ORCO PROPERTY GROUP A public limited liability company … · 2019. 5. 30. · i ORCO PROPERTY...

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ORCO PROPERTY GROUP

A public limited liability company (société anonyme)

organised under the laws of the Grand Duchy of Luxembourg (the "Company")

Admission to trading of 314,507,629 ordinary shares

This prospectus (the "Prospectus") provides information in relation to the admission to trading on the

regulated market of the Luxembourg Stock Exchange (the "Luxembourg Stock Exchange") which

constitutes the regulated market for the purposes of Directive 2004/39/EC of the European Parliament and

of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (the

"MiFID") of 314,507,629 ordinary shares (ISIN code LU0122624777) with an accounting par value of €

0.10 each, representing the entire share capital of the Company and issued by the Company under the

laws of the Grand Duchy of Luxembourg (the "Shares").

The Prospectus also provides information in relation to the admission to trading on the regulated market

of the NYSE Euronext Paris which constitutes the regulated market for the purposes of MiFID, of

200,000,000 shares (issued on 10 November 2014 and not yet admitted to trading on any regulated

market) out of the Company's entire share capital, since 114,507,629 shares have already been admitted

to trading on the regulated markets of NYSE Euronext Paris.

Application has been made for the shares, as detailed above, to be admitted to trading on the regulated

market of the Luxembourg Stock Exchange as well as on the regulated market of the NYSE Euronext

Paris (the "Admission to Trading").

Investing in the Shares involves certain risks. For more information see the "Risk Factors" section

of this Prospectus.

To determine the tax implications of investing in the Shares in light of each investor's circumstances,

particularly regarding dividends, capital gains and buy-backs, prospective investors are urged to consult

with their own tax advisors prior to making any investment decision.

This Prospectus constitutes a prospectus for the purposes of article 5.3 of Directive 2003/71/EC of the

European Parliament and of the Council of 4 November 2003 on the prospectus to be published when

securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, as

amended (the "Prospectus Directive") and the Luxembourg Law of 10 July 2005 on prospectuses for

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securities, as amended (loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières, telle que

modifiée) implementing the Prospectus Directive in Luxembourg (the "Prospectus Law") and has been

prepared in accordance with the Prospectus Law and Commission Regulation (EC) 809/2004 of 29 April

2004, as amended. The Commission de Surveillance du Secteur Financier (the "CSSF"), the Luxembourg

financial sector supervisory authority in its capacity as the competent authority in Luxembourg under the

Prospectus Law, has approved this Prospectus for the purposes of giving information with regard to the

Company and the Admission to Trading.

By approving this prospectus the CSSF assumes no responsibility as to the economic and financial

soundness of the transaction and the quality or solvency of the Company in line with the provisions of

article 7(7) of the Prospectus Law.

The Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as

amended (the "Securities Act") or with any securities regulatory authority of any state of the

United States, and may not be offered or sold within the United States unless the Shares are

registered under the Securities Act or an exemption from the registration requirements of the

Securities Act is available.

For a description of any restrictions on transfers of the Shares, see "Transfer and Selling Restrictions"

section of this Prospectus.

Neither the Admission to Trading nor the approval of the document by the CSSF shall constitute a

warranty or representation by the CSSF or the Luxembourg Stock Exchange as to the adequacy of the

information contained in this Prospectus or the suitability of the Company for investment purposes.

In accordance with article 16 of the Prospectus Law, copies of this Prospectus will be available in printed

form, free of charge:

at the registered office of the Company:

Orco Property Group, 40 rue de la Vallée, L-2661 Luxembourg

Telephone number: 00 352 26 47 671

Email: [email protected]; and

at the registered office of the Share Agent (as defined in the "Glossary")

Caceis Corporate Trust, 14, rue Rouget de Lisle, 92130 Issy-Les-Moulineaux, France

Telephone number: 00 33 1 57 78 00 00

This Prospectus can also be viewed on the Luxembourg Stock Exchange's website (www.bourse.lu) and

the Company's website (www.orcogroup.com).

Date: 30 September 2015

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TABLE OF CONTENTS

Page

GLOSSARY ................................................................................................................................................................. v SUMMARY OF THE PROSPECTUS ....................................................................................................................... 1 RISK FACTORS ....................................................................................................................................................... 14 MARKET AND INDUSTRY DATA ........................................................................................................................ 28 RESPONSIBILITY STATEMENT ......................................................................................................................... 29 FORWARD-LOOKING STATEMENTS ............................................................................................................... 30 AVAILABILITY OF PROSPECTUS ...................................................................................................................... 32 DIVIDENDS AND DIVIDEND POLICY ................................................................................................................ 33 CAPITALIZATION AND INDEBTEDNESS ......................................................................................................... 34 CAPITAL RESOURCES .......................................................................................................................................... 36 SELECTED FINANCIAL INFORMATION AND OTHER DATA ..................................................................... 41 OPERATING AND FINANCIAL REVIEW .......................................................................................................... 44 INDUSTRY OVERVIEW AND MARKET DATA ................................................................................................ 70 BUSINESS .................................................................................................................................................................. 77 DOCUMENT INCORPORATED BY REFERENCE ............................................................................................ 99 MANAGEMENT AND BOARD OF DIRECTORS ............................................................................................. 100 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS .................................................. 111 GENERAL INFORMATION ON THE COMPANY AND THE GROUP ........................................................ 116 DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY AND APPLICABLE REGULATIONS

................................................................................................................................................................................... 124 LISTING AND ADMISSION TO TRADING ...................................................................................................... 140 TAXATION .............................................................................................................................................................. 142 TRANSFER AND SELLING RESTRICTIONS .................................................................................................. 153 ENFORCEMENT OF CIVIL LIABILITIES ....................................................................................................... 154 INDEPENDENT AUDITORS ................................................................................................................................ 156 ANNEX 1 - INDEX TO FINANCIAL STATEMENT ...........................................................................................F- 1 ANNEX 2 – VALUATION REPORT ....................................................................................................................549

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THIS PROSPECTUS HAS BEEN PREPARED BY US SOLELY FOR THE PURPOSE OF THE

ADMISSION TO TRADING. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,

OR A SOLICITATION OF AN OFFER TO BUY, ANY SHARES BY ANY PERSON IN ANY

JURISDICTION. THE DELIVERY OF THIS PROSPECTUS SHALL NOT UNDER ANY

CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE

COMPANY OR ITS SUBSIDIARIES OR THAT THE INFORMATION SET FORTH HEREIN IS

CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN

EXAMINATION OF THE COMPANY, INCLUDING THE MERITS AND RISKS INVOLVED WITH

RESPECT TO AN INVESTMENT IN THE SHARES. NEITHER THE U.S. SECURITIES AND

EXCHANGE COMMISSION (the "SEC") NOR ANY STATE SECURITIES COMMISSION OR

REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THE SHARES.

FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY

OR TRUTHFULNESS, OR DETERMINED THE ADEQUACY, OF THIS PROSPECTUS. ANY

REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

We are not making any representation to any offeree or purchaser of Shares regarding the legality of an

investment in the Shares by such offeree or purchaser under the laws applicable to such offeree or

purchaser. Each investor should consult with its own advisors as to the legal, tax, business, financial and

related aspects of a purchase of the Shares.

The information contained in this Prospectus is accurate only as of the date of this Prospectus.

The distribution of this Prospectus is restricted by law in certain jurisdictions. No action has been or will

be taken in any jurisdiction by us or our Shareholders that would permit a public offering of the Shares or

possession or distribution of a prospectus in any jurisdiction where action for that purpose would be

required. This Prospectus may not be used for, or in connection with, and does not constitute an offer to,

or solicitation by, anyone in any jurisdiction in which it is unlawful to make such an offer or solicitation.

Persons into whose possession this Prospectus may come are required by us to inform themselves about

and to observe these restrictions. We do not accept any responsibility for any violation by any person,

whether or not such person is a prospective purchaser of Shares, of any of these restrictions. For further

information, see "Transfer and Selling Restrictions" section of this Prospectus.

This Prospectus has been prepared on the basis that all offers of Shares will be made pursuant to an

exemption under the Prospectus Directive, as implemented in member states of the European Economic

Area (the "EEA"), from the requirements to produce a prospectus for offers of securities. Accordingly,

any person making or intending to make an offer within the EEA of Shares which are the subject of this

Prospectus should only do so in circumstances in which no obligation arises for us, our affiliates or our

representatives to produce a prospectus for such offer. With respect to the Admission to Trading, this

Prospectus complies with the requirements of the Prospectus Directive. Copies of this Prospectus are

available for inspection at the registered office of the Company at 40, rue de la Vallée, L-2661,

Luxembourg, Grand Duchy of Luxembourg. This Prospectus will also be published on the websites of the

Company (www.orcogroup.com), and of the Luxembourg Stock Exchange (www.bourse.lu).

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GLOSSARY

In this Prospectus, unless the context otherwise requires:

"1915 Law" refers to the Luxembourg law of 10 August 1915 on commercial companies, as

amended;

"2001 Law" refers to the Luxembourg law of 1 August 2001 on the circulation of securities, as

amended;

"2010 PD Amending Directive" means Directive 2010/73/EU amending Directives 2003/71/EC

on the prospectus to be published when securities are offered to the public or admitted to trading

and 2004/109/EC on the harmonisation of transparency requirements in relation to information

about issuers whose securities are admitted to trading on a regulated market;

"2011 Law" refers to the Luxembourg law of 24 May 2011 on the exercise of certain rights of

shareholders in general meetings of listed companies, as amended;

"ACIT" refers to an advance of CIT;

"Articles of Incorporation" refers to the articles of incorporation of the Company, as amended

from time to time;

"Audit Committee" refers to the audit committee of the Board of Directors;

"Board of Directors" refers to the board of directors (conseil d'administration) of the Company;

"CA" refers to Credit Agricole CIB;

"CEE" refers to Central and Eastern Europe;

"CEO" refers to Chief Executive Officer;

"CFO" refers to Chief Financial Officer;

"CIT" refers to the Luxembourg corporate income tax;

"Company" refers to Orco Property Group, a public limited liability company (société anonyme)

organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 40,

rue de la Vallée, L-2661, Luxembourg, Grand Duchy of Luxembourg, and registered with the

Luxembourg Register of Commerce and Companies (Registre de commerce et des sociétés de

Luxembourg) under number B 0044996;

"Consolidated Annual Financial Statements" refers to the audited consolidated financial

statements of the Company and its subsidiaries as of and for each of the years ended

31 December 2014, 31 December 2013, and 31 December 2012;

"CPI" refers to the consumer price index;

"CPI PG" refers to CPI Property Group (formerly known as ORCO Germany S.A. and GSG

Group), in which the Group has a 4.82% shareholding;

"CSSF" refers to the Commission de Surveillance du Secteur Financier, the Luxembourg

securities regulator;

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"CZK" refers to Czech Koruna;

"D&O" refers to directors and officers;

"Director" refers to a member of the Board of Directors;

"EBITDA" refers to earnings before interest, tax, depreciation and amortization;

"Endurance Real Estate Fund" refers to Endurance Real Estate Fund, a Luxembourg law fonds

commun de placement - fonds d'investissement spécialisé subject to the amended Luxembourg

law of 13 February 2007 on specialised investment funds;

"EPRA" refers to the European Public Real Estate Association;

"EPRA Net Initial Yield" refers to the annualized rental income based on the cash rents passing

at the balance sheet date, less non-recoverable property operating expenses, divided by the gross

market value of the property (calculated by the Group's external appraiser);

"EPRA Vacancy Rate" refers to ERV of vacant space divided by ERV of the whole portfolio;

"Estimated rental value" or "ERV" refers to the estimated rental value at which space would be

let in the market conditions prevailing at the date of valuation (calculated by the Group's external

appraiser);

"EUR", "euro" and "€" refer to the single currency introduced at the start of the third stage of the

European Economic Monetary Union pursuant to the Treaty on the Functioning of the European

Union, as amended from time to time;

"Eurozone" refers to the region composed of members states of the European Union that at the

relevant time have adopted the euro;

"GDP" refers to gross domestic product;

"GE" refers to GECGE Kosik Investors S.à r.l.;

"GEFA" refers to Gross External Floor Area defined as the area of a dwelling measured

externally at each floor level;

"General Meeting of the Shareholders" refers to any ordinary or extraordinary shareholders'

meeting of the Company:

"Gross asset value" or "GAV" refers to the sum of fair value of all real estate assets held by the

Group on the basis of the consolidation scope and real estate financial investments (being shares

in real estate funds, loans to third parties active in real estate or shares in non-consolidated real

estate companies).

"Gross Lettable Area" or "GLA" refers to the floor space contained within each tenancy at each

floor level by measuring from the dominant portion of the outside faces of walls, to the center line

of internal common area/inter-tenancy walls.

"Gross Rental Income" refers to the rental income from let properties after taking into account

the net effects of straight-lining for lease incentives, including rent free periods. It includes

turnover-based rents, surrender premiums, car parking income and other possible rental income.

vii

"Group" refers to the Orco Property Group and its subsidiaries;

"HB Index" refers to the real estate price index announced by Hypoteční banka;

"HRK" refers to the Croatian Kuna;

"HUF" refers to the Hungarian Forint;

"IFRS" refers to the International Financial Reporting Standards;

"ILO" refers to the International Labor Organisation;

"Interim Financial Statements" refers to the unaudited condensed consolidated interim financial

statements of the Company and its subsidiaries as of and for the six-month period ended 30

June 2015;

"Like-for-Like" refers to all properties held in portfolio since the beginning of the period,

excluding those acquired, sold or included in the development program at any time during the

period;

"LITL" refers to the Luxembourg income tax law of 4 December 1967, as amended;

"Luxembourg" refers to the Grand Duchy of Luxembourg;

"Luxembourg Public Takeover Law" refers to the Luxembourg law dated May 19, 2006 on

public takeovers, as amended from time to time;

"Luxembourg Stock Exchange" refers to the regulated market of the stock exchange of

Luxembourg;

"Luxembourg Transparency Law" refers to the Luxembourg law dated 11 January 2008 on

transparency requirements in relation to information about issuers whose securities are admitted

to trading on a regulated market;

"Market Abuse Law" refers to the Luxembourg law of May 9, 2006 on market abuse, as

amended;

"Market Value" refers to the estimated amount determined by the Group's external appraiser in

accordance with the RICS Valuation Standards, for which a property should exchange on the date

of valuation between a willing buyer and a willing seller in an arm's-length transaction after

proper marketing;

"MBT" refers to the Luxembourg municipal business tax;

"MiFID" refers to Directive 2004/39/EC of the European Parliament and of the Council of 21

April 2004 on markets in financial instruments;

"Mémorial C" refers to the official gazette of the Grand Duchy of Luxembourg (Mémorial C,

Recueil des Sociétés et Associations);

"NAV" refers to net asset value;

"Net Lettable Area" or "NLA" (measured in SQM) refers to the floor space between the internal

finished surfaces of permanent internal walls and the internal finished surfaces of dominant

portions of the permanent outer building walls. It generally includes window frames and

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structural columns and excludes toilets, cupboards, plant/motor rooms and tea rooms where they

are provided as standard facilities in the building. It also excludes areas dedicated as public

spaces or thoroughfares such as foyers, atrium and building service areas;

"Net Rental Income" refers to the gross rental income less ground rents payable, service charge

expenses and other non-recoverable property operation expenses;

"New Notes" refer to the notes issued by the Company in October 2012 under ISIN Code

XS0820547742 in EUR 73.1 million initial denomination;

"NWT" refers to a net wealth tax (impôt sur la fortune);

"Occupancy Rate (SQM)" refers to the ratio of leased premises to leasable premises;

"p.p." refers to percentage point(s);

"Passing Rent" refers to the estimated annualised cash rental income being received as at the

reporting date, excluding the net effects of straight-lining for lease incentives;

"PLN" refers to the Polish Zloty;

"Prospectus Directive" refers to Directive 2003/71/EC on the prospectus to be published when

securities are offered to the public or admitted to trading (and any amendments thereto, including

the 2010 PD Amending Directive) and includes any relevant implementing measure in each

Relevant Member State;

"RCS" refers to the Luxembourg Trade and Companies Register;

"Relevant Implementation Date" refers to the date on which the Prospectus Directive was

implemented in that Relevant Member State;

"Relevant Member State" refers to each member state of the European Economic Area that has

implemented the Prospectus Directive;

"Reversion" refers to the estimated change in rent at review, based on today's market rents

expressed as a percentage of the contractual rents passing at the measurement date (but assuming

all current lease incentives have expired);

"Safeguard Plan" refers to, in relation to the French law insolvency type of proceedings

(Sauvegarde) that were opened in respect of the Company by a judgement of the Paris

Commercial Court on 25 March 2009 pursuant to the European Regulation n°1346/2000 and

articles L.620-1 et seq. of the French Commercial Code, the safeguard plan of the Company

approved by the Paris Commercial Court on 19 May 2010 which provided the Company with a

ten year payment schedule to repay its liabilities admitted under the safeguard plan.

Following the Company’s reorganisation that took place in 2014 and 2015, the Company

requested an amendment of the Safeguard Plan, aimed at the termination of the Safeguard Plan

linked with an early repayment of those liabilities admitted to the Safeguard Plan which became

due. On 19 June 2015, the Company filed a request with the Paris Commercial Court to modify

the Safeguard Plan and the Company's request was accepted by the Paris Commercial Court on

19 August 2015. The Paris Commercial Court's decision has not been opposed or appealed and

thus became final on 22 September 2015. As a result, within fifteen days as of the pronouncement

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of the judgement, the Company was obliged to pay to the Safeguard Plan administrator liabilities

that are subject to and due under the Safeguard Plan. Accordingly, on 28 August 2015 the

Company paid EUR 9,762,151.52 to the Safeguard Plan administrator. The Safeguard Plan

administrator will proceed with the distribution of the funds received from the Company on or

before 19 October 2015. Other liabilities that were admitted to the Safeguard Plan, but are

conditional or uncalled (such as uncalled bank guarantees, conditional claims of the holders of

Warrants 2014 registered under ISIN code XS0290764728, provided that they were admitted to

the Safeguard Plan), will be paid according to their contractual terms. Moreover, following the

court's decision, the duration of the Safeguard Plan has been reduced to two months.

"Share Agent" refers to Caceis Corporate Trust;

"Shareholders" refers to the shareholders of the Company;

"Shareholders' Rights Law" refers to the Luxembourg law of May 24, 2011 on the exercise of

certain rights of shareholders in general meetings of listed companies and implementing Directive

2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of

certain rights of shareholders in listed companies;

"Shares" refers to the ordinary shares with an accounting par value of € 0.10 each issued by the

Company under the laws of the Grand Duchy of Luxembourg;

"SHH" refers to Suncani Hvar, a property in which the Group has a 31.61% shareholding;

"SPV" refers to special purpose vehicle;

"SQM" refers to square meter;

"Squeeze-out/Sell-out Law" refers to the Luxembourg law of 21 July 2012 on squeeze-out and

sell-out, as amended from time to time;

"STRM" refers to four development projects located in Prague and Central Bohemia which the

Group acquired in the third quarter of 2014;

"Transparency Directive" refers to Directive 2004/109/EC of the European Parliament and of

the Council of 15 December 2004, as amended;

"Transparency Law" refers to the Luxembourg law of 11 January 2008 relating to the

transparency requirements in relation to information about an issuer whose securities are admitted

to trading on a regulated market, as amended;

"U.S." refers to the United States of America;

"Vacancy" refers to the amount of all physically existing spaces empty at the end of the period;

"VAT" refers to the value added tax.

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SUMMARY OF THE PROSPECTUS

Summaries are made up of disclosure requirements in accordance with the annexes of EC regulation

809/2004 as amended, referred to as "Elements". These Elements are numbered in Sections A - E (A.1 -

E.7). This summary contains all the Elements required to be included in a summary for this type of

securities and issuer. Since a number of points do not need to be addressed, there may be gaps in the

numbering sequence. Even though an Element may be required to be inserted in the summary because of

the type of securities and issuer, it is possible that no relevant information can be given regarding the

Element. In this case a brief description of the point with "not applicable" is included, accompanied by a

short explanation.

A. – Introduction and Warnings

A.1. Warnings. This summary should be understood as an introduction to the

prospectus. Any decision to invest in the securities should be based

on consideration of the prospectus as a whole by the investor.

Where a claim relating to the information contained in the

prospectus is brought before a court, the plaintiff investor might,

under the relevant national legislation of the individual member

states of the European Economic Area, have to bear the costs of

translating the prospectus before legal proceedings are initiated.

Civil liability attaches only to those persons who have tabled the

summary including any translation thereof, but only if the summary

is misleading, inaccurate or inconsistent when read together with

the other parts of the prospectus or it does not provide, when read

together with the other parts of the prospectus, key information in

order to aid investors when considering whether to invest in such

securities.

A.2. Information

regarding the

subsequent use of

the prospectus.

Not applicable. Consent regarding the use of the prospectus for a

subsequent resale or placement of the securities has not been

granted.

B. – Issuer

B.1. Legal and

commercial name

of the issuer.

The legal name of the company is Orco Property Group.

B.2. Domicile and legal

form of the issuer,

legislation under

The company is a public limited liability company ("société

anonyme") incorporated under the laws of Luxembourg and

governed by the laws of the Grand duchy of Luxembourg and in

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which the issuer

operates and

country of

incorporation.

particular the law of 10 August 1915 on commercial companies as

amended, having its registered office at 40 rue de la Vallée, L-2661

Luxembourg (the "Company").

B.3. Description of, and

key factors

relating to, the

nature of the

issuer's current

operations and its

principal activities,

main products sold

and/or services

performed and

identification of

the principal

markets in which

the issuer

competes.

The Company is a real estate investor and developer established in

Central and Eastern Europe since 1991, owning and managing

assets of approximately EUR 264 million as of 30 June 2015. The

Company has a strong local presence in its main markets, namely

Prague, Warsaw and Budapest.

The Group, as defined under B.5. below, focuses primarily on

development real estate business, in both residential and

commercial sectors. The Group also holds investment properties.

B.4a.

Most significant

recent trends

affecting the issuer

and the industries

in which it

operates.

The Group, as defined under B.5. below, is exposed to all of the

risks inherent in the business of owning, managing and using

commercial and residential real estate. Its performance may be

adversely affected by an oversupply or a downturn in the

commercial and residential real estate markets in general, or the

commercial and residential real estate markets in those cities in

which its properties are located. For example, rental income and

the market value for properties are generally affected by overall

conditions in the EU and national and local economy, such as

growth in gross domestic product (the "GDP"), inflation and

changes in interest rates. Changes in GDP may also impact

employment levels, which in turn may impact the demand for

premises generally.

B.5. Description of the

group and the

issuer's position

within the group.

The Company is the parent company of a group of subsidiaries

active in the real estate industry in Central and Eastern Europe. The

term "Group" refers to the Company and all of its subsidiaries.

The Group has participations in two listed entities, CPI Property

Group listed in Frankfurt (4.82% shareholding) and Suncani Hvar

listed in Zagreb (31.61% shareholding).

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B.6. Persons who,

directly or

indirectly, have a

(notifiable) interest

in the issuer's

capital or voting

rights or have

control over the

issuer.

To the best of Company's knowledge, as of the date of this

prospectus, the following shareholders have a (notifiable) interest in

the Company's capital or voting rights (more than 5%):

Shareholders

Number of

shares

Stake/Vo

ting

rights

Aspley Ventures Limited (an entity

closely associated with Mr. Pavel

Spanko) 100,000,000 31.80%

Fetumar Development Limited (an

entity closely associated with Mr.

Jan Gerner) 100,000,000 31.80%

Gamala Limited (an entity closely

associated with Mr. Radovan Vitek) 35,177,765 11.19%

Others 79,329,864 25.21%

Total 314,507,629 100.00%

B.7. Selected historical

key financial

information.

Consolidated

income statement

data

Six months ended 30

June Year ended 31 December

2015

2014

2014

2013

(Restated)(1)

2012

(Restated)(2)

(in € thousands)

Revenue 7,330 16,805 75,176 66,877 244,708

Net gain / (loss)

from fair value

adjustments on

investment property (13,976) 469 2,073 (57,840) (7,086)

Other operating

income 108 244 445 873 9,473

Net result on

disposal of assets 73 9 29 192 1,399

Cost of goods sold (865) (6,452) (58,840) (36,591)

(141,071

)

Employee benefits (514) (15,332) (16,113) (10,451) (26,736)

Amortization,

impairments and

provisions 4,994 (9,974) 38,256 (138,421)

(50,598

)

4

Other operating

expenses (8,346) (8,839) (15,065) (18,673) (53,819)

Operating result (11,196) (24,008) 25,961 (194,034) (23,730)

Financial result (10,742) (36,535) (48,188) (57,287) 755

Share of profit or

loss of entities

accounted for

using the equity

method 3,004 (206) (493) (413) (12,948)

Loss before income

taxes (18,934) (60,749) (22,720) (251,733) (35,923)

Income taxes 1,520 (920) 299 (1,060) (9,558)

Loss from

continuing

operations (17,414) (61,669) (22,421) (252,793) (45,481)

Loss after tax from

discontinued

operations – (2,817) (2,722) (756) (1,466)

Net loss for the

period (17,414) (64,486) (25,143) (253,550) (46,948)

Total loss

attributable to non-

controlling interests (324) (1,466) (1,527) (26,523) (5,064)

Owners of the

Company (17,090) (63,020) (23,616) (227,027) (41,883)

__________________________ (1)

The 2013 figures were restated subsequent to the originally reported financial information

in the 2013 Consolidated Annual Financial Statements due to the Group's high level of

disposals and acquisitions, in order to present a more meaningful presentation of financial

information. (2)


in the audited consolidated financial statements of the Company and its subsidiaries as of

and for the year ended 31 December 2012 due to the adoption of IAS 19, relating to the

recognition and disclosure of actuarial gains and losses resulting from increases or

decreases in the present value of defined benefit obligations, as well as a change in the

consolidation method of accounting for joint ventures.

5

Consolidated balance sheet

data

As of 30

June As of 31 December

2015

2014

2013

(Restated)(1)

2012

(Restated)(2)

(in € thousands)

Non-current assets 349,556 344,630 890,573 1,048,079

Current assets 18,901 28,089 252,156 332,743

Total assets 377,281 374,114 1,171,845 1,387,557

Equity attributable to owners of

the Company

203,544 205,510 175,909 438,493

Non-controlling interests 189 506 87,208 3,797

Total equity 203,733 206,016 263,117 442,290

Non-current liabilities 120,020 138,795 491,269 601,795

Current liabilities 49,515 29,066 389,737 333,680

Total liabilities 173,548 168,098 908,728 945,267

Total equity and liabilities 377,281 374,114 1,171,845 1,387,557

________________ (1)


in the 2013 Consolidated Annual Financial Statements due to the Group's high level of

disposals and acquisitions, in order to present a more meaningful presentation of financial

information. (2)


in the audited consolidated financial statements of the Company and its subsidiaries as of

and for the year ended 31 December 2012 due to the adoption of IAS 19, relating to the

recognition and disclosure of actuarial gains and losses resulting from increases or

decreases in the present value of defined benefit obligations, as well as a change in the

consolidation method of accounting for joint ventures.

Consolidated statement of cash

flows data

Six months

ended 30 June Year ended 31 December

201

5 2014

2014

201

3 2012

(in € thousands)

Net cash from / (used in)

operating activities 308 (42,716) 34,534 24,702 142,318


investing activities 275 (31,896) (112,652) 8,611 80,464


financing activities (2,999) 3,215 (3,252) 32,516 (232,386)

Net increase / (decrease) in cash (2,416) (71,397) (81,370) 65,829 (9,604)

6

Cash and cash equivalents at the

beginning of the year 7,103 88,669 88,669 23,633 32,849


beginning of the year of assets

reclassified to assets held for

sale(*)

(736) (8,671) - - -


end of the period 3,951 8,572 7,103 88,669 23,633

* Data published only for the half-year periods in 2015 and 2014

Other key performance indicators

As of 30


2015

2014 2013 2012

(in € thousands, unless otherwise

indicated)

EPRA Net Asset Value 206,860 210,319 220,405 531,265

Loan–to-Value Ratio 39.8% 38.1% 58.7% 47.9%

In 2013, the Group faced a significant deterioration in its financial

condition, results of operations and liquidity. The Group recorded

EUR 252 million in provisions, impairments and valuation

adjustments, triggered by various reasons, including widely

negative macroeconomic conditions in the Group's operating

markets, and mainly resulting from the Group's failure on major

residential projects, difficulties to collect its long term receivables

and going concern uncertainties of some subsidiaries. The

impairment on the Zlota 44 residential project in Warsaw

represented alone almost one-half of that amount. As a result of

these significant difficulties, the Group also faced critical liquidity

risks (including potential guarantee calls from certain financing

banks), as discussed in the going concern note (note 2.1.1) to the

Company's consolidated financial statements as of and for the year

ended 31 December 2013. The Group's net loss for the period in

2013 amounted to EUR 253.6 million.

In 2014, in response to these negative developments, the Group

implemented major changes in its management and business

strategy and completed a significant financial and operational

restructuring. The deconsolidation of the Group's leveraged assets

in 2014 and the accompanying streamlining of the Group's

corporate structure resulted in significant savings in its financing

and administrative costs, and the Group's real estate portfolio has

7

become more efficient as a result. As a result of the Group's 2014

restructuring, the Group's total assets declined from EUR 1.2 billion

as of 31 December 2013 to EUR 374.1 million as of 31 December

2014. In addition, the Group's equity declined from EUR 263.1

million as of 31 December 2013 to EUR 206.0 million as of 31

December 2014. Net loss for the period in 2014 improved to EUR

25.1 million compared to the prior year period.

The deconsolidation of the Group's leveraged assets in 2014 also

resulted in an improvement in the Group's loan to value ratio, which

went from 58.7% at 31 December 2013 to 38.1% at 31 December

2014, following a decline in the Group's financial debts from EUR

656.6 million at 31 December 2013 to EUR 141.3 million at 31

December 2014.

The results of the first six months of 2015 have shown stabilization

after the reorganisation of the Group throughout 2014. In line with

this, the Group recorded lower net loss attributable to owners of the

Company in the amount of EUR 17.1 million compared to a loss of

EUR 63.0 million in the first six months of 2014. The Group's loan-

to-value ratio deteriorated slightly compared to 31 December 2014

from 38.1% to 39.8% at 30 June 2015. Total amount of financial

debts was EUR 149.6 million as at 30 June 2015.

B.8. Selected key pro-

forma financial

information.

Not applicable. The prospectus does not contain any pro-forma

financial information.

B.9. Profit forecasts or

estimates.

Not applicable. The prospectus does not contain any profit forecasts

or estimates.

B.10. Any qualifications

in the audit report

on the historical

financial

information.

Not applicable. There are no qualifications in the auditor's report on

historical financial information.

B.11. Explanation of

insufficiency of the

issuer's working

capital.

Not applicable.

The Company is of the opinion that it has sufficient working capital

in that it believes it has the ability to access cash and other available

liquid resources in order to meet its payment obligations falling due

within the 12-month period following the date of the prospectus.

8

C. – Securities

C.1. Type and class of

the securities being

offered and/or

admitted to

trading, including

any security

identification

number.

The securities being admitted to trading are ordinary shares of the

Company (the "Shares").

All Shares carry the same rights.

The ISIN code for the Shares is LU0122624777. The Common

Code for the Shares is 012262477.

C.2. Currency of the

securities issue.

Euro

C.3. Number and par

value of the shares

issued and fully

paid in, and issued

but not fully paid

in.

The issued share capital of the Company is € 31,450,762.90,

divided into 314,507,629 Shares. All of the Shares are fully paid.

The accounting par value is € 0.10 per Share.

C.4. Description of the

rights attached to

the securities.

Each Share shall be entitled to one vote at all general meetings of

the shareholders. There are no restrictions on voting rights. All the

Shares carry full dividend rights.

C.5. Restrictions on the

free transferability

of the securities.

Not applicable. There are no restrictions on the free transferability

of the Shares.

C.6. Admission to

trading on a

regulated market.

The Company has applied for the admission to trading of the Shares

on the regulated market of the Luxembourg Stock Exchange as well

as on the regulated market of the NYSE Euronext Paris (the

"Admission to Trading"). 114,507,629 Shares registered under

ISIN code LU0122624777 are already admitted to trading on the

regulated markets of the NYSE Euronext Paris and the Warsaw

Stock Exchange. The 200,000,000 Shares that were issued on 10

November 2014 have not yet been admitted to trading on any

regulated market. However, the Company will seek to have them

admitted to trading on the regulated market of the NYSE Euronext

Paris as soon as reasonably practicable, subject to legal and

regulatory requirements. With respect to the shares already

admitted to trading on the Warsaw Stock Exchange, the Company

intends to delist them from the Warsaw Stock Exchange, subject to

legal and regulatory requirements and final decision to commence

9

the process of delisting.

C.7. Description of

dividend policy.

Dividends are distributed by the shareholders at the general meeting

of the shareholders as proposed by the board of directors of the

Company by deduction from the distributable sums in accordance

with applicable legal stipulations.

D. – Risks

D.1. Key risks that are

specific to the

issuer or its

industry.

The key risks that are specific to the Company and the Group, their

business and the industry in which the Company and the Group

operate are the following:

General operating risks

During 2013, the Group recorded significant losses and has

since undergone substantial restructuring. The Group's

restructuring efforts could prove insufficient and the Group

could suffer losses in the future.

The Group is exposed to a variety of financial risks.

Changes in the general economic and cyclical parameters,

especially a continuation of the financial crisis, may

negatively influence the Group's business activity.

The Group faces a number of general risks related to the

real estate industry.

The Group will continue to depend on its ability to identify

profitable development and investment projects.

The Group's properties may be subject to increases in

operating and other expenses.

The Company is frequently a guarantor of loans granted by

various banks in different countries to the Company's

various subsidiaries.

The Group may be exposed to an oversupply in its key

markets.

The Group's property valuations may not reflect the real

10

value of its portfolio, and the valuation of its assets may

fluctuate from one period to the next.

Competition in the markets in which the Group operates is

high and may intensify in the future.

The Group is dependent on co-operative relations with its

employees.

Interruption or failure of the Group's information

technology systems could damage its reputation and its

business.

The Group may sustain losses from damages or risks not

covered by, or exceeding the coverage limits of, its

insurance policies.

The Group is exposed to risks relating to planning and

environmental regulation, and municipal pre-emption

rights.

Development business operating risks

Unexpected problems and unrecognised risks could arise in

the Group's development projects.

Changing residential trends or tax policies may adversely

affect sales of developments.

The Group may face problems in obtaining vacant

possession of its development projects.

The Group is exposed to risks inherent in investments in

development projects.

The Group may not obtain all required permits and

consents or in a timely manner or for the entire

contemplated area to be developed.

Certain of the Group's building permits are for a limited

period of time and failure to complete the project prior to

such expiry would require the Group to refile.

11

The Group is exposed to the risk of illiquidity of real estate

investments.

Delays and other problems in the sale of real estate

investments may cause higher costs or a later realization of

revenues.

Investment business operating risks

The Group may not be able to successfully recover

operating, maintenance costs and capex costs from its

tenants.

The Group is subject to pressure on rental yields.

The Group is exposed to letting risks.

The Group is subject to risks relating to its office rental

business.

The Group is exposed to index risks.

D.3. Key risks that are

specific to the

securities.

The key risks that are specific to the Shares are the following:

The Company's ability to pay dividends depends on a

variety of factors including having sufficient distributable

profits and the receipt of sufficient funds from its

subsidiaries.

Future capital measures could lead to substantial dilution.

Future offerings of debt or equity securities may adversely

affect the market price of the Shares.

A suspension of trading in the Shares could adversely affect

the share price.

Exchange rate fluctuations could adversely affect the value

of the Shares and any dividends paid on the Shares for an

investor whose principal currency is not the euro.

12

E. – Offer

E.1. Total net proceeds

and estimated total

expenses of the

issue.

The Company estimates the total expenses of the Admission to

Trading to be € 120,000.

E.2a Reasons for the

offer, use of

proceeds,

estimated net

amount of the

proceeds.

Not applicable as no offer of the Shares to the public is being made.

The Company seeks to admit on the Luxembourg Stock Exchange

the Shares that are already issued and partially admitted to trading

on the regulated markets of the NYSE Euronext Paris and the

Warsaw Stock Exchange. The Company also intends to admit its

shares to trading on the regulated market of the NYSE Euronext

Paris.

The reasons for the Admission to Trading include, inter alia, the

fact that the Company, established and registered in the Grand-

Duchy of Luxembourg would like to have its presence supported by

the listing of its Shares on the regulated market of the Luxembourg

Stock Exchange. The Company intends to have the Luxembourg

Stock Exchange as its main market in the future.

E.3. Description of the

terms and

conditions of the

offer.


Admission to and

Commencement of

Trading.

Application has been made for the Shares to be admitted to trading

on the regulated market of the Luxembourg Stock Exchange.

Trading of the Shares on the regulated market of the Luxembourg

Stock Exchange is anticipated to commence on or about 2

October 2015. The Company also intends to admit its shares to

trading on the regulated market of the NYSE Euronext Paris.

E.4. Description of any

interest that is

material to the

issue including

conflicting

interests.

Not applicable as the Company is not aware of any interests

material to the issue which are held by persons involved in the

issue.

E.5. Person or entity

offering to sell the


13

security.

Lock-up

agreements.


E.6. Amount and

percentage of

immediate dilution

resulting from the

offer. In case of a

subscription offer

to the existing

holders, the

amount and

percentage of

immediate dilution

if they do not

subscribe to the

new offer.


E.7. Estimate of

expenses charged

to the investor by

the issuer or the

offeror.

Not applicable as no offer of the Shares to the public is being

made and therefore no expenses are charged to investors by the

Company.

14

RISK FACTORS

An investment in the Shares involves a high degree of financial risk. You should carefully consider all

information in this Prospectus, including the risks described below, before you decide to buy any Shares.

This section addresses both general risks associated with the industry in which we operate and the

specific risks associated with our business. If any such risks were to materialize, our business, results of

operations, cash flows and financial condition could be materially and adversely affected, resulting in a

decline in the value of the Shares. Furthermore, this section describes certain risks relating to the

investments in the Shares which could also adversely impact the value of the Shares.

The risks and uncertainties discussed below are those that our management currently views as material,

but these risks and uncertainties are not the only ones that we face. Additional risks and uncertainties,

including risks that are not known to us at present time or that our management currently deems

immaterial, may also arise or become material in the future, which could lead to a decline in the value of

the Shares and a loss of part or all of your investment.

This Prospectus also contains forward-looking statements that involve risks and uncertainties. The

Company's future results may be materially impacted by the uncertainties inherent in such forward-

looking statements as a result of various factors, including the risks described below and elsewhere in

this Prospectus.

GENERAL OPERATING RISKS

During 2013, the Group recorded significant losses and has since undergone substantial

restructuring. The Group's restructuring efforts could prove insufficient and the Group could

suffer losses in the future.

During 2013, the Group recorded a total of EUR 252 million in provisions, impairments and valuation

adjustments. This material amount has been triggered by various reasons, including widely negative

macroeconomic conditions in the Group's operating markets, and mainly resulted from the Group's failure

on major residential projects, difficulties to collect its long term receivables and going concern

uncertainties of some subsidiaries. The impairment on the Group's Zlota 44 residential project in Warsaw

represented alone almost one-half of that amount. As a result of these significant difficulties, the Group

also faced critical liquidity risks (including potential guarantee calls from certain financing banks), as

discussed in the going concern note (note 2.1.1) to the Company's consolidated financial statements as of

and for the year ended 31 December 2013. In 2014, the Group underwent a major financial and

operational restructuring (including sale of substantial assets and significant adjustment of the scope of

the Group's operations) with the aim to address its going concern issues, the details of which are

described below. If the Group fails to benefit from the expected effects of its restructuring efforts, the

Group's operating, financial and liquidity situation could deteriorate again, which would materially

adversely affect the Group's business, financial condition, results of operations and prospects, and result

in a decline in the price of the Shares.

In 2014, the Group managed to solve a difficult situation with its Zlota 44 project in Warsaw. In April

2014, the Group reached an agreement with the financing bank to acquire the accelerated Zlota 44 loan

15

and all related securities for EUR 55 million. That acquisition was executed to release the Group from

corporate guarantees of EUR 48.2 million related to Zlota 44 and to allow the Group to organize an

ordered sale process of Zlota 44. The Zlota 44 disposal was successfully carried out in August 2014 and

finalized in January 2015. The initial gross transaction purchase price of EUR 63.0 million was decreased

by EUR 13.0 million used for the settlement of disputes with the Zlota 44 general contractor INSO. The

final purchase price therefore amounted to EUR 50 million. The Group used part of the Zlota 44

proceeds for a total value of EUR 31 million to re-acquire some of the CPI PG shares that were

previously disposed of by the Group to mobilize the required liquidity in order to face Zlota 44 bank loan

acceleration and potential calls on the corporate guarantees.

In the first half of 2014, Suncani Hvar (the “SHH”) initiated a pre-bankruptcy procedure to allow the

restructuring of its operations. Consequently, the Group disposed of SHH shares representing 24.94% of

the SHH shareholding as well as receivables owed to SHH. As a result of long-term negotiations among

SHH’s biggest creditors and shareholders, the restructuring plan was approved at the creditors meeting in

December 2014 as well as at the shareholders meeting in January 2015, which provided a solid basis for

the approval of the plan by the Split Commercial Court, which occurred on 9 June 2015. Further to the

decision of the Commercial Court in Split issued on 14 September 2015, which resolved to confirm the

capital increase of SHH under the pre-bankruptcy procedure, the Company`s stake in SHH shareholding

decreased from 31.61 % to 16.7%. As an integral part of the negotiations between the Group and the

representatives of the Republic of Croatia, the parties mutually agreed to terminate the International

Chamber of Commerce arbitration procedure related to SHH and a consent award terminating the

arbitration has been issued in this respect.

In the second half of 2013, the Group initiated a pre-bankruptcy procedure of its three Hungarian

subsidiaries that hold assets known as the Paris Department Store, Vaci 1 (former stock exchange

building) and Szervita to allow the restructuring of its operations. As a result of long-term negotiations

among the biggest creditors throughout 2014, the restructuring plans were approved at creditors meetings

in December and later on by the Budapest Commercial Court. In the first half of 2015, as part of the

approved reorganization the subsidiaries transferred Váci 1 (former stock exchange building) and Szervita

assets to the financing bank and Paris Department Store to the Hungarian Republic, which exercised its

preemption right. Within the reorganization settlement the Company paid to the financing bank EUR 9

million in consideration of the release of corporate guarantees provided by the Company as well as the

release of pledges on Váci 188 project, which was cross-collateralized in favor of the financing bank. The

Company intends to proceed with orderly disposal of its remaining Hungarian assets, which is in line with

the Company's strategy to exit Hungarian, Slovak and Croatian (with the exception of SHH) markets.

In 2014, the Group focused on the restructuring of its debt situation. In the first half of 2014 the Group

completed a portfolio debt restructuring with Crédit Agricole CIB (the “CA”) relating to three assets

pledged as security for loans provided by CA: Bubenská commercial building in Prague, Hlubocky

production plant near Olomouc and the Dunaj department store in Bratislava. As a result of the

restructuring, the Group transferred the ownership of Hlubocky and Dunaj, together with related debt, to

CA and retained the ownership of Bubenská 1 with a decreased leverage and extended debt maturity over

the next 3 years. The Group also completed a long term refinancing of the Capellen office building in

Luxembourg with BGL BNP Paribas. The Group managed to obtain a stable and amortized financing of

16

EUR 16.8 million, maturing in 2027. New refinancing terms include a lowered interest rate allowing the

Group to hold and manage this income generating asset in the long term.

In line with its new strategy focusing on development projects, the Group acquired in November 2014

four development projects with an aggregate of 186 thousand square meters of developable land,

primarily in Prague, Czech Republic. These future projects, known as STRM, developable in the coming

years, will be a mix of residential, office, hospitality and retail premises. The transaction value was EUR

44 million. Furthermore, in December 2014, the Group acquired a brownfield area in Brno, Czech

Republic, with an area of approximately 22.5 hectares. The transaction value was EUR 13.95 million and

the intention is to build a mixed used project with a similar size to the Group’s project Bubny in Prague.

Moreover, the Group also contracted a development project located in Prague which comprises of

approximately 33 thousand square meters of developable land. The Group already owns 31 thousand

square meters of directly adjacent land and following this acquisition, the Group will have an excellent

developable land plot of approximately 64 thousand square meters. This acquisition was completed in

2015 and the transaction value was EUR 5.7 million.

The development of the core properties in the Czech Republic will continue to play a major role in the

transformation of the Group towards a streamlined and profitable operation. The continuous improvement

of the financial and operational performance supported by a sustainable cash flow position remains a

priority for the management for 2015.

The Group is exposed to a variety of financial risks.

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange

risk, interest rate risk and price risk), credit risk and liquidity risk.

The Group is exposed to the credit risk of its counterparties (including local sub-contractors who assist in

the development of projects) and their ability to satisfy the terms of contracts the Group has with them.

The Group has experienced and could in the future experience delays in recovering any sums or damages

owed to it by such counterparties and suffer significant losses, including declines in the value of its

investment during the period in which it seeks to enforce its rights, or an inability to realize any gains on

its investment during such period and may incur fees and expenses in enforcing its rights.

Liquidity risk is the risk that the Group might encounter difficulties raising liquid funds to meet

commitments as they fall due. In 2013, the Group experienced significant liquidity constraints, which

required it to implement a restructuring of its operations, including sale of major assets. This liquidity

crisis resulted mainly from the Group's failure on major residential projects, difficulties to collect its

receivables and going concern uncertainties of some subsidiaries. As a result, the Group recorded

substantial impairments and provisions and the value of its assets declined.

Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in foreign exchange rates.

Currency risk is applicable generally to those business activities and development projects where different

17

currencies are used for repayment of liabilities under the relevant financing to that of the revenues

generated by the relevant property or project. The Group operates internationally and is exposed to

foreign exchange risk arising from various currency exposures, primarily with respect to the Czech

Koruna (the "CZK"), the Polish Zloty (the "PLN"), the Hungarian Forint (the "HUF") and the Croatian

Kuna (the "HRK") and secondarily to the U.S. Dollar (the "USD"). Currency risk is managed where

possible by using the same currency for financing as that in which revenues will be generated. In the

event that different currencies are used, the Group companies limit the risk, where appropriate, by using

hedging instruments. Nevertheless, because the Group companies' operating costs are denominated in

local currencies, fluctuations in the exchange rates of these currencies can lead to volatility in the

financial statements of the Group companies. In addition, loans, operating income and - except in the

development activities - sales of buildings are mainly denominated in Euro. The Group currently does not

use foreign currency derivatives contracts, as salaries, overhead expenses, and future purchase contracts

in the development sector, building refurbishment and construction costs are mainly denominated in local

currencies, but may do so in the future. The main circumstance for the Group to put in place currency

derivatives is for the financing of a construction contract when the local currency operations do not

generate sufficient cash and as a result that construction contract must be financed with another currency.

Any loss accruing to the Group due to currency fluctuations may have a material adverse effect on the

Group's business, financial condition, results of operations and prospects.

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate

because of changes in market interest rates.

The Group uses floating and fixed rate debt financing to finance the purchase, development, construction

and maintenance of its properties. When floating rate financing is used, the Group's costs increase if

prevailing interest rate levels rise. While the Group generally seeks to control its exposure to interest rate

risks by entering into interest rate swaps, not all financing arrangements are covered by such swaps and a

significant increase in interest expenses would have an unfavourable effect on the Group's financial

results and may have a material adverse effect on the Group's business, financial condition, results of

operations and prospects. Rising interest rates could also affect the Group's ability to make new

investments and could reduce the value of the properties. Conversely, hedged interests do not allow the

Company to benefit from falling interest rates.

The Group is exposed to equity securities price risk because of investments held by the Group. To

manage its price risk arising from investments in equity securities, the Group diversifies its portfolio or

only enters these operations if they are linked to operational investments.

The Group is exposed to equity risks related to investments held in the Endurance Real Estate Fund, a

Luxembourg regulated closed end umbrella fund, which are classified in financial assets at fair value

through profit or loss and investments in shares of CPI PG classified as available-for sale.

Changes in the general economic and cyclical parameters, especially a continuation of the financial

crisis, may negatively influence the Group's business activity.

The Group's core business activity is based on the letting and sale of real estate property. The revenues

18

from rents and revenues from sales of real estate property investments are key figures for the Group's

value and profitability. Rents and sales prices depend on economic and cyclical parameters (which are, in

turn, affected by changes in consumer confidence, the unemployment rate, consumer prices, wage levels

and demographics), which the Group cannot control.

The financial crisis, which began in the real estate sector, has led to a general lack of confidence in real

estate investments among investors. The increased average discount to net asset value for listed real estate

companies and increased credit margins applied by banks to real estate financings demonstrates this lack

of confidence, which may have a further negative impact on the Group's revenues, costs and valuation.

The Group faces a number of general risks related to the real estate industry.

The Group is exposed to all of the risks inherent in the business of acquiring, developing, owning,

managing and using real estate. These risks include, in particular, the following:

- cyclical fluctuations in the property market generally and in the national and local markets where

properties are located;

- sales risks;

- property abuse risks (including terrorism);

- construction delays and construction budget overruns;

- opposition from civic and environmental groups; and

- natural disasters.

Although the Group takes precautionary measures to protect its business activities from the negative

impact of the above risks, such as the inclusion of certain contractual provisions and, as far as possible,

insurance coverage, it is not possible to completely insulate the Group from the effects of the above risks.

If any of these risks materialize, the result could have a material adverse effect on the Company's

business, financial condition, results of operations and prospects.

The Group depends on its ability to identify profitable development and investment projects.

The Group's business model depends on its continuing ability to develop and/or acquire commercial,

logistic and residential properties across Central and Eastern European countries with the potential for

capital growth and/or investment returns. Competition for such properties continues despite the weakened

financial situation of several market players. As a result, the Group may have difficulties finding suitable

properties at attractive prices, which inability could have a material adverse effect on the Group's

business, financial condition, results of operations and prospects. Even if the Group is able to develop

existing and new projects and acquire properties compatible with its strategy, such developments and

acquisitions could prove unsuccessful. The assumptions the Group makes when developing and acquiring

its property portfolio may prove inaccurate. Inaccurate assumptions could materially adversely affect the

Group's business, financial condition, results of operations and prospects.

The Group's properties may be subject to increases in operating and other expenses.

19

The Group's business, results of operations, financial condition and prospects could be materially

adversely affected in the event that operating and other expenses increase without a corresponding

increase in revenues.

Factors which could increase operating and other costs include, among others:

- changes in laws, regulations or government policies (including increases in property taxes and

other statutory charges), which increase the cost of compliance with such laws, regulations or

policies;

- increases in insurance premiums; and

- defects affecting the properties which need to be rectified, leading to unforeseen capital

expenditures.

Risk of the Company acting as guarantor of its subsidiaries under bank loans.

The Company is frequently a guarantor of loans granted by various banks in different countries to the

Company's various subsidiaries.

If a subsidiary is unable to meet its obligations under a loan agreement pursuant to which the Company

has provided a guarantee, the Company may be required to reimburse the lender all amounts owed under

such a loan agreement. In this case, the Company could lose significant liquidity and may be required to

sell its assets, including at prices that are below their fair market value. This could have a material adverse

effect on the Company's business, financial condition, results of operations or prospects.

The Group may be exposed to an oversupply in its key markets.

Although the Company believes that its focus on prime sites and projects means that there is and will

continue to be demand for its developments, the supply of new office and residential projects has

exceeded demand in a number of relevant jurisdictions. Due to the general worldwide financial crisis and

the tightening of financial conditions, the oversupply of office and residential properties may lead to

higher vacancies and to a stagnation or decline of renting yields. The oversupply affects the value of the

Company's portfolio and its ability to sell or lease its completed projects at forecasted levels or at all and,

therefore, may adversely affect the Company's business, financial condition, results of operations or

prospects.

The Group's property valuations may not reflect the real value of its portfolio, and the valuation of

its assets may fluctuate from one period to the next.

The Group's investment property portfolio is valued at least once a year by an independent appraiser. The

Group's property assets were valued most recently as of 30 June 2015. The change in the appraised value

of investment properties, in each period, determined on the basis of expert valuations and adjusted to

account for any acquisitions and sales of buildings and capital expenditures, is recorded in the Group's

income statements. For each euro of change in the fair value of the investment properties, the net income

of the Group changes by one euro. Changes in the fair value of the properties could also affect gains from

sales recorded on the income statement (which are determined by reference to the value of the properties)

20

and the rental yield from the properties (which is equal to the ratio of rental revenues to the fair value of

the properties). Furthermore, adverse changes in the fair value of the properties could affect the Group's

cost of debt financing, its compliance with financial covenants and its borrowing capacity.

The values determined by independent appraisers are based on numerous assumptions that may not prove

correct, and also depend on trends in the relevant property markets. An example is the assumption that the

Company is a "going concern", i.e., that it is not a "distressed seller" whose valuation of the property

assets may not reflect potential selling prices. In addition, the figures may vary substantially between

valuations. A decline in valuation may have a significant adverse impact on the Group's financial

condition and results of operations, particularly because changes in property values are reflected in the

Group's consolidated net profit. Reversely, valuations may be lagging soaring market conditions,

inadequately reflecting the fair property values at a later time.

The Group is also exposed to valuation risk regarding the receivables from its asset sales. Management

values these receivables by assessing the credit risk attached to the counterparties for the receivables. Any

change in the credit worthiness of a counterparty or in the Group's ability to collect on the receivable

could have a significant adverse impact on the Group's financial position and results of operations.

Competition in the markets in which the Group operates is high and may intensify in the future.

The real estate market in Central and Eastern Europe is competitive and fragmented. The Group faces

competition from both international and local real estate investors including developers, investment funds,

various types of financial institutions and wealthy individuals. As property markets in Central and Eastern

Europe are undergoing a maturing process, competition could intensify. In particular, the Group has

experienced, as a result of the accession of the Czech Republic, Hungary, Poland and Slovakia to the

European Union, increased competitive pressures from international property developers and other

investors in those markets. Although the financial and economic crisis has led to the exit of a number of

international players, certain competitors in various of the Group's markets may have significant

advantages over the Group, including greater name recognition, longer operating histories, pre-existing

relationships with current or potential purchasers or tenants, significantly greater financial, marketing and

other resources and more ready access to capital which would allow them to respond more quickly to new

investment opportunities. No assurance can be given that the Group will be able to compete successfully

in the future. If the Group fails to compete effectively or, if increased competition leads to lower revenues

and lower profit margins for the Group, the Group's business, financial condition, results of operations or

prospects may be adversely affected.

The Group is dependent on co-operative relations with its employees.

If the Group is unable to attract and retain employees with the required training, experience and

motivation in key strategic markets or if competition for qualified employees increases its employee

costs, it may materially adversely affect the Group's business, financial condition, results of operations or

prospects.

Interruption or failure of the Group's information technology systems could damage its reputation

21

and business.

The Group is dependent on the proper functioning of its information systems and processes. The Group's

systems and the systems on which it relies are vulnerable to damage or interruption from various factors,

including power loss, telecommunication failures, data corruption, network failure, computer viruses,

security breaches, natural disasters, theft, vandalism or other acts. A disaster or disruption in the

infrastructure that supports the Group's businesses could have a material adverse effect on its ability to

continue to operate the Group's business without interruption.

The Group is also reliant on the general and timely functioning of banking systems and associated

technology in order to receive and make payments. Any cessation of the ordinary functioning of the

banking system or any interruption of payment systems may impact the ability to collect rents from

tenants and could prejudice the ability of the Group to make payments.

The Group may sustain losses from damages or risks not covered by, or exceeding the coverage

limits of, its insurance policies.

The Group maintains insurance policies (including with respect to its properties) which it considers

appropriate to the nature of its business.

However, there are certain types of losses (such as losses resulting from war, terrorism, nuclear radiation,

radioactive contamination and heaving or settling of structures) which are or may be or become either

uninsurable or not insurable at economically viable rates, or which for other reasons are not covered by

the Group's insurance policies. The Group's profitability and financial condition might be affected

adversely if such an uninsured loss were to occur or the relevant insurer became insolvent or otherwise

unable to satisfy any claim, and the Group was not able to shift the cost burden to the tenant or another

third party.

No assurance can be given that material losses in excess of insurance proceeds will not occur in the

future. Any such uninsured loss or a loss in excess of insured limits may have a material adverse effect on

the Group's business, financial condition, results of operations and prospects.

The Group is exposed to risks relating to planning and environmental regulation, and municipal

pre-emption rights.

The Group's properties are subject to restrictions under applicable planning, building, monument

protection, environment and other laws and regulations, and may be subject to statutory encumbrances,

competing claims, pre-emption rights and other limitations, which may impact their value and/ or the

Group's ability to use and dispose of them as it would otherwise see fit. According to an article published

in the Czech newspaper PRAVO on 20 June 2015, Mr. Matej Stropnicky, the Deputy Mayor of Prague,

stated that the City of Prague will buyout major development areas, specifically mentioning Bubny,

whereby these areas shall be resold for smaller projects. The Group denies any formal or informal

discussions about sale, buyout or expropriation of the Bubny area to the City of Prague or to the Czech

Republic.

22

As a result of these or other restrictions, the Group may incur expenses and be prevented from charging

market rents or from upgrading the affected properties in a way that would otherwise make such

properties more attractive to tenants and allow the Group to increase its overall occupancy and/or rent

levels. Further, non-compliance with such restrictions may have consequences ranging from fines,

administrative and penal sanctions to prohibition of use or demolition orders.

Certain of the Group's properties were historically industrial buildings, and the aftermath of their former

uses may continue to constrain their current use due to the demands of applicable environmental laws.

Further, it is possible that the Properties contain ground contamination, hazardous materials, and other

residual pollution and/or wartime relics (including potentially unexploded ordnance).

The discovery of such residual pollution, particularly in connection with the lease or sale of properties,

can also trigger claims for rent reductions, termination of leases, damages and other breach of warranty

claims, and its remediation and related additional measures could involve considerable additional costs. It

may no longer be possible to take recourse against the polluter or the previous owners of the properties.

Moreover, the existence or even merely the suspicion of the existence of wartime ordnance, hazardous

materials, residual pollution or ground contamination can negatively affect the value of a property and the

ability to lease or sell such property.

In addition, several of the Group's properties may be in technical violation of easement or encroachment

requirements, and as a result the Group could be required to pay reasonable compensation or fines.

DEVELOPMENT BUSINESS OPERATING RISKS

Unexpected problems and unrecognised risks could arise in the Group's development projects.

The Group is engaged in residential, commercial and retail development projects and plans to undertake

further development in the future. The real estate construction and development business is subject to

certain risks arising from the complexity of the projects, including higher than expected costs, breaches of

labour laws, delays in completion, the application of regulations, health and safety or environmental

constraints, the multiplicity of participants and the need to obtain permits. These risks could result in the

abandonment of projects after significant feasibility study costs and management attention have been

expended or could lead to substantial project delivery delays, which could adversely impact the Group's

profitability and the value of its properties.

Changing residential trends or tax policies may adversely affect sales of developments.

Changing residential trends are likely to emerge within the markets in Central and Eastern Europe as they

mature and, in some regions, relaxed planning policies may give rise to over-development, thereby

affecting the sales potential of the Group's residential developments. Changing real estate taxes or VAT

may also have a notable impact on sales (such as increase in sales before implementation of a tax increase

followed by structurally lower sales). These factors will be considered within the investment strategy

implemented by the Group but may not always be anticipated and may have a material adverse effect on

23

the Group's business, financial condition, results of operations and prospects.

The Group may face problems in obtaining vacant possession of its development projects.

Some of the Group's properties at the time of purchase are subject to existing tenancies, and vacant

possession of these properties is necessary for the Group to commence its construction plans. The terms

for vacating the tenants will depend on inter alia, the terms of the lease agreement, some of which may

provide that the lease may only be terminated on the occurrence of specific events, or with the mutual

agreement of the parties. Any delay or additional costs incurred by the Group in reaching an agreement

with such tenants may delay the commencement and therefore completion of the development project

which may have a material adverse effect on the Group's business, financial condition and results of

operations.

The Group is exposed to risks inherent in investments in development projects.

During the initial phases of development projects, the Group normally carries the costs of the project,

both through injection of equity and by incurring liabilities, and begins to receive revenues only at a later

point in time. Development projects sometimes face cost overruns and delays in completion, many of

which are caused by factors that are not directly within the control of the developer. These types of risks,

especially in relation to the quality and timeliness of performance by contractors, are inherent in property

development. If any of these risks occur, the economic success of a project could be significantly

impaired and the Group's business, results of operations, financial condition and prospects could be

materially adversely affected.

The Group may not obtain all required permits and consents or in a timely manner or for the

entire contemplated area to be developed.

As a result of bureaucratic difficulties, environmental and heritage protection laws, and time constraints

with the administrative authorities in the relevant jurisdictions, the Group may encounter difficulties in

obtaining relevant permits for the development of its projects or, more likely, may acquire those permits

later than expected or for a lower amount of buildable area. Any such inability to obtain, or delay in

obtaining, permits or consents could have a material adverse effect on the Group's business, financial

condition, results of operations or prospects.

Certain of the Group's building permits are for a limited period and failure to complete the project

prior to such expiry would require the Group to re-file.

As a result of the economic crisis, the Group was forced to delay or stop construction on certain of its

developments. In certain situations, the Group holds a building permit that is valid for a restricted period.

If the Group does not initiate the construction of these projects prior to the expiry of the relevant building

permits, the Group will have to refile the appropriate documents to request new building permits, which

could entail additional costs or advice.

The Group is exposed to the risk of illiquidity of real estate investments.

24

Investments in real estate are relatively illiquid and are generally more difficult to realize than other

investments. Proceeds from current or future asset sales may not meet the Group's expectations, or the

Group may not be able to sell assets on the expected terms, in particular in distressed market conditions or

should the Group experience financial difficulties. Disposal of assets could take longer than may be

commercially desirable which may have an effect on the timing of a disposal or on the funds received for

the disposed property. Any delay in the disposal of a property or reduction in the sales price could have a

material adverse effect on the Group's business, financial condition, results of operations and prospects.

Delays and other problems in the sale of real estate investments may cause higher costs or a later

realization of revenues.

Real estate sales are exposed to various risks that could cause a delay or cancellation of the sale.

Negotiations of the sales contract may last longer than initially expected or may be more complicated,

which may result in additional costs. Furthermore, sales of real estate investments could be postponed or

cancelled resulting in unrecoverable costs.

Delays in the sales process may cause a later realization of revenues. As a consequence, the Group may

face additional costs from interest payments during the delay period. These external costs may not be

recoverable in all cases. In addition to the external costs resulting from delays in the sales process,

internal costs may arise due to necessary additional management attention, which are not in all cases

quantifiable, but may have a negative impact on the Group's business.

INVESTMENT BUSINESS OPERATING RISKS

The Group may not be able to successfully recover operating, maintenance costs and capex costs

from its tenants.

To maintain the Group's properties and comply with applicable law, it is necessary to perform

maintenance and repairs. Such measures can be time consuming and expensive, and risks can arise in the

form of higher costs than anticipated or unforeseen additional expenses for maintenance, repair or

modernisation that cannot be passed on to tenants. Moreover, work can be delayed, for example, because

of bad weather, poor performance or insolvency of contractors or the discovery of unforeseen structural

defects. In the ordinary course of events, the Group may fund such capital expenditure out of cash flow

generated by the properties. If the necessary capital expenditure is not undertaken, this could lead to a

decline in the value of the relevant properties, impacting the liquidation or refinancing value and hence

the ability to generate sufficient disposal proceeds. Changes in government regulations may result in

additional capital expenditure requirements to modernise or maintain the properties, for example

refurbishment to comply with energy efficient standards or health and safety requirements, which may not

always be possible to charge to tenants.

The Group is subject to pressure on rental yields.

Additional new retail and office space is being developed in a number of markets in which the Group is

25

active. As a result of such development there has been pressure on market rent levels, which negatively

affects the Group's rental returns, as well as the value of its properties. A fall in market rent levels has

adversely affected rents on new leases and on renewed leases. It has also made rent negotiations with

existing tenants more difficult. A further fall in market rent levels could therefore have a material adverse

impact on the Group's business, financial condition, results of operations and prospects.

The Group is exposed to letting risks.

The value of a rental property depends to a large extent on the remaining term of the related rental

agreements as well as the creditworthiness of the tenants. If the Group is unable to renew expiring leases

on favourable terms and find and retain suitably creditworthy tenants willing to enter into long-term rental

agreements, the market value of the relevant property will be adversely affected. The creditworthiness of

a tenant can decline over the short or medium term, leading to a risk that the tenant will become insolvent

or be otherwise unable to meet its obligations under the lease. If the Group's judgment about a significant

tenant or about the location, use or desirability of a property proves to be incorrect, its income from the

property may be significantly below its estimates while its operating costs remain largely fixed. Local law

or regulations may restrict the levels at which rentals may increase, or index such rental increases to price

indices. All of these factors could have a material adverse effect on the Group's business, assets, financial

condition, results of operations or prospects. The occupancy rate of the Group's rental investment

properties could fall if the Group were to become less effective in marketing vacant properties. Property

vacancies adversely affect the Group's results both because vacant properties earn no revenue, and

because the Group's costs increase when units are vacant. Vacant units increase costs because they require

fit out work before they are put on the market, and because the Group cannot pass on building costs

relating to those units in the form of higher rents. The Group cannot guarantee that it will be able to re-let

properties quickly and at satisfactory rent levels when tenants leave. Additionally, market conditions

could be adverse or new regulations could further restrict rent increases when existing leases come up for

renewal.

The Group is subject to risks relating to its office rental business.

The Group faces risks specific to the office rental business, which may have a negative impact on the

value of its assets, business, results of operations and financial condition. These risks result from the

following factors:

- The office rental portfolio is more sensitive than residential property to the economic

environment in the relevant markets.

- Renovation work required on vacant units before they are re-let is often more extensive in the

office segment than in the residential segment.

- The risk of tenants becoming insolvent and the resulting impact on Group results is greater in the

office segment because of the greater relative importance of each tenant.

The Group is exposed to index risks.

Most of the Group's leases include a clause that provides for partial or full indexation of the rent, in most

26

cases in line with consumer price indices or other similar indices, and the rent payable is pegged to the

euro on local currency. The Group may not be able to fully index its leases to appropriate consumer price

indices due to increasing competition in the real estate markets, which would materially adversely affect

the value of the relevant properties. If a lease is not fully indexed and, as a result, the rent remains

constant for a lengthy period, while the Group's costs of maintaining, operating and administering the

property increase due to inflation, this would adversely affect the Group's operating results. If such leases

are terminated after a long period, then the index link may subsequently cause a significant deviation in

the rent achievable on re-letting if market rates have not kept up with the rate of inflation or deviate from

the development of the euro. This may result in a material adverse effect on the Group's business, assets,

financial condition and results of operations.

RISKS RELATED TO THE SHARES

The Company's ability to pay dividends depends on a variety of factors including having sufficient

distributable profits and the receipt of sufficient funds from its subsidiaries.

The Company paid no dividends for the financial years 2010 to 2014. The Company may only pay

dividends if it has sufficient distributable profits as calculated by Luxembourg legal standards. The

Company is a holding company with no significant assets other than direct and indirect interests in the

subsidiaries through which it conducts its operations. Therefore, its ability to pay dividends to a large

extent depends on the receipt of sufficient funds from its subsidiaries. The extent of any such cash flows,

the Company, in turn, depends on the business, financial condition, results of operations and cash flows

of its subsidiaries.

The annual dividend proposal to the General Meeting of the Shareholders is, however, subject to the

Group's business development. The required capital base for growth initiatives and the current business

prospects are taken into account. There can be no assurance that dividends in line with the current

dividend policy will be paid in the future or that dividends will be paid at all.

In addition, payments and transfers of funds (also by way of cash pooling arrangements) to the Company

by its subsidiaries in order to enable dividend payments may become restricted by regulation of law or

otherwise. Furthermore, payments may become restricted, directly or indirectly, by the terms of Group's

future credit agreements or bond terms and conditions.

Future capital measures could lead to substantial dilution. Future offerings of debt or equity

securities may adversely affect the market price of the Shares.

The Group may require additional capital in the future to finance its operations and growth, or to repay its

debts. Both the raising of additional equity through the issuance of new shares and the potential exercise

of conversion or option rights by holders of any convertible bonds or bonds with warrants that may be

issued in the future may dilute existing Shareholders' shareholdings. The Company's Articles of

Incorporation provide for the issuance of up to 1 billion additional shares from authorized capital. The

Company may issue all of these Shares without any action or approval by its Shareholders and under

certain conditions, for example in the event of a capital increase against contributions in kind, without

granting any pre-emptive subscription rights to its Shareholders. Thus, investors bear the risk of the

27

Company's future offerings reducing the market price of the shares and diluting their shareholdings in the

Company.

A suspension of trading in the Shares could adversely affect the Share price.

With respect to securities publicly traded on the regulated markets of the NYSE Euronext Paris and the

Warsaw Stock Exchange the local regulators are authorized to suspend, or request the regulated market on

which securities are admitted to trading to suspend such securities from trading if, in its opinion, the

Company's situation is such that continued trading would be detrimental to investors' interests. The

regulators are further authorized to suspend trading in an issuer's securities in connection with measures

taken against market manipulation and insider trading. Existing orders are deemed void if trading is

suspended. Any suspension of trading in the Shares (other than for protecting investors' interest) could

adversely affect the price and the liquidity of the Shares and, consequently, could have a negative effect

on investors' ability to sell the Shares at a satisfactory price.

Exchange rate fluctuations could adversely affect the value of the Shares and any dividends paid on

the Shares for an investor whose principal currency is not the euro.

The Company declares and distributes dividends and distributions in euro. Exchange rate movements of

the euro will therefore affect the value of any dividends and distributions for investors whose principal

currency is not the euro. Furthermore, the market value of the Shares as expressed in foreign currencies

will fluctuate in part as a result of foreign exchange volatility. This could affect the value of the Shares

and of any dividends paid on the Shares for an investor whose principal currency is not the euro.

Additionally, should the Eurozone break up as a result of the sovereign debt crisis in Europe or for other

reasons or should certain member states of the Eurozone abandon the euro, the resulting exchange rate

movements to the euro could also materially affect the value of any dividends and distributions for

investors whose principal currency is not the euro.

28

MARKET AND INDUSTRY DATA

Market data and certain economic and industry data and forecasts used in, and statements regarding the

Company's position in the industry made in this Prospectus were estimated or derived based upon

assumptions the Company deems reasonable, from internal surveys, market research, government and

other publicly available information, reports prepared by consultants and independent industry

publications. External sources used include:

European Commission – European Economic Forecast Spring 2015;

Erste Group CEE Outlook 2014;

KBC Economic Outlook Central Europe January 2014;

DTZ European Investment Market Update Q4 2014;

DTZ European Investment Market Update Q2 2015;

CBRE CEE Property Investment Full year 2014;

Hypotéční banka (HB Index);

Prague City Report Q4 2014 and Q2 2015;

Budapest City Report Q4 2014 and Q2 2015;

Warsaw City Report Q4 2014; and

Macroeconomic indicators issued by the Czech Statistical Office.

In particular, reference has been made in this Prospectus to information concerning markets and market

trends. Such information was obtained from the above-mentioned market studies and other sources. The

Company has accurately reproduced such information and, as far as it is aware and able to ascertain from

information published by such third parties, no facts have been omitted that would render the reproduced

information inaccurate or misleading. Nevertheless, prospective investors are advised to consider this

information with caution. Market studies are often based on information or assumptions that may not be

accurate or appropriate, and their methodology is inherently predictive and speculative.

Irrespective of the assumption of responsibility for the content of this Prospectus, including the accurate

reproduction of third-party market data in this Prospectus, by the Company (see "Responsibility

Statement"), the Company has not independently verified the figures, market data or other information on

which third parties have based their studies. Accordingly, the Company makes no representation or

warranty as to the accuracy of any such information from third-party studies included in this Prospectus.

Prospective investors should note that the Company's own estimates and statements of opinion and belief

are not always based on studies of third parties.

29

RESPONSIBILITY STATEMENT

The Company assumes responsibility for the content of this Prospectus and declares that, having taken all

reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best

of its knowledge, in accordance with the facts and that it makes no omission likely to affect its import.

30

FORWARD-LOOKING STATEMENTS

This Prospectus includes forward-looking statements within the meaning of the securities laws of certain

applicable jurisdictions. These forward-looking statements include, but are not limited to, the discussion

of the changing dynamics of the marketplace and the Company's outlook for growth in the real estate

industry both within and outside of Croatia, Czech Republic, Hungary, Luxembourg, Poland, and

Slovakia. These forward-looking statements can be identified by the use of forward-looking terminology,

including the terms "aims", "anticipates", "believes", "continues", "could", "estimates", "expects",

"forecasts", "guidance", "intends", "may", "plans", "should" or "will" or, in each case, their negative, or

other variations or comparable terminology. These forward-looking statements include all matters that are

not historical facts. They appear in a number of places throughout this Prospectus and include statements

regarding our intentions, beliefs or current expectations concerning, among other things, our results of

operations, financial condition and performance, liquidity, prospects, growth, strategies and the industry

in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events

and depend on circumstances that may or may not occur in the future. We caution you that

forward-looking statements are not guarantees of future performance and that our actual financial

condition, results of operations and cash flows, and the development of the industry in which we operate,

may differ materially from those made in or suggested by the forward-looking statements contained in

this Prospectus. In addition, even if our financial condition, results of operations and cash flows, and the

development of the industry in which we operate are consistent with the forward-looking statements

contained in this Prospectus, those results or developments may not be indicative of our results or

developments in subsequent periods. Important factors that could cause these differences include, but are

not limited to:

the impact on our revenue, profits and cash flow resulting from changes in general economic

conditions, consumer confidence, unemployment rate, consumer prices, wage levels and

demographics in the markets in which we operate;

the laws, rules, regulations and taxation to which we are subject and the potential for changes to

those laws, rules, regulations and taxation;

our substantial leverage and ability to meet significant debt service obligations, including

significant repayment requirements in the coming years;

restrictions in our debt instruments that could impair our activities;

our exposure to interest rate risk, price risk and currency fluctuations;

changes in the competitive environment in the markets in which we operate;

changes in demand for our properties;

changes of the housing market and the rent level;

changes in the level of real estate development and renovation activities;

the success of the our recent investments;

31

natural disasters or other environmental impacts;

risk associated with our structure and ownership;

our ability to attract and retain highly skilled personnel and other qualified executives and

employees; and

other factors that are discussed in more detail under "Risk Factors" and elsewhere in this

Prospectus.

The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers

are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the

date hereof. The Company urges you to read this Prospectus, including the sections entitled "Risk

Factors", "Operating and Financial Review", "Industry Overview and Market Data" and "Business",

for a more complete discussion of the factors that could affect our future performance and the industry in

which the Company and the Group operate.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any

forward-looking statement contained in this Prospectus which may be made to reflect events or

circumstances after the date of this Prospectus, including, without limitation, changes in our business or

acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events

except as required by law or by the rules and regulations of the Luxembourg Stock Exchange.

32

AVAILABILITY OF PROSPECTUS

This Prospectus will be published on the Company's website (www.orcogroup.com). Note that nothing on

the Company's website (www.orcogroup.com) is intended to be, or should be construed as being part of,

this Prospectus. Furthermore, the Prospectus will be available free of charge as of the date of this

Prospectus during regular business hours on any weekday (Saturdays, Sundays and Luxembourg public

holidays excluded) at the registered office of the Company at 40, rue de la Vallée, L-2661, Luxembourg,

Grand Duchy of Luxembourg. This Prospectus will also be published on the website of the Luxembourg

Stock Exchange (www.bourse.lu).

33

DIVIDENDS AND DIVIDEND POLICY

Dividend Policy

Each year, at least five per cent of the net corporate profits are set aside and allocated to a reserve. Such

deduction ceases being mandatory when such reserve reaches ten per cent of the corporate capital, but

will resume whenever such reserve falls below ten per cent. The General Meeting of the Shareholders

determines the allocation and distribution of the net corporate profits.

Payment of dividends:

The Board of Directors is entitled to pay advances on dividends when the legal conditions listed below

are fulfilled:

an accounting statement must be established which indicates that the available funds for the

distribution are sufficient;

the amount to be distributed may not exceed the amount of revenues since the end of the last

accounting year for which the accounts have been approved, increased by the reported profits and

by the deduction made on the available reserves for this purpose and decreased by the reported

losses and by the sums allocated to reserves in accordance with any legal and statutory provision;

the Board of Directors' decision to distribute interim dividends can only be taken within two

months after the date of the accounting statement described above;

the distribution may not be determined less than six months after the closing date of the previous

accounting year and before the approval of the annual accounts related to this accounting year;

whenever a first interim dividend has been distributed, the decision to distribute a second one

may only be taken at least three months after the decision to distribute the first one; and

the statutory and independent auditor(s) in its (their) report to the Board of Directors confirm(s)

the conditions listed above are fulfilled.

Under general Luxembourg law, the conditions for making advances on dividends are less stringent than

the conditions listed above, however, the more restrictive provisions of the Company's Articles of

Incorporation will prevail as the recent changes under Luxembourg law have not yet been reflected in the

Articles of Incorporation of the Company.

When an advance distribution exceeds the amount of dividend subsequently approved by the General

Meeting of the Shareholders, such advance payment is considered an advance on future dividends.

No dividends were paid for the financial years 2010, 2011, 2012, 2013 and 2014.

34

CAPITALIZATION AND INDEBTEDNESS

Capitalization

The following table presents the Company's capitalization as of 30 June 2015:

As of 30 June

2015

(in € millions)

(unaudited, best

estimate)

Current financial liabilities(1)

36.8

Thereof secured 28.0

Thereof unsecured 4.4

Thereof guaranteed 4.4

Thereof unguaranteed -

Other current liabilities(2)

12.8

Thereof secured -


Thereof guaranteed -


Non-current financial liabilities(3)

112.3

Thereof secured 52.6

Thereof unsecured -

Thereof guaranteed 59.7


Other non-current liabilities(4)

7.7

Thereof secured -


Thereof guaranteed -


Total equity 203.7

Equity attributable to the owners of the parent 203.5

Non-controlling interests 0.2

(1)

Current financial liabilities include current financial debts and bonds and other current financial

liabilities. (2)

Other current liabilities include trade payables, advance payments and other current non-financial

liabilities. (3)

Non-current financial liabilities include non-current financial debts and bonds. (4)

Other non-current liabilities include provisions and other long term liabilities and deferred tax

liabilities.

35

Indebtedness

The following table presents the Company's net financial indebtedness as of 30 June 2015:

As of 30 June

2015

(in € millions)

(unaudited, best

estimate)

A. Cash 3.9

B. Cash equivalents -

C. Trading securities(1)

-

D. Liquidity (A) + (B) + (C) 3.9

E. Accounts receivables – consumer loans 4.1

F. Current bank debt -28.0

G. Current portion of bonds issued -4.4

H. Other current financial debt(2)

-9.3

I. Current financial debt (F) + (G) + (H) -41.7

J. Net current financial indebtedness (I) - (E) - (D) -33.7

K. Non-current bank loans -52.6

L. Non-current portion of bonds issued -59.7

M. Other non-current loans(3)

-

N. Non-current financial indebtedness (K) + (L) + (M) -112.3

O. Net financial indebtedness (J) + (N) -146.0

No significant change in the capitalisation and indebtedness

There has been no significant change in the Company's capitalisation or net financial indebtedness since

30 June 2015.

Working capital statement

The Company is of the opinion that it has sufficient working capital to meet its payment obligations at

least within the next 12 months following the date of this Prospectus.

No significant change in the Company's financial or trading position

There has been no significant change in the Company's financial or trading position since 30 June 2015

and there has been no material adverse change in the financial position or prospects of the Company since

31 December 2014.

36

CAPITAL RESOURCES

Cash and cash equivalents

As at 30 June 2015, the Group's cash and cash equivalents consisted of cash in bank of EUR 3.9 million

(EUR 7.1 million at 31 December 2014; EUR 85.2 million at 31 December 2013) and cash in hand of

EUR 17 thousand (EUR 9 thousand at 31 December 2014; EUR 0.1 million at 31 December 2013). There

were no short-term deposits at 30 June 2015 (EUR 28 thousand at 31 December 2014; EUR 3.4 million at

31 December 2013).

The cash in bank includes restricted cash of EUR 1.8 million (EUR 2.5 million at 31 December 2014;

EUR19.9 million at 31 December 2013), representing:

- Cash deposited in accounts reserved as collateral for development projects and lifted after sales of

units of EUR 0.1 million (EUR 0.1 million at 31 December 2014; EUR 10.6 million at 31

December 2013); and

- Cash deposited in accounts reserved as collateral for loans related to property of EUR 1.7 million

(EUR 2.4 million at 31 December 2014; EUR 9.1 million at 31 December 2013).

Loan-to-value ratio

For further discussion of the development of the Group's loan-to-value ("LTV") ratio, please refer to

"Operating and Financial Review―Liquidity and capital resources―Loan-to-value ratio."

Calculation of the LTV ratio as of the dates indicated is shown in the table below:

37

in EUR thousand, unless otherwise indicated

30 June

2015

31

December

2014

31

December

2013

Non-current liabilities

Financial debts 52,632 65,252 295,304

Non-current bonds 59,714 62,237 64,992

Current liabilities

Financial debts 27,957 13,557 273,041

Current bonds 4,375 278 321

Accrued interest 938 915 1,244

Liabilities linked to assets held for sale 4,013 237 27,722

Current assets

Current financial assets − − −

Cash and cash equivalents (3,951) (7,103) (88,669)

Net debt 145,678 135,373 573,954

Investment property 239,826 249,236 710,552

Hotels and owner-occupied buildings − − 61,639

Investments in equity affiliates 4,073 35 93

Financial assets at fair value through profit or loss 599 2,627 28,285

Financial assets available-for-sale 96,118 86,995 2,435

Non-current loans and receivables 7,962 4,669 28,533

Inventories 8,304 9,422 114,720

Assets held for sale 8,824 1,395 29,116

Revaluation gains on projects and properties 483 697 2,842

Fair value of portfolio 366,189 355,076 978,215

LTV ratio 39.8% 38.1% 58.7%

The LTV ratio of 39.8% at 30 June 2015 increased slightly compared to 38.1% at 31 December 2014.

LTV at 31 December 2014 decreased significantly compared to 58.7 % at 31 December 2013. The

components of LTV ratio have been influenced substantially by deconsolidation of leveraged assets over

the first half of the year 2014.

Both current and non-current debt went down following the derecognition of bank loans mainly related to

financing of investment properties in Germany and Hungary and the debt restructuring of the portfolio

financed by CA. In line with the decrease of financial debts, the cash held by the Group entities also went

down due to the loss of contribution of deconsolidated entities. In June 2014, the Group has partially sold

its shares in CPI PG for a total consideration of EUR 55.0 million. Most of the proceeds were used to

repay the bank liabilities related to Zlota project. The remaining investment in CPI PG (stake of 4.82%),

classified as financial asset available-for-sale, was valued at EUR 96.1 million (EUR 0.604 per share) at

30 June 2015.

Financial liabilities

38

For further discussion of the Group's financial debts, please refer to "Operating and Financial

Review―Liquidity and capital resources―Financial debts."

The Group's financial liabilities amounted to EUR 147.7 million at 30 June 2015 (EUR 141.3 million at

31 December 2014), including EUR 70.9 million related to bank loans on projects that are not under a

disposal process (EUR 76.8 million at 31 December 2014), EUR 64.1 million related to the Safeguard

Plan bonds and the notes issued by the Company in October 2012 under ISIN Code XS0820547742 (the

"New Notes") (EUR 62.5 million at 31 December 2014), EUR 3 million related to bank loans financing

assets held for sale (nil at 31 December 2014) and EUR 9.6 million related to loan from CPI PG (EUR 2.0

million at 31 December 2014).

The following table sets forth an analysis of maturities of the Group's financial debts as of the dates

indicated:

in EUR million Less than

one year -

Bank loans

linked to

assets held

for sale

Less

than one

year -

Others

1 to 3

years

3 to 5

years

More

than 5

years

Total

As at 30 June 2015 3.0 32.3 34.0 65.0 13.3 147.7

As at 31 December 2014 - 13.9 45.5 67.5 14.5 141.3

As at 31 December 2013 22.9 273.3 94.5 261.0 4.9 656.6

At 30 June 2015, financial liabilities increased by EUR 3.4 million compared to 31 December 2014. This

variation is explained by following transactions:

additional drawdown of short-term loan provided by CPI PG (EUR 7.6 million);

adjustment on Safeguard bonds booked in accordance with the termination of the Safeguard Plan

(EUR 2.1 million);

repayment on the New Notes (EUR -2.2 million);

repayments of bank loans for total amount of EUR 3.2 million and related to Bubenská (EUR 1.8

million), Na Poříčí (EUR 0.5 million), Capellen (EUR 0.5 million) and Hradčanská (EUR 0.4

million).

The decrease of financial liabilities at 31 December 2014 compared to 31 December 2013 followed from

the deconsolidation of CPI PG with bank loans amounting to EUR 284.1 million, of SHH shares with

bank loans amounting to EUR 21.1 million and other borrowings amounting to EUR 22.9 million, and

Hungarian assets with bank loans amounting to EUR 64.4 million.

In addition, bank loans related to the following assets were repaid or repurchased from financing bank

over 2014:

SHH (EUR 11.5 million);

Zlota 44 (EUR 59.6 million);

Hlubočky (EUR 3.1 million) and Dunaj (EUR 13.1 million) upon their successful debt

restructuring (for details please see note 11 to the 2014 Consolidated Annual Financial

Statements);

Bubenská (EUR 9.7 million);

39

Na Poříčí (EUR 3.3 million); and

Capellen (EUR 2.3 million).

At 30 June 2015, EUR 3.9 million of bank loan related to project classified as assets held for sale was in

breach of financial covenants. In 2014, the Group worked actively on the refinancing and restructuring of

its defaulted and short-term bank loans. As a result of this effort, the Group had no bank loans in breach

as at 31 December 2014. The Group completed successful refinancing of bank loans on three assets -

Capellen refinanced in June 2014 and prolonged until 2027, Diana bank loan prolonged until September

2019 and Marki until December 2015.

Non-derivative financial liabilities and net-settled derivative financial liabilities

The table below shows the Group’s non-derivative financial liabilities and net-settled derivative financial

liabilities by maturity as of 31 December 2014, based on the remaining period at the balance sheet date to

the contractual maturity date. The floating rate loans line presents the projected cash flows, including

interests and the reimbursements of the principal. The cash flows have been established on the basis of the

forward interest and exchange rates as at 31 December 2014.

At 31 December 2014 Less

than 1

month

Betwee

n 1 and

6

months

Betwee

n 6

months

and 1

year

Betwee

n 1 and

5 years

More

than 5

years

Total

cash

out-

flows

Book

value

(in € thousands) (audited)

Fixed rate loans and bonds 81 2,759 3,141 100,506 9,452 115,939 71,551

Floating rate loans 70 4,902 8,933 52,871 9,655 76,432 67,811

Other borrowings - - 1,890 55 17 1,962 1,962

Interest rate derivatives - - 599 - - 599 599

Liabilities linked to assets held

for sale - - 237 - - 237 237

Trade payables 1,120 2,785 103 - - 4,008 4,008

Other current financial

liabilities 439 3,817 158 - - 4,414 4,414

Total 1,710 14,263 15,061 153,432 19,124 203,590 150,582

In the table above, differences between book value and the cash-out flows are due to:

- Fixed rate loans and bonds: The bonds cash-out flows are equal to the mandatory payments as

they are defined in the terms of these financial instruments and include the nominal repayment,

the semi-annual cash interest payment and the payment of guarantee fee in respect of the notes.

