STRICTLY CONFIDENTIAL – FOR ADDRESSEE ONLY Valuation

STRICTLY CONFIDENTIAL – FOR ADDRESSEE ONLY

Valuation Report

PANGAEA REAL ESTATE LTD

Of the following Property LAND PLOTS OF 2,397,107 SQUARE METERS LOCATED ON

THE INTERSECTION OF

PULKOVSKOE AND VOLKHONSKOE HIGHWAYS IN SAINT PETERSBURG, RUSSIA Valuation Date: 30TH OF NOVEMBER 2009 Report Issue Date: 24TH OF DECEMBER 2009

Prepared by Cushman & Wakefield Stiles & Riabokobylko 125047, Moscow, 6 Gasheka St., Ducat Place III Tel: +7 (495) 797-9600 Fax: +7 (495) 797-9601

Valuation Report

of Land Plots of 2,397,107 square meters located

on the intersection of Pulkovskoye and Volkhonskoye highways in St. Petersburg, Russia

for Pangaea Real Estate Ltd.

for the purpose of management decision making

as of 30th of November 2009

Valuation Advisory - 2 -

Table of Contents

A INTRODUCTION ....................................................................................................................- 5 -

1 INSTRUCTIONS............................................................................................................................................................ - 6 - 2 BASIS OF VALUATION............................................................................................................................................... - 7 - 3 ASSUMPTIONS, DEPARTURES AND RESERVATIONS .................................................................................... - 8 - 4 INSPECTION.................................................................................................................................................................. - 8 - 5 SOURCES OF INFORMATION ................................................................................................................................ - 9 - 6 TOWN PLANNING..................................................................................................................................................... - 9 - 7 STRUCTURE................................................................................................................................................................... - 9 - 8 SITE AND CONTAMINATION................................................................................................................................ - 9 - 9 GENERAL COMMENT .............................................................................................................................................. - 10 - 10 MARKET UNCERTAINTY........................................................................................................................................ - 11 - 11 VALUATION ................................................................................................................................................................ - 12 - 12 CONFIDENTIALITY................................................................................................................................................... - 12 - 13 PREVIOUS VALUATIONS MADE BY THE VALUER ........................................................................................ - 12 - 14 DISCLOSURE AND PUBLICATION...................................................................................................................... - 14 -

B PROPERTY SCHEDULE........................................................................................................- 15 -

1 LOCATION .................................................................................................................................................................. - 16 -

2 DESCRIPTION ............................................................................................................................................................. - 20 - 3 ENVIRONMENTAL CONSIDERATIONS ............................................................................................................ - 24 - 4 TENURE ......................................................................................................................................................................... - 24 - 5 MARKET COMMENTARY........................................................................................................................................ - 26 - 6 VALUATION METHODOLOGY AND COMMENTARY ............................................................................... - 37 - 7 VALUATION SUMMARY.......................................................................................................................................... - 49 -

C APPENDIXES .........................................................................................................................- 50 -

APPENDIX I PHOTOGRAPHS OF THE PROPERTY.................................................................................................... - 51 -

APPENDIX II INFORMATION SUPPLIED ........................................................................................................................ - 52 -

APPENDIX III VALUATION LICENSES............................................................................................................................. - 53 -

APPENDIX IV PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS.......................... - 56 -

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EXECUTIVE SUMMARY (STRICTLY CONFIDENTIAL – FOR ADDRESSEE ONLY)

LAND PLOTS OF 2,397,107 SQUARE METERS LOCATED ON THE INTERSECTION OF PULKOVSKOE AND VOLKHONSKOE HIGHWAYS IN SAINT PETERSBURG, RUSSIA

DATE OF VALUATION: 30th of November 2009

LOCATION: Located on the intersection of

Pulkovskoye and Volkhonskoye

highways in Saint Petersburg in the

Southern part of the city.

DESCRIPTION: As far as we understand the Property is

represented by 3 land plots of 239.71 ha

in total. Morgal Investments LLC plans

to develop a big residential region

including retail centres, community

centres, educational facilities, sport

centres as well as all other necessary

residential facilities on these land plots.

TOTAL AREA: 239.71 ha

TENURE: Land plots:

Land plot with cadastral number 78:14:7723B:25 containing 79.14 Ha is held freehold

by Morgal Investments LLC according to the “Certificate of State Registration of

Ownership” #78-АГ 049881 from 6th November 2007







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LAND PLOTS OF 2,397,107 SQUARE METERS LOCATED ON THE INTERSECTION OF PULKOVSKOE AND VOLKHONSKOE HIGHWAYS IN SAINT PETERSBURG, RUSSIA

Buildings:

There are three dilapidated non-residential pieces of property located on the subject

land plots.

The Property cadastral number 78:7723B:7:34 containing 52.1 square meters is

freehold by Morgal Investments LLC starting from 17 September 2007 as stated in

Ownership Registration Certificate #78-АГ 049883 from 6 November 2007.







Notices from the Federal Registration Service regarding the change of the allowed

usage of the land plots from “for agricultural use” into the “for allocation of

residential buildings” made in the National Land Title Register:

� Notice #78-78-01/0073/2009-018 from 24.02.2009 (for the land plot with the cadastral number 78:14:7723B:22)



TENURE: The Land Plot belongs to the category “land of settlement” with an allowed usage

“for allocation of residential buildings”

MARKET VALUE: Market Value of the freehold interest in the subject land plots as of the date of

valuation is: US$124 600 000

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A INTRODUCTION

Real Estate Consultants

Ducat Place III, Gasheka ul. 6

Moscow 125047

Phone+7 495 797 9600

Fax+7 495 797 9601

www.cushwake.com


Strictly Confidential - For Addressee Only Pangaea Real Estate LTD 14 Shenkar Street, Herzelia, Israel For the attention of Mr. Barak Rosen and Mr. Asaf Touchmeir Our Ref: # 08-019254 from 30th November 2009 24th of December 2009 Dear Sirs

Valuation of Land Plots of 239.71 ha in Total located on the intersection of

Pulkovskoe and Volkhonskoe highways in Saint Petersburg, Russia ("the

Property") for Pangaea Real Estate LTD (“the Client”).

1 INSTRUCTIONS

1.1 Confirmation of Instructions

In accordance with your request we have inspected the above land plots (herein referred to as the

“Property”) and made all necessary enquiries to provide you with our Opinion as to the Market

Value of the freehold interest in the Property.

We understand from the instructions received by the Client that the valuation will be used for the

Client’s management decision making.

The Client shall use and publish the Report as a basis for determining the relative value of Pangaea

Israel (T.R.) Ltd. and Pangaea Real Estate Ltd. in the merger process.

The Client or any of Pangaea Real Estate Ltd. subsidiaries shall be entitled to publish the Report in

any immediate report published according to the Israeli Securities Regulations or within their

published financial statements and/or prospectus.

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1.2 Conflicts of Interest

We confirm that there are no conflicts of interest in our advising you on the value of the Property

under the assumed conditions as instructed.

1.3 Inspections

The Property was inspected externally on 4th of December 2009. No measurement survey has been

carried out by Cushman & Wakefield Stiles & Riabokobylko (“C&W S&R”). We have relied entirely

on the site areas provided to us by the Client. We have assumed that these are correct.

1.4 Background to the Valuation

In accordance with the information on the land areas provided to us by the Client, the Property

currently represents three land plots of 239.71 ha in total located on the intersection of Pulkovskoye

and Volkhonskoye highways in Saint Petersburg, Russia.

As far as we understand the Property is represented by three land plots of 239.71 ha in total, which

are zoned as “land of settlement for allocation of residential buildings”. The Client presented plans

for developing a big residential district including retail centres, community centres, educational

facilities, sport centres as well as all other necessary residential facilities on these land plots.

2 BASIS OF VALUATION

The valuation has been prepared in accordance with the Practice Statements contained in the RICS

Appraisal and Valuation Standards ("the Red Book") published by The Royal Institution of

Chartered Surveyors and updated in January 2008 (6th edition). The valuation has been prepared by

a valuer who conforms to the requirements as set out in the Red Book, acting in the capacity of an

independent valuer.

We have prepared our valuation according to Israeli "Security Law Regulations (periodic and

immediate statements) - 1970" (8B) and in accordance with the requirements of the Red Book.

Our valuation was carried out on the following basis:

2.1 Background to the Valuation

PS 3.2 of the Red Book defines Market Value as:

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“The estimated amount for which a property should exchange on the date of valuation between a

willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the

parties had each acted knowledgeably, prudently and without compulsion.”

We set out in paragraph 9.3 of our Principal Terms and Conditions of Appointment as Valuers

(attached in Appendix IV of this Valuation Report – herein referred to as the “Report”), the

relevant basis of valuation.

3 ASSUMPTIONS, DEPARTURES AND RESERVATIONS

As assumptions is stated in the Glossary to the Red Book to be a “supposition taken to be true”

(“assumption”). Assumptions are facts, condition or situations affecting the subject of, or approach

to, a valuation that, by agreement, need to be verified by a Valuer as part of the valuation process.

In undertaken our valuations, we have made a number of assumptions and have relied on certain

source on information. We believe that the assumptions we have are reasonable, taking into

account our knowledge of the properties, and the contents of report made available to us.

However, in the event that any of these assumptions prove to incorrect then our valuations should

be reviewed. The assumptions we have made for the purposes of our valuations are referred to

below.

We have based our valuations on our inspection of the Land Plots and information supplied to us

by the Company and the results of our other enquiries.

We have made an assumption that the information the Company and its professional advisers have

supplied to us in respect of the Properties is both full and correct.

It follows that we have made an assumptions that details of all matters likely to affect value within

their collective knowledge such prospective lettings, outstanding requirements under legislation and

planning decisions have been made available to us and that information is up to date.

In terms of the Assumptions which we have made and which are summarized within this Valuation

Report, the Company has confirmed that our Assumptions are correct as far as they are aware. In

the event that any of our Assumptions prove to be incorrect, the valuation contained in this

valuation report should be reviewed and modified as necessary.

4 INSPECTION

We inspected the subjected land plots on the 4th of December 2009.

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5 SOURCES OF INFORMATION

We have based our Valuation on our inspection of the Property and information supplied to us by

the Client and the results of our other enquiries.

6 TOWN PLANNING

We have not made formal searches, but have generally relied on verbal enquiries and any informal

information received from the Local Planning Authority or from the Company.

Each valuation is on the basis that the property has been erected either prior to planning control or

in accordance with a valid planning permission and is being occupied and used without any breach

of planning or building regulations. Except where stated otherwise, each valuation is on the basis

that each property is not affected by proposals for road widening, Compulsory Purchase, planning

inquiry, or archaeological investigation.

Each valuation reflects our opinion of an appropriate development that could reasonably be

expected to form the basis of a bid for a property by a third party. Therefore our valuations do not

necessarily reflect the Company’s intended investment /development program.

7 STRUCTURE

We have neither carried out a structural survey of each property, nor tested any services or other

plant or machinery. We are therefore unable to give any opinion on the condition of the structure

or services at any property. Each valuation takes into account any information supplied to us and

any defects noted during our inspection, but otherwise are on the basis that there are no latent

defects, wants of repair or other matters which would materially affect each valuation.

We have not inspected those parts of each property which are covered, unexposed or inaccessible

and each valuation is on the basis that they are in good repair and condition.

We have not investigated the presence or absence of High Alumina Cement, Calcium Chloride,

Asbestos and other deleterious materials. In the absence of information to the contrary, each

valuation is on the basis that no hazardous or suspect materials or techniques have been used in the

construction of any property. You may wish to arrange for investigations to be carried out to verify.

8 SITE AND CONTAMINATION

We have not investigated ground conditions/stability and each valuation is on the basis that any

buildings have been constructed, having appropriate regard to existing ground conditions. Where

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the property has development potential, our valuation is on the basis that there are no adverse

ground conditions which would affect building costs. However, where you have supplied us with a

building cost estimate, we have relied on it being based on full information regarding existing

ground conditions. We have considered the Company’s construction estimates in the light of typical

market norms.

We have not carried out any investigations or tests, nor been supplied with any information from

you or from any relevant expert that determines the presence or otherwise of contamination

(including any ground water). Accordingly, our valuation has been prepared on the basis that there

are no such matters that would materially affect our valuation. Should this basis be unacceptable to

you or should you wish to verify that this basis is correct, you should have appropriate

investigations made and refer the results to us so that we can review our valuation.

9 GENERAL COMMENT

Our Report is derived from the analysis of recent market transactions, together with our market

knowledge derived from the Firm’s agency coverage.

A valuation is a prediction of price, not a guarantee and different Valuers can properly arrive at

different opinions of potential future worth.

We have made subjective judgements during our approach in arriving at our Valuation and whilst

we consider these to be both logical and appropriate they are not necessarily the same as would be

made by a purchaser. The purpose of the valuation does not alter the approach to the valuation.

Property values can change substantially, even over short periods of time, and so our opinion of

value could differ significantly if the date of valuation was to change. If you wish to rely on our

valuation as being valid on any other date you should consult us first.

Should you contemplate a sale, we strongly recommend that the property is given proper exposure

to the market. In a rapidly rising market, or in the case of a property with development potential,

the inclusion of a 'clawback' provision in the sale contract should also be considered, so that further

sums become payable if the property is quickly re-sold at a profit.

You should not rely on this report unless any reference to tenure, tenancies and legal title has been

verified as correct by your legal advisers.

Our Valuation is exclusive of any Value Added Tax.

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10 MARKET UNCERTAINTY

Where uncertainty could have a material effect on an opinion of value, the Red Book requires a

valuer to draw attention to this, indicating the cause of the uncertainty and the degree to which this

is reflected in the valuation reported.

The global banking crisis and consequent reduction in the availability of debt, coupled with the

economic downturn, have caused property values to experience sharp falls in value and liquidity,

with very few transactions being completed.

Although recent transactions could be considered distressed, it is inappropriate to conclude that all

recent market activity represents forced transactions. An imbalance between supply and demand

(for example, fewer buyers than sellers) is not always a determinant of a forced transaction. A seller

might be under financial pressure to sell, but it is still able to sell at a market price if there is more

than one potential buyer in the market and a reasonable amount of time is available for marketing.

Similarly, transactions initiated during bankruptcy should not automatically be assumed to be

forced.

It has been held that valuers may properly conclude within a range of values. This range is likely to

be greater in an illiquid market where inherent uncertainty exists and a greater degree of judgement

must therefore be applied.

Some parts of the market, particularly for secondary or vacant properties, have experienced

particularly nil transaction volumes. As a consequence, there’s hardly any market evidence upon

which to base our valuation and so we have had to exercise a greater degree of judgement than

usual. We have considered both current and historic market evidence available and endeavoured to

reflect current market sentiment, although the signals are mixed.

We strongly recommend that you keep the valuation of the subject property under review. You

should also anticipate a longer marketing period than would previously have been expected in the

event that the property is offered for sale.

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11 VALUATION

11.1 Market Value

Subject to the contents of this Report and based on current values, we estimated the Market Value

of the freehold interest in the Property.

We are of the opinion that the Market Value of the freehold interest in the Property as of 30th of

November 2009 is:

US$124 600 000

(ONE HUNDRED TWENTY FOUR MILLION SIX HUNDRED THOUSAND US

DOLLARS)

The findings contained in our Report are based on calculations, conclusions and other information

obtained as a result of market research, on our expertise in the course of which we received certain

information.

12 CONFIDENTIALITY

The contents of this Report are intended to be confidential to the addressees and for the specific

purpose stated. Consequently, and in accordance with current practice, no responsibility is accepted

to any other party in respect of the whole or any part of its contents. Before the Report or any part

of its contents are reproduced or referred to in any document, circular or statement or disclosed

orally to a third party, our written approval as to the form and context of such publication or

disclosure must first be obtained. For avoidance of doubt, such approval is required whether or not

this firm is referred to by name and whether or not our Report is combined with others.

The Report should only be reproduced, in accordance with any of the above requirements, in full

and including all of the assumptions and conditions pertaining thereto. No part of the Report shall

be reproduced in isolation.

13 PREVIOUS VALUATIONS MADE BY THE VALUER

According to Clause 5 of the Israeli "Security Law Regulations (periodic and immediate statements)

- 1970" (8B) we are instructed to list the details of previous valuations made by Cushman &

Wakefield Stiles & Riabokobylko.

A. During the three years preceding the Effective Date of the Valuation we made 2 valuation

reports. Short summary of these reports in presented in the table below.

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Type of Value

Value Estimated

Date of Valuation

Purpose of Valuation

Report #1 Hypothetical Value Indication of the freehold interest in the subject land plot assuming that the documentation concerning changing the zoning is obtained.

Hypothetical Value Indication of the freehold interest in the subject land plot assuming that all the legal permissions required for starting the construction works are in place

US$977 305 000 excluding VAT

US$1 058 853 000 excluding VAT

31st of December 2007

For Fundraising and IFRS purposes

Report #2 (Letter of Opinion)

Market Value of the freehold interest in the Property

not lower than $125 000 000 excluding VAT

22nd of January 2009

For internal management decision making

B. The deviations of the valuation between the values given in the report as of December, 31st,

2007 and as of the current date of valuation (30th of November 2009) comprise more than 20%

(around 87%). This difference is explained by special assumptions used in the valuation in 2007

and the current market situation (the financial crisis that hit the whole world in 2008). This

crisis also changed real estate market in Russia and resulted in heavy price-falls especially on the

land market. Average price-drop from the beginning of the crisis till now made up around 70-

90% depending on location of the land plot, its category, legal status, and its attractiveness

from investment point of view, etc. Therefore such deviations between the valuations represent

regular state of affairs under current market conditions.

C. Based on the special assumptions, the main approach used in the valuation as of December,

31st, 2007 was income approach based on the discounted cashflow method. In the current

report we used sales comparison approach as the main approach of market value

determination. This is again explained by the influence of the financial crisis and market

changes that followed. Under current market conditions income approach is less reliable due to

real difficulties in estimation of introductory values and forecasts of main financial inputs

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(rental rates, discount rates, construction terms, sales schedule, etc.). Even small alterations of

initial data make great differences in the results because of high level of sensitivity of the

model. Therefore Sales Comparison Approach is more reasonable and advisable for application

at present.

14 DISCLOSURE AND PUBLICATION

We are aware and agree to the publication of our valuation report and the filing thereof in any

required filling under any security laws applicable in Israel.

Yours faithfully,

For and on behalf of Cushman & Wakefield

TIMOTHY MILLARD MRICS

Partner

KONSTANTIN LEBEDEV MRICS

Deputy Head of Valuation Advisory Department

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B PROPERTY SCHEDULE

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1 LOCATION

1.1 General

In the east the land plot

borders with the Pulkovskoe

highway, which changes its

name to Kievskoe highway in

the southern direction, in the

direction of south-west – Luga,

Pskov towns, Belorussia,

Estonia and Latvia.

In the north the land plot

borders with the territory of

Pulkovskaya Astronomic

Observatory, the monument of

national significance. The

adjacent territories to the

Observatory are used for

horticultural establishment

needs. The Observatory is

located at the highest point of

Pulkovskie heights. Pulkovo

Airport is situated in flatlands

behind them.

On the west there are former territories of agricultural lands which are planned to be used for

recreational zone. The Southern city cemetery borders the plot in the west.

In the south the plot bounds with Pulkovo village and Volkhonskoe highway which connects

Pushkin town and Strelna village to the shore of Finsky Bay.

The land plot is located on the border of two city districts – Moskovskiy and Pushkinskiy.

Mosckovsky district of St. Petersburg is also called the “southern gates of the city”, while it hosts

Pulkovo airport and two large Russian highways – “Rossia” and “Pskov” (Kiyevskoye highway).

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It is located in the south-west of St. Petersburg and occupies the territory of 7,107 ha. The

population of the district is about 252 thousand people. Main metro stations on the territory of the

district are Moskovskiye Vorota, Elektrosila, Park Pobedy, Moskovskaya, Zvezdnaya, Kupchino.

Moskovskiy district is characterized by a highly developed infrastructure including 43 schools, 73

kindergartens, a number of professional colleges and technical schools as well as sports and health

facilities.

Moskovskiy district belongs to one of the most industrially developed districts of the city and

belongs to the five largest ones, providing about 60% of all industrial production. Main branches of

the district are machinery and food industry. Plants and factories, located in the district, deliver

goods to more than 35 countries. The most significant branches for the district are transport cargo

and passenger traffic as well as trade.

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Pushkinsky district is also located in the southern part of St. Petersburg. The district includes five

municipal formations:

� The city of Pushkin

� The city of Pavlovsk

� Aleksandrovskaya village

� Tyarlevo village

� Shushary village

The population of the district is about 122 thousand people. More than 70% of the population live

in the city of Pushkin. Main district attractions are “Tsarskoye Selo” and ‘Pavlovsk”.

1.2 Communications

The Pulkovskoe highway is the highway of national significance – cargoes are shipped through this

highway in directions of Belorussia, Poland as well as to Baltic countries. In August 2009 a large-

scale reconstruction was started. The highway is being enlarged and a new viaduct has been arisen.

In future it is planned to be used as the main highway. Together with reconstruction of Pulkovskoe

highway, the interchange in the close proximity to Pulkovo-I Airport (till 2010), and Volkhonskoe

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highway towards Pushkin town, it is also planned to construct a new road interchanges – between

Pulkovskoe and Volkhonskoe highways in particular; construct a new road crossing Krasnoselskoe

highway (till 2015) and a road to Pushkin town. Recently the works to connect Encircling highway

to the Pulkovskoe highway were accomplished.

Currently there are no long-term plans of city committees to build any main roads or streets

crossing the subject land plot.

We estimate that the time to drive from the subject land plot to the centre of Saint Petersburg is

about 30-40 minutes depending on traffic conditions. The time to drive to Pushkin town is about

10-15 minutes.

There is a big interchange as well as terminal of public transportation heading to several directions

close to the border between the subject land plot and Pulkovskoe highway. There is a large public

transportation to Pushkin town, to Krasnoe Selo village (through Volkhonskoe highway) as well as

to Gatchina town. There is a quite convenient connection to the southern part of the city as well.

About three kilometres away from the subject land plot there is a railway towards south-west

direction from the Baltiysky railway station of the city. It is facing the direction of Gatchina, Luga

and Pskov towns. The nearest railway station Alexandrovskaya is situated 3.5 kilometres away from

the subject land plot.

Pulkovo Airport is located in a close proximity to the subject land plot. Pulkovo-I Airport is 7.5

kilometres away and Pulkovo-II – 7 kilometres.

Pulkovo Airport has two main terminals:

1. Pulkovo-1 is intended for internal flights

services and flights across CIS.

2. Pulkovo-2 is intended for international

flights.

Pulkovo Airport takes the forth place among all

Russian airports according to the number of passengers carried.

To summarise, the site accessibility can currently be described as being satisfactory.

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2 DESCRIPTION

2.1 General

The subject Property consists of 3 separate cadastral plots situated on the intersection of

Pulkovskoe and Volkhonskoe highways in Saint Petersburg (Cadastral No 78:14:7723B:25,

Cadastral No 78:14:7723B:22 and Cadastral No 78:14:7723B:27 of 79.14, 77.46 and 83.11 ha

correspondingly), summarizing to total area of 239.71 ha. The subjected land plots are held freehold

by the Client from 6th November 2007 and all zoned as “land of settlement”.

The land plot is situated in the valley of a small river,

the left tributary of the Pulkovka River. It is located on

the Pulkovskie heights in the southern part of Saint

Petersburg on the border of Moskovskiy administrative

district, in municipal district 47, on the former territory

of Tsvety LLC, which used to have greenhouses for

growing trees for the city’s needs.

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Most part of the territory is cultivated with forest

plantations including fine woods such as oaks and ash-

trees aging from 5 up to around 25 years old. Some

horticultural establishments are located on the territory

of the land plot as well. The rest part of the territory is

empty. There are three dilapidated non-residential

pieces of property on the land plots as well. Those are

held freehold by the Client. The properties are

registered in the real estate cadastre (Cadastral No

78:7723B:7:34, Cadastral No 78:7723B:7:35, Cadastral

No 78:7723B:7:36), have an address (Pulkovskoe

highway 103 letter “O”, “P” and “П” correspondingly)

and have a total area of 52.1, 219.5 and 52.1 square

metres correspondingly). According to the available

copies of “Certificate of State Registration of

Ownership” all the tree buildings are non-residential.

The building located at the address Pulkovskoe highway 103 letter “P” is a building of former

pumping station which previously was used to supply water for melioration of the greenhouses’

territory. It is located in the north-west part of the land plot, on the bank of a pond. Currently the

building is totally empty.

2.2 The Future Development Concept: “Planetograd”

Please note that the concept has been taken from the

documentation provided by the Client without any

further feasibility check by C&W S&R.

Planetograd – (City of Planets), the inspiration for this

project came from the nearby Pulkovskaya

observatory. This project represents a modern high quality residential quarter in Saint Petersburg

based on advanced designing principles, offering a convenient and high quality lifestyle, the future

of the city. The quality of life offered in this new urban project holding over two and half million

square meters is exceptional in Russia in general and in Saint Petersburg in particular. The main

focus was to create an environment for a full life, providing everything to fulfil the needs of the

inhabitants in: education, culture, shopping and sports.

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Pulkovskaya observatory was established in 1833. It is now the central and main institute of cosmos

study in Russia also known in the professional world of cosmos study worldwide.

The idea of neighbourhood with Pulkovskaya

observatory inspired “Y.A. Yashar Architects” to design

a new residential complex in a shape of Solar System. At

the centre lies the sun, surrounded by eight planets,

representing eight smaller neighbourhoods according to

the number of the planets surrounding the Sun.

According to the project each smaller neighbourhood of Planetograd will be called on the name of

a planet. Each neighbourhood will be holding 3 125 apartments, built around the neighbourhood

green zone of two Ha and a recreation centre in the shape of planet located in the middle of the

neighbourhood. The main public facilities such as four high schools, four elementary schools, sport

facilities, mall, entertainment centre, an expansive park and a big concert hall in a shape of Sun are

located in the middle of the whole region.

The central motif in the quarters design is the pedestrian. The main traffic system is green, a

peripheral park that connects the centres of the different neighbourhoods, with their parks, and all

are connected to the heart of the quarter in green walking routes, with no crossing roads.

The four-stair structures with their wide green background provide the whole quarter a pleasant and

personal atmosphere, with the central section being public, and as you move further away the

spaces become more and more private.

To the north of Planetograd projected a big green zone for extreme sports (0.3 Ha). The new

neighbourhood is planned to be full of parks, lakes, free space; it will be wide and airy.

Each district is planned to contain some amenities

such as kinder gardens, after school educational

clubs, restaurants, cinemas, shopping galleries food

courts as well. However most of the amenities will

be focused in the Sun region, in the middle of the

whole neighbourhood. It is also planned to construct

the inside and outside sport centres (saunas, fitness

centres, tennis courts, swimming pools etc).

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The streets in Planetograd are planned very wide and straight, which allows an easy and fast access

to all districts avoiding traffic jams. Moreover, as it was mentioned before, there is a pedestrian

access from each district to the centre with no crossroads which allows children to reach their

schools without crossing any road, which will decrease the possibility of accidents in the region.

As was said above the complex will consist of eight quite independent residential districts according

to the amount of the planets in the Solar System. This idea allows the developer to divide the

project to eight smaller and independent ones, which will allow merging risks and investments. In

total it is planned to build 25 000 apartments. 31 250 parking lots will allow convenient access to

the whole complex, providing that there will never be any problems with parking space all over the

region.

As was mentioned above the subject land plot is located on the Pulkovskoye and Volkhonskoye

highways in Saint Petersburg. There is a good public transport connection between the land plot

and southern part of Saint Petersburg, Pushkin town and other towns in the region.

The development of the land plot is to be started in 12-18 months and end in 2016.

2.2.1 Limitation conditions for the future construction

The request for limitations of the construction was received from Pulkovskaya observatory.

In order to decrease unfavourable factors disturbing the activity of the observatory there are several

requests that must be fulfilled:

• the buildings in the complex should not be higher than 21.75 meters1;

• there must not be new sources of concentrated emission of heat such as boiler pipe;

• new premises must contain a reliable heat insulation to decrease the amount of warm air

coming from the buildings;

• there must neither be vertical or horizontal strong sources of lights towards the direction of the

observatory, nor any illumination of the sky;

• the total observatory main building dome illuminance would not get over 0.05 luxmeter;

• there must be some green plantations in order to screen the light coming out of the windows

facing the observatory.

1 According to the current planning the height of the buildings is 12 meters, which fulfils the limitation

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2.3 Site Area

According to documentation available to us the Property is represented by three land plots

extending to 239.71 ha in total.

3 ENVIRONMENTAL CONSIDERATIONS

We have not carried out any investigations or tests, nor have been supplied with any information

from the owner or from any relevant expert that determines the presence or otherwise of pollution

or contaminative substances or any other land (including any ground water).

However, we would like to mention that there are several environmental issues that must be taken

into consideration:

• The plot is located about 1.3 kilometres from the city garbage dump, which rises high above a

hill and can be seen well from the southern and western sides of the plot. This can affect the

air purity, especially while the dump is burning. However, this is only possible when the south-

eastern wind is blowing which happens in average 30 days annually. Moreover, at 1.3

kilometres the smell disperses. Moreover, according to the new development planning this

dump is planned to be removed from the place.

• The western side of the plot borders the Southern city cemetery.

Considering all said above we would not expect there to be any outstanding environmental or

archaeological issues.

4 TENURE

As it was said above the Client has the freehold in all the mentioned land plots:

• cadastral number 78:14:7723B:25 containing 79.14 ha is held freehold according to the

“Certificate of State Registration of Ownership” #78-АГ 049881 from 6th November 2007,


“Certificate of State Registration of Ownership” #78-АГ 049827 from 6th November 2007,


“Certificate of State Registration of Ownership” #78-АГ 049882 from 6th November 2007)

As well as the following non-residential pieces of property located on the subject land plots:

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• The Property cadastral number 78:7723B:7:34 containing 52.1 square meters is freehold by

Morgal Investments LLC starting from 17 September 2007 as stated in Ownership

Registration Certificate #78-АГ 049883 from 6 November 2007.







In January 2009 allowed usage of the mentioned land plots has been changed which was changed

from “for agricultural use” into the “for allocation of residential buildings”. This was stated in the

Federal Registration Service and made in the National Land Title Register:

• Notice #78-78-01/0073/2009-018 from 24.02.2009 (for the land plot with the cadastral

number 78:14:7723B:22)


number 78:14:7723B:27)


number 78:14:7723B:25)

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5 MARKET COMMENTARY

5.1 Brief Economy Overview

The best way that describes Russia’s macroeconomics in 3Q 2009 is to use the term “stability”. All

macroindices fell sharp against 2008, but show stable condition or even modest growth on MoM

basis this year.

According to the recent data from Rosstat Russia’s GDP fell by 10.8% YoY, however showed

+7.4% QoQ. The pattern of industrial production is the same: -12.6 YoY and +0.5% QoQ SA.

Retail trade turnover shows positive dynamics for the fourth consecutive month with average

growth rate of 1.12% MoM, but still the YoY fall is –9.8%.

The unemployment level also shows trend for reduction, however it remains high: 7.8% in August

at that is 6mn of people.

The analysis of relative indicators -

such as consumer confidence index,

industrial production index change,

IET industrial optimism index, RTS

index and retail trade turnover

growth—shows noticeable results.

Projected on the timeline of the

economy situation they may serve as

prognostic indices for several upcoming months.

Industrial optimism index appeared to be the most sensitive for negative trends on the market: it

started to decline yet in Q1-Q2 2007, actually a year before the overall economy was impacted.

Opposite to this—the most inertial of them is Retail trade turnover: it showed positive values and

even slight growth at the end of 2008, when all others fell sharp. Now its negative trend is still

there, despite the other indices show positive trend starting from Q1-Q2 2009, and even from Q4

2008 for IET industrial optimism! Retail consumption is one of the main drivers of economy

wealth and its current downward trend does not allow us to speak about the economics’ recovery.

However, we hope that Russia will enter the recovery stage soon.

After 6 months of destocking, Russian economy started showing some subtle positive trends in

industrial production and cargo turnover. However these good news came along with serious shift

in household consumption. Over recent years Russians proved to be heavy shoppers, leaving more

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than 70% of household budget in the shops. Consumer expenses were growing since 2003

however in 2009 the share of retail in household budget lost 6 pp against previous year. Consumers

cut down their expenses in favor of savings and paying back debts.

However, consumer confidence index stabilized after sharp decrease and we do not expect further

significant compaction of consumer spending.

Now it is time for retailers to adapt to new consumption patterns. Some of them will even will be

able to increase their market share.

Rent Indexation ATB Currency

Rent indexation is always a big issue for Russian market due to the following reasons:

• Rent is nominated in foreign currency

• Inflation is always two-digits.

This means that lease contracts are exposed both to currency and inflation risk.

Landlords are financing construction with loans in US$ or EUR and so they want to fix rent in the

same currency. It works perfectly when tenant’s budget is in USD or EUR.

Then US CPI or European HICP is used for indexation, but sometimes fixed 3-5% annual

indexation is used.

But if the tenant is budgeted in RUR, he wants to secure himself from risk of national currency

devaluation. In such cases complicated lease structures can appear.

For example: US$1000 paid in RUR according to Central Bank exchange rate, unless Central Bank

rate exceeds certain limit, than this limit is used. Basically this is the way to split currency risks.

Again in such case US CPI or fixed indexation can be used.

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Sometimes one can find in the contract statements like: “US$1000 paid in RUR at rate of 25 RUR

per US$” This indeed means Ruble nominated rent but allow parties to pretend that this is dollar

rent. In such case Russian CPI can be applied.

In today’s “low” market, landlords wish to factor in the rent not only devaluation and inflation but

also an expected future growth of market rents. This is a matter of hard negotiations between

parties. Sometimes fixed rents are offered like US$500 in first year, US$700 in second, US$800 in

the following years.

5.2 Investment Market

Q3 2009 brought activity to the investment market, as the summer vacation season came to end a

couple of noticeable events took place: International investment forum in Sochi, Investment forum

of VTB in Moscow, cancellation of Sberbank limitations for individual credits and two consequent

reductions of refinancing rate by Central bank: by 0.25 and 0.5 pp accordingly.

All these events may be characterized as an appeal to potential investors. Here are some factors that

make Russian functionaries troubled and force them to make serious steps to increase capital

inflow.

1. In 2008 capital outflow resulted US$130 bn, Q1 2009 showed US$27.6 bn and additional US$ 39

bn flew out of Russian economy in Q3. Thus, the officially forecasted level of 42 bn USD has been

already exceeded and, that is more important, now it is Russian capital as well.

2. For now Russia’s gold and FX reserves account to about US$550 bn, the Reserve fund gives

US$140 bn more and National Welfare fund adds more US$32 bn to this basket. In the spot of

economy stabilization in two upcoming years both will be completely drawn out.

3. Recently published IMF research named India and China as the main drivers of world economy

growth for the near future.

Now emerging markets are generating about 30% of the world GDP, according to IMF data.

However, according to EPFR Global, the investments into emerging markets are still 1/8 of the

ones for the developed countries. Thus the investment market of the emerging countries is

underestimated and, if the forecasts are correct, we will see the increasing capital inflow into these

countries. But at the same time this report says that the downfall of Russia’s economy appeared to

be worse than expected thus Russia may find itself out of BRIC.

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Coming from these gloomy outlooks we hear promises regarding the reduction of state presence in

the economy, creating favorable investment climate, removing the obsolete licensing and control

procedures for business and investments and even the interest in investments into strategic sectors

of Russia’s economy expressed by prime-minister Putin on the VEB Investment forum.

