Mixed used fractional ownership concept in the South of France

f²h Paris-Provence French fractional & hospitality fund May 25, 2009

f²h May 25, 2009 A collection of small luxury estates in the South of France, each comprising up to 6 apartments offered as fractionals and up to 20 hotel rooms, with boutique-style 4-star & concierge services. An attractive IRR, thanks to the combination of developer profit, hospitality cash flows and the proceeds of the salesthe hotel business after 10 years. © Domaine & Demeure

f²h May 25, 2009 1 The concept Paris A 6-unit mixed-used luxury properties chain Each property: • Historical estate or house • 6 for-sale fractional flats and 20 hotel rooms • Mutualised concierge service, outsourced restaurant Provence Marketing edge: • Building on the fractional/lifestyle trend Paris • Unique offering for francophile US babyboomers + Provence 3-level leveraged value creation over 10 years: • Promoter’s return on fractional flats (62%) • Hotel cash flows (8%) • Proceeds of the sale of hotel business (30%) © Domaine & Demeure

f²h May 25, 2009 1 In a nutshell • For investors with real estate experience and an interest for small luxury hotels but Fractional real estate no taste for hands-on management • Leveraging two growth markets: fractional ownership & made-to-measure travel + Boutique hospitality • Paris & Provence: the best locations in the world’s most visited country • 4m€ invested grows into 37m€ after 10 years (52% IRR) • 400 investors @ 10,000€ each, or 20 investors @ 250,000€ each © Domaine & Demeure

f²h May 25, 2009 2 What’s in it for investors • 6 historical properties with 6 fractional apartments and 20 hotel rooms* in each – and 4-star services and amenities: a small hotel chain in its own right (33 flats, 106 rooms under management) • Mixed use: small luxury hotel and for-sale fractional: safer option for investors, which enables above average return • Fractional: long term trend, alternative to second home ownership, lifestyle concept • Comparables: ▫ RitzCarlton, Fairmont, Wyndham: all develop mixed use with fractional ▫ Garrigae in Languedoc (incl. hotels) ▫ Les Maisons de Baumanière (Avenio) * 3 fractional apartments and 6 rooms in the Paris townhouse © Domaine & Demeure

f²h May 25, 2009 2 What’s in it for co-owners & guests • A new way to travel, to go on vacation, to own a second home • For co-owners: ▫ More than just money – why pay 100% of a vacation home to use it only 15% of the time? ▫ Hotel rooms for their guests – like an « extendable » holiday home ▫ Paris & Provence: so co-owners can stop over in the City of Lights • For hotels guests: ▫ True boutique hotels: historic properties, modern amenities, just 20 rooms, the same 4-star service that co-owners enjoy ▫ A boutique hotel for less: the quality, the style, the service – without the stupid prices © Domaine & Demeure

f²h May 25, 2009 3 Clientele • North American (USA/Canada) baby boomers looking to organise their later years: travel, vacation/second home • France/Provence lovers, typical profile: Alliance Française members • A few figures: ▫ 100,000: US citizens reside in France ▫ 400,000: US citizens visit Provence (PACA/LR) each year ▫ 2,500: US fractional owner in Provence potential in 2013

f²h May 25, 2009 4 Paris • 1.3m North American tourists visited Paris in 2008 • Targeting those who want to go beyond St Germain des Prés and the Eiffel Tower • Solid demand for luxury accomodation, boutique hotel type – at the right price • Natural stop over on the way to Provence

f²h May 25, 2009 5 Provence (« where the Mistral rules ») • The most visited French region outside of Paris: 12 millions foreign tourists per year • Every American knows Provence • Mediterranean climat: olive trees, vineyards, palm trees, garrigue, scrublands, fig trees, apricot and cherry trees • 280 days of sun a year, summers from May to October, average temperature 25°C (77°F) • Easy reach from anywhere

f²h May 25, 2009 6 Partnerships • Branding: to build on the « Provence » name within the USA, for ex: L’Occitane or Souleiado • Architect & design: to capitalize on the credibility LAFOURCADE of an experienced professional, for ex: Lafourcade, Thoulouze • Food & beverage, concierge: to offer the top- quality service needed (and organize cooking seminars), a regional Michelin chef, for ex: Jérôme Nutile, Hostellerie Le Castellas (Collias) • Affiliation services: to commercialize the rooms and manage the fractional flats seamlessly, for ex: The Registry Collection • Commercial: to sell the fractional shares to a North American clientele, for ex: Global Quarters

f²h May 25, 2009 7 Legal structure • The investors’ owned hotel business can be set up offshore, with a French subsidiary running the properties in Paris & Provence • Each property is structured as a French condominium (copropriété horizontale), including 6 fractional flats (separately owned) and the hotel premises (owned by the hotel business) • Each fractional flat is the property of a French SCI (société civile immobilière), owned by a US LLC controlled by its co- owners

