SIO Properties

Le Mridien Grand Towers and Apartments, Lagos

April 2009
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SIO Properties
22
Disclaimer
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The distribution of this document to the addressee in certain jurisdictions may be restricted by law. Persons into whose possession this document comes are required to
inform themselves about, and to observe, any such restrictions. No action has been or will be taken in any jurisdiction by SIO Properties Ltd, Goldman Sachs International
or their respective affiliates that would permit the distribution of this information in any jurisdiction where action for that purpose is required. This document may not be used
in any jurisdiction where its distribution is not authorised or it is unlawful to distribute this document.
The investment described in this document may not be protected against sovereign risk including risks arising from any changes in applicable laws and may involve a high
degree of risk. Investors capital is not guaranteed in any respect and they could lose all or substantial portion of their investment. Please familiarize yourself with all the
terms and conditions pertaining to the specific products and services prior to availing of it. Goldman Sachs International is not acting as your advisor or in a fiduciary
capacity in respect of the products and services referred to in this document, and accepts no liability nor responsibility whatsoever with respect to the use of this document
or its contents. Nothing in this document is intended to constitute legal, tax, securities, or investment advice, or an opinion regarding the appropriateness of any investment,
or a solicitation of any type. The contents in this document are intended for general information purposes only and should not be acted upon without first obtaining
independent legal, tax, and investment advice from a licensed professional concerning your own situation and any specific investment questions you may have before
entering into any financial transaction.
Any reference to target returns in this document are only indicative and should not be construed to refer to any commitment by SIO Properties Ltd or its respective affiliates,
or any other service provider.
The financial or other projections etc. set out in this document have been prepared based upon projections that have been determined in good faith and from sources which
SIO Properties believes to be reliable. There can be no assurance that such projections will be accurate. SIO Properties and its respective affiliates do not accept any
responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. Past
performance cannot be a guide to future performance. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its
completeness. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially.
Any investment in any securities described in this document will be accepted solely on the basis of the final appropriate legal documentation (the Documentation).
Accordingly, this document should not form the basis of, and should not be relied upon in connection with, any subsequent investment in the Company. To the extent that
any statements are made in this document in relation to the investment, they are qualified in their entirety by the Documentation pertaining to the investment, which must be
carefully reviewed prior to making any decision to invest.
This document does not constitute an offer to sell or a solicitation of an offer to sell any securities to any person in any jurisdiction. The securities described herein have not
been, and will not be, registered under the US Securities Act of 1933, as amended (the US Securities Act), the securities laws of any state of the United States or the
securities laws of any other jurisdiction, nor is such registration contemplated. The securities described herein are subject to restrictions on transferability and resale and
may not be sold, transferred, pledged or otherwise disposed of except as permitted under the US Securities Act and the applicable state and non-US securities laws
pursuant to registration or an exemption therefrom, and then only to the extent permitted by the issuing entity's constitutional documents. The issuing entity of the securities
described herein has not been, and will not be, registered as an investment company under the US Investment Company Act of 1940, as amended, in reliance upon
exemptions from registration thereunder.
SIO Properties
1. Introduction
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44
Over 40 years real estate development, and insurance
industry, experience
Fellow of the Chartered Insurance Institute in Nigeria and
UK and the Chartered Institute of Insurance Brokers of
Nigeria
Recipient of the top National Honour of Commander of the
order of the Federal Republic of Nigeria (CFR)
Recipient of about half a dozen honorary Doctorate
Degrees from various Universities including Lincoln
University, Pennsylvania, USA
Pioneer of the Nigerian insurance industry, having started
in 1948 as a trainee at Norwich Union in Lagos
1998 recipient of the World Bank-IMF African Business
Leadership Award
Photo
Chief (Dr.) Sonny Iwedike Odogwu, CFR
Chairman
B.Sc, M.Sc (Economics), University of Lagos, Nigeria
LL.B, University of Abuja, Nigeria
Certificate in Macro-Economic Policy and Management,
Harvard University
Fellow, Chartered Institute of Management Accountants, UK
Fellow, Institute of Chartered Secretaries and
Administrators, England
Fellow, Institute of Chartered Accountants of Nigeria
Chartered Stockbroker and Authorised Dealing Clerk of the
Nigerian Stock Exchange
Former Director of the Bureau of Public Enterprises, Nigeria
Former Board Member of the Nigerian Bank for Commerce
Board Member, Royal Exchange Plc (listed company)
Chief Uwadi Okpa-Obaji
Chief Operating Officer
The Sponsor and the Operating Company
Key Management of SIO Properties Limited/Robert Dyson & Diket Limited
LL.B (University of Sheffield, UK), B.L. Nigerian Law
School, Lagos, Nigeria
B.A. History, Economics (University of Sheffield, UK)
MBA (New York University, USA)
Worked at Sofunde, Osakwe, Ogundipe & Belgore (top firm
of Legal Practitioners in Lagos)
Partner, Mansfield & Granville (Attorneys at Law), Lagos
Board Director, FinBank Plc
