Transcript Morocco Film City

Morocco Film City
Feasibility Study
Prepared for:
Tritel Management Group Inc
and
Morocco Film City s.a.
Prepared by:
Grant Leisure
Wyatt Design Group
ILM-THR Portugal
WSP
Baker Wilkins
SMC Leisure
Steve Forest & Associates
Global Universal
May 2007
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Project Objectives
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The Morocco Film City project aims to create a resort community offering world-class sports and entertainment facilities, around a working
motion picture production studio.
The expanding tourist market, particularly the second home market, has made Marrakech an attractive place for real estate development.
To attract international tourists as well as local residents, the resort will be designed to embrace Moroccan culture.
The 280 hectare site, with an option on a further 200 hectares, is just 8 kms from the centre of Marrakech, rapidly becoming one of the
world’s leading tourist destinations.
Bordering the desert and with stunning views across the city and of the Atlas Mountains, the mix of Moroccan architecture and culture
blended with modern entertainment and recreation will offer an exciting lifestyle and environment for residents and visitors alike.
The City will comprise of:
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2,380 apartments, riads, condominiums and villas
A resort including 3*, 4* and 5* hotels with a total of 750 bedrooms, plus a spa and sports and conferencing facilities.
A film studio complex with four sound stages, studios, theatres, back lot, film offices, cutting rooms, editing rooms, computer imagery facilities, film
processing and equipment centres, plus 50,000 sq ms of ancillary commercial development.
A film school, joint ventured with Marrakech University
Leisure activities including a film studios tour, pleasure gardens, clubs, cinemas, museums and festivals
A mix of European and traditional Moroccan shops, cafes and restaurants comprising of 24,000 sq ms.
An Institute of Moroccan Arts and Crafts
Sports facilities including a championship golf course and water sports.
The core aim of the project is to create, for the first time in Morocco, a sustainable centre for all aspects of the movie industry. Movie
production follows finance. Therefore to attract motion picture production to the Film City, TMG has devised a film financing package to be
used with major US studios and independent producers. TMG will provide €360m of financing over a first phase period of 5 years which will
be matched with €500m provided by third party film investors.
Other aims of the project include:
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Creating a world-class leisure and event destination.
Working in partnership with local and national government to encourage tourism and create jobs.
Being an exemplar of environmental responsibility using recycled water and renewable and non-polluting energy.
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Introduction
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This report presents the full potential build out of the Morocco Film City resort.
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Whilst some components may be built in one go, others may be phased in over a number of years.
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During the next phase of work it will be necessary to identify the optimum first phase development and also to value engineer the costs to
produce the maximum return and minimum risk.
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Cost estimates and feasibility assessments have been prepared for the full build-out of phase 1 over a period of approximately 5 years. The
initial proposals made by developers of a motor racing circuit, an ATP tennis centre, an athletics club and a boutique style hotel have all been
moved to phase 2 because of feasibility. Although they are discussed in this document they have been neither included in the costs, nor in
the revenue, nor in the value of the project.
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The financial projections are in current (May 2007) figures and no allowance is made for either inflation or ‘real’ increases in capital values.
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Financial Summary
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The following report presents financial feasibility appraisals for the core components of the project.
Presented below is a preliminary valuation based on the following assumptions;
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The studio complex including the studios, studio tour and 50,000 sq ms of ancillary commercial spaces will achieve a sales yield of around 7% (a
stabilisation year EBITDA multiple of 14).
The Medina retail, restaurants and entertainments (including the proposed Moroccan Gardens theme park) will achieve a similar stabilisation year
yield.
The resort components including the 3 hotels, spa, golf course and sports facilities will achieve a yield of 8% (EBITDA multiple of 12.5)
The residential will be part sold on the open market, primarily as holiday homes
The net equity value to TMG of the Films produced through the Film Fund totals €360m.
On the basis of the funding structure set out below on page 7 the net value of the project to TMG will be diminished by the repayment
obligation to BMCE Bank of €100m of loan and say €20m of finance fees.
Accordingly the consulting team concludes that the net value of the project’s economic feasibility is €1,177,000,00.
Including fees (10%) and land acquisition (€11m), the total development cost is estimated at around €586m, excluding financing costs.
Value engineering in later stages may enhance these figures.
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Project Team
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The development team behind the Morocco Film City project is Tritel Management Group Inc (“TMG” – an offshore SPV) and its wholly
owned Moroccan subsidiary Morocco Film City s.a (“MFC”).
