Valuation Report SC Monfalcone 20150115

VALUATION REPORT

‘Emisfero Monfalcone’ Shopping Centre Località San Polo - Via G.F. Pocar n. 1 34074 Monfalcone (GO)

Bank of America Merrill Lynch International Limited 2 King Edward St London, EC1A 1HQ Valuation Date : 30 September 2014

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY

2 VALUATION REPORT

3 PROPERTY REPORT æ PROPERTY DETAILS æ LEGAL CONSIDERATIONS æ MARKET COMMENTARY æ VALUATION CONSIDERATIONS æ OPINION OF VALUE

4 LETTER OF INSTRUCTION

EXECUTIVE SUMMARY 2

1 EXECUTIVE SUMMARY

EXECUTIVE SUMMARY 3

EXECUTIVE SUMMARY

The Property Address: “Emisfero Monfalcone” – Via G.F. Pocar 1, Località San Polo, Monfalcone, Gorizia, Italy. Main Use: Retail. The subject property comprises a Shopping Mall located in the northwest quadrant of Monfalcone in North East Italy. Monfalcone is situated approximately 24 km south west of Gorizia and 47 km North West of Trieste. More precisely the scheme is situated on the edge of a residential area. The area immediately surroundings of the property are characterised by residential and rural uses.

Tenure Assumed freehold.

Tenancies and Covenant Strengths The subject Shopping Centre is currently let on the basis of 44 tenancies (including the Emisfero hypermarket and two land parcels which are leased to ERG fuel pumps and the Cecar car wash respectively). The majority of the tenancies are on the basis of business lease agreements. As at the date of valuation there was one vacant unit (nr. 30). Detailed financial investigations of the tenants are outside the scope of this report. However we believe that the property investment market would view the tenant companies as providing satisfactory security.

EXECUTIVE SUMMARY 4

Gross Income

€3,548,926 per annum (€118.67 per sq m)

This figure includes the current MGR as at June 2014 (including land).

Net Income

€3,120,779 per annum (€104.35 per sq m)

Gross Market Rent

€3,776,355 per annum (€126.27 per sq m)

Net Market Rent €3,337,435 per annum (€111.59 per sq m)

Market Value €47,700,000 (FORTY SEVEN MILLION SEVEN HUNDRED THOUSAND EUROS)

Yield Profile

Net Initial Yield 6.32%

Reversionary Yield (October 2038) 6.76%

Nominal Equivalent Yield 6.60%

True Equivalent Yield 6.88%

Suitability for Loan Security

Strengths æ The property benefits from very good accessibility via both public and private transport. æ Well-connected to the cities of Gorizia and Trieste, by ‘A4 Torino-Trieste’ highway and ‘Strada Statale 305’ and ‘Strada Statale’ 14. æ Proximity to the ‘Ronchi dei Legionari’ Airport. æ Good provision of external parking spaces (1,450 spaces). æ The property is well established in the context of the local market and there is a general lack of strong competition in the catchment area.

EXECUTIVE SUMMARY 5

æ There is only one vacant unit.

Weaknesses æ The Property is relatively aged as the construction date is early 2000’s. æ Despite the fact that retail sales are stabilising, the current economic situation in Italy is still uncertain. æ Although there has been more investment activity in Italy since the turn of the year, the investment market is still limited and there have been few transactions relating to prime assets.

Lending Related Comments: We are of the opinion that the property interest provides suitable security for mortgage purposes although we have not been provided with the terms of the loan and cannot therefore comment on their suitability having regard to the nature of the Property. The scheme is established in the context of the local market and is trading at sustainable levels in our view. Occupier demand for space is reasonable, as demonstrated by the low volume of vacant units, and turnover levels appear to be good based on the information provided.

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2 VALUATION REPORT

VALUATION REPORT 7

VALUATION REPORT

CBRE Limited

Henrietta House Henrietta Place London, W1G 0NB

Switchboard +44 (0) 20 7182 2000

Report Date 27 October 2014

Addressee This report may be relied upon by Bank of America, N.A. and their affiliates, successors and/or assigns in connection with their respective consideration of the extension of credit related to the property and/or the beneficial ownership thereof (the "Loan Financing"). This information also may be relied upon by any actual or prospective purchaser, co-lender, participant, investor, transferee, assignee and servicer of the Loan Financing, any actual or prospective investor (including agents and advisors) in any securities evidencing a beneficial interest in, or backed by, the Loan Financing. Any rating agencies actually or prospectively rating any such securities, any indenture trustee and any institutional provider(s) from time to time of any liquidity facility or credit support for such Loan Financing may have sight of our report but with no reliance. In addition, this report or a reference to this report, may be included or quoted in any offering circular, registration statement, or prospectus in connection with a securitization or transaction involving the Loan Financing and/or related securities that may be issued. This report has no other purpose and should not be relied upon by any other person or entity. The aggregate liability of CBRE to all addressees, users or reliance parties ("Addressees") is capped at £20 million. Bank of America makes no warranties or representations regarding this document or the conclusions contained herein.

VALUATION REPORT 8

The Property “Emisfero Monfalcone” – Via G.F. Pocar 1, Località San Polo, Monfalcone, Gorizia, Italy.

Property Description Shopping Centre with a total area of approximately 30,000 sq m.

Ownership Purpose Investment.

Instruction To value on the basis of Market Value the freehold interest in the Property as at the Valuation Date in accordance with your letter of instruction dated 22 September 2014.

Valuation Date 30 September 2014.

Capacity of Valuer External.

Purpose Loan Financing.

Market Value €47,700,000 (FORTY SEVEN MILLION SEVEN HUNDRED THOUSAND EUROS) exclusive of VAT.

Our opinion of Market Value is based upon the Scope of Work and Valuation Assumptions attached, and has been primarily derived using comparable recent market transactions on arm’s length terms.

Security We are of the opinion that the property interest provides suitable security for mortgage purposes although we have not been provided with the terms of the loan and cannot therefore comment on their suitability having regard to the nature of the Property.

Compliance with The valuation has been prepared in accordance with Valuation Standards the RICS Valuation – Professional Standards (January 2014) (“the Red Book”).

We confirm that we have sufficient current local and national knowledge of the particular property market involved, and have the skills and understanding to undertake the valuation competently. Where the knowledge and skill requirements of The Red Book have been met in aggregate by more than one valuer within CBRE, we confirm that a list of those valuers has been retained within the working papers, together with confirmation that each named valuer complies with the requirements of The Red Book.

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Assumptions The property details on which each valuation is based are as set out in this report. We have made various assumptions as to tenure, letting, town planning, and the condition and repair of buildings and sites – including ground and groundwater contamination – as set out below.

If any of the information or assumptions on which the valuation is based are subsequently found to be incorrect, the valuation figures may also be incorrect and should be reconsidered. None. Variation from Standard Assumptions

Suitability for We are of the opinion that the property interest provides Mortgage Purposes suitable security for mortgage purposes although we have not been provided with the terms of the loan and cannot therefore comment on their suitability having regard to the nature of the Property.

Verification We recommend that before any financial transaction is entered into based upon these valuations, you obtain verification of the information contained within our report and the validity of the assumptions we have adopted.

We would advise you that whilst we have valued the Properties reflecting current market conditions, there are certain risks which may be, or may become, uninsurable. Before undertaking any financial transaction based upon this valuation, you should satisfy yourselves as to the current insurance cover and the risks that may be involved should an uninsured loss occur.

Valuer The Property has been valued by a valuer who is qualified for the purpose of the valuation in accordance with the RICS Valuation – Professional Standards (The Red Book).

Independence The total fees, including the fee for this assignment, earned by CBRE Ltd (or other companies forming part of the same group of companies within the UK from the Addressee (or other companies forming part of the same group of companies) are less than 5.0% of the

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total UK revenues .

Disclosure The principal signatory of this report has continuously been the signatory of valuations for the same addressee and valuation purpose as this report since 2011. CBRE Ltd has continuously been carrying out valuation instructions for the addressee of this report for over 20 years.

CBRE Ltd has carried out Valuation services for more than 15 years and over.

Conflicts of Interest We have no previous involvement with the property.

Reliance This report is for the use only of the party to whom it is addressed for the specific purpose set out herein and no responsibility is accepted to any third party for the whole or any part of its contents.

Publication Neither the whole nor any part of our report nor any references thereto may be included in any published document, circular or statement nor published in any way without our prior written approval of the form and context in which it will appear.

