An investment opportunity in the 5 Star Luxury Spa Resort of Champneys Marbella
7% 5 year Income Guarantee Invest through SIPP SSAS QROPS Developer buy back exit option 10% pre completion discount
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NOTICE TO RECIPIENTS
This Information is provided to inform Authorised Financial Advisors about a specific alternative investment, its structure and the detail surrounding the investment. This information is not produced or intended for members of the public or general circulation. Only authorised and regulated advisors are able to provide investment advice to their clients whom they know to be certified sophisticated investors. This document details an alternative investment through the purchase of shares in an unquoted company. Prospective investors must rely on their own examination of the legal, taxation, financial and other consequences of any contributions made in this investment including the risk involved. Prospective investors should not treat the contents of this information as advice relating to legal, taxation or other matters and, if in any doubt about the proposal discussed in this information, its suitability, or what action should be taken, should consult a person authorised and regulated by the FSA under The Financial Services and Markets Act 2000 (“FSMA”) and qualified to advise on alternative investments of this nature.
who has a current certificate in writing or other legible form signed by an authorised person (other than the authorised person by whom the Information Memorandum is communicated to the effect that he is sufficiently knowledgeable to understand the risks associated with participating in unregulated schemes; and who has signed within the period twelve months before the day on which the Information Memorandum is communicated, a statement in the term prescribed by article 23(1)(b) of the CIS Exemptions Order as amended by the Financial Services and Markets Act 2000 (Financial Promotion and Promotion of Collective Investment Schemes) (Miscellaneous Amendments) Order 2005. This information can only be provided to persons where the financial promotion is exempt from the financial promotions restrictions.
Accordingly, where this information is communicated by any person who is “authorised “under FSMA to any other person, it is to be so communicated only to (and directed only at) persons to whom such communication may lawfully be made (“Relevant Party and “Relevant Party” shall be construed accordingly), including (but not limited) to: “investment professionals” who have professional experience in participating in unregulated collective investment schemes within the meaning of article 14 of the FSMA (Promotion of Collective Investment Schemes) (Exemptions) Order 2001, as amended (the “CIS Exemptions Order”); ‘high net worth companies, unincorporated associations, partnerships or trustees of high value trusts’ within the meaning of article 22 of the CIS Exemption Order; “sophisticated investors” within the meaning of article 23 of the CIS Exemptions order as amended by the Financial Services and Markets Act 2000 (Financial Promotion and Promotion of Collective Investment Schemes) (Miscellaneous Amendments) Order 2005. A ‘sophisticated investor” for the purpose of article 23 of the CIS Exemptions Order as amended by the Financial Services and Markets Act 2000 (Financial Promotion and Promotion of Collective Investment Schemes) (Miscellaneous Amendments) Order 2005.
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TABLE OF CONTENTS
LETTER FROM THE MANAGING DIRECTOR............................................................. 4 EXECUTIVE SUMMARY.................................................................................................... 5 PURCHASE PROCESS......................................................................................................... 6 PARTIES AND ADVISORS.................................................................................................. 7 ABOUT CHAMPNEYS......................................................................................................... 8 INVESTMENT OPPORTUNITY........................................................................................ 9 EXIT STRATEGY................................................................................................................. 10 CHAMPNEYS MARBELLA SPA RESORT...................................................................... 11 MARBELLA - JEWEL OF THE MEDITERRANEAN............................................ 12 - 14 FINANCIAL ANALYSIS............................................................................................. 15 - 16 PROJECT DEVELOPMENT TEAM................................................................................. 17 INVESTMENT STRUCTURE AND COSTS................................................................... 18 TAXATION AND THE SPV.............................................................................................. 19 RISK FACTORS............................................................................................................ 20 - 21 MONEY LAUNDERING AND DATA PROTECTION................................................. 22 UNIT SPECIFICATIONS........................................................................................... 23 - 25 CONTACT DETAILS.......................................................................................................... 26
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LETTER FROM THE MANAGING DIRECTOR
Dear Potential Investor, Champneys is delighted to be working in partnership with Mr Martin Needham on this spectacular development planned in the hills above Marbella, minutes from the Mediterranean Sea. Champneys Marbella is a long term spa commitment for the Champneys Group, entering into arrangements that allow for a 20 year lease operation of the Spa within the Champneys Marbella complex. Within the Spa we aim to provide an idyllic spa retreat replicating the standards of service and facilities of our UK operations. Champneys Marbella represents to the board of Champneys a unique lifestyle opportunity and an investment opportunity for Champneys’ clientele. Champneys is, in itself, intending to purchase twelve apartments as it wishes to demonstrate its belief in the resort and can see the financial opportunities such an investment will bring. In offering apartment and penthouse investors the prospect of entering the Champneys letting pool, we aim to market Champneys breaks to Champneys customers with Marbella being positioned as a fifth resort for the group. Champneys Resorts enjoy a high level of occupancy and demand is high for such a luxury setting and facilities in the Mediterranean. Thank you for considering Champneys Marbella as both a positive lifestyle choice and as an investment opportunity. Yours sincerely Ray Payne Managing Director
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EXECUTIVE SUMMARY
This information is provided in order to inform the reader regarding an asset based “alternative” investment in a specific project, namely Champneys Marbella, Spain. Nothing in this prospectus prohibits whole ownership through a personal mortgage or a cash purchase. In addition Syndication with other cash investors or through a Self Invested Personal Pension (SIPP) provides a further opportunity for Investors to participate in the luxury 5 Star Champneys Marbella Resort.
