Government of the Republic of Cyprus Re-Development of the Larnaca Port and Marina Area MTCW/LCA1/2016

Government of the Republic of Cyprus Re-development of the Larnaca Port and Marina Area MTCW/LCA1/2016

Invitation for Expressions of Interest

23 November 2016

CONTENTS

ARTICLE 1. LEGAL FRAMEWORK OF THE PROJECT AND THE TENDER PROCESS

ARTICLE 2. TABLE WITH KEY DETAILS OF THE PROJECT

ARTICLE 3. INTRODUCTION – DESCRIPTION OF THE ASSET – SCOPE OF THE PROJECT – OBJECTIVES OF THE CONTRACTING AUTHORITY

ARTICLE 4. OVERVIEW OF THE TENDER PROCESS

ARTICLE 5. RIGHT TO PARTICIPATE IN THE TENDER PROCESS

ARTICLE 6. METHOD OF SUBMISSION OF EXPRESSIONS OF INTEREST/ REQUESTS FOR EXTENSION AND/ OR CLARIFICATIONS

ARTICLE 7. DRAFTING OF THE EXPRESSIONS OF INTEREST AND CONTENTS

ARTICLE 8. NECESSARY REQUIREMENTS FOR PREPARING AND SUBMITTING AN EXPRESSION OF INTEREST

ARTICLE 9. PRE-QUALIFICATION CRITERIA AND EXPRESSIONS OF INTEREST PROCESS

ARTICLE 10. OTHER TERMS

Annex A: For completion by Interested Parties

- Section 1: Interested Party’s profile - Section 2: Personal Situation criteria - Section 3: Financial criteria and financial information - Section 4: Technical criteria and information Annex B: Summary of Information Memorandum

ARTICLE 1. LEGAL FRAMEWORK OF THE PROJECT AND THE TENDER PROCESS

1. It is envisaged that the procurement process will be conducted in two (2) phases: (i) the Invitation for Expressions of Interest phase as described in article 4(i) below; and (ii) the Invitation to Tender ("ITT") phase as described in article 4(ii) below.

2. This Process falls outside the scope of the Utilities Directive 2004/17/EC (as transposed into national law by the Co-ordination of the Procurement Procedures for the Conclusion of Contracts of Supplies, Works and Services in the Water, Energy, Transport and Postal Services Sectors and Related Matters Law 11(I)/2006).

3. The new Concessions Directive 2014/23/EU does not apply to this Process as it has not yet been implemented into Cypriot law. However, the Process will be conducted in a fair, transparent and non-discriminatory manner in accordance with the general principles of administrative Law (Law 158(I)/1999, as amended) and the relevant principles applicable under the Treaty on the Functioning of the European Union and within the spirit of the Concessions Directive 2014/23/EU.

4. Furthermore, it is noted that this process is conducted further to the provisions of the Privatisation Law 28(I)/2014.

ARTICLE 2. TABLE WITH THE KEY DETAILS OF THE PROJECT

Par. Item 2 Tender document number . MTCW/LCA1/2016 1 2 Ministry of Transport . Communications and Works, 4 Republic of Cyprus.

Contact person: Ms. Stalo Aristidou

Contracting Authority Public Works Department 165, Strovolos Avenue, 2048 Nicosia, Cyprus Tel. 357 22806764 Fax. 357 22806921 Email: [email protected]

2 Available free of charge at the Details on the access to . website documents 5 www.eprocurement.gov.cy Deadline2 for the Submission of 20/01/2017 Comments/. Questions/ (the "Clarification Deadline") Recommendations6 Deadline2 for the Contracting Authority. to address Comments/ 27/01/2017 Questions/7 Recommendations 2 Deadline for the submission of 03/02/2017 at 10:00am . the Expressions of Interest (the "Closing Date") 8 2 6 months after submission of the . Expressions of Interest. 9 Period of Validity of Expressions Expressions of Interest that are of Interest declared to be valid for less than the minimum term required will be rejected as invalid. 2 Expressions of Interest must be . submitted in the English 1 language. Supporting documents Language of the Expressions of 0 drafted and submitted in any Interest other language, shall be accompanied by an official translation in English. 2 Expressions of Interest should be Method. of submission of submitted in Hard copies to the Expressions1 of Interest Tender Board of the Ministry of 1 Transport, Communications and

Par. Item Works, at the address:

28 Acheon Street 28 Agios Andreas Nicosia 1424 Republic of Cyprus

marked for the attention of: Ms Efi Theofanous and/or Ms Anna Pitsilidou Deadline for the Contracting Authority2 to notify Interested Parties. on whether they have 03/03/2017 qualified1 for Invitation to Tender Phase2 (indicative and not binding to the Contracting Authority) 2 The Invitation to Tender phase is . expected to commence Invitation1 to Tender Phase approximately within 10 days expected3 start date from the date that the Interested Parties are notified as to whether or not they have pre-qualified. 2 The Contracting Authority . expects the selection of the 1 preferred bidder to take place 4 between 4 and 5 months from the dispatch of the Request For Selection of the preferred bidder Proposals of Invitation to Tender expected date Phase.

The detailed and definitive timetable will be outlined in the Invitation to Tender Phase documentation.

ARTICLE 3. INTRODUCTION – DESCRIPTION OF THE ASSET – SCOPE OF THE PROJECT – OBJECTIVES OF THE CONTRACTING AUTHORITY

1. Introduction

1.1. The Ministry of Transport Communications and Work (“MTCW” or the “Contracting Authority”) of the Republic of Cyprus (“RoC”) has committed to proceed with a long term concession for the re-development and commercial exploitation of the Larnaca Port and Marina area (the “Project”), through an international competitive tender process (the “Tender Process”).

1.2. This is an invitation to potentially interested parties that are individuals, single legal entities or consortia ("Interested Parties" and each an "Interested Party") to express an interest in entering into a concession agreement with the Contracting Authority (this "Invitation").

1.3. The purpose of this Invitation is to guide Interested Parties on the terms and conditions for the submission of an expression of interest ("Expression of Interest") and to outline the personal situation criteria ("Personal Situation Criteria"), the financial eligibility criteria ("Financial Eligibility Criteria"), and the technical eligibility criteria ("Technical Eligibility Criteria") (together the "Pre-Qualification Criteria") described below, being the basis on which Interested Parties will be selected to participate in the next phases of the procurement process as defined in Article 3.

2. Description of the Asset

2.1. The Larnaca Port and Marina Area (the “Asset”) subject to re-development, is located on the southeast coast of Cyprus at a distance of 6km from the Larnaca International Airport. The Asset is extending along the seafront of the city of Larnaca, adjacent to its center.

2.2. The Asset, comprises of a total area of approximately 510,000 sq.m, and includes the following: a. the Larnaca Marina; b. the Larnaca Port; and c. the land area, mostly unexploited, surrounding the marina and port infrastructure.

2.3. Detailed information regarding the Asset is available under Annex B - Summary Information Memorandum.

3. Scope of the Project

3.1. The scope of the Project is to develop the Asset as a mixed-use development, combining a state-of-the-art marina, a modern and functional port and a real estate development, which may include residential, tourist, retail and office uses. It is envisaged that the contractual arrangement will be in the form of a long-term concession agreement.

3.2. The overall objective is the successful, innovative and viable re-development of the Asset, addressing the following: a. the integrated development of the Asset, aiming at the regeneration of the wider area by increasing its attractiveness to visitors, residents, cruise passengers, marina users and the general public; b. the upgrade of the Marina facilities and thereafter their operation to the highest international standards; c. the modern and proper operation of the commercial port in order to serve the regional commercial needs of Larnaca and its hinterland taking into consideration the rest of the uses; d. the development and expansion of the cruise terminal operations; e. the transformation of the Asset to a high quality sea front.

4. Objectives of the Contracting Authority

4.1. The wider benefits sought by the Contracting Authority are summarized below: a. ensure a successful and feasible innovative redevelopment of the Asset; b. re-development of the Port so as to attract the development of the cruise market in the Eastern Mediterranean and respond to demand whilst also addressing the needs of the commercial freight activities; c. transform the Marina into a high quality recreation harbor; d. development of the Port and Marina facilities to acceptable international standards in a timely manner to match the growing needs of Cyprus’ economy; e. transfer of responsibility to the qualified Interested Party for the marketing of the Port and Marina to realize the above; f. development of the surrounding land of the existing Port and Marina aiming to transform the area to be made more attractive to cruise passengers, marina users and the general public; g. operation of the Port and Marina to the highest standards.