Chairman, Royal Exchange Plc. A financial services group
that owns the oldest insurance company in Nigeria. The
company is quoted on the Nigerian Stock Exchange
Ken E. Odogwu
Chief Executive Officer
Graduate of University of Benin, Nigeria (BA Accounting)
Fellow of the Institute of Chartered Accountants of Nigeria
(ICAN)
Deputy Director/Special Assistant to the Director-General,
Budget Office of the Federation & Special Adviser to the
President on Budget (2004-2008)
Nigerian Deposit Insurance Company (NDIC) from (1989-
2004)
Esther Oyero
Chief Financial Officer
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The Sponsor
Group Structure and Track Record
SIO Properties was incorporated in 1962 to fulfil Chief Sonny Odogwus real estate interests, and has grown to
become one of the largest property and estate development companies in Africa
SIO Properties previously owned Radisson Plaza, Manhattan Beach, LA
SIO Properties previously owned and managed No. 1, Times Square, New York, New York
SIO Properties developed, owns and manages Grand Hotel, Resort and Convention Centre, Asaba, Nigeria
SIO Properties owns, and has owned, various residential and commercial developments in the UK, the US and in
Nigeria
Odogwu Group Africa
SIO Properties Track Record
Real Estate
(SIO Properties)
Oil and Gas
(Africoil & Gas)
Financial Services
(Insurance Banking)
Telecoms
(SioTel)
Manufacturing
(SIO Industries)
Others (Trading,
Publishing and Tourism)
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Project Overview
15-story, five star Starwood operated, Le Mridien hotel
314 keys:
234 rooms
80 suites (inc. 5 Presidential Suites)
Le Mridien Grand Apartments Le Mridien Grand Hotel
15-story, Le Mridien branded apartment block
125 apartments:
74 serviced apartments
51 apartments to be sold
Construction started in early-2008, total projected cost of $337m
$124m of senior debt finance being arranged by Diamond
Capital
Nairda (MEP contractor) providing vendor financing of $35m
SIO Properties has already invested $77m to the project
Seeking to raise $100m of equity from investors
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Key Parties
SIO Properties Ltd (Sponsor)
Robert Dyson & Diket (Operating Company)
Technical Parties Management and Advisors
Sponsor Ingenieur und Tiefbau Limited (ITB)
Building
Contractor
Starwood Hotels and Resorts Worldwide
Inc.
Manager Hamilton Project Management, Dubai
Project
Managers
Goldman Sachs International
Equity
Placement
Agent
GL & H Associates, South Africa
Adeniyi Consultants Limited
Architects
Diamond Capital & Financial Markets Ltd
Debt
Arranger
LC Consulting
IAA Associates Limited
Structural
Engineers
Mansfield & Granville Chambers (SIO)
Templars Attorneys (Transactional Counsel)
Olaniwun Ajayi (Placement Agent)
Nigerian
Counsels
DEL QS, South Africa
EL-Rufai & Partners
Quality
Surveyors
Sullivan & Cromwell (Placement Agent) UK Counsel
Nairda Limited
WSD Consulting Engineers
Mechanical/
Electrical/
Plumbing
Jide Taiwo & Co.
Real Estate
Valuation
Agent
Brunelli Construction & Co (Nig) Limited
Piling
Engineers
W Hospitality Ltd (investors)
Industry
Consultant
Lionel Levin & Partners
Interior
Designers
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Key Investment Highlights
Strong demand
for high quality
hotel and apartment
accommodation
in Lagos
Premium Lagos
positioning with
excellent location in
Ikoyi
Increasing inward investment and
interest in Nigeria as the key West
African business hub
Investor friendly
structure protects
downside and allows for
significant upside
participation
Sponsor with
40-year track record
in the real estate and
hospitality
industry locally
and internationally
Five star hotel product
backed by a world class
operator and the
Le Mridien brand
Grand Towers
SIO Properties
2. The Project
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Overview
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Le Mridien Grand Apartments Le Mridien Grand Hotel
Floors
To maximise views, the two towers will have an X and Y shape plan
Towers will sit on a podium that will house all the entrances, receptions, function halls, support services,
parking and security
Design
Hotel Facilities will include: three restaurants, spa, gym, swimming pool and a function hall for 850 people Facilities
Electricity to be supplied from the national grid
Power backup from six generators to ensure uninterrupted supply
Power
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314 # Rooms/Apartments 125
107,586m Floor Area
19,912m Land Area
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Overview
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The site is located on Ikoyi Crescent, a fulcrum
of the Ikoyi peninsula in Lagos
Ikoyi is connected to Lagos Island by Carter
Bridge and to Victoria Island by Falomo Bridge
The population of Lagos Island, Ikoyi and
Victoria Island is highly cosmopolitan and the
area constitutes the centre of economic life of
Nigeria
Location and Status of Build
Status of Build Location
Construction started in early-2008
The de-watering and piling have been completed
and the first floors erected
All relevant building permits and approvals have
been obtained (this has been confirmed by local
counsel)
Excellent development team made up of South
African, Dubai and Nigerian-based firms
Construction is due to be completed, with hotel
fully operational, by Jan-2011
Pre-selling of apartments to start end of
June 2009
Atlantic
Ocean
Victoria Island
Badagry Creek Lagos Harbour
Island Port
Lagos Murtala
Muhammed
Airport
Ifako-Ijayi
Ikeja
Agege
Oshodi-
Isolo
Surulere
Lagos
Lagoon
Mushin
Shomolu
Lagos
Mainland
Ikoyi
Lagos Island
Ajegunle
Apapa Apapa Port
Tin Can
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The Manager Starwood
Luxury and upscale hotels, resorts and
residences
European-inspired brand with a French
accent
Each hotel has a distinctive character driven
by its individuality and the Le Mridien brand
values
SIO Properties has signed a 15-year management and technical agreement with Starwood Hotels
& Resorts Worldwide Inc. (Starwood)
Starwood is a leading hotel management company with a portfolio of 897 hotels with approximately
275,000 rooms across 100 countries under management
(a)
Overview
The Le Mridien Brand Starwood Brands
(a) As at 31-Dec-2007, includes owned, leased, managed and franchise hotels.
