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					           SANTA ANA
                   MUNDO AGUILÓN                   14th November 2006

                   COSTA ALMERÍA, SPAIN

29% below                            Only 10% deposit
market value                                 Great leveraging
                                               opportunities
First class
golf development                              €2,564 per m2
                                             Only 45 minutes
All apartments                            from Almería airport
with sea views
Less than €26,000 down
      Executive Summary
      We are pleased to bring you a deal that has everything - prospect of capital growth, considerably
      under the market value and serious leverage - all in Britain’s number one second home destination,
      Spain, in the heart of its hot spot region of Almería.


      We’re very excited about Santa Ana. It is located 20 minutes from Mojacar, and being offered at
      €2,564 per m2 against the market price of at least €3,800 per m2.


      Santa Ana is part of the greater Mundo Aguilón golf resort, a high-end development offering
      2-bedroom apartments with underground parking and private terrace space, fantastic views of the
      golf course and of the sea just under 2km away. Sea views and a golf course location tend to add
      high premiums to property prices. In addition to these, there will be excellent facilities including
      golf clubhouse and tuition, communal pools, year-round security, shops, bars and restaurants and
      a hotel and spa to be built at a later stage. In short, it is planned as a top quality development.


      Santa Ana is part of a master plan which is funded by one of Spain’s foremost banks, BBVA.
      Furthermore, BBVA’s development arm is one of the active partners in the project.


      By far the best thing about Santa Ana is the financial package. The price is €256,400 (£176,828)
      for a 2-bedroom apartment, an amazing 30% under market value. With just a 10% deposit
      required and 90% payable on completion, the opportunity is there to use leveraging to great
      advantage. At a conservative estimate of 5% growth over 5 years, the value of your property could
      increase by 81%. This means a truly remarkable 810% return on your initial investment. And all
      this in a stable, mature market like good old Spain!


      Read on to find out more – we think this deal is a winner.




Spain - Santa Ana                                                         2
                                Deal Summary
  Key Points                    WHY COSTA ALMERIA? (PAGES 4-5)
                                Reasons why we think that the Costa Almería is a great place to invest.
  • Only 10% deposit required
                                LOCATION AND INFRASTRUCTURE (PAGES 6-7)
  • 30% discount                About the area and transport links.

  • €2,564 per m2               ABOUT THE DEVELOPMENT AND DEVELOPER (PAGE 8)
                                2-bedroom apartments on a golf development with sea views.
  • 70% LTV mortgages
                                SITE PLANS AND FLOOR PLANS (PAGES 9-10)
  • Assignable contracts
                                UNDER MARKET VALUE (PAGE 11-12)
  • 45 minutes from             On average 30% below market value.
    Almería airport
                                RENTAL COMPARABLES (PAGE 13)
                                Average returns for similar properties in the area.

                                DEAL STRUCTURING (PAGE 14)
                                10% deposit, 90% payable on completion; range of financing options.

                                SENSITIVITY ANALYSIS (PAGE 15)
                                LTV available and contingency.

                                COVERING YOUR COSTS (PAGE 16)
                                Rental yield forecast.

                                PROFIT FORECAST (PAGE 17)
                                Capital growth projections.

                                RETURN ON INVESTMENT (PAGE 18)
                                Equity increase due to capital growth.

                                PAYMENT TIMETABLE AND EXIT STRATEGY (PAGE 19)

                                TAX (PAGE 20-21)
                                Overview of tax system in Spain

                                MORTGAGES (PAGE 22)
                                We recommend Bancaja for mortgages, others available.

                                LAWYERS (PAGE 23)

                                CURRENCY (PAGE 24)




Spain - Santa Ana                                              3
          Why the Costa Almería?




          EXCELLENT CLIMATE                                                                                   RESTRICTED PLANNING
          The south coast of Spain has long been a magnet for northern                                        Having learned the lessons of over-development further
          Europeans seeking respite from cold, cloudy drizzle and                                             round the Mediterranean coastline, the authorities have
          when you look at the climate it’s not surprising. With an                                           clamped down on the planning permission process. Much
          average of 325 days of sunshine per year, the south eastern                                         of this region is protected national parkland with the
          corner of Spain enjoys beautiful year-round weather. It has                                         remainder being agricultural land. It is notoriously difficult
          a semi-arid climate with mild winters and long, warm to                                             to obtain change of land use permission, and all other
          hot summers and very low rainfall too. In fact, Almería                                             building requests have to go through a complicated and
          is reported to be the sunniest region in Europe, with an                                            time-consuming process at various levels of government
                                                                                                              – local and regional. It is not permitted to build on front-
          average 3000 hours per year1.
                                                                                                              line seafront land, any new buildings must be set back, and
                                                                                                              no building can rise higher than three storeys. This is good
          EASY TO GET TO
                                                                                                              news for the property investor as it restricts supply and
          South eastern Spain is extremely well-served for air                                                preserves the region’s natural beauty.
          travel. There are major airports at Almería, Malaga,
          Alicante and Murcia. It is possible to fly to the area
                                                                                                              IMPROVING INFRASTRUCTURE
          direct from all parts of the UK, with no need for a
                                                                                                              The Almería province will benefit enormously from
          time-consuming transfer in London. All the budget
                                                                                                              the upgrade of a stretch of road through the region to
          airlines fly to either Malaga (2 hours drive), Alicante
                                                                                                              motorway status. When completed in approximately 18
          (2 hours), Almería (1 hour) or Murcia (11⁄2 hours).
                                                                                                              months (mid-2008), it will create a high speed route to
          Flight time is approximately 21⁄2 hours.                                                            Valencia and Barcelona and onwards up into France. This
                                                                                                              will make travel in and out of the region much quicker
          GORGEOUS SETTING                                                                                    and will drastically reduce journey times to these attractive
          The province of Andalucia is a large one, and its eastern                                           cities, making it easier to explore other parts of Spain.
          end, the Almería region, is blessed with beautiful scenery.
          The Sierra del Aguilón (Mountains of the Eagles) rise up                                            BEAUTIFUL TOWNS AND PLACES TO VISIT
          to the north and gorgeous sandy beaches stretch out along                                           Andalucia is a stunningly beautiful region, jam-packed
          the Mediterranean. In between there are quaint hill towns                                           with fascinating historical sites, reflecting and celebrating
          and the famous, atmospheric “white villages” where it                                               hundreds of years of civilisation. Not-to-be-missed
          seems time stands still. Dramatic rock formations dot the                                           destinations include the Alhambra of Granada, the
          coastline and you might recognise places you have seen in                                           romantic and historic Seville, several nature reserves
          famous “spaghetti westerns”, and “Lawrence of Arabia”,                                              including the mountains of Sierra Nevada and Cabo de
          which were filmed in the region.                                                                     Gato-Nijar reserve. Mojacar was built as a Moorish hill-
                                                                                                              fort and its streets snake up the steep hillside, offering
                                                                                                              great views from the top. Dotted along the coastline are
                                                                                                              old Moorish towers, lookouts for sea-borne invaders.

