May 25, 2009

Paris-ProvenceFrench fractional & hospitality fundf²h

May 25, 2009f²h

© Domaine & Demeure

A collection of small luxury estates in the South of France, each comprising up to 6 apartments offered as fractionals and up to 20 hotel rooms, with boutique-style 4-star & concierge services.

An attractive IRR, thanks to the combination of developer profit, hospitality cash flows and the proceeds of the salesthe hotel business after 10 years.

May 25, 2009 1f²h

© Domaine & Demeure

Paris

Provence

A 6-unit mixed-used luxury properties chainEach property:• Historical estate or house• 6 for-sale fractional flats and 20 hotel rooms• Mutualised concierge service, outsourced restaurant

Paris

Provence 3-level leveraged value creation over 10 years:• Promoter’s return on fractional flats (62%)• Hotel cash flows (8%)• Proceeds of the sale of hotel business (30%)

Marketing edge:• Building on the fractional/lifestyle trend• Unique offering for francophile US babyboomers

The concept

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May 25, 2009 1

In a nutshell• For investors with real estate experience

and an interest for small luxury hotels but no taste for hands-on management

• Leveraging two growth markets: fractional ownership & made-to-measure travel

• Paris & Provence: the best locations in the world’s most visited country

• 4m€ invested grows into 37m€ after 10 years (52% IRR)

• 400 investors @ 10,000€ each, or 20 investors @ 250,000€ each

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Fractional real estate

Boutique hospitality

© Domaine & Demeure

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May 25, 2009 2

What’s in it for investors

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• 6 historical properties with 6 fractional apartments and 20 hotel rooms* in each – and 4-star services and amenities: a small hotel chain in its own right (33 flats, 106 rooms under management)

• Mixed use: small luxury hotel and for-sale fractional: safer option for investors, which enables above average return

• Fractional: long term trend, alternative to second home ownership, lifestyle concept

• Comparables:▫ RitzCarlton, Fairmont, Wyndham: all develop mixed use with

fractional▫ Garrigae in Languedoc (incl. hotels)▫ Les Maisons de Baumanière (Avenio)

© Domaine & Demeure

* 3 fractional apartments and 6 rooms in the Paris townhouse

May 25, 2009 2

What’s in it for co-owners & guests

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© Domaine & Demeure

• A new way to travel, to go on vacation, to own a second home• For co-owners: ▫ More than just money – why pay 100% of a vacation home to use it

only 15% of the time?

▫ Hotel rooms for their guests – like an « extendable » holiday home

▫ Paris & Provence: so co-owners can stop over in the City of Lights

• For hotels guests:▫ True boutique hotels: historic properties, modern amenities, just 20

rooms, the same 4-star service that co-owners enjoy

▫ A boutique hotel for less: the quality, the style, the service – without the stupid prices

May 25, 2009 3

Clientele

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• North American (USA/Canada) baby boomers looking to organise their later years: travel, vacation/second home

• France/Provence lovers, typical profile: Alliance Française members

• A few figures:▫ 100,000: US citizens reside in France

▫ 400,000: US citizens visit Provence (PACA/LR) each year

▫ 2,500: US fractional owner in Provence potential in 2013

May 25, 2009 4

Paris

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• 1.3m North American tourists visited Paris in 2008

• Targeting those who want to go beyond St Germain des Prés and the Eiffel Tower

• Solid demand for luxury accomodation, boutique hotel type – at the right price

• Natural stop over on the way to Provence

May 25, 2009 5

Provence (« where the Mistral rules »)

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• The most visited French region outside of Paris: 12 millions foreign tourists per year

• Every American knows Provence

• Mediterranean climat: olive trees, vineyards, palm trees, garrigue, scrublands, fig trees, apricot and cherry trees

• 280 days of sun a year, summers from May to October, average temperature 25°C (77°F)

• Easy reach from anywhere

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Partnerships

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• Branding: to build on the « Provence » name within the USA, for ex: L’Occitane or Souleiado

• Architect & design: to capitalize on the credibility of an experienced professional, for ex: Lafourcade, Thoulouze

• Food & beverage, concierge: to offer the top-quality service needed (and organize cooking seminars), a regional Michelin chef, for ex: Jérôme Nutile, Hostellerie Le Castellas (Collias)

• Affiliation services: to commercialize the rooms and manage the fractional flats seamlessly, for ex: The Registry Collection

• Commercial: to sell the fractional shares to a North American clientele, for ex: Global Quarters

LAFOURCADE

May 25, 2009 7

Legal structure

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• The investors’ owned hotel business can be set up offshore, with a French subsidiary running the properties in Paris & Provence

