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Research, Valuation & Advisory Cost Consulting Realty Tax Consulting | Geomatics

200 University Avenue, 7th Floor, Toronto, ON M5H 3C6 Canada T 416.221.1200 F 416.221.1416

www.altusgroup.com

March 23, 2010

Jerusalem Economy Ltd. (“JEC”)

Represented by Ms. Galia Feiler

Fishman Holdings North America Inc.

P.O. Box 152

North York, Ontario

Dear Ms. Feiler:

Re: Appraisal report for Woodbine Centre, 500 Rexdale Boulevard, Toronto ( Woodbine )

Reference is made to the appraisal report prepared by me in connection with the abovementioned

asset as at 31.12.2009 (the “Report”).

In addition to any analysis, assumptions, opinions and conclusions set forth in the Report, I hereby

represent and confirm as follows:

1. I was contacted and requested by you, on behalf of JEC, to prepare the Report.

2. From time to time, I provide real estate appraisals and evaluations to other companies within

the Fishman group. However, I am independent of Mr. Eliezer Fishman and/or any company

controlled by him.

3. I hereby represent that I do not have any personal interest in the contemplated asset and/or in

its owners, and the appraisal thereof hereunder has been prepared by me in accordance with

my best and professional knowledge, skills and consideration.

4. I hereby agree that my Report, together with this letter, be included in JEC s publicly published

financial statements which shall be published in March 2010.

The abovementioned in this letter shall constitute for all purposes as an integral part of my Report.

Sincerely,

Colin Johnston, MBA, AACI, MRICS.

Executive Vice President, Research, Valuation & Advisory

Altus Group

Fishman Portfolio

Prepared For:

Ms. Galia Feiler


Prepared by:

ALTUS GROUP

Date:

February 2, 2010

Independent Real Estate Intelligence

Research, Valuation & Advisory Cost Consulting Realty Tax Consulting | Geomatics | Environmental & Forestry Services

200 University Avenue, 7th Floor, Toronto, ON M5H 1K5 Canada T 416.221.1200 F 416.221.1416

www.altusgroup.com

February 2, 2010

Ms. Galia Feiler


5001 Yonge Street, Suite 203

P.O. Box 152

North York, Ontario

M2N 6P6

Dear Ms. Feiler:

Re: Fishman Portfolio

In accordance with instructions from Fishman Holdings North America Inc., we have completed a valuation of

each property tabled in the Certification Letter attached hereto.

The purpose of the appraisal is to estimate the Fair Value of each individual property as of December 31st 2009. No

portfolio effect has been considered. The intended use of the report is for annual financial reporting purposes. The

appraisals comply with the Fair Value (“FV”) model described in the International Accounting Standard 40

Investment property (i.e. IAS 40) and the International Valuation Standard. Exposure time is four to six months

unless stated otherwise in each of the separate property reports.

Our report conforms to the Canadian Uniform Standards of Professional Appraisal Practices (CUSPAP) and to the

code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute of Canada. The

reported analysis, opinions and conclusions are limited only by the Assumptions and Limiting Conditions defined

herein, and are our personal unbiased professional analysis, opinions and conclusions.

This summary report describes the method and approach to value in support of the conclusion and contains the

pertinent data gathered in our investigation of the market. The individual property conclusions are set out on the

Certification (page 12). If you have any questions, Colin Johnston would be pleased to discuss the valuation

further.

Respectfully submitted,

ALTUSGROUP LIMITED

Per:

Colin Johnston, MBA, AACI, MRICS.

Executive Vice President, Ontario

F I S H M A N P O R T F O L I O

2

TERMS OFREFERENCE

IDENTIFICATION

The subject of this appraisal is the portfolio of properties set out in the Certification Letter on page 12.

PURPOSE OFAPPRAISAL

The purpose of the appraisal is to estimate the Fair Value of each individual property as of December 31st

2009. We understand the intended use is for annual financial reporting purposes.

MARKETVALUEDEFINITION

Market value is defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite

to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by

undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider their best interests;

3. A reasonable time is allowed for exposure of each individual property in the open market estimated to be

in the range of three to nine months;

4. Payment is made in terms of cash in Canadian dollars or in terms of financial arrangements

comparable thereto; and

5. The price represents the normal consideration for the property sold, unaffected by special or creative

financing or sales concessions granted by anyone associated with the sale.

(Source: Canadian Supplement to 1998 Uniform Standards of Professional Appraisal Practice).


3

FAIRVALUEDEFINITION

Fair Value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an

arm’s length transaction.

The definition of fair value refers to ‘knowledgeable, willing parties’. In this context, ‘knowledgeable’ means

that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of

the investment property, its actual and potential uses, and market conditions at the balance sheet date. A

willing buyer is motivated, but not compelled, to buy. This buyer is neither over eager nor determined to buy at

any price. The assumed buyer would not pay a higher price than a market comprising knowledgeable, willing

buyers and sellers would require.

A willing seller is neither an over eager nor a forced seller, prepared to sell at any price, nor one prepared to

hold out for a price not considered reasonable in current market conditions. The willing seller is motivated to

sell the investment property at market terms for the best price obtainable. The factual circumstances of the

actual investment property owner are not a part of this consideration because the willing seller is a hypothetical

owner (e.g. a willing seller would not take into account the particular tax circumstances of the actual investment

property owner).

The fair value of investment property reflects, among other things, rental income from current leases and

reasonable and supportable assumptions that represent what knowledgeable, willing parties would assume

about rental income from future leases in the light of current conditions.

Fair value 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.

The fair value of investment property does not reflect future capital expenditure that will improve or enhance

the property and does not reflect the related future benefits from this future expenditure.

EXTRAORDINARYASSUMPTIONS&LIMITINGCONDITIONS

We have made the following extraordinary assumptions:

We accepted the Fishman and associated property manager capital budgets as reasonable and

appropriate, without audit.

We accepted that the Fishman and associated property manager operating costs and rent rolls

accurately reflect the existing leases without audit.

We assumed all properties are free and clear of debt.


5

SCOPE OF THEASSIGNMENT

FIELDWORK

SITE/BUILDING INSPECTION

Building inspection is on a “walk through” basis to report consistency with other similar properties as

opposed to a detailed condition report

Inquire about building features such as (design, parking, exterior/interior finish, mechanical, function,

observed condition, special features)

LOCATION

Identify characteristics and overall trends

Local & regional access

Public transportation

Adjacent land use

Dominant land uses affecting the area

Current trends

PLANNING/LANDUSE

Review zoning/official plan and other planning regulations. A formal review is not conducted and is

required for certainty

Proposals or initiatives

Excess density potential

DOCUMENTREVIEW&ANALYSIS

PHYSICAL

Site Plan / Survey

Floor plans, stacking plans, merchandising plans

Summary of rentable area / number of parking stalls

INCOMECHARACTER

We will request and review / analyze information supplied regarding the following:

Rent roll

Lease / rent roll variance analysis

Supplied exceptions to the “Standard Lease” recovery of operating costs (i.e. capital tax, operating

cost caps, etc.)

Major tenant cursory covenant review

Aged accounts receivable

Sublease agreements

Budgeted ancillary revenues (temporary, parking , storage, signs, antennas etc)

Retail sales performance analysis including percentage rent analysis


6

Abatement agreements

Outstanding lease take over costs

Account for inducements contracted but not yet paid

Remaining free rent periods

Summary of completed lease deals in subject for last 18 months

Prospective tenant leasing package

Pending leases or offers not yet executed

Capital expenditure program (recoverable and non recoverable)

TENURE


Current ownership

Historical transfers over the past three years

MANAGEMENT


Current year operating budget

Historical/budgeted operating costs per sq.ft. at 100% occupancy

Historical financial statements

SURVEYWORK

Detailed rental rate survey and leasing transaction summary

Detailed property sales / listings survey and summary

Operating cost analysis and comparison

Interviews:

experienced brokers

typical investors

property / leasing managers:

tenants that are expected to vacate within the next twelve months

tenancies that have vacated, but paying rent per existing un expired leases

tenants that have sub leased, together with the details of sub leases

list of vacant units, together with asking and expected net effective rates

most competitive buildings from a leasing perspective

INCOME FORECAST

Based on typical investor attitude

Forecast over a minimum of 10 years using Argus format

Net operating income

Cash flow


7

VALUATIONRATIONALE

Estimate Highest and Best Use in terms of:

Location

Zoning

Physical elements

Income potential

Market conditions

Overall Capitalization Rate

Internal Rate of Return

Terminal Capitalization Rate

Rate per sq.ft.

REPORTING

Summary portfolio report

Point form in layout

Descriptive facts

Valuation Methodology where appropriate, one or more of:

income approach

direct comparison approach

no replacement cost or cost approach is provided

EXCLUSIONS FROM THE SCOPE ORWORK

The scope of work specifically excludes the following:

Depreciated replacement cost of existing tenant improvements

Replacement cost estimates for insurance purposes.


8

VALUATIONMETHODOLOGY

INCOMEAPPROACH

An Income Approach is used as the primary method of valuation

since the investment is expected to be acquired by an investor

basing criteria on an expected income flow.

The two primary income methods are:

Discounted Cash Flow (DCF)

The Discounted Cash Flow method measures the relationship of

value to the income reasonably expected over the entire investment

horizon

Overall Capitalization Rate (OCR)

Overall Capitalization Rate method measures the relationship of

value to the stabilized Net Operating Income, normally at the first

year

Investors use both income approaches, applying different weight

to each method based on the particular characteristics of the

investment.

DIRECTCOMPARISON

APPROACH

The Direct Comparison Approach is developed in a rudimentary

manner only to determine the market range of unit prices

demonstrated by the sales or listings of comparable properties.

This method is developed to support of the conclusions reached

by the Income Approach, rather than to act as a valuation

conclusion in isolation.

The primary valuation approach for vacant land is the Direct

Comparison Approach.

COSTAPPROACH

The Cost Approach is not an appropriate indicator or driver of

market value since value is a reflection of demand conditions

whereas cost is a reflection of supply conditions.


9

CONTINGENT&LIMITINGCONDITIONS

1. This report is prepared at the request of the Fishman Holdings North America Inc. for an appraisal of Fair

Value for annual financial reporting purposes. It is not reasonable for any other person or corporation

other than the Fishman Holdings North America Inc. and/or their advisors, and any company under the

control of the Fishman family to rely upon this appraisal without first obtaining written authorization from

Altus Group Limited. There may be qualifications, assumptions or limiting conditions in addition to those

set out below, relevant to that person s identity or their intended use.

This report is prepared on the assumption that no other person will rely on it for any other purpose and that

all liability to all such persons is denied.

2. While expert in appraisal matters, the author is not qualified and does not purport to give legal advice. It is

assumed that:

any legal description provided is correct;

title to the property is good and marketable;

there are no encroachments, encumbrances, restrictions, servitudes, church taxes, heritage or

cultural property restrictions, privileges, liens, leases or covenants that would in any way affect

the valuation, except as expressly noted herein

leasehold interests referred to herein have, or will have, properly drawn and executed

instruments that legally bind the parties in the described manner and that any rent due has been

paid in full;

the use is a legally conforming or non conforming use which may be continued by any

purchaser from the existing owner;

rights of way, easements or encroachments over other real property and leases or other

covenants noted herein are legally enforceable

Because these assumptions have been made, no investigation, legal or otherwise, has been undertaken

whichwould verify these assumptions except as expressly noted herein.

3. The author is not a qualified surveyor and, unless noted, no legal survey concerning the subject property has

been provided. Furthermore, any measurements of rentable areas that have been provided to us are

assumed to be correct.

For certainty a formal up to date survey and architectural measurement are required. This appraisal is

therefore contingent on the correctness of the areas given. Any sketches, drawings, diagrams, photographs,

etc. are presented in this report for the limited purpose of illustration and are not to be relied upon in

themselves.

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11

CERTIFICATION

We certify that, to the best of our knowledge and belief:

The statements of fact contained in this report are true and correct

The Fair Value reported herein comply with IAS 40 and the International Valuation Standard.

The Fair Value model reported herein is for “Investment Property” as per the definition in IAS 40.

The determination of the Fair Value for all of the income producing investment property has been

supported by market evidence

Altus Group is independent of the client. Moreover, Altus Group does not provide real estate

brokerage, property management, asset management or financial auditing services, and therefore the

opinions expressed herein are un biased by other business considerations.

The reported analyses, opinions, and conclusions are limited only by the reported extraordinary

assumptions and contingent and limiting conditions defined herein, and are our personal, unbiased

professional analyses, opinions and conclusions

We have no present or prospective interest in the property that is the subject of this report, and we

have no personal interest or bias with respect to the parties involved

Compensation is not contingent upon the reporting of a predetermined value or direction in value

that favours the cause of the client, the amount of the value estimate, the attainment of a stipulated

result, or the occurrence of a subsequent event

To the best of our knowledge and belief, the reported analysis, opinions and conclusions were

developed, and this report has been prepared, in conformity with the Canadian Standard of

Professional Appraisal Practice (“The Standards”).

Inspections of the properties have been carried out during September to December 2009. The

content, form and reasoning has been reviewed by a designated member of the Appraisal Institute of

Canada. The inspection was considered sufficient to describe the real estate, develop an opinion of

highest and best use, and make meaningful comparisons with other market data. A detailed

inspection to report building condition has not been carried out

We have not knowingly withheld any comments or observations which might affect the opinions of

value stated in this report

We have the knowledge and experience to complete the assignment competently

No one provided significant professional assistance to the undersigned

The appraisal report is treated as confidential by the appraisers and will not be revealed to third

parties without the consent and authorization of the Client for whom this report was prepared,

subject only to review only if required by the Appraisal Institute of Canada


12

The ACCI’s listed as part of this certification are currently certified under the continuing education

program of the Appraisal Institute of Canada.

In our opinion, the fair value of the subject properties, subject to the assumptions and the contingent and

limiting conditions at Appendix “A” as of December 31, 2009 are as follows:

Property Name Address City Province Appraiser

Dec 31, 2009

Value

Bridlewood Mall 2900 Warden Avenue Toronto Ontario Colin Johnston $51,500,000

Woodbine Centre 500 Rexdale Boulevard Toronto Ontario Colin Johnston $94,100,000

Gateway Mall 1403 Central Avenue Prince Albert Saskatchewan Ryan Zacharuk $28,800,000

Merivale Mall 1642 Merivale Road Nepean Ontario Richard Cyr $36,700,000

Sunnyside Mall 1595 Bedford Highway Bedford Nova Scotia Arthur Savary $52,500,000

Pembroke Mall 1100 Pembroke Street Pembroke Ontario Colin Johnston $26,300,000

Market Mall 2325 Preston Avenue South Saskatoon Saskatchewan Ryan Zacharuk $32,900,000

Northgate Mall 489 Albert Street North Regina Saskatchewan Ryan Zacharuk $49,800,000

Place Montreal Trust 1800 McGill Avenue Montreal Quebec Jean Francois Rioux $92,000,000

Le Faubourg 1616 Rue St. Catharines Montreal Quebec Jean Francois Rioux $21,800,000

Place Du Parc 300 Leo Parizeau Montreal Quebec Jean Francois Rioux $65,000,000

St. Denis 5800 St. Denis Montreal Quebec Jean Francois Rioux $12,900,000

Industrial Boulevard 800 Industrial Boulevard St. Jean Quebec Jean Francois Rioux $13,000,000

Final Value Conclusion

Colin Johnston, MBA, MRICS, AACIRyan Zacharuk, AACI

Richard Cyr, AACI Jean-Francois Rioux, E.A., AACI

Arthur Savary, AACI

Date: February 2, 2010

PROPERTYVALUATIONREPORTS

Fi shman Por t fo l io

Woodb ine Centre

December 31 , 2009

B1

WOODBINECENTRE, 500 REXDALE BOULEVARD, TORONTO, ONTARIO

1. A review and reconciliation of the data and analysis leading to the conclusion and final estimate

of value is as follows:

Conclusions

Regional Mall

Retail

December

31, 2009

Market Value

Rate Analysis 1

Internal Rate of Return

Rate Per s.f.

Terminal Cap Rate

Overall Cap Rate

Cash Flow (DCF)

Net Income (DCF)

Year 1

Year 1 5

Year 6 10

Year 1

Year 1 5

Year 6 10

$94,100,000

8.75%

$138

8.00%

7.75%

5.65%

7.65%

8.29%

7.37%

8.67%

8.87%

Market Value LandRate Per Acre

(Rounded) $45,600,000

$950,000

Market Rent RangeENCLOSED MALL UNITS

< 500 sf

501-999 sf

1,000-3,000 sf

3,001-5,500 sf

Kiosks

Anchor- Department Store

Cinema

Food Court

$35.00-$75.00

$25.00-$45.00

$15.00-$40.00

$10.00-$30.00

$150 - $525

$10.00

$8.00

$80 - $125

Inducement New deals

Renew deals

$15.00

$0.00

Realty Commission New deals

Renew deals

$4.00

$2.00

Growth Rates Market Rental Growth (LT)

Expense Growth (LT)

Market rent and sales growth for

year two set at 0.0% and for year

three at 1.0%

2.25%

2.25%


Woodb ine Centre

December 31 , 2009

B2

Reserves Vacancy/Bad Debts Allow.1

Lag Vacancy in Mths

Management Fee 2

Structural Reserve 3

7.50%

8

3.00%

1.00%

Leasing Assumptions Renewal Probability 75%

1 Based on a % of PGI Less Anchors 2. Based on a % of EGR 3. Based on a % of EGR

2. A reasonable exposure time is estimated to be 6 months.

3. The location and physical character of the property is addressed as follows:

The property lies at the intersection of Highway 27 and Rexdale Boulevard.

The character of the district is dominated to the south by Woodbine Racetrack and a

series of industrial uses. To the north lie several large, low density residential

communities.

The interest appraised is the Leased Fee, Freehold subject to leases.

The character of the building is described as an enclosed regional mall.

The total leaseable area of the building is 682,696 square feet.

The total parking stalls is 3,580 at a ratio of 5.24 spaces per 1,000 square feet.

The total site area is 48.0 acres.

4. The Land Use Controls are

1. CPR – Commercial Planned Regional.

2. Major uses permitted are Retail/Commercial.

5. The existing use of the subject property is an enclosed regional mall. This is the use reflected in

the appraisal.

6. Highest and Best use is estimated to be its current use. As vacant land the highest and best use

is estimated to be a retail use, likely in the form of an open format strip development or a

power centre for big boxes. In addition, part of the site holds good appeal for high density

residential uses.

7. This appraisal has considered the possible effect on value of an assemblage and for the subject

property there is considered to be none. There is no effect on value of any anticipated public or

private improvements unless specifically noted herein

8. There is no planned re development for this property.


Woodb ine Centre

December 31 , 2009

B3

9. As far as we are aware there is no current agreement for sale, option or listing of the property

for sale.

10. History of subject property market activity indicates that the property is not currently listed for

sale and under contract. A review at the local Land Registry Office revealed that the property

last traded in March 2005 at a price of $109,250,000. The details of the sale are summarized as

follows:


Woodb ine Centre

December 31 , 2009

B4

11. For the December 31, 2009 valuation, for the Discounted Cash Flow Analysis, the most relevant

sales are:

Sale

No.

Database Sale

Reference No. Address or Name IRR TCR Date

1 21491 Bayshore Shopping Centre, Ottawa, Ont. 6.50% 7.49% Dec 2009

2 21570 Woodgrove Centre, Nanaimo, BC. 7.00% 8.09% Nov 2009

3 19302 Brentwood Town Centre, Burnaby, BC. 8.50% 7.50% Dec 2009

12. For the December 31, 2009 valuation, for the Direct Capitalization Approach, the most relevant

sales are:

Sale

No.

Database Sale

Reference No. Address or Name OCR Date

1 21491 Bayshore Shopping Centre, Ottawa, Ont. 6.38% Dec 2009

2 21570 Woodgrove Centre, Nanaimo, BC. 6.75% Nov 2009

3 19302 Brentwood Town Centre, Burnaby, BC. 6.47% Dec 2009

13. For the December 31, 2009 valuation, for the Land Valuation, based on the highest and best use,

and as if vacant, the most relevant sales are:

Sale

No.

Database Sale

Reference No. Address or Name

Rate ($)

Per Acre Date

1 RT67265 141 Clarence Street, Brampton, ON $803,571 Jun 2009

2 RT67976 1739 Dundas Street East, Mississauga, ON $1,149,533 Aug 2009

3 RT69323 1152 Centre Street, Vaughan, ON $922,330 Nov 2009


Woodb ine Centre

December 31 , 2009

B5

ARGUSCASH FLOW PROJECTION DECEMBER 31, 2009

Categories Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Rental Revenue

Base Rent $7,992,875 $8,312,696 $9,092,311 $9,661,943 $9,687,466 $9,110,162 $8,045,695 $7,976,558 $8,536,685 $8,542,510 $8,770,541

Percentage Rent 842,730 870,407 411,273 321,545 204,628 218,452 207,715 178,693 207,361 221,345 225,965

CAM Recovery 1,868,921 2,122,107 2,620,775 2,847,865 3,012,864 3,152,170 3,250,797 3,397,225 3,566,750 3,608,980 3,655,285

Realty Tax Recovery 2,669,747 2,970,421 3,551,794 3,825,468 4,028,977 4,220,761 4,376,418 4,587,360 4,817,036 4,899,614 5,074,213

Misc. Income 2,008,157 2,047,596 2,087,922 2,129,155 2,171,316 2,214,426 2,258,505 2,303,576 2,349,662 2,396,785 2,444,967

$15,382,430 $16,323,227 $17,764,075 $18,785,976 $19,105,251 $18,915,971 $18,139,130 $18,443,412 $19,477,494 $19,669,234 $20,170,971

Vacancy Allowance (122,000) (426,048) (537,920) (956,732) (962,755) (896,376) (783,888) (611,299) (1,068,889) (1,079,918) (1,170,624)

Total Gross Revenue $15,260,430 $15,897,179 $17,226,155 $17,829,244 $18,142,496 $18,019,595 $17,355,242 $17,832,113 $18,408,605 $18,589,316 $19,000,347

Rental Expenses

CAM Expense $2,980,161 $3,047,214 $3,115,777 $3,185,882 $3,257,564 $3,330,860 $3,405,804 $3,482,434 $3,560,789 $3,640,907 $3,722,827

Realty Tax Expense 4,720,500 4,826,711 4,935,312 5,046,357 5,159,900 5,275,998 5,394,707 5,516,088 5,640,200 5,767,105 5,896,865

Management Fee 457,813 476,915 516,785 534,877 544,275 540,588 520,657 534,963 552,258 557,679 570,010

Non Recoverable Expense 165,033 150,238 137,936 141,039 144,212 147,458 150,775 154,167 157,637 161,183 164,810

Total Rental Expenses $8,323,507 $8,501,078 $8,705,810 $8,908,155 $9,105,951 $9,294,904 $9,471,943 $9,687,652 $9,910,884 $10,126,874 $10,354,512

Net Operating Income $6,936,923 $7,396,101 $8,520,345 $8,921,089 $9,036,545 $8,724,691 $7,883,299 $8,144,461 $8,497,721 $8,462,442 $8,645,835

Capital Expenditures/Leasing Costs

Tenant Improvements $0 $527,736 $408,535 $58,044 $93,270 $158,410 $290,022 $421,961 $131,470 $79,305 $307,032

Leasing Commissions 43,170 182,552 272,358 38,698 62,181 105,607 193,351 281,310 87,645 52,870 204,690

Rec Cap Ex 287,500 225,000 525,000 50,000 50,000 0 0 0 0 0 0

Non Rec Cap Ex 1,141,603 0 0 0 0 0 0 0 0 0 0

Structural Reserve 152,604 158,972 172,262 178,292 181,425 180,196 173,552 178,321 184,086 185,893 190,003

Total Capital Expenditure $1,624,877 $1,094,260 $1,378,155 $325,034 $386,876 $444,213 $656,925 $881,592 $403,201 $318,068 $701,725

Net Cash Flow $5,312,046 $6,301,841 $7,142,190 $8,596,055 $8,649,669 $8,280,478 $7,226,374 $7,262,869 $8,094,520 $8,144,374 $7,944,110

Cash Flow Forecast


Woodb ine Centre

December 31 , 2009

B6

SUMMARY OF DISCOUNTED CASH FLOW ANALYSIS

ANALYSIS DATE Jan 10

Discount Rate (IRR) 8.75% Year Capitalized 11

Terminal Cap Rate 8.00% Rounding Places 5

Net Rentable Floor Area (excluding storage) 682,560 sq. ft. Selling Costs 0.00%.

Hold Net Operating Net Discount Net Present NOI / CF /

Year Income Cashflow Factor Value Value Value

1 12/10 $6,936,923 $5,312,046 0.919540230 $4,884,640 7.37% 5.64%

2 12/11 $7,396,101 $6,301,841 0.845554234 $5,328,548 7.86% 6.69%

3 12/12 $8,520,345 $7,142,190 0.777521135 $5,553,204 9.05% 7.59%

4 12/13 $8,921,089 $8,596,055 0.714961963 $6,145,852 9.48% 9.13%

5 12/14 $9,036,545 $8,649,669 0.657436288 $5,686,606 9.60% 9.19%

6 12/15 $8,724,691 $8,280,478 0.604539115 $5,005,873 9.27% 8.80%

7 12/16 $7,883,299 $7,226,374 0.555898037 $4,017,127 8.37% 7.68%

8 12/17 $8,144,461 $7,262,869 0.511170609 $3,712,565 8.65% 7.71%

9 12/18 $8,497,721 $8,094,520 $3,804,764 9.03% 8.60%

10 12/19 $8,462,442 $8,144,374 0.432222473 $3,520,181 8.99% 8.65%

Reversion $107,561,216 0.432222473 $46,490,375

PV of Cash Flow and Reversion $94,149,736

REVERSION CALCULATION FINANCIAL INDICATORS

11th Year NOI $8,645,835 NOI Cash Flow

Terminal Capitalization Rate 8.00% Initial Yield 7.37% 5.65%

Unadjusted Reversion Value $108,072,938 1 5 Year Average 8.67% 7.65%

Less: Reversion Inducement & Commission ($511,722) 6 10 Year Average 8.87% 8.29%

Add: PV of Unamortized Capital Revenue $0

Sub total $107,561,216 % Value of Reversion 49.38%

$0 $138

Net Reversion Value (000 S) $107,561,216

Discounted Cash Flow ConclusionsWoodbine Centre

ESTIMATEDMARKET VALUE (ROUNDED) 94,100,000$

Selling Costs @ 0.00%

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18

NOI Cash Flow


Woodb ine Centre

December 31 , 2009

B7

Normalized Statement of Operations

Woodbine Centre

REVENUE

Base Rent $7,948,525

Percent Rent 281,366

Recoveries

Operating Costs $2,644,556

Realty Taxes $3,718,148

Total $6,362,704

Miscellaneous Income $2,087,922

Vacancy Allowance ($950,884)

Effective Gross Income $15,729,633

EXPENSES

Recoverable Expenses

Operating Costs ($3,115,777)

Realty Taxes ($4,935,312)

Promotion ($24,164)

Non Recoverable Costs ($113,772)

Management Fee ($471,889)

Total Expenses $8,660,914

Stabilized NOI $7,068,719

OCR 7.75%

Indicated Value $91,209,277

Shortfall Gross Rents ($2,926,437)

Lease Up Costs ($567,399)

PV Unamortzied Rec Def Expenses $151,623

Non Recoverable Cap Ex $0

Major Tenant Adjustments (The Bay & Sears) $5,847,899

Estimated Value by the Direct Capitalization Approach

(Rounded)$93,700,000

COMPARABLE SALESTRANSACTIONS

RETAIL

Location: North Battleford is in a growth phase. Subject is well located w ith exposure and access to Highway 16.Physical: Traditional enclosed mall format w ith anchor space located at both ends. Two freestanding fast food pads and a

gas bar. Recent upgrades of approximately $6,000,000. Large site w ith ample parking and excess land for future development.

Income: Sale Price and Yield Analysis excludes $1,500,000 of excess land value, resulting in an effective building sale price of $16,000,000. Real Cdn. Wholesale Club, Peavey Mart, Prairie North Health, Staples, and Shoppers Drug Mart comprise 71% of NLA. Property well represented by national and regional tenants. Average rents are below market w ith upside acknow ledged upon rollover. Vacancy is low , three units, or 1.47% of total GLA.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number

Interest Transferred

PROPERTY DESCRIPTION

Year Built

Year Renovated

Site Area (acres/ sq. ft.)

Parking Ratio (per 1,000 sq.ft.)

Building Type

n/ a

SFR Frontier Realty Inc.

Syndicate Management Inc

n/ a

n/ a

100%

Enclosed Community Mall 1975

2007

32.02 / 1,394,791

n/ a

INVESTMENT CHARACTERISTICS

11429 RAILWAY AVE E, North Battleford, SK

Frontier Mall

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a

12837Reference Number

Listing Price n/ a

Firm Date n/ a

NLA / Building Area 207,383

PRICE ANALYSIS

Adjusted Sale Price

Adj. Price ($/ sq. ft.)

Sale Price $17,500,000

$17,500,000

$84

Time Frame NOI Cash Flow

Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

8.80% 8.41%

9.34% 9.17%

10.71% 10.46%CR (stabilized) 8.80%

YIELD ANALYSIS

Leveraged IRR

LEVERAGE YIELD ANALYSIS


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

9.25%

3.36%

7.50%

Canada Bond (10-Yr.)

IRR 10.86%

Closing Date 11/ 20/ 2008

Occupancy Type Multi Tenant

Tenure Leased Fee

Real Canadian Wholesale Club

Peavey Mart

Prairie North Health

Staples

Shoppers Drug Mart

Retail

The author is not qualified and does not purport to give legal advice. The legal description and/or cadastral number reported herein are assumed to be correct. Legal advice is required for certainty.OCRs, IRRs, TCRs, as well as NOI and cash flow yields, are based on Altus Group methodology and market inputs, and may not reflect the purchasers' or vendors' perception of the transaction.

Location: Located at the intersection of Chemin Chambly Road and Desormeaux Boulevard in the Vieux-Longueuil Borough. The property benefits of a very good visibility and access.

Physical: P lace Desormeaux is an enclosed destination community shopping centre. Opened in 1971 w ith redevelopment/ expansion in 1986 and major renovation w ith the arrival of Super C in 1998.

Income: Premises of former Winners is vacant. Vendor provides a 12-months rental income guaranty for the premises estimated at $20.00 per sq.ft. (gross basis).

Adj.Sale Price: Other (-$382,035) - Excess land Other ($878,944) - Market & Step-up rent Other (-$469,522) - Amortization Other ($486,782) - Capital expenditures

General: Property includes a 31,500 sq.ft. excess land.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

Société de portefeuille Morguard (Québec) inc.

6913041 Canada inc.

n/ a

15446254

100%


1986,1998

26.27 / 1,144,218

7.54


2875-2901 CH DE CHAMBLY, Longueuil - Vieux-Longueuil, QC

Place Desormeaux

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

< 20%

< 20%

< 20%

< 20%

< 20%


Listing Price n/ a

Firm Date 6/ 27/ 2008


PRICE ANALYSIS

Adjusted Sale Price



$22,114,169

$93


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

8.70% 7.26%

9.12% 8.36%

10.65% 10.10%CR (stabilized) 9.55%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

9.50%

3.81%

6.19%


IRR 10.00%



Tenure Leased Fee

Lender

O/ S Balance

Interest Rate

Annual Debt Service

Amortization Period

Term

La Great-West, compagnie d'assurance-vie

$11,400,402

5.14

$0

n/ a

n/ a

Zellers

Super C

Vacant (Former Winners)

Retail


Location: Well located in West Saskatoon off Circle Drive.Physical: The property was substantially renovated in 1999, converting a portion of the former food court to CRU space to

accommodate Pennington’s and Petland.Income: A Wal-Mart anchored SmartCentre is planned on a site in the Blairmore district, and management anticipates this

major tenant to relocate from the subject centre. This w ill require a redevelopment of a portion of the subject site, and the direction of this re-developement w ill be key in determining the long-term health of the mall.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

Riocan Holdings

Bayfield Realty Advisors

n/ a

n/ a

100%


1999

26.00 / 1,132,560

4.20


300 CONFEDERATION DR, Saskatoon , SK

Confederation Mall

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date n/ a


PRICE ANALYSIS

Adjusted Sale Price



$28,500,000

$87


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

8.33% 6.84%

9.02% 4.18%

12.65% 9.41%CR (stabilized) 8.33%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

8.75%

3.66%

6.47%


IRR 10.13%



Tenure Leased Fee

Wal-Mart

Safeway

Petland

Retail


Location: Located at the intersection of South Street and Jean-Jacques-Bertrand Boulevard in Cowansville.Physical: New development comprising one strip building of approximately 10,049 square feet. The property includes

approximately 14,000 square feet of excess land allow ing for an additional building or the enlargement of the existing building.

Market: There is an overall shortage of available financing for most types of investments and the cautious approach taken by equity investors has severely limited transaction activity. Market indicators are therefore scarce.

Adj.Sale Price: Other (-$170,000) - Excess land Financing (-$70,000) - Advantageous long-term financing.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

9173-1488 Québec inc.

Immeubles TG

n/ a

16336156

100%

Retail Strip - Not Anchored 2008

n/ a

2.09 / 90,924

10.85


1616 RUE SOUTH, Cowansville, QC

1616 SOUTH STREET

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

0%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date 4/ 6/ 2009


PRICE ANALYSIS

Adjusted Sale Price



$3,260,000

$324


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

7.94% 7.81%

7.95% 7.82%

8.41% 8.28%CR (stabilized) 7.94%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

8.25%

2.96%

5.61%


IRR 8.57%



Tenure Leased Fee

Lender

O/ S Balance

Interest Rate

Annual Debt Service

Amortization Period

Term

Caisse populaire Desjardins Dorval-Pointe-Claire

$2,416,469

6.15

$261,040

n/ a

48

Les Rôtisseries St-Hubert ltée

Pétrole Therrien

Subway

Retail


Location: Located on the northeast corner of the intersection of Elizabeth Street and Sir-Wilfrid-Laurier Boulevard in Longueuil, Saint-Hubert Borough.

Physical: The property is in good condition and well maintained.Market: There is an overall shortage of available financing for most types of investments and the cautious approach

taken by equity investors has severely limited transaction activity. Market indicators are therefore scarce.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

P lace Edouard Limited Partnership

Centre Édouard S. E. C.

n/ a

16082866

100%

Retail Strip - Not Anchored 1990

n/ a

3.17 / 138,287

7.38


1400 BOUL ÉDOUARD, Longueuil - St-Hubert, QC

Place Édouard

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

0%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

0%

20% - 40%

20% - 40%

0%

< 20%


Listing Price n/ a



PRICE ANALYSIS

Adjusted Sale Price



$3,100,000

$129


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

9.42% 9.27%

9.49% 8.94%

9.77% 8.78%CR (stabilized) 9.42%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

9.50%

3.08%

6.53%


IRR 9.61%



Tenure Leased Fee

Lender

O/ S Balance

Interest Rate

Annual Debt Service

Amortization Period

Term

National Bank of Canada

$2,015,000

25.00

$0

n/ a

n/ a

Centre Jeunesse

Mediavis inc.

CLSC

Vidéo Flash

Parentr'aide

Retail


Location: Les Galeries de la Canardière is located in the borough of Limoilou, neighboring the well known community of Beauport. Easily accessible from downtown via the Dufferin-Montmorency Autoroute,the property is situated in an established residential area. The average household income in the trade area of the centre is lower than the provoince of Quebec.

Physical: The centre has no real anchor tenant however there are two tenants who lease more than 15,000 s.f., they are Hart and Salle de Quilles St-Pascal.

Income: Includes a land lease w ith Canadian Tire for a gaz station.Adj.Sale Price: Other ($63,786) - Vacancy Other ($192,146) - Revenue Shortfall(Billardier) Other ($23,077) - Free rent Other (-

$453,311) - Amortization Financing (-$380,000) - Financing advantage Physical ($249,917) - Roof

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

Skyline-Canardière inc.

Corporation Econo-Malls #7 Corporation

n/ a

16187558

100%


2007

12.15 / 529,216

4.47


2485-2539 BOUL SAINTE ANNE, Québec - La Cité - Limoilou, QC

Galeries de la Canardière

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

< 20%

< 20%

< 20%

< 20%

< 20%


Listing Price n/ a

Firm Date 4/ 27/ 2009


PRICE ANALYSIS

Adjusted Sale Price



$11,686,979

$68


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

7.63% 5.12%

9.87% 7.91%

10.87% 8.98%CR (stabilized) 9.52%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

9.00%

3.57%

6.68%


IRR 10.25%



Tenure n/ a

Interest Rate (Wt. Avg.) (% )

-

-

$6,343,631

5.85%

Outstanding Balance

New MortgagesAssumed MortgagesHart

Salles de Quilles St-Pascal

Uniprix

Retail


Location: The property is located at the north east corner of Willingdon Avenue and Lougheed Highway; two major arterial routes. I t is easily accessible to vehicular traffic by Highway 1 and Canada Way. The centre also benefits from an integrated mass transit connection (Lower Mainland's SkyTrain LRT).

Physical: Brentwood Town Centre was originally built in 1961, and has undergone renovations in 1970, 1989, 2000, and 2006-07.

Income: The centre is anchored by Sears (176,088 s.f.), Zellers (91,823 s.f.), and London Drugs (32,249 s.f.). Average sales performance in 2008 was $455 per s.f. Currently, the centre has 23,181 s.f. of vacancy.

Market: Burnaby has been grow ing at pace w ith the Vancouver CMA over the past five years, and locations located on the SkyTrain line have been major centres of grow th, particularly for those seeking affordable accommodations w ithin an easy commute of downtown Vancouver. Vancouver's GDP growth is expected to remain steady in 2009 due to the offsetting effect of the decline in the Canadian dollar stimulating manufacturing and forestry. Also, significant investment in infrastructure and preparation for the 2010 Olympics w ill continue to drive non-residential construction.

General: Brentwood Town Centre is an enclosed regional shopping centre totalling 510,993 s.f., located in Burnaby, British Columbia.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

4/ 1/ 2009

OPB Realty Inc.

