HATFIELD PHILIPS INTERNATIONAL Windermere X Loan Presentation. 17 July 2014

Transcription

1 Windermere X Loan Presentation 17 July 2014 Hatfield Philips International 25 Canada Square 34 th Floor London E14 5LB

2 TABLE OF CONTENTS Executive Summary Bridge Loan Fortezza Portfolio Loan Lightning Dutch Loan Built Loan Tour Esplanade Loan Page 3 Page 4 12 Page Page 24 Page 26 Page 28 HPI WINDERMERE X 2

3 EXECUTIVE SUMMARY Windermere X - Loan Level Breakdown: Loan Outstanding Current # Property Transfer Valuation balance as % of Location Maturity Loan Status Balance Date ( ) Total Properties Type Date LTV Occupancy Bridge 336,171, % 6 Germany Office Jan-2014 In Special Jan ,000,000 Sep % 98.2% Lightning Dutch 14,492, % 1 Netherlands Retail Aug-2013 In Special Oct ,290,000 Aug % 98.0% Built 3,961, % 2 Germany Retail Sep-2011 In Special Oct ,480,000 Jun % 98.8% Tresforte 1,000, % 0 Netherlands N/A Jan-2012 In Special Jan-2010 sold N/A N/A N/A Sub-total 355,625, % 9 345,770,000 IFB and Pavia (Fortezza) 59,639, % 5 Italy Office Apr-2015 Primary N/A 47,120,000 Jun % 95.0% Enel Tower (Fortezza) 43,091, % 1 Italy Office Apr-2015 Primary N/A 32,700,000 Jun % 100.0% Tour Esplanade 257,000, % 1 France Office Oct-2016 Primary N/A 313,900,000 Jun % 0.0% Sub-total 359,730, % 7 393,720,000 Total * 715,356, % ,490,000 Amount in Euro ( ) * excluding 3.2M Tour Esplanade Capex Facility never drawn down As of Q Windermere X - Notes Level Breakdown: Class Original Current Interest Current % of Total % of Total % of Total Balance Balance Distribution Margin Class A 1,180,000, % 502,812, % 595, % 0.16% Class X 50, % 5, % 1,652, % N/A Class B 56,000, % 51,906, % 63, % 0.18% Class C 64,000, % 59,321, % 81, % 0.24% Class D 112,900, % 104,515, % 183, % 0.39% Class E 70,000, % 0 0.0% 82, % 0.72% Class F 14,506, % 0 0.0% 0 0.0% 3.00% Total 1,497,456, % 718,561, % 2,658, % Please note that 8 loans have already repaid in full and, to date, the losses realised at note level were related to the Woolworth Boenen and Tresforte loans Class D is the Controlling Class, however no Controlling Class Representative has come forward Classes A to D are still receiving interest, the principal payments are applied on a sequential basis HPI WINDERMERE X 3

4 Bridge Loan

5 BRIDGE LOAN OVERVIEW Loan Status Workout History Performance/Credit Events UPB at Origination (Senior) 342,090,000 Current UPB 336,171,988 Initial LTV 68.9% Current LTV 103.4% Special Servicing Transfer Date 15 January 2014 Estimated Final Resolution Date Q Asset Status Lettable area 191,546 sqm No. of assets 6 Asset type Office Valuation/Date 325,00,000 / 1/9/2013 Location Various, Germany Annualized GRI 27.7m ERV(current) 25.7m Vacancy in % 1.8% WALL (Q1 2014) 5.1 years Transferred to Special Servicing on 15 January 2014 due to maturity default Enforced and appropriated shares on 24 January 2014: Fast, efficient, cost effective Control Cash, stop any leakage to sponsor Default waterfall means no payments to B-lender. Senior loan hyper amortises Post enforcement: Provides flexibility to retain the expertise of the incumbent AM on selected processes/assets, while allowing for full optionality to appoint selected third parties Evaluating roles of Property Manager, incumbent Asset Manager and systems in place to make a seamless transition Worked with Fortress AM to ensure on-going leasing discussions were maintained and appropriately advanced Allows HPI to maintain greater control over the borrower in the bid selection and overall sales and leasing process HPI and Valad conducted a pitch process and have selected a preferred agent for the Frankfurt and Sulzbach properties Controlling Class Note Holders have indicated that they would prefer to await consultation with the soon to be appointed CCR Asset management activities continue in order to maintain/enhance the value of the properties Current BP envisages full pay-off of the Senior Loan through a combination of sale proceeds and amortisation February - March 2014: Initiated on-going discussions with the incumbent Asset Manager Began to stabilise the future process/relationship with the current Property Manager Met with Property Manager, BNP Paribas Real Estate, to evaluate its role, asset management systems and capabilities HPI Real Estate team conducted inspections for 5 of the 6 assets in the portfolio April 2014: After a competitive process, Valad was appointed as new Asset Manager to run the orderly sale and leasing process The transition phase has not caused any disruptions to the day-to-day operation of the 6 assets The loan has a healthy cash flow. Interest is expected to be paid regularly and soft amortisation is expected to be paid based after Opex and Capex requirements HPI WINDERMERE X 5

