Review of Market Performance for the development

of
a unique plot of land in
Lesvos Island

Confidential Information
Memorandum
Map of Location

vos
Les
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Site Location

Site

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Photos of the Site

Po
da
ra
Be
ac
h
Site

Si t e

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Table of Contents

Important Notice 6 page

Introduction 7 page
1. Investing in Greece 8
2. Investment Incentives in Greece 12
3. Regional Perspective 15
4. Lesvos Tourism Overview 18
5. Climate of Lesvos 29
6. Site Description 31
7. Zoning & Planning Regulations 35
8. Development Potential – Scenarios 38
9. Scenario I 39
10. Scenario II 47
11. Scenario III 52
12. SWOT 61
Appendix

5
Important Notice

Confidential information memorandum

This Confidential Information Memorandum contains proprietary and confidential information regarding the owner of the subject
and the proposed development which is the subject of this memorandum (“the project”). It has been prepared in order to enable
interested parties (buyers) to acquire a complete picture and conduct an initial evaluation of the land. No approaches of any
kind may be made by you to the owner without prior the knowledge and the written authority of Z. Floros . Neither this
memorandum, nor the information contained herein, may be reproduced or passed on to any person or used for any purpose
other than stated above. On request, the recipient will return this memorandum without retaining any copies thereof.

Contents of this memorandum

Neither the owner nor its associates makes any expressed or implied representation or warranty and no responsibility or liability
is accepted by any of them with respect to the accuracy or completeness of the information set forth in this memorandum.
Nothing contained herein is, or shall be relied upon as, a promise or representation regarding historic or current market
conditions or any future events or performance of the market and/or the project. The information set forth in this memorandum
is intended solely to assist in the preliminary evaluation of the subject plot of land by those to whom it has been delivered by
the owner and interested parties must undertake such investigations as they see fit before entering into any contract.

6
Introduction

The Owner
The owner has a prime land plot of 218 hectares in the south western part of Lesvos island and specifically in the area of
Podara Bay, at the community of Mesotopo in the municipality of Eresso, in the Prefecture of Lesvos (North Aegean Islands).
The owner has selected Z. Floros as its exclusive adviser in the identification and selection of a purchaser (the Buyer) for the
site.
The owner recognizes the potential of the site if it is successfully developed and managed by a well-reputed developer and
real estate management company. For this reason, the owner seeks the interest of international developers and companies
to purchase the freehold ownership of the subject site. The owner has the freehold interest in the subject plot since early
1900’s. The prime site and potential project, along with the improving infrastructure in the broader area, offer an outstanding
opportunity to a potential investor.

The Site

The site is located at approximately 0.5 km distance from Tavari town, 1.5 km from Mesotopo town and 75-80 km from the
upgraded international airport of Lesvos. The immediate area is rather agricultural and less tourism developed, however
there are opportunities and interest to develop the south western side of Lesvos island since it has one of the best seashores
on the island and provides for a good infrastructure network. The beach is one of the greatest assets of the subject site,
offering fine-grain sand, ideal for leisure, whilst the river bank at the south area of the subject represents a truly unique
feature of the site which offers significant ecologically sensitive development opportunities. In addition, due to the unspoiled
and undeveloped location of the site, the seclusion and privacy should greatly enhance the project as a destination.

7
1. Investing in Greece
1.1 Greece
Greece, at the southern extremity of the Balkan Peninsula, is the
only member of the EU without a land frontier with another member.
To the North, Greece has land borders with Albania, the former
Yugoslav Republic of Macedonia, and Bulgaria and to the east with
Turkey.
The sun and the sea are Greece’s principal resources and have
been so since antiquity. In Greece, a country of fishing boats and
freighters, ferries and yachts, one is never more than 100 klm from
the sea. Greece is competitive in significant cost intensive areas
such as Human resources, Energy, Telecommunications,
Construction and Property. It is Europe’s strategic link to the
sizeable emerging markets of the Balkan, Black Sea, eastern
European and eastern Mediterranean regions.
Greece’s advantageous location provides access and opportunity to
the neighboring regional markets while Thessalonica, the capital of
northern Greece, offers the financial and trading services needed in
order to conduct business in the regional markets. Greece has 39
international standard airports, many of which are being upgraded or
rebuilt. One of the biggest infrastructure projects in Greece is the
new Athens International Airport. Greece has 123 cargo or
passenger ships, cruise ships and freights. The new infrastructure
project of motorways will entail noticeable reductions in traveling
time between important Greek cities and it will lead to marked
improvements in road safety. Furthermore, it will contribute to
economic development, as it will stimulate commercial exchanges. It
improves in particular the accessibility of the remote northern
regions of Thrace, Epirus and Macedonia.
The population of Greece is around 11 million. The official language is
Greek (Hellenic) but English , French, German, and other languages are
widely spoken, especially in tourist areas. The religion is Greek Orthodox.
There are minorities of Catholics & Muslims. Greece is a member of the
EU since January 1981. It is a democracy and enjoys political and
economic stability.
Greece has a Mediterranean climate. Long, dry and hot summers and
mild sunny winters especially in the south, although winters can be colder
inland in northern areas mostly. The country has 300 days of sunshine
per year. The average temperature in the summer is 25 C (77 F). Annual
rainfall varies from 1500mm in the North to less than 500mm in the South
and it rarely rains in the summer.
Investing in an expanding economy with a major and increasing economic
role in the Balkans that is part of the EU and the Euro area is always a
paying proposition. Greece has the highest growth rate in Europe and,
given its prospects, is anticipated to keep this position in the foreseeable
future. It is also a natural destination for holiday homes and tourism.
Greece is in the process of establishing a National Land Registry
whereby official titles shall be issued for the property secured at the same
time by the state. Some areas already have a Land Registry (such as
Rhodes and the Cyclades islands in general) while most others are based
on a different system, that of the Registry of Mortgages on a Municipal
basis.
8
1. Investing in Greece

1.2 Investing in Greece

Investing in an expanding economy with a major and increasing economic role in the Balkans that is part of the EU and the Euro area is always a
paying proposition. Greece has the highest growth rate in Europe and, given its prospects, is anticipated to keep this position in the foreseeable
future. It is also a natural destination for holiday homes and tourism.
Greece is in the process of establishing a National Land Registry whereby official titles shall be issued for the property secured at the same time
by the state. Some areas already have a Land Registry (such as Rhodes and the Cyclades islands in general) while most others are based on a
different system, that of the Registry of Mortgages on a Municipal basis.

Below a checklist for acquiring property in Greece is provided:

Appoint Lawyer The purchaser must appoint a Lawyer to search the titles at the Registry of Mortgages and represent him/her to
the Public Notary where the contract deed will be signed. The lawyer must carry out a search at the Registry of
Mortgages and ensure that the vendor holds and absolute title (deed) to the property, that the property is
unencumbered, that all acts associated with the property are based on a lawful planning permission and that all
property taxes burdenening the vendor have been paid.

Receive Copy of Title The purchaser must secure copies of the title (contract deed) held by the vendor.

9
1. Investing in Greece

Appoint Public The purchaser must appoint a Public Notary in the presence of whom the contract deed is to be signed thereby becoming
Notary an official transaction whereby the purchaser acquires the title to the property purchased.

Raise Funding Different modules of financing are offered by Greek banks or one can receive his funds by a simple transfer from a foreign
account to an account in Greece.

Apply for Tax The purchaser must apply for and secure a Tax Registry Number (AFM or ΑΦΜ) from the Inland Revenue Service.
Registry No.

Transfer Tax The purchaser must make sure that the transfer tax is paid prior to signing the contract with the aid of his/her lawyer. The
tax is paid by the purchaser.

Pay Associated The purchaser will have to pay the following obligatory costs as required by Greek Law:
Costs
• Lawyer 1% of contract amount up to Euro 45,000 plus 0.5% for amounts exceeding Euro 45,000. Legal costs for
checking the title are separate.

• Public Notary 1.5% of contract amount.

• Transfer Tax Fees 11% of contract amount.

• Registration Fee 0.5% of contract amount.

Sign Contract at For property to be officially bought/sold a contract must be signed before a Public Notary. The Notary is a state official in
Public Notary’s the presence of whom the contract deed is read and signed by both vendor and purchaser. He/she is there to draft it and
Office verify and register in the public records the transaction, which takes place in his/her presence.

10
1. Investing in Greece

Effect Transfer at Registry of The contract deed must be transferred in the purchaser’s name at the Registry of Mortgages and the
Mortgages relevant official certificates secured. This is usually carried out by the purchaser’s lawyer.

Submit Proof of Transfer at Land If the property has already been registered under the National Land Registry the purchaser must submit
Registry a copy of the contract deed together wi the transfer certificate from the Registry of Mortgages so that the
said property be properly registered in his/her name.

Once one acquires property in Greece you have the obligation to submit a statement to Tax Authorities each year declaring your property, in
order to pay any taxes due for the said property. The total value of all property holdings of a person or legal entity are summed up and tax is
determined on that. Tax is calculated on ‘’objective values’’.

In many cases purchasers opt to declare as the contract amount, the Government –issued values, for tax purposes, the so-called “Objective
Values”. These are calculated on the basis of Governmental Data by the Public Notary and the Inland Revenue Service. The “’ Objective Value”
of each property is calculated according to a specified formula and a price per sqm for the location and particular characteristics of a property.
The advice of a lawyer is highly recommended on this issue.

Property tax is calculated by summing the total value of all property holdings of a person or legal entity and tax is determined on that. Tax is
calculated on “Objective Values”.

In areas near teh national borders and in some islands, non-European nationals require a special permission by Local Council in order to
purchase property. There is no restriction for all other mainland or island areas. This permission tends to be a formality for non-controversial
nations. Thus, if you are a EU national you do not have any problem purchasing property anywhere in Greece.

11
2. Investment Incentives in Greece

2.1 Tourism Investment Incentives in Greece

In Greece investment activity in the tourism sector is highly supported with the two main sources of public funding coming from tax
incentives and subsidies in accordance with Investment Law 2601/98, and from the 3rd Community Support Framework (CSF).
The current investment law is under amendment and is expected to be improved to the benefit of investors and is planned to be
enacted by the end of 2004.

Investment Law

q Investment Law 2601/98 sets out two basic investment incentives which are the following:

i. Capital and Interest Subsidies on Loans

ii. Tax exemption and interest subsidy on loans

q Prospective investors that have been in operation for less than 5 years have access to both incentives whereas long
established companies can only claim tax exemption and interest subsidy on any loans used to fund appropriate
investments. However certain tourism investments have access to both incentives:

–Long term investment programs (2-5 years)

–Business Plans for survival and reform
–Important investments over 73.4 million Euros
–Investments for the integrated modernization of hotel units

q In addition, the investment law divides tourism companies into two categories and subsidizes them accordingly. These
are:

–Category 1: Companies that are involved in tourism but excluding those which fall under category 2.
–Category 2: Companies associated with special or alternative forms of tourism such as conference facilities,
thalassotherapy, golf courses, etc.

