PRIVATE AND CONFIDENTIAL

Diriyah Development Project

Executive Summary on Financial Forecasts

Submitted by

GA Consult
Economic and Corporate Financial Consultants

August 07, 2009

GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69
 Diriyah Development Project, Executive Summary on Financial Forecasts

1. Introduction
The present summary highlights the results of GAC’s financial assessment of
KS/BW’s latest concept design as well as the impact of the recent value engineering
exercise completed by the Construction Division of SO on the Project’s foreseen
development costs and profitability.

2. Refresher on BUA Program

The table below shows the breakdown of the Project’s residential BUA among the
varied components for each phase along with their corresponding number of units.

BUA Breakdown, Residential Components

Number of Units
Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Total
Apartments 542 - - - 542
Attached Villas 161 102 110 125 498
Detached Villas 67 77 67 67 278

Total 770 179 177 192 1,318

BUA
sqm
Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Total
Apartments 49,120 - - - 49,120
Attached Villas 34,980 22,860 22,140 26,820 106,800
Detached Villas 21,120 24,290 21,220 21,250 87,880

Total 105,220 47,150 43,360 48,070 243,800

The table below shows the breakdown of the Project’s public BUA (amenities).

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GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69
 Diriyah Development Project, Executive Summary on Financial Forecasts

BUA Breakdown, Public Amenities

sqm Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Total
Neighborhood Center 592 198 198 198 1,186
Community Center 200 100 100 100 500
Swimming Pool 294 98 98 98 588
Gym 98 - - - 98
Shopping 3,000 - - - 3,000
Indoor Social/Recreational Facilities 7,150 - - - 7,150
Sports and Health Club 2,500 - - - 2,500
Movie Theater/ Entertainment Facilities 2,150 - - - 2,150
Natatorium 2,000 - - - 2,000
Spa 500 - - - 500
Rose Club 1,500 - - - 1,500
Pre-School 1,000 - 1,000 - 2,000
Facilities Management 6,700 - 2,500 1,000 10,200
Security Control Center 200 - - - 200
Parking 8,750 - - - 8,750

Total 28,892 198 3,698 1,198 33,986

3. GAC’s Base-Case Development Costs (Budgeted Amounts)

The table below shows the Project’s foreseen development costs as per GAC’s base-
case scenario. Total development costs, including land value, are foreseen at SR3
billion.

Foreseen Development Costs, Base-Case Scenario

SR Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Consolidated

Total development costs 1,476,411,466 523,045,306 507,588,212 512,274,244 3,019,319,227

Land 213,972,000 95,913,863 88,204,137 82,410,000 480,500,000

Site clearance 75,000,000 - - - 75,000,000

Central plant, softscape, hardscape 207,346,200 49,384,440 45,414,832 42,431,528 344,577,000

Public amenities 142,457,790 1,211,760 22,631,760 7,331,760 173,633,070

Construction (hard and soft), residential units 837,635,476 376,535,243 351,337,482 380,100,956 1,945,609,157

4. GAC’s Base-Case Financing Needs and IRR

The table below shows the Project’s foreseen financing requirements as per GAC’s
base-case scenario and based on a 60% targeted leverage. Total equity contribution
in cash and debt financing are foreseen at SR728 million and SR1.81 billion
respectively.

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GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69
 Diriyah Development Project, Executive Summary on Financial Forecasts

Foreseen Financing Requirements, Base-Case Scenario

SR Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Consolidated

Financing requirements 1,476,411,466 523,045,306 507,588,212 512,274,244 3,019,319,227

Equity contribution in kind (Land) 213,972,000 95,913,863 88,204,137 82,410,000 480,500,000

Equity contribution in cash 376,592,586 113,304,260 114,831,147 122,499,697 727,227,691

Debt financing 885,846,879 313,827,184 304,552,927 307,364,546 1,811,591,536

The table below shows the Project’s foreseen profitability indicators, i.e., foreseen
equity IRR and operating profits as per GAC’s base-case scenario. The Project’s
Equity IRR is foreseen at 12.3%. However, if land value is excluded, foreseen equity
IRR would increase to 16%, i.e., by up to 3.7 percentage points.

Profitability Indicators, Base-Case Scenario

SR Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Consolidated

Equity IRR 12.0% 12.3% 11.7% 13.7% 12.3%

Equity IRR, excluding land value 15% 17% 16% 17% 16%

Operating profits

1st operating year 70,431,870 25,315,389 24,259,104 26,299,976 146,306,341

2nd operating year 127,216,361 45,155,949 42,856,005 46,889,414 262,117,728

3rd operating year 134,849,343 47,865,306 45,427,365 49,702,778 277,844,792

5. Results of Value Engineering Exercise

5.1. Dismissed Items

The district cooling and photovoltaic panels were dismissed during the latest
workshop undertaken in SO’s premises in Riyadh as these two items alone
necessitate an estimated budget of SR323 million, and would thus increase the
infrastructure’s figure way above the initially budgeted amount of GAC, yet without
adding significant value to the marketability or foreseen rental rates of the Project.

5.2. Development Costs Post-Value-Engineering versus GAC’s

Budgeted Figures
The comparative table below shows GAC’s budgeted development costs (excluding
land value) versus the post-value-engineering development costs of SO’s
Construction Division.
4|Page

GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69
 Diriyah Development Project, Executive Summary on Financial Forecasts

GAC’s base-case infrastructure costs are foreseen at SR593 million while the post-
value-engineering infrastructure costs estimated by SO’s Construction Division
amount to SR452 million, thus resulting in a negative variance of about SR140 million
or 24%.

On construction cost of residential units, GAC’s budgeted figures are foreseen at

SR1,945 million, about SR25 million less than the revised construction cost provided
by SO’s Construction Division which amount to SR1,970 million.

