Executive Summary

Executive Summary
October 2011
Avalon Springs Wellness Through Water
The Waters Of Avalon Springs
The origin of SPA, many say, is “Salus Per Aquam” – Wellness Through Water
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To experience Avalon Springs is to experience the healing nature of water.
Avalon Springs Executive Summary | Confidential
Avalon Springs is graced with eleven different natural hot springs and therapeutic mineral drinking springs bubbling forth from the earth. With plans for
nineteen soaking pools, Avalon Springs will boast more pools per guest than
any other hot springs resort around. With a lush eco-friendly design, the pools
will be offered without the chemical pool treatments common in most resorts.
The purity and abundance of the waters, along with specialized water-centered
programming, will make Avalon Springs a premiere hot springs destination
world-wide.
Entering the springs is like stepping into
another world, a sanctuary where the body
is calmed by the steam, the mind quieted by
the sound of bubbling water, and the tensions
of life melt away into the beauty of pristine
mineral water.
A Day in the Life . . .
Almost all American hot springs
resorts treat their mineral water
with chlorine, bromine, or hydrogen
peroxide. Avalon Springs’ pools,
however, are designed to remain
clear and clean naturally.
7:21am
Sunrise from the private view deck of your
eco-cabin.
9:30am
Floating yoga class – held on the dock on
the pond.
10:44am
Hot springs. Hot dip, cold plunge. Hot dip,
cold plunge. Then warm soak. (bliss)
Seven Drinking Springs:
12:15pm
Salad with Avalon Springs pears and goat
cheese, lamb sourced locally.
1:37pm
Nap in the fragrance garden hammock to
the sound of honeybees’ hum.
3:35pm
Chi Gung fitness trail workout - stopping to
drink water from a natural spring under a
Sycamore tree.
5:00pm
Water-Chi aquatic bodywork – suspended in
the warm water, receiving gentle massage.
6:32pm
Finished with session. In warm-pool. Not
thinking. Just floating. Happy.
7:35pm
Dining on organic local farm fresh food and
sipping organic wines from neighboring
Napa Valley.
9:30pm
Enjoying a concert at the amphitheatre - a
regionally acclaimed band showed up this
afternoon. Surprise!
ƒƒ Lithium Water –mood-balancing Iron Soda – sparkling water
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Sycamore Spring – sweet forest water
Bohemia Spring – historic “hangover” cure
Source Spring – fresh water spring
Howard’s Spring –mineral-rich fresh water
Avalon’s Well – crystal clear drinking water
Four Hot Mineral Springs:
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Dragon Spring: 117° strengthening iron
Mother Spring: 100° skin-softening boron
Medicine Spring: 100° relaxing magnesium
Grace Spring: 90° private bath in the pine forest
The Avalon Springs Concept
The resort will gracefully integrate ecological technologies in natural building, lush
gardens, food forests, and water features.
Avalon Springs will offer a variety of lodging options, including tent cabins, ecocabins, and family cabins, that have been
proven to appeal to a segment of the
market interested in sustainable development practices and engagement with the
natural environment in a comfortable and
amenitized setting.
In addition to hot springs bathing, Avalon
Springs will offer its guests an extensive
range of water-based and conventional
spa treatments, water and non-water
based programming, as well as organic
dining.
Extensive market research, land planning, and financial analysis have been
conducted to develop the Avalon Springs
concept. Partially utilizing existing
infrastructure and existing buildings, as
well as new sustainably built cabins and
semi-permanent structures, Avalon Springs
has been designed to have minimal impact
on the land, minimize project costs, minimize the construction period, and maximize
returns to investors.
Avalon Springs is being developed by
Baywood Captial Corp. and Canopy Development, both of which have extensive experience in resort development and management.
The Partnership is raising a total of 19 million
dollars to executive its plans.
