this notice is important and requires the immediate ... · the santa hortensia borrower...

EME_ACTIVE-555929571.2-SHUGO 11/06/2012 2:18 PM

THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF THE REGISTERED AND BENEFICIAL OWNERS OF THE NOTES (AS DEFINED BELOW). ALL DEPOSITARIES, CUSTODIANS AND OTHER

INTERMEDIARIES RECEIVING THIS NOTICE ARE REQUESTED TO PASS THIS NOTICE TO THE BENEFICIAL OWNERS IN A TIMELY MANNER. IF NOTEHOLDERS ARE IN ANY DOUBT AS TO THE ACTION THEY SHOULD

TAKE, THEY SHOULD CONSULT THEIR OWN INDEPENDENT PROFESSIONAL ADVISERS AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS

ACT 2000 (IF THEY ARE IN THE UNITED KINGDOM) OR ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER AND

TAKE SUCH OTHER ADVICE FROM THEIR OWN PROFESSIONAL ADVISERS AS THEY DEEM NECESSARY, IMMEDIATELY.

€413,000,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2018 (XS0278734644)

€50,000 Class X Commercial Mortgage Backed Floating Rate Notes due 2018 (XS0278742316)

€43,000,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2018 (XS0278739874)

€23,750,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2018 (XS0278741771)

issued by

RIVOLI Pan Europe 1 plc (the “Issuer”)

(incorporated with limited liability in Ireland with registration number 427890)

(the “Noteholders” and the “Notes”, respectively)

NOTICE OF CONFERENCE CALL

The Notes are admitted to trading on the regulated market of the Irish Stock Exchange Limited.

Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse), as implemented by the relevant member states, requires disclosure by or on behalf of the Issuer of any inside information concerning the Notes.

We refer to the Issuer’s notices to Noteholders dated 15 October 2012 and 31 October 2012 (the “October Notices”).

Capitalised terms not defined in this notice have the meaning given to them in the Prospectus relating to the Notes dated 18 December 2006 or the October Notices, as the context may require.

The Santa Hortensia Borrower Presentation

In the October Notices, the Issuer referred Noteholders to an information conference call (the “Information Conference Call”) that took place on 5 November 2012 in connection with which AgFe LLP (as the financial adviser to the Santa Hortensia Borrower) delivered a presentation to Noteholders as to the proposals discussed in the October Notices, which includes two reports that were commissioned by the Santa Hortensia Borrower for the benefit of Noteholders (the “Santa Hortensia Borrower Presentation”).

The Issuer has received a copy of the Santa Hortensia Borrower Presentation from AgFe LLP, which is enclosed as schedule 1 to this Notice.

Noteholders should be aware that the Note Trustee, the Issuer, the Spanish Servicer, the Spanish Management Company and their respective advisers have not been involved in the negotiation or formulation of the Santa Hortensia Borrower Presentation or the proposals or other information provided by the Santa Hortensia Borrower or its advisers on the Information Conference Call and do not make any recommendation in relation thereto. Furthermore, the Note Trustee, the Issuer, the Spanish Servicer, the Spanish Management Company and their respective advisers do not make any representation that the information provided on the Information Conference Call or in the Santa Hortensia Borrower Presentation by the Santa Hortensia Borrower or its advisers is accurate, complete or up-to-date. Any reliance based on any such information shall be entirely at Noteholders’ own risk. The Issuer, the Note Trustee, the Spanish Management Company and the Spanish Servicer urge Noteholders who are in any doubt as to the importance of the Santa Hortensia Borrower Presentation or the implementation of any of the proposals therein to seek their own independent legal and financial advice.

Noteholder Discussions

The Issuer has been approached by certain Noteholders who wish to discuss with other Noteholders the Santa Hortensia Borrower Presentation and the proposals described therein (the “Requesting Noteholders”). Any Noteholders wishing to make contact with the Requesting Noteholders are invited to make themselves known to the Issuer by sending an email containing their contact details to the Issuer at [email protected] and its legal advisers at [email protected] referencing “Rivoli Pan Europe 1 plc” and requesting the Issuer to pass their details on to the Requesting Noteholders. Details of each Noteholder that expresses a wish to take part in the discussions (including the Requesting Noteholder) (together, the “Participating Noteholders”) will be collated by the Issuer and disclosed to all of the Participating Noteholders.

For and on behalf of RIVOLI Pan Europe 1 plc

Signature:

Name:

Date: 6 November 2012

Schedule 1

The Santa Hortensia Borrower Presentation

Santa Hortensia Loan

Information for Initial Noteholder Call

November 2012

Private and Confidential Without Prejudice

Call at 15.00 GMT Monday 5 November 2012 Dial in: +44 (0) 800 2797058 (free local) +44 (0) 1452 580111 (international) +44 (0) 844 5718912 (standard local) Conference ID: 64488516

This document has been prepared by AgFe LLP (“AgFe”) using information provided by MS Edificio Santa Hortensia, S.L. (the “Borrower”); AgFe has not independently verified the information contained in this document. This document is not and is not intended to be an approved prospectus prepared in accordance with Part VI of the Financial Services and Markets Act 2000 (“FSMA”) and contains no offer to the public within the meaning of article 85 of the FSMA, the Companies Act 1985, the Companies Act 2006 or otherwise and shall not be relied upon in connection with any contract with AgFe or AgFe’s holding company and its subsidiaries (the “AgFe Group”) or the Borrower.

No undertaking, representation, warranty or other assurance, express or implied, is given or made by or on behalf of the AgFe Group or the Borrower or any shareholders, directors, officers, partners, employees, consultants or advisers of the AgFe Group or the Borrower or any other person as to the accuracy, fairness, completeness or sufficiency of the information, opinions, statements, projections, estimates or beliefs contained in this document and this document does not purport to give a complete summary of the risks associated with the proposal contained herein.

This document does not constitute or form part of an offer or invitation to sell, or a solicitation of an offer or agreement to buy or subscribe for, any security or instrument or to participate in any particular trading strategy. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the use of or reliance upon any such information or opinion which is attributable to any errors, inaccuracies, omissions or misstatements (whether negligent or otherwise) contained in this document.

Neither the receipt of this document by you or any person, nor any information contained herein or subsequently communicated to you or any person is to be taken as constituting the giving of financial, tax, accounting, legal or investment advice or the making of a personal recommendation as defined in the rules of the Financial Services Authority (the “Rules”), by AgFe or any member of the AgFe Group and you acknowledge that you are not relying on any member of the AgFe Group for any such advice or recommendation. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem necessary. No member of the AgFe Group owes any duties of responsibilities of the kind referred to in the Rules relating to the making of personal recommendations in connection with any transaction.

This document has been delivered to you on the basis that you are a person into whose possession this document may be lawfully delivered in accordance with the laws and jurisdiction in which you are located. Persons who are not resident in the United Kingdom should inform themselves about, and observe, any applicable legal or regulatory requirements in their jurisdiction. By accessing this document you shall be deemed to have warranted and represented to AgFe that (a) you have understood and agree to the terms set out herein, (b) you are either (i) not a US person (within the meaning of Regulation S of the U.S. Securities Act of 1993, as amended (the "1933 Act")) or acting for the account or benefit of a US person; or (ii) a “qualified institutional buyer” as defined under Rule 144A under the 1933 Act, and (c) if you are a person in the United Kingdom then you are a person who (i) is a “qualified investor” as defined in section 86 of the Financial Services and Markets Act 2000 and either (ii) has professional experience in matters relating to investments; or (iii) is a high net worth entity falling within article 49(2)(a) to (d) of the Financial Services and Markets Act (Financial Promotion) Order 2005. Persons who do not fall within paragraphs (b) and (c) above should return this document immediately to AgFe. This document must be returned to AgFe on demand.

This document may not be distributed, copied, reproduced, discussed, published, quoted or referenced to, in whole or in part in any manner whatsoever, without the prior written consent of AgFe and in particular, may not be distributed to any U.S. person or to any U.S. address. Any distribution or reproduction of this document in whole or in part is unauthorised.

AgFe is authorised and regulated by the Financial Services Authority.

By accepting a copy of this document you agree to be bound by the foregoing limitations.

Important Information

Please note that nothing in this document is intended to amount to an invitation or inducement to engage in investment activity. By participating in the conference call, Noteholders confirm that they request the Issuer to communicate the Santa Hortensia Borrower Presentation and the information disclosed on the conference call.

Please note that the Santa Hortensia Borrower Presentation and the information disclosed on the conference call might constitute inside information as regards the Issuer, the Notes, the Issuer Security and the Santa Hortensia Loan. By participating on the conference call, Noteholders confirm to the Issuer that they are aware that the information disclosed might constitute inside information and are aware of their legal responsibilities in that respect.

The Santa Hortensia Borrower Presentation and all material information disclosed on the conference call will also be published the next Business Day after the conference call in a public notice or notices to Noteholders, which will also be published on the Irish Stock Exchange website."

Disclaimer

2

Contents

3

Section 1 Update on the Property and Market 4

Section 2 Summary of Draft Restructuring Proposal 9

Appendix 1 Cashflow Scenarios 11

Appendix 2 Common Questions / Q&A 14

Appendix 3 Broker Reports: i) Jones Lang LaSalle; ii) DTZ Separate attachments

Update on the Property and Market

Section 1

4


Property and Loan Overview

5 (1) Margin of 45bps if LTV is below 53% (2) Based on original value of €230MM as of 31 July 2006

Source: Borrower Source: Issuer reporting and Borrower

The Santa Hortensia building is a purpose-built office property developed in 1989 with a conference centre, cafeteria and datacentre (the “Property”). The Property is 100% let to IBM (no sublease) and is located inside the M-30 inner ring road right at the border of secondary and periphery Madrid office market.

Loan Overview (the “Loan”)

Initial Loan Balance €112.0MM

Balance (16 July 2012) €103.8MM

Maturity 13 January 2013

Interest Euribor + 46bps1

Original LTV 48.7%2

LTV Covenant <65.0%

ICR 2.7x

ICR Covenant >1.5x

DSCR 2.7x

Property Overview

Type Office/Conference/Datacentre

Address Santa Hortensia 26-28, Madrid

Floor Space 46,928 sqm

Parking Spaces 946

Tenancy 100% to IBM SA

Tenant Parent Rating Aa3/AA-/A+

Lease Expiry 30 September 2015

Gross Rent (2012 est) €12.0MM

Net Income (2012 est) €10.9MM

Madrid Sub Markets and Vacancy Rates


Market Overview – very weak letting and investment market

6

A lack of leasing activity with only 11,693 sqm of take-up in the Property’s

surrounding area since 2011

Investment volumes continue to be low given a lack of financing, macro

uncertainty and weak tenant demand

Source: Jones Lang LaSalle Q3 Madrid Offices Market Report

Rents €/sqm/month

Min Q2’12

Max Q2’12

Min Q3’12

Max Q3’12

12 Month Outlook

CBD 13.8 24.8 13.5 24.3

Secondary 10.0 16.0 10.0 15.5

Periphery 6.0 15.3 5.8 15.0

Satellite 5.0 11.0 2.0 10.8

Inve

stm

ent

Vo

lum

e €’

MM

Barcelona

Madrid (all submarkets)

Sqm

’00

0

Preliminary lease discussions have commenced with IBM and the Borrower believes that they are ultimately likely to be successful given:

— The Property was custom built for IBM in 1989 who has had sole occupancy since that date

— Building design specific to IBM’s needs: special showroom, datacentre space, auditorium, above standard safety features, good parking

facilities

— IBM recently invested in upgrading the entrance

— €5MM landlord capex programme implemented as part of 2009 lease negotiation (e.g. new chillers, improved building management

systems, etc.)

— No other single building in wider Madrid business area with 47,000 sqm of space currently available/coming to market

— The Borrower has proven capability of negotiating with IBM, having successfully extended the lease in 2009


IBM

7

Pros of building for IBM Cons of building for IBM

— Parking spaces

— Transport links including metro stops

— Custom spec for IBM

— Hosts data centre

— IBM has been moving and continue to move staff into the building from other locations

— Lower running costs of brick compared to glass fronted building

— New buildings coming to market are much smaller than the space required by IBM

— No relocation costs (ca. €400 per sqm)

— Several new buildings being developed/coming to market

— Few tenants available make IBM a major target for landlords willing to offer significant concessions

— Current interior lay-out inefficient (multi-desk), necessity to convert into open space to adapt to current business standards and increase occupancy ratio

Lease Negotiation

The Santa Hortensia Loan expires on 10 January 2013 which will likely lead to insolvency of the Borrower and/or fire-sale of the Property unless the Loan is restructured

— Sufficient time is needed to negotiate and document the lease extension with IBM who will be looking to confirm their requirements over the next two years

— IBM will want clarity as to the financial stability of the landlord and its ability to invest and manage this key asset

Asset Disposal

A sale of the Property in the current market and with the existing lease length would likely result in proceeds significantly below outstanding Loan balance

— Madrid investment market is very illiquid - only eleven commercial transactions of more than €20MM in the last 18 months1

— Limited investor universe unless lease is extended

— Large lot size will deter typical investor

— Core plus investors require good tenants and long remaining lease length (5 year minimum)

— Lack of financing

— Lenders want 5 to 7 years+ leases from a good quality tenant

— Maximum LTV of 50%

— Maximum loan amount per bank of ca. €25MM to €50MM meaning that multiple banks will likely be needed to refinance Santa Hortensia

If this asset is brought to market pre-lease extension, it will likely only attract a small universe of opportunistic investors with a high cost of equity

Not withstanding the quality of the Property and the tenant, a Loan extension is needed to allow the renegotiation of the lease and an orderly sale thereafter with sufficient

time for the arrangement of financing required. Without a Loan extension the Borrower will become insolvent which is likely to eliminate the chances to renew lease with

IBM. Without lease renewal the Property will not be refinanceable and likely only be sellable at a price substantially below the Loan amount.

The Borrower intends to make a formal proposal to Noteholders on 21 November 2012 and to call an EGM shortly thereafter.


