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January 2013

Tameer Towers: Analysis of 3 different options (B2, C6, Imperial)


General Assumptions for the 3 scenarios
General Assumptions

 Sheikh Zayed Road Project- 3 Towers which will be developed in phases and shown as Phase 1, Phase 2 and Phase 3; In this exercise we
have contemplated all the 3 Phases to be identical

 Current bank loan outstanding 799mm (principal + profit currently outstanding;) We pay the interests due till March 2013 in March 2013 and
then make Principal repayment of 700 mm in June 2013. Based on this the banks extend us a debt for construction financing .The
.Th balance
amount is added on to Principal of the new debt facility.

 Tameer Towers Closing: An estimated cost of AED 20mm for filling of commercial site and others

 Business Bay plot and Sharjah plots are sold in about one year from now

 Sorouh- We pay to Sorouh 150mm to consolidate TT ABCD plot and gain control of Commercial Plot. The payment is done in tranches of AED
25mm, every six month from Sep 2013

 The Sheikh Zayed Road project assumptions stay the same as last time presented
C O N F I D E N T I A L

Tameer Towers Shifting assumptions

 We shift all the customers at a marked up price per sqft of the new area being given to them. The marked up price is 100% increase (or
double) the estimate of current market price
 Thus we shift to Imperial @ AED 1,300/Sqft
 We shift to Tower B2 @ AED 1,700/Sqft
A N D

 We shift to Tower C6 @ AED 1,500/Sqft


 Thus in essence all the customers will be shifted at the same price/sqft
sqft in a particular tower. This will be a better protection to us,
P R I V A T E

legally, if there is any unforeseen circumstances later

 So we acquire the towers and shift all those customers whose ticket sizes (or amount paid to date) can be accommodated with a unit in the
acquired tower. If there are ane inventory left we sell it and use the proceeds to pay back the remaining customers in Tameer Towers at 5%
haircut
S T R I C T L Y

 We have not included the payments due to ARP

 We have only projected THI Dubai, Sheikh Zayed Road project and Impact of shifting TT Customers. Thus at the end we will still have the
ownership of TT ABCD plot which we can develop or resell later

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Case 1: Shifting TT Customers to Imperial
P&L analysis of Shifting TT customers to Imperial
Original Area Payments Area Needed # of Units in
Customers Settlement/Cash (gfa) Original Sales Value made (GFA) Imperial
Top 53 Customers To be settled with Units 698,356 2,962,970,389 494,794,339 380,611 267
Remaining
Customers(637) To be paid Cash 952,445 246,909,567 472,225,601 - -
Total 1,650,801 3,209,879,956 967,019,940 380,611 267
*Shifting assumed at A ED 1300/Sqft

Remaining Area in
Imperial after shifting ( Total value loss to THI in the process of settling TT
GFA SQFT) 3,398
Sales Price/Sqft 550 Area (Sqft) Money (AED)
Sales Value 1,868,883 Inventory Loss 380,611 209,336,067
M oney Needed after
50% haircut 236,112,801 Cash to Customers 234,243,917
Thus Extra cash needed 234,243,917 Total 443,579,984
C O N F I D E N T I A L

Acquisition of Tower - Total as % of TT Amount Paid 46%


Acquisition Costs - Thus haircut achieved 54%
Thus total Cash needed 234,243,917

Case 1: Shifting to Imperial- Shareholder peak and final profitability Case 1: Group companies payment profile: Original & with Case 11

1,000.0
600.0
AED 714.7mm AED 535.0mm
800.0
500.0
A N D

600.0 Original
Group Cumulative CF
400.0 400.0 New (Case 1)
P R I V A T E

200.0 300.0
-
200.0
1-Jan-13

1-Jan-14

1-Jan-15

1-Jan-16

1-Jan-17

1-Jan-18

1-Jan-19

1-Jan-20

1-Jan-21

1-Jan-22
1-Jul-13

1-Jul-14

1-Jul-15

1-Jul-16

1-Jul-17

1-Jul-18

1-Jul-19

1-Jul-20

1-Jul-21

(200.0)
100.0
S T R I C T L Y

(400.0)

(600.0) -
1-May-…

1-May-…

1-May-…

1-May-…

1-May-…

1-May-…

1-May-…
1-Jan-13

1-Sep-13
1-Jan-14

1-Sep-14
1-Jan-15

1-Sep-15
1-Jan-16

1-Sep-16
1-Jan-17

1-Sep-17
1-Jan-18

1-Sep-18
1-Jan-19
(800.0) (AED 749.0mm)
(1,000.0) 2
AED 535mm includes payments currently due to MADA, ARP, Al Arrab as well as surplus payment of AED 120mm projected earlier. Profit of 714.7mm is exclusive of this 120mm surplus
B2 Tower- Marina Square, Reem Island
General description and observations from our site visit

 One of two identical buildings, located on a parking podium.

