manger square village bethlehem -...

Feasibility Report

September 2015

Manger Square Village Bethlehem

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Contents Overview ............................................................................................................................................. 2

Project Description.............................................................................................................................. 2

Project Parking Scope (B4, B4, B6, +Conventional) ............................................................................ 3

Project Retail Scope (B3, B2, B1, Ground and First and Second Floors and Mezz) ............................ 4

Overall Project Built-up Areas ............................................................................................................. 4

Pre-Concept Project Design Renderings ............................................................................................. 5

Basement (4-6) Automated Parking Plan ........................................................................................ 5

Basement (3) Floor Plan .................................................................................................................. 6



Ground Floor Plan ........................................................................................................................... 9

First Floor Plan .............................................................................................................................. 10

Second Floor Plan .......................................................................................................................... 11

Second Floor Mezzanine Plan ....................................................................................................... 12

Overall Cross Sectional View of the Complex ............................................................................... 13

Target Markets .................................................................................................................................. 13

Benefits to the Region ...................................................................................................................... 13

Project Management & Implementation .......................................................................................... 14

Financials and Associated Assumptions ............................................................................................ 15

Programmatic................................................................................................................................ 15

CAPEX ............................................................................................................................................ 15

Operations and Maintenance ....................................................................................................... 16

Revenue ........................................................................................................................................ 16

Financing ....................................................................................................................................... 17

Source and Application of Funds $K ................................................................................................. 17

Financial Performance ...................................................................................................................... 17

Pro-forma Financial Statements $K .................................................................................................. 18

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MANGER SQUARE VILLAGE PROJECT

Overview

Bethlehem is widely recognized as an important historic center as well as one with

significant religious distinction. This recognition has blessed the region with positive impacts

and growing tourist awareness and activity. In addition, the tourism sector reflects one of

the key economic sectors in Bethlehem since it alone is responsible for significant foreign

currency inflows which, with knock-on effects, improve the prospects of other sectors (i.e.,

economic engine of growth). This in turn encourages the overall employment prospects of

the Palestinian people as a whole. This project embodies both of these economic principals

as well as fills the need to bolster the regions relatively undeveloped tourism infrastructure.

Since the project also includes a major shopping and social gathering point focus, it is also

important for the promotion of local organic culture and economy as well.

Being the most important area of BDI interventions, the Manger Square and the

surrounding area will be the heart of this major regeneration and development project.

Moreover, the Bethlehem Development Initiative concluded in its Conceptual Master Plan

that the main issue of Manger square that requires resolution is the traffic management and

conflict between car and pedestrian circulation. This project endeavors to streamline traffic

by including streamlining traffic in the square and surrounding streets and confirming

availability of Parking and suitable drop-off zones and planted/ shaded areas. It also

significantly increases the supply of high quality, safe, and secure parking spots.

Project Description

Located at the southern border of Manger Square, the proposed site covers a footprint of

approximately 3,200 square meters and is currently used as a parking lot with the capacity

of approximately 100 car spaces. The designation of a significant portion of the project to

conventional and automated parking facilities is essential to the functioning of the square,

especially after pedestrianizing the section between the two squares as per the conceptual

design of the Manger Square area.

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Therefore, a 10 level development/design is proposed. The levels will be at differing

elevations and will encompass 7 levels of commercial, entertainment and public spaces and

traditional parking facilities. The lower (below ground) 3 levels will accommodate a space-

saving efficient automated parking facility.

Project Parking Scope (B4, B4, B6, +Conventional)

A combination of conventional and automated parking will be adopted where

approximately 305 parking spaces will be provided. Space saving through efficient space

utilization allows a greater number of parking spaces per unit of retail space.

The lower 3 levels (B4, B5, B6) will consist of a fully automated parking system for 288 cars.

Total BUA for these levels is projected to be 4,898 square meters. The system provides an

engineered mechanized automated multi-level parking solution that exploits the full

economic value and potential of the land. With diminishing land availability and rising land

value, the need for innovative, efficient parking solutions is becoming increasingly

paramount. Current conventional parking systems are outdated and in-efficient.

Automated parking systems are secure and safe and provide savings in overall construction

costs such as excavation, piling, de-watering, electro-mechanical, HVAC and finishing. There

are also time savings in project execution resulting from the use of automated parking

systems. Furthermore, the associated saved space can be utilized for alternative uses or

revenue generating purposes.

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On both ground level and level B2 there will be space for some conventional parking spaces

for around 17 cars for VIP users or quick-stops.

The conventional parking space allows for a Civil Defense facility with Fire Truck access, a

First Aid Station, and an Ambulance.

