Morocco Film City

1
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

2
Project Objectives

• 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 worlds
  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
• 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
• 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.   

3
Introduction

• This report presents the full potential build out
  of the Morocco Film City resort.
• Whilst some components may be built in one go,
  others may be phased in over a number of years.
• 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.
• 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.
• The financial projections are in current (May
  2007) figures and no allowance is made for either
  inflation or real increases in capital values.

4
Financial Summary

• 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
• 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 projects 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.

5
Project Team

• 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
• 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, Schindlers 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

6
Consents, Approvals and Agreements

• 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 employers 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 governments
  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 governments
  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.

7
Funding

• In support of the project TMG has the following
  funding available
• 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
• 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

8
Site Location and Accessibility

• 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
9
The Site

• 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 north-west 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.

10
The Consulting Team

• Grant Leisure has been engaged to create a master
  plan for the site and to assess its financial
  viability.
• This report presents
• 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.
• 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.
• The project team includes
• 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 20th
  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 worlds 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.

11
The Vision
12
Master Plan

• The following section presents drawing, images
  and descriptions of the key components, namely
• The Studio complex including Studio Tour
  attraction
• The Moroccan Gardens themed amusement park
• A Medina incorporating 20,000 sq ms of
  traditional and contemporary retailing, 4,000 sq
  ms of restaurants and cafes, a 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.

13
Master Plan (with legend)
14
Views Showing Topography
15
Studio Complex