6 Alt Moabit, Berlin Property Status Construction Year 1989 Lettable Area 48,074 sqm Site area 21,750 sqm Asset Type Office Leasing Profile Multi-let Annualized GRI 5,992,181 Vacancy 2.99% WALL 2.78 years Market Value 76,100,000 / 1,583 psm The property has approximately 100 tenants and it is let on short/medium-term leases Approx. 4.5% take-up occurred in Q The Business Plan is to maintain the income profile and the current level of occupancy HPI WINDERMERE X 6

7 Kaiserswerther Strasse, Düsseldorf Property Status Construction Year 1995 Lettable Area 11,953 sqm Site area 5,545 sqm Asset Type Leasing Profile Office Multi-let Annualized GRI 2,075,361 Vacancy 14.20% WALL Market Value 3.82 years 27,700,000 / 2,317 psm The property has approximately 25 tenants and it is let on short/medium-term leases The Business Plan is to maintain the income profile and the current level of occupancy HPI WINDERMERE X 7

8 Galluspark, Frankfurt Property Status Construction Year 1996 Lettable Area 44,281 sqm Site area 18,211 sqm Asset Type Leasing Profile Office Single-let* Annualized GRI 5,100,610 Vacancy 0.16% WALL Market Value years 78,000,000 / 1,761 psm The current lease agreement was extended in early 2011 The property is fully let to a single tenant (Deutsche Bahn), LT rated AA/Aa1/AA (S&P/Moody s/fitch) The Business Plan is to dispose of the asset as-is The expected exit is before year-end 2014 *1,300 sqm of canteen and retail space separately let HPI WINDERMERE X 8

9 Am Unisys-Park, Sulzbach Property Status Construction Year 1972 / 1999 Lettable Area 17,282 sqm Site area 12,590 sqm Asset Type Leasing Profile Office Single-let Annualized GRI 1,560,841 Vacancy 0.71% WALL Market Value 8.50 years 19,600,000 / 1,134 psm The current lease agreement was extended in the second half of 2012 The property is fully let to a single tenant (Clariant), LT rated BBB-/Ba1 (S&P/Moody s) The Business Plan is to dispose of the asset as-is The expected exit is before year-end 2014 HPI WINDERMERE X 9

10 Abraham Lincoln Park, Wiesbaden Property Status Construction Year 2002 Lettable Area 29,740 sqm Site area 16,748 sqm Asset Type Leasing Profile Office Single-let Annualized GRI 5,592,295 Vacancy 0.00% WALL Market Value 2.75 years 49,500,000 / 1,664 psm The current tenant is utilising circa 60% of the property and 15% is sub-let The current lease agreement is set to expire in March 2017, however both tenants are willing to enter into early negotiations for lease extensions The Business Plan is to stabilise the asset prior to sale The expected exit is before year-end 2015 HPI WINDERMERE X 10

11 Alfred-Herrhausen-Allee, Eschborn Property Status Construction Year 2002 Lettable Area 40,223 sqm Site area 11,775 sqm Asset Type Leasing Profile Office Single-let Annualized GRI 7,240,326 Vacancy 0.00% WALL Market Value 3.25 years 74,100,000 / 1,842 psm The sole tenant (Vodafone) will vacate the property The current letting market in Eschborn is challenging The Business Plan is to determine potential opportunities to stabilise the asset prior to sale; the SpS has received several expressions of interest in the property from brokers acting for potential tenants The AM and the SpS are working to determine the precise requirements of potential occupiers The expected exit depends on the ability and on the time required to re-let the property HPI WINDERMERE X 11