Shape Properties

DTZ Barnicke

n/ a

100%

Tier 2 Regional Mall 1961

1970,1989,2000,2006-2007

27.60 / 1,202,256

3.57


4567 LOUGHEED HWY, Burnaby, BC

Brentwood Town Centre

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date 12/ 1/ 2009


PRICE ANALYSIS

Adjusted Sale Price


Sale Price $100,000,000

$100,000,000

$196


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

6.47% 6.19%

7.40% 6.69%

8.45% 7.56%CR (stabilized) 7.25%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

7.50%

3.25%

5.25%


IRR 8.50%

Closing Date n/ a


Tenure Leased Fee

Sears

Zellers

London Drugs

Retail


Location: The property is located in north Winnipeg, at the southeast corner of McPhillips Street and Leila Avenue. The character of the district is residential and retail/ commercial.

Physical: The property was constructed in 1970 and was last renovated/ expanded in 1999. In August 2009 the Canadian Tire at the property w ill expand, creating a total leasable area of 285,440 s.f. (excluding the Sears shadow anchor).

General: Garden City Mall is a 276,215 s.f. enclosed community mall that is shadow anchored by a 92,604 s.f. Sears.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

5/ 1/ 2009

Fishman Holdings

Bayfield Realty Advisors

TD Securities

n/ a

100%


n/ a

27.05 / 1,178,298

9.00


2305 MCPHILLIPS ST, Winnipeg, MB

Garden City Shopping Centre

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date 10/ 9/ 2009


PRICE ANALYSIS

Adjusted Sale Price



$40,200,000

$146


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

9.26% 5.57%

11.07% 8.73%

12.48% 10.69%CR (stabilized) 10.09%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

10.25%

3.45%

7.65%


IRR 11.10%

Closing Date n/ a


Tenure n/ a

Canadian Tire

Retail


Location: Located at the corner of Queen-Mary and Côte-des-Neiges roads. Very good visibility and exposure.Physical: Building in very good condition. A total amount of $62,000 shall be spent (short to mid-term) for works on the

roof, bricks and general repairs. Works to be completed by the seller.Income: Fully leased. 20-year lease on a fully net basis. Tenant has four 5-years options to renew - rent to be negotiated

between the parties.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

Propriétés Shoppers inc.

Groupe Gestiben inc.

n/ a

16398915

100%

Street Front 1935

1990

0.35 / 15,368

n/ a


5122 CH DE LA CÔTE DES NEIGES / 3715 CHEMIN QUEEN MARY, Montréal -

Pharmaprix

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

0%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date 2/ 23/ 2009


PRICE ANALYSIS

Adjusted Sale Price



$6,709,667

$333


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

7.22% 7.22%

7.22% 7.22%

7.72% 7.72%CR (stabilized) 7.22%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

7.50%

3.45%

4.57%


IRR 8.02%


Occupancy Type Single Tenant

Tenure Leased Fee

Pharmaprix

Retail


Location: Both properties are located along du Pont Street in the St-Nicolas Borough near the highways.Physical: Properties built in 2008Income: Properties benefits from good covenant tenants (BMO, Brunet, SAQ)w ith long term leases. The vendor guaranties

the revenue of the vacant space for a period of 5 years. Harvey's premises is vacant but the tenant pays its minimum and additional rent. The vendor w ill be responsible for the payment of the tenant improvement for these two premises.

General: Eventhough the property was not put on the market the purchase price reflects market conditions. The owner acquired 25% of the interest.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

n/ a

Fiducie Dupont St-Nicolas

9205-9450 Québec inc.

n/ a

16555313

25.00%

Street Front 2009

n/ a

5.14 / 224,037

6.63


400-420 RTE DU PONT, Lévis - Chutes-de-la-Chaudière-Ouest, QC

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date n/ a


PRICE ANALYSIS

Adjusted Sale Price



$9,100,000

$293


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

7.33% 7.33%

7.60% 7.60%

7.78% 7.58%CR (stabilized) 7.34%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

7.75%

3.31%

4.94%


IRR 8.25%



Tenure Fee Simple

Brunet

SAQ

Banque de Montréal

Retail


Location: The property is located at the northwest intersection of Richmond Road and the Queensway (Highway 417) in the western sector of the City of Ottawa (formerly City of Nepean). The site is well served by local public transit; and regional access has been significantly enhanced in the recent past w ith the opening of Highway 416. The junction of the Queensway Corridor (Hwy 417)and Highway 416 is immediately to the west of Bayshore Shopping Centre.

Physical: Bayshore Shopping Centre was opened in 1973, and was subsequently expanded w ith a third level and additional parking deck in September 1987. In the summer of 2001, a $26-million renovation was completed, and as such the property displays excellent physical appeal.

Income: The centre is anchored by The Bay, Zellers, and Sears. Average sales performance as of September 2009 was $560 per s.f.

Market: The competitive environment for Bayshore is projected to become more intense in future years w ith an additional 1.4 million s.f. of new retail space planned w ithin the PTA alone. The trade area population is 775,000 (2007) and w ill increase moderately to about 796,000 people by 2012.

General: Bayshore Shopping Centre is a 739,006 s.f. Tier 1 Regional Mall, located in Ottawa (Nepean).

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

3/ 1/ 2009

Ivanhoe Cambridge

KingSett Capital

Brookfield Financial

n/ a

50.00%

Tier 1 Regional Mall 1973

1987,2001

24.62 / 1,072,621

5.28


100 BAYSHORE DR, Ottawa, ON

Bayshore Shopping Centre

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

n/ a

n/ a

n/ a

n/ a

n/ a


Listing Price n/ a

Firm Date n/ a


PRICE ANALYSIS

Adjusted Sale Price


Sale Price $157,500,000

$308,400,000

$417


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

6.38% 4.76%

6.97% 5.86%

7.42% 7.29%CR (stabilized) 6.50%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

6.50%

3.25%

4.24%


IRR 7.49%



Tenure Leased Fee

The Bay

Zellers

Winners

Retail


Location: Well located in Nanaimo, B.C. approximately 90km north of Victoria on Vancouver Island. The site benefits from excellent regional accessibility w ith Island Highway providing a direct link to all municipalities on the east coast of Vancouver Island. The surrounding area has recently been developed w ith numerous big-box tenancies and a small power centre anchored by Michaels.

Physical: Single level enclosed regional shopping centre.Income: Virtually fully-leased at the time of sale, the income is well secured by a high percentage of national/ regional

tenants. CRU sales at $474 per s.f. have been downward trending since 2007.Market: Woodgrove Shopping Centre represents the dominant retail centre in the marketplace.

TRANSACTION DATA

Listing Date

Vendor

Purchaser

Vendor Broker

Registration Number



Year Built

Year Renovated



Building Type

4/ 27/ 2009

Ivanhoe Cambridge

Primaris REIT

RBC

n/ a

50.00%

Tier 1 Regional Mall n/ a

n/ a

66.76 / 2,908,066

5.05


6631 ISLAND HIGHWAY N, Nanaimo, BC

Woodgrove Shopping Centre

MORTGAGE DATA

TENANT PROFILE

Other Vacancy

0%

VACANCY

Retail Vacancy

Office Vacancy

< 20%

0% Year 3

LEASE ROLLOVER

Year 2

Year 1

Year 5

Year 4

< 20%

< 20%

< 20%

< 20%

< 20%


Listing Price n/ a



PRICE ANALYSIS

Adjusted Sale Price


Sale Price $103,100,000

$206,200,000

$286


Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

6.78% 6.72%

6.97% 6.87%

7.68% 7.47%CR (stabilized) 6.75%

YIELD ANALYSIS

Leveraged IRR



Year 1

Avg. Yrs. (1-5)

Avg. Yrs. (6-10)

n/ a n/ a

n/ a n/ a

n/ a n/ a

n/ a

TCR

Real Estate Premium

7.00%

3.25%

4.84%


IRR 8.09%



Tenure Leased Fee

The Bay

Wal-Mart

Save-On-Foods

Avalon Theatres

Toys R Us

Retail


INVESTMENTMARKETOVERVIEW


Nat iona l Economic Overview

December 31 s t , 2009

ECONOMIC OVERVIEW Canada

2007A 2008A 2009P 2010P 2011P 2012P 2013P 2014P

Real GDP at market prices, 2002 $ millions $1,315,907 $1,321,360 $1,289,647 $1,320,599 $1,364,179 $1,418,746 $1,464,146 $1,506,336

Percentage change 2.5 0.4 2.4 2.4 3.3 4.0 3.2 2.9

Manufacturing $171,710 $162,708 $142,131 $146,742 $155,427 $166,180 $175,300 $183,696


Construction $67,540 $69,381 $66,544 $69,719 $71,663 $74,657 $77,206 $79,659


Office $432,933 $442,934 $451,497 $464,781 $478,778 $495,067 $508,197 $519,102


Wholesale and Retail Trade $132,178 $134,370 $127,508 $131,380 $136,843 $144,244 $150,064 $155,051


Inflation (C.P .I.) Percentage Change 2.1 0.2 0.6 2.2 2.4 2.3 2.1 2.0

Population, in thousands 32,576 32,927 33,311 33,653 34,017 34,388 34,769 35,156


Employment, in thousands 16,866 17,126 16,852 16,919 17,122 17,413 17,762 17,975


Manufacturing 2,045 1,970 1,782 1,738 1,773 1,796 1,806 1,809


Construction 1,134 1,231 1,149 1,134 1,150 1,193 1,244 1,289


Services 12,145 12,329 12,343 12,489 12,820 13,172 13,419 13,565


Unemployment Rate 6.0 6.1 8.4 9.0 8.2 6.9 6.0 5.7

Personal Income, $ billions $1,170,715 $1,226,585 $1,230,319 $1,271,260 $1,331,381 $1,398,282 $1,469,056 $1,536,753


Housing Starts 228.3 211.1 143.2 150.0 174.5 194.0 192.8 191.5

Single detached, in thousands 118.9 93.2 70.5 73.3 88.1 99.5 97.6 96.3

Semi/Row, in thousands 37.7 33.5 25.0 27.9 36.5 39.9 38.3 36.4

Apartment, in thousands 71.7 84.3 47.7 48.8 49.9 54.7 56.8 58.8

Retail Sales, $ millions $412,037 $413,438 $411,900 $413,458 $415,780 $418,549 $420,649 $422,385


Source: Altus Group Economic Consulting based on Statistics Canada, CMHC, and Conference Board of Canada

Canada, Economic Overview

Statistics Canada reports that the Canadian economy emerged from its recession in the third quarter, as

real Gross Domestic Product (GDP) eked out a tiny gain of 0.4%, on an annual basis. Although the

consensus view is for the economy to remain out of recession, the recovery will likely be fairly gradual.

Third quarter performance relied heavily upon government spending initiatives. The broader Canadian

economy, however, must still navigate against multiple headwinds, impeding its growth. This includes

the strength of the Canadian dollar, which will likely continue to put downward pressure on exports and

manufacturing. Very low interest rates have also been stimulative in recent months, boosting durable

goods sales and housing sales. However rising rates in 2010 pose a corresponding risk to the strength and

longevity of the recovery.


Nat iona l Economic Overview


Over 2009 as a whole, Canada’s GDP is now expected to have contracted by some 2.4%, but expectations

are for relatively modest growth of some 2.4% in 2010. The recovery will continue to be led by public

sector spending. Private spending will likely remain depressed through 2010 as business and household

attempt to rebuild their balance sheets. Stronger economic conditions emerging in Asia may have a

positive effect on Canada’s exports, but weaker conditions in the U.S. will still be a risk. The dollar

volume of exports has recently regained its footing, and manufacturing shipments rose in three of the

past four months.

Canada lost approximately 400,000 jobs since the onset of the recession one year ago, and there remains

considerable slack in the economy. The slack in the economy has reduced productivity and could lead to

a ‘jobless recovery’, as employers take a wait and see approach to hiring. Thus, the weak job growth in

the third quarter, a gain of about 13,000 jobs over the second quarter, may be indicative of things to come.

In 2010 job creation is only expected to amount to approximately 70,000 jobs, representing a 0.4%

annualized growth rate.

The housing sector has recently shown signs of improvement. Housing starts are rising from their recent

recessionary lows in many markets, and sales of existing homes continue to impress. In the third quarter,

housing starts were 147,800 units on a seasonally adjusted at annual rates. This represented an increase of

15% over the previous quarter, albeit nearly 29% lower than the same period last year. In 2010, housing

starts are expected to improve, however the recovery could be very fragile. The introduction of HST is

expected to shape housing starts in 2010 as tax avoidance strategies may boost starts early in the year at

the expense of those later, in both Ontario and British Columbia. In terms of existing homes, the

Canadian Real Estate Association reported that the number of homes sold in the third quarter rose by

12% over the second. However, as pent up demand from first time buyers becomes satiated and move up

buyers continue to sit on the sidelines, it is expected that existing home sales activity should subside.

In the non residential construction sector (buildings and infrastructure), activity continues to be soft.

Spending declined by 4.2% in the third quarter compared to the same period in 2008. The decline is

mainly attributable to lower spending on commercial and industrial buildings. The weak performance in

the quarter was the result of substantial declines in Alberta and British Columbia and a slight decline in

Ontario. Investments announced by the federal and provincial governments should support spending

through 2010.

The next few months should prove pivotal in determining whether the recovery in the third quarter can

gain traction. The lingering effects the global financial crisis will likely continue to resonate over the next

year, as employment conditions and economic activity recover gradually.


Economic Overview


ECONOMIC OVERVIEW Ontario

2007A 2008A 2009P 2010P 2011P 2012P 2013P 2014P

Real GDP at market prices, 2002 $ millions $534,880 $532,209 $515,711 $526,025 $544,962 $567,850 $587,725 $606,514


Manufacturing $91,893 $85,203 $72,278

Percentage change 2.2 7.3 15.2

Construction $26,083 $25,733 $23,770


Office $204,491 $208,195 $211,955


Wholesale and Retail Trade $58,758 $59,134 $56,114







Manufacturing 950 901 789


Construction 413 439 404


Services 4,767 4,861 4,850



Personal Income, $ millions $464,386 $482,038 $480,046 $494,758 $520,181 $547,671 $577,748 $606,655


Housing Starts 68.1 75.1 48.3 48.3 51.2 70.5 70.0 70.3







Ontario, Economic Overview

The plight of the Ontario economy in 2009 is expected to restrain growth in 2010 after contracting by an

estimated 3.1%. While Ontario is expected to emerge from its current recession in 2010, its expected

growth rate of some 2.0% will still be one of the weakest performances in Canada. One encouraging sign

pointing to recovery in Ontario is manufacturing orders, which have recently begun rising after a long

decline. In the U.S., government stimulus measures such as the “cash for clunkers” and similar, although

smaller, initiatives in Canada have revived the auto industry and led to some modest job growth over the

past few months. Nascent signs of recovery in the U.S. in the third quarter could add some levity to

Ontario’s exports, although a strong Canadian dollar remains a challenge. All told, the signs of a

turnaround in the Ontario economy remain salient and growth is expected to return in 2010, albeit at a

gradual pace.


Economic Overview


Since the onset of the recession, the manufacturing sector has accounted for a large proportion of total job

losses. In the third quarter, however, employment advanced for the first time since the start of the

recession, rising by some 6,900 jobs (seasonally adjusted), representing a 0.1% increase. Despite the

modest turnaround, the number of jobs in Ontario remains some 2.7% lower a year ago, the largest

decline of any province.

Housing starts rose 5.9% in the third quarter compared to the previous quarter, although they remain

nearly 40% lower than the same time in 2008. The backlog of condominium projects in Toronto not yet

started will continue to elevate starts in 2010 and 2011 but will be a risk factor going forward. Housing

starts are expected to average between 48,000 and 70,000 over the forecast period, with ground related

housing fuelling most of the growth.

In the third quarter, investment in non residential building construction declined 3.2% compared to the

same period in 2008. The decline was due to lower spending for office buildings, shopping centres and

warehouses, accompanied by a decline in institutional spending. Federal and provincial stimulus

spending will likely have a buoyant effect on non residential construction spending and employment in

the industry. In recent months employment in construction has increased.

All in all, economic growth is expected to return to the province in 2010. The return of foreign demand

will provide support to the province’s exports and fuel gradual growth in 2010. Going forward, the long

term outlook for the province remains favourable, as upcoming tax reforms should increase Ontario’s

competitiveness and stimulate business investment leading to average annual growth of 3.6% after 2010.


Economic Overview


ECONOMIC OVERVIEW Toronto

2007A 2008A 2009P 2010P 2011P 2012P 2013P 2014P

Real GDP at market prices, 2002 $ millions $220,446 $221,110 $216,060 $220,980 $230,949 $239,676 $248,548 $256,920


Manufacturing $39,663 $36,732 $31,305


Construction $10,639 $10,379 $9,435


Office $98,328 $100,924 $103,548


Wholesale and Retail Trade $28,265 $28,472 $26,978







Manufacturing 404 392 339


Construction 169 183 151


Office 1,127 1,153 1,216


Wholesale and Retail Trade 464 454 449



Personal Income, $ millions $206,791 $215,246 $217,472 $227,024 $239,149 $252,767 $267,677 $281,783


Housing Starts 33.3 42.2 26.1 26.7 27.5 31.0 35.7 35.5







Toronto, Economic Overview

The Toronto Census Metropolitan Area (CMA) – some 5.6 million persons strong and composed of 23

individual municipalities is Canada largest urban region and has historically been an important

contributor to the Canadian economy. Toronto has long relied on its well diversified economy, focused in

the financial services, manufacturing and trade sectors to out perform the rest of the country in terms of

economic and job growth. However, due to its reliance on manufacturing and finance, two sectors which

have arguably been hit hardest by the recession, Toronto has been disproportionally affected by the

global economic downturn and strength of the Canadian dollar. However, as both domestic and foreign

demand for motor vehicles improves, manufacturing in Toronto should receive a boost. The more

favourable economic climate in 2010 is expected to benefit Toronto as economic activity rebounds after a

dismal 2009.


Economic Overview


In the third quarter Toronto shed some 35,000 jobs compared to the same period in 2008 (1.2% lower).

This was one of the largest declines of any large CMA. However, employment conditions appear to be

improving as only 2,000 jobs were shed in the third quarter on a quarter over quarter basis (seasonally

adjusted). In 2009 employment is expected to experience its first annual contraction since 1994. However

some job growth is expected to return in 2010.

Third quarter housing starts in Toronto dropped to 6,700 units, a level some 43% lower than the same

period in 2008, one of the poorest performances of any large metropolitan area in Canada. Condominium

apartment starts continued to represent a sizable share of starts in Toronto as new construction has

become more focused on the multi residential sector. Condominium apartment starts are expected to be

slightly higher in 2010 based on a recent acceleration in the pace of new condominium apartment sales.

The number of condominium apartment units under construction remains a risk factor for the Toronto

market, as there are over 27,000 units scheduled for occupancy in 2010 – normally considered about a

three year supply of this type of housing.

Investment in non residential buildings continued to decline in the third quarter. Compared to the same

period last year, non residential investment was 11% lower. With the completion of several office towers,

investment in the commercial component is expected to contribute less to non residential construction

activity. However, funding from the Federal Government’s “Building Canada Framework Program” will

provide a boost as local infrastructure projects, such as the $2 billion extension to the Spadina Subway,

and several light rail transit lines get underway this year.

The recession has affected consumer spending in Toronto, as retail sales fell some 2.4% in year to date

September compared to the same period last year. However, as resale activity in the housing market

continues to impress, it could signal stronger consumer sentiment going forward. The effects of stifled

consumer spending and restructuring in the auto industry, which weighed on economic activity in

Toronto in 2009 should ease in 2010 signalling a return to more robust economic growth.


F inanc ia l Marke t Overv iew


Financial Market Overview

Rates of Return

Rev. 2010-01-05 Z:\09Q4\Other\BackupData\[Fin Market-100105.XLS]GRAPH

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1998

2000

2002

2004

2006

2008

2010

2012

IPD, Real Estate

Canada 10-Yr.

Bond

TSE, Gains+Dividends

REITs Gains+Yields

2.3%

2.5%

2.7%

2.9%

3.1%

3.3%

3.5%

3.7%

3.9%

4.1%

4.3%

Dec-0

8

Mar-

09

Jun

-09

Sep

-09

Dec-0

9

Canada 10-Yr. Bond

Sources: Bank of Canada, ICREIM / IDP Canadian Property Index & RBC Daily Market Indicator

Latest Values

Date Commodity Return Comment

2009 09 30 IPD, Real Estate 2.40% Return of 3.7% in 2008, 16.1% in 2007 and 18.6% in 2006.

2009 12 31 TSE, Gains+Dividends 33.35% Index was 11,746.1 vs. 8,987.7 12 months ago,

plus current dividend of 2.66%.

2009 12 31 Canada 10 Yr. Bond 3.61% Average was 4.28% in 2007, 3.58% in 2008 and 3.29% in 2009.

2009 12 31 REITs Gains+Yields 49.35% Index was 115.45 vs. 81.05 12 months ago,

expected yield was 6.91% (vs. 10.18% 12 months ago).

As the Canadian economy slid into recession towards the latter part of 2008, returns (including revenue

plus value gains or losses) started to head downwards. At a time when losses being incurred were

diminishing the amount of capital available, the perspective of further losses discouraged investors from

all but the safest investments. Since March 2009, however, stock market values have shown a fairly

significant recovery, as indicated by the forthcoming graph.




Source: globeinvestor.com

We do not know whether the TSX will make its way back to the peak of 14800 reached in May 2008 as

interest rates are likely to increase in 6 to 12 months time. However, the recent recovery may have drawn

funds that might otherwise have gone to direct real estate investment. Yet one of the positive elements of

the stock market recovery is a better balance in the ratios measuring the degree of diversification of

pension fund investments: this could allow them to channel more funds toward real estate.

The story concerning REITs is about the same as that of other stocks, as illustrated by the following

graph. Although the Capped REIT return for the 12 months ended December 31, 2009, at 49.35%, is more

impressive than the corresponding TSX return of 33.35%, the Capped REIT index has a much longer way

to go if it wants to reach its February 2007 peak of approximately 175. The returns this year have been

impressive enough to attract capital, despite higher real estate vacancies, declining rents, higher financing

costs and more restrictive financing conditions. This places some REITs in a position where they can

attract more capital to acquire additional real estate if such acquisitions are adjudged to be fairly priced

and profitable for the fund.




Source: globeinvestor.com

There is a feeling, based on stock market behaviour and confirmed by economists, that the recession is

over and that the recovery that awaits us will be slow and sporadic. However, employment needs to

recover and consumer spending is still soft. Real estate reacts to economic events with a time lag of one to

two years and some after effects of the recession may still be felt in this sector.

Canada 10 Year Bond Rates, although they have been rising, are still low. This is largely the result of

worldwide government policies designed to provide liquidity in order to quick start an economic

recovery but it also indicates that there are still plenty of investors who prefer safety over high returns.

Eventually, most probably in the second half of 2010, governments will have to reverse their monetary

easing and allow interest rates to increase. In mortgage financing, low interest rates mask another reality:

commercial real estate mortgages are cheap but hard to get.

The IPD real estate return, which measures the performance of institutional real estate investments, is

significantly less volatile than the TSX and REIT indices. The evolution of this (IPD) return also seems to

validate the notion of a time lag in real estate’s response to economic events. The ICREIM/IPD Canada

Annual Property Index (IPD) moved from 3.7% in 2008 to 1.3% for the year ended Q1 2009, 1.2% for the

year ended Q2 2009 and 2.4% for the year ended Q3 2009. This compares to a long term average of 12.4%

per annum from 1996 to 2008. This particular index may possibly continue to decline for at least one more

quarter. Investors, when questioned for the Q4 2009 Altus InSite Investment Trends Survey about their real

estate value outlook for the next 12 months, also showed some lingering concern. They expected stable

(56%) or decreasing (26%) values, as shown hereafter. This is a vast improvement, however, over the Q4

2008 survey when 69% of investors anticipated a decline and 6%, a stable market.




Investor Outlook

Q4 2009

DECREASE

25.7%

INCREASE

18.7%

NO CHANGE

55.7%

Canada, DT AA Office, DT Office Land, Tier 1 Regional S/C, Tier 2 Regional S/C, Community S/C,

Single Ten. Industrial, Multi Ten. Industrial and Suburban Multi Family

In conclusion, stock markets seem to have anticipated the end of the recession but direct real estate

investments have been slower to react, as is usually the case. Interest rates are low and should increase in

the second half of next year if the economic recovery gets a strong foothold. Canadian real estate has

stood up to the recession with a far better performance than many parts of Europe and North America.


Nat iona l Inves tment Marke t Overview


National Investment Market Overview

Market surveys can provide perspective on past and present Overall Capitalization Rate perceptions of

active real estate investors. They complement, but do not substitute properly analyzed market

transactions. Surveys are test tube responses to a pre defined environment. In the case of the Altus InSite

Investment Trends Survey (ITS) 1, the responses dealing with Overall Capitalization Rates (OCRs) and

Internal Rates of Return (IRRs) reflect a number of factors, such as the respondents chosen, the real estate

location specified (which can be a specific address), the property type, the availability of financing

(usually an all cash transaction), as well as investor types (usually an indirect function of the other

specifications).

The objective of the Altus InSite ITS is to study the perception of key decision makers and to interpret the

trends that will have an impact on future markets. Close to 275 senior decision makers belonging to the

Respondent Categories shown on the following graph are contacted by senior Altus Group consultants.

From these contacts, we get about 500 responses per year. This ensures the ITS relevancy. As we have

conducted this survey since 1999, it also provides a good historical perspective.

1 See definition of Altus InSite Investment Trends Survey in Appendix A.




A total of 17 property types are surveyed in eight principal locations, namely Vancouver, Edmonton,

Calgary, Toronto, Ottawa, Montreal, Quebec City and Halifax. Other location subsets are also used on

occasion. The 17 property types are presented hereafter, by order of buy/sell preference.

While Q1 2009’s Altus InSite ITS ‘Property Type Barometer’ was showing a preponderance of selling over

buying for 10 of the 17 asset classes surveyed, a better balance was attained in Q2 with an equal number

of asset types on each side of the buy/sell equation. Q3 and Q4 2009 both show a positive tilt with a

preponderance of buyers in 10 of the 17 categories. The top barometer value is now 6.5 buyers per seller

for Tier 1 Regional Malls (up from 3.9 in Q1 and 4.5 in Q2 but down from 9.9 in Q3). Whereas Hotels,

with 7.4 sellers per buyer, occupied the last position in Q2 2009, this position is now occupied by

Suburban Class “B” Office, but with 5.0 buyers per seller, as opposed to 3.5 last quarter. In Q1 2008, when

the sky was still blue, the most significant negative value on the Barometer was 1.7 for Community Malls

and only two categories were in negative territory. While we are still a long way from restoring such high

confidence levels in the market, the fact that the number of asset classes with positive buyers to seller

ratios has been higher since Q3 2009, not mentioning the jump in the ratios themselves, tends to suggest

that investors are starting to see the light at the end of the tunnel for the best products.




Of the 17 property types surveyed, four have been earmarked as trendsetters. They are the best in the

office, retail, industrial and residential categories and are defined as follows:

Downtown Class “AA” Office• 400,000 to 900,000 square feet

• Class “AA” physical features, strong location

• 5% existing vacancy, 10% rollover per year

• Leased at market rates to good covenant tenants

Tier I Regional Mall• Greater than 700,000 square feet

• Dominant market presence, renovated in the past 5 years

• 2 3 anchor tenants occupy 50% of rentable area

• Expansion potential not to be considered

• Growing CRU sales >$450 per square foot sourced from

85% national tenants

Single Tenant Industrial Building• 100,000 square foot single tenant warehouse property

• +/ 5 years old, pre cast construction with 10% office and

28 ft. clear height, 10 to 15 shipping doors

• Suburban location, good highway access

• 45% site coverage with good turning radius and parking

• 10 year lease with 15% contractual rental growth in Year 6

• Investment grade covenant (i.e. S & P BBB or better)

Suburban Multiple Unit Apartment Building• 150 300 suites – high rise, 25 years old

• Well maintained, good suburban location

• Stabilized rents with stabilized operating expenses

• Average of 15 25% annual tenant turnover

• 25% cash to first mortgage at current rates

OCR Trends

Source: Altus InSite Survey, Office AA, Tier 1 Reg. Shop. Centre, Single Tenant Industrial

and Suburban Multifamily; Vancouver, Edmonton, Calgary, Toronto, Ottawa

Montreal, Quebec and Halifax

Canada - OCRs and IRRs

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4

IRR

OCR




From a level of 6.2% in Q1 2008, the mean, eight city, four category OCR started to gradually climb to

6.4% in Q2 and Q3 2008 and then to 6.9% in Q4 2008 and 7.2% in Q1, Q2 and Q3 2009. In Q4 2009, the

average OCR eased down to 7.2%. This time trend has been fairly similar for the four key property types

although the apartment type has fallen by one more percentage point in both Q3 and Q4 2009. Average

IRRs have also followed the same pattern and went down from 8.4% in Q3 2009 to 8.3% in Q4 2009.

The gap between rates of return, from the West Coast to the East Coast is deepening this quarter, with an

average margin in OCRs of 125 basis points (bps) between Vancouver and Halifax. However, the gap is

tightening for IRRs, with an average 88 bps between the two cities, down from 110 bps in Q1. A wider

margin would exist if one were to compare a prime major city location to a marginal small town location.

Relative to Q1, on a city by city basis, rates of return have remained fairly stable with an average decline

(OCRs and IRRs) of about 1/8 of a percentage point. Stronger decreases of about 25 bps in OCRs were

registered in Montreal, Quebec City and Halifax, while similar 25 bps IRR decreases were found in

Edmonton, Quebec City and Halifax.

When comparing property categories, there is a spread of 150 bps amongst OCRs, with Multi Residential

averaging 6.4% as compared to 6.8% for Tier 1 Regional Malls, 7.2% for prime office towers and 7.9% for

single tenant industrial properties. In the Office category, average OCRs range from a low of 7.2% for

Downtown Class “AA” offices in all cities to a high of 8.4% for Suburban Class “B” offices (Q1 2009).

These are averages and the range of answers extends above or below these limits. For retail properties

this quarter, the lowest average is for Tier I Regional Malls, at 6.8%, and the highest average, at 8.04%, is

for Community Malls. For investment industrial buildings, the average OCR of 7.9% for single tenant

buildings compares to 8.2% for multi tenant buildings.




While property type and location are the most important features influencing OCRs, other factors such as

investor type and availability of financing, can also be important. As a rule, smaller investors with lower

credit ratings require higher rates of return but they may still pay more for some smaller properties that

larger investors would not even touch. Restrictive financing is also expected to raise OCRs, but the

relationship is not always direct as there may be ways to remedy the problem, at least to some extent:

interest rate pre payments, balances of sale, higher rent and value forecasts due to inflation. Finally, the

age and condition of a property, as well as the quality, quantity and durability of rental income influence

OCRs.

In conclusion, while market trends are a good start to understanding OCR patterns, other considerations

will come into play when selecting an appropriate OCR for a particular appraisal assignment.




IRR Trends

IRR trends tend to follow those for OCRs. The Q4 2009 Altus InSite ITS shows IRRs stabilizing at 8.3%,

some 14 bps lower than in Q1 2009. The mean, eight city, four category IRR rose from 7.4% in Q3 2007 to

7.6% in Q3 2008, 8.1% in Q4 2008 and 8.4% in Q1, Q2 and Q3 2009.

OCRs and IRRs have shown stability since Q1 2009. Governments are still maintaining record low interest

rates in order to combat the recession and encourage some recovery. These rates are expected to stay low

until the middle of 2010, when governments may have to ease back on economic stimuli. This may bring

an eventual increase in all rates of return including perhaps OCRs and IRRs unless stronger rent and

value gain perspectives interact to offset this upward pressure.


Inves tment Marke t Overv iew


Retail Property Investment Market Overview

Tier I Regional Malls

Investor preference for Tier I Regional Malls has remained stable over the past 12 months, consistently

ranking within the top two most preferred asset classes out of 17 on the Altus InSite ‘Property Type

Barometer’. Investor demand also remains strong, with a reported 6.5 buyers for every seller, up from a

five year low of 1.6 buyers for every seller of a Tier I Regional Mall 12 months ago.

The Q4 2009 Altus InSite Investment Trends Survey (ITS) results suggest that yield requirements for Tier I

Regional Malls have remained stable over the previous three quarters, with mean Capitalization Rates

(CRs) and Internal Rates of Return (IRRs) now averaging 6.78% and 8.00% respectively, reflecting slight

decreases of 5 and 10 basis points (bps) respectively over the previous quarter. The reader will note that

current yield requirements remain approximately 100 bps higher than those reported in Q2 2008.


Inves tment Marke t Overv iew


The stabilization of investor attitudes for Tier I Regional Malls is also reflected in a continued

improvement of investor outlook for the coming quarter wherein 33% of survey respondents anticipate

values to increase for this asset class and 54% anticipate no change in values through early 2010.

CB Richard Ellis Valuation 145-151, rue de Courcelles 75017 Paris Tél : 33 (0)1 53 64 00 00 Fax : 33 (0)1 53 64 34 34

197/30/NantesV2.doc SAS CB Richard Ellis Valuation. 145-151, rue de Courcelles BP 80450-75824 Paris CEDEX17 / Code APE 6831Z

RCS Paris/Code SIRET / SIREN : 384 853 701 / SIRET : 384 853 701 00025/ Société créée le 26/03/1992/

Tél :01 53 64 00 00 / Fax : 01 53 64 34 34 : Site Web www.cbre.fr

March 22, 2010

Jerusalem Economy Ltd. (“JEC”) Represented by M. Didier Unglik

L'ETOILE PROPERTIES 109, Rue du Faubourg

Saint Honore 75008 Paris France

Dear Sir,

Re: Appraisal report for 92 route de Gachet 44000 N antes (the: "Asset")

Reference is made to the appraisal reports prepared by me in connection with the Asset as at 31.12.2009 (the: “Reports ”).

In addition to any analysis, assumptions, opinions and conclusions set forth in the Reports, I hereby represent and confirm as follows:

1. The appraiser name, education and experience in performing appraisals in similar or higher magnitudes.

� Yann Collandre

- 2 -


RCS Paris/Code SIRET / SIREN : 384 853 701 / SIRET : 384 853 701 00025/ Société créée le 26/03/1992/ Tél :01 53 64 00 00 / Fax : 01 53 64 34 34 : Site Web www.cbre.fr

� Alexandre Petitpré

- 3 -


RCS Paris/Code SIRET / SIREN : 384 853 701 / SIRET : 384 853 701 00025/ Société créée le 26/03/1992/ Tél :01 53 64 00 00 / Fax : 01 53 64 34 34 : Site Web www.cbre.fr

� Christian Robinet

2. I was contacted and requested by you, on behalf of JEC's, to prepare the Reports intended to use for accounting purposes.

3. From time to time, I provide real-estate appraisals and evaluations to other companies within the Fishman group. However, I am independent of Mr. Eliezer Fishman and/or any company controlled by him.

4. I hereby represent that I do not have any personal interest in the contemplated asset and/or in its owners, and the appraisal thereof hereunder has been prepared by me in accordance with my best and professional knowledge, skills and consideration.

5. I hereby agree that my Report, together with this letter, be included in JEC's publicly published financial statements as at 31.12.2009, which shall be published in March 2010.

The abovementioned in this letter shall constitute for all purposes as an integral part of my Report.

Sincerely,

Mr. Christian Robinet, MRICS Director of International Department

92 route de Gachet 44000 Nantes D200901029 YCOL/ALPE/CROB

ADDRESS:92 route de Gachet

44000 Nantes FRANCE

Publishing date : 31/12/2009

The property is registered in the

town’s cadastral plans in section VM 8, 18, 19, 20 for a total of

76,102 sq. m.

INSPECTED ON: The 16th May 2008 by Clemence Kibangou

MARKET

VALUE:

as at 31/12/2009

This valuation report is written in reference to the original valuation report as at as at May 2008, for financing purposes. In accordance with your instructions confirmed on 10th, November 2009 by e-mail, this report is an update of the previous values as at 30/06/2009 and of the previous valuation report that we made to determine the value of the property in accordance with the IAS/IFRS Standards and with the regulations of the Israel Securities Authority as at 31/12/2008. This report is provided for explanation purposes only and must be read in conjunction with and must not be relied upon out of context from the portfolio valuation report and analysis.

LOCATION:

The property is located at 92 route de Gachet, 44000 Nantes – France. Nantes is a commune situated in the French Department of Loire Atlantique. The asset is situated in the North of the city, within the Zone “ZAC de la Chantrerie”, on the road of Gachet. The vicinity of the property is composed mainly of offices, learning centers and residential zones. The zone is characterized by the presence of two famous schools: Ecole des Mines and Ecole du Design.

Train: Nantes Train station. Road Access: The “route de Gachet” allows direct access to the A11 highway (500m far from the property).Bus : Lines 72 and 76 Airport: Nantes-Atlantique Airport is located some 20 km South-West of Nantes.

SummaryIn summary, the property benefits from its proximity of the city of Nantes and the A11.


DESCRIPTION:GeneralThe site comprises a mix of 12 buildings of different uses (clean room, light industrial, warehouse, office, and technical premises) regrouped in 4 blocs, yielding a total of 15,244 sq.m. It also encompasses some 500 parking spaces. The buildings are erected on a plot of land yielding a total of some 76,102 sq.m, of which a square of 10,000 sq. m is available for residual construction (within the framework of this report, and regarding the facts that 1. This property is valued in its current state of use with a tenant staying for the next 11 years and 2. this parcel of land is not easily convertible and accessible, we have reflected this upside potential directly in the yield).

Building Use Net lettable area

A - G1 - G2 - I Office 4 105 sq.m

B - G1 - G2 - T Clean room 3 636 sq.m

S - G1 - G2 Ligth Industrial 1 669 sq.m

P - X - Y - Z Warehouse 694 sq.m

B - Penthouse - T - J Technical Premises 5 140 sq.m

Total 15 244 sq.m

The net lettable areas have been provided by Etoile properties which is in accordance with area stated in the lease and in the tenancy schedule. We have not been provided with a land surveyor report.

ConstructionThe property comprises different buildings constructed at different period of time. While most of the buildings have been built in the 80s, an extension has been added in 1994. Out of the 15,244 sq m, 3,636 are comprised of clean rooms, which are very specific to the activity of MHS (former tenant) and are difficult to re-let.

