1
INVESTMENT SUMMARY Total Project Investment USD $23.9 MILLION
•159 CONDO DEVELOPMENT PROJECT DEVELOPED IN 3 PHASES IN A 7 YEAR SPAN.
• THE
PROJECT TOTAL INVESTMENT OF USD $23.9
MILLION, WILL GENERATE
USD $56.8 MILLION IN
(PRETAX) REVENUES TO BE DISTRIBUTED BETWEEN THE
EQUITY
LAND OWNER (20% LAND REPAMYENT), GENERAL
SUMMARY
MANAGER (5% PROMOTE) AND INVESTORS.
•SEEKING MILLION
EQUITY INVESTOR TOTALLING USD $2.6 WHICH
WILL
GENERATE
Equity Investment USD $2.6 MILLION
ESTIMATED
Investor (pretax) IRR 38%
DISTRIBUTIONS OF APPROXIMATELY US $14.5 MILLION WITH AN ANNUAL (PRETAX) RETURN OF 38%.
Year 1
Capital Calls
Initial Investment
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
US $.7 million
US $1.4 million
US $0 million
US $0 million
US $.5 million
2
LOCATION
Los Santos
Pacific Ocean
3
Atlantic Ocean
PROJECT SUMMARY The Project is a 4.5-hectare (11 acre) Condo Development that will be developed within the Master Planned Community of Club Campestre San José, which is in San José del Cabo, Baja California. The Master Plan is divided in 3 lots and will consist of 159 condos with amenities to be included such as: Swimming pools, Cinema, Fitness Center, Kids Club, Fire Pit, Spa and others. Additionally owners will have access to the amenities already in place in Club Campestre San José such as Golf Course and Beach club. Total Lot Size: 45,263.455 Sqm (487,206 SqFt) / 159 Units Lot RN4-2 : Capacity for 33 units – Sqm 10,298 – SqFt 110,848 Lot RN4-3 : Capacity for 36 units – Sqm 10,298 – SqFt 110,848 Lot RN2-B : Capacity for 90 units – Sqm 24,667 – SqFt 265,513 4
JV PROPOSED STRUCTURE Equity Investor(s)
Contribution US $2.6 million
Developer
Development Trust
Land Owner
Parcel 1 At Market
Construction Administration Master Broker
Distributions US $14.4 million
Promote 5% of Sales
Bridge Funding
Sales Cashflow (pre-tax) US $26 million
Condo Regime (3 Parcels)
Optional Total Investment US $ 23.9 million
Parcel 2 Parcel 3 Land Payment 20% of Sales Residential Unit Sales Sales US $56.8 million
5
JV PROPOSED STRUCTURE A Special Purpose Vehicle (SPV) between Landowner, Leisure Partners and a Third Investor will be created to develop 159 units in Club Campestre San José, based on the business plan previously described. A. Landowner contributes the land into the SPV with a 20% land repayment on total Revenues once the unit is transferred.
• Phase 1 – 33 units • Phase 2 – 36 units • Phase 2 – 90 units B. Leisure Partners, as the General Manager of the Project will receive a 5% on total Revenues once the unit is transferred. C. Third Investor contributes capital for $2.6 million and receives the remaining (pretax) cash flow of the project ($14.5 million) after AS&M costs, construction costs, land repayment and provisions for next units are covered. 6
JV PARTICIPANTS
RICHARD MORASH
EQUITY PARTICIPANTS
LAND OWNER
TRUSTEE
DEVELOPER LEISURE PARTNERS
(to be determined)
is a hospitality, real estate advisory
and development company that works for private equity funds, real estate owners, investors, resort developers, lenders, hotel brands and other stakeholders who count on us to deliver independent and objective, high-quality services to help them achieve their business and social goals. Our team provides comprehensive advisory and promotion services specialized in the hospitality sector being one of the most experienced boutique tourism-oriented firms, participating in multiple Projects of all sizes throughout Mexico and Latin America.