Rationale for a Restructuring

8 (1) Jones Lang LaSalle Q1 Madrid Offices Market Report. Torre Picasso was the only asset above €50MM acquired all-equity by Pontegadea Immobiliaria

Summary of Draft Restructuring Proposal

Section 2

9

Loan extension proposed terms

Initial Extension Period: 2 years (up to 10 January 2015)

First Extension Option: one year additional extension to 10 January 2016, at Borrower’s request, subject to:

– Lease renewal is successfully completed prior maturity extension

– No default is outstanding

– The hedging is extended to meet new maturity

Second Extension Option: one year additional extension to 10 January 2017, at Borrower’s request, subject to:

– Borrower is in negotiations with a credible buyer and reasonably likely to repay the Loan in full prior to or at maturity

– No default outstanding

– The hedging is extended to meet new maturity

Semi-Annual Desktop Sales Valuation: prepared by a reputable agency including estimated sales prices on the basis that the Property is marketed for sale over a period of six months

Go To Market: if the Desktop Sales Value exceeds 110% of current Loan amount on any IPD, a sales agent will be engaged to market the Property aiming to conclude a sale within six months

Interest and Margin: unchanged at 3 month-EURIBOR + 46 bps

Extension Fee: a fee of 0.20% of the Note principal outstanding held by those Noteholders voting in favor of the proposal if the Proposal is approved

Servicer Fees and Costs: the Borrower will bear all reasonable costs and expenses of any finance party engaged in managing/servicing the notes whose approval is required for this Loan Extension

Equity Lock-out: no distributions to shareholders (including no asset management fee) prior to full repayment of Loan

Hedging: an interest rate cap with a strike rate of 4.0% will be put in place by the Borrower up to the extended maturity date

Full Cash-trap: prior to the lease renewal all cash after operating expenses, tenant incentives and capex will be trapped

Full Cash-sweep: following the execution of the lease renewal any excess cash (after payment of all tenant incentives, operational expenses and interest) will be available for amortization

Additional Reporting: on a quarterly basis the Borrower will provide a detailed update on the progress made in relation to (i) the lease renewal, and/or (ii) any refinancing / disposal activity

Lease Renewal Terms

Lease Term: target 10 years

Borrower is entitled to negotiate, on an arm’s length basis, the lease renewal terms and a tenant incentive package with IBM

Loan servicer is instructed to approve any lease proposed by the Borrower subject only to confirmation from a reputable agency that the proposed lease is on normal market terms

Associated Consents / Notification

LTV Covenant: LTV prepayment event and the LTV covenant will be waived until the full repayment of the Loan

RCI/ICR/DSCR Covenant: the ICR covenant shall be reset to 1.1x and any lease that is subject to a rent free period will be assumed to be cash paying at the contractual rent post rent free period

Summary of Draft Restructuring Proposal

Proposal currently under consideration

10

Cashflow Scenarios

Appendix 1

11

Cashflow Scenarios

Base Case – Lease Extension and Sale

12

Base Case assumes: — Loan is extended until

Dec 2016 — IBM lease is extended

in Q1 2013 for 10 years from September 2015 at market terms

— Property is sold at 7.5% NOI cap rate in Q1 2015

— Business plan allows for full repayment of Loan and current payment of all interest

— Tenant Incentives funded through excess cash in structure

— A full cash sweep is applied upon IBM lease extension

— Borrower recovers €2.9MM at exit

Source: Borrower and Broker Reports by Jones Lang LaSalle and DTZ

Notes: (1) costs are increased annually by assumed inflation of 2% (2) high non-recoverable expense in Q4 2012 is due to annual property tax being paid

Cash FlowIn €' 000 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15

2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 Total

Area - sqm 46,928 46,928 46,928 46,928 46,928 46,928 46,928 46,928 46,928 46,928 46,928

GRI 3,019 3,019 3,019 3,019 3,080 3,080 2,353 2,353 2,400 2,400 2,400 30,144

GRI (€ psm/month excl. Parking) 19.3 19.3 19.3 19.3 19.7 19.7 15.0 15.0 15.3 15.3 15.3

Rent Free - - - - - - (2,353) (2,353) (2,400) (2,400) - (9,507)

Property Management Fee (23) (23) (23) (23) (23) (23) (18) (18) (18) (18) (18) (226)

Other Non-Recoverables (1,2) (53) (810) (221) (221) (221) (221) (226) (226) (226) (226) (232) (2,883)

Maintenance & Repairs (1) (60) (60) (60) (60) (61) (61) (61) (61) (62) (62) (62) (670)

NOI 2,884 2,127 2,716 2,716 2,775 2,775 (305) (305) (307) (307) 2,088 16,858

Asset Management Fees 0.0% - - - - - - - - - - - -

SPV costs (1) 185,600 pa (47) (145) (47) (47) (48) (48) (48) (48) (49) (49) (49) (628)

Leasing Commissions 3.0% - - - - - - (282) - - - - (282)

Tenant Improvements (1) €125 psm - - - - - - (1,526) (1,526) (1,556) (1,556) - (6,164)

Operating Cash Flow 2,837 1,982 2,669 2,669 2,727 2,727 (2,161) (1,879) (1,912) (1,912) 2,039 9,784

Gross Disposal Proceeds - - - - - - - - - - 111,358 111,358

3rd Party Disposal Costs - - - - - - - - - - (1,670) (1,670)

Net Disposal Proceeds - - - - - - - - - - 109,688 109,688

Other Restructuring Costs and Fees - - (1,213) - - - - - - - - (1,213)

Taxes - - - - - (264) - - - - (8,197) (8,462)

Unlevered Cash Flow 2,837 1,982 1,456 2,669 2,727 2,462 (2,161) (1,879) (1,912) (1,912) 103,529 109,797

Special Servicing Fee - - - - - - - - - - -

Loan Extension Fees - - (788) - - - - - - - - (788)

Interest (1,003) (1,003) (215) (215) (215) (215) (301) (301) (301) (301) (420) (4,492)

ICR 2.87 2.12 12.61 12.61 12.88 12.88 6.81 6.81 6.96 6.96 4.97

Loan Balance BoP 105,078 105,078 105,078 105,078 105,078 105,078 100,670 100,670 100,670 100,670 100,670

Principal Repayment - - - - - - - - - - (100,670) (100,670)

Cash Sw eep - - - - - (4,408) - - - - - (4,408)

Loan Balance EoP 105,078 105,078 105,078 105,078 105,078 100,670 100,670 100,670 100,670 100,670 -

Total Cash Flow to Lenders (1,003) (1,003) (1,003) (215) (215) (4,623) (301) (301) (301) (301) (101,090) (110,358)

Levered Cash Flow Pre Cash Balance 1,833 978 452 2,453 2,511 (2,161) (2,462) (2,180) (2,213) (2,213) 2,439 (561)

Cash Balance BoP 3,500 5,333 6,311 6,763 9,217 11,728 9,567 7,105 4,926 2,713 500

Cash Inflow from Operations 1,833 978 452 2,453 2,511 2,247 - - - - 2,439 12,914

Cash Outflow from Operations - - - - - - (2,462) (2,180) (2,213) (2,213) - (9,067)

Cash Sw eep - - - - - (4,408) - - - - - (4,408)

Distribution at Exit - - - - - - - - - - (2,939) (2,939)

Cash Balance EoP 5,333 6,311 6,763 9,217 11,728 9,567 7,105 4,926 2,713 500 -

Equity Distributions - - - - - - - - - - 2,939 2,939

Cashflow Scenarios

Insolvency Case – Sale without lease extension

13

Insolvency Case assumes: — Loan is not extended — Borrower files for insolvency in January

2013 — IBM lese is not renewed — Building is sold to opportunistic buyer in Q1

2014 — Lenders recover ca. 55% of outstanding loan

balance — Nominal cash flow to lenders of ca.

€57.7MM

Assumptions: — Building is sold in formal liquidation at a

price of €50MM in line with broker estimates in a “sale as is” scenario

— Special servicing fee of 25bps pa applied as of insolvency as well as 80bps on sales proceeds at exit

— A monthly receivers fee of €30k is payable as well as €300k on exit

— Court Agent fee of €40k on exit

Source: Borrower and Broker Reports by Jones Lang LaSalle and DTZ

Cash FlowIn €' 000 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14

2012 2012 2013 2013 2013 2013 2014 Total

Area - sqm 46,928 46,928 46,928 46,928 46,928 46,928 46,928

GRI 3,019 3,019 3,019 3,019 3,080 3,080 3,080 21,317

GRI (€ psm/month excl. Parking) 19.3 19.3 19.3 19.3 19.7 19.7 19.7

Rent Free - - - - - - - -

Property Management Fee (23) (23) (23) (23) (23) (23) (23) (160)

Other Non-Recoverables (1,2) (53) (810) (221) (221) (221) (221) (226) (1,972)

Maintenance & Repairs (1) (60) (60) (60) (60) (61) (61) (61) (422)

NOI 2,884 2,127 2,716 2,716 2,775 2,775 2,769 18,763

Asset Management Fees 0.0% - - - - - - - -

SPV costs (1) 185,600 pa (47) (145) (47) (47) (48) (48) (48) (432)

Leasing Commissions 3.0% - - - - - - - -

Tenant Improvements (1) - - - - - - - - -

Operating Cash Flow 2,837 1,982 2,579 2,579 2,637 2,637 2,381 17,631

Gross Disposal Proceeds - - - - - - 50,000 50,000

3rd Party Disposal Costs - - - - - - (750) (750)

Net Disposal Proceeds - - - - - - 48,850 48,850

Other Restructuring Costs and Fees - - (400) - - - - (400)

Taxes - - - - - (156) (8,034) (8,190)

Unlevered Cash Flow 2,837 1,982 2,179 2,579 2,637 2,480 43,197 57,890

Special Servicing Fee (66) (66) (66) (66) (66) (66) (66)

Loan Extension Fees - - - - - - - -

Interest (1,003) (1,003) (215) (215) (215) (215) (314) (3,183)

ICR 2.87 2.12 12.61 12.61 12.88 12.88 8.82

Loan Balance BoP 105,078 105,078 105,078 105,078 105,078 105,078 105,078

Principal Repayment - - - - - - (57,748) (57,748)

Cash Sw eep - - - - - - - -

Loan Balance EoP 105,078 105,078 105,078 105,078 105,078 105,078 47,329

Total Cash Flow to Lenders (1,069) (1,069) (281) (281) (281) (281) (58,128) (61,390)

Levered Cash Flow Pre Cash Balance 1,767 912 1,898 2,298 2,356 2,199 (14,930) (3,500)

Cash Balance BoP 3,500 5,267 6,180 8,078 10,376 12,731 14,930

Cash Inflow from Operations 1,767 912 1,898 2,298 2,356 2,199 - 11,430

Cash Outflow from Operations - - - - - - (14,930) (14,930)

Cash Sw eep - - - - - - - -

Distribution at Exit - - - - - - - -

Cash Balance EoP 5,267 6,180 8,078 10,376 12,731 14,930 -

Equity Distributions - - - - - - - -

Notes: (1) costs are increased annually by assumed inflation of 2% (2) high non-recoverable expense in Q4 2012 is due to annual property tax being paid

Common Questions / Q&A

Appendix 2

14

Why can’t the Spanish Management Company/Servicer/Special Servicer implement the Proposal without Noteholder consent?

— The documents establishing the Spanish securitisation vehicle, in addition to those documents under which the Spanish Management

Company delegates certain rights and obligations to the Servicer and Special Servicer, do not provide any of these parties with the clear

authority to extend or vary the terms of the Santa Hortensia Loan in a manner consistent with our draft Proposal, or to grant a standstill on

a default, in either case without the approval of the Issuer

— The obligations of the Spanish Management Company under Spanish Law to maximise recoveries for creditors (i.e. the Issuer) are, under

common market practice, typically interpreted to require the enforcement of security as soon as possible

What does the Borrower expect to happen if no extension or standstill is granted under the Loan?

— Under Spanish Law, the Directors of the Borrower will, at the loan maturity in January 2013, be obliged to file for either insolvency or a pre-

insolvency period of 4 months

— A Spanish Law insolvency would almost certainly result in the appointment of an insolvency administrator who would oversee the Directors

of the Borrower for an initial period of 9 to 12 months prior to a second liquidation stage of 6 to 9 months given the relative simplicity of the

Borrower/creditor structure

— The Borrower therefore expects that, should the Proposal not be approved by noteholders as required, that a sale of the Property in 1.5 to 2

years via a court-approved auction would be likely with a significantly lower probability of an IBM lease being secured prior to such sale


Common Questions

15

Q1: Why are the LTV and ICR Covenants being amended?

A1: The LTV covenant should no longer be relevant given the full cash sweep and the “Go To Market” obligations on the Borrower which oblige it to sell the property as soon

as practicable

Q2: Is €15/SqM an appropriate Base Case assumption for the extended lease and does this include a rent-free component? Is more equity to be injected by the Sponsor?

A2: The €15/SqM assumption seems appropriate to the Borrower noting the market feedback and the small premium that an existing tenant might pay to extend their current

lease (vs market). The rent-free assumption is modelled separately so this is not a net effective rent. Further equity will not be injected by the Sponsor given that cashflow is

sufficient to support the debt service and targeted investment, and the P2V Fund (a 50% shareholder in the Borrower) is currently in liquidation

Q3: What’s the ICR under the assumed extended lease?

A3: Based on the cashflow assumptions on Pg 12 and assuming EURIBOR equal to the 4% strike on the proposed cap, this would be approximately 1.7x

Q4: What is the rationale for the extension term proposed?

A4: Initial 2yr term ties into the likely timeline for the tenant vs its existing lease maturity. The incremental 1+1 year extensions are designed to cover the potential disposal

timeline in the event that the lease is executed towards the end of the initial 2-yr period, and are intended to avoid the requirement for a further noteholder consent exercise

in that event. The Go To Market covenant and absence of Asset Management Fees hopefully address any concerns over unnecessary delay in achieving a sale

Q5: What is the basis for the Extension Fee? Is it low relative to comparable transactions?

A5: The 0.20% payable to Noteholders would equate to ca 0.70% on the outstanding loan amount if all noteholders approve the transaction (given the multi-loan nature of the

transaction), which is considered by the Borrower to represent a premium to typical consent fees of 0.25% to 0.50%. The Borrower is further restricted by the need to

preserve cash to cover the potential TI/rent-free obligations under the extended lease, with the very limited recovery to the Sponsor under the Base Case scenario being a

further factor.

NB: The Issuer, Borrower and Servicer will consider further queries in relation to the potential sharing of legal advice provided to the Issuer and to certain other procedural

queries including a noteholder call and the voting requirements for the Proposal which will be clarified in due course


Noteholder Q&A – Summary of Key Questions on Noteholder Call

16

Broker Reports

Appendix 3

17

Project Avenida

Strategic Consultancy: Market & Value Opinion on Behalf of:

MS Santa Hortensia SL

November 2012

Capital Markets Spain Project Avenida: MS Santa Horensia SL

COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All Rights Reserved

1

Mr Andrés Cerdan MS Santa Hortensia SL Serrano 55 28046 Madrid

Madrid, November 2nd 2012 Terms of Reference

Addressee: MS Santa Hortensia SL Serrano 55 28046 Madrid For the attention of Mr. Andrés Cerdan

Property Address: Santa Hortensia 26-28 Office building located in Madrid, Spain.

Tenure: We assume that the properties are held on a basis equivalent to Freehold.

Strategic Consultancy Report: 2nd November 2012

Instruction Date: 29th October 2012

Instruction and Purpose of Report:

We have been informed that the reasons for the preparation of the report are to inform public noteholders about the rationale of either a sale of the property given the current market conditions in Spain or extending the existing lease contract and a further sale; as well as the key points to consider in the decision-making process.

This analysis should not be considered in any manner as a formal appraisal and no decisions therefore should be made relied upon for any other purpose other than providing sales advice.

We have been asked to prepare the report analysing the IBM Building covering the main points as follows:

- Property Overview. - Property Market Background. - Leasing Market. - Competitive Landscape. - Investment Market. - Recent Transactions. - An indicative Value range considering two scenarios on a

potential sale:

“As is”

Once lease extended.



2

The scope of work and investigations completed in order to prepare this report Do Not comply with RICS valuation standards. This report has been prepared for the addresses’ internal purposes and attention should be paid to the limited scope of work and information on which any Estimation of Value included in the report is based (as detailed herein).

We are carrying out a high level desktop analysis of the asset based on the information provided and our market knowledge.

Inspection: As per our instruction the property was inspected internally and externally.

Personnel: The project has been carried out by Gustavo Martínez MRICS, Maurice Kelly MRICS under the direction of Juan Manuel Ortega MRICS, Head of Offices Capital Markets.

We confirm that the personnel responsible for this project have sufficient experience to complete the work.

Assumptions: We outline the assumption and special assumptions included in our analysis in the attached report.

Sources of Information: We have relied on the information that has been supplied to us and

information gathered by us as being correct.

Measurements: For this exercise we have not measured the property.