          1. http://spainforvisitors.com/module-ContentExpress-display-ceid-110-meid-1054.htm?meid=1054


Spain - Santa Ana                                                                                         4
          Why the Costa Almería?




          GOLF                                                                LIFESTYLE
          The south of Spain has always attracted the keen golfer             Life in southern Spain is laidback and relaxed. Perhaps it
          with its excellent year-round temperature and challenging           is something to do with the weather, or maybe it is the
          and beautifully designed courses. There is plenty to interest       proximity to the beach, but life is lived at a slower pace
          players of all levels. In addition to the course at Mundo           there. In common with the rest of Spain, life should be
          Aguilón, there are several other courses in the area which          enjoyed, and spent happily with family and friends in
          offer variety to players of all standards.                           front of a cold glass of wine and a plate or two of tapas,
                                                                              or relaxing on the beach, or savouring the great outdoors
          ACTIVITIES (INCLUDING SKIING WITHIN 2 HOURS DRIVE)                  or just making the most of your absence from the rat race,
          This region of Spain is one of those places where it is             even just for a little while.
          possible to spend a morning on the beach and then enjoy
          an afternoon’s skiing in the Sierra Nevada, approximately
          2 hours inland. As well as golf – there are a couple of other
          courses in the area if you fancy a change from the course at
          Mundo Aguilón – there are the obvious attractions of the
          beach – swimming, boating (there is a marina at nearby
          Garrucha) and water sports. You can also go horse-riding,
          hiking, play tennis and enjoy a host of other outdoor
          activities, thanks to the pleasant weather.

          YEAR-ROUND RENTALS
          With its mild climate, south east Spain attracts visitors all
          year round. Golfers, in particular, relish the opportunity
          to play in the mild weather, compared to the heat of the
          summer. This means good potential for rental yields, even
          outside of the high season. On a recent site visit at the end
          of October, there were still plenty of people on the golf
          course, by the pool and in the sea.




Spain - Santa Ana                                                         5
         Santa Ana
         Costa Almería, Spain
          LOCATION
          Mundo Aguilón golf development is situated on the Costa
          Almería at the eastern end of the Andalucia region in the
          south east of Spain. At the foot of the Sierra del Aguilón
          range of hills, and just under 2km from the coast, the
          development will occupy a 200 hectare site, built around
          an 18-hole golf course.

          The Costa Almería consists of miles of sandy beaches,
          interspersed with rocky outcrops and hidden coves. The
          nearest seaside town is San Juan de los Terreros where the
          beaches are excellent for families as they are gently shelving.
          The town itself has good amenities and has recently begun
          upgrading its beachfront, including a brand new esplanade
          with wooden beach-side bars and restaurants.

          The coastline is unspoilt as large-scale and high-rise
          development is not permitted on the frontline, and no                 INFRASTRUCTURE
          building can rise above 3 storeys. This means that while
                                                                                FLIGHTS:
          there are plenty of tourist amenities, the area retains an
                                                                                The south east of Spain is extremely well-served for airports.
          authentic Spanish feel, with no shortage of friendly local            Almería is the nearest airport to Mundo Aguilón, and is
          bars and restaurants to while away a pleasant few hours.              45 minutes drive away.
                                                                                Other airports in the area include Murcia (90 minute drive),
          The ancient Moorish hill town of Mojacar is a short drive             Alicante (2 hours) and Malaga (2 hours). There are also plans to
          away. Popular with writers and artists, this settlement is            build a second runway at Murcia Airport to accommodate the
                                                                                demands of tourism.
          a warren of narrow streets lined with shops, boutiques,
                                                                                All the budget airlines fly from all major airports in the UK
          restaurants and small galleries. It is an attractive place            direct to one of these airports, removing the need for a time-
          to visit and has a weekly market, as well as colourful                consuming transfer in London.
          annual fiestas, the best known of which is                             British Airways, British Midland and Iberia also fly to the region
          “Moros y Cristianos” in June. 2km away on the coast is                from London airports. Flight time on average is 21⁄2 hours and
          Mojacar Playa, stretching for 9km along sandy beaches,                fares start from £40 return.

          with bars and restaurants to suit every taste. Just east of
                                                                                ROADS:
          Mojacar Playa is Garrucha, a former fishing village and later          Almería region is well served for roads and has had much
          a port where the metal from nearby mines was shipped,                 funding to improve and upgrade the network. The latest project
          where there is now a large marina.                                    is the upgrading of a section of road to fast motorway linking
                                                                                this area to Valencia, Barcelona and France. This is due to be
          Elsewhere in the region there is much to explore,                     completed mid-2008.

          including a large national park, Cabo de Gata-Nijar, a
                                                                                CAR HIRE:
          marine and land eco-system of great significance. It covers            Spain has an efficient high-speed rail network, but outside of
          a huge area south west of Mojacar. Also in the region                 the main cities, rail services are minimal. It would therefore
          are several systems of caves and an attraction called Mini            be advisable to hire a car on arrival. All the major car hire
          Hollywood, which celebrates the numerous “spaghetti                   companies are represented in Spain and you can expect to pay
          westerns” that were filmed in the region.                              around €240 for a week’s hire of a family-size car.




