General overview for investors in Hungary’s Real Estate market

WHY INVEST?

• There is sizeable gap in the market signalling a new era for quality developments and unique solutions that are still sought after. • In general the real estate sector’s prime submarkets saw growth in rent levels thus decreasing vacancy ratios leading to increased investor appetite and transaction volumes. • By investing into real estate, the highest returns can still be achieved in the CEE region. • Tourism volume and hotel performances show continuously increasing tendency since 2009 both in terms of Budapest and the countryside converging into solidly performing hotels year in year out; • High investment appetite experienced for quality income generating products meets limited supply. • Hungary is considered the ifth strongest health and medical destination in the world due to its excellent geographical location, outstanding quality of thermal waters and abundant geothermal resources; • There is an increasing volume of investors eyeing the market and amongst the hotels the upscale/luxury sector is very much favoured; • Improving image and increasing popularity of Budapest as a city-break destination; • There are a number of seasoned destinations in provincial Hungary that could support the advent of new hotels and resorts; • The country is a politically and economically safe destination. The dynamics of the real estate market during the past 25 years were inluenced by the general economic conditions in Hungary. Signiicant and long-lasting GDP growth started in 1997 and lasted until 2007. As major real estate segments (ofice, retail, logistics) were operated on a non-market basis before 1989, the changes resulted in signiicant improvements in this sector. Major existing stocks lost their past function and became unused and large scale new and modern developments entered the market. As Hungary transformed to a market economy, the real estate market emerged to western standards.

Subsequent to the effects of the crisis Hungary is slowly returning to international property investment map. Along with stable economy, many attributes of Hungarian property market promise remarkable growth potential in the future. Decreasing risks and increasing demand for property market is relected by decreasing investment yields as well.

Both transactional and sentiment data shows prime yields ranging 7.00%-7.10% for ofices, 8.50%-8.75% for logistics, and 6.50%-7.00% for shopping centres. Overall market climate is becoming brighter, measurable with decreasing vacancy, slightly increasing rents in some market segments and increasing pipeline in most sectors. Highest development volume is forecasted in class “A” ofice segment, while lowest in retail (shopping centres).

Similarly to 2015, investment activity remained strong in irst half of 2016. The total volume of investments exceeded past year igures by 13%, resulting highest investment record since 2008.

Transaction market activity was dominated primarily by Hungarian investment funds representing 84% of the total invested volume, but the interest of foreign investors is increasing and expected to be realised in more transactions in 2016. Q2 investments are dominated by ofice market (over EUR 191 million) and by retail market (nearly EUR 278 million).

OFFICE MARKET

The total Budapest ofice stock (including owner-occupied and speculative buildings) reached 3,297,362 sqm in the second quarter of 2016. Total modern stock comprises 2,632,781 sqm of ‘A’- and ‘B’- category speculative ofice buildings and 664,581 sqm of owner-occupied buildings.

The development pipeline – in contrast with previous years – looks healthy, projected handover for 2016 is 97,800 sqm, while, 149,000 sqm for 2017 and 97,000 sqm for 2018. Demand for green (sustainable) certiication of new and existing buildings is continued to grow, 25% of total stock is certiied already, and this ratio is expected to reach 30% by year-end.

Vacancy rate has been declining continuously since Q2 of 2012, and reached its lowest igure of 10.3% of past years.

During the second half of 2015 an overall increase has been monitored in average asking rents, which continued in 2016 with rent levels growing between 5 and 15%. Segmentation between „ A” and „B” categories observed is relected by growth pricing differences these buildings.

In the second quarter of 2016, the gross take up totalled 129,172 sqm relecting an 40% growth on the corresponding period of 2015. This volume contained 37% new leases, 8% expansions, 4% pre-leases, whereas the share of renewals was 51%. BUDAPEST MODERN OFFICE STOCK (M2)

3 500 000 24.00% 3 000 000 22.00% 2 500 000 20.00% 2 000 000 18.00% 1 500 000 16.00%

1 000 000 14.00%

500 000 12.00%

0 10.00% 2010 2011 2012 2013 2014 2015 2016 Q2 Owner Occupied Stock Speculative Stock Vacancy

Similar to past year, due to continuous ageing and permanent deiciency of new premises, potential future demand will not be adequately supplied if the construction pipeline remains at the current level. This will leave a sizeable gap in the market and signal a new era for quality developments and unique solutions that are still sought after. Moreover supply of contiguous spaces over 1,000 sqm is very limited, therefore tenants should accept decreasing level of incentives and in-time planning prior to extension plans.

RETAIL MARKET

The retail market experienced the most signiicant structural and volume change, among all segments as new retail types entered the market, and covered the whole country with shopping centres, hypermarkets, DIY stores, thematic stores, supermarkets, discount stores etc. over a very short time period. Almost all modern retail types appeared and expanded until 2008.

Following the years of 2008 and 2009, the retail market in Hungary stabilised during 2010 as market players adjusted to the changed conditions. According to Hungarian Council of Shopping centers, the total shopping centre stock in 2015 remained 2,068,000 sqm and the supply pipeline for new retail space remains fairly muted. Budapest represents more than 31% of total Hungarian modern shopping centre stock.

Supply remained unchanged in the last years and no new larger scheme opened in H1-H2 2016. However, the signiicantly improved market conditions motivated developers to commence a series of new schemes including the 34,000 sqm IKEA retail warehouse in Budapest (2016), the 18,000 sqm Alba Plaza 2 in Székesfehérvár (late 2018), and the 45,000 sqm Etele City Center in Budapest, which is planned to be completed in 2019. BUDAPEST SHOPPINg CENTRE STOCK (M2)

1 000 000 900 000 800 000 700 000 600 000 500 000 400 000 300 000 200 000 100 000 New Supply Existing Stock 0 2010 2011 2012 2013 2014 2015 2016 2017

Transaction activity in the Hungarian market in irst half of 2016 was strong. Investor interest is expected to increase throughout the remainder of 2016 with a number of deals already well progressed, with demand from international investors seeking large shopping centres or retail portfolios, while local Hungarian investors focus on smaller single asset deals.

Occupier demand remains healthy, with a growing number of international mass-market and high end operators actively looking for space in key high street locations and in dominant shopping centres.

Typical monthly rental rates for shopping centres fall in the range of 20–65 EUR/sqm, for high streets 40–90 EUR/sqm, in retail parks 5-8 EUR/sqm while in outlet centres 15-20 EUR/sqm.

INDUSTRIAL/LOgISTICS MARKET

As most of the brownield industrial sites were insuficient for modern production and logistics purposes, high numbers of modern industrial premises were built over the past 25 years. Almost every larger city established new industrial and logistics parks. In 2014, more than 220 industrial parks existed in Hungary.

The highest volume of modern industrial/logistic stock is located in Budapest, but Győr and Kecskemét (due to stable demand generated by large automotive industry) are also important industrial locations.

Total area of the Budapest speculative stock is 1,887,798 sqm, 10% of the stock is represented by premium quality city logistics.

The construction activity – similarly to other market segments – is low.

The Hungarian industrial market has seen good levels of activity over the irst half of 2016. Total take up reached 210,000 sqm. Market demand is dominated by renewals, as 65% of the total demand. As in the previous quarters, the automotive sector, along with occupiers from the pharmaceutical and FMCG logistics segments are the main drivers of demand. BUDAPEST MODERN INDUSTRIAL/LOgISTIC STOCK (M2)

1 950 000 28.00% 1 900 000 1 850 000 23.00% 1 800 000 1 750 000 18.00% 1 700 000 1 650 000 13.00% 1 600 000 1 550 000 1 500 000 8.00% 1 450 000 0 3.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 New Supply Existing Stock Vacancy %

Vacancy stands at 9.7% - as the second lowest igure since 2008 – despite of 1.1% temporary growth in Q2 compared to Q1. For the second half of 2016 growing demand and further decline for vacancy rate is expected by most of market participants.

Key market players forecast market rent increases in the mid-term for the modern stock. The most successful submarket is the city logistic, with low luctuation, stable rental fees, and low and decreasing vacancy levels.

It remains dificult to ind appropriate size and quality areas for new tenants, as no large vacant and contiguous areas are available on the market. There is around 57,000 sqm of new space scheduled to enter the market by the end of 2016 (79,000 sqm for full year of 2016) which may bring some temporary relief to the occupier market. Developers are beginning to assess speculative build options but this is from a low base and any schemes are expected to be absorbed with relative ease.

TOURISM AND HOTEL MARKET

Tourism is one of the leading economic sectors worldwide, which is illustrated perfectly by its contribution of about 9.8% to the global GDP. The sector has shown continuous increase ever since the economic recession in 2009 with the number of international tourist arrivals reaching 1.2 billion in 2015 according to UNWTO. This means a 4.4% increase compared to the previous year and it is forecasted to continue in 2016 as well with an expected 4% y-o-y growth rate.

At a global level, the most visited region is Europe accounting for over half of the international tourist arrivals. In 2015, the number of international arrivals in Europe increased by 5% and is expected to grow further by 3.5% to 4.5% in 2016. According to WTTC, tourism is one of most relevant economic sectors in Europe in terms of GDP impact. The positive trends are relected in the Hungarian tourism sector as well: inbound tourism volume shows an uninterrupted increase over the past ive years, with rates above the European average!

DEVELOPMENT OF TOURISTS VOLUME IN HUNgARY (2011-2015)

5.4% 5.8% 5.3% 6.4% 6.0% 30 000 000 10.0% 25 000 000 5.0% 0.0% 20 000 000 -5.0% 15 000 000 -10.0% 10 000 000 -15.0% 2011 2012 2013 2014 2015

Number of guest nights spent In commercial Change in % Source: HCSO accommodation establishments

The number of guest nights spent in Hungarian commercial accommodation establishments reached 25.9 million nights in 2015, representing a 6% growth on 2014 and a dynamic close to 25% improvement on 2011 igures.

