CPV09 VENTURE DEVELOPMENT · 2020-05-25 · new venture. Targets will include companies that would have a vested interest / strategic alignment with a business boutique hotel. Investment

Strategize, Manage, & Deliver…

STRICTLY PRIVATE & CONFIDENTIAL

CPV09 – VENTURE DEVELOPMENTRELIANCE PACIFIC BERHAD JANUARY 4, 2015

CPV09/STRAT/042/01042015

2COPYRIGHT©2015 OCRG LTD. ALL RIGHTS RESERVEDCPV09/STRAT/042/01042015

TABLE OF CONTENTS


CPV09A New Hotel CompanyProposed Structure 4Key Elements 5Competitive Survey 6Valued Amenities 7Typical Habits 8Miscellaneous 9Target Locations 10

CPV09B Real Estate FundProposed Structures 12

Key Elements 13

3COPYRIGHT©2015 OCRG LTD. ALL RIGHTS RESERVEDCPV09/STRAT/042/01042015 STRICTLY PRIVATE & CONFIDENTIAL

CPV09A New Hotel Company

Review of current progress, including revised structure and applicable reseach and anlaysis for concept development

Holding Company

Restaurant

“Spin Off”

Company

Strategic Investor

Strategic Investor

Strategic Investor

Hong Kong 1

Hong Kong 2

Singapore KL

MANAGEMENT ENTITY

Equity

Equity

Equity

Equity

Investors(SPV)

Investors(SPV)

Equity

Investor / Partners

Equity

Equity

Equity

Dividends

Dividends

Dividends

Dividends

Dividends

2 to 5 YRS

Management Contract

HOTEL MANAGEMENT

COMPANY

Agreement(All Hotels)

OCRG70%

AVI Newco30%

Avi New Co80%

Pro Team20%

CPV 09A - New Hotel CompanyDeal Structure

Additional “Spin Offs”

Case by Case

PROPOSED STRUCTURE

STRICTLY PRIVATE & CONFIDENTIAL4

COPYRIGHT©2015 OCRG LTD. ALL RIGHTS RESERVEDCPV09/STRAT/042/01042015

CPV 09A - New Hotel CompanyDeal Structure

Strategic InvestorsAnchor investors that will get in on the “ground floor” of the new venture. Targets will include companies that would have a vested interest / strategic alignment with a business boutique hotel. Investment will be based on a typical returns relative to the markets targeted (8 to 10%)

Holding CompanyMaster investment vehicle that will own the brand, equity in the SPV’s set up per property, as well as any potential “spin offs” such as a restaurant brand. Exit Strategy will be to take the holding company public within in a 5 to 10 year time frame and / or sell to larger corporation.

Management EntityResponsible for the development and management of the venture. This includes strategic and business planning, financial management, and project development. Management contract will be based on a 2% total fee of total funds under management.

Hotel ManagementMaster agreement between Hotel management company, run by Avillon and Holding company to manage all properties. Specific management agreements will be generated per property aligned with the specfics of the structure (third party investors etc.)

Hotel PropertiesEach individual hotel will be structured as an SPV, with the option of attracting third party investment for specific property. For the first property identified in Hong Kong, the strategy would be “in house” financing.

SPV InvestorsSPV investors will be brought in as necessary / prudent for spefic hotel properties. The equity ratio for SPV investors will have to be discussed as to not impact financial returns on the holding company level. Furthermore, criteria for SPV investors should be discussed as it may be beneficial device for complicated markets

Restaurant CompanyAs part of the hotel progam, the idea of one centralized kitchen / eatery can be explored as a potential “spin off” brand. This may also increase the profitatability of the Group as a whole as well as create a new avenue for expansion into new markets.

Additional “Spin Offs”There are several other “spin off” brands that could be created as a result of a successful hotel chain. These include a furniture / furnishing line, Online Travel / Tourism / Concierge, and Technology. Once the first hotel has been launched, these ideas should be explored.

KEY ELEMENTS



Property Location Avg. Nightly Rate

Rooms Avg Size (SQFT)

Restaurants / Dining

Ovolo / Central Central / Soho 2,200 HKD 42 350 1Indigo Wanchai 2,400 HKD 138 350 2Mira Moon Wanchai /

Causeway Bay2,400 HKD 91 380 to 400 1

99 Bonham Sheung Wan 1,600 HKD 84 500 to 600 NoneJervois Sheung Wan 2,400 HKD 49 750 NoneLKF Hotel Central / Soho 2,400 HKD 95 500 to 600 3Ovolo / Noho Sheung Wan 1,800 HKD 60 150 to 190 1

Property Dining Room Service

High Tech

SMART System

Desk / Office

Gym, Spa, And Other

Biz Center

Mini Bar

Wifi Concierge

Ovolo / Central

1 Limited*

Yes No Yes Limited Limited Full (Free)