Spain - Santa Ana                                                           6
         Santa Ana




          LOCATION CONTINUED...
          Road networks in the area are good, with a stretch of              with many historic buildings and a charming old town.
          dual carriageway currently being upgraded to motorway              It has galleries, museums and good shopping facilities. It is
          standard. It will link the region with the motorway                even possible to take a ferry from here to North Africa.
          network to Valencia and Barcelona, and on into France.
          When this road is completed (mid-2008) it will slash               Almería is well provided with golf courses – Desert
          journey times to these fabulous cities. Madrid is currently        Springs, Playa del Este and Marina Golf are all within an
          around a 4 hour drive away. The city of Almería, the capital       hour of Mundo Aguilón. These offer challenges to all levels
          of the region, is an hour’s drive and is a bustling port,          of golfer and provide variety for the golf aficionado.



                    • Puerto de                               • Los Jurados
                      los Peines


                                               MUNDO AGUILÓN


                                                             San Juan de
                                                             los Terreros      •                                              N
                                                                                                                        W   �E
                                                                                                                            S

           MUNDO AGUILÓN                                                                    Location
                                                                                                                              N
           San Juan de los Terreros                  Seaside town with bars, restaurants etc - 2km
           Mojacar Pueblo and Playa
                                                                                                                        W   �E
                                                     Hill town with shops, boutiques and restaurants, and beaches – 20 minute drive
                                                                                                                            S
           Almería City                              1 hour by car
           Madrid                                    4 hours by car
           Almería Airport                           45 minute drive
           Murcia Airport                            90 minutes by car
           Malaga Airport                            2 hours by car
           Alicante Airport                          2 hours by car


Spain - Santa Ana                                                        7
         Santa Ana




          ABOUT THE DEVELOPMENT                                                ABOUT THE DEVELOPER
          Mundo Aguilón is a high-end golf development, which                  The Mundo Aguilón development is underway with the
          aims to be the best in the region. The 18-hole golf course           backing of Anida, the property development arm of BBVA,
          was started 6 months ago and has already been landscaped.            one of Spain’s largest banks.
          The apartment buildings are arranged around the course,
          offering views of the greens and fairways, as well as sea and         The architect for the Santa Ana section of Mundo Aguilón
          mountain vistas. The basic infrastructure of the site is well        is a firm called Arquivir, a well-established Madrid-based
          underway, roads have been laid and surfaced, streetlights            company who have enormous experience in all kinds of
          installed and a long cycle-circuit already completed which           building projects, all over Spain. The Mundo Aguilón
          skirts the whole site.                                               design is headed by Antonio Arrechea Fúster, a senior
                                                                               architect in the practice. You can visit their website at
          The development as a whole will benefit from the amenities            www.arquivir.com where you can view their extensive
          provided for the golfer. The main attraction is the course           track record, which includes residential and tourist units,
          itself, and residents will be offered preferential rates to use       apartments and schemes all over Spain, in addition to civic
          all facilities, including the clubhouse, the golfing school           and municipal work for a variety of public bodies as well as
          and shop. Each section of the development will benefit                commercial projects, hotels, schools and libraries.
          from a large communal swimming pool, shops, bars and
          restaurants. There will also be other sporting facilities,           The project manager for Santa Ana is Barry Haslam-Walker,
          including tennis courts and fitness centre. At a later phase          a quantity surveyor with 20 years of project management
          of the development a hotel and spa will be built. Owing              experience. His company’s website (www.novopro.com)
          to its proximity to the foot of the Sierra del Aguilón, it is        gives full details of their work and experience. He has
          easy to enjoy hiking in the hills, which offer great views of         extensive experience of the Spanish construction market
          the surrounding area. You may even spot an elusive eagle –           sector together with international experience on a wide
          these hills are named Mountains of the Eagle in Spanish.             range of development/construction projects throughout
                                                                               Europe, North/South America and the Middle East.
          The section of the Mundo Aguilón development we
          are offering is called Santa Ana. It will consist of 238
          apartments in total, with the great advantage that all of                   Price                        2-bedroom, 100m2
          these will be sea-facing, providing great views. There will be              Euros                              € 256,400
          ninety 2-bedroom apartments available to the investors,
          and these will be finished to a high standard. They will                   Sterling                             £ 176,828
          have underground parking, garden areas and the whole                 Exchange rate calculated at 1.45 euros to 1 pound sterling
          site benefits from year-round security surveillance. The
          apartments will be arranged in terraced “stepped” design,
          with each enjoying their own private outside area.




Spain - Santa Ana                                                          8
          Mundo Aguilón
                          W

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          Santa Ana Siteplan
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          The area marked in red indicates the development plot. The coast lies 2km south east of the plot.




          View from Santa Ana plot.


Spain - Santa Ana                                                    9
          Santa Ana
          Floorplans




          The above image shows a conceptual design for the Santa Cristina plot belonging to BBVA ANIDA, elsewhere
          in the Mundo Aguilón, designed by Antonio Arrechea Fúster.


               100m2 apartment




Spain - Santa Ana                                                10
          Financials
          UNDER MARKET VALUE
          An apartment in the Santa Ana development is a great                      to raise finance through early, discounted sales is
          investment because of the combination of two factors:                     diminished.
          a great discount (30% to market value) and the fact
          that only a 10% deposit is required. As you will see in                   However, as with all markets, individual situations
          the profit forecast on page 17, this combination could                     and conditions sometimes occur where a developer
          produce a return on investment of 800% within 5 years                     is happy to sell some of his property quickly and at a
          at just 5% capital growth per year.                                       large discount. If he has a high risk approach, this could
                                                                                    be in order to maximise his land buying and building
          Finding a suitable development and negotiating                            ability on multiple sites. If the developer has a low risk
          a large discount to market value is not an easy                           approach, he may wish to cover his downside by securing
          task in the emerging markets of Eastern Europe.                           steadfast financing through selling off-plan contracts. At
          In Spain it is twice as difficult, especially on golf                       Santa Ana the latter is true.
          developments with direct sea views. Demand for
          this type of property is still strong, the market in                      To verify the discount on offer from the developer, we
          Spain is mature and developers have access to                             can compare prices and values of other developments of
          excellent financing options, meaning that the need                         a similar nature. The following table shows a selection
                                                                                    of our comparables.

