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BOARD MEETING

26th June 2014

A MEMBER OF THE AL RAJHI GROUP


EST. 1936
INDEX
MARKETING & SALES FINANCE
a) Road Map a) Budget 2014/2015
b) Sales & Communication Campaign b) Bank Strategy
c) Tower Sale 10B
CONSTRUCTION
d) ECQ Plot F-08 analysis
a) Program
b) Risk
LEGAL
c) Budget
a) TVL/TVC Strategy
COMMERCIAL b) Criminal Action Strategy
a) Procurement PA 2, 10 & 16
b) PA 14B Tender Status

2
A MEMBER OF THE AL RAJHI GROUP, EST. 1936 3
MARKETING & SALES

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 4


MARKETING CRITICAL PATH

Trust Regain Interest Confidence Authority

TIME From June From September From December From April


STAGE RE-LAUNCH – PHASE 1 OPEN MARKET 1 - PHASE 2 OPEN MARKET 1 CONT OPEN MARKET 2- PHASE 3

Marketing New identity, Web Phase 1; Press articles & Advertising (Brand & Press articles & Advertising (Brand & Database growth; Thought
Solutions Show Flat & Furniture Offer; Bank); Mortgage Products; Web Phase 2; Bank); Mortgage Products; Web leadership on RE investment;
Cityscape; CRM Phase 1; Newsletter; Referrals (Advocacy); Rentals Phase 2; Newsletter; Referrals The Pearl services pack;
Mortgage Intro 2 Core Grp Packs: Showcase team. (Advocacy)& Rentals Packs

TOWER •8A •Updates on 16A Progress •2B (OCT); 10B •16A (FEB)
DELIVERY •16A In activity

Message/ Break from past; New Team & Investment benefits; Title Deed; Delivery Delivery power & precedents: 2B & Investment expertise; Turnkey
Actions Strategy; Delivery Milestones; of 8A; Client events & referrals; Launching 10B launches post sales solutions; 16A
Client re-engagement; Show Turnkey themes; PR advocacy showcase & launch; Launch VB
flat Tours Towers

Sales/ Mth 5-10 10-20 20+ 30+

Price •Pricing Revaluation •Maintain price points •Closed market pricing •Release Strategy Stage 2
Strategy Introduction •Release Strategy Starts

IMPACT ON PERCEPTION DURING CAMPAIGN +5 VERY POSITIVE -5 VERY NEGATIVE


JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY
CURRENT OWNERS -5 -3 -1 -1 0 1 3 3 3 3 3 3
PROSPECTS -3 -3 0 0 1 1 3 5 5 5 5 5
GOV AGENCIES 0 0 0 1 1 1 1 1 3 3 3 3
PARTNERS 0 1 3 3 3 3 3 5 5 5 5 5
MEDIA 0 0 0 1 1 1 1 1 3 3 3 3

A MEMBER OF THE AL RAJHI GROUP, EST. 1936


Sales Status SALES TO DATE 1
Achieving Sales targets requires two fundamental goals to be realised:
• Delivery of 8A to customers to gain the trust of the market
• Further refining pricing to ensure a market alignment

To achieve this target we need to


• Put in SPA a sliding scale penalty after 6 months at 1% /month to a 5% maximum (compared to
current penalty of 5% after12 months)
• Extend the bank loan agreement for one month (no cost to TLQ)
• Extend Habitat free furniture offer at a cost of around 1% of purchase price to TLQ
• Enter into an agreement with Better Homes to provide a leasing service to purchasers
• Commence approach to bulk purchasers over the following 1-2 months

Tower YTD July Aug Sept Oct Nov Dec Total

TARGET SALES 30 4 6 60^ 23 31 38 192


SALES REVENUES
65,548*** 4,484 6,726 47,929 25,604 32,740 40,133 223,164
(000s) ^^
CONVERTED
21 N/A N/A N/A N/A N/A N/A 21
SALES
COLLECTED
22** N/A N/A N/A N/A N/A N/A 22
SALES
SALES
COLLECTIONS 34,034 N/A N/A N/A N/A N/A N/A 34,034
(000S)
* Up to 15.06; we have 1 reservation pending and 5 deals currently in negotiation
**includes collection of 1 from Dec’13
***estimates based on market & expected delivery of 8A

A MEMBER OF THE AL RAJHI GROUP, EST. 1936


Sales Status Cont SALES TO DATE 2

• Focus over the Summer is aimed at selling all “ready” apartments either as Bulk investment deals or good
price points given unfavourable locations in respective towers.