External Areas Parking units are located on the dedicated exterior spaces. The site is enclosed by a wire mesh. The fence seems to be in a correct state. The roads are covered with concrete and bituminous mix.

Technical and Physical Considerations:

Fixtures and Fittings

FlooringOffice: Carpet, Warehouse: Cement, Clean Room: Tiles.

Walls and partitions Office: Painted walls, Warehouse: Breeze block, Clean Room: Painted walls.

CeilingOffice: Suspended ceiling with halogen strip lights, Warehouse: Concrete ceiling, Clean Room: Suspended ceiling with halogen strip lights.

Services

Access The site can be accessed through two metallic gates. Heating / Air conditioning No A/C, Electric heating in the offices. Security system Badge access. Fire security 2 sprinkler tanks, Alarm manually operating, Smoke hatches manually operating, Extinguishers.


Conclusions

The site is characterized by the heterogeneity of the buildings. Indeed buildings were built in different periods (the 80’s for most of the buildings and the 90’s for the extension).

ENVIRONMENTAL CONSIDERATIONS

Asbestos Studies have been conducted by Cabinet “Le Dreff” in: 1. December 2005 “asbestos has been detected in some parts of the property”,2. June 2006 - post Capex / works realized on the buildings - “asbestos has been detected in some parts of the property”, 3. March 2008, a study of “Floxal” & “Portakabin” parts of the building did not reveal traces of asbestos. Thus, the products containing asbestos will have to be monitored. However, there is no legal obligation to remove them except in the event of deterioration. On the other hand, if rehabilitation work is done, a new asbestos analysis will have to be carried out in the zone concerned and products containing asbestos will have to be removed at that time.

Legionnella The title of deeds (June 2008) states that the buyer has been provided with a report from December 2007 produced by IDAC that recommend the conduct of analysis on some equipment. Thus, we recommend the owner to conduct those studies in order to comply with regulation DGS/VS4/98.771 (31/12/1998) related to surveillance and prevention of Legionnella. Moreover, the tenant (MHS Electronics) is contractually the sole responsible of the respect of the monitoring Legionnella and should conduct annual reviews on the equipment indentified by the report mentioned above.

Termites The site is part of a zone that may be contaminated by termites. However, a study conducted by Cabinet “Le Dreff” in March 2008 did not reveal any trace of termites in the buildings.

PCB The vendor declares and warranty that there is no equipment containing PCB (title of deeds - 05/06/2008). We have not been provided with any report regarding PCB.


Soil and ground conditions

Articles L. 514-20 and L. 512-18 of the French Code of Environment state that the vendor has the obligation to inform the buyer of any environmentally linked obligation linked to the site being sold. Thus, the vendor has mentioned the following points (detail in the title of deeds): - the installation is producing “waste”, as defined in L. 541-2 of the French Code of Environment, - that from this installation, no toxic waste has been transported to another place, which would trigger the responsibility of either the buyer or the seller, and ask it to engage into costs : cleaning, decontamination, litigation …, - the installation has been exploited in accordance to prevailing laws, - all regulatory requirements have been fulfilled, - the installation has not been subject to any litigation, - that the property benefits from an authorization given in 2000 that allows MHS to exercise its activity on the site, - that the activity conducted has not been subject to any form of sanction, - that a diagnostic of soil pollution has been conducted by Bureau Veritas in November 2005 and that a copy has been included in the appendix of the title of deeds (CBRE Valuation did not get access to that document), and thus the buyer is knowing the risks associated with the purchase of the property, - the vendor warranties that since November 2005, it did not get any update regarding the soil pollution.

In the absence of any updated information to the contrary, we have assumed that the property is free from any pollution which may affect the value. Moreover, as a Sale & Leaseback transaction, the seller / current tenant has taken the building knowing the environmental considerations and thus there is no recourse possible from the current tenant to the owner.


TENANCY OVERVIEW:

UseParkings (units)

Area (sq.m) (net lettable

area) Lease start

Next Break Option

Lease end Basis Rent

excluding taxes and charges

Insee index

reference

Invoiced rent excluding taxes

and charges

Current Deposit

Non recoverable

charges

Non recoverable charges per

annum

Office 4 105 sq.m

Clean room 3 636 sq.m

Ligth Industrial 1 669 sq.m

Warehouse 694 sq.m

Technical Premises 5 140 sq.m

- -

30/06/2010(default of the tenant)

- - 1 591 194 - - -

500 U 15 244 sq.m

Comments:

Assume to be a fully vacant property as at 30/06/2010 (default of the current tenant : MHS Electronics)


LEGAL SITUATION

TenurePleine Propriété – equivalent to the freehold interest, subject to all leasehold interests. The property is owned by Kalkalit Blade SARL, situated at the 109, rue du Faubourg Saint Honoré, registered under the SIREN n° 500 667 803 and the Paris “Registre du Commerce et des Sociétés”. According to the title of deed, there is evidence of: - 29-year root of title (07/08/1979) for previously referenced cadastral sections AD 220 - 225 - 228, - 27-year root of title (17/11/1981) for previously referenced cadastral sections AD 226 - 229, - 27-year root of title (27/01/1982) for previously referenced cadastral sections AD 189 - 191 - 192. Thus, there is still a three year period before the 30-year root of title for each cadastral section is clearly purged.

Private EasementThe property is subject to several private easement rights, described in details in the title of deeds, and notably to the obligation to give access to Air Liquide to the “Floxal” building and to allow permanent access to the delivery post located on the parking.

Town PlanningWe have obtained urban planning information (“P.L.U.”) from the town of Nantes, approved from the local authorities 9 March 2007. The site is located in zone UPch 1 & 2.

Building specificationsRegarding zone UPch (Nantes), the main rules are the following: . Dedicated to the construction of residential and commercial usage, . Not to be used as industrial or agricultural.

Administrative AuthorizationsIn the title of deeds dated 21 March 2008, the vendor has given all the building authorizations for the buildings mentioned in the contract. However, it is specified that no “Declaration d’Achèvement des Travaux” (Notice of Completion Work) and no “Certificat de Conformité” (Certificate of Compliance) have been requested to / obtained from the local authorities. Those documents will need to be requested by the vendor in order to comply with regulations.For the avoidance of doubt, we have not undertaken detailed investigations on planning matters affecting the property. Where there is an absence of information we have assumed that the property is fully authorised in terms of planning and not in contravention of any building permit or legislation regarding environmental issues. If the building authorisations are not in compliance with French Law then this might reduce the value now reported, and accordingly we reserve the right to alter the valuation.


SWOT ANALYSIS

Property strengths: Property Weaknesses:

1. Freehold property,

2. Good road access,

3. Close to Nantes,

4. Many parking places.

1. Fully vacant property,

2. Atypical asset (hard to re-let),

3. Heterogeneous buildings (Capex required at tenant’s departure to adapt the buildings for a future tenant),

4. Future road to be constructed by the city of Nantes that may need one part of the land to be sold to SEM Nantes Amenagement,

5. Weak public transportation network,

6. No inter company restaurant,

7. No A/C.

Property Opportunities: Property Threats:

1. Low vacancy rate in Nantes and its surroundings,

2. Residual land.

1. The property will be hard to re-let considering its present state of use,

2. The increase of the yield considering this type of assets.


MARKET COMMENTARY:Nantes as of September 2009 compared to other regional CRE office markets

Nantes as of September 2009 compared to other regional CRE light industrial and industrial markets

March 23rd, 2010

Mondon Investments Ltd. Dear Sir, Re: Appraisal report for the project Festival City, Ludhiana, Punjab India (the "Asset") Reference is made to the appraisal report prepared by me in connection with the Asset as at 30.12.2009 and the addendum to the abovementioned appraisal report (together: Reports

In addition to any analysis, assumptions, opinions and conclusions set forth in the Reports, I hereby represent and confirm as follows:

1. Appraisers Name: Sachin Garg (Details attached as Annexure A)

2. I was contacted and requested by Mr. RS Agarwal, on behalf of Aerens Entertainment Zone Pvt.

Ltd., to prepare the Reports intended to use for accounting purposes.

3. I hereby represent that I do not have any personal interest in the contemplated asset and/or in its

owners, and the appraisal thereof hereunder has been prepared by me in accordance with my best and professional knowledge, skills and consideration.

4. I hereby agree that the Reports, together with this letter, be included in Mondon Investment Ltd. publicly published financial statements for 31.12.2009, which shall be published in March 2010.

The abovementioned in this letter shall constitute for all purposes as an integral part of the Reports.

Sincerely,

Name : Sachin Garg

Qualifications: Master In Valuation (Specialized in Real Estate) B.Tech, Information Technology, GGSIPU, New Delhi

Experience:

Arcelor Mittal

Valuation cum Feasibility of residential township, group housing blocks, hotels and commercial / retail malls located in 8 different cities.

DLF Limited Valuation of retail mall project spread over 35 acres in Gurgaon

DLF Limited Valuation of 40 acre of residential land parcel in Gurgaon

Unitech Limited Valuation of IT Parks / IT SEZ located in NCR

Unitech Limited Valuation of hotels located in NCR and Chandigarh

Unitech Limited Valuation of proposed retail mall in Dehradun, UP

Ernst & Young Valuation of land parcel proposed for residential township and SEZ

Emaar MGF Valuation of proposed commercial, IT park and retail mall.

HSBC Valuation of commercial establishments and residential projects

Barclays Bank Valuation of commercial establishments

Ambience Projects & Infrastructure Valuation of real estate portfolio, varying from retail mall, commercial land parcel hotels, to residential townships.

Triveni Valuation of real estate portfolio for IPO.

Valuation of residential project

Valuation of hotels and residential project.

Knight Frank India Valuation Services 1

Re-Valuation of rights and interests of Aerens Entertainment Zone Pvt. Ltd. (AEZL) in a project known as

Festival City, Located in Ludhiana, Punjab, India

December 2009

Undertaken for:

Aerens Entertainment Zone Pvt. Ltd.

Private and Confidential

Knight Frank India Pvt. Pvt. Ltd.

201-202, Tower-

Signature Towers,

South City-1

Gurgaon 122001

This report has been prepared at the instance of Aerens Entertainment Zone Pvt. Ltd., and is not for

public distribution. Neither the whole nor any part of this report nor any reference thereto may be

included in any published document, circular or statement nor published in any way without Knight

.


Table of Contents

Abbreviations ............................................................................. 3

1 Preamble ............................................................................. 4

2 Currency & Measurements ........................................................ 4

3 Date of Inspection .................................................................. 4

4 Date of Valuation ................................................................... 4

5 Knight Frank Team ................................................................. 4

6 Legal Characteristics ............................................................... 5

7 Environmental Characteristics .................................................... 5

8 Property Description ............................................................... 5

9 Photographs of the Site ............................................................ 6

10 Market Commentary ............................................................. 7

11 Map of Ludhiana .................................................................. 8

12 Assumptions ....................................................................... 9

13 Methodology .................................................................... 11

14 Valuation ........................................................................ 13

Conclusion .............................................................................. 20

Disclaimer .............................................................................. 21


Abbreviations

Financials related terms

FAR Floor Area Ratio

FSI Floor Space Index

INR Indian National Rupee

mn million

Numbers

Rs./sq.ft. Rupees per Square Feet

sq.ft. Square Feet

sq.km. Square Kilometer

sq.m. Square Meter

Measurements

1 acre = 43,560 sq.ft.

1 mn = 10 Lakhs

1 sq.km. = 100 Ha

1 sq.m. = 10.76 sq.ft.

1 hectare = 2.47 Acre


Re-Valuation of rights and interests of Aerens Entertainment Zone Pvt. Ltd. (AEZL) in a project known as

Festival City, Located in Ludhiana, Punjab, India

1 Preamble

In accordance with the instructions received from Aerens Entertainment Zone Pvt. Ltd, we have

been requested to provide an opinion on the value of the project, known as Festival City,

located in Ludhiana, Punjab. The value estimate is based upon on discounting the future cash

flows for their present value. Discounted cash flow method, under income approach of

valuation is employed to estimate the present value of the project.

The necessary information, estimates and opinions that have been expressed in this report

have been obtained from the sources that we consider reliable and believe to be true and

correct. The report is based on these particulars and inspection carried out by us.

2 Currency & Measurements

The Currency used in the report for the valuation of the subject property is in Indian Rupees

(INR). This is the currency normally used for property transactions in India. All measurements

are in acres and sq.ft. (1 acre = 4840.00 sq.yd. = 43560 sq.ft) as this is the prevailing market

practice.

3 Date of Inspection

The subject site was inspected on 30h December

4 Date of Valuation

The date of valuation is 31st December

5 Knight Frank Team

This report has been prepared by Gulam Zia, National Director Research & Advisory

Services; Saurabh Mehrotra, Head Consultancy & Valuation (North); Sachin Garg, Senior

Manager Valuation and Shubh Chouksey, Assistant Manager Valuation.


6 Legal Characteristics

Though we ourselves have gone through the legal documents provided by the client, we still

took an opinion of a practicing lawyer on the memorandum of understanding, power of attorney

in the project as well as liability towards AVM Land Developers (P) Pvt. Ltd. We have been

made to understand, that two companies have been merged and there are no liability arising

towards AVM.

7 Environmental Characteristics

For the purpose of this report we have assumed that the property is not subject to

environmental contamination. However, as we are not experts in this field we recommend that

you engage an appropriate consultant to confirm our assumptions. If the subsequent

investigation identifies any environmental contamination on the site our report may require

revision.

8 Property Description

Location :

The project is located on Grant Trunk road, also known as NH-1. This

road leads to Amritsar, passing through Jalandhar. The road is of

historical prominence as it connected western India with Eastern India. It

was named after the king Sher Shah Suri;. It is major corridor for

passenger as well freight. On either side of the road lot of commercial

establishments are under construction.

Accessibility :

The property abuts, Grant Trunk road through which it is accessible. An

expansion plan of GT road is underway, after which travelling time from

city centre and neighbouring villages is expected to reduce, increasing

the market penetration of the project.

Visibility :

Property has good frontage and is visible from the main high way. Due,

to this it is expected to attract not only city dwellers but also, travellers

using the high way.

Shape : The property is an irregular parcel of land. It is contiguous and physically

demarcated.

Current Status : The property is designated for development of a retail mall cum

multiplex.


9 Photographs of the Site


10 Market Commentary

Ludhiana is the largest city in the state of Punjab both in terms of area and population.

It has largest urban population in Punjab. The city is an important centre of commerce

and education. Ludhiana

of the Indian hosiery industry.

It boasts of the largest number of small scale industries in the country and is

commercial capital if the state. The economy of the city is primarily driven by the textile

and woollen industry, auto parts and bi- cycles manufacturing, sewing machines, cast

iron and other foundry material. Over the past couple of years, sectors such as real

estate, financial and banking services, public services and tourism have increased

their share in the pie reflecting the overall economic growth of the city. The per capita

income of the city is Rs. 63,000 whereas per capita expenditure of the city is Rs.

44,000.

The 2001 census of India reported the population of Ludhiana to be approximately 14

lakhs person, giving it a metropolitan city status. In 1991, the city crossed 1 million,

and is expected cross 19 lakh by the end of 2009 at a CAGR of 4.5% approx.

Increased employment opportunity un urban area and, better social and physical

infrastructure as compared to other cities in the state are among the primary factors

attracting people form rural areas into the city.

The HIG, MIG and upper MIG in Ludhiana constitute 36% of the urban households

which demonstrates the highest propensity to spend on consumer goods followed by

Lower MIG (19%) with moderate propensity to spend on consumer goods.

The market dynamics have changed drastically in past 8-12 months whereby all

sectors across real estate segment have taken a hit, with Retail industry being among

the worst affected globally. The revenues from leased out spaces have fallen by more

than 50% since their peak, revoking re-negotiations of committed leases with shift

towards profit sharing lease model.


11 Map of Ludhiana


12 Assumptions

Methodology / Model

Fair value model is employed for arriving at the value of the property, as considerable area

has already been committed to lease to different tenants / retailers.

Data Source

We assume that information provided by the company or its representative for this

valuation is true and accurate. It includes details of measurement of land built up area,

development control regulations, lease rentals, sale price, memorandum of agreement,

power of attorney and development mix proposed. The area signed up with tenants /

retailers is considered at the same rate, whereas balance area, which is yet to be leased, is

considered at current market rate, arrived at from comparable properties.

Legal Aspects

We have taken an opinion of the legal experts on the documents submitted by the

company for establishing the rights and interests of AEZL in the project and liability of

AEZL toward AVM. The opinion of legal expert is based upon on the Memorandum of

Agreement; Power of Attorney and General Power of Attorney between AEZL and AVM.

The value so derived is estimated on the basis of the legal opinion.

Development Permission

All projects will be developed according to development control regulations of respective

authority. It is assumed that company is eligible to obtain development permission for all

properties from respective development authorities. We have neither gone through the

statutory norms and development rights of any authority nor inspected any such permission

like permission for land use, mix development permission, construction permission, etc.

Site Inspection

We have physically inspected the site and have surveyed the vicinity. We have done site

analysis related to conditions and services for the purpose for which property is developed

or intended to be developed. We have not done any soil investigation of land. Also, we

have not measured the land physically.


Environmental Aspect

For the purpose of this valuation assignment we assumed that the property is not subject to

any environmental contamination. However, as we are not experts in this field we

recommend that an appropriate consultant may be engaged to confirm our assumptions. If

the subsequent investigation identifies any environmental contamination on the site our

report may require revision.

Liability

Unless advised by the company or representative of the company, no allowance is made

for any expense of realization or for taxation, which may arise in the event of a disposal.

The property is considered as free and clear of all mortgages or other charges that may be

secured thereon. The liability on AEZL is as follows:

AEZL has to develop and complete the retail mall cum multi-plex.

AEZL has to incur all the cost for approvals, development etc.

Market Study

This report is not based on a comprehensive market research for all possible markets. We

have assumed that demand; supply, pricing, fiscal and non-fiscal policies of Government,

taste of public will remain same as on date of valuation over the period of time of

development. All of these factors are in strong relation with the value of property. Any

radical change in any of the factor may affect value at large.


13 Methodology

There are three approaches/methods used in real estate property valuation. The purpose of

valuation demands valuation methodology for which valuation is meant.

Market approach sales comparison method

Income approach rental method - capitalization method

Cost approach land & building method

Market Approach

This method is applicable to all properties, which are capable of being bought and sold in the

market. A comparison is made for the purpose of valuation with similar properties that have

recently been sold in the market and has thus acquired a market value. The sales comparison

approach is the preferred approach when sales data are available.

Sales prices of comparable properties are usually considered the best evidence of market

value. Sale comparison approach models the behaviour of the market by comparing the

properties being appraised with similar properties that have recently sold (comparable

properties) or for which offers to purchase have been made. Comparable properties are

selected for similarity to the subject property by way of attributes, such things as size, shape,

gentry etc. Their sale prices are then adjusted for their difference from the subject. Finally a

market value for the subject is estimated from the adjusted sales price of the comparable

properties.

Income Approach

Income approach valuation is applicable to properties, which are in the nature of investment. All

investments are intended to generate income or so to say profit. The valuation consists in

ascertaining the present worth of future benefits. The income approach should begin with

analysis of the present income and series of projected income in future. The primary factors

that decide the yield of land and building by way of rental are the location, amenities provided in

the building, occupational use, age of the building and the type of neighbourhood.


Cost Approach

While marketable properties are valued under the sales comparison method and investment

properties with the income approach, there are properties in land and building, which are meant

neither for investment nor for sale in the open market because of their specialized nature. The

valuation of such property is done by method of costing, which involves the following steps.

Value of land;

Estimate the current construction cost of improvement including building and

development and subtract the accrued depreciation

Summation of land value and depreciated replacement cost of building is market value

of property by cost approach.


14 Valuation

We have been approached by Aerens Entertainment Zone Pvt. Ltd. to provide an opinion on

the rights and interests of AEZL in the project, known as Festival City, situated in Ludhiana.

Discounted cash flow method under income approach of valuation is employed to arrive at the

value.

The discounted cash flow valuation (DCF) procedure consists of three steps:

Ascertaining the timeline and cost of development, of the project.

Ascertaining the timeline for sale / lease along with price of the developed product.

Discounting the future cash flows at an appropriate rate, to arrive at net present value

The property under consideration is a retail mall cum multiplex, and is expected to be operation

. Development mix is summarized in the table below:-

Sr.No. Particulars sq m sq ft acres

1 Area of Land 45,774 492,712 11.31

2 FAR 3.00

3 Built-up Area

Retail 1478135

Basement (free from FAR) 338719

Total Area 1816853

5 Leaseable Area (As provided by client) 1,680,347

Sale 504,990

Lease - committed 344,019

Lease - uncommitted 831,338

6 No. Car Parking Slots (As provided by client) 1,000

Area Statement

Noticeable change, since our previous valuation, can be observed in lease area and in funds

requirement. Uncommitted lease area stand at 8,31,338 sq.ft, with close to 45% of area

dedicated for large format hyper brands, demanding good quantum of space and balance area

designated for vanilla brands. Completion timeline of the project as per the client is projected to

be by September 2011. This is accompanied with increase in funds requirement for completion

of the mall.

Considering the long gestation period of the project and market outlook of retail in the city, the

monthly lease rental for uncommitted hyper market portion is assumed at Rs. 34 psf and for

uncommitted vanilla space is assumed at Rs. 68 psf. The weighted average for the


uncommitted area is arrived to be at Rs. 53 psf. Already committed area is assumed, as per the

company, at Rs. 40 psf. Vacancy of 10 % is considered out of the total space which is yet to be

marketed. This vacancy is assumed to take into account the turnaround period for the new

tenant, after the space is vacated.

Assumption:

The main assumptions considered are tabulate below:

1 Cost of Construction (Rs. per sq.ft.) [COC]

Retail 2,550

2 Other Costs

Contingencies (% of Cost of Construction [COC]) 6.00%

Land Development Cost (Cutting, filling, dressing, transporting excess of earth, backfilling &

preparing the surface) (Rs per sq.ft.)

60

Landscaping - horticulture, roads & pavement, sewage system and cabling (Rs per sq.ft.) 30

Consultants (Architect, Landscape Architect, Civil and Services Provider, Real Estate

Consultant, Lawyers, Publicity) Fee (% of Construction Cost)

5.00%

3 Monthly Rental

Retail 53

Car Parking (per slot per month) 1,000

4 Brokerage Charges @ % of total revenue 1 months rent

5 Escalation in Cost of Construction Every Year 5.00%

6 Escalation in Lease Rentals after every 3 years 10.00%

7 Terminal Cap rate 11.00%

8 Discount Rate 21.00%

Assumptions

Discount Rate is a function of risk perceived for the project. Risks perceived includes all the

risks associated during the course of the project from statutory risks, approval risks,

development risks, and marketing risks to risks from completion and is market driven. Discount

rate for real estate projects varies and depends upon the stage of the project as well as market

conditions. The risks associated for green field project are very high, thus discount rate is high,

whereas risk associated with an operational project is less, due to risk aversions, and thus

discount rate is less. Though discount rate market driven and varies from time to time, discount

of 30% is considered for green field project and 14 % for operational projects.


Since, the project under consideration is 70% complete and market condition is not conducive

for real estate due to slowdown, a discount of 21% considered. This increase of 1 % is on

account of delay in construction of the project.

Cash Flows:

Cash flows are projected for a period of 10 years, where expenses as well as revenue

generated are taken into consideration. Since, rights and interests of AEZL are being valued,

the liability on AEZL towards AVM on the project has to be given due consideration. The liability

is in form of paying 75 Cr, development and construction of the project and incurring all the

expenses for approvals.

As on 31ST

December , the project was 70% complete; AEZL had liability of 5.00 Cr

towards approvals. This has been taken into consideration under expenses head.

The revenue is expected to be generated once the mall is complete and operational. The

tentative date of operation . Receivables to be received from

the space already sold have also been taken into account. The rent realization of the space

already signed up has been assumed at the same rate at which it has been signed. The

average monthly rent is Rs. 40 psf; whereas for the space which has not been signed the

rentals have been assumed at Rs. 53 psf per month.

As per the agreement between MONDON INVESTMENTS Pvt. Ltd. and AERENS

Entertainment Zone limited and promoters dated 25th

it is agreed between the

parties that revenue from other sources such as: Profit from CAM , Parking , Advertisements

including Banners and Holdings, Promotions and Launches including Kiosks and exhibitions ;to

be considered at Rs 2 Crore per month (Refer Annexure:1 as provided by the client). The same

is being considered for the purpose of this valuation. However, we perceive revenues from

other sources also, to witness a fall.

The total revenue generated from the project is analyzed for a period of ten years after, which it

is capitalized. Present value of revenues at the end of each year, after deduction for necessary

expenses, is summed to arrive at the present value.


Retail - Festival City - Ludhiana 0 1 2 3 4

Construction Phasing (in %) 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13

Retail 15% 15% - - -

Land Dev elopment - - - - -

Landscaping - 100% - - -

Cost

[COC] Cost of Construction (in

Rs)

Retail 694,946,436 729,693,758 - - -

Total 694,946,436 729,693,758 - - -

[OC] Other Costs (in Rs)

Liability to AVM -


Contingencies 41,696,786 43,781,625 - - -

Landscaping - 14,781,345 - - -

Consultants Fee 34,747,322 36,484,688 - - -

Gov t. Approv als (completion, NOC

etc.)

50,000,000

Total 76,444,108 145,047,659 - - -

TOTAL COST (771,390,544) (874,741,417) - - -


Marketing Schedule Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Marketing Phasing (in %) 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19

Retail (Sale Proceeds) - - - - - - - - - - -

Retail (Lease - Committed) 100% - - - - - - - - - -

Retail (Lease - Uncommitted) 90% - - - - - - - - - -

Revenue `

Annual Rental Values (Rs per

sq.ft.)

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Retail (Sale Proceeds)

Retail (Lease - Committed) - - 483 483 483 531 531 531 584 584 584

Retail (Lease - Uncommitted) - - 636 636 636 700 700 700 770 770 770

(in Rs)

Profit from Mall Management - 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000

Retail (Sale Proceeds) - -

Retail (Lease - Committed) - - 166,078,612 166,078,612 166,078,612 182,686,474 182,686,474 182,686,474 200,955,121 200,955,121 200,955,121

Retail (Lease - Uncommitted) - - 475,857,796 475,857,796 475,857,796 523,443,575 523,443,575 523,443,575 575,787,933 575,787,933 575,787,933

Total - - 881,936,408 881,936,408 881,936,408 946,130,049 946,130,049 946,130,049 1,016,743,054 1,016,743,054 1,016,743,054

Brokerage - - - -

Net Revenue - - 881,936,408 881,936,408 881,936,408 946,130,049 946,130,049 946,130,049 1,016,743,054 1,016,743,054 1,016,743,054

Reversion value 9,949,248,719

Net Cash Flow (in Rs) (771,390,544) (874,741,417) 881,936,408 881,936,408 881,936,408 946,130,049 946,130,049 946,130,049 1,016,743,054 1,016,743,054 10,965,991,772

Discount Rate 21.00%

NPV of project considering 2,966,870,836

Value of Project (in millions) 2,967


Retail - Festival City - Ludhiana 0 1 2 3 4 5 6 7 8 9 10 11

Construction Phasing (in %) 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20

Retail 0% 0% - - - - - - - - - -

Land Dev elopment - - - - - - - - - - - -

Landscaping 0% 0% - - - - - - - - - -

Cost

[COC] Cost of Construction (in Rs)

Retail - - - - - - - - - - - -

Total - - - - - - - - - - - -


Liability to AVM -

Land Dev elopment - - - - - - - - - - - -

Contingencies - - - - - - - - - - - -

Landscaping - - - - - - - - - - - -

Consultants Fee - - - - - - - - - - - -

Gov t. Approv als (completion, NOC etc.) -

Total - - - - - - - - - - - -

TOTAL COST - - - - - - - - - - - -

Hypothetical Scenario:

Valuation of the property, on hypothetical scenario, that it was completed on date of valuation, with no cash outflow towards development or construction of the

property, , when it is due to be operational.


Marketing Schedule Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Marketing Phasing (in %) 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20

Retail (Sale Proceeds) - - - - - - - - - - - -

Retail (Lease - Committed) 100% - - - - - - - - - - -

Retail (Lease - Uncommitted) 90% - - - - - - - - - - -

Revenue `

Annual Rental Values (Rs per sq.ft.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11


Retail (Lease - Committed) 480 480 480 552 552 552 635 635 635 730 730 730

Retail (Lease - Uncommitted) 672 672 672 773 773 773 889 889 889 1,022 1,022 1,022

(in Rs)

Profit from Mall Management 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000 240,000,000


Retail (Lease - Committed) 61,995,720 247,982,880 247,982,880 285,180,312 285,180,312 285,180,312 327,957,359 327,957,359 327,957,359 377,150,963 377,150,963 377,150,963

Retail (Lease - Uncommitted) 99,599,371 398,397,485 398,397,485 458,157,108 458,157,108 458,157,108 526,880,674 526,880,674 526,880,674 605,912,775 605,912,775 605,912,775

Total 401,595,091 886,380,365 886,380,365 983,337,420 983,337,420 983,337,420 1,094,838,032 1,094,838,032 1,094,838,032 1,223,063,737 1,223,063,737 1,223,063,737

Brokerage 88,532,774 - - -

Net Revenue 401,595,091 797,847,590 886,380,365 983,337,420 983,337,420 983,337,420 1,094,838,032 1,094,838,032 1,094,838,032 1,223,063,737 1,223,063,737 1,223,063,737


Net Cash Flow (in Rs) 401,595,091 797,847,590 886,380,365 983,337,420 983,337,420 983,337,420 1,094,838,032 1,094,838,032 1,094,838,032 1,223,063,737 12,341,824,986 1,223,063,737


NPV of project considering its 6,277,613,932


The value of the property, on hypothetical scenario, that if it was completed on date of valuation, is estimated to be Rs.6,278 million


Conclusion

On the basis of assumptions, methodology of valuation and the belief that there are no onerous

restrictions, covenants or unusual outgoings which we have no knowledge of, we are of the

opinion that the value of the property on s where is basis , assuming all statutory approvals

have been obtained and all government dues / charges been paid is Rs. 297 Crores (Two

Hundred and Ninety Seven Crores only).

Receivables, to be received from area sold, which accounts 30% of the total area

of the mall, has not been considered, although construction cost with respect to

same, has been accounted for in the cash flows.

Note

Our valuation is only for use of the party to whom it is addressed and no responsibility is

accepted to any third party for the whole or any part of its contents.


Disclaimer

intended only as a guide to some of the important considerations that relate to property

investment. Although we believe they are correct and not misleading, with every effort having

been made to ensure that they are free from error, they should not be taken to represent, nor

are they intended to represent, investment advice or specific proposals, which must always be

Neither Knight Frank nor any persons involved in the preparations of this publication give any

warranties as to the contents nor accept any contractual, tortuous or other form of liability for

any consequences, loss or damage which may arise as a result of any person acting upon or

using the statements, information or opinions in the publication. This publication is confidential

to the addressee and is not to be the subject of communication or reproduction wholly or in

Udyog Bhavan, 1st floor

29, Walchand Hirachand Marg

Ballard Estate

Mumbai 38

Tel: 22670876

Fax: 22670899s


Revenue from Mall Management- Festival City GLA: 1660261 sq ft

Per Month Per Annum

Net Revenue from mall management (Income - Exp) Common Area

(Rs. 8/- per sq ft income; Rs. 6/- per sq ft Expenses) pm ( A ) 33 398

Revenue From Other Sources

Rev. from Parking ( B ) 45 548

(2500 cars*Rs. 20/- per car* 3 rotations = Rs. 150000*365=547.50

Lacs

Rev from Advertisements

# Dangles/ Banners

(30*20000/- pm = 6 lacs pm*12= 72 lacs) 6 72

# Gantrys(8) @125000 pm, & Hoardings(8) @ 300000 pm 34 408

# Screen Advertisements 24 288

(6 screens * 4 lacs per month per screen=24 lacs*12=288 lacs)

Total Advertisement ( C ) 64 768

Promotion & Launches

# 8 promotions @ Rs. 1 lacs pm=8lacs pm*12=96 lacs 8 96

# 25 kiosks @ Rs. 15000 per day for 25 days*12 93 1125

# 5 exhibitions @ Rs. 1.5 lacs per month= 7.5 lacs pm*12 7 90

Total Promotion & Launches ( D ) 108 1311

Total Income (A+B+C+D) 250 3025

Rounding Off Total Income (A+B+C+D) 250 3000

Expenses

NET REVENUE 200 2400

Rs. In Lacs

Catering for expenses @ 50 Lacs per Month on Parking and

Promotional items 50 600

Annexure 1 : Break-up of Income from Mall Management

(as provided by the client)

Addendum

This is in addendum to the Valuation report of Ludhiana Festival City dated 31st December

2009. The inspection of the site was conducted on 30th December 2009. A scenario is

considered , events ,

advertisements ,promotional launches has not been considered, and is limited to the revenue

from parking and profit on CAM ( details of which are provided in annexure A ). The workings for

the same are appended below.

Sr.No. Particulars sq m sq ft acres

1 Area of Land 45,774 492,712 11.31

2 FAR 3.00

3 Built-up Area

Retail 1478135

Basement (free from FAR) 338719

Total Area 1816853

5 Leaseable Area (As provided by client) 1,680,347

Sale 504,990

Lease - committed 344,019

Lease - uncommitted 831,338

6 No. Car Parking Slots (As provided by client) 1,000

Area Statement

1 Cost of Construction (Rs. per sq.ft.) [COC]

Retail 2,550

2 Other Costs

Contingencies (% of Cost of Construction [COC]) 6.00%

Land Development Cost (Cutting, filling, dressing, transporting excess of earth, backfilling &

preparing the surface) (Rs per sq.ft.)

60

Landscaping - horticulture, roads & pavement, sewage system and cabling (Rs per sq.ft.) 30

Consultants (Architect, Landscape Architect, Civil and Services Provider, Real Estate

Consultant, Lawyers, Publicity) Fee (% of Construction Cost)

5.00%

3 Monthly Rental

Retail 53

Car Parking (per slot per month) 1,000

4 Brokerage Charges @ % of total revenue 1 months rent

5 Escalation in Cost of Construction Every Year 5.00%

6 Escalation in Lease Rentals after every 3 years 10.00%

7 Terminal Cap rate 11.00%

8 Discount Rate 21.00%

Assumptions

Retail - Festival City - Ludhiana 0 1 2 3 4

Construction Phasing (in %) 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13

Retail 15% 15% - - -


Landscaping - 100% - - -

Cost

[COC] Cost of Construction (in

Rs)

Retail 694,946,436 729,693,758 - - -

Total 694,946,436 729,693,758 - - -


Liability to AVM -


Contingencies 41,696,786 43,781,625 - - -

Landscaping - 14,781,345 - - -

Consultants Fee 34,747,322 36,484,688 - - -

Gov t. Approv als (completion, NOC

etc.)

50,000,000

Total 76,444,108 145,047,659 - - -

TOTAL COST (771,390,544) (874,741,417) - - -


NPV of project considering 2,094,583,263


Marketing Schedule Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Marketing Phasing (in %) 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20

Retail (Sale Proceeds) - - - - - - - - - - - -

Retail (Lease - Committed) 100% - - - - - - - - - - -

Retail (Lease - Uncommitted) 90% - - - - - - - - - - -

Revenue `

Annual Rental Values (Rs per

sq.ft.)

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11


Retail (Lease - Committed) - - 483 483 483 531 531 531 584 584 584 643

Retail (Lease - Uncommitted) - - 636 636 636 700 700 700 770 770 770 847

(in Rs)

Profit from Mall Management - 49,500,000 49,500,000 49,500,000 49,500,000 49,500,000 49,500,000 49,500,000 49,500,000 49,500,000 49,500,000


Retail (Lease - Committed) - - 166,078,612 166,078,612 166,078,612 182,686,474 182,686,474 182,686,474 200,955,121 200,955,121 200,955,121 221,050,633

Retail (Lease - Uncommitted) - - 475,857,796 475,857,796 475,857,796 523,443,575 523,443,575 523,443,575 575,787,933 575,787,933 575,787,933 633,366,726

Total - - 691,436,408 691,436,408 691,436,408 755,630,049 755,630,049 755,630,049 826,243,054 826,243,054 826,243,054 903,917,359

Brokerage - - - -

Net Revenue - - 691,436,408 691,436,408 691,436,408 755,630,049 755,630,049 755,630,049 826,243,054 826,243,054 826,243,054 903,917,359


Net Cash Flow (in Rs) (771,390,544) (874,741,417) 691,436,408 691,436,408 691,436,408 755,630,049 755,630,049 755,630,049 826,243,054 826,243,054 9,043,673,590 903,917,359

Based on the assumptions the value of the property is estimated to be Rs. 210 Crores (Two Hundred and Ten Crores only).

Revenue from Mall Management - Festival City GLA: 1680347 sq ft

Profit from CAM ( Income - Expense) 2 Rs per sq ft per month

Total Leasable area 1680347 sq ft

Profit from CAM per month 3.360694 Mn

Yearly Profit from CAM 40.328328 Mn

No. of Car Parks 2500

Parking charge 10 Rs

Yearly Revenue from Car Parks 9.125 Mn

Total Revenue from Mall Management 49.453328 Mn

~~ 49.5 Mn

Annexure A

______________________________________________________________________________

COLLIERS INTERNATIONAL BALTIC STATES & BELARUS

Ph. +371 778 3333, fax +371 778 3334 J.Alunana str. 2-11, Riga, LV-1010, Latvia

www.colliers.lv www.colliers.com

Valuation report

Land plot for development. Project “High Technologies Park” (HTP) (Minsk).

Development period 2009-2025

Minsk Belarus

Valuation Date: September 30, 2009

Valuation Report: Land plot for development. Project „HTP“________________________________________________________________________________________________________________________________________________

Page 2 of 102

October , 2009

To: Director Svitland Limited

Mr. Eddie Prilepsky

Re: fair value of land plot for development

(project “High Tech Park”)

Dear Mr. Eddie Prilepsky!