12 Galluspark and Sulzbach Hold vs Sell The Galluspark and Sulzbach properties are now stabilised, have long WALL and do not require any other asset management initiatives in the short term The SpS received feedback advising to sell as soon as possible the Galluspark and Sulzbach properties from the 4 asset management companies approached during the AM selection process and from the 4 brokers approached for the sale of the properties In response to several investors' queries regarding the hold vs sell scenarios, the Servicer and its selected advisors have prepared the following analysis based on cash collection: Assumed exit date 15/01/ /07/2017 Delta Amortisation from Galluspark and Sulzbach (circa 1.1m per quarter) 2,283,727 13,702,362 11,418,635 Sale proceeds from Galluspark and Sulzbach 92,091,757 77,050,542-15,041,215 Total 94,375,484 90,752,904-3,622,580 LENDER WATERFALL Following the default, and regardless of the level of interest rate set at Borrower level, all of the funds available after the Issuer and Special Servicer costs are used to pay Senior Interest and Senior Principal at Lender level, therefore hyper-amortising the Senior Loan The Senior loan has been hyper-amortised by approx. 1.68m in January 2014, 4.24m in April 2014 and 4.26m in July 2014 HPI WINDERMERE X 12

13 Fortezza Loan Portfolio

14 FORTEZZA LOAN PORTFOLIO OVERVIEW Loan Current Balance Outstanding balance as % of # Location Property Maturity Loan Status Transfer Date The two loans are cross-collateralised and are also identified as the Fortezza Loan Portfolio Valuation ( ) Date Occupancy Total CMBS IFB and Pavia (Fortezza) 59,639, % 5 Italy Office Apr-2015 Primary N/A 47,120,000 Jun % 95.0% Enel Tower (Fortezza) 43,091, % 1 Italy Office Apr-2015 Primary N/A 32,700,000 Jun % 100.0% Total 102,730, % 6 79,820,000 Amount in Euro ( ) As of Q BORROWER PROFILE Borrower is an Italian fund vehicle with multiple unit holders The Fund is managed by a SGR ( Torre SGR ), which is an independent agent with a fiduciary to the Fund but no duty of care to the Lenders SGR rights cannot be assigned or waived under Bank of Italy legislation Highly regulated environment limiting workout options for the Servicer / Lender to control or replace SGR Performance of Torre SGR: 3.27M in rental value on 4 properties was secured during the last 3 years Minimum / No rent discount on previous re-gears achieved by SGR Italian legislation on public sector leases: Public sector tenant minimum discount 15% for any new lease or re-gear, triggered unilaterally at lease break/maturity New law as of December 2013: public sector tenants can unilaterally break from any existing lease until end of July This results in uncertainty and potential delays on lease re-gears and asset sales which is factored in the milestones timeline LTV HPI WINDERMERE X 14

15 Performance/Credit Events Q2 2013: Engaged real estate and legal advisors Comprehensive investment strategy report and valuation completed, providing necessary background to assess discrepancies between Borrower and Lender valuations Legal review of options for enhanced control and security Q3 2013: Conducted a comprehensive review of the revised business plan received by Borrower against the investment strategy report to: Identify key dates and events for each property Investigate leasing and sales parameters for each asset Q / January 2014: Developed a revised business plan in conjunction with enhanced legal controls The new loan level thresholds were determined by a revised disposal plan combining the rental level achievable according to the Sponsor business plan assumptions with the yields achievable on the investment market according to our real estate advisors. The Borrower rental levels were utilised on the basis of the historical track record of the Borrower in retaining tenants and re-gearing leases at above ERV level The result is an agreed disposal plan which is envisaging a full recovery of the loan, but which is less aggressive than the Sponsor business plan Loan restructuring executed (see next page for summary of terms) Q / Q : Sale agent has been appointed with a duty of care towards Lender The borrower has recently agreed the terms with the main tenant for the extension of the leases at Sesto S.G., Via Bertolaia and Lecco HPI WINDERMERE X 15

