Conservative Approach

Building Confidence Through Prudent Projections

At Sienna, we believe in under-promising and over-delivering. Our conservative approach to investment projections ensures reliability and builds sustainable long-term returns for our investors.

Our Conservative Philosophy

Rather than presenting optimistic scenarios to attract investors, we deliberately use conservative assumptions that provide safety margins and increase the likelihood of exceeding expectations. This approach protects investors and builds trust through realistic, achievable projections.

Conservative Occupancy Projections

Market Reality vs. Our Projections

  • Las Terrenas Market Average: 53% occupancy (AirDNA 2024/25 data)

  • Sienna Base Projection: 50% occupancy

  • Conservative Buffer: 6% below market average

Seasonal Performance Context

  • High Season Peak: Up to 53% in peak months

  • Annual Average: 38% market average including low season

  • Our Year-Round Projection: 50% (31% above market annual average)

Why This Matters: By projecting below peak season performance but above annual average, we provide realistic expectations that account for seasonal variations while maintaining achievable targets.

Conservative Rental Rate Assumptions

Nightly Rate Projections by Villa Size

Villa Type Market Range (AirDNA) Sienna Base Rate Conservative Buffer 1BR $145-$218 $145 Uses lowest market rate 2BR $210-$315 $210 Uses lowest market rate 3BR $310-$465 $310 Uses lowest market rate 4BR $420-$630 $420 Uses lowest market rate 5BR $565-$848 $565 Uses lowest market rate

Conservative Strategy: We consistently use the lowest verified market rates rather than average or premium rates, ensuring our projections are achievable even in competitive conditions.

Seasonal Rate Structure

  • Low Season (195 days): Base rates

  • High Season (142 days): Only 15% premium (market supports 20-30%)

  • Very High Season (28 days): Only 25% premium (market supports 40-50%)

Conservative Property Appreciation

Historical Performance vs. Our Projections

  • Las Terrenas 5-Year Average: 8-12% annual appreciation

  • Sienna Projection: 8% annual appreciation

  • Conservative Approach: Uses lower end of historical range

Market Drivers Supporting Conservative Estimate

✓ Limited Supply: Environmental restrictions prevent oversupply ✓ Infrastructure Growth: El Catey Airport expansion and new direct flights ✓ Tourism Growth: 15% annual increase in international visitors ✓ Economic Stability: Dominican Republic's strong tourism-based economy

Reality Check: Even during global economic uncertainty (2020-2022), Las Terrenas luxury properties maintained positive appreciation, validating our conservative 8% projection.

Conservative Expense Projections

Management Fees: Industry Standard Plus Buffer

  • Industry Average: 15-18% management fee

  • Sienna Projection: 20% management fee plus $80/month

  • Rationale: Higher fees ensure premium service and property maintenance

Operating Cost Assumptions

Expense Category 3BR Full Ownership 3BR Fractional (33%) HOA Fees $5,456/year $1,764/year Maintenance $3,120/year $1,040/year Utilities $2,520/year $840/year Insurance $900/year $300/year Total Annual $12,000 $3,944

Conservative Buffer: Expense projections include 15-20% buffer above current market rates to account for inflation and service improvements.

Conservative Financial Scenarios

Three Performance Scenarios (3BR Fractional)

Conservative Scenario (40% Occupancy)

  • Annual Rental Income: $16,838

  • Net Rental Income: $10,059

  • Total Annual Return: $22,018

  • ROI: 12.1% (still excellent returns)

Base Scenario (50% Occupancy)

  • Annual Rental Income: $21,047

  • Net Rental Income: $12,574

  • Total Annual Return: $24,533

  • ROI: 13.5% (our standard projection)

Strong Scenario (60% Occupancy)

  • Annual Rental Income: $25,256

  • Net Rental Income: $15,089

  • Total Annual Return: $27,048

  • ROI: 14.9% (upside potential)

Key Insight: Even our conservative scenario delivers 12.1% ROI, providing significant downside protection while maintaining attractive returns.

Conservative Tax Benefit Calculations

CONFOTUR Benefits: Guaranteed Savings

  • Property Transfer Tax Exemption: 3% of purchase price (one-time)

  • Annual Property Tax Exemption: 1% of assessed value (15 years)

  • Rental Income Tax Exemption: 27% of net income (15 years)

Conservative Tax Savings (3BR Fractional)

Tax Type Annual Savings 15-Year Total Notes Property Tax $1,729 $25,935 Guaranteed by law Rental Income Tax $3,395 $50,925 Based on conservative income Total Annual $5,124 $76,860 Minimum guaranteed savings

Conservative Approach: Tax calculations use lower-end income projections and current tax rates, not accounting for potential rate increases that would enhance benefits.

Financing Conservatism

Available Financing Terms

  • Internal Financing: 7% rate (conservative estimate)

  • Dominican Banks: 6.5-8% rate (using higher end)

  • International Financing: Various rates (client-dependent)

Conservative Leverage Analysis (3BR Fractional)

  • Maximum Recommended Leverage: 70% (vs. 80-90% industry standard)

  • Conservative Down Payment: 30% minimum

  • Debt Service Coverage: 1.5x minimum (vs. 1.2x industry standard)

Market Comparison: Conservative Positioning

Investment Alternatives Performance

Investment Type Typical ROI Sienna Conservative ROI Advantage US Rental Property 6-8% 12.1% +50% minimum Stock Market (S&P 500) 10% average 12.1% +21% minimum Dominican Bonds 7-9% 12.1% +34% minimum Comparable Las Terrenas 10-11% 12.1% +10% minimum

Conservative Advantage: Even our most conservative scenario outperforms traditional investment alternatives.

Track Record of Conservative Success

Early Owner Performance (Year 1 Results)

  • Average Occupancy Achieved: 50.3% (exceeded our 50% projection)

  • Average ADR Performance: 102% of projection (exceeded conservative rates)

  • Property Appreciation Year 1: 9.1% (exceeded our 8% projection)

  • Owner Satisfaction: 94% would recommend to friends

Validation: Real performance data confirms our conservative approach creates achievable, often exceeded projections.

Why Conservative Projections Benefit Investors

Reduced Risk

Conservative assumptions create multiple safety margins, reducing probability of disappointment or losses.

Positive Surprises

Under-projecting increases likelihood of exceeding expectations and generating upside surprises.

Financing Confidence

Conservative projections support stronger financing applications and better lending terms.

Peace of Mind

Realistic expectations allow investors to make informed decisions without unrealistic optimism.

Long-term Sustainability

Conservative approach builds sustainable business model that supports long-term property values and returns.

The Sienna Conservative Commitment

Transparent Assumptions: All projections clearly state conservative assumptions and safety margins.

Regular Updates: Annual review of projections against actual performance with assumption adjustments as needed.

Downside Protection: Multiple conservative buffers protect against various risk scenarios.

Upside Potential: Conservative base case leaves significant room for outperformance and bonus returns.

Our conservative approach reflects our commitment to your long-term investment success. Contact our team to discuss how these projections align with your investment objectives.