ARTICLE 4. OVERVIEW OF THE TENDER PROCESS

1. Expressions of Interest will be evaluated by an Evaluation Committee specifically appointed by the Authority for this purpose. The recommendations of this committee will be submitted to a Specialised Board, also specifically appointed for this purpose. The Specialised Board will have the power to either approve, reject or request further clarifications on the recommendations submitted to it by the Evaluation Committee. The decisions of the Specialised Board will be the final decisions concerning the Process, against which an Interested Party may appeal to the Administrative Court in accordance with Article 146 of the Constitution.

2. It is anticipated that the Tender Process will be conducted in two (2) phases: (i) the Invitation for Expressions of Interest phase; and (ii) the Invitation to Tender phase:

(i) Invitation for Expressions of Interest Interested Parties are invited to express their interest in participating in the Tender

Process by submitting a response to this Invitation in accordance with the provisions of this invitation. Whether or not an Interested Party qualifies to be invited to proceed to the Invitation to Tender phase will be determined by the Contracting Authority on the basis of the criteria and the terms set out in Article 9 below, provided they meet all of the requirements set out in Article 8 and Article 9 of this Invitation in order to qualify for the Invitation to Tender phase.

(ii) Invitation to Tender The second phase is the Invitation to Tender phase. Details of this second phase will be set out in the relevant documentation issued at that stage. The information set out below is intended to provide initial information to the Interested Parties as to what the said phase may entail, it is subject to changes and will only be confirmed in the respective documentation issued to Interested Parties that qualify for that phase (“Qualified Parties”).

Qualified Parties will be required to sign a confidentiality agreement at the outset of the Invitation to Tender phase.

1. Following execution of the confidentiality agreement and subject to the provisions of the relevant documentation, the Qualified Parties will receive in writing the Invitation to Tender, which will, inter alia, include instructions on the content and submission of their proposal and an overview of Invitation to Tender Phase (the “Invitation to Tender” or “ITT”).

2. The ITT will also determine the criteria for the selection of the Qualified Party with which the Contracting Authority will enter into the concession agreement. Together with the ITT, Qualified Parties will also receive a draft copy of the concession agreement on which they may provide their comments.

3. Furthermore, Qualified Parties will be able to obtain information regarding the Asset through a data room process, will be offered the opportunity to visit the Asset and will be thereafter requested to submit in writing, at the end of the Invitation to Tender Phase: a. a detailed forward-looking business plan for the operations (including the development of the Asset) for a period of time post-closing of the Project, such period to be defined in the ITT (the “Business Plan”). The business plan should also incorporate a development plan along with an indicative masterplan of the proposed development; b. adequate funding commitments supporting the Business Plan (the “Funding Commitments”); and c. a binding financial offer for the concession (the “Financial Offer”) (together with the Business Plan and the Funding Commitments, the “Tender”).

4. The expected contents of the Business Plan and other details of the Proposal together with the evaluation process of the Invitation to Tender phase will be described in detail in the ITT.

ARTICLE 5. RIGHT TO PARTICIPATE IN THE TENDER PROCESS

1. Expression of Interest from Interested Parties

1.1. Interested Parties are eligible to participate in the Tender Process and submit an Expression of Interest in accordance with Article 9, provided they meet all of the requirements set out in Article 8 and Article 9 of this Invitation in order to qualify for the Invitation to Tender phase.

2. Bidding Consortia

2.1. Parties that participate in the Tender Process as members of a consortium (“Members” and each a “Member”) are not required to establish or assume a specific legal form in order to submit an Expression of Interest.

2.2. In case the Qualified Party is a consortium, it will be required to assume a specific legal form (a special purpose vehicle or "SPV" legally established in the Republic of Cyprus), prior to entering into a contract with the Contracting Authority.

2.3. Each Member of a consortium shall be jointly and severally liable with each other Member of that consortium vis-à-vis the Contracting Authority, in connection with all matters relating to the Tender Process and the Project. Further details of this requirement will be set out in the Invitation to Tender phase documentation.

2.4. In accordance with Section 1 consortia will need to provide (a) details of their proposed structure and (b) an organizational chart (including percentage share / interest in the consortium, if relevant), signed by all Members of the Consortium.

3. Designation of a Representative

3.1. As part of the Expression of Interest, an Interested Party shall duly nominate a principal contact (the "Representative") for its organization (where the Interested Party is an individual or a single legal entity) or for the consortium, and that Representative must be the same person for all Members of that consortium. The Representative shall have the authority to act as the primary contact towards the Contracting Authority for all matters relating to the Tender Process and the Project.

3.2. The Contracting Authority shall not be responsible for contacting the Interested Party through any route, other than the Representative. Any changes to the Representative should be notified in writing to the Contracting Authority as soon as the changes come into effect.

4. Changes to a consortium

4.1. The Contracting Authority recognizes that consortium membership can change over time. Any changes to the Members of consortia that are confirmed as

Qualified Parties shall at all times be subject to the prior written approval of the Contracting Authority, subject to any further procedures required by law and/or the terms and conditions each time applicable to the relevant stage of the Tender Process. In order to resolve on whether a change is permissible, the Contracting Authority should be provided, in writing, with at least the below:

(a) the reason(s) for the change; (b) full details of the proposed new/ replacement/ additional Member (as the case may be); (c) details of the ownership of any new Member and the impact of that new ownership on any of the other Members' participation percentages in the consortium; (d) evidence of compliance by the consortium as a whole and the new Member with the applicable Pre-Qualification Criteria set out below under Article 9 (including the completion of the relevant/ affected sections of the response to the present Invitation) and any and all supporting documentation evidencing such compliance.

4.2. Following the submission of the Expression of Interest and until the longstop date for changes to the consortium, as specified in the ITT phase documentation (the "Consortium Lock-in Date"), the composition of a consortium can change as follows subject to the provisions of this section:

(a) by exit of existing Members; (b) by entry of new Members; or (c) by internal re-allocation of the participation percentages; provided that:

(i) the consortium as a whole continues to fulfil the applicable Pre-Qualification Criteria; and (ii) any new Members meet the applicable Pre-Qualification Criteria relevant for such Members.

4.3. If the intended changes in the composition of a consortium or the formation of a new one are not in compliance with the provisions of this section or in the absence of the necessary supporting documentation evidencing such compliance, the Contracting Authority may reject the intended change or formation and/or disqualify that Interested Party.

ARTICLE 6. METHOD OF SUBMISSION OF EXPRESSIONS OF INTEREST/ REQUESTS FOR EXTENSION AND/ OR CLARIFICATIONS

1. Method of Submission of Expressions of Interest

1.1. Expressions of Interest should be submitted in accordance with the requirements stated in Article 7, by courier or by hand delivery to the address:

The Tender Board of the Ministry of Transport, Communications and Works 28 Acheon Street Agios Andreas Nicosia 1424

Cyprus marked for the attention of: Ms Efi Theofanous and/or Ms Anna Pitsilidou

1.2. Expressions of Interest which are submitted after the specified date and time shall not be taken into consideration. They shall be declined and returned without being unsealed.

1.3. Interested Parties may modify or withdraw their Expressions of Interest before the Closing Date.

2. Request for extension/ clarifications

2.1. Extensions Any request for an extension of the period for submission of the Expressions of Interest must be received the latest by the date on which Interested Parties are allowed to submit questions on the Tender Process, as this date is defined in the table under Article 2 of the present, but no undertaking can be provided that any such extension will be granted.