According to the latest data, further growth is expected for 2016, with the number of guest nights reaching 10.98 million in the irst half of the year, an increase of 4.5% compared to H1 2015. The development of gross room revenue of hotel establishments was in line with the dynamically growing demand, and increased 37.8% to reach EUR 613,193,000 in 2015, and continued to rise in H1 2016, with a remarkable growth of 6.4% compared to H1 2015.

gROSS ROOM REVENUES OF HOTEL ESTABLISHMENTS IN HUNgARY, THOUSAND EUR (2011-2015)

5.3% 7.0% 8.6% 12.6% 800 000 15.0% 600 000 10.0% 400 000 5.0% 200 000 0 0.0% 2011 2012 2013 2014 2015

Gross Room Revenues of hotel establishments Change in % Source: HCSO BUDAPEST Budapest is the most visited destination of the country realising almost 41% of total guest nights (about 8.7 million in 2015) spent in Hungarian hotels. In 2015, from the national total, 67% of foreign and 9.3% of domestic hotel guest nights were registered in the capital. As per a recent publication, Budapest is one of top 10, most popular city break destinations in Europe, due to its vast offerings, cultural heritage, exciting gastronomy, quality of hotels and buzzing nightlife. To date total hotel supply in Budapest amounts for nearly 19,500 hotel rooms at all levels of which nearly 50% are classiied by the Hotelstars Union (HSU) standards, allowing for a pretty transparent picture of the capital’s roomstock. NUMBER OF gUESTS AND gUEST NIgHTS SPENT IN COMMERCIAL ACCOMMODATION ESTABLISHMENTS IN BUDAPEST, 2011-2015

10 000 000 Number of Guests 9 000 000 Number of Guest Nights 8 000 000 7 000 000 6 000 000 5 000 000 4 000 000 3 000 000 2 000 000 1 000 000 0 2011 2012 2013 2014 2015

Demand in Budapest grew by 6.9% in 2015 compared to the previous year in terms of guest nights (reaching 8,712,571), underlining the continued demand growth for Budapest in 2015. Budapest saw 4,041,967 guest nights in the irst half of 2016, representing a growth of 2.2% compared to the same period in 2015.

The 5 largest foreign feeder markets of Budapest were the UK (9.3%), the USA (7%), Germany (6.9%), Italy (6.8%) and Spain (3.8%). The 5 main feeder countries and domestic tourism dominated nearly 44.3% of the market.

Statistics by category show that 4-star hotels registered a total of 3.5 million guest nights in 2015, an increase of 19.4% compared to 2014. Demand for 5-star establishments was quite steady, the top category realised approximately 670,000 guest nights in 2015.

Highest occupancy and average daily rates can be observed in the 5-star category (occupancy: 78%, ADR: EUR 128.9 as of 2015). In the 4-star segment average occupancy was lower (72.6%) but still above the Budapest average (69.1%), while the ADR was EUR 56.1. The 3-star segment was characterised by an average occupancy of 68.5% and an ADR of EUR 35.4. When evaluating rates at a much closer look, hotels in downtown Budapest (District V) have traditionally overperformed market averages by a good 11-20% in terms of occupancy and over 50% with regards to ADR.

In the irst six month of 2016, the gross average daily rate of hotels achieved a 5.4% growth compared to the same period of 2015. In terms of gross average daily rate the 3-,4-, and 5-star hotels realised an increase of 10.3%, 5.6% and 7.6% respectively compared to H1 2015. In the irst three months of 2016, the OCC level of hotels overperformed the registered performance indicator of Q1 2015, while it saw a decrease in Q2 2016 compared to the same period of 2015.

2016 is anticipated to show gradual, further growth in performance and proitability igures, although rate of growth is perceived to be lower than in 2015. Positive factors contributing to the rise in demand include the continued passenger volume increase at Liszt Ferenc Airport. Since 2013 the number of passengers at the airport has been showing an uninterrupted increase reaching an all-time peak (app. 10.3 million passengers) in 2015. The airport achieved a remarkable 12.5% growth in 2015, which can be regarded as an outstanding performance even at an international level as the number of passengers increased by 4% on average in 2015. In the irst seven months of 2016 the passenger volume of the airport continued to rise. The number of passengers increased by 11% compared to the same period of the previous year. According to the information received from Budapest Airport the number of passengers will exceed 13 million by 2020. As of 2015, there were 95 destinations, served by 44 airlines available from Budapest Airport.

The advent of new airlines (Emirates, Air Canada Rouge) or new routes (e.g. Toronto) are signs of sustained growth and if accompanied by targeted marketing will make their mark on the hotel scene.

The upturn in the hotel and tourism market in Budapest, accompanied by a sustained price increase has led to both foreign and domestic investors investigating the development possibilities at all levels. On the one hand the advent of the Ritz Carlton in 2016 (replacing Le Meridien) fuels other luxury developments including the Ballet Institute on Andrássy Avenue, the ‘Párizsi’ Court on Ferenciek Square and eventually the Matild Palace– all owned by international investors, on the other hand the appearance of Marriott International’s luxury brand on the Budapest hotel market scene is generally expected to increase the high-end travellers’ demand in the hotel market thereby contributing to the increase of ADRs.

PROVINCIAL HUNgARY

The most visited region in Hungary is the Budapest - Central Danubian Region accounting for about 38% of total guest nights spent in the country (as of 2015). Over 20% of total guest nights are registered in the Balaton Region, while Western Transdanubia – a renowned thermal spa and medical region - attracted over 11% of total guest nights.

Despite the setback of foreign demand tourism volume has shown an uninterrupted, but slowing increase over the past ive years at Lake Balaton. The number of guest nights exceeded 3.39 million in 2015 showing an increase of 0.5% y-o-y - while the growth rate of guest nights was 6.9% in 2013.

SHARE OF TOURISTIC REgIONS BASED

4% 1% 4% Budapest and Central Danubian Region 6% Lake Balaton

Western Transdanubia 8% 38% Northern Hungary Northern Hungarian Plains Southern Hungarian Plains 8% Central Transdanubia Southern Transdanubia 11% Lake Tisza Source: HCSO

20% Average hotel occupancy was also highest in Budapest - Central Danubian Region with 66.3% in 2015 which is over 12% point higher than the national average (53.9%). The second best performing region in terms of hotel room occupancy rates was Western Transdanubia performing slightly under the Hungarian average with 50%, while the hotel units of Balaton Region had an average room occupancy rate of 49.7%. The performance of other touristic regions ranged between 37.1% and 48%.

MEDICAL TOURISM

Medical tourism can be considered as one of the most relevant touristic subsectors based on the high performance of medical hotels. In the last three years the share of medical hotels increased further, accounting for 8.2% of total hotel guest arrivals (662,939 arrivals) and 11.4 % of total hotel guest nights (2,223,220 nights) in 2015.

Medical hotels achieved an average room occupancy of 61.8% in 2015 (7.9 percentage points higher than the national average occupancy of the hotel sector), 9.8% higher REVPAR and are historically characterised by lower seasonality and a remarkably longer average length of stay as the hotel segment in general (3.5 nights versus 2.4 nights).

CONCLUSIONS

It is expected that the 2017 FINA World Swimming and Water Championship held in Budapest, the Youth Olympics in Győr the same year, the 2020 Foorball Euro Championship will give a boost to the inward tourism to Hungary, and other developments such as the conference centre planned to be completed by 2019 will lead to sustained growth in both leisure and business visitation.

The positive expectations around tourism have materialised in the Government restructuring the public sector involved in tourism by appointing a government commissioner to oversee tourism and help the sector to contribute to the national GDP in the share of more than 10% on a sustained level.

Also the 2014-2020 period is to see a number of infrastructural and complex tourism product developments supported by EU funds and these, primarily public sector projects are to assist the Hungarian tourism’s evolution going forward.

THE OVERVIEW WAS PREPARED BY: BDO Hungary Hotel and Real Estate Services Ltd. Tel: +36 1 235 3010 Address: 1103 – Hungary, Budapest, Kőér Street 2/a, Laurus Ofices, Building C Contact: Mr. györgy Rábai ([email protected]) and Mr. Attila Hegedűs ([email protected]) www.bdo.hu

3* Congr ess Hot el

SHORT DESCRIPTION Unique opportunity to develop a 3* Business Hotel with 125 rooms in Budapest. The hotel will be located within 200 metres of the new Budapest Congress Centre. It will include meeting facilities, fi tness room, wellness centre and restaurant. Funding requirement

EUR 3.5 M

BASIC PROJECT DATA BASIC PROJECT (representing 100% of Equity)

Sector Tourism Location District IX, Vágóhíd Street, Budapest Implementation period 30 - 36 months Operator search 4 - 8 months Raising bank fi nancing 4 - 8 months Construction 18 - 24 months Overall Budget of the Project EUR 7 million Bank fi nancing EUR 3.5 million

I. PROJECT BACKGROUND

The project owner is a project company created to successfully implement the 3* Congress Hotel project. For the required EUR 3.5 million investment, the project owner would sell 100% shares representing full ownership of the project company, in possession of development rights.

The owners signed a contract with KRAFT & Associates – Tourism Development (www.kraftassociates-td.com) to prepare the Business Plan and the fi nancial projections for the project. KRAFT & Associates is also responsible for the hotel operator search. Several international hotel chains have expressed interest.

II. PROJECT DESCRIPTION This is a unique investment opportunity to develop a 3* business hotel in Budapest, ideally located within 200 metres of the planned new Budapest Congress Centre. The future hotel is located close to several important cultural sites, such as the Hungarian National Theatre (www. nemzetiszinhaz.hu) and the Palace of Arts (www.mupa.hu). Several offi ce complexes have been built in the neighbourhood with major international tenants such as Morgan Stanley, Vodafone, IBM and Nestlé. The dynamically developing District IX attracts increasingly more business and leisure tourists, creating growing demand for a branded hotel. This hotel could become one of the fi rst – if not the fi rst – internationally branded hotels in the close vicinity of the planned Congress Centre. The hotel is planned to feature 125 guest rooms, meeting facilities on 130 m2, an 80 m2 fi tness centre, breakfast area and private parking facilities.

