TECHNICAL REPORT · Camorim, Vargem Pequena, Vargem Grande, Recreio dos Bandeirantes, Grumari e a Barra da Tijuca. The Barra da Tijuca neighborhood occupies an area of approximately

TECHNICAL REPORTECONOMIC FEASIBILITY

ANALISYS OF THE PROJECT

BEST WESTERN PREMIER AMERICAS

FASHION HOTEL BY LENNY NIEMEYER

AnáliseViabilidadeEconômica_BestWesternBarraCalçada-Prime 1/58

RIO DE JANEIRO – RJ Travessa do Paço, nº 23 sl. 408 – Centro –CEP 20010-170 – Telefax (021) 2232-0221

SÃO PAULO – SP • CURITIBA – PR • FLORIANÓPOLIS – SC • PORTO ALEGRE – RS

www.peritosjudiciais.com [email protected]

ECONOMIC FEASIBILITY ANALISYS OF THE PROJECT

BEST WESTERN PREMIER AMERICAS FASHION HOTEL BY

LENNY NIEMEYER

MARCOS HERINGER, arbitral and judicial expert, Finances Coordinating Teacher of FGV

– Fundação Getulio Vargas and IBMEC, Master and Engineering Degree in IME – Military Institute

of Engineering – and Expert in Business and Company´s Evaluation by the New York Institute of

Finance – NYIF –, Member of the Brazilian Institute of Finance Executives – IBEF -, and

MARCELO ALVIM, Master in Economics, Consultant in Company´s Evaluation, Finances

Teacher with MBA of FGV – Fundação Getulio Vargas and IBMEC, both hired by CALÇADA

S.A., through PERITOS JUDICIAS – FINANCE & ENGENEERING EXPERTS, to execute the

ECONOMIC FEASIBILITY ANALISYS of the hotelier screen project, hereby submits their

report.





SUMMARY

1. MAIN GOALS – GENERAL AND SPECIFICS.................................................................. 4

2. PRELIMINARIES RECORDS .............................................................................................. 6

3. MARKET ANALYSIS.......................................................................................................... 7

3.1 Premises and Surroundings........................................................................................... 8

3.2 The Hotelier Project..................................................................................................... 18

3.3 Choosing the Chain and Hotelier Administration ...................................................... 19

3.4 Primary and Secondary Competitors ......................................................................... 21

3.5 Hotelier Market Analysis by Sector, Evolution Perspective and

Analysis of the Insertion of the Hotelier Product in Study in this Market .................. 24

4. REVENUE, EXPENSES AND RESULTS PROJECTIONS .............................................. 34

4.1 Income Distribution, Monthly Average Free Cash Flow for Hotel Fraction ............ 38

5. ECONOMIC FEASIBILITY ............................................................................................... 41

5.1 Financial Flows of Resource Assistance .................................................................... 41

5.2 Investors Flow Charts of Free Cash Flow .................................................................. 45

5.3 Calculation of Internal Rate of Return........................................................................ 51

5.4 Other Parameters of Economic Feasibility ................................................................ 54

6. CONCLUSION AND RECOMMENDATIONS ................................................................ 56

7. FINAL OPINION ................................................................................................................ 57

8 CLOSING ............... ............................................................................................................. 58





1. MAIN GOALS – GENERAL AND SPECIFICS

The main goal of the study is to proceed to an Economic Feasibility Analysis of the

Hotelier Project BEST WESTERN PREMIER AMERICAS FASHION HOTEL BY LENNY

NIEMEYER, to be developed in the city of Rio de Janeiro/RJ.

The referred financial- economic evaluation of the project was developed on the basis

a complete scope, within this analytic context, including the result estimates for a 5 (five) year

period, and the validation of Intern Rate of Return - IRR – to a 10-year projective horizon, the

presentation of conclusions and possible recommendations, validated by a conclusive final opinion.

For the achievement of the main goal previously quoted, the following specific

objectives were set:

(i) Market Analysis, based on Hotel Studies developed by

specialized companies;

(ii) Extrapolation, for a 10-year period, of flow charts of free cash

flow projected for the first 05 (five) years of the Hotel, on Hotelier

studies grounds;

(iii) Coupling of the projected and extrapolated cash flows to those

representatives of the investments to be effected by the prospective

shares acquirers, represented by the payment flows attached to the sales

chart practiced by the incorporator;





(iv) Analysis and evaluation of the total amount of free cash flows

(investment and incomes) to a 10-year projective horizon, with the

validation of Intern Rate of Return – IRR and Cap Rate;

(v) Subscriber´s elaboration of the terms of Conclusions and

Considerations of the current Hotel Project;

(vi) Formulation of a final opinion, with the grounds of the technical

convincing of the present study acquired by the subscribers, throughout

the analysis and evaluations developed.





2. PRELIMINARIES RECORDS:

This presentation considers a starting point the information already collected, directly or

through specialized thirds by the hired. Thus, it should be recorded that the evaluators subscribers

are not responsible for the preparation of these information. However, such information, in our

professional judgement, based on our experience, reveal to be consistent and able, with no

professional contraindication known to it´s considerations.

The Market Studies and Prospective Financial Analysis, elaborated by Hotelaria Brasil (HB)

and by Lang LaSalle (JLL), brought information related to the targeted enterprise of the present

study, not only with regard to the various market aspects of macro and hotel industry environment as

well as contextualization of the project, providing thus, the necessary and sufficient substrate to the

building and solidity of the Economic - Finantial Feasibility Analysis contained in this document.

The main topics of study developed by JLL were highlighted on ITEM 3 – MARKET ANALYSIS –

of this Final Opinion, as presented bellow.

The subscribers clarify, in time, to have no inclination or particular interest in the subject

matter involved in this study, and that their relation with the hiring company are limited to provision

of services of the same nature as presented, given that their professional fees are in any way subject

to the conclusions recorded in its Final Opinion.

For last, consign, in these preliminary instances, that part of the projective studies used as

substrate to the present study were developed by the company Hotelaria Brasil, which will be

responsible for management of hotel operations on the screen, in other words, entity interested in the

commercial success of the enterprise. However, one should point out, in this regard, that the reffered

company is sympathetic to the operation risk, bearing in mind that to any performance opposing the

investors interests, compromises not the results by them projected and inevitably commits the future

commitment of maintaining it´s managing position and uptaking new deals.





3. MARKET ANALYSIS

Regarding the hotel market analysis on screen of the area, the present study was based on

the informationbrought by the JLL report, which, thereof built a set of researches and treatments of

the emerging information, consolidating several significant and necessary items to the development

of an Economic Feasibility Analysis.

The reffered study brought to light significant questions about the location, characteristics of

the project in debate, it´s surroundings or neighbourhood, it´s primary and secondary competidors,

the hospitality market itself, and the capability of this market penetration by the project under

discussion.

Such aspects, highlighted no JLL´s Hotel Study, follows individually related in the itens

bellow, in the following sequence of approach:

3.1 Premises and Surroundings;

3.2 The Hotel Project;

3.3 Choosing the Chain and Hotel Administration;

3.4 Choosing the Chain and Hotel Administration;

3.5 Hotel Market Analysis by Sector, Perspective of Growth and Analysis of the Insertion of

the Hotel Product in Study in this Market

The texts and images presented on the next itens of the present topic have been extracted

from Market Financial Perspective Analysis produced by JLL.





3.1 – Premises and Surroundings;

The Hotel project in vogue in this study will be implemented in Barra da Tijuca

neighborhood, located in the west zone of Rio de Janeiro, in a coastal area of the city commonly

known as Barra.

Barra da Tijuca presents itself as the natural extension of the south zone coastal area of Rio

de Janeiro. After the successful occupation of Copacabana, Ipanema and Leblon, Barra da Tijuca has

become the most suitable way for new real estate investments, which occupies 20 km of beaches on

one side and lacoons and sandbanks on the other. Nowadays, Barra is the place of most interest of

real estate companies and received, in recent years 60% of the buildings held in the city during the

last years

The administrative region of Barra da Tijuca encompasses the districts of Joá, Itanhangá,

Camorim, Vargem Pequena, Vargem Grande, Recreio dos Bandeirantes, Grumari e a Barra da

Tijuca. The Barra da Tijuca neighborhood occupies an area of approximately 5,600 hectares, which

represents only 20% of the administrative region of Barra. The neighborhood extends from the

Tijuca Lagoon channel to Salvador Allende Avenue and towards the Jacarepagua neighborhood to

the Camorim pond. The Figure 1, presented bellow, shows the relative position of its two main

neighborhoods, which are: Jacarepaguá and Recreio dos Bandeirantes.