2.2. Clarifications

2.2.1. The Contracting Authority considers that the information included in this Invitation is sufficient for the submission of an Expression of Interest. However, should Interested Parties have any questions regarding the Tender Process or other related matters, they are entitled to submit detailed requests for clarification through the Electronic Public Procurement System at www.eprocurement.gov.cy, as soon as possible and, in any event, no later than the deadline provided in the table under Article 2 of the present. Fax or telephone or oral enquiries will not be accepted. 2.2.2. The Contracting Authority will reply in writing to such requests for clarification within the timeframe set out in the table under Article 2, and in order to ensure the objectivity and transparency of the Tender Process, all such written responses will be made available to all Interested Parties through the Electronic Public Procurement System at www.eprocurement.gov.cy. 2.2.3. Where an Interested Party believes that a clarification is confidential in nature, the request for clarification should clearly identify that the Interested Party wishes the response to be kept confidential and not circulated to all Interested Parties. However, the Contracting Authority reserves the right to make the final decision as to the level of confidentiality of the request and therefore in turn as to whether the clarification is provided to all Interested Parties or not. The Contracting Authority will give the Interested Party the right to withdraw the request for clarification in the event that the Contracting Authority disagrees with the Interested Party's assessment as to the confidentiality of the request for clarification. Responses to clarification requests issued by the Contracting Authority shall be deemed to form part of this Invitation and must be treated as such by the Interested Parties.

ARTICLE 7. DRAFTING OF THE EXPRESSIONS OF INTEREST AND CONTENTS

1. The Expressions of Interest should be completed in English using Microsoft Word or word searchable PDF format – supporting information such as management charts in alternative formats are acceptable.

2. Three hard copies, the one marked as “ORIGINAL” and two soft copies on CD/memory stick of the Expression of Interest response should be submitted in accordance with the requirements stated in this document.

3. In the case of any discrepancy between the documents submitted in soft copy and those in hard copy, the hard copy “ORIGINAL” version will prevail.

4. Interested Parties are advised that supporting materials should be relevant and should not include general promotional materials prepared by the Interested Party or, if the Interested Party is a consortium, by its individual Members. Such materials will not be taken into account in the evaluation and will be discarded.

ARTICLE 8. NECESSARY REQUIREMENTS FOR PREPARING AND SUBMITTING AN EXPRESSION OF INTEREST

1. Interested Parties seeking to pre-qualify should complete and duly sign the forms set out in Annex A of the present.

2. If a consortium is expressing an interest, the aforementioned forms under Annex A should be completed and duly signed by each of the Consortium Members.

ARTICLE 9. PRE-QUALIFICATION CRITERIA AND EXPRESSIONS OF INTEREST PROCESS

1. Pre-qualification criteria

1.1. The Pre-Qualification Criteria comprise the Personal Situation Criteria, the Financial Eligibility Criteria and the Technical Eligibility Criteria.

1.2. All Interested Parties have to meet the Pre-Qualification Criteria upon the submission of the Expression of Interest and throughout the Tender Process.

1.3. In the case of an Interested Party that is a natural person or a single legal entity, this means that the Interested Party must meet:

a. the Personal Situation Criteria; b. the Financial Eligibility Criteria; and c. the Technical Eligibility Criteria, upon the submission of the Expression of Interest and throughout the Tender Process.

In the case of an Interested Party that is a consortium: a. each Member of the consortium must meet the Personal Situation Criteria; b. the consortium as a whole must meet the Financial Eligibility Criteria, subject to the requirements set out in Section 3 of Annex A; c. the consortium as a whole must meet the Technical Eligibility Criteria, subject to the requirements set out in Section 4 of Annex A,

13 upon the submission of the Expression of Interest and throughout the Tender Process.

1.4. Interested Parties that do not fulfil all of the applicable Pre-Qualification Criteria will be disqualified from the Tender Process. In the case of a consortium, if any one Member fails to meet the Pre-Qualification Criteria applicable to such Member, then such Member will be disqualified and the Authority reserves the right to disqualify the consortium as a whole.

2. Expressions of Interest Process

2.1. The opening of the Expressions of Interest submitted in time shall be carried out by authorized persons, after the deadline for the submission of Expressions of Interest as set out in the table under Article 2 above.

2.2. The pre-qualification process shall be carried out in accordance with the steps outlined below:

2.2.1. Completeness and Compliance check

2.2.1.1. This is a check that all information requested has been submitted. Failure to provide the required information, complete a satisfactory response to any question, supply documentation that is requested within the specified timescales, may result in the Interested Party being disqualified.

2.2.1.2. Expressions of Interest must include duly completed and signed the participation letter under Annex A and the forms listed in Section 1 of said Annex A hereto with respect to the Interested Parties’ participation and profile.

2.2.1.3. Only if an Interested Party passes the completeness and compliance check will its response proceed to be considered under the steps set out in the section directly below.

2.2.2. Personal Situation Criteria check

2.2.2.1. This is an evaluation that the Interested Party and, where relevant, each consortium Member meets any one or more of the grounds for the mandatory or discretionary exclusion of that Interested Party and/or Member. If an Interested Party has met any of the grounds for exclusion set out in Section 2 of Annex A within the past five (5) years, the Contracting Authority must disqualify the Interested Party from the Tender Process. If a consortium Member has met one or more of the mandatory grounds for exclusion within the past five (5) years, the Contracting Authority must disqualify the Member from the Tender Process and reserves the right to disqualify the consortium as a whole.

2.2.2.2. The Contracting Authority shall also exclude an Interested Party and/or consortium Member (where relevant) where the person convicted by final judgment is a member of the administrative, management or supervisory body of the Interested Party or consortium Member. The Contracting

Authority also reserves the right to disqualify the consortium as a whole from the Tender Process in that eventuality.

2.2.2.3. If an Interested Party or a consortium Member has met any of the discretionary grounds for exclusion set out in Section 2 of Annex A within the past three (3) years, the Contracting Authority reserves the right to exclude the Interested Party, the consortium Member and/or the consortium as a whole from the Tender Process as the case may be. Furthermore, the Contracting Authority reserves the right to disqualify an Interested Party and, in the case of a consortium, the consortium as a whole, on grounds of the protection of the essential interests of the Republic of Cyprus, including, without limitation, its national security.

2.2.2.4. Only if an Interested Party passes the step set out in this section will its response proceed to be considered under the step set out in the section directly below.

2.2.3. Financial Eligibility Criteria

2.2.3.1. This involves an evaluation of the financial information provided by the Interested Party to verify that the financial criteria are satisfied. An Interested Party must be in a sound financial position and funding capacity to participate in a procurement of this size. If the Interested Party does not meet the requirements set out in Section 3 of Annex A, the Contracting Authority will exclude them from the Tender Process. The Contracting Authority will exclude an Interested Party from the Tender Process where the Interested Party is a consortium in the circumstances set out in the present Article (as applicable).

2.2.3.2. Only if an Interested Party passes the step set out in this section will its response proceed to be considered under the step set out in the section directly below.

2.2.4. Technical Eligibility Criteria

2.2.4.1. This involves an evaluation of the information provided by the Interested Party that it has the required levels of technical ability to participate in this Tender Process. If the Interested Party does not meet the requirements set out in Section 4 of Annex A, the Contracting Authority will exclude it from the Tender Process. The Contracting Authority will exclude an Interested Party from the Tender Process where the Interested Party is a consortium in the circumstances set out in the present Article (as applicable).

ARTICLE 10. OTHER TERMS

1. Inaccurate/ False Information

1.1. The inclusion of information in Expressions of Interest that is found to be false or misleading will result in the Interested Party’s exclusion from this Tender Process.

1.2. Furthermore, in the event that false or misleading information comes to light after an Interested Party has been awarded a contract, this may result in termination of the contract.

2. Acceptance of Terms and Conditions

2.1. The Interested Parties’ participation in the Tender Process shall mean the unconditional acceptance of the terms and conditions of this Invitation on their part.

3. Clarifications from Interested Parties

3.1. The Contracting Authority may, at any time, require from the Interested Parties clarifications and/or supplemental information on documents already duly submitted.

4. Accuracy of Information

4.1. This Invitation has been prepared by the Contracting Authority. It does not constitute an offering and, to the extent permitted by law, the Contracting Authority accepts no liability in relation to it.

4.2. Whilst the information contained in this document has been prepared in good faith, it has not been verified independently by the Contracting Authority. Thus, no representation, warranty or undertaking, express or implied, is or will be made in relation to the accuracy, adequacy or completeness of this document.

4.3. No responsibility or liability is or will be accepted by the Contracting Authority or its advisors, or any agents, servants, officers or affiliates of the Contracting Authority in respect of any error or misstatement in or omission from this document. No person acquires any right or claim for compensation from this Invitation or from their participation in the Process, against the Contracting Authority, for any reason.

4.4. No information contained in this document forms the basis for any warranty, representation or term of any contract by the Contracting Authority with any third party.