Whole Ownership It is possible to own the property outright in a SIPP, through mortgage finance subject to individual status or an outright cash purchase.
Syndication -Minimum Entry Level Investment €50,000 Many people want the security of an asset based investment without the responsibility of investing and owning a property outright. Our syndicate structures are ideal for this type of investor. The Champneys Marbella Resort minimum entry level investment is €50,000 and thereafter multiples of €10,000 can be additionally invested.
SIPP Compliant Investment from €50,000 UK Pension Trustee approved for Direct SIPP investment. Whilst SIPP purchasers do not receive any personal usage or beneficial interest in the property invested they certainly do benefit from the tax efficient returns on the investment. Minimum investment for SIPP is the same as the minimum investment for syndication at €50,000 and thereafter multiples of €10,000 can be additionally invested.
The investment presents the following advantages: • Idyllic location set in the head of a valley within a National Park with views across the valleys towards the Mediterranean sea. • Designed by award-winning architects Fluiters Group with experience in building apartments, commercial property and resorts in Spain and Portugal. • Fully furnished to a luxury 5 star standard. •
Skilful management - The resort will be managed by the world renowned Champneys Spa Group, internationally regarded as one of the top Destination Spa operators in the world with its own exclusive product range, 4 Residential Spa Resorts and 7 Town & City Day Spas in the UK.
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Experienced international development team - Architects Fluiters, Developer Martin Needham and Project manager Sergio Zumaquero provide a dynamic technical and architectural team.
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Sound Project Finance - The land is owned freehold
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High quality construction – Casanita Sl is headed
by the developer through the Champneys Marbella development company Casanita SL. Construction costs have been met through the developer´s own funds, pre sales and the CAM Bank.
by Martin Needham, who, in association with Sergio Zumaquero, has completed a number of successful development schemes in Spain.
• Investment returns - 2% pre construction interest with 7% (net) per annum 5 year post completion rental guarantee. • Buy Back Scheme - Guaranteed developer buyback scheme 5 years after completion at initial Net purchase price.
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PURCHASE PROCESS
The agreed purchase price secured for each of the 12 completed apartments is €675,000 (net) equating to £567,227 (net) using an exchange rate of 1.19 Euros to the Pound. This price is based upon a “turnkey operation” as the management company provides all furnishings and ongoing management. Each of the SIPP or Syndicated properties will be owned through a separate Special Purpose Vehicle (SPV). Shares equal to the funds deposited will be issued to the investor, once sufficient funds have been deposited into the SPV sales contracts will be signed with the developer and the purchase effected. The property build will be funded directly through the SPV which will contract with the developer, releasing funds at various stages of the build against verification of works undertaken. Investment in this scheme is expected to be a medium term investment of 7 years, 24 months off plan with completion in September 2012. Following this a 5 year investment term is recommended in line with the rental guarantee paid at 7% per annum of the net purchase price. Annual management of the SPV will be provided by the syndicate managers ensuring that all legal requirements, company registrations and annual shareholders reports are undertaken and managed effectively.