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Le Mridien Grand Hotel
Le Mridien Room Breakdown
Room Types Number of Rooms Average Room Size (m
2
) Total Floor Area (m
2
)
Complementary Rooms 46 43 1,978
Classic Rooms 188 44 8,272
Suites 71 84 5,955
Diplomat Suites 4 217 905
Presidential Suites 5 263 1,315
Total 314 22,411
The hotel will be of extremely high quality; its positioning will be at a significant premium to any other hotels in
Nigeria or Sub-Saharan Africa
The hotel rooms will be the most spacious in the country with an average size of 71m
2
(and a minimum of 43m
2
)
The Four Seasons in New York, a benchmark for luxury hotels, has an average room size of 65m
2
The facilities will be in keeping with an international 5-star hotel of this calibre
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Le Mridien Grand Apartments
Apartment block will have 125 apartments; comprising of 51 Le Mridien branded, 4 bedroom apartments and
duplexes occupying the 7th to the 11th floors, a large Penthouse on the 12th floor and 74, 1 and 2 bedroom
serviced apartments to be operated as part of the hotel by Starwood situated on the 1st to the 7th floors
Will provide more spacious rooms and living/dining areas affording between 55 to 161 square meters for 1 and 2
bedroom apartments, between 358 to 504 square meters for 3 and 4 bedroom apartments, and 407 to 516 square
meters for the duplexes and a 654 sqm penthouse
Le Mridien Apartment Breakdown
Description
No. of
Units Floor Area (m
2
)
Total Floor Area
(m
2
)
Apartments for sale
Types 1-3 Three Bedroom Apartments 46 358 504 20,929
Duplex Type 1 Duplex Apartment 1 (2 floors) with terraces 2 516 1,034
Duplex Type 2 Duplex Apartment 2 (2 floors) with terraces 2 407 813
Penthouse Penthouse (above central units) 1 654 654
Serviced Apartments Operated as Hotel
Type 1 One Bedroom Apartments 53 55 108 4,116
Type 2 Two Bedroom Apartments 21 154 161 3,304
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Facilities for the Hotel
A large Porte Cochere and Foyer will welcome guests into the Le Mridien Grand Hotel. The Foyer will be vertically extended by an atrium going
the full height of the tower and roofed by the central dome over the 13th floor
Reception
There will be a main lounge on the ground floor. A VIP Lounge consisting of meeting rooms and a kitchen area will also be located on the twelfth
floor overlooking the surrounding lagoon. There will be a cigar lounge with an adjoining cigar safe room
There will be four lifts at the lounges on the ground floor leading to the main hotel floors. VIP's will be given special access cards granting them
preferential access to the VIP reception and lounge on the 12th floor
Lounges
The main restaurant will be located on the ground floor. Two other restaurants an African and an Oriental restaurant will be located on the
Mezzanine floor, directly over the main restaurant. These two restaurants will have their own atmosphere; one will overlook the lower garden and
link to the Pool area, while the second will have an intimate setting. Both restaurants will be serviced from a common kitchen linked to the main
service core of the Le Mridien Grand Hotel
There will be three bars in the hotel; one attached to the main lounge on the ground floor, another attached to the VIP lounge on the 12th floor and
a third at the pool side
Restaurants and
Bars
Meeting and banqueting facilities include a main function hall on the ground floor with a capacity to sit 850 people. The main function hall can be
sub-divided into two smaller facilities. There will also be six (6) breakaway rooms on the mezzanine floor and two (2) board rooms a 16-seater
and a 12-seater located at the VIP area
Banqueting and
Meeting
Facilities
These health and exercise amenities will be situated on the mezzanine floor and will be accessible to guests from the main lifts via a bridge
overlooking the Lounge area. The spa and the gym will be located along a link between the Le Mridien Grand Hotel tower and the Le Mridien
Grand Apartments tower. They will both open onto the main garden where they can split out onto two large and secluded terraces and pool area.