The project planning and preparation phase (including operator search, obtaining necessary permits and raising bank fi nancing) is expected to be completed within 12 months while construction will take approximately another 18-24 months after that. Once an investment decision is made, the new hotel could be in operation within 30-36 months. WHY INVEST? In general, the growing Budapest market justifi es the advent of new hotels in town and those, located in upcoming or mature areas of town – for example the broad vicinity of the development - will see successful and sustained operation going forward.

As per the assessment of the project’s status, the future investor can take over a project that is ready for development and in possession of development rights. The hotel will benefi t from the adjacent conference centre, driving substantial demand for the subject hotel, which until the advent of additional properties will be the only branded property in the area.Even beyond the opening of other hotels, it can remain a good price value proposition with a sustained position and solid income stream.

COMPETITIVE ADVANTAGES • Forthcoming development of the Budapest Congress Centre with a capacity of 4-5,000 people • Limited competition in the area • District IX is a dynamically developing district • Easy access to Liszt Ferenc International Airport (17 km) • Proximity to the Palace of Arts (www.mupa.hu) • Proximity to the National Theatre (www.nemzetiszinhaz.hu) • Signifi cant presence of multinational companies • Proximity to Budapest’s largest open air club (www.budapestpark.hu) • Suffi cient parking facilities • Good accessibility and high profi le visibility from all directions • Effi cient public transportation PROPERTY RIGHTS, LICENCES, CERTIFICATIONS The project developer owns the 1,250 m2 project site. A set of architectural plans for the project were prepared in 2014 and are available for evaluation; it is understood that the fi nal concept will be prepared in conjunction with the selected international hotel operating company to comply with the relevant brand standards and specifi cations. In terms of any building permit, there has been an initial building permit issued for an earlier concept, which has now expired, but once the new scheme has been fi nalised it can be re-issued within 6 months.

CURRENT POSITION IN THE MARKET – EXPECTED SHARE The project aims to fi ll a market niche for a business hotel in the vicinity of the future Budapest Congress Centre. The Budapest Congress Centre is an approximately EUR 80 million development, which will be fi nanced from government funds and is planned to open in 48 months (2018-2019). For the realisation of the multi-thousand seat congress centre, the Government of Hungary has issued a governmental decree under registry number 1359/2014 (dated 30 June 2014), regarding many major developments and identifying the tasks and the deeds to be performed by the government commissioner assigned to manage ‘Large scale development projects in Budapest’. Since the surrounding area is home to many international companies with their headquarters located in the various offi ce complexes along Soroksári út, and with easy access to the city centre, the area will attract a signifi cant number of leisure and business tourists.

TARGET GROUPS Business travellers, attendees of conferences and other events held in Budapest Congress Centre, visitors of cultural events. SHORT MARKET DESCRIPTION, MAIN COMPETITORS According to current market trends, there is a growing demand for international conferences in Budapest. Based on the number of international conferences held in Budapest, the city is ranked 9th in Europe while Hungary is the 18th most preferred conference and meetings destination in Europe (Source: www.iccaworld.com). In 2013, there were 1,017 international conferences held in Hungary (Source: www.turizmus.com). The number of conferences is expected to see an immediate and signifi cant increase once the Budapest Congress Centre enters the market, driving substantial demand for quality hotels in the city. MAIN COMPETITORS: It must be noted that until the advent of • Ibis Budapest Aero Hotel (www.ibis.com) another internationally branded hotel in the • Mercure Budapest Duna (www.mercure.com) area, the subject property will be the only quality hotel in the area. Even beyond this • Leonardo Budapest (www.leonardo-hotels.com) point, it can remain the key midscale product offering a competitive price value proposition • In terms of future supply, there are currently no announced projects in close proximity. to its customers.

III. FINANCIAL INDICATORS

ASSUMPTIONS AND MAIN INDICATORS KRAFT & Associates – Tourism Development lead by its CEO Dr Péter Kraft (Vice President and Country Manager of the American Express Hungarian Subsidiary 1990-1997 and Tourism Secretary of Hungary 1999-2000) prepared the fi nancial projections of the project. MAIN INDICATORS Year 1 Year 2 Year 3 Year 4 Year 5 Number of Rooms 125 125 125 125 125 Average Daily Rate (ADR) (in EUR) 41 42 43 44 45 Occupancy Rate 55% 57% 60% 63% 63% Revenue per Available Room (RevPAR) (in EUR) 22 24 26 28 29

QUANTITATIVE AND QUALITATIVE INDICATORS QUALITATIVE INDICATORS All fi gures in EUR Year 1 Year 2 Year 3 Year 4 Year 5 Sales (1000) 1,509 1,609 1,739 1,880 1,935 EBITDA (1000) 479 526 573 649 656 Free Cash Flow (1000) 212 65 129 208 249

IV. INVESTMENT OFFER

Required amount of investment EUR 3.5 million (representing 100% Equity) Form of investment Cash

THE INVESTED CAPITAL (EUR 3.5 MILLION) WILL GENERATE AN INTERNAL RATE OF RETURN (IRR) OF 13 %. NEARBY BUILDINGS

Offi ce Towers (Infopark) National Theatre

CONTACT DETAILS MR. KRISZTIÁN BELLON, Project Manager +36 20 446 0801 [email protected] MR. AMBASSADOR PÉTER KRAFT, CEO +36 20 938 0737 [email protected] www.kraftassociates-td.com

RUHATÁROLÓ ÖLTÖZŐ 10,22 m2 23,79 m2

TAKSZER 3,92 m2

ÖLTÖZŐ 100 24,12 m2 210 gazdaságili

100 2125

RAKTÁR RAKTÁR HULLADÉK 6,91 m2 12,24 m2 6,52 m2

gazdasági lépcső KÖZLEKEDŐ 37,72 m2

MOZGS. WC 6,20 m2 főlépcső

MELEGÍTŐ KONYHA 36,18 m2

BEVILÁGÍTÓ UDVAR 5 WC 2

100 212 6,12 m személyliek

5

100 212 100 210 100 210

WC 6,12 m2

ELŐCSARNOK 131,47 m2

RECEPCIÓ 11,68 m2

POGGYÁSZ 3,96 m2

ÉTTEREM 150,88 m2

4* Br anded Lif est yle Select -Ser vice Hot el

SHORT DESCRIPTION Unique opportunity to develop a 4* internationally branded upmarket select service, lifestyle hotel with 140 to 143 rooms in Budapest. The proposed hotel will be l cated in close proximity to the city’s upscale promenade, Andrássy út, which is home to an array of luxury boutiques, in a very convenient location close to major sights. Funding requirement

EUR

BASIC PROJECT DATA BASIC PROJECT 4 M (50% equity) or EUR 7.8 million (100% equity)

Sector Tourism Location Budapest, 6th District, Nagymező utca Implementation period 18-22 months Operator search 4-6 months Raising bank fi nancing 2–4 months Construction 16–18 months from the availability of fi nancing Overall Budget of the Project EUR 13,6 million Bank fi nancing Up to EUR 9.5 million – subject to equity input I. PROJECT BACKGROUND Short background The project owner, Rockwood Real Estate Ltd., is an SPV created for the NM38 hotel project. The owners of the company are active players in the Hungarian Real Estate scene, and have gained substantial experience in commercial and residential projects. II. PROJECT DESCRIPTION

This is a unique investment opportunity to develop a 4* internationally branded upmarket select service, lifestyle hotel in Budapest, located at Nagymező utca 38., a frequented area with small pubs and bars, running into Andrássy út, which provides a great opportunity for shopping, as world renowned brands (Louis Vuitton, Gucci, Armani, Burberry, etc.) have opened stores there, thus enhancing the overall recognition of the area as an upmarket and trendy hub. The future hotel is situated close to several important cultural sites, such as the Opera (www.opera.hu), the Music Academy (www.zeneakademia.hu), the Thalia Theatre (www.thalia.hu) and the Operetta Musical Theatre (www.operettszinhaz.hu). The site is located in a convenient and ideal destination for both business and leisure travellers, serviced by excellent infrastructure; the Metro, bus and tram lines make the various parts of downtown easily accessible. The hotel is planned to feature up to 143 guest rooms (133 standard and 10 deluxe rooms), small but compact meeting room/boardroom facilities on 50 m2, a 91 m2 recreational area (including a small-sized pool/whirlpool/sauna and fi tness centre), a breakfast area, a 24/7 grab’n’go style outlet, a spacious bar lounge area and underground parking facilities. For the subject project, depending on the proposed investor’s consideration, either 50% and equity partnership or full ownership is available, when the current owner will hand over the building site, preliminary concept plans, other documents and all the necessary offi cial permits needed for construction. WHY INVEST? The 6th District is a classic example of a diplomatic district and, through Andrássy út, a frequented area of Budapest, it attracts more and more business and leisure tourists, thus creating growing demand for a branded hotel. This hotel could become one of the fi rst internationally branded lifestyle hotels in Budapest’s downtown hotel sector. In general, the growing market justifi es the advent of new hotels in the heart of the city, and one could foresee successful and economically viable operation going forward especially in the lifestyle sector, which is currently under-serviced in Budapest. Based on the assessment of the location and future market environment, the property has the potential to become one of the leading city centre upscale hotels in Budapest. The hotel will immediately be able to compete head-to-head with its competitive set and, by representing a unique product mix and design, could outperform some hotels located in the area.