Project Retail Scope (B3, B2, B1, Ground and First and Second Floors and Mezz)

The seven commercial levels consist of retail space including souvenir and tourist gift shops,

a supermarket, cafes and restaurants, and public leisure spaces. In general, the design

philosophy revolves around having easy-flow spaces that naturally invite users from the

surrounding sidewalks and from Manger Square into the lot with easy access to retail stores

both above and below ground levels. The main idea is to allow the pedestrian movement to

flow into the heart of the project (internal courtyard), which mimics the old souks and

alleyways of Bethlehem, and then upwards onto the open air cafe/restaurants with direct

visual access onto Manger Square on one side, and a view onto all of Bethlehem city on the

other side at its highest point. The division of the volume of the project into smaller parts

also fits into the morphology of Bethlehem city, rendering it to behave almost like a village

instead of a retail-concentrated mass.

Overall Project Built-up Areas

The overall project will consist of a total of approximately 16,448 square meters of which

6,123 is allocated for all parking and 6,581 for commercial shopping use while the balance

of 3,744 square meters is allocated for outdoor retail, horizontal and vertical circulation,

services, etc.

SectorB6-4 B3 B2 B1 GF 1 Floor 2 Floor

2 Floor

MezzTotals

Shopping Area - 356 1,360 1,256 1,217 670 543 350 5,752

Outdoor Retail - - 153 38 - 200 156 41 588

Cinema - 241 - - - - - - 241

Circulation + Void - 468 1,005 554 713 288 186 40 3,254

Services - 265 28 43 43 37 37 37 490

Parking (Conv) - 1,225 - - - - - - 1,225

Parking Automated 4,898 - - - - - - - 4,898

Total 4,898 2,555 2,546 1,891 1,973 1,195 922 468 16,448

B6-4 B3 B2 B1 GF 1 Floor 2 Floor2 Floor

MezzTotals

Parking 4,898 1,225 - - - - - - 6,123

O/H - 733 1,033 597 756 325 223 77 3,744

Commercial Area - 597 1,513 1,294 1,217 870 699 391 6,581

16,448

BUA (Allocation by Function)

BUA Sq Meters

Note: Circulation and Services are non-revenue generating areas and as such are considered O/H. The commercial revenue

generating area is assumed to be 85% of the gross commercial BUA.

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Pre-Concept Project Design Renderings

The principal concept encompasses a 10 level design which includes 7 levels of commercial retail and

3 or 4 levels of parking (the lower 3 levels of parking will be of the automated type plus the addition

of conventional parking).

Basement (4-6) Automated Parking Plan

The automated parking facility calls for 288 spaces. Total built up area is expected to be

approximately 4,898 square meters.

Due to the modular flexibility of the Parking System, automated parking structures are designed and

built from hundreds to thousands of parking spaces.

Automated parking systems provide 2 or more times the number of available parking spaces than

conventional self-park garages of the same volume, providing a faster return on investment and

greater revenues.

By reducing the width, the vehicles are stored by the robotic car park machines with precise control

of the vehicle movement; Automated Parking Garages utilize much narrower spaces than self-park

facilities. Additional space width is not required for door opening clearances or for maneuverability

into the parking space. One can accommodate approximately 4 automated-parking spaces in the

same width as 3 self park spaces.

Layout of one of the levels of the automated parking facility

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Basement (3) Floor Plan

The B3 floor plan consists of approximately 2,555 square meters of BUA. Approximately 1,225

square meters are included a conventional parking area, while 597 square meters is for retail areas.

733 square meters are dedicated to horizontal/vertical circulation, services and O/H, etc.

Basement (3) floor plan

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square meters is for retail areas. 1,033 square meters are dedicated to horizontal/vertical

circulation, services and O/H, etc.


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square meters are included in the commercial area. The total outdoor space amounts to 38 square

meters, while the horizontal and vertical circulation areas add up to 554 square meters. Service

areas are 43 square meters.


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Ground Floor Plan

The ground floor plan consists of approximately 1,973 square meters of BUA. This level includes

1,217 square meters of shopping space, and 713 square meters of horizontal and vertical circulation.

Service areas are 43 square meters.

Ground floor plan

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First Floor Plan

The first floor plan consists of approximately 1,195 square meters of BUA. Approximately 670

square meters are included in the commercial area, while 200 square meters form the outdoor retail

space. Horizontal and vertical circulation space takes up 288 square meters. Service areas are 37

square meters.