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PARTIES AND ADVISORS
Architects
Fluiters sl. Caídos División Azul, Nº 1 - Of.2, 28016, Madrid, Spain Tel: +34 913 530 240 www.fluiters.com
Project Management
Sergio Zumaquero Casanita sl Puerto de Ojen 2, 29610 Ojen, Malaga, Spain Tel: +34 952 881 551
Quantity Surveying
Sergio Zumaquero. Jaime Fons. Casanita sl. Casanita sl Puerto de Ojen 2, 29610 Ojen, Malaga, Spain Tel: +34 952 881 551
Structure Contractors
Estructuras Gonzalez Trujillo sl. Mijas Costa, Rio Guadiato, Local 7ª, Malaga, Spain Tel: +34 952 197 019 www.estructuras-egt.com
Mechanical and Electrical Engineers
Ares Arco Estudio de Ingenieros c/ Nanclares de Oce, 1 Prt 1E, Bajo E, 28022, Madrid, Spain Tel: +34 913 294 610 www.ares-ingenieros.es
Structural and Civil Engineers
Dovela Ingenieros sl c/ Batalla del Salado 24, 1º A, 28045, Madrid, Spain Tel: +34 915 062 936 www.dovela.es
Ten Year Build Quality Insurance MUSAAT c/ Jazmín, 66 - 28033, Madrid, Spain Tel: +34 917 667 511 www.musaat.es
Build Quality Control INDYCCEOCT c/ Barroso, 5.2a Planta, 29001, Malaga, Spain Tel: +34 952 122 634 www.indycceoct.com
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Quality Control Laboratory
CEMOSA c/ Benaque, 9, 29004, Malaga, Spain Tel: +34 902 111 400 www.cemosa.es
Technical Personnel Insurance MUSAAT and ASEMAS C/ Gran Vía 2, 3º, 48001 Bilbao, Spain Tel: +34 944 235 412 www.asemas.es
Site Insurance
MAPFRE C/ Sor Ángela de la Cruz, 6, 28020, Madrid, Spain Tel: +34 902 140 214 www.mapfre.com
Corporate Imaging
Champneys Wigginton, Tring HP23 6HY, UK Tel: +44 (0) 870 330 0300 www.champneys.com
Communications
Advent Communications San Pedro Alcántara, Málaga, Spain Tel: +34 952 783 677 www.advent.es
SIPP Compliance
Montpelier Pension Administration Services 11 High View Close, Lewisher Road, Leicester, LE4 9LJ, UK Tel: +44 (0) 116 368 0082 www.mypensionsexpert.com
International Sales and Marketing Project Kudos Limited Malvern House, New Road, Solihull B91 3DL, UK Tel: +44 (0) 208 090 1874 www.projectkudosgroup.com
Syndicate Management
Glenmuir International Limited Second Floor, Capital City Independence Avenue, PO Box 1312 Victoria, Mahe Seychelles
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ABOUT CHAMPNEYS
Champneys is an internationally recognised premium British brand and the leading Destination Spa operator in Europe. The company has attained a consistently high profile and achieved strong consumer recognition since its inception in 1925.
Champneys was founded in 1925 as a Health Spa in Tring, Hertfordshire. The Purdew family have owned Spas since 1979 acquiring the Champneys Group and brand in 2002. Over the last 7 years the business has grown to include 4 Resort Spas located in Hampshire, Hertfordshire, Bedfordshire and Leicestershire, 7 Town and City Spas in affluent towns in southern England, a personal care products business and an International College of Health & Beauty. Champneys employs approximately 400 therapists. Recent growth, even in difficult economic times, has been encouraging, with the Town & City Spas enjoying average occupancy of 85%, a 35% year on year growth in the sales of its ´Champneys Collection´ personal care products via its transactional website, and consistently high rates of occupancy in its residential resorts (suite and premier room occupancy is 76%). Ranked 306 in The Superbrands Top 500 2009/10 and winners of countless health and beauty media awards, Champneys boasts an eclectic client base that includes well-known celebrities such as David & Victoria Beckham, Dame Helen Mirren, Joan Collins, Cherie Blair, Simon Cowell, Kate Moss and Kylie Minogue, with the company priding itself in offering exceptional standards in beauty, fitness, nutrition and holistic wellbeing. Champneys has exciting growth plans for the next 2-3 years for which it has laid solid foundations through its investment in the brand. As well as increasing sales of Champneys branded products in the UK, the company is keen to develop its presence in key territories internationally.
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INVESTMENT OPPORTUNITY
Investment in Champneys Marbella allows investors to participate in the high end 5 Star Spa Resort market in Marbella, Spain through SIPP, SSAS, Qrops or cash. Investment through syndication provides for smaller amounts of capital to be invested whilst enjoying pro rata the same financial returns whole ownership offers. Marbella Local Property Market Although Europe is still slowly emerging from recession, we have already witnessed and expect the high-quality Marbella property market to hold firm, and slowly increasing in value over the medium term, due in part to the following reasons: Building restrictions in Marbella over the last few years have kept stock levels relatively low, while a glut of homes has emerged in other, less desirable destinations on the Costa del Sol. Research from the tax office shows total property sales in the Marbella region have risen to their highest level in four years. The restrictions in the award of planning consents and the lack of new-build property in the area over recent years has actually led to a dearth of top quality, resort-style properties on offer in the marketplace. The Spanish property market as a whole actually grew by 16% in February 2010, compared to the same month last year (according to the country´s National Institute of Statistics). Perhaps of greater significance, local figures suggest that Marbella is leading the way to recovery with figures from the town´s tax office revealing that 2,499 properties were sold in the first three months of 2010, a rise of more than 200% compared to the same period in 2009 when just 820 properties were sold, and the highest figure for four years. The typical profile of those seeking to purchase property in Spain has changed markedly in the last 5 years. Once the domain of the speculative investor with access to widely available finance, nowadays the vast majority of buyers are looking to invest with longer-term intentions, for personal use and with rental potential in mind, and are therefore seeking out those developments that offer a combination of location, quality and on-site amenities. There is a lack of quality, brand-name investment opportunities in Southern Spain. Champneys is a name that is widely known throughout the UK, and is also expected to appeal to the large UK and international expat base on the Costa del Sol. From research undertaken by the Champneys group occupancy levels at Champneys Marbella are expected to be running at 65% almost immediately after completion in September 2012.