The bank loans not in default or to be restructured include the accrued interest (not accounted for)

to the contractual maturity.

- Floating rate loans: The cash-out flows are not impacted by the fees related to the restructuring of

the financing which have been capitalized. The loans not in default or to be restructured include

40

the accrued interest (not accounted for) to the contractual maturity.

Consolidated statements of cash flows

For a discussion of the development of Group's consolidated cash flows, please refer to "Operating and

Financial Review―Liquidity and capital resources―Cash flows."

41

SELECTED FINANCIAL INFORMATION AND OTHER DATA

The selected financial information as of and for the years ended 31 December 2014, 2013 and 2012 has

been derived from the Company's Consolidated Annual Financial Statements. The selected financial

information as of and for the six-month period ended 30 June 2015 has been derived from the Company's

Interim Financial Statements. The following tables should be read in conjunction with, and are qualified

entirely by reference to "Operating and Financial Review" and the Company's Consolidated Annual

Financial Statements and Interim Financial Statements, including the notes thereto, included in this

Prospectus.

The Consolidated Annual Financial Statements and Interim Financial Statements have been prepared in

accordance with IFRS. The Consolidated Annual Financial Statements were audited by KPMG

Luxembourg, Société cooperative, having its registered office at 39, Avenue John F. Kennedy, L-1855,

Luxembourg.

Consolidated income statement

data

Six months ended 30


2015

2014

2014

2013

(Restated)(

1)

2012

(Restated)(

2)

(in € thousands)

Revenue 7,330 16,805 75,176 66,877 244,708

Net gain / (loss) from fair value

adjustments on investment

property (13,976) (469) 2,073 (57,840) (7,086)

Other operating income 108 244 445 873 9,473

Net result on disposal of assets 73 9 29 192 1,399

Cost of goods sold (865) (6,452) (58,840) (36,591) (141,071)

Employee benefits (514) (15,332) (16,113) (10,451) (26,736)

Amortization, impairments and

provisions 4,994 (9,974) 38,256 (138,421) (50,598)

Other operating expenses (8,346) (8,839) (15,065) (18,673) (53,819)

Operating result (11,196) (24,008) 25,961 (194,034) (23,730)

Financial result (10,742) (36,535) (48,188) (57,287) 755

Share of profit or loss of entities

accounted for using the equity

method 3,004 (206) (493) (413) (12,948)

Loss before income taxes (18,934) (60,749) (22,720) (251,733) (35,923)

Income taxes 1,520 (920) 299 (1,060) (9,558)

Loss from continuing

operations (17,414) (61,669) (22,421) (252,793) (45,481)

42

Loss after tax from discontinued

operations – (2,817) (2,722) (756) (1,466)

Net loss for the period (17,414) (64,486) (25,143) (253,550) (46,948)

Total loss attributable to non-

controlling interests (324) (1,466) (1,527) (26,523) (5,064)

Owners of the Company (17,090) (63,020) (23,616) (227,027) (41,883)

____________________ (1)

The 2013 figures were restated subsequent to the originally reported financial information in the 2013

Consolidated Annual Financial Statements due to the Group's high level of disposals and acquisitions,

in order to present a more meaningful presentation of financial information. (2)

The 2012 figures were restated subsequent to the originally reported financial information in the

audited consolidated financial statements of the Company and its subsidiaries as of and for the year

ended 31 December 2012 due to the adoption of IAS 19, relating to the recognition and disclosure of

actuarial gains and losses resulting from increases or decreases in the present value of defined benefit

obligations, as well as a change in the consolidation method of accounting for joint ventures.

Consolidated balance sheet data

As of 30


2015

2014

2013

(Restated)(1)

2012

(Restated)(2)

(in € thousands)

Non-current assets 349,556 344,630 890,573 1,048,079

Current assets 18,901 28,089 252,156 332,743

Total assets 377,281 374,114 1,171,845 1,387,557

Equity attributable to owners of the

Company

203,544 205,510 175,909 438,493

Non-controlling interests 189 506 87,208 3,797

Total equity 203,733 206,016 263,117 442,290

Non-current liabilities 120,020 138,795 491,269 601,795

Current liabilities 49,515 29,066 389,737 333,680

Total liabilities 173,548 168,098 908,728 945,267

Total equity and liabilities 377,281 374,114 1,171,845 1,387,557

(1)



in order to present a more meaningful presentation of financial information. (2)

The 2012 figures were restated subsequent to the originally reported financial information in the

audited consolidated financial statements of the Company and its subsidiaries as of and for the year

ended 31 December 2012 due to the adoption of IAS 19, relating to the recognition and disclosure of

43

actuarial gains and losses resulting from increases or decreases in the present value of defined benefit

obligations, as well as a change in the consolidation method of accounting for joint ventures.

Consolidated statement of cash

flows data

Six months ended 30


2015 2014

2014 2013 2012

(in € thousands)

Net cash from / (used in) operating

activities 308 (42,716) 34,534 24,702 142,318

Net cash from / (used in) investing

activities 275 (31,896) (112,652) 8,611 80,464

Net cash from / (used in) financing

activities (2,999) 3,215 (3,252) 32,516 (232,386)

Net increase / (decrease) in cash (2,416) (71,397) (81,370) 65,829 (9,604)


beginning of the year 7,103 88,669 88,669 23,633 32,849


beginning of the year of assets

reclassified to assets held for sale(*)

(736) (8,671) - - -

Cash and cash equivalents at the end

of the period 3,951 8,572 7,103 88,669 23,633

* Data published only for the half-year periods in 2015 and 2014

Other key performance indicators

As of 30


2015

2014 2013 2012

(in € thousands, unless otherwise indicated)

EPRA Net Asset Value 206,860 210,319 220,405 531,265

Loan-to-Value Ratio 39.8% 38.1% 58.7% 47.9%

44

OPERATING AND FINANCIAL REVIEW

The following discussion and analysis of the Group's financial condition and results of operations should

be read in conjunction with the Consolidated Annual Financial Statements and the Interim Financial

Statements included in the section "Financial Statements", which begins on page F-1 of this Prospectus.

The Consolidated Annual Financial Statements and Interim Financial Statements have been prepared in

accordance with IFRS, as adopted by the European Union and as permitted by Luxembourg Law dated

December 20, 2010 and subsequently amended (the "IFRS"). The following section contains forward-

looking statements, which are based on our management's assumptions regarding our future business

performance. See "Forward-Looking Statements". A number of factors, including the risks described in

the section titled "Risk Factors", may cause our actual results to differ materially from the results

expected on the basis of these forward-looking statements.

Overview

The Company and its subsidiaries (together the "Group") is a real estate group with a major portfolio in

Central and Eastern Europe (the "CEE"). It is principally involved in the development of properties for its

own portfolio or intended to be sold in the ordinary course of business and is also active in leasing

investment properties under operating leases as well as in asset management.

In 2014 and 2015, the Group implemented major changes in its management and business strategy and

completed a significant financial and operational restructuring. The deconsolidation of the Group's

leveraged assets over the first half of 2014 and the accompanying streamlining of the Group's corporate

structure resulted in significant savings in its financing and administrative costs and the Group's real

estate portfolio has become more efficient as a result. Consequently, the Group's LTV ratio as of 31

December 2014 decreased to 38.1% compared to 58.7% as of 31 December 2013 (restated) and 47.9% as

of 31 December 2012 (restated). As of 30 June 2015, the Group's LTV ratio stood at 39.8%. In 2014, net

loss attributable to the owners of the Company decreased to EUR 23.6 million, compared to EUR 227.0

million in 2013 (restated) and EUR 41.9 million in 2012 (restated). In the first six months of 2015, net

loss attributable to the owners of the Company declined to EUR 17.1 million from net loss of EUR 63.0

million in the prior-year period.

Key factors affecting comparability of results of operations and financial condition

During the period under review in this chapter, the Group's results of operations, financial condition and

liquidity have been substantially influenced by the financial and operational restructuring of the Group

undertaken to stabilize its going concern issues (see note 2.1.1 to the 2013 Consolidated Annual Financial

Statements, note 2.2 to the 2014 Consolidated Annual Financial Statements and note 2.1 to the Interim

Financial Statements for details regarding the Group's going concern issues). Through this process, which

included sale of non-strategic assets, the Group's real estate portfolio has become more efficient and

focused. The following are the key transactions taken as part of the Group's restructuring (see also note

1.1 to the 2014 Consolidated Annual Financial Statements).

45

Zlota 44 Disposal

In December 2013, the loan guaranteed by a pledge on the Group's Zlota 44 project in Warsaw went into

default. In April 2014, the Group received a termination notice concerning the Zlota 44 project, calling

for the repayment of the then-outstanding loans (up to EUR 56 million). Subsequently, the Group reached

an agreement with the financing bank to acquire the accelerated Zlota 44 loan and all related securities for

EUR 55 million. That acquisition was executed to release the Group from corporate guarantees of EUR

48.2 million related to Zlota 44 and to allow the Group to organize an ordered sale process of Zlota 44.

The Zlota 44 disposal was carried out in August 2014 and finalized in January 2015 for a final purchase

price amounting to EUR 50 million (the net revenue recognized in the financial statements from the Zlota

44 disposal following settlement of disputes with the Zlota 44 general contractor). The Group used part of

the Zlota 44 proceeds in an amount of EUR 31 million to re-acquire some of the CPI PG shares that were

previously disposed of by the Group to mobilize the required liquidity in order to face the Zlota 44 bank

loan acceleration (see also below).

Suncani Hvar restructuring

In the first half of 2014, SHH, a property in which the Group is a shareholder and which carried

substantial debt, initiated a pre-bankruptcy procedure to allow the restructuring of its operations.

Consequently, the Group disposed of SHH shares representing 24.94% of the SHH shareholding, as well

as its shareholder receivables from SHH. The SHH shares were sold for EUR 1 and receivables were sold

for EUR 2.1 million. As a result of impairments recognized in 2013, the transaction had no material

impact on the Group's 2014 financial results. The restructuring plan was approved in December 2014

(creditors' meeting) and January 2015 (shareholders' meeting). Approval of the plan by the Split

Commercial occurred on 9 June 2015. Further to the decision of the Commercial Court in Split issued on

14 September 2015, which resolved to confirm the capital increase of SHH under the pre-bankruptcy

procedure, the Company`s stake in SHH shareholding decreased from 31.61% to 16.7%. By the adoption

of its financial restructuring plan, SHH's total debt would decrease by HRK 272.4 million, or 47.76%,

which is at the level of debt that SHH could properly settle from operating activities, as it is proven by its

business results with a continuous growth for the past three full years. See also note 18 to the 2014

Consolidated Annual Financial Statements and note 5.4 to the Interim Financial Statements.

Debt restructuring of certain properties

In 2014, the Group focused on restructuring of its debt. In the first half of 2014, the Group completed a

portfolio debt restructuring with Credit Agricole CIB (the "CA") related to three assets pledged as

security for loans provided by CA (Bubenska commercial building in Prague, Hlubocky production plant

near Olomouc and the Dunaj department store in Bratislava). As a result of the restructuring, the Group

transferred ownership of Hlubocky and Dunaj (together with related debt) to CA and retained ownership

of Bubenska with a decreased leverage and extended debt maturity. The Group also completed a long-

term refinancing of the Capellen office building in Luxembourg with BGL BNP Paribas. The loan

guaranteed by a pledge on the Capellen building amounting to EUR 19 million went into default in

December 2013.

Hungarian subsidiaries insolvency

46





in December and later on by the Budapest Commercial Court. As part of the approved reorganization the

subsidiaries transferred Váci 1 (former stock exchange building) and Szervita assets to the financing bank

and Paris Department Store to the Hungarian Republic, which exercised its preemption right. Within the

reorganization settlement the Group paid to the financing bank EUR 9 million in consideration of the

release of corporate guarantees provided by the Company as well as the release of pledges on Vaci 188

project, which was cross-collateralized in favour of the financing bank. The Group intends to proceed

with orderly disposals of its remaining Hungarian assets, in line with its strategy to exit the Hungarian,

Slovak and Croatian (with the exception of SHH) markets.

Loss of control over CPI PG

In May 2013, the Group sold shares in CPI PG (formerly Orco Germany S.A.) for EUR 8 million.

Furthermore, during March and April 2014, CPI PG implemented a capital increase without the Group's

participation, leading to a decrease in the Group's share in CPI PG from 58.5% to 44.4%. This, together

with a change in CPI PG's management, resulted in a loss of the Group's control over CPI PG (including

loss of access to CPI PG's cash flows, which represented EUR 52 million out of the Group's EUR 89

million total consolidated cash position at 31 December 2013). In June 2014, the Group sold 108 million

shares in CPI PG for EUR 55 million, which were used to pay for the acquisition of the loan receivables

and collateral related to the Zlota 44 project from the lender, as described above. In September 2014, the

Group subscribed for new CPI PG shares in an amount of EUR 31 million. In addition, the Group entered

into a put option agreement with Radovan Vitek (a major shareholder of CPI PG) concerning the disposal

of a significant portion of the Group's shares in CPI PG (approximately 41% of the total shares currently

held by the Group), pursuant to which the Group has the right to require Mr. Vitek to purchase a part of

these shares held by the Group, for a period of two years at a price of EUR 31.0 million. The Group's total

shareholding in CPI PG as of 30 June 2015 amounted to 4.82% (31 December 2014: 4.82%; 31 December

2013: 58.48%). The Group deconsolidated CPI PG from its financial statements in 2014. See also note 18

to the 2014 Consolidated Annual Financial Statements and notes 5.2 and 9 to the Interim Financial

Statements.

Restructuring of notes issued in 2012

Effective November 2014, the Group managed to renegotiate and amend the terms and conditions of its

notes issued in October 2012 under ISIN Code XS0820547742 in EUR 73.1 million initial denomination

(the "New Notes"). In relation to the amendment, the Company paid EUR 1 million to the noteholders as

interest and an amendment fee. The Company also made a "mandatory prepayment on the Zlota 44

disposal" of EUR 15.0 million. In addition, on 30 January 2015, the Company made another "mandatory

prepayment on the Zlota 44 disposal" with respect to the New Notes in the amount of EUR 2.2 million.

Accordingly, the outstanding amount of the New Notes was EUR 65.1 million as of 30 June 2015.

Capital decrease and equity raising

47

In August 2013, the Company increased its capital by EUR 15 million through the issuance of new shares

to existing shareholders.

In April 2014, the Company decreased its corporate capital from EUR 229.0 million to EUR 114.5

million without cancellation of shares, by decreasing the par value of the Company's shares from EUR 2

to EUR 1 per share. Subsequently, in May 2014, the Company's capital was further decreased to

EUR 11.5 million without cancellation of shares, by decreasing the par value of the Company's shares

from EUR 1 to EUR 0.10 per share.

In November 2014, the Group raised EUR 59.2 million of new equity, improving its balance sheet, by

issuing 200 million new shares. Two investors, Aspley Ventures Limited (an entity closely associated

with Mr. Pavel Spanko) and Fetumar Development Limited (an entity closely associated with Mr. Jan

Gerner), subscribed the new capital in equal shares. As of 10 November 2014, the Company's capital

amounted to 314,507,629 shares and has not changed to the date of this Prospectus.

Disposals and acquisitions

In 2013, the Group sold all of the units it held in the Office and Office II sub-funds of the Endurance Real

Estate Fund for a total price of EUR 10 million. Furthermore, in May 2013, the Group completed the

disposal of a land plot U Hranic (Czech Republic) for EUR 4.3 million.

In December 2014, the Group disposed of its stake in Mamaison hospitality portfolio for EUR 13.3

million, thereby exiting its final investment in Russia. See also note 10.1.1 to the 2014 Consolidated

Annual Financial Statements for additional details.

In line with its new strategy focused on real estate development project, in November 2014, the Group

acquired four new development projects with an aggregate of 186 thousand SQM of developable land,

mainly in Prague, for EUR 44.0 million. In addition, in December 2014, the Group acquired a brownfield

area in Brno (Czech Republic) with an area of approximately 22.5 hectares, for EUR 13.95 million. In

March 2015, the Group completed the acquisition of a development project located in Prague 10

comprising approximately 33 thousand SQM of developable land directly adjacent to the Group's already

owned land, for EUR 5.7 million.

Due to the above-described events, the Group's results of operations between the periods covered in this

chapter are not fully comparable. In order to present a more meaningful comparison between 2013 and

2014, the Company restated its previously reported 2013 financial results. Such figures are presented in

the "restated" column in the 2014 Consolidated Annual Financial Statements included in this Prospectus.

In addition, the Group restated its previously reported 2012 financial results (as presented in the "restated"

column in the 2013 Consolidated Annual Financial Statements included in this Prospectus). These

restatements were made to reflect certain changes in accounting policies as described in note 2.1.3 to the

2013 Consolidated Annual Financial Statements. In this chapter, such restated 2013 and 2012 figures are

used, unless otherwise indicated.

Segmentation

48

The Group has two reporting segments: Development and Property Investments. For more information on

the Group's segment reporting, see note 5.1 to the 2014 and 2013 Consolidated Annual Financial

Statements and note 3 to the Interim Financial Statements.

Results of operations

Comparison of the six months ended 30 June 2015 and 30 June 2014

The following table presents a comparison of the Group's results of operations for the periods indicated:

49

Six months ended 30 June

Change

2015 2014

2015/2014

(in € thousands) (in %)

Revenue 7,330 16,805 -56.4

Sale of goods 770 7,892 -90.2

Rent 3,974 5,037 -21.1

Hotels and restaurants ― 1,040 n.m.

Services 2,586 2,836 -8.8

Net gain / (loss) from fair value adjustments on

investment property (13,976) (469) ˃−100

Other operating income 108 244 -55.7

Net result on disposal of assets 73 9 ˃+100

Cost of goods sold (865) (6,452) 86.6

Employee benefits (514) (15,332) 96.5

Amortization, impairments and provisions 4,994 (9,974) ˃+100

Other operating expenses (8,346) (8,839) 5.6

Operating result (11,196) (24,008) 53.4

Interest expense (5,717) (13,642) 58.1

Interest income 441 882 -50

Foreign exchange result 1,638 (2,842) ˃+100

Other net financial results (7,104) (20,933) 66.1

Financial result (10,742) (36,535) 70.6

Share of profit or loss of entities accounted for

using the equity method 3,004 (206) ˃+100

Loss before income taxes (18,934) (60,749) 68.8

Income taxes 1,520 (920) ˃+100

Loss from continuing operations (17,414) (61,669) 71.8

Loss after tax from discontinued operations ― (2,817) n.m.

Net loss for the period (17,414) (64,486) 73.0

Total loss attributable to non-controlling interests (324) (1,466) 77.9

Owners of the Company (17,090) (63,020) 72.9

The results of the first six months of 2015 have shown stabilization after the reorganisation of the Group

throughout 2014. In line with this, the Group recorded lower net loss attributable to owners of the

Company in the amount of EUR 17.1 million compared to a loss of EUR 63.0 million in the first half of

2014.

50

Revenue

Revenue comprises sale of goods, rent, hotel and restaurants and services. In the first six months of 2015,

total revenue decreased by EUR 9.5 million year-on-year to EUR 7.3 million, mainly as a result of sales

of residential units on finished projects V Mezihori and Mostecka in Prague, which were completed in

2014. Renting properties contributed EUR 0.8 million to total rent revenue in the first six months of 2015

compared to EUR 7.9 million in the prior-year period.

The decline in revenue was attributable primarily to the Development segment, where revenue decreased

from EUR 8.1 million in the first half of 2014 to EUR 1.3 million in the first half of 2015. Residential

development sales declined from EUR 8.0 million in the first half of 2014 to EUR 0.8 million in the first

half of 2015. The main contributors of revenues recognized in the first half of 2015 were projects V

Mezihori (EUR 0.3 million) and Benice I (EUR 0.4 million) in Prague, for total revenue generated in the

Czech Republic of EUR 0.7 million, compared to EUR 6.6 million in the first six months of 2014. In

addition, Klonowa Aleja in Warsaw contributed EUR 0.1 million to revenue in the first half of 2015, for

total revenue generated in Poland of EUR 0.1 million, compared to EUR 0.6 million in the prior-year

period. Commercial development revenue in the first half of 2015 increased slightly by EUR 0.4 million

compared to the prior-year period. The only contributor was rental revenue generated on project

Zbrojovka Brno.

Revenue in the Property Investments segment amounted to EUR 6.0 million in the first six months of

2015 compared to EUR 8.7 million in the prior-year period, a decline of 31.3%. Revenue from rental and

hospitality activities amounted to EUR 6.0 million in the first half of 2015, which is lower compared to

EUR 7.6 million over the same period in 2014. Main contributors to the decrease of EUR 2.3 million on

rental activity were disposed assets Hlubočky and Dunaj (EUR 1.1 million) and deconsolidated

Hungarian assets which ceased to contribute to revenue after loss of control as a result of the bankruptcy

procedure (EUR 0.6 million).

Operating expenses (including employee benefits) decreased to EUR 8.9 million in the first six months of

2015 from EUR 24.2 million in the prior-year period. The decrease was due mainly to reduction in

headcount and one-off expenses related to termination indemnities, which occurred in 2014. Other

operating expenses increased by EUR 2.1 million in the first six months of 2015 compared to the prior-

year period due to a write-off of receivables of the Group's Hungarian companies.

Operating expenses can be split into direct asset or project costs generating revenues ("operation costs")

which amounted to EUR 3.6 million in the first six months of 2015 (EUR 6.0 million in the first six

months of 2014) and general management or services expenses ("service companies costs") in the amount

of EUR 5.2 million in the first six months of 2015 (EUR 18.2 million in the first six months of 2014).

The following table sets forth a breakdown of the Group's operating expenses for the periods indicated:

51


2015

2014

(in € thousands)

Leases and rents (57) (178)

Building maintenance and utilities supplies (1,303) (2,078)

Marketing and representation costs (220) (726)

Administration costs (4,111) (4,954)

Taxes other than income tax (366) (643)

Hospitality specific costs 0 (106)

Other operating expenses (2,290) (155)

Employee benefits (514) (15,332)

Total operating expenses (8,861) (24,171)

Valuation adjustments and impairments

The net revaluation loss for the first six months of 2015 amounted to EUR 14.0 million, which was the

result of new valuations performed in June on all properties. The impact of fair value adjustments and

impairments on real estate assets or investments at 30 June 2015 is detailed by country as follows:

Freehold

buildings

Extended

stay

hotels

Land

bank Total

(in € thousands)

Czech Republic 974 ― (10,923) (9,949)

Poland (1,120) ― ― (1,120)

Croatia ― ― (407) (407)

Hungary (2,660) ― ― (2,660)

Luxembourg 160 ― ― 160

Total (2,646) ― (11,330) (13,976)

Operating result

Operating result improved from a loss of EUR 24.0 million in the first half of 2014 to a loss EUR 11.2

million in the first half of 2015. This improvement was driven mainly by reduced costs associated with

termination indemnities paid in the first half of 2014 in the amount of EUR 12.3 million.

Adjusted EBITDA

52

Adjusted EBITDA deteriorated in the first half of 2015 to a loss of EUR 2.3 million compared to a loss of

EUR 1.3 million in the prior-year period. Following the improvement of operating result, the

Development segment reported improved adjusted EBITDA in the first half of 2015 in the amount of

EUR 2.7 million.

In Property Investments, the EBITDA decline of EUR 3.8 million in the first six months of 2015 was

impacted mainly by lower EBITDA in renting activity, which decreased by EUR 3.5 million due to

decreased revenue and no termination indemnities contributing in the first half of 2015, but reported in

the first half of 2014.

Development

Property

Investments Total

(in € thousands)

Operating result (first six months of 2015) (11,476) 279 (11,197)

Net gain or loss from fair value adjustments on investment

property 11,321 2,655 13,976

Amortization, impairments and provisions (822) (4,172) (4,994)

Termination indemnities ― ― ―

Net result on disposal of assets ― (73) (73)

Adjusted EBITDA (first six months of 2015) (977) (1,311) (2,288)

Adjusted EBITDA (first six months of 2014) (3,732) 2,462 (1,270)

Variation year on year 2,755 (3,773) (1,018)

Financial result

Financial result comprises interest expense, interest income, foreign exchange result and other net

financial results. Improved other net financial results amounted to a loss of EUR 7.1 million in the first

half of 2015, compared to a loss of EUR 20.9 million over the same period in 2014, reflecting the

stabilization of the Group following its reorganisation. The following table sets forth the Group's other net

financial results for the periods indicated:


2015 2014

(in € thousands)

Change in fair value and realized result on derivative instruments 158 (117)

Change in fair value and realized result on other financial assets (2.121) (20,224)

Other net financial results (156) (592)

Realized result on repayment of borrowings (4,188) ―

Result on disposal of subsidiaries (797) ―

Total (7,104) (20,933)

53

Other net financial results for the first half of 2015 were impacted mainly by change in fair value and

realized result on other financial assets, which related to: (i) impairment of the receivable related to a

disposal of the Radio Free Europe building of EUR 0.6 million, (ii) dividends from Residential sub-fund

of the Endurance Real Estate Fund in the amount of EUR 0.5 million and (iii) negative revaluation of

EUR 2.0 million realized on investment in the Endurance Real Estate Fund.

Realized result on repayment of borrowings of EUR -4.2 million in the first half of 2015 related mainly to

adjustment on early payment of Safeguard Plan liabilities (e.g., bonds) of EUR 2.1 million and the

Company corporate guarantee issued in respect of Stein project of EUR 1.8 million, which has been

called further to Stein project’s default.

Comparison of the years ended 31 December 2014 and 31 December 2013


Year ended 31 December

Change

2014

2013

(Restated)(1

)

2014/2013

(Restated)

(in € thousands) (in %)

Revenue 75,176 66,877 +12.4

Sale of goods 60,691 45,525 +33.3

Rent 8,507 12,006 −29.1

Hotels and restaurants 1,032 2,368 −56.4

Services 4,946 6,978 −29.1

Net gain / (loss) from fair value adjustments on

investment property 2,073 (57,840) ˃+100

Other operating income 445 873 −49.0

Net result on disposal of assets 29 192 −84.9

Cost of goods sold (58,840) (36,591) −60.8

Employee benefits (16,113) (10,451) −54.2

Amortization, impairments and provisions 38,256 (138,421) ˃+100

Other operating expenses (15,065) (18,673) +19.3

Operating result 25,961 (194,034) ˃+100

Interest expense (21,115) (21,689) +2.7

Interest income 2,181 1,800 +21.2

Foreign exchange result (46) (3,447) +98.7

Other net financial results (29,208) (33,951) +14.0

Financial result (48,188) (57,287) +15.9

Share of profit or loss of entities accounted for

using the equity method (493) (413)

−19.4

54

Loss before income taxes (22,720) (251,733) +91.0

Income taxes 299 (1,060) ˃+100

Loss from continuing operations (22,421) (252,793) +91.1

Loss after tax from discontinued operations (2,722) (756) ˃−100

Net loss for the period (25,143) (253,550) +90.1

Total loss attributable to non-controlling interests (1,527) (26,523) +94.2

Owners of the Company (23,616) (227,027) +89.6

(1)



in order to present a more meaningful presentation of financial information.

Revenue

The Group's revenue increased by EUR 8.3 million, or 12.4%, from EUR 66.9 million in 2013 (restated)

to EUR 75.2 million in 2014. The increase was primarily a result of sale of goods increasing from EUR

45.5 million in 2013 (restated) to EUR 60.7 million in 2014 due to in large part to the sale of the Zlota 44

project in Poland. Rental income decreased from EUR 12.0 million in 2013 (restated) to EUR 8.5 million

in 2014 mainly due to the sale of assets, deconsolidation of certain Hungarian assets due to bankruptcy

procedures and lower rental revenues of certain properties in Warsaw. Revenue from hotels and

restaurants decreased from EUR 2.4 million in 2013 (restated) to EUR 1.0 million in 2014 due primarily

to the loss of control of SHH during restructuring procedures in 2014. Revenue from services decreased

from EUR 7.0 million in 2013 (restated) to EUR 4.9 million in 2014.

Within the Development segment, revenue increased from EUR 46.3 million in 2013 (restated) to EUR

61.3 million in 2014. Residential development sales increased from EUR 26.0 million in 2013 (restated)

to EUR 61.1 million in 2014. 61 units were delivered in 2014, including 54 in Prague (-63% year-on-

year), 4 in Warsaw (-87% year-on-year) and 3 in Bratislava (-75% year-on-year), compared to 189 units

in 2013. The decrease was due to lower existing inventory, no new projects initiated and loss of control

over CPI PG with Naunynstrasse residential project (Naunynstrasse is not included in the number of

units). In 2014, the main contributors to the revenue were:

In Prague: V Mezihori (EUR 4.6 million), Benice (EUR 2.5 million) and Mostecka (EUR 1.4

million) generated total revenue in the Czech Republic of EUR 9.0 million to be compared to

EUR 18.5 million in 2013;

In Warsaw: Zlota 44 project with revenue from sale amounting to EUR 50.0 million; Klonowa

Aleja (EUR 0.4 million) and Feliz Residence (EUR 0.2 million). Total revenue generated in

Poland in 2014 was EUR 50.8 million to be compared to EUR 3.9 million in 2013; and

In Bratislava: Koliba for EUR 0.8 million (year-on-year decrease of EUR 2.7 million).

Commercial development revenue for 2014 significantly decreased by EUR 20.0 million compared to

2013, when the Group closed the sale of a part of the Bubny plot to Unibail Rodamco for that amount.

55

Within the Property Investments segment, revenue declined from EUR 20.6 million in 2013 (restated) to

EUR 13.9 million in 2014. Rental activity and management services generated revenue of EUR 12.8

million in 2014, which is lower compared to EUR 18.1 million in 2013. Main contributors to the decrease

of EUR 5.3 million on rental activity are the deconsolidated Hungarian assets which ceased to contribute

to revenue after loss of control as a result of the bankruptcy procedure (EUR 1.8 million), sold assets

Hlubocky and Dunaj (EUR 1.3 million) and lower rental revenues of Marki in Warsaw (EUR 0.4

million). Revenue from asset management services decreased as a result of the sale of Endurance Real

Estate Fund assets. Hospitality revenue amounting to EUR 1.1 million in 2014 decreased by EUR 1.4

million compared to 2013. After the loss of control over SHH, the only contributor to revenue from

hospitality activities in 2014 was Pachtuv Palace, which was included in the termination package and

transferred to a new owner in July 2014.

Operating expenses and employee benefits

As detailed in the table below, the total operating expenses including employee benefits increased by

7.1% from 2013 to 2014. Excluding expenses related to termination indemnities, Zlota 44 project and

Hungarian deconsolidated entities, the operating expenses would amount to EUR 17.5 million for 2014.


2014

2013

(restated)

(in € thousands)

Leases and rents (339) (1,249)


Marketing and representation costs (1,175) (2,884)


Taxes other than income tax (1,354) (1,588)

Hospitality specific costs (105) (220)

Other operating expenses (284) (598)

Employee benefits (16,113) (10,451)


Operating costs (i.e. direct asset or project costs generating revenues) amounted to EUR 8.8 million in

2014 (EUR 12.3 million in 2013) and service companies costs (i.e. general management or services

expenses) amounted to EUR 22.4 million in 2014 (EUR 16.8 million in 2013).

As a result of strong reduction of local teams and termination indemnities paid during 2014, employee

benefits increased by EUR 5.7 million compared to 2013, reaching EUR 16.1 million in 2014. Employee

benefits excluding termination indemnities (EUR 11.0 million) went down by EUR 5.3 million,

amounting to EUR 5.1 million in 2014 (EUR 10.5 million in 2013).

56

Net gain or loss on disposal of assets

In 2014, the Group finalized the transfer of Hlubocky and Dunaj assets, as discussed above. The

transaction price was reflected in the fair value of the properties at 31 December 2013 and so, the disposal

had no effect on 2014 results.

Disposal of the Zlota 44 project resulted in a partial reversal of impairment losses accumulated in

previous year in the amount of EUR 34.3 million. The total consideration in the amount of EUR 50.0

million was included in the revenues generated from sale of goods in 2014. The same amount was

charged to the income statement as a cost of goods sold.

Valuation adjustment, impairments, amortization and provisions

The net revaluation gain on investment properties recorded in 2014 amounted to EUR 2.1 million and

resulted from positive revaluation of properties in the Czech Republic and Hungary.

The impact of fair value adjustment and impairments on real estate assets is detailed by country as

follows:

Year ended

31 December 2014

Year ended

31 December 2013

Revaluation Impairment Total Revaluation Impairment Total

(in € thousands)

Czech Republic 2,652 (1,612) 1,040 (26,795) (12,222) (39,017)

Poland (1,270) 34,277 33,007 (1,683) (121,031) (122,899)

Hungary 2,131 ― 2,131 (24,405) ― (24,405)

Slovakia ― (13) (13) (4,888) 254 (4,634)

Luxembourg (1,440) ― (1,440) 110 ― 110

Croatia ― ― - 6 ― 6

Total 2,073 32,652 34,725 (57,840) (132,999) (190,839)

The main movements in fair value in 2014 were as follows:

In the Czech Republic, the fair value decreased for Bubenska (EUR 0.5 million) and went up for

freehold buildings Hradcanska (EUR 0.4 million) and Na Porici (EUR 0.9 million); the value of

the land bank in the Czech Republic went up thanks to Praga – an increase by EUR 1.1 million;

In Poland, the market value of Diana Office went down by EUR 0.2 million. Also, the value of

logistic park Marki decreased by EUR 1.1 million;

In Hungary, the increase related to the freehold buildings Vaci 188 (EUR 1.5 million) and

Vaci 199 (EUR 0.6 million); and

In Luxembourg, the value of Capellen office building decreased by EUR 1.4 million.

57

The reversal of impairment charges in Poland is attributable to Zlota 44. Following the sale, impairment

recorded in 2013 (EUR 120.8 million) was partially reversed in the amount of EUR 34.3 million

reflecting the sales price exceeding the net book value of the project. In addition, a provision of EUR 13.2

million related to payments claimed by Zlota 44 general contractor has been released as the sales price

was reduced for potential indemnities provided to the buyer.

The total gross transaction price of EUR 63.3 million agreed in August 2014 was partially deferred and

subject to settlement of disputes with the general contractor. The purchase price was finally agreed and

decreased by EUR 13.3 million used for the settlement of the disputes. The final purchase amounted to

EUR 50.0 million.

Operating result

The operating profit for 2014 amounted to EUR 26.0 million compared to an operating loss of EUR 194.0

million in 2013 (restated). This significant improvement is attributable to the sale of the Zlota 44 project

concluded in August 2014 with total net impact of EUR 47.5 million.

In contrast, the operating result was negatively influenced by indemnity payments for termination

agreements in the aggregate amount of EUR 11.0 million, concluded in the first half of 2014 and

completed and finally settled throughout the year.

Adjusted EBITDA

Unlike the operating result, adjusted EBITDA decreased by EUR 5.5 million and amounted to EUR -3.4

million in 2014, compared to EUR 2.0 million in 2013. The sale of Zlota 44 project itself did not

contribute to EBITDA as both revenue and cost of goods sold amount to EUR 50.0 million. As EBITDA

is adjusted for non-cash items, the reversal of impairment for Zlota 44 did not influence this measure. The

other projects were not in the position to generate sufficient revenue to cover all the operating expenses,

including administration costs and consultancy fees.

The Development segment reported a decrease of EUR 4.6 million in 2014 compared to 2013, which was

driven mainly by residential activity with negative EBITDA of EUR 9.4 million. The residential activity

included revenue from the sale of Zlota 44 and absorbed major part of operating expenses which are

allocated based on the portion of revenue generated in each segment. As described above, the sale of

Zlota 44 project had no impact on EBITDA.

In Property Investments, adjusted EBITDA decreased by EUR 0.8 million in 2014 compared to 2013.

This negative variation was impacted by Management services activity due to lower amount of

management fees from sold Endurance Real Estate Fund assets.

Development

Property

Investments Total

(in € thousands)

Operating result (as of 31 December 2014) 25,648 313 25,961

Net gain or loss from fair value adjustments on investment (1,177) (896) (2,073)

58

Development

Property

Investments Total

(in € thousands)

property

Amortization, impairments and provisions (42,390) 4,134 (38,256)

Termination indemnities 8,943 2,030 10,973

Net result on disposal of assets 19 (47) (28)

Adjusted EBITDA (as of 31 December 2014) (8,958) 5,533 (3,425)

Adjusted EBITDA (as of 31 December 2013) (reported) (4,314) 6,348 2,034

Variation year on year (4,644) (815) (5,459)

Financial result

The Group's financial result in 2014 was a loss of EUR 48.2 million compared to a loss of EUR 57.3

million in 2013 (restated). The 2014 financial loss was primarily due to interest expenses accrued on bank

loans and bonds issued by the Group and from extraordinary financial charges related to the Group's

restructuring of its financial debts. In addition, the Group suffered severe accounting losses due to the

deconsolidation of certain assets which are recorded in the other net financial result, as described below.

In 2014, gross interest expenses recorded in profit and loss reached EUR 21.1 million compared to

EUR 21.7 million in 2013. Out of these EUR 21.1 million, EUR 7.6 million were paid cash (as shown in

the consolidated cash flow statement). The interests on Safeguard Plan bonds and the New Notes

increased from EUR 9.3 million in 2013 to EUR 10.4 million in 2014.

The interests on bank loans decreased from EUR 12.4 million in 2013 to EUR 10.7 million in 2014.

Disposal of highly leveraged assets had a positive effect on total interest on bank loans which decreased

due to lower interest paid on loans financing investment properties (EUR 4.3 million in 2014 compared to

EUR 10.7 million in 2013). On the other hand, interests on bank loans for development projects increased

from EUR 1.6 million in 2013 to EUR 6.4 million in 2014 due to suspension of interest capitalization for

Zlota 44 bank loan following the decision to stop development and sell the project as is.

The following table sets forth the Group's other net financial results:


2014

2013

(Restated)

(in € thousands)

Impairment of long-term receivables - (37,864)

Change in fair value and realized result on derivative instruments (69) 1,218

Change in fair value and realized result on other financial assets (7,534) (11,619)

Realized result on repayment of borrowings (3,474) 14,891

Result on disposal of subsidiaries (17,646) -

Other net financial results (485) (578)

59


2014

2013

(Restated)

Total (29,208) (33,952)

Change in fair value and realized result on other financial assets in 2014 related to:

negative revaluation of EUR 9.7 million realized on a loan provided to hospitality joint venture

prior to its disposal;

further impairment of RFE promissory note of EUR 1.1 million;

a dividend received from Endurance Residential Sub Fund in the amount of EUR 1.6 million; and

reversal of impairment of EUR 1.5 million recognized on Endurance Residential Sub Fund.

The result on repayment of borrowings in 2014 consisted of loss recognized in relation to revaluation of

the New Notes after the amendment of their terms and conditions.

Result on disposal of subsidiaries in 2014 included the following:

a gain recognized in relation to the deconsolidation of Hungarian entities of EUR 25.6 million;

a loss upon deconsolidation of CPI PG of EUR 34.8 million and a loss on disposal of CPI PG

shares of EUR 2.9 million;

a settlement payment of EUR 9.0 million transferred to financing bank of Hungarian assets in

bankruptcy. In consideration the bank waived the guarantee provided by the Company in respect

of the assets and released the mortgage over Vaci 188 asset;

a loss upon disposal of hospitality joint venture and related loan receivables in the amount of

EUR 6.5 million;

a gain of EUR 3.0 million resulting from deconsolidation of Orco Project, sp. z o.o. with negative

net asset value due to declaration of bankruptcy of the company; and

a gain related to deconsolidation of company Szczecin Project, sp. z o.o. in the amount of

EUR 5.4 million.

Share on profit or loss of entities accounted for using the equity method

The share of profits or losses of joint ventures recognized in the Group's income statement in 2014

amounted to a loss of EUR 0.4 million, compared to a EUR 0.5 million loss in 2013 (restated). As of 31

December 2014, the Group was involved in two joint ventures (Kosik and Uniborc).

60

Kosik is a joint venture established with GE dedicated to residential development in the south-east area of

Prague. The Group has a 50% interest in Kosic S.à r.l., a Luxembourg based holding company which in

turn holds 100% of two operational companies seated in the Czech Republic - SV Fáze II, s.r.o. and SV

Fáze III, s.r.o. The carrying amount of Group's investment in Kosik joint venture was nil as at 31

December 2014 (2013: EUR 0.1 million) as the Group's share of losses exceeded the carrying amount of

interest in the joint venture. Losses in excess of the interest amounting to EUR 0.2 million were applied to

a loan receivable provided to Kosik joint venture by the Group. A provision of EUR 1.8 million in 2014

(2013: EUR 3.5 million) was accrued in the liabilities of the joint venture to cover the onerous contract on

the minimum return guaranteed to the partner. When this agreed amount will be paid by the joint venture

to the other joint partner, their 50% share will be transferred to the Group for no consideration. On 3

September 2015, GE sold its stake in Kosic S.à r.l. to a third party.

Uniborc S.A is a joint venture constituted in 2013 with Unibail Rodamco aimed at developing a shopping

center in the Bubny area, Prague. The Group's shareholding is 20%. The Group has an option until the

start of the works for the future shopping mall to increase its shareholding to 50% at acquisition cost in

the joint venture plus interest. The net liabilities of the joint venture amounted to EUR 1.9 million as at 31

December 2014. Losses in excess of the interest amounting to EUR 0.4 million were applied to a loan

receivable provided to Uniborc joint venture by the Group.

As of 31 December 2013, the Group held a 44% interest in the joint venture Hospitality Invest S.á r.l.,

created by Endurance Hospitality Assets S.à r.l., a Group subsidiary and a joint partner AIG. The interest

was sold in 2014 in line with the Group's new strategy for EUR 13.3 million.

Loss from continuing operations

Loss from continuing operations comprises loss before income taxes and income taxes. Over the year

2014, a significant group of activities (relating to both investment properties and hotels) were excluded

from the scope of consolidation in the Company's financial information. These activities contributed to

the Group results until the date of loss of control and are presented as discontinued operations. To provide

a more reliable view on the development of the Group activities and to comply with IFRS guidance, the

consolidated income statement is presented excluding discontinued operations, the net impact of which is

disclosed on a separate line.

Loss from continuing operations comprises loss before income taxes and income taxes. The loss from

continuing operations for 2014 amounted to EUR 22.4 million, compared to EUR 252.8 million for 2013

(restated). This decrease is primarily due to the reasons discussed above. The income tax recognized in

the income statement amounted to EUR 0.3 million in 2014 and was composed of EUR 0.4 million of

current income tax revenue which related to the return of income tax paid in respect of previous years and

EUR 0.1 million of deferred tax expenses. The Group paid EUR 0.1 million of current income taxes in

2014.

Net loss for the period

Net loss for the period comprises loss from continuing operations and loss after tax from discontinued

operations. In 2014, the net loss for the period amounted to EUR 25.1 million compared to EUR 252.8

million in 2013 (restated).

61

Owners of the Company

The net loss attributable to the owners of the Company in the amount of EUR 23.6 million for 2014,

compared to EUR 227.0 million in 2013 (restated), has been driven mainly by the negative financial result

of EUR 48.2 million and exceptional one-off expenses recognized in the operating result.

Comparison of the years ended 31 December 2013 and 31 December 2012



Change

2013

(Restated)(1)

2012

(Restated)(2)

2013/2012

(Restated)

(in € thousands)

(in %)

Revenue 66,877 244,708 −72.7

Sale of goods 45,525 140,687 −67.6

Rent 12,006 66,074 −81.8

Hotels and restaurants 2,368 19,305 −87.7

Services 6,978 18,641 −62.6

Net gain / (loss) from fair value adjustments on investment

property (57,840) (7,086)

˃−100

Other operating income 873 9,473 −90.8

Net result on disposal of assets 192 1,399 −86.3

Cost of goods sold (36,591) (141,071) +74.1

Employee benefits (10,451) (26,736) +60.9

Amortization, impairments and provisions (138,421) (50,598) ˃−100

Other operating expenses (18,673) (53,819) +65.3

Operating result (194,034) (23,730) ˃−100

Interest expense (21,689) (63,960) +66.1

Interest income 1,800 3,812 −52.8

Foreign exchange result (3,447) 6,476 ˃−100

Other net financial results (33,951) 54,425 ˃−100

Financial result (57,287) 755 ˃−100

Share of profit or loss of entities accounted for using the

equity method (413) (12,948)

+96.8

Loss before income taxes (251,733) (35,923) ˃−100

Income taxes (1,060) (9,558) +88.9

Loss from continuing operations (252,793) (45,481) ˃−100

Loss after tax from discontinued operations (756) (1,466) +48.4

62

Net loss for the period (253,550) (46,948) ˃−100

Total loss attributable to non-controlling interests (26,523) (5,064) ˃−100

Owners of the Company (227,027) (41,883) ˃−100

(1)


Consolidated Annual Financial Statements due to the Group's high level of disposals and acquisitions, in

order to present a more meaningful presentation of financial information.

(2) The 2012 figures were restated subsequent to the originally reported financial information due to changes

in accounting policies as further described in note 2.1.3 to the 2013 Consolidated Annual Financial

Statements.

The following analysis of the results of operations in the 2013 and 2012 financial years is condensed due

to the limited comparability of the restated 2013 financial results with the 2012 financial results. Due to

the significant changes to the scope of the Group's activities following its restructuring in 2014, the Group

believes that the 2013 (restated) and 2012 comparison is of limited informational value. Therefore, only

selected key income statement line items are discussed below.

Revenue

The Group's revenue decreased by EUR 177.8 million, or 72%, from EUR 244.7 million in 2012

(restated) to EUR 66.9 million in 2013 (restated). This decrease was primarily due the sale of a major

asset, the Sky office complex in Düsseldorf, in 2012 (contributing EUR 121.6 million in revenue), which

negatively impacted the Group's Development segment revenue. In 2013, the sale of the Bubny plot

(Czech Republic) generated EUR 20.0 million and the project V Mezihori in Prague contributed EUR

12.9 million to revenue. Rental income decreased from EUR 66.1 million in 2012 (restated) to EUR 12.0

million in 2013 (restated) primarily due to excluded rental income from Germany portfolio (EUR 48.2

million), no rental revenue from sold assets - Sky office (EUR 3.3 million) and RFE (EUR 1.9 million).

Revenue from hotels and restaurants decreased from EUR 19.3 million in 2012 (restated) to EUR 2.7

million in 2013 (restated). As a result of the Group's previous joint ventures no longer being fully

consolidated, SHH and Pachtuv Palace were the only hospitality activities contributing to revenue for

2013. Revenue from services decreased from EUR 18.6 million in 2012 (restated) to EUR 7.0 million in

2013 (restated) primarily due to the sale and liquidation of the Endurance Real Estate Fund.

Within the Development segment, revenue declined by almost EUR 100.0 million in 2013 due to absence

of Sky office revenue from 2012 (EUR 121.6 million). On the other hand, 2013 revenue was positively

influenced by the sale of Bubny plot for EUR 20.0 million and contribution of the project V Mezihori

(EUR 12.9 million).

Residential development revenue increased from EUR 20.8 million in 2012 to EUR 26.1 million in 2013.

162 units were delivered, including 118 in Prague (+513% year-on-year), 31 in Warsaw (-37% year-on-

year), 12 in Bratislava (-33% year-on-year) and 1 in Berlin (-87% year-on-year) compared to 97 units in

2012. The main driver of this increase was the V Mezihori project in Prague (EUR 12.9 million) with 102

units delivered after its completion in the third quarter in 2013. Decrease in other countries was due to

lower existing inventory and no new projects initiated.

63

Commercial development revenue was significantly impacted by sales in both 2012 and 2013. In

December 2012, the Group sold the Sky Office building in Düsseldorf generating revenue of EUR 117.3

million. Together with the sale, the Group lost annual rent and management fee amounting to EUR 4.3

million. The main contributor to 2013 remained the sale of Bubny plot to Unibail Rodamco (EUR 20.0

million).

Within the Property Investments segment, revenue is not directly comparable between 2013 and 2012 due

to the restatement of the 2013 figures following the Group's significant restructuring in 2014. On an "as

reported" basis, Property Investments revenue rose by 1.2% in 2013 compared to 2012. The absence of

contribution of the Radio Free Europe building revenue (EUR 2.2 million in 2012) and decrease of

Endurance fees (EUR -1.4 million year-on-year) were more than compensated by strong performance of

Berlin rental portfolio (EUR +3.2 million year-on-year) and rising revenue of hospitality activity (EUR

+1.4 million year-on-year).

Operating result

The operating loss for the year 2013 (restated) amounted to EUR 194.0 million compared to an operating

loss of EUR 23.7 million in 2012 (restated). This significant decline reflects past difficulties in the

Central European real estate markets, including impairment losses recognized on some of the Group's

residential projects and negative market valuation of investment properties in Hungary and the Czech

Republic in 2013. Notwithstanding the overall negative result, the Group achieved positive results in

Germany with the management of the Group's Berlin rental portfolio as well as a particular residential

project in Prague.

Financial result

The Group's financial result in 2013 (restated) was a loss of EUR 57.3 million compared to a gain of EUR

0.8 million in 2012 (restated). The 2013 financial loss was due in large part to the restructuring of the

Group's bonds in 2012, which decreased the Group's cash interests therein as well as other net finance

losses including refinancing fees and bank expenses.

Share on profit or loss of entities accounted for using the equity method

The share of profits or losses of joint ventures recognized in the Group's income statement in 2013

(restated) amounted to a loss of EUR 0.4 million, compared to a EUR 13.0 million loss in 2012 (restated).

Loss from continuing operations

Loss from continuing operations for 2013 (restated) amounted to EUR 252.8 million, compared to EUR

45.5 for 2012 (restated). The income tax loss recognized in the income statement in 2013 amounted to

EUR 10.4 million and was composed of EUR 1.5 million of current income tax expenses and EUR 8.9

million of deferred tax expense. The Group paid EUR 4.6 million of current income taxes in 2013,

primarily in Germany.

Net loss for the period

64

In 2013 (restated), net loss for the period amounted to EUR 253.6 million compared to EUR 47.0 million

in 2012 (restated).

Owners of the Company

The net loss attributable to the owners of the Company in the amount of EUR 227.0 million for 2013

(restated), compared to EUR 41.9 million in 2012 (restated), was driven mainly by the negative financial

result of EUR 57.3 million, due to valuation decreases and other losses recognized by the Group in 2013.

Investment property

The Group's investment property consists of property that is held for long-term rental yields or for capital

appreciation or both, and that is not occupied by the Group. Investment property comprises freehold land,

freehold buildings, extended stay residences, land plots held under operating leases and buildings held

under finance leases. For further information, see also note 4.6 to the 2014 Consolidated Annual Financial

Statements and note 4 to the Interim Financial Statements..

The Group's investment property amounted to EUR 239.8 million as of 30 June 2015 compared to

EUR 249.2 million as of 31 December 2014, EUR 710.6 million as of 31 December 2013 and EUR 782.7

million as of 31 December 2012. The following table sets forth an overview of the development of the

Group's investment property as of the dates indicated:

At 30 June At

31 December

2015 2014

2013

(Restated)

2012

(Restated)

(in € thousands)

Balance at the beginning of the period 249,236 710,552 782,731 862,765

Changes in the Group ― (578,631) ― (6,322)

Investments/acquisitions 752 1,147 3,545 2,114

Asset sales ― ― (6,825) (74,603)

Revaluation through income statement (13,976) 2,073 (34,444) (7,514)

Changes in classification ― ― ― (2,170)

Transfer from inventories ― 64,850 ― ―

Acquisition of group of assets 5,568 66,072 ― ―

Transfers to/from assets held for sale (5,717) (12,762) (22,189) (5,182)

Other transfers ― ― ― (1,207)

Translation differences 3,963 (4,065) (12,265) 14,849

Balance at the end of the period 239,826 249,236 710,552 782,731

In the first six months of 2015, investment property declined principally as a result of movements in fair

value of assets related to the land bank and freehold buildings (Czech Republic: Bubny (EUR -13

million), Zbrojovka (EUR +6 million); Hungary: Vaci 188 (EUR -2 million); Poland: Marki (EUR -1.1

65

million)). Acquisitions related to the Group's purchase of approximately 33 thousand SQM of

developable land in Prague 10 in March 2015 for EUR 5.7 million. See also note 4 to the Interim

Financial Statements. One land bank plot in Istria (Croatia) and the property Marki (Poland) were

transferred to assets held for sale in the expectation of their sale. At 30 June 2015, 7 investment properties

with a net book value of EUR 167.2 million have been pledged as a security for bank loans amounting to

EUR 71.0 million.

In 2014, investment property declined primarily as a result of the Group's loss of control over CPI PG and

SHH, as well as the deconsolidation of three Hungarian assets, as discussed under "Key Factors Affecting

Comparability of Results of Operations and Financial Condition."As a result, freehold buildings in the

amount of EUR 570.7 million and land bank of EUR 4.9 million were derecognized from the Group's

balance sheet. In 2014, acquisition of group of assets related principally to the Group's acquisition of four

projects in the Czech Republic for EUR 44.0 million and a brownfield area in Brno (Czech Republic) for

EUR 13.95 million, as likewise discussed under "Key Factors Affecting Comparability of Results of

Operations and Financial Condition." The transfer from inventories to investment property in 2014

related to the classification of the Group's Bubny plot in the Czech Republic (see also note 14 to the 2014

Consolidated Annual Financial Statements). In 2014, 8 investment properties with a net book value of

EUR 178.7 million have been pledged as a security for bank loans amounting to EUR 76.9 million.

In 2013, investment property declined primarily as a result of the disposal of project U Hranic in Prague

for a total sales price of EUR 4.3 million, as well as an industrial park in Stribro (Czech Republic) or a

total sales price of EUR 1.7 million. Movement in fair value of investment property of EUR -34.3 million

related principally to decreases in property values in the Czech Republic (Na Porici, Bubenska,

Hradcanska and Pachtuv Palac), Hungary (Vaci 1, Vaci 188 and Szervita) and Slovakia (shopping center

Dunaj), which were in part offset by increases in property values in Germany. The transfer into assets

held for sale from investment property related mainly to a the transfer of ownership of Dunaj and

Hlubocky assets to the financing bank in connection with debt restructuring.

For further breakdown and explanations of movement in investment property, see note 8 to the 2014 and

2013 Consolidated Annual Financial Statements.

Investments in progress

As at the date of this Prospectus, there are no new investments in progress.

Liquidity and capital resources

Cash flows

The following table shows the Group's consolidated cash flow data for the periods indicated:

Six months ended

30 June Year ended 31 December

2015 2014 2014

2013

(Restated)

2012

(Restated)

(in € thousands)

66

Six months ended

30 June Year ended 31 December

2015 2014 2014

2013

(Restated)

2012

(Restated)

Net cash from/ (used in) operating activities 308 (42,716) 34,534 24,702 142,318

Net cash from/ (used in) investing activities 275 (31,896) (112,652) 8,611 80,464

Net cash from/ (used in) financing activities (2,999) 3,215 (3,252) 32,516 (232,386)

Net increase (decrease) in cash (2,416) (71,397) (81,370) 65,829 (9,604)

Cash and cash equivalents at the beginning of

the year 7,103 88,669 88,669 23,633 32,849

Cash and cash equivalents at the beginning of

the year of assets reclassified to assets held

for sale

Cash and cash equivalents at the end of the

period

(736)

3,951

(8,671) - - -

8,572

7,103 88,669 23,633

Net cash from operating activities

For the year ended 31 December 2014, net cash from operating activities was EUR 34.5 million compared

to EUR 24.7 million in 2013. The increase reflects mainly higher operating result in 2014 (profit of EUR

23.2 million) compared to 2013 (loss of EUR 164.3 million), as well as changes in operating assets and

liabilities, which added EUR 53.5 million to operating cash flow in 2014, compared to lowering operating

cash flow in 2013 by EUR 7.1 million.

Net cash from operating activities was EUR 24.7 million in 2013 compared to EUR 142.3 million in

2012. The decline in 2013 was driven mainly by the operating loss of EUR 164 million (2012: loss of

EUR 23.7 million). Changes in operating assets and liabilities added EUR 112.2 million to operating cash

flow in 2012, compared to lowering operating cash flow in 2013 by EUR 7.1 million.

Net cash from/ (used in) investing activities

For the year ended 31 December 2014, net cash used in investing activities was EUR 112.7 million

compared to net cash from investing activities of EUR 8.6 million in 2013. The change in 2014 was due

primarily to (i) changes in the Group of EUR 87.4 million relating to the deconsolidation of CPI PG and

SHH (see also note 6 to the 2014 Consolidated Annual Financial Statements), (ii) purchase of financial

assets of EUR 48.5 million and (iii) acquisition of subsidiaries of EUR 37.0 million relating to the

acquisition of development projects and a brownfield area in the Czech Republic. These effects were in

part offset by cash inflows in 2014 in relation to proceeds from disposal of financial assets of EUR 60.3

million.

Net cash from investing activities was EUR 8.6 million in 2013 compared to EUR 80.5 million in 2012.

In 2012, cash inflows resulted principally from proceeds from sales of non-current tangible assets (Radio

Free Europe in Prague, as well as additional assets in Prague and Germany, as described in detail in notes

67

8 and 11 to the 2013 Consolidated Annual Financial Statements). In 2013, proceeds from such sales

amounted to EUR 7.0 million. In addition, in 2013, the Group granted loans to joint ventures and

associates in the amount of EUR 4.2 million (2012: nil), as described in note 13.3 to the 2013

Consolidated Annual Financial Statements.

Net cash from/ (used in) financing activities

For the year ended 31 December 2014, net cash used in financing activities was EUR 3.3 million

compared to net cash from financing activities of EUR 32.5 million in 2013. The change reflected

primarily repayment of borrowings in 2014 of EUR 84.4 million compared to EUR 35.7 million in 2013

(see note 19.2 to the 2014 Consolidated Annual Financial Statements for further details), as well as

repayment of the New Notes in an amount of EUR 12.3 million (see note 19.1 to the 2014 Consolidated

Annual Financial Statements). This was in part offset by higher proceeds from issuances of the

Company's shares (EUR 59.2 million in 2014 compared to EUR 15.0 million in 2013).

Net cash from financing activities was EUR 3.3 million compared to net cash used in financing activities

of EUR 232.4 million in 2012. In 2012, the Group's repayment of borrowings amounted to EUR 462.6

million (2013: EUR 35.7 million), as described in more detail in notes 19.3 and 19.4 to the 2013


Financial debts

The Group primarily uses bank loans and bonds to finance its activities.

As of 30 June 2015, the Group had EUR 147.7 million in financial debts, including EUR 70.9 million

related to bank loans on projects that are nor under a disposal process, EUR 3 million related to bank

loans financing assets held for sale, EUR 64.1 million related to the Safeguard Plan bonds and the New

Notes (the terms of which were amended effective as of November 2014, as described in note 19.1 to the

2014 Consolidated Annual Financial Statements), and EUR 9.6 million related to a loan from CPI PG.

Bank loans include EUR 46.7 million for which the financing banks have no recourse to the Group. These

loans finance assets with a total secured value of EUR 79.6 million. As of 30 June 2015, EUR 2.9 million

of bank loan related project classified as assets held for sale was in breach of financial covenants. Due to

classification as asset held for sale, there was no effect on the Group's financial statements as at 30 June

2015. For further discussion (including a breakdown of maturities), see "Capital Resources―Financial

liabilities", as well as notes 10 and 11 to the Interim Financial Statements.

As of 31 December 2014, the Group had EUR 141.3 million in financial debts. This total amount

consisted of (i) EUR 62.5 million in outstanding bonds, primarily comprising the New Notes, as well as

Safeguard Plan bonds (EUR 4.0 million outstanding nominal amount as of 31 December 2014) and (ii)

EUR 78.8 million in bank loans and other borrowings (see note 19.2 to the 2014 Consolidated Annual

Financial Statements for full details). Other borrowings represent mainly loans from related parties. Bank

loans included EUR 46.7 million (as of 31 December 2014) for which the financing banks have no

recourse to the Group. These loans finance assets with a total secured value of EUR 79.6 million. A

breakdown of the maturities of the Group's financial debts is set forth in note 19.3 to the 2014

Consolidated Annual Financial Statements. As of 31 December 2014, there were no bank loans in breach

of covenants.

68

As of December 2013, the Group had EUR 656.6 million in financial debts. The decrease of EUR 515.3

million in financial debts in 2014 followed the deconsolidation of (i) CPI PG with bank loans amounting

to EUR 284.1 million, (ii) SHH with bank loans amounting to EUR 21.1 million and other borrowings of

EUR 22.9 million, as well as (iii) Hungarian assets with bank loans amounting to EUR 64.4 million (all

amounts as of 31 December 2013). In addition, in 2014, the Group repaid of repurchased from the

financing banks the following bank loans: (i) SHH (EUR 11.5 million); (ii) Zlota 44 (EUR 59.6 million);

(iii) Hlubocky (EUR 3.1 million) and Dunaj (EUR 13.1 million); (iv) Bubenska (EUR 9.7 million; (v) Na

Porici (EUR 3.3 million); and (iv) Capellen (EUR 2.3 million).

Loan-to-value ratio

As of 30 June 2015, the Group's LTV ratio increased slightly compared to 31 December 2014 from 38.1%

to 39.8%. Total amount of financial liabilities including bonds was EUR 147.7 million at 30 June 2015 in

comparison to EUR 141.3 million at 31 December 2014. Fair value of portfolio evaluated from

EUR 355.1 million at 31 December 2014 to EUR 366.2 million at 30 June 2015.

The Group's LTV ratio was 38.1% as of 31 December 2014 compared to 58.7% as of 31 December 2013.

The significant decrease in the LTV ratio in 2014 was due to deconsolidation of leveraged assets in the

first half of 2014. In 2014, financial debt went down following the derecognition of bank loans mainly

related to financing of investment properties in Germany and Hungary, and the debt restructuring of the

portfolio financed by CA. In line with the decrease in financial debts, the cash held by the Group also

declined due to the loss of contribution of the deconsolidated entities. In June 2014, the Group partially

sold its shares in CPI PG for total consideration of EUR 55.0 million. The Group's remaining investment

in CPI PG was valued at EUR 84.3 million as of 31 December 2014. Most of the proceeds were used to

repay bank liabilities related to the Zlota 44 project.

See also "Capital Resources―Loan-to-value ratio".

Capital commitments

As a developer of buildings and residential properties, the Group is committed to finalize the construction

of properties in different countries. At 30 June 2015, the Group has started to carry out one project and as

such is committed to construction costs amounting to EUR 1.3 million. The Group also holds interest in

the Kosik joint venture with two active projects started in 2014 and 2015. The total commitments of these

projects amount to EUR 14.3 million.

Off-balance sheet arrangements

The Group has no material off-balance sheet arrangements.

Financial risk management

The Group has exposure to credit risk, liquidity risk and market risk (including currency risk, interest rate

risk and price risk), among others. The Group's overall risk management program focuses on the

unpredictability of financial markets and seeks to minimize potential adverse effects on the Group

financial performance. The Group uses financial instruments to mitigate certain risk exposures. Risk

management is carried out by the Group's Chief Financial Officer and his team, who identify, evaluate

69

and mitigate financial risks in close cooperation with the Group's operating units. The Board of Directors

provides principles for overall risk management, as well as policies covering specific risk areas. For more

information concerning market risks and the Group's financial risk management, see notes 20.1 and 20.2

to the 2014 Consolidated Annual Financial Statements.

Critical accounting estimates

The Group prepares its consolidated financial statements in accordance with IFRS, which requires the

Group's management to make estimates and assumptions that affect the reported amounts of assets,

liabilities, income and expenses and the disclosure of contingent assets and liabilities. Actual results could

differ materially from these estimates. In particular, the Group's management must make estimates and

assumptions in fair value measurements, income taxes, determining remaining construction costs and

impairment on developments, pension benefits and impairment on goodwill and trademark. For a

description of the Group's critical accounting policies, see note 2.3 to the Interim Financial Statements,

note 3 to the 2014 Consolidated Annual Financial Statements and note 2 to the 2013 Consolidated Annual

Financial Statements.

70

INDUSTRY OVERVIEW AND MARKET DATA

Certain information set forth in this section has been derived from external sources, identified in "Market

and Industry Data". Industry surveys and publications generally state that the information contained

therein has been obtained from sources believed to be reliable, but some of this information may have

been derived from estimates or subjective judgments or have been subject to limited audit and validation

measures. While we believe these market data to be accurate and correct, we have not independently

verified them. We have accurately reproduced the sector share and industry data, and as far as we are

aware and able to ascertain from various market research publications, publicly available information

and industry publications, including reports published by the third-party sources identified in "Market

and Industry Data", no facts have been omitted which to our knowledge would render the reproduced

information inaccurate or misleading.

The following is an overview of recent macro-economic developments and conditions in the real estate

markets in the Czech Republic, Hungary, Slovakia and Poland in which the Group operates, including

outlook and key drivers of these markets.

Global macro-economic conditions1

Czech Republic

The following macroeconomics data and description were published by the Czech Statistical Office

(unless otherwise stated).

The gross domestic product adjusted for price, seasonal, and calendar effects increased in 2014 by 2.0%

year-on-year. The economy of the Czech Republic benefited from increasing of both foreign and

domestic demand as well as from a very low comparison base, the first quarter of 2013 was the weakest

for the last four years in terms of economic performance. The final consumption expenditure increased in

total by 1.7%, year-on-year. The total gross capital formation increased by 3.7%, year-on-year. Increased

investments were directed to transport equipment, machinery equipment, and buildings and structures

except for dwellings. Quarter-on-quarter, the fixed capital formation increased by 1.2%.

The consumer price level in December 2014 was 0.5%. This development came particularly from prices

in 'food and non-alcoholic beverages' and from slowed increase in transport services, recreation and

culture. The increase in the average consumer price index over the twelve months to December 2014

compared to the average consumer price index over the previous twelve months, stood at 0.4% in

December 2014.

The general unemployment rate according to the International Labour organization (the "ILO") definition

in the age group 15-64 years attained 5.9% in December 2014 and decreased by 0.9 percentage points

(p.p.) year-on-year. The number of unemployed persons reached 306.8 thousand decreasing by 45.8

thousand persons, year-on-year.

Hungary

1European Commission - European Economic Forecast Spring 2015; Erste Group CEE Outlook 2014;KBC Economic Outlook

Central Europe January 2014

71

In 2014, on the back of increasing performance of agriculture, manufacturing and construction, the

seasonally adjusted year-on-year quarterly gross domestic product growth was above 3% during the first

three quarters of the year, which means that the country´s economy expanded at its fastest pace in the last

8 years. Based on the latest forecast, the annual growth for 2014 was 3.6%. The rebounding economy is

also having a positive impact on the labour market: Hungary´s unemployment rate between October 2014

and December 2014 was 7.1%, which is a substantial improvement compared to the corresponding period

of last year.

Slovakia

Slovakia's economic performance in 2014 was more balanced when compared to previous years, as

domestic demand rose at a significant pace. This led to significant economic improvement with estimated

gross domestic product growth at 2.4%. Stronger economic growth was however slowed down by

limitations of the automotive industry and by EU sanctions levied against Russia. Retail sales, new car

registrations and consumer sentiment initiated an upward trend for private consumption, which is boosted

by lower unemployment levels, growth in nominal wages by 5% and consumer price index inflation close

to 0%. Slovakia is forecasted to outperform the EU with 3.0% GDP growth in 2015 and 3.4% in 2016.

The unemployment rate in December 2014 was 12.6%.

Poland

The Polish economy remains resilient despite recent tensions between Russian and Ukraine as well as

deflation which is still on the rise. Gross domestic product growth in 2014 was 3.4% year-on-year.

Moreover, 2015 paints a positive picture for the Polish economy which is expected to be driven by strong

domestic demand and industrial production. The unemployment rate in 2014 was in a downward trend,

reaching 11.5% in December 2014 and was lowest since 2011. The retail sales in Poland were 2.7%

higher in 2014 than in 2013. Spending power in the Warsaw agglomeration was EUR 10,339 per capita

per annum, which stands 68% higher than the national average.

European investment activity and lending market2

A very strong finish to the year took total European commercial real estate investment volume in 2014 up

to EUR 186 billion, an increase of 29% year on year. The fourth quarter total volume of nearly EUR 65

billion, posted the best ever performance for a single quarter. The outlook for Europe´s markets during

2015 is still positive. Combined with a strong weight of new capital chasing opportunities across the

region, this is expected to lead to further growth in volumes which are set to reach at least EUR 210

billion in 2015.

CEE investment market was also up in 2014, by 25% year on year. All of the main markets grew except

of Poland (which declined by -9%), with Czech Republic growing by +52% and Hungary by +69%.

Offices continued to drive investment activity with a 44% market share. The industrial segment has

shined with volumes reaching a new record of EUR 21 billion in 2014, driven by strong demand from

warehousing/logistics space, especially across CEE markets. In the retail segment, shopping centres

remains the most sought after asset with EUR 24 billion of acquisitions in 2014, up from EUR 18 billion 2DTZ European Investment Market Update Q4 2014 ; CBRE CEE Property Investment Full year 2014

72

recorded a year ago.

Growth in investment activity has been across the board from both domestic and overseas investors. Non-

European investors have been a key driver of activity and their investment reached a record EUR 56

billion in 2014, itself a record 30% share of total investment.

Selected market focus

Prague office market3

Almost 149 thousand SQM of office space was completed throughout 2014 which represents the

strongest annual supply since 2009 and an approximately 90% increase in comparison to last year's

volume. As of 30 June 2015, three new office schemes, among others, with a total leasable area of

approximately 95 thousand SQM had been completed and there is approximately 148 thousand SQM of

office space under construction, with several office projects due to commence construction in the second

half of 2015. Out of the projects currently under construction, approximately 88 thousand SQM is

scheduled for completion by the end of 2015. The cumulative gross take-up for 2014 reached 333

thousand SQM which represents a 12% year-on-year increase and it is the highest ever take-up in the

history of Prague's modern office market. In the first half of 2015, gross up-take reached 204 thousand

SQM, with the strongest ever quarterly demand recorded in the Prague office market in the second quarter

of 2015. In 2014, the share of renegotiations remained significantly below the level from 2013, reaching

39.5%. Overall net take-up in 2014 reached 201 thousand SQM which is the fourth highest result since

2005. The vacancy rate in 2014 significantly increased to 15.26%, mainly due to speculative supply. In

the first half of 2015, the overall vacancy rate further increased to 16.56%, however, the second quarter

saw a decrease of 0.5%, compared to the previous quarter. This is mainly the result of the postponed

completion of some speculative projects into the next quarter. The prime office rent remained stable at

EUR 18.50-19.50/SQM/month in city centre. As of 30 June 2015, the modern office stock in the capital

city totalled approximately 3 million SQM.

Prague residential market4

In the first quarter of 2015 the real estate price index announced by Hypoteční banka (HB INDEX)

confirmed a slight increase in prices of residential real estate which already started at the beginning of

2014. The prices of family houses increased in the first half of 2015 by 0.5% (year end 2014: 0.4%) and

reached HB INDEX 106.3 (year end 2014: 105.8). This represents the highest level announced since the

beginning of 2010. The land prices increased by 0.9 p.p. (year end 2014: 1.0 p.p.) and reached 120.3 (year

end 2014: 119.4), followed by an increase in flats by 1.0 p.p. (year end 2014: 1.2 p.p). The average

market price of flats increased to HB INDEX 98.4 (year end 2014: 97.4) in the first half of 2015.

Index HB is regularly presented by Hypoteční banka, a.s. and is based on realistic estimates of market

prices of real estates. INDEX HB itself is calculated for the entire Czech Republic, and for the three types

of real-estates - flats, houses and land. As a basic value were selected realized real estate prices from 1

January 2010.

3 Prague City Report Q4 2014 4 Hypotéční banka (HB Index)

73

In December 2014, the interest rates of mortgage loans under the aggregate index of Fincentrum

(Hypoindex) fell again to record 2.37%.

Czech industrial market5

The total modern A-class industrial stock in the Czech Republic was 4.9 million SQM at the end of fourth

quarter of 2014. For the entire year of 2014 new supply amounted to a post crisis record level of 356

thousand SQM. This reflects a 31% increase on 2013 levels and is 37% above the 5-year average. For full

year 2014, gross take-up amounted to 1.3 million SQM, a new record in the history of the Czech market.

It beat the last 2013 record by 11%. Net take-up reached 828 thousand SQM and surpassed 2013 results

by more than 34%. The vacancy rate in the Czech Republic rose by 26 basis points year-on-year and

reached a level of 8.2%. Prime headline rents in Prague remained stable at EUR 3.80-4.25/SQM/month.

Prime rents in the Brno region were also stable at EUR 3.90-4.25/SQM/month.

Budapest office market6

Almost 20 thousand SQM were delivered to the office market over the first half of 2015 (compared to 19

thousand SQM in the fourth quarter of 2014). The total office stock stood at approximately 3.25 million

SQM as at end of the first half of 2015, an increase of approximately 10 thousand SQM since the end of

2014. The annual gross take-up for 2014 totalled 466 thousand SQM which was 17% stronger than in

2013. The half year gross take-up for the first half of 2015 totalled approximately 197 thousand SQM,

which is an all-time high in the history of the Budapest office market and 10% stronger than the previous

peak. The volume of net take-up reached 252 thousand SQM, which is the highest volume since 2009. In

total, almost 700 transactions were signed in 2014, with an average deal size of 664 SQM. The vacancy

rate declined by a massive 220 basis points year-on-year in 2014, dropping to 16.2%, and declined further

to 14.2% in the first half of 2015. The improvement was due to a combination of factors: a strong annual

net absorption of nearly 125 thousand SQM in 2014 in addition to a strong 12-month rolling volume of

151 thousand SQM as of 30 June 2015, which is the highest since the second quarter of 2010 and the

limited volume of completions – on year-on-year basis new deliveries represent a 44% decline in

comparison to the first half of 2014. Prime rent stands at EUR 15.5/SQM/month as of 30 June 2015 (year

end 2014: 20/SQM/month). This level is only achievable in a few, selected prime properties in the Central

Business District for the best office units within the building. Average asking rents did not change

significantly on the previous quarter; they remained in the range of EUR 11-14/SQM/month for A class

offices with generous incentive packages.

Warsaw office market7

Total modern office stock in Warsaw reached almost 4.4 million SQM at the end of 2014, a growth of

277 thousand SQM on the 2013 level. As of 30 June 2015, this number had further increased to more than

4.5 million SQM. A number of new office deliveries with low occupancy ratio rescheduled for the

beginning of 2015. Construction activity in Warsaw remains substantial with 760 thousand SQM under

active construction as of 31 December 2014 (including 56 thousand SQM under refurbishment) of which

5Prague City Report Q4 2014 6Budapest City Report Q4 2014, Budapest City Report Q2 2015 7Warsaw City Report Q4 2014, DTZ European Investment Market Update Q2 2015

74

19% is secured with pre-lets. During the first two quarters of 2015, 14 buildings with the office area of

almost 150 thousand SQM received occupancy permits and, according to developers' plans, a further 200

thousand SQM may be completed by the end of 2015. If all projects are delivered according to schedule,

the annual supply for 2015 may reach 350 thousand SQM, which will be the highest figure recorded so

far on the Warsaw market. An even larger volume of new completions can be expected for 2016

(approximately 430 thousand SQM), two of which are major tower buildings located in the city centre:

Q22 and Warsaw Spire, collectively accounting for almost 120 thousand SQM of new office space.

However, DTZ, in its published report for the second quarter of 2015, is of the opinion that depending on

the market situation and absorption pace of the space delivered earlier, part of the projects scheduled for

2016 may be delayed due to insufficient tenant activity. As of 31 December 2014, the total gross take-up

reached approximately 612 thousand SQM, only 21 thousand SQM below the record-breaking volume in

2013. The public sector had a 13% share in the total take-up volume in 2014, becoming one of the key

demand drivers. 75% of the total modern office stock in Warsaw is located within the four largest

subzones: Upper South, Fringe, South West and Core. The vacancy rates for the central zones were 15%,

and 13.7% for non-central locations. The highest vacancy rates were recorded in the Core, South West

and Upper South subzones. In the East zone the availability ratio was the lowest among other districts in

Warsaw. Prime headline rents currently range between EUR 22-24/SQM/month in central locations.

Warsaw industrial market8

2014 saw only a marginal growth to the supply in both Warsaw zones as only 46 thousand SQM was

delivered through the year compared to 78 thousand SQM in 2013. The gross leasing activity in the

Warsaw region peaked in 2014, amounting to over 684 thousand SQM. The Warsaw Suburbs market was

clearly driven by lease renewals, which stood at over 257 thousand SQM and accounted for 43% of the

gross take-up. The net take-up exceeded 339 thousand SQM. At the end of 2014, availability in both

Warsaw zones totalled 298 thousand SQM, translating into a vacancy rate of 11.2%. This was

considerably lower than a year ago, when 14.6% of the total warehouse supply remained unoccupied.

Prime headline rents remain stable between EUR 2.7-3.6/SQM/month.

Breakdown of total revenues by category of activity and geographic market

Total

Revenu

e (€

thousands)

Rental

revenue

(€

thousands)

Investment

Property(€

thousands)

Property,

plant

&

equipment(€

thousands)

Inventories

Czech Republic 19,329 5,195

204,896 - 8,212

Poland 51,753 579

11,300 - 554

8Warsaw City Report Q4 2014

75

Croatia 34 34

470 - 653

Hungary 1,054 584

10,800 - -

Slovakia 977 116

- - 3

Luxembourg 5,608 1,999

21,770 - -

Inter-geographic (3,580) -

- - -

December

2014 75,176 8,507

249,236 - 9,422

Total

revenue (€

thousands)

Rental

revenue (€

thousands)

Investment

Property (€

thousands)

Property,

plant

&

equipment

(€

thousands)

Inventories


85,181 - 79,160

Germany - -

532,234 2,971 2,571

Poland 5,328 933

16,045 - 31,244

Croatia 25 23

1,386 58,668 655

Hungary 2,654 1,987

52,496 - -

Slovakia 3,976 255

- - 770


23,210 - -


- - -

December 2013

(restated) 66,877 12,006

710,552 61,639 114,400

Total

revenue (€

thousands)

Rental

revenue (€

thousands)

Investment

Property(€)

Property,

plant

&

equipment

(€

thousands)

Inventories


146,681 - 117,694

76

Germany 180,952 51,692

504,745 2,893 1,841

Poland 8,158 1,406

17,985 - 136,631

Croatia 17,265 368

2,790 85,845 645

Hungary 2,634 1,890

77,360 - -

Slovakia 5,505 307

10,070 - 3,620


23,100 - -


- - -

December

2012(restated) 244,708 66,075

782,731 88,738 260,431

77

BUSINESS

Overview

The Group is a real estate group with a major portfolio in CEE. It is principally involved in the

development of properties for its own portfolio or intended to be sold in the ordinary course of business

and is also active in leasing investment properties under operating leases as well as in asset management.

In 2014, the Group implemented major changes in its management and business strategy and completed a

significant financial and operational restructuring. The deconsolidation of the Group's leveraged assets

over the first half of 2014 and the accompanying streamlining of the Group's corporate structure resulted

in significant savings in its financing and administrative costs and the Group's real estate portfolio has

become more efficient as a result. Consequently, the Group's loan to value ratio as of 31 December 2014

decreased to 38.1% compared to 58.7% as of 31 December 2013 (restated) and 47.9% as of 31 December

2012 (restated). In 2014, net loss attributable to the owners of the Company decreased to EUR 23.6

million, compared to EUR 227.0 million in 2013 (restated) and EUR 41.8 million in 2012 (restated).

According to the new strategy, the Group will focus on investing in real estate development projects.

Recent developments

In the first half of 2015, the Company finalised several important projects that it began in 2014:

Early Termination of Safeguard Plan Accepted: Following the successful completion of various projects

and transactions, as well as its reorganisation and restructuring that took place in 2014 and 2015, the

Company requested a termination of its Safeguard Plan linked with an early repayment of those liabilities

admitted to the Safeguard Plan that became due. Towards this end, the Company filed on 19 June 2015 a

request with the Paris Commercial Court (the "Court") to modify its Safeguard Plan.

On 19 August 2015, the Court pronounced a judgement pursuant to which the Court accepted the

Company's request to modify its Safeguard Plan as follows:

- Within fifteen days as of the pronouncement of the judgement, the Company is obliged to pay to

the Safeguard administrator liabilities that are subject to and due under the Safeguard Plan.

- The Safeguard Plan administrator will proceed with the distribution of the funds received from

the Company, after the judgement becomes final.

- Other liabilities that were admitted to the Safeguard Plan, but are conditional or uncalled (such as

uncalled bank guarantees, conditional claims of the holders of Warrants 2014 registered under

ISIN code XS0290764728, provided that they were admitted to the Safeguard Plan), will be paid

according to their contractual terms.

- The duration of the Safeguard Plan has been reduced to two months.

78

The Court's decision has not been opposed or appealed and thus became final on 22 September 2015.

The liabilities to be paid based pursuant to the filed request amount to EUR 9,762,152 and include the

remaining bond debt (EUR 4,375,934) as well as debts towards suppliers and called bank guarantees

(EUR 5,386,218). Pre-Safeguard Plan liabilities that were not admitted to the Safeguard Plan will be

unenforceable. On 28 August 2015 the Company paid EUR 9,762,151.52 to the Safeguard Plan

administrator. The Safeguard Plan administrator will proceed with the distribution of the funds received

from the Company on or before 19 October 2015.

Finalisation of the Zlota Disposal and Prepayment on New Notes: Following the settlement of disputes

with Zlota 44 general contractor INSO, the Company agreed on 7 January 2015 on a final sales price of

EUR 50,040,501 for the disposal of Zlota 44 to the international consortium of AMSTAR and BBI

Development. Further to this, the Company proceeded with an additional "mandatory prepayment on

Zlota disposal" under the terms and conditions of the New Notes. The prepayment in the amount of

EUR 2.2 million was distributed to the holders of the New Notes on 30 January 2015. Accordingly, the

outstanding principal of the New Notes amounted to EUR 65,064,248.49 as of 30 June 2015.

Successful Reorganisation of SHH: In Croatia, the Split Commercial Court approved on 9 June 2015 the

restructuring plan of SHH, which is a successful outcome of pre-bankruptcy procedure initiated by SHH

in the first half of 2014 in order to allow the restructuring of its operations. Following the long-term

negotiations among SHH's biggest creditors and shareholders, the restructuring plan was approved at the

creditors' meeting in December 2014, as well as at the shareholders' meeting in January 2015, which

provided a solid basis for the approval of the plan by the Split Commercial Court.

Completion of Reorganisation of Hungarian Subsidiaries: The Company completed insolvency

reorganisation proceedings for its three Hungarian subsidiaries. The restructuring plans were approved at

creditors' meetings in December and subsequently by the Budapest Commercial Court. As part of the

approved reorganisation, the subsidiaries transferred Váci 1 (former stock exchange building) and

Szervita assets to the financing bank and Paris Department Store to the Hungarian Republic, which

exercised its pre-emption right. Within the reorganisation settlement, the Company paid to the financing

bank EUR 9 million in consideration of the release of corporate guarantees provided by the Company, as

well as the release of pledges on Vaci 188 project, which was cross-collateralized in favour of the

financing bank.

Acquisition of development project: on 19 December 2014 the Group entered into an agreement

concerning the development project located in Prague 10. The project comprises of approximately 33

thousand sqm of developable land. The Group already owns 31 thousand sqm of directly adjacent land.

The completion was subject to certain corporate approvals on seller´s side, which were granted on 10

March 2015, thus the acquisition became effective. The Group acquired an excellent developable land

plot of approximately 64 thousand sqm with good location. The purchase price for transfer of shares and

receivables is EUR 5.7 million.

79

Other than the acquisitions and disposals described above, there has been no increase or decrease in the

Company's portfolio since 31 December 2014.

Real estate portfolio

Overview

The Group is concentrating on long-term investments and the lease of real estate, mainly in the Central

European region and Luxembourg. The activities of the Group are focused on rental income generating

properties such as office, retail and industry and logistics. Additionally, the Group develops some

residential development for future sale. As of 30 June 2015, the GAV of the Group's real estate portfolio

decreased to EUR 264 million from EUR 265 million as of 31 December 2014. The Group's GAV breaks

down into 40% of property investments (which consists of rental properties and assets held for sale,

together, the "Property Investments") and 60% of projects or land bank for the development (which

consists of land bank (properties held for development and/or capital appreciation), inventories,

residential and assets held for sale (properties intended for a future sale in the ordinary course of

business), together, the "Development"). The Group's GAV corresponds to the sum of fair values of all

real estate assets held by the Group. The value of the assets owned in joint ventures is included at the

percentage of economic interest.

The following chart shows the Group's portfolio split between rental assets and assets held for

development as of 30 June 2015:

The following chart shows the Group's portfolio split between rental assets and assets held for

development as of 31 December 2014:

80

Over the year 2014, the Group's GAV decreased from EUR 1,004 million at 31 December 2013 to EUR

265 million at 31 December 2014. This decrease of EUR 739 million primarily resulted from the Group's

loss of control over CPI PG, SHH and Hungarian assets, sales of the other hotel's portfolio and

inventories up to EUR 129 million, negative foreign exchange impact partly offset by new acquisition

made by the Group and changes in market value. Between 31 December 2014 and 30 June 2015, the

Group's GAV remained relatively stable, decreasing from EUR 265 million to 264 million.

The following chart shows a comparison between the Group's GAV as of 31 December 2014 and 30 June

2015:

79

15

65

13

93

0 0

GAV by Business Line as of December 2014 EUR Million

Land Bank Residential Commercial Assets Held For Development Rental Assets Hospitality

Property Investments 106

Development159

81

The following chart shows a comparison between the Group's GAV as of 31 December 2014 and the

Group's GAV as of 31 December 2013:

* To be in line with the economic interest owned by the Group, the hospitality assets of the AIG Joint

venture are included at 75%. The whole share in this portfolio was sold during December 2014.

The following chart shows the Group's total real estate portfolio data as changed between 31 December

2014 and 30 June 2015:

The following chart shows the Group's total real estate portfolio data as changed between 31 December

2013 and 31 December 2014:

856

106148 159

December 2013* December 2014

GAV Evolution

Property Investments Development

82

In line with its strategy, the Group acquired in November 2014 four development projects with an

aggregate of 186,000 SQM of developable land, primarily in Prague, Czech Republic. These development

projects represent a mix of residential, office, hospitality and retail premises. The aggregate transaction

value of these development projects was EUR 44 million.

Furthermore, in December 2014, the Group acquired a brownfield area in Brno, Czech Republic, with an

area of approximately 22.5 hectares. The transaction value of this development project was EUR 13.95

million. In this case, the Group intends to build a mixed used project with a similar size to the Group's

project Bubny in Prague.

Moreover, the Group also acquired a development project located in Prague which comprises

approximately 33,000 SQM of developable land. The Group already owned 31,000 SQM of land directly

adjacent to the newly acquired land and following this acquisition, the Group has now an attractively

located developable land plot of approximately 64,000 SQM. This acquisition was completed in 2015 and

its transaction value was EUR 5.7 million.

As part of the new strategy, the Group disposed of its stake in Mamaison hospitality portfolio for EUR

13.3 million (NAV) in December 2014, thereby exiting its final investment in Russia.

Property investment portfolio

As of 30 June 2015, the GAV of the Property Investments portfolio represented EUR 105 million in value

(thereof 35% for rental assets and 5% of assets held for development (year end 2014: 106 million (thereof

88% rental assets and 12% assets held for development)). This EUR 1 million decrease was caused by the

decrease in market value of one of the Group's projects in Hungary. Assets held for development

encompass a group of assets rented on a short-term basis, which the Group is planning to fully redevelop.