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Yours faithfully

Graham Hughes MRICS Executive Director RICS Registered Valuer For and on behalf of CBRE Ltd

T: +44 20 7182 2631

E: [email protected]

CBRE – Valuation & Advisory Services T: 020 7182 2000 F: 020 7182 2273 W: www.cbre.co.uk

VALUATION REPORT 12

SCHEDULE OF MARKET VALUES

Properties Held for Investment

Address Freehold Leasehold Market Value TOTAL “Emisfero Monfalcone” – Via G.F. Pocar 1, Località San Polo, Monfalcone, Gorizia, Italy. €47,700,000 €47,700,000

TOTAL €47 ,700,000 €47 ,700,000

VALUATION REPORT 13

SCOPE OF WORK & SOURCES OF INFORMATION

Sources of We have carried out our work based upon information Information supplied to us by UNICOMM which we have assumed to be correct and comprehensive.

The Property Our report contains a brief summary of the property details on which our valuation has been based.

Inspection We inspected the Property internally on 30 September 2014.

The inspection was undertaken by James Scoular MRICS.

Areas We have not measured the Property but have relied upon the floor areas provided.

Environmental We have not carried out any investigation into the past Matters or present uses of the Property, nor of any neighbouring land, in order to establish whether there is any potential for contamination and have therefore assumed that none exists.

Repair and Condition We have not carried out building surveys, tested services, made independent site investigations, inspected woodwork, exposed parts of the structure which were covered, unexposed or inaccessible, nor arranged for any investigations to be carried out to determine whether or not any deleterious or hazardous materials or techniques have been used, or are present, in any part of the Property. We are unable, therefore, to give any assurance that the Property is free from defect.

Town Planning We have not undertaken planning enquiries.

Titles, Tenures and Details of title/tenure under which the Property is held Lettings and of lettings to which it is subject are as supplied to us. We have not generally examined nor had access to all the deeds, leases or other documents relating thereto. Where information from deeds, leases or other documents is recorded in this report, it represents our understanding of the relevant documents. We should emphasise, however, that the interpretation of the documents of title (including relevant deeds, leases and

VALUATION REPORT 14

planning consents) is the responsibility of your legal adviser.

We have not conducted credit enquiries on the financial status of any tenants. We have, however, reflected our general understanding of purchasers’ likely perceptions of the financial status of tenants.

VALUATION REPORT 15

VALUATION ASSUMPTIONS

Capital Values The valuation has been prepared on the basis of “Market Value” which is defined as: “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".

No allowances have been made for any expenses of realisation nor for taxation which might arise in the event of a disposal. Acquisition costs have not been included in our valuation.

No account has been taken of any inter-company leases or arrangements, nor of any mortgages, debentures or other charges.

No account has been taken of the availability or otherwise of capital based Government or European Community grants.

Rental Values Rental values indicated in our report are those which have been adopted by us as appropriate in assessing the capital value and are not necessarily appropriate for other purposes nor do they necessarily accord with the definition of Market Rent.

The Property Where appropriate we have regarded the shop fronts of retail and showroom accommodation as forming an integral part of the building.

Landlord’s fixtures such as lifts, escalators, central heating and other normal service installations have been treated as an integral part of the building and are included within our valuations.

Process plant and machinery, tenants’ fixtures and specialist trade fittings have been excluded from our valuations.

All measurements, areas and ages quoted in our report are approximate.

Environmental In the absence of any information to the contrary, we

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Matters have assumed that:

(a) the Property is not contaminated and is not adversely affected by any existing or proposed environmental law;

(b) any processes which are carried out on the Property which are regulated by environmental legislation are properly licensed by the appropriate authorities.

Repair and Condition In the absence of any information to the contrary, we have assumed that:

(a) there are no abnormal ground conditions, nor archaeological remains, present which might adversely affect the current or future occupation, development or value of the property;

(b) the Property is free from rot, infestation, structural or latent defect;

(c) no currently known deleterious or hazardous materials or suspect techniques, including but not limited to Composite Panelling, have been used in the construction of, or subsequent alterations or additions to, the Property; and

(d) the services, and any associated controls or software, are in working order and free from defect.

We have otherwise had regard to the age and apparent general condition of the Property. Comments made in the property details do not purport to express an opinion about, or advise upon, the condition of uninspected parts and should not be taken as making an implied representation or statement about such parts.

Title, Tenure, Unless stated otherwise within this report, and in the Planning and Lettings absence of any information to the contrary, we have assumed that:

(a) the Property possesses a good and marketable title free from any onerous or hampering restrictions or conditions;

(b) all buildings have been erected either prior to planning control, or in accordance with planning permissions, and have the benefit of permanent planning consents or existing use rights for their current

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use;

(d) all buildings comply with all statutory and local authority requirements including building, fire and health and safety regulations;

(e) only minor or inconsequential costs will be incurred if any modifications or alterations are necessary in order for occupiers of each Property to comply with the provisions of the relevant disability discrimination legislation;

(f) there are no tenant’s improvements that will materially affect our opinion of the rent that would be obtained on review or renewal;

(g) tenants will meet their obligations under their leases;

(h) there are no user restrictions or other restrictive covenants in leases which would adversely affect value;

(i) where appropriate, permission to assign the interest being valued herein would not be withheld by the landlord where required; and

(j) vacant possession can be given of all accommodation which is unlet or is let on a service occupancy.

PROPERTY REPORT 18

3 PROPERTY REPORT

PROPERTY REPORT 19

PROPERTY DETAILS

Location The subject property is located in the Municipality of Monfalcone in North East Italy, which has a population of circa 27,300 inhabitants. The nearest major establishments nearby are Gorizia which lies 24km to the north east and Trieste which is 47km to the south east. The subject property benefits from good accessibility due to its proximity to the ‘A4 Venezia –Trieste’ highway (8 km). Also, ‘Strada Statale SS305’ and ‘SS14’ roads facilitate easy access to the scheme for residents from Monfalcone and its neighbouring municipalities. The airport of Trieste called ‘Ronchi dei Legionari’ is located north of the town, accessible by car (5 minutes’ drive). Location map is attached in Appendix A.

Situation The subject property was built between the late ’90s and the early years of last decade, and has a total lettable area of 29,906 sq m. There is ample outdoor parking, and the car area also includes a petrol station, a car wash and a Mc Donald’s restaurant. The surrounding area is generally characterized by low-density residential uses. The property benefits from a good accessibility, mainly via private means of transport and there is a large number of parking spaces for customers. A site plan is attached in Appendix A.

Description The subject property consists of a shopping centre which comprises 41 retail units and a hypermarket. The property was built between the late ’90s and early 2000s and opened in November 2002. The property lies on a land plot with an area of 100,575 sq m and has a total GLA of 29,906 sq m. The property has two floors above ground. The ground floor accommodates the hypermarket and retail units and has direct access from the exterior parking. On this level there is also the main production and facility services of the ‘Emisfero Hypermarket’, to the rear of this store. There is direct access to this section from the rear of the shopping centre. The first floor covers a considerably smaller floorplate and mainly accommodates office space, which is located directly above the rear and west end of the Gallery, and a utility room which lies adjacent to the generator. The majority of the plant systems are located on the roof. The built structure is in pre-stressed concrete and to a lesser extent in cast concrete, as

PROPERTY REPORT 20

well as the roof structure, which is made with pre-stressed concrete TT tiles. The external appearance is characterized by solid walls made of Leca-type blocks and prefabricated panels in the storage and service areas. The internal specification features laminated wood beams which cover the entrance area and main walkways within the centre. The floor is tiled, except in the storage areas which have industrial concrete floor, and some retail units that have customised finishes. The technical plants are fully integrated and automated, the specification includes:

° Air-conditioning, serving the shopping galleries and the medium surfaces, with 9 air handling units (AHU), installed on the roof and powered hydraulically from the circuit hot/chilled water of condominium. The hypermarket is air-conditioned with 10 air roof-top conditioners with gas-powered battery. The offices are served independently with a fan coil system fed by a boiler. The primary air of the offices is provided by a small air-processing unit in the ceiling of the corridors and hydraulically linked to the fan-coils circuit. Heating requirements are ensured by a technical station on the ground floor that serves the distribution circuit that supplies all the stores’ air processing units, the galleries, the medium- sized surface areas and the office building.

° Electrical plants and system: the whole complex is connected to the public mains by an ENEL substation. Two generators sets of 800kVa in containers on the roof serves the hypermarket and the 300 KVA generator for indoor installation serves the mall. These are the original systems which were installed in 2002.

° Fire-fighting system: the mall and hypermarket are protected by fire hydrants with an implant and an automatic extinguishing system.

° Telephone and data transmission system.

° CCTV systems, Sound system and emergency message system. Photographs of the property are attached in Appendix B.

Accommodation We have not measured the property but have relied on the floor areas provided. Below we produce a summary showing the total areas divided by merchandising category. This excludes outdoor areas of the property.