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EXIT STRATEGY
There is a 7 year exit strategy from investment based on selling completed units five years after completion. Individual investors who own units outright may resell their units at any time, Syndicated investment shares can also be sold at anytime though this could be cost prohibitive, it is likely that a higher return will be achieved post-construction and probably with at least one year of the resort’s operating profits in place. The developer will contract on purchase to buy back the property from the SPV at the same net purchase price that it was purchased from him guaranteeing investors a quantifiable and defined exit strategy.
INSURANCE During construction there is Contractors all risk insurance which covers the buildings and also liability insurance for any injuries. Post construction there is comprehensive general liability insurance which covers the buildings for replacement costs in the event of fire tempest or other additional perils of the industry. In addition injuries are covered as to employees or guests. The cost of this insurance is included in the monthly maintenance fee; the SPV will not get billed separately for insurance. Build quality insurance is already contracted and runs for ten years after completion to cover the building structure. The cost of this insurance has been paid by the developer. The SPV is not billed for this insurance.
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CHAMPNEYS MARBELLA SPA RESORT
In the midst of natural beauty, the site of Champneys Marbella Resort lies adjacent to the nature reserve of the Sierra de las Nieves mountain range in the foothills of Marbella, whilst only 3 minutes from one of the famous Andalucian whitewashed villages, Ojen.
Marbella town is just 10 minutes from the site of the Champneys Marbella Resort, while Puerto Banus, home to world-class nightlife and designer shopping, can be reached within 15 minutes. With protected and uninterrupted views over green valleys to the Mediterranean and beyond, the resort is set within beautiful landscaped parkland and gardens, and features stylish architecture and Moorish waterways, fed from an old natural spring, combining to create a secure and peaceful living environment. Within this unique setting, Champneys Marbella offers the privacy and comfort of an outstanding Apartment with all the benefits of a magnificent Champneys Spa. The development will have a range of amenities including but not limited to; clubhouse and restaurant, heated indoor and outdoor pools, 25 therapy rooms, manicure salon, sauna and Turkish bath, jacuzzi terrace, fully equipped gymnasium and fitness centre, exercise studio and juice bar, relaxation areas, sun terraces, conservatory gardens and spectacular patios and water features. There will also be an on site medical facility and Champneys product store.
The Resort Apartments Enjoy exceptional interior design in the luxury of space and comfort provided by the exquisitely appointed, two bedroom apartments at Champneys Marbella. For both summer and winter, interior and exterior living, all Champneys Marbella Apartments have stunning courtyards with peaceful Moorish water features. Interior gardens form an integral part of spacious high quality marble and stucco luxury bathrooms.
Construction update The Resort is currently under construction with all architectural, engineering, planning and Tourist Board permissions obtained from the Andalucia Regional Government. In July 2010 the resort is approximately 30% structurally complete with construction running ahead of schedule - there are no expected delays with the intended opening in September 2012. The development consists of the main Spa Building with underground parking and Plaza with stunning views to the South. Set within the resort gardens and parkland is a total of 12 buildings each with four apartments (48 total) and two penthouses (24 Total)
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MARBELLA - JEWEL OF THE MEDITERRANEAN
Marbella is one of the jewels of the Mediterranean, offering an unrivalled environment enabling visitors to enjoy a wide range of genuinely world-class sports, leisure and lifestyle attractions. Marbella is not a ´new´, unproven resort. It already boasts a superb infrastructure that has supported its growth as a centre of quality tourism since the 1950s.
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Accessibility
Climate
Due to its phenomenal track record of success, Marbella is a consolidated area, well-known and frequented annually by millions of overseas and domestic visitors. In 2009 alone, Malaga Airport welcomed over 11½ million passengers, with over 20% of these arriving on flights from the UK. In March 2010, the new Terminal 3 was opened, enabling the airport to double its capacity, while a second runway will be completed in 2011. There are flight connections to 60 countries worldwide, with an average of 30 flights per day from Malaga to the UK, (just a 2½ hour flight away), making Marbella the ideal short-break destination.
Marbella is famous for its internationally renowned and privileged climate. The annual average temperature is around 18.5º C, with 320 days of sunshine a year. This climate is due to its unique geographical situation, namely the mountains which surround Marbella, the Sierra Blanca and La Concha, visible from the entire area. Allied to the position of its coastal inlet, the effect is to shelter the town from the northern winds, allowing it to enjoy a special microclimate unique in the world and one which has become one of its great tourist attractions.
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Lifestyle Marbella offers something for everybody, and rather than confining itself to just one short season, Marbella is able to offer a range of world-class amenities on a year-round basis, enabling it to appeal to a diverse clientele that includes short-break jet-setters, golfers, traditional summer holiday-makers and those visiting for longer periods who choose to make Marbella their base for work and leisure. Nobody is a foreigner in Marbella. A cosmopolitan town inhabited by 137 nationalities, with a very well-balanced size and population, over 30% of the inhabitants are of international origin and the majority from outside of Marbella. With all the charisma of a large city and the attributes of a convenient town, Marbella is, without any doubt, one of the best places in the world to live.
