Investor Presentation • Jun 27, 2017
Investor Presentation
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Org. No. 914 892 902
Aheloy Beach Resort
June 2017
.
Black Sea Property AS ("Black Sea Property" or "BSP") has produced this presentation. Black Sea Property has made no enquires as to the correctness of the information provided to us by the developers of the Aheloy Beach Resort (the "Developers"), and we have not requested or taken part in any due diligence reviews for any of the projects discussed in this report:
Black Sea Property has relied primarily on information provided by the board and management of the Developers in written or oral form;
The information includes non-factual information with regard to forward looking information which intrinsically is subjective and based on "best judgment".
Accuracy and completeness of information:
Although Black Sea Property believes the information to be correct at the time of the issuance of this presentation, there is no certainty that the information is correct or that it is complete. It is fully possible that had Black Sea Property had access to other or more extensive information, the conclusion and information of the report could have been materially different;
The conclusions in this report are made on the basis of a number of important assumptions. Whereas these are made to the best of our ability, based on discussions with management and access to relevant information, there is no certainty with regard to the correctness of these assumptions. Even relatively moderate changes to our assumptions may lead to material changes in the conclusion of this report and the valuation of the developers and developments.
Black Sea Property judgment with regard to non-factual information:
Whereas the information provided to us has been the basis for the valuation and analysis, Black Sea Property has, as far as possible, evaluated the substance of the information independently and made its own opinion with regard to the implication of the information on the value of the developments.
Black Sea Property expressly disclaim any representation and warranty with regard to the content and conclusions of this presentation;
Black Sea Property will not accept any responsibility for the use of or reliance upon the information contained in this presentation whatsoever.
| Building | Number of Units |
Resort square meters |
Average unit size |
Other owners |
Doba 1 units |
EPOA owned units |
Aheloy Residence receivable |
EPOA sq. m estimate |
|---|---|---|---|---|---|---|---|---|
| N | 175 | 13,237 | 75.64 | 175 | 13,237 | |||
| M | 183 | 12,834 | 70.13 | 183 | 12,834 | |||
| $\overline{P}$ | 244 | 16,553 | 67.84 | 109 | 50 | 85 | 5,766 | |
| L | 306 | 18,800 | 61.44 | 8 | 284 | $\overline{14}$ | 18,308 | |
| $K^*$ | 100 | 6,300 | 63.00 | 100 | 6,300 | |||
| Total | 1,008 | 67,724 | 117 | 50 | 642 | 199 | 56,446 | |
| 167 | 841 | |||||||
| * Reduction according to new plans projected | 1.008 |
EPO Aheloy is the only secured creditor in the insolvency procedure. The assets being sold by the receiver include 3 groups of assets:
EPO Aheloy submitted the highest tender offers for the assets included in the first and the third group. EPO Aheloy has won the bids for groups 1 & 3, the receiver has approved a distribution account which is now appealed by third parties. For the group 2 assets the plan is for EPO Aheloy to submit a tender offer in the next auction, that will likely will take place during summer.
Zlatarsko EOOD has brought a claim against Aheloy Commercial for the amount of BGN 4'454'101.
The local court ruled in mid June 2017 that Zlatarsko needs to provide 4% of the claimed amount in order to move the process forward
EPO Aheloy believes that the processes will continue for some time but is confident that favorable outcome for both Aheloy Residence assets and Commercial assets will be achieved.
