Hotel development

Kaunas,Lithuania

Content:

1. Project

2. Location

3. Development ideas

4. Market outlook

5. Investment opportunity

1. Project

Please find ideas for the development and

completion of an unfinished hotel in Kaunas,

Lithuania.

Project consist from two phases: I’st – hotel,

II’nd - offices

For the I’st phase is planned to install:

• A wing (left) 144 room hotel

• B wing (right) up to 7 000m2 for hostel or

office, with a possibility to equip spa,

amusements, etc.

• 365 (147 on ground, 218 underground)

parking places on site; 2 400 parking places

within 200m of the building;

The building is comprised of two 10 floor wings

(26 000 m2 gross area), joined by a mid-

section.

The mid-section is planned to be demolished.

The two remaining buildings will share ground

level and underground parking.

1. Project – areal view

Hostel & Offices (I’st phase)

Hotel (I’st phase)

Offices (II’nd phase)

Offices (II’nd phase)

1. Project

• The primary purpose of this building (as a hotel) is 40% completed.

• It is situated on an 8 497 m2 land plot, leased from the state for long term

period.

• An architectural study by G.Natkevičius and Partners has been prepared.

Pre-design solutions and 3d drawings are also available.

• Kauno arka, UAB (KA) is a special purpose vehicle, which owns the

unfinished hotel building.

• The building has been bought from equity and the company has no

liabilities to the banks or other financiers.

• Kauno Verslo Rumai (KVR) is the owner of 100% KA shares. KVR was

established as a development company in 2004.

• KVR also owns two plots of land (4 398 m2 and 2 992 m2) adjacent to the

hotel. The company plans to develop in II’nd phase offices and

commercial premises.

• KVR is owned by two corporate shareholders from Lithuania and the

Netherlands with 5 other private shareholders also involved.

2. Location – Kaunas, Lithuania

Distances from Kaunas:

• Vilnius 100 km

• Klaipėda (sea port) 220 km

• Riga (Latvia) 265 km

• Warsawa (Poland) 405 km

Information about Kaunas city:

• Wikipedia http://en.wikipedia.org/wiki/Kaunas

• Kaunas city http://bit.ly/gbXH3W

• Invest in Kaunas http://www.invest-in-kaunas.lt/

2.Location – Kaunas center

Kaunas central district – satellite view Kaunas central district – closer view

An interactive map can be found at the following link: http://bit.ly/eccZuZ (Google maps) or

http://binged.it/omNFWQ (Bing maps)

Location summary:

• central district of Kaunas.

• borders to 6 lane central city street.

• Waterfront.

• distances:

o 200 meters - Main pedestrian street.

o 300 meters - Sports arena and park on the island of the river Nemunas.

o 1.0 km - City council.

o 6.5 km - Access to national motorways Vilnius - Klaipeda and Via Baltica (Warsaw - Tallin).

o 15 km - Kaunas airport → http://www.kaunasair.lt/index.php?lang=en.

2. Location - Surroundings

Medical academy www.kmu.lt

Shopping center www.akropolis.lt

Parking for 2 400 cars

“Zalgiris” arena www.zalgiris.lt

VDU - University www.vdu.lt

Pedestrian street http://goo.gl/XxGM3

K.Mindaugo str. 6 lane road

Island park

3. Development - Ideas

Main functions of the building:

• Left wing – hotel and reception.

• Right wing – student house, hotel, hostel,

office, spa, restaurants, conference hall,

reception.

• Underground and ground level parking

will serve both buildings.

• Hotel rooms and reception will be

equipped according to operator

requirements.

• Building construction is predefined for

~23 m2 rooms, which can be joined

together for bigger suites.

3. Development – Space utilization

Floor Function

Number

of rooms

Size,

m2

Net area,

m2

Gross

area, m2 Function

Number

of rooms

Size,

m2

Net area,

m2

Gross

area, m2

Number

of rooms

Net area,

m2

Gross

area, m2

10 ho 24 22 528 865 hs 22 22 484 765 46 1 012 1 630

9 ho 24 22 528 865 hs 22 22 484 765 46 1 012 1 630

8 ho 24 22 528 865 hs 22 22 484 765 46 1 012 1 630

7 ho 24 22 528 865 hs 22 22 484 765 46 1 012 1 630

6 ho 24 22 528 865 hs 22 22 484 765 46 1 012 1 630

5 ho 24 22 528 865 hs 22 22 484 765 46 1 012 1 630

4 tc tc -

3 re, off, ofc, tc 735 865 off 650 765 1 386 1 630

2 re, off, ofc, tc 735 865 off 650 765 1 386 1 630

1 rc, off, tc 735 865 off, cf, re 2 350 2 765 3 086 3 630

0 tc - sp, tc - -

Total 144 5 374 7 785 132 6 555 8 885 276 11 929 16 670

Function list:

ho Hotel cf Conference hall, ballroom

hs Hostel re Restourant, bar, amusement

sh Student house rc Reception

ofc Office - cabinet layout sp Spa

off Office - free layout tc Technical, other purpose

Right wingLeft wing Total

3. Development – Layouts

Double room solution (5-10th floors)

Single - double room solution (current situation, 5-10th floors)

3. Development – Parking

• Parking entrances will be from

two adjacent streets for easy

access from any direction.

• 365 (147 ground level and 218

underground) parking places on

site.