The pool, about 25 meters long, will be surrounded by a garden. A water feature will cascade down into the lower garden. The pool will have a
large separate relaxation pool as well as a baby pool
Spa, the Gym
and the
Swimming Pool
This will be located on the mezzanine floor above the lounge and can serve normal guests as well as the VIP guests Business Centre
A small retail component to support only the guest of the suites will be located on the ground floor along the lounge area. It will comprise shops
such as an exclusive boutique, a small pharmacy, a hairdressing saloon and a bookstore. Additional shops will be located on the ground floor
Retail
There will be 252 parking bays in the Le Mridien Grand Hotel and 43 shared bays in the functional areas. 100 of the parking bays will be used by
hotel guests while the reminder will form part of the 252 slots to be operated as paid-parking lots
Car Parking
SIO Properties
3. Market Review
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Nigeria
Nigeria is the most populous country in Africa
and the 8
th
most populous country in the
world
The economy is dominated by the oil and gas
sector (accounts to approximate 85% of
government revenue); however the non-oil
economy has exhibited high growth (10% in
2007)
Since the election in 1999 of its first
democratic civilian leader, Nigeria has seen a
number of significant political and economic
reforms
The IMF forecasts 8.1% real GDP growth in
2009; and GDP growth above 7% from 2009
to 2013
Overview GDP and Population
$147
$167
$220
$256
$303
$347
$387
$418
6.2%
5.9%
6.2%
8.1%
7.7%
7.4% 7.4%
7.0%
140
144
148
152
156
160
165
169
2006 2007 2008 2009 2010 2011 2012 2013
Nominal GDP ($bn)
Real GDP Growth (%)
Population (milllions)
Source: International Monetary Fund, October 2008
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Lagos
The commercial, financial and business centre of Lagos
and of Nigeria are the business districts of Lagos and
Victoria Island, where most of the country's largest banks
and financial institutions are located
Lagos State has 60 per cent of the countrys total
industrial investments and foreign trade while also
attracting 65 per cent of Nigerias commercial activities. It
also accounts for more than 40 per cent of all labour
emoluments paid in the country
The headquarters of multinational conglomerates like
UAC, Unilever, John Holts, British American Tobacco
(BAT), Leventis, Churchgate, Chevron, Shell, Mobil, Zain,
Etisalat, MTN Nigeria and some of Nigerias large public
enterprises are all located within the State
Whilst foreign embassies are obliged to be located in
Abuja, many countries, and all of the larger trade
partners, maintain a consular presence in Lagos. The
diplomatic community generates high demand for hotel
accommodation
Commercial Activity Overview
Lagos lies in the southwest of Nigeria on the Atlantic
coast in the Gulf of Guinea, west of the Niger River delta
It is the primary gateway to Nigeria and the rest of the
West African region
Its population of 15 million inhabitants makes it Africas
most populous city
Lagos is Nigerias most economically important city,
therefore Nigeria's most prosperous city, containing much
of the nation's wealth and economic activity, fueled by
one of the largest seaports in Africa
Nigeria
Ghana
Togo
Benin
Niger
Mali
Chad
Cameroon
Central
African
Republic
Burkina
Faso
Lagos
Abuja
Port Harcourt
Ogbomosho
Ibadan
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Lagos Hotel Market
Demand Trends
The oil-boom fuelled massive demand for accommodation until the mid 1990s
During this period the Sheraton Ikeja achieved occupancies well above 90 per cent due to a lack of
hotel supply as well as the increasing demand levels
Late 1980s
1993 to 1998 was a checkered period in terms of the demand for accommodation, especially from
foreign visitors, when Nigerias military government was isolated from the international community
The hotel industry suffered significant reductions in occupancy levels in the mid-1990s, which
eventually picked up in the late 1990s due to greater economic and political stability in the country
Mid-1990s
From 1998, Nigerias transition towards a democratically elected government caused a resurgence
in demand levels
Greater economic and political stability in this period saw increased inward investment from the
international community, particularly but not only in the hydrocarbons and telecommunications
sectors, which in turn brought a need for further accommodation
Democracy
Whilst there is still a huge amount to do to recover from the neglect of the past decades, Nigeria is
experiencing strong economic growth, with several new internationally-branded hotels under
construction in Lagos to cater to the ever-increasing demand
2000
Onwards
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Lagos Hotel Market
Demand Characteristics
Corporate demand is the largest market sector
generating demand for hotel accommodation in
Lagos
High levels of international and domestic demand
from corporates is likely to continue
In Nigeria, hotels in Lagos have the highest
occupancy and command higher rates than other
commercial centers in Nigeria
Average occupancy levels for highly rated hotels in
Lagos can be as high as 85%+
Given the extreme under supply of high quality
hotels, supply of new hotels unlikely to negatively
impact rates or occupancy levels
Development of Rates
(b)
(a) Weighted by number of rooms.
(b) Average (weighted by number of rooms) for Sheraton, Eko, Federal Palace and Sofitel; the four hotels for which consistent data is available.
(c) Excludes Federal Palace.
