I am honored to accept the challenge of being tasked to turn around the fortunes of GHC a high profile victim of Bahrain’s 2008 real estate downturn. As of today we have acted swiftly to restructure the business and remarkably announced the reactivation of one of our main projects “Villamar”.

The company has good assets and all stakeholders realized that GHC offers good potential and that we needed to do whatever it would take to give it another lifeline, to meet our financial and ethical commitments to the market and rebuild our image. One of our main priorities was to assemble a new and experienced management team capable of turning around the company. Key appointments have already been made in investments, engineering, marketing, business development and administration functions.

The main goal is to create a “shock resistant” business model so we are well equipped to handle the next economic cycle. Establishing new revenue streams and targeting service oriented income and not just direct investments are keys to success.

With the restructuring and project reactivation underway, GHC could well be one of the region’s great turnaround stories of the year. Restoring confidence among stakeholders sends a stronger message and people have started to believe in us again and are confident that GHC will deliver on its commitments.

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Majed Al KhanChief Executive Officer

Gulf Holding Company Newsletter

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Bahrain Real Estate General Market Update

The drop in oil prices and the gradual elimination of crucial subsidies in Bahrain and the GCC market continues to affect sentiment regionally; however, this should be a temporary effect as Bahrain continues to be a relative stable and low cost base option for both residents and businesses compared to the GCC region.

The general demand for real estate in Bahrain is soft but stable and price the key driver in a very self-conscious market. The removal of subsidies such as electricity and water will most likely shrink the bottom line for both landlords and leaseholders as the former will likely cap any inclusive lease agreements and the latter will seek to negotiate better deals.

As household and business budgets come under more inflationary pressure there are increasingly signs of tenants seeking better value for money. It is also notable that some landlords continue to have a high occupancy rate and able to charge a slight premium if the provider offers high quality property management, services and maintenance packages.

The overall demand picture from a long term perspective continues to be positive in Bahrain, the limited amount of land available, growing young population and finally the growing numbers of tourists are all long term positive factors. Furthermore, Bahrain’s government effort to attract GCC and international tourists is gradually showing positive signs; especially with the new ‘visit visa’ law amendments to enter the Kingdom of Bahrain and the number of beach front hotels and recreational projects under development.

Bahrain Real Estate Residential Apartment Market Update

The demand for residential apartments in key areas such as Seef, Juffair, Reef, Bahrain Bay and Amwaj continues to be solid, where average selling prices per sq.m ranges from BHD 650 to BHD 1,300 depending on area and unit size. The demand for smaller units continues to be high and developers are able to charge a larger premium on top of the added costs involved with smaller units. Market research continues to indicate that end users key decision maker to purchase, is the unit total selling price and not the price per sq.m. However, the entrance of many developers targeting the same segment of the market will undoubtedly increases supply which will eventually put pressure on prices.

The overall rental demand in the main market and submarket continues to be flat in terms of rental prices. However, areas such as Amwaj, Juffair, Saar and Seef continue to be favorable for expatriates given the high end life style, amenities and schools available close by. The average rental rate continues to vary from BHD 625 to BHD 1,000 per month for 2 and 3 bedrooms depending on the area and building quality. It is also important to note that tenants are always seeking better values so it is important for landlords to offer exceptional services to retain and increase occupancy. As the supply of new units comes available and the tightening of household’s budget coming under inflationary pressure, flexibility catering to market demand and pressure is important to win market share in a stagnated market.

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Gulf Holding Company continues to build up its senior management team as the Villamar development continues to gain traction. As of today GHC employs a new and experienced operational team collectively bringing more than 70 years of real estate experience; a team that is working tirelessly to turn around the company to honor all of its obligations and commitments to sustainably protect and grow shareholders value over the coming years.

Gulf Holding Company would like to welcome its new team members that includes;

Mr. Majed Al Khan as Chief Executive Officer, Mr. Al Khan is a well-reputed businessman with extensive experience across various sectors including banking, investments, industry, trading and contracting across the GCC. He holds a Bachelor’s degree in International Accounting and Finance from the University of Northumbria at Newcastle, England. His experience comes from a career background which includes senior positions in HSBC Middle East, Capivest (Khaleej Finance & Investment) and finally as Deputy CEO of Inovest (formerly known as Tameer). Mr. Al Khan specializes in financial engineering and value enhancement of real estate and private equity products.

