PRICING & RENTAL

Why would the developer offer such heavily discounted purchase prices?

• A typical developer in the UK makes a profit by selling property at a margin higher than the cost to build it. However, this Developer has a different approach. Their profit is generated through a share of the ongoing rental income from holiday-makers over a number of years following completion.

Who owns the unit? How is the unit rented out?

• All units are freehold so an investor owns the property and the land, or a share of the land in the case of multi- storey units. As part of the contract, an investor agrees to rent the unit to holiday makers by using the hotel management company as their letting agent. This way the hotel chain and developer realise their margin through their share of the ongoing rental income.

UNIT SELECTION & RESALE

Does the location of the unit within the resort influence the rental returns? What happens if a particular unit is below the resorts’ average occupancy?

• The resort facilities will be distributed throughout the whole site, not isolated in a single area. Therefore on each resort, all facilities will be easily accessible. The importance of specific unit location, then, is of less relevance than it might be in a typical resort.
• All units of the same type are pooled in order to assess rental income and occupancy levels. This is independently audited so that the combined rental income type is split equally for all units of the same type. As a result the specific location of a particular unit on the site does not impact the investor’s rental returns.

How does an investor select a unit?

• On each resort the units are priced according to their type and number of bedrooms. An investor selects the type of unit required at reservation stage (e.g. 1 bed studio, 3 bed apartment etc).
• For reservations on resorts where the developer already has detailed site plans available, investors can select their specific plot. ln the case of pre-launch reservations, allocation of specific units is agreed between the investor and the developer once the detailed site plans have been finalised. The date of reservation determines the order of priority for unit selection.

Can an investor sell their unit prior to completion? What is the process to do that?

• Yes, the units can be resold at any time. The developer has a resale facility available to all investors. For maximum return on investment, it is recommended that an investor does not re-sell before 2 years post completion. Re-sales 2 years after reservation can also be profitable but are not as lucrative. Many investors are likely to retain the properties to continue to benefit from the rental income generated.

INVESTOR PROTECTION & SECURITY

What security/protection is in place for an investor?

• The developer conducts an in-depth research project including a feasibility study (at costs between £250,000 - £500,000) before the land is even purchased to assess potential returns for both themselves and investors.
• The developer acquires both the land and outline planning permission before the sales launch of the units, typically 2 years before.
• The value of the site is always higher than the monies paid to purchase it, providing additional security.
• An investor’s money is always used towards the development of the sites, funds being broadly allocated proportionally to each resort.
• The investor’s transaction is processed through the developer’s UK sales and marketing office.
• A robust contract is provided by the developer for each investor, a copy of which is available prior to any commitment requirement.

What insurance arrangements are in place to protect the developer & investor? (e.g. in the event of natural disaster)

• The developer has insurance throughout the build stage of the development. In the event of a force majeure, a condition of the contract is that this should result in no more than a 6-month delay.
• The hotel operator will have buildings insurance to cover the units post-build (included in the monthly maintenance fees).
• The hotel operator will have loss of earnings insurance to replace lost income so an investor’s 50% share of rental income is protected.

What happens if an investor cannot secure a mortgage at completion or if the value of the property decreases?

• The developer will arrange financing for an investor for up to 70% loan to value.
• Property values in the Caribbean have not decreased in over 60 years, since records began.
• As the investment properties are commercial units, not just bricks and mortar, they are valued based on the income they generate. A unit will, therefore, likely retain a higher value than an equivalent normal residential unit.
• The value of the units is underpinned by the value of the resort as a whole, which includes the added value of all the extra facilities.
• According to Thomas Cook recent demand for 4 and 5 star holidays in the Caribbean has increased by 10% and 14% respectively; if demand is high then prices will likely remain high.

What are the terms of the mortgage?

• Details are to be confirmed. Based on current negotiations and previously agreed development financing, expectations are about less than 7% over a 20 to 25 year-term.

How is an investor protected if the completion of the development is delayed?

• The developer has a contract with the tour operator for an agreed completion date. This date is for the resort to be fully completed to 5 star standards. The tour operator will be booking guests for the resort 12 months prior to completion date. As both the developer and the tour operator have a vested interest in receiving rental returns from the resort as early as possible, there is a strong incentive for completion to be achieved on schedule.
• The contract states that if the completion is delayed by more than 12 months, then an investor will be refunded the deposit (less any legitimate expenses and finance payments).