16 SUMMARY OF RESTRUCTURING TERMS Maturity extension: 1.25 years to April 2015 plus 0.75 years to January 2016, subject to agreed outstanding balance milestone ( 40m for Enel Tower and 25m for IFB and Pavia) Full cash sweep; we expect m amortisation per quarter (depending on other expenses, like Capex). Switch to EURIBOR after maturity in January 2014 to hyper-amortise the loans No distributions to the Unit Holders while loan is outstanding Appointment of sales agent in April 2014 with duty of care towards Lender Debt repayment milestones established in April 2015 and January 2016, resulting in estimated full debt recovery Minimum net sale prices agreed in accordance with Torre SGR Business Plan and HPI external advisors SGR / asset manager fee reduction, back-ended portion PoA from Fortress (the sponsor) as Unit Holder to HPI, and mechanism to cause a voluntary liquidation in the event milestones are breached SGR to call a vote in 15/30 business days in order to amend Fund s regulation such that units held by the sponsor (and subject to PoA) can achieve required voting majority PoA remains in effect if the sponsor transfers Units to third party Additional collateral: covenant for SGR to credit all income/proceeds from unencumbered asset into pledged rent accounts. The funds will then be applied to pay Windermere XIV and Windermere X lenders pro-rata based on loan balance (currently circa 70%/30% split) Servicer fees: Consent fees: 25bps on outstanding loan balance paid at the January 2014 extension by the Borrower Monitoring fees: 10bps on a quarterly basis payable by the Borrower HPI WINDERMERE X 16

17 Napoli, via Porzio Property Status Construction Year Early 1990s Lettable Area 20,675 sqm Asset Type Office Leasing Profile Multi-let Annualized GRI 4,658,571 Vacancy 0.00% WALL (as of Q1 2014) 3.75 years Market Value 32,700,000 / 1,582 psm The office space is let to ENEL (accounting for 96.7% of the GRI), LT rated BBB/Baa2/BBB+ (S&P/Moody s/fitch) Wind, the third mobile operator in Italy, has a lease in place for the antenna; LT rated BB-/B2/B+ The Business Plan for this property is to re-gear the lease and then sell in Q HPI WINDERMERE X 17

18 Sesto S.G., Viale Italia Property Status Construction Year 1988 Lettable Area 9,852 sqm Asset Type Leasing Profile Office Multi-let Annualized GRI 2,359,216 Vacancy 0.00% WALL (as of Q1 2014) Market Value 6.02 years 21,300,000 / 2,162 psm One of the two leases was renewed in 2013 until 31/12/2027 The Borrower is in advanced discussions with the main tenant for a lease extension in exchange of a reduction in rent (current lease expiry on 31/12/2017) The Business Plan for this property is to dispose of the asset as soon as the second lease is extended A sale agent has recently been appointed HPI WINDERMERE X 18

19 Milano, Via Bertolaia Property Status Construction Year Late 1980s Lettable Area 3,131 sqm Asset Type Canteen Leasing Profile Single let Annualized GRI 435,302 Vacancy 15.78% WALL (as of Q1 2014) 3.75 years Market Value 2,170,000 / 693 psm The Borrower is in discussion with the tenant for a reduction in rent (with no extension) The asset cannot be sold with the current tenant due the short WALL, micro-location and asset specs The Business Plan for this property is to find a new tenant on a 6 years lease and then sell in Q HPI WINDERMERE X 19

20 Lecco, C.so Martiri della Liberazione Property Status Construction Year Early 1960s Lettable Area 10,615 sqm Asset Type Office Leasing Profile Multi-let Annualized GRI 682,956 Vacancy 8.87% WALL (as of Q1 2014) 3.92 years Market Value 5,000,000 / 471 psm The Borrower is in discussion with the tenant for a lease extension in exchange of a reduction in rent The asset cannot be sold with the current lease profile due to the short WALL and macro-location The Business Plan for this property is to re-gear the lease and then sell HPI WINDERMERE X 20

21 Grosseto, Via Bonghi Property Status Construction Year Early 1950s Lettable Area 3,443 sqm Asset Type Office Leasing Profile Multi-let Annualized GRI 329,446 Vacancy 0.00% WALL (as of Q1 2014) 4.37 years Market Value 3,250,000 / 944 psm The two leases were recently renewed (to July 2018 and December 2018 respectively) and the CapEx refurbishment plan has been completed The Business Plan for this property is to dispose of the asset as soon as possible A sale agent has recently been appointed HPI WINDERMERE X 21

22 Pavia, Viale Indipendenza Property Status Construction Year 1995 Lettable Area 10,615 sqm Asset Type Leasing Profile Office Single let Annualized GRI 1,650,000 Vacancy 0.00% WALL (as of Q1 2014) Market Value 5.17 years 15,400,000 / 1,451 psm The lease with the sole tenant was extended for 6 years despite the tenant initially sending a notice to vacate CapEx refurbishment plan has been recently completed The Business Plan for this property is to dispose of the asset as soon as possible A sale agent has recently been appointed HPI WINDERMERE X 22

