THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION ( FSMA

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you shoud take you are recommended to seek your own financia advice immediatey from your stockbroker, bank manager, soicitor, accountant and/or independent financia adviser, who is authorised under either: (i) if you are in the United Kingdom, the Financia Services and Markets Act 2000 ( FSMA ); or (ii) if you are in South Africa, the Financia Advisory and Intermediary Services Act If you are in a territory outside the United Kingdom or South Africa, you are recommended to seek your own financia advice from another appropriatey authorised independent financia adviser. This document comprises a prospectus reating to Sirius Rea Estate Limited (the Company ) and has been prepared in accordance with the Prospectus Rues of the Financia Conduct Authority (the FCA ) pursuant to section 73A of the Financia Services and Markets Act 2000, as amended ( FSMA ). This document has been approved by the FCA in accordance with section 87A of FSMA and made avaiabe to the pubic in accordance with Rue 3.2 of the Prospectus Rues. This document does not constitute a prospectus in terms of the South African Companies Act, No. 71 of 2008, as amended (the South African Companies Act ) and wi not be fied with the South African Companies and Inteectua Property Commission in terms of the South African Companies Act. This document is sent to the hoders of ordinary shares in the capita of the Company (the Sharehoders ) in South Africa for information purposes ony, is in compiance with section 18 of the istings requirements of the JSE Limited (the JSE ) (the JSE Listings Requirements ), as amended to the extent required and has been approved by the JSE s Corporate Actions and Cearing and Settement Departments with regard to any procedura and timetabe issues. Sirius Rea Estate Limited (incorporated as a company imited by shares under The Companies (Guernsey) Law, 2008 as amended and registered with the Registrar of Companies in Guernsey with registered number 46442) Admission to the premium segment of the Officia List and to trading on the London Stock Exchange s Main Market for isted securities of 852,858,815 Ordinary Shares Canaccord Genuity Limited UK Sponsor PSG Capita Proprietary Limited RSA Sponsor The Company s entire issued ordinary share capita comprising ordinary shares of no par vaue each (the Ordinary Shares ) is currenty admitted to trading on the AIM market ( AIM ) of the London Stock Exchange pc ( LSE ) and the Aternative Exchange ( AtX ) of the JSE Limited ( JSE ). Appications have been made to: (i) the LSE to cance the admission of the Ordinary Shares to trading on AIM; (ii) the FCA for a of the Ordinary Shares to be admitted to the premium segment of the Officia List of the FCA; and (iii) the LSE for the Ordinary Shares to be admitted to trading on its Main Market for isted securities (together, UK Admission ). It is expected that UK Admission wi become effective and that deaings in the Ordinary Shares on the main market of the LSE wi commence at 8.00 a.m. on 6 March Trading of the Ordinary Shares on AIM wi be canceed by no ater than UK Admission. Appication has been made to the JSE for a of the Ordinary Shares of the Company to be transferred to trading on the Main Board for isted securities of the JSE (the Main Board ) ( JSE Transfer ). It is expected that JSE Transfer wi become effective and that deaings in the Ordinary Shares on the Main Board wi commence at the same time and date as UK Admission. No appication has been made or is currenty intended to be made for the Ordinary Shares to be admitted to isting or trading on any other exchange. The Company and the Directors, whose names appear on page 30, accept responsibiity for the information contained in this document. To the best of the knowedge and beief of the Company and the Directors (each of whom has taken a reasonabe care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission ikey to affect the import of such information. The whoe text of this document shoud be read and, in particuar, the section headed Risk Factors on pages 14 to 25 of this document. A statements (in particuar regarding the Group s business, financia position and prospects) shoud be viewed in ight of such Risk Factors. Sharehoders are not required to take any action upon receipt of this document. The Company is not issuing any new Ordinary Shares nor is it seeking to raise any new money in connection with UK Admission or JSE Transfer. This document has been pubished soey to enabe the Company to obtain admission of the Ordinary Shares to the premium segment of the Officia List and to trading on the LSE s Main Market for isted securities. The contents of this document are not to be construed as advice reating to ega, financia, taxation, accounting, reguatory, investment decisions or any other matter. Canaccord Genuity Limited ( Canaccord Genuity ) has been appointed as sponsor in the UK (the UK Sponsor ). Canaccord Genuity, which is authorised and reguated in the United Kingdom by the FCA, is acting excusivey for the Company and no one ese in connection with the contents of this document or UK Admission, and wi not regard any other person (whether or not a recipient of this document) as a cient in reation to UK Admission and wi not be responsibe to anyone other than the Company for providing the protections afforded to its cients or for advising any other person on the contents of this document or on any other transaction or arrangement referred to in this document. Apart from the responsibiities and iabiities, if any, which may be imposed on Canaccord Genuity under the FSMA or the reguatory regime estabished thereunder, Canaccord Genuity does not accept any responsibiity whatsoever nor makes any representation or warranty, express or impied, concerning the contents of this document incuding its accuracy, competeness or verification or concerning any other statement made or purported to be made by the Company, or on the Company s behaf, or by Canaccord Genuity, or on Canaccord Genuity s behaf, in connection with the Company or UK Admission and nothing in this document is or sha be reied upon as a promise or representation in this respect, whether as to the past or the future. Subject to appicabe aw, Canaccord Genuity discaims, to the fuest extent permitted by appicabe aw, a and any duty, iabiity or responsibiity whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) which it might otherwise have in respect of this document and the matters referred to herein. PSG Capita Proprietary Limited ( PSG Capita ) has been appointed as sponsor in South Africa ( RSA Sponsor ). PSG Capita, which is authorised and reguated in South Africa by the JSE, is acting excusivey for the Company and for no one ese in reation to the contents of this document or JSE Transfer. PSG Capita wi not regard any other person (whether or not a recipient of this document) as its cient in reation to JSE Transfer and wi not be responsibe to anyone other than the Company for providing the protections afforded to its cients or for advising any other person on the contents of this document or on any other transaction or arrangement referred to in this document. Apart from the responsibiities and iabiities, if any, which may be imposed on PSG Capita by the JSE, PSG Capita does not accept any responsibiity whatsoever nor makes any representation or warranty, express or impied, concerning the contents of this document incuding its accuracy, competeness or verification or concerning any other statement made or purported to be made by the Company, or on the Company s behaf, or by PSG Capita, or on PSG Capita s behaf, in connection with the Company or JSE Transfer and nothing in this document is or sha be reied upon as a promise or representation in this respect, whether as to the past or the future. Subject to appicabe aw, PSG Capita discaims, to the fuest extent permitted by appicabe aw, a and any duty, iabiity or responsibiity whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) which it might otherwise have in respect of this document and the matters referred to herein. Investors shoud rey ony on the information in this document. No person has been authorised to give any information or make any representations other than those contained in this document and any such information or representations must not be reied upon as having been so authorised by the Company, the Directors, or any other person. The Company wi compy with any obigation to pubish a suppementary prospectus containing further updated information as required by aw or by any reguatory authority but assumes no further obigation to pubish additiona information. Subject to FSMA, the Listing Rues, the Discosure and Transparency Rues, the Prospectus Rues, the rues of the LSE, the JSE Listings Requirements and appicabe aws, the deivery of this document sha not under any circumstances create any impication that there has been no change in the affairs of the Company since the date of this document or that the information in this document is correct as at any time after this date. The distribution of this document in certain jurisdictions may be restricted by aw. Any faiure to compy with any such restrictions may constitute a vioation of the securities aws of such jurisdictions. No action has been taken or wi be taken by the Company, Canaccord Genuity or PSG Capita to permit a pubic offering of the Ordinary Shares or to permit the possession, issue or distribution of this document (or any other offering or pubicity materias or appication form(s) reating to the Ordinary Shares) in any jurisdiction where action for that purpose may be required or doing so is restricted by aw. Accordingy, neither this document nor any advertisement or any other offering materia may be distributed or pubished in any jurisdiction except under circumstances that wi resut in compiance with any appicabe aws and reguations. Persons into whose possession this document comes shoud inform themseves about and observe any such restrictions. Any faiure to compy with these restrictions may constitute a vioation of the securities aws of such jurisdiction. This document does not constitute or form part of an offer to se, or the soicitation of an offer to buy or subscribe for, Ordinary Shares to any person in any jurisdiction. The Ordinary Shares have not been, and wi not be, registered under the United States Securities Act of 1933 (as amended) (the US Securities Act ) or quaified for sae under the aws of any state of the United States or under the appicabe aws of any other prohibited territory. Subject to certain exceptions, the Ordinary Shares may not be offered or sod in any jurisdiction, or to or for the account or benefit of any nationa, resident or citizen of any jurisdiction in which such offer is unawfu. In addition, neither the US Securities and Exchange Commission, nor any securities reguatory authority of any state of the United States, has approved the Ordinary Shares or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a crimina offence in the United States. The distribution of this document into jurisdictions other than the United Kingdom, South Africa and Guernsey may be restricted by aw. Any faiure to compy with any such restrictions may constitute a vioation of the securities aws of any jurisdiction, incuding Austraia, Canada, New Zeaand or Japan. The contents of this document shoud not be construed as ega, business or tax advice. Each prospective investor shoud consut his, her or its ega adviser, financia adviser or tax adviser for advice, and in making an investment decision each prospective investor must rey on their own examination, anaysis and enquiry of the Company, incuding the merits of the risks invoved in an investment in the Company. Neither the Company nor any of its Directors, empoyees, agents or representatives is making any representation to any offeree or purchaser or acquirer of Ordinary Shares regarding the egaity of an investment in Ordinary Shares by such offeree or purchaser or acquirer under the aws appicabe to such offeree or purchaser or acquirer. 8 February 2017

2 CONTENTS Page Part I Summary 3 Part II Risk Factors 14 Part III Important Information 26 Part IV Expected Timetabe of Principa Events 29 Part V Directors, Secretary, Registered Office and Advisers 30 Part VI Information on the Group 32 Part VII Operating and Financia Review of the Group 53 Part VIII Historica Financia Information 72 Part IX Capitaisation and Indebtedness 116 Part X Directors, Senior Management and Corporate Governance 117 Part XI Vauation Report 127 Part XII Taxation 140 Part XIII Additiona Information 149 Part XIV Definitions 194 2

3 PART I SUMMARY Summaries are made up of discosure requirements known as Eements. The Eements are numbered in Sections A to E (A.1 to E.7). This summary contains a of the Eements required to be incuded in a summary for these types of securities and issuer. Because some Eements are not required to be addressed, there may be gaps in the numbering sequence of the Eements. Even though an Eement may be required to be inserted in the summary because of these types of securities and issuer, it is possibe that no reevant information can be given regarding the Eement. In this case, a short description of the Eement is incuded in the summary with the mention of not appicabe. Section A Introduction and warnings A.1 Introduction and This summary shoud be read as an introduction to this warnings document ony. Any decision to invest in the Ordinary Shares shoud be based on consideration of this document as a whoe. Where a caim reating to the information contained in this document is brought before a court, the caimant investor might, under the nationa egisation of the member state of the EU, have to bear the costs of transating this document before the ega proceedings are initiated. Civi iabiity attaches to the Directors of the Company who are responsibe for this summary incuding any transation thereof, but ony if the summary is miseading, inaccurate or inconsistent when read together with the other parts of this document or it does not provide, when read together with the other parts of this document, key information in order to aid investors when considering whether to invest in the Ordinary Shares. A.2 Subsequent resae of securities or fina pacement of securities through Not appicabe. No consent has been given by the Company or any person responsibe for drawing up this document to the use of this document for subsequent resae or fina pacement of securities by financia intermediaries. financia intermediaries Section B Issuer and any guarantor B.1 Lega and The Company s ega and commercia name is Sirius Rea Estate commercia name Limited. B.2 Domicie and ega form, appicabe egisation and country of incorporation The Company is a imited company, incorporated in Guernsey on 20 February 2007 under The Companies (Guernsey) Law, 2008 ( Companies Law ). Its registered office is situated in Guernsey at PO Box 119, Marteo Court, Admira Park, St. Peter Port, Guernsey, GY1 3HB, Channe Isands. The principa egisation under which the Company operates and under which the Ordinary Shares were created is the Companies Law and the ordinances and reguations made thereunder. The Company is subject to the Takeover Code. 3

4 B.3 Current operations, principa activities and markets The Company is a eading operator of branded business park rea estate assets in Germany, acquiring, reconfiguring and integrating business parks into its network of sites under the Company s brand with a focus on the German SME market. In the six month period to 30 September 2016, the Group empoyed an average of 196 empoyees, expressed as fu time equivaents, throughout Germany and had four Non-executive Directors. As at 30 September 2016, the Group owned or managed a portfoio of 42 industria and office business parks in Germany, with a market vaue of miion. As at 30 September 2016, the Group currenty owned more than 400 buidings on these business parks and approximatey 164,000 square metres of surpus and which coud be deveoped or sod. The majority of these properties are a mixture of office, storage and production space, and to a esser extent retai space. Cafeterias and fitness centres aso exist on the parks. The Company s strategy is to acquire assets at attractive yieds with enough vacancy to provide scope to add vaue through intensive asset management and investment, combined with financing on favourabe terms and the disposa of mature assets. The sites are marketed centray, enabing the Company s team to offer space across Germany with the abiity for tenants to configure space according to their needs. The Company derives a arge part of its renta income from conventiona industria tenants which incude internationa bue-chip corporations but the majority of its cients are German SME companies. The Company aso creates a range of innovative products incuding Smartspace, FexiLager, Conferencing and FexConnect by investing into its sub-optima space in order to generate higher income and asset vaue growth from ower quaity space, which attracts a arge number of smaer tenants to its sites. The management and deveopment of this space is conducted through the Company s interna asset and property management patform. B.4a Significant recent trends affecting the Company and the industry in which it operates The Group operates in the German rea estate market, principay in the operation of branded mixed-use business parks. The Group s core market is the provision of conventiona and fexibe workspace to German SMEs. The Group is exposed to trends in the German economy which drive demand for commercia rea estate. The German economy and the SME market in particuar continue to see growth, meaning demand for both the Group s conventiona space and fexibe workspace continues to be high. According to the OECD, German GDP is forecast to grow by 1.7 per cent. in both 2017 and 2018, supported by a continuing favourabe interest rate environment that has encouraged business investment. The trend to ong-term ow interest rates has aso been a factor in aowing the Group to refinance mutipe times at progressivey more attractive rates, improving returns to Sharehoders. To date, the Group has seen no materia impact on its markets or its business resuting from the UK s decision to eave the European Union. German business confidence has improved in recent months and, as measured by the Institute for Economic Research ( Ifo ) Business Cimate Index, reached its highest point since May 2014 in September Strengthening sentiment underpins expectations of a 3.2 per cent. rise in fixed 4

5 capita investment by German businesses in 2017, which is expected to promote further demand for the Group s products. B.5 Description of the The Company is the utimate hoding company of the Group. A Company s group of the Company s subsidiaries are majority-owned (directy or and the Company s indirecty) by the Company. The Company indirecty owns position therein 100 per cent. of each of Sirius One B.V., Sirius Two B.V., Sirius Three B.V. and Sirius Four B.V. (the AssetCo Hoding Companies). As at 7 February 2017 (being the ast practicabe date prior to the pubication of this document), the AssetCo Hoding Companies have a majority hoding (directy or indirecty) in 42 property hoding companies (the Propcos) which together own a but two of the Group s properties. As at 7 February 2017, the Company indirecty owns 100 per cent. of DDS Wanut BV which owns 100 per cent. (directy or indirecty) of eight subsidiaries which provide certain services to the Propcos, 100 per cent. directy of one subsidiary which owns one of the Group Properties and per cent. indirecty of one subsidiary which owns one of the Group Properties. For more information on the Group pease see Part VI of this document. B.6 Number of Ordinary Percentage of Ordinary Shares as at Share Capita as at Notifiabe interests, different voting rights and controing interests Sharehoder 27 January 2017* 27 January 2017* Od Mutua Investment Group 73,388, % Arctospark** 58,743, % Coronation Fund Mgrs 36,497, % BMO Goba Asset Mgt 34,517, % Mstead Limited** 29,711, % * This does not incude: (i) shares under option; or (ii) treasury shares. **Homestead Group Hodings Limited is the controing sharehoder of each of Mstead Limited, PDI Investment Hodings Limited and Arctospark (Pty) Limited, giving Homestead Group Hodings Limited an aggregate indirect voting interest in the Company of approximatey per cent. as at 27 January As at 7 February 2017, being the ast practicabe date prior to the pubication of this document, except as discosed in the tabe above, in so far as is known to the Company, no person is directy or indirecty interested in 3 per cent. or more of the Company s share capita or voting rights. The Ordinary Shares owned by the Company s major Sharehoders rank pari passu with the other Ordinary Shares in a respects. As at 7 February 2017, being the ast practicabe date prior to the pubication of this document, the Company is not aware of any person who exercises or who coud exercise, directy or indirecty, jointy or severay, contro over the Company, and is not aware of any arrangement the operation of which may at a subsequent date resut in a change of contro of the Company. B.7 Seected historica key financia information The seected financia information set out beow has been extracted without materia adjustment from the audited financia information of the Group for the years ended 31 March 2014, 31 March 2015 and 31 March 2016, and for the six months ended 30 September 2016 and unaudited historica financia information for the six months ended 30 September 2015, as set out in Part VIII (Historica Financia Information) of this Prospectus. The financia statements have been prepared in accordance with Internationa Financia Reporting Standards as 5