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Avalon Springs Executive Summary | Confidential
Avalon Springs is a hot spring eco-resort
in development on a beautiful hilltop site
in Northern California. Avalon Springs
is designed to appeal to a proven and
growing niche market of resort customers from Northern California and around
the country who are interested in taking
a vacation immersed in hot springs baths,
natural beauty and healthful living.
Site
Avalon Springs is located in Lake County,
The hilltop site has classic Northern
California, 40 minutes north of the Napa
California rugged beauty characterized by
Valley wine region. The approximately
rolling topography, generous tree canopy,
two hour drive from the San Francisco and
and meadows. This site commands
Sacramento metro areas, makes the resort
breathtaking panoramic views of Boggs
attractive for weekend getaways as well
Forest, Big Canyon’s wooded valleys, and
as longer stays. Because of its abundant
the Mayacamas Mountains. The land
mineral springs, from the late 1800’s
offers excellent opportunities for hiking,
through much of the 1900’s, the area was
biking, and other outdoor activities.
home to a number of hot springs resorts.
The 318-acre Avalon Springs resort will
be built on the scenic site of a historic hot
springs resort, Howard Hot Springs, which
operated from 1876
until 1970.
In addition, the nearby village of Middletown offers alternative dining and shopping experiences that provide a compelling opportunity for Avalon Springs’
guests to venture outside the resort.
Artist Rendering | Aerial
Stephanie Bower,
Architectural Illustration
Masterplan
In addition, the resort will feature a renovated lodging for dining and workshops,
hot springs bathing and wellness spa
facilities, a reception building, a gathering
pavilion, an amphitheater, and gardens
and orchards.
The spa and wellness center will include
19 pools and baths of varying sizes,
temperatures, and mineral contents, a
reception building, and ten renovated
cabins to be used as treatment rooms.
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Avalon Springs Executive Summary | Confidential
The resort will consist of eighty keys:
thirty seven eco-cabins, twenty eight
tent cabins, and fifteen larger family tent
cabins.
Artist Rendering | Upper Site
Entitlement Summary
Avalon Springs permitting envelope consists of eighty acres zoned for commercial resort development. The remaining 238 acres will be left as undeveloped wilderness
and utilized for conservation, education, and recreation.
Artist Rendering | Pools
Avalon Springs Executive Summary | Confidential
Avalon Springs has an approved Major Use Permit from Lake County to develop most aspects of its planned development. The master plan has been modified since
that approval and therefore a minor amendment has been applied for with the county via administrative process. This modification is expected to be approved shortly.
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SOURCES AND USES
Sources Of Funds
Financial Projections
Existing equity
$
Partnership capital
$
New equity
The financial projections for Avalon Springs have been developed with great care to make sure
New debt
that assumptions fall within industry ranges and are reasonable. Most of the assumptions used
Total
to develop the financial forecasts were underwritten by a market study conducted by RCLCO, a
leading national real estate consulting firm, and a costing study conducted by DRB Consulting,
LLC. Both studies are available upon request. A complete set of assumptions is spelled out in
the full business plan, also available by request. Depending on the type of lodging, the resort is
forecasted to generate $135 to $225 per room night with stabilized occupancy of between 65%
and 70% within three years.
In addition to overnight stays, Avalon Springs will have multiple revenue streams including day
use, programming, spa treatments, private hot springs baths rental, retail, and organic dining.
Construction is expected to commence in early 2012 with the resort opening and beginning
generating positive cash flow by early 2013. The holding period is projected to be 10 years from
the beginning of the construction period.
While returns are not guaranteed, investors are projected to receive an above market return.
A summary pro-forma and a sources and uses statement are presented here. A complete
financial package is available by request
.