But the facts that we see are pretty much opposite to the verbal statements. We saw governmental

ultimatum to Renault-Nissan requiring either to increase investments into dying AvtoVAZ or to

decrease its market share in it and state law concerning foreign investments into strategic sectors of

economy that strictly limits the possibilities of foreign investments in these sectors, but at the same

time, these sectors are most profitable among Russian economy.

It looks like the state keeps the most profitable sectors for itself, leaving foreign capital with the

possibility for long-term and risky investments without guarantees of investment stability. Who is

going to be a winner in this case?

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5.3 Commercial Real Estate Investments

Real estate investment market shows us the same trends as the global market does. The most

remarkable are disastrous fall of foreign investments compared to 2007 and 2008 and prevailing

share office deals over the rest of the market (83%).

In Q3 2009 total volume of the investment deals on the market accounted to US$745.3 mn,

compared to US$447.5 mn in Q1 and US$569.5 mn in Q2. There is certain interest on the

investment market and its further development depends on vendors’ appetites and from the

interest of foreign capital.

Now investors are ready to invest in projects with capitalization rate starting from 12.5% - 13%,

however most of vendors are ready to sell projects starting from 9.5 - 10% as the most appropriate

for the market. The market is yet to find the level of capitalization rates that will fit both vendors

and investors.

For the Q4 we expect that the investment market will keep its current pace thus the total volume of

investment deals will reach US$2.5 bn.

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5.4 Land Market Overview

5.4.1 General characteristics

Land market has experienced a lot of changes since the beginning of the crisis. According to all

specialists land market reached the bottom quicker than all other segments of real estate.

Land prices have always been determined mostly by the balance of demand and offer. In 2007- first

half of 2008 huge demand for land plots for construction and complex development was the main

lever of the price boom.

At present, all deals in St. Petersburg involving huge projects and investments have stopped.

Demand is shifted to small land plots of 0.5-1.5 ha. Land plots of 3 ha show only solitary interest,

whereas land plots of more than 10 ha are practically not considered at all.

Main market share is represented by small land plots of 1 ha for individual construction.

If speaking about price changes, the biggest drop was marked in the segment of agricultural lands.

The difference between pre-crisis and current prices has reached 10 times already. Rather

overstated prices on these lands in 2008 were dictated mainly by the perspective of their transfer

into commercial use whereas under current market conditions these lands turn out to be not in

great demand.

Land plot prices in central parts of St. Petersburg have dropped by 40-50%. If last year prices there

fluctuated around $3,000-5,000 per sq. m, today they are around $1,500-2,000 sq. m. The price of

the real deal will be even lower.

Large land plots cost 50% to 70% cheaper than last year. Buyers of such land plots are represented

by huge developers which do not have enough money to invest into large-scale projects or land

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banking. Middle-size land plots (1-3 ha) suffered the least as they are mostly interesting for small

groups of investors who do not dare to enter a project alone – these land plots have become 20-

40% cheaper.

In general offer is much higher than demand now. When crisis struck, the market was going

through a mass cottage development boom. But around 75-80% of all developers left their projects,

putting their land assets on sale.

Though the number of land plots for sale has doubled, the largest in-flow of offers represents lands

without any engineering pre-works, agricultural land and other low-liquid land (with legal problems

or encumbrances), whereas demand today is oriented on fully prepared land plots. At present

investors only sell land assets, and buyers are represented by end-customers (industrial companies,

retail and service companies, etc.)

It is practically impossible speak about any kind of regular price formation under current market

situation, where every land plot owner determines the discount relying on his own economic

realities.

At present prices are at the level of US$100 per sq. m of projected improvements against US$400-

500 before crisis. If land is included into the price of 1 sq. m then development of 1 sq. m will cost

around US$2,000 against US$2,500 before crisis. It is quite obvious that developers who saved

some free cash are in a very good position now as it is very profitable to buy land and build at

present.

Land plot prices depend greatly on the market conditions. Even small change of price of the end-

product (apartments or retail spots) leads to the change in the land price. Land component in the

general price of the end-product takes no more than 10%. Therefore land has become several times

cheaper notwithstanding the fact that the end-product price (apartments or rental rates) has

dropped only by 20%. Nevertheless if the end-product becomes more expensive, land prices will

immediately go up.

5.4.2 Land Plot Offer in St. Petersburg as of Q3 2009

All represented land plots are divided into three categories:

1. Business objects – these are objects (buildings, building complexes), intended for reconstruction

for allocation of business-centers, hotels, banks, etc.

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2. Residential objects – these are land plots for different-level residential construction or buildings,

intended for reconstruction into residential objects.

3. Multifunctional objects – these are objects (land plots, buildings, property complexes), which can

be used for retail, business and complex zones.

The chart below shows the proportion of land plots intended for different use depending on the

object of development.

Objects ratio according to categories

Objects for

business

development;

33%

Objects for

residential

development;

17%

Objects for

multifunctional

development;

50%

In general all land plots can be characterized in the following way:

1. Land plots for business development are concentrated mainly in central and elite city district.

Too many factors influence price formation of these objects which means big difference in price.

Therefore price range here is from US$500 to US$10,000 per sq. m of land.

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2. Land plots for residential construction are represented on the map below:

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These land plots can be divided into the following groups:

- huge land plots from 5 to 100 ha, which are located in the suburbs of the city, in new

development districts, near the KAD (Orbital Road) and in the outskirts of St. Petersburg. Such

land plots cost from US$40 to US$100 per sq. m of land.

- land plots for construction of one or two houses in a densely populated areas. This group takes

the biggest share of the market (50%). Here prices range from US$250 to US$1,000 per sq. m of

land.

- small spots in central and historic elite parts of St. Petersburg. This is the most expensive land

where prices may reach US$5,200 per sq. m.

Land plots for residential development

32%

50%

18%

Huge land plots in new

districts, average price -

US$90/sq. m

Land plots in already

developed districts,

average price -

US$600/sq. m

Land plots for elite

residential objects,

average price -

US$2,200/sq. m

3. Multifunctional objects are located practically in every part of the city. A bit higher concentration

is observed at the city’s gateway along Vyborgskoye and Pulkovskoye highways.

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The biggest share here is taken by land plots of different size – 75%. 25% are represented by

buildings and property complexes for reconstruction.

Prices on land plots for multifunctional development, US$/sq. m

more than

1,000; 8%

from 500 to

1,000; 9%

up to 500; 83%

The biggest part of land plots (83%) reach US$500 per sq. m. Buildings and property complexes

cost higher and may reach US$3,400 per sq m, making US$2,800 per sq. m of a building on average.

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6 VALUATION METHODOLOGY AND COMMENTARY

There are three generally adopted approaches used to value property: The Sales Comparison

Approach; The Income Approach; and The Cost Approach. We have valued the Property using the

Income Approach, taking into account sales comparables. The cost approach has not been used as

this produces a “Non-Market Value” suitable for financial statements relating only to “specialised

properties”. A description of mentioned above approaches and how these relate to the Russian

Market, follows.

In preparing our valuation we have relied upon our knowledge of the investment market and the

available evidence which is summarised in our market commentary:

The Cost Approach

Under IVS this approach is relevant to specialised properties (i.e. properties that are rarely if ever

sold on the open market … due to their uniqueness which arises from their specialised nature and

design of the buildings, their configuration, size, location or otherwise) and Limited Market

Property (i.e. properties that because of market conditions, unique features, or other factors attract

relatively few buyers).

The Income Approach

In the Income approach, an estimate is made of prospective economic benefits of ownership.

These amounts are discounted and/or capitalised at appropriate rates of return in order to provide

an indication of value.

The most commonly used technique for assessing market value within the Income Approach is

Discounted Cashflow. This is a financial modelling technique based on explicit assumptions

regarding the prospective cashflow to a property or business and the costs associated with being

able to generate the income. To this assessed cashflow is applied a market-derived discount rate to

establish a present value of the income stream. This Net Present Value (“NPV”) is an indication of

Market Value.

For the purposes of this valuation we consider the Income Approach to be unreliable. Due to the

global financial crisis that has resulted in a crisis of real estate market all over the world, any analysis

and estimates of the value of the property by means of the Income Approach are hindered by a lot

of uncertainties in the real estate sphere as a whole. For instance, it is hard to predict and forecast

any trends and dynamics of rental rates (and, as a result, future cash flows of owners of properties

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on the market). Also the lack of transactions on the market poses certain difficulties in assessing

discount and capitalization rates used in Income Approach analysis. Thus, in current situation this

method based solely on our own assumptions can be misleading and that is why it should not be

used for the purposes of this valuation.

The Sales Comparison Approach

We used the Sales Comparison Approach to develop an opinion of land value. In this method, we

analyzed prices for which sellers currently offer similar sites in this area. While making comparisons,

we adjusted the prices for differences between the Property and the comparable sites. On the

following pages we give a summary of pertinent details of sites currently available for sale that we

compared to the site appraised.

This method involves analysing all available information on sales of comparable properties that

have taken place and making adjustments in the prices achieved to reflect the differences in the

properties sold and the Property to be valued. This approach hinges on the availability of reliable

market evidence of comparable sales. Distinction must be drawn between information that is

known to be accurate and reported information that is second hand or at best hearsay. Only

information that is known to be accurate can be relied upon with any degree of comfort to provide

an accurate valuation

Real estate developers make qualitative and quantitative judgments while planning acquisition of a

site with development potential such as the Property. Subjectively, a developer considers the nature

of surrounding land uses and proximity to complimentary services to a potential project.

Objectively, the physical and functional attributes of the site and the cost of preparing it for

construction must be calculated. Many aesthetic and economic factors lying between these two

considerations tend to influence the final result.

Special Assumption - Using prices from inactive markets2

A quoted market price in an active market for an identical asset or liability is most representative of

fair value and is required to be used (generally without adjustment). Transaction prices in inactive

markets might be inputs when measuring fair value, but may not be determinative.

2 Using judgment to measure the fair value of financial instruments when markets are no longer active. An IASB Staff Summary. October 2008.

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Characteristics of an inactive market include a significant decline in the volume and level of trading

activity, the available prices vary significantly over time or among market participants or the prices

are not current. However, these factors alone do not necessarily mean that a market is no longer

active and determining that a market is not active requires judgement. An active market is one in

which transactions are taking place regularly on an arm’s length basis. What is ‘regularly’ is a matter

of judgement and depends upon the facts and circumstances of the market for the instrument being

measured at fair value.

Regardless of the level of activity, transaction prices that do not represent distressed transactions

cannot be ignored when measuring fair value using a valuation technique, although they might

require significant adjustment based on unobservable data. When a market becomes inactive, it is

not appropriate to conclude that all market activity represents forced liquidations or distress sales.

However, it is also not appropriate to conclude automatically that any transaction price is

determinative of fair value. Determining fair value in a market that has become inactive depends on

the facts and circumstances and may require the use of significant judgement. Regardless of the

valuation technique used, an entity must include appropriate risk adjustments that market

participants would make, such as for credit and liquidity.

Global Assumptions

We used the Sales Comparison Approach to develop an opinion of land value. In this method, we

analyzed prices offered by owners for similar sites in the market. In making comparisons, we

adjusted the sale prices for differences between this site and the comparable sites. If the comparable

was superior to the subject, a downward adjustment was made to the comparable sale. If inferior,

an upward adjustment was made. We present on the following pages a summary of pertinent details

of sites recently sold that we compared to the subject site.

In the valuation of the freehold interest in the property, the Sales Comparison Approach has been

used to establish prices being paid for comparably zoned land. The most widely used and market

oriented unit of comparison for properties with characteristics similar to those of the subject is the

sale price per square meter of land area. All transactions utilized in this analysis are analyzed on this

basis.

The major elements of comparison utilized to value the subject site include the property rights

conveyed, economic terms, accompanying the sale, conditions or motivations surrounding the sale,

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changes in market conditions since the sale, the location of the real estate, its utility and the physical

characteristics of the property.

We have chosen up the following Comparables for our analysis.

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SUMMARY OF LAND OF SETTLEMENT SALES

No. Location Price Site Sqm Property Zoning Public $/SqmSite Hectares Rights Utility* Utilities $/Ha

1

Pushkinsky district, St. Petersburg, Kolpino, 12 km from KAD along Moskovskoye highway

$34 744 000 404 000 SqmLand of settlement; for

agricultural use$86,00

40,40 Ha Good $860 000

2

Vsevolozhsky district, St. Petersburg, Kolpino, 500 m to KAD

$5 905 260 106 000 SqmLand of settlement; for

high-rise residential construction

$55,71

10,60 Ha Good $557 100

3

Pushkinsky and Moskovsky districts, St. Petersburg, 12 km from KAD

$960 706 500 2 850 000 SqmLand of settlement; for high-rise and low-rise

residential construction$337,09

285,00 Ha Good $3 370 900

4

Moskovsky district, St. Petersburg, Intersection of Kievskoye and Krasnoselskoye highway, 6,6 km from KAD

$77 200 000 1 930 000 SqmLand of settlement; for


193,00 Ha Good $400 000

5

Moskovsky district, St. Petersburg, Intersection of Kievskoye and Krasnoselskoye highway, 6,6 km from KAD

$41 600 000 1 040 000 SqmLand of settlement; for


104,00 Ha Good $400 000

Price Site Sqm Property Zoning Public $/SqmSite Hectares Rights Utility* Utilities $/Ha

$5 905 260 106 000 Sqm N/A N/A $40,00 $960 706 500 2 850 000 Sqm N/A N/A $337,09 $224 031 152 1 266 000 Sqm N/A N/A $111,76

10,6000 Ha N/A N/A $400 000 285,0000 Ha N/A N/A $3 370 900 112,0000 Ha N/A N/A $1 117 600

2 397 107 Sqm Residential239,7107 Ha Good

*Utility includes shape, access, frontage and visibility.

Freehold

All

Along the border

Along the border

Along the border

All technical conditions received, all utilities brought to the land

plot, all initial documents in place

Along the borderFreehold

Freehold

Freehold

Freehold

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Comparable 1 is the plot of land held freehold located in Pushkinsky district, St. Petersburg,

Kolpino, 12 km from KAD along Moskovskoye highway. The plot (land of settlement) is zoned for

agricultural use. All necessary utilities are located along the border of the plot. The total area of the

plot is 40.4 ha. The plot is offered for sale for US$34,744,000.

Comparable 2 is the plot of land held freehold located in Vsevolozhsky district, St. Petersburg,

Kolpino, 500 m to KAD. The plot (land of settlement) is zoned for high-rise residential

construction. All necessary utilities are located along the border of the plot. The total area of the

plot is 10.6 ha. The plot is offered for sale for US$5,905,260.

Comparable 3 is the plot of land held freehold located in Pushkinsky and Moskovsky districts, St.

Petersburg, 12 km from KAD. The plot (land of settlement) is zoned for high-rise (up to 9 stores)

and low-rise (from 3 to 5 stores) residential construction. The land plot is fully ready for

construction; the project has all necessary approvals and initial documentation for zero cycle

construction. All utilities are brought to the land plot, all technical conditions agreed and received.

The total area of the plot is 285 ha. The plot is offered for sale for US$960,706,500.

Comparable 4 is the plot of land held freehold located in Moskovsky district, St. Petersburg,

Intersection of Kievskoye and Krasnoselskoye highway, 6,6 km from KAD. The plot (land of

settlement) is zoned for agricultural use. All necessary utilities are located along the border of the

plot. The total area of the plot is 193 ha. The plot is offered for sale for US$77,200,000.

Comparable 5 is the plot of land held freehold located in Moskovsky district, St. Petersburg,

Intersection of Kievskoye and Krasnoselskoye highway, 6,6 km from KAD. The plot (land of

settlement) is zoned for agricultural use. All necessary utilities are located along the border of the

plot. The total area of the plot is 104 ha. The plot is offered for sale for US$41,600,000.

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The following adjustments were applied to the above-mentioned Comparables.

Discussion of Adjustments

While estimating the level of adjustments we were guided by common practice and based our

assumptions on our previous experience in valuation of similar kind of assets.

Property Rights Conveyed

All of the comparables used are held freehold as the subject Property. Therefore, no adjustments

were required.

Type of Comparable

Adjustments for the type of comparable usually reflect the status of the comparable itself. As all

comparables are open offers, we made necessary adjustments taking into account the discount that

each owner is ready to give to the buyer. Therefore all comparables were adjusted accordingly.

We made downward adjustments in the range of 5 to 20% depending on the size of the discount

the owners are ready to give in each case.

Market Conditions

The prices, which are included in this analysis, date November 2009. All comparables represent

open market offers, which are relevant to the date of valuation. These land plots do not represent

any distressed sales and have a reasonable exposure period on the market. A reasonable exposure

period is an exposure period of the object, when it is sold at the price, which corresponds to its

market price, if it is put on sale on the open market. At present an average exposure period for land

plots for residential development out of a city-center is in the range from 6 month to 1 year.

Therefore as Market Conditions for the Subject Property and all Comparables are the same, we did

not make any adjustments in this respect.

According to the information, received from the owners, Comparable 1 has been on sale for 3-4

months as of the date of valuation and Comparable 3 – for 1-2 months. As far as the rest

comparables are concerned, no data could be obtained from the owners. However, due to the

market in-transparency in Russia, this information cannot be fully relied on and should be used only

as a reference.

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Other

There are no other economic adjustments to be made in respect of the comparables to be reflected

in our valuation.

Location

An adjustment for location is required when the location characteristics of a comparable property

are different from those of the subject property. The subject property has a good location. We

have made a downward adjustment to those comparables considered superior in location versus the

subject. Conversely, an upward adjustment was made to those comparables considered inferior.

We have considered the data relative to the subject Property based on general market location as

well as the specific location and immediate surroundings. We estimated the adjustments for specific

sub-market and other main considerations as shown in the accompanying adjustment grid.

Size

The size adjustment generally reflects the inverse relationship between the unit price and the lot

size. Smaller lots tend to sell for higher unit prices than larger lots, and vice versa. Hence, upward

adjustments were made to larger land parcels, and downward adjustments were made to smaller

land parcels.

Public Utilities

The public utilities adjustment usually reflects access to all necessary utilities such as gas, electricity

and water supply. We have made a downward adjustment to those comparables where all technical

conditions were agreed whereas for the subject Properties it was assumed that all necessary utilities

are located nearby.

Utility (including access, shape, frontage, visibility and encumbrances)

The sites with main streets frontage have more visibility and exposure, and are more desirable than

sites with no frontage or exposure. Moreover such aspect as existence of encumbrances is also

included into this point.

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Zoning

Such category as “zoning” for a property dictates permissible uses. The subject Property belongs to

the category of land of settlement with an allowed usage for allocation of residential buildings. We

made a downward adjustment, where zoning of the comparables was different from that of the

subject Properties. All comparable were adjusted accordingly.

Where the comparables belonged to the category of agricultural land, we made an upward

adjustment of 30%, which reflects an average difference in price between land of settlement zoned

for agricultural use and land of settlement zoned for allocation of residential buildings.

Legal Status

In our case this adjustment reflects existence of necessary project documentation with which you

can start zero construction cycle (for example, Governmental Approval of the project, existence of

town-planning documentation, etc.).

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No.

$/SqmDate

PropertyRights

ConveyedType of

ComparableMarket*

Conditions Other Subtotal Location SizePublic

Utilities Utility** ZoningLegal status

Adj.$/Sqm Overall

1 $86,00 Freehold Sale offer Similar Similar $68,80 Similar Smaller Similar Similar Inferior Similar $75,68 Inferior

0,0% -20,0% 0,0% 0,0% -20,0% 0,0% -20,0% 0,0% 0,0% 30,0% 0,0% 10,0%

2 $55,71 Freehold Sale offer Similar Similar $52,92 Superior Smaller Similar Similar Similar Similar $31,75 Superior

0,0% -5,0% 0,0% 0,0% -5,0% -10,0% -30,0% 0,0% 0,0% 0,0% 0,0% -40,0%

3 $337,09 Freehold Sale offer Similar Similar $303,38 Similar Similar Superior Similar Similar Superior $60,68 Superior

0,0% -10,0% 0,0% 0,0% -10,0% 0,0% 0,0% -30,0% 0,0% 0,0% -50,0% -80,0%

4 $40,00 Freehold Sale offer Similar Similar $36,00 Inferior Smaller Similar Similar Inferior Similar $46,80 Inferior

0,0% -10,0% 0,0% 0,0% -10,0% 5,0% -5,0% 0,0% 0,0% 30,0% 0,0% 30,0%

5 $40,00 Freehold Sale offer Similar Similar $36,00 Inferior Smaller Similar Similar Inferior Similar $45,00 Inferior

0,0% -10,0% 0,0% 0,0% -10,0% 5,0% -10,0% 0,0% 0,0% 30,0% 0,0% 25,0%

Price Range Unadj. $/Sqm $/Ha Adj. $/Sqm $/Ha

Low $40,00 $400 000,00 $31,75 $317 547 0,00%

High $337,09 $3 370 900 $75,68 $756 800 30-Nov-09

Average $111,76 $1 117 600 $51,98 $519 822

Low -80,0%

High 30,0%

Average -11,0%

$/Sqm $/Ha

$51,98 $519 822

x 2 397 107 x 239,7107

$124 606 848 $124 606 848

$124 600 000 $124 600 000 6

$51,98 $519 793Per square meter

Net Adjustment Range

Indicated Value

CONCLUSION

Site Area

LAND SALE ADJUSTMENT GRID

**Utility includes shape, access, frontage and visibility, encumbrances.

Indicated Value

Rounded to nearest $100 000

*Market Conditions Adjustment

Change in market conditions relevant to the date of valuation:

Date of Value (for adjustment calculations):

Economic Adjustments (Cumulative) Property Characteristic Adjustments (Additive)

SUMMARY

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Discussion of Comparable Sales

Comparable Site 1

Apart from a worse zoning, Comparable 1 is of a smaller size. Overall the site is inferior to the

Property in terms of zoning and superior in terms of size, which resulted in an adjusted price of

US$75.68 per sq. m.

Comparable Site 2

Comparable 2 has smaller size and better location than the Property. Due to the adjustments given,

its price decreased by 40%. Overall the site is superior to the Property in terms of location and size,

which resulted in an adjusted price of US$31.75 per sq. m.

Comparable Site 3

Comparable 3 has better public utilities (all utilities are brought to the plot, all technical conditions

received and paid) than the Property and better legal status (it has all necessary approvals and

documentation for zero cycle construction) hence it was adjusted upward. Overall the site is

superior to the Property in terms of legal status and public utilities, which resulted in an adjusted

price of US$60.68 per sq. m.

Comparable Site 4

Comparable 4 has smaller size than the Property, but is worse in zoning and location hence it was

adjusted upward. Overall the site is inferior to the Property in terms of location and zoning and

superior in terms of size, which resulted in an adjusted price of US$46.80 per sq. m.

Comparable Site 5

Comparable 5 has smaller size than the Property, but is worse in zoning and location hence it was

adjusted upward. Overall the site is inferior to the Property in terms of location and zoning and

superior in terms of size, which resulted in an adjusted price of US$45.00 per sq. m.

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Summary of Prices and Opinion of Site Value

After the adjustments mentioned above the comparable land sites reflect unit prices ranging from

US$31.75 to US$75.68 per sq. m with an average of US$51.98 per sq. m.

As the extreme figures of the range differ greatly, we threw away these figures in order to prove the

average price we arrived at and took into consideration a narrower range from US$45.00 to

US$60.68 which resulted in a similar average.

Thus, we came to a conclusion that the adjusted value should be at the level of US$51.98 per sq. m.

The total value of the Property indicated by the Sales Comparison Approach is as follows:

Square Meter

Land Area: 2 397 107

Indicated Value: X US$51.98

Indicated Land Value: US$124,606,848

Rounded Land Value: US$124,600,000

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7 VALUATION SUMMARY

Subject to the contents of this Report and based on current values, we estimated the Market Value

of the freehold interest in the Property.

We are of the opinion that the Market Value of the freehold interest in the Property as of 30th of

November 2009 is:

US$124 600 000

(ONE HUNDRED TWENTY FOUR MILLION SIX HUNDRED THOUSAND US

DOLLARS)

The findings contained in our Report are based on calculations, conclusions and other information

obtained as a result of market research, on our expertise in the course of which we received certain

information.

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C APPENDIXES

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APPENDIX I PHOTOGRAPHS OF THE PROPERTY

Land plot views

The border with the cemetery

The nearby dump

A new junction under construction

The over road passage and the bus-stop nearby

The nearby cottage settlement

Border with the Observatory territory

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APPENDIX II INFORMATION SUPPLIED

• Yashar Architects – Planetograd Pulkovski Meridian presentation

• “Certificate of State Registration of Ownership” #78-АГ 049881 from 6th November 2007



• Ownership Registration Certificate #78-АГ 049883 from 6 November 2007.



• Cadastral Passport of the land plot with the total area of 83.1 ha #78:14:7723B:27



• Notices from the Federal Registration Service regarding the change of the allowed usage of the

land plots from “for agricultural use” into the “for allocation of residential buildings” made in

the National Land Title Register:

� Notice #78-78-01/0073/2009-018 from 24.02.2009 (for the land plot with the cadastral

number 78:14:7723B:22)


number 78:14:7723B:27)


number 78:14:7723B:25)

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APPENDIX III VALUATION LICENSES

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APPENDIX IV PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS

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1. PRELIMINARY

1.1 These general terms and conditions (the "Terms of Business") shall apply to all forms of professional services, other than agency services (to which separate terms will apply), provided by Cushman & Wakefield Stiles & Riabokobylko (“C&W/S&R”, “we”, “us” or “the Firm”) to the client to whom the Proposal is sent (“you”). They shall apply separately to each service provided to you.

1.2 The Terms of Business are to be read in conjunction with the Proposal sent by us to you (the “Proposal"). In the event of any ambiguity or conflict between the Proposal and these Terms of Business, the provisions in the Proposal shall prevail. These Terms of Business and the Proposal may only be varied in writing by agreement between the parties.

1.3 The Terms outlined in paragraph 1.2 above will be incorporated into a formal contract between the Parties. The contract will have precedence over all other documents.

2. PERFORMANCE OF THE SERVICES

2.1 We undertake to use all reasonable skill and care in providing the services and advice described in the instruction given by you (the "Services"). We will inform you if it becomes apparent that the Services need to be varied or external third party advice is required. Any variation is to be confirmed in writing.

2.2 We may need to appoint third party providers to perform all or part of the Services and we shall agree this with you in advance.

3. BASIS OF FEES

3.1 The basis of our fees for our Services are set out in the Proposal.

3.2 When applicable, VAT shall be payable by you in addition to any fees or disbursements invoiced at the applicable rate.

3.3 You shall pay our fees in accordance with the payment schedule represented in the Proposal. Payment is due within 10 days of the invoice date.

3.4 Where valuations are undertaken for a lender for loan security purposes and it is agreed that a borrower will pay our fee, you shall remain primarily liable to pay our fee should such borrower fail to meet its liabilities to us in full. Payment of our fees is not conditional upon the loan being drawn down or any of the conditions of the loan being met.

3.5 If you do not dispute with us an invoice or any part thereof within 10 days of the date of such invoice, you shall be deemed to have accepted the invoice in its entirety.

3.6 If we are required by you to undertake additional work in relation to an instruction, you shall pay additional fees based upon our usual rates. We will notify you of the amount of such additional fees.

3.7 Where there is a change to the stated purpose for which our valuation is being commissioned and in our sole opinion we deem this to result in an increase in our liability (for example a valuation

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for annual accounts being used for loan security purposes), we reserve the right to charge an additional fee in accordance with clause 12.

3.8 In the event that you withdraw our instructions prior to completion of a valuation, you shall be liable to pay us for a fair and reasonable proportion of our fees and any agreed disbursements. If we have sent you a draft valuation report, such fees shall be subject to a minimum of 80% of the fee originally agreed between us.

3.9 We will advise you in advance if it is necessary or convenient to instruct a third party to provide advice or to act as an expert or arbitrator and provide an estimate of the likely cost. If you approve, either verbally or in writing, that the third party be instructed, we will instruct the party as agent on your behalf and request that all the third party's invoices be addressed to you care of us. If we are requested by you to advance payment of the third party invoices, you shall be obliged to reimburse the advance payment made and pay a handling charge.

Associated/Related Entities of the Client

3.10 Where we are instructed to provide Services to one of your subsidiaries or associate/related entities or should you subsequently request that another entity be substituted for you at a later stage and we are unable to seek or obtain payment of any outstanding monies for whatever reason, you shall remain primarily liable to pay those outstanding monies if the subsidiary, associate/related or other entity does not meet its liabilities in relation to the Services.

4. DISBURSEMENTS

4.1 You shall reimburse disbursements incurred in the provision of the Services quarterly in arrears from the date they were incurred in accordance with terms in the proposal. These include, for example, maps, plans, research, photography, copying of documents or plans, messenger delivery, costs of obtaining external information on companies, properties, demographic or other similar information, any reproduction, copying or other royalties incurred, additional bound copy reports, costs of external information/references obtained and key cutting, travel and subsistence expenses at their actual cost and car mileage at the standard AA scales.

5. INFORMATION RECEIVED FROM THE CLIENT

5.1 We will take all reasonable steps to ensure property information is accurate where we are responsible for its preparation. Where you provide us with any information on a property that is necessary or convenient to enable us to provide the Services properly, you are aware that we will rely on the accuracy, completeness and consistency of any information supplied by you or on your behalf and, unless specifically instructed otherwise in writing, we will not carry out any investigation to verify such information. We accept no liability for any inaccuracy or omission contained in information disclosed by you or on your behalf, whether prepared directly by you or by a third party, and whether or not supplied directly to us by that third party and you shall indemnify us should any such liability arise. If our valuation is required for the purpose of purchase or loan security, you accept that full investigation of the legal title and any leases is the responsibility of your lawyers.

5.2 Advice Assumptions

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Unless otherwise advised by you in writing, we will provide the Services in relation to any property on the assumption that:

(i) information provided as to the extent of and ownership of the property is complete and correct and that there are no encumbrances or unduly onerous or unusual easements, restrictions, outgoings or conditions attaching to the property save as specifically notified to us;

(ii) there are no environmental matters (including but not limited to actual or potential land, air or water contamination, or by asbestos or any other harmful or hazardous substance) that would affect the property, any development or any existing buildings on the property in respect of which the Services are provided or any adjoining property, and that we shall not be responsible for any investigations into the existence of the same and that you are responsible for making such investigations;

(iii) the property and any existing buildings are free from any defect whatsoever;

(iv) all the building services (such as lifts, electrical, gas, plumbing, heating, drainage and air conditioning installations and security systems) and property services (such as incoming mains, waste, drains, utility supplies, etc) are in good working order without any defect whatsoever;

(v) any building, the building services and the property services comply with all applicable current regulations (including fire and health and safety regulations);

(vi) the property and any existing building comply with all planning and building regulation, have the benefit of appropriate planning consent or other statutory authorization for the current use and no adverse planning conditions or restrictions apply (which includes, but is not limited to, threat of or actual compulsory purchase order);

(vii) appropriate insurance cover is, and will continue to be, available on commercially acceptable terms for any building incorporating types of construction or materials which may pose an increased fire or health and safety risk, or where there may be an increased risk of terrorism, flooding or a rising water table; and

(viii) items of plant and machinery that usually comprise part of the property on an assumed sale, are included in the property but items of plant and machinery that are associated with the process being carried on in the property or tenants trade fixtures and fittings are excluded from the property.

(ix) all buildings have been constructed having appropriate regard to existing ground conditions or that these would have no unusual effect on building costs, property values or viability of any development or existing buildings.

5.3 Where comparable evidence information is included in our report, this information is often based upon our oral enquiries and its accuracy cannot always be assured, or may be subject to undertakings as to confidentiality. However, such information would only be referred to where we had reason to believe its general accuracy or where it was in accordance with expectation. In addition, we have not inspected comparable properties.

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6. STRUCTURE

6.1 We will not carry out a structural survey of any property nor will we test services. Further, no inspection will be made of the woodwork and other parts of the structures which are covered, unexposed or inaccessible. In the absence of information to the contrary, the valuation will be on the basis that the property is free from defect. However, the value will reflect the apparent general state of repair of the property noted during inspection, but we do not give any warranty as to the condition of the structure, foundations, soil and services. Our report should not be taken or interpreted as giving any opinion or warranty as to the structural condition or state of repair of the property, nor should such an opinion be implied.

6.2 Measurements

(x) Our standard practice in Russia is that all measurements are to be provided by the Client from Property registration documentation. We will not carry out any physical measurements unless you specifically instructed us to do so.

7. CONFLICTS OF INTEREST

7.1 We have conflict management procedures designed to prevent us acting for one client in a matter where there is or could be a conflict with the interest of another client for whom we are acting. If you are aware or become aware of a possible conflict of this type, please raise it immediately with us. If a conflict of this nature arises, then we will decide, taking account of legal constraints, relevant regulatory body rules and your and the other client’s interests and wishes, whether we can continue to act for both parties (eg through the use of separate teams with appropriate Chinese Walls), for one only or for neither. Where we do not believe that any potential or actual conflict of interest can be managed appropriately, we will inform you and consult with you as soon as reasonably practicable. Should you have any queries on this, you should contact your client partner.

8. MANAGEMENT OF THE PROPERTY

8.1 We shall not be responsible for the management of the property nor have any other responsibility (such as maintenance or repair) in relation to the property. We shall not be liable for any damage that may occur while the property is unoccupied. The property shall be your sole responsibility. You are aware that while a property is unoccupied, the property is likely to suffer from adverse weather conditions and frost damage may occur to water and heating systems and sanitary appliances. You are strongly recommended to take all necessary actions to protect the property from such risks and to ensure that adequate insurance cover is in force.

9. APPRAISAL EXCLUSIONS

Delay

9.1 Where matters beyond the control of ourselves cause delay to the performance of the services we will notify the client as soon as we become aware of the situation. The client agrees that we will not be held responsible for such delay.

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Basis of Valuation

9.2 Unless otherwise requested the valuation will be prepared in accordance with Russian Valuation Standards and rules and the Appraisal and Valuation Standards published by the RICS (“The Red Book”) and will be prepared by Asset Valuers as defined therein. In case of any discrepancies between these standards the Russian Valuation Standards and rules will have precedence.

9.3 The valuation of any property held as an investment or surplus to requirements will be on the basis of Market Value (as defined in paragraph 21 hereof). Any properties primarily occupied by the owner of those properties or their subsidiaries will be valued on the basis of Existing Use Value (as defined in paragraph 21 hereof).

9.4 Any property which is classified as "specialized" or which has been subject to specialist adaptation works may need to be valued on the basis of Depreciated Replacement Cost (as defined in paragraph 21 hereof). This value will be caveated as being subject to the directors of the owning company being satisfied that there is adequate potential profitability of the business compared with the value of the total assets employed.

9.5 When assessing either Existing Use Value or Market Value for balance sheet purposes in accordance with International Accounting Standards, we will not include directly attributable acquisition or disposal costs in our valuation. Where asked to reflect costs by the client (as required under FRS15), these will be stated separately.

Tenure and Tenancies

9.6 We will not inspect title deeds and we will therefore rely on the information supplied as being correct and complete. In the absence of information to the contrary, we will assume the absence of unusually onerous restrictions, covenants or other encumbrances and that the property has a good and marketable title. Where supplied with legal documentation, we will consider it but we will not take responsibility for the legal interpretation of it.

9.7 You should confirm to us in writing if you require us to read leases and if so, provide all the relevant documentation within a reasonable time for consideration bearing in mind the date for receipt of our report. You should not rely upon our interpretation of the leases without first obtaining the advice of your lawyers.