6 adopted by the European Union and Internationa Financia Reporting Interpretations Committee ( IFRIC ) interpretations (together IFRS ) and the Companies Act appicabe to companies reporting under IFRS, and incorporate the accounts of the Company and its subsidiaries, joint ventures and associates from the effective date of acquisition or to the date of deemed disposa. Consoidated statement of comprehensive income (Unaudited) Six months six months Year Year Year ended ended ended ended ended 30 September 30 September 31 March 31 March 31 March Net renta income 23,736 17,540 39,958 30,312 28,546 Surpus on revauation of investment properties 25,370 27,027 44,168 25,425 22,735 Administrative expenses (5,041) (1,651) (5,603) (6,526) (4,043) Operating profit 42,764 41,840 76,324 48,068 43,253 Finance income Finance expense (5,147) (13,866) (18,817) (12,704) (12,155) Profit before tax 37,509 28,274 57,076 32,653 31,034 Taxation (4,632) (185) (2,388) (5,651) (2,102) Profit for the period 32,877 28,089 54,688 27,002 28,932 Earnings per share Basic EPS 4.09c 3.97c 7.51c 4.84c 7.31c Diuted EPS 3.97c 3.87c 7.13c 4.71c 7.01c Adjusted EPS 2.01c 1.25c 3.16c 2.10c 2.73c Consoidated statement of financia position 30 September 31 March 31 March 31 March Tota non-current assets 770, , , ,659 Tota current assets 39,193 31,829 29,658 30,006 Tota assets 810, , , ,665 Tota current iabiities (34,123) (36,068) (30,153) (23,922) Tota non-current iabiities (325,089) (301,970) (262,284) (226,441) Tota iabiities (359,212) (338,038) (292,437) (250,363) Net assets 450, , , ,302 Tota equity 450, , , ,302 NAV per share 53.62c 51.47c 45.73c 43.61c Adjusted NAV per share 55.62c 53.35c 47.51c 44.32c 6

7 Consoidated statement of cash fow (Unaudited) Six months six months Year Year Year ended ended ended ended ended 30 September 30 September 31 March 31 March 31 March Cash fows from operating activities 21,765 13,480 37,847 29,413 18,524 Cash fow reating to acquisitions (51,179) (49,479) (84,863) (70,975) Cash fows used in other investing activities (8,347) (4,782) (15,167) (4,724) 10,224 Dividends paid (5,503) (3,425) (7,345) (3,871) Proceeds from oans 141,500 59,000 99,088 36, ,560 Repayment of oans (116,426) (58,324) (60,383) (6,717) (259,838) Cash fows from other financing activities 23,063 37,507 30,560 27,264 34,559 Cash and cash equivaents at the beginning of the period 19,874 20,137 20,137 13,747 16,718 Increase/(decrease) in cash and cash equivaents 4,873 (6,023) (263) 6,390 (2,971) Cash and cash equivaents at the end of the period 24,747 14,114 19,874 20,137 13,747 Certain significant changes to the Group s financia condition and resuts of operations occurred during the years ended 31 March 2014, 31 March 2015 and 31 March 2016 and the six months ended 30 September 2016 and 30 September These changes are set out beow: Between 31 March 2014 and 31 March 2015, annuaised renta income increased 8.7 miion to 50.0 miion, driven by 2.3 miion of organic growth and 6.4 miion from new acquisitions made in the period. Between 31 March 2015 and 31 March 2016, annuaised renta income improved by 10.5 miion to 60.5 miion. Again this was driven by 3.0 miion organic growth and the 7.5 miion positive impact of six acquisitions in the period. Profit for the year ending 31 March 2016 increased by per cent. to 54.7 miion from the 27.0 miion recorded for the year ending 31 March This refects the increase in renta income aongside a much higher surpus on revauation of investment properties, which increased from 25.4 miion to 44.2 miion. Profit for the year ending 31 March 2014 was sighty higher than the 27.0 miion for the year to 31 March 2015, with renta income improvements offset by a 2.6 miion increase in non-recurring expenses and an increase in the tax charge from 2.1 miion to 5.7 miion reating to the booking of deferred tax in reation to gains on revauation. The impact of the Group s asset management initiatives and investment programme as we as the newy acquired properties drove an increase in Adjusted NAV per share of 7.2 per cent. from 31 March 2014 to 31 March 2015 to 47.51c and 12.3 per cent. from 31 March 2015 and 31 March 2016 to 53.35c. 7

8 For the six months to 30 September 2016 compared to the six months to 30 September 2015, net renta income increased by 6.2 miion to 23.7 miion. This was mainy attributabe to continued organic growth and acquisitions of CönParc, Wu rseen II, Mainz, Markgröningen and Krefed. Profit for the six months to 30 September 2016 increased by 17.0 per cent. to 32.9 miion compared to the interim period in the prior year. This resuted primariy from the growth in net renta income and a reduction in interest costs after securing favourabe terms on new oans and on the refinancing of two existing faciities. There has been no significant change in the financia condition and operating resuts of the Group since 30 September 2016, the date to which the atest audited consoidated financia statements of the Group were prepared. B.8 Seected key pro Not appicabe. No securities are being offered pursuant to this forma financia Prospectus. information B.9 Profit forecast or Not appicabe. The Company has not made a profit forecast or profit estimate estimate. B.10 Audit report on the historica financia information Not appicabe. The report from KPMG on the historica financia information incuded in this document does not contain any quaifications. quaifications B.11 Insufficient working capita Not appicabe. The Company is of the opinion that the working capita avaiabe to the Group is sufficient for its present requirements, that is at east for the period of 12 months from the date of this document. Section C Securities C.1 Type and cass of No securities are being offered pursuant to this Prospectus. the securities The Company has one cass of share in issue, being fuy paid being admitted to Ordinary Shares of no par vaue. The Company has trading, incuding 851,796,757 Ordinary Shares (excuding those hed in treasury) the security and 1,062,058 treasury shares of no par vaue. identification number The Company wi appy for the admission of a of its Ordinary Shares, to: (i) the Officia List; (ii) trading on the Main Market; and (iii) trading on the Main Board. When admitted to trading, the Ordinary Shares wi be registered with Internationa Securities Identification Number ( ISIN ) GG00B1W3VF54 and Stock Exchange Daiy Officia List ( SEDOL ) number B1W3VF5. It is expected that the Ordinary Shares wi be traded under ticker SRE on both the LSE and the JSE. C.2 Currency of the Offer Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. From the date of UK Admission, the Ordinary Shares wi trade in Pounds Stering. 8

9 C.3 Number of shares issued and fuy paid securities and par vaue As at 7 February 2017 (being the atest practicabe date prior to pubication of this document), the Company had in issue 851,796,757 Ordinary Shares (excuding treasury shares) of no par vaue a of which are fuy paid. As at 7 February 2017 (being the atest practicabe date prior to pubication of this document), the Company had in issue 1,062,058 treasury shares of no par vaue a of which are fuy paid. C.4 Rights attached to the securities The Ordinary Shares rank pari passu in a respects and wi form a singe cass for a purposes, incuding with respect to voting and for a dividends and other distributions decared, made or paid on the Ordinary Shares. The Ordinary Shares rank equay for voting purposes. On a show of hands each Sharehoder has one vote, and on a po each Sharehoder has one vote per Ordinary Share hed. Each Ordinary Share ranks equay for any dividend decared. Each Ordinary Share ranks equay for any distribution made on a winding up of the Company. Save to the extent agreed from time to time by the Sharehoders in a genera meeting, the Ordinary Shares wi benefit from fu pre-emption rights foowing adoption of the Artices. C.5 Restrictions on transfer The Board may decine to register any transfer of certificated Ordinary Shares if they are not fuy paid up (provided that the refusa does not prevent deaings in the Company s shares from taking pace on an open and proper basis). There are no other restrictions on the free transferabiity of the Ordinary Shares, save that the Ordinary Shares have not been and wi not be registered under the US Securities Act or any US state securities aws and may not be otherwise offered or sod in breach of securities aws of other jurisdictions. The Ordinary Shares may not be offered, sod, pedged or otherwise transferred, directy or indirecty, within the US (as defined in Reguation S under the US Securities Act) uness the offer and sae of the Ordinary Shares has been registered under the US Securities Act or pursuant to an exemption from, or a transaction not subject to, the registration requirements of the US Securities Act. Other aws may imit or restrict the free transferabiity of the Ordinary Shares in certain circumstances (i.e. the Ordinary Shares have not been, and wi not be, registered under the appicabe securities aws of Austraia, Canada, New Zeaand or Japan and, subject to certain exceptions, the Ordinary Shares may not be offered or sod directy or indirecty within these jurisdictions or to, or for the account or benefit of, any persons within these jurisdictions). This document does not constitute an offer of, or the soicitation of an offer to buy or to subscribe for, Ordinary Shares to any person in any jurisdiction to whom, or in which jurisdiction, such offer or soicitation is unawfu. C.6 Appication for admission to trading on reguated market Appications wi be made to the FCA and to the LSE respectivey for the Ordinary Shares to be admitted to the premium segment of the Officia List and to trading on the Main Market. Admission to trading on the Main Market constitutes admission to trading on a reguated market. It is expected that UK Admission wi become effective and that deaings wi 9

10 commence in the Ordinary Shares on the Main Market at 8.00 a.m. on 6 March In reation to the appications detaied above, the Company wi separatey notify the LSE of its wish to cance the admission of its Ordinary Shares to trading on AIM, and it is anticipated that such canceation wi occur by no ater than UK Admission. Appication has been made to the JSE for a of the Ordinary Shares of the Company to be transferred to trading on the Main Board for isted securities. It is expected that JSE Transfer wi become effective and that deaings in the Ordinary Shares on the Main Board wi commence at 9.00 a.m. (South Africa time) on 6 March Initiay, JSE Transfer wi resut in the Company having a secondary isting on the Main Board. However, it is intended that the Company s isting on the JSE wi be converted to a dua primary isting in the financia year ending 31 March No appication has been made or is currenty intended to be made for the Ordinary Shares to be admitted to isting or trading on any other exchange. C.7 Dividend poicy It is the Company s current poicy to pay out 65 per cent. of Funds From Operations ( FFO ) as dividends. FFO is cacuated as recurring profit before tax as reported in the Company s statutory accounts, adjusted for depreciation, amortisation of financing fees and current tax receivabe/incurred. The Board seeks to baance its dividend poicy with its cash fow requirements, in particuar its capex investment programme and reguar debt amortisation. The Board intends to review the pay-out ratio, reguary taking into account these and other cash fow requirements of the Group. The Company has previousy offered Sharehoders the opportunity to receive some or a of their dividend entitement in new Ordinary Shares rather than cash. At the 2016 AGM, the Company obtained authority to offer to Sharehoders the right to eect to receive Ordinary Shares instead of some or a of their entitement to any dividend decared in respect of the financia year of the Company ending in On 2 December 2016, the Company announced its intention to offer its current Sharehoders the chance to receive the whoe or part of the interim dividend of 1.39c per Ordinary Share for the six month financia period ended 30 September 2016 in Scrip Shares instead of in cash. 11,027,524 Scrip Shares were issued pursuant to the scrip dividend aternative on 13 January 2017 and the Scrip Shares were admitted to trading on Aim and AtX on 20 January Section D Risks D.1 Key information on key risks reating to the Company or its industry The Group is subject to ocation risk in its property portfoio as this consists ony of assets in the commercia rea estate sector of Germany. The Company s performance may be significanty affected by events such as a genera downturn in the German economy, changes in German reguatory requirements and aws and German interest and infation rate fuctuations. The Group s abiity to generate its desired returns depends party on its abiity to invest successfuy into its vacant 10

11 space and reaise income and vaue from etting this space. The Group s abiity to impement its strategy and improve returns to Sharehoders may be imited if investment is not made into vacant space within existing and new portfoios. Factors such as the economy, competition and sentiment may change in the future which may reduce the demand for commercia property in Germany and thus the income generated. The Group s abiity to service its debt and provide the returns its sharehoders expect is dependent on maintaining a certain eve of renta income that is generated by its portfoio. A major oss of tenants wi adversey affect the Company s profits, its abiity to pay dividends and potentiay its abiity to service its debt. The Group has deveoped strong systems and methodoogies to mitigate this risk and re-et space whenever it is vacated, and the Directors do not expect a major oss of tenants in the next 12 months. The Group s abiity to continue to grow wi depend on its abiity to identify and acquire suitabe properties and to overcome competition in doing so. The Group may face significant competition in acquiring suitabe properties from other investors, incuding competitors, who may have greater iquid resources. Competition may materiay affect the Group s abiity to acquire properties at satisfactory prices. The Company is reiant on the performance and retention of key personne. The departure of any of these individuas without adequate repacement may have a materia adverse effect on the Company s business prospects and resuts of operations. A deterioration in genera economic conditions coud materiay affect the Group s business, incuding changes to interest rates and rates of infation, market and sector conditions, competition, poitica and dipomatic events and trends and tax aws. The Group invests in property and and, both of which are subject to a number of economic and ega risks. Investments in property may be difficut, sow or impossibe to reaise. The performance of the Group woud be adversey affected by a downturn in the German commercia rea estate market in terms of capita vaue or weakening of renta markets. LTV covenant breaches may occur shoud vaues of property assets decine. Properties such as those in which the Group invests are reativey iiquid. In particuar, the Group s properties may be especiay iiquid due to their ocation, age, quaity and specification. Iiquidity may affect the Group s abiity to vary its portfoio or dispose of or iquidate part of its portfoio in a timey fashion and at satisfactory prices in response to changes in economic, rea estate market or other conditions. The abiity of the Group to raise funds to ro-over or refinance its existing debt faciities on simiar terms to the Group s existing debt faciities, or at a, wi depend on a number of factors, incuding genera economic, poitica, 11

12 debt and equity capita market conditions, funding avaiabiity and, importanty, the appetite of the financia institutions to end to the property sector. The Group is exposed to risks reating to its financing terms over the onger term and risks reating to breaching any of the financia covenants in its banking faciities. If re-financing of faciities is on ess favourabe terms than those currenty enjoyed by the Group, the Company s profits, dividends and financia condition may suffer. A defaut by a major tenant or a significant number of tenants in the portfoio coud resut in a significant oss of renta income, void costs, a reduction in asset vaues and increased bad debts. Any change in the tax status or tax residence of the Company, tax rates appicabe to the Company, tax egisation or tax or accounting practice (in Guernsey, the UK, the Netherands or Germany) may have an adverse effect on the returns avaiabe on the Company s investments. D.2 Key information on the key risks specific to the securities The market price of the Ordinary Shares may fuctuate widey and there may be imited iquidity in the Ordinary Shares. The price wi be infuenced by factors such as the performance of the Group s operations, arge purchases or saes of Ordinary Shares, iquidity (or absence of iquidity) in the Ordinary Shares, currency fuctuations, and genera economic and ega factors. Subject to the appication of pre-emptive rights over new shares, issues of Ordinary Shares may resut in immediate diution of existing Sharehoders. If existing Sharehoders are not eigibe to, or do not, subscribe for additiona Ordinary Shares on a pro rata basis in accordance with their existing sharehodings, their existing interests in the Company wi be diuted. Overseas Sharehoders may be subject to exchange rate risk. The Company s earnings are reported in Euros, however the Ordinary Shares wi be traded in Pounds Stering in the UK and Rand in South Africa. Any dividends to be paid in respect of the Ordinary Shares wi be paid in Euros or Pounds Stering (at the Sharehoder s eection) for Sharehoders on the UK register and Rand for Sharehoders on the South Africa register. An investment in Ordinary Shares exposes the investor to foreign currency exchange rate risk as the Ordinary Shares trade in Pounds Stering on the LSE and trade in Rand on the JSE, whereas the Company s earnings are in Euros and the Company s dividends are decared in Euros. Section E Offer E.1 Tota net proceeds and estimated tota expenses Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. 12

13 E.2a Reasons for the offer, use of, estimated net amount of the proceeds Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. E.3 Terms and conditions of the offer Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. E.4 Materia interests Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. E.5 Lock-in agreements Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. E.6 Diution Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. E.7 Estimated expenses charged to investor Not appicabe. This document reates to the appication for isting of the Ordinary Shares on the Officia List and admission to trading on the reguated market ony. No new Ordinary Shares are being issued by the Company in connection with UK Admission or JSE Transfer. 13

