Al-Thouraia Project Management Company, WLL

Transcription

1 Al-Thouraia Project Management Company, WLL (an SPV to invest in Mazaya Saudi) Private Placement of 500,000 units Unit Price KD per unit 2008 Lead Manager Global Investment House KSCC

2 Contents Introduction 3 Terms of the Offer & Lead Manager 4 Saudi Arabia 6 Economic Overview Real Estate Sector Mazaya Saudi 11 Activity & Management Initial Projects Financial Summary & Projections Mazaya Holding 18 Key Investment Factors 27 Annexure - Mazaya s Projects 29 Kuwait The UAE Risk Factors & Disclaimer 48

3 Introduction The real estate sector in the Kingdom of Saudi Arabia has seen tremendous growth in the past few years Al-Thouraia Project Management Company, WLL ( Al-Thouraia ), a Kuwaiti limited liability entity, has been incorporated to be utilized as a Special Purpose Vehicle (SPV) to invest its whole capital in Mazaya Saudi for Commercial Investment Co., LLC ( Mazaya Saudi ) Mazaya Saudi will have a paid-up capital of SR2.5bn and is geared to become the leading real estate development company in the Kingdom of Saudi Arabia. The Company will conduct its business in accordance with Islamic Shariah For the first three years, Mazaya Saudi will be managed by Mazaya Holding, a real estate development company with a proven track record in managing real estate developments in the region. This will build a strong foundation for the Company and help it capture prevailing market opportunities in the Kingdom The Company will also have strong Saudi Arabian partners who will play a crucial role in making Mazaya Saudi the leading real estate development company in Saudi Arabia The Company will seek to capitalize on the lucrative opportunities in the Kingdom and plans to begin developing three projects within the first year of operations 3

4 Terms & Conditions of the Offer Company Name: Unit Par Value*: Unit Sale Value*: Number of units for sale: Minimum Subscription: Maximum Subscription: Al-Thouraia Project Management Company, WLL An SPV to invest in Mazaya Saudi for Commercial Investment Co., LLC Mazaya Saudi KD per unit KD per unit The price includes a 1% non-refundable Placement Fee and a 4% non-refundable Marketing Fee per unit 500,000 units Please note that each Al-Thouraia unit is equivalent to 100 Mazaya Saudi units 55 units 50,000 units NOTE: THIS PRODUCT SHALL NOT BE SOLD IN THE KINGDOM OF SAUDI ARABIA *Values given in KD are based on a currency conversion rate of SR1=KD The rate of actual conversion shall finally apply to the investors on the date that the funds are transferred to the Company. The resulting gain or loss on the account, whether the changes in the rate favorable or unfavorable, shall be fully borne by the investors.

5 Lead Manager Global Investment House, KSCC ( Global or the Lead Manager ) P.O. Box Safat Kuwait Tel: (965) Fax: (965) [email protected] Web: The Lead Manager reserves the right to allocate participation in the units of Al-Thouraia Project Management Company among Investors. Investors will receive units as the Lead Manager may determine, in its sole discretion. If the Offer is oversubscribed, the Lead Manager will allocate the units after the closing. The Lead Manager also reserves the right to reject subscription applications as a whole or in part, in its sole discretion, or to allocate units higher than the maximum subscription indicated above. The Lead Manager, in its sole discretion, may issue and allocate additional units and acquire additional interests in Al-Thouraia Project Management Company. Also, the Lead Manager, in its sole discretion, may waive the maximum subscription limit for strategic investors who can add value to the company and its future operations.