Competitive advantages • Managed by an International Hotel Company • Central location next to Andrássy út with excellent accessibility • ‘Lifestyle’ hotel, new, contemporary design and layout • Fresh and unique design, making the property stand out from the crowd • High quality materials, continuous refurbishment due to larger FF&E reserve • Immediate surrounding offering a variety of activities, adjacent to high-end shopping lettings • Good accessibility on foot, by car or via public transport • Effi cient public transportation

Property rights, licenses and certifi cates The 1,190 m2 project site is owned by the developer. A set of architectural plans for the project have been prepared and are available for evaluation, yet it is understood that the fi nal concept has to be prepared in conjunction with the selected international hotel operating company to comply with the relevant brand standards and specifi cations.

Current position in the market and expected share The future hotel will be able to capitalise on a gap between the mainstream hotels of the existing four- and fi ve-star hotels and to remarkably differentiate itself due to its design-savvy and trendy development approach accompanied by the proposed strong brand message provided by the future operator. Target groups They include leisure and business segments, including FIT guests, leisure groups, MICE and corporate guests. The most signifi cant market segment will be independent travellers (FIT). The property will also attract an element of demand from the centrally located core fi ve-star branded hotels, and mainly FIT and corporate clients who are seeking new experience. Short market description, main competitors According to current trends, there is a growing demand for Budapest, and continuous demand and rate improvement characterise the market since 2009. In terms of occupancies, the average of commercial accommodation establishments in the 6th District was 69.6% in 2014, which is substantially higher than the city’s average, and even hotels of good quality were able to outperform this indicator by 10% to 15%, which justifi es any hotel development in the area. As the market seems to have revived after the economic crisis, there are new hotel openings in the pipeline for the following years. The new development projects are concentrated in the central parts of the city, including three-, four- and a few fi ve-star hotel projects. Main competitors Overall, it can be said that there is no ideal competitive set for the future hotel. Hotels of relevance include primarily four-star properties situated in central Budapest, complemented by two fi ve-star properties. • Iberostar Grand Hotel • Hilton Budapest City • Mamaison Hotel Andrássy • Art’otel Budapest • Lánchíd 19 Design Hotel • Zenit Budapest Palace • Continental Hotel Budapest • NH Budapest City • Courtyard by Marriott • Radisson Blu Béke Hotel Budapest • MGallery Hotel Nemzeti • In terms of future supply, there are some announced projects that can be relevant regarding the proposed hotel: Hotel Ária, Zara Hotel Prestige and Andrássy A8. III. FINANCIAL INDICATORS Assumptions and main indicators BDO Hungary Hotel and Real Estate Services Ltd. prepared the fi nancial projections of the project. Main indicators year 1 year 2 year 3 year 4 year 5 Number of rooms 143 143 143 143 143 Average Daily Rate (ADR) 71 73 75 78 80 (in EUR) Occupancy Rate 58 % 62% 67% 71 % 75% Revenue per Available Room 41 45 51 56 60 (RevPAR) (in EUR)

Quantitative and qualitative indicators Qualitative indicators All fi gures in EUR ‘000 Year 1 Year 2 Year 3 Year 4 Year 5 Total Revenues 1,937 3,179 3,561 3,877 4,184 EBITDA 299 656 835 981 1,121

IV. INVESTMENT OFFER

Required amount of investment EUR 4 million (50% equity) or EUR 7.8 million (100% equity) Form of investment Equity participation/Full takeover

CONTACT DETAILS MRS. ÁGNES ZÁSZLÓS +36 30 600 7868 offi [email protected] www.rockwoodholding.com

EcoDome Off ice building The Living Off ice

SHORT DESCRIPTION Vacant land – with offi ce building project. The new Ecodome Offi ce Building offers high quality, LEED Platinum certifi ed offi ces, providing 4,946 sqm gross lettable area and 90 underground parking spaces. The building provides a highly liveable environment on the Buda side of the city, with a breath-taking panoramic view from the upper fl oors. As a result of the wide development experience, conscious and consequent planning, the maintenance of EcoDome will be highly cost-effi cient. Funding requirement BASIC PROJECT DATA BASIC PROJECT EUR 9M Sector Real Estate Project owner B&L Estates Real Estate Investment Ltd. www.rockwoodholding.com/ecodome Location District 1, 13 Mészáros str., 2/a Pálya str., 1012 Budapest, Hungary Implementation period Completion: 15-16 months from the start of construction. Overall Budget of the Project EUR 9 million

Investment need Based on selected options: 1. Finance (possible as a partner) the development of the project: EUR 1-2 million 2. Pre-Lease the project from 1,500 up to 4,900 sqm 3. Sale when completed: EUR 12 million I. PROJECT BACKGROUND Introduction to the Project owner B&L Estates Real Estate Investment Ltd. is an active player in the Hungarian real estate market and has signifi cant experience both in commercial and residential projects. The owner has been involved in luxury residential developments in central Budapest, fi ve star leisure projects in the countryside of Hungary and has substantial experience in the fi eld of facility management. Key People: • Bálint Erdei, Chief Executive Offi cer B&L Estates Real Estate Investment

II. PROJECT DESCRIPTION

Ecodome will be the ultimate unique and effi cient green offi ce building investment in Budapest, in an especially prestigious location in Central Buda. It will be ideally suited as a headquarter building operating with customised solutions The projected building is located in the Central Buda side of Budapest, in close proximity to Déli Pályaudvar (railway station) and an M2 metro station The Buda Boulevard (Alkotás street), Krisztina ring road and Déli Pályaudvar are all nearby. Mészáros street is directly connected to Lánchíd (the Chainbridge), making central Pest (CBD) easily accessible through the Várhegy (Castle Hill) tunnel. The M1 and M7 motorways are also readily accessible. The Ecodome Offi ce Building offers high quality and environmentally conscious offi ces for companies requiring a liveable environment in Buda, together with a breath-taking panoramic view from the upper fl oors. The offi ce areas are planned to be very bright in the modern-looking building thanks to the optimal depth; furthermore, they are able to satisfy bigger offi ce needs on one fl oor of up to 1000 sqm. As a result of the consequent planning and long term development experience, the maintenance of EcoDome will be highly cost-effi cient. A LEED certifi cation with a “Platinum” score is planned. Why invest Target groups • Central Buda is a prestige offi ce building Large multinational companies, law fi rms or location. start-ups looking for an offi ce building in a good location and green environment for their • Sustainable (LEED) certifi cation provides HQ. competitive market advantage. • Low service charge level is very favourable Short market description, for potential buyers. main competitors • No similar projects are in progress in the As the current offi ce development pipeline is catchment area. very tight in Budapest, and market occupancy has grown remarkably in the past year, no Competitive advantages primary competition is expected for the • Central Buda is a prestige location for small project. The building has few secondary and modern offi ce buildings competitors (existing offi ce buildings in the • The building will be installed with the most Buda area), and the majority of which provide advanced green technologies, and will signifi cantly larger, older, less fl exible spaces, ensure low service charges, attractive for generally with higher service charges, and both potential occupiers and investors lack a sustainable certifi cate, which already is a must for new offi ce buildings. • A New building with an existing building permit that determines building shape but Key strategic partners also provides the option of built to suit (included: involved in project fi nance): solutions for tenant needs • Major Hungarian banks (fi nancial side), Property rights, licenses certifi cations • Jones Lang LaSalle and Robertson • Final building permit, (BNP Paribas Real Estate) (real estate side). • LEED Platinum Classifi cation, Key risks and measures to prevent • 100% property rights. risks Current position in the market market risk – relatively small building does not – expected share result in a signifi cant increase in total stock, “A” offi ce segment, limited competition in moreover, there is very limited new supply in the future. the pipeline. III. FINANCIAL INDICATORS Assumptions and main indicators Proposed income levels: The estimated/targeted average offi ce lease is EUR 13/sqm/month. Construction cost: approximately EUR 9 million (including land cost) EBITDA Gross Potential Income is projected to be in excess of EUR 771,500/year from the second year of operation of the completed building. IRR, NPV (based on current market levels): • Yield 7.25%-9.8% based on selected option • Estimated Market Value : EUR 12 million (when completed)

Quantitative and Qualitative Indicators

QUANTITATIVE INDICATORS

Revenues / year 2015 Not relevant (development phase)

Gross Potential Income is projected to be in excess of €771,500/year (stabilized) from the Mid-term revenues/year expectation second year of operation of the completed building

Mid-term market penetration expectation (%) N/A

property(land) ownership, project plans, Available owner’s resources /available funds building permit, LEED certifi cation QUALITATIVE INDICATORS

poor adequate high

Elaboration level X

Existing client relations X

Level of sectorial/market competition* X

Owner’s background X (market presence, experience) Management background X (knowledge, experience) Level of innovation in the X Project idea /Added value

Risk management plan X

* poor = high competition IV. INVESTMENT OFFER

Based on negotiation with the project owner, Required amount of investment see various forms of investment

• Finance the existing project, EUR 1-2 million. Estimated return: 9-10% / year, in 24-36 months; • Leasing (pre-leasing) of the completed Form of investment project, rate: 13 EUR/sqm /month + VAT 1,500 sqm - 4,900 sqm • Invest in the completed project, EUR 12 million + VAT. Estimated return: 7.25% Guaranteed profi t / estimated 7.0-18.0% based on selected investment type return Estimated exit time Approximately 36 months

Proposed capital/equity structure: • Based on the form of investment. • Equity/loan structure based on fi nancing negotiations Investment schedule: see above Proposed exit policy: • Subject to negotiations. Sale as completed and fully let in an approximately 36 month period.