1 004

265

680

129 6 72

4

100

200

300

400

500

600

700

800

900

1 000

1 100

GAV Dec_2013 Change ofscope

Sales Capex Financial assets Forex Impact Change ofValue

GAV Dec_2014

Total Portfolio - Data in EUR Million

83

Between 31 December 2013 and 31 December 2014, the value of the Property Investment portfolio

decreased by EUR 739 million. This decrease was due primarily to the following factors:

EUR 631 million decrease due to loss of control over GSG portfolio, change of scope in

hospitality portfolio and Hungarian and Polish assets entering the bankruptcy process;

EUR 119 million decrease due to sales of hotel portfolio (EUR 95 million, out of that EUR 11

million Pachtuv Palac) and disposal of Hlubočky (EUR 19 million) and Dunaj (EUR 5 million);

EUR 1 million of investments on the rental portfolio;

EUR 4 million of negative currency conversion impact mainly related to the weakening of the

Czech crown; and

EUR 3 million of net decrease in market value.

The following chart shows the Property Investment portfolio data as changed between 31 December 2014

and 30 June 2015:

The following chart shows the Property Investment portfolio data as changed between 31 December 2013

and 31 December 2014:

1 106 105

-

20

40

60

80

100

120

140

160

GAV Dec_2014 Change of scope Sales Capex Financial assets Forex Impact Change of Value GAV June_2015

Property Investments Portfolio - Data in EUR Million

84

Property Investment Portfolio – Rental Assets

As of 30 June 2015, the GAV of rental assets in the Property Investment portfolio was estimated at EUR

93 million, (which reflects no change since 31 December 2014). On 31 December 2013, the GAV of

rental assets amounted to EUR 678 million. This change in GAV of EUR 585 million between 31

December 2013 and 31 December 2014 was due to:

EUR 566 million of deconsolidation of rental assets identified under GSG portfolio and

Hungarian assets being in bankruptcy process;

EUR 19 million of sales due to disposal of Hlubocky;

EUR 1 million of investments; and

EUR 1 million of negative foreign exchange impact.

In Central Europe, over the year 2014, the valuation of the rental portfolio on a Like-for-Like basis

slightly decreased by EUR 1.1 million (-1 % in comparison with valuation as of 31 December 2013).

In acquisition of rental assets for the Property Investment portfolio, the Group focuses on commercial

buildings.

The following table shows key performance data with respect to rental assets held in the Property

Investment portfolio:

631

119

4 1 3

856

106

-

100

200

300

400

500

600

700

800

900

GAV Dec_2013 Change of scope Sales Capex Financial assets Forex Impact Change of Value GAV Dec_2014


85

* The following items are not reported on the Like-for-Like basis in the table above: (i) Hlubocky

production plant, the ownership of which was transferred to a fully owned subsidiary of Crédit Agricole

CIB; (ii) Dunaj department store (Bratislava, Slovakia), the ownership of which was transferred to a fully

owned subsidiary of Crédit Agricole CIB; and (iii) three Hungarian subsidiaries of the Group because

they have entered bankruptcy proceeding.

Over the period between September to December 2014, the occupancy rate of the Central European

portfolio increased by 30 bps to 54.9%. Over the same period, average rent slightly decreased from 9.25

EUR/SQM/month to 9.22 EUR/SQM/month.

In Prague, the Group increased the occupancy rate of its portfolio by 300 bps over 2014. This

increase was due primarily to the tenancy extension of the Group's key tenants and signing of

new leases for more than 1,100 SQM in the office building Na Porici. The average rent slightly

decreased to 8.35 EUR/SQM/month.

In Budapest, the occupancy rate improved by 340 bps to 14.2% over 2014. A new tenant taking

up to 531 SQM was signed for V188 with a move in November 2014. In addition, the average

rent increased from 4.14 EUR/SQM/month to 4.21 EUR/SQM/month.

In Warsaw, the decrease of occupancy rate is due to the departure of one tenant from the logistic

platform of Marki. As a result, the Group's occupancy rate dropped by 780 bps to 24.7% as of 31

December 2014 in Poland. The asset is being currently reviewed for sale.

In Luxembourg, occupancy rate and average rent are stable, the office asset of Capellen is almost

fully let with an average rent almost 23 EUR/SQM/month.

The following table shows year-on-year change in Market Value (as defined below) and EPRA Net Initial

Yield (as defined below) of all rental assets in the Property Investment portfolio, excluding the

development land attached to the logistic asset of Marki and the land plots attached to the new acquisition

of the STMR portfolio, as they do not generate rents:

Dec. Sept. June Dec. Dec. Sept. June Dec. Dec. Sept. June Dec.

Portfolio 2014 2014 2014 2013 2014 2014 2014 2013 2014 2014 2014 2013

Prague, Czech republic * 60 497 60 497 60 497 60 497 79,0% 79,4% 76,3% 76,0% 8,35 8,49 8,92 8,49

Budapest, Hungary 15 591 15 591 15 591 15 591 14,2% 10,8% 10,8% 10,8% 4,21 4,49 4,88 4,14

Warsaw, Poland 36 598 36 598 36 598 36 598 24,7% 24,7% 24,7% 32,5% 4,44 4,98 4,78 4,91

Capellen, Luxembourg 7 695 7 695 7 695 7 695 91,1% 91,1% 91,1% 90,2% 22,73 22,67 22,64 22,62

CE Portfolio 120 381 120 381 120 381 120 381 54,9% 54,6% 53,1% 55,2% 9,22 9,43 9,67 9,25

Like for like basis, therefore disposals and reclasified assets are not included

Reported lettable area is based on the current technical conditions and excludes an upside from the possible redevelopment

*: The lettable area of Bubenska is 17,575 sqm meanwhile potential GLA of the asset is increased to 30,549 sqm.

Average rent EUR / SQMOccupancy (%)GLA (SQM)

86

* "Market value" is the net market value estimated by the Group's independent expert at year end. This

market value is used for the GAV calculation. "EPRA NIY" or "EPRA Net Initial Yield" (as defined in

the "Glossary") is based upon the figures provided by the external appraiser as of 31 December 2014 in

terms of yield. "Net Initial Yield" is based on the current gross market value of the assets. Following the

scope of EPRA (as defined in the "Glossary") and definitions mentioned above the market value excludes

valuation of lands which are to be used for development. "Reversion" is the estimated change in rent at

review, based on today's market rents expressed as a percentage of the contractual rents passing at the

measurement date (but assuming all current lease incentives have expired). These figures are indicators of

the current operating performance of the assets; they are not the basis of the valuation of the assets. They

should not be mistaken with valuation yield measure such as "equivalent yield" which are market based

figures and are the basis of the valuation of the assets under the capitalization approach.

The following table shows the Group's rental income data for 2014:

* The table above presents details on the level of rents and the occupancy of the assets held in the

Property Investment portfolio as of 31 December 2014. Gross Rental Income (as defined in the

"Glossary") and the Net Rental Income (as defined in the "Glossary") are calculated according to EPRA

standards. The "Passing Rent" according to EPRA terminology is the annualized cash rental income being

received as of a certain date excluding the effects of straight-lining for lease incentives. The "EPRA

Vacancy Rate" is based on EPRA standards which take into account the ratio of the ERV (as defined

below) of the area to be leased compared to the total ERV of the asset ("EPRA Vacancy Rate"). The

"Lettable Space" in the table above is based on the assumptions made by the valuator and reflects possible

upside from the redevelopment. The Lettable Space in the table above corresponds to the assumptions

taken by the independent external valuator and is in line with the calculation of ERV. The difference

Asset Class Location

Market Value of

Property

Dec 2014

EUR Million

Valuation

Movement

EUR Million

Y-o-Y

Prague 60,6 0,2 7% 18%

Budapest 10,8 1,6 -2% 2699%

Luxembourg 21,8 -1,4 8% -6%

Warsaw 4,6 -0,3 7% 5%

Office 97,7 0,0 6% 55%

Prague 1,1 0,2 10% 30%

Warsaw 2,8 -0,5 16% 235%

Logistics 3,9 -0,2 15% 142%

Portfolio Total 101,6 -0,3 7% 58%

Net Initial Yield

EPRA (%)

Reversion

(%)

Location

Lettable space

sqm

Passing rent at

period end

EUR Million

Estimated

rental value at

period end

EUR MillionPrague 4,7 4,3 63 820 4,7 5,6 14%

Budapest 0,1 (0,2) 13 877 0,1 3,4 95%

Luxembourg 1,9 1,9 7 695 2,0 1,9 0%

Warsaw 0,3 0,3 1 400 0,3 0,3 0%

7,0 6,3 86 792 7,2 11,2 35%

Prague 0,1 0,1 8 762 0,1 0,2 24%

Warsaw 0,2 (0,3) 35 198 0,2 0,5 77%

0,3 (0,2) 43 960 0,3 0,7 64%

Portfolio Total 7,3 6,1 130 753 7,5 11,9 37%

Gross rental

income over the

past 12 months

EUR Million

Net rental

income over the

past 12 months

EUR Million

EPRA Vacancy

rate at period

end %

87

compared to the current area refers to the projects Bubenska and Vaci 190 and amounts to the additional

area of 10,731 SQM. All assets disposed during the year 2014 have been excluded from the table above.

The figures of GRI, NRI, Lettable Space, Passing Rent, ERV and EPRA Vacancy Rate only include

assets owned by the Group as of 31 December 2014.

The Passing Rent (as defined in the "Glossary") is still 58% below the potential ERV (as defined in the

"Glossary") of the portfolio, leaving strong upside value potential for further improvement of the

operating performance.

Property investment portfolio – assets for development

As of 30 June 2015, the GAV of assets held for development in the Property Investment portfolio was

estimated at EUR 11.9 million (as of 31 December 2014, the GAV of these assets amounted to 12.5

million). The EUR 0.6 million change is composed of negative change in market value for the project

Vaci 190. On 31 December 2013, the GAV of these assets amounted to EUR 24 million. This value

change in GAV of EUR 11 million was due to:

EUR 6 million of deconsolidation of Hungarian assets in bankruptcy process (Szervita Office and

Parking); and

EUR 5 million of sales due to disposal of Dunaj department stores (part of cross-collateral

together with Hlubocky and Bubenska assets).

On a Like-for-Like basis, the GAV of the assets held for development in the Property Investment

portfolio increased by 1 % as of 31 December 2014 compared to the GAV of these assets as of 31

December 2013.

Overview of most important Rental Assets in the Property Investment Portfolio

Na Porici - Palac Archa: This property is situated in one of the most frequented streets in the centre of

Prague. It is easily accessible by public transport as well as by car. It consists of five buildings and a

courtyard, including two historical buildings designed by renowned architects Josef Gočár and František

Marek in 1930's. The building comprises office premises, retail units on the ground floor with Archa

theatre and Starbucks Café and 113 underground parking places. The property underwent major

redevelopment in 2009, resulting in the achievement of a grade A specification for the premises. The

occupancy rate increased from 85.7% in 2013 to 88.9% at the end of 2014.

Location : Prague

Land Area : 6,001 sqm

Floor area : 22,061 sqm

Type of property : office

Acquisition date : 13.12.2005

Form of Ownership : SPV owned 100% by OPG S.A.

Occupancy rate : 88,9%

Insert Picture

88

Capellen Office Building: This property is located at the entrance of Mamer-Capellen business park, an

important

business hub bordering Luxembourg city. The property conveniently bridges Luxembourg airport and

Luxembourg city centre and is easily accessible for cross-border employees. Delivered in 2005, the

building is of a modern standard with a two-level underground car parking facility accommodating 295

vehicles. The occupancy rate for this building increased from 90.2% as of 31 December 2013 to 91.1% as

of 31 December 2014.

Marki: This property is located in the eastern suburbs of Warsaw. The property benefits from very good

vehicular access and also has good transport facilities. The site currently comprises a production

warehouse, constructed in the 1970's and an area of potential development land. The development land is

currently occupied by a number of buildings designated for demolition. The occupancy rate of the

buildings was 21.7% as of 31 December 2014.

Vaci 188: This property is an office building situated in the 13th district of Budapest in the Váci Ut

corridor, 7 km north of Budapest city centre. The building was re-purchased from the bank in mid-2011.

It comprises approximately 13,876 SQM of leasable area over two basement levels, a ground floor, a

mezzanine level and six upper floors. It is ideal for headquarter purposes with flexible floor plates, ample

natural light and sufficient number of parking spaces: 228 underground and a further 29 above ground.

This property used to accommodate the head quarter of Budapest Bank, which moved out in July 2010.

The occupancy rate was 15.9% as of 31 December 2014.

Overview of most important Assets held for Development in the Property Investment Portfolio

Location : Luxembourg




Acquisition date : December 2007



Location : Budapest







Insert Picture

Location : Warsaw

Land Area including building: 207,841 sqm


Type of property : logistic & light industrial




Insert Picture

89

Bubenska: This property is an iconic office building of Prague constructed in the 1930's as the

headquarters of the Prague Transportation Company. The Property is located between the eastern and

western parts of Holesovice in Prague 7, a central district on the bank of the Vltava River opposite to the

city center. Nadrazi Holesovice, one of Prague's main train terminals, is located nearby. The Property

comprises 8 floors with 3 basement levels and a number of small retail storefronts on the ground floor of

the property. The building is well known for the ambulance service for Prague 7. The current leasable

area (before redevelopment) is 17,575 SQM and the occupancy rate of the building increased from 74.3%

as of 31 December 2013 to 75.9% as of 31 December 2014.

Vaci 190: This property is situated in the 13th district of Budapest on the Vaci street. It lies 7 km north of

Budapest city centre fronting Vaci street and Meder street, therefore its visibility is excellent. The

site/building was re-purchased from the bank in mid 2011. The building currently comprises 1,715 SQM

of basic quality office accommodation on two stories. The Group plans to redevelop this 3,852 SQM land

plot into a modern office building.

Development portfolio

The Development portfolio consists of commercial properties or land designated as future development,

to be transferred to the Property Investments portfolio or sold, and residential projects made of land bank

to be developed or buildings to be refurbished, converted or sold.

As of 30 June 2015, the GAV of the Development portfolio amounted to EUR 159 million (56% of land

bank, 33% of commercial and mixed use developments, 11% of residential developments). The GAV of

the Development portfolio as of 31 December 2014 also amounted to EUR 159 million (49% of land

bank, 41% of commercial and mixed use development, 10% residential developments). The development

assets are mainly located in the Czech Republic (99%) with key projects such as Bubny and Benice in

Prague.

The following chart demonstrates the changes in the Development portfolio between 31 December 2014

and 30 June 2015:

Location : Prague






Year of construction completion / major refurbishment : NA

Insert Picture

Location : Budapest






Year of construction completion / major refurbishment : NA

Insert Picture

90

The following chart demonstrates the changes in the Development portfolio between 31 December 2013

and 31 December 2014:

Development portfolio - commercial assets

The commercial assets in the Development portfolio encompass of properties that the Group has

developed or is developing across CEE region to keep and manage, or to sell. The ongoing and finished

projects are office, retail or mixed-use projects but also land plots for which the Group acts as a land

developer.

49

10

2

71

1

148

159

-

20

40

60

80

100

120

140

160

180

200

GAV Dec_2013 Change of scope Sales Capex Financial assets Forex Impact Change of Value GAV Dec_2014

Development Portfolio - Data in EUR Million

91

The GAV of the commercial assets in the Development portfolio, which mainly encompasses the project

Bubny, decreased to EUR 52 million as of 30 June 2015. This figure had previously remained stable over

the year 2014 and amounted to EUR 65 million as of 31 December 2014 and 2013. Though there were

changes as:

EUR 2 million of investments;

EUR 1 million of negative exchange rate impact; and

EUR 1 million of net decrease in market value expressed in Euros.

The decline of EUR 13 million between 31 December 2014 and 30 June 2015 is due to the net decrease in

the market value, which was impacted by uncertainty regarding the future change in the Bubny master

plan. The key commercial project held in the Development portfolio is the project Bubny in Prague with a

total development land amounting to 24 hectares. As of 31 December 2014, the market value of the

project was estimated at EUR 65 million (3.6 hectares of the Bubny landplot are now held at 20%

through a joint venture with Unbibail Rodamco and are not included in the value above). The construction

of the project is planned to be completed in 2025. The project Bubny is a challenging long term

development project close to the city centre. Bubny remains the last brownfield plot in the centre of

Prague and the Group intends to develop more than 600,000 SQM of the GLA consisting of residential

and commercial units, offices and shops as well as educational, medical, and cultural facilities. In

addition, a modern train terminal on Vltavska metro station and large green spaces will be incorporated.

The main goal for the upcoming period is to continue in the process to change the Bubny masterplan to

enable future development of this area. According to an article published in the Czech newspaper

PRAVO on 20 June 2015, Mr. Matej Stropnicky, Deputy Mayor of Prague, stated that the City of Prague

shall buyout major development areas, specifically mentioning Bubny, whereby these areas shall be

resold for smaller projects. The Group denies any formal or informal discussions about sale, buyout or

expropriation of the Bubny area to the City of Prague or to the Czech Republic.

Development portfolio – residential assets

The residential assets in the Development portfolio are aimed at the middle and upper market segments in

Prague. As of 30 June 2015, the GAV of residential assets in the Development portfolio amounted to

EUR 18 million, an increase of EUR 3 million since 31 December 2014 due to the increased fair value of

residential projects Kosik 3b and 3c. Previously, during the year 2014, the GAV of residential assets in

the Development portfolio decreased by EUR 41 million (from EUR 56 million as of 31 December 2013

to EUR 15 million as of 31 December 2014) due to:

EUR 4 million of change of scope due to loss of control over GSG portfolio;

EUR 41 million of sales mainly due to sales of Zlota 44, Benice and V Mezihori;

EUR 3 million of investments; and

EUR 1 million of negative change in value offset by EUR 1 million positive impact of market

value

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Development portfolio – residential assets – completed projects (inventory)

The following table shows an overview of completed residential projects in 2014:

V Mezihori: The site is located in Prague 8, Palmovka, approximately 3 km from Prague city centre and

within walking distance of the metro and tram station Palmovka. Construction of this project with 138

apartments was completed in the third quarter of 2013. Deliveries of this project started in the fourth

quarter of 2013 and 100% of the project was delivered as of 30 June 2015. The apartments in this project

have been sold faster and for higher prices than estimated in the Group's budget (by 2.6%, despite two

VAT increases). Higher sale prices of the apartments in combination with significant cost savings in this

project led to an overall profitability improvement by EUR 1.6 million. In addition, the project Mezihori

won multiple awards from both real estate experts as well as general public (Construction & Investment

Journal's "Best Residential Development" award, Conventia's "Project of the year"). The success of

Mezihori could serve as a springboard for the Group's upcoming residential projects.

Mostecka: This project is a mixed-use space with ground floor, basement and inner courtyard designated

for retail and commercial space, and upper floors used for apartments. As of 30 June 2015, 100% of the

residential area was delivered with one remaining of one commercial unit (former cinema) for a total area

of 2,600 SQM. This unit was transferred into its own SPV (as defined in the "Glossary") and the Group is

now negotiating its sale with one potential buyer.

Kosik 1-3A: This project is a joint venture dedicated to the development of the site into an all-inclusive

residential area featuring commercial units, play grounds and sport facilities. All but one commercial unit

in Kosik 1 & 2 have been delivered. The value indicated represents the market value of the remaining

units owned by the Group at 50%. As of 30 June 2015, 99% of phases 1, 2 and 3A of the project were

delivered.

Feliz Residence: the property, located in Ochota district of Warsaw, comprises a multi-family residential

scheme of 40 apartments (4,434 SQM sellable area) and basement car parking for 44 parking spaces. As

of 31 December 2014, the project was delivered at 100%.

Klonowa Aleja: The project, located in the Targówek district of Warsaw, comprises 284 apartments as

well as retail space and underground car parking facilities (402 parking spaces). The project was

completed at the beginning of the year 2010. As of 30 June 2015, the project was delivered at 98%.

Project completed Location Asset type Comments

Market value Dec

2014

EUR Million

Market value Dec

2013

EUR Million

Mezihori Prague Multi-dwelling houses Occupancy permit in Q3 2013 0,3 5,3

Mostecka Prague Multi-dwelling houses 0,0 1,3

Kosik* Prague Multi-dwelling houses 0,1 0,4

Feliz Residence Warsaw Multi-dwelling houses 0,0 0,2

Klonowa Aleja Warsaw Multi-dwelling houses 0,5 0,9

Koliba Bratislava Multi-dwelling houses 0,0 0,8

TOTAL 0,8 8,9

* The Group owns 50% of Kosik. The market value indicated is the market value of the 50% share of the Group. As of January 2013, Kosic is consolidated

under the equity method.

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Koliba - Parkville: This project, located on the Koliba hill in the northern part of Bratislava, consists of

10 residential buildings with 91 flats, 157 parking spaces. As of 31 December 2014, the project was

delivered at 98%.

Development Portfolio – Residential Assets – Project under Construction

The following table shows an overview of residential projects under construction in 2014:

** Value of Phases II-V of the project Benice is not included in the table above as they are categorized as

land bank which will be developed only in the future.

*** The project Berlin Naunynstr. 68 was deconsolidated as a result of the Group's loss of control over

CPI PG.

The Board of Directors resolved not to complete the development of the project Zlota 44 as of June 2014

and managed to sell the property (unfinished) in August 2014.

Benice – Phase 1: This project is a large scale residential development project located in the south east of

Prague, about 15 kilometres from the city centre. Phase 1B is currently on offer comprising 32 row

houses, semi-attached and detached houses, which were completed during the first half of 2014, and 4

apartments and 2 commercial units completed in the fourth quarter of 2014. As of 30 June 2015, 93%

SQM of the project was delivered. An additional phase, Benice 1C with 9 houses is currently under

development.. The construction began in July 2015 and presales were launched in of June 2015, with

construction completion planned for 2016.

Kosik 3B: This project is in its last phase of development (comprising of 253 apartment units), which is

divided into two sub-phases. Sale of the first sub-phase with 153 units was launched in the fourth quarter

of 2013 and has exceeded expectations with 109 units pre-sold as of December 2014 and 128 units pre-

sold as of the end of June 2015. Completion of the first sub-phase is scheduled for the second half of 2015

with first deliveries before the end of 2015 and with remaining deliveries in 2016. The second sub-phase

(containing 80 apartment units) was launched in the fourth quarter of 2014 and is planned to be completed

no later than in 2016. As to the second sub-phase, 22 apartment units were pre-sold as of 31 December

2014 and 45 apartment units were pre-sold as of the end of June 2015.

Development Portfolio – Land Bank

The GAV of the Group's land bank (including empty buildings and land plots for development or

redevelopment classified in the IFRS financial information under investment properties or inventories)

increased from EUR 27 million as of 31 December 2013 to EUR 79 million as of 31 December 2014.

Project under construction Location Asset type Comments

Market value

December 2014

EUR Million

Market value

December 2013

EUR Million

Zlota 44 Warsaw High rise luxury appartments Project sold out of the Group 0,0 30,1

Kosik 3B Prague Multi-dwelling houses Sales launch in Q4 2013 4,2 1,7

Benice 1 Prague Houses Delivery of units in progress 1,4 2,3

Berlin Naunynstr. 68 Berlin, Kreutzberg Multi-dwelling houses Project was deconsolidated 0,0 3,5

TOTAL 5,7 37,6

* The Group owns 50% of Kosik. The market value indicated is the market value of the 50% share of the Group. As of December 2014, Kosic is consolidated

under the equity method.

94

This year-on-year increase of EUR 52 million was driven by:

EUR 15 million of change of scope due to loss of control over GSG portfolio and deconsolidation

of Polish projects due to bankruptcy;

EUR 66 million of investments mainly due to purchase of new acquisition for future

development; and

EUR 2 million of positive change in value.

The GAV of the Group's land bank increased further to 89 million as of 30 June 2015. This further

increase of EUR 10 million was driven by:

EUR 6.1 million of change due to new acquisition;

EUR 4.8 million of change due to positive increase in market value; and

EUR 0.5 million of sales.

As of 30 June 2015, the Group holds approximately 2.1 million SQM of land plots (0.3 million SQM

zoned and 1.8 million SQM unzoned), which reflects no change since 31 December 2014. The potential

GEFA development is currently estimated at 0.8 million SQM. Potential GEFA is not estimated on all the

land plots and should be considered here as only an indication of the potential pipeline on the short to

mid-term basis.

The following table summarizes the land bank status per country and gives an estimate of the current

projected GEFA:

Over the first half of 2015, the land bank decreased due to the sale of land plots in Ostrava. This decrease

was offset by new acquisitions in the Czech Republic made during the first quarter of 2015. The new

acquisitions contain two development projects for residential use, counting approximately 42 thousand

SQM of developable land area in Prague and the surrounding area.

Country Land plot area GEFA estimated Land plot area GEFA estimated* Land plot area GEFA estimated*

The Czech Republic 95 738 sqm 96 801 sqm 800 305 sqm 66 250 sqm 896 043 sqm 163 051 sqm

Poland 69 681 sqm 59 726 sqm 35 573 sqm 47 256 sqm 105 254 sqm 106 982 sqm

Slovakia 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm

Croatia 6 208 sqm 0 sqm 104 944 sqm 0 sqm 111 152 sqm 0 sqm

Germany 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm

Sub-total land bank 171 627 sqm 156 527 sqm 940 822 sqm 113 506 sqm 1 112 449 sqm 270 033 sqm


Poland 131 130 sqm 0 sqm 0 sqm 0 sqm 131 130 sqm 0 sqm

Slovakia 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm

Croatia 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm


Sub-total other category 150 011 sqm 32 008 sqm 885 813 sqm 530 400 sqm 1 035 824 sqm 562 408 sqm

Total 321 638 sqm 188 535 sqm 1 826 635 sqm 643 906 sqm 2 148 273 sqm 832 441 sqm

GEFA estimated*: the figure is presented here as an estimation only on the basis of the latest internal study performed. Only building permit

determine the authorized GEFA. All the land plot are not systematically covered with a GEFA estimate.

With zoning Without zoning Total

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Together with the acquisitions made in the second half of 2014, these future projects, developable in the

coming years, consist of freehold land with a potential for development of residential, office, hospitality

and retail premises. The land bank provides the support for the future pipeline of the Group. Praga,

Benice 2-5 or Nupaky in Prague amounting to approximately 870 thousand SQM of land bank, of which

approximately 31.5 thousand SQM are zoned, and currently under review to be potentially developed for

residential development projects over the coming years. The plot of Bubny amounting to nearly 240

thousand SQM of land in Prague 7 (including joint venture with Unibail Rodamco) is at the core of the

commercial development pipeline in Central Europe.

The following table summarizes the land bank status per country as of 31 December 2014 and shows

previous estimates of projected GEFA:

** "Other category" refers to land plots included in the reported gross asset value of other sub group of

the portfolio (rental, commercial development or residential development).

Over the year 2014, the land bank decreased through the deconsolidation of land bank due to the Group's

loss of control over CPI PG. However, this decrease was partially offset by new acquisitions in the Czech

Republic made during the fourth quarter of 2014. These new acquisitions contain four development

projects, counting approximately for 186,000 SQM of developable land area in Prague and its

surrounding areas, and a brownfield area in Brno with an area of approximately 22.5 hectares. These

future projects, developable in the coming years, consist of freehold land with a potential for development

of residential, office, hospitality and retail premises. For the brownfield, the Group indents to build a

mixed used project with similar size as its project Bubny in Prague.

Environmental issues

The Group's real estate portfolio does not include properties which, in the view of the Group's

management, have material environmental issues. However, the Group is subject to various

environmental laws and cannot rule out that material environmental issues with respect to properties held

in its real estate portfolio will arise in the future.

Country Land plot area GEFA estimated Land plot area GEFA estimated* Land plot area GEFA estimated*


Poland 69 681 sqm 59 726 sqm 35 573 sqm 47 256 sqm 105 254 sqm 106 982 sqm

Croatia 6 208 sqm 0 sqm 104 944 sqm 0 sqm 111 152 sqm 0 sqm


Sub-total land bank 188 711 sqm 169 730 sqm 897 968 sqm 113 506 sqm 1 086 679 sqm 283 236 sqm


Poland 131 130 sqm 0 sqm 0 sqm 0 sqm 131 130 sqm 0 sqm

Sub-total other category 150 011 sqm 32 008 sqm 885 813 sqm 530 400 sqm 1 035 824 sqm 562 408 sqm

Total 338 722 sqm 201 738 sqm 1 783 781 sqm 643 906 sqm 2 122 503 sqm 845 644 sqm

GEFA estimated*: the figure is presented here as an estimation only on the basis of the latest internal study performed. Only building permit

determine the authorized GEFA. All the land plot are not systematically covered with a GEFA estimate.


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Insurance coverage

The Group has purchased various operating insurance policies, which include customary property and

general liability insurances, covering e.g. damage from fire, water pipe, flood and weather-related

incidents, theft and unidentified risks, and insurance covering liability claims against the property owner

(so-called all risks property insurance); contractors' all risks insurances including third party liability

insurance; third party office liability insurances; third party liability insurances for the property

management activity; group accident and travel insurance, and car insurance.

The Group has taken out directors and officers (the "D&O") liability insurance. The D&O insurance

against financial damages and legal claims for wrongful acts performed by corporate directors or officers

of the Group as part of their corporate duties comprising also the members of the Board of Directors. The

D&O insurance contracts provide for a deductible for all of the members of the Board of Directors.

Based on its current knowledge, the Group believes that its insurance coverage, including the maximum

coverage amounts, exclusions and limitations of liability and terms and insurance policy conditions, are

standard for its industry. The Group cannot, however, guarantee that it will not incur any losses or

become the subject of claims that exceed the scope of the relevant insurance coverage.

Employees

As of 31 December 2014, the Group employed in total 21 employees: 11 in the Czech Repulic; 4 in

Luxembourg; 5 in Poland and 1 in Slovakia. From 1 July 2014 the Group began outsourcing services in

the field of general administration, tax, accounting, reporting, human resources, property management

and IT to certain assets in the Czech Republic. The value of such services amounted to EUR 0.5 million

in 2014.

As of 31 December 2013, the Group employed in total 268 non-hospitality employees: 83.5 in the Czech

Repulic; 108.5 in Germany; 13 in France; 7 in Luxembourg; 14 in Hungary; 39 in Poland and 3 in

Slovakia.

As of 31 December 2012 the Group employed in total 298 non-hospitality employees: 104.5 in the Czech

Republic; 103 in Germany; 26 in France; 7 in Luxembourg, 15.5 in Hungary; 38 in Poland and 3 in

Slovakia. The Group's employees in Luxembourg form the strategic management of the Group and their

support staff.

None of the Group's entities have a works council as of 31 December 2014. The Group believes to have a

good relationship with its employees and has not experienced any strikes in the past.

Research and development

The Group owns and manages real estate assets and does not engage in research and developments

activities.

Intellectual property, trademark and domains

97

The Group does not own any patents. The Group considers the trademarks "ORCO" and “ORCO

PROPERTY GROUP” to be its most important registered trademarks.

The Group has several website domains, the most significant of which is www.orcogroup.com.

Apart from the intellectual property rights mentioned above, the Group holds no significant intellectual

property rights and is not dependent on patents or licenses material to the Group's business.

Material agreements

The Company or members of its Group are not party to any material agreements that are out of the

ordinary course of business.

Financing agreements

The Company or members of its Group are not party to any financing agreements that are out of ordinary

course of business.

Asset management, property management and supply agreements

The Company or members of its Group are not party to any asset management, property management or

supply agreements that are out of ordinary course of business.

Legal proceedings relating to the Group

From time to time, the Group may be subject to various legal proceedings and claims that are incidental to

the Group's ordinary course of business. The Group is currently party to various legal proceedings,

including consumer complaints, contract disputes, and other claims. This section identifies all litigation

matters which we believe are potentially material to the Group's business, financial position or results of

operations or which, in the event of an adverse outcome, could materially harm the Group's reputation.

For the potential consequences of an adverse outcome in relation to these proceedings and claims, see

"Risk Factors". The Group is, and may be in the future, involved in various legal proceedings and may

experience unfavourable outcomes, which could adversely affect its business and financial condition.

Certain Shareholders of the Company, notably Kingstown Partners Master Ltd. (Cayman Islands),

Kingstown Partners II LP (Delaware), Ktown LP (Delaware) (collectively "Kingstown") challenged the

CPI PG's capital increases of 4 December 2013 and 5 March 2014 and sued, inter alia, for their

cancellation. Some of these Shareholders also contested the validity of the Company's general meeting

held on 6 January 2014 in Luxembourg. On 13 February 2015, the Tribunal d'Arrondissement de et à

Luxembourg (the "Court") accepted Kingstown's request to withdraw their legal action against the

Company.

On 20 January 2015 the Company was served with a summons containing legal action of Kingstown. The

action was filed with the Court and sues the Company, CPI PG and certain members of the Board of

Directors as jointly and severally liable for damages in the amount of EUR 14,485,111.13 and

compensation for moral damage in the amount of EUR 5,000,000. According to Kingstown's allegation

98

the claimed damage has arisen as a consequence of alleged violation of the Company's minority

Shareholders rights. Management of the Company will take all available legal actions to oppose these

allegations in order to protect the corporate interest as well as the interest of its Shareholders.

Portfolio valuation

We kindly refer you to Annex 2 which tables the evaluation report prepared by DTZ as of 30 June 2015

with respect to the Company's material properties.

As further detailed in the section "Document incorporated by reference" we also kindly draw your

attention to the valuation report prepared by Mazars Consulting s.r.o as of 30 June 2015 with respect to

the Company's material properties, available on the website of the Company (www.orcogroup.com), as

well as on the website of the Luxembourg Stock Exchange (www.bourse.lu).

No material changes have occurred in the properties of the Company since the dates of valuation

mentioned in the respective valuation reports.

Any differences between the values presented in the valuation reports and the ones underlined in the 2014

annual accounts are related to the following landbank and freehold buildings: the fair value decreased for

Bubny, Czech rRepublic (EUR 13 million), Váci 188, Hungary (EUR 2 million) and Marki, Poland (EUR

1.1 million) and increased for Zbrojovka Brno, Czech Rrepublic (EUR 6 million). For a more recent

valuation, we kindly refer you to the valuation report attached as Annex 2 and to the valuation report

incorporated by reference to this Prospectus, which can be found on the website of the Company

(www.orcogroup.com), as well as on the website of the Luxembourg Stock Exchange (www.bourse.lu).

http://www.orcogroup.com/

http://www.bourse.lu/



99

DOCUMENT INCORPORATED BY REFERENCE

A valuation report prepared by Mazars Consulting s.r.o as of 30 June 2015 with respect to the Company's

material properties shall be deemed to be incorporated in, and to form part of, this Prospectus (with the

exception of "Annex No. 1: Extract from the land register" of the valuation report) and has been

published on the website of the Company (www.orcogroup.com), as well as on the website of the

Luxembourg Stock Exchange (www.bourse.lu). The parts of the valuation report that are not incorporated

by reference (i.e. "Annex No. 1: Extract from the land register") are not relevant

for the investors.

Document Page Reference Incorporated on page of the

Prospectus

Valuation report prepared by

Mazars Consulting s.r.o as of 30

June 2015 with respect to the

Company's material properties

1-38 98, 99



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MANAGEMENT AND BOARD OF DIRECTORS

Board of Directors

General

The Company's Board of Directors (conseil d'administration) is responsible for the management,

administration and representation of the Company in all matters concerning the business of the Company,

including but not limited to the review, establishment and oversight of the Company's strategic objectives,

and supervises the Company's operations, approves certain major transactions and oversees the

Company's systems of internal controls and governance. The Board of Directors is also entrusted with

convening General Meetings of the Shareholders and operates subject to the provisions of the Articles of

Incorporation and the powers granted by shareholders' resolutions.

The Board of Directors represents the Shareholders and acts in the best interests of the Company. Each

member, whatever his/her designation, represents the Company's Shareholders. The Board of Directors is

empowered to carry out all and any acts deemed necessary or useful to accomplish the corporate purpose

of the Company. All matters that are not reserved for the General Meeting of the Shareholders by law or

by the Articles of Incorporation are within its authority.

In its relationship with third parties, the Company is bound by acts exceeding its corporate purpose,

unless it can prove that the third party knew such act exceeded the Company's corporate purpose or

should have known under the circumstances. The Directors (as defined below) do not contract any

personal obligation with regard to the commitments of the Company. The Directors however remain

responsible to the Company in accordance with common law as regards the due discharge of their duties

as given and any faults committed during their period in office.

The Directors are jointly and severally liable, to the Company or to third parties if applicable, for any and

all damages resulting from infractions to the provisions of the 1915 Law, or to the Articles of

Incorporation of the Company. They may only be granted discharge from such liability, with respect to

infractions in which they have taken part, if no fault may be attributed to them and they have denounced

such infractions before the next General Meeting of the Shareholders as soon as they have become aware

of such infractions.

Board size and composition

The Articles of Incorporation provide for a Board of Directors consisting of a minimum of three (3)

directors (administrateurs) (each a "Director" and together the "Directors").

As of the date of this Prospectus, the Company's Board of Directors currently comprises (3) three

Directors:

1 executive member representing the management of the Company:

101

Mr. Jiri Dedera (the "Managing Director"), with professional address at 40 rue de la Vallée, L-

2661 Luxembourg, Grand-Duchy of Luxembourg;

1 independent member:

Mr. Edward Moss Hughes (the "Chairman"), with professional address at Linden 4, 31-33

Merrion Road, Ballsbridge, Dublin 4, Ireland (together the "Independent Directors"); and

1 non-executive member representing Shareholders: Mr. Pavel Spanko, with professional address

at Václavské Náměstí 33, 11000 Prague 1, Czech Republic Prague (the "Non-Executive

Director").

Any natural or legal person may serve on the Board of Directors, except for persons specifically

prohibited by applicable law. A legal entity may be a Director (a "Corporate Director"), in which case it

must designate a permanent representative to perform that role in its name and for its account. The

revocation by a Corporate Director of its representative is conditional upon the simultaneous appointment

of a successor.

Term, appointment and removal of Directors

The members of the Board of Directors are elected by the General Meeting of the Shareholders for a

period not exceeding six (6) years. They are eligible for re-election and they may be removed at any time,

with or without cause, by a resolution adopted by the simple majority of the General Meeting of the

Shareholders. The current mandate for the directors expires on the 2016 annual General Meeting of the

Shareholders approving the accounts for the financial year ending 31 December 2015. The 2015 annual

General Meeting of the Shareholders took place on 28 May 2015 in Luxembourg. The 2016 annual

General Meeting of the Shareholders is expected to be convened to take place on 28 May 2016.

Chairman and Managing Director

The annual General Meeting of the Shareholders held on 28 May 2015 appointed Jiri Dedera as Managing

Director (administrateur délégué) of the Company until the annual General Meeting of the Shareholders

of 2016 concerning the approval of the annual accounts of the Company relating to the accounting year

ending 31 December 2015.

The Articles of Incorporation and Rules of Procedure of the Board of Directors will provide that the

Board of Directors will elect a Secretary of the Board of Directors who need not be a Director as soon as

practicable. The Secretary will be tasked with ensuring that the actions of the Board of Directors comply

with the Articles of Incorporation.

Meeting of the Board of Directors

Meetings of the Board of Directors are held as often as deemed necessary or appropriate. All members,

and in particular the independent and non-executive members, are guided by the interests of the Company

and its business, such interests including, but not limited to, the interests of the Company's Shareholders

and employees.

102

Since the beginning of the year 2015, the Board of Directors has held 4 meetings, while in 2014 the Board

of Directors had 18 meetings.

The Board of Directors may only deliberate if the majority of its members are present or represented, a

proxy between Directors, which may be given in writing, by telegram, telex or fax being admitted. In

cases of emergency the Directors may vote in writing, by telegram, telex, fax, fax, electronic signature or

by any other secured means.

The decisions of the Board of Directors are taken at a majority of votes, in case of a tie, the Chairman of

the meeting has a casting vote. Resolutions signed by all members of the Board of Directors are just as

valid and enforceable as those taken at the time of a duly convened and held meeting of the Board of

Directors. The Secretary makes sure to get a specimen of the signatures of all Directors, and the Chairman

and Managing Director checks that they correspond to those affixed on all and any documents signed

outside of meetings.

Delegation of powers of the Board of Directors

The Board of Directors can delegate all or part of its powers regarding the daily management as well as

the representation of the Company with regard to such daily management to one or more Directors, who

need to be Shareholders. The realisation and pursuit of all transactions and operations basically approved

by the Board of Directors are likewise included in the daily management of the Company. Within this

scope, acts of daily management may include particularly all management and provisional operations,

including the realisation and the pursuit of acquisitions of real estate and securities, the establishment of

financings, the taking of participating interests and the placing at disposal of loans, warranties and

guarantees to group companies, without such list being limitative.

The Board of Directors can likewise designate a secretary, who may be a person outside the Board of

Directors (the "Secretary"). The Secretary shall be in charge of convening the Directors to the meeting of

the Board of Directors, of keeping the register of attendance, of ensuring the drawing of minutes of any

meetings, and to deliver requested copies, extracts or abstracts of the same. In the event of the absence or

impediment of the Managing Director, the Board of Directors designates at the time of each meeting the

one of its members who shall act as Chairman of the meeting.

The Managing Director and Secretary are at all times eligible for re-election.

Directors

Biographical information

Jiri Dedera – is the chief executive officer "the "CEO") & Managing Director of the Company,

previously appointed as deputy CEO, Mr. Dedera joined the Company in January 2014 and has

also been a Director of the Company since 4 February 2013 and is a member of the Company's

Audit Committee and Remuneration Committee. Before joining the Company, Mr. Dedera

worked for CPI PG as the investment director and before that for Deloitte and Pricewaterhou-

seCoopers in the Czech Republic and in the United States. He graduated from the Technical

University of Brno, Czech Republic;

103

Edward Moss Hughes began his career with Arthur Andresen, where he worked in various

positions in auditing and corporate finance. Later he worked as a director for GE Capital Europe.

Since the mid-1990’s Mr. Hughes has been engaged in entrepreneurial and investment activity,

primarily in the corporate finance and real estate areas with a primary focus on Central and

Eastern Europe. Mr. Hughes is also a Director in CPI PG.

Pavel Spanko has been an active entrepreneur and investor in the Czech Republic and the Central

and Eastern European region since early 1990s. His early activities included mainly marketing

and internet businesses. Later he turned to real estate businesses and his current portfolio

includes both residential and investment properties. Since November 2014 Mr. Spanko has held

31.80% of ORCO Property Group via Aspley Ventures Limited.

Board committees

As of the date of the Prospectus, the Board of Directors has the following committees:

Audit Committee (the "Audit Committee");

Remuneration, Appointment and Related Party Transaction Committee (the "Remuneration

Committee").

The implementation of decisions taken by these committees enhances the Company's transparency and

corporate governance. Independent and non-executive directors are a significant part of these

committees.

Audit Committee

As of the date of this Prospectus, the Audit Committee is now comprised of one Independent Director

(Edward Hughes) and the Managing Director (Jiri Dedera).

The Audit Committee reviews the Company's accounting policies and the communication of financial

information. In particular, the Audit Committee follows the auditing process, reviews and enhances the

Company's reporting procedures by business lines, reviews risk factors and risk control procedures,

analyzes the Company's group structure, assesses the work of external auditors, examines consolidated

accounts, verifies the valuations of real estate assets made by DTZ, marks bonds to market and audits

reports.

The Audit Committee has therefore invited persons whose collaboration is deemed to be advantageous to

assist it in its work and to attend its meetings.

Remuneration Committee

As of the date of this Prospectus, the Remuneration Committee is comprised of one Independent Director

(Edward Hughes) and the Managing Director (Jiri Dedera). The Remuneration Committee presents

proposals to the Board of Directors about remuneration and incentive programs to be offered to the

104

management and the Directors of the Company. The Remuneration Committee also deals with related

party transactions.

The role of the Remuneration Committee is among other things to submit proposals to the Board of

Directors regarding the remuneration of executive managers, to define objective performance criteria

respecting the policy fixed by the Company regarding the variable part of the remuneration of top

management (including bonus and share allocations, share options or any other right to acquire shares)

and that the remuneration of non-executive Directors remains proportional to their responsibilities and the

time devoted to their functions.

Senior Management

The senior management of the Company (the "Senior Management") is entrusted with the day-to-day

running of the Company and among other things to:

be responsible for preparing complete, timely, reliable and accurate financial reports in

accordance with the accounting standards and policies of the Company;

submit an objective and comprehensible assessment of the Company's financial situation to the

Board of Directors;

regularly submit proposals to the Board of Directors concerning strategy definition;

participate in the preparation of decisions to be taken by the Board of Directors;

supply the Board of Directors with all information necessary for the discharge of its obligations in

a timely fashion;

set up internal controls (systems for the identification, assessment, management and monitoring

of financial and other risks ), without prejudice to the board's monitoring role in this matter; and

regularly account to the board for the discharge of its responsibilities.

The Senior Management meets on a regular basis to review the operating performance of the business

lines and the containment of operating expenses.

Evolution of the Senior Management

Mr. Guy Wallier passed away on 3 September 2015 at the age 79. Mr. Wallier, French national and a

former banker was a member of OPG’s Board since the Company’s creation. Recently he was also a

member of the audit committee and the president of the remuneration committee.

On 18 March 2014, the Board of Directors decided to implement changes in the management structure by

terminating the executive contracts of Messrs. Jean-François Ott, Nicolas Tommasini, Ales Vobruba and

Brad Taylor, and agreeing to comply with their termination packages.

105

The Board of Directors appointed Mr. Tomas Salajka as new CEO and Mr. Jiri Dedera, then Deputy

CEO, as new Managing Director.

In November 2014 the Company and Mr. Yves Désiront, then chief financial officer (the "CFO"),

mutually agreed to terminate their collaboration. Mr. Yves Désiront continued supporting the Company in

several specific matters until the end of February 2015.

On 10 November 2014 Mr. Salajka resigned from his position of CEO of the Company with immediate

effect, but continued supporting the Company in several specific matters until the end year. Further to the

resignation of Mr. Salajka from the position of CEO on 10 November 2014, the Board of Directors

appointed Mr. Dedera as the new CEO on 12 November 2014.

On 15 December 2014 the Company appointed Mr. Erik Morgenstern as the new CFO.

Members of the Senior Management

Accordingly, as of the date of this Prospectus, the Senior Management of the Company, with professional

address at 40 rue de la Vallée, L-2661 Luxembourg, Grand-Duchy of Luxembourg consists of the

following members:

Jiri Dedera, CEO & Managing Director, previously appointed as Deputy CEO, joined the

Company in January 2014. Jiri Dedera has also been a Director of the Company since 4 February

2013 and is a member of the Company's Audit Committee and Remuneration Committee. Before

joining the Company, Jiri Dedera worked for CPI PG as the investment director and before that

for Deloitte and PricewaterhouseCoopers in the Czech Republic and in the United States. He

graduated from the Technical University of Brno, Czech Republic; and

Erik Morgenstern, CFO, has over 10 years of experience in various finance positions in the real

estate sector, including director of accounting and IFRS and chief financial officer. Prior to

joining the Company Mr. Morgenstern worked for CPI PG. He graduated from the University of

Economics Prague, Czech Republic.

Corporate governance

The Company is dedicated to acting in the best interests of its Shareholders and stakeholders. Towards

these ends, it is recognized that sound corporate governance is critical. The Company is committed to

continually and progressively implementing industry best practices with respect to corporate governance

and has been adjusting and improving its internal practices in order to meet evolving standards. The

Company aims to communicate regularly to its Shareholders and stakeholders regarding corporate

governance and to provide regular updates on its website.

The Company complies with the Luxembourg corporate governance regime and in particular with the

corporate governance principles applicable to Luxembourg companies that are listed on the Luxembourg

Stock Exchange, as established by the Luxembourg Stock Exchange (the X Principles of Corporate

106

Governance of the Luxembourg Stock Exchange).

Conflicts of interests within the Board of Directors and Senior Management

The Independent Directors are not involved in management, are not employees or advisors with a regular

salary and do not give professional services such as external audit services or legal advice. Furthermore,

they are not related to any management member or majority Shareholder of the Company.

Apart from their mandates as described below, the Directors have no further potential conflicts of

interests between any duties to the Company and their private interests or other duties.

Mr. Jiri Dedera

No other mandates other than within the Group and the Endurance Real Estate Fund, as of the date of

this Prospectus.

Mr. Dedera also held the following mandates outside of the Group and the Endurance Real Estate

Fund in the previous 5 years:

- Na Františkově, s.r.o.

- CD Property s.r.o.

- Polygon BC, a.s.

- CPI Palmovka Office, s.r.o.

- HD Investments s.r.o.

- CPI – Orlová, a.s.

- CPI Group, a.s.

- Ždírec Property Development, a.s.

- CPI Meteor Centre, s.r.o.

- Beroun Property Development, a.s.

- Airport City s.r.o.

- Farhan, a.s.

- Olomouc Office, a.s.

- CPI Park Mlýnec, a.s.

- Besnet Centrum, a.s.

- Materali, a.s.

- CTPark Olomouc, a.s.

- MQM Czech, a.s.

107

- Arkáda Prostějov, s.r.o.

- ABLON s.r.o.

- Luxembourg Plaza, a.s.

- CPI BB Centrum, a.s.

- OC Spektrum, s.r.o.

Mr. Edward Hughes

Mr. Hughes holds the following mandates / participations outside of the Group as of the date of this

Prospectus:

- LEXXUS a.s.;

- Pentaura s.r.o.;

- Residentia s.r.o.;

- Weened s.r.o.;

- Zonker a.s.;

- Castlefoyle a.s.;

- Castlefin a.s.;

- Castlederg a.s.;

- CPI Property Group S.A.;

- CPI Hotels, a.s.;

- Fidicien, s.r.o.;

Mr. Spanko also held the following mandates outside of the Group in the previous 5 years:

- EMH West, s.r.o.

- EMH South, s.r.o.

- EMH North, s.r.o.

Mr. Pavel Spanko

Mr. Spanko holds the following mandates / participations outside of the Group as of the date of this

Prospectus:

- Balabenka Office Building, a.s.;

- CIB Flats P10, a.s.;

- CIB GROUP, a.s.;

- CIB Property, s.r.o.;

- DELTA HAUS s.r.o.;

- CIB Rental, a.s.;

- MAISON development, a.s.;

- CIB Real Estate, s.r.o.;

- CIB Lands, s.r.o.;

108

- CIB Balabenska, s.r.o.;

- ASPLEY VENTURES LIMITED;

- Kanceláře Zámecká, s.r.o.;

- Office Rent Prachatice, s.r.o.;

Mr. Spanko also held the following mandates outside of the Group in the previous 5 years:

- Integra stavby, a.s.

Mr. Erik Morgenstern

Mr. Morgenstern holds the following mandates / participations outside of the Group as of the date of

this Prospectus:

- Karlín Development I, s.r.o.

Mr. Morgenstern held the following mandates in the previous 5 years outside of the Group:

- LD Praha, a.s.

- Best Properties South, a.s.

- Statenice Property Development, a.s

- Camuzzi, a.s.

- STRM Gama, a.s.

- STRM Alfa, a.s.

- STRM Property, a.s.

- STRM Beta, a.s.

- STRM Delta, a.s.

- VERETIX a.s.

- CURITIBA a.s.

- RK Building s.r.o.

- BAYTON Delta, a.s.

- BAYTON Alfa, a.s.

Shareholdings of Directors and Members of Senior Management

Apart from participations in the shareholding of the Company described below, the members of the Board

of Directors and of the Senior Management have no participation in the Company.

Mr. Jiri Dedera

109

Mr. Dedera holds one Share of the Company.

Mr. Edward Hughes

Mr. Edward Hughes holds one Share of the Company.

Mr. Pavel Spanko

Mr. Spanko holds indirectly 100,000,000 Shares in the Company (via Aspley Ventures Limited).

Mr. Erik Morgenstern as a member of the Senior Management

Mr. Morgenstern holds no Shares in the Company.

Remuneration of Directors and Members of Senior Management

Total compensation given as a short term employee benefits to the Senior Management in 2014 amounted

to EUR 0.8 million.

The annual General Meeting of the Shareholders held on 28 May 2014 resolved to approve, with the

effect as of 1 January 2014, the payment of attendance fees to all Independent Directors and Non-

Executive Directors of the Company in the amount of EUR 3,000 per calendar month as a base fee and

empowered the Board of Directors to decide at its sole discretion about the payment of additional fees up

to EUR 3,000 per calendar month to Independent Directors and Non-Executive Directors of the

Company. The Board of Directors and Committee attendance fees amounted to EUR 72,000 in 2014.

No benefits in kind were granted to the Directors and Members of the Senior Management in 2014.

Service contracts providing for benefits upon termination of employment and/or board

membership

As of the date of this Prospectus, there are no potential indemnity payments payable to the Senior

Management in the event of termination of their contracts in excess of compensation required by

respective labor codes.

Loans and similar undertakings

There are no current loans between the Group and the current members of the Board of Directors and the

Senior Management.

However, CPI PG (where Mr. Hughes is an independent member of the Board of Directors) has provided

a loan to the Company.

Arrangements between any Director or Member of Senior Management and Shareholders

Mr. Spanko holds (via Aspley Ventures Limited) 100,000,000 Shares of the Company. There are no

other arrangements between Directors or members of the Senior Management with major Shareholders,

customers, suppliers or others pursuant to which any Director or member of the Senior Management was

selected as a member of the respective body.

110

Family relationships

There are no family relationships between any Director or member of the Senior Management and

Shareholders.

Statement on past records

During the previous five years up to the date of this Prospectus, as far as any Director or member of the

Senior Management is concerned, there were no convictions in relation to fraudulent offences, no

bankruptcies (other than as described below), receiverships or liquidations, no official public

incrimination and/or sanctions by statutory or regulatory authorities (including designated professional

bodies) or any disqualification by a court from acting as a member of the administrative, management or

supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer.

Mr. Dedera was a member of the Supervisory Board of SHH, which initiated a pre-bankruptcy procedure

to allow the restructuring of its operations. As of the date of this Prospectus, the pre-bankruptcy plan of

SHH has been approved and the reorganization of SHH successfully completed.

Restrictions on the disposal of securities

To the best knowledge of the Company there are no restrictions agreed between any of the members of

the management and the Senior Management on the disposal of the Company's securities.

PRINCIPAL SHAREHOLDERS

To the best knowledge of the Company, as of the date of this Prospectus, the following Shareholders have

a (notifiable) interest in the Company's capital or voting rights (more than 5%):

Shareholders

Number of

Shares

Stake/Voting

rights

Aspley Ventures Limited (an entity closely associated with Mr.

Pavel Spanko) 100,000,000 31.80%

Fetumar Development Limited (an entity closely associated with

Mr. Jan Gerner) 100,000,000 31.80%

Gamala Limited (an entity closely associated with Mr. Radovan

Vitek) 35,177,765 11.19%

Others 79,329,864 25.22%

Total 314,507,629 100.00%

To the best knowledge of the Company, natural persons associated with the Shareholders mentioned

above represent the ultimate beneficial owners of the Shareholders.

To the best knowledge of the Company, there are no arrangements between its major Shareholders, their

beneficial owners or representatives.

111

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

For additional information on related party transactions, please refer to note 16 to the Interim Financial

Statements, note 28 to the 2014 Consolidated Annual Financial Statements and note 29 to the 2013


Transactions with key management personnel

a) Remuneration of key management personnel

The members of the Board of Directors and the management of the Company are considered the key

personnel of the Group. As of 30 June 2015, the top management was made of two people as six members

were terminated or resigned in 2014.

Total compensation given as short term employee benefits to the top managers for the first half of 2015

amounted to EUR 0.1 million (EUR 0.4 million in the first half of 2014). For the full year 2014, such

compensation amounted to EUR 0.8 million (EUR 2.7 million for the year 2013).

The Board and Committees attendance compensation for the first half of 2015 was EUR 36,000 (same as

in the first half of 2014). For the full year 2014, such compensation amounted to EUR 72,000 (EUR

356,000 for 2013). The annual general meeting held on 28 May 2014 resolved to approve, with the effect

as of 1 January 2014, the payment of attendance fees to all independent, non-executive Directors in the

amount of EUR 3,000 per calendar month as a base fee and empowered the Board of Directors to decide

at its sole discretion about the payment of additional fees up to EUR 3,000 per calendar month to

independent, non-executive Directors.

During its meeting held on 3 February 2014, the Board of Directors agreed to terminate the Board and

Committees attendance compensation as set before, affective 1 January 2014. The previous

compensation scheme was as follows: (i) each Board and Committee member for all physical attendance

received EUR 4,000 per meeting, (ii) president presiding an ordinary and extraordinary General Meeting

of the Shareholders received EUR 9,000 per meeting.

b) Termination and change of control clauses

At 30 June 2015 and 31 December 2014, there were no potential termination indemnity payments in place

payable to the members of the Company's management in the event of termination of their contracts in

excess of the compensation as required by the respective labour codes.

On 18 March 2014, the Company's Board of Directors decided to dismiss and to terminate the executive

contracts of Jean-François Ott, Nicolas Tommasini, Ales Vobruba and Brad Taylor. Following

negotiations and approvals from the Board of Directors, on 27 March 2014 the Group and the former

management entered into a confidential settlement and mutual general release agreement by which the

Group settled all the existing and future potential obligations and claims arising from the termination and

the holding of warrants by the former management. Under this settlement agreement, the former

112

executives received EUR 7,150,000 in cash (EUR 1,150,000 to be paid in cash by CPI PG, then Orco

Germany SA). In addition, settlements in kind (non-core assets) were agreed with the former management

to transfer the Pachtuv Palace hotel in Prague and the Hakeburg property in Berlin (with their related

assets and liabilities) at the net asset value as of 31 December 2013 of EUR 8,400,000 including all

related shareholders' loans granted by the Group. As a result of the settlement agreement, Jean-François

Ott, Nicolas Tommasini, Ales Vobruba and Brad Taylor resigned from all their Board of Directors

positions and particularly from OPG and CPI PG boards. Accordingly, all indemnity payments as per

previous paragraph have been terminated and settled. As part of the settlement, affiliated entities of the

two members of the former management, or their affiliated entities, took over leasing of their company

cars and one member of the former management, or his affiliated entity, purchased his company car at the

then current accounting value.

c) Loans and advances with key management personnel

On 16 February 2007, the Company granted a loan of EUR 61,732 to Steven Davis, a former executive of

the Company with maturity date on 1 March 2008. In 2009, the loan was fully impaired as a result of a

dispute on the termination of the employment contract of Steven Davis. As of the date hereof, litigation is

pending in front of Luxembourg court. Bubny Development sued Mr. Davis for damages in the amount of

CZK 30,981,461. These litigations are pending as of the date of this Prospectus.

d) Other transactions with key management personnel

To ensure the liquidity for satisfaction of its future liabilities, the Company and Mr. Radovan Vitek

entered on 25 September 2014 into a put option agreement concerning the disposal of the shares held by

the Company in CPI PG. Pursuant to the terms of the put option agreement the Company has the right to

request Mr. Vitek, major shareholder of CPI PG, to purchase the CPI PG shares, or their portion, upon a

written request of the Company. The put option price payable by Mr. Vitek to the Company is EUR 0.47

per share plus 6% p.a. interest from the date of the put option agreement until the exercise of the put

option. The Company is not limited by the put option agreement to dispose of the CPI PG shares to a third

party and/or on the market. The put option agreement is valid for 2 years.

In 2014, the Company transferred 1 Share to Jiri Dedera and Tomas Salajka each for free and while they

hold their Board functions. Following resignation of Tomas Salajka in November 2014, 1 Share was

automatically transferred back to the Company.

In the first half of 2011, two entities closely associated to Gabriel Lahyani, then member of the Board of

Directors acquired 8,890 bonds (ISIN: XS0302623953) of ORCO Germany S.A. from the Company's

subsidiary for a total of EUR 4.4 million. As of the date of this Prospectus, the amount of EUR 227.480

plus statutory late interest accrued thereon is owed to the Company's subsidiary as a consequence of this

transaction. Although the Company firmly intends to pursue full recovery of this amount, the receivable

has been impaired in the 2012 accounts. As of the date of this Prospectus litigation is pending with

respect to the delivery and payment of these bonds.

Transactions with the Endurance Real Estate Fund

113

The Group is the sponsor of a Luxembourg regulated closed end umbrella investment fund dedicated to

qualified investors, the Endurance Real Estate Fund. This fund has opted for the form of a "Fonds

Commun de Placement". The Company is the shareholder of the management company of the fund and

had an ownership interest of 14.8% in the Residential Sub-fund as at 30 June 2015.

The Company's remuneration from the Residential Sub-fund amounting to EUR 0.3 million in the first

half of 2015 (0.7 million in 2014; EUR 1.7 million in 2013) is linked to:

- the liquidation fee for the Residential Sub-fund; and

- the disposal fee calculated as 0.5% of the value of the assets sold.

As of 30 June 2015, open invoices for unpaid management fees owed by Endurance Real Estate Fund to

the management company amounted to EUR 0.15 million. The total of invoices issued in 2014 by the

management company to the sub-funds of the Endurance Real Estate Fund, mainly composed of

management fees, amounted to EUR 0.6 million (2013: EUR 1.1 million).

Besides the fund management, there are transactions between the Group and the Endurance Real Estate

Fund companies as a consequence of Group companies rendering administrative and financial services.

These transactions resulted in the recognition in 2014 of EUR 86 thousand of revenue (EUR 0.6 million

in 2013) and EUR 0.2 million of expenses (EUR 0.5 million in 2013). The net outstanding amount of

receivables was EUR 0.4 million at 30 June 2015 (EUR 0.1 million at 31 December 2014;

EUR 0.3 million as at 31 December 2013).

Moreover Group companies subscribed for loans with Endurance Real Estate Fund partners that

amounted to EUR 0.8 million at 31 December 2014, interests included (EUR 0.8 million at 31 December

2013).

During the first half of 2015, the Residential sub-fund distributed dividends to the Company in the

amount of EUR 0.5 million (EUR 1.6 million in 2014; ''EUR 0.2 million in 2013).

Transactions with CPI PG

Management fees

CPI PG companies, affiliated with Mr. Radovan Vitek, have provided property management services to

certain assets of the Company in the Czech Republic. The value of such services amounted to EUR 6

thousand in the first half of 2015 (2014: EUR 0.1 million; 2013: EUR 54 thousand).

From 1 July 2014 CPI PG companies began providing outsourcing services in the field of general

administration, tax, accounting, reporting, human resources and IT to certain assets of the Company in the

Czech Republic. The value of such services amounted to EUR 0.6 million in the first half of 2015 (2014:

EUR 0.4 million).

114

In prior years, the Group provided services to hospitality entities of which the outstanding amount was

EUR 0.9 million at 31 December 2014. These services related to IT, human resources and restructuring.

The Group created allowance for these receivables in the amount of EUR 0.7 million.

Sale of SHH loan

On 11 June 2014 the Company entered into a transaction concerning partial disposal of its stakes in SHH,

whereby the Group disposed of 2,080,000 SHH shares corresponding to 24.94% of the shares and voting

rights and also of its shareholder receivables from SHH. Shares were sold for EUR 1 and receivables were

sold for EUR 2.1 million. The opportunity to dispose of the SHH stakes was mediated by CPI PG.

However, CPI PG made no profit or other benefit out of such mediation.

Loan by CPI PG

On 17 June 2014 the Company as borrower and CPI PG as lender entered into a credit facility agreement

with the following parameters: EUR 3.5 million facility framework, repayment in 3 months and interest

of 8% p.a. The parties agreed to extend the maturity until 31 December 2015, the facility limit was

extended to EUR 20.0 million, and the interest decreased to 5% p.a. At 30 June 2015, the outstanding

balance amounted to EUR 9.6 million (31 December 2014: EUR 1.9 million).

Capital Increase

On 24 September 2014 the Company entered into an agreement for the subscription of 65,957,446 new

ordinary shares issued by CPI PG at the subscription price of EUR 0.47 per share, which is approximately

12% below the current market price of EUR 0.53. The Company paid an aggregate subscription price of

EUR 30,999,999.62 and the new shares were issued by CPI PG on 24 September 2014.

Notes guarantee

On 7 November 2014, the Company and CPI PG entered into a trust deed pursuant to which CPI PG

agreed to unconditionally and irrevocably guarantee the due and punctual payment of all sums from time

to time payable by the Company in relation to the New Notes, which were issued on 4 October 2012 and

amended and restated pursuant to the trust deed. CPI PG has also undertaken in the trust deed to be

bound by certain limitations on its activities and to maintain certain financial ratios.

In consideration of CPI PG's entry into the trust deed and the guarantee given thereunder, the Company

has agreed to pay to CPI PG a guarantee fee of 3% per annum of the outstanding principal balance of the

New Notes, payable on a payment in kind (PIK) basis falling due on the business day after all amounts

payable in connection with the New Notes have been paid in full.

Treasury shares sale

115

On 5 November 2014 the Group sold 117,980 of its treasury shares to CPI PG at the then prevailing

market price of EUR 0.37 per share.

Hospitality transaction

On 19 December 2014, the Company sold its interest in the hospitality Mamaison joint venture to CPI PG

through transfer of its ownership in Endurance Hospitality Assets S.à r.l. and Endurance Hospitality

Finance, S.à r.l., entities holding 50 % share in Hospitality Invest S.á r.l. As part of the transaction the

Group sold the receivables (loans) provided by the Group to these entities. The transaction price for

shares and the receivables was EUR 13.3 million.

Transactions with SHH

As part of the pre-bankruptcy reorganisation proceedings of SHH the Group agreed on 19 December 2014

to equitise its receivables in the amount of approximately EUR 1.58 million into newly issued SHH

shares as part of the pre-bankruptcy plan. In order to support SHH the Group agreed on 19 December

2014 not to invoice its management fees from the date of the initiating of the SHH pre-bankruptcy

proceedings. On 22 April 2015 the Group also terminated the management agreement with SHH.

116

GENERAL INFORMATION ON THE COMPANY AND THE GROUP

Formation, name, registered office, fiscal year and duration of the Company

The Company is a public limited company ("société anonyme") incorporated and existing under

Luxembourg law, and registered at the Luxembourg Trade and Companies Register (RCS) under number

B 44 996. The Company's corporate capital is set at EUR 31,450,762.90 represented by 314,507,629

shares without nominal value, as of the date of this Prospectus. The Company was incorporated by a

notarial deed drawn on 9 September 1993 by Maître Frank Baden, for an indefinite period of time.

The Company's financial year begins on the first day of January and ends on the thirty first day of

December. The first financial year of the Company exceptionally began on the Company's date of

incorporation. The Company's registered office is located at 40, rue de la Vallée, L-2661 Luxembourg,

Grand Duchy of Luxembourg. The telephone number of the Company is +352 26 47 67 47.

Historical changes to the Articles of Incorporation of the Company

Corporate purpose

The latest amendment of the Articles of Incorporation took place after the extraordinary General Meeting

of the Shareholders held on 17 February 2015, which decided, inter alia, to modify, renew and replace the

Company's existing authorised share capital and to set it to an amount of one hundred million euros (EUR

100,000,000.00).

According to article 4 of the Articles of Incorporation, the purpose of the Company is:

the direct acquisition of real property, the taking of participations and the placing of loans at

disposal for companies that form part of its group. Its activity may consist in carrying out

investments in real estate, such as the purchase, sale, construction, valorisation, management

and rental of buildings, as well as in the promotion of real estate, be it on its own or through

its branches;

to carry out investments, as regards the hotel industry, such as the purchase, sale,

construction, valorisation, management and running of hotels on its own or through its

branches;

the taking of participations, in any form whatsoever, in any commercial, industrial, financial

or other Luxembourg of foreign companies, whether they are part of the group or not, the

acquisition of all and any securities and rights by way of participation, contribution,

subscription, underwriting or purchase options, or negotiation, and in any other, and in

particular the acquisition of patents and licenses, their management and development, the

granting to undertakings in which it holds a direct or indirect stake of all kinds of assistance,

loans, advances or guarantees and finally all and any activities directly or indirectly relating

to its corporate purpose;

playing a financial role, or carry out an activity of management in enterprises or companies it

holds or owns; and

117

to carry out all and any commercial, movable, immovable and financial operations likely to

relate directly or indirectly to the activities defined above and susceptible of promoting their

fulfillment.

Group structure and material shareholding

Orco Property Group consolidated subsidiaries

% Shareholding

Company Country

Currenc

y Activity

31.12.201

4

31.12.201

3

Orco Adriatic, d.o.o. Croatia HRK Hospitality 100.00% 100.00%

Orco Razvoj, d.o.o. Croatia HRK Development 100.00% 100.00%

Asmihati Holding Limited Cyprus EUR Development 100.00% n/a

BCC - Brno City Center, a.s.

(sold)

Czech

Republic

CZK Renting 0.00% 100.00%

BIANKO, s.r.o. Czech

Republic

CZK Development 100.00% n/a

Bubenská 1, a.s. Czech

Republic

CZK Renting 100.00% 100.00%

Bubny development, s.r.o. Czech

Republic

CZK Development 100.00% 100.00%

Byty Podkova, a.s. Czech

Republic


Darilia a.s. Czech

Republic


Development Doupovská,

s.r.o.

Czech

Republic


Development Pražska s.r.o. Czech

Republic


Estate Grand, s.r.o. Czech

Republic


Hagibor Office Building, a.s. Czech

Republic

CZK Renting 100.00% 100.00%

Industrial Park Střibro s.r.o. Czech

Republic

CZK Renting 100.00% 100.00%

IPB Real, s.r.o. Czech

Republic


Jihovýchodni Město, a.s. Czech

Republic


Megaleiar, a.s. Czech

Republic


Na Poříčí, a.s. Czech

Republic

CZK Renting 100.00% 100.00%

118

Nupaky, a.s. Czech

Republic


Oak Mill, a.s. Czech

Republic


OFFICE CENTER

HRADČANSKÁ, a.s.

Czech

Republic

CZK Renting 100.00% 100.00%

Orco Financial Services,

s.r.o.

Czech

Republic


Orco Praga, s.r.o. Czech

Republic


Orco Prague, a.s. Czech

Republic

CZK Management

services

100.00% 100.00%

Pachtův Palac, s.r.o. (sold) Czech

Republic

CZK Hospitality 0.00% 100.00%

Rubeška Development, s.r.o. Czech

Republic


Seattle, s.r.o. Czech

Republic


STRM Alfa, a.s. Czech

Republic


STRM Beta , a.s. Czech

Republic


STRM Delta, a.s. Czech

Republic


STRM Gama, a.s. Czech

Republic


T-O Green Europe, a.s. Czech

Republic


TQE Asset, a.s. Czech

Republic


V Mezihoří (merged) Czech

Republic


Zeta Estate a.s Czech

Republic


Vinohrady s.a.r.l. France EUR Management

services

100.00% 100.00%

Brillant 1419 GmbH & Co.

Verwaltungs KG

Germany EUR Management

services

100.00% 100.00%

Ariah Kft. Hungary HUF Renting 0.00% 100.00%

CWM 35 Kft. Hungary HUF Renting 100.00% 100.00%

Energy Trade Plus Kft Hungary HUF Renting 100.00% 100.00%

Meder 36 Kft. Hungary HUF Renting 100.00% 100.00%

ORCO Budapest Rt. Hungary HUF Renting 0.00% 100.00%

119

ORCO Development Kft. Hungary HUF Renting 100.00% 100.00%

ORCO Hungary Kft. Hungary HUF Renting 100.00% 100.00%

Orco Vagyonkezelo Kft. Hungary HUF Management

services

100.00% 100.00%

ORR Kft. Hungary HUF Renting 100.00% 100.00%

Vaci 1 Kft. (formerly Yuli

Kft.)

Hungary HUF Renting 0.00% 100.00%

Vaci 190 Projekt Kft. Hungary HUF Renting 100.00% 100.00%

Capellen Invest S.A. Luxembourg EUR Renting 100.00% 100.00%

CEREM S.A. Luxembourg EUR Management

services

100.00% 100.00%

Endurance Hospitality Asset

Sàrl (sold)

Luxembourg EUR Hospitality 0.00% 88.00%

Endurance Hospitality

Finance Sàrl (sold)

Luxembourg EUR Hospitality 0.00% 88.00%

Endurance Real Estate

Management Company Sàrl

Luxembourg EUR Management

services

100.00% 100.00%

OPG Invest. Lux S.A. Luxembourg EUR Management

services

100.00% 100.00%

ORCO Russian Retail S.A. Luxembourg EUR Renting 100.00% 100.00%

Diana Property SP. z.o.o. Poland PLN Renting 100.00% 100.00%

Orco Enterprise Sp.z o.o. Poland PLN Development 100.00% 100.00%

Orco Logistic Sp.z o.o. Poland PLN Renting 100.00% 100.00%

Orco Poland Sp.z.o.o. Poland PLN Management

services

100.00% 100.00%

Orco Project Sp.z o.o. Poland PLN Development 0.00% 100.00%

Orco Property Sp.z o.o.

(sold)

Poland PLN Development 0.00% 93.59%

Szczecin Project sp. z.o.o. Poland PLN Development 0.00% 75.00%

ORCO Development, s.r.o. Slovakia EUR Development 100.00% 100.00%

ORCO Estates, s.r.o. (sold) Slovakia EUR Renting 0.00% 100.00%

Orco Residence, s.r.o. Slovakia EUR Development 100.00% 100.00%

ORCO Slovakia, s.r.o. Slovakia EUR Management

services

100.00% 100.00%

Equity method investments

Hereafter follows a list of joint ventures accounted for using the equity method presenting the Group's

effective shareholding in them:

% Shareholding

Company Country

Currenc

y Activity

31.12.201

4

31.12.201

3

120

Blue Yachts, d.o.o. Croatia HRK Hospitality 22.13% 39.58%

Obonjan Rivijera d.d. Croatia HRK Development 31.61% 56.55%

Suncani Hvar, d.d. Croatia HRK Hospitality 31.61% 56.55%

Dienzenhoferovy sady 5 s.r.o.

Czech

Republic CZK Hospitality 0.00% 44.00%

Janáčkovo nábřeží 15, s.r.o.

Czech


Mamaison Management s.r.o.

Czech


Orco Hotel Ostrava, a.s.

Czech


Orco Hotel Riverside, s.r.o.

Czech


Orco Property Start a.s.

Czech


Residence Belgická, s.r.o.

Czech


SV Fáze II, s.r.o.

Czech

Republic CZK Development 50.00% 50.00%

SV Fáze III, s.r.o.

Czech

Republic CZK Development 50.00% 50.00%

Tyršova 6, a.s.

Czech


Valanto Consulting, a.s.

Czech


Brillant 1419. Verwaltungs

GmbH Germany EUR

Management

services 49.00% 49.00%

Orco Hotel Management Kft. Hungary HUF Hospitality 0.00% 44.00%

Orco Hotel Rt. Hungary HUF Hospitality 0.00% 44.00%

Ozrics Kft. Hungary HUF Hospitality 0.00% 44.00%

Residence Izabella Rt. Hungary HUF Hospitality 0.00% 44.00%

Hospitality Invest Sàrl Luxembourg EUR Hospitality 0.00% 44.00%

Kosic Sàrl Luxembourg EUR Development 50.00% 50.00%

MMR Russia S.A. Luxembourg EUR Hospitality 0.00% 44.00%

Diana Development Sp.z.o.o. Poland PLN Hospitality 0.00% 44.00%

Orco Hospitality Services Sp.z

o.o. Poland PLN Hospitality 0.00% 44.00%

Orco Hotel Development Sp. z

o.o. Poland PLN Hospitality 0.00% 44.00%

Orco Hotel Project Sp.z o.o. Poland PLN Hospitality 0.00% 44.00%

Orco Investment Sp.z o.o. Poland PLN Hospitality 0.00% 44.00%

Orco Warsaw Sp.z o.o. Poland PLN Hospitality 0.00% 44.00%

Orco Pokrovka Management Russia RUB Hospitality 0.00% 44.00%

121

o.o.o.

MaMaison Bratislava, s.r.o. Slovakia EUR Hospitality 0.00% 44.00%

CPI Property Group S.A.

The following table represents the list of deconsolidated entities as a result of loss of control over CPI PG.

% Shareholding

Company Country

Currenc

y Activity

31.12.201

4

31.12.201

3

CPI Property Group S.A.

Luxembour

g EUR

Developme

nt 4.82% 58.48%

Gebauer Höfe Liegenschaften GmbH Germany EUR Renting 9.59% 94.98%*

GSG 1. Beteiligungs GmbH Germany EUR Renting 0.00% 99.75%*

GSG Asset GmbH & Co. Verwaltungs

KG Germany EUR Renting 0.00% 99.75%*

GSG Gewerbehöfe Berlin 1. GmbH Co.










GSG Gewerbesiedlungs-Gesellschaft

mbH Germany EUR Renting 0.00% 99.75%*

Hofnetz und IT Services GmbH Germany EUR

Developme

nt 0.00% 99.75%*

Isalotta GP GmbH & Co. Verwaltung


Orco Berlin Invest GmbH Germany EUR

Developme

nt 0.00%

100.00%

*

Orco Grundstücks- u. Bet.ges.mbH Germany EUR Renting 0.00%

100.00%

*

Orco Immobilien Gmbh Germany EUR

Developme

nt 0.00%

100.00%

*

Solar GSG Berlin GmbH Germany EUR Renting 0.00% 99.75%*

Vivaro GmbH & Co. Grundbesitz KG Germany EUR

Developme

nt 0.00% 94.34%*

Vivaro GmbH & Co. Zweite Germany EUR Developme 0.00% 100.00%

122

Grundbesitz KG nt *

Vivaro Vermögensverwaltung GmbH Germany EUR

Developme

nt 0.00%

100.00%

*

Wertpunkt Real Estate Experts GmbH Germany EUR Renting 0.00% 99.75%*

Orco Germany Investment S.A.

Luxembour

g EUR Renting 0.00%

100.00%

*

Significant subsidiaries

% Shareholding

Company Country 31.XII.14

BIANKO, s.r.o. Czech Republic 100.00%

Bubenská 1, a.s. Czech Republic 100.00%

Industrial Park Střibro s.r.o. Czech Republic 100.00%

Na Poříčí, a.s. Czech Republic 100.00%

OFFICE CENTER HRADČANSKÁ, a.s. Czech Republic 100.00%

STRM Alfa, a.s. Czech Republic 100.00%

STRM Beta , a.s. Czech Republic 100.00%

STRM Delta, a.s. Czech Republic 100.00%

STRM Gama, a.s. Czech Republic 100.00%

Capellen Invest S.A. Luxembourg 100.00%

Independent Auditors

The independent auditors of the Company are KPMG Luxembourg S.à r.l., having its registered office at

9, Allée Scheffer, L-2520 Luxembourg, Grand Duchy of Luxembourg. KPMG Luxembourg S.à r.l. are

members of the Luxembourg Institute of Registered Auditors (Institut des Réviseurs d'Entreprises),

qualifying as cabinet de revision agréé, and have been appointed by the ordinary General Meeting of the

Shareholders of 27 June 2013, expiring at the end of the ordinary General Meeting of the Shareholders

convened to approve the accounts for the financial year ended 31 December 2016.

KPMG Luxembourg S.à r.l. has audited the Consolidated Annual Financial Statements, as stated in their

reports appearing elsewhere in this Prospectus.

The ownership threshold above which the shareholder ownership must be disclosed

In accordance with Article 26 of the Articles of Incorporation a shareholder who acquires or disposes of

shares of the Company must notify the proportion of voting rights held as a result of the relevant

acquisition or disposal, where that proportion reaches, exceeds or falls below the thresholds of 2,5%, 5%,

10%, 15%, 20%, 25%, 33 1/3%, 50% and 66 2/3% within the delays imposed under the Luxembourg

Transparency Law. In case of default of notification by the shareholder of the Company, the exercise of

voting rights relating to the shares exceeding the fraction that should have been notified under the

Luxembourg Transparency Law to the Company is suspended. The suspension of the exercise of voting

rights is lifted the moment the shareholder makes the notification provided for in the Luxembourg

123

Transparency Law. For the purposes of this notification, voting rights are calculated on the basis of the

entirety of shares to which voting rights are attached even if the exercise of such voting rights is

suspended.

Pre-bankruptcy procedures/reorganization proceedings





in December and later on by the Budapest Commercial Court. As part of the approved reorganization the

subsidiaries transferred the Váci 1 (former stock exchange building) and Szervita assets to the financing

bank and Paris Department Store to the Hungarian Republic, which exercised its preemption right. Within

the reorganization settlement the Group paid to the financing bank EUR 9 million in consideration of the

release of corporate guarantees provided by the Company as well as the release of pledges on the Vaci

188 project, which was cross-collateralized in favour of the financing bank.

In the first half of 2014, Suncani Hvar (the “SHH”) initiated a pre-bankruptcy procedure to allow the

restructuring of its operations. Consequently, the Group disposed of SHH shares representing 24.94% of

the SHH shareholding as well as receivables owed to SHH. As a result of long-term negotiations among

SHH’s biggest creditors and shareholders, the restructuring plan was approved at the creditors meeting in

December 2014 as well as at the shareholders meeting in January 2015, which provides a solid basis for

the approval of the plan by the Split Commercial Court, which occurred on 9 June 2015. Further to the

decision of the Commercial Court in Split issued on 14 September 2015, which resolved to confirm the

capital increase of SHH under the pre-bankruptcy procedure, the Company`s stake in SHH shareholding

decreased from 31.61% to 16.7%.

In 2015, Hagibor Office Building, a.s. (to meet its legal obligation) submitted to the Municipal Court in

Prague an application for its insolvency reorganization proceedings. The Group supports the

reorganization proceedings as more favourable option to all creditors as opposed to bankruptcy

proceedings.

124

DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY AND APPLICABLE

REGULATIONS

The following overview provides information concerning the Company's share capital and briefly

describes certain significant provisions of the Company's Articles of Incorporation and Luxembourg

corporate law. Copies of the Company's Articles of Incorporation are available at its registered office at

40, rue de la Vallée, L-2661 Luxembourg.

Share capital

General

As of the date of this Prospectus, the share capital of the Company was set EUR 31,450,762.90 composed

of 314,507,629 shares without nominal value. All Shares in the Company's issued share capital were fully

paid up. The accounting par value price is EUR 0.1 per share.

The share capital of the Company is represented by only one class of shares carrying same rights. The

114,507,629 shares registered under ISIN code LU0122624777 (representing app. 36.4% of the total

share capital) are admitted to trading on the regulated markets of the NYSE Euronext Paris and the

Warsaw Stock Exchange. The 200,000,000 shares that were issued on 10 November 2014 (representing

app. 63.6% of the total share capital) have not been admitted to trading on any regulated market yet.

However, the Company will seek to have them admitted to trading, in addition to the regulated market of

the Luxembourg Stock Exchange, on the regulated market of NYSE Euronext Paris as soon as reasonably

practicable, subject to legal and regulatory requirements. With respect to the shares already admitted to

trading on the Warsaw Stock Exchange, the Company intends to delist them from the Warsaw Stock

Exchange, subject to legal and regulatory requirements and final decision to commence the process of

delisting.

Under Luxembourg law, a share premium may be paid in at the incorporation or during the existence of

the company. From a Luxembourg corporate law perspective, such share premium represents neither a

profit, nor a reserve but an additional contribution which is not part of the share capital and may be paid

by new subscribers to equalize the financial rights of the former and new Shareholders. The payment of

share premium is not mandatory and implies that the value of the shares is higher than their nominal

value.

Evolution of issued and authorized share capital

Evolution of the share capital during the year 2012

During the year 2012, the share capital of the Company and the authorised share capital of the Company

were modified as follows:

a) On 14 May 2012, the share capital of the Company was increased from EUR 69,920,850.60 to

EUR 145,203,164.60, divided into 35,415,406 shares without nominal value, through the creation

and the issuance of 18,361,540 new ordinary shares. The authorised shared capital was at that

moment in the amount of EUR 410,000,000.

125

b) On 28 June 2012, the extraordinary General Meeting of the Shareholders of the Company decided

to increase the authorised share capital of the Company by EUR 63,582,861.50 and to set it at

EUR 473,582,861.50.

c) On 28 June 2012, the extraordinary General Meeting of the Shareholders of the Company

approved a second increase of the share capital of the Company by an amount of up to EUR

266,500,000 through the creation and issue of up to 65,000,000 new ordinary shares. Following

this approval, with effective date of 3 September 2012, the share capital of the Company was

increased by an amount of EUR 264,767,680.30 from EUR 145,203,164.60 to EUR

409,970,844.90, divided into 99,992,889 shares without nominal value, through the creation and

issue of 64,577,483 new ordinary shares.

d) On 28 September 2012 the share capital of the Company was increased by an amount of EUR

32,177,099.30 from EUR 409,970,844.90 to EUR 442,147,944.20, divided into 107,840,962

shares without nominal value, through the creation and the issuance of 7,848,073 new ordinary

shares.


During the year 2013, there was a decrease and a subsequent increase in the share capital of the Company,

as well as an increase in the authorized share capital of the Company, as shown below:

a) On 4 February 2013, the extraordinary General Meeting of the Shareholders, decided to decrease

the corporate capital of the Company from EUR 442,147,944.20 to EUR 215,681,924 represented

by 107,840,962 shares without nominal value, without cancellation of shares, by decreasing the

accounting par value of the existing shares from EUR 4.10 to EUR 2 per share.

b) On 27 June 2013 the extraordinary General Meeting of the Shareholders decided to set the

authorized corporate capital to EUR 278,992,584.

c) On 28 August 2013 the board of directors of the Company increased the share capital of the

Company by EUR 13,333,334 and the issue of 6,666,667 new shares, with suppression of the

preferential subscription right of the existing shareholders. As a consequence of the capital

increase and the issue of shares, the subscribed share capital of the Company amounted to EUR

229,015,258, divided into 114,507,629 shares without nominal value.


During the year 2014 the corporate capital of the Company and the authorised share capital of the

126

Company were modified as follows:

a) On 8 April 2014, the extraordinary General Meeting of the Shareholders decided to decrease the

corporate capital of the Company from EUR 229,015,258 to EUR 114,507,629, represented by

114,507,629 shares without nominal value, without cancellation of shares, by decreasing the

accounting par value of the existing shares from EUR 2.- to EUR 1.- per share.

b) On 28 May 2014, the extraordinary General Meeting of the Shareholders further decided to

decrease the corporate capital of the Company from EUR 114,507,629 to EUR 11,450,762.90,

represented by 114,507,629 shares without nominal value, without cancellation of shares, by

decreasing the accounting par value of the existing shares from EUR 1.- to EUR 0.10 per share.

The extraordinary General Meeting of the Shareholders also decided to modify, renew and

replace the Company's authorised share capital and to set it to an amount of EUR 20,000,000 in

addition to the share capital of the Company.

c) By resolutions dated 10 November 2014, the board of directors of the Company approved the

increase of the share capital of the Company, by issuance of 200,000,000 new ordinary shares by

cancelling the existing shareholders' preferential subscription rights. Pursuant to this increase, the

share capital of the Company was raised by EUR 20,000,000 from EUR 11,450,762.90 to EUR

31,450,762.90, represented by 314,507,629 shares without nominal value.

Following this increase of the Company's share capital, the authorised share capital has been

decreased to nil euros (EUR 0.00).


On 17 February 2015 the extraordinary General Meeting of the Shareholders decided to modify, renew

and replace the authorised share capital of the Company and to set it at EUR 100,000,000.00 for a period

of 5 years from the date of this extraordinary General Meeting of the Shareholders.