12
2. Investment Incentives in Greece

2.2 3rd Community Support Framework (CSF)

q The 3rd Community Support Framework enables Greece to tap into substantial European Union funds which it can apply
towards projects that readdress inequalities amongst EU member countries between 2000 and 2006. The CSF’s projected
capital expenditure for the tourism sector in Greece is approximately 2 billion Euros, composed of EU support, the Greek
State and private funds.

q CSF proceeds are distributed in the following order of priority:

–Modernization and expansion of tourist facilities including new hotels

–Expansion of the Greek tourist market through the provision of new services including public investment in specific
sectors such as marinas, cultural events, etc.
–Technological upgrading of tourism businesses to support their competitiveness
–Promotional campaigns supporting Greece as a tourist destination
–Development of thematic tourism
–Creation of special tourism infrastructure facilities ( congress centers, golf courses, thalassotherapy centers,
hydrotherapy centers, marinas, etc).

13
 2. Investment Incentives in Greece
2.3 Rehabilitation Centers
According to Law 2601/1998 / Α-81 and Law 2072/1992/A-125 (article
10 and 30) Grants are received for Centres of full recovery and
rehabilitation according to the following:
q Individual or legal entities, which develop Centres of full
recovery and rehabilitation are able to receive grants from the
aforementioned Laws. The Centre is required to operate for
the benefit of services of health and hospitalisation of ill
internal or external patients that require rehabilitation and
suffer from diseases such as muscular, nervous, circulatory,
respiratory system, as well as from intellectual deprival, using
the modern means and the methods of medical rehabilitation.
q The Minister of Health, Prevention and Social Insurances
determines the specifications of operation of such centres for
full recovery and rehabilitation, the facilities and the essential
equipment, the necessary personnel, as well as the essential
space.
According to Law 2601/1998 / Α-81 (Article 3), the Expenditure Support
Grants are provided for the following:
(i) The construction, the expansion, the upgrading, of specialised as well as
auxiliary installations, in addition to the expenditures for landscaping.
(ii) The purchase and installation of new modern machinery and equipment.
The financial lease payments of new modern machinery and equipment,
which is acquired for the operation of the subject centre.
(iii) The purchase and installation of new modern hardware and software.
(iv) The purchase of new mass transportation vehicles for personnel as well
as the patients of the subject centre.
14
According to Law 2601/1998 / Α-81 (Article 4), the specific
grants are broken down according to Greek Zones, as
follows:
q The purchase of new mass transportation vehicles for
personnel as well as the patients of the subject centre. For
the application of provisions of the present law, the Greek
Territory it is distributed into four (4) regions as follows:
q Region D': Includes the Prefectures of Eastern
Macedonia and Thrace, Continental Regions and frontier
areas at a distance of 20 km from the Greek borders. Also
included are: the islands of Greek Territory with a
population up to 3.100 residents, according to the census
of 2001, the Northern Aegean islands (including
Lesvos), the Dodecanese Prefecture, except for the
region that is determined from the ministerial decision of
the general urban drawing of the city of Rhodes.
The grants for zone D are based on the following:
ü Percentage grant on the capital expenditures:
40%
ü Percentage grant on the interest expenses of the
financial loans of the investment: 40%
ü Percentage grant on the financial leasing
payments : 40%
3. Regional Perspective
3.1 Greek Economy / Positive economic growth

Officially known as the Hellenic Republic, Greece is a country of 10.6m inhabitants located in the eastern Mediterranean. Bordered by
Turkey to the east and Bulgaria, the Former Yugoslav Republic of Macedonia (FYROM) and Albania to the north, the peninsula that
constitutes mainland Greece is surrounded by some 1,400 islands.
Greece joined the European Community in 1982 and is a major beneficiary of E.U aid, equal to about 4% of GDP. Despite the effects of
recent global economic uncertainty, Eurozone participation and the Athens 2004 Olympic Games have assisted Greece maintain high
investment levels, high GDP growth and lower interest rates, as shown by the key economic indicators detailed in the following table
• Inflation has slowed significantly since the early
1990’s. Key economic indicators (1998 – 2004)
• GDP growth in 2003 is estimated to reach 3,8%, 1998 1999 2000 2001 2002 2003
(1)
2004
nearly four times as high as GDP growth in the GDP growth (%) 3,4 3,4 4,3 4,1 4,0 4,8 4,2
Eurozone (1,0%). Inflation (%) 4,8 2,7 3,1 3,8 3,5 3,4 3,3
Unemployment Rate 11,1 12 11,4 10,9 10 9,1 8,3
• GDP growth in 2003 is estimated to reach 3,8%, Consumer Price Index 4,7 3,9 2,7 3,9 3,4 3,5 3,6
nearly four times as high as GDP growth in the Debt as % of GDP 108,5 105,5 104,6 103,9 104,9 101,7 98,5
(1)
Eurozone (1,0%). Estimates based on the latest official information
Source: Greek National Bank / Ministry of Finance 2003
• Inflation has slowed significantly since the early
1990’s.
• Low interest rates and implied rapid credit expansion in the private sector have fuelled consumption.
• Measures for the reduction of corporate tax and increased tax exemption, together with the discontinuance of stamp duty, are
expected to free more resources, which in turn should have a positive effect on investment and consumption levels.
• Unemployment has been falling steadily over the last couple of years. Recent job creations specifically in the services and
construction sectors due primarily to the Olympic Games and the Community Support Framework Grants have pushed
unemployment below 10% for the first time in 10 years. Assuming stability in the Balkans, however, Greece should benefit from their
re-building and the high level of aid and investment expected to flow into the area.
15
3. Regional Perspective
3.2 Overview of Greek Tourism

Tourism is a key industry providing 8% of the

20%
total GDP in Year 2002 (latest official data).
Greece
Moreover, 10% of the direct employment is
centered in tourism related activities and 15% Spain
comprises 30% of the total national
Turkey
investment. In 2002, Greece was rated the 10%
10th country worldwide in regards of the Cyprus
Tourism receipts (€10,3 million ). 5% Portugal
The Greek Tourism Industry is characterized Egypt
by an intense seasonality of visitation with a 0%
concentration of tourism demand during the J F M A M J J A S O N
months of May through to October (almost
50% of tourism arrivals take place during that
period).
This is mainly due to the characteristics of the key European source markets. It is also, however, due to limited focus to date on extending
the season through conference and incentive visitation, golf and spa tourism.
The improvement of the investment environment through the Greek Development law (N.P 17/65), the attraction of foreign investors, the
constant upgrading of all tourism infrastructure and the intense Greek tourism promotion to be seen from the organization of the 2004
Olympic Games, consist the main axis of achieving the goals for sustainable qualitative and quantitative tourism growth.

16
 3. Regional Perspective

The Iraq war and the SARS epidemic have affected the international tourism industry. The Greek tourism market experienced a
slowdown in the tourism arrivals during 2003. It is estimated that the Olympic Games of 2004 will boost significantly the foreign arrivals.
Future forecasts suggest continued growth with 14.5m tourists estimated by 2005 (compound annual growth rate of 3%).

The following table shows a comparison of tourist arrivals amongst Greece and other competitive European tourist destinations for the
period 1990-2001 :

Year Greece Change Spain Portugal France Italy Turkey

§ Greece in Y2002 was rated the 15th top
(000s) % (000s) (000s) (000s) (000s) (000s)
tourist destination in the world.
1994 10,642 13% 43,232 9,169 61,312 27,480 6,670
1995 10,130 -5% 34,920 9,511 60,033 31,052 7,727 § According to the GNTO, Europe is the
1996 9,233 -9% 36,221 9,730 62,406 32,943 8,614 dominant source market, representing
1997 10,070 9% 39,553 10,172 67,310 34,692 9,689 up to 94% of total arrivals to Greece,
with Germany and the United Kingdom
1998 10,916 8% 43,396 11,295 70,040 34,933 9,752
accounting for some 40%.
1999 12,164 11% 46,776 11,632 73,042 36,516 7,487
2000 13,100 8% 47,900 12,096 75,600 41,200 10,428
2001 14,033 7% 49,500 12,167 76,500 39,000 11,618

CAG(1) 4% 2% 4% 3% 5% 8%
Compound annual growth (1994 to 2001) – Latest official data available
Source: World Tourism Organization

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4. Lesvos Tourism Overview
4.1 History of Lesvos Island
There are seven major islands in the northeastern group:
Samos, Chios, Ikaria, Lesvos, Limno, Samothraki and
Thasos. Large distances separate them, therefore island
hoping is not as easy as it is within the Cyclades and
Dodecanese. Most of these islands are large and have
very distinctive characters.
Lesvos island, Greece’s third largest island after Crete
and Evia, was a center of the Aeolian civilization, when
around the 10th century B.C. it spread to the shores of
Asian Minor. During the reign of the tyrant Pittakos (6t
century B.C.), one of the Seven Sages of Antiquity –
Sappho and Alcaeus, tow of the greatest poets of the
ancient world immortalized the island in their poetry. It has
also been the birthplace of the greatest Arion and the
musician Terpandros. In the 5th century B.C., Lesvos
joined the Athenian League but, like the other Greek
States, succumbed to Macedonia in the following century
in 88 B.C., it was annexed to the Roman province of Asia
Minor. In later years, it was ruled successively by the
Byzantines (1355), the Genoese (1462) and the Turks
(1462-1912), while repeated pirate raids over the
centuries caused the islanders to erect countless castles
in self defense.
Its long unbroken high standard of civilization is still in
evidence, even in our own day many outstanding writers,
artists, and thinkers have their roots in Lesvos. Greece’s
most famous contemporary poet, Odysseus Elytis, the Nobel
laureate was also born here.
Lesvos is one of the few places where most of the towns and
villages have preserved intact their architectural heritage.
The highest mountains are Lepetymnos (968m) and Olympus
(967m). Most of the towns and villages were built in the
interior for security reasons, in the dips and hollows of its
undulating hills.
The landscape is varied with enormous olive groves (the 11
million trees produce a vast quantity of justly famous oil),
pine, chestnut and plane trees, rocky mountains, numerous
beaches, some sandy, some pebble, some with stream rising
from them indicating the presence of hot springs, some –the
ones facing the open sea – blessed with crystalline waters.
18
4. Lesvos Tourism Overview
4.2 Lesvos at a Glance

Lesvos belongs to the islands of the Eastern Aegean Sea. Its area is 1,638 sq.km and together with the islands of Lemnos,
Ayios Efstratios and the islets around them, it belongs to the Prefecture of Lesvos. Its coastline forms two bays in the south
- Geras and Kallonis - and a plethora of creeks and capes. The main plains are the plains of Kalloni, Ippeos, Perama and
Eressos and the highest mountains are Lepetymnos, Olympos and Psilokoudouno. There are streams flowing through the
fertile plains, among them Tsiknias, Tsichliotas, Mylopotamos and Sedountas. The eastern and central part of the island is
cloaked in olive groves, pine forests, and chestnut, oak, beech and plane trees.

