April 2009 2 SIO Properties 22 Disclaimer This document and the information contained herein are strictly confidential and are meant solely for the selected recipient. This document may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of SIO Properties Ltd. 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 4 SIO Properties 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 5 SIO Properties 55 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) 6 SIO Properties 66 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 7 SIO Properties 77 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 8 SIO Properties 88 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 10 SIO Properties 10 10 Overview 15 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 15 314 # Rooms/Apartments 125 107,586m Floor Area 19,912m Land Area 11 SIO Properties 11 11 Overview 12 SIO Properties 12 12 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 13 SIO Properties 13 13 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. 14 SIO Properties 14 14 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 15 SIO Properties 15 15 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 16 SIO Properties 16 16 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 18 SIO Properties 18 18 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 19 SIO Properties 19 19 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 20 SIO Properties 20 20 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 21 SIO Properties 21 21 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 $340.5 2004 2005 2006 2007 2008 CAGR: 17.0% Source: W Hospitality Group (c) 22 SIO Properties 22 22 Lagos Hotel Market Supply: Existing Hotels The current supply of hotels (and their relative room volume) of international standard in Victoria Island and Ikoyi is limited There is only one internationally branded hotel, the 96-room Sofitel Moorhouse in Ikoyi, located there, and the increase of approximately 400 rooms since 2003 has been in 13 small hotels, with an average size of just 30 rooms Prior to the re-opening of the renovated 150-room Federal Palace, operated by Sun International, in July 2008, there had been no new hotel of any significant size opened in Lagos since the Sheraton Hotel in Ikeja in 1985 Quality Hotels in Lagos (Victoria Island and Ikoyi) No of Rooms Published Rate ($) 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 23 SIO Properties 23 23 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 24 SIO Properties 24 24 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 $85,000 depending in configuration Apartments in Ikoyi are mostly occupied by executives of oil companies, multinationals and big corporations who can afford them and apartments record occupancy rates as high as 100% for most parts of the year Rents are usually paid in advance and it is not uncommon for property owners in Ikoyi to demand 3 years rent in advance and agents are said to have long waiting lists of persons seeking accommodation in Ikoyi and Victoria Island Rental Market Purchase Market Deluxe residential property in Lagos continues to meet strong demand Ikoyi in particular is the most expensive real estate in Africa because of its proximity to the Lagos central business district and its aesthetics Increasing demand is resulting from: Economic growth in the country, with new companies entering the economy, requiring accommodation for senior local and expatriate staff The resultant increase in wealth of the managerial and executive classes There are no apartments in Lagos of the quality proposed by the Project, and no serviced apartments with an international operator There is a large quantity of poor quality accommodation on the market, with erratic services, and with reluctant occupiers due to the lack of any alternative. New apartments are therefore in high demand, provided they can offer guaranteed power and water supply, parking, and good security 25 SIO Properties 25 25 Lagos Real Estate Market Selected Apartment Complexes Apartment Apartment Location Components Sales per Unit (US$) 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 27 SIO Properties 27 27 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: $120.0m E q u i t y :
5 3 % D e b t :
4 7 % 28 SIO Properties 28 28 Revenue: Hotel Rooms and Serviced Apartments Hotel Rooms Number Rate ($) (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 29 SIO Properties 29 29 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% 30 SIO Properties 30 30 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 31 SIO Properties 31 31 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 32 SIO Properties 32 32 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 SIO Properties 34 34 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 35 SIO Properties 35 35 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 37 SIO Properties 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 38 SIO Properties 38 38 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 39 SIO Properties 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 40 SIO Properties 40 40 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