According to the agreement on working out a valuation report No 676/E/09/BY of 11.08.2009 (the

“Agreement”) between Svitland Limited (the “Client”) and Colliers International CJC (the “Appraiser”),

appraisers of Colliers International have defined fair value of a land plot for development project “High

Tech Park” (the “Subject Property”), for IFRS aims.

The appraisal was made as per September 30, 2009; the date of physical inspection of the Subject

Property by representatives of Colliers International – September 30, 2009.

According to the Financial Accounting Standards No 157 (FAS 157, par.5), fair value is defined as

follows:

“Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date”.

Three classic approaches are normally used for valuation of a real estate property: Cost Approach,

Income Approach and Sales Comparison Approach/Comparison Approach. Cost Approach implies that

value of a property can be calculated as the sum of the expenses that would be necessary for

reconstruction or substitution of Subject Property, taking into account its depreciation. Comparison

Approach is based on comparing Subject Property with analogous objects if sufficient volume of

information on market transactions with similar objects is available. Income Approach is based on the

analysis of future revenues from utilization of Subject Property. Considering the fact that the Subject

Property is an undeveloped site and therefore several methods need to be used to define its fair value

based on different approaches, we applied these methods in our valuation. The most appropriate method

used in definition of a site value is the Subdivision Development Method.

Subdivision Development Method is based on the Income Approach and used for valuation of

undeveloped sites. The condition for applying this method is the possibility to develop improvements on a


Page 4 of 102

Contents

1.� Engagement Overview ............................................................................................................ 6�

2.� Results of Valuation ................................................................................................................ 7�

3.� Certification of Value............................................................................................................... 8�

4.� Assumptions and limitations .................................................................................................. 9�

5.� Description of the Subject Property ...................................................................................... 10�

5.1.� Analysis of location and neighborhood ............................................................................ 10�

5.2.� The Subject Property’s characteristics and concept.......................................................... 16�

5.3.� Analysis of the Project.................................................................................................... 19�

5.4.� Analysis of the competitive environment .......................................................................... 19�

5.5.� SWOT-analysis ............................................................................................................. 25�

6.� Highest and Best Use of the Subject Property ...................................................................... 26�

7.� Market Overview ................................................................................................................... 27�

7.1.� An overview of the economic situation in Belarus ............................................................. 27�

7.2.� The Minsk city ............................................................................................................... 29�

7.3.� The demographic situation in the city .............................................................................. 31�

7.4.� An overview of the economic situation in the city.............................................................. 34�

7.5.� Brief analysis of residential market .................................................................................. 35�

7.5.1.� Supply on the primary market ......................................................................................... 35�

7.5.2.� Supply structure ............................................................................................................ 36�

7.5.3.� Construction volumes..................................................................................................... 37�

7.5.4.� Demand on the primary market....................................................................................... 38�

7.5.5.� Prices at the primary market ........................................................................................... 39�

7.5.6.� Prognosis of price level for 2010 ..................................................................................... 42�

7.6.� Office market analysis .................................................................................................... 43�

7.6.1.� Supply .......................................................................................................................... 44�

7.6.2.� Demand ........................................................................................................................ 46�

7.6.3.� Rent Rates .................................................................................................................... 48�

7.6.4.� Vacancy Level ............................................................................................................... 49�

7.6.5.� Plans and prognoses ..................................................................................................... 49�

7.7.� Retail market analysis .................................................................................................... 50�

7.7.1.� Supply .......................................................................................................................... 51�

7.7.2.� Tenants......................................................................................................................... 54�

7.7.3.� Rent rates and sale prices .............................................................................................. 55�

7.7.3.1.� Rent rates ..................................................................................................................... 55�

7.7.3.2.� Sale prices .................................................................................................................... 56�


Page 5 of 102

7.7.4.� Vacancies ..................................................................................................................... 57�

7.7.5.� Street retail.................................................................................................................... 58�

7.7.6.� Prognosis of retail market capacity.................................................................................. 60�

7.8.� Analysis Rent rate level and sales prices for the Subject Property ..................................... 61�

8.� Valuation of the Subject Property ......................................................................................... 62�

8.1.� Definition of Value.......................................................................................................... 62�

8.2.� Methods Used to Assess Land Value .............................................................................. 63�

8.2.1.� Valuation Methodology ................................................................................................... 63�

8.2.2.� Reasoning of choosing methods for the Subject Property value estimation ........................ 69�

8.3.� Determination of possible cash flows from the Subject Property ........................................ 70�

8.4.� Calculation of Value of the Subject Property .................................................................... 70�

8.4.1.� Valuation Under Subdivision Development Method .......................................................... 70�

8.4.2� Calculation of Fair Value of the Subject Property ............................................................. 96�

List of references and the documents provided by the Client .......................................................101�


Page 6 of 102

1. Engagement Overview

Subject Property and Property Rights to Be Appraised

Subject Property

Undeveloped land plot of 52,0 ha (up to 119.0 ha) (cadastral zones No 251 and 59) in Minsk for construction residential and commercial premises within project “High Tech Park”

Property Rights to Be Appraised

Future land permanent use title to the land plot for development and property maintenance

Purpose of Valuation To estimate the fair value of the Subject Property

Intended Use For accountant aims

Holder of Rights “Devinvest” Foreign Ltd.

Information about the Client

Client: Svitland Limited, code HE170699

Client’s bank details: 0385-40-06-155922 in Bank of Cyprus International Business Unit 121 Georgiou Griva Digheri Ave.P.O. Box 50215 CY-3699, Limassol, Cyprus, SWIFT: BCYPCY2NA030

Legal address: Nicolaou Pentadromos Centre, 10th Floor, Flat/Office 1002, P.C. 3025, Limassol, Cyprus

Information about the Appraiser

Appraiser: SIA “Colliers International”, reg. No 50003659921

Appraiser’s bank details: LV02HABA0551006389274 in Swedbank (Hansabanka), AS, Riga, SWIFT: HABALV 22

Legal address: Jura Alunāna iela 2-11, Rīga, LV-1010

Valuation Basis: Agreement No 676/Е/09/BY of 11.08.2009

Effective Date of Valuation:

September 30, 2009


Page 7 of 102

2. Results of Valuation

Full name of the appraiser, his qualification (the certificate, the license)

SIA «Colliers International», reg. № 50003659921Mail address: Jura Alunāna iela 2-11, Rīga, LV-1010 Phone: (+371) 67783333, fax (+371) 67783334

Valuation Basis Agreement No 676/Е/09/BY of 11.08.2009

Description of the Subject Property Undeveloped land plot of 52,0 ha (up to 119.0 ha) (cadastral zonesNo 251 and 59) in Minsk for construction residential and commercial premises within project “High Tech Park”

Purpose of Valuation To estimate the fair value of the Subject Property

Effective Date of Valuation: September 30, 2009

Currency of Valuation USD

Exchange rate for the date of valuation (according to the National Bank of Belarus)

1 USD = 2 764 BYR1 EUR = 4034,33 BYR Exchange rate: 1 EURO/1 USD = 1,4596

Methods used for Valuation Subdivision Development Method

Fair Value of the Subject Property: USD 52 900 000 (net of VAT), includingUSD 51 700 000 (net of VAT) – commercial part; USD 1 200 000 (net of VAT) – residential part.


Page 8 of 102

3. Certification of Value

We herewith certify that, to the best of our knowledge and belief:

1. The statements of facts and data contained in this Report are true and correct.

2. The reported analysis, opinions and conclusions are limited only by the reported assumptions and

limiting conditions, and presents our personal, unbiased professional analyses, opinions, and

conclusions.

3. We have no present or prospective interest in the property, which is the subject of this Report, and we

have no personal interest or bias with respect to the parties involved.

4. Our compensation is not contingent upon the reporting of a predetermined value or direction in value

that favors the cause of the Client, the amount of the value estimate, the attainment of a stipulated result,

or the occurrence of a subsequent event.

5. We and our close relatives have no proprietary rights with reference to the Subject Property.

6. Our analyses, opinions, and conclusions were developed, and this Report has been prepared in

conformity with the requirements of:

• International Valuation Standards (IVS), Eighth Edition, 2007, adopted by International Valuation

Standards Committee – IVSC: IVS1 –IVS3;

• IVS 1 Market Value Basis of Valuation;

• IVS 2 Valuation Bases Other Than Market Value;

• IVS 3 Valuation Reporting;

• Statement of Financial Accounting Standards No. 157;

7. The appraiser of Colliers International personally inspected the Subject Property on September 30th,

2009.


Page 9 of 102

4. Assumptions and limitations

This report is subject to the following assumptions and limiting conditions:

General Assumptions and Limiting Conditions

1. This Report is authentic when considered in full and for the purposes stated herein only.

2. The Appraiser assumes that there are no hidden factors which may affect the valuation, the condition

of the properties, the specifications or the functions performed. The Appraiser bears no responsibility

for the presence of such hidden factors or the need to detect these.

3. The information obtained by the Appraiser and contained in the Report is assumed to be authentic.

However, the Appraiser cannot guarantee the absolute accuracy of the information. Therefore, a

source of information is specified for all the information used in the Report.

4. The Appraiser is not required to appear in a court of law or otherwise testify in respect of the

valuation performed, other than on a court summons.

5. The Appraiser’s opinion in respect of the value of the properties is valid as at the date of the

valuation only. The Appraiser assumes no responsibility for any change in the economic, legal or any

other factors which may emerge after that date and influence the market situation and hence, the

market value of the properties.

6. The Appraiser bears no responsibility for the legal description of the rights to the Subject Property or

any matters related to review of property rights. The rights to the Subject Property are assumed to be

valid. The Subject Property is assumed to be free from any claims or restrictions.

Special Assumptions and Limiting Conditions

7. Definition of the Subject Property fair value is based on the assumption, that the Project will be

realized according to the concept dd. 11.09.2009, presented by the Client. Terms of construction and

commissioning of separate parts (stages) of construction will correspond to the data provided by the

Client.

8. The Appraisers have made all calculations in Microsoft Excel. The values in calculation tables

presented in this Report are given in rounded figures and do not conform to the rule of mathematic

round off. The rounding of the final market value of the Subject Property does not follow the rule of

the mathematical rounding of numbers.


Page 10 of 102

5. Description of the Subject Property

5.1. Analysis of location and neighborhood

The Object is located within the borders of Minsk and belongs to Pervomaisky District in administrative

terms. It is one of the city’s environmentally safe areas thanks to the fact that there are only few industrial

facilities and there are recreational areas existing both inside of the district and around it. The current

number of residents is approx. 217,000.

The primary specialty of this part of the city is the presence of micro districts (residential compounds).

The surrounding of the Property consists primarily of apartment buildings interspersed with public

services and infrastructural facilities. Commercial properties are developing, too. The process is primarily

driven by the opening of new subway stations. The subway (being one of the fastest and most convenient

means of public transportation in Minsk) opens new opportunities for diversifying the functional use of the

district area.

The location of the land plot beyond the Minsk Ring Road is one of its peculiarities. The Minsk Ring Road

is a key traffic line, which significantly reduces the possibility of pedestrian flows forming in the area.

Figure 5.1.1 Location of Subject Property in Minsk


Page 11 of 102

The land plot for development includes the territory of Akademgorodok, the Academy of Sciences

residential compound. The area of the compound is 73.86 hectares and the total floor space of all the

properties there including unfinished buildings comprises 252,590 sqm. The unfinished construction

accounts for 42,300 sqm of floor space. The presence of these buildings may significantly complicate the

creation of a homogeneous development in the area as the project expands, because the existing

buildings are out of conformity with modern trends in architecture.

Figure 5.1.2. Several real estate objects in the site’s area

Aside these buildings and structures, the site of the projected development contains a snow dump, a

public transport terminal “Uruchye-2” and a parking lot.


Page 12 of 102

Table 5.1.1. Residential districts located in the vicinity of the Subject Property territory

# Name Description Image

1 Vostok

Consists primarily of 5 - 12 floor apartment

buildings, with 18 floor apartment buildings

along Nezavisimosti Avenue. This micro

district is completely formed.

2 Stepyanka

Consists primarily of low-rise private houses

with gardens and infrastructural facilities. A

maternity hospital, a brain surgery clinic,

garages and warehouses are located in the

area, too. There are plans to erect new

large-panel apartment buildings totalling

70,000 sqm until 2010.

3 Uruchye

An upmarket residential area that includes

both standard panel buildings erected in the

1980s and 1990s and newer designs with

improved consumer characteristics. This is

considered to be a completely formed micro

district, with only some isolated non-standard

apartment buildings and public services

currently under construction.

4 Vostocnhy

The micro district contains military

compounds and apartment buildings

originally erected for servicemen. The

residential buildings mainly have 5 to 9

storeys and are of a standard type. New

construction is limited.

5 Ozerishche

A residential community with the status of a

micro district that lies within the city limits

and belongs to the aforementioned

Pervomaisky District. Consists of private

houses.

Thus, the land plot is located in the area most favourable for the residential function. At the same time, a

new business area is being formed along Nezavisimosti Avenue towards the city centre due to

development of numerous commercial real estate objects.�


Page 13 of 102

The largest share of new projects is located along the city's primary road – Nezavisimosti Avenue, which

is stipulated by positive transport and visual access. These factors are of top priority, when assigning

location for the future commercial object. Location of the most important objects is mapped on the figure

below.

Figure5.1.3. Real estate objects in the Subject Property neighborhood

Table 5.1.2. Real estate objects in the Subject Property neighborhood

# Type Developer Date, GBA Picture

Existing Objects

1 Business Centre «XXI century»

Chief Economic Administration of the Office of the President of Belarus

1998, GBA 18 000 sqm

2 DIY «Decorum»

Decorum

2002, GBA 6000 sqm goods for construction, repair and finishing


Page 14 of 102


3 Office building «Port»

Hypercom development

2009, 11 000 sqm.

4 Residential complex

Minskstoy 2008, 3 buildings

5 Residential complex «Yasnij Bor»

CJSC «Avtoprival» 2006-2008 50 000 sqm

Projects under construction or in planning stage


«Tapas» Low-rise residential development 2007-2009

2

Mixed-use complex «Eastern Lighthouse of Minsk»

Belinte-roba

955,000 sqm Objects height varies from 3 to 80 floors. The key feature of the complex will be 270 meter high hotel complex.

3 Built-to -suit “Belarusian Potash Company” (BPC)

Sport complex includes sport hall with tribunes, tennis court, water pool and SPA

4 Mixed-use complex

Kayson

Office, Retail, 5* Hotel, Apartment Hotel, Sport Centre. GBA 117 000 sqm.


Page 15 of 102


5 Mixed-use complex

«Avtodomservis», «Prostormarket»

Office, Retail, Hotel.

6 Office building «Depo»

«Damaan» GBA 6 000 sqm.

7 Residential complex «Uruchskij»

C-Trading, Ltd Residential, GBA 26 500 sqm.


MJK 21-floor residential complex

9 Hypermarket Bellvilisden Hypermarket “Hyppo”

10

Mixed-use complex «Radzivill-Hall»

Hypercom development

Office&Retail


Page 16 of 102



«Minskstroj»

Part of residential complex development of Nezavisimosti Avenue

12 Mixed-use complex «Iceberg»

CJSC «Avtoprival»

Office & Retail as part of residential complex development “Yasnij Bor” GBA 10500 sqm

13 Residential complex «Velikij Les»

«Triple» Ltd Residential complex in district “Vostochnij”

Planned and undergoing development of surrounding territories is presented by various residential and

commercial objects. With the new business developments this city area will avoid reputation of purely

residential, which is positive factor for the office development. Prevailing opinion that the region is an

attractive residential area favours residential development.

5.2. The Subject Property’s characteristics and concept

Project Description

City Minsk

Concept

A multifunctional high technologies park, which will include office, retail and residential premises along with social and transportation infrastructure

State support The project was initiated by the Belarusian Presidential Administration and enjoys a strong state support

Status Existing permits for preparation works for ph.1

General Info

Land area (ha) 52

Total GBA (excl. parking, sqm) 617 982

Total GLA (excl. parking, sqm) 471 926

Total parking (PPL), out of which 9 609

Underground parking (PPL) 2 883


Page 17 of 102

Underground parking (sqm) 86 482

On ground parking (PPL) 6 726

On ground parking (sqm) 168 160

Street retail Incorporated in buildings, construction of small sized neighborhood shopping center is being considered

Number of apartments 1 980

Average size of apartment (GLA, sqm) 65

Ownership (%) 100%

Land Status Rights for planning of the project

State (%) 14%

VAT (for Residential premises) 0%

Nbr of phases 7 (details see in Table 5.2.1)

Construction period 10.2009 – 03.2025

Table 5.2.1. Architectural Concept of the Subject Property

Built Area GBA (sqm) GLA (sqm)

/PPL Picture

Phase 1 (10.2009 – 03.2013)

Residential 14 000 8 400

On ground parking (resid.) 3 500 140

Underground parking (resid.) - -

Offices 45 000 38 250

On ground parking (offices, sqm) 6 750 270

Underground parking (offices, sqm) 21 900 730

Street Retail - - Phase 2 (10.2011 – 03.2015)



Underground parking (resid.) 3 713 124

Offices 50 786 43 168



Street Retail 9 139 7 768 Phase 3 (10.2013 – 03.2017)




Offices 50 786 43 168



Street Retail 9 139 7 768


Page 18 of 102

Built Area GBA (sqm) GLA (sqm)

/PPL Picture

Phase 4 (10.2015 – 03.2019)




Offices 50 786 43 168







Offices 50 786 43 168







Offices 50 786 43 168







Offices 50 786 43 168



Street Retail 9 139 7 768


Page 19 of 102

5.3. Analysis of the Project

Criteria Effect

Residential Office Retail Entertainment

Location in residential area

Positive Neutral Positive Positive / Neutral

Adjacent to the city center

Positive Positive Neutral Neutral / Positive

Rapid developmentof neighborhood

Positive / Neutral

Good visualization Neutral / Positive Neutral / Positive Positive PositivePedestrian flows of medium intensity

Positive / Neutral Neutral Negative Neutral / Negative

High density of transport traffic

Neutral / Negative Positive / Neutral Positive / Neutral Positive / Neutral

Satisfactory accessibility by private transport

Positive

Noise Negative Neutral Neutral Neutral

5.4. Analysis of the competitive environment

The city currently has no multi-use development projects realized that combine housing with commercial

properties. Until recently, developers have designated the grounds floors or parts of new apartment

buildings for commercial use. The first-ever diversified project will be Kaskad, owned by Univest-M. Itera

has begun the construction of its project on Maxim Tank Street. Work on Sozvezdiye owned by

Lithuania’s Hanner has begun, too.

Figure 5.4.1. Competitive projects’ location

Р28

М9

М9 М3

М9

М9

М9

М9

М9

1

2

3

4

5

12

3

Object area

under construction complex

in planning complex


Page 20 of 102

Table 5.4.1. Competitive projects under construction

# Name Developer Construction

period Description Image

1 Kaskad Univest-M 2008-2015

Total GBA 215,000 square meters (125,000 square meters housing and 90,000 square meters offices)

2 No name Itera Holding 2011 GBA 280,000 square meters

3 Sozvezdiye Hanner Bel Invest

2011

Includes 10 apartment buildings, 4 office buildings and a shopping complex.

The largest of the developments currently projected in Minsk is Minsk City, which will cover the territory of

the former Minsk 1 airport in the south of the city. The declared funding target is $5 billion.

The second most important project for the city is Vostochny Mayak, a development, which will cover the

area adjacent to the National Library. It will be located less than two kilometres from the boundary of the

Property and would have the most effect on it.

Three projects to be developed by Oman provide for redevelopment of areas in the central part of the city.

Table 5.4.2. Competitive projects in planning



1 Minsk City IteraInvestHolding Ltd.

2009-2023

GBA 3,500,000 square meters, residential space 2,000,000


Page 21 of 102



2 No name Oman 2014* Confidential



5Vostochny Mayak

Belinteroba 2014*

GBA 950,000 square meters, residential space 570,000 square meters

Multifunctional complex Cascade

The first multi-storey residential

complex to be completed is Cascade.

Announced completion terms – 2009 -

2015. Construction will be carried out

in stages – depending on the

movement of the correctional system

institution located on the territory

under development outside the

boundaries of Minsk. Till the end of 3Q

2009 80 percent of underground part

of first building in residential part is

built. Fulfilment of the main volumes of the construction is planned for 2010 - 2013. According to the

project, residential areas of 125 000 sq. m in 5-25 storey buildings and administrative-domestic part of 90


Page 22 of 102

000 sq. m are planned to be developed, announced investment volume is USD 350 million. With good

transport and visual accessibility, the complex from environmental standpoint has unfavourable location:

between two radial city routes and intensive traffic, immediate proximity to the railway and repairs depot,

and factually bordering Minsk heating equipment plant, which is among the most hazardous in respect of

emission of pollutants into air. The above-mentioned plant is not included into the general plan of Minsk

City, as it is planned to be moved out of the territory of the city.

Multifunctional complex Minsk-City

It is one of the biggest

projects under

development in the

Republic. According

to the project, a

business centre of

Minsk City and

Republic on the whole

is planned to be

constructed on the territory of the airport Minsk - 1 that is in service at present. Buildings of different

functional purposes will be constructed in the district: residential houses, commercial-entertainment

facilities, business centres, social-cultural and sport facilities. The dominating element of the project will

be construction of a number of high-rise buildings, including 84-storey building, visually reminding of a

stork that is a symbol of Belarus. Developer of the project is IteraInvestHolding Ltd. (Cyprus). Completion

of complex development is projected for 2020.

Area of the development – 331 ha, GBA – 2 900 000 sq.m., area of offices and hotels – 550 000 sq.m.,

area of commercial – entertainment objects – 200 000 sq.m., residential premises – 1 800 000 sq.m.

Planned investment – USD 5 billion.

Office part will consist of offices Class A, B1, and built-to-suit buildings. Typical residential (panel)

construction will not be carried out (according to the project), construction of “higher comfort” and

“prestigious” housing is recommended. Distribution of the planned areas by these segments is not known

at present, since the design is currently under development.

Complex Eastern Lighthouse of Minsk

Development of the territory adjoining the building of the National Library of Belarus is provided.


Page 23 of 102

The project in question is one of the

biggest projects announced to be

developed in the country. Total area

of the complex will be 955 000 sq.m.,

according to the sketch. At present,

the project is in early development

stage - only sketches were

presented. Number of floors of the

complex is 3-80 floors. The key

feature of the complex will be 270

meter high hotel complex.

The complex is situated alongside Nezavisimosti avenue, near the object of national importance - library.

It borders with forest park zone in the east, has exits to the River Svisloch. The district is very attractive

because of the following: location on the main traffic route of the city, at the distance of 10 minutes by

transport to the centre of the city and at the same time it is situated in environmentally clean district of the

city. Developer of the project is company Belinte-roba.

Reconstruction of the cinema studio Belarusfilm

It is provided on the land plot

occupied by the cinema studio of the

total area of 12.5 ha. Old structures

(car depot of the Ministry of Culture

and cinema studio) are planned to be

demolished and apart from

reconstruction of the studio, 10 multi-

storey residential houses with the

total area of about 100 thousand

sq.m. will be constructed. These

residential houses can be positioned

as housing of the class of “higher consumer qualities”. Bordering of the land plot of Nezavisimosti avenue,

exit to the underground station Moskovskaya, and proximity to recreational zones Park Cheljuskincev and

the River Svisloch will make the complex in question attractive for living. Developer of the project is

Lithuanian building company Hanner.


Page 24 of 102

Oman projects

An office, hotel and residential

development on a site located

immediately north of the city centre,

close to Victory Square. Powerful

architectural form is created by

placing the two fall office and hotel

towers on the northern corners of the

site, to book-end the development,

and provide a striking addition to the

skyline. The elliptical shape of the

office tower has a central access atria

and service core, optimizing the

quality of the office space.

The hotel tower has two strong wings and a central service core. The office blocks are based on best

practice principles for modern offices. The key residential blocks are in a courtyard formation with

landscaped podia, with both soft and hard landscape features. The southern edge of the site is also book-

tended by two drum-shaped residential blocks offering views over the city centre and a modern leisure

facility at the heart of the development.

The proposed redevelopment

respects the existing storey heights

and urban scale of the historic heart

of Minsk, a city of astonishing physical

beauty and, for many a vital regional

centre at the crossroads of Eastern

Europe, The scheme will re-create

street frontages in the spirit of the

historic environment. To the elevated

west portion of the site is located the

historic hospital, whilst on the

northern boundary is the Opera and Ballet House and gardens. To the south east, on the opposite bank

of the river, is located the Holy Sprit Cathedral, Each aspect offers different architectural references and

topologies.

The scheme will provide a response to the three-level changes across the site, from the highest in the

west where the hospital is located, the mid section where we propose the new five-star hotel, and the

east and lowest position, where the class-A office is located and the relocated formal gardens will be


Page 25 of 102

situated. Each level will address its own architecture in a sympathetic manner with the upper portion

paying direct reference to the historic buildings.

Al mixed-use scheme to the west of the city

centre, overlooking the River Svisloch, The

development retains the traditional urban

grain of the city with residential, retail,

leisure and community facilities and a

strong infrastructure with the best principals

of community sustainability at its heart. The

master plan is overlaid with major

boulevards, central linear parks, vistas,

private roads, gardens and community centre, This, combined with the various building uses, creates the

complexity of the urban landscape and produces the ideal pattern for development.

5.5. SWOT-analysis

Strengths Weaknesses

� Good accessibility by motor vehicles � Vicinity to the city’s major transport lines � Environmentally safe area � Vicinity of densely populated districts creates a

pool of potential dwellers (since people prefer to dwell as close as possible to their initial residence)

� Good visibility from adjacent major motorway MRR

� Developed engineering infrastructure and road network in the territory will serve lower costs while adapting those facilities to the Object’s needs

� Relatively large land plot area gives an opportunity to develop a master planned site that will be able to provide necessary infrastructure (parking, green zone, supportive premises, etc.) and create an “environment” often lacking in “dot-like” single use projects

� Adjacency to the railroads could be mentioned as one of the strong opportunities for industrial usage

� Poor access by public transport � No transit pedestrian flows � No attractions for pedestrians � Site is located away from the city’s business districts

and city centre, close to the city limit � MRR servers as mental border to the site � Presence of lost or undeveloped territories and

unfinished construction in vicinity of the area and in the area itself is a negative factor for dwellings

Opportunities Threats

� Strong Government support both for developer and potential tenants

� The developing project is an unique one in Belarus

� Comfortable residential area

� There are existing, currently under construction and planned competing projects in each of the segments in question

� Development of public functions is not an attractive option due to remoteness from established pedestrian flows

� City residents have no feeling of attachment to the place


Page 26 of 102

6. Highest and Best Use of the Subject Property

The highest and best use may be defined as the reasonably probable and legal use of an undeveloped

site or improved property, which is physically possible, appropriately supported, financially feasible, and

results in its highest value. The highest and best use analysis is carried out by verification of four criteria:

• Legally permissible: the use of a property should not be in conflict with public restrictions, zoning,

building codes, historic district controls, environmental regulations, etc.

• Physically possible: the use of a property should be in conformity with physical parameters of a

land plot and must be technologically possible.

• Financially feasible: legally permissible and physically possible uses should be checked for ability

to produce a positive return. All uses that are expected to produce a positive return are regarded

as financially feasible.

• Maximally productive: of all financially feasible uses the use that produces the maximum net

operating income or maximum present value is considered maximally productive.

Market value of a land plot as improved depends not only on current land use, but on alternative uses as

well. At this, when appraising market value of land with improvements highest and best use concept is

interpreted as the most probable use of the existing property. At the same time, when appraising market

value of the property as vacant the emphasis in the interpretation is made on the most effective use of the

property.

According to the valuation theory, it is recognized that as long as the market value of a land plot with

improvements is higher than the market value of the land plot as if vacant, the highest and best use for

such land plot will be the use of Real Estate with improvements.

Given that by the date of valuation a land plot was developed, to apply correct approaches to value and to

give answer to the question about expediency of further location of improvements on a land plot, it is

necessary to make analysis so as to define highest and best use of a land plot as if vacant.

Analysis of Land as Though Vacant

Hypothetically the land plot analyzed can have any commercial use: office, retail, industrial, warehouse,

services (restaurants, cafes, fitness centers etc) and even residential use.

According to analysis of the Project (see par.5.3.), the obvious best use of the site as thought vacant is

mixed-use, including predominant part of office premises and residential and supportive part of retail

premises.


Page 27 of 102

7. Market Overview

7.1. An overview of the economic situation in Belarus

2008 was generally a positive year for the economy of the Republic of Belarus. The realization that the

country enters the crisis, in fact, came just in December, when statistics showing the decline in exports

and revenues from exports became available. These are substantial losses for the Belarusian economy,

where about 80% of all products intended for export. GDP growth for 2009 was forecasted at the level of

10-12%. The results of the economy in January-August 2009 comparing with the analogous period of the

last year showed the GDP decrease of 0.5% in comparable prices.

Table 7.1.1. Economic Indicators

Name 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F

GDP current prices, bln EUR 12.4 13.3 15.3 15.6 18.5 24.3 29.2 31,7 41,0 39

GDP growth (real), % yoy 5.8 4.7 5.0 7.0 11.4 9.4 9.9 8.5 10.5 2

Industrial Production, % yoy 7.8 5.9 4.5 7.1 15.9 10.5 11.3 9.0 10.8 8

Unemployment Rate, % avg 2.1 2.3 3.0 3.1 1.9 1.5 1.2 1.0 0.8 0,9

Total central government debt, % of GDP

14.5 12 12.5 12 n/a 17.2 18.6 28.0 25.3 32.4

PPI, % yoy 168 39,1 42,6 28,1 18,8 10 9 16,8 16,4 12,5

CPI, % yoy 107,5 46,1 34,8 25,4 14,4 8 6,6 12,1 13,3 11

Fiscal deficit, % of GDP -0,6 -1,9 -1,8 -1,7 0,04 -0,7 0,5 -1,5 1,9 -1.8

Export, bln EUR 7,9 8,4 8,45 8,8 11 12,7 15,65 16,3 22,5 23

Import, bln EUR 9,4 9,3 9,5 10,2 13,2 13,3 17,7 18,5 27 26

Current Account, bln EUR -0,5 -0,4 -0,3 -0,4 -1,0 0,4 -1,2 -2,1 -2.5 -4,8

Current Account, % of GDP -3,9 -3,2 -2,1 -2,4 -5,2 1,7 -4,1 -6,8 -7.6 -5.4

FDI, mln EUR 189,2 108,0 315 597 687 361 594 700-720 1561 2000

Cumulative FDI, mln EUR 1344 1586 1910 2500 3200 3550 4250 3986 4470 5500

BYR/USD aop 800 1447 1804 2075 2163.73 2155.13 2146.28 2144.76 2136 2136

BYR/EUR aop 736 1288 1704 2353 2698.27 2684.29 2714.88 2897.28 3134 3134

Source: National Statistical Committee of the Republic of Belarus

Liberalization of the Belarusian economy continued in 2008. As a result, in the first half of the year

Belarus climbed on 30 positions from 115th to 85

th place according to World Bank’s rating “Doing

Business”.

Liberalization continued in the second half of the year. It should be noted that in overcoming of financial

crunch Belarus choose measures that are opposite to those undertaken by USA or EU states: Belarus

activated processes of privatization. Tax burden on entrepreneurs was reduced.

In the second half of the year Belarus increased its external debt. Until that it the debt was at a low level

relative to GDP.

2008 was generally positive for the economy of the Republic of Belarus. Largely due to the fact that

Belarus has not developed mortgage, avoided the mortgage crisis, which erupted preceded by the world


Page 28 of 102

financial and economic crisis. The realization that the country enters a period of crisis, in fact it is only in

December, when it became known statistics showing the decline in exports and revenues from exports.

For the Belarusian economy, where about 80% of all products intended for export, are the tangible

losses.

During the last years Belarusian economy showed high growth rate that was determined by increased

labor productivity, efficient operation of energetic and the best use of natural resources.

In 90es there was a period of hyperinflation in Belarus that was exacerbated by the crisis in Russia in

1998. From 2001 the Government increased the control over the inflation in the country.

Figure 7.1.1. Inflation – Unemployment – GDP indicators

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fla

tio

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CPI Unemployment* GDP Change

*Forecast: Ministry of Economy Source: National Statistical Committee of the Republic of Belarus


Page 29 of 102

Figure 7.1.2. Sector-focused structure of GDP comparison


7.2. The Minsk city

Minsk is the capital of the Republic of Belarus and the centre of the region and district of the same name.

It lies over the Minsk Hills upon the both banks of the river Svisloch. Minsk covers an area of 256 square

kilometers. Population is 1,815 thousand persons. Minsk is divided into 9 city districts and includes also 1

urbanized settlement Sokol. The city of Minsk is granted a special status of the capital, its charter, coat of

arms and anthem.


Page 30 of 102

Figure 7.2.1. Currently, the territory of Minsk is divided into 9 administrative districts:

Minsk is a city of quite an ancient history. It was firstly mentioned in chronicles in 1067 A.D. In 1974 Minsk

obtained a title of City-Hero in the commemoration of its citizens’ services in their struggle against Nazism

during World War II. At the present moment the residence of the executive committee of the

Commonwealth of Independent States is located in Minsk. The Government and the Parliament of the

Republic of Belarus are there too.

Staying at the strategic crossroads from East to West and from North to South, from Moscow to Warsaw

and from Vilnius to Kiev, Minsk is an important transport junction with several bus and railway stations, 2

airports (1 national) and metro network.

Within a system of the united economic complex of Belarus the city possesses developed industry,

science and scientific services, transport and management and finances. Industry is represented in the

following fields: machine building, electronics, textile, construction, food industry and others. More than

300 industrial enterprises are registered there. City’s share in the Republican industrial output overcomes

22 %.

There are 34 higher educational establishments in Minsk. The most significant among them are the

Belarusian State University, Belarusian State Polytechnic Academy, Minsk State Linguistic University and

others. Besides 28 specialized vocational schools are in function, 260 vocational schools, more than 500

preschool institutions.


Page 31 of 102

Minsk is a huge centre of science and technology. 164 scientific research centers are concentrated there

with the National Academy of Sciences.

Minsk is famous for its cultural component. There are 16 museums, among them National Arts Museum,

Museum of History and Culture of Belarus, Museum of history of Great Patriotic War. There are 11

theatres among them State Russian Drama Theatre and Byelorussian Academic Theatre, National

Theatre of Opera and Ballet. Besides that there are 20 cinemas, 139 libraries in the city. About 300

magazines and more than 700 newspapers are edited there.

7.3. The demographic situation in the city

According to the program of socio-economic development of Minsk in 2009, the annual average resident

population of the city of Minsk will increase by 20 thousand up to 1 844 thousand people. The upward

trend in the birth rate and natural population growth of the city will remain.

The total population of working age will be 66.4%, over working age - 19.3%, the proportion of young

people under 16 years - 14.3%. The trend of aging workforce and an increase of the share of persons

over working age will remain.

Because of the projected growth of population the labor force will grow too by 6.2 thousand persons and

will compose 1 328.4 thousand persons.

In accordance with the needs of the economy, in 2009 employment will increase up to 1 080 thousand

people and will exceed the level of 2008 by 3.3%. The bulk of the population will be engaged in the

material production (69.3%). Employment services will be necessary for more than 19 thousand of

unemployed. Social support is planned for 11.4 thousand unemployed and it will include unemployment

benefits for the period of active job search.

Growth dynamics is shown on the diagram below.


Page 32 of 102

Figure 7.3.1. Growth dynamics of Minsk population


The demographic situation on marriages and divorces is represented on the figure. The overall dynamics

is positive and determined by stable economic situation in the country during last years.

Figure 7.3.2. Marriages and divorces by regions (per 1000 population)



Page 33 of 102

Figure 7.3.3. Distribution of population by gender (Minsk)

40%

42%

44%

46%

48%

50%

52%

54%

56%

2000 2005 2007 2008

men women


Minsk is one of the leaders in the republic on the population growth and its population is currently greater

than in any other administrative district of the Republic. Annually, about 15 000 people (mostly of young

working age) moved to Minsk while other oblasts loose from 1.5 to 3 thousand people annually.

The largest portion of young people is concentrated in Moscovski, Frunzenski and Zavodskoi districts,

and the smallest density is in Sovetski, Leninski and the Centralny districts.

The high level of socio-economic development of the city provides high opportunities for labor resources

and gives good conditions for further development.

Figure 7.3.4. Distribution of population by working ability, 2009 (Minsk)


Th

ou

san

ds


Page 34 of 102

7.4. An overview of the economic situation in the city

Forecast socio-economic development of the city of Minsk in 20091

The industrial production growth rate in Minsk in 2009 is provided at the level of 113.5% and 115.5% in

comparable prices; the growth rate for consumer goods is forecasted at 112.5%; the growth rate for

investment in fixed capital in organizations subordinate to the Minsk City Executive Committee is

forecasted at 125 % and for legal entities without departmental affiliation - 127%; the growth rate for

exports of goods and services is forecasted at 121% and for imports of goods and services - 117%

respectively; the growth for retail turnover is planned at 117% and for paid services – 114%. Energy

saving index will be minus 14%.

Retail and services

In 2009 it is expected to keep the high growth rate of retail turnover at 117%.

Currently, there are 2644 shops in Minsk with the total floor area of 475.1 thousand sq. m. Among them

there are 854 food shops (179.1 thousand sq. m), 1 674 non-food (257.9 thousand sq. m), 116 mixed

shops (38.1 thousand sq. m). There are 34 shopping center with total shopping area of 85.7 thousand sq.

m and 21 markets. Public catering includes 1 642 objects for 121.1 thousand seats.

Enlargement of shops is one of directions of retail development.

Some new worldwide brands are expected to appear on Belarusian market. E-commerce also is expected

to gain further development.

The growth rate of services in 2009 is provided at the level of 114%. Services to population have the

following structure: telecommunication takes the largest share (over 23%), then goes transport (over

20%), housing and communal services (about 18%). Social services have stable share: education (10%),

personal services (over 8%), tourists’ (about 6%) and medical (4%).

Personal services will increase in 2009 by 25%. Their growth is due to increased demand of services,

their availability and service quality improvement.

Demand increase for medical services is projected at 16%. Paid services in health care will be provided

additionally to the guaranteed by state free medical care.