100% $
0% $
$
USES OF FUNDS
2,248,195
19,000,000
21,248,195
Total
Existing capital
Retire debt for land purchase
and use permit
$
3,399,715
Reissue existing equity
$
2,248,195
Redemption of equity
$
1,082,512
$
3,449,000
Reception building
$
293,000
Spa pool area
$
1,156,000
Entire site
Site development
Lower Level
Lodge site
$
1,474,000
Cabins/tents site
$
1,221,000
Back of house site
$
143,000
Upper Level
Cabins/tents site
$
1,064,000
Ampitheater
$
60,200
Gathering pavilion
$
189,224
Event hall
$
354,000
Gardens and orchards
$
112,000
Family and guest services building
$
283,136
Hiking and meditation trails
$
22,400
FF&E
$
760,000
Start-up costs allowance
$
100,000
Design fees and consultant costs
$
700,000
Pre-development costs
$
161,939
Soft Costs
10% $
1,138,096
Development fee
Contingency
5% $
634,050
Capital raise fee
6%
Total
$
1,202,728
$
21,248,195
SUMMARY PRO-FORMA
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
Lodging
Day use
Restaurant and store
Programming
$2,494,228
$547,500
$1,885,700
$1,260,482
$2,957,918
$565,568
$2,246,434
$1,461,992
$3,310,157
$584,231
$2,510,052
$1,611,748
$3,538,485
$603,511
$2,665,828
$1,704,013
$3,655,255
$623,427
$2,753,800
$1,760,245
$3,775,878
$644,000
$2,844,676
$1,818,333
$3,900,482
$665,252
$2,938,550
$1,878,338
$4,029,198
$687,205
$3,035,522
$1,940,324
$4,162,162
$709,883
$3,135,695
$2,004,354
Wellness spa and private pools
$2,748,137
$3,204,344
$3,542,110
$3,748,320
$3,872,014
$3,999,791
$4,131,784
$4,268,133
$4,408,981
Total Revenue
$8,936,046
$10,436,255
$11,558,298
$12,260,156
$12,664,742
$13,082,678
$13,514,406
$13,960,382
$14,421,074
Resort operations
Management
Marketing
$5,325,534
$357,442
$357,442
$6,264,327
$417,450
$313,088
$6,963,565
$462,332
$231,166
$7,396,658
$490,406
$245,203
$7,640,748
$506,590
$253,295
$7,892,892
$523,307
$261,654
$8,153,358
$540,576
$270,288
$8,422,418
$558,415
$279,208
$8,700,358
$576,843
$288,421
Total Expenses
$6,040,418
$6,994,865
$7,657,063
$8,132,267
$8,400,632
$8,677,853
$8,964,222
$9,260,041
$9,565,623
Net Operating Income
$2,895,628
$3,441,391
$3,901,236
$4,127,889
$4,264,110
$4,404,825
$4,550,184
$4,700,340
$4,855,452
Expenses
Net Sale Proceeds
Total Cash Flow for Distribution
$51,251,990
2,895,628
3,441,391
3,901,236
4,127,889
4,264,110
4,404,825
4,550,184
4,700,340
56,107,442
$2,990,546
$4,316,729
$88,097
$ $3,185,129
$1,365,055
$ $3,290,238
$1,410,102
$ $39,275,209
$16,907,596
Distribution
LP principal balance
Cash to LP
Cash to GP
$21,248,195 $18,410,479 $15,037,916 $11,214,705 $7,169,374
$2,837,716 $3,372,563 $3,823,211 $4,045,331 $4,178,827
$57,913
$68,828
$78,025
$82,558
$85,282
Return
LP IRR
20%
Total Cash to LP
68,324,954
LP Multiple on Investment
3.22
A more detailed financial excel model is available by request.
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Avalon Springs Executive Summary | Confidential
2013
Market Analysis
Avalon Springs Unique Water And Pools
According to the market
study conducted for Avalon
Springs by RCLCO, the
Avalon Springs concept will
appeal to a relatively broad
and growing niche audience interested in “lifestyles
of health and sustainability”
(LOHAS).
In part because of its unique waters, Avalon Springs will become one of the premiere
resorts in the United States for hot springs bathing and aquatic therapy.
