Botevgrad Update Report June 2017

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Botevgrad Update Report June 2017 Property Update Location Botevgrad (Sofia), Bulgaria Property Type Industrial Occupancy Rate 20% Senior Financing N/A Valuation Date: 31 October 2016 Appraisers:

1 Botevgrad Update Report June 2017 Property Update Location Botevgrad (Sofia), Bulgaria Property Type Industrial Occupancy Rate 20% Senior Financing N/A Valuation Date: 31 October 2016 Appraisers: ELTA & CBRE Value*: EUR 2,121,561 % change from 2015: -6% Expected Equity Gain/Loss*: -33%** Strategy To actively market and sell the property. Yes Income Generating*** Income EUR 62,160 Total Cost EUR 87,358 *Taken as an average of both valuations (ELTA & CBRE). **This represents the percentage Gain / (Loss) that investors would realise if the asset (property) was sold at its most recent valuation. No preferred return has been paid to date. The Expected Equity Gain/Loss is updated upon obtaining the annual valuation for the property. ***Based on 2017 projections. Market Update In 2016, Bulgaria s GDP growth was at 3.4%, the same rate as the previous year. The main driver of GDP growth in 2016 was Bulgaria s exports. The country s low inflation supported the improvement of private consumption during the year. The improving economic conditions in Bulgaria also affected employment, where the unemployment rate declined to 7.6%, which is the lowest rate for the past seven years. The 2016 statistics show that the supply of industrial real estate grew by 5% in Bulgaria, where total stock reached 839,500 sqm. A number of projects are expected to be completed in 2017, upon completion they would further grow the supply of industrial real estate. The market indicators show that the lack of industrial real estate has negatively affected leasing activity. A decline in prime yields is expected in Bulgaria s industrial real estate due to the increased supply of properties in the market.. Page 1 of 5

2 Botevgrad (the Project ) Key Developments On 31 December 2016, the responsibility of Investment Manager transferred from the Islamic Investment Company of the Gulf (Bahamas) Limited ( IICG ) to Ithmaar Bank B.S.C. (c) ( Ithmaar or the Investment Manager ). Ithmaar is currently looking at different options to maximize the value of the subject property in Botevgrad. A local broker has been mandated to find suitable tenants and/or buyers for the property. No distributions are expected until an acceptable occupancy rate is achieved. Currently, 20% of Botevgrad is leased. Site Visit Ithmaar representatives plan to visit Botevgrad during the second half of 2017, whereby meetings will take place with the local property managers and real estate experts. The purpose of this visit is to explore the potential sale of Botevgrad. Page 2 of 5

3 Appendix Central Bank of Bahrain Disclosure Requirements Up-front fees: up to 6.21% of the total capital Management fee: an annual fee up to 0.99% of the total capital and reasonable out of pocket expenses. Original Plan As per the Investment Term Sheet, the initial objective was to acquire and manage an industrial/logistic property generating above average cash flows. The property was strategically located in Botevgrad (60 km. from Sofia), on a renovated lane, part of the main Trans-European road corridor connecting Sofia with Wien and Northern Europe through the Danube Bridge. The investment was envisaged to consist of an industrial/logistic property in the Sofia Region (Bulgaria) indirectly owned, through a Bulgarian subsidiary, by the COFRA Holding (Breenikmeyer family owner of the C&A clothes brand). At the time of the initial Investment Term Sheet, the owner which occupied through its subsidiary, Tekstil Logistik Bulgaria Eood ( TLB ), approximately 60% of the space, was to enter into a lease agreement until 31 December At the time of initial Investment Term Sheet, the property was fully leased to TLB, WKS Bulgaria ( WKS ) and Bulgarian Apparel Manufacturing ( BAM ). The net purchase price was EUR million, with an average cap rate of 12% over the term of the lease, and an acquisition cap rate of approximately 20%. The investment was to be shared 50/50 with Prime Properties ( Prime ), a Bulgarian developer that sourced the transaction. The investment was supported by the WKS intention to renew for another year (at least) to its lease expiring at the end of In addition, the property also includes a 3,300 sqm plot of land that could be marketed for a build-to-suit industrial property. At the investment s launch, the initial investment manager, Faisal Private Bureau ( FPB ) had an investment objective to maintain fully occupancy of the building. Although, the investment was underwritten under a conservative assumption that only the main tenant would occupy the building in the long term (i.e. a vacancy rate of approximately 30% was assumed). Project Milestones In 2007, the Project entered into a partnership with Prime to acquire the property. In 2008, the Project bought out Prime s share in the property at a price of EUR 1.2 million. Changes to the Original Plan and Anticipated Exit Date Initially, the plan was to enter into this investment for 4-5 years as a partnership with Prime. Although, in 2008 the Project bought Prime s share and became sole owners of the property. Page 3 of 5

