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Sea&Sun English

  1. 1. Investment projects in city-resort Jurmala, Latvia Development of elite residential apartment houses in Jurmala. Projects acquisition proposal August 2008
  2. 2. Executive summary <ul><li>This presentation provides an overview of, and proposal to acquire, 2 residential real estate investment projects in Jurmala, Latvia. </li></ul><ul><li>The projects’ name “Sea&Sun” represents the essence of unique and beautiful town of Jurmala, a recreational resort city just 20 minutes drive from Riga city, the largest metropolis in the Baltic and Scandinavian countries. The projects can be acquired separately or together. </li></ul><ul><li>“ Sea&Sun-1” is located on 79 Melluzu prospect, it has approved technical design ( the “red stamp” ) , construction and sales can be started after receiving building permit (within 0.5 -2 months) . Land plot area: 3,740 m 2 . </li></ul><ul><li>“ Sea&Sun-1” acquisition price is EUR 2,200,000. </li></ul><ul><li>“ Sea&Sun-2” is located on 3 Olgerta street, it has approved detailed planning and APA * , construction and sales can be started after design approval and building tender (within 6- 8 months) . Land plot area: 4,879 m 2 . </li></ul><ul><li>“ Sea&Sun-2” acquisition price is EUR 2,400,000. </li></ul><ul><li>The seller of the projects – Arbuma Ltd. – an experienced project management and development consulting company, is ready to provide project management services to the prospective investor under a separate agreement. </li></ul><ul><li>* Architectural Planning Assignment ( PAU in Latvian) is issued by municipality. It assigns design, technical and other parameters of the future object. The APA is a “green light” to architectural and technical design, and other planning activities. </li></ul>
  3. 3. <ul><li>City-”chain” of 20 towns along Riga Gulf shores </li></ul><ul><li>Recreational resort-city and second residence to the upper-class from all over the world </li></ul><ul><li>55,000 inhabitants </li></ul><ul><li>32 km of fine white sand beaches, “Blue Flag” certified </li></ul><ul><li>Pine tree woods and 2 national nature resorts </li></ul><ul><li>Latvia’s second largest River of Lielupe borders Jurmala along 30 km, host to boat and yacht ports </li></ul><ul><li>25 min drive from Riga, and 15 min drive from the International Airport “Riga” </li></ul><ul><li>Convenient commute train connection to Riga Central Railway Station </li></ul><ul><li>Host to numerous world famous song contests, festivals, star concerts and shows </li></ul><ul><li>SPA-centres, aqua parks, rehabilitation centres are welcoming visitors from all over the world </li></ul>Jurmala Jurmala: between The River and The Sea Riga Centre ♫ Jurmala borders Riga borders International Airport “Riga” ♫ Concert Hall “Dzintari” Sea&Sun-1 Sea&Sun-2
  4. 4. Description of the projects Sea&Sun-1 Sea&Sun-2 Location 79 Melluzu prospect 400 m from the sea, 5-7 minutes drive from Jurmala city center 25 minutes drive from Riga Bus stop: 2 min walk Train stop: 10 min walk 3 Olgerta street 200 m from the sea, 7-10 minutes drive from Jurmala city center 25 minutes drive from Riga Bus stop: 5 min walk Train stop: 10 min walk Status of the project Technical design approved, building permit and tender is necessary to start construction and sales. This stage can be completed in 1-2 months. Detailed planning is ready, PA U received, technical and sketch designs to be started and approved. This stage can be completed in 6- 8 months. Planned project duration 24 months / 2 years 3 2 months / 2 years and 8 months Infrastructure in the neighbourhood Restaurants & cafes, school, equipped sand beach, grocery shops, aqua parks recreation centres, hotels, a supermarket construction is planned in the neighbourhood, the neighbourhood is located 3 km from Kauguri (Jurmala most populated district with market, hypermarkets, department stores, and other urban infrastructure). Design decisions Technical design for 40- apartment two - section dwelling house with underground parking is accomplished and approved Design of detailed planning , which allows designing and construction of 3 one - section dwelling houses for several families in 300 m protected dune zone is accomplished and approved Area to build Built area: 5,956 m 2 Saleable: 5,346 m 2 (apartments+other premises) + 44 underground parking units Built area: 6,622 m 2 Saleable: 6,010 m 2 (apartments+other premises) + 50 underground parking units Project acquisition price EUR 2,200,000 EUR 2,400,000