Tower Total # of Units Total Units in Average Total Price % of unsold % per view
Stock Price/m2
9B 161 7 11,625 13,324,000 5% 6% block view
(6 legal cases 94%% Side
Babco)
8B 237 8 11,400 20,798,885 3,3% 100% Side/level 1-
2-3

8A 261 *15 13,000 40,873,300 6,5% 2% No view


69% Side
26% Sea
5% Marina

16A 261 99 14,200 243,710,050 38% 1% No view


32% Side
35% Sea
32% Marina

TOTAL 920 129 318,706,235

-Tower 9B stock is1 penthouse overlooking Sea view with a total area of 932 square meters (Rate to be determined)
-Tower 8B stock is no longer prime location (Side view, low levels)
-Staff accommodations are included in stock.
-The whole stock in 8B is rented.
- *includes offices on Amenity floor

A MEMBER OF THE AL RAJHI GROUP, EST. 1936


Sustained High Monthly Sales Volumes Require New SUMMARY
Approach, based on: ACTIONS
1. Delivery Certainty
• The Land has to turn weakness into strength by delivery leadership
• Transform beliefs of sales team, clients & prospects through improved info sharing & education
2. Improved Fit-Out Quality
• Attention to detail, and improved design narrative will assist
3. Refine further our Pricing System Based on Qual & Quant Info from Comparative Offers
• We need to connect our offer to our pricing, as well as to our delivery timing; one example
recently showed we were 12% above UDC pricing
• Need to agree bulk buy discount policy of say 5% for greater than 5 apartments
4. Sales and Marketing Team Structure
• Investigate broker-style approach vs in-house team & culture
• Investigate concierge and leasing resourcing to improve overall proposition (Better Homes)
5. Sales Team KPIs & Incentives
• Align sales behaviours to CRM-based KPI monitoring
6. Communication Approach
• Regular updates, involving key stakeholders, and strong segmentation essential to accelerating
perception change.
7. Post Sales Services
• More structured follow up, Increasing database size, creating loyalty and trust

A MEMBER OF THE AL RAJHI GROUP, EST. 1936


DEVELOPMENT & CONSTRUCTION

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 9


DEVELOPMENT AND CONSTRUCTION
QCDD works
2014 Complete JULY 2015
OC- Sept 2014
Tower Provisional
OC - JULY
8A Construction Period
(98.81%)
CURRENT UDC CC CC - SEPT OC - Nov 2014
Tower DATE
CAE CAE report
2B appointed to CUM
Construction Period (1 month ext)
(90.61%)
CURRENT UDC CC CC - NOV OC – JAN 2014
Tower CAE CAE report DATE
10B appointed to CUM Construction Period (1 month ext.)
(84.52%)
CC - DEC OC – Feb 2015
Tower CAE report
16A to CUM Construction Period
OC
(68.62%) 30/9
CURRENT UDC CC CC - JUN
Tower CAE CAE report
Construction Period
DATE

14B appointed to CUM

(43.00%)
April May June July Aug Sept Oct Nov Dec Jan Feb Mar April May Jun Jul
Court Appointed Expert Confirmed QCDD works complete Occupation Certificate
CAE Report submitted to Court of Provisional Occupation Certificate Testing / Comm & Snagging
Urgent Matters
Completion Certificate UDC CC Deadline (requires
Commence works / Works ongoing
extension from UDC)
• 8A QCDD Works Program on track for completion end July 2014 • Programs include nightshift
• Mobilization commenced 2B and 10B – initial QCDD remedial packages let

10
A MEMBER OF THE AL RAJHI GROUP, EST. 1936
DEVELOPMENT AND CONSTRUCTION
Risks
Tower 8A
1. Provisional OC – UDC refusal requires QCDD sign off for handover – time risk
2. QCDD Remedial Works – unforeseen works

