p.o. box 799 · incorporation and listing 4 4. ... mauritus 2.7 mauritian ... targeted property...

Tel: +230 202 3000 Fax: +230 202 9902 www.bdo.mu

BDO & CO 10, Frère Félix de Valois Street Port Louis, Mauritius P.O. Box 799

May 2, 2017

The Board of Directors

Mara Delta

3rd Floor, La Croisette

Grand Bay

Mauritius

Dear Sirs

We have examined the Business Plan of Paradise Property Investments Ltd, in accordance with Section 18.6(a)(ii) of the Listing Rules of the Stock Exchange of Mauritius Ltd, in view of the company’s application for listing Class B shares on the Official Market of the Stock Exchange of Mauritius Ltd. Our review was based on assumptions and information provided by management and we have not audited same. Based on our review, nothing has come to our attention which causes us to believe that the operational assumptions laid out in the Business Plan, inclusive of the financial forecast (covering the three-year period ending 2020) do not provide a reasonable basis for the forecast with regards to its sustained viability. Further, in our opinion the forecast is properly prepared on the basis of the assumptions and is presented in accordance with International Financial Reporting Standards. Actual results may also differ from the forecast since anticipated events may not occur as expected and the variation may be material.

BDO assumes no responsibility whatsoever in respect of or arising out or in connection with the

contents of this certificate to third parties.

Afsar Ebrahim

BDO & CO

Chartered Accountants

BUSINESS PLAN

PARADISE PROPERTY INVESTMENTS LTD

28 APRIL 2017

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TABLE OF CONTENTS

Page 1. Executive Summary 32. Corporate Information 33. Incorporation and Listing 44. Overview of the Company 55. Investment Policy 66. Share capital 107. Capital Raises on Listing on the SEM 128. Debt Funding 129. Market Research 1210. Investments 1811. Risks 1812. Personnel 2113. Key Service Providers 2214. SWOT Analysis 2315. Structure Diagram 2816. Financial Data 28 Annexure A Profile of Board Members 33

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1. Executive Summary

Paradise Property Investments Ltd (“Paradise Property” or “the Company”) was incorporated in

Mauritius on 7 February 2017 and the Company is a public company limited by shares holding a

Category 1 Global Business License in Mauritius issued by the Mauritian Financial Services

Commission.

Paradise Property has been established with the primary objective of investing into properties

(directly or indirectly) in the hospitality sector within the Indian Ocean region, including among

others Madagascar, Seychelles and Mauritius. The Company will identify yield accretive assets

that will generate hard currencies return to its shareholders while at the same time partnering with

blue chip hotel brands in the different countries to generate sustainable rental income.

The capital structure of the Company is made up of two classes of shares as follows:-

a. Class A – Ordinary shares (“Class A shares”)

‐ Delta International Mauritius Limited currently owns 100% of the Class A shares in the Company.

b. Limited voting Class B – Preference Shares (“Class B shares)

‐ As at the date of this business plan, i.e. as at 28 April 2017, there are no Class B shares in issue.

The Company is seeking to list its Class B shares on the Official Market of the SEM while its

Class A shares will not be listed on any securities exchange. Post listing of the Class B shares

on SEM, it is envisaged that the Company will raise further capital from targeted investors

(through private placements) to fund its various investments opportunities. In return, Paradise

Property will issue new Class B shares to those investors which will be listed on the Official

Market of the SEM.

The directors of the Company do not anticipate that an active secondary market will develop in

the Class B shares.

Given that the Company is newly incorporated and that its primary capital raising exercise will

only take place concurrently with the listing of the Company’s Class B shares on the Official

Market of the SEM, the Company does not currently hold any major assets. In anticipation of

the approval to list on the SEM, the Company has identified a number of investment opportunities

in line with Paradise Property’s investment policy as defined in paragraph 5 below.

2. Corporate Information

2.1. Name of Company: Paradise Property Investments Ltd

Registered Address: c/o Intercontinental Fund Services Ltd (“IFSL”) Level 5, Alexander House

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35, Cybercity Ebene 72201 Republic of Mauritius

2.2. Regulatory Bodies: Financial Services Commission (“FSC”) and, once listed, the

Stock Exchange of Mauritius Ltd (“SEM”)

2.3. Constitutive Document: Constitution

2.4. Date of incorporation: 7 February 2017

2.5. Banker: SBM Bank (Mauritius) Ltd

SBM Tower

1, Queen Elizabeth II Avenue

Port Louis, Mauritius

2.6 Auditor: BDO & Co 10 Frère Félix de Valois Street

Port Louis

Mauritus

2.7 Mauritian legal advisor: C&A Law (Registered as a Law Firm in Mauritius)

Suite 1005, Level 1, Alexander House

35 Cybercity, Ebene, 72201

Mauritius

2.8 SEM authorised Perigeum Capital Ltd representative & Ground Floor, Alexander House sponsor and transaction 35 Cybercity, Ebene, 72201 advisor: Mauritius

3. Incorporation and listing

Paradise Property Investments Ltd was originally incorporated as a domestic private company in

Mauritius according to the Companies Act 2001 under the name of Delta Leisure Investments

Limited on 7 February 2017. Paradise Property was converted into a public company limited by

shares on 21 April 2017. On 14 April 2017, the FSC granted a Category 1 Global Business

License to the Company in accordance with the Financial Services Act 2007 of Mauritius.

The Company has changed its reporting currency from Mauritian Rupee (“MUR”) to Euro

(“EUR”) as approved by the Mauritian Registrar of Companies effective as from 20 March 2017.

The Company has also changed the denomination of its share capital from MUR to EUR under

Section 50(4) of the Companies Act 2001, as approved by the Mauritian Registrar of Companies

effective as from 20 March 2017.

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The Company does not currently have any class of shares which are listed on a securities

exchange. It is envisaged that the Company will seek to list its Class B shares on the Official

Market of the SEM. The Company’s Class A shares will not be listed on the SEM.

4. Overview of the Company

Paradise Property has been established with the primary objective of investing into properties

(directly or indirectly) in the hospitality sector within the Indian Ocean region including amongst

others Madagascar, Seychelles and Mauritius. The company will identify yield accretive assets

that will generate hard currencies return to its shareholders while at the same time partnering with

blue chip hotel brands in the different countries to generate sustainable rental income.

The Company’s objective is therefore to rent out its properties so as to maximize shareholder

return from its property portfolio.

The Company will follow a value-added strategy with a strong income focus.

Paradise Property is led by a team of individuals with significant experience and a successful

track record in real estate investment and property asset management. The team comprises

individuals with a proven track record in value-added intensive asset management and the

management of significant real estate businesses. Reference can be made to Annexure A of this

business plan for more information relating to the experience of the directors of the Company.

Management’s first-hand experience, knowledge and network across the targeted jurisdictions is

considered invaluable to the strategic direction and day-to-day management of the Company.