Source: W Hospitality Group
Occupancy Levels
2007 2008
Sheraton (Ikeja) 88.1% 89.8%
Eko Hotel & Suites (Vic. Is.) 83.7% 85.2%
Federal Palace (Vic. Is.) 77.6% NA
Sofitel Moorhouse (Ikoyi) 77.8% 78.9%
Average
(a)
83.6% 86.2%
$181.5
$194.0
$207.8
$237.2
$340.5
2004 2005 2006 2007 2008
CAGR: 17.0%
Source: W Hospitality Group
(c)
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Lagos Hotel Market
Supply: Existing Hotels
The current supply of hotels (and their relative room volume) of international standard in Victoria Island and Ikoyi is
limited
There is only one internationally branded hotel, the 96-room Sofitel Moorhouse in Ikoyi, located there, and the
increase of approximately 400 rooms since 2003 has been in 13 small hotels, with an average size of just 30 rooms
Prior to the re-opening of the renovated 150-room Federal Palace, operated by Sun International, in July 2008,
there had been no new hotel of any significant size opened in Lagos since the Sheraton Hotel in Ikeja in 1985
Quality Hotels in Lagos (Victoria Island and Ikoyi)
No of
Rooms
Published Rate ($)
Hotel Standard Deluxe Suites from Location
Victoria Crown Plaza 45 - 435 530 Victoria Island Annexe
Protea Victoria Island 58 379 485 566 Victoria Island
Protea Kuramo 60 271 339 932 Victoria Island Annex
Sofitel Moorhouse 96 403 479 560 Ikoyi
Federal Palace 150 495 533 677 Victoria Island
Eko Hotel & Suites 586 497 516 1,769 Victoria Island
Le Mridien 314 540 675 1,035 Ikoyi
Source: W Hospitality Group
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Lagos Hotel Market
Supply: New Hotels Under Construction
In the deluxe category, the only new supply under construction is the InterContinental which is in a significantly
worse location for parking and accessibility purposes
There are currently no international 5-star standard hotels in Lagos
New Quality Hotels Under Construction in Lagos State
Location No of Rooms
Estimated
Opening Date
Wemco Victoria Island Annex 160 2009
Radisson SAS Victoria Island 170 2009
Ikoyi Hotel (Southern Sun) Ikoyi 200 2009
Eko Hotel Extension Victoria Island 125 2010
InterContinental Victoria Island 346 2010
Le Mridien Ikoyi 314 2011
Source: W Hospitality Group Research
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Lagos Real Estate Market
Dynamics in the Deluxe Real Estate Sector
Source: W Hospitality Group Research
Rentals in Lagos are among the highest in the country
with Ikoyi and Victoria Island considered the most
expensive. Annual rent for a good quality serviced
apartment in Ikoyi ranges between $50,000 and $85,000
depending in configuration
Apartments in Ikoyi are mostly occupied by executives of
oil companies, multinationals and big corporations who
can afford them and apartments record occupancy rates
as high as 100% for most parts of the year
Rents are usually paid in advance and it is not uncommon
for property owners in Ikoyi to demand 3 years rent in
advance and agents are said to have long waiting lists of
persons seeking accommodation in Ikoyi and Victoria
Island
Rental Market Purchase Market
Deluxe residential property in Lagos continues to meet
strong demand
Ikoyi in particular is the most expensive real estate in
Africa because of its proximity to the Lagos central
business district and its aesthetics
Increasing demand is resulting from:
Economic growth in the country, with new
companies entering the economy, requiring
accommodation for senior local and expatriate staff
The resultant increase in wealth of the managerial
and executive classes
There are no apartments in Lagos of the quality proposed
by the Project, and no serviced apartments with an
international operator
There is a large quantity of poor quality accommodation
on the market, with erratic services, and with reluctant
occupiers due to the lack of any alternative. New
apartments are therefore in high demand, provided they
can offer guaranteed power and water supply, parking,
and good security
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Lagos Real Estate Market
Selected Apartment Complexes
Apartment Apartment Location Components Sales per Unit (US$)
Trenchard Place Gerrard Road 3 Bedroom
4 Bedroom
$1.0m
$1.1m
Luxury Garden Alexander Avenue
4 Bedroom
5 Bedroom Penthouses
$1.5m
$2.0m
Luxury Apartments Mulliner Road 3 Bedroom $1.5m
Admiralty Towers Gerard Road
3 Bedroom
4 Bedroom
$1.9m
$3.7m
Luxury Apartments Bourdillon Road
3 Bedroom
4 Bedroom
$1.0m
$0.9m
Wemabod Towers Mosley Road
3 Bedroom
4 Bedroom Penthouse
$1.8m
$2.7m
Compound Annual Growth Rate in Apartment Prices - Ikoyi
Apartment Type 2006 2007 2008 CAGR 06-08
3 Bedroom $650,000 $800,000 $950,000 21%
4 Bedroom $800,000 $1,000,000 $1,200,000 22%
Penthouse $1,200,000 $1,500,000 $1,900,000 26%
Average $883,333 $1,100,000 $1,350,000 23%
Source: W Hospitality Group (Jan-2009)
Source: Jide Taiwo & Co (Jan-2008)
SIO Properties
4. Key Assumptions and Summary Financials
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Sources and Uses of Capital
Being arranged by Diamond
Capital
6 year maturity, local currency
Expected rate c.18% p.a.
Uses of Funds
From Nairda (constructor)
5-year maturity, in USD
Expected rate c.7.0% p.a.
Corresponds to a 57.8% equity
ownership
Sponsor has already injected
over USD73m
Sources of Funds
Land: $35.2m
Piling: $10.0m
Construction and
FF&E: $258.5m
Start-up Costs: $25.8m
Total: $329.5m Total: $329.5m
Sponsors Equity
(Land & Piling):
$45.3m
Sponsors Other
Equity: $28.5m
New Equity Investors:
$100.9m
Vendor Finance:
$35.0m
Bank Loan: $120.0m
E
q
u
i
t
y
:


5
3
%
D
e
b
t
:


4
7
%
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Revenue: Hotel Rooms and Serviced Apartments
Hotel Rooms
Number Rate ($)
(a)
Connecting (Classic 35) 46 540
King/Twin (Classic 45) 188 675
Suites 71 1,035
Diplomat 3 1,872
Diplomat G 1 2,238
Presidential 5 3,065
Total 314 791
(a) Assumed end-2008 rate.
(b) Assumed to grow at 5% per annum.