The population is approximately 100,000 and Mytilene is the capital

city of the island and the administrative center of the Prefecture of
Lesvos, the seat of the Ministry of the Aegean Sea, of the District of
the North Aegean and of the University of the Aegean. The island is
divided in 13 Municipalities. The local economy is based on the
agricultural production with an emphasis on olive oil production (of
exceptionally high quality), cattle-raising (mainly dairy products) and
fishing. Distillery is developed and its main product is the world famous
ouzo. Many of the island's inhabitants are professionally engaged in
tourism. The soil and the climate of the island have given Lesvos an
unusually rich flora to which it owes its beauty, the beauty that Sappho,
the famous lyric poetess (6th century BC), sung. The Lesvian
philosopher Theophrastus (3rd century BC), one of the forefathers of
Botany, was the first to record a large number of plants.

19
4. Lesvos Tourism Overview
4. 3 Tourism Overview

§ Lesvos island has over 100 organized hotels which compose of 6,784 beds.
The majority of the hotel units were built from 1985 – 1995.
§ While in Lesvos 1000 residents correspond to only 64 beds in other Greek
islands 1000 residents correspond to 1000 beds. This shows the
underdevelopment of the island during the past few decades.
§ Due to the limited supply of hotel units, during the past years, there has been
an increased interest to develop large hotel units (over 500 beds) with facilities
such as conference centers , thalassotherapy and balneotherapy centers in
order to take advantage of the numerous thermal baths in Lesvos island.
§ The majority of the tourists of Lesvos are mid to upper class and growth in
arrivals is significantly greater than at other Greek destinations. For example
in 1999, average growth in arrivals for Greece was 6.5% whilst Lesvos island
experienced a 20% growth rate.
§ Accordingly, visitation from countries of origin is as follows: Greeks (30%),
Germans (22.5%), British (18%), Dutch (9.5%) and the remainder come from
countries such as Austria, Scadinavia, Belgium, Cyprus, and Israel.
§ In 2003, arrivals by charters where as follows: British (27,223), German
(7,670), Holland (15,255), Danish (7,460), Swiss (1,158), Austrian (2,995),
Belgian (5.717), Norwegian (5,973), Swedish (3,475), Slovenia (977), whereas
the total arrivals where 77,903 compared to 81,045 in 2002 and 83,286 in
2001.
Lesvos island is split into various tourist zones:
§ a) The southeast zone of Mitilini town; b) Molyvos-Petra-
Anaxou zone, a pure tourism center; c) Sigriou-Eressou-
Antissas zone; d) Kalloni-Polichnitou-Vateron zone; e)
Plomariou zone; f) The north east zone in the broader area of
Mantamados; g) the internal zones.
§The major tourism developments are centered in the east,
i.e. 25% of the hotel beds and 21% of the beds of non hotels.
§ The Molyvos-Petra-Anaxou zone, comprises of 40% of the
tourism beds of the island.
§The Sigriou-Eressou-Antissas zone comprises of 11% of the
hotel beds.
§The connection of Sigriou and the port of Rafina will expand
the demand for accommodation further east to Tavari and
Podara (area of the subject plot).

§ In year 1989 and 1999, tourism experienced significant increases of 32% and
36% respectively. §Accordingly, visitation in Lesvos follows undoubtedly highly
seasonal patterns, with a concentration of approximately 95%
§ Lesvos, undoubtedly, has retained its cultural perspective, social mores and
of nights spent during months May through to October.
has respected its environment in a unique manner over the years.
§ 70% of arrivals represent domestic tourism
§The major tour operators on the island are TUI, Sunset,
Cosmar, and Olymbia.
20
 4. Lesvos Tourism Overview
Lesvos island has over 100 organized hotels which compose of
6,784 beds. The majority of the hotel units were built from 1985 –
1995. Lesvos has numerous alternative forms of tourism, as
seen below:
§ Thermal Springs: The volcanic activity in Lesvos resulted in
the formation of several hot springs with therapeutic properties.
Bathhouses date back to antiquity. The most famous are
Polichnito, Lisvoriou, Thermis, Eftalous, and the Gulf of Gera.
§ Religious Tourism: monasteries and churches are scattered
around the island such as Panagia Agiasou, St. Rafael, Taxiarch
of Mantamadou and the moastery of Leimonos.
§ Rambler/Stroller Tourism: A number of forests, olive groves
and natural beauties cover the island of Lesvos.
§ Agricultural Tourism: The diverse traditional villages scattered
on the island and the small agricultural tourist accommodations
are ideal for this form of tourism.
§ Birdwatching: The Bay of Kalloni is famous for its water
grounds and numerous rare birds. Generally the flora and fauna
of the island are extremely rich. In the recent years birdwatching
facilities have been constructed while the number of persons
visiting Lesvos in order to watch the birds has also increased.
§ Today, 1,400 taxa (species and sub-species) of plants have
been recorded on the island making Lesvos a “botanic paradise”:
aromatic, pharmaceutical, ornamental and rare plants, bushes
and trees.
21
§ Based on a relevant research of the local tourism
authorities, the percentage of repetitive visitors in
Lesvos reaches a percentage of 40%.
§ The European Union Co Financing Grants such as
the LEADER+ (Community Initiative for Links
between actions for the development of the rural
economy) have helped the island restore the vitality
of rural areas and to stimulate the creation and
maintenance of rural activities.
§ Local authorities in Lesvos are very active towards
leveraging the seasonality pattern of tourism arrivals.
The aim is to develop and promote diversified
tourism products of high quality able to expand
tourism demand for a longer period during the year.
§ In addition there seems to be a trend to provide
more initiative to the local tourism authorities, which
will utterly provide more flexibility and focus to the
sector.
4. Lesvos Tourism Overview

4.4 Hotel supply in Lesvos Island

In order to achieve a more realistic approach of demand and supply factors that apply to the specific area, we provide some information
about the tourism in the North Aegean. The conclusions are derived from the analysis of the latest statistical data provided by the Greek
national Tourism Organization. In the table below, a summary of the hotel units and room supply in the North Aegean is set out, using the
official Greek grading system.

Lesvos Chios Limnos Samos North Agean

Units Rooms Units Rooms Units Rooms Units Rooms Units Rooms
De Luxe 0 0 0 0 3 478 1 92 4 570
0 0
A´ 8 360 10 493 2 63 6 684 27 1,605

B´ 43 1,678 16 398 7 160 35 1,463 106 3,810

C´ 55 1,174 7 215 9 182 125 2,768 209 4,579

D´ 1 11 5 58 3 51 14 116 27 376
182
E´ 7 108 0 0 0 0 15 157 30 378

TOTAL 114 3,331 38 1,164 24 934 196 5,346 403 11,318

Directory of Tourism- Northern Agean Prefecture

The following is of note:

§ The Lesvos prefecture offers approximately 28% of the hotel units in the North Aegean and 29% of hotel rooms.
§ Approximately 7% of the units and 11% of the rooms offered in Lesvos belong to the A category and are mainly located in Molyvos and
Mitilini town, whilst there are no De Luxe hotels on the island.
22
4. Lesvos Tourism Overview

Maps of Lesvos

23
4. Lesvos Tourism Overview

4.5 Hotel occupancy rates in Lesvos

•Lesvos island experiences lower
occupancy rates than other Greek islands.
Occupancy Rates of North Aegean Islands This is predominately due to the fact that
the season is limited compared to other
TOTAL islands in the south of Greece.
YEAR VARIATION
Prefecture 1996 1997 1998 1999 2000 97/96 98/97 99/98 00/99
•In addition, Lesvos island just recently has
become a tourism destination compared to
NORTHERN AEGEAN
other islands of the Kyklades and
Lesvos 44,45% 45,45% 45,41% 49,08% - 1 -0,05 3,67 -
Dodekanese.
Chios 45,82% 46,18% 47,10% 55,83% - 0,36 0,92 8,73 -
Samos 61,81% 63,68% 64,63% 74,65% - 1,87 0,95 10,02 - •Eressos, Mitilini Town, Plomari, Petra,
TOTAL 52,54% 54,24% 54,70% 61,40% 59,48% 1,7 0,45 6,7 -1,92 Molyvos and Kalloni gather the largest
GREECE percentage of foreign arrivals on the island.
TOTAL 54,37% 58,37% 61,12% 63,46% 64,97% 4,01 2,75 2,34 1,51 Eressos and Mitilini Town both have 6000
Source: GNTO (2000) arrivals in August, whereas for the same
period Plomari has 2300, Petra 3800, and
Molyvos and Kalloni have 1300 and 1800,
respectively.

24
4. Lesvos Tourism Overview
4.6 Hotel occupancy rates in Lesvos (major destinations)

Molyvos

Petra

Mitilini
Kalloni

Eressos
S it e

Vrisa
Plomari

25
4. Lesvos Tourism Overview
INTERNATIONAL MOVEMENTS BY CHARTERED FLIGHTS
4.7 Air Movements in Lesvos
180.000
Below, a chart with the monthly arrivals by charter are presented.
160.000
140.000
Arrivals by Charter (Monthly)
120.000
20.000 100.000
15.000
Months

80.000
2002
10.000 60.000
2003
5.000
40.000
-

November
January

May

July
March

June

December
April
February

August
Sept.
20.000

October
0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Αrrivals Departures
Arrivals

DOMESTIC MOVEMENTS
• International Arrivals to the island of Lesvos typically occur during
the months of April through October (7months).
350.000
•Similar arrival patterns were experienced in year 2002 and 2003
whilst a total of 81,045 and 77,903 arrivals occurred in year 2002 300.000
and 2003, respectively.
250.000
•In year 2000, Domestic Arrivals to Lesvos were 167,611 whereas
departures were 169,112. 200.000

•In year 2000, International Arrivals to Lesvos were 78,965 150.000

whereas departures were 80,529. Similar a movements were
100.000
achieved for years 2001- 2003.
The adjacent charts represent 1) the International Movements from 50.000
1986 through year 2003, 2) the Domestic Movements from 1986
0
through year 2000. 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Source: GNTO (2000) Arrivals Departures

26
 4. Lesvos Tourism Overview

4.8 Nights spent in Lesvos

Table 1: Nights spent by foreign tourists in hotels by region Table 2: Nights spent by Greek nationals in hotels
and prefecture by region and prefecture
Total Total
Year Year

Prefecture 1996 1997 1998 1999 2000 2001 Prefecture 1996 1997 1998 1999 2000 2001
NORTHERN AEGEAN NORTHERN AEGEAN
Lesvos 414.277 369.803 345.689 408.787 521.556 Lesvos 172.669 218.772 223.765 276.363 279.919
Chios 96.987 82.226 81.656 115.212 95.445 Chios 80.788 96.064 100.434 98.036 97.708
Samos 745.742 822.055 782.375 902.547 749.411 Samos 139.814 155.851 166.992 186.413 188.961
TOTAL 1.257.006 1.274.084 1.209.720 1.426.546 1.336.412 1.441.465 TOTAL 393.271 470.687 491.191 560.812 566.588
GREECE GREECE
TOTAL 35.497.834 39.991.655 42.565.008 45.803.360 46.636.293 46.573.553 TOTAL 12.447.672 13.372.852 13.984.434 14.453.542 14.666.610 14.983.243