Based on above figures, GAC’s base-case development costs (excluding land value)
are foreseen at SR2.54 billion while the post-value-engineering development costs
estimated by SO’s Construction Division amount to SR2.42 billion, thus resulting in a
negative variance of about SR115 million or 4.6%.

Development Costs Post Value Engineering versus GAC's Budgeted Figures

Infrastructure Costs Post- GAC's Budgeted Variance to GAC's
SR
Value-Engineering Figures Budgeted Figures

Site clearance 75,000,000 75,000,000 0.0%

Public amenities* 154,446,660 173,633,070 -11.0%

Central plant, softscape, hardscape 222,236,982 344,577,000 -35.5%

Central plant 108,647,805 n.a. n.a.
Softscape 79,938,215 n.a. n.a.
Hardscape 29,421,177 n.a. n.a.

Construction (hard and soft), residential units 1,969,987,334 1,945,609,157 1.3%

Total 2,421,670,976 2,538,819,227 -4.6%

 Excluding the residential stay apartments

5.3. Impact of Value Engineering on the Project’s Foreseen

Development Costs and Profitability
The tables below show the Project’s foreseen development costs, financing needs
and Equity IRR based on the post-value-engineering development costs. Foreseen
development costs amount to SR2.9 billion – about SR115 million lower than GAC’s
base-case figure – increasing the Project’s foreseen Equity IRR from 12.3% to 13.3%
and from 16% to 18% if value of land is excluded.

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GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69
 Diriyah Development Project, Executive Summary on Financial Forecasts

Foreseen Development Costs, Post Value Engineering

SR Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Consolidated

Total development costs 1,398,411,975 509,035,707 494,616,555 500,106,739 2,902,170,976

Land 213,972,000 95,913,863 88,204,137 82,410,000 480,500,000

Site clearance 75,000,000 - - - 75,000,000

Central plant, softscape, hardscape 134,567,595 31,350,574 29,272,680 27,046,134 222,236,982

Public amenities 123,938,277 1,054,231 23,075,520 6,378,631 154,446,660

Construction (hard and soft), residential units 850,934,102 380,717,040 354,064,218 384,271,974 1,969,987,334

Foreseen Financing Requirements, Post Value Engineering

SR Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Consolidated

Financing requirements 1,398,411,975 509,035,707 494,616,555 500,106,739 2,902,170,976

Equity contribution in kind (Land) 213,972,000 95,913,863 88,204,137 82,410,000 480,500,000

Equity contribution in cash 345,392,790 107,700,420 109,642,485 117,632,696 680,368,390

Debt financing 839,047,185 305,421,424 296,769,933 300,064,043 1,741,302,586

Profitability Indicators, Post Value Engineering

SR Phase 1 Phase 2 (A) Phase 2 (B) Phase 3 Consolidated

Equity IRR 13.4% 12.9% 12.3% 14.2% 13.3%

Equity IRR, excluding land value 17% 18% 17% 19% 18%

Operating profits

1st operating year 70,431,870 25,315,389 24,259,104 26,299,976 146,306,341

2nd operating year 127,216,361 45,155,949 42,856,005 46,889,414 262,117,728

3rd operating year 134,849,343 47,865,306 45,427,365 49,702,778 277,844,792

6|Page

GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69
 Diriyah Development Project, Executive Summary on Financial Forecasts

6. Appendix: Post-Value-Engineering Infrastructure Costs (Prior to

Contingencies and Cost Inflation)

Infrastructure Costs Post Value Engineering

SR Area in sqm Total Amount

Site Clearance - 75,000,000

Total Site Clearance - 75,000,000

Hardscape
General Rough Grading (for entire Area) - 6,336,000
LCA1 3,151 6,943,200
LCA2 7,000 2,221,120
LCA3 16,160 15,029,630
LCA4 1,730 1,676,180
LCA5 7,000 7,373,626
LCA6 5,970 2,275,900
LCA7 105,910 23,166,165
LCA8 5,700 8,886,790
LCA9 5,390 1,504,800
Total Hardscape 158,011 75,413,411

Softscape
LCA1 28,359 7,158,357
LCA2 7,000 2,186,800
LCA3 4,040 893,564
LCA4 32,870 4,641,402
LCA5 10,500 2,322,382
LCA6 13,930 3,081,026
LCA7 18,690 4,133,840
LCA8 5,700 1,780,680
LCA9 2,310 583,088
Additional 2,500 974,688
Total Softscape 125,899 27,755,827

Public Amenities
Neighborhood Center 1,186 7,067,168
Shopping 3,000 15,060,600
Indoor Social/Recreational Facilities 7,150 56,686,212
Rose Club 1,500 8,970,000
Medical 200 1,863,000
Pre-School 2,000 11,202,000
Facilities Management 6,600 27,213,450
Security Controls Center 200 2,001,000
Parking 8,750 21,179,450
Total Public Amenities 30,586 151,242,880

Central Plant
Storm Water - 7,350,000
Fire - 1,980,000
Potable Water - 11,536,250
Potable Water Storage - 7,474,500
Grey/ Irrigation Water Piping - 2,087,250
Sanitary Piping - 5,855,438
Waste Water Treatment - 16,851,992
Electric Services - Site Loop / UG - 31,374,200
Infrastructure Facility - Management 3,600 17,988,300
Total Central Plant 3,600 102,497,929

Total Infrastructure Costs 318,096 431,910,047

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GA Consult – Economic and Corporate Financial Consultants

Stephan Bldg., Riad El Solh Street, Solidere P.O.Box 11 - 1699 Beirut, Lebanon
Website: www.gaconsultgroup.com E-mail: info@gaconsultgroup.com
Tel: 961 1 97 39 38 / 9 Fax: 961 1 97 39 69