6 Saudi Economy

7 Macro Economic Overview Saudi Arabia remains a leading producer of oil and natural gas The Kingdom holds approximately 25% of the world's proven oil reserves The continued improvement in oil prices was reflected in all economic conditions of the Kingdom GDP (at current prices) rose by 10.6% in 2006 over previous year to SR1.3trillion Real growth (at constant prices of 1999) was 4.3% for the same time period, amounting to SR798.9bn in 2006 The state budget registered a substantial surplus Amounting to SR289.7bn or 22.2% of GDP in 2006, as compared to a surplus of SR217.9bn or 18.4% in the preceding year Privatization efforts continue to promote the role of the private sector in the management and operation of many economic activities The government continues to pursue economic reform and diversification, in addition to promoting foreign investment in the Kingdom Particularly since Saudi Arabia's accession to the WTO in December 2005 Foreign investment activity witnessed notable expansion The rating agencies Standards & Poor and Fitch raised the Kingdom s credit rating to A+ 7

8 Real Estate Sector: Overview Saudi Arabia s real estate industry has undergone dramatic growth The market was estimated to have ballooned to more than SR1trillion (US$266.7bn) in value during 2004 It s expected to reach SR1.3trillion (US$346.7bn) by the end of 2012 The demand for real estate in the Kingdom is led by the residential sector The total demand in the Eight Development Plan for the period is estimated at 1 million housing units Implying an average increase of 200,000 units per year The new mortgage law should result in banks and financial institutions providing Shariahcompliant mortgage financing to Saudi nationals, making housing ownership affordable SAGIA, under the direction of the King and the Crown Prince, has launched a total of four integrated Economic Cities The four cities are expected to attract investments worth more than SR250bn (US$66.7bn) and create more than a million jobs by 2020 The boom in the real estate sector has trickled into the construction sector The construction activity was brisk beginning in 2000 up through 2007 Building permits, as a proxy for construction activity in the economy, reported an 11.1% CAGR over the period , and has continued to grow through

9 Real Estate Sector: Market Segments The growth in the real estate sector is mainly driven by the demand for residential properties. The determinants of housing demand are as follows: Economic expansion and increased investment opportunities in the country to continue to encourage the influx of expatriates at increasing rates; Population in the Kingdom is forecasted to continue growing at an average annual rate of 2.5%, as per the Ministry of Economy and Planning, resulting in a total population of 25.66mn by the end of 2009; Average household size estimated to decline from 5.5 to 5.2 people over the period ; Up to the end of 2009, a portion of the population will enter into marriageable age, thus demanding more housing units The positive business environment in Saudi Arabia, resulting from oil wealth, increasing oil prices, growing GDP and accession to the WTO, will continue to support demand for the commercial segment While the overall supply of retail space in Saudi Arabia is growing, there is strong potential for profitable investments in retail assets in the medium to long term 9

10 Drivers for the Real Estate Market Increasing oil wealth, rising GDP and per capita income are expected to support higher demand for real estate There is a noticeable demand-supply gap in the housing sector in Saudi Arabia, which will drive supply High population growth rate, at 2.46% for the period, compared to the 1.6% global average, will encourage demand for new housing units Demographic profile of the country is favorable: Of the total Saudi population, 6.5mn or 37.8% of the population is in the age group of 0-14 years, and 7.4mn or 43.1% of the Saudi population is in the age group of years As children reach marriageable age and youth marry, the demand for housing will increase A trend of the average household size decreasing is prevailing: NCB projects the household size to decrease from 5.62 in 2006 to 5.21 by This will also have a positive impact on housing demand The new mortgage law, expected to be introduced in early 2008, would make home financing easily available for Saudi Nationals and give a tremendous boost to the housing sector Entry to the WTO has led to relaxed regulations Foreign retailers can now hold up to 51% in local companies, allowing multinational chains to open retail outlets The new laws have made it easy for foreign investors, especially for GCC investors to own property in Saudi Arabia 10

