FEASIBILITY STUDY FOR ROMAN EMPIRE PANGLAO HOTEL RESORT PROJECT NAME: Roman Empire Panglao Condotel COMPANY: Roman Empire Panglao Inc. NAME: Roman Empire Panglao Condotel STREET: Purok 2 ADDRESS: Tawala CITY: Panglao STATE: Bohol COUNTRY: Philippines ZIP CODE: 6340 DATE: March 16th 2018  

 

 

1 TABLE OF CONTENTS

1.1 EXECUTIVE SUMMARY .......................................................................................................... 1.2 DESCRIPTION OF PRODUCTS AND SERVICES .......................................................................... 1.3 THE CONCEPT ........................................................................................... 1.4 PRODUCT/SERVICE MARKETPLACE ....................................................................................... 1.5 MARKETING STRATEGY ........................................................................................................ 1.6 ORGANIZATION AND STAFFING ............................................................................................. 1.7 SCHEDULE ............................................................................................................................ 1.8 FINANCIAL PROJECTIONS ...................................................................................................... 1.9 FINDINGS AND RECOMMENDATIONS .....................................................................................

 

1.1 EXECUTIVE SUMMARY

The ROMAN EMPIRE PANGLAO CONDOTEL is the first CONDOMINIUM –

HOTEL - a so called “Condotel” on Panglao Island within the Municipality of Panglao

and located in Walking Distance to the famous Alona Beach, the Premier Tourist

Destination in the Philippines

THE CONDOTEL CONCEPT A "Condotel" is a Condominium Complex, existing of Hotel Rooms, where for each Hotel Room (Unit) a Condominium Title will be issued. The Hotel Operator will rent out all Condominium Units in behalf of all Owners and will operate same Hotel Rooms as a Hotel. Therefore, the Owners shall participate on the earnings of the hotel. The Construction already begun in 2017 and in November 2018 the “Soft Opening” with 40 out of 80 Hotel Rooms, the Restaurant, the Pool- and Garden Area as well as other necessary facilities, ready for occupancy and operation shall take place. As a god-father to the "Roman Empire Condotel" stood a typical Roman U-shaped Domicilium with an atrium in the middle the pool within a garden landscape. Behind the Condotel-Project stands the Planer and Developer is the experienced German Diploma-Engineer Werner Klippert. He has lived on Panglao, Bohol, Philippines for 16 years and has developed, planned and built a number of projects to this day. The high technical quality of its structures is known all over the island and beyond. To get an impression of some of our projects already completed, we recommend visiting the following projects:

‐ Bohol-Homes, a private residence with 35 Apartment-Units ‐ Panglao Chocolatehills Resort, a 3-star-resort with 26 rooms ‐ Panglao Residences, another private residence complex with 8 houses

New hotel facilities are being built around the island. Overall, the economic situation has been rated as "very good" in the long term, which has resulted in the three major

rating agencies "Fitch", "Standard & Poor's" and "Moody's" rating the country to "Triple B". The RATING FROM INTERNATIONAL INSTITUTION FOR THE PHILIPPINES 2015 Apr 24 Standard & Poor's BBB STABLE 2015 Dec 14 Moody's Baa2 STABLE 2015 Sep 24 Fitch BBB- POSITIVE 1.2 DESCRIPTION OF PRODUCTS AND SERVICES For the Purpose of the Project Development, Implementation and Marketing Condominiums to the private public market for Investment purposes, the Company "Roman Empire Panglao Inc." was created. The Land and all facilities needed to run the Condominium Project as a Hotel Resort (Condotel), the Developer Roman Empire Panglao Inc. owns already the land and registered a Master Deed on same Land Title, registered same Condotel Project with HLURB and applied for the necessary License to Sell, which is already issued. The first Condominium titles for the Hotel Rooms (Units) will be issued soon from Register of Deeds (ROD). After Completion of the Roman Empire Panglao Condotel Project, the common land and Infrastructure as described in the Master Deed, shall be turned over to the “Panglao Roman Empire Condotel Corporation”, Same Condominium Corporation then will own the common areas, protect the Investment of all Condominium Owners and represent them in all legal issues. The Roman Empire Panglao Condotel will be operated after Completion by Roman Empire Panglao Hotel Resort Inc. (the Hotel Operator). All Condominiums (Hotel Rooms) will be rented out from the Hotel Operator, who will operate the whole Project as a Hotel Resort and all Condominium Owners shall participate on the earnings of the Hotel Operator, therefore all Condominium Owners shall enter into a Profit Sharing Agreement with the Hotel Operator. To optimize the Profit for the Condominium Owner, each Condominium Owner shall sole participate on the Hotel’s Rental Income, which produces its earnings through renting out all Hotel Rooms, deducted by its expenses as Marketing-, Reception -, Pool-, Garden -, Security -, Laundry- and Maintenance Services. No Condominium