                                                   Playa Macenas-                               Lorca Golf                    Valle del Este
                                  Santa Ana                       Desert Springs2                             Marina Golf4
                                                     Los Patios 1                                Resort3                      Golf Resort5

           Building type          Apartment           Apartment             Apartment           Apartment       Apartment       Apartment

           Bedrooms                    2                    2                     2                 2               2                2

           Price                  € 256,400            € 422,950            € 279,000           € 294,496       € 243,480        € 210,000

           Living area (m2)           100                 100                   100                100              65              63

           Price per m2             € 2,564             € 4,230               € 2,790            € 2,945         € 3,746          € 3,333

                                 San Juan de
           Location                                     Mojacar                 Vera              Lorca          Mojacar           Vera
                                 los Terreros

           Sea view                   Yes                  Yes                   No                No               Yes             Yes

           Swimming pool              Yes                  Yes                  Yes                Yes              Yes             Yes

           Golf                       Yes                  Yes                  Yes                Yes              Yes             Yes

           Private parking            Yes                  Yes                  Yes                Yes              Yes             Yes




          1. http://www.imagineAlmería.com/playa_macenas/apartment__los_patios_2_bedroom
          2. http://www.imagineAlmería.com/desert_springs/apartment_2_bedroom
          3. http://www.imagineAlmería.com/lorca_resort_golf_and_spa/apartment_2_bedrooms
          4. http://www.rightmove.co.uk/viewdetails-4469241.rsp?pa_n=3&tr_t=buy&chnl=overseas
          5. http://www.inspain.tv/AllProperties/__property63522_4.html


Spain - Santa Ana                                                              11
          Financials




         When comparing property prices to determine market            At only €2,564 per m2, Santa Ana apartments are
         value it is essential to compare like for like – compare      30% below the average market value of €3,638
         apples with apples. The previous comparables show a           per m2. A discount of this magnitude locks in
         selection of golf course apartments on the Costa Almería      considerable instant equity. In fact with only 10%
         closest to Mundo Aguilón. However, sometimes factors          deposit it actually quintuplicates your equity! Buying at
         exist over and above simply the category of a property        discount also covers your downside – the market would
         that will affect its value. In the case of Spain, sea views    have to drop by the value of your discount before you
         play a major role in determining property value and           would begin to lose money, and to help ensure a quick
         conservatively add a premium of over 20% to property          sale, you also have the luxury of being able to pass on
         prices. This should be factored in when calculating           part of your discount when you come to sell.
         the average market value by adjusting the price per m2
         of properties without sea views, as represented in the
         table below:                                                  ALMERIA GOLF COURSES

          Calculating the discount             Price per m2
          Playa Macenas - Los Patios               € 4,230

          Desert Springs                          € 3,348*
                                                                                                   VERA
          Lorca Golf Resort                       € 3,534*

          Marina Golf                              € 3,746                                   MOJACAR

                                                                                 ROQUETAS
          Valle del Este Golf Resort               € 3,333

          Average price:                           € 3,638

          Santa Ana                                € 2,564

          Discount                                 30%
         * Conservative 20% adjustment due to non-sea views

                    A 2-bed 100m2 apartment normally worth €363,800 costs only €256,400.
                                        That’s a saving of €107,400!

Spain - Santa Ana                                                     12
          Financials
          RENTAL COMPARABLES
          The rental market on the Costa Almería is strong. With
          Spain remaining the number 1 destination for UK
          holiday-makers this comes as no surprise. There are a
          number of property management and rental companies in
          the area that can manage both the property and the rentals
          for investors. The resort managers have also offered this
          service and we are looking at the possibility of organising
          a rental pool for the investors. Regardless of this we will
          put you in touch with rental companies closer to the time
          of completion.

          As with the price comparables, to get a feel for the likely
          rental income, we can compare the current rack rates of
          other golf course apartments in the region:

                                                          Weekly
            Resort Name                  Type                          Season
                                                           Rate
                                                                                        With 320 days sunshine a year the Spanish season is
            Valle del Este       2-bed apartment            € 525        high           long. The high season stretches from mid-June to mid-
            La Torre golf                                                               September with two weeks at Christmas and two weeks at
                                 2-bed apartment            € 825        high
            development                                                                 Easter. Occupancy over these periods is always very high
            La Torre golf                                                               and rental rates are reflectively increased. The weeks either
                                 2-bed apartment            € 675        high
            development                                                                 side of the high seasons also tend to do better than the
            Valle del Este       2-bed apartment           € 600         high           remainder of the year, which does not benefit from such
                                    High season                                         high occupancy or rates.
                                                           € 656
                                      average
                                                                                        The following table represents the rental yield that could
             Marina Golf         2-bed apartment            € 203         low
                                                                                        be generated for a 2-bed, 100m2 apartment at Santa
            Valle del Este       2-bed apartment            € 220         low
                                                                                        Ana, taking into account both the high season with
                                    Low season                                          high occupancy and the low season with a conservative,
                                                            € 212
                                      average                                           lower occupancy.