As demonstrated by the rise
of LOHAS related activities such as yoga, spas, and
consumption of organic
foods, this is a flourishing
and growing sector and
over the last two decades a
LOHAS type of vacation has
become more mainstream.
The marketplace now includes a wide spectrum of individuals who are interested in this
type of experience, including those who are already deeply committed to this lifestyle
and others who are drawn to such an experience as an occasional retreat opportunity. Because of the large population of “LOHAS” customers with significant disposable
income in the nearby Bay Area, the resort will be able to attract weekend getaways, day
visitors as well as longer stays from this population, as well hot spring aficionados from
around the country and world, particularly Europe and Asia.
Avalon Springs will be marketed through the internet, organizational networking, and
corporate and group bookings.
There are eleven natural springs on the Avalon Springs property, including seven
springs with drinkable mineral water and four hot springs sources for soaking. Each
spring has a unique combination of minerals, including iron, magnesium, lithium and
boron, all with associated healing qualities, and all bubbling out of the ground at different temperatures, ranging from 55 to 117 degrees.
The hot spring waters will be piped into swimming pools and bathing pools. The pools
and baths will be the main attraction of Avalon Springs and will be available for both
resort guests and day-visitors. Some baths will be private rental areas, while most will be
for general use.
With 19 pools, and never more than 200
guests at the resort, Avalon Springs will
have more natural soaking pools per
guest than any other known resort in the
U.S and, unlike other hot springs resorts, it
will never feel crowded.
Most pools will remain completely
untreated, providing a rare opportunity to
soak in the natural mineral water without
the addition of chlorine or peroxide.
The mineral hot springs of Avalon
Springs have been revered for centuries
for promoting harmony and wellness.
Making use of these healing waters is the
heart of Avalon Springs.
Wellness Spa And Programming | Centered Around The Waters
Wellness Spa
Avalon Springs is connected with the
originators and masters in various aquatic
therapies, many especially useful in recuperating from surgery, spinal injury, and
illness. Richard Bock, one of the founding
partners of Avalon Springs, is one of the
earliest and best-known Watsu™ practitioners, a founder of Waterdance™, and
an internationally renowned teacher and
practitioner of these and other forms of
aquatic bodywork. Aquatic therapies
have been more popular in Europe until
this point and there are very few centers
for aquatic bodywork that feature mineral
springs in the United States. However,
these effective and deeply healing thera-
Programming
pies will inevitably become more popular
in the United States and Avalon Springs
is poised to become the premiere resort
for aquatic bodywork and other water
therapies. This is especially true because
the waters of Avalon will be left in their
natural state without chemical treatment.
While water-based therapies will be what
Avalon Springs is known for, the resort will
also offer a full complement of wellness
spa services. These will include massage,
herbal and organic healing skin treatments, integrative and alternative treatments, and cleansing and detoxification
support.
Like the wellness
spa, Avalon Springs’
programming will
be focused around
the natural spring
waters. Examples
include guided inwater meditations,
floating yoga classes (balanced yoga on a floating foundation), water-chi meditation (Avalon’s own
practice of guided meditation in water),
and water-chi-fitness (gentle movement
while standing in water to strengthen and
tone muscles).
In addition, a wide variety land based
programming will be offered, including
workshops on creating a sustainable
backyard, art, chi-gong, and other forms
of fitness.
Avalon Springs will host live concerts,
lectures, and art events in its open-air
amphitheater. The amphitheater will seat
150 people on grassy terraces that will
overlook a panoramic view of valley and
mountains beyond. Other group spaces
like the event hall, the gathering pavilion,
and the activities hall in the lodge will be
available for a large variety of gatherings,
classes, and celebrations.
