Herastrau Property - Navigator Consulting · PDF fileHerastrau Property ... This Teaser is being furnished for the sole purpose of assisting the recipient in deciding whether to proceed

© Navigator Consulting Group Ltd. 2013

Herastrau Property

Luxury Student Apartments in Bucharest, Romania


Herastrau Property

Investment Sought

The Herastrau project will develop the first large-scale, purpose‐built student housing complex in central Bucharest, housing 506 students in 484 units. The project is located in the Romexport area 500 m from the Mai 1 metro station. It is adjacent to two major universities, and part of a larger mixed-use development by an international property group. The project will offer affordable luxury, catering and other services, and comprises a unique housing offer in a rapidly-developing area. The majority of income is from room lettings at a monthly, all-inclusive average rent of EUR 225/student (including VAT). Due to significant supply and demand imbalance in Bucharest, we expect a high occupancy rate of 95% and an average tenancy period of 11.5 months. Additional rental income is derived from retail space (EUR 25/m2 per month) on the ground floor. Non-rental income from laundry, parking, vending machines and advertising is additional.

Avg. Annual Net Operating Income

EUR 1,330,000 (8 years operation)

Avg. Annual Net Operating Yield

12.8%

LTV Ratio

61%

Loan Terms

6% interest during operations; 15 years

Design & Permitting:

4-5 months

Construction & Commissioning:

16-18 months

Amount Total (EUR)

Land Contribution 2,070,000

Other Equity Investors 1,988,824

Total Equity Required 4,058,824

Total Bank Loan 6,343,252

Total Development Cost 10,402,075

Project Objectives

EUR 1,990,000 for 39% equity in the project. Alternative arrangements are possible.


The Location

Herastrau Project

The project is located in the Romexport area of Bucharest, near Herastrau Park. Nearby transport includes the Mai 1st Metro and several bus stops. The Piata Romana and Piata Universitatii universities are 5 and 6 stops away on the Mai 1st line.

The project is located near the University of Agricultural Sciences and the Veterinary Medicine, as well as the the Romano-Americana University.


The Project

Site Specifications

•  Land Area: 3,000 m2

•  Building Coefficient: 3.7

•  Surface Coverage: 70%

•  Total Buildable Area: 14,100 m2

•  Above-Ground: 11,180 m2

•  Underground: 3,000 m2

Unit Types

•  Single Studios

•  Twin Apartments

•  3 / 4 Bedroom Cluster Apartments

•  Luxury Single Studios

•  Disabled Rooms

The project comprises 484 units in 12 above-ground floors, with the majority of units comprising high-spec studios with en-suite bathrooms. The ground floor includes 460 m2 of retail space. An underground car park with 96 spaces will be available underground. Facilities:

•  Café •  Fitness Centre •  Courtyard Communuty Area

•  Communal Study / TV Rooms •  Landry •  Games Space

•  Storage Benefits •  Central Location •  Free Internet Access

•  24/7 Security •  Contemporary Design

•  Cashless Environment •  Student Services Support •  Onsite Maintenance Staff


Development Cost

Property Acquisition Cost Area m2 Cost EUR/m2 Total (EUR) Property Costs 3,000 690 2,070,000 Transaction Costs 51,750 Total Property Costs 2,121,750

Hard Construction Costs Area m2 Cost EUR/m2 Total (EUR) Excavation Costs 12,000 10 120,000 Underground Levels 3,000 250 750,000 Commercial Cold Cell 460 250 115,000 Residential & Lobby 10,720 500 5,360,000 Total Hard Costs 14,180 447 6,345,000

Soft Costs Total (EUR) Architectural Fees 174,525 Development Management 499,623 Construction Management 162,988 Architectural Supervision 53,175 Marketing 47,588 Furniture & Fixtures 354,200 Total Soft Costs 1,292,099

Total Development Cost 9,758,849


PL Forecast

Year 1 (Constr)

Year 2 (Constr)

Year 3 (Ops)

Year 4 (Ops)

Year 5 (Ops)

Year 6 (Ops)

Year 7 (Ops)

Year 8 (Ops)

Year 9 (Ops)

Year 10 (Ops) Averages

Revenues Rental income - - 1,202,330 1,274,470 1,357,311 1,445,536 1,539,496 1,639,563 1,746,134 1,859,633