7
KEY PARTICIPANTS BENJAMIN D. GREENBERG ESCROW AGENT Benjamin D. Greenberg, Regional Vice President and México Country Manager of NB Advisors, Inc. and Senior Advisor to TLA
SALES & MARKETING
LEGAL STRUCTUING CONELL &
MARCO KLEIN, a real estate expert in the
ASSOCIATES
advising real estate developers, investors, government agencies
area, has successfully created a cooperative with
Whether you are starting a new development, dealing
and corporate clients in various real estate maners in the
several renowned development professionals.
with tax or legal issues of an existing business or trying
commercial, industrial, residenoal, tourisoc and hospitality real
Marco has worked with the landowner to negotiate
to resolve a problem, our team of Mexican attorneys
estate sectors throughout Mexico and Laon America. Previously
a very affordable land price.
has the experience and knowledge in Mexico to
in his career, Benjamin served Duff & Phelps as founding
Together this synergy will create a unique final
understand the issues, present you with your options
Managing Director of its Mexico City pracoce, and Deloine
product of excellent quality, in the best location.
and follow through with the necessary services to get
Mexico as Director of Real Estate Services. From 2015 to 2018,
The combination will enable saving a percentage of
the business done. We provide a wide and
Benjamin served as an advisor to Indaabin, Mexico’s federal
ROI return on “investment” for the developer,
comprehensive range of services and a staff of diverse
agency in charge of the administraoon and valuaoon of all
which affects the final sale price.
specialists ready to assist you in your business
government owned properoes, in adapong Internaoonal
ventures in Mexico.
Valuaoon Standards, and has further advised hundreds of
Title and Escrow Services. Benjamin has extensive experience
companies, including Kia Motors, AB-Inbev, Abilia, Alhel, Best Buy, Bimbo, FedEx, H&M, MetroBuildings, Red Brick, among 8
many others.
PROJECT WATERFALL Sales Revenues
AS&M Costs
Construction
Proceeds from Sales and Presale units
Reserve Provisions for Future Blocks Constructions
20% Land Repayment & 5% General Manager Payment
Upon title is transferred
Remaining Cashflow (Pre-tax) for Third Investor Distribution
9
PHASE I 33 units Ends at Year 4
Equity Contribution Phase I – US$2.6m
Phase I - Investor Distribution: US$4.1m Estimated IRR: 19%
PHASE I:
NO
Phase I + II - Investor Distribution: US$6.9m Estimated IRR: 30%
Sales Revenues: US$11.8m AS&M Cost: US$1.4m Investment: US$5.9m Land & Developer: US$3m Phase Cashflow (Pretax): US$1.5m
Investor Par,cipa,on choice on next Stage
YES
PHASE II 36 units Ends at Year 6
Phase I - Investor Distribution: US$2.3 million Phase II - Investor Distribution: US$4.6 million
Phase I + II + III - Investor Distribution: US$14.5m Estimated IRR: 39%
Equity Contribution Phase II – US$1.8 million
NO
Investor Participation choice on next Stage
Phase II - Investor Distribu,on: US$0.8 million
YES
PHASE II:
PHASE III:
Sales Revenues: US$12.9m AS&M Cost: US$1.5m Investment: US$5.3m Land & Developer: US$3.2m Phase Cashflow (Pretax): US$2.9m
Sales Revenues: US$32.2m AS&M Cost: US$3.9m Investment: US$12.8m Land & Developer: US$8m Phase Cashflow (Pretax): US$7.5m
Equity Contribution Phase III – US$3.8 million
PHASE III 90 units Ends at Year 7
Phase III - Investor Distribution: US$11.4 million
INDEX 1. VALUE CREATION 2. CONDO PROTOTYPE 3. MARKET ANALYSIS 4. COMPETITIVE ASSESMENT 5. MARKET ASSESMENT 6. BUSINESS PLAN 7. INVESTMENT BREAKDOWN 8. CAPITAL DEPLOYMENT 9. CAPITAL STACK 10.FINANCIAL PROJECTIONS 11.INVESTMENT HIGHLIGHTS
11
VALUE CREATION •Target Market for this Project: Second-home owners interested in luxury ammenities, rentals and possible fractional ownership.
•Cost Benefit: The only Condo complex starting sales at USD$357K, with amenities such as: Golf Course, Beach Club, Cinema, Fitness Center, Grill Area, Fire Pit, Swimming Pool, Spa etc.
•Flexible Sales:
The 3-room unit can be sold as they are or as
independent rooms/lofts Size (sqm) Complete Condo 2 room 1 room Average
143 105 65
Price per sqm $ $ $ $
2,500.00 2,952.38 3,269.23 2,500.00
Price $ $ $ $
357,500.00 310,000.00 212,500.00 357,500.00
*Price per sqm for the sales of the first year
•Rental
Program: Project to be possibly managed through a
professional rental program with full hotel services and ammenities.