CONTACT DETAILS MR. BÁLINT ERDEI, Chief Executive Offi cer B&L Estates Real Estate Investment Kft. + 36 30 999 1482 [email protected] www.rockwoodholding.com/ecodome European Retirement Lifestyles

SHORT DESCRIPTION European Retirement Lifestyles is the proposed development of a privatised active independent senior living community in Western Hungary, targeting European senior citizens looking for active retirement and taking advantage of favourable real estate prices and cost of living compared to their current residence. The development would consist of approximately 350 to 375 single level units, an Activity Centre and on-site amenities, and would offer units for sale. Funding requirement

as construction loan or negotiated settlement as a BASIC PROJECT DATA BASIC PROJECT buyout of the EUR 13.23M project

Sector Real Estate/Tourism Location Aranyossziget, Máriakálnok, Western Hungary Implementation period Maximum 60 months Overall Budget of the Project EUR 83.7 million + VAT I. PROJECT BACKGROUND Introduction to the Project owner European Retirement Lifestyles is an American/Hungarian partnership with substantial real estate development experience in Eastern Europe. The Developer is proposing to establish a Hungarian legal entity to develop the real estate constituting the subject of this project or to sell the concept ‘as is’ and to participate in the project as a project manager. Currently, the scheme is in the planning phase, with available preliminary development plans and a market snapshot study (detailed below).

II. PROJECT DESCRIPTION The project outlines the development of a senior living community in Western Hungary, offering Western European (Norwegian, Finnish, German, Dutch, Swedish, Danish,Austrian and French) senior couples and individuals looking to capitalise on the favourable real estate prices and cost of living in Hungary and a chance to buy real estate in this centralised community. The concept is based on similar communities that have been very successful in the United States and Canada, aiming to focus on active and independent seniors, and have provided substantial returns to developers.

The development would consist of 350 to 375 single family units, i.e. one- and two- bedroom villas, and an Activity Centre that houses common facilities and activities (gym, swimming pool, board games, lounges/craft rooms, library, etc.). The facility is proposed to be developed gradually in ive phases. Phase 1 and 2 would comprise 36 single-family units and 100 one- and two-bedroom villas. Sales and development would commence upon securing inancing for the expansion of the development. The proposed location, Aranyossziget, is With the cooperation of the HIPA and other situated in the very Western part of Hungary entities and government bodies promoting near the Austrian border with convenient Hungary as an investment destination, a access via the M1 Motorway that crosses high number of tourists who belong to the the area and connects Budapest and target market can be made aware of the Vienna. The Hungarian capital could be opportunity. reached within two hours, whilst Vienna The project owner has vast experience in is about less than one-hour drive from real estate development and operation as here. Other noteworthy destinations well as senior living communities in the US, nearby include Bratislava, the Slovakian and even in the case of selling the concept capital, and Győr and Pannonhalma, the altogether, it would commit itself to a latter being an important sanctuary for the hands-on consulting role, overseeing the Catholic Church. development step by step. Besides convenient car access, the Liszt Ferenc Budapest International Airport is about 2.5 hours’ drive, whilst the Competitive advantages: Schwechat Airport (Austria) is about 35 to 40 minutes away only, both options • No current competitors. allowing for convenient access to short- • The market snapshot study prepared and long-haul lights. by Brooks Adams Research conirms The project owner proposes to work closely the viability of the project by comparing with sales & marketing agencies specialised cost of living and real-estate prices in pre-development sales and primary sales of the target markets and those of of real estate as well as with agencies and Hungary, with the latter being organisations with direct reach to senior exceedingly preferable for the target communities in the target countries. The market. Unique Selling Point of the complex is • The developer has experience with the lifestyle concept and the community similar facilities in the US. of like-minded senior individuals with a • Due to its central location, Hungary is similar background, who could participate an ideal location for such a facility. in a collective lifestyle experience, along Proximity to both Budapest and Vienna, with local entertainment and excursions. allowing for the easy accessibility of the The project is currently concentrating on facility. active seniors who do not need assistance, but possible future expansions may include • There is already a tendency of Western an assisted living facility on the premises. European seniors retiring to Hungary. Why invest: • A high number of expats who have worked here in the past two decades. This is the first facility of its kind in the region: Europe has lagged the United States • A large number of Hungarians living in in developing and operating privatised foreign countries, but looking to settle senior living communities catering to the down in Hungary later on. lifestyle of retired Europeans over the age of • Possible future expansion in the 55. While there are skilled nursing facilities direction of assisted living. and assisted living facilities throughout much of Europe, the idea of activities that • A large proportion of the target market you control at your own pace and follow is already aware of the favourable your interests is unavailable. conditions in Hungary. Property rights, licenses, certifications • providing exclusivity for accessing the site; • as of now, the proposed development site has been selected and thoroughly scouted, • a form of LOI or other type of and upon acquiring the development commitment document from current funding/investment, the developer landowners to sell the designated pledges to ensure the required land; plots at a ixed price to ERL or any successor; • preliminary architectural plans are available; • obtaining zoning and building permits from local authorities; • site – Aranyossziget/Máriakálnok (28 Hectares) • at least preliminary agreements with health service providers (ambulance, • letter of option from the owner as of medical assistance, transportation May 26 2016, irms [land, air etc.]) • the development is supported by the local municipality, the site is both Current position in the market – secluded and accessible expected share Once completed, the proposed senior living community would be the irst of its ERL Commitment towards likely kind in Hungary and Europe, providing an Investors advantage over possible future entrants. • To support the realisation of the project and when reaching the stage of investor discussions, ERL, the initiator and current owner of the concept, would commit itself to: • presenting a detailed marketing strategy and sales concept for the target markets and sales scheme; Target groups The primary target market consists of Western European (Norwegian, Finnish, German, Dutch, Swedish, Danish, Austrian and French) senior couples and individuals (55+), looking to capitalise on favourable real estate prices and cost of living compared to their current residence. According to the project owner’s estimates, the above market would comprise 85% of the residents. The secondary target market includes wealthier Hungarian seniors (10% to 15%) and residents of North America (USA and Canada) with Hungarian relatives or historic ties.

Short market description, main competitors The proposed development would be the irst of its kind based on similar facilities in the United States, where there are a large number of such communities operating successfully. The basis of demand is the fact that in the past decade Hungarian real estate both as investment and temporary or permanent residence has been in high demand amongst the target market. Hungary is home to more than 400,000 expatriates and a large number of businesses with foreign interests. There are Austrian, Finnish and Dutch expatriate communities in Western Hungary consisting of seniors that chose to retire to Hungary due to the favourable conditions. However, these are not centralised communities, but a group of individually purchased properties unlike the proposed development. III. FINANCIAL INDICATORS

Projections and main indicators The financial indicators were prepared as part of the preliminary feasibility study by ERL and comprise benchmark figures for the proposed development and real estate sales excluding operational costs and revenues.

MAin indiCAtors All figures in EUR Phase 1 & 2 Phase 3 Phase 4 Phase 5

Sales Revenue 30 644 000 16 791 000 21 221 000 14 449 000

Costs 15 635 000 8 762 000 10 821 000 6 959 000

Total Planning and Development 24 885 000 Costs Financing and Administrative Costs (incl. loan repayment 4 004 000 interest)

Projected Net Profit 12 079 000

Note: Amounts shown above have been rounded to the nearest 1K – Conversion 1USD = 0.9EUR IV. investMent offer

About EUR 13.23 million as construction loan or investment representing 50% Equity or Negotiated Required amount of investment Settlement to buy out the project or another form of investment can be considered Form of investment Construction loan/Investment/Buyout Construction loan: two to three years at a 6% to Estimated return 8% interest rate; the return for other forms of investments are subject to negotiations Estimated exit time subject to negotiations

CONTACT DETAILS Mr GArry J. tAkáCs, MAnAGinG PArtner Phone: +1 (615) 482-3224 [email protected] www.europeanretirementlifestyles.com Hot el Ar bor et um

SHORT DESCRIPTION Construction and operation of a 214-room 5-star hotel and 60 apartments with an exclusive medical and spa complex, sports and recreational facilities, a live casino and a 6-hole golf course. An ideal location for business purposes with a conference hall accommodating 760 guests.