14 PART II RISK FACTORS An investment in the Company invoves a variety of risks. Accordingy, prospective investors shoud consider carefuy the specific risk factors set out beow in addition to the other information contained in this document before investing in the Company. In particuar, the Company s performance may be materiay and adversey affected by changes in the market and/or economic conditions and by changes in the aws and reguations (incuding any tax aws and reguation) reating to, or affecting, the Group, or the interpretation of such aws and reguations. If any of the foowing risks materiaise, the business, financia condition, resuts or future operations of the Group coud be materiay and adversey affected. In such circumstances, the trading price of the Ordinary Shares coud decine and investors coud ose part or a of the vaue of their investment in the Ordinary Shares. The risks beow are not the ony risks to which the Company may be subject. The Company may be unaware of certain risks or beieve certain risks to be immateria which ater prove to be materia. The order in which risks are presented is not an indication of the ikeihood of the risks actuay materiaising, of the potentia significance of the risks or of the scope of any potentia harm to the Group s business, resuts of operations and financia condition. Prospective investors shoud consider carefuy whether an investment in the Ordinary Shares is suitabe for them in the ight of the information in this document and their persona circumstances. RISKS RELATING TO THE GROUP AND ITS BUSINESS The Group is subject to ocation risk in its property portfoio The Group s property portfoio consists ony of rea estate assets in Germany, a of which are in the commercia rea estate sector. Accordingy, the Company s performance may be significanty affected by events affecting Germany which are beyond its contro, such as a genera downturn in the German economy, changes in German reguatory requirements and appicabe aws (incuding in reation to taxation and panning), and German interest and infation rate fuctuations. Such events coud reduce the amount of payments that the Group receives on its properties and the capita vaue of the Group s properties, which coud, in turn, have an adverse impact on the financia condition and resuts of operations of the Company, its abiity to pay dividends and its share price. In particuar, the potentia for the redeveopment, refurbishment and/or expansion of properties may be adversey affected by a number of factors, incuding constraints on ocation, panning egisation and the need to obtain other icences, consents and approvas, and the existence of restrictive covenants affecting the tite to such property. Consequenty, on some of the Group s assets, there may not be an opportunity for the Group to carry out redeveopment, expansion, refurbishment or enhancement work, which, in each case, may have an adverse effect on the Group s business, financia condition and/or resuts of operations. The Group s abiity to generate its desired returns depends party on its abiity to invest successfuy into its vacant space and reaise income and vaue from etting this space The Group s abiity to improve returns to Sharehoders may be imited by its abiity to fuy reaise the returns from its capita investments into the existing and new portfoios. The Group s abiity to impement its strategy and improve returns to Sharehoders may be imited if investment is not made into vacant space within existing and new portfoios. Whie the eve of demand for the Group s offerings is currenty robust, factors such as the economy, competition and sentiment may change in the future which may reduce the income generated from capita expenditure and hence the further improvements that the Company is expecting from its assets. The Group s abiity to service its debt and provide the returns its sharehoders expect is dependent on maintaining a certain eve of renta income that is generated by its portfoio The Company s annuaised renta income and net operating income is dependent to a degree on keeping its portfoio at a certain occupancy eve. As at 30 September 2016, amost haf of the Group s renta income is contracted with its top 50 tenants. The Group has deveoped strong systems and methodoogies to mitigate this risk and re-et space whenever it is vacated, and the Directors do not expect a major oss of tenants in the next 12 months. However, a major oss of tenants that are not repaced coud adversey affect the Company s profits, its abiity to pay dividends and potentiay its abiity to service its debt providers in the onger term. 14

15 The Group s abiity to continue to grow wi depend on its abiity to identify and acquire suitabe properties and to overcome competition in doing so The Group s abiity to impement its growth through acquisition and asset recycing strategies and achieve its desired future returns may be imited by its abiity to identify and acquire suitabe properties. In addition, the Group may face significant competition in acquiring suitabe properties from other investors, incuding competitors, who may have greater iquid resources or who may be prepared to pay a higher price. Competition in the German commercia rea estate market may ead to prices for properties identified by the Group as suitabe being driven up through competing bids. Accordingy, the existence and extent of such competition may have a materia adverse effect on the Group s abiity to acquire properties at satisfactory prices and otherwise on satisfactory terms. If increasing competition for properties causes the Group s acquisition pipeine to decine, or its capita expenditure to increase, it is ikey to negativey affect the Company s abiity to continue the current trajectory of its earnings and dividend growth rates. Market conditions may deay or prevent the Company from acquiring properties that generate attractive returns In addition to the competition mentioned above, market conditions may have a negative impact on the Company s abiity to identify and execute property acquisitions that generate acceptabe returns. Market conditions (in the rea estate and the financia sectors) may have a significant negative impact on the avaiabiity of credit, property pricing and iquidity eves. During such periods, enders often tighten their ending criteria, ending ower mutipes of income and owering LTV ratios. Such market conditions may restrict the suppy of suitabe assets that are abe to generate acceptabe returns and adverse market conditions may ead to increasing numbers of tenant defauts. The Company may be unabe to access credit markets, or may be abe to access them ony on more onerous (incuding as to interest rates) terms. Adverse market conditions can have materia adverse effects on the Company s NAV or its abiity to make distributions to Sharehoders. The Group is exposed to risks reating to indebtedness in the onger term and impact of gearing on NAV The Group may use its existing cash resources and incur additiona borrowings to finance additions to the Group s portfoio. The Group s abiity to generate sufficient cash fow to make schedued interest payments on its indebtedness in the onger term and the Group s abiity to refinance its indebtedness when due wi depend on the market at the time and its performance over future years, which wi be affected by a range of economic, competitive and business factors, many of which are outside the Group s contro. Use of gearing increases voatiity in NAV per Ordinary Share. Prospective investors shoud be aware that, whist the use of borrowings shoud enhance the NAV of the Ordinary Shares where the vaue of the Group s underying assets is rising, it can have the opposite effect if the underying asset vaue is faing. In addition, in the event that the renta income of the Group s property portfoio fas, the use of borrowings wi increase the impact of such fas on the profitabiity of the Group and, accordingy, this wi have an adverse effect on the Group s profits and the Company s abiity to pay dividends to Sharehoders in the future. As at 7 February 2017 (being the ast practicabe date prior to the pubication of this document), the Group had approximatey 350 miion of externa debt outstanding. If the Group were to breach any of the financia covenants in its banking faciities, or if the Group s enders determine that there has been a materia adverse change in the financia position or business of the Group under the defaut provisions of the Group s banking faciities, an event of defaut may arise. If an event of defaut arises and is continuing, the Group s enders coud enforce their security over the Group s assets. In addition, any event of defaut coud resut in the acceeration of the Group s obigations to repay those borrowings and any amounts owing to the bank or other hoders of debt or canceation of the banking faciities. In the event of enforcement of security by a ender under one of the Group s borrowing faciities or in the case of a sae required for compiance with covenants contained in the Group s financing, ack of iquidity in the market for the Group s rea estate may ead to a significant shortfa between the carrying vaue of the property on the Group s consoidated baance sheet and the price achieved on the disposa of such property, and there can be no assurance that the price obtained from such a sae woud cover the book vaue of the property sod. 15

16 In ine with its stated strategy, the Group wi continue to ook for further acquisitions of high yieding and opportunistic mixed-use commercia rea estate assets in Germany which meet the Group s investment objectives and poicies. Where such acquisitions are undertaken, the Group may refinance existing borrowings against the vaue of the asset to be acquired, or may incur additiona borrowings against the vaue of the asset to be acquired. Nothing in this risk factor is intended to quaify the opinion of the Company (as set out in section 16 of Part XIII) that, taking into account the bank and other faciities avaiabe to the Group, the working capita avaiabe to the Group is sufficient for the present requirements of the Group, that is, for at east the 12 months foowing the date of pubication of this document. The Group is exposed to risks reating to hoding assets in Specia Purpose Vehices ( SPV ) Many of the Group s German assets are hed by various SPVs registered in the Netherands or Germany, which are subsidiaries of the Company and subject to ring-fenced financing on a oca eve. Each SPV coud be adversey affected if access to debt finance was to be constrained by enders or any new oans were ony avaiabe on more onerous (incuding as to interest rates) terms and as a resut the SPV coud not refinance its debt or raise new debt to fund acquisitions. Any increase in interest rates coud have significant adverse effects on the reevant Group members business, financia condition and resuts of operations. An overa rise in interest rates woud increase the reevant Group members financing costs, coud make the sae of properties ess profitabe or more difficut. Certain of the SPVs financing agreements additionay stipuate compiance with specified financia covenants, whereby non-compiance coud have serious consequences for the reevant Group member. Vioating a financia covenant woud, for exampe, imit such Group member s right to freey dispose of the renta income from its properties which serves to secure the reevant oan agreement. Vioating financia covenants coud aso resut in the reevant Group members being required to pay certain amounts based on renta income to specified bocked accounts pedged in favour of the respective ender. Moreover, vioating the aforementioned and other obigations arising from oan agreements coud entite enders to terminate the respective financing agreement without further notice. If one or more oans were to become due because of premature termination, the reevant Group member may not be abe to refinance the oans becoming due in a timey manner or at a, or may ony be abe to do so on consideraby ess favourabe terms. In such event, if the reevant Group member(s) were unabe to refinance the terminated financing, possiby on short notice, the worst case scenario coud be the insovency of the reevant Group member. The Group may not be abe to refinance existing faciities over the onger term The abiity of the Group to raise funds to ro-over or refinance its existing debt faciities over the onger term on simiar terms to those currenty enjoyed, or at a, wi depend on a number of factors, incuding genera economic, poitica, debt and equity capita market conditions, funding avaiabiity and, importanty, the appetite of the financia institutions to end to the property sector. If the Group were to face a tightening in the avaiabiity of iquidity in the future, whether for macroeconomic reasons or for reasons specific to the Group, it coud significanty increase the Group s cost of funding or ead to difficuties for the Group in refinancing debts. There is no certainty that the Group woud be abe to retain existing debt faciities over the onger term if the vaue of its property portfoio shoud fa beow a certain eve. An inabiity to refinance existing faciities may mean that the Group wi not have funds avaiabe to pay existing debts or invest in or deveop properties, which coud resut in the Group being forced to se assets. Saes in such circumstances may not deiver the eve of proceeds that the Group may otherwise expect. In addition, if the Group is unabe to renegotiate or refinance existing debt faciities, this may have a materia impact on the financia condition of the Group. This woud have an adverse effect on the Group s business, resuts of operations, financia condition and/or prospects. The Group is exposed to risks reating to its financing terms over the onger term The Group currenty has secured ow interest rates on a of its banking faciities for the next four to seven years. However, it wi need to refinance these faciities in the future. If such re-financing is on ess favourabe terms than those currenty enjoyed by the Group, the Company s profits, dividends and financia condition may suffer. 16

17 The Group may be subject to increases in operating and other expenses The Group s operating, financing and capita expenses coud increase without a corresponding increase in turnover or tenant reimbursement of these costs. Factors which coud increase operating and other expenses incude: (a) (b) Costs not recovered from tenants: increases in interest rates; increases in the rate of infation and currency fuctuation; increases in payro expenses; increases in capita expenditure resuting from competition in the market which causes the costs of refurbishment and deveopment of the properties to increase; unforeseen increases in the costs of maintaining properties; unforeseen capita expenditure arising as a resut of defects affecting the properties which need to be rectified; and changes in aws, reguations or government poicies (incuding those reating to heath and safety and environmenta compiance) which increase the costs of compiance with such aws, reguations or poicies. Costs mosty recovered from tenants: increases in energy costs; increases in property taxes and other oca government charges; and increases in insurance premiums. Such increases coud have a materia adverse effect on the Company s financia position and its abiity to make distributions to its Sharehoders. Any costs associated with potentia property acquisitions that do not proceed to competion wi affect the Group s performance The Group expects to incur certain third-party costs, incuding, in connection with financing, vauations and professiona services associated with the sourcing and anaysis of suitabe properties for potentia acquisition. The Company usuay imits these on a transaction basis but because there can be no guarantee that the Group wi be successfu in its negotiations to acquire any given property, it may incur costs when transactions fai. The Company may enter into certain purchase agreements which incude break fees or other reated damages payabe by the Company to the vendor if it fais to meet the agreed terms of the purchase agreement. It is therefore the case that, the greater the number of transactions that do not reach competion, the greater the ikey impact on the Group s resuts of operations. The Company s NAV and Adjusted NAV may not accuratey refect the vaue of the portfoio Property assets are inherenty difficut to vaue as there is no iquid market or standard pricing mechanism. As a resut, vauations are subject to substantia uncertainty. There is no assurance that estimates resuting from a vauation process wi refect the actua saes price even when such saes occur shorty after the date of the vauation. Sharehoders shoud be aware that the Company currenty performs NAV vauations on a haf yeary basis ony. As a resut, the Company s reported NAVs may not accuratey refect the vaue the Company woud receive if it had to se a of its underying assets immediatey. The Group is exposed to certain risks in reation to information technoogy and systems/inteectua property The nature of the Group s business invoves the receipt and storage of persona information about its tenants, customers and empoyees. If the Group experiences a significant data security breach or fais to detect, and appropriatey respond to, a significant data security breach, it coud be exposed to government enforcement actions (incuding substantia fines) and private itigation. In addition, the Group s tenants and customers coud ose confidence in its abiity to protect their persona information and the Group coud see a subsequent reduction in demand. Any materia disruption or 17

18 sowdown of the Group s IT systems coud aso cause operations to be disrupted or deayed and business opportunities missed. The oss of confidence from a significant data security breach coud damage the Group s reputation, cause recruitment and retention chaenges, increase abour costs and affect how the Group operates its business. Any of these factors coud have an adverse effect on the Group s business, financia condition and prospects and/or operating resuts. The Group s businesses carry with them the risk of aeged inteectua property right infringement in reation to third parties copying websites owned by the Group The Group may be required to pursue a variety of caims against third parties in order to protect its operations. These caims coud reate to aeged copyright infringement, design right infringement, trademark infringement and passing off. The Group seeks to protect its inteectua property rights by reying on trademark and copyright protection in addition to contractua protections. The Group s insurance poicies may not be adequate or comprehensive The Company maintains insurance within the range of coverage that the Directors beieve is consistent with industry practice, having regard to the nature of its assets and the activities being conducted. No assurance, however, can be given that the Company wi be abe to maintain such insurance coverage at reasonabe rates in the future or that any coverage it arranges wi be adequate and avaiabe to cover any future caims against the Company. The Group s properties coud suffer osses which may not be fuy compensated for by insurance, or at a. Infation, changes in buiding codes and ordinances, environmenta considerations, and other factors, incuding terrorism or acts of war, may aso resut in insurance proceeds being insufficient to repair or repace a property if it is damaged or destroyed. Under such circumstances, the insurance proceeds may be inadequate to restore the Group s economic position with respect to the affected rea estate. Shoud an uninsured oss or a oss in excess of insured imits occur, the Group coud ose capita invested in the affected property as we as anticipated future revenue from that property. In addition, the Group coud be iabe to repair damage caused by uninsured risks. The Group woud aso remain iabe for any debt or other financia obigation reated to that property. No assurance can be given that materia osses in excess of insurance proceeds, if any, wi not occur in the future. The Company is reiant on the performance and retention of key personne The Company is internay managed and reies on its empoyees and their experience, ski and judgment in identifying, seecting and negotiating the acquisition and disposa of suitabe properties, as we as the deveopment and property management of the portfoio when owned. The Company aso reies on the executive Directors and other members of the executive team to manage the day-to-day affairs of the Company. There can be no assurance as to the continued service of these individuas as Directors and empoyees of the Company. The departure of any of these individuas from the Company without adequate repacement may have a materia adverse effect on the Company s business prospects and resuts of operations. The Group is subject to the risk of contracting counterparties faiing to meet their obigations The Group engages in contractua reationships with third parties in the ordinary course of business. For the Group, this reates to both operating the portfoio and acquiring and seing properties. For the operating of the portfoio, the risk is primariy with tenant ease contracts and contracts with suppiers for services provided to the Group s properties. In reation to acquiring and seing properties, this reates to agreements with vendors and purchasers as we as the financing institutions that provide debt to acquire the assets. Exampes of such faiures incude a ender defauting on its commitment to provide financing to a purchaser, a purchaser defauting in respect of the purchase of a property from the portfoio, or tenants of the portfoio defauting on renta payments, but aso incude construction companies not competing or unawfuy renovating space, technica faciity management suppiers faiing to fufi their obigations on maintenance checks, security companies faiing to meet their obigations, or snow remova suppiers not cearing snow propery. The faiure of third parties to fufi their contractua responsibiities coud pace the Group and its business at risk. Future dividends wi be dependent upon the financia condition of the Group As a matter of Guernsey aw, any distribution of dividends wi need to be in accordance with the provisions of the Companies Law. The Directors wi therefore need to carry out a iquidity or cash fow test and a baance sheet sovency test before any dividend or distribution payment can be made. 18

19 The test requires the Directors to make a future assessment by making reference to the sovency test being satisfied immediatey after a distribution or dividend payment is made. If at the time a dividend or distribution payment is to be made, the Directors beieve that the sovency test cannot be passed, no payment may be made to the hoders of Ordinary Shares. A deterioration in genera economic conditions coud materiay affect the Group s business Changes in economic conditions (both goba and/or affecting Germany in particuar) incuding, for exampe, changes to interest rates and rates of infation, market and sector conditions, competition, poitica and dipomatic events and trends, tax aws and other factors, coud substantiay and adversey affect equity investments and, consequenty, the Group s operationa and financia prospects. It shoud further be noted that the Company is not registered in a territory within the European Union. However, the Company and the Group is nevertheess subject to the risk reating to the outcome of the UK s referendum on continued membership of the European Union ( UK Referendum ). The UK hed a referendum on its continued membership of the European Union on 23 June 2016, the resut of which was a majority vote for the UK to eave the European Union. The poitica, economic, ega and socia consequences of this decision, and the exact timing for the triggering by the UK government of the forma process for negotiating the UK s exit from the European Union, as we as the potentia utimate outcome of such negotiations, are uncertain at the current time and may remain uncertain for some time to come. Such potentiay proonged poitica and economic uncertainty and the potentia, negative economic trends that may foow coud have a materia adverse effect on the Group s business, financia position and/or resuts of operations. Therefore, there can be no certainty at present on the severity or compexity of any negative trends affecting the Group s business, assets and the vauation of its property portfoio foowing the resut of the UK Referendum. A further consequence of the UK eaving the EU may be that the Company s abiity to offer Ordinary Shares to EU residents is affected by potentia new EU securities aws. The potentia significance is such that a of the information in this Part II of this document shoud be read in conjunction with the statement set out above, as negative outcomes arising from the UK Referendum resut coud exacerbate the effect on the Group of a or any of the risk factors its business woud otherwise face. Poitica risk in Europe The forthcoming 2017 eections in Europe, in France and in Germany in particuar, which may resut in eadership and poicy changes (incuding in reation to migration) are causing uncertainty and are genera areas of risk for the Group s business. Natura disasters, terrorist attacks, power outages or other detrimenta events, whether man-made or natura in origin may affect the Group s business Such events that prevent the Group from using a or a significant part of its offices or computer systems, or that otherwise disrupt operations, may make it difficut and, in some cases, impossibe for the Group to continue to operate its business for a substantia period of time, which coud materiay and adversey affect the Group s business, resuts of operations and financia performance. Whist the Group has in pace disaster recovery pans and procedures which the Directors consider to be appropriate, there can be no assurance that these wi be adequate to ensure that any disruption is minimised. RISKS RELATING TO PROPERTY SECTOR The Group invests in property and and, which are subject to a number of economic and ega risks. Investments in property may be difficut, sow or impossibe to reaise The performance of the Group woud be adversey affected by a downturn in the German commercia rea estate market in terms of capita vaue or weakening of renta markets. In the event of defaut by a tenant, the Group woud suffer a renta shortfa and incur additiona costs, incuding ega expenses and the costs of maintaining, insuring and re-etting the property. Loss of a major tenant coud resut in vaue adjustment which coud trigger a LTV covenant defaut. Any future recession in the German commercia rea estate market coud materiay and adversey affect the vaue of the Group s portfoio. 19