11 Mazaya Saudi

12 Mazaya Saudi Mazaya Saudi is geared to become the leading real estate development company in the Kingdom of Saudi Arabia and will conduct its business in accordance with Islamic Shariah Mazaya Saudi for Commercial Investment Co., LLC ( Mazaya Saudi ) Has been incorporated in the Kingdom of Saudi Arabia The Company will have a paid-up capital of SR2.5bn (subject to approval of the concerned government authorities) Distributed over 50mn units with Par Value of SR50 per unit Mazaya Saudi will primarily be engaged in the following activities: Identify attractive real estate opportunities to develop and manage Invest in the Saudi real estate sector The Company s initial ventures To develop 3 plots of land in Riyadh into residential, commercial and retail properties Estimated total built-up area of 150,682sqm Total project cost of approximately SR1.1bn Will continue to seek attractive opportunities in the Kingdom The expected Equity IRR for the company is 20.1%, based on a five-year holding period 12

13 Management Mazaya Holding shall assume all duties and responsibilities of managing Mazaya Saudi, for an initial term of 3 years, and implement its successful corporate strategy onto the Company The duties and responsibilities of Al Mazaya Holding will pertain to: Formulating the Company s 3-year Business Plan Strategic corporate planning To include forming joint ventures with other Saudi entities Hiring and setting up the structure of the Company s management team Establishing the Company s administrative formation: Creating corporate identity Setting up the administration of the local office Creating the Company s policies and procedures Sitting on and steering the Company s management committee 13

14 Mazaya Saudi Organizational Structure 14

15 Proposed Shareholding Structure Strategic Shareholders Mazaya Holding Global Investment House Abdullatif Alissa Group Holding Company Abdulaziz Alajlan Sons for Commercial & Real Estate Investment Company Other strategic investors include investment banks, among other entities The strategic partners will add great value to Mazaya Saudi, lending: Expertise to the relevant needs of the Company Financial backing Industry insight 15

16 Initial Projects The Company plans to begin developing three plots of land in Riyadh within the first year of operations Project 1: A mixed-use development on a 21,790sqm plot of land with residential and commercial components and total built-up area of 46,282sqm Total project cost estimated at SR325.5mn Estimated Project IRR of 20.4% for the residential component and 21.1% for the commercial component Project 2: Class A office buildings on a 26,745sqm plot and a total built-up area of 54,000sqm Total project cost estimated at SR501.5mn Estimated Project IRR of 21.9% Project 3: Residential development on a 35,000sqm of land and total built-up area of 50,400sqm Total project cost estimated at SR287.5mn Estimated Project IRR of 21.9% 16

17 The Financial Summary & Projections Net Income (SR '000) 475,669 Balance Sheet (SR mn) 362,149 4,003 4, ,321 2,511 2,522 2,542 2,524 2,622 3,234 2,810 3,057 21,101 25,218 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Shareholder Equity Total Assets Return on Average Equity Return on Average Assets 13% 16% 10% 12% 7% 6% 2% 1% 2% 1% Year 1 Year 2 Year 3 Year 4 Year 5 17 Year 1 Year 2 Year 3 Year 4 Year 5

18 Mazaya Holding - Management

19 Mazaya Holding A Snapshot Mazaya Holding was incorporated as a Closed Kuwaiti Shareholding Company Began its operations in January 2004 With a paid-up capital of KD15mn (USD51.759mn) Its current paid-up capital stands at KD45.406mn (USD170mn) Listing Kuwait Stock Exchange - May 2005 Dubai Financial Market - Feb 2006 The company has grown beyond its Kuwaiti headquarters and has gained entry into competitive and active markets such as: Dubai Abu Dhabi Bahrain Qatar Oman KSA 19

20 Mazaya Holding Business Strategy Mazaya Holding aims to become a leader in the regional real estate industry, and is involved in projects including premier: High rise towers Hotels Hospitals Housing communities Commercial complexes/office space Its three-pronged strategy aims to materialize Mazaya Holding s vision, through: Consolidating its position in the existing markets Diversifying into new geographies Inorganic/Acquisition route Acquired First Dubai Real Estate Company Continues to actively seek acquisition opportunities 20

