Financial Data
Based on the information provided by the management of Monte Campanador and other experts, hereunder we provide a summary of the main financial data which could give an indication of the final implications of the total investment proposal. It goes without saying that margins of error cannot be excluded. However the analysis gives a good picture of the potential of this project for experienced project developers and operators.
Buyers are expected to come mainly from the U.K., Scandinavia, Holland, Belgium, Germany, Eastern Europe, North Africa, Middle East, France and emerging markets.
Expected CASH OUT
| Item | Estimated value (x € 1.000) |
|---|---|
| Land investment | € 15.500 |
| Large infrastructure | € 14.050 |
| Golfcourse | € 7.100 |
| Other sporting & leisure facilities | € 4.680 |
| Construction | € 53.150 |
| Shops / Restaurants / Reception | € 2.000 |
| Equipment | € 1.000 |
| Marketing and sales | € 7.500 |
| Management | € 2.500 |
| Total cash out | € 107.480 |
Expected CASH IN
| Item | Estimated value (x € 1.000) |
|---|---|
| Housing & apartments | € 156.417 |
| Golf membership | € 7.500 |
| Subsidies | € 9.080 |
| Total cash in | € 172.997 |
Expected Profit
| Item | Estimated value (x € 1.000) |
|---|---|
| Total cash in | € 172.997 |
| Total cash out | € 107.480 |
| Total profit | € 65.517 |
THE “TUSCANIAN” LANDSCAPE AND ATMOSPHERE
CREATES A GREAT OPPORTUNITY
INVESTMENT PROPOSAL
The main shareholder of Monte Campanador acquired and financed the property early 2000. When he visited the property he fell in love with the nature and the beauty of the plot. Since he was not from a real estate background it took him some time to think what direction to take in order to commercialize the property without destroying the key elements of peace and nature. Experts told him that a golf course was necessary to attract guests and he accepted the idea but refused to build villas and roads alongside the golf course. Also the creation of one of the largest lakes in Portugal came from this way of thinking.
The goal was to leave nature as much as possible intact. As a conclusion the major shareholder has the wish to sell the properties with approved plans to a prominent party with a combination of financial strength and great experience in the touristic and real estate world. Portugal is one of the safest places in the world. The unique combination of excellent access by road and air and the “tuscanian” landscape and atmosphere of the Alentejo create a great opportunity. The present shareholders could also foresee a situation where different key holders own / operate separate elements of the total project like ownership operation of the hotel, golf course and even the ownership / operation of the different villages inside the resort. The current owners and project team maintain an excellent relatonship with local authorities and political decision boddies in Lisbon.
INCENTIVES
I. PNI APPROVAL
Monte Campanador has obtained the PNI (Project of National Interest) approval. Issued by the Portuguese Government in order to recognize projects that have an important impact on the economy’s competitiveness. This approval creates the conditions for a greater proximity between the PNI Projects and the different approval organisms, with special advantages concerning the following:
- Overcoming of administrative blocks;
- New system for monitoring and accompanying projects and faster response to promoters’ needs;
- Public visibility.
II. POTENTIAL FINANCIAL INCENTIVE
In this regard, the summary below presents the detailed information regarding the financial incentive, according to Incentives Scheme for Innovation:
Total investment € 76.728.683
Eligible investment € 44.145.978
Reimbursable incentive € 15.451.092
Maximum available premium € 9.080.324
Changes of the market situation cause changes in this scheme
III. POTENTIAL TAX BENEFITS
Additionally, a potential fiscal benefit of € 5.297.517,38 can be considered as a result of the application of a 12%
rate of the eligible expenses regarding (1) the general tax benefit rate, plus (2) regional and (3) employment increases.
INVESTMENT OPPORTUNITY
Presently the owners expect that a fair value of the property is € 15.500.000,-
Note 1:
The amount of potential reimbursable incentive can be transformed into non-reimbursable according to the fulfilment of incentive contract conditions up to 75% of the potential reimbursable incentive.
Nonetheless, regarding (1) the maximum financial and fiscal incentives allowed by the European Union Regional Aid and (2) the assumption that Monte Campanador will use the fiscal benefit, it was considered the amount of € 9.080.323,97 as maximum available premium, that can provide a cumulative fiscal and financial incentives of € 17.658.391,27.
Note 2:
Considering the potential reimbursable incentive conditions, the maximum basic incentive rate is 35%, consisting of a reimbursable financing for seven years, with a three years grace period, without interests and with a premium linked to the project’s performance.
Note 3:
Regarding the investment amount, it was considered € 23.503.936,00 of land, € 3.000.000 of marketing expenses and €2.000.000 for studies. In this regard, the real estate investment, up to € 70.524.170,00, for incentives purposes, was not included. Changes of the market situation cause changes in this scheme
Monte Campanador Resort – Empreendimentos Turísticos, Lda., located in Monte Campanador, has as main activity, the development of tourist activities and, according to the inclusion by the Portuguese Classification of Business Activities (CBA), it possesses the designation of “touristic villages with restaurant” (55117) and “tourist apartments with restaurant” (55118).
One of the shareholders of Monte Campanador was a board member of two of the leading holiday village operators in Europe and has been active in second home developments in Switzerland and Costa Rica.
As a result, the legal entity was set up exclusively for undertaking activities related with the present Investment Project, not having been conducted any significant activity until now, with the exception of the execution of technical studies. Nevertheless, since 2005 the activities that were done, allowed project structuring, taking into account the requirements of the Potential National Interest project (PNI). Studies were done, particularly environmental, allowing application for project approval and construction licensing. All the necessary licenses were obtained in December 2010.