12
MARKET ANALYSIS •High-end Properties and Condominiums within Master Planned Communities are the most attractive product in Los Cabos Real Estate market.
•There is genuine interest for Private Homes both for Full and Fractional ownership.
•Luxury amenities is a must for this specific market segment, and the base line of competitors.
•Communities with access to Golf Course provide a greater perception of value and exclusivity.
•There’s been a continuous growth in tourism in Los Cabos, San Jose del Cabo and Cabo San Lucas have shown the greatest expansion in the last 3 years. 13
COMPETITIVE ASSESSMENT MAIN DEVELOPMENTS MPC - ZONE
TYPE
NUMBER OF DEVELOPMENTS
AVERAGE PRICE
AVERAGE SIZE (SQM)
AVERAGE PX (SQM)
AVERAGE SIZE (SQFT)
Gardenias
Condos
6
$495,800
183.5
$2,567
1975
$251
Tezal
Condos/Houses
6
$340,759
153
$2,578
1951
$175
Cabo Real
Condos/Houses
4
$516,750
211
$2,387
2266
$228
Ventanas
Condos/Houses
6
$455,000
168
$2,719
1803
$252
Los Santos
Condos
$357,500
143
$2,500
1539
$232
Average Price (USD) $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 Gardenias
Tezal
Cabo Real
Ventanas
Los Santos
14
AVERAGE PX/SQFT
MARKET ASSESSMENT Average Sale Prices
AVERAGE SALE PRICES CABO SAN LUCÁS AREA
AVERAGE SALE PRICES SAN JOSÉ DEL CABO AREA
$1,000,000
$800,000
$900,000
$700,000
$800,000
$600,000
$700,000 $600,000
$500,000
$500,000
$400,000
$400,000
$300,000
$300,000
$200,000
$200,000
$100,000
$100,000 $1 Bedroom 2 Bedroom 3 Bedroom Total
Active Listings 2019
Sales 2018
Sales 2017
Sales 2016
$166,939 $476,363
$222,444 $256,533
$175,407 $239,979
$151,957 $239,979
$927,072 $587,613
$622,578 $329,009
$487,432 $278,454
$412,368 $278,454
$1 Bedroom 2 Bedroom 3 Bedroom Total
Price per unit in Los Santos: USD$357,500
15
Active Listings 2019
Sales 2018
Sales 2017
Sales 2016
$171,815 $417,093 $756,144 $494,596
$135,359 $304,122 $632,328 $342,460
$103,554 $282,745 $705,381 $324,491
$202,161 $307,667 $667,604 $372,080
MARKET ASSESSMENT Hotel Occupancy and ADR
SAN JOSÉ DEL CABO, BAJA CALIFORNIA
LOS CABOS, BAJA CALIFORNIA 5 - star , 4 - star and 3- star
5 - star , 4 - star and 3- star
4,500,000
72.00%
600,000
70.00%
500,000
66.00%
4,000,000
65.00%
3,500,000 3,000,000
68.00%
64.00%
400,000
63.00%
2,500,000 66.00%
300,000
2,000,000
62.00%
1,500,000
64.00%
200,000
62.00%
100,000
60.00%
0
61.00%
1,000,000 60.00%
500,000 0 2013
*2014 Tourist Arrivals
2015
2016
2017
59.00% 2013
Occupancy Rate
*2014
2015
Tourist Arrivals
*HURACAN ODILE ** BETWEEN 2015 – 2017 THERE WAS A GROWTH IN AVAILABLE ROOMS 16
2016 Occupancy Rate
2017
BUSINESS PLAN
DEVELOPMENT AND SALES SCHEDULE ACCUMULATED INVENTORY
The Condo Development consists of three lots with a total capacity
180
for 159 Condos, to be developed in three phases.
160 140 120
An investment of $2.6 million is required for the development of
100
the first 6 units and infrastructure of Lot RN4-2.
80
The proceeds from sales will be used for the construcoon of the
60 40
153 units leu.
20 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
The first phase includes 33 units from Lot RN4-2
Accum. New Condos Construction
The second phase includes 36 units from Lot RN4-3.