 The district is know as Marina Square, a recently delivered new and modernly planned community.

 Within walking distance of a completed but not operationalmarina,, a semi completed mini-community
mini mall under construction and an
abandoned hotel under construction of which it is claimed works will recommence within the next few months.

 Once the mall and the hotel are completed, this precinct should be considered of a comparable quality of life, amenities and facilities as
the Dubai Marina

 Entrance lobby at top podium level L2. Modern, spacious double height atrium.

 Through the lobby one gains access to the kids area, swimming pools and recreation deck. A single retail unit adjacent to the lobby is under
permitting, and seems fit for a quality coffee shop. The second level atrium provides access to a large (but poorly equipped) and very well
located mixed gender gym. Said floor furthermore contains rooms that can be converted into community facilities. It also contains
cont the OA
C O N F I D E N T I A L

and FM offices.

 We visited the 1, 2, 3 and 4 bedroom units, as well as the penthouses (equal to 4-beds).
4 The PH`s are on the top 4 floors, and boast 1 unit
per floor only. These should be considered special. All units are centrally air-conditioned
air and all were running.

 In general all Units are finished to the same quality level, palette, materials and boast floor-to-ceiling
floor windows in most rooms.
(interestingly many of the colors and finishes items in this building resemble our preliminary choices for TT) All units feel relatively large
and spacious, are well planned, most have open plan kitchens of adequate sizing. Similarly for the bathrooms, many are equipped
equipp with bath
tubs and separate shower cubicles (considered a significant add-on).
on). Most en-suites
en have only showers, again seen as a positive. Most rooms
A N D

equipped with smoke detectors and sprinklers. Central gas installation present. All rooms have dedicated thermostats suggesting
suggesti dedicated
FCU`s; an excellent feature. Built workmanship is average, relatively low-cost
low finishes materials thinly veiled by dark contemporary colors
however as a comparison to the quality standards in AD this building should be considered way above the Khalifa Committee quality but just
P R I V A T E

below frontline Corniche developments. All bedrooms have built in closets. Many units have maids rooms.

 Another good attribute is the dedicated service elevator in a separate area of the core, doubling up as fireman`s elevator. Very
V well
designed.
S T R I C T L Y

 Overall the building is ready for occupancy. Utility connections are active, certification appears in order and no significant
significan defects were
apparent nor referred to upon questioning.

 We could not gain access to the BMS, security room or BMU, however we were told these are present.

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B2 Tower- Marina Square, Reem Island
General description and observations from our site visit

 We have not performed nor procured a full due diligence on the unit entitlement GFA`s and NSA`s to confirm the total actual square
s
footage. The title deed sample does not contain such individualized plans but merely reference to SQF. It is recommended to have
h a full
3rd party spatial survey performed prior to acquisition.

 There were no contractor nor consultant present to answer technical queries. It is recommended to have a full technical audit performed
on the built specification with respect to MEP systems and installations, F&LS systems, cladding, glazing and overall unit by unit snag-survey
to pre-determine obvious complaints that may occur upon hand over.

 We have not had sight of the Strata Title Deed of the plot associated with this building, in other words: who owns what? The Building
Permit mentions three buildings, of which this is one, and it may very well be that it forms part of one development which is facing
stratification difficulties. From a strata perspective, this building is exactly the same as our Imperial Residence: two towers
towe and a “podium
villa” component. Subdividing these is extremely complex, and may not even be possible or allowable unless it was pre-subdivided
pre much
like the JLT developments whereby the podium and parking are considered separate. Although from an individual Unit owner`s perspective
pe
this does not make any difference, it matters from a management viewpoint vide liabilities, SC`s, access, security and above all ownership
C O N F I D E N T I A L

of the land.