20 Returns from an investment in property depend argey upon the amount of renta income generated from the property and the expenses incurred in the deveopment or redeveopment and management of the property, as we as changes in its market vaue. Renta income and the market vaue for properties are generay affected by overa conditions in the oca economy, such as growth in GDP, empoyment trends, infation, changes in interest rates and suppy and demand. For exampe, revenues from properties may be adversey affected by the oca conditions, such as oversuppy of properties or a reduction in demand for properties in the market in which the Group operates. Changes in GDP may aso impact empoyment eves, which in turn may impact demand for premises, especiay for office space for commercia enterprises. Furthermore, movements in interest rates may aso affect the cost of financing for rea estate companies and may create voatiity in reation to the Company s derivative contracts. Both renta income and property vaues may aso be affected by other factors reevant to the German commercia rea estate market, such as competition from other property owners and deveopers, the perceptions of prospective tenants as to the attractiveness, convenience and safety of properties, the inabiity to coect rents, management fees or expenses because of the bankruptcy or insovency of tenants or otherwise, the periodic need to renovate, repair or re-ease space and the costs thereof, the costs of maintenance and insurance, and increased operating costs. In addition, the owner must meet certain significant expenditures, incuding operating expenses, even if the property is vacant. Certain significant expenditures associated with each equity investment in rea estate (such as externa financing costs, rea estate taxes and maintenance costs) are generay not reduced when circumstances cause a reduction in revenue from properties. Investments in property are reativey iiquid and it is more difficut, costy and time consuming to reaise property investments (if they can be reaised at a) than investments in equities or bonds. A decine in the vaue of the portfoio coud trigger a LTV covenant defaut. Due diigence may not identify a risks and iabiities in respect of an acquisition Prior to entering into an agreement to acquire any property, the Group wi perform due diigence on the proposed investment. In doing so, it woud typicay rey, in part, on third parties to conduct a significant portion of this due diigence (incuding ega reports on tite and property vauations). To the extent that the Group or other third parties underestimate or fai to identify risks and iabiities associated with the investment in question, the investment may be subject to defects in tite or environmenta, structura or operationa defects requiring investigation, remova or remediation; or the Group may be unabe to obtain the necessary permits. If there is a due diigence faiure, there may be a risk that properties that are inconsistent with the Group s strategy are acquired, that properties are purchased for a price which exceeds their reaistic vaue or that properties are acquired that fai to perform in accordance with projections. There can be no assurance that the tite to the properties in any acquisition wi not be subject to chaenge. It can sometimes be difficut to estabish beyond doubt that such tite is incapabe of chaenge. Any successfu chaenge to the vaidity of the Group s tite to a property may have adverse consequences for its tite and the Group may not be abe to obtain compensation from the seer in this circumstance. The Group may not have fu recourse against a seer in respect of a potentia iabiities in reation to acquisitions, whether identified or unidentified. As part of any acquisition, the Group wi normay receive certain indemnities, representations and/or warranties from the seer(s). However, these indemnities, representations and/or warranties may not cover a potentia iabiities associated with the reevant property hoding entity or the property itsef, whether identified or unidentified, and in certain circumstances are imited in their scope, duration and/or amount. The Group may aso obtain warranty and indemnity insurance in respect of certain acquisitions. However, such insurance is subject to excusions and imitations and may not cover a of the risks that may manifest themseves in connection with a particuar acquisition. Accordingy, the Group may not have fu recourse against, or otherwise recover in fu from, any reevant seer (or insurer) in respect of a osses suffered as a resut of a breach of those representations and/or warranties, in respect of the subject matter of any of the indemnities, or in respect of the acquisition. In addition, the Group wi be dependent on the ongoing sovency of the seer(s) to the extent that it seeks to recover amounts in respect of caims brought under such indemnities, representations and/or warranties. 20

21 A defaut by a major tenant or a significant number of tenants in the portfoio coud resut in a significant oss of renta income, void costs, a reduction in asset vaue and increased bad debts The majority of the Group s revenue is derived directy or indirecty from rent received from a number of tenants operating within a number of sectors, with approximatey 48 per cent. of its revenue being derived from its top 50 tenants. A downturn in business, bankruptcy or insovency coud force the tenants to defaut on their renta as at 30 September 2016 obigations and/or vacate the premises. Such a defaut, in particuar by a series of the Group s tenants in any one property or by severa of the Group s tenants coud resut in a significant oss of renta income, void costs, an increase in bad debts and a decrease in the vaue of the Group s property portfoio. Such a defaut may aso prevent the Group from increasing rents or resut in ease terminations by, or reductions in rent for, other tenants. The overa effect of one or more of these risks is ikey to have a materia adverse effect on the Group s business, financia condition and/or resuts of operations. In addition, in the event that the renta income of the Group s property portfoio fas for whatever reason, incuding tenant defauts, the use of borrowings wi increase the impact of such a fa on the net revenue of the Group and accordingy may have an adverse effect on the Company s abiity to pay dividends to Sharehoders. Amounts owing under the bank faciities wi rank ahead of Sharehoders entitements and, accordingy, if the Group s assets do not grow at a rate sufficient to cover the costs of operating the Group (incuding interest and oan repayments), Sharehoders may not recover the amount initiay invested. Since bank faciities are amost certain to be secured by way of a charge over the assets of the Group s property portfoio, in the event that the Group is unabe to repay the oan, the Group s creditors wi rank ahead of Sharehoders. Furthermore, shoud any fa in the underying asset vaue or expected revenues resut in the Group breaching the financia covenants contained in its bank faciities, incuding LTV ratios, the Group may be required to repay such borrowings in whoe or in part, together with any attendant costs, incuding the costs of disposing of any assets comprised in the Group s property portfoio at ess than their market vaue or at a time and in circumstances in which the reaisation proceeds are reduced because of a downturn in property vaues generay or because there is imited time to market the property. If any of the covenants under any such bank faciity are breached, the Company is ikey to be required to suspend payment of its dividends. Furthermore, the Group is ikey to suffer reputationa damage which coud resut in a ender being unwiing to extend additiona finance to the Group which may significanty raise the Group s future borrowing costs. Changes in aws and reguations reating to the German commercia rea estate market may have an adverse impact Any change to the aws and reguations reating to the German commercia rea estate market may have an adverse effect on the capita vaue of the Group s property portfoio and/or the renta income of the Group s property portfoio. Changes in German aw reating to foreign ownership of property might have an adverse effect on the net returns from the Group s property portfoio. Rea estate investments are reativey iiquid Properties such as those in which the Group invests are reativey iiquid. In particuar, the Group s properties may be especiay iiquid due to their ocation, age, quaity and specification. Such iiquidity may affect the Group s abiity to vary its portfoio or dispose of or iquidate part of its portfoio in a timey fashion and at satisfactory prices in response to changes in economic, rea estate market or other conditions or the exercise by tenants of their contractua rights such as those which enabe them to vacate properties occupied by them prior to, or at, the expiry of the originay agreed term. This coud have an adverse effect on the Group s financia condition and resuts of operations, with a consequentia adverse effect on the market vaue of the Ordinary Shares or on the Company s abiity to make expected distributions to its Sharehoders. The Group may incur environmenta iabiities Under various state and oca aws, ordinances and reguations, an owner of rea estate may be iabe for the costs of remova or remediation of certain hazardous or toxic substances on or in such property. Such aws often impose such iabiity without regard to whether the owner knew of, or was responsibe for, the existence of these substances. The owner s iabiity as to any property is generay not imited under such aws and coud exceed the vaue of the property and/or the aggregate assets of the owner. The presence of such substances, or the faiure propery to remediate contamination from such substances, may adversey affect the owner s abiity to se the rea estate or to borrow funds using such property as coatera, which coud have an adverse effect on the Group s return from such investment. 21

22 RISKS RELATING TO THE ORDINARY SHARES Investment in the Company may ony be suitabe for sophisticated investors The Company is intended for investors who are interested in the German commercia rea estate market and are aware of the risks of investing in property in this sector and jurisdiction. Such investments are ony suitabe for sophisticated investors who fuy understand and are wiing to accept the risks invoved in such investments, incuding potentia iiquidity and voatiity. Any investor must be abe to accept the possibiity of osses and an investment in the Company is ony intended for investors who can afford to set aside the invested capita for a number of years. Before making any investment decision in respect of the Ordinary Shares, prospective investors shoud consut a financia adviser who speciaises in advising on the acquisition of Ordinary Shares and other securities and carefuy review and consider such an investment decision in ight of the above and the prospective investors persona circumstances. The past performance of the Company is not an indication of future performance. The market price of the Ordinary Shares may fuctuate widey and there may be imited iquidity in the Ordinary Shares The price at which the Ordinary Shares may trade and the price which Sharehoders may reaise for their Ordinary Shares wi be infuenced by a arge number of factors, some specific to the Company and some which may affect quoted companies generay. These factors incude the performance of the Group s operations, arge purchases or saes of shares, iquidity (or absence of iquidity) in the Ordinary Shares, currency fuctuations, a perception that other market sectors may have higher growth prospects, egisative or reguatory changes and genera economic conditions. The vaue of the Ordinary Shares wi therefore fuctuate and may not refect their underying asset vaue. The market vaue of an Ordinary Share may vary consideraby from its underying NAV. In addition, stock markets have from time to time experienced extreme price and voume voatiity which, in addition to genera economic and poitica conditions, coud adversey affect the market price for the Ordinary Shares. To optimise returns, investors may need to hod the Ordinary Shares on a ong-term basis and they may not be suitabe for short-term investment. The vaue of Ordinary Shares may go down as we as up. There is no pubic market for Ordinary Shares in the United States or esewhere outside of the UK and South Africa The Ordinary Shares wi not be registered under the US Securities Act or any state securities aws of the United States and wi be subject to significant restrictions on resae in the United States. The Company does not intend to appy for a isting of the Ordinary Shares on a securities exchange in the United States or esewhere outside the United Kingdom and South Africa. Consequenty, an active trading market is not expected to deveop for the Ordinary Shares outside of the United Kingdom and South Africa, and investors outside of the United Kingdom and South Africa may not be abe to se them at an acceptabe price or at a. US and other non-eu Sharehoders may not be abe to participate in future equity offerings. Hoders of Ordinary Shares wi, in certain cases, be entited to pre-emption rights to subscribe for shares to be issued in connection with an increase in the Company s share capita, uness such rights have been waived by a resoution at a Sharehoders meeting. US and certain other non-eu hoders of Ordinary Shares wi usuay be excuded from exercising any such pre-emption rights that they may have, uness exemptions from any overseas securities aw requirements are avaiabe. There can be no certainty that the Company wi utiise any such exemption from appicabe overseas securities aw requirements that might enabe US or other non-eu hoders to exercise such pre-emption rights. Furthermore, and as mentioned the impact of the UK Referendum resut may extend some of these restrictions to EU hoders of Ordinary Shares. The sae of a substantia number of the Ordinary Shares, or the perception that such saes coud occur, coud adversey affect the price of the Ordinary Shares The sae of a substantia number of the Ordinary Shares by the hoders of such shares in the pubic market coud adversey depress the market price of the Ordinary Shares. 22

23 If the Company is wound up, distributions to Sharehoders wi be subordinated to the caims of creditors On a return of capita on a winding-up, hoders of Ordinary Shares wi be entited to be paid out of the assets of the Company avaiabe to members ony after the caims of a creditors of the Company have been setted. The rights of Sharehoders and the fiduciary duties owed by the Board wi be governed by Guernsey aw and the Artices The rights of Sharehoders and the fiduciary duties that its board owes to the Company and Sharehoders are governed by Guernsey aw and the Artices. As a resut, the rights of Sharehoders and the fiduciary duties owed to them and the Company may differ in materia respects from the rights and duties that woud be appicabe if the Company were organised under the aws of a different jurisdiction (for exampe those of Engand) or if the Company was not permitted to vary such rights and duties in its Artices. Issues of Ordinary Shares may resut in immediate diution of existing Sharehoders The Company may decide to issue additiona Ordinary Shares in the future to fund property acquisitions and capita expenditure, business activities and future pans. If existing Sharehoders are not eigibe to, or do not, subscribe for additiona Ordinary Shares on a pro rata basis in accordance with their existing sharehodings, this wi diute their existing interests in the Company. The issue of Ordinary Shares by the Company, or the possibiity of such issue, may cause the market price of the Ordinary Shares to decine and may make it more difficut for Sharehoders to se Ordinary Shares at a time or price they deem appropriate. There are no statutory rights of pre-emption for existing Sharehoders on the issue of new Ordinary Shares by the Company under Guernsey aw. However, the Company is seeking Sharehoder approva to adopt new Artices at the Extraordinary Genera Meeting. These Artices contain rights of pre-emption that are consistent with the Companies Act UK Admission is conditiona on the adoption of these Artices and therefore, from UK Admission, the issue of new Ordinary Shares for cash wi be subject to rights of pre-emption uness the Company has received Sharehoder approva to dis-appy pre-emption rights. Sharehoders outside the UK and South Africa may not be abe to participate in future issues Securities aws of certain jurisdictions may restrict the Company s abiity to aow participation by certain Sharehoders outside of the UK and South Africa in future equity issues. Changes in foreign investment aws in South Africa Any change to the aws and reguations of South Africa reating to investment in foreign businesses may have an adverse effect on the trading iquidity of the Ordinary Shares on the JSE and current or future investments by South African investors in the Company. Overseas Sharehoders may be subject to exchange rate risk The Company s earnings are reported in Euros. However, the Ordinary Shares are traded in Pounds Stering in the UK and Rand in South Africa. Any dividends to be paid in respect of the Ordinary Shares wi be paid in Euros or Pounds Stering (at the Sharehoder s eection) for Sharehoders on the UK register and in Rand for Sharehoders on the South Africa register. An investment in Ordinary Shares exposes the investor to foreign currency exchange rate risk as the Ordinary Shares trade in Pounds Stering on the LSE and trade in Rand on the JSE, whereas the Company s earnings are in Euros and the Company s dividends are decared in Euros. Any depreciation of Euros or Pounds Stering in reation to such foreign currency wi reduce the vaue of the investment in the Ordinary Shares or any dividends in foreign currency terms. If securities or industry anaysts do not pubish research or reports about the Group s business, or if they downgrade their recommendations, the market price of the Ordinary Shares and their trading voume coud decine The trading market for the Ordinary Shares wi be infuenced by the research and reports that industry or securities anaysts pubish about the Group or its businesses. If any of the anaysts that cover the Group or its business downgrade either of them, the market price of the Ordinary Shares may decine. If anaysts cease to produce coverage of the Group or fai to pubish reguar reports on it, the Group coud ose visibiity in the financia markets, which in turn coud cause the market price of the Ordinary Shares and their trading voume to decine. 23

24 RISKS RELATING TO THE TAXATION OF THE GROUP Change in tax status or residence Any change in the tax status or tax residence of the Company, tax rates appicabe to the Company, tax egisation or tax or accounting practice (in Guernsey, the UK, the Netherands or Germany) may have an adverse effect on the returns avaiabe on the Company s investments. Change in accounting standards, tax aw and practice The anticipated taxation impact of the structure of the Group and its underying investments is based on prevaiing taxation aw and accounting practice and standards as at the date of this document. Any change in the tax status of the Group or any of its underying investments, or in tax egisation or practice (incuding in reation to taxation rates and aowances) or in accounting standards coud adversey affect the investment return of the Company. Taxation risks Statements in this Prospectus concerning the taxation of Sharehoders and the Group are based on aw and practice as at the date of this Prospectus. These are, in principe, subject to change and prospective investors shoud be aware that such changes may affect the Company s abiity to generate returns for Sharehoders and/or the taxation of such returns to Sharehoders. If you are in any doubt as to your tax position you shoud consut an appropriate independent professiona adviser. Any change in the Company s tax status, in taxation egisation or the taxation regime, or in the interpretation or appication of taxation egisation appicabe to the Company or the Group coud affect the vaue of the investments hed by the Company, its abiity to achieve its stated objective, and its abiity to provide returns to Sharehoders and/or ater the post-tax returns to Sharehoders. Tax residence The investment objectives and expected returns incuded in this document are based on the Company being treated as tax resident in the UK. A non-uk incorporated company wi generay be regarded as tax resident in the UK if its centra management and contro is exercised in the UK. The Board of the Company expects the Company to be managed and controed in such a way that it is UK tax resident. The tax treatment in each of the Group s underying subsidiaries incuded in this document, being estabished in the Netherands, Germany and Guernsey is based on each of those entities being treated as tax resident in their respective jurisdictions. In the Netherands, entities that are incorporated in Netherands are deemed to be resident in the Netherands for tax purposes. In Germany, an entity is so resident if either it is incorporated in Germany or if its centra management and contro is exercised in Germany. In Guernsey, an entity is considered to be tax resident there if it is controed or incorporated in Guernsey, and has not been granted exempt status. The boards of each of the Group subsidiary entities expect the respective entity to be managed and controed in such a way that it is tax resident in its respective jurisdiction. Transfer pricing Sharehoder oans and management agreements between connected parties, i.e. between Group entities are subject to the transfer pricing rues in the jurisdictions in which they operate. Consequenty, if the terms of sharehoder oans and management agreements are found not to be on arm s ength or in accordance with a specified ratio in a particuar jurisdiction and as a resut a tax advantage is being obtained, an adjustment may be required to compute the taxabe profits in that jurisdiction or jurisdictions as if the sharehoder oans and management agreement were on arm s ength. Such adjustments may have an adverse effect on the returns avaiabe on the Company s investments. Depreciation for German tax purposes The eve of depreciation accounted for within the current tax cacuations in the property hoding entities for German tax purposes are based on a proportiona aocation (of the acquisition costs) to and and buiding. The amounts aocated to the buidings amount to between 50 per cent. and 100 per cent. which may be considered by the German tax authorities to be excessive. Any adjustment required by German tax authorities may have an adverse effect on the returns avaiabe on the Company s investments. 24