Investments

In 2009, in Minsk, the growth rate of fixed capital investments for organizations subordinate to the local

executive and administrative bodies planned at the amount of 125% and for legal entities without

municipal affiliation – 127%. To fulfill the established growth rate 1.5 billion dollars and 2.35 billion dollars

respectively have to be drawn.

1 The prognosis has been written in October 2008 when there was no any notable influence of worldwide financial

crunch. Therefore, some forecasted indexes may be corrected and reviewed.


Page 35 of 102

The winners of competitions conducted by Minsk City Executive Committee will continue works on the

design and construction of multipurpose complexes, office buildings, retail and business-shopping

centers. The main facilities include: the Plant of cellular-concrete products (LLC "Euro-Block); mixed-use

complex on the base of the “Tractor” stadium (CJSC “Stadium”), A-class business center on Maxim Tank

Str. (JV “Iterabelstroy”); cultural and business center “Moscow House” (PUE “Moscow Zarubezstroy”);

shopping-entertainment center within the Kiseleva Str. - Masherov Ave (PUE “Manolium-Engineering”);

entertainment complex on Pobediteley Ave (JV “Minsk-Lido”); business center “Minsk-City” (JV "Minsk-

City"); cultural center with a hotel on the street Novovilenskaia and Kanatny lane (LLC "Sir’evie Resursy"),

a multifunctional hotel and business complex on Independence Ave near the intersection with the

Kalinovsky street (LLC “Belpars”); hotel complex of high class on Internacional'naja Str and October

Square (LLC “Prudenko Investment Ltd.”). For the realization of large-scale socially significant projects

foreign investments are planned for attraction at amount of $ 540 million.

Among the most important investment projects of the Minsk city for 2009 there are a multi-functional sport

complex “Minsk-Arena”, Student Housing Complex (Student Village), BSU hostel for 1 030 seats (CUE

"UKS Mingorispolkom”); business center on M Tank Str (JV "Iterabelstroy"); business center “Minsk-City”

(JV “Minsk-City”).

7.5. Brief analysis of residential market

7.5.1. Supply on the primary market

Commissioned flats were represented on the primary market more than year and the half, until February

2008. It was due to Presidential Decree No 396 “About the shared construction of multifamily houses” that

adversely affected the development of the construction by attracting co-investors. As a result, the

developers have shifted from the cost-sharing form of construction to the direct bank lending with

subsequent disposal of the constructed flats. During the same period prices both in the primary and in the

secondary markets increased rapidly almost twice. All these stimulated the developers to build houses at

their own expenses and with use of credit resources.

As a result of amendments to the Decree in January 2008, there was a noticeable recovery in the market

and the 18 new projects offered shared construction already in 2008. Nevertheless, the previous

construction volumes were not reached. During 2005 and the first half of 2006 about 400 thousand sq.m

of residential areas were constructed by shared participation. In 2008 the supply of the residential areas

was just 180 thousand sq.m. It should be noted that in the primary market the supply was balanced by the

solvent demand, which means a sufficient number of options to select by potential buyers.

More than 40 commercial projects offered shared construction in Minsk at September 2009. More than 25

houses were commissioned and flats in the houses are offered at the primary market.


Page 36 of 102

7.5.2. Supply structure

The authorities set the task to increase the volume of newly constructed residential areas for those, who

registered as socially weak category of citizens (“citizens who need to improve dwelling conditions”) to

80% from the total amount by 2010. This structure is not followed in Minsk. Generally across the Republic

this figure is about 76% while in Minsk the share of social dwelling is a few greater than 60%.

Figure 7.5.1. Supply structure, 2009

42%

58%

social dwelling

commercial dwelling

Source: Realting agency

Figure 7.5.2. Offer structure by types of buildings

40%

23%

20%

17%

large-panel

monolithic

block-frame

others

Source: Realting agency


Page 37 of 102

According to the Program of development of Minsk construction complex to 2009-2012, the structure of

the new construction will change as follows: the share of panel houses in total construction amounts will

reduce to 30%; the share of monolithic houses will increase to 29.5%; the block-frame construction will

compose at least 23.3%.

7.5.3. Construction volumes

The volume of residential construction in Minsk is lower than planned because there is a low capacity of

the building materials industry and the construction companies. According to the estimations, there is a

lack of 17 thousand workers of construction specialty and also insufficiency of construction machinery for

high-rise buildings.

Figure 7.5.3. The construction volume in Minsk

0

200

400

600

800

1000

1200

1400

2005 2006 2007 2008 jan-aug 2009

843 897 9811156

552,8

59

17399

73

Plan isn't realized

Commissioned


Planned for completion in 2008 1,229 thousands sq.m. of residential areas in Minsk were not realized.

Just 1,156 thousands sq.m. were commissioned that is 94.4% from the planned volume. It can be

assumed today that plans for dwelling construction in 2009 wouldn’t be fulfilled. Colliers International

estimation is that in 2009 will be commissioned the same volume of residential premises as in 2008. In

January-August, 2009 552.8 thousand sq.m of dwelling was commissioned that is 3% less than in

previous year and composes 39.5 % of the total plan for the year.


Page 38 of 102

7.5.4. Demand on the primary market

The serious changes on the residential market were caused by the devaluation of the Belarusian Ruble

held in the beginning of 2009 and by changes in banks’ credit policy. The demand reduced and as a

result prices lowered. The structure of transactions’ financing was also changed.

The first half of the year is characterized by the demand rapid decrease. It can be explained by increased

interest rates for the bank loans and reduced incomes. That’s why some of the potential buyers refused to

buy a flat and others who possess their own finances delayed the acquisition.

Figure 7.5.4. Demand by sources of financing in 2008 (the primary market)

5%6%

52%

37%

from the Budget

funds of organizations

own funds

bank loans

Source: Colliers International

Figure 7.5.5. Demand by sources of financing in the 1HY 2009 (the primary market)

5%6%

72%

17% from the Budget

funds of organizations

own funds

bank loans



Page 39 of 102

As can be seen from the diagram, the majority of flats are constructed or bought at the expense of the

population (the financing includes bank credits taken directly by individuals).

7.5.5. Prices at the primary market

There are several price levels for dwelling in Minsk according to its different types.

1. The first (more often is called “social”) is a dwelling which is constructed for the citizens who need to

improve dwelling conditions. It is sold for the social, strictly regulated prices. At December 2008 the prices

for such type of dwelling ranged from 605 USD per sq.m. (panel houses) to 745 USD per sq.m. (brick and

frame houses).

2. The second is a dwelling also for the citizens who need to improve dwelling conditions but this type of

dwelling is constructed within commercial projects. According to the building permits investors as usually

have to give some share of the constructed flats to the municipality and municipality sells these flats to

the citizens who need to improve dwelling conditions. The profit formula for investors in this case is

“cost+5%”.

3. The third is a commercial dwelling which is sold on the free-of-control (market) prices.

In this segment the greatest variation of prices. The average price level in 2008 became lower than in

2007 due to the recovery of the shared construction market. In cases of the shared construction the

prices in average lower because when a flat is sold on an early construction stage the price lower

comparing with sell of completed flat.

4. Typical dwelling (frame-panel buildings, FPB)

In Minsk the level of commercial prices for FPB in average is reduced from 1700-1750 USD per sq.m. in

January 2008 to 1450-1650 USD per sq.m. in December 2008. In May 2009 the average price in this

segment was 950-1100 USD per sq.m. and during the summer prices almost didn’t change and stayed at

the level of 850-1050 USD.

5. The houses of improved convenience (brick and frame houses).

The value is 1000-1600 USD per sq.m currently.

6. Elite houses

The houses of this class have a long exposition and as result the prices vary greatly. There is no strict

division between the houses of improved convenience and the elite houses. That’s why the prices’ range

is very wide. It is from 1500 to 3000 USD per sq.m.


Page 40 of 102

Table 7.5.1. Projects of houses and residential areas for shared construction

No Address Commission

date Characteristic

Price for 1 sq.m. in autumn 2008/May 2009

(US dollars) Picture

1 Sovetskij District,

Gamarnika Str.

4 Quarter 2010 Multistory (12) multifamily house with public premises, parking

from 1950 / 1100-1200

2 Sovetskij District, Luk'janovicha Str.

4 Quarter 2009 Multistory multifamily house from 1850 / from 1000

3 Frunzenskij District, Prityckogo Str.

1 Quarter 2009 Multistory (16) multifamily house with embedded underground parking

from 1850 / from 1200

4 Leninskij District, Majakovskogo Str.

Multistory multifamily house with embedded underground parking

from 1550 / 1100 - 1300

5 Sovetskij District, Belomorskaja Str.

2 quarter 2009 Multistory multifamily house with embedded underground parking

from 2000 / from 1500

6 Pervomajskij District, Volgogradskaja Str.

1 Quarter 2009 Multistory multifamily house from 1800 / from 1370

7 Moskovskij District,

Esenina Str.

3 Quarter 2009 Multistory (19) multifamily panel house (the first of four in the complex)

from 1530 / 1100-1210

8 Frunzenskij District, Prityckogo – Lobanka Str.

3 Quarter 2009 Multistory multifamily house with embedded underground parking and multilevel aboveground parking

from 1810 / 1330

9 Sovetskij District,

Bogdanovicha Str.

4 Quarter 2009 (first home). Latest - 4 Quarter 2012

Complex of 4 multistory (12-15-26) multifamily houses

1295 – 1818 /

910 - 1380


Page 41 of 102

No Address Commission

date Characteristic

Price for 1 sq.m. in autumn 2008/May 2009

(US dollars) Picture

10 Oktjabr'skij District,

Voronjanskogo Str.

Stages, up to 2 quarters of 2010

Residential multistory complex-(8-15) «Izumrudni»

1800 – 2200 / from 1550

11 Pervomajskij District,

Shafarnjanskaja Str

4 Quarter 2009 Multistory (21) multifamily house with premises

2000 / 1500

12 Leninskij District, Rokossovskogo Str.

3 Quarter 2009 Multistory (1-20) multifamily house

1534 – 1736 / from 1200

In the table the panel and frame-blocked houses are represented. But there was a significant decline in

the offer price for all objects except for the high-class houses. It is also possible to receive additional

discounts in some projects when you pay certain amount immediately. Also, a number of developers is

currently offering price set forth in the Belarusian rubles, and leaves at this level until the end of the

construction.

Table 7.5.2. Prospective and existing projects of residential developmemnt with significant number of social (typical) flats

No Name Implementation

terms Address Description Picture

1 Kamennaja Gorka

2008-2015 Within MRR - Prityckogo Str.– Kuncevschina Str.– Kolesnikova Str.- MRR

1 500 000 sq. m. is residential part

2 Dombrovka (Masukovschina)

2007-2013 Within Kolesnikova Str. – Matusevicha Str.– Vladislava Golubka Str.

The new district, adjacent to the area of «Kamenaja Gorka»

3 Residential district Brilevichi («Druzhba»)

2006-2011 Dzerzhinskogo Ave. –Napoleona Ordy Str.

The district will consist of a 3 micro-districts. Will be built approximately 750 thousand sq. m. of dwelling

4 Kaskad 2008-2011 Kalvarijskaja Str. – Skryganova Str. – railroad

125 000 sq. m. is residential part, 90 000 sq. m. is retail and administrative part


Page 42 of 102

No Name Implementation

terms Address Description Picture

5 Mihalovo 2006-2011 Dzerzhinskogo Ave. –Gurskogo Str.

Two micro-districts 130 and 145 thousand sq. m. of dwelling. Some of the houses have already completed

6 Lebjazhij n.d. Pobeditelej Ave. – area of trading house «Zhdanovichi»

565 000 sq. m. of total area, 480 000 sq. m. of residential area

7 No name\ n.d. Orlovskaja Str. – Starovilenskij trakt

100 000 sq.m. is residential part

8 Golf-Club Starts in 2010 Near “Kolodischi” settlement Land plot of 320 hectares area for public and residential development

9 Nottingham Starts in 2011 Bordering with Golf-Club and Stiklevo national sanctuary

Land plot of 290 hectares area for 850 000 sq.m residential development

7.5.6. Prognosis of price level for 2010

The average construction cost of 1 sq.m. of the house of improved convenience (monolithic structure,

external enclosing structure and silicate blocks) according to the estimations of construction companies is

equivalent 800-830 USD per sq.m. Thus, the developers have some reserve for the price reduction in a

case of demand decrease.

Panel houses have a very minor presence among the commercial projects. It is explained, first of all, by

the technical characteristics of such buildings and potential buyers precept these buildings as of low

quality. According to the construction companies the costs of such construction are 650-700 USD per

sq.m. That’s why developers are allowed to provide the more flexible price policy taking into consideration

that the probable selling price is about 950 USD per sq.m.

Thus, by the end of 2009 and in the first half of 2010 if there is no any substantial changes on the market

the probable stable prices for dwelling in houses of improoved convenience are 950-1100 USD per sq.m.

and in the commercial projects of large-panel construction are 800-950 USD per sq.m.


Page 43 of 102

7.6. Office market analysis

The office real estate sector has the most active development within Minsk commercial real estate

market. A great number of projects are simultaneously at the construction stage. A lot of developers have

financial problems because of worldwide financial crunch. That’s why for some of projects the

commissioning date was postponed for longer than 6-8 months.

Office market in Minsk is introduced with about 300 buildings where areas are rented out. Among them

there are 100 buildings owned by Principal Economic Bureau of the Administration of the President of the

Republic of Belarus (PEB APRB) with total area more than 1.3 mln sq.m. As well 1.25 mln sq.m. are

owned by municipalities. As a rule these objects are ranked as C class. Most of them were constructed in

70-80s and have corridor system planning with use of outdated building and finishing materials. There is

a lack of typical for modern office buildings options and technical equipment.

At September 2009, modern office buildings are represented with more than 30 specialized office

buildings with gross usable area more than 285,000 sq.m. Some of new office premises are located at the

first floors of residential and other buildings and therefore are not ranked and are not included in supply

volume of modern office buildings. Nevertheless these offices influence the market situation in the

segment of commercial real estate. Despite the probable high quality and services available this part of

offices is classified as B2 and C.

The major part of privately owned offices is represented by reconstructed old objects of state or

communal ownership which were bought at the auctions. There is also lesser part of newly constructed

buildings.

The feature of the Minsk office market is a significant number of projects implemented by the participatory

construction (attracting co-investors). Sometimes co-investors build offices not for their own needs. A lot

of companies consider participation in the share construction as investment, and later premises appear

on the rent market or resale. Thus, according to the Integrated Property Register in several dozens of

Minsk’s office buildings have been registered around 1.5 thousand owners.

In the second half of 2009 supply of offices for sale composed 5-7% of the total speculative offices’ area.

The supply of shared construction of offices is not included because it is not “clean” selling (despite in

advertisements they are represented as “offices sale”). In mid-term perspective the number of share

constructed offices will increase because developers haven’t enough equity.

Last years there was steady tendency in rent rates for offices increase. The tendency was both for

primary and secondary market. Rent rates increase was also stimulated by changing of indexes for

building and assembly costs. Building and assembly costs have grown in Belarusian rubles, which

occurred against the backdrop of strengthen the Belarusian ruble to the major currencies (Euro and U.S.

dollar) during the period 2006-2008 and it contributed to higher prices, nominated in those currencies.

After the devaluation of the ruble by 20% in January 2009, this factor gained lesser influence on the

prices of sales denominated in those currencies.


Page 44 of 102

In general, the analysis of Minsk office market has shown the insufficient supply of modern office

buildings and overrated rents (comparing with offices’ market of Central and Eastern Europe). Financial

difficulties reduced the activity of tenants and thus created pent-up demand. The pent-up demand will be

compensated with postponed offices construction projects. Sales price for such areas will be reduced

because of increased supply (completion of some new projects) and simultaneous decrease in demand

caused by Economic crisis.

7.6.1. Supply

Office real estate is the most active segment of commercial real estate market. A lot of projects are in

different realization stage. More than 10 projects are announced to be completed in 2009. At the 1-st of

September, 2009 the volume of modern offices supply in Minsk was 285,000 sq.m. of leasable area.

Figure 7.6.1. Retrospective and predictable dynamics of offices in Minsk in short-term perspective

F* - forecast Source: Colliers International

For Belarusian market the tendency to postpone commissioning date is typical. In 2009 this tendency is

supposed to increase because of financial difficulties of developers. Despite developers attract co-

investors to participate in projects the completion dates for some projects can be shifted to 6-18 months.

There is a concentration of offices in central and north-eastern parts of the city of Minsk because these

parts are most attractive in terms of location. In the long term, because of the reduction of sites in the

central part of the city will be a scattering of new objects in the peripheral urban areas. In southern and

south-western part of the city the Dzerzhinsky Avenue is under active development. Dzerzhinsky Avenue


Page 45 of 102

is one of the arterial highways of the city. The territory of the national airport Minsk-1 is also will be

redeveloped. Thus, the area of business activity will shift relative to the city center.

Figure 7.6.2. The location map of the existing speculative office buildings in Minsk

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1. Victoria Plaza2. XXI – vek

3. Saako

4. Capital5. Nemiga-City

6. Na Korolya7. Expobel

8. IBC

9. Orlovskaya, 4010. Alexandrov passage

11. Odoevskogo 115А12. Olshevskogo 22

13. Ankor

14. Akvabel15. Bogdanovicha 120B

16. Smolenskaya 2717. Timiryazeva 65А

18. Timiryazeva 65B

19. Krasnozvezdnaya 18B20. Info

21. Komkon22. Khoruzhei 22

23. Olshevskogo 2424. Belarussian interbank center

25. Masherova 19

26. Gikalo 327. Biruzova, 10

28. Hi-Tech29. Myasnikova, 70

30. Meleza, 5

31. Hi-Tech Park32. Port

33. Silver Tower

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Among office buildings the old buildings of B2 class dominate. These old buildings were constructed in

1996-2004 and are characterized with outdated corridor plans and premises most of which have area

lesser than 50 sq.m. Nowadays developers tend to design more intelligent and functional projects and

some of them use services of consulting companies who audit their projects. Nevertheless some of

buildings will preserve corridor system that will reduce their attractiveness for tenants considerably.

The supply structure at the end of 2008 changed considerably because two new A class objects have

entered the market. Thus the supply of A class for the segment increased from 10240 sq. m. to 35064 sq.

m. Due to new objects the market share of B1 building also increased.


Page 46 of 102

Figure 7.6.3. The structure of offices supply

13%

44%

43%

Class А

Class В1

Class В2


7.6.2. Demand

According to brokers’ estimation in Minsk about 500,000 sq.m. of offices are dealt annually and there is a

constant tendency for growth. There are following basic reasons for growing demand:

• Expansion of business and followed widening of working space

• Registration of new companies

• Removal to new office buildings that meet the modern tenants’ requirements

• Removal to office buildings with lower rent rates

Among the companies who composes the demand for offices the following can be named:

Representative offices of foreign companies. 2,500 representative offices, foreign companies and joint

enterprises were registered in Minsk at January, 2009 with participation of investors from more than 60

countries.

IT companies. One of the most active market segments. These companies are interested in B class

premises (B2 class is suitable in most cases). Currently IT companies perform insignificant staff reduction

and that’s why the demand in premises reduced in some degree.

Belarusian and foreign banks. Due to increase banking services, especially retail banking, the demand

for premises from banks increased. Banks need additional premises to open new departments and

branches. In mid-terms these organizations will be interested in lease of necessary areas rather than in

constructing of buildings for own use (built-to-suit).

Insurance companies. Insurance is a growing market in Belarus likewise retail banking services.

According to some estimations Belarus together with Kazakhstan has leading positions in insurance

market development rates among other CIS countries.

Tenants are becoming more fastidious, they require the higher standards of quality and more services. A

lot of companies faced with insufficiency of high quality vacant areas. As a result potential tenants


Page 47 of 102

became more prudent and try to take into consideration current and future needs in office premises when

making a lease decisions. Such decisions can be made today taking into consideration a high number of

objects under construction. Unfeasible economic conditions and shortage of financing make developers

to reduce rents and propose “special offers”. Some companies tend to reserve premises in buildings

under construction to obtain the best areas 1-2 years later when current slack will cease.

The major number of existing built-to-suit objects belong to banks. This tendency is still urgent and most

of large built-to-suit objects and objects under construction are planned to be used by banks. But because

of the current economic situation new construction of such buildings (for banks) is not expected in 2009.

The completion dates will be revised and shifted to 2010-2011. Currently, most of banks and huge

companies have projects for new construction. But “Velcom” is the only company that has started a huge

built-to-suit development in 2009. “Velcom” is one of the leading GSM telecommunication providers in the

country.

In general, during 2009 the priorities of companies-tenants for speculative office building are changing

and the structure of the most attractive companies can be changed for lessors.

Figure 7.6.4. The demand for offices regarding their size

54%

19%

16%

8% 3%under 50 sq. m.

50-100 sq. m.

100 - 250 sq. m.

250 - 500 sq. m.

above 500 sq. m.


The most demanded premises are those lesser than 100 sq.m. Nevertheless there is a probability that the

most sustainable companies will remove into A and B1 class business centers. These can make the

offices with area 130-170 sq.m. highly demanded. With expanding of activity of such companies the

increase of demand for offices 300-450 sq.m. area is expected. It’s necessary to mention that companies

interested in offices of 3,500-5,000 sq.m. are appearing now. During the first half of 2009 Colliers

International conducted the largest lease transactions of A and B1 office spaces. Premises of area 1200,

1400, 2000 and 2200 sq.m were rented out.

In general, it can be noted that if during the period of 2007-2008 there was a positive trend towards bigger

offices, then since December 2008 and 1st quarter 2009 interest in small offices increased again: the

companies began to optimize staff and space per 1 employee.


Page 48 of 102

7.6.3. Rent Rates

The rapid growth in rent rates was at the end of 2007. In the first half of 2008 it was just correlation of rent

rates concerning areas leased in 2007.

But since the end of November 2008 was marked a decline in interest from tenants for premises with high

rental rates, the process of rent rates decline was started. Opposite trend also became apparent: the

offers with the highest rates approaching to those with lower rates.

Figure 7.6.5. Dynamics of Rent Rates* in Minsk

5

10

15

20

25

30

35

40

45

50

2006 2007 1HY 2008 2HY 2008 1HY 2009

Class B2 Class B1 Class A

Rent price EUR/sqm/month excluding VAT and other expenses


But even the lowest rental rates also began to decline: commissioning of several new business centers

was at the end of 2008, and some owners at the start suggested the lower rates as compared to the

operating business centers. There is a high risk of rent rates decrease for offices of all classes because of

a great number of co-owners that own premises up to 100 sq. m.

In the 1st quarter 2009 the decline in rental rates continued as a result of increasing new offices supply in

2008, and also because of the release of areas in a number of existing business centers. Devaluation of

the ruble also played a role: the majority of tenants provide payments in rubles at the rate of National

Bank, although the rent rates are denominated in Euro. As a result the payments in rubles after the

devaluation substantially increased. Therefore, the owners, especially owners of premises with high rental

rates and high building coefficients, agreed to significant reduction that resulted in offer fall to 33-35 Euros

together with base rate and all coefficients.


Page 49 of 102

7.6.4. Vacancy Level

The supply level of offices in 2008 changed considerably because huge areas of new premises entered

the market (the increase of supply) and because of worldwide financial crisis influence (reduction of

demand). Because of these factors the average level of vacancies increased more than 4 times.

Nevertheless, it is typical for new office buildings with high rent rates. The main owner of administrative

premises in Minsk (the Principal Management Department of the Administration of the President of

Republic of Belarus) almost had no vacancies during last years. Rent rate in such objects is formed in

accordance with legal documents and it is relatively low comparing with privately owned objects.

Sustainable rent rates comparing with rapid rent growth in commercial objects attracts tenants even

despite the absence of comfortable conditions.

The vacancy increase was in the first half of 2009. Offices’ owners refused to lower rent rates but at the

same time a lot of tenants prefer cheaper offices even with fewer conveniences.

Figure 7.6.6. Vacant office areas in Minsk

0%

2%

4%

6%

8%

10%

12%

Jan. 2005

June 2005

Jan. 2006

June 2006

Jan. 2007

June 2007

Jan. 2008

June 2008

Jan. 2009

June 2009

%

Class A Class B Average


7.6.5. Plans and prognoses

The economic and financial crunch will decrease the demand volume in the short term. Nevertheless, the

office market will be unsaturated and unsatisfied demand will be pent up for later terms: 2012-2013.

In the future needs per capita will increase because according to the Minsk Master Plan the share of

population involved in production will be reduced from 39% in 2005 to 27% in 2020. This change of

occupation structure seems to be real because the decision was made concerning the elimination of

industrial enterprises located within the city boundaries. The profitable enterprises can be transferred to


Page 50 of 102

the Minsk District or to some other regions of Belarus. Accordingly, increasing the number of population

involved in nonproduction sector requires additional areas of offices and services.

In medium term until 2012 there will be an increase in offices’ supply. It is assumed that the total supply in

2012 will exceed supply of the beginning of 2009 more than twice. This estimation can be corrected in the

future because the shifts in completion terms are possible, especially for huge projects. And vice versa,

during the period some new minor projects can appear. This very likely influences the developers in

2008-2009 in the circumstances of financial crunch.

The structure of the market will change in the medium term, i.e. during 4-5 years, because the completion

of new business-centers of A and B1 classes is expected. Of course, classes of some projects can be

changed due to revision of buildings’ technical parameters.

7.7. Retail market analysis

The retail sector has shown a good positive dynamics at the end of 2008 and it preserved positive

dynamics in rouble terms. According to the data of National statistic committee of the Republic of Belarus

the retail turnover growth at the Q1 2009 composed 117% to the analogous period of the last year.

However, in terms of freely-convertible currency (USD) the turnover has decreased of more than 30%.

This is due, first of all, the devaluation of the national currency at the beginning of the year and the

continuing soft devaluation of the Belarusian rouble.

Figure 7.7.1 Dynamics of retail turnover in Belarus and Minsk

7,319

11,7

14,48

17,78

23,82

4,222,16 2,65 3,44 4,25

5,57,19

1,33

0

5

10

15

20

25

30

2003 2004 2005 2006 2007 2008 1Q 2009

US

D, b

illio

n

Belarus Minsk

Source: National statistic committee of the Republic of Belarus

At the end of 2008 the positive relation of non-food products (51%) to foodstuffs (49%) was reached in

Belarus. The situation has changed slightly in Q1 2009 (49.02% and 50.08% for non-food / foodstuffs

respectively). Nonfoods dominate in Minsk retail market structure (52.4% vs. 47.6%) because of number


Page 51 of 102

of reasons: the Minsk’s population income higher than in other regions and Minsk is place for nonfoods

purchase of Minsk District inhabitants. in ;. The structure of retail trade turnover in Minsk preserved the

dominance of the proportion of non-food products (52.4%) on food (47.6%), due to a higher standard of

living of the population, and importance of cities as places to purchase non-food items for the residents of

the Minsk district.

7.7.1. Supply

According to the information of the Trade and Services Department of Minsk Municipality at the 1st of

January, 2009 the provision with shopping areas in Minsk reached 304 sq.m. per 1000 inhabitants2. The

provision of population with seats in catering was 20 seats per 1000 inhabitants at the end of 2008. The

municipality planned that during 2009-2010 80 retail and 90-95 catering establishments have to be put in

operation in Minsk yearly.

The basis for the retail in Minsk is small format objects, that factually of format “convenience shops”. The

shopping centers commissioned in 2002 have also specific features. Such shopping centers were

designed for the tenants-individual entrepreneurs and they are small pavilions of 6-12 sq.m. This format

got a special term that sounds like: “Shopping center of roofed market type”.

Before 2000, only a few retail projects (except the existing market-places) with trade areas exceeding

5,000 sq. m had been available in Minsk. During 2000–2004 some growth was observed, but most of the

newly constructed shopping centers still did not have more than 2,500–3,000 sq. m of the floor space.

The retail facilities with shopping areas over 5,000 sq. m started to be developed just after 2004.

In 2007 some retail facilities with the larger trade areas began to appear in Minsk. At the end of 2008 total

retail space supply in Minsk exceeded 325,000 sq. m.

Figure 7.7.2 Dynamics of new retail objects commissioning in Minsk *

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F

GL

A, 0

00

sq

. m

.

Total stock New construction Forecast

Source: Colliers International *- Including the areas of large department stores constructed in the Soviet period

2 This figure can change monthly, including decrease. Because different objects are taken into consideration,

including both newly opened objects, and closed or even temporally closed (e.g. for renovation) objects.


Page 52 of 102

The major part of the retail objects constructed before 2008 is located in the central part of the city, first of

all near Kolasa Square and Horuzhej Str. This situation is due to existence of two big magnets which are

Komarovski market and TsUM “Minsk”. These objects are historically formed retail districts that are well-

known among the population and attract huge flows of the visitors. So, attendance of Komarovski market

during weekend is up to 150 thousand people.

Figure 7.7.3 Location of the largest retail objects in Minsk

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1. Expobel

2. Aquabel3. Dzmitryeŭ Kirmash

4. Dekorum5. Vostok

6. TD Zhdanovichy7. Nekrasovskij

8. Europe-19. Manezh

10. Parking

11. Manetka

12. Zerkalo13. Atlantic

14. Impulse

15. CUM Minsk16. Karona

17. Rakavski Kirmash18. TD Na Niamize

19. Kupalavski20. GUM

21. Stalitsa22. Maximus

23. Most

24. Aeradromny

25. Hyppo26. Belarus

27. Padzemny Horad

28. Kirmash29. ProStore

30. Riga31. Stolichnij Centr

32. Tytan33. Boro

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Page 53 of 102

At the same time the major population is concentrated in the micro-districts, close to the Minsk Ring Road

(MRR). First of all, these are located in Moskovskij, Frunzenskij, Partizanskij and Leninskij districts. As a

result the disproportion appeared between the location of retail objects and places where people

dominantly live. The largest retail objects were constructed away from the densely populated residential

areas.

The objects constructed in 2008 approached to densely populated areas. So, 2 of 5 newly constructed

objects located in the dormitory area Suharevo (“Magnit” and “Prazdnik”) and one of them is a hyper

discounter “Euroopt” which located outside the MRR not far from micro-districts Suharevo and Malinovka.

Figure 7.7.4 Location of the retail objects commissioned in 2008 and in 1HY 2009

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1. Globo

2. Prazdnik3. Magnit

4. Alexandrov Passage5. Euroopt

6. Fashion World

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Completions in 1HY 2009

1. Boro

2. Titan3. Stolichnyi Centr

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Page 54 of 102

Table 7.7.1 Retail objects commissioned in 2008

Project name Address GLA, sq.m. Anchor tenant Developer

Globo Umanskaja Str., 108 12 642 Vester BelTjazhmashPrazdnik Suhorevskaja Str., 16 7 200 Vester BondiMagnit Sharangovicha Str., 25 4 700 Rublevskij KVSK-95

Alexandrov Passage Nezavisimosti Ave., 117a 4 850 Mothercare Alexandrov

Passage Euroopt Montazhnikov Str., 2 10 500 Evroopt Euroopt

Fashion World Timirjazeva Str., 125/11 4 485 none TH ZhdanovichiTotal 44 377


Table 7.7.2 Retail objects commissioned in 1 HY 2009

Project name Address GLA, sq.m. Anchor tenant Developer

Boro Logojskij Trakt 3 000 Gippo EterikaTitan Dzerzhinskogo Ave, 104 2 851 5th Element Sigmaplus

Stolichnyj Centr Nezavisimosti Ave, 58 2 432 none BoartstroyTotal 8 283


Noticeable, that one of three new shopping centers has absolutely outdated concept and therefore

despite it located in one of the most important city’s retail corridors the vacancy in the center exceeds

60%.

Six large commercial objects with developed retail part are expected to be opened till the end of 2009.

The objects mentioned below are at the completion stage. The total are of retail premises to be

commissioned in 2009 is about 45 000 sq.m. what is comparable with the volumes of 2008.

Table 7.7.3 New retail projects in Minsk to be completed in the 2HY 2009

City Project Name GLA, sqm Status DeveloperMinsk Coolman 6 700 under construction Tsibor-TMinsk Slavyansky 6 000 under construction Parking-MMinsk Kaltso 13 964 under construction Torgovy Mir KoltsoMinsk Palas 8 400 under construction ErnisMinsk TD Mir-Produkt 4 300 is opening MirproduktMinsk Soyuz 3,800 under construction TabinaMinsk Zebra 4 500 under construction Lanex PlusTotal 47 664


At the same time there is a probability that some of the objects announced for cokpletion in 2009 will be

opened in 2010. Among such objects are “Europe”, “Zebra”, “Preston”. The declaration of some new retail

projects is postponed, concepts are corrected and terms of new construction are shifted.

7.7.2. Tenants

The specifics of Minsk is that most of the retail premises are mainly aimed for the minor tenants

(individual entrepreneurs) and number of such tenants can vary from several dozens to several hundreds


Page 55 of 102

in one shopping center. The small pavilions of 10-25 sq.m. area dominate in such shopping centers and

there are no any anchor tenants. This is due to shared construction and latent thinking of developers. At

the same time the developers of the most of modern retail facilities were also retail operators.

Thus, company «BelVillesden» is a developer and operator of the hypermarket «Gippo» in the shopping

center «Gippo»; the company «Tabak-Invest» is also a developer and operator of hypermarkets and even

partly of the shopping gallery in the shopping entertainment center «Korona»; the situation is similar in the

shopping center «Prostor» where the operator is the same company «Prostor-Market» which is affiliated

with the company-developer «Altersolutions». But this process is not the basic trend and in number of the

objects the developers and operators are not the same.

Thus, company «Boniar» is an anchor tenant in ESC «Expobel» with hypermarket «Bigzz» (developer is

«Aquabel»); supermarket «Preston» is an anchor tenant in SC «Maximus» (Sukharevo micro-district).

The supermarket «Vester», belonging to the Russian company «Vester Group» is the major tenant in the

SIC «Globo» (developer is company «Beltyazhmash»). «Vester» is also an anchor tenant in the shopping

center «Prazdnik» which was opened in the summer 2008. According to the company, the investment to

these two supermarkets in 2008 is 5.6 million USD.

The retail chain “Rublevski” is the anchor tenant in the SC “Magnit” which is opened in December 2008.

The nonfoods chain “Elektrosila” opened household appliances and electronics supermarkets in ESC

«Expobel», «Globo», “Umnie veschi” (ESC “Stolitsa”).

Among the sport shops “SportMaster”, “DeltaSport” and “Adidas” are actively developing.

Among the shoes shops Opinions, Mattioli, Corso Como and Axis are represented in Minsk shopping

centers.

Among the children’s goods “Bulsik”, “Orngevi verblud”, “Marusia” and “Mothercare” are represented in

the shopping centers of Minsk.

Among perfumery and cosmetics Yves Roche and “Kravt” are represented most widely in Minsk shopping

centers.

The professional developers are entering the marking and thus the quality of the projects increases

because developers started to apply to famous consulting companies and famous architects.

7.7.3. Rent rates and sale prices

7.7.3.1. Rent rates

The rent rates for retail spaces were stable during 2008. Even in December 2008 the owners of the retail

premises didn’t make any rents reductions for operators despite the noticeable influence of the World’s

financial crunch on Belarusian economy and reduction of rents in office sector.


Page 56 of 102

Figure 7.7.5 Rent rates* in Minsk’s shopoping centers in the 1HY 2009

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sq. m.

representative

Rent price EUR/sqm/month including VAT and other expenses


The methods of rent rates calculations were changed in January 2009 due to the Belarusian ruble

devaluation. Thus, the rents that exceed the base rent established by Presidential Decree No 148 (it is 10

Euros for Minsk) have to be reduced by 20%. So, despite rates in Euro weren’t changed, the real level of

payments was decreased if we take into consideration the devaluation. Thus we can say that the real

level of rent rates for retail in Minsk was decreased. Nevertheless, some owners have tried to raise the

rent rates but a bit later have reduced it again.

Owners of some shopping premises give benefits to attract new tenants. First of all, owners can reduce

rent rates during first one-two months in 4-5 times. Such conditions were introduced in new shopping

centers “Globo” and “Alexandrov Passage” are they are not typical for Minsk retail market.

7.7.3.2. Sale prices

The prices have been increasing by 20 to 22 percent annually since 2004. In 2007, they jumped by 40 to

50 percent and even higher for some properties.

In the latter half of 2007, sales area in some centers (including Nekrasovsky and Soyuz) was offered for

$7,000-$8,000 per square meter incl. VAT, while one retail unit (in the Na Nemige shopping center) was

offered for $10,000 per square meter incl. VAT. The purchase contracts were reported to have been

struck. The prices applied in the exploited property market. In the market of newly-built property and

property under construction, prices increased significantly as well. During 2008 this prices level become

typical for the market despite in average prices across the city were a bit lower.


Page 57 of 102

In December 2008 and Q1 2009 the tendency to price reduction has appeared due to the vacancies

increase in some shopping centers and the demand decrease. As a result the number of transactions

with retail premises decreased too.

The price record in 2007-2008 was reached by retail areas in the shopping center “Slavianski” on Nemiga

str. In 2007 the price for retail premises in this shopping center was from 5,000 USD per sq.m. to 8-

10,000 USD per sq.m. In 2008 depending on the location of retail premise and its area the offer prices

reached 8-17,000 USD per sq.m. VAT included. At the end of Q1 2009 the offer prices were at the level

3-5,000 USD per sq.m. VAT included and kept during the 1HY 2009.

In general, in 2008 the prices’ growth for the retail premises slowed down compared to 2007, and in the

1st half of 2009 the upper level of the offer prices have reduced, as in other segments of commercial real

estate. Only a few owners keep the level of prices as before New Year, but they will be forced to adjust

their price expectations.

7.7.4. Vacancies

Because of devaluation of Belarusian rouble the purchasing power of population was decreased and as a

result the efficiency of shopping centers decreased.

The offer of vacant spaces in Minsk’s shopping centres in Q1 2009 didn’t increase noticeably. The overall

growth of the offer observed in the market in late 2008 and early 2009 is mainly related to the increased

number of retail objects put into operation in 2008 and completing in 2009. But in February / March 2009

the trend towards the appearance of vacancies emerged in the shopping centres that traditionally had no

any vacant space. Thus, the offers appeared in shopping centres “Zerkalo”, “Monetka”, “Korona”.