§Similar arrival patterns were experienced in year 2002 and 2003

whilst a total of 81,045 and 77,903 arrivals occurring in year 2002
and 2003, respectively.
§In year 2000, Domestic Arrivals to Lesvos were 167,611 whereas
the average stay was 1.7 days.
Table 3: Nights spent by foreign tourists and Greek Nationals
§In year 2000, International Arrivals in Lesvos were 78,965
whereas the average stay was 6.6 days.
Total
Year
Prefecture 1996 1997 1998 1999 2000 2001
NORTHERN AEGEAN
Lesvos 586.946 588.575 569.454 685.150 801.475
Chios 177.775 178.290 182.090 213.248 193.153
Samos 885.556 977.906 949.367 1.088.960 938.372
TOTAL 1.650.277 1.744.771 1.700.911 1.987.358 1.933.000 2.018.559
GREECE
Source: GNTO (2000)
TOTAL 47.945.506 27 53.364.507 56.549.442 60.256.902 61.302.903 61.567.209
4. Lesvos Tourism Overview
Museums
4.9 Nearby Attractions in Lesvos ◊ 1. Archaeological Museum
of Mytilene
Island ◊ 2. The house of
Vareltzedaina at Petra,
Lesbos
◊ 3. Teriade Museum-
The subject site is located in close proximity to a Library
number of archaeological, historic and natural ◊ 4. Museum of Works by
Theophilos
points of exceptional interest, such as:
The Acropolis of Eressos, the Fotress of Sigri,
and the Kaloktistos wall, all just a few kilometers • A1 Archaeological site of
Thermi
from the site. • A2 The Acropolis of Eressos
(Mastos)
• A3 Archaeological site of
Klopedi
• A4 The "Kaloktistos" wall
• A5 The Theater of Mytilini
• A6 The Roman Aqueduct at
Moria
• A7 Fortress of Sigri
SUBJECT SITE
28
Recent Monuments
◊ N1 Mytilini First High School
◊ N2 Parthenagogeion - Girls' School
◊ N3 Mytilini Old City Hall
◊ N4 Aghia Paraskevi Oil-Mills
◊ N5 Aghia Paraskevi School
◊ N6 Multi-cultural Center of Polychnitos
◊ N7 Lesbos Prefecture Building
Ancient and Byzantine Monuments
• B1 The Fortress of Mytilini
• B2 The Fortress of Methymna
• B3 Early Christian basilica of
Aghios Andreas (St. Andrew of
Crete)
• B4 Fortress of Myrina
• B5 Early Christian basilica at
Chalinados
• B6 Church of the Virgin
(Panagia) Troulloti
• B7 Church of St Stephen
(Agios Stephanos) at
Mantamados
• B8 Church of the Dormition of
the Virgin at Petra
• B9 Church of St Athanasios at
Mytilene
• B10 Church of St Therapon at
Mytilene
• B11 Church of St Therapon at
Mytilene
• B12 Church of St John (Agios
Ioannis) at Kerami
• B13 Church of the
Transfiguration of Christ at
Papiana
• B14 Church of the Dormition of
the Virgin (Koimesis
Theotokou) at Agiasos
• B15 Monastery of the
Taxiarches at Mantamados
• B16 Monastery of Leimon
(Moni Leimonos)
• B17 Monastery of the Dormition
of the Virgin (Koimesis
Theotokou) at Damandri
• B18 Monastery of Perivoli
• B19 Monastery of Ypsilos
• B20 Yeni Tzami (Mosque) at
Mytilene
• B21 Tsarsi Hamam (Turkish
bath) at Mytilene
• B22 Valide Tzami (Mosque) at
Mytilene
5. Climate of Lesvos
5.1 Sunshine & Temperature of Sea

vo s
L es
§ The climate of Greece is similar to that of other
Mediterranean countries. The hottest months are July
to August with average temperatures of
approximately 25 °C. Winters are mild with average
temperatures reaching lows of between 11 °C and 13
°C.
§The climate is considered temperate, whereas the
average temperature is 17.5 °C.
§ The average sunshine in Lesvos is over 140 days
per year or 2,734 hours annually.
§ The temperature of the sea above 18 C is estimated
to be 5 – 6 months per year.

29
5. Climate of Lesvos
5.2 Rainfall, Winds & Shores
§ The average annual rainfall is considered low at 40- 80
cm, whereas the south of the island experiences even
lower rainfall.
§ The climate of Lesvos is mild and healthy: the winter is
warm and the sun shines throughout the year.

vo s
§North Etesian winds are experienced during the year in

L es
the North Aegean.
§The North Aegean has 2.5 times more sandy as well as
notable beaches than its percentage surface compared to
other islands.
§Lesvos island has 24 klm of exploitable beaches.

30
6. Site Description

6.1 Location

The plot site is located at approximately a 75 km distance from Mitilini International Airport, 10 km from the
well known Eressos town and 32 km from Kalloni town, both major tourism destinations. The site is only 22
km from the Petrified Forest In Sigri, one of the best known tourist attractions in Lesvos and a unique
natural monument of great palaeontological, geological and environmental significance.

§ The site covers an area of over 218,000 sqm, stretched along the
slopes of Podara Bay. The site is inclined with views to the sea and the
mountains of the area.
§ The site is an exceptional property situated 300 m away from the
Aegean seashore, i.e. Podaras beach, one of the best known beaches
in Lesvos island.
§ The overall site is located out of the city planning, but is considered
build able according to the respective Presidential Decree.
§ The site is in near proximity to the famous Podara beach, which in the
summer months gathers a number of tourists due to its sandy beach,
privacy, as well as calm and clean waters.
§ The neighboring plots are predominately rocky and barren some used
as sheep yards whereas others for agricultural use.
SUBJECT PROPERTY
§ Although western Lesvos, with the exception of some small plains is
barren, the eastern, southern and central parts are cloaked in olive
groves (11 million olive trees) and forests of pine chestnut, oak, beech
and plane trees.
§ Moreover, the Forestry Authority has no legal claim against the land,
i.e. the land is free and clear of any claim.
§ The bathing water quality at the area of the site is considered excellent.

31
6. Site Description
6.2 Topography

The landscape is topographically varied. The two impressive gorges, the bays, the olive tree forest in the surrounding area of the site, and
the views of the Aegean sea compose a picture of great beauty.
The partial rocky surfaces and the incitation of the site consist of major attributes which permit eased architectural interference. The way
that the site is physically separated from the neighboring area, helps the visitor to feel “isolated” and secure (sentiments highly appreciated
by the modern tourist).

Estimated flight time to Lesvos airport

6.3 Access
from Key Destinations

Air Greece

The character of the proposed project makes it essential that both the hotel / rehabilitation Athens 0: 35
guests and the villas’ owners be able to fly directly from their home countries to eastern
Lesvos and subsequently have a comfortable travel by coach or car to their final destination. Thessaloniki 0:35

Through the newly enlarged road network of Lesvos and the newly acquired access by road Rhodes 1:35
to the subject site which is 1km east of from Tavari town the visitor enjoys both convenience
International Destinations
and a sense of arrival like none other.
The airport of Mitilini features a runway of 2,400 m. long and 60 m. wide being able to Frankfurt 2:30
facilitate the aircraft landing even under difficult weather conditions. There are daily routes Vienna 2:00
from Athens to Lesvos and Thessaloniki, Limnos and Chios.
London 3:35
Munich 2:15
Amsterdam 3:15

32
6. Site Description
Sea
Access to the site is also possible by sea through Miitilini Port and Molyvos (Mithimna) Port. There are daily ferry boats from the Port of Piraeus, and
routes from Thessaloniki and Kavala, as well as from Chios, Samos and Patmos, Leros, Kalimnos, Kos, and Rhodes. The port of Mitilini has been
recently upgraded to easily accommodate large ferries. The average travel time between Piraeus and Lesvos island is14 hours with intermediary
stops.
The Cruise Ship Arrivals have dropped during the past years do to the Shengen regulation constraints. The Mitilini Port cruise arrivals from years
2000 through 2003, were as follows:
Year 2000 2001 2002 2003
Passengers 25.680 12.662 9.330 13.661
Road
The road network of Lesvos links Tavari to Mitilini town, from where a regional road of approximately 75 km leads to the site. The Lesvos Road Axis
has been upgraded and is considered in very good compared to other islands. In addition, another axis road is currently being developed to the site
which leads to Podara beach. The final access to the site from the city of Lesvos is facilitated through a newly carves dirt road connects in near
proximity to the subject land. This section of the road has been included into the municipality’s road upgrading program and it is expected to be
significantly improved from its current condition. Kilometric distances and driving times from the subject site to other key destinations within Crete
are exhibited into the following table

KEY DISTANCES AND DRIVE TIMES

Destination Distance (km) Drive time from site
Mitilini’s Intern. Airport (Lesvos) 75 1 hr-20 min
Kalloni town 32 30 min
Eresos 10 10 min
Sigrion 22 20 min
Mythimna (Molyvos) 51 55 min
Pirgi Thermis 66 1 hr-10 min
Plomari 78 1 hr-20 min
Mandamados 48 50 min
Source: Microsoft AutoRoute
33
6. Site Description
6.4 Utilities

Electricity: All energy requirements for the development will be provided by the Public Power Corporation (PPC) network.

Water: The municipality of Eressos will be required to be engaged to supply the development with 400-500 cubic meters of water for
all uses which is the estimated quantity required in full operational mode. Moreover, the Municipality will need to approve the boring for
water in order for the site to be self-sufficient in water supplies.

Telephone: The Greek Telecommunications Organization will need to provide all telephone connections required.

34
7. Zoning & Planning Regulations
The subject plot has the ability to be built under various zoning & planning regulations and according to the following
Presidential Decrees (PD’s) and government gazettes:

Laws Development Scenario

A) PD 31.5.85, Official Journal of the Hellenic Republic 270 D: Building Terms for plots of land outside town planning and outside of
designated settlements prior to 1923 . According to this PD , the following apply:

•Minimum land plot of 4,000 sqm and a façade of 25 meters

•Maximum building coverage of 10%

•Minimum 15 meter distance from the land boarder

•Maximum levels: 2 floors (or maximum 7.5 m)

•Maximum building coefficient of 0.2 (for the minimum 4,000 sqm), i.e. 200 meters

B) Amendments published in PD 3212.2003, Official Journal of the Hellenic Republic A – 308: According to Article 10 of this PD, the
following apply:

• Case a of paragraph 1 of article 1 from PD (24) 31.5.1985 -270 D is replaced as follows:

– a) Minimal area of land 4.000 sqm and a façade on a communal road of twenty five (25) meters.

• Paragraph 9 of article 1 from PD (24) 31.5.1985 -270 D is replaced as follows:

– b) Land which is found within ridges, the maximum altitude of buildings is prohibited to exceed the ridge.

• The first section of paragraph 10 of article 1 from PD (24) 31.5.1985 -270 D is replaced as follows:
– The construction of independent buildings is approved from the pitch of the slope. If the pitch of the slope exceeds 35%
where the building is placed, the area of the underground auxiliary spaces which do not factor in the building coefficient,
then the area can not exceed 20% of permitted building coefficient.