A combination of factors such as the lack of available land in central and southern areas of

the city, ease of access and availability of areas, is transforming the Barra da Tijuca neighborhood in

the major development of Rio de Janeiro. The region is characterized by large residential gated

communities, with complete leisure infrastructure and security, and also for commercial buildings,

attracting many companies to the region.

Another distinct feature of the region is the long distance between points, making the car the

main transportation, differently of the traditional neighborhoods of Rio de Janeiro, the routes and

daily activities can not be done on foot. In this sense, the streets and avenues are wide and there are

many traffic lights, stimulating the circulation of high-speed vehicles.





Figura 1 Relative positioning Barra da Tijuca vs. Recreio vs. Jacarepaguá. .

Regarding the Infrastructure of the Neighborhood:

“Green” Ecosystem:

The region presents a unique ecosystem, characterized by wetlands, mangroves, lagoons

(Jacarepaguá, Camorim, Tijuca, Lagoinha e Marapendi). Because of the richness of its ecosystem,

some areas are classified as environmental reserves, limiting the use of land for real estate holding.

Sanitation Improvement:

One of the biggest issues of Barra is it´s basic sanitation infrastructure of, which did not

develop at the same rate that was real state growth. In order to improve this scenario, water and

sewage treatment works are being held in several parts of Barra da Tijuca.

Jacarepaguá

Barra da Tijuca

Recreio





““Eco” Regional Master Plan:

The Pilot Plan for the Baixada de Jacarepagua was created by Professor Lucio Costa

foreseeing since the occupation of the land to the trees to be planted, given the need to establish

certain urbanization criteria, on the required scale, preserving where possible "in natura", the fauna

and flora of the region.

Engineered Development:

Even with the accelerated growth, Barra´s quality of life is assured by the Pilot Plan, that,

with its full occupancy - 3 million inhabitants - provides for the presence 160-270 inhabitants per

hectare per quarter, against 1,480 inhabitants per hectare found in Copacabana.

Thorough Development in Infrastructure and Trade:

Barra´s current population is approximately half million people and the infrastructure to

attend this population grows every day. At present there is an intense commercial development in

the region, especially Avenida Ayrton Senna, where is located Makro, the Via Parque Shopping, the

CasaShopping, two hospitals, car dealerships, gyms and commerce in general.

New Access:

The access is improving with the construction of the 4th line of the Metro (subway) that will

connect Ipanema to Barra and the “TransCarioca” that will connect Barra to the International Airport

passing through Penha (neighborhood) located in the north of the city. The “TransOeste”, as shown

on Figure 2, bellow, is the most advanced Project and will connect Barra to the regions of de Campo

Grande e Santa Cruz, with easy access to Itaguaí Port. The main tunnel, “Grota Funda”, was

inaugurated on May 2012and is already being used. These projects are part of the infrastructure for

the 2016 Olimpics.





Figure 2 Trace of Transoeste.

Regarding the entertainment options in the area:

Barra da Tijuca offers many options for entertainment as shown bellow:

Theaters and Show Houses:

The Citibank Hall is usually host to many spectacles opened to the public which are much

frequented by locals and also by people from other states such as São Paulo and Minas Gerais. In

some cases, is also used for the opening and closing of the congresses held at Riocentro, may also

host closed concerts of these events. There is also two other Show Houses located at Avenida das

Américas, The Garden Hall, located at Barra Garden, and the Ribalta, which attends to shows and

events besides having it´s own restaurant. Also located at Barra, at Avenida Ayrton Senna, there is

the Theater Antônio Fagundes, that holds 433 seats and also pointed as one of the most modern in

the city.





Events Spaces

On Abelardo Bueno Avenue is HSBC Arena, administrated by GL Events. With capacity for

up to 18,000 people, the arena is a multi-purpose space capable of receiving shows, various events.

Shopping Centers:

Barra accounts also several shopping centers, such as the Shopping Rio Desing Barra, Barra

Shopping which is located near to New York City Center, an entertaining shopping center, there is

also CasaShopping, Village Mall and Città América, where was founded the first Hard Rock Café of

the country.

City of Arts:

The newest concert room of Rio de Janeiro, wich name is inspired by the City of Music of La

Villete Park in Paris. The invited architect Christian de Portzamparc, is the author of the project of

the original Cité de la Musique. Opened in 2013 the City of Arts houses the largest room to

symphony orchestra and Opera of the Latin America and will be the new headquarter to the

Brazilian Symphony Orchestra.

Regarding the Olimpcs Park:

The Olimpic Park is where most facilities for the Olympic and Paralympic Games in Rio de

Janeiro in 2016 are being implemented. The Park is under construction since July 2012 where was

located Jacarepaguá Circuit, on a peninsula on the side of Abelardo Bueno Avenue. The works are

expected to end in 2015 for carrying out various tests events.the of the O Parque Olímpico é onde a

maioria das instalações para os Jogos Olímpicos e Paraolímpicos do Rio de Janeiro de 2016 estão

sendo implantadas. O parque está sendo construído desde julho de 2012 onde localizava-se o

Autódromo de Jacarepaguá, em uma península do lado da Avenida Abelardo Bueno. As obras estão

previstas para terminar em 2015 para a realização de vários eventos testes.





The Figure 3, bellow, brings the top view of the reffered sports complex

Figure 3 Olimpic Park Project.

Each building and sports facility has a solid business plan, ensuring long-term sustainability.

After the Olympic Games, the park will be maintained and the region will become the main place in

Brazil and South America to high level trainings and sports events.





Regardind the Metropolitan Center:

The Metropolitan Center is a 3,5 million square meters, located between the edge Barra da

Tijuca and the Baixada of Jacarepaguá. It has a grand directive plan designed by Brasilia´s Urbanist

Lucio Costa.

The pattern of the urbanization of Metropolitan Center foresee that 39% of the área is

occupied by road infraestructure, what, by itself representes a high degree of quality, matching or

superior to the urban pattern of most valued areas of cities such as New York (38%) and Barcelona

(33%).

Among the mix of projects, the Metropolitan Center should include:

o Residential Buildings with apartments from 700 square meters;

o Residential with Services (Longstay);

o Corporative and Commercial Buildings;

o Market Town

o Shopping (www.shoppingmetropolitanobarra.com.br), in operation, counting with

44,000 m² of GLA, 6 anchors, 7 mega stores, 223 shops, food court and 5 restaurants, 8 cinemas and

2,700 parking spaces;

o Hilton Hotel with 300 Apartments.

http://www.shoppingmetropolitanobarra.com.br/





Regarding the presence of Industries and Companies in the region.

Space for development:

Given the shortage of space in neighborhoods of downtown and south zone areas of Rio de

Janeiro, several companies changed their offices to Barra da Tijuca where they can find modern

roomy buildings for their facilities. Among the prominent business centers are Rio Office Park

complex, where is the headquarter of Cosan and other buildings, with multinational companies and

medical offices and the Dimension Office Park, with 6 commercial towers, stores and offices where

are located the headquarted of the CBF (Brazilian Soccer Confederation) and RioTur.

Intensive Industries of R&D (Research and Development)

Furthermore, near Barra, numerous industries are settled in Jacarepaguá, mainly labs and

food processing companies.

Other projects:

Deployed at Avenida Abelardo Bueno in 2009, international center of Neurorehabilitation and

neurosciences, the Sarah Kubitschek Hospital holds about 550 calls daily.





Offices suplly:

According to research from Jones Lang La Salle, currently Barra da Tijuca has a total stock

of approximately 200 thousand m² of AA office areas and A. This represents 16% of total stock A

and AA of Rio de Janeiro. Of the 565 thousand square meters of office areas planned for the city by

2014, 11.3% (63,800 m²) are located in Barra, representing a 30% growth in relation to the current

total supply and bringing new companies to the region.

Regarding access to the surrounding areas of the region:

To other important regions of Barra is easyable accessed. From the place in question to downtown area neighborhoods the access is made from Ayrton Senna Avenue -one of the most important roads. The distance between the boulevards is 3 km with a displacement that can be performed in 5 minutes.

Surrounding the Ayrton Senna Avenue are the Subprefecture of Barra and Jacarepagua, Via Parque and Casa Shopping. Also the Airport of Jacarepaguá, three hospitals, two residential complex and lots of others commercial ventures.

Another important road that can be accessed near the terrain in study is Salvador Allende Avenue, where Riocentro, responsible for housing the main complex of events in the city of Rio de Janeiro, is located. The route can be accessed directly from the Americas Avenue near the studied location. The complete path is done in about 15 minutes.