Breakdown
Serviced Apartments
Number Rate ($)
(a)
Type 5a (2 bed) 11 540
Type 5b (1 bed) 11 405
Type 6 (2 bed) 10 540
Type 7 (1 bed) 10 405
Type 8 (1 bed) 10 405
Type 9 (1 bed) 11 405
Type 10 (1 bed) 11 405
Total 74 443
Year
Av. Room Rate ($)
(b)
Av. Discount
Av. Discounted Rate ($)
Occupancy Rate
Revenue ($m)
2011 2012 2013 2014 2015 2016
916 962 1,010 1,060 1,113 1,169
20.1% 15.2% 10.6% 10.6% 10.6% 10.6%
732 815 903 948 996 1,046
60.0% 75.0% 75.4% 75.8% 76.1% 76.5%
50.4 70.1 78.0 82.3 86.9 91.7
2011 2012 2013 2014 2015 2016
513 539 566 594 624 655
20.1% 15.2% 10.6% 10.6% 10.6% 10.6%
410 457 506 531 558 586
60.0% 75.0% 75.4% 75.8% 76.1% 76.5%
6.6 9.3 10.3 10.9 11.5 12.1
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Revenue: Apartments Sales
Breakdown Number Price ($m)
4 Bed (Types 1-4) 46 3.85
4 Bed Duplex (Types 11-14) 4 4.10
Penthouse (4 bed) 1 4.90
Total 51 3.89
Year 2009 2010
Number of Apartments Sold
4 Bed (Types 1-4) 22 24
4 Bed Duplex (Types 11-14) 2 2
Penthouse (4 bed) 0 1
Total 24 27
Discount to Sale Price
5% 0%
Sales Cost 5% 5%
Revenue from Properties Sold ($m)
Sold in 2009 41.8 41.8
Sold in 2010 0.0 100.2
Total 41.8 142.0
Instalment Payments
Sold in 2009 50% 50%
Sold in 2010 0% 100%
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Summary Income Statement
USD m 2009 2010 2011 2012 2013 2014 2015 2016
Room Revenue 50.4 70.1 78.0 82.3 86.9 91.7
Serviced
Apartment
Revenue
6.6 9.3 10.3 10.9 11.5 12.1
Food & Beverage 14.3 19.8 22.1 23.3 24.6 25.9
Other income 7.4 10.2 11.3 11.9 12.5 13.2
Hotel 78.6 109.3 121.7 128.4 135.5 143.0
Apartment Sales 41.8 142.0 0.0 0.0 0.0 0.0 0.0 0.0
Service Charges 0.8 0.8 0.8 0.9 0.9 1.0
Total Revenue 41.8 142.0 79.4 110.1 122.5 129.3 136.4 143.9
Total Direct Costs (17.8) (24.6) (27.4) (28.9) (30.5) (32.1)
Indirect Cost (15.7) (21.9) (24.3) (25.7) (27.1) (28.6)
Operating Profit 41.8 142.0 45.8 63.7 70.8 74.7 78.9 83.2
Fixed Costs (5.9) (8.1) (8.9) (9.4) (9.9) (11.1)
EBITDA 41.8 142.0 40.0 55.6 61.9 65.3 68.9 72.1
EBITDA Margin 50.3% 50.5% 50.5% 50.5% 50.5% 50.1%
Depreciation (34.0) (8.3) (8.9) (9.4) (10.0) (10.7)
EBIT 41.8 142.0 6.0 47.2 53.1 55.9 58.9 61.4
Interest (21.7) (22.3) (16.4) (13.5) (8.9) (4.2) 0.0 0.0
Profit Before Tax 20.2 119.7 (10.4) 33.7 44.2 51.7 58.9 61.4
Tax Payable 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (7.7)
Deferred Tax 0.0 0.0 5.8 (6.3) (8.5) (10.0) (11.5) (12.0)
Profit After Tax 20.2 119.7 (4.6) 27.4 35.7 41.7 47.4 41.8
25% of revenues from rooms and
serviced apartments
Car parking, minor operating
departments and other
12.8% of revenues from rooms
and serviced apartments
22.3% of revenue
Administration, marketing,
property operations etc
19.9% of revenue
Property tax & insurance and
management fee
7.3% of revenue
Write off of start-up costs
Positive as a result of initial capital
allowance
Pioneers status no corporate
taxes for first five years
Thereafter, 30% income tax and
2% education tax
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Summary Cash Flow Statement
USD m 2008 2009 2010 2011 2012 2013 2014 2015 2016
EBITDA 0.0 41.8 142.0 40.0 55.6 61.9 65.3 68.9 72.1
Change in
Working Capital
0.0 0.0 0.0 (4.7) (1.8) (0.7) (0.4) (0.4) (0.4)
Tax 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (7.7)
Cash from
Operations
0.0 41.8 142.0 35.3 53.8 61.2 65.0 68.5 64.0
Investing Cash
Flows
(162.2) (113.7) (53.8) (1.6) (3.3) (5.4) (5.7) (6.0) (6.3)
Equity Financing 86.0 60.3 28.5 0.0 0.0 0.0 0.0 0.0 0.0
Debt Financing 155.0 (3.5) (31.9) (31.9) (31.9) (31.9) (24.0) 0.0 0.0
Interest 0.0 (21.7) (22.3) (16.4) (13.5) (8.9) (4.2) 0.0 0.0
Change in DSRA (6.6) (7.0) 1.2 1.2 1.2 3.1 7.0 0.0 0.0
Cash From
Financing
234.3 28.1 (24.5) (47.1) (44.2) (37.6) (21.1) 0.0 0.0
Total Cash Flow 72.1 (43.8) 63.7 (13.4) 6.3 18.2 38.1 62.6 57.7
Dividends 0.0 0.0 0.0 78.6 6.3 18.2 38.1 62.6 57.7
Cash Balance 72.1 28.2 92.0 0.0 0.0 0.0 0.0 0.0 0.0
Debt Balance 155.0 151.5 119.6 87.7 55.9 24.0 0.0 0.0 0.0
FF&E replacement reserve
equal to 2% and 3% of hotel
revenue in years 1 and 2
respectively and 4%
thereafter
Additional 500k p.a. assumed
from 2013
Assumes 1 year repayment
grace period on bank loan
Assumed to equal 25% of
following years interest a
repayment obligation
First dividend at end of first
year of operation
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Indicative Equity Returns
Exit Assumptions
Assumed Exit Year 2013
Assumed Exit EBITDA Multiple 8.0
EBITDA in 2013 ($m) 61.9
Implied Exit EV ($m) 495.5
Net Cash / (Debt) in 2013 (24.0)
Implied Exit Equity Value ($m) 471.5
Return Sensitivities
Exit Multiple IRR
5.0x EBITDA 22.8%
6.5x EBITDA 29.1%
8.0x EBITDA 34.3%
9.5x EBITDA 38.8%
11.0x EBITDA 42.9%
USD m 2008 2009 2010 2011 2012 2013
Equity Investment from New Equity Investors 12.2 60.3 28.5 0.0 0.0 0.0
Equity Investment from Sponsor (Land + New Equity) 73.8 0.0 0.0 0.0 0.0 0.0
Total Equity Investment 86.0 60.3 28.5 0.0 0.0 0.0
