Goldman Sachs International La Scaglia Civitavecchia
Strictly Confidential For Addressee Only
LA SCAGLIA CIVITAVECCHIA (ROME) ITALY
Report and Valuation for
GOLDMAN SACHS INTERNATIONAL
Valuation Date
31 MARCH 2014
RIF: GOLDMANSACHS-RM-LASCAGLIASC-REPORT-140401-04-FP.DOCX
GOLDMANSACHS-RM-LASCAGLIASC-REPORT-140401-04-FP.DOCX
TABLE OF CONTENTS
1. INSTRUCTIONS ...... 6 2. ASSUMPTIONS & SPECIAL ASSUMPTIONS ...... 7 3. DATE OF VALUATION ...... 7 4. INSPECTION ...... 7 5. INFORMATION SUPPLIED ...... 7 6. LOCATION ...... 8 7. CATCHMENT AREA ...... 9 8. DESCRIPTION ...... 11 9. GENERAL STATE OF REPAIR AND MAINTENANCE ...... 12 10. AREAS ...... 12 11. MERCHANDISING MIX ...... 13 12. SITE AND ENVIRONMENTAL CONSIDERATIONS ...... 14 13. TOWN PLANNING AND CADASTRAL USE ...... 14 14. COMMERCIAL REGULATIONS – TRADE LICENSES ...... 14 15. TENURE ...... 15 16. TENANCIES, EXPIRY PROFILE AND RENTAL INCOME ...... 15 17. CENTRE MANAGEMENT, SERVICE CHARGES AND MAINTENANCE COSTS ...... 19 18. PERFORMANCE ...... 21 19. RETAIL MARKET COMMENTARY ...... 23 20. COMPETITION ANALYSIS ...... 29 21. MARKET RENT ...... 31 22. VALUATION METHODOLOGY AND RATIONALE ...... 31 23. VALUATION CERTAINTY ...... 34 24. MARKET VALUE ...... 34 25. VALUATION CONSIDERATIONS AND FINAL COMMENTS ...... 35 26. CONFIDENTIALITY ...... 36 27. DISCLOSURE AND PUBLICATION ...... 36
ATTACHMENT I LOCATION MAPS ATTACHMENT II PHOTOGRAPHS ATTACHMENT III TENANCY SCHEDULE PROVIDED ATTACHMENT IV RENT ROLL ATTACHMENT V CALCULATIONS ATTACHMENT VI GENERAL VALUATION PRINCIPLES AND PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS ATTACHMENT VII INSTRUCTION AND CONFIRMATION LETTER ATTACHMENT VIII TEMPLATE RELIANCE LETTER
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EXECUTIVE SUMMARY
PROPERTY: LA SCAGLIA SHOPPING CENTRE, CIVITAVECCHIA (ROME) ITALY
VALUATION DATE: 31 March 2014.
PURPOSE OF This report has been prepared for financing purposes. VALUATION:
LOCATION: The Property is located in the municipality of Civitavecchia, some 45 km north of Rome. The Centre is about 8 km to the north of the city centre, along the State Road SS1 Via Aurelia Nord, from which it is directly accessible and from which it benefits from good visibility. The Centre benefits from fair accessibility by car. As the access to the Property’s site is through two gates, during peak hours, accessibility is difficult.
BRIEF DESCRIPTION: The Property, open in 1998, consists of a Shopping Centre, with a total GLA (Gross Lettable Area) of 15,816 sq m. The shopping centre is developed on two levels and accommodates a hypermarket (Conad-Leclerc) of 6,350 sq m GLA and 32 retail units including a cash dispenser. Some 75% of the total GLA is at first floor. The hypermarket run by Conad-Leclerc is part of the Property and has a total GLA of 6,350 sq m. In 2013 it has reduced the GLA allowing the creation of an MSU let to Upim (national fashion) and 2 small units. The ground floor accommodates a portion of the retail gallery, a covered parking and on the north-east end the warehouse of Euronics and the loading area of the hypermarket.
The internal finishes are typical of a shopping centre of this type and age, of average quality. Overall, the centre has a nice internal environment and during our inspection it appeared in good condition.
The current layout allows fair circulation but in terms of units’ visibility and pedestrian flow the Centre has some ‘cold’ areas at first floor on both sides of Stroili Oro whose large size and location, in the centre of the mall obstructs the close-by units. At the ground floor, the location of the vertical connections creates a sort of barrier between the small units and the MSUs.
CATCHMENT AREA: We consider this factory outlet centre has a catchment population of about some 72,000 people. This is our estimate of the population within a drive time of 20 minutes from the Property.
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COMPETITION: None real.
TENURE: We have assumed the title is freehold.
TENANCIES: As at the valuation date, the Property has seven vacant units, representing about 9.3% of the total gallery’s GLA (excluding the hypermarket). Moreover, legal procedures to recover the rental arrears and to regain possession of the unit are currently underway on 1 unit (Units 28 - Camer Casa).
CAVEAT – SUMMARY This executive summary is subject to the facts, terms and conditions, IS PART OF REPORT: caveats, assumptions and special assumptions contained in the main report of which it forms a part. It should not be read in isolation from the remainder of the report.
THIRD PARTY The valuation has been carried out for Goldman Sachs International and no LIABILITY: responsibility is accepted to any other party in respect of its contents without prior written consent from Cushman & Wakefield LLP. Only (i) the addressee of the report and (ii) the parties who sign a reliance letter will be permitted to rely on the report. No other party shall be permitted to do so
NO STRUCTURAL We have not carried out a structural survey of the Property. SURVEY:
NO ENVIRONMENTAL We have not investigated ground conditions or the presence of SURVEY: contamination.
SITE INSPECTION: The Property was inspected on 26 March 2014.
ASSUMPTIONS: As contained in this report and our General Valuation Principles at Attachment VI.
SPECIAL None. ASSUMPTIONS:
MARKET RENT: €2,130,000 (Two million one hundred thirty thousand Euro) per year Our opinion of Market Rent is intended to be the headline rent and it is exclusive of service charge contributions. This excludes rent for temporary lettings (precari).
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MARKET VALUE (NET €18,200,000 (Eighteen million two hundred thousand Euro) OF ACQUISITION COSTS): As required, the above Market Value assumes the sale of a direct interest in the property. Accordingly we have made an allowance for the purchaser’s liability for transfer tax (assumed at 4%) following the Bersani Visco law in 2006. In addition we have assumed a buyer will make allowance for acquisition costs at 1.0% of Market Value.
In reality, as you are aware, normal Italian market practice is to transfer the ownership of retail centres by selling the SPV that owns the asset. For that reason investment yields are analyzed on the basis of the value allocated to the asset for the purpose of establishing the price for the shares. That asset value then becomes part of a wider transaction which typically has regard to other issues, such as any inherent liability for gains tax within the company, the nature of any representations and warranties, adjustments for cash or liabilities, obligations towards staff and so on.
The primary advantage of this method of transfer is that all the approvals, licenses, and contracts which benefit the owning SPV remain undisturbed. For this reason it has been the preferred and conventional basis for such disposals. An additional benefit is that the SPV transfer does not attract the transfer tax which would be applicable to an asset sale (at 4%).
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Strictly Confidential – For Addressee Only
Cushman & Wakefield LLP Via Filippo Turati 16/18 20121 Milano
Tel. +39 02 63799.1 Fax +39 02 63799.250 www.cushmanwakefield.com
TO: GOLDMAN SACHS INTERNATIONAL
ATTENTION: MS ANTONELLA BIFULCO, MR ALESSANDRO LUCA
BORROWER: BLACKSTONE
PROPERTY: LA SCAGLIA SHOPPING CENTRE, CIVITAVECCHIA (ROME), ITALY
REPORT DATE: 15 APRIL 2014
VALUATION DATE: 31 MARCH 2014
1. INSTRUCTIONS
1.1 THE PROPERTY In this report we shall refer to “the Property” as the La Scaglia Shopping Centre. The Property has a total GLA of 15,816 sq m and accommodates a hypermarket and 32 units, including a cash dispenser.
1.2 PURPOSE OF VALUATION We have been instructed to prepare this valuation for financing purposes.
1.3 COMPLIANCE WITH RICS “RED BOOK” The valuation has been prepared in accordance with the RICS Valuation – Professional Standards current at the date of the Letter (the “Red Book”) by valuers conforming to its requirements, acting as external valuer.
1.4 DISCLOSURE OF PRIOR INVOLVEMENT We confirm that we have no conflict of interest in carrying out this assignment.
1.5 BASIS OF VALUATION The valuation has been prepared on the basis of Market Value and adopts the following definitions contained in the Red Book:
MARKET VALUE “The estimated amount for which an asset or a liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.
Iscritta nel ruolo degli agenti d’affari in mediazione al N. 14936 del 8/5/2008 C.C.I.A.A. di Milano – Registro Imprese di Milano N. 06159600961 - R.E.A. N. 1873621. Sede legale e amministrativa: Via Filippo Turati 16/18, 20121 Milano - Codice Fiscale e Partita IVA N. 06159600961. Cushman & Wakefield LLP è una società personale a responsabilità limitata (Limited Liability Partnership) registrata in Inghilterra e Galles con il N. OC328588. Il termine partnership può essere riferito ad un membro di Cushman & Wakefield LLP o ad un impiegato o consulente con ruolo e qualifiche equivalenti. La lista dei membri di Cushman & Wakefield LLP è disponibile presso la sede di Londra, W1A 3BG, 43/45 Portman Square
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MARKET RENT “The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion”.
1.6 CONFIRMATION OF TERMS OF ENGAGEMENT A copy of our confirmation letter VAL/CLI/GoldmanSachs-Portfolio-ConfLett-140320-02-mcl dated 20 March 2014 is attached to this report.
1.7 THIRD PARTY LIABILITY The valuation has been carried out for Goldman Sachs International and no responsibility is accepted to any other party in respect of its contents without prior written consent from Cushman & Wakefield LLP. Only (i) the addressee of the report and (ii) the parties who sign a reliance letter will be permitted to rely on the report. No other party shall be permitted to do so.
1.8 VALUERS This valuation has been undertaken by Francesca Prandi MRICS and reviewed by Joachim Sandberg FRICS.
1.9 GENERAL COMMENT You will appreciate that a valuation is a prediction of price, and not a guarantee. By necessity it requires the valuer to make subjective judgments that, even if logical and appropriate, may differ from those made by a particular purchaser, or by another valuer. Historically it has been considered that valuers may quite properly conclude within a range of possible values.
Property values can change substantially, sometimes even over short periods, and so our opinion of value could differ if the date of valuation was to change. If you wish to rely on our valuation as being valid on any other date you should therefore consult us first.
You should not rely on this report unless any reference to tenure, tenancies and legal title has been verified as correct by your legal advisers.
2. ASSUMPTIONS & SPECIAL ASSUMPTIONS This valuation report and its contents are subject to the General Assumptions contained in our General Valuation Principles as listed under Attachment VI of this report.
This valuation is not subject to any Special Assumptions.
3. DATE OF VALUATION The date of valuation is 31 March 2014.
4. INSPECTION We inspected the Property on 26 March 2014.
5. INFORMATION SUPPLIED The following information has been supplied to us by the Borrower and their advisors:
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Tenancy Schedule updated as at March 2014 (Excel files ‘Tenancy CC SCAGLIA 01042014.xls’ and ‘Tenancy CC SCAGLIA 21 03 14 (2).xls’), followed by e-mail updates.
Copy of the lease contracts signed with the following tenants: Conad-Leclerc, Terranova (Unit 12), Upim (Unit 29).
Monthly turnover figures by tenant for 2009, 2010, 2011, 2012, 2013-Jan/Sept (Excel files ‘2009 SCAGLIA TO.xls’, ‘2010 SCAGLIA TO.xls’, ‘2012 SCAGLIA TO.xls’, ‘2013 SCAGLIA TO.xls’). The monthly turnover figures by tenant for 2013 and the first two months of 2014 have been provided in hard copy by Multi. A pdf copy of these documents has been forwarded to Goldman Sachs via email on 8 April.
Temporary lettings income generated in 2010, 2011, 2012 and 2013-Jan/Sept (Excel file ‘TEMPORARY RENT 2010_2013.xls’).
Data on non recoverable costs: IMU property tax, Insurance cost, property management fees, extraordinary maintenance (Excel files ‘Assicurazioni pagate nel 2013.xls’, ‘CC SCAGLIA Assicurazioni pagate 2013.xls, ‘IMU 2012 Gruppo Axa IMD .xls’, ‘Property Fees SCAGLIA 2012_13 .xls’, Pdf files ‘2013_acconto a.pdf’, ‘2013_acconto b.pdf’, ‘La_Scaglia__Extraordinary_Maint.pdf’).
Monthly footfall figures from March 2008 to February 2014 (Excel file ‘Contapersone_08_09_10scostam_%’).
Turnover rent for 2010, 2011 and 2012 with breakdown by tenant (Excel file ‘2010 SCAGLIA TOR.xls’, ‘2010 SCAGLIA TOR.xls’ and ‘2010 SCAGLIA TOR.xls’).
2012 and 2013 budget Service Charges (Pdf files ‘La_Scaglia_- _Consuntivo_Consorzio_2012_e_budget_2013.pdf’ and ‘LA SCAGLIA CONSorzio 12_PREV13 scaglia.pdf’).
Details on rental arrears and litigations (Excel file ‘LA SCAGLIA CONSorzio 12_PREV13 scaglia.xls’ and word file ‘report legale LA SCAGLIA 231013 agg 271013 V3.docx’).
Copy of the Building Survey Report produced by CBRE dated 18 November 2013 (CBRE - TDD La Scaglia.pdf).
Copy of the Legal Due Diligence produced by Shearman & Sterling dated 10 Decemebr 2013 (Project_Bramley___La_Scaglia_Diligence_Memorandum.pdf).
Copy of the Financial Due Diligence on La Scaglia Srl produced by PWC dated 23 December 2013 (Project Bramley1_Final draft FDD report 231213.pdf).
We have relied on this information as being correct and complete and on there being no undisclosed matters which would affect our valuation.
6. LOCATION The Property is located in the municipality of Civitavecchia, some 45 km north of Rome.
The Centre is about 8 km to the north of the city centre, along the State Road SS1 Via Aurelia Nord, from which it is directly accessible and from which it benefits from good visibility. The SS1 is a dual carriageway road linking Rome to Tuscany. Civitavecchia is also connected to Rome through the motorway A12.
The Centre benefits from fair accessibility by car. As the access to the Property’s site is through two gates, during peak hours, accessibility could be difficult.
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The Centre is located in a mixed use peripheral area on the coast, some 300 meters from the Mediterean sea. Between the Shopping Centre and the sea there is the huge Enel thermoelectric power station of Torrevaldaliga Nord. Accordingly to Enel’s website ‘The plant covers 50% of Lazio region's electricity needs. Compared to the previous oil-fuelled plant, all emissions are strongly reduced: nitrogen oxides will go down by 61%, while dusts and sulphur oxide will be cut by 88% (50% beneath the strict European regulatory limits set for health and environmental protection)’.
To the North of the Property, along Via Marrani there are some retail warehouses run by local operators and a furniture discount run by the national brand Mondo Convenienza.
Location maps identifying the Property, along with an aerial view, are provided under Attachment I.
7. CATCHMENT AREA
7.1 DEMOGRAPHIC PROFILE A drive time based catchment area has been adopted for the purpose of this analysis. We have identified the catchment area on the basis of the standard maximum speed limits, with a reduced speed for local roads.
The following drive time bands (isochrones) have been examined:
- Primary Area, corresponding to approximately 00 – 10 minute-drive time band (highlighted in red in the following map)
- Secondary Area, corresponding to approximately 10 – 20 minute-drive time band (highlighted in orange in the following map)
The estimated catchment area (illustrated by Map 1 which follows) covers about 220 km2 and has a population density of approximately 328 inhabitants per km2, above the Italian average (200 inhabitants per km2). The table below summarises the results of this study, indicating a resident population of over almost 72,000 inhabitants within 20 minute drive time, with the city of Civitavecchia accounting for 72% of the total catchment population, followed by Tarquinia (21%) and Santa Marinella (6%).
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The following table summarises the isochrones analysed for the Shopping Centre:
ISOCHRONE DRIVETIME RESIDENT % ON TOTAL POPULATION DENSITY (MINUTES) POPULATION POPULATION (INHABITANTS/SQ KM)
0-10 34,244 48% 590 10-20 37,662 52% 233 TOTAL 71,906 100% 328 Source: Cushman & Wakefield on MB Research data (2013)
7.2 CONSIDERATIONS The location provides a catchment population appropriate for the size of the scheme.
Over 34,000 inhabitants live in the primary area, which is comprised almost entirely by the population of Civitavecchia. This isochrone represents 48% of the whole catchment area population.
The secondary area comprises some 37,600 inhabitants, with Civitavecchia and Tarquinia covering about 88% of the population residing in this isochrone. This area represents 52% of the total catchment population.
The Centre does not have any competitor in the Primary area.
7.3 ECONOMIC PROFILE According to MB Research data, purchasing power per capita within the catchment area is of €16,588 per year, which is 2% above the Italian average.
DISPOSABLE INCOME PER CAPITA AREA DISPOSABLE INCOME INDEX NUMBER PER CAPITA (€/YEAR) (ITALY=100)
Primary 17,018 105 Secondary 16,198 100 GRAND TOTAL 16,588 102 ITALY 16,230 100 Source: Cushman & Wakefield on MB Research data (2013)
The unemployment rate of the Rome province is lower than the regional and national averages, as shown in the table below.
UNEMPLOYMENT RATE AREA UNEMPLOYMENT RATE (%) Rome province 11.3% Lazio region 12.3% ITALY 12.2% Source: ISTAT data (2013)
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8. DESCRIPTION The Property consists of a Shopping Centre, with a total GLA (Gross Lettable Area) of 15,816 sq m. The shopping centre is developed on two levels and accommodates a hypermarket (Conad-Leclerc) of 6,350 sq m GLA and 32 retail units including a cash dispenser. Some 75% of the total GLA is at first floor. The hypermarket run by Conad-Leclerc is part of the Property and has a total GLA of 6,350 sq m. In 2013 it has reduced the GLA allowing the creation of an MSU let to Upim (national fashion) and 2 small units. The ground floor accommodates a portion of the retail gallery, a covered parking and on the north-east end the warehouse of Euronics and the loading area of the hypermarket. The Centre opened in 1997. The Property is attached to a retail facility occupied by a DIY (Brico) and a Chinese MSU which are not part of the Property subject to valuation. Accordingly to the information received, despite the two properties are located within an enclosed and fenced site, there is not any super condominium as there are not areas of common use/ownership. Each property, the Centre and the attached retail facility, has its own parking. The Centre is on two levels, the ground, directly accessible by the covered parking at the semi- basement level and the uncovered parking surrounding the Property and the first floor accessible through travellators, an elevator and staircases from the ground and directly from the exteriors. These latter vertical connections obstruct the visibility of the MSUs located there at both floors.
The scheme has the typical characteristics of a medium/small-sized Italian shopping centre, with a gallery developed in front of the hypermarket. The gallery at first floor represents 58% of the total gallery (excluding the hyper), is L-shaped with 3 MSUs concentrated in correspondence to the access at the ground floor. The ground floor is well anchored by 2 L-MSUs. The large-medium size units have been strategically positioned within the scheme balancing the pedestrian flow over the whole scheme.