4 As previously mentioned, the property includes a plot of land adjacent to the building, which was envisaged to be marked for a build-to-suit industrial property. Permits were to be obtained to build at least 2,000 sqm rentable space. This land remains in the same status, and no permits were obtained for it. Botevgrad has been affected by weakening demand for its units, which is why the property did not have full occupancy since The anticipated exit date for the Project is 31 December Through the appointed local broker, Ithmaar is looking at options to lease and/or sell the property. Planning Permissions Obtained to date None Utilisation of Proceeds Project Fair Value* as on 31 December 2016: Nominal Equity Net Fair Value Surplus (Shortfall) 2,532,424 1,708,469 (823,955) All amounts in EUR *The Project Fair Value is updated on an annual basis upon receiving the year-end thirdparty valuation report. Project s bank accounts: Bank Name Currency Amount Allianz BGN 3, Allianz EUR *The Project s equity has been fully utilised, and further liquidity is obtained in the form of financing and payables (booked by the Investment Manager) as and when Project expenses arise. The Project has not undertaken any financing. Amount Spent from 1 January 2017 to 30 June 2017: Category From 1 January 2017 to 30 June 2017 Amount (EUR) Percentage (%) Building Expenses 5, % Page 4 of 5

5 Total 5, % *Building Expenses represent the local property manager s fees, accounting fees, registration fees, bank fees and other operational fees related to the on going business of the Project. Recipients of Material Amounts (above 10%) from 1 January 2017 to 30 June 2017: Supplier Lou Hajts Venchars EOOD (local property expenses) Frea Akpos Ltd. (electricity) Chronika Ltd. (accountants) Amount (EUR) % of Total Spent during the period % 2, % % The company does not have senior management, and is managed by the Investment Manager. Current Board Members: Name Date Elected Date Resigned Pavelina Kalcheva 14/01/2013 N/A Board remuneration paid during 1 January 2017 to 30 June 2017: The Board does not receive any remuneration. Summary of Board resolutions from 1 January 2017 to 30 June 2017 There were no Board resolutions in for the period 1 January 2017 to 30 June Litigation or Disputes: There were no litigations or disputes during the Project s life. Pledges created over the assets of the investee company: The Investment Manager confirms that the property is free from any pledge or mortgage. Disclaimer: The information provided herein is provided by Ithmaar Bank B.S.C. (c) in the best of its knowledge following the transfer of management responsibility from the ex-investment manager. Every reasonable diligence and caution has been exercised to ensure its accuracy. However, this information is subject to a number of factors beyond the control of Ithmaar Bank B.S.C. (c), including current and future market conditions, constant changes in occupancy and vacancy rates, currency fluctuations, supply and demand, and more. Ithmaar Bank B.S.C. (c) is not a real estate promoter but an investment manager managing the investments on behalf of its clients. Ithmaar Bank B.S.C. (c) has a network of contacts helping it to select appropriate local real estate promoters. Page 5 of 5

Corbeanca Update Report June 2017

Corbeanca Update Report June 2017 Property Update Location Brasov County, Romania PropertyType Land Valuation Date: 31 October 2016 Appraiser: Winterhill Value: EUR 1,090,000 % change from 2015: 0% Equity