Authorized capital

As of the date of this Prospectus, the Company has an unissued but authorized share capital of a

maximum amount of EUR 100,000,000 to be represented by one billion shares without a nominal value,

in addition to the 314,507,629 Shares currently outstanding. The authorized and unissued share capital

shall be valid and the authorization to issue shares thereunder is valid for a period ending 5 years from the

date of the Extraordinary General Meeting of the Shareholders held on 17 February 2015.

The Board of Directors has been authorized, during a period of five (5) years from the date of the

Extraordinary General Meeting of the Shareholders held on 17 February 2015, without prejudice to any

renewals, to increase the issued capital on one or more occasions within the limits of the authorized

capital. The Board of Directors is authorized to determine the conditions of any capital increase including

127

through contributions in cash or in kind, among others, the conversion of debt into equity, by offsetting

receivables, by the incorporation of reserves, issue premiums or retained earnings, with or without the

issue of new shares, or following the issue and the exercise of subordinated or non-subordinated bonds,

convertible into or repayable by or exchangeable for shares (whether provided in the terms at issue or

subsequently provided), or following the issue of bonds with warrants or other rights to subscribe for

shares attached, or through the issue of stand-alone warrants or any other instrument carrying an

entitlement to, or the right to subscribe for, shares.

Form and transfer of Shares

The Company's Shares are in registered form which is in accordance with the 1915 Law and permitted by

the Company's Articles of Incorporation. The Company's Shareholders' register is kept at the registered

office of the Company.

The Shares are freely transferable at any time at the Shareholder's discretion, subject to applicable

limitative legal provisions.

Applicable law

The Terms and Conditions of the Shares are governed by Luxembourg law.

Competent courts

The competent courts in the event of disputes shall be the ones under whose jurisdiction the registered

office of the Company falls without prejudice to the latter's right to take action before any other

competent court under Luxembourg law.

Settlement and delivery of the Shares

The Shares are already issued and fully paid up. The Company delivers the respective global share

certificate(s), corporate documents and instruction(s) to the Share Agent and Euroclear. Upon creation of

dematerialized Shares by Euroclear, the Share Agent will procure for their distribution to the respective

security accounts of subscribers pursuant to instruction(s) from the Company.

Rights and restrictions attached to the Shares

The Shares will be subject to all the provisions of the Company's Articles of Incorporation. Pursuant to

the Company's Articles of Incorporation the main rights attached to the Shares are described below:

Dividend rights

See Dividends and dividend policy on page 25 of this Prospectus.

Dividend restrictions

See Dividends and dividend policy on page 25 of this Prospectus.

Rights to share in any surplus in the event of liquidation

128

In the event of the Company's dissolution, the Company must be liquidated according to applicable

Luxembourg law. The balance of the Company's equity remaining after the payment of debts (and the

cost of liquidation) shall be distributed to the Company's Shareholders pro rata to the aggregate number

of Shares held by each Shareholder.

Redemption or conversion provisions

The Company may acquire its own Shares either on its own, or through a company in which the Company

holds directly the majority of the voting rights, or through a person acting in its own name but for the

account of the Company, subject to the conditions of the 1915 Law.

No conversion mechanism is foreseen for the Shares.

Voting Rights and General Meeting of the Shareholders

Each Share shall be entitled to one vote at all General Shareholder Meetings. There are no restrictions on

voting rights and there is no minimum shareholding required to be able to attend a General Meeting of the

Shareholders. Every Shareholder may take part in the deliberations and/or take the floor on any matter on

the agenda. There are no different voting rights of the Company's principal shareholders (as listed in the

section "Principal Shareholders").

The annual General Meeting of the Shareholders will be held in the City of Luxembourg at the registered

office or at any other place specified in the convening notice at the date and time set forth in the Articles

of Incorporation. If such day is a holiday, the General Meeting of the Shareholders will be held on the

immediately preceding business day.

The annual General Meeting of the Shareholders will resolve upon the approval of the audited annual

financial statements the discharge of the directors and other items of the agenda (if any).

Other General Meeting of the Shareholders may be called as often as the interest of the Company demand

and be held at such place and time as may be specified in the respective convening notice of the meeting.

The annual financial statements, the report of the statutory auditors or of the independent auditors

(réviseurs d'entreprises agréés), as the case may be, and the annual report shall be sent to the registered

Shareholders at the same time as the convening notice.

Fifteen days before the General Meeting of the Shareholders, Shareholders may inspect at the registered

office:

the annual financial statements and the list of directors, as well as a list of the statutory auditors or

the independent auditors (réviseurs d'entreprises agrées);

the list of sovereign debt, shares, bonds and other company securities making up the Company's

portfolio;

129

the list of shareholders who have not paid up their Shares, with an indication of the number of

their Shares and their domicile;

the report of the Board of Directors; and

the report of the statutory auditors or the independent auditors (réviseurs d'entreprises agrées).

Every Shareholder shall be entitled to obtain free of charge, upon production of proof of his title, fifteen

days before the meeting, a copy of the documents referred to in the foregoing paragraph.

Unless otherwise required by the Articles of Incorporation or Luxembourg law, all resolutions of the

General Meeting of the Shareholders shall in principle be adopted by a simple majority of votes cast, no

quorum being required. However, a quorum of half of the nominal share capital of the Company and a

majority of two-thirds of votes cast are required in respect of certain matters, as listed below. If the

quorum requirement of half of the nominal share capital of the Company is not met at the first General

Meeting of the Shareholders, then the Shareholders may re-convene for a second General Meeting of the

Shareholders. No quorum is required in respect of such second meeting and the resolutions are adopted by

a majority of two-thirds of the votes cast. The matters reserved to such General Meeting of the

Shareholders are, amongst others, (i) the limitation or waiver of pre-emptive rights or the granting of

powers to the Board of Directors to limit or waive the pre-emptive rights of the shareholders; (ii) the

increase or reduction of the Company's share capital; (iii) any changes to the Articles of Incorporation;

and (iv) the voluntary dissolution of the Company.

Changes of materiality (i.e. the change of the nationality of the Company or the increase of the

commitments of the Company's Shareholders) are subject to unanimous approval of all Shareholders as

well as bondholders.

The Board of Directors or the auditor(s) may convene a General Meeting of the Shareholders in

accordance with Luxembourg law. They shall be obligated to convene it so that it is held within a period

of one month if Shareholders representing one-tenth of the capital require so in writing with an indication

of the agenda. If the entire issued share capital of the Company is represented at a General Meeting of the

Shareholders, no convening notice is required for the meeting to be held and the proceedings at such

General Meeting of the Shareholders will be deemed valid.

As long as the Company's Shares are admitted to trading on a regulated market within a European Union

Member State, General Meeting of the Shareholders will be convened in accordance with the provisions

of the Luxembourg law of May 24, 2011 on the exercise of certain rights of shareholders in general

meetings of listed companies and implementing Directive 2007/36/EC of the European Parliament and of

the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed companies (the

"Shareholders' Rights Law") and the Articles of Incorporation.

To vote at meetings, Shareholders entitled to vote must duly evidence their shareholdings as of the record

date determined in accordance with the Shareholders' Rights Law. Subject to the Shareholders' Rights

Law, the Board of Directors may establish further conditions that must be fulfilled by Shareholders

wishing to participate in any Shareholders' meeting as provided by the Articles of Incorporation and

130

applicable law. A Shareholder may act at any General Meeting of the Shareholders by appointing another

person (who need not be a Shareholder) as his/her/its proxy in accordance with the provisions of the

Shareholders' Rights Law.

One or more Shareholders who together hold at least 5% of the subscribed capital may request that one or

more additional items be put on the agenda of any General Meeting of the Shareholders and have a right

to table draft resolutions for items included or to be included on the General Meeting of the Shareholders'

agenda. The requests should include justification for the proposed additional agenda points or the draft

resolutions to be adopted. Such a request shall be sent by post or electronically to the address indicated in

the convening notice and must be received by the Company no later than on the twenty-second day prior

to the holding of the meeting. The request should include the postal or electronic address where the

Company can acknowledge receipt of the request and the Company should send such acknowledgement

within forty-eight (48) hours of receipt. Draft resolutions submitted by Shareholders shall be added to the

Company's website as soon as possible after their receipt by the Company.

In accordance with the Shareholders' Rights Law, convening notices for all General Meeting of the

Shareholders shall be published at least thirty (30) days prior to the holding of the General Meeting of the

Shareholders in the official gazette of the Grand Duchy of Luxembourg (Mémorial C, Recueil des

Sociétés et Associations) (the "Mémorial C"), a Luxembourg newspaper and in media which may

reasonably be relied upon for the effective dissemination of the information to the public throughout the

EEA, and which are rapidly accessible and on a non-discriminatory basis. If a new convening notice is

required as a result of the quorum requirements not being met upon the first convocation and provided

that the convening notice complied with the above requirements and no new agenda items have been

added, the abovementioned period of thirty (30) days is reduced to seventeen (17) days prior to the

General Meeting of the Shareholders.

As the Shares of the Company shall all be registered shares, convening notices are to be sent by registered

letter (unless the addressees have otherwise expressly indicated in writing that they accept to receive the

notice by other means) to the registered Shareholders, the director and the statutory auditors (réviseurs

d'entreprises agrées).

The convening notice shall contain at least the following details:

precise indication of the date and location of the General Meeting of the Shareholders and the

proposed agenda;

a clear and precise description of the procedures that the Shareholders must comply with in order

to be able to participate in and cast their votes during the General Meeting of the Shareholders.

This information shall include. (i) the rights available to the Shareholders to include points to the

agenda and table draft resolutions (as described above) and where applicable, the deadline by

which those rights may be exercised and the electronic address to which Shareholders should send

their requests. The convening notice may confine itself to stating only the deadlines by which

those rights may be exercised and the abovementioned electronic address, provided it contains a

statement that more detailed information with respect to these rights are available on the

131

Company's internet site; (ii) the procedure for voting by proxy, including the forms to be used and

the means by which the Company is prepared to accept electronic notifications of the appointment

of proxy holders; and (iii) where applicable, the procedures for participating from a remote

location and voting by correspondence or electronically.

where applicable, an indication of the record date, as defined in article 5 of the Shareholders'

Rights Law, and the manner in which Shareholders have to register, and a statement that only

those who are Shareholders on that date shall have the right to participate and vote in the General

Meeting of the Shareholders;

indication of the postal and electronic addresses where it is possible to obtain the full text of the

documents and draft resolutions and an indication on how such documents can be obtained;

indication of the address of the internet site (i.e. the Company's website (www.orcogroup.com)

where for a continuous period starting the day of publication of the convening notice (and

including the day of the General Meeting of the Shareholders) the following information (at a

minimum) shall be made available by the Company:

convening notice;

total number of Shares and voting rights at the date of the convening notice including

subtotals for each class of Shares (if applicable);

documents to be submitted to the General Meeting of the Shareholders;

draft resolution, or where no resolution has been proposed for adoption, a comment from

the Board of Directors for each item of the proposed agenda; and

where applicable, forms for voting by proxy and voting by correspondence, unless they

have been sent directly to each Shareholder.

The Shareholders' Rights Law also sets forth rules in relation to participating in a General Meeting of the

Shareholders by electronic means, the right to ask questions in relation to agenda points, proxy voting and

formalities for proxy holders, voting remotely and voting results.

Issue of Shares and pre-emptive rights

The Shares may be issued pursuant to a resolution of the General Meeting of the Shareholders. The

General Meeting of the Shareholders may also delegate the authority to issue shares to the Board of

Directors for a renewable period of five years.

Each holder of Shares shall have pre-emptive rights to subscribe for any issue of shares pro rata to the

aggregate amount of such holder's existing holding of the Shares. Each Shareholder shall, however, have

no pre-emptive right on Shares issued for a non-cash contribution in case of capital increase in cash.

Nevertheless, the Company's Articles of Incorporation may authorize the Board of Directors to withdraw

or restrict these preferential subscription rights in relation to an increase of capital made within the limits

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of the authorized capital. The Board of Directors must draw up a report to the General Meeting of the

Shareholders on the detailed reasons for the restriction or withdrawal of the preferential subscription

rights which must include in particular the proposed issue price. It may be renewed on one or more

occasions by the extraordinary General Meeting of the Shareholders, deliberating in accordance with the

requirements for amendments to the Company's Articles of Incorporation, for a period which, for each

renewal, may not exceed five years.

In addition, an extraordinary General Meeting of the Shareholders called upon to resolve, at the

conditions prescribed for amendments to the Company's Articles of Incorporation, either upon an increase

of capital or upon the authorization to increase the capital, may limit or withdraw preferential subscription

rights or authorize the Board of Directors to do so. Any proposal to that effect must be specifically

announced in the convening notice. Detailed reasons therefore must be set out in a report prepared by the

Board of Directors and presented to the extraordinary General Meeting of the Shareholders dealing, in

particular, with the proposed issue price. This report must be made available to the public at the

Company's registered office, and on its website.

If the Company decides to issue new shares in the future and does not exclude the pre-emptive rights of

existing Shareholders, the Company will publish the decision by placing an announcement in Mémorial

C, Recueil des Sociétés et Associations, in two newspapers published in Luxembourg, which are expected

to be the Luxemburger Wort or the Tageblatt, and on the websites of the Company and the Luxembourg

Stock Exchange. The announcement will specify the period in which the pre-emptive rights may be

exercised. Such period may not be shorter than 30 days from the start of the subscription period.

Luxembourg law does not provide for any procedure for determining the pre-emptive right exercise date

and such date is always defined in the relevant resolution on the issue of Shares. The announcement will

also specify the details regarding procedure for exercise of the pre-emptive rights. The pre-emptive right

is exercised by placing an order with the Company and paying for the newly issued Shares. Under

Luxembourg law pre-emptive rights are transferable and tradable property rights. The 1915 Law provides

that the unexercised subscription rights shall, after the end of the subscription period, be sold publicly by

the Company on the Luxembourg Stock Exchange. The proceeds of the sale, after deduction of the

expenses thereof, shall be held at the disposal of the Shareholders who have not exercised their

preferential subscription rights for a period of five years. Any balance not claimed by the relevant

Shareholder shall revert to the Company.

Repurchase of own shares

According to article 49-2 of the 1915 Law and without prejudice to the principle of equal treatment of all

shareholders and the Market Abuse Law (as defined below), the Company and its subsidiaries as referred

to in article 49-2 of the 1915 Law may acquire its own shares subject to the following conditions:

an authorization given by the General Meeting of the Shareholders which shall determine the

terms and conditions of the proposed acquisition and in particular the maximum number of

Shares to be acquired, the duration of the period for which the authorization is given and

which may not exceed five years and, in case of acquisition for value, the maximum and the

minimum requirements;

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the acquisitions, including Shares previously acquired by the Company and held by it in its

portfolio as well as Shares acquired by a person acting in its own name or on behalf of the

Company, must not have the effect of reducing the net assets below the aggregate of the

subscribed capital and the reserves which may not be distributed under law or the Articles of

Incorporation; and

only fully paid Shares may be included in the transaction.

The Board of Directors shall ensure that, at the time of each authorized acquisition, the conditions

referred to in the second and third bullet are complied with.

The 1915 Law further provides that a Luxembourg public limited liability company (société anonyme)

may the issue of redeemable shares provided that the redemption thereof is subject to the following

conditions:

(i) the redemption must be authorised by the articles before the redeemable shares are subscribed

for;

(ii) the shares must be fully paid-up;

(iii) the terms and conditions for the redemption must be laid down in the Articles of

Incorporation;

(iv) redemption can only be made by using sums available for distribution in accordance with

Luxembourg law or the proceeds of a new issue made with a view to carry out such redemption;

(v) an amount equal to the nominal value, or, in the absence thereof, the accounting par value, of

all the shares redeemed must be included in a reserve which cannot be distributed to the shareholders

except in the event of a reduction in the subscribed capital; the reserve may only be used to increase the

subscribed capital by capitalisation of reserves;

(vi) point (v) shall not apply to a redemption using the proceeds of a new issue made with a view

to carry out such redemption;

(vii) where provision is made for the payment of a premium to shareholders in consequence of

a redemption, the premium may be paid only from sums which are available for distribution in

accordance with Luxembourg law; and

(viii) notice of redemption shall be published in accordance with the 1915 Law.

In principle, the Company has no obligation to sell or cancel the Shares so acquired and held by the

Company in treasury. According to the 1915 Law, the Company may, under certain circumstances,

acquire its own Shares without the prior authorization by the Shareholders and the other conditions set out

above. Such Shares shall be sold after three years as from the date of their acquisition unless the nominal

value or, in the absence of nominal value, the accounting par value of the Shares acquired, including

shares which the Company may have acquired through a person acting in its own name, but on behalf of

the Company, does not exceed 10% of the subscribed capital. If such transfer is not made within three

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years, such Shares shall be cancelled.

Capital reduction

The General Meeting of the Shareholders may, subject to Luxembourg law and the Company's Articles of

Incorporation resolve to reduce the Company's issued share capital. Article 69 of the 1915 Law provides

that in the event of a capital reduction involving a repayment to the shareholders or a waiver of the

shareholders' obligations to pay up their Shares, creditors whose claims predate the publication in the

Luxembourg official gazette (Mémorial C, Recueil des Sociétés et Associations) of the minutes of the

General Meeting of the Shareholders deliberating on the capital reduction may, within 30 days from the

date of such publication, apply for the creation of security interests in this respect to the judge presiding

over the chamber of the Tribunal d'arrondissement dealing with interim applications relating to

commercial matters. The judge may only reject such an application if the creditor already has adequate

safeguards or if such security is unnecessary, having regard to the assets of the Company. No payment

may be made or waiver given to the Shareholders until the creditors have obtained satisfaction or until the

judge has ordered that their application should not be granted.

Certain disclosure and reporting duties

As a Luxembourg domiciled company that is to be listed on a regulated market in Luxembourg,

disclosure and reporting duties of the shareholders and the Company will be subject to Luxembourg law

as to duties imposed by the Directive 2004/109/EC of the European Parliament and of the Council of 15

December 2004, as amended (the "Transparency Directive"), as Luxembourg is the home Member State

of the Company.

Reporting and notification duties for material shareholdings

Disclosure and reporting duties with regard to material shareholdings in the Company are governed by the

Luxembourg law of 11 January 2008 relating to the transparency requirements in relation to information

about an issuer whose securities are admitted to trading on a regulated market, as amended (the

"Transparency Law"). Shareholders in the Company and/or holders of derivatives or other financial

instruments linked to Shares may be subject to notification obligations pursuant to the Transparency Law.

The following description summarizes those obligations. Shareholders are advised to consult with their

own legal advisers to determine whether the notification obligations apply to them. The Transparency

Law requires a shareholder who acquires or disposes of shares (or certain rights to shares), including

depositary receipts representing shares, of issuers whose shares, including depositary receipts

representing shares, are admitted to trading on a regulated market and for which Luxembourg is the home

Member State and to which voting rights are attached, to notify the issuer and the CSSF of the proportion

of voting rights of the issuer held by the shareholder as a result of the acquisition or disposal where that

proportion reaches, exceeds or falls below the threshold of 5%, 10%, 15%, 20%, 25%, 33 1/3%, 50% and

66 2/3%.

A person must also notify the Company of the proportion of his or her voting rights if that proportion

reaches, exceeds or falls below the above-mentioned thresholds as a result of events changing the

breakdown of voting rights.

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For the purposes of calculating the percentage of a Shareholder's voting rights in the Company, the

following will have to be taken into account:

voting rights held by a third party with whom that person or entity has concluded an

agreement and which obliges them to adopt, by concerted exercise of the voting rights they

hold, a lasting common policy towards the management of the Company;

voting rights held by a third party under an agreement concluded with that person or entity

providing for the temporary transfer for consideration of the voting rights in question;

voting rights attaching to Shares which are lodged as collateral with that person or entity,

provided the person or entity controls the voting rights and declares its intention to exercise

them;

voting rights attaching to Shares in which a person or entity holds an interest for the duration

of the life of such person or entity;

voting rights which are held, or may be exercised within the meaning of the four foregoing

points, by an undertaking controlled by that person or entity;

voting rights attaching to Shares deposited with that person or entity which the person or

entity can exercise at its discretion in the absence of specific instructions from the

Shareholders;

voting rights held by a third party in its own name on behalf of that person or entity; and

voting rights which that person or entity may exercise as a proxy where the person or entity

can exercise the voting rights in its sole discretion.

As long as the information required in accordance with the Transparency Law as mentioned above has not

been notified to the Company in the manner prescribed in the Transparency Law, the exercise of voting

rights relating to the Shares exceeding the fraction that should have been notified is suspended. Where

such voting rights have been exercised notwithstanding their suspension under Luxembourg law, the

District Court (Tribunal d'arrondissement) in the district in which the Company's registered office is

located, sitting in commercial matters, may, on request of the Company or of one of its Shareholders

holding voting rights or any other person having a justifiable interest, pronounce the nullity of part or all

of the decisions of the General Meeting of the Shareholders if, without the voting rights exercised

unlawfully, the quorum or majority requirements for the decision in question had not been reached.

Ad hoc notifications

Directors' dealings

The disclosure and reporting of directors' dealings in the Company's Shares will be governed principally

by the Luxembourg law of May 9, 2006 on market abuse, as amended (the "Market Abuse Law").

Any dealings in or from Luxembourg in respect of the Shares, and any other securities whose value is

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determined by the value of the Shares are also subject to the provisions of the Market Abuse Law in

relation to the prohibition of insider dealing and market manipulation.

Pursuant to the Market Abuse Law, persons discharging managerial responsibilities in respect of an issuer

which has its registered office in Luxembourg and, if applicable, persons closely associated with any such

person shall notify the CSSF and the issuer, within five business days of each individual transaction, all

transactions conducted on their own account relating to shares admitted to trading on a regulated market

(or derivatives or other financial instruments linked to them). Persons discharging managerial

responsibilities include the members of the board, the managers having a delegation of the day-to-day

management and the statutory auditors, as well as other high level responsible persons having regular

access to inside information and being empowered to take management decisions on future developments

and strategy of the issuer.

In addition, persons closely associated with a person discharging managerial responsibilities have the

same obligation of declaration. This category concerns (i) the spouse or any partner considered by

national law as equivalent, (ii) dependent children, (iii) other relatives living in the same household for at

least one year, (iv) any legal entity, fiduciary estate or trust or association where managerial

responsibilities are discharged by any of the persons described under the two categories (persons

discharging managerial responsibilities with the issuer or closely associated persons) or where the

organization is under control by or created in favour of such person or the economic interests are

substantially equivalent to such a person.

The declaration has to indicate (i) the name of the issuer, (ii) the name of the person discharging

managerial responsibilities, or as the case may be the name of the closely associated person, (iii) the

reason for the notification obligation, (iv) the description of the financial instrument, (v) the nature of the

transaction (acquisition or disposal), (vi) the date and place of the transaction and (vii) the price per

instrument and the total amount of the transaction.

The issuer shall ensure that the information pertaining to the transactions in shares notified to it by

persons discharging managerial responsibilities or closely associated persons is easily accessible to the

public as soon as possible, at least in the French, German or English language.

Voting at the General Meeting of the Shareholders

According to the 1915 Law and the Articles of Incorporation, in principle, General Meetings of the

Shareholders shall be held in the place where the Company's registered office is situated, or any other

place within Luxembourg as may be specified in the notices convening the General Meeting of the

Shareholders. The annual General Meeting of the Shareholders shall, in accordance with the Articles of

Incorporation, take place in Luxembourg at the registered office of the Company at 40, rue de la Vallée,

L-2661 Luxembourg, or at any other location to be indicated in the relevant convening notice on the last

Thursday in the month of May at 2:00 p.m.. If such day is a holiday, the General Meeting of the

Shareholders will be held on the previous business day.

Provided that all the shareholders are present or represented and if they state that they have been informed

of the agenda of the meeting, they may waive all convening requirements and formalities.

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Under the 2011 Law, the rights of a Shareholder to participate in a General Meeting of the Shareholders

and to vote in respect of its Shares is determined with respect to the Shares held by that shareholder on the

record date. See "Voting Rights and General Meeting of the Shareholders".

Challenging Resolutions of General Meetings of the Shareholders

Under Luxembourg law and the conflict of law rules, a resolution of the General Meeting of the

Shareholders of a Luxembourg company may only be challenged in a Luxembourg court in accordance

with Luxembourg commercial and civil proceedings law.

Pursuant to Luxembourg law, a resolution of the General Meeting of the Shareholders may be challenged

by each Shareholder regardless of the number of Shares held by it if the resolution is, amongst others: (i)

in conflict with the statutory law, provisions of the Articles of Incorporation or the proceedings for taking

resolutions; or (ii) made to the sole benefit of the majority Shareholder and not in the Company's best

interest (abus de majorité).

The claim should be filed with a district court having jurisdiction over the Company's seat. The statute of

limitation to file a claim is ten years as at the day of passing of the resolution.

As regards the Company, the competent courts are the Courts of Luxembourg City, Grand Duchy of

Luxembourg. The plaintiff should show a legal interest in challenging the resolution. The claim may be

made in the French, Luxembourgish or German language and can be made by an attorney qualified to

practice in the Grand Duchy of Luxembourg. If the court finds in favour of the appealing shareholder,

then the resolution will be nullified.

Actions against Directors

Being a manager or a director of a Luxembourg public limited liability company (société anonyme)

potentially entails certain liabilities, both civil and criminal. A director has a potential statutory liability

for failure to execute his mandate properly or for any misconduct in the management of the company's

business. Liability under this head is to the company which can only bring an action on the basis of an

ordinary resolution of shareholders, but the individual shareholders cannot sue the directors direct in

respect of liability under this heading. A director also has a potential statutory liability for breach of the

1915 Law or of the articles of incorporation of the company. The directors are jointly and severally liable

for a breach; however a director who is not a party to the breach will not be liable provided he reports the

breach to the next General Meeting of the Shareholders held after he becomes aware of the breach.

Liability under this head is both towards the company and third parties (including individual shareholders

to the extent they have suffered a loss separate from that suffered by the company as a whole). Finally,

the Luxembourg Civil Code includes a provision to the effect that any person who causes damage to

another person is liable to compensate that other person for the damage resulting from that behaviour.

Potential criminal liabilities for a director under Luxembourg law can be mainly grouped in the following

categories: (i) offences relating to the normal running of the company; (ii) misuse of corporate assets or

powers; (iii) offences under general law and (iv) offences relating to the insolvency of the company.

Luxembourg companies may take out insurance in favour of their directors in respect of their liability as

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directors provided the insurance does not cover criminal liability, tax or administrative penalties, wilful

default or gross negligence.

Public takeover bids

Voluntary and mandatory public takeover bids

Pursuant to the Luxembourg law dated May 19, 2006 on public takeovers (the "Luxembourg Public

Takeover Law"), where a person as a result of such person's acquisition or the acquisition by persons

acting in concert with such person, holds securities, which added to any existing holdings of those

securities of such person and the holdings of those securities of persons acting in concert with such

person, directly or indirectly gives such person a specified percentage of voting rights in the company,

giving control over that company, that person is required to make a mandatory public offer to all the

holders of those securities for all their holdings at an equitable price within the meaning of article 5(1) of

the Luxembourg Public Takeover Law.

For a company whose registered office is in Luxembourg, the percentage of voting rights which confers

control for the purposes of the Luxembourg Public Takeover Law is set at 33⅓% of the voting rights in

that company (excluding for the purposes of calculation the securities which only confer voting rights in

particular circumstances).

Pursuant to article 4(5) of the Luxembourg Public Takeover Law the CSSF is allowed not to apply

article 5(1) of the Luxembourg Public Takeover Law provided that the general principles set out in

article 3 of the Luxembourg Takeover Law are respected. This means that a person having gained control

over the target company by reaching the threshold of 33⅓% of voting rights is allowed to submit a

request to the CSSF asking to be granted an exemption from the obligation to launch a mandatory

takeover bid. However, a specially reasoned decision is required in this case.

A voluntary takeover bid can be launched at any time irrespective of the existence of a mandatory

takeover bid pursuant to the principles set out in the Luxembourg Public Takeover Law. In this respect,

the rules applying to voluntary takeover bids are not different to the rules for mandatory takeover bids.

Consideration

Pursuant to the Luxembourg Public Takeover Law, the fair price in a mandatory takeover bid situation is

the highest price paid for the securities during the 12 month period preceding the mandatory bid.

Squeeze-out rules

Pursuant to the Luxembourg Public Takeover Law, should an offeror hold shares in the Company

representing not less than 95% of the capital carrying voting rights and not less than 95% of the voting

rights in the Company as a result of a takeover bid, such offeror would be entitled to squeeze out the

minority shareholders. Where the Company has issued more than one class of securities, the right of

squeeze-out can be exercised only in the class in which the applicable threshold has been reached. The

right of squeeze-out must be exercised within three months of the end of the time allowed for acceptance

of the bid.

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Sell-out rules

The Luxembourg Public Takeover Law provides that following a bid made to all holders of the

Company's shares for all of their shares, a holder of remaining shares is allowed to require the offeror to

buy such holder's shares from him/her at a fair price where the offeror holds alone or together with

persons acting in concert shares representing more than 90% of the voting rights in the Company. Where

the Company has issued more than one class of securities, the right of sell-out can be exercised only in the

class in which the applicable threshold has been reached. The right of sell-out must be exercised within

three months of the end of the time allowed for acceptance of the bid.

Luxembourg Squeeze-out/Sell-out Law

In scenarios in which no takeover bid pursuant to the Luxembourg Public Takeover Law has taken place,

the Luxembourg law of 21 July 2012 on squeeze-out and sell-out (the "Squeeze-out/Sell-out Law")

might be applicable. Pursuant to article 4 of the Squeeze-out/Sell-out Law, any majority Shareholder of

the Company is entitled to squeeze out the minority shareholders (squeeze-out). In accordance with article

5 of the Squeeze-out/Sell-out Law any minority shareholder of the Company is allowed to require the

majority Shareholder to buy his/her Shares (sell-out). A majority shareholder within the meaning of

article 1 of the Squeeze-out/Sell-out Law is any legal or natural person holding alone or together with

persons acting in concert shares in the Company representing not less than 95% of the capital carrying

voting rights and not less than 95% of the voting rights in the Company.

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LISTING AND ADMISSION TO TRADING

Admission to trading and markets

General information

Application has been made for the Shares to be listed on the Official List of the Luxembourg Stock

Exchange and admitted to trading on the regulated market operated by the Luxembourg Stock

Exchange (the "Admission to Trading"). The Shares will be accepted for clearance through the

global system maintained by Clearstream Banking Luxembourg, with its registered office at 42,

Avenue J.F. Kennedy, L - 1855 Luxembourg. The ISIN for the Shares is LU 0122624777. The

Common Code for the Shares is 012262477. Application has also been made for the Company's

shares to be admitted to trading on the regulated market of NYSE Euronext Paris.

The Prospectus will be published on the website of the Company (www.orcogroup.com) and on the

website of the Luxembourg Stock Exchange (www.bourse.lu) on or about 2 October 2015.

The Admission to Trading is expected to occur on or about 2 October 2015.

The Company may decide to change the above dated if it deems so necessary for the successful

completion of the Admission to Trading. Information on any changes in the above dates will be

announced on the website of the Company www.orcogroup.com. Information on any change of the

above dates will be published no later than on the originally set date.

The Company does not intend to enter into any underwriting agreements in connection with the

Shares.

There is no transaction aiming at stabilization of the price of the Shares.

There are no lock-up agreements in relation to the Shares.

Markets

As indicated above the Shares will be admitted to trading on the regulated market operated by the

Luxembourg Stock Exchange. The 114,507,629 Shares registered under ISIN code LU0122624777

have already been admitted to trading on the regulated markets of NYSE Euronext Paris and the

Warsaw Stock Exchange. The 200,000,000 Shares that were issued on 10 November 2014 have not

yet been admitted to trading on any regulated market. However, the Company will seek to have them

admitted to trading, in addition to the regulated market of the Luxembourg Stock Exchange, on the

regulated market of NYSE Euronext Paris, which constitutes the regulated market for the purposes of

Directive 2004/39/EC of the European Parliament and of the European Parliament and of the Council

of 21 April 2004 on markets in financial instruments, as soon as reasonably practicable, subject to

legal and regulatory requirements. With respect to the shares already admitted to trading on the

Warsaw Stock Exchange, the Company intends to delist them from the Warsaw Stock Exchange,

subject to legal and regulatory requirements and final decision to commence the process of delisting.

The Luxembourg Stock Exchange's regulated market is a regulated market for the purpose of the


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MiFID.

Paying agent

Caceis Corporate Trust will be the paying agent in respect of Luxembourg. The address of the paying

agent in respect of Luxembourg is 14, rue Rouget de Lisle 92130 Issy-Les-Moulineaux, France,

telephone number: 00 33 1 57 78 00 00.

Estimate of the total expenses of the Admission to Trading

The Company estimates the total expenses of the Admission to Trading to be € 120,000.

Interest of natural and legal persons involved in the Admission to Trading

There are no specific interests of any natural and legal persons involved in the Admission to Trading.

Reasons for the Admission to Trading

The reasons for the Admission to Trading include, inter alia, the fact that the Company, established and

registered in the Grand Duchy of Luxembourg would like to have its presence supported by the listing of

its Shares on the regulated market of the Luxembourg Stock Exchange. The Company intends to have the

Luxembourg Stock Exchange as its main market in the future.

Inspection of documents and availability of future financial information

For a period of 12 months following the Admission to Trading, copies of the following documents will,

when published, be available for inspection free of charge during regular business hours on any weekday

(Saturdays, Sundays and Luxembourg public holidays excluded) at the registered office of the Company

at 40, rue de la Vallée, L-2661, Luxembourg, Grand Duchy of Luxembourg:

the Articles of Incorporation;

the Consolidated Annual Financial Statements; and

the Interim Financial Statements.

The Company's future annual and interim financial information, which the Company will be required to

publish pursuant to the Luxembourg law of 11 January 2008 relating to the transparency requirements in

relation to information about an issuer whose securities are admitted to trading on a regulated market, as

amended, will be available on the Company's website (www.orcogroup.com) and on the website of the

Luxembourg Stock Exchange (www.bourse.lu) and may be inspected during regular business hours on

any weekday (Saturdays, Sundays and Luxembourg public holidays excluded) at the registered office of

the Company at 40, rue de la Vallée, L-2661, Luxembourg, Grand Duchy of Luxembourg.

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TAXATION

TAXATION IN LUXEMBOURG

Taxation of the Company

Income taxation

The Company is a fully taxable resident company for tax purposes in Luxembourg and liable as a matter

of principle to Luxembourg corporate income tax (the "CIT") and municipal business tax (the "MBT").

For the fiscal year 2015, the maximum CIT rate is 22.47% (including the 7% solidarity surcharge for the

employment fund). The MBT rate is 6.75% (for a company having its statutory seat in Luxembourg City).

As a result, the current aggregate rate is 29.22% for the fiscal year 2015 for a company established in

Luxembourg-City.

A minimum advance CIT (the "ACIT") of € 3,000 (increased to € 3,210 by the 7% solidarity surcharge

for the employment fund) is levied, as from 1 January 2013, on any company and whose financial assets,

transferable securities and cash deposits exceeds 90% of their total balance sheet and a minimum amount

of € 350,000. This minimum ACIT is creditable against any future CIT charge due by the taxpayer. Any

excess is however not refundable.

An ACIT is also levied for all other companies at a progressive minimum amount which ranges from €

535 to € 21,400 depending on the closing balance sheet total. For the purpose of determining the

minimum ACIT, (i) shares and units held in tax transparent entities will be considered "financial assets"

irrespective of the underlying assets held by the entity as it is computed on the commercial balance sheet

and (ii) the net value of assets which generate (or may generate) income that Luxembourg is not allowed

to tax according to a double tax treaty (e.g., income deriving from foreign real estate) should be excluded

when computing the balance sheet total.

Liability for such taxes extends to the Company's worldwide profits including capital gains, subject to the

provisions of any relevant double taxation treaty or EU regulations (and the implementing laws). The

taxable income of the Company is computed by application of the Luxembourg income tax law of 4

December 1967 (the "LITL"), as amended, as commented and currently applied by the Luxembourg tax

authorities. As a fully taxable Luxembourg resident company, the Company should, from a Luxembourg

tax perspective, be able to benefit from double taxation treaties and European directives in direct and

indirect tax matters.

It should however be noted that specific exemptions are available under certain conditions in relation to

dividends and liquidation proceeds received as well as capital gains realized on qualifying shareholdings

held by the Company (participation exemption regime as provided for by article 166 of the LITL and the

Grand-Ducal decree dated 21 December 2001 (Règlement Grand-Ducal du 21 décembre 2001)).

Net Wealth Taxation

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Unless benefiting from a special tax regime, a net wealth tax (impôt sur la fortune) (the "NWT") is due

annually by the Company on 1 January of each year at the rate of 0.5% assessed on the net wealth of the

Company (unitary value – valeur unitaire). The unitary value is the difference between (a) assets

estimated at their fair market value (valeur estimée de realisation or Gemeiner Wert), and (b) liabilities

vis-à-vis third parties. In this respect, specific assets such as shares in subsidiaries may benefit from a

NWT exemption (section 60 Bewertungsgesetz) if the following conditions are met:

(i) the Company holds a participation of at least 10% or which acquisition price is at least €

1,200,000 at the end of the fiscal year preceding 1 January, and

(ii) the subsidiary is (a) a Luxembourg fully taxable capital company, (b) a non-Luxembourg capital

company, fully liable to a tax corresponding to the Luxembourg corporate income tax (i.e. a

taxation of at least 10.5% and a taxable basis comparable to the corporate income tax basis), or (c)

a European Union resident company in the meaning of Article 2 of the EU Council Directive

2011/96/EU of 30 November 2011.

Debts in economic relation with an exempt shareholding are not deductible in calculating the net wealth.

Such an economic relation implies that the debt was exclusively concluded in order to acquire, maintain,

or insure the shareholding. In addition, any non-qualifying participation should be valued at its market

value (i.e. including any latent gain).

For the purposes of application of the exemption, the holding of participation through an entity listed

under article 175 of the LITL in a company listed under paragraph (ii) above is deemed to be a direct

shareholding in proportion with the part of net asset value held in such entity.

The NWT charge for a given year can be reduced if a specific reserve, equal to five times the NWT to

save, is created before the end of the subsequent tax year and maintained during the five following tax

years. The maximum NWT to be saved is limited to the corporate income tax amount due by the

Company for the preceding tax year, including the employment fund surcharge, but before imputation of

available tax credits. The NWT cannot however be reduced for the portion corresponding the ACIT.

Capital Duty – registration duties

As of 1 January 2009, and subject to certain exceptions, (such as the contribution of a Luxembourg real

estate property), only a fixed registration duty of €75 is due upon incorporation of a Luxembourg

company by a contribution of cash made to its share capital and on further amendments of its Articles of

Incorporation.

No registration duties or other similar taxes are payable in Luxembourg on the issue of Shares by the

Company.

Withholding Tax on Dividends

Dividends paid by the Company to its Shareholders are normally subject to withholding tax in

Luxembourg at the domestic rate of 15% unless (i) the reduced withholding tax rates as provided for by

144

relevant double taxation treaties apply or, (ii) the conditions to benefit from the exemption of withholding

tax set out under article 147 LITL are met:

(i) at the date the distribution is made available to the Shareholders, each of the relevant Shareholders

holds or commits to hold directly or through a tax transparent vehicle, during an uninterrupted

period of at least 12 months, a participation representing (a) at least 10% of the share capital of

the Company or (b) an acquisition cost of at least €1.2 million;

(ii) the beneficiary of the dividends is:

a company ("société à caractère collectif") resident in Luxembourg fully liable to

Luxembourg tax; or

an EU resident company within the meaning of article 2 of the EU Council Directive

90/435/EC of 23 July 1990 as replaced by EU Council Directive 2011/96/EU of 30

November 2011 concerning the common fiscal regime applicable to parent and subsidiary

companies of different member states or its Luxembourg permanent establishment; or

a Swiss corporation which is liable to Swiss corporate tax without benefiting from an

exemption; or

a company subject to an income taxation comparable to the Luxembourg corporate

income tax (in practice a tax rate of 10.5% applied on a comparable taxable basis should

be acceptable), which is resident in a country having concluded a double taxation treaty

with Luxembourg or its Luxembourg permanent establishment; or

a corporation or a cooperative company resident in a non-European Union country that is

member of the EEA that is fully subject to an income taxation corresponding to the

Luxembourg corporate income tax (in practice a tax rate of 10.5% applied on a

comparable taxable basis should be acceptable); or

a permanent establishment of a corporation or a cooperative company resident in a non-

European Union country member of the EEA.

With respect to the application of the above-mentioned exemption, the investors should note that

according to a recent circular (Circular N° 154/2 of 13 February 2015) of the Luxembourg tax authorities,

withholding tax should be applied to any distributions made to shareholders holding a direct participation

of at least 10% (or acquisition cost of at least of €1.2 million) before the 12 months period has elapsed.

Repayment of such withholding tax can however ultimately be requested by the relevant Shareholder.

To the extent a withholding tax applies the Company is responsible for withholding amounts

corresponding to such taxation at source.

Capital Decrease

145

The reimbursement of share capital by the Company is not treated as a dividend distribution for

Luxembourg withholding tax purposes and thus not subject to any withholding tax, provided (i) there are

no reserves or profits at the level of the Company and (ii) the capital decrease is motivated by sound

business reasons. In case the Company does not have sound business reasons to proceed to a capital

decrease, the entire amount paid will be subject to a 15% withholding tax, unless the conditions set out

under "Withholding Tax on Dividends" are met.

Taxation of the Company's Shareholders

Preliminary Consideration on the Luxembourg Tax Residency of the Company's Shareholders

A Shareholder will not become a resident, nor be deemed to be a resident, in Luxembourg, by reason only

of the holding of the Shares, or the execution, performance, delivery and/or enforcement of the Shares.

Income Taxation of Luxembourg Resident Shareholders

Luxembourg Resident Individuals

50% of the dividends received by resident individuals, who act in the course of either their private wealth

or their professional/business activity, are subject to income tax at the progressive ordinary rate (with the

2013 maximum effective marginal tax rate being at 42.80% or 43.60% depending on the amount of

taxable income); the other 50% of the dividends received are tax exempt. The 15% withholding tax may

be offset against the income tax liability.

Notwithstanding the above, a Luxembourg tax resident individual is not taxable on the first tranche of

EUR 1,500 (or EUR 3,000 in case of collective taxation with his/her spouse) of the aggregate amount of

interest and dividend income he/she receives during any given year.

A gain realized upon the sale, disposal or redemption (note that if some but not all the Shares of a given

holder of Shares are redeemed, the same tax treatment applies as for dividends) of Shares by Luxembourg

resident individual Shareholders, acting in the course of the management of their private wealth is not

subject to Luxembourg income tax, provided this sale, disposal or redemption took place more than 6

months after the acquisition of the Shares were acquired and provided the Shares do not represent a

substantial shareholding.

In this respect, a substantial shareholding is defined where (i) the relevant shareholder has held, either

alone or together with its spouse or partner and/or its minor children, either directly or indirectly, at any

time within the five years preceding the realization of the gain, more than 10% of the share capital of the

Company, or (ii) the taxpayer acquired free of charge, within the 5 years preceding the transfer, a

participation that constituted a substantial participation in the hands of the alienator (or the alienators in

case of successive transfers free of charge within the same five-year period). Capital gains realized on a

substantial participation more than 6 months after the acquisition thereof are subject to income tax

according to the half-global rate method (i.e. the average rate applicable to the total income is calculated

according to progressive income tax rates and half of the average rate is applied to the capital gains

146

realized on the substantial participation). A disposal may include a sale, an exchange, a contribution or

any other kind of alienation of the shareholding.

Capital gains realized on the disposal of the Shares by resident individual holders, who act in the course

of their professional / business activity, are subject to income tax at ordinary rates. Taxable gains are

determined as being the difference between the price for which the Shares have been disposed of and the

lower of their cost or book value.

Luxembourg Corporate Residents

Luxembourg resident corporate shareholders (société à caractère collectif) of the Company must include

50% of the dividends received and any capital gains derived from the Shares, in their taxable profits for

Luxembourg income tax assessment purposes (CIT and MBT at the maximum aggregate rate of 29.22%

in 2015 for corporate shareholders having their statutory seat in Luxembourg City). The other 50% of the

dividends received are tax exempt. The 15% withholding tax may be offset against the income tax

liability. Taxable gains are determined as being the difference between the sale, repurchase or redemption

price and the lower of the cost or book value of the Shares sold or redeemed.

However, dividends and liquidation proceeds received by Luxembourg resident corporate shareholders

from the Company will be exempt from CIT and MBT in case of a participation held directly, or

indirectly through a tax transparent vehicle, representing at least 10% of the share capital of the Company

or an acquisition price of at least €1.2 million, provided that at the time of the income is made available,

the recipient has held or commits to hold the participation during an uninterrupted period of at least

twelve months.

Capital gains realized upon disposal of the Shares by Luxembourg resident corporate shareholders will be

exempted in case of a participation held directly, or indirectly through a tax transparent vehicle,

representing at least 10% of the share capital of the Company or an acquisition price of at least €6 million,

provided that at the time of the disposal, the beneficiary has held or commits to hold the participation

during an uninterrupted period of at least twelve months. Capital gains would remain taxable up to the

aggregate amount of expenses and impairment incurred during the year of disposal and previous years

which have been deducted from the taxable base.

Luxembourg Residents Benefiting from a Special Tax Regime

Luxembourg resident Shareholders of the Company that are entities benefiting from a special tax regime,

such as, (i) undertakings for collective investment subject to the amended law of 17 December 2010 (Loi

du 17 décembre 2010 concernant les sociétés de placement), (ii) specialized investment funds subject to

the amended law of 13 February 2007 (Loi du 13 février 2007 relative aux fonds d'investissement

spécialisés) or (iii) family wealth management companies governed by the amended law of 11 May 2007

(Loi du 11 mai 2007 relative à la création une société de gestion de patrimoine familial (SPF)) are tax

exempt entities in Luxembourg and are thus not subject to any Luxembourg income tax.

Income Taxation of Luxembourg Non-resident Shareholders

147

Shareholders of the Company who are non-residents of Luxembourg and who have neither a permanent

establishment nor a permanent representative in Luxembourg to which or to whom the Shares are

attributable, are generally not liable to any Luxembourg income tax.

As an exception, a non-resident shareholder may be liable to Luxembourg income tax on capital gains

realized on the Shares if it has held, either alone or together with its spouse or partner and/or its minor

children, directly or indirectly, at any time within the five years preceding the disposal of the Shares,

more than 10% of the Shares of the Company and it has either (i) held the Shares for less than 6 months

or (ii) been a Luxembourg resident taxpayer for more than 15 years and became a non-resident less than

five years before the realization of the capital gains on the Shares. Depending on its residence State, such

non-resident shareholders might, however, claim tax treaty benefits in order to avoid Luxembourg tax on

any such capital gains.

Non-resident corporate shareholders that have a permanent establishment or a permanent representative in

Luxembourg to which or whom the Shares are attributable, must include any income received, as well as

any gain realized on the sale, disposal or redemption of Shares, in their taxable income for Luxembourg

tax assessment purposes. The same inclusion applies to individuals, acting in the course of the

management of a professional or business undertaking, who have a permanent establishment or a

permanent representative in Luxembourg to which or whom the Shares are attributable. Taxable gains are

determined as being the difference between the sale, repurchase, or redemption price and the lower of the

cost or book value of the Shares sold or redeemed. Subject to certain conditions being satisfied,

Luxembourg resident corporate Shareholders and certain non-resident corporate Shareholders that have a

permanent establishment in Luxembourg to which the Shares are attributable may benefit from a net

wealth tax exemption.

Net Wealth Tax

Luxembourg resident Shareholders and Shareholders who have a permanent establishment or a permanent

representative in Luxembourg to which or whom the Shares are attributable are subject to Luxembourg

NWT on such Shares, except if such Shareholder is (i) a resident or non-resident individual taxpayer, (ii)

an undertaking for collective investment subject to the amended law of 17 December 2010 (Loi du 17

décembre 2010 concernant les sociétés de placement collectif), (iii) a securitization company governed by

the amended law of 22 March 2004 on securitization (Loi du 22 mars 2004 relative à la titrisation), (iv) a

company governed by the amended law of 15 June 2004 on venture capital vehicles (Loi du 15 juin 2004

relative à la Société d'investissement en capital à risque (SICAR)), (v) a specialized investment fund

governed by the amended law of 13 February 2007 (Loi du 13 février 2007 relative aux fonds

d'investissement spécialisés) or (vi) a family wealth management company governed by the amended law

of May 11, 2007 (Loi du 11 mai 2007 relative à la création d'une société de gestion de patrimoine

familial (SPF)).

Subject to certain conditions being satisfied, Luxembourg resident corporate Shareholders and certain

non-resident corporate Shareholders that have a permanent establishment in Luxembourg to which the

Shares are attributable may benefit from a net wealth tax exemption.

148

Other Taxes

No Luxembourg registration duties or similar taxes are levied on the transfer of the Shares.

No estate or inheritance tax is levied on the transfer of the Shares upon death of a Shareholder of the

Company in cases where the deceased was not a resident of Luxembourg for inheritance tax purposes.

Luxembourg tax may be levied on a gift or donation of the Shares if embodied in a Luxembourg notarial

deed or otherwise registered in Luxembourg. Where a holder of Shares is a resident of Luxembourg for

tax purposes at the time of his death, the Shares are included in its taxable estate for inheritance tax or

estate tax purposes.

The above information is based on the Luxembourg law in force and current practice and is subject to

change.

TAXATION IN FRANCE

The following is a summary of certain French tax considerations that may be relevant for Shareholders

that are (i) resident in France for tax purposes ("French Resident Shareholders") and are either (ii)

individuals holding the shares in the Company as part of their private assets ("Individual French

Resident Shareholders") or (ii) French legal entities subject to corporate income tax ("French Resident

Corporate Shareholders"). French Resident Shareholders that do not fall within any of these two

categories should contact their own tax advisor to determine the tax consequences in connection with the

acquisition and holding of the Shares applicable to them.

This summary is provided for general information purposes and does not purport to be a comprehensive

description of all of the tax considerations that may be relevant for specific French Resident Shareholders

in light of their particular circumstances.

This summary is based on the tax laws and regulations in force in France, including the double tax treaty

entered into between France and Luxembourg on 1 April 1958 (as amended), as currently in effect and

applied by the French tax authorities and all of which are subject to change or to different interpretation.

This summary is not intended to be, nor should it be construed as being legal or tax advice. French

Resident Shareholders should consult their own professional tax advisors in order to determine the tax

regime that is applicable in their particular case.

Individual French Resident Shareholders holding the Shares as part of their private assets

Dividends

Dividend distributed by the Company to French Resident Shareholders will be subject to 15% dividend

withholding tax in Luxembourg. This Luxembourg domestic dividend withholding tax rate is not reduced

under the current provisions of France-Luxembourg double tax treaty as far as Individual French Resident

Shareholders are concerned (i.e. Article 8, 2. a.)-2° of the France-Luxembourg double tax treaty also

provides for 15% dividend withholding tax rate, which is applicable in accordance with Luxembourg

domestic law).

149

Individual French Resident Shareholders will be subject to personal income tax in France at progressive

rates up to 45% on the gross amount of the dividend received. As the Company is subject to corporate

income tax in Luxembourg and assuming the relevant dividend distribution is decided in accordance with

the corporate governance rules, dividends received by Individual French Resident Shareholders should be

eligible to an allowance in taxable basis equal to 40% of the gross amount of the dividend received, as

provided for by Article 158, 3°-2 of the French tax code. In addition, an exceptional contribution on "high

revenues" is due by Individual French Resident Shareholders if the total taxable income of the household

exceeds certain thresholds. This tax is levied (i) at the rate of 3% on part of the taxable income of the year

comprised between € 250,000 and € 500,000 for single tax payers and between € 500,000 and €

1,000,000 for joint tax payers and (ii) at the rate of 4% on part of the taxable income of the year

exceeding € 500,000 for single tax payers and € 1,000,000 for joint tax payers.

In advance of payment of personal income tax liability with respect to the relevant year, Individual

French Resident Shareholders are subject (except if their annual taxable income does not exceed certain

thresholds) to a mandatory withholding tax at the rate of 21% on the gross amount of the dividends

received, to be paid to the French tax authorities by the paying institution established in France (or the

paying institution established within the European Economic Area and authorized by the tax payer to pay

the withholding tax on his behalf) or the Individual French Resident Shareholder if the paying institution

is established outside France, within 15 days of the month following the month of payment of the

dividend. This mandatory withholding tax is creditable against the personal income tax due.

The 15% dividend withholding tax levied on the dividends in Luxembourg gives rise to a tax credit

deductible from personal income tax due in France.

Dividends received from the Company by Individual French Resident Shareholders will also be subject to

social contributions at the aggregate rate of 15.5%, i.e. (i) the contribution sociale generalisée at the rate

of 8.2%, 5.1% of which is tax deductible, (ii) the contribution de remboursement de la dette sociale of

0.5% non deductible for tax purposes, (iii) the prélèvement social of 4.5% non deductible for tax

purposes, (iv) the contribution additionelle of 0.3% non deductible for tax purposes and (v) the

prélèvement de solidarité of 2% non deductible for tax purposes. Social contributions are generally

withheld and paid in the same manner as the mandatory 21% withholding tax.

Capital gains

Pursuant to Article 18 of the France-Luxembourg double tax treaty, capital gains realised by individual

French Resident Shareholders upon sale of shares in the Company should be taxable in France.

Under the French tax law currently in force, capital gain realised upon disposal of Shares in the Company

will be subject as from the first euro to personal income tax at progressive rates up to 45%. The taxpayer

will be eligible for a reduction of the taxable basis of the capital gain realized depending on the number of

years of the holding of the Shares. The reduction for holding more than two years and less than eight

years is 50%, and 65% for holding of at least eight years or more at the date of the sale. This reduction

only applies to the tax basis for determination of the personal income tax.

150

In addition, an exceptional contribution on "high revenues" is due by Individual French Resident

Shareholders if the total taxable income of the household exceeds certain thresholds. This tax is levied (i)

at the rate of 3% on part of the taxable income of the year comprised between € 250,000 and € 500,000

for single tax payers and between € 500,000 and € 1,000,000 for joint tax payers and (ii) at the rate of 4%

on part of the taxable income of the year exceeding € 500,000 for single tax payers and € 1,000,000 for

joint tax payers.

Furthermore, capital gain realised upon sale of Shares in the Company will be subject to social

contributions at the aggregate rate of 15.5%, assessed on the gross amount of the gain with no reduction

for holding period, i.e. (i) the contribution sociale generalisée at the rate of 8.2%, 5.1% of which is tax

deductible, (ii) the contribution de remboursement de la dette sociale of 0.5% non deductible for tax

purposes, (iii) the prélèvement social of 4.5% non deductible for tax purposes, (iv) the contribution

additionelle of 0.3% non deductible for tax purposes and (v) the prélèvement de solidarité of 2% non

deductible for tax purposes.

Pursuant to Article 150-0 D, 11° of the French tax code, capital losses realised upon disposal of Shares in

the Company may be deducted only from capital gains on sales of securities of the same nature in the

same year or in the ten years following the disposal.

Wealth Tax

The Shares held by Individual French Resident Shareholders will be within the scope of French wealth

tax. Individual French Resident Shareholders should consider with their own tax advisor whether any

allowance or tax exemption is available depending on their personal situation.

French Resident Corporate Shareholders

Dividends

Dividends distributed by the Company to French Resident Corporate Shareholders subject to corporate

income tax in France will be subject to 15% dividend withholding tax in Luxembourg, reduced to 5%

under Article 8, 2°-a.) 1°) of the France-Luxembourg double tax treaty if the beneficiary of the dividend

distribution is a French company with capital divided into shares ("société de capitaux") holding directly

at least 25% of the share capital of the Company and timely complying with applicable tax treaty

formalities. The reduction of the dividend withholding tax under the France-Luxembourg double tax

treaty is also available when several French resident companies with share capital divided into shares hold

an aggregate shareholding of at least 25% in the Luxembourg distributing company and belong to a group

of companies which is more than 50% controlled by any of them. French Resident Corporate

Shareholders that are likely to qualify for the reduced dividend withholding tax rate under the France-

Luxembourg double tax treaty should provide the Issuer with a tax residency certificate before the date of

dividend distribution (and a proof of holding of a stake of at least 25%); alternatively, French Resident

Corporate Shareholders could ask for a refund of the excess withholding tax levied by 31 December of

the year following the dividend distribution by filing the appropriate withholding tax refund claim (form

901bis) with the Luxembourg Tax Authorities together with the required supporting documentation (i.e.

tax residency certificate, proof of the amount of dividends received and tax withheld and proof of holding

151

of a stake of at least 25% at the time of dividend distribution). Furthermore, dividends distributed by the

Company to French Resident Corporate Shareholders that fulfil the conditions of the Luxembourg

domestic dividend whithholding tax exemption regime (please refer to Section Taxation in Luxembourg -

Withholding Tax on Dividends above) may benefit from the exemption from the Luxembourg 15%

dividend withholding tax under Luxembourg domestic tax rules.

Dividends received by French Resident Corporate Shareholders will be subject to French corporate

income tax at the standard rate of 33.1/3% increased with (i) a social contribution of 3.3% assessed on the

amount of the corporate income tax in excess of € 763,000 in a relevant fiscal year and (ii) an exceptional

contribution of 10.7% assessed on the amount of corporate income tax due by the companies realising an

annual turnover exceeding € 250,000,000, it being specified that the exceptional contribution of 10.7% is

applicable until 30 December 2016.

Companies, whose annual turnover is less than € 7,630,000 in a relevant fiscal year and whose share

capital, fully paid in, is continuously held in a relevant fiscal year for at least 75% by individuals or

companies satisfying the above conditions, are subject to corporate income tax at the rate of 15% up to €

38,120 of the taxable income realised in a relevant fiscal year.

French Resident Corporate Shareholders holding at least 5% of the capital of the Company may be

eligible, under certain conditions, to the French parent-subsidiary regime, provided for by the Articles 145

and 216 of the French tax code, under which dividends are exempt from French corporate income tax,

subject to an add-back to the taxable income of a 5% lump sum ("quote part de frais et charges") of the

dividends received.

The Luxembourg dividend withholding tax gives rise to a tax credit deductible from corporate income tax

due in France, except if the French parent-subsidiary regime is applicable to the relevant French Resident

Corporate Shareholder.

Capital gains

As a general rule, capital gains and losses realized upon disposal of the Shares by French Resident

Corporate Shareholders will be included in the taxable income realized in a relevant fiscal year by French

Resident Corporate Shareholders and subject to corporate income tax at the standard rate of 33.1/3%

increased with (i) a social contribution of 3.3% assessed on the amount of the corporate income tax in

excess of € 763,000 in a relevant fiscal year and (ii) an exceptional contribution of 10.7% assessed on the

amount of corporate income tax due by the companies realising an annual turnover exceeding €

250,000,000, it being specified that the exceptional contribution of 10.7% is applicable until 30 December

2016.

French Resident Corporate Shareholders may be eligible to a specific tax treatment if the Shares qualify

as controlling interest ("titres de participation") in the meaning of the provisions of Article 219 of the

French tax code and were held for a period of at least two years on the date of disposal. Pursuant to the

provisions of Article 219-I a quinquies of the French tax code, only 12% of the gross capital gain realised

upon disposal of a controlling interest that was held for a period of at least two years at the date of the

sale is subject to corporate income tax at the standard 33.1/3% rate (increased with the social and

152

exceptional contributions listed above, as applicable), which means that the gain is exempt from tax up to

88% of its amount, it being specified, however, that capital gains realised upon transfers of controlling

interest in predominantly real estate companies in the meaning of Article 219-I a sexies-0 bis) of the

French tax code that are listed on a regulated market (BOFIP-Impôts, BOI-IS-BASE-20-20-10-30, 31

December 2013) are excluded from this 88% corporate income tax exemption but are eligible to a reduced

19% corporate income tax rate in accordance with the provisions of Articles 219, I a.) and 219, IV of the

French tax code. French Resident Corporate Shareholders should consider with their own tax advisor

whether they fulfil the conditions for this specific tax treatment to apply.

Other Taxes and Duties

Pursuant to the Article 235 ter ZD of the French tax code, acquisitions of equity securities or similar

instruments issued by a company having its head office in France and having a market capitalisation in

excess of € 1 billion as of 1 December of the year preceding the acquisition are subject to French financial

transaction tax at the rate of 0.2%. This tax also applies to acquisition of securities issued by an issuer

whose head office is not in France when these securities represent securities whose issuer has its head

office in France. Based on the official administrative guidelines of the French tax authorities (BOFIP-

Impôts, BOI-TCA-FIN-10-10, dated 26 December 2014), when the issuer does not have its head office in

France, its securities are outside the scope of the French financial transaction tax, even if they are

admitted to trading on a French trading platform or their issue account is held by a central depositary in

France. As long as the head office of the Company is not in France, acquisition of the Shares on NYSE

Euronext Paris will not be subject to the French financial transaction tax.

No French registration duties are payable by reason of the acquisition of the Shares, provided that no

written agreement formalizing the transfer of the Shares is executed in France.

153

TRANSFER AND SELLING RESTRICTIONS

Selling restrictions

European Economic Area

In relation to each member state of the European Economic Area that has implemented the Prospectus

Directive (each, a "Relevant Member State"), with effect from and including the date on which the

Prospectus Directive was implemented in that Relevant Member State (the "Relevant Implementation

Date"), no Shares have been offered or will be offered to the public in that Relevant Member State prior

to the publication of a prospectus in relation to the Shares which has been approved by the competent

authority in that Relevant Member State or, where appropriate, approved in another Relevant Member

State and notified to the competent authority in the Relevant Member State, all in accordance with the

Prospectus Directive, except that with effect from and including the Relevant Implementation Date, offers

of Shares may be made to the public in that Relevant Member State at any time under the following

exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State:

a) to any legal entity which is a qualified investor, as defined in the Prospectus Directive;

b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the

Prospectus Directive) in such Relevant Member State; or

c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Shares shall result in a requirement for the publication by the Company of a

prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to

Article 16 of the Prospectus Directive.

For this purpose, the expression "an offer of any shares to the public" in relation to any Shares sold in any

Relevant Member State means the communication in any form and by any means of sufficient

information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to

subscribe for any Shares, as the same may be varied in that Relevant Member State by any measure

implementing the Prospectus Directive in that Relevant Member State. The expression "Prospectus

Directive" means Directive 2003/71/EC (and any amendments thereto, including the 2010 PD Amending

Directive) and includes any relevant implementing measure in each Relevant Member State and the

expression "2010 PD Amending Directive" means Directive 2010/73/EU.

154

ENFORCEMENT OF CIVIL LIABILITIES

The Company is a public limited liability company (société anonyme) organized under the laws of the

Grand Duchy of Luxembourg and its assets are located primarily outside the United States. In addition,

the members of the Company's Board of Directors are non-residents of the United States whose assets are

located primarily outside the United States. As a result, it may not be possible for investors to effect

service of process within the United States upon the Company or such persons or to enforce against them

or the Company judgments of courts of the United States, whether predicated upon the civil liability

provisions of the federal securities laws of the United States or other laws of the United States or any state

thereof.

Although there is no treaty between Luxembourg and the United States regarding the reciprocal

enforcement of judgments, a valid, final and conclusive judgment against the Company obtained from a

state or federal court of the United States, which judgment remains in full force and effect, may be

enforced through a court of competent jurisdiction in Luxembourg, subject to compliance with the

enforcement procedures set forth in article 678 et seq. of the Luxembourg New Code of Civil Procedure,

as follows:

the foreign court must properly have had jurisdiction to hear and determine the matter, both

according to its own laws and to the Luxembourg international private law conflict of jurisdiction

rules;

the foreign court must have applied the law which is designated by the Luxembourg conflict of

laws rules (although some first instance decisions rendered in Luxembourg, which have not been

confirmed by the Court of Appeal, no longer apply this condition) or, at least, the order must not

contravene the principles underlying those rules;

the decision of the foreign court must be enforceable (exécutoire) in the jurisdiction in which it

was rendered;

the decision of the foreign court must not have been obtained by fraud, but in compliance with the

rights of the defendant and in compliance with its own procedural laws; and

the decisions and the considerations of the foreign court must not be contrary to Luxembourg

international public policy rules or have been given in proceedings of a tax, penal or criminal

nature (which would include awards of damages made under civil liabilities provisions of the

U.S. federal securities laws, or other laws, to the extent that the same would be classified by

Luxembourg courts as being of a penal or punitive nature (for example, fines or punitive

damages)). Ordinarily an award of monetary damages would not be considered as a penalty, but if

the monetary damages include punitive damages, such punitive damages may be considered as a

penalty.

If an original action is brought in Luxembourg, without prejudice to specific conflict of law rules,

Luxembourg courts may refuse to apply the designated law if the choice of such foreign law was not

made bona fide or (i) if the foreign law was not pleaded and proved or (ii) if pleaded and proved, such

foreign law was contrary to mandatory Luxembourg laws or incompatible with Luxembourg public policy

155

rules. In an action brought in Luxembourg on the basis of U.S. federal or state securities laws,

Luxembourg courts may not have the requisite power to grant the remedies sought.

156

INDEPENDENT AUDITORS

The Consolidated Annual Financial Statements included elsewhere in this Prospectus have been audited

by KPMG Luxembourg (the "KPMG"), Société coopérative, independent auditors of the Company, as

stated in their reports appearing elsewhere in this Prospectus. KPMG is a current member of the Institut

des Réviseurs d'Entreprises the national member body for Luxembourg of the International Federation of

Accountants. KPMG is on the public register of authorized audit firms held by the Commission de

Surveillance du Secteur Financier.

ANNEX 1 - INDEX TO FINANCIAL STATEMENT

Orco Property Group | Société Anonyme | 40 Rue de la Vallée, L-2661 Luxembourg RCS Luxembourg B 44996

-

-

-

-

1

1 JLL – Prague Office Market – Q2 2015

2

2 The classification of GAV is in line with the vision of the management and is not always reflecting the IFRS classification disclosed in the Financial Statements.

-

1 106 105

-

20

40

60

80

100

120

140

160

GAV Dec_2014 Change of scope Sales Capex Financial assets Forex Impact Change of Value GAV June_2015


-

Property portfolio 30 June 2015 Property Investment Development Carrying value Carrying value Bank Loans

%

Czech Republic 63,792 149,992 213,784 82% 53,234

Croatia - 1,292 1,292 1% -

Hungary 8,200 - 8,200 3% -

Poland 11,409 340 11,749 5% 5,019

Luxembourg 21,930 - 21,930 9% 15,636

CE property portfolio 105,331 151,624 256,955 100% 73,889

Property portfolio 31 December 2014 Property Investment Development Carrying value Carrying value Bank Loans

%

Czech Republic 61,690 152,936 214,626 83% 65,320

Croatia - 1,124 1,124 0% -

Hungary 10,800 - 10,800 4% -

Poland 11,300 433 11,733 5% 5,072

Luxembourg 21,770 - 21,770 8% 16,611

CE property portfolio 105,560 154,493 260,053 100% 87,003

Investment Property - renting 30 June 2015

Carrying value Carrying value Gross lettable area Occupancy Average rent Bank Loans

% thds. sqm % EUR / SQM

Prague, Czech republic 63,792 60% 60 83.0% 8.0 43,621

Budapest, Hungary 8,200 8% 16 10.8% 4.1 -

Warsaw, Poland* 11,409 11% 36 24.7% 4.6 5,019

Capellen, Luxembourg 21,930 21% 8 90.8% 21.9 15,636

Portfolio total 105,331 100% 120 56.4% 7.4 64,276

Investment Property - renting 31 December 2014

Carrying value Carrying value Gross lettable area Occupancy Average rent Bank Loans

% thds. sqm % EUR / SQM

Prague, Czech republic 61,690 58% 60 79.0% 8.4 54,958

Budapest, Hungary 10,800 10% 16 14.2% 4.2 -

Warsaw, Poland 11,300 11% 36 24.7% 4.4 2,096

Capellen, Luxembourg 21,770 21% 8 91.1% 22.7 16,611

Portfolio total 105,560 100% 120 54.9% 9.2 73,665

Key Project held in portfolio as of June 2015

Committed Location Asset type Area

in SQM Permit status

Current valueJune 2015

EUR million

ERV EUR

million

Bubny Czech Republic, Prague Mixed commercial 24 ha* Pending 52.0 NA

*3.6 ha of the Bubny landplot are now held at 20% through a joint venture with Unibail Rodamco and are not included in the value above

•

•

•

•

•

•

•

•

Country Land plot area GEFA estimated Land plot area GEFA estimated* Land plot area GEFA estimated*The Czech Republic 95 738 sqm 96 801 sqm 800 305 sqm 66 250 sqm 896 043 sqm 163 051 sqmPoland 69 681 sqm 59 726 sqm 35 573 sqm 47 256 sqm 105 254 sqm 106 982 sqmSlovakia 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqmCroatia 6 208 sqm 0 sqm 104 944 sqm 0 sqm 111 152 sqm 0 sqmGermany 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqmSub-total land bank 171 627 sqm 156 527 sqm 940 822 sqm 113 506 sqm 1 112 449 sqm 270 033 sqmThe Czech Republic 18 881 sqm 32 008 sqm 885 813 sqm 530 400 sqm 904 694 sqm 562 408 sqmPoland 131 130 sqm 0 sqm 0 sqm 0 sqm 131 130 sqm 0 sqmSlovakia 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqmCroatia 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqmGermany 0 sqm 0 sqm 0 sqm 0 sqm 0 sqm 0 sqmSub-total other category 150 011 sqm 32 008 sqm 885 813 sqm 530 400 sqm 1 035 824 sqm 562 408 sqmTotal 321 638 sqm 188 535 sqm 1 826 635 sqm 643 906 sqm 2 148 273 sqm 832 441 sqmGEFA estimated*: the figure is presented here as an estimation only on the basis of the latest internal study performed. Only building permit determine the authorized GEFA. All the land plot are not systematically covered with a GEFA estimate.


30 June 31 December 2015 2014

Non current liabilities

Financial debts 52,632 65,252

Non-current Bonds 59,714 62,237

Current liabilities

Financial debts 27,957 13,557

Current Bonds 4,375 278

Accrued interest 938 915

Liabilities linked to assets held for sale 4,013 237

Current assets

Current financial assets - -

Cash and cash equivalents (3,951) (7,103)

Net debt 145,678 135,373

Investment property 239,826 249,236

Investments in equity affiliates 4,073 35

Financial assets at fair value through profit or loss 599 2,627

Financial assets available-for-sale 96,118 86,995

Non current loans and receivables 7,962 4,669

Inventories 8,304 9,422

Assets held for sale 8,824 1,395

Revaluation gains / (losses) on projects and properties 483 697

Fair value of portfolio 366,189 355,076

Loan to Value 39.8% 38.1%

in EUR Million Less than one year -

Bank loans linked to

AHS

Less than one year -

Others

1 to 3 years 3 to 5 years More than 5 years

Total

As at 30 June 2015 3.0 32.3 34.0 65.0 13.3 147.7 As at 31 December 2014 - 13.9 45.5 67.5 14.5 141.3 Variation 3.0 18.4 (11.5) (2.5) (1.2) 6.4

-

-

-

-

3

June 2015 December 2014

Consolidated equity 203,544 205,510

Fair Value adjustment on asset held for sales 356 -

Fair value adjustments on inventories 127 697

Deferred taxes on revaluations 2,833 4,112

Goodwills - -

Own equity instruments - -

EPRA Net asset value 206,860 210,319

Existing shares (in thousands) 314,508 314,508

Net asset value in EUR per share 0.66 0.67

EPRA Net asset value 206,687 210,319

Deferred taxes on revaluations (2,833) (4,112)

Fair value adjustment of bonds issued by the Group (*) - -

EPRA Triple Net asset value 204,027 206,207

Fully diluted shares 314,508 314,508

Triple net asset value in EUR per share 0.65 0.66

-

-

-

6 months 6 months 2015 2014

Revenue 7,330 16,805

Sale of goods 770 7,892 Rent 3,974 5,037 Hotels and restaurants - 1,040 Services 2,586 2,836

Net gain from fair value

adjustments on investment property (13,976) (469) Other operating income 108 244 Net result on disposal of assets 73 9 Cost of goods sold (865) (6,452) Employee benefits (514) (15,332) Amortisation, impairments and provisions 4,994 (9,974) Operating expenses (8,346) (8,839)

Operating result (11,196) (24,008)

Interest expense (5,717) (13,642) Interest income 441 882 Foreign exchange result 1,638 (2,842) Other net financial results (7,104) (20,933)

Financial result (10,742) (36,535)

Share of profit or loss of entities accounted for using the equity method 3,004 (206)

Loss before income taxes (18,934) (60,749)

Income taxes 1,520 (920)

Loss from continuing operations (17,414) (61,669)

Loss after tax from discontinued operations - (2,817)

Net loss for the period (17,414) (64,486)

Total loss attributable to:

Non controlling interests (324) (1,466)

Owners of the Company (17,090) (63,019)

Development Property Investments

Total

YTD Revenue

As at June 2015 1,342 5,988 7,330

As at June 2014 8,084 8,721 16,805

Variation (6,742) (2,733) (9,475)

•

•

30 June 2015 30 June 2014

Leases and rents (57) (178)


Marketing and representation costs (220) (726)


Taxes other than income tax (366) (643)

Hospitality specific costs 0 (106)

Other operating expenses (2,290) (155)

Employee benefits (514) (15,332)


Freeholdbuildings

Extendedstay hotels

Land bank TOTAL

Czech Republic 974 - (10.923) (9.949)

Poland (1,120) - - (1,120)

Croatia - - (407) (407)

Hungary (2,660) - - (2,660)

Luxembourg 160 - - 160

At 30 June 2015 (2,646) - (11.330) (13.976)

4


TOTAL

Operating Result - 6m 2015 (11,476) 279 (11,197)

Net gain or loss from fair value adjustments on investment property 11,321 2,655 13,976

Amortisation, impairments and provisions (822) (4,172) (4,994)

Termination indemnities - - -

Net result on disposal of assets - (73) (73)

Adjusted EBITDA - 6m 2015 (977) (1,311) (2,288)

Adjusted EBITDA - 6m 2014 (3,732) 2,462 (1,270)

Variation YoY 2,755 (3,773) (1,018)

30 June 2015 30 June 2014 Variance

Change in fair value and realized result on derivative instruments 158 (117) 275

Change in fair value and realized result on other financial assets (2,121) (20,224) 18,103

Other net financial results (156) (592) 435

Realized result on repayment of borrowings (4,188) - (4,188)

Result on disposal of subsidiaries (797) - (797)

Total (7,104) (20 933) 13,655

4

-

-

-

EPRA Net Asset Value Page 15

-

-

-

ORCO PROPERTY GROUPSociété Anonyme

Condensed consolidated interim financial information

for the period of six months ended 30 June 2015

Orco Property Group’s Board of Directors has approved the condensed consolidated interim financial information for the period ended 30 June 2015 on 27 August 2015.

All the figures in this report are presented in thousands of Euros except if explicitly stated.

2 ORCO PROPERTY GROUP | I. Condensed consolidated interim income statement

I. Condensed consolidated interim income statement

The accompanying notes form an integral part of this condensed consolidated interim financial information.

6 months 6 months Note 2015 2014

Revenue 3 7,330 16,805 Sale of goods 770 7,892 Rent 3,974 5,037 Hotels and restaurants - 1,040 Services 2,586 2,836

Net loss from fair value adjustments on Investment Property 3/4 (13,976) (469)

Other operating income 3 108 244Net result on disposal of assets 3 73 9Cost of goods sold 3/6 (865) (6,452) Employee benefits 3 (514) (15,332) Amortization, impairments and provisions 3 4,994 (9,974) Other operating expenses 3 (8,346) (8,839)


Interest expense 10.3 (5,717) (13,642) Interest income 441 882Foreign exchange result 1,638 (2,842) Other net financial results 12 (7,104) (20,933)

Financial result (10,742) (36,535)

Share of profit or loss of entities accounted for using the equity method 3,004 (206)


Income taxes 1,520 (920)


Loss after tax from discontinued operations - (2,817)


Total loss attributable to: Non-controlling interests (324) (1,466)


Basic earnings in EUR per share 13 (0.05) (0.55) Diluted earnings in EUR per share 13 (0.05) (0.55)

The condensed consolidated interim income statement and relevant tables in the Notes which provide detailed breakdown of the income or expense refer to continuing operations only.

ORCO PROPERTY GROUP | II. Condensed consolidated interim statement of comprehensive income 3

II. Condensed consolidated interim statement of comprehensive income


6 months 6 months2015 2014


Other comprehensive income/ (loss) Items that may be reclassified subsequently to profit or loss 15,131 1,265

Currency translation differences 3,355 1,265

Change in value of available-for-sale financial assets 2 11,776

Items that will not be reclassified subsequently to profit or loss - -Remeasurements of post-employment benefit obligations - -

Total comprehensive loss attributable to: (2,283) (63,221) Owners of the Company (1,966) (61,768)

Non-controlling interests (317) (1,453)

4 ORCO PROPERTY GROUP | III. Condensed consolidated interim statement of financial position

III. Condensed consolidated interim statement of financial position


ASSETS 30 June 31 December

Note 2015 2014

NON-CURRENT ASSETS 349,556 344,630

Intangible assets - 38

Investment property 4 239,826 249,236

Property, plant and equipment 978 1,030 Fixtures and fittings 978 1,030

Equity method investments 5.4 4,073 35

Financial assets at fair value through profit or loss 5.1 599 2,627

Financial assets available-for-sale 5.2 96,118 86,995

Non-current loans and receivables 5.3 7,962 4,669

CURRENT ASSETS 18,901 28,089 Inventories 6 8,304 9,422 Trade receivables 4,060 2,362 Cash and cash equivalents 8 3,951 7,103 Other current financial assets 395 6,092 Other current non-financial assets 2,191 3,110

ASSETS HELD FOR SALE 7 8,824 1,395

TOTAL 377,281 374,114

EQUITY & LIABILITIES

30 June 31 December 2015 2014

EQUITY 203,733 206,016

Equity attributable to owners of the Company 14 203,544 205,510

Non-controlling interests 189 506

LIABILITIES 173,548 168,098 Non-current liabilities 120,020 138,795

Bonds 10.1 59,714 62,237 Other financial debts 10.2 52,632 65,252 Provisions and other long term liabilities 5,017 7,209 Deferred tax liabilities 2,657 4,097

Current liabilities 49,515 29,066 Current bonds 10.1 4,375 278Other financial debts 10.2 27,957 13,557 Trade payables 3,260 4,008 Advance payments 1,617 1,474 Derivative instruments 445 599Other current financial liabilities 4,429 4,414 Other current non-financial liabilities 7,432 4,736

LIABILITIES HELD FOR SALE 7 4,013 237

TOTAL 377,281 374,114

5 O

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6 ORCO PROPERTY GROUP | IV. Condensed consolidated interim statement of changes in equity

Definitions

Share Capital is the initial nominal (or par) value of the shares which the shareholders subscribed from the issuing company.

Share Premium is an excess amount received by the Company over the par value of its shares. This amount forms a part of the non-distributable reserves of the Company which usually can be used only for purposes specified under corporate legislation.

Translation Reserve includes exchange differences relating to the translation of the results and net assets of the group’s foreign operations from operational to the Group’s consolidation currency. Exchange differences previously accumulated in the translation reserve are reclassified to profit or loss on the disposal of the respective foreign assets and operations.

Treasury Shares are shares issued by the Company and controlled by itself. Treasury shares come from a repurchase or buyback from shareholders. These shares do not pay dividends, have suspended voting rights, and are not included in shares outstanding calculations.

Other Reserves are created from accumulated profits and losses and other equity operations, such as scope variations, variation of detention, or revaluation of assets. These reserves may be subject to the distribution of dividends.

Non-controlling interests are interests of the Group’s equity not attributable, directly or indirectly, to a parent. They belong to those shareholders who do not have a controlling interest in the Group.

ORCO PROPERTY GROUP | V. Condensed consolidated interim statement of cash flows 7

V. Condensed consolidated interim statement of cash flows

The accompanying notes form an integral part of this condensed consolidated interim financial information.30 June 30 June

2015 2014

OPERATING RESULT (11,196) (21,987)

Net (loss) from fair value adjustments on investment property 3/4 13,976 469

Amortization, impairments and provisions 3 (4,994) 10,978

Net result on disposal of assets 3 (73) (7)

Other non-cash transactions 1,505 -

Adjusted operating loss (782) (10,547)

Financial result (84) (1,217)

Income tax paid 79 (1,054)

Financial result and income taxes paid (5) (2,271)

Changes in operating assets and liabilities 1,095 (29,898)

NET CASH FROM /(USED IN) OPERATING ACTIVITIES 308 (42,716)

Capital expenditures and tangible assets acquisitions (752) (1,625)

Proceeds from sales of non-current tangible assets 73 45

Purchase of intangible assets - (13)

Purchase of financial assets - (7)

Loans granted to joint ventures and associates (60) -

Dividends received 542 -

Proceeds from disposal of subsidiary 472 -

Proceeds from disposal of financial assets - 57,119

Changes in the Group - (87,415)

NET CASH FROM INVESTING ACTIVITIES 275 (31,896)

Proceeds from capital increase in subsidiary by non-controlling interests - 36,000

Proceeds from borrowings 10.2 7,710 3,214

Net interest paid (1,981) (5,940)

Repayment of New Notes 10.1 (2,226) -

Repayments of borrowings 10.2 (3,914) (29,738)

Repayment interests on Safeguard bonds and New Notes 10.1 (2,588) (321)

NET CASH USED IN FINANCING ACTIVITIES (2,999) 3,215

NET (DECREASE) IN CASH (2,416) (71,397)

Cash and cash equivalents at the beginning of the year 7,103 88,669 Cash and cash equivalents at the beginning of the year of assets reclassified to assets held for sale (736) (8,671)

Exchange difference on cash and cash equivalents - (29)

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 8 3,951 8,572

88 ORCO PROPERTY GROUP | General information

Selected notes to the condensed consolidated interim financial information

1 General information

ORCO PROPERTY GROUP, société anonyme (the “Company”) and its subsidiaries (together the “Group” or “OPG”) is a realestate group with a portfolio in Central and Eastern Europe. It is principally involved in the development of properties for its own portfolio or intended to be sold in the ordinary course of business and is also active in leasing investment properties under operating leases as well as in asset management.

The Company is a joint stock company incorporated for an unlimited term and registered in Luxembourg. The address of itsregistered office is 40, rue de la Vallée, L-2661 Luxembourg, Grand-Duchy of Luxembourg. The trade registry number of theCompany is B 44 996.

The Company’s shares are listed on the regulated markets of NYSE EuroNext Paris and the Warsaw Stock Exchange.

The condensed consolidated interim financial information has been approved for issue by the Board of Directors on 27 August 2015.

The structure of the shareholders as at 30 June 2015 is as follows:

Aspley Ventures Limited (entity associated with Mr. Pavel Spanko) 100 000 000 shares 31.80% voting rights

Fetumar Development Limited (entity associated with Mr. Jan Gerner) 100 000 000 shares 31.80% voting rights

Gamala Limited (entity associated with Mr. Radovan Vitek) 35 177 765 shares 11.19 % voting rights

Others 79 329 864 shares 25.21 % voting rights

Total 314 507 629 shares 100.00 % voting rights

As at 30 June 2015 the Board of Directors consists of the following directors:

Mr. Jiri Dedera

Mr. Edward Hughes

Mr. Pavel Spanko

Mr. Guy Wallier

1.1 Changes in the Group structure

Over the first half of 2015, the following changes occurred in the Group:

1.1.1 Acquisition of development project

In line with its new strategy focusing on development projects, the Company entered on 19 December 2014 into a EUR 5.7 million agreement concerning the development project located in Prague 10. The project comprises of approximately 33 thousand sqm of developable land. The Group already owns 31 thousand sqm of directly adjacent land. The completion was subject to certain corporate approvals on seller´s side, which were granted on 10 March 2015, thus the acquisition became effective. Following this acquisition the Group now owns an excellent developable land plot of approximately 64 thousand sqm with good location.

1.1.2 Liquidation of Orco Vagyonkezelo Kft.

Liquidation of Hungarian subsidiary Orco Vagyonkezelo Kft. has been ordered as of 25 June 2015. Consequently, the entity was deconsolidated from the Group.

ORCO PROPERTY GROUP | 9

2 Summary of significant accounting policies

2.1 Basis of preparation

The condensed consolidated interim financial information for the six months ended 30 June 2015 has been prepared in accordance with IAS 34, Interim Financial Reporting. It does not include all the information required for a complete set of IFRSfinancial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2014.

Going concern

In determining the appropriate basis of preparation of the consolidated financial information, the Board of Directors is requiredto consider whether the Group can continue in operational existence for the foreseeable future.

The Group recorded a net loss after tax of EUR 17.4 million for the 6 month period ended 30 June 2015 (EUR 64.5 million as at 30 June 2014) and has had a net operating cash inflow of EUR 0.3 million. Notwithstanding the loss incurred for the six month period, the Board of Directors is of the view that no material uncertainty towards going concern exists as at 30 June 2015 based on the following reasons:

- A significant part of the loss suffered in the first half of 2015 is attributable to the loss from revaluation of investment property that has no impact on the Group´s cash position.

- The Group had a cash and cash equivalents balance of EUR 3.9 million including restricted cash of EUR 1.8 million as at 30 June 2015.

- The Group has a stake of 4.82 % in CPI PROPERTY GROUP (“CPI PG”) as at 30 June 2015. The fair value of this stake as at 30 June 2015 equals to EUR 96.1 million (see Note 5.2). The Group has concluded a put option agreement with Mr. Vitek concerning a significant portion of the shares in CPI PG (approximately 41 % of the total shares held by the Group). The Group is entitled to request Mr. Vitek, the major shareholder of CPI PG, to purchase part of these shares for a defined price (EUR 31.0 million) and consequently to ensure the liquidity for satisfaction of the Group’s future liabilities.

Based on these facts, the Board of Directors considers the going concern basis of preparation to be appropriate for thecondensed consolidated interim financial information. Accordingly the condensed consolidated interim financial information as at 30 June 2015 has been prepared on the going concern basis that contemplates the continuity of regular business activities and realization of assets together with the settlement of liabilities in the ordinary course of business.

2.2 Accounting policies

The accounting policies have been consistently applied by the Group’s entities and are consistent with those applied by the Group for its 31 December 2014 consolidated financial statements, except for the determination of fair value of financial assetsavailable for sale. For this determination of fair value the Group applies the EPRA NAV of CPI PG as reported as at 31 March 2015, while as at 31 December 2014 the fair value was based on quoted market price, refer also to Note 5.2.

The application of the revised and new standards and interpretation applied as from 1 January 2015 are described below:

New and amended standards adopted by the Group in 2015

The Group adopted IFRIC 21 “Levies” in 2015 without impact on the consolidated accounts of the Group.

The Group refers to the endorsement status of the new IFRS standards and amendments to standards and interpretations as they are published by the European Union (http://ec.europa.eu/internal_market/accounting/ias/index_en.htm).

2.3 Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that present a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

1010 ORCO PROPERTY GROUP | Summary of significant accounting policies

2.3.1 Properties fair value measurement and valuation process

The fair value of properties is based on the highest and best use of the assets as described by IFRS 13. It takes into account the use of the asset that is physically possible, legally permissible and financially feasible. On a general basis the current use of the asset has been considered as the highest and best use, but the possibility of a full redevelopment has been systematically tested and carefully evaluated.