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CATEGORY GLA Gallery % sq m Bar & Restaurants 3.3% 814 Clothing & Shoes 23.0% 5,691 Electronics 9.9% 2,434 Health & Beauty 2.8% 688 Hypermarket 57.7% 14,260 Personal goods 1.4% 341 Services 1.0% 251 Storage 0.6% 155 Vacant 0.3% 62 Outdoor 21.1% 5,210 Total 121.1% 24,696 State of Repair CBRE have not undertaken a structural survey, nor tested the services. We have undertaken only a limited inspection for valuation purposes. Subject to the caveats in the Valuation Assumptions set out above, from our inspection for valuation purposes the property appeared to be in a fair state of maintenance and repair. We have been provided with a technical report prepared by Starching – Studio Architettura Ingegneria, dated 02 September 2014 and an Environmental Due Diligence Report prepared by URS Italia, dated July 2014. According to both of these the subject property does not need any extraordinary maintenance.

Environmental Considerations We have been instructed not to make any investigations in relation to the presence or potential presence of contamination in land or buildings or the potential presence of other environmental risk factors and to assume that if investigations were made to an appropriate extent then nothing would be discovered sufficient to affect value. We have not carried out investigation into past uses, either of the properties or of any adjacent lands, to establish whether there is any potential for contamination from such uses or sites, or other environmental risk factors and have therefore assumed that none exists. We have been provided with the Environmental Due Diligence Report prepared by URS Italia dated July 2014. This does not highlight any risks related to the environment.

Property Tax

Address Description Property Tax Località San Polo - Via G.F. Pocar Property Tax (IMU) €164,325 n. 1 - 34074 Monfalcone (GO)

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Cadastral Data and Town Planning The information included below is as reported in the technical report prepared by Starching – Studio Architettura Ingegneria, dated 02 September 2014. The subject property is registered in the Cadastral Office of the Municipality of Monfalcone as follows:

CADASTRAL CADASTRAL SHEET MAP SUBORDINATE FLOOR REGISTER CATEGORY Building B/2 .1314 4 PT C/1 Building B/2 .1314 40 PT C/1 Building B/2 .1314 7 PT D/8 Building B/2 .1314 41 PT C/1 Building B/2 .1314 11 PT C/1 Building B/2 .1314 42 PT C/1 Building B/2 .1314 12 PT C/1 Building B/2 .1314 43 Building B/2 .1314 13 PT C/1 Building B/2 .1314 45 Building B/2 .1314 14 PT C/1 Building B/2 .1314 46 PT D/1 Building B/2 .1314 15 PT C/1 Building B/2 .1314 47 PT D/1 Building B/2 .1314 16 PT D/8 Building B/2 .1314 48 PT D/1 Building B/2 .1314 17 PT C/1 Building B/2 .1314 49 PT/1°P D/8 Building B/2 .1314 18 PT C/1 Building B/2 .1314 50 1°P A/10 Building B/2 .1314 19 PT C/1 Building B/2 .1314 51 PT D/8 Building B/2 .1314 20 PT C/1 Building B/2 .1314 52 PT D/8 Building B/2 .1314 21 PT C/1 Building B/2 .1314 54 PT D/8 Building B/2 .1314 22 PT C/1 Building B/2 .1314 55 Building B/2 .1314 23 PT C/1 Building B/2 .1314 56 Building B/2 .1314 24 PT C/1 Building B/2 .1314 57 PT D/8 Building B/2 .1314 25 PT C/1 Building B/2 .1314 58 Building B/2 .1314 26 PT C/1 Building B/2 .1314 59 PT/-1 D/8 Building B/2 .1314 27 PT C/1 Building B/2 .1314 59 1°P D/8 Building B/2 .1314 28 PT C/1 Building B/2 .1314 60 PT C/2 Building B/2 .1314 29 PT C/1 Building B/2 .1314 61 PT D/1 Building B/2 .1314 30 PT C/1 Building B/2 .1314 62 PT D/1 Building B/2 .1314 31 PT C/1 Building B/2 .1314 63 PT D/8 Building B/2 .1314 32 PT C/1 Building B/2 .1327 E/3 Building B/2 .1314 33 PT C/1 Building B/2 .1333 D/8 Building B/2 .1314 34 PT C/1 Building B/2 .1314 35 PT C/1 Land B/2 386 Building B/2 .1314 36 PT C/1 Land B/2 390/2 Building B/2 .1314 37 PT C/1 Land B/2 215/21 Building B/2 .1314 38 PT C/1 Land B/2 215/23 Building B/2 .1314 39 PT C/1 Land B/2 215/24 Source: Technical Report Shopping centres usually are usually categorised under the C/1 category which identifies “shops and boutiques, including restaurants, bars, boutiques, etc…” and D/8 related to “buildings erected for specific purposes related to commercial activities”. This generally includes the hypermarket and large area stores. The urban mechanism used for the Town Planning Scheme is the Piano Regolatore Generale Comunale (PRGC) of the Municipality of Monfalcone, which was approved by the city council referendum n. 49 (15 October 2009).

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The property is within the area “HG - San Polo”, called “Zona HG – Centro Commerciale esistente” (HG Zone – Shopping Centre), which is regulated by article 18 of the PRGC “Norme Tecniche di Attuazione”.

Town Planning Scheme (PRGC)

Source: Monfalcone Municipal website

The latest town planning regulation issued by the Municipality of Monfalcone, called ‘Piano Regolatore Generale Comunale’ (PRGC), dated 15.10.2009, identifies the urban area of ‘San Polo’ as “ Centro Commerciale esistente ” (existing shopping centre). The sale scheme covers a surface larger than 15,000 sq m. The site on which the property is built is formed of a number of land parcels which were merged over the years. This process allowed Unicomm the original developers to expand the lettable area and create an effective gallery configuration. The ‘ Piano Attuativo Comunale’ which is another key planning instrument which is relevant for the property acknowledges that the centre could be extended further in the

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future at the west end of the mall. We understand the additional area that could be created is around 3,150 sq.m. We have not considered this extra building potential in our valuation which is based on the scheme ‘as is’.

VAT We understand from the Report on Title that the property is elected for VAT. All rents and capital values stated in this report are exclusive of VAT.

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LEGAL CONSIDERATIONS

Tenure We understand that the property is held on a freehold-equivalent basis. We have not been provided with any information on, and have assumed that there are no onerous restrictions, covenants or any other encumbrances. We have been provided with the following notary deed: - Lease Repurchase Agreement dated as of February 27, 2012 (signed by notary Rossella Manfrè – References: n° repertorio 7763, n° raccolta n°3709), indicating that Unicredit Leasing S.p.A. (ex Locat S.p.A.) sold the property to Unicomm Srl in 2005.

Tenancies According to the information provided, the property is let to 44 tenants. The majority of the units are let on business leases, while three units are let on standard property leases. The main characteristics of a business lease are: æ Term: variable according to negotiation. Usually between 5 and 7 years. æ Break option: variable according to negotiation. æ Indexation: 100% of CPI. æ Service Charges: tenant is responsible for extraordinary and ordinary maintenance (for the demised unit only); the landlord responsible for municipal tax (IMU) and insurance. æ Rent payment: variable according to negotiation. æ Sub-letting: allowed only upon written consent of the landlord. The main characteristics of standard property lease are: æ Term: 6 years + 6 years (automatic renewal). æ Break option: after 6 years (tenant only) and after 12 years (both tenant and landlord). æ Indexation: 75% of CPI.

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æ Service Charges: tenant is responsible for ordinary maintenance; landlord responsible for extraordinary maintenance, municipal tax (IMU) and insurance. æ Rent payment: quarterly in advance. æ Sub-letting: allowed only upon written consent of the landlord.

Business leases are generally more flexible than property leases and give the landlord the following advantages: æ There is no requirement for a particular term, which can be agreed according to specific requirements, whereas for a property lease the term ex-lege must be 6+6 years and this obviously limits the control of the landlord over the property. æ Tenants have no automatic right of renewal upon expiry whereas this is the case with property leases. æ Annual rental indexation is 100% of ISTAT (Italian CPI), while there is a limit of 75% of ISTAT for a property lease. æ Goodwill indemnities are generally not required in the case of business leases, whereas property leases envisage this.

Tenant Covenant Strength Detailed financial investigations of the tenants are outside the scope of this report. We believe that the property investment market would view the tenant companies as providing satisfactory security.

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LOCAL MARKET COMMENTARY

Catchment Area and Economical Data We have based our catchment area on an area of a 30 minute car drive from the shopping centre. On the basis of this definition and our on-site analysis, the catchment area of ‘Emisfero Monfalcone’ Shopping Centre coincides with an area which includes, besides Monfalcone itself, the nearby towns of Villesse, Cervignano del Friuli, San Giorgio di Nogaro.