Covenant

9.8 Our valuation will take into account potential purchasers’ likely opinion of the financial strength of tenants. However, we will not undertake any detailed investigations on the covenant strength of the tenants. Unless informed to the contrary by you, we will assume that there are no significant arrears and that the tenants are able to meet their obligations under their leases or agreements.

9.9 We will not make any allowance in our Services for the existence of any mortgage or other financial encumbrance on or over the property nor take account of any leases between subsidiaries.

9.10 Any appraisal figures provided will be exclusive of VAT.

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9.11 In instances where we are instructed to provide an indication of current reinstatement costs for fire insurance purposes, this is given solely as a guide without warranty. Formal estimates for insurance purposes can only be given by a quantity surveyor or other person with sufficient current experience of replacement costs.

10. PLANNING REGULATIONS

10.1 Unless specifically instructed in writing to make formal searches with the relevant local planning authorities, we shall rely in the provision of our Services on the information provided informally by the relevant planning authority or its officers. We recommend that your lawyers be instructed to confirm the planning position relating to the property and review our comments on planning in the light of their findings.

10.2 Where we undertake value appraisals, we may consider the possibility of alternative uses being permitted. Unless otherwise notified by you in writing, we shall assume that the property and any existing buildings comply with all planning and building regulation, existing uses have the benefit of appropriate planning consent or other statutory authorization, and that no adverse planning conditions or restrictions apply.

11. TERMINATION BY NOTICE

11.1 Unless a fixed period has been agreed, either party may terminate the instruction by giving 14 days’ notice in writing to the other party.

11.2 In the event of termination by notice, you shall be obliged to pay forthwith all the fees accrued in relation to the Services and work performed up to the date of termination (and any agreed abort fee) (the "Termination Fees") plus any expenses or disbursements incurred by us or to which we are committed at the date of termination.

12. PROFESSIONAL LIABILITY

12.1 Subject to the provisions in these Terms of Business and the Letter, our total aggregate liability (including that of our partners and employees) to you in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Services shall be limited to an aggregate sum not exceeding twenty times the fee paid for each instruction accepted. We shall not be liable to you for any pure economic loss, loss of profit, loss of business, depletion of goodwill, in each case whether direct, indirect or consequential, or any claims for consequential compensation whatsoever (howsoever caused) which arise out of or in connection with the Services.

12.2 For the avoidance of doubt, our partners and employees shall have no liability in respect of their private assets.

12.3 Nothing in these Terms of Business excludes or limits our liability for: (i) death or personal injury caused by our negligence; (ii) any matter which it would be illegal for us to exclude or attempt to exclude our liability; or (iii) fraud or fraudulent misrepresentation.

12.4 Where a third party has contributed to the losses, damages, costs, claims or expenses, we shall not be liable to make any contribution in respect of the liability of such third party.

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12.5 Save in respect of third parties directly instructed by us and not on your behalf, we shall not be liable for the services or products provided by other third parties, nor shall we be required to inspect or supervise such third parties, irrespective of the third party services or products being incidental to or necessary for the provision of our Services to you.

12.6 We shall be released from our obligations to the extent that performance thereof is delayed, hindered or prevented by any circumstances beyond our reasonable control (examples being a strike, act of God or act of terrorism). On becoming aware of any circumstance which gives rise, or which is likely to give rise, to any failure or delay in the performance of our obligations, we will notify you by the most expeditious method then available.

12.7 To cover any liability that might be incurred by us, we confirm that we will maintain professional indemnity insurance, so long as such insurance is available at commercially acceptable rates and terms, with insurers of good standing and repute of up to $1 million on an each and every claim basis in Russia. Cushman & Wakefield Healey & Baker additionally maintains insurance on the same basis of not less than £10 million on an each and every claim basis.

12.8 Our pricing structure has been established by reference to these limitations on our liability and our level of professional indemnity insurance in respect of the Services we provide. If you feel that it is necessary to discuss with us a variation in these levels, then please raise the issue with your client partner who will be able to let you have proposals for a revised pricing structure to reflect the agreed level of our liability and/or professional indemnity cover.

12.9 Responsibility for our valuation extends only to the party(ies) to whom it is addressed. However in the event of us being asked by you to readdress our report to another party or other parties or permit reliance upon it by another party or other parties, we will give consideration to doing so, to named parties, subject to the following minimum fees:-

First Extended Party

Second & Subsequent Extended Parties

For the first $1m of reported value

0.075% 0.025% per party

Thereafter 0.035% 0.015% per party

These fees are exclusive of VAT & expenses (including the cost of readdressing the report) and are subject to a minimum fee of $1000. Should additional work be involved, over and above that undertaken to provide the initial report, we may make a further charge although we will agree this with you before commencing the work.

13. QUALITY OF SERVICE

13.1 Whilst we seek to provide high quality Services, if a client has cause for complaint we have standard complaints procedures, a copy of which is available on request. This is in accordance with requirements of the Royal Institution of Chartered Surveyors.

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14. QUALITY CONTROL

14.1 In circumstances where a valuation, although provided for a client, may also be of use to third parties, for instance the shareholders in a company (otherwise defined as a “Regulated Purpose Valuation” by the RICS), the RICS requires us to state our policy on the rotation of the surveyor who prepares the valuation and the quality control procedures that are in place.

14.2 Irrespective of the purpose of the valuation, we will select the most appropriate surveyor for the valuation having regard to his/her expertise and the possible perception that independence and objectivity could be compromised where a valuer has held the responsibility for a particular client for a number of years. This may result in us rotating the surveyor responsible for repeat valuations for the same client although we will not do so without prior discussion with the client.

14.3 All our valuation reports are signed by a Board Member of the Firm whose responsibility it is to ensure that all relevant quality control procedures have been complied with. In particular for valuations of properties with an individual value of $30m or over, the valuer is required to present and explain his methodology to another member of the Valuation Advisory Team.

14.4 Where we are undertaking a Regulated Purpose Valuation (see 14.1 above) we are required by the RICS to state all of the following in our report:

14.4.1 The length of time the valuer continuously has been the signatory to valuations provided to you for the same purpose as the report, together with the length of time we have continuously been carrying out that valuation instruction for you;

14.4.2 The extent and duration of the relationship between you and us;

14.4.3 In relation to our preceding financial year the proportion of the total fees, if any,

payable by you to our total fee income expressed as one of the following:

less than 5%; or if more than 5%, an indication of the proportion within a range of 5 percentage points;

14.4.4 Where, since the end of the last financial year, it is anticipated that there will be a material increase in the proportion of the fees payable, or likely to be payable, we shall include a further statement to that effect in addition to 14.4.3 above.

15. DATA PROTECTION

15.1 We (including any of our international partnerships, group companies and affiliated organizations) are a data controller of all personal data collected during the provision of the agency services. We shall use such personal data and information we obtain from other sources for providing the agency services, for administration and customer services, for marketing and to analyze your preferences. We may keep such personal data for a reasonable period for these purposes. We may need to share personal data with our service providers and agents for these purposes. We may disclose personal data in order to comply with a legal or regulatory obligation and you may request, in writing and upon payment of a fee, a copy of the details held about you by us.

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15.2 To help us to make credit decisions about you, to prevent fraud, to check identity and to prevent money laundering, we may search the files of credit reference agencies and we may also disclose details of how you conduct your account to such agencies.

15.3 We may share personal data within our international partnerships, group companies and affiliated organizations and with our business partners for marketing purposes, which may be to countries or jurisdictions which do not provide the same level of data protection as the country in which you are based, or we may send you and your employees information about other organizations' goods and services. We or any business partners may contact you and your employees, directly or via our agents, by mail, telephone, fax, email, SMS or other electronic messaging service with offers of goods and services or information that may be of interest. By providing us with your or your employees' personal data (whether that data is deemed sensitive or not) including fax numbers, telephone numbers or email addresses, you and your employees consent to being contacted by these methods for these purposes.

16. MONEY LAUNDERING REGULATIONS

16.1 We have regard to UK legislation, including the Proceeds of Crime Act 2002, Money Laundering Regulations 2003 and related guidance as updated from time to time, which has imposed on us obligations for mandatory reporting, record keeping and identification procedures. We may be required to verify certain particulars of our clients and may need to ask you to assist us in complying with such requirements. Where such information is requested, you will provide such information promptly to enable us to proceed to provide our Services. We shall not be liable to you or any other parties for any delay in the performance or any failure to perform the Services which may be caused by our duty to comply with such requirements.

17. ELECTRONIC COMMUNICATIONS

17.1 We may communicate with each other by electronic mail, sometimes attaching electronic data. By consenting to this method of communication, we and you accept the inherent risks (including the security risks of interception of, or unauthorised access to, such communications, the risks of corruption of such communications and the risks of viruses or other harmful devices). In the event of a dispute, neither of us will challenge the legal evidential standing of an electronic document and our system shall be deemed to be the definitive record of electronic communications and documentation.

18. CONFIDENTIALITY AND INTELLECTUAL PROPERTY

18.1 We owe our clients a duty of confidentiality. You agree, however, that we may, when required by our insurers or other advisers, provide details to them of any engagement on which we have acted for you, and that we may also disclose confidential information relating to your affairs if required to do so for legal, regulatory or insurance purposes only.

18.2 Both parties agree never to disclose sensitive details of transactions or our advice without the other’s consent. Unless we are expressly bound by a duty of confidentiality which otherwise overrides this, both parties shall be entitled to mention to third parties (e.g. in the course of presentations, speeches or pitches) and/or publish (e.g. in brochures, marketing or other written material) that we provide our services to you.

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18.3 We shall provide the Services to you only for your sole use and for the stated purpose. We shall not be liable to any third party in respect of our Services. You shall not mention nor refer to our advice, in whole or in part, to any third party orally or in annual accounts or other document, circular or statement without our prior written approval. The giving of an approval shall be at our sole discretion.

18.4 We will not approve any mention of our Services unless it contains sufficient reference to all the special assumptions and/or limitations (if any) to which our Services are subject. For the avoidance of doubt our approval is required whether or not we are referred to by name and whether or not our advice is combined with others.

18.5 We may make the approval of any mention of our Services, or re-address to third parties our Services, subject to the payment of an additional fee to cover additional work and professional liability.

18.6 All intellectual property rights (including copyrights) in the documents, materials, records, data and information in any form developed or provided to you by us or otherwise generated in the provision of our Services shall belong to us solely.

19. THIRD PARTIES RIGHTS AND ASSIGNMENT

19.1 No term of the Proposal or these Terms of Business is intended to confer a benefit on or to be enforceable by any person who is not a party to the same.

19.2. We shall be entitled to assign or transfer this contract and any rights and obligations arising from it to any party which comprises of substantially the whole of our business, including any limited liability partnership, by giving appropriate notice.

19.3 Subject to clause 18.2 above, neither party shall be entitled to assign this contract or any rights and obligations arising from it without the prior written consent of the other, such consent not to be unreasonably withheld.

20. GENERAL

20.1 If any provision of the Terms of Business is found by any court, tribunal or administrative body of competent jurisdiction to be wholly or partly illegal, invalid, void, voidable, unenforceable or unreasonable it shall to the extent of such illegality, invalidity, voidness, voidability, unenforceability or unreasonableness be deemed severable and the remaining provisions of the Terms of Business and the remainder of such provision shall continue in full force and effect.

20.2 Failure or delay by us in enforcing or partially enforcing any provision of these Terms of Business shall not be construed as a waiver of any of our rights under these Terms of Business.

20.3 The Proposal and these Terms of Business shall be governed by and be construed in accordance with Russian law.

21. BASES OF VALUATION

Our valuation advice will be prepared in accordance with one or more of the following bases of valuation as defined in the Practice Statements of the Red Book (“PS”), as appropriate:

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21.1 Market Value

PS 3.2 defines Market Value as:

“The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

21.1.1 Trading Related Valuations

Where appropriate, such properties will be valued on the basis of Market Value as a fully equipped operational entity, having regard to trading potential.

Where we are instructed to value an operational property having regard to it’s trading potential (such as self storage properties, hotels and marinas), we will take account of any trading information provided to us. The valuations will be based on our opinion as to future trading potential and the level of turnover and net operating income likely to be achieved.

The valuations will be made on the basis that the properties will be sold as a whole including all fixtures, fittings, stock and goodwill. The new owner would normally engage the existing staff and the new management would expect to take over the benefit of existing and future bookings or occupational agreements which may be an important feature of the continuing operation, together with all existing statutory consents plus all operational permits and licenses.

Unless made clear to the contrary in our report, the valuations will reflect our opinion that all goodwill for the properties is tied to the land and buildings and does not represent personal goodwill to the operator.

Our valuations will be based on the information which either the operator has supplied to us or which we have obtained from our enquiries (including full detailed trading information in relation to each trading property). We will rely on this being correct and complete and on there being no undisclosed matters which would affect our valuation.

21.2 Depreciated Replacement Cost

PS 3 Appendix 3.1 states that Depreciated Replacement Cost (DRC) is recognized as an acceptable method of estimating Market Value where more reliable methods, such as market comparison or an income (profits test), cannot be applied. The valuer must be satisfied that it is not practicable to prepare a valuation by any other method before relying solely on depreciated replacement cost.

DRC is based on an estimate of the value of the land, plus the current gross replacement (reproduction) costs of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimization.

21.3 Market Rent

PS 3.4 defines Market Rent as:

“The estimated amount for which a property, or space within a property, should lease (let) on the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arms

Valuation Report







length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion.”

21.4 Existing Use Value

PS 1.3 defines Existing Use Value as:

“The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction, after proper marketing wherein the parties had acted knowledgeably, prudently, and without compulsion, assuming that the buyer is granted vacant possession of all parts of the property required by the business and disregarding potential alternative uses and any other characteristics of the property that would cause it’s Market Value to differ from that needed to replace the remaining service potential at least cost.”

VALUATION

REPORTCourthouses in Chemnitz and

Hohenstein-Ernstthal

Project Court

Date of Valuation as at

30 November 2009

Valuation Report as at

31 December 2009

On behalf of

Pangaea Real-Estate Ltd.

14 Shenkar Herzliya, Israel 46725

CONTENTS

Part I CERTIFICATE

Part II APPENDICES

A VALUATION OVERVIEW

B VALUATION

C VALUATION & PROPERTY REPORT

PART

CERTIFICATE

Report Date 2

Instructing Party 2

Preamble 2

Instruction/Properties 3

Purpose of Valuation 3

Addressee/Reliance 3

Disclosure 4

Publication 4

Date of Valuation 4

Fair Value 5

Market Instability 6

Compliance with Valuation Standards 6

Values Assessed 6

Currency 6

Sources of Information 7

Verification 11

Conflict of Interest 11

Insurance and Liability 11

Limitation 11

Assignation of Rights 12

Place of Performance and Jurisdiction 12

Professional Competence 12

CERTIFICATE 2

CERTIFICATE

CB Richard Ellis GmbH

Hausvogteiplatz 11 A 10117 Berlin

Germany

Switchboard +49 (0) 30 726154 - 0 Fax + 49 (0) 30 726154 - 100

Report Date

31 December 2009

Instructing Party


14 Shenkar Herzliya

Israel 46725

(Hereinafter referred to as the “Principal”)

Preamble

On 6 February 2008 CB Richard Ellis GmbH (“CBRE”) has submitted a valuation certificate to the Pangaea Real-Estate Ltd., 14 Shenkar Herzliya, Israel 46725, regarding the so called Court Properties, Project “Court”, with the date of valuation being 31 December 2007.

On 2 January 2009 as well as on 7 April 2009 CBRE has submitted a valuation certificate to the Pangaea Real-Estate Ltd., 14 Shenkar Herzliya, Israel 46725, regarding the so called Court Properties, Project “Court Update”, with the date of valuation being 31 December 2008.

CERTIFICATE 3

Instruction/Properties

We have been appointed to undertake an update valuation of the properties by undertaking full re-inspections. The subject properties are listed as detailed below:

District Court of Chemnitz Parkstrasse 28 09120 Chemnitz Germany; and

District Court of Hohenstein-Ernstthal Conrad-Clauß-Straße 11, Karl-Marx-Straße 5, Schillerstraße 2 09337 Hohenstein-Ernstthal Germany.

CBRE will prepare a certificate of value (the “Certificate”) in English language. We understand that the properties are held as investments. We confirm that regarding this instruction we are acting solely for the Principal and that we have no conflicts of interests in relation to this instruction.

We will value the properties as instructed on an asset-by-asset basis. Upon execution of this Valuation Instruction the Principal confirms that the subject properties listed in detail above are held as investment properties within the meaning as classified in IAS 40.


We acknowledge that our Certificate will be used by the Principal as a source of

information regarding the value of the subject properties for IFRS financial statements

and as a basis for determining the relative value of Pangaea Israel (T.R.) Ltd. and

Pangaea Real Estate Ltd. in the merger process which is currently being formulated

between the companies.

Addressee/Reliance

The Certificate is addressed to and for the use of the Principal only. It is strictly

confidential to the addressee and is only to be used for the specific purpose set out

herein. No responsibility will be accepted to any third party for the whole or any part of

its contents.

CERTIFICATE 4

Disclosure

A copy of our Certificate may be disclosed to the Principal’s auditor and the Principal’s

tax advisor for informational purposes only, in each case on a non-reliance basis.

Publication

If requested by the Principal’s auditors or the Israeli Securities and Exchange

Commission, the Certificate or a reference to the Certificate (in the form and context in

which it appears in the Certificate) may be included or quoted in unchanged format in

the Financial Report of the principal.

The Certificate may be included and published in the Principal’s prospectus and/or in a

valuation that is aimed to determine the relative value of Pangea Real Estate Ltd. and

Pangea Israel (T.R.) Ltd.

Save as otherwise stated in this letter, neither the whole nor any part of our Certificate

nor any references thereto may be included in any published document, circular

statement nor published in any way without our prior written approval of the form and

context in which it will appear.

You agree that, following completion of our work, CBRE is permitted to use the name of

your company, its corporate logo, the specific services performed and information such

as the number and area of the units valued, the locations, as well as a reference within

and outside the CBRE international network. You agree to release us from our duty of

confidentiality in this respect.

Date of Valuation

30 November 2009

CERTIFICATE 5

Fair Value

Upon the assumption that there are no onerous restrictions or unusual outgoings of

which we have no knowledge and the specific comments and assumptions which are set

out in this valuation statement, we are of the opinion that the sum of the two Fair Values

of the respective freehold interest in the subject properties, as at 30 November 2009, is:

EUR 12,360,000

(Twelve million three hundred and sixty thousand Euro)

The net capital value is 11,680,000 EUR excluding 5.8% purchaser’s costs (677,154

EUR).

The aggregate of the individual Fair Values presented here takes account of the

marketing period of the individual properties and does not reflect any discount or

premium on the sale of the portfolio.

Fair Value previous Valuations

Date of Valuation Fair value

Chemnitz

Deviation Fair value

Hohenstein

Deviation

31.12.2007 (initial) 6,000,000 7,500,000

31.12.2008 (update) 5,380,000 - 10.4% 7,060,000 - 5.9%

31.12.2009 (update) 5,430,000 + 0.9% 6,930,000 - 1.8%

Compared to our update valuation in December 2008, several factors have been taken

into consideration in order to arrive at this value:

Decrease of vacancy of the property in Chemnitz (impact on value: slightly

positive)

Lower remaining average lease term in Hohenstein-Ernstthal (impact on value:

slightly negative)

Please refer to Appendix A “Valuation Overview” and Appendix C “Valuation & Property

Report” for further details on a valuation unit basis.

CERTIFICATE 6

Market Instability

In accordance with Guidance Note 5 of the RICS Valuation Standards, we would draw

your attention to the following comment regarding current market conditions.

With an eye on the quickly changing conditions in the global financial and national real

estate markets, we must make clear that the Market Value is a "snapshot", which reflects

the current market situation at a given date. Market Value is therefore not to be

regarded as valid for a longer period but is rather subject to market-induced variations.

We therefore recommend that close observation should be maintained of the behaviour

of market players, the banks' guidelines for loan allocation, as well as the trend of all

parameters affecting the value of the subject property, taking into account the stated

purpose of valuation.

Compliance with Valuation Standards

This valuation has been prepared in accordance with The RICS Valuation Standards,

Sixth Edition (Red Book), published by the Royal Institution of Chartered Surveyors 1

January 2008. The property details on which each valuation is based are as set out in

this report.

We confirm that we have sufficient current local and national knowledge of the

particular property market involved and have the skills and understanding to undertake

the valuations competently.

Values Assessed

The properties will be valued to “Fair Value” in accordance with IAS 40.5 of the

International Financial Reporting Standards (IFRS) published by the International

Accounting Standards Board (IASB), which is defined as:

“Fair value is the amount for which an asset could be exchanged between

knowledgeable, willing parties in an arm‘s-length transaction. “

In the course of ascertaining the Fair Value we will incorporate the Principal’s and its

financial auditor’s opinion and thereby, identify the Fair Value as Gross Capital Value.

Currency

The reporting currency is EURO.

CERTIFICATE 7

Sources of Information

This valuation has been substantially and mainly based upon the information supplied to

us by the principal as follows:

Received on 25 November 2009:

ULA-Justice_Chemnitz_2009-11_V20091110.xls

ULA-Justice_Hohenstein_2009-11_V20091110.xls

All conclusions made by CBRE as regards the condition and the actual characteristics of

the land and buildings have been based exclusively on our inspection of the subject

property and on the documents and information provided.

Documents and Information provided

CBRE has assumed that it was provided with all information and documents that were

relevant to CBRE in carrying out this appraisal report. We have assumed that the

information and documentation had unrestricted validity and relevance as at the date of

valuation. We have not checked the relevant documents and information with respect to

the above-mentioned issues.

Inspection

We have undertaken full inspections on 27 November 2009. We have not carried out

any building surveys. The properties have not been measured as part of CBRE’s

inspection nor have the services or other installations been tested. All of CBRE’s

conclusions resulting from the inspection are based purely on visual investigations

without any assertion as to their completeness.

Investigations that might cause damage to the subject property have not been carried

out. Statements about parts of the structure or materials that are covered or otherwise

inaccessible are based on the information or documents provided or on assumptions. In

particular, structural surveys and technical investigations of any defects or damage of the

property, which may exist, have not been carried out.

Deleterious Material etc.

Since no information to the contrary has been brought to our attention and since there is

no information to the contrary contained in the Chemnitz and Hohenstein-Ernstthal

Property Condition Reports both dated 29 March 2007, there are no building materials

or structures and no characteristics of the site that could endanger or have a deleterious

CERTIFICATE 8

effect on either the fitness of the subject properties for its purpose or the health of its

occupiers and users. Common examples include high alumina cement concrete,

calcium chloride, asbestos and wood wool as permanent shuttering.

CBRE does not take into account any replacement costs for deleterious material for the

Chemnitz and Hohenstein-Ernstthal properties.

Site Conditions

We did not carry out investigations on site in order to determine the suitability of ground

conditions and services, nor did we undertake environmental, archaeological, or

geotechnical surveys. Unless notified to the contrary, our valuations were carried out on

the basis that these aspects are satisfactory and also that the site is clear of underground

mineral or other workings, methane gas, or other noxious substances.

In the case of a property which may have redevelopment potential, we have assumed

that the site has load bearing capacity suitable for the anticipated form of

redevelopment without the need for additional and expensive foundations or drainage

systems. Furthermore, we have assumed in such circumstances that no unusual costs will

be incurring in the demolition and removal of any existing structure on the property.

Monument List

According to the telephone call with the competent authority for historic monuments for

the initial valuation the subject property in Hohenstein-Ernstthal is a listed building in the

official list of historic monuments. We have therefore assumed higher maintenance costs

in comparison to non-listed buildings. The building in Chemnitz is no listed building in

the official list of historic monuments.

Environmental Contamination

Since no information to the contrary has been brought to our attention and since there is

no information to the contrary contained in the Chemnitz and Hohenstein-Ernstthal

Property Condition Reports both dated 29 March 2007, the subject properties in

Chemnitz and Hohenstein-Ernstthal are not contaminated and no contaminative or

potentially contaminative use is, or has ever been, carried out at the properties.

Since no information to the contrary has been brought to our attention for both, the

properties in Chemnitz and Hohenstein-Ernstthal, we are not aware of any

environmental audit or other environmental investigations or soil surveys which may

have been carried out on the property and which may draw attention to any

contamination or the possibility of any such contamination.

As we had not been specifically instructed, we have not undertaken any investigation

into the past or present uses of either the properties or any adjoining or nearby land, to

establish whether there is any potential for contamination from these uses and assume

that none exists.

CERTIFICATE 9

Legal Requirements / Consents and Authorisation for the Use of the Property

An investigation of the compliance of the properties in Chemnitz with legal requirements

(including (permanent) planning consent, building permit, acceptance, restrictions,

building, fire, health and safety regulations etc.) relating to the existence and use of the

site and building has not been carried out by CBRE. According to the information

confirmed and provided by the Principal all necessary consents and authorisations for

the use of the properties and the processes carried out at the properties are in existence,

will continue to subsist and are not subject to any onerous conditions.

According to the Chemnitz Property Condition Report dated 29 March 2007, provided

by the Principal for the initial valuation, a building permit does exist. We have received a

copy of the planning permission to change the use of the building section in Hohenstein-

Ernstthal into a gaming and billiards centre. According to the Hohenstein-Ernstthal

Property Condition Report dated 29 March 2007, provided by the Principal, the

historical buildings permits were not available for review due to the fact that the property

is an historical one.

Taxes, Contributions, Charges

According to the information confirmed and provided by the Principal all public taxes,

contributions, charges etc. as well as the recoupment charge for local public

infrastructure which could have an effect on value of the subject properties “Court” will

have been levied and paid as at the date of valuation.

Insurance Policy

According to the information confirmed and provided by the Principal the subject

property is covered by a valid insurance policy that is adequate both in terms of the sum

assured and the types of potential loss covered.

Town Planning and Road Proposals

Since no information to the contrary has been brought to our attention, we have

assumed that the properties are not adversely affected by town planning or road

proposals.

Statements by Public Officials

In accordance with established legal practice, we have not regarded statements by

public officials, particularly regarding factual information, as binding. We do not assume

any liability for the application of any such statements or information in the subject

appraisal Certificate.

CERTIFICATE 10

Assumptions regarding the Future

For the purpose of determining the fair value of the subject properties, we have assumed

that the existing business will continue (as regards both manner and extent of usage of

the subject properties) for the remainder of the useful life determined for the buildings,

or that comparable businesses would be available to take over the use of the subject

properties.

Tenants

No investigations have been carried out concerning either the status of payments of any

contractually agreed rent or ground rent at the date of valuation, or of the

creditworthiness of any tenant(s). Since no information to the contrary has been brought

to our attention, we have assumed that there are no outstanding rental payments and

that there are no reservations concerning the creditworthiness of any of the tenants.

Pending Litigation, Legal Restrictions (Easements on Real Estate, Rent

Regulation etc.)

According to the information provided by the Principal the properties are free from any

pending litigation, the real estate is unencumbered and there are no other legal

restrictions such as easements on real estate, rent regulations, restrictive covenants in

leases or other outgoings which might adversely affect value. A part from the facts is

listed in “Special Valuation Assumptions” in part II of this Certificate.

Subsidies

According to the information provided by the Principal there are no subsidies or grants

and there is no negative impact on the market value.

Section II of the Land Register

The land register (sheet 3347) for the subject property in Hohenstein-Ernstthal has been

brought to our attention by the Principal for the initial valuation. There is an entry in

section 2, that the Free State of Saxony has a pre-emption right. However we have not

assumed an impact on value resulting from this fact.

Important

Should any of the information or assumptions on which the valuation is based be

subsequently found incorrect or incomplete, our calculations may need to be amended

and the valuation figure may also be incorrect and should be re-evaluated. We

therefore cannot accept any liability for the correctness of this assessment or for any loss

or damage resulting there from.

CERTIFICATE 11

Verification

We recommend that before any financial transaction, relating to any other date other

then the date of Valuation (November 30th, 2009) is entered into based upon these

valuations, you obtain verification of the information contained within our valuation

statement and the validity of the assumptions we have adopted.

We would advise you that whilst we have valued the property reflecting current market

conditions, there are certain risks, which may be or may become uninsurable. Before

undertaking any financial transaction based upon this valuation, you should satisfy

yourselves as to the current insurance cover and the risks that may be involved should an

uninsured loss occur.

Conflict of Interest

We hereby confirm that we have no existing potential conflict of interest in providing the

valuation report, neither with the Borrower nor with the Properties.

Furthermore, we confirm that we will not benefit (other than from receipt of the valuation

fee) from this valuation instruction.

Insurance and Liability

CBRE´s liability for damages caused by intentional or gross negligence of its surveyors is

not limited. However, CBRE shall not be liable for any damages caused by slight

negligence of its surveyors, unless (a) liability is based on any personal injuries, death or

damages to personal health, or (b) there is a breach of a contractual obligation

(Cardinal duties). Cardinal duties are duties of material relevance for achieving the

object of this agreement and the adherence to which the contractual partner may rely

upon regularly. If CBRE is liable for slight negligence under the circumstances described

in sentence 2 (b) of this clause, the liability is limited to reasonably foreseeable damages

and the maximum amount of such liability shall be 15,000,000.00 EUR. If a number of

different breaches of duties cause a number of different damages, these damages will

be regarded as one integrative damage in terms of the limitation of liability set out in this

clause.

Paragraph 1 of this clause shall likewise apply to vicarious liability.

Limitation

Warranty claims based on slight negligence shall become time-barred one year after the

termination of the year in which the acceptance took place. Exceptions hereto are the

cases as referenced in Para 1 Sentence 2 (a) and (b) of “Insurance and Liability”.

CERTIFICATE 12

Assignation of Rights

The addressees of the agreement, based upon which this report has been prepared,

shall not be entitled to assign their rights under the agreement – in total or in part – to

any third party or parties, unless it was explicitly specified otherwise in the agreement.

Place of Performance and Jurisdiction

The agreement, on which the preparation of this report is based, is governed by and

construed in accordance with the laws of Germany. In the event that there is any conflict

between the English legal meaning and the German legal meaning of this Contract or

any part hereof, the German legal meaning shall prevail. The place of performance and

jurisdiction for disputes arising from this contractual relationship shall be Frankfurt am

Main, Germany.

Professional Competence

Dr. Henrik Baumunk

Henrik Baumunk joined CB Richard Ellis in April 2007. He is Director and Head of

Residential Valuation in Berlin.

Prior to joining CB Richard Ellis he worked for 7 years in the Corporate Finance Real

Estate division of KPMG.

Henrik Baumunk has a degree in Surveying from the Technical University of Dresden.

There he also received a PhD in Land Management und Valuation (Thesis:

“Globalisation of Real Estate and Real Estate Valuation”).

He is co-publisher and co-author of “IFRS Real Estate”.

Michael Schlatterer, MRICS

Michael Schlatterer joined CB Richard Ellis in June 2005. He is Associate Director and

Team Leader in the Berlin Valuation Office.

Prior to joining CB Richard Ellis he worked for 7 years as Senior Consultant for

BulwienGesa AG, one of the leading property market analyst companies in Germany.

Michael Schlatterer has a degree in Economic Geography and Regional Planning

(Wirtschaftsgeographie und Regionalplanung) from the University of Bayreuth. He also

received a scholarship to study City and Regional Planning at the University of California

at Berkeley. In 2003 he received a diploma (Immobilienökonom) from the European

Business School (ebs), Berlin. Furthermore, he is a Member of the Royal Institution of

Chartered Surveyors.

CERTIFICATE 13

Birte Graalfs

Birte Graalfs joined CB Richard Ellis in October 2007. She is a Graduate Surveyor in

the Residential Valuation Team in Berlin.

She studied Real Estate Management at the Nürtingen-Geislingen University and was

awarded the qualification of Diplom-Betriebswirtin (FH).

During her education and prior to joining CB Richard Ellis, she worked as a trainee at

Bankhaus Ellwanger & Geiger in Stuttgart and LB Immobilienbewertungsgesellschaft

mbH in Frankfurt/Main.

Anne Pierschke

Anne Pierschke joined CB Richard Ellis in October 2007. She is a Graduate Surveyor in


Prior to joining CB Richard Ellis she studied Real Estate Management at the University of

Cooperative Education Leipzig in a dual studies program and graduated as a Diplom-

Betriebswirtin (BA).

During her studies she worked for the DB Services Immobilien GmbH in Leipzig.

Yours faithfully Yours faithfully

Dr. Henrik Baumunk

Managing Director

Head of Residential Valuation

Germany

For and on behalf of

CB Richard Ellis

ppa. Michael Schlatterer, MRICS

Associate Director

Team Leader Residential Valuation

Germany


CB Richard Ellis

T:030 /726154-264 T: 030 /726154-264-156

E: [email protected] E: [email protected]

PART

APPENDICESA VALUATION OVERVIEW

B VALUATION

C VALUATION & PROPERTY REPORT

VALUATION

OVERVIEW

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VALUATION

1 Valuation Approach 1

1.1 DCF (Discounted Cashflow) 1

1.2 Fair Value 1

1.3 Rental Values 2

2 General Valuation Assumptions 3

2.1 The Property 3

2.2 Repair and Condition 3

2.3 Floor Areas 3

2.4 Title, Tenure, Planning and Lettings 3

2.5 Infrastructure and Services 4

2.6 Taxes, Insurance 5

2.7 VAT 5

3 Special Valuation Assumptions &

Considerations 6

3.1 Non-recoverable Costs for Management 6

3.1.1Non-recoverable Costs for Management 6

3.1.2 Non-recoverable Costs for Regular

Maintenance 6

3.1.3 Non-recoverable Costs for Tenant

Improvements 6

3.1.4 Non-recoverable Service Charges on

Vacant Space 7

3.2 Outstanding (deferred) Maintenance

Costs (structural Costs) 7

3.3 Void Period for currently vacant Space /

Future Void Periods on Re-Letting 7

3.4 Letting Costs 8

3.5 Credit Loss 8

3.6 Inflation and Rental Growth 8

3.7 Selection of Discount Rate and

Capitalization Rate 8

3.8 Rental Value Applied (ERV) 9

3.9 Letting Period 10

3.10 Sensitivity Analysis - Best Case / Worst

Case Scenario 11

APPENDICES 1

VALUATION

1 Valuation Approach

1.1 DCF (Discounted Cashflow)

In arriving at our Fair Values and the Vacant Possession for the subject properties with a

significant part of income from commercial use we have applied the DCF (discounted

cash flow) approach, based on a 10-year time horizon.

The DCF model involves period-by-period estimation of gross income and expenditure,

to calculate the net income (cash flow) for each period, explicitly taking into account a

range of variables including changes in rent due to contractual agreements and growth

in market value, expenditure on maintenance, repairs and renovation, timing of

vacancies etc. over a the period of the time horizon.

The properties are valued, normally using the income capitalisation method, at the end

of the time horizon, using forecasts of the then market rental income and appropriate

investment yield, on the assumption that it will be sold at that point. The resulting net

cash flows are then discounted at a selected discount rate, normally set by comparing

with money-market rates and allowing for the relative disadvantages of real estate

ownership, in order to arrive at the net present value.

After allowing for purchaser’s costs if appropriate, the result is the Net Capital Value.

In comparison, the income capitalisation method is based on capitalisation of the

current and market net rental income from the properties, adjusted for landlord’s

expenditure, at a rate obtained by direct or indirect comparison with sales of

comparable real estate in the market. This method does not reflect e.g. rental growth

and expenditure forecasts explicitly, rather their effect is implicit in the yield

(capitalisation) rate that is adopted.