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Avalon Springs Executive Summary | Confidential
Avalon Springs will offer more water based therapies, conducted by national leaders in the field, as well as more programming
centered on water, than any other resort in the United States. From the aquatic healing therapies of the spa, to the guided water
meditations and floating yoga classes offered as daily programming, Avalon Springs will feature its incredible natural mineral
spring waters.
Dining
Avalon Springs will offer an ample buffet-style meal plan with large meals twice daily (lunch and dinner) and
a juice and snack bar available for breakfast and between meals needs. Guests wishing a more formal and
luxurious farm-to-table dining experience may sign up to partake of the intimate chef’s seating dinner.
Entrees for meals at Avalon will include organic local meats, fish, and poultry as well as ample fresh vegetarian
fare sourced from local farms and Avalon’s own gardens. Wine will also be a part of the Avalon experience, as
the surrounding region is graced with many sustainable award-winning vineyards and wine-makers.
Sustainability
Sustainability is a core principle of the Avalon Springs resort concept, and it will
be integrated into all aspects of the development and operations of the resort,
starting with the decision to redevelop an existing resort rather than build on virgin
land. Sustainable practices will be utilized in Avalon Springs’ green buildings, energy systems (solar power), dining, programming, and its overall approach to doing
business. The focus on the natural waters of Avalon Springs will provide a unique
opportunity for promoting sustainability and the resort will model water systems
that honor, protect, and re-use the waters intelligently. Avalon Springs’ dedication
to sustainability and water resource management will be an integral part of the
resort’s marketing and brand identity.
Development & Management Team
The hotel properties include the historic
Mount View Hotel and Spa in Calistoga,
California, the Inn at Eagle Mountain near
Scottsdale, Arizona, White Sulphur Spring
Resort & Spa in St. Helena, California,
Carmel Valley Inn and Tennis Resort in
Carmel Valley, California, Emerson Hotel in
Palo Alto, California and, El Pizoti Lodge in
Costa Rica.
Mellissa Seaman,
Marketing & Education Director
Seaman is a founder of
the Avalon Springs project
and has directed design,
communications, marketing, and programming. She
graduated from Stanford
University and from the University of
San Diego School of Law. She spent five
years as an attorney in the areas of public
interest law and business litigation. Her
background includes founding a theatre
and school of improvisation (San Diego
TheatreSports) and a holistic healing arts
center (San Diego Circle).
Richard Bock,
Director of Spring Water
Systems
A founder of Avalon, Bock
has been working with
mineral water bathing systems for much of his career.
His hands on experience
and knowledge of spring box development and hot mineral water systems
make him a valuable asset for Avalon
Springs. For nearly twenty years, Bock
has been involved with nearby Harbin
Hot Springs resort as a teacher, project
designer, and community leader.
Tom Horton,
CEO, Canopy Development
(www.canopydevelopment.com)
Tom Horton is a seasoned
social entrepreneur,
manager, developer, and financier. He has raised more
than $100 million in early
stage capital for multiple social enterprises. Tom founded Canopy Development
in 2004 and brings more than 20 years of
community-focused real estate development and project finance experience to
the company. Canopy has created an
innovative approach to land management
that bridges the best practices in conservation and land development.
Sam Spencer,
Canopy Development
Sam Spencer is a Maine
based real estate developer
and entrepreneur who
has worked to refine the
development and financial
plans for Avalon Springs. He
previously served as an aide in the Clinton
White House. Spencer is a graduate of
Harvard and Harvard Business School.
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Avalon Springs Executive Summary | Confidential
Michael Woods,
Managing Partner
Woods is the key founder
of the Avalon Springs
project, and has guided its
development since inception. Woods is the founder
and president of Baywood
Capital Corporation (www.baywoodcorp.
com)and since 1977 has managed over 40
real estate investments, including hotels,
office buildings, retail buildings and apartments.
Contact
Tom Horton
voice:413.584.4491
email:thorton@canopydevelopment.com
Michael Woods
voice:707.339.2339
email:invest@avalonsprings.com
www.avalonsprings.com