 This building stands significantly above the average residential offering in AD. Space, modernity, planning, dedicated parking
parkin (crucial),
amenities, location, accessibility, views are all matters adding significant value to this property. Quality wise it compares perhaps best as
somewhere between Palace Towers and Princess, but with better layouts.

 The property lends itself for immediate leasing, and is likely to gain occupancy quickly as it is such a contrasting alternative
alternat to the
relatively congested high-density
density living conditions so prevalent on the main AD island. The argument that Marina Square has many units on
offer is quashed by the assertion most adjoining property are already occupied. Alternatively, offering these units to TT customers
cus as an
A N D

immediate fix is likely to prove highly popular for obvious reasons and my sense is many will accept this ready product at an even higher
rate than what they bought for in TT. They have been emotionally pre-conditioned
conditioned for the last 3-5
3 years, with many believing all was lost.
Being offered a ready product should be overwhelmingly positive to most.
P R I V A T E

 On the other hand it is somewhat surprising to see this building being offered @ AED711 PSQFT NSA, and forms my most significant
signific
reservation. Is it really NSA, or is it BUA? Why are they selling it to begin with? What is it we do not know, or cannot see? What exactly is
being offered for sale: individual units only or the full building including the land? So we need to do a detailed due diligence
dilige
S T R I C T L Y

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B2 Tower, Marina Square, Reem Island
Picture of Marina and the Mall from B2
C O N F I D E N T I A L
A N D
P R I V A T E
S T R I C T L Y

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B2 Tower, Marina Square, Reem Island
Picture of Internal Corridors
C O N F I D E N T I A L
A N D
P R I V A T E
S T R I C T L Y

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B2 Tower, Marina Square, Reem Island
Picture of Internal Finishes
C O N F I D E N T I A L
A N D
P R I V A T E
S T R I C T L Y

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B2 Tower, Marina Square, Reem Island
Picture of Internal Finishes
C O N F I D E N T I A L
A N D
P R I V A T E
S T R I C T L Y

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B2 Tower, Marina Square, Reem Island
Picture of Internal Finishes
C O N F I D E N T I A L
A N D
P R I V A T E
S T R I C T L Y

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B2 Tower, Marina Square, Reem Island
Picture of Pool area
C O N F I D E N T I A L
A N D
P R I V A T E
S T R I C T L Y

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Case 2: Acquiring B2 Tower and shifting TT customers to B2
P&L analysis of acquiring and Shifting TT customers to B2
Original Area Original Sales Payments Area Needed # of Units in
Customers Settlement/Cash (gfa) Value made (GFA) new tower
Top 69 Customers To be settled with Units 792,952 1,739,768,929 543,175,663 319,515 113
Remaining
Customers(621) To be paid Cash 857,849 1,470,111,027 423,844,277 - -
Total 1,650,801 3,209,879,956 967,019,940 319,515 113
*Shifting assumed at A ED 1700/Sqft

Remaining Area in New


Tower after shifting ( Total value loss to THI in the process of settling TT
GFA SQFT) 221,488

Sales Price/Sqft 792 Area (Sqft) Money (AED)


Sales Value 175,344,392 Acquisition 541,003 353,600,000
M oney Needed after
50% haircut 211,922,138 Cash to Customers 36,577,747
Thus Extra cash needed 36,577,747 Total 390,177,747
Acquisition of Tower 340,000,000 Total as % of TT Amount Paid 40%
Acquisition Costs 13,600,000 Thus haircut achieved 60%
C O N F I D E N T I A L

Thus total Cash needed 390,177,747

1 Assuming AED 950/Sqft as the sales price per NSA. Thus AED 792/Sqft GFA

2 Currently there are listings for 392 apartments at an average price of AED 1,102/sqft
3 Apprx. 2% brokerage, 2% title. We should challenge these

Case 2: Acquiring and Shifting TT customers to B2 -Shareholder peak & p8l Case 2: Group companies payment profile: Original & with Case 21
1,000.0
600.0
AED 764.3mm AED 535.0mm
A N D