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The Centre has one entrance located at the first floor and two entrances at the ground floor, one from the covered parking and one from the external parking. The internal finishes are also typical of a shopping centre of this type and age, of average quality, with ceramic tiled floors, false ceilings incorporating the lighting and the air conditioning system and large skylights along the malls, providing good internal lighting. Each unit’s interior is different, as required by each brand’s standard fittings and style, but with the same attention to quality and details. Overall, the centre has a nice internal environment and during our inspection it appeared in good condition. Overall, the current layout allows fair circulation but in terms of units’ visibility and pedestrian flow the Centre has some ‘cold’ areas at first floor on both sides of Stroili Oro whose large size and location, in the centre of the mall obstructs the close-by units. At the ground floor, the location of the vertical connections creates a sort of barrier between the small units and the MSUs. The centre is served by 900 car parking spaces, providing a ratio of 1 space per 17 sq m GLA, which seems adequate for the type of scheme. A selection of internal and external photographs is appended to this report under Attachment II.
9. GENERAL STATE OF REPAIR AND MAINTENANCE Based on our cursory visual inspection, it appeared that the Property was generally in a good state of repair internally. Externally, the bituminous covering surface of the parking is in bad conditions and needs refurbishment. As concerns the works carried out in 2013, the cost related to the Upim unit were equal to €778,000. In addition, some €250,000 and €150,000 were granted as incentives to Upim and Conad respectively. We have not carried out technical surveys of the Property and our valuation is on the basis that there are no latent defects, wants of repair or other matters which would materially affect our valuation. Similarly we assume that no hazardous or suspect materials and techniques were used in the construction and that there are no problems related to any previous industrial activities conducted on the site or any adverse considerations relating to aspects such as the water table level, seismic risks or other ground conditions.
10. AREAS For the purposes of this valuation, we have relied on the data provided to us. Based on this information, the Property has a total GLA of about 15,816 sq m. We report hereunder the breakdown of the Property’s GLA:
GROSS LETTABLE AREA (GLA) TYPE OF UNIT GLA NO. OF
(SQ M) UNITS Hypermarket 6,350 1 Small-sized Retail Units (GLA < 500 sq m) 3,536 25
Service Units 75 1 Medium-sized units (GLA between 500 sq m and 1,000 sq m) 2,584 3 Large-sized units (GLA > 1,000 sq m) 3,266 2 Cash Dispenser 5 1 TOTAL GLA 15,816 33
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The tenancy includes an Antenna which is not counted in the above table. A breakdown of the above GLA by unit is provided in Attachment IV.
11. MERCHANDISING MIX For the retail units of the Property, the merchandising mix can be viewed by reference to the totals for (i) GLA and (ii) Headline Rent, as shown in the following charts.
MERCHANDISING MIX of the Property (based on the GLA)
MERCHANDING MIX of the Property (based on Headline Rent)
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The key points regarding the merchandising mix are as follows: The Property offers a balanced, diversified and complete merchandising mix. Within the hypermarket’s GLA there is an area dedicated to bar and restaurant which is accessible directly from the mall without entering in the hypermarket area. Conad has been in the shopping center from almost the opening. At the very beginning, the hypermarket was run by Standa, with a contract belonging to 1997, but after approximately one year it was substituted by Conad under the same lease contract. The gallery includes strong brands such as Upim, Piazza Italia, Deichman, Euronics and Game 7 Athletics. The shops are let and run partially by local franchisees partially by national parent companies. The number of international brands is limited (i.e Deichman and Sephora) but this is not surprising considering the location and size of the Centre. As at the valuation date, the Property has 7 vacant units, representing about 9.3% of the total GLA and 11.9% of the total Market Rent of the gallery (excluding Hyper).
12. SITE AND ENVIRONMENTAL CONSIDERATIONS We have not investigated ground conditions/stability or for the presence of pollution or contamination in the Property or any other land (including any ground water) and neither you nor your consultants have informed us of any reason to suspect such contamination.
According to the Building Survey Report produced by CBRE we understand there are no environmental issues. Our valuation is on the assumption that there are no such matters that would materially affect our revaluation.
13. TOWN PLANNING AND CADASTRAL USE Our valuation is on the basis that the Property has been erected in accordance with a valid planning permission and is being occupied and used without any contravention.
We also assume the Property is not affected by proposals for road widening or compulsory purchase and that it has been erected in accordance with a valid planning permission.
According to the Building Survey Report produced by CBRE we understand that the compliance between the existing building and the General Town Plan (PRG) is confirmed. As concerns the cadastral use, the mentioned Survey reports that the use is noted to be broadly compliant to cadastral categories.
14. COMMERCIAL REGULATIONS – TRADE LICENSES We have not been provided with any specific information concerning the trade licenses situation. Our valuation is on the assumption that the Landlord holds the required trade licenses on the gallery.
As concerns the hypermarket, as common for old retail schemes, the hypermarket’s operator owns the retail licenses. In the new lease contract, the parties have dealt with the uncertainty related to the destination of the trade licenses in case the current operator leaves the Centre. If the current hypermarket operator leaves the Centre or upon expiry of the lease, it is given to the Landlord the option of renting the trade licenses for a period of 30 years at a rent of €100,000 (which we understand flat, it will not be indexed annually). In the case that the current hypermarket operator decides to sell the business to a third party, the Landlord has a pre-emption right to by the retail licenses at the price offered by a third party, not defined in the lease.
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15. TENURE According to the Legal Due Diligence produced by Shearman & Sterling, we understand that the Property is effectively a freehold by La Scaglia Srl and free from any easements, third party rights or other encumbrances, save for those reported in the Legal Due Diligence. We have assumed that those rights do not impact on the valuation of the Property and that it has a good and marketable title. The Legal Due Diligence produced by Shearman & Sterling reports a litigation against Le Palme, the owner of the close-by DIY, but the seller’s legal advisers confirmed that La Scaglia is willing to reach a settlement. Our valuation is on the basis that this has been done.
16. TENANCIES, EXPIRY PROFILE AND RENTAL INCOME For the purposes of this valuation, we have relied on the information provided as being correct and complete and on there being no undisclosed matters which would affect our valuation. Please note that we have not reviewed the lease contracts but, accordingly with your instructions, we have utilized the tenancy schedule provided summarizing heads of terms.
16.1 LETTING STATUS As at the valuation date, the Property has 7 vacant units, corresponding to approximately 9.3% of the total gallery’s GLA (excluding the hypermarket). With reference to these units we have been provided with the following information:
Unit 6: this unit of some 294 sqm was previously occupied by Sfizio (Bars & Restaurants). The unit is currently vacant but there is an on-going negotiation at an annual headline rent of some €35,000.
Moreover, we have been informed that a legal procedure to regain possession of unit 28 Camer Casa (154 sqm at ground floor) is currently underway although, as at the valuation date, the unit is open and operating. The tenant should pay an annual indemnity for occupation but is the biggest long term debtor. Terranova has moved from unit 20 (95 sqm) to unit 12 (263 sqm). At the date of inspection the new unit was not yet opened. According to the information verbally provided, we are aware that some renegotiations are currently underway with the following tenants:
NEGOTIATIONS UNDERWAY
UNIT TENANT LEASE EXPIRY HEADLINE RENT CURRENT VAR. DATE UNDER MGR MGR NEGOTIATION (€/YR) % (€/YR)
5 Piazza Italia 31/07/2015(*) 155,000 152,568 +1.5% 17 Caporiccio 31/12/2015 22,000 22,619 -2.7%
(*) with rolling break
The above renegotiations aim to secure durations longer than the remaining ones. In fact the renegotiation with Piazza Italia refers to a new 9 years contract with a rolling break after the first 4 years and the renegotiation with Caporiccio refers to a new 5 years contract unexpired. An initial stepped rent might be given in exchange to the existing tenant (€19k, €20k and €22k to Caporiccio).
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Within the external parking, there is a small car washing station which is not rented. We have ignored it. As part of the recently signed lease agreement, Conad-Leclerc, should realize a petrol station within the parking and pay a annual rent of €50,000 to the landlord.
16.2 LEASE TERMS The occupation leases for the Property are modelled on two different types of contracts. These are Business Leases (Affitto di ramo di Azienda) and Property Leases (Contratto di locazione). Business Lease contracts are the most common type of lease for retail schemes and typically run for a period of 5 or 7 years. The format can only be used when the landlord holds the retail trade licences. It gives the owner more control, enables him to participate in rental growth (potentially after 5 not 12 years) and avoids the compensation that has to be paid to the tenant at the end of a Property Lease when the landlord does not renew the lease. The vast majority of units at the Property are let under this lease format. Property Leases follow a statutory framework and are typically for 6 + 6 years, the effect being that the tenant may stay for 12 years or break the lease mid-term. At the end of a PL the tenant will have the right to compensation that could be 18 months or 36 months of the prior rent. This model is mandatory for the units occupied by services (such as banks, travel agents and dry cleaners). Of the 27 leases currently in place (including the Antenna), 24 are business leases and 3 are property leases. The duration of the business lease contracts varies from unit to unit and ranges from 7 to 5 years in some cases renewable (ie. UPIM is 7+5). The duration for the hyper’s property lease is of 9+9 years (longer than the standard of 6+6). The cash dispenser’s property lease is of 18 years and 2 years is the duration of the antenna’s property lease. Most of the leases in place reserve rents which are the greater of (i) MGR or (ii) a specified percentage of the tenant’s reported turnover, net of VAT; these mainly vary between 2.5% and 8%. Three lease contracts do not contain a turnover rent element (cash dispenser, Euronics and Milleocchiali). The annual rent of business leases is indexed up to 100% of ISTAT every year. Property leases are indexed at 75% of ISTAT every year. Currently, for 4 lease contracts, ISTAT indexation does not start from the second lease year but at a later date. The tenants, therefore, benefit from a fixed rent for the initial years of the lease, as the rent is not annually indexed. 20 tenants have break options (For more details, please refer to paragraph 16.4). In 7 cases the MGR in the lease contract is subject to rental discounts in the initial years of the leases, in the form of stepped rents (For more details, please refer to paragraph 16.5). The Rent Roll Schedule is appended to this report under Attachment IV.
16.3 EXPIRY PROFILE The following chart reflects the termination dates assumed in our cash flow projection. As shown in the chart, lease contracts corresponding to about 19% of the let GLA and 36% of the expected headline rent are expected to expire over the next three years. The table below reports the end date of the leases which, given the age of the Centre, is often the second date. The Upim contract, representing only 3% of the Headline Rent, will expire in 2028. With regard to the renewal probability in the centre, from the information available to us, we can comment that, the 2 recent leases (signed in 2014) are renewals and Terranova has expanded the GLA. However, in a prudential approach, we have assumed that all the new leases at lease expiry will be new lettings at our estimate of market rent.
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16.4 BREAK OPTIONS According to the information provided, the following 20 tenants can still exercise their break options:
BREAK OPTIONS UNIT TENANT BREAK OPTION NOTICE iper CONAD-LECLERC 24/10/2021 24/10/2020 24 EURONICS 31/12/2017 31/12/2016 29 UPIM 27/08/2017 28/08/2016 3+4 GAME 7 ATHLETICS 31/12/2017 01/07/2017 5 PIAZZA ITALIA From 01/08/2011 23 DEICHMAN From 08/03/2011 25 CASTELLESE 07/12/2015 12 TERRANOVA 31/05/2017 31/05/2016 21+22 GIUNTI AL PUNTO From 01/02/2015 8+9 STROILI ORO 31/12/2014 31/12/2013 28 CAMER CASA From 07/03/2011 15 bis OKAIDI from 01/01/17 19 BLIZZARD From 16/05/2013 2 H3G 30/06/2014 30/06/2013 26 ter GAMESTOP From 01/07/2015 18 SCARPA JUNIOR From 01/07/17 16 GOLDEN LADY From 25/10/2015 25/04/2015 1 bis IT STYLE MAKE-UP From 11/05/2015 24/10/2020 N/A BANCOMAT 01/09/2017 28/08/2016 N/A ANTENNA 01/07/2015 01/07/2017
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The inclusion of break option in business lease contracts is a very common market practice in Italy, also for prime shopping centres.
Blizzard (108 sqm) whose contract should have ended on 14 October 2014 has sent its 8 months prior notice on 9 December 2013.
Given the good performance of the majority of the tenants benefiting of break options in this Centre, we have not adopted any anticipated break option in the valuation (except Blizzard). Camer Casa which is the bad performer within the above list (see para. 18.3) has a lease contract expiring by the end of 2014 and if it leaves, it will be an opportunity for the Landlord.
16.5 STEPPED RENT PROVISIONS From the information provided, we understand that the following leases are subject to rental discounts in the initial years of the leases, in the form of stepped rents. We report below only the lease contracts in which the stepped rent is still effective:
STEPPED-RENT PROVISIONS
UNIT TENANT GLA LEASE CURRENT HEADLINE (SQ M) START MGR RENT DATE (€/YEAR) (€/YEAR) 24 EURONICS 2,135 01/01/2014 150,000 250,000 25 CASTELLESE 420 07/12/2013 8,000 15,000 21+22 GIUNTI AL PUNTO 181 01/02/2013 48,000 52,000 15 bis OKAIDI 150 01/01/2014 33,000 39,000 18 SCARPA JUNIOR 71 01/01/2014 20,000 24,000 1 bis IT STYLE MAKE-UP 42 11/05/2013 15,000 20,000 12 bis ISOLA VERDE ERBORISTERIA 33 01/01/2013 15,000 16,000
For a number of lease contracts ISTAT indexation is not applied from the second lease year but at the end of the reduced-rent periods.
16.6 RENTAL DISCOUNTS According to the information provided by the Borrower, we understand that no tenants were granted exceptional rental concessions for 2014.
16.7 RENTAL INCOME MINIMUM GUARANTEED RENT The Gross Minimum Guaranteed Rent (MGR) provided amounts to €1,908,185 corresponding to an average of €128 per sq m of GLA per annum. This has been calculated based on the rents provided, including the stepped-rents agreed and ISTAT indexation. This amount refers to the let units.
The Gross Expected MGR in year 1 of our cash flow, which takes account of stepped rents, 4 leases expiring in 2014 and part of the current vacancy, is equal to €1,928,847. The Gross Expected Headline Rent, which takes into account the annual rent to be paid at the end of any stepped-rent period and includes our estimated market rent for the unit currently vacant, is equal to €2,221,719.
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TURNOVER RENT According to the information provided, we understand that the 2012 turnover rent paid in 2013 is equal to circa €28,158, which represents approximately 1.45% of the year 1 Expected Minimum Guaranteed Rent. We have not been provided with the breakdown of the turnover rent paid by tenant.
In the last three years, the trend of turnover rent was the following:
TURNOVER RENT 2010 2011 2012 Total amount € 45,945 32,882 28,158 Y/Y Var % -28% -14% 3-Y Var % -39%
TEMPORARY LETTINGS Based on the information provided and the inspection carried out, the mall is used for temporary lettings. The total amount of temporary income in 2012 was €112,258 (net of VAT), representing a rate of about 5.8% when compared to the year 1 gross Expected MGR.
In the last three years, the trend of temporary lettings income was the following:
TEMPORARY LETTINGS
2010 2011 2012
Total amount € 94.137 116.591 112.258 Y/Y Var % 24% -4% 3-Y Var % 19%
We would like to bring to your attention to the fact that the amount for the first three quarters of 2013 is € 78,722, some 26% higher than the amount recorded in the same period of 2012 and equal to €62,422.
17. CENTRE MANAGEMENT, SERVICE CHARGES AND MAINTENANCE COSTS
17.1 PROPERTY MANAGEMENT The Consortium Manager is CBRE and they have a resident centre manager.
The Property Manager is Cushman & Wakefield. From June 2014 the new Property Manager will be Multi, the shopping centres property company recently bought by Blackstone.
17.2 SERVICE CHARGES We understand that the tenants pay a pro-rata of the costs incurred in the running of the shopping centre, such as: utilities, security, cleaning, management, ordinary maintenance and advertising.
These costs can amount to a significant proportion of the tenants’ total occupation cost, and typically might range between €70 and €110 per sq m of GLA depending on the size and nature of the centre. Often the anchor tenants require a capping on the amount they would pay.
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Details on the total Service Charge costs budgeted for 2013 for the shopping centre are summarised in the following table:
COMMON SERVICE CHARGES 2013 BUDGET SERVICE CHARGES ITEMS % OF TOTAL (€/YR) 165,000 Electricity 20% 3,000 Water 0% 78,100 Cleaning 10% 89,000 Internal Maintenance 11% 72,000 Security 9% 14,000 External expenses 2% 202,800 Marketing and advertising 25% 77,800 Miscellaneous expenses 10% 110,300 Management fee 14% TOTAL 812,000 100%
The budget for 2014 reported in the tenancy schedule on a unit by unit basis is for an amount of €765,022 representing a saving of 5.8% compared to the budget 2013.
According to the information provided, the 2012 figures may be summarized as follows:
COMMON SERVICE CHARGES BY UNIT 2013 SERVICE 2013 SERVICE % SERVICE GLA UNIT CHARGES CHARGES CHARGES ON (SQM) (€/YR) (€/SQM/YR) TOTAL AMOUNT
CONAD-LECLERC 6,350 173,352 27 23%
EURONICS 2,135 94,099 44 12%
UPIM 1,131 62,721 55 8%
GAME 7 ATHLETICS 958 56,219 59 7%
PIAZZA ITALIA 958 55,566 58 7%
DEICHMAN 668 39,221 59 5%
SUB-TOTAL 12,200 481,178 39 63%
All other units 3,616 283,843 79 37% TOTAL 15,816 765,022 48 100%
UPIM has a cap at €80,000 but the allocation of service charges is lower.
Conad-Leclerc has a cap equal to the service charges paid the previous year (subject to ISTAT annual indexation of 100%) plus 2%.
Please note that on vacant units, the cost for service charges is paid by the Landlord. On the current 7 vacant units this amount is equal to €68,699.
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17.3 EXTRAORDINARY MAINTENANCE Based on the information provided, some extraordinary maintenance works were due in 2013/2014 for a total amount of €127,000. Some of these costs (ie. wind barrier at the entrance at ground floor for €45,000) have already been carried out.
18. PERFORMANCE
18.1 FOOTFALL The shopping centre is equipped with a people counting system that tracks the number of visitors accessing the centre.
Based on the information provided, in 2013 some 2.1 million people accessed the Centre, slightly lower than the previous year (-1.2%). In the first three months of 2014, the Centre registered a negative trend, with -2.4% on the same period of 2013. During 2013, the Centre showed a fluctuating trend in visitors, with August and October being the months registering the highest peaks compared to 2012 (+11 and +14%) and January being the month registering the steepest drop (-14% compared to 2012). It should be considered that in 2013 there have been refurbishment works within the Centre (para. 8).
FOOTFALL 2010 2011 2012 2013 TOTAL 2.221.317 2.201.427 2.109.906 2.084.467 Y/Y Var % -0.9% -4.2% -1.2% 4-Y Var % -6.2%
18.2 TURNOVER AND EFFORT RATES According to the information provided by the Borrower, the total net turnover generated by La Scaglia Shopping Centre in 2013 amounted to €45,898,129, showing a +1% increase with respect to the previous year. This amount includes the sales generated by all the tenants, including those which left the centre and those which did not operate during the entire year.