Tower 2B, 10B and 16A


1. Locked doors within towers causing delay – further advice being sought via legal.
2. Procurement – back up resources being deployed to recover time subject to doors

Tower 14B
1. Court of Urgent Matters – Submission of Court Appointed Expert Report to CUM
2. Procurement Route – F&G engaged to fast track

General
1. TVL / TVC – Criminal Case Claims against The Land staff
2. Resolution of UDC Fees – to be resolved when UDC letter is received
3. Commencement of Porto Arabia – The Land Resources (PM’s) recruitment offers made
and start dates are 4 weeks

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 11


DEVELOPMENT AND CONSTRUCTION
Construction Budget Overview

Board Paid Cost to Deviation from


Cost to Total Forecast
Tower Approved Date @ 31 May Board Approved
Complete Cost
Budget 2014 Budget

2B 312,773,595 255,117,417 57,656,178 312,773,595 0


8A QCDD Works 312,952,239 277,146,719 29,395,436 306,542,155 -6,410,084
10B 325,182,990 227,892,622 97,290,368 325,182,990 0
14B 340,985,375 125,965,266 215,020,109 340,985,375 N/A
16A 318,642,508 175,772,697 142,869,811 318,642,508 0
TOTALS 1,610,536,707 1,061,894,721 542,231,902 1,604,126,623 -6,410,084

Explanatory Notes
•Figures derived from Project Cost Report (PCR)
•Includes Historical Costs, revised CTC, contingency, Consultants fees, Authority / Municipality fees
•Excludes Land, Financial Costs and other fees and charges, UDC fees (LD’s etc)
•Tower 14B – Tender review ongoing. Simultaneous short form tender process underway with select main works
contactors. Tender Close Recommendation Due 17 July 2014
•14B not board approved and subject to tender process finalization

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 12


COMMERCIAL

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 13


COMMERCIAL
PORTO ARABIA 02B, 10B & 16A PROCUREMENT
The current delays in procurement are a result of the following:
➢ Harinsa’s previous inability to recommend packages with the correct prescribed level of
detail or challenge of the quotes received.
➢ Budget issues on MEP packages due to perceived risk by Sub-contract market resulting
in re-tendering/ value engineering and cost cutting exercises.
➢ Locked doors on PA02B & 10B has resulted in reduced tender returns.

Mitigation & Result


• Increase Harinsa team, Gemstone assistance, F&G increase resources
• Operational resolution will be made by Monday 30 June
• Opening Doors – procurement cannot proceed without opening doors.
• If doors are open the procurement gap will be closed in 2-3 weeks
• Delay will then be 2 weeks on 2b, 10 days on 10b and no delay on 16A
• If the doors are not opened then each day they are closed is a days delay
A MEMBER OF THE AL RAJHI GROUP, EST. 1936 14
COMMERCIAL
PORTO ARABIA 14B TENDER
▪ Porto Arabia 14B re-tendered on a lump sum completive basis.
▪ Initial tender returns from Main Contractors received was poor with only one tender
return from a tender list of thirteen which was over budget.
▪ To mitigate this ACC adopted a two parallel routes of procurement:
1. Large sub-contract packages such as MEP, Elevators, Fit Out and Civil Works
to be procured separately with a separate external construction
management team to manage the construction.
2. Re-tender to ‘Tier 2’ General Contractors to manage all remaining works.
▪ The timeframes for these procurement routes are:
➢ Large sub-contract packages tender returns are received with tender
analysis ongoing.
➢ Tender returns for ‘Tier 2’ contractors due back on 6th of July 2014.
▪ Tender recommendation to be proposed by 13th of July 2014.
▪ Enabling works masonry and rectification works package to commence immediately
as soon as legal issues are resolved.