The Company has not appointed a Property Asset Manager. As such, the ongoing management

of the portfolio of assets will be undertaken by the management team of the Company. However,

the Company intends to appoint a Property Asset Manager in the medium term, once the property

assets of the Company reach EUR 50 million.

The Company’s reporting currency is Euro, with the financial year-end of the Company being 30

June each year.

It is envisaged that the listing of the Class B shares on the SEM will provide access to a global

investor base of managed funds, high net worth individuals and other sources of capital who view

Mauritius as an attractive investment destination.

To broaden its investor base and source additional capital to fund growth aspirations, Paradise

Property may consider listing its shares on other recognised international stock exchanges to:

provide an additional source of capital to fund the growth aspirations of the Company;

enhance potential investors’ awareness of the Company;

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improve the depth and spread of the shareholder base of the Company, thereby improving liquidity in the trading of its shares;

provide invited investors, both institutional and private, the opportunity to participate

directly in the income streams and future capital and income growth of the Company; and

provide invited investors with an additional market for trading the Company shares.

In order to create a platform for future growth both locally, regionally and internationally, a

listing of the Class B shares on SEM in Mauritius is envisaged by 15th May 2017. This will

provide an investment vehicle which is ideally positioned to raise capital from both within and

beyond Mauritius in order to take advantage of investment opportunities in a variety of

jurisdictions.

The choice to list on the SEM is motivated by several factors, which include reasonable costs of

compliance, corporate action thresholds and flexibility.

5. Investment policy

5.1. Objectives, Geographic and Sectoral Focus

Paradise Property has been established with the primary objective of investing into

properties (directly or indirectly) with triple net, long term leases in the hospitality sector

within the Indian Ocean region, including amongst others Madagascar, Seychelles and

Mauritius. The company will identify yield accretive assets that will generate hard

currencies return to its shareholders while at the same time partnering with blue chip

hotel brands in the different countries to generate sustainable rental income.

The Company’s objective is therefore to rent out its properties so as to maximize

shareholder return from its property portfolio.

Paradise Property will consider opportunistic investments outside of the above

mentioned jurisdictions, where the commercial merits of the opportunistic investments

support the Company’s overall investment strategy.

The proposed investments of the Company in Mauritius shall be subject to receipt of all

regulatory approvals, such as approval from the Board of Investment, Prime Minister’s

Office, amongst others.

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5.2. Investment Strategy

The Company’s investments may be held through subsidiaries incorporated in Mauritius

or foreign jurisdictions for the purpose of maximising tax efficiencies of the Company’s

investments.

The Company’s intended strategy is different from most investment companies as it

intends to keep the property ownership of its hotels segregated from the hotel business.

The Company’s strategy is to identify properties that are managed by well-known and

reputable hotel brands in the identified jurisdictions and that are able to deliver a rental

yield of 7.5% or more in hard currencies (EUR, GBP and USD).

Lower rental yield may be considered by the Company on a case-to-case basis if the

targeted property forms part of a portfolio of assets managed by blue chip brands.

As far as possible, the Company shall aim to secure triple net leases with the various

tenants.

5.3. Investment Criteria

Investment decisions will be based on the following criteria:

Regional analysis;

Country specific analysis;

Macro and micro analysis;

Specific hotel performance (including operating margins, rental to EBITDA

margins, occupancy rates and seasonal fluctuations);

Ability to provide financial guarantees from the hotel operator (including parent

company rental guarantees, substantial lease deposits, etc);

Air transportation availability for guests;

Analysis of the underlying guests catchment (primarily the region and currency of

the paying guests);

Geographic analysis;

Quality, sustainability and location of asset analysis;

Value-added asset management opportunity analysis;

Income growth potential;

Total return analysis; and

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Well-known hotel brands.

5.4. Investment Source

All investments will be sourced through management, any appointed Property Asset

Manager, and a select network of hospitality sector contacts principally based in Africa.

Management expects to source its investments from both the open market and off-market

opportunities due to the collective team’s extensive network and relationships across the

targeted geographical jurisdictions.

5.5. Investment Process

The Company’s directors will set the investment policy, parameters and objectives and

review and approve each purchase or sale of investment assets together with the

Investment Committee. Management together with any appointed Property Asset

Manager is responsible for identifying and reporting, to the Company’s directors, the

availability of new investment opportunities that fall within the investment policy and

objectives.

Following the identification of a potential new investment opportunity and approval by

the Board and Investment Committee, Management is responsible for negotiating the

terms of investment and ongoing management of the investment assets.

The ongoing management of the portfolio of assets will be undertaken by the

management team of the Company. However, the Company intends to appoint a

Property Asset Manager in the medium term, once the property assets of the Company

reach EUR 50 million.

5.6. Medium Term Goals and Capital Raising

The Company anticipates investing approximately EUR 115.8 million in the first 12

months of operation, which may be funded through a combination of third-party debt

and equity capital (through the issue of Class A shares and Class B shares).

Equity capital will be raised through private placements of Class B shares to targeted

investors after securing a listing on the SEM.

The Company’s medium term target is to grow the value of investments to EUR 117

million by the end of the financial year ending June 2019.

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5.7. Gearing Policy

In order to fund future value-accretive investments, management will look to raise debt

financing with a targeted loan to value ratio at, or below, 60%

5.8. Exchange Rate Policy

The Company will not take speculative positions on currency exchange contracts. Any

such contracts will only be taken as hedges, taking into account its current debt portfolio

and cash holdings and the near to medium-term expected debt portfolio and cash

holdings.

5.9. Distribution Policy

The Company will receive regular distributions from its investments which it will

aggregate, and after making provision for expenses, interest and loan repayment

obligations, maintenance, capital expenditure, and its current and anticipated operational

cash requirements, declare a net amount to shareholders as dividends on a semi-annual

basis, subject to all applicable laws.

The Board shall declare dividends and effect distributions on a semi-annual basis. The Company will declare 100% of its distributable earnings, provided that the Company satisfies the solvency test and has sufficient liquidity equivalent to 3 months’ worth of working capital.

Class A shares The holders of Class A shares shall rank below the Class B shares in respect of dividend payments and the dividend for Class A shares shall be calculated using the following formula:

D= E-B Where: D= Dividends available for holders of Class A shares; E= Distributable earnings of the Company; and B= Total dividend declared to Class B shareholders. And, the dividend per Class A share shall be calculated using the following formula: D N Where: D= Dividends available for holders of Class A shares; and

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N= Number of Class A shares in issue as date of declaration.

Class B shares The holders of Class B shares shall be entitled to the first right to dividend of up to 6.25% of the net asset value (“NAV”) per Class B share and the dividend for each Class B share shall be calculated using the following formula: NAV per Class B share as at the date of declaration x 6.25%.

The Class B shares’ dividend will be non-accumulative.

5.10. Targeted Acquisition Yields

Management aims to acquire assets with a net forward acquisition yield between 7.5%

and 9%.

5.11. Targeted Dividend Returns

The Company’s core objective is to provide shareholders with property investments in

the hospitality industry that yields above average returns on a continual basis with

income growth potential. This is intended to be achieved through active value-added

management of the acquired portfolio of assets, and through future acquisitions of

earnings enhancing properties.