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As showed in the following table, since 2009 to 2012 the Centre has been registering a continuous decrease in sales which appears to be stabilised now.
NET TURNOVER € 2009 2010 2011 2012 2013 2014 TOTAL 52.862.021 50.138.601 48.762.868 45.669.630 45.898.129 % var -5% -3% -6% 1% JAN-FEB 6.496.495 6.685.724 % var 3%
With regard to the sales of the last 12 months (March 2013-February 2014), they were equal to €46,087,358, showing a +1.4% with respect to the period March 2012-February 2013, and an average turnover of €2,914/sqm. While there are opposite situations on a unit by unit basis, the main contributor to the turnover increase is the electronics unit whose turnover has increased by some 14% between March 2012-February 2013 and March 2013-February 2014.
The table below provides a breakdown of the net turnover by sector, taking into account only those tenants operating during the entire period and communicating their turnover data. The analysis has been carried out considering the information supplied by the Borrower.
TURNOVER AND EFFORT RATES
LAST 12 MAR 2013 - FEB MAR 2013 - FEB MONTHS TOTAL GLA HEADLINE RENT CATEGORY 2014 TURNOVER 2014 TURNOVER AVERAGE (SQM) (€) (€) (€/SQM) EFFORT RATE (%)
HYPERMARKET 6.350 22.335.295 3.517 2,5% 554.400 ELECTRICAL GOODS & TELECOM 2.324 10.563.606 4.545 2,9% 302.408 SPORTING GOODS 958 1.239.147 1.293 13,9% 172.000 SERVICES 75 1.435.249 19.137 2,6% 37.331 FASHION, SHOES & ACCESSORIES 2.190 4.887.240 2.232 9,6% 467.898 GIFTS & JEWELLERY 434 1.185.389 2.731 10,8% 128.333 BOOKS & TOYS 181 382.512 2.113 13,6% 52.000 HEALTHCARE & BEAUTY 410 1.838.459 4.484 7,5% 138.202 HOUSEHOLD GOODS 154 63.114 410 43,6% 27.534 TOTAL 13.076 43.930.011 3.360 4,3% 1.880.107
We have analysed separately the medium and large sized units, as detailed in the table below:
EFFORT RATES ANALYSIS - MEDIUM AND LARGE SIZED UNITS
MAR 2013 - MAR 2013 - AVERAGE FEB 2014 FEB 2014 AVERAGE EFFORT TURNOVER TURNOVER EFFORT RATE W SC TENANT GLA (SQ M) (€) (€/SQM) RATE (%) (%) Conad-Leclerc 6.350 22.335.295 3.517 2,48% 3,26% Euronics 2.135 9.579.080 4.487 2,61% 3,59% Piazza Italia 958 1.865.067 1.947 8,18% 11,16% Deichmann Calzature 668 1.104.553 1.654 10,97% 14,52%
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The rents paid by the MSUs appear sustainable. Excluding the Hypermarket and Euronics, the average effort rate (rent-to-sales ratio) of the gallery is 9.0% (on homogeneous data), which is indicative of a fairly good performance. We have analysed the effort rates for each individual retailer communicating the turnover data and operating during the entire period of analysis (March 2013 – February 2014). The analysis has been carried out considering the information supplied by the Borrower. About 71% of the MGR relates to tenants with an effort rate below 10%. Some 24% of the MGR has an effort rate in the medium risk category (between 10% and 20%), and only 3 tenants have critical situations, with effort rates higher than 20%. One of them is the already mentioned Camer, for which a legal procedure to regain possession is currently underway. Another tenant, 3 Store has a high effort rate (>20%) but the turnover is considerably improving. The reason is that because of its location, this tenant has been affected by the refurbishment works carried out in the hypermarket area to split the GLA with the creation of an MSU let to Upim (national fashion) and 2 small units.
EFFORT RATES ANALYSIS NO. OF EFFORT RATE GLA (SQM) MGR (€) % MGR (€) UNITS
ER <5% (no risk) 4 8.644 862.899 46% 5%< ER <10% (low risk) 7 1.828 460.723 25% 10%
18.3 ARREARS According to the information provided, we understand that a number of tenants still operating in the Centre have matured arrears older than 90 days equal to € €264,440 (VAT included) by the end of September 2013. These mainly relate to 4 tenants. The main debtor is Camer Casa (Unit 28- €150,649). For this unit, the current landlord started legal actions for the contract’s withdrawal and for the redelivery of the unit. The other debtors are Stile Libero (Unit 26-€50,832) and Fantasia (Unit 13-€30,729) for which the former asset manager has taken legal action and Carpisa (Unit 26- €28,572) for which there is a recovery plan.
The overall situation of the arrears in the Property is broadly in line with market average for centres of this type and age and the current delinquency does not pose any particular commercial risk.
19. RETAIL MARKET COMMENTARY
19.1 RENTAL LEVELS The euro-area sovereign debt crisis has had a strong impact on the Italian market, with consumer confidence worsening nationwide, family spending cautious and weak consumption. This resulted into a sharp drop in sales, which remarkably affected the performances of the retail schemes and the trends of rental levels throughout the whole country. Nevertheless, it should be noted that trends registered in 2013 vary greatly depending on the quality of the schemes and on their catchment. Prime shopping centres with proven track records, good catchment areas and sustainable turnovers, have suffered from less pressure than secondary shopping centres, and have continued to show rental increases on new lettings, further supported by the limited offer of good quality schemes characterising the Italian market.
The situation is quite different for secondary poorly-performing schemes. Such schemes have felt more the general slowdown in consumer spending and their rental levels have been subject to a
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strong downward pressure, supported by an increase in rental concessions both for new leases and re-negotiations, with the most common form of discount being stepped-rents. In addition to this, the concession of early break options has also become a common practice.
The general trend reported in 2013 has characterised also the first quarter of 2014, with rent reviews applied both for existing shopping centres and pipeline schemes.
However, in general, in the first quarter of 2014 rental levels in established prime shopping centres have remained fairly stable at €850/sq m for units up to 250 sq m, and up to €1,300/sq m for the smaller units.
The following chart shows the trend of prime rents since 2007:
SHOPPING CENTRES - TREND OF PRIME RENTS 2007-2014 (*) €/sqm/year
900
850
800
750
700 2007 2008 2009 2010 2011 2012 2013 Q1 2014
Shopping Centres (*) Units with GLA up to 250 sq m
The table above represents the top and not necessarily the generality of the market. Therefore, rather than the comparison with the above benchmark of prime shopping centres, most important is the analysis of the specific affordability of the passing rents in the Centre. We have thoroughly analysed this aspect in paragraph 18.2. The headline rent of this Centre is broadly in line with the Market Rent presumable in a centre having this location, size, merchandising, catchment and competition.
19.2 INVESTMENT FOCUS Despite ongoing political turmoil, the trend in underlying data is improved and sentiment indicators for consumers and businesses have brightened. The short term outlook is still relatively weak, with businesses cautions and high unemployment, declining real wages and fiscal austerity depressing household and corporate spending. Improving global confidence should however be a tonic for exports and this may be the key driver for Italy to leave recession. A pick up in business investment is forecast for 2014 as improved conditions lead to further gains in confidence.
The Italian real estate investment market is at a turning point. After having been increasingly scarce and expensive, starting from the second half of 2013 finance has becoming more available. The pool of active and new investors is growing and a two tier market exists: (i) well located, trophy assets still attract core funds; (ii) good quality assets which have been repriced attract opportunistic players. Domestic players will remain focused on core assets (mainly office and high street investments) in established locations with good lease contracts in place. International investors will remain attracted by the larger lot size, value add / opportunistic assets which have been repriced.
In terms of investments, an upturn in volumes has been registered in retail investment transactions starting from the second half of 2013, after a challenging 2012 and first half of 2013, with no
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significant shopping centres transacted, lack of financing and perceived country risk.. In the second half of 2013, in fact, the Italian real estate market has been marked by a shift in investor sentiment, with many international investors, who have been absent from the Italian retail arena since the beginning of the economic recession, turning their interest to the country and becoming active players.
During the year retail investment volumes equal to circa €1.1 billion have been registered (excluding the Fondo Boccaccio shares transaction and the Auchan portfolio acquired by Morgan Stanley), against the €359 million recorded in 2012, corresponding to a +206% increase in volumes. Of the transacted amount, about €890 million are related to shopping centres, retail parks and FOCs. In this regard, the role played by opportunistic investors has been fundamental, though a few deals also suggest some investors’ will of having a longer-term involvement in Italy.
In 2013, nine deals concerned shopping centres and retail parks. The sale of Market Central Da Vinci Retail Park, Valecenter, Airone and Limbiate Shopping Centres (for a total volume of €415 million, better detailed in the table below) represents the first stage of increased activity.
With regard to the high street market, it has proved resilient, as demonstrated by several transactions occurred over the year, such as the acquisition of the Benetton Building located in Rome, Via del Corso, for €180 million. Prime high street locations remain the focus of private investors and owner occupiers.
ITALY SINGLE ASSET RETAIL TRANSACTIONS(1) 2003 - 2013
2500 46 50 41
40 2000 32 30
2.100 27 30 23 2.300 24 1500 21 19 17
1.800 20 10
1000 1.380 1.310 10 980 1.140 1.050 900
500 780 0 360 0 -10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Retail Single Asset No. of Transactions
Excluding Auchan portfolio acquired by Morgan Stanley Source: Cushman&Wakefield
Source: Cushman&Wakefield
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The following table summarises the main retail transactions registered in 2013.
MAIN 2013 RETAIL INVESTMENT DEALS SCHEME LOCATION BUYER TOTAL PRICE GROSS GLA (SQM) (€ MLN) YIELD H&M + Vodafone (High Milan Beni Stabili 1,900 67.6 n.a. street) Gestioni SGR Ortona Centre SC Ortona (Chieti) Finiper 11,759 18.8 n.a. (hypermarket only) Mongolfiera SC (retail Molfetta (Bari) Blokker Holdings 38,000 68 n.a. gallery only) (*) NV (Private) Auchan Bergamo (retail Bergamo Foncière LFPI 2,000 7,85 ~7.90% gallery only) Italia Virgin Active Milan Goldwinds Asset 5,800 15 n.a. Management Metro Cash&Carry La Spezia Foncière LFPI 4,616 8,18 ~7.80% Italia Il Parco Shopping Centre Camposampiero Lombardini 23,600 29 n.a. (Padua) Group Market Central Da Vinci Fiumicino (Rome) GWM Group 56,600 130 n.a. RP Franciacorta FOC Brescia Blackstone 32,600 126 ~10%
Via XX Settembre 35 Genova Confidential 1,300 13 n.a. Amex Building Rome Confidential 1,100 ~40 n.a.
Via del Corso (Benetton Rome H&M 6,000 180 n.a. Building) Via Montenapoleone 9 Milan Swatch n.a. 40 n.a.
Ipercity and Le Brentelle Padova Allianz 47,100 n.a. n.a. SC (part of SES Portfolio) Meraville RP Bologna Orion 35,500 80 n.a.
Carrefour Palestrina (Rome) Local buyer 2,300 2.3 ~8.73%
Valecenter and Airone SC Marcon (Venice) Blackstone 60,000 144.5 n.a. and Monselice (Valecenter) (Padua) 16,000 (Airone) Carrefour di Limbiate SC Limbiate (Monza e ING Insurance 21,000 140 ~7.10% (retail gallery only) Brianza) (**)
The above information was gathered from both official and informal sources. (*) 50% stake (**) Net
In addition to the deals indicated above, it must be underlined the acquisition, by a fund managed by Morgan Stanley SGR, of a portfolio comprising 13 shopping centre and 2 retail parks, for a total GLA of more than 200,000 sq m. The assets, sold by Gallerie Commerciali Italia (Auchan Group), have been bought for a total value of about €635 million. Morgan Stanley owns the majority stake in the fund owning the centres, while Immochan (the company controlled by Auchan) will maintain a minority stake in the fund and will provide property and leasing management services for the assets.
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Positive signals, further hinting at Italy being on the way to recovery, have been registered also during the first quarter of 2014, with the following retail deals closed:
MAIN 2014 RETAIL INVESTMENT DEALS SCHEME LOCATION BUYER TOTAL PRICE GROSS GLA (SQM) (€ MLN) YIELD Fonti del Corallo SC (*) Livorno BNP Reim SGR 7,300 47 ~7.00%
Terminal Nord RP Udine Europa Risorse SGR 32,300 n.a. n.a.
Carrefour Market Via Monti n.a. 1,800 5,4 ~6.08% (supermarket) (Milan) Carrefour Market Viale Fulvio n.a. 3,500 4,9 ~6.94% (hypermarket) Testi – Cinisello (Milan) Le Mura SC (retail gallery Ferrara Serenissima SGR 12,000 38 n.a. only) Coin portfolio (3 assets) Milan Sorgente SGR n.a. 77 n.a.
Vialarga SC (retail gallery Bologna Nordiconad Soc. 7,400 32,1 n.a. only) Coop.
(*) Master Lease
The following chart shows the trend registered by prime shopping centres yields since 2007. As a general trend, yields decreased steadily for several years up until 2007, when prime gross yields for prime shopping centres reached record-low levels, around 5.00%, reflecting the increasing interest for retail properties on the part of investors. When the global economic crisis hit, ignited by the credit crunch, yields started to rise again. A general stabilization has been registered in 2010 and 2011. A new increase in yields was registered starting from 2012, mainly reflecting the instability that has been affecting the Italian economic and political situation.
SHOPPING CENTRES - PRIME GROSS YIELDS 2007-2013
9,00%
8,00%
7,00%
6,00%
5,00%
4,00% 2007 2008 2009 2010 2011 2012 2013
Shopping Centres
Low liquidity translated into a softening of prime yields in the retail warehouse and shopping centre sub-sectors. On an annual basis retail warehouse figures, in 2013, softened by 75-175 basis points, while shopping centres’ yields grew by 75-100 basis points, with the sharpest of these upward corrections occurring across Southern Italy, where a further future softening is still possible. Following the 2013 increased investment activity, market sentiment would suggest yields are likely to remain stable in the first half of 2014. The renewed interest of international investors in the Italian
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property market, and the growing investment volumes, seem to suggest that Italy is slowly entering a new market phase.
The following table summarizes the main retail transactions closed in the last seven years (2006 – 2012).
2006 – 2012 MAIN RETAIL INVESTMENT DEALS YEAR SCHEME LOCATION BUYER TOTAL GLA PRICE PRICE GROSS (SQM) (€ MLN) (€/SQM) YIELD 2012 Retail Galleries Gallarate (Varese) Carrefour 5,000 13 2,600 ~9.00% Gallarate and San and San Giuliano Property Italia Giuliano Milanese Milanese (Milan) 2011 Megalò SC Pescara (Abruzzo) ECE 48,500 140 2,900 ~7.25%
2011 Mongolfiera SC Molfetta (Bari) Orion 35,000 65 1,900 ~7.25% 2011 Fidenza RP Fidenza (Parma) Cordea Savills 26,000 40 1,500 ~7.50% 2011 Punta di Ferro SC Forlì COOP+Unipol 12,600 92 7,300 ~6.26% (retail gallery only) 2011 Casal Bertone SC Rome Union Investment 9,800 48 4,900 ~5.75% (retail gallery only) RE GmbH (**) 2010 Le Vele SC + Cagliari Corio 31,900 103.3 3,200 ~7.00% Millennium EC 2010 Mongolfiera SC Surbo (Lecce) Schroders 11,300 49 4,300 ~7.50% (retail gallery only) (Net 2010 Porta di Roma SC Rome Allianz + Corio 100,000 440 4,400 ~6.4%) Antegnate Axa Investment 2009 Antegnate SC 36,500 160 4,400 ~6.15% (Bergamo) Management 2009 Auchan SC (**) Monza Union Investment 28,000 141 5,000 ~6.00% Barberino Designer Henderson 2009 Firenze 21,000 125 6,000 ~6.50% Outlet Global Investors 2009 Vittuone SC Milan Klepierre 32,500 44.2 1,400 ~6.50% I Portali SC (retail 2009 Modena Eurocommercial 7,800 39 5,000 ~6.50% gallery only) 2008 Terminal Nord RP Udine British Land 33,000 100 3,000 ~5.70% Castelguelfo FOC – 2008 Bologna Neinver 13,000 53.1 4,100 ~6.60% Phase I 2008 La Fabbrica SC La Spezia Pradera 11,700 48.5 4,100 ~6.00% Leone di Lonato + 2008 Variuos locations Klepierre 46,200 129.5 2,800 ~6.50% Corti Venete SC Henderson 2008 Navile RP Bologna 11,000 45 4,100 ~6.50% Global Investors 2007 Città Fiera SC Udine Corio 27,400 87 3,200 ~6.05% Le Colonne SC 2007 Brindisi DEGI 12,000 70.4 5,900 ~5.35% (retail gallery only) Serravalle RP (Phase Serravalle 2007 Henderson 16,200 37 2,300 ~5.80% A) (Alessandria) ING Real Estate 2007 Fiumara Sc Genova 24,900 249 10,000 ~5.00% (today CBREGI)
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2006 – 2012 MAIN RETAIL INVESTMENT DEALS ING Real Estate 2007 I Petali sc Reggio Emilia 28,500 95 3,300 n.a. (today CBREGI) 2007 Le Masserie sc Ragusa TMW Pramerica 23,700 59.7 2,500 ~6.50% Credit Suisse 2007 Porto degli Ulivi sc Rizziconi Asset 13,000 53 4,100 ~6.50% Management 2007 Il Ducale sc Pavia IGD SIIQ SpA 16,000 40 2,500 ~5.80%
Carrefour Limbiate Limbiate (Monza ING Real Estate 2006 SC (retail gallery 21,000 130 (***) 6,200 ~5.50% e Brianza) (today CBREGI) only) Carrefour Siracusa ING Real Estate 2006 SC (retail gallery Siracusa 13,000 70 (***) 5,400 ~6.40% (today CBREGI) only) ING Real Estate 2006 8 Gallery SC Turin 21,500 92.1 4,300 ~6.00% (today CBREGI) Valdichiana Outlet Foiano della 2006 DEGI 17,500 86 5,000 ~6.40% Village FOC Chiana (Arezzo)
(*) Net (**) Master lease with Gallerie Commerciali Italia Spa (***) Package deal of Limbiate and Siracusa
We would like to underline that the amount of available data is limited, as only a few transactions occur in a year. Furthermore, the lack of transparency characterising the Italian market further reduces the amount of any comparable information available.
20. COMPETITION ANALYSIS
20.1 THE EXISTING COMPETITION In the estimated catchment area (0-20 minute-drive time), we have identified one other shopping centre (Top 16), located in the 0-10 minute isochrones.
We report hereunder a brief description of the scheme.
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1. TOP 16 CITY Tarquinia PROVINCE Viterbo YEAR OF OPENING 1992 CAR PARKING SPACES (no.) n/a TOTAL GLA (sq m) 10,500 NO. OF SHOPS 31 LEVELS 2 FOOD ANCHOR Carrefour
MEDIUM/LARGE-SIZED UNITS n/a
Sharand, Pizzamania, Scarpamania, Top Service, Arredo Casa, Galleria del Tempo, Il Capriccio, Vanità, Green Sec, Electroline, De Pretis Profumerie, Scuderi Sport, MAIN BRANDS Seven Top, Non Solo Fumo, Tutti i Tipi, Valleverde, Vipel, Zacchini elettrodom, Il Ditirambo, Ottica di Luzio, C’ Era una Volta, Donna Simon.