23 Rome, Via Raffaele Costi Unencumbered Property Status Construction Year Early 1990s Lettable Area 10,530 sqm Asset Type Office Leasing Profile Vacant Annualized GRI N/A Vacancy 100% WALL (as of Q1 2014) N/A BOV range 2m / 4m* The property has been vacant since 2009 HPI visited the property and discussed future possibilities with local brokers Significant CapEx should be spent prior to letting The Business Plan for this property is to lease the property and then sell * 30% of the proceeds will be payable to Windermere X HPI WINDERMERE X 23

24 Lightning Dutch Loan

25 LIGHTNING DUTCH LOAN OVERVIEW Loan Status Workout History Performance/Credit Events UPB at Origination 66,300,000 Current UPB (as of Q1 2014) 14,492,500 Initial LTV 75.0% Current LTV 83.8% Special Servicing Transfer Date 19 Oct 2012 Estimated Final Resolution Date Q Asset Status Lettable area 20,302 sqm No. of assets 1 Asset type Showroom Valuation/Date 17,290,000/ 31/8/2012 Location Netherlands GRI (as of 31 Dec 13) 2.77m ERV(current) 3.14m Vacancy 12.03% WALL 2.87 years Loan matured on 17 Oct 2011 and Borrower exercised its first and second extension option (embedded in loan agreement) to extend loan maturity to 12 August 2013 A new valuation was obtained in August 2012 and resulted in an LTV breach (80% threshold). Borrower was required to cure the breach (approx. 3.25M). The cure payment was not made, and as a result the loan transferred to Special Servicing on 19 October 2012 Head lessee (1 head lease in place between TCN & Borrower) filed for bankruptcy in December 2012 To maintain stability at property, HPI implemented following measures: Worked with insolvency administrator in reassigning approx. 120 subleases to Borrower Members of TCN asset management team were retained to ensure tenants security & income HPI has conducted assessment of workout options with respect to 1) enforcement of securities 2) holding asset with aim to reduce loan balance through periodic amortisation with sale of the asset at exit. The business review prepared by a 3rd party advisor confirmed short to mid-term sustainability of the business but highlighted potential risks in long-term. The 20,302 sqm property is currently 87.97% occupied with short (up to 3 months) and medium term leases due to nature of the business concept. Tenants are mainly sport clothing manufactures with their administration and showroom units in Leusden (targeted customers are retail wholesalers) The loan has been amortised through unscheduled principal payments each quarter since Q ( 350,000 was paid down in Q2 2014). Soft amortisation per quarter is averaging 200k-300k The business report concluded that the Sport Business Centre operates as sustainable business model with only limited fluctuations in cash flows and average occupancy of 88% in a short-term view (1-3 years) as no major changes in tenant commitments are expected Due to recent capex investments (to great extent funded by tenants themselves) the short term capex requirement is expected to be limited. The report also recognizes the value of the property/commercial manager as seen in increased letting activities and retention of tenants. The strategy is to hold the asset and amortize through periodic amortisation payments while preparing the property for sale for the end of 2014 or beginning of This will allow the property to accumulate 2 years of trading records under new lease scheme (since reassignment of leases from head lease to the Borrower). The Special Servicer is also looking into options to optimize corporate cost structure. HPI WINDERMERE X 25