1.2 Fair Value

The property has been valued to “Fair Value” in accordance with IAS 40.5 of the





In IAS 40.37 it is defined that an entity determines fair value without any deduction for

transaction costs it may incur on sale or other disposal.

No account has been taken of any inter-company leases or arrangements, or of any

mortgages, debentures or other charges.

APPENDICES 2

1.3 Rental Values

Rental values indicated in this report are those which have been adopted by us as

appropriate in assessing the capital value or the letting potential of the properties,

subject to market conditions that are either current or expected in the short term. They

are mainly based on recent lease agreements within the properties, our experience of the

markets and our knowledge of actual comparable market activity.

APPENDICES 3

2 General Valuation Assumptions

2.1 The Property

Landlord’s fixtures such as lifts, escalators, central heating and other normal service

installations have been treated as an integral part of the building and are included within

our valuations. Tenant-specific process plant and machinery, tenants’ fixtures and

specialist trade fittings have been excluded from our valuations.

2.2 Repair and Condition

We have not carried out building surveys, tested services, made independent site

investigations, inspected woodwork, exposed parts of the structure which were covered,

unexposed or inaccessible, nor arranged for any investigations to be carried out to

determine whether or not any deleterious or hazardous materials or techniques have

been used, or are present, in any part of the Property. We are unable, therefore, to give

any assurance that the Property is free from defect.

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

a. there are no abnormal ground conditions, nor archaeological remains, present

which might adversely affect the current or future occupation, development or

value of the property;

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

c. no currently known deleterious or hazardous materials or suspect techniques,

including but not limited to Composite Panelling, have been used in the

construction of, or subsequent alterations or additions to, the Property; and

d. the services, and any associated controls or software, are in working order and

free from defect.

We have otherwise had regard to the age and apparent general condition of the

Property. Comments made in the property details do not purport to express an opinion

about, or advise upon, the condition of uninspected parts and should not be taken as

making an implied representation or statement about such parts.

2.3 Floor Areas

We have been provided with tenancy lists as mentioned in Part I “Sources of

Information” of this Certificate. In undertaking our work, we have assumed that these

floor areas are correct.

2.4 Title, Tenure, Planning and Lettings

According to the information brought to our attention by the Principal for the initial

valuation, there are no entries, information or circumstances that could have an impact

on market values (including any easements, restrictions, or similar restrictions and

APPENDICES 4

encumbrances). We reserve the right to amend our valuation should any such factors be

found to exist.

Details of title/tenure under which the Property is held and of lettings to which it is

subject are as supplied to us. We have not generally examined nor had access to all the

deeds, leases or other documents relating thereto. Where information from deeds,

leases or other documents is recorded in this report, it represents our understanding of

the relevant documents. We should emphasise, however, that the interpretation of the

documents of title (including relevant deeds, leases and planning consents) is the

responsibility of your legal adviser.

We have not conducted credit enquiries on the financial status of any tenants. We have,

however, reflected our general understanding of purchasers’ likely perceptions of the

financial status of tenants.

According to the information confirmed and provided by the Principal for the initial

valuation:

a. the Property possesses a good and marketable title free from any onerous or

hampering restrictions or conditions;

b. all buildings have been erected either prior to planning control, or in

accordance with planning permissions, and have the benefit of permanent

planning consents or existing use rights for their current use;

c. all buildings comply with all statutory and local authority requirements including

building, fire and health and safety regulations;

Apart from that we have assumed that:

d. there are no tenant’s improvements that will materially affect our opinion of the

rent that would be obtained on review or renewal;

e. tenants will meet their obligations under their leases;

f. there are no user restrictions or other restrictive covenants in leases which would

adversely affect value;

g. where appropriate, permission to assign the interest being valued herein would

not be withheld by the landlord where required; and

h. vacant possession can be given of all accommodation which is unlet or is let on

a service occupancy.

2.5 Infrastructure and Services

According to the information confirmed and provided by the Principal the site is serviced

within the meaning of paragraph 123 of the German statutory building code

(Baugesetzbuch § 123) i.e. that it is connected to the road system, service mains (water,

electricity, gas and district heat) and sewers (for both waste and surface water) and that

refuse collection was provided.

APPENDICES 5

2.6 Taxes, Insurance

According to the information confirmed and provided by the Principal, we have

considered in our valuation that:

a. all public taxes, contributions, charges etc. which could have an effect on value

will have been levied and paid as at the date of valuation.

b. the subject property is covered by a valid insurance policy that is adequate both

in terms of the sum assured and the types of potential loss covered.

2.7 VAT

No allowance has been made in our valuation for the possible effect on value of non-

recoverable VAT (Mehrwertsteuer) on purchase as a result of one or more of the tenants

not being liable to pay VAT in addition to rent.

APPENDICES 6


Considerations

3.1 Non-recoverable Costs

Under German law, management and repair costs are transferable to commercial

tenants, but not transferable to residential tenants. We have applied our market

experience for the purposes of this valuation. The amounts reflected depend on the

number of properties or, in the case of maintenance, the age and condition of the

buildings.

3.1.1 Non-recoverable Costs for Management

Based on experience of the typical allowances reflected in, the market for commercial

buildings of the subject characteristics we have assumed 3% of the gross rental income

(depending on the number of units and consequently the complexity of administration of

the subject properties).

3.1.2 Non-recoverable Costs for Regular Maintenance

For the purpose of the Chemnitz valuation we have adopted EUR 8 per sq m p.a. for

residential area, EUR 5 per sq m p. a. office area, EUR 5 per sq m p.a. for storage area,

EUR 5 per sq m p.a. for surgery concerning ongoing repairs and maintenance. For the

office space in the residential building we assumed an amount of EUR 5 per sq m p.a.

and EUR 30 p.a. per internal parking space, all together it is an amount of 7.2% of the

gross rental income.

In Hohenstein-Ernstthal we have assumed EUR 5 per sq m p. a. for office area, EUR 5

per sq m p.a. for retail area, EUR 5 per sq m p.a. for the area of the energy supply for

Edeka, EUR 5 per sq m p.a. for other spaces and EUR 20 p.a. per external parking

space. All together it is an amount of 7.4’% of the gross rental income.

3.1.3 Non-recoverable Costs for Tenant Improvements

Under German law, it is frequently the tenant’s responsibility to carry out decorative and

minor repairs.

Upon a change in tenants, however, additional expenses for basic repairs and

renovation of the interior of the individual rental units must be incurred, e.g. in the

bathrooms and kitchens of residential space, to facilitate renewed letting.

We have adopted an amount, based experience, for initial refurbishments or in case of

tenant fluctuation in Chemnitz as follows:

EUR 80 per sq m for residential space

EUR 50 per sq m for office and surgery space

EUR 0 per space for internal car parking

APPENDICES 7

In Hohenstein-Ernstthal we have adopted an amount of:

EUR 50 per sq m for retail space

EUR 50 per sq m for office space

EUR 0 per sq m for vacant space (Sozialbau)

EUR 0 per space for external car parking and for the space of the energy supply for

Edeka

(in accordance with the state of repair of the subject accommodation).

3.1.4 Non-recoverable Service Charges on Vacant Space

This heading refers to a book reserve for costs that would normally be borne by the

tenant but that for various reasons (e.g. bankruptcy) cannot be recovered, as well as

additional costs such as legal fees and charges.

For both properties in Chemnitz and Hohenstein-Ernstthal EUR 12 per sq m p.a. have

been adopted for vacant accommodation for all use types.

3.2 Outstanding (deferred) Maintenance Costs (structural Costs)

According to the Chemnitz Property Condition Report dated 29 March 2007 provided by

the Principal for the initial valuation, there is reserved a total amount of EUR 55,016

(year 1-7) for deferred maintenance. This amount is totally covered by the maintenance

costs of on average EUR 6.18 per sq m p.a. (please refer to “3.1.2 Non-recoverable

Costs for Regular Maintenance”).

According to the Hohenstein-Ernstthal Property Condition Report dated 29 March 2007

provided by the Principal for the initial valuation, there is reserved a total amount of EUR

148,266 (year 1-7) for deferred maintenance. This amount includes costs for demolition

of the currently vacant social building of EUR 68,000. This amount has not been taken

into account in our fair value calculation because we assume that the Social Building

can be re-letted. The remaining deferred maintenance costs are totally covered by the

maintenance costs of on average EUR 5.18 per sq m p.a. (please refer to “3.1.2 Non-

recoverable Costs for Regular Maintenance”). Due to this there is no negative impact on

the market value.

3.3 Void Period for currently vacant Space / Future Void Periods on Re-

Letting

Currently, the portfolio has an average vacancy rate of 5.5%. For vacant

accommodation and on re-letting of units currently occupied, a void period of three

months for residential units, between nine and 12 months for office and retail units and

six months for external parking spaces has been assumed.

APPENDICES 8

3.4 Letting Costs

Under German law, there are no restrictions for charging agency fees with regards to the

letting of commercial space. In the event that the administration is not able to recover

some of the letting costs, book allowances have been made at this level to reflect the

management expenses incurred in letting, e.g. meetings to negotiate lease terms,

newspaper adverts etc.

We have assumed letting fees equivalent from two month’s rent would be paid by the

owner on re-letting for all use types located in the subject properties. Parking spaces, the

spaces of the Energy Supply for Edeka and the former youth centre are not taken into

account.

These assumptions can vary due to the different activities in the subject property markets.

3.5 Credit Loss

The risk of potential credit loss, by tenants not paying any rent, is implicitly reflected in

the discount rate.

The tenants “Staatsbetrieb“ in Hohenstein-Ernstthal which generates around 60% of the

current rental income and „Staatsbetrieb Sächsisches Immobilien- und

Baumanagement“ in Chemnitz who generates even around 70% of the current rental

income have a high creditbility as they are statutory corporations of the federal state of

Saxony.

3.6 Inflation and Rental Growth

Explicit reflection of rental growth of market rent has been made on a regional basis.

For increasing the costs over the next ten years we applied the following inflation rates:

Year 1: 0.85%

Year 2: 1.91%

Year 3-10: 2.0%

3.7 Selection of Discount Rate and Capitalization Rate

The calculated cash flows during the time horizon and the "capitalisation (exit) value"

have been discounted using the selected discount rate, quarterly in arrears.

Capitalisation and discount rates relate to each specific property and take into account

the following criteria:

Location and quality of the subject property

Demand and level of prices in the relevant local or regional real estate markets.

The current letting situation as regards vacancy, over- or under-rented situation,

quality of tenant(s) (covenant), lease length(s) and the quality of the lease (indexation

adjustments and stepped rents etc.)

The development prospects of the location and the property itself.

APPENDICES 9

The discount rate reflects the specific combination of risks and opportunities presented

by the property, the location and the letting situation during the 10-year period of

detailed consideration of cash flows. The exit capitalisation rate is used to capitalise the

net rental income at that time. The net rental income used for capitalisation is calculated

from the potential rental value at the date of capitalisation less operating costs.

For the subject properties we have adopted a Discount Rate of 7.0% for Chemnitz and

7.50% for Hohenstein-Ernstthal and an Exit Cap Rate of 6.75% for Chemnitz and 7.0%

for Hohenstein-Ernstthal. The selection of both rates is based on investment market

evidence, explicitly shown in Appendix C “Valuation & Property Report”.

3.8 Rental Value Applied (ERV)

Taking into account market conditions, as well as the advantages and disadvantages of

the location and the property itself, so far as they have an effect on the letting ability we

have adopted market rental values market rental values for the subject properties

“Court”.

The market rents adopted are in accordance with the results of the recent lease

agreements, the local rental table (Mietspiegel) – if available - , the RIWIS data bank of

BulwienGesa AG, Immodaten.net and our internal data base.

At date of valuation the Current Gross Rental Income in Chemnitz was 424,748 EUR p.

a. which equals on the average to a

office current rent of 7.10 EUR per sq m p. m.

residential current rent of 5.71 EUR per sq m p. m.

surgery current rent of 11.20 EUR per sq m p. m.

internal parking rental income of 40.53 EUR per p. m.

The Estimated Rental Income (ERV) in Chemnitz in comparison is 404,166 EUR p. a.

which includes a

office market rent of 6.50 EUR per sq m p. m. (on average)

residential market rent of 5.69 EUR per sq m p. m. (on average)

surgery market rent of 10.00 EUR per sq m p. m.

internal parking market rent of 40 EUR per p. m.

At date of valuation the Current Gross Rental Income in Hohenstein-Ernstthal was

611,861 EUR p. a. which equals on the average to a


retail current rent of 5.13 EUR per sq m p. m.

storage current rent of 0.64 EUR per sq m p. m.

external parking rental income of 0.00 EUR per p. m.

APPENDICES 10

The Estimated Rental Income (ERV) in Hohenstein-Ernstthal in comparison is 517,682

EUR p. a. which includes a

office market rent of 6.00 EUR per sq m p. m.

retail market rent of 5.00 EUR per sq m p. m.

storage market rent of 0.60 EUR per sq m p. m.

external parking market rent of 0.00 EUR per p. m.

The differences of the Rental Income (-4.8% in Chemnitz and -15.4% in Hohenstein-

Ernstthal) between current levels and market levels is based mainly on:

the fact that the contracts are overrented (the court buildings),

the difficult real estate market in Chemnitz and Hohenstein-Ernstthal with high

vacancy rates and low take-up of office areas in comparison.

For further details, please, see Appendix C “Valuation & Property Report”.

3.9 Letting Period

For the commercial leases we were provided by the Principal with extracts of the tenancy

agreements for the initial valuation which we have taken into account in our valuation.

For the parts we weren’t provided with lease agreements, we calculated on a term

period of 5 years.

For the main tenant of the property in Chemnitz we assumed a prolongation of the lease

term for 5 years until 31.12.2018 (end of year 9). The NOI in year 10 decreases due to

turnover vacancy and tenant improvements.

APPENDICES 11

3.10 Sensitivity Analysis - Best Case / Worst Case Scenario

For the purpose of identifying the risk of the subject valuation, we have calculated a best

case / worst case scenario. It is based on the following assumptions (only listed if varying

between scenarios):


INPUT Best Case Most Likely Case Worst Case

ERV

Edeka Märkte 5.50 EUR/ sq m p.m. 5.00 EUR/ sq m p.m. 4.50 EUR/ sq m p.m.

Staatsbetrieb 6.50 EUR/ sq m p.m. 6.00 EUR/ sq m p.m. 5.50 EUR/ sq m p.m.


Vacancy (Sozialbau) 3.00 EUR/ sq m p.m. None None

Axima GmbH 1 EUR/ sq m p.m. 0.60 EUR/ sq m p.m. 0.60 EUR/ sq m p.m.

Discount and Capitalisation Rate

Discount Rate 7,25% 7,50% 7,75%

Capitalisation Rate 6,75% 7,00% 7,25%

APPENDICES 12

Chemnitz


ERV


Dr. Nolandt (Surgery) 10.50 EUR/ sq m p.m. 10.00 EUR/ sq m p.m. 9.50 EUR/ sq m p.m.

Residential Tenants 6.19 EUR/ sq m p.m. 5.69 EUR/ sq m p.m. 5.19 EUR/ sq m p.m.

Parking 42.50 EUR/ unit p.m. 40.00 EUR/ unit p.m. 37.50 EUR/ unit p.m.

Discount and Capitalisation Rate

Discount Rate 6,75% 7,00% 7,25%

Capitalisation Rate 6,50% 6,75% 7,00%

After running the DCF model taking into account these assumptions, the Gross Asset

Value of each scenario is as follows:


OUTPUT Best Case Most Likely Case Worst Case

Fair Value EEUR 8,000,000 EUR 6,940,000 EUR 6,280,000

(rounded)

Chemnitz

OUTPU7 Best Case Most Likely Case Worst Case

Fair Value EEUR 5,910,000 EUR 5,430,000 EUR 4,990,000

(rounded)

APPENDICES 13

VALUATION &

PROPERTY REPORT

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Property Key Figures

Primary Use

Year of Construction / Refurbishment

Ownership

Site Area

Total Lettable Area

Vacant Area %

Anchor Tenant

Lease Analysis

Secured Income Ratio %

Weighted Average Lease Term years

Gross Rental Income

Current Rent EUR

Potential Rent EUR

Market Rent EUR

Non Recoverable Costs %

Net Rental Income

Area and Income Analysis

Office 3484

LettableLettable Unit

current 98,1% ### Residen 1367

stabilized ### ### Surgery 97

CB Richard Ellis GmbHHausvogteiplatz 11 1 110117 Berlin

Current and Stabilized Occupancy Rate Lettable Area by Use

40,00

PAGE 1

per annum sq m/month per annum

0

6,36

0,00 0

27.723

per annum

0,00

Unit/month

0

00,00 0

1,3%40,00

sq m sq m sq m/month%

AdvertisementsOther (per unit)

Storage

Indication%

Parking

Parking - underground car park

Total

Antenna

Total

Office

Supermarket

Retail

Store (> 200 sq m)

Residential

Surgery

Mixed Use

Office/Other

Other

5757

4.8534.948

0 00 0

0 0

95 1,9%

0,0%0

0 0,0%0 0,0%

0 0,0%

27.72340,53

397.0246,82

0,00 00,00 0

0,00

0,00 0,0%

27.360

0,0%

0,0%

1,3%

0 0,0%

0,0%

0,00

40,53

0,0%

27.360

0

Unit/monthper annum

0,000,00

0

0 0,00

0 0,00 0 0,0%

13.039 12,0%

0

00

0

0,00

0

0,0%

0,0%0,0%

0,0%

0

0

0

0

0

0

0

0

97 97

0

1.272

0,0%

0,0%

3.484 3.484

0

0

0

0

0

Fair Value

11,1

Office

Freehold

1992/1993

3,1

Staatsbetrieb SIB / LSG

1,9

50,1

431.374

Germany , Saxony

09120 Chemnitz

01

Parkstraße 28/28A

Mixed use: residential/office

VALUATION REPORT

Property Address

Property Type/Name

sq m

7,3

30.11.2009

95

6,8%

Market Rent *

Opinion of Value


Total

7,3

per sq m / month

Lettable Area Gross Rental Income EURVacancy Rate

6,8

Current RentVacantLet

Over-/Underrented

424.748

sq m

sq m

EUR

EUR

overrented

380.050

404.166

k.A.

EUR

-44.698

EUR

EUR

per annum (month 1 x 12)

sq m

4.948

0,0%

0,00

0 0,00 0

296.878

0,0%

0

95

57

Unit(s)Unit(s) Unit(s)

0 0 0

57

0

%

0,0%

7,0%1.367

0

0

0

0

0,0%

370.180 7,3%

Indication%

0,00 0

5,71

0

11.640

0

0,00

87.108

0,00

10,00

7,10

0,00

0,00

11,20

0,00

0

9,2%

0,0%

0,0%

0,0%

0,0%

271.7896,50

5,69

0,00 0

0,4%86.750

0,0%

0

* based on Let Area

98,1% 100,0%100,0% 100,0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lettable Area Lettable Unit

current stabilized

Office

70%

0%0%0%

Residential

28%

Surgery

2%0%0%0%0%

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Occupied Area and Secured Rental Income

Cash Flow Analysis

Market Value Calculation Terminal Value Calculation

Discount Rate % Capitalization Rate

Sum Discounted Cash Flow EUR Stabilized Rent (Capitalisation Basis)

Gross Capital Value EUR Gross Terminal Value

Acquisition Costs % EUR Acquisition Costs %

Net Capital Value EUR Net Terminal Value


*Cash Flow Figures annualized!

458.528

30.11.2009

Property Address

Parkstraße 28/28A

Property Type/Name

Mixed use: residential/office Pangaea Real-Estate Ltd.

Cash Flow in EUR*

93,2%

100,0%

9 100,0% 0,0%

Occupancy Rate

09120 Chemnitz

97,6%

97,5%

01

Secured Rental

Income

99,5%

100,0%

Germany , Saxony

2

Year

1

10 83,3% 0,0%

Total 94,3% 50,1%

3

8

4

5

6

7

100,0%

97,5%

97,5%

0,0%

0,0%

30,1%

0,0%

100,0%

100,0%

67,2%

-12.557

-10.378-4.134

425.684433.487 166.489

323.341

-31.483 -31.641

-2.072

-31.326

436.359

Year 1 Year 4Year 2 Year 3

-48.0970

245.379

434.825

376.009

5.548.798

Year 9Year 8Year 7Year 5 Year 6

Opinion of Value

283.674

5.265.124

481.347

0

0

-12.495

9,8%

-2.082

-12.187

-2.031

-12.371

-30.708

471.744 476.621

Fair Value

-31.799

-12.620-12.125

-30.552

-12.432

-30.861 -31.016 -31.171

Net Operating Income

Capex

Non Recoverable Costs in %

Running NOI Yield

Total Capex

-286

-8.720

293.668404.825

0

7,00

0

-92.726-91.350

433.487

10,5%

0

277.738 390.528

9,5% 14,1%

-19.899

5.265.124

0

259.842275.025

430.330

2.840.843

6,75

0 0

0

425.684

0

428.621423.827

428.621

PAGE 2

0

EUR

EUR

EUR

%

EUR

5.570.501

-305.377

423.827

Gross Rental Income 468.752

9,7% 9,6%

Other Costs -2.021

Management Costs

Maintenance Costs

-12.248

-2.051

9,5%

478.863

-12.309

-2.041

473.772

-2.062

00

Net Rental Income 413.831Total Non Rec's

9,7%

0

428.621

Running NRI YieldVacancy Costs

0

Discounted Cash Flow

Year 10

388.904

-31.958

Total Cash Flow

-12.683

-2.114-2.093 -2.103

9,7%

5,8

342.149

0

430.330 434.825

0

166.489

5.425.948

-297.453

5.425.948

433.487

0

0

5,8

Terminal Value

392.129 121.868 200.729

404.825 423.827

0

384.053 362.988 343.092

293.668 425.684 430.330 434.825

5.128.496

Discounted Cash Flow Chart

12,0%

99,5% 100,0% 100,0% 100,0%

67,2%

93,2%100,0% 100,0% 100,0%

83,3%

0

100.000

200.000

300.000

400.000

500.000

600.000

Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8 Y 9 Y 100,0%

20,0%

40,0%

60,0%

80,0%

100,0%

120,0%

Secured Rental Income Potential Rent Market Rent Occupancy Rate

7,46%7,81% 7,90% 7,99%

3,07%

5,41%

7,85% 7,93% 8,01%7,63% 7,81% 7,90% 7,99%

5,12%

7,20%

7,85% 7,93% 8,01%

5,23%

6,31%

0

100.000

200.000

300.000

400.000

500.000

600.000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

9,00%

Net Operating Income Non Recoverable Costs Capital Expenditure Gross Rental Income

Market Rent Potential Rent Running Yield Running NRI Yield

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Valuation Assumptions

Capitalization Rates Lease Assumptions

Discount Rate % Void Periods

Capitalization Rate % Vacancy Costs

Tenant Improvements

Acquisition Costs Leasing Commissions

Land Transfer Tax % % Length of indefinite Leases

Agent Costs % % Reletting Lease Terms

Notary Costs % % Renewal Probability

Total Acquisition Costs % %

Valuation Results

Valuation Approach

Projection Period 10 years

Gross Capital Value

Acquisition Costs EUR

Net Capital Value

per sq m EUR

Yield Profile

Yield Chart

%

%%

Net Initial Ys Initial Yield

% 7,00% 8,28%

% 7,13% 8,41%

% 6,62% 7,88%

x

x

x

%

%

%


PAGE 3

0

5.430.000

-1,5%

-48.0970

-1,5%

0

0 00 0 0 0

00


Ø

0 Rents 2 Rents

Year 9Year 8

1 Rents

60 months

MIN

0 EUR/sq m

0 EUR/sq m

Inflation & Real Growth Year 9 Year 10

Tenant Improvements -7.616 0 0

Total 00

Year 1 Year 2

2,0%2,0%

Year 3

0

Year 5

0

0 -32.763

-91.350

Agent Costs -1.104 0 0

Additional Capex 0

2,00

Capital Expenditure

-8.720

5,80 5,80

0

Year 3Year 2Year 1

0

Year 4

0

0,30 0,30

7,00

6,75

--

Fair Value (rounded)

7,136,62

8,28

8,41

11,9at Potential Rent

3,50

Purchase

(Equated Yield)

(Equivalent Yield)

09120 Chemnitz

Property Address

30.11.2009

Sale

6,75

7,00

Germany , Saxony

Property Type/Name

Mixed use: residential/office 01

2,00

Parkstraße 28/28A

3,50

-59.963 0

60 months

Year 10

-48.097

60 months

50%

Year 6

Opinion of Value

MAX

Year 7

0 0

50%

60 months

50%

60 months

2,0%2,0%

Year 4 Year 5 Year 6

-92.726-91.350

0

12,1

7,00

1,9%

-1,5% -1,5%

EUR

Valuation Standard

at Potential Rent

7,88

at Current Rent

Gross Multiplier

at Market Rent

Net Initial Yield

at Current Rent

Valuation Date 30.11.2009

12,7

-1,5%

5.128.496

International Financial

-1,4% -1,5%

5.425.948

-297.453

For the determination of Fair Value, the Discounted Cash Flow (DCF) method, with a 10-year time horizon, has been applied. The Fair Value of the

properties has been determined in accordance with the definition of ''Fair Value'' with IAS 40.5 of the International Financial Reporting Standard

(IFRS) published by the International Accounting Standards Board (IASB).

Source: Consensus Economics, EZB

12 EUR/sq m 6 EUR/sq m

37 EUR/sq m80 EUR/sq m

5 months12 months3 months

Fair Value

Inflation

Real Growth -0,4%

0,9%

at Market Rent

Gross Initial Yield

at Potential Rent

at Current Rent at Current

at Potentia

-1,5%

at Market

EUR

Equivalent Yield

at Market Rent

Capitalization Rate

Discount Rate (IRR)

EUR

2,0%

1.097

2,0% 2,0% 2,0%

0

0

60 months

Year 7 Year 8

-1,5%

7,00% 7,13%6,62%

8,28% 8,41%7,88%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

9,00%

at Current Rent at Potential Rent at Market Rent

Net Initial Yield Gross Initial Yield

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Rent Roll


#1

0€ /0€

50% /50%

3m /3m 80€ /80€ 50% /50%

3m /3m

LET Thomas / Anja Löser / Förster Parking - underground ca

3m /3m 80€ /80€

3m /3m 80€ /80€ 50% /50%

3m /3m 80€ /80€ 50% /50%

1 40,00 50% /50%

50% /50%

6m /6m 0€ /0€

6m /6m

40,00 01.03.2009

14.04.2014

31.12.2013

31.12.2013

38,35 40,00 01.05.2001LET Hannelore Otto Parking - underground ca 1

LET Uwe-Jens und Katrin Giese Residential 145 5,46 5,50 01.04.1999

6,12 6,00 01.03.1999LET Georg Weck Residential 37

31.08.2009 3m /3m 80€ /80€ 50% /50%VACANT Leerstand Residential 58 0,00 5,80

6,14 5,80 01.07.1999LET Irene Martin Residential 58

3m /3m 80€ /80€ 50% /50%LET Helga Flemming Residential 55 6,14 5,80 01.08.2006

5,68 5,80 01.11.2009LET René Busch Residential 41

3m /3m 80€ /80€ 50% /50%6,02 5,80 01.04.2005

5,98 6,00 01.06.2005

LET Nico Stolle Residential 60

LET Bianca Zicker Residential 37

5,80 01.06.1994 3m /3mLET Erhard und Erika Bauer Residential 58

3m /3m 80€ /80€ 50% /50%LET Ingeborg Hammer Residential 58

6m /6m 0€ /0€ 50% /50%56,73 40,00 15.12.2001LET Stefan und Sylvina Zimmer Parking - underground ca 2

6m /6m 0€ /0€ 50% /50%

6m /6m 0€ /0€ 50% /50%

LET Uwe-Jens und Katrin Giese Parking - underground ca 2 39,23 40,00 01.04.1999

43,46 40,00 01.03.1999LET Georg Weck Parking - underground ca 1

6m /6m 0€ /0€ 50% /50%

6m /6m 0€ /0€ 50% /50%

LET René Busch Parking - underground ca 1 40,00 40,00 01.11.2009

40,00 40,00 01.04.2005LET Nico Stolle Parking - underground ca 1

6m /6m 0€ /0€ 50% /50%

6m /6m 0€ /0€ 50% /50%

LET Erhard und Erika Bauer Parking - underground ca 1 43,46 40,00 01.06.1994

35,79 40,00 01.03.1997LET Hermann und Helga Klemm Parking - underground ca 1

6m /6m 0€ /0€ 50% /50%

6m /6m 0€ /0€ 50% /50%

LET Dieter und Annelies Eckert Parking - underground ca 1 40,00 40,00 01.03.2007

40,00 40,00 01.01.2009LET René Vogel Parking - underground ca 1

6m /6m 0€ /0€ 50% /50%

6m /6m 0€ /0€ 50% /50%

LET Doreen Goeritz Parking - underground ca 1 40,00 40,00 01.02.2009

43,46 40,00 15.04.1994LET Sabine Nolandt Parking - underground ca 2

6m /6m 0€ /0€ 50% /50%

6m /6m 0€ /0€ 50% /50%

LET Staatsbetrieb SIB / LJA Parking - underground ca 5 38,35 40,00 01.06.2009

38,35 40,00 01.02.1994LET Staatsbetrieb SIB / LSG Parking - underground ca 5

3m /3m 80€ /80€ 50% /50%

3m /3m 80€ /80€ 50% /50%

80€ /80€ 50% /50%

80€ /80€ 50% /50%

LET Stefan und Sylvina Zimmer Residential 120 4,84 5,50 15.12.2001

6,39 5,80 01.03.1997

6,15 5,80 15.11.1998

6,39

LET Hermann und Helga Klemm Residential 55

3m /3m 80€ /80€ 50% /50%

3m /3m 80€ /80€ 50% /50%

LET Babett Roskosch Residential 41 5,43 5,50 01.02.2009

6,02 5,80 01.03.2007LET Dieter und Annelies Eckert Residential 60

31.12.2013 12m /12m 50€ /50€ 50% /50%

12m /12m 50€ /50€ 50% /50%

LET 1.OG 6 LJA Office 0 0,00 6,50 01.06.2009

0,00 6,50 01.06.2009 31.12.2013LET 1.OG 5 LJA Office 0

31.12.2013 12m /12m 50€ /50€ 50% /50%

3m /3m 80€ /80€ 50% /50%

LET 1.OG 4 LJA Office 0 0,00 6,50 01.06.2009

6,10 6,00 01.03.2009LET Thomas / Anja Löser / Förster Residential 55

31.12.2013 12m /12m 50€ /50€ 50% /50%

3m /3m 80€ /80€ 50% /50%

LET 1.OG 2 LJA Office 0 0,00 6,50 01.08.2009

80€ /80€ 50% /50%

LET Rosemarie Erdbeer Residential 60 5,73 5,80 01.02.2003

50% /50%

VACANT Leerstand Residential 37 0,00 5,80 31.10.2009 3m /3m

50% /50%

LET André Schneider Residential 58 5,39 5,50 01.11.2008 3m /3m

50% /50%

LET Hannelore Otto Residential 58 5,62 5,80 01.05.2001 3m /3m

50% /50%

LET René Vogel Residential 55 6,10 6,00 01.01.2009 3m /3m

50% /50%

LET Elisabeth Habelitz Residential 41 6,15 6,00 15.02.1997 3m /3m

50% /50%

LET Cornelia Gusew Residential 60 5,62 5,80 01.03.1994 3m /3m

50% /50%

LET Doreen Goeritz Residential 63 4,21 4,50 01.02.2009 3m /3m

50% /50%

LET Margot Felber Parking - underground ca 1 43,00 40,00 01.11.2007 6m /6m

50% /50%

LET Henry Schreiter Parking - underground ca 1 43,46 40,00 01.12.2006 6m /6m

50% /50%

LET Frank Rockel Parking - underground ca 1 43,46 40,00 15.02.2000 6m /6m

50% /50%

LET Heinz Wille Parking - underground ca 1 45,00 40,00 01.05.2002 6m /6m

50% /50%

LET Ernst Raddatz Parking - underground ca 1 43,46 40,00 01.11.1998 6m /6m

43,46 40,00 15.10.1998LET Steffen Ackermann Parking - underground ca 1

50% /50%

Parking - underground ca 1 46,02 40,00 02.10.1997 6m /6m 0€ /0€ 50% /50%

50% /50%

LET Klaus Hickmann Parking - underground ca 1 51,13 40,00 01.11.1995 6m /6m

50% /50%

LET Michael Brommer Parking - underground ca 1 43,00 40,00 01.10.2009 6m /6m

50% /50%

LET Elke Hotz Parking - underground ca 1 40,00 40,00 01.05.2004 6m /6m

50% /50%

LET Olaf Köpsel Parking - underground ca 2 35,79 40,00 01.11.1994 6m /6m

50% /50%

LET Ute Müller Parking - underground ca 1 43,00 40,00 01.10.2009 6m /6m

50% /50%

LET Sabine Nolandt Surgery 97 11,20 10,00 15.04.1994 14.04.2014 9m /9m

50% /50%

LET HHG Haus- u. Grundstücksverw. Parking - underground ca 8 38,35 40,00 01.08.2009 31.12.2013 6m /6m

LET Staatsbetrieb SIB / LJA

init./cont.init./cont.init./cont.Date

50% /50%50€ /50€12m /12m

Renewal

ProbabilityTI'sMarket Rent

EUR/sq m

Office 856 7,10 6,50 01.06.2009 31.12.2013 12m /12m

Lease Start Lease Expiry Void Periods

31.12.2013LET Staatsbetrieb SIB / LSG 6,507,102.628Office

Tenant Area

01.02.1994

DateEUR/sq msq m/unitsTypeName

UseCurrent

RentStatus

50€ /50€ 50% /50%

LET Bilfinger Berger Parking - underground ca 10 38,35 40,00 01.12.2008

0€ /0€

0€ /0€

0€ /0€

0€ /0€

6m /6m

80€ /80€

80€ /80€

80€ /80€

80€ /80€

80€ /80€

80€ /80€

0€ /0€

0€ /0€

0€ /0€

0€ /0€

PAGE 4

LET

Property Address

Reinhard Starke

09120 Chemnitz

Germany , Saxony Opinion of Value

50€ /50€

0€ /0€

31.12.2009 6m /6m 0€ /0€

0€ /0€

Fair Value

Property Type/Name

Mixed use: residential/office 01

30.11.2009Parkstraße 28/28A


0€ /0€

0€ /0€

Property address Client ID 01 CBRE ID Instruction

Reporting level

Valuation date

Prepared for


Property type/Primary use Mixed use: residential/office

Year of construction / of refurbishment n/a / n/a

Site area sq m n/a

Ownership n/a

Total lettable area sq m

Vacancy rate 0,00%

Over- /Underrented Rackrented 00,00%

Current gross rental income total p.a.

(month 1 x 12) per sq m/month

Potential gross rental income total p.a.


Market gross rental income total p.a.


Non recoverable expenses total p.a.

(months 1 x 12) as % of GRI

Net rental income (month 1 x 12) total p.a.

Property DescriptionGeneral

Facade

Entrance

Outside space

Elevator

Source of information

Floor plan

Maintenance backlog

Valuation Result

Yield Profile

At current rental income 0,0 #DIV/0!

At potential rental income 00,0 #DIV/0!

At market rental income 0,0 #DIV/0! Purchaser's costs #DIV/0! 0 EUR

30.11.20099120 Chemnitz

Fair Value

PROPERTY REPORT

Mixed use: residential/office Pangaea Real Estate Ltd.

Floor covering

At least one rental unit and all rooms were inspected.