4.5. In furnishing this document, the Contracting Authority undertakes no obligation to provide Interested Parties with access to any additional information or to update the document or to correct any inaccuracies therein which may become apparent.

4.6. All Expressions of Interest, responses, requests for clarifications, proposals and submissions relating to this document and/or the Process are made at the risk of the Interested Parties.

5. No commitment to proceed

5.1. The issuance of this Invitation or any related documents in no way commits the Contracting Authority to proceed with the implementation of this Project, pursuant to the Tender Process or at all. The Contracting Authority reserves the right to amend the terms of this Invitation (including the timetable), to amend the terms of, postpone or terminate the Tender Process without prior notice, to reject any or all of the Expressions of Interest and/or to terminate discussions with any or all Interested Parties at any time.

6. Confidentiality

6.1. This Invitation may not be reproduced, copied or stored in any medium, in whole or in part, without the prior written consent of the Contracting Authority, other than as strictly required for the preparation of a response to this Invitation.

6.2. All Expressions of Interest become the property of the Contracting Authority upon receipt by the Contracting Authority. Interested Parties give the Contracting Authority the right to replicate and disclose the responses to this Invitation for any purposes in connection with the fulfilment of their statutory duties.

6.3. If required by law, regulation or order of a court or regulatory body, governmental authority or otherwise, the Contracting Authority may be required to disclose certain information and/or documents relating to Expressions of Interest.

7. Expenses and Losses

7.1. The Contracting Authority will not be liable for any bid costs, expenditure, work or effort incurred by Interested Parties in proceeding with or participating in this Tender Process, including if the Tender Process or Project are terminated or amended by the Contracting Authority.

8. Communication with officials

8.1. Any Interested Party who, save as may be permitted by the Tender Process, directly or indirectly canvasses or approaches any official, employee, consultant or contractor of the Contracting Authority concerning any award in respect of this Project, or who directly or indirectly obtains or attempts to obtain consultancy or information from such officials, employees, consultants or contractors concerning the Project or any other procurement, will be disqualified.

9. Applicable Law and Jurisdiction

9.1. The Courts of the Republic of Cyprus will have exclusive jurisdiction in relation to any disputes arising from this tender process and Laws of the Republic of Cyprus shall be applicable.

ANNEX A PARTICIPATION LETTER FOR COMPLETION BY INTERESTED PARTIES (in case of a consortium, this is to be completed and duly signed by each Consortium Member)

TO BE ADDRESSED TO THE CONTRACTING AUTHORITY

Name of Interested Party:

I/We certify that the information provided in this Expression of Interest is true and correct. I/We confirm and declare on behalf of the Interested Party and, where applicable, each Member organization that:  The applicable forms listed in Annex A of the Invitation for Expressions of Interest have been completed.  The documents requested in Annex A of the Invitation for Expressions of Interest have been appended.  I/We have not colluded and shall not collude with any other Interested Party or Member organization of an Interested Party in respect of the Project during the Tender Process.  I/We have not canvassed, approached or attempted to obtain consultancy or information from any official, employee, consultant or contractor of the Contracting Authority, in respect with the Project during the Tender Process.  I/We will co-operate with any further inquiries by the Contracting Authority and/or its advisors in relation to the Tender Process.  I/We understand that the decision of the Contracting Authority in respect of the pre-qualification shall be final and I/we agree to abide by the terms of the Tender Process as set out in the Invitation being a prerequisite to the Contracting Authority producing a short-list of bidders based on their Expressions of Interest. Name of Contact person:

Signature: Position : Date:

SECTION 1: INTERESTED PARTY'S PROFILE (in case of a consortium, this is to be completed and duly signed for and by each Consortium Member)

1.1. Contact Details

1.1.1. Interested Party:

Name:

Address:

Telephone:

Fax No:

E-mail:

1.1.2. Interested Party’s authorized Representative:

Representative

Name:

Job Title:

Contact Address:

Tel no:

Fax no:

E-mail:

1.2. Organization

1.2.1. Please provide details of the full corporate structure for the Interested Party and each consortium Member, including the immediate and ultimate parent companies and any beneficial owners.

1.2.2. If the Interested Party is a consortium, please list all Member organizations, identifying the role of each Member including the services to be provided by that organization.

Role and services to be Name Registered office provided

1.2.3. If the Interested Party is a consortium, please provide details of the proposed structure and provide an organizational chart (including percentage share / interest in consortium, if relevant). [Response no more than 3 pages]. This is to be signed by all Members of the Consortium.

SECTION 2: PERSONAL SITUATION CRITERIA (in case of a consortium, this is to be completed and duly signed by each Member)

This section is to be completed by the Interested Party and each consortium Member listed in paragraph 1.2.1 of Annex A above.

2.1 Mandatory Grounds for Exclusion

Where an Interested Party or consortium Member (as applicable) has been the subject of a conviction by final judgment for one of the following grounds in any jurisdiction within the past five (5) years, the Contracting Authority shall exclude the Interested Party or consortium Member from participation in the Tender Process and reserves the right to disqualify the consortium as a whole, where a conviction relates to a consortium Member to which the Interested Party is or will become a Member for the purposes of the Tender Process:

(a) participation in a criminal organization, as defined in Article 2 of the Council Framework Decision 2008/841/JHA of 24 October 2008 on the fight against organized crime, as amended or replaced;

(b) bribery as defined in Article 3 of the Council Act of 26 May 1997 (EU C 195 of 25.6.1997, page 1) and Article 2 paragraph 1(a) of the Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector, as amended or replaced;

(c) fraud, within the meaning of Article 1 of the Convention relating to the protection of the financial interests of the European Union, as amended or replaced;

(d) terrorist offences or offences linked to terrorist activities defined in Articles 1 and 3 of the Council Framework Decision 2002/4 respectfully or inciting, aiding or abetting or attempting to commit an offence, as referred to in Article 4 of that framework Directive, as amended or replaced;

(e) money laundering, as defined in Article 1 paragraph 2 of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, as amended or replaced;

(f) child labor and other forms of trafficking in human beings as defined in Article 2 of the Directive 2011/36/EU of the European Parliament and of the Council, as amended or replaced; or

(g) breach of obligations relating to the payment of taxes or social security contributions where this has been established by a judicial or administrative decision having final and binding effect in accordance with the legal provisions of the country in which it is established or with those of the Republic of Cyprus.

I, the undersigned, certify on behalf of [trade name of the Interested Party] that our organization and has not been subject of a conviction by final judgment for any of the mandatory grounds for exclusion set out in paragraph 2.1 above within the past five years:

2.2 Discretionary Grounds for Exclusion Where the Interested Party/consortium Member (as applicable) has met one of the following discretionary grounds for exclusion within the past three (3) years, the Contracting Authority reserves the right to disqualify any Interested Party or consortium Member from participation in the Process and reserves the right to disqualify the consortium as a whole:

(a) the Interested Party/consortium Member (as applicable) has violated any environmental, social and labor law established by European Union law, national law collective agreements or by the international environmental, social, and labor law provisions listed in Annex X of Directive 2014/23/EU;

(b) the Interested Party/consortium Member (as applicable) has been declared bankrupt, or is the subject of insolvency proceedings, where its assets are being administered by a liquidator or by the court, where it is in an arrangement with creditors, where its business activities are suspended or it is in any analogous situation arising from a similar procedure under national laws and regulations;

(c) the Interested Party/consortium Member (as applicable) has been found guilty of grave professional misconduct, rendering its integrity questionable;

(d) where a conflict of interest within the meaning of the second paragraph of Article 35 of Directive 2014/23/EU, cannot be effectively remedied by any other less intrusive measure;

(e) where there are indications to conclude that the Interested Party/consortium Member (as applicable) has entered into agreements with other economic operators aimed at distorting competition;

(f) where the Interested Party/consortium Member (as applicable) has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior concession or a prior contract with a contracting authority or with a contracting entity as defined in Articles 6 and 7 (respectively) of Directive 2014/23/EU which led to early termination of that prior contract, damages or other comparable sanctions;

(g) where the Interested Party/consortium Member (as applicable) has been guilty of serious misrepresentation in supplying the information required for the verification of the absence of grounds for exclusion or the fulfilment of the selection criteria, has withheld such information or is unable to submit the required documents supporting such information; or

(h) the Interested Party/consortium Member (as applicable) is in breach of its obligations relating to the payment of taxes or social security contributions.