• In paragraph 11 of article 1 from PD (24) 31.5.1985 -270 D, the following is added:

– The level of the roof of the underground space is not allowed to be higher than 0,80 meters from the shaped surrounding
ground.
35
7. Zoning & Planning Regulations

Laws Development Scenario

B) continued
•In paragraph 11 of article 1 from PD (24) 31.5.1985 -270 D, the following is added:
–The level of the roof of the underground space is not allowed to be higher than 0,80 meters from the shaped
surrounding ground.
•At the end of case b of paragraph 1 of article 6 from PD (24) 31.5.1985 -270 D, the following is added:
–Land with an area multiple of 4,000 sqm, for which conditions of segmentation apply, the maximum allowable surface
of the building is equal to the sum of the area of the buildings that would be allowed to be erected in each plot after the
segmentation, decreased by 15% and under the conditions that:
–a) a building will be erected and b) the ground will remain united.

36
7. Zoning & Planning Regulations

Laws Development Scenario

C) Presidential Decree (PD) 2508/1997, Official Journal of the Hellenic Republic A-124:

According to this PD, which sets the terms for the Urban Study of Viable development of cities and settlements in Greece, the
following apply:

• According to article 18 of this PD, the maximum building coefficient for second residencies cannot exceed 0,4.

• According to Article 24 which represents Regions of specifically regulated zoning -P.E.R.P.O., the following apply:
– The territorial extent, which is found outside of city and designated settlements prior to 1923, and outside of
settlements up to 2.000 residents may be determined as regions of specifically regulated zoning (P.E.R.P.O.)
– The territorial extent which is determined as PERPO should be united and have a minimal surface of fifty (50)
acres (50,000 sqm). It is not considered united if it is interrupted from approved national, provincial,
municipal or Community roads.
– The urban study is drawn up according to the specifications quoted in paragraph of 12 of the present PD and
contain specifically: a) uses of land and posible additional prohibitions or obligations, b) diagrams of networks
of infrastructure, c) communal and public areas which should amount to a maximum 40% of the total extent of
the total land under the P.E.R.P.O. and d) the general and specific terms and restrictions of zoning, which can
be fixed per building block or part of a building block, provided that this it is imposed by the configuration of
the land or the need of protection of the natural or cultural environment or other special urban needs.
The determined medium building coefficient for the total buildable area of P.E.R.P.O. it is not allowed
to exceed 0,6 times and specifically for regions of seasonal residence 0,4 times. In any case, the
building coefficient of each buildable areas cannot specifically exceed 0,8 and for regions of second residence
0,6.

37
8. Development Potential- Scenarios
The subject plot has been analyzed and reviewed for its development potential according to three distinctive scenarios. The scenarios
are limited and not exhausted.
Scenario I & II- Residential

The first two scenarios concern the development of the site and include:

§ A) The development of a residential complex of 70 villas (as fragmented plots of 4,000 sqm), according to PD 31.5.85,
Official Journal of the Hellenic Republic 270 D.

§ B) The development of a residential zoned community residential block consisting of 222 high quality villas, according to
Presidential Decree (PD) 2508/1997, Official Journal of the Hellenic Republic A-124.

Scenario III– Rehabilitation Center

The second alternative concerns the development of a rehabilitation center and includes:
§ The development of 350 room rehabilitation center in addition to supporting facilities and amenities.

Scenario IV (not analyzed):

The subject could also be considered for the development of a hotel with supporting seasonal residents, state of the art conference
centre, Thalassotherapy centre, etc

38
Scenarios 1

RESIDENTIAL COMPLEX

(as fragmented plots of 4,000 sqm)

Base Case Scenario

39
 9. Project Description
9.1 Residential Alternative (as separate land Plots)
§ According to Presidential Decree (PD) 31 /Gov. Gazette D 270/1985, the
plot is legally buildable when a plot is equal or over 4,000 sqm. Land of Development 200.000

§ Assuming the entire plot can be fragmented into smaller plots, which is Net Land (after infrastructure works) 170.000
possible, 70 luxury villas can be built on the land to accommodate the needs
Number of Plots for development 42
of the international and national summer home market.
Allowed build able sqm according to Law 8.500
The specifications for the proposed residential development are
presented in the table below.

Residential Number sqm sqm Construction Total Sale value Total Sale
Cost (€/sqm) Construction (€/sqm) Value(€/sqm)
Cost (€/sqm)
Villas Sea View 50 100 5.000
900 4.500.000 2200 11.000.000
Villas Village View 12 100 1.200
900 1.080.000 1900 2.280.000
Double villas 4 200 800

900 720.000 2200 1.760.000

Triple Villas 4 300 1.200 900 1.080.000 2200 2.640.000
Commercial Areas - 500
900 450.000 4000 2.000.000
Common Areas - -
800 - 0 -
TOTAL 70 9.000 7.830.000 19.680.000

§ The absorption of the units is assumed to be 25%, 35%, 40% § The discount rate has been estimated at 12%.
during year 1, 2 and 3.
§ A Hypothetical Loan at 75% of total construction costs has been
§ Marketing & Agency and other expenses are assumed at 5% of assumed with an interest rate of 6,5%, amortized over the 3 year
the sales value. absorption period of the units.
40
 9. Project Description
9.1 Residential Alternative- Financial Performance (as separate land plots)

Scenario 1: Residential Development (as Construction Construction SALES

1 2 3
separate land plots) 2005 2006 2007 2008 2009

Gross Income
Income from Sales 4.920.000 6.888.000 7.872.000
Expenses
Marketing & Agent Fee Expenses 147.600 206.640 236.160
Other Miscellaneous Expenses 0,35 0,65 98.400 137.760 157.440
Total Expenses $246.000 $344.400 $393.600

Net Operating Income - 4.674.000 6.543.600 7.478.400

Asking Land Value -$5.000.000
Estimated Construction Cost of the Property (2004) -$2.740.500 -$5.089.500
Cash Flow before Debt Financing -7.740.500 € -$5.089.500 4.674.000 6.543.600 7.478.400
Unleveraged IRR 15%
NPV (project) $ 878.933
Hypothetical Loan -2.055.375 € -3.817.125 €
Interest Expense (construction period only) -133.599 € -381.713 €
Debt Service (Principal & Interest) 0 0 -2.217.313 € -2.217.313 € -2.217.313 €
Total Debt Service -133.599 € -381.713 € -2.217.313 € -2.217.313 € -2.217.313 €

Equity Investment -5.685.125 € -1.272.375 €

Cash Flow after Debt -5.818.724 € -1.654.088 € $2.456.687 $4.326.287 $5.261.087

Leveraged IRR 17%
NPV (equity) $ 1.053.713
1
Debt Service Coverage Ratio 2,11 2,95 3,37

1) Debt Service Coverage Ratio is defined as the Net Operating Income (NOI) divided by the Total Debt Service

41
9. Project Description

§ All of the villas may be generous in space and may feature furnishings selected from a menu of options prepared by the
project’s interior designers to maintain the highest possible standards. Residential ownership should include access to dining,
pools, spa, tennis, and golf as well as full concierge service.
§ The price of the villas ranges from 1,900 to 2,200 €/sqm, which is considered affordable compared to other destinations in the
Mediterranean. Also, one should consider that the area of the villa will be much larger (by 50%) if you consider the basement in
the total area since the subjects plots inclined land provides for above ground basement.
§ Assuming in the calculations the cost of the land at 5,000,000 € plus construction costs and expenses the subject
project has a positive leveraged NPV of 1,053,713 € and an IRR of 17%.

42
 9. Project Description - Seasonal home market in Greece
Demand
• Our market research has identified three major buyer
groups that are currently active in the residential
market in Greece, whilst with Greeks being the vast
majority. The typical characteristics of each buyer
group are set out in the following table.
• The Greek second home buyer group prefers
predominately apartments, semi-detached houses or
small townhouses, with a building surface that ranges
between 50 – 100 m2 with minimal amenities. On the
other hand, international buyers seek clustered
residential developments. Units are usually more than
100m² within organized resorts, offering on-site
amenities.
• Interviews with development companies, local real
estate agents, and operators, highlight that most
foreign purchasers have previously visited the location
of the subject residence. Most of the Greek
developers do not market their products internationally
through special marketing programs. Although there is
no official or published data available on the purchase
of second homes in Greece, our interview program
revealed a general consensus that the second home
market for foreign purchasers is increasing, although
current absolute numbers continue to be low due to a
lack of supply.
Major residential buyer groups currently active in Greece
Greek • Great interest in the local market especially for seaside
nationals units
• Budget typically €100,000 to € 250,000
UK • Seeking retirement homes
• Flats preferred to villas, whereas living space of around
80m2 is required
• Budget typically €300,000 to €450,000
German/Swiss • Seeking holiday and retirement homes with plot sizes of up
to 1,000m 2 and living space of 120-150 m 2
• Budget typically €320,000 to €450,000
•Interviews with development companies, local real estate
agents, and operators, highlight that most foreign purchasers
have previously visited the location of the subject residence.
Most of the Greek developers do not market their products
internationally through special marketing programs. Although
there is no official or published data available on the purchase
of second homes in Greece, our interview program revealed a
general consensus that the second home market for foreign
purchasers is increasing, although current absolute numbers
continue to be low.
43
 9. Project Description - Seasonal home market in Greece
Construction costs Future Supply

• From the research we have conducted, we understand that the

construction cost for townhouses designed to attract foreign
purchasers, typically range between €880/m² to €1,300/m²,
reflecting the high-quality of construction and finish that is
required. Local developers and local agents consider that
specifications for the design of such developments should reflect
traditional Greek island architecture which is considered a
paramount in the purchase decision.
• Our market research has included a detailed overview of the Mediterranean
and Atlantic master-planned residential developments within resorts– focusing
on four destinations that have been profiled. In each destination we have
investigated the potential future supply of residential product – notably within
master-planned resorts – that would compete for the same market. However,
this review cannot be exhaustive.

In the Table below, we have tabulated summary data on the most significant master-planned residential developments that are in operation.

Table Existing supply of master-planned residential developments in Greece

Condominium

Location/site Project Units Comments

Greece
Sounio Poseidonia 77 Limited leisure facilities; maintenance is optional. Operates since
Complex 2000.

Siteia, Crete Dionysos 394

Village
Ermioni Porto Hydra 300 Each year a new construction plan is set.
Village

______
Total 771

• The vast majority of the Greek multi-unit developments are comprised of 30-40 units on average with Dionysos Village
comprising of 394 units, as an exemption. Most of the residential developments offer the residents modern, comfort,
leisure amenities and maintenance for an annual fee.

