Jumeirah | Culu Culu Polo Resorts Information Memorandum Spring 2009
| CULU CULU POLO
OLOP ULUC ULUC |
Information Memorandum | 1
Contents Execitive Summary
2
Concept Definition
5
Project Descriptions
Jumeirah Culu Culu Argentina
10
Jumeirah Culu Culu at Hurtwood Park
16
Pro Forma Financial Statements
Consolidated Financial Statements
18
Jumeirah Culu Culu Argentina Financial Statements
20
Jumeriah Culu Culu at Hurtwood Park Financial Statements
22
Investment Opportunity
24
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2 | Information Memorandum
Executive Summary Jumeirah Culu Culu Polo Resorts (“Jumeirah Culu Culu”) is the world’s first branded polo hotel and resort portfolio. Jumeirah Culu Culu will develop properties in compelling international destinations to leverage global appeal for the sport among the most coveted investor, resident and guest demographics.
The resorts will share common elements including
Jumeirah Culu Culu Polo Resort in Argentina will be
The Sponsor Group will aggregate, from a small group
exclusive residential villas, managed by Jumeirah Living,
the first property developed in the global portfolio.
of preferred institutional-grade investors, a total of $150
state-of-the-art polo and equestrian facilities, conference
The second portfolio property will be developed in the
million commitments to fund Jumeirah Culu Culu
centers, spa facilities and a six-star hotel.
United Kingdom. The plan, in due course, is to list
Polo Resort developments in Argentina and the United
the global Jumeirah Culu Culu portfolio on a leading
Kingdom. This raise will occur in two tranches. The first
international exchange.
tranche, structured as a preferred equity investment,
Jumeirah Culu Culu Resort hotels will be operated by Jumeirah Group, the Dubai-based operating company, which
totaling $50 million will close on or before March 31,
counts assets such as the Burj al Arab in Dubai, the Jumeirah
The Novati Group International SPC (“Novati
2009. The second tranche totaling $100 million will close
Essex House in New York and the Jumeirah Carlton Towers
International”), in collaboration with its Gulf-based
on or before December 31, 2009. The pro forma cash
Hotel in London as anchor members of its portfolio.
affiliates, is acting as the General Manager as well as
flow analysis suggests an aggregate IRR of 36.1% subject
anchor investor for this portfolio of projects. In such
to the development timeline and asset performance.
The Dubai Investment Group (“DIG”) will be the asset
capacity, Novati International, et al. have also agreed to
manager of the global resort portfolio. Jumeirah and DIG
facilitate the participation of other investors to fund the
are part of Dubai Holding, a holding company owned by
development program.
the Government of Dubai.
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Concept Definition Originally devised as a form of battle training by Persian noblemen, polo has long been known as the Game of Kings. One of the oldest sports in the world, polo dates back at least 2,500 years, with the first recorded match being played between the Persians and Turkomans in 600 BC. The Turkomans won.
From Persia the game migrated to the East, eventually
International Olympic Committee. Whereas once
establishing itself in China, Japan and India by the 16th
the game was primarily played by Royalty and later
Century. It was in India that the British tea-planters and
cavalry, today the sport has become more accessible
Army regulars stationed there first saw and played the
and attracts a broader spectrum of society.
game in the mid 19th century, before enthusiastically taking it back to England in about 1869, from where
The modern sport of polo continues to attract the
it spread to other European countries with a strong
interest and active involvement of royalty and the
equestrian tradition, including Russia, Poland, Austria
world’s super-rich as well as the sponsorship of
and France.
exclusive brands, such as Cartier, Piaget, BVLGARI, Audi, Rolls-Royce, Bombardier Learjet and Azimut
Today, polo is played in more than 77 countries
Yachts. Numerous global executives as well as stars
worldwide. It was an Olympic sport from 1900 to
of music and film are actively involved in the sport,
1936 and has now been recognized again by the
making polo one of the world’s most fashionable leisure pursuits.
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6 | Information Memorandum- Aspirational Brand
Aspirational Brand Polo has evolved into a unique sports entertainment offering, drawing considerable print and television media coverage around the world.
The larger international polo tournaments draw capacity crowds of up to 17,000 for England’s Cartier International and 100,000 for the Argentine Open. To this regard, Jumeirah Culu Culu Polo Resorts is engineered to elicit feelings of quality, service and exclusivity:
Quality Jumeirah Culu Culu Polo Resorts will be developed and maintained to a market-leading professional and operational standard.
Service Jumeirah Culu Culu will strive to create an unparalleled customer experience. Every member to the Jumeirah Culu Culu team will be stewards of this promise. The Jumeirah Culu Culu brand will emanate through them.
Exclusivity A significant portion of the Jumeirah Culu Culu exposure audience will wish to own a resort property but may not ultimately succeed in doing so. Scarcity of the brand will further drive aspirational value.
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Information Memorandum | 7
Culture Each property will celebrate the uniqueness of its
A portfolio of exclusive polo resorts operated by
location. The host city itself is an important factor in
Jumeirah will feature facilities necessary for full-scale
determining site selection. The host city will be a tourist
championship events, hospitality and spa services,
destination poised and equipped to show the best of the
restaurants and other entertainment. However, the
local culture, history and traditions.
properties will not be limited to polo – other equestrian, leisure and entertainment options will be available at the
Polo venues in their functionality and scope vary
resort. These assets will capture a significant portion of a
worldwide. A clear distinction can be made between
patron’s (resident, guest and/or sponsor) spend.
the traditional polo club which relies solely on polo as a form of sport and entertainment, and the more developed concepts that utilize polo and its aspirational qualities as a lifestyle vehicle in a direct product extension to other sports and accommodation. Globally, no one has developed a polo resort property portfolio in combination with a luxury hospitality brand. The combination of aspirant lifestyle programming reinforced by an exclusive hospitality offering will forge a new sustainable brand.