The immediate surroundings are characterised by the existence of mixed segments such as residential and verticalized commerce.

Next to the terrain in question is a small shopping center, for conveniences and a commercial tower. Moreover, near the area the enphasys is the residential segment.





Another point of interest just a few blocks away is Rio Design Barra, one of the main

shoppings centers of the city, especially it´s restaurants which makes it a main meeting point

and sevices to the community

Conclusions on the location of the project and its surroundings:

(i) Barra da Tijuca is presented as the natural extension of the coastline of the southern

zone of Rio de Janeiro and concentrated the largest number of real estate in Rio de Janeiro in

the last years;

(ii) The region is characterized by large closed residential condominiums and commercial

buildings that set the scenario of Barra, mainly due to the several companies that have settled

in there their headquarters, some in the Oil and Gas sector such as Esso, Shell, Baker Hughes

and others like Vivo, Nokia, Michelin and Amil. In addition, other prominent occupants are

Rede Globo / Projac Studios and the Sarah Kubitscheck Hospital;

(iii) Many industries are installed in Jacarepaguá, near Barra, mostly labs and food

processing companies such as Smithkline Beechman, Pfizer, Mantecorp, Coca Cola, IBF,

Nestlé;

(iv) Barra is going through a great change process to prepare for the 2016 Olimpics,

including deployment of new and several road access; BRT (Bus Rapid Transport) lines,

Metro stations, in addition to the specific equipament for the games, such as Olympic

Training Centers, Olympic Park, Aquatic Center Maria Lenk, the Olympic Stadium, Aquatic

Sports and the Olympic Arena of Rio;

(v) The terrain in study is located at Americas Avenue, main road of Barra da Tijuca

which connects the entire neighborhood with it´s completion in Recreio dos Bandeirantes.





(vi) The proximity to the terrain in analysis to great service offers such as Rio Design

Shopping center. The access to A altura do terreno em análise esta próximo grandes ofertas de

serviço, como o Shopping Rio Design. Access to other locations is facilitated, at 3,5 km from

Ayrton Senna Avenue and 4,5 km of Salvador Allende Avenue, responsible for housing the

main complex of events, Rio Centro;

(vii) The proximity and ease of access to the central part of Barra and at the same time

between the residential and commercial areas of Abelardo Bueno and Ayrton Senna Avenue

where are located the main demand generators, are quite positive. On the other half, the

proposed Hotel will face challenges for it´s farthest position on Americas Avenue or breach

fronted.

3.2 The Hotel Project

Hotel project developed in single tower, containing a total of 666 (six hundred and sixty-six)

hotel fractions, superior luxury standard, with two typifications - Class A and Class B - given by

their ideal fractions, and 594 (five hundred ninety-four ) Class A, and 72 (seventy-two) fractions

hotel Class B, whose respective ideal fractions and following certain price given in Table 1 below.

The reffered project accounts also with a Convention Center of 2,000 m2 (two square

meters).

Table 1 Classifications of Hotel fractions and their ideal fractions.

Table 1 Classifications of Hotel fractions and their ideal fractions

FRAÇÃO HOTELEIRA FRAÇÕES HOTELEIRAS FRAÇÕES IDEAIS VALOR

* Valores com data-base em Jul/2015.

236.139,53R$ Classe A 594 0,1459%

Classe B 72 0,1855% 300.369,48R$





A Market Analysis, based on the surroundings of the region location of the project on screen

brought to evidence that, on average, sales values per square meter in similar projects surpass that

practiced in the project under discussion, as listed in Table 2, bellow. Consequently, due to the

equalization of returns as a result of a balance between the daily rates practiced and cost structures

and expenses linked to hotel operations, BEST WESTERN PREMIER AMERICAS investors will

have the financial average return to the segment of the surroundings, contributing, to such,

equivalent amounts of resources, which, in general lines, brings them the expectation of a higher

expected profitability to those received in other hotel projetcs.

Table 2 Selling Prices per m² in the region of the project under analysis:

3.3 Choosing the Chain and Hotel Administration

Regarding the hotel operation to be developed in the reffered project, No que tange à

operação hoteleira a ser desenvolvida no referido empreendimento, will be the responsibility of the

company "Hospitality Brazil Ltda.", and the hotel brand will be the international network "Best

Western", choose guided the history of excellence built by these brands through their performances

in the hotel industry, as posted bellow

Nº ADRESS FRACTIONS/UN.FOOTAGE

(m2)

OFFER

(R$)

OFFER

(R$/m2)

SOURCE

1 RUA EVANDRO LINS E SILVA (AC Hotels by Marriott) 3 25 240.000,00 28.800,00 RIO CAPITAL IMOBILIÁRIA - 99913-8755

2 AVENIDA AMERICAS (Americas Townhouses Hotel by Ramada) 8 31 115.000,00 29.677,42 EXPAN IMÓVEIS - 23031734

3 AVENIDA AMERICAS (Americas Townhouses Hotel by Ramada) 8 31 125.000,00 32.258,06 Valdeir Vieira e - 7281-8816

4 RUA EVANDRO LINS E SILVA (AC Hotels by Marriott) 3 25 280.000,00 33.600,00 INVEST IMÓVEIS RJ - 97651-1548

5 Avenida Lucio Costa (Hotel Pestana Barra da Tijuca) 3 27 240.000,00 26.666,67 Michel do Nascimento - 99205 - 8996

6 Avenida Lucio Costa (Hotel Pestana Barra da Tijuca) 3 27 259.000,00 28.777,78 Consultores de Imóveis - 97294-7266

7 Avenida Lucio Costa (Hotel Pestana Barra da Tijuca) 3 27 247.000,00 27.444,44 Newton Mello - 98606 - 4140

8 RUA EVANDRO LINS E SILVA (AC Hotels by Marriott) 3 25 280.000,00 33.600,00 Alana Cunha - 96463 - 4366

30.103,05

29.728,22

AVERAGE PRICE OF THE REGION (R$/m2)

PRICE BW PREMIER AMERICAS (Preço médio - R$/m2)





Management of Hotel Operations – Hotelaria Brasil

Hotelaria Brasil is a Brazilian company, active in the hospitality industry, applying their

skills and experiences to offer the investors a modern management based on transparency,

commitment and results. It´s portfolio consists on hotel management and condominiums on

developments with it´s own brand - Matiz and Unna -, and thirds, like the Best Western brand,

besides the food and beverages sectors of the enterprises with own restaurants. A corporative staff

experienced in the national and international hotel industry guarantees that the Financial, Incomes

and Distributions, Sales, Marketing, Operational, Human Resaurces areas play a modern, focused

and agile management.

The Hotelaria Brasil DNA was built under the premiss that is not just the individual seeking

the best results for you or your business individually, but rather seek the outcome that is best for you

and the group in which is inserted, simultaneously. This DNA meets the basic notions that must be

observed in theis actions to safeguard transparency as a company´s main attribute, aiming to reflect

their cultural identity and the commitments assumed by it to several physical, public or private

entities. The company's brand the conduct of it´s operations with honesty, integrity, with respect to

Human Rights and it´s diversity, acting in a righteous manner towards the legitimate interests of

those with whom it maintains relationships.

Hotel Brand – Best Western

Founded in 1946, headquarted at Phoenix, United States, the traditional and renowned chain

fo Hotels “Best Western” operates with more than 4.200 (four thousand and two hundred) hotel in

more than 110 (one hundred and ten) countries being aproximatelly 50% (fifty percent) of the units

located at the United States.

The option for the “Best Western” brand was guide due to it´s its recognized and outstanding

performance in the hotel industry. According to the World Ranking 2013 Of Hotel Groups And

Brands, the Best Western Group, with the creation of Best Western Plus, has been keeping,

comfortably, the second position in the best 50 (fifty) ranking of the biggest brands in the world

hotel scene, demonstrating clearly its differentiated preparation in relation to most players in this

market.





3.4 Primary and Secondary Competitors

Overview of Offers in Barra da Tijuca:

The hotel offer in Barra da Tijuca has now only 15 hotels with 2.771 apartments, which

represents approximately 14% of the total hotels of the city and 15% of the apartment offer.

According to the graphic bellow, although there are more economic category hotels, when

we analyze the total of available apartments, the prevalence are the higher and higher luxury

categories. This is due to hotels with such categories are larger and with more accomodations than

economics.

Currently there are no hotels in the economic super and luxury segments.