Confidentiality: In accordance with our normal practice we confirm that the Report is confidential to the party to whom it is addressed for the specific purpose to which it refers. No responsibility whatsoever is accepted to any third party and neither the whole of the Report, nor any part, nor references thereto, may be published, otherwise than stated in the Purpose of the Report, in any document, statement or circular, nor in any communication with third parties without our prior written approval of the form and context in which it will appear.



3

Contents

1 Executive Summary ............................................................................................................................................... 4

2 Property Overview ................................................................................................................................................. 8

2.1 Location………………………………………………………………………………………………………………............. 8

2.2 Property Description .............................................................................................................................................. 10

2.3 Communications .................................................................................................................................................... 12

2.4 State of Repair ....................................................................................................................................................... 13

2.5 Areas ..................................................................................................................................................................... 14

3 The Market ............................................................................................................................................................ 15

3.1 Madrid Office Market .............................................................................................................................................. 15

3.2 The Leasing Market ............................................................................................................................................... 19

3.3 The Investment Market .......................................................................................................................................... 22

3.4 The Micro Market: Santa Hortensia Office Area & Surroundings ........................................................................... 25

3.5 Available/Alternative Routes For IBM .................................................................................................................... 27

4 The tenant: IBM .................................................................................................................................................... 30

5 Opinion of Value .................................................................................................................................................. 31

5.1 Scenario 1: "As is" ................................................................................................................................................. 31

5.2 Scenario 2: "New Lease Extension"....................................................................................................................... 34

6 Disclaimers ........................................................................................................................................................... 37



4

1 Executive Summary

A. The Property

Address: Santa Hortensia 26-28, 28002, Madrid Main Use: Office Picture of building Location Plan

Tenure: Freehold.

Tenancies: Current Lease (on an Internal Repairing and Insuring terms) o Single tenant (100% Occupancy rate): IBM. o Rental Income: €19.09 /Sq m/month and €104.35 /Parking/month. o WALT (weighted average mandatory lease term): 2.8 years with break option in September 2015.

Location: the property is classified within the Secondary market, which covers the whole of Madrid within the M-30 ring road, but outside of the main CBD.

Description: Exclusive office building with current 46,928 sq m total GLA (including 6,899 sq m of technical floor) and 946 parking spaces. However, according to the planning regulation, the maximum Office GLA is 40,028 sq m, being the remaining area above ground suitable for associated uses (filing, meeting rooms, etc.)

Communications: Within the M30 ring road, where the IBM building is located, public transport and local infrastructure adjacent to the NII road is first class. Moving further eastward away from the city, the situation deteriorates, particularly due to the lack of availability of the metro.

State of Repair: the general condition of the building appears to be satisfactory. However should the property be vacated and the re-let as a multi-tenanted scheme then a significant capex investment would be required.

B. The Madrid Office Market

Leasing Market Overview: the market trend continues a downward slope. o Rents have decreased close to 50% on average since 2008. Further office rents decreases expected

for upcoming quarters. o Take up has consistently declined from the peak with take up forecast below 300,000 sq m by 2012

year-end. o Average office demand continues to fall to slightly under 800 sq m. o Vacancy rate standing at 11.44% with strong disparity among office areas. o Office supply limited and speculative office development completely constrained.



5

Investment Market Overview:

o Demand: mainly driven by national private investors focusing on prime assets with credit-worthy tenants. As well opportunistic investors who have not yet found transactions that suit their investment profiles.

o Supply : Asset prices have still not adjusted to the market so there is a broad gap between the supply and the demand. Only few office opportunities currently offered in the market.

o Capital Values: The values adjusted for inflation are very close to the historical lows from 1995. The difference in real terms compared with the recent peak in 2007 is -61%.

o Transactions and yield levels: Lowest investment record in 2012 over the last 15 years with prime yields standing at 6.25% although they may rise at the end of the year.

o Finance: no finance available for real estate investment transactions unless long leases in place and investment volumes at €50 m or below with very conservative LTV ratios (40/50%) and short amortization periods (4 to 7 years)

C. The Micro Market Santa Hortensia office area & surroundings:

Located within the so called Secondary Area, overall the Santa Hortensia and surrounding area have underperformed compared with the secondary area situation with:

o Vacancy rate standing at 22% with 160,000 Sq m of vacant office space. o Take up since January 2011 have reached 6,115 Sq m. o Rents in a range between €10-15/Sq m and expected to further decrease in coming months. o Last renegotiation in the area for 15,000 Sq m closed at €13.3Sq m/month with 6 months’ rent free

period (five years contract) o The competitiveness of this area has been negatively impacted over the last years by the

development of new office areas in northern locations.

D. Available Alternative/Routes for IBM A lease renegotiation between landlord and tenant to start in the near future. In this event IBM can consider the following scenarios:

o Renew the lease at market levels. o Reallocate the new headquarters in a different single office building. o A built to suit project.

Pros & Cons: the present report provides with both positive and negative factors to be assessed by IBM during the lease renegotiation process.

Main Santa Hortensia building competitors: there are two different options for IBM already available for their current office area, while several alternatives are available if IBM reduces their existing occupancy office space. For a built to suit project IBM could also find several options but this would require to reach a pre-lease agreement between IBM and the landlord in the short term to start refurbishment in order to be available for occupancy in 2015.

E. The Tenant: IBM: The best strategy to create/maintain the value of the building is to secure IBM for a longer lease period. Elements to consider:

o To agree a new mandatory lease term close to 10 years with IBM staying at the 100% of Santa Hortensia are key drivers in terms of the real estate investment liquidity of Santa Hortensia.

o Office Passing Rent (€19.09/sq m/month) - substantially exceeding ERV (€13 - 14 /sq m/month) o Incentives: a package of incentives required to achieve a long lease term and to compete against the

current office opportunities: lower rents, rent free period, tenant improvements (Tis)



6

F. Opinion of Value For the purpose of the indication/opinion of value we have considered two different scenarios:

1. Scenario 1 – “As Is” : we have assumed the value which will be given but an investor under the current

market circumstances and assuming no changes in the current lease are taking place.

2. Scenario 2 – “New Lease Extension”: which take into account the change of the existing lease into a 10 year lease with no break options.

i. “As Is”: An opinion of the property value is provided considering its current characteristics if the property is going to be sold in the market within the next 12 months.

Likely Investor profile: Distressed/ Opportunistic Buyer.

Transaction: Acquiring in Jan 2014 the property with a low WALT; looking for a high competitive capital value to mitigate the risk of fully refurbish the property to convert it into a multi-tenanted scheme and to lease the office areas. Sale in year 6 in Dec 2019.

Distressed Buyers current requirements for this type of transactions in Madrid: o 2x equity minimum.

o 20% unlevered IRR minimum.

o Maximum holding period: 6 years.

Assumptions: Capex, New leases, Rental Levels, etc. provided in the report, Section 5.

Methodology: a DCF analysis, taking into consideration the different assumptions and investor

requirements, has been carried out to obtain the potential value of the building.

Price: €45.7 m within a range of €42.2 m to €48.1 m. See in table below the sensitivity analysis which

provides the range of prices in relation to the investor requirements (IRR, Equity Multiple, €/sq m).

ii. “New Lease Extension”: An opinion of the property value is provided considering that there is a new lease agreement between the owner and IBM for the occupancy of the 100% of the building during a mandatory term of 10 years.

Likely Investor profile: Core Plus.

Transaction: the property would be acquired in Jan 2014 with a new mandatory term of 10 years. Acquisition price will differ depending on the final discount achieved during the renegotiation process with IBM.

Sales Price (€ m) IRR Equity Multiple €/sq m

48.1 21.3% 3.09 1,025

45.7 22.9% 3.34 950

42.2 24.1% 3.53 900



7

Core Plus requirements for this type of transactions in Madrid: o Net Initial Yield: 7.00% - 7.75%

o Unlevered IRR : 9% - 12%

o Maximum holding period: 10 -12 years.

o LTV requirements: 60% -70%

Assumptions: new lease conditions provided in the report, Section 5.

Methodology: a DCF analysis taking into consideration the different assumptions and investor

requirements has been carried out to obtain the potential value of the building.

Price: €119.35 m within a range of €115.23 m to €123.20 m See in table below the sensitivity analysis

which provides the range of prices in relation to both, discount (%) applied on the current passing rent and

the initial net yield required by the investors.

Discount (%) on current passing rent

-35% -30% -25% -20% Annualised Rent (as of

Nov12)

1st Rent €/Year (New Lease 10 Years)

7.757.590 8.354.327 8.951.065 9.547.803 11.934.753

INY Potential Sales Price (€ m) after New Lease Extension

6,50% 119,35 128,53 137,71 146,89 183,61

6,75% 114,93 123,77 132,61 141,45 176,81

7,00% 110,82 119,35 127,87 136,40 170,50

7,25% 107,00 115,23 123,46 131,69 164,62

7,50% 103,43 111,39 119,35 127,30 159,13

7,75% 100,10 107,80 115,50 123,20 154,00

8,00% 96,97 104,43 111,89 119,35 149,18



8

2 Property Overview

2.1. Location

The IBM office building is located to the east of the Central Business District immediately adjacent, and with a prominent frontage to Avenida de America (A-2) motorway, close to its junction with the M-30 inner ring road. Specifically, the property is classified within the Secondary market, which covers the whole of Madrid within the M-30 ring road, but outside of the main CBD. The junction of A-2 and M-30 is one of the principal office locations outside of the CBD and has attracted many major companies such as IBM, Flex, 3M, Gamesa, Anaya and Accenture. This is largely due to the proximity to both the airport and the city centre and also the scope the area has to offer. Within the M-30, where the IBM building is located, public transport and local infrastructure adjacent to the A-2 is first class. (See Section C). The area immediately to the North comprises a mixture of commercial uses and medium to good quality residential. The best quality residential is either side of Calle de Corazón de Maria that is immediately adjacent to the IBM property.



9

Macro Plan

Micro Plan



10

2.2. Property Description

The Property at Santa Hortensia 26-28 is a 46,928 sq m 10 stories office building, wholly let to IBM. The building has 946 car parking spaces occupying a further 25,668 sq m, distributed on three basement levels. The Property was purpose built in 1989 for occupation by IBM who was consulted on the design and specification. The building is broadly rectangular in shape, with the principal floors having dimensions of approximately 152.3 metres by 41.8 metres. There is a substantial central atrium that commences at Level 3 and rises to Level 10, with approximate dimensions of 99 metres by 18.4 metres. The central section of the atrium at Level 3 incorporates a fountain feature and patio area. Levels 1 to 10 are accessed by ten passenger lifts in three banks. Each lift has a maximum capacity of 1,350 kg/18 people. In addition, levels 2 to 10 benefit from two service-lifts with a maximum capacity of 2,000 kg/26 people. Between Level 2 and the underground car parking levels, there is one disabled person lift and two escalators. Level 2 comprises the reception areas, an auditorium (for 148 seated), a staff restaurant (468 diners per sitting) and the 2,500 m² IBM forum marketing facility. Due to the absence of the central atrium at this level the accommodation provided is deep and suffers from inferior natural lighting. Likewise, Level 3 includes large areas of deep space in which IBM have installed a call centre, as well as staff services such as a bank and travel agency. As a result of the central atrium, Levels 4 to 10 benefit from good natural light, having a clear floor to ceiling height of 3.525 metres and a general width from the external wall to the atrium of approximately 11.7 metres. The principal office levels (3 - 10) benefit from a peripheral heating and cooling system, using inductors and a variable air volume (VAV) installation (air only) for cooling and ventilation. There are additional fan-coils units serving the ground floor vestibule, cafeteria and marketing centre and a separate air-conditioning system serves the data processing centre. The electrical installations include eight transformers of 1,000 KVA each and power is transformed into 15 KVA, 380/220 V. There is a back-up generator for the building, plus two Uninterrupted Power Supply (UPS) units, which are the tenant’s back-up (i.e. one of the UPS´s doesn’t support the building). The Property benefits from connection to mains water, drainage, electricity and telecom services.



11

Pictures



12

2.3. Communications

The A-2 national road and M-30 ring road provide good access to the Northeast of Spain and Madrid’s road network. The main public entrance to the Property is from Calle Santa Hortensia. In terms of public transport, the Metro stations of Alfonso XIII, Prosperidad and Cartagena are within a 6, 8 and 10 minute walk, respectively. A number of bus routes serve the area including routes 40, 43 and 72. Barajas International Airport is around a 10 minute drive from the Property. The Property is easily accessible on foot from the surrounding residential area. Public Transport Plan



13

2.4. State of repair

For the purpose of this analysis we have not carried out any technical inspection of the building. However from our inspection the general condition of the building appeared to be satisfactory and we are unaware of any structural or other major defects to the building. For the scope of the present report we have figure out with our Project Development Services division the potential cost of carrying out the necessary works in order to transform the building into a suitable multi-tenanted property. We are assuming regarding this topic a potential cost ranging from €400 to €450/Sq m.



14

2.5. Areas

The building has a total area of 72,596 sq m including the four levels below ground (floors 1, -1, -2 and -3) which provide three floors of car parking and technical floor. Floors 2 to 10 provide below ground offices. The tables below show the area breakdown per floor:

* Excluding the Technical First Floor ** Leased Areas

Floor Registered Area

(sq m) Prk Spaces

Basement 1 9,658.00 Basement 2 7,695.00 Basement 3 8,315.00

Totals 25,668.00 946

Santa Hortensia Registered Area

(sq m) Prk Spaces

Total Area 72,596.00 946 For the purpose of this study, we have considered the total office area leased by IBM: 46,928 sq m. For the purpose of the DCF model in the “as is” sale scenario, we have considered the maximum buildable are according to the planning regulation. Therefore, we have used 40,028 sq m.

Floor Registered Area

(sq m) 10 4,239.83 9 4,123.80 8 4,123.80 7 4,123.80 6 4,123.80 5 4,415.41 4 4,377.79 3 4,931.15 2 5,569.43

1 (Technical) 6,899.19

Totals* 40,028.81



15

3 The Market

3.1. The Madrid Office Market

General Overview Although the market activity is low compared to previous years, the market trend continues showing a downward slope. Considering all submarkets, Madrid office rents have decreased between 40-50% since the peak of the market reached in 2008. The take up in the office market in Madrid has declined from 850,000 sq m in 2008 to 350,000 sq m in 2011. Most of the transactions have taken place in new buildings in the periphery. These buildings construction commenced before the crisis started. Corporates are generally focused on cost reductions or taking advantage of this opportunity to lease better space within the CBD at very attractive rental levels compared to the peak of the market. Thus several firms which were located in the secondary and periphery considered to move to a better location. This trend is reinforced with the owners’ willingness to attract these potential tenants offering interesting incentives like rent free periods, stepped rents, paying moving or implantation costs.



16

The Madrid office market divided into 4 different sub-markets according to the location; these are represented in the map below:

3Q 2012



17

The Central Business District

Prime is middle section of Pº de la Castellana from Plaza de Colon to Azca.

North of this section along Pº de la Castellana has become more established over time.

Other established areas include Azca, Salamanca, Cuzco and the 4 Towers Business Area.

Secondary Area

Rest of Madrid outside of CBD but inside M30 (light grey shaded on plan) where the IBM Building is located.

Most established areas are Centro and Chamartin in North, which benefit from good transport communications.

Periphery Area

Classified as areas between M-30 and M-40, offering comparable specification buildings to those within CBD &

Secondary areas.

Most consolidated areas are along M-30 and N-II motorway connecting centre with Barajas International

Airport. To the south of Calle Alcala the quality is generally lower.