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Jumeirah Culu Culu will become a center of learning equine sports. By bringing people into the sport, in what will become world renowned facilities, the Jumeirah Culu Culu brand will become analogous with polo attributes of class and exclusivity, thereby feeding the aspirational brand philosophy. Jumeirah Culu Culu will deliver world class instruction to adults and children alike, led by polo and equestrian experts from across the world. Jumeirah Culu Culu will also cater to families and embrace them, as a whole, as customers. For example, every horse loving child will want to participate in a Culu Culu Summer Camp. These Camps will be uniquely anchored by the quality of the resort facilities; driving occupancy and residential activity. Becoming the custodian of polo development globally, the Jumeirah Culu Culu brand will grow by exploiting this involvement. Jumeirah Culu Culu will host cutting edge polo, equine and other entertainment events. As a result, this event programming will further enhance the Jumeirah Culu Culu brand image in an exclusive yet thoughtful manner.
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Information Memorandum | 9
Operating Partners The project’s founding shareholders are Albert Alletzhauser and Anne Cabot-Alletzhauser. To date, the Alletzhausers have funded all development activities. The Alletzhausers have successfully listed and/or funded three companies previously: Advantage Asset Management, an asset management firm with USD $12 billion under management; Bloomsbury Publishing, the publishing house best known for its discovery and publication of the Harry Potter series; and TIR Securities, a global executiononly brokerage house since sold to E*Trade. Jumeirah Culu Culu’s operating partners include The Jumeirah Group and Dubai Investment Group (DIG). The Jumeirah Group and DIG are related entities, both part of Dubai Holding, a holding company owned by the Dubai Government. Jumeirah is a world class luxury international hotel and hospitality management company known for its iconic hotel properties across the globe including, but not limited to, the Burj Al Arab,
Jumeirah Carlton Tower and Jumeirah Essex House.
focused on various investment and advisory mandates
Jumeirah will serve as the hotel operator across the
in the Gulf Cooperation Council (GCC) region, North
portfolio. Jumeirah Living will manage the exclusive
& Sub-Saharan Africa, CIS, the Americas and the Asian
Jumeirah Living residences.
sub-continent. Michael P. Williams, serves as Chairman of The Novati Group International SPC in collaboration
All Jumeirah hotels owned by the government of Dubai
with David P. Mapplebeck, who serves as the firm’s Vice
are physically held through DIG, the asset manager of
Chairman. Novati International and its affiliates are
the Jumeirah Group. Although Jumeirah Culu Culu is
headquartered in the Emirate of Dubai, United Arab
privately held, DIG will also serve as the asset managers
Emirates and have representative offices in New York,
for the Jumeirah Culu Culu global resort portfolio. DIG
London, Riyadh and the Kingdom of Bahrain.
offers third party asset management services to other luxury brands including Fairmont Hotels and Resorts.
The JCC management team will include Al Alletzhauser, the Founder and Executive Chairman of Jumeirah Culu
The Sponsor Group for the Jumeirah Culu Culu
Culu, and a strong core of senior managers, with decades
global resort portfolio is led by the Novati Group
of hospitality development and management experience.
International, SPC. Novati Group International
Their experience includes designing, building and
SPC (“Novati International”) is an alternative
operating resorts across developing markets for luxury
investment management and advisory firm focused
hotel brands such as Four Seasons, Mandarin Oriental,
on infrastructure, industrial, real estate and natural
One & Only, Raffles, Ritz Carlton and Rosewood.
resources opportunities in emerging and/or newlydeveloped markets. Presently, Novati International is
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10 | Information Memorandum
Jumeirah | Culu Culu Argentina Jumeirah Culu Culu will launch its first project in Argentina. The site is located in the town of Lobos, Argentina, 30 minutes from Ezeiza-Ministro-PistariniInternational Airport and approximately an hour from Buenos Aires. This 1,200 acre property will cost approximately $331 million to develop. Jumeirah Culu Culu will finance this development with invested equity and pre-sales of fractional villas and private residences. This project will generate an IRR of approximately 40.6%
Argentina
subject to timeline and asset performance. This property is the first Jumeirah asset to be launched in Latin America and is the first full resort to be launched within driving distance of Buenos Aires’ 13 million residents. Programming for the property will include a boutique hotel with 54 suites and 16 separate fractional villas, 124 luxury residences, four championship caliber polo fields, Olympic specification eventing facilities, a branded Jumeirah Talise spa and fitness center, a Jumeirah Lifestyle Concierge, fine and casual dining options plus numerous other leisure and entertainment facilities. Specifically, the resort will include an indoor multi-purpose arena, the first in Argentina. The arena will cater to concerts, indoor sports and equestrian events.