Apartments Distribution by Categories in Barra da Tijuca:

Over many years the hotel offers available in Barra da Tijuca was limited both in quantity of

hotels and enterprises quality. Most part of the hotels were simple and small with the occurence of

some apart-hotels, where only a few apartments were destined to the hotel industry. Due to the

shortage of hotels, many companies located in Barra and adjacente areas such as Jacarepaguá lodged

their employees in hotels located in other neighborhood of Rio de Janeiro such as Copacabana,

Ipanema, Leblon, Vidigal and São Conrado.

Driven by the neighborhood growth and the perception of good opportunity for the

installation of hotels, several projects were launched in the 90s and 2000s, representing na increase

of nine hotels. With the opening of these new developments, Barra da Tijuca offer increased from

593 apartments in 2000 to 2.345 apartments in 2010. Since then, only two hotels opened, Brisa da

Barra with 140 apartments and Ramada with 216, both in 2012.





The expansion of the hotel offer in Barra da Tijuca continues to grow rapidly. Side by side

with the downtown area of Rio due to work to Porto Maravilha, are the regions with the highest

expantion rates in the hotel industry.

Performance - Barra da Tijuca

Barra hotels, for beeing far from downtown and not presente great appeal to leisure, attracts

mostly corporative segments, coming from companies located in the region, and the events segment,

specially the Windsor Barra with good rooms facilities.

It is observed that Barra´s occupation had a leap from 2009 to 2010 but kept linear until

2011, at 69% while Rio reached 79% in 2011. This difference may be explained, mostly, for the non

existing of leisure public, often present i other areas of the city and which guarantees occupancy on

weekends. The year of 2012 had a diferent behavior, with a occupancy rate increase although other

regions presented a reduction but a smaller increase of 8% on the daily rate while the city average

growth was 23%.

In turn, the year of 2013 reflected the market´s tendency, with sharp drop in occupancy, but

an expressive growth on the average daily rate which resulted in a 6,5% growth on RevPAR

compared previous year.

Overview of Offers in Barra da Tijuca

Follows bellow a list of the main hotels in Barra da Tijuca that will compete directly with the operation of the project in study:

(i) Radisson Barra Hotel & Suites – Superior Luxury – operated by Starwood, with 292 hu’s;





(ii) Windsor Barra – Superior Luxury – operated by Windsor, with 338 hu’s;

(iii) Bourbon Residence Barra Premium – Superior – operated by Bourbon, with 208 hu’s;

(iv) Brisa Barra – Superior – operated by Independente, with140 hu’s;

(v) Promenade Barra First Class – Superior – operated by Promenade, with 224 uh’s;

(vi) Promenade Paradiso – Superior – operated by Promenade, with 149 hu’s;

(vii) Ramada Hotel and Suites Rio Centro – Superior – operated by Vert Hotéis, with 216 hu’s;

(viii) Royalty Barra – Superior – operated by Independente, with 249 hu’s;

(ix) Transamérica Flat Barra – Superior – operated by Transamérica, with 550 hu’s;

(x) Casa Del Mar Residence – Economic – operated by Promenade, with 64 hu’s;

(xi) Entremares – Economic – operated by Independente, with 64 hu’s;

(xii) Gaivota – Economic – operated by Independente, with 92 hu’s;

(xiii) Praia Linda – Economic – operated by Independente, with 63 hu’s;

(xiv) Sol da Barra – Economic – operated by Independente, with 20 hu’s;

(xv) Tropical – Economic – operated by Independente, with 102 hu’s.





Competitve Offer

Considering the location, Market positioning and quality of the facilities, the primary competitive offer of the proposed hotel should include more categorized hotels located in Barra da Tijuca, that is, the Windsor Barra and the Radisson bar, which are top luxury class hotels. Besides these hotels we also consider Sheraton Rio hotel located at Vidigal and Royal Tulip Inn in São Conrado. All hotels are located at the seashore and are administrated by renowned hotels chains;

Together, the hotels os primary and secondary competition add up to 1.590 apartments.

3.5 Hotel Market Analysis by Sector, Perspective of Growth and Analysis of the Insertion of the Hotel Product in Study in this Market

Demand Analysis

The demand analysis includes information obtained through enterviews with hotels included

in the competitive offer. We complement this information with interviews with the official tourism

agencies, tour operators, meeting planners, incentive travel organizers, convention center and

exhibitions and other bodies related to the tourist demand, and companies located in Barra da Tijuca,

Jacarepagua and nearby regions. With these informations we were able to determinate the profile of

the potential users of for the proposed hotel.

Barra da Tijuca is considered as an especific destiny that is not part of Rio de Janeiro as a

touristic destination. In general, Barra da Tijuca is still considered far from all market segments,

however, the growth of Rio de Janeiro towards Barra and the perception of it as a future of the city,

have shortened this distance. The characteristics of demand segments that use hotels in Barra are

presented as follows:





Commercial:

This segment is composed by business travellers, inclusing all levels of board of directors,

managers, sales consultants, government officials etc. where the company sign contratcs with the

hotels stablishing fees under a generated minimum of room nights.

Currently, this is the main segment of demand in Barra and is generated by local companies

and industries and labs located in Jacarepaguá, for example, companies located in the north zone and

Itaguaí. Several large companies are located in Barra, mainly along the Americas Avenue. In

addition to the Oil & Gas companies such as Shell, health sectors (Unimed, Amil), telephony (Vivo,

TIM, Nokia) and telecommunications (Globo / Projac).

Tourism:

The tourists segment consists on travelers that have chosen Rio de Janeiro as their tourisctic

destination, both Brazilians and foreigners, including also travelers with travel packages through

tour operators. The capture of the tourists segments in Barra da Tijuca is limited by the distance to

the sights of the city.

However, due to the freat number of leisure options (show houses, shopping centersn

cinemas and theater) in Barra da Tijuca and the quality of the beach, there is already a share of

tourists that chooses to stay in this region, specially in their second or third visit to the city. Most of

these tourists are Brazilian or south American and prefer to stay in seafront hotels or nearby the

beach.

We, JLL, identified a strong potential in Barra da Tijuca to attracting events, specially after

the renewal and modernization of Riocentro which attracted new events. The segment group consists

of four sub-segments, which are described below:





(i) Corporative Groups:

Composed by employees of companies that gather in training seminars or technical

improvement, stategy meetings, etc. These groups tend to occupy a larger hall and several smaller

support rooms and are generated by companies such as labs, banks and service rendering companies.

Basically all the city hotels that have event areas are used for different types of business

events, for different hierarchical levels and ranging from 10 to 600 participants.

(ii) Incentive Groups:

The incentive groups can be sorted by “events” and “awards”. The awards are exclusively

leisure travels offered by the companies to their employees as a resulto f their professional

performance. In general the empoyees travel with family. The events of incentive are held by the

companies as incentive and promotion of the companies themselves, as in products releases and can

be composed of employees, customers, suppliers, journalists, dealers etc.

These groups occupy 30-100 hotel rooms and stay for a period of two to five days. incentive

events use, in some cases, meeting spaces that take place in the morning, and for banquets, cocktails

and themed dinners that take place in the evening. The resto f the day is dedicated to leisure,

tourism or sports with no specific agenda. Incentive groups preferred hotels in Rio de Janeiro are

the hotels located at the beach, in Copacabana and Ipanema, highlighting the Copacabana Palace,

Royal Tulip and the Sheraton Rio.

This group hardly chooses staying in Barra and when they do the preference is for beach

fronted hotels.





(iii) Associations:

Association groups are formed by class entities that meet in congress, seminars and

conferences to discuss and exchange experiences and information about their professions.

This segment often occupies a large number of hotel accomodations since their meetings os

often constituted by large groups of participants and given the destination comes with a large

number of companions (spouses or family members).

In Rio de Janeiro, most of the conferences are medical related and mainly occour at the

Royal Tulip, Sofitel Rio and Windsor Barra.

Most national congresses have 500 to 2.000 participants ans the international 1.000 to 6.000.

All of them using support and ballrooms, and an exhibition area of up to 1,000 m² for the assembly

of sponsors stands.

Events use hosting at their own hotel headquarters and varying leveled hotels around,

preferring based hotels that have a close diversified hotel offer, often having the need to offer

transfer to other hotels.

In general, these events are three to five-day duration with annual, biannual and, depending

of the event´s size, monthly, frequency. Mostly they are annual but shift cities around the country.

The Riocentro renewal and the expansion of Windsor Barra Hotel events area tend to turn that area

into an important polo event in the city.

Nowadays, however, both fail to capture events due to lack of high standard hotel around

hotels to host participants. With the opening of the hotels identified in future offer, that should

change, and this segment is expected to have a significant growth in the coming years, generating

demand for all Hotels in Barra.