In line with this objective, the board expects to generate a dividend yield on Class A

shares of between 8% and 10% and a dividend yield on Class B shares of 6.25% from

its investments in the targeted geographical jurisdictions, with modest to stable positive

earnings growth.

Comparing Paradise Property to similar Mauritian listed companies, it is anticipated that

the Company will produce an above-average yield with strong income growth, which

should in turn result in meaningful capital appreciation for its investors.

6. Share capital

6.1. Class of shares

Paradise Equity has two classes of shares, namely:

Class A – Ordinary Shares

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The Class A shares shall be unlisted shares in the share capital of the Company of par value EUR 1.00.

Limited voting Class B – Preference Shares

The Class B shares shall be listed on the Official Market of the SEM of par value EUR 1.00.

The number of Class B shares may not exceed 40% of the total number of shares in issue (both

Class A shares and Class B shares combined) for any period exceeding 12 months.

6.2. Description of the rights attached to share classes

Class A – Ordinary Shares

Rank below the Class B shares in respect to dividend payment; One vote for every share held at a meeting of the Shareholders Rank equally with Class B shares in all other respects

Limited voting Class B - Preference Shares

Ranks senior to Class A shares in regard to a first right to dividends, capped at a maximum dividend of 6.25% on the Net Asset Value per Class B share

One vote for every two shares held at a meeting of the Shareholders Rank equally with Class A shares in all other respects

Rights common to both classes of shares

Both classes of shares are entitled to a pro rata share of the entity’s net assets in the event of the entity’s winding up or liquidation; and

Both classes of shares rank below financiers and creditors.

6.3. Shareholders

Delta International Mauritius Limited currently owns 100% of the Class A shares in the

Company. Delta International Mauritius Limited is a wholly owned subsidiary of Mara Delta

Property Holdings Limited, which is listed on the Official Market of the SEM and on the Main

Board of the JSE.

On incorporation the Company was capitalised by its founder shareholder in an amount of MUR

100.

As at the date of this business plan, i.e. as at 28 April 2017, there are no Class B shares in issue.

Following approval for listing on the SEM, the Company intends to raise funds with proceeds

derived from private placements of Class B shares to targeted investors. It is anticipated that the

equity funding will be raised from investors in Mauritius and from international investors

(including in South Africa) to whom listed Class B shares will be issued and at the same time,

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meet the minimum market capitalisation requirement of MUR 20 million prior to the initial date

of listing.

As highlighted above, the Company will seek a listing of its Class B shares on the SEM, which

will provide the Company with the ability to issue shares to both on-shore and off-shore investors,

having regard to the strength of managements’ relationships and the known interest of investors

in the targeted geographical jurisdictions.

The listing on the SEM will provide Paradise Property with access to a global investor base of

institutional investors, managed funds, high net worth individuals, retail investors and other

sources of capital who view Mauritius as an attractive investment destination.

7. Capital Raises on Listing on the SEM

It is anticipated that Paradise Property will raise c. EUR 10 million on listing on the SEM.

Paradise Property intends investing these proceeds into a portfolio of hotels in the targeted

geographical jurisdictions. A number of possible hospitality targets have been identified by the

Company. Discussions with the relevant parties are still at an early stage.

Post listing, larger capital raisings may be undertaken through private placements of Class B

shares to targeted investors, depending on demand. These proceeds will be invested in line with

the Company’s investment policy.

8. Debt Funding

The Company will also consider raising debt capital in order to fund its various investments in

line with its investment strategy.

9. Market Research

In line with the Company’s investment strategy, the Company will mainly seek opportunities in

property assets in the hospitality sector within the Indian Ocean region. It will initially focus in

finding opportunities in Seychelles, Madagascar and Mauritius.

Some Indian Ocean Islands market analysis

9.1. Seychelles

Seychelles has a stable political environment and is situated in a favourable time zone (GMT +4).

Government policies are mostly supportive of both domestic and foreign investment. Seychelles’

population is skilled, with adult literacy rate at 96% and labour force fluent in both English and

French. The country also has favourable tax regimes for investment in Tourism, Agriculture,

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Energy and Fisheries sectors and a world class financial centre with no foreign exchange

restrictions1.

9.1.1. Trends in hospitality sector

Tourism is an important sector of Seychelles' economy. With over 20 % of gross domestic

product (GDP) directly attributable to tourism in the recent years2, Seychelles ensures that its

tourism sector will continue to be competitive in the long-run through pro-tourism government

policies. In line with the government’s commitment towards developing the tourism industry, an

enabling policy framework guides the development of the sector as outlined in the country’s

development plan (1990-1994) and tourism strategy (2010 - 2017).

According to JLL (2016)3, international arrivals to the Seychelles grew from 128,000 in 2006 to

276,000 in 2015 representing a compounded annual growth rate of 7.9% across the 10-year

period. Tourist arrivals have enjoyed significant growth in 2015, increasing by 18.7% y-o-y as at

YTD December 2015 as a result of improving air access and more direct flights. There are around

15 Seychelles tourist offices around the world that serve as vital first-hand information links

between Seychelles and potential visitors, tour operators, travel agents, and the media.

Infrastructure developments and an increase in the number of weekly flights between Abu Dhabi

and Mahé as well as more code share agreements between Air Seychelles and several major

airlines will help support further growth in tourist arrivals. Several leading international airlines,

provide non-stop flights from London, Paris, Rome, Milan, Frankfurt, Dubai, Doha,

Johannesburg, Nairobi, Mauritius, Reunion and Singapore and these contribute in maintain the

rising trend of Seychelles tourist arrivals and expanding hospitality industry.

9.1.2. Players in hospitality segment

In Seychelles, a wide range of affordable, new and refurbished hotels, self-caterings and Creole

guesthouses are joining the ranks of existing 5-star hotels and exclusive island retreats4.

According to the Seychelles Tourism Board, there were 30 large hotels (more than 25 rooms)

with 9,082 beds available in 20145. The main concentration of hotel rooms in the Seychelles is

on Mahé and Praslin islands. With a small future supply pipeline compared to markets such as

the Maldives, any increase in demand is likely to have a major impact on trading performance by

allowing resorts to upsell and yield more effectively during peak periods and keeping occupancy

stable during low periods.

1 Seychelles Investment Board. (2017) 2 World Bank. 2013. Seychelles Tourism Sector Review : Sustaining Growth in a Successful Tourism Destination 3 JLL 2016: Hotels destinations Indian Ocean

4 Seychelles Tourism Board (2016) 5 JLL 2016: Hotels destinations Indian Ocean

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Occupancy rates for rooms in Seychelles averaged 70% in 2015, which is well in line with peers

like Mauritius (73%) and Maldives (64%)6. The Average Daily Rate was also USD500 in 2015,

which places the island in the luxury destination segment7. Since Seychelles is considered to be

a premium destination, Paradise Property can investigate opportunities to acquire property assets

currently being managed by luxury hotel groups. These should guarantee steady rental income

and returns to the Company.

