The 2 nd Annual Indonesia Hotel Investment Conference 2014

1. Hotel Branded Residences The 2nd Annual Indonesia Hotel Investment Conference 2014 Bill Barnett, Managing Director C9 Hotelworks Grand Nikko Bali June 6, 2014

2. The Good • Funding – full development funding to completion irrespective of unit sales, or an existing property with units as an extension, or already in progress; • Ownership – freehold or registered land title; • Management – branded, international, or otherwise credible/ recognizable. Maintenance of unit inclusive; • Market – product proactively created to match requirements of pre-determined end user; • Investment: • Opportunity for strong ROI through rental yields and/or capital appreciation; • Pricing to comp set and with reasonable developers margins • Low completion risk due to full developers project funding • Financing available: bank or developer financing • Legal Structure – full due diligence pack and clear and thorough transaction documents; • Quality – strong partners and stakeholders across the board (developer, designers, contractors, consultants); • Tax / Revenue Structure – clear documentation on tax liabilities and treatment of rental revenues;

3. The Bad • Often have over reliance on unit sales to complete, but perhaps have fall back funding if required • Often are on leasehold tenures; • No international brand standard management and an only average attempt to show “new brand” or boutique management capabilities; • Product often created “reactively” based on developer or designers thoughts / ideas / preferences; • Often not flexible on rental management structure: i.e. mandatory vs. non-mandatory; • Often not 100% solid / clear in treatment of rental revenues; • Often difficult to generate a solid ROI as priced too high; • Financial Forecasting often done internally - subjective • Often difficult to derive capital appreciation because of lease tenure; • Often high perceived “completion risk” due to lack of clear developers funding or existing facilities on site; • Often unclear on tax obligations and rental revenues;

4. The Ugly • Often try to sell off plan with no funding in place; • Often utilizing strategy of not starting project until a certain number of unit sales completed; • Often are on leasehold tenures; • Often have poor or no management in place; • Product often created purely on developer preferences; • Often very week in Legal Due Diligence and Transaction Documents – selling on Booking Forms only; • Often extremely unclear in treatment of rental revenues; • Financial Forecasting almost exclusively done internally – highly subjective • Often high perceived “completion risk” due to lack of clear developers funding or existing facilities on site; • Often unclear on tax obligations and rental revenues; • Often unrecognizable stakeholders (developers, designers, management companies, contractors, etc.); • Often lots of hidden fees in transaction costs, taxes, ongoing maintenance costs, etc.

5. The Good

6. The Bad

7. The Ugly

8. The Good • Legian Beach, 112 Apartments sold out

9. The Bad • Brand new 3 Star Hotel • Selling Rooms for $24 per night • Front page Agoda assume 30% commission • Hotel takes $17 Gross

10. The Ugly • Selling Fast, 50% already completed • Overlooking Canggu’s last rice paddies

11. Details Details

12. Last Words