MUHAISNAH Labor Accommodation - Dubai May 2016 | Rasameel Structured Finance | Strategic Advisor 12% Projected Return Building Valuer Investment Memorandum May 2016 Confidential – Subject to Contract ABBREVIATION AND ACRONYMS RSF Rasameel Structured Finance (K.S.C.c) RIH Rasameel Investment House (Dubai) Goldline Gold Line Contracting Company LLC IRR Internal Rate of Return USD U.S. dollar AED Emirati Dirham GDP Gross Domestic Product pa Per annum Sq ft Square feet G+2 Ground floor + two floors Hurdle rate the minimum rate that a company expects to earn SPA Sale and Purchase Agreement DREC Dubai Real estate Corporation DIFC Dubai International Financial Centre the tenant is obligated to pay an agreed rent ,taxes ,property management, maintenance NN lease and DEWA. CoC Cash-On-Cash Return DEWA Dubai Electricity and Water Authority Confidential – Subject to Contract 2 TABLE OF CONTENTS Disclaimer ...........................................................................................................................................................4 Investment Summary .........................................................................................................................................5 The Property ......................................................................................................................................................6 Location .......................................................................................................................................................6 Site ...............................................................................................................................................................7 Services .......................................................................................................................................................8 Inspection......................................................................................................................................................9 Master Tenant................................................................................................................................................9 Investment Structure .......................................................................................................................................12 Investment and Exit Strategies ..........................................................................................................................13 Market Analysis ................................................................................................................................................14 Dubai Labor Accommodation Overview ...........................................................................................................18 Partners ...........................................................................................................................................................21 Risks ................................................................................................................................................................22 Team ................................................................................................................................................................23 Confidential – Subject to Contract 3 DISCLAIMER Rasameel Investment House Limited is an investment company incorporated in Dubai International Financial Centre “DIFC” (License Number CL0738) and regulated by the Dubai Financial Services Authority “DFSA” to provide services to Professional Clients only as defined in the DFSA Conduct of Business Rulebook. Therefore, this document is intended only for Professional Clients and no other Person should act upon it. This document is confidential, and no part of it may be reproduced, distributed or transmitted without the prior written permission of Rasameel Investment House Limited. This document has been prepared by Rasameel Investment House Limited and its affiliates (“Rasameel”) for information purposes only. This document is an indicative summary of the terms and conditions of the securities/transaction described herein and may be amended, superseded or replaced without notice. The conditions of the securities/transaction will be set out in full in the applicable binding transaction document(s). This document shall not constitute an underwriting commitment, an offer of financing, an offer to sell, or the solicitation of an offer to buy or sell any securities described herein, which shall be subject to Rasameel’s internal approvals. Rasameel is acting solely as arranger and not as advisor or fiduciary. You must independently determine, with your own advisors, the appropriateness of the securities / transaction before investing. Rasameel accepts no liability whatsoever for any consequential losses arising from the use of this document or reliance on the information contained herein. Rasameel does not guarantee the accuracy or completeness of information which is contained in this document and which is stated to have been obtained from or is based upon trade and statistical services or other third party sources. All opinions and estimates are given as of the date hereof and are subject to change. The value of any investment may fluctuate as a result of market changes. The information in this document is not intended to predict actual results and no assurances are given with respect thereto. Rasameel, its affiliates and the individuals associated therewith may (in various capacities) have positions or deal in transactions or securities (or related derivatives) identical or similar to those described herein. THIS DOCUMENT DOES NOT DISCLOSE ALL THE RISKS AND OTHER ISSUES RELATED TO AN INVESTMENT IN THE SECURITIES/TRANSACTION. PRIOR TO TRANSACTING, POTENTIAL INVESTORS SHOULD ENSURE THAT THEY FULLY UNDERSTAND THE TERMS OF THE SECURITIES/TRANSACTION AND ANY RISKS ASSOCIATED THEREWITH. THIS DOCUMENT IS NOT A PROSPECTUS. INVESTORS SHOULD ONLY SUBSCRIBE FOR ANY TRANSFERABLE SECURITIES DESCRIBED HEREIN ON THE BASIS OF INFORMATION IN THE LEGALLY BINDING TRANSACTION DOCUMENT(S) AND NOT ON THE BASIS OF ANY INFORMATION PROVIDED HEREIN.Subject to contract Confidential – Subject to Contract 4 INVESTMENT SUMMARY The Property The subject property comprises of 4 similar G+2 concrete block structures which are designed for labor accommodation. Location The property is located in Al Muhaisnah 2 area in Dubai. The property is strategically located in an area which is almost exclusively allocated for labor camp developments. The property is located 6km from Dubai International Airport, 7km from Umm Ramool and Garhoud, 48km from Al Maktoum International Airport and 42km from the Expo 2020 site. Address Labour Camp, Plot 264-118, Al Muhaisnah 2, Dubai, UAE Tenure Al Muhaisnah 2 area is a Leasehold with DREC. The leases are automatically renewed annually with tenants. Projected Return In excess of 12% per annum cash-on-cash “CoC”. Distribution Monthly distributions to investors where the first distribution is 30 days after the closing date. Investment Horizon 3 years +1 +1. Hurdle Rate The hurdle rate is over and above 12% pa CoC. Investment Seed Rasameel is expected to invest not less than 15% of the transaction size as seed capital. Master Tenant Goldline Contracting LLC “Goldline”. Investment Strategy Acquire an undervalued labor accommodation to benefit from its high CoC return for a period of 3 years. The Property is leased to a master tenant on a double net bases (NN least) for a period of three years. At the end of the third year, we either renew the master tenancy lease or directly let the units in the open market based on which scenario is more beneficial to the investors. Exit Strategy After the third year, the property is going to be sold in the open market or to a strategic buyer. Since the property is acquired in a deep discount to market value, we similarly can offer a discount to market price on exit to attract buys without loosing on the targeted exit IRR. Fees Subscription Fees: a onetime upfront fee of 2% of invested amount paid by investors Acquisition Fees: a onetime upfront fee of 3% of deal size paid by the transaction Management Fees: annual fee of 10% pa deducted from Net Operational Income paid quarterly. Incentive Fees: annual fee paid to the manager subject to achieving returns over and above the hurdle rate of 12% pa CoC. Excess returns are distributed 70% to clients and 30% to the manager. Confidential – Subject to Contract 5 THE PROPERTY The property is seven years old; it was built in 2009. The property comprises of four building blocks. Each of the four blocks within the property (referred to as A, B, C and D) are of similar construction properties with blocks C & D comprising of a retail unit in each building facing the front elevation. The building can be accessed from one of three gates, which are on the North West and South East elevations. Each of the gates have a swing door mechanism with a smaller internal door for pedestrians. Each of the building blocks comprises of similar 135 rooms, providing a total of 540 rooms in total. However, eight rooms in each block are allocated for supervisor accommodation providing a separate en-suite bathrooms for these rooms. Location • As can be seen from the Google Earth image below, the property is located in the Al Muhaisnah 2 area in Dubai. The property is strategically located in an area which is almost exclusively allocated for labor accomodation developments.