(iv) Social Events:

Social events are mostly marriages, birthday parties, socializing, products realease and other,

besides having large groups of participants the hotel occupancy is low.

These events use the larger rooms, using settings such as banquets (participants sitting at

round tables) or cocktail (people standing).

Is an ascending segment in Rio and can be explored by hotel with well dimensioned

ballrooms.

(v) Crews

This segment is composed by crews and other employees of airline companies that uses

Santos Dummont and Galeão.

Some of Barra´s hotel host Galeão Airport´s crews due to the ease access using Linha

Amarela.

Demand Growth Perspective:

The future demand for Hotels rely on the economic situation, business volume growth and

well projected and suitable hotels offers. To project the demand potential to then proposed hotel we

evaluated the natural demand growth of hotels in Rio de Janeiro, and, more specifically, in Barra da

Tijuca, besides the non-accommodated, created and induced demands described as follows:





Natural Demand Growth

Happens due to the Market growth in face of economic conditions and available offer. For

example, the level increase of economic activity in the city stimulated by investimens on the oil

industry has increased the commercial demand in hotels. Moreover, of the 565 thousand square

meters of office areas planned for the city in the last year, 11.3% (63,800 m²) were located in Barra,

representing a 30% increase compared to the current total supply and bringing new companies to the

region.

Non-Accommodated Demand:

Includes the unable to be accommodated in hotels for several reasons. The non-

accommodated demand constitutes the declined demand due to lack of availability of existing hotels

or groups that have not been able to find suitable and quality hotels facilities. Currently, Barra has a

high level of non-accommodated demand, specially during events in Riocentro or other parts of the

city.

Created Demand

It is that rising from the opening of some new venture in the analysed market as a new

convention and exhibition center or a theme park.

Marketing efforts of new hotel chains setting up shop in the city should also help create

demand for new hotels.





Induced Demand

It is the generated demand by a determined event such as the 2016 Olimpics that will take

place in the city of Rio de Janeiro. This type of demand is intense only during the period of the

event.

In 2016 Barra´s demand will be more intense. Riocentro will be booked with the events

connected to the Olimpic Games for a 6 to 7-month period. Embratur and Olympic Committee

expects a total estimated betweenof 360.000 and 380.000 visitors for the Olimpics.

For purposes of our analysis we consider a total volume of induced demand of 88.000

roomnights in 2016 in competitive markets analyzed. To project this total, we have considered an

average stay of 7 days, double occupation of 2,0 and a 45% pickup of roomnights by market

competition in Barra.

Demand Growth Perspective

To the competitive Market of the proposed hotel, JLL considered a based total roomnights

(overnights) estimated for 2013 of 389,000 and projected growth rates for the various demand

segments based on the factors mentioned above.

The demand growth will vary given the opportunities due to the impact generated from each

hotel chain marketing efforts, loyalty programs and size of the events area that may generate

additional group demand, etc.

The estimated growth for the years of 2015 and 2016 is high and reflects not only the growth

of the the demand origining from sports events but also the acquisition of the non-accommodated

demand by new hotels in the competitive market in question





Therefor, the average occupation rate drops to 47% in it´s critical moment gradually

recovering until reaches 57% in 2021

Findings about the Demand:

Hotel industry in Rio de Janeiro is currenly undergoing through a major transformation, with

several hotels, focused on tourism and commercial segments being built, mainly in Barra da Tijuca.

New ventures in Barra should make these regions increasingly attract a bigger commercial and

events demand with the occurrence of modern and new hotels and top luxury categories, not very

common, nowadays, in Barra.

Due the 8 km distance between Embaixador Abelardo Bueno Avenue and hotels located at

Barra da Tijuca beach, similar to the distance between Botafogo and Ipanema´s beaches, the

tendency is the formation of two distinct hotel regions once the hotel offer around Abelardo Bueno

Avenue is consolidated. Is expected Barra to consolidates as a hotel destination to it´s own demand,

becoming more local. Hotels such as Tullip Inn and Sheraton Rio that that competes with others

hotels in Barra for lack of options shall have less impact on the future.

Currently, the hotel offer in Barra da Tijuca is 15 hotels, with a total of 2.771

accommodations. Quality hotels in the region is yet limited, there are, though, many projects in

different states, some under construction, planning or study, that, according to our researches, sum

4.647 house units (hu) in the future (not including the proposed hotel).

The proposed Project will compete mainly with hotels of the same category located in Barra

da Tijuca, São Conrado and Vidigal, specially due the lack of hotels of that same category in Barra.

The competition hotels are all located at the beach and administrated by a renown hotel chain. I also

included in the analysis a secondary competive offer, formed by hotels top luxury categorized

located in Copacabana and Ipanema under management of international companies having as

comparative quality of facilities and management.





We considered a total of seven hotels with 2.444 accomodations. These hotels presented an

average occupancy rate of 73% and daily rate of R$554,00. In 2013, maintaining the market flow,

there was a decrease in the occupancy, although with an average daly rate growth of 15%. A more

discrete growth in comparison with the previous years.

Regarding the demand, Barra da Tijuca has, today, several segments of hotel demand,

evolving to a market independent to the south zone of Rio de Janeiro. The commercial segment is

the strongest and generated by a variety of national and international companies from the Oil and

Gas sector to great sized labs companies. The commercial sector demand is also generated from

farthest regions sich as the north zone and Itaguaí wich have no accommodation options. With the

infrastructure changes that are taking place in Rio, the access to these companies to Barra are being

facilitated.

Out researches have shown that Barra da Tijuca have both the amplitude and variety of

generators that sustain the offer growth in many segments. Besides, all demand generators presents

good growth perspectives. In 2012 and 2013 there was a demand retraction, specially in the

telecommunication area, the companies headquarted in Europe reduced their travelers flow. Even so,

the growth perspective of sectors such as Oil & Gas, allied to the implantation of new companies in

Barra sould contribute to the new offers absorption.

The events segment is Strong in Barra given the available áreas at Riocentro and Windsor

Barra. However, our research indicates that both lack to capture events due to limited hotel offer in

Barra. In addition, during most important events, a great part of the demand is not accommodated

and has to find accommodations in south zone hotels. With the increase of the offer and product

variety comes the perspective of significant growth in the number of events.

The Barra tourism segment is considerably smaller than the south zone since most tourists,

specialy those who come to Rio for the first time, search the main sights of the city. Greater part of

the tourists that choose to stay in Barra are Brazilians and South Americans that are already familiar

with the city and choose Barra due to the combination of the beach quality and leisure options

(shopping centers and show houses). With Barra and Rio de Janeiro exposure during the 2016

Olympic Games the segment should experience a considerable growth.





Lastly, Barra receives a small part of airline crews of Galeão Airport, given the ease of

access by Linha Amarela. With the increase of passangers flow expected for Galeão and the

availability of new Hotels in Barra, mainly the beach fronted, this segment is expected to grow for

the next years.

Althought the positive facts sustaining the demand growth, given the considerable increase

of the offer between the years of 2014 and 2016, we estimate that occupation rate should experience

a sharp drop. The future offer includes 07 hotels with 2.363 rooms and was carefully considered in

our analysis given the uncertainty of some projects conclusion. The situation encountered points to a

decrease in the occupancy rates to 40% until the market is adapted and new units acquired.





4. REVENUE, EXPENSES AND RESULTS PROJECTION

This presentation is based on the study of the Results Projections elaborated by the company

HOTELARIA BRASIL – HB and the previous information contained in this study, exclusively to

the economic – finantial feasibility of the targeted project – BEST WESTERN PREMIER

AMERICAS FASHION HOTEL BY LENNY NIEMEYER, consolidated as follows on chart 3

presented bellow:

Chart 3 Projections – Incomes, Costs / Expenses, Results - Hotelaria Brasil (HB).





It is important to emphasize, regarding the projections made by HB, in which this study

noted, in verbis, the following:

“Results with no Income Taxes.

Profits Projection Study elaborated by HOTELARIA BRASIL to BEST

WESTERN PREMIER AMERICAS FASHION HOTEL BY LENNY

NIEMEYER venture.

The foregoing analysis, merely perspective, subordinated to the market

´s fluctuation, and therefore, may suffer positive and/or negative

modification walking aside with the economic conditions of the

country, state or city in which the Project is occourring, so that neither

Hotelaria Brasil nor any of its partners in this project guarantee or

take responsibility in any of the projections contained in that analysis.

The projections are based on uncertain and variables factors, not

representing, therefore, results or actual facts that should be

necessarily accomplished or actually fulfilled.

