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Resort Investment Analysis Medical Spa

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Boutique resort property investment analysis sample

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Resort Investment Analysis Medical Spa

  1. 1. Investment Analysis Saboey Resort and Villas Big Buddha Beach, Koh Samui, Thailand
  2. 2. Presentation Outline  The Investment Objective  Property Description  Current Status  Projected Cash Flows  Baseline Projection Assumptions  Resort Operations  Partnership Structure  Appendix
  3. 3. The Investment Strategy  Objectives  Produce a minimum, total annual return (IRR) of 25% over a five-year holding period  Generate a minimum, annual, cash-on-cash return of 15%  Strategy  Purchase leasehold and operating rights to a newly constructed, beachfront, boutique resort  Retain partnership with current developer-operator  Apply innovative and effective marketing programs to maximize current occupancy and room rates  Maintain 100% equity i.e., no debt  Financing  Purchase Cost: $1,000,000  Capital Funding Sources: GP: $175,000 LP: $75,000 Loan: $750,000
  4. 4. Samui International Airport Property Description Saboey Resort  Conveniently situated, close to the airport, and the busy tourist center of Chaweng, the spectacular bay is home to both traditional wooden fishing boats, diving schools, and island hopping speed boats, yet remains tranquil, under the watchful eyes of the 14m high golden Big Buddha statue, Samui's biggest cultural attraction.  Saboey provides a haven of simple elegance in a contemporary tropical style. Designed to maximize comfort, space, and privacy, the resort is unparalleled within its price range, offering affordable luxury for the discerning traveler. Sloping gently down to the beachfront, each of the well-appointed villas enjoys panoramic sea views and vast wooden decks. A double infinity edge feature of the freshwater pool and cascading Jacuzzi provides both with a seamless view onto the sea. The lush tropical gardens landscaped around the existing palms are adorned with water features, and are kept vibrant with an eco-friendly flow of collected rain water and recycled filtered drainage water.
  5. 5. Current Status  Corporate Structure: Thai Private Limited Liability Company  Shareholders: Managing Partner, Jose Levi plus two passive equity partners  Facilities:  14 units, café/bar and main areas operating. To complete remaining 6 units and 50 seat restaurant by December 31, 2005  Selling Price: $1,400,000  Operating Results: Revenue Current Month Current year Hotel 19,106.23$ 159,039.20$ Restaurant 3,984.48$ 32,320.58$ Bar 3,426.45$ 28,598.68$ Laundry 29.53$ 402.55$ Other 1,698.98$ 10,908.10$ Service Charge 2,855$ 23,370$ Rental & Other 2,854.65$ 681.95$ Total Gross 33,954.95$ 255,321.53$ Occupancy 56.65% 48.29% As of 8/29/2005
  6. 6. Projected Cash Flows Baseline Case Acquisition Sources of Funds Cash Investment, General Partner 182,500 Cash Investment, Limited Partner 100,000 First Mortgage 750,000 Total: $1,032,500 Uses of Funds Purchase, Real Estate 1,000,000 Purchase, Personal Property 0 Closing Costs 25,000 Points 7,500 Amortized Fees 0 1st Year Capital Improvements 0 Total: $1,032,500Property Overview Cash Taxable Cash Flow Taxable Gain Proceeds Year Invested Income Before Taxes on Sale of Sale 2006 282,500 115,567 63,490 2007 51,263 (4,658) 2008 122,993 62,909 2009 138,059 73,511 2010 154,296 84,962 175,570 760,072
  7. 7. Baseline Projection Assumptions  Sell in fifth year  20 rental villas, café/bar, and medical spa  Selling price based on 15% cap rate  Room rate growth of 8.0%  Expense growth of 3.5%  Starting average room rate = $50/night (not including 10% service charge)  Average occupancy 65%  Tax rate of 30%  Debt: $750,000 10 year fully-amortizing loan at 7.0% int.