           Season                             Occupancy              Total Weeks            Weekly Rate          Total Income           Yield

           High Season                            100%                      16                  € 656              € 10,500             4.10%

           Low Season                              40%                     14.4                 € 211               € 3,038             1.19%

           Combined Season                                                30.4                                     € 13,538            5.28%



          6. http://www.wttc.org/2006TSA/2006individual%20pages/spain.htm
          7. http://www.holidaylettings.co.uk/rentals/Vera/15440
          8. http://www.holidaylettings.co.uk/rentals/La-Torre-Golf-Resort/15297
          9. http://www.holidaylettings.co.uk/rentals/La-Torre-Golf-Resort/13631
          10. http://www.holidaylettings.co.uk/rentals/Vera/12751
          11. http://www.mojacarestates.com/longterm-lets/



Spain - Santa Ana                                                                  13
          Financials




          DEAL STRUCTURING
          10% of the property purchase price is due at reservation           Using a 100m2 2-bed apartment costing €256,400 as an
          and 90% at completion. To maximise leverage and returns,           example the figures could look like this:
          ideally this 90% would be covered with a mortgage. This
          would also mean that no extra capital need be contributed          Purchase value                          € 256,400
          by investors at completion. Unfortunately current mortgage
                                                                             90% due at completion:                  € 230,760
          lenders in Spain do not offer interest-only mortgages at a
          90% loan-to-value. An 80% LTV is achievable but 70%                Market value at completion:             € 363,823
          LTV is more common and easily accessible. So as investors
          how can we make this work?                                         70% LTV available at completion:        € 254,676


          The answer lies in the discount. Mortgage lenders in               The €254,676 mortgage that can be raised on the market
          Spain are prepared to lend on the valuation amount of a            value of the property would be more than enough to cover
          property, not just the purchase value. This means that as          the €230,760 due on the purchase.
          the development nears completion, the lending bank will
          value the property at its market value at the time and will
          then lend against it.

          In other words a 70% LTV mortgage on a bank valuation of
          the property at completion should cover the remaining 90%
          due of the purchase price:


          € 400,000

          € 350,000

          € 300,000                                30% Equity

          € 250,000         10% Equity
          € 200,000

          € 150,000
                               90%                     70%
          € 100,000
                               LTV                     LTV
           € 50,000

                    €0
                          Purchase Value          Market Value



Spain - Santa Ana                                                       14
          Financials




                                                                                                    The view from the Santa Ana plot facing west


          SENSITIVITY ANALYSIS
          There are two key variables upon which the success of this     greatly affect the market value of property. So although
          strategy depends. They are:                                    at the time of publication we believe to the best of our
                                                                         knowledge that the information these figures represent
             • Calculated market value                                   is correct, we recommend that all investors intending to
             • Achievable loan-to-value mortgage                         purchase with a mortgage have a contingency plan to cover
                                                                         any extra equity unexpectedly required at a later stage.
          The following tables represent how much ‘room for error’
          there is within our calculations.

           Sensitivity to Market Price
            Mortgage       Calculated   Break even
                                                    Sensitivity
            required      market value market value
            € 230,760       € 363,823      € 330,000        10%

          If the market value was 10% less than our calculated value,
          then with a 70% LTV mortgage the required amount
          could still be raised.

           Sensitivity to LTV
            Mortgage                      Break even
                          Targeted LTV                   Sensitivity
            required                         LTV
            € 230,760           70%        63% LTV          10%

          A 63% LTV mortgage on our calculated market price of
          €363,823 would also be enough to cover the remainder
          due at completion.
                                                                             View from the left side of the land looking north west.
          CONTINGENCY
          Investors should be aware that any market can decrease as
          well as increase and that external influences can sometimes




Spain - Santa Ana                                                       15
          Financials
          STAYING IN THE BLACK
          In any deal, an investor wants a property to stay cash      the three years that it will take for the development
          positive. This means that the rental income should cover    to complete.
          the mortgage payments. In this way the associated costs
          of using a mortgage are not incurred by the investor and    This investment is not about yields or generating income.
          the leveraging effect that it provides means the capital     It is about the massive capital appreciation, achievable
          growth makes your equity work a lot harder.                 through the generous discount, steady growth and
                                                                      effective leveraging, as covered by the next section.
          If the aforementioned mortgage strategy is adopted
          for a Santa Ana purchase, then 90% of the purchase
          price would be taken as mortgage. As the percentage
          of purchase value borrowed increases, the likelihood
          of covering the interest payments with rental yield
          decreases. However, there is strong rental demand
          for golf property in Almería and the added bonus of
          sea views means higher rental rates, and therefore the
          higher rental yield can be obtained – as demonstrated
          on page 13.

          The next table shows a breakdown of rental income
          versus mortgage payments for a 100m2 2-bed apartment
          costing €256,400. We have conservatively anticipated
          that 20% of rental income will go towards letting and
          maintenance fees.




           Property price                         € 256,400
           Borrowings required                    € 230,760
           Interest rate                             4%
           Annual payment                          € 9,230


           Expected annual rental income           € 13,538
           Costs (20%)                             € 2,708
           Net income                              € 10,831


          Rental income for a Santa Ana 2-bed apartment with
          a 70% LTV mortgage should cover the mortgage
          payments. As always, we prefer to stay conservative with
          the expected rental income. We have not incorporated
          the option that the rental rates might increase over




Spain - Santa Ana                                                    16
          Financials
          PROFIT FORECAST
          The south coast of Spain in general has already                                              and untainted hand on issuing building licences and
          experienced massive growth and it can in no way be                                           rezoning agricultural land. In fact it took the original
          considered an emerging market like those of Eastern                                          owner of the Mundo Aguilón land 14 years to get the
          Europe. Consequently the current capital growth                                              land rezoned from farm land to development land
          remains steady but low in comparison to some of                                              before he sold it.
          Europe’s younger markets. However, undiscovered and
          underdeveloped pockets do still exist along the coast                                        Current coastal capital growth rates in Costa Almería
          where there remains room for growth. The San Juan de                                         are around 7-8%1 p.a. The lack of current and future
          los Terreros area is one such place.                                                         supply, and the ever higher demand that exists for
                                                                                                       golf properties with sea views, indicate that the capital
          The little sea-side village has remained very authentic                                      growth for the Santa Ana development may be slightly
          and large development there has been restricted. This                                        higher than this.
          is partly due to lack of transport infrastructure (a new
          motorway expected to be completed in 18 months                                               The following table represents how growth in the market
          will vastly improve this) and also because the territory                                     will increase the property value of a €256,400 purchase,
          surrounding the area is protected national park land.                                        assuming a 30% discount to market value at variable
          Additionally, the local council has kept a vigilant                                          growth rates.