Owner shall participate on the higher Risks Operations as the Restaurant Services, Stores and other services provided.

1.3 TECHNOLOGY CONSIDERATIONS There are three (3) basic (pre-) conditions which lead to the implementation of this Project: 1. The acquisition of land by Foreigners in the Philippines is still prohibited, just

buildings are allowed to be owned by foreigners. At the same time, the value of real estate is growing disproportionately strong due to exceptionally high demand by the local population, but also increasingly by foreigners with no end in sight.

In addition, since the last 10 years, the Philippines has been increasingly favored by foreign Internationals like Europeans, Americans, Koreans, Australians and Japanese nationals as a holiday destination and as a retirement place, due to the low cost of living. Demand is significantly greater than the current available properties for sale!

2. The sustained low interest rate climate in Germany, Europe, and other nations

has been a source of negative net yields for many years. Given the current financial environment, property investment makes sense, is extremely important, and offers good long-term value and security for the investor.

‐ A Condotel Project offers Investors two sources of Investment Income:

a. Growth through appreciation value of Condo ownership and rental

income with adjusted inflation growth. This approach is smart because it deleverages risk.

b. Property values in this emerging tourist economy will continue to grow and is still in very early stages of development.

3. Finally, after the Completion in August 2018 of the “New Bohol International

Airport" on Panglao Island approximately 1.7 million additional tourists, up from 700,000, are expected on the Panglao holiday island creating further demand for housing. In particular, 4,000 resort beds are currently available but 20,000 additional beds will be needed due to the rapidly increasing visitor growth.

New Panglao, Bohol airport currently under construction.

The resulting idea now is to take account of the optimal conditions for Investors, especially in the Philippines, and to build an already existing 5,000 m² of land on the holiday island "Panglao Island" in "Walking Distance" to the famous Alona Beach, a mixed concept of a Hotel and a Resort with the Security for Investors, owning their “Investment” in form of a Condominium and participating on the much higher Earnings compared to what a Bank Deposit offers.

1.4 PRODUCT/SERVICE MARKETPLACE Since an Investment in Form of a Condominium is allowed to Foreigners and Pilipino Citizen and has it own Ownership Certificate (Condominium Certificate of Title “CTT”), it is one of the safest Forms of an Investment. Furthermore, the Participation on the Earnings of a Hotel Resort offers the great Opportunity to receive a reasonable Money Return Rate (ROI), especially the Investor participates only on the low risk Operations of the pure Hotel, while the higher-risk Personal Intensive Operations as Restaurants, Services and Shops will be outsourced. With Panglao Island as one of the mayor Tourist Destinations in the Philippines, its steady growing market and arrival of Tourists, the soon operation “New Bohol International Airport” which can cater more than 1.7 Million Tourists in addition and “Roman Empire Panglao Condotel’s”

location in Walking Distance to the Famous Alona Beach, this Investment offers a unique Chance to participate on this Booming Industry. 1.5 MARKETING STRATEGY Since the last 10 years, the Philippines has been increasingly favored by foreign Internationals like Europeans, Americans, Koreans, Australians and Japanese nationals as a holiday destination and as a retirement place, due to the low cost of living. Demand is significantly greater than the current available properties for sale! The sustained low interest rate climate in Germany, Europe, and other nations has been a source of negative net yields for many years. Given the current financial environment, property investment makes sense, is extremely important, and offers good long-term value and security for the investor. The Condotel project offers investors two sources of investment income:

a. Growth through appreciation value of Condo ownership b. Rental income with adjusted inflation growth