I, the undersigned, certify on behalf of [trade name of the Interested Party] that none of the discretionary grounds for exclusion set out in paragraph 2.2 above have applied to our organization within the past three years except for those stated below.

Where relevant, circumstances relating to the discretionary grounds for exclusion set out in paragraph 2.2 above are:

SECTION 3: FINANCIAL CRITERIA AND FINANCIAL INFORMATION

This section is to be completed by the Interested Party to demonstrate a sound financial position enabling them to participate in a procurement of this size. 3.1 Financial Eligibility Criteria

Interested Parties should meet the below minimum financial standing criteria:

a. Average annual revenue exceeding €30,000,000 (for the last 3 financial years 2015, 2014 and 2013); b. Positive earnings before interest, taxation, depreciation and amortisation (during at least 2 of the last 3 financial years); c. Net assets (i.e. total assets less total liabilities) exceeding €50,000,000 (for the last financial year); and d. Going concern in accordance to the Audit Report (for the last financial year for which an Audit Report is available).

In the case of the Average Revenue and the Net Assets requirement if the Interested Party is a consortium, then the weighted average will be considered. In the case of the Positive Earnings and Going Concern requirement, these will need to be met by all Members.

3.2 Financial Information

To demonstrate economic and financial standing the Interested Party must be able to provide audited financial statements for the last 3 financial years 2015, 2014 and 2013.

In case audited financial statements are not available then an independent confirmation by a qualified auditor will need to be provided in relation to the financial statements.

Any published interim accounts relating to periods after the latest audited accounts should also be included.

Please provide details of any significant post balance sheet events, if not apparent from the most recent accounts for the Organization. [Response no more than 1 page]

Further to the above, the Interested Party must complete and provide the below tables, depicting information on its financial standing for the last 3 financial years 2015, 2014 and 2013:

Table 1 – Annual Revenues

Registered name of the Annual revenues (€) interested Party (in case of a consortium, to be filled for each Member) 2013 2014 2015 Average

Name of Consortium Member 1 Name of Consortium Member 2 Name of Consortium Member 3 Name of Consortium Member 4

Table 2 – EBITDA

Registered name of the Earnings before interest, tax, depreciation, interested Party (in case of a amortisation (€) consortium, to be filled for each Member) 2013 2014 2015 Name of Consortium Member 1 Name of Consortium Member 2 Name of Consortium Member 3 Name of Consortium Member 4

Table 3 – Average Revenue

Consortium Consortium Member's net Member's Consortium Weighted asset average Member's % Weighted average net position (i.e. revenue stake in average asset total assets during the consortium revenue (€) position (€) less total last 3 years (00.00%) liabilities) (€) (€) Name of Consortium

Member 1 Name of Consortium

Member 2 Name of Consortium

Member 3 Name of Consortium

Member 4 Total

3.3 Funding Ability

The Interested Parties should be able to demonstrate their ability to fund the Project by providing a description of their proposed funding approach and track record of securing funding (with details about the structure) for at least one large scale mixed- use development with a gross value1 above € 75,000,000 with a total built area of not less than 20,000 m2.

If the Interested Party is a consortium, it is sufficient for this requirement to be met cumulatively by the respective Members.

1 Definition of Gross Value: The construction cost of the project at completion calculated in 31.12.2015 prices with the application of the general consumer price index (or equivalent metric of price inflation) of the relevant national statistical authority of the jurisdiction where the corresponding project was executed for the period from the date of completion of the project’s construction work until 31.12.2015. The project’s construction value is defined as the value of the contracts (one or more pertaining to the same project), excluding VAT and cost of land acquisition, through which contracts the physical subject matter of the project was completed. The amounts should be in Euro. In case that the stated contract is concluded in a currency other than euro, the Interested Party must convert the required amounts to Euro and present the currency exchange rate used for the conversion to euro.

SECTION 4: TECHNICAL CRITERIA AND TECHNICAL INFORMATION

This section is to be completed by the Interested Party to demonstrate that it has the required levels of technical ability to participate in this Transaction.

1. To demonstrate relevant experience and expertise the Interested Parties must be able to provide:

a. A comprehensive description and verifiable evidence of their lead role in the operation (with participation of at least 45%) of at least one marina with at least 300 berths. The marina should have been operational during the years 2013-2016. Also, the operation of the marina should have not been terminated by the competent public authority as a result of any breach of any terms and conditions specified relating to the marina operation and /or any other reason relating to a misconduct or fault of the operator.

b. A comprehensive description and verifiable evidence of their lead role in the operation (with participation of at least 40%) of at least one port terminal with an annual traffic of at least 350,000 metric tons of dry bulk/general cargo, or alternatively, experience in the operation of a passenger/cruise terminal with an annual traffic of at least 100,000 passengers. In either case, the terminal must be operational during the years 2014-2016 and its operation should not have been terminated by the competent public authority as a result of any breach of any terms and conditions specified relating to the terminal operation, and/or meeting any performance targets, and /or any other reason relating to a misconduct or fault of the operator. The operation of the terminal will additionally have to be in compliance with the ISPS (International Ship and Port Facility Security Code).

c. A comprehensive description and verifiable evidence of their lead role (participation of at least 40%) in the development and operation/ commercialization of a mixed use real estate project (defined as a real estate project combining at least two of the following uses: residential, hospitality, retail and office). The total gross value2 of the project above should be at least €75,000,000, with a minimum total built area of 20,000 m². The commencement of the operation/commercialization of the above project must be within the last twelve (12) years prior to the deadline for submitting the Expression of Interest in this process. It is noted that the gross value is defined as the value of the contracts (one or more pertaining to the same project), excluding VAT, through which contracts the physical subject matter of the project was completed.

2 Definition of Gross Value: The construction cost of the project at completion calculated in 31.12.2015 prices with the application of the general consumer price index (or equivalent metric of price inflation) of the relevant national statistical authority of the jurisdiction where the corresponding project was executed for the period from the date of completion of the project’s construction work until 31.12.2015. The project’s construction value is defined as the value of the contracts (one or more pertaining to the same project), excluding VAT and cost of land acquisition, through which contracts the physical subject matter of the project was completed. The amounts should be in Euro. In case that the stated contract is concluded in a currency other than euro, the Interested Party must convert the required amounts to Euro and present the currency exchange rate used for the conversion to euro.

2. The requirement relating to the lead role in the development and operation/ commercialization of a mixed use real estate project needs to be met by a Consortium Member with a participation of at least 30%. Subject to the provisions of the following section, the requirement relating to the lead role in the operation of the marina and port should be undertaken by a Consortium Member with a participation of at least 10%.

Interested Parties may subcontract to third parties responsibilities in relation to the operation of the marina and/or the port under the concession. Interested Parties are required to name their subcontractors and identify the parts of the responsibilities that they intend to assign to each subcontractor. Interested Parties should also submit written documentation demonstrating that the subcontractor acknowledges its assignment and that it is capable of responding to the obligations which it shall assume as well as meeting the relevant experience in operations as described in this document. The term subcontract and subcontractor above also refers to other entities on whose capacities the Interested Party relies for satisfying the technical criteria, irrespective of the legal relation or legal ties with them. In such a case, the other entities must also provide a statement that they shall place at the Interested Party’s disposal all necessary resources and expertise such that this will ensure, to the satisfaction of the Contracting Authority that the Interested Party’s team for this Project will meet throughout the duration of the concession the relevant marina and port operations experience requirements as described in the present.

3. Interested Parties may, until the completion of the Expressions of Interest phase, replace a subcontractor identified during said phase, or undertake itself the part of the Project which it had stated in its Expression of Interest that would be implemented by a subcontractor, subject to the provision of evidence satisfactory to the Contracting Authority that the new party undertaking the relevant responsibilities can adequately perform the relevant duties and meets any relevant requirements as set in the present.

4. In proof of the experience in similar projects as per the above, Interested Parties should provide the Contracting Authority with the below completed table:

Title of the project

Role in the project

Short description of the project

Contracting Authority Contractor or Special Purpose

Vehicle (SPV) Percentage of participation in the

SPV/ consortium (if applicable) Other Shareholders in SPV/ consortium (if applicable) Value of the project 3 Date of commencement of operations/commercialisation Quantity of berths/ cargo/ passenger/ built area

5. Further to this table, Interested Parties must also provide the Contracting Authority with official, duly signed documentation evidencing the successful development/operation of the afore-mentioned projects.