Ground floor commercial income - - 138,000 144,900 152,145 159,752 167,740 176,127 184,933 194,180 Total Rental Income - - 1,340,330 1,419,370 1,509,456 1,605,288 1,707,236 1,815,690 1,931,068 2,053,813 Other Income - - 93,876 96,692 99,593 102,581 105,658 108,828 112,093 115,456 Gross Potential Income (GPI) - - 1,434,206 1,516,062 1,609,049 1,707,869 1,812,894 1,924,518 2,043,161 2,169,269 less: Vacancy loss - - 60,117 63,724 67,866 72,277 76,975 81,978 87,307 92,982 less: Rent Defaults - - - - - - - - - - Average Effective Gross Income (EGI) - - 1,374,090 1,452,339 1,541,183 1,635,592 1,735,919 1,842,540 1,955,854 2,076,287 1,701,725 As % of Gross Potential Income 96% 96% 96% 96% 96% 96% 96% 96%

1st Year Provision 0

Operating costs Total Operating Expenses - - 335,819 345,894 356,003 366,552 377,417 388,608 400,134 412,007 372,804 As % of Effective Gross Income 24% 24% 23% 22% 22% 21% 20% 20%

Average EBITDA - Net Operating Income (NOI) - - 1,038,271 1,106,445 1,185,180 1,269,040 1,358,502 1,453,932 1,555,719 1,664,280 1,328,921

GGH Property MgmtFee (standard) - - 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000

GGH Property Mgmt Fee (bonus) 43,062 48,516 54,814 61,523 68,680 76,315 84,458 93,142 66,314 Interest Payment on Bank Loan 89,375 295,531 448,951 438,681 417,012 394,007 369,582 343,651 316,121 286,893 376,862 Interest Income (prev yr available cash) 2,143 1,821 2,029 741 730 855 1,002 1,161 1,310 Depreciation - - 596,595 596,595 596,595 596,595 596,595 596,595 596,595 596,595 596,595 Earnings Before Tax (EBT) (89,375) (295,531) (78,194) (5,525) 88,787 187,656 294,375 408,226 529,548 658,811 260,460

Corporate Income Tax Rate 16% 16% 16% 16% 16% 16% 16% 16% 16% 16% Corporate Income Tax - - - - 14,206 30,025 47,100 65,316 84,728 105,410 Net After Tax Profit (89,375) (295,531) (78,194) (5,525) 74,581 157,631 247,275 342,910 444,820 553,401

Average NOI / Total Investment 10.0% 10.6% 11.4% 12.2% 13.1% 14.0% 15.0% 16.0% 12.8%


Sponsors and Deal Structure

51% of equity is held by a UK property fund and property development group based in London. This fund is developing a larger property around the Herastrau project. 10% of equity is held by GGH, a Cyprus investment management firm specialising in niche real estate investments in Central & South Eastern Europe. GGH will also act as developer and property manager. A third investor is sought for 39% of equity, valued at EUR 1,990,000.

International Property Group (UK)

GGH (Cyprus)

Third Investor

SPV (Cyprus)

Herastrau SPV (Romania)

51% 39%

10%

100%


Contact

This Teaser is being furnished for the sole purpose of assisting the recipient in deciding whether to proceed with further analysis of this potential opportunity. This Teaser is for informational purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of securities, or form the basis of any decision to finance the transaction described herein, or for engaging in any other transaction. The information set out in this Teaser has not been verified by Navigator Consulting Group Ltd., its client/s or any other person and may be subject to updating, completion, revision and amendment and such information may change materially. No representation or warranty, express or implied, is or will be made by Navigator Consulting Group Ltd., its client/s or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this Teaser and any reliance the recipient places on them will be at its own sole risk. Without prejudice to the foregoing, neither Navigator Consulting Group Ltd. nor its associates or client/s accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this Teaser or its contents or otherwise arising in connection therewith. There is no representation, warranty or other assurance that any of the projections in the Teaser will be realised. The recipient should conduct its own investigation and analysis of the business, data and property described herein. Any statement contained in this Teaser that refers to a particular company or entity or its related parties, estimated or anticipated future results or future activities are forward-looking statements which reflect current analysis of existing trends, information and plans. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and could adversely affect the outcome and financial effects of the plans and events described herein. As a result, the recipient is cautioned not to place undue reliance on such forward-looking statements. This Teaser and its contents are confidential and may not be further distributed, published or reproduced, in whole or in part, by any medium or in any form for any purpose, without the express written consent of Navigator Consulting Group Ltd. In furnishing this Teaser, Navigator Consulting Group Ltd. and its client/s undertake no obligation to provide the recipient with access to any additional information or to update this Teaser or to correct any inaccuracies therein which may become apparent.

For further information, please contact: Philip Ammerman Managing Partner Navigator Consulting Group Ltd. [email protected] www.navigator-consulting.com

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Herastrau Property - Navigator Consulting · PDF fileHerastrau Property ... This Teaser is being furnished for the sole purpose of assisting the recipient in deciding whether to proceed