44
 9. Project Description - Seasonal home market in Greece

In this Table, we Table Future supply of smaller scale residential developments in selected M editerranean locations
tabulate summary data Condominium
on the most significant Location/site Project Units Comments
smaller scale master- Greece – Residential
planned residential
developments Spetses Pitiousa Resort 71
underway in the Chania By J & P 35 Unknown date of commencement of construction
Development
Mediterranean. Rhodes- Kalathos Helios Resort 30 Expected completion of the project end of 2004
Chania/Kalatha Cybarco 5 Construction began in May 2003
Chania/M alamai Cybarco 25 The project is in the construction phase
Pirgaki, Naxos Naxos resort 26 Expected completion of the development 2004
Myconos Myconos Villas 4 Construction has begun
Xylokastro Xylokastro 200 Estimated to be completed by the end of 2003
Apartments
Siteia Domiki Critis - Development of condominiums on an area of 12 hectares Unknown date of
commencement of construction
St. John – Evoia Navy’s Resort - 2 .
Units vary from 80-120 m . Intended for navy officers
(O.S.M.A.N.)
Paros Paros Village 26 Expected completion of the development on June 2004

Agrari, Myconos EKTER S.A. - Construction of luxurious country residences. The construction license approval
is suspended at the moment
Pountazeza, Sounio Babis Vovos - 2
Construction of condominiums on a total area of 67,540 m (building area of
2
15,750 m ). Unknown date of commencement of construction.
Iraklion Theseus Beach 350 32 residential units are already constructed. Expected completion of the
Village (TE.A.K)
development end of 2007. Hotel construction is expected to commence on 2008.
Spain - Costa del Sol

Marbella – Puerto El Embrujo 84 Under construction

Banus
Marbella- La Montua Casa Grande Resort 58 Under construction

Istan Zahara de Istan 120 Under construction

Benalmadena Atalaya Golf 122 Under construction
45
 9. Project Description - Seasonal home market in Greece
Table Prices and Absorption Rates of small scale residential development in selected Mediterranean locations
In this Table, summary data
Average Construction Absorption Consumer’s
is tabulated on residential 2
Project Price (€/m2 ) Cost (€/m ) Rate Origination Units Size
property prices in Greek and
Greece- Residential
selected Mediterranean/ J&P Development – 2,500 - 3,000 1,2 80% sold Mainly Greek 2; 2
71 units, 50 – 200 m land 250-350 m
Atlantic master-planned Pitiousa/Spetses
residential developments. J&P Development – 2,000 - 3,000 - - 2;
35 units, 50 – 200 m land 250-30 m
2

Whilst not exhaustive, this Chania

overview is intended to give
a perspective on typical
build areas, price levels and
absorption rates.
2 2 2
Helios Resort-Cybarco- 2,150 - 2,300 1,300 including 50% sold 65% British, 25% 30 units on land of 6.5 hectares, 2bdrm-72 m , 3bdrm-108 m , 4bdr- 140m
Rhodes pool, Cyprian, 10% Greek
landscaping, a/c
Cybarco- Chania/Kalatha 2,000 - 2,100 - Marketing & - 2 2
5 units, 2 units of 177 m , 3 units of 146 m
Construction
began in May

Cybarco- Chania/Malamai - - - 25 units under planning phase

2 2 2
CRE Copelouzos/Naxos 2,9 - - - § 14 units of 95 m , 10 of 115 m , 2 of 151 m
resort

Paros Village 2,35 1,027 (plus 20% Greek 2

115 – 200 m
2
293€/m for the
surrounding area)

Dionysos Village 2,050 – 2,935 735 (densely 77% after 3.5 95% of the units are From 35 to 121 m 2
built) years sold to Greeks
Posidonia Complex - - - - 2
77 villas of 55, 77, 106 and 130 m
Theseus Beach Village 1,500- 2,800 - 37,5% of the 32 2 2
350 units, apartments 50-60 m ; villas 300 m
(TE.A.K) constructed units

Spain –Costa del Sol –

Residential
El Embrujo 2,263 – 2,669 - - - Under construction

Zahara de Istan 2,748 – 2,861 - - Under construction

Atalaya Golf 2,347 – 2,121 - - - Under construction

46
Scenarios 2

RESIDENTIAL ZONED COMMUNITY

Best Case Scenario

47
 10. Project Description
10.1 Residential Zoned Community
§ According to Presidential Decree (PD) 2508/1997, Official Journal of the Hellenic Republic A- Land of Development 199.999
124, the plot can be zoned receiving a building coefficient which in the case of seasonal 80.000
residencies can not exceed 0.4 times. Although this process is considered more time Phase II
consuming than Scenario 1, the economical benefits are much greater. We have assumed a 120.000
building coefficient of 0,25 times in order to make the development less dense and more Residential (1st Phase)
appealing to the buyer. Therefore, the buildable area is 30,000 sqm on only 120,000 sqm of
the land. The remainder may be developed for example as a hotel unit (Phase II). Building Coeficient 0,25
Buildable Area 30.000
§ Assuming the entire plot can be fragmented into smaller plots, which is possible, 70 luxury
villas can be built on the land to accommodate the needs of the international and national
summer home market. The specifications for the proposed residential zoned community
are presented in the table below.
Residential Number sqm sqm Construction Total Sale value Total Sale
Cost (€/sqm) Construction (€/sqm) Value(€/sqm)
Cost (€/sqm)
Villas Sea View 100 100 10.000 900 9.000.000 2200 22.000.000
Villas Village View 100 100 10.000 900 9.000.000 1900 19.000.000
Double villas 17 200 3.400

900 3.060.000 2200 7.480.000

Triple Villas 5 300 1.500 900 1.350.000 2200 3.300.000
Commercial Areas - 3.000 900 2.700.000 4000 12.000.000
Common Areas - 2.000 800 1.600.000 0 -
TOTAL 222 30.000 26.710.000 63.780.000
§ The absorption of the units is assumed to be 25%, 35%, 40% § The discount rate has been estimated at 12%.
during year 1, 2 and 3.
§ A Hypothetical Loan at 75% of total construction costs has been
§ Marketing & Agency and other expenses are assumed at 13% assumed with an interest rate of 6,5%, amortized over the 3 year
and 2% respectively on the sales value, since the project is absorption period of the units.
greater in scale and scope than Scenario 1. 48
 10. Project Description
10.1 Residential Zoned Community - Financial Performance

Scenario 2: Lesvos Residential Community Construction Construction SALES

1 2 3
Development 2005 2006 2007 2008 2009

Gross Income
Income from Sales 15.945.000 22.323.000 25.512.000
Expenses
Marketing & Agent Fee Expenses 2.072.850 2.901.990 3.316.560
Other Miscellaneous Expenses 318.900 446.460 510.240
Total Expenses $2.391.750 $3.348.450 $3.826.800

Net Operating Income - 13.553.250 18.974.550 21.685.200

Land Value -$5.000.000
Estimated Construction Cost of the Property (2004) -$5.342.000 -$21.368.000
Cash Flow before Debt Financing -10.342.000 € -$21.368.000 13.553.250 18.974.550 21.685.200
Unleveraged IRR 25%
NPV (project) $ 8.086.597
Hypothetical Loan - 4.006.500 - 16.026.000
Interest Expense (construction period only) - 260.423 - 1.041.690
Debt Service (Principal & Interest) 0 0 -$7.563.785 -$7.563.785 -$7.563.785
Total Debt Service -260.423 € -1.041.690 € -$7.563.785 -$7.563.785 -$7.563.785

Equity Investment -6.335.500 € -5.342.000 €

Cash Flow after Debt -6.595.923 € -6.383.690 € $5.989.465 $11.410.765 $14.121.415

Leveraged IRR 39%
NPV (equity) $ 10.121.506
1
Debt Service Coverage Ratio 1,79 2,51 2,87

1) Debt Service Coverage Ratio is defined as the Net Operating Income (NOI) divided by the Total Debt Service

49
10. Project Description

§ All of the villas may be generous in space and may feature furnishings selected from a menu of options prepared by the
project’s interior designers to maintain the highest possible standards. Residential ownership should include access to dining,
pools, spa, tennis, and golf as well as full concierge service.
§ The price of the villas ranges from 1,900 to 2,200 €/sqm, which is considered affordable compared to other destinations in the
Mediterranean. Also, one should consider that the area of the villa will be much larger (by 50%) if you consider the basement in
the total area since the subjects plots inclined land provides for above ground basement.
§ Assuming in the calculations the cost of the land at 5,000,000 € plus construction costs and expenses the subject
project has a positive leveraged NPV of 10,121,506 € and an IRR of 39%. Plus there is a remaining 80,000 sqm of land
to exploit (Phase II)

50
10. Project Description

§ Note: The design of the villas should remind typical Lesvos architecture. Local and imported construction materials of the
highest quality should be carefully selected based on the requirements of the design. Careful landscaping will ensure that public
spaces provide visual softness and serenity providing views of the sea. The villages will be pedestrianised in order to enhance
relaxation while parking will be provided in carefully selected areas. Other amenities possibly available to the owners of the
residences will include open air theatre, commercial areas, banking facilities while ownership will include access to dining,
pools, and tennis. The residential units will be marketed domestically and internationally, through predefined principles. The
construction will be gradually materialised, according to the respective market demand. The company, as an additional service
to the residences’ owners, should intend to create a management company for the residential component which among other
services will also offer the opportunity to the owners to rent if they wish their villas for some periods within the summer season.
§ The villas will consist of one or two floor buildings, the majority of which will have a surface of 100 s.m. within the building
coefficient which along with the semi-open and underground space will total approximately 120 s.m. Some villas will cover 200
and 300 s.m.

§ Note: The concept of master-planned resorts including a residential component is quite new in Greece. Emerging prospects are
appearing due to the new law submitted to parliament. The law institutes urban planning incentives for large tourism
investments. This is a unique opportunity to combine real estate and tourism, through the creation of permanent secondary
residences in both seaside and mountain resorts which may prolong the tourist period. In Greece, potential development of
residential complexes and tourist facilities such as golf courses, tennis courts, spa, club houses can be constructed on land of
more than 30 ha (300,000 sqm). The tourist facilities shall cover 65% of development whereas the residential component shall
cover 35% of the total buildable area, with a new cohesive building coefficient of 0.20%. The new law will presumably attract
foreign and national institutional investors.

51
Scenarios 3

REHABILITATION

SCENARIO

Alternative Case Scenario

52
11. Project Description
11.1 Rehabilitation Center Development
INITIAL SPECIFICATIONS FOR THE REHABILITATION CENTER
According to Presidential Decree (PD) 2508/1997, Official
2
Journal of the Hellenic Republic A-124, the plot can be privately Components Units/Seats Area (m )
zoned. It has been assumed that the following specifications will Guestrooms
apply to the Rehabilitation Development. Standard guestroom 320
Junior suites 20
De lux suites 9
Land for Development 200.000 Presidential Suites 1
Total Guestrooms 350 17,000
Green area (possible future development) 80.000
Food & Beverage Outlets
Land Required for Rehabilitation
120.000 Coffee Shop 220 440
(Alternative) Additional terrace seating 100
Greek & Mediterranean restaurant 140 300
Additional terrace seating 70
Building Coefficient 0,2 Grill Pool restaurant 100 280
Piano bar 60 120
Build able Area 24.000 Lounge bar 60 300
Additional terrace seating 70
Average Gross Room area Total F&B Outlets 1,440
68
(including communal areas)
Supporting Facilities
Number of Rooms 350 Retail 120
Rehabilitation Rooms 1000
Number of Beds 700 Business Center 40
Library 60
Church 75
§ The development is assumed to be constructed Infirmary 300
on 120,000 sqm of land, whilst the remainder Total Supporting Facilities 1,595
will be used for green area or possibly be Leisure Facilities
developed separately (the additional income Swimming pools (outdoor) 2
Swimming pool (indoor) 1
from the remaining land of 80,000 sqm has not
Health Center / Spa 1,000
been included in the calculations) Tennis Courts 2
Source: Assumptions

53
11. Project Description
11.2 Rehabilitation Center - Construction costs

In this chapter, some initial indicative and illustrative estimates of the performance of the rehabilitation center are presented as
well as estimates of the construction cost of the development, as seen below.

