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Summary Document February 2013 Montenegro - The world’s fastest growing tourism market
The Project The development will be located in Montenegro, which is predicted to have the fastest growing tourism market in the world over the next 10 years, according to the World Travel Tourism Council The development is for a 5-star branded hotel, with luxury residential apartments and a conference centre The site benefits from 100 metres of prime beach frontage and is located within a 15 minute drive of an international airport The 5-star hotel will have approximately 190 en-suite rooms that all benefit from large balconies and sea views A contract has been signed with a world renowned luxury hotel operator, for the 25 year management of the hotel All 161 luxury residential apartments will have access to all hotel facilites, including room service The development will benefit from the ongoing business generated from the world class conference centre that will be built on the site The resort will have an exclusive private beach club, casino, world class restaurants and entertainment facilities The apartments will be available for purchase off-plan by existing investors from January 2013 The Investment Opportunity The project will be of greatest interest to UK resident companies who are looking to invest in a fast growing property market with risked managed exposure The minimum investment is £50,000 The project will enable corporate partners to participate in the partnerships trade An opportunity for corporate investors to generate up to 2-4 times return on equity pre-tax over the life of the project Downside protection may be afforded in certain circumstances by the tax treatment of trading losses arising The profit calculation for purposes of Montenegro revenue excludes the purchase price of the land The Partnership (as defined in the structure plan overleaf) has been established to provide a range of services in relation to the project, including the: design and build of the conference centre management of the conference centre over a 25 year term acquisition of the beach restaurant on behalf of the land owner BPHS refurbishment of the beach restaurant to the standard required by BPHS upgrade and maintenance of the beach facilities to the required standard over a 25 year term fit-out of the casino and retail units to the required specification
Montenegro, located south of Croatia, is a country of approximately 650,000 people with 290 kilometres of undeveloped coastline, a narrow coastal plain, backed by the impressive black mountains from which Montenegro takes its name The country became independent in 2006 and has leadership with a vision to create the “Monaco of the Balkans”, with a focus on luxury tourism The first major international hotel chain to commit to the country is The Aman, which has opened on Sveti Stefan. Additionally, Six Senses, Four Seasons and Banyan Tree are also actively engaged on other development sites. Most visitors to Montenegro are from Russia and former Yugoslavian countries (in particulair Serbia) Montenegro’s base currency is the Euro According to the World Travel & Tourism Council, Montenegro is the fastest growing tourism market in the world, with travel and tourism investment estimated to rise by 13.2% per annum to reach €606.7m (or 57.8% of total investment) in 2022 The project will be the first 5-star resort on the beautiful Bay of Budva and we strongly believe will become a major international tourist attraction
2 (GP) ("Partnership") Profits Design and construction services relating to the conference centre.Structure Step Plan Corporate Partners ("Partners") Montenegro Real Estate No.5m £8.2 (Jersey) Ltd ("Corporate Founder") £1.8m Procyon Real Estate Partners ("Procyon") Profits Procyon provides services in return for revenue under the PW&SA Consultancy Fee £0. and further property related services in relation to the overall development Irrevocable payment to secure the services of IPCS £9.5m Co-Venture Agreement Principal Works and Services Agreement ("PW&SA") Montenegro Real Estate Partners No.05m Boka Adriatic Developments (Montenegro) Ltd ("BAD") Commissioning Agreement Profits Future Design and Build Services Ltd ("FDBS") Boka Property Holding Services Ltd ("BPHS") Integrated Property Contractor Services Ltd (Montenegro) ("IPCS") Multiple Sub-contractors (including Bouygues) Luxury Hotel & Residential Apartments .
815.771.694. Years 1-28 • Investment of £1.492 £6.790 £6.661 £618.225 £3.Financial Illustrations Commercial Assumptions Montenegro Real Estate Partners No.241.355.306 £424.748 136% Assuming Sale of Hotel in 2040.0% £1.a.Mar 2016 Debt financing: 8% p.359 £431.0% £11.637.752 £427.8m €150.524 £89.982.1m €28m €122.0% £10.284 £547.434.888.637.842.1m) • Residential sales per m2: €5.541 £3.661 £1.939 375% Construction programme: Oct 2013 .820 £102.000.744 £435.088 £79.874 £3.588 164% 9.000 (€1. 25 years hotel management Forecast Returns Assuming Sale of Hotel in 2020.104.056 £1.439.562.528 Cap value at: Total MREP income Consultancy fee FDBS 4% Total Corporate Founder Total Corporate Partners Return on Equity – Corporate Partners 8.000.755.282 £3.8m €213.786.528 Cap value at: Total MREP income Consultancy fee FDBS 4% Total Corporate Founder Total Corporate Partners Return on Equity – Corporate Partners Inputs: Development programme: Apr 2009 .806 144% 10.166 £1.May 2016 Sales programme: Jan 2013 .5% £10.134 £95.454 £6.003.May 2017 8.000 (€1.0% £2.974 £1.157 £6.967 382% 9.926 £440.533.792.612.9% 10.721.979 £84.095/m2 Contingency: 1.199 £580.633 £708.737 377% Build cost: €2.623 379% 9.765 £660.3m (141% Return on Cost) €75.4m €44m Procyon's Share of Proﬁts Residential Development Hotel Operating Profits Conference Centre Beach Restaurant Casino and Retail Beach Facilities 10% 25% 50% 50% 25% 25% *Assuming sale of apartments at €5528 per m2.5% £2.021 176% 8.394. Years 1-8 • Investment of £1. investors receive 25% of the remaining 95% of income at Partnership level The Partnership will receive a pro-rata share of the profits realised by Procyon (as defined in the structure plan on page 9) as follows: Development Appraisal (28 Years) Net Development value*: Land Purchase Price: Development costs (excluding land): Total costs including land: Gross profit: Assumed senior debt 50% LTC: Equity invested to date: agreement and sale in 2040 at 9% yield €364.2 (GP) commences trade in February 2013 Build completion by March 2016 Corporate Founder is entitled to receive the first 5% of Partnership profits Investors receive 75% of the remaining 95% of income at Partnership level until pre-tax ROE is 200% Once investors achieve pre-tax ROE of 200%.752. senior debt .565.550 £6.0% £10.1m) • Residential sales per m2: €5.5% £10.227 £3.781 £1.0% £2.228 384% 8.5% £2.495.203 153% 9.