• 2 400 parking places in 200m

reach;

• Territory: 65,300 km2

• Common borders with: Latvia Belarus Poland Russia (Kaliningrad Region)

• Population: 3.4 million 84% of Lithuanians 7% Polish 6.5% Russians

• Capital and biggest cities: Vilnius (capital): 550,000 Kaunas: 320,000

• State language: Lithuanian

• State Government: Democratic Republic

• Religion: 80% of Roman Catholics, 5% Orthodox

4. Market outlook - Lithuania

More information about country could be found at http://www.investlithuania.com/

4. Market outlook Macroeconomic outlook and forecasts

In the first quarter of 2012 Lithuania’s real GDP increased by 3.9 per cent on an annual basis. Taking into mind unfavorable

economic climate in Europe, economic growth in Lithuania remained rather robust. Good export diversification and increasing

efficiency at company level were important growth factors. Meanwhile domestic demand was strong and contributed

significantly to economic development.

On the one hand, GDP growth was slower than in 2011. On the other hand, it was higher than expected, and the situation in

main economic sectors remained stable what gives ground to more optimistic expectations about the nearest future. Sectors

oriented to domestic demand demonstrated the fastest growth in the first quarter of 2012, i.e. value added in construction

increased by 10.8 per cent year-on-year, IT and communications by 6.5 per cent, real estate operations by 5.6 per cent,

manufacturing industry by 5.0 per cent, retail and wholesale trade, transport and logistics, accommodation and catering by 4.9

per cent. Other sectors grew slower than the whole economy on the average.

Despite the ongoing euro zone crisis, Lithuanian exports grew fast both to Western and Eastern markets. At the beginning of

2012, exports to European Union countries increased even faster than exports to CIS countries. Regardless lower demand in

most of euro zone countries (except Germany), Lithuanian-origin exports remain competitive in terms of prices.

Source: SEB, 2012

Hotel market in

Lithuania vs Europe

Number of places to

stay in hotels and

campsites per 1 000

inhabitants.

Lithuania <=10

Lithuania

Source: Eurostat

4. Market outlook

5 000

10 000

15 000

20 000

25 000

30 000

2005M

04

2005M

10

2006M

04

2006M

10

2007M

04

2007M

10

2008M

04

2008M

10

2009M

04

2009M

10

2010M

04

2010M

10

2011M

04

Nights in hotels - Kaunas

Nights in hotels - Kaunas 12m moving average

100 000

150 000

200 000

250 000

300 000

350 000

400 000

2006M

01

2006M

07

2007M

01

2007M

07

2008M

01

2008M

07

2009M

01

2009M

07

2010M

01

2010M

07

2011M

01

2011M

07

2012M

1

Nights in hotels - Country

Nights in hotels - Country 12m moving average

4. Market outlook - Hotels

Source: Lithuanian statistic department

+63%

-22%

+46%

30.00%

35.00%

40.00%

45.00%

50.00%

55.00%

60.00%

2003Q

1

2003Q

3

2004Q

1

2004Q

3

2005Q

1

2005Q

3

2006Q

1

2006Q

3

2007Q

1

2007Q

3

2008Q

1

2008Q

3

2009Q

1

2009Q

3

2010Q

1

2010Q

3

2011Q

1

2011Q

3

2012Q

1

Room occupation in hotels - 4q moving average

Occupancy rate of rooms - country

Occupancy rate of rooms - Kaunas

4. Market outlook - Hotels

Park In Kaunas opening

232 rooms

+25% of Kaunas market

Source: Lithuanian statistic department

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

2005M

04

2005M

07

2005M

10

2006M

01

2006M

04

2006M

07

2006M

10

2007M

01

2007M

04

2007M

07

2007M

10

2008M

01

2008M

04

2008M

07

2008M

10

2009M

01

2009M

04

2009M

07

2009M

10

2010M

01

2010M

04

2010M

07

2010M

10

2011M

01

2011M

04

2011M

07

2011M

10

2012M

1

2012M

4

Nights spent in Kaunas - country share

Nights spend - country share 12m moving average

4. Market outlook

Key facts

• Kaunas city has 355 th. inhabitants, placed in

centrum of Lithuania.

• Near Kaunas crosses two main motorways: Via

Baltica (Warsaw – Helsinki) and A1 (Vilnius –

Klaipeda)

• Total amount of keys in Kaunas hotels – 1152

• Total number of hotels - 24

• Recent developments in Kaunas:

– Kaunas City ** (44 rooms) started in August 2011

– Ibis ** class hotel (125 rooms, 3 143 m2) in March 2012

5. Investment opportunity

We would like to discuss your investment goals, therefore no firm scenario

has been defined.

Possible development scenarios:

• Development of 168 room hotel (left corpus) only

• Development of 168 room hotel and 138 room student house/hostel

• Development of 300 room hotel – Additionally some space could be installed for conference hall, office, amusement, spa

• Complex development of hotel and adjacent land plots (~0,7 ha) for hotel,

office and/or housing

Financially could be considered:

• Joint venture by share acquisition and/or equity raising

• Sale of shares or assets

• Convertible bond debt

Contacts:

Disclaimer: The information contained in this presentation is for information purposes only, and may not apply to your situation. The

author, publisher, distributor and provider provide no warranty about the content or accuracy of content enclosed.

Neither the Presenter nor Author shall be liable for any loss of profit or any other commercial damages resulting from use of this guide. All

links are for information purposes only and are not warranted for content, accuracy, or any other implied or explicit purpose

Vaidas Repečka

Development adviser

+370 686 46800

vaidas.repecka@vajare.lt

http://lt.linkedin.com/in/vaidasjrepecka