Investing in a Family Nest Experience resort in Bali

For residential tourist villas: the investor will have the opportunity to resell the villas at any time. However, in order to achieve optimal profitability, we do not recommend doing this before the end of construction. Recent projects have shown that real estate in Bali that generates strong demand among tourists and has a track record in revenue, increases in price by 30–50% relative to its off-plan (during construction) price.

For shares in commercial properties’: through the secondary market, investors in Family Nest project partnership (PT Blue Ocean Capital) will be able to offer position for sale at a sale price based on the net asset value (“NAV”) of the investment at that time. Investments are typically eligible to post on the secondary market six months after the initial investor closing. In this specific case of a ground-up development, the first eligible quarter may follow completion of development or all underwritten capital contributions.

The current shareholders of the project will have a priority right to buy back shares over external investors. Under an additional agreement, conditions may be established for the partnership to repurchase a shareholder's share at a fixed price. Liquidity, pricing or availability of the secondary market are not guaranteed. Prior to investing, you should assume that you may be required to hold your investment for the duration of hold period.

See important disclosures below.

The rights to the villas will be issued to private individuals according to the structure typical for Indonesia — leasehold of the land for 40 years.

Documents in the transaction:
a) Development agreement (framework) which defines the whole deal structure and obligations with PT Blue Ocean Capital – an Indonesian equivalent of LLC, the holder of all land rights and assets in the project except owned by investors.

b) Construction agreement of real estate with Indonesian constructor.

c) Preliminary and the main leasehold agreements for the land plot.

d) Marketing and management agreement for the future management of the entire Family Nest complex and all the villas in its rental pool. That agreement includes marketing, sales, finance, maintenance and all other applicable types of management and could not be dismissed. The deal for commercial part shares (Kids center, Steam center, Sport Center and Restaurant) will be structured through the Indonesian equivalent of LLC –PT Pangolin Kids Club/ PT Essential Steam Bali, PT The Ants Pants Restaurant. Each legal entity is a full shareholder and owner of the relevant assets. These companies will directly own the rights to the land and all property, investors will buy and own shares of the company on the basis of a share purchase agreement (SPA). For corporate management, a shareholder’s agreement (SHA) and a management agreement (MA) will be signed.

Payments to shareholders will be made directly to their preferred bank accounts.

For residential villas, distributions will be made monthly, with profits paid net of taxes, except for personal income tax in Indonesia, which is subject to a 10% tax rate. This tax can be paid by the management company on behalf of investors, but the declaration and payment of taxes remain at the discretion of the investor.

For commercial assets, distributions will be made semi-annually from available cash flow once construction is completed and the asset is stabilized. Dividends from commercial operations in Indonesia are also subject to a 10% tax rate.

Indonesia has a double tax treaty with most major countries, including the US, European Union, the UK, Australia, India, Hong Kong, and China, which may allow investors to offset taxes paid in Indonesia against their domestic tax obligations.

The management team will oversee the distribution process, ensuring payments are made on a pro-rata basis in accordance with the management agreement.

In this project, Blue Ocean Capital participates as a project developer, so no promote or any kind of success fees apply to avoid fiduciary risk and conflicts of interest. To cover the costs of organizing the transaction, we charge a one-time entrance fee in the amount of 5% of the transaction. We don’t charge any asset management fees.

Other project fees are charged by the JV (PT) and external contractors. Investors should review the Investment Memo for complete fee disclosures and descriptions. Basically, there will be only market calculated fees for marketing, management and maintenance which have been taken into account in a financial model.  

At the operational stage, that is, after the launch of the hotel, all property owners will pay management fees in accordance with the management package – 50% of gross revenues for marketing and management, and additional fee for operation management. Utilities, operating staff salaries, consumables, maintenance and promotions will also be applied directly or being allocated. If operating profit (before tax) targets are exceeded, a bonus of 20% success fee will be applied.