Free No

Indigo 1 Yes Yes Limited Yes Yes Yes Full Free YesMira Moon

1 Yes Yes Yes Limited

Yes Limited Full Free Yes

99 Bonham

None No No No No Limited No No Free No

Jervois None No No No No Limited No No Free NoLKF Hotel 3 Yes Yes Limited Yes Yes Limited Full Free YesOvolo / Noho

1 Limited*

Yes No Yes Limited Limited Full Free No

Property Location Design Efficiency Workspace Amenities / Facilities

SMART System

In Room Tech

Dining Value for Money

RATING(Total Score Divided By Rating Categories)

Ovolo / Central 5 5 5 5 3 3 5 3 5 4.7

Indigo 4 3 4 3 5 5 4 5 4 4.1

Mira Moon 2 5 3 1 4 5 5 5 3 3.8

99 Bonham 4 4 4 2 2 1 3 0 5 2.7

Jervois 4 5 4 3 2 2 3 0 5 3.1

LKF Hotel 5 5 3 4 4 4 5 5 3 4.2

Ovolo / Noho 4 5 5 4 3 3 5 3 5 4.1

CPV 09A - New Hotel CompanyResearch & Analysis

Legend:1 Poor2 Acceptable3 Satisfactory4 Good5 Excellent

During September 2014, a “boots on the ground” survey was conducted of potential competitors in the Hong Kong Market.


COMPETITIVE SURVEY




55% 54%

41%

33%

29%

0

10

20

30

40

50

60

MOST VALUED AMENITIES

In Room Tech & Wifi Room Design

Loyalty Program Late Check In / Check Out

Customer Service

56%

43%

29%

0

10

20

30

40

50

60

BIGGEST COMPLAINTS

Speed & Cost Wifi

Substandard Cleanliness

Inconvenient / InsufficientPower Outlets

Top Rated Loyalty Programs: 1. Marriot 2. Starwood 3. Hilton

ANALYSISThe survey indicates that much of the Focus Group session feedback previously collected is accurate. Specfically regarding assumptions that technology and interconnectivity are the most important issues for business travelers . Concepts like automated guest services, mobile device apps, and SMART hotel systems should be a major priority. Equally, when looking at the biggest complaints of business travelers, the “tech” issues are at the forefront. This includes associated costs to hotel guests for accessing technology. Secondly, highly efficient, comfortable room layouts and features should be a major design objective. Out of the hotels viewed in Hong Kong, the Ovolo Central design was very impressive in several areas, including space efficiency, comfort, and amenities. This should be a comparative benchmark for future hotel design concepts. Furthermore, there are improvements that can be made on Ovolo’s concepts. This can be viewed as a competitive advantage if achieved at a reasonable cost.

VALUED AMENITIES

Source: Forbes / Travel + Leisure Magazine




71%

28%

66%

13%

40%

0

50

100

TYPICAL HABITS / ISSUES

Travel Exclusively with Carry-OnLuggageIncreased Scrutiny on ExpenseReportingLike Exposure to New Places

"Mileage Run" For Status

48%

35%

9%7%

1%

OPINIONS ON GENERAL BUSINESS TRAVEL

Mostly Enjot it Sometimes Necessary Love It Hate It

ANALYSISTaking into consideration the general habits of business travelers further confirms previous Focus Group sessions concerning typical business-travel length of stays and need for efficient, well organized spaces. In addition, the importance of the cost vs. “value for money” continuum. An interesting insight in the survey is the fact that participants believe they have experienced “increased scrutiny with expense reporting” at their respective companies and / or businesses. 7% of participants admitted to being “creative” with their expense reporting. Furthermore, considering that 40% of the survey’s participants typically order room service, it is probably safe to assume the remaining 60% do not or do not frequently do so for economic reasons. In order to reduce overhead costs for providing room service / in room consumables, this appears to verify the necessity of incorporating state-of-the-art SMART systems and automated hotel services. Also, including as many “free-bees” as feasible in guest rooms would seem to increase the “value for money” factor.From the standpoint of general perceptions of business travel, a primary target should be the

38% of survey participants that “Sometimes” enjoy business travel. This provides a “ball park”

demographic for the new hotel concept, in addition to the 48% majority which state that they

“Mostly Enjoy” business travel. The perception of “enjoyment” and pleasure appears to factor

in substantially with all survey participants.