Paradise Property will thus consider investment opportunities in property assets in the hospitality

sector in Seychelles.

9.2. Madagascar

Madagascar has a challenging history but the government recently passed legislation to promote

the country as an investment destination. It has recently established the first ever regulatory

framework for public-private partnerships, and it will seek foreign investment to rehabilitate and

extend its dilapidated infrastructure in accordance with its five-year National Development Plan.

The legislative framework governing investment in Madagascar does not discriminate against

foreign investors, nor does it prohibit, limit, or condition foreign investments. Any natural person

or legal entity, Malagasy or foreign, is free to invest in Madagascar, in accordance with the laws

and regulations in force, and national treatment is not denied to foreign investors in any sector.

Despite presenting challenges to investment akin to those encountered in many other developing

countries, Madagascar remains a country of vast resources and potential8.

9.2.1. Trends in hospitality sector

Madagascar joined the Vanilla Islands (Mauritius, Reunion, Seychelles and Madagascar) to

acquire part of the new touristic market via each island’s strengths and complementarity. The

increase of tourists during the last 3 years, including the arrival of cruise tours, showed the

dynamism of the tourism sector. This significant growth of the demand needs to be supported by

an appropriate supply, namely in terms of accommodation facilities. Madagascar is especially

lacking offers at a high and very high standing (4 and 5 star hotels)9.

Tourism to Madagascar had been deeply affected but the year 2013 was a turning point in

Madagascar’s political history. After almost five years of political crisis following 2009’s

unconstitutional change of government, which led to a deep governance crisis, international

isolation and sanctions, Madagascar succeeded in organizing general elections (presidential and

parliamentary), a necessary step toward ending the crisis and restoring international and regional

relations. As Madagascar once again possesses elected institutions and is recognized as a

6 JLL 2016: Hotels destinations Indian Ocean 7 JLL 2016: Hotels destinations Indian Ocean 8 US Department of State (2016): Bureau of economic and business affairs 9 Economic Development Board of Madagascar

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potential international and regional partner, the conditions are ripe for an improvement in

democratic and economic performance10.

Madagascar's tourism industry is a key source of foreign exchange for the country. Since 1990,

the number of tourists in the country has grown considerably and 60% of its tourists are French,

who form the majority because of cultural and historical links between the countries, and flight

routes11.

Paradise Property will thus also consider investment opportunities in the hospitality sector in

Madagascar.

9.3. Mauritius

Mauritius has established itself as one of Africa's most dynamic and attractive investment

destinations increasingly positioning itself as a port for Africa-destined investment. The country's

reliable judicial system, low tax environment and liberal investment regime, as well as a number

of Double Taxation Avoidance Agreements and Investment Promotion and Protection

Agreements, have turned the island into a platform for investments into the African continent.

The Mauritian government has been pushing to diversify its economy further, including by

turning the island into a high-tech and telecoms hub. Mauritius has a stable political environment

and has virtually no security threats. Crime rates are also relatively low. However, global trends

and demand pose a risk to the country's growth prospects, given the island's heavy reliance on

the external sector.

9.3.1. Trends in Hospitality sector

Mauritius has a well-established tourism market and well-developed hospitality sector. The

country has long been a popular beach holiday destination for vacationers from Europe and

arrivals from affluent Asia Pacific, and Middle Eastern markets are also increasing as travel

connections improve and visa restriction are eased. The country is well placed to keep up with

demand, being home to an extensive hotel sector which caters primarily to the high end and

luxury travel segment and with visitor numbers increasing steadily.

In 2014 tourist arrivals peaked the 1 million mark with tourist arrivals growing by 3.4% annually

over the past 10 years. Leisure tourism is the primary purpose of visit, accounting for 93% of

arrivals in 2014. The segment has grown by 4% per annum since 2004, in line with the global

average of 3.9% and remains the primary driver of the hotel market. Latest figures from the

Statistics Mauritius Office are more optimistic, showing an increase of 10.8% in arrivals in the

country in 2016 as compared to 201512.

10 BTI (2016): Madagascar Country Report

11 World Bank(2013): MADAGASCAR Tourism Sector Review: Unlocking the tourism potential of an unpolished gem

12Statistics Mauritius (2017): Tourist Arrivals 2016

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Mauritius has high growth ambitions which is supported by air access development. The Sir

Seewoosagur Ramgoolam International airport with capacity of servicing 4.5 million passengers

per annum serves the country’s needs for the foreseeable future. The new airport was ranked as

the best airport in Africa for 2015 according to the Airport Service Quality Awards.

9.3.2. Players in hospitality segment

Hotels can be split in two groups, namely those belonging to global conglomerates and those that

are owned by local companies. Only 25% of hotels in Mauritius are globally branded, with the

majority of these positioned in the upper upscale and luxury segments. Globally branded supply

has grown by 5% per annum since 2005, compared to total supply growth of 6% per annum over

the same period. Globally branded properties are on average 167 keys, with non-branded and

locally branded hotels being smaller at 125 keys.

Locally operated hotels have historically outperformed the globally branded hotels for two

primary reasons:

Group ownership of tour operators - This horizontal integration and control of the value

chain allow these groups to channel demand into their hotels.

Understanding of the market - Established nature of these groups, together with their

Mauritius specific experience has enabled stronger performance than the internationals.

The concentration of supply in the luxury and upper upscale segments is consistent with the

positioning of Mauritius as a high-end destination. However, supply growth in the 3- and 4-star

segment over the past 10 years has been stronger than the 5-star segment. All inclusive packages

have grown in popularity, both evidence of a shift in the destinations positioning towards a less

exclusive, volume driven destination.

The hotel performance in Mauritius has seen steady recovery in occupancy since 2013 when the

market hit a recent low of 63%. In 2014 this increased to 64% and in 2015 to 73% according to

STR Global. During the first half of 2016 the occupancy achieved was 71% which compared to

69% for the same period in 2015.

Paradise Property will thus also consider investing in bricks and mortars in the hospitality sector

in Mauritius.

Competitive Advantage

The Company’s intended strategy is different from most investment companies as it intends to

keep the property ownership of its hotels segregated from the hotel business. The Company’s

objective is therefore to rent out its properties so as to maximize shareholder return from its

property portfolio. Industry peer with similar strategy has recently achieved returns above 7%.

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However, this does not limit the Company from considering other acquisition opportunities

whereby the Company will also manage the operations of the hotel.

The Company will seek to differentiate from its competitors through a targeted investment

approach. The Company will systematically seek targets that have potential to generate healthy

earnings, focussing on businesses and assets with good track record.

The management team has a wealth of experience in managing real estate and hospitality related

investments to generate lucrative returns for its stakeholders. The team members have had

exposure in structuring investments in the least risky way, investing in bricks and mortars rather

than operations. In this way, they were able to own tangible assets and benefit from steady rental

income, while minimising tenant default risk.