Satellite Areas

Beyond M-40 and usually 25 to 30km from centre.

First developed during late 1980s, initially attracting large multi-national companies (e.g. Microsoft, Compaq,

Citibank) seeking low cost accommodation.

The maps from above are showing the different sub-markets with some of the key performance indicators such as the vacancy rate and the market rents. Thus, it can be seen that the level of available space in the secondary sub-market area is the lowest of Madrid with just 5.8% of the total office stock available. This could be the result of the interest of corporates and users to occupy space close to the CBD at historically low rent levels, benefiting from a great public transport network and the use of the M-30 ring road to communicate with the city of Madrid, particularly with the Madrid-Barajas Airport located 12 km far from Santa Hortensia. In the secondary area there are many relevant tenants like IBM, Kraft Foods, Roche, CLH or Grupo Mahou San Miguel.



18

In order to have a broader view on the Office Market in the city of Madrid, the following charts and graphs summarizes the some of the most relevant main indicators: Annual Take Up Total Investment Volume

Annual Vacancy European Prime Rents

Future Supply Prime Yields



19

3.2. The Leasing Market Leasing Performance Indicators – Overview Rental Levels - Prime rental levels continue to fall up to 2% per quarter, driven by the lack of transactions and the high level of available supply. However, occasional transactions are taking place at very high prices due to the particular characteristics of the demand that has arisen. As in previous quarters, minimal rental levels in the secondary and satellite areas remain stable, whilst levels in the periphery fell by 4.2% due to the available supply. Supply - The overall vacancy rate increased by 2.1% to 11.4%. In general, the availability of offices and high-tech buildings has remained relatively stable across all areas and this trend is likely to continue in the medium term, increasing by no more than 3.5%, until the space currently occupied by a certain large tenant with headquarters under construction and a number of buildings occupied by the public administrations are vacated. Transactions - Take-up remains very low, totaling 61,000 sq m. Once again this quarter, only a couple of transactions of over 5,000 sq m took place: one at Alcalá 65 and one at Almagro 40, both in the CBD. The number of transactions for spaces over 1,000 sq m remains very low and the total number of transactions continues to fall. As a result, the average space taken up has continued to fall, to slightly under 800 sq m. Renegotiations - Due to the financial situation, the uncertainty, landlords flexibility and Capex, most of the companies are renegotiating contracts for their current premises. In case of large scale floorplates that figure is over 90%. New Leases - Facts to consider:

Incentives - Considering the market trends, landlords are starting to offer very important incentives in order to make their buildings interesting from a financial point of view. For large requirements, rent free periods are reaching more than 1 year. In the past 12 months, there has been some transactions in the market where the landlord has not only offered a significant rent free period but also has assumed part of the Capex if not 100% of it.

There has not been a transaction bigger than 30,000 sq m in the past 10 years.

Since 2010 there has not been a transaction bigger than 10,000 sq m.

It is understood that in Madrid, as an average, there is a transaction larger than 20,000 sq m every 20 years.

All the above indicates that it would be difficult to find a single tenant willing to occupy 100% of the office space in Santa Hortensia in case IBM leaves the building vacant.



20

The Trend for Rents The charts below are showing the behavior of the prime rent in Madrid during the last decades:

PRIME RENT & VACANCY

MADRID NOMINAL vs REAL PRIME RENTS 1987-2012

Forecast



21

Relevant Leasing Transactions (2010 – 3Q 2012) In Madrid since 2010 there has been 28 transactions for more than 5,000 sq m

1. CBD - 8 transactions including Abengoa, Pwc, Linklaters, CNMV, IESE.

2. Secondary - 2 transactions including Grupo Mahou San Miguel.

3. Periphery - 16 transactions including AENA, Amper, BBVA, Santader, Amazon, INDRA, OHL and Tecnicas

Reunidas.

4. Satellite - 2 transactions including GEOBAN and LG Electronics.

The table below shows details of the transactions:

TENANT SQ M YEAR QUARTER SECTOR CITY STREET nº BUILDING

BANCA CIVICA 7,652 2010 2 Banking MADRID RECOLETOS 37 Recoletos 37

IESE 7,000 2010 3 Education MADRID VELAZQUEZ 130 CAMPOS VELAZQUEZ

PWC 21,386 2010 4 Management Consultancy MADRID CASTELLANA 259 Torre SyV (4 Towers)

ABENGOA 5,997 2011 4 Energy MADRID CASTELLANA 43 N/A

CNMV 11,494 2011 2 Public Administration MADRID EDISON 4 N/A

MINISTRY OF JUSTICE 8,500 2011 3 Public Administration MADRID GOYA 14 N/A

GRUPO BERGE 5,473.75 2012 3 Automotive MADRID ALCALA 65 ALCALA 65

LINKLATERS 5,080.42 2012 3 Legal Activities MADRID ALMAGRO 40 N/A


MAHOU SAN MIGUEL 7,762 2010 1 Food & Beverages MADRID TITAN 15 TORRE NOZAR

GRUPO CTO FORMACION 6,465 2011 3 MADRID FRANCISCO SILVELA 106 CHAMARTIN


AENA 14,630 2010 2 Aeronautica MADRID Aragón 402 EDIFICIOS ALLENDE Y LAMELA (Pegaso City)

Alcatel 17,419 2010 2 Computer & Related Activities MADRID MARIA TUBAU 9 BILMA

Amper 11,007 2010 2 Electricity, Gas, Steam & Hot Water Supply MADRID N/A - PE DEHESA DE VICALVARO

Banco Santander 5,890 2010 3 Banking POZUELO DE ALARCON CLUB DEPORTIVO (SOMOSAGUAS SUR) 1 CLUB DEPORTIVO (Somosaguas - La Finca)

BBVA 5,046 2010 4 Banking MADRID VIA DE LOS POBLADOS 13 MILENIUM

FORCEM 9,239 2010 2 Extra-Territorial Organisations & Bodies MADRID TORRELAGUNA 56 N/A

OHL 6,615.32 2010 1 Construction MADRID ARTURO SORIA 343 HIDAFA I

SUEZ ENERGY SERVICES ESPAÑA 6,575 2010 2 Electricity, Gas, Steam & Hot Water Supply MADRID TORRELAGUNA 79 N/A

BBVA 8,928 2011 1 Banking MADRID ISABEL COLBRAND 4 N/A

BP OIL 6,065 2011 3 Energy ALCOBENDAS BARAJAS 27 OMEGA (Edif. D)

BUY VIP (GRUPO AMAZON) 5,664 2011 3 Internet Sales POZUELO DE ALARCON DOS CASTILLAS 33 ATICA (Edif. 2)

INDRA SISTEMAS, S.A. 8,372.75 2011 3 Telecommunications MADRID JULIAN CAMARILLO 16 N/A

INTERXION 6,067.6 2011 4 Control de datos MADRID EMILIO MUÑOZ 49 N/A

SECURITAS 6,320 2011 4 Seguridad MADRID ENTREPEÑAS 27 COMPLEJO EMPRESARIAL LA GAVIA

CONFIDENTIAL 5,663.84 2012 1 IT MADRID ALCALA 506 ARAGON

TECNICAS REUNIDAS 8,250.8 2012 2 Energy MADRID BURGOS 89 N/A


LG Electronics 5,500 2010 3 Machinery & Equipment LAS ROZAS PLAYA DE LAS AMERICAS 2 CODESA II

GEOBAN 11,152.36 2011 2 Finance LAS ROZAS JACINTO BENAVENTE 2 TRIPARK (Edif. C)

CBD

SECONDARY

PERIPHERY

SATELLITE



22

3.3. Investment Market

General Overview Demand - Private investors continue to seek investment opportunities of a defensive nature, focusing on prime assets with credit-worthy tenants. Thanks to their capacity to carry out transactions with very low debt levels, these are among the few investors that are active in the market, which means it is difficult to reach high investment volumes. The international investors prepared to enter the Spanish market also have financial capacity. These are opportunistic investors who, given the high returns they demand on their investments, have not yet found transactions that suit their investment profiles. Supply - Asset prices have still not adjusted to the market so there is a broad gap between the supply and the demand, with the outcome that assets on the market are, in most cases, priced at levels which do not interest the demand. The banks have a substantial stock of commercial property, part of which is beginning to be put up for sale at well above market prices. In this respect, banks will need to study the regulations surrounding the bad bank to determine the transfer value of these assets, and depending on that value, either put them on the market or transfer them to the bad bank. Capital Values - The prime capital values have continued to decrease and are currently set at 5,050 €/m², but the speed of the decrease has slowed down in the recent quarters. However, it is still possible to find values in excess of this for transactions below €30 million. The values adjusted for inflation are very close to the historical lows from 1995. The difference in real terms compared with the recent peak in 2007 is - 61%. Transactions and yield levels - There were no significant transactions in the Madrid office market in the third quarter of the year. There are transactions underway but these do not look likely to go through in the short term as the deal closing process is increasingly long. That said, it is not impossible that some of these transactions could close before the end of the year. Prime yield levels are expected to remain stable, although they may rise at the end of the year. Investment volume - There is a lack of investment transactions over €60m volume being the international funds the main actors in high volume investment transactions. Only 19% of the last 4 years investments were over €60m, 23% were below €20m, 41% of the transactions were between €20m & €40m and 17% were between €40m & €60m. This is shown in the next graph.



23

The investor profile from the investment transactions recorded is as follows:

Investors continue to prefer buildings located in the prime area and in the CBD as prices are close to the bottom of the market and there could be interesting investment opportunities. However, the profile is really conservative and investors are looking for secure investments with really solvent tenants using office premises on a long term basis. Private and institutional investors remain very active but the investment volume is limited up to €40-50 million. There have been a few transactions during 2012 and all of them follow two patterns:

Great location and adjusted capital value (Torre Picasso and Calle Pinar 7).

Long lease contracts (from 10 to 20 years) secured by wealthy tenants (Urbaser ).

This lack of transaction in the Madrid office market, hence in Spain, is highly motivated by two main reasons among other factors:

1. Current economic situation in Spain with lack of confidence perceived from international investors, social

instability and unemployment; creating a high risk country perception that will be considered for returns on

investments;

2. No finance available with an almost dry financial system or completely in cases of lot size investments with high

risks associated (construction, marketing, planning, etc.).

In Spain, finance for tertiary developments and projects were mainly sourced by international banks. These international players are closing or have close the business in Spain and are on the process to sell the debt positions; performing, sub-standard and non performing. Most of these banks have ceased almost completely the sourcing of debt for real estate investments. The only investments that could be analyzed would be opportunities with long leases in place and volumes below €100 million, with Loan To Value ratios (LTV) of 40% to 55%, short amortization periods (4 to 7 seven years) and some conditions that makes this finance expensive and hard to obtain (additional guarantees, cash sweeps, upfront fees, etc.). Finance from Spanish banks is not an option right now. The financial situation of the Spanish Banks and Saving Banks is critical, the system is under a great reconfiguration process of nationalization of entities and mergers and acquisitions processes to create a wealthier financial map of the country. This picture reveals that, if this building is offered to the market at some point in the near future, the possibilities to find a decent level of finance are very limited. If IBM renew the lease on a long term basis paying a contractual rent adjusted to market levels; there could be some chances to find a bank which could provide a level of senior debt with hard conditions as mentioned before.



24

In our opinion, there would be no options to source debt to acquire Santa Hortensia with its current tenancy situation (over rented with a lease expiring in 2015). After a long lease renewal with IBM, low leverage financing should, in our opinion be available. Only Opportunistic buyers with high return requirements would currently consider acquiring IBM building (pricing analysis is set on Section 5. Investment Office Transactions in Madrid (2012)



25

3.4. The Micro Market: Santa Hortensia Office Area & Surroundings

As mentioned, Santa Hortensia and the IBM Building are located in the secondary area. To provide an accurate micro market analysis it is necessary to analyze some of the main indicators of the Santa Hortensia and Surronding Areas in order to benchmark the building’s area with the rest of Madrid’s office areas. The key performance indicators of the surrounding area of the property as Q2 2012 are the following:

Total stock in the area, 725,000 sq m.

160,000 sq m vacant office space.

Take up since January 2011 in the area has been 6,115 sq m.

Since 2010 Vacancy rate has increased from 7% up to a current 22%.

The figures for the last lease renegotiation in the area for 15,000 sq m was €13.3sq m/month and six months’

rent free period for a 5 year mandatory term.

Overall the Santa Hortensia surrounding area has underperformed other similar areas in the Madrid office market because:

• In the past, one of the most important attributes of this area was an easy and quick access to the airport.

However, the development of other areas in the North of Madrid like Manoteras, Las Tablas, San Chinarro has

especially reduced the aforementioned attribute, as communication to the airport (through road M-11) has also

been developed.

• Large office requirements have been and are choosing new modern buildings to move to. As the most of the

new office developments have been completed in the north of Madrid, these areas have recorded a relevant

take up in comparison with other locations such as the surrounding area of Santa Hortensia.

• The improvement in public transportation (Subway) for North and East areas (i.e. Julian Camarillo).

• All the aforementioned reinforced by more competitive rents in Northern areas.

The result is a very limited take up in the surroundings area of Santa Hortensia; with more than 7,200 sq m over the last

18 months with an average demand of 873 sq m. The table below shows the most relevant transactions in the area of

Santa Hortensia:

TENANT

AREA

(SQ M)

RENT (€/SQM/

MONTH) YEAR QUARTER CITY STREET nº

AKKA 872 12.00 2012 3 MADRID CALERUEGA 102

EXCLUSIVE NETWORKS 436 12.00 2012 3 MADRID CALERUEGA 102

IKUSI 728.50 11.50 2012 1 MADRID EMILIO VARGAS 1

CHM ABOGADOS 728.51 9.50 2012 1 MADRID EMILIO VARGAS 1

GYM 1,327.00 11.50 2011 3 MADRID JOSEFA VALCARCEL 9

BANCO DE ESPAÑA 551.18 TBD 2011 3 MADRID RAMIREZ DE ARELLANO 35

Planet Media 220.00 10.00 2011 2 MADRID RAMIREZ DE ARELLANO 17

GAMESA 2,205.00 16.50 2011 2 MADRID RAMIREZ DE ARELLANO 35

TeamPRO 355.23 12.00 2011 1 MADRID ALBACETE 3

CBD

After reviewing the most significant leasing transactions in the city of Madrid within the area where the IBM Building is located; we are of the opinion that it would be very unlikely to find a single tenant willing to occupy the whole office space available in the short/medium term should IBM decide not to continue with the usage of the building.



26

Historically the chances to find a corporate looking for that amount of office space are very limited, thus when adding some of the ingredients that the current economic situation in Spain is bringing; we believe that there would be no demand of a single tenant to occupy around 47,000 sq m of office during the next 3 years until the lease expire of IBM’s current lease in September 2015.



27

3.5. Available Alternative/Routes for IBM

IBM has different options:

1. Renew the lease in Santa Hortensia

2. Reallocate the new headquarters of the company in a different single office building

3. A “built to suit” project in an office plot available.

To analyze this options, the following graph shows the future supply for office space in Madrid for the next 2 years:

We are not aware of the real intentions of IBM in the near future with regards to its needs of space (reduce or extend). We are aware that the renegotiation of the current lease is likely to start between both the landlord and IBM in the near future but we have no knowledge about its objectives: extending the lease at market levels or a real need to reduce space leaving some of the space used in Santa Hortensia vacant. In case IBM is looking for a new location to establish its Headquarters (Option 2), we are of the opinion that the competition available in the Madrid office market for a similar office area the following 2 properties:

Avenida de America 115 – 50,682 sq m. Asking Rent: €11-12/sq m/monthly. Located within the Periphery East

Area of madrid.

o Pros:

Possibility to negotiate a high level of incentives.