In the conditions of rapid retail turnover growth and the development of entrepreneurial activity in the

retail trade, and as a consequence, the apparent shortage of retail space, the retail premises were built

and designed for the moment demands. The lack of concepts, location analysis and design errors are

revealing more and more clear today in the shopping centers «Globo» and «Stolichny Center».

The occupancy is quite stable in other Minsk’s shopping centers, in the street retail located along the

major retail corridors. The rent offers are rare and have a permanent character.


Page 58 of 102

Figure 7.7.6 Share of the vacant retail premises in Minsk

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Jan 2006 June 2006

Jan 2007 June 2007

Jan 2008 June 2008

Jan 2009 June 2009

%


7.7.5. Street retail

There are several trade corridors in Minsk. But the main is that from Ya. Kolasa square together with

Horuzei str. and adjacent blocks. 6 of 11 largest and most popular shopping centers are concentrated

here and there is also a lot of retail premises of small format which are located at the first floors of

houses.

The other important trade corridors are Nezavisimosti Ave which is the main avenue of the city and

historic street Nemiga with exit to the Pobeditelei Ave.

The rent rates are still high enough in these trade corridors and there is almost no vacancy. Vacancies

when appear aren’t enter the open market or occupied immediately.

Figure 7.7.7Trade corridor at Nezavisimosti Avenue

Figure 7.7.8Trade corridor in the central part of the city


Page 59 of 102

Figure 7.7.9Adidas store at Nezavisimosti Avenue

Figure 7.7.10Zvezda store at Nezavisimosti Avenue

In these trade corridors there are retail objects of outdated formats besides the modern retail. First of all,

among such objects there are groceries of different ownership form which don’t meet to contemporary

retail standards neither in quality of premises nor in range of goods.

Figure 7.7.11Grocery at Nezavisimosti Avenue

Figure 7.7.12Bookshop at Nezavisimosti Avenue

An integral part of street retail in Minsk is banks branches and public catering. In the first half of 2008 one

of the banks bought a premise formerly used as a street retail at a price exceeding of 10 thousand EUR

per 1 sq. m. That actually is a record for the Belarusian market.

The rent rates for street retail properties amount to 15-150 EUR per sq m depending on object’s location

and area. Rent rates at the basic trade corridors are about 60-130 EUR per sq m.

Sales prices for street retail premises located out of central part of city amount to 1500 – 2200 USD per

sq.m depending on object’s location, quality and area. Taking into account class of street retail premises

in HTP project and location, achievable sales prices for street retail premises in HTP project amount to

2000 USD per sq.m.


Page 60 of 102

Figure 7.7.13 Figure Basic trade corridors of Minsk


7.7.6. Prognosis of retail market capacity

As have been mentioned there is 0.3 sq.m. of the retail areas in Minsk per capita. But the modern retail

objects compose just 0.13 sq.m. per capita.

Figure 7.7.16 Comparison of the retail areas ratio per capita in different CEE cities



Page 61 of 102

As can be seen from the figure, Minsk has much less retail areas than the most of the capitals.

The number of new shopping objects is expected to be commissioned in Minsk during 2009-2010. But

this wouldn’t influence substantially on the provision with retail areas per capita.

Therefore, Minsk’s modern sales space must increase from 2 to 3.5 times in midterm to get closer to the

average levels in the capitals of other Central and Eastern European countries. The number of well-

established formats such as multipurpose developments, and shopping and leisure centers also should

increase, as these formats enjoy the highest popularity among customers, with the city authorities and

users that need larger trade areas being interested in their development. Besides, increasingly more

foreign retail networks are found among tenants, interested in sales area that meets advanced retail

property markets. The increasing income of the population, retail sales growth and the extending system

of consumer lending also are among positive factors behind the development of the modern shopping

facilities.

7.8. Analysis Rent rate level and sales prices for the Subject Property

In the Report we used achievable rent rates for commercial premises similar to the Subject Property. As

base for data origination the information on rent rates as of the September, 2009, received from Foreign

Ltd. "Colliers International" which are rendering service on brokerage in the Belarus market of the

commercial real estate is used. At determination of rent rate, all rates are led to the uniform standard and

represent the base rent rate with VAT. Rent rates and sales prices are given in table 7.8.1.

Table 7.8.1. Average rent rates and sales prices as of September 2009

Name Unit of measurement Volume

EUR USD

Rent rate Office premises sq.m GLA/month, VAT incl. 20 29.2on ground parking (office) ppl/month, VAT incl. 20 29.2underground parking (office) ppl/month, VAT incl. 40 58.4

Sales price

Residential sq.m GFA 1250

underground parking (residential) ppl 7000 Office premises sq.m GBA, VAT incl. 1500on ground parking (office) ppl, VAT incl. 1500underground parking (office) ppl, VAT incl. 10000Retail premises sq.m GBA, VAT incl. 2000

All the rent rates and sales prices are taken at the average level according to the given above marker

overview.


Page 62 of 102

8. Valuation of the Subject Property

8.1. Definition of Value

This Report details the determination of the fair value of the Subject Property.

Fair value

According to the Financial Accounting Standards No 157 (FAS 157, par.5), fair value is defined as

follows:

“Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date”.

Valuation Process

Valuation summary

Identification of the Subject Property. Determination of purposes and tasks of the valuation, rights to be

appraised, standard of value, potential uses and application scope of the valuation results. Discussing

with the Client the research scope and required focuses, main assumptions and limitations.

Description and analysis of the Subject Property

Location, structure and technical condition of the real property. Quantitative and qualitative characteristics

of the Subject Property.

Analysis of competitive environment and value sensitive factors

Market review, analysis of demand and supply, competitive context, market changes and future market

development. Financial alternatives with similar investment risk. Typical market participants, their

motivations and standard deal terms.

Selection of valuation methods under standard approaches to value

According the Valuation Standards compulsory for application by appraisers, the Appraiser performing a

valuation must use (or substantiate dismissal) the cost, the market and the income approaches to value.

The Appraiser may determine at its own discretion the specific valuation methods to be used under each

of the approaches. Based on results produced under each approach to value, the Appraiser determines

the resultant value of a Subject Property.

Cost approach is the combination of valuation methods used to estimate the value of a Subject Property

by determining costs required for reproduction or replacement of such Subject Property, less

depreciation.


Page 63 of 102

Market approach (Comparison approach) is the combination of valuation methods used to estimate the

value of the Subject Property by comparing such property with sales data of similar properties.

Income approach is the combination of valuation methods used to estimate the value of a Subject

Property by determining expected cash flows from such Subject Property.

Final conclusion on value

The conclusive element of the analytical research of the Subject Property’s value characteristics is the

comparison of estimated values produced through the application of classical valuation methods. At the

point the Appraiser analyzes to what extent the estimated values are fair and each approach matches

with declared purposes of the valuation. The Appraiser weighs and reconciles valuation results, makes

the final conclusion on the value and provides the valuation certification.

Valuation report

Valuation report is a paper given to the Client that contains fair evidences of the value.

8.2. Methods Used to Assess Land Value

8.2.1. Valuation Methodology

Methods used to assess land value within the framework of valuation approaches (cost, comparison and

income) are shown on Figure 8.2.1.

Figure 8.2.1. Methods Used to Assess Land Value

Valuation Approaches

Comparison approach Income Approach Cost Approach

Sales Comparison Method Ground Rent Capitalization Method

Extraction Method Land Residual Technique Method

Allocation Method Subdivision Development Method

approaches and corresponding methods used for valuation

The following sources: [1; 5; 6; 7] were used for methods description.


Page 64 of 102

Sales Comparison Method

The method is used for valuation of both built-up and undeveloped land plots. The condition for

application the method is that information on the deal prices with undeveloped sites similar to the

appraised site is available. When authentic information about the deal prices with similar undeveloped

sites is unavailable, using asking/market prices is acceptable.

This method presumes using the following sequence of actions:

• selection of the basic value factors for the land plot;

• determination of sale prices for similar land plots;

• determination of the character and differences between the appraised site and every analogous site

under each of the selected value factors;

• determination of adjustments to prices for the selected similar land plots, based on the character and

differences between each similar land plot and the appraised land plot;

• adjustment of prices for each selected analogous site, leveling the differences between it and the

appraised site; and

• reasoning and value determination of the appraised site as a weighted average value of the adjusted

prices for similar sites.

Normally, the most important value factors for a site include: location and surrounding; permitted use;

other persons rights to the site; the site physical characteristics, such as terrain, size, shape, etc.;

vehicular accessibility; existing infrastructure (availability or vicinity of utility lines, conditions of

connecting, etc.).

The character of differences between a similar site and the valuated site are defined by direct comparison

of value factors of the subject site and analogous sites.

While adjusting prices for similar sites, the following factors should be taken into account (but not limited

to):

• conditions of funding deals with similar sites (leverage and conditions of borrowing);

• payment conditions for the deals with similar sites;

• circumstances of the deals with similar sites; and

• time passed since the deal dates with similar sites.

Adjustment of the price for a similar site by value factors can be made either for the site’s measurement

unit (Ex: hectare or sq.m) or for the site as a whole object. Such adjustment can be calculated and

expressed in absolute values and as a percentage.

Price adjustments are defined, as a rule, by the following methods:

• direct pairwise comparison of prices for similar land plots, differing from each other by one value

factor only and use of the information obtained for adjustment by this value factor;

• comparison of incomes from two similar sites, differing from each other by one value factor only,

using capitalization of their incomes gap for adjustment by this value factor;


Page 65 of 102

• regression-correlation analysis of the relationship between the value factor variation and the similar

sites’ prices variation and defining the formula of relationship between the value factor and the market

value of the subject land plot;

• evaluation of costs related to variation of the value factor feature in which the similar land plot differs

from the subject land plot; and

• expert determination of adjustments of prices for similar land plots.

By value factors one of which is determinant in adjustment of prices for similar land plots we should make

the following successive steps: first, the price for the similar land plot is adjusted by the determinant factor

and then the price received is adjusted by the dependant factor.

By independent value factors we should adjust the price for the similar land plot by calculation of its total

adjustment expressed in absolute value or as a percentage.

If adjustments are defined correctly, the leveled prices for similar land plots should be close to each other.

If the adjusted prices received for similar land plots differ significantly, it is reasonable to select other

similar land plots, other value factors for comparison and other adjustment values.

Extraction Method

This method is used for evaluation of developed land plot. The condition for application this method is

availability of information about the deal prices or asking/market prices for real estate objects, developed

on similar land plots.

Normally, this method is used to define the cost of the land plot were standard construction scheme is

developed. At that the comparable plots of land must have the same size.


• selection of the basic value factors of a property, including the appraised land plot;

• determination of sale or asking/market prices for the whole real estate properties, including their

land plots similar to the appraised plot;

• determination of the character and differences between every analogous property and the

property including the appraised land plot under each of the selected value factors;

• determination of adjustments to prices for the selected similar properties, based on the character

and differences between each similar property and the property including the appraised land plot;

• adjustment of prices for each selected analogous property, leveling the differences between it

and the property including the appraised plot;

• reasoning and market value determination of the property that includes the appraised plot as a

weighted average value of the adjusted prices for similar properties;

• estimation of the cost of replacement or the cost of reproduction of improvements for the

appraised land plot ; and


Page 66 of 102

• estimation of the market value of the appraised plot by subtraction the subject plot replacement

cost and its improvements reproduction cost from the market value of the subject property as a

whole, that includes the appraised plot.

The cost of replacement or reproduction of improvements of a land plot is defined using own resource

methods or basis (index, compensation) methods (resource methods should be preferably used). In

estimation of the cost of replacement or reproduction it is necessary to take into account indirect costs,

entrepreneurial profit and all kinds of improvements depreciation.

Resource methods for determination the cost of replacement or reproduction include calculation in current

(projected) prices and tariffs of all resources (cost elements), needed for creation of improvements. Basic

methods include the use of the system of current and projected indices for recalculation of the budget

value in relation to the value defined using basis price level.

Entrepreneurial profit is the value of the profit reasoned by the market for organization and/or

implementation of a profitable project. Entrepreneurial profit is estimated as the difference between the

sale price of the assets and the cost of their creation, or between the cost of acquisition and

modernization of a property. Entrepreneurial profit can also be calculated by standard return for the most

likely alternative investment.

The accumulated depreciation is divided into physical, functional and external.

Physical depreciation is the loss of the value of improvements, related to partial or full loss of their

operational values.

Functional depreciation is the loss of the value of improvements because of discrepancy between the

planning solution, construction materials and engineering equipment in the building, quality of performed

construction work or other improvement characteristics and the modern market standards applied to the

given type of improvements.

External depreciation is the loss of a real estate property value caused by negative impact of external

value factors.

Physical and functional depreciation can be either removable or not removable. Depreciation can be

removed if the cost of its removal is less than the increased value of the real estate property after removal

of depreciation.

Accumulated depreciation can be defined as the total of physical, functional and external depreciation or,

in general, on the basis of evaluation of the actual age and economic lifespan of the improvements of the

appraised land plot.

Allocation Method

The allocation method is used for evaluation of developed land plots. The conditions for application of this

method are: availability of information about the deal prices or asking/market prices for real estate

objects, including similar plots; availability of information on the most probable share of a plot value in the


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market cost of the whole real estate property and compliance of improvements developed on the land plot

with its highest and best use.


• selection of the basic value factors of a whole property, including the appraised land plot;

• determination of sale or asking/market prices for selected similar properties taken as whole objects;

• determination of the character and differences between every analogous property and the whole

property including the appraised land plot under each of the selected value factors;

• determination of adjustments to prices for the selected similar properties, based on the character and

differences between each similar property and the whole property including the appraised land plot;

• adjustment of prices for each selected analogous property, leveling the differences between it and

the whole property including the appraised plot;

• reasoning and market value determination of the whole property that includes the appraised plot as a

weighted average value of the adjusted prices for similar properties;

• estimation of the market value of the appraised plot by multiplying the market value of the whole

property, including the appraised plot by the most likely share of land plots value in total real estate

property market value.

This method gives more accurate results for plots built up with relativity new buildings for which cost

estimates are available. With increase of the age of buildings the ratio of the land value to the total value

of a whole property increases.

Land Rent Capitalization Method

This method is used for evaluation of both developed and undeveloped plots. The condition for

application of this method is the possibility of obtaining land rent from the appraised land plot.

The method presumes using the following sequence of actions:

• estimation of the land rent generated by the subject plot;

• determination of the land rent capitalization rate; and

• estimation of the subject plot market value by dividing the land rent by the capitalization rate.

For the land plots that are developed or allocated for construction, the land rent can be calculated as

income received from lease of the plot.

Estimation of capitalization rate is based on the analysis of the return rates on capital similar by the level

of investment risks. The main methods for estimation the capitalization rate are:

• dividing the land rent of similar land plots by their sale price; and

• increasing the risk-free rate of return on capital by the amount of risk premiums related to investment

into the appraised plot.


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Land Residual Technique Method

This method is applied for evaluation of both built-up and undeveloped plots. The condition for application

of this method is the possibility of developing improvements or the possibility of commercial use of the

subject plot that would generate income. If the income from commercial use is calculated, the income not

related to the plot must be deducted from it or market value of the assets not related to the plot should be

deducted from the capitalized income.


• calculation of the reproduction or replacement cost for improvements existing or planned to be

developed on the appraised land plot;

• calculation of the total net income from the property as a whole based on the market rent rates and

existing regulatory restrictions on use of the subject property;

• calculation of the net income related to the improvements as the product of their replacement or

reproduction costs and the improvements income capitalization rate;

• calculation of the net income related to the plot as the difference between the total net income and

the net income related to the improvements; and

• calculation of the value of the land plot by dividing the net income related to the plot by the land

income capitalization rate.

Net operating income (NOI) is the difference between the actual gross income and operation costs. In this

case, only the operation costs of the tenant are subtracted from the actual gross income.

Effective gross income (EGI) is equal to the difference between the potential gross income and loss from

the idle time of premises and loss from unpaid rent.

Potential gross income (PGI) is the income that can be received from lease of the real estate if tenants

use 100% of the area without any loss from unpaid rent. In evaluating a plot of land, rent rates for the use

of the real estate must be calculated exclusively on the basis of market rent rate, with due account of

existing encumbrances (for example, the existing rent contracts). For empty premises and premises used

by the tenant for his own needs, it is also necessary to use market rent rates. Potential income must

include other incomes from integrated real estate improvements, but not included into the rent fees.

There are two types of operation costs: permanent, i.e., not dependent on the occupation level of the

facility, and variable, i.e., dependent on the occupation level. The level of operation costs is defined base

done market rent conditions.

Calculation of costs for replacement of improvement elements with short economic service life is made

directly: by dividing the improvement element replacement costs (without depreciation) by their economic

service life.

Management costs are included into operation costs irrespective of who is the manager of a real estate

object, the owner or a contract manager. The management costs are defined either in monetary terms or

in percentage of the gross income depending on the type of property.


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While calculating the net operating income, depreciation deductions on the property and debt servicing

costs related to it should not be subtracted from the actual gross income.

While calculating the capitalization rate for improvements it is generally recommended to take into

account the need of return of the capital invested into the plot improvements, i.e., to assume the sale of

improvements (real estate objects) in the end of the perspective period (reversion).

Subdivision Development Method

This method is applied for evaluation of developed and undeveloped plots. The condition for its

application is the possibility to develop improvements on the subject plot that would generate income. The

method can be used for appraisal of any land plot having the perspective of development.


• analysis of the optimal way of development for a subject plot and its highest and best use generating

income;

• determination of investment volume required for the proposed use of the plot;

• determination of forecasting period;

• determination of discount rate;

• determination of the cash flows during the forecasting period and reversion resulting from sale of the

property in the post-forecasting period; and

• evaluation of the value of the land plot by discounting of the cash flow related to implementation of

the project according to the highest and best use scenario.

To estimate the present value of future gains and costs the discount rates received on the basis of

analysis of capital return rates on the investments alternative by risk level need to be used.

The source of income may be lease of improvements planned on the land plot or their sale after

completion within acceptable period by sound market price. While calculating income from lease of

premises we must take into account the market value of the property on having it sold at the end of the

lease payments calculation line.

8.2.2. Reasoning of choosing methods for the Subject Property value estimation

Considering the fact that the appraised Subject Property is an undeveloped plot of land, from the

valuation methods stated in par. 8.2.1. we can use the following:

• sales comparison method;

• land rent capitalization method;

• land residual technique method; and

• subdivision development method.


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As of the date of valuation and earlier in the previous years, there was no practice in Minsk of open

bidding regarding large land plots for future commercial real estate development. Generally, such plots

were usually allocated to developers or investors on condition of their repayment the cost of development

engineering services on the subject plots to the city. Consequently, the sales comparison method cannot

be applied for determination of the Subject Property value.

As the state is the main owner of land in Belarus providing plots to business structures mainly with the

right to permanent use or long-term lease, the land rent for the sites to be developed can be established

only at the level of the average rent fee or land tax, which does not correspond to the appraisal

conditions. Hence, the ground rent capitalization method cannot be used for defining the Subject Property

value.

Thus, to determine the value of the Subject Property it is most reasonable to use the land residual

technique method and. Considering investment character of use of the land lot, the subdivision

development method is chosen as main and the most preferable appraisal method.

8.3. Determination of possible cash flows from the Subject Property

Within the offered development concept of the project «High Tech Park» the following variant of

realization of the project is supposed:

• residential part is offered to be realized by a variant of share building, parking places on an

underground parking are realized at the final stage of construction;

• retail premises on the ground floors of residential is supposed to be realized at the final stages of

construction;

• office premises is supposed:

o to sell on the conditions of share building within the limits of internal demand on the property

on offices from HTP participants (60 000 sq. m GLA),

o to lease till 2029 and to reverse (investment sale) in 2030 for the rest premises.

The given variant of cash flows from the Subject Property is the most preferable in current economic

conditions.

8.4. Calculation of Value of the Subject Property

8.4.1. Valuation Under Subdivision Development Method

Analysis of the highest and best development scenario and profitable use of the developed land

plot

According to the analysis provided in Chapter 6, the highest and best development scenario is the


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scenario proposed by the Customer.

Determination of project life

While determining the forecasting period Colliers International appraisals used the following assumptions:

• Forecast period includes the following stages:

o Construction stage:

� I stage – 10.2009-03.2013, putting into operation – 04.2013;

� II stage – 10.2011-03.2015, putting into operation – 04.2015;

� III stage – 10.2013-03.2017, putting into operation – 04.2017;

� IV stage – 10.2015-03.2019, putting into operation – 04.2019;

� V stage – 10.2017-03.2021, putting into operation – 04.2021;

� VI stage – 10.2019-03.2023, putting into operation – 04.2023;

� VII stage – 10.2021-03.2025, putting into operation – 04.2025;

o Stage of getting income in the form of rental payments: from 04.2013-04.2025 till 2030 for I-

VII stages accordingly;

o Reversion (investment sale) – 2030.

• The model used for valuation is based on annual principle.

• As of the valuation date – September 30, 2009 the exchange rate according to the National Bank of

Belarus was 2,764 Belarusian rubles/USD and 4,034.33 Belarusian rubles/Euro.

• The model is based on current economic situation in Belarus under impact of world economic crisis.

We used moderate pessimistic scenario for real estate market tendencies.

• Initial data for leasable areas are given by the Client and are based on given architectural concept.

Determination of investment volume for the planned use of the land plot

To determine investment volume for the proposed use of the land plot the Appraiser used the data

received after consultations with the leading Belarusian construction companies as well as world practice

for construction of facilities of the same type.


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Table 8.4.1.

Cost of construction in prices of September, 2009

Name Volume

Cost of construction

Residential, USD per sq.m GLA (flat area), net of VAT 700On ground parking (residential), USD per sq.m GBA, net of VAT 40Underground parking (residential), USD per sq.m GBA, net of VAT 250Office premises, USD per sq.m GBA, net of VAT 700On ground parking (office), USD per sq.m GBA, net of VAT 40Underground parking (office), USD per sq.m GBA, net of VAT 250Retail premises, USD per sq.m GBA, net of VAT 700Internal roads, USD per sq.m, net of VAT 40Green zones, USD per sq.m, net of VAT 12.5Finish, USD per sq.m GBA, net of VAT (commercial premises) 150Project management, % per cost of construction 3,0%Permits, % per cost of construction 0,5%Detailed and engineering planning, % per cost of construction 3,0%Marketing, % per cost of construction 1,0%Contingency, % per cost of construction 7,5%Engineering infrastructure, % per cost of construction 3,0%Other expenses, % per cost of construction 0,5%

At cash flow estimation the precondition that it will be possible to receive permissions to all premises built

on the land plot in accordance with the Report is done. Predicted cost of investment in current prices is

given in table 8.4.2.

Table 8.4.2.

Cost of investment in current prices Name Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Dynamics of cost of construction

(September, 2009 = 1,000) 0,941 0,850 0,850 0,885 0,921 0,958 0,997 1,038 1,080 1,123 1,169 1,217 1,266 1,317 1,371 1,427 1,484

Stage 1

Cost of investment with VAT, USD 52 965 031 3 556 823 16 623 996 13 477 982 15 060 481 4 245 749 - - - - - - - - - - - -

VAT in cost of investment per annum 7 283 271 542 566 2 535 864 1 769 967 1 896 956 537 919 - - - - - - - - - - - -

Stage 2

Cost of investment with VAT, USD 81 124 492 - - 4 736 340 20 394 153 24 253 074 26 422 946 5 317 979 - - - - - - - - - -

VAT in cost of investment per annum 10 384 130 - - 722 493 2 735 991 2 926 896 3 207 123 791 629 - - - - - - - - - -

Stage 3

Cost of investment with VAT, USD 93 069 449 - - - - 5 398 936 23 413 640 27 825 098 30 250 700 6 181 074 - - - - - - - -

VAT in cost of investment per annum 12 041 292 - - - - 823 567 3 165 521 3 407 755 3 722 785 921 664 - - - - - - - -

Stage 4

Cost of investment with VAT, USD 100 780 877 - - - - - - 5 846 275 25 353 618 30 130 594 32 757 173 6 693 218 - - - - - -

VAT in cost of investment per annum 13 038 994 - - - - - - 891 805 3 427 806 3 690 110 4 031 243 998 030 - - - - - -

Stage 5

Cost of investment with VAT, USD 109 131 249 - - - - - - - - 6 330 678 27 454 335 32 627 116 35 471 325 7 247 796 - - - -

VAT in cost of investment per annum 14 119 362 - - - - - - - - 965 697 3 711 822 3 995 861 4 365 258 1 080 724 - - - -

Stage 6

Cost of investment with VAT, USD 118 173 505 - - - - - - - - - - 6 855 217 29 729 111 35 330 491 38 410 362 7 848 324 - -

VAT in cost of investment per annum 15 289 246 - - - - - - - - - - 1 045 711 4 019 372 4 326 945 4 726 949 1 170 269 - -

Stage 7

Cost of investment with VAT, USD 127 964 972 - - - - - - - - - - - - 7 423 217 32 192 367 38 257 859 41 592 918 8 498 610

VAT in cost of investment per annum 16 556 062 - - - - - - - - - - - - 1 132 355 4 352 404 4 685 461 5 118 609 1 267 234

Stages 1-7

Cost of investment with VAT, USD 683 209 575 3 556 823 16 623 996 18 214 323 35 454 633 33 897 760 49 836 586 38 989 352 55 604 318 42 642 346 60 211 508 46 175 550 65 200 435 50 001 504 70 602 729 46 106 184 41 592 918 8 498 610

VAT in cost of investment per annum 88 712 358 542 566 2 535 864 2 492 459 4 632 946 4 288 381 6 372 644 5 091 188 7 150 591 5 577 471 7 743 065 6 039 602 8 384 630 6 540 024 9 079 353 5 855 730 5 118 609 1 267 234

Choosing the method of calculation

The discounted cash flow method was selected for calculating the value. This method implies the

following sequence of steps:

• Estimation of rental income from operation of the Subject Property. This figure corresponds to

potential gross income calculated based on the assumption of full occupancy. Losses due to

vacancy and non-payment of rent are deducted from this figure to obtain effective gross income.


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• Analysis and calculation of operating expenses.

• Operating expenses are then deducted from effective gross income to obtain net operating income.

• Determination of discount rate and capitalization rate.

• The last step is discounting of expenses necessary to complete the construction and future income

and expenses including reversion value (value of the Subject Property at the end of the forecast

period), to arrive to the current value.

Determination of the discount rate

The discount rate at which investors calculate the current value of future cash flows is determined by the

return on investment they expect for compensation of investment risks.

The discount rate may be determined using the following methods: build-up, comparison of alternative

investments, isolation, monitoring, etc. The build-up method is the most widespread in transition

economies due to limited access to deal and property income data. Under this method, the discount rate

is based on certain minimum profit (risk-free rate) and additionally includes premiums for various risks:

inflation, price rise, tax changes, illiquidity, management, etc. The amount of the risk premium may be

determined on the basis of location, type and physical characteristics of the property. Jack Friedman and

Nicholas Ordway [see 5, pp. 73-74] distinguish the following components of the discount rate: a risk-free

rate, risk compensation, low liquidity compensation, and investment management compensation.

This method uses the interest rate for the most reliable type of money deposit, foreign currency deposit

with a term over one year, as the risk-free rate. According to the National Bank of Belarus, the rate in

August 2009 was 10.0% per annum. This rate is accepted in the Report at the level of 10.0% per annum.

The risk compensation (premium) is divided into two types. The first type comprises systematic and non-

systematic risk, and the second, static and dynamic risk. The following risks dominate the market as a

whole:

Systematic risk. The value of a specific income property may be linked to economic or institutional market

conditions. Examples include: emergence of an excess of competing properties; closure of an industrial

plant providing a large part of local employment; imposition of environmental restrictions and/or rent caps;

other economic or legal change affecting the property sector. Considering the nature of the Subject

Property and current situation on the Minsk commercial real estate market, the systematic risk premium is

assumed at 1.0 percent.

Non-systematic risk is Subject Property-specific risk independent of risks that affect comparable

properties. Examples of non-systematic risk are basement cracks, seizure of land for public needs, non-

payment of rent, destruction by fire and/or development of an incompatible land use system in the vicinity


Page 74 of 102

of the property. Considering the good location of the land lot, the non-systematic risk premium is

assumed at 1.5 percent.

Low liquidity compensation (premium) is an adjustment for lengthy exposure when selling or looking for a

new tenant in case of the present tenant going bankrupt or discontinuing the lease. Considering the fact

that the Subject Property exists and has good recognisability in the regional property market, the

adjustment is 1.5 percent.

Investment management compensation (premium) the riskier and more complex the investments, the

more competent management they require. This component is assumed in the Report at 2.0 percent.

Thus, the discount rate in the Report is assumed at 16.0 percent per annum.

In consideration of while market development discount rates go down, reduction of influence from world

finance crisis, activation of market movement, in the Report we assume discount rate reduction from 2012

by 0.5% per year till 12.0% in 2019 and stabilization from 2019.

Determination of cash flows during the forecast period

Cash flows during the forecast period are determined on the basis of incomes from leasing retail units

and as supplementary income from advertising services in the shopping centers.

The following steps are performed to determine cash flows:

• Estimation of rental income from the use of land improvements. This figure corresponds to potential

gross income based on full occupancy. Losses due to vacancy and non-payment of rent are then

deducted form that figure to obtain effective gross income.

• Analysis and calculation of operating expenses.

• The operating expenses are then deducted from the effective gross income to obtain net operating

income, or earnings before interest, taxes, depreciation, and amortization (EBITDA) for a

business property.

Determination of potential gross income (PGI)

Total income from leasing 100 percent of all units in the property is commonly termed potential gross

income (PGI). PGI is calculated as the product of achievable rental rates and leased area.

Determination of rent rates and sales prices

In the Report we used achievable rent rates for commercial premises similar to the Subject Property. As

base for data origination the information on rent rates as of the September, 2009, received from Foreign

Ltd. "Colliers International" which are rendering service on brokerage in the Belarus market of the

commercial real estate is used. At determination of rent rate, all rates are led to the uniform standard and

represent the base rent rate with VAT. Rent rates and sales prices are given in table 8.4.3.


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Table 8.4.3. Average rent rates and sales prices as of September 2009

Name Unit of measurement Volume

EUR USD

Rent rate Office premises sq.m GLA/month, VAT incl. 20 29.2On ground parking (office) ppl/month, VAT incl. 20 29.2Underground parking (office) ppl/month, VAT incl. 40 58.4

Sales price

Residential sq.m GFA 1250

Underground parking (residential) ppl 7000 Office premises sq.m GBA, VAT incl. 1500On ground parking (office) ppl, VAT incl. 1500Underground parking (office) ppl, VAT incl. 10000Retail premises sq.m GBA, VAT incl. 2000

Determination of effective gross income (EGI)

Effective gross income (EGI) is a potential gross income (PGI), reduced to the value of losses, which can

be connected with the non-occupancy of the areas and non-payment of rental payment.

Taking into account significant dimensions of the Subject Property, it is necessary to guarantee its optimal

occupancy rate during the initial years of operation. Based on this condition, loss from under-use of

offices will be, presumably, reduced from 15% to 8%, for on ground and underground parking from с 15%

to 10%. This dynamics of occupancy rate is given in Table 8.4.4.

Table 8.4.4. Occupancy rate

Name First year of operation Second and other years of operation

Office premises 85% 92%On ground parking 85% 90%Underground parking 85% 90%

Losses from non-payment of rent payment are accepted at the level of 1% of potential gross income

minus losses due to non-occupancy of areas.

Determination of net operating income

Net operating income from commercial use of the Subject Property during the forecast period is

determined as effective gross income less operating expenses: constant expenses, variable expenses

and capital provision.

Constant expenses

• Under Ministry of Taxes and Duties Resolution No.14 of January 31, 2004, Approval of the Real

Estate Tax Calculation and Payment Directions for Organizations, the annual real estate tax rate is 1

percent of the property residual value. Under clause 14.12 of the Directions, real estate tax shall not

be paid for one year from the commissioning of the property. Under the Minsk city council’s Decision


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No.181 of November 19, 2008, the multiplying factor for Economic Planning Zone IV where the

Subject Property is located is fixed at 1.4. Therefore, the real estate tax rate is assumed at 1.4

percent of the Subject Property residual value. With-in the Report the initial cost of the premises is

accepted as a depreciated cost at the level of their substitution, net of VAT and amortization.

• The annual land tax is accepted, proceeding from perspective use of the land plot for placing of

objects of socially-business appointment (a cadastral zone No 251, cadastral cost is 331 US dollars

for sq. m of the land lot) under the rate of 0,36 percent from cadastral value annually with allowance

for the increasing factor 1,7 established according to the Decision of the Minsk municipal council of

deputies «About a city budget of Minsk on 2009г.» No 181 from 19.11.2008 for Economic Planning

Zone IV in which the Subject Property is possessed. The land lots are allocated according to

requirement for them. On the right of permanent use the plots used for placing and service of office

buildings are saved only.

Variable expenses

• Management expenses. These include the compensation of employees engaged in the leasing

process, advertising and management overhead. For commercial properties these expenses vary

between 0.5 and 5 percent of effective gross income depending on property size. Considering the

significant area of the improvements and relatively large number of premises that can be leased to

separate landlords, these expenses are assumed at 2.0 percent of effective gross income.

• Unified tax payment to the national agriculture support fund is assumed at 1.0 percent of effective

gross income as per clause 2, Article 8 of the Republic of Belarus Budget Act 2009, No.450-3 dated

November 13, 2008.

Capital provision

For buildings with the standard service lifespan of 83.3–100.0 years, capital provision usually makes 1.2-

1.7%. Considering that fact that the complex of buildings will be built from modern construction materials

and in the first years usually costs less, for valuated buildings capital provision is accepted at the level of

1,0 % from the full replacement costs.

Insurance expenses

It is typical to cover commercial properties against fire, flooding, etc. The usual insurance premium rate

for these events is 0.2 percent of the property’s residual value.

Brokerage fees

Brokers’ services are normally used when filling a property with tenants or selling. Considering that the

owner leases the premises to tenants without mediation, brokerage fees were not taken into account. A

fee charged by Colliers International when selling a property in the Belarusian property market is 2.0

percent of the sale price, when leasing premises – 8.333 percent of annual lease payment.

For calculation of net operating income see below.


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Rent rate forecast

Rent rates are indexed according to the factors indicated in table 8.4.5.

Table 8.4.5. Rent rate dynamics (Base 09.2009)

Name End of 2009 2010 2011 2012 2013 2014…2030

Dynamics of rent rate, % yoy -10% -5% 0% 3% 3% +3%/year

Dynamics of sa le price, % yoy -5% -5% 0% 5% 5% +5%/year

Subject Property sale price at the end of the forecast period (reversion)

To determine the cost of reversion in 2030 in the Report it is used the method of income capitalization.

Annual income during post-forecast period is accepted to be equal to the income during the last year of

the forecast period (2029).

The simplest and most reliable way to determine the capitalization rate for net operating income from this

property is analysis of capitalization rates indicated by comparable sales.

In view of a crisis condition of the market of the commercial real estate in Minsk, asymmetry of the market

information, offers’ non-elasticity under the price at purchase and sale, actual level of yield, which would

reflect vision of investors on commercial real estate object for purchase and sale, according to Colliers

International, constitutes for office premises as of September, 2009 of 14,0-18,0 %. The bottom border

corresponds to modern A-Class and B1-Class office premises, top – to B2- Class office premises. In

considered territory optimum to develop B2-Class office premises with an insignificant share of B1-Class

office premises. Thus, for the Subject Property the cap rate (yield) as of September, 2009 constitutes

16,0 %.

Considering that fact that the cap rate (yield) is advanced as of 2030, and universal tendencies show that

with other things being equal in process of development of a property market the cap rate (yield) falls, and

also in view of crisis of the world market of the real estate in 2008 which under forecasts will be stretched

for 2-3 years, i.e. by the predicted period will cease, the given falling is accepted in the order 4,0 %.

Thus, in the Report the cap rate (yield) is accepted for 2030 in the order 12 %.

Determination of Subject Property Value Using Discounted Cash Flow Method

The discounted cash flow method, the most universal method of converting future income and loss

flows to current value, was used to determine the value of the Project. The present value of future income

from a property is determined using the formula given below.

∑= +

+

+

=

n

t

nt

t

Y

REV

Y

NOIV

1 )1()1(, (8.1)

where NOIt is net operating income during the time t,

REV is reversion value, i.e. cash flow from the sale of the property at the end of the forecast period,


Page 78 of 102

Y is the discount rate, and

n is the depth of the forecast period.

The specific feature of valuation real estate objects under construction or undeveloped sites is that in

order to get potential income that is possible after commissioning the facility only, it is necessary to have

funds to complete the construction. In this case, the present value of future income from possession of

real estate property is defined by the modified formula (8.1):

∑∑==

+

+

+

+

+

−=

n

mt

nt

t

m

t

t

t

Y

REV

Y

NOI

Y

IV

)1()1()1(1

, (8.2)

where It is investments needed to complete the construction during period t;

m is the period when completion of construction is planned.

Calculation of the value using method of discounting of cash flows is shown in Tables 8.4.6.-8.4.28.

Therefore, the value of the Subject Property as calculated using the income approach (discounted cash

flow method) as at September 30, 2009, net of VAT, is

USD 83 876 770,

including

the value of Commercial part of the Subject Property – USD 76 915 370,

the value of residential part of the Subject Property – USD 6 961 400.