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 15


FINANCE

Budget 2014/2015

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 16


FINANCIALS
Preamble

The financials presentation is articulated into 4 sections:

A. The Qatar operations’ Budget covering the period from May 2014 up to June 2015 with:
1. The PA Towers development cash flows forecasts,
2. The VB Towers development cash flows forecasts,

B. The current & forecasted LTV coverage for the assets pledged on behalf of the Syndicate assuming:
1. Plots & construction value as per fresh external valuation reports submitted to the Syndicate in May 2014 to
comply with conditions imposed to the 6 months standstill approval for the 5th installment,
2. Adjusted plots value to current market price at QAR 1,400 per sqft,

C. The sensitivity analysis to assess:


1. The risks associated to the sale of PA-10B in terms of use of funds, [BASE CASE scenario]
{Build up of the Minimum Debt Service account / Mandatory Prepayment }

2. The non deferral by 1y for the 6th installment due on October 14, 2014, [STRESSED CASE scenario]

D. Recommendations with expected timing & milestones

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 17


FINANCE - Budget 2014 up to 06.2015 - ASSUMPTIONS
Revenue
Sale is defined as contract signed and deposit paid
▪ Sales for calendar year 2014
• 180 units at QAR 221.3m with QAR 27.4m for sales made to May 31 (which is PA-8B, 9B, 8A,16A
&14B)
• 180 unit value (i.e. selling price) is QAR 405.6m
• PA-10B at QAR 450m with QAR 225m in 2014 Aug and remainder Feb 2015
• ECQ at QAR 33m net Aug 2014
▪ Collections for calendar year 2014
• Sold PA-8A (QAR 143.7m) between Oct and Dec 2014
▪ Sales to June 2015
• 125 units at QAR130.3m (which is PA-14B)
• Sales value of the 125 units is QAR 260.6m
• PA-2B at QAR 480m in Mar 2015
▪ Collections to June 2015
• Balance of sold PA-8A (QAR 67.9m) from Jan to Feb
• Sold PA-16A (QAR 39.1m) between Mar and Jun 2015 + balance of sale campaign from Jun to Oct
2014 (QAR 107.2m)
▪ Upside Bapco 6 and 1 other unsold apartment + PA-8B Dec 2015 = 23 apartments at QAR48.5m + 7 units in
PA-16A at QAR 31.4m
A MEMBER OF THE AL RAJHI GROUP, EST. 1936 18
FINANCE - Budget 2014 up to 06.2015 - ASSUMPTIONS

Banks
▪ Delay QNB 6th installment by 1 year => Oct 2014 to Oct 2015
▪ QNB is assumed to be restructured off the back of fresh equity injected to cover April 2014 installment
▪ This is reliant on VB reclaimed from UDC and the release of PA-10B from QNB pledge
▪ Doha Bank extension for both PA-8A & PA-16A to Dec 2014 and June 2015

Construction
▪ PA-2B => CC is Sept 30 and OC Nov 30 – risk is EOT for locked doors
▪ PA-10B => CC Nov 30 and OC 31 Jan – risk of EOT of 2 weeks more
▪ PA-16A => CC Dec 31 and OC is 28 Feb – risk of EOT of 2 weeks
▪ PA-14B => CC June 30, 2015 OC 30 Sept – risk is new contractor

Risk
▪ PA10B 225m in August and again in Feb 2015
▪ECQ plot sale QAR 33m in August
▪ QNB 6th instalment not allowed for in October 2014
▪ Upside of TVL, MCSC, Bridge & Alpha Pearl of QAR 200m

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 19


Budget 2014 up to 06.2014 - PORTO ARABIA Development
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
QAR mio Sub 1 Grand 1+2
-14 -14 -14 -14 -14 -14 -14 -14 -15 -15 -15 -15 -15 -15

Total INFLOWS 3.9 27.2 3.2 275.3 64.5 64.3 112.5 72.5 623.4 71.5 287.8 622.3 38.4 16.3 13.0 1,672.7

Sales Revenues 3.9 27.2 3.2 275.3 64.5 64.3 112.5 72.5 623.4 71.5 287.8 622.3 38.4 16.3 13.0 1,672.7
of which R sales 3.9 27.2 3.2 17.0 64.5 33.7 31.9 39.9 221.3 34.6 31.9 139.1 31.9 458.8

of which W sales 225.0 225.0 225.0 480.0 930.0

of wh. collections 30.6 80.6 32.6 143.8 36.9 30.9 3.2 6.5 16.3 13.0 250.6

of wh. ECQ plots 33.3 33.3 33.3

Total OUTFLOWS (20.7) (47.0) (72.8) (137.2) (109.6) (98.8) (187.9) (50.1) (724.1) (40.7) (35.8) (235.9) (31.1) (32.1) (77.3) (1,177.0)