Beaches Sunbathing, swimming in the tranquil waters of the Mediterranean, having lunch in a beachside restaurant, enjoying a drink in an exclusive beach club - these are just some of the options open to you on the 26 kms of Marbella’s beaches, the finest on the Costa del Sol.
Golf Marbella has the largest number of golf courses in continental Europe. Over 50 quality courses can be reached within 45 minutes and many play host to international events such as the World Matchplay Championship, the Spanish Open and even the Ryder Cup. The warm climate means that golf can be played 365 days a year without the need to don a sweater. Marbella truly is a golfer’s paradise.
Shopping Offering the best and most exclusive brand names in the world in Puerto Banus, the charming shops of the Old Town and Avenida Ricardo Soriano, the huge weekly markets, the handy shopping centres‌shopping in Marbella is a must.
Food & Drink Very few world capitals can boast three restaurants with a Michelin star. The standard of cuisine and varieties of national and international food that greet you in Marbella are extraordinary. With over 600 restaurants to choose from, the avant-garde and traditional truly come together in Marbella.
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Sport & Leisure Awarded the title of European Town of Sport 2009, Davis Cup host Marbella offers the best opportunities to practice and watch the sports you like best. From football to horse riding, baseball to basketball, beach volleyball to American football, Marbella offers a comprehensive range of sports, with tennis, golf and water sports being the most popular. For 6 months of the year, you can even be skiing in the Sierra Nevada within a 2 hour drive of Marbella.
Water Sports With 7 yacht marinas within easy reach, combined with one of the best race courses on the Costa del Sol and a perfect microclimate for virtually 365 days a year, Marbella sets the benchmark for water sports in Spain.
Culture Marbella is a marriage of cultures. Concerts at the Arabic walls; museums featuring works by Picasso, Miró, Tapies and Chillida; Roman archaeological sites … in Marbella you will not only find a place to rest and enjoy leisure but also many opportunities to broaden your cultural horizons and appreciation of art.
Nightlife Marbella is a vibrant 24-hour town, and features Spain’s top night spots, which range from large but exclusive discotheques with world-famous DJs, to pubs, chill out bars and exclusive beach clubs.
Nature The famous and charismatic mountain that shelters Marbella, La Concha, is situated within the Sierra de las Nieves Nature Park, which has been named a Biosphere Reserve by Unesco. Abundant nature is there for you to discover right on Marbella’s doorstep.
Tradition One of the most beautiful and best-preserved historical centres anywhere in Andalucía is the jewel called Plaza de Los Naranjos (Orange Square), where the 16th Century Town Hall building is located. Many visitors to Marbella particularly enjoy the lively and popular San Bernabé Festival, and the impressive Semana Santa (Holy Week) processions and parades. Marbella is mindful of its origins – and equally proud of them.
Exclusivity If there is one place where exclusivity, glamour and elegance truly come together, it is the world-famous Puerto Banús. Spectacular boats, dream cars, world class restaurants, bars, and discotheques - Puerto Banus is the playground of the rich and famous, yet accessible to all. How many places in the world can boast this as a line-up on its high street? – Bulgari, Cartier, Chopard, Christian Dior, Dolce & Gabbana, Armani, Fendi, Louis Vuitton, Ralph Lauren, Roberto Cavalli, Burberry, Salvatore Ferragamo, Tom Ford, Gucci, Hermes, Hugo Boss, Tom Ford, Versace.
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FINANCIAL ANALYSIS
The following information and projections are indicative only and do not constitute a forecast of the actual income, profits, returns or cash flow of the Investment. Indeed these projections may be affected by factors completely outside of anyone’s control. Potential investors should review the financial model themselves and form their own views in relation to the reasonableness, completeness and achievability of the projections and the relevant underlying assumptions. 12 units have been secured for SIPP investment by Project Kudos in the prestigious Champneys Spa Resort in Marbella. This is an alternative Investment and each property will be held in a single asset investment company commonly referred to as a special Purpose Vehicle (SPV). Post establishment the annual management of the SPV will be provided through the Project Kudos team. The investment is structured around a 7 year term in order to benefit from the forecasted capital appreciation and to allow for 2 years off plan and five years post completion rental income guaranteed year on year by the developer at 7% of the net purchase price.
Investor Returns The exit strategy for investors is the sale of the units in which the SPV has invested; this could be the sale of the units as single entities as each unit will be placed into its own SPV. At the end of the term it may be that the majority of shareholders wish to retain the asset and for those investors a further rental return will be negotiated. The developer will contract on purchase to buy back the property from the SPV at the same net purchase price that it was purchased from him guaranteeing investors a quantifiable and defined exit strategy. For those investors wishing to sell to the developer at the end of the term and seeking sale at a higher price, then Project Kudos will facilitate the sale of the shares to other investors and market the property on the open market if required by the investors. All shares offered for sale by investors, whether during or at the end of the investment term, must under the terms of the shareholder agreement be offered to existing shareholders for a period of 30 days at a price determined by the investor.