6. Said documentation may, indicatively, include certificates of successful completion issued by the competent contracting authorities, copies of signed agreements/ assignments etc.

3 Definition of Gross Value: The construction cost of the project at completion calculated in 31.12.2015 prices with the application of the general consumer price index (or equivalent metric of price inflation) of the relevant national statistical authority of the jurisdiction where the corresponding project was executed for the period from the date of completion of the project’s construction work until 31.12.2015. The project’s construction value is defined as the value of the contracts (one or more pertaining to the same project), excluding VAT and cost of land acquisition, through which contracts the physical subject matter of the project was completed. The amounts should be in Euro. In case that the stated contract is concluded in a currency other than euro, the Interested Party must convert the required amounts to Euro and present the currency exchange rate used for the conversion to euro.

ANNEX B

SUMMARY INFORMATION MEMORANDUM

1. Asset Description

1.1 Project site

The Larnaca Port and Marina Area (the “Asset”) subject to re-development, is located on the southeast coast of Cyprus. The Asset is extending along the seafront of the city of Larnaca, adjacent to its center. It is located 6 km north of the Larnaca International Airport and the nearby salty marsh (a Natura 2000 site). To the northeast at a distance of 8 km is located the British Sovereign Base (SBA) of Dhekelia.

Figure 1: The Asset area on satellite photo (background: Google Earth) The Asset has good access status. A four lane urban road connects the Asset to the Nicosia and Limassol highways and a two lane main road connects the Asset to the south with the center of the city of Larnaca and to the north with the SBA area and the Ammochostos District (including the seaside resorts of Ayia Napa and Paralimni).

The Asset occupies a total gross area of around 510,000 sq.m, and can be broken down into three separate areas of activity: the Larnaca Port, the Larnaca Marina and a large unexploited land parcel surrounding the above and available for development.

1.2 The Larnaca Marina

The Larnaca Marina is located south of the Larnaca Port, and was constructed in the mid 1980's. In its current status, the marina offers around 350 berths for vessels of different sizes (up to 25m long) and a dry storage area of approximately 200 vessels. The marina also accommodates a number of daily-cruise vessels.

The marina’s infrastructure includes a windward and a leeward breakwater, piers, quays and buildings. More precisely:

a. The main marina basin is surrounded by the windward breakwater and a northern pier, providing sufficient protection against wave action. The main basin also encompasses an old jetty consisting of a steel structure and piles with a timber deck on top. Floating pontoons are also placed along the northern side of the jetty providing additional berths. These are a fairly recent addition as they were constructed in 2011. The southern side of the jetty serves the accommodation of the larger daily-cruise vessels. A smaller outer basin limited by the leeward breakwater and the northern pier are also occasionally used for berthing, when the marina reaches its full capacity and the prevailing winds allow it. Electricity and water are provided through pillars to all berths. b. The northern and part of the western part of the marina land area which are asphalted and used for yacht dry storage. A travel lift of limited lifting capacity operates on a narrow docking area at the northern quay of the marina. The northern part also includes a maintenance hangar. c. An additional dry storage area for smaller vessels is located at the middle of the parcel and extending behind the main western quay. A launching ramp is also serving this area. d. The marina land area also includes an administration building and two coffee/ snack bars, which are located along the main western quay of the marina and alongside the above mentioned dry storage area. These buildings are of poor quality. In addition to the above, land facilities such as a mini children's playground, storage areas, public conveniences, have been abandoned and now hardly operate due to the lack of maintenance. A sewage treatment plant and a land based fuel station operate in the marina. Car parking and green areas (mainly tall trees) are also located in various spots within the marina area.. e. The marina entrance is situated at the southwestern side of the marina’s land area with a guard house and controlled access.

1.3 The Larnaca Port

The Port of Larnaca is the second largest in Cyprus, after Limassol. It is a multipurpose port, serving both commercial and passenger uses. It is servicing regional commercial needs by handling various types of cargo, such as conventional cargo, dry bulk (grains, animal feeding, salt, gypsum etc.), liquid bulk (oil products, liquefied gas), containerized cargo and vehicles. With respect to passenger movements, it mainly serves cruise operations, handling only small to medium size vessels.

The port infrastructure includes a windward and a leeward breakwater, two quays (north and south), an extensive yard area, sheds, warehouses and buildings (including a passenger terminal and the administration building). In more detail the port’s layout includes the following:

a. A north quay with a total length of 326 m and depth of around 10 m, equipped with a rail mounted slewing crane. The adjacent yard incorporates two warehouses (covering an area of 3,170 sq.m. each), various ancillary buildings and open storage areas. b. A south quay with a total length of 340 m and depth of around 12 m, also equipped with a rail mounted slewing crane and two STS cranes. This quay also incorporates a ramp for Ro-Ro vessels and includes an adjacent yard with a 11,680 m² shed and open stacking areas. Both the north and south quays can serve commercial as well as passenger port activities. c. A waterfront area between the two quays that is backfilled (no quay in this area) that includes a small concrete jetty with a floating pontoon extension serving smaller vessels located towards its northern end. The adjacent land area serves as stacking area and at current a significant part of this area is used for storage purposes by companies operating in the oil and gas sector in Cyprus’s Exclusive Economic Zone. d. A controlled entry gate house at the port entrance, located at the north-western side of the port. The main buildings of the port (passenger terminal and administration building) are located near this gate. e. Asphalted yards at the southern part of the port towards the city, including a car parking area of around 12,500 m², with access via the main road network. f. A large unexploited area combined with a stacking area created by reclamation in the northern boundary.

The following graph shows the master plan of the port:

Figure 3: Larnaca Port master plan (Source: Cyprus Ports Authority)

1.4 Planning regime and development options

The development of the Asset is mainly governed by the planning regime set by the Larnaca Local Plan. The Larnaca Local Plan (the “Plan”) was initially drafted and approved in 1990, according to Law 90/1972 about Spatial and Urban Planning, as subsequently amended. Thereafter it was drafted and approved as a new plan in 2011 and was subsequently amended in 2013. The provisions regarding the area of the Asset are stated in the 2011 version of the Plan (Chapter 33). The Plan can be found on the website of the Planning Authority:

(http://www.moi.gov.cy/moi/tph/tph.nsf/All/DF1F6EE1C3DF5AA1C22578370026B02 B?OpenDocument) and may be subject to amendment.

Some of the provisions of the Plan with respect to the Asset are presented below. It is however recommended that the complete documents, as included on the above website, are read.

A. Larnaca Marina area i. The capacity of the marina could reach up to 1,000 berths. The gross land area of the marina is estimated to cover a gross surface of 98,000 sq.m. and has an allocated building coefficient (i.e. factor of total buildable area over total land area surface) of 40%. The final area available for development is subject to a deduction of the area provisions required for the public road network and green areas. ii. Other allowable uses in the marina area are included under Development Incentives in subsection C below.

B. Larnaca Port area i. The land area of the port is distinguished in two parts. The southern part which is to be developed according to the Development Incentives stated in subsection C below and the northern part which is allocated exclusively to port uses. ii. The southern part, which is to be developed according to the Development Incentives, is estimated to cover a gross surface area of 185,000 sq.m. (subject to road network and green provisions) and has an allocated building coefficient of 120%.

C. General provisions regarding the development i. The maximum allowable building area of the Asset is set at 260,000 sq.m. High rise buildings up to 15 floors are allowed. ii. Allowable additional uses under the ‘’Development Incentives’’ for the surplus land include the following: Retail, Recreation and tourism (e.g. hotels, exhibition halls, restaurants, recreational areas/halls, sports facilities, etc.), Offices & exhibition centers, Housing / Residential, and Facilities of cultural and environmental character (museums, halls, conference centre, workshops enhancing the local culture, theme park, etc).

1.5 Other

It is noted that the Government has appointed an advisor for the preparation of an environmental impact survey relating to the port activities. The scope of the survey is to record the environmental status of the Larnaca port, marina and surrounding area, and the compatibility or interference of the commercial activities of the port and the marina with the potential/proposed other uses to be developed in the project as well as the neighboring urban environment.

It is also noted that the current information document provides only introductory information in relation to the Asset. Additional information in relation to the Asset, its current status and operations, requirements for its development, and other details will be provided to all successful applicants at the Invitation to Tender stage.