Valuation Report: Land plot for development. Project „HTP“____________________________________________________________________________________________________________________________________________________________________________________________________________________________

Page 79 of 102

Table 8.4.6. Estimation of NOI. Stage 1. Income from sale Name Total Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Premises for sale, sq.m 7 224

Resident ial 7 224 - - 7 224 7 224 7 224underground parking (residential) - - - - - -

Office premises 44 100 - - 44 100 44 100 44 100on ground parking (office) 270 - - 270 270 270

underground parking (office) 730 - - 730 730 730

Sale price, USD per sq.m/ppl with VAT (retail only)

Resident ial 1 250 1 187,5 1 128,1 1 128,1 1 184,5 1 243,8 1 305,9 1 371,2 1 439,8 1 511,8 1 587,4 1 666,8 1 750,1 1 837,6 1 929,5 2 026,0 2 127,2 2 233,6 2 345,3 2 462,6 2 585,7 2 715,0underground parking (residential) 7 000 6 650,0 6 317,5 6 317,5 6 633,4 6 965,0 7 313,3 7 679,0 8 062,9 8 466,1 8 889,4 9 333,8 9 800,5 10 290,5 10 805,1 11 345,3 11 912,6 12 508,2 13 133,6 13 790,3 14 479,8 15 203,8

Office premises 1 500 1 425,0 1 353,8 1 353,8 1 421,4 1 492,5 1 567,1 1 645,5 1 727,8 1 814,2 1 904,9 2 000,1 2 100,1 2 205,1 2 315,4 2 431,1 2 552,7 2 680,3 2 814,3 2 955,1 3 102,8 3 258,0

on ground parking (office) 1 500 1 425,0 1 353,8 1 353,8 1 421,4 1 492,5 1 567,1 1 645,5 1 727,8 1 814,2 1 904,9 2 000,1 2 100,1 2 205,1 2 315,4 2 431,1 2 552,7 2 680,3 2 814,3 2 955,1 3 102,8 3 258,0underground parking (office) 10 000 9 500,0 9 025,0 9 025,0 9 476,3 9 950,1 10 447,6 10 969,9 11 518,4 12 094,4 12 699,1 13 334,0 14 000,7 14 700,8 15 435,8 16 207,6 17 018,0 17 868,9 18 762,3 19 700,4 20 685,5 21 719,7

Sale volume, %

Resident ial - - 30% 35% 35%

underground parking (residential) - - - - - Office premises - - 30% 35% 35%

on ground parking (office) - - - - 100%underground parking (office) - - - - 100%

Potential gross income PGI, USD 79 137 964 - - 20 354 985 24 934 857 33 848 123 - - - - - - - - - - - - - - - -

Effective gross income EGI, USD 79 137 964 - - 20 354 985 24 934 857 33 848 123 - - - - - - - - - - - - - - - -

Operation expenses (OPEX)Sales commission 2,0% (1 390 901) - - (352 459) (431 762) (606 680) - - - - - - - - - - - - - - - -

VAT 18,0% (9 592 914) - - (2 732 051) (3 346 763) (3 514 101) - - - - - - - - - - - - - - - -

Unified tax payment (after VAT payment) 1,0% (695 450) - - (176 229) (215 881) (303 340) - - - - - - - - - - - - - - - - Total OPEX (11 679 266) - - (3 260 739) (3 994 405) (4 424 121) - - - - - - - - - - - - - - - -

Net operating income NOI 67 458 698 - - 17 094 246 20 940 451 29 424 001 - - - - - - - - - - - - - - - -


Page 80 of 102

Table 8.4.7. Estimation of NOI. Stage 2. Income from lease Name Total Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Premises for lease*, sq.m GLA/ppl 17 022

Office premises 17 022 - - - - - - 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022 17 022on ground parking (office) 307 - - - - - - 307 307 307 307 307 307 307 307 307 307 307 307 307 307 307

underground parking (office) 90 - - - - - - 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90

Rent rate, USD per sq.m/ppl with VAT

Office premises 29,2 26,3 25,0 25,0 26,2 27,5 28,9 30,3 31,9 33,4 35,1 36,9 38,7 40,7 42,7 44,8 47,1 49,4 51,9 54,5 57,2 60,1on ground parking (office) 29,2 26,3 25,0 25,0 26,2 27,5 28,9 30,3 31,9 33,4 35,1 36,9 38,7 40,7 42,7 44,8 47,1 49,4 51,9 54,5 57,2 60,1

underground parking (office) 58,4 52,5 49,9 49,9 52,4 55,0 57,8 60,7 63,7 66,9 70,2 73,8 77,4 81,3 85,4 89,6 94,1 98,8 103,8 109,0 114,4 120,1

Occupancy rate, %

Office premises - - - - - - 85% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92%on ground parking (office) - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

underground parking (office) - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

Potential gross income PGI, USD 137 547 886 - - - - - - 6 374 284 6 692 998 7 027 648 7 379 030 7 747 982 8 135 381 8 542 150 8 969 257 9 417 720 9 888 606 10 383 036 10 902 188 11 447 298 12 019 663 12 620 646

Rent loss from vacancy (11 523 000) - - - - - - (956 143) (539 163) (566 121) (594 427) (624 149) (655 356) (688 124) (722 530) (758 657) (796 589) (836 419) (878 240) (922 152) (968 259) (1 016 672)Rent loss from rent nonpayment 1,0% (1 260 249) - - - - - - (54 181) (61 538) (64 615) (67 846) (71 238) (74 800) (78 540) (82 467) (86 591) (90 920) (95 466) (100 239) (105 251) (110 514) (116 040)

Effective gross income EGI, USD 124 764 636 - - - - - - 5 363 960 6 092 296 6 396 911 6 716 757 7 052 595 7 405 224 7 775 486 8 164 260 8 572 473 9 001 097 9 451 151 9 923 709 10 419 894 10 940 889 11 487 934

Operation expenses (OPEX)

Brokerage fee (included into investment volume) 8,3% (476 910) - - - - - - (438 953) (37 957) - - - - - - - - - - - - -

VAT 18,0% (19 031 894) - - - - - - (818 231) (929 333) (975 800) (1 024 590) (1 075 820) (1 129 611) (1 186 091) (1 245 396) (1 307 665) (1 373 049) (1 441 701) (1 513 786) (1 589 475) (1 668 949) (1 752 397)Insurance 0,2% (895 979) - - - - - - (57 198) (57 634) (58 056) (58 464) (58 855) (59 230) (59 586) (59 923) (60 240) (60 536) (60 808) (61 056) (61 279) (61 474) (61 641)

Capital provision 1,0% (5 215 233) - - - - - - (290 835) (298 106) (305 559) (313 198) (321 027) (329 053) (337 279) (345 711) (354 354) (363 213) (372 293) (381 601) (391 141) (400 919) (410 942)

Unified tax payment (after VAT payment) 1,0% (1 057 327) - - - - - - (45 457) (51 630) (54 211) (56 922) (59 768) (62 756) (65 894) (69 189) (72 648) (76 280) (80 095) (84 099) (88 304) (92 719) (97 355)Land Rent, ha 5,20 (1 580 062) - - - - - - (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337)

Property tax 1,4% (6 271 854) - - - - - - (400 383) (403 437) (406 393) (409 245) (411 985) (414 607) (417 102) (419 463) (421 682) (423 749) (425 656) (427 393) (428 951) (430 320) (431 489)Property management expenses (after VAT payment) 2,0% (2 114 655) - - - - - - (90 915) (103 259) (108 422) (113 843) (119 536) (125 512) (131 788) (138 377) (145 296) (152 561) (160 189) (168 198) (176 608) (185 439) (194 711)

Total OPEX (36 643 914) - - - - - - (2 247 309) (1 986 693) (2 013 778) (2 081 598) (2 152 328) (2 226 106) (2 303 078) (2 383 397) (2 467 223) (2 554 725) (2 646 079) (2 741 471) (2 841 096) (2 945 159) (3 053 873)

Net operating income NOI 88 120 723 - - - - - - 3 116 650 4 105 604 4 383 133 4 635 159 4 900 267 5 179 118 5 472 408 5 780 863 6 105 250 6 446 372 6 805 073 7 182 238 7 578 798 7 995 731 8 434 060

Reversion 12,0% 70 283 836 70 283 836

Sales commission 2,0% (1 405 677) (1 405 677)VAT when selling the object (additionally to the reversion sum) (12 651 091) (12 651 091)

NOI with Reversion, net of VAT 156 998 882 - - - - - - 3 116 650 4 105 604 4 383 133 4 635 159 4 900 267 5 179 118 5 472 408 5 780 863 6 105 250 6 446 372 6 805 073 7 182 238 7 578 798 7 995 731 8 434 060 68 878 159


Page 81 of 102


Reversion

Premises for sale*, sq.m 17 151Residential 17 151 - - - - 17 151 17 151 17 151

underground parking (residential) 124 - - - - 124 124 124Office premises 26 400 - - - - 26 400 26 400 26 400

on ground parking (office) 430 - - - - 430 430 430underground parking (off ice) 130 - - - - 130 130 130

Retail premises 7 860 - - - - 7 860 7 860 7 860

Sale price, USD per sq.m/ppl with VAT (retai l only)

Residential 1 250,0 1 187,5 1 128,1 1 128,1 1 184,5 1 243,8 1 305,9 1 371,2 1 439,8 1 511,8 1 587,4 1 666,8 1 750,1 1 837,6 1 929,5 2 026,0 2 127,2 2 233,6 2 345,3 2 462,6 2 585,7 2 715,0underground parking (residential) 7 000,0 6 650,0 6 317,5 6 317,5 6 633,4 6 965,0 7 313,3 7 679,0 8 062,9 8 466,1 8 889,4 9 333,8 9 800,5 10 290,5 10 805,1 11 345,3 11 912,6 12 508,2 13 133,6 13 790,3 14 479,8 15 203,8

Office premises 1 500,0 1 425,0 1 353,8 1 353,8 1 421,4 1 492,5 1 567,1 1 645,5 1 727,8 1 814,2 1 904,9 2 000,1 2 100,1 2 205,1 2 315,4 2 431,1 2 552,7 2 680,3 2 814,3 2 955,1 3 102,8 3 258,0on ground parking (office) 1 500,0 1 425,0 1 353,8 1 353,8 1 421,4 1 492,5 1 567,1 1 645,5 1 727,8 1 814,2 1 904,9 2 000,1 2 100,1 2 205,1 2 315,4 2 431,1 2 552,7 2 680,3 2 814,3 2 955,1 3 102,8 3 258,0

underground parking (off ice) 10 000,0 9 500,0 9 025,0 9 025,0 9 476,3 9 950,1 10 447,6 10 969,9 11 518,4 12 094,4 12 699,1 13 334,0 14 000,7 14 700,8 15 435,8 16 207,6 17 018,0 17 868,9 18 762,3 19 700,4 20 685,5 21 719,7Retail premises 2 000,0 1 900,0 1 805,0 1 805,0 1 895,3 1 990,0 2 089,5 2 194,0 2 303,7 2 418,9 2 539,8 2 666,8 2 800,1 2 940,2 3 087,2 3 241,5 3 403,6 3 573,8 3 752,5 3 940,1 4 137,1 4 343,9

Sale volume, %

Residential - - - - 30% 35% 35%underground parking (residential) - - - - - - 100%

Office premises - - - - 30% 35% 35%on ground parking (office) - - - - - - 100%

underground parking (off ice) - - - - - - 100%Retail premises - - - - - 50% 50%

Potential gross income PGI, USD 83 895 059 - - - - 18 220 302 30 531 176 35 143 580 - - - - - - - - - - - - - -

Effective gross income EGI, USD 83 895 059 - - - - 18 220 302 30 531 176 35 143 580 - - - - - - - - - - - - - -


Sales commission 2,0% (1 551 275) - - - - (328 343) (566 446) (656 485) - - - - - - - - - - - - - - VAT 18,0% (6 331 323) - - - - (1 803 154) (2 208 863) (2 319 306) - - - - - - - - - - - - - -

Unif ied tax payment (after VAT payment) 1,0% (775 637) - - - - (164 171) (283 223) (328 243) - - - - - - - - - - - - - - Total OPEX (8 658 235) - - - - (2 295 668) (3 058 533) (3 304 035) - - - - - - - - - - - - - -

Net operating income NOI 75 236 823 - - - - 15 924 634 27 472 644 31 839 546 - - - - - - - - - - - - - -


Page 82 of 102

Table 8.4.9. Estimation of NOI. Stage 3. Income from leaseName Total Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion


Office premises 37 125 - - - - - - - - 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125on ground parking (office) 677 - - - - - - - - 677 677 677 677 677 677 677 677 677 677 677 677 677

underground parking (office) 202 - - - - - - - - 202 202 202 202 202 202 202 202 202 202 202 202 202

Rent rate, USD per sq.m/ppl with VAT



Occupancy rate, %

Office premises - - - - - - - - 85% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92%on ground parking (office) - - - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

underground parking (office) - - - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

Potential gross income PGI, USD 271 622 252 - - - - - - - - 15 334 642 16 101 374 16 906 443 17 751 765 18 639 353 19 571 321 20 549 887 21 577 381 22 656 250 23 789 063 24 978 516 26 227 442 27 538 814

Rent loss from vacancy (22 948 235) - - - - - - - - (2 300 196) (1 297 221) (1 362 083) (1 430 187) (1 501 696) (1 576 781) (1 655 620) (1 738 401) (1 825 321) (1 916 587) (2 012 416) (2 113 037) (2 218 689)Rent loss from rent nonpayment 1,0% (2 486 740) - - - - - - - - (130 344) (148 042) (155 444) (163 216) (171 377) (179 945) (188 943) (198 390) (208 309) (218 725) (229 661) (241 144) (253 201)

Effective gross income EGI, USD 246 187 277 - - - - - - - - 12 904 101 14 656 111 15 388 917 16 158 363 16 966 281 17 814 595 18 705 324 19 640 591 20 622 620 21 653 751 22 736 439 23 873 261 25 066 924


Brokerage fee (included into investment volume) 8,3% (1 146 738) - - - - - - - - (1 055 470) (91 267) - - - - - - - - - - -

VAT 18,0% (37 553 991) - - - - - - - - (1 968 422) (2 235 678) (2 347 462) (2 464 835) (2 588 077) (2 717 481) (2 853 355) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768)Insurance 0,2% (1 659 496) - - - - - - - - (122 815) (123 752) (124 658) (125 533) (126 374) (127 178) (127 943) (128 668) (129 348) (129 982) (130 567) (131 100) (131 578)

Capital provision 1,0% (9 454 941) - - - - - - - - (624 482) (640 095) (656 097) (672 499) (689 312) (706 545) (724 208) (742 313) (760 871) (779 893) (799 390) (819 375) (839 860)

Unified tax payment (after VAT payment) 1,0% (2 086 333) - - - - - - - - (109 357) (124 204) (130 415) (136 935) (143 782) (150 971) (158 520) (166 446) (174 768) (183 506) (192 682) (202 316) (212 432)Land Rent, ha 5,20 (1 369 387) - - - - - - - - (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337)

Property tax 1,4% (11 616 475) - - - - - - - - (859 704) (866 261) (872 609) (878 732) (884 617) (890 246) (895 604) (900 674) (905 437) (909 875) (913 970) (917 700) (921 046)Property management expenses (after VAT payment) 2,0% (4 172 666) - - - - - - - - (218 714) (248 409) (260 829) (273 871) (287 564) (301 942) (317 039) (332 891) (349 536) (367 013) (385 363) (404 632) (424 863)

Total OPEX (69 060 027) - - - - - - - - (5 064 302) (4 435 003) (4 497 407) (4 657 743) (4 825 063) (4 999 700) (5 182 007) (5 372 352) (5 571 121) (5 778 722) (5 995 580) (6 222 144) (6 458 884)

Net operating income NOI 177 127 250 - - - - - - - - 7 839 799 10 221 108 10 891 510 11 500 619 12 141 218 12 814 894 13 523 318 14 268 239 15 051 499 15 875 030 16 740 859 17 651 117 18 608 040

Reversion 12,0% 155 067 002 155 067 002


NOI with Reversion, net of VAT 329 092 912 - - - - - - - - 7 839 799 10 221 108 10 891 510 11 500 619 12 141 218 12 814 894 13 523 318 14 268 239 15 051 499 15 875 030 16 740 859 17 651 117 18 608 040 151 965 662


Page 83 of 102


ReversionPremises for sale*, sq.m 17 151

Residential 17 151 - - - - - - 17 151 17 151 17 151

underground parking (residential) 124 - - - - - - 124 124 124Retail premises 7 860 - - - - - - 7 860 7 860 7 860

Sale price, USD per sq.m/ppl with VAT (retai l only)Residential 1 200 1 140,0 1 083,0 1 083,0 1 137,2 1 194,0 1 253,7 1 316,4 1 382,2 1 451,3 1 523,9 1 600,1 1 680,1 1 764,1 1 852,3 1 944,9 2 042,2 2 144,3 2 251,5 2 364,1 2 482,3 2 606,4

underground parking (residential) 7 000 6 650,0 6 317,5 6 317,5 6 633,4 6 965,0 7 313,3 7 679,0 8 062,9 8 466,1 8 889,4 9 333,8 9 800,5 10 290,5 10 805,1 11 345,3 11 912,6 12 508,2 13 133,6 13 790,3 14 479,8 15 203,8Retail premises 2 000 1 900,0 1 805,0 1 805,0 1 895,3 1 990,0 2 089,5 2 194,0 2 303,7 2 418,9 2 539,8 2 666,8 2 800,1 2 940,2 3 087,2 3 241,5 3 403,6 3 573,8 3 752,5 3 940,1 4 137,1 4 343,9

Sale volume, %Residential - - - - - - 30% 35% 35%

underground parking (residential) - - - - - - - - 100%Retail premises - - - - - - - 50% 50%

Potential gross income PGI, USD 43 391 351 - - - - - - 6 773 366 17 350 339 19 267 646 - - - - - - - - - - - -

Effective gross income EGI, USD 43 391 351 - - - - - - 6 773 366 17 350 339 19 267 646 - - - - - - - - - - - -

Operation expenses (OPEX)Sales commission 2,0% (811 208) - - - - - - (135 467) (319 388) (356 353) - - - - - - - - - - - -

VAT 18,0% (2 830 970) - - - - - - - (1 380 961) (1 450 009) - - - - - - - - - - - - Unified tax payment (after VAT payment) 1,0% (405 604) - - - - - - (67 734) (159 694) (178 176) - - - - - - - - - - - -

Total OPEX (4 047 781) - - - - - - (203 201) (1 860 042) (1 984 538) - - - - - - - - - - - -

Net operating income NOI 39 343 570 - - - - - - 6 570 165 15 490 296 17 283 108 - - - - - - - - - - - -


Page 84 of 102


Reversion


Office premises 37 125 - - - - - - - - - - 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125on ground parking (office) 677 - - - - - - - - - - 677 677 677 677 677 677 677 677 677 677 677

underground parking (office) 202 - - - - - - - - - - 202 202 202 202 202 202 202 202 202 202 202

Rent rate, USD per sq.m/ppl w ith VAT



Occupancy rate, %

Office premises - - - - - - - - 85% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92% 92%on ground parking (office) - - - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

underground parking (office) - - - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

Potential gross income PGI, USD 240 186 236 - - - - - - - - - - 16 906 443 17 751 765 18 639 353 19 571 321 20 549 887 21 577 381 22 656 250 23 789 063 24 978 516 26 227 442 27 538 814

Rent loss from vacancy (19 350 817) - - - - - - - - - - (1 362 083) (1 430 187) (1 501 696) (1 576 781) (1 655 620) (1 738 401) (1 825 321) (1 916 587) (2 012 416) (2 113 037) (2 218 689)Rent loss from rent nonpayment 1,0% (2 208 354) - - - - - - - - - - (155 444) (163 216) (171 377) (179 945) (188 943) (198 390) (208 309) (218 725) (229 661) (241 144) (253 201)

Effective gross income EGI, USD 218 627 065 - - - - - - - - - - 15 388 917 16 158 363 16 966 281 17 814 595 18 705 324 19 640 591 20 622 620 21 653 751 22 736 439 23 873 261 25 066 924


Brokerage fee (included into investment volume) 8,3% - - - - - - - - - - - - - - - - - - - - - -

VAT 18,0% (33 349 891) - - - - - - - - - - (2 347 462) (2 464 835) (2 588 077) (2 717 481) (2 853 355) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768)Insurance 0,2% (1 512 554) - - - - - - - - - - (132 991) (134 005) (134 987) (135 934) (136 845) (137 716) (138 544) (139 329) (140 065) (140 752) (141 385)

Capital provision 1,0% (8 441 632) - - - - - - - - - - (676 225) (693 131) (710 459) (728 220) (746 426) (765 087) (784 214) (803 819) (823 915) (844 512) (865 625)

Unified tax payment (after VAT payment) 1,0% (1 852 772) - - - - - - - - - - (130 415) (136 935) (143 782) (150 971) (158 520) (166 446) (174 768) (183 506) (192 682) (202 316) (212 432)Land Rent, ha 5,20 (1 158 712) - - - - - - - - - - (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337)

Property tax 1,4% (10 587 880) - - - - - - - - - - (930 936) (938 037) (944 910) (951 541) (957 913) (964 009) (969 811) (975 300) (980 458) (985 264) (989 698)Property management expenses (after VAT payment) 2,0% (3 705 543) - - - - - - - - - - (260 829) (273 871) (287 564) (301 942) (317 039) (332 891) (349 536) (367 013) (385 363) (404 632) (424 863)

Total OPEX (60 608 985) - - - - - - - - - - (4 584 195) (4 746 151) (4 915 117) (5 091 428) (5 275 435) (5 467 508) (5 668 034) (5 877 419) (6 096 091) (6 324 498) (6 563 109)

Net operating income NOI 158 018 080 - - - - - - - - - - 10 804 721 11 412 212 12 051 164 12 723 167 13 429 889 14 173 083 14 954 586 15 776 332 16 640 348 17 548 763 18 503 815

Reversion 12,0% 154 198 457 154 198 457


NOI with Reversion, net of VAT 309 132 567 - - - - - - - - - - 10 804 721 11 412 212 12 051 164 12 723 167 13 429 889 14 173 083 14 954 586 15 776 332 16 640 348 17 548 763 18 503 815 151 114 487


Page 85 of 102

Table 8.4.12. Estimation of NOI. Stage 4. Income from saleName Total Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Residential 17 151 - - - - - - - - 17 151 17 151 17 151

underground parking (residential) 124 - - - - - - - - 124 124 124Retail premises 7 860 - - - - - - - - 7 860 7 860 7 860

Sale price, USD per sq.m/ppl with VAT (retai l only)Residential 1 200,0 1 140,0 1 083,0 1 083,0 1 137,2 1 194,0 1 253,7 1 316,4 1 382,2 1 451,3 1 523,9 1 600,1 1 680,1 1 764,1 1 852,3 1 944,9 2 042,2 2 144,3 2 251,5 2 364,1 2 482,3 2 606,4

underground parking (residential) 7 000,0 6 650,0 6 317,5 6 317,5 6 633,4 6 965,0 7 313,3 7 679,0 8 062,9 8 466,1 8 889,4 9 333,8 9 800,5 10 290,5 10 805,1 11 345,3 11 912,6 12 508,2 13 133,6 13 790,3 14 479,8 15 203,8Retail premises 2 000,0 1 900,0 1 805,0 1 805,0 1 895,3 1 990,0 2 089,5 2 194,0 2 303,7 2 418,9 2 539,8 2 666,8 2 800,1 2 940,2 3 087,2 3 241,5 3 403,6 3 573,8 3 752,5 3 940,1 4 137,1 4 343,9

Sale volume, %Residential - - - - - - - - 30% 35% 35%

underground parking (residential) - - - - - - - - - - 100%Retail premises - - - - - - - - - 50% 50%

Potential gross income PGI, USD 47 838 964 - - - - - - - - 7 467 636 19 128 748 21 242 580 - - - - - - - - - -

Effective gross income EGI, USD 47 838 964 - - - - - - - - 7 467 636 19 128 748 21 242 580 - - - - - - - - - -

Operation expenses (OPEX)Sales commission 2,0% (894 356) - - - - - - - - (149 353) (352 125) (392 879) - - - - - - - - - -

VAT 18,0% (3 121 144) - - - - - - - - - (1 522 509) (1 598 635) - - - - - - - - - - Unified tax payment (after VAT payment) 1,0% (447 178) - - - - - - - - (74 676) (176 062) (196 439) - - - - - - - - - -

Total OPEX (4 462 679) - - - - - - - - (224 029) (2 050 696) (2 187 953) - - - - - - - - - -

Net operating income NOI 43 376 286 - - - - - - - - 7 243 607 17 078 052 19 054 627 - - - - - - - - - -


Page 86 of 102


Reversion


Office premises 37 125 - - - - - - - - - - - - 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125 37 125on ground parking (office) 677 - - - - - - - - - - - - 677 677 677 677 677 677 677 677 677

underground parking (office) 202 - - - - - - - - - - - - 202 202 202 202 202 202 202 202 202




Occupancy rate, %

Office premises - - - - - - - - - - - - 85% 92% 92% 92% 92% 92% 92% 92% 92%on ground parking (office) - - - - - - - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90%

underground parking (office) - - - - - - - - - - - - 85% 90% 90% 90% 90% 90% 90% 90% 90%

Potential gross income PGI, USD 205 528 028 - - - - - - - - - - - - 18 639 353 19 571 321 20 549 887 21 577 381 22 656 250 23 789 063 24 978 516 26 227 442 27 538 814

Rent loss from vacancy (17 852 755) - - - - - - - - - - - - (2 795 903) (1 576 781) (1 655 620) (1 738 401) (1 825 321) (1 916 587) (2 012 416) (2 113 037) (2 218 689)Rent loss from rent nonpayment 1,0% (1 876 753) - - - - - - - - - - - - (158 435) (179 945) (188 943) (198 390) (208 309) (218 725) (229 661) (241 144) (253 201)

Effective gross income EGI, USD 185 798 520 - - - - - - - - - - - - 15 685 016 17 814 595 18 705 324 19 640 591 20 622 620 21 653 751 22 736 439 23 873 261 25 066 924


Brokerage fee (included into investment volume) 8,3% (1 393 867) - - - - - - - - - - - - (1 282 931) (110 936) - - - - - - -

VAT 18,0% (28 342 147) - - - - - - - - - - - - (2 392 630) (2 717 481) (2 853 355) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768)Insurance 0,2% (1 332 365) - - - - - - - - - - - - (144 010) (145 108) (146 172) (147 198) (148 183) (149 126) (150 024) (150 873) (151 671)

Capital provision 1,0% (7 289 244) - - - - - - - - - - - - (732 255) (750 561) (769 325) (788 558) (808 272) (828 479) (849 191) (870 421) (892 181)

Unified tax payment (after VAT payment) 1,0% (1 574 564) - - - - - - - - - - - - (132 924) (150 971) (158 520) (166 446) (174 768) (183 506) (192 682) (202 316) (212 432)Land Rent, ha 5,20 (948 037) - - - - - - - - - - - - (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337)

Property tax 1,4% (9 326 555) - - - - - - - - - - - - (1 008 071) (1 015 759) (1 023 203) (1 030 383) (1 037 283) (1 043 884) (1 050 166) (1 056 111) (1 061 696)Property management expenses (after VAT payment) 2,0% (3 149 127) - - - - - - - - - - - - (265 848) (301 942) (317 039) (332 891) (349 536) (367 013) (385 363) (404 632) (424 863)

Total OPEX (53 355 906) - - - - - - - - - - - - (6 064 005) (5 298 096) (5 372 951) (5 566 836) (5 769 203) (5 980 460) (6 201 034) (6 431 373) (6 671 948)

Net operating income NOI 132 442 614 - - - - - - - - - - - - 9 621 011 12 516 498 13 332 374 14 073 755 14 853 417 15 673 291 16 535 405 17 441 888 18 394 976

Reversion 12,0% 153 291 463 153 291 463


NOI with Reversion, net of VAT 282 668 248 - - - - - - - - - - - - 9 621 011 12 516 498 13 332 374 14 073 755 14 853 417 15 673 291 16 535 405 17 441 888 18 394 976 150 225 634


Page 87 of 102



Residential 17 151 - - - - - - - - - - 17 151 17 151 17 151

underground parking (residential) 124 - - - - - - - - - - 124 124 124Retail premises 7 860 - - - - - - - - - - 7 860 7 860 7 860



Sale volume, %Residential - - - - - - - - - - 30% 35% 35%

underground parking (residential) - - - - - - - - - - - - 100%Retail premises - - - - - - - - - - - 50% 50%

Potential gross income PGI, USD 52 742 458 - - - - - - - - - - 8 233 069 21 089 445 23 419 944 - - - - - - - -

Effective gross income EGI, USD 52 742 458 - - - - - - - - - - 8 233 069 21 089 445 23 419 944 - - - - - - - -

Operation expenses (OPEX)Sales commission 2,0% (986 028) - - - - - - - - - - (164 661) (388 218) (433 149) - - - - - - - -

VAT 18,0% (3 441 061) - - - - - - - - - - - (1 678 566) (1 762 495) - - - - - - - - Unified tax payment (after VAT payment) 1,0% (493 014) - - - - - - - - - - (82 331) (194 109) (216 574) - - - - - - - -

Total OPEX (4 920 103) - - - - - - - - - - (246 992) (2 260 893) (2 412 218) - - - - - - - -

Net operating income NOI 47 822 355 - - - - - - - - - - 7 986 077 18 828 552 21 007 726 - - - - - - - -


Page 88 of 102


Reversion


Office premises 37 125 - - - - - - - - - - - - - - 37 125 37 125 37 125 37 125 37 125 37 125 37 125on ground parking (office) 677 - - - - - - - - - - - - - - 677 677 677 677 677 677 677

underground parking (office) 202 - - - - - - - - - - - - - - 202 202 202 202 202 202 202




Occupancy rate, %

Office premises - - - - - - - - - - - - - - 85% 92% 92% 92% 92% 92% 92%on ground parking (office) - - - - - - - - - - - - - - 85% 90% 90% 90% 90% 90% 90%

underground parking (office) - - - - - - - - - - - - - - 85% 90% 90% 90% 90% 90% 90%

Potential gross income PGI, USD 167 317 354 - - - - - - - - - - - - - - 20 549 887 21 577 381 22 656 250 23 789 063 24 978 516 26 227 442 27 538 814

Rent loss from vacancy (14 906 934) - - - - - - - - - - - - - - (3 082 483) (1 738 401) (1 825 321) (1 916 587) (2 012 416) (2 113 037) (2 218 689)Rent loss from rent nonpayment 1,0% (1 524 104) - - - - - - - - - - - - - - (174 674) (198 390) (208 309) (218 725) (229 661) (241 144) (253 201)

Effective gross income EGI, USD 150 886 315 - - - - - - - - - - - - - - 17 292 730 19 640 591 20 622 620 21 653 751 22 736 439 23 873 261 25 066 924


Brokerage fee (included into investment volume) 8,3% (1 536 738) - - - - - - - - - - - - - - (1 414 431) (122 307) - - - - -

VAT 18,0% (23 016 557) - - - - - - - - - - - - - - (2 637 874) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768)Insurance 0,2% (1 115 149) - - - - - - - - - - - - - - (155 942) (157 132) (158 283) (159 394) (160 461) (161 482) (162 454)

Capital provision 1,0% (5 984 561) - - - - - - - - - - - - - - (792 927) (812 750) (833 069) (853 896) (875 243) (897 124) (919 552)

Unified tax payment (after VAT payment) 1,0% (1 278 698) - - - - - - - - - - - - - - (146 549) (166 446) (174 768) (183 506) (192 682) (202 316) (212 432)Land Rent, ha 5,20 (737 362) - - - - - - - - - - - - - - (105 337) (105 337) (105 337) (105 337) (105 337) (105 337) (105 337)

Property tax 1,4% (7 806 042) - - - - - - - - - - - - - - (1 091 596) (1 099 922) (1 107 982) (1 115 757) (1 123 229) (1 130 376) (1 137 180)Property management expenses (after VAT payment) 2,0% (2 557 395) - - - - - - - - - - - - - - (293 097) (332 891) (349 536) (367 013) (385 363) (404 632) (424 863)

Total OPEX (44 032 501) - - - - - - - - - - - - - - (6 637 754) (5 792 807) (5 874 799) (6 088 018) (6 310 586) (6 542 952) (6 785 586)

Net operating income NOI 106 853 814 - - - - - - - - - - - - - - 10 654 976 13 847 783 14 747 822 15 565 734 16 425 853 17 330 309 18 281 337

Reversion 12,0% 152 344 479 152 344 479


NOI with Reversion, net of VAT 256 151 404 - - - - - - - - - - - - - - 10 654 976 13 847 783 14 747 822 15 565 734 16 425 853 17 330 309 18 281 337 149 297 590


Page 89 of 102



Residential 17 151 - - - - - - - - - - - - 17 151 17 151 17 151

underground parking (residential) 124 - - - - - - - - - - - - 124 124 124Retail premises 7 860 - - - - - - - - - - - - 7 860 7 860 7 860



Sale volume, %Residential - - - - - - - - - - - - 30% 35% 35%

underground parking (residential) - - - - - - - - - - - - - - 100%Retail premises - - - - - - - - - - - - - 50% 50%

Potential gross income PGI, USD 58 148 560 - - - - - - - - - - - - 9 076 959 23 251 113 25 820 489 - - - - - -

Effective gross income EGI, USD 58 148 560 - - - - - - - - - - - - 9 076 959 23 251 113 25 820 489 - - - - - -

Operation expenses (OPEX)Sales commission 2,0% (1 087 096) - - - - - - - - - - - - (181 539) (428 010) (477 547) - - - - - -

VAT 18,0% (3 793 770) - - - - - - - - - - - - - (1 850 619) (1 943 150) - - - - - - Unified tax payment (after VAT payment) 1,0% (543 548) - - - - - - - - - - - - (90 770) (214 005) (238 773) - - - - - -

Total OPEX (5 424 414) - - - - - - - - - - - - (272 309) (2 492 634) (2 659 471) - - - - - -

Net operating income NOI 52 724 147 - - - - - - - - - - - - 8 804 650 20 758 479 23 161 018 - - - - - -


Page 90 of 102


Reversion


Office premises 37 125 - - - - - - - - - - - - - - - - 37 125 37 125 37 125 37 125 37 125on ground parking (office) 677 - - - - - - - - - - - - - - - - 677 677 677 677 677

underground parking (office) 202 - - - - - - - - - - - - - - - - 202 202 202 202 202




Occupancy rate, %

Office premises - - - - - - - - - - - - - - - - 85% 92% 92% 92% 92%on ground parking (office) - - - - - - - - - - - - - - - - 85% 90% 90% 90% 90%

underground parking (office) - - - - - - - - - - - - - - - - 85% 90% 90% 90% 90%

Potential gross income PGI, USD 125 190 085 - - - - - - - - - - - - - - - - 22 656 250 23 789 063 24 978 516 26 227 442 27 538 814

Rent loss from vacancy (11 659 167) - - - - - - - - - - - - - - - - (3 398 438) (1 916 587) (2 012 416) (2 113 037) (2 218 689)Rent loss from rent nonpayment 1,0% (1 135 309) - - - - - - - - - - - - - - - - (192 578) (218 725) (229 661) (241 144) (253 201)

Effective gross income EGI, USD 112 395 609 - - - - - - - - - - - - - - - - 19 065 235 21 653 751 22 736 439 23 873 261 25 066 924


Brokerage fee (included into investment volume) 8,3% (1 694 254) - - - - - - - - - - - - - - - - (1 559 411) (134 843) - - -

VAT 18,0% (17 145 093) - - - - - - - - - - - - - - - - (2 908 256) (3 303 115) (3 468 270) (3 641 684) (3 823 768)Insurance 0,2% (856 769) - - - - - - - - - - - - - - - - (168 863) (170 151) (171 398) (172 601) (173 757)

Capital provision 1,0% (4 513 222) - - - - - - - - - - - - - - - - (858 626) (880 092) (902 094) (924 647) (947 763)

Unified tax payment (after VAT payment) 1,0% (952 505) - - - - - - - - - - - - - - - - (161 570) (183 506) (192 682) (202 316) (212 432)Land Rent, ha 5,20 (526 687) - - - - - - - - - - - - - - - - (105 337) (105 337) (105 337) (105 337) (105 337)

Property tax 1,4% (5 997 386) - - - - - - - - - - - - - - - - (1 182 042) (1 191 058) (1 199 785) (1 208 205) (1 216 296)Property management expenses (after VAT payment) 2,0% (1 905 010) - - - - - - - - - - - - - - - - (323 140) (367 013) (385 363) (404 632) (424 863)

Total OPEX (33 590 927) - - - - - - - - - - - - - - - - (7 267 245) (6 335 115) (6 424 931) (6 659 421) (6 904 215)

Net operating income NOI 78 804 682 - - - - - - - - - - - - - - - - 11 797 989 15 318 636 16 311 508 17 213 840 18 162 709

Reversion 12,0% 151 355 905 151 355 905


NOI with Reversion, net of VAT 227 133 469 - - - - - - - - - - - - - - - - 11 797 989 15 318 636 16 311 508 17 213 840 18 162 709 148 328 787


Page 91 of 102



Residential 17 151 - - - - - - - - - - - - - - 17 151 17 151 17 151

underground parking (residential) 124 - - - - - - - - - - - - - - 124 124 124Retail premises 7 860 - - - - - - - - - - - - - - 7 860 7 860 7 860



Sale volume, %Residential - - - - - - - - - - - - - - 30% 35% 35%

underground parking (residential) - - - - - - - - - - - - - - - - 100%Retail premises - - - - - - - - - - - - - - - 50% 50%

Potential gross income PGI, USD 64 108 788 - - - - - - - - - - - - - - 10 007 347 25 634 352 28 467 089 - - - -

Effective gross income EGI, USD 64 108 788 - - - - - - - - - - - - - - 10 007 347 25 634 352 28 467 089 - - - -

Operation expenses (OPEX)Sales commission 2,0% (1 198 523) - - - - - - - - - - - - - - (200 147) (471 881) (526 495) - - - -

VAT 18,0% (4 182 631) - - - - - - - - - - - - - - - (2 040 308) (2 142 323) - - - - Unified tax payment (after VAT payment) 1,0% (599 262) - - - - - - - - - - - - - - (100 073) (235 940) (263 248) - - - -

Total OPEX (5 980 416) - - - - - - - - - - - - - - (300 220) (2 748 129) (2 932 066) - - - -

Net operating income NOI 58 128 372 - - - - - - - - - - - - - - 9 707 126 22 886 223 25 535 022 - - - -


Page 92 of 102

Table 8.4.19. Estimation of value using the DCF method. Stage 1 Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (52 965 031) (3 556 823) (16 623 996) (13 477 982) (15 060 481) (4 245 749) - - -

VAT in cost of investment per annum (7 283 271) (542 566) (2 535 864) (1 769 967) (1 896 956) (537 919) - - - VAT cumulative with return (13 687 152) (542 566) (3 078 430) (4 848 397) (4 013 301) (1 204 458) - - - - - - - - - - - - - - - - -