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Lobos
Buenos Aires
Information Memorandum| 11
Hotel & Polo Pavilion
The Jumeirah polo pavilion and terrace are attached to
The hotel and polo pavilion will be located in front of Lake
the Jumeirah hotel facility, the first in the world. The
Culu Culu, with views over the overall resort. The hotel
pavilion and terrace will be 200 yards long, comprising
architecture will reflect a contemporary interpretation of
of a restaurant, viewing deck, bar, an equestrian shop, a
an Argentinean Estancia (country estate). The decor will
large conference centre facility and banqueting facility.
be contemporary and related to polo. Natural materials
There are currently few facilities outside Buenos Aires
including native stone, wood and leather will be integral
that cater to the corporate conference market. The
to the construction. Large windows will offer guests views
conference centre (under the pavilion) will be serviced
over the estate.
by the hotel back of house. During large scale polo events, the pavilion will seat 5,000 people. The overall
This Jumeirah hotel will function as an upscale country
championship field will accommodate over 20,000
club house and offer prime accommodation through its
attendees.
suites and fractional villas. The hotel will also function as the social focal point for resort property owners. The hotel will include a restaurant with accommodation for 100 patrons indoors as well as outdoors on a shaded terrace. This restaurant will feature nouveau Argentine cuisine.
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Lake View
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Jumeirah | Culu Culu Argentina Hotel & Polo Pavilion
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Project Summary Fractional Villas Jumeirah Culu Culu will develop and service 16 two to four bedroom villas, on the eastern shore of Lake Culu Culu, in close proximity to the hotel. These villas will be furnished at a Jumeirah-approved hotel standard and fractional interests will be sold. When not occupied, these units will be contributed to the hotel pool under a revenue sharing plan with the villa owners.
Event Facilities Argentine culture has always shown special interest
Weddings
in celebrating a wide range of social events. Jumeirah
High Season:
September, October, November, December and March (due to weather conditions)
Mid Season:
April, May
Culu Culu expects to capture a competitive segment
Low Season:
January, February, June, July and August
Attendance:
200 – 300 indoor and up to 500 outdoor
of this market. There are 500 weddings each week held
Peak Days:
Saturday, Friday night, and Sunday noon
in Buenos Aires. The average wedding consists of 400
Average Cover:
AR$350 per person
Average Spend:
US$30,000
attendees. Almost every hotel in Buenos Aires offers facilities for events, from small boardrooms catering to corporate meetings to large convention centres offering a
Conferences High Season:
October, November and December
Mid Season:
March, April, May, June August and September
Low Season:
January, February and July
Attendance:
200 – 300 indoor and up to 500 outdoor
Peak Days:
Monday – Thursday
Average Stay:
2 nights
Average Spend:
US$50,000 – US$150,000 (depending on services hired)
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wide variety of rooms of different sizes catering any kind of event. There are no significant non-urban venues for events. Jumeirah Culu Culu will have event facilities to compete for revenue in this space.
Information Memorandum| 15
Spa
Private Residences
Jumeirah Culu Culu will have an indoor riding arena,
The spa business has not been highly developed in
The Jumeirah Living Private Residences will be available
one of two in Argentina. This arena will be used for all
Argentina. Most city hotels have urban spas. In some
in three, four and five bedroom configurations. Owners
equestrian activities in times of inclement weather, night
cases, small estancias in the suburbs are beginning to
may choose to furnish themselves or purchase a
training and shows. A number of outdoor sand arenas
develop spa facilities, but none are upscale. The Jumeirah
complete interior design and furniture package. Inside
for horse training will be constructed as well. A dirt/sand
Talise Spa will offer premium facilities and services
and outside, the Private Residences will reflect the polo
exercise track will encircle the entire resort will be a dirt/
unrivalled in the market.
lifestyle with large sliding glass panels integrating the
sand exercise track. Bridle paths will circulate through
landscape with each room. The orientation and design
the interior of the resort. The resort will also feature
The Jumeirah Talise Spa anticipates an increase in
of the house will maximize views and interactivity with
daily cultural exhibitions as traditionally practiced on
day use due to strong forecasted growth of real estate
the pool. Bedrooms have been designed with generous
the Argentine Pampa by gauchos (Argentine cowboys)
developments in the area. The spa will support hotel
decks that encourage outdoor living. Each residence
displays and other indigenous exhibits.
occupants, villa guests and private residents.
will have an optional underground cellar and cigar
 
room with access by the kitchen through a feature
The resort will also be home to the Jumeirah Culu Culu
staircase. Residents may entertain family and friends
Riding Academy catering to all riders – from beginners
year round from a kitchen fully equipped with luxury
to professionals. Families new to horse-back riding will
appliances. Outdoor patios include a summer kitchen
have the benefit of basic instruction on safe horses. The
and substantial leisure facilities.
academy will be managed by a former Argentine national show jumping champion and resident women’s polo
Arena & Equestrian Facilities
professional.
Jumierah Culu Culu will have equestrian facilities unrivalled in the market, including Olympic Standard jumping, dressage and cross country facilities and five polo fields. The main polo field fronting the pavilion will contain 20,000 cubic metres of sand, making it playable in all weather conditions. The resort will have 256 stables comprised of 4 stable blocks, each of 64 stables.
Talise Spa High Season:
September to April
Accommodation for grooms, tack and feed will be
Peak Days:
Friday, Saturday and Sunday
provided on site.
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Jumeirah | Culu Culu at Hurtwood Park Jumeirah Culu Culu will start development at the Hurtwood Park Polo and Country Club in the third quarter of 2009. The site is located near the village of Cranleigh in Surrey, 20 minutes from Gatwick Airport and approximately an hour from London. The development of this 250 acre property will be financed by invested equity and pre-sales of fractional villas. This project will generate an IRR totaling 34.2% subject to timeline and asset performance. Hurtwood Park has hosted televised high goal polo events, music concerts, corporate outings, weddings and other private parties. This acquisition facilitates Jumeirah Culu Culu’s access to one of the premiere polo markets in the world in an established location. The preliminary development plan for Hurtwood includes renovation of existing polo facilities, a 60 suite boutique hotel and spa plus 17 fractional villas.