2. Current Market Status and Trends

2.1 General Economic Outlook

In April 2013 the Republic of Cyprus entered into an Economic Adjustment Program with the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).

The Cypriot authorities’ successful fiscal adjustment program resulted in better-than- expected results allowing Cyprus to exit its bailout program in March 2016, a year earlier than initially projected. The measures taken included among others, new legislation modernizing the state’s budgetary process, increasing accountability for public spending, and improving the state’s tax collection ability. In addition to the structural reforms, the Cypriot Government also introduced a number of measures encouraging foreign direct investment; including among others a simplification of bureaucratic processes and the introduction of incentives in the form of tax relaxations and increased building coefficients.

Cyprus also managed to regain access to the international financial markets only 16 months after its bail-out and has since then carried out a series of successful bond issuances.

The real GDP growth based on statistics obtained from the IMF reached 1.6% in 2015 and is expected to rise further over the next years. Unemployment is projected to decrease, accompanied with a steady and moderate inflation rate. The projected key economic indicators are presented below:

Percentage (%) 2014 2015 2016F 2017F 2018F 2019F 2020F

Real GDP growth (2.5) 1.6 1.6 2.0 2.2 2.1 1.8

Unemployment rate 16.1 15.3 14.2 13.0 11.7 10.4 9.4 Inflation rate (average (0.3) (1.50) 0.6 1.3 1.5 1.8 1.9 consumer prices) Gross government debt 108.2 108.7 99.3 95.3 90.1 85.4 81.0 (% of GDP) Source: International Monetary Fund

The expectations that Cyprus will continue its successful efforts for restoring economic growth and confidence have also been reflected in a number of consecutive upgrades from all main credit rating agencies (Standard & Poor’s, Moody's, Fitch).

Cyprus is considered as a business gateway between Europe, Asia, the Middle East and Africa; building on factors like its strategic location, EU membership, transparent legal system and political stability, highly qualified professionals, favorable tax regime, and excellent infrastructure in terms of communication and technologies.

Besides financial services which constitute a material part of the country’s GDP,

priority sectors for future growth include shipping and tourism. Shipping has developed into a key driver of the Cypriot economy with Cyprus being the largest third-party ship management center in the EU, highlighting the success of the country’s competitive maritime sector. The Cyprus Registry is also classified as the tenth largest merchant fleet in the world and the third largest fleet in the EU with around 1,700 vessels under its flag and a gross tonnage of around 22 million tonnes.

2.2 Tourism

Tourism is one of the key sectors of the Cypriot economy with a total GDP contribution of around 19% (or €2.1 bn.). The sector experienced a significant growth over the last years, as demonstrated by the increase in tourist arrivals presented in the table below:

Year Tourist Arrivals % Change from Previous Year

2010 2,172,998 -

2011 2,392,228 10.09%

2012 2,464,908 3.04%

2013 2,405,390 -2.41%

2014 2,441,239 1.49%

2015 2,659,405 8.94% Table 1: Tourist arrivals in Cyprus (Source: CyStat)

The positive trend continues into 2016 with arrivals projected by Cyprus Tourism Organisation (CTO) to exceed 3 million by the end of the year. Long-term forecasts by the World Travel and Tourism Council for Cyprus include an increase of arrivals to 3.7 million and relevant revenues of around €3.5bn by year 2025.

Nautical tourism together with other special interest products (e.g. conference and incentives tourism, sports, cycling, golf, weddings, religious and cultural tourism, etc.) are one of the key areas of focus in achieving these projections. CTO’s strategy also includes an expansion of the operating period and increase in hotel occupancy rates by improving competitiveness, upgrading the appearance of tourist infrastructure, promoting professionalism in services (through continuous upgrading of knowledge, skills and abilities of the tourism workforce), and cultivating and promoting an awareness of the importance of tourism and hospitality among the resident population.

The following graph summarizes the tourist arrivals and tourism revenues in Cyprus over the last 15 years.

Figure 2: Fluctuations of arrivals and revenues in the Republic of Cyprus over the period 2001-2015 (Source: CyStat) A breakdown of the tourist arrivals into different nationalities over the last five years is provided below:

Average annual Total arrivals - % of main % of all Nationality arrivals (2010-2015) last 5 years markets markets

Germany 123,173 739,036 6.68% 5.08%

Greece 124,138 744,827 6.73% 5.12% United Kingdom 963,364 5,780,182 52.21% 39.76%

Russia 467,095 2,802,570 25.31% 19.28%

Israel 53,380 320,281 2.89% 2.20%

Sweden 112,079 672,476 6.07% 4.63% Subtotal 11,071,447 100.00% 76.16%

All Countries 14,536,168 100.00%

Table 2: Annual arrivals of main nationality markets – proportion to main markets and to total arrivals (Source: Cystat)

Cyprus hotels enjoy one of the highest average hotel occupancy rates in Europe, with a percentage exceeding 60 %.The allocation of hotel accommodation into various cities is as follows:

Region % Beds Ammochostos 34.56% Paphos 31.47% Limassol 18.28% Larnaca 7.89% Nicosia 5.05% Hill Resorts 2.75% Table 3: Larnaca hotel supply (Source: CyStat)

Larnaca appears to be one of the least developed regions of Cyprus in terms of hotel accommodation, offering an opportunity for future growth. At the moment Larnaca hosts twenty four hotel units, with a total of approximately 4,200 beds. From this bed capacity around 3% relates to 5 star accommodation and around 11% to 4 star hotels.

2.3 Marina / Yachting

The yachting sector has been steadily increasing in recent years and the East Mediterranean holds a notable share of this sector. Since the early ‘90s, demand for berths in high quality and well organized marinas in the East Med presented a positive growth rate, primarily due to the longer summer period and the attractive coastal geomorphology of the area with respect to yachting (mild weather, wave protected bays, sandy beaches and rocky coasts, etc.). This increase in demand is also aligned with the saturation along in the coasts of Central and West Med. East Med countries like Croatia, Montenegro, Italy, Malta, Greece, Turkey, Israel and Cyprus show constantly increasing number of berths in well-organised leisure harbors of various kinds (marinas, shelters, anchorages, etc.). Strategic investors coupled with experienced marina operators are also taking new project development, very often coupled with significant commercial and residential development.

Currently, the total number of berths in the main marinas of the East Med sum up to approximately 48,500, with more than 75% of East Med berths located in four countries, Croatia, Greece, Italy and Turkey.

In the Republic of Cyprus there are currently four marinas; the Limassol Marina, Larnaca Marina, St. Raphael Marina and Latchi Port Marina, which together offer in total 1,520 berths and 310 dry-storage spaces.

Limassol Marina

This is a relatively newly constructed marina with around 650 berths and a maximum LOA of 100 m. The marina also hosts a small scale dry yacht storage and a yacht maintenance area with a capacity of up to 50 yachts. The development also includes extensive residential development (villas and apartments) and commercial development (shops, restaurants, etc), with a total area of around 40,000 sq.m.

St. Raphael Marina St. Raphael Marina is located on the east outskirts of Limassol. The marina was constructed and is operating as part of a wider development also including a hotel and small scale residential development. The marina has a capacity of around 220 berths with a maximum LOA of 30 m, and offers a wide range of services as well as yacht repairs and maintenance.

Latchi Port Marina Latchi Marina is located at the outer basin of the Port of Latchi, which in its inner basin is used for fishing vessels. The Cyprus Ports Authority expanded the port in order to accommodate the increased demand for yacht berthing in the Paphos area. The marina has a capacity of around 300 berths with a maximum LOA of 20 m and offers basic marina services.

Other Planned marinas Three additional marinas are currently planned as follows: − The Ayia Napa marina, where an agreement was signed between the State and the successful bidder, PM Makronisos Marina Ltd in 2012. PM Makronisos recently awarded the construction contract to a successful bidder and is anticipating a commencement of construction within 2016. The marina is expected to have a capacity of around 480 wet and 250 dry spaces. Its masterplan also includes extensive real estate development (residential and commercial) in the region of around 46,000 sq.m. − The Paphos marina, where the preferred bidder was chosen in May 2016, and is currently at the stage of raising finance and finalising design work. The construction is expected to begin in 2017. This mixed-use resort is expected to comprise of a marina with capacity of around 710 wet berths and 220 dry berths. The project will also have a significant real estate component including residential and commercial development and a buildable area of around 40,000 sq. m. − The authorities are also in discussions with a preferred bidder, P.M.V. Maritime Holdings Ltd, for the Paralimni Marina. This marina is expected to have a capacity of around 300 yachts. It will also have around 16,800 sq.m of residential and commercial real estate development.