This analysis and projection was conceived unically to serve as

information and not encouragement or motivation for the

accomplishment of any purchase action. We also would like to record

that the associating companies of this project are not obliged to review

or update the projections to reflect future modifications in the

information or presumptions in which this analysis was elaborated.





The Incorporating name, of it´s partners and this analysis can not be

partial or fully reproduzed without the inclusion in any promotional

brochure or used as advertising in any kind of printed material or be

part of any other study, report or offer, unless its use is authorized in

advance and in writing by the partner companies of this venture."

The Table 1, presented bellow, consolidates the results of the financial projections made by

HB, showing not only the component items of the projection structure of future cash flows, such as

revenue lines and structure of costs and expenses associated with the project, as well as the ratios

between the assumed values for each of these items in relation to net revenue, along the projection -

five (05) years.





Table 1 Projections of Annual Free Cash Flow – 05 (five) years horizon.

Fonte: Hotelaria Brasil.

Year 1 Year 2 Year 3 Year 4 Year 5

Management Information45% 50% 55% 60% 65%

460,00 513,00 535,00 606,00 650,00- 11,52% 4,29% 13,27% 7,26%

207,00 257,00 294,00 364,00 423,00- 24,15% 14,40% 23,81% 16,21%

36.464 40.515 44.567 48.618 52.670

43.756 48.618 53.480 58.342 63.203

365 365 365 365 365

Average Occupation Average Daily RateGrowth RevPargrowthOccupied AccomodationTotal GuestsTotal Number of DaysNumber of Accommodations

222 222 222 222 222

Year 1 Year 2 Year 3 Year 4 Year 5

NET INCOME (a) 100,00% 23.082.115,00 28.285.955,00 32.565.697,00 39.656.913,00 45.962.125,00

TOTAL EXPENSES (b) 51,75% (13.154.948,00) (15.083.115,00) (16.949.390,00) (19.394.783,00) (21.818.006,00)

(-) Total expenses and Departmental costs 24,86% (6.687.642,00) (7.393.869,00) (8.134.535,00) (8.988.819,00) (9.889.608,00)

(-) Total Not Distributed expenses 26,89% (6.467.306,00) (7.689.246,00) (8.814.855,00) (10.405.964,00) (11.928.398,00)

Gross Operating Profit (GOP) 48,25% 9.927.167,00 13.202.840,00 15.616.307,00 20.262.130,00 24.144.119,00

Annual margin 43,01% 46,68% 47,95% 51,09% 52,53%

(-) Administration Fees (10% x GOP) 4,83% (992.716,70) (1.320.284,00) (1.561.630,70) (2.026.213,00) (2.414.411,90)

(-) Other DeductionsTotal (7% x Receita Líquida) 0,22% (62.548,00) (66.155,00) (69.971,00) (74.007,00) (78.275,00)

Operating Cash Flow (OCF) 43,21% 8.871.902,30 11.816.401,00 13.984.705,30 18.161.910,00 21.651.432,10

(-) Asset Replacement Reserve (2% x GOP) 1,67% (198.543,34) (396.085,20) (468.489,21) (810.485,20) (1.207.205,95)

(=) ANNUAL CASH FLOW 41,54% 8.673.358,96 11.420.315,80 13.516.216,09 17.351.424,80 20.444.226,15

(%) 37,58% 40,37% 41,50% 43,75% 44,48%

(=) AVERAGE MONTHLY CASH FLOW 41,54% 722.779,91 951.692,98 1.126.351,34 1.445.952,07 1.703.685,51

BEST WESTERN BARRA CALÇADA - PREMIER

FLUXO DE CAIXA AVERAGEPERCENTAGE





In order to show the average proportions of the items considered in the projections shown in Table 1,

Table 4 was built, revealing the associated percentages, as follows:

Table 4 Medium Proportions of the Categories used in the Projections According to Net Revenue.

According to the projections made by HOTELARIA BRASIL, the annual free cash flow to

share among the 666 (six hundred and sixty-six) fractions represents on average and approximately

42% (forty two percent) of the net revenue generated by hotel operations.

NET REVENUE 100,00%

TOTAL EXPENSES 51,75%

(-) Total of Expenses and Departmental Costs 24,86%

(-) Total of Non Distributed Expenses 26,89%

Gross Operating Profit (GOP) 48,25%

Annual margins

(-) Administration Fees (10% x GOP) 4,83%

(-) Total of Other Deductions (7% x Receita Líquida) 0,22%

Operationg Cash Flow (OCF) 43,21%

(-) Asset Replacement Reserve (2% x GOP) 1,67%

(=) ANNUAL FREE CASH FLOW 41,54%

CASH FLOW AVARAGEPERCENTUAL





4.1 Income Distribution - Monthly Average Free Cash Flow for Hotel Fraction

Bearing in mind the typifications – Class A and Class B – which characterize hotel fractions

of the Project in study, as identified in Table 1, the operation result or it´s free cash flow was

Tendo em vista as duas tipificações – Classe A e Classe B – que caracterizam as frações

hoteleiras do empreendimento em questão, conforme identificado no Quadro 1 retro, a distribuição

do resultado da operação, ou do seu fluxo de caixa livre, foi conducted based on the respective

proportions of ideal fractions with the respective ideal prices, which ensured the equalization of

incomes to be received by investors, regardless of the hotel class fraction acquired. The calculation

presented bellow reveal the quantitative procedures for the determination of these coefficients:

(i) Coefficient of Class B Fraction Distribution (ideal fraction of 0,185484%):

00185484,0

145867,0594185484,072

185484,0

ClassB

ClassB

ClassAClassAClassBClassB

ClasseBClassB

Coef

Coef

Ideal FractionQuantIdeal FractionQuant

Ideal FractionCoef

(ii) Coefficient of Class AFraction Distribution (ideal fraction of 0,145867%):

00145867,0

145867,0594185484,072

145867,0

ClasseA

ClassA

ClassBClassBClassAClasseA

ClassAClassA

Coef

Coef

Ideal FractionQuantIdeal FractionQuant

Ideal FractionCoef





Once determinated the distribution coefficients, those were applied within the free cach flows

projected to the hotel operation, thus extracting the representative cost of the flows determined to the

investors od ueach type of ideal hotel fraction - Class A and Class B. At the occasion were also

determinated the monthly flows, and annuals using the number of months associated to these (12).

The following equation reveals the mathematic model to this operation:

12

YearXClasseKClassK

FCLCoefMonthlyFreeCash Flow

YearX

Replacing the incurred costsb y the variables listed in the equation, we determined the

monthly free cash flows for each of the 05 (five) years of the projections in each of the two types of

the hotels fractions of the project under analysis. This perspective results are as listed bellow:

Chart 2 Free Cash Flow – Hotel Fractions Class A and Class B.

1.054,30 1.388,21 1.642,97 2.109,17 2.485,11

(%)

(=) AVERAGE MONTHLY FREE CASH FLOW

(=) Monthly Free Cash Flow - Fraction Class B ( Ideal Fraction 0,185484%)

(=) Monthly Free Cash Flow - Fraction Class A (Ideal Fraction 0,145467%)

1.340,64 1.765,24 2.089,20 2.682,01 3.160,06

0,43 0,47 0,48 0,51 0,53

722.779,91 951.692,98 1.126.351,34 1.445.952,07 1.703.685,51

(=) ANNUAL FRE CASH FLOW 8.673.358,96 11.420.315,80 13.516.216,09 17.351.424,80 20.444.226,15

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5BEST WESTERN BARRA CALÇADA - PREMIER





5. ECONOMIC FEASIBILITY OF THE PROJECT

Based on the premiss that created the oportunity for the establishment of the known

variables, through primary data provided by the hiring company or third party hired by them, follow

the Economic-Financial Feasibility Study of the Project and Return of Investment Fee, having the

investor as the acquirer of one of the hotel fractions.

For such, we proceeded with the assembling of the charts of free cash flows of the acquiring

investors by ideal hotel fraction type acquired based on the economic-financial informations

described on item 4 (above), considering not only the projected 5 years but also the 10 years which

is reccommended for this category of investiment .

5.1 Investors Flow Charts of Free Cash Flow

Resource intakes by investors were distributed, as reflected above, over time based on the

table line provided by the contractor through twelve (12) monthly contributions made during the

incorporation period, beginning July 2015. Aside from the aforementioned shares, investors will

take other hundred (100) monthly installments, fixed and consecutive, maturing from the first month

after the delivery of the project, scheduled for July 2016, which will last until the month of October

2024.





