riga shopping mall riga, latvia feasibility study

Download RIGA SHOPPING MALL RIGA, LATVIA FEASIBILITY STUDY

Post on 11-Jan-2016

36 views

Category:

Documents

0 download

Embed Size (px)

DESCRIPTION

RIGA SHOPPING MALL RIGA, LATVIA FEASIBILITY STUDY. Preparation and Analysis: Bank Financing of Construction Project. The Project. Two stories of a commercial Western standard "mall" area retail commercial establishments a bank service establishments (laundry, dry-cleaning etc) - PowerPoint PPT Presentation

TRANSCRIPT

  • RIGA SHOPPING MALLRIGA, LATVIA FEASIBILITY STUDYPreparation and Analysis:Bank Financing of Construction Project

  • The ProjectTwo stories of a commercial Western standard "mall" arearetail commercial establishmentsa bankservice establishments (laundry, dry-cleaning etc)up-scale restaurantsfast-food facilitiesa night-club and disco office and residential This shopping mall space will be the first of its kind in and around Riga

  • The ProjectThe project site is situated on the main highway between Riga and Riga International Airport. 3 - 4 minutes to reach the Mall site from the center of Riga by way of the bridge over the Daugava River 3 minutes' drive to the southwest is an old-Soviet-style multiple high-rise housing complexes in which close to a quarter of a million persons presently reside.

  • The ProjectThe project site is situated on the main highway between Riga and Riga International Airport. Most of these people work in Riga and must reach their jobs by using the highway, thus ensuring that they will pass the Mall twice a dayThere are virtually no shopping facilities of any size or substance in the vicinity of this housing area.

  • Term SheetDESCRIPTION: $48 million conventional construction and/or take out loan (mortgage); term: 7 10 Years (Terms flexible), rate: 10% (or lower).SECURITY: (1) Mortgage of land and improvement to be executed by MESA (land - or such other entity as to which the land may be conveyed at the start of construction) and MOS-MALL (improvement); (2) Full guarantee of initial draw- down; (3) Performance and payment (subcontractors and suppliers) bond.

  • Term SheetEQUITY: Flexible in terms of debt equity mix but can be structured to include:(1) straight equity injections(2) land; worth after clearing which has been completed - $1.5 million presently owned by MESA and investors;(3) preparation of design and engineering drawings by MESA ($1 million +/-) (4) condo sales $3 - $5 million held in escrow. (4) LOC enhancements and/or structures.

  • Term SheetPURPOSE: Construction of commercial Western standard "mall" area which will contain retail commercial establishments (a large western "department store selling mid-range goods priced to be affordable, and a large auto showroom will serve as an anchor tenants), upscale restaurants, a general-purpose hall, above ground parking, a petrol and refueling station, and a 13-14-story office/residential apartment tower. With a tentative list of viable, interested parties, tenant commitments will grow quickly once project receives a conditional commitment.

  • Term SheetPROJECT SITE: Situated on principal route to new Riga International airport. Most people work in Riga and must reach jobs by using the highway, ensuring that they pass the Mall twice a day. Virtually no shopping facilities of any size or substance exist in vicinity of this project.

  • Term SheetEQUITY YIELDS: Final deal structure will determine project equity yields. While preliminary analysis point to average equity ROE 31.9%, returns appear understated.If rents increase beyond projection assumptions relative to supply/demand factors, increase in GDP, continuing control of inflation, and expected increase in disposable income, average ROE should increase beyond 45%.

  • Term SheetLENDERS PRIMARY SOURCE OF PAYMENT CASH FLOW: Conservative projections geared to test viability of the project to protect construction (and/or take out lender) in terms of(1) ability of the project to generate operating cash flows over debt service(2) probabilities that the project requires additional equity over $7 million and(3) whether, after debt service, returns are available to service equity participants. Given conservative projections, it appears the project is solid and sound in terms of full lender payout.

  • Term SheetCONSTRUCTION: MESA HOUSING GROUP, INC.: (Architect / designer-builder). Principal participant for design and construction, MESA is highly experienced in working in Russia and the surrounding republics, as well as in North Africa and, of course, Turkey. The firm received international recognition for the massive housing project at Tchailkowvka, Russia, to house contingents of Russian officers and their families returning from postings in East Germany.

  • Term SheetThe MESA GROUP of Companies (MESA), based in Ankara, Turkey, is a fifteen (15) corporation conglomerate which has operated for over 25 years in real estate development, construction, engineering and architectural, resort and tourism, and marketing fields. The firm developed, designed and delivered more than twenty-five major housing complexes with all related facilities, in Turkey and abroad.