The principal assumptions underlying management’s estimation of fair value are those related to: the potential use of the asset,the receipt of contractual rentals; expected future market rentals; void periods; maintenance requirements; and appropriate discount rates. The expected future market rentals are determined on the basis of current market rentals for similar propertiesin the same location and condition.

Valuation results are regularly compared to actual market yield data, actual transactions by the Group and those reported by the market.

2.3.1.1 Valuation update

After an internal assessment and analysis of changes in the market, the management of the Group has appointed an external appraiser to perform an independent valuation of the investment properties.

2.3.1.2 Main observable and non-observable inputs

The following table presents the main observable and non-observable inputs supporting the valuation of the portfolio. In some specific cases the valuation is supported by a letter of interest or specific circumstances related to ownership. In those casesthe carrying amount is different from the externally appraised value.

For a valuation of the Bubny property external valuer assumed in its valuation that change of master plan is in place. While theGroup expects change of master plan within reasonable period of time, it disagreed with the above assumption used by the external valuer and for the purposes of the property valuation as at 30 June 2015 concluded that estimated fair value as provided by external valuer already reflects uncertainties in change of master plan. Bubny property is consequently valued in these financial statements as at 30 June 2015 in amount of EUR 51.9 million. 30 June 2015

Per asset type Equivalent Yield Initial Yield Reversionary Yield

Min Max Min Max Min Max

Central Europe portfolio Rental 6.8% 11.5% 3.1% 7.9% 7.1% 14.4%

Central Europe portfolio Asset held for development 9.2% 15.0% 5.2% 16.9% 10.6% 18.8%

31 December 2014

Per asset type Equivalent Yield Initial Yield Reversionary Yield

Min Max Min Max Min Max

Central Europe portfolio Rental 7.0% 15.0% -2.2% 16.5% 7.4% 18.4%

Central Europe portfolio Asset held for development 9.4% 13.0% 4.7% 10.0% 10.7% 14.9%

The significant unobservable inputs used in fair value measurement categorized within level 3 of the fair value hierarchy of theGroup’s portfolios are:

- Equivalent Yield

- Estimated Rental Value (ERV) for rental asset or Gross Development Value (GDV) for development

- Capex for rental assets or Construction costs when the residual method is used

ORCO PROPERTY GROUP | Summary of significant accounting policies 11

Change of the valuation rates would have the following impact on the portfolio of rental assets valued by discounted cash flow valuation method and income capitalization: 30 June 2015

Figures in EUR million

Investment Properties Portfolio - Investment Properties Equivalent Yield

EY - 25 bps EY + 25 bps

Czech Republic 1.8 (1.7)

Hungary 0.1 (0.1)

Luxembourg 0.6 (0.6)

Poland 0.2 (0.2)

Total 2.7 (2.6)

EY : Equivalent Yield

31 December 2014

Figures in EUR million

Investment Properties Portfolio - Investment Properties Equivalent Yield

EY - 25 bps EY + 25 bps

Czech Republic 2.1 (2.1)

Hungary 0.2 (0.2)

Luxembourg 0.7 (0.7)

Poland 0.2 (0.3)

Total 3.3 (3.3)

EY : Equivalent Yield

Furthermore, significant increase (or decrease) of the GDV or ERV assumptions would result in isolation in a similar significantincrease (or decrease) of the fair value of the assets. Significant increase (or decrease) of costs or capital expenditures assumptions in isolation would result in a significantly lower (or higher) fair value measurement.

2.3.2 Fair value estimation

Fair value measurements of financial instruments reported at fair value are classified by level of the following measurement hierarchy:

- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices);

- Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, trading securities and financial assets at fair value through profit or loss) is based on quoted market prices at the reporting date. The fair value offinancial instruments that are not traded in an active market is determined by using valuation techniques. The Group is using a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rateswaps is calculated as the present value of the estimated future cash flows.

Valuations are performed regularly on the basis of the management best estimates of the credit risk the Group is exposed to or of the specific entity concerned in the light of existing, available and observable market data.

- For the derivatives (interest rate swaps), the valuation is provided by the Group’s banks;

- For the investment in “Residential” sub-fund of Endurance Real Estate Fund the fair value is based on the net asset value provided by the Fund manager;

- For CPI PG shares the fair value is determined by EPRA NAV per share (see Note 5.2).

1212 ORCO PROPERTY GROUP | Summary of significant accounting policies

Accounting classification and fair values

The following tables show the carrying amounts and fair value of financial assets and liabilities, including their level in the fair value hierarchy.

Carrying amount Fair value

30 June 2015 Financial

assets & liabilities

measured at fair value

Financial assets & liabilities

not measured

at fair value (*)

Level 1 Level 2 Level 3

Financial assets Investments in joint ventures - 4,073 - - 4,073

Equity method investments - 4,073

Investment in Endurance Fund 599 - - - 599Financial assets at fair value through profit or loss (**) 599 -

CPI PROPERTY GROUP shares (***) 96,118 - - - 96,118

Financial assets available-for-sale 96,118 -

Radio Free Europe deferred consideration 2,817 - - - 2,817

Loan granted to the Uniborc joint venture - 3,119 - - 3,119

Other - 2,026 - - -

Non-current loans and receivables 2,817 5,145

Trade receivables - 4,060 - - -

Other current financial assets - 395 - - -

Cash and cash equivalent - 3,951 - - -

Current financial assets - 8,406


New Notes - 59,714 - - 59,714

Financial debt (floating rate bank debts) - 44,265 - - 44,265

Financial debt (fixed rate bank debts) - 8,289 - - 8,289

Financial debt (other borrowings) - 78 - - 78

Long term liabilities - 1,225 - - 1,225

Non-current financial liabilities - 113,571

Safeguard Bonds - 4,375 - - 4,375


Financial debt (fixed rate bank debts) - 501 - - 501

Financial debt (other borrowings) - 9,600 - - 9,600

Derivative instruments 445 - - 445 -

Advanced payments - 1,617 - - -

Trade payables - 3,260 - - -

Other current financial liabilities - 4,429 - - -

Current financial liabilities 445 41,638

(*) It does not include fair value information for financial assets and liabilities not measured at fair value if the carrying amount is a reasonable approximation of the fair value. (**) Designated at fair value.(***) The transfer from Level 1 to Level 3 for financial assets available for sale is explained by the change of determination of the fair value of these quoted financial instruments. The Group applied transaction price based on the observable prices on the market. For the valuation as at 30 June 2015 the Group’s share is valued using EPRA NAV per share of CPI Property Group as at 31 March 2015.

ORCO PROPERTY GROUP | Summary of significant accounting policies 13


31 December 2014 Financial

assets & liabilities

measured at fair value

Financial assets & liabilities

not measured

at fair value (*)

Level 1 Level 2 Level 3

Financial assets Investments in joint ventures - 35 - - 35

Equity method investments - 35

Investment in Endurance Fund 2,627 - - - 2,627

Financial assets at fair value through profit or loss (**) 2,627 -

Radio Free Europe deferred consideration 2,652 - - - 2,652

CPI PROPERTY GROUP shares 84,343 - 84,343 - -

Financial assets available-for-sale 86,995 -

Loan granted to the Uniborc joint venture - 4,162 - - 4,162

Other - 507 - - 507

Non-current loans and receivables - 4,669

Trade and other receivables - 2,362 - - 2,362

Other current financial assets - 6,092 - - 6,092

Cash and cash equivalent - 7,103 - 7,103 -

Current financial assets - 15,557

Financial liabilities New Notes - 60,229 - - 60,229

Safeguard Bonds - 2,008 - - 2,008


Financial debt (fixed rate bank debts) - 8,540 - - 8,540

Financial debt (other borrowings) - 72 - - 72

Long term liabilities - 1,306 1,306

Non-current financial liabilities - 128,795

Safeguard Bonds - 278 - - 278


Financial debt (fixed rate bank debts) - 496 - - 496

Financial debt (other borrowings) - 1,890 - - 1,890

Derivative instruments 599 - - 599 -

Advanced payments - 1,474 - - 1,474

Trade payables - 4,008 - - 4,008

Other financial current liabilities - 4,414 - - 4,414

Current financial liabilities 599 23,731

(*) It does not include fair value information for financial assets and liabilities not measured at fair value if the carrying amount is considered as a reasonable approximate of the fair value.

(**) Designated at fair value.

1414 ORCO PROPERTY GROUP | Segment reporting

3 Segment reporting

The Board of Directors is the responsible body making decisions for all acquisitions and disposals of projects. The Board assesses the performance of the operating segments based on a measure of adjusted earnings before interests, tax, depreciation and amortization (“adjusted EBITDA” as defined below).

Corporate expenses are allocated on the basis of the revenue realized by each activity.

Adjusted EBITDA is the recurring operational cash result calculated by deduction from the operating result of the non-cash and non-recurring items (Net gain or loss on fair value adjustments; Amortization, impairments and provisions; Net gain or losson the sale of abandoned developments; Net gain or loss on disposal of assets; Termination expenses) and the net results on sale of assets or subsidiaries.

The Group structure lies on two main activities to which the Board of Directors is allocating the investment capacity on the basis of the defined strategy. On one hand, the Group is investing in land bank or assets for development and effectively developing them once the project presented is satisfactorily approved by the Board of Directors. Once the asset is developed it can be either sold to a third party or kept in the Group own portfolio for value accretion. On the other hand, the Group is actively investing in and managing its own or third parties real estate assets for operational profitability and value appreciation. These two business lines are the segments by which the operations are analysed.

These two segments or business lines can be defined as the following:

- Development business line covers all real estate assets under construction or designated as a future development in order to be sold to a third party or to be transferred to the Property Investment Business line once completed;

- Property Investment business line covers all real estate assets operated (such as logistic parks) and rented out assets or that will be sold without any major refurbishment.

The level of indebtedness of each asset, which is to finance projects and operations, is decided by the Board of Directors above certain thresholds. The funds allocation after draw down is independent from the asset pledged or leveraged. Since the segmentation by business line of the finance debt based on the pledged project is not representative of operational cash allocation, this information is not disclosed as it is not relevant.

ORCO PROPERTY GROUP | Segment reporting 15

3.1 Segment Reporting - 30 June 2015

Profit or loss 30 June 2015


TOTAL

Revenue 1,342 5,988 7,330

Sale of goods 770 - 770 Rent 477 3,497 3,974 Hotels, Extended Stay & Restaurants - - -Services 94 2,492 2,586

Net (loss) from fair value adjustments on investment property (11,321) (2,655) (13,976) Cost of goods sold (853) (12) (865) Impairments - Allowance (447) (592) (1,039) Impairments - Write-Back 990 2,709 3,699 Amortization and provisions 280 2,054 2,334 Other operating results (1,465) (7,214) (8,679)

Operating Result (11,475) 279 (11,196)

Net loss from fair value adjustments on investment property 11,321 2,655 13,976 Impairments - Allowance 448 591 1,039 Impairments - Write-Back (990) (2,709) (3,699) Amortization and provisions (280) (2,054) (2,332) Termination expenses - - -Net result on disposal of assets - (73) (73)

Adjusted EBITDA (976) (1,311) (2,287)

Financial Result (10,742)

Share of profit or (loss) of entities accounted for using the equity method (942) 3,947 3,004

Loss before Income Tax (18,934)

Statement of financial position & Cash Flow 30 June 2015


TOTAL

Segment Assets 151,705 109,322 261,027

Investment Property 141,174 98,652 239,826 Property, plant and equipment - - -Inventories 8,304 - 8,304 Assets held for sale 2,145 6,679 8,824 Equity method investments 82 3,991 4,073

Unallocated assets 116,254 Total Assets 377,281

Segment Liabilities 38 3,975 4,013

Liabilities linked to assets held for sale 38 3,975 4,013

Unallocated liabilities 169,535 Total Liabilities 173,548

Cash flow elements 712 40 752

Capital expenditure 712 40 752

Direct Operating Expenses 30 June 2015


TOTAL

Direct operating expenses arising from investment property that : - generated rental income (828) (6,163) (6,991) - did not generated rental income (22) (47) (69)

1616 ORCO PROPERTY GROUP | Segment reporting

3.2 Segment Reporting - 30 June 2014

Profit or loss 30 June 2014


TOTAL

Revenue 8,080 8,725 16,805

Sale of goods 7,836 56 7,892 Rent 161 4,876 5,037 Hotels, Extended Stay & Restaurants - 1,040 1,040 Services 83 2,753 2,836

Net gain or (loss) from fair value adjustments on investment property 12 (481) (469) Cost of goods sold (6,435) (17) (6,452) Impairments – Allowance (1,853) (132) (1,985) Impairments - Write-Back 399 481 880 Amortization and provisions (3,242) (5,627) (8,869) Other operating results (11,296) (12,623) (23,919)

Operating Result (14,335) (9,673) (24,008)

Net gain or (loss) from fair value adjustments on investment property (12) 481 469 Impairments – Allowance 1,853 132 1,985 Impairments - Write-Back (399) (481) (880) Amortization and provisions 3,242 5,627 8,869 Net result on disposal of assets 5,919 6,385 12,304

- (9) (9)Adjusted EBITDA (3,732) 2,462 (1,270)


(36,535)Share of profit or (loss) of entities accounted for using the equity method (116) (90) (206)

(206)Loss before Income Tax (60,749)

(60,749)

Statement of financial position & Cash Flow 31 December 2014


TOTAL

Segment Assets 154,503 105,585 260,088

Investment Property 143,676 105,560 249,236 Property, plant and equipment - - -Inventories 9,422 - 9,422 Assets held for sale 1,395 - 1,395 Equity method investments 10 25 35

Unallocated assets 114,026 Total Assets 374,114

Segment Liabilities 237 - 237

Liabilities held for sale 237 - 237

Unallocated liabilities 167,861 Total Liabilities 168,098

Cash flow elements 28 1,269 1,297

Capital expenditure 28 1,269 1,297

Direct Operating Expenses 31 December 2014


TOTAL

Direct operating expenses arising from investment property that: - generated rental income (4) (8,811) (8,815) - did not generated rental income (168) (47) (215)

ORCO PROPERTY GROUP | Investment property 17

4 Investment property

The main assumptions used to calculate the fair value of the properties are disclosed in note 2.3 of this condensed consolidatedinterim financial information.

Freehold buildings Extendedstay hotels

Land bank TOTAL

At 1 January 2014 678,120 10,922 21,510 710,552

Changes in the Group (570,650) - (7,981) (578,631)

Investments / acquisitions 1,119 - 28 1,147

Revaluation through income statement 433 463 1,177 2,073

Transfer from inventories - - 64,850 64,850

Acquisition of group of assets - - 66,072 66,072

Transfers to/from asset held for sale - (11,375) (1,387) (12,762)

Translation differences (3,461) (10) (594) (4,065)

At 31 December 2014 105,561 - 143,675 249,236

Investments / acquisitions 40 - 712 752

Revaluation through income statement (2,646) - (11,330) (13,976)

Acquisition of group of assets - - 5,568 5, 568

Transfers to/from asset held for sale (5,652) - (65) (5,717)

Translation differences 1,349 - 2,614 3,963

At 30 June 2015 98,652 - 141,174 239,826

In 2015

7 investment properties with a net book value of EUR 167.2 million located in special purpose entities (SPV) have been pledged as a security for bank loans amounting to EUR 71 million.

a) Revaluation through the income statement Freeholdbuildings

Land bank TOTAL

Czech Republic 974 (10,923) (9,949)

Poland (1,120) - (1,120)

Croatia - (407) (407)

Hungary (2,660) - (2,660)

Luxembourg 160 - 160

At 30 June 2015 (2,646) (11,330) (13,976)

The movements in fair value of the assets are related to the land bank and freehold buildings:

- In the Czech Republic, the fair value decreased for Bubny (EUR -13 million) and increased for Zbrojovka Brno (EUR 6 million);

- In Hungary, the decrease is mainly attributable to the freehold building Váci 188 (EUR 2 million);

- In Poland, the fair value decreased for Marki (EUR 1.1 million).

1818 ORCO PROPERTY GROUP | Investment property

b) Acquisition of Group assets

In the first half of 2015, the Group entered into an agreement concerning the development project located in Prague 10. The project comprises of approximately 33 thousand sqm of developable land. The completion was subject to certain corporate approvals on seller´s side, which were granted on 10 March 2015, thus the acquisition became effective. The purchase price for transfer of shares and receivables was EUR 5.7 million.

c) Transfer to assets held for sale

One land bank Istria plot in Croatia and property Marki in Poland were transferred to assets held-for-sale in the expectation oftheir sale after the end of reporting period.

In 2014

8 investment properties with a net book value of EUR 178.7 million located in special purpose entities have been pledged as a security for bank loans amounting to EUR 76.9 million. The number of pledged assets decreased as a result of the loss of control over CPI PG and deconsolidation of three Hungarian assets and two investment properties within the Suncani Hvar portfolio.

a) Changes in the Group

As a result of the loss of control referred to above, freehold buildings in the amount of EUR 570.7 million and land bank of EUR4.9 million were derecognized from the consolidated balance sheet. The book value of deconsolidated freehold buildings and land plots in CPI PG amounts to EUR 533.2 million and the value of Hungarian assets at the date of derecognition was EUR 41.4 million. Furthermore, one land bank in Poland in the book value of EUR 3.1 million was deconsolidated as a result of the bankruptcy.

b) Investments / Acquisitions

In the first quarter of 2014 (when still contributing to OPG results), CPI PG has invested EUR 0.6 million into refurbishment of buildings in the mixed retail and office portfolio in Berlin. CPI PG has also acquired an asset in Berlin (Voltastraße 29, 30) for EUR 0.4 million.

c) Revaluation through the income statement Freeholdbuildings

Extendedstay hotels

Land bank TOTAL

Czech Republic 1,011 463 1,177 2,651

Poland (1,269) - - (1,269)

Hungary 2,131 - - 2,131

Luxembourg (1,440) - - (1,440)

Total for 2014 433 463 1,177 2,073

The main movements in fair value of the assets related to the freehold buildings are:

- In the Czech Republic, the fair value decreased for Bubenská (EUR -0.5 million) and went up for Hrad anská(EUR 0.4 million) and Na Po í í (EUR 0.9 million);

- In Poland, the market value of Diana Office went down by EUR 0.2 million. Also, the value of logistic park Marki decreased by EUR 1.1 million;

- In Hungary, the increase relates to the freehold buildings Váci 188 (EUR 1.5 million) and Váci 199 (EUR 0.6 million)

- In Luxembourg, the value of Capellen office building decreased by EUR 1.4 million.

The value of Pachtuv Palace hotel was adjusted by EUR 0.5 million to its fair value prior to the reclassification to held for sale (see below).

The improvement of the value of land bank in the Czech Republic is mainly attributable to Praga – an increase by EUR 1.1 million.

d) Acquisition of group of assets

Following its amended strategy aiming at development projects, the Group acquired four projects in the Czech Republic inNovember 2014 – STRM portfolio. The entities were acquired in a portfolio transaction for total consideration ofEUR 44.0 million and include freehold land with potential for development of residential, office, hospitality and retail premises.

ORCO PROPERTY GROUP | Non-Current Financial assets 19

Since the Group did not decide about the form of development of the land bank yet and the final use of the plots is consideredto remain uncertain, the acquired project real estate assets were classified as investment properties and recognized in theamount of EUR 45.7 million in the consolidated balance sheet.

Further transaction occurred in December 2014, when the Group purchased a brownfield located in Brno, Czech Republic, with an area of 22.5 hectares. The transaction was structured as a share deal and the transaction price for net assets of the SPV amounts to EUR 13.95 million. In accordance with the Group policy and due to the fact that decision regarding final use of the land bank plots has not been taken yet, the freehold land was classified as land bank in investment properties. The valueof the real estate assets acquired in the transaction is EUR 20.3 million.

e) Transfers

Transfer from inventories

At the end of 2014, the Group changed the classification of the Bubny plot, which was transferred from Inventories intoInvestment property in the amount of EUR 64.85 million.

Transfer to assets held for sale

In the first half of 2014, the Group reached an agreement with former management regarding compensation for their dismissal from managerial functions. The Pachtuv Palace hotel in Prague forms part of the compensation in-kind of the former management’s indemnity package. Prior to completion of the handover, the hotel was transferred to held-for-sale category.

Two land banks (Rubeška and Na Františku) were transferred to held-for-sale in the expectation of their sale after the end of reporting period.

5 Non-Current Financial assets

5.1 Financial assets at fair value through Profit or Loss

This balance sheet line includes the following financial assets:

- The fair value of the investments in the “Residential” Sub-funds of Endurance Real Estate Fund amounts to EUR 0.6 million as at 30 June 2015 (EUR 2.6 million as at 31 December 2014). The Endurance Real Estate Fund is managed by the Group (refer to Note 16). The fair value of the fund units is based on the net asset value as provided by the fund manager in its report.

The fund manager took the decision not to extend its initial maturity (the liquidation started on the 29 March 2013) and the liquidation should be finalized during 2015.

5.2 Available-for-sale financial assets

This balance sheet line represents the Group’s share of CPI PROPERTY GROUP:

- In 2014, the Group lost control over CPI PG (at that time Orco Germany). As a result of the change in control and dilution of the participation interest, the shares of CPI PG are classified as financial assets available-for-sale.

In determining the fair value of these quoted financial instruments the Group used transaction price based on the observable prices on the market. For the preparation of the condensed consolidated interim financial information as at 30 June 2015 the method of the fair value determination has been modified.

The primary reason for the change in the valuation technique represents Group‘s management assessment of the market that is considered as not active and with low liquidity. This assessment required of different valuation technique for example use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

For the valuation as at 30 June 2015 the Group’s share is valued using EPRA NAV per share of CPI PG as at 31 March 2015. The EPRA NAV published by CPI PG was 0.604 EUR per share as at 31 March 2015.

5.3 Non-current loans and receivables

The “Non-current loans and receivables” mainly include:

- The loan granted to the company Uniborc amounts to EUR 3.1 million in 2015 (EUR 4.1 million in 2014). This joint venture with Unibail, started in April 2013, is mainly financed through an equity loan provided by both partners in the same proportion as their respective shareholdings.

2020 ORCO PROPERTY GROUP | Inventories

- Receivable amounting to EUR 2.8 million related to Radio Free Europe / Hagibor office building deferred consideration.

5.4 Equity method investments

As of June 2015, the Group is involved in the following joint ventures and associates recognized under the equity method:

- The Kosik JV (Kosic Sarl & SV Faze II s.r.o) recognized at EUR 0.1 million as of 30 June 2015;

- As at 30 June 2015 the Group holds 31.61% stake in Suncani Hvar. Due to uncertainties regarding the going concern as of 31 December 2014 the Group’s share was recognized in zero value. The progress in pre-bankruptcy reorganization was achieved during the reporting period which mitigated the uncertainty. The Group’s share on the equity is valued at EUR 4 million as at 30 June 2015. The gain from the revaluation is recognized in statement of comprehensive income as share of profit or loss of entities accounted for using the equity method in the amount EUR 4.0 million.

6 Inventories June 2015 December 2014

Opening Balance 9,422 114,720

Impairments - Allowance (315) (1,770)

Impairments - Write-Back 945 53

Transfer to held for sale (1,193) (30,195)

Transfer to investment properties - (64,850)

Translation differences 156 (1,116)

Net increase in inventories 154 5,287

Cost of goods sold (865) (9,340)

Changes in the group - (3,367)

Closing Balance 8,304 9,422

In 2015

In the first half of 2015, the non-residential unit of the former cinema located at Mostecká, Prague 1, is intended for sale incarrying value EUR 1.2 million. The inventories related to this projects were transferred to assets held for sale as at 30 June2015 (see Note 7).

Increase in inventories represents development costs related mainly to capitalization of expenses and development investments.

Significant part of the costs of sold units is attributable to the Prague residential project Benice 1 (EUR 0.6 million) where almost 94 % of family houses were delivered by the end of June. Over the first half of 2015, the units were sold at another Prague project V Meziho í with a book value of EUR 0.2 million and Klonowa Aleja in Poland for EUR 0.1 million.

In 2014

No project assets located in special purpose entities have been pledged as a security for bank loans.

In 2014, an impairment charge has been recognized for Bubny plot in the amount of EUR 1.5 million based on an updatedannual valuation.

In March 2014, the Board of Directors decided to sell the project Zlota 44 in Warsaw as is. After meeting the IFRS definition,the inventories related to Zlota 44 project were transferred to assets held for sale as at 30 June 2014 in the amount of EUR 30.2 million. On 27 August 2014, the Group disposed of its stake in the project.

Increase in inventories represents development costs related mainly to capitalization of expenses and developmentinvestments.

ORCO PROPERTY GROUP | Assets and liabilities classified as held for sale 21

Following some uncertainties regarding the future development of the Bubny area in Prague, the Group has reviewed theclassification of this project. Due to the fact that the master plan has not been approved yet and there exists the uncertaintyabout the length of time to obtain the relevant permits and future use of the plot, the plot was transferred from inventories toinvestment properties as of the year end 2014 in the amount of EUR 64.9 million. The plot development has been suspendedand the development plans have been deferred. The Group continues to hold the property awaiting the change of the master plan and the plot is held for capital appreciation.

Significant part of the costs of sold units is attributable to the Prague residential project V Meziho í (EUR 3.5 million) wherealmost all apartments were delivered by the end of December. Family houses at costs of EUR 2.3 million were sold in Benicenear Prague. Over the year 2014, last remaining units were sold at another Prague project Mostecká with a book value of EUR1.3 million and Koliba in Bratislava (EUR 0.8 million).

The amount of Cost of goods sold does not reconcile with the amount presented in the income statement due to the fact thatthe cost of goods in the income statement include costs related to disposal of Zlota 44 project in the amount of EUR 50.0 million.

The line Changes in the group mainly represents deconsolidation of the CPI PG residential project Naunynstraße.

7 Assets and liabilities classified as held for sale Assets held for sale June December

2015 2014

Opening Balance 1,395 29,116

Transfers to 7,974 45,957

Translation differences (63) (1,310)

Transfer of ownership / Asset sales (482) (72,368)

Closing Balance 8,824 1,395

Liabilities held for sale June December2015 2014

Opening Balance 237 27,722

Accrued interest - (207)

Transfers to 4,013 80,470

Translation differences (235) 235

Transfer of ownership (2) (107,984)

Closing Balance 4,013 237

“Transfers to” assets classified under Held for sale (AHS): both of the initial transfer of asset at fair value and the subsequentchanges in fair value are disclosed and detailed in Investment Property (note 4). Subsequent changes in fair value are presented under the line “Revaluation through income statement” and then transferred in AHS using the line “Transfers to/from asset held for sale”.

In 2015

During the first half of 2015, the significant portion of the changes in the assets and liabilities held for sale related to the Marki property in Poland were classified as held for sale (assets EUR 6.7 million, liabilities EUR 4.0 million).

On 6 February 2015 the Group finalized the disposal of the development project Na Františku, Ostrava – Slezská, Czech Republic. This transaction is reported in line Transfer of ownership/Asset sales (EUR 0.5 million).

In 2014

During 2014, the Group sold 4 assets classified as held for sale:

- Zlota project (Poland): in March 2014, Board of Directors decided to sell Zlota project as is. After meeting criteria set by IFRS, all assets and liabilities related to this project were reclassified as held for sale. Total assets classified as held for sale amount to EUR 31.4 million and are presented on line “Transfers to”. Total liabilities classified as held

2222 ORCO PROPERTY GROUP | Non-controlling interest transactions

for sale amounted to EUR 74.6 million are presented on line line “Transfers to” in table “Liabilities linked to assets held for sale”. The disposal of Zlota project is then presented on line “Transfer of ownership / Assets sale”.

- Hlubo ky (Czech Republic) and Dunaj (Slovakia) projects, classified as held for sale in 2013, were sold in June 2014 as part of a portfolio debt restructuring transaction with Crédit Agricole Corporate and Investment Bank, which concerned three assets that used to be cross collateralized: two in the Czech Republic (Bubenska, Hlubo ky) and one in Slovakia (Dunaj department stores). As a result of this transaction, the Group transferred the ownership of Hlubo ky and Dunaj, together with related debt to a fully owned subsidiary of Crédit Agricole CIB. In return, the Group retained the ownership of Bubenska 1 with leverage decreased to EUR 9.0 million with extended debt maturity to June 2017. This transaction does not have any major impact to financial result of the Group, as fair value of transferred assets was adjusted as at 31 December 2013 according to the value agreed for the purposes of expected transaction. Impact to assets classified as held for sale is reported in this note on line “Transfer of ownership” – total assets amounting to EUR 24.7 million, total liabilities amounting to EUR 17.3 million.

- Pacht v Palác: In addition, the Group reached an agreement with the former management regarding compensation for their dismissal from the managerial functions. In line with that, Pachtuv Palace hotel in Prague – part of this compensation - was transferred to assets held for sale and reported on line “Transfers to” (assets amounting to EUR 12.2 million, liabilities EUR 5.6 million). After completion of the transfer administration procedure, Pacht v Palác was deconsolidated and is reported on line “Transfer of ownership / asset sales” – assets amounting to EUR 12.0 million, liabilities EUR 6.2 million.

The Group received an offer to sell the receivable for deferred consideration on the sale of Molcom. After repayment of EUR 0.6 million and impairment of EUR 35.2 million (no accrual of interests in 2014 or 2013), the fair value of the receivable was EUR 1.0 million in 2014 (EUR 0.9 million in 2013). The receivable was reclassified from financial assets to assets held forsale as at 30 June 2014 in value of EUR 1.0 million. The receivable and the related security rights were sold on 2 July 2014 for the amount of EUR 1.0 million.

After the rejection by the financing bank of the Group’s offer to purchase the loan provided by the bank towards Szczecin Project sp. z o.o., the entity has been removed from the consolidation scope. According to this, all assets and liabilities related to the project Szczecin were deconsolidated and are presented on lines “Transfer of ownership” – assets in the amount of EUR 4.4 million, liabilities in the amount of EUR 10.4 million as at 31 December 2014.

In October 2014, the Board of Directors agreed to dispose of two non-strategic projects in the Czech Republic, namely Rubeška, located in Prague 9 and Na Františku, located in Ostrava - Slezka. All assets and liabilities related to these two projects were classified as held for sale. Total assets amount to EUR 1.4 million and total liabilities amount to EUR 0.2 million as at the end of December 2014.

8 Cash and cash equivalents

As at 30 June 2015, cash and cash equivalents consist of cash in bank for EUR 3.9 million (EUR 7.1 million in December 2014) and cash in hand for EUR 17 thousand (EUR 9 thousand in December 2014). There were short-term deposits for EUR 28 thousand in December 2014, but none reported in June 2015.

The cash in bank includes restricted cash for EUR 1.8 million in 2015 (EUR 2.5 million as of December 2014) representing:

- Cash deposited in accounts reserved as collateral for development projects and lifted after sales of units for EUR 0.1 million (EUR 0.1 million as of 31 December 2014);

- Cash deposited in accounts reserved as collateral for loans related to property for EUR 1.7 million (EUR 2.4 million as of 31 December 2014).

9 Non-controlling interest transactions

In 2015

The only non-controlling interest recognized as of June 2015 is related to the Czech entity holding land bank project Doupovska.

ORCO PROPERTY GROUP | Non-controlling interest transactions 23

In 2014

Deconsolidation and disposal of CPI PG shares

On 3 March 2014, CPI PG resolved to raise EUR 36.0 million in a reserved capital increase in favor of Stationway Properties Limited (“Stationway”), an entity affiliated with Jean-François Ott. Stationway subscribed 76,600,000 new shares which were issued on 5 March 2014. The total number of shares comprising the share capital of CPI PG as well as the number of voting rights was 421,256,445 shares as of 5 March 2014. This capital increase results from the 29 November 2013 decision of the CPI PG’s Board of Directors to raise up to EUR 100 million pursuant to the authorization granted by shareholders during the extraordinary meeting of 26 April 2012.

As a result of the capital increase by Stationway without participation of OPG, the Group’s shareholding interest was diluted to47.85% represented by 201,571,194 shares and the equity attributable to the owners of the Company decreased by EUR 10.3 million. Consequently, the amount of non-controlling interests increased by EUR 46.3 million.

On 18 March 2014, CPI PG’s Board of Directors decided to implement changes in the management structure and to terminate the executive contracts of Jean-François Ott, Nicolas Tommasini and Brad Taylor, Group representatives in the management of CPI PG. The Group and the former management agreed on 27 March 2014 on a settlement and mutual general release agreement by which the Group settled all the existing and potential future obligations and claims arising from the termination.

As a consequence of the dilution of participation and the removal of the Group’s representatives from the management of CPI PG, the Company lost control over CPI PG and its subsidiaries. As at the date of loss of control, assets, liabilities and non-controlling interest attributable to the CPI PG were derecognized from the consolidated statement of financial position and theremaining shares were recognized at their fair value in the category financial asset available-for-sale. The fair value of the retained interest was determined based on the market price at closing as at the date of losing control (EUR 0.53 per share) multiplied by the total number of CPI PG shares held by OPG. In the opinion of the Group management, the market price represented the best indicator of the fair value. The deconsolidation and recognition of financial assets available for sale measured at fair value, as described above, resulted in a loss of EUR 34.8 million recorded in 2014 income statement. The non-controlling interests in the former subsidiaries have been derecognized in the carrying amount of EUR 152.8 million. The change in non-controlling interests is presented as an impact of deconsolidation of subsidiaries in the statement of changes inequity.

In order to meet the liquidity requirements, in particular to finance the acquisition of PEKAO receivable related to Zlota project, the Company entered on 28 April 2014 into an agreement to dispose of 108,395,743 shares it held in CPI PG for a total purchase price of EUR 55.0 million. The completion of the disposal of the shares was subject to certain conditions, including the approval of the Paris Commercial Court. The court approved the disposal of the shares on 2 June 2014. Following this disposal the shareholding of the Group in CPI PG decreased from 201,571,194 shares to 93,175,451 shares equal to 20.53% of the voting rights at the time of disposal.

The disposal of the CPI PG shares under distressed conditions but at market price gave rise to an accounting loss of EUR 2.9 million.

Disposal of Suncani Hvar shares

On 11 June 2014, Company entered into a transaction concerning partial disposal of its stake held in Suncani Hvar d.d. (SHH). OPG disposed of 2,080,000 shares corresponding to 24.94% of the voting rights. After the disposal, the Company holds 2,636,734 SHH shares equal to 31.61% of the voting rights. Together with the shares, the Company transferred to the buyer shareholder receivables from SHH. The shares and receivables were sold at an aggregate purchase price of EUR 2.1 million.

After having recognized impairments in 2013 in relation to SHH as a result of the uncertainty regarding the going concern of the activities, the disposal of SHH shares and receivables resulted in an accounting gain of EUR 0.5 million.

Since the shareholding interest in SHH was reduced below 50% and, consequently, the Company lost control over SHH activities, related assets and liabilities were deconsolidated from the Group statement of financial position, including the non-controlling interest share in negative net assets of EUR 6.1 million.

Nevertheless, the Group continues to have a significant influence and as at 31 December 2014, the retained investment in SHH is classified as an investment in associate and accounted for under the equity method.

Increase of ownership interest in Praga and Benice

In September 2014, the Group signed an agreement regarding purchase of the 25% non-controlling interest in two SPVs holding projects in Benice and Praga (Jihovychodni Mesto, a.s and Orco Praga, s.r.o. respectively). The acquisition resulted in an increase of equity attributable to the owners of the Company by EUR 1.9 million. Non-controlling interests in the amount of EUR 1.3 million has been derecognized.

2424 ORCO PROPERTY GROUP | Financial debts

Other changes in non-controlling interest

As a result of other transactions described in the note 1.1 of the Consolidated financial statements as at 31 December 2014, non-controlling interests share in negative net asset value related to the following projects or group of assets has been derecognized from the consolidated statement of financial position:

- Hospitality portfolio in the amount of EUR 10.6 million;

- Zlota 44 in the amount of EUR 5.6 million;

- Szczecin in the amount of EUR 1.2 million.

10 Financial debts

10.1 BondsNon-current bonds Non-convertible

bonds and New Notes

Balance at 1 January 2014 64,992 Interest on Safeguard Bonds 439

Interest on New Notes 11,104

Transfer from long term to short term on Safeguard Bonds (278)

Transfer from long term to short term on New Notes -

Transfer of accrued interest on New Notes (4,097)

Repayment on New Notes (13,156)

Changes in the Group (43)

Loss on restatement of New Notes 3,276

Balance at 31 December 2014 62,237 Interest on Safeguard Bonds 232

Interest on New Notes 3,636

Transfer from long term to short term on Safeguard Bonds (2,239)

Transfer from long term to short term on New Notes -

Transfer of accrued interest on New Notes (2,157)

Repayment on New Notes (2,226)

Loss on restatement of New Notes 231

Balance at 30 June 2015 59,714

Current bonds Non-convertible bonds and

New Notes

Balance at 1 January 2014 321 Repayment interests on Safeguard Bonds (321)

Transfer from long term to short term on Safeguard Bonds 278

Balance at 31 December 2014 278 Repayment interests on Safeguard Bonds (278)

Transfer from long term to short term on Safeguard Bonds 2,239

Adjustment made on Safeguard bonds 2,136

Balance at 30 June 2015 4,375

In 2015

On 19 June 2015, the Management of the Company filed a request to modify its Safeguard Plan pronounced on 25 March 2009 with the Paris Commercial Court to an early termination of its Safeguard Plan. The Paris Commercial Court decided on 19 August 2015 to amend the Safeguard Plan. Following the court's decision, within fifteen days as of the pronouncement of the judgement, the Company is obliged to pay to the Safeguard Plan administrator liabilities that are subject to and due under

ORCO PROPERTY GROUP | Financial debts 25

the Safeguard Plan (including Safeguard Bonds debt). The Safeguard Plan administrator shall proceed with the distribution of the funds received from the Company, after the court's decision becomes final.

As of 30 June 2015, Safeguard Bonds book value was amounting to EUR 2.2 million and was entirely transferred from long term to short term. The Company adjusted Bonds book value by EUR 2.1 million to reflect the nominal value admitted by Court to be paid to Bondholders.

As of 30 June 2015, non-current balance is composed of actuarial value of New Notes.

In 2014

A general meeting of the holders of the New Notes (registered under ISIN code XS0820547742) was held on 9 October 2014 in Luxembourg. At the meeting the holders of the New Notes approved certain amendments to the terms and conditions of the New Notes, which have become effective after its acceptance by the Company on 7 November 2014.

The amendments include, inter alia, the decrease of the interest rate applicable to the New Notes to 7% per annum, the extension of the maturity to five years, the implementation of the guarantee by CPI PG for 3% per annum fee, and the change of the law governing the New Notes from Luxembourg law to English law. The repayment terms were changed to one–off bullet payment at the maturity date as opposed to the previously applicable amortization payments (25% of the principal amount of the New Notes due on 28 February 2015, 2016 and 2017 with the remaining outstanding principal amount due on the maturity date of 28 February 2018).

As a result of the amendment and the fact of the substantial change of the quantitative and qualitative characteristics of the Note liability, the liabilities from the New Notes under original conditions were derecognised and liabilities from New Notes under amended conditions were recognised which resulted in an accounting loss of EUR 3.3 million.

In August 2014, the Company repaid EUR 0.4 million as part of the cash sweep following the partial disposal of logistic park St íbro. In addition, on 14 November 2014 the Company proceeded with “Mandatory Prepayment on Zlota Disposal” under the terms and conditions of the New Notes in the amount of EUR 12.8 million.

The transfer from long term to short term corresponds to the interest on Safeguard Bonds to be paid in April 2015 in accordancewith the repayment schedule of the Safeguard plan.

10.2 Bank loans and other borrowings Non-current loans and borrowings Bank loan Other non-

current borrowings

Total

Balance at 1 January 2014 295,130 174 295,304 Issue of new loans and drawdowns 2,908 341 3,249

Acquisition of group assets 6,235 - 6,235

Repayments of loans - (36) (36)

Changes in the Group (250,243) (94) (250,337)

Transfers to Liabilities held for sale (4,821) - (4,821)

Other transfers 16,538 (283) 16,255

Translation differences (569) (28) (597)

Balance at 31 December 2014 65,178 74 65,252 Issue of new loans and drawdowns - - -

Repayments of loans - - -

Other transfers (13,348) 4 (13,344)

Translation differences 724 - 724

Balance at 30 June 2015 52,554 78 52,632

In 2015

During the first six months of 2015, the other transfers relate to transfers from long-term to short-term part of bank loans financing projects Hrad anská (EUR 9.8 million), Bubenská (EUR 1.9 milion), Capellen (EUR 0.5 million) and Na Po í í(EUR 0.5 million).


In 2014

Issue of new bank loans fully corresponds to Solar project in Germany before its deconsolidation.

Acquisitions amounting to EUR 6.2 million is long term part of bank loan related to development project in Brno, acquired by the Group in December 2014.

As a result of loss of control the Group excluded from the consolidation following subsidiary with impact shown on the row Changes in the Group:

- CPI PG with bank loans amounting to EUR 250.4 million including the loan related to the Solar project.

The transfers to Liabilities linked to assets held for sale are wholly related to Pachtuv Palac which is part of the settlement in kind agreed with the former management, refer to comment for Current loans and borrowings below.

The Other transfers are mainly explained as following:

- Transfer from short-term part to long-term related to the bank loans financing Capellen (EUR +15.1 million), Diana (EUR +2.0 million) and Bubenska (EUR +6.0 million) after successful renegotiation process with the bank;

- Current part of the non-current bank loans (EUR -6.4 million).

Other non-current borrowings are mainly loans from related parties.

Current loans and borrowings Long-term Debt - current part

Other current borrowings

Bank loans and Other

borrowings linked to

Liabilities held for sale

Total

Balance at 1 January 2014 273,008 33 22,924 295,965 Issue of new loans and drawdowns 306 3,464 - 3,770

Acquisition of group assets 328 - - 328

Repayments of loans (40,494) (2,666) (51,569) (94,729)

Repayments of loans upon sales - - (16,176) (16,176)

Changes in the Group (128,492) (22,921) (12,041) (163,454)

Transfers to Liabilities held for sale (52,041) - 56,862 4,821

Other transfers (39,965) 23,710 - (16,255)

Translation differences (982) 269 - (713)

Balance at 31 December 2014 11,668 1,889 - 13,557 Issue of new loans and drawdowns - 7,624 - 7,624

Repayments of loans (3,914) - - (3,914)

Transfers to Liabilities held for sale (2,975) - - (2,975)

Other transfers 13,348 86 - 13,434

Translation differences 231 - - 231

Balance at 30 June 2015 18,358 9,599 - 27,957

In 2015

Additional increase of short-term loan provided by CPI PG to the Group is reported in Other current borrowings in amount of EUR 7.6 million. Total outstanding balance of this short-term loan is EUR 9.6 million, compared to EUR 1.9 million as of December 2014.

Repayments of bank loans of EUR 3.9 million relate mainly to Bubenská (EUR 1.8 million), Na Po í í (EUR 0.5 million), Capellen (EUR 0.5 million), Hrad anská (EUR 0.4 million) and Zbrojovka Brno (EUR 0.3 million).

Transfers to Liabilities held for sale relate to project Marki, which was reclassified as held for sale during the first half of 2015.

Other transfers in amount of EUR 13.3 million are explained as transfers from long-term part of bank loans to short-term part and relate to Hrad anská (EUR 9.8 million), Bubenská (EUR 1.9 milion), Capellen (EUR 0.5 million) and Na Po í í(EUR 0.5 million).

ORCO PROPERTY GROUP | Financial debts 27

In 2014

Issue of new loans and drawdowns related to Other current borrowings is mainly composed of short-term loan provided by CPI PG to the Group.

The repayments of bank loans are mainly related to Suncani Hvar (EUR 11.5 million), Bubenska (EUR 9.7 million), Zlota 44 (EUR 8.2 million), Capellen (EUR 2.8 million) and Na Porici (EUR 3.8 million). The repayments of bank loans upon sales are related to successful debt restructuring of Bubenska, Hlubocky and Dunaj assets. As a result of the transaction, the Group has transferred the ownership of share interests in entities Hlubocky and Dunaj to the bank.

As a result of loss of control the Group excluded from the consolidation following subsidiaries and related projects with impactshown on row Changes in the Group:

- CPI PG with bank loans amounting to EUR 33.9 million;

- Hungarian assets with bank loans amounting to EUR 64.4 million;

- Suncani Hvar with bank loans amounting to EUR 21.1 million and other borrowings amounting to EUR 22.9 million.

- Project Krakow with loans amounting to EUR 4.4 million;

- Loans related to hospitality portfolio in the amount of EUR 4.9 million;

- Project Szczecin with loans amounting to EUR 6.5 million and Pacht v Palác with bank loan amounting to EUR 5.5 million, which were classified as held for sale.

The transfers to Liabilities held for sale are related to Pachtuv Palace which is part of the settlement in kind agreed with theformer management (EUR 5.5 million) and to Zlota 44 project (EUR 51.5 million). In April 2014 the Group decided to acquire the loan receivables and collateral related to the Zlota 44 project from Pekao bank. The agreed price was partly repaid from cash blocked in the SPV related to Zlota 44 project and the remaining part of EUR 51.4 million has been deposited on escrow account till the transfer of pledges from Pekao bank to the Group in July 2014.

During 2014, the other transfers of bank loans and other current borrowings are mainly explained as following:

- Transfer from short-term part of bank loans to long-term related to the loans financing Capellen (EUR -15.6 million), Diana (EUR -2.0 million) and Bubenska (EUR -6.0 million) after successful renegotiation process with bank;

- Transfer from short-term part of bank loans to Other current borrowings related to Suncani Hvar (EUR -22.6 million);

- Current part of the non-current loans (EUR +6.4 million).

Other current borrowings are loans from related parties.


10.3 Maturity of borrowings

In 2015 At 30 June 2015 Less than one

year 1 to 3 years 3 to 5 years More than 5

years Total

Bonds - - 59,714 - 59,714 Financial debts - 34,042 5,293 13,297 52,632 Bank loans - 33,964 5,293 13,297 52,554

Bank loans fixed rate - 1,103 1,226 5,960 8,289

Bank loans floating rate - 32,861 4,067 7,337 44,265

Other non-current borrowings - 78 - - 78

Sub-total - Non current - 34,042 65,007 13,297 112,346 Current bonds 4,375 - - - 4,375 Financial debts 27,957 - - - 27,957 Bank loans - current part 18,357 - - - 18,357

Bank loans fixed rate 501 - - - 501

Bank loans floating rate 17,856 - - - 17,856

Other current borrowings 9,600 - - - 9,600 Borrowings linked to liabilities held for sale

2,975 - - - 2,975

Bank loans 2,975 - - - 2,975

Other borrowings 0 - - - 0

Sub-total - Current 35,307 - - - 35,307

Total 35,307 34,042 65,007 13,297 147,653

The interest on bank loans and Bonds decreased from EUR 13.6 million as at 30 June 2014 to EUR 5.7 million as at 30 June 2015 mainly due to deconsolidation of some entities and refinancing of several bank loans.

The bank loans are made of EUR 44.6 million for which the financing banks have no recourse on the Group. These loans finance assets with a total value of EUR 85.5 million.

In 2014 At 31 December 2014 Less than one

year 1 to 3 years 3 to 5 years More than 5

years Total

Non-current Bonds - - 62,237 - 62,237 Financial debts - 45,483 5,285 14,484 65,252 Bank loans - 45,428 5,285 14,467 65,180

Bank loans fixed rate - 1,073 1,195 6,272 8,540

Bank loans floating rate - 44,355 4,090 8,195 56,640

Other non-current borrowings - 55 - 17 72 Sub-total - Non current - 45,483 67,522 14,484 127,489 Current bonds 278 - - - 278 Financial debts 13,557 - - - 13,557 Bank loans - current part 11,667 - - - 11,667

Bank loans fixed rate 496 - - - 496

Bank loans floating rate 11,171 - - - 11,171

Other current borrowings 1890 - - - 1890 Sub-total - Current 13,835 - - - 13,835

Total 13,835 45,483 67,522 14,484 141,324

Following the amendment of terms and conditions for New notes (see note 19.1.2 of the Consolidated financial statements as at 31 December 2014), the date of repayments has been postponed to 7 November 2019. Total amount of bank loans reduced significantly due to the deconsolidation of certain assets with bank financing, mostly the CPI PG portfolio.

ORCO PROPERTY GROUP | Loans with covenant breaches 29

The Group has entered into interest rate derivatives representing 49.8% of the non-current floating rate borrowings (95.4% in 2013) and 37.6% of the current floating rate borrowings (16.0% in 2013), in order to limit the risk of the effects of fluctuations of market interest rates on its financial position and future cash flows. Most floating interest debt instruments have a fixingperiod of maximum 3 months.

The bank loans include EUR 46.7 million for which the financing banks have no recourse on the Group. These loans finance assets with a total secured value of EUR 79.6 million.

11 Loans with covenant breaches

As of 30 June 2015, EUR 2.9 million of bank loan related project classified as assets held for sale is in breach of the financial covenant. Due to classification as asset held for sale there is no effect on financial statements as at 30 June 2015.

As of 31 December 2014, there were no bank loans in breach.

12 Other net financial results 30 June 2015 30 June 2014 Variance

Change in carrying value of liabilities at amortized cost - - -Change in fair value and realized result on derivative instruments 158 (117) 275Change in fair value and realized result on other financial assets (2,121) (20,224) 18,103Other net financial results (156) (592) 436Realized result on repayment of borrowings (4,188) - (4,188)Result on disposal of subsidiaries (797) - (797)Total (7,104) (20,933) 13,829

Change in fair value of derivative instruments is mainly from the fair value gain on derivatives of EUR 0.2 million for Na Po í í.

Change in fair value and realized result on other financial assets relates to:

- impairment of RFE receivable of (EUR 0.6 million);

- a dividend received from Endurance residential Sub Fund in the amount of EUR 0.5 million;

- revaluation of (EUR 2.0 million) realized on investment in Endurance Fund.

Realized result on repayment of borrowings of (EUR 4.2 million) relates chiefly to adjustment on early payment of safeguard liabilities e.g. bonds of EUR 2.1 million and Stein guarantee of EUR 1.8 million.

3030 ORCO PROPERTY GROUP | Equity holders

13 Earnings per share 30 June 2015 30 June 2014

At the beginning of the period 314,507,629 114,625,629 Shares issued 314,507,629 114,507,629

Treasury shares - 118,000

Weighted average outstanding shares for the purpose of calculating the basic earnings per share 314,507,629 114,625,629

Weighted average outstanding shares for the purpose of calculating the diluted earnings per share 314,507,629 114,625,629

Net loss attributable to the Equity holders of the Company (17,090) (63,020)

Net loss attributable to the Equity holders of the Company after assumed conversions / exercises (17,090) (63,020)

Total Basic earnings in EUR per share (0.05) (0.55)

o/w continuing operations (0.05) (0.53)

o/w discontinued operations - (0.02)

Diluted earnings in EUR per share (0.05) (0.55)

o/w continuing operations (0.05) (0.53)

o/w discontinued operations - (0.02)

Basic earnings per share is calculated by dividing the loss attributable to the Group by the weighted average number of ordinaryshares in issue during the period, excluding ordinary shares purchased by the Group and held as treasury shares.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

The warrants were not taken into account in the EPS calculation as the conversion of the warrants had an anti-dilutive impact in 2015 and 2014.

14 Equity holders

14.1 Share capital

Number Share Share of shares Capital premium

Balance at 1 January 114,507,629 229,015 647,164

Reduction of nominal value of shares - 8 April 2014 - (114,507)

Reduction of nominal value of shares - 28 May 2014 - (103,057)

Capital increase of 10th of November 2014 200,000,000 20,000 39,200

Balance at 31 December 2014 314,507,629 31,451 686,364

Balance at 30 June 2015 314,507,629 31,451 686,364

The subscribed and fully paid-up capital of the Company of EUR 31,450,762.90 is represented by 314,507,629 ordinary shares, without nominal value. The shares of the Company have an accounting par value of EUR 0.10 per share and are fully paid. Each share is entitled to a prorate portion of the profits and share capital of the Company, as well as to a voting right and representation at the time of a general meeting, all in accordance with statutory and legal provisions.

No change in the share capital of the Company occurred in 2015 until the date of this financial information.

ORCO PROPERTY GROUP | Equity holders 31

During 2014, the share capital of the Company decreased twice. The extraordinary general meeting of 8 April 2014 resolved to approve the decrease of the share capital of the Company from the amount of EUR 229,015,258 to EUR 114,507,629 without cancellation of shares, by decreasing the accounting par value of the existing shares from EUR 2 to EUR 1 per share, with allocation of the reduction proceeds to reserves. As such, the share capital of the Company amounted to EUR 114,507,629 as of 8 April 2014. The extraordinary general meeting of 28 May 2014 resolved to approve the decrease of the share capital of the Company from the amount of EUR 114,507,629 to EUR 11,450,762.90 without cancellation of shares, by decreasing the accounting par value of the existing shares from EUR 1 to EUR 0.1 per share, with allocation of the reduction proceeds to reserves. As such, the share capital of the Company amounted to EUR 11,450,762.90 as of 28 May 2014.

On 10 November 2014 the Board of Directors of the Company resolved to implement a reserved capital increase and raiseEUR 59.2 million pursuant to the authorization granted to it by its shareholders during the extraordinary general meeting of 28 May 2014. On 10 November 2014 the he Company issued 200 million new ordinary shares having a par value of EUR 0.10 each, at a subscription price of EUR 0.296 per new share, for a global cash contribution of EUR 59.2 million, which were subscribed as follows: (i) 100,000,000 new shares were subscribed for a total subscription price of EUR 29,600,000 by ASPLEY VENTURES LIMITED, British Virgin Islands, an entity closely associated with Mr. Pavel Spanko, and (ii) 100,000,000 new shares were subscribed for a total subscription price of EUR 29,600,000 by FETUMAR DEVELOPMENT LIMITED, Cyprus, an entity closely associated with Mr. Jan Gerner. The new shares are not listed upon their issue, but the Company will seek to list them on the regulated markets of NYSE Euronext Paris and the Warsaw Stock Exchange as soon as reasonably practicable, subject to legal and regulatory requirements.

The corporate share capital of the Company has been increased from EUR 11,450,762.90 represented by 114,507,629 shares to EUR 31,450,762.90 represented by 314,507,629 shares. The total number of shares comprising the share capital of the Company as well as the total number of voting rights attached thereto is 314,507,629 as of 10 November 2014.Authorized capital not issued

The extraordinary general meeting of 17 February 2015 approved resolutions to modify, renew and replace the existingauthorized share capital and to set it to an amount of one hundred million euros (EUR 100,000,000.00) for a period of five (5) years from 17 February 2015, which has authorized the issuance of up to one billion (1,000,000,000) new ordinary shares inaddition to the 314,507,629 shares outstanding as of 17 February 2015.

The Company’s Board of Directors was granted an authorization to increase the Company’s share capital in accordance witharticle 32-3 (5) of the 1915 Luxembourg company law. The Board of Directors was granted full power to proceed with the capital increases within the authorized capital under the terms and conditions it will set, with the option of eliminating or limitingthe shareholders’ preferential subscription rights as to the issuance of new shares within the authorized capital.

The Board of Directors was authorized, during a period of five (5) years from the date of the extraordinary general meeting ofshareholders held on 17 February 2015, without prejudice to any renewals, to increase the issued capital on one or more occasions within the limits of the authorized capital. The Board of Directors was authorized to determine the conditions of any capital increase including through contributions in cash or in kind, among others, the conversion of debt into equity, by offsettingreceivables, by the incorporation of reserves, issue premiums or retained earnings, with or without the issue of new shares, orfollowing the issue and the exercise of subordinated or non-subordinated bonds, convertible into or repayable by orexchangeable for shares (whether provided in the terms at issue or subsequently provided), or following the issue of bondswith warrants or other rights to subscribe for shares attached, or through the issue of stand-alone warrants or any otherinstrument carrying an entitlement to, or the right to subscribe for, shares.

Securities giving access to equity (warrants)

Within the authorized capital, the Board of Directors decided to issue Bonds with Warrants (“OBSAR”) without preferential subscription rights:

“2012 Warrants” issued under the ISIN code LU0234878881 with the following major terms: number of outstanding 2012 Warrants: 21,161; exercise ratio: one warrant gives the right to subscribe to 1.03 share; exercise period: 31 December 2019; exercise price: EUR 7.21; listing: Euronext Paris.

“2014 Warrants” issued under the ISIN code XS0290764728 with the following major terms: number of outstanding 2014 Warrants: 2,871,021; exercise ratio: one warrant gives the right to subscribe to 1.73 share; exercise period: 31 December 2019; exercise price: EUR 11.20; listing: Euronext Brussels and Paris.

Under the Securities Note and Summary dated 22 March 2007, with respect to the issue of the 2014 Warrants, the occurrence of a Change of Control (as described in Condition 4.1.8.1.2.1 of the Securities Note and Summary dated 22 March 2007) could result in an aggregate potential liability for the Company due to “Change of Control Compensation Amount”. According to the Securities Note and Summary each 2014 Warrant would need to be repurchased by the Company at a price of EUR 6.29/ 2014 Warrant in the event of a Change of Control as at 31 December 2014. This “Change of Control Compensation Amount” per 2014 Warrant decreases as time goes by. Change of Control is defined as “the acquisition or control of more than 50 per cent of the voting rights of that entity or (b) the right to appoint and/or remove all or the majority of the members of the

3232 ORCO PROPERTY GROUP | Related party transactions

Board of Directors or other governing body of that entity, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise.” The Group holds 1,327,088 2014 Warrants.

The Change of Control Compensation Amount with respect to 2014 Warrants filed with their respective holders has been admitted in the Company’s Safeguard plan only in the amount of EUR 707,826.24. Accordingly, in the event that the Change of Control would occur, the Company will only pay those Change of Control claims linked with the Warrants 2014 that were admitted to the Company’s Safeguard.

14.2 Dividends per share

The Board of Directors has decided not to propose any dividend payment at the annual general meeting of the Company forthe year 2014.

15 Capital and other commitments

Capital commitments

As a developer of buildings and residential properties, the Group is committed to finalize the construction of properties in different countries. As at the end of June 2015 the Group has started to carry out one project and as such is committed to construction costs amounting to EUR 1.3 million. However, the Group holds interest in the Kosik joint venture with two active projects started in 2014 and 2015. The total commitments of these projects amount to EUR 14.3 million.

Bank loans covenants (see Note 11)

16 Related party transactions

Transactions with key management personnel

a) Remuneration of key management personnel

The members of the Board of Directors of the Company and of the management of the Company are considered the key management personnel of the Group. As of 30 June 2015, the top management was made of two people as six members have been terminated or resigned during the year 2014.

Total compensation given as short term employee benefits to the top managers for the first half of 2015 was EUR 0.1 million(EUR 0.4 million for the first half of 2014).

The Board and Committees attendance compensation for the first half of 2015 was EUR 36,000 (EUR 36,000 for the first half of 2014). The annual general meeting held on 28 May 2014 resolved to approve, with the effect as of 1 January 2014, the payment of attendance fees to all independent, non-executive Directors of the Company in the amount of EUR 3,000 per calendar month as a base fee and empowered the Board of Directors to decide at its sole discretion about the payment of additional fees up to EUR 3,000 per calendar month to independent, non-executive Directors of the Company.

b) Termination and change of control clauses

As at 30 June 2015, there are no potential termination indemnity payments in place payable to the members of the Company's management in the event of termination of their contracts in excess of the compensation as required by the respective labor codes. As at 30 June 2014, indemnities to some members of the management agreed in their respective contracts amounted to EUR 465,000.

c) Loans and advances to key management personnel

On 16 February 2007, the Company granted a loan of EUR 61,732 to Steven Davis, a former executive of the Company withmaturity date on 1 March 2008. In 2009, the loan was fully impaired as a result of a dispute on the termination of the employmentcontract of Steven Davis. As of the date hereof, litigation is pending in front of Luxembourg court. Bubny Development suedMr. Davis for damages in the amount of CZK 30,981,461. These litigations are pending as at 30 June 2015.

d) Other transactions with key management personnel

To ensure the liquidity for satisfaction of its future liabilities, the Company and Mr. Radovan Vitek entered on into a put option agreement 25 September 2014 concerning the disposal of the shares held by the Company in CPI PG. Pursuant to the termsof the put option agreement the Company has right to request Mr. Vitek, major shareholder of CPI PG, to purchase the CPIPG shares, or their portion, upon a written request of the Company. The put option price payable by Mr. Vitek to the Company

ORCO PROPERTY GROUP | Related party transactions 33

is EUR 0.47 per share plus 6% p.a. interest from today until the exercise of the put option. The Company is not limited by theput option agreement to dispose of the CPI PG shares to a third party and/or on a market. The put option agreement is validfor 2 years.

In 2014, the Company transferred 1 share to Jiri Dedera and Tomas Salajka each for free and while they hold the Board function. Further to the resignation of Mr. Salajka on 10 November 2014, 1 share was automatically transferred back to the Company.

Transactions with the Endurance Real Estate Fund

The Group is the sponsor of a Luxembourg regulated closed end umbrella investment fund dedicated to qualified investors,the Endurance Real Estate Fund. This fund has opted for the form of a “Fonds Commun de Placement”. The Company is theshareholder of the management company of the Fund and had an ownership interest of 14.8% in the Residential Sub-fund asat 30 June 2015.

Orco’s remuneration from Residential Sub-fund amounting to EUR 0.3 million in 2015 (EUR 0.7 million in 2014) is linked to:

- the liquidation fee for the Residential Sub-fund;

- the disposal fee calculated as 0.5% of the value of the assets sold.

As at 30 June 2015, open invoices for unpaid management fees owed by Endurance Fund to the management company are amounting EUR 0.15 million (nil in 2014). The total of invoices issued in 2014 by the management company to the sub-funds of the Endurance Fund, mainly composed of management fees and disposal fees, is amounting to EUR 0.3 million (2014: EUR 0.6 million).The net outstanding amount of receivables is EUR 0.4 million as at 30 June 2015 (EUR 0.1 million as at 31 December 2014).

During the midyear 2015, Residential Sub-fund distributed dividends to the Company in the amount of EUR 0.5 million (in 2014the Company´s income from Residential Sub-fund´s dividends was EUR 1.6 million).

Transactions with CPI PG group

Management Fees

CPI PG companies, affiliated with Mr. Radovan Vitek, have provided property management services to certain assets of theCompany in the Czech Republic. The value of such services amounted to EUR 6 thousand in the first half of 2015 (2014: EUR 0.1 million).

CPI PG companies are providing outsourcing services in the field of general administration, tax, accounting, reporting, human resources and IT to certain assets of the Company in the Czech Republic. The value of such services amounted to EUR 0.6 million in the first half of 2015 (2014: EUR 0.4 million).

In prior years, the Group has provided services to hospitality entities of which outstanding amount is EUR 0.9 million as at 31 December 2014. These services relate to IT, human resources and restructuring. The Group created allowance for these receivables in the amount of EUR 0.7 million.

Sale of SHH loan

On 11 June 2014 the Company entered into a transaction concerning the partial disposal of its stakes in Suncani Hvar, wherebyOPG disposed of 2,080,000 Suncani Hvar shares corresponding to 24.94% of the shares and voting rights and also of its shareholder receivables from SHH. Shares have been sold for EUR 1 and receivables have been sold for EUR 2.1 million. The opportunity to dispose of the Suncani Hvar stakes was mediated by CPI PG. However, CPI PG made no profit or other benefit out such mediation.

Loan by CPI PG

On 17 June 2014 the Company as borrower and CPI PG as lender entered into the credit facility agreement with the followingparameters: EUR 3.5 Million facility framework, repayment in 3 months and interest of 8% p.a. The parties agreed to extendthe maturity until 31 December 2015, the facility limit was extended to EUR 10.0 million, and the interest decreased to 5% p.a.As at 30 June 2015 the outstanding balance amounts to EUR 9.6 million.

3434 ORCO PROPERTY GROUP | Litigations

Capital increase

On 24 September 2014 the Company entered into an agreement for the subscription of 65,957,446 new ordinary shares issuedby CPI PG at the subscription price of EUR 0.47 per share, which is approximately 12% below the current market price of EUR0.53. The Company paid an aggregate subscription price of EUR 30,999,999.62 and the New Shares were issued by CPI PGon 24 September 2014.

New Notes guarantee

On 7 November 2014, the Company and CPI PG entered into a trust deed (the “Trust Deed”) pursuant to which CPI PG agreed to unconditionally and irrevocably guarantee the due and punctual payment of all sums from time to time payable by theCompany in relation to its Notes (registered under ISIN code XS0820547742), which were issued on 4 October 2012 andamended and restated pursuant to the Trust Deed. CPI PG has also undertaken in the Trust Deed to be bound by certainlimitations on its activities and to maintain certain financial ratios.

In consideration of CPI PG's entry into the Trust Deed and the guarantee given thereunder, the Company has agreed to payto CPI PG a guarantee fee of 3% per annum of the outstanding principal balance of the Notes, payable on a payment in kind(PIK) basis falling due on the business day after all amounts payable in connection with the Notes have been paid in full.

Transaction with Suncani Hvar

As part of the pre-bankruptcy reorganization proceedings of Suncani Hvar on 19 December 2014 the Group agreed to equitize its receivables in the amount of approximately EUR 1.58 million into newly issued Suncani Hvar shares as part of the pre-bankruptcy plan. In order to support Suncani Hvar the Group agreed on 19 December 2014 not to invoice its management fees from the date of initiating of the SHH pre-bankruptcy proceedings. On 22 April 2015 the Group also terminated the management agreement with SHH.

17 Litigations

On 28 December 2012, the Group filed a request for arbitration against the State Property Management Agency of the Republic of Croatia, also known as AUDIO, which is the legal successor to the Croatian Privatization Fund. Orco's preliminary claimsfor damages exceed EUR 32 million. The claims relate to underlying title disputes to properties on the island of Hvar in Croatiaheld through the Croatian company Suncani Hvar d.d. In 2013 AUDIO has transformed into the Croatian Centre forRestructuring and Sales (CERP) and the State Property Management Administration (DUUDI). On 19 December 2014 theCompany and the Republic of Croatia announced the signing of a memorandum of understanding concerning their stakes inSuncani Hvar d.d. The memorandum dealt with, inter alia, a mutual settlement of the ICC International Court of Arbitrationproceedings between the Company and the Republic of Croatia. Following a joint request, the arbitration proceedings werestopped by a consent award issued by the ICC International Court of Arbitration.

On 20 January 2015 the Company was served with a summons by Kingstown, claiming on former shareholders of the Company. The action was filed with the „Tribunal d´Arrondissement de et a Luxembourg“ and seeks condemnation of the Company, CPI PG and certain members of the Company´s board of directors as jointly and severally liable to pay damages in the amount of EUR 14,485,111.13 and compensation for moral damage in the amount of EUR 5,000,000. According to Kingstown´s allegation the damage claimed arose inter alia from the alleged violation of the Company´s minority shareholders rights. The management of the Company will take all available legal actions to oppose these allegations in order to protect the corporate interest as well as the interest of its shareholders.

ORCO PROPERTY GROUP | 35

18 Events after the reporting period

18.1 Early Termination of Safeguard Plan Accepted

Following the successful completion of various projects and transactions, as well as its reorganization and restructuring that took place in 2014 and 2015, the Company decided to request a termination of its Safeguard plan linked with an early repayment of those liabilities admitted to the Safeguard plan that became due. Towards this end, the Company filed on 19 June 2015 a request with the Paris Commercial Court (the “Court”) to modify its Safeguard plan.

On 19 August 2015, the Paris Commercial Court (the “Court”) pronounced a judgment pursuant to which the Court accepted Company’s request to modify its Safeguard plan as follows:

- Within fifteen days as of the pronouncement of the judgment, the Company is obliged to pay to the Safeguard administrator liabilities that are subject to and due under the Safeguard plan;

- The Safeguard administrator will proceed with the distribution of the funds received from the Company, after today’s judgmentbecomes final;

- Other liabilities that were admitted to the Safeguard, but are conditional or uncalled (such as uncalled bank guarantees, conditional claims of the holders of Warrants 2014 registered under ISIN code XS0290764728, provided that they were admitted to the Safeguard plan), will be paid according to their contractual terms.

- The duration of the Safeguard plan has been reduced to two months.

The liabilities to be paid based pursuant to the filed request amount to EUR 9,762,152 and include the remaining bond debt (EUR 4,375,934) as well as debts towards suppliers and called bank guarantees (EUR 5,386,218). Pre-Safeguard liabilities that were not admitted to the Company’s Safeguard will be unenforceable.

18.2 Disposal of Croatian entities

On 10 July 2015, the Group entered into an agreement concerning a disposal of a land bank project located at peninsula Istria, Croatia. The purchase price of this transaction is HRK 492 thousand.

On 21 August 2015, the Group disposed of the second project – residential building Sun House – located in city Hvar, Island of Hvar, Croatia. Transaction price of this asset is EUR 1.0 million.

18.3 Intent to List the Company Shares on Luxembourg Stock Exchange

The Company decided to apply for the admission to trading of its 314,507,629 ordinary shares, representing the entire share capital of the Company, on the regulated market of the Luxembourg Stock Exchange, which constitutes a regulated market for the purposes of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial. The admission to trading is subject to the approval of a prospectus by the Commission de Surveillance du Secteur Financier. The admission to trading is expected to occur in Q3 2015.

3636 ORCO PROPERTY GROUP |

Index of the notes to the condensed consolidated interim financial information

1 General information ........................................................................................................................................................ 8

1.1 Changes in the Group structure .......................................................................................................................... 8

2 Summary of significant accounting policies ............................................................................................................... 9

2.1 Basis of preparation ............................................................................................................................................. 9

2.2 Accounting policies .............................................................................................................................................. 9

2.3 Critical accounting estimates and judgments .................................................................................................... 9

3 Segment reporting ........................................................................................................................................................ 14

3.1 Segment Reporting - 30 June 2015 ................................................................................................................... 15

3.2 Segment Reporting - 30 June 2014 ................................................................................................................... 16

4 Investment property ..................................................................................................................................................... 17

5 Non-Current Financial assets ...................................................................................................................................... 19

5.1 Financial assets at fair value through Profit or Loss ...................................................................................... 19

5.2 Available-for-sale financial assets .................................................................................................................... 19

5.3 Non-current loans and receivables ................................................................................................................... 19

5.4 Equity method investments ............................................................................................................................... 20

6 Inventories ..................................................................................................................................................................... 20

7 Assets and liabilities classified as held for sale ........................................................................................................ 21

8 Cash and cash equivalents .......................................................................................................................................... 22

9 Non-controlling interest transactions ......................................................................................................................... 22

10 Financial debts .............................................................................................................................................................. 24

10.1 Bonds ................................................................................................................................................................... 24

10.2 Bank loans and other borrowings ..................................................................................................................... 25

10.3 Maturity of borrowings ....................................................................................................................................... 28

11 Loans with covenant breaches ................................................................................................................................... 29

12 Other net financial results ........................................................................................................................................... 29

13 Earnings per share ....................................................................................................................................................... 30

14 Equity holders ............................................................................................................................................................... 30

14.1 Share capital ........................................................................................................................................................ 30

14.2 Dividends per share ............................................................................................................................................ 32

15 Capital and other commitments .................................................................................................................................. 32

16 Related party transactions ........................................................................................................................................... 32

17 Litigations ...................................................................................................................................................................... 34

18 Events after the reporting period ................................................................................................................................ 35

18.1 Early Termination of Safeguard Plan Accepted .............................................................................................. 35

18.2 Disposal of Croatian entities .............................................................................................................................. 35

18.3 Intent to List the Company Shares on Luxembourg Stock Exchange ........................................................... 35

ORCO PROPERTY GROUP | consolidated interim financial information 37

Société Anonyme

Valuation process

Valuation techniques

Main observable and non-observable inputs

-

-

-

Changes in fair value by class and level

23,6

39 -

4,40

728

,046

-

1,38

61,

386

1,45

0 -

23,6

39

5,26

06,

710

4,40

7-

28,0

46

-

-

-

Operating lease

Finance lease

Operating lease

Finance lease

-

-

-

-

-

60,6918,5071,0324,946

45,52512,006

2,3686,978

45,72264,62620,78814,760

Bank loans - 45,428 5,285 14,467 65,180

Other borrowings - 55 - 17 72

Bank loans - current part 11,667 - - - 11,667

Other borrowings 1,890 - - - 1,890

Bank loans - 57,788 234,379 2,964 295,131


Bank loans - current part 273,008 - - - 273,008

Other current borrowings 33 - - - 33

-

-

-

- 35

2,627 -

86,995 -

- 4,669

- 15,557

- 128,795

599 23,731

- 93

28,285 -

2,435 -

905 27,628

29 111,305

- 361,750

1,244 362,668

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Share capital

Authorized capital not issued

12 months 12 monthsNote 2013 2012

(restated)Revenue 5 145,896 244,708

Sale of goods 45,722 140,687 Rent 64,626 66,074 Hotels, Extended Stay & Restaurants 20,788 19,305 Services 14,760 18,641

Net loss from fair value adjustments on Investment Property 8 (34,444) (7,086)

Other operating income 22 1,458 9,473 Net result on disposal of assets 15 88 1,399 Cost of goods sold 5/14 (38,437) (141,071)Employee benefits 24 (23,620) (26,736)Amortization, impairments and provisions 23 (166,812) (50,598)Other operating expenses 24 (48,446) (53,819)


Interest expenses 19 (37,382) (63,960)Interest income 4,114 3,812 Foreign exchange result (4,282) 6,476 Other net financial results 25 (39,693) 54,425

Financial result (77,242) 755

Share of profit or loss of entities accounted for using the equity method 10 (413) (12,948)


Income taxes 26 (10,449) (9,558)


Loss after tax from discontinued operations 6 (1,127) (1,466)


Total loss attributable to:

Non-controlling interests 18 (26,523) (5,064)


Basic earnings in EUR per share 27 (2.06) (0.82)Diluted earnings in EUR per share 27 (2.06) (0.82)


(restated)

Loss for the period (253,550) (46,948)

Other comprehensive income /(loss)

Items that may be reclassified subsequently to profit or loss (11,560) 7,408Currency translation differences (11,560) 7,408

I tems that will not be reclassified subsequently to profit or loss 16 (1,529)Remeasurements of post employment benefit obligations 16 (1,529)

Total comprehensive loss attributable to: (265,094) (41,069)

Owners of the Company (238,474) (35,699)Non-controlling interests (26,620) (5,370)

31 December 31 December

Note2013 2012

(restated)

NON-CURRENT ASSETS 890,573 1,048,079 7 46,414 47,338

Investment property 8 710,552 782,731

Property, plant and equipment 73,949 101,882 Hotels and owner occupied buildings 9 61,639 88,738 Fixtures and fittings 12 12,310 13,145

10 93 8,909

13.1 28,285 32,919

13.2 2,435 9,466

13.3 28,533 64,482

Deferred tax assets 26 313 353

252,156 332,743 Inventories 14 114,720 262,130 Trade receivables 19,962 22,343 Other current assets 16 28,776 24,579 Derivative instruments 19.7 29 20 Current financial assets - 37 Cash and cash equivalents 17 88,669 23,633

11 29,116 6,736

TOTAL 1,171,845 1,387,557

ASSETS

ASSETS HELD FOR SALE

CURRENT ASSETS

Intangible assets

Financial assets at fair value through profit or loss

Non current loans and receivables

Financial assets available-for-sale

Equity method investments

31 December 31 December2013 2012

(restated)

EQUITY 263,117 442,290 Equity attributable to owners of the Company 28 175,909 438,493

Non controlling interests 18 87,208 3,797

LIABILITIES 908,728 945,267 Non-current liabilities 491,269 601,795

Bonds 19 64,992 59,193 Financial debts 19 295,304 408,196 Provisions and other long term liabilities 20 23,436 34,397 Deferred tax liabilities 26 107,537 100,009

Current liabilities 389,737 333,680 Current bonds 19.4 321 261 Financial debts 19.4 273,041 222,879 Trade payables 21 22,425 25,570 Advance payments 33,887 32,554 Derivative instruments 19.7 1,244 6,446 Other current liabilities 21 58,819 45,970

Liabilities linked to assets held for sale 11 27,722 9,792

TOTAL 1,171,845 1,387,557

EQUITY & LIABILITIES

Note Sharecapital

Sharepremium

Translationreserve

Treasuryshares

Otherreserves

Equity attributable

to ownersof the

Company

Noncontrolling

interests

Totalequity

Balance at 1 January 2012 (reported) 69,921 418,688 14,041 (22,813) (220,305) 259,532 11,666 271,198

Effect of change in consolidation method 16,146 16,146 (3,264) 12,881

Adoption of revised IAS 19 (25) (25) (1) (26)

Balance at 1 January 2012 (restated) 69,921 418,688 14,041 (22,813) (204,185) 275,652 8,401 284,054

Comprehensive income:

Loss for the period (41,883) (41,883) (5,064) (46,948)

Other comprehensive income 7,683 (1,499) 6,184 (305) 5,879

Total comprehensive income - - 7,683 - (43,382) (35,699) (5,370) (41,069)

Capital increase of 14 May 2012 28 75,283 710 (22,744) 53,249 53,249

Capital increase of 3 September 2012 28 264,767 225,150 (367,221) 122,696 122,696

Capital increase of 28 September 2012 28 32,177 949 (10,366) 22,760 22,760

Own equity transactions 27 20,943 (23,653) (2,710) (2,710)

Non controlling interests' transactions 18 2,544 2,544 766 3,310

Balance at 31 December 2012 (restated) 442,148 645,497 21,724 (1,870) (669,007) 438,493 3,797 442,290

Comprehensive income:

Loss for the period (227,027) (227,027) (26,523) (253,550)

Other comprehensive income (11,457) 10 (11,447) (97) (11,544)

Total comprehensive income - - (11,457) - (227,017) (238,474) (26,620) (265,094)

Capital decrease of 4 February 2013 28 (226,466) 226,466 - -

Capital increase of 28 August 2013 28 13,333 1,667 15,000 15,000

Own equity transactions 27 1,639 614 2,253 2,253

Non controlling interests' transactions 18 (41,362) (41,362) 110,031 68,669

Balance at 31 December 2013 229,015 647,164 10,267 (231) (710,307) 175,909 87,208 263,117

31 December2013

31 December2012

(restated)

OPERATING RESULT (164,318) (23,730)

Net gain / loss from fair value adjustments on investment property 8 34,444 7,086Amortization, impairments and provisions 23 166,812 50,598Net result on disposal of assets 15 (88) (1,399)Adjusted operating profit / loss 36,850 32,555

Financial result 25 (490) (1,607)Income tax paid 26 (4,600) (875)Financial result and income taxes paid (5,090) (2,482)

Changes in operating assets and liabilities (7,058) 112,245

NET CASH FROM /(USED IN) OPERATING ACTIVITIES 24,702 142,318

Capital expenditures and tangible assets acquisitions 5, 8, 12 (4,957) (3,814)Proceeds from sales of non current tangible assets 8, 11 6,993 82,246Purchase of intangible assets 7 (201) (865)Purchase of financial assets (347) -Loans granted to joint ventures and associates 13.3 (4,239) -Deferred consideration repayment received from long-term receivables 13.3 634 2,897Proceeds from disposal of associates 13.1 8,742 -Proceeds from disposal of financial assets 13.1 1,986 -

NET CASH FROM INVESTING ACTIVITIES 8,611 80,464

Net issue of equity instruments to shareholders / Repayment on third party transactions - (1,525)

Proceeds from issuance of ordinary shares 15,000 -Proceeds from third parties in subsidiary capital increase 28 53,862 -Proceeds on disposal of treasury shares 27 2,253 (882)Proceeds on disposal of partial interests in a subsidiary 8,216 -Proceeds from borrowings 19.3, 19.4 17,236 274,949Net interest paid 19.8 (23,546) (35,631)Repayments of borrowings 19.3, 19.4 (35,682) (462,564)Restructuring fees (4,823) (6,733)

NET CASH USED IN FINANCING ACTIVITIES 32,516 (232,386)

NET INCREASE/(DECREASE) IN CASH 65,829 (9,604)

Cash and cash equivalents at the beginning of the year 23,633 32,849Exchange difference on cash and cash equivalents (794) 388

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 88,669 23,633

2.1.3.1 New and amended standards adopted by the Group in 2013

2.1.3.2 New standards and interpretations not yet adopted

2.1.3.3 Change in consolidation method for joint ventures

2.1.3.4 Adoption of IAS 19 (2011)

2.1.3.5 Effect of changes in accounting policies

-

-

-

Operating lease

Finance lease

Operating lease

Finance lease

-

-

-

At 31 December 2013

Less than 1 month

Between 1 and 6 months

Between 6 months and 1

year

Between 1 and 5 years

More than 5 years

TotalCash-out

Flows

Book value at 31 December

2013

Fixed rate loans and bonds 9,036 2,151 7,168 96,032 2,761 117,148 80,198Floating rate loans 220,348 - 38,391 335,132 3,366 597,237 553,254Other borrowings - - 33 173 - 206 206Interest rate derivatives - - 1,244 - - 1,244 1,244Liabilities linked to assets held for sale - - 27,722 - - 27,722 27,722Trade payables 15,394 2,297 4,734 - - 22,425 22,425Other current financial liabilities 11,783 8,051 13,161 - - 32,994 32,994

Total at 31 December 2013 256,561 12,499 92,453 431,337 6,127 798,976 718,043

-

-

-

At 31 December 2012

Less than 1 month


Between 6 months and 1

year

Between 1 and 5 years

More than 5 years

TotalCash-out

Flows

Book value at 31 December

2012

Fixed rate loans and bonds - 1,471 7,244 100,744 11,550 121,009 74,235Floating rate loans 145,124 - 72,418 440,085 4,018 661,645 610,347Other borrowings - - 155 - 5,792 5,947 5,947Interest rate derivatives - - 6,446 - - 6,446 6,446Liabilities linked to assets held for sale - - 9,792 - - 9,792 9,792Trade payables 3,694 8,814 13,062 - - 25,570 25,570Other current financial liabilities 5,962 9,437 11,553 - - 26,952 26,952

Total at 31 December 2012 154,780 19,722 120,670 540,829 21,360 857,361 759,289

31 December 31 December2013 2012 (restated)

Non current liabilitiesFinancial debts 295,304 408,196 Current liabilitiesFinancial debts 273,041 222,879 Current assetsCurrent financial assets - (37)Liabilities linked to assets held for sale 27,722 9,792 Cash and cash equivalents (88,669) (23,633)

Net debt 507,398 617,197 Investment property 710,552 782,731 Hotels and owner-occupied buildings 61,639 88,738 Investments in equity affiliates 93 8,909 Financial assets at fair value through profit or loss 28,285 32,919 Financial assets available-for-sales 2,435 9,466 Non current loans and receivables 28,533 64,482 Inventories 114,720 262,130 Assets held for sale 29,116 6,736 Revaluation gains / (losses) on projects and properties 2,842 32,813

Fair value of portfolio 978,215 1,288,923

Loan to Value 51.9% 47.9%

Bonds and New Notes and accrued interests on New Notes 66,556 59,808

Loan to value after bonds and New Notes 58.5% 52.5%

Valuation process

-

-

o

o

o

Main observable and non-observable inputs

Per rate type Min Max Min Max Min MaxDiscount rate 6.0% 20.0% 5.5% 14.3% 5.3% 17.0%Capitalization yield 6.5% 16.0% 7.0% 15.3% 5.4% 19.1%Cap rate 6.0% 15.0% 5.6% 18.0% 5.3% 17.0%

Per asset typeMin Max Min Max Min Max

Hospitality 6.5% 9.0% 7.5% 15.0% 10.0% 20.0%Land bank 16.0% 16.0% 15.0% 15.0% 18.0% 18.0%Berlin portfolio NA NA 6.0% 8.3% 6.0% 9.4%Central Europe portfolio AHD 9.6% 13.0% 8.5% 13.0% 10.0% 10.0%Central Europe portfolio Rental 7.3% 15.0% 7.3% 15.0% 8.0% 8.0%

2011

Discount rate

2013 2012

Capitalization yield Cap Rate

-

-

-

-

-

Figures in EUR Million

Investment Properties

DR - 25 bps DR + 25 bps ECR - 25 bps ECR + 25 bps EY - 25 bps EY + 25 bpsBerlin Portfolio 9.9 (9.7) 9.6 (9.0) - -Central Europe 0.5 (0.5) 0.4 (0.4) 3.6 (3.3)Total 10.4 (10.2) 10.0 (9.4) 3.6 (3.3)DR : Discount rate, ECR : Exit Capitalization Rate, EY : Equivalent Yield

Inventories

DR - 25 bps DR + 25 bps ECR - 25 bps ECR + 25 bps EY - 25 bps EY + 25 bps

Poland - - - - 5.7 (4.9)Total - - - - 5.7 (4.9)DR : Discount rate, ECR : Exit Capitalization Rate, EY : Equivalent Yield

Owner-occupied building & Hotels - Portfolio consolidated under equity method and presented here at 100%

DR - 25 bps DR + 25 bps ECR - 25 bps ECR + 25 bps EY - 25 bps EY + 25 bps

Central Europe 1.9 (1.8) 1.8 (1.6) - -Total 1.9 (1.8) 1.8 (1.6) - -DR : Discount rate, ECR : Exit Capitalization Rate, EY : Equivalent YieldPortfolio Croatia is not published as the Suncani Hvar portfolio is presented under transaction value

Equivalent Yield

Equivalent Yield

Equivalent Yield

Portfolio - Investment Properties Discount Rate Exit Cap Rate

Portfolio - Hotels and Owner Occupied - Central Europe

Discount Rate Exit Cap Rate

Portfolio - Inventories Discount Rate Exit Cap Rate

Changes in fair value by class and level

3,695

-

-

-

-

31 December 2013 Financial assets & liabilities measured

at fair value

Financial assets & liabilities not

measured at fair value (*)

Balance Sheet Level 1 Level 2 Level 3

Financial assets

Investments in joint ventures - 93 93Equity method investments - 93 93

Investment in Endurance Fund 1,077 - 1,077 - - 1,077PPL granted to the Hospitality Joint venture 27,015 - 27,015 - - 27,015Long-term Equity investments 193 - 193 - - 193Financial assets at fair value through profit or loss (***) 28,285 - 28,285

Radio Free Europe promissory note 2,387 - 2,387 - - 2,387Other financial assets available-for-sale 48 - 48 - - 48Financial assets available-for-sale 2,435 - 2,435

Leipziger Platz deferred consideration - 22,597 22,597Molcom deferred consideration 905 0 905 - 905 -Loan granted to the Uniborc joint venture - 4,239 4,239Other - 792 792Non current loans and receivables 905 27,628 28,533

Trade and other receivables - 48,738 48,738Trading derivatives 29 - 29 - 29 -Cash and cash equivalent - 88,669 88,669Current financial assets 29 137,407 137,436


New Notes - 63,102 63,102 - 61,728 -Safeguard bonds - 1,891 1,891 - - 1,891Floating rate bank debts - 294,520 294,520 - - 294,520Fixed rate bank debts (**) - 611 611 - - 671Other borrowings - 173 173 - - 173Long term liabilities - 1,453 1,453Non current financial liabilities - 361,750 361,750

Safeguard bonds - 321 321 - - 321Floating rate bank debts - 258,734 258,734 - - 258,734Fixed rate bank debts (**) - 14,274 14,274 - - 16,715Other borrowings - 33 33 - - 33Trading derivatives 1,244 - 1,244 - 1,244 -Advanced payments - 33,887 33,887Trade payables and Other current liabilities - 55,419 55,419

Current financial liabilities 1,244 362,668 363,911


31 December 2012 (restated) Financial assets & liabilities measured

at fair value

Financial assets & liabilities not

measured at fair value (*)

Balance Sheet Level 1 Level 2 Level 3

Financial assets

Investments in joint ventures - 171 171Investments in associates - 8,738 8,738Equity method investments - 8,909 8,909