Great Britain
London Cranleigh
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Information Memorandum| 17
Hurtwood Park Polo Club
Sale of fractional residences at Hurtwood will offer access
Jumeirah Culu Culu will renovate the existing Hurtwood
to one of London’s most exclusive enclaves. Surrey’s close
Park Polo Club House. This renovation will include a
proximity to London and the presence of two major
new dining facility, retail outlets and offices. Anticipated
international airports, Heathrow and Gatwick, close
facilities on-site include an indoor polo arena, expanded
by have been the key drivers and shapers of the Surrey
parking, housing for academy students and staff and a
economy. Much of Surrey is located in a greenbelt and it
state of the art stabling facility.
is the most wooded county in the United Kingdom, with 22.4% coverage compared to a national average of 11.8%.
Hotel/Spa & Residences The Jumeirah Culu Culu boutique hotel and spa at Hurtwood Park will offer five star facilities and best in class service to its guests and Club residents. The close proximity of this property to existing Jumeirah hotels in London, such as, the Carlton Towers in Knightsbridge, will drive traffic to the property and its adjacent facilities from the current Jumeirah client base.
This high quality environment makes Surrey a desirable place to live, work and play. Surrey is credited with having the highest proportion of millionaires in the United Kingdom and is home to many professional working in the City of London. Surrey’s proximity to London and strategic location within South East England has resulted in it becoming one of the most affluent and successful counties in the UK.
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JUMEIRAH CULU CULU COMBINED PROJECT ANALYSIS
PROJECT DEVELOPMENT COST SUMMARY
SUMMARY OF KEY ASSUMPTIONS SPRING, 2009 FINANCIAL SUMMARY
PRE-DEVELOPMENT COSTS Total Development Costs
$484,831,950
Total Site Analysis and Due Diligence
Total Capital Requirement (Equity + Debt)
$131,889,247
Total Development Profit
$229,000,037
Total Architecture and Engineering - Conceptual Planning
Blended Unleveraged IRR
36.06%
Total Hotel Keys
174
1st Stabilized Year Occupancy
66.67%
1st Stabilized Year ADR
$819.73
Average Month of Sale (or Refinance) of Hotels Total Residence Club Units Average Residence Club Memberships per Unit Total Residence Club Memberships Average Price per Residence Club Membership Average Annual Membership Fee Total Home and Condominium Units Average Sale Price per Home or Condominium Average Sale Price per Sq Foot
Month 120 33 5 164
124 $1,800,000 $450
Total Gross Polo Field Acreage
90
Total Net Polo Field Acreage
90
Total Polo Fields
9
Residence Club Net Area (Square Feet)
118,065 sf
Homes / Condominium Net Area (Square Feet)
496,000 sf
Total Land Cost
$27,451,600
(included in Development Costs) 10.00 Years
Average Hotel Sale (or Refinance) Cap Rate
10.00%
ALL AMOUNTS ARE IN US DOLLARS
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$436,358
Total Marketing and Public Relations
$1,145,431
Total General and Overhead
$895,435 Total Pre-Development Costs
$4,046,817
Hotel Costs Total Construction - Hotel
$68,509,884
Total FF&E - Hotel
$21,363,198
Total Undistributed Costs - Hotel
$20,339,924
Total Land or Building Cost - Hotel
$11,171,500 Total Hotel Development Costs
$121,384,506
Private Residence Club Costs Total Construction - Private Residence Club
$59,266,057
Total FF&E - Private Residence Club
$16,021,672
Total Undistributed Costs - Private Residence Club
$15,429,506
Total Land or Building Cost - Private Residence Club
$10,180,100 Total Private Residence Club Development Costs
$100,897,335
Ancillary Facilities Costs
$45,017,154
Homes and Condominiums Development Cost
$186,000,000
Estate Lots and Acreage Development Cost
$5,817,200
Undistributed Project Costs
Average Holding Period for Profit and IRR Number of Projects Included in Analysis
$1,076,504
Total Pre-Opening and Technical Services
$1,459,372 $7,941
$493,089
2
ALL AMOUNTS ARE IN US DOLLARS
$21,668,938 TOTAL PROJECT COST
$484,831,950
includes LAND COST/VALUE of
$27,451,600
Information Memorandum| 19
JUMEIRAH CULU CULU RESORTS
TOTAL
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
Buenos Aires
418,470,382
19,039,503
91,915,291
97,319,903
Hurtwood Park
295,361,605
-
19,033,966
71,777,682
80,369,063
24,655,080
8,828,429
9,795,136
10,895,565
12,098,046
63,554,366
74,526,959
17,717,720
7,060,255
7,658,428
8,115,553
8,597,057
80,873,985
$713,831,987
$19,039,503
$110,949,257
$169,097,585
$154,896,022
$42,372,800
$15,888,684
$17,453,565
$19,011,118
$20,695,103
$144,428,350