Financial Information All prices have been converted from Euros into UK pounds at a rate of €1.19 to £1 for ease of presentation – The Euro exchange rate will prevail during the actual investment and sale period. A number of units have been secured for purchase at €675,000 (net) which is based on a rate of €4101.75 per m² well under the comparable prices in the chart below. Property prices have been assumed to increase at 5% per annum throughout the remaining construction and sale period.
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Investment Forecast – completion value €876,150 (gross*) Current comparable projects in the Marbella area which have now sold and their completion prices per square metre are shown below. DEVELOPMENT
LOCATION
TYPE
BEDS
PRICE PER M2
Imara
Marbella foothills
Apts and penthouses
2 and 3
€ 7,041
Las Alamandas
Nueva Andalucia
Apts and penthouses
3 and 4
€ 8,096
Puente Romano
Marbella beachside
Apts and penthouses
2
€ 8,045
Mansion Club
Marbella foothills
Apts and penthouses
2 and 3
€ 5,478
Others
Nueva Andalucia
Apts and penthouses
2 and 3
€ 5,299
*Gross price represents the net purchase price including VAT at 18% plus 10% completion price increase Based on a price at completion of €876,150 (gross) which represents a completion price increase of just 10% the completion price per square metre would be €4840 (gross).
Rent guarantees Monies invested off plan will attract a deposit interest of 2% pa during construction; this payment will be made into the SPV 6 months in arrears with the final payment made on completion. Following completion for a fixed period of 5 years an annual guaranteed sum calculated at 7% of the net purchase price of €675,000 will be paid into the SPV directly from the developer. This equates to €47,250 per year which will be paid 6 months in arrears. The rental guarantees negotiated are further underwritten and secured by a first charge over a block of property retained by the developer equivalent to the amount of rent guarantee offered over the pre and post completion stages.
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PROJECT DEVELOPMENT TEAM
Champneys Spa Resort Marbella benefits from an international development team, this team provides a technical and architectural base with the strength of experience and foresight to deliver the highest level of engineering, build quality and luxury finishes to this unique and very beautiful Spa Resort.
Project Highlights Architects The Fluiters group of architects has vast experience in building apartments, commercial developments and resorts in Spain and Portugal since 1981. Management Champneys Marbella Spa will be run by Champneys, world leaders in spa management and branding, on a 20 year lease. Champneys have 4 Destination Spa Resorts and 7 Day Spas in the UK and have an international reputation for first class Spa Resort management and products. Developer The Champneys Group, property developer Martin Needham and Architects Fluiters have joined forces to build and manage Champneys Marbella. The combined skill and experience of this winning team in design, construction, hospitality and Spa management has created a fabulous investment opportunity for those who seek both luxury and high returns. A long established relationship with Martin Needham and his project manager Sergio Zumaquero has proven to be a dynamic team in the past and has included many successful construction projects. Project Finance Champneys Marbella has been financed by the developer, pre sales (which now exceed 50%) and the CAM Bank. The land base is owned freehold by the developer through the Champneys Marbella development company Casanita SL. Construction The construction company is Casanita SL who have a solid reputation and have completed several projects in Spain.
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INVESTMENT STRUCTURE AND COSTS
This investment is structured as a Special Purpose Vehicle (SPV). It is a single asset Property Company funded through syndicated investment with a unique structure and fees not available in any other real asset based syndicate investment vehicle. The structure has been designed to be the most efficient and profitable way to add real estate into any investor’s portfolio, and open up the real estate market to those who have not had the capacity to build a property portfolio. The structure is simple, an offshore limited liability company divided into equal shares and a company resolution to buy a single real property with certain investment guidelines. The Articles of Association of this Company are standard for most jurisdictions, and are based on English Common Law. The other element to the investment is a real and tangible asset in the form of a property identified by the Syndicate Manager that meets the investment guidelines of the Company which could include some or all of the following: • Fair or below market price, in an appreciating market • Potential for near term rental income at well above average yields • Potential for significant price appreciation • Stable rule of law in the country of location • Freehold ownership • Security of guarantees offered to Shareholders
Shareholders
Annual costs
The SPV is ultimately owned and managed by shareholders. Each Company is typically divided into 10 equal shares, though it can be more, which can be owned by 1 to 10 parties. However, each SPV is structured by the Syndication Manager so that no single shareholder can acquire a majority voting position.
The annual costs to the SPV payable to the syndicate managers for the management of the asset are 1% of the gross purchase price charged annually in advance from completion.