800.0
500.0
600.0
Series1 Original
P R I V A T E

400.0 400.0
New (Case 2)
200.0 300.0
-
200.0
1-Jan-13

1-Jan-14

1-Jan-15

1-Jan-16

1-Jan-17

1-Jan-18

1-Jan-19

1-Jan-20

1-Jan-21

1-Jan-22
1-Jul-13

1-Jul-14

1-Jul-15

1-Jul-16

1-Jul-17

1-Jul-18

1-Jul-19

1-Jul-20

1-Jul-21

(200.0)
S T R I C T L Y

100.0
(400.0)

(600.0) -
1-Jan-13

1-Sep-13
1-Jan-14

1-Sep-14
1-Jan-15

1-Sep-15
1-Jan-16

1-Sep-16
1-Jan-17

1-Sep-17
1-Jan-18

1-Sep-18
1-Jan-19
1-May-13

1-May-14

1-May-15

1-May-16

1-May-17

1-May-18

1-May-19
(800.0)

(1,000.0) (AED857.0mm) 11
AED 535mm includes payments currently due to MADA, ARP, Al Arrab as well as surplus payment of AED 120mm projected earlier. Profit of 764.3mm is exclusive of this 120mm surplus
C6 Tower- Najmat, Reem Island
General description and observations from our site visit

 G+40, 3B, 2P, standard “Khalifa committee” design building.

 One of a twin set of buildings on adjacent plots. (this building is not on the corner) Second building not under construction,
construction but ready to go.
(allegedly)

 AED202mn MC procured, few if any PS & PC`s, price LS and locked in with Seidco.

 Seidco are a mid range general contractor, no issues. P-bond, A-bond,


bond, retention, standard FIDIC `88 all in place.

 Syrconsult EOR, AOR and CS. Well deployed and in control.

 Lender`s Engineer on site thrice a week. (ADCB)

 Progress @ 15%, on (revised) program, expected completion Oct 2014. My assessment is closer to X-mas
X 2014. Now at B2-B1 and 350 labor on
site. They seem organized. (see photos)
C O N F I D E N T I A L

 No VO`s, claims, EOT`s or other issues currently known.

 Building Permit is “old rules”, no ESTIDAMA rules. Relevant NOC`s in place, confirmed via the BP.

 Cooling through chilled water from DCS, no in house plant. I have not seen the terms agreement for chilled water supply.

 Quick review of the design at site noted no amenities, pool, gym, kids area, community room or other extras. We have today received
re
updated design drawings introducing a pool on the podium deck of adequate size. Also they have introduced a small gym on the 20th floor,
considered poorly sized and laid out. It is clearly designed poorly
A N D

 Furniture layouts designs and shop drawings were also received today morning and a cursory review confirms the apartments are generally
poorly to very poorly laid out, sized and dimensioned. Enclosed kitchens, distant living rooms, tiny bathrooms, corridors, seemingly
se
P R I V A T E

unusable balconies, oddly shaped/sized bedrooms or large but unusable/un-furnish


unusable/un able. The studios are ok.

 General property location is considered standard, not great across the road from a labor camp, no access to waterfront or other
oth quality
public space. Access from the main road is good, once the access is opened. No other construction evident in the vicinity, thus
th the project
is considered lonely. The master plan suggest a slither of a water body behind the building, but from a planning perspective I do not see
how this would ever be built nor how it would function feasibly.
S T R I C T L Y

12
C6 Tower- Najmat, Reem Island
General description and observations from our site visit

 We donot understand the reason to exit, given the construction is now looking smooth, 100% financing in place and no sales commitments.
commitments
Mr Abdullah (HH Office) seemed genuinely disappointed with HH with this decision to sell now given he had been working on this since
s 2007
and he perceives it as a success. It seems he just wants to exit. Shk Omar is a younger brother of Shk Khalifa (UAE President) and is always
by his side as his Military Advisor. Usually these people know more than you and I, thus we can only conclude his desire to exit
e and incur an
even greater loss is a mix of science and emotion. Another thought is that it is now realized what a poor quality building this
th is going to be,
and the association with such product may be causal to the exit desire. Mr Abdullah told me that 3 years ago, the construction was
procured at AED450mn. Although construction prices have collapsed since then, basic building materials and labor costs have not n reduced
by 60%, suggesting the building was down-graded
graded massively; perhaps even with the foresight to sell it as a whole asap.