21 21 Business Sectors of Mazaya

22 Mazaya Holding Board of Directors 22

23 Mazaya Holding Executive Management 23

24 Corporate Awards & Certifications Awarded Top Real Estate Company 2007 Arabian Business Magazine Ranked #34 as part of the Most Admired Companies List Arabian Business Magazine, 2007 Top Real Estate Company Award, 2007 Tamweel PJSC 24

25 25 Media Recognition

26 Mazaya Holding Financial Performance In the last few years, Mazaya Holding s assets have grown more than sevenfold Growing to over KD167mn as of yearend ,008 Net Profit (KD '000) 23,431 32,037 An active and hands-on management approach has yielded handsome growth in net profit, year after year The company achieved a Return on Average Assets of 19% Return on Average Equity of 33% as of the year-end Balance Sheet (KD '000) 166, , ,238 87,802 31,413 51, Shareholders' Equity Total Assets

27 Key Investment Factors

28 28 Key Investment Factors Mazaya Saudi will operate in the real estate sector in the Kingdom of Saudi Arabia A vibrant, growing and a lucrative market Projects under Mazaya Saudi will be designed in accordance with the latest construction and design standards Favorable demographics Mazaya Saudi will be engaged in real estate development that are in high demand in the Kingdom Attractive appreciation rates of real estate assets in Saudi Arabia Strong management team to steer the company, Mazaya Holding Proven track record in entering new and competitive markets Mazaya Saudi is targeting real estate development projects that generate an IRR of at least 15% Anchor investors and partners will encourage joint ventures with attractive incentives Expected growth in the Saudi economy will increase the demand for residential properties for citizens and foreigners Potential listing on the Saudi Stock Exchange will enhance liquidity options Buoyant GCC economies and strong real estate sector performance Evolving regulatory environment in the GCC real estate sector, attracting foreign investors, thus increasing demand and value

29 Annexure: Mazaya s Projects

30 Kuwait Al Roya Completed Residential complex 2 towers Each 19 stories 10 individual villas Location: Mahboula 30

31 Kuwait Global Tower Completed Commercial offices Single tower Smart building 22 stories Location: Kuwait City 31

32 Kuwait Al Maha Villas Completed Residential 32 villas Rent/ownership Location: Salwa 32

33 Kuwait Kuwait Business Town Completion set for end high rise towers Office building Retail & leisure components Location: Kuwait City 33

34 7 Zones (BOT project) Completion set for end 2008 (Kuwait) Partnership with Arab Building Materials Co. Commercial outlets 3 levels Basement, ground & mezzanine Divided into 7 zones Each specializing in certain building material The showrooms can function as: Offices, retail shops & storages BUA: 51,750sqm Primary Locations: Industrial Shuwaikh (Kuwait) & Bahrain Secondary Locations (to be implemented): Qatar, Amman, Dubai, Abu Dhabi, Jordan Kuwait 34

35 Kuwait Mazaya Health Clinic (BOT project) Project to be initiated Partnership with Mr. Mohamed Al Hajeri Integrated Medical Center 20 Story tower Architectural designs underway Location: Jabriya 35

36 Oman Badia Residence Completion set for residential villas Location: Sohar 36

37 The UAE The Icon Towers Completion set for high rise towers Residential/retail 40 stories Up to 400 units Location: Jumeirah Lakes - Dubai 37

38 The UAE Downtown Jebel Ali Completion set for 2010 Mixed use plots 9 plots Mid-high rise towers Location: Jebel Ali 38

39 The UAE Al Mazaya Index Tower Completion set for 2010 Commercial Tower 70 stories Location: Sheikh Zayed Road - Dubai 39

40 The UAE Queue Point at Liwan Completion set for residential & mixed use plots Residential community 4,000 apartments Mixed use areas Offices Commercial shops Location: Dubailand - Dubai 40

41 The UAE The Villa Completion set for mid 2009 Eng. Perla Lichi awarded Interior Designer Residential community 500 residential villas Fully sold out Facilities include gardens, entertainment areas, mosques, health clubs Location: Dubailand - Dubai 41