  8. 8. Hotel Operations Competitive Advantages  Direct beachfront location  Mostly, private villas  Branded and promoted medical spa as magnet  State-of-the-art operations, mechanicals and ambiance  Close to Chaweng commercial and nightlife area  Less than 10 minutes from Samui International Airport  Steps from the Ferry Port to neighboring islands and the Angton National Park islands  Personalized service with experienced management and staff  Full range facilities, services and amenities
  9. 9. Partnership Structure  Limited Partnership or LLC  Koh Samui Investments LLC is the General Partner and will assume all management and reporting responsibilities  General Partner contributes 70% of total investment and receives 75% of operating cash flow plus 75% of realized gain on sale  90% of cash flow distributed as received  Assets will be owned through a Thai private limited company (may purchase shares of existing company to avoid transfer tax)  Taxes on money distributed will be the responsibility of the individual member
  10. 10. Appendix  Photos of Property  Revenue Analysis  Projected Income and Expenses  Analysis of Operating Cash Flows  Analysis of Resale  Limited Partnership Analysis  Disclaimer  Contact Information
  11. 11. Picture Gallery
  12. 12. Projected Income and Expenses PROJECTED INCOME AND EXPENSES, in total dollars 2006 2007 2008 2009 2010 INCOME Gross Scheduled Rent Income 401,500 433,620 468,310 505,774 546,236 Food & Beverage 80,000 86,724 93,662 101,155 109,247 Rent from Medical Spa 75,000 75,000 75,000 75,000 75,000 TOTAL GROSS INCOME 556,500 595,344 636,972 681,929 730,484 VACANCY & CREDIT ALLOWANCE 140,525 151,767 163,908 177,021 191,183 GROSS OPERATING INCOME 415,975 443,577 473,063 504,908 539,301 EXPENSES Land Lease 0 57,750 Food & Beverage 40,000 43,362 46,831 50,577 54,624 Operating Costs 207,988 221,789 236,532 252,454 269,650 Consultant 0 20,837 22,294 23,868 25,567 TOTAL EXPENSES 247,988 343,738 305,657 326,899 349,841 NET OPERATING INCOME 167,988 99,839 167,407 178,009 189,460
  13. 13. Analysis of Operating Cash Flows ANALYSIS OF OPERATING CASH FLOWS 2006 2007 2008 2009 2010 NET OPERATING INCOME 167,988 99,839 167,407 178,009 189,460 - Debt Service, First Mortgage 104,498 104,498 104,498 104,498 104,498 CASH FLOW BEFORE TAXES 63,490 (4,658) 62,909 73,511 84,962 Cash on Cash Return (CFBT/Initial investment) 22.47% -1.65% 22.27% 26.02% 30.08% Reserves Utilized 0 0 0 0 0 Reserves Remaining 0 0 0 0 0 NET CASH FLOW AFTER UTILIZING RESERVES 63,490 (4,658) 62,909 73,511 84,962 - Income Tax Attributable to Property 0 0 0 0 0 CASH FLOW AFTER TAXES AND RESERVES 63,490 (4,658) 62,909 73,511 84,962 Cumulative Cash Flow After Taxes 63,490 58,832 121,741 195,252 280,214
  14. 14. Analysis of Resale ANALYSIS OF RESALE Saboey Long-term Stay 2006 2007 2008 2009 2010 PROJECTED SELLING PRICE, incl. pers. property 1,120,000 666,000 1,116,000 1,187,000 1,263,000 - Costs of Sale 56,000 33,300 55,800 59,350 63,150 - First Mortgage Payoff 696,302 638,721 576,978 510,771 439,778 + Balance of Reserve Fund 0 0 0 0 0 BEFORE-TAX SALE PROCEEDS 367,698 (6,021) 483,222 616,879 760,072 Internal Rate of Return, Before Tax 52.63% n/a 32.07% 34.35% 34.78% PV, Net Operating Inc. & Sale Price less Costs of Sale 985,590 603,215 826,822 818,797 812,161 EQUITY, excluding reserves 423,698 27,279 539,022 676,229 823,222 RETURN ON EQUITY (CFBT/equity) 14.98% -17.08% 11.67% 10.87% 10.32%