Funding requirement

BASIC PROJECT DATA BASIC PROJECT 40 M EUR

Sector Tourism (medical) Project owner Arbo Invest Ltd. Location Debrecen is located 102 km from Satu Mare (RO), 194 km from Kosice (SK), 154 km from Uzhgorod (UKR) and 237 km from Budapest (HU). Implementation period 18 months Investment offer 85% of the company through capital increase amounting to EUR 40 million Overall budget of the project EUR 47 million I. PROJECT BACKGROUND Short background Arbo Invest is a project company dedicated solely to successfully develop the Hotel Arboretum investment project. Organisation • Nóra Tanka-Pocsai, project owner o Levente Nagy, project manager • István Ceglédi, technical director o József Attila Pocsai, consultant Management background (including partner companies and relations) The company has over 10 years of experience in developing and implementing various tour- ism development projects. IavnCeglédi is a well-known and acknowledged expert with a vast experience in building and operating large scale construction projects. His references include Arbo Ranch, Hotel Balmaz****, Stop Shop Shopping Park, Fontana Restaurant and Leisure Park and Erdőspuszta Club Hotel****. All members of the management team are in possession of the necessary marketing, sales and international background to elevate the project to the realisation phase. II. PROJECT DESCRIPTION Hotel Arboretum aims to offer multiple recreational, medical and spa services along with various sports and entertainment facilities to its visitors. The hotel comprises 214 rooms and 60 apart- ments, a main conference hall holding up to 760 guests, a spa and aqua park, a sports centre equipped with a bowling alley, a squash court, a golf simulator and a golf course for trainees plus a live casino. As part of the project, Hotel Arboretum was awarded a non-refundable grant to build a geothermic energy system, which will reduce the expected energy costs of the complex by approximately 60 to 70%. WHY INVEST? Hotel Arboretum will be a luxurious spa, sports and entertainment hotel complex. The planned facili- ties and services are in line with the current trends, which are showing a growing demand for pre- mium medical, recreational and spa tourism. Demand for good quality and exclusive 5-star hotels is a rapidly growing segment in Hungary. Hotel Arboretum will be a spectacular complex with an easy to reach location not only from Hungary, but also from the neighbouring countries. Tourists are expected to come from Romania, Slovenia, the Ukraine and Russia with a rapid transfer from Debrecen Inter- national Airport. The casino, spa and conference complex will attract many of the wealthier traveller segments including recreation tourists, business travellers and high spending gambling tourists. Competitive advantages The complex offers excellent spa and medical services; it is also ideal for sports lovers, business travellers, families, and tourists requiring premium services. The complex has promising development potential as the currently planned 9-hole golf course can be further developed into an 18-hole golf course, making the complex an ideal place to host professional golf tournaments. Debrecen International Airport is in close proximity to the planned hotel. The area and the site are rich in valuable quality mineral water resources (certifi ed by balneological surveys), which can also be exploited and bottled for commercial purposes. Property rights, licences and certifi cations The project has all the necessary building licences and permits. The planned casino complex is yet to obtain a gambling licence. Current position in the market The project is a greenfi eld investment opportunity that aspires to be a leading luxury hotel in a region with strong international recognition and tourist base. Target groups Hotel Arboretum targets spa and medical tourists including senior travellers, business travellers, tourists seeking high spending weekend casino getaways, sports lovers and families. Current trends show that there is an increasing demand for premium accommodation and services, while Hungary has a great reputation among international travellers. Debrecen International Airport provides easy access for foreign tourists who typically have twice the average spend of domestic guests. The planned casino complex has an enormous revenue generating potential. Short market description and main competitors Overall growth in the tourism sector in Europe has had a favourable effect on the Hungarian tour- ism industry. The volume of tourism in terms of guest nights has been steadily rising since 2010 in the country, surpassing 24 million guest nights in 2014. The Northern Great Plain tourist region had a share of 8% in terms of total tourist demand in the country in 2014. Average daily rates of the 5-star hotel segment have been steady in the last few years, reaching EUR 112 in 2014. Medical hotels achieved an average room occupancy of 61.9% in 2014 (19.5% higher than the national average occupancy of the hotel sector), and a revenue per available room of EUR 30.3; they are also characterised by lower seasonality and a remarkably longer average length of stay compared to the hotel segment in general.

III. FINANCIAL INDICATORS

Assumptions and main indicators

All fi gures in EUR year 1 year 2 year 3 year 4 year 5 Number of rooms in the hotel 214 214 214 214 214 in the apartments 60 60 60 60 60 Average Daily Rate (ADR) 102 106 111 115 120 Occupancy 45% 55% 57% 59% 60% Revenue per available rooms (RevPAR) 46 58 63 68 72 Revenue from hotels in total revenues 82% 81% 80% 80% 79%

Quantitative and Qualitative Indicators All fi gures in EUR year 1 year 2 year 3 year 4 year 5 Sales 5,029,531 12,544,309 13,733,697 15,005,614 16,033,198 EBITDA 2,638,927 7,177,922 7,926,044 8,687,987 9,267,608 After tax operating 1,387,038 4,705,938 5,777,345 6,609,935 7,320,858 cash fl ow

IV. INVESTMENT OFFER

Required amount of investment EUR 40 million Form of investment 85% of the company through capital increase amounting to EUR 40 million. CONTACT DETAILS MR. LEVENTE NAGY +36 20 429 4878 [email protected] VIENNA

ZAGREB, LJUBLJANA Lake Par k Off ices and Residences

SHORT DESCRIPTION The project is a compact city next to Budapest, the capital of Hungary. The project embraces a built-up area of 200,000 m2, which includes offi ce buildings, apartments, shopping opportunities, service industry units, as well as facilities for sports and recreation. There is a conference hotel with an additional conference center. Each segment of this property has been designed with environmentally conscious solutions and green energy. Funding requirement BASIC PROJECT DATA BASIC PROJECT EUR 49.5M Sector Real Estate Project owner ÚtnetÉpítő Kft. (subsidiary of Lavinamix Group) Location Biatorbágy, Hungary Implementation period Development period of 5 years (2015-2020 - ongoing project) Overall Budget of the Project EUR 101.5 M EUR (excluding industrial land) Sale price is 52 M EUR (with motorway connection and internal roads completed) Cost of completion: 49.5 M EUR

Investment need Total: 49.5 M EUR to complete the whole project (cost of completion) I. PROJECT BACKGROUND Introduction to the Project owner Lavinamix Építő Kft. was involved in almost all signifi cant road and motorway construction projects in the past 20 years in Hungary. The very large volume of assets – consisting of close to 300 pcs of heavy duty and transportation vehicles, a metalworking unit and service background – owned by Lavinamix, qualifi ed and experienced staff and major efforts to continuously renew the company resulted in its successful participation both in specialty and complete road construction projects.

Main activities of Lavinamix: • Complete implementation of expressways and public roads • Construction of embankments and dams, fl ood prevention • Mining exploitation and quality processing of raw materials • Manufacturing of fresh concrete

The Lavinamix Group holds an interest in several companies (in addition to Lavinamix Kft.): • ÚtnetÉpítő Kft.– Tópark real estate development • CEVIAÚtépítő Kft.– Concrete technology • Arany-Fény Kft. - Gastronomy • FogasHalászcsárda Kft. - Gastronomy • N-Zoll Trans Kft.– Renewable energy • Premier MinőségvizsgálóTechnológiai Kft.– Concrete technology • Euro Basalt a.s.- Mining • Lavinamix Slovakia s.r.o.– Mining and concrete mixing plant • SC Lavinamix Construct s.r.l.– Mining and concrete mixing plant II. PROJECT DESCRIPTION The multifunctional Tópark real estate Why invest: complex consists of 9 attached buildings with a total gross fl oor area of 90,000 • Unique opportunity for large scale sqm, plus two-story underground parking investment in the CEE region; (60,000 sqm). The total fl oor area is • Professional partnership with experienced allocated to offi ce (45,000 sqm), residential construction company (project owner); (30,000 sqm) and commercial (15,000 sqm) • Flexibility of functional breakdown, based functions, allowing the implementation on tenant needs; of a conference center with a 800-1,000 person capacity and a business hotel with • Additional development plots are available 140 rooms. through acquisition; As Lavinamix Group owns a further 13 • Direct access to two motorways that serve hectares of industrial land with an existing heavy domestic and international traffi c road connection at a few hundred meters’ (Budapest-Vienna and Budapest Zagreb distance (along motorway M0), the / Ljubljana connection), providing a high main functions can be supported with volume of potential customers/tenants for production/logistic or R&D developments, commercial spaces; if required. • Due to the good location, considerable The Tópark project is a unique development purchasing power and a market for a highly opportunity, considering its location, size qualifi ed workforce is available in the and potential to provide an optimal mix catchment area. of functions in one location, delivering high standards of a built environment and meeting modern, contemporary tenant Competitive advantages: demands. • Limited number of similarly sized One of the main advantages of the property development areas in the CEE region complex is that it is situated immediately (development timing also considered); next to the lake of Törökbálint, providing numerous recreational opportunities for • Excellent geographical location in CEE; visitors of Tópark, as well as the people • The current development phase is at living and working here. The project 55% (construction is in progress); includes the development of a 3 hectare • Timing advantage because building green park area around the real estate structures are already completed; complex. • The competitive advantage of Tópark Exceptional visibility and advertising is that the construction of the offi ce value for companies renting offi ces here, buildings is relatively cheap because of the where 180,000 cars/day drive by on the construction-ready status, offering offi ces motorways. with downtown standards but below Downtown Budapest can be reached in downtown rental rates; 15 minutes by care on the motorway. • Experienced support provided by the Public transport: a nonstop bus line can be project owner and the government to operated. complete the development. Opportunities to expand development sites to neighboring areas. Property rights, licenses, certifi cations Based on the anticipated large volume of the workforce in the offi ce buildings, • 100% property rights additional rental demand is expected. • building permits • Offi ces: A+ category offi ce buildings • LEED pre-certifi cation. with a LEED certifi cate will be developed in an urban environment (similarly to the offi ce district of Budapest). In terms of Current position on the market: potential tenants, the project is expecting mainly multinational tenants who will – expected share: Tópark is the fi rst “out- outsource their background activities or of-city small town property development” SSC services to the agglomeration areas. in Hungary, therefore its position is unique on the market • Interest shown by the IT sector is also considerable, where there is a need to • Experienced support provided by the increase offi ce fl oor space from one day project owner and the government to to another, with a demand for a high complete the development. level of offi ce services, and the workplace must not necessarily be located in the city center. Target groups: • Conference center: medium sized • Apartments: potential buyers are conferences targeted (800-1,000 persons) expected from surrounding settlements – low competition, as very limited supply and from west Hungarian cities. There is is on the market in this segment. signifi cant interest in the apartments for investment purposes. End user buyers are • Business hotel: clients/partners of offi ce targeted from the younger generation tenants, conference guests, tourism (aged 20-30) and young families applying guests. for special government housing subsides. The 50-60 age group is targeted as second home owners and investors. Short market description, main Key strategic partners (also competitors: involved in project fi nancing): The Hungarian investment property • HIPA, strategic advisors, professional real market experienced a rapid recovery from estate agencies for sales and rental. 2013, with a strong increase in demand for good quality products. The occupier market in some segments (modern offi ces Key risks and risk mitigation: and logistics) remarkably strengthened at the same time. The number of property risk to identify reliable and creditworthy transactions in urban residential markets investment partner for very high scale (in major cities) increased strongly in development. parallel with investment demand for new Construction cost risk: construction. as the construction industry gained momentum in several areas, prices are Residential: expected to increase. The probable additional costs are included (as reserve) in • New legal regulations and statutory the investment calculations. amendments provide resources for apartment purchases for families with several children; • Low prime rates prompt individual investors to invest in real estate; • In the past 7 years, a number of individuals planning to purchase apartments postponed their plans as a result of the economic recession; • No signifi cant condominium development projects in the pipeline in the western agglomeration of Budapest. Offi ce: • Lowest vacancy rate in the past 8 years on the Budapest market; • High demand for good quality investment projects; • Very limited number of offi ce development projects are in progress; • Need for large space in one location, but existing buildings unable to provide adequately sized offi ces. III. FINANCIAL INDICATORS

Assumptions and main indicators • Proposed income levels: Sales revenue - residential (in the period 2017-2018) 42.8 M EUR Rental revenue - offi ce/retail (stabilized from yr. 2020) 6.1 M EUR/yr. • Construction cost: 49.5 m EUR (excluding sale price) • EBITDA Gross Potential: N/A • IRR, NPV (based on current market levels): Expected Return On Investment 10.39% )

Quantitative and Qualitative Indicators

QUANTITATIVE INDICATORS Revenues / year 2015 Not relevant (development phase) Mid-term revenues/year expectation Based on future development plans Mid-term market penetration expectation (%) N/A property (land) ownership, zoning plans, public Owner’s available resources /available funds utility connections, existing road connections, existing building structures.