HARD COSTS

Construction (14.5) (32.9) (31.7) (63.9) (29.9) (29.9) (32.7) (30.9) (266.4) (32.8) (24.6) (24.5) (23.9) (27.8) (12.2) (412.2)

TVL settl. costs (29.2) (4.2) (33.4) (33.4)

Qatar Cool costs (12.0) (12.0) (24.0) (1.5) (25.5)

UDC MCSC costs (53.8) (53.8) (53.8)

Trade Creditors (1.0) (2.6) (2.7) (1.7) (8.0) (8.0)

SOFT COSTS

Opex *
(2.2) (3.1) (2.4) (2.7) (4.1) (2.1) (2.1) (2.3) (21.0) (3.2) (2.0) (2.0) (2.8) (1.8) (1.6) (34.4)
Fixed costs

Opex**
(0.5) (0.9) (0.4) (0.4) (6.7) (0.9) (109.8) (0.6) (120.2) (0.3) (4.8) (5.1) (0.3) (60.9) (191.6)
Vari costs

FIN. COSTS

Doha Bank (0.9) (3.2) (6.1) (64.5) (61.6) (26.9) (163.2) (53.4) (216.6)

QIB (4.0) (0.7) (1.8) (1.8) (1.8) (1.8) (1.8) (13.8) (1.8) (1.8) (148.6) (166.0)

QNB (2.5) (2.6) (2.5) (2.6) (2.6) (2.5) (2.6) (2.5) (20.4) (2.6) (2.6) (2.3) (2.6) (2.5) (2.6) (35.6)

TOTAL (16.8) (19.8) (69.6) 138.1 (45.1) (34.5) (75.4) 22.4 (100.7) 30.8 252.0 386.4 7.3 (15.8) (64.3) 495.7

Cumulative 17.1 (2.7) (72.3) 65.8 20.7 (13.8) (89.2) (66.8) (36.0) 216.0 602.4 609.7 593.9 529.6

* Including: salaries / Admin & Gen exp / rents/Insurance / PM-CM **Including: Marketing expenses / Legal costs / Legal fee & provisions for Alpha Pearl + BH

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 20


Budget 2014 up to 06.2015 - VIVA BAHRIYA Development
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Grand
QAR mio Sub 1
-14 -14 -14 -14 -14 -14 -14 -14 -15 -15 -15 -15 -15 -15 1+2

Total INFLOWS 2.17 2.17 2.17 10.8 10.8 10.8 39.0

Sales Revenues 2.17 2.17 2.17 10.8 10.8 10.8 39.0

Total OUTFLOWS (9.54) (9.57) (9.57) (0.07) (0.07) (0.07) (0.07) (0.07) (29.0) (63.5) (58.9) (26.0) (51.5) (31.4) (33.9) (294.2)

HARD COSTS

Construction (40.0) (56.7) (23.8) (26.4) (26.6) (29.3) (202.8)

UDC dues & payables (21.0) (21.0) (42.0)

SOFT COSTS

Opex *
(0.04) (0.07) (0.07) (0.07) (0.07) (0.07) (0.07) (0.07) (0.53) (1.3) (1.0) (1.0) (1.2) (1.9) (1.7) (8.6)
Fixed costs

Opex**
(0.03) (0.03) (0.03) (0.2) (0.2) (0.2) (0.7)
Vari costs

VB-16 refund (9.5) (9.5) (9.5) (28.5) (28.5)

Contingency (1.2) (1.2) (1.2) (2.7) (2.7) (2.7) (11.7)

TOTAL (9.54) (9.57) (9.57) (0.07) (0.07) (0.07) (0.07) (0.07) (29.0) (61.3) (56.7) (23.8) (40.7) (20.6) (23.1) (255.2)

Cumulative (9.54) (19.1) (28.7) (28.7) (28.8) (28.9) (28.9) (29.0) (90.3) (147.0) (170.8) (211.5) (232.1) (255.2)

* Including: overheads & charges / Insurance / PM-CM **Including: Marketing & Sales expenses