  15. 15. Partnership Analysis 2006 2007 2008 2009 2010 LIMITED PARTNER’S CAPITAL ACCOUNT Balance, Beginning of Year 100,000 114,607 127,422 144,016 161,991 ± Income or Loss from Operations 28,892 12,816 30,748 34,515 38,583 - Distributions from Cash Flow 14,285 0 14,155 16,540 19,116 Balance, End of Year 114,607 127,422 144,016 161,991 181,458 + Profit from Sale 0 0 0 0 43,892 - Distribution from Sale 0 0 0 0 226,515 ENDING CAPITAL ACCOUNT BALANCE, LP n/a n/a n/a n/a (1,165) GENERAL PARTNER’S CAPITAL ACCOUNT Balance, Beginning of Year 182,500 226,320 264,767 314,548 368,472 ± Income or Loss from Operations 86,675 38,448 92,245 103,544 115,750 - Distributions from Cash Flow 42,856 0 42,464 49,620 57,349 Balance, End of Year 226,320 264,767 314,548 368,472 426,873 + Profit from Sale 0 0 0 0 131,677 - Distribution from Sale 0 0 0 0 562,044 ENDING CAPITAL ACCOUNT BALANCE, GP n/a n/a n/a n/a (3,494)
  16. 16. Measures of Investment Quality Resale at End of 2010 Projected Selling Price: $1,263,000 Cost of Sale: $63,150 Gain (Loss) on Sale: $179,320 Federal Tax on Sale: $0 Before-Tax Sale Proceeds: $760,072 Measures of Investment Quality IRR, Before-Tax: 34.78% MIRR, Before-Tax: 30.73% PV, at 25.00% $812,161 Debt Cap. Gross Cash on Operating Gross Operating Coverage Rate Income Cash Expense Income, Expenses, Ratio Multiplier Return Ratio $/sf $/sf 2006 1.61 16.80% 2.69 22.47% 59.62% 51.94 23.15 2007 0.96 9.98% 1.50 -1.65% 77.49% 55.57 32.08 2008 1.60 16.74% 2.36 22.27% 64.61% 59.45 28.53 2009 1.70 17.80% 2.35 26.02% 64.74% 63.65 30.51 2010 1.81 18.95% 2.34 30.08% 64.87% 68.18 32.65
  17. 17. Disclaimer This report is not intended as an offering to purchase securities. The information and calculations presented in this analysis are believed to be accurate, but are not guaranteed. They are intended for the purposes of projection and analysis, and should not be used for preparation of income tax returns. Federal tax calculations in this report are based upon the Tax Reform Act of 1986, the Revenue Reconciliation Act of 1993, the Taxpayer Relief Act of 1997 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 and are subject to revision as well as further clarifications, interpretations, rulings, regulations and technical corrections. These tax calculations are also based upon certain assumptions about the taxpayer and about the property, and do not take into account the possibility of Alternative Minimum Tax liability, the At-Risk rules, investment interest limitations, possible future-year indexing of tax brackets, or the impact of other investments which may intereact to produce tax consequences other than those projected here. The user of this program and information should consult a tax specialist concerning his/her particular circumstances before making any investment decision. *Note especially that a taxpayer’s ability to use losses generated by this investment to offset income generated by this investment is likely to be affected by the taxpayer’s particular circumstances, including Adjusted Gross Income, and passive and investment income or losses from other activities. Consult your tax advisor regarding these issues. Any reference to "this partner," "this LP" or "this member" refers to any partner or member with a given percentage interest based on his/her share of capital invested.
  18. 18. KSI Contact Information Russell M. Blumenthal Managing Director Koh Samui Investments LLC Emal: russblumenthal@hotmail Phone: +66 (0)1 669 0330

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