Buenos Aires
$330,610,396
$44,771,020
$71,371,398
Hurtwood Park
$154,221,554
$9,871,342
$81,810,285
$78,367,058
$69,107,341
$57,993,579
$9,000,000
$0
$0
$0
$0
$39,507,783
$10,981,646
$10,455,541
$1,594,957
$0
$0
$0
$0
TOTAL INVESTMENT
$484,831,950
$54,642,362
$153,181,682
$117,874,841
$80,088,987
$68,449,120
$10,594,957
$-
$-
$-
$-
13%
38%
29%
20%
$229,000,037
$(35,602,859)
$(42,232,425)
$51,222,743
$74,807,035
$(26,076,320)
$5,293,727
$17,453,565
$19,011,118
$20,695,103
$144,428,350
$229,000,037
$(35,602,859)
$(42,232,425)
$51,222,743
$(34,356,745)
$34,356,745
$40,450,290
$8,280,425
$5,293,727
$17,453,565
$19,011,118
$20,695,103
$144,428,350
$13,837,748
$(35,602,859)
$(42,232,425)
$51,222,743
$40,450,290
End of Calendar Year 2018 Schedule - Projected Investment Performance (1) CASH FLOW
NET CASH FLOW TOTAL CAPITAL REQUIREMENT (2)
TOTAL UNLEVERAGED CASH FLOW (3)
36.1%
LESS: CASH RESERVES ADJUSTED UNLEVERAGED CASH FLOW TIER I (4)
9.0%
TIER II Residual Cash Flow
100.0%
$215,162,289
$8,280,425
$5,293,727
$17,453,565
$19,011,118
$20,695,103
$144,428,350
Managing Member
-20.0%
$(43,032,458)
$(1,656,085)
$(1,058,745)
$(3,490,713)
$(3,802,224)
$(4,139,021)
$(28,885,670)
$6,624,340
$4,234,982
$13,962,852
$15,208,894
$16,556,083
$115,542,680
PROJECTED INVESTOR PERFORMANCE
$185,967,579
$(35,602,859)
$(42,232,425)
$51,222,743
$40,450,290
Net Co-Investor IRR
31.27%
Net Co-Investor Return
$185,967,579
(1) - Assumes 10-Year investment horizon concluding FY 2018. (2) - Assumes all development complete 2014. (3) - Assumes no leverage. (4) - Assumes 9.0% investor preferred return.
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JUMEIRAH CULU CULU BUENOS AIRES, ARGENTINA
PROJECT DEVELOPMENT COST SUMMARY
SUMMARY OF KEY ASSUMPTIONS SPRING, 2009 FINANCIAL SUMMARY
PRE-DEVELOPMENT COSTS Total Development Costs
$330,610,396
Total Capital Requirement (Equity + Debt)
$59,241,586
Total Development Profit
$87,859,986
Unleveraged Project IRR
40.55%
Total Hotel Keys
63.71%
1st Stabilized Year ADR
$627.77
Month of Sale (or Refinance) of Hotel Total Hotel Villas Residence Club Memberships per Unit Residence Club Memberships Average Price per Residence Club Membership Average Annual Membership Fee Total Home and Condominium Units Average Sale Price per Home or Condominium Average Sale Price per Sq Foot
6 96
$0
$10,000,000
(included in Development Costs) CRITICAL INPUTS Pro Forma Start Date
06-Jan-09
First Month of Hotel Occupancy
April 2011
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10 Years
$3,319,657
Total Construction - Hotel
$43,032,207
Total FF&E - Hotel
$15,065,735
Total Undistributed Costs - Hotel
$12,440,648 $3,900,000 $74,438,590
Total Construction Private Residence Club $4,844 / sq m
$27,547,226
Total FF&E - Private Residence Club
$8,481,981
Total Undistributed Costs Private Residence Club
$6,207,415
Total Land or Building Cost Private Residence Club
5
n/a
$750,000 Total Pre-Development Costs
$0 Total Private Residence Club Development Costs
n/a
Average Development Cost per Polo Field
ALL AMOUNTS ARE IN US DOLLARS ($)
Total General and Overhead
Private Residence Club Costs
$1,800,000 $450
$1,000,000
Total Hotel Development Costs
124
Average Development Cost per Net Acre
Hotel Sale (or Refinance) Cap Rate
$400,000
9,899
50
Period for Profit and IRR
Total Pre-Opening and Technical Services
Total Land or Building Cost - Hotel
659,947
Total Net Polo Acreage
Total Land Cost
$822,000
Hotel Costs
16
50
Average Sale Price per Polo Field
Year Ending Mar-2015
Month 120
Total Gross Polo Acreage Total Polo Fields
$347,657
Total Architecture and Engineering - Conceptual Planning
Total Marketing and Public Relations
54
1st Stabilized Year Occupancy
Total Site Analysis and Due Diligence
$42,236,621
incl in Total Dev Costs Ancillary Facilities Costs
$9,743,485
Homes and Condominiums Development Cost
$186,000,000
Estate Lots and Acreage Development Cost
$0
Undistributed Project Costs
10.00%
ALL AMOUNTS ARE IN US DOLLARS ($)
$14,872,043 TOTAL PROJECT COST
$330,610,396
includes LAND COST/VALUE of
$10,000,000
Information Memorandum| 21
JUMEIRAH CULU CULU BUENOS AIRES, ARGENTINA INCOME STATEMENTS AND CASH FLOWS Period
10 Years
INCOME STATEMENT - ANNUAL
Year 1
ALL AMOUNTS ARE IN US DOLLARS ($) Totals and Percentages HOTEL OPERATIONS (EBIDTA)
$15,323,430
8.41%
TOTAL DEVELOPMENT COSTS
($330,610,396)
100.00%
NET PRIVATE RESIDENCE CLUB REVENUES
$63,044,493
TOTAL ANCILLARY FACILITIES REVENUES
$58,005,105
NET HOMES AND CONDOMINIUMS REVENUES
Year 2
Year 3
Year 4
Year 5
06-Jan-2011
06-Jan-2012
05-Jan-2013
05-Jan-2014
05-Jan-2015
05-Jan-2016
04-Jan-2017
04-Jan-2018
thru 5-Jan-2012
thru 4-Jan-2013