Business Park comprising 5 different buildings that may allow to house different IBM’s

businesses in each of them.

Impressive signage can be placed.

Belongs to Sabadell Bank who may be enforced by the current real estate provisions

regulations to offer very competitive rents to tenants.

o Cons:

Inadequate access for the size of the Business Park.

Poor in terms of Public transportation.

Medium to low technical Specifications.

Lack of services in the area.



28

Marie Curie 9-11 – 45,145 sq m. Asking Rent: €7-9/sq m/monthly. Satellite location on the south east of Madrid.

o Pros:

Rental levels (€5 Sq m/month)

High incentives to be offered.

Good access by Public transportation.

Good level of services.

o Cons:

Poor office perceived area by corporations. It is not considered as an office area.

Outside Madrid City.

Therefore, there are real options currently available, at lower rental levels and offering attractive incentives (rent free periods, Tis, etc.) for new tenants that IBM could consider once the lease renegotiation process starts. In the case that the demand for space is smaller, there are a few more buildings that would be currently suitable to allocate IBM:

ADEQUA Business Park – 19,387 sq m. (ADEQUA has free buildable area to increase office space). Asking

Rent: €11-12/sq m. Average incentives.

Martinez Villergas 49 – 24,135 sq m. Asking Rent: €12-13/sq m/monthly. Average incentives.

Emilio Vargas 4-6 – 25,874 sq m. Asking Rent: €14-15/sq m/monthly. Currently under refurbishment expected

to be completed at the end of 2013.

Repsol Building Castellana 278 – 15,295 sq m. Asking Rent: €16-17/sq m/monthly. Average incentives.

However this option would require a relevant refurbishment which will take at least 18 months.

The third option for IBM is to build or have built a new tailored building in a “built to suit” project similar to Santa Hortensia. There are various plots available in Madrid ready to be developed. IBM will consider the benefits from staying in the building by extending the current lease versus leaving the property to find new headquarters. A brief list with the Pros and Cons of the IBM Building would be of interest to anticipate the rationale of IBM during the renegotiation process of the lease extension. PROS:

Excellent visibility and prominent frontage from Avenida de America (A-2 motorway).

Corporate Signage placed on the façade.

Trophy Asset: Building known as the “IBM Building”.

Located on one of the main entrances to the city centre, the A-2 (from the Airport and Barcelona).

Proximity to both the airport and the city centre.

Recent refurbishment works undertaken and continuous Capex improvements.

Good parking space ratio for office use.

Opportunity to extend the lease agreement at market rents.

No reallocation costs/moving costs. The costs to move the CPD are higher and in this particular case could

have a great impact in price.

Good access to public transportation

IBM has recently upgraded the main entrance hall.



29

Tailored Building: IBM participated in the design of the building from the beginning of the process as this was a

“built to suit” project for IBM to establish its headquarters in Madrid allocating also the CPD.

Labor Unions: The building allocates around 2,300 workers who are represented by strong labor unions worried

about the loss of the current benefits for workers using a building specially prepared for IBM. Moving far from

the city centre with worse public transport service, more difficulties for mobility and less working flexibility; would

be aspects that need to be consider by IBM decision-makers. A good and adjusted social benefits package

should be offered in case of a change in the workplace.

CONS:

- Large surface area (circa 47,000 sq m).

- Inefficient office area with high ratio of common areas.

- Low office take up figures and poor prospects in Madrid may drive landlords very aggressive to attract new

tenants both in rental levels and incentives.



30

4 The Tenant: IBM

After an analysis of the Madrid Office Market and a special focus on the secondary sub-market and the surrounding area of Santa Hortensia where the building is located; we are of the strong opinion that the best strategy to create/maintain the value of the building is to secure IBM for a longer period. The current lease expires next September 2015 and the closer to this date, the lower the market value of the building. The criteria IBM would consider in order to extend the current lease would be based on the following factors: Rent: Currently the annual rent that IBM is paying during 2012 amounts €11,934,751 which represents an office rent of €19.09/sq m/month and €104.32 per parking space. This rent is over-rented, needing a great adjustment from a reasonable 20% to 35% discount; considering that during renewal negotiations, the rent signed will be higher than the market rent (ERV) for that particular property as a result of the negotiations between the two parties. ERV: According to the distribution of office areas shown in Section 2.- A, Santa Hortensia street is located within the secondary sub-market. The rents range from €10/sq m/month to €15/sq m/month . We are of the opinion that the Estimated Rental Value (ERV) for the building should be around € 13 – 14 /Sq m/month Incentives: It would be really important to offer the tenant a package of incentives to make the offer more attractive and being able to compete against other potential buildings/owners able to offer a significantly lower nominal rent. In this sense, the landlord should be in the position to offer:

Rent free periods: from 12 to 18 months.

Investment: according to the needs of IBM, the landlord should offer some Capex in order to facilitate any

demanded improvement of the building (i.e. social facilities such as gym, spa, sport courts), climate system,

new fit out, etc. A range of €75/sq m to €100/sq m would be necessary considering the current state of repair

and the need of the building.



31

5 OPINION OF VALUE

For the purpose of the indication/opinion of value we have considered two different scenarios:

Scenario 1 – “As Is” : we have assumed the value which will be given but an investor under the current market circumstances and assuming no changes in the current lease are taking place.

Scenario 2 – “New Lease Extension”: which take into account the change of the existing lease into a 10 year lease with no break options.

We would like to highlight that this is not a Valuation as per the RICS guidelines but just our opinion of the investment market and investor appetite for this property based on the two scenarios indicated. The opinion of values provided is referred to the real estate asset of Santa Hortensia 26-28 or IBM Building and should not be understood as an opinion of value for a Special Purposes Vehicle (SPV) or other entity holding the asset.

5.1. Scenario 1: “As Is”

We have been asked to provide an opinion on the potential market value of the property considering its current characteristics including location, market demand, state of repair, lease length, and all relevant aspects that could affect the value of the building in case this would be available to be sold in the market.

5.1.1. Assumptions

From the information provided, we understand that the property is 100% leased to IBM on an Internal Repairing and Insuring lease (IRI). In this type of leases:

Tenant is responsible for paying most of common and ordinary expenses as well as ordinary repairs and

insurance for the content of the building.

All extraordinary costs and costs related to the conservation, maintenance and repairs for structural damages

are paid by the landlord.

IBM’s Current Lease Occupancy Rate: 100%.

Lease Expiry: September 2015.

Current rent: €11,934,750.73 per annum.

o Office: €19.09sq m/month.

o Parking: €106.30space/month.

Renewal: No provisions.

Rent Reviews: Indexed annually to CPI on the 1st of March (2.50% for this purpose).

Recoverable Costs: Internal Repairing and Insuring Terms.

Non Recoverable Costs: Costs excluded from IRI:

o Property Tax (IBI): Capped to €60,000 p.a. the excess will be paid by the tenant..

o Insurance:



32

The landlord will be responsible for insuring the structure and installations of the property as

well for paying a Professional Indemnity Insurance.

The tenant will be responsible for insurance of the content of the building.

o Taxes (Property, Vado, Garbage): According to the IRI lease terms, these will be paid by the landlord

(see Property Tax).

5.1.2. Potential Investors Profile

We are of the opinion that only opportunistic/distressed buyers such as opportunity funds and developers would look at this investment opportunity.

We know from market experience that opportunistic and distressed investors would be willing to study the opportunity

under the current scenario “as is”. These investors have been in the Spanish Market for the last four years and are

willing to enter to real estate transactions where Spanish natural investors would not do so. These investors have

specific return requirements for this risk to include the following:

2x equity minimum.

Minimum 20% unlevered IRR.

Maximum holding period: 6 years.

High LTV requirements.

These investors will analyze this investment opportunity creating a Discounted Cash Flow modeling the current lease situation, the refurbishment period and the marketing process to forecast the potential incomes and outcomes generated by the project. In addition to the DCF, they would probably study the property from a different perspective, always considering very conservative scenarios. In this case we believe it would be appropriate to build a Residual Method Model to value the land and add the Net Present Value of the contractual income secured until September 2015.

5.1.3. Opinion of Value - DCF

We therefore assume that a potential opportunistic/distressed investor would consider the following:

Run a cash flow over a 6 year period starting on 1st March 2013.

Acquisition Date: January 2014.

WALT: 1.75 years.

Capex of around €450/sq m during a period of 15 months to refurbish the building into a multitenant

scheme with 9 different tenants. This high investment will be required to adjust the building to the market

standards to compete with the rest of available supply.

Marketing period of 15 months, starting when IBM leaves vacant the building so the first tenant would be

able to occupy the building as soon as the refurbishment work will cease (January 2017).

Estimated Rental Value January 2017 in nominal terms (after deducting all incentives): €/13/sq m/month.

Parking Space: €100 per space.

LTV: 0%.

Unlevered IRR: circa 20%.

Exit Date: December 2019.

Exit Cap Rate: 7.50%.

Vacancy at Exit: 14%.



33

Exit Value based on the Gross Rental Income in year 6 (86% of total office space).

Vacant office space valued at €1,240/sq m (Vacant Possession Value).

No finance has been allowed since we think that no financial entity will provide any type of senior finance for the

acquisition of Santa Hortensia. Thus, IRR levered and unlevered will be above 20% in order to be interesting for these

investors.

The investment model would be built considering the different scenarios in terms of rental levels, marketing periods,

required capex, etc. Opportunistic and distressed investors will probably use the worst case scenario as the base case

therefore the sales value from this method will be the lowest value of the different approaches.

Considering all factors mentioned, we have prepared a sensitivity analysis considering the most relevant indicators that

will determine the investor’s final acquisition price as seen in the table below.

We are of the opinion that the Market Value of the freehold interest in Santa Hortensia 26-28, as at November

2012, from a 6 year Cash Flow would be €45.7 m within a range of €42.2 m TO €48.1 m. See in table below the

sensitivity analysis which provides the range of prices in relation to the investor requirements (IRR, Equity Multiple, €/Sq

m).

5.1.4. Opinion of Value – Residual Method + NPV Contractual Rent

It is not hard to believe that opportunistic and distressed investors would consider doing a cross check analysis to

compare the output with the DCF’s one. But it is also an interesting exercise that, considering all factors involved is this

investment, to study it from different angles and points of view.

Thus, considering the age, size, tailored building and lease length of the property, a potential investor would consider

that the value of the building itself is close to the Vacant Possession Value (VPV) as no tenant will be find to occupy the

whole building once IBM leaves in September 2015. But also to take into account the investment required to refurbish

the property into a multitenant building compared to the potential to generate a secure cash flow once refurbished and

leased.

Considering the age of the building, its technical specifications and a potential positioning in the market of the building;

the VPV would be close to the value of the land. Land value is calculated using a Residual Model of Valuation; but the

building as today is still generating a free cash flow that the potential investor will also value discounting at a given

discount rate to obtain the net present value of the rents.

Sales Price (€ m) IRR Equity Multiple €/Sq m

48.1 21.3% 3.09 1,025

45.7 22.9% 3.34 950

42.2 24.1% 3.53 900



34

5.2. Scenario 2: New Lease Extension

Besides the scenario of a potential sale of the property “as is”; we have been asked to provide an opinion on the potential market value of the property considering that there is a new lease agreement on place between the owner and IBM, the existing tenant. In order to facilitate an opinion of the potential price that could be reached in an open market transaction, we have considered the building with the new 10 year lease in place, as well as all its main characteristics including location, market demand, state of repair, lease length, covenant and all relevant aspects that could affect the value of the building.

5.2.1. Assumptions

We have been asked to consider that after the negotiations, tenant and landlord have reached an agreement to renew the lease about to expire on September 2015. From the instructions received, we consider the property 100% rack rented to IBM starting on September 2015 with a mandatory lease term of 10 years. We assume that the new lease will continue maintaining most of the clauses from the current lease and on the basis of an Internal Repairing and Insuring (IRI) lease. In this leases:

Tenant is responsible for paying most of common and ordinary expenses as well as ordinary repairs and

insurance for the content of the building.

All extraordinary costs and costs related to the conservation, maintenance and repairs for structural damages

are paid by the landlord.

IBM’s New Lease Occupancy Rate: 100%.

Gross Contractual Rent as 1st January 2014: €7,941,678 per annum.

o Office: €12.35sq m/month.

o Parking: €83.46space/month.

Lease Expiry: December 2023.

Renewal: No provisions.

Rent Reviews: Indexed annually to CPI on the 1st of March (2.50% for the purpose of this calculation).

Recoverable Costs: Internal Repairing and Insuring Terms.

Non Recoverable Costs:

o Costs excluded from IRI terms;

o Property Tax (IBI): Capped to €60,000 p.a. the excess will be paid by the tenant.

o Insurance:

The landlord will be responsible for insuring the structure and installations of the property as

well for paying a Professional Indemnity Insurance.

The tenant will be responsible for insurance of the content of the building.

o Taxes (Property, Vado, Garbage): According to the IRI lease terms, these will be paid by the landlord

See Property Tax).



35

5.2.2 Potential Investors Profile

We are of the opinion that taken into account the new leasing situation of the property beside all its characteristics, the GLA of the building (46,928 sq m), its location (secondary) and the tenant of the existing lease; it would be very likely, based on our experience in the Madrid investment market, that this investment opportunity could be of interest for:

- National and international institutional Core Plus Investors These investors are looking for secure and stable investments where the payments are mostly secured by the lease contract with a long mandatory lease term. In this case, IBM, a strong covenant, will be occupying the premises for a further 10 year period paying a rent at market levels and offering a stable return over the length of the investment. Their requirements real estate investments in Madrid could be summarized as follows:

o Net Initial Yield: 7.00% - 7.75%

o Unlevered IRR : 9% - 12%

o Maximum holding period: 10 -12 years.

o LTV requirements: 60% -70%

5.2.3 Opinion of Value – DCF

We therefore assume that a potential core + investor would consider the following:

Run a cash flow over a 10 year period starting on 1st January 2014.

IBM renew the lease after 15 months of negotiations and effective execution starting 1st January 2014

Acquisition Date: January 2014.

Mandatory Lease Term: 10 years.

Capex of €100,000 per year.

Estimated Rental Value January 2014 in nominal terms (after deducting all incentives): €/12.35/sq m/month

and Parking Space: €100 per space.

LTV: 50%.

Unlevered IRR: circa 8%.

Exit Date: December 2023.

Exit Cap Rate: 7.00%.

Exit Value based on the Gross Rental Income in year 10.



36

We are of the opinion that the Market Value of a renewed lease for 10 mandatory years with IBM in the

100% of Santa Hortensia 26-28, as at November 2012, would be Price: €119.35 m within a range of

€115.23 m TO €123.20 m

See in table below the sensitivity analysis which provides the range of prices in relation to both, discount (%)

applied on the current passing rent and the initial net yield required by the investors

Discount (%) on current passing rent

-35% -30% -25% -20% Annualised Rent (as of

Nov12)

1st Rent €/Year (New Lease 10 Years)

7.757.590 8.354.327 8.951.065 9.547.803 11.934.753

INY Potential Sales Price (€ m) after New Lease Extension

6,50% 119,35 128,53 137,71 146,89 183,61

6,75% 114,93 123,77 132,61 141,45 176,81

7,00% 110,82 119,35 127,87 136,40 170,50

7,25% 107,00 115,23 123,46 131,69 164,62

7,50% 103,43 111,39 119,35 127,30 159,13

7,75% 100,10 107,80 115,50 123,20 154,00

8,00% 96,97 104,43 111,89 119,35 149,18

5.2.2. Investment Appetite for Core/Core + Investors

This is the only option that makes Santa Hortensia a really liquid product within the real estate investment market. In spite of the age and the state of repair of the building, having IBM as the sole tenant being responsible for almost all ongoing expenses creates an investment that core and core + investors will consider to carry out. Between these investors, we could find real estate investment funds, insurance companies, traditional real estate investment companies, investor’s clubs among others.