 A cursory review of the specification confirms ultra-low-cost


cost finishes throughout, ceramic tiles, PC rate for full bathrooms @ AED3500
A all
inclusive buys the absolute lowest cost material one can find. Kitchen fit out spec could not be identified. There are some product
p choices
that seem inappropriate for their space or use, or are priced too low to be able to procure adequate material for. The building
buildi does not
have a service elevator, nor is one of the elevators sized for service or furniture movement. They are thus too small to move larger
C O N F I D E N T I A L

furniture items and this is a massive problem, meaning that many items may have to be moved into the building via staircases or may simply
have to be abandoned.

 One thing is clear: this is not a Tameer Towers level building and our sense is that convincing customers to make this switch will require a
massive effort if at all agreeable. Even a significant upgrade of the design and the specifications to sweeten the proposition
propositio may not suffice
to generate the desired appetite. Finally, a G+40 with 296 apartments is a lot, which has translated into relatively small unit
un sizes in
general.

 Our quick scan of the land sale agreement suggest this plot is “lease hold”. They believe it is free-hold.
free We have asked confirmation from
the seller without response yet. So this needs detailed due diligence too
A N D
P R I V A T E
S T R I C T L Y

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S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

Picture of the Model


C6- Najmat, Reem Island

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S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

Construction in progress
C6- Najmat, Reem Island

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S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

Construction in progress
C6- Najmat, Reem Island

16
S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

Construction in progress
C6- Najmat, Reem Island

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Case 3: Acquiring C6 Tower and shifting TT customers to C6
P&L analysis of acquiring and Shifting TT customers to C6
Original Area Original Sales Area Needed # of Units in
Customers Settlement/Cash (gfa) Value Payments made (GFA) new tower
Top 117 Customers To be settled with Units 924,562 1,962,637,493 627,126,556 418,084 288
Remaining
Customers(573) To be paid Cash 726,239 1,247,242,463 339,893,385 - -
Total 1,650,801 3,209,879,956 967,019,940 418,084 288
*Shifting assumed at A ED 1500/Sqft

Remaining Area in New


Tower after shifting ( Total value loss to THI in the process of settling TT
GFA SQFT) 21,010

Sales Price/Sqft 708 Area (Sqft) Money (AED)


Sales Value 14,881,821 Acquisition 439,094 435,101,829
M oney Needed after
50% haircut 169,946,692 Cash to Customers 155,064,871
Thus Extra cash needed 155,064,871 Total 590,166,700
Acquisition of Tower 418,367,143 Total as % of TT Amount Paid 61%
C O N F I D E N T I A L

Acquisition Costs 16,734,686 Thus haircut achieved 39%


Thus total Cash needed 590,166,700
1 Assuming AED 850/Sqft as the sales pric e per NSA. Thus AED 708/Sqft GFA
2 Currently there are listings for 392 apartments at an average pric e of AED 1,102/sqft

Case 3: Acquiring and Shifting TT customers to C6 -Shareholder peak & P&L Case 3: Group companies payment profile: Original & with Case 31

800.0
600.0
AED 577.2mm AED 535.0mm
600.0
A N D

500.0
400.0
Group Cumulative CF
400.0 Original
P R I V A T E

200.0
New (Case 3)
300.0
-
1-Jul-13

1-Jul-14

1-Jul-15

1-Jul-16

1-Jul-17

1-Jul-18

1-Jul-19

1-Jul-20

1-Jul-21
1-Jan-13

1-Jan-14

1-Jan-15

1-Jan-16

1-Jan-17

1-Jan-18

1-Jan-19

1-Jan-20

1-Jan-21

1-Jan-22

(200.0) 200.0
S T R I C T L Y

(400.0) 100.0

(600.0) -
1-Jan-13
1-May-13
1-Sep-13
1-Jan-14
1-May-14
1-Sep-14
1-Jan-15
1-May-15
1-Sep-15
1-Jan-16
1-May-16
1-Sep-16
1-Jan-17
1-May-17
1-Sep-17
1-Jan-18
1-May-18
1-Sep-18
1-Jan-19
1-May-19
(800.0)
(AED 806.6mm)
(1,000.0) 18
AED 535mm includes payments currently due to MADA, ARP, Al Arrab as well as surplus payment of AED 120mm projected earlier. Profit of 577.2mm is exclusive of this 120mm surplus

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