RN4-2 (33 units)
Finally, the third phase includes 90 units from Lot RN2-B.
RN4-3 (36 units) RN2-B (90 units)
Second and Third Phases will be funded with proceeds from previous sales.
Construction (initiation) Sales 17
Accum. Units Sold
YEARLY SALES IN CABO SAN LUCÁS AREA
Number of Sales
BUSINESS PLAN
Condos Sold in Los Santos 60
100 90 80 70 60 50 40 30 20 10 0
160 140 120 100 80 60 40 20
Total 1 Bedroom 2 Bedroom 3 Bedroom
50 40
2016
2017
2018
96 7 64 25
123 22 67 34
138 18 91 29
0
30
YEARLY SALES IN SAN JOSE DEL CABO AREA
10 0 Sold
18
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
6
6
18
24
30
48
27
Number of Sales
20
60
120
50
100
40
80
30
60
20
40
10
20
0
0
Total 1 Bedroom 2 Bedroom 3 Bedroom
2016 79 20 39 20
2017 101 26 54 21
2018 103 33 41 29
CAPITAL DEPLOYMENT Year 1
Initial Investment Predevelopment (Project Design and Engineering) $250K Working Capital $50K
$2.6 Million Equity Investment
6 Units Construction Cost US$ .825 Million
Legal Expenses $125K Structuring Cost & Capital Raise Fees $250K US $675K
Infrastructure & Amenities $.7 M Others $.34 M
US $1.865 Million
19
FINANCIAL PROJECTIONS INITIAL INVESTMENT
TOTAL
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
YEAR 6
YEAR 7
Investment Pre-Development
-250,000
$
(250,000.00) $
-
$
-
$
-
$
-
$
-
$
-
$
-
Working Capital
-50,000
$
(50,000.00) $
-
$
-
$
-
$
-
$
-
$
-
$
-
Legal Expenses (Trust, ect.)
-125,000
$
(125,000.00) $
-
$
-
$
-
$
-
$
-
$
-
$
-
Finders Fee
-250,000
$
(250,000.00) $
-
$
-
$
-
$
-
$
-
$
-
$
-
Construction Cost Units
-19,856,754
$
-
$
(821,408.09)
$
(7,574,885.46) $
-
Infrastructure & Amenities
-3,374,542
$
-
$
(700,376.61) $
(955,059.01) $
(955,059.01) $
-
Total Investment
Real Estate Sales Price per Sqm Price Increasing Factor Price per Unit Units Sold Total Revenues
-23,982,700
159 $56,842,500 $11,828,075
AS&M Costs G&A $1,136,850 Advertising Cost $1,136,850 Sales Commissions and Marketing Cost $4,547,400 Total AS&M Cost $6,821,100
-675,000
-1,521,785
$
(1,642,816.17) -
-1,642,816
$ $
(3,525,209.70)
$
(382,023.61) $
-5,795,172
(1,916,618.87)
$
(382,023.61) $
-1,616,545
(4,375,815.60)
-3,628,403
-9,102,980
0
$0 35750000.00%
0 100% 0 6 * $2,145,000 2500
0 100% 0 6 $2,145,000
2,500 100% 357,000 18 $8,580,000
2,500 100% 357,500 24 $11,797,500
2,500 100% 357,000 30 $3,828,825
2,500 100% 357,500 48 $5,823,675
2,500 100% 357,000 27 $22,522,500
$0 $0 $0 $0
$62,920 $67,518 $171,600 $302,038
$62,920 $58,322 $171,600 $292,842
$148,720 $148,720 $514,800 $812,240
$132,990 $132,990 $686,400 $952,380
$327,113 $327,113 $858,000 $1,512,225
$321,750 $321,750 $1,372,800 $2,016,300
$80,438 $80,438 $772,200 $933,075
20
* Average price of yearly of sales
FINANCIAL PROJECTIONS (CONT) Distribuoons:
•Land Owner will receive a distribuoon of 20% once unit is transferred to the new owner • Leisure Partners a 5% distribuoon once unit is transferred to the new owner •The Third Party Investor will receive the remain of the Cashflow Project once the distribuoons above and the necessary provisions are being made. TOTAL
INITIAL INVESTMENT
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
YEAR 6
YEAR 7
Land Repayment & Developer Distributions Land Repayment Developer Distributions
20% -11,368,500 -2,842,125
5% 0 0
-600,000 -107,250
-1,200,000 -107,250
-1,759,500 -321,750
-1,200,000 -429,000
-1,074,000 -214,500
-3,604,500 -1,179,750
-1,930,500 -482,625
Equity Contribution
$2,540,803
$675,000
$1,865,803
$0
$0
$0
$0
$0
$0
$2,540,803
$675,000
$1,865,803
$0
$0
$0
$0
$0
$0
14,368,878
0
1,479,731
-1,097,909
-108,662
7,599,575
-2,600,303
-10,079,855
19,176,300
Cash Equity Contribution
Unlevered Cashflow
TOTAL
INITIAL INVESTMENT
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
YEAR 6
YEAR 7
Equity Contribution Investor Distributions
$ (2,540,803.00) $ $ 14,445,281.39 $
(675,000.00) $ (1,865,803.00) $ $ $
-
$ $
16,097.95
$ $ 1,622,979.03
$ $
512,068.88
$ $ 5,987,835.53
$ $
6,306,300.00
CashFlow IRR
$ 11,904,478.39 $ 38.75%
(675,000.00) $ (1,865,803.00) $
-
$
16,097.95
$ 1,622,979.03
$
512,068.88
$ 5,987,835.53
$
6,306,300.00
21
INVESTMENT HIGHLIGHTS
•OPPORTUNITY TO INVEST US $2.6 MILLION FOR DISTRIBUTIONS WORTH US $14.5 MILLION WITH AN ANNUAL (PRETAX) RETURN OF 38% IN A 7 YEAR LAPSE.
•LOS CABOS IS ONE OF THE MOST DEMANDED REAL ESTATE MARKETS IN MEXICO WITH A GENUINE INTEREST IN LUXURY AMMENITIES, BEACH CLUB AND GOLF COURSE.
•THE CONTINIOUS GROWTH OF TOURISM IN LOS CABOS CORRIDOR WILL ALLOW THE RENTAL POOL OF THE CONDOS TO PERFORM SUCCESSFULLY.
•FLEXIBLE SALES OF THE 3 ROOM CONDO WILL BOOST SALES CASHFLOW
22
CONCEPTUAL DESIGN
LOS SANTOS • CONDOMINIUM DEVELOPMENT/ CONCEPTUAL DESIGN
CONCEPTUAL DESIGN
GROUND FLOOR • SINGLE UNIT / 1,538 sf
FIRST FLOOR • SINGLE UNIT / 1,538 sf
SECOND FLOOR • SINGLE UNIT / 1,538 sf
ROOF TOP • SINGLE UNIT
CONCEPTUAL DESIGN
GROUND FLOOR • DOUBLE UNIT / 3,077 sf
FIRST FLOOR • DOUBLE UNIT / 3,077 sf
SECOND FLOOR • DOUBLE UNIT / 3,077 sf
ROOF TOP FLOOR • DOUBLE UNIT
CONCEPTUAL DESIGN
SECTION A-A.
GENERAL LAYOUT / LOT NR4-2
1st PHASE.
CONCEPTUAL DESIGN
GENERAL LAYOUT / LOT NR4-2 LEVEL 83.00.
1st PHASE
CONCEPTUAL DESIGN
GENERAL LAYOUT / LOT NR4-2 LEVEL 93.00.
1st PHASE
CONCEPTUAL DESIGN
GENERAL LAYOUT / LOTS NR4-2 • RN4-3
CONCEPTUAL DESIGN
PUBLIC AREA • GROUND FLOOR / RN4-2 • RN4-3
PUBLIC AREA • FIRST FLOOR / RN4-2 • RN4-3
CONCEPTUAL DESIGN
PUBLIC AREA • SECTION C-C. PUBLIC AREA • ROOF TOP / RN4-2 • RN4-3
CONCEPTUAL DESIGN
CONCEPTUAL DESIGN
CONCEPTUAL DESIGN
CONCEPTUAL DESIGN
CONCEPTUAL DESIGN
CONCEPTUAL DESIGN
SECTION B-B. GENERAL LAYOUT / LOT NR4-3
2nd PHASE.
CONCEPTUAL DESIGN
SECTION A-A. GENERAL LAYOUT / LOT NR2-B
3th PHASE.