First floor plan

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Second Floor Plan

The second floor plan consists of approximately 922 square meters of BUA. Approximately 543

square meters are reserved for the shopping area, while 156 square meters are dedicated to

outdoor retail spaces. The horizontal and vertical circulation spaces take up 186 square meters.

Service areas are 37 square meters.

Second floor plan

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Second Floor Mezzanine Plan

The second floor mezzanine plan consists of approximately 468 square meters of BUA.

Approximately 350 square meters are reserved for the shopping area, while 41 square meters are

dedicated to outdoor retail spaces. The vertical circulation space takes up 40 square meters. Service

areas are 37 square meters.

Second floor

Mezzanine

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Overall Cross Sectional View of the Complex

Target Markets

The Manger Square Village’s parking facilities will be the only available parking in the area of

Manger Square. By building the commercial center with additional parking spaces, it will

meet the requirement to mitigate the area’s congestion and parking shortages. In addition,

the parking will offer safe and secure spaces for individual visitors, especially during the

Christmas and Easter seasons.

Benefits to the Region

The project will provide a good quality of life with ample public space where tourists and

citizens alike can interact in the courtyards, alleyways, open spaces, and observation deck.

Moreover the project will offer a safe, car-free environment, where pedestrians can freely

walk around the Manger & Nativity squares, engage in shopping/entertainment activities

and access the Multipurpose Parking Garage.

As for the environmental impact, the multipurpose parking garage will reduce fuel

consumption through added pedestrianisation and will provide an increase in natural air

quality since emissions are reduced and cars are not running while being automatically

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parked. Trees and vegetation contribute toward beauty of nature, converting CO2 to oxygen,

and providing habitat for birds and other wildlife.

Walking yields health benefits from exercise as well as from better air quality. The buffer

zone of trees or parking also increases pedestrian safety. In community terms, walking

allows more frequent informal encounters between citizens. Pedestrian friendly streets give

more mobility to those citizens who either don't drive or don't own a car, which allows for

more involvement and connectedness, as well as addressing an issue of equity.

In addition the Parking’s automated parking system can use 66% less surface area compared

to a conventional garage to fit the same number of parking spaces. More importantly, the

parking’s automated parking garage can save up to 60% of the cubic feet of a garage leaving

more space for other more profitable uses.

Project Management & Implementation

The ownership and management of the entity to run the city center is still to be defined. The

overall project partnership will consist of the Armenian Patriarchate, CCC, and local

shareholders. In particular the project’s shareholders will enter into a concession

agreement with the Patriarch. Roles and responsibilities within the SPV for each ownership

party will be called out in shareholders’ agreement. This project will be run and managed as

a for-profit business and will require various administrative and financial support. The

graphic below outlines the proposed structure.

Concession Agreement

General Points• Project Development Involvement by Church (yes or no)• Right to use land during concession period (free or compensated)

• Design, build, develop, operate and maintain the new asset• Project Company owns Greenfield revenue generating assets during

concession period• Church Approval Rights

• Design, Construction, Operation & Maintenance• Business types for rental• General audit

• Terms of Final Transfer after concession period• Investors right to a profitable return over concession period

Design/Construction Contract• Tendering• Decision• Commencement• Commissioning• Contract

Completion Certificate

Operations & Maintenance Contract• Tendering• Decision• Commencement

Financing and Equity Agreements• Loan Agreements• Shareholder Agreements

Project Dev• Business Case • Planning• Financing• Legal and

Permitting

Rental Agreements

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Financials and Associated Assumptions

The following section outlines the assumptions and financial results for the Manger Square Village

Commercial project.

This study relies on assumptions that draw upon experienced local business sources knowledgeable

with the region’s cost and revenue structure and associated economics. In addition, a verification

study was performed by Price Waterhouse Coopers which provided validation for the study’s

assumptions and is available upon request.

Programmatic

For modeling purposes we have assumed a 25 year operational schedule. Other key Milestones

appear below.

Project Development Go-Ahead 01 Jul 14 Financial Close 01 Jan 16 Construction Start 01 Jan 16 Construction Period 24 Months Operational Start 01 Jan 18 Operation 25 Years

CAPEX

Total project capital expenditures are expected to be approximately $16.7M. The key assumptions

are listed below.

CAPEXBUAs

Total Project BUA Sq Meters 16,448 Parking BUA sq meters 6,123 Commercial BUA sq meters 6,581 Circulation and Public (O/H) sq meters 3,744

CostsConstruction Costs Parking $/sq meter 400 Construction Costs Building $/sq meter 1,000 Parking System Infrastructure & Equip $K 2,000 Land Lease/Goodwill during Construction $K 134 Pre Design, Design $K 1,566 Eviction Compensation 436 Development (Advisory, Permitting, Other) 477 Contingency % of Capex 5%

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Operations and Maintenance

The key assumptions for O&M costs are listed below.