           Forecasted capital growth

            Capital                                               Predicted                                Property price increase from capital growth
                                Purchase price
            growth                                               market value
                                                                                                  Year 1               Year 2              Year 3              Year 4      Year 5
                5%                  € 256,400                       € 363,823                 € 382,014             € 401,114           € 421,170           € 442,229    € 464,340
               10%                  € 256,400                       € 363,823                 € 400,205            € 440,225            € 484,248           € 532,673    € 585,940
               15%                  € 256,400                       € 363,823                 € 418,396             € 481,155           € 553,329           € 636,328    € 731,777
          Forecast growth excluding transaction costs and tax over 5 years, assuming variable rates of capital growth per annum and assuming a €256,400 purchase.



          For cash buyers this would translate into the following profit:

           Forecasted return on investment

            Capital                                               Predicted                                     Return on investment for cash buyers
                                Purchase price
            growth                                               market value
                                                                                                  Year 1               Year 2              Year 3              Year 4      Year 5
                5%                  € 256,400                       € 363,823                     49%                  56%                  64%                    72%     81%
               10%                  € 256,400                       € 363,823                     56%                  72%                  89%                108%        129%
               15%                  € 256,400                       € 363,823                     63%                  88%                 116%                148%        185%

          Forecast ROI excluding transaction costs and tax over 5 years, assuming variable rates of capital growth per annum and assuming a €256,400 purchase.




         1. http://www.50connect.co.uk/index.asp?main=http%3A//www.50connect.co.uk/50c/articlepages/retirement_index.asp%3Fsc%3Doverseasretirement%26aID%3D14928




Spain - Santa Ana                                                                                  17
          Financials




          RETURN ON INVESTMENT VIA MORTGAGE
          Our four principles of successful property investing are: buying below market value; capital growth; adding value and
          effective structuring. We usually recommend that an investment benefit from at least two of these principles to really
          maximise returns. Santa Ana ticks 3 of the 4 boxes. It benefits from a great discount to market price, and value is
          added from the fact that it sits on a golf course overlooking the sea. Although the expected capital growth is average,
          it is compounded by the great deal structuring available. This means the equity you put into the property works
          extremely hard.


           Forecasted equity stake growth if bought with a 70% mortgage (covering the remaining 90%)
                                 10% equity                                                                  Equity increase from capital growth
            Capital                                         Equity value due
                                  invested
            growth                                          to 30% discount                  Year 1              Year 2              Year 3             Year 4            Year 5
                                 on purchase
                5%                 € 25,640                      € 133,063                 € 151,254          € 170,354           € 190,410          € 211,469         € 233,580
               10%                 € 25,640                      € 133,063                € 169,445           € 209,465           € 253,488          € 301,913         € 355,180
               15%                 € 25,640                      € 133,063                € 187,636           € 250,395           € 322,569          € 405,568          € 501,017
          Forecasted equity growth excluding transaction costs, tax and mortgage payments over 5 years, assuming variable rates of capital growth per annum and assuming a €256,400
          purchase with 90% borrowing.



          Translated into profit, the magnifying effect of leveraging is clear. The return on investment available to investors who
          purchase 90% of their property with a mortgage is 10 times greater than those who purchase with cash.


           Forecasted return on investment if bought with a 70% mortgage (covering the remaining 90%)

             Cap growth                  Year 0                   Year 1                  Year 2                   Year 3                  Year 4                    Year 5

                    5%                    419%                    490%                     564%                    643%                     725%                      811%

                    10%                   419%                    561%                     717%                    889%                    1078%                     1285%

                    15%                   419%                    632%                     877%                    1158%                   1482%                     1854%


          With such a substantial discount to market value and with great leveraging available, if
          only 5% growth per annum is achieved, then you could see a Return on Investment of
          over 800% in just 5 years.



Spain - Santa Ana                                                                              18
          Financials
          PAYMENT TIMETABLE
          We present below a broad payment timetable for a generic purchase.

           Payment                                  Amount                                           Timing
           Reservation                              £2,500 +17.5% VAT (£2,937.50)                    Immediately 1
           Deposit                                  10% of purchase price                            On contract (21 days after reservation)2
           IVA on deposit3                          7% on first deposit                               On contract (21 days after reservation)3
           Legal fees                               50% of legal fees                                On contract (21 days after reservation)4
           Final payment                            90% of property value                            On completion5
           IVA on final payment                      7% on remaining 90%                              On completion
           Legal fees                               Remaining 50% of legal fees                      On completion
           Additional closing costs                 Approximately 2% of purchase price               On completion6


           Ongoing costs
           Management, maintenance
                                                    Approximately 20% of rental income               Annually
           and rental fees
          You can see from the table above that additional property purchase costs in Spain usually equates to approximately 10% of
          the purchase value.

          EXIT STRATEGY
          As previously mentioned, the strength of a Santa Ana purchase lies not in the yield but in the rapid equity growth. That said,
          the leveraging effect of a mortgage will always magnify the capital growth, so a number of exit strategies could be adopted.

          1. SHORT TERM – SELL BEFORE COMPLETION                                high standard ‘bricks and mortar’ property on a golf course will
          The majority of the capital appreciation for this deal is made        always be a more attractive option to this type of buyer than an
          over the initial period. With only 10% down, the 30% discount         off-plan opportunity.
          to market value creates an immediate five-fold growth in equity.
          This creates an ideal situation for investors looking for a ‘quick    3. MID TO LONG TERM
          flip’ – to potentially sell their contract before completion.          Many overseas buyers/investors often want to utilise their
          Part of the discount can be passed on to help initiate a quick        properties both for investments and as holiday getaways.
          onwards sale and there is also the possibility of never needing       Although the rental yield is not expected to be very high, it
          to take a mortgage out on the property yourself. That said, this      should nevertheless generate enough income to cover the
          type of strategy is normally considered high risk – if you fail       mortgage payments. Keeping the property long term should not
          to sell the property on to another investor then you will have        impact negatively on investor’s cash flow. The expected capital
          to cover the final payment yourself. We recommend that any             growth in the region is also steady and sustainable and its effect
          investor looking to adopt this strategy has a contingency plan        on equity is heavily leveraged via the mortgage. Consequently,
          to be able to cover the mortgage payments should the property         a longer term strategy could be maintained indefinitely with
          not sell before completion.                                           the invested equity in the property working very hard for you
                                                                                as an investor.
          2. SHORT TERM – SELL AFTER COMPLETION
          The advantage of waiting to sell after completion is that the         1. Payable in GBP
          majority of potential buyers in Spain are lifestyle buyers as         2. Payable to developer in euros
                                                                                3. IVA is the Spanish equivalent to VAT and is due on each payment
          opposed to strict investors. In fact, 80% of coastal apartment        4. Spanish legal fees are usually 1% of purchase price
          buyers are still Spanish families looking for holiday homes7.         5. Payable to developer in euros
                                                                                6. Including: notary, registry, and mortgage costs other documents
          This is your primary resale market. Therefore a completed,            7. http://www.siprograms.com