MUNICIPALITY PROVINCE REGION COMPARED PARAMETERS AREA 00' - 30' ITALY MONFALCONE GORIZIA FRIULI-VENEZIA GIULIA Inhabitants (n.) 232.735 27.319 140.650 1.221.860 59.685.227 Families (n.) 107.058 13.096 65.955 562.676 25.872.613 Average number of family members (n) 2,17 2,09 2,13 2,17 2,31 According to the latest national census, the permanent population of Monfalcone, Villesse, Cervignano del Friuli and San Giorgio di Nogaro, within the catchment area, is 8% of the total permanent population of the province. The catchment area generally follows the major road connections. This analysis does not include tourist flows (which are considered below). As the above figures exclude tourists they should be considered a conservative analysis.

Monfalcone Shopping Centre catchment area

Source: “Virtual Market”, processed by CBRE Valuation S.p.A.

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According to the latest data available, the earning pro-capita statistics relating to inhabitants of the Gorizia province is slightly lower than the Friuli-Venezia Giulia region, but higher than the Italian average. A similar analysis of internal consumption pro-capita data shows a slightly lower value for the Monfalcone area then both the Gorizia province and Friuli-Venezia Giulia region indicators. Regarding the share of consumption between food and non-food products, the value for non-food products is slightly higher than the Italian average, which is a sign of a high standard of living.

Earning Pro-capita (2014) (100=Italian Available Earning Pro-capita)

Municipality Province Region INHABITANTS AND INCOME 00' - 05' 05' - 10' 10' - 15' 15' - 20' 20' - 25' 25' - 30' Total ITALY MONFALCONE GORIZIA FRIULI-VENEZIA GIULIA Inhabitants (n.) 23.685 28.027 22.151 28.987 51.967 77.918 232.735 27.319 140.650 1.221.860 59.685.227 Available Income (€) 17.264 17.089 17.299 17.200 17.353 18.148 17.554 17.375 17.686 17.520 15.795 Income Ratio Number (IRN) 102,8 100,8 102,6 105,1 107,3 112,6 107,1 104 106,3 111,1 100 Source: “Virtual Market”, processed by CBRE Valuation S.p.A.

Internal Consumption Pro-capita (2014) (100=Italian Available Internal Consumption Pro-capita) Municipality Province Region INHABITANTS AND INCOME 00' - 05' 05' - 10' 10' - 15' 15' - 20' 20' - 25' 25' - 30' Total ITALY MONFALCONE GORIZIA FRIULI-VENEZIA GIULIA Inhabitants (n.) 23.685 28.027 22.151 28.987 51.967 77.918 232.735 27.319 140.650 1.221.860 59.685.227 Consumption Index Number (CIN) 109,3 108,2 109,5 108,9 109,9 114,9 111,1 110 112 110,9 100 Source: “Virtual Market”, processed by CBRE Valuation S.p.A. The unemployment rate of the Monfalcone area is lower than the Italian average, being 7.0% against the national rate of 10.7%, but it is higher than that for the Friuli-Venezia Giulia region, which is 6.8% (see table below).

Unemployment rate first half 2014 Municipality Province Region COMPARED PARAMETERS CATCHEMENT AREA 00' - 30' ITALY MONFALCONE GORIZIA FRIULI-VENEZIA GIULIA Unemployment rate 7 8,1 7 6,8 10,7

Source: “Virtual Market”, processed by CBRE Valuation S.p.A. Again, there is a market difference between the local and national situation, with the latter being higher.

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Competition On the basis of our on-site analysis, the ‘Emisfero Monfalcone’ does not face strong competition from existing comparable shopping centres. There are stand alone supermarkets and hypermarkets within the catchment area in addition to ‘La Vela’ Shopping Centre, and ‘Tiare Shopping’, at 7 minutes and 18 minutes from the subject property respectively. The following map shows the location of the major existing competing properties:

Competitor’s map

Legenda 1. Monfalcone (GO) – “La Vela” Shopping Centre 2. Villesse (GO) – “Tiare Shopping” Shopping Centre

Source: “Virtual Market”, processed by CBRE Valuation S.p.A.

The table below has a list of the competitors in the catchment area as far as size and nature are concerned:

ZONES TYPE PLAYERS PR. MUNICIPALITY ADDRESS GLA (SQM) DISTANCE (') (ISOCHRONES) Shopping Centre EMISFERO GO MONFALCONE Via Pocar 1 24.850 3 00' - 05' Shopping Centre LA VELA GO MONFALCONE Via Grado 18 5.080 4,8 05' - 10' 10' - 15' 15' - 20' Shopping Centre TIARE SHOPPING GO VILLESSE Localita' Maranuz 2 90.000 16,1 20' - 25' 25' - 30' Source: “Virtual Market”, processed by CBRE Valuation S.p.A.

PROPERTY REPORT 30

“La Vela” – Monfalcone (GO) − 1 Shopping Centre; − 33 retail units; − Anchor Stores: OVS Industry (clothing), Cisalfa Sport (sportswear), Scarpe&Scarpe (footwear); − External car parking (1.450 car spaces).

“Tiare Shopping” – Villesse (GO) − 2 Shopping centre; − 175 retail units. − Anchor Stores: Conbipel (clothing), H&M (clothing), Piazza Italia (clothing), Scarpe&Scarpe (footwear), Deichmann (footwear), Mediaworld (electronics), Brico Io (bricolage), Decathlon (sportswear), IKEA (furniture); − External car parking (4.200 car spaces)

Our on-site analysis shows that ‘Emisfero Monfalcone’ does not face strong competition from a local context. While Tiare is located relatively nearby and is a major scheme, it is much larger and represents a different type of product compared to the subject property which is heavily based on attracting local custom.

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MARKET COMMENTARY

Economic Overview GDP growth in Italy has fluctuated over the last few years. There seemed to be a slight recovery at the end of last year but this was subsequently followed by two consecutive quarters of GDP contraction which took Italy back into recession, leading to worsening forecast for the next couple of years and weakening the overall situation. GDP fell by 0.1% in Q1 and 0.2% in Q2 of this year. According to the most recent data, Oxford Economics’ projection for the Italian economy has been downgraded and, despite a likely modest recovery expected in the second half of the year, GDP is forecasted to contract by 0.2% in 2014, followed by a slight recovery in 2015 with growth of 0.9%. Full recovery has been postponed in 2016 when GDP is expected to increase by 1.3%.

GDP change (%) change GDP (1)

(2)

(3)

(4)

Q1 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 Source: ISTAT

Recent changes to fiscal policy have not been sufficient to help regain confidence and growth. The weak labour market is still the main constraint to the recovery, even though large differences between regions still exist. The unemployment rate is expected to remain above 12% for the next two years and it should start to ease in 2016, remaining in the range of 11% over the 2014-2023 period. In spite of the negative figures recorded by the labour market, the richest northern regions recorded (2013) an unemployment rates of between 7.7% and 8.9%, which compare to the weakest southern regions which registered rates closer to 20%. According to data published by Oxford Economics, the unemployment rate should increase further over 2014 when it will reach 12.5%, but then it is forecast to decrease

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over the 2015-2025 period when it is expected to reach the 9.3% threshold. The latest recession was marked by strong austerity measures which hit Italian consumers hard and therefore a sharp contraction in consumer spending was recorded since 2011. At the end of 2013 the prolonged contraction in private consumption appeared to come to an end. Consumer spending continues to be weighed down by the deep uncertainty over the outlook for income and employment. As expected, the delay in the new government’s program of reform which should boost the economy, is having a negative effect on both business and consumer confidence. Domestic demand growth has been limited by the extreme weakness of consumption and investment. Weighed down by subdued real wage dynamics and heavy taxation on labour income, the real incomes of households have grown by less than 1% pa throughout the last decade. The renewed recession, combined with fiscal austerity which has only partially been eased with the new Government, could continue to hit domestic demand in the next quarters thus limiting the prospect for growth in the coming years. Household consumption was virtually unchanged over the fourth quarter of 2013 compared with the third (down 0.1 per cent). Real disposable income also steadied at about the same level as in the third quarter (slipping by just 0.1 per cent). According to the latest Oxford Economics forecast, household consumption is expected to be neutral in 2014 with no growth and growth is expected from 2015 with a 0.6% increase forecast, followed by increasing yearly rate in the range of 0.8% until 2023. CBRE estimates (based on a panel of Italian shopping centers), also available for the month of June, showed a smaller decrease in sales in the first half of the year compared to first half 2013 than the national index. This indicates that sales volumes in shopping malls have stabilized, a trend which is expected to continue through the second half of the year, despite the threats pending on the general economy. Early estimates for July pointed out a positive increase in July retail sales on the same year of 2013, which brought the first seven month of 2014 yearly change in a positive area. The PMI for retail sales has worsened since the start of the third quarter as sales declined at the fastest rate for five months. The PMI index in July stood at 43.4 signaling a sharp and accelerated decrease in sales. The downturn has been affected by a combination of factors including lower spending power, unfavorable weather and weak consumer confidence. Recent negative indicators confirm that a return to growth in sales is still far off. According to Oxford Economics forecast (June 2014), retail sales are expected to resume since 2015 and to grow at roughly 1% pa yearly from 2016 to 2025. Considering consumer confidence, the relevant index fluctuates from month to month. The graphic below shows how consumer confidence has evolved since 2010:

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Italian Consumer Confiden ce Index

110

105

100

80 Jul-13 Jun-13 Jun-14 Jan-14 Apr-13 Apr-14 Feb-13 Sep-13 Feb-14 Oct-13 Dec-13 Aug-13 Mar-13 Mar-14 Nov-13 May-13 May-14 Jan 2011 Jan 2012 Jan 2013 Apr 2011 Apr 2012 Apr Feb 2011 2011 July Feb 2012 2012 July Oct 2010 Oct 2011 Oct 2012 Dec2010 Dec2011 Dec2012 Aug2011 Aug2012 Mar2011 Mar2012 Nov2010 Nov2011 Nov2012 May 2011 Sept2011 May 2012 Sept2012 June 2011 June 2012

Source: ISTAT Italian GDP Quarterly Evolution, yearly change

The Shopping Centre Market Supply and Pipeline The second quarter of 2014 saw the completion of the Nave De Vero Centre (Located in Venice) and the Shopping Brugnato Centre (Located in La Spezia) which combined have a total GLA of 61,300 sq m. Construction of projects which are already underway continues slowly. In mid-2014 the total retail stock for Italy (with a GLA area over 10,000 sq m.) reached 14.4 million sq m. of GLA, corresponding to 241sq m. per thousand inhabitants. Of the total stock, 86% is represented by shopping centres. The amount of space which is under construction with delivery expected in the next three years is approximately 630,000 sq m. of GLA, of which 490,000 sq m. consists of shopping centres. The refurbishment and/or expansion of existing centres continues, a trend which is expected to grow over coming years. A reason for this trend is that developments are struggling to gain traction. In this context the refurbishment or expansion of a centre offers the chance to create a new layout and a new occupying brand supply. After Oriocenter which is located outside Bergamo, in recent months other centres also announced the beginning of their expansion plans for the coming years. Among these the ESP centre (Ravenna) stands out. At this centre, one of the first to be developed by IGD (1998), a 19,035 sq m. expansion is planned, for completion between 2016 and 2017, which will raise the total GLA of the centre to over 47,000 sq m.

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Italian Shopping Centre GLA evolution

GLA sqm (completed and UC) GLA sqm (planned) N°units 1,200 45 40 1,000 35 800 30 25 600 N° units 20 GLA m ,000sq GLA 400 15 10 200 5 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: ISTAT

For the avoidance of doubt the volume of accommodation labelled ‘GLA sq m. (planned) refers to anticipated newly created space which is either a new development, a refurbishment or an extension of existing properties. The figures represent a forecast and are therefore indicative at this stage. Retailer Demand General retailer sentiment generally remains positive relative to recent years, although occupiers are heavily selective and approach opportunities with caution. Some existing retailers are strengthening their presence through new stores reflecting new formats, which are more modern and responsive to consumer needs. Compared to the past, new supply today is encouraging the entry and/or repositioning of international retailers which have been interested in the Italian market for years. One interesting example is that of Galerie Lafayette, which recently signed a pre let agreement to occupy the planned Westfield centre just outside Milan. We believe that rental values remained stable over the second quarter, in all types of centres. The renegotiation of existing contracts is confirming values in line with previous levels. This is especially true for both prime and good secondary centres which are being targeted by retailers that want to strengthen their position. While the situation is improving, letting of units at secondary centres, which do not benefit from prime catchment areas characteristics, or which suffer from the effect of better-performing centres in their catchment area, remains challenging. The rental values in these centres are still low and signs of recovery are not expected in the short term.

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Investment Market The volume of retail investments in the second quarter of the year started increasing again, exceeding 30% of the quarterly average for the last three years. Below we provide a graphic showing the volume of funds invested in Italian retail real estate since 2007:

1,400

1,200

1,000

800

,000€ 600

400

200

0 Q1 07 Q1 07 Q2 07 Q3 07 Q4 08 Q1 08 Q2 08 Q3 08 Q4 09 Q1 09 Q2 09 Q3 09 Q4 10 Q1 10 Q2 10 Q3 10 Q4 11 Q1 11 Q2 11 Q3 11 Q4 12 Q1 12 Q2 12 Q3 12 Q4 13 Q1 13 Q2 13 Q3 13 Q4 14 Q1 14 Q2

At € 645 million, the amount invested in the second quarter was double that of the previous quarter, driven by two major portfolio acquisitions that alone represented 60% of quarterly volume. These were the acquisition of a pan-European portfolio of retail galleries (Klepierre) by a consortium led by Carrefour, and the acquisition by Blackstone of two shopping centres and a factory outlet, respectively from funds Degi Global Business and Degi International (managed by Aberdeen Immobilien). Amongst the single-asset retail deals concluded in the second quarter, the Fiumara Genova shopping centre transaction is undoubtedly the largest, with an investment of over € 170m made by two international institutional investors (Allianz and Ing Insurance). A smaller volume was invested in high street assets, particularly in Milan and Venice, for a total of € 28 m. Improvements compared to last year continue, with investments in the first half of 2014 close to one billion euro, more than double that of the same period in 2013. In the first half of 2014 retail remained the sector preferred by investors, corresponding to 60% of the total volume invested in Italy.

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Retail investment by sub-sector , H1 14

FOC High street 9% 14% Other 1%

Retail Park 10% Shopping center 66%

Source: 2014, CBRE Spa

The growing competition for prime assets has pushed yields to 6.00% net in the second quarter (6.75% gross) for prime shopping centres, a 25 bps decrease on the previous quarter. A similar tightening was seen for good secondary centres, with yields that reached 7.3% net (8.25% gross). The trend for yield compression is confirmed by negotiations underway in which prospective buyers, compared to 12 months ago; now seem more willing to accept values which may even be slightly higher than their expectations, in order to secure good secondary or prime assets with good performance and growth prospects, in line with economic improvement expectations. In a comparison with Spain, as pointed out in the next chart, the spread between yields for prime centres continues to grow, even though compression has begun in Italy as well, confirming the window of opportunity that the Italian market continues to offer to investors who are looking at the peripheral/secondary markets.

Gross yields * (%) for prime shopping centres and spread, Italia vs. Spain

8 100 Spread Italy Spain 50 7 0 6 -50 5 -100

4 -150 Jun-14 Jun-11 Jun-08 Sep-13 Sep-10 Sep-07 Dec-12 Dec-09 Mar-12 Mar-09

Source: 2014, CBRE Spa

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The potential volume of investments in the retail sector remains high and is predominantly driven by motivated sellers. Today a pipeline of €1.2-1.3bn worth of retail investments is estimated which could be closed within the year, bringing the year-end volume in line with that recorded in 2013. Retail investment Outlook The preliminary figure at Q3 2014 for retail investment volume stands at approximately €500 million, almost in line with the past three-years-quarterly average. The quarterly volume of funds (at mid-September 2014) invested points to a contraction compared to the previous quarter as well as to the same quarter of last years. We forecast there are deals underway relating to a further €200 million of transactions in the pipeline which could be completed within Q3, which would make it a similar to Q1 and Q2. Major transactions recorded in Q3 comprise the acquisition of the 90% of Le Terrazze (La Spezia), a good secondary shopping center, by Union Investment from Sonae Sierra, GCI’s disposal of a core portfolio made by 3 shopping malls (Bussolengo, Mestre, Mesagne) to an Italian pension funds (ENPAM), the Foncier LFPI (Foncier Omicron srl) acquisition of a core portfolio made by 13 bank branches and the IGD Siiq acquisition of a core retail portfolio including one shopping centre (Città delle Stelle, Ascoli Piceno), two hypermarkets (Schio and Cesena Lungo Savio), two supermarkets (the acquired assets will be leased back by the Coops under an 18-year lease agreement). Public sources indicate that Le Terrazze was sold at a value above €100m, reflecting a net yield in the range of 6.50-6.80%; the GCI portfolio’s disposal worth €266m, the IGD Siiq’s acquisition has been valued at little above €90 million and the Foncier LFPI acquisition stood at €70.1 million. To date, retail investment volume stands at €1.4 bn Euro, 47% above the Q1-Q3 2013 level. There are still positive expectations for the year to come with an overall volume which should reach at least €2 bn. Prime net yield at Q2 2014 stood at 6%, a slight decline compared to the previous quarter and the expectation for Q3 is that values should remain stable.

