Resort Hotel in Sendona Arizona Feasibility Study for EB-5 VISA - Wert-Berater, Inc

SEDONA, Ariz. - May 19, 2014 - PRLog -- Liberty Regional Centers contacted Wert-Berater, Inc, because of the company's reputation for providing high quality feasibility studies for EB-5 VISA underwriting by their investors and for presentation to the USCIS.  Their goal was to have something to put in the hands of investors that had meat to it and to make sure that they have completed their due diligence to assure investors that their projects would succeed.

The difference between Wert-Berater, Inc.'s studies and their competitors is that the study is a complete project evaluation including land use, availability of labor and cost, availability of utilities, economic impact and more items not included in the Market Feasibility Study.

The problems with most feasibility studies is that they are focused on market demand, room occupancy, room pricing (ADR) and demand drivers.  This type of study is valuable, but falls short of unmet demand calculations and how much the new hotel will impact the market, meaning more room nights might cause overall occupancy and ADR levels or decline, or is there something going on in the market that warrants new rooms?

The complete feasibility study provided by Wert-Berater, Inc. of course includes a complete market study, but also the following:

Economic Feasibility: Information related to the project site; legally permissible uses, zoning, entitlements, permits, availability of trained or trainable labor; availability of utilities including capacities; rail, air, and road service to the site; required usable site area, environmental impact summary of concerns, laws and regulations, and the overall economic impact of the project.

The Economic Feasibility section helps to uncover problems that might prohibit site development or slow it down.  We report at what stage the land is in.  For instance, we allow the audience of the study to know if the land is under contract for purchase, what happens next and what are the risks?  Risks could involve things such as availability of utlities.  Often developers overlook capacities and this could cost more or take longer for the site to be developed on schedule.  And time is money.

Market Feasibility: Information on the sales organization and management, nature andextent of market and market area, marketing plans for potential exit sale. Demand for hotel room nights and spa uses. Average Daily Rates, Occupancy Levels. Spa Revenues, existing, envisioned and under construction competition, tourism capture rate, and all market details related to acceptance of a new hotel spa in the region.

The evaluation of the market is very important.  Although the market is described in detail, we wonder if there is unmet demand?  Also, what is the affect on the market if new hotel rooms or meeting space is added?  Thus, this is not only a summary of past market conditions, but a detailed analysis including Monte Carlo Simulations as to supply and demand factors.  Just because all of the existing hotels have an occupancy rate or ADR, that does not mean the new hotel will because adding rooms to the market can decrease the occupancy and ADR of all of the hotels in the market, unless there is a growing demand based on recent demand driver changes.

Cost Feasibility: The Cost Feasibility section shall address the impact of the expected costs for the development, construction, site improvements, F, F & E and required pre-opening expenses and CADS on the hotel & spa project feasibility.

This test of feasibility is very important.  This limited to a potential set of values using direct capitalization rate of pro form NOI, Discounted Cash Flow of pro forma NOI for 10 years, Equity Calculations and Gross Income Mulitpliers based on pro forma.  The cost must be less than the capitalized value estimates.  Entrepreneurial profit is added to the project cost to assure that it makes sense to build and helps to understand the exit strategies such as refinance or sale as reasonable options.

Financial Feasibility: The pro forma is developed based on a month-by-month basis through stabilization. Data developed in the economic, market and cost feasibility sections are applied to present the reliability of the financial projections and the ability of the project to achieve the projected income and cash flow. Returns evaluated include Rate of Return on Equity, Internal Rate of Retum, Modified Internal Rate of Return, Net Present Values of cash flows for 3, 5, 7 and 10 year hold periods.

The pro forma is developed based on market indicated operating expenses, ADR and occupancy levels.  Seasonality is included in this analysis on a month by month basis based on recent Smith Travel Research reports and local economic news.  The outcome of this analysis is tested using Breakeven Analysis and Monte Carlo Simulations to test the sensitivity of the pro forma and its returns such as Cash on Cash, Net Present Value and Debt Service Coverage Ratios.

Management Feasibility: Evidence that continuity and adequacy of management has been evaluated and documented as being satisfactory. This section of the report also indicates labor scheme and cost of labor including project construction,operations management. Management includes experience of the development, general contractor, company assets, liquidity, and availability of short term credit. This section of feasibility is to assist underwriters in evaluating credit quality and experience of the borrower.

This test tells us who is involved in both development and management.  We discuss how much experience everyone has including the general contractor, architect and even the civil engineering firm.  This allows the audience of the study to really know the deal.

Thus, this type of Feasibility Study covers everything one would need to know to make a decision.  A Market Feasibility Study, which our competitors sell, is only a market analysis and just because there might be market demand, that does not make a project feasible because like when building a bicycle, one lose spoke can change everything in the performance of the bike.

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Contact Wert-Berater, Inc at 1.888.661.4449 or see us at http://www.wert-berater.com

Matus Kucera

mkucera@wert-berater.com