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Project Sunny - Instructions

The sponsor has posted a €2 million deposit to acquire the 174-unit Riviera Beachfront property in Antibes, France for €100 million. It plans to renovate the property into a 388-key UXCO boutique hotel over two years, operated for 5 years, then sold. The sponsor is seeking €67 million in equity and has received terms for a €125 million loan. This is an opportunity to invest 67% of the equity and partner with the sponsor on the renovation and operation of the property as a luxury hotel, with projected returns based on the assumptions provided.

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Hichem Yazid
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15 views3 pages

Project Sunny - Instructions

The sponsor has posted a €2 million deposit to acquire the 174-unit Riviera Beachfront property in Antibes, France for €100 million. It plans to renovate the property into a 388-key UXCO boutique hotel over two years, operated for 5 years, then sold. The sponsor is seeking €67 million in equity and has received terms for a €125 million loan. This is an opportunity to invest 67% of the equity and partner with the sponsor on the renovation and operation of the property as a luxury hotel, with projected returns based on the assumptions provided.

Uploaded by

Hichem Yazid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Riviera Beachfront

No-Name Equity (the “Sponsor”) has posted a €2 million hard deposit on the Riviera
Beachfront (the “Property” or “Riviera”), a 174-unit multifamily complex in Antibes, French
Riviera, and is seeking both equity and debt capital to complete the €100 million acquisition
of the Property and convert it into a UXCO-branded Boutique Residence of 388 keys.

Asset Summary:

The Riviera is an oceanfront residential building located on Promenade Amiral de Grasse in


Antibes, France. The Property consists of three towers, built in 1940, 1955 and 2007
respectively. Prior to its 2007 conversion into apartments, the Property was operated as a
253-key hotel. The 2007 renovation and construction resulted in three interconnected towers
consisting of 174 apartments and a nearby five-level parking structure. The Property also
includes a historic single family home adjacent to the pool (currently serves as the fitness
centre).

Sponsor Business Plan:

The Sponsor’s business plan has three main components:


(i) continue to operate the Riviera as a 174-unit residential building for an
anticipated 12-month period after closing while current tenants vacate the
Property and predevelopment and permitting work is completed,
(ii) execute an approximately €68 million (cf. appendix) renovation and hotel
conversion over the following 12-month period and
(iii) commence operations of a 4-star 388-key Residence, to be named the Amiral de
Grasse, an UXCO Boutique.
(iv) Exit anticipated after 5 years of the Boutique residence operations

The transformed Property will include three restaurants with a total of 300-350 seats (a
Sushi restaurant, a Bakery / Salad bar and an all-day dining restaurant), four separate bar
areas totalling 800SQM, a 2500 SQM pool deck, 600 SQM of indoor meeting space (with an
additional 400 SQM of flex meeting space and 700 SQM of private event space on the
second floor, fourth floor and rooftop), a spa and a fitness centre.

Investment Opportunity:

The Sponsor will be investing 33% of the equity and is seeking an equity partner to provide
the additional 67%.

The Sponsor has also received indications from lenders for a €125 million, 7-year term (with
three 1-year extension options), LIBOR +3.5% senior mortgage, with a 0.50% LIBOR floor
and 1.0% origination fee.

You have the opportunity to participate in the equity at the above terms.
Modeling Assumptions:

General Senior Mortgage


Purchase Price: €100 million Total Proceeds: €125 million
Investment Date 30/09/2022 Upfront Funding: €85 million
Keys: 388 Future Funding: €40 million
Closing Costs: 2.5% Interest Rate: LIBOR+3.5%
Exit Cap: 4.5% LIBOR Floor: 0.5%
Exit Costs: 2.0% Origination Fee: 1.0%
Hold Period: 7 years (1+1+5) Stamp Duty 450,000
Libor: Assumed Negative Initial Term: 7 years
Three,
Extension Options:
1-yr extension options
Extension Fee: 0.25%

Hotel Pro Forma


Assumption Type Growth
Revenues
Rooms See Case Study Tasks ADR/OCC N/A
Food & Beverage See Case Study Tasks POR 3.0%
Spa 5.0 POR 3.0%
Minor Operated Departments 8.0 POR 3.0%
Resort Fees, Net 18.0 POR 3.0%
Telephone 2.0 POR 3.0%
Parking 13.0 POR 3.0%
Other Income, Net 8.0 POR 3.0%

Expenses
Rooms 82.0 POR 3.0%
Food & Beverage 75.0% Margin 3.0%
Spa 75.0% Margin 3.0%
Minor Operated Departments 70.0% Margin 3.0%
Telephone 100.0% Margin 3.0%
Parking 61.4% Margin 3.0%
Other Income, Net 20.0% Margin 3.0%

Undistributed Expenses
Administrative and General 11,686 PAR 3.0%
Marketing 8,487 PAR 3.0%
Repairs and Maintenance 7,426 PAR 3.0%
Utilities 2,949 PAR 3.0%
Fixed Expenses
Management Fee 3.5% of Total Rev
Insurance 2,069 PAR 3.0%
Real Estate Taxes 1,326 Inflation 3.0%
Other Expenses - PAR 3.0%
Reserve for Replacement Year 1: 2.0%, Year 2: 3.0%, Year 3: 3.5%, Year 4 onwards: 4.0%
POR: Per Occupied Room
PAR: Per Available Room
Case Study Tasks:

1) 7-year annual Excel model showing


a) unlevered and levered equity cash flows and returns (IRR, MoM, valuation, etc.)
b) Sensitivity table on IRR based on ADR-Average Daily rate variance
c) Incorporate the sponsor pro forma (cf. Appendix) and model your own using the
assumptions provided on page 2.
i) For Room, stabilised KPI’s have been benchmarked and are assumed to be
correct (both occupancy and ADR)
ii) For F&B revenue determine appropriate assumptions based on sponsor
projections and assumptions provided on page 2.
iii) Resi projections are based on sponsor pro-forma that are contracted (cf.
appendix)
d) Include a presentation page in the model with annual rollup, sources and uses,
relevant metrics and relevant sensitivities.

2) Prepare a short, concise Investment Committee memo in PowerPoint outlining your


investment thesis in bullet point format. The memo should focus on presenting your
recommended equity investment. It should include:
a) an executive summary, including the investment thesis/rationale,
b) valuation & main ROI KPI’s
c) Presentation could also add (not mandatory):
i) strengths and weaknesses,
ii) a list of additional information that you would like to have and any additional
analysis that you see fit.

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