Description Number/ Size (sqm) Cost€/Unit Cost€

General Infrastructure Works/

Landscaping 96.000 55 5.280.000
Retail areas construction cost 220 600 132.000
Construction cost per bed 700 22000 15.400.000
REHABILITATION Furniture, Fixtures and Equipment 700 4000 2.800.000
COMPONENT Swimming Pools 500.000
(COSTS) Biological Treatment 600.000
Common Areas 1700 600 1.020.000
Sport Facilities /Spa and Fitness
Centre/Rehabilitation Rooms 1.000.000
Medical Equipment 1.000.000
Total Construction cost of
Rehabilitation Component € 27.732.000,00

Grants for Rehabilitation Center (40%) 0,4 € 11.092.800,00

Capital Required for Development (after Grants) € 16.639.200,00

§ The construction costs have been estimated at 27,732,000€, whereas the cash grants represent 40% of this amount, i.e.
11,092,800€. Therefore, the capital required (in the form of equity and debt) is 16,639,200€.

54
11. Project Description
11.3 Rehabilitation Center - Assumptions
It is noted that those per bed cost estimates do not include provisions for furniture and equipment, such as rooms’ furniture,
kitchen installations, carpets, curtains, decoration or other. The expenses for all the above, are added separately depending on
the specifications and the quality level of the unit. The predefined per bed cost has been estimated taking into account the
following:
üAll the common areas that are necessary for the classification of the unit, which includes kitchens, bars and
restaurants, kitchens, lobby etc and other areas of the main building
ü Air condition
ü Connection to all supply networks
ü Elevators
ü Fire protection system
ü Other installations
ü All installations essential for the correct and efficient organization and operation of the hotel
üThe amount of €22,000 as an initial cost estimate per bed in double rooms, is considered adequate for the quality level of the
proposed rehabilitation unit.

55
11. Project Description

INCOME
Year of 1st Operation 2008
Days of Operation (annually) 224
Rooms 350
Occupancy 57%
Double Occupancy 2
Average Room Rate 144
Income from F&B (each person per occupied room) 50
Telephone & Laundry (% of revenue) 4%
Rehabilitation Income (each person per occupied room) 50

§ We have assumed 350 rooms for a maximum capacity of 700 visitors.

§ 1st Year occupancy is at 57% with an Average Romm Rate of 144 € (or 72 € per person in double
occupancy). It has been assumed that the occupancy of the subject Rehabilitation Center will stabilize at
72% in year 5 of operation. The subject is assumed to operate 224 days out of the year.
§ Rehabilitation income arises to 4.4 million € in year 2008 and the expenses have been assumed at 72% of
income, i.e. it is estimated that each visitor per day will provide income of 50€, a very conservative
estimate.
§ A Basic Management (3% of Revenue) and Incentive Fee has been included for the operation of the
Center. A provision for Renewals has also been included.

56
 a
a
n
r
rRc
e
ay
tv
P
e
a8
r2 11. Project Description
Year 2008 2009 2010 2011 2012
R oom occupancy 57% 62% 65% 70% 72%
11.4 Rehabilitation Alternative A verage room rate
R evP ar
144
82
154
95
160
104
170
119
174
125

Presented in future A m ount Ratio Am ount R atio A m ount R atio A m ount R atio Am ount Ratio
Financial Performance (1-5 yrs) Euros Values 000s % 000s % 000s % 000s % 000s %

R evenues
R oom s 6.704 41,7% 7.815 43,1% 8.539 43,7% 9.723 44,6% 10.266 44,7%
Food 3.439 21,4% 3.794 20,9% 4.056 20,7% 4.440 20,4% 4.670 20,4%
B everage 1.089 6,8% 1.210 6,7% 1.299 6,6% 1.431 6,6% 1.508 6,6%
Telephone 259 1,6% 289 1,6% 310 1,6% 343 1,6% 362 1,6%
Laundry 130 0,8% 144 0,8% 155 0,8% 170 0,8% 180 0,8%
R ehabilitation services 4.443 27,7% 4.876 26,9% 5.197 26,6% 5.666 26,0% 5.950 25,9%
R entals & other incom e 0 0,0% 0 0,0% 0 0,0% 0 0,0% 0 0,0%
Total revenue 16.064 100,0% 18.128 100,0% 19.556 100,0% 21.773 100,0% 22.936 100,0%

(1 )
Departm ental costs
R oom s 1.544 23,0% 1.645 21,0% 1.724 20,2% 1.832 18,8% 1.906 18,6%
Food & beverage 3.499 77,3% 3.714 74,2% 3.888 72,6% 4.118 70,1% 4.280 69,3%
Telephones 116 44,8% 130 45,0% 140 45,2% 154 44,9% 163 45,0%
Laundry 73 56,2% 78 54,2% 82 52,9% 87 51,2% 90 50,0%
R ehabilitation services 3.172 71,4% 3.371 69,1% 3.529 67,9% 3.743 66,1% 3.890 65,4%
Total departm ental costs 8.404 52,3% 8.938 49,3% 9.363 47,9% 9.934 45,6% 10.329 45,0%

Total operated dept incom e 7.660 47,7% 9.190 50,7% 10.193 52,1% 11.839 54,4% 12.607 55,0%

U ndistributed costs
A dm inistration & general 1.667 10,4% 1.667 9,2% 1.649 8,5% 1.726 7,9% 1.783 7,8%
Marketing 1.152 7,2% 1.128 6,2% 1.102 5,6% 1.131 5,2% 1.160 5,1%
P roperty operation & m aint 698 4,3% 756 4,2% 817 4,2% 838 3,8% 860 3,7%
E nergy 572 3,6% 604 3,3% 630 3,2% 665 3,1% 690 3,0%
Total undistributed costs 4.089 25,5% 4.155 22,9% 4.198 21,5% 4.360 20,0% 4.493 19,6%

N et incom e from operations 3.571 22,2% 5.035 27,8% 5.995 30,6% 7.479 34,4% 8.114 35,4%

Fixed charges
B asic m anagem ent fees 482 3,0% 544 3,0% 587 3,0% 653 3,0% 688 3,0%
Incentive m anagem ent fee 309 4,9% 449 5,5% 541 5,8% 682 6,1% 742 6,2%
P rovision for renewals 321 2,0% 544 3,0% 782 4,0% 871 4,0% 917 4,0%
P roperty insurance 80 0,5% 91 0,5% 98 0,5% 109 0,5% 115 0,5%
Total fixed charges 1.192 7,4% 1.628 9,0% 2.008 10,3% 2.315 10,6% 2.462 10,7%

(2 )
N et incom e (EB ITD A) 2.379 14,8% 3.407 18,8% 3.987 20,3% 5.164 23,8% 5.652 24,7%

Statistical references
Daily room s available 350 350 350 350 350
A nnual room s available 81.900 81.900 81.900 81.900 81.900
A nnual room s occupied 46.683 50.778 53.235 57.330 58.968
D ouble occupancy 1,68 1,68 1,68 1,68 1,68
A nnual sleepers 78.427 85.307 89.435 96.314 99.066

(1)
These ratios are calculated on departm ental revenue
(2)
57
EB ITD A - E arnings before interest, taxes, depreciation and am ortis ation
11. Project Description
Year 2013 2014 20 1 5 2016 2017
Room occupancy 72% 72% 72% 72% 72%
11.5 Rehabilitation Alternative A v e r a g e r o o m r a te
RevPar
188
135
192
139
197
142
203
146
20 8
15 0

P r e s e n te d in fu t u r e Am ount R a tio Am ount R a tio Am ount R a tio A m ount R a tio Am ount R a ti o

Financial Performance (6-10 yrs) E u r o s V a lu e s 000s % 000s % 000s % 000s % 000s %

Revenues
Room s 1 1 .0 5 7 4 6 ,0 % 1 1 .3 4 5 4 6 ,0 % 1 1 .6 4 0 4 6 ,0 % 1 1 .9 41 4 6 ,0 % 12 .2 5 4 4 6 ,0 %
Food 4 .7 9 2 1 9 ,9 % 4 .9 1 7 1 9 ,9 % 5 .0 4 5 1 9 ,9 % 5.176 1 9 ,9 % 5.311 1 9 ,9 %
B e v e ra g e 1 .5 4 7 6 ,4 % 1 .5 8 7 6 ,4 % 1 .6 2 9 6 ,4 % 1.671 6 ,4 % 1.714 6 ,4 %
T e le p h o n e 371 1 ,5 % 381 1 ,5 % 391 1 ,5 % 40 1 1 ,5 % 412 1 ,5 %
L a u n d ry 184 0 ,8 % 189 0 ,8 % 194 0 ,8 % 19 9 0 ,8 % 204 0 ,8 %
R e h a b ilita tio n s e rv ic e s 6 .1 0 4 2 5 ,4 % 6 .2 6 3 2 5 ,4 % 6 .4 2 6 2 5 ,4 % 6.593 2 5 ,4 % 6.764 2 5 ,4 %
R e n ta ls & o th e r in c o m e 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
T o ta l re v e n u e 2 4 .0 5 5 1 0 0 ,0 % 2 4 .6 8 2 1 0 0 ,0 % 2 5 .3 2 5 1 0 0 ,0 % 2 5 .9 81 1 0 0 ,0% 26 .6 5 9 1 0 0,0 %

(1)
D e p a r tm e n ta l c o s ts
Room s 1 .9 5 6 1 7 ,7 % 2 .0 0 8 1 7 ,7 % 2 .0 6 0 1 7 ,7 % 2.113 1 7 ,7 % 2.168 1 7 ,7 %
F o o d & b e v e ra g e 4 .3 9 2 6 9 ,3 % 4 .5 0 5 6 9 ,3 % 4 .6 2 3 6 9 ,3 % 4.743 6 9 ,3 % 4.865 6 9 ,3 %
T e le p h o n e s 167 4 5 ,0 % 172 4 5 ,1 % 176 4 5 ,0 % 18 1 4 5 ,1 % 185 4 4 ,9 %
L a u n d ry 93 5 0 ,5 % 95 5 0 ,3 % 97 5 0 ,0 % 10 0 5 0 ,3 % 103 5 0 ,5 %
R e h a b ilita tio n s e rv ic e s 3 .9 9 1 6 5 ,4 % 4 .0 9 5 6 5 ,4 % 4 .2 0 1 6 5 ,4 % 4.311 6 5 ,4 % 4.422 6 5 ,4 %
T o t a l d e p a r tm e n ta l c o s ts 1 0 .5 9 9 4 4 ,1 % 1 0 .8 7 5 4 4 ,1 % 1 1 .1 5 7 4 4 ,1 % 1 1 .4 48 44,1% 11 .7 4 3 44 ,0 %

T o t a l o p e r a te d d e p t in c o m e 1 3 .4 5 6 5 5 ,9 % 1 3 .8 0 7 5 5 ,9 % 1 4 .1 6 8 5 5 ,9 % 1 4 .5 33 55,9% 14 .9 1 6 56 ,0 %