f²h May 25, 2009 8 Typical city site • Art Deco house, built in 1924 for writer Frank Townshend, design by André Lurçat, a Cubist architect friend of Le Corbusier (unlisted by owner choice) • In the private « Villa Seurat » (20 houses) where former tenants include Salvador Dali and Henry Miller • 420 m² (4520 sq.ft) on 5 floors, with 2 separate stairs and entrances, a roof terrace (60 m²) and a patio (30 m²) • Potential for 3 fractional flats, 6 hotel rooms • Parc Montsouris quartier, quiet, recently renovated one-way street (Tombe-issoire) • Current price tag: 3m€

f²h May 25, 2009 9 Typical rural site (1) • Heritage 18th century property, with own name (« Mas Dalgaz ») on the map • 5 acres, 64 more available • Nice open plain location, gentle hills in sight • Mature trees, easily landscapable surroundings • 14,000 sq.ft inside 6 buildings • Current price tag: 790,000€

f²h May 25, 2009 10 Typical rural site (2) • 14 miles from Uzès, 16 miles from Nîmes • Airport: 23 miles; high-speed train (TGV): 16 miles • On the outskirt of the village, less than 400 yards from village center • Only one property nearby (line of sight with some trees)

f²h € May 25, 2009 11 Investment metrics (per rural unit*) Property purchase cost/m² 590€ Renovation cost/m² 1,400€ Furnishing cost/m² 840€ Architect’s fee 12% # of fractional flats 6 # of guest/hotel rooms 20 Average flat size 110 m² Average room size 25 m² Common areas 160 m² * City unit metrics & financials available on demand

f²h € May 25, 2009 12 Investment (per rural unit) Purchase 869,000€ Renovation 1,928,000€ Interior design & furnishing 1,104,400€ Landscaping & outdoor 564,000€ Coordination 260,572€ Financing 160,352€ Other costs 659,439€ Per unit 5,488,727€ Total cost per m² 4,096€

f²h € May 25, 2009 13 Fractional sales (per rural unit) Fractional flats per domaine 6 Shares (co-owners) per flat 36 Price per share 210,000€ Gross sales 7,560,000€ Sales & marketing costs 1,512,000€ Net sales 6,048,000€ Costs 5,020,190€ Financing (30%, 3 years, 6%) 296,391€ P/L per rural unit 1,909,500€ ROI p.a., 3 years 17%

f²h € May 25, 2009 14 Hotel revenues metrics (per rural unit) Co-owners’ annual 4% maintenance fee of purchase price Hotel room price (incl. Tax) 190€ Average room service charge 46€ Hotel occupancy rate (all year) 50% Margin on outside services 20% Seminars (cooking etc.)/year 7

f²h € May 25, 2009 15 Hotel revenues (per rural unit) Room sales 451,894€ Co-owners fees 302,400€ Food & beverages 163,800€ Seminars (net) 28,840€ Other revenues (net) 87,750€ Per unit 1,034,684€

f²h € May 25, 2009 16 Expenses metrics (per rural unit) Number of staff 12 Staff-to-guest ratio 1:4 Salaries/total cost 53% Social security costs/base salary 80% Management & affiliation fee/total revenue 6.7% Yearly remplacement provision: Fractional flat 11,000€ Guest room 2,500€

f²h € May 25, 2009 17 Expenses (per rural unit) Salaries 455,760€ Furniture replacement provision 116,000€ Materials 56,400€ Management & affiliation fees 68,969€ Office, running & other costs 63,900€ Marketing & sales 117,600€ Per unit 878,629€ Operating profit 156,055€ 15%

f²h € May 25, 2009 18 10-year P/L Fractional sales 34.8m€ Hospitality cash flow (net) 4.6m€ Sale of hotel business 16.4m€ 55.9m€ Investment 22.9m€ Cost of financing 1.6m€ 24.5m€ Profit 31.4m€ Cash invested 4m€ IRR 52%

f²h € May 25, 2009 20 10-year summary

f²h € May 25, 2009 21 Model variations • Add another townhouse – either in Paris or in Montpellier, Aix or Avignon • Replicate the concept in other countries, with a historical heritage and a vacation/sun identity • Develop rural units outside of Provence, for ex: Bordeaux region (wine estate) or Brittany

Thank you for your interest Contact: Pierre Guillery  +33 (0)6 8434 8992 f²h pguillery@francefractionalinvest.com www.francefractionalinvest.com

Mixed used fractional ownership concept in the South of France

0 comments

Notes on slide 1

Favorites, Groups & Events