Asset

0

Fair Value

Parkstraße 28/28A

01

01

The thermally-insulated curtain wall facade is in good condition, with no major defects or obvious damage.

#NV

0,00%

Windows

0 EUR

#DIV/0!

0 EUR

Roof

The windows are double glazed. The window frames consist of PVC and have no signs of disrepair or damage. All the windows in this building have external roller shutters or

jalousies.

The subject property was inspected on 27/11/2009. The property was constructed in 1992/93. The year of refurbishment is not available.. The mixed-use property comprises 6 full storeys and is in a structural

condition comparable with the surrounding buildings. The tenancy structure appears to be non-problematic.

The property has a flat roof. The covering is not new but apparently in good condition with no obvious defects or signs of disrepair. The attic is not fitted-out. We did not

inspect the roof structure internally. The roof structure is thermally-insulated and is not "as new" but apparently in good condition, with no visible defects or disrepair.

#DIV/0!

0 EUR

Balconies etc. More than 80% of the residential units have balconies, loggias, terraces and/or conservatories which mainly face landscaped or quiet areas. The balconies' or comparable

facilities' good location, as well as the nice view, have a positive impact on the units' value. They are in good condition, with no noticeable defects or signs of disrepair. There

are no tenants' gardens.

Walls

The entrance area is attractive. The stairwell is in good condition.

Heating & Fittings

Cellar

The site has an appropriate provision of "green" areas. The external facilities are reasonably well-maintained.

The property is equipped with one or more passenger lifts.

The property is equipped with central heating. The electrical fittings are in a fairly good condition (year of installation: not available). The water pipes are in a fairly good

condition (year of installation: not available).

Multiplier

There is a cellar beneath the entire property. Some of the cellar areas were inspected. Based on the information provided and/or our inspection, the structural condition of the

cellar is good.

The floors are mainly covered with laminate and the covering is in good condition, although it has signs of minor wear and tear. On re-letting, the floor covering will be left in

its present condition. On re-letting, the floors are mainly covered with laminate.

The walls of the inspected unit are mainly decorated with woodchip textured wallpaper and the electrical fittings are mainly flush-mounted. The water pipes are mainly flush-

mounted. On re-letting, the walls are mainly decorated with woodchip textured wallpaper.

The layout of the apartments allows for efficient use of the floor space.

per sq mGIY

#DIV/0!

0 EUR

#DIV/0!

The bathrooms are adequately sized in relation to the size of the apartments and are fitted out with a bathtub and wall-hung WC. The bathroom fittings are in good condition.

The floors are fully tiled and the walls are tiled to full height. All bathrooms are internal and have no natural light. On re-letting, the bathroom will be left in its present

condition.

Bathroom

0,00%

0,00% 0 EUR #DIV/0!

NIY

n/a

Page 1

Additional comments External: No additional comment is available.

Internal:

The sales / commercial areas have a rectangular layout. Building is accessed through the folding doors. The entrance to the underground car park is sufficiently high and

visible with no tight corners, making it easily manouevrable for large vehicles such as SUVs (sport utility vehicles) The parking spaces are only accessible to and are for the

exclusive use of the tenants.

Retail units

Office units Please refer to "Retail units". Parts of the technical equipment are gate or rolling shutter gate, aeration equipment and lighting.

Garage There are 57 internal parking spaces in this valuation unit.

Property address Client ID 01 CBRE ID Instruction Fair Value

Reporting level

Valuation date 30.11.2009

Prepared for

Schedule of Rental & Investment Evidence

Recent Lease Agreements (Tenancy Schedule)

Recent Lease Agreements (ZIP-code area) from CBRE Database

Rental Table (not adjusted to subject property's quality and fit-out)

Residential Asking Rental Comparable within ZIP-code area (Immodaten.net)

Commercial Asking Rental Comparable within ZIP-code area (Immodaten.net)

Sales Comparables from Local Land Valuation Board (Gutachterausschuss)

Sales Price

EUR / sq m

Multiplier Construction

Date

n/a n/a n/a

Asking Sales Comparables within ZIP-code area (Immodaten.net)

Asking Price

EUR / sq m


Date

n/a n/a n/an/a

01

54,94 01.03.2009

Average Rent

EUR / sq m

Parkstr. 28/28A 54,94

67,00

115,00

Total Area

sq m

Address Date of Offering

n/a n/a

6,22

n/a n/a

Office

6,33

Maximum Rent

EUR / sq m

Signing Date Total Area

sq m

01.01.2009

Parkstr. 28/28A

Parkstraße 28/28A

62,97

9120 Chemnitz

Address

01.02.2009

Date of Offering

15.06.2009

n/a

23.08.2009

Date of Transaction

11.09.2009

Address

09120 Chemnitz, n/a

6,43

41,00

59,00 6,44

09120 Chemnitz, Becker Str.

09120 Chemnitz, Park Str.

09120 Chemnitz, Hüttenberg

09120 Chemnitz, Kauffahrtei


Total Area

sq m

Sales Price absolut EUR

Office

Page 2

n/a

30.06.2009

17.02.2009 56,00

6,07

09.04.2009

22.01.2009

59,00 29.09.2009

74,00

5,95

Asking Rent

EUR / sq m

Office

11.09.2009

UseTotal Area

sq m


Address

09120 Chemnitz, Am Stadtpark



Parkstr. 28/28A

Date of Rental Table

01.01.2007

Address

Total Number

Parkstr. 28/28A

Parkstr. 28/28A

17

Parkstr. 28/28A

15.06.2009

Total Area

sq m

74,00


5,23

01.02.2009

01.11.2009 40,52

40,52

58,43

60,00

5,43

5,40

5,68

Date of Offering

Minimum Rent

EUR / sq m

6,73

Minimum Rent

EUR / sq m

4,95

5,41

Average Rent

EUR / sq m

Asset

5,39

6,10

Pangaea Real Estate Ltd.

6,10 There were no comparable

transactions in the subject property's

surroundings.

01.11.2008

160,00

6,59

n/a

Asking Price absolut

EUR

9,38

Monthly Rent

EUR / sq m

4,21

6,00

6,60

6,10

Asking Rent

EUR / sq m

Maximum Rent

EUR / sq m


Reporting level


Prepared for

Property Photos

Picture is not available

Surroundings 2

Exterior view 4

Surroundings 1

9120 Chemnitz


Parkstraße 28/28A


Asset

01

Page 3

Exterior view 3


Picture is not available Picture is not available


Exterior view 1 Exterior view 2


Reporting level


Prepared for

Property Photos

Asset

Interior view 1 Interior view 2


9120 Chemnitz

Parkstraße 28/28A

01



Page 4



Picture is not availablePicture is not available



Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope


Primary Use

Year of Construction / Refurbishment

Ownership

Site Area

Total Lettable Area

Vacant Area %

Anchor Tenant

Lease Analysis

Secured Income Ratio %

Weighted Average Lease Term years

Gross Rental Income

Current Rent EUR

Potential Rent EUR

Market Rent EUR

Non Recoverable Costs %

Net Rental Income


Office 3877

Superm 3952

LettableLettable Unit

current 92,5% 0,0%

stabilized ### ###

Storage 200

Other 648


Current and Stabilized Occupancy Rate Lettable Area by Use

0,00

PAGE 1

per annum sq m/month per annum

0

5,37

0,00 0

0

per annum

0,00

Unit/month

0

00,00 0

0,0%0,00

sq m sq m sq m/month%

AdvertisementsOther (per unit)

Storage

Indication%

Parking

Parking - underground car park

Total

Antenna

Total

Office

Supermarket

Retail

Store (> 200 sq m)

Residential

Surgery

Mixed Use

Office/Other

Other

080

8.0298.677

0 00 0

0 0

648 7,5%

100,0%80

0 0,0%0 0,0%

0 0,0%

00,00

611.8616,35

0,00 00,00 0

0,00

0,00 0,0%

0

0,0%

0,0%

0,0%

0 0,0%

0,0%

0,00

0,00

100,0%

0

0

Unit/monthper annum

0,600,64

0

0 0,00

0 0,00 0 0,0%

0 0,0%

0

0648

0

0,00

1.534

0,0%

0,0%100,0%

0,0%

648

0

0

0

200

0

200

0

0 0

0

0

0,0%

0,0%

3.877 3.877

3.952

0

0

0

0

Fair Value

12,2

Supermarket

Freehold

n/a

2,9

Staatsbetrieb Hauptgebäude

7,5

40,7

611.861

Germany , Saxony

09337 Hohenstein-Ernstthal

02

Conrad-Clauß Straße 11

Office/retail building

VALUATION REPORT

Property Address

Property Type/Name

sq m

6,4

30.11.2009

648

18,2%

Market Rent *

Opinion of Value


Total

5,9

per sq m / month

Lettable Area Gross Rental Income EURVacancy Rate

5,0

Current RentVacantLet

Over-/Underrented

611.861

sq m

sq m

EUR

EUR

overrented

548.759

517.682

k.A.

EUR

-63.102

EUR

EUR

per annum (month 1 x 12)

sq m

8.677

0,0%

0,00

243.375 5,00 237.120

366.952

0,0%

3.952

0

0

Unit(s)Unit(s) Unit(s)

80 0 80

0

0

%

0,0%

0,0%0

0

0

0

0

0,0%

517.682 18,2%

Indication%

0,00 0

0,00

0

0

0

0,00

0

0,00

0,00

7,89

5,13

0,00

0,00

0,00

1.440

31,5%

0,0%

0,0%

6,5%

2,6%

279.1226,00

0,00

0,00 0

0,0%0

0,0%

0

* based on Let Area

92,5%

0,0%

100,0% 100,0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lettable Area Lettable Unit

current stabilized

Office

45%

Supermarket

46%

0%0%0%0%0%0%

Storage

2%

Other

7%

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Occupied Area and Secured Rental Income

Cash Flow Analysis

Market Value Calculation Terminal Value Calculation

Discount Rate % Capitalization Rate

Sum Discounted Cash Flow EUR Stabilized Rent (Capitalisation Basis)

Gross Capital Value EUR Gross Terminal Value

Acquisition Costs % EUR Acquisition Costs %

Net Capital Value EUR Net Terminal Value


*Cash Flow Figures annualized!

689.286

30.11.2009

Property Address


Property Type/Name

Office/retail building Pangaea Real-Estate Ltd.

Cash Flow in EUR*

92,4%

87,8%

9 99,3% 0,0%

Occupancy Rate


97,1%

60,3%

02

Secured Rental

Income

98,1%

76,8%

Germany , Saxony

2

Year

1

10 95,9% 0,0%

Total 93,9% 40,7%

3

8

4

5

6

7

97,4%

60,1%

60,4%

0,0%

0,0%

38,2%

0,0%

99,3%

100,0%

91,7%

-17.221

-4.936-8.504

406.947635.530 433.449

601.166

-49.143 -49.880

-2.786

-48.417

534.812

Year 1 Year 4Year 2 Year 3

-49.361-135

288.461

531.705

519.301

7.460.066

Year 9Year 8Year 7Year 5 Year 6

Opinion of Value

448.175

7.011.891

603.649

-8.472

0

-16.967

13,1%

-2.828

-15.749

-2.625

-16.469

-45.618

524.634 588.114

Fair Value

-50.629

-17.479-15.530

-44.983

-16.716

-46.302 -46.997 -47.701

Net Operating Income

Capex

Non Recoverable Costs in %

Running NOI Yield

Total Capex

-1.976

-131.200

348.021493.008

0

7,50

0

-110.367-91.639

635.530

12,7%

0

534.251 466.893

9,4% 11,1%

-9.164

7.011.891

0

295.474255.441

506.710

3.649.535

7,00

-2.961 -788

-34.839

455.697

-13.910

625.693495.386

624.849

PAGE 2

0

EUR

EUR

EUR

%

EUR

7.418.580

-406.690

432.608

Gross Rental Income 559.378

9,2% 11,4%

Other Costs -2.588

Management Costs

Maintenance Costs

-15.986

-2.704

9,4%

701.456

-16.225

-2.664

690.645

-2.745

-721-24.466

Net Rental Income 626.184Total Non Rec's

11,8%

0

624.849

Running NRI YieldVacancy Costs

0


Year 10

574.558

-51.388

Total Cash Flow

-17.742

-2.957-2.870 -2.913

11,9%

5,8

502.472

-124

518.143 532.628

0

433.449

6.926.269

-379.701

6.926.269

635.530

-38.313

0

5,8

Terminal Value

479.275 316.460 234.106

493.008 432.608

0

389.420 523.132 494.965

348.021 406.947 506.710 531.705

6.546.568

Discounted Cash Flow Chart

12,5%

98,1%

76,8%

99,3% 100,0%91,7% 92,4%

87,8%

97,4% 99,3% 95,9%

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000

Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8 Y 9 Y 100,0%

20,0%

40,0%

60,0%

80,0%

100,0%

120,0%

Secured Rental Income Potential Rent Market Rent Occupancy Rate

7,12%

6,25%

9,02% 9,18%

6,26%

5,02%

5,88%

7,32%7,68%

9,04%

7,15%

9,03% 9,18%

7,71%

6,74% 6,58%

7,48% 7,69%

6,47%

7,25%

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000


0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

9,00%

10,00%

Net Operating Income Non Recoverable Costs Capital Expenditure Gross Rental Income

Market Rent Potential Rent Running Yield Running NRI Yield

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Valuation Assumptions

Capitalization Rates Lease Assumptions

Discount Rate % Void Periods

Capitalization Rate % Vacancy Costs

Tenant Improvements

Acquisition Costs Leasing Commissions

Land Transfer Tax % % Length of indefinite Leases

Agent Costs % % Reletting Lease Terms

Notary Costs % % Renewal Probability

Total Acquisition Costs % %

Valuation Results

Valuation Approach

Projection Period 10 years

Gross Capital Value

Acquisition Costs EUR

Net Capital Value

per sq m EUR

Yield Profile

Yield Chart

%

%%

Net Initial Ys Initial Yield

% 7,92% 9,35%

% 7,92% 9,35%

% 6,56% 7,91%

x

x

x

%

%

%


PAGE 3

-34.839

6.930.000

-0,5%

-49.361-135

-0,5%

-8.472

0 00 0 0 0

0-2.927


Ø

0 Rents 2 Rents

Year 9Year 8

1 Rents

0 months

MIN

0 EUR/sq m

0 EUR/sq m

Inflation & Real Growth Year 9 Year 10

Tenant Improvements -131.200 -15.719 0

Total 0-124

Year 1 Year 2

2,0%2,0%

Year 3

0

Year 5

0

0 -22.323

-91.639

Agent Costs 0 -22.594 0

Additional Capex 0

2,00

Capital Expenditure

-131.200

5,80 5,80

-38.313

Year 3Year 2Year 1

-124

Year 4

0

0,30 0,30

7,50

7,00

--

Fair Value (rounded)

7,926,56

9,35

9,35

10,7at Potential Rent

3,50

Purchase

(Equated Yield)

(Equivalent Yield)


Property Address

30.11.2009

Sale

7,00

7,50

Germany , Saxony

Property Type/Name

Office/retail building 02

2,00


3,50

-88.044 -22.669

0 months

Year 10

-49.361

60 months

42%

Year 6

Opinion of Value

MAX

Year 7

-5.544 0

0%

0 months

50%

120 months

2,0%2,0%

Year 4 Year 5 Year 6

-110.367-91.639

-12.170

10,7

7,92

1,9%

-0,5% -0,5%

EUR

Valuation Standard

at Potential Rent

7,91

at Current Rent

Gross Multiplier

at Market Rent

Net Initial Yield

at Current Rent

Valuation Date 30.11.2009

12,6

-0,5%

6.546.568

International Financial

-0,5% -0,5%

6.926.269

-379.701

For the determination of Fair Value, the Discounted Cash Flow (DCF) method, with a 10-year time horizon, has been applied. The Fair Value of the

properties has been determined in accordance with the definition of ''Fair Value'' with IAS 40.5 of the International Financial Reporting Standard

(IFRS) published by the International Accounting Standards Board (IASB).

Source: Consensus Economics, EZB

12 EUR/sq m 10 EUR/sq m

42 EUR/sq m50 EUR/sq m

8 months12 months0 months

Fair Value

Inflation

Real Growth -0,5%

0,9%

at Market Rent

Gross Initial Yield

at Potential Rent

at Current Rent at Current

at Potentia

-0,5%

at Market

EUR

Equivalent Yield

at Market Rent

Capitalization Rate

Discount Rate (IRR)

EUR

2,0%

799

2,0% 2,0% 2,0%

-135

0

0 months

Year 7 Year 8

-0,5%

7,92% 7,92%

6,56%

9,35% 9,35%

7,91%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

9,00%

10,00%

at Current Rent at Potential Rent at Market Rent

Net Initial Yield Gross Initial Yield

Client ID CBRE ID

Client Name

Valuation Date

Mandate

Scope

Rent Roll


#1

0% /0%

50% /50%

VACANT Parking external Parking 80 0,00 0,00 0m /0m

50% /50%

VACANT Sozialbau ( leerstehend ) Other 648 0,00 0,00 0m /0m

50% /50%

LET Staatsbetrieb Anbau Office 420 6,00 6,00 01.01.1999 31.12.2010 9m /9m

LET Edeka Märkte

init./cont.init./cont.init./cont.Date

50% /50%50€ /50€12m /12m

Renewal

ProbabilityTI'sMarket Rent

EUR/sq m

Supermarket 3.952 5,13 5,00 11.11.1996 31.10.2010 12m /12m

Lease Start Lease Expiry Void Periods

30.06.2011LET Axima GmbH 0,600,64200Storage

Tenant Area

01.05.1995

DateEUR/sq msq m/unitsTypeName

UseCurrent

RentStatus

50€ /50€ 50% /50%

LET Staatsbetrieb Hauptgebäude Office 3.457 8,12 6,00 01.07.1995

PAGE 4

Property Address


Germany , Saxony Opinion of Value

50€ /50€

0€ /0€

30.06.2014 9m /9m 50€ /50€

50€ /50€

Fair Value

Property Type/Name

Office/retail building 02

30.11.2009Conrad-Clauß Straße 11


Property address Client ID 02 CBRE ID Instruction

Reporting level

Valuation date

Prepared for


Property type/Primary use Office/retail building

Year of construction / of refurbishment n/a / n/a

Site area sq m n/a

Ownership n/a


Vacancy rate 0,00%

Over- /Underrented Rackrented 00,00%

Current gross rental income total p.a.


Potential gross rental income total p.a.


Market gross rental income total p.a.


Non recoverable expenses total p.a.

(months 1 x 12) as % of GRI

Net rental income (month 1 x 12) total p.a.

Property DescriptionGeneral

Facade

Entrance

Outside space

Elevator

Source of information

Floor plan

Maintenance backlog

Valuation Result

Yield Profile

At current rental income 0,0 #DIV/0!

At potential rental income 00,0 #DIV/0!

At market rental income 0,0 #DIV/0! Purchaser's costs #DIV/0! 0 EUR

30.11.20099337 Hohenstein-Ernstthal

Fair Value

PROPERTY REPORT

Office/retail building Pangaea Real Estate Ltd.

Floor covering

Residenital rental units could not be inspected.

Asset

0

Fair Value


02

02

The brick facade is in reasonable condition.

#NV

0,00%

Windows

0 EUR

#DIV/0!

0 EUR

Roof

The windows are double glazed. The window frames consist of PVC and have no signs of disrepair or damage. All the windows in this building have external roller shutters or

jalousies.

The subject property was inspected on 27/11/2009. The property was constructed in not availableand fully refurbished in 1995. The Office/retail building comprises 3 full storeys and is in a structural

condition comparable with the surrounding buildings. The tenancy structure appears to be non-problematic.

The property has an unusual type of roof structure. The covering is in reasonable condition. The attic is not fitted-out. We inspected the roof structure internally. The roof

structure is not thermally-insulated and is in fairly good condition.

#DIV/0!

0 EUR

Balconies etc. The property has no balconies, loggias, terraces and/or conservatories. The building has no balconies or comparable facilities. We were unable to determine the condition.

There are no tenants' gardens.

Walls

The entrance area is attractive. The stairwell is in reasonable condition.

Heating & Fittings

Cellar

The site has an appropriate provision of "green" areas. The external facilities are reasonably well-maintained.


The property is equipped with central heating. The electrical fittings are in a fairly good condition (year of installation: not available). The water pipes are in a fairly good

condition (year of installation: not available).

Multiplier

There is a cellar beneath the entire property. Some of the cellar areas were inspected. Based on the information provided and/or our inspection, the structural condition of the

cellar is fairly good.

n/a

n/a

n/a

per sq mGIY

#DIV/0!

0 EUR

#DIV/0!

n/aBathroom

0,00%

0,00% 0 EUR #DIV/0!

NIY

n/a

Page 1

Additional comments External: No additional comment is available.

Internal:

The sales / commercial areas have a rectangular layout. Building is accessed through the folding doors. The entrance to the underground car park is sufficiently high and

visible with no tight corners, making it easily manouevrable for large vehicles such as SUVs (sport utility vehicles) The parking spaces are only accessible to and are for the

exclusive use of the tenants. barrier,

Retail units

Office units Please refer to "Retail units". Parts of the technical equipment are barrier and ticket machine.

Garage There are 80 external parking spaces in this valuation unit.


Reporting level


Prepared for

Schedule of Rental & Investment Evidence


Recent Lease Agreements (ZIP-code area) from CBRE Database

Rental Table (not adjusted to subject property's quality and fit-out)

Residential Asking Rental Comparable within ZIP-code area (Immodaten.net)

Commercial Asking Rental Comparable within ZIP-code area (Immodaten.net)


Sales Price

EUR / sq m


Date

n/a n/a n/a

Asking Sales Comparables within ZIP-code area (Immodaten.net)

Asking Price

EUR / sq m


Date

n/a n/a n/an/a

02

Average Rent

EUR / sq m

n/a

Total Area

sq m

Address Date of Offering

n/a n/a

n/a n/a

Maximum Rent

EUR / sq m

Signing Date Total Area

sq m

n/a


n/a


Address

n/a

Date of Offering

n/a

Date of Transaction

n/a

Address

n/a

n/a

Total Area

sq m

Sales Price absolut EUR

Page 2

n/a

n/a

n/a

Asking Rent

EUR / sq m

n/a

UseTotal Area

sq m

Address


n/a

Address

Total Number

2

n/a

Total Area

sq m

n/a


6,40 7,76

Date of Offering

Minimum Rent

EUR / sq m

n/a

Minimum Rent

EUR / sq m

5,40

n/a

Average Rent

EUR / sq m

Asset


There were no comparable

transactions or recent lease

agreements in the subject property's

surroundings.

n/a

Asking Price absolut

EUR

Monthly Rent

EUR / sq m

n/a

n/a

Asking Rent

EUR / sq m

Maximum Rent

EUR / sq m


Reporting level


Prepared for

Property Photos


Surroundings 2

Exterior view 4

Surroundings 1





Asset

02

Page 3

Exterior view 3






Reporting level


Prepared for

Property Photos

Asset





02



Page 4



Picture is not availablePicture is not available



VALUATION

REPORTZOO

Residenz am Zoo

Date of Valuation as at

30 November 2009

Valuation Report as at

31 December 2009

On behalf of


14 Shenkar Herzliya, Israel 46725

CONTENTS

Part I CERTIFICATE

Part II APPENDICES

A VALUATION OVERVIEW

B VALUATION

C PROPERTY REPORT & CALCULATION

PART

CERTIFICATE

Report Date 2

Instructing Party 2

Preamble 2

Instruction 3

Purpose of Valuation 3

Addressee/Reliance 3

Disclosure 4

Publication 4

Property 4

Date of Valuation 4

Fair Value 5

Market Instability 6

Compliance with Valuation Standards 6

Values Assessed 6

Currency 6

Sources of Information 7

Verification 11

Conflict of Interest 11

Insurance and Liability 11

Limitation 12

Assignation of Rights 12

Place of Performance and Jurisdiction 12

Professional Competence 12

CERTIFICATE

2

CERTIFICATE

CB Richard Ellis GmbH

Hausvogteiplatz 11 A 10117 Berlin

Germany

Switchboard +49 (0) 30 726154 - 0 Fax + 49 (0) 30 726154 - 100

Report Date

31 December 2009

Instructing Party


14 Shenkar Herzliya

Israel 46725

(Hereinafter referred to as the “Principal”)

Preamble

On 17 January 2008 CB Richard Ellis GmbH (“CBRE”) has submitted a valuation

certificate to the Pangaea Real-Estate Ltd., 14 Shenkar Herzliya, Israel 46725, regarding

the so called Zoo Properties, Project “Zoo”, with the date of valuation being 31

December 2007.

On 2 January 2009 as well as on 7 April 2009 CBRE has submitted a valuation

certificate to the Pangaea Real-Estate Ltd., 14 Shenkar Herzliya, Israel 46725, regarding

the so called Zoo Properties, Project “Zoo Update”, with the date of valuation being 31

December 2008.

CERTIFICATE

3

Instruction

We have been appointed to undertake an update valuation of the properties by

undertaking full re-inspections. The subject properties are listed as detailed below:

Residenz am Zoo Nordstraße 35-39 04105 Leipzig Germany; and

Parthenstr. Cadastral district 0415 Plot 2708/10 04105 Leipzig Germany (used as part of the parking space but not included in the "WEG").

We will prepare a certificate of value (the “Certificate”) in English language.

We understand that the properties are held as investments.

We confirm that regarding this instruction we are acting solely for the Principal and that

we have no conflicts of interests in relation to this instruction.

We will value the properties as instructed on an asset-by-asset basis.

Upon execution of this Valuation Instruction the Principal confirms that the subject

properties listed in detail above are held as investment properties within the meaning as

classified in IAS 40.


We acknowledge that our Certificate will be used by the Principal as a source of

information regarding the value of the subject properties for IFRS financial statements

and as a basis for determining the relative value of Pangaea Israel (T.R.) Ltd. and

Pangaea Real Estate Ltd. in the merger process which is currently being formulated

between the companies.

Addressee/Reliance

The Certificate is addressed to and for the use of the Principal only. It is strictly

confidential to the addressee and is only to be used for the specific purpose set out

herein. No responsibility will be accepted to any third party for the whole or any part of

its contents.

CERTIFICATE

4

Disclosure

A copy of our Certificate may be disclosed to the Principal’s auditor and the Principal’s

tax advisor for informational purposes only, in each case on a non-reliance basis.

Publication

If requested by the Principal’s auditors or the Israeli Securities and Exchange

Commission, the Certificate or a reference to the Certificate (in the form and context in

which it appears in the Certificate) may be included or quoted in unchanged format in

the Financial Report of the principal.

The Certificate may be included and published in the Principal’s prospectus and/or in a

valuation that is aimed to determine the relative value of Pangaea Real Estate Ltd. and

Pangaea Israel (T.R.) Ltd.

Save as otherwise stated in this letter, neither the whole nor any part of our Certificate

nor any references thereto may be included in any published document, circular

statement nor published in any way without our prior written approval of the form and

context in which it will appear.

You agree that, following completion of our work, CBRE is permitted to use the name of

your company, its corporate logo, the specific services performed and information such

as the number and area of the units valued, the locations, as well as a reference within

and outside the CBRE international network. You agree to release us from our duty of

confidentiality in this respect.

Property

Residenz am Zoo

Nordstraße 35-39

04105 Leipzig

Germany

Date of Valuation

30 November 2009

CERTIFICATE

5

Fair Value

Upon the assumption that there are no onerous restrictions or unusual outgoings of

which we have no knowledge and the specific comments and assumptions which are set

out in this valuation statement, we are of the opinion that the total Fair Value of the

respective freehold interest in the subject property, as at 30 November 2009, is:

13,900,000 EUR

(Thirteen million nine hundred thousand Euro)

The net capital value is 13,134,172 EUR excluding 5.8% purchaser’s costs (761,782

EUR).

Fair Value previous Valuations

Date of Valuation Fair value Deviation

31.12.2007 (initial) 15,500,000

31.12.2008 (update) 14,500,000 - 6.5%

31.12.2009 (update) 13,900,000 - 4.1%

Compared to our update valuation in December 2008, several factors have been taken

into consideration in order to arrive at this value:

Decrease of the current rental income from 6.22 EUR per sq m to 6.17 EUR per

sq m (impact on value: slightly negative)

Lower recent lease agreements than the expected market rent of 2008 (impact

on value: slightly negative)

Please refer to Appendix A “Valuation Overview” and Appendix C “Property Report &

Calculation” for further details on a valuation unit basis.

CERTIFICATE

6

Market Instability

In accordance with Guidance Note 5 of the RICS Valuation Standards, we would draw

your attention to the following comment regarding current market conditions.

With an eye on the quickly changing conditions in the global financial and national real

estate markets, we must make clear that the Market Value is a "snapshot", which reflects

the current market situation at a given date. Market Value is therefore not to be

regarded as valid for a longer period but is rather subject to market-induced variations.

We therefore recommend that close observation should be maintained of the behaviour

of market players, the banks' guidelines for loan allocation, as well as the trend of all

parameters affecting the value of the subject property, taking into account the stated

purpose of valuation.

Compliance with Valuation Standards

This valuation has been prepared in accordance with The RICS Valuation Standards,

Sixth Edition (Red Book), published by the Royal Institution of Chartered Surveyors 1

January 2008. The property details on which each valuation is based are as set out in

this report.

We confirm that we have sufficient current local and national knowledge of the

particular property market involved and have the skills and understanding to undertake

the valuation competently.

Values Assessed

The properties will be valued to “Fair Value” in accordance with IAS 40.5 of the





In the course of ascertaining the Fair Value we will incorporate the Principal’s and its

financial auditor’s opinion and thereby, identify the Fair Value as Gross Capital Value.

Currency

The reporting currency is EURO.

CERTIFICATE

7

Sources of Information

This valuation has been substantially and mainly based upon the information supplied to

us by the principal as follows:

Received on 25 November 2009:

Graniak KG, 2009-10, monthly summary.doc

Graniak KG, 2009-10, tenancy report.rtf

Graniak KG, 2009-10, tenancy report.xls

Graniak KG, GWP, VacancyReport, 2009-11-03.pdf

Hardcopy tenancy report dated 26 November 2009

All conclusions made by CBRE as regards the condition and the actual characteristics of

the land and buildings have been based exclusively on our inspection of the subject

property and on the documents and information provided.

Documents and Information provided

CBRE has assumed that it was provided with all information and documents that were

relevant to CBRE in carrying out this appraisal report. We have assumed that the

information and documentation had unrestricted validity and relevance as at the date of

valuation. We have not checked the relevant documents and information with respect to

the above-mentioned issues.

Inspection

We have undertaken full inspections on 27 November 2009. We have not carried out

any building surveys. The property has not been measured as part of CBRE’s inspection

nor have the services or other installations been tested. All of CBRE’s conclusions

resulting from the inspection are based purely on visual investigations without any

assertion as to their completeness.

Investigations that might cause damage to the subject property have not been carried

out. Statements about parts of the structure or materials that are covered or otherwise

inaccessible are based on the information or documents provided or on assumptions. In

particular, structural surveys and technical investigations of any defects or damage of the

property, which may exist, have not been carried out.

CERTIFICATE

8

Deleterious Material etc.

According to the Phase I Environmental Site Assessment Report dated 20 March 2006,

provided by the Principal for the initial valuation, no material on-site environmental

issues were identified during the course of the assessment. Based on the year of

construction (1966), ACM may have been used in construction materials. Non friable

suspect ACM has been identified in the following building elements:

vinyl flooring observed and floor adhesive may contain non-friable ACM.

The hot and cold water risers between the kitchens and bathrooms in the

apartments were covered by drywalls. The surfaces of the drywalls were observed

to be either painted wallpaper or ceramic tile finishes. These drywalls potentially

consist of Sokalit-panels, which can be described as mineral fibre elements with

an asbestos content of 12-15%. These panels are classified as non-friable

asbestos.

According to the Phase I Environmental Site Assessment Report dated 20 March 2006

provided by the Principal for the initial valuation, existing non-friable suspect ACM does

not currently pose a health hazard. It is recommended monitoring of the suspect non-

friable asbestos containing elements in order to replace these in the course of

maintenance measures. Prior to any maintenance work on these building parts testing

for asbestos content should be performed in order to ensure proper handling of these

materials. Due to the fact that no other items except the abovementioned do exist, CBRE

does not take into account any replacement costs for deleterious material.

Site Conditions

We did not carry out investigations on site in order to determine the suitability of ground

conditions and services, nor did we undertake environmental, archaeological, or

geotechnical surveys. Unless notified to the contrary, our valuations were carried out on

the basis that these aspects are satisfactory and also that the site is clear of underground

mineral or other workings, methane gas, or other noxious substances.

In the case of a property which may have redevelopment potential, we have assumed

that the site has load bearing capacity suitable for the anticipated form of redevelopment

without the need for additional and expensive foundations or drainage systems.

Furthermore, we have assumed in such circumstances that no unusual costs will be

incurring in the demolition and removal of any existing structure on the property.

Monument List

According to the telephone call with the office for historic monuments for the initial

valuation, the subject property is no listed building in the official list of historic

monuments.

CERTIFICATE

9

Environmental Contamination

According to the telephone call with the environmental protection office for the initial

valuation, the subject property is not listed in the register of contaminated lands.

Legal Requirements / Consents and Authorisation for the Use of the Property

An investigation of the compliance of the property with legal requirements (including

(permanent) planning consent, building permit, acceptance, restrictions, building, fire,

health and safety regulations etc.) relating to the existence and use of the site and

building has not been carried out by CBRE. According to the information confirmed and

provided by the Principal for the initial valuation, all necessary consents and

authorisations for the use of the properties and the processes carried out at the property

are in existence, will continue to subsist and are not subject to any onerous conditions.

According to the Property Condition Report dated 24 March 2006 provided by the

Principal, a building permit does exist.

Taxes, Contributions, Charges

According to the information confirmed and provided by the Principal, all public taxes,

contributions, charges etc. as well as the recoupment charge for local public

infrastructure which could have an effect on value of the subject property “Residenz am

Zoo” will have been levied and paid as at the date of valuation.

Insurance Policy

According to the information confirmed and provided by the Principal, the subject

property is covered by a valid insurance policy that is adequate both in terms of the sum

assured and the types of potential loss covered.

Town Planning and Road Proposals

According to the telephone call with the town planning office for the initial valuation, the

property is not adversely affected by town planning or road proposals.

According to the telephone call with the town planning office for the initial valuation, the

property is not situated in a reallocation or redevelopment area.

Statements by Public Officials

In accordance with established legal practice, we have not regarded statements by

public officials, particularly regarding factual information, as binding. We do not assume

any liability for the application of any such statements or information in the subject

appraisal report.

CERTIFICATE

10

Assumptions regarding the Future

For the purpose of determining the Fair Value of the subject property, we have assumed

that the existing business will continue (as regards both manner and extent of usage of

the subject property) for the remainder of the useful life determined for the buildings, or

that comparable businesses would be available to take over the use of the subject

property.

Tenants

No investigations have been carried out concerning either the status of payments of any

contractually agreed rent or ground rent at the date of valuation, or of the

creditworthiness of any tenant(s). Since no information to the contrary has been brought

to our attention, we have assumed that there are no outstanding rental payments and

that there are no reservations concerning the creditworthiness of any of the tenants.

Pending Litigation, Legal Restrictions (Easements on Real Estate, Rent

Regulation etc.)

According to the information provided by the Principal, the property is free from any

pending litigation, the real estate is unencumbered and there are no other legal

restrictions such as easements on real estate, rent regulations, restrictive covenants in

leases or other outgoings which might adversely affect value.