Investment The initial investment price per share is simply the gross purchase price of the property, plus the 7% syndication fee and the set up costs of the Company, divided by 10 shares. Fees Maintenance fees for the Company cost approximately £1,500 per annum to include annual company registration. Each Shareholder shall incur a one-off standard Agreement fee of £500.00 payable at application stage. This is a non-refundable deposit to secure their position in the syndicate and covers the costs of the administration and issue of the shareholder certificate.
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Other Costs At the end of the investment term Project Kudos will provide a sales service for those investors wishing to exit the investment. The cost of selling any of the 12 units or equivalent shares to other investors will be 6% of the gross property price or 6% of the share sale value. Investment Returns All projected investment returns in this information have been calculated after allowing for all the costs shown in this section but before any UK taxes payable by direct investors themselves.
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TAXATION AND THE SPV
The following summary is a guide for investors considering whether to invest in the Champneys Marbella resort. It is not specific advice for any investor and any such investor requiring such advice should speak to their specialist advisors.
Income Tax Corporation taxation in Spain is currently paid for small companies at the rate of 25%. However the corporate structure established through which the income from the rental guarantees are received are tax efficient and mitigate annual taxable income. At the end of the term of this investment each individual’s personal tax circumstances will detail the amount and type of tax due. Capital Gains Each investor is treated under UK capital gains tax rules as having direct ownership of shares in an unquoted company. If the asset held within the SPV established for this acquisition of the property is sold as a business then the appropriate taxes are due. The circumstances of the disposal of the asset will dictate the relevant capital gains tax due. Inheritance Tax The net asset value of the investor´s assets held within the SPV will form part of the estate for inheritance tax purposes if the investor is liable to UK inheritance tax Stamp Duty and Land Tax (SDLT) The acquisition of an interest in the SPV is outside the scope of UK stamp taxes. Any subsequent transfer of an interest in the SPV may be subject to stamp duty at an applicable rate. Rates vary from Nil to 4% depending on the consideration paid. Value Added Tax The SPV will register for VAT in Spain and will apply for the VAT rebate following purchase; those funds will then be held within the SPV for the term of the investment.
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RISK FACTORS
Potential investors should carefully consider the following risk factors in relation to the investment, which individually or in aggregate could have a material effect on the investment return, and should consult their financial advisor before investing.
Valuation of the Units The sales comparison approach in valuing a resort development has some limited use in providing a range of values. Differences in location, facilities and property rights transferred and many other variables make a precise comparison between the comparable sales and this particular project difficult. Subjective adjustments used to lessen these difficulties are highly speculative. Moreover, there is no accurate way of determining whether the sales prices actually paid represent market values, because it is difficult to determine the exact motivations of the buyers and sellers, or what special conditions may have influenced the sale. Operational Risk This risk represents the likelihood that the resort development within which the units are located will under perform and will therefore experience periods of financial distress. However, given the relative experience of the management company appointed to manage the resort, the level of operational risk is not considered high. Champneys Marbella as a tourist destination The value of the development is dependent on there being a sufficient demand from tourists to visit the region and the resort for holidays and in particular being prepared to pay average room rates. As this will be a new development, there is obviously no statistical information other than comparison and general information available. To some extent this is mitigated for the investment period of 7 years as rental income is paid by guarantee. The investment´s prospective returns must be considered in light of the risks, problems, uncertainties and possible delays in the completion of the resort, which could have the effect of reducing the actual return.
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Currency The deposit into the investment is made in Euros as is the purchase price and rent guarantees. There are inherent risks in any exchange rate dependent investment. Should the Euro be stronger at exit in 7 years time the return will be greater. Should the Euro be weaker at exit in 7 years time the return will be less. (This assumes that all other variables are constant) Investors should consider the current risk associated with this investment over the lifetime of the investment, as well as the political considerations associated with these jurisdictions and how they might affect these interacting exchange rates. Sale The price that will be attained when the property is sold will be heavily dependent on a number of factors, most of which are detailed within this report. The better the performance of the income revenue at the time of sale (both high occupancy rates and high room rates), the higher the sale price will be. The currency position at that time will also be relevant. The sale of the properties will be dependent on a number of factors including market liquidity and economic conditions at that time. Liquidity This investment is in the asset class of property which is of a less liquid nature than some other asset classes. The suggested investment period is for 7 years. If an investor wishes to sell their shares prior to the liquidation of the investment then additional costs may have to be borne by that investor, such as valuation and administration costs. Shares if sold prior to the 7 year period will be offered for 30 days to remaining shareholders before they can be offered for sale elsewhere. Death of an investor during the lifetime of the investment - SIPP Investor In the event of a death of a SIPP investor on whose behalf shares are held within their SIPP, the directors of the SPV will endeavour to establish an internal market for the purchase of the shares amongst current shareholders. In the unlikely event that no buyers can be found within 3 months of notification of an investor’s death, the director may offer the shares on the open market or to a new investor at a fair market price. “Where possible for a SIPP investor the shares could be assigned to the next of kin as in a specie payment” Death of an investor during the lifetime of the investment - Non SIPP investor In the event of the death of a private individual shareholder the directors of the SPV will endeavour to establish an internal market for the purchase of the shares amongst current shareholders. In the unlikely event that no buyers can be found within 3 months of notification of an investor’s death, the director may offer the shares on the open market or to a new investor at a fair market price. In both of the above cases the definition of a “fair market price” is a subjective one and the investor’s beneficiary may receive a diminished return to that anticipated. “Where possible for a direct investor the shares could be assigned to the next of kin” Taxation Any changes to the taxation position in either the UK or Spain, or any changes to the tax treatment of the SPV may affect investment returns to the investors. The SPV has a tax transparent structure. Accordingly each investor must consider their own tax position and must take their own specialist advice. Any potential investors who are not UK resident for tax purposes are strongly advised to seek specialist advice on their own position, both in relation to withholding tax and receipts from the SPV. Take professional advice This is a fixed term investment and you are effectively tied in for the full term. In any event you should not enter into this arrangement unless you have taken financial advice from a qualified professional who has assessed your overall financial situation and particularly your exposure to risk.