25 Exchange contros and withhoding tax Reaisation proceeds of investments may be subject to exchange contros or withhoding taxes in various jurisdictions. In the event that exchange contros or withhoding taxes are imposed with respect to any of the Company s investments, the effect wi generay be to reduce the income received by the Company from such investments. Automatic exchange of information (AEOI) If the Company is judged to be a Reporting Financia Institution under FATCA and/or the Common Reporting Standard it may be obiged to require Sharehoders to provide it with certain information in order to compy with its AEOI obigations whereby information may be provided to the UK tax authorities who may in turn exchange the information with certain other tax authorities. THE RISKS NOTED ABOVE DO NOT NECESSARILY COMPRISE ALL THE RISKS FACED BY THE GROUP AND ARE NOT INTENDED TO BE PRESENTED IN ANY ASSUMED ORDER OF PRIORITY. 25

26 PART III IMPORTANT INFORMATION No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be reied upon as having been authorised by the Company, Canaccord Genuity or PSG Capita. Without prejudice to any ega or reguatory obigation on the Company to pubish a suppementary prospectus pursuant to section 87G FSMA and Rue 3.4 of the Prospectus Rues, the pubication or deivery of this document sha not, under any circumstances, create any impication that there has been no change in the affairs of the Company and/or the Group since the date of this document or that the information in this document is correct as at any time subsequent to its date. This document is being furnished by the Company soey for the purpose of admission of the Ordinary Shares to the Officia List and to trading on the Main Market and is sent to Sharehoders for information purposes ony. Nothing contained in this document is intended to constitute investment, ega, tax, accounting or other professiona advice. This document is for prospective investors information ony and nothing in this Prospectus is intended to endorse or recommend a particuar course of action. Prospective investors shoud consut with an appropriate independent professiona advisor for specific advice rendered on the basis of their particuar situation. Any reproduction or distribution of this document, in whoe or in part, or any discosure of its contents or use of any information herein for any purpose other than this purpose is prohibited, except to the extent that such information is otherwise pubicy avaiabe. This document is not intended to provide the basis of any credit or other evauation and shoud not be considered as a recommendation by the Company that any recipient of this document shoud purchase or subscribe for Ordinary Shares. A Sharehoders are entited to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Artices which investors shoud review. A summary of the Artices is contained in section 5 of Part XIII of this document. Forward-ooking statements Certain statements contained herein are forward ooking statements and are based on current expectations, estimates and projections about the potentia returns of the Group and the industry and markets in which the Group operates, and the Directors beiefs and assumptions. Such forwardooking statements are identified by their use of terms and phrases such as beieve, target, expect, aim, anticipate, project, woud, coud, envisage, estimate, intend, may, pan, wi or the negative of these, variations or comparabe expressions, incuding references to assumptions. The forward-ooking statements in this document are based on current expectations and are subject to known and unknown risks and uncertainties that coud cause actua resuts, performance and achievements to differ materiay from any resuts, performance or achievements expressed or impied by such forward-ooking statements. Factors that may cause actua resuts to differ materiay from those expressed or impied by such forward-ooking statements incude, but are not imited to, those described in the risk factors. These forward-ooking statements are based on numerous assumptions regarding the present and future business strategies of the Group and the environment in which the Group wi operate in the future. A subsequent ora or written forward-ooking statements attributed to the Company or any persons acting on its behaf are expressy quaified in their entirety by the cautionary statement above. The Company and/or its Directors expressy discaim any obigation or undertaking to reease pubicy any updates or revisions to any forward ooking statements contained herein as a resut of new information, future events or other information except to the extent required by the Listing Rues, the Discosure and Transparency Rues, the Prospectus Rues, the Market Abuse Reguation, the rues of the LSE, the JSE Listings Requirements or appicabe aw. Nothing in this paragraph is intended to quaify the opinion of the Company (as set out in section 16 of Part XIII) that, taking into account the bank and other faciities avaiabe to the Group, the working capita avaiabe to the Group is sufficient for the present requirements of the Group, that is, for at east the 12 months foowing the date of pubication of this document. 26

27 Presentation of financia information The Company pubishes its financia information in Euros. The abbreviation m represents miions of Euros. The financia information presented in a number of tabes in this document has been rounded to the nearest whoe number or the nearest decima pace. Therefore, the sum of the numbers in a tabe may not conform exacty to the tota figure given for that tabe. In addition, certain percentages presented in the tabes in this document refect cacuations based upon the underying information prior to rounding, and, accordingy, may not conform exacty to the percentages that woud be derived if the reevant cacuations were based upon the rounded numbers. The historica financia information presented in this document consists of: audited financia information of the Group for the three years ended 31 March 2014, 31 March 2015 and 31 March 2016 and the six months to 30 September 2016 and unaudited financia information of the Group for the six months to 30 September IFRS The financia information of the Company is prepared in accordance with the requirements of the Prospectus Directive, the Listing Rues and IFRS, as endorsed and adopted by the EU, and in accordance with the interpretations issued by the Internationa Financia Reporting Interpretations Committee of the IASB, as endorsed and adopted by the EU. Use of property vauation figures This document incudes vauations by Cushman & Wakefied LLP of the Group s properties in respect of each of the Rea Estate Assets as at 30 September 2016, other than Wiesbaden and Krefed II (which are vaued as at 5 Juy 2016) and Dreieich (which is vaued as at 19 October 2016), as set out in Part XI of this document, which has been prepared in accordance with the appropriate sections of the Roya Institution of Chartered Surveyors ( RICS ) Professiona Standards and RICS Goba Vauation Practice Standards (the Red Book ). The vauations are based upon assumptions incuding future renta income, anticipated maintenance costs and an appropriate discount rate. The properties are vaued on the basis of a ten year discounted cash fow mode supported by comparabe evidence. The discounted cash fow cacuation is a vauation of renta income considering non-recoverabe costs and appying a discount rate for the current income risk over a ten year period. After ten years a determining residua vaue (exit scenario) is cacuated. A capitaisation rate is appied to the more uncertain future income, discounted to a present vaue. Adjustments are made to account for ease incentive accounting, Directors write-downs on non-core assets and recassification of investment properties hed for sae. Directors write-downs represent the discretionary impairment of specific assets resuting from the existence of exceptiona eases, geographica distinctions and particuar encumbrances that management beieves materiay impact the amounts which may utimatey be reaised in respect of the concerned properties. As a resut of the eve of judgement used in arriving at the market vauations, the amounts which may utimatey be reaised in respect of any given property may differ from the vauations shown in the statement of financia position. Directors estimates of vaue shoud not be construed as vauations by Cushman & Wakefied LLP, nor shoud they be construed as profit forecasts or interpreted to mean that the Group s asset vaues or earnings in any future period woud necessariy match, be greater than or be ess than those for any other period. The Internationa Vauation Standards Counci ( IVSC ) pubishes and periodicay reviews the Internationa Vauation Standards ( IVS ), which set out internationay accepted, high eve vauation principes and definitions. These have been adopted and suppemented by the RICS, and are refected in the Red Book. Thus, the RICS considers that a vauation that is undertaken in accordance with the Red Book wi aso be compiant with IVS. Distribution of this document This document does not constitute an offer to se or issue, or an invitation to subscribe for, or the soicitation of an offer to buy or to subscribe for, Ordinary Shares in Austraia, Canada, New Zeaand or Japan, or any other jurisdiction where it woud be unawfu to do so ( Restricted Jurisdiction ). This document is not for distribution in or into the Restricted Jurisdictions and is ony distributed in South Africa for information purposes. The Ordinary Shares have not been nor wi they be registered under the US Securities Act or with any securities reguatory authority of any state or other jurisdiction of the United States or under the appicabe securities aws of the other Restricted Jurisdictions or any other 27

28 jurisdiction and, uness an exemption under the US Securities Act or other reevant aws is avaiabe, may not be offered for sae or subscription or sod or subscribed, directy or indirecty, in, into or from the United States or any of the Restricted Jurisdictions or for the account or benefit of any nationa, resident or citizen of the United States or any of the Restricted Jurisdictions. The distribution of this document in jurisdictions other than the United Kingdom, South Africa or Guernsey may be restricted by aw and therefore persons into whose possession this document comes shoud inform themseves about and observe any such restrictions. Any faiure to compy with these restrictions may constitute a vioation of the securities aws of such jurisdictions. Restrictions on saes in the United States NEITHER THIS DOCUMENT NOR THE ORDINARY SHARES HAVE BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER REGULATORY AUTHORITY IN THE UNITED STATES. THE AFOREMENTIONED AUTHORITIES HAVE NOT PASSED UPON OR ENDORSED THE MERITS OF, INTER ALIA, UK ADMISSION OR JSE TRANSFER, OR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES. Currency In this Prospectus references to Pounds Stering,, pence or p are to the awfu currency of the United Kingdom, references to Euros,, cent or c are to the singe currency of those reevant adopting member states of the EU and references to Rand or R are to the awfu currency of South Africa. Third party information Where third party information has been used in this document, the source of such information has been identified. The Company confirms that such information has been accuratey reproduced and, so far as it is aware and has been abe to ascertain from information pubished by such third parties, no facts have been omitted which woud render the reproduced information inaccurate or miseading. No action to be taken by Sharehoders Sharehoders are not required to take any action upon receipt of this document. The Company is not issuing any new Ordinary Shares, nor is it seeking to raise any new money, in connection with UK Admission or JSE Transfer. This document has been pubished soey to enabe the Company to obtain admission of the Ordinary Shares to the Officia List and to trading on the Main Market. Website The contents of the Group s website and of any website accessibe via hyperinks from the Group s website are not incorporated into, and do not form part of, this document. Defined terms Certain terms used in this document, incuding certain capitaised terms and certain technica and other terms, are defined in Part XIV of this document. 28

29 PART IV EXPECTED TIMETABLE OF PRINCIPAL EVENTS Each of the times and dates in the tabe beow is indicative ony and may be subject to change. Pease read the notes to this timetabe set out beow. UK Admission Notice of intention to de-ist from AIM 25 January 2017 Last day of trading of Ordinary Shares on AIM 3 March 2017 Expected deisting of Ordinary Shares from AIM 8.00 a.m. (UK time) on 6 March 2017 Expected admission of the Ordinary Shares to the Officia List and 8.00 a.m. (UK time) expected commencement of deaings on the Main Market (1) on 6 March 2017 (1) Or as soon as practicabe thereafter. No temporary documents of tite wi be issued. JSE Transfer Last day of trading of Ordinary Shares on AtX 3 March 2017 Expected transfer of Ordinary Shares from AtX to the Main Board 8.00 a.m. (South Africa time) and expected commencement of deaings on the Main Board (1) on 6 March 2017 (1) Or as soon as practicabe thereafter. No temporary documents of tite wi be issued. Notes The times and dates set out in the expected timetabe of principa events above and mentioned in this document, and in any other document issued in connection with UK Admission or JSE Transfer, are subject to change, in which event detais of the new times and dates wi be notified to the UK Listing Authority, the LSE, the JSE and, where appropriate, to Sharehoders by the reease of an announcement on RNS and SENS. Any reference to a time in this document is to the time in London, Engand, uness otherwise specified. 29

30 PART V DIRECTORS, SECRETARY, REGISTERED OFFICE AND ADVISERS Directors Nei Sachdev (Independent Non-executive Chairman) Andrew Coombs (Executive Director) Aistair Marks (Executive Director) Wesse Hamman (Non-executive Director) James Peggie (Non-executive Director) Robert Sincair (Independent Non-executive Director) Company secretary Registered office and PO Box 119 Directors business address Marteo Court Admira Park St. Peter Port Guernsey GY1 3HB Channe Isands UK Sponsor RSA Sponsor Lega advisers to the Company as to Engish aw Lega advisers to the Company as to South African aw Intertrust Fund Services (Guernsey) Limited Marteo Court Admira Park St. Peter Port Guernsey GY1 3HB Channe Isands Canaccord Genuity Limited 88 Wood Street London EC2V 7QR PSG Capita Proprietary Limited 1st Foor Ou Koege 35 Kerk Street Steenbosch 7600 Norton Rose Fubright LLP 3 More London Riverside London SE1 2AQ Lega advisers to the Carey Osen Company as to Guernsey aw Les Banques St Peter Port Guernsey GY1 4BZ Reporting accountants and auditor Norton Rose Fubright South Africa Inc 15 Aice Lane Sandton South Africa 2196 KPMG LLP 15 Canada Square London E14 5GL 30

31 Lega advisers to the Addeshaw Goddard LLP UK Sponsor as to Engish aw Miton Gate 60 Chiswe Street London EC1Y 4AG UK Registrar South African Registrar Independent Vauer Capita Registrars (Guernsey) Limited Mont Crevet House Buwer Avenue St Sampson Guernsey GY2 4LH Computershare Investor Services Proprietary Limited Rosebank Towers 15 Biermann Ave Rosebank 2169 Cushman & Wakefied LLP 125 Od Broad Street London EC2N 1AR 31

32 PART VI INFORMATION ON THE GROUP INTRODUCTION The Company is a Guernsey-incorporated property company that is currenty a eading operator of branded business parks providing conventiona space and fexibe workspace in Germany. The Group s core strategy is the acquisition of business parks at attractive yieds, the integration of these business parks into its network of sites under the Company s brand, and the reconfiguration and upgrade of existing and vacant space to appea to the oca market, through intensive asset management and investment. The Group s strategy aims to deiver attractive returns for Sharehoders by increasing renta income and improving cost recoveries and capita vaues, as we as by enhancing those returns through financing its assets on favourabe terms. Once sites are mature and net income and vaues have been optimised, the Group may take the opportunity to refinance the sites to reease capita for investment in new sites or consider the disposa of sites in order to recyce equity into assets which present greater opportunity for the asset management skis of the Group s team. The Company is currenty isted on AIM of the LSE and the AtX of the JSE. As at 6 February 2017 (being the ast practicabe date prior to pubication of this document), the Company had a market capitaisation of 494 miion on AIM and R7,066 miion on AtX and, as at 30 September 2016, had net assets of 451 miion and an EPRA NAV of cents per Ordinary Share. As at 30 September 2016, the Group: owned or controed a portfoio of 42 industria and office business parks across Germany; had annuaised renta income of 67.2 miion; had portfoio of assets with a book vaue of miion; and had secured financing against these assets of miion. In the financia year to 31 March 2016, the Group made a consoidated profit after tax of 54.7 miion. As at 30 September 2016, the Group s business parks, covered an aggregate of 2.3 miion square metres, and comprised over 400 buidings with 1.4 miion square metres of gross ettabe area. Of this 2.3 miion square metres, the Group s management team has identified approximatey 164,000 square metres of and which is currenty non-income producing and can potentiay be deveoped or sod. The majority of these properties are a mixture of office, storage and production space and, to a much esser extent, retai space. Whist retaining the major core anchor industria tenants, many of the parks are restructured to enhance the working environment of the tenants (for exampe, by encouraging food and fitness operators to service the working tenant base as we as externa customers). In addition, the Group provides conference, meeting room and catering offerings on the majority of sites. The Group s 50 argest tenants contribute approximatey 48 per cent. of the September 2016 annuaised renta income on more conventiona ong term contracts and over 3,500 other tenants, mainy SMEs, make up the rest of the annuaised renta income on a mixture of fexibe and ong-term contracts. 1. GERMAN MARKET The German economy and SME market, in particuar, continue to see growth, meaning demand for both the Group s conventiona space and fexibe workspace continues to be high. The sites acquired over the ast few years have enhanced the Group s offering to prospective tenants by adding new ocations, different tenant mixes and new space combinations. The Group s capex investment programme, which is directed at transforming sub-optima space, has provided it with a greater proportion of higher quaity space to et which has enabed the Group s marketing and ettings patform to fi this space with muti-tenants, usuay at premium pricing eves compared to the rest of the portfoio. This has resuted in the Group being abe to significanty and organicay increase its annuaised renta income, occupancy and average rate per square metre over the ast three financia years. Having operated in the business park market in Germany for neary a decade, the Group now has a strong record in service charge recovery, and the combination of this with top ine renta growth and significanty reduced borrowing costs, whist not having to increase the size of the operating patform materiay, has resuted in strong financia performance in recent years. 32