Spain - Santa Ana                                                              19
          Tax



          As a property owner in Spain, whether you are a resident
          or a non-resident, you will have to pay tax. You are
          considered a resident if you spend more than 183 days
          per year in the country or if the majority of your activities with
          economic worth occur in Spain1.

          The Spanish fiscal system appears at first glance to be very tax-
          heavy and complex. In 2007 the government will be looking
          into simplifying and reducing many of the taxes2.

          We have compiled a brief guide to give you an idea of what
          you can currently expect from this system. However, we
          emphasise that this is for guidance only and we strongly
          advise you to seek professional advice from a tax specialist if
          you intend to invest in Spain.


          1. PERSONAL INCOME TAX (IRPF / INRN)                                 If you’re a non-resident, you are required to pay tax on your assets
          If you’re resident in Spain, you will pay income tax on your         located in Spain, irrespective of the value of your net wealth4.
          total worldwide income (IRPF, personal income tax) from
          employment or asset gains or losses. This varies between             3. INHERITANCE TAX / GIFT TAX
          15-45%, depending on the income.                                     In Spain you pay tax on acquisition of assets through inheritance
                                                                               and legacy and other monies. The inheritor does not pay tax on the
          If you don’t reside in Spain but earn some income in the country,    whole estate but on the actual inheritance. This tax is progressive,
          you pay 25% tax on the income you earn in Spain (IRNR, tax           ranging between 7-35% depending on the relationship to the
          on the income of a non-resident).                                    deceased and on the inheritor’s personal circumstances, and
                                                                               is calculated differently according to the region5. In case of
          In both cases you need to calculate your own tax liability and       donations, the donator is required to pay the tax6.
          apply for the tax returns from the relevant local authorities.
          However, double taxation treaties exist between Spain and            To avoid any unnecessary, and potentially very expensive
          other members of the EU, so you won’t be taxed twice on the          complications later, it is strongly advised that you arrange a
          same income3.                                                        Spanish will at the same time as buying your property in Spain.

          2. WEALTH TAX                                                        4. VAT (VALUE ADDED TAX)
          If you reside in Spain for tax purposes, you need to pay tax on      There are three different VAT rates in Spain - the general rate
          your worldwide net wealth. Charged at progressive rates ranging      of 16%, the reduced rate of 7% and the second reduced rate of
          between 0.2-2.5%, you are required to calculate your own             4%. The VAT of 7% is added to accommodation or passenger
          tax liability, complete the tax return and pay the tax during a      transport. The 4% VAT is in use when purchasing food items,
          specified period.                                                     books, newspapers, medicines and so forth7.




Spain - Santa Ana                                                             20
          Tax




          5. CAPITAL TRANSFERS / GAINS TAX
          This tax is payable on any asset transfers, corporate transactions
          and documented legal acts (notarial and administrative
          documents) at the moment of transfer or sale8. This applies to
          property sales.

          For residents, the system is more favourable – the capital gains tax
          is charged at 15% of the net profit. If you are over 65 and have
          been a resident in the property for 3 years, no capital gains tax
          is payable. This is why Spain is such a highly desirable location
          for retirement.

          For non-residents, the system is again different. If the asset is
          held for a year or less, the gains will be taxed in the income tax.
          The basic capital gains tax stands at 35%9 and if you have a
          buy-to-let property, 25% tax is payable on the gross
          rent received10.

          However, again there is a double taxation regime in place between
          Spain and the UK so you will not be taxed twice.

          6. LOCAL TAXES
          These taxes include the tax on immovable property (Impuesto
          sobre Bienes Inmuebles) at around 0.2% of the ‘national rental
          value’; tax on economic activities (Impuesto sobre Actividades
          Económicas) and tax on vehicles (Impuesto sobre Construcciones,
          Instalaciones y Obras). Construction, installation and works taxes
          and tax on the increase in the value of urban land (Impuesto sobre
          el Incremento de Valor de los Terrenos de Naturaleza Urbana)
          may also be charged11.
                                                                                      1. http://ec.europa.eu/youreurope/nav/en/citizens/working/taxation/es/index_en.html
          7. CORPORATE TAX                                                            2. http://www.lowtax.net/lowtax/html/offon/spain/spnhom.html
                                                                                      3. http://ec.europa.eu/youreurope/nav/en/citizens/working/taxation/es/index_en.html
          Currently the Spanish corporate tax stands at a high 35%.                   4. Ibid
                                                                                      5. http://www.spainlawyer.com/guialegal/guialegal.cfm?IDCAPITULO=11030000
          However, the country attracts multinational companies                       6. Ibid
                                                                                      7. http://ec.europa.eu/youreurope/nav/en/citizens/working/taxation/es/index_en.html
          despite the high rate because there are tax breaks for                      8. http://www.graydon-associates.com/taxes.htm
                                                                                      9. http://www.graydon-associates.com/faqs.htm#six
          co-ordination centres in certain areas. These centres are the basis         10. Ibid.
                                                                                      11. http://ec.europa.eu/youreurope/nav/en/citizens/working/taxation/es/index_en.html
          for a variety of corporate entities that then enjoy tax breaks12.           12. http://www.lowtax.net/lowtax/html/offon/spain/spnhom.html




Spain - Santa Ana                                                                21
         Mortgages