thru 4-Jan-2014
thru 4-Jan-2015
thru 4-Jan-2016
thru 3-Jan-2017
thru 3-Jan-2018
thru 3-Jan-2019
($1,974,057)
($1,635,821)
$586,664
$1,412,181
$1,950,269
$2,565,077
$3,295,602
$4,109,255
$5,014,259
($44,771,020)
($71,371,398)
($78,367,058)
($69,107,341)
($57,993,579)
($9,000,000)
$2,209,503
$27,037,773
$27,037,773
$6,759,443
$2,022,415
$5,119,905
$6,224,910
$6,543,388
$6,878,160
$7,230,060
$7,599,963
$7,988,792
$8,397,513
($171,571)
$9,795,136
$10,895,565
$12,098,046
$13,411,773
$66,798,046
$16,699,511
NET CASH FLOW - OPERATIONS AND PROPERTY SALES
$37,717,393
($25,731,517)
$20,543,893
$18,952,844
$11,261,722
($33,338,499)
IMPUTED SALE OF HOTEL OPERATION
$50,142,593
TOTAL NET CASH FLOW FROM OPERATIONS AND SALES UNLEVERAGED PROJECT IRR
$87,859,986
Year 10
06-Jan-2010
$66,798,046
120
Year 9
thru 5-Jan-2011
$64,829,160
10.00%
Year 8
06-Jan-2009
$16,830,000
Month
Year 7
thru 5-Jan-2010
$231,954,763
Cap Rate
Year 6
$50,142,593 ($25,731,517)
$20,543,893
$18,952,844
$11,261,722
($33,338,499)
($171,571)
$9,795,136
$10,895,565
$12,098,046
$63,554,366
40.55%
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22 | Information Memorandum
PROJECT DEVELOPMENT COST SUMMARY
HURTWOOD PARK - SURREY, UNITED KINGDOM SUMMARY OF KEY ASSUMPTIONS SPRING, 2009
PRE-DEVELOPMENT COSTS
FINANCIAL SUMMARY Total Development Costs Total Capital Requirement (Equity + Debt)
$154,221,554 $72,647,661
Total Development Profit
$141,140,051
Unleveraged Project IRR
34.15%
Total Hotel Keys 1st Stabilized Year Occupancy 1st Stabilized Year ADR Month of Sale (or Refinance) of Hotel Total Private Residences Private Residence Owners per Unit Total Private Residence Memberships Average Price per Private Residence Average Annual Owner Association Fee Total Condominium Units
$906.11 Month 120 17 4 68 $5,176 0 n/a
Average Sale Price per Sq Foot
n/a
Total Gross Polo Acreage
40
Total Net Polo Acreage
40
Average Sale Price per Polo Field Average Development Cost per Polo Field Average Development Cost per Net Acre Total Land Cost
$254,504
4 n/a $1,454,300 $145,430 $17,451,600
(included in Development Costs)
Period for Profit and IRR Hotel Sale (or Refinance) Cap Rate
ALL AMOUNTS ARE IN US DOLLARS ($)
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$145,431
Total General and Overhead
$145,435 Total Pre-Development Costs
Year Ending Mar-2015
$727,160
Hotel Costs Total Construction - Hotel
$25,477,677
Total FF&E - Hotel
$6,297,463
Total Undistributed Costs - Hotel
$7,899,277
Total Land or Building Cost - Hotel
$7,271,500 Total Hotel Development Costs
$46,945,916
Private Residence Club Costs Total Construction - Private Residences
$31,718,832
Total FF&E - Private Residences
$7,539,692
Total Undistributed Costs - Private Residences
$9,222,091
Total Land or Building Cost - Private Residences
$10,180,100 Total Private Residence Club Development Costs
$58,660,714
Ancillary Facilities Costs
$35,273,669
Homes and Condominiums Development Cost
$0
Polo Field Development Cost
$5,817,200
Undistributed Project Costs
$6,796,895
CRITICAL INPUTS First Month of Hotel Occupancy
$36,358
Total Marketing and Public Relations
$2,587,973
Average Sale Price per Condominium
Total Polo Fields
$145,432
Total Architecture and Engineering Conceptual Planning Total Pre-Opening and Technical Services
120 68.00%
Total Site Analysis and Due Diligence
TOTAL PROJECT COST
April 2011 10 Years
includes LAND COST/ VALUE of
10.00%
ALL AMOUNTS ARE IN US DOLLARS ($)
$154,221,554 $17,451,600
Information Memorandum| 23
HURTWOOD PARK - SURREY, UNITED KINGDOM INCOME STATEMENTS AND CASH FLOWS Period
10 Years
INCOME STATEMENT - ANNUAL
Year 1
ALL AMOUNTS ARE IN US DOLLARS ($) Totals and Percentages HOTEL OPERATIONS (EBIDTA)
$41,829,918
19.98%
TOTAL DEVELOPMENT COSTS
($154,221,554)
100.00%
NET PRIVATE RESIDENCE CLUB REVENUES
$169,377,637
TOTAL ANCILLARY FACILITIES REVENUES
$12,384,216
NET CASH FLOW OPERATIONS AND PROPERTY SALES
$69,370,216
IMPUTED SALE OF HOTEL OPERATION
$71,769,835
TOTAL NET CASH FLOW OPERATIONS AND SALES UNLEVERAGED PROJECT IRR
$141,140,051
Month
120 10.00%
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
06-Jan-2009
06-Jan-2010
06-Jan-2011
06-Jan-2012
05-Jan-2013
05-Jan-2014
05-Jan-2015
05-Jan-2016
04-Jan-2017
04-Jan-2018
thru 5-Jan-2010
thru 5-Jan-2011
thru 5-Jan-2012
thru 4-Jan-2013
thru 4-Jan-2014
thru 4-Jan-2015
thru 4-Jan-2016
thru 3-Jan-2017
thru 3-Jan-2018
thru 3-Jan-2019
($696,738)
$1,749,638
$4,094,075
$4,761,197
$5,529,927
$6,037,711
$6,398,818
$6,778,305
$7,176,983
($9,871,342)
($81,810,285)
($39,507,783)
($10,981,646)
($10,455,541)
($1,594,957)
$19,730,704
$69,067,815
$69,067,815
$11,511,303
$960,229
$1,365,068
$1,445,220
$1,530,328