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Prime Shopping Centre Net Yields (%) Q2 2014

Prime Yield Cyclical Low (2004 - 2008) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 UK Italy Spain Serbia Russia France Turkey Poland Ireland Austria Finland Netherl… Norway Sweden Switzerl… Belgium Slovakia Hungary Portugal Romania Denmark Germany Czech Rep

Source: CBRE List of the main retail investment transactions in Italy Below we provide a list of recent relevant comparable transactrions, although we do not consider any of these are directly comparable with the subject property.

Date Address Size (sq m) Gross Yield Price € Comments (%)

H2 2013 Market Central 56,600 7.70%** 130,000,000 Retail Park Da Vinci – Rome

H2 2013 Franciacorta 32,600 8.20%* 127,000,000 FOC Outlet Village - Brescia

H2 2013 Mongolfiera 35,000 7.30% 130,000,000 Shopping Molfetta - Bari gallery

H1 2014 Parco Dora 30,000 7.60%* 14,400,000 Shopping Torino gallery

H1 2014 Terminal Nord - 32,340 10.00% 50,000,000 Retail Park Udine

H1 2014 Fonti del Corallo 7,300 7.10% 47,000,000 Shopping Livorno gallery

H1 2014 Centro Sicilia 33,800 9.00% 50,600,000 Retail Park Retail Park - Catania

H2 2014 Fiumara - 40,000 7.00% ** 170,000,000 Shopping Genova Gallery

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H2 2014 Le Terrazze - La 27,500 <7.00% ** 112,000,000 Shopping Spezia Gallery

H2 2014 Romaest - Rome 92,700 5.90% ** 205,000,000 Shopping gallery (50%) * Estimate CBRE ** Net Yield

Source: CBRE 2013 Transactions Da Vinci Market Central Retail Park, Rome In August 2013, GWM Group purchased this asset which is located near Rome Fiumicino airport for some €130m from AIG Lincoln. The centre has 75 units with a GLA of some 56,600 sq m and is the largest retail park in Italy. Tenants include H&M, Nike, Decathlon, Leroy Merlin, Mediaworld and Maison du Monde. The deal reflects an Net Initial Yield of 7.70%, and a Gross Initial Yield of 8.80%.

Franciacorta Outlet Village, Brescia In September 2013 Blackstone this property which is located near Brescia for €127m from Aberdeen Group. The centre has 152 units and a GLA of some 32,600 sq m. The Property was developed over two phases: the first dates from July 2003 and accommodates 84 retail units; the second was completed in October 2006 and this increased the retail offer by 68 further units. Major tenants include Adidas, Calvin Klein, Bata, Nike, Puma, Levi’s and many other renowned fashion brands. The deal reflected an Net Initial Yield of 8.2% and a Gross Initial Yield of 9%.

Gran Shopping Mongolfiera di Molfetta, Molfetta (nr Bari) In Q2 2013 ForumInvest sold its 50% share in this centre to Blokker Holding NV, the Dutch retailer of household articles, electronics items and related accessories. The shopping centre has some 35,000 sq m of GLA on a single level, and is situated in the industrial area of Molfetta, c. 35 km from Bari. The centre has an Ipercoop food anchor and includes brands like H&M, Zara, OVS, McDonald, Mediaworld, and Desigual. The sale price was €130m and the GIY reflected by the deal was 7.3%.

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2014 Transactions Le Fonti del Corallo, Livorno In Q1 2014 BNP Paribas REIM purchased the “Fonti del Corallo” shopping gallery, which is currently the dominant retail destination in Livorno, for some €47m from IGD SIIQ. The gallery has a GLA of some 7,300 sq m. The deal reflects a Gross Initial Yield of 7.10%. It should be noted this refers to a master lease transaction. The gallery has an Ipercoop food anchor which is excluded from the transaction.

Fiumara, Genova In Q2 2014, Allianz – ING purchased this property which is located in Genova for €170m from CBRE GI. The centre has a GLA of some 40,000 sq m. The deal reflects a Net Initial Yield of 7.00%. The centre has a Conad food anchor and includes brands like OVS, Mediaworld, Conbipel and other prime retail brands. Fiumara also has a large leisure component.

Le Terrazze, La Spezia In Q3 2014, Union purchased this centre which is located in La Spezia for some €112m from Sonae Sierra. The centre has a GLA of some 27,500 sq m. The deal reflects a Net Initial Yield of below 7.00%. The centre has an Ipercoop food anchor and includes brands like H&M, OVS, Piazza Italia, Alcott, Nuvolari, Mediaworld, and other prime retail brands.

Compared to the subject scheme the above listed comparable transactions occupy a dominant position within their respective catchment areas. They all have good performance levels in terms of turnover and low levels of vacancy.

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Yields and Outlook In our view prime yield contraction started in Q2 2014 as a result of a combination of factors including the low 10 year government bond level (which was 2.8% in July), greater competition amongst investors who are increasingly looking at the Italian market, and the ongoing excess of liquidity available in the investment markets. We believe the polarisation continues between prime products and the more secondary opportunistic products. Our forecast for the end of year investment volume is in line with or slightly higher than the total volume invested in 2013, at over €5 bn.

Source: CBRE S.p.A.

Comparable Rental Evidence As showed below in the Income summary and analysis of passing rents we have considered as comparable rental evidence the latest 2013 and 2014 passing rents.

M.G.R. UNIT AREA (SQ M.G.R. 2014/SQ M M.G.R. STABILIZED/ SQ BRAND MERCHANDISING CBRE L.S. M.G.R. 2014 STEPPED RENT STABILIZED M) (EURO) M (EURO) (EURO) TENANT A Personal goods 112 28/03/2014 23,736 212 YES 40,000 357 TENANT B Clothing & Shoes 105 15/01/2014 33,639 320 YES 40,000 381 TENANT C Clothing & Shoes 117 29/03/2013 43,000 368 NO 43,000 368 TENENT D Clothing & Shoes 141 04/05/2013 48,000 340 NO 48,000 340 TENANT E Services 66 01/11/2013 25,600 388 NO 25,600 388 TENANT F Services 71 05/09/2013 16,660 235 NO 16,660 235 TENANT G Electronics 113 17/05/2013 26,950 238 NO 26,950 238 TENANT H Electronics 2,193 16/06/2014 108,333 49 YES 300,000 137 Turnover/Affordability We have been provided with the following information by UNICOMM. Turnover data provided relates to the period from January 2011 to July 2014. The total turnover of the gallery is €49,650,379 (from August 2013 to July 2014), resulting in €2,283 per sq m (based on the GLA of the units providing turnover data. These include the hypermarket with €32,852,596, €2,304 per sq m).

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SUSTAINABILITY €/SQM MGR/TO MGR STAB./TO Hyper included 2.282,99 5,90% 5,98% Hyper excluded 2.243,29 11,53% 11,77% We consider the performance of property to be sustainable. The affordability ratio is 5.9% based on passing rent and turnover data for 2013 (including the hypermarket).

Opinion of ERV We have looked at the units individually in terms of position within the centre, size and category in order to estimate their rental values. In our view considering the passing rental levels on a per sq.m. basis in combination with the effort ratios, the passing rent at the scheme is sustainable. Our estimated rental value is €3,776,355 per annum. We provide a breakdown of our ERV determinations per unit in an appendix below.

Opinion of Key Valuation Yields The subject scheme is well located in Monfalcone and has a strong position in the context of the local market. In our view this would be considered as a good quality secondary centre if it were to be made available for sale on the open market. The investment sale transactions listed in the section above indicate that yields reflected by transactions of good secondary centres tend to be in the range of 6.50% to 7.50% net. In our view the transactions listed above, especially those which occurred during 2014, are not directly comparable with the subject property, although they are illustrative of yields investors are prepared to pay for centres of good secondary status. The subject scheme is different from the comparables in the sense that while it is smaller and has less strong catchment area characteristics, it also trades very well and is well established as the top scheme in Monfalcone. On the basis of the above we have targeted an equivalent yield of 6.60% for our valuation. As the property is slightly underrented in our view this reflects an initial yield of 6.32% and a reversionary yield of 6.76%. You will appreciate that several of the transactions above reflect gross yields, partly because commentators on the Italian market use this indicator and partly because we were unable to obtain information on the net yields reflected by these deals. The gross yield is represented by the gross rent as a proportion of the net value (after a capital expenditure allowance), with the difference between the gross and net rent being the property operating costs such as: insurance, property management, lease registration tax, property tax and property maintenance costs. We have prepared our valuation using net yields so the bank can understand the net rental position for the purpose of its analysis. In addition, while commentators commonly refer to gross yields for transactions of office and industrial properties, references to net yields tend to be more common when referring to Italian Shopping Centre transactions as this market segment is generally more internationalised. In any case we have cross

PROPERTY REPORT 43

checked our valuation result by calculating the gross yields reflected by our market value determination. Further comments are provided in the section entitled ‘opinion of value’ below.

