MANAGEMENT & INVESTMENT OPPORTUNITY SOUTH LOMBOK

OfferingUnique opportunity to invest in a hotel development on one of the only beachfront land blocks available on Kuta Beach Lombok, home of the Mandalika Resort Complex.

This prime location is 20 minutes from the new Lombok International Airport and within 15- minutes to most Southern beaches (Selong- Belanak, Mawun, Tanjung Aan).

Take advantage of the growing Tourism industry and the high demand for quality hotel accommodation in South Lombok.

The increasing number of international and domestic flights to the new International Airport are bringing more tourists looking to experience the beauty of the South.

An initial planning permission has already been granted for the hotel development and both water and electricity are available.

Investment Highlights

Offering Beachfront land in Kuta LombokLocation Central Kuta, Lombok, IndonesiaLand Tenure Hak Milik (freehold) Site Area 15,000 m²Beach frontage 90 meters

Upscale Hotel Development

Land Investment $3,375,000Development Investment $10,785,203Total Investment $14,160,203Unlevered IRR* 20.5%Cash on cash Yield (stabilized) 18.2%

* Assuming Sale in Year 3 of operation

Located 20 minutes from

the new Lombok International Airport, this prime site has a direct access to the new public road linking Kuta, the New Airport and all the beaches in the South, including Air Guling, Mawun, Tampah and Selong Belanak. The site is also within walking distance to Kuta restaurants and shops.

This site is also unique due to water access at all tides. It is perfect for a marina that will be the gateway for all sea travel and watersports in this area.

Adjacent to this hotel site is a 10,000 m2 site to be developed as luxury residential apartments boutique shops and a beach club. Cross selling of these businesses will help to elevate the hotel revenue. These developments are available for purchase as part of this package.

Location

The road to Kuta will also serve the 1,200 hectare masterplan Mandalika and further development in Bumbang Bay. This places Kuta as tourism hub for South Lombok.

While Kuta is fairly underdeveloped as of today (the only international hotel is the Novotel), beachfront land (with clear title) is rare since most of the beach frontage in Kuta is incorporated into the planned Mandalika project.

PURE HOTEL - 110 Keys

CONCEPT – Medium Density Resort

Based on the success of the Kuta Novotel Resort over the last 18 years, the current tourist demographic and the imminent start of the Mandalika project, this feasibility study presents the business case for a beach front medium density resort in the heart of Kuta Lombok .

The resort concept is designed to provide a range of room types to satisfy mid to high end travellers. With access to Kuta Bay marina, the adjacent beach club and walking distance to all the best café’s and shops in Kuta, this resort will be the first choice of any traveller looking to experience the South coast.

Projected room rates between $120 and $350 per night provide an ADR of $150, stabilized in 3 years to give a very healthy ROI.

Source: Google Images

Facilities Program

COMPONENT SIZE (SQM.) SIZE PER KEY (SQM.)

Hotel Guestrooms & Villas 6,980 63.5

Public Areas (Lobby & Front-Desk) 312 2.8Restaurant and Beach Bar 500 4.5

Pool and Pool Deck (Non GFA) 1,400 12.7

Gym 100 0.9

Spa 220 2.0

Admin Offices 167 1.5

Back-of-House, Service Support Areas 750 6.8

Plant and Equipment 350 3.2

TOTAL (GFA) 8,775 80

The Facilities Program is developed by Ozone Developments based on analyzing successful properties in the region. The facilities program is used to estimate the development cost of the project and as a base from which to prepare prospective financial analysis of the- operating performance.

The hotel guestrooms are separated in three categories:• 76 x Standard hotel rooms – These rooms are located in 3 & 4 storey blocks at the back of the site with the top

level rooms getting ocean views. Each room is sized to 42m2 including an 8m2 terrace. These rooms are priced to sell at $120 per night excl. breakfast.

• 24 x One-bedroom Pool Suites– These suites are located in the 2 level units through the middle of the site. Each room is 60m2 with a private 3x5 plunge pool. These rooms are priced to sell at $170 per night excl breakfast.

• 10 x Two-bedroom Pool Villas – These premium villas come with 120m2 internal floor area with private access to a 120m2 roof-top terrace including a 10x4m pool, garden and ocean views. These villas are priced to sell at $350 per night.