Other A number of yachts are also currently moored in fishing shelters along the coasts of the island. According to data provided by the Department of Fisheries and Marine Research of the Ministry of Agriculture, Rural Development and Environment, the yachts berthed in fishing shelters are estimated to be around 400.

The following table summarizes the supply as described above and including also the planned marinas:

No of dry Map Max. LOA No of berths storage Reference (m) slots (see below) Existing marinas

Limassol Marina 650 50 100 3 Larnaca Marina 350 200 25 1 St. Raphael Marina 220 30 30 7 Latchi Port Marina 300 30 20 9 Total 1,520 310

No of dry Max. LOA No of berths storage (m) slots

Planned marinas Ayia napa Marina 480 150 60 4 Paphos Marina 710 220 50 2 Paralimni Marina 300 - 25 5 Total 1,490 370

Grand total 3,010 680

Table 4: Current and planned marina berth supply in Cyprus

It is noted that with the exception of the Limassol Marina existing marinas can only accommodate small or medium size yachts (up to 30 m long). Supply covering large vessels over 60 m long appears to be and remain limited.

The following image shows the locations of the Cyrpiot marinas.

Figure 3: Map of proposed supply of berths according to CTO’s Strategy for the Development of Nautical Tourism

The current and planned marinas are expected to contribute to the development of nautical tourism and establishment of Cyprus as a yachting destination. Cyprus enjoys a number of factors that can help its establishment in the yachting sector, including among others the following: i. political stability and EU membership (safe destination in the proximity of an unstable region), ii. ideally is situated on the route from/ to the Suez Canal (an advantageous location with respect to yachts entering the Mediterranean from the southeast), iii. its mild all year round climate, and iv. a number of additional factors like the diversity of activities, the cultural heritage and history, and the Cypriot cuisine and hospitality.

The Larnaca Marina enjoys other considerable advantages as a marina since it is located in “direct contact” with the city center and the city seafront, and also has a close proximity to the International Airport. The combination of the Larnaca marina with the port infrastructure can also offer additional capabilities and opportunities.

As in the case of the other local marina developments described above, the Local Plan also allows in the case of the Asset real estate uses like residential, retail and office development. The Asset offers the following advantages for real estate development compared to other local marina developments: i. Unique positioning, combining city center and sea front;

ii. Located in the heart of Larnaca, with easy access and a significant number of visitors all year round (as opposed to the seasonality issues faced by other locations in Cyprus); iii. Proximity to the Larnaca International Airport (10 minutes’ drive); iv. Closest marina development to Nicosia, the capital of Cyprus; v. Diversity of experiences within close proximity, and vi. A multicultural and safe environment.

The real estate trend in Cyprus presents a significant decrease in property sales during the last years up to 2014. Since 2014 property sales have started increasing again. The property sales growth in the last two years has been driven by a number of factors including the return to growth of the Cypriot economy, the Cyprus citizenship by investment programs (minimum investment criteria in property of a net value of €2 million for Cyprus passport), and the other advantages that the Republic of Cyprus offers as an investment destination.

It should also be noted that a number of additional incentives have been recently introduced by the government to stimulate the real estate sector, including among others an increase of building coefficients for large mixed-use development projects and tax incentives on the buyers’ side (reduction in transfer fees for property sales, exemption from capital gains tax upon disposal of properties, etc.).

The following graph shows the property sales in the Republic of Cyprus during the last years, both in terms of the number of units sold and value of sales.

Figure 4: Property sale transactions in the Republic of Cyprus (Source: Land & Survey Department) The following additional points are noted in relation to real estate development:

i. Luxury residential beach front properties in Larnaca appear to show higher demand and absorption rates compared to other units. There also appears to be a limited supply of modern and high end city apartments at the Larnaca beach front. ii. Larnaca’ s office space supply is considered low on a per capita basis compared to Nicosia and Limasol. The majority of the Larnaca current office supply also appears to be Grade B and C standard (e.g. converted apartments to offices), with a limited supply of Grade A office space, especially one combining the beachfront and the city centre. iii. Currently in Larnaca there is a very high proportion of old, small and mid- quality retail premises. This may explain the apparent loss of relevant traffic to Nicosia and also the low spending from visitors of the areas. iv. Leisure outlets (restaurants, cafes, bars, etc) in Larnaca appear to concentrate mainly in the Mackenzy and Finikoudes area, with high demand for hiring quality space and a limited supply.

2.4 Cruise

Cruise tourism continues to grow worldwide, not only in terms of number of passengers, but also in the number of cruise ships deployed, the size of ships being built and the number of new destinations being introduced. This reflects the increasing global demand for cruises and expansion into new targeted groups (incorporating persons from different age groups, nationalities and habits). In response to the increased demand, cruise operators place orders for new ships with larger capacity (i.e. larger ships with length from 260 m up to 360 m) in order to utilise economies of scale and offer more competitive process.

The Mediterranean is the world’s second largest cruise market after the Caribbean, representing over 20% of the annual cruise capacity. Italy comes first in terms of Mediterranean calls with a share of around 29%, followed by Spain with 21% and Greece with 11%. Other key players include Turkey (8%), France (8%), Croatia (7%) and Portugal (6%).

The Mediterranean market is divided in four “regions”: the West Med, the Adriatic, the East Med and the Black Sea. East Med ports come third in traffic by accommodating over 3 million passengers in 2015. This region was adversely affected during the last years economic by the Middle East and North Africa turbulence (Syria, Egypt, etc.), resulting in a redeployment of part of its market to the Aegean and the Adriatic.

The following graph provides a breakdown of the passenger movements hosted in 2015 in the largest Mediterranean ports. Cypriot ports are recorded as a single port.

Table 1: Total Cruise Passenger Movements by Med Cruise Region (Source: Med Cruise Report 2016)

Cypriot ports have also been affected by the current political instability in the surrounding countries, showing a material reduction in passengers over the last five years. Between 2010 and 2015, the number of cruise passengers in Cyprus declined by around 54%, from 378,000 passengers to 173,309. In terms of cruise ships Cyprus hosted in 2015 167 cruise ships as opposed to 378 in 2010.

Despite the above, the location of Cyprus in the south part of the East Med, connecting three continents (Europe, Middle East/Asia, Africa), is advantageous with respect to cruise lines. For eastbound cruising itineraries, Cyprus has very good proximity to ports like Beirut (Lebanon), Ashdod and Haifa (Israel), providing to the cruise lines attractive thematic itineraries (cultural, religious, gastronomy, etc.). On westbound and southbound cruising itineraries Cyprus can also combine with calling ports such as Rhodes, Antalya, Crete, Fathiye, Marmaris, Alexandria and Port Said.

The following features of Larnaca could potentially facilitate a cruise destination role: security, close proximity to the city center and the international airport, and the potential offer of diversity of shore excursions within an ‘acceptable’ distance range (beachfront of Protaras and Ayia Napa, archeological sites, villages, monasteries, wineries, etc).

2.5 Commercial Port

Currently the commercial port of Larnaca caters for the needs of local companies operating in the wider area of Larnaca. The main commodities handled in bulk are cereals, feedstuff, earths and minerals (gypsum, salt, pumice stone, bentonite, perlite, gravel) cars, oil products and other liquid bulk goods (crude sunflower, soya bean oil). The main commodities handled as general cargo are wood, iron and steel, fertilizers and potatoes. Also, cars and live animals are occasionally handled. In 2014, the cargo throughput of Larnaca Port was 886,660 metric tonnes, while provisions for 2015 amount to 1,039,525 metric tonnes. The same year (2014), the annual container throughput of Larnaca Port was not material with 1,723 metric tonnes.

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Figure 5: Cargo total throughput (excluding containerized) of Larnaca Port during the last 5 years (Source: Cyprus Ports Authority)

Limassol is the main commercial port of the country, followed by Larnaca. The annual cargo handled by Larnaca Port will be restricted subject to other contractual obligations that the Cyprus Government has undertaken.