          Securing a mortgage in Spain is a relatively straightforward         is great news for investors looking to get in and out of the
          process as the mortgages are available in euros. The majority        market quickly.
          of Spanish mortgages are full status and the different types
          of mortgages available are interest-only and repayment               Along with your mortgage application, Bancaja will require
          mortgages with either fixed or variable interest rates. These         hard copies of the following documents:
          rates will be reviewed yearly in accordance with the rates
          provided by the European Central Bank. Most Spanish                     1. Proof of partial payments for the house
          mortgages, whilst linked to a percentage of valuation,                     (from the Bancaja account)
          cannot exceed the price stated in the title deeds.                      2. Copy of contract
                                                                                  3. Copies of bank statements
          Although we welcome you to use a bank of your choice in                 4. Most recent P60 statement
          acquiring a mortgage in Spain, we recommend a Spanish                   5. Last two salary slips
          bank called Bancaja. We have negotiated with them to find                6. Profits and losses (confirmed by accountants)
          the best possible mortgage deals.                                          if self-employed
                                                                                  7. Copy of tax return form (from Inland Revenue)
          It will be possible to secure a mortgage through Bancaja                   if self-employed
          with up to 80% loan to value, although it is highly
          likely that in Santa Ana only 70% LTV will be required.              If you choose not to use Bancaja for your mortgage, the
          Interest rates are around 4.5%, depending on the current             application requirements and paperwork may vary from
          Euribor rates, and the maximum loan period is 40 years,              those listed above. Further, the details of the mortgage
          depending on the age of the borrower; the upper age limit is         itself may also vary. It should therefore be noted that this
          75 years old.                                                        page is for guidance only and that you should acquire the
                                                                               accurate list of details from the bank you choose to use for
          There is also a possibility to take an interest-only                 your mortgage.
          mortgage from Bancaja for a maximum of 5 years. This




Spain - Santa Ana                                                         22
          Lawyers




          Lawyers representing the investors in any foreign country         The lawyer’s fees will be approximately 1% of the purchase
          must be able to accomplish the following:                         price. The functions these fees covers are:

          • Act as Power of Attorney for the investor                           1. Land Registry
          • Guide through the conveyancing process                              2. Tax Department issues
            until completion                                                    3. Legal advice
          • Provide a good level of service especially around busy              4. Power of attorney
            times, such as completion, keeping the investor up to               5. Notary – final deed
            date with the various stages in the process                         6. Registrations
          • Provide an English-speaking key contact who can
            respond to enquiries within 48 hours by email or phone          Please note that this is not an exhaustive list. For a full list
          • Provide English translations of any important contracts         and clarification on each point, please contact Jausas direct.
          • Include the cost of all notarisation, apostils, postage, tax    As with all our developments, we ask that the investor pay
            registration and other legal paperwork that will need to        50% of the legal fees upfront and 50% at completion. This
            be done locally                                                 “aligns” the lawyer with the investor and ensures a high
          • Provide receipts for all disbursements or out of                level of representation is maintained throughout the life of
            hand expenses                                                   the investment.

          With these key points in mind, we chose a local Spanish           We believe this represents tremendous value for money, as
          firm Jausas, and the partner Sergio Giménez Binder,                the service they offer is wide ranging and actually exceeds
          as by far the best firm to represent our investors. Jausas         our criteria in many ways.
          have offices in Madrid and Barcelona and they have a solid
          track record spanning over 40 years. They specialise in           If you have any questions for Sergio Giménez Binder,
          various areas, including real estate law and town planning.       please drop him an e-mail at:
          Their philosophy is to provide innovative, internationally        sgimenez@jausaslegal.com
          orientated and business-minded service, and therefore they        or call him on 00 34 93 415 00 88.
          can easily provide services in English. You can visit their
          website at www.jausaslegal.com.

          We have worked with Sergio for some time and find him
          an extremely trustworthy and experienced lawyer. He also
          speaks fluent English and is always ready to provide a high
          level of service.


Spain - Santa Ana                                                          23
          Currency



          CURRENCY EXCHANGE
          Small differences in exchange rates make a big difference to the end amount you pay, and specialist companies compare
          extremely favourably to the High Street banks. We currently work with Moneycorp and Complete Currency, currency
          conversion companies in London that offer an extremely personal service and excellent rates.

          MONEYCORP                                                         COMPLETE CURRENCY
          Moneycorp, the UK’s leading foreign exchange company, can         This company offers a range of foreign exchange products
          help you achieve the best exchange rates, making your money       to ensure its clients maximise their potential within the
          go further. They have been trading foreign currencies since       foreign exchange market, taking advantage of exchange
          1979 and are the only foreign exchange company in the UK to       rate fluctuations and safeguarding their investment. The
          have been certified to ISO 9000 Quality Assurance.                 company will provide fast money transfer with a full variety
                                                                            of foreign exchange products with no hidden charges.
          In addition, you can take advantage of the following benefits:
                                                                            The directors of Complete Currency have over 30 years
          • No commission charges or receiving bank fees.                   of currency trading and money transfer experience at
          • Fast, efficient worldwide transfers.                              your disposal, and they will see to it that you get the best
          • A dedicated dealer to guide you throughout                      exchange rate.
            your currency transaction(s).
          • Extended office opening hours                                     Call our contact Steve Rowe on +44 (0) 207 709 2060
            Monday - Friday 7:30am - 10:30pm                                for a quick consultation, between 8:30am and 8:00pm or
            and 10:00am - 4:00pm Saturday.                                  take a look online at www.completecurrency.co.uk.

          Moneycorp offers a very straightforward, efficient and cost-
          effective service. Exchanging and transferring money is an easy
          three-step process:

          1. Open a trading facility - you can register online by
             visiting the Moneycorp website at www.moneycorp.com
             or calling their London office on +44 (0)20 7589 3000
          2. Book a transaction - once a trading facility has been
             set up, a dealer will call you and discuss your individual
             requirements with you. Rates are booked with your
             dealer over the telephone
          3. Transfer your funds - dependent on the date you
             require your currency

          Our contact, Ben Nicholson, is always available to take
          your calls at their London office and can be reached on
          +44 (0)20 7823 7500




Spain - Santa Ana                                                          24

				
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