37

6 DISCLAIMERS

Scope of Work/ Limitations

The work completed herein is a desktop estimation and opinion of value, does not meet RICS valuation

standards and is subject to the following limitations:

o We have based our estimations on the information provided to us and we have assumed that this information is correct and complete.

o Our analysis is based on the Special Assumption that the property is held on a basis equivalent to freehold. We have assumed that there are no encumbrances or unduly onerous or unusual easements, restrictions, outgoings or conditions, likely to have an adverse effect upon the desktop estimated value of the property, and we have assumed that a good and marketable title in the properties is held.

o We have not investigated planning or licensing issues and we assume that the structure in-place have been developed within the permitted planning regulations and that this structure have been granted all the required licences to permit their economic use.

o We have not investigated ground conditions or environmental issues. We assume that there are no material adverse facts as regards these issues which would affect our opinion of value.

o We have not measured the properties and have relied on the areas provided.

Jones Lang LaSalle expressly disclaim all liability for any statements, express or implied, contained herein,

commissions or any other written or oral communications made to any interested party.

All recipients of the present document should base their asset analysis solely on recipient’s own reviews and business analysis. This information is only provided as a guide and cannot form part or the whole of a contract.

This analysis should not be considered in any manner as a formal appraisal and no decisions therefore should not be relied upon for any other purpose other than providing sales advice.



38

Juan Manuel Ortega, MRICS

National Director

Capital Markets

Pº Castellana, 51, 5ª planta

Madrid

+34 91 789 1100

Gustavo Martínez, MRICS

Senior Consultant

Capital Markets


Madrid

+34 91 789 1100

Maurice Kelly, MRICS

Associate Director

Capital Markets


Madrid

+34 91 789 1100

This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in

part, without the prior written consent of Jones Lang LaSalle IP, Inc.

The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in

respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them.

Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.

CONSULTANCY REPORT

IBM HEADQUARTERS

Santa Hortensia 26-28

28002 Madrid - Spain

Prepared on behalf of MS Edificio Santa Hortensia SL 30 October 2012 Private and Confidential

PRIVATE & CONFIDENTIAL www.dtz.com

MS Edificio Santa Hortensia SL Page 1

Contents

1. Terms of instruction, disclosure and confidentiality 2

1.1. Our Appointment 2

1.2. Inspection 3

1.3. Conflicts of interest 3

1.4. Tenure 3

1.5. Information Received 3

1.6. Confidentiality and Disclosure 4

2. Consultancy Report 5

2.1. Property Overview 5

2.2. Property Market Background 10

2.3. Leasing Market 12

2.4. Competitive Landscape 16

2.5. IBM 19

2.6. Investment Market 21

2.7. Opinion of Value 25

Appendices 28

Appendix A – Photographs 29

Appendix B - Floor plans 32

Appendix C - Terms and Conditions 43


MS Edificio Santa Hortensia, SL

Serrano 55 - Pl. 3

28006 Madrid

For the attention of Mr. Andrés Cerdán

Our ref: V-707

Direct tel: +34 91 770 96 00

Direct fax: +34 91 556 10 20

Email: [email protected]

Date: 30 October 2012

Dear Sir,

Client: MS Edificio Santa Hortensia, SL

Property: IBM HQ - Santa Hortensia 26-28, 28002 Madrid (Spain)

Date of the Report: 31st October 2012

Purpose of the Report: Publicly disclose our consultancy report in its entirety to the benefit of the public noteholders

via a stock exchange notice.

1. Terms of instruction, disclosure and confidentiality

1.1. Our Appointment

In accordance with our proposal signed by Mr. Andrés Cerdán and Mr. Dietmar Riemenschneider on 23

October 2012, we have prepared a Consultancy Report in the above property covering the following scope:

PROPERTY OVERVIEW

Location, description, alternative uses, SWOT analysis

PROPERTY MARKET BACKGROUND General overview of the Madrid office market

LEASING MARKET Recent letting transactions, how Santa Hortensia compares to CBD and other relevant submarkets

COMPETITIVE LANDSCAPE Details on existing and/or new buildings that could accommodate IBM

IBM Key criteria for extending the lease with IBM, lease renewal factors including our opinion as to when a tenant is likely to negotiate a lease extension and how long this takes

INVESTMENT MARKET Marketability and potential purchasers, recent transactions

OPINION OF VALUE Opinion of value assuming IBM vacates the building upon expiry of the lease currently in place Opinion of value assuming a 10-year term lease extension upon expiry of the lease currently in place

APPENDICES Photographs Floor plans Terms and Conditions


1.2. Inspection

The property was inspected internally and externally by Angel Cordero MRICS and Micaela Figueiredo

MRICS on 20 September 2012.

We were able to inspect all of the property and are satisfied that this provided us with a representative

view of the property. We have assumed that details of all matters likely to affect value have been made

available to us.

1.3. Conflicts of interest

We confirm that we have no current, anticipated or previous recent involvement with the property and/or

parties to the transaction and therefore do not consider that any conflict arises in preparing the advice

requested.

1.4. Tenure

We have assumed that the property is held freehold free from restrictions as to use, title or occupation and

free from any other restriction which may affect value.

1.5. Information Received

We have received the following documents related to this report:

Copy of lease contract

Current rent

Details on non-recoverable costs

Floor plans

Extract from Property Register (“Nota Simple”)

Optimization Analysis prepared by Aguirre Newman on behalf of Morgan Stanley on September 2007.

This documentation was provided by Andrés Cerdán, Vice President of Morgan Stanley Real Estate. We have assumed that the information provided to us in respect of the property is both full and correct. It follows that we have assumed that details of all matters likely to affect value have been made available to us and that the information is up to date.


1.6. Confidentiality and Disclosure

The contents of the Consultancy Report and Appendices are confidential to the party to whom they are addressed (MS Edificio Santa Hortensia SL) for the specific purpose to which they refer and are for their use only. Consequently, and in accordance with current practice, no responsibility will be accepted to any other party in respect of the whole or any part of their contents. We understand that you wish to publicly disclose our consultancy report in its entirety to the benefit of the public note holders via a stock exchange notice. Such publication is only permitted in the case that the report is published in its entirety including its appendices and providing that it is not published in a prospectus.

For any other purposes than those mentioned above, our Consultancy Report, or any part thereof should

not in any case be reproduced or referred to, in any document, circular or statement, nor shall it be

disclosed orally or otherwise to a third party.

Yours faithfully,

Micaela Figueiredo MRICS Angel Cordero MRICS

Associate Director Senior Consultant

For and on behalf of

DTZ Iberica


2. Consultancy Report

2.1. Property Overview

Location

The subject property is located at 26-28 Santa Hortensia st., to the East of the city center of Madrid but

within the M-30 inner ringroad.

The property is situated in the neighbourhood of Prosperidad, a consolidated, medium-high residential area

bordered by the M-30 ringroad to the East and by Avenida de America to the South. There are several

commercial buildings in the form of office buildings, hotels and shopping centres in Prosperidad, especially

along the M-30 and Avenida de America, but it is mainly a high-density residential area. The property enjoys

a good location within Prosperidad, close to the junction of the M-30 with Avenida de America, from which

it enjoys excellent visibility. However, the subject property is the only office building in the immediate

surroundings.

Further to the East, after the junction with the M-30, there is an extensive office supply along Avenida de

America and its prolongation, the A-2 highway, which links Madrid with the Barajas airport and Barcelona.

In fact, this office area, known as the A-2 corridor, has consolidated as one of the most recognized and

sought after office locations of the periphery of Madrid together with Campo de las Naciones and the A-1

corridor, to the North of the city.

In addition to a good visibility, the subject property enjoys very good road accesses both from (i) Avenida de

America, which links Paseo de la Castellana (the main road axis of Madrid) with the M-30, M-40 and M-50

ringroads as well as with the Barajas airport, which is located 12 km to the East, and (ii) from the M-30,

which gives access to the 6 highways linking Madrid with the rest of Spain.

By means of public transportation, there are 3 metro stations within a 10 minutes walking distance:

Prosperidad and Alfonso XIII, line 4, which connects the historic centre of Madrid with the northern districts

and Cartagena, line 7, which runs from the western to the eastern outskirts of the city. Finally, bus lines 43,

72, 114 and 115 serve this area and have stops in the immediate surroundings of the building.


The Avenida de America transport centre, which is situated a bit further away, within a 15 minutes walking distance, gives access to lines 4, 6, 7 and 9 of the underground network as well as to urban and long distance buses.

Description The subject property comprises a 9-storey office building constructed in 1989. The property was constructed to meet the requirements of IBM (built to suit), which occupies the building since construction was finished. The property also comprises 4 basement levels: basement 1 accommodates several installation and storage rooms as well as the IBM data center while the remaining underground levels are dedicated to parking facilities (946 car spaces). The building has reinforced concrete structure and mixed façades of brick and granite.

The property occupies a 12,532 sq m flat, irregular in shape land plot.

ROAD MAP - MADRID


The ground floor accommodates the main lobby as well as the canteen, the marketing centre and a conference centre while the remaining upper floors are entirely used as offices. Vertical circulation is provided by 4 sets of lifts (2 sets with 4 lifts and 2 sets with 2 lifts) as well as by 8 staircases. However, it must be noted that all lifts and staircases only connect the ground floor with the upper levels. Access to the building from the parking lot is only provided by two escalators. All upper floors are fairly rectangular in shape. However, the building incorporates two large central atriums from the second floor and two further smaller atriums from the fourth floor. Therefore, the floor area decreases from the ground floor to the fourth floor.

We have relied on the floor areas included in the lease contract supplied by MS Santa Hortensia:

Floor Area (sq m)

Basement 1 6,899.19

Ground 5,569.43

1 4,931.15

2 4,377.79

3 4,415.41

4 to 7 4,123.80

8 4,239.83

TOTAL 46,928.00

The property provides well specified, open-plan office space with carpeted floors, suspended ceilings and

air-conditioning throughout. Furthermore, it enjoys good daylight, a free height of 3.6 m. and a good

overall condition. In fact, several improvement and renovation works have been carried out by both

landlord and tenant during the last 2-3 years: replacement of chillers and BMS; renovation of lift machinery;

roof waterproofing; replacement of plumbing, renovation of the main lobby, etc. However, the building does not have raised floors, the free-height in all central corridors is only 2.60 m due to the air-condition ducts, some of the finishes and installations appear dated and the layout is not very efficient, comprising two long and narrow rectangular plates (approximately, 100 m x 15 m) in most of the upper floors. In order to make the property available for multi-letting, there are concerns related to fire regulations in addition to the physical deficiencies listed above. To bring the building up to a multi-letting standard, extensive refurbishment would be required. However, we want to mention that even if the necessary refurbishment works were undertaken, the potential of the building will continue to be affected by the inefficient layout and building footprint.


Alternative Uses Based on an Optimization Analysis of the building prepared by Aguirre Newman on behalf of Morgan Stanley in September 2007, we understand that the subject property falls within “Norma Zonal 3.2” of the 1997 General Plan of Madrid and that alternative uses including residential, hotel and retail uses are allowed. For replacement works, the new building may use the same constructed area as long as it registers on the outer surrounding of the pre-existing building. However, a new building configuration may be approved through the issuing of a Detailed Study (Estudio de Detalle).

Tenancy The property is fully let to IBM. We summarize below the main parameters of the lease contract.

Lease start date: 25 September 2009

Lease expiry date: 30 September 2015

Initial rent: €11,440,588.8 per annum (€18.3 per sq m per month for the office space + €100 per car

space per month).

Payment: quarterly in advance.

Current rent: €12,065,988 per annum (€3,016,497 per quarter)

Rent reviews: August 1st of each year according to the variation of the CPI. First rent review takes place

the 1st August 2011.

Outgoings and expenses:

o Tenant is responsible for payment of all supplies; all taxes affecting the use/activity of the

building; all taxes affecting the tenure of the building (with the exception of the Property Tax);

all necessary costs to keep the building in good condition (maintenance and ordinary repair

costs of building and installations); security, gardening and cleaning, etc.

o Landlord is responsible for the costs related to maintenance and repairs of foundations,

structure, roofs and façades; extraordinary repairs and replacement of main installations.

o Up to the property tax amount of 2009 (€746,832) plus €60,000 is borne by the landlord.

Property Tax 2012: €881,530 hence amount paid by the landlord is €806,832.

Insurances: landlord responsible for the insurance of the structure of the building and for A General

Liability Insurance (€45,492 in 2012); tenant to hire insurance for the installations and remaining

elements of the building.

Alienation: the lessee may assign the contract and sublet the entire or part of the building to subsidiary

companies.

Tenant has no right of first refusal.


SWOT Analysis Strengths

Good location within the urban area of Madrid, close to the confluence of the M-30 with Avenida de

America.

Good connections to both the private and public transport networks.

Good overall condition.

Sufficient parking provision (1 p.s. per 42 sq m lettable area above ground).

Excellent visibility from Avenida de America.

Weaknesses

Large size building.

Building not fully prepared for multi-letting.

Dated design.

Inefficient layout.

Access to the upper floors from the parking lot is only provided by two escalators.

Low liquidity of the asset at present given its size, letting situation and complicated exit should it

becomes vacant.

Occupational demand remains very weak.

Opportunities

Extending the lease contract with IBM even at the expense of reducing the current rental income.

Market rents stand close to minimum historic levels. Future uplifts are likely to take place.

The property enjoys a very good location in a medium-high residential area with very limited expansion

possibilities and, according to the information provided by Morgan Stanley, alternative uses (including

residential) are allowed (with no loss on buildable area,).

Threats

New office areas such as Valdebebas and Ciudad Pegaso, among others, may have a negative impact on

future rental growths in the A-2 corridor and bring to the market further alternatives for large occupiers

such as IBM.


2.2. Property Market Background

As is the case with many other European cities, Madrid has been suffering a severe correction in its property market since 2007. Rental prices in the CBD have fallen by up to 50%, demand and take up have dropped considerably and overall availability has increased. Rental prices in the CBD suffered a sharp correction (above

40%) in the years following the start of the crisis in 2007

but appear to have stabilised with the decline flattening out

in 2010.

We believe rents have more or less bottomed out now and

do not expect to see any further large corrections before a

recovery kicks in.

The market is definitely a ‘Tenant’s Market’ and the time is ripe now for end-users to make the most of this to reduce OPEX through lease re-gears and/ or consolidation, re-location to higher specification premises, or better locations, and to tie into the current market conditions for as long as possible.

Despite the slow market there have been some large rental transactions over the last year

Office vacancy continues to rise due to low take-up, which reached 13% in Q3 2012. Vacancy rates have been somewhat mitigated by the reduction in new developments coming to market.