TYPICAL HABITS




71%

54%

68%

17%

42%

0

20

40

60

80

MISCELLANEOUS HABITS

Shopping Between Meetings

Extend for Leisure

Maintain Regular Exercise & EatingRoutine

Use Hotel Spa

Bring Spouse or Partner



MISCELLANEOUS

0

10

20

30

40

50

60

TOP APPS

Google Maps Kayak Expedia Yelp

Skype SeatGuru Orbitz Tripit

Uber GateGuru

Preferred International Airlines:1.Singapore Airlines 2. Virgin Atlantic 3. Emirates4. Qantas Airlines 5. Cathay Pacific

Best Frequent Flyer Programs:1.Virgin Atlantic 2. Singapore Airlines 3. Qantas Airlines

ANALYSISAdditional areas of the survey include miscellaneous habits such as shopping and “mixing” business trips with leisure activities. The survey indicates that 68% percent of participants maintain routines for exercise and eating as well as that 42% have brought a spouse / partner with them on a business trip previously. Again, this indicates that the “enjoyment” factor should be strongly considered when designing / developing the hotel concept and “Flex Space” for accommodating lodging variances. When looking at the typical apps used by business travelers, Google maps, Yelp, and Uber are some of the most popular. Although a concierge may not be necessary, exploring the following may be prudent - a) providing local, qualified recommendations on shopping, restaurants, car services, and related activities, readily available through various modes b) the need for an optimized location for the hotel. In the case of Hong Kong, Central would be the best, preferably within a 2 square mile radius of Queen’s Road to Staunton Street as the two outer most nodes on the radial . Finding a location with restaurants and shopping within a short walking distance of the hotel would seem to be highly desirable. Looking at the international flight preferences of survey participants, our assumption that gateway cities, such as Hong Kong and Singapore as primary targets is valid. It would be worth considering Dubai and Sydney / Melbourne as future locations. Furthermore, looking at the preferred loyalty programs, Singapore and Qantas are among the top 3. From a business and marketing standpoint, strong consideration should be given to linking up with various airlines, particularly in the expansion stages of the newco’s development.





TARGET LOCATIONS


11

CPV09B Real Estate Fund

Review of current progress, including revised structure, SPV structure for mixed use developments, and relevant strategic concepts

COPYRIGHT©2015 OCRG LTD. ALL RIGHTS RESERVEDCPV09/STRAT/042/01042015 STRICTLY PRIVATE & CONFIDENTIAL

REAL ESTATE FUND

Investor

InvestorInvestor

Investor

Investor

Hotel Retail

Res. Comm.

Dividends

MANAGEMENT COMPANY

Equity

MIXED USE DEVELOPMENT / PROJECT COMPANY

FUND Investors

Hotel Sub-Development

Company

Retail Sub-Development

Company

Res. Sub-Development

Company

Equity Dividends Equity Dividends

Equity

Div. Div. Div.

Equity

Equity

Reliance

Service Provider

Joint Venture

Service Provider /

NewCO

Joint Venture

DIAGRAM 1: FUND STRUCTURE DIAGRAM 2: EXAMPLE MIXED USE DEVELOPMENT STRUCTURE (LANGKAWI 12 Acre “Resort Village”)

Equity

Equity

Equity

Equity

Equity

Management Contract (2% + 20% Upside)

OCRG50%

Reliance50%

CPV 09B – Real Estate FundDeal Structure

PROPOSED STRUCTURES



CPV 09B – Real Estate FundDeal Structure

Real Estate FundProposed RE fund will be marketed to investors, including within OCRG’s network. The offering will be aligned with industry standards for emerging market funds. Ideally, we would want to offer slightly better returns than comparable funds, targeting the 15 to 20% range.

Management CompanyJointly owned and operated fund management company would be set up utilizing an industry standard compensation program (2 /20). A management committee should be formed as well as plans to assign a managing director (TBA).

Asset PortfolioA portfolio of prospective projects should be identified and tagrted which fall within the basic parameters of the fund’s financial objectives. Three critical factors for the portfolio are risk diversification, terminal value and target profitability.

Investment ApproachRE fund will be responsible for providing the initial project finance / capital outlay. Depending on the size and value of the project, additional investors may be required. This can be performed through utilizing Capital Calls at specific milestones as well as for specific sub developments.

Sub-Development CompaniesDepending on the parameters of the project, various sub development companies may need to be set up to diversify risk, acquire additional capital, as well as improve asset performance ( Through joint venturing with operators / service providers).

Master Development CompanyA development company (SPV) will be set up per project. The property deed will be placed held by the development company, as well as the DEVCO officially incurring debt.

KEY ELEMENTS

Diagram 1: Real Estate Fund Structure

Diagram 2: Mixed Use Development Structure



WWW.OCRGSOLUTIONS.COM

COPYRIGHT© 2015 OCRG INC. ALL RIGHTS RESERVED.

Documents

CPV09 VENTURE DEVELOPMENT · 2020-05-25 · new venture. Targets will include companies that would have a vested interest / strategic alignment with a business boutique hotel. Investment