Dividends 0.0 0.0 0.0 78.6 6.3 18.2
Exit Enterprise Value (8.0x EBITDA) 0.0 0.0 0.0 0.0 0.0 495.5
Adjustment for (Debt) / Cash 0.0 0.0 0.0 0.0 0.0 (24.0)
Cash Outflows 0.0 0.0 0.0 78.6 6.3 489.7
Equity Cash Flows (86.0) (60.3) (28.5) 78.6 6.3 489.7
Blended Equity IRR 34.3 %
New Investors Equity IRR 40.2 %
SIO Properties
5. Conclusions
34
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Investment Highlights
Strong demand
for high quality
hotel and apartment
accommodation
in Lagos
Premium Lagos
positioning with
excellent location in
Ikoyi
Increasing inward investment and
interest in Nigeria as the key West
African business hub
Investor friendly
structure protects
downside and allows for
significant upside
participation
Sponsor with
40-year track record
in the real estate and
hospitality
industry locally
and internationally
Five star hotel product
backed by a world class
operator and the
Le Mridien brand
Grand Towers
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Electronic Data Room Contents
Document Comments
Financial Model
SIO model incl. Management case and a Flex case
(based on W Hospitality assumptions)
PKF Report
September 2006 Financial Estimates for Proposed
Hotel and Apartments Complex in Ikoyi, Lagos
(commissioned by SIO Properties)
W Hospitality Investor Due Diligence Report
January 2009 Market Report on Le Mridien Grand
Towers (commissioned by Goldman Sachs and SIO
Properties)
Jide Taiwo Report(s)
Land Valuation Report (2005) and Lagos Market
Apartment Letting and Sales Rates (2008) by Jide
Taiwo & Co
Actual Marketing Report Marketing Report on Apartments for Sale
Main Contractor Contract
Executed Contract between SIO Properties and ITB
Nigeria
Le Mridien Management Contract (Old + Revised)
Executed Contract between SIO Properties and
Starwood
Bank Financing Memo
Expression of Interest from Domestic Senior Banks
(Memorandum from Diamond Capital)
Legal Memorandum on Status of Licence and Permits Memorandum from Nigerian Counsel, Templars
Floor Plans and Project Images Submitted by SIO Properties
Odogwu Group Profile Submitted by SIO Properties
SIO Properties
Appendix A: Technical Parties
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37 37
Technical Parties (1/4)
Ingenieur-und Tiefbau (I.T.B) Nigeria Limited, a company within the construction division of the Chagoury Group, was formed in 1995 and has about
1,000 employees with a presence in major cities in Nigeria. It is one of the few civil engineering and construction firms whose head office and main
operations are in Africa
Relevant projects done by I.T.B in the past include
National Assembly Complex, Abuja
Eko Hotel Construction of a 9 storey concrete structure, comprising 8 floors of luxury suites and 1 floor for services/reception
Federal Secretariat Complex, Abuja
Sapetro Towers, Victoria Island 13 storey residential development for Sapetro
I.T.B Nigeria
Limited
Hamilton Project Management (HPM) was established in Dubai nearly 10 years ago and has accumulated a portfolio of major projects related to the
hotel and leisure industry as well as quality office/commercial buildings such as shopping malls and residential buildings. Hamilton is staffed with
qualified engineers with local and international experience in Project Management, Construction and Design Consultancy
Projects handled by the firm include numerous hotels, beach resorts and high-rise buildings such as
J.W Marriott Hotel Phase II, Dubai
Le Mridien Hotel (Hotel & Resort), Mauritius
Hilton Hotel, Doha, Qatar
Hamilton Project
Management
(U.A.E)
One of the leading MEP Contractors in Nigeria with extensive track record of participating in Landmark Projects in Nigeria
Some of the relevant projects recently handled by Nairda include:
World Bank Headquarters - Abuja (M&E) (alongside Asokoro District Hospital)
Afribank Head Office, Broad Street, Lagos
Chevron/Gulf Oil - Complex at Lekki Peninsula
Texaco - Headquarters Complex - Warri
Habib Bank - Headquarters, Ikoyi
State Oil Nigeria Limited - Lagos
Novotel Hotel in Festac, Lagos
Le Meridien hotel in Akwa Ibom
Tinapa Shopping and Entertainment Centre in Calabar
Nairda Limited
(Nigeria)
Mechanical, Electrical and Plumbing (MEP) Sub-Contractor
Project Managers
Main Building Contractor
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Technical Parties (2/4)
ACCL was established some 18 years ago as a firm of Architects and Engineers. ACCL has designed and supervised the successful construction of
over 100,000 sqm of commercial office space and has also been involved in the oil industry as well as several institutional projects. Projects handled
by ACCL in the past include
Frith Hill Apartments A block of 10 luxury apartments situated in a high brow area of Lagos
Univest Apartments, Ikoyi, Lagos - A residential development comprising 4 living units located at Osborne Foreshore, Ikoyi, Lagos