Take-up by areas, sq m

Availability Forecast, sq m

Take-up Forecast, sq m

New Supply, sq m

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

CBD Rest of District Rest of the City Periphery Outskirts

-

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

1.600.000

1.800.000

2009 2010 2011 2012 (F) 2013 (F) 2014 (F) 2015 (F)

-

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

2009 2010 2011 2012 (F) 2013 (F) 2014 (F) 2015 (F)

-50.000

100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000 500.000

2005 2006 2007 2008 2009 2010 2011 2012 (F)

2013 (F)

New Supply Future supply


Madrid Office Market Rents by Zone

Zone 2008 2009 2010 2011 2012 (Q3)

CBD 420 319 285 280 261

Rest of District 334 228 205 211 200

Rest of City 247 188 155 184 172

Periphery (M-30) 266 156 165 134 142

Outskirts (M-40) 222 140 127 138 127

Office Market – Key Figures

Q3 2011

Q4 2011

Q1 2011

Q2 2012

Q3 2012

Variation Q/Q (%)

Variation Y/Y (%)

Tendency 3T 2012

Take-up (sq m) 80,000 75,000 56,000 77,000 72,000 -6.5 -10.0

Available space (sq m) 1,334,700 1,370,700 1,447,800 1,466,800 1,519,300 3.6 13.8

Availability Rate (%) 11.55 11.84 12.46 12.60 12.96 2.8 12.2

CBD Rents (€/sq m/year)

280 280 270 261 261 0 -6.8


2.3. Leasing Market

Letting Comparables The table below includes letting transactions that have taken place in the A-2 corridor and comparable

office areas since the beginning of 2011.

Letting transactions (A-2, A-1, M-30 and Méndez Alvaro)

Ref. Location Quarter Year

Rent €/ sq

m/month Area sq m

1 Ribera del Loira 4 3T 2012 13 2,174

2 María de Molina 54 3T 2012 17 929

3 Quintanavides - PE Via Norte 3T 2012 14 683

4 Mahonia 2 3T 2012 18 731

5 Ribera del Loira 4 2T 2012 16.5 447

6 Retama 7 2T 2012 17 493

7 Vía de los Poblados 1 1T 2012 14.5 520

8 Quintanavides - PE Via Norte 1T 2012 16 381

9 Mendez Alvaro 56 1T 2012 17 863

10 Cardenal Marcelo Spínola 50 1T 2012 13 912

11 Avda. Partenón 10 1T 2012 13 368

12 Avda. de Burgos 19 1T 2012 16.5 199

13 Avda. de Burgos 17 1T 2012 16.5 200

14 Mahonia 2 4T 2011 19 358

15 María de Molina 39 4T 2011 18.5 453

16 Avda. del Partenon 16 4T 2011 18 553

17 Avda. de Burgos s/n 4T 2011 16 912

18 Titán 8 4T 2011 16 1,590

19 Retama 7 3T 2011 15 239

20 Ramirez de Arellano 35 2T 2011 16.5 2,205

21 Arequipa 1 2T 2011 16 243

22 Cardenal Marcelo Spinola 2 2T 2011 17 800

23 Albacete 3 1T 2011 12 355

24 Arturo Soria 336 1T 2011 16.86 396

25 Via de los Poblados 13 1T 2011 13.50 850

26 Avda. Partenón 16 1T 2011 15.50 1,127


Letting transactions included in the table above mainly vary between €13 and €18 per sq m per month

depending on the quality and specific location of the office buildings as well as on the size of the leased

premises.

Higher rents (€16 to €18 per sq m per month) are generally achieved in high quality buildings that enjoy

good visibility from the main highways such as the A-2, the A-1 and the M-30. Lowest levels (€12 to €14 per

sq m per month) usually apply to dated buildings that do not have any visibility.

In order to provide an opinion about a range of market rental levels in the A-2 office area, we have also

analysed current asking rental prices in this corridor.

Asking prices in the areas surrounding the subject property stand between €12 and €17 per sq m per

month. Again, higher rents (Ref. 1, 2 and 4), refer to quality buildings that enjoy excellent visibility from the

A-2 highway.

Taking into consideration the most recent letting transactions, current asking rental prices and the different

types of buildings in terms of quality and location that comprise the office supply in the A-2 office area, we

are of the opinion that market rents mainly stand between €13 and €17 per sq m per month.

Ref.

Building

Area (sq m)

Rent (€/sqm/month)

1

Torrelaguna, 75 10,616 15.50

2

Martínez Villergas, 49 24,135 16.75

3

NCR Building

Albacete, 3 2,355 13

4

Mizar Building

Albacete, 3 5,249 16.5

5

Condesa de Venadito, 1 4,126 12.50


The A-2 Office Area The subject property enjoys a good location at the beginning of the A-2 office corridor, which extends from

the beginning of Avenida de America to km 8 of the A-2 highway.

This area has consolidated as one of the best and most sought-after outskirt office locations of Madrid

together with the A-1 corridor, to the north of the city. This northern corridor is, together with the Mendez

Alvaro office area, to the southeast of Madrid, the most comparable and competitive office area.

These three office areas have traditionally achieved the highest market rents of the Madrid office market

after the CBD and Campo de las Naciones. In fact, market rents have basically followed a similar trend in

these three office locations and currently remain at very similar levels. Market rents in these areas reached

€22-23 per sq m per month in the peak of the market (2006-2007) and stand between €13-17 at present.

Market rents in the CBD reached €35-40 per sq m and month in 2006-2007 and have now dropped to €24-

€28. Prime Rental Prices €/ sq m/ year

A-2

M. ALVARO

A-1


Compared to the A-1 corridor, which extends from the northern end of Paseo de la Castellana to Arroyo de

la Vega, in the municipality of Alcobendas (18 km North of Madrid), the A-2 office area generally enjoys

better public transportation and a higher supply of services. However, the A-1 corridor generally provides

more modern and higher quality buildings that benefit from a better environment in recently developed

neighbourhoods.

Mendez Alvaro enjoys similar connections to the public transport system as well as a full supply of services.

However, the Madrid office market is clearly heading to the North and East of the city and the southern

areas are steadily losing relevance.


2.4. Competitive Landscape

The following map provides information on the most relevant competitive office buildings and office

schemes that could accommodate IBM. Buildings available at present are marked in Blue and those that will

become available within the next 2 years are marked in Red.

Omega Business Park Alcobendas, A-1 road km.17

33,800 sqm Adequa Business Park

Avda. de Burgos, 89 64,890 sqm

Torre Cristal Paseo de la Castellana, 259

50,013 sqm

Torre Caja Madrid Pº de la Castellana, 259

70,000 sqm

Paseo de la Castellana, 81 38,585 sqm

Prado Business Park Ramírez del Prado, 5

33,000 sqm

Rivas Futura Business Park Marie Curie, 17-19

Rivas Vaciamadrid, A-3 road km. 17 35,878 sqm

Avda. de América, 115 50,683 sqm

Pegaso City Avda. de Aragón, 402

35,066 sqm

Valdebebas area: 1,2 millions of tertiary use (offices, hotel

and commercial area)


From all the buildings and schemes included in the map above, we are of the opinion that top 3 competitors

are:

Avenida de America 115

Pros

Modern office complex (completed in 2011) that enjoys a good location at the confluence of the A-2

highway and the M-40 ringroad.

Good visibility

Cons

Complicated road access.

Poor connections to public transport system.

Very limited supply of services in the area.

Adequa Business Park

Pros

Modern office complex that enjoys a good location at the beginning of the A-1 corridor.

Good visibility.

Good road access.

Cons

Poor connections to public transport system.

Limited supply of services in the area.

Prado Business Park

Pros

Project aimed to provide high quality office space.

Located within the urban area of Madrid.

Good connections to both the private and public transport systems.

Cons

Decentralized office area.

Listed building, which may involve limitations on the flexibility of the office space.


With regards to suitable locations to start the construction of a turn-key building, we have included

Valdebebas and Ciudad Pegaso as the most likely options.

Valdebebas is a new district located to the north-east of Madrid, in front of the Barajas airport, that

includes approximately 1.2 million sq m of office, retail and hotel uses.

Ciudad Pegaso is a new office area located at km. 17 of the A-2 highway that comprises urbanized land for

the development of 520,000 sq m of office and hotel use.

Given the current economic conditions, we do not foresee the speculative development of large office

buildings in these new areas in the short and medium term. In fact, despite the urbanization works of

Valdebebas were completed at the beginning of 2011, no office developments have yet started. In Pegaso

City, the construction of the first two office buildings is about to be completed but they will be fully

occupied by Aena.


2.5. IBM

Based on our experience, lease renewal negotiations with tenants occupying an entire building should be

started between 18 to 24 months prior to the lease expiry date.

However, in this specific case we are of the opinion that the landlord should approach IBM as soon as

possible due to the following reasons:

The large size of the building.

Extremely competitive conditions that IBM could achieve in the current economic environment. At

present, tenants take advantage of the historic low rents and of the concessions made by owners

to attract occupational demand.

Avoid IBM moving into a turn-key building. As already mentioned in this report, we consider that

there are only a few competitive buildings that could accommodate and might meet the

requirements of IBM in terms of space efficiency, location and quality of the premises (under the

assumption that they require a similar office area, approximately 46,000 sq m).

This lack of competitive landscape could lead IBM to look for a turn-key building to be developed in

some of the office expansion areas of Madrid such as Valdebebas, Ciudad de Pegaso or the A-1

corridor. We are of the opinion that it would take no less than 3-years for IBM to be able to move

to a turn-key building, which is in line with the unexpired term of the lease contract in place.

Avoid IBM splitting their activities between back and front-office, which would allow them to look

for smaller spaces in different locations.

From the tenant´s perspective, we understand that they would need to start conversations with the

landlord at least 18 months before the lease expiry date. In the unlikely event that the landlord chooses not

to renew the contract, we understand this is the minimum time they would need to find an alternative

location and move to the new building.

With regards to the time needed to negotiate a new lease, we are of the opinion that it should not take

more than 6 months.

With regards to the renewal conditions, we want to note that we are in a tenant´s market. Some

differences remain when comparing negotiations for a lease renewal and for a new lease. This is especially

important in large size buildings where tenants have to face high economic and labor costs, as in the case of

relocation. Furthermore, in this case it must be noted that IBM keeps investing in the subject building.

Based on verbal information from Morgan Stanley, the entire lobby was renovated by IBM in 2009 and

2012. This provides the landlord another advantage in the negotiation process.

Finally, we understand that employee unions and syndicates in IBM are quite strong hence we consider that

alternative locations must stick to minimum requirements in terms of transportation, supply of services in

the surrounding area, etc. Given the lack of competitive landscape, this issue may be perceived as another

factor of negotiation in favor of the landlord.

In any case, we consider that IBM would hold the dominant position in the renewal negotiations. Under

current market conditions and given the large office space required by IBM, they represent an ideal tenant.

Therefore, the landlord would most likely have to grant IBM large concessions in the renewal terms.

We are of the opinion that, in order to negotiate a new 10-year term lease with IBM, key renewal factors

would be:


Offer IBM a competitive rent, reviewed annually, according to CPI as the rent currently paid by IBM

appears to be above market levels. However, it must be noted that renewal rents tend to be higher

than market rents as the tenant´s relocation costs give landlords the possibility to achieve rental

premiums. Furthermore, in long-term leases that are not subject to market rent reviews, lease

rents tend to be in the upper range of market levels so the property does not remain too far below

the market when market growth takes place.

A 12-month rent free period.

TI´s contribution. This is very difficult to quantify as it is strongly dependant on the specific needs

of IBM. The subject property is in an overall good condition. However, based on the information

provided, we understand that the 6-year extension agreed in 2009 was subject to the landlord’s

contribution to several renovation and improvement works. In fact, according to Morgan Stanley,

the landlord has invested approximately €5 mill. in the subject building over the last 3 years.

Based on the internal inspection carried out on the 23rd October 2012, we understand that TI´s

could be in the region of €2 mill. to €3 mill. However, we have not carried out a formal cost

assessment through our Building Consultancy Division. Our assessment should be treated as a

guide only and should not be relied upon.

Finally, we want to note that some other renewal factors could be discussed: the elimination of the IBM

dilapidation costs; the introduction of stepped rents or giving IBM the possibility to partially vacate the

building after a certain period of time, etc.


2.6. Investment Market

The market remains suspended as a lack of clear indicators frustrate investment and continued difficulties in raising finance hamper investor confidence.

Investment in commercial property has continued to be very low and fell significantly in the third quarter against the previous quarter. If the next quarter does not prove a turning point, this year could have the lowest volumes seen in a decade.

Investor profiles are now fairly evenly divided between domestic and foreign purchasers, this past quarter saw foreign investment drop further.

This year has seen fewer transactions and generally for smaller investments, a symptom of the lack of appetite for larger scale investment schemes which has also meant that most transactions this quarter have been owner occupation or sale and leaseback schemes.

The last DTZ Fair Value Index™ Q1 2012 indicated the increasing attractiveness of many European markets, it also forecasts for an increasing divergence between principal and periphery markets. Currently in Spain there are only a few specific markets in which one can expect a reasonable rate of return.

More than in previous years, foreign investors tend to be looking for prime assets, focusing on specific criteria dependant on the investors’ profiles. In a market made less competitive due to limited financing options, the majority of foreign investors look for long term leases that secure a recurring income and large volumes. Domestic investors are generally purchasing smaller properties and taking advantage of the economic situation to purchase in locations that were not financially feasible in previous years.

Madrid Supply Pipeline, sq m

Figure 1

Prime Office Initial Yields

Figure 2

Volume of commercial transactions in Spain, EUR billions

Investment volumes by lot size

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

2012 2013 2014 2015

Central Madrid Rest of Madrid

4%

5%

6%

7%

Barcelona Madrid

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0%10%20%30%40%50%60%70%80%90%

100%

Menos 10m 10-20m 20-50m 50-100m

100-200m 200-500m 500-1,000m 1bn+


Significant Investment Deals, Madrid Q1 2011- Q3 2012

Ref. Building / address Purchaser Type of Deal Date Size m

2

Price (€ million)

(e)

Initial Yield

(e)

1 Josefa Diaz Sabadell BS Sale & Leaseback Q3, 2012 24,000 28 9.00%

2 Torre Picasso Pontegadea Investment Q4, 2011 78,100 400 5.60%

3 Titan 4 Invesco Investment Q4, 2011 10,300 39 6.50%

4 HP Headquarters Allegra Holdings Investment Q3, 2011 10,120 29.4 7.50%

5 Oracle HQ - Investment Q3, 2011 12,000 30 7.20%

6 Recoletos 22 M. de la Abogacía Investment Q2, 2011 3,800 26 6.00%

7 Recoletos 4 Private Investor Investment Q2, 2011 2,500 20.6 <5.50%

8 Avda. de Camino de Santiago Gorbea Sale & Leaseback Q4, 2010 21,494 80 7.50%

9 Tres Cantos DTS Investment Q4, 2010 41,000 86 8.00%

10 Avenida Bruselas, 30 Mapfre Investment Q4, 2010 6,892 30 6.00%

11 C/ Valgrande Sabadell BS Investment Q2, 2010 37,200 51 9.00%

10

P

F

A

M

Po

LG

NE

CI

LF

MA

LT

PR

JC

GV

AA

PV

CPCC

VP

CN

PV

M30

D4T

CBD

Po 4

Po 3

Po 2

Source : DTZ Research, Navteq

CBD

Outskirts

Periphery

Rest of City

0 0.75 1.5 km

Rest of District

The Madrid office market is

divided in 5 areas:

CBD: or "Central Business District",

it is the main business area in the

capital and includes exclusive office buildings

Rest of District: it is located mainly

in the CBD’s surroundings, in the city centre

Rest of City: the rest of buildings

located within the M-30 ring-road, with exceptions (Vía de los Poblados,

Ciudad de las Comunicaciones,

Arroyo de la Vega sur)

Periphery: generally includes areas

located between the M-30 and

M-40, besides Méndez Álvaro

Outskirts: it comprises the business

parks in the periphery (outside the

M-40) along the main roads

1

2

3

67

8

Location M2

1 Josefa Diaz 24,000

2 Torre Picasso 78,100

3 Titan 4 10,300

4 HP Headquarters 10,120

5 Oracle HQ 12,000

6 Recoletos 22 3,800

7 Recoletos 4 2,500

8 Avda. de Camino de Santiago 21,494

9 Tres Cantos 41,000

10 Avenida Bruselas, 30 6,892

11 C/ Valgrande 37,200

9

54

1011


Ref. 1: recently developed office building of average quality located in a very decentralized area for

office use at the southern outskirts of Madrid.