QUALITATIVE INDICATORS

poor adequate high

Elaboration level X

Existing client relations X

Level of sectorial/market competition* X Owner’s background X (market presence, experience) Management background X (knowledge, experience) Level of innovation in the Project concept / X Added value Risk management plan X

* poor = high competition IV. INVESTMENT OFFER

• 52 M EUR for property purchase, Required amount of investment • +49.5 M EUR for construction costs based on existing development plans • Sale of property as is (land + building structure) Form of investment • Potential long-term partnership in construction phase Guaranteed profi t / estimated return 10.39% Estimated exit time 4 years for full development and exit

Proposed capital/equity structure: • Based on the form of investment. • Equity/loan structure based on fi nancing negotiations Investment schedule: see above Proposed exit policy: • Residential: sale • Offi ce/retail: lease or sale

CONTACT DETAILS MRS. ADEL CARLSON PROJECT MANAGER Phone: + 36 70 948 3687 [email protected] www.topark.hu www.utnet.hu

Pr emium Healt h Par k Kapuvár

SHORT DESCRIPTION Construction and operation of two hotels (a 5-star hotel with 200 rooms and a 4-star hotel with 200 rooms), a 50-apartment medical village and a complex therapeutic and spa centre. Total development area is 500,000 m2.

Funding requirement

BASIC PROJECT DATA BASIC PROJECT EUR 63 M

Sector Tourism (medical) Project owner Kaputherm Ltd. Location Kapuvár is located 15 km from the Austrian border, 100 km from Vienna and 170 km from Budapest. It is an internationally well-known location for vascular patients due to its unique carbon-dioxide baths and medical services. Implementation period 24 months Investment offer 90% of the company through capital increase amounting to EUR 63 million I. PROJECT BACKGROUND

Short background The project company was set up by private investors and is supported by the local municipality in a written agreement. This provides a safe business environment for the potential investor from legal aspects and ensures an effi cient and pro-active support to the investment. General background of the management The management of the project have a wide range of experience with local and international projects. Mr. Sándor Kiss-Mihály, CEO is a well-known and respected local opinionleader. Mr. György Sztranyák was senior engineer at the construction of the National Health Centre in Baku, Azerbaijan and also worked on construction projects in Dubai. Dr Károly Salamon was chairman and CEO of Allianz Hungária, the largest insurance company in Hungary. Currently he is chairman and CEO of the insurance company of the MKB Bank Group. II. PROJECT DESCRIPTION The aim of the project is to develop a ‘health park’ in Kapuvár including a 5-star and a 4-star hotel, a medical bath and an apartment complex with 50 units. Each hotel consists of 200 rooms and all buildings and facilities are located within a 50 hectares area.

The Premium Health Park provides unique services such as medical water treatments, carbonic acid gas bath therapy, hydrotherapy, electrotherapy and other local special therapies along with auxiliary medical activities. The successful operation and overbooked carbon-dioxide treatments at the Angiological Department of Kapuvár Hospital and Clinic show that Kapuvár is internationally known among vascular patients.

Besides the recreational and wellness services, the Health Park offers different sports activities (such as horse riding, tennis and swimming) and facilities suitable for conferences and cultural events.

WHY INVEST? • Kapuvár has wide international recognition in curing vascular diseases. The “miracle of Kapuvár” refl ects the reputation deserved by the Kapuvár Hospital with the use of carbon-dioxide bath therapy and carbonic acid snow to treat circulation and respiratory diseases. Over past decades, nearly 30,000 patients were treated and healed with the therapy, which is also acknowledged by the Hungarian Cardiology Institute.

• According to the forecast of the World Health Organisation, health and medical tourism will become one of the leading sectors of the world economy by 2022. Hungary is considered to be the fi fth strongest health and medical destination in the world due to its excellent geographical location, outstanding quality of thermal waters and abundant geothermal resources. Competitive advantages Carbon-dioxide baths have a centuries old tradition, which goes back even to Roman times. Kapuvár is an internationally known medical centre among vascular patients who are willing to stay for even 2 to 3 weeks to receive a full therapy. The state-owned Kapuvár Hospital provides the skills and expertise necessary for these unique therapies. Capacities at the Kapuvár Hospital are not suffi cient to satisfy the increasing demand leading to constant overbooking. There are no similar investments known in the surrounding area that would be able to offer high quality accommodation and carbon- dioxide treatment in one place.

Demand for these medical services is both fromthe domestic market and from the neighbouring countries. The demand for medical therapies surpasses the capacity of hospitals. Geothermal treasures provide a unique basis for medical tourism. Property rights, licenses and certifi cations Licenses related to the utilisation of thermal water and the carbonic acid gas bath therapy used at the local hospital are held by the project company. Current position in the market The project is a green fi eld investment opportunity, which aims to be an internationally recognised spa and medical centre themed around the certifi ed cardiovascular healing effects of carbon dioxide baths and therapy. Target groups Patients with arterial diseases. There are approximately 400,000 vascular patients in Hungary, 60to 70 million in Europe and tens of millions globally. Demand for artery disease treatments is ever increasing from all social groups including elderly people from developed countries who are looking for premium services and accommodation when booking a treatment. Key strategic partners The municipality of Kapuvár provides the project company with essential support ensuring the local regulatory background, and is committed to the developments targeting health care and tourism. State-owned Kapuvár hospital provides the skills and expertise for the unique therapies. The workforce is planned to be recruited from the medical staff of the hospital. Short market description and main competitors The main competitors are the thermal hotels of Budapest, Hévíz, Bük and Sárvár.

Location Budapest Hévíz Other 5-star thermal hotels Aquincum Hotel Lotus Therme Hotel Budapest Danubius Hotel Gellért 4-star thermal hotels Danubius Health Spa Danubius Health Spa Greenfi eld Hotel Golf & Spa, Resort Helia Resort Aqua Bükfürdő Danubius Health Danubius Health Spa Danubius Thermal Spa Resort, Sárvár Danubius Resort Margitsziget Hotel Hévíz Thermal and Sport Hotel, Bükfürdő Hunguest Hotel Répce Gold, Bükfürdő III. FINANCIAL INDICATORS

Assumptions and main indicators All fi gures in EUR year 1 year 2 year 3 year 4 year 5 Number of rooms 5-star hotel 200 200 200 200 200 4-star hotel 200 200 200 200 200 Average Daily Rate (ADR) 5-star hotel 110.9 110.9 110.9 110.9 110.9 4-star hotel 87.2 87.2 87.2 87.2 87.2 Occupancy 5-star hotel 40.0% 45.0% 50.0% 55.0% 60.0% 4-star hotel 40.0% 45.0% 50.0% 55.0% 60.0% Revenue per available rooms (RevPAR) 5-star hotel 44.4 49.9 55.5 61.0 66.5 4-star hotel 34.9 39.2 43.6 48.0 52.3 Revenue from hotels in total revenues 60.1% 66.6% 73.9% 73.9% 73.9% Quantitative and Qualitative Indicators All fi gures in EUR year 1 year 2 year 3 year 4 year 5 Sales 11,675,869 11,856,270 11,870,003 13,050,404 14,230,804 EBITDA 7,606,439 7,551,760 7,430,415 8,475,737 9,521,058 After tax operating 6,738,515 6,692,585 6,590,655 7,468,725 8,346,795 cash fl ow

IV. INVESTMENT OFFER

Required amount of investment EUR 63 million Form of investment 90% of the company through capital increase amounting to EUR 63 million

CONTACT DETAILS MR. GYÖRGY SZTRANYÁK +36 30 446 6400 MR. SÁNDOR KISS-MIHÁLY +36 20 964 9362 [email protected] Scar bant ia Hot el * * * *

SHORT DESCRIPTION Unique opportunity to develop a multifunctional complex including a 4 star hotel with 142 rooms and a modern spa/wellness centre in the heart of Sopron. The planned hotel will be located in a central area of the town, in close proximity to downtown.

Funding requirement

BASIC PROJECT DATA BASIC PROJECT 7 M EUR

Sector Tourism Location II. Rákóczi Ferenc Street, Sopron Implementation period 24-30 months Operator search 8-12months Raising bank fi nancing 6–8 months Construction 16-18 months from obtaining fi nancing Overall Budget of the Project EUR 32.5 million Bank fi nancing EUR 25,5 million I. PROJECT BACKGROUND Brief summary of background The owner of the project is MH Scarbantia Hotel Ltd. The full ownership of the project subject to this teaser is available as the current owner would hand over the construction site, preliminary concept plans, other documents and all the necessary offi cial permits required for the construction.