OCallaghan Court, Ikoyi Lagos - A three-storey block of 12 luxury apartments located in the residential area of Ikoyi
GLH &
Associates
(South Africa)
Grosskopff Lombart Huyberechts & Associates (GLH & Associates) was established in 1945 in South Africa. The Practice prides itself in having
contributed to the Johannesburg architectural landscape with its landmark buildings such as the Johannesburg Civic Theatre (1962), The Market
Theatre (1984) and the Ponte Residential Complex (1976)
Other projects handled by GLH & Associates include
The Illovo Boulevard, Johannesburg
The Vodacom Buildings Phases 1 to 6, Midrand
Nedbank Head Office, Johannesburg
Microsofts Regional Head Office, Bryanson
International Finance Corporation (IFC) building, Johannesburg
Adeniyi Coker
Consulting
Engineers
Limited (Nigeria)
Architects
Piling Engineers
Brunelli
Construction Co
Limited (Nigeria)
Brunelli Construction Company (Nigeria) Limited was incorporated in 1972. The company specializes in piling and foundation works, diaphragm wall
installation, construction of jetties, shore-line protection works, dredging of canals and construction of drainages, roads and bridges
Piling and foundation works handled by Brunelli Construction Nigeria Limited include
Re Insurance Corporation
Chellarams building (now WEMA Bank building), Marina, Lagos
Trade House, Lagos.
African Continental Bank, Broad Street, Lagos
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39 39
Technical Parties (3/4)
IAA Associates Limited is an independent organization providing consultancy and advisory services in the fields of civil and structural engineering
The company is capable of handling a wide variety of projects, including development engineering, conceptual engineering, detailed design,
construction and project management
LAMATA Recurrent Maintenance Work, Lagos
22-storey Intercontinental Hotel, Victoria Island, Lagos
Office Block Development for AIICO Insurance Plc
Addax Headquarters on Victoria Island, Lagos
IAA Associates
Limited (Nigeria)
Structural Engineers
Pinconsult Associates based in Lagos Nigeria, was established in 1985 to provide highly competent professional consultancy services in the fields of
civil engineering, structural engineering, and building management. This practice became a limited liability company Pinconsult Associates Limited in
1993 for a wider coverage of engineering activities and a better corporate image. Previous projects handled by the firm include:
NIDB Head Office, Abuja
Ecobank Head Office, Victoria Island, Lagos
Sapetro Towers, Lagos
7-Up Bottling plant, Enugu
Teslim Balogun Stadium, Surulere Lagos
Head Office for Dubri Oil
Pinconsult
Associates
Limited (Nigeria)
WSP Structures
(Civil &
Structural
Engineers)
(South Africa)
WSP Consulting Engineers is part of the WSP Consulting Group based in UK. WSP is one of the worlds fastest-growing design, engineering and
management consultancies specializing in property, transport and environmental projects. WSP Group was established in the UK in the '70s and was
listed on the London Stock Exchange (LSE) in 1987. The company has grown through strategic development into one of the largest international
consultancy groups in the world employing around 8,000 staff worldwide. Relevant projects handled by WSP Consulting Engineers include:
Holiday Inn Garden Court, Sandton
Le Tuessrok Hotel, Mauritius
Mirage Hotel and Conference Centre, Dubai
Royal Swazi Spa, Swaziland
Grand Palm Casino, Botwana
Ridgeway Hotel, Zambia
Hampton Park, Sandton
University of Witwatersrand Business School, Johannesburg
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Technical Parties (4/4)
Del QS is one of the worlds leading service providers to the construction and property industries specialising in quantity surveying and property
valuation. Del QS was involved in the following projects
Sheraton Hotel, Pretoria, South Africa
Sheraton 4 point hotel, Kuwait
Southern Sun hotel, Tinapa, Calabar, Nigeria
Del QS (South
Africa)
Quantity Surveyors
El-Rufai & Partners was established in 1982. The firm provides consultancy services in quantity surveying, building and engineering construction cost
management and project management
The following are some of the projects handled by the firm in the past
NIDB Head Office, Abuja
NDIC Head Office Building, Abuja
NITEL Management Staff housing, Ikoyi, Lagos
El-Rufai &
Partners
(Nigeria)
Lionel Levin & Partners was established in 1974 and is one of Africa's leading interior design companies. The firm specialises in hotel and leisure
design and has completed a number of shopping centres and prestigious corporate projects in many African countries as well as in Europe. The firm
is involved in all aspects of the design process from master planning through to graphic and uniform design
Lionel Levin &
Partners
(Nigeria)
Interior Designers