Subsidies

According to the information provided by the Principal, there are no subsidies or grants

and there is no negative impact on the market value.

Separation Declaration

According to the information provided by the Principal, the subject property is separated

in compliance with the German Condominium Act. The tenancy report provided to us as

basis for the valuation, states, that the subject property contains 436 valuation units.

Section 2 of the Land Register

One land register extract (15756, unit 181) has been brought to our attention by the

principal for the initial valuation despite of the separation in compliance with the German

Condominium Act. We assumed that the other land register extracts contain same

information: there are no easements on real estate. We have assumed that there is no

negative impact on the market value.

CERTIFICATE

11

Agreements under Private Laws

According to the information provided by the Principal, no agreements under private law

do exist. Due to this, there is no impact on market value.

Important

Should any of the information or assumptions on which the valuation is based be

subsequently found incorrect or incomplete, our calculations may need to be amended

and the valuation figure may also be incorrect and should be re-evaluated. We therefore

cannot accept any liability for the correctness of this assessment or for any loss or

damage resulting there from.

Verification

We recommend that before any financial transaction, relating to any other date other

then the date of Valuation (November 30th, 2009) is entered into based upon these

valuations, you obtain verification of the information contained within our valuation

statement and the validity of the assumptions we have adopted.

We would advise you that whilst we have valued the property reflecting current market

conditions, there are certain risks, which may be or may become uninsurable. Before

undertaking any financial transaction based upon this valuation, you should satisfy

yourselves as to the current insurance cover and the risks that may be involved should an

uninsured loss occur.

Conflict of Interest

We hereby confirm that we have no existing potential conflict of interest in providing the

valuation report, neither with the Borrower nor with the Properties.

Furthermore, we confirm that we will not benefit (other than from receipt of the valuation

fee) from this valuation instruction.

Insurance and Liability

CBRE´s liability for damages caused by intentional or gross negligence of its surveyors is

not limited. However, CBRE shall not be liable for any damages caused by slight

negligence of its surveyors, unless (a) liability is based on any personal injuries, death or

damages to personal health, or (b) there is a breach of a contractual obligation

(Cardinal duties). Cardinal duties are duties of material relevance for achieving the

object of this agreement and the adherence to which the contractual partner may rely

upon regularly. If CBRE is liable for slight negligence under the circumstances described

in sentence 2 (b) of this clause, the liability is limited to reasonably foreseeable damages

CERTIFICATE

12

different breaches of duties cause a number of different damages, these damages will be

regarded as one integrative damage in terms of the limitation of liability set out in this

clause.

Paragraph 1 of this clause shall likewise apply to vicarious liability.

Limitation

Warranty claims based on slight negligence shall become time-barred one year after the

termination of the year in which the acceptance took place. Exceptions hereto are the

cases as referenced in Para 1 Sentence 2 (a) and (b) of “Insurance and Liability”.

Assignation of Rights

The addressees of the agreement, based upon which this report has been prepared,

shall not be entitled to assign their rights under the agreement – in total or in part – to

any third party or parties, unless it was explicitly specified otherwise in the agreement.

Place of Performance and Jurisdiction

The agreement, on which the preparation of this report is based, is governed by and

construed in accordance with the laws of Germany. In the event that there is any conflict

between the English legal meaning and the German legal meaning of this Contract or

any part hereof, the German legal meaning shall prevail. The place of performance and

jurisdiction for disputes arising from this contractual relationship shall be Frankfurt am

Main, Germany.

Professional Competence

Henrik Baumunk

Henrik Baumunk joined CB Richard Ellis in April 2007. He is Director and Head of

Residential Valuation in Berlin.

Prior to joining CB Richard Ellis he worked for 7 years in the Corporate Finance Real

Estate division of KPMG.

Henrik Baumunk has a degree in Surveying from the Technical University of Dresden.

There he also received a PhD in Land Management und Valuation (Thesis:

“Globalisation of Real Estate and Real Estate Valuation”).

He is co-publisher and co-author of “IFRS Real Estate”.

CERTIFICATE

13

Michael Schlatterer

Michael Schlatterer joined CB Richard Ellis in June 2005. He is Associate Director and

Team Leader Residential Valuation.

Prior to joining CB Richard Ellis he worked for 7 years as Senior Consultant for

BulwienGesa AG, one of the leading property market analyst companies in Germany.

Michael Schlatterer has a degree in Economic Geography and Regional Planning

(Wirtschaftsgeographie und Regionalplanung) from the University of Bayreuth. He also

received a scholarship to study City and Regional Planning at the University of California

at Berkeley. In 2003 he received a diploma (Immobilienökonom) from the European

Business School (ebs), Berlin. Furthermore, he is a Member of the Royal Institution of

Chartered Surveyors.

Birte Graalfs

Birte Graalfs joined CB Richard Ellis in October 2007. She is a Graduate Surveyor in the

Residential Valuation Team in Berlin.

She studied Real Estate Management at the Nürtingen-Geislingen University and was

awarded the qualification of Diplom-Betriebswirtin (FH).

During her education and prior to joining CB Richard Ellis, she worked as a trainee at

Bankhaus Ellwanger & Geiger in Stuttgart and LB Immobilienbewertungsgesellschaft

mbH in Frankfurt/Main.

Anne Pierschke

Anne Pierschke joined CB Richard Ellis in October 2007. She is a Graduate Surveyor in


Prior to joining CB Richard Ellis she studied Real Estate Management at the University of

Cooperative Education Leipzig in a dual studies program and graduated as a Diplom-

Betriebswirtin (BA).

During her studies she worked for the DB Services Immobilien GmbH in Leipzig.

CERTIFICATE

14

Yours faithfully Yours faithfully

Dr. Henrik Baumunk

Managing Director

Head of Residential Valuation

Germany


CB Richard Ellis

ppa. Michael Schlatterer, MRICS

Associate Director

Team Leader Residential Valuation

Germany


CB Richard Ellis

T:030 /726154-264 T: 030 /726154-264-156

E: [email protected] E: [email protected]

PART

APPENDICESA VALUATION OVERVIEW

B VALUATION

C PROPERTY REPORT & CALCULATION

VALUATION

OVERVIEW

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VALUATION

1 Valuation Approach 1

1.1 DCF (Discounted Cashflow) 1

1.2 Fair Value 1

1.3 Rental Values 1

2 General Valuation Assumptions 2

2.1 The Property 2

2.2 Repair and Condition 2

2.3 Floor Areas 2

2.4 Title, Tenure, Planning and Lettings 2

2.5 Infrastructure and Services 4

2.6 Taxes, Insurance 4

2.7 VAT 4


Considerations 5

3.1 Non-recoverable Costs for Management 5

3.2 Non-recoverable Costs for regular

Maintenance 5

3.3 Non-recoverable Costs for Tenant

Improvements 5

3.4 Non-recoverable Service Charges on vacant

Space 6

3.5 Outstanding (deferred) Maintenance Costs

(structural Costs) 6

3.6 Void Period for currently vacant Space /

Future Void Periods on Re-Letting 6

3.7 Letting Costs 6

3.8 Credit Loss 6

3.9 Inflation and Rental Growth 7

3.10 Selection of Discount Rate and Capitalization

Rate 7

3.11 Rental Value Applied (ERV) 7

3.12 Letting Period 8

3.13 Sensitivity Analysis - Best Case / Worst Case

Scenario 9

APPENDICES 1

VALUATION

1 Valuation Approach

1.1 DCF (Discounted Cashflow)

In arriving at our Fair Values for the subject properties we have applied the DCF

approach, based on a 10-year time horizon.

The DCF model involves a period-by-period estimation of gross rental income and

expenditures to calculate the net operating income (cash flow) for each period, explicitly

taking into account a range of variables including changes in rent due to legally

permissible rent increases and growth in market rents as well as expenditures on

maintenance, repairs and renovation, vacancies etc. over the period of the time horizon.

The resulting net cash flows are discounted at a selected discount rate, normally set by

considering money-market rates and allowing for a risk premium derived from net initial

yields observed in the market. The terminal value of the properties at the end of the time

horizon is estimated using forecasts of the then rental income (in most cases market

rental level due to turnover) and appropriate capitalisation rates (income capitalisation

method).

After allowing for purchaser’s costs (notary fees, land transfer tax, agency fees), the result

is the Net Capital Value.

1.2 Fair Value

The property has been valued to “Fair Value” in accordance with IAS 40.5 of the





In IAS 40.37 it is defined that an entity determines fair value without any deduction for

transaction costs it may incur on sale or other disposal.

No account has been taken of any inter-company leases or arrangements, or of any

mortgages, debentures or other charges.

1.3 Rental Values

Rental values indicated in this report are those which have been adopted by us as

appropriate in assessing the capital value or the letting potential of the properties,

subject to market conditions that are either current or expected in the short term. They

are mainly based on recent lease agreements within the properties, our experience of the

markets and our knowledge of actual comparable market activity.

APPENDICES 2

2 General Valuation Assumptions

2.1 The Property

Landlord’s fixtures such as lifts, escalators, central heating and other normal service

installations have been treated as an integral part of the building and are included within

our valuations. Tenant-specific process plant and machinery, tenants’ fixtures and

specialist trade fittings have been excluded from our valuations.

2.2 Repair and Condition

We have not carried out building surveys, tested services, made independent site

investigations, inspected woodwork, exposed parts of the structure which were covered,

unexposed or inaccessible, nor arranged for any investigations to be carried out to

determine whether or not any deleterious or hazardous materials or techniques have

been used, or are present, in any part of the Property. We are unable, therefore, to give

any assurance that the Property is free from defect.

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

a. there are no abnormal ground conditions, nor archaeological remains, present

which might adversely affect the current or future occupation, development or

value of the property;

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

c. no currently known deleterious or hazardous materials or suspect techniques,

including but not limited to Composite Panelling, have been used in the

construction of, or subsequent alterations or additions to, the Property; and

d. the services, and any associated controls or software, are in working order and

free from defect.

We have otherwise had regard to the age and apparent general condition of the

Property. Comments made in the property details do not purport to express an opinion

about, or advise upon, the condition of uninspected parts and should not be taken as

making an implied representation or statement about such parts.

2.3 Floor Areas

We have been provided with tenancy lists as mentioned in Part I “Sources of

Information” of this Certificate. In undertaking our work, we have assumed that these

floor areas are correct.

2.4 Title, Tenure, Planning and Lettings

According to the information brought to our attention by the Principal for the initial

valuation, there are no entries, information or circumstances that could have an impact

on fair value (including any easements, restrictions, or similar restrictions and

APPENDICES 3

encumbrances). We reserve the right to amend our valuation should any such factors be

found to exist.

Details of title/tenure under which the Property is held and of lettings to which it is

subject are as supplied to us.

We were supplied with copies of one commercial and one residential lease contract,

which we received for the initial valuation on 23 December 2008 (please refer to

“Sources of Information” of this Certificate).

Where information from deeds, leases or other documents is recorded in this report, it

represents our understanding of the relevant documents. We should emphasise,

however, that the interpretation of the documents of title (including relevant deeds,

leases and planning consents) is the responsibility of your legal adviser.

We have not conducted credit enquiries on the financial status of any tenants. We have,

however, reflected our general understanding of purchasers’ likely perceptions of the

financial status of tenants.

According to the information confirmed and provided by the Principal for the initial

valuation:

a. the Property possesses a good and marketable title free from any onerous or

hampering restrictions or conditions;

b. all buildings have been erected either prior to planning control, or in

accordance with planning permissions, and have the benefit of permanent

planning consents or existing use rights for their current use;

c. all buildings comply with all statutory and local authority requirements including

building, fire and health and safety regulations;

According to the telephone call with the town planning office for the initial valuation:

d. the Property is not adversely affected by town planning or road proposals;

Apart from that we have assumed that:

e. there are no tenant’s improvements that will materially affect our opinion of the

rent that would be obtained on review or renewal;

f. tenants will meet their obligations under their leases;

g. there are no user restrictions or other restrictive covenants in leases which would

adversely affect value;

h. where appropriate, permission to assign the interest being valued herein would

not be withheld by the landlord where required; and

i. vacant possession can be given of all accommodation which is unlet or is let on

a service occupancy.

APPENDICES 4

2.5 Infrastructure and Services

According to the information confirmed and provided by the Principal the site is serviced

within the meaning of paragraph 123 of the German statutory building code

(Baugesetzbuch § 123) i.e. that it is connected to the road system, service mains (water,

electricity, gas and district heat) and sewers (for both waste and surface water) and that

refuse collection was provided.

2.6 Taxes, Insurance

According to the information confirmed and provided by the Principal, we have

considered in our valuation that:

a. all public taxes, contributions, charges etc. which could have an effect on value

will have been levied and paid as at the date of valuation.

b. the subject property is covered by a valid insurance policy that is adequate both

in terms of the sum assured and the types of potential loss covered.

2.7 VAT

No allowance has been made in our valuation for the possible effect on value of non-

recoverable VAT (Mehrwertsteuer) on purchase as a result of one or more of the tenants

not being liable to pay VAT in addition to rent.

APPENDICES 5


Considerations

3.1 Non-recoverable Costs for Management

Based on experience of the typical allowances reflected in the market for residential

buildings as well as under consideration of the current management contracts of the

borrower, we have assumed 200 EUR per unit p.a. (depending on the number of units

and consequently the complexity of administration of the subject properties).

3.2 Non-recoverable Costs for regular Maintenance

For the purpose of this valuation we have adopted our standard assumptions concerning

ongoing repairs and maintenance with 7.50 EUR per sq m p. a. (year 1-10) and 8.50

EUR per sq m p. a. (year 11). These figures reflect the state of repair of the subject

property as well the existence of lifts, restrictions because of an entry in the monuments

list, the overall updated condition of the individual buildings after the planned

refurbishments, etc..

For the purpose of this valuation we have adopted our standard assumptions concerning

ongoing repairs and maintenance as follows:

7.50 EUR per sq m per year for office space

7.50 EUR per sq m per year for retail space

7.50 EUR per sq m per year for residential space

20 EUR per external parking space per year

3.3 Non-recoverable Costs for Tenant Improvements

Under German law, it is frequently the tenant’s responsibility to carry out decorative and

minor repairs.

Upon a change in tenants, however, additional expenses for basic repairs and

renovation of the interior of the individual rental units must be incurred, e.g. in the

bathrooms and kitchens of residential space, to facilitate renewed letting.

For the Valuation Unit we have adopted an amount, based on current market

experience, for initial refurbishments or in case of tenant fluctuation as follows:

40 EUR per sq m for residential space

40 EUR per sq m for office and retail space

(in accordance with the state of repair of the subject accommodation).

APPENDICES 6

3.4 Non-recoverable Service Charges on vacant Space

This heading refers to a book reserve for costs such as legal fees and charges that would

normally be borne by the tenant but due to the vacancy can not be recovered. For the

sake of prudence a level of 12 EUR per sq m p.a. has been adopted for vacant

accommodation.

3.5 Outstanding (deferred) Maintenance Costs (structural Costs)

According to the Property Condition Report dated 24 March 2006, provided to us by the

Principal for the initial valuation, there is reserved a total amount of EUR 182,969 (year

1-12) for deferred maintenance. According to the information provided to us by the

principal, no maintenance measure has been carried out at the subject property since

the initial valuation.

The amount is totally covered by the maintenance costs of 7.50 EUR per sq m p. a. /

8.50 EUR per sq m p. a. (please refer to “3.1 Non-recoverable Costs for Regular

Maintenance”). Due to this there is no negative impact on the market value.

3.6 Void Period for currently vacant Space / Future Void Periods on Re-

Letting

Currently, the portfolio has an average vacancy rate of 4.4% (including commercial

units). For vacant accommodation and on re-letting of those residential units currently

occupied, a void period of three months has been assumed, which is based on

experience of the local property market.

3.7 Letting Costs

Under German law, there are no restrictions for charging agency fees with regards to the

letting of commercial space. In the event that the administration is not able to recover

some of the letting costs, book allowances have been made at this level to reflect the

management expenses incurred in letting, e.g. meetings to negotiate lease terms,

newspaper adverts etc.

According to the information provided by the Principal for the initial valuation, no letting

fees will be paid by the owner on re-letting for all use types located in the subject

property.

3.8 Credit Loss

The risk of credit loss, by tenants not paying any rent, is implicitly reflected in the

discount rate.

APPENDICES 7

3.9 Inflation and Rental Growth

Explicit reflection of rental growth of market rent has been made on a regional basis.

For increasing the costs over the next ten years we applied the following inflation rates:

Year 1: 0.85%

Year 2: 1.91%

Year 3-10: 2.0%

3.10 Selection of Discount Rate and Capitalization Rate

The calculated cash flows during the time horizon and the "capitalisation (exit) value"

have been discounted using the selected discount rate, quarterly in arrears.

Capitalisation and discount rates relate to each specific property and take into account

the following criteria:

Location and quality of the subject property

Demand and level of prices in the relevant local or regional real estate markets.

The current letting situation as regards vacancy, over- or under-rented situation,

quality of tenant(s) (covenant), lease length(s) and the quality of the lease (indexation

adjustments and stepped rents etc.)

The development prospects of the location and the property itself.

The discount rate reflects the specific combination of risks and opportunities presented

by the property, the location and the letting situation during the 10-year period of

detailed consideration of cash flows. The exit capitalisation rate is used to capitalise the

net rental income at that time. The net rental income used for capitalisation is calculated

from the potential rental value at the date of capitalisation less operating costs.

For the subject property we have adopted a Discount Rate of 6.55% and an Exit Cap

Rate of 5.55%. The selection of both rates is based on investment market evidence,

explicitly shown in Appendix C “Property Report & Calculation”.

3.11 Rental Value Applied (ERV)

Taking into account market conditions, as well as the advantages and disadvantages of

the location and the property itself, so far as they have an effect on the letting ability we

have adopted market rental values market rental values for the subject property

“Residenz am Zoo”.

The market rents adopted are in accordance with the results of the recent lease

agreements, the local rental table (Mietspiegel) – if available - , the RIWIS data bank of

BulwienGesa AG, Immodaten.net and our internal data base.

APPENDICES 8

At date of valuation the Current Gross Rental Income was 1,046,437 EUR p. a. which

equals on the average to a

residential current rent of 6.17 EUR per sq m p. m.


retail current rent of 6.92 EUR per sq m p. m.

external parking rental income of 16 EUR per p. m.

The Estimated Rental Income (ERV) in comparison is 1,106,315 EUR p. a. which

includes a

residential market rent of 6.25 EUR per sq m p. m.

office market rent of 6.50 EUR per sq m p. m.

retail market rent of 6.50 EUR per sq m p. m.

external parking market rent of 15 EUR per p. m.

The increase of the Rental Income (5.7%) between current levels and market levels is

based mainly on:

a potential increase of the prospective rents .

For further details, please, see Appendix C “Property Report & Calculation”.

3.12 Letting Period

For the commercial leases no tenancy agreements were provided to us by the Principal.

All of the fixed commercial lease terms are calculated with an expiry date of

31.12.2014. On re-letting we have assumed a five-year lease.

APPENDICES 9

3.13 Sensitivity Analysis - Best Case / Worst Case Scenario

For the purpose of identifying valuation uncertainty, we have calculated a best case and

a worst case scenario based on varying ERVs (Estimated Rental Values). The following

table provides an overview of input variables representing the respective best case, most

likely case and worst case:


ERV Residential

EUR/ sq m

6.75 per month 6.25 per month 5.75 per month

ERV Retail

EUR/ sq m


ERV Office

EUR/ sq m


ERV External Parking

EUR/ space


The resulting Gross Present Values are as follows:

OUTPUT Best Case Most Likely Case Worst Case

Fair Value

(rounded)

EUR 15,300,000 EUR 13,900,000 EUR 12,600,000

APPENDICES 10

PROPERTY REPORT &

CALCULATION

Property address Instruction

Valuation date

CBRE ID

Client ID

Client

Property type/Primary use

Year of construction / of refurbishment

Site area sq m

Ownership

Rent restriction


Vacancy rate

Over- /Underrented

Current gross rental income month 1 x 12

per sq m/month

Potential gross rental income month 1 x 12

per sq m/month

Market gross rental income month 1 x 12

per sq m/month

Non recoverable expenses month 1 x 12

as % of GRINet rental income month 1 x 12

Capitalisation rate

Discount rate

IRR Internal rate of return PPurchaser's costs

Strengths Weaknesses

Opportunities Threats

rackrented



4.36%

Location

Starke Prägung des Immobilienmarktes durch individuellen Wohnungsbau.

Geringe Transaktionen vom Mehrgeschossigen Wohnungsbau in den Jahren

2008 und 2009.

Abhängigkeit des Standortes von der Metroporegionen Köln - Bonn.

Weiterer Bevölkerungszuwachs des Stadtteils Quadrath-Ichendorf.

Kontinuierlicher Abbau der Arbeitslosenquote.

Ausbau und Optimierung des ÖPNV.

Stabilisierung des Wohnungsmarktes in Bergheim.

Hohe Leerstandsquote von ca. 21%.

Geringes Niveau der tatsächliche Mieteinnahmen.

Besatz des Objektes mit teilweisem schwierigen Mieterklientel.

Problematische Vermarktung der Gewerbeflächen im Erdgeschoss.

1,046,437 EUR

841,307 EUR

205,130 EUR

1,106,315 EUR

1,094,416 EUR

6.18 EUR

6.55%

948 EUR

Page 1

Yield Profile

7.97%

Potential rental income 6.45%8.33%

Market rental income 11.87

Yield Profile

6.54%

5.55%

6.55%

Fair Value

13,900,000 EUR5.80%

PROPERTY REPORT & CALCULATION (Single asset)

Nordstraße 35-39

Fair Value

30.11.2009

1

12.55 6.05%

Multiplier

Current rental income

Net initial yields

1966 / 1998

Apartment building

No

Freehold

-1.17%

6.26 EUR

6.22 EUR

19.60%

Gross initial yield

12.00

per sq m

Abvermietung von 8 leerstehenden Wohnungen im Jahr 2009.

Reduzierung der Leerstandsquote. Abbau der Underrentsituation.

Zentrale Lage in Quadrath-Ichendorf. Gute Verkehrsanbindung an den

öffentlichen Personennahverkehr, an Fernstraßen und die Bundesautobahn.

8.42%

0

14,660


04105 Leipzig

Valuation Result

7.97%

6.05%5.55%

8.33%

6.45% 6.55%

8.42%

6.54% 6.55%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Gross initial yield Net initial yields Cap Rate / IRR / Discount

Rate

Current rental income

Potential rental income

Market rental income


Valuation date

CBRE ID

Client ID

Client

Surroundings Surroundings

Infrastructure

Public transport (within 750 m) & public parking

Bus Tram

Underground Regional railway

S-Bahn Public parking more than adequate

The bathrooms are rather small in relation to the size of the individual apartments and are fitted out with shower and floor-standing WC. The bathroom

fittings are of fairly good standard and are in reasonable condition. The floors are fully tiled and the walls are tiled to door height. All bathrooms are

internal and have no natural light. On re-letting, the bathroom will be partially refurbished.

Fair Value

30.11.2009

1



There is a cellar beneath the entire property. Some of the cellar areas were inspected. Based on the information provided and/or our inspection, the

structural condition of the cellar is fairly good.

Nordstraße 35-39

Facade

Property description

Additional

comments

No additional comment is available.

Inspection

Bathroom

Commercial units were not inspected

Parking

Commercial

units

Walls

The parking spaces are only accessible to and are for the exclusive use of the tenants. The entrance to the underground car park is sufficiently high

and visible with no tight corners, making it easily manouevrable for large vehicles such as SUVs (sport utility vehicles) .

not available available

04105 Leipzig

Maintenance

backlog

We assume there is no maintenance backlog. No additional comment is available.

not available

Page 2

Floor plan The layout of the apartments allows for efficient use of the floor space.

The floors are mainly covered with floorboards / parquet and the covering is in fairly good condition. On re-letting, the old floor covering will be

refurbished. On re-letting, the floors are mainly covered with floorboards / parquet.

The walls of the inspected unit are mainly decorated with woodchip textured wallpaper and the electrical fittings are mainly flush-mounted. The water

pipes are mainly flush-mounted. On re-letting, the walls are mainly decorated with woodchip textured wallpaper.

Floor covering

The property is heated via district heating. The electrical fittings are in a fairly good condition (year of installation: not available). The water pipes are in

a fairly good condition (year of installation: not available).

Elevator

21 to 40% of the residential units have balconies, loggias, terraces and/or conservatories which mainly face landscaped or quiet areas. The balconies'

or comparable facilities' good location, as well as the nice view, have a positive impact on the units' value. They are in good condition, with no

noticeable defects or signs of disrepair. There are no tenants' gardens.

The site has an appropriate provision of "green" areas. The external facilities are reasonably well-maintained.Outside space

Entrance

Balconies etc.

The entrance area is reasonably attractive. The stairwell is in reasonable condition.

The property is situated in a good residential area. The location is neutral in terms

of image. The district is characterised by residential use with urban character. The

immediate surroundings of this valuation unit are mainly characterised by 3 to 5

storey low-density terraced developments.

Cellar

Situation

The subject property was inspected on 27/11/2009. The property was constructed in 1968 and fully refurbished in 1999/2001/09. The high-rise apartment block

comprises 10 full storeys and in a structural condition comparable with the surrounding buildings. The tenancy structure appears to be non-problematic.

Windows

Heating &

fittings

Roof


not available

The property has a flat roof. The covering is in reasonable condition. The attic is not fitted-out. We did not inspect the roof structure internally. The roof

structure is thermally-insulated and the state of repair of the roof structure could not be assessed.

The thermally-insulated rendered facade is in good condition, with no major defects or obvious damage.

The windows are double glazed. The window frames consist of PVC and have no signs of disrepair or damage. The windows on the ground floor of the

building have external roller shutters or jalousies.

not available

The surroundings of the property make a good impression; there are nevertheless

a few negative aspects such as minor damage resulting from graffiti. There is

minimal pollution from noise, dirt or factory emissions. There are shopping

facilities in the immediate surroundings (within 750 m). One or more playgrounds

are available in the immediate surroundings.

At least one rental unit and all rooms were inspected.


Valuation date

CBRE ID

Client ID

Client

Structural vacancy - residential area

Vacancy due to tenant fluctuations

Letting costs

Tenant improvements residential area

Tenant improvements retail area

Tenant improvements office area

Tenant improvements other commercial area

* EUR / sq m ** in % of Potential Rental Income

Monumental protection

Lift

Rent restriction

Ownership

200.00 12.008.50

8.50


No

Yes

Fair Value

30.11.2009

1


7.50

6.261,040,2936.18

Current

p.a.

Current

unit/

month

0 0.00

Market

p.a.

Market

unit/

month

0.00 0

1,100,555

6.92 5,608 6.50 7,490

6.45 19,020 6.50

Market

p.a.

Market

sq m/

month

Current

p.a.

Current

sq m/

month

0

1,073,8856.251,015,6656.17

0.00 0 0.00 0

0.00

425

0 0 0

Vac. RateVacant

unitsLet units

0 0 0.0%

5.6%24401

0.0%

4.4%63914,02214,660

96 68 28 29.6%

246

0.0%

0 0 0 0.0%

246 0 0.0%

14,318

0 0 0

13,708 610Residential

Residential subsidized

Retail

Total

Commercial

Office

Parking external

Nutzung (units)

Parking internal

Commercial

Office

Retail

Residential subsidized

Residential

3 monthly rent(s)

Other units 0 0 0 0.0%

5.5%26443 0.00%

Lettable area by current rental incomeLettable area by use

Overview Valuation Assumptions

Total

0 month(s)

Management

Costs

p.a.*

Freehold

Office

Parking external20.00 EUR/m²

40.00 EUR/sq m

Commercial

Parking internal

0 Monatsmiete(n)

8.507.50Retail

Residential

0.00 0

Non Rec's

Vacant Areas

p.a.*

Main-tenance

Year 1-10*

0.00%

5,760

Maintenance

from

Year 11*

2.5% ** 12.00

4.0% ** 12.00

4.0% ** 12.00

Page 3

40.00 EUR/sq m

40.00 EUR/sq m

32

6,144

0

469

6,144 15.00 5,760

0

31.00

0.00%

6.67%

0.00%

-0.84%

0

32 0 0.0%

0 0 0 0.0%

16.00

40.0%

0.00

7.50

4.3%

04105 Leipzig

20.00

0.00

25.0020.00

70.00 70.00

0.00

0.00

6.41%

-1.17%

Indication%Total units

7.50 8.50

No


Over-/Underrented

Indication%

Lettable area

Vacant sq

m

Let

sq m

Total

sq m

Vacancy

rate

Gross Rental Income EUR

-1.21%

Use (area)

7 0.0%

19,181

0.00%

5 3 2

7 0

Nordstraße 35-39

Residential

98%

Office

2%

Commercial

1%

Residential

98%

Office

2%

Commercial

1%


Valuation date

CBRE ID

Client ID

Client

Terminal Value Year 11 Present value of cash flow

Net rental income for capout Land surplus

Cap rate Waiver for mining subsidence

Gross terminal value Other influences

Purchaser's costs of Maintenance backlog year 1

Net terminal value Gross capital value

Discount rate Purchaser's costs of

Capitalized net terminal valueGround lease expiry date Net capital value

Remaining term before liquidation (months) Fair Value (rounded)

Gross Capital Value NIY Current Multiplier Current

Purchase Costs NIY Potential Multiplier Potential

Gross Capital Value (rounded) NIY Market Multiplier Market

Fair Value

Fair Value

Net Operating

Income

Leasing

Commission

5.80%

0 797,615 0

0

EUR

745,651

714,015

13,895,954

13,900,000

12.55

12.00

11.87

Term. Val.

73,025

73,419

Year 6

Year 7

Year 8

Year 9

208,661 821,642

0

Fair Value

30.11.2009

1



845,180

54,222 0 767,420

5.80%

13,895,954

Valuation Result

13,900,000 EUR

14,994,363

6.55%

7,992,628

EUR

61,884 0 809,582 0

72,953 0

Extraord.

income/

costs

851,126

20.7

20.1

20.3

839,154

Inco

me in E

UR

00.01.1900

59,497 0 820,957

EUR

Year 10

67,967

71,582

72,302

69,392Year 5

1,164,078

1,175,826

76,804

70,846

7,992,628

636,748

601,226

554,711

537,524

507,540

479,181

452,386

674,345


EUR

65,672 0 824,198 0

64,384 0 819,347

784,351 0

883,731

877,611

0

63,122 0 814,489 021.3

21.6

233,514 21.1

229,971 21.2

04105 Leipzig

EUR

Tenant

Improv.

Potential

Rental IncomeVac. loss

EUR EUR

Net Rental

Income

%EUR

Operating

costs

Year 4

Year 1

Year 2

EUR

68,676

65,407

67,2651,118,039

1,060,903

Year

Year 3

Gross Rental

Income

1,030,303

1,050,774

EUR

5.80%

23.3 880,454

889,87021.8

880,454

5.55%

15,864,037

869,673

0

1,198,936

1,187,356

1,095,710

1,128,870

1,139,818

1,150,883

871,466

56,078

59,481

Cash Flow

Nordstraße 35-39

58,315 0 792,811 0

57,171 0 788,009 0

1,210,632

1,221,919

00.01.1900

Page 4

0

224,395

268,046

247,738

20.5

242,903

238,163

1,148,500

0

220,016

13,895,954

1,137,607

1,126,634

1,115,774

1,081,491

1,087,274

1,071,142

1,104,979

948 EURper sq m

857,303

857,096

0

0

761,782

13,134,172

783,076 0

% of

GRI

6.54%

6.45%

6.05%

13,900,000

761,782

215,723

211,619

20.3

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000


Net operating income Other costs Operating expenses

Maintenance backlog Potential rental income Gross rental income


Valuation date

CBRE ID

Client ID

Client

Rental Table


Recent Lease Agreements (surrounding) from CBRE Database

Asking Rental Comparables (ZIP-code area) of Immodaten.net

Monthly Rent

EUR / sq m

5.72

5.53

n/a

good

CommentMonthly Rent

EUR / sq m

Fair Value

30.11.2009

Comment

Ø area

sq mfitting

n/a

Residential 15.07.2009

15.07.2009Residential


Residential

Use Date of offeringTotal Area

sq m

5.53

5.31

57.88


Residential

Use Signing Date


5.53

5.344.60

43.00

Page 5

Total Area

sq mUse

Residential04105 Leipzig, Humboldt Str. 7.21

Residential


Address

08.05.2009

Address

Address

n/an/a

04105 Leipzig, Pfaffendorfer Str.


Leipzig

04105 Leipzig, Jacob Str.


04105 Leipzig, Nordstraße 35-39


04105 Leipzig, Hinrichsenstr.

04105 Leipzig, Friedrich-Ebert Str.

04105 Leipzig, Max-Planck Str.

04105 Leipzig, Max-Planck Str.

Monthly Rent

EUR / sq mComment

7.14

6.86

62.92

57.8831.10.2008

6.74

37.00

35.00

6.76

38,353.00


42.00

12.04.2009 34.00

49.00

1



Nordstraße 35-39

Signing Date

Maximum Rent

EUR / sq m

Construction

year

1961-1990

Total Area

sq m

57.88

30.09.2008

Minimum Rent

EUR / sq m

Average Rent

EUR / sq m

04105 Leipzig

Schedule of Rental Evidence

30


Valuation date

CBRE ID

Client ID

Client


Asking Sales Comparables (ZIP-code area) of Immodaten.net



980,000 1,045

Asking Price EURAsking Price

EUR / sq m

1

MultiplierConstr.

Date

06.02.2009 735.00 735,000 1,000 n/a n/a

n/a n/a

n/a n/a25.08.2009 2,890.00 2,700,000 934

Date of offering Total Area sq m

01.03.2009 938.00

14.90 n/a1,085,000 980

01.07.2008 863.00

01.01.2009 1,107.00

n/a

14.90 1994

n/a 1910

914

820,000 950

n/a

Constr.

DateMultiplier

Sales Price

EUR / sq mDate of Transaction

Ludwig-Beck-Str.

Address

Scheumannstr.

Heinrich-Budde-Str.

Waldstr.

Lindenthaler Str.

Schedule of Investment Evidence

Nordstraße 35-39

04105 Leipzig

Fair Value

1905

30.04.2008

Address

n/a

04105 Leipzig, Waldstr.

04105 Leipzig, n/a

01.03.2009 574.00 500,000 871

31.01.2008 842.00 770,000

Viertelsweg

Markranstädter Str.

01.02.2008

Page 6

767.00

Total Area sq mSales Price

EUR

n/a841725,000

30.11.2009

862.00

645,000 841 n/a


Valuation date

CBRE ID

Client ID

Client

Surroundings 1 Surroundings 2






Fair Value

04105 LeipzigPangaea Real-Estate Ltd.


Property photos

Page 7

Nordstraße 35-3930.11.2009

1


Valuation date

CBRE ID

Client ID

Client







30.11.2009

Property photos

Fair Value

Page 8



Nordstraße 35-39 1

04105 Leipzig

Valuation Report

LAND PROPERTY OF TOTAL AREA OF 34.5800 HA

WIERZBICA SEROCK MUNICIPALITY, POLAND

Prepared by:

SAVILLS Sp. z o.o.

ul. Marszałkowska 111, 00-102 Warsaw,

Poland

E: [email protected]

KRS: 0000206831; NIP: 526-27-71-913; Share Capital: PLN 275,000

DECEMBER 2009

_________________________________________________________________________________________________________

Valuation Report Undeveloped land Wierzbica, the Serock Municipality

2

EXECUTIVE SUMMARY

Address: The Serock Municipality, Wierzbica

Description: Investment land of 34,5800 m²

Accommodation: Undeveloped land of 34,5800 m² designated for single-family

residential developments.