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VALUATION CONSIDERATIONS

Valuation Methodology

Market Value We have adopted the traditional investment/income capitalisation method of valuation. The investment method of valuation involves the capitalisation of the net income stream from the property at a net yield. In establishing the gross income stream we have reflected current rents payable to lease expiry (or break if activated) at which point we have assumed that each unit will be re-let at our opinion of market rent. In order to arrive at a net income stream certain items of non-recoverable expenditure are deducted from the gross rental income, such as non-recoverable management fees, a maintenance and repair sinking fund, and any non-recoverable service charges. The net yield applied to capitalise the income stream is derived from analysis of market evidence of investment transactions. Purchaser’s costs are deducted from the resultant capital value to arrive at a net Market Value. Any items of capital expenditure are also deducted. You will appreciate that the yield analysis above relates to gross yields. While we have applied net yields to arrive at our valuation, we have also calculated the notional gross yields reflected by our figures and we consider these to be appropriate.

Valuation Assumptions

Income As stated above the current passing rent is €3,548,926. This includes an allowance for turnover and temporary rents, for which we have made assumptions based on information supplied by UNICOMM. These figures are €36,580 for the turnover rent and €109,160 for the temporary rent. We have calculated that on a cumulative basis around 34% of the income receivable is subject to leases expiring within 1 year, 46% within 3 years, 52% within 5 years, 87% within 10 years, with the remaining 3% of income subject to leases expiring more than 10 years after the valuation date. Regarding the Weighted Average Lease Term (WALT), according to the tenancy schedule received this is just under 9 years for the whole centre. Below we provide an summary of the rent paid by the top tenants.

PROPERTY REPORT 45

AREA RENT (€) (SQ.M.)

Top 3 Tenants 1,435,124 16,933

Next Top 7 Tenants 857,269 4,124

Remaining Tenants 1,256,533 8,849

TOTAL 3,548,926 29,906

Indexation We have valued the property on an equivalent yield basis in which indexation is implicit in the yield. Therefore the rate at which the rental income will be indexed at once the initial rental step ups have taken place does not directly impact our calculation in terms of value.

Occupancy

99.80%

As at the date of valuation there is only a vacant unit (nr. 30). We have applied 6 months void for unit 30 (62 sq m).

Costs In order to estimate the net rent, we have made allowance for the landlord’s non- recoverable costs as follows:

Cost Item Per Annum Property management 2.3% of rent paid Letting Fee 12% of 50% Market rent on lease expiry Mall Income Charge Fee 15.0% of temporary lettings Insurance [Provided by €11,713 p.a. Unicomm] Property tax [Provided by €164,325 p.a. Unicomm] Charges on Vacant Units €39 applied on Provision for long term vacancy (0.90% of total GLA) Credit Loss 1.00% of Total Income (included Turnover rental income and Mall Income) Provision for Extraordinary 2.50% of rent paid Maintenance Rental tax 0.5% of rent paid

Capital Expenditure We have not been provided with any capital expenditure from the property for Monfalcone asset.

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Purchaser’s Costs Acquisition costs in Italy depend of the legal status of the purchaser. For the purpose of our valuation we have allowed for 2% property transfer. We have also allowed for 1% agent fees and 0.5% legal fees.

Opinion of Yield We have assessed the appropriate yield for the completed property on the basis of market evidence and our knowledge of current market movements. Further commentary is provided in the section entitled above. We have targeted a net equivalent yield of 6.60% for our valuation.

Key Valuation Factors

Marketability and Potential Purchasers In our view the subject property would be classified as good secondary as it is well located in the context of the local market, is of modern specification, is one of the main centres in the catchment area and has a good merchandising mix. As stated above the polarisation between prime and secondary assets in the Italian market continues. This is confirmed by our observation that in recent months a relatively high volume of secondary assets have been placed on the market, and that these have only received interest from opportunistic investors. We understand the prospective buyer of the subject property is Orion which is consistent with the above assertion.

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On the basis of the above if the asset were to be made available for sale on the open market we believe the most likely buyer would be an opportunistic purchaser such as Blackstone, Apollo, Soros, Tristan or Benson Elliot.

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OPINION OF VALUE

Market Value We are of the opinion that the Market Value of the property as at 30 September 2014 is: €47,700,000 (FORTY SEVEN MILLION SEVEN HUNDRED THOUSAND EUROS)

Yield Profile

Net Initial Yield 6.32%

Reversionary Yield (October 2038) 6.76%

Nominal Equivalent Yield 6.60%

True Equivalent Yield 6.88%

Valuation printouts are provided under Appendix C.

Comments While we have prepared our valuation using net yields so the bank can understand the net rent position for the purpose of its analysis, we have also cross checked our valuation with reference to gross yields to ensure they are appropriate in the context of local market practice. Please refer to the section entitled ‘opinion of valuation yields’ above which has an explanation showing how gross yields are calculated. On an indicative basis our market value breaks back to a gross equivalent yield of approximately 7.65%. We believe this is appropriate considering our key comparables which reflect gross yields above. The transaction of the Livorno centre is the most comparable gross yield for this centre in our view, although that deal related to a masterlease sale so the buyer does not incur the cost or risk of centre management and was therefore prepared to pay a higher price.

Reinstatement Cost Assessment The property has not been inspected by a suitably qualified building surveyor from CBRE, nor have we carried out a full Reinstatement Cost Assessment. For indicative purposes only we estimate that the reinstatement cost of the property for fire insurance purposes would be in the region of €50,100,000 on a day one basis, including fees including VAT and inflation. This figure should be compared with the current sum insured and if a material discrepancy exists we suggest that a full Reinstatement Cost Assessment is carried out.

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A LOCATION PLANS

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LOCATION PLANS

Macro-location

Source: Google Maps

Micro-Location

Source: Google Maps

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B PHOTOGRAPHS

PROPERTY REPORT 53

PHOTOGRAPHS

Main Entrance

View of Shopping Gallery

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View of OVS

View of Food court

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C VALUATION PRINTOUT

REPORT Valuation Summary CBRE Ltd

Report Date 20 October 2014 Valuation Date 30 September 2014

Property

Address SC MONFALCONE,11 Localita San Polo ,Via GF Pocar N,Monfalcone File/Ref No

Gross Valuation €49,453,832 Capital Costs -€85,308 Net Value Before Fees €49,368,524

Less Stamp Duty @2.00% of Net Value -€953,981 Agents Fee @1.00% of Net Value -€476,991 Legal Fee @0.50% of Net Value -€238,495

Net Valuation €47,699,057 Say €47,700,000

Equivalent Yield 6.6000% True Equivalent Yield 6.8781% Initial Yield (Deemed) 6.3214% Initial Yield (Contracted) 6.3214% Reversion Yield 6.7602%

Total Contracted Rent €3,548,926 Total Current Rent €3,548,926 Total Rental Value €3,776,355 No. Tenants 46 Capital value per m² €1,595.00

Running Yields

Date Gross Rent Net Rent Annual Quarterly 30-Sep-2014 €3,548,926 €3,120,779 6.3214 % 6.5793 % 13-Nov-2014 €3,526,726 €3,099,312 6.2779 % 6.5322 % 29-Nov-2014 €3,520,726 €3,093,510 6.2662 % 6.5195 % 01-Jan-2015 €3,520,726 €3,094,215 6.2676 % 6.5210 % 15-Jan-2015 €3,524,087 €3,097,465 6.2742 % 6.5281 % 01-Feb-2015 €3,556,327 €3,131,059 6.3422 % 6.6018 % 20-Feb-2015 €3,512,910 €3,084,473 6.2479 % 6.4997 % 28-Mar-2015 €3,516,310 €3,087,761 6.2545 % 6.5069 % 01-Apr-2015 €3,516,310 €3,087,871 6.2547 % 6.5071 % 20-May-2015 €3,563,510 €3,138,115 6.3565 % 6.6173 % 16-Jun-2015 €3,613,510 €3,186,465 6.4544 % 6.7235 % 01-Jul-2015 €3,613,510 €3,184,035 6.4495 % 6.7181 % 13-Jul-2015 €3,637,809 €3,207,532 6.4971 % 6.7698 % 01-Oct-2015 €3,637,809 €3,206,925 6.4959 % 6.7684 % 13-Nov-2015 €3,660,009 €3,228,392 6.5394 % 6.8156 % 29-Nov-2015 €3,662,009 €3,230,326 6.5433 % 6.8199 %