Rather odd retail scheme lacking central management (ie. shops open at different time), mainly let to local COMMENTS operators offering a wide variety of ‘uncommon’ services and goods (ie. bride clothes, temporary job agencies..). There is a considerable amount of vacancy.
La Scaglia does not have a real competitor (ie. a proper shopping centre) in its catchment.
Finally, in order to complete our analysis, we would like to mention the presence in the area of Viterbo, some 60 km from the Property, of some shopping centres such as Tuscia, Essedue and Murialdo. Taking into consideration their location and retail offer, we are of the opinion that these centres do not represent a threat for the Property.
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20.2 THE PIPELINE We are not aware of any development in the pipeline in the catchment. The following Map highlights the location of the scheme described above.
21. MARKET RENT Our opinion of Market Rent (MR) reflects the existing tenancies and merchandising mix and is exclusive of service charges contributions. We would like to underline that in our assessment of market rental values, we have carried out a unit-by-unit analysis and we have taken into account the performance registered by each tenants and the relevant effort rates. Moreover, we have also considered the rental values achieved by the most recent leases signed in the scheme. Our opinion of Market Rent is intended to be the headline rent. This excludes rent for temporary lettings (precari) and Antenna. Subject to the contents of this Valuation Report, and based on values current as of the date of valuation, it is our opinion that the annual Market Rent of the Property, may be fairly assessed at:
€2,130,000 (Two million one hundred thirty thousand Euro) per year
The composition of this total forms part of Attachment IV. Taken overall, the annual gross Market Rent of the let units within the Property is 4.5% lower than the Expected Headline Rent (€2,035,089).
22. VALUATION METHODOLOGY AND RATIONALE 22.1 METHODOLOGY The Property is multi-let with different types of contracts and with differing termination dates and MGR indexation regimes.
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We have arrived at our valuation by using two complementary approaches, namely by reference to the initial yield profile, and by constructing a DCF over a 10 year holding period. We acknowledge that the DCF approach involves the selection of a large number of subjective inputs in addition to the estimates for Market Rent; these include the assumptions for rental growth, the exit rate and the discount rate. Our preference is to place higher importance to the initial yield selection, using the DCF analysis as support. The main DCF inputs which we have adopted are summarised below.
22.2 INFLATION We have assumed a constant inflation rate of 2.0% p.a. (1.4% in 2014).
22.3 REVENUE
GROSS MINIMUM GUARANTEED RENT The gross Expected Minimum Guaranteed Rent in Year 1 of the cash flow (1 April 2014 to 31 March 2015) is €1,928,847. The amount takes into account the leases in place, the stepped rents agreed, and indexation. It also includes our estimate of market rent for the units whose leases will expire in 2014, where we have applied our estimated market rent for the period from the lease expiry until the end of the year.
TURNOVER RENT In addition to the minimum guaranteed rent, in our DCF, we have also taken into account the turnover rent, as per the information provided to us by the Borrower. For our cash flow projections, we have assumed an annual amount of Turnover Rent equal to 0.75% of the Gross Minimum Guaranteed Rent.
TEMPORARY LETTINGS INCOME We have also taken into account the temporary lettings income, as per the information provided to us by the Borrower. We have assumed a temporary lettings income for 2014 equal to €110,000 (net of letting fees). For our cash flow projections, however, in order to reflect the higher risk attributable to this slice of income, we have weighted the above amount at 75% (€82,500).
RENTAL INDEXATION We have assumed a CPI rate equal to our inflation rate, and adopted the rent indexation clauses as indicated in the lease contracts in place. For the units currently vacant, we have assumed indexation at 100% of the inflation rate.
RENTAL GROWTH AND REVERSIONS We have calculated the reversionary income by reference to our estimates for current market rental values, increased by 2.0% p.a. (1.4% in 2014) for rental growth. Therefore, in terms of real rental growth, we have assumed no growth above inflation over the period of the cash flow. We have assumed that all units will revert to our estimate of market rent at the termination of the current lease, whether in the case of a lease renewal or re-letting. As concerns the Antenna, prudentially we have assumed that it will not be relet upon termination of the current lease.
CURRENT VACANT UNITS We have assumed to let them in 12 months from the date of valuation. The 12 months void includes rent free periods as incentives necessary to let the units.
GENERAL VACANCY AND COLLECTION LOSS To deal with the risk of void periods at lease expiry, of rental arrears and of the rent-free and reduced-rent periods at lease renewals, and based on the arrears analysis reported in Paragraph
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18.2, we have made an allowance, over the period of the cash flow, of 4.00% of total potential gross revenue for general vacancy and of 2.00% of total potential gross revenue for collection loss.
22.4 OPERATING EXPENSES The total operating expenses we have estimated represent on average approximately 20% of the total annual revenues. These costs include the following:
IMU PROPERTY TAX According to the data provided, we have considered an IMU Municipal Tax equal to €218,407 per annum.
INSURANCE According to the information provided, we have allowed costs for landlord’s insurance costs, equal to €11,588 per annum. For the cash-flow projections, we have assumed to increase Property Tax/IMU and Insurance costs in line with inflation.
PROPERTY MANAGEMENT FEES We have assumed a non recoverable property management and rent collection expense of 2.50% on the effective gross revenue, in line with market practice.
MANAGEMENT FEE ON TURNOVER RENT We have assumed management fee on turnover rent equal to 2.50% of the gross annual receivable turnover rent.
SERVICE CHARGES NOT RECOVERABLE FROM THE ASSUMED VACANT UNITS They have been estimated at €80 per sq m of GLA per annum.
LEASE REGISTRATION TAX We have assumed 0.50% of the annual minimum guaranteed rent where applicable as per the tenancy schedule provided.
CAPITAL RESERVES We have allowed an annual provision of 5.0% of the total annual market rent for capital reserves.
22.5 LEASING AND CAPITAL COSTS These costs include the following:
LEASING COMMISSIONS We have allowed 10% on the market rent, to take into account the agency fees required to re-let the units at lease expiry. This takes into account both renewals and new lettings.
CAPITAL EXPENDITURES We have not taken into account any capital expenditure over the period of the cash flow as the allowed capital reserves provision cover the residual amount of capital expenditures provided for 2013/2014 and the amount reported in the Building Survey Report produced by CBRE.
ACQUISITION COSTS We have assumed a buyer will make allowance for acquisition costs at 5.00% of Market Value (Bersani transfer tax at 4.0% and legal, agency fees at 1.0%).
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22.6 EXIT YIELD AND DISCOUNT RATE The terminal value is based on the forecast gross revenue in year 11 capitalised at a net exit yield of 8.25%. The result has then been reduced to reflect the selling costs (at 0.50%). We have applied a discount rate of 11.00%, to reflect the specific features of the subject Property and the market conditions as at the date of valuation. This figure reflects our judgement for (i) the rate necessary to provide the investor with a risk free return and (ii) an appropriate risk premium.
22.7 RESULTING DISCOUNTED CASH FLOW This is provided under Attachment V of this report.
23. VALUATION CERTAINTY Where uncertainty could have a material effect on an opinion of value, the Red Book requires a valuer to draw attention to this, indicating the cause of the uncertainty and the degree to which this is reflected in the valuation reported. While we have recorded a number of retail transactions during the latest 6 months, we do not have evidence of transactions of shopping centres similar to the Property in terms of location, letting status and size. While we have taken the benchmark provided by those transactions into account, we have to register that our opinion requires a greater degree of judgment than is usual in more active and stable market conditions.
24. MARKET VALUE Subject to the contents of this Report we consider that the Market Value of the Property (net of purchaser’s costs), as at the valuation date may fairly be estimated at:
€18,200,000 (Eighteen million two hundred thousand Euro)
As required, the above Market Value assumes the sale of a direct interest in the property. Accordingly we have made an allowance for the purchaser’s liability for transfer tax (assumed at 4%) following the Bersani Visco law in 2006. In addition we have assumed a buyer will make allowance for acquisition costs at 1.0% of Market Value. In reality, as you are aware, normal Italian market practice is to transfer the ownership of retail centres by selling the SPV that owns the asset. For that reason investment yields are analyzed on the basis of the value allocated to the asset for the purpose of establishing the price for the shares. That asset value then becomes part of a wider transaction which typically has regard to other issues, such as any inherent liability for gains tax within the company, the nature of any representations and warranties, adjustments for cash or liabilities, obligations towards staff and so on. The primary advantage of this method of transfer is that all the approvals, licenses, and contracts which benefit the owning SPV remain undisturbed. For this reason it has been the preferred and conventional basis for such disposals. An additional benefit is that the SPV transfer does not attract the transfer tax which would be applicable to an asset sale (at 4%).
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25. VALUATION CONSIDERATIONS AND FINAL COMMENTS Our conclusion for the valuation of this investment takes account of the following: STRENGTHS
The Property is sized for its catchment. It does not suffer from competition and the catchment is such that it is unlikely that a bigger, proper shopping centre will be located there. The Centre is well established in its catchment area, as it has been operating since 1998. Purchasing power per capita within the catchment area is of €16,588 per year, which is 2% above the Italian average. The Centre is in good conditions internally, with average quality finishes in line with the type of centre, creating an overall pleasant internal environment. The Property offers a balanced, diversified and complete merchandising mix. The Centre is well-anchored and the hyper, the electronics and the MSUs are performing well. The electronics, unlike the majority of the shopping centres, has increased its turnover despite the economic crisis. The average turnover registered by the Property is indicative of a fairly good performance, as it is broadly in line with the turnover expected from a centre of this type. Excluding the Hypermarket and Euronics (which have a low effort rate), the average effort rate (rent-to-sales ratio) of the gallery is 9.0% (on homogeneous data), which is indicative of a fairly good performance. In particular, about 71% of the MGR relates to tenants with an effort rate below 10%. Some 24% of the MGR has an effort rate in the medium risk category (between 10% and 20%). Few tenants paid a turnover rent in 2013. The net income from temporary lettings within the 12 months ending on September 2013 (the latest data provided) equal €128,559 representing some 6.66% of the gross Expected Minimum Guaranteed Rent in Year 1 of the cash flow (1 April 2014 to 31 March 2015) is €1,928,847. This is higher than the standard. The service charges (including the marketing costs) per sq m GLA are in line with the level expected for a shopping centre of this size and quality. In 2013 the hypermarket has reduced the GLA, oversized for the type of centre, ensuring a greater sustainability of the MGR and allowing the creation of an MSU let to Upim (national fashion) and 2 small units.
WEAKNESSESS
During peak hours, accessibility to the Property is difficult. Overall, the current layout allows fair circulation but in terms of units’ visibility and pedestrian flow the Centre has some ‘cold’ areas at first floor on both sides of Stroili Oro whose large size and location, in the centre of the mall, obstructs the units located close-by. At the ground floor, the location of the vertical connections creates a sort of barrier between the small units and the MSUs. While the Property is generally in good conditions internally, externally, the bituminous covering surface of the parking is in bad conditions and needs refurbishment. As at the valuation date, the Property has 7 vacant units, corresponding to approximately 9.3% of the total gallery’s GLA (excluding the hypermarket).
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Attachments that form part of this report:
ATTACHMENT I LOCATION MAPS ATTACHMENT II PHOTOGRAPHS ATTACHMENT III TENANCY SCHEDULE PROVIDED ATTACHMENT IV RENT ROLL ATTACHMENT V CALCULATIONS ATTACHMENT VI GENERAL VALUATION PRINCIPLES AND PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS ATTACHMENT VII INSTRUCTION AND CONFIRMATION LETTER ATTACHMENT VIII TEMPLATE RELIANCE LETTER
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ATTACHMENT I
LOCATION MAPS
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LA SCAGLIA SHOPPING CENTRE, CIVITAVECCHIA (ROME), ITALY General Location
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LA SCAGLIA SHOPPING CENTRE, CIVITAVECCHIA (ROME), ITALY Detailed Location and Aerial View
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ATTACHMENT II
PHOTOGRAPHS
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La Scaglia Shopping Gallery Civitavecchia (Rome)
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La Scaglia Shopping Gallery Civitavecchia (Rome)
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La Scaglia Shopping Gallery Civitavecchia (Rome)
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La Scaglia Shopping Gallery Civitavecchia (Rome)
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La Scaglia Shopping Gallery Civitavecchia (Rome)
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ATTACHMENT III
TENANCY SCHEDULE PROVIDED
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R E N T L E A S E INDEXATION S E C U R I T Y per payment period Size or spaces Contractual contract Break- Break- service charges ISTAT VAT Payment Indexation Next Indexation Name BRAND Unit of rental unit Vacancy Start EndRent free period Notice period Notice period VAT Option Turnover passing rent 2014 rent dec 13 registration contract type Total rent Gross rent Type Amount Option 1 Option 2 2014 indexation 22% period date date indices [m²/ Spaces] RENT tax recoverable [Date] [Date] [Start [End Date] [Latest Date] [Date] [Latest Date] [Date] [yes/no] [yes/no] [EUR] [EUR] [EUR] %% [EUR] [EUR] [EUR] dd/mm/YY dd/mm/YY [EUR]
lease Disco S.r.l. CONAD N/A 6.350,00 No 25/10/12 24/10/21 12 months 24/10/21 24/10/2020 24/10/2023 Yes 554.400,00 550.000,00 173.351,82 50 100 137.500,00 € 30.250,00 € 167.750,00 € Quaterly 25/10/13 25/10/14 ISTAT september Deposit 275.000,00 contract
business Coin S.p.A. UPIM 29 1.131,00 No 28/08/13 27/08/21 28/08/13 30/09/13 12 months 27/08/17 28/08/2016 27/08/2019 Yes Yes 60.000,00 60.000,00 62.720,94 50 100 15.000,00 € 3.300,00 € 18.300,00 € Quaterly 28/08/14 28/08/15 ISTAT Bank guarantee 42.108,00 contract
VACANT ex Julius II 1 100,00 Yes 7.793,87 0,00 €
business H3G S.p.A. TRE 2 105,00 No 01/07/11 30/06/16 12 months 30/06/14 30/06/2013 Yes Yes 31.240,44 31.240,44 8.179,27 50 100 7.810,11 € 1.718,22 € 9.528,33 € Quaterly 01/07/13 01/07/14 ISTAT Bank guarantee 19.800 contract
6 months business Game 7 Athletics GAME 7 3+4 958,00 No 01/07/13 30/06/20 rolling after 1st 31/12/17 01/07/2017 Yes Yes 172.000,00 172.989,03 56.218,72 50 100 43.247,26 € 9.514,40 € 52.761,65 € Quaterly 01/07/14 ISTAT Bank guarantee 115.412 contract b.o. 31/12/17
From business Piazza Italia S.r.l. Piazza Italia 5 958,00 No 01/08/08 31/07/15 12 months Yes Yes 152.568,45 152.568,45 55.566,35 50 100 38.142,11 € 8.391,26 € 46.533,38 € Quaterly 01/08/13 01/08/14 ISTAT Bank guarantee 70.000 01/08/2011 contract
VACANT ex All Ways Food 6 294,00 Yes 23.156,58 0,00 € 0,00 € 0,00 €
business Stroili Oro S.r.l. Stroili Oro 8+9 158,00 No 01/01/11 31/12/15 12 months 31/12/14 31/12/2013 Yes Yes 79.680,23 79.205,00 13.099,60 50 100 19.801,25 € 4.356,28 € 24.157,53 € Quaterly 01/01/14 01/01/15 ISTAT Bank guarantee 48.000 contract
VACANT 10 87,00 Yes 7.183,60 Ex Finbre
business Milleocchiali Gruppo Folletto S.r.l. Milleocchiali 11 60,00 No 01/03/03 28/02/15 Yes No 24.529,67 24.529,67 4.500,71 50 100 6.132,42 € 1.349,13 € 7.481,55 € Quaterly 01/03/13 01/03/14 ISTAT Deposit 5.164,57 contract
business Goletti Alessandro Terranova 12 263,00 No 15/03/14 14/03/21 12 months 15/03/16 14/03/2018 14/03/2019 Yes Yes 50.000,00 20.541,82 50 100 12.500,00 € 2.750,00 € 15.250,00 € Quaterly 15/03/16 15/03/16 ISTAT Bank Guarantee 15.250,00 contract
business Isola Verde Erboristeria S.r.l. Isola Verde 12 bis 33,00 No 01/01/13 31/12/17 Yes Yes 15.096,00 14.000,00 2.555,18 100,00 100,00 3.500,00 € 770,00 € 4.270,00 € Quaterly 01/01/14 01/01/15 ISTAT Bank guarantee 10.648 contract
business Okaidi Italy S.r.l. Okaidi 15 bis 150,00 No 01/01/14 31/12/20 12 months from 01/01/17 Yes Yes 33.000,00 39.191,03 11.694,39 50 100 Quaterly 01/01/16 ISTAT Bank guarantee 23.790 contract
VACANT area bimbi 26 bis 107,00 Yes 8.419,26 0,00 €
From business Gamestop Italy S.r.l. Gamestop 26 ter 84,00 No 01/01/13 31/12/17 6 months Yes Yes 21.168,00 21.000,00 6.480,90 50 100 5.250,00 € 1.155,00 € 6.405,00 € Quaterly 01/01/14 01/01/15 ISTAT Bank guarantee 14.823 01/07/2015 contract
business Salvai Donato Tabaccheria Fantasy 13 75,00 No 13/06/07 31/12/15 Yes Yes 37.330,52 37.330,52 5.864,07 50 100 9.332,63 € 2.053,18 € 11.385,81 € Quaterly 13/06/13 13/06/14 ISTAT contract
business LVMH Italy S.r.l. Sephora 14 317,00 No 01/01/11 31/12/15 Yes Yes 97.672,54 97.090,00 25.119,51 50 100 24.272,50 € 5.339,95 € 29.612,45 € Quaterly 01/01/14 01/01/15 ISTAT Bank guarantee 47.000 contract
VACANT 15 150,00 Yes 11.479,61 EX Feh S.r.l. Unipersonale