This approach is smart because it deleverages risk. Property values in this emerging tourist economy will continue to grow and is still in very early stages of development. Finally, after the completion of the new "Bohol International Airport" on Panglao Island approximately 1.7 million additional tourists, up from 700,000, are expected on the Panglao holiday island creating further demand for housing. In particular, 4,000 resort beds are currently available but 20,000 additional beds will be needed due to the rapidly increasing visitor growth. The resulting idea now is to take account of the optimal conditions for investors, especially in the Philippines, and to build an already existing 5,000 m² of Land on the famous Holiday Island "Panglao Island" in "Walking Distance" to the famous Alona Beach, a mixed concept of a Hotel and a Resort with the security for investors. Same Project to be realized as a Condominium Complex, a so-called "Condotel".

 

1.6 ORGANIZATION AND STAFFING

The following Staffing Positions are needed for:

A. Roman Empire Panglao Inc.

will develop and construct the Condotel and all its Facilities needed. #1: Roman Empire Panglao Inc.: PRESIDENT

This full-time position will handle the Development and Construction of Roman Empire Panglao Condotel.

#2: Roman Empire Panglao Inc.: CEO

This full-time position will handle the Construction Crew and all Permit issues. This person will report to the President

#3: Roman Empire Panglao Inc.: Treasurer

This full-time position will handle all financial issues and the Sales of the Condominiums. This person will report to the President and CEO

B. Roman Empire Panglao Hotel Resort Inc. will operate the Hotel Business.

#1: Hotel Resort General Manager

This full-time position will lead the head of Staff as Laundry, House Keeping, Maintenance and Reception. This person will report to the President and CEO.

# 2: Hotel Accounting Manager

This full-time position will handle all accounting works and the billing of Online Travel Agencies (OTA’s). This person will report to the General Manager.

# 3: Hotel Online Sales Manager (Receptionist)

This full-time position will handle all online bookings sales and its staff (receptionists). Furthermore, the staff is responsible in identifying sales opportunities and converting these opportunities to actual sales. This person will report to General Manager.

 

#4: Hotel Online Marketing Manager This full-time position will lead marketing staff in identifying target customer groups/markets and conducting online advertising/marketing efforts to maximize traffic to the Hotels marketplace. This person will report to the General Manager.

1.7 SCHEDULE This section is intended to provide a high-level framework for implementation of the product or service being considered. This section is not intended to include a detailed schedule as this would be developed during project planning should this initiative be approved. This section may include some targeted milestones and timeframes for completion as a guideline only. The Roman Empire Panglao Inc.’s online sales campaign for Condominiums is expected to take place six months before its Hotel Resort will be operational and launches its “Soft Opening”. The much-needed e-commerce platforms will be launched now as well as many of the foundations for this platform, such as high-speed internet and web server capability, are already available. The following is a high-level schedule of some significant milestones for this initiative: May 26, 2016: Security Exchange Commission Corporation Approval September 23, 2016: Environmental Clearance Certificate Issuance December 1, 2016: Civil Air Aviation Clearance Issuance February 1, 2016: Initiate Roman Empire Panglao Condotel Project March 1, 2017: Building Permit released March 15, 2017: Construction Start August 1, 2017: Completing of Building 1with 18 Hotel Rooms September 1, 2017: Completing of Reception Building February 1, 2018: Project kickoff meeting January 15, 2018: Online Sales Website Design with Sales Functionality March 1, 2018: Completing of Pool 1 April 30, 2018: Completing of Garden and Relaxing Area July 15, 2018: Completing of Restaurant Building October 1, 2018: Completing of Building 2 with 24 Hotel Rooms November 1, 2018: SOFTOPENING Each Project team received a created a detailed schedule including all tasks and deliverables to stay on the scheduled target.