II. PROJECT DESCRIPTION This is a unique investment opportunity to develop a multifunctional complex including a 4 star hotel with 142 rooms and a modern spa/wellness centre in the heart of Sopron, located at II. Rákóczi Ferenc Street, in a central area of the town. The nearly 125 years old buildings on the property must be preserved to conserve the traditional landscape of the town, but the other buildings will be demolished and replaced by new wings with a contemporary design. The multifunctional complex is planned to feature a hotel with 142 rooms, a 900 m2 spa unit, compact meeting/boardroom facilities with a seating capacity of 150 people, a wellness and fi tness centre, and a 2,030 m2 multifunctional area. The hotel is planned to feature an a’la carte restaurant, a pub, a drinkbar, retail units and leisure rooms. Since Sopron lacks modern, international quality hotel complexes and adequate spa and wellness facilities that target local and regional day visitors, there is a gap in the market this project may be able to fi ll. WHY INVEST? Sopron is part of Lake Fertő tourism destination; the city and its immediate surroundings have a wide range of cultural, historical and natural values, making Sopron a city that warrants a multi-day stay. This hotel could be the leading modern, high-quality accommodation unit in Sopron. The revitalisation of the city centre and the implementation of the multifunctional complex would contribute to the recovery of tourism in Sopron. Competitive advantages • Wide range of high-quality services • First modern accommodation unit in Sopron • The proposed hotel will be very close to the historic city centre, as well as to the Lövérek, a favoured excursion area of the city Property rights, licenses and certifi cates The 13.322 m2 project site is owned by the developer, MH Scrabantia Hotel Ltd. A set of architectural plans have been prepared for the project and are available for evaluation. Current position in the market and expected share The wide range of services of the multifunctional complex guarantee a unique market-leading position. The location of the project and the current structure of the buildings may also allow for residential/ apartment development, an area in which the city shows a great defi cit. Target groups Leisure segment. The most signifi cant market segment will be the independent travellers (FIT). In addition the proposed hotel would also be appealing for the local corporate traveller segment. Short market description, main competitors Subdued demand characterises tourism in Sopron, related to the lack of signifi cant touristic attractions and adequate promotion. Once the local products become reinvented and more sophisticated, Sopron can return to being one of the most visited cities in Hungary where it was ranked before. Main competitors In terms of local competition the closest relevant establishments in town are Hotel Fagus – in need of improvement and repair, and small properties like Hotel Wollner. Other, higher quality accommodation only exists in the nearby Austria (Lutzmannsburg, Mörbisch or properties around the Neusiedler See). III. FINANCIAL INDICATORS

Assumptions and main indicators Updated fi nancial projections shall be made available before the fi nal investment decision by the prospective buyer, parallel with completing the due diligence procedure. IV. INVESTMENT OFFER

Required amount of investment EUR 7 million Form of investment Full takeover

CONTACT DETAILS MRS. IBOLYA JAKUS +36 20 919 9717 [email protected] Zala Spr ings Golf Resor t

SHORT DESCRIPTION The project is a complex development programme consist- ing of various facilities. A new, luxury 5-star hotel with spa, villas, apartments, and the fi rst RTJ II golf course in Central- Eastern Europe to comply with the highest international standards, will all be constructed in Hévíz - Zalacsány. The project owner has already started part of the investment and seeks investors only for the implementation of the lux- ury hotel and the spa. Funding requirement BASIC PROJECT DATA BASIC PROJECT EUR 36 M (hotel and spa facilities) Sector Tourism (wellness, recreation) Project owner SGHBIRDIE Ltd. Location Zalacsány is 200 km, about a one hour forty minute drive from Budapest, and 200 km or two and a half hours drive from Vienna. The Resort is only 10 min- utes from Hungary’s second largest international Air- port, co-owned by the Promoter, 5 minutes from Héví z and a 15-minute drive from Lake Balaton. It is located in the centre of a famous wine and thermal region. Implementation period 18 months Investment offer The project owner seeks an investor solely for the hotel and spa elements where 100% of the hotel and spa will become the investor’s property. I. PROJECT BACKGROUND The project was conceived and initiated by an Irish consortium in 2005. The investment reached its initial phase, but the investors froze the project due to the economic crisis. The 160-hectare project site was purchased by the current project owner in 2013. In March 2013, the development restarted. The 9-hole golf course opened on the 1st of April 2014 while the 18-hole championship Robert Trent Jones Jr. golf course and the state of the art clubhouse will be completed by July 2015. General background of the management Mr. Gábor Széles is one of the best-known and acknowledged businessmen in Hungary. He holds the position of being the 4th wealthiest person in Hungary in 2014 (Forbes). His major enterprises include Ikarus bus manufacturing and the electronics company Videoton Holding Zrt. His media portfolio includes a daily newspaper and a nation-wide TV channel. GáborSzé les was Chairman of the National Association of Manufacturers for 18 years. II. PROJECT DESCRIPTION

Zala Springs Golf Resort will be a unique destination with golf, hotel, spa and residential elements, since it is expected to be the single championship golf course in Central-Eastern Europe that com- plies with the highest standards required to host international golf tournaments. It is expected to raise demand among golf lovers not only from Hungary, but also from the international golf com- munity. International golf tournaments are expected to be organized here from 2016. Zala Springs Golf Resort is strategically located close to the thermal spring and wine tourist region around Lake Balaton, which will make it a popular tourist destination. The hotel and spa development is part of a complex project consisting of the following facilities: • a 5-star luxury hotel and a connected spa building • 600 residential apartments and villas for sale • an 18-hole Robert Trent Jones Junior golf course The project owner seeks investors only for the hotel and spa project element. The hotel is planned to have an interior space of 10,500 m2 and 200 rooms. The spa is planned to be 3,000 m2. There are four thermal wells drilled on site with the relevant permits available to utilize the natural hot thermal water in the spa. WHY INVEST? Zala Springs Golf Resort will be a unique spa and golf complex with an exclusive golf course designed by Robert Trent Jones II. It is also strategically located close to Lake Balaton and surrounded by a popular thermal and wine region. The project will strengthen the image of Hungary to become an internation- ally acclaimed “Paradise of Thermal Springs”. The exceptional golf and spa theme with the 5-star luxury hotel and the villas will make this project a remarkable location among Central-Eastern Europe spa and golf tourism destinations. The complex will be situated on 160 hectares surrounded by a beautiful natural landscape. Competitive advantages Zala Springs Golf Resort will be located in the wellness region of Hungary with excellent amenities and luxury services. There is a high demand for quality services not just from international but also from domestic tourists. The golf course will satisfy international standards thus it will welcome large international golf tournaments. A few additional advantages are as follows: • proximity to an international airport (Héví z–Balaton Airport) co-owned by the Promoter • proximity to the spa town of Héviz and also Lake Balaton, one of the most popular domestic tour- ist destinations in Hungary • the Zala Springs product concept, which aims to deliver international 5-star standards • the diversity of activities to be provided at Zala Springs Golf Resort will attract visitors from various target markets • natural hot thermal water available on site (with four wells already permitted and drilled) • the presence of international brands (i.e. the international golf course developer brand Robert Trent Jones Jr.) Property rights, licenses and certifi cations the 160-hectare project site is the property of the project owner.

Current position in the market The project is a greenfi eld development, which aims to be the highest standard golf course in Hungary with an exceptional luxury hotel and spa.

Target groups Wellness, spa and golf lovers, business travellers. After Budapest, the Balaton region is the second most visited tourism destination in Hungary, generating 20% of total guest nights of the country with an average occupancy rate of 49.3%. Tourists from the key golfi ng nations, namely Germany and Austria, are the primary markets for the Balaton Region and are directly connected to the region by air. Further opportunities to attract visitors from Scandinavian countries (also golfi ng countries) are being explored.

Short market description, main competitors According to current market trends, there is an increasingly strong demand for 4 and 5-star hotels in Hungary. The highest average daily rates (ADR) experienced in the 5-star luxury hotel segment were EUR 112 in 2014, which is expected to grow further in the coming years. Demand related to spas and medical hotels has also increased steadily and is responsible for 11.6% of total guest nights. In order to reduce seasonality in the golf and sport tourist segment, Zala Springs Golf Re- sort intends to enter the Meetings, Incentive, Conference and Exhibitions (MICE) market combined with the spa and medical tourism segment. The MICE market in Hungary is rather large with ap- proximately 28,000 conference related events each year. The hotel complex with its state of the art and unique amenities and golf course will be unmatched in the Central-Eastern European region and targets mainly international tourists. The region of Zala is famous for its springs and bathing culture but lacks the complex services to be offered by Zala Springs Golf Resort. The main competitors, therefore, are only the thermal hotels of Budapest, Héví z, Bü k and Sárvá r. III. FINANCIAL INDICATORS Assumptions and main indicators All fi gures in EUR year 1 year 2 year 3 year 4 year 5 Number of rooms 200 200 200 200 200 Average Daily Rate (ADR) 220 220 220 220 220 Occupancy 30% 40% 45% 55% 55% Revenue per available rooms 66 88 99 121 121 (RevPAR) Revenue from hotels in total 69.14% 69.14% 69.14% 69.14% 69.14% revenues Quantitative and qualitative indicators Quantitative indicators All fi gures in year 1 year 2 year 3 year 4 year 5 EUR Sales 10,452,273 13,936,364 15,678,409 19,162,500 19,162,500 EBITDA 3,174,505 4,232,673 4,761,757 5,819,925 5,819,925 After tax 3,034,054 3,938,645 4,383,076 5,271,937 5,271,937 operating cash fl ow IV. INVESTMENT OFFER

Required amount of investment EUR 63 million

Form of investment 100% of the hotel and spa

CONTACT DETAILS MR. TAMÁS BENKÓ CS + 36 30 934 7184 [email protected] www.zalasprings.hu