The reffered payment flow was distributed through the mentioned periods above

concentrating 15% (fifteen percent) of the adjusted price of certain ideal hotel fraction in the form of

a sign, due in a single installment, maturing upon subscription of the purchase and sale option. In

addition to the payment of the deposit, left provided a set of ten (10) equal monthly and consecutive

installments, which absorb 18% (eighteen percent) of the right price, payable from 1 month after the

signal (August 2015) , lasting until the 10th month, the incorporation period (May 2016). In addition

to the parts here mentioned for the first month to ten (10) per month, ie to June 2016, remained

planned single installment ("delivery") corresponding to 7% (seven percent) of the right price,

confirming the forecast of payment of 40% (forty percent) of the purchase price of the hotel ideal

fraction object of buying and selling over the incorporation period.

Given the total right price of the percentage written off by the payments described (40% -

forty percent), the completion of the total to be amortized (60% - sixty percent) as scheduled

discharge through direct financing with developer, through the payment of one hundred (100)

monthly, equal and consecutive installments, plus interest calculated at a rate of 1% (one percent per

month), maturing over the period counted from July 2016 to October 2024.

The Table 5, presented next reveals the distribution of the right priced partitions in

percentage of the latter, which will be amortized through the due installments over the period of

incorporation and post-key period, as mentioned in the preceding paragraphs.

Table 5 Right priced partitions associated with the payments.

Table 5 Right priced partitions associated with the payments..

Due. Ago 15 to May 16 Jun 16

Quote Deliver

%

Jul 15

Act

15,00%

10 monthly

18,00% 7,00%

Jul 16 to Oct 24

Loan

60,00%

RIGHT PRICED PARTITIONS OF CLASS A AND CLASS B UNITS





Considering it is a set of fixed and periodic installments (monthly), the amortization model

suggested by the developer was the one termed as French Amortization System or Payment Uniform

Series, also known as the Price Table, whose mathematical model for calculating the value given by

the following benefits listed below:

1

n

m

m

n

mMonthly

i 1

ii 1Financed AmountInstallment ;

where im representes the monthly interest fees and n the number of installments assumed by the borrower.

Applying the values assumed by the variables on the equation for each of the two classes of

ideal hotel portion of the project screen, were determined the amounts assumed by the respective

post-key monthly installments, as follows: R $ 2,248.00 (two thousand two hundred and forty eight

reais) and R $ 2,859.00 (two thousand, eight hundred fifty-nine reais) for hotel fractions Class A and

Class B, respectively.

Still regarding the total investment to be made by the purchaser of one of the hotel fractions

of the project under discussion, it is to establish that the Hotel Implantation rate, which comprise

pre-operating expenses and working capital required for the development of hotel operations as well

as the decoration costs and equipping the units will be added to the total value of the fraction. The

distribution of the value assumed by the reffered rate, among the items mentioned, follows shown in

chart below:





Chart 1 Distribution of the Implementation Rate Per Fraction.

Fraction Working Capital andPre-operating expenses / pc.

Installation and equipment / pc.

Total Implementation Rate / un.

PROJECT TOTALS R$ 3.425.999,76 R$ 9.141.339,36 R$ 12.567.339,12

Class A R$ 5.000,00 R$ 13.333,33 R$ 18.333,33

Class B R$ 6.333,33 R$ 16.963,05 R$ 23.296,38

All these information translated into two diagrams of payment streams, one for each of type

of the ideal hotel fractions - Class A and Class B - would lead to the following representative

graphics of the contributions made by purchasers investors:





Figur 4 Hotel Fraction Class A Diagram of Monthly Payments Flows

Figure 5 Hotel Fraction Class B Diagram of Monthly Payments Flows .





5.2 Investors Charts of Free Cash Flow

Return on plan assets________________

0,65%

Asset Value

The projections flows made by HOSPITALITY BRAZIL (HB), whose values are oriented in

Table 2 of this document, were allocated in a monthly basis, from the first month of operation, which,

in view of the project period - July 2015 (date zero total projection) to June 2016 (month 11 of the

total projection) - will take place in July 2016 (month 12), which shows that part of the investment

(post-key portions) will be held with the hotel project already in operation.

Extrapolation of projections of 05 (five) years treated by HB for ten (10) years of full

projection was preceded by maintaining the monthly free cash flows projected for each ideal hotel

fraction class, which, as indicated in Table 2, took the amount of R $ 3,160.00 (three thousand one

hundred and sixty reais) - ideal hotel fraction Class B - and R $ 2,485.00 (two thousand, four hundred

eighty-five reais) - ideal hotel fraction Class A - for the subsequent months, which implies the

crystallization of the average values of daily and occupancy rates, ceteris paribus for the other items,

after the project maturation period.

By the end of the10 years projection, with the hotel fraction sale planned, based on the

premise that the monthly income generated is 0.65% (sixty-five hundredths percentage points) on the

value market assets - Income Method (Appraisal Engineering) - representative of a current market

standard assets property related.

In terms of valuation of the ideal hotel fractions of the project, the premise described in the

above paragraph can be expressed through the following quantitative procedure:





Replacing in that model the amounts assumed by the representative extrapolated returns of

free cash flows to the 120th (twenty hundredth) month from the projections of HB to the hotel

fractions Class A and Class B, it was determined the respective expected market values during the

same period, as follows:

(i) Expected market values of hotel fractions Class B (ideal fraction of 0,185484%):

85,153.486$

0065,0

00,160.3$

%65,0

120

120

120

120

120120

RMarket Exp Value

RMarket Exp Value

FreeCxFlowMarket Exp Value

FreeCxFlow

o

o

o

o

oo

ClassB

ClassB

ClasseB

ClassB

ClasseBClasseB

0,65% Market Exp Value

(ii) Expected market values of hotel fractions Class A (ideal fraction of 0,145867%):

69,307.382$

0065,0

00,485.2$

%65,0

120

120

120

120

120120

RMarket Exp Value

RMarket Exp Value

FreeCxFlowMarket Exp Value

FreeCxFlow

o

o

o

o

oo

ClassA

ClassA

ClasseA

ClassA

ClasseAClasseA

0,65%Market Exp Value





Given the above, the estimated market values of hotel fractions Class B and Class A, at the

end of 10 years, remained in R$ 486,000.00 (four hundred eighty-six thousand reais), and R$

382,000.00 (three hundred eighty-two thousand reais), respectively.

The reffered amounts were entry by the last period of the diagrams - 120 (hundred and

twentieth) month - as a non investiment or low fixed, along with the last income of free cash flow of

the operation.

An analysis that can bring the most reliable evidence of the reality of investors in the project

in vogue in this study were considered, in addition to boundary conditions of the certain price

payment flows adjusted the ideal hotel fractions, costs emerging from such acquisitions with

gatherings of their Real Property Transfer Tax – ITBI.

ITBI´s value is calculated, regardless of the classification of the ideal hotel fraction, by

applying the rate of 2% (two percent) of the transacted value or property purchase.

The reffered accessory costs related to the acquisition of an ideal hotel fraction had its

settlement conceived in line with the deadlines given by the municipality, for the month of delivery

of the keys, that is, to June 2016.

It is importante to notice that the Project in vogue will be sold on the real estate regime, this

regime that meets requirements of Law No. 4591 (Law of the merger), which remained established

in item V of its Article 43, in verbis, the following.:





Art. 43. When the developer hire the delivery of the unit over time and

certain price, determined or determinable, even when individual, the

following rules they will be imposed: (...) V - may not modify the

terms of payment or readjust price of units, even in the case of rising

prices of materials and labor, work, unless it has been explicitly set the

readjustment college, proceeding then under the prescribed conditions;

(...). "(Emphasis added)

In other words, the said law device mentioned in the paragraph above requires that, since the

construction costs are included in the final price of the ideal hotel fraction - ideal hotel fraction price

- as in the case of the project under consideration, any construction cost variation will be covered

exclusively by the developer.

Also regarding the total investment to be made by purchasers investors of hotel fractions, it

is to establish that, as noted above, the development in the screen were not included in their prices

contributions related to working capital and pre-operating expenses, which were listed in the Grid 1,

with total amounts, in round numbers, of R$ 23,296.00 (twenty-three thousand, two hundred ninety-

six reais) to ideal fractions Class B, and R $ 18,333.00 (eighteen thousand three hundred and thirty-

three reais) to ideal fractions Class A. These values have their payment forecast four (04) equal

monthly and consecutive installments, maturing from September to December 2015 - periods of 2

to 5 cash flow.