Ref. 2: Torre Picasso is a landmark building located at the heart of the CBD of Madrid. Multi-let.

Ref. 3: modern office building located in Mendez Alvaro that enjoys excellent visibility from the M-

30.

Fully let to a single tenant with a good covenant.

Ref. 4: office building located in Las Rozas BP, 24 km to the northwest of Madrid. Fully let to HP

under a long-term lease. We understand that this building would be in need of an extensive

refurbishment to make it suitable for multi-letting

Ref. 5: office building located at the A-6 office corridor (to the northwest of Madrid). The property

enjoys excellent visibility from the A-6 highway.

Ref. 6 and Ref. 7: small, classic-style office buildings located in the CBD of Madrid. Multi-let.

Ref. 8: forward-purchase of an office building under development that will accommodate the HQ

of the Spanish construction and services company FCC. Property located in the A-1 corridor.

Ref. 9: mixed-use building located in Tres Cantos, a decentralized office area 18 km. to the North of

Madrid. The property is fully let to Grupo Prisa.

Ref. 10: good quality office building fully let to Mercedes located in Arroyo de la Vega, at the

northern end of the A-1 corridor.

Ref. 11: mixed-use building of standard quality fully let to Telvent. The building is situated in a

secondary location of the A-1 highway.

As it can be seen in the table at the top of page 22, the investment activity in the Madrid office market in

2012 has remained at very low levels.

Based on the investment transactions included in the table above, we are of the opinion that current prime

yields for good quality office buildings in the CBD of Madrid stand between 5.50% and 6% (Ref. 2, 6 and 7).

In fact, we are aware that a high quality office building located in the CBD of Madrid, currently occupied by

a blue-chip tenant under a long-term lease, is currently under offer which would reflect a yield below 6%.

It must be noted that the only transactions of multi-let assets refer to these 3 buildings located in the CBD

of Madrid (Ref. 2, 6 and 7). All other transactions in the above table that are not in the CBD were for

buildings fully let over the long term to a single tenant with good covenant strength. Therefore, investment

activity outside the CBD is predominantly focused on buildings that are easy to manage and provide a

secure income stream over the long term.

Yields required by investors for these office buildings, follow a logical upward trend as long as they move

further away from the CBD: 6% to 7% for good secondary locations (Ref. 3 and 10); 7.25% to 7.50% for

buildings located in the far periphery of Madrid (Ref. 4, 5 and 8) and above 8% for decentralized locations

(ref. 1, 9 and 11)


However, the short unexpired lease term (3 years), the large size of the building and the fact that it is not

suitable for multi-letting without carrying out an extensive refurbishment have a strong negative impact on

sale prospects and, therefore, on the liquidity of the property.

In its current condition, the property does not meet the requirements of institutional funds and traditional

investors and is too big for private investors, which have remained fairly active in recent years. Therefore,

we are of the opinion that in its current condition, there would be very little investment demand for the

subject building and that only opportunity and value added funds would show interest in a potential

disposal of the asset.

In any case, the value of the asset depends heavily on whether IBM remains on as tenant at the end of the

lease and thus we recommend delaying any decisions to market the property until negotiations with the

tenant have taken place. If IBM decides to vacate, it would be advisable to wait to sell until the end of the

lease as market conditions in the office and residential markets may likely improve.


2.7. Opinion of Value

We have been asked to provide an opinion of value of the subject property under the following scenarios:

1. Opinion of value assuming IBM vacates the building upon expiry of the lease currently in place.

2. Opinion of value assuming a 10-year term lease extension upon expiry of the lease currently in place.

Scenario 1

As explained in the previous section, we are of the opinion that only opportunity funds would show interest

in the acquisition of the subject property under this scenario. Current market conditions and the

complicated exit strategy (large building in need of an extensive refurbishment) would likely deter

institutional investors.

Therefore, in order to provide an opinion of value under this scenario, we have followed an opportunistic

pricing approach assuming that, as of September 2015, a potential investor would have a 40,000* sq m

vacant office building that does not meet the requirements of the current occupational demand.

*We have not considered basement 1 (6,899 sq m) as income producing lettable area.

We have used a 10-year DCF to arrive at our opinion of value under this scenario subject to the following

parameters:

Current lease in place until expiry date (30 September 2015) as to rental income, rent indexation

and non-recoverable costs.

18-month refurbishment period upon lease expiry date to improve the quality of the building and

make it suitable for multi-letting. Total refurbishment costs estimated at €15 mill.

Re-letting process is estimated to take 24 months once refurbishment works are completed.

Rental levels considered are €14 to €16 per sq m per month for the office space and €100 per

month for the underground car spaces.

Rental growth:

Years 1 and 2: 0%

Year 3: 4%

Year 4: 8%

Year 5 onwards: 2%

We have assumed that a stabilized occupancy rate would be achieved by the beginning of 2019

(we have included a structural vacancy rate of 5%).

Exit yield: 7.25%.

Considering discount rates of 16% to 18%, which we view as typical for these equity-funded opportunistic

funds, our opinion of value under this scenario would be in the region of €50 mill. to €60 mill.

Our opinion of value under this approach is very similar to that resulting from the analysis of a change of

use of the building into residential upon lease expiry date. This would likely be perceived as a very positive


factor by potential purchasers as the building enjoys a good location in a consolidated medium-high class

residential area with no expansion possibilities. In the medium to long term, the marketing of a quality

residential development in this area should not find serious obstacles, which would provide an investor

with a feasible alternative use.

Scenario 2

Opinion of Value assuming:

Lease term: 3 years subject to the existing lease conditions + 10 years (no break-option dates) subject to

renewal conditions to be agreed.

Renewal conditions considered:

Fixed rent to be reviewed annually according to the variation of the Spanish CPI. No provision for

market rent reviews.

12-month rent free period starting the 1st October 2015.

Landlord contribution to renovation and improvement works in the amount of €50 per sq m of

office lettable area.

In order to arrive at our opinion of value under this scenario, we have produced a sensitivity analysis based

on (a) different rents to be agreed with IBM for the new lease and (b) different exit yields to reflect the

inherent uncertainty of the subject building on the lease maturity dates.

With regards to the rent renewal for the office space, we have analyzed a range, starting at €13 per sq m

per month (which we consider to be a plausible market rent under current market conditions) and

increasing up to €17 per sq m per month.

It must be noted that renewal rents tend to be higher than market rents as the tenant´s relocation costs

give landlords the possibility to achieve rental premiums. Furthermore, in long-term leases that are not

subject to market rent reviews (such as that considered under this scenario), lease rents tend to be in the

upper range of market levels so the property does not remain too far below the market when market

growth takes place. This is especially important in the current market conditions in Spain, where market

rents are at historically low levels.

The table below provides a summary of the sensitivity analysis.

EXIT YIELD

7.00% 7.50% 8.00%

RENEWAL RENT

13 €110.5 €102.2 € 95 €107.3 €99.3 €92.3 €104.5 €96.7 € 90

14 €116.7 €107.9 € 100 €113.3 €104.8 €97.3 €110.-3 €102.2 € 95

15 € 123 €113.5 €105.1 €119.4 €110.3 €102.2 €116.2 €107.5 € 100

16 €129.3 €119.3 €110.3 €125.5 €115.8 €107.2 € 122 €112.8 €104.5

17 €137.6 € 125 €115.5 €131.5 €121.3 €112.2 € 128 € 118 €109.3

DISCOUNT RATE 8.00% 9.00% 10.00% 8.00% 9.00% 10.00% 8.00% 9.00% 10.00%

The range of values under this scenario varies from a minimum of €90 mill. to a maximum of €140 mill.

However, we are of the opinion that the most plausible range would stand between €110 mill. and €120

mill.


Under this scenario, we are of the opinion that institutional funds would replace opportunity funds as the

most likely purchasers. The investment demand for the subject property under this scenario would be

considerably higher compared to scenario 1. However, the liquidity of the building would be negatively

impacted by the lot size. At present, demand for large lot sizes (>€75 mill.) is very limited due to the lack of

finance and high finance costs, which means that investors require higher returns. This has pushed offer

prices far below asking prices in good quality buildings with large lot sizes and is the reason behind the lack

of large volume investments reported over the last 18 months.


Appendices


Appendix A – Photographs


Appendix B - Floor plans



Appendix C - Terms and Conditions


These are the terms, conditions and assumptions upon which our consultancy report was prepared. They apply to

the opinions of value that are the subject of this instruction unless we have specifically mentioned otherwise in

this Consultancy Report. We have made certain Assumptions in relation to facts, conditions or situations affecting

our opinions of value.

Title

We have not had access to the title deeds of the property. Where a Certificate of Title has been made available,

we have reflected its contents in our valuation. Save as disclosed either in any such Certificate of Title or as

referred to in our Report, we have made an Assumption that there is good and marketable title and that the

property is free from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings.

We have also made an Assumption that the property is free from mortgages, charges or other encumbrances.

Condition of structure and services, deleterious materials, plant and machinery and goodwill

Due regard has been paid to the apparent state of repair and condition of the property, but a condition survey has

not been undertaken, nor have woodwork or other parts of the structure which are covered, unexposed or

inaccessible, been inspected. Therefore, we are unable to report that the property is structurally sound or is free

from any defects. We have made an Assumption the property is free from any rot, infestation, adverse toxic

chemical treatments, and structural or design defects other than such as may be mentioned in the body of our

Report and the appendices.

We have not arranged for investigations to be made to determine whether high alumina cement concrete, calcium

chloride additive or any other deleterious material have been used in the construction or any alterations, and

therefore we cannot confirm that the property is free from risk in this regard. For the purposes of this opinion of

value, we have made an Assumption that any such investigation would not reveal the presence of such materials in

any adverse condition.

We have not carried out an asbestos inspection and have not acted as an asbestos inspector in completing the

valuation inspection of properties. We advise that such enquiries should be undertaken by a lawyer during normal

pre-contact or pre-loan enquiries.

No mining, geological or other investigations have been undertaken to certify that the site is free from any defect

as to foundations. Where relevant, we have made an Assumption that the load bearing qualities of the site of the

property are sufficient to support the buildings constructed, or to be constructed thereon. We have also made an

Assumption that there are no services on, or crossing the site in a position which would inhibit development or

make it unduly expensive, and that there are no abnormal ground conditions, nor archaeological remains present,

which might adversely affect the present or future occupation, development or value of the property.

No tests have been carried out as to electrical, electronic, heating, plant and machinery equipment or any other

services nor have the drains been tested. However, we have made an Assumption that all services, including gas,

water, electricity and sewerage, are provided and are functioning satisfactorily.

No allowance has been made in this opinion of value for any items of plant or machinery not forming part of the

service installations of the building. We have specifically excluded all items of plant, machinery and equipment

installed wholly or primarily in connection with any of the occupants’ businesses. We have also excluded furniture

and furnishings, fixtures, fittings, vehicles, stock and loose tools. Further, no account has been taken in our

opinion of value of any goodwill that may arise from the present occupation of the property.

It is a condition of DTZ or any related company, or any qualified employee, providing advice and opinions as to

value, that the client and/or third parties (whether notified to us or not) accept that the consultancy report will in

no way relate to, or give warranties as to, the condition of the structure, foundations, soil and services.


Environmental matters

We have made no investigations in relation to the presence or potential presence of contamination in land or

buildings, and we assumed that if investigations were made to an appropriate extent then nothing would be

discovered sufficient to affect value. We have not carried out any investigation into past uses, either of the

property or any adjacent land to establish whether there is any potential for contamination from such uses or

sites, and have therefore assumed that none exists.

Commensurate with our Assumptions set out above we have not made any allowance in the opinion of value for

any effect in respect of actual or potential contamination of land or buildings.

Nevertheless, we did visit the premises and there is no evidence that there are any apparent negative aspects in

this matter.

Flood enquiries/Seismic/Fire

We have not made any enquiries regarding flood/seismic/fire risks within the area where the property is located,

and which could affect the property’s value.

Should the property lie within or close to a flood/fire hazed area, or have a history of flooding/fire/seismic

incidences, we have made an Assumption that building insurance is in place regarding these risks and available to

be renewed by the current or any subsequent owner of the property, without payment of an excessive premium

or excess.

Statutory requirements and planning

We have not made verbal and/or written enquiries of the relevant planning authority in order to verify in whose

area the property lies as to the possibility of highway proposals, comprehensive development schemes and other

ancillary planning matters that could affect property values.

Save as disclosed in a Certificate of Title or unless otherwise advised, we have made an Assumption that the

building has been constructed in full compliance with valid town planning and building regulations approvals, that

where necessary it has the benefit of a current Fire Certificate and that the property is not subject to any

outstanding statutory notices as to its construction, use or occupation. Unless our enquiries have revealed to the

contrary, we have made a further Assumption that the existing use of the property is duly authorised or

established and that no adverse planning conditions or restrictions apply.

We have made an Assumption that the property complies with all statutory requirements.

Leasing

We have not undertaken investigations into the financial strength of the tenant(s). Unless we have become aware

by general knowledge, or we have been specifically advised to the contrary, we have made an Assumption that the

tenant(s) is/are financially in a position to meet its/their obligations. Unless otherwise advised, we have also made

an Assumption that there are no material arrears of rent or service charges or breaches of covenants, current or

anticipated tenant disputes.

However, our opinion of value reflects the type of tenant(s) actually in occupation or responsible for meeting lease

commitments, or likely to be in occupation, and the market's general perception of their creditworthiness.

Information

We have made an Assumption that the information that you and the applicant, and your/their respective

professional advisers have supplied to us in respect of the property is both full and correct.


It follows that we have made an Assumption that details of all matters likely to affect value within your/their

collective knowledge have been made available to us and that the information is up to date.

Legal issues

Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant

bearing on the value of an interest in property. Where we have expressed an opinion upon legal issues affecting

the opinion of value, then such opinion should be subject to verification by the client with a suitable qualified

lawyer. In these circumstances, we accept no responsibility or liability for the true interpretation of the legal

position of the client or other parties in respect of the valuation of the property.

55 Baker Street

London W1U 8EW

+44 20 3219 5000

[email protected]

www.agfe.com AgFe AR Limited: incorporated in England and Wales with registration number 05941566 AgFe AR Limited is authorised and regulated by the Financial Services Authority AgFe LLP: incorporated in England and Wales with registration number OC356652 AgFe LLP is an Appointed Representative of AgFe Limited AgFe Group Limited: incorporated in England and Wales with registration number 06449765 AgFe Management Limited: incorporated in England and Wales with registration number 06445839

Contacts

James Wright Tel: +44 203 219 5015 [email protected] Emma Hallgren Tel: +44 203 219 5018 [email protected]

18

mailto:[email protected]

this notice is important and requires the immediate ... · the santa hortensia borrower...

Documents