Budget assumptions
▪ Assume go ahead from UDC in January 2015
▪ Commence construction of VB-12-13-14 Towers
Forecasted 2015 sales:
▪ VB-12: Q1 = 12 units / Q2 = 24 units
▪ VB-13: Q1 = nil / Q2 = 13 units
▪ Payment schedule/collections based on effective completion rates
▪ Refresh the brand and establish positive and regular communication with the market
▪ Resolve all legal cases to free the project of encumbrances

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 21


FINANCE - LTV coverage -
LTV coverage
LTV coverage as per external Valuers' reports submitted to Syndicated Lenders in May 2014
1- Tower PA-10B is released during Q3 2014
2- Thereafter, mechanism of release upon repayment of each installment based on towers completion chronological order
10.7639

Value per sqft Value per sqm of Debt outstanding


Plot value Construction value Installment date Balance LTV
of land BUA amount

PA-10B 134,743,752 2,000 376,039,800 5,400 737,300,000 34%


LTV once PA-10B is RELEASED 737,300,000 45%
PA-14B 121,891,536 2,000 208,911,000 3,000 248,200,000 Oct-14 489,100,000 30%
LTV once PA-14B is RELEASED 489,100,000 38%
VB-12 143,696,171 1,950 111,617,000 2,200 248,200,000 Apr-15 240,900,000 19%
LTV once VB-12 is RELEASED 240,900,000 23%
VB-13 145,606,243 1,950 111,478,400 2,200 240,900,000 Oct-15 0 0%
VB-14 145,501,294 1,950 105,184,200 2,200
VB-15 145,375,355 1,950 35,002,000 732
VB-08 151,945,162 1,950 25,000,000 512
VB-25 150,790,723 1,950 25,000,000 484
1,139,550,235 998,232,400 737,300,000

LTV coverage in which it is assumed that plots value is adjusted to current market rates at QAR 1,400/sqft
1- Tower PA-10B is released during Q3 2014
2- Thereafter, mechanism of release upon repayment of each installment based on towers completion chronological order
1400

Plot size in Debt outstanding


Plot value Construction value GRAND TOTAL Installment date Balance LTV
sqm amount

PA-10B 94,319,750 6,259 376,039,800 737,300,000 41%


LTV once PA-10B is RELEASED 737,300,000 55%
PA-14B 85,323,283 5,662 208,911,000 248,200,000 Oct-14 489,100,000 36%
LTV once PA-14B is RELEASED 489,100,000 47%
PA Towers 179,643,033 584,950,800 764,593,833
VB-12 103,165,523 6,846 111,617,000 248,200,000 Apr-15 240,900,000 23%
LTV once VB-12 is RELEASED 240,900,000 29%
VB-13 104,536,844 6,937 111,478,400 240,900,000 Oct-15 0%
VB-14 104,461,497 6,932 105,184,200
VB-15 104,371,080 6,926 35,002,000
VB-08 109,087,821 7,239 25,000,000
VB-25 108,259,001 7,184 25,000,000
VB Towers 633,881,765 413,281,600 1,047,163,365

GRAND TOTAL 813,524,798 998,232,400 1,811,757,198 737,300,000


Pearl Qatar Island
- PORTO ARABIA -
Tower PA-10B

Valuing Income Generating Property

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 23


Tower PA-10B – Sale assessment
Preamble
▪ Purchase plot price = QAR 95,000,000 (on April, 2007) equivalent to QAR 1,290 per sqft
▪ Total Development costs to date = QAR 300,000,000 (incl. Finance costs for QAR 39.2m
▪ Total Budgeted Costs to Complete = QAR 102,000,000

Investor Return Assessment [assuming Purchase Price = Capitalized Sale Price]


Proposed Investment Cash Flow and Equity IRR (QAR)
Total 2014 2015 2016 2017 2018 2019 2020
Purchase Price (450,000,000) (225,000,000) (225,000,000) 0 0 0 0 0

