Equity Portfolio
61.4%
Arab Monetary Fund (AMF) Composite Index
36.4%
Atlas alpha per annum
25.0%
49
Table of Contents
Section
Page
What is Saraya?
2
9
The MENA Region
25
29
The Tourism Sector
34
Country Snapshots
39
44
50
50
Saraya Real Estate Development Group (SDG)
Saraya Real Estate
Development Group
(SDG)
Real Estate Developer and Asset Manager, with offices in Amman and Dubai
Provides advisory and management services to Saraya Projects
Acts as Property Adviser to the Saraya Real Estate MENA Fund
Property Adviser’s
Mission
To provide high quality, tailored advice in all investment, technical, and
operational aspects related to Saraya Projects
To manage the investment appraisal and project development process and
deliver on investors’ objectives
To maximise shareholder value through the asset management role
Property Adviser’s
Competencies
Management– overall project and program management
Technical– master planning, architecture, technical liaison, working with and
managing technical specialists (marine, geotechnical, environmental, etc.)
Financial– undertaking financial analysis and investment appraisal; working
with appointed financial advisers and lead arrangers to raise the necessary
equity and/or debt capital
Commercial– extracting optimum returns and entering JV agreements that
enhance operational and financial performance
Marketing and PR– establishing site branding via an integrated
communication plan and a route map for events and announcements; working
with agencies and journalists to deliver successful events and PR
51
51
SDG Methodology
SDG has established a methodology for evaluating opportunities to invest in real estate developments
and to deliver and oversee projects that it chooses to invest in. This is illustrated in the sequence
shown below.
SDG will mandate specialist companies in the areas of market research, architecture, urban planning,
engineering, communications, etc., to work on Saraya Projects as necessary.
Strategize
Concepts
and
Strategies
Originate
Potential
Deal
Secure
Deal
(e.g. MOU)
Develop
Business
Opportunity
Structured
Funded
Deal
Execute
Developed
Assets and
Business
Readiness
Realize Value
Steady
Cash
Exit
Capital
Appreciation
52
SDG Methodology
Strategize
Originate
Secure
Develop
Business
Opportunity
Execute
Source Leads
To generate an initial list of potential deals,
sourcing activities are conducted based on the
strategic business plan
Realize Value
Exit
Second Stage Screening
Potential Deal
To analyze the output of the first stage screening,
a stage two screening is conducted
The screening output is a second stage analysis report
on which the ‘Go’ or ‘No Go’ decisions are based
First Stage Screening
To screen the initially identified potential deals, a
first stage screening process in conducted where
Pro-activity allows for opportunistic leads to be
channelled
The screening output is an analysis report on which
the Go or No Go decisions are based
The screening criteria for this stage are:
¾ Source Leads
¾ First Stage Screening
¾ Second Stage Screening
The screening criteria for this stage are:
Vision, mission, and core values
Strategic business plan
Strategic fit and alignment of identified partners including:
• Financial due diligence
• Legal due diligence
Saraya brand attributes
Potential returns
Ability to repatriate profits
Ability to reach MoU quickly
Location Attributes
Market potential
Strategic fit and alignment of potential partners
53
SDG Methodology
Strategize
Originate
Secure
Develop
Business
Opportunity
Execute
Realize Value
Exit
Established Principles
The first step is to sign a confidentiality and noncircumvention
agreement
to
govern
the
relationship between the parties going forward.
Deal
(e.g. MOU)
Technical and development ideas and principles
Operational strategies
Identified site
Investment principles
Initial development ideas
Branding and PR strategy guidelines
Seed capital requirements
Commercial terms
¾ Established Principles
¾ Concept Site
Established MoU roadmap
¾ Signed MOU
Concept Site
To identify a specific site, the site boundaries and
possible phasing
To develop a high level master plan
To define operational strategies and high-level
execution timetables
To finalize the signing of an MoU the following
must be finalized:
The established principles include:
Investment requirements and sources
Signed MOU
¾ Project Announcement
Legal terms
Project Announcement
An announcement of the agreement and signing
of MOU are established once the founders
agree the definition of the event.
The following are usually incorporated in the event:
Visuals
Branding
Boards showing design intent
Speeches, etc.
54
SDG Methodology
Strategize
Originate
Secure
Develop
Business
Opportunity
Execute
To define the characteristics which affect the project type
Structured
Funded Deal
and economic yield

To recommend a proposed use of the site
Exit
Revenue Assessment
Market Studies

Realize Value

To evaluate revenue projections for the various products
and services offered by the project.
Cost Assessment
¾ Market Studies

¾ Technical Development
Marketing & PR
To evaluate the project’s capital and operating costs
Technical Development

To identify key technical opportunities and constraints and
integrate them into master plan and program options

To identify technical requirements that link with operator
requirements and the site operating strategy

¾ Operating Strategies
¾ Revenue Assessment
To develop technical data that can be used for financial
appraisal and presentation material that can be used in
¾ Cost Assessment
To define a site-wide operating strategy
¾ Marketing & PR
¾ Financial Evaluation
To define terms of operator involvement
To obtain/negotiate operator-specific requirements
Financial Evaluation

launching and funding the project
Operating Strategies
To define the brand and brand attributes for the
destination
To establish a route map for announcing the project
To support a successful launch and fund raising exercise
¾ Due Diligence & Capital
Raising
To evaluate the rate of return, peak funding
requirement, optimum capital structure and fund
raising stages of the project
Due Diligence & Capital Raising