Key participants include:
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David Lowe , founder of Beresford Lowe & Co, a legal company specialising in media, and president of Europe Vision plc, a UK listed company which
has supplied €160 for the project. David has participated in the production and financing of over 500 movies including Platoon, The Last Emperor,
Terminator, Schindler’s List and Ghandi.
Sanje Tandam, president of TGM Music and formerly Head of Warner Brothers music and Publishing in Scandinavia.
Ahmed Benkirane, former senior Moroccan Government Minister, ambassador and president of the Moroccan Confederation of Employers (CGEM).
Simone Haggiag, son of Robert Haggiag the former owner of Warner Brothers and one of the great international film producers. Simone has
successfully combined careers in finance, film production and music.
Mel Morris, an internationally known developer of shopping malls, villas and golf in Europe, the United States and Asia.
Castro Khatib, initiator of the blue print vision and major shareholder and provider of finance for Europe Vision.
Robert Haggiag, former owner of Warner Brothers and current owner operator of film studios with his son Simone.
Michael Solomon, industry guru for television and electronic media, former owner of Lorimar Telepictures and president of international television for
Warner Bros.
Michel Thoulouze, former operations president of Canal+.
‘This project will bring Morocco a real movie industry through the construction of state-of-the-art studios and a centre of
production for all related sectors of the industry’
Ahmed Benkirane
‘Morocco has a long and rich history as the location for many huge international films. We will build on this experience to create
a vibrant film industry centre. The profit from joint ventures in real estate and tourism within the project will give us the financial
ability to invest in long term and permanent future film making in Morocco’
Castro Khatib
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Consents, Approvals and Agreements
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The project aims to be a centre piece of King Mohammed ’s long term plans to develop Morocco as a tourist destination. To achieve this the
government are committed to developing and supporting the necessary infrastructure.
An agreement in 2001 between the government and the employer’s union (CGEM) under the title ‘Tourism: vision, challenge, determination’
outlines the objectives of attracting 10 million tourists to Morocco by 2010, 3.5 million of them to Marrakech.
To encourage tourism, particularly mid and upper tourism brackets, Morocco has entered into Open Skies Agreements, improved
infrastructure and made property buying by foreigners much simpler and more attractive with no tax on rental income for the first five years,
inheritance tax and no capital gains once the property has been owned for 10 years.
Land is at an enormous premium in and around Marrakech, not least because of the difficulty of establishing ownership. Under the Islamic
‘melkia’ title system it is necessary to get signed approval and acceptance of sale from all members of the owning family. Much of the land
around Marrakech where title is easily proved has already been bought or owners are unwilling to sell, driving prices ever higher. The MFC
site is owned by the government making the purchase far simpler and there can be no question of title.
There is an agreement to acquire a first section of land which is aprox 280 hectares (including perimeter and access highways which will be
part of the development but which will remain state owned). There is a non-contractual exchange of letters of understanding that should the
project be achieved reasonably within the time frames indicated by TMG then at any time TMG may acquire a further 200 hectares to the
north of the site for what is called the second phase development which will include the ATP tennis and the motor racing circuit desired by the
state authorities. The understanding is that the calculation of pricing will be on the same basis as the phase 1 land.
The price of the land is based on zero cost for land used in connection with the film studios, theme parks, sports facilities and green spaces,
which the government wishes to encourage with the land being regarded as its contribution/incentive. The agreed price for the phase 2 land
is €11m, the equivalent of approximately 9% of its open market value.
The site is empty except for electricity pylons (which will be buried at the government’s expense) and there are no rights of way or
easements.
The neighbouring military site will move in 2009.
Planning permission has been granted for an 18.5% construction density excluding the film studios and theme parks (excluding their offices
and retail).
The government has committed to build exit roads from the two motorways (due for completion in 2008) to the west and east of the site,
feeding into the road to the south of the site which will eventually form part of a ring road around Marrakech. They have further committed to
build a new train station and access road for shuttle buses close to the site.
The government is also currently constructing a large sewerage treatment plant close to the south-west corner of the site and has agreed that
the project will be allowed to use this free of charge and will draw, as a first right, all treated water therefrom. This will be treated in a second
MFC plant adjacent to the government’s plant, ensuring that the site (including its golf course) will be completely self-sufficient in water.
The value of the infrastructure that the government has agreed to provide has been estimated at €54m.
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Funding
In support of the project TMG has the following funding available:
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In respect of the €586m required for the capital cost of build-out:
– 350 million euros from TMG shareholders in cash and in guarantees.