Investment in Endurance Fund 2,284 - 2,284 - - 2,284PPL granted to the Hospitality Joint venture 30,441 - 30,441 - - 30,441Long-term Equity investments 194 - 194 - - 194Financial assets at fair value through profit or loss (***) 32,919 - 32,919

Radio Free Europe promissory note 9,407 - 9,407 - - 9,407Other financial assets available-for-sale 59 - 59 - - 59Financial assets available-for-sale 9,466 - 9,466

Leipziger Platz deferred consideration - 26,861 26,861Molcom deferred consideration - 36,793 36,793Other - 827 827Non current loans and receivables - 64,482 64,482

Trade and other receivables - 46,923 46,923Trading derivatives 20 - 20 - 20 -Others current financial assets 37 - 37 - 37 -Cash and cash equivalent - 23,633 23,633Current financial assets 56 70,556 70,612


New Notes - 57,156 57,156 - 61,509 -Safeguard bonds - 2,036 2,036 - - 1,075Floating rate bank debts - 392,805 392,805 - - 392,805Fixed rate bank debts (**) - 9,599 9,599 - - 13,109Other borrowings - 5,792 5,792 - - 5,792Long term liabilities - 12,710 12,710Non current financial liabilities - 480,099 480,099

Safeguard bonds - 261 261 - - 261Floating rate bank debts - 217,542 217,542 - - 217,542Fixed rate bank debts (**) - 5,182 5,182 - - 4,780Other borrowings - 155 155 - - 155Trading derivatives 6,446 - 6,446 - 6,446 -Advanced payments - 32,554 32,554Trade payables and Other current liabilities - 52,522 52,522

Current financial liabilities 6,446 308,215 314,661



TOTAL

Revenue 46,517 99,379 145,896

Sale of goods 45,573 149 45,722Rent 343 64,283 64,626Hotels, Extended Stay & Restaurants 66 20,722 20,788Services 534 14,226 14,760

Net gain or loss from fair value (3,422) (31,022) (34,444)adjustments on investment propertyCost of goods sold (36,542) (1,895) (38,437)Impairments - Allowance (139,127) (38,434) (177,561)Impairments - Write-Back 614 847 1,461Amortization and provisions 2,534 6,755 9,289Other operating results (10,774) (59,747) (70,521)

Operating Result (140,201) (24,117) (164,318)

Net gain or loss from fair valueadjustments on investment property

3,422 31,022 34,444

Impairments - Allowance 139,127 38,434 177,561Impairments - Write-Back (614) (847) (1,461)Amortization and provisions (2,534) (6,755) (9,289)Net result on disposal of assets (531) 443 (88)

Adjusted EBITDA (1,330) 38,180 36,850


(219) (194) (413)


Profit & Loss31 December 2013

Share of profit or loss of entities accounted for using the equity method


TOTAL

Segment Assets 139,804 775,996 915,799

Investment Property 20,886 689,666 710,552Property, plant and equipment - 61,639 61,639Inventories (*) 114,400 - 114,400Assets held for sale 4,425 24,691 29,116Equity method investments 93 - 93

Unallocated assets 256,046Total Assets 1,171,845

Segment Liabilities 10,388 17,334 27,722

Liabilities linked to assets held for sale 10,388 17,334 27,722

Unallocated liabilities 881,006Total Liabilities 908,728



Development Property TOTAL

Direct operating expenses arising frominvestment property that :

- generated rental income (34) (36,307) (36,341)- did not generated rental income (62) (210) (272)

Balance Sheet & Cash Flow31 December 2013

Direct Operating Expenses

Development Property Investments TOTAL

Revenue 146,467 98,239 244,706

Sale of goods 140,514 173 140,687Rent 4,092 61,983 66,075Hotels, Extended Stay & Restaurants 3 19,303 19,306Services 1,860 16,782 18,642

Net gain or loss from fair value 1,234 (8,320) (7,086)adjustments on investment propertyCost of goods sold (139,385) (1,685) (141,070)Impairments - Allowance (35,014) (9,223) (44,237)Impairments - Write-Back 486 1,066 1,552Amortization and provisions (4,673) (3,241) (7,914)Other operating results (19,299) (50,383) (69,682)

Operating Result (50,183) 26,452 (23,731)

Net gain or loss from fair valueadjustments on investment property

(1,234) 8,320 7,086

Impairments - Allowance 35,014 9,223 44,237Impairments - Write-Back (486) (1,066) (1,552)Amortization and provisions 4,673 3,241 7,914Net result on disposal of assets (1,274) (125) (1,399)

Adjusted EBITDA (13,491) 46,046 32,555

Financial Result 755

(3,857) (9,091) (12,948)


Profit & Loss31 December 2012 (restated)

Share of profit or loss of entities accounted for using the equity method


Segment Assets 288,893 858,652 1,147,545

Investment Property 24,846 757,885 782,731Property, plant and equipment - 88,738 88,738Inventories (*) 258,590 1,841 260,431Assets held for sale 5,286 1,450 6,736Equity method investments 171 8,738 8,909

Unallocated assets 240,012Total Assets 1,387,557

Segment Liabilities 9,792 - 9,792

Liabilities linked to assets held for sale 9,792 - 9,792

Unallocated liabilities 935,475Total Liabilities 945,267




Direct operating expenses arising frominvestment property that :

- generated rental income (121) (32,721) (32,842)- did not generated rental income (105) (350) (455)

Direct Operating Expenses

Balance Sheet & Cash Flow31 December 2012 (restated)


(restated)Revenue - -

Net gain or loss from fair value adjustments on investment property (185) (428)

Other operating expenses (23) (14)

Operating result (208) (442)

Interest expenses (723) (765)Other net financial results (196) (259)

Financial result (919) (1,025)

Profit or loss before income taxes (1,127) (1,466)

Income taxes (1) 0

Profit / (loss) of the Company after tax from discontinued operations (1,127) (1,466)

Total profit or loss attributable to:

Non controlling interests (282) (367)

Owners of the Company (846) (1,100)

Basic earnings in EUR per share (0.01) (0.02)Diluted earnings in EUR per share (0.01) (0.02)

Freeholdbuildings

Extendedstay hotels

Land bank TOTAL

Czech Republic (17,437) (7,077) (2,281) (26,795)Germany 25,403 - (805) 24,598Poland (1,793) - 110 (1,683)Croatia - - (1,382) (1,382)Hungary (24,405) - - (24,405)Slovakia (4,888) - - (4,888)Luxembourg 110 - - 110

Balance at 31 December 2013 (23,010) (7,077) (4,357) (34,444)

20132012

(restated)Joint ventures 93 171 Associates - 8,738 At 31 December 93 8,909

20132012

(restated)Joint ventures (413) (3,857) Associates - (9,091) At 31 December (413) (12,948)

20132012

(restated)At 1 January 171 4,421 Additions 62 - Share of profit /(loss) (413) (3,857) Other comprehensive income 196 (393) Disposals (64) - At 31 December (49) 171 Provisions recognised for joint ventures with a negative net asset value (142) - Carrying amount at 31 December 93 171

December December December December2013 2012 2013 2012

(restated) (restated)

Opening Balance 6,736 24,129 Opening Balance 9,792 15,890

Asset sales (600) (19,489) Repayment of loans - (15,890)Transfers to 24,690 6,736 Transfers to 17,930 9,792Transfers from (1,450) (1,528) Transfers from - -Variations (185) - Variations - -Scope Exit - (3,150) Scope Exit - -Translation differences (75) 38 Translation differences - -

Closing Balance 29,116 6,736 Closing Balance 27,722 9,792

Liabilities linked to assetsheld for sale

Assets held for sale

-

-

-

-

-

-

Gross amount Amortisation and Impairments

Net amount

Balance at 1 January 2012 (restated) 22,568 (9,121) 13,447Increase 1,520 - 1,520Assets sales and scraps (1,663) 1,033 (630)Allowance - Write-back - (1,655) (1,655)Translation difference 803 (342) 461

Balance at 31 December 2012 (restated) 23,228 (10,083) 13,145

Increase 1,660 - 1,660Assets sales and scraps (1,201) - 1,046 (155)Allowance / Write-back - (3,126) (3,126)Transfer (0) 976 976Translation difference (551) 362 (189)

Balance at 31 December 2013 23,136 (10,825) 12,310

Balance as at31 December 2012

(restated)

Variation Impairments Transfer Translationdifferences

Balance as at 31 December 2013

Prepayment tax and social security 2,099 4,305 - 9 (44) 6,368Operating loans 92 4 - 9 (0) 105Accrued assets 17,051 895 - 799 (389) 18,355Other current assets 3,752 (181) (391) 571 (42) 3,710Accrued interests 1,285 1,232 - (2,305) (23) 188Advance payment for work in progress 301 (236) - (7) (9) 50

Total other current assets 24,579 6,019 (391) (925) (507) 28,776

-

-

-

Balance as at1 January 2012

(restated)

Variation Impairments Transfer Translationdifferences

Balance as at31 December 2012

(restated)

Prepayment tax and social security 893 1,166 - (26) 66 2,099Operating loans 116 (31) - 0 7 92Accrued assets 21,957 (5,081) - (2) 177 17,051Other current assets 7,157 (2,842) (713) 11 139 3,752Accrued interests 1,769 1,189 - (1,697) 23 1,285Advance payment for work in progress 390 (107) - - 18 301

Total other current assets 32,282 (5,707) (713) (1,714) 431 24,579

Non-current bonds

Convertible bonds Non Convertible bonds and New Notes

Total

Balance at 1 January 2012 (restated) 64,383 98,995 163,378

Reclassification from convertible to non convertible bonds (64,383) 64,383 -Sales Own bonds 3,059 3,059Interest Safeguard Bonds 25,382 25,382Interest New Notes 2,049 2,049Transfer from short term to long term 122,248 122,248Transfer from long term to short term (261) (261)Redemption premium OG bonds 25,025 25,025Coupon capitalized OG bonds 4,004 4,004Exchange of 84.5 % of OG bonds at book value (109,129) (109,129)Conversion as at 03.09.2012 into New Shares (89.90%) (190,693) (190,693)Exchange as at 04.10.12 against New Notes (40,977) (40,977)Recognition of New Notes 55,108 55,108

Balance at 31 December 2012 (restated) - 59,193 59,193

Interest on Safeguard Bonds 413 413Interest on New Notes 10,561 10,561Transfer from long term to short term on Safeguard Bonds (321) (321)Transfer of accrued interest on New Notes (3,636) (3,636)Repayment on New Notes (420) (420)Others (799) (799)

Balance at 31 December 2013 - 64,992 64,992

Description ISIN CODE Number of bonds

Book value per Bond

Total value of bonds

Nominal value per Bond

Total Nominal value of

bonds

% of nominal

SHH Bonds XS0223586420 8,843 14 123,271 26 230,183 17%

Convertible bonds 2006-2013 FR0010249599 106 333 35,298 686 72,727 19%

Czech Bond CZ0000000195 7 217,548 1,522,836 366,367 2,564,569 23%

Convertible bonds 2006-2013 FR0010333302 6,381 74 470,599 138 880,578 22%

OBSAR 2 XS0291838992 �/ XS0291840626 74 688 50,912 1,464 108,329 21%

OBSAR OG XS0302623953 62 700 43,400 676 41,912 8%

Total 15,473 2,246,316 3,898,297 18%

Non-current liabilities - Financial debts Bank loan Other non-current borrowings Total

Balance at 1 January 2012 (restated) 182,720 10,992 193,712

Issue of new loans and drawdowns 274,510 131 274,641Repayments of loans (555) (2,954) (3,509)Scope exit - (945) (945)Repayments upon sales (40,372) - (40,372)Transfers (18,493) (2,325) (20,818)Translation differences 4,594 893 5,487

Balance at 31 December 2012 (restated) 402,404 5,792 408,196

Issue of new loans and drawdowns 4,745 40 4,785Repayments of loans (3,635) (8,026) (11,661)Merger - 1 1Transfers (103,136) 2,563 (100,573)Translation differences (5,248) (196) (5,444)

Balance at 31 December 2013 295,130 174 295,304

-

-

-

-

-

-

Current liabilities - Financial debts and Liabilities linked to assets held for sale

Long-term Debt - current part

Other current borrowings

Bank loans and Other borrowings linked to

assets held for sale

Total

Balance at 1 January 2012 (restated) 619,646 369 8,062 628,077

Issue of new loans and drawdowns 439 148 - 587

Repayments of loans (307,405) (388) (8,062) (315,855)

Repayments upon sales (102,828) - - (102,828)

Scope exit (5,103) - - (5,103)

Transfers 12,714 - 6,844 19,558

Translation differences 5,261 26 - 5,287

Balance at 31 December 2012 (restated) 222,724 155 6,844 229,723

Issue of new loans and drawdowns 9,693 2,758 - 12,451Repayments of loans (43,983) (80) - (44,063)Transfers 87,223 (2,801) 16,080 100,502Translation differences (2,649) 1 - (2,648)

Balance at 31 December 2013 273,008 33 22,924 295,965

-

-

-

-

-

-

-

At 31 December 2013 Note Less than one year


Total Unaccrued liabilities

Bonds 19.3 - 36,525 26,576 1,891 64,992 17,272

Financial debts 19.3 - 57,961 234,379 2,964 295,304Bank loans - 57,788 234,379 2,964 295,131

Bank loans fixed rate - 11 600 - 611Bank loans floating rate - 57,777 233,779 2,964 294,520


Sub-total - Non current - 94,486 260,955 4,855 360,296

Current bonds 19.4 321 - - - 321

Financial debts 19.4 273,041 - - - 273,041Bank loans - current part 273,008 - - - 273,008

Bank loans fixed rate 14,274 - - - 14,274Bank loans floating rate 258,734 - - - 258,734

Other current borrowings 33 - - - 33

6/11 22,924 - - - 22,924Bank loans 20,464 - - - 20,464Other borrowings 2,460 - - - 2,460


Total 296,286 94,486 260,955 4,855 656,582(*) Includes only the financial debts.

Borrowings linked to liabilties held for sale (*)

Note Less than one year


Total Unaccrued liabilities

Bonds 19.3 - 14,011 43,144 2,038 59,193 19,380

Financial debts - 44,166 347,257 16,773 408,196

Bank loans 19.3 - 44,166 347,257 10,981 402,404

Bank loans fixed rate - 1,060 1,073 7,466 9,599 Bank loans floating rate - 43,106 346,184 3,515 392,805

Other non-current borrowings - - - 5,792 5,792

Sub-total - Non current - 58,177 390,401 18,811 467,389

Current bonds 19.4 261 - - - 261

Financial debts 222,879 - - - 222,879

Bank loans - current part 19.4 222,724 - - - 222,724

Bank loans fixed rate 5,182 - - - 5,182

Bank loans floating rate 217,542 - - - 217,542 Other current borrowings 155 - - - 155

6/11 6,844 - - - 6,844 Bank loans 4,349 - - - 4,349 Other borrowings 2,495 - - - 2,495


Total 229,984 58,177 390,401 18,811 697,373 (*) Includes only the financial debts.

At 31 December 2012 (restated)

Borrowings linked to liabilties held for sale (*)

Principal Accrued Interest

Total Principal Accrued Interest

Total

Long-term loans presented in short-term 68,934 851 69,785 - - -

due to Non repayment 9,036 - 9,036 - - - due to Administrative breach (*) 59,898 851 60,749 - - -

Short-term loans in breach 160,449 8,525 168,974 136,945 1,623 138,568due to Financial covenant breach (**) 29,833 87 29,920 25,237 100 25,337due to Non repayment 130,616 8,438 139,054 96,526 797 97,323due to Financial and administrative breach and/or non repayment (*) (**) - - - 15,182 726 15,908

20,464 - 20,464 4,349 - 4,349

Total Loans in Breach 249,847 9,376 259,223 141,294 1,623 142,917

(*) Financial covenant is a standard for the financial strength and performance of the borrower.(**) Administrative covenant requires the borrower to fulfill certain conditions or which forbids the borrower from undertaking certain actions.

At 31 December 2013 At 31 December 2012 (restated)

Total loans linked to assets held for sale

31 December 2013 31 December 2012(restated)

Interest rate derivatives - current assets 29 20

Interest rate derivatives - current liabilities (1,244) (6,446)

Net derivatives (1,215) (6,426)

At 31 December 2012

(restated)

Scope Exit Variation Allowance Write-Back Transfer FX adjust. At 31 December 2013

Retirement obligations 10,810 - (140) - - - - 10,670Other provisions 10,877 (14) - 3,012 (2,840) 340 (61) 11,314Other long term liabilities 12,710 - 144 - - (11,089) (313) 1,453

Total provisions and other long term liabilities 34,397 (14) 4 3,012 (2,840) (10,749) (374) 23,436

At 1 January 2012

(restated)

Variation Allowance Write-Back Transfer FX adjust. At 31 December 2012

(restated)

Retirement obligations 9,083 1,727 - - - - 10,810Other provisions 3,962 - 7,941 (1,124) 42 55 10,877Other long term liabilities 1,280 11,264 - - (21) 188 12,710

Total provisions and other long term liabilities 14,326 12,990 7,941 (1,124) 21 243 34,397

2013 2012 (restated)

Beginning of the year 10,810 9,083

Interest cost 335 408

Actuarial gains(losses) (16) 1,739

Benefits paid (459) (420)

End of the year 10,670 10,810

31 December 2013 31 December 2012

Discount rate 3.26% 3.17%

Future salary increases n.a n.a

Future pension increases 2.00% 2.00%

Defined benefit obligation as of December 2013 10 670

Significant actuarial assumptions as of December 2013

Parameters Original value

Sensitivity analysis

Effect on DBO

Discount rate 3,26% 0,09% 10 792Discount rate 3,26% -0,09% 10 549

Less than1 month


Between 6 months and

1 year

TOTAL

Financial debts & Current bonds 191,073 13,282 69,007 273,362Trade payables 15,721 2,297 4,407 22,425Advance payments 246 2,561 31,080 33,887Derivative instruments - - 1,244 1,244Other current liabilities 11,782 8,051 38,987 58,819

31 December 2013 218,822 26,191 144,725 389,737

Other current liabilities as at December 2013 58,819

Other non-financial current liabilities 25,825of which Tax and income tax 18,093of which Social & Payroll 2,066of which Provisions 5,667

Other financial current liabilities 11,782 8,051 13,161 32,993

Less than1 month


Between 6 months and

1 year

TOTAL

Financial debts & Current bonds 56,264 108,746 58,130 223,140Trade payables 4,015 8,814 12,741 25,570Advance payments 2,474 4,697 25,383 32,554Derivative instruments 6,446 - - 6,446Other current liabilities 24,620 9,437 11,913 45,970

31 December 2012 (restated) 93,819 131,694 108,167 333,680

Other current liabilities as at December 2012 45,970

Other non-financial current liabilities 19,018of which Tax and income tax 11,834of which Social & Payroll 1,986of which Provisions 5,198

Other financial current liabilities 5,602 9,437 11,913 26,952

31 December 2013 31 December 2012 Variation Notes(restated)

Provisions for pension scheme - 11 (11) 20Provisions for other risks and charges (172) (4,863) 4,690 20

Total Provisions (172) (4,851) 4,679

Impairment of Intangible Assets (53) (610) 557 7Impairment of Hotels and owner occupied buildings (25,551) (7,014) (18,537) 9Impairment of Fixtures and Fittings (850) 300 (1,150) 12Impairment of Inventories (133,012) (33,149) (99,863) 14Impairment of Trade Receivables (2,551) (1,415) (1,137) 3.1.2Impairment of Other Current Assets (393) (713) 320 16

Total Impairments (162,410) (42,600) (119,810)

Amortisation of Intangible assets (1,126) (451) (675) 7Amortisations of Hotels and owner occupied buildings (827) (739) (88) 9Amortisation of Fixtures and Fittings (2,276) (1,956) (320) 12

Total Amortisation (4,229) (3,146) (1,082)

Total Amortisation, Impairments & Provisions (166,812) (50,598) (116,214)

---

-

-

-

31 December 2013 31 December 2012 Variance(restated)

Change in carrying value of liabilities at amortised cost - 74,092 (74,092)Impairment of long-term receivables (44,305) - (44,305)Change in fair value and realized result on derivative instruments 5,060 (1,284) 6,344Change in fair value and realized result on other financial assets (11,862) (15,831) 3,969Other net finance results (3,477) (2,552) (925)Realized result on repayment of borrowings 14,891 - 14,891

Total (39,693) 54,425 (94,118)

-

-

-

December 2012

Scope Variation

Variation Other Changein %

Currency translation

December 2013

DTAAt Closing

DTLAt Closing

Intangible assets (2,152) - (4) - - - (2,156) 1 (2,157)Tangible assets (86,782) 123 (3,650) - (80) (365) (90,753) 25,913 (116,666)Financial assets (12,655) - 9,363 (41) (271) (75) (3,679) 23,964 (27,644)Inventories 5,204 711 27,272 254 (7) (7) 33,428 35,883 (2,454)Current assets (5,309) (1) 1,611 267 (68) 7 (3,492) 3,436 (6,928)Equity (272) - - - (3) 1 (275) - (275)Provisions (778) (119) (531) 258 (6) (6) (1,183) 934 (2,117)Long term debts (7,100) - (610) 80 (158) (16) (7,805) 4,471 (12,276)Current debts 1,431 - (525) (161) (5) (4) 735 1,264 (529)DTA derecognition (42,366) 19 (43,414) (1,199) (59) 895 (86,124) (86,124) -Recognized loss carried forward 51,123 (66) 2,015 542 655 (191) 54,078 54,078 -

Total deferred taxes (99,656) 667 (8,473) - (2) 239 (107,226) 63,820 (171,046)

Deferred tax assets 353 313Deferred tax liabilities (100,009) (107,537)

December 2011

Scope Variation

Variation Other Changein %

Currency translation

December 2012

DTAAt Closing

DTLAt Closing

Intangible assets (2,153) - 1 - - - (2,152) 5 (2,157)Tangible assets (95,790) (7,694) 1,180 15,040 125 358 (86,782) 13,769 (100,550)Financial assets (21,964) (1,231) (428) 10,965 3 - (12,655) 15,417 (28,073)Inventories (4,093) 3,712 1,810 3,857 (13) (68) 5,204 11,336 (6,132)Current assets (8,479) 456 2,613 98 - 4 (5,309) 1,879 (7,188)Equity (235) - - (35) - (3) (272) - (272)Provisions (1,117) (409) 788 (26) - (15) (778) 792 (1,571)Long term debts (9,249) - (1,830) 3,883 - 97 (7,100) 4,882 (11,982)Current debts 1,183 (327) (1,481) 1,972 15 68 1,431 2,002 (571)DTA derecognition - 1,606 (8,123) (35,754) - (95) (42,366) (42,366) -Recognized loss carried forward 50,778 3,837 (2,870) - (123) (499) 51,123 51,123 -

Total deferred taxes (91,119) (50) (8,340) - 7 (153) (99,656) 58,839 (158,496)

Deferred tax assets - 353Deferred tax liabilities (91,119) (100,009)

Profit or Loss before tax (243,100) (37,390)

(-) Profit or Loss before tax from discontinued operations 1,127 1,466

Profit or Loss before tax from continued operations (241,973) (35,923)

Tax calculated at domestic rates applicable to profits in the respective countries 42,774 1,628

Tax effects of:Equity investments results reported net of tax 74 192 Untaxed gains or losses 22,965 24,316 Undeductible charges and interests (6,280) (1,278) Temporary differences (70,370) (34,149) Other income tax 360 132 Remeasurement of deferred tax - Change in tax rates (2) 7 Adjustments in respect of prior years 31 (406)

Income tax expense recognised in profit or loss from continued operations (10,449) (9,558)

2012 (restated)

2013

At 31 December 2013Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total

Unused tax losses 15,925 82,105 25,782 982,364 1,106,176

Expiry date

31 December 2012(restated)

At the beginning of the period 106,885,588 16,737,951Shares issued 107,840,962 17,053,866Treasury shares (955,374) (315,915)

Weighted average movements 3,071,303 34,386,417Issue of new shares 2,283,105 34,600,970Treasury shares 788,198 (214,553)

.Weighted average outstanding shares for thepurpose of calculating the basic earnings per share 109,956,891 51,124,368

Weighted average outstanding shares for thepurpose of calculating the diluted earnings per share 109,956,891 51,124,368

Net loss attributable to the Equity holders of the Company (227,027) (41,883)

Net loss attributable to the Equity holders of the Companyafter assumed conversions / exercises (227,027) (41,883)

Total Basic earnings in EUR per share (2.06) (0.82)o/w continuing operations (2.06) (0.80)

o/w discontinued operations (0.01) (0.02)

Diluted earnings in EUR per share (2.06) (0.82)o/w continuing operations (2.06) (0.80)

o/w discontinued operations (0.01) (0.02)

31 December 2013

Share capital


Number Share Shareof shares Capital premium


Capital increase of 14th of May 2012 18,361,540 75,283 710Capital increase of 3 of September 2012 64,577,483 264,768 225,150Capital increase of 28th of September 2012 7,848,073 32,177 949


Capital decrease of 4th of February 2013 (226,466)Capital increase of 28th of August 2013 6,666,667 13,333 1,667


Average exercice Number ofprice in EUR options

Outstanding at the beginning of the year 75.60 60,000

Exercised - -Cancelled (75.60) (60,000)

Outstanding at the end of the year 0.00 0

Company Country Currency Activity 31.12.2013 31.12.2012Blue Yachts, d.o.o. Croatia HRK Hospitality 39.58% 39.58%Obonjan Rivijera d.d. Croatia HRK Development 56.55% 56.55%Orco Adriatic, d.o.o. Croatia HRK Hospitality 100.00% 100.00%Orco Razvoj, d.o.o. Croatia HRK Development 100.00% 100.00%Suncani HVAR Croatia HRK Hospitality 56.55% 56.55%Larevaco (sold) Cyprus EUR Management services 0.00% 100.00%Valley Water Investment BVI (sold) Cyprus EUR Management services 0.00% 100.00%BCC - Brno City Center, a.s. Czech Republic CZK Property investments 100.00% 100.00%Belgicka-Na Kozacce, s.r.o. (merged) Czech Republic CZK Development 0.00% 100.00%Beta Development, s.r.o. (sold) Czech Republic CZK Development 0.00% 100.00%Bubenská 1, a.s. Czech Republic CZK Property investments 100.00% 100.00%Bubny development, s.r.o. Czech Republic CZK Development 100.00% 100.00%Byty Podkova, a.s. Czech Republic CZK Development 100.00% 100.00%Darilia a.s. Czech Republic CZK Development 100.00% 100.00%Development Doupovská, s.r.o. Czech Republic CZK Development 75.00% 75.00%Development Prazska s.r.o. Czech Republic CZK Development 100.00% 100.00%Estate Grand, s.r.o. Czech Republic CZK Development 100.00% n/aHagibor Office Building, a.s. Czech Republic CZK Property investments 100.00% 100.00%Industrial Park Stribro s.r.o. Czech Republic CZK Property investments 100.00% 100.00%IPB Real, s.r.o. Czech Republic CZK Development 100.00% 100.00%Jihovychodni Mesto, a.s. Czech Republic CZK Development 75.00% 75.00%Megaleiar, a.s. Czech Republic CZK Development 100.00% 100.00%Na Porící, a.s. Czech Republic CZK Property investments 100.00% 100.00%Nupaky, a.s. Czech Republic CZK Development 100.00% 100.00%Oak Mill, a.s. Czech Republic CZK Development 100.00% 100.00%OFFICE CENTER HRADCANSKÁ, a.s. Czech Republic CZK Property investments 100.00% 100.00%ORCO ESTATE, s.r.o. (merged) Czech Republic CZK Development 0.00% 100.00%Orco Financial Services, s.r.o. Czech Republic CZK Development 100.00% 100.00%Orco Praga, s.r.o. Czech Republic CZK Development 75.00% 75.00%Orco Prague, a.s. Czech Republic CZK Management services 100.00% 100.00%Pachtuv Palac, s.r.o. Czech Republic CZK Hospitality 100.00% 100.00%První Kvintum Praha, a.s. (sold) Czech Republic CZK Development 0.00% 100.00%Rubeška Development, s.r.o. Czech Republic CZK Development 100.00% n/aSeattle, s.r.o. Czech Republic CZK Development 100.00% 100.00%T-O Green Europe, a.s. Czech Republic CZK Development 100.00% 100.00%TQE Asset, a.s. Czech Republic CZK Development 100.00% 100.00%V Mezihori Czech Republic CZK Development 100.00% 100.00%Zeta Estate a.s Czech Republic CZK Development 100.00% 100.00%Vinohrady s.a.r.l. France EUR Management services 100.00% 100.00%Brillant 1419 GmbH & Co. Verwaltungs KG Germany EUR Management services 100.00% 100.00%Gebauer Höfe Liegenschaften GmbH Germany EUR Property investments 5.02% 5.02%Ariah Kft. Hungary HUF Property investments 100.00% 100.00%CWM 35 Kft. Hungary HUF Property investments 100.00% 100.00%Energy Trade Plus Kft Hungary HUF Property investments 100.00% 100.00%Meder 36 Kft. Hungary HUF Property investments 100.00% 100.00%ORCO Budapest Rt. Hungary HUF Property investments 100.00% 100.00%ORCO Development Kft. Hungary HUF Property investments 100.00% 100.00%ORCO Hungary Kft. Hungary HUF Property investments 100.00% 100.00%Orco Vagyonkezelo Kft. Hungary HUF Management services 100.00% 100.00%ORR Kft. Hungary HUF Property investments 100.00% 100.00%Vaci 1 Kft. (formerly Yuli Kft.) Hungary HUF Property investments 100.00% 100.00%Vaci 190 Projekt Kft. Hungary HUF Property investments 100.00% 100.00%Capellen Invest S.A. Luxembourg EUR Property investments 100.00% 100.00%CEREM S.A. Luxembourg EUR Management services 100.00% 100.00%

% Shareholding

Company Country Currency Activity 31.12.2013 31.12.2012Endurance Hospitality Asset Sàrl Luxembourg EUR Hospitality 88.00% 88.00%Endurance Hospitality Finance Sàrl Luxembourg EUR Hospitality 88.00% 88.00%Endurance Real Estate Management Company Sàrl Luxembourg EUR Management services 100.00% 100.00%OPG Invest. Lux S.A. Luxembourg EUR Management services 100.00% 100.00%Orco Germany S.A. Luxembourg EUR Development 58.48% 98.02%Orco Property Group S.A. Luxembourg EUR Management services 100.00% 100.00%ORCO Russian Retail S.A. Luxembourg EUR Property investments 100.00% 100.00%Valley Investment SARL (liquidated) Luxembourg EUR Property investments 0.00% 100.00%Diana Property SP. z.o.o. Poland PLN Property investments 100.00% 100.00%Orco Enterprise Sp.z o.o. Poland PLN Development 100.00% 100.00%Orco Logistic Sp.z o.o. Poland PLN Property investments 100.00% 100.00%Orco Poland Sp.z.o.o. Poland PLN Management services 100.00% 100.00%Orco Project Sp.z o.o. Poland PLN Development 100.00% 100.00%Orco Property Sp.z o.o. Poland PLN Development 93.59% 91.12%Szczecin Project sp. z.o.o. Poland PLN Development 75.00% 75.00%ORCO Development, s.r.o. Slovakia EUR Development 100.00% 100.00%ORCO Estates, s.r.o. Slovakia EUR Property investments 100.00% 100.00%Orco Residence, s.r.o. Slovakia EUR Development 100.00% 100.00%ORCO Slovakia, s.r.o. Slovakia EUR Management services 100.00% 100.00%

% Shareholding

Company Country Currency Activity 31.12.2013 31.12.2012Dienzenhoferovy sady 5 s.r.o. Czech Republic CZK Hospitality 44.00% 44.00%Janáčkovo nábřeží 15, s.r.o. Czech Republic CZK Hospitality 44.00% 44.00%Mamaison Management s.r.o. Czech Republic CZK Hospitality 44.00% 44.00%Orco Hotel Ostrava, a.s. Czech Republic CZK Hospitality 44.00% 44.00%Orco Hotel Riverside, s.r.o. Czech Republic CZK Hospitality 44.00% 44.00%Orco Property Start a.s. Czech Republic CZK Hospitality 44.00% 44.00%Residence Belgicka, s.r.o. Czech Republic CZK Hospitality 44.00% 44.00%SV Fáze II, s.r.o. Czech Republic CZK Development 50.00% 50.00%SV Fáze III, s.r.o. Czech Republic CZK Development 50.00% n/aTyrsova 6, a.s. Czech Republic CZK Hospitality 44.00% 44.00%Valanto Consulting, a.s. Czech Republic CZK Hospitality 44.00% 44.00%Brillant 1419. Verwaltungs GmbH Germany EUR Management services 49.00% 49.00%Orco Hotel Management Kft. Hungary HUF Hospitality 44.00% 44.00%Orco Hotel Rt. Hungary HUF Hospitality 44.00% 44.00%Ozrics Kft. Hungary HUF Hospitality 44.00% 44.00%Residence Izabella Rt. Hungary HUF Hospitality 44.00% 44.00%Hospitality Invest Sàrl Luxembourg EUR Hospitality 44.00% 44.00%Kosic Sàrl Luxembourg EUR Development 50.00% 50.00%MMR Russia S.A. Luxembourg EUR Hospitality 44.00% 44.00%Uniborc S.A. Luxembourg EUR Development 20.00% n/aDiana Development Sp.z.o.o. Poland PLN Hospitality 44.00% 44.00%Orco Hospitality Services Sp.z o.o. Poland PLN Hospitality 44.00% 44.00%Orco Hotel Development Sp. z o.o. Poland PLN Hospitality 44.00% 44.00%Orco Hotel Project Sp.z o.o. Poland PLN Hospitality 44.00% 44.00%Orco Investment Sp.z o.o. Poland PLN Hospitality 44.00% 44.00%Orco Warsaw Sp.z o.o. Poland PLN Hospitality 44.00% 44.00%Orco Pokrovka Management o.o.o. Russia RUB Hospitality 44.00% 44.00%MaMaison Brastislava, s.r.o. in EUR Slovakia EUR Hospitality 44.00% 44.00%

% Shareholding

Company Country Currency Activity 31.12.2013 31.12.2012Elb Loft BAU Hamburg - Gmbh (merged) Germany EUR Development n/a 100.00%Gebauer Höfe Liegenschaften GmbH Germany EUR Property investments 94.98% 94.98%GSG 1. Beteiligungs GmbH Germany EUR Property investments 99.75% 100.00%GSG Asset GmbH & Co. Verwaltungs KG Germany EUR Property investments 99.75% 100.00%GSG Gewerbehöfe Berlin 1. GmbH Co. KG Germany EUR Property investments 99.75% n/aGSG Gewerbehöfe Berlin 2. GmbH Co. KG Germany EUR Property investments 99.75% n/aGSG Gewerbehöfe Berlin 3. GmbH Co. KG Germany EUR Property investments 99.75% n/aGSG Gewerbehöfe Berlin 4. GmbH Co. KG Germany EUR Property investments 99.75% n/aGSG Gewerbehöfe Berlin 5. GmbH Co. KG Germany EUR Property investments 99.75% n/aGSG Gewerbesiedlungs-Gesellschaft mbH Germany EUR Property investments 99.75% 99.75%Hofnetz und IT Services GmbH Germany EUR Development 99.75% 99.75%Isalotta GP GmbH & Co. Verwaltung KG Germany EUR Property investments 94.99% 94.99%Knorrstrasse 119 Gmbh & Co KG (merged) Germany EUR Development n/a 50.00%Knorrstrasse 119 Verwaltungs GmbH (merged) Germany EUR Development n/a 50.00%Orco Berlin Invest GmbH Germany EUR Development 100.00% 100.00%Orco erste PEG mbH (merged) Germany EUR Development n/a 100.00%Orco Grundstücks- u. Bet.ges.mbH Germany EUR Property investments 100.00% 100.00%Orco Immobilien Gmbh Germany EUR Development 100.00% 100.00%ORCO Projektentwicklung GmbH (merged) Germany EUR Development n/a 100.00%Orco Vermietungs- und Services GmbH (merged) Germany EUR Property investments n/a 100.00%Solar GSG Berlin GmbH Germany EUR Property investments 99.75% n/aVivaro GmbH & Co. Grundbesitz KG Germany EUR Development 94.34% 94.34%Vivaro GmbH & Co. Zweite Grundbesitz KG Germany EUR Development 100.00% 94.34%Vivaro Vermögensverwaltung GmbH Germany EUR Development 100.00% 100.00%Wertpunkt Real Estate Experts GmbH (former Orco-GSG Unternehmensförderungs- und -beratungs GmbH)

Germany EUR Property investments 99.75% 100.00%

Endurance HC Beta SARL (liquidated) Luxembourg EUR Development n/a 100.00%Endurance HC Gamma SARL (liquidated) Luxembourg EUR Development n/a 100.00%Orco Germany Investment S.A. Luxembourg EUR Renting 100.00% 100.00%

% Shareholding

New and amended standards adopted by the Group in 2012

The following new standard has been issued by the IASB but is not adopted by the European Union

The following new standards, new interpretations and amendments to standards and interpretations are adopted by the European Union, not compulsory before the financial year beginning 1 January 2013 and have not been early adopted by the Group:

Change in accounting policy & classification

Prior-Period adjustment

-

-

-

Operating lease

Finance lease

Operating lease

Finance lease

Expiring w ithin one year 756 4,000

Expiring after one year 49,424 29,533

Total 50,180 33,533

-

-

-

-

-

-

-

-

-

- 17,9189,466 -

17 2064,486 -25,203 -

738,600-

26,085 -

- 46,787 46,787- 29 29

36,145 - 36,14566,666 - 66,66637,095 - 37,095

5,994 5,9941,153,261 1,153,261

- 41,153 41,15316,366 - 16,366

Per rate type Min Max Min Max Min Max Discount rate 5.5% 17.0% 5.3% 17.0% 6.5% 11.8%Capitalization yield 7.0% 15.3% 5.4% 19.1% 5.8% 13.0%Cap rate 5.6% 18.0% 5.3% 17.0% 5.3% 9.0%

Per asset typeMin Max Min Max Min Max

Hospitality NA NA 7.5% 11.0% 10.0% 17.0%Berlin portfolio NA NA 5.6% 8.3% 5.5% 9.6%Central Europe portfolio 7.0% 15.3% 7.5% 18.0% 7.3% 13.0%

Capitalization yield Cap rate Discount rate

2012 2011 2010

Figures in EUR Million

DR - 25 bps DR + 25 bps ECR - 25 bps ECR + 25 bpsBerlin Portfolio 9.43 (9.25) 9.03 (8.50) Central Europe Portfolio 4.05 (3.94) 3.57 (3.34) Total 13.48 (13.19) 12.60 (11.84) DR : Discount rate, ECR : Exit Capitalization Rate

Portfolio Discount Rate Exit Cap Rate

142,74266,49931,42118,898

Prior-period adjustment:

40,14968,48830,01418,951

-

-

-

-

-

-

-

-

-

-

-

C a rr ying v a lue o f te rm e d o u t b o nd s

Fa ir va lu e of ter m ed ou t bo n ds

C a r ryin g v alu e o f O G b o nd s

F a ir v a lu e of O G b on d s

B o nd s a s a t 3 1 D ec e m be r 2 01 1 1 85 ,7 6 4 1 68 ,2 7 8 1 2 0 ,6 9 1 1 18 ,2 4 8

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(*) 9.678 KEUR are strictly related to the financial debt, 9.792 presented in balance sheet includes 114 KEUR trade payables

-

-

-

-

-

-

-

-

-

-

In Euro

Share capital

Number Capital Shareof shares premium


Capital increase 3,000,000 12,300 14,700


Capital increase of 14th of May 2012 18,361,540 75,283 710Capital increase of 3d of September 2012 64,577,483 264,768 225,150Capital increase of 28th of September 2012 7,848,073 32,177 949


Average exercice Number of Average exercice Number ofprice in EUR options price in EUR options

Outstanding at the beginning of the year 75.60 60,000 75.60 60,000

Exercised - - - -Expired (75.60) (60,000) - -

Outstanding at the end of the year 0.00 0 75.60 60,000

-

-

-

PRIVATE & CONFIDENTIAL

REPORT AND VALUATION AS AT 30 JUNE 2015 Prepared on behalf of ORCO Property Group

ORCO Property Group Portfolio Czech Republic Hungary Luxembourg Poland Comprising 26 assets

DTZ Florentinum Na Florenci 2116/15 110 00 Prague 1 Czech Republic


CONTE NTS | Pa ge i

Table of Contents

SUMMARY OVERVIEW 1

1 INTRODUCTION 2

2 INSPECTIONS 2

3 COMPLIANCE WITH RICS VALUATION STANDARDS 2

4 STATUS OF VALUER AND CONFLICTS OF INTEREST 2

5 PURPOSE OF THE VALUATION 3

6 DISCLOSURES 3

7 REPORT FORMAT 3

8 BASIS OF VALUATION 3

9 VAT 4

10 ASSUMPTIONS AND DEFINITIONS 4

11 MARKET COMMENTARY 10

12 VALUATION 47

13 CONFIDENTIALITY AND DISCLOSURE 48

Appendix A: Summary Table

Appendix B: Property Proformas

Appendix C: Argus Exports


VALU ATIO N REPORT | Pag e 1

SUMMARY OVERVIEW We are of the opinion that the Market Value of the freehold or leasehold interests in the Property as at 30 June 2015, subject to assumptions and comments in this report and appendices is:- Location Property Market Value (EUR)

CZ

Benice 1B 835,000 Benice 1C 268,000 Benice 2-5 5,484,000 Bubenská 1 9,407,000 Bubny 51,945,000 Děčín 253,000 Doupovská 1,290,000 Grand Hotel Špindlerův Mlýn 1,602,000 Industrial Park Stříbro 1,100,000 Košík I a II 110,000 Košík IIIA 20,000 Košík IIIB 12,130,000 Košík IIIC 3,030,000 Nupaky 3,744,000 Office Center Praha - Hradčanská 13,498,000 Palác Archa Praha 39,790,000 Praga 9,131,000

Czech republic OPG assets in total 153,637,000

HU V188 Offices 6,800,000 V190 Offices 1,400,000

Hungary OPG assets in total 8,200,000 LUX Capellen Office Building 21,930,000 Luxembourg OPG assets in total 21,930,000

PL

Diana property 4,730,000 Klonowa Aleja 340,000 Krakow 3,390,000 Marki - Excess Land 3,232,000 Marki property 2,420,000 Szczeczin 3,320,000

Poland OPG assets in total 17,432,000 OPG portfolio 201,199,000

Detailed Summary Table is attached at the Appendix A of this report. Property proformas of individual Property valuations are attached at Appendix B of this report.



Jiří Dedera ORCO Prague, a.s. Na Poříčí 1047/26 Prague 1 110 00 Czech Republic

In Prague, 7. August 2015

DTZ Czech Republic, a.s.

Na Florenci 2116/15 110 00 Prague 1 Czech Republic

Tel: +420 226 209 100

Fax: +420 222 322 134

www.dtz.com

Client: ORCO Prague Property: Portfolio comprising 26 assets located in the Czech Republic, Hungary, Luxembourg and Poland

1 Introduction In accordance with your instructions we have inspected the above properties owned by Orco Property Group (and/or its subsidiaries) (the “Client”), referred to the appendices, in order to advise you of our opinion on Market Value of the freehold or leasehold interests in each of the properties as at 30 June 2015. The OPG portfolio comprises 26 properties located in the Czech Republic, Hungary, Luxembourg and Poland.

2 Inspections The properties were inspected during the period from September 2014 to July 2015. Inspection dates for individual properties can be found in the Summary Table which is attached at Appendix A of this report.

3 Compliance with RICS Valuation Standards This is an internationally accepted standard of valuation and is compliant with the requirement of the International Valuation Standards Council for a valuation prepared under the International Financial Reporting Standards. We confirm that the valuation has been prepared in accordance with the appropriate sections of the Valuation Professional Standards January 2014 (the "Red Book").

4 Status of valuer and conflicts of interest We confirm that we have sufficient current knowledge of the relevant markets, and the skills and understanding to undertake the valuations competently. We also confirm that where more than one valuer has contributed to the valuations, the requirements of Professional Standards of the Red Book have been satisfied.



We confirm that Karel Klečka MRICS has overall responsibility for the valuation. Finally, we confirm that we have undertaken the valuation acting as an External Valuer, qualified for the purpose of the valuation. We confirm that we have no current, anticipated or previous recent involvement (such as property/asset management or investment agency) and with any of the subject properties other than in connection with the provision of valuation reports as described below.

5 Purpose of the Valuation We understand that the valuations are required for IFRS purposes as at 30 June 2015. Therefore, we have made certain disclosures in connection with this valuation instruction and our relationship with the Client. These are included in item 6 below.

6 Disclosures 6.1 DTZ's relationship with client

DTZ has previously provided Valuation Reports for the Client in respect of the properties for financial reporting purposes and DTZ has also previously provided valuation reports to financial institutions in respect of some of the properties for secured lending purposes.

6.2 Instruction Management Since October 2013, Karel Klečka MRICS is the signatory of the Valuation Reports provided to the Client. DTZ Czech Republic supported by DTZ International Valuation Team based in London has been carrying out this valuation instruction for the Client for a continuous period since 2011. The overall management and coordination of the valuation process in terms of provision of information and reporting was undertaken by DTZ Valuation in Prague.

6.3 Fee income from the Client DTZ Debenham Tie Leung was a UGL Company until 5 November 2014. In UGL's financial year ending 30 June 2014, the proportion of fees payable by the Client to the total fee income of UGL was less than 5%. DTZ became a stand alone, private global property services company on 5 November 2014, following the sale to TPG Capital Management. DTZ's financial year end is 30 June. We anticipate that the proportion of fees payable by the Client to DTZ in the financial year to 30 June 2015 will remain at less than 5%.

6.4 DTZ involvement in any of the properties in the previous 12 months DTZ has received no introductory fee/acquisition fee in respect of any of the properties during the 12 months prior to the date of valuation.

7 Report format The appendices to this Valuation Report comprise details of the properties and our valuations as well as detailed Argus calculations for each of the property.

8 Basis of valuation In accordance with Client’s instructions, we have undertaken our valuation on the basis of Market Value of the Property.



We have set out the definition of the Market Value in the current Section (‘Assumptions and definitions’) of this Valuation Report. Our opinion of the Market Value of the Property has been primarily derived using the investment, residential and comparable methods of valuation. Our Valuation Report is subject to our standard Valuation Conditions and Assumptions. In the event that any of our Assumptions prove to be incorrect then our valuation should be reviewed.

8.1 Market Value The value of each of the properties has been assessed in accordance with the relevant parts of the RICS Valuation – Professional Standards January 2014 ("the Red Book"). In particular, we have assessed Market Value in accordance with Valuation Practice Statement 4.1.2. Under IVS Framework paragraph 29, the term "Market Value" refers to “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."

8.2 Taxation and costs We have not made any adjustments to reflect any liability to taxation that may arise on the disposals, not for any costs associated with disposals incurred by the owner. No allowance has been made to reflect any liability to repay any government or other grants, taxation allowance or lottery funding that may arise on disposals.

9 VAT The capital valuations and rentals included in this Valuation Report are net of value added tax at the prevailing rate.

10 Assumptions and definitions 10.1 Valuation conditions and Assumptions

These are the conditions and Assumptions upon which our valuations and reports are normally prepared and form an integral part of our appointment together with our related Engagement Letter and DTZ Terms and Conditions. Unless otherwise referred to in this Valuation Report these conditions and Assumptions apply to the valuation that is the subject of this Valuation Report. We have made certain Assumptions in relation to facts, conditions or situations affecting the subject of, or approach to, our valuation that we have not verified as part of the valuation process but rather, as referred to in the Glossary to the RICS Valuation – Professional Standards 2014 ("the Red Book"), have treated as “a supposition taken to be true”. In the event that any of these Assumptions prove to be incorrect then our valuation will need to be reviewed. For some of the properties within the portfolio we have been instructed by the Client to use a Special Assumption. All Special Assumptions are clearly stated in the individual property reports.

10.1.1 Condition of structure and services

It is a condition of DTZ or any related company, or any qualified employee, providing advice and opinions as to value, that the client and/or third parties (whether notified to us or not) accept that the



Valuation Report in no way relates to, or gives warranties as to, the condition of the structure, foundations, soil and services. Due regard has been paid to the apparent state of repair and condition of the Property, but a condition survey has not been undertaken, nor have woodwork or other parts of the structures which are covered, unexposed or inaccessible, been inspected. Therefore, we are unable to report that the Property is structurally sound or are free from any defects. We have made an Assumption that the Property is free from any rot, infestation, adverse toxic chemical treatments, and structural or design defects other than such as may have been mentioned in the body of our Valuation Report. We have not arranged for investigations to be made to determine whether high alumina cement concrete, calcium chloride additive or any other deleterious materials have been used in the construction or any alterations, and therefore we cannot confirm that the Property are free from risk in this regard. For the purposes of this valuation, we have made an Assumption that any such investigation would not reveal the presence of such materials in any adverse condition in any of the above. We have not carried out an asbestos inspection while completing the valuation inspection of the Property. No mining, geological or other investigations have been undertaken to certify that the sites are free from any defect as to foundations. We have made an Assumption that the load bearing qualities of the sites where the Property are located are sufficient to support the buildings constructed thereon. We have also made an Assumption that there are no services on, or crossing the sites in a position which would inhibit development or make it unduly expensive and that there are no abnormal ground conditions, nor archaeological remains present, which might adversely affect the present or future occupation, development or value of the Property. No tests have been carried out as to electrical, electronic, heating, plant and machinery, equipment or any other services nor have the drains been tested. However, we have made an Assumption that all services, including gas, water, electricity and sewerage, are provided and are functioning satisfactorily. It is a condition of DTZ or any related company, or any qualified employee, providing advice and opinions as to value, that the Client and/or third parties (whether notified to us or not) accept that the Valuation Report in no way relates to, or gives warranties as to, the condition of the structure, foundations, soil and services.

10.1.2 Plant and Machinery

No allowance has been made for any items of plant or machinery not forming part of the service installations of the building. We have specifically excluded all items of plant, machinery and equipment installed wholly or primarily in connection with any of the occupants’ businesses. We have also excluded furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools.

10.1.3 Goodwill

No account has been taken in our valuation of any business goodwill that may arise from the present occupation of the Property.



10.1.4 Floor areas and inspections

Where we were not instructed to measure and calculate the floor areas, we have applied floor areas provided. We have made an Assumption that these areas have been measured and calculated in accordance with the current Code of Measuring Practice prepared by the Royal Institution of Chartered Surveyors.

10.1.5 Statutory requirements and planning

We have made an Assumption that the building has been constructed in full compliance with valid town planning and building regulations approvals. Similarly, we have also made an Assumption that the Property is not subject to any outstanding statutory notices as to its construction, use or occupation. Unless our enquiries have revealed to the contrary, we have made a further Assumption that the existing use of the Property is duly authorised or established and that no adverse planning condition or restriction applies.

10.1.6 Leasing

We have not reviewed leases or related documents with regard to the tenants in this building. However, a tenancy schedule has been provided to us. We have made an Assumption that all information within the tenancy schedule is correct. We have not undertaken investigations into the financial strength of the tenants. Unless we have become aware by general knowledge, or we have been specifically advised to the contrary, we have made an Assumption that the tenants are financially in a position to meet their obligations. Unless otherwise advised, we have also made an Assumption that there are no material arrears of rent or service charges or breaches of covenants, current or anticipated tenant disputes. However, our valuation reflects the type of tenants actually in occupation or responsible for meeting lease commitments, or likely to be in occupation, and the market's general perception of their creditworthiness.

10.1.7 Information

We have made the Assumption that the information provided and respective professional advisers in respect of the Property we have valued is both full and correct. We have made the Assumption that details of all matters relevant to value within your and their collective knowledge, such as prospective lettings, rent reviews, outstanding requirements under legislation and planning decisions, have been made available to us, and that such information is up to date.

10.1.8 Taxation and VAT

No adjustment has been made to reflect any non-tax costs associated with disposal incurred by the owner. Furthermore, no allowance has been made to reflect any liability to repay any government or other grants, taxation allowance or lottery funding that may arise on disposal. Our valuation figure for the Property is that receivable by the willing seller excluding stamp duty, if applicable.



10.2 Definitions of bases of valuations

10.2.1 Market value

Market Value as defined in the Valuation Practice Statement 4.1.2 of the RICS Valuation – Professional Standards 2014 ("the Red Book") and applying the conceptual framework which has been settled by the International Valuation Standards Council (IVSC). Under IVS Framework paragraph 29, the term "Market Value" The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."

The conceptual framework settled by the IVSC is set out in paragraphs 30-35 of the IVS Framework and is reproduced below:-

"31. The definition of market value shall be applied in accordance with the following conceptual framework: (a) "the estimated amount" refers to a price expressed in terms of money payable for the asset in an arm's length market transaction. Market value is the most probable price reasonably obtainable in the market on the valuation date in keeping with the market value definition. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value; (b) "an asset should exchange" refers to the fact that the value of an asset is an estimated amount rather than a predetermined amount or actual sale price. It is the price in a transaction that meets all the elements of the market value definition at the valuation date; (c) "on the valuation date" requires that the value is time-specific as of a given date. Because markets and market conditions may change, the estimated value may be incorrect or inappropriate at another time. The valuation amount will reflect the actual market state and circumstances as of the effective valuation date, not as of either a past or future date. The definition also assumes simultaneous exchange and completion of the contract for sale without any variation in price that might otherwise be made; (d) "between a willing buyer" refers to one who is motivated, but not compelled to buy. This buyer is neither over eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than in relation to an imaginary or hypothetical market that cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present owner is included among those who constitute "the market"; (e) "and a willing seller" is neither an over eager or a forced seller prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the asset at market terms for the best price attainable in the open market after proper marketing, whatever that price may be. The factual circumstances of the actual owner are not a part of this consideration because the willing seller is a hypothetical owner; (f) "in an arm's length transaction" is one between parties who do not have a particular or special relationship, eg parent and subsidiary companies or landlord and tenant, that may make the price level



uncharacteristic of the market or inflated because of an element of special value. The market value transaction is presumed to be between unrelated parties, each acting independently; (g) "after proper marketing" means that the asset would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonable obtainable in accordance with the market value definition. The method of sale is deemed to be that most appropriate to obtain the best price in the market to which the seller has access. The length of exposure time is not a fixed period but will vary according to the type of asset and market conditions. The only criterion is that there must have been sufficient time to allow the asset to be brought to the attention of an adequate number of market participants. The exposure period occurs prior to the valuation date; (h) "where the parties had each acted knowledgeably, prudently" presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the asset, its actual and potential uses and the state of the market as of the valuation date. Each is further presumed to use that knowledge prudently to seek the price that is most favourable for their respective positions in the transaction. Prudence is assessed by referring to the state of the market at the valuation date, not with benefit of hindsight at some later date. For example, it is not necessarily imprudent for a seller to sell assets in a market with falling prices at a price that is lower than previous market levels. In such cases, as is true for other exchanges in markets with changing prices, the prudent buyer or seller will act in accordance with the best market information available at the time; (i) "and without compulsion" establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it. 32. The concept of market value presumes a price negotiated in an open and competitive market where the participants are acting freely. The market for an asset could be an international market or a local market. The market could consist of numerous buyers and sellers, or could be one characterised by a limited number of market participants. The market in which the asset is exposed for sale is the one in which the asset being exchanged is normally exchanged (see paras 16 to 20 above). 33. The market value of an asset will reflect its highest and best use. The highest and best use is the use of an asset that maximises its productivity and that is possible, legally permissible and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. 34. The highest and best use of an asset valued on a stand-alone basis may be different from its highest and best use as part of a group, when its contribution to the overall value of the group must be considered. 35. The determination of the highest and best use involves consideration of the following: (a) to establish whether a use is possible, regard will be had to what would be considered reasonable by market participants, (b) to reflect the requirement to be legally permissible, any legal restrictions on the use of the asset, eg zoning designations, need to be taken into account, (e) the requirement that the use be financially feasible takes into account whether an alternative use that is physically possible and legally permissible will generate sufficient return to a typical market



participant, after taking into account the costs of conversion to that use, over and above the return on the existing use.

10.2.2 Market Rent

Market Rent as defined in Valuation Professional Standard January 2014 of the Red Book. Under Valuation Practice Statement 4.1.3 the term "Market Rent" means "The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion". Whenever Market Rent is provided the "appropriate lease terms" which it reflects should also be stated. The commentary from the Red Book is reproduced below.

"1. The definition of market rent is a modified definition of market value; paragraphs C10 and C11 in IVS 230 provide additional commentary. 2. Market rent will vary significantly according to the terms of the assumed lease contract. The appropriate lease terms will normally reflect current practice in the market in which the property is situated, although for certain purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the frequency of rent reviews and the responsibilities of the parties for maintenance and outgoings will all impact the market rent. In certain states, statutory factors may either restrict the terms that may be agreed, or influence the impact of terms in the contract. These need to be taken into account were appropriate. 3. Valuers must therefore take care to set out clearly the principal lease terms that are assumed when providing market rent. If it is the market norm for lettings to include a payment or concession by one party to the other as an incentive to enter into a lease, and this is reflected in the general level of rents agreed, the market rent should also be expressed on this basis. The nature of the incentive assumed must be stated by the valuer, along with the assumed lease terms. 4. Market rent will normally be used to indicate the amount for which a vacant property may be let, or for which a let property be may relet when the existing lease terminates. Market rent is not a suitable basis for settling the amount of rent payable under a rent review provision in a lease, where the actual definitions and assumptions have to be used."

10.3 Equivalent yields There are references in this Valuation Report to both NEY (Ann in arr) and TEY (Qly in adv). These terms are defined as follows:- NEY (Ann in arr) = Nominal equivalent yield (annually in arrears). In order to calculate a NEY (Ann in arr) it is assumed that the rental is paid annually in arrears, even though this is not actually the case. TEY (Qly in adv) = True equivalent yield (quarterly in advance). In order to calculate a TEY the actual timing of the rental payments is reflected, so that if rent is payable quarterly in advance the term TEY (Qly in adv) is used.



11 Market commentary 11.1 Czech Republic

11.1.1 Economic Overview

The Czech economy grew by 2% in 2014 mainly driven by the export-oriented processing industry helped by strengthening external demand. Last year’s industrial production as well as retail sales volumes surpassed the peak levels from 2008 for the first time. Consumer confidence also exceeded the levels recorded in 2008. Strengthening domestic demand significantly contributed to growth aided by looser monetary and fiscal policy as well as improvements on the labour market. In Q1 2015 GDP growth accelerated to 3.9% y-o-y, which is the fastest annual growth since 2008. The rise is partially influenced by a change in methodology, but key economic prospects remain favourable. The Czech GDP should grow by 2.6% this year. Increasing public investments will be the main drivers of growth. Private consumption should be boosted by lower oil prices and low inflation, which will support households’ real incomes and spending.

GDP Growth at constant prices, %

Source: Oxford Economics

External demand will continue to be supportive of Czech growth in 2015/16, helped by recovering demand in Germany. However, there are downside risks to this view. After very strong growth in 2014, German imports from the Czech Republic decelerated in Q1 2015, driven in turn by China’s slowing demand for German exports. Czech exports to Russia and Ukraine, although only 5% of total exports prior to the crisis, are also serving as a drag, having decreased by 48% and 57% y/y respectively in Q1 due to recession in these countries and sharp depreciation of their currencies compared to the same period last year. The impacts of a default and a potential “Grexit” from the Eurozone could negatively affect economic development, it is however too early to estimate the extent of the negative influence. Direct impact should be marginal as the Czech banking sector is healthy with almost no exposure to Greek debt and could cope with some short-term turbulence on the financial markets. The Czech currency could be weakened temporarily as a result of increased risk awareness of investors. Around 80% of Czech exports are directed to the Eurozone, therefore any longer term economic repercussions resulting in a decrease in external demand would affect the Czech export-oriented economy.

-6

-4

-2

0

2

4

Czech Republic Eurozone



CPI Inflation and ILO unemployment, %


CPI Inflation reached 0.7% in May 2015 and is forecast to stay close to zero in 2015 (0.2%) compared to 0.3% recorded in 2014, while adjusted inflation excluding fuels remains well within the 1% lower bound of the Czech National Bank’s inflation target. The Central Bank indicated that it will continue with exchange rate controls at least until the second half of 2016. Consumer expenditure should grow by 2.7 % this year in comparison with 1.7 % last year thanks to low inflation and a projected 2.8 % increase in wages. The unemployment rate should continue decreasing during 2015 to 6.7 % down by one percentage point year on year.

11.1.2 Czech Republic Office Market Overview

New supply & Take-up

Total stock exceeded the threshold of 3 million sq m, made up of 68% A class and 32% B class properties, top quality AAA class offices represent 11% of the total stock. After decreases in annual supply in the years 2009-2013, a renewed construction boom was seen in the last two years, whereby annual supply in 2015 should reach the highest level since 2008 with projected new supply of 183,500 sq m.

Annual supply, sq m

Source: DTZ, PRF

0123456789

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f 2016f

Unemployment rate Inflation

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000



Gross take-up last year reached a record level with 331,800 sq m, while net take-up totaled 200,000 sq m. Gross take-up (including renegotiations and subleases) reached 70,800 sq m in Q1 2015, down by 37% on the previous quarter and 3% more than in the same period last year. Net take-up reached 42,400 sq m in the first three months of 2015, 44% down on the previous quarter and 8% on the same period last year.

Gross and net take-up by quarter, sq m

Source: DTZ, PRF

Demand continues to focus on established office zones such as Prague 4, 5 and 8 as can be seen on the chart below showing historical allocation of new leases in Prague districts. The highest new leasing activity in Q1 2015 was recorded in Prague 4 (61%) followed by Prague 5 (19%) and Prague 7 (8%). Renegotiation represent on average around 40% of total leasing activity.

Net take-up by Prague district in 2005-Q1 2015, sq m

Source: DTZ, PRF

0

20,000

40,000

60,000

80,000

100,000

120,000

Gross take-up Net take-up

14%

2%3%

29%

17%

5%

6%

16%

5% 3%Prague 1

Prague 2

Prague 3

Prague 4

Prague 5

Prague 6

Prague 7

Prague 8

Prague 9

Prague 10



Net absorption was negative in Q1 2015 (-36,100 sq m), meaning that more space was vacated than occupied. Last year the Prague office market absorbed around 100,000 sq m.

Vacancy & Rents

In Q1 2015 the vacancy rate continued increasing, as a result of new additions to office stock and increasing vacancies in older offices, to 17.1% from 15.3% in the previous quarter. This represents 521,800 sq m of vacant office space.

Vacancy rate by district, %

Source: DTZ, Prague Research Forum

The vacancy rate increased most markedly in Prague 10 by 10 percentage points due to the relocation of Vodafone and in Prague 5 by 4.9 percentage points mainly due to the newly completed project Metronom (29,900 sq m) which was added to stock without secured pre-leases. The highest vacancy rate can still be found in Prague 7 (35.9%), followed by Prague 2 (23.6%). Net absorption was negative (-36,100 sq m), meaning that more space was vacated than occupied.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q1 2014 Q1 2015



Prime headline office rents in the Prague districts, €/sq m/month

Source: DTZ Prime headline rents in the city centre stand at €18.50-19.50 per sq m per month. Rents stand at €15.00-17.00 in the inner city and at €13.00-14.50 in the outer city.

Pipeline

There was ca. 206,300 sq m of office space in various stages of active construction or refurbishment. Additionally, ca. 34,000 sq m are on hold and awaiting pre-leases. In Q1 2015 construction was launched on Classic 7 Phase III (6,300 sq m) in Prague 7, Park Radlice (6,400 sq m) in Prague 5 and City Deco (13,200 sq m) in Prague 4. The highest amount of office space under construction can be found in Prague 4 (101,400 sq m), followed by Prague 8 (37,700 sq m) and Prague 5 (33,400 sq m). Of the supply under construction, 33% was pre-leased. In 2015 up to 183,700 sq m could be completed; the highest post-crisis annual new supply.



Supply pipeline, sq m


Prague - projects under construction

Building Planned delivery

Area (sq m) Developer

Space available (sq m)

Asking office Rents sq

m/month (€)

BB Centrum Delta 2015 32,535 Passerinvest Group 2,927 13,90-14,25

Enterprise OC 2015 29,069 Erste Group Immorent 17,961 14,90-15,50

Aviatica 2015 27,000 Penta Investments 27,000 13,50

Corso Court 2015 17,266 Skanska 7,653 15,00

Nová Palmovka 2016 16,687 Metrostav Alfa 10,932 13,50

Green Line 2015 13,682 Karimpol 13,682 14,80-15,50

Crystal 2015 12,828 GES REAL 7,745 14,50-15,90

Park Radlice 2016 6,400 Red Group 2,238 Not yet

Palác Národní 2016 7,655 Sebre 7,655 Not yet

Classic 7 phase III 2016 6,300 AFI 6,300 13,50

City Deco 2017 13,216 S+B Gruppe 13,216 15,50-16,50


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000



11.1.3 Czech Republic Residential Market Overview

The recent evolution of the CEE residential markets can be separated into four stages of development. The EU accession of most countries in the region between 2004 and 2007 generated confidence in both domestic and foreign demand and thus determined banks’ lending attitudes - leading to an initial housing boom. Secondly, as early as May 2007, the subprime crisis had its first impact on the CEE markets and caused an out-flow of foreign investment capital. Thirdly, starting in October 2008, the credit crunch started to affect the region leading to a decline in domestic demand. Finally, we have seen a continuous recovery of the residential sector after September 2010 onwards and recently supported by historically low interest and improving economic prospects strong demand for residential purchases. In terms of economic factors, there is a clear distinction between the development prospects of the CEE countries in the years to come. The Czech Republic is forecast to see positive GDP figures in 2015 (2.6%) followed by 2.9% in 2016. This should boost demand for housing in the coming years. The proportion of privately owned housing in the Czech Republic is already high and it has surpassed 75%. One key indicator that shows the level of interest in the residential market is the mortgage market. The demand for residential housing has been decreasing since 2009. A decreased interest in the purchase of residential housing was clearly demonstrated by the annual decrease in the volume of mortgage loans and overall loans granted into the residential sector. The Czech Republic has experienced a significant increase in the volume of mortgage loans granted in 2011–2013. The volume of mortgages in 2014 accounted for 143 billion CZK, representing a 4% decrease on 2013, however still above the long term average. Around 80% of customers still purchase their property through mortgage loans. On the other hand, it is questionable what percentage of these mortgages represents refinancing from previous years as they are included in the total volume. According to Czech National Bank data refinancing represents 23% of the total.

The volume of granted mortgage loans and residential loans (CZK billion)

Source: MMR, Hypoteční banka There are three possible reasons for the stabilization of the total volume level of mortgage loans: (i) a continual decline in the interest rates of mortgage loans; (ii) refinancing of older mortgage loans from the peak period (2006-2008); (iii) intensive marketing activity of developers.

0

20

40

60

80

100

120

140

160



Average mortgage interest rates 2003 – 2015

Source: Hypoindex

At the end of 2008 mortgage loans as a financial tool were impacted by an increase in interest rates attached to the loans. The average mortgage rate at the end of 2008 was about 5.8% and during 2009 decreased to 5.5%. Since the beginning of 2010 there has been an accelerated decrease of the interest rate to slightly above 2% in 2014. When compared to other nearby countries the Czech mortgage market is reasonably strong. The price remains the main decisive factor when buying residential property. The crisis significantly contributed to the lack of confidence of domestic buyers and the excess of supply over demand. This has taught buyers to be more selective, more insistent on their demands and to negotiate on price. Although buyers were increasingly considering quality, price and related value for money, if the property was in a good location, had practical interior design, an appropriate level of standard and set a realistic price, it faced no difficulties in finding buyers. Supported by historically low interest rates, favourable lending conditions with higher LTV ratios, the willingness of banks to finance and positive economic outlook demand for residential purchases has accelerated. Recent data from Q1 2015 on granted mortgages show that 38.5 billion CZK were granted on mortgages, which is a historical record.

Supply

There were 23,900 dwellings completed in the Czech Republic in 2014 (the lowest number since 2001). The decrease in residential supply is mainly caused by a decline in household demand; a lack of bank financing for development and relative saturation of the residential markets in terms of supply.



Residential construction in the Czech Republic

Source: CSO, DTZ

According to the Population and Housing Census from 2001 there were 551,243 dwelling units in Prague. In 2011 496,911 apartments were permanently occupied. Within this category 63,642 apartments were found in family houses and 430,234 in apartment houses. Since 2001 Prague has experienced strong residential development with 63,948 apartments completed in 2002–2010. Construction activity started dropping at the end of 2009 to its low in 2011, the lowest since the 2001 census. In 2012 construction activity slightly increased but again saw a drop in 2013. During 2014 4,725 apartments were completed in Prague, up by 23% y-o-y, and 4,480 apartments were started, representing an increase of 34% on 2013. This translates into 3.6 apartments completed per 1,000 inhabitants.

Apartments completed per 1,000 inhabitants in Prague

Source: CSO, DTZ In the last few years, most developments in Prague have concentrated on locations such as Prague 4, Prague 5, Prague 9 and Prague 10. Recently, Prague 8 has entered the residential market with 2,300 apartments planned, representing 10,6% of the new supply pipeline and closely following Prague 5.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Dwellings completed Dwellings started

0

1

2

3

4

5

6

7

8

9

2006 2007 2008 2009 2010 2011 2012 2013 2014



The residential market in other urban areas consists mainly of smaller new projects, renovated housing (panelaks) and stand alone family houses. The largest projects concentrate in decentralized areas such as Barrandov (Ekospol), Stodůlky (FINEP) and Nové Butovice (Trigema) in Prague 5, Kyje (Ekospol) and Letňany (Trigema) in Prague 9, Hostivař (FINEP) and Nové Měcholupy (Ekospol, Central Group) in Prague 10, and Újezd in Prague 11 (Skanska Reality). Central Group intends to launch a new project in Žižkov, Prague 3 and in Kamýk, Prague 4. Skanska Reality will launch another phase of a larger project in Modřany, Prague 4 (121 apartments). According to Ekospol the total pipeline in Prague amounts to over 22,000 apartments.

Sales Prices

Residential sales prices in Prague have experienced a significant decrease in the last five years. Prices grew until mid-2008 followed by a sober 2009. In 2010, new projects and increasing competition resulted in downward pressure on residential prices; this trend has continued until today. According to Lexxus, prices have dropped between 2008 and 2010 by around 20%. According to information by the Czech Statistical Office sales prices of older apartments reached an average of CZK 48,214/ sq m excluding VAT in Prague during 2008–2010, while new flats reached an average price of CZK 52,743/sq m during the same period. During 2011 residential prices decreased at a slower pace by only around 3% and recorded an increase in 2012 of ca. 5-10% caused primarily by the increase of the VAT rate and artificial increases in certain projects. Prices grew slightly during 2014 in all segments, most of all in the family house segment. The engine of the price growth is Prague, Brno, Pilsen, the Olomouc Region and the South Bohemian Region. A very slight year-on-year drop was recorded in the Zlin Region and the Usti nad Labem Region according to the ARTN Trend report 2015. Annual sales climbed to 5 950 new flats. This is a year-on-year increase of 18% in comparison with 2013. The stock of available apartments was 6,750 units as of December 2014. Current average prices of new apartments in Prague stand at ca. CZK 50,000-52,000 per sq m excluding VAT for good quality projects in attractive locations. For the lower segment, prices stand at around CZK 40,000 – 50,000/ sq m. The most expensive projects target prices over CZK 200,000 per sq m.



Indices of realised prices of new apartments

Source: Czech Statistical Office; * 2010 = 100

The average price of available apartments grew in Q4 2014 by 0.5% in comparison with Q3 2014, and it currently is CZK 61,857 including VAT/sq m. The market has shown long-term sales growth, and the same trend can be seen when looking at the development of the average price for sq m. The price was 1% higher at the end of 2014 than the price calculated in the end of the previous year according to statistics provided by Trigema.

11.1.4 Czech Republic Industrial Market Overview

Stock

In Q1 2015 39,900 sq m of storage space were completed, the total industrial stock thus increased to 5.14 million sq m. Out of that 2 million sq m were situated in the Greater Prague Area. There were more than 411,000 sq m of storage space under construction, of that around 90% were pre-leased at the end of Q1 2015. More than half of the space is under construction in the Greater Prague area, followed by the Plzeň and Hradec Králové region. In Q1 2015 construction was launched among others on Building HR4 in CTPark Hranice (12,500 sq m), Building BP16 in CTPark Plzeň for MOL Logistics (10,200 sq m) and Building H6 for Nika Chrudim in P3 Liberec (7,600 sq m).

95.0

96.0

97.0

98.0

99.0

100.0

101.0

102.0

103.0



Annual new supply, sq m

Source: DTZ, Industrial Research Forum

Take-up

Gross take-up (including renegotiations) amounted to 238,100 sq m in Q1 2015, this represents a decrease of 45% compared to the previous quarter, when however a record leasing transaction was concluded by Amazon (133,000 sq m). In an annual comparison gross take-up dropped by 13%. Net take-up amounted to 190,900 sq m, 50% down on Q4 2014 but 40% up on Q1 2014. Expansions of existing, operating companies accounted for 29% of gross take-up, new leases in existing space recorded a share of 27%. Pre-leased space accounted for 24% and renegotiations took a 20% share. Manufacturing companies had the highest share on net take-up with a share of 63%, followed by 3PLs (23%) and distribution companies (14%). Largest volumes of new leases were recorded in the Greater Prague area and the surrounding of Plzeň and Ostrava.

Gross and net take-up, sq m


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

Gross take-up Net take-up



Net take-up by owner in Q1 2015, sq m


Net take-up by region in Q1 2015, sq m


39%

13%11%

11%

11%

9%6%

CTP Invest

P3

VGP

Contera

Prologis

Uno

Other

23%

16%

14%14%

9%

9%

7%4%

3% 1% Greater Prague

Plzeň region

Moravia-Silesia region

South Moravia region

Central BohemiaregionÚstí nad Labem region

Liberec region

Olomouc region

Vysočina region

Pardubice region



Major deals in Q1 2015

Property Region Size (sq m) Tenant Sector Deal Type

VGP Park Plzeň Pilsen region 21,800 Confidential Production Pre-lease

CTPark Ostrava Moravia-Silesia 20,300 Grupo Antolin Production Renegotiation,

expansion Uno Park Mladá Boleslav

Central Bohemia 13,000 Confidential 3PL New

occupation Business Park Ostrava

Moravia-Silesia 11,900 Adler Czech Distribution Pre-lease

CTPark Kadaň Ústí nad Labem 8,800 Bilka Production New

occupation


Vacancy & Rents

The vacancy rate in the Czech Republic registered a quarterly decrease of 50 bps to 7.8% reflecting 402,500 sq m of vacant modern industrial space. The Hradec Králové region (15.9%) and Pardubice region (14.3%) count among the regions with highest vacancy rates. The Greater Prague area recorded a vacancy rate of close to the country average at 8.0%.

Vacancy rate, %


Prime headline rents for modern logistics space have remained static at €3.80-4.25 per sq m per month. The effective rent including the rent free period ranged from €3.20 to €3.90 per sq m per month.

4

5

6

7

8

9

10



Czech Republic industrial stock, vacancy and asking rents in Q1 2015

Source: DTZ

11.1.5 Investment Market

The key driver of investment activity in the region and the Czech Republic is the weight of capital. Amid low interest rates and close to zero yields on non-risky assets, investors turn to real estate in the search for yields, supported by favourable financing conditions. Thanks to the strong start of the year and the pipeline of investment transactions we anticipate another successful year. Investment volumes could approach a new record, if all deals in negotiations will complete. The retail sector is likely to continue to be attractive. Investors also increasingly look at value - add investment opportunities as a result of yield compression in the core plus and core segment

Investment volume by sector, € m

Source: DTZ

0100200300400500600700800900

1,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2013 2014 2015

Office Retail Mixed use Industrial Hotel Residential



The Q1 total investment volume of €915 million was the second highest quarterly result ever recorded in the market and the strongest ever first quarter. Compared with Q1 2014 this was three times higher and almost twice the level of Q4 2014. The strong result was largely influenced by the sale of Palladium shopping and office centre (€570 m), the largest transaction volume ever recorded on a single property sale. The investment activity was thus dominated by retail and mixed use investments with a 78% share of the total volume. Additional notable retail transactions include the acquisition of the portfolio of 72 retail assets by Peakside Capital Advisors and Campus Square Brno by CBRE GI. The hotel investment market is also reviving with Diplomat Center in Plzeň and Europort Airport Centre in Prague anchored by Marriott Courtyard hotels and complementary office and retail space sold by CA Immo, and hotel Jury´s Inn in Prague 8 sold by Avestus Real Estate. The only industrial transaction was the acquisition of Panattoni Park Prague Airport by AEW Europe.

Investment volume by source of capital in Q1 2015, € m

Source: DTZ

Continued strong investment activity has pushed yields further down and capital values up. Prime industrial properties yield 7% (-50bps). Prime office properties achieve yields of 5.75% (-25bps). Prime yields for high street retail have compressed sharply already in 2014 and thus remained stable in Q1 2015. Further yield compression is likely during the remainder of the year.

Major investment deals in Q1 2015

Property Vendor Vendor Nationality

Purchaser Purchaser Nationality

Price (€ m)

Palladium Hannover Leasing

Germany Union Investment Real Estate

Germany 570

Panattoni Park Prague Airport

Panattoni United States

AEW Europe European 150

Portfolio of 72 retail assets

Atrium European Real Estate

Austria Peakside Capital Advisors

European 70

Campus Square Brno

AIG Lincoln United Kingdom

CBRE Global Investors

International Confidential

Source: DTZ

62%

24%

6%6%

2%

Germany

European

Czech Republic

International

Undisclosed



11.2 Hungary

11.2.1 Economic Overview

The preliminary estimate indicated that real GDP growth slowed to 0.6% on the quarter in Q1, a result that confounded our and most others’ more optimistic estimates. However, historical revisions to growth during H2 2014 meant that the overall implication of the new figures for growth this year was neutral. No detail on the expenditure breakdown is yet available, but separate data from the Central Statistics Office suggests that investment is likely to have been the key drag on growth. The public sector accounted for most of the recorded decline, reflecting a reduction in EU-funded projects. Looking ahead, we have become marginally more upbeat regarding growth prospects this year. Recent trade and industrial production data have consistently surprised on the upside, perhaps indicating a greater than- expected impact from the upturn in Eurozone activity. As a result, we have raised our GDP growth forecast for this year to 3% from 2.8% before.

Main economic indicators for Hungary

Source: Oxford Economics, DTZ

Finally, the government’s unorthodox economic strategy received a further boost this month due to an upgraded outlook for Hungarian sovereign debt by Fitch. The move paves the way for Hungarian bonds to be returned to investment grade over the next 18 months.

Forecast for Hungary (Annual percentage changes unless specified)

2013 2014 2015 2016 2017 2018 Domestic Demand 1.1 4.3 4.8 3.3 2.3 2.1

Private Consumption -0.1 1.6 3.1 3.2 2.0 1.8 Fixed Investment 5.2 11.7 1.2 3.5 3.1 2.8 Stockbuilding (% of GDP) -2.5 -2.3 -0.1 0.3 0.4 0.5 Government Consumption 3.2 2.4 1.5 1.2 1.5 1.6

Exports of Goods and Services 5.9 8.7 5.7 5.1 5.2 4.9 Imports of Goods and Services 5.9 10.0 7.5 6.0 5.7 5.3 GDP 1.7 3.6 3.0 2.6 1.9 1.8 Industrial Production 1.4 7.1 5.7 3.0 3.6 3.2 Consumer Prices 1.7 -0.2 0.2 2.5 3.2 2.9 Current Balance (% of GDP) 4.0 4.1 4.2 3.7 3.1 2.3 Government Budget (% of GDP) -2.5 -2.6 -2.7 -2.8 -2.7 -2.6 Current Account ($bn) 5.39 5.69 5.09 4.59 4.12 3.32 Trade Balance ($bn) 4.67 3.59 4.82 4.97 4.81 4.64 Short-Term Interest Rates (%) 4.32 2.41 1.85 2.39 3.63 4.43 Exchange rate (Per Euro) 297.0 308.7 305.1 300.1 293.8 287.1


-20

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-5

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F

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GDP CPI Industrial production Unemployment rate



In a widely-anticipated move, the Monetary Policy Council (MPC) cut interest rates by a further 15bp at its May meeting. We have retained our forecast for a further cut of 15bp in June, followed by a pause for the remainder of the year. But recent communication has fueled speculation of further cuts. However, inflation has begun to pick up with recent prints having surprised on the upside. In our view, with the economy now operating close to full capacity, it is a stretch to argue that the current monetary policy stance is too tight to allow inflation to return to target in the medium term. However, the risk of further cuts this year has risen in the past month.

11.2.2 Office Market Overview

Office market Q4 2014 Q1 2015 Directional outlook New supply (sq m) 19,000 -

Demand (sq m) 117,000 64,010

Vacancy rate (%°) 16.2 15.7

Prime rents (€/sq m/month) 14-16

Source: BRF, DTZ

Supply

no new completion in Q1 2015 two office projects in the pipeline for 2015 over 3 million sq m modern office stock

Development activity remains low, 95,000 sq m is currently in the pipeline to be delivered in the next two years. Nearly 80% of the office new supply is located on Váci út corridor. Modern office stock in Budapest stands at 3.23 million sq m, including 2,587,800 sq m of rental stock and 642,300 sq m of owner-occupied stock. Budapest Research Forum, where DTZ is a member, has carried out an annual review of the office stock resulting in a negative correction totalling nearly 8,000 sq m.

Office stock by completion year, in sq m

Source: BRF, DTZ

Supply of larger areas within modern office schemes is becoming scarce. Due to the time required to complete new office centres and a general reluctance of developers to launch projects on speculative basis, occupiers increasingly need to take a long term view when commencing a relocation or major expansion project. They shall take into account the lead in time for property selection, negotiation and delivery of the project as well.

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1990-1995 1996-2000 2001-2005 2006-2010 2011-2015

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Demand

64,000 sq m was let in Q1 2015 share of new deals was the highest relatively small average deal size

Demand in Q1 2015 was slightly less (by 5%) than the 5-year average of the first quarters’ lettings. 64,010 sq m was transacted, only half of the record level registered previous quarter. New deals comprised over 27,000 sq m, out of which 8,000 sq m was signed by companies relocating within stock. Renewals made up 31% of the take-up, while expansions took 19% of the quarterly demand. Net take-up (new deals, relocations from outside stock and expansions) totaled 31,200 sq m, 49% of the total demand. One owner-occupied deal was registered for 4,680 sq m, 7% of the demand. 165 deals were closed with an average size of 388 sq m. This equals to the level of Q1 2014. The business services sector retained its leading position in terms of take-up, with an outstanding 37% market share. Companies in the IT/hi-tech/telecom sector followed with 20% share, while the industrial sector represented 12% of the total demand. The highest share of demand was registered on the largest office sub-market, Váci út corridor, representing 24% of the demand in Q1 2015. Inner Pest followed with 20% market share and Central Buda with 12%. Net absorption totalled 13,960 sq m, with Váci út corridor accounting for 9,220 sq m.

Major office indicators

Source: DTZ

Vacancy

competitive rents in the CEE region average grade A headline at €10.5 – €12.5

Grade A office buildings with excellent technical specifications and in prime locations offer office spaces at headline rents ranging between €14 and €16 per sq m per month. From a global point of view, Budapest is one of the most affordable office locations in Europe. Rental levels are below the European market average, and good infrastructure and excellent human resources make Budapest a favorable choice in the region.

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2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1

New supply Demand Rental vacancy rate Overall vacancy rate



Rents

the market is stabilizing average grade A headline at €10.5 – €12.5

Grade A office buildings with excellent technical specifications and in prime locations offer office spaces at headline rents ranging between €14 and €16 per sq m per month. From a global point of view, Budapest is one of the most affordable office locations in Europe. Rental levels are below the European market average, and good infrastructure and excellent human resources make Budapest a favourable choice in the region.

Budapest office sub-markets

Source: DTZ Research

11.2.3 Investment market

Volume

2014 was characterized by turbulent investment activity, with several larger deals closed in addition to numerous smaller transactions. Investment volume in Hungary totalled €480 million, 70% above 2013 figure.

28 investment transactions were closed, the highest number recorded during the past 5 years. 2014 was characterized by turbulent investment activity, with several larger deals closed in addition to numerous smaller transactions. Investment volume in Hungary totaled €480 million, 70% above the 2013 figure.



Investment volume in Hungary, € million


Owner occupied deals added an additional €50 million to the total volume, while off-market, market and opportunistic deals accounted for a further €69 million. The largest transaction was the sale of a 50% share in Allee shopping and office center to Nationale Nederlanden for about €95 million. This was followed by the Hotel Intercontinental deal sold to Al Habtoor group for €65 million and the recently completed landmark office building Eiffel Palace, bought by the National Bank for over €45 million. The trend towards smaller transactions continues as the average transaction size reached €17 million in 2014. Only 7 out of 28 investment transactions were closed for over €20 million. Hotel transactions totalled in average of €24 million, office and industrial transactions were close to the total average with €18 and €19 million. Several smaller retail units were transacted during the year resulting in an average deal size of €14 million. The office and retail sectors had an almost equal share in terms of both value and number of transactions in 2014, however only one large retail transaction gave 54% of the value in the retail sector. There are few large retail properties in Hungary suitable for investment, therefore, office properties are expected to dominate the investment pipeline, which is also supported by growing occupier demand and potential development in the sector. Market activity was dominated primarily by Hungarian Investors and a smaller number of larger German investors. Hungary has a number of locally active asset managers, who typically team up with international investors, integrating local knowledge whilst sharing the risks of sourcing capital. In addition, capital continues to flow into the major local property funds, thus creating liquidity that can target large lot sizes. The 100-150 bps yield premium on quality assets and the opportunity to realize an IRR close to 20% on good performing, but management intensive secondary assets will continue to make Hungary an attractive destination. That said however, the number of available quality products needs to increase to drive up transaction volume. We are aware that a number of international institutional investors are already scanning the Hungarian market for suitable products.

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014



Investment share by sector

Source: DTZ

Yields

Converging pricing expectations of vendors and purchasers have led to transactions, providing valuable benchmarks for the market. Prime yields in Hungary have reached 7.0-7.25% in the office and retail sector, whilst the industrial market is experiencing yields of around 9%. This translates into a yield premium of 100-150 bps over the Czech Republic and Poland.

Prime yields


Forecast

We expect that investors will continue to prefer the CEE region in order to realize higher returns, as increases in bond yields make Western European markets less attractive on a relative pricing basis. Some larger products are in the pipeline, mainly single office properties and cross-border industrial portfolios with Hungarian components. Vacancy rates on the Budapest office and industrial markets show significant declines, this coupled with a modest construction volume indicates a shift towards a landlord market. The office and industrial markets show a strong trend towards recovery, while prime retail displays a steady performance. With these positive notes on the market, we expect increasing investment activity over the next two years as well-positioned and well-managed properties will be able to create added value for today’s buyers.