26 Built Loan

27 BUILT LOAN OVERVIEW Loan Status Workout History Performance/Credit Events UPB at Origination 9,100, Current UPB 3,961, Initial LTV 85.6% Current LTV 113.8% Special Servicing Transfer Date 03 Oct 2011 Estimated Final Resolution Date Q Asset Status Lettable area 2,649 sqm No. of assets 2 Asset type Retail Valuation/Date 3,480,000/14/6/2013 Location Germany GRI (as of 31 Dec 13) 351,960 ERV(current) 302,832 Vacancy 0% WALL 6.15 years The loan was transferred to Special Servicing following maturity payment default on 03 Oct 2011 Consensual workout strategy was agreed with borrower in February After signing consensual documentation, 3 out of 5 properties were sold in 2012 Sale of remaining 2 assets has been hampered by: Expiry of consensual sales arrangements in late 2012 coincided with account holding bank terminating borrowers accounts and freezing balances available in the accounts (SpS was informed that decision to terminate this relationship was made after account holding bank reviewed relationships categorising borrowers accounts asnon-core businesses) As a result, borrowers were unable to receive any rental income from the tenants, nor able to pay companies operating expenses (including invoices received from professional advisors advising borrower on disposal strategy) New control accounts were opened in Oct 2013 and are in operation. Servicer has signing rights on the accounts SpS has negotiated an amended extension of the consensual sales agreement. Borrower agreed to grant an irrevocable power of attorney to sell properties in an open market transaction The 33 sqm vacancy area in the Hildesheim property, has been fully let to the Netto tenant as a bakery unit. Asset now is fully let (changes will be reflected in the Q reporting) Tenants have been paying their rent in full and on time since the new control accounts were opened. Currently approx. 30k is outstanding from previous periods (the tenant transferred rental payment to an incorrect account owned by the sponsor after the bank accounts were frozen). HPI is liaising with the property manager to locate the funds and direct the payments into the control accounts HPI together with company directors reviewed sales agencies pitches. Sales agency agreement was prepared and circulated to the sales agent for signing. The sales agency agreement is finalised with the relevant agent along with the execution of the consensual work-out documentation. Currently SpS along with the agent have managed to negotiate extension of the existing leases in one of the properties and will re-market the asset to achieve highest possible recovery (final signing is pending). Exit still remains to be at Q A selection process for a sales agency role has been finalized and the elected sales agent has been appointed in order to market the two remaining propoerties in the portfolio The marketing process has already started and is expected to be finalised by mid Q HPI aims to exit from the transaction in Q following successful sale of the properties and distribution of the sale proceeds in accordance with the loan documentation HPI WINDERMERE X 27

28 Tour Esplanade Loan

29 TOUR ESPLANADE LOAN OVERVIEW Loan Status UPB at Origination 257,000,000 Current UPB 257,000,000 Initial LTV 67.5% Current LTV 81.9% Special Servicing Transfer Date Lettable area 51,218 sqm No. of assets 1 Asset type Office Valuation/Date 313,900,000/30/6/2011 Location GRI (as of Q1 2014) France Nil ERV(current) 25.4m Vacancy 100.0% WALL N/A (in Primary) Estimated Final Resolution Date Q Asset Status 0 years Please note that a new lease has been signed in favour of the French Government acting on behalf of several state ministries The lease start date, which is due to commence on or around 1 July 2014, is dependent on the completion of a specific CapEx programme to be funded by shareholder equity and it has a fixed term of 13 years and 6 months Performance/Credit Events All debt service payments to date have been made on time The Borrower approached the Servicer in order to discuss a potential restructuring of the shares in the Borrower. The Servicer, together with its advisors, extensively reviewed and consented to this proposal The shareholding of the Tour Esplanade Borrower (the Borrower ) has recently been restructured. Whilst the ultimate shareholding of the Borrower remains unchanged, there have been a number of significant structural changes: 1. The shareholder of the Borrower has set up a French organisme de placement collectif en immobilier, which is a regulated real estate investment company held as a 100% subsidiary. This subsidiary (the Esplanade OPCI ) is managed by Tishman Speyer Management OPCI SAS 2. All but one share of the Borrower has been transferred to the Esplanade OPCI. The Borrower was then transformed from a societe par actions simplifiee into a societe civile immobiliere, a non-listed, tax transparent real estate investment company The restructuring will produce a number of advantages for the Issuer: 1. The OPCI vehicle has well established advantages in terms of tax efficiency and of ensuring increased liquidity of the Tour Esplanade Property on the real estate market, which will enhance the Borrower s refinancing opportunities 2. The shares of the Borrower will continue to be pledged in full for the benefit of the Issuer and the Issuer will also receive the benefit of pledges over the shares in the Esplanade OPCI and over the shares in the Esplanade OPCI immediate shareholder. This gives the Issuer different enforcement options if there was to be a Loan Event of Default in the future 3. In addition, and as previously confirmed in an earlier notice dated 16 January 2013, a CapEx programme is being carried out by the Borrower, funded by shareholder equity. A new CapEx reserve account has been set up, pledged to the Issuer and pre-funded by the sponsor so that, on the 5th of each month, it will contain an amount equal to the greater of (i) 3,000,000 and (ii) an amount equal to 100% of the CapEx expenses to be paid by the Borrower during the one month period starting on the relevant date based on the quarterly CapEx expenses budget to be provided by the Borrower 4. In addition, an amount of two quarter s interest will be placed on reserve initially, which will be maintained on an on-going basis at an amount equal to one quarter s interest (approx. 3.5m) HPI WINDERMERE X 29

30 End of Presentation