From business Golden Lady Company S.p.A. Golden Point 16 68,00 No 25/10/12 24/10/17 25/10/12 28/02/13 6 months 25/04/2015 Yes Yes 29.000,00 29.000,00 5.161,23 50 100 7.250,00 € 1.595,00 € 8.845,00 € Quaterly 25/10/13 25/10/13 ISTAT Bank guarantee 19.299,00 25/10/2015 contract
Texcomm S.r.l. business Caporiccio 17 50,00 No 01/01/11 31/12/15 Yes Yes 22.618,90 22.484,00 4.286,85 50 100 5.621,00 € 1.236,62 € 6.857,62 € Quaterly 01/01/14 01/01/15 ISTAT Bank guarantee 7.500 contract
From business Scarpa Junior di Masserdotti Giulia Scarpa Junior 18 71,00 No 01/01/14 31/12/18 6 Months Yes Yes 20.000,00 20.000,00 5.349,89 50 100 5.000,00 € 1.100,00 € 6.100,00 € Quaterly 01/01/15 01/01/15 ISTAT Deposit 12.000 01/07/17 contract
From business Blizzard Terzo S.r.l. Blizzard 19 108,00 No 15/10/09 14/10/14 8 months Yes Yes 41.246,22 41.246,22 8.231,06 50 100 10.311,56 € 2.165,43 € 12.476,98 € Quaterly 15/10/13 15/10/14 ISTAT 16/05/2013 contract
VACANT VACANT 20 95,00 yes 7.218,88 ex Terranova
From business Giunti al Punto S.p.A. Giunti al punto 21+22 181,00 No 01/02/13 31/01/20 12 months Yes Yes 48.000,00 45.000,00 13.948,79 50 100 11.250,00 € 2.475,00 € 13.725,00 € Quaterly 01/02/17 01/02/18 ISTAT (december) Bank guarantee 31.460 01/02/2015 contract
12 months From business Deichmann Calzature S.r.l. Deichmann 23 668,00 No 08/03/08 31/12/14 Yes Yes 121.192,95 121.192,95 39.221,20 50 100 30.298,24 € 6.665,61 € 36.963,85 € Quaterly 08/03/13 08/03/14 ISTAT Bank guarantee 66.000 notice 08/03/2011 contract
12 months Tufano Italia S.r.l. business Euronics 24 2.135,00 No 01/01/14 31/12/20 after 31/12/17 31/12/17 31/12/2016 Yes No 150.000,00 193.854,60 94.099,33 50 100 48.463,65 € 10.662,00 € 59.125,65 € Quaterly 01/01/15 ISTAT Bank guarantee 152.500 shop 1685 mq warehouse 450 mq contract b.o. rolling
business bank guarantee DG GROUP S.R.L. Castellese 25 420,00 Yes 07/12/13 06/12/20 07/12/13 31/12/13 12 months 07/12/15 Yes Yes 8.000,00 0,00 32.776,05 50 100 0,00 € 0,00 € 0,00 € Quaterly 07/12/14 ISTAT 10.000 contract under delivery
business Alfimar S.r.l. Stile Libero 26 276,00 No 21/11/09 20/11/14 Yes Yes 48.653,17 48.653,17 21.518,86 50 100 12.163,29 € 2.675,92 € 14.839,22 € Quaterly 01/11/13 01/11/14 ISTAT Bank guarantee 27.000 contract
business Bimama S.r.l. CARPISA 26q 117,00 No 01/12/10 30/11/15 01/12/10 31/03/11 Yes Yes 38.271,91 38.043,65 9.293,34 50 100 9.510,91 € 2.092,40 € 11.603,31 € Quaterly 01/12/13 01/12/14 ISTAT contract
VACANT ex gelateria 27 45,00 Yes Yes 3.447,14 0,00 € 0,00 € Monthly ISTAT
From business Pegaso Import Export S.r.l. Camer Casa 28 154,00 No 07/03/07 31/12/14 6 months Yes 27.533,52 27.533,52 12.002,34 50 100 2.294,46 € 2.294,46 € Monthly ISTAT Bank guarantee 07/03/2011 contract
lease Unicredit Real Estate S.p.A. Bancomat Unicredit N/A 5,00 No 01/09/99 31/08/17 18 months 01/09/17 Yes 50 75 263,78 € 58,03 € 321,81 € Monthly 01/10/13 01/10/14 ISTAT August contract 3.165,36 3.165,36 trasmitting Telecom Italia S.p.A. (Antenna) N/A No 01/07/13 30/06/15 6 months 01/07/15 Yes 6.817,23 6.817,23 not registered not provided antenna is not 6.817,23 € 1.499,79 € 8.317,02 € Annual a contract
From business Francia Group S.r.l. IT STYLE 1 bis 42,50 No 11/05/13 10/05/18 12 months Yes Yes 15.000,00 15.000,00 4.540,53 100 100 3.750,00 € 825,00 € 4.575,00 € Quaterly 11/05/16 11/05/17 ISTAT Bank guarantee 12.100 11/05/2015 contract
1.908.185,11 € 1.891.134,84 € 765.021,69 € 475.482,39 € 103.998,23 € 579.480,62 € Size or spaces Comments Name BRAND Unit of rental unit Vacancy Expiry [m²/ Spaces] [Date]
only for first year rent € 400.000,00. As of first 9 years, rolling B.O. at the Disco S.r.l. CONAD N/A 6.350,00 No end of each 3 years (12 m notice)
contract start date 28/08/13 = shop opening date (Further B.O. on 27/08/20 Notice 28/08/19 ) Minimun Contract lenght 48 months Possible Coin S.p.A. UPIM 29 1.131,00 No 27/05/28 7 years renewal from 28/08/21 (rolling bo with 12 months notice)
VACANT ex Julius II 1 100,00 Yes
b.o. possible after 24 months with 12 months notice (minimun contract H3G S.p.A. TRE 2 105,00 No 31/12/16 lenght 36 months)
Game 7 Athletics GAME 7 3+4 958,00 No new lease signed on january 14 bank guarantee under delivery
Piazza Italia S.r.l. Piazza Italia 5 958,00 No 31/07/15
VACANT ex All Ways Food 6 294,00 Yes
Step rent: I YEAR 2011 73.500 €/YEAR Stroili Oro S.r.l. Stroili Oro 8+9 158,00 No 31/12/16 II YEAR 2012 75.000 €/YEAR III YEAR 77.500 €/YEAR Contract renewal for further 2 years up
VACANT 10 87,00 Yes Ex Finbre
Milleocchiali Gruppo Folletto S.r.l. Milleocchiali 11 60,00 No
base rent 50,000 istat adjustment from 15/03/16 bank guarantee under Goletti Alessandro Terranova 12 263,00 No delivery
base rent 16.000,00 Isola Verde Erboristeria S.r.l. Isola Verde 12 bis 33,00 No 30/06/18 Rent discount for I year - 2.000,00 (€ 14.000,00) Rent discount for II year - 1.000,00 (€ 15.000,00)
base rent 39.000,00 Rent discount for I year - 6.000,00 (€ 33.000,00) Rent discount for II year - 5.000,00 (€ 34.000,00) Okaidi Italy S.r.l. Okaidi 15 bis 150,00 No Rent discount for III year - 3.000,00 (€ 36.000,00) indexation starting from Third year New contract signed in January 2014 bank guarantee under delivery
VACANT area bimbi 26 bis 107,00 Yes
Gamestop Italy S.r.l. Gamestop 26 ter 84,00 No 30/06/18
Salvai Donato Tabaccheria Fantasy 13 75,00 No
I YEAR 2011 92.000 €/YEAR FROM 2012 95,000 €/YEAR LVMH Italy S.r.l. Sephora 14 317,00 No 31/12/15 Lease Renewal up to 31/12/2017 + BO on 31/12/2016 with notice within 01/01/2016
VACANT 15 150,00 Yes EX Feh S.r.l. Unipersonale
Golden Lady Company S.p.A. Golden Point 16 68,00 No 30/04/18
Texcomm S.r.l. Caporiccio 17 50,00 No 30/06/16 Step rent: I YEAR 2011 21.000 €/YEAR FROM 2012 22,000 €/YEAR
base rent 24.000,00 Rent discount for I year - 4.000,00 (€ 20.000,00) Scarpa Junior di Masserdotti Giulia Scarpa Junior 18 71,00 No Rent discount for II year - 2.000,00 (€ 22.000,00) - Minimun Lease duration 36 months Step rent: I YEAR 2009 30.000 €/YEAR- II YEAR 2010 34.000 €/YEAR III YEAR Blizzard Terzo S.r.l. Blizzard 19 108,00 No 38.000 €/YEAR Used break option and notice sent 9/12/2013
VACANT VACANT 20 95,00 yes ex Terranova
base rent 52.000,00 Rent discount for I year - 7.000,00 (€ 45.000,00) Giunti al Punto S.p.A. Giunti al punto 21+22 181,00 No 31/07/20 Rent discount for II year - 4.000,00 (€ 48.000,00) - Minimun Lease duration 36 months
Deichmann Calzature S.r.l. Deichmann 23 668,00 No 30/06/15
Tufano Italia S.r.l. new contract headline rent € 250.000 € 100.000,00 Rent discount I year Euronics 24 2.135,00 No shop 1685 mq warehouse 450 mq - new bank guarantee under deliver
free rent 07/12/13 - 31/12/13 Rent Payment start from 01/01/2014 DG GROUP S.R.L. Castellese 25 420,00 Yes Rent for 2014 € 8.000,00 Base rent € 15.000,00 indexation starting from II year 07/12/14
Alfimar S.r.l. Stile Libero 26 276,00 No 20/11/14 Only for 2012 rent € 12,765,00 (lease agreement)
Bimama S.r.l. CARPISA 26q 117,00 No
VACANT ex gelateria 27 45,00 Yes
. From 20/04/11 INDENMITY OCCUPATION invoiced at the end of the Pegaso Import Export S.r.l. Camer Casa 28 154,00 No month NO VAT
Unicredit Real Estate S.p.A. Bancomat Unicredit N/A 5,00 No Lease duration 6+6+6….+6 up to notice
Telecom Italia S.p.A. (Antenna) N/A No Automatic renewal for further 2 years up to notice
Rent 1° year: € 15.000 Francia Group S.r.l. IT STYLE 1 bis 42,50 No 10/11/18 Rent 2° year: € 20.000 GOLDMANSACHS-RM-LASCAGLIASC-REPORT-140401-04-FP.DOCX
ATTACHMENT IV
RENT ROLL
GOLDMAN SACHS INTERNATIONAL CUSHMAN & WAKEFIELD
Client: GOLDMAN SACHS Property: CENTRO COMMERCIALE LA SCAGLIA Address: Civitavecchia (Roma), Italy Valuation Date: 31/03/2014
TENANCY SCHEDULE LEASE GROSS GROSS 2013/2014 YTD EFFORT TYPE OF LEASE Service LEASE START MGR 2014 STEPPED- 2013/2014 2014/2015 2015/2016 2013/2014 YTD EFFORT CW MARKET CW MARKET EFFORT RATE LEVEL UNIT NO. TRADING NAME SECTOR GLA ISTAT EXPIRY BREAK OPTION MGR 2014 ISTAT HEADLINE HEADLINE TURNOVER RATE (INCL. NOTES ER/MR (%) CONTRACT Charges DATE (Provided ) RENT Stepped-Rent Stepped-Rent Stepped-Rent TURNOVER €/YR RATE RENT 2014 RENT 2014 MARKET RENT DATE RENT RENT €/SQM/YR SC) SQ M % €/YR €/SQM/YR €/YR €/SQM/YR €/YR €/YR €/YR €€%%€/SQM/YR €/YR % LET UNITS F iper CONAD Hypermarket 6.350,00 lease contract 100% 173.352 25/10/2012 24/10/2021 24/10/2021 554.400 87 100% 554.400 87 22.335.295 3.517 2,5% 3,3% 90 571.500 2,6% -2,99% G 24 EURONICS Electrical goods & Telecom 2.135,00 business contract 100% 94.099 01/01/2014 31/12/2020 31/12/2017 150.000 70 100% 250.000 117 yes 150.000 9.579.080 4.487 2,6% 3,6% 115 245.525 2,6% 1,82% F 29 UPIM Fashion, shoes & accessories 1.131,00 business contract 100% 62.721 28/08/2013 27/08/2028 27/08/2017 60.000 53 100% 60.000 53 50 56.550 6,10% F 3+4 GAME 7 ATHLETICS Sporting goods 958,00 business contract 100% 56.219 01/07/2013 30/06/2020 31/12/2017 172.000 180 100% 172.000 180 1.239.147 1.293 13,9% 18,4% 150 143.700 11,6% 19,69% F 5 PIAZZA ITALIA Fashion, shoes & accessories 958,00 business contract 100% 55.566 01/08/2008 31/07/2015 From 01/08/2011 152.568 159 100% 152.568 159 1.865.067 1.947 8,2% 11,2% 160 153.280 8,2% -0,46% G 23 DEICHMAN Fashion, shoes & accessories 668,00 business contract 100% 39.221 08/03/2008 31/12/2014 From 08/03/2011 121.193 181 100% 121.193 181 1.104.553 1.654 11,0% 14,5% 180 120.240 10,9% 0,79% G 25 CASTELLESE Fashion, shoes & accessories 420,00 business contract 100% 32.776 07/12/2013 06/12/2020 07/12/2015 8.000 19 100% 15.000 36 yes 8.000 40 16.800 -10,71% F 14 SEPHORA Healthcare & Beauty 317,00 business contract 100% 25.120 01/01/2011 31/12/2015 97.673 308 100% 97.673 308 1.385.758 4.371 7,0% 8,9% 300 95.100 2,71% G 26 STILE LIBERO Gifts & Jewellery 276,00 business contract 100% 21.519 21/11/2009 20/11/2014 48.653 176 100% 48.653 176 228.691 829 21,3% 30,7% 100 27.600 12,1% Relatively big unit at ground floor, poor merchandising. Assumed lower MR at reversion. 76,28% F 12 TERRANOVA Fashion, shoes & accessories 263,00 business contract 100% 20.542 01/06/2014 31/05/2021 31/05/2017 50.000 190 100% 50.000 190 190 49.970 0,06% F 21+22 GIUNTI AL PUNTO Books & Toys 181,00 business contract 100% 13.949 01/02/2013 31/01/2020 From 01/02/2015 48.000 265 100% 52.000 287 yes 48.000 382.512 2.113 13,6% 17,2% 250 45.250 11,8% 14,92% F 8+9 STROILI ORO Gifts & Jewellery 158,00 business contract 100% 13.100 01/01/2011 31/12/2015 31/12/2014 79.680 504 100% 79.680 504 956.698 6.055 8,3% 9,7% 500 79.000 0,86% G 28 CAMER CASA Household Goods 154,00 business contract 100% 12.002 07/03/2007 31/12/2014 From 07/03/2011 27.534 179 100% 27.534 179 63.114 410 43,6% 62,6% 100 15.400 24,4% Bad tenant since longtime. Cause for Collection Loss higher than standard. 78,79% F 15 bis OKAIDI Fashion, shoes & accessories 150,00 business contract 100% 11.694 01/01/2014 31/12/2020 from 01/01/17 33.000 220 100% 39.000 260 yes 33.000 34.000 36.000 679.511 4.530 5,7% 7,5% 350 52.500 7,7% -25,71% G 26q CARPISA Fashion, shoes & accessories 117,00 business contract 100% 9.293 01/12/2010 30/11/2015 38.272 327 100% 38.272 327 376.648 3.219 10,2% 12,6% 325 38.025 10,1% 0,65% F 19 BLIZZARD Fashion, shoes & accessories 108,00 business contract 100% 8.231 15/10/2009 09/07/2014 From 16/05/2013 41.246 382 100% 41.246 382 207.661 1.923 19,9% 23,8% 275 29.700 14,3% 38,88% F 2 H3G Electrical goods & Telecom 105,00 business contract 100% 8.179 01/07/2011 30/06/2016 30/06/2014 31.240 298 100% 31.240 298 140.815 1.341 22,2% 28,0% 150 15.750 11,2% Bad turnover in 2013 due to works on the hyper. Turnover is improving. 98,35% G 26 ter GAMESTOP Electrical goods & Telecom 84,00 business contract 100% 6.481 01/01/2013 31/12/2017 From 01/07/2015 21.168 252 100% 21.168 252 843.712 10.044 2,5% 3,3% 250 21.000 2,5% 0,80% F 13 FANTASIA Services 75,00 business contract 100% 5.864 13/06/2007 31/12/2015 37.331 498 100% 37.331 498 1.435.249 19.137 2,6% 3,0% 500 37.500 2,6% -0,45% F 18 SCARPA JUNIOR Fashion, shoes & accessories 71,00 business contract 100% 5.350 01/01/2014 31/12/2018 From 01/07/17 20.000 282 100% 24.000 338 yes 20.000 22.000 146.843 2.068 16,3% 20,0% 300 21.300 14,5% 12,68% F 16 GOLDEN LADY Fashion, shoes & accessories 68,00 business contract 100% 5.161 25/10/2012 24/10/2017 From 25/10/2015 29.000 426 100% 29.000 426 306.019 4.500 9,5% 11,2% 425 28.900 9,4% 0,35% F 11 MILLEOCCHIALI Healthcare & Beauty 60,00 business contract 100% 4.501 01/03/2003 28/02/2015 24.530 409 100% 24.530 409 305.233 5.087 8,0% 9,5% 400 24.000 7,9% 2,21% F 17 CAPORICCIO Fashion, shoes & accessories 50,00 business contract 100% 4.287 01/01/2011 31/12/2015 22.619 452 100% 22.619 452 200.936 4.019 11,3% 13,4% 425 21.250 10,6% 6,44% F 1 bis IT STYLE MAKE-UP Healthcare & Beauty 42,50 business contract 100% 4.541 11/05/2013 10/05/2018 From 11/05/2015 15.000 353 100% 20.000 471 yes 15.000 475 20.188 -0,93% F 12 bis ISOLA VERDE ERBORISTERIA Healthcare & Beauty 33,00 business contract 100% 2.555 01/01/2013 31/12/2017 15.096 457 100% 16.000 485 yes 15.000 147.468 4.469 10,8% 12,6% 450 14.850 10,1% 7,74% G N/A BANCOMAT Services 5,00 lease contract 75% - 01/09/1999 31/08/2017 01/09/2017 3.165 633 75% 3.165 633 650 3.250 -2,60% 0 N/A ANTENNA Other - 01/07/2013 30/06/2015 01/07/2015 6.817 0% 6.817 - SUBTOTAL LET 14.937,50 1.908.185 128 2.035.089 136 43.930.011 130 1.948.128 4,46%
VACANT UNITS F 6 VACANT (ex Sfizio) 294 75% 23.157 01/04/15 31/03/27 120 35.280 F 15 VACANT (fronte cassa) 150 100% 11.480 01/04/15 31/03/22 400 60.000 F 26 bis VACANT (area bimbi) 107 100% 8.419 01/04/15 31/03/22 150 16.050 G 1 VACANT (accanto Game Stop) 100 100% 7.794 01/04/15 31/03/22 200 20.000 F 20 VACANT (EX Terranova) 95 100% 7.219 01/04/15 31/03/22 350 33.250 F 10 VACANT (accanto Sfizio) 87 75% 7.184 01/04/15 31/03/27 150 13.050 G 27 VACANT (ex gelateria) 45 75% 3.447 01/04/15 31/03/27 200 9.000 SUBTOTAL VACANT UNITS 878 - - 213 186.630
TOTAL RETAIL GALLERY 15.816 765.022 120 2.035.089 129 43.930.011 135 2.134.758
GoldmanSachs-RM-Civitavecchia-LaScagliaSC_attachment IV-V.xlsx GOLDMANSACHS-RM-LASCAGLIASC-REPORT-140401-04-FP.DOCX
ALLEGATO V
CALCULATIONS
GOLDMAN SACHS INTERNATIONAL CUSHMAN & WAKEFIELD
Client: GOLDMAN SACHS Property: CENTRO COMMERCIALE LA SCAGLIA Address: Civitavecchia (Roma), Italy Valuation Date: 31/03/2014
ASSUMPTIONS ISTAT uplifts (p.a.) 1,4% in 2014, 2.0% from 2015 Market rental growth (p.a.) 1,4% in 2014, 2.0% from 2015 Business lease indexation (p.a.) 100,00% Property lease indexation (p.a.) 75,00% Weighting Temporary Letting Income 75,00% Turnover Income (€/yr) € 18.900 Estimated Temporary Income (€/yr) € 110.000
General Vacancy 4,00% Collection Loss 2,00% Management Fees 2,50% Management Fees on Turnover Income 2,50% Management Fees on Temporary Letting Income 0,00% IMU (€/yr) € 217.645 Insurance (€/yr) € 11.548 Lease Registration Tax (p.a.) 0,50% Service Charges on vacant units (€/sqm/yr) € 80 Leasing Commissions 10,00% Capital Reserves 5,00%
Acquisition Costs 5,00% Sale Commissions 0,50%
Discount Rate / IRR 11,00% Net Exit Yield 8,25%
(Euro) CASH FLOW 1234567891011TOTAL For the Years Ending 30/03/2015 30/03/2016 30/03/2017 30/03/2018 30/03/2019 30/03/2020 30/03/2021 30/03/2022 30/03/2023 30/03/2024 30/03/2025
Turnover Rent as a % of MGR 0,75% 0,75% 0,75% 0,75% 0,75% 0,75% 0,75% 0,75% 0,75% 0,75% 0,75%
REVENUE Gross Minimum Guaranteed Rent (MGR) 1.928.847 2.202.498 2.228.970 2.270.230 2.313.578 2.356.872 2.376.402 2.430.228 2.481.951 2.531.249 2.581.529 Temporary Lettings Income 82.500 84.150 85.833 87.550 89.301 91.087 92.908 94.767 96.662 98.595 100.567 Turnover Rent 14.466 16.519 16.717 17.027 17.352 17.677 17.823 18.227 18.615 18.984 19.361
TOTAL POTENTIAL GROSS REVENUE 2.025.813 2.303.167 2.331.520 2.374.807 2.420.231 2.465.636 2.487.133 2.543.222 2.597.228 2.648.828 2.701.457
General Vacancy & Collection Loss 6,00% (121.549) (138.190) (139.891) (142.488) (145.214) (147.938) (149.228) (152.593) (155.834) (158.930) (162.087)
TOTAL EFFECTIVE GROSS REVENUE 1.904.264 2.164.977 2.191.629 2.232.319 2.275.017 2.317.698 2.337.905 2.390.629 2.441.394 2.489.898 2.539.370
OPERATING EXPENSES Management Fees 2,50% (48.221) (55.062) (55.724) (56.756) (57.839) (58.922) (59.410) (60.756) (62.049) (63.281) (64.538) Management Fees on Turnover Rent 2,50% (362) (413) (418) (426) (434) (442) (446) (456) (465) (475) (484) IMU 9,81% (218.407) (221.795) (226.231) (230.756) (235.371) (240.079) (244.880) (249.778) (254.773) (259.869) (265.066) Insurance 0,52% (11.588) (11.768) (12.004) (12.244) (12.489) (12.738) (12.993) (13.253) (13.518) (13.788) (14.064) Lease Registration Tax 0,50% (9.644) (11.012) (11.145) (11.351) (11.568) (11.784) (11.882) (12.151) (12.410) (12.656) (12.908) Service Charges on Vacant Units 2,28% (126.126) (71.496) (52.606) (53.658) (54.732) (55.826) (56.943) (58.082) (59.243) (60.428) (61.637) Capital Reserves 5,00% (96.442) (110.125) (111.449) (113.512) (115.679) (117.844) (118.820) (121.511) (124.098) (126.562) (129.076)
TOTAL OPERATING EXPENSES 80% (510.790) (481.671) (469.577) (478.703) (488.112) (497.635) (505.374) (515.987) (526.556) (537.059) (547.773)
NET OPERATING INCOME (NOI) 1.393.474 1.683.306 1.722.052 1.753.616 1.786.905 1.820.063 1.832.531 1.874.642 1.914.838 1.952.839 1.991.597
LEASING AND CAPITAL COSTS Leasing Commissions 10,00% (21.899) (62.406) (1.628) (7.250) (4.510) (5.066) (52.038) (70.967) - - (14.862) Capex
TOTAL LEASING AND CAPITAL COSTS (21.899) (62.406) (1.628) (7.250) (4.510) (5.066) (52.038) (70.967) - - (14.862)
CASH FLOW Gross Proceeds from Sale 24.140.570 Sale Commissions 0,50% (120.703)
TOTAL NET CASH FLOW 1.371.575 1.620.900 1.720.424 1.746.366 1.782.395 1.814.997 1.780.493 1.803.675 1.914.838 1.952.839 24.019.867
Discount Rate 11,00% Period 0,50 1,50 2,50 3,50 4,50 5,50 6,50 7,50 8,50 9,50 10,00 Discount Factor 0,95 0,86 0,77 0,69 0,63 0,56 0,51 0,46 0,41 0,37 0,35
PRESENT VALUE 1.301.841 1.386.027 1.325.342 1.212.006 1.114.424 1.022.350 903.527 824.586 788.654 724.600 8.459.424 19.062.782
MARKET VALUE (Gross of acquisition costs) 19.062.782 Acquisition Costs (907.752)
MARKET VALUE (Net of acquisition costs) 18.155.030
Rounded MV 18.200.000 1.504
Net Initial Yield 7,54% Gross Initial Yield 11,13% Net Exit Yield 8,25% Gross Exit Yield 11,19% Triple Net Yield (Net Rent on Gross Price) 7,31%
Net Running Yield 7,54% 8,91% 9,45% 9,60% 9,79% 9,97% 9,78% 9,91% 10,52% 10,73%
Gross Running Yield 11,13% 12,65% 12,81% 13,05% 13,30% 13,55% 13,67% 13,97% 14,27% 14,55%
Source: Cushman & Wakefield LLP (Based on information supplied by the Client and analysed by Cushman & Wakefield LLP)
GoldmanSachs-RM-Civitavecchia-LaScagliaSC_attachment IV-V.xlsx GOLDMANSACHS-RM-LASCAGLIASC-REPORT-140401-04-FP.DOCX
ATTACHMENT VI
GENERAL VALUATION PRINCIPLES AND PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS
GOLDMAN SACHS INTERNATIONAL CUSHMAN & WAKEFIELD
GENERAL VALUATION PRINCIPLES September 2012 (Italian Version)