$1,620,717
$1,716,735
$1,818,752
$1,927,167
$32,269,899
$63,545,313
$7,262,179
$5,465,298
$7,658,428
$8,115,553
$8,597,057
$9,104,150
($9,871,342)
Cap Rate
Year 2
($62,776,319)
$71,769,835 ($9,871,342)
($62,776,319)
$32,269,899
$63,545,313
$7,262,179
$5,465,298
$7,658,428
$8,115,553
$8,597,057
$80,873,985
34.15%
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24 | Information Memorandum
Investment Opportunity The Sponsor Group will aggregate, from a small group
not constitute any form of binding contract and create no
of preferred institutional-grade investors, a total of $150
obligations or the basis of any claims against any party,
million commitments to fund Jumeirah Culu Culu
but rather are solely for the purpose of outlining the terms
Polo Resort developments in Argentina and the United
pursuant to which a definitive agreement may ultimately
Kingdom. The pro forma cash flow analysis suggests
be entered into. Any subsequent investment in JCCR and/or
an aggregate IRR of 31.3% subject to the development
its subsidiaries will be subject to and contingent upon the
timeline and asset performance.
completion of successful due diligence and the negotiation and execution of formal agreements. This Memorandum
Participating investors will be invited to subscribe
is intended only for the use of the recipient and is not to be
for a pro rata stake in the subsidiaries of JCC Resorts
reproduced or distributed in whole or in part.
SPC (JCCR), a Cayman Islands segregated portfolio company with limited liability. This company will invest, through a series of subsidiary special purpose entities (SPEs), into specified resort development projects in various geographies (presently, Argentina and the United Kingdom), with the goal of maximizing tax and operational efficiency for the targeted investment in that respective country of origin. Note: This Information Memorandum (“Memorandum”) is being submitted on a confidential basis solely for the information of selected qualified investors in connection with the private placement of shares in JCC Argentina Limited and JCC UK Limited, Cayman Islands exempted companies with limited liability (henceforth, the “JCC SPEs”). This Memorandum is neither an offer to sell nor the solicitation of an offer to buy such interests in any jurisdiction where prohibited by law or to any firm or individual to whom it is unlawful to make such offer. The terms of this Memorandum do
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Information Memorandum| 25
Proposed Entity
The JCC SPEs shall be created by the Sponsor Group, in cooperation with JCCR, the holding company for the Jumeirah Culu Culu Resorts global portfolio. These SPEs shall fund, pursuant to the structure outlined in the Investment Opportunity section, supra, the equity capital requirements for the development of the Jumeirah Culu Culu Polo Resorts in Argentina and the United Kingdom. Participating JCC SPE Shareholders shall provide 99.0% of required project equity investment for public infrastructure and private development (“Project Equity Contributions”). JCCR shall provide the remaining 1.0% of required project equity investment (Project Equity Investment”). As a result of these investment and development activities, the JCC SPEs shall receive preferred distributions from the Jumeirah Culu Culu resort development projects in Argentina and the United Kingdom and shall distribute such income, amongst its participating investors, as set forth in the SPE Operating Agreements.
Purpose
Design, capitalize, build, operate and dispose of Jumeirah Culu Culu Resorts inclusive of hotels, for sale luxury residential properties, equestrian facilities and other leisure and entertainment assets in preferred global locations.
Managing Member of JCC SPEs
The Managing Member of the Jumeirah Culu Culu Argentina Project shall be JCCR or a Special Purpose Entity designated by JCCR.
Contribution Tranches
$50 million Preferred Equity Tranche
Removal of Managing Member
The Managing Member may be removed in the event that it commits fraud, gross negligence, willful misconduct, or materially breaches the agreements between the Managing Member and JCC SPE Shareholders and fails to cure such breach within such reasonable timeframe as agreed between the parties, and/or is convicted of a criminal act. After removal, the Managing Member’s SPE interest(s) shall be converted to non-voting limited SPE interest(s).
Financing Fee
None.
Acquisition Fee
None.
Development Fee
The Managing Member shall be paid a development fee, on an amortized basis, equivalent to 4.0 percent of the total Project Cost.
Disposition Fee
None.