33 2. HISTORY AND DEVELOPMENT OF THE BUSINESS The Company was formed in February 2007 with the intention of purchasing and operating mixed-use industria business parks in Germany, with an externay operated asset manager (the Asset Manager ). The Company was admitted to trading on AIM in May 2007, with a primary capita raise of 328 miion which was initiay used to acquire 20 business parks. A further nine business parks were purchased in the year to 31 March 2008 and the portfoio grew to 38 business parks over the course of the foowing year. The Group s business was not immune from the chaenges of the goba financia crisis that started in 2007, and in 2009 the Group ceased its acquisition programme and focused on increasing occupancy and Group efficiency, which incuded a restructuring of the German operating company, a doubing of the saes team and deveopment of the in-house team to improve cost recovery from tenants. In January 2012, the Group acquired the Asset Manager thereby internaising the asset management patform. Andrew Coombs, who joined the Asset Manager in 2010, and Aistair Marks, who had been with the Asset Manager since the Company s formation, were subsequenty appointed as CEO and CFO of the Group, respectivey. Foowing internaisation, the primary strategic objective of the Group continued to be to improve profitabiity and strengthen the Group s financia position by disposing of non-core and mature assets, as we as surpus and saes, and refinancing the Group s entire oan book. By 2013, the Group s portfoio was reduced to 34 business parks across Germany and with further disposas the tota number of parks was reduced to 30 by The restructuring undertaken by the Group in the period from 2009 to 2014 ed to a significant improvement in profitabiity and financia strength and the portfoio consisted primariy of we ocated core properties, foowing the disposa of the majority of non-core assets. Foowing this strategy for the ast four years has contributed to increasingy strong financia resuts and the resumption of a reguar dividend. The interna asset management patform and financing base gave rise to the opportunity to grow the portfoio organicay and through acquisitions, with a focus on custering in core ocations to make the best use of the estabished oca teams. In the ast four financia years the Company has raised miion in equity from pacings on five separate occasions, one of which was executed aongside the successfu aunch of the Company on the AtX of the JSE in December 2014, giving it a secondary isting aongside the origina AIM isting. The capita raised through these pacings has enabed the Group to acquire 14 new business parks, supported by the refinancing of the Group s debt faciities at significanty improved rates and on much onger terms than were previousy avaiabe. As at 30 September 2016, the Group s average weighted interest rate was 2.18 per cent. and the weighted debt expiry was 5.8 years. The most recent pacing of 30 miion in June 2016 enabed the Group to acquire sites in Dresden, Wiesbaden, Krefed and Dreieich. The sites ocated in Dresden and Wiesbaden enabed the Group to secure an attractive 31 miion extension of an existing banking faciity with BerinHyp which, when competed in October 2016, further improved the weighted average interest rate to 1.99 per cent. and extended the Group s weighted debt expiry to 6.2 years. 3. OVERVIEW OF THE GROUP S PRINCIPAL ACTIVITIES The Group owns and manages a substantia portfoio of primariy arge mixed-use commercia rea estate assets in Germany which are operated as business parks. As at 30 September 2016, the Group owned 42 business parks, with a market vaue of miion. As at 30 September 2016, the Group s business parks, covered an aggregate of 2.3 miion square metres, and comprised over 400 buidings with 1.4 miion square metres of gross ettabe area. Within the business parks, the Group s management team has identified approximatey 164,000 square metres of and which is currenty non-income producing and can potentiay be deveoped or sod. Many of the parks have been set up to enhance the working environment of the site by encouraging food and fitness operators as tenants to service the working tenant base as we as externa customers, and aso providing conference, meeting room and catering faciities on the majority of sites. The Group s business parks house a combination of ong-term bue-chip anchor tenants, smaer SME tenants on conventiona terms and fexibe workspaces offering a range of high quaity managed business accommodation to nationa and oca businesses. On every business park, the Group impements strategies to extend and secure a core base of stabe income, and sub-divides and converts sub-optima space into either fexibe workspaces, or higher quaity conventiona spaces, which achieve much higher rents than the unimproved acquired space woud have. In addition, the transformation of each site usuay incudes strategies such as: 33

34 investing in cosmetic improvements to the common areas, incuding adding the Group s branding to the premises; buiding a marketing suite and Centre Manager office; improving the façade and surrounding outside areas; ensuring adequate parking is avaiabe on site; deveoping on-site cafes and sourcing third party operators to provide on-site catering; etting space to fitness centre operators; creating meeting rooms and conference faciities; and seing excess and on site or deveoping it into conventiona etting and sef-storage faciities. Once transformed, the enhanced working environment within the business parks offer a competey different income profie which provides a stabe investment proposition. As vauations increase on mature sites, the Group may take the opportunity to refinance the sites and reease capita to invest in new assets or seek to dispose of such assets with a view to crystaising the vaue created and recycing the capita into sites which present greater opportunity for the asset management skis of the Group s team. In the six month period to 30 September 2016 the Group empoyed an average of 196 empoyees, expressed as fu time equivaents, throughout Germany. These empoyees perform the majority of the asset and property management functions on its business parks and have heped to deveop the Group s management patform which is primariy focused on marketing and etting space, renewing tenants, recovering service charge cost, coecting cash and deveoping and maintaining its properties. The sites are marketed centray on the Group s website and on many internet portas, enabing the Group s team to offer space across the country. This marketing structure generates more than 1,000 enquiries per month from the fu range of arge industria tenants to singe-office and sef-storage customers. The abiity to contro the ettings process internay aows the Group to offer a comprehensive range of products from arge production factories to more innovative products incuding Smartspace (higher end fexibe office, workboxes and storage); Smartspace FexiLager (ower end storage); Conferencing; and FexConnect (internet and teephony services). This generates higher income from previousy sub-optima space and attracts a arge number of smaer tenants to its sites. The avaiabe space on the sites is designed to be fexibe so that the Company can accommodate changes to customers business and storage needs. 3.1 Group Business Mode and Investment Strategy The Group continues to be focused on both organic growth and growth through acquisition, and has expanded its strategy to incude recycing existing assets to free up capita to be used to acquire assets which it can transform and add vaue to. Organic growth is generated through increasing occupancy, renta revenues, capita vaues and efficiency across the portfoio, through the Group s asset management. Additionay, it is intended to grow the portfoio with accretive acquisitions which have been funded historicay through new equity, refinancing or disposas of mature assets and non-core assets. The Group s principa objectives are to: increase net asset vaue of the Group s portfoio, through improving net operating income and capita vaues; and generate tota returns for Sharehoders through the payment of dividends (adopting a risk based approach to managing the Group s business). Over the ast three financia years the Group has deivered an average tota sharehoder return ( TSR ) of 14.9 per cent. per year 1, and in the six month period from 31 March to 30 September 2016, a TSR of 6.7 per cent. was achieved. The main contributors to this return were ike-for-ike increases in market vaue of 4.2 per cent. and a ike-for-ike increase in annuaised renta income of 2.4 per cent. in the period. 1 See section 3 in Part VII for the basis of this cacuation 34

35 3.2 Organic Growth Enhance organic renta and capita growth through active portfoio management The Group seeks to maximise its income and the vaue of its assets through an active and ongoing asset management programme, deivered by converting properties into improved, more efficient, higher yieding and fexibe workspaces. This transformation comes from etting vacant space, significanty improving the recovery of service charge costs, extending and improving the ease terms of the anchor tenants, as we as from the Group s capex investment programme, which reconfigures and upgrades sub-optima space into a combination of conventiona office, production and storage spaces as we as its fexibe Smartspace (office, workbox and storage) and Smartspace FexiLager (ower end storage) products. In addition, the Group provides an enhanced working environment in the common parts of its buidings, through cosmetic improvement schemes, incuding adding the Group s branding to the premises, and improving the façades, surrounding outside areas, and the she and core of the buidings. 3.3 Transformation and conversion of sub-optima space The Group s intensive capex investment programme, which is aimed at transforming sub-optima space, is presenty one of the major drivers of organic income and capita vaue growth for the Group. Demand continues to be strong from the Company s target German SME market, and this enabes the Group to add significant vaue to sub-optima space as we as manage arge move-outs by investing and etting at improved renta rates. The current capex investment programme commenced in January 2014, with an initia target of transforming and converting approximatey 100,000 square metres of space over a three year period. This programme has since been expanded to cover around 200,000 square metres, to incude simiar space which has become avaiabe from the Group s recent acquisitions and some move-outs. As at 30 September 2016, 11.7 miion of the programme s 24.0 miion budget had been invested, transforming 139,900 square metres of space which is now either et or in the process of being et. The 10.8 miion of investment which reates to the fuy competed space is aready generating annuaised renta income of 7.6 miion as we as contributing significanty to the vauation increases seen over the ast few years, which demonstrates the extent to which this programme has and is expected to benefit the Group s annuaised renta income, profitabiity and net asset vaue. This initia success was achieved at 23 per cent. ess than the budgeted cost and the Group hopes to benefit from the continuous improvement in its in-house experience to keep a tight contro on costs without impacting the renta improvements. The progress of the programme up to 30 September 2016 can be seen in more detai in the tabe beow. Annuaised Annuaised Renta Capex Renta Income Rate Per Investment Income Increase Occupancy Rate Per sq. m Programme Investment Actua Increase Achieved to Occupancy Achieved to sq. m Achieved to Progress Sq. m Budgeted Spend Budgeted Sep 2016 Budgeted Sep 2016 Budgeted Sep 2016 % % Competed 139,900 14,025,713 10,823,356 8,411,428 7,627,219 86% 78% In Progress 22,765 5,066, ,590 1,318,799 83% 5.89 To Commence in Next Financia Year 44,308 4,924,176 86,771 1,764,025 74% 4.48 Tota 206,974 24,016,588 11,698,717 11,494,252 7,627,219 83% 53% Across the entire programme, approximatey 43,000 square metres of the 139,900 square metres transformed to date has been converted into new Smartspace (office, workbox and storage) products, some of which has invoved the conversion of the ower end Smartspace FexiLager storage product into other more vauabe products, and the remainder has been transformed into higher quaity conventiona space. This has ed to increased occupancy eves and an increase in the average renta rate per square metre across the portfoio. This is evidenced by the fact that as at 30 September 2016, the tota portfoio s occupancy eve was 80 per cent., with a renta rate of 5.10 per square metre per month being achieved which represents a materia improvement from the start of the programme (31 March 2014: 76 per cent. occupancy and a renta rate of 4.48 per square metre per month). 35

36 In addition, there is currenty a 35 per cent vacancy rate at the newy acquired Dresden and Wiesbaden sites which has been identified for significant improvement as we as approximatey 12,000 square metres of recenty vacated space at other sites which woud significanty benefit from upgrading. Based on the resuts that have been achieved to date from the capex investment programme, this gives the Directors confidence that the vaue-add business mode that the Group runs shoud deiver further successes over the coming years. 3.4 Occupancy and renta growth driven by in-house operations and saes and marketing patform One of the reasons the Group is abe to effectivey break up arge space into smaer units and et these at much higher rates is due to interna marketing and etting capabiities. This capabiity provides the Group with more options as to the range of workspace it acquires and aows it to deveop its range of products to suit oca demand. The operationa saes and marketing patform referred to above is aso a substantia barrier to entry in terms of competitors moving into the market. The interna marketing department of the Group generates eads predominanty by means of its significant internet presence but aso by means of its strong reationships and active engagement with agents and brokers throughout Germany, fostered over the past decade. To penetrate the market further and generate interest in, and awareness of, its offerings, the Group reguary hosts dedicated saes events on many of its sites. Athough many of the arger industria tenant deas come from the broker channes, more than 98 per cent. of the Group s average 1,072 eads generated per month over the ast three years to September 2016 came from the Group s website and the externa internet portas upon which space is advertised. The marketing team s use of the internet, integration of digita innovations and search engine optimisation have been key drivers of the Group s high take-up rates and average new ettings of 139,797 square metres per year over this period. Once eads have been generated, the Group has a dedicated ca centre of six empoyees, who are incentivised to convert eads into viewings. Rea-time progress is tracked, which aows the department to convert approximatey 70 per cent. of eads into appointments and 55 per cent. of eads into viewings. Detaied information is gathered from a enquiries and stored within the Group s CRM system and this is used to enabe the management team to make more informed decisions on investments, campaigns and strategies based on the eve of demand and competition in each area in which it operates. The Group has a further 73 empoyees based on the Group s business park sites, who are focused on conducting viewings, etting vacant space and activey managing the needs of existing tenants. This enabes the Group to both secure and retain tenants as we as provide visibiity as to the changes in the tenants requirements so that the Group has the time to pan its management of each site carefuy. On average, 11 per cent. of eads were converted into new contracts over the three years to September Over this period, 68 per cent. of eases (by vaue) which had reached their term have been renewed. The on-site empoyees have been extensivey trained to ensure compiance with the Group s poicies and objectives, and the sites are reguary visited by mystery shoppers to ensure that they are operating effectivey and in accordance with the Group s guideines. The Directors beieve that this nationa saes force is one of the key reasons for the Group s high et-up rates and good cient retention. 3.5 Improvement of service charge irrecoverabes Historicay across the sector, the recovery of service charge costs for mixed-use, muti-tenant business parks has resuted in high eakage from renta income down to net operating income, particuary when vacancy exists. Since AIM Admission, the Group has invested substantiay in its in-house team, systems, suppiers and procedures in order to improve its service charge prepayments and its cost recovery eves, especiay with regard to faciity management and utiities costs. The Group has focused on improving utiities metering, controing contracted maintenance and aocating these costs on an actua usage basis, as opposed to the more traditiona aocation by square metre basis. Additionay, the increased scae of the Group has provided opportunities to consoidate energy consumption and aowed it to receive attractive terms on utiity and faciity management contracts. The Group has improved its service charge cost recovery from 69.5 per cent. for the financia year ending 31 March 2010, when average occupancy was 72.0 per cent., to 87.8 per cent. as at 31 March 2016, when average 36

37 occupancy was approximatey 80.0 per cent.. It is beieved that the Group s abiity to achieve a cost-recovery percentage that is higher than the percentage occupancy represents a bestin-cass performance in terms of recovery of service charge. The improved performance the Group has achieved in this area since the March 2010 year equates to a benefit of approximatey 5.8 miion per year, and management are continuing to seek further ways of improving this. Deveoping and performing the service cost recovery function internay has created another major asset and aso provides a significant competitive advantage for the Group in an aready high yieding asset cass. The detai of the Group s historica service charge recovery record as at 31 March 2016 can be seen in the foowing tabe: Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 m m m m m m m Service Charge Recovery Service Charge Costs (35.7) (35.9) (37.6) (38.4) (39.6) (40.3) (41.8) Irrecoverabe Costs (10.9) (9.3) (8.2) (7.1) (6.6) (6.3) (5.1) Recovery Percentage 69.5% 74.1% 78.2% 81.5% 83.4% 84.4% 87.8% Average Occupancy* 72.0% 76.0% 77.0% 77.0% 75.0% 76.0% 80.0% Recovery Rate 96.5% 97.5% 101.5% 105.8% 111.2% 111.1% 109.7% * Average occupancy cacuated using DDS headeases not DDS subeases. 3.6 Growth through acquisition The Group has been active in making acquisitions over the ast two years and, if suitabe opportunities can be identified, it intends to further increase its portfoio size. Over the next 18 to 24 months, in ine with its stated strategy, the Group wi continue to ook for further acquisitions of high yieding and opportunistic mixed-use commercia rea estate assets in Germany which meet the Group s investment objectives and poicies. The Group is committed to achieving portfoio growth in a sustainabe manner that supports the ongoing capex investment programme and therefore such acquisitions wi ony be undertaken where the Group has in pace committed funding from debt, equity or the reaisation of vaue in existing assets to finance each acquisition. In order to estabish and maintain a baanced portfoio, the Group seeks to acquire a mix of opportunistic assets and more stabe assets. The more stabe and ower risk assets are attractive to the Group s debt providers, whereas the opportunistic assets provide the opportunity for higher returns for Sharehoders making optima use of the Group s asset management capabiity. When these assets are financed with the currenty avaiabe ow interest rate bank faciities, the Group has the potentia to deiver strong cash on cash returns from the date of acquisition. Returns on equity over time are expected to be simiary attractive as vaue is added to the assets through the appication of asset management initiatives. The typica business park that the Group ooks to acquire has often been deveoped by previous owner-occupiers and taiored to their specific needs. Based on a deep understanding of these assets and their potentia vaue, the Group is abe to purchase these assets at attractive prices. These assets often come with significant vacancy or underutiised space and high nonrecovered service charge costs, which provide the Company with considerabe vaue-add opportunities. The Group has a highy experienced senior management team who coectivey have many years of experience in property markets, most of which is specificay in the German property market. The team is abe to everage its strong market connectivity and track record of acquiring assets to access a arge number of potentia investment opportunities. The Group s investment criteria when considering a business park for acquisition is broady as foows: gross ettabe area of between 20,000 to 60,000 square metres; ocated in or around the Group s key geographies, typicay outying major conurbations; EPRA net initia yied typicay in excess of 8.0 per cent.; substantia vacancy and vaue-add opportunity; and office, storage and production usage. 37