NOI with Reversion 67 458 698 - - 17 094 246 20 940 451 29 424 001 - - - - - - - - - - - - - - - - -

VAT from operation activity (9 592 914) - - (2 732 051) (3 346 763) (3 514 101) - - - - - - - - - - - - - - - - - VAT to repayment 7 283 271 - - 2 732 051 3 346 763 1 204 458 - - - - - - - - - - - - - - - - -

Cash flow with taking into account the return of VAT 21 776 939 (3 556 823) (16 623 996) 6 348 314 9 226 733 26 382 710 - - - - - - - - - - - - - - - - -

Discount rate 16,0% 16,0% 16,0% 16,0% 16,0% 15,5% 15,0% 14,5% 14,0% 13,5% 13,0% 12,5% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0%Discount coef ficient 1,0000 0,8824 0,7606 0,6557 0,5677 0,4937 0,4312 0,3782 0,3332 0,2949 0,2621 0,2340 0,2090 0,1866 0,1666 0,1487 0,1328 0,1186 0,1059 0,0945 0,0844 0,0754 0,0673

Discounted cash flow 6 642 362 (3 138 373) (12 645 028) 4 162 793 5 238 324 13 024 646 - - - - - - - - - - - - - - - - -

Project value (NPV) 6 642 362


Reversion

Cost of investment with VAT, € (81 124 492) - - (4 736 340) (20 394 153) (24 253 074) (26 422 946) (5 317 979) -

VAT in cost of investment per annum (10 384 130) - - (722 493) (2 735 991) (2 926 896) (3 207 123) (791 629) - VAT cumulat ive with return (31 901 930) - - (722 493) (3 458 484) (6 385 379) (7 789 348) (6 372 113) (3 234 576) (2 305 242) (1 329 442) (304 852) - - - - - - - - - - -

NOI with Reversion 232 235 705 - - - - 15 924 634 27 472 644 34 956 196 4 105 604 4 383 133 4 635 159 4 900 267 5 179 118 5 472 408 5 780 863 6 105 250 6 446 372 6 805 073 7 182 238 7 578 798 7 995 731 8 434 060 68 878 159

VAT from operation activity (38 014 308) - - - - (1 803 154) (2 208 863) (3 137 538) (929 333) (975 800) (1 024 590) (1 075 820) (1 129 611) (1 186 091) (1 245 396) (1 307 665) (1 373 049) (1 441 701) (1 513 786) (1 589 475) (1 668 949) (1 752 397) (12 651 091)VAT to repayment 10 384 130 - - - - 1 803 154 2 208 863 3 137 538 929 333 975 800 1 024 590 304 852 - - - - - - - - - - -

Cash flow with taking into account the return of VAT 161 495 344 - - (4 736 340) (20 394 153) (6 525 287) 3 258 561 32 775 754 5 034 937 5 358 933 5 659 749 5 205 119 5 179 118 5 472 408 5 780 863 6 105 250 6 446 372 6 805 073 7 182 238 7 578 798 7 995 731 8 434 060 68 878 159

Discount rate 16,0% 16,0% 16,0% 16,0% 16,0% 15,5% 15,0% 14,5% 14,0% 13,5% 13,0% 12,5% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0% 12,0%Discount coefficient 1,0000 0,8824 0,7606 0,6557 0,5677 0,4937 0,4312 0,3782 0,3332 0,2949 0,2621 0,2340 0,2090 0,1866 0,1666 0,1487 0,1328 0,1186 0,1059 0,0945 0,0844 0,0754 0,0673

Discounted cash flow 14 914 069 - - (3 105 770) (11 578 440) (3 221 411) 1 404 970 12 396 209 1 677 778 1 580 302 1 483 565 1 218 210 1 082 254 1 021 019 963 008 908 077 856 084 806 893 760 370 716 387 674 819 635 547 4 634 198



Reversion

Cost of investment with VAT, € (93 069 449) - - - - (5 398 936) (23 413 640) (27 825 098) (30 250 700) (6 181 074) - - - - - - - -

VAT in cost of investment per annum (12 041 292) - - - - (823 567) (3 165 521) (3 407 755) (3 722 785) (921 664) - - - - - - - - VAT cumulat ive with return (49 090 265) - - - - (823 567) (3 989 088) (7 396 843) (11 119 628) (10 660 331) (7 241 900) (5 006 222) (2 658 760) (193 925) - - - - - - - - -

NOI with Reversion 368 436 482 - - - - - - 6 570 165 15 490 296 25 122 908 10 221 108 10 891 510 11 500 619 12 141 218 12 814 894 13 523 318 14 268 239 15 051 499 15 875 030 16 740 859 17 651 117 18 608 040 151 965 662

VAT from operation activity (68 297 021) - - - - - - - (1 380 961) (3 418 431) (2 235 678) (2 347 462) (2 464 835) (2 588 077) (2 717 481) (2 853 355) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768) (27 912 060)VAT to repayment 12 041 292 - - - - - - - 1 380 961 3 418 431 2 235 678 2 347 462 2 464 835 193 925 - - - - - - - - -

Cash flow with taking into account the return of VAT 287 408 325 - - - - (5 398 936) (23 413 640) (21 254 933) (13 379 443) 22 360 264 12 456 786 13 238 971 13 965 454 12 335 143 12 814 894 13 523 318 14 268 239 15 051 499 15 875 030 16 740 859 17 651 117 18 608 040 151 965 662


Discounted cash flow 17 124 700 - - - - (2 665 353) (10 095 085) (8 038 887) (4 458 393) 6 593 846 3 265 242 3 098 458 2 918 290 2 301 439 2 134 776 2 011 419 1 894 836 1 784 691 1 680 659 1 582 431 1 489 709 1 402 206 10 224 417



Page 93 of 102


Reversion

Cost of investment with VAT, € (100 780 877) - - - - - - (5 846 275) (25 353 618) (30 130 594) (32 757 173) (6 693 218) - - - - - -

VAT in cost of investment per annum (13 038 994) - - - - - - (891 805) (3 427 806) (3 690 110) (4 031 243) (998 030) - - - - - - VAT cumulat ive with return (51 972 001) - - - - - - (891 805) (4 319 610) (8 009 721) (12 040 964) (11 516 485) (7 570 388) (5 105 553) (2 517 476) - - - - - - - -

NOI with Reversion 352 508 853 - - - - - - - - 7 243 607 17 078 052 29 859 348 11 412 212 12 051 164 12 723 167 13 429 889 14 173 083 14 954 586 15 776 332 16 640 348 17 548 763 18 503 815 151 114 487

VAT from operation activity (64 226 757) - - - - - - - - - (1 522 509) (3 946 097) (2 464 835) (2 588 077) (2 717 481) (2 853 355) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768) (27 755 722)VAT to repayment 13 038 994 - - - - - - - - - 1 522 509 3 946 097 2 464 835 2 588 077 2 517 476 - - - - - - - -

Cash flow with taking into account the return of VAT 264 766 970 - - - - - - (5 846 275) (25 353 618) (22 886 987) (14 156 612) 27 112 227 13 877 047 14 639 241 15 240 644 13 429 889 14 173 083 14 954 586 15 776 332 16 640 348 17 548 763 18 503 815 151 114 487


Discounted cash flow 15 334 381 - - - - - - (2 211 136) (8 448 513) (6 749 172) (3 710 810) 6 345 364 2 899 816 2 731 328 2 538 871 1 997 523 1 882 199 1 773 200 1 670 211 1 572 931 1 481 070 1 394 352 10 167 149



Reversion

Cost of investment with VAT, € (109 131 249) - - - - - - - - (6 330 678) (27 454 335) (32 627 116) (35 471 325) (7 247 796) - - - -

VAT in cost of investment per annum (14 119 362) - - - - - - - - (965 697) (3 711 822) (3 995 861) (4 365 258) (1 080 724) - - - - VAT cumulat ive with return (56 364 727) - - - - - - - - (965 697) (4 677 519) (8 673 380) (13 038 638) (12 440 796) (8 285 671) (5 568 191) (2 714 836) - - - - - -

NOI with Reversion 330 490 603 - - - - - - - - - - 7 986 077 18 828 552 30 628 737 12 516 498 13 332 374 14 073 755 14 853 417 15 673 291 16 535 405 17 441 888 18 394 976 150 225 634

VAT from operation activity (59 375 672) - - - - - - - - - - - (1 678 566) (4 155 124) (2 717 481) (2 853 355) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768) (27 592 463)VAT to repayment 14 119 362 - - - - - - - - - - - 1 678 566 4 155 124 2 717 481 2 853 355 2 714 836 - - - - - -

Cash flow with taking into account the return of VAT 235 478 716 - - - - - - - - (6 330 678) (27 454 335) (24 641 039) (14 964 206) 27 536 065 15 233 979 16 185 728 16 788 591 14 853 417 15 673 291 16 535 405 17 441 888 18 394 976 150 225 634


Discounted cash flow 12 304 003 - - - - - - - - (1 866 861) (7 196 483) (5 767 005) (3 126 994) 5 137 563 2 537 760 2 407 418 2 229 541 1 761 204 1 659 302 1 563 011 1 472 050 1 386 150 10 107 346



Reversion

Cost of investment with VAT, € (118 173 505) - - - - - - - - - - (6 855 217) (29 729 111) (35 330 491) (38 410 362) (7 848 324) - -

VAT in cost of investment per annum (15 289 246) - - - - - - - - - - (1 045 711) (4 019 372) (4 326 945) (4 726 949) (1 170 269) - - VAT cumulat ive with return (60 495 362) - - - - - - - - - - (1 045 711) (5 065 083) (9 392 027) (14 118 977) (13 438 626) (8 857 602) (5 861 579) (2 715 756) - - - -

NOI with Reversion 308 875 550 - - - - - - - - - - - - 8 804 650 20 758 479 33 815 994 13 847 783 14 747 822 15 565 734 16 425 853 17 330 309 18 281 337 149 297 590

VAT from operation activity (54 232 333) - - - - - - - - - - - - - (1 850 619) (4 581 024) (2 996 022) (3 145 823) (3 303 115) (3 468 270) (3 641 684) (3 823 768) (27 422 006)VAT to repayment 15 289 246 - - - - - - - - - - - - - 1 850 619 4 581 024 2 996 022 3 145 823 2 715 756 - - - -

Cash flow with taking into account the return of VAT 205 991 291 - - - - - - - - - - (6 855 217) (29 729 111) (26 525 842) (15 801 264) 30 548 694 16 843 806 17 893 645 18 281 490 16 425 853 17 330 309 18 281 337 149 297 590


Discounted cash flow 9 877 415 - - - - - - - - - - (1 604 400) (6 212 340) (4 949 080) (2 632 262) 4 543 724 2 236 874 2 121 690 1 935 427 1 552 655 1 462 633 1 377 587 10 044 906



Page 94 of 102


Reversion

Cost of investment with VAT, € (127 964 972) - - - - - - - - - - - - (7 423 217) (32 192 367) (38 257 859) (41 592 918) (8 498 610)

VAT in cost of investment per annum (16 556 062) - - - - - - - - - - - - (1 132 355) (4 352 404) (4 685 461) (5 118 609) (1 267 234)VAT cumulat ive with return (64 912 942) - - - - - - - - - - - - (1 132 355) (5 484 759) (10 170 220) (15 288 829) (14 515 754) (9 465 175) (6 162 060) (2 693 790) - -

NOI with Reversion 285 261 841 - - - - - - - - - - - - - - 9 707 126 22 886 223 37 333 012 15 318 636 16 311 508 17 213 840 18 162 709 148 328 787

VAT from operation activity (48 571 787) - - - - - - - - - - - - - - - (2 040 308) (5 050 580) (3 303 115) (3 468 270) (3 641 684) (3 823 768) (27 244 063)VAT to repayment 16 556 062 - - - - - - - - - - - - - - - 2 040 308 5 050 580 3 303 115 3 468 270 2 693 790 - -

Cash flow with taking into account the return of VAT 173 852 931 - - - - - - - - - - - - (7 423 217) (32 192 367) (28 550 733) (16 666 387) 33 884 981 18 621 751 19 779 779 19 907 630 18 162 709 148 328 787


Discounted cash flow 7 679 840 - - - - - - - - - - - - (1 384 993) (5 362 783) (4 246 553) (2 213 312) 4 017 820 1 971 450 1 869 686 1 680 152 1 368 648 9 979 724


Table 8.4.26. Estimation of value using the DCF method. Stages 1-7 Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (683 209 575) (3 556 823) (16 623 996) (18 214 323) (35 454 633) (33 897 760) (49 836 586) (38 989 352) (55 604 318) (42 642 346) (60 211 508) (46 175 550) (65 200 435) (50 001 504) (70 602 729) (46 106 184) (41 592 918) (8 498 610) - - - -

VAT in cost of investment per annum (88 712 358) (542 566) (2 535 864) (2 492 459) (4 632 946) (4 288 381) (6 372 644) (5 091 188) (7 150 591) (5 577 471) (7 743 065) (6 039 602) (8 384 630) (6 540 024) (9 079 353) (5 855 730) (5 118 609) (1 267 234) - - - -

VAT cumulative with return (328 424 378) (542 566) (3 078 430) (5 570 889) (7 471 785) (8 413 403) (11 778 436) (14 660 761) (18 673 814) (21 940 991) (25 289 825) (26 546 650) (28 332 869) (28 264 657) (30 406 883) (29 177 037) (26 861 267) (20 377 334) (12 180 931) (6 162 060) (2 693 790) - -

NOI with Reversion 1 945 267 732 - - 17 094 246 20 940 451 45 348 635 27 472 644 41 526 361 19 595 900 36 749 648 31 934 319 53 637 201 46 920 501 69 098 176 64 593 902 89 913 951 85 695 455 103 745 409 85 391 260 90 232 771 95 181 647 100 384 937 819 810 319

VAT from operation activity (342 310 792) - - (2 732 051) (3 346 763) (5 317 254) (2 208 863) (3 137 538) (2 310 294) (4 394 231) (4 782 777) (7 369 378) (7 737 847) (10 517 369) (11 248 457) (14 448 754) (15 397 446) (19 075 574) (18 029 359) (18 930 827) (19 877 368) (20 871 237) (150 577 405)

VAT to repayment 88 712 358 - - 2 732 051 3 346 763 3 007 611 2 208 863 3 137 538 2 310 294 4 394 231 4 782 777 6 598 411 6 608 236 6 937 126 7 085 576 7 434 379 7 751 166 8 196 403 6 018 871 3 468 270 2 693 790 - -

Cash flow with taking into account the return of VAT 1 350 770 515 (3 556 823) (16 623 996) 1 611 974 (11 167 419) 14 458 487 (20 155 079) 5 674 547 (33 698 123) (1 498 467) (23 494 412) 14 060 062 (11 671 698) 26 033 798 1 076 749 51 242 146 51 853 703 103 443 201 91 410 131 93 701 041 97 875 437 100 384 937 819 810 319


Discounted cash flow 83 876 770 (3 138 373) (12 645 028) 1 057 023 (6 340 116) 7 137 882 (8 690 116) 2 146 186 (11 229 128) (441 885) (6 158 486) 3 290 626 (2 438 975) 4 857 277 179 371 7 621 607 6 886 222 12 265 497 9 677 418 8 857 101 8 260 434 7 564 490 55 157 742



Page 95 of 102

Table 8.4.27. Estimation of value using the DCF method. Stages 1-7. Commercial part (office premises, street retail)Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (551 682 551) (3 067 890) (16 418 243) (15 039 974) (28 687 987) (26 321 859) (39 580 571) (31 335 149) (44 498 522) (34 353 941) (48 185 523) (37 200 396) (52 178 017) (40 282 698) (56 501 316) (37 338 010) (32 634 940) (8 057 514) - - - -

VAT in cost of investment per annum (84 154 965) (467 983) (2 504 478) (2 294 233) (4 376 134) (4 015 199) (6 037 714) (4 779 938) (6 787 910) (5 240 432) (7 350 334) (5 674 637) (7 959 359) (6 144 818) (8 618 845) (5 695 629) (4 978 211) (1 229 112) - - - -

VAT cumulative with return (297 973 960) (467 983) (2 972 461) (5 266 694) (6 910 777) (7 579 213) (10 790 506) (13 361 581) (17 011 954) (19 942 091) (22 898 194) (24 078 202) (25 744 002) (25 727 867) (27 603 511) (26 907 900) (24 451 732) (18 681 545) (10 485 143) (5 280 437) (1 812 166) - -

NOI with Reversion 1 766 428 497 - - 14 722 720 18 035 332 36 090 620 19 868 286 26 047 995 11 547 448 20 036 868 23 060 900 35 211 362 37 137 557 48 783 688 53 808 206 67 517 228 73 804 225 89 755 129 85 391 260 90 232 771 95 181 647 100 384 937 819 810 319

VAT from operation activity (342 310 792) - - (2 732 051) (3 346 763) (5 317 254) (2 208 863) (3 137 538) (2 310 294) (4 394 231) (4 782 777) (7 369 378) (7 737 847) (10 517 369) (11 248 457) (14 448 754) (15 397 446) (19 075 574) (18 029 359) (18 930 827) (19 877 368) (20 871 237) (150 577 405)

VAT to repayment 88 712 358 - - 2 732 051 3 346 763 3 007 611 2 208 863 3 137 538 2 310 294 4 394 231 4 782 777 6 598 411 6 608 236 6 937 126 7 085 576 7 434 379 7 751 166 8 196 403 6 018 871 3 468 270 2 693 790 - - Cash flow with taking into account the return of VAT 1 303 458 304 (3 067 890) (16 418 243) 2 414 797 (7 305 893) 12 776 373 (17 503 422) (2 149 617) (30 640 780) (9 922 842) (20 341 846) 4 609 378 (8 432 223) 15 438 117 4 392 466 37 613 597 48 920 451 89 894 018 91 410 131 93 701 041 97 875 437 100 384 937 819 810 319


Discounted cash flow 76 915 370 (2 706 962) (12 488 522) 1 583 459 (4 147 799) 6 307 454 (7 546 820) (813 013) (10 210 339) (2 926 159) (5 332 118) 1 078 782 (1 762 039) 2 880 379 731 721 5 594 537 6 496 683 10 658 940 9 677 418 8 857 101 8 260 434 7 564 490 55 157 742


Table 8.4.28. Estimation of value using the DCF method. Stages 1-7. Residential part Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (131 527 024) (488 932) (205 753) (3 174 349) (6 766 646) (7 575 901) (10 256 016) (7 654 203) (11 105 795) (8 288 405) (12 025 985) (8 975 155) (13 022 418) (9 718 806) (14 101 413) (8 768 173) (8 957 978) (441 096) - - - -

VAT in cost of investment per annum (4 557 392) (74 583) (31 386) (198 226) (256 813) (273 182) (334 929) (311 250) (362 681) (337 040) (392 731) (364 966) (425 272) (395 205) (460 508) (160 101) (140 398) (38 121) - - - -

VAT cumulative with return (61 645 776) (74 583) (105 969) (304 195) (561 008) (834 190) (1 169 120) (1 480 370) (1 843 051) (2 180 090) (2 572 821) (2 937 787) (3 363 059) (3 758 264) (4 218 772) (4 378 873) (4 519 271) (4 557 392) (4 557 392) (4 557 392) (4 557 392) (4 557 392) (4 557 392)

NOI with Reversion 178 839 235 - - 2 371 526 2 905 120 9 258 015 7 604 358 15 478 366 8 048 452 16 712 779 8 873 419 18 425 839 9 782 944 20 314 488 10 785 696 22 396 723 11 891 230 13 990 280 - - - - -

VAT from operation activity - - - - - - - - - - - - - - - - - - - - - - -

VAT to repayment - - - - - - - - - - - - - - - - - - - - - - -

Cash flow with taking into account the return of VAT 47 312 211 (488 932) (205 753) (802 822) (3 861 526) 1 682 114 (2 651 658) 7 824 164 (3 057 343) 8 424 374 (3 152 566) 9 450 684 (3 239 474) 10 595 681 (3 315 717) 13 628 549 2 933 252 13 549 184 - - - - -


Discounted cash flow 6 961 400 (431 411) (156 506) (526 436) (2 192 317) 830 428 (1 143 296) 2 959 199 (1 018 790) 2 484 274 (826 368) 2 211 845 (676 936) 1 976 898 (552 350) 2 027 071 389 539 1 606 558 - - - - -



Page 96 of 102

8.4.2 Calculation of Fair Value of the Subject Property

The fair value of the Subject Property differs from the market value of the Subject Property. The following

assumptions for valuation were used:

• The land plot can be built up by the business, public and residential properties (as the best variant of

building concept offered by the Client);

• The land plot at its development has a certain growth potential;

• The developer’s income from the project wouldn’t be lower than an average market level.

Belarusian practice has shown that in 2009, in Minsk average Developer Profit constituted 15-20% for

development of huge real estate schemes (retail, office premises, residential).

Considering significant duration of project’s realization, its multifunctionality, availability of a sold part that

allows to diversify risks of the project, developer profit in the Report is accepted at the level of 15 % from

investment costs.

Estimation of fair value of the Subject Property is given in Tables 8.4.29 – 8.4.38.

Based on our research and calculations, the fair value of the Subject Property rounded as at September

30, 2009, net of VAT is

USD 52 900 000

(Fifty two million nine hundred thousand US dollars)

including

the fair value of commercial part of the Subject Property – USD 51 700 000,

the fair value of residential part of the Subject Property – USD 1 200 000.


Page 97 of 102

Table 8.4.29.

Estimation of fair value using the DCF method. Stage 1 Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (52 965 031) (3 556 823) (16 623 996) (13 477 982) (15 060 481) (4 245 749) - - - - - - - - - - - - - - - - -

Cash flow with taking into account the return of VAT 21 776 939 (3 556 823) (16 623 996) 6 348 314 9 226 733 26 382 710 - - - - - - - - - - - - - - - - -

Developer's profit, USD 15,0% (7 944 755) (533 523) (2 493 599) (2 021 697) (2 259 072) (636 862) - - - - - - - - - - - - - - - - -

Cash flow for a land plot, USD 13 832 184 (4 090 346) (19 117 596) 4 326 617 6 967 661 25 745 848 - - - - - - - - - - - - - - - - -


DCF, USD 1 352 203 (3 609 129) (14 541 782) 2 837 101 3 955 773 12 710 239 - - - - - - - - - - - - - - - - -

Land plot fair value, USD 1 352 203

Table 8.4.30.


Reversion

Cost of investment with VAT, USD (81 124 492) - - (4 736 340) (20 394 153) (24 253 074) (26 422 946) (5 317 979) - - - - - - - - - - - - - - -

Cash flow with taking into account the return of VAT 161 495 344 - - (4 736 340) (20 394 153) (6 525 287) 3 258 561 32 775 754 5 034 937 5 358 933 5 659 749 5 205 119 5 179 118 5 472 408 5 780 863 6 105 250 6 446 372 6 805 073 7 182 238 7 578 798 7 995 731 8 434 060 68 878 159

Developer's profit , USD 15,0% (12 168 674) - - (710 451) (3 059 123) (3 637 961) (3 963 442) (797 697) - - - - - - - - - - - - - - -

Cash flow for a land plot, USD 149 326 670 - - (5 446 791) (23 453 275) (10 163 248) (704 881) 31 978 057 5 034 937 5 358 933 5 659 749 5 205 119 5 179 118 5 472 408 5 780 863 6 105 250 6 446 372 6 805 073 7 182 238 7 578 798 7 995 731 8 434 060 68 878 159


DCF, USD 8 904 858 - - (3 571 635) (13 315 206) (5 017 404) (303 918) 12 094 510 1 677 778 1 580 302 1 483 565 1 218 210 1 082 254 1 021 019 963 008 908 077 856 084 806 893 760 370 716 387 674 819 635 547 4 634 198


Table 8.4.31. Estimation of fair value using the DCF method. Stage 3 Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (93 069 449) - - - - (5 398 936) (23 413 640) (27 825 098) (30 250 700) (6 181 074) - - - - - - - - - - - - -

Cash flow with taking into account the return of VAT 287 408 325 - - - - (5 398 936) (23 413 640) (21 254 933) (13 379 443) 22 360 264 12 456 786 13 238 971 13 965 454 12 335 143 12 814 894 13 523 318 14 268 239 15 051 499 15 875 030 16 740 859 17 651 117 18 608 040 151 965 662

Developer's profit , USD 15,0% (13 960 417) - - - - (809 840) (3 512 046) (4 173 765) (4 537 605) (927 161) - - - - - - - - - - - - -

Cash flow for a land plot, USD 273 447 907 - - - - (6 208 777) (26 925 687) (25 428 698) (17 917 048) 21 433 103 12 456 786 13 238 971 13 965 454 12 335 143 12 814 894 13 523 318 14 268 239 15 051 499 15 875 030 16 740 859 17 651 117 18 608 040 151 965 662


DCF, USD 11 846 599 - - - - (3 065 156) (11 609 348) (9 617 458) (5 970 446) 6 320 435 3 265 242 3 098 458 2 918 290 2 301 439 2 134 776 2 011 419 1 894 836 1 784 691 1 680 659 1 582 431 1 489 709 1 402 206 10 224 417



Page 98 of 102

Table 8.4.32.


Reversion

Cost of investment with VAT, USD (100 780 877) - - - - - - (5 846 275) (25 353 618) (30 130 594) (32 757 173) (6 693 218) - - - - - - - - - - -

Cash flow with taking into account the return of VAT 264 766 970 - - - - - - (5 846 275) (25 353 618) (22 886 987) (14 156 612) 27 112 227 13 877 047 14 639 241 15 240 644 13 429 889 14 173 083 14 954 586 15 776 332 16 640 348 17 548 763 18 503 815 151 114 487

Developer's profit , USD 15,0% (15 117 132) - - - - - - (876 941) (3 803 043) (4 519 589) (4 913 576) (1 003 983) - - - - - - - - - - -

Cash flow for a land plot, USD 249 649 838 - - - - - - (6 723 216) (29 156 660) (27 406 576) (19 070 188) 26 108 244 13 877 047 14 639 241 15 240 644 13 429 889 14 173 083 14 954 586 15 776 332 16 640 348 17 548 763 18 503 815 151 114 487


DCF, USD 10 879 700 - - - - - - (2 542 806) (9 715 790) (8 081 960) (4 998 784) 6 110 391 2 899 816 2 731 328 2 538 871 1 997 523 1 882 199 1 773 200 1 670 211 1 572 931 1 481 070 1 394 352 10 167 149


Table 8.4.33.


Reversion

Cost of investment with VAT, USD (109 131 249) - - - - - - - - (6 330 678) (27 454 335) (32 627 116) (35 471 325) (7 247 796) - - - - - - - - -

Cash flow with taking into account the return of VAT 235 478 716 - - - - - - - - (6 330 678) (27 454 335) (24 641 039) (14 964 206) 27 536 065 15 233 979 16 185 728 16 788 591 14 853 417 15 673 291 16 535 405 17 441 888 18 394 976 150 225 634

Developer's profit , USD 15,0% (16 369 687) - - - - - - - - (949 602) (4 118 150) (4 894 067) (5 320 699) (1 087 169) - - - - - - - - -

Cash flow for a land plot, USD 219 109 029 - - - - - - - - (7 280 279) (31 572 485) (29 535 106) (20 284 905) 26 448 896 15 233 979 16 185 728 16 788 591 14 853 417 15 673 291 16 535 405 17 441 888 18 394 976 150 225 634


DCF, USD 8 484 411 - - - - - - - - (2 146 891) (8 275 955) (6 912 416) (4 238 833) 4 934 724 2 537 760 2 407 418 2 229 541 1 761 204 1 659 302 1 563 011 1 472 050 1 386 150 10 107 346


Table 8.4.34.


Cost of investment with VAT, USD (118 173 505) - - - - - - - - - - (6 855 217) (29 729 111) (35 330 491) (38 410 362) (7 848 324) - - - - - - -

Cash flow with taking into account the return of VAT 205 991 291 - - - - - - - - - - (6 855 217) (29 729 111) (26 525 842) (15 801 264) 30 548 694 16 843 806 17 893 645 18 281 490 16 425 853 17 330 309 18 281 337 149 297 590

Developer's profit , USD 15,0% (17 726 026) - - - - - - - - - - (1 028 283) (4 459 367) (5 299 574) (5 761 554) (1 177 249) - - - - - - -

Cash flow for a land plot, USD 188 265 266 - - - - - - - - - - (7 883 499) (34 188 477) (31 825 415) (21 562 818) 29 371 446 16 843 806 17 893 645 18 281 490 16 425 853 17 330 309 18 281 337 149 297 590


DCF, USD 6 581 240 - - - - - - - - - - (1 845 059) (7 144 191) (5 937 852) (3 592 053) 4 368 623 2 236 874 2 121 690 1 935 427 1 552 655 1 462 633 1 377 587 10 044 906



Page 99 of 102

Table 8.4.35.


Reversion

Cost of investment with VAT, USD (127 964 972) - - - - - - - - - - - - (7 423 217) (32 192 367) (38 257 859) (41 592 918) (8 498 610) - - - - -

Cash flow with taking into account the return of VAT 173 852 931 - - - - - - - - - - - - (7 423 217) (32 192 367) (28 550 733) (16 666 387) 33 884 981 18 621 751 19 779 779 19 907 630 18 162 709 148 328 787

Developer's profit , USD 15,0% (19 194 746) - - - - - - - - - - - - (1 113 483) (4 828 855) (5 738 679) (6 238 938) (1 274 792) - - - - -

Cash flow for a land plot, USD 154 658 185 - - - - - - - - - - - - (8 536 700) (37 021 222) (34 289 412) (22 905 325) 32 610 189 18 621 751 19 779 779 19 907 630 18 162 709 148 328 787


DCF, USD 4 834 427 - - - - - - - - - - - - (1 592 742) (6 167 200) (5 100 107) (3 041 849) 3 866 665 1 971 450 1 869 686 1 680 152 1 368 648 9 979 724


Table 8.4.36.

Estimation of fair value using the DCF method. Stages 1-7 Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (683 209 575) (3 556 823) (16 623 996) (18 214 323) (35 454 633) (33 897 760) (49 836 586) (38 989 352) (55 604 318) (42 642 346) (60 211 508) (46 175 550) (65 200 435) (50 001 504) (70 602 729) (46 106 184) (41 592 918) (8 498 610) - - - - -

Cash flow with taking into account the return of VAT 1 350 770 515 (3 556 823) (16 623 996) 1 611 974 (11 167 419) 14 458 487 (20 155 079) 5 674 547 (33 698 123) (1 498 467) (23 494 412) 14 060 062 (11 671 698) 26 033 798 1 076 749 51 242 146 51 853 703 103 443 201 91 410 131 93 701 041 97 875 437 100 384 937 819 810 319

Developer's profit, USD 15,0% (102 481 436) (533 523) (2 493 599) (2 732 148) (5 318 195) (5 084 664) (7 475 488) (5 848 403) (8 340 648) (6 396 352) (9 031 726) (6 926 333) (9 780 065) (7 500 226) (10 590 409) (6 915 928) (6 238 938) (1 274 792) - - - - -

Cash flow for a land plot, USD 1 248 289 079 (4 090 346) (19 117 596) (1 120 174) (16 485 614) 9 373 823 (27 630 567) (173 856) (42 038 771) (7 894 819) (32 526 139) 7 133 729 (21 451 763) 18 533 572 (9 513 660) 44 326 219 45 614 766 102 168 410 91 410 131 93 701 041 97 875 437 100 384 937 819 810 319


DCF, USD 52 883 438 (3 609 129) (14 541 782) (734 534) (9 359 432) 4 627 680 (11 913 266) (65 755) (14 008 458) (2 328 113) (8 525 932) 1 669 583 (4 482 665) 3 457 916 (1 584 838) 6 592 952 6 057 685 12 114 342 9 677 418 8 857 101 8 260 434 7 564 490 55 157 742

Land plot market value, USD 52 883 438


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Table 8.4.37. Estimation of fair value using the DCF method. Stages 1-7. Commercial part (office premises, street retail) Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (551 682 551) (3 067 890) (16 418 243) (15 039 974) (28 687 987) (26 321 859) (39 580 571) (31 335 149) (44 498 522) (34 353 941) (48 185 523) (37 200 396) (52 178 017) (40 282 698) (56 501 316) (37 338 010) (32 634 940) (8 057 514) - - - - -

Cash flow with taking into account the return of VAT 1 303 458 304 (3 067 890) (16 418 243) 2 414 797 (7 305 893) 12 776 373 (17 503 422) (2 149 617) (30 640 780) (9 922 842) (20 341 846) 4 609 378 (8 432 223) 15 438 117 4 392 466 37 613 597 48 920 451 89 894 018 91 410 131 93 701 041 97 875 437 100 384 937 819 810 319

Developer's profit, USD 15,0% (82 752 383) (460 184) (2 462 736) (2 255 996) (4 303 198) (3 948 279) (5 937 086) (4 700 272) (6 674 778) (5 153 091) (7 227 828) (5 580 059) (7 826 703) (6 042 405) (8 475 197) (5 600 702) (4 895 241) (1 208 627) - - - - -

Cash flow for a land plot, USD 1 220 705 921 (3 528 074) (18 880 979) 158 800 (11 609 091) 8 828 094 (23 440 507) (6 849 889) (37 315 559) (15 075 933) (27 569 675) (970 682) (16 258 926) 9 395 712 (4 082 731) 32 012 895 44 025 210 88 685 390 91 410 131 93 701 041 97 875 437 100 384 937 819 810 319


DCF, USD 51 681 377 (3 113 007) (14 361 800) 104 131 (6 590 868) 4 358 264 (10 106 669) (2 590 716) (12 434 556) (4 445 761) (7 226 716) (227 179) (3 397 545) 1 753 012 (680 124) 4 761 505 5 846 590 10 515 630 9 677 418 8 857 101 8 260 434 7 564 490 55 157 742


Table 8.4.38. Estimation of fair value using the DCF method. Stages 1-7. Residential part Name 30.09.2009 Sum 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reversion

Cost of investment with VAT, USD (131 527 024) (488 932) (205 753) (3 174 349) (6 766 646) (7 575 901) (10 256 016) (7 654 203) (11 105 795) (8 288 405) (12 025 985) (8 975 155) (13 022 418) (9 718 806) (14 101 413) (8 768 173) (8 957 978) (441 096) - - - - -

Cash flow with taking into account the return of VAT 47 312 211 (488 932) (205 753) (802 822) (3 861 526) 1 682 114 (2 651 658) 7 824 164 (3 057 343) 8 424 374 (3 152 566) 9 450 684 (3 239 474) 10 595 681 (3 315 717) 13 628 549 2 933 252 13 549 184 - - - - -

Developer's profit, USD 15,0% (19 729 054) (73 340) (30 863) (476 152) (1 014 997) (1 136 385) (1 538 402) (1 148 130) (1 665 869) (1 243 261) (1 803 898) (1 346 273) (1 953 363) (1 457 821) (2 115 212) (1 315 226) (1 343 697) (66 164) - - - - -

Cash flow for a land plot, USD 27 583 158 (562 272) (236 616) (1 278 975) (4 876 523) 545 729 (4 190 060) 6 676 033 (4 723 212) 7 181 114 (4 956 464) 8 104 411 (5 192 837) 9 137 860 (5 430 929) 12 313 323 1 589 555 13 483 019 - - - - -


DCF, USD 1 202 062 (496 122) (179 982) (838 665) (2 768 564) 269 416 (1 806 597) 2 524 961 (1 573 902) 2 117 648 (1 299 216) 1 896 762 (1 085 121) 1 704 904 (904 714) 1 831 448 211 094 1 598 712 - - - - -



Page 101 of 102

List of references and the documents provided by the Client

Publications used in this Report

1. International Valuation Standards. Seventh Edition. 2005 / Translated from English by I.L.

Artyomenkov, G.I. Mikerin, N.V. Popov. Moscow: Russian Society of Appraisers, 2005. – 414 pages.

2. IVS 1 – Market Value Basis of Valuation // International Value Standards (IVS). Eighth Edition. 2007.

– International Value Standards Committee, 2007 (URL: http://www.ivsc.org).

3. IVS 2 – Valuation Bases Other Than Market Value // International Value Standards (IVS). Eighth

Edition. 2007. – International Value Standards Committee, 2007 (URL: http://www.ivsc.org).

4. IVS 3 – Valuation Reporting // International Value Standards (IVS). Eighth Edition. 2005. –

International Value Standards Committee, 2007 (URL: http://www.ivsc.org).

5. Friedman, Jack P. and Nicholas Ordway. Income Property Appraisal and Analysis. Translated from

English. Moscow: Delo Ltd., 1995. – 480 pages.

6. Belarusian National Standard STB/OR 52.3.01-2007. Valuation of Civil Law Rights Objects. Valuation

of Permanent Structures, Buildings and Installations, Uncompleted Structures, and Isolated Premises

as Real Properties. // Approved and Enacted under State Standardization Committee Resolution

No.15 of March 14, 2007.

7. Belarusian National Standard STB/OR 52.2.01-2007. Valuation of Civil Law Rights Objects. Land

Valuation. // Approved and Enacted under State Standardization Committee Resolution No.15 of

March 14, 2007.

8. Belarusian National Standard STB/OR 52.0.01-2007. Valuation of Civil Law Rights Objects. General

Provisions. // Approved and Enacted under State Standardization Committee Resolution No.15 of

March 14, 2007.

9. Methodical recommendations about definition of a commercial value of the land lots / Joint-Stock

Company "Kvinto-consulting" by request of centre Laris. – М, 2006. (URL:

http://www.armorf.ru/inform/inform-m7-80-6.shtml).

10. Information and reference publications about the Belarusian property market: Nedvizhimost

Belorussii, Belorusy i rynok (Nedvizhimost section), Nedvizhimost dlya vsekh, Vsya nedvizhimost. Iz

ruk v ruki, Katalog nedvizhimosti, Belarusian specialized Internet resources: www.realt.by,

www.realting.com

Other printed materials provided by the Client

11. Investment agreement between the Republic of Belarus and Lyons Solutions Holding (PTY) LTD on

development of the complex of the complex of real estate objects of the High technologies park

12. Sertificate No 500/313-6515 dd 18.09.2009.

13. Sertificate No 500/313-6516 dd 18.09.2009.


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14. Decision of Minsk City Executive Committee No 1826 dd 07.08.2009.

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