Strictly Confidential For Addressee Only Café Royal 68 Regent Street London W 1B 5EL Report and Valuation for Alrov Property & Lodging Valuation Date 31 December 2012 Alrov Property & Lodging Café Royal Hotel, 68 Regent Street, London W1B 5EL as at 31 December 2012 Contents A Valuation Report ............................................................................................................. 2 1 Instructions ............................................................................................................................................................................. 2 2 Background to the Valuation ............................................................................................................................................. 2 3 Bases of Valuation ................................................................................................................................................................. 2 4 Assumptions, Departures and Reservations ................................................................................................................. 3 5 Inspection ................................................................................................................................................................................ 3 6 Sources of Information ........................................................................................................................................................ 3 7 General Comment ................................................................................................................................................................ 3 8 Limitations ............................................................................................................................................................................... 4 9 Valuation .................................................................................................................................................................................. 6 10 Valuation for a Regulated Purpose ................................................................................................................................... 7 11 Confidentiality ........................................................................................................................................................................ 7 12 Disclosure and Publication ................................................................................................................................................. 7 Appendix 1 Draft Reference for Publication ........................................................................................................................................ 9 B Property Schedule......................................................................................................... 10 1 General .................................................................................................................................................................................. 10 2 Location ................................................................................................................................................................................. 10 3 Description ........................................................................................................................................................................... 13 4 Structural Condition and Repair ..................................................................................................................................... 29 5 Environmental Considerations ........................................................................................................................................ 30 6 Town Planning and Statutory Considerations............................................................................................................. 30 7 Taxation ................................................................................................................................................................................. 32 8 Tenure .................................................................................................................................................................................... 33 9 Tenancies ............................................................................................................................................................................... 33 10 Market Trends and General Comments ...................................................................................................................... 33 11 Valuation Considerations .................................................................................................................................................. 45 12 Valuation Methodology and Commentary ................................................................................................................... 51 13 Market Value ........................................................................................................................................................................ 55 Appendix B1 Hotel - 10 Year Forecast .................................................................................................................................................. 56 Appendix B2 Hotel - Valuation Calculations ......................................................................................................................................... 57 Appendix B3 Retail - Schedule of Tenancies ......................................................................................................................................... 58 Appendix B4 Retail - Schedules of Comparable Evidence................................................................................................................. 59 Appendix B5 Retail - Valuation Calculations ......................................................................................................................................... 60 C Instruction ....................................................................................................... 61 Appendix C1 Instructions (Correspondence) ....................................................................................................................................... 62 Appendix C2 Information Supplied .......................................................................................................................................................... 63 Alrov Property & Lodging Café Royal Hotel, 68 Regent Street, London W1B 5EL A Valuation Report To: Alrov Property & Lodging Attention: Mr Roni Greenbaum Property: Café Royal, 68 Regent Street, London W1B 5EL Report Date: 12 February 2013 Valuation Date: 31 December 2012 1 Instructions Appointment We are pleased to submit our valuation report, which has been prepared for financial reporting purposes. The properties and interests valued are detailed in Part B. The valuation has been carried out in accordance with the instructions detailed in Part C of this report. The extent of our professional liability to you is also outlined within these instructions. We confirm that we have sufficient knowledge, skills and understanding to undertake the valuation competently. In accepting this instruction, we confirm that we do not have any conflicts of interest in dealing with this matter. 2 Background to the Valuation You have told us that the valuation report is required for financial reporting purposes and that these financial statements are being prepared in accordance with IFRS and in particular IFRS 13. 3 Bases of Valuation The valuation and report has been prepared in accordance with the RICS Valuation Standards, 8th Edition as amended (the “Red Book") by a valuer acting as an External Valuer, as defined within the Red Book. We confirm that the valuer conforms to the stipulated requirements. The valuation and report has been prepared in accordance with the IVSC International Valuation Application 1 (IVA 1). Valuation Advisory 2 Alrov Property & Lodging Café Royal Hotel, 68 Regent Street, London W1B 5EL Bases The properties in Part B have been classified held as investments and have been valued on the following basis: Hotel - Market Value as a fully-equipped operational entity, having regard to trading potential Retail – Market Value as income producing investment let to occupational tenants Definitions Our Principal Terms of Appointment as Valuers (within Part C) contain full definitions of the Red Book valuation bases. 4 Assumptions, Departures and Reservations We have prepared our valuations on the basis of the assumptions within our instructions detailed in Part C of this report. We have valued the Hotel on the Special Assumption that the property is complete and fully operational as at the date of valuation, i.e. 31 December 2012. We have made no Departures from the Red Book. 5 Inspection We have inspected the property. The inspection was carried out by Stephen Richardson MA FRICS and Ben Russell MRICS of the London office on 25 January 2013 and by John O’Neill FRICS and Richard Haywood- Farmer MRICS, also of the London office, on 31 January 2013. We did not carry out any measurements (other than retail Unit 4) or intrinsic on-site investigations and have relied upon the information provided to us. 6 Sources of Information In addition to information established by us, we have relied on the information obtained