38 The due diigence process for each potentia acquisition invoves: undertaking a rigorous tenant-by-tenant ease and renewa anaysis, which incudes detaied ega due diigence of eases and other major contracts to ensure the sustainabiity of key income streams; a competitor anaysis to determine demand, pricing and competition; a review of the demographics of the specific asset ocation and its wider geographic ocation; a thorough technica due diigence of the property, reviewing the existing form and functionaity of the property; and the deveopment of a comprehensive five-year business pan for the asset to anayse its ong-term potentia. The information used for the due diigence comes from both the Group s CRM system which maintains a of the historica customer and enquiry information that the Group receives and the data that the Group s marketing department generates from mystery shopping and other sources on its competitors. The team wi aso assess the opportunity for financing the assets within the parameters of the many channes of bank and other financing that the Group has accessed over the past few years. One of the reasons that these assets are avaiabe to acquire at reativey high yieds is because most previous owners, and the Group s competitors do not have the capabiities to reease the potentia of the sub-optima space and therefore typicay eave this space vacant or use it inefficienty. The Group s capex investment programme aims to deiver high income and significant vaue upifts on the property by deveoping the sub-optima space into higher quaity conventiona space or the various products that the Group has deveoped and which are described in more detai in Section 4 of this Part VI. Since 1 Apri 2013, the Group has purchased 229 miion (incuding acquisition costs) of rea estate assets throughout Germany comprising 393,179 square metres at an EPRA net initia yied of 8.2 per cent. and a vacancy of 24 per cent.. The acquisitions have a enhanced earnings, as we as providing a good baance of stabe high-quaity income and vaue-added opportunity. The detais of these assets are incuded in the foowing tabe: Tota Investment Annuaised (inc. Acquisition Annuaised Acquisition Acquisition Cost Per Renta Acquisition EPRA Net Site Costs) sq. m sq. m Income NOI Initia Yied % Mahsdorf 19,573,781 30, ,786,063 1,575, % Potsdam 29,352,527 37, ,346,622 2,192, % Bonn II 3,316,230 9, , , % Aachen I 18,692,656 26, ,751,112 1,543, % CönParc 18,585,679 13,640 1,363 1,468,505 1,355, % Heidenheim 18,319,585 47, ,845,715 1,511, % Krefed 13,475,000 11,458 1,176 1,218,603 1,138, % Ludwigsburg 7,442,986 26, , , % Mainz 25,074,012 25, ,218,796 2,003, % Markgröningen 8,720,000 56, ,321, , % Weiimdorf 5,699,271 5, , , % Würseen II 7,339,673 9, , , % Dresden 28,600,275 53, ,781,105 2,376, % Wiesbaden 17,658,382 19, ,877,793 1,598, % Krefed II 2,894,100 6, , , % Dreieich 4,584,500 12, ,345 41, % Tota 229,328, , ,838,085 18,781, % 38

39 Significant improvements have aready been made to date on the earier assets acquired which can be seen in the foowing tabes: Annuaised Annuaised Annuaised Tota Market Market Acquisition Renta Renta Acquisition Vaue Vaue Renta Income for Income Site Cost (rounded) Increase Income Sep 2016 Increase % % Mahsdorf 19,573,781 22,700,000 16% 1,786,063 1,953,766 9% Potsdam 29,352,527 34,200,000 17% 2,346,622 2,638,213 12% Bonn II 3,316,230 6,900, % 530, ,020 74% Aachen I 18,692,656 22,000,000 18% 1,751,112 2,073,241 18% Ludwigsburg 7,442,986 9,520,000 28% 969,305 1,098,520 13% Weiimdorf 5,699,271 5,910,000 4% 510, ,835 Heidenheim 18,319,585 20,700,000 13% 1,845,715 1,820,450 (1)% Tota 102,397, ,930,000 19% 9,740,253 11,019,045 13% Capex Since Acquisition Sep 2016 Occupancy Acquisition Site Occupancy Occupancy Increase to Sep 2016 % % % Mahsdorf 85% 90% 5% 524,163 Potsdam 85% 96% 11% 235,413 Bonn II 76% 93% 17% 78,510 Aachen I 75% 87% 12% 352,337 Ludwigsburg 68% 74% 6% 331,282 Weiimdorf 100% 100% Heidenheim 83% 85% 2% 60,031 Tota 80% 87% 7% 1,581,736 In addition, the Company has notarised four acquisitions since the period ending 30 September An acquisition of an asset in Krefed competed on 25 January 2017 and an acquisition of an asset in Dreieich competed on 1 February Another notarised acquisition is in Frankfurt, with tota acquisition costs of 4.5 miion. The fourth notarised acquisition is for the purchase of an asset in Coogne for a consideration of 22.9 miion. Frankfurt and Coogne are being purchased at EPRA net initia yieds of 1.0 per cent. and 8.1 per cent. respectivey and represent a continuation of the Group s strategy to acquire a mix of stabe and more opportunistic assets. The purchase of Frankfurt is expected to compete by March 2017 and the purchase of the Coogne site is expected to compete in May The assets are described in further detai in note 30 of Part VIII of this document. 3.7 Refinancing and disposa of assets As part of its strategy, the Group reguary assesses potentia opportunities to refinance or dispose of mature assets that have been successfuy repositioned in order to reease or recyce capita into new opportunities with high net initia yieds and greater opportunity to add vaue. Since AIM Admission, the Group has disposed of properties or buidings generating aggregate proceeds of approximatey 38.6 miion. In addition to the competed disposas, the Group has notarised the sae of a further asset, which is expected to compete by the end of Apri The Group has notarised the sae of its Rupert-Mayer-Straße business park in Munich for 85.0 miion, which refects an increase of approximatey 9 per cent. on the book vaue as at 30 September The agreement incudes a easeback for six years with rent of approximatey 5.0 miion per annum for the first year increasing each year by per cent. up to and incuding the fifth year. In the fina year, the monthy rent is equa to the net rent received by the Group from the sub-tenants. The Group wi receive an annua property-management fee of 100,000 for the term of the property management agreement. The sae is expected to compete by the end of Apri The sae of a core asset for a materia capita gain provides evidence of the Group s abiity to add vaue to assets in its portfoio and recyce capita from mature assets, which is a main piar of the Group s strategy. The proceeds of the disposa wi be used to fund further acquisitions in the Group s key markets, where it identifies scope for its asset management competencies to add vaue. 39

40 Additionay, as at 7 February 2017 (being the ast practicabe date prior to the pubication of this document), the Group owns or contros approximatey 156,000 square metres of surpus and, which can either be deveoped or sod. Given such and does not typicay produce any income, it is rarey attributed materia vaue by the Group s vauers. Since AIM Admission, the Group has disposed of approximatey 96,000 square metres of surpus and for an aggregate saes vaue of approximatey 10.6 miion and continuay assesses the opportunities for further saes or deveopment. 3.8 Bank finance with ow interest rates and ow eves of gearing The Group s successfu track record and asset management patform in Germany, together with the covenant strength of its major customers, has enabed it to deveop strong reationships with a wide range of ending banks, which provide the Group with substantia debt capita on attractive terms. This is evidenced by the fact that between January 2013 and March 2014, when debt capita markets were difficut to access, the Group refinanced its entire oan book of more than 300 miion. More recenty, borrowing costs have been driven down by the faing ECB base interest rates and the greater amount of capita avaiabe to end against German property assets. As at 30 September 2016, through new banking arrangements and a refinancing that the Group has undertaken, the tota cost of debt was reduced to an average weighted interest rate of 2.18 per cent. and this was subsequenty reduced to 1.99 per cent. in October The Group currenty has six different providers of debt. At present, the Group is usuay abe to access seven year debt within its normay desired LTV range on very attractive terms, and the Directors beieve that this avaiabe capita shoud aow the Group to continue to compete transactions quicky, thus giving it another competitive advantage. As at 30 September 2016, the weighted debt expiry was 5.8 years which increased to 6.2 years after the atest BerinHyp refinancing in October As a matter of poicy, the Group is currenty targeting debt gearing eves of no more than 40 per cent. at Group eve, which it expects to achieve no ater than 31 March 2018, and to operate between 40 per cent. and 45 per cent. unti then, provided that market conditions and vauation yieds on its assets remain consistent with the current position. When appraising future acquisition opportunities, the Board wi consider the market conditions, the overa impact on the Group LTVs and the appropriate financing mix for the transaction. This may incude acquiring otherwise financeabe assets on an unencumbered basis. This has the benefit of reducing LTVs and providing fexibiity in the event of any market downturns. With the benefit of increased scae, the Group may seek to move away from asset-by-asset debt financing and towards corporate faciities or other forms of corporate eve financing with attendant benefits in fexibiity and cost. As at 30 September 2016, the Group s LTV was 41.7 per cent. and is 44.3 per cent. (based on a book vaue of Miion) at 7 February 2017, being the ast practicabe date prior to the pubication of this document. A detaied breakdown of the Group s current borrowings as at 30 September 2016 can be found in note 20 of Part VIII of this document. 4. THE PORTFOLIO The Group has buit a substantia portfoio of assets in Germany. As at 30 September 2016, the Group owned 42 industria and office business parks, with a market vaue of miion. As at 30 September 2016, the Group s business parks had pot sizes totaing 2.3 miion square metres with over 400 buidings comprising 1.4 miion square metres of gross ettabe area. Within this, the Group s sites have, in tota, over 164,000 square metres of non-income producing surpus and that can potentiay be deveoped or sod. Most of the parks are mixed-use, muti-tenant office, industria and storage assets ocated throughout Germany. The Group has invested significanty in, and transformed, the mature assets to provide higher-quaity accommodation with the addition of services such as conferencing, meeting room and catering offerings. The Group has aso encouraged food and fitness centre operators to operate on many of its sites. The Group s current portfoio consists of a good baance of high-quaity stabe assets, mature assets which have been fuy or cose-to-fuy transformed and assets which have significant unreaised vaue-add potentia. The Group speciaises in arge-scae commercia and office rea estate assets, which are usuay ocated in business parks surrounding the major conurbations of Germany and which are et to 40

41 tenants ranging from major internationa industria tenants to singe office tenants and individuas who rent space for sef-storage. The Directors beieve that these commercia rea estate assets wi continue to offer attractive investment opportunities because of the high net initia yieds at current acquisition prices, the sustainabe income streams and the potentia for onger term capita growth through active asset management and deveopment initiatives. The usage mix of the Group s portfoio, as at 30 September 2016, between arge-scae production space, conventiona office space, conventiona storage space and the Group s fexibe Smartspace products can be seen on the foowing chart: Usage Mix of Net Lettabe sq. m The renta income and occupancy of the Group, as at 30 September 2016, broken down by usage is iustrated by the foowing tabe: Annuaised Net Lettabe Occupied Renta Rate Per Usage Type sq. m sq. m Income sq. m Occupancy % Office 335, ,293 21,611, % Storage 479, ,006 15,166, % Production 357, ,728 16,755, % Smartspace 80,438 53,181 4,156, % Other 119, ,315 6,639, % Non Occupancy Reated 2,893,084 Tota 1,371,360 1,097,523 67,222, % The Group s typica asset is a business park which combines either one or a sma number of anchor tenants that occupy a significant proportion of the occupied area of the property. These tenants comprise the majority of the top 50 tenants which make up 48 per cent. of the tota annuaised renta income of the Group. Due to the nature of the mixed-use business parks operated by the Group, the anchor tenants usuay ease a combination of production, storage and office space. The Group is mindfu of the need to retain a good mix of tenants across the whoe portfoio so that the Group has both ong-term income, which makes it easier for the Group to access attractive financing terms and higher margin, shorter-term income, which enabes it to drive income and, consequenty, the vaue of the assets. The Group s tenant mix spit, as at 30 September 2016, can be seen in the foowing tabe: % of Tota Annuaised Annuaised No. of Occupied Renta Renta Rate Per Type of Tenant Tenants sq. m Income Income sq. m Top 50 Anchor Tenants ,431 32,283,912 48% 4.99 Smartspace SME Tenants 1,675 53,181 4,156,365 6% 6.51 Other SME Tenants 1, ,911 30,782,128 46% 5.08 Tota 3,678 1,097,523 67,222, %

42 4.1 Large-Scae Industria and Office Space The Group s 50 argest anchor tenants, which, as at 30 September 2016, make up approximatey 48 per cent. of the Group s annuaised renta income, mainy consist of arge internationa corporations. These anchor tenants provide security to the Group s renta income due to their ong term tendencies as we as the industria nature of their businesses and the space they occupy. Whist higher returns may come from the smaer tenants, these arge tenants provide strong covenants for debt providers of the Group who assess this when granting and determining the pricing of bank faciities. Large-scae industria and office space represents approximatey 48 per cent. of the annuaised renta income, as at 30 September The tabe beow sets out the Group s top 10 tenants across its portfoio by annuaised renta income, as at 30 September 2016, iustrating the income provided by the Group s anchor tenants: % of Tota Annuaised Annuaised Top 10 Tenants Occupied sq. m Renta Income Renta Income No. 1 36,673 2,029, % No. 2 18,873 1,785, % No. 3 34,842 1,593, % No. 4 32,962 1,561, % No. 5 35,005 1,493, % No. 6 39,731 1,302, % No. 7 18,179 1,208, % No. 8 17,695 1,080, % No. 9 19,276 1,024, % No ,062 1,020, % Tota 277,297 14,101, % 4.2 Conventiona workspace for the SMEs In addition to arge-scae production faciities, the Group aso provides smaer-scae conventiona workspace, predominanty for SMEs. This comprises office, industria or storage space, and is et on both a ong-term and short-term basis. This space appeas to German SMEs because of the size and fexibiity of the offering. Given the nature of the industry, this resuts in higher demand, which enabes the Group to repace existing tenants with higher paying, faster growing SMEs on a reguar basis. The Directors beieve that the strength of the Group s saes and marketing patform (as outined in Section 3.4 of Part VI of this document) and its poicy of pricing products at the bottom of the upper quartie of the next best aternative aow it to keep the avaiabe space in this category at a high rate of occupancy. Conventiona workspaces represent approximatey 46 per cent. of annuaised renta income, as at 30 September Fexibe Smartspace for SMEs In addition to more traditiona business park accommodation, the capex investment programme supports more entrepreneuria deveopments such as the Smartspace range of products which are generay created from sub-optima space. The Smartspace product range consists of Smartspace serviced Office; Smartspace Sef-storage; Smartspace FexiLager (ower end storage); and Smartspace Workbox (serviced factory space), as detaied beow. These are avaiabe on fexibe ease terms with a-incusive monthy charges and provide an attractive fexibe accommodation soution to sma, and particuary, growing companies. With respect to creating this type of space from the industria business parks that the Group owns, it is a unique provider in the German market. Smartspace is highy accretive to the Group because it enabes sub-optima space to be refurbished and eased at materiay higher rents than the Directors beieve woud otherwise be achievabe, based on market evidence. As at 30 September 2016, the average rent received from Smartspace tenants was 6.51 per square metre per month, which is approximatey 29 per cent. higher than the rent from more traditiona arge scae commercia space and conventiona workspaces. In addition, the Group is abe to increase returns from Smartspace through the provision of high margin anciary services, such as conferencing, catering, teephony and internet services. 42

43 Smartspace products currenty represent 6 per cent. of the net ettabe space, as at 30 September 2016, athough the Group aims to be coser to 10 per cent. on competion of the capex investment programme. 4.4 Smartspace Office The Smartspace Office product is created from excess office space on the Group s business parks, and can be compared to conventiona, serviced offices where tenants rent by office with a fixed a-incusive price per month. As at 30 September 2016, the Smartspace office product had been created on a net ettabe area of 30,544 square metres and had been et at an occupancy rate of 78 per cent.. Before and after Rupert-Mayer-Straße business park in Munich The Sirius Business Park in Munich was acquired from Siemens in At that time, Siemens was the main tenant occupying more than 60,000 square metres of the tota 71,782 ettabe square metres of the site. Siemens has competey vacated the site since the Group acquired this asset, and part of the space returned by Siemens was a 9,364 square metre office buiding (which has been predominanty re-et on a conventiona basis) of which 1,561 square metres was aso transformed into Smartspace offices. Approximatey 65 per square metre was invested into the transformation, and as at March 2016 the space was 97 per cent. occupied with a renta rate in excess of 9.00 per square metre per month (excuding service charge contribution). The conversion of this space to Smartspace has provided optionaity, fexibiity and cost certainty to potentia tenants, as we as a higher renta rate per square metre for the Group. In January 2017, the Group notarised the sae of its Rupert-Mayer Straße business park in Munich for 85.0 miion to a Munich based consortium. Competion of the sae is expected to be in Apri The sae price represents a 9 per cent. premium to book vaue of 78.1 miion as at 30 September Smartspace Workbox (Serviced factory space) Smartspace Workbox is created by converting arge sub-optima has into smaer units with separate access. The Directors beieve that these spaces are much more desirabe to the tenant market. The product is popuar with sma and growing companies such as etaiers that require ess space than a typica industria unit that is avaiabe on industria business parks. The Smartspace Workbox product provides the business park with a diverse offering aongside the other arger has that have not been converted. This is aso reevant to the Smartspace Office product and is one of the reasons that the Group achieves a high conversion rate of enquiries to saes. Tenants are prepared to pay significant premiums to conventiona rents for fexibe and smaer sized offerings such as the Smartspace Workbox product. 4.6 Smartspace Sef-storage The Smartspace Storage product is simiar to that of conventiona sef-storage and is usuay created from basements and redundant has within the business parks. The cost to create Smartspace Storage in these spaces is usuay between 50 to 150 per square metre, which is typicay significanty ower than the Group s competitors in more traditionay purpose-buit 43