OPERATIONS & MAINTANENCECommercial O&M (% of Commercial Revenue) 20%Land Lease/Goodwill $K/yr 150 Parking Direct O&M $/movement 0.25Parking Direct Labor O&M $K/yr 46O&M Annual Escalation 2%Eviction Compensation $K/YR 3.6

* The commercial O&M cost ramps up to 20% of commercial revenue by year 3. Before that a factor

used is 16%.

Revenue

The key assumptions for revenue generation are listed below.

REVENUE (Commercial)Commercial (Rentable Area) Sq Meters 5,594 Year 1 Commercial Demand Factor 30%Maximum Commercial Demand Factor 85%Max Commercial Demand Reached in Op Year (end) 3Commercial Rent $/Sq M /Year 300Commercial Rent Escalation 2%

REVENUE (Parking)Max Number of Spaces Available 305Year 1 Parking Demand Factor 60%Maximum Parking Demand Factor 90%Max Demand Reached in Operational Year (end) 3Rate Plans

% Cars that are on 1-2 hour Plan 20%% Cars that are on 2-4 hour Plan 55%% Cars that are on 4+ hour Plan 20%% Cars that are on Monthly Plan 5%Turnover of the 1 Hour Space (Per Day) 4.0Turnover of the 1-3 Hour Space (Per Day) 3.0Turnover of the 3+ Hour Space (Per Day) 2.0Turnover of the Monthly Space (Per Day) 1.0

TariffsTariff $ Per Space 1-2 hrs 1.73Tariff $ Per Space 2-4 Hour 3.45Tariff $ Per Space 4+ Hour 5.18Tariff $ Per Space Per Day (Monthly Plan) 0.50

Tariff Escalation 0%

* 150K years 1-5, 200K years 6-15, 250K years 16-25

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Financing

The key assumptions for the project’s financing are listed below.

FINANCEIncome Tax 20.0%Loan Rate (all-In) 5.0%Facility Fee 1.5%Loan Term (Years) 15Depreciation Years 25Equity 30%

Debt 70%

Source and Application of Funds $K

APPLICATION OF FUNDS

Project Cost (CAPEX) 16,708

Parking Structure + Conventional 2,449

Parking Infrastructure and Equipment 2,000

Commercial Area 6,581

Circulation and Public Areas 1,498

Pre-Design, Design and CM 1,566

Contingency 772

Eviction Goodwill Payments during Construction 570

Development 477

Interest During Construction, Facility Fee 795

SOURCE OF FUNDS

Debt 11,695

Equity 5,012

Financial Performance

Based on the above assumptions the project can expect to generate a project IRR of approximately

8+% while equity returns are projected to be 11%.

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Pro-forma Financial Statements $K