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MONEY LAUNDERING REGULATION AND DATA PROTECTION
Verification In accordance with the Money Laundering Regulations 2003, we will require verification of the identity of every potential investor and any authorised intermediary acting for a prospective Investor. Any forms submitted must be completed in full and the payment mechanism must be adhered to strictly. Rejection Any potential investor not meeting the requirements will have their application rejected as we are under a legal duty to comply with the anti-Money Laundering Regulations. Compliance All investors should complete the application forms fully and comply with the information/requirements stated therein. Data Protection Act Any details or information submitted during the course of the application will be retained on a database at its registered office under the provisions of the Data Protection Act 1998. Warranty Completion of an application form warrants that all cheques forwarded by an Investor will be honored at the first presentation.
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UNIT SPECIFICATIONS
Construction • Foundations of reinforced concrete. • Main structure of reinforced concrete for both pillars and roof. • Parking and storage spaces, with flooring of mechanically polished concrete with grey quartz finishing. • Drinking water, irrigation water and water in case of fire will be held in water deposits throughout the site. • Infill walls of double layer brick with polyurethane cavity wall insulation. • Inclined roofs covered with reclaimed and new roof tiles, flat roofs with protective finish of crushed stone. Exteriors • Exteriors of moorish style toned hand finished lime and cement rendering. • Windowsills in moorish style clay tiles with guttering above in keeping with the style of the building • Exterior windows of high spec lacquered aluminium of high quality with multipoint closures. • High spec double glazing with ‘Climalit’ cavity, safety glass with thermo/acoustic insulation Interiors • Interior dividing walls of double hole ceramic brick, dividing walls of specialised sound resistant brick. • Walls of fine plaster high quality finish • Ceilings of high quality finish fine plaster and false ceilings of fine plaster finished plasterboard • Bathrooms finished with high quality hand polished stucco applied by master plasterers over a fine plaster and polished concrete base.
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Floorings •
Interior flooring in high quality ‘ivory cream’ marble with a nine centimetre skirting of the same material. The interior steps of the penthouse in the same ‘ivory cream’ marble in full slabs.
• Building staircase steps, skirtings and landings in hand made moorish style clay tiles. • Terrace exteriors in hand made moorish style clay tiles with skirting in the same style tiles. • Communal zone flooring of hand made moorish style clay floor tiles and outdoor pathways of colour textured printed concrete. • Fully fitted bathrooms with horizontal surfaces of high quality ‘ivory cream’ marble slabs with 40x40 ‘ivory cream’ high quality marble flooring. Interior Carpentry • Apartment feature front door in wood finish by Wengue with hidden vertical bolts and security lock. • Interior doors also by Wengue with horizontal design feature and door furniture in stainless steel. •
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Inlaid wardrobe doors in wood and frosted glass by Wengue to complement the interior doors, fitted melamine interior, shelving and hanging area, designer round handles in stainless steel.
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Installations •
Plumbing installations with high quality sanitary units by Roca model Dama Senso and Roca monotap model Logica with thermostat control in the bath/ shower. Installation of high spec PVC tubing.
• Electrical installation in accordance with current building regulations, with high spec mechanisms, mechanism model Simon 82 in colour. •
Telecommunications Installations in accordance with current building regulations with TV and telephone points in all bedrooms, living room and kitchen. Satellite TV installation included.
• Hot and cold high spec Air Conditioning fully installed with thermostat and remote control in the whole property except the bathroom (heated towel rails). Unique Design Details • Designer Moorish fountains in the interior patios of all the properties • Panoramic window feature wall in the living area of the penthouses with motorized blinds • Plunge pools in the penthouse terraces • Hot tub/jacuzzi preinstallation on first and ground floor terraces. • Underfloor Heating • Surround sound pre-installation
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KUDOS Malvern House New Road, Solihull B91 3DL Tel: +44 (0) 208 090 1874 www.projectkudosgroup.com