  5. 5. Description of the projects: areas Sea&Sun-1 Sea&Sun-2 Land plot area 3’740 m 2 4’879 m 2 Number of floors 3.5 floors + basement 2.5 floors + basement Number of apartments 40 apartments 50 apartments Total built area, incl.: 5’956 m 2 6’622 m 2 - Above ground built area 4’151 m 2 4’732 m 2 - Basement area 1’805 m 2 1’890 m 2 Total saleable apartment area , incl.: 3’811 m 2 4’370 m 2 - Balconies’ area 128 m 2 250 m 2 Ground floor terraces area 445 m 2 500 m 2 Roof terraces area , incl.: 950 m 2 940 m 2 - Covered roof terraces 184 m 2 - - Open roof terraces 766 m 2 940 m 2 Number of underground parking units 44 units 50 units Basement storage rooms 141 m 2 (31 units) 200 m 2 (50 units)
  6. 6. Sea&Sun development concept <ul><li>environment friendly materials, </li></ul><ul><li>“ breathable ” external walls , which unite massive Keroterm clay blocks laying and high - performance heater from stone wadding , </li></ul><ul><li>wooden windows and facades ’ finishing with mineral stucco and wood, </li></ul><ul><li>maximum level of sound proofing from the outside and between rooms/apartments, </li></ul><ul><li>maximum sun-light in the apartments thanks to correct orientation of the building, </li></ul><ul><li>arrangement of large panoramic windows, </li></ul><ul><li>intelligent ventilation and air conditioning solutions, </li></ul><ul><li>highest level of heat insulation of the walls and the roof , </li></ul><ul><li>territory improvement foresees planting of specially selected kinds of grass, bushes and trees, </li></ul><ul><li>comfortable and modern Otis elevators without engine room, practically noiseless, </li></ul><ul><li>natural lightening of staircases and elevator halls through the roof window and area lights in ceiling, </li></ul><ul><li>use of relaxing effect of flowing water by arrangement of waterfalls in staircases and elevator halls, as well as fountains by the entrance to the buildings, </li></ul><ul><li>equipped areas for fireplaces’ arrangement in each apartment, </li></ul><ul><li>specially selected color gamma in spaces for relaxation and creation of positive for health environment , </li></ul><ul><li>arrangement of underground heated parking with elevators to the apartment . </li></ul>“ Green” and advanced technologies will be broadly applied in the construction of Sea&Sun buildings:
  7. 7. Sea&Sun concept <ul><li>Engineering concept of dwelling houses of Sea&Sun complex satisfies requirements of modern European elite house, int. al. the following amenities are foreseen: </li></ul><ul><li>video access into the house , </li></ul><ul><li>round-the-clock guarding of buildings using video monitoring system, security and fire alarm, </li></ul><ul><li>arrangement of modern economical automatic heating gas boiler room, </li></ul><ul><li>specially selected filters ’ system on the incoming water-supply pipe, </li></ul><ul><li>energy-saving hot water boilers, </li></ul><ul><li>controllable heating system with high-performance heaters, </li></ul><ul><li>intelligent and effective ventilation and smoke removal system from parking and fireplaces in the apartments, prepared networks for air conditioning systems installation, </li></ul><ul><li>effective power supply system s, house and territory lightening arrangement , </li></ul><ul><li>fast internet, digital multichannel television, and telephone lines in each apartment, </li></ul><ul><li>monitor counters installation in apartments with data transfer to the centralized computer without necessity for strangers to enter the apartment. </li></ul>
  8. 8. Financials Sea&Sun-1 The above project financial data and calculations are based on usual business assumptions and cannot be guaranteed to a potential investor by the project Seller. The above financial data is derived by applying a project financial model, which can be presented to the prospective investor upon request. The financial model assumes inflation 6% p.a. assumed for both costs and revenues Sources Uses 56% Bank loan @ 40% (land), 80% (construction) € 5.21 m 24% Project acquisition € 2.25 m 38% Equity € 3.53 m 68% Construction hard costs € 6.27 m 6% Other equity (pre-sales and sales) € 0.51 m 8% Project soft costs € 0.73 m 100% Total sources € 9.25 m 100% Total project costs € 9.25 m Sales (incl. VAT) Apartments @ 2’900 EUR/m 2 (starting price) 3’810 m 2 € 11.44 m Covered roof terraces @ 1’800 EUR/m 2 (starting price) 184 m 2 € 0.34 m Open terraces @ 800 EUR/m 2 (starting price) 1’211 m 2 € 1.00 m Basement storages @ 1’600 EUR/m 2 (starting price) 141 m 2 € 0.23 m Underground parking @ 14’ 000 EUR/unit (starting price) 44 units € 0.64 m Total sales € 13.65 m Total project duration: 24 months Main project results & ratios Equity to invest € 3’535’000 Dividends (after profit tax 15%) € 3’131’000 Net mark-up before tax 45% Net mark-up after tax 38% ROE (dividends / equity invested) 89% xEquity 1.9x Unleveraged IRR 47.9% Leveraged IRR 69.4%