Property Management Fees
Third parties or affiliates of the Sponsor Group and/or other JCC Shareholders may provide service to the Project, including due diligence, real estate brokerage, construction management, sales, information technology and management, and risk management. All such services shall be provided on an armslength basis.
Expenses
Upon consummation of the transaction, the JCC SPEs will bear all expenses related to the design, build, operation and disposition, financing (including origination fees, mortgage brokerage cost and investment banking fees), including allocated advisory costs, third party services, attorneys fees, and all other such costs and expenses related to project activities (“Project Costs”). Project Costs shall be paid out of the SPEs funds as they are incurred.
$100 million Common Equity Tranche Project Equity Contributions
1.0% Managing Member -JCCR 99.0% JCC SPE Preferred & Common Shareholders - Participating Investors
Project Distributions
Distributions of Project net cash flow shall be made at such times as the Managing Member deems appropriate in the following priorities: 1. First, to the JCC SPE Preferred Shareholders in accordance with their capital percentages until all JCC Preferred SPE Shareholders have received a 9.0 percent per annum cumulative return, compounded quarterly, on unreturned Equity Contributions;
If the parties do not proceed to negotiate and execute final documentation, each party shall bear its own legal fees and other costs in connection with the transactions contemplated herein. Reports & Meetings
JCC SPE Shareholders shall receive (i) Annual Audited Financial Statements and Annual Report (including an overview of all SPE activities), and (ii) Unaudited quarterly financial reports and project updates. The Managing Member and JCC SPE Shareholders shall meet in person or by teleconference no less than quarterly to review the progress of the SPE activities.
Confidentiality
The terms and conditions of this Information Memorandum shall be deemed Confidential Information and shall not be disclosed to any third party without prior consent, except that the parties hereto may disclose the terms and conditions described in this Information Memorandum including its existence to their respective officers, directors, employees, attorneys, potential lenders, and other advisers (“Representatives”), provided that such persons shall be advised of the confidential nature of the information and the disclosing Party shall be responsible for any disclosure of Confidential Information by a Representative of such Party. If any Party determines that it is required by law to disclose information regarding this Information Memorandum, it shall, promptly upon being advised of such disclosure obligation, advise the other party thereof and consult with the other party regarding such disclosure or filing and seek confidential treatment for such portions of the disclosure or filing as may be reasonably requested by the other party.
Non-Solicitation
For the thirty (30) day period commencing with the date of the execution hereof (“Due Diligence Period”), neither the Receiving Party nor any of its affiliates will directly or indirectly solicit, initiate, or participate in any discussions or negotiations with, or encourage or respond to any inquiries or proposals by any person or group, (other than customary bank financing sources) concerning polo themed resort development.
2. Second, 80 percent to the JCC SPE Preferred Shareholders and 20 percent to the Managing Member, in the ratio of their percentage interest. 3. Upon the earlier of a 10-year duration of the participation by the Preferred and/or Common Tranche Holders or of the sale or listing of a single JCC asset and/or an aggregated portfolio of JCC assets, a conversion will be made for Preferred and Common Tranche Holders from economic participation in the cash flows of the funded JCC asset(s) to a common ownership stake in the identified asset(s) and/or portfolio, based on a pre-stated valuation. Leverage
JCCR intends to evaluate the use of credit and/or credit alternative products to create leverage within the Project. The leverage shall not exceed 70.0 percent, in aggregate, of the total Project Cost at the time that such indebtedness is incurred (“Aggregate Debt Limit”).
Business Plans
As part of the JCC SPE Agreement, the parties will agree on a multiphase Project Business Plan and Budget. Any material variation from the Project Business Plan will require the consent of the JCC SPE Shareholders. Such consent will not to be unreasonably withheld, conditioned or delayed.
Day to Day Operations
The Sponsor Group will execute day to day operations in accordance with the approved Business Plan.
Future Contributions
The Managing Member and all JCC SPE Shareholders shall be required to contribute capital to the JCC SPEs as required by any approved budgets and/or approved Business Plan. In the event any Member and/ or Shareholder fails to make such required capital contribution, such Party shall be considered in default of their obligations under the SPE Agreements and, as such, may be removed from the JCC SPEs and/or such Partner’s SPE interest may be diluted as a result thereof. Contributions necessary to fund project costs including land acquisition, carrying cost, vertical development costs, credit facility and/or operating costs, if approved, will be made in proportion to the initial equity contributions shown above.
Items Requiring Consent
The following items shall require the written consent of the Managing Member and all JCC SPE Shareholders:
At the end of the Due Diligence Period, Receiving Parties will either deliver a further notice to the Sponsor Group setting forth its intention to proceed with the project (in which case the exclusivity provisions shall continue for an additional thirty (30) day period to allow the parties to negotiate definitive transaction documents, or will notify the Sponsor Group of its decision not to proceed, in which case the exclusivity provisions will terminate but the Confidentiality provisions above shall remain in full force and effect. During the Due Diligence Period, the Sponsor Group shall provide to prospective investors reasonable assistance and such information as it has in its possession related to the Project.
1. Dissolution or winding up of the JCC SPEs; 2. Change in the nature of business of the JCC SPEs; 3. Admission and/or removal of a Shareholder and 4. A material amendment to the SPE Agreements or certification of formation.
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28 | Information Memorandum
OLOP ULUC ULUC |
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Information Memorandum| 29
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www.culuculu.com.ar
Jumeirah Culu Culu Polo Resort Argentina Av. Callao 1870, 2nd Floor Buenos Aires, Argentina