1. PRELIMINARY 1.1 These general valuation principles (the "Valuation Principles") shall apply to all valuation instructions, other than agency services and other forms of professional services (to which separate terms will apply), provided by Cushman & Wakefield LLP, a limited liability partnership under the Limited Liability Partnerships Act 2000 with registered number OC328588 and having its registered office at 43-45 Portman Square, London, W1A 3BG, acting through its Italian branch registered at Milan, Via Filippo Turati 16/18 (“C&W”, “we” or “us”) to the client to whom an instruction confirmation letter (the “Letter”) is sent (“you”). They shall apply separately to each service subsequently provided to you. 1.2 The Valuation Principles are to be read in conjunction with the relevant Letter and the Terms of Business attached hereto. In the event of any ambiguity or conflict between the relevant Letter, the Terms of Business and these Valuation Principles, the provisions in the relevant Letter shall prevail. These Valuation Principles may only be varied in writing by agreement between the parties. It is our practice to review and upgrade our Valuation Principles frequently and new versions will be sent to you and agreed with you.
2. VALUATION BASES 2.1 Unless we have said otherwise within the Letter, the valuation date will be the date of our inspection. 2.2 Unless we have said otherwise in the relevant Letter, the valuation will be prepared in accordance with the RICS Valuation – Professional Standards current at the date of the Letter (the “Red Book”) by valuers conforming to its requirements, acting as external valuer. 2.3 Each property will be valued on a basis appropriate to the purpose of the valuation, in accordance with the Red Book. The basis of valuation that we will adopt for each property is specified in the relevant Letter. The definitions are as follows: (i) Market Value Market Value is “the estimated amount for which an asset or a liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” (ii) Market Rent Market Rent is “the estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.” (iii) Existing Use Value Existing Use Value is “the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arms length transaction, after proper marketing and where the parties had acted knowledgeably, prudently, and without compulsion, assuming that the buyer is granted vacant possession of all parts of the asset required by the business and disregarding potential alternative uses and any other characteristics of the asset that would cause its Market Value to differ from that needed to replace the remaining service potential at least cost.”. (iv) Fair Value The Red Book contains two alternative definitions of Fair Value as follows: 1. the definition adopted by the International Valuation Standards Committee (IVSC): “the estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those parties”. 2. the definition adopted by the International Accounting Standards Board (IASB): “the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date”. Unless we have said otherwise within the Letter, we will adopt the IASB definition of Fair Value.
a
GENERAL VALUATION PRINCIPLES September 2012 (Italian Version)
2.4 When assessing either Existing Use Value, Fair Value or Market Value for balance sheet purposes, we will not include directly attributable acquisition or disposal costs in our valuation. Where you have asked us to reflect costs (as required under FRS15), they will be stated separately. 2.5 In the case of specialised properties (where valuation methods such as market comparison or an income (profits) test cannot be reliably applied), we may use Depreciated Replacement Cost (“DRC”) as a method of estimating Value. The valuation using this method of a property in the private sector will include a statement that it is subject to the adequate profitability of the business, paying due regard to the value of the total assets employed. If the property is in the public sector, the valuation will include a statement that it is subject to the prospect and viability of the continued occupation and use. Any writing down of a valuation derived solely from the DRC method to reflect the profitability/viability of the entity in occupation is a matter for the occupier. If the valuation is being undertaken for inclusion in accounts prepared under International Financial Reporting Standards, our report will contain a statement that because of the specialised nature of the property, the value is estimated using a DRC method and is not based on the evidence of sales of similar assets in the market. If we consider that the value of the asset would be materially lower if the business ceased, the report will contain a statement to this effect.
3. GENERAL VALUATION ASSUMPTIONS 3.1 Unless otherwise agreed, we will provide the Services in relation to any property on the following assumptions: (i) the property and any existing buildings are free from any defect whatsoever; (ii) all buildings have been constructed having appropriate regard to existing ground conditions or that these would have no unusual effect on building costs, property values or viability of any development or existing buildings; (iii) all the building services (such as lifts, electrical, gas, plumbing, heating, drainage and air conditioning installations and security systems) and property services (such as incoming mains, waste, drains, utility supplies, etc) are in good working order without any defect whatsoever; (iv) roads and sewers serving the property have been adopted and that the property has all necessary rights of access over common estate roads, paths, corridors and stairways and to use common parking areas, loading areas and other facilities; (v) there are no environmental matters (including but not limited to actual or potential land, air or water contamination, or by asbestos or any other harmful or hazardous substance) that would affect the property, any development or any existing buildings on the property in respect of which the Services are provided or any adjoining property, and that we shall not be responsible for any investigations into the existence of the same and that you are responsible for making such investigations; (vi) any building, the building services and the property services comply with all applicable current regulations (including fire and health and safety regulations); (vii) the property and any existing building comply with all planning and building regulations, have the benefit of appropriate planning consents or other statutory authorisation for the current use and no adverse planning conditions or restrictions apply (which includes, but is not limited to, threat of or actual compulsory purchase order); (viii) appropriate insurance cover is, and will continue to be, available on commercially acceptable terms for any building incorporating types of construction or materials which may pose an increased fire or health and safety risk, or where there may be an increased risk of terrorism, flooding or a rising water table; (ix) items of plant and machinery that usually comprise part of the property on an assumed sale are included in the property but items of plant and machinery that are associated with the process being carried on in the property or tenants trade fixtures and fittings are excluded from the property; (x) in reflecting the development potential of any property, that all structures will be completed using good quality materials and first class workmanship;
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GENERAL VALUATION PRINCIPLES September 2012 (Italian Version)
(xi) any occupational leases are on full repairing and insuring terms, with no unusually onerous provisions or covenants that would affect value; (xii) in respect of any lease renewals or rent reviews, all notices have been served validly within any time limits; (xiii) vacant possession can be given of all accommodation which is unlet or occupied by the entity/borrower or its employees on service tenancies; and (xiv) any mineral rights are excluded from the property.
4. VALUATION ASSUMPTIONS FOR PROPERTY VALUED HAVING REGARD TO TRADING POTENTIAL 4.1 Unless we have agreed otherwise, for trading related property (such as self storage properties, hotels and marinas) where the property is trading and is expected to continue, we will value on the basis and assumption of a fully equipped operational entity, having regard to trading potential. 4.2 Where we are instructed to value a property having regard to its trading potential, we will take account of any trading information that either the operator has supplied to us or that we have obtained from our own enquiries. We will rely on this being correct and complete and on there being no undisclosed matters that could affect our valuation. The valuation will be based on our opinion as to future trading potential and the level of fair maintainable turnover and net operating income likely to be achieved by a reasonably efficient operator. 4.3 Unless we have said otherwise in the relevant Letter: (i) the valuation will be made on the basis that each property will be sold as a whole including all fixtures, fittings, furnishings, equipment, stock and goodwill required to continue trading; (ii) we will assume that the new owner will normally engage the existing staff and the new management will have the benefit of existing and future bookings or occupational agreements (which may be an important feature of the continuing operation), together with all existing statutory consents, operational permits and licences; (iii) we will assume that all assets and equipment are fully owned by the operator and are not subject to separate finance leases or charges; (iv) we will exclude any consumable items, stock in trade and working capital; and (v) we will assume that all goodwill for the properties is tied to the land and buildings and does not represent personal goodwill to the operator.
5. STRUCTURE 5.1 We will not carry out a structural survey of any property nor will we test services. Further, no inspection will be made of the woodwork and other parts of the structures which are covered, unexposed or inaccessible. In the absence of information to the contrary, the valuation will be on the basis that the property is free from defect. However, the value will reflect the apparent general state of repair of the property noted during inspection, but we do not give any warranty as to the condition of the structure, foundations, soil and services. Our report should not be taken or interpreted as giving any opinion or warranty as to the structural condition or state of repair of the property, nor should such an opinion be implied. 5.2 If we give the age of a building in our report, this will be an estimate and for guidance only.
6. MEASUREMENTS 6.1 Where we are required to measure a property we will specify the basis of measurement. However, you should specifically note that the floor areas contained in any report we may publish are approximate and if measured by us will be within a 3% tolerance either way. In cases where the configuration of the floor plate is unusually irregular or is obstructed, this tolerance may be exceeded. 6.2 We will not be able to measure areas that we are unable to access. In these cases we may estimate floor areas from plans or by extrapolation. Where we are required to measure land or site areas, the
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areas will be approximate and will be measured from plans supplied. They will not be physically checked on site. 6.3 The areas we report will be appropriate for the valuation purpose, but should not be relied upon for any other purpose.
7. PLANNING AND STATUTORY REGULATIONS 7.1 Unless specifically instructed in writing to make formal searches with local planning authorities, we shall rely in the provision of our Services on the information provided informally by the local planning authority or its officers. We recommend that your lawyers be instructed to confirm the planning position relating to the property and review our comments on planning in the light of their findings. 7.2 We may consider the possibility of alternative uses being permitted. Unless otherwise notified by you in writing, we shall assume that the property and any existing buildings comply with all planning and building regulations existing uses have the benefit of appropriate planning consent or other statutory authorisation, and that no adverse planning conditions or restrictions apply.
8. VALUATION EXCLUSIONS 8.1 We will not inspect title deeds and we will therefore rely on the information supplied as being correct and complete. In the absence of information to the contrary, we will assume the absence of unusually onerous restrictions, covenants or other encumbrances and that the property has a good and marketable title. Where supplied with legal documentation, we will consider it but we will not take responsibility for the legal interpretation of it. Unless agreed, we will not obtain information from public offices. 8.2 You should confirm to us in writing if you require us to read leases and if so, provide all the relevant documentation within a reasonable time for consideration bearing in mind the date for receipt of our report. You should not rely upon our interpretation of the leases without first obtaining the advice of your lawyers. 8.3 We will take into account any information that you provide concerning any tenants’ improvements. Otherwise, if the extent of tenants’ alterations or improvements cannot be confirmed, we will assume that the property was let with all alterations and improvements evident during our inspection (or, in the case of valuation without inspection, as described within the information that you provide). 8.4 Our valuation will take into account potential purchasers’ likely opinion of the financial strength of tenants. However, we will not undertake any detailed investigations on the covenant strength of the tenants. Unless informed to the contrary by you, we will assume that there are no significant arrears and that the tenants are able to meet their obligations under their leases or agreements. 8.5 Any plans we provide to you indicating the site of a property are for identification only. We will rely on our inspection and information that you provide in outlining the extent of each property, but you should not rely upon our plans to define boundaries. 8.6 Where comparable evidence information is included in our report, this information is often based upon our oral enquiries and its accuracy cannot always be assured, or may be subject to undertakings as to confidentiality. However, such information would only be referred to where we had reason to believe its general accuracy or where it was in accordance with expectation. In addition, we have not inspected comparable properties. 8.7 For a recently completed development property, we will not take account of any retentions or outstanding development costs. For a property in the course of development, we will reflect your advice on the stage of construction, the costs already incurred and those still to be spent at the valuation date, and will have regard to any contractual liabilities. 8.8 We will not make any allowance in our Services for the existence of any mortgage or other financial encumbrance on or over the property nor take account of any leases between subsidiaries. 8.9 Any valuation figures provided will be exclusive of VAT whether or not the building has been elected. 8.10 We will not make any allowance in any valuation advice provided for the expenses of realisation or any taxation liability arising from the sale or development of the property.
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GENERAL VALUATION PRINCIPLES September 2012 (Italian Version)
8.11 Unless we have said otherwise in the Letter, each property will be valued individually; in the case of a portfolio, we will assume that the properties would be marketed in an orderly way and not placed on the market at the same time. 8.12 The components of our valuation calculations (such as future rental values, cost allowances, or void periods) may only be appropriate as part of the valuation calculation. They should not be taken as a forecast or prediction of a future outcome. You should not rely on any component of the valuation calculation for any other purpose. 8.13 We will value in the local currency. If we are to report to you in another currency, unless we have agreed otherwise we will adopt a conversion rate equivalent to the closing rate (“spot rate”) on the valuation date. 8.14 Our valuation does not make allowance either for the cost of transferring sale proceeds to another state, or for any restrictions on doing so. 8.15 In instances where we are instructed to provide an indication of current reinstatement costs for insurance purposes, this will be given solely as a guide without warranty. Formal estimates for insurance purposes can only be given by a building surveyor or other person with sufficient current experience of replacement costs. The property will not be inspected by a building surveyor or qualified building cost estimator and the guide will be based on costs obtained from generic building cost tables. You should not rely on it as the basis for insurance cover.
9. REGULATED PURPOSE VALUATIONS AND MONITORING 9.1 In circumstances where a valuation, although provided for a client, may also be of use to third parties, for instance the shareholders in a company (otherwise defined as a “Regulated Purpose Valuation” by the Red Book), we are required to state our policy on the rotation of the surveyor who prepares the valuation and the quality control procedures that are in place. 9.2 Irrespective of the purpose of the valuation, we will select the most appropriate surveyor for the valuation having regard to his/her expertise and the possible perception that independence and objectivity could be compromised where a valuer has held the responsibility for a particular client for a number of years. This may result in us rotating the surveyor responsible for repeat valuations for the same client although we will not do so without prior discussion with the client. 9.3 For all Regulated Purpose Valuations we are required by the Red Book to state all of the following in our report: (i) the length of time the valuer continuously has been the signatory to valuations provided to you for the same purpose as the report, together with the length of time we have continuously been carrying out that valuation instruction for you; (ii) the extent and duration of the relationship between you and us; (iii) in relation to our preceding financial year the proportion of the total fees, if any, payable by you to our total fee income expressed as one of the following: less than 5%; or if more than 5%, an indication of the proportion within a range of 5 percentage points; (iv) where, since the end of the last financial year, it is anticipated that there will be a material increase in the proportion of the fees payable, or likely to be payable, we shall include a further statement to that effect in addition to (iii) above. 9.4 The valuation may be subject to monitoring under the RICS’s conduct and disciplinary regulations.