U n d is tr ib u t e d c o s ts
A d m in is t ra tio n & g e n e ra l 1 .8 3 8 7 ,6 % 1 .8 8 6 7 ,6 % 1 .9 3 5 7 ,7 % 1.985 7 ,7 % 2.037 7 ,7 %
M a rk e tin g 1 .1 9 1 5 ,0 % 1 .2 2 2 5 ,0 % 1 .2 5 3 4 ,9 % 1.286 4 ,9 % 1.319 4 ,9 %
P ro p e rty o p e ra tio n & m a in t 882 3 ,7 % 905 3 ,7 % 928 3 ,7 % 95 3 3 ,7 % 977 3 ,7 %
E n e rg y 708 2 ,9 % 726 2 ,9 % 745 2 ,9 % 76 4 2 ,9 % 784 2 ,9 %
O t h e r n o n -o p . d e p t 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
F r a n c h is e fe e s 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
O th e r o ve rh e a d c o sts 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
T o t a l u n d i s tr ib u te d c o s ts 4 .6 1 9 1 9 ,2 % 4 .7 3 9 1 9 ,2 % 4 .8 6 1 1 9 ,2 % 4.988 19,2% 5.117 19 ,2 %

N e t i n c o m e f ro m o p e ra t io n s 8 .8 3 7 3 6 ,7 % 9 .0 6 8 3 6 ,7 % 9 .3 0 7 3 6 ,7 % 9.545 36,7% 9.799 36 ,8 %

F ix e d c h a r g e s
B a s ic m a n a g e m e n t f e e s 722 3 ,0 % 740 3 ,0 % 760 3 ,0 % 77 9 3 ,0 % 800 3 ,0 %
In c e n tiv e m a n a g e m e n t fe e 812 6 ,4 % 833 6 ,4 % 855 6 ,4 % 87 7 6 ,4 % 900 6 ,4 %
P ro v is io n fo r r e n e w a ls 962 4 ,0 % 987 4 ,0 % 1 .0 1 3 4 ,0 % 1.039 4 ,0 % 1.066 4 ,0 %
P ro p e rty ta x e s 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
Rent 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
P ro p e rty in s u ra n c e 120 0 ,5 % 123 0 ,5 % 127 0 ,5 % 13 0 0 ,5 % 133 0 ,5 %
R e s e rv a t io n c o s ts 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 % 0 0 ,0 %
T o t a l fix e d c h a r g e s 2 .6 1 6 1 0 ,9 % 2 .6 8 3 1 0 ,9 % 2 .7 5 5 1 0 ,9 % 2.825 10,9% 2.899 10 ,9 %

(2)
N e t i n c o m e ( E B IT D A ) 6 .2 2 1 2 5 ,8 % 6 .3 8 5 2 5 ,8 % 6 .5 5 2 2 5 ,8 % 6.720 25,8% 6.900 25 ,9 %

S ta ti s tic a l r e fe r e n c e s
D a ily ro o m s a v a ila b le 350 35 0 350 350 350
A n n u a l r o o m s a v a ila b le 8 1 .9 0 0 8 1 .9 0 0 8 1 .9 0 0 8 1 .9 0 0 8 1 .9 00
A n n u a l r o o m s o c c u p ie d 5 8 .9 6 8 5 8 .9 6 8 5 8 .9 6 8 5 8 .9 6 8 5 8 .9 68
D o u b le o c c u p a n c y 1 ,6 8 1 ,6 8 1 ,6 8 1 ,6 8 1,68
A n n u a l s le e p e rs 9 9 .0 6 6 9 9 .0 6 6 9 9 .0 6 6 9 9 .0 6 6 9 9 .0 66

(1 )
T h e s e ra tio s a re c a lc u la te d o n d e p a r tm e n ta l r e v e n u e
(2 )
E B IT D A - E a rn in g s b e fo re in te re s t, ta x e s , d e p re c ia tio n a n d a m o rt is a tio n
58
11. Project Description
11.6 Rehabilitation Alternative - Assumptions of WACC

Terminal (Expected Growth Rate) 0%

Capital Required for Development (after Grants): 16.639.200 € Marginal Tax rate 35%
Debt 70%
Loan (debt): 11.647.440 € Equity 30%
Long Term Balloon Payment (interest) 6,50%
Total Construction cost of Rehabilitation Component:
27.732.000 €
Unlevered beta *[1+(1-tax rate) [debt/equity]]
Unlevered beta 0,62
Leveraged Beta 1,56

Cost of equity = Risk free rate + Beta * Risk

Premium = 5.4% + 1.56 (4%) = 11,6%
Risk Free Rate 5,4%
Risk Premium 4%
Cost of capital = 11.60% (.30) + 6.5% (1-.35) (.70) = 6,45%
Annual Depreciation € 2.218.560

59
11. Project Description
11.7 Rehabilitation Center Financial Performance Estimates (to the Firm)
Scenario 3: Construction OPERATION
Rehabilitation 1 2 3 4 5 6 7 8 9 10
Development 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Land -5.000.000 €
Construction Expenses - -5.823.720 € -10.815.480 €

Operating income before

depreciation (EBITDA) 0€ 0€ 0€ 2.379.000 € 3.407.000 € 3.987.000 € 5.164.000 € 5.652.000 € 6.221.000 € 6.385.000 € 6.552.000 € 6.720.000 € 6.900.000 €
Depreciation 0 0 0 -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 € -2.218.560 €
Operating income 0 0 0 160.440 € 1.188.440 € 1.768.440 € 2.945.440 € 3.433.440 € 4.002.440 € 4.166.440 € 4.333.440 € 4.501.440 € 4.681.440 €
Taxes 0 0 0 -56.154 € -415.954 € -618.954 € -1.030.904 € -1.201.704 € -1.400.854 € -1.458.254 € -1.516.704 € -1.575.504 € -1.638.504 €
Operating income after
taxes 0 0 0 104.286 € 772.486 € 1.149.486 € 1.914.536 € 2.231.736 € 2.601.586 € 2.708.186 € 2.816.736 € 2.925.936 € 3.042.936 €
(+) Depreciation 0 0 0 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 € 2.218.560 €
Cash flow to firm 0 0 0 2.322.846 € 2.991.046 € 3.368.046 € 4.133.096 € 4.450.296 € 4.820.146 € 4.926.746 € 5.035.296 € 5.144.496 € 5.261.496 €

Cash flow to firm 2.322.846 € 2.991.046 € 3.368.046 € 4.133.096 € 4.450.296 € 4.820.146 € 4.926.746 € 5.035.296 € 5.144.496 € 5.261.496 €
Terminal Value 81.574.846
Land & Construction
Costs -5.000.000 € -5.823.720 € -10.815.480 € - - - - - - - - - -

Discounted at @ 6.45 0,94 0,88 0,83 0,78 0,73 0,69 0,65 0,61 0,57 0,54 0,50 0,47
Present Value of Cash
Flows to Firm -5.000.000 € -5.470.855 € -9.544.546 € 1.925.682 € 2.329.389 € 2.464.063 € 2.840.560 € 2.873.241 € 2.923.467 € 2.807.067 € 2.695.085 € 2.586.694 € 41.016.484 €

IRR to Firm 22%

NPV to Firm 41.753.000 €

§ The land cost of 5,000,000 € as well as the construction costs have been incorporated in the
estimations.
§ The subject rehabilitation development has a positive leveraged NPV of 41,753,000 € and an IRR of
22%.

60
12. SWOT Analysis
In order to place our findings in context, we set
out the strengths, weaknesses, opportunities
and threats (SWOT) relating to the site and the
local market.
SWOT analysis
Strengths
• According to studies of the tourism
development of the island, the next
development potential areas of Lesvos are
the south west seashores (Tavari and
Podara beaches-adjacent to subject site)
• Natural beauty, privacy, location and access
• High quality of facilities
• Real estate component
• Sizeable plot of land
• Unspoilt and up and coming destination
• Proximity to other Lesvos destinations
(Singriou, Eressos) and nearby antiquities
• Climate (better than in other competitive
destinations)
• Cultural and natural beauties of the island
• Large capacity for demand satisfaction
• In near proximity to Turkish boarders, i.e.
Smyrni – 5 million population, Asia Minor-
10 million population which is expected to
increase to 30 million in 10 years.
• Summer home market is expected to grow
significantly for Greece
• Subject land has clean titles and no issues
with Archaeology or Forestry
Opportunities
• Improving image of Greece (Economic,
Infrastructure, Safe Destination)
• Proximity to source markets
• New infrastructure works in the area
• Expected critical mass from the
development of resort projects in the
broader area which is expected to improve
the recognition of the area as an
international tourism destination
• The planned route from the port of Rafina
to Sigrio will assist in the development of
western Lesvos
• Possibilities for alternative tourism
• Penetration of source markets (west and
east Europe, North America, developed
countries of Asia, and huge market of
Turkey
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Weaknesses
• Airport distance and scheduled flights
• The tourism season is short
• The occupancy rates are somewhat limited
• The average daily rate is considered inexpensive
• The unit size of the hotels is limited which does not
provide for economies of scale
• The dispersal of units is large making the Tour
operators business more difficult
• Limited alternative tourism facilities (golf, theme
parks, etc)
• Limited number of units over 400 beds (A category
and up), making its entrance in the Tour Operator
catalogues very difficult
• The cultural, folk and archaeological richness of the
island requires proper marketing and promotion
• Limited transportation routes and alternatives (by
air and sea)
• Seasonality
• Low quality of existing accommodation facilities in
the broader area
• Limited existence of other large hotels in the area
(critical mass)
Threats
• Possible delays in the planned infrastructure works
• Economic recession
• Increased competition of planned resorts in the
broader area
• Pricing Policy (Value for Money)
• Tour Operator exploitation
•
Appendix - Permits
Project’s Permits

The typical permits required for a development of this size are seen below .

Typical List of Permits required for

development
Type of Permit , Licence or Approval Jurisdiction of Status

Shore Line Designation (for properties 50m from the seashore) Ministry of Finance/ Ministry of Public works & Environment, Ministry of N/A
Defence

Declassification from forest land Forestry Authority Issued

Archaeological Permits Ministry of Culture a) Department of Prehistorical and Classical Monuments Issued

Water Supply Certification Municipality or Eressos TBD

Sewage Treatment Certification Municipality or Eressos TBD

Wastes Treatment Certification Municipality or Eressos TBD

Access Road Width Certification Municipality or Eressos TBD

Certification of Building restrictions of Plot Town Planning Office of Lesvos TBD

GNTO Suitability of Plot Permit (if Tourism related) Greek National Tourism Organisation TBD

Environmental Impact Study Approval Ministry of Public Works & Environment TBD

GNTO Design Approval (if Tourism related) Greek National Tourism Organisation TBD

Zoning Approval Ministry of Public Works & Environment TBD

Infrastructure Works Permit Department of Technical Services of Lesvos TBD

Building (construction) permit Town Planning Office of Lesvos TBD

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Appendix – Air Photo of Site

63
Appendix – MAP

64