44 sef-storage centres. One of the reasons that the Group is abe to operate this product cost effectivey is because it is abe to secure customers for its sef-storage faciities through its own marketing initiatives. The average occupancy as at 30 September 2016 of the tota Smartspace Storage faciities is 72 per cent. but this is much higher for mature sites (greater than 12 months operation) in the Group s five key regions. The average renta rate per square metre achieved by Smartspace Storage, after adjusting for service charge costs and aocation of common areas, is 5.53 per square metre per month, which is much higher than the amount achievabe from this space prior to investment. 4.7 Before and after- Sirius Business Park München-Neuaubing Within the Sirius Business Park München-Neuaubing a basement area of 2,038 square metres, which had remained unet for many years, was converted into Smartspace storage for a cost of 129 per square metre. This was subsequenty et by March 2016 to 91 per cent. occupancy at a renta rate in excess of 7.00 per square metre per month (excuding service charge contribution). This represents a substantia upift compared to what the basement coud have been et for before the transformation. This case study is typica of the kind of Smartspace Storage conversions that the Group undertakes. 4.8 Smartspace FexiLager The Smartspace FexiLager product is predominanty used by the Group on a temporary basis and is a cost effective way of converting sub-optima space into a basic storage product, by using wire fencing and pastic sheeting to separate the storage areas. The product is used to test the eves of demand for storage in a particuar area, whie providing an immediate revenue stream from otherwise normay vacant space. FexiLager provides imited vauation upift to the asset and is often converted to another Smartspace product at the appropriate time, once demand has been proven. The tota Smartspace portfoio, as at 30 September 2016, is iustrated in the tabe beow: Annuaised % of Renta Tota Rate Per Income Annuaised sq. m Smartspace Occupied (exc Service Renta (exc Service Product Type Tota sq. m sq. m Occupancy Charge) Income Charge) % Smartspace Office 30,544 23,811 78% 2,180,702 52% 7.63 Smartspace Workbox 5,526 3,723 67% 280,786 7% 6.28 Smartspace Storage 23,699 17,083 72% 1,133,028 27% 5.53 Subtota* 59,769 44,618 75% 3,594,515 86% 6.71 Smartspace Fexiager** 20,668 8,563 41% 561,850 14% 5.47 Smartspace Tota 80,438 53,181 66% 4,156, % 6.51 ** adjusted for common areas ** not adjusted for common areas 44

45 4.9 Property Locations The Group s business parks are ocated throughout Germany. The main areas of focus in the immediate future wi be in and around Berin, Frankfurt, Stuttgart, Munich, the industria Rhine Corridor (Bonn, Coogne, Dussedorf), Dresden and Hamburg. The Group aready has sites in a of these areas, apart from Hamburg. The ocations of the portfoio as at 30 September 2016 are outined in map beow: The foowing tabe summarises the portfoio in each of the major areas in which the Group currenty operates as 30 September 2016: No. Net Market Annuaised EPRA of Lettabe Rate Per Vacant Vaue Renta Annuaised Gross Net Net Region Sites sq. m Occupancy sq. m sq. m (rounded) Income NOI Yied Yied Yied* % % % % Berin 5 191,546 91% , ,900,000 10,858,719 10,122, % 7.9% 7.3% Frankfurt 7 236,879 86% , ,670,000 11,925,426 10,980, % 8.0% 7.4% Stuttgart 5 204,781 84% ,480 91,620,000 8,802,108 7,547, % 8.2% 7.6% Munich 2 153,026 82% , ,500,000 10,054,961 9,201, % 6.2% 5.7% Other West Locations **** ,139 85% , ,880,000 11,163,211 10,250, % 8.2% 7.6% Dresden 1 59,246 64% ,120 28,400,000 2,713,954 2,307, % 8.1% 7.5% Bremen 3 179,131 51% ,029 32,860,000 3,491,264 2,074, % 6.3% 5.8% Other 8 160,613 84% ,300 87,760,000 8,212,762 7,220, % 8.2% 7.6% Tota 42 1,371,360 80% , ,590,000 67,222,405 59,703,512** 8.6% 7.7% 7.1% Post Sep 2016 Acquisition*** Wiesbaden (Frankfurt Region) 1 19,602 65% ,939 17,658,382 1,877,793 1,598, % 9.1% 8.4% Krefed II (Other West Locations) 1 6, % ,894, , , % 13.5% 13.1% Dreieich (Frankfurt Region) 1 12,905 29% ,110 4,584, ,345 41, % 6.3% 0.9% **** incudes estimated purchaser costs **** Site eve NOI ony **** A amounts referred to are in reation to acquisition vaues **** Bonn, Kön, Wupperta, Düssedorf, Soingen, Aachen and Krefed 5. PORTFOLIO VALUATION The foowing tabe summarises the market vaue of the Group s property assets as at 30 September 2016 (except for the Wiesbaden and Krefed assets, which were vaued at 5 Juy 2016 and the 45

46 Dreieich asset which was vaued at 19 October 2016), as set out in the vauation report contained in Part XI of this document: Properties vaued under 10 miion Site Site Address Kie Wittand 2-4 Kirchheim-Nabern Neue Straße 95 (Geb. 60/35) Wupperta Ludwig Richter Straße 7 Mainta Phiipp-Reis-Straße 17 Offenbach Sprendinger Landstraße 180 Bremen Dötinger Straße 3 Bremen Rigaer Straße (HAG) 1 Magdeburg Lübecker Straße Soingen Georgestraße 5-7 Düssedorf Heerdt Wiesenstraße/Carissenstraße 51 Kasse Heinrich-Hertz-Straße 11 Bonn II Siemensstraße Ludwigsburg Osterhozaee Weiimdorf Rossbachstrasse 38 Aachen-Würseen II Adenauerstraße 20 Krefed II Europark Fichtenhain B 15 Dreieich Otto-Hahn-Str. 36 Properties vaued between 10 miion and 15 miion Rostock Industriestraße 15 Hannover Am Brabrinke 14 Berin Großbeerenstraße 2-10 Bonn Siemenstrasse 2-50 Kön Wihem-Ruppert-Straße 38 Düssedorf Am Trippesberg/Reishozer Werftstraße 92/76 Bayreuth Riedinger Straße 16 Markgröningen Hans-Grüninger Weg 11 Krefed I Kimperstrasse Properties vaued between 15 miion and 20 miion Berin Gartenfeder Straße Offenbach Car-Legien-Straße 15 Pfungstadt Werner-von-Siemens-Straße 2 Kön Ruth-Haenseben-Str. 4-6 Wiesbaden Mainzer Straße 75 Properties vaued between 20 miion and 25 miion Bremen Hermann-Ritter- Straße 108 Nürnberg Katzwangerstraße 150 Berin-Mahsdorf Landesberger Straße , , , Aachen-Würseen Adenauerstraße 20 Heidenheim In den Seewiesen 26 Properties vaued between 25 miion and 30 miion Mainta Am Technoogiepark 1-5 Mainz Robert-Koch-Str. 50 Dresden Zur Wetterwarte/Hugo-Junders-Ring Properties vaued between 30 miion and 35 miion Potsdam-Babesberg Wetzarer Straße 28-58A, 62+64, Properties vaued between 35 miion and 40 miion Berin Egestraße 21 Kirchheim-Nabern Neue Straße 95 Mannheim Car-Reuther-Straße 1 Properties vaued between 70 miion and 80 miion München-Neuaubing Brunhamstraße 21 München Rupert-Mayer-Straße 44 46

47 6. GERMAN PROPERTY MARKET 6.1 Overview The Group operates in the German rea estate market, owning and managing a portfoio of 44 business parks across Germany as at 7 February 2017 (being the ast practicabe date prior to the pubication of this document). As at 30 September 2016, the Group owns and operates 1.4 miion square metres of gross ettabe space with a NAV of 451 miion. Marketed under the Company s brand, each business park offers fexibe workspace and services to suit SMEs aongside conventiona space which is more suited to nationa and internationa corporates. The sites are marketed centray, enabing the Group to offer space across the country, with the fexibiity for tenants to configure space according to their needs. In addition, the Group offers a range of innovative products incuding Smartspace, Smartspace FexiLager and FexConnect. The Group benefits from the dynamics of the wider German economy, which is characterised by strong underying fundamentas and a we-deveoped business environment. 6.2 The German Economy Germany is the argest economy in Europe, with a GDP of $3.4 triion, representing 20.1 per cent. of tota EU GDP. The economy has recovered since the financia crisis of , deivering rea GDP growth above that of the EU15 (the origina 15 EU members). This performance is expected to continue, with GDP forecast to grow by 1.8 per cent. in 2016 and by 1.6 per cent. in 2017 according to the OECD. Domestic demand is a key driver of Germany s economic growth and is forecast to be the argest driver of growth in 2017 as private consumption expenditure rises against a background of more favourabe deveopments in empoyment conditions. As at October 2016, Germany had the second owest rate of unempoyment in the European Union, at 4.1 per cent. (Statista). The Ifo, one of Germany s argest economic research institutes, expects the positive basic trend in the German abour market wi continue. Rea GDP Unempoyment rate as a per cent. of abour force Footnote 1 to the above graphs: Euro area countries which are OECD members. Footnote 2 to the above Rea GDP graph: Incudes Denmark, Sweden, Switzerand and the United Kingdom. They are weighted on the basis of GDP at 2011 purchasing power parities. Footnote 4 to the above Unempoyment rate as a per cent. of abour force graph: Incudes Denmark, Sweden, Switzerand and the United Kingdom. Source: OECD (June 2016) Monetary poicy in Germany, as set by the ECB, continues to be accommodating to both business and consumer spending Economic growth has rebounded quicky since the goba financia crisis that started in A competitive manufacturing sector and Euro depreciation have driven strong export performance. The proonged, favourabe financing conditions, driven by record ow centra bank rates, are providing positive stimui for rea estate and capita investment. With borrowing costs at historic ows, the German rea estate sector is we-positioned to absorb a rise in borrowing costs if there is a reverse in the current rate trend. German business investment has recovered at a sower rate since the trough seen in 2009 as compared with other European nations. Nevertheess, Euro area monetary conditions are reativey oose for the cycica position of the Germany economy, as economic growth and empoyment have been stronger than esewhere in the Euro area, and the output gap in 47

48 Germany is now ikey to be sma. The OECD expects this recovery to continue into 2017 with year-on-year gross fixed capita expansion of 3.6 per cent., up from 3.1 per cent. in 2016 and 1.7 per cent. in In addition to supportive monetary poicy, high net migration to Germany is underpinning growth in residentia construction. In the construction sector, the business cimate indicator continued its record-breaking run in October 2016, rising for the seventh month in succession. Rea non-residentia business investment Footnote 5 to the above graph: Incudes Denmark, Sweden, Switzerand and the United Kingdom. They are weighted on the basis of investment spending in Source: OECD (June 2016) According to the Ifo Business Cimate Index, sentiment in the German economy improved consideraby in September 2016, rising to from points in August (seasonayadjusted), the index s highest reading since May Improved sentiment in manufacturing, whoesaing and retaiing drove the index performance. Readings continue to recover towards post financia crisis peaks, foowing a period of decine in Manufacturing and services sectors in Germany have been buoyant in 2016, with PMI readings showing expansions in every month to December. E: Ifo Business Cimate Index in Germany Footnote 1 to the above graph: Manufacturing, construction, whoesaing and retaiing. Source: Ifo Business Survey (September 2016) 48

49 6.3 The German SME Market The Group s strategy is to provide fexibe workspace for the German SME market, aongside more conventiona space typicay occupied by nationa and internationa corporates. SMEs, defined by Eurostat as enterprises with fewer than 250 empoyees, represent a fundamenta piar of the German economy and form a significant part of the Company s tenant base. According to KfW, per cent. of German enterprises are SMEs and 68 per cent. of workers (29.1 miion peope) are empoyed by an SME in Germany. SMEs invest 158 biion in new buidings and faciities, representing a share of 27 per cent. of the tota gross fixed capita formation, and 45 per cent. of tota corporate investment. Within this SME category, micro enterprises with fewer than 10 empoyees account for 34 per cent. of workpaces. Service industries dominate, accounting for three quarters of SMEs. Mirroring wider business sentiment in Germany, SME sentiment reached its highest eve in two and a haf years in September 2016, when the KfW-ifo business cimate index for SMEs recorded its argest rise since August The return to a more positive outook is underpinned by an expectation that domestic demand, an important driver of SME performance, wi remain buoyant. The recent spike in sentiment has aso been attributed to an easing in concerns over the impact on German businesses of the UK s decision to eave the EU. Source: Ifo, KfW (October 2016) 6.4 Commercia Rea Estate Market Independent industry anaysis from Coiers Internationa has shown that demand for office space has intensified in German cities in Q Activity in Germany s seven argest office markets increased, with take-up of space over the first nine months of 2016 totaing approximatey 2.7 miion square metres, an increase of approximatey 15 per cent. year-on-year. This is a return to the peak recorded in 2007 prior to the financia crisis, exceeding the ten-year average by 24 per cent.. Since the UK s vote to eave the EU, there are sti no cear signs of any direct impact on the German office easing markets. Industry anaysts beieve the situation is unikey to change in The strength of SME tenant demand is iustrated by the fact that units of 5,000 square metres or ess accounted for more than two thirds of the 554,000 square metres of commercia and ight industria property space taken up in the first haf of Units beow 10,000 square metres aso recorded an average net absorption of 14.9 per cent. compared with arger units (greater than 10,000 square metres), where net absorption was 11 per cent.. Renta price trends across Germany as a whoe are positive, with Berin, Dussedorf, Hamburg, Stuttgart and Munich showing growth in average rents. The Group continues to pursue a strategy of geographic diversification within Germany in order to spread risk and capture upside from regiona variations whist aso custering around key ocations to make the best use of its oca teams and knowedge. 49

50 Source: Coiers Internationa (Q3 2016) Strong demand for space and moderate new-buid activity combined with a decrease in avaiabe accommodation has caused ongoing vacancy absorption in office space across a ocations. At the end of September 2016, approximatey 4.5 miion square metres of office space was avaiabe for immediate tenancy in Germany s argest seven cities, which represents a reduction of 560,000 square metres year-on-year. The nation-wide vacancy rate was recorded at 5.1 per cent., which represents an improvement of 20 basis points from the previous quarter and 60 basis points down year-on-year. The owest vacancy rates are recorded in Munich and Stuttgart (3.1 per cent.), foowed cosey by Berin (3.2 per cent.). The sighty higher vacancy rates in cities such as Dussedorf (7.5 per cent.), Coogne (5.6 per cent.) and Hamburg (5.0 per cent.) create ess pressure on suppy. 6.5 Industria Rea Estate Market Industria rea estate in Germany comprises a spectrum of property types, incuding business parks, warehouse/ogistic properties, ight manufacturing properties and converted properties. A four of these categories are characterised by aternative use potentia, reversibiity of use, and a genera suitabiity for muti-tenant occupation. Business parks tend to consist of a number of separate buidings with a centra management function and shared infrastructure, and are typicay muti-tenanted and situated in suburban ocations with good transport inks. Warehouse and ogistic properties are generay defined as schemes with simpe storage faciities, which are typicay characterised by reversibiity of use. Warehouse and ogistics properties beow 10,000 square metres vary in fit out standard and configuration which makes them fexibe and affordabe soutions for SMEs. Light manufacturing properties consist of individua warehouse structures, which are principay suitabe for aternative use types, such as storage, research and deveopment, and services, as we as for whoesae and retai trading, in a fexibe and reversibe manner. Converted properties refers to transformed and revitaised commercia rea estate, which is often ocated cose to town centres, comprising a mix of period and new-buid, which permit muti-tenant schemes and a high degree of fexibiity. Improved investor understanding of industria rea estate, combined with the reativey ow rates of return possibe from more estabished asset casses, have prompted growing interest in mixed use industria and commercia rea estate, known as Unternehmensimmobiien. The first haf of 2016 saw tota transaction vaue of 775 miion for this cass of German rea estate, a 27 per cent. increase on the same period in Demand for ight manufacturing properties remains particuary strong, with investment reaching approximatey 260 miion during the same period, the equivaent of 33.5 per cent. of a industria rea estate investment in the first haf of The investment voume of the first haf-year of 2016 topped the mid-year tota 2015 by amost 40 per cent. in the category of converted properties and around 1.5 per cent. in the business park category. At approximatey 196 miion, converted properties were the category that attracted the second-highest demand in H

51 Investment voume in miion Euros by property type. Source: IUI Market Report, September 2016 In 2015 and in the first six months of 2016, property deveopers and principas represent the group with the argest voume of disposa and institutiona funds were the dominant buyer group. Improving asset pricing is refected in yied compression, which is seen particuary in converted properties which recorded an average yied of 8.4 per cent. in 2015, versus an average on disposa of 6.2 per cent. in the first haf of Light manufacturing properties experienced the east yied compression. Despite some compression, the income return refected by these yieds remains attractive against many other asset casses. The average yied across a four Unternehmensimmobiien casses was 8.2 per cent. at the end of the first haf of Renta price growth continues, with the attraction for tenants of fexibe space supporting 13 per cent. growth in monthy prices from the second haf of 2015 to the first haf of Average rents by use (Roing haf-year periods: /m²/month) Source: IUI Market Report, September REASONS FOR MOVE UP On 28 November 2016, the Group announced that it intended to move its isting to the Main Market and, subject to meeting eigibiity criteria, for its share capita to be admitted to the premium segment of the Officia List of the UK Listing Authority and to trading on the Main Market of the LSE. The Company has appied for the transfer of its AtX isting to the Main Board. The Directors beieve that the proposed move to the Main Market and the Main Board wi: provide a more appropriate patform for the continued growth of the Group and further raise its profie and status as a high quaity rea estate business; pace the Company in a better position to achieve improved iquidity in its Ordinary Shares due to the higher number of institutiona investors who reguary trade in shares of companies admitted to the Main Market and the Main Board and the higher profie of such companies; faciitate the onger term ambitions of the Company, increase its appea to a broader range of internationa investors and, subject to meeting the reevant criteria, aow the Company to benefit from incusion in certain indices; and further deveop the Company s corporate governance, reguatory and reporting discipines. 51