  • Term SheetSURVEY OF EXISTING FACILITIES IN RIGA RELEVANT TO THE MALL:a) Existing office stock versus needA shortage of Western standard office space continues to dog the Riga market. Much of the trading and office spaces in Riga do not correspond to Western standards. As a result, rental agreements with upwards of 30% of future tenants are generally reached while construction is still in progress;

  • Term Sheetb) Current rental/purchase rates: As of April 1998, rents for offices and shops in downtown Riga is 4060 US$ per square meter per month. (Lower rates pertain for so called "Russian standard" offices) Higher rates are generally available for fully equipped "Western standard" offices. Purchase of office and residential space is over $US 1,000 per M2 and climbing

  • Term SheetECONOMIC AND MARKET CONDITIONS IN LATVIA AND RIGA: Since regaining independence in 1991, Latvia has put in place a comprehensive program of economic reforms which will develop an open market economy based on free trade and competition. Latvia now is welcoming extensive international trade and investment.

  • The Budget and Construction Costs

    Chart2

    800

    4220

    2710

    3050

    1020

    1620

    1020

    680

    2200

    Shopping Center

    Term Sheet

    Discrip

    THE PROJECT

    The RIGA MALL will consist of the construction and operation of a multi-use structure located on the main highway between RIGA and FURMAN (a four-minute drive over the Daugava River Bridge from central RIGA). The highway leads both to Jurmala, a heavily u

    The Mall project will include:

    a) Two stories of a commercial Western standard "mall" area which will contain retail commercial establishments, a bank, service establishments (laundry, dry-cleaning etc), up-scale restaurants, fast-food facilities, and a night-club and disco (approximat

    Food facilities will include up-scale restaurant dining as well as fast food facilities. Presently, there are no facilities for dining and evening entertainment between Riga and Jurmala, and only four round-the-clock up-scale restaurants in all of Riga it

    b) A general-purpose hall 'Cultural-Center'' hall suitable for concerts, modern dance, lectures, theatrical events and meetings. The hall will be used, among other things, for concerts, chamber music, drama and comedy, lectures and meetings, modern dance,

    c) Aboveground parking space for 236 cars will be provided, plus a residential garage attached to the Office/residential tower, which will hold 48 cars. The facilities will include guarded and non-guarded parking areas. Prices of guarded parking areas in

    d) A supervised playground (indoor and out-door) where customers children may be left while their parents are shopping, etc.

    e) A petrol and refueling station for private automobiles and international trucking. At present, transportation trailers are frequently forced to wait twenty-four hours or more at the Customs Warehouse waiting for refueling. The petrol station will be lo

    f) A large western "department store" which will sell midrange goods priced to be affordable to the population at large, and a large auto show-room will serve as an anchor tenants.

    g) A 13-14-story office/residential apartment tower at the East End of the project. Apartment rentals are projected, according to currently available figures in Riga, at 1000 to 1,200 US$ per month, while sale prices are expected to be approximately 40,00

    The project site is situated on the main highway between Riga and Jurmala. This highway is also the principal route to and from the new Riga International airport. It takes only 3 - 4 minutes to reach the Mall site from the center of Riga by way of the br

    SURVEY OF EXISTING FACILITIES IN RIGA RELEVANT TO THE MALL

    a) Existing office stock versus need: A shortage of Western standard office space continues to dog the Riga market. Much of the trading and office spaces in Riga do not correspond to Western standards. As a result, rental agreements with upwards of 30% of

    b) Current rental/purchase rates: As of 1996 the rent for offices and shops in downtown Riga is 10-30 US$ per square meter per month. (Lower rates pertain for so called "Russian standard" offices) Higher rates are generally available for fully equipped "W

    c) Office stock in the vicinity of the Mall: None

    d) Other Mall facilities (and other large retail properties) in the vicinity of the Riga Mall: None - the only commercial installation of any size whatsoever is a combined grocery and furniture store located approximately five minutes from the mall site.

    Assumptions as of April 5, 2001:

    Annual Interest Rate During Construction6.0%

    No changes in Construction Budget as follows:

    Loan Principal Amount44874

    Annual Interest Rate0.06

    Loan Period in Years13

    Base Year of Loan2001

    Base Month of Loan10

    Monthly Mesa Draws RequiredNo Change

    Cumulative Mesa Draws RequiredNo Change

    Initial Mesa Equity *No Change

    Project ReservesNo Change

    A

Recommended

View more >