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2010 2011 2012 2013 2014

Office Retail Industrial Hotel

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Office Retail Industrial



11.2.4 Office Investment Transactions

Address Description

Size Date and type of transaction Tenancy

Purchase price million

€ Yield

Vision Towers North Budapest XIII 11,100 sq m – Class A+

Q3 2014 core

100% leased to KPMG 25.0 7.30%

Green House Budapest XIII 17,800 sq m – Class A+

Q3 2014 core+

96% leased asking rent: €13/sqm/month 36.0 8.00%

Kálmán Imre - Regus Budapest V 3,200 sq m – Class A

Q4 2014 core+

100% leased to Regus 6.5 8.40%

Stefánia Park Budapest XIV 4,800 sq m – Class A

Q2 2014 core+

94% leased asking rent: €13/sqm/month

9.2 8.75%

Buda Business Center Budapest II 6,000 sq m – Class B

Q4 2014 value-added

55% occupancy asking rent: €9-10/sqm/month 6.0 9.40%



11.3 Poland

11.3.1 Economic overview

Economic growth and inflation

In Q1 2015, the Polish economy has continued to grow steadily, achieving a GDP increase of 3.6% y-o-y, compared to 3.4% registered in Q1 2014. This was driven mainly by the further rise of domestic demand, bolstered by the increase in private consumption levels by 3.1% and a dynamic surge in enterprises’ investment of 11.4%. The Polish Purchasing Managers Index grew in June 2015 by 1.9% and amounted to 54.3%, which resulted from the increase in industrial production output, the amount of new orders as well as higher consumer demand. Also, as a consequence of lower unemployment and rising purchasing power, the Consumer Confidence Index published by the Central Statistical Office surged by 3.2 percentage points in June 2015 and amounted to –10.4, which was the best result since September 2008. Another factor which significantly influenced the GDP growth in Poland is the ongoing economic recovery in EU member countries, which traditionally are the biggest recipients of goods and services produced in Poland. In H1 2015, a substantially larger share of Polish exports were sold to the EU; a consequence of the Russian embargo. Furthermore, a significant increase in Polish exports to China has been reported in 2015. The GDP growth is expected to continue growing in H2 2015. However, due to some external factors, such as the uncertainty of the Greek bailout program and Russian embargo on some of the EU products, the forecasts for 2015 fluctuate around 3.4 – 3.5%. According to the National Bank of Poland (NBP), the pace of GDP growth will be sustained in the coming years and will amount to 3.5% in 2016 and 3.4% in 2017. Due to a significant decrease in food and oil prices in Poland, deflation of 1.5% in Q1 2015 has been noted. In order to further stimulate lending and consumption in the economy, the Polish Monetary Policy Council decreased interest rates by 0.5 percentage points to the record low levels (deposit rate: 0.5%, lombard rate: 2.5%, rediscount rate: 1.75% and reference rate: 1.5%). The decrease of interest rates resulted from a prolonged period of deflation in the Polish economy and the intention to lowering the disparity in the interest rate levels between Poland and neighbouring markets. No further interest rate reductions are expected in the coming months.

Trade balance

In Q1 2015, Polish exports grew by 5.2% y-o-y and amounted to EUR 42.5 billion. At the same time the level of imports decreased by 1.0% and equaled EUR 40.4 billion. The trade balance amounted to EUR 2.1 billion, which constituted an increase of EUR 2.5 billion, compared to Q1 2014. The majority of goods and services produced in Poland were sold to the EU, mainly Germany, which accounts for almost 30% of the Polish exports. As a consequence of the Russian embargo, a repositioning of Polish exports has taken place in H1 2015. A decrease in exports to CEE countries has been noted (Belarus by 40%, Russia by 32% and Ukraine by 16%) with a sharp growth of exports to Western Europe and China (22%). According to the Polish Ministry of Economy, the value of Polish exports in 2015 will amount to EUR 176.1 billion, while the value of imports will equal EUR 176.4 billion. The forecasted trade balance for 2015 is expected to be at the level of –EUR 0.3 billion.



Foreign direct investments

Positive economic outlook and relative political stability encourage foreign investment in the Polish market, which is reflected in the growing FDI inflow. The investment transaction volume, in which the Polish Information and Foreign Investments Agency (PAIiIZ) was involved in Q1 2015, was estimated at approximately EUR 300 million. A great deal of projects involved American, French and German companies. According to PAIiIZ, the main factors which attracted foreign investors to Poland were the Polish membership in the EU, a large labour base of skilled professionals and high education levels.

Currency exchange

In H1 2015, the Polish zloty depreciated against the euro and the US dollar, achieving the level of 4.16 PLN/EUR and 3.76 PLN/USD as of 30 June 2015. The weakening of the Polish currency resulted to a large extent from external factors such as the removal of the currency peg between the Swiss franc and the euro by the Swiss National Bank and the quantitative easing program introduced by the European Central Bank in January 2015. Additionally, the expected increase of interest rates in the US and the political tensions in the Polish economic environment, and the potentially negative outcome of the Greek bailout program can further negatively influence the currency exchange level of the Polish zloty in H2 2015.

Retail sales

In Q1 2015, retail sales at constant prices grew by 4.4% y-o-y, which constituted an increase compared with 2.9% y-o-y in 2014. This growth was a consequence of improved consumer sentiment, which resulted from the decrease of unemployment and rising salaries. Additionally, the growth of retail sales in Poland in Q1 2015 was fuelled by the decline of prices of many products and services, which in turn increased consumer purchasing power.

Industrial production

Industrial production increased in Poland in the first three months of 2015, on average by 5.3% y-o-y, compared to 3.3% y-o-y in 2014. The increase in industrial production levels was accompanied by an increase in output, which grew on average by 3.4% y-o-y. The Polish Ministry of Economy estimates that the increase in industrial production in 2015 will amount to 3.7%.

Labour market

Compared to the end of 2014, the unemployment rate decreased by 0.7 percentage points and amounted to 10.8% as of 31 May 2015. This was followed by an increase in average salary levels in the enterprise sector, which rose in nominal terms by 4.0% y-o-y and equaled PLN 4,054 gross as of the end of Q1 2015. Due to deflation, the purchasing power of the average salary was 5.7% higher than in the corresponding period of 2014. Nonetheless, the unemployment level in Poland still remains relatively high, which limits the pace of further growth of salaries as well as the inflationary processes in the economy. According to the NBP forecasts, the unemployment rate is expected to decrease in 2015 to the level of 10.5%, which will be triggered mainly by an increase of economic activity in the second half of the year.



11.3.2 Warsaw office occupational market

Warsaw is the largest and most mature office market in Poland, with a total modern office stock of 4.5 million sq m located in 450 buildings. Q1 2015 ended with the completion of 8 new schemes, delivering 59,000 sq m to the market.

New supply in Warsaw by location (2006 – 2015)

Source: DTZ, PORF, * – forecast 75% of the total modern office stock in Warsaw is located within the four largest zones including Upper South, Fringe, South West and Core. It should be noted that a vast majority of new schemes scheduled for 2015 and 2016 will also be situated in these districts, which will strengthen their position as the major business clusters in the city. Currently, 37 office buildings with an area of 660,000 sq m are under construction and scheduled for delivery in 2015 and 2016. According to estimations, the next two years will be record-breaking in terms of volumes of annual new supply. It should be mentioned, however, that due to strong competition on the market, completion of some schemes may be delayed or put on hold.

Existing office stock and planned new supply in Warsaw by location (Q1 2015)

Source: DTZ, PORF

In Q1 2015, the Upper South was the most popular zone among developers, with 17,600 sq m of office space completed, followed by the South West (14,600 sq m).

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*0

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New supply in Warsaw by location (Q1 2015)

Source: DTZ, PORF Compared to the previous year, the demand for modern office space in Q1 2015 remained at a similar stable level. Net take-up (volume of transactions excluding renegotiations) registered during the last quarter amounted to 121,000 sq m, whereas the total amount of leased space exceeded 169,000 sq m and was higher by 10% than the 2014 quarterly average.

Take-up in Warsaw by location (2006 – Q1 2015)

Source: DTZ, PORF The Upper South zone again proved to be the most popular location among tenants, with a 37% share in the total volume of lease transactions concluded in Q1 2015. It outnumbered the second most popular destination, Fringe (20% share in the total volume of lease transactions). Renegotiations and renewals still accounted for a substantial share of the take-up volume, reaching 29%, which was a similar level to those recorded in the previous two years (31% in 2014 and 30% in 2013). Like in 2014, pre-lets were not a popular market practice (14% of the take-up volume), which is due to high availability of space within existing buildings.

30%

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Upper South West South East North Other

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q12015

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Take-up in Warsaw by type of transaction (2006 – Q1 2015)

Source: DTZ, PORF The strong demand on the market results less from the expansion of occupied space, being instead rather more optimisation-led. Occupiers take advantage of their improved negotiating position and relocate to new premises. This trend will continue towards the year 2015 as a result of growing competition among landlords and downward pressure on effective rents. At the end of Q1 2015, the vacancy rate in Warsaw stood at 13.0%, which represents a decrease by 0.3 percentage points compared to Q4 2014. This was the second quarter in a row when the availability ratio fell, which may be attributed to strong demand for modern office space. The vacancy rate for the central zones was 14.5%, indicating a fall from 15.2% at the end of 2014. The availability ratio in non-central locations reached 12.4% and remained stable in the last quarters. Similarly to the previous quarters, the highest vacancy rate was recorded in the North zone (19.6%), which translated into 41,000 sq m of vacant space. Below-average values were noted in the Upper South, East, South East and Lower South zones.

Vacancy rates in Warsaw by location (2006 – 2015)

Source: DTZ, PORF, * – forecast

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q12015

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New Pre-let Renegotiations and renewals

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*0%

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Central Non-central Warsaw



Vacancy rates in Warsaw by location (Q1 2015)

Source: DTZ, PORF Vacancy rates in 2015 and 2016 are likely to increase due to strong pipeline supply. During Q1 2015, rental levels remained relatively stable and currently prime asking rates in the central zones range from EUR 22 to EUR 25 per sq m per month, whereas in non-central locations they are at the level of EUR 14 – 15 per sq m per month.

Quoting rents in Warsaw by location (2006 – 2015)

Source: DTZ, PORF, * – forecast High levels of new supply and increasing availability ratios recorded over the last 2 – 3 years resulted in strong competition among landlords and favourable negotiation position of tenants. Consequently, occupiers may count on attractive incentive packages including fit-out contributions and rent free periods, which exert a downward pressure on effective rents. Taking into consideration the strong pipeline supply scheduled for the next two years, we are of the opinion that this trend is likely to continue, which may lead to a further decrease of effective rents, especially in buildings characterised by inferior location and/or quality.

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11.3.3 Industrial occupational market

Supply

The total supply of modern warehouse space in Poland at the end of 2014 amounted to 8.8 m sq m and increased by almost 14 per cent compared to 2013. Similar to previous years, almost 90 per cent of the modern warehouse space was located in the five biggest logistics hubs in Poland: Greater Warsaw, Upper and Lower Silesia, the Poznań region and central Poland (Łódź / Stryków area). At the end of 2014 the majority of warehouse space was located in greater Warsaw (2.8 m sq m), Upper Silesia (1.6 m sq m), Lower Silesia (1.2 m sq m), the Poznań region (1.2 m sq m) and central Poland (1.1 m sq m).

Stock by regions in Poland, 2014 (%)

Source: DTZ The high attractiveness of these locations stems from their close proximity to relatively big markets (Warsaw, Silesia, Poznań) and their well-established positions as warehouse hubs, as well as the large number of existing buildings, which attracts further warehouse investment. On the other hand, we still observe an increasing amount of new warehouse projects in locations such as the Tricity area, Szczecin, Kraków, Lublin and Bydgoszcz. These markets are increasingly attractive due to new investments in infrastructure, access to seaports and container terminals (Tricity, Szczecin), convenient connections to new markets (Tricity – Scandinavia, Lublin – Ukraine, Eastern markets) and lower labour costs (Lublin, Szczecin). The total amount of modern warehouse space in these locations, as of at the end of 2014, was 900,000 sq m and increased by more than 200,000 sq m (by approximately 30 per cent) compared to 2013. This increase in the amount of warehouse space results from the delivery of several new projects (e.g. Logistic & Business Park Bydgoszcz, Kowale 3 in Gdańsk), as well as the expansion of existing ones (PPL Omega Pilzno, Panattoni Park Gdańsk, North-West Logistics Park). Moreover, an additional 170,000 sq m of warehouse space is currently being developed in the aforementioned locations.



Selected projects delivered in H2 2014

Project Region Area (sq m) Developer

Panattoni Wrocław Lower Silesia 123 000 Panattoni

Goodman Wrocław South Logistics Centre Lower Silesia 123 500 Goodman

Panattoni Poznań Poznań Region 123 000 Panattoni

Goodman Konin Poznań Region 39 700 Goodman

Clip Poznań Poznań Region 20 800 CLIP

Source: DTZ

Developers’ activity

In the second half of 2014 approximately 740,000 sq m of new warehouse space was delivered, which shows an increase of approximately 117 per cent compared to the first half of the year. The total amount of new supply in Poland in 2014 equalled 1.1 m sq m, the highest amount since 2008 (1.6 m sq m). The majority of new supply in the second half of 2014 was delivered in Lower Silesia (approximately 350,000 sq m) and the Poznań Region (approximately 280,000 sq m). Almost all of the newly delivered warehouse space was located outside the Greater Warsaw. The largest projects delivered to the Polish market in the second half of 2014 included Panattoni Poznań, Panattoni Wrocław and Goodman Wrocław South Logistics Centre, the sum total of which amounted to almost 370,000 sq m. At the end of the fourth quarter of 2014 an additional 630,000 sq m of warehouse space was under construction, the majority of which was located in the Poznań area (214,000 sq m) and Upper Silesia (122,000 sq m).

New supply by regions (000 sq m)

Source: DTZ Approximately 70 per cent of the warehouse space under construction has been pre-let, which constitutes a decrease from the more than 90 per cent of space being pre-let at the end of the first half of 2014. This indicates an increase in speculative warehouse space delivered to the market.



Speculative warehouse space is usually only a part of larger logistics and industrial projects; standalone speculative warehouses remain rare on the market. Developers still focus on pre-let projects or built-to-suit schemes, which are adjusted to tenants’ specific requirements. DTZ expects that in the first half of 2015 an additional 400,000 - 500,000 sq m of new supply will be delivered and that the total stock in Poland will exceed 9 m sq m.

Major warehouse schemes under construction

Project Region Area (sq m) Developer

Goodman Poznań II Logistics Centre Poznań Region 82 400 Goodman

Panattoni BTS Bielsko-Biała Upper Silesia 45 000 Panattoni

Panattoni Park Sosnowiec Upper Silesia 43 300 Panattoni

North-West Logistics Park Other regions (Szczecin Region)

42 550 Waimea

Segro Logistics Park Poznań Komorniki Poznań Region 40 800 Segro

Goodman Pomeranian Logistics Centre Tricity Region 39 350 Goodman

Panattoni Park Poznań IV Poznań Region 35 000 Panattoni

Panattoni Busness Centre Łódź II Central Poland 31 500 Panattoni

Source: DTZ

Demand

A further strengthening of demand for modern warehouse space in Poland was observed in the second half of 2014. Take-up during this period amounted to 1.6 m sq m, which represented an increase of 30 per cent as compared with the first half of 2014 and an increase of 18 per cent as compared with to the second half of 2013. Total take-up volume in 2014 equalled 2.8 m sq m. The increase in the take-up volume results from the arrival of new key tenants (e.g., Amazon) and strong demand for warehouse space generated by e-commerce, logistics and FMCG tenants. Approximately 70 per cent of take-up related to new leases, while 30 per cent fell to renewals and 1 per cent to expansions. In H2 2014 the highest volume of take-up was recorded in Lower Silesia (approximately. 280,000 sq m), Warsaw Zone 3 (approximately 240,000 sq m) and in Upper Silesia (approximately 235,000 sq m). These three locations accounted for almost 47 per cent of the total take-up volume recorded in Poland during this period.



Take-up split, 2014 (%)

Source: DTZ The average (leased) unit size remained comparable to previous periods and amounted to 5,000 sq m. A significant demand for small business units (SBU, units up to 600 sq m) has also been observed in greater Warsaw. Lease agreements relating to these types of units corresponded to approximately 24 per cent of the total take-up volume in all three Warsaw zones in the second half of 2014 and resulted from strong demand for SBUs. Another factor that helped result in increased take-up in 2014 was the further expansion of companies providing logistics outsourcing services. This, in turn, led to several relocations to new BTS schemes. DTZ expects that in 2015 demand will be driven by both new ecommerce tenants and existing tenants, who will likely introduce new services and require additional warehouse space. DTZ predicts that the upward trend in take-up will continue in 2015, and will exceed 1 m sq m of modern warehouse space in the first half of the year.

Vacancy

In the second half of 2014 vacancy rates in Poland fell to the record-low of 5,8 per cent (at the end of 2014). The vacancy rate at the end of 2014 was lower by 3.2 pp as compared to the result from the end of H1 2014, and almost two times lower than the rate from the end of 2013 (11.1 per cent). A further reduction of the vacancy rate resulted from the higher number of new tenants in 2014 (mainly from the e-commerce and FMCG industries) and the fact that the majority of new warehouse projects were built based on pre-let or BTS arrangements. At the end of 2014 the lowest vacancy rates were recorded in central Poland (4.4 per cent), Warsaw zone 3 (5.4 per cent) and the Poznań region, where the vacancy rate amounted to 0.6 per cent. The Poznań region was also characterized by the highest amount of space under construction. On the other hand, the highest vacancy rate was recorded in Warsaw Zone 1 (11.8 per cent, a decrease of 9.1 pp as compared with the end of 2013) and other locations (e.g., Toruń), where the vacancy rate rose by 3.7 pp to 11.8 per cent at the end of 2014.



Vacancy rates 2008-2014, Poland (%)

Source: DTZ

Rents

Despite falling vacancy rates, strong competition between developers on the market resulted in stable rent levels. Prime rents – compared with those noted in preceding years - did not change significantly in the second half of 2014. Highest rent levels were recorded in Warsaw Zone 1 (EUR 4.0 - 5.5 per sq m per month). High rent levels were also recorded in the Kraków Region (EUR 3.3 – 4.3 / sq m / month, on average), Upper Silesia (EUR 3.0 – 3.8 / sq m / month) and Tricity (EUR 3.2 – 3.7 / sq m / month). The lowest rent levels were observed in Warsaw Zone 3, where they varied between EUR 2.3 and EUR 3.2 / sq m / month. Given the decreasing vacancy rates, DTZ expects slight upward pressure on the rent levels in some locations (e.g. the Poznań Region, Lower Silesia), while in locations such as Warsaw Zones 2 and 3 asking rents may decrease insignificantly.

Headline rents by regions, 2014 (EUR per sq m per month)

Source: DTZ



11.3.4 Investment market

In H1 2015, the commercial real estate investment volume in Poland amounted to EUR 801 million and was considerably lower compared to the same period in the past two years (EUR 1.4 billion in H1 2014 and EUR 1.3 billion in H1 2013). Lower investment volume recorded in H1 2015 was a result of the lack of large transactions which took place in the first 6 months in the previous years. For instance, in H1 2013 New City/NC2, Senator and Złote Tarasy (23% stake) changed hands, while in H1 2014 properties such as Lipowy Office Park, Poznań City Centre, Rondo 1 and a portfolio of warehouse units built by Panattoni Europe were sold. In terms of the number of transactions concluded, the investment activity in H1 2015 was, however, only slightly below that of H1 2014 and H1 2013. H1 2015 saw 20 completed transactions compared to 23 in H1 2014 and 29 in H1 2013.

Investment activity in Poland (2006 – H1 2015)

Source: DTZ Office properties accounted for 45% of total investment volume, remaining the most popular asset class among investors. Compared to previous years, small transactions under EUR 50 million dominated the Polish market, with the largest transactions being Avestus selling Enterprise Park in Kraków to Tristan Capital Partners (EUR 65 million), Skanska selling Infosys Green Horizon in Łódź to the Griffin Group (EUR 65 million) and Akron selling Europlex in Warsaw to Lone Star (EUR 61 million). 50% of total investment volume involved office properties located in Warsaw, which results mainly from the general availability of investment product and maturity of this market. On the other hand, considerable amount of space under construction combined with increasing vacancy rates in Warsaw (13.5% in Q2 2015) encourage investors to seek opportunities in main regional cities such as Kraków, Tricity and Wrocław. The most attractive investments in these areas are the best assets let to strong covenants on long leases. Overall, the number of transactions in regional office markets is expected to increase further in the short to medium term along with their ongoing maturity. The investment activity in the retail sector reached EUR 260 million in H1 2015, accounting for 32% of total investment volume. This represents a decrease of 28% on the same period of the previous year.

0

20

40

60

80

100

2006 2007 2008 2009 2010 2011 2012 2013 2014 H12015

0

1

2

3

4

5

EU

R b

n

Investment activity No. of transactions



In the first 6 months of this year, almost all significant retail investment transactions took place in medium-sized cities, which is a consequence of the growing importance of these markets and limited number of retail properties available for sale in Warsaw and other large cities. The retail sector was also dominated by small transactions of less than EUR 100 million, with the largest deal being Union Investment’s purchase of Sarni Stok in Bielsko-Biała from CBRE GI. The second largest transaction of H1 2015 was the purchase of Factory Ursus in Warsaw and Factory/Futura Park in Kraków (50% stake) by TH Real Estate from Neinver (EUR 60 million). The investment volume in the retail sector will be strong again in H2 2015 as a few large shopping centres are expected to be sold by the end of December 2015, including Riviera in Gdynia (EUR 291 million). After a strong growth in 2013/14, transactional activity in the industrial sector fell during H1 2015. In the period between January and June 2015, the investment turnover was EUR 149 million and only 3 significant transactions were reported. The largest transaction was the sale of Europolis Park Błonie in Błonie and Europolis Park Poland Central in Wola Bykowska to P3 Logistic Parks by CA Immo/EBRD (EUR 80 million). This was followed by the sale-and-leaseback of FM Logistic’s warehouse units in Mszczonów and Tomaszów Mazowiecki. WP Carey is the new owner of the properties. Despite the limited number of investment opportunities currently available in the industrial sector, some further acquisitions have been made in Q3 2015 including Ideal Idea Park III in Warsaw and Prologis Park Wrocław III & V in Wrocław.

Investment activity in Poland by sector (2006 – H1 2015)

Source: DTZ Similarly to 2014, foreign investors were responsible for the majority of transactions concluded in H1 2015. American, British and German investors such as the Griffin Group, P3 Logistic Parks, Tristan Capital Partners and Union Investment were the most active in the first 6 months of this year. In addition, positive results of the Polish economy along with good economic forecasts continue to attract new global players who have not invested in Poland before. Among new investors are Loan Star, Rockcastle and TH Real Estate. Further new investors, mainly from Asia and Scandinavia, are expected to appear in the Polish market in the short to medium term. Polish investors took over 3 office properties in H1 2015.

2006 2007 2008 2009 2010 2011 2012 2013 2014 H12015

0%

20%

40%

60%

80%

100%

Office Retail Industrial Other



Prime yields for office properties in central and non-central Warsaw have remained static during H1 2015 at 6.00 – 6.25% and 7.50 – 7.75% respectively. Yields for the best assets in major regional office markets are still 7.25 – 7.50%.

Prime office yields in Poland (2006 – H1 2015)

Source: DTZ

Prime industrial yields in Poland (2006 – H1 2015)

Source: DTZ Prime and secondary retail yields have compressed by 25 bps in H1 2015 and now stand at an average of 5.50 – 5.75% and 7.25 – 7.50% respectively. Prime industrial yields were also flat in H1 2015 at 7.00 – 7.25% in case of single-let properties. In case of multi-let logistics facilities yields are in excess of 7.50%. Because of considerable development pipeline, growing vacancy rates and concerns about rents, prime office yields in Warsaw are anticipated to remain unchanged in the short to medium term. Further yield compression is, however, expected over the coming months in the industrial and retail sectors. The largest yield movements will be seen in medium-sized cities, largely as a result of the growing investors' appetite for shopping centres in such locations. Secondary retail yields may fall to as low as 7.00%.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H12015

0%

2%

4%

6%

8%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H12015

0%

2%

4%

6%

8%

10%



12 Valuation We are of the opinion that the Market Value of the freehold or leasehold interests in the Property as at 30 June 2015, subject to assumptions and comments in this report and appendices is:- Location Property Market Value Local Currency EUR

CZ

Benice 1B 22,741,000 CZK 835,000 Benice 1C 7,303,000 CZK 268,000 Benice 2-5 149,400,000 CZK 5,484,000 Bubenská 1 256,300,000 CZK 9,407,000 Bubny 1,415,240,000 CZK 51,945,000 Děčín 6,895,000 CZK 253,000 Doupovská 35,200,000 CZK 1,290,000 Grand Hotel Špindlerův Mlýn 43,657,000 CZK 1,602,000 Industrial Park Stříbro 29,970,000 CZK 1,100,000 Košík I a II 3,130,000 CZK 110,000 Košík IIIA 550,000 CZK 20,000 Košík IIIB 330,440,000 CZK 12,130,000 Košík IIIC 82,490,000 CZK 3,030,000 Nupaky 102,010,000 CZK 3,744,000 Office Center Praha - Hradčanská 367,750,000 CZK 13,498,000 Palác Archa Praha 1,084,000,000 CZK 39,790,000 Praga 248,782,000 CZK 9,131,000

Czech republic OPG assets in total 4,185,858,000 CZK 153,637,000

HU V188 Offices 2,141,864,000 HUF 6,800,000 V190 Offices 440,972,000 HUF 1,400,000

Hungary OPG assets in total 2,582,836,000 HUF 8,200,000 LUX Capellen Office Building 21,930,000 EUR 21,930,000 Luxembourg OPG assets in total 21,930,000 EUR 21,930,000

PL

Diana property 19,840,000 PLN 4,730,000 Klonowa Aleja 1,430,000 PLN 340,000 Krakow 14,230,000 PLN 3,390,000 Marki - Excess Land 13,550,000 PLN 3,232,000 Marki property 10,150,000 PLN 2,420,000 Szczeczin 13,940,000 PLN 3,320,000

Poland OPG assets in total 73,140,000 PLN 17,432,000 OPG portfolio 201,199,000

For the Properties where the majority of income is denominated in Euro’s we have used Euro as the valuation currency. As agreed with the Client we have applied an exchange rate of 27.245 CZK to 1 Euro, 314.98 HUF to 1 Euro and 4.1944 PLN to 1 Euro in order to provide the final value either in Local currencies and Euros. Please see the notes for individual Properties. Detailed Summary Table is attached at the Appendix A of this report. Property proformas of individual Property valuations are attached at the Appendix B of this report.



13 Confidentiality and disclosure The contents of this Valuation Report and Appendices are confidential to Orco Property Group SA and Orco Prague for the specific purpose to which they refer and are for their use only. Consequently, and in accordance with current practice, no responsibility is accepted to any other party in respect of the whole or any part of their contents. Before this Valuation Report, or any part thereof, is reproduced or referred to, in any document, circular or statement, and before its contents, or any part thereof, are disclosed orally or otherwise to a third party, the valuer's written approval as to the form and context of such publication or disclosure must first be obtained. For the avoidance of doubt, such approval is required whether or not DTZ is referred to by name and whether or not the contents of our Valuation Report are combined with others. Yours faithfully,

Karel Klečka MRICS Associate Director, Head of Valuation For and on behalf of DTZ Czech Republic

VALU ATIO N REPORT | APPENDICES

APPENDIX A

Summary Table

Sum

mar

y Ta

ble

Valu

atio

n D

ate:

30 J

une

2015

Loca

tion

Prop

erty

Nam

ePr

oper

ty A

ddre

ssTo

tal F

loor

Are

aIn

spec

tion

Dat

eLo

cal c

urre

ncy

EUR

CZ

Bub

ensk

á 1

Bub

ensk

á 1,

Pra

gue

717

447

sq

m87

.48

5.21

9.18

10.5

9Ju

ly 2

015

256

300

000

CZK

9 40

7 00

0C

ZIn

dust

rial P

ark

Stří

bro

Plz

eňsk

á 38

7, S

tříbr

o8

801

sq m

68.6

911

.02

13.0

014

.63

Oct

ober

201

429

970

000

CZK

1

100

000

CZ

Offi

ce C

ente

r Pra

ha -

Hra

dčan

ská

Mila

dy H

orák

ové

116,

Pra

gue

12 8

98 s

q m

80.1

57.

478.

509.

05Ju

ly 2

015

367

750

000

CZK

13 4

98 0

00C

ZP

alác

Arc

ha P

raha

Na

Poř

íčí 2

4-26

, Pra

gue

122

017

sq

m84

.23

6.88

7.31

7.79

July

201

51

084

000

000

CZK

39

790

000

HUV

188

Offi

ces

Vác

i út 1

88, B

udap

est,

1138

13 8

77 s

q m

12.1

1(3

.05)

11.4

814

.43

Sep

tem

ber 2

014

2 14

1 86

4 00

0H

UF

6 80

0 00

0LU

XC

apel

len

Offi

ce B

uild

ing

Rue

Paf

ebru

ch, M

amer

7 69

5 sq

m90

.78

7.63

8.00

8.49

July

201

521

930

000

EU

R

21

930

000

PLD

iana

pro

perty

Chm

ieln

a 13

A, W

arsa

w1

400

sq m

100.

006.

906.

757.

07Ju

ly 2

015

19 8

40 0

00P

LN

4

730

000

PLM

arki

pro

perty

ul. O

kóln

a 45

a, M

arki

35 1

99 s

q m

91.8

716

.90

15.0

018

.82

July

201

510

150

000

PLN

2 42

0 00

099

675

000

Exc

hang

e ra

te C

ZK/E

UR

:27

.245

Exc

hang

e ra

te H

UF/

EU

R:

314.

98

Exc

hang

e ra

te P

LN/E

UR

:4.

1944

Loca

tion

Prop

erty

Nam

ePr

oper

ty A

ddre

ssSi

te A

rea

Insp

ectio

n da

te

CZ

Ben

ice

1BB

enic

e17

041

sq

mJu

ly 2

015

CZ

Ben

ice

1CB

enic

e9

832

sq m

July

201

5C

ZB

enic

e 2-

5B

enic

e49

8 00

0 sq

mJu

ly 2

015

CZ

Bub

nyA

rgen

tinsk

á, P

ragu

e-H

oleš

ovic

e20

2 17

7 sq

mJu

ne 2

015

CZ

Děč

ínB

eneš

ovsk

á, Děč

ín19

152

sq

mJu

ly 2

015

CZ

Dou

povs

káD

oupo

vská

, Pra

gue

175

975

sq m

June

201

5C

ZG

rand

Hot

el Š

pind

lerů

v M

lýn

Špi

ndle

rův

Mlý

n 16

4, Š

pind

lerů

v M

lýn

15 1

61 s

q m

July

201

5C

ZK

ošík

I a

IID

oupo

vská

, Pra

gue

10N

/AJu

ly 2

015

CZ

Koš

ík II

IAK

Hor

kám

, Pra

gue

10N

/AJu

ly 2

015

CZ

Koš

ík II

IBB

ratis

lavs

ká, P

ragu

e 10

9 81

5 sq

mJu

ly 2

015

CZ

Koš

ík II

ICR

ižsk

á, P

ragu

e 10

8 26

6 sq

mJu

ly 2

015

CZ

Nup

aky

Nup

aky

340

041

sq m

July

201

5C

ZP

raga

Pra

gue

Zábě

hlic

e/ H

ostiv

ař64

119

sq

mD

ecem

ber 2

014

HUV

190

Offi

ces

Vác

i út 1

90, B

udap

est X

III4

583

sq m

Sep

tem

ber 2

014

PLK

lono

wa

Ale

jaul

. Św

. Win

cent

ego

128,

War

saw

18 5

35 s

q m

July

201

5PL

Kra

kow

ul. P

iltza

, Kra

ków

35 5

73 s

q m

Sep

tem

ber 2

014

61 2

00 s

q m

10 3

21 s

q m

59 6

09 s

q m

PLS

zcze

czin

ul. S

zosa

Pol

ska,

Szc

zeci

n69

681

sq

mO

ctob

er 2

014

Exc

hang

e ra

te C

ZK/E

UR

:27

.245

Exc

hang

e ra

te H

UF/

EU

R:

314.

98

Exc

hang

e ra

te P

LN/E

UR

:4.

1944

Mar

ket V

alue

Inve

stm

ent p

rope

rtie

s su

mm

ary

Yiel

d (%

)

Dev

elop

men

t pro

pert

ies

sum

mar

y

Equi

vale

nt Y

ield

22 7

41 0

00C

ZK

Lo

cal c

urre

ncy

Occ

upan

cy ra

te (%

)In

itial

Yie

ldR

ever

sion

ary

Yiel

d

EUR

Mas

ter p

lan

(MP)

, Pl

anni

ng p

erm

issi

on (P

P),

Bui

ldin

g pe

rmis

sion

(BP)

Com

plet

ed

Mar

ket V

alue

PLM

arki

- E

xces

s La

ndul

. Okó

lna

45a,

Mar

kiJu

ly 2

015

248

782

000

CZK

10

2 01

0 00

0C

ZK

82

490

000

CZK

330

440

000

CZK

550

000

CZK

3

130

000

CZK

43 6

57 0

00C

ZK

13

940

000

PLN

13

550

000

PLN

14

230

000

PLN

1 43

0 00

0P

LN

440

972

000

HU

F

35 2

00 0

00C

ZK

6

895

000

CZK

1

415

240

000

CZK

14

9 40

0 00

0C

ZK

7

303

000

CZK

101

524

000

3 32

0 00

0

3 23

2 00

0

3 39

0 00

034

0 00

01

400

000

9 13

1 00

03

744

000

3 03

0 00

012

130

000

20 0

0011

0 00

01

602

000

1 29

0 00

025

3 00

051

945

000

5 48

4 00

026

8 00

083

5 00

0

MP

MP

Non

eM

PM

P, P

PM

PN

one

befo

re c

ompl

etio

nbe

fore

com

plet

ion

Com

plet

edC

ompl

eted

MP

, PP

Non

e - S

peci

al A

ssum

ptio

nM

PN

one

- Spe

cial

Ass

umpt

ion

Non

eM

P, P

P, B

P


APPENDIX B

Property Proformas

PRO

PER

TY

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in C

ZK

Mar

ket V

alue

Unso

ld F

loor

Are

a in

cl. c

ella

rsC

onst

ruct

ion

date

Tenu

re

Free

hold

MAR

KET

VAL

UE

in E

uros

Valu

er

Mar

ket V

alue

in E

URLo

catio

n M

ap &

Pho

togr

aph

Des

crip

tion

Mar

ket V

alue

Com

men

ts

Met

hodo

logy

SWO

T AN

ALYS

ISM

ARK

ET V

ALU

E An

alys

is

Stre

ngth

sB

uild

ings

Mai

n us

eTo

tal f

loor

ar

eas

sq m

%

Apa

rtmen

ts33

3.1

51.7

%O

ppor

tuni

ties

Com

mer

cial

(Kin

derg

arde

n)45

3.8

48.3

%TO

TAL

786.

910

0.0%

Mar

ket V

alue

21 5

96 2

50

Plot

s of

land

NoAr

ea s

q m

Pric

e /s

q m

Ris

ks31

2/17

2

862

400

A

gric

ultu

re

312/

70 &

312

/69

3 2

76 &

584

Mar

ket V

alue

1 14

4 80

0

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Zoni

ng1

144

800

2013

Natu

reTh

e pr

oper

ty is

a p

art o

f a re

side

ntia

l pro

ject

whi

ch is

loca

ted

in B

enic

e, a

villa

ge

whi

ch is

situ

ated

app

roxi

mat

ely

13 k

m to

the

sout

h-ea

st o

f Pra

gue

city

cen

tre.

The

prop

erty

is s

ituat

ed in

the

sout

hern

par

t of t

he v

illage

and

can

be

easi

ly a

cces

sed

by e

xit 6

from

the

D1

high

way

. The

exi

t als

o le

ads

to th

e m

ajor

out

let a

nd s

hopp

ing

zone

, Prů

honi

ce. T

o th

e no

rth, t

here

is a

long

road

whi

ch p

rovi

des

acce

ss to

Pra

gue

dist

ricts

Uhř

íněv

es a

nd H

orní

Měc

holu

py.

Site

are

a17

041

sqm

786.

9 sq

m

Cze

ch R

epub

licR

esid

entia

l Inv

ento

ryEx

chan

ge ra

te (€

)27

.25

Com

mer

cial

pre

mis

es re

nted

by

OR

CO

are

act

ive

as k

inde

rgar

den.

A p

lot n

umbe

r 312

/17

(2,8

62 s

q m

), 31

2/70

(3,2

76 s

q m

) an

d 31

2/69

(584

sq

m) a

re s

ubje

ct o

f val

uatio

n.

21 5

96 2

50• P

ublic

tran

spor

t ext

ensi

on in

the

futu

re

Ther

e ar

e fiv

e ph

ases

of t

he B

enic

e pr

ojec

t, co

mpr

isin

g ap

prox

imat

ely

68 h

ecta

res

of

land

. The

pro

ject

sta

rted

in 2

007.

Ben

ice

1B is

con

ceiv

ed a

s a

luxu

rious

and

com

forta

ble

livin

g in

sep

arat

e an

d du

plex

ho

uses

. Ind

ivid

ual h

ouse

s ar

e co

mpl

eted

acc

ordi

ng to

the

requ

irem

ents

of t

he c

lient

s.

Con

stru

ctio

n of

the

fam

ily h

ouse

s an

d ap

artm

ents

has

bee

n co

mpl

eted

and

they

are

re

ady

for s

ale

or re

nt. D

etai

ls o

f uns

old

unit

are

in M

arke

t Val

ue a

naly

ses

sect

ion.

We

unde

rsta

nd th

at th

ere

are

two

plot

of l

ands

bei

ng a

par

t of B

enic

e 1B

. A p

lot o

f la

nd n

umbe

r 312

/17

(2 8

62 s

q m

) whi

ch is

zon

ed a

s ag

ricul

ture

land

has

com

mer

cial

us

e an

d a

plot

s of

land

312

/70

(3 2

76 s

q m

) & 3

12/6

9 (5

84 s

q m

) whi

ch d

o no

t hav

e co

mm

erci

al u

se.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15

Prop

erty

add

ress

: Ben

ice,

Cze

ch R

epub

lic

Addr

ess

Tow

nB

enic

e 1B

Ben

ice

Prop

erty

nam

e: B

enic

e IB

(apa

rtm

ents

and

com

mer

cial

pre

mis

es)

CO

MP

AR

ISO

N A

PP

RO

AC

H -

an a

ppro

pria

te m

etho

d fo

r com

plet

ed b

uild

ings

Cou

ntry

DTZ

Wea

knes

ses

Mar

ket V

alue

CZK

• Lim

ited

dem

and

for l

ivin

g in

loca

tions

with

out c

ivic

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catio

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nice

, with

in re

ach

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shop

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side

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plex

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Stre

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e fu

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sum

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ould

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read

in c

onju

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n w

ith o

ur v

alua

tion

repo

rt.

Bui

ldin

g Pe

rmit

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hold

Valu

erTe

nure

YES

Plan

ning

Per

mit

Ther

e ar

e fiv

e ph

ases

of t

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enic

e pr

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t, co

mpr

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g ap

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imat

ely

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of

land

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pro

ject

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rted

in 2

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ce 1

C c

ompr

ises

9 8

32 m

2 an

d ha

s th

e in

frast

ruct

ure

at th

e bo

rder

of t

he s

ite. T

he

zoni

ng is

for r

esid

entia

l use

and

the

clie

nt a

ssum

es to

sta

rt co

nstru

ctio

n in

Sep

tem

ber

2015

(fin

ish

june

201

6). T

he p

roje

ct c

ompr

ises

a c

onst

ruct

ion

of 8

sem

i-det

ache

d 4+

kk/5

+kk

hous

es (i

nter

ior a

rea

of a

hou

se in

clud

ing

gara

ge is

156

sq

m) a

nd o

ne

deta

ched

6+

kk h

ouse

(int

erio

r are

a of

195

sq

m).

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of th

e si

te a

rea

plan

ned

as g

arde

ns is

situ

ated

in th

e pr

otec

ted

zone

of h

igh

volta

ge li

nes

and

no c

onst

ruct

ion

is

poss

ible

in th

e pr

otec

ted

area

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stru

ctio

n is

due

to s

tart

in S

epte

mbe

r 201

5.

Dev

elop

men

t App

rais

al (c

ross

che

ck w

ith c

ompa

rabl

e m

etho

d) -

Con

stru

ctio

n is

due

to s

tart

in S

epte

mbe

r 201

5.

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knes

ses

27.2

5

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ress

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nBe

nice

1C

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ntry

Nat

ure

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ange

rate

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erty

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enic

e 1C

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iden

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cate

d in

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ice,

a v

illag

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hich

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ituat

ed a

ppro

xim

atel

y 13

km

to th

e so

uth-

east

of P

ragu

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ty c

entre

.

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prop

erty

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ituat

ed in

the

sout

hern

par

t of t

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illag

e an

d ca

n be

eas

ily a

cces

sed

by e

xit 6

from

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D1

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way

. The

exi

t als

o le

ads

to th

e m

ajor

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nd s

hopp

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zone

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o th

e no

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here

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long

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whi

ch p

rovi

des

acce

ss to

Pra

gue

dist

ricts

Uhř

íněv

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nd H

orní

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py.

Site

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a

YES

9 83

2 sq

m

Mas

ter P

lan

DTZ

YES

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dem

and

on li

ving

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reas

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lim

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c am

eniti

es

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forta

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hříněv

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ach

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rea

• A s

port

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arby

the

resi

dent

ial c

ompl

ex

30 J

une

2015

Valu

atio

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ate:

30/0

6/20

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luat

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Prop

erty

add

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Cze

ch R

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30/0

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0

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ould

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read

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onju

nctio

n w

ith o

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alua

tion

repo

rt.

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ning

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mit

NO

NO

498

000

sqm

The

prop

erty

is a

par

t of a

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dent

ial p

roje

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hich

is lo

cate

d in

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ice,

a

villa

ge w

hich

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ituat

ed a

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xim

atel

y 13

km

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e so

uth-

east

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ragu

e ci

ty c

entre

.

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prop

erty

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ituat

ed in

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east

ern

part

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e vi

llage

and

can

be

easi

ly a

cces

sed

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xit 6

from

the

D1

high

way

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exi

t als

o le

ads

to th

e m

ajor

out

let a

nd s

hopp

ing

zone

, Prů

honi

ce. T

o th

e no

rth, t

here

is a

long

ro

ad w

hich

pro

vide

s ac

cess

to P

ragu

e di

stric

ts U

hříněv

es a

nd H

orní

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holu

py.

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hold

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e ar

e fiv

e ph

ases

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mpr

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g ap

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imat

ely

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hect

ares

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and.

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pro

ject

sta

rted

in 2

007.

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roxi

mat

ely

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004

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ctar

es) o

f la

nd. T

he in

frast

ruct

ure

is a

t the

bor

der o

f the

site

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zon

ing

for P

hase

s 2-

5 is

agr

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tura

l use

thou

gh th

e cl

ient

is in

the

proc

ess

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chan

ge th

e m

aste

r pla

n.

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the

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n of

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stre

ets,

land

for t

ank

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d la

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r a

high

vol

tage

dis

tribu

tion

line,

the

land

for r

esid

entia

l dev

elop

men

t re

pres

ents

498

000

sq

m.

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er d

eman

d on

urb

an a

reas

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no

civi

c am

eniti

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otia

tions

abo

ut c

hang

e to

the

mas

terp

lan

repe

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ly fa

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lic tr

ansp

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xten

tion

in th

e fu

ture

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forta

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luat

ion

The

site

is a

n gr

icul

ture

land

sui

tabl

e fo

r lar

ge s

cale

pro

ject

with

long

term

per

spec

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ange

dis

cuss

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faile

d.Prop

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add

ress

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Cze

ch R

epub

lic

30 J

une

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• Lan

d is

zon

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s ag

ricul

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l

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sibi

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the

mas

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This

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mar

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ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Free

hold

27.2

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ce 119

35N

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ldLi

ens

of c

oven

ant,

ease

men

t

87.4

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The

Pro

perty

is s

ituat

ed in

Pra

gue

7, a

cen

trally

loca

ted

dist

rict o

n th

e op

posi

te b

ank

of th

e V

ltava

Riv

er to

the

city

cen

tre (P

ragu

e 1

and

Pra

gue

8). P

ragu

e 7

has

an a

ppro

xim

ate

popu

latio

n of

40,

700

inha

bita

nts.

Bub

ensk

a 1

is lo

cate

d cl

ose

to V

ltavs

ká M

etro

Sta

tion

(line

C

), tra

in s

tatio

n B

ubny

and

Hlá

vkův

Brid

ge. B

uben

ska

Stre

et le

ads

over

the

brid

ge w

here

the

road

bec

omes

Wils

onov

a, a

lso

know

n as

th

e M

agis

trala

, Pra

gue'

s ar

teria

l roa

d. T

he P

rope

rty is

opp

osite

to th

e la

rge

Bub

ny d

evel

opm

ent s

ite. T

he H

oleš

ovic

e di

stric

t has

see

n so

me

new

dev

elop

men

t in

rece

nt y

ears

. The

mos

t sig

nific

ant d

evel

opm

ents

are

the

Toko

vo (1

3,40

0 sq

m) a

nd L

ight

hous

e (2

1,00

0 sq

m)

offic

e bu

ildin

gs, b

oth

of w

hich

are

loca

ted

clos

e to

the

Libe

nsky

Brid

ge in

the

Hol

esov

ice

Por

t are

a. In

201

4 an

ext

ensi

ve a

dmin

istra

tive

sche

me

ArtG

en (2

3,00

0 sq

m) w

as d

eliv

ered

by

PP

F in

the

prox

imity

of t

he P

rope

rty.

As

an In

vest

men

t pro

duct

the

Por

perty

wou

ld a

ppea

l opp

ortu

nist

ic b

uyer

who

wou

ld p

roba

bly

re-d

evel

op th

e P

rope

rty. T

he P

rope

rty s

uffe

rs fr

om

high

vac

ancy

and

poo

r con

ditio

n (h

igh

oper

atin

g co

sts

and

CA

PE

X).

DTZ

Pra

gue

The

Pro

perty

was

con

stru

cted

dur

ing

the

1930

s an

d co

mpr

ises

nea

rly 1

7,50

0 sq

m o

f offi

ce a

nd re

tail

letta

ble

area

. It b

elon

gs to

the

mos

t di

stin

guis

hed

func

tiona

list b

uild

ings

in P

ragu

e. T

he P

rope

rty is

list

ed w

hich

mak

es a

ny re

-dev

elop

men

t cha

lleng

ing.

The

tena

nt m

ix

incl

udes

arti

sts,

thea

tres,

exh

ibiti

on h

alls

and

dan

ce s

tudi

os. A

dditi

onal

ly th

e bu

ildin

g ac

com

mod

ates

the

ambu

lanc

e se

rvic

e fo

r Pra

gue

7. M

ajor

ity o

f the

tena

nts

have

inde

finite

leas

e te

rm.

Ther

e ar

e sm

all r

etai

l/com

mer

cial

uni

ts lo

cate

d al

ong

the

front

of t

he P

rope

rty a

nd a

lso

two

smal

l cou

rtyar

ds fo

r par

king

. The

offi

ce ro

oms

rang

e fro

m 1

0 sq

m to

50

sq m

, with

mos

t of t

hem

hav

ing

ca. 3

0 sq

m.

Inve

stm

ent

July

201

5C

cla

ss

Prop

erty

nam

e: B

uben

ská

1

7 99

6Holešovice

946

Prop

erty

add

ress

: Bub

ensk

á 1,

Pra

gue

7

30 J

une

2015

Valu

atio

n D

ate:

30 J

une

2015

Cur

rent

Val

uatio

nC

urre

nt V

alua

tion

30 J

une

2015

Bube

nskáBu

bens

ká 1

Bube

nská

1

PRO

PER

TY

ASS

ET P

RES

ENTA

TIO

NM

AR

KET

VA

LUE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in C

ZKP

ragu

e-H

oleš

ovic

eC

zech

Rep

ublic

CZK

CZK

/sq

m

Mar

ket V

alue

1 41

5 24

0 00

0

7 00

0

Des

crip

tion

MA

RK

ET V

ALU

E in

Eur

os

Mar

ket V

alue

in E

UR

EU

RE

UR

/sq

m

Mar

ket V

alue

51 9

45 0

00

25

6.93

SWO

T A

NA

LYSI

SC

omm

ents

Stre

ngth

s• C

lose

to a

n es

tabl

ishe

d re

side

ntia

l are

a • V

ery

good

acc

essi

bilit

y an

d lo

catio

n cl

ose

to th

e ci

ty c

entre

Opp

urtu

nitie

s• P

ossi

bilit

y of

the

chan

ge o

f zon

ing

• Lar

ge s

cale

dev

elop

men

t clo

se to

the

city

cen

tre

Wea

knes

ses

• Cur

rent

ly th

e la

nd is

not

com

mer

cial

ly d

evel

opab

le

• The

dis

trict

suf

fers

from

hig

h of

fice

vaca

ncy

and

fallin

g re

nts

Met

hodo

logy

• Pos

sibl

e co

ntam

inat

ion

on th

e pl

ots

• Som

e of

the

build

ings

on

the

site

are

list

ed

Ris

ks• T

he m

aste

r pla

n ch

ange

in th

e ne

xt y

ears

is v

ery

unlik

ely

• Pos

sibi

lity

of lo

ss o

f the

inte

rrest

to c

ontin

ue n

egot

iatio

ns a

bout

th

e ch

ange

of t

he M

aste

r pla

n on

the

Clie

t's s

ide

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

27.2

5

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

n

NO

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Prop

erty

nam

e: B

ubny

Dev

elop

men

t

NO

Arg

entin

ská

NO

The

prop

erty

com

pris

es a

n ex

tens

ive

site

loca

ted

in P

ragu

e - H

oleš

ovic

e,

a di

stric

t whi

ch d

irect

ly n

eigh

bour

s w

ith P

ragu

e ci

ty c

entre

on

the

north

. Th

e si

te e

xten

ds to

202

177

sq

m. M

ost o

f the

site

is c

urre

ntly

unu

sed

and

seve

ral d

ated

bui

ldin

gs in

det

erio

ratin

g st

ate

of re

pair

are

loca

ted

on

it. S

ome

thes

e bu

ildin

gs a

re li

sted

. Con

tam

inat

ion

of th

e si

te is

exp

ecte

d.

The

deve

lopm

ent a

nd m

aste

r pla

n ch

ange

in th

e ne

xt y

ears

is v

ery

unlik

ely.

In

the

futu

re th

e de

velo

pmen

t of m

ix re

side

ntia

l, re

tail

and

offic

e us

e is

ex

pect

ed.

Cur

rent

Val

uatio

n

At t

he d

ate

of v

alua

tion

the

land

is n

ot c

omm

erci

ally

dev

elop

able

. Pot

entia

l cha

nge

of th

e m

aste

r pla

n in

the

futu

re.

We

have

add

opte

d th

e va

lue

of th

e P

rope

rty u

nder

ass

umpt

ion

that

ther

e is

mas

ter p

lan

chan

ge in

pla

ce a

nd th

at

ther

e ar

e no

dem

oliti

on a

nd d

econ

tam

inat

ion

cost

s ne

eded

.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15C

urre

nt V

alua

tion

Prop

erty

add

ress

: Ar

gent

insk

á, P

ragu

e-H

oleš

ovic

e, C

zech

Rep

ublic

30/0

6/20

15

Mas

ter P

lan

Site

are

a

The

site

occ

upie

s a

larg

e pa

rt of

the

Hol

ešov

ice

dist

rict,

Pra

gue

7. T

he

river

Vlta

va d

ivid

es th

e di

stric

t fro

m o

ther

s, n

amel

y Li

beň

(to th

e ea

st),

Kar

lín (t

o th

e so

uth)

and

Tró

ja (t

o th

e no

rth-w

est).

Hol

ešov

ice

offe

rs

suffi

cien

t pub

lic a

men

ities

as

wel

l as

larg

e S

trom

ovka

and

Let

ná p

arks

. Th

ere

is a

n ex

tens

ive

area

of P

ragu

e m

arke

t (P

ražs

ká tr

žnic

e) a

long

the

sout

h-ea

ster

m b

ound

ary

and

Pra

gue

Exp

o ar

ea n

eigh

bour

s w

ith th

e no

rth-w

este

rn c

orne

r of t

he p

rope

rty.

Arg

entin

ská

Stre

et p

rovi

des

conn

ectio

n w

ith th

e ci

ty c

entre

as

wel

l as

with

the

D8

high

way

(Úst

í na

Labe

m d

irect

ion)

.Fr

eeho

ldD

TZ

Plan

ning

Per

mit

202

177

sqm

Bro

wnf

ield

clo

se to

the

cent

re

CO

MP

AR

ISO

N A

PP

RO

AC

H -

an a

dequ

ate

met

hod

for l

and

with

out V

alid

pla

nnin

g/bu

ildin

g pe

rmit.

Prop

erty

add

ress

: B

eneš

ovsk

á, Děč

ín, C

zech

Rep

ublic

Loca

tion

Mar

ket V

alue

in C

ZKDěč

ínC

zech

Rep

ublic

Dev

elop

men

tC

ZKC

ZK/s

q m

Mar

ket V

alue

6 89

5 00

0

36

0

Des

crip

tion

Mar

ket V

alue

in E

UR

EUR

EUR

/sq

m

Mar

ket V

alue

253

000

13

Com

men

ts

Stre

ngth

s• C

onve

nien

t com

mer

cial

loca

tion

• Ver

y go

od a

cces

sibi

lity

via

the

road

262

Opp

urtu

nitie

s• F

utur

e de

velo

pmen

t pot

entia

l• P

lann

ing

perm

it ex

tens

ion

Wea

knes

ses

Met

hodo

logy

• B

row

nfie

ld w

hich

nee

ds e

xten

sive

dem

oliti

on a

nd re

vita

lisat

ion

• Con

cret

e pl

ant o

n th

e si

te -

plot

ow

ned

by C

EMEX

Ris

ks• U

ncer

tain

ty in

the

curr

ent e

cono

mic

clim

ate

- reg

ion

• Mai

ntan

ance

and

dem

oliti

on c

osts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

PRO

PER

TY

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in E

uros

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

27.2

5

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

n

NO

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Cur

rent

Val

uatio

n

CO

MPA

RIS

ON

APP

RO

ACH

- an

ade

quat

e m

etho

d fo

r lan

d w

ithou

t Val

id b

uild

ing

perm

it.

Red

evel

opm

ent o

f the

pro

perty

in te

rms

of re

tail

or in

dust

rial u

se is

fitti

ng th

e si

te. P

rope

rty is

left

with

out

mai

ntan

ance

. W

e un

ders

tand

that

the

plan

ning

per

mis

sion

has

rece

ntly

exp

ired.

30/0

6/20

15

SWO

T AN

ALYS

IS

The

subj

ect p

rope

rty is

a fl

at c

omm

erci

al s

ite w

hich

com

pris

es m

ainl

y un

mai

ntai

ned

land

and

der

elic

t bui

ldin

gs w

hich

wer

e pr

evio

usly

use

d as

a

part

of fo

rmer

frei

ght t

rain

sta

tion.

Th

e si

te c

ompr

ises

19

152

sq m

. With

in th

e im

med

iate

vic

inity

of t

he s

ite

ther

e is

Děč

ín-W

est r

ailw

ay s

tatio

n, s

ome

indu

stria

l are

as a

nd re

side

ntia

l dw

ellin

gs.

On

the

ajac

ent p

lot t

here

is a

con

cret

e pl

ant,

situ

ated

in th

e m

iddl

e of

the

site

, whi

ch is

in o

wne

rshi

p of

diff

eren

t ow

ner.

Orc

o pl

an to

rede

velo

p th

is s

ite fo

r ret

ail u

se, h

owev

er, n

egot

iatio

ns w

ith

OBI

war

ehou

se fa

iled

in th

e pa

st.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15

Mas

ter P

lan

Site

are

a

Děč

ín h

as a

ppro

xim

atel

y 49

000

inha

bita

nts

and

is lo

cate

d 75

km

to th

e no

rth fr

om P

ragu

e, 3

0 km

to th

e no

rth fr

om Ú

sti n

ad L

abem

, 35

km to

no

rth w

est f

rom

Čes

ká L

ípa

and

14 k

m to

the

north

eas

t fro

m T

eplic

e.

The

site

is lo

cate

d on

the

east

edg

e of

the

city

2 k

m to

the

sout

h ea

st

from

the

Děč

ín´s

city

cen

tre a

long

the

maj

or ra

ilroa

d tra

cks

num

ber 2

62

on B

eneš

ovsk

á St

reet

.

Free

hold

DTZ

Plan

ning

Per

mit

NO

Bene

šovs

ká

YES

19 1

52 s

qm

Cur

rent

Val

uatio

n

Prop

erty

nam

e: D

evel

opm

ent l

and

Děč

ín

Prop

erty

add

ress

: D

oupo

vská

, Pra

gue,

Cze

ch R

epub

lic

Loca

tion

Mar

ket V

alue

in C

ZKPr

ague

C

zech

Rep

ublic

Orc

hard

, gar

dens

CZK

CZK

/sq

m

Mar

ket V

alue

35 2

00 0

00

20

0

Des

crip

tion

MAR

KET

VAL

UE

in E

uros

Mar

ket V

alue

in E

UR

EUR

EUR

/sq

m

Mar

ket V

alue

1 29

0 00

0

7.

34

Com

men

ts

Stre

ngth

s• E

stab

lishe

d re

side

ntia

l are

a• P

roxi

mity

of H

ostiv

ar p

ark

• Ver

y go

od a

cces

sibi

lity

eith

er b

y ca

r or p

ublic

tran

spor

t

Opp

urtu

nitie

s• L

etta

ble

for p

ublic

eve

nts

• Pos

sibi

lity

to e

stab

lish

urba

n ga

rden

s

Wea

knes

ses

Met

hodo

logy

• A

ny d

evel

opm

ent i

n th

e fu

ture

is v

ery

unlik

ely

Ris

ks• M

aint

anan

ce c

osts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

30 J

une

2015

Valu

atio

n D

ate:

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y AS

SET

PRES

ENTA

TIO

N

Dou

povs

ká

NO

175

975

sqm

Cur

rent

Val

uatio

n

The

Prop

erty

is lo

cate

d on

Dou

povs

ká S

treet

in th

e m

unic

ipal

dis

trict

of

Prag

ue 1

5 - H

ostiv

ař c

a. 1

2 km

sou

thea

st o

f Pra

gue´

s ci

ty c

entre

.

The

surr

ound

ing

area

is p

redo

min

antly

resi

dent

ial w

ith a

few

hig

h ris

e bu

ildin

gs o

f var

ying

age

and

qua

lity,

ther

e ar

e al

so a

few

sm

all r

etai

l uni

ts

incl

udin

g a

supe

rmar

ket.

Ther

e ar

e al

so n

umer

ous

serv

ices

and

recr

eatio

nal

faci

litie

s ne

arby

, inc

ludi

ng a

hor

se ri

ding

sch

ool.

Imm

edia

te tr

ansp

ort

faci

litie

s in

clud

e a

bus

stop

ser

vici

ng a

num

ber o

f rou

tes

is lo

cate

d to

the

sout

h of

the

site

.

Free

hold

DTZ

30/0

6/20

15

Plan

ning

Per

mit

NO

SWO

T AN

ALYS

IS

30/0

6/20

15C

urre

nt V

alua

tion

The

site

repr

esen

ts a

flat

plo

t of l

and

in w

ider

city

cen

tre o

f Pra

gue,

The

site

is

und

evel

oped

cov

ered

by

wild

veg

etat

ion

The

site

are

a eq

uals

nea

rly 1

7.6

ha a

nd w

as p

revi

ousl

y us

ed a

s an

orc

hard

. W

e un

ders

tand

from

the

owne

r tha

t any

dev

elop

men

t on

site

in th

e fu

ture

is

very

unl

ikel

y.

CO

MPA

RIS

ON

APP

RO

ACH

- an

ade

quat

e m

etho

d fo

r lan

d w

ithou

t Val

id p

lann

ing/

build

ing

perm

it.

Cur

rent

ly th

ere

is n

o m

aste

r pla

n fo

r the

sub

ject

site

and

no

chan

ge is

exp

ecte

d. A

ny d

evel

opm

ent i

n th

e fu

ture

is

ver

y un

likel

y.As

the

clie

nt re

ques

ted

we

have

app

lied

an a

ssum

ptio

n th

at th

e la

nd c

an n

ot b

e de

velo

ped

in th

e fu

ture

.

27.2

5

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

n

NO

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Prop

erty

nam

e: D

oupo

vská

Mas

ter P

lan

Site

are

a

PRO

PER

TY

Loca

tion

Mar

ket V

alue

in C

ZKŠp

indl

erův

Mlý

nC

zech

Rep

ublic

CZK

CZK

/sq

m

Mar

ket V

alue

43 6

57 0

00

14

400

Plan

ning

Per

mit

YES

Biu

ldin

g Pe

rmit

NO

Tenu

re

Free

hold

Free

hold

Valu

erD

TZ

Des

crip

tion

MAR

KET

VAL

UE

in E

uros

Mar

ket V

alue

in E

UR

EUR

EUR

/sq

m

Mar

ket V

alue

1 60

2 00

0

52

9

Com

men

ts

Stre

ngth

• Goo

d tra

nspo

rt ac

cess

• Uni

que

loca

tion

surr

ound

ed b

y na

ture

and

clo

se to

the

ski a

reas

Opp

urtu

nitie

s• R

edev

elop

men

t of t

he p

rope

rty in

to a

goo

d st

anda

rd h

otel

Wea

knes

ses

• Pro

perty

is in

bad

con

ditio

n w

ithou

t mai

nten

ance

- C

APEX

nee

ded

• C

ity c

ounc

il re

quire

a h

otel

use

- no

oth

er u

se is

pos

sibl

e�• D

eman

ding

clim

ate

cond

ition

sM

etho

dolo

gy

Ris

ks• T

he p

rope

rty h

as a

lread

y be

en c

lose

d fo

r sev

eral

yea

rs• U

ncer

tain

ty in

cur

rent

eco

nom

ic c

limat

e an

d ch

alle

ngin

g ho

tel

mar

ket i

n th

e ar

ea

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

3 03

2 sq

m

30 J

une

2015

Valu

atio

n D

ate:

Prop

erty

add

ress

: Špi

ndle

rův

Mlý

n 16

4, Š

pind

lerů

v M

lýn,

Cze

ch R

epub

lic

ASSE

T PR

ESEN

TATI

ON

Hot

el re

deve

lopm

ent

15 1

61 s

qm

30/0

6/20

15

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

Cur

rent

Val

uatio

n

SWO

T AN

ALYS

IS

30/0

6/20

15Th

e pr

oper

ty w

as o

rigin

ally

use

d as

a h

igh

clas

s ho

tel.

Ther

e is

a

plan

ning

per

mis

sion

for t

he re

cons

truct

ion

and

exte

nsio

n of

the

hote

l va

lid ti

ll 11

/201

6.

Acco

rdin

g to

the

info

rmat

ion

from

the

Clie

nt d

evel

opm

ent p

lan

is n

ot

final

ised

. The

cur

rent

Gro

ss In

tern

al F

loor

Are

a of

the

prop

erty

is 3

03

1.76

sq

m.

The

prop

erty

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poo

r con

ditio

n le

ft w

ithou

t mai

nten

ance

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igh

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idity

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d du

e to

repe

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us b

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es w

hich

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derg

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ors.

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rent

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uatio

n

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e pe

r sq

m h

as b

een

appl

ied

at th

e le

vel o

f CZK

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ket i

n Šp

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ver

y ch

alle

ngin

g. T

he p

rope

ry is

in d

eter

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ting

stat

e of

repa

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ft w

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t m

aint

enan

ce. H

otel

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velo

pmet

nl w

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nee

d hi

gh v

olum

e of

inve

stm

ents

to b

e ca

rrie

d ou

t. Va

lidity

term

of

plan

ning

per

mis

sion

has

bee

n ex

tend

ed.

At th

e m

omen

t we

unde

rsta

nd th

at th

e pr

oper

ty is

in p

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tate

and

that

the

Clie

nt p

lann

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ext

ensi

on o

f the

ho

tel.

CO

MPA

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RO

ACH

- Th

e Pr

oper

ty h

as b

een

valu

ed u

sing

a c

ompa

rabl

e m

etho

d.

27.2

5

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tion

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& P

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grap

h

Addr

ess

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nC

ount

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atur

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chan

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Mas

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Prop

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nam

e: G

rand

Hot

el Š

pind

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lýn

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PER

TY

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ain

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this

tow

n ha

s be

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e a

popu

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estin

atio

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th fo

r loc

al a

nd fo

reig

n to

uris

ts.

The

Prop

erty

is s

ituat

ed o

n th

e rig

ht s

ide

of th

e m

ain

road

lead

ing

thro

ugh

Špin

dlerův

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the

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vedi

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i res

ort a

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e Šp

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ka

cabi

n. T

here

are

sev

eral

hot

els

and

cabi

ns lo

cate

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the

slo

pes.

The

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oper

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situ

ated

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Des

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Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Prop

erty

add

ress

: Pl

zeňs

ká 3

87, S

tříb

ro

Free

hold

27.2

5

30 J

une

2015

68.6

9%68

.69%

Cur

rent

Val

uatio

n

DTZ

Pra

gue

The

Pro

perty

com

pris

es a

pur

pose

bui

lt in

dust

rial p

ark

desi

gnat

ed o

rigin

ally

for l

ight

indu

stria

l pro

duct

ion.

The

par

k w

as re

cons

truct

ed in

th

e 19

90's

to m

atch

the

dem

and

for h

igh

qual

ity s

pace

s, fe

atur

ing

conc

rete

floo

rs a

nd la

rge

acce

ss a

reas

. Site

are

a of

60,

753

sq m

co

mpr

ises

11

sepa

rate

mul

ti pu

rpos

e bu

ildin

gs a

nd e

xter

nal c

ar p

arki

ng. M

ultip

le w

areh

ouse

acc

ess

supp

ortin

g lo

gist

ics

with

wid

e ro

ads

for h

eavy

goo

ds.

Cur

rent

ly th

e P

rope

rty is

par

tly le

ased

to o

ne te

nant

(Ide

al A

utom

otiv

e) a

nd th

e re

nt is

den

omin

ated

in E

UR

. Rem

aini

ng p

art o

f the

pr

emis

es re

mai

ns v

acan

t.

Prop

erty

nam

e: S

tříb

ro In

dust

rial P

ark

60 7

53Stříbro

1910

30 J

une

2015

Cur

rent

Val

uatio

n

The

prop

erty

wou

ld p

roba

bly

appe

al o

wne

r occ

upie

rs o

r opp

ortu

nist

ic in

vest

ors

who

wou

ld b

e co

mfo

rtabl

e w

ith B

-cla

ss p

rodu

ct w

ith li

mite

d ac

cess

to th

e hi

ghw

ay n

etw

ork.

The

Pro

perty

is d

ated

with

nee

d of

ann

ual m

aint

anan

ce c

osts

and

furth

er C

AP

EX.

30 J

une

2015

Valu

atio

n D

ate:

Free

hold

Inve

stm

ent

N/A

Indu

stria

l17 N/A

1990

s3

The

Pro

perty

is lo

cate

d in

the

Plz

en R

egio

n in

the

Wes

t of t

he C

zech

Rep

ublic

, bet

wee

n th

e ci

ty o

f Pils

en (3

3 km

) and

the

Ger

man

bo

rder

(48

km).

The

tow

n of

Stří

bro

has

a po

pula

tion

of a

ppro

xim

atel

y 7,

900

peop

le. T

he P

rope

rty h

as g

ood

trans

port

links

to m

ajor

G

erm

an c

ities

, inc

ludi

ng N

urem

burg

, Mun

ich,

Stu

ttgar

t and

Fra

nkfu

rt, w

hils

t the

nea

rby

D5

Hig

hway

pro

vide

s di

rect

tran

spor

tatio

n to

P

ilsen

and

Pra

gue

and

the

rest

of t

he C

zech

Rep

ublic

.

Oct

ober

201

4B

cla

ss

Stříb

ro In

dust

rial P

ark

Stříb

ro In

dust

rial P

ark

Stříb

ro In

dust

rial P

ark

Stříb

ro In

dust

rial P

ark

Stříb

ro In

dust

rial P

ark

Prop

erty

nam

e: K

ošík

I&II

Prop

erty

add

ress

: D

oupo

vská

, Pra

gue

10, C

zech

Rep

ublic

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in C

ZK

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ket V

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re

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hold

Free

hold

Valu

erD

escr

iptio

n

MAR

KET

VAL

UE

in E

uros

Loca

tion

Map

& P

hoto

grap

h

Mar

ket V

alue

in €

Mar

ket V

alue

Met

hodo

logy

Stre

ngth

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men

ts

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urtu

nitie

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ARK

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ALU

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alys

is

Tota

l flo

or a

reas

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msq

m/ u

nits

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Rem

aini

ng C

onst

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ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Exch

ange

rate

(€)

27.2

5

Mai

n us

e

The

proj

ect S

lune

čný

vrše

k co

mpr

ises

thre

e co

mpl

eted

pha

ses

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IIIA

and

two

unde

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es II

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e I,

whi

ch w

as c

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, whi

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in Q

4 20

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125

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Cur

rent

ly, o

nly

one

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mer

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sq m

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two

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mai

n un

sold

. The

com

mer

cial

uni

t is

used

by

the

owne

r as

a sa

les

poin

t for

the

phas

es II

I B&

C w

hich

are

cur

rent

ly u

nder

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stru

ctio

n.

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tanc

e fro

m a

met

ro s

tatio

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cces

sibl

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es w

ithin

15

min

utes

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e pr

ojec

t is

exte

nsiv

e an

d ha

s on

ly li

mite

d ci

vic

amen

ities

.

Larg

e re

side

ntia

l sup

ply

in P

ragu

e 10

and

sim

ilar l

ocat

ions

(Byt

y M

aleš

ice,

Ek

ospo

l, Sk

ansk

a, J

RD

, YIT

etc

.).

Cur

rent

Val

uatio

n

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knes

ses

220

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3 13

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0

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e

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ntry

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ure

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old

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te20

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ch R

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l inv

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Add

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Tow

n

PRO

PER

TY

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povs

ká, B

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káPr

ague

10

30/0

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SWO

T AN

ALYS

IS

Valu

e de

crea

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just

ified

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a de

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the

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ld u

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par

king

spa

ce le

ss th

an in

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embe

r 201

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MPA

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RO

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AIN

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an a

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pria

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r com

plet

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side

ntia

l bui

ldin

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e to

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ide

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s an

d sp

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e ne

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e un

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rage

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Goo

d lo

catio

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r you

ng fa

milie

s an

d pe

rson

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ith a

n ac

tive

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tyle

.Sa

le o

f the

pro

ject

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lmos

t com

plet

ed.

CZK

0.0

0

EUR

110

000

The

Prop

erty

Koš

ík -

Slun

ečný

vrš

ek is

loca

ted

in th

e m

unic

ipal

dis

trict

of P

ragu

e 10

- H

ostiv

ař c

a 12

km

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th-e

ast o

f the

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gue

city

cen

tre. T

he im

med

iate

vic

inity

co

mpr

ises

pre

dom

inan

tly re

side

ntia

l use

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ario

us ty

pes,

pub

lic a

men

ities

and

a la

rge

gree

nery

nea

rby,

adj

acen

t to

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Dou

povs

ká ro

ad. V

ehic

ular

acc

ess

to th

e Pr

oper

ty is

go

od. P

ublic

tran

spor

t con

nect

ion

is li

mite

d to

a n

umbe

r of b

us li

nes

runn

ing

alon

g D

oupo

vská

and

K H

orká

m S

treet

s.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15C

urre

nt V

alua

tion

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3 13

0 00

0

Prop

erty

nam

e: K

ošík

IIIa

Prop

erty

add

ress

: K

Hor

kám

, Pra

gue

10, C

zech

Rep

ublic

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ET P

RES

ENTA

TIO

NM

AR

KET

VA

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in L

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ng C

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This

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ould

be

read

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onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

CZK

30 J

une

2015

Valu

atio

n D

ate:

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Add

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n

PRO

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TY

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ague

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mun

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f Pra

gue

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ca

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outh

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ragu

e ci

ty c

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imm

edia

te v

icin

ity

com

pris

es p

redo

min

antly

resi

dent

ial u

se o

f var

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type

s, p

ublic

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eniti

es a

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larg

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earb

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djac

ent t

o th

e D

oupo

vská

road

. Veh

icul

ar a

cces

s to

the

Prop

erty

is

good

. Pub

lic tr

ansp

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onne

ctio

n is

lim

ited

to a

num

ber o

f bus

line

s ru

nnin

g al

ong

Dou

povs

ká a

nd K

Hor

kám

Stre

ets.

550

000

Mai

n us

e

20 0

00

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550

000

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V

Exch

ange

rate

(€)

27.2

5

The

proj

ect S

lune

čný

vrše

k co

mpr

ises

thre

e co

mpl

eted

pha

ses

I, II,

IIIA

and

two

unde

velo

ped

phas

es II

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e I,

whi

ch w

as c

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eted

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ises

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rtmen

ts, 2

26 c

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rs a

nd

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mm

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al u

nits

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se II

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ch w

as c

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eted

in Q

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08, c

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ises

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ap

artm

ents

, 91

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rs a

nd 1

2 co

mm

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al u

nits

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rent

ly, f

ive

park

ing

spac

es re

mai

n un

sold

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e ph

ase

IIIA.

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tanc

e fro

m a

met

ro s

tatio

n, a

cces

sibl

e by

bus

es w

ithin

15

min

utes

.Th

e pr

ojec

t is

exte

nsiv

e an

d ha

s on

ly li

mite

d ci

vic

amen

ities

.

Larg

e re

side

ntia

l sup

ply

in P

ragu

e 10

and

sim

ilar l

ocat

ions

(ByT

y M

aleš

ice,

Ek

ospo

l, Sk

ansk

a, J

RD

, YIT

etc

.).

Goo

d lo

catio

n fo

r you

ng fa

mili

es a

nd p

erso

ns w

ith a

n ac

tive

lifes

tyle

.Sa

le o

f the

pro

ject

is a

lmos

t com

plet

ed.

Prop

erty

nam

e: K

ošík

IIIb

Prop

erty

add

ress

: B

ratis

lavs

ká, P

ragu

e 10

, Cze

ch R

epub

lic

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ET P

RES

ENTA

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KET

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renc

y

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tion

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ague

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zech

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iden

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ket V

alue

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00

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Com

men

ts

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hodo

logy

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vici

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rage

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neig

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nitie

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ENT

APP

RIS

AL

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y go

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catio

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mili

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n ac

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tyle

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ales

of t

he a

partm

ents

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ost c

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eted

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12 0

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dens

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nita

ry R

atio

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ppar

tmen

ts

40 0

00 C

ZK/s

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Wea

knes

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No.

Of p

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166

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tanc

e fro

m th

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etro

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tal C

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ect m

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er8.

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arge

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dent

ial s

uppl

y in

Pra

gue

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imila

r loc

atio

ns (B

yTy

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ešic

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l, Sk

ansk

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This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Cur

rent

Val

uatio

n

30 J

une

2015

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atio

n D

ate:

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urre

nt V

alua

tion

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re

Valu

er

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6/20

15

SWO

T A

NA

LYSI

S

The

Prop

erty

Koš

ík -

Slun

ečný

vrš

ek is

loca

ted

in th

e m

unic

ipal

dis

trict

of P

ragu

e 10

- H

ostiv

ař c

a 12

km

sou

th-e

ast o

f the

Pra

gue

city

cen

tre. T

he im

med

iate

vic

inity

co

mpr

ises

pre

dom

inan

tly re

side

ntia

l use

of v

ario

us ty

pes,

pub

lic a

men

ities

and

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rge

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nery

nea

rby,

adj

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t to

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Dou

povs

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ad. V

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ular

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ess

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e Pr

oper

ty is

go

od. P

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spor

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nect

ion

is li

mite

d to

a n

umbe

r of b

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nes

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g D

oupo

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orká

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treet

s.

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hold

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ning

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mit

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ress

Tow

n

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ure

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rate

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ldin

g Pe

rmit

Mas

ter P

lan

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a

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PER

TY

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povs

ká/ B

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lavs

ká

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9 81

5 sq

m

Phas

e III

com

pris

es p

arts

A, B

and

C. C

onst

ruct

ion

at P

hase

III A

com

men

ced

in M

ay

2008

and

was

com

plet

ed in

Oct

ober

200

9.

Con

stru

ctio

n of

the

phas

e III

B ha

s st

arte

d in

201

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d is

due

to b

e co

mpl

eted

in H

2 20

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n co

mpl

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n th

e sc

hem

e w

ill p

rovi

de 1

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partm

ents

with

in 3

apa

rtmen

t bu

ildin

gs (J

, K, L

). At

the

date

of v

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tion

136

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dent

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nits

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ld a

nd 1

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its re

mai

n fo

r sal

e. T

he p

roje

ct a

lso

com

pris

es e

ight

com

mer

cial

uni

ts o

ut o

f whi

ch

thre

e ar

e pr

e-so

ld. R

emai

ning

con

stru

ctio

n co

sts

are

estim

ated

at t

he le

vel o

f 61

450

000

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.

Gro

ss D

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ent V

alue

DEV

ELO

PM

ENT

APP

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ss c

heck

ed w

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ompa

rison

app

roac

h) -

an a

dequ

ate

met

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for d

evel

opm

ent

proj

ects

und

er c

onst

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Net

Are

a in

cl. C

ella

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Prag

ue re

side

ntia

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ket r

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ery

stro

ng. T

he c

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is in

an

adva

nced

sta

ge a

nd 9

0% o

f the

apa

rtmen

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are

curr

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pre

-sol

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Prop

erty

nam

e: K

ošík

IIIc

Prop

erty

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ress

: R

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ragu

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, Cze

ch R

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lic

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ET P

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zech

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366

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Stre

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neig

hbou

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ojec

t in

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futu

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AL

7

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e fro

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No.

Of p

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nits

107

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eniti

es in

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imm

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te p

roxi

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y in

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gue

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ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Cur

rent

Val

uatio

n

30 J

une

2015

Valu

atio

n D

ate:

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urre

nt V

alua

tion

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re

Valu

er

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SWO

T A

NA

LYSI

S

The

Prop

erty

Koš

ík -

Slun

ečný

vrš

ek is

loca

ted

in th

e m

unic

ipal

dis

trict

of P

ragu

e 10

- H

ostiv

ař c

a 12

km

sou

th-e

ast o

f the

Pra

gue

city

cen

tre. T

he im

med

iate

vic

inity

co

mpr

ises

pre

dom

inan

tly re

side

ntia

l use

of v

ario

us ty

pes,

pub

lic a

men

ities

and

a la

rge

gree

nery

nea

rby,

adj

acen

t to

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Dou

povs

ká ro

ad. V

ehic

ular

acc

ess

to th

e Pr

oper

ty is

go

od. P

ublic

tran

spor

t con

nect

ion

is li

mite

d to

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umbe

r of b

us li

nes

runn

ing

alon

g D

oupo

vská

and

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orká

m S

treet

s.

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hold

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Plan

ning

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mit

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Add

ress

Tow

n

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Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Mas

ter P

lan

Site

are

a

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PER

TY

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povs

ká/ R

ižsk

á

YES

8 26

6 sq

m

Phas

e III

com

pris

es p

arts

A, B

and

C. C

onst

ruct

ion

at P

hase

III A

com

men

ced

in M

ay

2008

and

was

com

plet

ed in

Oct

ober

200

9.

Con

stru

ctio

n of

the

phas

e III

C h

as s

tarte

d in

Q1

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and

the

com

plet

ion

is p

lann

ed

for Q

3 20

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n co

mpl

etio

n th

e sc

hem

e w

ill p

rovi

de 8

0 ap

artm

ents

with

in 2

apa

rtmen

t bu

ildin

gs (M

, N).

At th

e da

te o

f val

uatio

n 45

uni

ts w

ere

pre-

sold

and

35

units

rem

ain

for s

ale.

Rem

aini

ng c

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ruct

ion

cost

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e es

timat

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y sh

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be

read

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onju

nctio

n w

ith o

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alua

tion

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rt.

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tion

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h

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ess

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n

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Nat

ure

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rate

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Prop

erty

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urre

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agr

icul

tura

l lan

d an

d is

loca

ted

near

by th

e Be

nice

site

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re is

cur

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o zo

ning

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lann

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perm

issi

on o

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te.

The

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nt is

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aste

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ange

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rdin

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nt p

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p to

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d w

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perm

it.

30 J

une

2015

Valu

atio

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ate:

30/0

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15

Prop

erty

add

ress

: N

upak

y, P

ragu

e, C

zech

Rep

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Cur

rent

Val

uatio

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Cur

rent

ly th

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bjec

t site

is z

oned

as

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ral l

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lan.

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clie

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ing

to c

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aste

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n si

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ears

.

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rent

Val

uatio

n

Mas

ter P

lan

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north

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villa

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f Nup

aky,

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curr

ently

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.E

UR

/sq

m p

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Gro

ss c

urre

nt re

nt (D

ay 1

)31

129

632

3 01

1

1 14

2 58

111

1

N

et c

urre

nt re

nt30

002

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2

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7

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ross

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ket r

ent

37 5

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107

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italis

atio

n ra

te9.

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9.00

%C

apita

lisat

ion

rate

on

Vaca

nt9.

00%

9.00

%

Equi

vale

nt Y

ield

9.00

%9.

00%

Initi

al Y

ield

7.92

%7.

92%

Rev

ersi

onar

y Yi

eld

9.62

%9.

62%

Initi

al v

oid

(if a

pplic

able

)6

mon

ths

6m

onth

sEx

piry

voi

d0

to 6

mon

ths

0 to

6m

onth

sN

ew le

ase

leng

th5

year

s5

year

s

Non

-rec

over

able

s p.

a.3.

00%

of E

RV

3.00

%of

ER

VLe

tting

fees

10.0

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ER

V10

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of E

RV

CAP

EX

11 0

59 6

76C

ZK40

5 93

4EU

R

Tota

l flo

or a

rea

12 8

98sq

m12

898

sqm

Let a

reas

10 3

38sq

m10

338

sqm

Stru

ctur

al v

acan

cy1

500

sqm

1 50

0sq

mLo

catio

nO

ccup

ancy

rate

Num

ber o

f car

par

king

spa

ces

14un

its14

units

WAU

LT (w

eigh

ted

by in

com

e)3.

9ye

ars

3.9

year

s

Des

crip

tion

Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

2010 7

Hra

dčan

ská

Offi

ce C

entre

is lo

cate

d ou

tsid

e of

Pra

gue

City

Cen

tre, i

n P

ragu

e 6,

apr

roxi

mat

ely

3 km

nor

th-w

est o

f the

city

cen

tre. T

here

are

m

any

serv

ices

and

civ

ic a

men

ities

in a

clo

se v

icin

ity to

the

Pro

perty

, inc

ludi

ng e

xcel

lent

pub

lic tr

ansp

ort l

inks

(tra

ms,

met

ro) c

onne

ctin

g th

e P

rope

rty w

ith o

ther

par

ts o

f Pra

gue.

Com

petit

ion

with

in th

e im

med

iate

pro

xim

ity is

lim

ited

as th

e ne

ares

t adm

inis

trativ

e pr

ojec

ts a

re lo

cate

d ar

ound

Dej

vick

á m

etro

sta

tion

(ca.

5 m

inut

es d

rive

from

the

Pro

perty

).

July

201

5

Map

- M

icro

Phot

o - o

utsi

de

80.1

5%80

.15%

As

an In

vest

men

t pro

duct

the

Pro

perty

wou

ld a

ppea

l cor

e+ o

r opp

ortu

nist

ic b

uyer

s w

ho w

ould

sea

rch

for h

igh

yiel

d pr

oper

ties

with

in w

ide

city

cen

tre.

The

Pro

perty

sho

ws

dece

nt o

ccup

ancy

and

it is

loca

ted

dire

ctly

on

the

met

ro s

tatio

n, h

owev

er, H

radč

any

is n

ot re

gare

d as

a w

ell e

stab

lishe

d of

fice

loca

tion.

DTZ

Hra

dčan

ská

Offi

ce C

ente

r is

a re

furb

ishe

d G

rade

B o

ffice

bui

ldin

g w

hich

was

orig

inal

ly b

uilt

in 1

980s

. The

Pro

perty

is m

ade

up o

f tw

o se

para

te b

uild

ings

, eac

h w

ith it

s ow

n re

cept

ion

area

, but

link

ed v

ia a

n el

evea

ted

wal

kway

. The

bui

ldin

g of

fers

flex

ible

adm

inis

trativ

e la

yout

s de

pend

ing

on th

e te

nant

s' re

quire

men

ts. T

he b

uild

ing

is in

a p

rom

inen

t pos

ition

whi

ch m

akes

for a

hig

hly

visi

ble

loca

tion.

It is

als

o di

rect

ly

abov

e th

e re

cent

ly re

cons

truce

d H

radč

ansk

á m

etro

sta

tion.

Inve

stm

ent

Free

hold

27.2

5Fr

eeho

ld

Lien

s of

cov

enan

t

Phot

o - I

nsid

e

B c

lass

Map

- M

acro

30 J

une

2015

Valu

atio

n D

ate:

30 J

une

2015

Offi

ce 2

Prop

erty

nam

e: H

radč

ansk

á O

ffice

Cen

ter

2 88

3

Hra

dčan

y

138

Prop

erty

add

ress

: M

ilady

Hor

ákov

é 11

6, P

ragu

e

1980

Cur

rent

Val

uatio

nC

urre

nt V

alua

tion

30 J

une

2015

Phot

Photho

ttPh

otPh

otPh

otPh

oPh

otPh

otPh

otPh

otPh

otPh

othhPPPPho

Phot

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o

o

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Insi

Insi

Insi

Insi

Insi

InsinInsi

Insinnsnss

isiisiddededdededdededededdedeedededdddddee

Hrad

čans

ká O

ffice

Cen

tre

Hrad

čans

ká O

ffice

Cen

tre

Prop

erty

loca

tion

and

desc

riptio

nSu

mm

ary

of v

alue

s an

d as

sum

ptio

ns

Sum

mar

yM

ain

Use

Land

Are

a (s

q m

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umbe

r of b

uild

ings

Cad

astra

l Dis

trict

Dat

e B

uilt

Title

list

no.

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e of

Las

t Ren

ovat

ion

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re L

and

No.

of F

loor

sR

estri

ctio

ns o

n Ti

tleTe

nure

Bui

ldin

g E

xcha

nge

rate

use

dVa

luat

ion

Cur

renc

yC

ZKC

ZK/s

q m

EUR

EUR

/sq

m

Val

uatio

n m

etho

d ad

opte

dV

alue

rC

ondi

tion

Dat

e of

last

insp

ectio

nG

ross

Mar

ket V

alue

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p.a

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UR

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Gro

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urre

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nt (D

ay 1

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ross

Mar

ket r

ent

89 5

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924

066

3

285

748

149

Cap

italis

atio

n ra

te7.

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7.25

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apita

lisat

ion

rate

on

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nt8.

25%

8.25

%

Equi

vale

nt Y

ield

7.36

%7.

36%

Initi

al Y

ield

7.09

%7.

09%

Rev

ersi

onar

y Yi

eld

7.85

%7.

85%

Initi

al v

oid

(if a

pplic

able

)6,

12

and

24m

onth

s6,

12

and

24m

onth

sEx

piry

voi

d0

- 12

mon

ths

0 - 1

2m

onth

sN

ew le

ase

leng

th5

year

s5

year

s

Non

-rec

over

able

s p.

a.2.