– 82 million euros by way of discounted land value made available by the Dept of Inward Investment of the State of Marrakech
– 54 million euros of infrastructure provided by the Central Government of Morocco
– 100 million euros loan facility with BMCE Bank
Total = 586 million euros
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In respect of the €360m for the film fund:
– 160 million euros provided by Europe Vision Plc to TMG
– 200 million euros provided by Lombard International to TMG
Total = 360 million euro
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Site Location and Accessibility
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Set at the foot of the Atlas Mountains and bordering the dessert
the location has year round sunshine set in stunning views.
The site is just 8 kilometres from the centre of Marrakech, easily
accessible by taxi, bus, coach or private car.
The site is well served by new motorways linking Marrakech with
Casablanca on the north-eastern side (due for completion in
2007) and Agadir/Essaouria on the north-western side (due for
completion in 2008).
The road to the south of the site forms part of the ring road being
built around Marrakech, which links directly to the airport.
The railway line from Tangier and Casablanca passes less than
one kilometre to the east of the site. The line is being upgraded to
eventually allow for the introduction of TGV trains
A new train station will be built close to the site with a direct
access road to the site for shuttle buses.
Marrakech is serviced by direct flights from the main European
markets – the UK, France, Holland, Italy, Belgium, Germany,
Switzerland and Spain.
The introduction of low cost carriers including EasyJet, Atlas Blue,
Myjet, Jet4You, Thompsonfly and Ryanair have increased tourist
numbers (up 39% from the UK last year) and are making
Marrakech an increasingly popular holiday-home destination.
Marrakech airport is being expanded to accommodate up to 10
million passenger movements (from 2.5 million in 2006).
Morocco Film City
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The Site
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Just 8 kms from the centre of Marrakech, the site is bordered to
the south by the road RP9 for a length of around 1,800ms.
To the south and south-east the plot is almost flat and mainly
covered with rocks on the surface, on top of a crust of limestone.
To the north the land rises by 15metres. In the west and northwest a series of small hills rise to a height of 35 metres.
The average maximum temperature rises from 18 degrees in
December and January to 37 degrees in July.
Total annual rainfall averages around 240mm.
The prevailing wind is from the east.
The main constraint is the electricity pylons, but these will be
buried at government expenses.
A report describing the infrastructure requirements of the project
has been prepared by WSP.
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The Consulting Team
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Grant Leisure has been engaged to create a master plan for the site and to assess its financial viability.
This report presents:
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A summary of the proposed vision
Master plan drawings, sketches and benchmark images
Market analyses
Outline financial feasibility appraisals and
Capital costs of the MFC project.
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The report has been prepared by European and US specialists in the various aspects of the project, supported by government agencies and
local tourism and project management consultants.
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The project team includes:
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Grant Leisure, international leisure development consultants with offices in London and The United States
ILM-THR - a consultancy providing project management service to clients in the hospitality and resort development sectors with offices throughout
Europe.
Wyatt Design Group – US based specialists in the design and development of theme parks. WDG has worked on movie-themed projects for
Universal Studios, Warner Bros, Viacom, Paramount and 20 th Century Fox, the designers of parks
Baker Wilkins - cost and project management consultants with worldwide experience in almost every construction and engineering sector.
Arthur Hills/Steve Forest and Associates, championship golf course designers.
Roland Dieterle, a renowned architect behind many projects including Hydropolis, the world’s first underwater hotel located off the coast of Dubai.
Representatives from Savills, the international real estate agency.
Global Universal Inc, the motion picture valuation specialist from Los Angeles.
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WSP has advised on infrastructure requirements and costs.
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The project team is led by Andrew Grant, CEO of the Grant Leisure Group who has over 35 years experience in the development and
management of movie themed parks and attractions in the United States, Europe and Asia.
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The Vision
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Master Plan
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The following section presents
drawing, images and descriptions of
the key components, namely:
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The Studio complex including
Studio Tour attraction
The Moroccan Gardens themed
amusement park
A Medina incorporating 20,000 sq
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contemporary retailing, 4,000 sq
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multiplex cinema and club.
A 300 bed 3 star hotel and 250
bed four star hotel in the Medina.
A 200 bed resort hotel complex
including spa, golf, conferencing
and sports facilities.
2,000 apartments and
condominiums
380 luxury villas around the golf
course.
Sports and events facilities.
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Master Plan (with legend)
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Views Showing Topography
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Studio Complex
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