 

1.8 FINANCIAL PROJECTIONS The price for a Condominium (Hotel Room/Suite) starts at 2,95 Mio. PHP* (about 59.000 Euro or 67.000 US$, depending on the exchange rate) plus 7.5% real estate tax and 12% VAT. Special conditions: � Preselling-price for the first 10 Suites: 2.95 Mio PHP (47.500Euro/55.550US$; further 10 Suites: 3,20 Mio PHP (50.000 Euro/58.500 US$, Suites 21-40 = 3,45 Mio PHP (54.200 Euro/63.500 US$)* (depending on exchange rate) � All Suites are run as Hotel Business. All owners are allowed to use their Suite for 30 days / year. � The owners of the Suites receive either a fixed 5.5% basic dividend (annual distribution of interest/interests) or can choose to benefit from Hotel Earnings and will participate on the growth in value of real estate through the tourist development on the island. 10% value growth/year is the lowest value of what Panglao experts predict. � Completion price incl. Plot of the entire facility: 280 Mio PHP = about 4,5 Mio Euro/5.4 Mio US$ � The 5.000qm property is already available and is capitalized as an own-equity in the income statement. � Construction has already begun. Soft Opening planed for November 2018 � The construction period for the entire project is approx. 2.5 - 3 years. � Construction phase 1 has already been completed. Phase 2 has begun. � The completion date is planned for the 2nd half year 2019. � The advance sale of the Suites had begun after Issuance of the License to Sell from HLRUB in November 2017. � Only 50 % or 40 Suites will be offered to the private public market.

 

 

Roman Empire Panglao Hotel Resort

80 Rooms Revenue for Investor for his Suites

OCCUPANY RATE in % 40.00

SUITE RATE (Low Season) 2,600.00

1. Gross Room Revenue of 80 SUITES 29,952,000.00 Less Sales Discount (Agoda; Booking.com, others; 20%) 5,091,840.00 2. Gross Room Sales 24,860,160.00 Less 25% Management Fee of Gross Room Sales (Administrator Fees) 6,215,040.00 3. Net Room Sales 18,645,120.00 Less Operating Expenses Salaries and Wages ꞏ Duty Managers and Supervisors 1,450,000.00 ꞏ Administrative / Finance / Accounting / Internal Audit Staff 650,000.00 ꞏ Housekeeping (Building Complex A + B) 685,000.00 ꞏ Front Office 650,000.00 ꞏ Maintenance / Engineering 240,000.00 ꞏ Security Services 725,000.00 Bonuses 60,000.00 Repairs and Maintenance Expenses 285,000.00 Laundry Expenses 148,000.00 Supplies 84,000.00 ꞏ Office 85,000.00 ꞏ Housekeeping (Building Complex C + D) 125,000.00 ꞏ Maintenance Supplies 144,000.00 Utilities - ꞏ Telephone, WIFI, TV 288,000.00 ꞏ Fuel 85,000.00 ꞏ Electricity 1,250,000.00 ꞏ Water 150,000.00 Realty Taxes / Licenses/ Business Permits 196,000.00 Legal Fees 54,000.00 Insurance 350,000.00 Other Miscellaneous Charges, CPA (Certified Public Acc.) 150,000.00

Less Total Operational Expenses 7,854,000.00

 

4. Gross Operating Profit 10,791,120.00 Less Income Tax 32%) 3,453,156.00 5. Net Profit after Tax 7,337,962.00 6. Income from 30 free night stay (pecuniary advantage) 6,000,000.00 NET PROFIT FOR DIVIDEND PAY OUT TO SUITE OWNERS 13,337,962.00 Total Number of SUITES 80.00

6. Net Profit for Dividend Pay-out to each SUITE owner 162,658.00

Cash Investment per SUITE 2,950,000.00

Money return rate for Cash Investment 5.50

1.9 FINDINGS AND RECOMMENDATIONS We believe the following information is important to investors because they provide valuable information about the Philippines many favorable conditions.