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
1. PRELIMINARY 1.1 These terms and conditions (the "Terms of Business") shall apply to all valuation services (excluding agency services and other forms of professional services, to which separate terms will apply) provided by Cushman & Wakefield LLP, a limited liability partnership under the Limited Liability Partnerships Act 2000 with registered number OC328588 and having its registered office at 43-45 Portman Square, London, W1A 3BG, acting through its Italian branch registered at Milan, Via Filippo Turati 16/18 (“C&W”, “we” or “us”) to the client to whom an instruction confirmation letter (the “Letter”) is sent (“you”). They shall apply separately to each service subsequently provided to you. 1.2 The Terms of Business are to be read in conjunction with the relevant Letter and general valuation principles (“Valuation Principles”) attached thereto. In the event of any ambiguity or conflict between the relevant Letter, the Valuation Principles and these Terms of Business, the provisions in the relevant Letter shall prevail. These Terms of Business and the relevant Letter may only be varied in writing by agreement between the parties. It is our practice to review and upgrade our Terms of Business frequently and new versions will be sent to you and agreed with you.
2. PERFORMANCE OF THE SERVICES 2.1 We undertake to use all reasonable skill and care in providing the services and advice described in the relevant Letter, based on the instructions given by you (the "Services"). We will inform you if it becomes apparent that the Services need to be varied or external third party advice is required. Any variation is to be confirmed in writing and agreed between the parties. 2.2 We may need to appoint third party providers to perform all or part of the Services and we shall agree this with you in advance.
3. BASIS OF FEES 3.1 The basis of our fees for our Services is set out in the relevant Letter. 3.2 You shall pay all applicable VAT in addition to any fees and disbursements at the applicable rate. 3.3 You shall pay our fees on completion of our Services (whether or not additional work is still to be carried out by third parties) or, where the fees are in relation to an ongoing instruction or an instruction of a duration of more than three months, at least quarterly in arrears upon submission by us of quarterly invoices. Payment is due within 15 days of the invoice date. 3.4 Where valuations are undertaken for a lender for loan security purposes and it is agreed that a borrower will pay our fee, you shall remain primarily liable to pay our fee should such borrower fail to meet its liabilities to us in full. Payment of our fees is not conditional upon the loan being drawn down or any of the conditions of the loan being met. 3.5 If you do not dispute with us an invoice or any part thereof within 15 days of the date of such invoice, you shall be deemed to have accepted the invoice in its entirety. 3.6 If we are required by you to undertake any additional work in relation to an instruction, you shall pay additional fees based upon our usual rates. We will notify you of the amount of such additional fees. This also applies where we are asked to review a legal report or Certificate of Title provided to us more than 8 weeks after we have submitted our Report (either draft or final). 3.7 Where there is a change to the stated purpose for which our valuation is being commissioned and in our sole opinion we deem this to result in an increase in our liability (for example a valuation for annual accounts being used for loan security purposes), we reserve the right to charge an additional fee. 3.8 If you subsequently request our invoice to be re-addressed to a party other than that originally agreed, we reserve the right to make an administration charge of €100. Payment will still be due within 15 days of the original invoice date. 3.9 In the event that you withdraw our instructions prior to completion of a valuation, you shall be liable to pay us for a fair and reasonable proportion of our fees and any agreed disbursements ("the Termination Fee"). If we have sent you draft valuation figures, the Termination Fee shall be subject to
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
a minimum of 50% of the fee originally agreed between us and if we have sent you a draft valuation report, such fees shall be subject to a minimum of 80% of the fee originally agreed between us. 3.10 We will advise you in advance if it is necessary or convenient to instruct a third party to provide advice or to act as an expert or arbitrator and provide an estimate of the likely cost. If you approve, either verbally or in writing, that the third party be instructed, we will instruct the party as agent on your behalf and request that all the third party's invoices be addressed to you care of us. If we are requested by you to advance payment of the third party invoices, you shall be obliged to reimburse the advance payment made and pay a handling charge. We may request that you put us in funds in respect of any third party’s costs before or at the time of formally instructing them on your behalf and you will comply with this request. 3.11 Where we are instructed to provide Services to one of your subsidiaries or associated / related entities or should you subsequently request that another entity be substituted for you at a later stage and we are unable to seek or obtain payment of any outstanding monies for whatever reason, you shall remain primarily liable to pay those outstanding monies if the subsidiary, associated / related or other entity does not meet its liabilities in relation to payment for the Services provided by us.
4. INTEREST You shall pay interest on the amount of any invoice for fees or other disbursements that remains unpaid for 15 days after the date of the invoice. Interest shall be payable at the rate of 4% above the base rate of Barclays Bank PLC from the date of the invoice until payment is made whether after or before judgement.
5. DISBURSEMENTS You shall pay all disbursements incurred by us in the provision of the Services at least quarterly in arrears from the date they were incurred. Disbursements include, but are not limited to: maps, plans, research, photography, copying of documents or plans, messenger delivery, costs of obtaining external information on companies, properties, demographic or other similar information, any reproduction, copying or other royalties incurred, additional bound copy reports, costs of external information / references obtained and key cutting, travel and subsistence expenses at their actual cost and car mileage at the standard ACI scales.
6. INFORMATION RECEIVED FROM THE CLIENT We will take all reasonable steps to ensure that property information is accurate where we are responsible for its preparation. Where you provide us with any information on a property that is necessary or convenient to enable us to provide the Services properly, you acknowledge that we will rely on the accuracy, completeness and consistency of any information supplied by you or on your behalf and, unless specifically instructed otherwise in writing, we will not carry out any investigation to verify such information. We accept no liability for any inaccuracy or omission contained in information disclosed by you or on your behalf, whether prepared directly by you or by a third party, and whether or not supplied directly to us by that third party and you shall indemnify us should any such liability arise. If our valuation is required for the purpose of purchase or loan security, you accept that full investigation of the legal title and any leases is the responsibility of your lawyers.
7. CONFLICTS OF INTEREST AND ANTI-CORRUPTION 7.1 We have conflict management procedures designed to prevent us acting for one client in a matter where there is or could be a conflict with the interest of another client for whom we are acting. If you are aware or become aware of a possible conflict of this type, please raise it immediately with us. If a conflict of this nature arises, then we will decide, taking account of legal constraints, relevant regulatory body rules and your and the other client’s interests and wishes, whether we can continue to act for both parties (e.g. through the use of separate teams with appropriate Chinese Walls), for one only or for neither. Where we do not believe that any potential or actual conflict of interest can be managed appropriately, we will inform you and consult with you as soon as reasonably practicable.
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
7.2 You acknowledge that we may earn commissions, referral fees and may charge handling fees connected to the services that we perform and agree that we shall be entitled to retain them without specific disclosure to you. We will not accept any commissions or referral fees in circumstances where we are of the reasonable belief that they would compromise the independence of any advice that we provide to you. 7.3 We confirm that we will not, and will procure that our employees will not, knowingly engage in any activity which would constitute a breach of the Bribery Act 2010 and that we have in place a compliance programme designed to ensure compliance with the terms of the Bribery Act 2010.
8. MANAGEMENT OF THE PROPERTY We shall not be responsible for the management of the property nor have any other responsibility (such as maintenance or repair) in relation to the property. We shall not be liable for any damage that may occur while the property is unoccupied. The property shall be your sole responsibility.
9. TERMINATION BY NOTICE 9.1 Unless a fixed period has been agreed, either party may terminate the instruction by giving 14 days’ notice in writing to the other party. 9.2 In the event of termination by notice, you shall be obliged to pay forthwith all fees accrued in relation to the Services and work performed up to the date of termination (and any abort fee) plus any expenses or disbursements incurred by us or to which we are committed at the date of termination.
10. PROFESSIONAL LIABILITY 10.1 With the exclusion of our fraud and/or gross negligence, we shall not be liable to you in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Services in respect of: (i) any direct loss of profit; (ii) any indirect, special or consequential loss whatsoever howsoever caused including without limitation (a) indirect loss of profit; (b) loss of business; (c) loss of goodwill; (d) loss of use of money; (e) loss of opportunity, and the parties agree that the sub-clauses of this clause shall be severable. 10.2 We shall not be liable to you in negligence for pure economic loss arising in connection with the performance or contemplated performance of the Services. 10.3 You acknowledge and agree that the exclusions contained in this clause 10 are reasonable in all the circumstances and that you have had the opportunity to take independent legal advice. 10.4 Where a third party has contributed to the losses, damages, costs, claims or expenses, we shall not be liable to make any contribution in respect of the liability of such third party. 10.5 Save in respect of third parties directly instructed by us and not on your behalf, we shall not be liable for the services or products provided by other third parties, nor shall we be required to inspect or supervise such third parties, irrespective of the third party services or products being incidental to or necessary for the provision of our Services to you. 10.6 With the exclusion of our fraud and/or gross negligence, our total aggregate liability (including that of our members and employees) to you in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Services shall be limited to an aggregate sum not exceeding twenty times the fee paid. Nothing in these Terms of Business excludes or limits our liability: (i) for death or personal injury caused by our negligence; (ii) for any matter which it would be illegal for us to exclude or attempt to exclude our liability and (iii) for fraud or fraudulent misrepresentation. 10.7 We shall be released from our obligations to the extent that performance thereof is delayed, hindered or prevented by any circumstances beyond our reasonable control (examples being a strike, act of God or act of terrorism). On becoming aware of any circumstance which gives rise, or which is likely
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
to give rise, to any failure or delay in the performance of our obligations, we will notify you by the most expeditious method then available. 10.8 To cover any liability that might be incurred by us, we confirm that we will maintain professional indemnity insurance through the Lloyds and company insurance market, so long as such insurance is available at commercially acceptable rates and terms, with insurers of good standing and repute of not less than £20 million on an each and every claim basis. 10.9 Responsibility for our valuation extends only to the party(ies) to whom it is addressed. However in the event of us being asked by you to readdress our report to another party or other parties or permit reliance upon it by another party or other parties, we will give consideration to doing so, to named parties, subject to the following minimum fees:
First Extended Party Second & Subsequent Extended Parties
For the first €1m of reported value 0.075% 0.025% per party Thereafter 0.035% 0.015% per party
These fees are exclusive of VAT and expenses (including the cost of readdressing the report) and are subject to a minimum fee of €750. Should additional work be involved, over and above that undertaken to provide the initial report, we may make a further charge although we will agree this with you before commencing the work. 10.10 Where we consent in writing to reliance on our report by another party or other parties, we do so on the basis that (i) the other party or parties agree in writing to be bound by the Letter and these Terms of Business as if it / they had been a party to the original Letter between us, with such written agreement being provided to us, (ii) such other party pay the fees demanded as set out in clause 10.9 above (unless agreed otherwise in writing) and (iii) where you act on behalf of a syndicate or in relation to a securitisation, you agree that you are not entitled to pursue any greater claim on behalf of any other party than you would have been entitled to pursue on your own behalf had there been no syndication or securitisation. 10.11 Where you provide a copy of and / or permit another party or parties to rely upon our valuation report without obtaining our express written consent and fail to provide us with the written consent of any other party or parties who have received our report to be bound by the Letter and Terms of Business (in accordance with clause 10.10 above), you agree to indemnify us for any and all liability which arises from the use of or reliance upon our report by such unauthorised party. 10.12 Notwithstanding clause 10.11, where a valuation report is prepared or where we consent to a valuation report being used for the purpose of a prospectus, offering (either directly or indirectly), or a circular to shareholders, you agree to indemnify us for any liability whatsoever that we may have to any parties that have not agreed with us in writing to be bound by these Terms of Business which exceeds our aggregate cap on liability (referred to at clause 10.6) arising from their use and / or reliance on the valuation report.
11. QUALITY OF SERVICE AND COMPLAINTS 11.1 Our UK valuation procedures are certified as ISO9001:2000 compliant. 11.2 All our valuation reports are signed by a Member of C&W whose responsibility it is to ensure that all relevant quality control procedures have been complied with. In particular, for valuations of properties with an individual value of €20m or over, the valuer is required to present and explain his methodology to another member of the Valuation Advisory Team unconnected with the instruction and who is a Member of C&W. 11.3 If you wish to complain about the level or our service to you, in accordance with the requirements of the Royal Institution of Chartered Surveyors, we have a standard complaints procedure, a copy of which is available on request.
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
12. DATA PROTECTION 12.1 According to the Legislative Decree n. 196/2003 “Data Protection Code”, (“D.lgs. 196/2003”), We hereby inform you of the following: a) data processing purposes Your personal data provided under these Terms of Business shall be processed for purposes relating to: i. the collection of contractual or pre-contractual information, including financial and economic evaluation and the products/services; ii. the management and the performance of these Terms and Conditions, the Letter and management of the related obligations and services; iii. performance of our legal, accounting and fiscal duties, compliance with EU regulation and law as well as provisions provided by the relevant regulatory or governmental authority and any other kind of duties related to the previous subclauses (i) and (ii), including other clients/suppliers requests of related references; iv. statistical, commercial, marketing, customer services concerning the services of “CUSHMAN & WAKEFIELD LLP”. b) data processing modalities The data processing shall be carried out by means of collection, recording, organization, keeping, interrogation, elaboration, modification, selection, retrieval, comparison, utilization, interconnection, blocking, communication, dissemination, erasure and destruction of data, whether the latter are contained or not in a data bank. Such operations shall be carried out with or without the help of electronic or automated means by the data controller. c) the obligatory or voluntary nature of providing the requested data The personal data provision shall be necessary for performing the services listed under letter a). d) the consequences of failing to reply Your denial to provide personal data with reference to letter c) shall cause the impossibility to perform the activities listed under letter a). e) the entities or categories of entity to whom or which the data may be communicated The personal data provided shall be communicated, exclusively for the purposes listed under letter a), to any of our international partnerships, group companies and affiliated organisations. f) data transfer to foreign countries The personal data may be transferred in other EU Member States or in other foreign countries within exclusively the purposes listed under letter a). g) rights provided under article 7 of D.lgs. 196/2003 You are entitled to obtain confirmation as to whether or not personal data concerning you exists, regardless of whether it is already being recorded, and you shall be provided with such data in an intelligible form. Moreover, you shall have also the rights specifically provided for by article 7 of D.lgs. 196/2003 h) the identification of the data controller and the data processor The data controller is CUSHMAN & WAKEFIELD LLP acting through its Italian Branch, with its local registered office in Milan, Via Filippo Turati 16/18 and has appointed Mr. Joachim Sandberg. 12.2 Therefore, having acquired the necessary information with regards to the D.lgs. 196/2003, you assent to the processing of your personal data, also outside the EU, as well as to their diffusion and communication.
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
13. MONEY LAUNDERING REGULATIONS In order to comply with all applicable money laundering legislation and regulation, we may be required to verify certain of your details and may ask you to assist us in complying with such requirements. Where such information is requested, you will provide such information promptly to enable us to provide our Services. We shall not be liable to you or any other parties for any delay in the performance or any failure to perform the Services which may be caused by our duty to comply with any such legal and regulatory requirements.
14. FREEDOM OF INFORMATION Where you are a public authority for the purposes of the Freedom of Information Act 2000 (the "Act"), you shall notify us within five business days of receiving a request pursuant to the Act requesting information which relates to the business arrangements between us and you and/or any information we have provided to you at any time. In recognition of the fact that we may be providing you with genuinely confidential or commercially sensitive information, you agree to consult us and seek our views on all such requests prior to making a decision on whether any information should be publicly disclosed.
15. ELECTRONIC COMMUNICATIONS We may communicate with each other by electronic mail, sometimes attaching electronic data. By consenting to this method of communication, we and you accept the inherent risks (including the security risks of interception of, or unauthorised access to, such communications, the risks of corruption of such communications and the risks of viruses or other harmful devices). In the event of a dispute, neither of us will challenge the legal evidential standing of an electronic document and our system shall be deemed to be the definitive record of electronic communications and documentation.
16. CONFIDENTIALITY 16.1 We owe you a duty of confidentiality. You agree that we may, when required by our insurers or other advisers, provide details to them of any engagement on which we act or have acted for you, and that we may also disclose confidential information relating to your affairs if required to do so for legal, regulatory or insurance purposes only. 16.2 Subject to clause 16.1, we both agree never to disclose sensitive details of transactions or our advice without the other’s consent. Unless we are expressly bound by a duty of confidentiality which otherwise overrides this, we both shall be entitled to mention to third parties (e.g. in the course of presentations, speeches or pitches) and/or publish (e.g. in brochures, marketing or other written material) that we provide our services to you. 16.3 We shall provide the Services to you only for your sole use and for the stated purpose. We shall not be liable to any third party in respect of our Services. You shall not mention nor refer to our advice, in whole or in part, to any third party orally or in annual accounts or other document, circular or statement without our prior written approval. The giving of an approval shall be at our sole discretion. 16.4 We will not approve any mention of our advice unless it contains sufficient reference to all the special assumptions and/or limitations (if any) to which our advice is subject. Our approval is required whether or not we are referred to by name and whether or not our advice is combined with others.
17. INTELLECTUAL PROPERTY All intellectual property rights (including copyrights) in the documents, materials, records, data and information in any form developed or provided to you by us or otherwise generated in the provision of our Services shall belong to us solely. You are granted an irrevocable, non-exclusive, royalty-free licence to use or copy such intellectual property rights for any purpose connected with the property.
18. ASSIGNMENT Neither party shall be entitled to assign this contract or any rights and obligations arising from it without the prior written consent of the other, such consent not to be unreasonably withheld.
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PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS September 2012 (Italian Version)
19. GENERAL 19.1 If any provision of these Terms of Business is found by any court, tribunal or administrative body of competent jurisdiction to be wholly or partly illegal, invalid, void, voidable, unenforceable or unreasonable it shall to the extent of such illegality, invalidity, voidness, voidability, unenforceability or unreasonableness be deemed severable and the remaining provisions of these Terms of Business and the remainder of such provision shall continue in full force and effect. 19.2 Failure or delay by us in enforcing or partially enforcing any provision of these Terms of Business shall not be construed as a waiver of any of our rights under these Terms of Business. 19.3 No term of the relevant Letter or these Terms of Business is intended to confer a benefit on or to be enforceable by any person who is not a party to the same. 19.4 All Letters and these Terms of Business shall be governed by and be construed in accordance with Italian law. Any dispute arising out of or in connection with the interpretation and/or enforcement of this contract, will be submitted to mediation in the first instance to be performed by Bridge Mediation Italia under its relevant proceedings and regulations. Mediation shall be performed in Milano. If the mediation is not successful within 4 months from its commencement, the matter will be submitted to the exclusive jurisdiction of the courts of Milan. 19.5 References to partners of Cushman & Wakefield LLP are used to refer to a member of Cushman & Wakefield LLP or an employee or consultant with equivalent standing and qualifications. A list of the members of Cushman & Wakefield LLP and of the non-members who are designated as “partners” is open to inspection at our registered office, 43-45 Portman Square, London, W1A 3BG.