• Each property is structured as a French condominium (copropriété horizontale), including 6 fractional flats (separately owned) and the hotel premises (owned by the hotel business)

• Each fractional flat is the property of a French SCI (société civile immobilière), owned by a US LLC controlled by its co-owners

May 25, 2009 8

Typical city site

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• Art Deco house, built in 1924 for writer Frank Townshend, design by André Lurçat, a Cubist architect friend of Le Corbusier (unlisted by owner choice)

• In the private « Villa Seurat » (20 houses) where former tenants include Salvador Dali and Henry Miller

• 420 m² (4520 sq.ft) on 5 floors, with 2 separate stairs and entrances, a roof terrace (60 m²) and a patio (30 m²)

• Potential for 3 fractional flats, 6 hotel rooms• Parc Montsouris quartier, quiet, recently

renovated one-way street (Tombe-issoire)• Current price tag: 3m€

May 25, 2009 9

Typical rural site (1)

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• Heritage 18th century property, with own name (« Mas Dalgaz ») on the map

• 5 acres, 64 more available• Nice open plain location, gentle hills

in sight• Mature trees, easily landscapable

surroundings• 14,000 sq.ft inside 6 buildings• Current price tag: 790,000€

May 25, 2009 10

Typical rural site (2)

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• 14 miles from Uzès, 16 miles from Nîmes

• Airport: 23 miles; high-speed train (TGV): 16 miles

• On the outskirt of the village, less than 400 yards from village center

• Only one property nearby (line of sight with some trees)

May 25, 2009 11

Investment metrics (per rural unit*)

f²h €Property purchase cost/m² 590€Renovation cost/m² 1,400€Furnishing cost/m² 840€Architect’s fee 12%# of fractional flats 6# of guest/hotel rooms 20Average flat size 110 m²Average room size 25 m²Common areas 160 m²

* City unit metrics & financials available on demand

May 25, 2009 12

Investment (per rural unit)

f²h €Purchase 869,000€Renovation 1,928,000€Interior design & furnishing 1,104,400€Landscaping & outdoor 564,000€Coordination 260,572€Financing 160,352€Other costs 659,439€Per unit 5,488,727€Total cost per m² 4,096€

May 25, 2009 13

Fractional sales (per rural unit)

f²h €Fractional flats per domaine 6Shares (co-owners) per flat 36Price per share 210,000€Gross sales 7,560,000€Sales & marketing costs 1,512,000€Net sales 6,048,000€Costs 5,020,190€Financing (30%, 3 years, 6%) 296,391€P/L per rural unit 1,909,500€ROI p.a., 3 years 17%

May 25, 2009

Hotel revenues metrics (per rural unit)

f²h € 14

Co-owners’ annual maintenance fee

4% of purchase price

Hotel room price (incl. Tax) 190€Average room service charge 46€Hotel occupancy rate (all year) 50%Margin on outside services 20%Seminars (cooking etc.)/year 7

May 25, 2009

Hotel revenues (per rural unit)

f²h € 15

Room sales 451,894€Co-owners fees 302,400€Food & beverages 163,800€Seminars (net) 28,840€Other revenues (net) 87,750€Per unit 1,034,684€

May 25, 2009

Expenses metrics (per rural unit)

f²h € 16

Number of staff 12Staff-to-guest ratio 1:4Salaries/total cost 53%Social security costs/base salary 80%Management & affiliation fee/total revenue 6.7%

Yearly remplacement provision: Fractional flat 11,000€ Guest room 2,500€

May 25, 2009

Expenses (per rural unit)

f²h € 17

Salaries 455,760€Furniture replacement provision 116,000€Materials 56,400€Management & affiliation fees 68,969€Office, running & other costs 63,900€Marketing & sales 117,600€Per unit 878,629€Operating profit 156,055€

15%

May 25, 2009

10-year P/L

f²h € 18

Fractional sales 34.8m€Hospitality cash flow (net) 4.6m€Sale of hotel business 16.4m€

55.9m€Investment 22.9m€Cost of financing 1.6m€

24.5m€Profit 31.4m€Cash invested 4m€IRR 52%

10-year summary

May 25, 2009f²h € 20

May 25, 2009

Model variations

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• Add another townhouse – either in Paris or in Montpellier, Aix or Avignon

• Replicate the concept in other countries, with a historical heritage and a vacation/sun identity

• Develop rural units outside of Provence, for ex: Bordeaux region (wine estate) or Brittany

Thank youfor your interest

Contact: Pierre Guillery +33 (0)6 8434 8992

pguillery@francefractionalinvest.comwww.francefractionalinvest.comf²h