To mandate and supervise the process of raising
the equity and/or debt capital required for the
project
55
SDG Methodology
Strategize
Originate
Secure
Develop
Business
Opportunity
Execute
(Support
Work Stream)
Procurement Strategy
Realize Value
Exit
Architecture and Engineering Design
The procurement strategy defines the project description
and scope, the objectives of the business strategies, the
approach, form of contract, and the selection criteria for
the selection of suppliers
Developed Assets &
Business Readiness
To produce:
Schematic designs
Design development
Construction documents
Client Brief
¾ Procurement Strategy
A client brief is produced to mainly cover the following:
¾ Client Brief
Total/unit prices
¾ Design Brief
Required cash allowance including amount and
contingencies: (Testing allowance, Contingency, Utility
connections, etc.)
Description of project, its products and services
Functional,
operational,
requirements
technical,
and
special
Constraints (physical, financial, time, legal, etc.)
Communication protocol
Project organization
Detailed cost estimates (architectural,
mechanical, electrical, and civil)
structural,
¾ Design Development
Construction
¾ Construction
¾ Closure
In construction, further design requirements and drawings
are captured to enable execute-ability.
Design Brief
The design brief builds upon the client brief and includes
design development guidelines which enable the master
plan to be developed into concept and schematic designs
for the different project areas and spaces
¾ Soft Running
Commissioning and Handover
To complete the construction project
56
SDG Methodology
Strategize
Originate
Business Strategy & Partner Strategy
To lay the foundation for selecting the remaining
strategic (key) partners and the approach tactics and
negotiation principles
Secure
Develop
Business
Opportunity
Execute
(Support
Work Stream)
Developed Assets &
Business Readiness
To confirm partner position relating to conflict of interest
To establish Memorandum of Understanding/Heads of
Terms that would go to partner
To compile approach to involving operators and
technical advisors as partners in the development
strategy
¾ Business Strategy &
Partner Strategy
Realize Value
Exit
Execution
To commence the project execution by registering
the company, recruiting, setting up the offices,
facilities and associated infrastructure, acquiring the
furniture, machinery, equipment, vehicles, etc.
Training and Dry Running
¾ Business Planning
To train the employees
Business Planning
¾ Business Structuring
To conduct end-to-end business process testing, endto-end system testing (iterative)
To produce a Business Plan which covers the market
studies, legal and political issues, technical development,
customer strategy, development and operational strategy,
and financial evaluation
¾ Execution (Setup and
Recruitment)
To identify gaps and produce snagging lists
Business Structuring
¾ Training and Dry
Running
To establish structuring principles; Value Chain
Analysis and Organization Structure
To develop organization blueprint (structure,
processes, policies & procedures)
To suggest and validate fixes
Soft Running:
¾ Soft Running
To final-validate and QA the project once the physical and
business work streams are fully conducted
To identify resource requirements (manpower
planning, IT, etc.)
57
SDG Methodology
Strategize
Originate
Program Management
To manage project vision and brief
Secure
Develop
Business
Opportunity
Execute
(Support
Work Stream)
Developed Assets &
Business Readiness
To manage project strategy
Realize Value
Exit
Sales
To commence off-plan sales
To manage the sales operation
To manage project organization
To manage master scheduling
To manage project delivery within time and budget
To manage all produced documents
¾ Program Management
Marketing and PR
¾ Marketing and PR
To further develop the brand and brand attributes for
the destination
To create a consistent portfolio to safeguard and
increase brand equity
To establish a route map for announcing the milestones
of achievement during the course of the project and
¾ Sales
Accounting and Finance
Budgeting
Procurement
¾ Accounting and Finance
Payables
Receivables
Financial reports and statements
build up the hype to support a successful soft opening
and official launch
58
SDG Methodology
Strategize
Originate
Secure
Develop
Business
Opportunity
Execute
(Support
Work Stream)
Site-wide operating strategies
• Site-wide operating strategy consisting of a set of
support business entities which provide services to the
site as a whole.
Operating Agreement & Operating Entities
• To ensure obtaining value for money and in place
effective and robust agreements.
Steady Cash
• To establish procedures for the oversight role
• To establish financial systems to be used on the site
• To ensure proper documentation (drawings, operating
manuals, warranties, operator agreements, etc.)
• To establish meetings, plan and service Level
Agreements, and mode of conduct between the various
legal entities
Exit
(Asset
Management)
Asset Management
To oversee entire operations
¾ Site-wide operating
strategy
To manage payables and receivables
¾ Operating Agreements &
Operating Entities
To
¾ Mobilized Asset
Management Set Up
To
Mobilized Asset Management Set Up
• To decide organization structure for site
Realize
Value
¾ Asset Management
To plan and undertake marketing activities
manage
relationships
between
entities
especially service level agreements
seek
further
synergies
and
operating
efficiencies
To study any expansion or exit scenarios and
undertake necessary financial modeling and
investment/divestment strategies
To monitor performance of operators
To agree actions that will improve KPI’s
• To establish an industrial relations scheme for uniform
and consistent terms and conditions across the site
59
60