Cap rate = 7.6%


Gross Leasing Income 186,704,644 0 22,923,876 37,503,462 38,628,565 39,787,422 40,981,045 6,880,273
(Less expenses) (33,473,424) 0 (7,483,937) (6,212,190) (6,398,556) (6,590,513) (6,788,228) 0
Rental Guarantee 0 0 (3,056,517) (3,178,778) (3,305,929) (3,438,166) (3,575,692) 0
Net Leasable Income 153,231,220 0 12,383,423 28,112,494 28,924,081 29,758,744 30,617,124 6,880,273
0
Capitalized Sale Price 450,124,572 450,124,572
Net Cash Flow 153,355,792 (225,000,000) (212,616,577) 28,112,494 28,924,081 29,758,744 30,617,124 457,004,845
IRR 5.61%

TLQ/ACC Return Assessment


Development Cash Flow and Equity IRR
Total 2007 2008 2009 2010 2011 2012 2013 2014 2015
Development Costs (496,523,023) (134,630,100) (60,086,480) (52,840,133) (20,582,868) (9,830,446) (50,321,643) (62,455,801) (73,345,684) (32,429,868)
Land Cost (95,000,000) (95,000,000) 0 0 0 0 0 0 0 0
Piling Costs (7,246,347) 0 (7,246,347) 0 0 0 0 0 0 0
Construction Costs (280,488,481) (32,257,265) (43,009,687) (43,009,687) (10,752,422) 0 (40,491,197) (33,742,664) (55,444,945) (21,780,615)
Connection Charges (13,532,789) 0 0 0 0 0 0 (1,530,000) (12,002,789) 0
UDC (27,487,106) 0 0 0 0 0 0 (17,352,690) 0 (10,134,416)
Overheads (33,517,641) (3,265,208) (4,353,610) (4,353,610) (4,353,610) (4,353,610) (4,353,610) (4,353,610) (3,615,934) (514,837)
Financial Charges (39,250,659) (4,107,627) (5,476,836) (5,476,836) (5,476,836) (5,476,836) (5,476,836) (5,476,836) (2,282,015) 0
Purchase Price 450,000,000 225,000,000 225,000,000
Rental Guarantee 2,571,159 0 2,571,159
Net Leasable Income 2,571,159 0 0 0 0 0 0 0 0 2,571,159

Net Cash Flow (43,951,865) (134,630,100) (60,086,480) (52,840,133) (20,582,868) (9,830,446) (50,321,643) (62,455,801) 151,654,316 195,141,290
IRR -2.26%

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 24


Energy City Qatar
- LUSAIL -
Plot F-08

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 25


ECQ F-08 – Development Assessment + Market analysis
Preamble [Key metric]
▪ Purchase price = QAR 20,892,660 (on Oct 23, 2007) equivalent to QAR 439 per sqft
▪ Plot area = 4,423 sqm / FAR 140% / covered ratio 35%
▪ Number of floors = G+M+3 / 2 level of parking under ground + outdoor car park (with 1 car park / 25 sqm NLA)

Development Assessment [Office Building use]


Scenario A Scenario B
[as per study dated Jan 28, 2014] [as per updated construction cost from Harinsa]

1- maximize BUA with 2 level of parking UG 1- no parking UG


2- efficiency ratio of 75% - NLA=4,528 sqm 2- efficiency ratio of 75% - NLA=4,644 sqm
3- top of the range construction materials & fixtures’ quality 3- standard quality range for offices
[QAR 6,500/sqm] [QAR 4,800/sqm]

Qatar Office Market overview [DTZ Q1 2014 report]


▪ High level of take-up has reduced vacancy rates & increased the potential for rental inflation
[Total current prime office stock in CBD = 1.637m sqm with a vacancy rate of approx. 8% (vs. 10% at the end of 2013)]
▪ Net take-up during Q1 2014 stands at approx. 105,000 sqm compares with the annual average of 162,000 sqm recorded over 5y
period from 2009-2013,
▪ Rental rates for good quality office stock in secondary locations range from QR 130-150 per sqm/month,
▪ Small suites of less than 500 sqm are at a premium with rental rates in excess of QAR 300 per sqm/month,
▪ Prime commercial stock are now available in Lusail [4 towers completed equivalent to 90,000 sqm / leased to Government
related occupiers: Katara Hospitality + Qatari Diar],
▪ In the LT (5 to 10y) DTZ anticipates that Lusail will supersede CBD as a prime office district, therefore securing prime rentals
which are currently in the region of QAR 220 per sqm/month.