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ATTACHMENT VII
INSTRUCTION AND CONFIRMATION LETTER
GOLDMAN SACHS INTERNATIONAL CUSHMAN & WAKEFIELD
CONFIRMATION LETTER FOR VALUATION SERVICES PREPARED FOR GOLDMAN SACHS INTERNATIONAL
20 MARCH 2014
GOLDMANSACHS-PORTFOLIO-CONFLETT-140320-02-MCL.DOCX
GOLDMAN SACHS INTERNATIONAL Peterborough Court Cushman & Wakefield LLP Via Filippo Turati, 16/18 133 Fleet Street 20121 Milano London EC4A 2BB Tel. +39 02 63799.1 For the attention of Ms Antonella Bifulco, Mr Alessandro Luca Fax +39 02 63799.250 www.cushmanwakefield.com By e-mail: [email protected], [email protected], [email protected]
Milan, 20 March 2014
Our Ref: VAL/CLI/GoldmanSachs-Portfolio-ConfLett-140320-02-mcl.docx
Dear Sirs,
CONFIRMATION LETTER FOR PROPERTY VALUATION
VALDICHIANA OUTLET VILLAGE, FOIANO DELLA CHIANA (AR) LE COLONNE SHOPPING CENTRE, BRINDISI IL BORGOGIOIOSO SHOPPING CENTRE, CARPI (MO) LA SCAGLIA SHOPPING CENTRE, CIVITAVECCHIA (RM) (“THE PROPERTY”) GOLDMAN SACHS INTERNATIONAL (“THE CLIENT”)
Further to recent conversation, we confirm that we would be delighted to value the Properties on your behalf and set out below the basis upon which we will undertake this assignment.
I. THE CLIENT The valuation will be carried out on behalf of Goldman Sachs International in connection with its potential financing and subsequent securitisation related to the Properties (the “Financing”).
II. THE PROPERTIES The Properties consists of an outlet village and three shopping centre as below briefly described below:
Valdichiana Outlet Village, located in Foiano della Chiana (Arezzo), Tuscany, with a total GLA of 30,812 sq m; Le Colonne Shopping Centre, located in Brindisi, Apulia, with a total GLA of 12,099 sq m; Il Borgogioioso Shopping Centre, located in Carpi (Modena, Emilia Romagna, with a total GLA of 10,828 sq m; La Scaglia Shopping Centre, located in Civitavecchia (Rome), Lazio, with a total GLA of 15,853 sq m.
Iscritta nel ruolo degli agenti d’affari in mediazione al N. 14936 del 8/5/2008 C.C.I.A.A. di Milano – Registro Imprese di Milano N. 06159600961 - R.E.A. N. 1873621. Sede legale e amministrativa: Via Filippo Turati 16/18, 20121 Milano - Codice Fiscale e Partita IVA N. 06159600961. Cushman & Wakefield LLP è una società personale a responsabilità limitata (Limited Liability Partnership) registrata in Inghilterra e Galles con il N. OC328588. Il termine partnership può essere riferito ad un membro di Cushman & Wakefield LLP o ad un impiegato o consulente con ruolo e qualifiche equivalenti. La lista dei membri di Cushman & Wakefield LLP è disponibile presso la sede di Londra, W1A 3BG, 43/45 Portman Square
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III. TENURE AND TENANCIES We understand that the Properties are held freehold and are currently leased to multiple tenants on the basis of property and business leases.
IV. THE INTEREST TO BE VALUED The freehold interest in the Properties.
V. PURPOSE OF THE VALUATION The valuation is required for financing purposes in connection with the Financing.
VI. BASIS OF VALUATION The Properties will be valued on the basis of Market Value as defined by the RICS Valuation - Professional Standards current at the date of the Letter (the Red Book):
“The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
VII. VALUATION SCENARIOS As required, we will provide the Market Value of the Properties in their current state as at the date of valuation.
VIII. VALUATION DATE The valuation date will be the date of the site inspection.
IX. THE STATUS OF THE VALUER AND DISCLOSURE OF ANY OTHER CURRENT INVOLVEMENT External Valuer.
As Valuation & Advisory, we do not have any current involvement with the Properties.
We confirm that we will act with independency and integrity.
X. THE CURRENCY TO BE ADOPTED Euros.
XI. GENERAL ASSUMPTIONS TO WHICH THE VALUATIONS ARE SUBJECT Please see our General Valuation Principles as attached to this letter at Attachment II. These principles outline the Assumptions on which any estimate of Market Value will be based, other than as agreed specifically and in writing.
They form an important part of this proposal document.
XII. ANY ASSUMPTIONS, SPECIAL ASSUMPTIONS, RESERVATIONS, ANY SPECIAL INSTRUCTIONS OR DEPARTURES No Special Assumptions are defined or known at this time.
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XIII. INFORMATION REQUIREMENTS AND THE NATURE AND SOURCE OF INFORMATION TO BE RELIED UPON BY THE VALUER In preparing our valuation, we will rely upon information provided to us. We attach, as Attachment I, the information which we would expect to receive from you or your client in respect of the Properties. This is very comprehensive but also serves as a check list.
Given the current volatility of the financial markets and uncertainty affecting the real estate sector, it is increasingly important that we are supplied with updated, detailed and accurate information on the Properties we shall value on your behalf.
Our instruction excludes any type of due diligence (i.e. legal, technical, environmental, etc). If any due diligence report is provided to us before commencing the work, we would read and rely on the executive summaries in these reports and include the conclusions in our analysis.
We would not make independent searches or checks and would rely on the information supplied as being correct and complete.
As concerns zoning, trade and building licenses, we shall not carry out independent searches but rely on the information you shall supply. In the absence of relevant information, our valuation will be on the basis that the Properties have been constructed in accordance with appropriate approvals and that they meet relevant planning and other regulations, including those relating to the issue of the retail trade licenses.
We shall rely on the areas supplied.
We will not measure floor areas on site or against Autocad plans. We have not allowed for this in our fee proposal or in the timeframe estimated to undertake this assignment.
XIV. EXTENT OF VALUER’S INVESTIGATIONS AND INSPECTIONS Please see our General Valuation Principles attached.
We shall inspect the Properties internally and externally.
XV. METHODOLOGY We shall arrive at our opinion of Market Value by using two complementary approaches, namely by reference to the initial and early year yield profile, and by constructing a DCF over a 10 year holding period. We acknowledge that the DCF approach is dependent on the selection of a large number of subjective inputs in addition to the estimates for Market Rent, including the assumptions for rental growth, the exit rate and the discount rate. For this reason our preference is to place higher importance on the initial and subsequent yield pattern, which we shall compare with recent transactions in the market, using the DCF analysis as support.
XVI. OUTLINE OF REPORT CONTENT We will provide you with a Full Valuation report for each Property, which will include the following sections:
Summary Instructions Assumptions & Special Assumptions Date of Valuation Inspection
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Information Supplied Location Catchment Area Description General State of Repair and Maintenance Areas Merchandising Mix Site and Environmental Considerations Town Planning and Cadastral Use Commercial Regulations – Trade Licenses Tenure Tenancies, Expiry Profile and Rental Income Centre Management, Service Charges and Maintenance Costs Performance Market Commentary Competition Analysis Market Rent Valuation Methodology And Rationale Valuation Certainty Market Value Valuation Considerations and Final Comments Confidentiality Disclosure and Publication
The Report will also include: SWOT analysis
Commentary around affordability of leases
Comparisons of (i) sales per sqm and (ii) effort ratios within other relevant outlet villages
Comparable lettings (if available)
Comparable transactions (if available)
The Appendices will include: Location Plans, Representative Photographs, Floor Plans and Site Plan, Tenancy Schedule, Valuation calculations and the Instruction Letter or the Terms of Engagement.
XVII. TIMETABLE We will provide you with the draft values by Friday 4 April 2014 COB. The Draft Full Valuation Reports will be provided by 15 April 2014. We will submit our Final Reports upon your approval of the drafts.
The extent to which we are able to adhere to these deadlines is dependent upon the early receipt of the information requested.
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XVIII. FEES The fee agreed to undertake this assignment is as follows:
€80,000.00 (Euro Eighty Thousand/00);
Our fee is inclusive of all expenses, but exclusive of VAT (currently 22%) which will be charged at the prevailing rate when the invoice is issued.
Fee becomes payable upon receipt of our invoices.
XIX. PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS We attach the Principal Terms and Conditions of Appointment as Valuers (September 2012) and the General Valuation Principles (September 2012) to which, together with this letter, our instruction will be subject (the “Terms of Engagement”), other than as agreed specifically in writing.
We have agreed to make the following amendments to our Principal Terms and Conditions of Appointment as Valuers:
Clause 3.3: the last sentence is deleted and replaced with the following ‘Payment is due within 30 days of the invoice date’.
Clause 4: the reference to 15 days shall be deleted and replaced with 45 days and the penalty interest rate shall be deleted and replaced with 1%.
Clause 8: the last sentence ‘The property shall be your sole responsibility.’ is deleted.
Clause 10.3: is deleted.
Clause 10.9: shall be deleted and replaced with the following:
“Responsibility for our valuation extends only to the party(ies) to whom it is addressed. However, in the event of us being asked by you to readdress our report to another party or other parties or permit reliance upon it by another party or other parties, we will do so provided that we are able to agree the terms on which such reliance is given. We shall not charge any additional fee for this, and it shall be inclusive in the price outlined in section XVIII headed “Fees” in the engagement letter.”
Clause 10.10: shall be deleted and replaced with the following:
“You have told us that you might syndicate or securitise the loan. Subject to the provisions relating to permitted disclosure to potential providers of finance, ratings agencies, issuers of commercial backed security and notes trustees as set out in clause 16.3 below, you may only make our report available to third parties participating in the syndication or securitisation on a reliance basis on the express condition and understanding that the report is provided by you in its entirety and any such party does so on the same basis as laid out in these Terms of Engagement (as defined below), unless otherwise agreed in writing, including, but not limited to, in any reliance letter which may be signed by an agent acting on behalf of such parties (provided that such agent is properly authorised to act on behalf of such party), with such party deemed to be the client. In the event that a reliance letter is either not agreed and duly executed, or , where it is signed by an agent, is found by law not to bind the underlying principals, reliance by a third party in such circumstances on the report shall be deemed acceptance of the Terms of Engagement. Our report will be addressed to you and will be for your exclusive use save to the extent that we have permitted third parties to rely on the report.”
Clause 10.11: shall be deleted.
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Clause 10.12: shall be deleted.
Clause 14: shall be deleted.
Clause 16.2: is deleted and replaced with the following ‘Subject to clause 16.1, we all agree never to disclose sensitive details of transactions or our advice without the others’ consent except that you may disclose the report prepared pursuant to this engagement (i) in accordance with applicable law, regulatory requirement or order of a court of competent jurisdiction and (ii) to your directors, officers, employees and professional advisors, your affiliates and their directors, officers, employees and professional advisors, any potential providers of finance, to rating agencies, any issuer of a commercial mortgage backed security in an issue related to the Financing (‘the Issue’) and any notes trustee related to the Issue in each case on a non-reliance basis and provided that they are bound by obligations of confidentiality.
Clause 16.3: shall be deleted and replaced with the following:
“You shall not mention nor refer to our advice, in whole or in part, in annual accounts, circular or statement or any other document (“Document”) without our prior written approval. We will not approve any mention of our advice in any such Document unless it contains sufficient reference to all the special assumptions and / or limitations (if any) to which our advice is subject. Our approval is required whether or not we are referred to by name and whether or not our advice is combined with others. The foregoing shall not apply to regulatory announcements. Notwithstanding the foregoing, we confirm that we consent to any issuer of a commercial mortgage backed security publishing our advice or the report prepared pursuant to this engagement in any offering document or related documentation for any securitisation in relation to the Financing (as defined in the engagement letter).”.
Clause 16.4 shall be deleted.
XX. PROFESSIONAL LIABILITY, LIMITS OR EXCLUSION OF LIABILITY TO PARTIES OTHER THAN THE CLIENT Please see paragraph 10 of our Principal Terms and Conditions of Appointment attached at Attachment II, as amended in this letter.
While our PT&C refer to a cap of 20 times the fee, for this instruction, we are prepared to increase this limit to €15 million.
In accordance with standard practice, the Valuation Report to be provided will be confidential to the Client and will be provided to the Client for the purposes stated in paragraph V above only and for the sole use of the Lender. To the extent that you ask us to permit third parties to rely on the valuation, we shall consider this provided that such third parties sign a reliance letter in which they agree to be bound by the Terms of Engagement, amongst other things.
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ATTACHMENT VIII
TEMPLATE RELIANCE LETTER
GOLDMAN SACHS INTERNATIONAL CUSHMAN & WAKEFIELD
Cushman & Wakefield LLP TO: Via Filippo Turati 16/18 20121 Milano CBRE Loan Servicing Limited as facility agent for itself and on behalf of the Finance Parties under and as defined in the Facility Agreement; Tel. +39 02 63799.1 Fax +39 02 63799.250 CBRE Loan Servicing Limited as security agent for itself and on behalf www.cushmanwakefield.com of the Finance Parties under and as defined in the Facility Agreement; the Finance Parties; any person to whom any Lender originally party to the Facility Agreement assigns any of its rights or benefits in relation to any participation in the Loan,
(“the Addressees”)
DATE
Dear Sirs
VANGUARD BIDCO S.À R.L. (“THE BORROWER”) VALDICHIANA OUTLET VILLAGE, FOIANO DELLA CHIANA (AR) LE COLONNE SHOPPING CENTRE, BRINDISI IL BORGOGIOIOSO SHOPPING CENTRE, CARPI (MO) LA SCAGLIA SHOPPING CENTRE, CIVITAVECCHIA (RM) (“PROPERTIES”) RELIANCE LETTER We refer to each of our valuations dated 31 March 2014 addressed to GOLDMAN SACHS INTERNATIONAL (“the Client”) in respect of the Properties (“Valuations”). Cushman & Wakefield LLP prepared the Valuations in connection with the acquisition by the Borrower of the entities which own the Properties and we understand that you, the Addressees, are otherwiseSAMPLE involved in the financing of this transaction and wish to rely on the Valuations for that purpose (“the Purpose”).
Definitions "Facility Agreement" means the EUR [120,250,000] facility agreement dated [] between, amongst others, Vanguard Pledgeco S.à r.l. as the company, Vanguard Bidco S.à r.l. as bidco, CBRE Loan Servicing Limited as the facility agent, CBRE Loan Servicing Limited as the security agent, Goldman Sachs International as mandated lead arranger and the Lenders (as defined therein).
"Finance Parties" means the Facility Agent (as defined in the Facility Agreement), the Mandated Lead Arranger (as defined in the Facility Agreement), the Security Agent (as defined in the Facility Agreement) and the Lenders.
Iscritta nel ruolo degli agenti d’affari in mediazione al N. 14936 del 8/5/2008 C.C.I.A.A. di Milano – Registro Imprese di Milano N. 06159600961 - R.E.A. N. 1873621. Sede legale e amministrativa: Via Filippo Turati 16/18, 20121 Milano - Codice Fiscale e Partita IVA N. 06159600961. Cushman & Wakefield LLP è una società personale a responsabilità limitata (Limited Liability Partnership) registrata in Inghilterra e Galles con il N. OC328588. Il termine partnership può essere riferito ad un membro di Cushman & Wakefield LLP o ad un impiegato o consulente con ruolo e qualifiche equivalenti. La lista dei membri di Cushman & Wakefield LLP è disponibile presso la sede di Londra, W1A 3BG, 43/45 Portman Square
PROJECTVANGUARD-RELIANCELETTER-140505-03-MCL-DRAFT.DOCX
"Lender" means any person which: (a) is a lender under the Facility Agreement as at the date of this letter; or (b) becomes a lender under the Facility Agreement in accordance with the procedures set out in the Facility Agreement from one of the lenders originally party to the Facility Agreement as part of the primary syndication of the transaction. "Loan" has the meaning given to it in the Facility Agreement.
Reliance We agree that the Addressees may rely upon the Valuations as if they were originally commissioned by the Addressees for the Purpose at the date when each Valuation was produced (subject to the terms contained herein). This is on the basis that each Addressee agrees and acknowledges the following:
a. the same terms and conditions of our appointment for the Valuations (as agreed with the Client) (the “Terms”) will apply to the Valuations. We have attached those terms and conditions for your convenience; b. the Valuations are produced as at the date of issue but that circumstances and conditions may change over time and affect the accuracy and reliability of the views and information contained therein; c. we will not have any duty, obligation or liability, whether in terms of amount, nature or scope, to the Addressees which is greater than that which we have to the Client if the Addressees had been the Client. For the avoidance of doubt, our aggregate liability to the Client, Addressees and any other party we permit to rely on the Valuations (with the prior written consent of the Addressees) is as specified in the Terms; d. the contents of the Valuations are intended to be confidential to the original Client and to the Addressees and for the purpose stated in this letter. Consequently, and in accordance with current practice, no responsibility is accepted to any other party in respect of the whole or any part of their contents; and e. that publication or disclosure of the Valuations or any part of their contents in any document, circular or statement will not be permitted unless, where relevant, it incorporates the special assumptions referred to in the Valuations.
Disclosure SAMPLE The Valuations are provided in connection with the Facility Agreement and are solely for the benefit of the Addressees and our Client in accordance with the terms of this letter and the Terms. They may not, without our prior written consent, be relied upon for any other purpose or be disclosed to or relied upon by any other person save that they may be disclosed without such consent to:
(i) any person to whom disclosure is required to be made by applicable law or court order or pursuant to the rules or regulations of any supervisory or regulatory body or in connection with any judicial proceedings; (ii) the directors, officers, employees, auditors and professional advisers of any Addressee; (iii) any affiliate of any Addressee and the directors, officers, employees, auditors and professional advisers of such affiliate; (iv) any Servicer (as defined in the Facility Agreement);
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(v) any person, not otherwise an addressee of this letter, who (i) becomes a lender in accordance with the Facility Agreement or (ii) is a potential transferee or assignee, or sub-participant, of any lender, and their respective professional advisers; (vi) any trustee with respect to any securities issued in connection with a securitisation of any of the Loans (as defined in the Facility Agreement); and (vii) each of Fitch Ratings Ltd., Moody's Investors Service, Inc. and Standard & Poors' Ratings Group, a division of McGraw Hill Companies, Inc., DBRS Ratings Limited and their respective professional advisers, on the basis that (i) such disclosure is made solely to enable any such person to be informed that a Valuation has been given and to be made aware of its terms but not for the purposes of reliance and (ii) (except in the case of any person referred to in (v) above which is an Addressee) we do not assume any duty or liability to any person to whom such disclosure is made and in preparing the Valuations we only had regard to the interests of our client(s).
In addition, the Valuations or a reference to and summary of them (and the methodologies and concepts on which it is based) may be included in any information memorandum, offering circular, registration statement or similar document as may be required to comply with any applicable laws, regulations or official guidelines relating to the issuance of or investment in any securitisation of the Loans in connection with the Facility Agreement.
If you agree to these terms, please sign below and return the signed copy to us at the above address. In any event, reliance by an Addressee on the Valuations is deemed acceptance of, agreement to, and acknowledgement of, the terms of this letter.
Yours faithfully
CUSHMAN & WAKEFIELD LLP
______Joachim Sandberg FRICS SAMPLE
______Francesca Prandi MRICS Mariacristina Laria MRICS
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On copy:
Acknowledged and agreed
______CBRE Loan Servicing Limited as facility agent and security agent for itself and on behalf of the Finance Parties under and as defined in the Facility Agreement
Date:______
SAMPLE
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