| FORECASTED PAYMENTS TO COMPLETE PHASE 1 (to June 2018) | EUR | |
|---|---|---|
| $\mathbf{1}$ | Landscape Construction Cost | 67,715 |
| $\overline{2}$ | Total organizational expenses / Architect, Planning, Engineers, Control / | 85,000 |
| 3 | Building "P" to be tourist operational | 1,190,000 |
| 4 | Building "N" to be tourist operational | 150,500 |
| 5 | Building "M" to be tourist operational | 802,003 |
| 6 | Resort fence and additional landscape facilities | 100,000 |
| 7 | Obtaining the Aheloy Residence assets | 635,000 |
| 8 | Obtaining the Aheloy Commercial assets | 103,020 |
| 9 | Sewage and EVN electrical connection | 600,000 |
| 10 | Restaurants and commercial areas | 650,000 |
| 11 | Bank Loan 2017 principal | 489,855 |
| 12 | Interest 2017 and H1 2018 | 362,407 |
| TOTAL | 5,235,500 | |
| FORECASTED CONTRIBUTIONS | EUR | |
| $\mathbf{1}$ | Cash | 240,000 |
| 2 | Payment from Black Sea Property | 1,250,000 |
| 3 | Payment from BB | 700,000 |
| 4 | "P" owners appartments contribution | 807,661 |
| 5 | Interest Secured Fund | 242,114 |
| 6 | Possible loan from Tour Operator "N", "M" & "P" | 1,500,000 |
| 7 | Receiver return to EPO Aheloy | 690,000 |
| TOTAL | 5,429,775 |
| FORCASTED PAYMENTS TO COMPLETE PHASE 2 | ||
|---|---|---|
| 1 | Building L construction cost | 3,384,000 |
| $\overline{2}$ | Furnishing units (298) | 745,000 |
| $\overline{3}$ | TOTAL for building "L" to be tourist operational | 4,129,000 |
| $\overline{4}$ | Building K construction cost | 1,386,000 |
| 5 | Demolition cost | 50,000 |
| $6\phantom{.}6$ | Furnishing units (100) | 250,000 |
| TOTAL for building "K" to be tourist operational | 1,686,000 | |
| 17 | Landscape Phase II | 500,000 |
| $\overline{8}$ | Pools and facilities | 1,500,000 |
| TOTAL phase II outside | 2,000,000 | |
Thank you for you attention.
The Burgas district is the beating heart of Bulgaria's property industry, with the Black Sea coast along the east of the country providing thousands of tourists every year with beautiful beaches at bargain prices.
In resort towns such as Sunny Beach, you will find a very small permanent population, as the strength of Bulgaria's beach towns lies in their booming numbers in the peak holiday months: during the summer, each resort sees its number of residents swell significantly, as vacationing Bulgarians and foreigners descend upon the area's hotels and rented accommodation. Budget tripping Brits are joined by Russians, Germans, French tourists, those from the Czech Republic, and other Eastern European countries such as Romania, Poland and Austria.
For overseas investors, Bulgaria's property market has always been tied to its tourism industry and the country's international appeal is as strong as ever: in March 2017, the number of foreign arrivals in the country rose 20.1% year-on-year, continuing a trend of rising overseas visitors.
The annual index from travel website Hoppa ranked Bulgaria's Sunny Beach as the cheapest holiday destination in the world. It is no surprise, therefore, that the total number of nights spent in all types of tourist accommodation is also on the up.
With Bulgaria's economy also strengthening, the result is a market that draws both holiday home investors and buy-to-let investors. Indeed, at a time when the UK's buy-to-let sector is tightening rules and raising costs, Bulgaria's low property prices and record low lending rates (at an average of 4.5%) are helping to fuel foreign interest. For British investors, the chance to offset the weakening of the pound since the country's vote to leave the European Union is particularly attractive.
Bulgarian capital Sofia is leading the rise in residential property transactions, but Burgas and other Black Sea areas such as Varna are also seeing sales growth of between 5 and 10%. On TheMoveChannel.com, Burgas made up 30% of all enquiries for Bulgarian real estate in 2016. The Bulgarian seaside is responsible for almost half of all investment activity. Bulgaria has been among TheMoveChannel.com's Top 15 most popular destinations for five of the last six months.
As well as the potential for rental income and the offer of an affordable lifestyle, capital growth is also reinforcing Bulgaria's property credentials: in Q4 2016, the country's house prices rose 8.1% year-on-year, compared to 2.4% growth in Q4 2015, and above the 4.7% average recorded in the EU.
Commercial property is also a particularly popular target for investors on TheMoveChannel.com, with the strong Burgas tourism market opening up affordable opportunities in the country's hotel sector.
In February 2017, official figures show that total revenue from nights spend by tourists in the country jumped 7% year-on-year. Revenue from foreign visitors increased 14%. Accommodation supply, on the other hand, decreased 2.3%, with the number of beds down 1%. With occupancy rates up 1.6 percentage points year-on-year, there is growing potential for improved revenue for commercial property investors. In Sozopol, for example, one hotel's occupancy rate has risen from 56% in 2014 to 59% in 2015, with a forecast of 70% for 2016.
Bulgaria has traditionally been a popular market among Russian investors and others from Eastern Europe. Today, a significant quantity of transactions are now carried out by domestic buyers and investors, a sign of how much confidence has grown in the nation's housing market. British buyers keen to find more affordable opportunities to counter the weakness of the pound are also looking to Bulgaria's tourist hotspots for profitable investments, both residential and commercial.
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