The identified jurisdictions, mainly Seychelles and Mauritius, have well developed hospitality

sectors. Most hotel operators in Seychelles and Mauritius boost healthy profits, with some of the

hotel groups in Mauritius achieving profitability levels in the double digits. Revenue is mostly

earned in foreign hard currencies like the EURO and GBP, which in some cases, allows the

investee companies to repay shareholders in foreign currencies. In Mauritius, returns for major

hospitality sector players averaged 8% in 2015, which indicates the potential to tap in a profitable

market. The Company will thus have a wider pool of existing profitable businesses and assets to

consider for investment, which gives the Company a significant advantage over other investment

companies targeting different jurisdictions.

The Company will also have access to competitive lending rates for debt financing for Mauritian

acquisitions as banks in Mauritius generally offer more competitive rates than banks in mainland

Africa. This will enable the Company to reduce its cost of capital and achieve higher profitability

levels.

Conclusion

The market analysis performed by Paradise Property shows that there are significant

opportunities in the hospitality sector in the targeted geographic jurisdictions. Paradise Property

intends to capitalise on these opportunities by making a series of acquisitions in the next 12 to 36

months. The Company aims to benefit from above-market returns earned through its investment

in hospitality assets offering strong income returns and value-added asset management

opportunities.

Whilst undertaking its market analysis, a number of possible property assets in the hospitality

sector have been identified by Paradise Property. Discussions with the relevant parties are still at

an early stage. As discussions are at an early stage, and the details are highly confidential, details

of these potential acquisitions cannot be disclosed at this stage.

Note that the proposed listing of the Class B shares of Paradise Propery on the Official Market

of the SEM is not dependent on these conclusion of these potential investments.

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10. Investments

Paradise Property’s stated investment strategy is to invest in properties within the hospitality

sector in the Indian Ocean region, including Mauritius, Seychelles and Madagascar, and it is

intended that these investments will deliver suitable returns for investors through both income

and capital growth. Details of the criteria that will be considered when evaluating the types of

investments that the Company will target can be found in paragraph 5 above.

Given that the Company is newly incorporated and that its primary capital raising exercise will

only take place concurrently with the listing of the Company’s Class B shares on the Official

Market of the SEM, the Company does not currently hold any major assets. In anticipation of

the approval to list on the SEM, the Company has identified a number of hospitality investment

opportunities in line with Paradise Property’s investment policy as defined in paragraph 5 above.

11. Risks

The risks of the Company are all of the risks that would typically be associated with investing in

the real estate, and to a lesser degree the hospitality sector. The board of Paradise Property

understands these inherent risks and will take reasonable and, where possible, appropriate steps

to mitigate such risks.

The Company is considering to raise further capital once it is listed on the SEM, to avail

itself of any investment opportunities that may arise in order to pursue its investment

policy. Although there is always a risk that the Company does not raise the capital they

intended to, such failure to do so would not impact on the operations of the Company.

11.1. Risk from tenants

Where the Company will consider to invest in bricks and mortar, it will be exposed to

the risk of tenants’ inability to pay rental fees. However, the Company will seek to have

triple net, long-term rental agreements with strong counterparties, and where applicable

parent guarantees and/or step-in clauses with the relevant parent global hospitality group.

The rental agreements will have well-defined clauses to ensure tenants always settle

rental dues in a timely and fashionable manner. The Company will also ensure that rental

agreements include clauses on penalties for late payments and breach of contract. In a

worst case scenario, the Company will resume possession of the properties and be forced

to seek a single new tenant or multiple tenants for its different properties. Under these

circumstances, the Company may be financially strained as a result of no rental income

for a period of time. Liquidity risk is further explained under paragraph 11.6.

19

11.2. Risk arising from leasehold land

Specific to hotel properties is the limited lifetime risk of ownership. Most land found in

Mauritius is on the so called ‘Pas Geometriques’ basis and is not freehold but leasehold.

Thus the Company faces the real risk that the Mauritian government may not renew its

lease agreement. The Company thus faces the risk of loss of future income as well as

loss of property.

11.3. Capital and Portfolio Risk

The acquisition of assets carries the investment risk of a loss of capital and there can be

no assurance that the Company will not incur losses. Returns generated from the

investments of the Company may not adequately compensate shareholders for the

business and financial risks assumed. An investor should be aware that it may lose all or

part of its investment in the Company. Many unforeseeable events, including actions by

various government agencies, domestic and international economic and political

developments as well as the global prevalence of terrorism; may cause sharp market

fluctuations which could adversely affect the Company’s portfolios and performance

both in the short and longer terms.

11.4. Currency Risk

The Company will also seek to acquire assets located in foreign jurisdictions and

denominated in foreign currencies (“the foreign currency”); albeit that primary currency

denominations shall be in hard currencies. For those investors whose base or home

currency is not the same as the relevant foreign currency, there is a risk of currency losses

if the foreign currency depreciates against the investors’ base currency.

11.5. Stock Market Risk

The investments of and in the Company could decrease in value as a result of a decline

in global stock markets.

11.6. Liquidity Risk

Further, direct investment in hospitality property assets such as hotels is a relatively

illiquid investment and long lead times are sometimes required to divest from these

holdings. This may affect the liquidity of the Company and the ability to repay investors,

if required.

11.7. Leverage and Financing Risk

The capital of the Company may be leveraged so as to achieve a higher rate of return.

Accordingly, the Company may pledge its securities in order to borrow additional funds

for investment purposes. While leverage presents opportunities for increasing the total

return of the Company, it has the effect of potentially increasing losses as well.

Accordingly, any event which adversely affects the value of an investment by the

20

Company would be magnified to the extent the Company is leveraged. The cumulative

effect of the use of leverage by the Company in a market that moves adversely to the

Company’s investments could result in a substantial loss which would be greater than if

the Company were not leveraged.

11.8. Interest Rate Risk

The company’s use of leveraging creates the risk that any substantial increase in interest

rates may result in a difficulty in meeting its debt repayment obligations. The company

manages its exposure to interest rate fluctuations through the use of hedging instruments,

and continuous monitoring of credit metrics and financial ratios.

11.9. Global Political, Economic and Financial Risk

As the Company will invest in property assets in the African hospitality sector, it will be

exposed to adverse political, economic and financial events in the African continent. The

value of the investments could decline as a result of economic developments such as

poor or negative economic growth, poor balance of payments history, high interest rates

or rising inflation. A similar situation could prevail due to political instability in certain

jurisdictions.

The Company will take reasonable steps to mitigate against these risks, including risk

insurance cover.

11.10. Valuations Risk

Valuations of hospitality-related assets are inherently subjective due to the individual

nature of each asset and the hospitality operation’s primary customer base / consumer

market. As a result, valuations are subject to uncertainty and, in determining market

value, valuers are required to make certain assumptions and such assumptions may prove

to be inaccurate. This is particularly so in periods of volatility or when there is limited

transactional data against which valuations can be benchmarked. There can also be no

assurance that these valuations will be reflected in the actual transaction prices, even

where any such transactions occur shortly after the relevant valuation date, or that the

estimated yield and annual rental income will prove to be attainable.

