Palawan Pearl

Project Vision

A sophisticated private island eco resort in Palawan. Palawan, an unspoilt archipelago of islands in the Philippines - its known as the last bastion of naturally stunning and totally pristine group islands and beaches in the world - and as such, development of any kind is tightly controlled by the government and must be thoroughly sustainable.

Opportunity Background - Initial Fundraising for Barefoot Investments LLC concluded last summerThere were 26 private placements (a placement is 1/30th of the company - straight equity) into Barefoot Investments LLC and raised $2,600,000. The target was to raise 30 placements, but 26 was enough to kick things off and Barefoot wanted to secure buying the island before prices went up too drastically (as they often do in Asia if one takes a little too long).

Out of the 4 final placements 2 have been sold and now we have 2 to find homes for - with the deal structure remaining the same as it was before:

$100k buys 1/30th of the company

Returns in 48 months max - capital back plus 35.875%

PLUS a developed land plot of circa 1000m2

PLUS a resort villa with a footprint of 80m2 (Estimated Value $250k on completion)

The risk ratio has changed dramatically though, as Barefoot, in line with their business plan, have successfully sourced and acquired the island which was their first choice in fact. The 26 investors who came in last June were buying into a brand new company without tangible land assets, so it was much more a leap of faith than what is on the table now. Many of the investors were previous investors on the companies previous project. Now, the proposition includes equity in a development company with both land (the 120 acre private island) and cash assets (HSBC Hong Kong).

Location: Busuanga, Palawan

Busuanga is the location of the airport currently used to reach Barefoot Investment´s newly acquired island.

There are two airlines running several services per day to and from Busuanaga - Asian Spirit and South East Air. Co Founder and Managing Director of SE Air, Mr Nikos Gitsis, just happens to sit on the tourism committee for Palawan too - SE Air (www.flyseair.com) will be increasing the number of flights and the capacity of planes into Palawan as soon as the updates to the airport have been made - the building of the new terminal and runway are underway (Completion scheduled for end of 2008.

Tourism Potential

There are a mix of tourists in Palawan already including locals from Manila (middle class, privately educated, etc) plus scuba divers from all over the world and of course some expats from Hong Kong, Singapore etc looking for a bit of peace in paradise.

There are several resorts in the area already, from $200 USD per night luxury (Club Paradise) to $50 USD a night - basic but beautiful (Coron Bay Resort).

Worth noting, Banyan Tree are building two resorts in Palawan at the moment - which is a very strong sign that the area is soon going to be very exclusive and very popular as a new international tourist destination.

The Private Island - The Palawan Pearl

From the island of Busuanga, the boat ride to the Barefoot Pearl Island on an old traditional boat took about one and a half hours. In a speedboat it will take about 25 mins, which is fine and no different to arriving at the Maldives. Barefoot intend to invest in a sea plane although this will be decided nearer the time of opening. The Palawan Pearl (as the island is now going to be known as) is extremely stunning. A pure white sand beach wrapping around the island in a horseshoe shape and then more dense jungle and hills up in the centre. The island covers 120 acres so you could easily imagine staying for a week or two without feeling cramped. The water is turquise and great for swimming and snorkelling.

Once the resort is developed it will be home to 90 island villas (30 villas are of course given to the founder placement holders as part of the deal when Barefoot buy back their shares) and 60 villas will be sold on the open market. The resort will also feature a natural spa, restaurants, cafe bars, a movie theatre etc etc etc. The resort will have a natural and rustic feel, but will be seriously boutique and luxurious - think Six Senses and you are somewhere close.

Deal Structure Legally, Barefoot Investments Asia LLC own the island and this is the company you would be investing into. Investors own one thirtieth of the company for a maximum 48 month term. That is your security (the island and assets and bank account).

As the island gets developed, the value of the investment increases (once there is power and water, the island will be worth a much higher value).

At the end of the maximum term (or sooner), you will be contractually obligated to sell your equity (1/30th) back to Barefoot in exchange for your capital back plus the return (which is 35.875%) PLUS a developed land plot on the island (circa 1000m2) PLUS an island villa on that land plot which will have a footprint of circa 80m2.

Worst Case Scenario

If Barefoot are unable to deliver on any of these items you, and the other founder shareholders retain the shares in the company. This would be the worst case scenario. Matt Pontoles and Matt Morrison (the Founders and Co-Directors) are both very comfortable that they can deliver on their contractual obligations within 36 months, but have built in an extra year for contingency.

Investment Returns

You are free to sell your villa and land plot on completion, should you chose to retain it you receive 80% of the gross rental income. You also have unlimited use as it would belong to you outright. Completed villas will be sold at circa $250k - this is the projected value.

If you retain the villa, nightly rates vary from $200k to $400k per night depending on the season. So if we assume 50% occupancy at just $200k per night x 80% that gives you a yield of $29,200.00 USD per annum.

Oyster Analysis Overview

Whilst you have to tie up $100,000 (£50,000) for 4 years, you are assured of returning 135% of initial investment, plus ownership to a villa on a private island resort.

Because there will be 60 other villas for sale once the project is finished, this will make instant resale less simple, therefore we suggest this is a 5 - 10 year investment. Not only does this give the resort a chance to ´bed in´, it will enable you to decide the value of the proposition.

If the property market in the Philippines were flat and tourism doesn´t increase, we foresee the value of the villa being no less than $100,000.

Overall we rate this about 7.5 of of 10.

It covers the first two ´Golden rules´ well, but the third, ´Exit Strategy´, requires the investor to hold the position for 5 years plus, and even then the market is directly linked to the returns from tourism.

For More Information, call 00 44 (0)208 390 8001

info@oyster-international.com

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Palawan Pearl