Planning: Master Plan for the land for single – family residential

development.

Tenure:

Land and mortgage register books:

WA1L/00048009/4 – land plot 189/10

Owner: Teise Holdings Ltd

Purpose of valuation: Financial statement purposes

Basis of valuation: Comparative method

RICS Valuation Standards

Valuation Date: 4th December 2009

Key Information and

Assumptions:

o Value of 1 m² of undeveloped land by comparable method

PLN 55 / m²

o Reasonable period in which to complete a sale: 24 – 36

months

Market Value of the subject property

in its current state:

EUR 4,640,000

(Four Million Six Hundred Forty Thousand EUR)

The above executive summary is to be used in conjunction with the valuation report to which it

forms part and is subject to the assumptions, caveats and bases of valuation stated herein and

should not be read in isolation.

_________________________________________________________________________________________________________


3

CONTENTS

1 INSTRUCTIONS ......................................................................................................................... 4

2 BASIS OF VALUATION ............................................................................................................. 6

3 LOCATION.................................................................................................................................. 7

4 PROPERTY DESCRIPTION ....................................................................................................... 9

4.1 THE SITE ..................................................................................................................................... 9

5 TENURE...................................................................................................................................... 9

5 PLANNING SITUATION ........................................................................................................... 10

5.1 MASTER PLAN ........................................................................................................................... 10

6 MARKET CONSIDERATIONS ................................................................................................. 12

6.1 LAND MARKET IN POLAND .......................................................................................................... 17

6.2 LAND MARKET IN SEROCK MUNICIPALITY .................................................................................... 19

7 MARKET VALUE OF THE SUBJECT PROPERTY ................................................................ 24

8 PREVIOUSE VALUATIONS ..................................................................................................... 26

9 CONDITIONS ............................................................................................................................ 27

APPENDICES

APPENDIX I: Location plan

APPENDIX II: Extract from the Master Plan

APPENDIX III: Photographs

_________________________________________________________________________________________________________


4

10th December 2009


Canada Israel Group

14 Shenkar Herzliya,

Israel 46725

Dear Sirs,

Valuation of the undeveloped land plot no. 189/10 located in Wierzbica, the Serock

Municipality.

1 INSTRUCTIONS

In accordance with the instructions of Pangaea Real Estate Ltd CFO Mr Guy Kende and the

valuation agreement with Pangaea Real Estate Ltd dated 22.10.2009, we have inspected the

above property and made all relevant enquiries in order to provide you with our opinion of the

Market Value of the above property as at 04.12.2009.

We understand that our valuation is required for financial statement purposes, and that we are to

provide our independent opinion as to the Fair Value of the property according to IFRS

(International Financial Reporting Standards) for financial reporting. Fair Value is defined in IFRS

as the amount for which an asset could be exchanged or a liability settled between knowledgeable,

willing parties in arm's length transaction.

Savills Sp z o o was formed in Poland in 2005 as a first subsidiary of Savills plc in East Europe.

Savills is one of the world’s leading international property consultants with offices and associates

throughout the UK, Europe, Asia Pacific, and Africa. Savills plc is listed on the London Stock

Exchange and employing 19,000 staff. Savills Sp. z o o employees in Poland 37 staff including 6 in

Valuation & Consultancy Department (including 3 Polish Licenced Valuers and a RICS member).

Savills Valuation team offers a full range of valuation services for all types of real estate property,

_________________________________________________________________________________________________________


5

including: offices, shopping centres and retail parks, residential property, industrial, warehouse,

hotels and development sites. During last 5 years we have prepared over 250 valuations of

development sites designated for residential (single- and multi-family), retail, office, industrial as

well as hotel developments, located all over Poland.

We confirm that we have had previous involvement in respect of the property, including due-

diligence report for this property in September 2007, valuation of this property in January 2009 and

Addendum letter prepared in August 2009. Notwithstanding these, we do not consider there to be a

conflict of interest and we, therefore, will be acting as External Valuers, as defined in the Red Book.

Furthermore, we confirm that we are not to receive remuneration relating to this property, other

than the fee for this report.

All information as to tenure, site boundaries and similar matters were supplied to us by the

Pangaea Real-Estate Ltd (who is a majority shareholder of Teise Holdings Limited through a fully

held subsidiary).

We have not carried out any investigation into past or present uses, either of the property or of any

neighbouring land, to establish whether there is any contamination to the subject property from

these uses or sites, and the value has been concluded on the assumption that none exists.

We have been provided with documentation, upon which we have relied as being correct for the

purposes of this report. We have carried out a formal inspection of the Land and mortgage register

book. General economic data was obtained from the main Statistical Office and the local statistical

offices while data related to the property market have been based on the market survey conducted by

Savills Sp. z o.o.

Any departures from the above assumptions in reality may have a substantial effect on the valuation.

The Consultant warrants that it currently has and will continue to maintain professional indemnity

insurance (Savills Plc and their Subsidiary Companies). Notwithstanding the provision of

professional indemnity insurance, the maximum liability to the Client for this valuation is EUR

5,000,000.

The report is signed jointly by Brian Burgess – Fellow of Royal Institute of Chartered Surveyors

(FRICS) and Karina Szafrańska – Polish Licenced Valuer (Rzeczoznawca Majątkowy nr. 4487)

_________________________________________________________________________________________________________


6

Neither the whole nor any part of this report or any references thereto should be including in any

published document, circular or statement, nor published in any way without the prior written

approval by Savills Sp. z o.o. of the form and context in which it may appear. We confirm that our

report may be referred to or published (as whole) in the Pangaea Real-Estate Ltd statement as

required according to IFRS requirements. Additionally the valuation may be used and published in

the process of the Pangaea Real-Estate Ltd and Pangaea Israel Ltd companies valuation and /or

as part of a prospectus published.

2 BASIS OF VALUATION

Our valuations have been carried out in accordance with the Practice Statements of the Royal

Institution of Chartered Surveyors’ (RICS) Appraisal and Valuation Standards (the “Red Book”)

published in November 2007, which was effective from 1st January 2008. The property was

inspected by Katarzyna Kotkowska – Polish Licensed Valuer on 4th December 2009. You have

instructed us to value the property on the basis of Market Value, the definition of which is set out at

Practice Statement 3.2 and which is defined as follows:

“The estimated amount for which a property should exchange on the date of valuation between

a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the

parties had each acted knowledgeably, prudently and without compulsion.”

We have reported on the market conditions according to the sources stated in this report

and according to our knowledge of market conditions. It is clear that the market is in a

period of uncertainty with few transactions and little transactional evidence on which to

base opinions of value and to predict trends in the market.

As a result we have provided our opinion of values by using the agreed methodology and

the most relevant information in the market together with our knowledge of the requirements

and expectations of investors and potential trends and patterns.

The definition of market value in the RICS Guidance Note provides for the valuer to assume

that values remain static during the reasonable sales period. Clearly in uncertain market

conditions this assumption may not accord with actual conditions over the period of the

next 12 – 24 months. Once further information becomes available on lease rents and

conditions and investment prices and yields then it would be appropriate to review the

valuations completed and recorded in this report.

_________________________________________________________________________________________________________


7

We have used the comparative method for the undeveloped land sites in order to arrive at a market

value of the land property as clean land using today’s market values. The comparative method

involves the analysis and comparison of sales and lettings of interests in property as similar as

possible to that which is the subject of the valuation.

Our report and valuation in accordance with these requirements is set out below.

3 LOCATION

THE SEROCK MUNICIPALITY

The Municipality of Serock is an suburban area located on the northern edge of Warsaw, alongside

national roads no. 61 and 62. It has an area of 108.08 km² and is inhabited by 11,564 people. The

Serock Municipality is mostly agricultural area with no heavy industry. The most attractive area for

residential development in the Municipality of Serock are villages Jachranka, Ludwinowo

Zegrzyńskie and Jadwisin. The area benefits from the surrounding of the Zegrzyński Lake as well

as local forests and green areas. A new Serock ring-road is currently under development with

expected delivery in 2011.

Serock is located some 40 km from Warsaw to the north – east. The town is located north from the

Zalew Zegrzyński at the bank of the Narew River. The area along the coastline of the Zalew

Zegrzyński as well as the tributary of Narew river and Bug river since years were location of many

vacation houses and recreation centers. Warsaw inhabitants like to spend their weekends and

holidays there. The area of the Zalew Zegrzyński became an attractive sailing centre and the

starting point for voyages into Mazurkas lakes.

The recreation centers were mainly owned by the state companies. After political transformation in

Poland many of them were closed and sold in form of land sites or vacation houses. Survived only

those which could come up to the market expectations and were redeveloped into conference

centers. Change of Master Plans and the increasing interest in houses causes change in the

character of development. Many vacation houses were redeveloped into whole year houses.

SUBJECT PROPERTY

The property is located some 4.5 km from the centre of Serock, less than 1 km west from the road

no 61 (Warsaw – Augustów) and in the near future it will be located approx. 400 m from the ring-

road. The property borders with the village of Pobyłkowo Małe to the west.

_________________________________________________________________________________________________________


8

There are two important transportation routes leading through the city of Serock and the

municipality no. 61 and 62. The first connects Warsaw with Augustów and the second leads from

Strzelno in Wielkopolska to Siemiatycze close to the eastern border of Poland.

SURROUNDINGS

The direct neighborhood of the property is dominated by vast green areas, mostly in agricultural

use. There are single family houses and the ruin of the old brick factory located next to the subject

site, with direct access from the local road. The areas north and south from the property are

dominated by greenery and forest. There is a small river (Kluskówka) bordering the site to the

north. The land bordering the site to the east and west is in agricultural use with few new single –

family residential estates. The site borders with a local road to the south.

There are no facilities like shops or schools in the vicinity of the subject property. The nearest

shops are located in Pobyłkowo Małe (local grocery) some 1 km from the property and in Wierzbica

village (groceries) on the opposite site of the road no 61, some 2 km from the property. The primary

schools as well as kindergarten are located in Serock, some 5 km from the property. Other primary

schools in the municipality are located in Jadwisin, Wola Kielpińska and Zegrze.

ACCESSIBILITY

The property is accessible by car, from the local road leading directly from the main road no 61.

There is no public transport available in the immediate neighborhood of the property. The access

by public transport from Warsaw is available by PKS with bus stops in Wierzbica and Serock, on

road no 61. The journey takes about 1 hour according to the bus schedules, however it may differ

due to the heavy traffic in rash hours.

There is no railway leading to the area of Serock. The nearest railway station in the direction

towards Warsaw is located in Wieliszew, some 12 km away to the south from the property.

A ring road of Serock is currently under development with the scheduled for spring 2011. The new

ring road will lead approximately 300 m from the subject property and will enable fast encircled of

Serock and easier access to.

LOCATION QUALITY

The location of the subject property can be described as an attractive residential location. The

subject property benefits from its location away from main transportation routes; albeit with

_________________________________________________________________________________________________________


9

convenient access to the main routes connecting Wierzbica with Warsaw as well as to the

developed Serock ring-road. The location, however, is less accessible by public transport services

and there is notable congestions on the access roads to Warsaw.

4 PROPERTY DESCRIPTION

4.1 The site

The subject site has an area of 345,800 m2 and constitutes a single plot no 189/10, zone 25

(Wierzbica). The site is green, overgrows with many trees and bushes as well as built up with a

ruined residential building. There are also several small ponds located in the northern part of the

property. The site is not fenced and has an irregular shape, slightly sloping towards north - east.

There is a built up area (with houses and former brick factory) in the central part of the area (which

does not constitute part of the land property).

All utilities are available on borders of the property and partly in the centre area which does not

constitute the subject site.

The property is designated for single-family residential purposes however we have not been

provided with information regarding the exclusion of the land from agricultural use and the costs

connected with it.

5 TENURE

The legal state of the property has been adopted based on the Legal due diligence report dated

6.05.2009 prepared by the law firm Magdalena Kowalska-Jedrzejowska and provided to us for the

purpose of this valuation by the client. Additionally the entries in the land and mortgage register

book has been confirmed during the inspection of the electronic register in the regional court on

27.11.2009.

LAND AND MORTGAGE REGISTER BOOK

The District Court for Legionowo IV Department for the Land and Mortgage Record maintains one

Perpetual Book for the land property. The above book comprises following parts and entries (as at

27.11.2009):

Perpetual Book no. WA1L/00048009/4

Regional Court for Legionowo Department IV of Land and Mortgage Register

_________________________________________________________________________________________________________


10

Perpetual Book no. WA1L/00048009/4

Regional Court for Legionowo Department IV of Land and Mortgage Register

I - Property Identification, rights connected with ownership

Location The Serock Municipality, Wierzbica

Land plot no. 189/10

Area 345,800.00 m2

II – Ownership

The owner Teise Holdings Limited

III – Restrictions

No entries

IV – Charges

No entries

LAND REGISTER

We have not been provided with the extract from the Land Register. According to the information

received from the Legal due diligence report the subject area constitutes of one land plot no.

189/10 with an area of 345,800 m². The indicated function is agricultural development land (sign B).

5 PLANNING SITUATION

5.1 Master Plan

According to the Master Plan for the Serock Municipality (Resolution of the Municipality Council of

Serock no 561/LVII/2001 dated 30.07.2001 and 138/XVIII/2003 dated 12.12.2003) the subject site

is located in the area designated for single family residential development, recreational as well as

touristic facilities (symbol MN/U/UT/ZR). Northern part of the site, near the small river, is designated

for greenery (symbol LZ). 90.64% of the area is situated in the MN/U/UT/ZR and 9.46% is located

in the LZ area.

There are a number of key conditions that will impact on the potential development of the property,

including:

• plots for single family free standing units should be no less than 800 m2,

• minimum 70% of the land area must be retained as biologically active land i.e. green areas,

landscaping, parks etc.

_________________________________________________________________________________________________________


11

• maximum height of the buildings shall not exceed:

o 2.5 storeys for residential buildings (maximum 11 m)

o 1.5 storeys for recreational buildings (maximum 8 m)

o 4 storeys for services (maximum 12 m).

According to the Master Plan, part of the site (marked as 50-67/5 – ancient colonization) is

embraced by the Heritage protection and constitutes an archeological site. The developer is obliged

to organized an archeological excavation before commencement any development.

The master plan does not indicated any detailed division of the land site into single plots, which

implies that the developer may arrange the area freely.

_________________________________________________________________________________________________________


12

6 MARKET CONSIDERATIONS

POLAND – THE FACT SHEET

DEMOGRAPHY

Area:

Population:

Population’s density:

Population by age:

312,683

38,518,000

122

15.5 %

71.1 %

13.3 %

km²

inhabitants (2008)

inhabitants / km² (2008)

pre-working (2008)

working (2008)

post-working (2008)

ECONOMY

Poland is one of the fastest growing economies in Central Europe, with annual growth rate in recent years of

over 6.0%. Poland has pursued a policy of economic liberalisation throughout the 1990s, with positive results

for economic growth. Privatisation of small and medium state-owned companies and a liberal law on

establishing new firms has encouraged the development of the private business sector, which has been the

main drive for Poland's economic growth.

The financial crisis that has spread across all global markets has affected Poland with cost optimization

processes conducted in many foreign companies leading increased unemployment. The depreciation of the

currency, PLN, will lead to increased prices, particular of imported durable goods. The Polish banking system

is relatively young and has a low level of indebtedness, which may limit the negative effects of the crisis.

Analysts now expect Poland to emerge from the crisis in better condition than many of it’s neighbours.

GDP AND INFLATION

Economic growth in Poland has been

one of the highest in the region and

was referred to as a Central Eastern

Tiger. The average GDP growth over

the last 12 years exceeded an average

of 4.0% per year but was on a rising

trend up to 6.7% in 2007. At this time

the World economic slow-down started

to affect Poland with a lower GDP

growth of 4.8% in 2008. Whereas in the

first quarters of 2009 all major

European economies showed a

downturn or were at the level close to

zero, the Polish economy had a slight

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

200

3.Q

1

200

3.Q

3

20

04

.Q1

200

4.Q

3

20

05.Q

1

20

05

.Q3

200

6.Q

1

20

06

.Q3

200

7.Q

1

20

07

.Q3

2008

.Q1

200

8.Q

3

20

09

.Q1

2009

.Q3

GDP growth Inflation

_________________________________________________________________________________________________________


13

increase of 0.8% and in the following quarters of 1.1% and 1.7%. Annual inflation rate increased from 2.5% in

2007 to 4.2% in 2008 and is expected to reduce further in 2009 with 3.2% the projection from NBP. Forecasts

of GDP growth in 2009 are concentrating around 1% (World Bank, Moody’s, HSBC, EC, IMF). Forecasts

relating to inflation vary between 2.3% (Deutsche Bank) and 3.2% (NBP) in 2009 and 1.9% and 0.9% in 2010

and 2011 respectively (NBP). One of the features of the Polish economy has been a high level of grey

economy, mainly cash business from the east. This is now estimated to add another 15% to economic

performance. Whilst continued grey economy will mean less budget revenues for the government, it does

maintain consumer spending. It should be noted, that in comparison with other EU countries, Poland has still

one of the fastest growing economies, and average growth, although slowing down is still positive and much

higher than the average in EU and in EUR area.

UNEMPLOYMENT AND SALARIES

Average monthly salaries in the

enterprise sector rose 8.3% in 2008,

albeit there was a notable slow-down

in Q4. Unemployment rate now is 11%

and is higher than in September 2009

(10.8%), and compare to its lowest

point in October 2008 (8.7%). The

increase in unemployment rate is

partly subject to seasonal fluctuations,

nevertheless, there is an upward trend

resulting from economic slowdown.

The average growth in salaries over

the last 10 years was usually

significantly higher than the inflation rate which supported by the decrease in unemployment, confirms

growing purchasing power of the population. In accordance with the recent forecasts of Ministry of Labour

and Social Policy the unemployment rate is expected to rise in 2009 to 12-13%, however, in the worst

scenario it could reach 14%. Independent researchers forecast, that as a result of the slowdown in economy

in 2009 – 2010 the unemployment rate is to increase by 2%, whilst the rise in salaries is expected to slow

down to the level of 3 – 4% per year, however, it should remain positive, which reflects lower growth but not

full recession.

INTEREST AND EXCHANGE RATES

Interest rates in Poland have continued a continuously downward trend over the last 18 years falling from the

level of 50-60% in 1991 to below 5% in 2006. Over the last 5 years interest rates have been more stable and

adjusted slightly by +/- 0.25-0.50% according to current financial markets. The Monetary Policy Council

increased the interests rates in the first half of 2008 by 1% (reference rate from 5.0% to 6.0%) and then

decreased them back in the second half of the year.

2 000

2 200

2 400

2 600

2 800

3 000

3 200

3 400

3 600

200

7.0

1

200

7.0

3

20

07

.05

20

07

.07

20

07

.09

20

07

.11

20

08

.01

20

08

.03

20

08.0

5

200

8.0

7

200

8.0

9

200

8.1

1

20

09

.01

200

9.0

3

200

9.0

5

20

09

.07

20

09

.09

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

16,00%

AVERAGE MONTHLY SALARIES IN ENTERPRISE SECTOR UNEMPLOYMENT RATE

_________________________________________________________________________________________________________


14

Over the first three months of 2009

the main interest rates have been

decreased further by another

1.25% and in June for another

0.25% so that the main reference

rate is now at 3.50%. Further

movements will depend on the

market situation but are expected

to be in line with central EU bank

movements. However it is not

expected that there will be any cuts

by the end of 2009 before the

election of the new Council.

Between 2005 and 2007 the value

of the PLN increased significantly against the Euro as a result of strong economic performance. As a result of

a reaction to the worsening economic conditions in Europe and negative sentiment relating to all emerging

markets and speculative activity on the

Forex market, the PLN has significantly

depreciated since August 2008. The

exchange rate of EUR increased from

PLN 3.2026 at the end of July 2008 to

PLN 4.1724 at the end of 2008 and

further to PLN 4.8999 by mid February

2009. During the same period USD

increased from PLN 2.0509 to PLN

3.8978. Since March 2009 the situation

had stabilised and we evidenced slow

appreciation of PLN. As the result of

the uncertain financial market

conditions forecasts for exchange rates

over the remainder of 2009 are varied and the majority of analysts are reluctant to state any long-term

forecasts. The PLN has the potential to appreciate further in 2010 - 2012 towards EU accession at a level

closer to 3.80-4.00.

EURO IN POLAND

There is continuing uncertainty as to the final date of accession to the Euro area, however, it is not expected

that the value of the PLN will be higher than at today’s level. To qualify for the Euro, a country must stay in

the ERM-2 for two years. To pass the test the Euro hopeful’s currency must trade within a band of +/-15%

around a central parity rate. The currency can be revalued but not devalued. To join ERM-2 a country must

get the approval of the Economic and Financial Committee, an EU body composed of officials from the

executive Commission, deputy central bank governors and deputy finance ministers.

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

20

07

-04-2

5

200

7-0

7-2

5

20

07

-10-2

5

200

8-0

1-2

5

200

8-0

4-2

5

200

8-0

7-2

5

20

08

-10-2

5

200

9-0

1-2

5

200

9-0

4-2

5

Kredyt lombardowy / lombard rate (annually)

Kredyt redyskontowy / rediscount rate (annually)

Stopa referencyjna / reference rate

Stopa depozytowa / NBP deposit rate

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

5,00

20

07

-01-0

22

00

7-0

2-0

220

07

-03

-02

20

07

-04-0

220

07

-05-0

220

07

-06-0

220

07

-07-0

22

00

7-0

8-0

22

00

7-0

9-0

22

00

7-1

0-0

2

20

07

-11-0

22

00

7-1

2-0

2

20

08

-01-0

22

00

8-0

2-0

220

08

-03

-02

20

08

-04

-02

20

08

-05

-02

200

8-0

6-0

22

008

-07-0

2

20

08

-08-0

22

00

8-0

9-0

22

00

8-1

0-0

22

00

8-1

1-0

22

00

8-1

2-0

2

20

09

-01-0

220

09

-02-0

220

09

-03-0

22

00

9-0

4-0

22

00

9-0

5-0

22

00

9-0

6-0

22

00

9-0

7-0

2

20

09

-08-0

22

00

9-0

9-0

2

CH

F/P

LN

U

SD

/PL

N E

UR

/PLN

1,20

1,30

1,40

1,50

1,60

1,70

1,80

1,90

2,00

EU

R/U

SD

USD/PLN EUR/PLN CHF/PLN EUR/USD

_________________________________________________________________________________________________________


15

Currently, the decision concerning accession to the European exchange rate mechanism ERM2 is awaited by

the market. The decision should take place by the end of 2009, however, the stabilisation on the financial

market and political consensus are crucial for this step. It should be noted that in case of the property market,

majority of rental and sale deals are already being done in EUR. This refers also to financing of transactions,

thus reducing Forex risk of investment transactions. Nevertheless, PLN is still the major currency on the

construction market, which increases the risk of the development process.

FDI

One of the most important factors

about Polish economy has been

the high level of foreign

investment that has been

attracted to the country over the

last 13 years; with the beneficial

increase in production, in

employment, salaries and

economic growth. One of the

main reasons why investors tend

to choose Poland is its location at

the very heart of continental

Europe, part of the trans

European road network and with

ready access to 250 million

consumers within a radius of 1,000 kilometres. Poland is a significant market of 38 million consumers which

has been driving force behind 10% average annual retail market growth. There are several fiscal advantages

for selecting Poland, particularly for producers. The government offers investors various forms of state aid,

such as: CIT tax at the level of 19% and investment incentives in 14 Special Economic Zones (among others:

income tax exemption, real estate tax exemption, competitive land prices), several industrial and technology

parks, the possibility to benefit from the EU structural funds, brownfield and greenfield localisations. One of

the key commercial advantages for foreign investors is cost competitiveness, mainly significantly lower average

salaries in Poland, which are some 3 times lower than the average in the EU. The inflow of foreign direct

investments in 2008 is estimated at EUR 11.2 bn, somewhat less than in 2006 – 2007. The most important

foreign investors in 2008 included Mondi in Swiecie (EUR 280 mln / 140 employees), ADPF in Wroclaw (EUR

150 mln / 700 employees) as well as Lenovo in Legnica (EUR 4 mln / 1,276 employees), Zensar

Technologies in Gdansk (EUR 1.8 mln / 350 employees), First Data Corporation in Gdansk (EUR 3 mln / 400

employees) and Google in Wroclaw and Krakow (EUR 1.5 mln / 270 employees). The global economic

slowdown is expected to adversely affect the foreign direct investment inflow to Poland. Initial projections

indicate that in 2009 the volume of FDI will be about EUR 8.5 bln. Conversely it is possible for this to grow as

the cost competitiveness in Poland has grown considerably with the recent rise in the value of the Euro to

PLN. Approximately 20 -30% of FDI comes into construction / property sector, not taking into account real

estate element of large industrial plants.

0

3 000

6 000

9 000

12 000

15 000

18 0001

99

6

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

*

0

20 000

40 000

60 000

80 000

100 000

120 000

FDI accumulated (mln EUR) FDI inflow (mln EUR)

_________________________________________________________________________________________________________


16

According to the recent Ernst & Young report, Poland ranks 7th in the world in terms of investment

attractiveness. It is estimated that the selection of Poland as the co-organizer of the European Football

Championships in 2012 will speed up investment projects targeted for Poland in the coming years. It will

mainly be the investment in sectors such as road, railway and air infrastructure, as well as in the hotel,

tourism, gastronomy and recreation industry.

MAZOWIECKIE VOIVODESHIP – THE FACT SHEET

GEOGRAPHY

Location:

Area:

Administrative Division:

- Powiats

- Municipalities

Powiat cities:

Central Poland

35,579 km²

42

314

Warszawa

Radom

Płock

Ostrołęka

Siedlce

INFRASTRUCTURE

Main roads:

Budzisko – Suwałki – Augustów – Białystok – Warszawa – Wrocław – Kudowa-Zdrój

Żukowo – Gdańsk – Elbląg – Ostróda – Warszawa – Radom Kielce – Kraków – Chyże

Świecko – Poznań – Konin – Warszawa – Biała Podlaska –Terespol

Warszawa – Zamość – Tomaszów Lubelski – Hrebenne

Warszawa – Sandomierz – Kraków – Sosnowiec – Katowice – Bytom

Warszawa – Ostrołęka – Augustów

Airport: � Fryderyk Chopin Airport in Warsaw

_________________________________________________________________________________________________________


17

POPULATION

Voivodship:

Powiat cities:

- Warszawa

- Radom

- Płock

- Ostrołęka

- Siedlce

Population’s density:

Population by age:

5,213,900

1,710,055

224,041

126,693

53,928

77,207

147

18.84 %

63.78 %

17.38 %

inhabitants (June 2009)

inhabitants (March 2009)





inhabitants / km² (June 2009)

pre-working (June 2009)

working (June 2009)

post-working (June 2009)

ECONOMY

Employment in enterprise sector:

Unemployment rate:

Average salary in enterprise sector:

No. of new apartments:

No. of business entities:

Main industrial zones:

1,276,500 (October 2009)

8.6% (October 2009)

PLN 4.235.96 (October 2009)

31,796 (I-X 2009)

646,365 (October 2009)

SSES (The “Starachowice” Special Economic Zone)

TSSE EURO-PARK WISLOSAN (Special Economic Zone Tarnobrzeg)

6.1 Land Market in Poland

SUPPLY

In 2008 and at the beginning of 2009 the land market in Poland experienced significant changes in

comparison with the period up to 2007. The turmoil in the financial markets started to have a

negative effect on the property market with many projected developments postponed or cancelled.

This radical change was mainly as a result of the fact that developers were unable to finance their

developments.

This situation has worsened due to the more restrictive financing conditions, as the majority of

banks have now halted financing of new developments, especially those concerning residential

projects. This situation has affected the correlation between demand and supply resulting in a

significant increase of development sites available for purchase with lower demand limited by

funding possibilities. This refers mostly to institutional investors and therefore affects market of

large developments.

_________________________________________________________________________________________________________


18

Single plots are frequently large pieces bought directly from farmers as previously agricultural land,

whereas smaller plots are generally purchased from individuals or companies at higher unit prices.

With the prices increases noted in 2007 fewer owners were willing to sell their properties and

waited in order to gain higher profits, however, the current market situation has reversed the

positive trend and currently there are a number of investors (including developers) willing to sell the

properties.

DEMAND

In 2007 we noted increasing demand for land sites especially among individuals and developers,

resulting in an increase in the number of transactions for small and medium-sized sites. By the

middle of 2007 most of the developers had purchased attractive land plots and there are very few

buyers in the market.

During the first half of 2008 there was a notable move by developers to transfer activity from

residential development to commercial development. This was partly due to the decrease in prices

of apartments and demand as well as the more difficult financing conditions.

With the current financial turmoil and increasing reluctance of banks to grant credit most developers

have ceased to be active, thus restricting the pool of potential buyers. Currently demand for

development sites has significantly decreased with the most affected sites being designated for

large residential housing estates. Supply of such sites for sale is now much greater than the

demand from potential buyers. This is mainly due to the lack of credit for land purchase and

development.

Demand continues for single plots where purchasers will build their own house, usually agricultural

or designated for vacation estates where there is the possibility of change of planning use to

residential in the next 5 – 10 years. Private individuals continue to search for attractive plots for

single housing, especially those located among existing single-family developments with good

accessibility to the city centre and at the same time with suburban character.

PRICES

In the first half of 2007 we noted increases in the asking and transactional prices, however, toward

the end of 2007 the market situation stabilized. In second half of 2008 there has been a significant

change in market conditions. This has resulted in a significant fall in land prices, especially those

ready for development by commercial developers and institutions.

_________________________________________________________________________________________________________


19

There is a prospect for stabilisation in land prices with possible local declines, resulting from an

increase in the supply of development sites in some locations and reduced demand. Additional

concerns arise from the fact that there are additional investment opportunities within the large cities

boundaries, resulting from a change in agricultural land protection law, according to which all

agricultural lands within the city limits have been excluded from agricultural production. This then

further affects the saleability and price for sites away from the city centre.

The prices for small land sites attractive for individual purchasers sustain prices in most attractive

locations and noted slight downturn in less popular areas.

6.2 Land Market in Serock Municipality

SUPPLY

The supply of land sites designated for residential investments in the areas surrounding Warsaw

varies significantly between individual municipalities. The historical development of selected

villages and green areas has attracted people for many years. As a result in most prestigious areas

there is a shortage of un-built development land sites. Transactions in these locations concern

mainly properties built-up with residential buildings or former farm buildings.

During 2009 the supply of large sites (above 10,000 m²) has been highly limited in the urbanised

areas close to the cities of the Legionowski poviat, with available sites located outside densely

developed areas on the previous agricultural areas, thus in less attractive locations.

Relatively large plots can be bought directly from farmers; however with current agricultural

designation and usually in unfavourable shape (usually long thin strips). Additionally there is a

growing number of second-hand sellers who have originally bought the lands sites from farmers

merged them and now offer for sell large plots with favourable shape.

In comparison, the supply of small land plots designed for single-family houses remains relatively

plentiful, provided by both individual and institutional investors who have divided previously larger

sites into small development plots with utilities on site. The majority of sites are located within the

boundaries of Serock and close to the city borders in the villages along the main transportation

routes. Single plots have an average size of up to 1,500 m².

_________________________________________________________________________________________________________


20

Table 1: Selected sale offers for land sites in the Serock Municipality

Date of offer

Location Area (m²) Asking

Price (PLN) Asking Price

(PLN) / m² Designation in

master plan Comments

2009.12 Serock, Moczydło 880.00 146,000 166.00 Single family Utilities on site

2009.12 Serock 984.00 130,000 132.00 Single family Utilities on site

2009.12 Serock (surroundings) 1,322.00 175,000 132.00 Single family Utilities on site

2009.12 Serock, Pogorzelec 2,180.00 190,000 87.15 Single family and

services Along national road

2009.10 Serock, Wierzbica 625.00 129,000 206.00 Single family Close to Narew river

2009.10 Serock, Wierzbica 1,186.00 245,000 207.00 Single family Close to Narew river

2009.10 Serock, Wierzbica 2,600.00 110,000 55.00 Single family Close to Serock ring-

road

In the Serock Municipality the supply of sites for development is generated mainly by individual

farmers / private owners. Sites are embraced by the valid Master Plan and are in the majority

designated for single – family residential purposes, low intensity commercial development

(including touristic services) and agricultural areas.

The supply of land sites in Serock and its neighbourhood with designation for single – family

residential purposes depends on the exact area. Vacant sites are available outside intensive

residential areas on previously agricultural areas as well as on the edges of housing and holiday

homes.

Table 2: Selected sale offers for land sites offered by the Serock Municipality

Date of offer

Location Area (m²) Asking Price

(PLN) / m² Designation in

master plan Comments

2009.09 Borowa Góra

1,275.00 1,004.00

875.00 699.00

139.00 Single family Close to national

road

2009.09 Serock, Herberta street 1,923.00 130.00 Single family -

2009.07 Wola Smolana 1,097.00 1,077.00

100.00 Single family -

*According to information received from the Local Authorities the latest tender for the above properties was unsuccessful,

none of the properties were sold. Based on the law the Municipality can offer properties for public sell only after valuation

and the bid price have to be at the level of the market value determined by the Licenced Property Valuer.

DEMAND

As Warsaw is expanding, the areas surrounding the city are gaining interest among buyers, looking

for lower prices as well as those already living in Warsaw and now looking for larger space or more

_________________________________________________________________________________________________________


21

comfort of own home. With rising prices of apartments in Warsaw more and more people are

interested in buying single-family houses at relatively comparable prices.

Demand is shifting between those interested in land on which to build they own homes and those

looking for finished homes in small or medium-sized houses. As a result there are two groups of

investors: individual and developers. The first is looking for attractive locations already developed

with some single-family houses and the second is ready to buy large land plots in undeveloped

areas at lower prices then developed.

Developers have been particularly interested in development sites located in the areas embraced

by a valid Master Plan. The lack of approved Master Plan increases the risks of development and

extends the time for preparing a development. In the case of Serock Municipality the spatial

situation is rather favourable as most of the potential areas for residential development are already

covered by plans. Additionally the local authorities have recently changed the Development Study

allowing for more single-family developments. The resolutions of the Development Study will be

implemented through changes in the Local Master Plans.

Private individuals are interested in single plots located in the neighbourhood of the existing single-

family residential developments with fast connection to main roads and local services. The special

situation is for them less important as the existence of the utilities and neighbouring developments.

As far as location is concerned, the greatest preferences are for land plots located south from

Serock in the area of Ludwinowo Zegrzyńskie, Borowa Góra and Jadwisin. There is also increasing

interest in the areas on the northern borders of Serock within the intensive single – family

development and proximity to the Narew river. Individuals are ready to buy a land plot with an area

of 1,000 – 3,000 m² and construct a single – family residence with their own financing. The second

group is looking for an area of at least 7,000 m² to develop an estate of single-family or semi-

detached residences. The group of developers is limited to the local companies present of the

market for several recent years.

PRICES

The highest prices in the Serock municipality are achieved for sites located close to the Zegrzyński

lake and the Narew river. Among the most attractive locations are Zegrze and villages along the

main road connecting Serock with Warsaw.

_________________________________________________________________________________________________________


22

According to our research, there is a large spread of transaction prices among Serock municipality

districts. This is the result of the influence of the following factors on the land value and thus the

transactional price.

• Location;

• Neighbourhood and surroundings;

• Accessibility;

• Infrastructure;

• Land size and its physical features;

• Designation in Master Plan;

Due to the limited number of comparable transactions (in terms of land area) recorded in the

Serock Municipality, we have analysed two neighbouring municipalities (the Wieliszew and Zegrze

municipalities) located along the same national road leading to Warsaw and close to the Zegrzyński

Lake.