HOTEL PROFIT & LOSS

Number of rooms 110 110 110

Number of rooms occupied 22,083 26,098 30,113 Occupancy 55.0% 65.0% 75.0%ADR(USD) 140.0 145.0 150.0

YEAR 1 YEAR 2 YEAR 3

YEAR 1 YEAR 2 YEAR 3USD % USD % USD %

TOTAL REVENUE

Departmental Profit – Rooms 2,504,156 72.83% 3,140,834 70.57% 3,839,344 70.79%Departmental Profit - F&B 549,854 15.99% 842,949 18.94% 1,023,825 18.88%Departmental Profit - Spa 331,238 9.63% 396,682 8.91% 469,755 8.66%Departmental Profit – OOD 52,998 1.54% 70,463 1.58% 90,338 1.67%Gross Profit 3,438,245 100.00% 4,450,929 100.00% 5,423,261 100.00%Undistributed Expenses 1,729,038 31.70 1,806,573 27.20 2,012,117 25.70GOP 1,709,208 31.34 2,644,355 39.81 3,411,144 43.57EBITDA* 1,279,392 23.46% 2,020,767 30.42% 2,580,135 32.96%

* Total revenue is determined using $85 F&B Revenue and $20 Spa Revenue Per Occupied Room.# Management Fees (base and incentive) are included in the EBITDA calculation.

Disclaimer: This financial analysis has been prepared by Ozone Developments based upon assumptions including ADR and hotel occupancy provided by Asia Prospects. The information in this report is private & confidential. It is intended only for the use of the person(s) named. Neither Asia Prospects nor Ozone Developments give any representation, warranty or guarantee with respect to the accuracy or completeness of any content of this document or any of the schedules, diagrams and images herein, or any information furnished to you, and you are expected to rely entirely on your own enquiries and inspection. The actual operating results and costs of a similar property will vary from those presented and these variations may be material.

Investment Amount

Cost Per Unit ($)

Land $30,682Development $98,047

TOTAL $128,728

$10,785,203

DEVELOPMENT COST

LAND COST$3,375,0

00

Disclaimer: This financial analysis has been prepared by Ozone Developments based upon assumptions including ADR and hotel occupancy provided by Asia Prospects. The information in this report is private & confidential. It is intended only for the use of the person(s) named. Neither Asia Prospects nor Ozone Developments give any representation, warranty or guarantee with respect to the accuracy or completeness of any content of this document or any of the schedules, diagrams and images herein, or any information furnished to you, and you are expected to rely entirely on your own enquiries and inspection. The actual operating results and costs of a similar property will vary from those presented and these variations may be material.

Return Analysis

20.5%Project Unlevered Internal Rate of

Return

18.2%Cash-on-Cash Operating

Year 3 (stabilized)

TOTAL INVESTMENT $14,160,203

NET SALE PROCEEDS $20,640,325

ABSOLUTE PROFIT $12,360,417

UPSIDE POTENTIALEXPECTED SELLING PRICE

(YEAR 3)

$ 21,061,557 OR$ 191,468 Per Key

Disclaimer: This financial analysis has been prepared by Ozone Developments based upon assumptions including ADR and hotel occupancy provided by Asia Prospects. The information in this report is private & confidential. It is intended only for the use of the person(s) named. Neither Asia Prospects nor Ozone Developments give any representation, warranty or guarantee with respect to the accuracy or completeness of any content of this document or any of the schedules, diagrams and images herein, or any information furnished to you, and you are expected to rely entirely on your own enquiries and inspection. The actual operating results and costs of a similar property will vary from those presented and these variations may be material.

Facilities Program

GUESTROOM- INDOOR SPACE

The standard guestrooms offer approximately 50 Sqm. of total space. The general design of the room is contemporary rustic with clean lines and natural materials. This proven style will appeal to all tourism markets with open plan indoor-outdoor space integration maximizing natural light and ventilation. Operating systems are designed to minimize running costs through water and electricity usage. All materials, fixtures and furniture are sourced locally to manage cost and overall sustainability.

Facilities Program

GUESTROOM BATHROOMS

A generous 10 Sqm. is allocated for the open plan bathroom. Detailed with natural materials and a simple contemporary finishes the bathrooms are designed for easy maintenance and a feeling of space. All fixtures and fittings will be high quality and water saving. Integration of the bathrooms with the bedroom space helps natural light and ventilation while giving the guest a feeling of total luxury. The shower and toilet are enclosed in frosted glass cubicles for privacy.

Facilities Program

1 & 2 BEDROOM POOOL VILLAS – DECK AND POOL

The villas are designed to function as a private suite with spacious bedrooms, bathrooms and lounge. The 1 Bedroom villa is a total of 60 Sqm. with its own private 5x3m pool and deck adjacent to the room. The 2 Bed villa is 120 Sqm. internal with stairs to a private rooftop terrace and pool all with ocean views. The roof terrace is shaded and landscaped to stay cool in the heat of the day. The pool deck is made of local timber and offers two chaise-lounge and a covered relaxing area with an outdoor sofa. As for the standard rooms, furniture is also sourced locally.