  9. 9. Financials Sea&Sun-2 The above project financial data and calculations are based on usual business assumptions and cannot be guaranteed to a potential investor by the project Seller. The above financial data is derived by applying a project financial model, which can be presented to the prospective investor upon request. The financial model assumes inflation 6% p.a. assumed for both costs and revenues . Areas and other technical data are assumed based on approved detailed planning and PAU. Sources Uses 43% Bank loan @ 40% (land), 80% (construction) € 4.36 m 24% Project acquisition € 2.45 m 44% Equity € 4.53 m 65% Construction hard costs € 6.68 m 13% Other equity (pre-sales and sales) € 1.35 m 11% Project soft costs € 1.11 m 100% Total sources € 10.24 m 100% Total project costs € 10.24 m Sales (incl. VAT) Apartments @ 3’100 EUR/m 2 (starting price) 4’370 m 2 € 14.49 m Open terraces @ 1’000 EUR/m 2 (starting price) 1’440 m 2 € 1.54 m Basement storages @ 1’600 EUR/m 2 (starting price) 200 m 2 € 0.34 m Underground parking @ 14’ 000 EUR/unit (starting price) 50 units € 0.75 m Total sales € 17.12 m Total project duration: min 32 months Main project results & ratios Equity to invest € 4’531’000 Dividends (after profit tax 15%) € 4’916’000 Net mark-up before tax 64% Net mark-up after tax 54% ROE (dividends / equity invested) 109% xEquity 2.1x Unleveraged IRR 48.4% Leveraged IRR 60.7%
  10. 10. Arbuma <ul><li>Arbuma Ltd. is a dynamically growing company that works as a project manager in the Real Estate market in Latvia since 1999. Using its own experience in design and construction of the largest projects in Latvia as well as experience of team members of it’s subsidiary design and construction company “LPL”, Arbuma provides qualified project development services to local and foreign investors. </li></ul>Experience in design and construction, knowledge of Latvian legislation and real estate market development conditions allows us to guarantee our clients quality project management service, int. al.: Recent projects developed by Arbuma as project manager Recent projects developed by Arbuma as investor and developer Office building in Riga client: Baltic GreenhouseTechnic Ltd. Dwelling complex with hotel and office building in Riga client: Aeropark Ltd. Multistorey multiapartment house in Riga client: Reltcom Ltd. Multistorey multiapartment house in Balozi, Riga district client: B Fonds Ltd. Tennis club “ENRI” , Arbuma Ltd. and LPL Ltd. administrative building Townhouses in Ramava, Kekava Parish Exclusive apartment house in Riga Shopping and office centre Praga, in Riga
  11. 11. Acquisition proposal <ul><li>Projects’ acquisition prices include transfer of title to the land plots and all relevant project documentation and materials; </li></ul><ul><li>The price can be decreased if the two projects are acquired together; </li></ul><ul><li>Title transfer: Sea&Sun-1 to be transferred from legal entity, Sea&Sun-2 – from natural person (Latvian resident); </li></ul><ul><li>Arbuma team also offers its services of development manager, under a separate agreement; </li></ul><ul><li>At the project Buyers’ request Arbuma may assist in organisation of the process of development projects in Latvia, incl.: choice of banks, lawyers, tax and accounting advisors, and other specialists the Buyer will need for transaction; </li></ul><ul><li>For any further inquiries and negotiations please contact Mr. Ilya Berkov, tel. +371 2951 3720, [email_address] . </li></ul>
  12. 12. Appendices
  13. 13. Sea&Sun-1 79 Melluzu prospect Visualisation and general plan of the plot
  14. 14. Sea&Sun-1 79 Melluzu prospect Facades Front view Rear view Side views
  15. 15. Sea&Sun-1 79 Melluzu prospect Selected floor plans 1 st floor Basement floor
  16. 16. Sea&Sun-2 3 Olgerta street General plan and concept visualisation
  17. 17. Prices of selected new residential projects in Jurmala For more information and market data see Sea&Sun № Project Web page Selling prices 1 Edem from 3’400 EUR/m 2 2 365 from 3’400 EUR/m 2 3 Summertime from 2’100 EUR/m 2 4 SunDays from 3’500 EUR/m 2 1 2 3 4
  18. 18. Jurmala views
  19. 19. Jurmala views