Mr. Laith Yousif Al Memar as Chief Development Officer, Mr. Al Memar has over 30 years of commercial and residential real estate experience, which includes structuring investments, fund management, logistics, property management and executing new developments. Prior to joining Mr. Al Memar was the CEO of Al Khaleej Development Co (Tameer) until 2015. He was also a board member and managing director of several companies, including Bahrain Investment Wharf, Tamcon Contracting, Tala Island Development and Durrat Marina. Mr. Al Memar holds a BSc degree in Architecture from the University of Technology in Baghdad.

Mr. Ahmed Jamsheer as Senior Manager of Investment, Mr. Jamsheer past experience was the head of the overall investment portfolio at Fortuna Company and Finance Director at Promoseven Holdings. Mr. Jamsheer has great exposure and experience in real estate (development, management & acquisitions), equities, fixed income, private equity and alternative investments. Mr. Jamsheer has a strong educational background graduating with high distinction from Bentley University located in Waltham, Massachusetts for both his Undergraduate and Graduate degrees.

Mr. Mahmood Al - Kamel has also been recently appointment as Acting Head of Business Development. Mr Al - Kamel has more than 12 years of experience in Business Development & Investor Relations. He joined Gulf Holding as an Assistant Vice President back in 2007 and continued serving till now. During his stay with GHC he played an important role to identify potential markets and developed strategic relationship with clients. Mr Al-Kamel has previously worked for Gulf Air, Ministry of Commerce and United Gulf Bank. He holds BSc in accounting from the University of Bahrain.

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Villamar Update

GHC is glad to announce that the “Villamar” development is back on track and the contractor has re-mobilized to the site after concluding strategic rescheduling terms with the project main financers (Al-Rajhi Bank), the contractor (Al-Hamad), and strategic guarantor (GFH Financial Group).

The construction permit has been renewed, the consultant’s panel has been engaged and; to date, almost 45% of the project has already been completed and remaining shall be completed within 48 months through 2 phases. The first phase is expected to take 24 months and will include completing entire structural works, entire external finishes, and internal finishes of both tower B and common areas. This will enable us to hand over tower B to the existing buyers and regain market confidence in the project and GHC as a major developer in the Bahraini market. The second phase which is expected to take 24 months will include finishing the remaining works required for handing over the remaining unsold units. GHC has the option to initiate both phases on a collective and parallel basis.

As of end of April 2016, the contractor has initiated the following main tasks;

· Remobilization to the site.

· Installation of the aluminum panels including the commencement of the curtain wall works.

· New shuttering is being prepared to receive steel reinforcement for the slab.

· Steel reinforcement bars are supplied cut, bend and fixed at ground floor level.

· Steel lapping reinforcements are cleaned and treated.

· Samples are being tested for expansion joint repairs.

· Testing all existing cables.

· Checked, maintained and tested all tower cranes, hoists, cradles, concrete placing boom and slip-form system.

· Currently more than 350 appointed manpower’s and in the process of recruiting more than 350 workers and 50 staff members.

The sales process to market the remaining units is expected to start in the near future and the retail area is expected to generate significant demand especially since the majority of the units are water front in a prime city center location linked to the ‘Avenues Mall’.

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1 August 2015GHC announced the signing of restructuring agreements with support from Al Rajhi Bank (original majority financiers of the project),GFH (the project’s new financiers) and Al Hamad Construction (the project’s contractor).

8 December 2015GHC has announced the appointment of COWI, an international Danish engineering consultancy firm, to provide consultancy services for the construction work related to the US$700 million Villamar@ the Harbor project in Bahrain.

15 February 2016GHC received the UAE delegation led by H.E. Yafea Eid Al Faraj, Executive Director of the Ajman Real-Estate Regulatory Agency (ARRA). During this visit, the UAE delegation had a first-hand account of Villamar’s progress, and also examined various best practices relating to project management, construction, design, execution and other critical aspect.

21 March 2016To carry out the construction works in accordance with the best possible practice GHC announced the appointment of Projacs International as the project management consultant, and Haj Gulf as the cost management consultant.

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9 May 2016Gulf Holding Company (GHC), the developer of Villamar project, received a high-level delegation from the Ministry of Works, Municipalities Affairs and Urban Planning. The delegation was headed by Minister Eng. Essam bin Abdullah Khalaf accompanied by Undersecretary of Municipalities Affairs Dr. Nabil Mohammed Abul Fateh and head of the Municipal Center Eng. Salem Al Qouti.

Gulf Holding CompanyBahrain Financial Harbour,

East Tower 30th floor,P.O. Box 23239, Manama, Kingdom of Bahrain

(T) +973 17102102, (F) +973 17102100www.gfholding.com

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