11.11. Regulatory change may affect the Company

Legal or regulatory change may affect the Company and impose potential limits on the

Company’s flexibility in implementing its strategy. Any change to landlord and tenant,

planning, trust, tax (including stamp duty and stamp duty land tax) or other laws and

regulations relating to the areas in which the Company operates may have an adverse

effect on the Company.

The levels of, and relief from, taxation may change, adversely affecting the financial

prospects of the Company and/or the returns to shareholders.

21

The Company is subject to the tax authorities within the jurisdictions it operates and

taxes and tax dispensations accorded to the Company may change over time.

The nature and amount of tax payable is dependent on the availability of relief under tax

treaties in a number of jurisdictions and is subject to changes to the tax laws or practice

in any other tax jurisdiction affecting the Company. Any change in the terms of tax

treaties or any changes in tax law, interpretation or practice could increase the amount

of tax payable by the Company and could affect the value of the investments held by the

Company or affect its ability to achieve its investment objective and alter the post-tax

returns to shareholders. The level of dividends the Company is able to pay would also

be likely to be adversely affected.

11.12. Natural disaster and damage risk

Another risk factor lies with the risk of structural damage or other types of damage on

the Company’s properties as a result of fire, theft, intentional infliction of damage or

other acts of God. As a preventive measure, the Company will subscribe to insurance

with reputable insurers against damage of property.

12. Personnel

12.1. Board of Directors

The board of directors will be responsible for the management of the Company and

strategic decision making and implementation. Annexure A contains the profile of the

Company’s board members. Attention is drawn to the significant experience and

expertise of the board members in the real estate sector, asset and property management.

On incorporation, the majority of the directors are resident in Mauritius and the board

has ensured that each member has the requisite advisory and management experience

and expertise. The Company will at all times seek to uphold corporate governance

standards commensurate with international best practice.

It is further anticipated that the Board will set up an Investment Committee that will

comprise of directors and other members as may be appointed by the board. The

Investment Committee’s primary role will be to assess identified investment

opportunities and to make recommendations to the Board.

12.2. Management and Operational Team

A key component to the ultimate success of Paradise Property and the investment in and

ongoing management of suitable hospitality assets is the management and operations

team, comprising Heidi Rix and Bevan Smith.

The management team has a wealth of experience in managing real estate and hospitality

related investments to generate lucrative returns for its stakeholders. The team members

22

have had exposure in structuring investments in the least risky way, investing in bricks

and mortars rather than operations. In this way, they were able to own tangible assets

and benefit from steady rental income, while minimising tenant default risk.

The team jointly has over 24 years of extensive real estate investment, property and asset

management experience. Collectively, management’s experience provides the Company

with deep rooted expertise in:

Hospitality industry;

Real Estate Investment, Finance, Asset and Fund Management;

Business Origination, negotiation, structuring, investment and acquisition;

Financial and Portfolio Management; and

Mergers and Acquisitions.

Their careers have provided them with first-hand experience of managing real estate

businesses through wide ranging economic cycles and across varying geographic

locations including Paradise Property’s targeted geographical jurisdictions, thereby

enabling a fundamental understanding of the property asset class, and its respective risks

and returns.

As and when other businesses are acquired by the Company, the operations team will

expand to include additional experts joining the Group.

13. Key Service Providers

13.1. Company Secretary

It is anticipated that the board will leverage off existing operations within its duly

appointed Company Secretary in Mauritius, Intercontinental Fund Services Ltd (“IFSL”)

and its associated companies.

IFSL is licensed by the Mauritius Financial Services Commission to provide a

comprehensive range of financial and fiduciary services to international businesses. All

administrative business functions of the Company shall be carried out by IFSL in

Mauritius, and they will also act as the company secretary to Paradise Property.

13.2. SEM authorised representative & sponsor and transaction advisor

The Company has appointed Perigeum Capital Ltd (“Perigeum Capital”) as its SEM

authorised representative & sponsor and transaction advisor. Perigeum Capital holds an

Investment Advisor (Corporate Finance Advisory) licence issued by the Mauritius

Financial Services Commission.

23

Perigeum Capital shall handle the listing application process with the SEM and has been

engaged to advise the Company and its directors on compliance with ongoing SEM

listing obligations.

13.3. Property Asset Manager

The Company has not appointed a Property Asset Manager. As such, the ongoing

management of the portfolio of assets will be undertaken by the management team of the

Company. However, the Company intends to appoint a Property Asset Manager in the

medium term, once the property assets of the Company reach EUR 50 million.

13.4. Management Performance Managing Similar Assets

Management has a proven track record in value-added investment through its

management of previous property projects, and believes that its knowledge advantage

and entrepreneurial outlook enables it to exploit market inefficiencies to provide superior

risk-adjusted returns. Previous managed portfolios have generated total returns well in

excess of the comparable IPD index. Through its network and previous experience,

management plans to acquire mispriced assets where it considers there is an opportunity

to create additional value through active asset management.

13.5. Other Third-Party Service Providers

In addition, it is envisaged that the Company will outsource a number of functions to

specialist third-party service providers. Such service providers may include without

limitation: investor relations managers; company administrators; legal counsel;

accountants and auditors; and bankers.

In this regard, the board of Paradise Property will engage only with reputable,

internationally-recognised institutions with established track records for the provision of

such services.

14. SWOT Analysis

An analysis of the target markets’ and Company’s strengths, weaknesses, opportunities and

threats is detailed below:

STRENGTHS

Seychelles

Well-recognized destination image in the international markets for holidays;

Politically stable and the tourism sector is prioritized by the government; and

Strong partnership between public and private sector.

24

Madagascar

Madagascar is one of the world’s top “biodiversity hotspots” and attracts a large number of

tourists who are passionate about natural beauty. It has a rich natural heritage - more than 80%

of Madagascar's flora and fauna are found nowhere else in the world and some taxonomic groups,

including reptiles and amphibians, are over 95% endemic; The Malagasy government is also

placing increasing emphasis on developing tourism, especially development of eco-tourism and

beach tourism.

Mauritius

Mauritius has a mature hospitality sector - The sector has a solid base of more than 100+ large resorts and is supported by strong local hotel operators and leading global hotel brands;

Limited new hotel supply growth in Mauritius during the past three years has allowed excess supply to by absorbed and stronger performance to be experienced by hotels since late 2014;

Perceived safety levels: Mauritius has not been affected by terrorism or political instability unlike many of its long haul competitors;

Political support for tourism through improved policy and developed tourism infrastructure: There is a strong base of tourism infrastructure present in Mauritius with a large airline network, well established local tour operators, high quality road network and tourism training facilities;

High ease of doing business in Mauritius: Favourable corporate environment for business

and investment into the hospitality sector; and

Healthy returns being generated by existing hospitality players in Mauritius and existence of profitable target acquisitions.