All these information can be identified in Figures 6 and 7, consolidated in graphic, as

follows:





Figure 6 Class A Monthly Free Cash Flow per Ideal Hotel Fraction Diagram.





Figure 7 Class B Monthly Free Cash Flow per Ideal Hotel Fraction Diagram .





5.3 Calculation of Internal Rate of Return

With the diagrams depicted in Figures 3 and 4, the main parameters of economic and

financial feasibility analysis and investment projects were determined, among which stands out the

Internal Rate of Return - IRR, which is determined through the applicability of mathematical

relation characterized as a polynomial, as follows:

Since there are two conventional flows, each with one inverting signal throughout its length,

the application of the above equation results in a single TIR value with validations in mathematical

and practical fields, which made the calculation this parameter feasible and reliable as result for the

required economic and financial nature analysis.

It is important to mention that, bearing in mind that the distribuition of the hotel operation

income will be, as stated by the flows in analysis, using the same proportions brought by the ideal

fractions of the ideal fractions, and having been such fractions the basis for the differentiation for

Class A and Class B ideal fractions prices, the Return Internal Rate - TIR's - measured for each of

the flows , expressed the same value, which follows listed in Table 6 below, in monthly and annual

terms.

Table 6 Annual and Monthly Internal Rate of Return - Class A and Class B..

n

1jj

j

0 0TIR1

CFCF

per year

per month

Internal Rate of Return (IRT)

Class A and Class B

13,23%

1,0407%





Given the above, it is concluded that, according to the information provided on the

projections of future flows, as well as in relation to certain prices and temporality of the investments

required for the acquisition of one of the ideal fractions of the hotel project under discussion at any

one of the two (02) available classes - Class a and Class B - the profitability of the venture investors

in screen will be 13.23% pa (Thirteen point twenty-three percentage points per year).

Table 7 Annual and average rentabilities of the major market indicators (last 5 years).

Taking as a basis the market average rates shown in Table 7, we may confirm that, compared

to the average returns related, the IRR of the project Best Western Premier Americas Fashion Hotel

by Lenny Niemeyer has clear superiority, which produces enough technical convictions to conclude

its economic and financial viability.

In order to annul and / or mitigate the risks to which commercial activities (such as the hotel

industry) are subjected, the Calçada SPE has chosen to offer, through the contract signed with the

Calçada Empreendimentos Imobiliários SA, available to investors, minimum security profitability

for each type of fraction. This guarantee was designed to tolerate the effects of the sharp drop in

hotel demand is sustained less sensitive post-Olympics time 2016.

Thus, owners of Class A fractions have guaranteed minimum return of R $ 6,000.00 (six

thousand reais); and the owners of fractions of class B have guaranteed minimum return of R $

7,800.00 (seven thousand eight hundred reais), per semester.





The owners of the BW Americas fractions will receive the amount proportional to a fraction

(s) of the fixed rent of R $ 50,000.00 (fifty thousand reais), plus 90% (ninety percent) of the net

result of the operation of the hotel project. However, if the result to be distributed to investors every

six months, is less than R $ 6,000.00 (per fraction class A) and R $ 7,800.00 (per fraction class B),

the Calçada SPE e a Calçada Empreendimentos Imobiliários S.A. will supplement the compensation

of investors, so that the owners receive these minimum wages.

Calçada SPE and Calçada Empreendimentos Imobiliários S.A. will ensure a minimum return

for a period of 24 (twenty four) months from June 2016 (start date of the effective operation of the

project), with calculation and distribution of the result at the end of each semester.

By the end of each 6 months period, after the Hotelaria Brazil Ltda., Administrator BW

Americas, determine the business results of distributions and disseminate the results, the alçada SPE

and Calçada Empreendimentos Imobiliários S.A. will verify if the owners received the minimum

amounts the semester. If the sum determined does not reach this minimum required, the a Calçada

SPE e Calçada Empreendimentos Imobiliários S.A. will ensure a minimum return on behalf of the

acquirer, complementing the results obtained by each owner.

If the result immediately after the semester is larger than the minimum, acquirers must

reimburse the guarantors in proportion to the amount received in the previous six months, to ensure

minimum profitability.

Considering that the guarantee under discussion will take place for 24 (twenty four) months

from June 2015, the requirement will last for 04 (four) semesters. At the end of this period, if there is

any "credit" in favor of the guarantors, it will automatically be disregarded, so that BW Americas

fractional owners hold no debit securities and / or as a result of this profitability security to Calçada

SPE ou Calçada Empreendimentos Imobiliários S.A.





5.4 Other Parameters of Economic Feasibility

In addition to the TIR parameter, follow certain other relevant indicator, the Cap Rate, used

in analysis of economic and financial viability, with adhesion and applicability of this analytical

framework.

Cap Rate – Return on Capital

This indicator metric is related to the evaluation of the return generated by the project, year

after year on the capital contributed by the investor at the beginning of it.

Within the present study context, the economic feasibility of the project is attested when your

Cap Rate exceeds the Cap Rate of the market, having as a basis the market value of assets linked to

the rated project.

To determine this indicator, subscribers made use of the same premise appreciation of ideal

fractions used in estimating the the value of the non investment described at the beginning of this

item, and applying this result to identify the market value of the ideals fractions of the project, , year

after year, observing their classes and values.

Thus, the spectrum of annual value was obtained over the years covered by the projections of

the Cap Rate and Market Cap Rate, as indicated in Table 8, shown below. With regard to this

economic parameter, it is, once again, worth noting that, it is argued that, since the results distributed

as free flows are prorated based on the same proportions of hotel fractions, their results will not

suffer variations, from one class to another.





Table 8 Cap Rate vs. Market Cap Rate – Class A and Class

Operation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10*

investor - 4,83% 10,54% 10,66% 11,94% 12,48% 11,21% 10,18% 9,32% 120,37%

Market - 2,36% 5,84% 6,49% 5,15% 4,83% 4,54% 4,26% 4,00% 92,95%

Cap Rate - Classe A e Classe B

* Year containing unit sales premise

The consolidated values above prove the superiority of the project Cap Rate under discussion

in relation to Market Cap Rate, in all contemplated periods, which, again, supports the opinion of the

economic and financial feasibility assigned to the current project.





6. CONCLUSION AND RECCOMMENDATIONS

Our findings, considering all the analysis, the conditions that occasioned the completion of

this study and the results achieved are favorable as the feasilibity y of the hotel project and are

formalized in the following item, in the form of opinion.

It is with a constructive point of view that the subscribers register their recommendation and

concern to the effective launch of the project, in the sense that all stages of your project may begin,

in particular, civil works, so that the enterprise is delivered to the point that the hotel is fully

operational for the Olympic Games in Rio de Janeiro in 2016.





7. FINAL OPINION

MARCOS HERINGER and MARCELO ALVIM, qualified experts, have proceded with an

Economical Feasibility Analisys study of the hotel Project named BEST WESTERN PREMIER

AMERICAS FASHION HOTEL BY LENNY NIEMEYER, which will be located in the Barra da

Tijuca neighborhood, in the city of Rio de Janeiro / RJ. The primary data were provided by

contractors or third parties hired by these, who have been discriminated in the study.

In the development of the present were adopted accounting and financial techniques deemed

most appropriate, the theoretical framework commonly adopted in feasibility analysis and, in the

case of a hotel project and its peculiarities, the recommendations of the BEST PRACTICES

MANUAL SPRAYED HOTEL INVESTORS prepared by SECOVI - SP (Sindicato das Empresas

de Compra, Venda, Locação e Administração de Imóveis de São Paulo), with the contribution of

ABIH - Associação Brasileira da Indústria Hoteleira, ADITBrasil - Associação para o

Desenvolvimento Imobiliário e Turístico do Brasil, FOHB - Fórum de Operadores Hoteleiros do

Brasil and FHORESP - Federação de Hotéis, Restaurantes, Bares e Similares do Estado de São

Paulo.

Based on our knowledge and results of the simulations presented, we are of the opinion that

the project under discussion is economically viable.





8 ENCERRAMENTO

E assim, dando por encerrado o presente Parecer Técnico, contendo 58 (cinquenta e oito)

páginas, além da capa, o subscrevemos.

Rio de Janeiro, 14 de julho de 2015.

MARCOS HERINGER

CREA/RJ: 145927/D

IBEF/RJ: 10710

MARCELO ALVIM

CRC/MG: 070899/04-T

Documents

TECHNICAL REPORT · Camorim, Vargem Pequena, Vargem Grande, Recreio dos Bandeirantes, Grumari e a Barra da Tijuca. The Barra da Tijuca neighborhood occupies an area of approximately