00%

of E

RV

2.00

%of

ER

VLe

tting

fees

10.0

0%of

ER

V10

.00%

of E

RV

CAP

EX33

248

169

CZK

1 22

0 34

0EU

R

Tota

l flo

or a

rea

22 0

17sq

m22

017

sqm

Let a

reas

18 5

45sq

m18

545

sqm

Loca

tion

Stru

ctur

al v

acan

cy1

200

sqm

1 20

0sq

m

Occ

upan

cy ra

te

Num

ber o

f car

par

king

spa

ces

114

units

114

units

WAU

LT (w

eigh

ted

by in

com

e)3.

7ye

ars

3.7

year

s

Des

crip

tion

Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Offi

ce a

nd R

etai

l4

1921

2009 6

B c

lass

July

201

5

Cur

rent

Val

uatio

n30

Jun

e 20

15

84.2

3%30 J

une

2015

84.2

3%

DTZ

Pra

gue

Phot

o - I

nsid

ePh

oto

- out

side

The

Pro

perty

is lo

cate

d be

twee

n N

a P

ořič

í and

Na

Flor

enci

Stre

ets

in P

ragu

e 1,

app

roxi

mat

ely

1km

nor

th-e

ast o

f the

his

toric

al c

ity c

entre

.Th

e P

rope

rty is

situ

ated

on

one

of th

e m

ost f

requ

ente

d st

reet

s in

the

cent

re o

f Pra

gue.

It b

enef

its fr

om b

eing

clo

se to

Nám

ěstí

Rep

ublik

y,

one

of P

ragu

e's

mai

n sq

uare

s an

d a

cent

ral p

oint

for t

rans

port

links

into

the

city

. The

re is

an

esta

blis

hed

shop

ping

cen

tre P

alla

dium

ca.

30

0 m

to th

e w

est f

rom

the

Pro

perty

.

The

hist

oric

ally

pro

tect

ed b

uild

ing

is d

esig

ned

in ro

ndoc

ubis

tic s

tyle

and

com

pris

es o

f fou

r sep

arat

e bu

ildin

gs, A

, B, C

and

D. T

he o

ldes

t pa

rt of

the

build

ing

date

s ba

ck to

192

1. T

he p

rope

rty u

nder

wen

t maj

or re

deve

lopm

ent i

n 20

09 d

ue to

whi

ch a

gra

de A

spe

cific

atio

n of

the

prem

ises

has

bee

n ac

hiev

ed. T

he b

uild

ing

com

pris

es o

ffice

pre

mis

es w

ith re

tail

units

on

the

grou

nd fl

oor i

nclu

ding

tena

nts

such

as

Sub

way

and

Sta

rbuc

ks C

afe.

Par

t of t

he p

rem

ises

is a

lso

leas

ed to

Arc

ha th

eatre

. The

bui

ldin

g al

low

s fo

r fle

xibl

e of

fice

solu

tions

in

clud

ing

dedi

catio

n of

one

of f

our m

ain

rece

ptio

ns to

a s

ingl

e te

nant

.

Inve

stm

ent

As

an In

vest

men

t pro

duct

the

Pro

perty

wou

ld a

ppea

l cor

e+ b

uyer

s w

ho w

ould

sea

rch

for m

ulti-

let p

rodu

ct w

ith d

eman

ding

ass

et m

anag

emen

t ne

eds.

The

Pro

perty

is a

his

toric

ally

pro

tect

ed b

uild

ing

situ

ated

in th

e ci

ty c

entre

with

lim

ited

layo

ut fl

exib

ility.

The

mic

ro lo

catio

n ha

s be

com

e m

ore

attra

ctiv

e af

ter c

ompl

etio

n of

the

mix

ed-u

se c

ompl

ex F

lore

ntin

um in

201

4.

Prop

erty

add

ress

: N

a Po

říčí 2

4-26

, Pra

gue

1

Free

hold

27.2

5

Cur

rent

Val

uatio

n30

Jun

e 20

15

Lien

of c

oven

ant,

ease

men

ts

Valu

atio

n D

ate:

Prop

erty

nam

e: N

a Po

říčí (

Palá

c Ar

cha)

Map

- M

acro

Map

- M

icro

6 00

1N

ové

Měs

to22

Free

hold

NaPo

říčí

NaPo

říčí

PRO

PER

TY

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in C

ZKP

ragu

e C

zech

Rep

ublic

Dev

elop

men

tC

ZKC

ZK/s

q m

Mar

ket V

alue

248

782

000

3 88

0

Loca

tion

Map

& P

hoto

grap

hD

escr

iptio

nM

ARK

ET V

ALU

E in

Eur

os

Mar

ket V

alue

in E

UR

EU

RE

UR

/sq

m

Mar

ket V

alue

9 13

1 00

0

142.

41

SWO

T AN

ALYS

ISC

omm

ents

Stre

ngth

s• E

stab

lishe

d re

side

ntia

l are

a in

the

grea

ter n

eigh

bour

hood

• Sup

erm

arke

t and

tram

sto

ps in

the

vici

nity

• Goo

d ac

cess

to P

ragu

e rin

g ro

ad -

Jižn

í Spo

jka

• Stro

ng re

side

ntia

l mar

ket -

ava

ilabl

e fin

anci

ng

Opp

urtu

nitie

s• A

larg

e pl

ot o

f lan

d w

hich

allo

ws

to d

evel

op a

resi

dent

ial l

ivin

g in

clud

ing

serv

ices

for r

esid

ents

Wea

knes

ses

• A s

ite w

ith a

form

er in

dust

rial u

se h

as s

ome

unde

rgro

und

stru

ctur

es

whi

ch n

eed

to b

e re

mov

ed• L

imite

d ci

vic

amen

ities

• Som

e pl

ots

unus

able

for d

evel

opm

ent (

publ

ic c

omm

unic

atio

n)M

etho

dolo

gy

Ris

ksC

OM

PAR

ISO

N A

PPR

OA

CH

- an

ade

quat

e m

etho

d fo

r lan

d w

ithou

t Val

id p

lann

ing/

build

ing

perm

it.• T

he p

lot r

equi

res

a la

rge

scal

e pr

ojec

t and

the

pool

of p

oten

tial

inve

stor

s in

suc

h a

proj

ect i

s lim

ited

• Cur

rent

eco

nom

ic c

limat

e an

d m

arke

t cha

nges

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

30 J

une

2015

Biu

ldin

g Pe

rmit

Mas

ter P

lan

27.2

5

Addr

ess

Tow

nP

ragu

e-Zá

běhl

ice

/ Pra

gue-

Hos

tivař

Prop

erty

nam

e: P

raga

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Valu

atio

n D

ate:

The

prop

erty

is lo

cate

d on

the

bord

ers

of P

ragu

e 10

Záb

ěhlic

e an

d P

ragu

e 15

Hos

tivař

ap

prox

imat

ely

10 k

m fr

om P

ragu

e’s

city

cen

tre.

The

surr

ound

ing

area

is p

rimar

ily lo

w c

ost h

igh

rise

resi

dent

ial a

nd li

ght i

ndus

trial

in th

e ge

nera

l vic

inity

. A fe

w m

id c

lass

fam

ily h

ouse

s ar

e lo

cate

d di

rect

ly s

outh

of t

he s

ite.

Ther

e ar

e nu

mer

ous

bus

and

tram

line

s ru

nnin

g in

fron

t of t

he p

rope

rty a

nd m

etro

st

atio

n lin

e A

: Ska

lka

is lo

cate

d fiv

e m

inut

es a

way

.

NO

Site

are

a

30/0

6/20

15P

rope

rty c

ompr

ises

a s

ite o

f lar

ge tr

iang

ular

sha

ped

plot

that

was

occ

upie

d by

Pra

ga -

Hos

tivař

fact

ory

who

use

d th

e pr

emis

es fo

r lig

ht in

dust

rial p

urpo

ses.

The

site

ben

efits

fro

m a

ll se

rvic

es a

vaila

ble

dire

ctly

on

the

bord

er o

f the

site

.

We

unde

rsta

nd th

at th

e si

te c

ompr

ises

two

sepa

rate

SPV

s in

ow

ners

hip

of tw

o di

ffere

nt

owne

rs O

RC

O P

raga

and

Gru

nt H

Z. B

oth

com

pani

es a

re p

art o

f the

OR

CO

pro

perty

gr

oup

wha

t low

ers

the

risk

of a

ny fu

ture

dev

elop

men

t dis

agre

emen

ts.

Acco

rdin

g to

the

Clie

nt th

e si

te a

llow

s to

dev

elop

ca.

96

664

sq m

of G

ross

Ext

erna

l Fl

oor A

rea.

Cur

rent

Val

uatio

n

30/0

6/20

15C

urre

nt V

alua

tion

Prop

erty

add

ress

: Pr

ague

Záb

ěhlic

e/ H

ostiv

ař, C

zech

Rep

ublic

The

site

is s

uita

ble

for l

arge

sca

le re

side

ntia

l dev

elop

men

t in

the

futu

re. A

ccor

ding

to th

e C

lient

's re

ques

t we

have

ap

plie

d an

ass

umpt

ion

that

ther

e ar

e no

cos

ts re

late

d to

infra

stru

ctur

e w

orks

(cap

acity

) and

that

ther

e ar

e no

cos

ts

rela

ted

to e

nviro

nmen

tal i

ssue

s an

d po

ssib

le c

onta

min

atio

n.Th

e pl

ot a

rea

as w

ell a

s co

nstru

ctib

le fl

oor a

rea

wer

e bo

th p

rovi

ded

by O

RC

O a

nd w

e ha

ve fu

lly re

lied

on th

em.

We

have

bee

n in

form

ed b

y th

e cl

ient

that

som

e of

the

land

plo

ts o

f the

Pra

ga d

evel

opm

ent s

ite a

re s

ubje

ct o

f a

rest

itutio

n di

sput

e w

ith d

esce

ndan

t of t

he p

revi

ous

owne

rs. T

he s

ubje

ct o

f thi

s re

stitu

tion

clai

m is

a s

hare

of ½

of t

he

land

plo

ts n

o. 1

761/

438,

176

1/43

9, 1

761/

440,

176

1/29

5, 1

761/

208,

176

1/15

4 (to

tal a

rea

7 03

3 sq

m, o

f whi

ch ½

sha

re

repr

esen

ts 3

516

.5 s

q m

). Th

e cl

aim

in to

tal r

epre

sent

s th

e va

lue

of s

light

ly o

ver C

ZK 9

milli

on (a

ppro

xim

atel

y 33

0 00

0 E

UR

). A

s in

stru

cted

by

the

clie

nt a

nd fo

r the

pur

pose

of t

he v

alua

tion

only

we

have

ass

umed

that

the

clai

m h

as b

een

reso

lved

not

impa

ctin

g th

e M

arke

t Val

ue.

Tenu

re

Valu

erFr

eeho

ld

64 1

19 s

qm

Plan

ning

Per

mit

DTZ

YES

NO

Valu

atio

n D

ate:

Prop

erty

loca

tion

and

desc

riptio

nSu

mm

ary

of v

alue

s an

d as

sum

ptio

ns

Sum

mar

yM

ain

Use

Land

Are

a (s

q m

)N

umbe

r of b

uild

ings

Cad

astra

l Dis

trict

Dat

e B

uilt

Title

list

no.

Dat

e of

Las

t Ren

ovat

ion

Tenu

re L

and

No.

of F

loor

sR

estri

ctio

ns o

n Ti

tleTe

nure

Bui

ldin

g E

xcha

nge

rate

use

dC

urre

ncy

HU

FH

UF/

sq m

EUR

EUR

/sq

m

Val

uatio

n m

etho

d ad

opte

dV

alue

rC

ondi

tion

Dat

e of

last

insp

ectio

nG

ross

Mar

ket V

alue

2 14

1 86

4 00

015

4 34

66

800

000

490

HU

F p.

a.H

UF/

sq m

p.a

.E

UR

p.a

.E

UR

/sq

m p

.a.

Gro

ss c

urre

nt re

nt (D

ay 1

)25

868

677

15 3

89

82

128

49

N

et c

urre

nt re

nt(7

7 70

1 78

6)46

224

-

(2

46 6

88)

147

-

Gro

ss M

arke

t ren

t37

9 15

1 50

527

322

1 20

3 73

287

Cap

italis

atio

n ra

te9.

00%

9.00

%C

apita

lisat

ion

rate

on

Vaca

nt12

.00%

12.0

0%

Equi

vale

nt Y

ield

11.4

8%11

.48%

Initi

al Y

ield

(3.0

5%)

(3.0

5%)

Rev

ersi

onar

y Yi

eld

14.4

3%14

.43%

Initi

al v

oid

(if a

pplic

able

)15

mon

ths

15m

onth

sEx

piry

voi

d6

mon

ths

6m

onth

sN

ew le

ase

leng

th5

year

s5

year

s

Non

-rec

over

able

s p.

a.3.

00%

of E

RV

3.00

%of

ER

VLe

tting

fees

- of

ER

V -

of E

RV

CAP

EX41

3 20

1 78

8H

UF

1 31

1 83

5EU

R

Tota

l flo

or a

rea

13 8

77sq

m13

877

sqm

Let a

reas

1 68

1sq

m1

681

sqm

Loca

tion

Stru

ctur

al v

acan

cy-

sqm

- sq

m

Occ

upan

cy ra

te

Num

ber o

f car

par

king

spa

ces

237

units

237

units

WAU

LT (w

eigh

ted

by in

com

e)-

year

s-

year

s

Des

crip

tion

Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Prop

erty

nam

e: V

188

Offi

ces

Map

- M

acro

Map

- M

icro

5 84

4

2595

8/5

Free

hold

30 J

une

2015

12.1

1%

DTZ

Bud

apes

t

Phot

o - I

nsid

ePh

oto

- out

side

The

Pro

perty

is s

ituat

ed in

the

13th

dis

trict

of B

udap

est o

n th

e V

áci ú

t cor

ridor

, whi

ch is

the

larg

est o

ffice

sub

-mar

ket i

n B

udap

est.

It lie

s 7

km n

orth

of B

udap

est c

ity c

entre

fron

ting

Vác

i út a

nd M

eder

utc

a, th

eref

ore

its v

isib

ility

is e

xcel

lent

. The

clo

se s

urro

undi

ng c

ompr

ises

D

una

Pla

za s

hopp

ing

cent

re a

nd a

Tes

co h

yper

mar

ket a

s w

ell a

s se

vera

l Cla

ss A

and

B o

ffice

bui

ldin

gs. T

he P

rope

rty c

an b

e ea

sily

ac

cess

ed b

y ca

r via

Vác

i út.

In te

rms

of p

ublic

tran

spor

t, th

e bu

ildin

g is

loca

ted

betw

een

two

met

ro s

tatio

ns o

f M3

line

that

link

s so

uthe

ast

parts

of P

est.

Bus

line

s pr

ovid

e ac

cess

with

Bud

a si

de.

The

prop

erty

is a

Cla

ss B

offi

ce b

uild

ing

built

in 2

001

on g

roun

d flo

or (c

ompr

isin

g a

form

er b

ank

bran

ch s

uita

ble

for r

etai

l uni

t, as

wel

l as

a ca

ntee

n) a

nd 6

offi

ce fl

oors

loca

ted

at V

áci ú

t, w

hich

is th

e m

ost d

evel

opin

g of

fice

sub-

mar

ket i

n B

udap

est.

The

prop

erty

has

2 s

treet

fro

ntag

es a

nd fl

oorp

late

s ha

ve a

U-s

hape

. The

bui

ldin

g us

ed to

hos

t Bud

apes

t Ban

k H

Q, w

hich

mov

ed o

ut a

ppro

xim

atel

y 5

year

s ag

o,

sinc

e it

has

only

one

tena

nt (1

2% o

ccup

ancy

). T

he p

rope

rty m

ay re

quire

som

e re

furb

ishm

ent b

efor

e re

leas

e. It

ben

efits

from

a to

tal o

f 23

7 pa

rkin

g sp

aces

und

ergr

ound

and

abo

ve g

roun

d.

Inve

stm

ent

The

prop

erty

was

leas

ed to

Bud

apes

t Ban

k H

Q, w

hich

mov

ed o

ut a

ppro

xim

atel

y 5

year

s ag

o. T

he b

uild

ing

is 8

8% v

acan

t, on

e te

nant

is le

asin

g of

fices

(DoC

omp

- 1 6

80 s

q m

). Th

e bu

ildin

g re

quire

s so

me

refu

rbis

hmen

t. Th

e cl

ient

's re

furb

ishm

ent b

udge

t has

bee

n ap

plie

d at

€50

0,00

0, a

nd

addt

iona

l fit

out c

osts

has

bee

n es

timat

ed to

am

ount

to a

roun

d E

UR

75

per s

q m

. The

rent

al v

alue

est

imat

ed is

7.0

EU

R /s

qm/m

onth

in c

ase

of

offic

es a

fter r

efur

bish

men

t. H

ard

Cor

e va

luat

ion

met

hod

has

been

app

lied

with

har

d co

re y

ield

of 9

.0%

for l

et a

nd 1

2.0%

for v

acan

t are

as.

Prop

erty

add

ress

: Vá

ci ú

t 188

, Bud

apes

t, 11

38 H

unga

ry

Free

hold

314.

98

Cur

rent

Val

uatio

n30

Jun

e 20

15

Yes

Cla

ss B

(may

requ

ire s

ome

refu

rb.)

Sep

tem

ber 2

014

Cur

rent

Val

uatio

n30

Jun

e 20

15

12.1

1%

Offi

ce 120

01n/

a 6

V188

Offi

ces

V188

Offi

ces

PRO

PER

TY

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in H

UF

Buda

pest

XIII

Hun

gary

Dev

elop

men

t lan

dH

UF

HU

F/sq

m

Mar

ket V

alue

440

972

000

96

069

Des

crip

tion

MAR

KET

VAL

UE

in E

uros

Mar

ket V

alue

in €

EUR

EUR

/sq

m

Mar

ket V

alue

1 40

0 00

0

30

5.00

SWO

T AN

ALYS

ISC

omm

ents

Stre

ngth

s• L

ocat

ed in

the

mai

n of

fice

deve

lopm

ent l

ocat

ion

in B

udap

est

Opp

urtu

nitie

s• O

ppor

tuni

stic

dev

elop

men

t afte

r dem

oliti

on o

f exi

stin

g bu

ildin

g

Wea

knes

ses

Met

hodo

logy

• L

ocat

ed h

alfw

ay b

etw

een

two

met

ro s

tops

• Che

aper

end

of V

áci ú

t cor

ridor

Ris

ks• H

igh

com

petit

ion

on V

áci ú

t

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

314.

98

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

n

NO

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Prop

erty

nam

e: V

190

Offi

ces

YES

Váci

út 1

90

YES

30/0

6/20

15

The

prop

erty

com

pris

es a

bui

ldin

g of

1 7

22 s

q m

of b

asic

qua

lity

offic

e ac

com

mod

atio

n on

two

stor

eys,

whi

ch is

com

plet

ely

vaca

nt fo

r man

y ye

ars.

The

bui

ldin

g is

not

sui

tabl

e fo

r mod

ern

offic

e ac

com

odat

ion.

Ther

e ar

e pl

ans

to d

emol

ish

the

exis

ting

build

ing

and

deve

lop

a m

oder

n of

fice

build

ing.

The

usa

ble

area

of t

he s

ite is

3 8

52 s

q m

. The

pro

perty

is

zone

d as

I-XI

II-VD

, ins

titut

iona

l are

a su

itabl

e fo

r hig

h ris

e co

nstru

ctio

n.

The

zoni

ng a

llow

s pr

edom

inan

tly o

ffice

, ret

ail,

inst

itutio

nal,

park

ing

and

partl

y re

side

ntia

l use

s. 7

5% o

f the

gro

und

floor

and

40%

of t

he u

pper

flo

ors

may

be

built

-in, w

ith 2

0% la

ndsc

aped

are

as. T

he g

ross

floo

r ar

ea/s

ite a

rea

ratio

is h

igh

at 4

.0 -

4.4

m2/

m2.

The

min

imum

hei

ght i

s 18

m a

nd th

e m

axim

um h

eigh

t is

30 to

45m

, as

the

zoni

ng a

llow

s fo

r hig

h

RES

IDU

AL M

ETH

OD

- th

ere

have

bee

n ve

ry fe

w tr

ansa

ctio

ns o

f com

para

ble

prop

ertie

s in

Bud

apes

t in

the

past

yea

rs. T

he o

nes

that

sol

d ar

e no

t dire

ctly

com

para

ble

to th

e su

bjec

t pro

perty

due

to th

eir b

ette

r res

pect

ive

loca

tions

.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15

Prop

erty

add

ress

: Vá

ci ú

t 190

, Bud

apes

t XIII

, Hun

gary

Cur

rent

Val

uatio

n

We

have

ass

umed

a s

ingl

e ph

ase

offic

e de

velo

pmen

t pro

vidi

ng 1

6 94

9 sq

m o

ffice

s an

d re

late

d un

dreg

roun

d pa

rkin

g. T

he d

evel

opm

ent i

s as

sum

ed to

sta

rt af

ter a

12-

mon

th p

erm

ittin

g pe

riod

and

last

for 1

5 m

onth

s.

Cur

rent

Val

uatio

n

Mas

ter P

lan

Site

are

a

The

Prop

erty

is s

ituat

ed in

the

13th

dis

trict

of B

udap

est o

n th

e Vá

ci ú

t co

rrid

or, w

hich

is th

e la

rges

t offi

ce s

ub-m

arke

t in

Buda

pest

. It l

ies

7 km

no

rth o

f Bud

apes

t city

cen

tre fr

ontin

g Vá

ci ú

t and

Med

er u

tca,

ther

efor

e its

vis

ibilit

y is

exc

elle

nt. T

he c

lose

sur

roun

ding

com

pris

es D

una

Plaz

a sh

oppi

ng c

entre

and

a T

esco

hyp

erm

arke

t as

wel

l as

seve

ral C

lass

A a

nd

B of

fice

build

ings

. The

Pro

perty

can

be

easi

ly a

cces

sed

by c

ar v

ia V

áci

út. I

n te

rms

of p

ublic

tran

spor

t, th

e bu

ildin

g is

loca

ted

betw

een

two

met

ro

stat

ions

of M

3 lin

e th

at li

nks

sout

heas

t par

ts o

f Pes

t. Bu

s lin

es p

rovi

de

acce

ss w

ith B

uda

side

.

Free

hold

DTZ

Plan

ning

Per

mit

4 58

3 sq

m

Valu

atio

n D

ate:

Prop

erty

loca

tion

and

desc

riptio

nSu

mm

ary

of v

alue

s an

d as

sum

ptio

ns

Sum

mar

yM

ain

Use

Land

Are

a (s

q m

)N

umbe

r of b

uild

ings

Cad

astra

l Dis

trict

Dat

e B

uilt

Title

list

no.

Dat

e of

Las

t Ren

ovat

ion

Tenu

re L

and

No.

of F

loor

sR

estri

ctio

ns o

n Ti

tleTe

nure

Bui

ldin

g E

xcha

nge

rate

use

dVa

luat

ion

Cur

renc

yC

ZKC

ZK/s

q m

EUR

EUR

/sq

m

Val

uatio

n m

etho

d ad

opte

dV

alue

rC

ondi

tion

Dat

e of

last

insp

ectio

nG

ross

Mar

ket V

alue

21 9

30 0

002

850

21 9

30 0

002

850

CZK

p.a

.C

ZK/s

q m

p.a

.E

UR

p.a

.E

UR

/sq

m p

.a.

Gro

ss c

urre

nt re

nt (D

ay 1

)1

832

041

262

1 83

2 04

123

8

N

et c

urre

nt re

nt1

798

922

258

1 79

8 92

223

4

G

ross

Mar

ket r

ent

2 00

2 20

026

0

2

002

200

260

Cap

italis

atio

n ra

te8.

00%

8.00

%C

apita

lisat

ion

rate

on

Vaca

nt8.

00%

8.00

%

Equi

vale

nt Y

ield

8.00

%8.

00%

Initi

al Y

ield

7.63

%7.

63%

Rev

ersi

onar

y Yi

eld

8.49

%8.

49%

Initi

al v

oid

(if a

pplic

able

)N

/Am

onth

sN

/Am

onth

sEx

piry

voi

d0

- 12

mon

ths

0 - 1

2m

onth

sN

ew le

ase

leng

th3

year

s3

year

s

Non

-rec

over

able

s p.

a.1.

60%

of E

RV

1.60

%of

ER

VLe

tting

fees

10.0

0%of

ER

V10

.00%

of E

RV

CAP

EX0.

00%

CZK

0EU

R

Tota

l flo

or a

rea

7 69

5sq

m7

695

sqm

Let a

reas

6 98

6sq

m6

986

sqm

Loca

tion

Stru

ctur

al v

acan

cy-

sqm

- sq

m

Occ

upan

cy ra

te

Num

ber o

f car

par

king

spa

ces

324

units

324

units

WAU

LT (w

eigh

ted

by in

com

e)3.

7ye

ars

3.7

year

s

Des

crip

tion

Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Offi

ce 120

05N

ot a

dvis

ed3

Goo

dN

ot a

dvis

ed

Cur

rent

Val

uatio

n30

Jun

e 20

15

90.7

8%30 J

une

2015

90.7

8%

DTZ

Fra

nce

Phot

o - I

nsid

ePh

oto

- out

side

Cap

elle

n is

a d

istri

ct s

ituat

ed a

ppro

xim

atel

y 10

km n

orth

wes

t of L

uxem

bour

g ce

ntre

, and

app

roxi

mat

ely

26km

from

the

airp

ort.

The

loca

tion

is w

ithin

pro

xim

ity o

f the

Bel

gian

bor

der a

nd h

as g

ood

acce

ss fr

om th

e A

6 R

ingr

oad.

The

subj

ect p

rope

rty is

loca

ted

in th

e M

amer

Cap

elle

n B

usin

ess

park

whi

ch is

an

impo

rtant

bus

ines

s hu

b at

the

edge

of L

uxem

bour

g ci

ty.

The

area

is c

hara

cter

ised

by

offic

es a

nd a

few

sem

i-ind

ustri

al b

uild

ings

. The

Mam

er C

apel

len

Bus

ines

s pa

rk b

enef

its fr

om it

s pr

oxim

ity to

Fr

ance

and

Bel

gium

whi

ch e

nabl

es c

ompa

nies

loca

ted

ther

e to

hav

e Fr

ench

and

Bel

gian

em

ploy

ees.

The

prop

erty

con

sist

s of

an

offic

e bu

ildin

g ar

rang

ed o

ver g

roun

d an

d tw

o up

per f

loor

s un

der a

pitc

hed

roof

. Acc

ess

to th

e pr

oper

ty is

di

rect

ly o

ff th

e st

reet

from

Rue

Paf

ebru

ch.

The

exte

rnal

ele

vatio

n co

nsis

ts o

f gla

zing

and

cla

ddin

g.

The

prop

erty

is c

urre

ntly

let t

o 6

tena

nts

who

occ

upy

appr

oxim

atel

y 91

% o

f the

tota

l let

tabl

e ar

ea.

Inve

stm

ent

The

prop

erty

is a

ppro

xim

atel

y 91

% le

t, w

ith 4

20 s

q m

of o

ffice

s an

d 28

9 sq

m s

tora

ge s

pace

cur

rent

ly a

vaila

ble

to le

t. W

e ha

ve a

ssum

med

that

al

l the

tena

nts

will

rene

w th

eir l

ease

s on

exp

iry a

n ha

ve a

llow

ed 6

-mon

th re

nt fr

ee in

cent

ives

on

each

rene

wal

. We

have

reta

ined

an

ER

V o

f €22

0 pe

r ann

um (€

18.3

3 pe

r mon

th) f

or th

e of

fices

. We

have

allo

wed

for 1

5 m

onth

s to

rele

t the

vac

ant s

pace

, with

a 3

-mon

th re

nt fr

ee a

nd h

ave

reta

ined

the

non-

reco

vera

ble

void

cos

ts o

f €33

,119

per

ann

um. N

o C

AP

EX

allo

wan

ce h

as b

een

mad

e. W

e ha

ve a

pplie

d an

equ

ival

ent y

ield

of

8% to

the

rent

from

the

prop

erty

. Pur

chas

er's

cos

ts o

f 7.5

0% h

ave

been

ded

ucte

d.

Prop

erty

add

ress

: R

ue P

afeb

ruch

, Mam

er, L

uxem

bour

g

Free

hold

1.00

Cur

rent

Val

uatio

n30

Jun

e 20

15

Not

adv

ised

Prop

erty

nam

e: L

e C

apel

len

Bui

ldin

g

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- M

acro

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icro

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rand

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hé d

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hold

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atio

n D

ate:

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erty

loca

tion

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desc

riptio

nSu

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ary

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d as

sum

ptio

ns

Sum

mar

yM

ain

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umbe

r of b

uild

ings

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astra

l Dis

trict

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e B

uilt

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no.

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e of

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t Ren

ovat

ion

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re L

and

No.

of F

loor

sR

estri

ctio

ns o

n Ti

tleTe

nure

Bui

ldin

g E

xcha

nge

rate

use

dVa

luat

ion

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renc

yPL

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uatio

n m

etho

d ad

opte

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tion

Dat

e of

last

insp

ectio

nG

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ket V

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19 8

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378

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p.a

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R p

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m p

.a.

Gro

ss c

urre

nt re

nt (D

ay 1

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369

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978

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urre

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nt1

369

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Gro

ss M

arke

t ren

t1

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n ra

te6.

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apita

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al Y

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ersi

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y Yi

eld

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al v

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pplic

able

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piry

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ase

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R

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l flo

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rea

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Let a

reas

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0sq

m1

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sqm

Loca

tion

Stru

ctur

al v

acan

cysq

msq

m

Occ

upan

cy ra

te

Num

ber o

f car

par

king

spa

ces

3un

its3

units

WAU

LT (w

eigh

ted

by in

com

e)9.

2ye

ars

9.2

year

s

Des

crip

tion

Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Offi

ce 120

04N

/A 4

B c

lass

July

201

5

Cur

rent

Val

uatio

n30

Jun

e 20

15

100.

00%

30 J

une

2015

100.

00%

DTZ

War

saw

Phot

o - I

nsid

ePh

oto

- out

side

The

Pro

perty

is lo

cate

d in

War

saw

city

cen

tre, a

long

Chm

ieln

a S

treet

, whi

ch fo

rms

one

of th

e w

ell r

ecog

nize

d re

tail

stre

ets

of th

e ci

ty.

The

prop

erty

adr

ess

is C

hmie

lna

13A

. In

clos

e vi

cini

ty o

f the

pro

perty

, Chm

ieln

a S

treet

inte

rsec

ts w

ith B

rack

a S

treet

whi

ch le

ads

to A

l. Je

rozo

limsk

ie S

treet

. The

latte

r for

min

g on

e of

the

mai

n tra

nspo

rtatio

n ro

ute

of th

e ci

ty.

The

subj

ect p

rope

rty b

enef

its fr

om c

onve

nien

t acc

ess

to tr

ansp

ort f

acilit

ies.

A fe

w tr

am a

nd b

us ro

utes

are

ava

ilabl

e al

ong

Al.

Jero

zolim

skie

Stre

et w

ith th

e ne

ares

t sto

p in

a d

ista

nce

of a

ppro

xim

atel

y of

300

m o

f the

sub

ject

pro

perty

. Th

e im

med

iate

nei

ghbo

urho

od o

f the

sub

ject

pro

perty

is d

omin

ated

by

com

mer

cial

and

mul

ti-fa

mily

resi

dent

ial d

evel

opm

ents

with

a

com

pone

nt o

f ser

vice

use

. In

maj

ority

the

neig

hbou

ring

build

ings

con

stitu

te h

isto

rical

tene

men

t hou

ses

with

gro

und

floor

pre

mis

es u

sed

for r

etai

l and

ser

vice

pur

pose

s.

The

Pro

perty

was

con

stru

cted

in 2

004

and

com

pris

es o

ffice

uni

t with

an

area

of 1

400

.09

sq m

. The

bui

ldin

g is

of a

rein

forc

ed c

oncr

ete

stru

ctur

e w

ith h

ip ro

of. E

leva

tions

inco

rpor

ate

a co

mbi

natio

n of

bric

ks in

sula

ted

with

foam

ed p

olys

tyre

ne, g

alss

, alu

min

ium

and

nat

ural

st

one.

Inte

rnal

Lay

out:

tiled

and

car

pete

d flo

ors.

Tec

hnic

al e

quip

men

ts: c

entra

l hea

ting

with

a g

as b

oile

r, fre

on a

s a

sour

ce o

f air-

cond

ition

ing,

one

lift,

ala

rm a

nd s

mok

e de

tect

ors.

The

bui

ldin

g is

in a

goo

d co

nditi

on, w

e no

ticed

onl

y m

inor

see

page

s on

sus

pend

ed

ceilin

gs.

Inve

stm

ent

The

prop

erty

is fu

lly le

t to

one

tena

nt. M

arke

t Val

ue in

crea

sed

in c

ompa

rison

to th

e D

ecem

ber v

alua

tion

by a

ppro

x. 4

% m

ainl

y du

e to

the

decr

ease

of c

apita

lisat

ion

rate

from

7%

to 6

.75%

. Lea

se a

gree

men

t with

Goe

the

Inst

itut h

as b

een

sign

ed. O

n th

e ot

her h

and,

ER

V a

ssum

ptio

n de

crea

sed

by 0

.50

EU

R/s

q m

from

20

EU

R/s

q m

to 1

9.50

EU

R/s

q m

rela

ted

to th

e cu

rrent

offi

ce m

arke

t situ

atio

n - h

igh

leve

l of s

uppl

y, s

tabl

e de

man

d, v

acan

cy ra

tio te

mpo

rary

sta

ble,

how

ever

it is

fore

cast

ed in

a d

irect

ion

of fu

rther

incr

ease

s, h

igh

pres

sure

on

effe

ctiv

e re

nts.

Hea

dlin

e re

nt in

line

with

the

rent

agr

eed

with

the

tena

nt. F

it-ou

t con

tribu

tion

reco

ncile

d in

H1

2015

.

Prop

erty

add

ress

: C

hmie

lna

13A,

War

saw

RP

U

4.19

Cur

rent

Val

uatio

n30

Jun

e 20

15

N/A

Prop

erty

nam

e: D

iana

offi

ce

Map

- M

acro

Map

- M

icro

1 69

1Ś

ródm

ieśc

ie (p

reci

nct 5

-03-

11)

117

Free

hold

NaPo

říčí

NaPo

říčí

PRO

PER

TY

ASS

ET P

RES

ENTA

TIO

NM

AR

KET

VA

LUE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in Z

LOW

arsa

wP

olan

dM

ulti-

fam

ily re

side

ntia

l / R

etai

l un

its

Mar

ket V

alue

Des

crip

tion

MA

RK

ET V

ALU

E in

Eur

os

Mar

ket V

alue

in E

UR

Mar

ket V

alue

SWO

T A

NA

LYSI

S

Stre

ngth

s

• Con

veni

ent a

cces

s to

pub

lic tr

ansp

orta

tion

mea

nsC

omm

ents

• Goo

d vi

sibi

lity

and

acce

ssib

ility

of tw

o of

reta

il un

itsO

ppur

tuni

ties

• Pla

nned

sub

way

sta

tion

in th

e cl

ose

dist

ance

from

the

prop

erty

Wea

knes

ses

• Ver

y sm

all a

rea

of c

ella

rs (1

.08

sq m

and

0.9

2 sq

m)

Met

hodo

logy

Ris

ks

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

ZLO

1 43

0 00

0

EU

R

340

000

4.19

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

nC

ount

ry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Prop

erty

nam

e: K

lono

wa

Alej

a

Św

. Win

cent

ego

128

YES

30/0

6/20

15

The

subj

ect s

ites

are

deve

lope

d w

ith a

com

plex

of f

our-s

tore

y re

side

ntia

l bu

ildin

gs d

evel

oped

in 2

009.

Thr

ee re

tail

units

(294

.60

sqm

), th

ree

park

ing

spac

es a

nd tw

o ce

llars

rem

ain

unso

ld.

CO

MP

AR

ISO

N A

PP

RO

AC

HA

list

of c

ompa

rabl

es a

ttach

ed to

the

repo

rt as

an

App

endi

x. F

or th

e pu

rpos

es o

f the

val

uatio

n, w

e ha

ve

cons

ider

ed th

e lo

cal p

rope

rty m

arke

t foc

usin

g on

com

mer

cial

uni

ts lo

cate

d in

the

prox

imity

to th

e su

bjec

t pr

oper

ty.

• Wea

k vi

sibi

lity

of o

ne o

f the

reta

il un

it (e

ntra

nce

from

the

rear

of t

he

build

ing)

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15

Prop

erty

add

ress

: ul

. Św

. Win

cent

ego

128,

War

saw

, Pol

and

Cur

rent

Val

uatio

n

• Inc

reas

ing

com

petit

ion

in th

e di

rect

vic

inity

Cur

rent

Val

uatio

n

Mas

ter P

lan

Site

are

a

The

subj

ect p

rope

rty is

loca

ted

with

in W

arsa

w’s

dis

trict

of T

argó

wek

, in

a di

stan

ce o

f app

roxi

mat

ely

9.5

km to

the

north

-eas

t of t

he c

ity c

entre

. It i

s si

tuat

ed a

long

Św

. Win

cent

ego

Stre

et w

hich

form

s on

e of

the

mai

n ro

ads

of T

argó

wek

dis

trict

. Acc

ess

to th

e su

bjec

t pro

perty

is p

rovi

ded

via

inte

rnal

road

s co

nnec

ted

with

Św

. Win

cent

ego

Stre

et.

The

prop

erty

ben

efits

from

con

veni

ent a

cces

s to

pub

lic tr

ansp

orta

tion

mea

ns. T

he s

urro

undi

ngs

of th

e pr

oper

ty c

onst

itute

mai

nly

mul

tifam

ily

resi

dent

ial d

evel

opm

ents

. The

sub

ject

site

s ar

e re

ason

ably

flat

and

of

irreg

ular

sha

pe. T

he s

ubje

ct s

ites

are

deve

lope

d w

ith a

com

plex

of f

our-

stor

ey re

side

ntia

l bui

ldin

gs e

rect

ed in

200

9.Fr

eeho

ldD

TZ

Plan

ning

Per

mit

18 5

35 s

qm

The

diffe

renc

e in

val

ue c

ompa

ring

to th

e la

st v

auat

ion

roun

d re

sults

from

diff

eren

t sta

te o

f the

pro

perty

as

at

the

prev

ious

val

uatio

n da

te a

nd c

urre

nt v

alua

tion

date

. Cur

rent

ly s

ubje

ct to

the

valu

atio

n ar

e: 3

com

mer

cial

un

its, 3

par

king

spa

ces

and

2 ce

llars

.

• Goo

d lo

catio

n al

ong Ś

w.W

ince

nteg

o S

treet

whi

ch fo

rms

one

of th

e m

ain

road

s of

Tar

gów

ek d

istri

ct

PRO

PER

TY

ASS

ET P

RES

ENTA

TIO

NM

AR

KET

VA

LUE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in P

LNK

rakó

wP

olan

dD

evel

opm

ent l

and

ZLO

ZLO

/sq

m

Mar

ket V

alue

14 2

30 0

00

40

0

Des

crip

tion

MA

RK

ET V

ALU

E in

Eur

os

Mar

ket V

alue

in E

UR

EU

RE

UR

/sq

m

Mar

ket V

alue

3 39

0 00

0

95

.37

SWO

T A

NA

LYSI

S

Stre

ngth

s• C

lose

to a

n es

tabl

ishe

d re

side

ntia

l are

a • F

reeh

old

as th

e tit

le to

the

prop

erty

Com

men

tsO

ppur

tuni

ties

• The

pop

ulat

ion

of K

rakó

w h

as b

een

incr

easi

ng in

rece

nt y

ears

• The

suc

cess

ful r

esid

entia

l pro

ject

s be

ing

real

ized

in th

e vi

cini

ty

Wea

knes

ses

• Lar

ge s

ize

of th

e la

nd

• Lac

k of

loca

l mas

ter p

lan/

deci

sion

on

the

site

dev

elop

men

t con

ditio

ns

Met

hodo

logy

• Lan

d w

ithou

t acc

ompl

ishe

d ac

cess

road

Ris

ks• A

hea

t pip

e ru

nnin

g th

roug

h th

e no

rther

n pa

rt of

the

site

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15

Prop

erty

add

ress

: ul.

Piltz

a, K

rakó

w, P

olan

d

Cur

rent

Val

uatio

n

Cur

rent

Val

uatio

n

Mas

ter P

lan

Site

are

a

The

prop

erty

is lo

cate

d w

ithin

Kra

ków

’s d

istri

ct o

f Łag

iew

niki

, in

a di

stan

ce o

f ap

prox

imat

ely

7 km

to th

e so

uth-

wes

t of t

he c

ity c

entre

. It i

s si

tuat

ed a

long

ul.

Pilt

za, b

etw

een

ul. B

obrz

yńsk

iego

and

ul.

Kob

ierz

yńsk

a w

hich

form

mai

n co

mm

unic

atio

n ar

terie

s le

adin

g to

the

city

cen

tre.

Free

hold

Mic

hał W

ielg

at, B

artło

mie

j Usz

kur

Plan

ning

Per

mit

35 5

73 s

qm

30/0

6/20

15

The

subj

ect p

rope

rty is

und

evel

oped

. The

sub

ject

pro

perty

is re

ason

ably

flat

and

of

irre

gula

r sha

pe. A

s at

the

valu

atio

n da

te th

ere

is n

o va

lid m

aste

r pla

n fo

r the

ar

ea w

here

the

subj

ect p

rope

rty is

loca

ted.

In L

and

Use

Stu

dy ("

Stu

dium

U

war

unko

wań

i K

ieru

nków

Zag

ospo

daro

wan

ia P

rzes

trzen

nego

") th

e pr

oper

ty is

de

sign

ed fo

r mul

ti-fa

mily

resi

dent

ial u

ses.

CO

MP

AR

ISO

N A

PP

RO

AC

H -

an a

dequ

ate

met

hod

for l

and

with

out v

alid

bui

ldin

g pe

rmit.

In th

e fir

st h

alf o

f 201

5 w

e re

cord

ed tw

o ve

ry c

ompa

rabl

e la

nds

whi

ch w

ere

sold

at t

he p

rice

of P

LN 5

58 a

nd

PLN

846

per

sq

m. B

oth

sold

land

s ar

e ad

jace

nt to

the

subj

ect p

rope

rty .

4.19

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

n

NO

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Prop

erty

nam

e: K

rakó

w R

ucza

j

NO

ul. P

iltza

NO

Prop

erty

add

ress

: ul.

Okó

lna

45a,

Mar

ki, P

olan

d

PRO

PER

TY

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

1)Lo

catio

n1)

Mar

ket V

alue

in Z

LO3)

Mar

ket V

alue

in Z

LOM

arki

Pol

and

Exc

ess

Land

(ind

ustri

al la

nd)

ZLO

ZLO

/sq

mZL

OZL

O/s

q m

Mar

ket V

alue

4 82

0 00

0

79

M

arke

t Val

ue7

000

000

117

2)M

arki

2)M

arke

t Val

ue in

ZLO

Pol

and

Exc

ess

Land

(lan

d oc

cupi

ed b

y el

ectri

city

com

pany

)ZL

OZL

O/s

q m

Mar

ket V

alue

1 73

0 00

0

16

8

3)

Mar

kiP

olan

dE

xces

s La

nd (d

esig

nate

d fo

r pr

oduc

tion

use

in la

nd s

tudy

)

Des

crip

tion

MAR

KET

VAL

UE

in E

uros

1)M

arke

t Val

ue in

EU

R3)

Mar

ket V

alue

in E

UR

EUR

EU

R/s

q m

EUR

EUR

/sq

mM

arke

t Val

ueM

arke

t Val

ue1

150

000

18.7

9

1 66

9 00

0

28

.00

2)M

arke

t Val

ue in

EU

R

EUR

EU

R/s

q m

Mar

ket V

alue

413

000

40

.00

SWO

T AN

ALYS

ISC

omm

ents

Stre

ngth

s• C

lose

to W

arsa

w• V

icin

ity o

f ind

ustri

al p

rope

rties

Opp

urtu

nitie

s• S

treng

then

ing

of d

eman

d fo

r war

ehou

se s

pace

in P

olan

dD

ecre

sing

vac

ancy

rate

for w

areh

ouse

are

as

Wea

knes

ses

Met

hodo

logy

Long

dis

tanc

e to

the

mai

n ro

ad

Ris

ks• L

ow a

ttrac

tiven

ess

of M

arki

as

war

ehou

se h

ub

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Plan

ning

Per

mit

Addr

ess

Okó

lna

45a

Tow

nC

ount

ry

Nat

ure

Exch

ange

rate

(€)

4.19

Site

are

a59

609

sqm

Addr

ess

Okó

lna

45a

Tow

nC

ount

ry

30 J

une

2015

Valu

atio

n D

ate:

Mas

ter P

lan

Site

are

a

Cur

rent

Val

uatio

n30

/06/

2015

Nat

ure

Exch

ange

rate

(€)

4.19

Site

are

a10

321

sqm

Cur

rent

Val

uatio

n30

/06/

2015

30/0

6/20

15

61 2

00 s

qm

Cur

rent

Val

uatio

n

The

Pro

perty

is lo

cate

d in

Mar

ki, i

n th

e vi

cini

ty o

f nor

th-e

aste

rn s

ubur

bs W

arsa

w in

a

dist

ance

of a

ppro

xim

atel

y 15

km

nor

th-e

ast o

f the

city

cen

tre. I

t is

situ

ated

alo

ng

Okó

lna,

whi

ch in

ters

ects

with

Sło

necz

na S

treet

. Sło

necz

na S

treet

in a

dis

tanc

e of

ap

prox

imat

ely

900

m in

ters

ects

with

Piłs

udsk

iego

Stre

et, w

hich

form

s on

e of

the

mai

n tra

nspo

rtatio

n ro

ute

runn

ing

thro

ugh

the

city

in th

e so

uthe

rn d

irect

ion

and

lead

ing

to th

e W

arsa

w c

ity c

entre

. Th

e ve

hicu

lar a

cces

s to

the

subj

ect p

rope

rty is

poo

r. A

bus

rout

es a

re a

vaila

ble

alon

g P

iłsud

skie

go S

treet

with

the

near

est b

us s

top

in a

dis

tanc

e of

app

roxi

mat

ely

of 1

.3 k

m o

f th

e su

bjec

t pro

perty

.

The

imm

edia

te n

eigh

bour

hood

of t

he s

ubje

ct p

rope

rty is

mai

nly

indu

stria

l in

char

acte

r. D

irect

ly to

the

east

and

sou

th o

f the

pro

perty

are

pro

duct

ion/

war

ehou

se d

evel

opm

ents

lo

cate

d. D

irect

ly to

the

wes

t and

nor

th a

re u

ndev

elop

ed la

nd s

ituat

ed. F

urth

er

surr

ound

ings

con

stitu

te m

ainl

y si

ngle

-fam

ily re

side

ntia

l hou

sing

.

• Poo

r veh

icul

ar a

cces

s to

the

prop

erty

1) C

hang

e re

gard

ing

cost

s of

dec

onta

min

atio

n an

d tre

es re

mov

al, n

o ot

her c

hang

es.

2) a

nd 3

) On

the

land

mar

ket t

here

wer

e re

cord

ed th

ree

new

com

para

ble

trans

actio

ns w

ith p

rices

at r

ange

of 9

2-20

1 P

LN p

er s

qm. T

wo

of th

em c

once

rns

land

s lo

cate

d in

the

vici

nity

of t

he s

ubje

ct

prop

erty

but

they

are

sig

nific

antly

sm

alle

r. Th

ird p

rope

rty w

ith c

ompa

rabl

e ar

ea h

as w

orse

loca

tion.

No

chan

ges

in v

alue

s in

com

paris

on to

the

last

val

uatio

n - p

rice

leve

l of n

ew tr

ansa

ctio

ns c

onfir

ms

our f

igur

es.

1) R

esid

ual -

For

the

purp

ose

of th

e V

alua

tion

we

have

ado

pted

ave

rage

con

stru

ctio

n co

sts

275

EU

R p

er s

qm o

f tot

al G

LA 2

1 27

1 sq

m, p

rofit

on

cost

s 15

%, c

ontin

genc

y 5%

, pro

ffesi

on fe

es 3

%,

eqiu

vale

nt y

ield

8.5

%. G

ross

dev

elop

men

t val

ue is

10

362

975

EU

R. T

otal

EM

RV

p.a

. 908

224

EU

R

2) a

nd 3

) we

have

use

d co

mpa

rabl

e m

etho

d to

ado

pt a

sui

tabl

e va

lue

1) In

dust

rial l

and

- The

pro

perty

con

stitu

tes

an u

ndev

elop

ed p

art o

f site

no.

73/

13 w

ith

area

of 6

1 20

0 sq

m. I

t is

loca

ted

in M

arki

, in

the

vici

nity

of n

orth

-eas

tern

sub

urbs

W

arsa

w a

nd is

loca

ted

900

m a

way

from

the

mai

n tra

nspo

rtatio

n ro

ute

whi

ch le

ads

to

the

War

saw

city

cen

tre. T

he v

ehic

ular

acc

ess

to th

e pr

oper

ty is

poo

r.

2) L

and

occu

pied

by

elec

trici

ty c

ompa

ny -

The

prop

erty

con

stitu

tes

an u

ndev

elop

ed p

art

of s

ite n

o. 7

3/13

with

are

a of

10

321

sqm

and

is o

ccup

ied

by th

e el

ectri

city

com

pany

. It

is lo

cate

d in

Mar

ki, i

n th

e vi

cini

ty o

f nor

th-e

aste

rn s

ubur

bs W

arsa

w a

nd is

loca

ted

900

m

away

from

the

mai

n tra

nspo

rtatio

n ro

ute

whi

ch le

ads

to th

e W

arsa

w c

ity c

entre

. The

ve

hicu

lar a

cces

s to

the

prop

erty

is p

oor.

3) L

and

desi

gnat

ed fo

r pro

duct

ion

use

- The

pro

perty

con

stitu

tes

an u

ndev

elop

ed s

ites

no. 7

3/8,

73/

5, 4

2 an

d 27

with

agg

rega

te a

rea

of 5

9 60

9 sq

m. I

t is

loca

ted

in M

arki

, in

the

vici

nity

of n

orth

-eas

tern

sub

urbs

War

saw

and

is lo

cate

d 90

0 m

aw

ay fr

om th

e m

ain

trans

porta

tion

rout

e w

hich

lead

s to

the

War

saw

city

cen

tre. T

he v

ehic

ular

acc

ess

to th

e pr

oper

ty is

poo

r.

Cur

rent

Val

uatio

n30

/06/

2015

Cur

rent

Val

uatio

n

30/0

6/20

15

30/0

6/20

15

Cur

rent

Val

uatio

n

Free

hold

DTZ

4.19

Loca

tion

Map

& P

hoto

grap

h

Addr

ess

Tow

n

NO

Cou

ntry

Nat

ure

Exch

ange

rate

(€)

Biu

ldin

g Pe

rmit

Tenu

re

Valu

er

Prop

erty

nam

e: M

arki

exc

ess

land

NO

Okó

lna

45a

YES

Valu

atio

n D

ate:

Prop

erty

loca

tion

and

desc

riptio

nSu

mm

ary

of v

alue

s an

d as

sum

ptio

ns

Sum

mar

yM

ain

Use

Land

Are

a (s

q m

)N

umbe

r of b

uild

ings

Cad

astra

l Dis

trict

Dat

e Bu

iltTi

tle li

st n

o.D

ate

of L

ast R

enov

atio

nTe

nure

Lan

dN

o. o

f Flo

ors

Res

trict

ions

on

Title

Tenu

re B

uild

ing

Exch

ange

rate

use

dVa

luat

ion

Cur

renc

yPL

NPL

N/s

q m

EUR

EUR

/sq

m

Valu

atio

n m

etho

d ad

opte

dVa

luer

Con

ditio

nD

ate

of la

st in

spec

tion

Gro

ss M

arke

t Val

ue10

150

000

288

2 42

0 00

069

PLN

p.a

.P

LN/s

q m

p.a

.E

UR

p.a

.E

UR

/sq

m p

.a.

Gro

ss c

urre

nt re

nt (D

ay 1

)70

0 43

192

166

992

22

N

et c

urre

nt re

nt(1

068

947

)14

0-

(2

54 8

51)

33-

Gro

ss M

arke

t ren

t2

299

651

65

54

8 26

716

Cap

italis

atio

n ra

te15

.00%

15.0

0%C

apita

lisat

ion

rate

on

Vaca

nt15

.00%

15.0

0%

Equi

vale

nt Y

ield

15.0

0%15

.00%

Initi

al Y

ield

(-10.

52%

)(-1

0.52

%)

Rev

ersi

onar

y Yi

eld

21.5

1%21

.51%

Initi

al v

oid

(if a

pplic

able

)9

mon

ths

9m

onth

sEx

piry

voi

d9

mon

ths

9m

onth

sN

ew le

ase

leng

th3

year

s3

year

s

Non

-rec

over

able

s p.

a.2.

00%

of re

nt p

aid

2.00

%of

rent

pai

dLe

tting

fees

12.5

0%of

ER

V12

.50%

of E

RV

CA

PEX

0PL

N0

EUR

Tota

l flo

or a

rea

35 1

99sq

m35

199

sqm

Let a

reas

7 63

3sq

m7

633

sqm

Loca

tion

Stru

ctur

al v

acan

cy-

sqm

- sq

m

Occ

upan

cy ra

te

Num

ber o

f car

par

king

spa

ces

n/a

units

n/a

units

WA

ULT

(wei

ghte

d by

inco

me)

0.84

year

s0.

84ye

ars

Des

crip

tion

Com

men

ts

This

sum

mar

y sh

ould

be

read

in c

onju

nctio

n w

ith o

ur v

alua

tion

repo

rt.

Prop

erty

nam

e: M

arki

indu

stria

l pro

pert

y

Map

- M

acro

Map

- M

icro

78 6

55M

arki

WA1

W/0

0102

301/

7

Free

hold

30 J

une

2015

21.6

9%

DTZ

War

saw

Phot

o - I

nsid

ePh

oto

- out

side

The

Prop

erty

is lo

cate

d in

Mar

ki, i

n th

e vi

cini

ty o

f nor

th-e

aste

rn s

ubur

bs W

arsa

w in

a d

ista

nce

of a

ppro

xim

atel

y 15

km

nor

th-e

ast o

f the

ci

ty c

entre

. It i

s si

tuat

ed a

long

Okó

lna,

whi

ch in

ters

ects

with

Sło

necz

na S

treet

. Sło

necz

na S

treet

in a

dis

tanc

e of

app

roxi

mat

ely

900

m

inte

rsec

ts w

ith P

iłsud

skie

go S

treet

, whi

ch fo

rms

one

of th

e m

ain

trans

porta

tion

rout

e ru

nnin

g th

roug

h th

e ci

ty in

the

sout

hern

dire

ctio

n an

d le

adin

g to

the

War

saw

city

cen

tre. T

he v

ehic

ular

acc

ess

to th

e su

bjec

t pro

perty

is p

oor.

A bu

s ro

utes

are

ava

ilabl

e al

ong

Piłs

udsk

iego

St

reet

with

the

near

est b

us s

top

in a

dis

tanc

e of

app

roxi

mat

ely

of 1

.3 k

m o

f the

sub

ject

pro

perty

. The

imm

edia

te n

eigh

bour

hood

of t

he

subj

ect p

rope

rty is

mai

nly

indu

stria

l in

char

acte

r. D

irect

ly to

the

east

and

sou

th o

f the

pro

perty

are

pro

duct

ion/

war

ehou

se d

evel

opm

ents

lo

cate

d. D

irect

ly to

the

wes

t and

nor

th a

re u

ndev

elop

ed la

nd s

ituat

ed. F

urth

er s

urro

undi

ngs

cons

titut

e m

ainl

y si

ngle

-fam

ily re

side

ntia

l ho

usin

g.

The

prop

erty

con

sist

s of

indu

stria

l bui

ldin

g co

nstru

cted

in 1

970'

s. It

is lo

cate

d in

Mar

ki, i

n th

e vi

cini

ty o

f nor

th-e

aste

rn s

ubur

bs W

arsa

w

and

is lo

cate

d 90

0 m

aw

ay fr

om th

e m

ain

trans

porta

tion

rout

e w

hich

lead

s to

the

War

saw

city

cen

tre. T

he v

ehic

ular

acc

ess

to th

e pr

oper

ty

is p

oor.

The

prop

erty

is o

ccup

ied

by tw

o te

nant

s w

ho a

re o

ccup

ying

21.

7% o

f the

35

198.

60 s

q m

letta

ble

area

(as

per C

lient

requ

est

leas

e w

ith O

rco

has

been

dis

rega

rded

for t

he p

urpo

ses

of v

alua

tion)

.

Inve

stm

ent

The

prop

erty

is 2

1.7%

leas

ed (l

ease

with

Orc

o ha

s be

en d

isre

gard

ed a

s re

ques

ted

by th

e C

lient

). Th

ere

is c

urre

ntly

27

567

sqm

of v

acan

t spa

ce.

For t

he p

urpo

se o

f the

Val

uatio

n w

e ha

ve d

educ

ted

2% fr

om th

e gr

oss

inco

me

for n

on-r

ecov

erab

le e

xpen

ses

and

3% fo

r bad

deb

ts a

nd w

e ha

ve

dedu

cted

1.2

5 EU

R/s

qm/m

th fo

r on-

goin

g va

canc

y. A

n av

erag

e EM

RV

for t

he p

rem

ises

has

bee

n ad

opte

d at

15.

58 E

UR

/sqm

/mth

. For

inde

finite

le

ase

we

have

app

lied

9 m

onth

s le

ase

perio

d fro

m th

e da

te o

f val

uatio

n.

Prop

erty

add

ress

: ul

. Okó

lna

45a,

Mar

ki, P

olan

d

Perp

etua

l usu

fruct

4.19

Cur

rent

Val

uatio

n30

Jun

e 20

15

Mor

tgag

es, e

asem

ents

Indu

stria

l1

1970

'n/

a 2

Wea

kJu

ly 2

015

Cur

rent

Val

uatio

n30

Jun

e 20

15

21.6

9%

PRO

PER

TY

ASSE

T PR

ESEN

TATI

ON

MAR

KET

VAL

UE

in L

ocal

Cur

renc

y

Loca

tion

Mar

ket V

alue

in P

LNSz

czec

inPo

land

Dev

elop

men

t lan

dZL

OZL

O/s

q m

Mar

ket V

alue

13 9

40 0

00

20

0

Des

crip

tion

MAR

KET

VAL

UE

in E

uros

Mar

ket V

alue

in E

UR

EUR

EUR

/sq

m

Mar

ket V

alue

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Nat

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Exch

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rate

(€)

Biu

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re

Valu

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Prop

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ul. S

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ther

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ter p

lan

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ct p

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ain

uses

are

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N -

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re h

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s to

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ch la

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land

s in

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ears

on

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ket.

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ns w

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land

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once

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rea

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bout

5

000-

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00 s

q m

and

the

pric

es w

ere

at th

e le

vel o

f PLN

323

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per

sq

m. O

ne o

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sol

d pr

oper

ties

was

lo

cate

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ose

the

city

cen

tre.

30 J

une

2015

Valu

atio

n D

ate:

30/0

6/20

15

Prop

erty

add

ress

: ul.

Szos

a Po

lska

, Szc

zeci

n, P

olan

d

Cur

rent

Val

uatio

n

Cur

rent

Val

uatio

n

Mas

ter P

lan

Site

are

a

The

prop

erty

is lo

cate

d w

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Szc

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n’s

dist

rict o

f Pół

noc,

in a

dis

tanc

e of

app

roxi

mat

ely

8 km

to th

e no

rth o

f the

city

cen

tre. I

t is

loca

ted

in c

lose

pr

oxim

ity o

f Szo

sa P

olsk

a St

reet

whi

ch fo

rms

the

mai

n tra

nspo

rtatio

n ro

ute

of th

e no

rther

n pa

rt of

the

city

. The

sur

roun

ding

s of

the

prop

erty

co

nstit

ute

unde

velo

ped

land

and

sin

gle-

fam

ily h

ouse

s.

Free

hold

Mic

hał W

ielg

at, B

artło

mie

j Usz

kur

Plan

ning

Per

mit

69 6

81 s

qm


APPENDIX C

Argus Exports (investment and residual method)

Benice 1C

APPRAISAL SUMMARY DTZ DEBENHAM TIE LEUNG - U.K Benice 1C

Summary Appraisal for Phase 1

Currency in £

REVENUE Sales Valuation Units m² Rate m² Unit Price Gross Sales

Houses 1 1,443.00 44,000.00 63,492,000 63,492,000

NET REALISATION 63,492,000

OUTLAY

ACQUISITION COSTS Residualised Price 7,303,490

7,303,490 CONSTRUCTION COSTS Construction Units Unit Amount Cost

Houses 1 un 37,110,135 37,110,135 37,110,135

Contingency 4.00% 1,484,405 Road/Site Works 2,700,000

4,184,405

PROFESSIONAL FEES Professional fees 5.00% 1,855,507

1,855,507 MARKETING & LETTING

Marketing 500,000 500,000

DISPOSAL FEES Sales Agent Fee 3.00% 1,904,760 Sales Legal Fee 0.50% 317,460

2,222,220 FINANCE

Debit Rate 4.000% Credit Rate 0.000% (Nominal) Land 423,725 Construction 801,858 Other 809,087 Total Finance Cost 2,034,671

TOTAL COSTS 55,210,428

PROFIT 8,281,572

Performance Measures Profit on Cost% 15.00% Profit on GDV% 13.04% Profit on NDV% 13.04%

IRR 17.52%

Profit Erosion (finance rate 4.000%) 3 yrs 6 mths

File: U:\VALUATION\2015 files\Clients\OPG - Luxembourg Listing June 2015\Properties\Benice\Benice 1C\Benice 1C Jun2015.wcfx ARGUS Developer Version: 6.00.002 Date: 03/08/2015

Bubenská 1

REPORT Summary Valuation DTZ Central and Eastern Europe BV

Report Date 03 August 2015Valuation Date 30 June 2015

Property

Address ORBU_Bubenska,1,Bubenska,Prague,170 00File/Ref No C 106

Gross Valuation Kc267,855,850Capital Costs -Kc11,573,369Net Value Before Fees Kc256,282,482

Less Acquisition Fee Fixed Amount Kc0

Net Valuation Kc256,282,482Say Kc256,300,000

Equivalent Yield 9.1767% True Equivalent Yield 9.6614%Initial Yield (Deemed) 5.2141% Initial Yield (Contracted) 5.2141%Reversion Yield 10.5925%

Total Contracted Rent Kc14,843,844 Total Current Rent Kc14,843,844Total Rental Value Kc29,250,000 No. Tenants 10Capital value per m² Kc14,690.24

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 Kc14,843,844 Kc13,966,344 5.2141 % 5.3886 %01-Jul-2015 Kc14,438,832 Kc13,561,332 5.0629 % 5.2273 %01-Aug-2015 Kc14,170,956 Kc13,293,456 4.9629 % 5.1208 %01-Jan-2016 Kc14,688,156 Kc13,810,656 5.1560 % 5.3265 %01-Feb-2016 Kc15,169,356 Kc14,291,856 5.3357 % 5.5184 %30-Jun-2016 Kc19,611,756 Kc18,734,256 6.9942 % 7.3109 %01-Jul-2016 Kc17,152,716 Kc16,275,216 6.0761 % 6.3141 %01-Jan-2017 Kc14,066,388 Kc13,188,888 4.9239 % 5.0792 %01-Jul-2017 Kc15,888,948 Kc15,011,448 5.6043 % 5.8062 %01-Jan-2018 Kc18,912,708 Kc18,035,208 6.7332 % 7.0264 %01-Jul-2018 Kc20,735,268 Kc19,857,768 7.4136 % 7.7703 %01-Jan-2019 Kc25,016,868 Kc24,139,368 9.0121 % 9.5435 %30-Jun-2019 Kc20,574,468 Kc19,696,968 7.3536 % 7.7044 %01-Jul-2019 Kc24,856,068 Kc23,978,568 8.9520 % 9.4762 %31-Dec-2019 Kc24,807,600 Kc23,930,100 8.9339 % 9.4560 %30-Jun-2020 Kc29,250,000 Kc28,372,500 10.5925 % 11.3326 %

Yields based on Kc267,855,851

Portfolio: Orco June 2015ARGUS Valuation - Capitalisation 2.50.079Portfolio: Orco June 2015ARGUS Valuation - Capitalisation 2.50.079

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Property

Address ORIP_Stríbro Industrial Park,Plzenska,StøíbroFile/Ref No C 192

Gross Valuation €1,144,260Capital Costs -€48,515Net Value Before Fees €1,095,745

Less Acquisition Fee @0.00% of Net Value €0

Net Valuation €1,095,745Say €1,100,000


Total Contracted Rent €136,824 Total Current Rent €136,824Total Rental Value €178,080 No. Tenants 3Capital value per m² €124.99

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 €136,824 €126,139 11.0236 % 11.8271 %30-Nov-2016 €176,904 €166,219 14.5263 % 15.9474 %01-Jan-2018 €40,080 €29,395 2.5689 % 2.6107 %01-Oct-2018 €178,080 €167,395 14.6291 % 16.0712 %30-Jun-2021 €138,000 €127,315 11.1264 % 11.9454 %30-Nov-2022 €178,080 €167,395 14.6291 % 16.0712 %

Yields based on €1,144,260


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5

Office Center Praha - Hradčanská



Property

Address OROH_Office Center Hradcanska,PragueFile/Ref No C 159

Gross Valuation Kc378,785,901Capital Costs -Kc11,059,676Net Value Before Fees Kc367,726,226

Less Stamp Duty @0.00% of Net Value Kc0

Net Valuation Kc367,726,226Say Kc367,750,000



Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 Kc31,129,632 Kc30,002,685 7.9208 % 8.3289 %01-Aug-2015 Kc31,007,328 Kc29,880,381 7.8885 % 8.2933 %01-Sep-2015 Kc33,843,624 Kc32,716,677 8.6372 % 9.1244 %01-Oct-2015 Kc33,630,948 Kc32,504,001 8.5811 % 9.0618 %01-Nov-2015 Kc33,382,656 Kc32,255,709 8.5156 % 8.9888 %01-Dec-2015 Kc33,483,432 Kc32,356,485 8.5422 % 9.0184 %01-Jan-2016 Kc30,932,808 Kc29,805,861 7.8688 % 8.2715 %29-Feb-2016 Kc30,505,992 Kc29,379,045 7.7561 % 8.1472 %01-Mar-2016 Kc32,108,256 Kc30,981,309 8.1791 % 8.6150 %16-Mar-2016 Kc31,769,016 Kc30,642,069 8.0895 % 8.5157 %30-Mar-2016 Kc35,039,016 Kc33,912,069 8.9528 % 9.4771 %01-Apr-2016 Kc34,516,152 Kc33,389,205 8.8148 % 9.3227 %01-May-2016 Kc34,202,292 Kc33,075,345 8.7319 % 9.2301 %01-Jun-2016 Kc34,096,752 Kc32,969,805 8.7041 % 9.1990 %02-Jun-2016 Kc34,007,076 Kc32,880,129 8.6804 % 9.1726 %01-Jul-2016 Kc34,148,676 Kc33,021,729 8.7178 % 9.2143 %01-Aug-2016 Kc33,849,324 Kc32,722,377 8.6388 % 9.1261 %01-Sep-2016 Kc33,646,020 Kc32,519,073 8.5851 % 9.0663 %09-Sep-2016 Kc33,545,244 Kc32,418,297 8.5585 % 9.0366 %01-Oct-2016 Kc33,550,692 Kc32,423,745 8.5599 % 9.0382 %01-Nov-2016 Kc28,861,164 Kc27,734,217 7.3219 % 7.6696 %29-Nov-2016 Kc29,218,188 Kc28,091,241 7.4161 % 7.7730 %16-Dec-2016 Kc29,566,188 Kc28,439,241 7.5080 % 7.8740 %19-Dec-2016 Kc29,491,668 Kc28,364,721 7.4883 % 7.8524 %30-Dec-2016 Kc26,221,668 Kc25,094,721 6.6250 % 6.9087 %01-Jan-2017 Kc25,139,304 Kc24,012,357 6.3393 % 6.5986 %01-Feb-2017 Kc25,045,632 Kc23,918,685 6.3146 % 6.5719 %01-Mar-2017 Kc24,066,492 Kc22,939,545 6.0561 % 6.2924 %02-Mar-2017 Kc24,156,132 Kc23,029,185 6.0797 % 6.3180 %10-Mar-2017 Kc24,008,736 Kc22,881,789 6.0408 % 6.2760 %01-May-2017 Kc24,582,648 Kc23,455,701 6.1923 % 6.4396 %01-Jun-2017 Kc23,984,148 Kc22,857,201 6.0343 % 6.2690 %09-Jun-2017 Kc24,087,588 Kc22,960,641 6.0616 % 6.2984 %01-Jul-2017 Kc24,820,788 Kc23,693,841 6.2552 % 6.5076 %01-Aug-2017 Kc29,110,308 Kc27,983,361 7.3876 % 7.7418 %29-Aug-2017 Kc29,179,308 Kc28,052,361 7.4059 % 7.7618 %19-Sep-2017 Kc29,269,308 Kc28,142,361 7.4296 % 7.7879 %01-Oct-2017 Kc30,542,508 Kc29,415,561 7.7657 % 8.1578 %01-Nov-2017 Kc30,897,708 Kc29,770,761 7.8595 % 8.2613 %01-Dec-2017 Kc33,076,908 Kc31,949,961 8.4348 % 8.8990 %10-Dec-2017 Kc33,218,508 Kc32,091,561 8.4722 % 8.9406 %01-Jan-2018 Kc32,657,412 Kc31,530,465 8.3241 % 8.7759 %01-Feb-2018 Kc32,754,012 Kc31,627,065 8.3496 % 8.8042 %01-Mar-2018 Kc34,122,108 Kc32,995,161 8.7108 % 9.2065 %






01-May-2018 Kc34,225,548 Kc33,098,601 8.7381 % 9.2370 %01-Jan-2019 Kc33,664,452 Kc32,537,505 8.5899 % 9.0717 %01-Mar-2019 Kc34,225,548 Kc33,098,601 8.7381 % 9.2370 %15-Mar-2019 Kc32,365,548 Kc31,238,601 8.2470 % 8.6903 %01-Apr-2019 Kc28,842,876 Kc27,715,929 7.3170 % 7.6643 %01-Jun-2019 Kc28,704,648 Kc27,577,701 7.2806 % 7.6243 %01-Jul-2019 Kc27,275,076 Kc26,148,129 6.9031 % 7.2116 %01-Aug-2019 Kc26,954,784 Kc25,827,837 6.8186 % 7.1194 %30-Sep-2019 Kc30,224,784 Kc29,097,837 7.6819 % 8.0653 %01-Oct-2019 Kc28,102,632 Kc26,975,685 7.1216 % 7.4503 %15-Dec-2019 Kc29,942,232 Kc28,815,285 7.6073 % 7.9832 %01-Jan-2020 Kc32,636,232 Kc31,509,285 8.3185 % 8.7696 %01-Mar-2020 Kc32,759,832 Kc31,632,885 8.3511 % 8.8059 %01-Apr-2020 Kc35,570,232 Kc34,443,285 9.0931 % 9.6343 %01-May-2020 Kc35,831,832 Kc34,704,885 9.1621 % 9.7118 %01-Jul-2020 Kc37,748,232 Kc36,621,285 9.6681 % 10.2817 %01-Aug-2021 Kc36,614,028 Kc35,487,081 9.3686 % 9.9440 %01-May-2022 Kc37,808,028 Kc36,681,081 9.6839 % 10.2996 %19-Dec-2022 Kc35,686,224 Kc34,559,277 9.1237 % 9.6687 %20-Mar-2023 Kc35,672,568 Kc34,545,621 9.1201 % 9.6646 %19-Jun-2023 Kc37,642,968 Kc36,516,021 9.6403 % 10.2503 %12-Nov-2023 Kc37,564,908 Kc36,437,961 9.6197 % 10.2271 %01-Sep-2025 Kc34,264,908 Kc33,137,961 8.7485 % 9.2486 %01-Jun-2026 Kc37,564,908 Kc36,437,961 9.6197 % 10.2271 %

Yields based on Kc378,785,902

Portfolio: Orco June 2015ARGUS Valuation - Capitalisation 2.50.079 Page 2Portfolio: Orco June 2015ARGUS Valuation - Capitalisation 2.50.079 Page 2

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Palác Archa Praha



Property

Address ORNP_Na Porici,24-26,No Porici,Prague,110 00File/Ref No C 118

Gross Valuation Kc1,117,255,358Capital Costs -Kc33,248,169Net Value Before Fees Kc1,084,007,189

Less Acquisition Fee @0.00% of Net Value Kc0

Net Valuation Kc1,084,007,189Say Kc1,084,000,000



Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 Kc80,977,368 Kc79,186,964 7.0876 % 7.4131 %01-Jul-2015 Kc80,045,544 Kc78,255,140 7.0042 % 7.3219 %01-Aug-2015 Kc80,882,688 Kc79,092,284 7.0792 % 7.4038 %01-Sep-2015 Kc81,498,252 Kc79,707,848 7.1343 % 7.4641 %01-Oct-2015 Kc80,517,036 Kc78,726,632 7.0464 % 7.3680 %01-Nov-2015 Kc79,372,920 Kc77,582,516 6.9440 % 7.2562 %16-Nov-2015 Kc80,460,072 Kc78,669,668 7.0413 % 7.3625 %30-Dec-2015 Kc89,053,272 Kc87,262,868 7.8105 % 8.2072 %01-Jan-2016 Kc90,593,460 Kc88,803,056 7.9483 % 8.3594 %01-Feb-2016 Kc88,784,736 Kc86,994,332 7.7864 % 8.1806 %01-Mar-2016 Kc89,882,808 Kc88,092,404 7.8847 % 8.2891 %31-Mar-2016 Kc87,897,876 Kc86,107,472 7.7071 % 8.0931 %01-Jun-2016 Kc86,620,128 Kc84,829,724 7.5927 % 7.9671 %01-Jul-2016 Kc84,528,852 Kc82,738,448 7.4055 % 7.7614 %01-Aug-2016 Kc85,437,996 Kc83,647,592 7.4869 % 7.8508 %01-Sep-2016 Kc83,908,044 Kc82,117,640 7.3499 % 7.7004 %01-Oct-2016 Kc83,836,044 Kc82,045,640 7.3435 % 7.6933 %01-Nov-2016 Kc82,691,928 Kc80,901,524 7.2411 % 7.5811 %30-Nov-2016 Kc84,046,728 Kc82,256,324 7.3624 % 7.7140 %31-Dec-2016 Kc82,902,600 Kc81,112,196 7.2600 % 7.6017 %01-Jan-2017 Kc81,010,044 Kc79,219,640 7.0906 % 7.4163 %01-Mar-2017 Kc82,058,844 Kc80,268,440 7.1844 % 7.5190 %01-Apr-2017 Kc83,880,636 Kc82,090,232 7.3475 % 7.6977 %01-May-2017 Kc79,683,924 Kc77,893,520 6.9719 % 7.2866 %31-May-2017 Kc81,422,724 Kc79,632,320 7.1275 % 7.4567 %30-Jun-2017 Kc80,311,176 Kc78,520,772 7.0280 % 7.3479 %01-Aug-2017 Kc80,419,176 Kc78,628,772 7.0377 % 7.3585 %01-Sep-2017 Kc81,398,376 Kc79,607,972 7.1253 % 7.4543 %01-Nov-2017 Kc83,349,576 Kc81,559,172 7.3000 % 7.6456 %30-Nov-2017 Kc84,704,376 Kc82,913,972 7.4212 % 7.7786 %01-Dec-2017 Kc84,785,976 Kc82,995,572 7.4285 % 7.7867 %31-Dec-2017 Kc79,123,044 Kc77,332,640 6.9217 % 7.2318 %01-Feb-2018 Kc78,997,044 Kc77,206,640 6.9104 % 7.2195 %01-Mar-2018 Kc83,342,244 Kc81,551,840 7.2993 % 7.6449 %28-Mar-2018 Kc62,236,716 Kc60,446,312 5.4103 % 5.5983 %30-Jun-2018 Kc60,881,916 Kc59,091,512 5.2890 % 5.4686 %01-Jul-2018 Kc64,597,116 Kc62,806,712 5.6215 % 5.8247 %30-Aug-2018 Kc65,740,716 Kc63,950,312 5.7239 % 5.9347 %01-Oct-2018 Kc44,438,316 Kc42,647,912 3.8172 % 3.9100 %01-Jan-2019 Kc44,333,700 Kc42,543,296 3.8078 % 3.9002 %01-Mar-2019 Kc49,258,500 Kc47,468,096 4.2486 % 4.3639 %01-Apr-2019 Kc49,882,500 Kc48,092,096 4.3045 % 4.4228 %28-May-2019 Kc66,430,500 Kc64,640,096 5.7856 % 6.0010 %01-Jun-2019 Kc66,478,500 Kc64,688,096 5.7899 % 6.0057 %






05-Jul-2019 Kc65,357,148 Kc63,566,744 5.6895 % 5.8978 %19-Aug-2019 Kc63,268,296 Kc61,477,892 5.5026 % 5.6972 %01-Oct-2019 Kc60,968,460 Kc59,178,056 5.2967 % 5.4768 %01-Dec-2019 Kc83,284,860 Kc81,494,456 7.2942 % 7.6392 %19-Jul-2020 Kc84,255,660 Kc82,465,256 7.3811 % 7.7345 %05-Sep-2020 Kc85,408,860 Kc83,618,456 7.4843 % 7.8479 %19-Oct-2020 Kc86,220,060 Kc84,429,656 7.5569 % 7.9277 %01-Dec-2020 Kc88,489,260 Kc86,698,856 7.7600 % 8.1515 %30-Dec-2020 Kc79,896,060 Kc78,105,656 6.9909 % 7.3073 %01-Jan-2021 Kc77,340,780 Kc75,550,376 6.7621 % 7.0579 %30-Jun-2021 Kc75,985,980 Kc74,195,576 6.6409 % 6.9259 %01-Oct-2021 Kc78,388,380 Kc76,597,976 6.8559 % 7.1601 %30-Nov-2021 Kc86,981,580 Kc85,191,176 7.6250 % 8.0028 %26-Jun-2022 Kc85,919,784 Kc84,129,380 7.5300 % 7.8982 %30-Aug-2022 Kc87,274,584 Kc85,484,180 7.6513 % 8.0316 %01-Jan-2023 Kc84,843,588 Kc83,053,184 7.4337 % 7.7923 %26-Mar-2023 Kc85,886,388 Kc84,095,984 7.5270 % 7.8949 %01-Aug-2023 Kc84,553,644 Kc82,763,240 7.4077 % 7.7638 %30-Aug-2023 Kc85,908,444 Kc84,118,040 7.5290 % 7.8971 %01-Jan-2024 Kc82,725,792 Kc80,935,388 7.2441 % 7.5844 %01-Mar-2024 Kc83,649,792 Kc81,859,388 7.3268 % 7.6750 %01-Aug-2024 Kc85,706,592 Kc83,916,188 7.5109 % 7.8772 %01-Jun-2025 Kc89,520,192 Kc87,729,788 7.8523 % 8.2533 %

Yields based on Kc1,117,255,358

Portfolio: Orco June 2015ARGUS Valuation - Capitalisation 2.50.079 Page 2Portfolio: Orco June 2015ARGUS Valuation - Capitalisation 2.50.079 Page 2

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V188 Offices

REPORT Summary Valuation DTZ Hungary


Property

Address Vaci 188,188,Váci út,XIII,BudapestFile/Ref No

Gross Valuation €8,093,180Capital Costs -€1,311,835Net Value Before Fees €6,781,345

Less Stamp Duty @0.00% of Net Value €0


Equivalent Yield 11.4825% True Equivalent Yield 12.1947%Initial Yield (Deemed) -3.0481% Initial Yield (Contracted) -3.0481%Reversion Yield 14.4272%

Total Contracted Rent €82,128 Total Current Rent €82,128Total Rental Value €1,203,732 No. Tenants 4Capital value per m² €490.02

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 €82,128 -€246,688 -3.0481 % -3.1071 %30-Sep-2016 €1,118,568 €1,082,456 13.3749 % 14.5724 %01-Jan-2019 €1,114,476 €1,078,364 13.3244 % 14.5124 %01-Jul-2019 €1,118,568 €1,082,456 13.3749 % 14.5724 %01-Sep-2020 €1,040,532 €1,004,420 12.4107 % 13.4365 %01-Mar-2021 €1,203,732 €1,167,620 14.4272 % 15.8282 %30-Sep-2021 €167,292 €131,180 1.6209 % 1.6374 %30-Mar-2022 €1,203,732 €1,167,620 14.4272 % 15.8282 %


ARGUS Valuation - Capitalisation 2.50.079ARGUS Valuation - Capitalisation 2.50.079

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V190 Offices

APPRAISAL SUMMARY DTZ Summary Appraisal for Phase 1 Office refurbishment

Currency in €

REVENUE

Rental Area Summary Initial Net Rent Initial Net MRV Units m² Rate m² MRV/Unit at Sale MRV at Sale

Office 1 14,406.65 11.00 1,901,678 1,863,644 1,901,678 1,863,644 Parking 150 4,622.00 2.27 840 123,480 126,000 123,480 Storage 1 785.16 6.00 56,532 55,401 56,532 55,401 Totals 152 19,813.81 2,042,525 2,084,209 2,042,525

Investment Valuation Office Current Rent 1,863,644 YP @ 8.5000% 11.7647 21,925,226 Parking Current Rent 123,480 YP @ 8.5000% 11.7647 1,452,706 Storage Current Rent 55,401 YP @ 8.5000% 11.7647 651,775

24,029,707

NET REALISATION 24,029,707

OUTLAY

ACQUISITION COSTS Residualised Price 1,407,611 Stamp Duty 4.00% 56,304 Agent Fee 1.00% 14,076 Legal Fee 0.50% 7,038

1,485,030 CONSTRUCTION COSTS Construction m² Rate m² Cost

Office 16,949.00 m² 750.00 pm² 12,711,750 Parking 4,622.00 m² 300.00 pm² 1,386,600 Totals 22,356.16 m² 14,098,350 14,098,350

Contingency 5.00% 704,918 Demolition 100,000

804,918

PROFESSIONAL FEES Architect 10.00% 1,409,835

1,409,835 MARKETING & LETTING

Letting Agent Fee 10.00% 204,253 204,253

DISPOSAL FEES Sales Agent Fee 1.00% 240,297 Sales Legal Fee 0.50% 120,149

360,446 FINANCE

Debit Rate 7.500% Credit Rate 0.000% (Nominal) Land 259,471 Construction 692,729 Letting Void 709,729 Total Finance Cost 1,661,929

TOTAL COSTS 20,024,760

PROFIT 4,004,948

Performance Measures Profit on Cost% 20.00% Profit on GDV% 16.67% Profit on NDV% 16.67% Development Yield% (on Rent) 10.20% Equivalent Yield% (Nominal) 8.50% Equivalent Yield% (True) 8.97%

IRR 23.59%

Rent Cover 1 yr 12 mths Profit Erosion (finance rate 7.500%) 2 yrs 5 mths

ARGUS Developer Version: 6.00.002 Date: 05/08/2015

Le Capellen Office Building

REPORT Summary Valuation Debenham Tie Leung


Property

Address Capellen Office Bldg File/Ref No

Gross Valuation €23,575,913Capital Costs €0Net Value Before Fees €23,575,913

Less Stamp Duty @7.50% of Net Value -€1,644,831 Legal Fee @0.00% of Net Value €0



Total Contracted Rent €1,832,041 Total Current Rent €1,832,041Total Rental Value €2,002,200 No. Tenants 7Capital value per m² €2,850.27

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 €1,832,041 €1,798,922 7.6303 % 8.0086 %01-Feb-2016 €1,729,273 €1,696,154 7.1944 % 7.5299 %01-Apr-2016 €1,729,273 €1,607,955 6.8203 % 7.1213 %01-May-2016 €1,600,914 €1,479,596 6.2759 % 6.5300 %01-Aug-2016 €1,702,614 €1,581,296 6.7073 % 6.9981 %30-Sep-2016 €1,702,614 €1,614,415 6.8477 % 7.1511 %01-Nov-2016 €1,827,514 €1,739,315 7.3775 % 7.7306 %30-Dec-2016 €1,983,014 €1,894,815 8.0371 % 8.4576 %01-Jul-2017 €1,846,527 €1,758,328 7.4582 % 7.8192 %01-Jan-2018 €1,980,727 €1,892,528 8.0274 % 8.4469 %01-Apr-2020 €1,980,727 €1,898,414 8.0523 % 8.4745 %01-Apr-2022 €1,980,727 €1,980,727 8.4015 % 8.8619 %01-Jul-2022 €1,333,204 €1,333,204 5.6549 % 5.8606 %01-Sep-2022 €1,287,731 €1,287,731 5.4621 % 5.6537 %01-Jan-2023 €1,808,931 €1,808,931 7.6728 % 8.0553 %01-Mar-2023 €1,855,631 €1,855,631 7.8709 % 8.2738 %01-Apr-2025 €1,084,200 €1,084,200 4.5988 % 4.7340 %01-Oct-2025 €2,002,200 €2,002,200 8.4926 % 8.9632 %



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2

Diana Office property

REPORT Summary Valuation DTZ Debenham Tie Leung - Poland


Property

Address Diana Office ,Chmielna,WarsawFile/Ref No





Total Contracted Rent €326,448 Total Current Rent €326,448Total Rental Value €334,821 No. Tenants 1Capital value per m² €3,378.35

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 €326,448 €326,448 6.9025 % 7.2109 %14-Sep-2019 €163,224 €163,224 3.4513 % 3.5270 %14-Mar-2020 €326,448 €326,448 6.9025 % 7.2109 %15-Sep-2024 €0 €0 0.0000 % 0.0000 %15-May-2025 €334,821 €334,821 7.0796 % 7.4043 %



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Marki Industrial property

REPORT Summary Valuation DTZ Debenham Tie Leung - Poland


Property

Address Marki - industrial disr. Orco ,MarkiFile/Ref No




Equivalent Yield 15.0000% True Equivalent Yield 16.1176%Initial Yield (Deemed) -10.5256% Initial Yield (Contracted) -10.5256%Reversion Yield 21.5119%

Total Contracted Rent €166,992 Total Current Rent €166,992Total Rental Value €548,267 No. Tenants 5Capital value per m² €68.75

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 €166,992 -€254,851 -10.5256 % -11.2563 %01-Jan-2016 €75,900 -€398,730 -16.4680 % -18.3133 %30-Mar-2016 €495,468 €360,907 14.9059 % 16.4052 %01-Oct-2016 €482,101 €340,589 14.0667 % 15.3961 %30-Mar-2017 €482,101 €393,035 16.2328 % 18.0236 %01-Jul-2017 €548,267 €504,766 20.8475 % 23.8751 %01-Oct-2017 €548,267 €512,583 21.1703 % 24.2979 %01-Jul-2018 €548,267 €520,854 21.5119 % 24.7472 %30-Mar-2019 €128,699 -€291,229 -12.0281 % -12.9897 %30-Dec-2019 €548,267 €468,408 19.3458 % 21.9319 %30-Dec-2020 €548,267 €520,854 21.5119 % 24.7472 %



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Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ. © DTZ 2015 www.dtz.com

DTZ Contacts

Karel Klečka MRICS Head of Valuation Czech Republic and Slovakia Tel: +420 234 262 232 Mobile: +420 777 203 389 Email: [email protected]

ORCO PROPERTY GROUP A public limited liability company … · 2019. 5. 30. · i ORCO PROPERTY...

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