Company The management team is an experienced team with a proven track record in deal sourcing,

asset and property management;

The management team is a highly qualified, technically strong team with a good work ethic;

Debt and equity are currently available to acquire the property assets targets in the pipeline;

The Company will have a strong and experienced board of directors and board committees

in place; and

The Company will have appropriate governance in place.

WEAKNESSES

Seychelles

Seychelles is perceived as a luxury destination and has relatively high cost of accommodation

and travel, which limits the number of tourists that can afford the destination;

25

Lacks of middle range accommodation for the middle income travellers; and

Lacks developed infrastructure like roads, which reduces appeal to tourists.

Madagascar

Madagascar’s investment climate is not conducive to tourism development;

Weak country credit rating;

Stiff competition from neighbouring tourism destinations;

Inadequate flights from the key markets - Europe and North America; and

Poor infrastructure - roads, transport.

Mauritius

Low levels of Asian demand in Mauritius hospitality sector: A number of other competitive

destinations, particularly in the Indian Ocean achieve higher levels of demand from Asia.

This is likely to change with improved air access from recent government policies;

Short-haul catchment area is smaller than that of Maldives and Sri Lanka. Over time this will

be offset by the growth in the outbound tourism market from Africa into Mauritius which is

in its infancy; and

Lack of capital expenditure on hotels between 2010 and 2015 due to the tougher trading

environment. This has prompted the government to slow down new supply to allow

reinvestment in assets.

Company

Lack of a substantial balance sheet at listing may hamper growth opportunities; and

The different legal and tax frameworks in the targeted geographical jurisdictions will require

specialist technical expertise. Whilst the Company’s management may not have the

necessary experience and skills to deal with these challenges, specialists are readily available

and accessible.

OPPORTUNITIES

Seychelles

Favourable policies for foreign investment in order to upgrade hotels and other services;

Potential for hotel and resort development;

Increased flight, i.e. new airlines including Ethiopian Airlines, Air Austral and Blue

Panorama; and

26

Focusing on emerging destinations like China, Africa, Asia and India.

Madagascar

Establishment of ecotourism investment zones;

Targeting emerging markets in Africa and Asia;

Resort development along the coastal regions; and

Product diversification [eco-tourism, capitalising on the natural assets].

Mauritius

High growth in air access to Mauritius is increasing seat capacity and affordability of

Mauritius. The arrivals of low cost and charter flights will have a positive impact on arrivals

and demand in the 3- and 4-star segments in the hospitality market;

During the next decade there is likely to be a shift towards a more volume driven, value

oriented destination from a perceived luxury destination. This presents an opportunity for

hotels positioned in the midscale and upscale segments to target this demand; and

Increased liquidity for hotel assets: With well capitalised local groups and foreign investors

looking to invest in the sector, it is expected that liquidity will improve. By comparison to

other mature resort destinations, the yields in Mauritius remain relatively high.

Company

There are planned investments into properties that offer strong rental income with value-

added asset management opportunities, representing capital appreciation opportunities;

The Company intends to source off-market acquisition opportunities through its strong

networks across the targeted geographic jurisdictions; and

The Company intends to tap into prime assets and enhance rental yields.

THREATS

Seychelles

Piracy activities in and around Seychelles’ territorial waters in the Indian Ocean causing

insecurity;

Climate change related environmental impacts;

Competition from neighbouring islands including Mauritius; and

Effect of world economic crises especially on the European markets which are its key source

markets.

27

Madagascar

Madagascar does not maintain an “open skies” policy in order to preserve business for

government-owned Air Madagascar;

Perceptions of poor governance and political instability;

Madagascar’s tourism industry also has to cope with stringent competition from

neighbouring tourism destinations such as Seychelles and Mauritius; and

Hotel investments could be hampered by a limited arrival capacity.

Mauritius

Increased competition from other beach destinations: There has been strong growth in

demand for the broader Indian Ocean market, with newer destinations such as Sri Lanka

increasing in popularity. The impact of this is likely to be offset by the higher growth in

demand for the region of focus and the continued turbulence in competing beach destinations

like Turkey and North Africa; and

Increased popularity of rental pools at residential estates, which are likely to increase

competitive supply as a portion of the market looks to rent houses and apartments through

platforms such as Airbnb.

Company

The volatility of the ZAR against the investee countries’ currency could impact returns for

the South African investors; and

Currency volatility and mismatch of revenues and expenses that are incurred in different

currencies could impact on the profitability of hotels.

28

15. Structure Diagram

16. Financial Data

The Company will be wholly financed by its shareholders and, in due course, third party funding,

and will generate sufficient cash-flow to meet expenses as they arise.

The financial data is a representation of the expected statement of financial position, statement

of comprehensive income and statement of cash flows of the Company for the next four years.

The projected forecasts are reasonable given the assumptions, and the board is confident in the

ability of the Company to raise the capital required to acquire a portfolio of hospitality property

assets. The key assumptions in respect of the financial forecasts are also set out after the forecast

financial information.

29

Forecast Statement of Financial Position

FY17 FY18 FY19 FY20

Eur'000 Eur'000 Eur'000 Eur'000

Non‐current assets 28,500 115,825 116,923 118,024

Investment in Property 1 ‐ 13,222 13,976 14,737

Shareholder Loan Property 1 28,500 28,500 28,500 28,500




Shareholder Loan Property 4 ‐ 10,000 10,000 10,000

Total Assets 28,500 115,825 116,923 118,024

Equity

28,500

114,712

114,712

114,712

Class A shares

18,500

76,212

76,212

76,212

Class B shares

10,000

38,500

38,500

38,500

Transfer to distributable income ‐ ‐ ‐ ‐

Total share capital 28,500 114,712 114,712 114,712

Retained Earnings ‐

1,113

2,211

3,312

Opening Balance ‐ ‐

1,113

2,211

Profit for the year 379 10,738 11,232 10,907

Dividends paid

(379)

(9,626)

(10,134)

(9,806)

‐ Class A shares (222) (7,219) (7,704) (7,353)

‐ Class B shares (156) (2,406) (2,430) (2,453)

Total equity 28,500 115,825 116,923 118,024

Total liabilities ‐ ‐ ‐ ‐

Total equity and liabilities 28,500 115,825 116,923 118,024

NAV per share (Euro)

‐ Class A shares 1.00

1.01

1.02

1.03

‐ Class B shares 1.00

1.01

1.02

1.03

30

Forecast Statement of Comprehensive Income

FY17* FY18 FY19 FY20

Eur'000 Eur'000 Eur'000 Eur'000

Dividends ‐

8,620

9,149

8,835

Property 1 ‐ Property yield: 7.5% ‐

2,032

2,199

1,766

Property 2 ‐ Property yield: 8% ‐

3,113

3,159

3,205


2,974

3,266

3,315


501

525

549

Interest ‐ SH Loans

445

2,731

2,731

2,731

Property 1 ‐ interest: 6.25% 445 1,781 1,781 1,781

Property 4 ‐ interest: 9.5%

950

950

950

Expenses ‐ Management fee (Mara Delta) ‐

(1,448)