42 The UAE Mazaya Business Avenue Completion set for end of 2009 High rise towers 3 towers (2 of which have been sold) Each 44 stories Commercial use Smart buildings Location: Jumeirah Lakes & Sheikh Zayed Road - Dubai 42

43 The UAE DHCC Completed Mixed use buildings 6 buildings Varying between 5-8 floors Location: Dubai Healthcare City 43

44 The UAE Sky Gardens Completion set for 2008 High rise residential tower 40 stories 9 gardens Location: Dubai International Financial Center 44

45 The UAE Morina Residence Completion set for 2010 Tower & townhouses Residential 20 story tower Additional duplexes & townhouses Location: Shams Abu Dhabi 45

46 Risk Factors & Disclaimer

47 Risk Factors Cost and time overruns Funding Credit risk Competition Occupancy rates Changes in regulations Rising building & material prices Underperformance of master developers/promoters Force majeure 47

48 Disclaimer This Document is a confidential document intended only for those to whom it is addressed. Those targeted by this document have been specifically selected as sophisticated investors having the experience and expertise necessary to assess the nature of the investment, understand and quantify the risks addressed in this Document. The reproduction or redistribution of this Document is strictly prohibited without the prior written consent of Global Investment House KSCC (Global). The contents of this Document should not be treated as investment, tax or legal advice by any prospective investor. All prospective investors must make their own investigation and evaluation of the opportunity to invest in Al-Thouraia Project Management Company, the company established in Kuwait to do the objectives addressed in the Articles of Association, and should seek to consult with their own advisors concerning the evaluation of the risks of the investment and its suitability for their individual circumstances. A summary of certain information relevant to an investment in Al-Thouraia Project Management Company is provided in this Document. This Document is not intended to be the sole document upon which investors should rely in reaching their investment decision. Global may, from time to time, provide investors and their advisors the opportunity to receive additional information concerning investment in Al-Thouraia Project Management Company. It should be noted that no person has been authorized to give any information concerning investment in Al-Thouraia Project Management Company, nor has any person been authorized to give any information or to make any representation other than those contained in this Document, and if made or given such information or representations may not be relied upon as having been authorized by Global. The Directors of Global confirm that it is their opinion that this Document contains all material information that a potential investor would reasonably require to be able to make an informed decision as to whether or not to invest in Al-Thouraia Project Management Company. To their knowledge, such information is true and accurate and is not misleading in any material respect. The opinions, forecasts, assumptions or intentions expressed in this Document are honestly held and made, and are not misleading in any material respect. Investors in this issue must note that Global has not carried out any independent due diligence on Al-Thouraia Project Management Company. This Document has not been independently verified or reviewed as to its accuracy or completeness or in relation to the methods of raising capital described in the Document, by any professional, financial, legal advisor or by any government authority identified herein. Such bodies and authorities assume no responsibility for the contents of the Document or the performance of any obligations of Global. This Document does not constitute and shall not be construed as being an offer or solicitation, nor shall it be used for those purposes by any person in any jurisdiction (i) in which such an offer or solicitation is not authorized, or (ii) in which the person making such an offer or solicitation is not qualified to do so, or (iii) to any person to whom it is unlawful or unauthorized to make such an offer or solicitation. Investors should be aware that any projections concerning potential rates of return and future performance of the investments described herein represent estimates prepared on the basis of assumptions which are considered fair by the Lead Manager under the present market conditions. However, investors in this issue must note that Global has not carried out any independent due diligence on Al-Thouraia Project Management Company. It should be understood that actual results may vary considerably from the projections. Consequently, the inclusion of the projected information herein should not be regarded as representation by Global or any other person that the projected results will be achieved. An investment of this type is subject to inherent risk, the value of investment in Al-Thouraia Project Management Company, could decrease in value and may be difficult to sell or liquidate.