The surrounding villa walls are clad with timber shade structures and the gardensare landscaped with natural palm trees, frangipani and other plants. This green touch to the hotel helps to keep the spaces cool and emphasize the lush characteristic of the development.

Facilities Program

FOOD & BEVERAGE - RESTAURANT

The restaurant will serve breakfast, lunch and dinner. Presenting an Asian-Mediterranean fusion created from fresh organic locally sourced produce that will be the talk of the town. Hotel guests and walk-in customers will mingle together in this beachfront complex including bar and pool.

The architecture is simple and set to wow all who visit, with a modern natural touch similar to the villas and rooms. The clean open spaces will flow seamlessly, capturing the sea views and breezes. Bespoke designed and locally sourced furniture, while inexpensive will give an authentic touch and create a fine dining atmosphere.

Facilities Program

BEACH BAR

The Beach Bar is a more casual extension of the restaurant allowing the guests and customers spill out onto the sandy floor for lunch, sunset drinks and dinner. It serves a limited selection of light dishes for lunch and specialty dining for dinner.

It is expected that it will be an attractive venue for non-resident guests due to its location on the beach and high quality offerings. As the night progresses the bar is expected to evolve into a more beverage driven outlet.

The structure is a collage of roofs and shades that give a feeling of openness while protecting from the sun and rain. Furniture is adapted to the sand environment and thus local materials resistant to both humidity and sand are specified.

Facilities Program

SPA

The Spa is positioned on the roof of the restaurant and bar building with extensive terraces overlooking Kuta Bay. The elevation creates privacy while capturing the ocean views. Kuta is lacking any quality spa facilities, so this venue is designed to cater for both hotel guests and walk-in customers. A mix of single and couples massage rooms is designed into the plan with spaces for foot reflexology, manicure/ pedicure and a Yoga pavilion.

Lombok Hotel MarketUPDATE

In term of arrivals, domestic tourists - driven by consumer confidence and the increasing number of budget airlines - represented 93% of all arrivals in Lombok in 2013. The number of domestic arrivals has grown at a CAGR of 7.2% between 2011 and 2013 from 798,485 to 983,470. The most significant changes regard the international arrivals which have grown at a CAGR of 45.5% over the same period, from 19,549 arrivals in 2011 to 41,380 in 2013. Year-to-date as of April 2014, we have observed a 191% increased compared to 2013 and expect international arrivals to be around 90,000 for 2014 (a 15.3% increase compared to 2013), taking into consideration the recent flight changes.

The boutique hotels located in north-west Lombok appeal mainly to foreign travelers (Europeans and Australians are important source areas). Most of them have a low key count (less than 100 rooms), low density and upscale positioning. We looked at a sample of 10 hotels, 8 being in the Senggigi area, the Novotel being in Kuta and Villa Ombak being in the Gili Islands. The sample represents a total of 690 rooms. Last quarter 2013, the sample achieved an occupancy of 77.5% and an ADR of Rp.1,115,859 (almost $100). The first quarter 2014, which is normally the slowest period of the year, has experienced a strong increase in Australians arrivals enabling the sample to reach 67.3% occupancy and an ADR of Rp.1,138,714. Year-to-date (as of May 2014), the sample’s occupancy is 71.3% with an ADR of Rp.1,120.215. If we project these increases over the next 2 years to end 2017 an ADR of $140 is conservative.

While these hotels yield a strong performance, most of them are located in the Senggigi area and the Novotel is the only quality hotel in the South. Since the opening of the airport, several guesthouses have opened in Kuta totaling about 100 rooms. Due to the lack of competition in the Kuta area, these guesthouses charge about $50 per night for a limited service property. TSI in a recent article estimated that the room inventory in Lombok will double by 2022, reaching almost 4,500 hotel rooms. Despite the new development in the Senggigi area, we expect most of the new additions to supply to take place in South Lombok.

Lombok Tourism evolved to an international quality level in approximately 1990 and most hotels built at that time are located on the West Coast, from the Senggigi area to the North-West part of the island. The opening of the new airport in 2011 switches the dynamic of the island from the West Coast to a more balanced offering that will see the evolution of the beautiful South of the island with its surf and white sand beaches.

ASIA PROSPECTS

Adam MurrayDirectoradam@asiaprospects.com+65 8338 3597+62 813 3727 9758

Tim WatsonDirectortim@asiaprospects.com+62 813 3810 0301

www.asiaprospects.comConcept Development, estimates of operating performance and return analysis produced by Ozone Developments.