FCP and nostatements part of this summary or its subject matter may be reproduced. a subsidiary of Bouygues Construction. and particular attention should be paid to all of the risk warnings contained therein. no furnishing liability whatsoever for. as the date under which believesof a an transaction might be arranged or agreed. The and forecasts contained in this summary such aupon transaction in fact and be executed atwhich the specific levels on the specific indicated. toFuture enter into any Partners transaction (including. a solicitation of information an offer or an agreement. FCP is not committing any transaction. disseminated or disclosed without the prior approval of FCP. The projections. statements in this summary.com Disclaimer: This summary should be read in conjunction with the Proposal. This summary is furnished only for memorandum. including the Porto Montenegro development. This will guarantee the total construction cost and thereby ensure the development will be delivered on time and on budget FCP are contracted by the land owner to raise capital and by Montenegro to conduct adminstrative services. information purposes. in fact sion of any services).not and accepts no liability purposes offor. Montenegro contracts Future Design and Build services Limited to provide real estate expertise on the project Savills advises the owners of the site regarding valuation of the Development For further information please contact: info@futurecapitalpartners. statements or forecasts contained in this FCP summary. for the provithe terms. transaction statements might be arranged or agreed. This summary not constitute adviceincluded or a recommendation to is enter into any By this summary to the recipient. and real estate. Atlas is the vendor of the site and a potential future partner for the development of the on site conference centre An agreement was signed with Bouygues Batiment International.Development Team Boka Real Estate Managers (Boka) introduced this opportunity and have been involved in conceptualising other landmark development opportunities in the region.com This should be read in conjunction with the Initial Business Plan (in particular the “Important Information” and “Risk Management” sections) and accompanying documents. under which believes aprojections. is not committing to any transaction. By furnishing thisthe summary the recipient. actual disclosed without the prior of FCP. transaction could. Although any indicative information included in or be executed at the specific levels or on specificto terms indicated. This summary and its or contents are proprietary toprojections. This summary is furnished only for information purposes. anyand services). the provisionas of to. it may be amended without notice and as may be relied upon for the the information appearing in the information Future Capital Partners (FS) and/or Limitedsupplemented (“FCP”) makes no representation to. The presented will does be deemed superseded by any subsequent versions of this and isor whatsoever the accuracy completeness ofinformation such information.FCP No representation is made or warranty given as to the accuracy. United Kingdom Telephone: +44 (0) 20 7009 6600 Fax: +44 (0) 20 7009 6601 Email: info@futurecapitalpartners. achievability reasonableness of any or forecasts contained in this summary. no assurance is givenare that reasonableness any projections. assumptions estimates are subject toor uncertainties and terms contingencies. Although does any indicative information in this summary reflective of transaction orof an offer orhereof. achievability this summary is of reflective of the terms. notransaction assurance is given thatwithout such a limitation. disseminated or and forecasts contained inapproval this summary are based upon various assumptions and estimates which are subject to uncertainties and contingencies. without limitation. completeness. Capital (FS) Limited (“FCP”) makes no for representation accepts an offer to or the an agreement. as of the date hereof. or aFCP solicitation offer or an agreement. actual results could differ materially from those accuracy. The information presentedwith herein be deemed superseded by any attention subsequent versions of this summary andwarnings is subjectcontained to therein. and particular should be paid to all of the risk of entering into any transaction. completeness. media. London W1S 3AG. entering into anyor transaction. Boka provides local expertise. Thisherein summary not constitute advice or a recommendation to enter into summary any transaction subject informationor appearing in the memorandum. in September 2012 for the development of the project. financial services. to enter into any (including. No representation is made or warranty given contained as to the based variouscould. the accuracy or completeness of such to information. Manly has been appointed to advise on all aspects of the design and development process Atlas Group is one of Serbia’s largest private companies with business interests ranging from infrastructure. Principal address: 10 Old Burlington Street. This summary and its contents are proprietary to FCP and no part of this summary or its subject matter may be reproduced. contacts and on the ground support to manage all aspects of the development Manly is an international development and project management consultancy operating in emerging and established markets. results could differ materially from those contained in this summary. it may be amended and/or supplemented without notice and may not be relied upon for the purposes Disclaimer: This summary should be read in conjunction thewill Information Pack. an agreement. .
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