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 26


ECQ F-08 – Sale analysis
Capital value
▪ Limited benchmarks
▪ Sales rates for PRIME commercial properties are in the region of QAR 20,000 per sqm

Development profit
Scenario A Scenario B
QAR
[Selling price = QAR 23,000 per sqm] [Selling price = QAR 18,000 per sqm]
Net Revenue (excl. sales & mkt exp.) 101,020,712 100.0% 81,086,859 100.0%
Development costs (51,633,660) 51.1% (32,397,590 39.9%
Finance costs (5% of dev costs) (2,581,683) 2.6% (1,619,880) 2.0%
Development Profit [excl. Land cost] 46,805,369 46.3% 47,069,389 58.1%
Land Residual value

With an expected Profit Margin of 25% - on top of total costs (dev + land) - for the Developer,
SENSITIVITY

the plot selling prices reach QAR 559 per sqft & QAR 648 per sqft for each scenario respectively.
With an expected Profit Margin of 10% - on top of total costs (dev + land) - for the Developer,
the plot selling prices reach QAR 791 per sqft & QAR 834 per sqft for each scenario respectively.

Rental yield
Based on DTZ forecasts & given the respective positioning of each product, it is assumed that Scenario A will command an
average rental rate of QAR 280 per sqm/month & Scenario B an average of QAR 180 per sqm/months.
Therefore, expected Rental Yields reach 15.1% & 12.4% respectively or QAR 15.2m & 10m yearly as rental income.
Conclusion [based on latest offer received]
With a plot selling price of QAR 725 per sqft equivalent to QAR 34.5m, the development profit margin is QAR 12.3m or 12.2% &
12.5m or 15.5% respectively.
RECOMMEND to sell plot - cash profit on selling F-08 plot will be QAR 13,623,409 (i.e.: 65.2%)
A MEMBER OF THE AL RAJHI GROUP, EST. 1936 27
LEGAL

A MEMBER OF THE AL RAJHI GROUP, EST. 1936 28


LEGAL
Criminal Cases against ACC/TLQ
• For 15 months the BAPCO case has created many issues for staff in Qatar with
charges, interrogation and travel bans being placed by the prosecution.
• Various legal avenues were employed&recently this case has been transferred to the
court where its anticipated it will be thrown out but will take time
• The issue is the power of the accuser BAPCO to manipulate the highest levels of the
public prosecution and be able to do this for over 1 year now
• After finally achieving the transfer of the file, less than a month after this another
criminal case has been lodged on 19th June 2014.
• The public prosecutor advised our lawyer that when cases are transferred to court
Bapco/Al Assi will merely lodge another claim and the issue will continue
• This situation is untenable from a professional and personal perspective for any staff
member in Qatar and must be addressed as a priority.
• The threat of incarceration is real & must be understood to enable a solution
• We face the same type of issue potentially with TVL and the locked doors
• The impact on the operation is vast and has many intangible impacts
Recommendation A high level strategy is devised to address the lawlessness and
uncertainty of Qatar next week and that resources be committed to establishing
protection mechanisms within the Qatar operation
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A MEMBER OF THE AL RAJHI GROUP, EST. 1936
LEGAL
TVL/TVC Strategy
1.Our final offer to TVL was for them to pay us QAR20m (they owe us 55m plus 20m LDs)
2.We have now been able to commence work on all towers but 14b
3.The court expert has ruled in our favor for 2b, 10b and 16a at circa QAR25m
4.We still have the issue of locked doors and threat of criminal action by TVL
5.We have the risk of subcons & suppliers claiming directly against ACC (25-40m)
6.Legal costs of this may be QAR2m but time delay is the major risk
7.Arbitration costs are estimated at 30-40m for claiming from TVL/TVC
8.Legal advice states that we can cash TVL/TVC guarantee cheques of QAR42m
Recommendation Cash cheques. If they reject this and go to arbitration we reduce to zero
subject to indemnity from payment to any subons & suppliers.

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A MEMBER OF THE AL RAJHI GROUP, EST. 1936
THANK YOU

P 23871 Doha Qatar


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