Portfolio: BANK OF AMERICA 3 ITALIAN SC ORION CIRCLE VISUAL INVESTOR 2.50.039 REPORT Valuation Summary CBRE Ltd

Report Date 20 October 2014 Valuation Date 30 September 2014

01-Jan-2016 €3,297,323 €2,798,749 5.6691 % 5.8758 % 15-Jan-2016 €3,300,323 €2,801,650 5.6750 % 5.8821 % 28-Mar-2016 €3,303,323 €2,804,552 5.6808 % 5.8884 % 01-Apr-2016 €3,679,123 €3,245,843 6.5747 % 6.8540 % 16-Jun-2016 €3,729,123 €3,294,193 6.6727 % 6.9605 % 01-Jul-2016 €3,729,123 €3,292,943 6.6701 % 6.9577 % 29-Nov-2016 €3,733,123 €3,296,811 6.6780 % 6.9663 % 01-Jan-2017 €3,729,606 €3,293,398 6.6710 % 6.9587 % 27-May-2017 €3,715,856 €3,280,102 6.6441 % 6.9295 % 01-Jul-2017 €3,715,856 €3,280,446 6.6448 % 6.9302 % 01-Jan-2018 €3,698,991 €3,264,559 6.6126 % 6.8952 % 01-Jan-2019 €3,713,681 €3,278,397 6.6407 % 6.9257 % 01-Jan-2020 €3,712,260 €3,277,058 6.6379 % 6.9228 % 01-Jan-2021 €3,511,903 €3,040,703 6.1592 % 6.4038 % 01-Apr-2021 €3,707,263 €3,272,351 6.6284 % 6.9124 % 01-Jan-2023 €3,407,263 €2,904,224 5.8827 % 6.1056 % 01-Apr-2023 €3,707,704 €3,272,766 6.6293 % 6.9133 % 03-Jul-2030 €3,698,544 €3,263,908 6.6113 % 6.8938 % 01-Oct-2030 €3,698,544 €3,264,137 6.6118 % 6.8943 % 30-Sep-2034 €3,696,964 €3,262,610 6.6087 % 6.8909 % 01-Oct-2034 €3,696,964 €3,262,649 6.6088 % 6.8910 % 30-Sep-2038 €3,776,355 €3,339,420 6.7643 % 7.0602 % 01-Oct-2038 €3,776,355 €3,337,435 6.7602 % 7.0558 %

Yields based on €49,368,524

Portfolio: BANK OF AMERICA 3 ITALIAN SC ORION CIRCLE VISUAL INVESTOR 2.50.039 Page 2 VALUATION REPORT

‘Emisfero Fiume Veneto’ Shopping Centre Via Maestri del Lavoro, 42 33080 Fiume Veneto (PN)

Bank of America Merrill Lynch International Limited 2 King Edward St London, EC1A 1HQ Valuation Date : 30 September 2014

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY

2 VALUATION REPORT

3 PROPERTY REPORT æ PROPERTY DETAILS æ LEGAL CONSIDERATIONS æ MARKET COMMENTARY æ VALUATION CONSIDERATIONS æ OPINION OF VALUE

4 LETTER OF INSTRUCTION

EXECUTIVE SUMMARY 2

1 EXECUTIVE SUMMARY

EXECUTIVE SUMMARY 3

EXECUTIVE SUMMARY

The Property Address: ‘Emisfero Fiume Veneto’ - Via Maestri del Lavoro 42, Fiume Veneto, Pordenone, Italy. Main Use: Retail. The property is situated in Fiume Veneto, a municipality located approximately 10 km South-East of Pordenone city centre in Northern Italy. The nearest major establishments are Treviso which is 60km to the south west and Venice which is 90km to the south west. The property comprises a shopping centre which includes a multiplex cinema and a fast food restaurant (Mc. Donald’s). The immediate surroundings of the commercial complex are characterised by buildings with productive uses and rural areas.

Tenure Freehold.

Tenancies and Covenant Strengths The subject Shopping Centre is currently let on the basis of 67 tenancies (including the hypermarket and UCI Cinema) most of which are on the basis of business lease agreements. As at the date of valuation there was one vacant unit (25/C). In addition the operator of unit 63 recently passed away, and therefore there was uncertainty about the ongoing operation of this unit as at the date of valuation. Detailed financial investigations of the tenants are outside the scope of this report. However from our investigations we believe that the property investment market would view the tenant companies as providing satisfactory security.

EXECUTIVE SUMMARY 4

Gross Income

€ 5,181,139 per annum (€ 146.82 per sq m)

Net Income

€ 4,832,141 per annum (€ 136.93 per sq m) Based on the assumptions listed below.

Gross Market Rent

€ 5,204,507 per annum (€147.50 per sq m)

Net Market Rent

€ 4,860,038 per annum (€137.72 per sq m) Based on the assumptions listed below.

Market Value €67,230,000 (SIXTY SEVEN MILLION TWO HUNDRED THIRTY THOUSAND EUROS)

Yield Profile

Net Initial Yield 6.94%

Reversionary Yield (April 2026) 6.98%

Nominal Equivalent Yield 7.00%

True Equivalent Yield 7.32%

Suitability for Loan Security

Strengths æ Property benefits from very good accessibility via both public and private transport. æ Good provision of external parking spaces.

EXECUTIVE SUMMARY 5

æ The property belongs to a well-established area comprising a retail park (not included in the ownership) which features anchors including Decathlon and Mediaworld and complements the scheme, a Multiplex (included in the valuation) and some industrial buildings. æ The centre opened in 2008 and is in a good state of repair. æ Ample parking provision. æ Consolidated scheme in the context of the local market. æ The hypermarket anchor Emisfero is a local brand which has a strong profile in the Veneto and Friuli Venezia Giulia regions. æ The internal distribution of retailers is good and the centre configuration encourages even footfall throughout the gallery. æ There is only one vacant unit.

Weaknesses æ Five units appear to be trading poorly. æ Despite the fact that retail sales are stabilising, the current economic situation in Italy is still uncertain. æ Although there has been more investment activity in Italy since the turn of the year, the investment market is still limited and there have been few transactions relating to prime assets.

VALUATION REPORT 6

2 VALUATION REPORT

VALUATION REPORT 7

VALUATION REPORT

CBRE Limited

Henrietta House Henrietta Place London, W1G 0NB

Switchboard +44 (0) 20 7182 2000

Report Date 27 October 2014

VALUATION REPORT 8

The Property ‘Emisfero Fiume Veneto’ - Via Maestri del Lavoro 42, Fiume Veneto, Pordenone, Italy.

Property Description Shopping Centre with a lettable area of 35,288 sq m.

Ownership Purpose Investment.

Instruction To value on the basis of Market Value the freehold interest in the Property as at the Valuation Date in accordance with your letter of instruction dated 22 September 2014.

Valuation Date 30 September 2014.

Capacity of Valuer External.

Purpose Loan Financing.

Market Value €67,230,000 (SIXTY SEVEN MILLION, TWO HUNDRED AND THRITY MILLION EUROS) exclusive of VAT.

Our opinion of Market Value is based upon the Scope of Work and Valuation Assumptions attached, and has been primarily derived using comparable recent market transactions on arm’s length terms.

Compliance with The valuation has been prepared in accordance with Valuation Standards the RICS Valuation – Professional Standards (January 2014) (“the Red Book”).

VALUATION REPORT 9

Valuer The Property has been valued by a valuer who is qualified for the purpose of the valuation in accordance with the RICS Valuation – Professional Standards (The Red Book).

VALUATION REPORT 10

total UK revenues .

CBRE Ltd has carried out Valuation services for more than 15 years and over.

Conflicts of Interest We have no previous involvement with the property.

VALUATION REPORT 11

Yours faithfully

Graham Hughes MRICS Executive Director RICS Registered Valuer For and on behalf of CBRE Ltd

T: +44 20 7182 2631

E: [email protected]

CBRE – Valuation & Advisory Services T: 020 7182 2000 F: 020 7182 2273 W: www.cbre.co.uk

VALUATION REPORT 12

SCHEDULE OF MARKET VALUES

Properties Held for Investment

Address Freehold Leasehold Market Value TOTAL ‘Emisfero Fiume Veneto’ - Via Maestri del Lavoro 42, Fiume Veneto, Pordenone, Italy. €67,230,000 €67,230,000

TOTAL €67,230,000 €67,230,000