General Information and Facts: The Philippines consists of 7107 islands and has countless numbers of dream beaches. The Philippines is characterized by Western Spanish and American colonial times. The official language is English. The population currently counts about 100 million inhabitants. Population growth is enormous and rises by 1.73% per year. Accordingly, the demand for housing is huge which is one of the reasons for the rising price of the prospering real estate market. The average age is 24 years, in Germany it is 44 years. Political: The Philippines - with 85 million Catholics the largest majority Catholic country in Asia - sees itself as part of the western community of values. The country is democratically composed and has a presidential system with two chambers, the House of Representatives and the Senate. The state is divided into 14 regions and two autonomous areas with limited self-administration, as well as the metropolitan metropolitan area Manila. Economical: For several years now, the Philippines has recorded an above-average economic growth of 7% to over 8%, even in Asia. The Philippine budget is largely balanced by

 

improved tax revenues, also as a result of combating tax evasion. Public infrastructure investments ("Public Private Partnerships") are intended to improve employment opportunities and create new jobs, some of which have also been successful. Nevertheless, unemployment and underemployment are still around 15%. The gross domestic product of 2015 was about 300 billion US $, about 10% of the economic power of the Federal Republic of Germany, but almost twice as high as that of Portugal and Greece. The annual growth is 7% - 8%. The Philippines has a very strong service sector due to the widespread knowledge of English. Above all, call centers working for American companies are very numerous in the Philippines. Other services are accounting and software development, as Philippine graduates are very well educated in these areas, but still have fairly low salaries. Project specific Information and Facts: The "Roman Empire Panglao Condotel" is an exclusive, high quality Hotel Resort Condominium Complex, is located on a plot of approx. 5,000 sqm on the holiday island Panglao (province of Bohol), only about 15 walking minutes from the well-known Alona Beach. A total of 80 Condominiums (Suites) each with 28 square meters will be built. If desired, two Suites can be put together as an apartment and have a kitchen and living room, as well as a separate bedroom, connected by a door. Based on a Roman "Domicilium Atrium", the "courtyard" will create a pool landscape that harmoniously fits into the surrounding tropical garden as well as a children's playground. The complex also includes a separate Reception Building from where the hotel is managed. Furthermore, there will be a separate restaurant, a wellness center, a diving center, a vehicle rental, a Shuttle Service to Alona and White Beach and other shops in the complex. However, in order to ensure a good cost transparency and low operator costs for the Condotel to optimize to profit for its owners, this area is completely detached from the hotel business and is operated privately so that earnings or loses will not affect to condominium owners. All suites as well as the facility itself will have satellite TV and high-speed Wi-Fi.

 

The Roman Empire Panglao Condotel: The Roman Empire Condotel is designed as a two-story building complex. The resort will have 80 fully furnished Condos, the layouts are approximately 28.00 square meter (about 312 square feet). Facilities of the Complex: Four (4) large outdoor pools, a waterfall, a Roman-style fountain, spa, child-care service, diving base, restaurant, boutique and other facilities such as. A multifunctional area and reception. WIFI is everywhere to receive. Specification of the suites: Spacious, modern designed individual suites, on ground floor with terrace and direct access to the pool. On the first floor, the suites also have a balcony with stunning views of the pool and the tropical garden. All suites offer space for 2 adults, flat screen TV, modern inverter air conditioners, refrigerator, and partial kitchen preparation, built-in wardrobe, table and chairs, loungers (on balcony or terrace) and king size bed or 2 single beds and have a central hot water supply. Finished rooms:

Hotel Room Apartment

 

 

 

Data and facts • The purchase price for investors of a condominium is during presale currently 2.95 million pesos plus 7.5% real estate tax and 12% VAT • Special conditions: • Pre-sale price for the first 10 Condos is 2.95 million Peso, for the next 10 Condos it is 3.20 Mio. Peso then for the following 20 Condos 3.45 Mio Peso and for the last 20 Condos it is 3,65 million peso (plus real estate tax and VAT) • A maximum of 10 Condos can be “connected” together as an apartment and must be included in the rental for 10 years to the hotel operator. The selling prices of an apartment (2 Condos with kitchen and living room) is 6.65 million Peso net. • Estimated completion cost of the entire facility (estimated): 280 million pesos • The approximately 5,000 square meters of land is already owned • The start of construction was 1st of March 2017 • The estimated construction period for the entire project is approx. 2.5 years • The planed completion date shall be 2nd half year 2019 • The pre-sale of condominiums (suites) and apartments starts summer 2017 • All condominiums (suites) shall be constantly maintained by the hotel operator and are subject to permanent maintenance and care.

Roman Empire Hotel Resort: Building 1