Profit and Loss 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022

Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22

Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23

Revenue 566 568 730 895 1,062 1,232 1,239 1,247 1,255 1,263

Operational Costs (-) 239 239 243 247 266 296 298 300 302 305

EBDITA 327 329 488 648 797 936 941 947 953 958

Depreciation (-) 334 334 334 334 334 334 334 334 334 334

Profit Before Int & Taxes (=) (7) (5) 153 314 462 602 607 613 619 624

Interest (-) 292 286 279 272 265 257 250 242 234 226

Tax (-) - - - - - - 45 74 77 80

Profit After Taxes (359) (349) (151) 51 237 413 339 297 307 318

Profit and Loss

2023 2023 2024 2024 2025 2025 2026 2026 2027 2027



Revenue 1,271 1,279 1,287 1,296 1,304 1,312 1,321 1,330 1,338 1,347


EBDITA 939 945 951 957 963 969 975 981 987 993

Depreciation (-) 334 334 334 334 334 334 334 334 334 334

Profit Before Int & Taxes (=) 605 611 617 623 628 635 641 647 653 659

Interest (-) 218 209 201 192 182 173 163 153 143 133

Tax (-) 77 80 83 86 89 92 95 99 102 105

Profit After Taxes 310 321 333 345 357 369 382 395 408 421

Profit and Loss

2028 2028 2029 2029 2030 2030 2031 2031 2032 2032



Revenue 1,356 1,365 1,374 1,383 1,392 1,402 1,411 1,421 1,430 1,440


EBDITA 1,002 1,008 1,015 1,022 1,028 1,035 1,042 1,048 1,055 1,062

Depreciation (-) 334 334 334 334 334 334 334 334 334 334


Interest (-) 122 111 100 89 77 65 53 40 27 14

Tax (-) 109 113 116 120 123 127 131 135 139 143


Profit and Loss

2033 2033 2034 2034 2035 2035 2036 2036 2037 2037



Revenue 1,450 1,460 1,470 1,480 1,490 1,500 1,511 1,521 1,532 1,543


EBDITA 1,044 1,051 1,059 1,066 1,073 1,080 1,088 1,095 1,103 1,111

Depreciation (-) 334 334 334 334 334 334 334 334 334 334


Interest (-) - - - - - - - - - -

Tax (-) 142 143 145 146 148 149 151 152 154 155


Profit and Loss

2038 2038 2039 2039 2040 2040 2041 2041 2042 2042



Revenue 1,553 1,564 1,575 1,587 1,598 1,609 1,621 1,632 1,644 1,656


EBDITA 1,119 1,126 1,134 1,142 1,150 1,159 1,167 1,175 1,184 1,192

Depreciation (-) 334 334 334 334 334 334 334 334 334 334


Interest (-) - - - - - - - - - -

Tax (-) 157 158 160 162 163 165 167 168 170 172


Profit and Loss

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Cash Flow 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020



EBDITA - - - - 327 329 488 648 797 936

Principal Repayment (-) - - - - 266 273 280 287 294 301

Interest (-) - - - - 292 286 279 272 265 257

Tax (-) - - - - - - - - - -

Cash Available for Distribution - - - - (232) (230) (71) 90 238 377

Equity Injection (1,663) (1,103) (1,105) (1,142)

IRR Cash Flow (1,663) (1,103) (1,105) (1,142) (232) (230) (71) 90 238 377

Cash Flow

2021 2021 2022 2022 2023 2023 2024 2024 2025 2025



EBDITA 941 947 953 958 939 945 951 957 963 969

Principal Repayment (-) 309 317 325 333 341 350 358 367 376 386

Interest (-) 250 242 234 226 218 209 201 192 182 173

Tax (-) 45 74 77 80 77 80 83 86 89 92

Cash Available for Distribution 338 314 317 320 303 306 309 312 315 318

Equity Injection

IRR Cash Flow 338 314 317 320 303 306 309 312 315 318

Cash Flow

2026 2026 2027 2027 2028 2028 2029 2029 2030 2030



EBDITA 975 981 987 993 1,002 1,008 1,015 1,022 1,028 1,035

Principal Repayment (-) 395 405 415 426 437 447 459 470 482 494

Interest (-) 163 153 143 133 122 111 100 89 77 65

Tax (-) 95 99 102 105 109 113 116 120 123 127


Equity Injection

IRR Cash Flow 321 323 326 329 334 337 340 343 346 349

Cash Flow

2031 2031 2032 2032 2033 2033 2034 2034 2035 2035



EBDITA 1,042 1,048 1,055 1,062 1,044 1,051 1,059 1,066 1,073 1,080

Principal Repayment (-) 506 519 532 545 - - - - - -

Interest (-) 53 40 27 14 - - - - - -

Tax (-) 131 135 139 143 142 143 145 146 148 149


Equity Injection

IRR Cash Flow 352 355 358 361 902 908 914 919 925 931

Cash Flow

2036 2036 2037 2037 2038 2038 2039 2039

Jan-36 Jul-36 Jan-37 Jul-37 Jan-38 Jul-38 Jan-39 Jul-39

Jul-36 Jan-37 Jul-37 Jan-38 Jul-38 Jan-39 Jul-39 Jan-40

EBDITA 1,088 1,095 1,103 1,111 1,119 1,126 1,134 1,142

Principal Repayment (-) - - - - - - - -

Interest (-) - - - - - - - -

Tax (-) 151 152 154 155 157 158 160 162

Cash Available for Distribution 937 943 949 955 962 968 974 981

Equity Injection

IRR Cash Flow 937 943 949 955 962 968 974 981

Cash Flow

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2040 2040 2041 2041 2042 2042

Jan-40 Jul-40 Jan-41 Jul-41 Jan-42 Jul-42

Jul-40 Jan-41 Jul-41 Jan-42 Jul-42 Jan-43

EBDITA 1,150 1,159 1,167 1,175 1,184 1,192

Principal Repayment (-) - - - - - -

Interest (-) - - - - - -

Tax (-) 163 165 167 168 170 172

Cash Available for Distribution 987 994 1,000 1,007 1,014 1,020

Equity Injection

IRR Cash Flow 987 994 1,000 1,007 1,014 1,020

Cash Flow

manger square village bethlehem -...

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