(1,462)

(1,475)

Gross operating income

445

9,903

10,419

10,091

Fair value adjustment ‐

1,113

1,098

1,101

Operating income

445

11,016

11,517

11,192

(Loss)/Profit before tax 445 11,016 11,517 11,192

Less tax (67) (278) (285) (285)

(Loss)/Profit after tax 379 10,738 11,232 10,907

Attributable to:

Class A shares 222 7,219 7,704 7,353

Class B shares 156 2,406 2,430 2,453

31

Forecast Cash Flow Statement

FY17* FY18 FY19 FY20

Eur'000 Eur'000 Eur'000 Eur'000

Cash flow from operations

379

9,626

10,134

9,806

Dividends paid

(379)

(9,626)

(10,134)

(9,806)

‐ Class A shares

(222)

(7,219)

(7,704)

(7,353)

‐ Class B shares

(156)

(2,406)

(2,430)

(2,453)

Cash flow from Investing Activities

(28,500)

(86,212) ‐ ‐

Cash flow from Financing Activities 28,500 86,212 ‐ ‐

Proceeds from issue of Shares 28,500 86,212 ‐ ‐

‐ Class A shares

18,500

57,712 ‐ ‐

‐ Class B shares

10,000

28,500 ‐ ‐

Cash movement ‐ ‐ ‐ ‐

The internal rate of return of cash flows generated from operations is 12.11%.

Key Assumptions Set out below are the key assumptions in respect of the forecast financial statements of Paradise Property: Paradise Property intends to make four investments into the hotel real estate sector, as listed below:

44.4% ownership stake in three hotels located in Mauritius at a 7.5% property yield. The estimated transaction value is EUR 50 million, funded by:

o Direct Equity: EUR 12.5 million o Class A shares: EUR 18.5 million o Class B shares: EUR 10 million o Debt: EUR 9 million (at the SPV level)

100% ownership stake in a hotel located in Mauritius at an 8% property yield. The estimated transaction value is EUR 59.7 million, funded by:

o Direct Equity: EUR 25.4 million o Debt: EUR 34.3 million (at the SPV level)

100% ownership stake in a hotel located in the Seychelles at a 7.5% property yield. The estimated transaction value is EUR 71.4 million, funded by:

o Direct Equity: EUR 32.4 million o Debt: EUR 39 million (at the SPV level)

100% ownership stake in a hotel in Madagascar at an 8.25% property yield. The estimated transaction value is EUR 33.9 million, funded by:

o Direct Equity: EUR 5.9 million o Shareholders Loan: EUR 10 million

32

o Debt: EUR 18 million (at the SPV level)

Paradise Property expects to undertake one capital raise in FY 2017 for 18.5 million Class A shares and 10 million Class B shares. The Company will undertake several capital raises in FY 2018, as and when the above transactions are completed. For the purposes of the forecasts, we have assumed that all four investments will be completed by 1 July 2017, resulting from a capital raise of 57.7 million Class A shares and 28.5 million Class B shares.

Balance sheet assumptions: Investments are recorded at fair value No debt is assumed to be taken in Paradise Property at a Company level. However there

will be debt taken at each property owning SPV level to enhance the equity return to Paradise Property shareholders

The Assets acquired in FY 2018 as assumed to transfer on 1 July 2017 Class B shares are limited to 40% of total capital

Income statement assumptions: Each property will be held in a special purpose vehicle (PropCo). There are two ways that

Paradise Property will extract value from the PropCo, that is through dividends and interest on shareholder loans. The returns to Paradise Property will be enhanced through the use of bank debt at the PropCo level.

The Company will declare all distributable earnings to shareholders in the form of dividends

Shareholder loans will accrue interest at a range of 6.25% - 9.5% Asset management fee of 1% will be based the market value of the underlying properties,

and will commence during the 2018 financial year The Assets acquired in FY 2018 as assumed to transfer on 1 July 2017

Cash flow statement assumptions: All distributable earnings are declared as dividends and paid to shareholders. Investments are held throughout the forecast period.

33

Annexure A – Profile of board members

Director Name Role Qualifications Profile

Bevan Smith Executive

director

UNISA: BCom

(Honours), CA

(SA), CFA

Bevan joined the Delta Group in 2015 as an

Investment Manager and then moved into

the role of Senior Investment Manager at

Mara Delta Property Holdings. Bevan

headed the acquisition of the Tamassa Hotel

and Mara Delta’s investment in

Beachcomber Hospitality Investments

Limited.

Prior to joining Mara Delta Bevan held the

roll of Investment Principal at RH

Managers, a boutique private equity firm,

specializing in green field healthcare

investments within South Africa. In 2013

Bevan was instrumental in the successful

listing of Accelerate Property Fund on the

JSE, which consisted of 51 properties,

valued at R5.9 billion. Following the listing

Bevan assumed the position of Head of

Finance. Post completion of his articles in

2009, Bevan joined EY’s corporate finance

division.

Heidi Rix Executive

director

Bcom LLB Heidi Rix joined Mara Delta as Chief Operating Officer on 1 May 2016. Heidi brings 18 years of commercial and real estate experience and holds BComm LLB degrees with further studies in the real estate industry including an Advanced Diploma in Property Practice (cum laude).

Heidi joins Mara Delta from the Broll Property Group where she was a Director of the Group and held the position of Managing Director Investor Services with overall responsibility and accountability for the Asset Management, Property Management and Retail Leasing businesses. Prior positions held by Heidi include Director of Atterbury Asset Managers (Pty) Ltd and General Manager Rand Merchant Bank Properties (Pty) Ltd.

Peter Todd Independent

non-executive

director

Wits: BCom, LLB

Degree, Higher

diploma in Tax

Peter is a qualified attorney and began his

career as the senior tax manager at Arthur

Anderson and Associates in Johannesburg.

34

He joined TWS Rubin Ferguson in 1993 as

a tax partner and was instrumental in listing

six companies on the JSE. In 2000, Peter

established Osiris International Trustees

Limited in the British Virgin Islands

(“BVI”) to provide international trust and

corporate administrative services to global

clients. He held a non-executive director

position at Redefine International Limited

from the initial listing for some nine years

and has been involved in the property

industry for many years, including serving

on the board of Mara Delta Property

Holdings Limited since its listing on the

SEM.

Teddy Lo Seen

Chong

Non-executive

director

ACA Mr Lo Seen Chong is the Finance Director

of Intercontinental Trust Limited. He was

previously Manager in the Fund

Administration department. He worked for

six years in a firm of chartered accountants

in London, where his areas of

responsibilities were auditing, accounting

and taxation. He also worked for Deloitte in

Mauritius where he was involved in the

listing of a major local bank on the

Mauritius Stock Exchange. He spent the last

eleven years in Canada where he gathered

valuable experience in the field of

accounting and finance in North America.

p.o. box 799 · incorporation and listing 4 4. ... mauritus 2.7 mauritian ... targeted property...

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