For the purposes of our valuation we have made an analysis of the land plots designated for

residential purposes located in the Serock Municipality, the Wieliszew Municipality and the Zegrze

Municipality. Land transactional evidence was obtained from the Geodesy and Cartography

Department in Legionowo (Powiatowy Ośrodek Dokumentacji Geodezyjnej i Kartograficznej w

Legionowie) by way of a direct inspection of the acts of notarial deeds. The analysis of the property

market has been timely limited to the last 12 months.

Table 3: Selected land transactions in Serock, Wielisze and Zegrze Municipalities

Date of transaction

Municipality Location Plots no. Area (m²) Price PLN (excl.

VAT) Price PLN / m²

(excl. VAT)

Designation in master

plan

2009-02-20 Serock Wierzbica 76/67, 76/94 1,660.00 209,275.00 zł 126.07 zł Residential

2009-03-16 Serock Wierzbica 103/5 1,300.00 165,000.00 zł 126.92 zł Residential

2009-03-16 Wieliszew Skrzeszew 69/2 9,871.00 296,130.00 zł 30.00 zł -

2009-03-26 Wieliszew Wieliszew 342/1 8,245.00 494,700.00 zł 60.00 zł -

2009-04-06 Serock Stasi Las 425 19,800.00 245,000.00 zł 12.37 zł -

2009-04-24 Serock Jachranka 357, 358 14,442.00 2,888,400.00 zł 200.00 zł Residential

2009-06-26 Serock Jadwisin 16/48 6,424.00 580,000.00 zł 90.29 zł Residential

2009-07-08 Serock Poddębie 447/1, 447/4, 447/7

10,133.00 210,000.00 zł 20.72 zł -

2009-07-13 Serock Wierzbica 86/3 986.00 150,000.00 zł 152.13 zł Residential

2009-08-14 Nieporęt Nieporęt 290/2 20,000.00 930,000.00 zł 46.50 zł -

2009-09-23 Wieliszew Skrzeszew 69/2 9,871.00 275,000.00 zł 27.86 zł Residential

2009-10-12 Wieliszew Skrzeszew 633/23 10,647.00 200,000.00 zł 18.78 zł Residential



all average 74.05 zł

Wierzbica average 109.29 zł

weighted average from chosen 50.49 zł

_________________________________________________________________________________________________________


23

According to the above, prices for land plots in the subject area range between PLN 20.00 and PLN

200.00 per m² (depending mainly on location, neighbourhood, available infrastructure and size of the

site). For larger sites (exceeding 10,000 m²) transaction prices range between PLN 20.00 and PLN

80.00 per m² with one transaction at the level of PLN 200.00 / m² located in the very attractive area

next to congress centre & hotel facilities and the Zegrzyński Lake. Land sites designated based on

the master plan for residential purposes achieved prices between PLN 40.00 – 180.00 / m² for sites of

an area of 600 – 3,000 m².

The major influence on price had location and direct surrounding. The highest prices were achieved

for undeveloped land sites located close to the existing residential areas and covered with local

master plan with designation for single-family residential purposes. Higher prices are also received

for lands located with good access to the public transport.

CONCLUSION ON COMPLETED VALUES

It must be emphasised that no recent transaction evidence was found relating to a property of a

sufficiently comparable nature to the subject property, thus there is no completely reliable information

for large sites as the majority of transactions were completed on small plots. The information is,

however, useful in providing a basis to review trends for large land sites.

In conclusion, we consider that there has been a further decline in values for large land sites as well

as an increase in the amount of land for sale, compared with the far fewer numbers of institutional

purchasers (developers and funds). In addition, there is very little credit available for developers, thus

weakening further demand for such property. Based on the available data the annual decline in land

values for the largest land plots has generally been 10 – 20% having regard to the large size of the

property, it’s location and characteristics.

At the same time there has been stable demand from individual purchasers for small land sites

however they are now more reluctant when buying single sites and spend more time on searching for

attractive offers.

The majority of the recent transactions relate to smaller plots of an area below 2,000 m² and the

largest recorded has an area of 20,000 m². In terms of location the most comparable are

transactions regarding sites located in Wierzbica on the northern outskirts of Serock.

_________________________________________________________________________________________________________


24

The average transactional price from the selected transactions (table 3.) was at the level of PLN

74.00 / m² with a weighted average for the largest five sites at the level of PLN 66.00 / m². Whereas

the weighted average from the chosen transactions was at the level of PLN 50.00 / m².

In the view of the above and the fact that the subject site is large, it will be appropriate to consider

this for development only by commercial developers and not for individual house building by private

owners. Additionally, the plot has been cleared but requires some expenditure / investment in

connecting utilities. It is, however, located close to the area of attractive single – family residential

estates. In conclusion the expected value per m² of the plot will be close to the average for the most

comparables transactions.

Owing to the recent significant market changes, especially in the capital markets, it is now more

difficult to assess market values and to predict the future land prices trend on the local market. In

most cities the supply of sites is relatively limited, however, this is less true of outskirts of Warsaw

and land sites designated for single – family residential developments where large areas of

agricultural land can be converted into development land. Generally, there are fewer buyers for the

largest sites.

7 MARKET VALUE OF THE SUBJECT PROPERTY

In accordance with your instructions, we have provided you with our opinion of the Market Value

of the property having regard to the value of the subject land in its current state as undeveloped

land constituting one single area.

For the purpose of this valuation we have analysed transactions as similar as possible to the

subject property regarding the location, possible density and size of the land site. Transaction

prices of the largest five plots (see table 2 page 21-22) vary in the range of PLN 12.00 per m2 up to

PLN 200.00 per m2 and the prices for the most comparable transactions vary between PLN 20.00 –

150.00 / m².

Land transactional evidence do not include information on size or density of the possible

development, however due to location of the chosen properties as well as preferred type of

development in the Serock municipality, we consider that most sites will be developed with

buildings of similar type and density.

_________________________________________________________________________________________________________


25

For the purpose of this valuation we have strongly focused on the transactions related to the sites

designated (in Master plan or Development Study) for single-family purposes and we have made

appropriate adjustments bearing in mind individual characteristics of the comparable properties. We

have used the comparative method of valuation in order to arrive at the current market value of the

part of the subject land.

The following sales of interests in properties, which are as similar as possible to those which are

the subject of the valuation, has been the main focus of our analysis and comparison:

� property located in Jadwisin, site area 6,424 m2

� property located in Poddębie, site area 10,133 m2

� property located in Wierzbica, site area 986 m2

� property located in Nieporęt, site area 20,000 m2

� property located in Wierzbica, site area 2,610 m2

� property located in Wierzbica, site area 1,000 m2.

The above land plots are all designated for single – family residential developments of comparable

density to the subject property. None of the selected transactions are fully comparable to the

subject property in terms of size and all are significantly smaller. The largest is located south from

Serock in Nieporęt, close to the Zegrzyński Lake.

The site with the lowest price is located in Poddębice in distance to the established residential

locations however closer to the Warsaw as the subject property. The remaining transactions

referred to land sites located closer to the subject property in Jadwisin, directly south from Serock

and Wierzbica. In the case of sites located in Wierzbica the most comparable are site of area of

2,610 m² and 1,000 m². The third transaction regards to the land site located along the bank of

Narew River.

The weighted average price (weighted by size) from the five comparables is at the level of PLN

50.49 / m2. When considering only the two largest sites, the average is at the level of PLN 37.83 /

m2, however, when considering only the transactions from Wierzbica the average is PLN 109.29 /

m².

We have made the following observations in order to conclude the market value of the subject land:

• Location close to the single – family residential area; however there is no established

housing estate in the area;

• Proximity to the leisure areas of Zegrzyńskie lake and to the Serock ring road;

• Distance to the public infrastructure (school, shops);

_________________________________________________________________________________________________________


26

• Large area of the site that is expected to be developed in phases, lengthening the

development process and the developer’s financial exposure;

• Part of the property excluded from development due to existing ponds and river and the

future projected internal roads and common areas;

• Sloping nature of the site and unknown ground conditions that may limit the development

area and increase the green and common areas;

• Expected high costs of infrastructure due to the current lack of utilities on the site;

• Relatively favourable overall shape allowing to constitute an attractive housing estate;

• Easy access to roads leading to Warsaw including new Serock ring road;

• Master Plan for the single – family and commercial developments.

Having regard to the above, we have concluded the value of such land would be between PLN

50.00 – 60.00 / m² thus we have applied the average of PLN 55.00 / m² for the subject property

giving a total sum of PLN 19,019,000 (EUR 4,644,898*).

Based on the above assumptions it is our opinion that the Market Value of the freehold interest in

property, as at 4 December 2009 is in the sum of:

PLN 19,019,000

(Nineteen Million Nineteen Thousand PLN)

EUR 4,640,000

(Four Million Six Hundred Forty Thousand EUR)

*According to the exchange rate at the date of valuation 4.12.2009 EUR 1 = PLN 4.0946

Having regard to current market conditions, we consider that a reasonable period in which

to openly market the property for sale and to complete the transaction is 24 to 36 months.

8 PREVIOUS VALUATIONS

We have completed a valuation of the subject property in January 2009; this was prepared for

financial statement purposes of the Pangaea Real-Estate Ltd.

Table 5. Specification of the previous valuations

Date of valuation

Purpose of valuation Valuation method

Value determined

(PLN)

Exchange rate at the date of valuation

(PLN/EUR)

Value determined

(EUR)

6.01.2009 Financial statement and comparative 20,750,000 4.0613 5,110,000

_________________________________________________________________________________________________________


27

inclusion in the Panagaea Real-Estate Ltd statement

The value determined in the current valuation is lower than the previous valuation by about 10%.

We consider that such a decline in value is the result of weaker market conditions resulting from

capital market changes and the limited availability of credit, together with reduced demand from

purchasers.

9 CONDITIONS

Abnormal Market Uncertainty

In view of our comments on the market, it is clear that any property valuations reported at the

present time contain ‘abnormal uncertainty’ caused by ‘market instability’. RICS Guidance Note 5

(GN5) refers to such circumstances thus:

“Unforeseen macroeconomic or political crises can have a sudden and dramatic effect on markets. This

could manifest itself by either panic buying or selling, or simply a disinclination to trade until it is clear

how prices in the market will be affected in the longer term. If the valuation date coincides with the

immediate aftermath of such an event, the data on which any valuation is based may be confused,

incomplete or inconsistent, with an inevitable effect on the certainty that can be attached to it.

“The RICS considers that, where uncertainty could have a material effect on the valuation, the

valuer should draw attention to this, indicating the cause of the uncertainty and the degree to which

this is reflected in the reported valuation.”

Accordingly, please be advised that such circumstances exist and that we have advised you in the

context above.

This report is for the sole use of Pangaea Real-Estate Ltd. and is confidential to you and your

professional advisers. We understand that the valuation may be referred to and/or published in

official Pangaea Real-Estate Ltd documents relating to IFRS standards requirements. The valuation

may be used and published as part of the process of the Pangaea Real-Estate Ltd and Pangaea

Israel Ltd companies valuation in the merger process which is currently being formulated between

the companies.

We accept the responsibility for the skill, care and diligence expected of a professional valuer, but

no responsibility whatsoever to any third party other then stated in the instruction clause of this

_________________________________________________________________________________________________________


28

report. No part of our report may be reproduced in any published document without the written

approval or SAVILLS Sp. z o.o. of the form and context in which it might appear.

Yours faithfully

Brian Burgess FRICS

Karina Szafrańska

Polish Licenced Valuer

on behalf of Savills Sp. z o.o.

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20מתו� 8עמוד 11869�27

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491.440 162,2264 491.44 25.06.2007679,724,4214 � 25.03.2007מכירות אסטרטגיי�

147.500 228,2534 147.50 31.12.20079933,667,2754 � 19.08.2007מכירות פרטיי�

Tag Along 26.536 253,7164 96.50 30.11.20097024,483,6004 � 07.01.2008מכירות

665.476 175137,875,2961סה"כ

סיכו� שטחי� ומכירות

רו לידנו שלעיל מבוססי� על נתוני המכירות כפי שהועב ההנתוני� המפורטי� בטבל

ומצאנו חוזי� לאימות הנתוני�' ערכנו בדיקה מדגמית למס. ובאחריותה מהחברה .הבה� התאמה מלאה לדיווח שקיבלנו מהחבר

השטחי� בבעלות החברה .8.7

דונ� 955.875 � 16.11.2006 –שטח שנרכש נכו� ל דונ� 647.665 � 30.11.2009 –שטח שנמכר נכו� ל

דונ� 399,290 � בבעלות החברהנותר ששטח " 'ברקמ� וקסלר בלו� ושות"ד "הממוע� ממשרד עו, פ מכתב שהועבר לידנו"ע

.מפורטות ס� המכירות של החברה בהסכמי� השוני� ,לחברה . דונ� 290.399 –פ מכתב זה הינ� כ "זכויות החברה במקרקעי� ע

מצב תכנוני .9

בתוק�מקומיות ת בני� עירותכני .9.1

26.02.1981מתארי% 2695פ .תוק� בי פורסמה למת� 79/צש/הצ' תכנית מס •

דונ� 980 : שטח התכניתקביעת אזור חקלאי מיוחד להקמת מתקני� הנדסיי� עבור : מטרת התכנית

להקמת , מיוחד –משרד התקשורת ואזור לבנייני ציבור .ל"מבני� המשרתי� את המתקני� הנ

:לשני אזורי� קרקעהתכנית מחלקת את הר תותר הקמת מתקני� הנדסיי� של משרד התקשורת באזו � אזור חקלאי מיוחד .מהשטח החקלאי המיוחד 0.1%זכויות הבניה הינ� עד . ומבני� תפעוליי�

בנייני� עבור הציוד , באזור תותר בניית משרדי� � אזור לבנייני ציבור מיוחד, בנייני� לשירותי� כלליי� לעובדי�, מחסני� ובתי מלאכה, להפעלת המתקני�

20%זכויות הבניה עד . בדי המשמרות ומבני� לשירותי� שוני�מגורי� לעו .קומות 3בקומה ועד


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20מתו� 12עמוד 11869�27

03.02.2010


בתוק�ומחוזית ארצית ברמה ת ותכני .9.2

, שמורות טבע ושמורות נו�, תכנית מתאר ארצית לגני� לאומיי� – 8א "תמ • 21.06.1981מיו� 693' פ החלטה מס"אושרה ע

חולות "( "ג� לאומי מוצע"כשטח של )פו� מערביצ( קרקעהתכנית מייעדת חלק מהאי� אפשרות . המשתרעי� ג� בשטחי� גובלי� דונ� 700 –של כ כולל בשטח " קדימה

למעט , "חולות קדימה"הנכלל ב, מתו� הנכס, א/ להערי� מה גודל שטח הקרקע ).אי� אפשרות לזיהוי. המיקו� בצפו� מערב

5236פ .י, 12.11.2003 –למת� תוק/ ב אושרה , 21/3/מ"תמ •

:נדו�שב קרקעמהשטחי� בבחלק התכנית קובעת ייעודי קרקע שוני� בו , קרקעשל ה המהווה את מרבית שטח � "נו� כפרי פתוח/אזור חקלאי" −

מתקני ספורט , )בהתא� לתוספת הראשונה(יותרו בי� היתר שימושי חקלאות .ת תדלוקמסעדות ותחנו, נופש ותיירות, ייעור, שטחי� פתוחי�, ונופש

בו יותרו בי� היתר הקרקעהצפוני של החלק � "אזור פיתוח עירוני" − .תיירות ופנאי, נופש, תעסוקה ומסחר, מלאכה, תעשייה, מגורי�

.הקרקעהמערבי של הרצועה לאור� חלק � "ג� לאומי" −השימושי� המותרי� בי� , קרקעהדרומי של ה הבחלק � "אזור פיתוח כפרי" −

נופש פנאי , מבני� ציבוריי� ומתקני ספורט, י משקמבנ, מגורי�: היתר .בנייני מסחר תעשייה ומלאכה, ותיירות

:מ המציג את ייעודי הקרקע במתח� הנדו�"להל� חלק מתשריט התמ


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20מתו� 13עמוד 11869�27

03.02.2010


כל פרטי� לגבי חלוקת הייעודי� בתחו� הקרקע , בשלב זה, אי� בידינו −למתח� הקרקע (יכל התכנית שבהכנה אנו עושי� מאמ. לקבל מאדר. שבנדו�

פרטי� נוספי� להל� . ל"את חלוקת השטחי� הנ, )י להל�/ראה �שבנדו� .בתכנית שבהכנה

פ "אושרה ע ,תכנית מתאר ארצית משולבת לבניה לפיתוח ולשימור – 35א "מת • 27.11.2005מיו� 4467' החלטה מס

שמורות "קו כובחל" מרק� כפרי"כ קרקעהשטח התכנית מייעדת את מרבית .)הנכסחלקו הצפו� מערבי של (" וגני�

בהכנה ת בני� עירותכני .9.3

"שכונת הגול� –מתח� הלל " � 97/2�0/צש' תכנית מס •

צור� �פיתוח האזור המקשר בי� שני חלקי הרשות קדימה : מטרות התכנית .ויצירת רשות אחת רציפה פיזית

.קביעת שטחי� לבניה המשלבת מגורי� בבנייה רוויה קביעת שטחי� וזכויות לפעילויות של פנאי ונופש ופריסת

.שטחי גול/ בדרו� התכנית

.ד"יח 400 –הכולל כ "'מגורי� ב"שינוי ייעוד מאזור חקלאי ל : עיקרי התכנית קביעת איזור לשטחי מסחר ואירוח כפרי .קביעת שטחי� פתוחי� לפעילות ספורט ונופש

ייעודי� חלוקה להמתוכנני� בתכנית ב להל� השטחי� : שטחי התכנית :השוני�

איזור חקלאי נו/ כפרי פתוח/

ג� לאומי

איזור פיתוח כפרי

איזור פיתוח עירוני


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20מתו� 14עמוד 11869�27

03.02.2010


הערות אחוז שטח ייעוד 477 10.01% ר"מ 95,749 'מגורי� ב

ד"יחמבני�

ומוסדות ציבור 4.99% ר"מ 47,731

שטח ציבורי פתוח

1.18% ר"מ 11,262

24.45% ר"מ 233,824 ספורט ונופשמסחר ואירוח

כפרי 4.05% ר"מ 38,713

� שטחי פתוחי�

21.89% ר"מ 209,300

3.56% ר"מ 34,075 ג� לאומישטח לתכנו�

בעתיד 23.37% ר"מ 223,497

6.50% ר"מ 62,123 דרכי� 100% ר"מ 956,274 כ"סה

.פיתוח מתח� מסחר ואירוח כפרי ושטח הגול/' שלב א : לבי ביצועש

.562' פיתוח מתח� המגורי� וחיבור לדר� מס' שלב ב

אנו מניחי� . בדיוני� תנמצא אכי הי" לב השרו�"נמסר ב. הופקדה טר�התכנית על בסיס . כי התכנית משתלבת בהוראות תכניות המתאר הארציות והמחוזיות

לשינוי ייעוד נושאת פוטנציאל שבנדו� אנו סבורי� כי הקרקע ,הנחת עבודה זו . בהמש�כ� ג� מחירי השוק לקרקע הנדונה כפי שיוסבר . בחלק ממנה

היתרי בניה .9.4

עיינו בבקשה .בתיק הבניי� של הנכס לא נמצאו היתרי הבנייה לשטחי� הבנויי�ס� השטח הבנוי )28.08.2007מיו� (לשימוש חורג ותוספת קומה למבני� קיימי�

. הבקשה טר� אושרה .ר"מ 2,419 –בבקשה הינו כ .השטחי� הבנויי� אינ� רלוונטיי� לאומד� השווי שלהל�

טל השבחההי .9.5

קיימת חובה לבדוק את ,שינוי הייעוד בקרקעמימוש א� וכאשר יאושר בעת .היטל השבחהלגזור את גובה ובעטיהא� חלה , ההשבחה במקרקעי�

בעת ביצוע פעולת ההשבחה תהיה החברה רשאית להפחית 8.2' כמפורט לעיל בססכו� )ת ההשבחהמעליית הער� של הנכס בעקבות פעול 51%בשיעור (י .מ.מהתשלו� למ .3,500,000$חד פעמי של

ולא יותר שו� , או כל חלק ממנו/ניכוי היטל השבחה ו במקו�סכו� ההפחתה בא .או ניכוי נוס/ בגי� תשלו� היטל השבחה/קיזוז ו


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20מתו� 15עמוד 11869�27

03.02.2010


השומה .10

גישות להערכת שווי של נכסי מקרקעי� 3קיימות .10.1

גישת ההשוואהסקאות ס על נתוני שוק ועהתבסהגישה מבוססת על אומד� שווי השוק של הנכס ב

.ב"מידת סחירות� וכיו, רמת הסיכו� בה�, אופיי�, בנכסי� הדומי� במיקומ� .י התאמת מכלול הגורמי� בי� נכסי ההשוואה לנכס הנישו�"ההערכה מבוצעת ע

גישת העלויותבגישה זו הנכס מוער� על בסיס העלות הצפויה בבניית נכס אחר הדומה לנכס

.יישו� עיקרו� התחלופה י"עפ, הנישו�בתוספת עלות ההקמה והיזו� של מבנה חדש , השווי הינו סיכו� של ער� הקרקע

.וכ� התייחסות להשפעה של מענקי השקעה, ובניכוי מרכיבי הפחת החל בנכס הנדו�

גישת היוו� ההכנסותבגישה זו אומדי� את שווי הנכס על ידי היוו� זר� הכנסות אשר צפויות להתקבל

בגישה זו מגולמי� ג� מרכיבי סיכו� לזר� . ור� יתרת החיי� הכלכליי� של הנכסלא .ההכנסות וההוצאות

.או בעלי פוטנציאל הנבה/ גישה זו מתאימה בעיקר לנכסי� מניבי� ו

גורמי� ושיקולי� .10.2

מאפייני הסביבה .10.2.1

קדימה צור� ועי� שריד הממוקמי� בלב השרו� מהווי� את סביבת הנכס .הנישו�י� קדימה צור� אשר אוחדו לאחרונה הינ� יישובי� מבוקשי� היישוב

יישובי� אלו מנותקי� . למגורי� המאופייני� ברמת חיי� מעל הממוצע .פיזית והנכס הנישו� מהווה את הקישור הפיזי בינה�

מאפייני הנכס .10.2.2

.דונ� 955 –של כ קרקע משטח לתי מסוי� הנכס הנישו� מהווה חלק בבער� במרכזו שטחי� בנויי� .מעובדי�בו חי� מגודר ומרבית השט נכסה

שהייתה " הלל"שנבנו לטובת תחנת הממסר ר "מ 2,400 �בהיק/ של כ .בשימושאינ� המבני� . 2006במקו� עד

מצב משפטי .10.2.3

רכשה החברה את זכויות החכירה המהוונות בקרקע 16.11.2006 –ב •מסתיימת ב שני� ה 49הזכויות הינ� לתקופה של . דונ� 955 –בשטח של כ

.שני� נוספות 49 �קיימת אופציה להארכת התקופה ב .21.03.2042 –בלתי מסוימי� ע� רכישת הזכויות החלה החברה לשווק שטחי� •

דונ� ונותרה ע� 665 �מכרה ס� כ 30.11.2009 –לרוכשי� שוני� ונכו� ל .דונ� 290 –כ

טגיי� רוכשי� אסטר 3שיש לחברה ע� " טאג אלונג"במסגרת הסכמי ה •חל שיעור הזכויות מה�) 8.6.1' כמפורט לעיל בס(דונמי� 429.75שרכשו

. 37.5%עומד על " טאג אלונג"ה

ולכ� כל ) 30% –עומדת על כ (עברה החברה שיעור זה 30.11.2009נכו� ל ."טאג אלונג"מכירה עתה הינה בחלק יחסי להסכמי ה


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20מתו� 16עמוד 11869�27

03.02.2010


" ח לב השרו�החברה הכלכלית לפיתו"בד בבד התקשרה החברה ע� •במטרה לקד� את שינוי ייעוד הקרקע מחקלאי ברובו לקרקע לבניה

."מצב תכנוני"כמפורט בפרק , למגורי�

שכירות חופשית .10.2.4

ש המתקבלי� "דמ. לצרכי עיבוד חקלאיבשכירות חופשית הקרקע מושכרת כל מועברי� ל י השכירותדמ. בשנה4 200,000 –בגינה עומדי� על כ

.התא� לחלק� היחסיהשותפי� במושעא ב

מצב תכנוני .10.2.5

לאזור חקלאי קרקעהמייעדת את ה 79/צש' על הקרקע חלה תכנית מסמיוחד להקמת מתקני� הנדסיי� עבור משרד התקשורת ואיזור לבנייני

.מיוחד –ציבור תכניות מתאר ארציות ומחוזיות שינו חלק מהשטחי� וייעדו אות� בי�

שמורות ", "איזור פיתוח עירוני", "נו/ כפרי פתוח", "ג� לאומי"היתר ל ).9.2' כמפורט לעיל בס(' וכדו" וגני�

400 �כ(למגורי� קרקעלפתח את ה העיקריתקיימת תכנית בהכנה שמטרתה י קביעת "ולהוות גור� מקשר בי� היישובי� קדימה וצור� וזאת ע) ד"יח

.אזורי מסחר ואירוח כפרי ושטחי ספורט ונופש, שטחי בנייה למגורי� .התכנית מצויה בשלביה הראשוניי�

סיכויי� וסיכוני� בנכס .10.2.6

כולו מתוכננת נכסעל ה. שטחו קרקע חקלאית מהווה במרבית שבנדו�הנכס .נופש תרבות וספורט, תכנית לשינוי ייעוד למגורי�

מבדיקה שערכנו לא , רשומה הפקעה לדרכי� ושטחי ציבור 18' על חלקה מסהערכתנו השטח המופקע זניח ביחס לכלל ל, נית� לאמוד את השטח במדויק

. שטח הקרקעתחת ההנחה כי במחירי� ספקולטיביי� הקרקעות המשווקות נמכרות

ישנה כאמור (תאושר ביו� מ� הימי� תכנית לשינוי ייעוד הקרקע למגורי� .ובעקבות זאת יאמירו מחירי הקרקעות הנרכשות )תכנית בהכנה

האישורמשביחה כזו ולמועד תכניתאישור היקפי חוסר הוודאות בנוגע ל .סיכו� המגול� במחירי הקרקע נכו� למועד הקובעהאת מרכיב מהווה

גורמי מפתח בהערכה ובדיקת רגישות .10.2.7

.על כל תתי הסעי/ 10.3פירוט גורמי המפתח בשומה מפורטי� להל� בסעי/

עקרונות לתחשיב .10.3

גישת השומה .10.3.1

.שווי דונ� במתח�עת בגישת ההשוואה לקביעשינו שימוש בשומה זו

כפי שדווחו עצמו המכר שנערכו במתח� תחשיב השווי מבוסס על עסקאות בגדלי� קרקע רכישת שטחי( מאחר וטווח הרוכשי� הינו רחב .החברהמ

אנו מזהי� , )רוכשי� פרטיי�י "ה� עי רוכשי� אסטרטגיי� ו"עה� שוני� .מחירי השוק החופשיבמחירי� שהושגו את

אנו , שישנה ג� תכנית בהכנה שלמיטב ידיעותינו לא סורבהלאור העובדה סבורי� כי מחירי העסקאות משקפי� ג� את שוויה של הקרקע בשוק

.אנו ננתח את העסקאות בתחשיב שלהל�. החופשי


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20מתו� 17עמוד 11869�27

03.02.2010


שטח תארי%

(דונ�)

מחיר לדונ� מחיר מכירה

ב � 1

28/6/091.061,000$ 244,000

30/6/091.069,000$ 276,000

7/10/091.060,000$ 240,000

29/10/091.061,000$ 244,000

10/11/091.060,000$ 240,000

10/11/091.060,000$ 240,000

22/11/091.070,000$ 280,000

252,000בממוצע

עסקאות למכירת קרקעות ישנ� בסביבה � קרקעות חקלאיות בסביבהומושפע י� א� כל אחד מה� מאופי, ספקולטיביי�מחירי� בחקלאיות

. ממיקומו ומרמת הציפיות הקיימות במיקו� זה או אחר

העסקאות שנערכו בקרקע לאור הכמות הגדולה והבלתי הומוגנית של ו ,לכ�ויה של הקרקע אלו מייצגי� נאותה את שו תוני�אנו סבורי� כי נ, הנדונה

ואי� לכ� צור� להיעזר בדוגמאות השוואה מקרקעות , שבנדו� בשוק החופשי .ות בסביבהאחר

שיטת החישוב .10.3.2

:השווי שלהל� נער� בשתי חלופות לקביעת שווי הקרקעתחשיב

לבודדי� שווי הקרקע במכירת הקרקע � 'חלופה א

בשלמותשווי הקרקע במכירת הקרקע � 'חלופה ב

ערכי השווי לקרקע .10.3.3

שווי דונ� במכירות לבודדי� •מחיר לדונ� בקביעת שווי דונ� במכירה לשטחי� קטני� התבססנו על

:במכירות האחרונות

.במכירת דונמי� בודדי� 1 252,000 –כ מתקבל שווי של

במכירת הקרקע בשלמותשווי דונ� •

ערכנו מספר חישובי� תו� ) דונ� 290(על מנת לתת ביטוי לגודל הקרקע :שבוצעו שילוב הנתוני� מהמכירות

ביחד ע� הרוכשי� (מכרה החברה במהל� השנתיי� האחרונות

דהיינו כ ") טאג אלונג("דונ� במכירות לפרטיי� 96.5 �כ )האסטרטגיי� חודשי� 3דונ� לאסטרטגיי� במהל� 490לעומת ( דונ� בשנה 48 –

).30% �משמעותית יותר בכא� במחיר לדונ� נמו� , 2007בשנת

למכירת יתרת הדרוש פרק הזמ� ,ל"היק/ המכירות הנבהתבסס על 6 –ו כ הינ, בהתחשב במצבה הראשוני של התכנית שבהכנה השטחי�

.)דונ� בשנה 290/48= שני� 6 �כ( שני�כי בד בבד ע� התקדמות הליכי התכנו� יוא. סבורי�אנו ,יחד ע� זאת

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20מתו� 18עמוד 11869�27

03.02.2010


96.50 דונ�

2

48.25 דונ�

4.0

290 דונ�

73 דונ�

252,0004

6.5%

1 62,676,003

215,8254

220,0001

סה"כ מכירות לפרטיי� במהל� 2008�2009

תקופת המימוש בשני�

ממוצע מכירות לשנה

שווי ממוצע לדונ�

במעוגל

יתרת שנות מכירה חזויות

יתרת השטח למכירה

שטח ממוצע שיימכר בכל אחת מהשני�

שווי דונ� בממוצע

שער היוו� לקרקע

בער% נוכחי

� לכעל ידנו מוער� והוא יהיה קצר יותר יחסית למכירת יתרת השטחי� .שני� 4 –

לשטחי� שהתקבל דונ� ל מחירב זהמכירות קצב )בשנה 6.5%לפי (בהיוו� קרקע דונ�/1 220,000 –מתקבל שווי של כ ) דונ�/4 252,000(קטני� ה

.לנכס הנישו�

:להל� התחשיב

מיסוי .10.3.4

טו לפני היוונו את זר� התקבולי� ברו. שומתנו איננה כוללת הפחתה למיסוי . מס

היוו� זר� התקבולי� ברוטו בנכסי� מניבי� הינו מקובל בעסקאות בנכסי� .דומי� וזאת מאחר ושיקול המס הינו סובייקטיבי למוכר ולקונה

מס שבח מקרקעי� הצפוי /כמו כ� לא מובא בחשבו� השומה מס רווחי הו� .במכירה

היוו� השער .10.3.5

שער זה מבטא את רמת . 6.5%נעשה שימוש בשער היוו� שנתי לקרקע של הסיכוני� הכללית לקבלת זר� ההכנסות ממכירה כמתואר לעיל בתחשיב

.10.3.3' שבסו/ סאנו נציי� כי ההשוואה הינה לבסיס שער ההיוו� המקובל והנפו. בהחכרת

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.בשנה 5%י הינו .מ.ער ההיוו� לתחשיבי מששער היוו� זה בתחשיביה להחכרת קרקעות בפועל א למשל אימצה "ת. ע

.בבעלותה

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20מתו� 19עמוד 11869�27

03.02.2010


נתוני�

955.875 דונ�שטח נרכש

665.476 דונ�שטח נמכר נכו� ל � 30.11.2009

290.399 דונ�שטח נותר לזכות החברה

252,0004שווי דונ� במכירה לבודדי�

73,180,5484שווי הקרקע במכירה לבודדי�

73,000,0001במעוגל

220,0004שווי דונ� במכירת הקרקע בשלמות

63,887,7804שווי הקרקע במכירת הקרקע בשלמות

64,000,0001במעוגל

חלופה ב' � במכירת הקרקע בשלמות

חלופה א' � במכירה לבודדי�

תחשיב השווי :להל� סיכו� תחשיב השווי בחלופות השונות

קביעת השווי .11

ולאחר שנבחנה על ידינו , ותו� התחשבות במכלול הגורמי� שהוזכרו האמור לעיל כל לאורזכויות החברה ביתרת הקרקע (על שוויו של הנכס המוער� השפעת� של גורמי� אלו

,בשוק החופשי, במצבוהנכס שבנדו� ו שלאומד� שוויקובעי� את הננו , )במתח�, חוב, כשהוא ריק ופנוי ונקי מכל שיעבוד ,בקריטריו� של קונה מרצו� ממוכר ברצו�

שיפנו את הקרקע בשינוי – למעט זכויות השוכרי� החופשיי�( 'משכנתא וזכויות צד ג :בחלופות השונותבמעוגל בגבולות הס� , )ייעוד

1 73,000,000 � שווי הקרקע במכירה לבודדי� � 'א חלופה )4שבעי� ושלושה מליו� (

1 000,00064, � בשלמותשווי הקרקע במכירה � 'בחלופה )4מליו� שישי� וארבעה(

.מ"לא כולל מע

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20מתו� 20עמוד 11869�27

03.02.2010


הקובע מועדבדיקת רגישות ל .11.1

מאחר ואי� גורמי משנה רגישותהבדיקות מתיתרות בגישת ההשוואה כפי שנערכה .ל"הניתני� לכימות אשר לגביה� אפשר להפעיל את הבדיקות הנכלכליי�

הערכות שמאיות קודמות שנערכו על ידינו בשלוש השני� לפני המועד .11.2 הקובע

. רונותהשני� האח 3 �בלנכס לא נערכו על ידינו הערכות קודמות

הערכות שמאיות קודמות שנערכו על ידי שמאי� אחרי� בשלוש השני� .11.3 לפני המועד הקובע

יוס/ זרניצקי להערכת שווי זכויות ' י השמאי אינג"חוות דעת קודמות ע 2נערכו . החברה במתח�

תארי%

ד"חוושיעור זכויות החברה

שטח בדונ�

שווי הזכויות במכירה לבודדי�

שווי לדונ� ה במכיר

לבודדי�

שווי הזכויות במכירה

למתחמי� גדולי�

שווי לדונ� למתחמי�

גדולי�

24.09.2008 31.81% 304.078 73,000,000 4

240,000 4 60,800,000 4

200,000 4

�כ ($ 60,000 32,000,000$ 537.700 56.25% 02.07.2007209,000 4(

–כ ($ 40,000 18,820,000$139,500 4(

בכבוד רב

עודד האושנר מהנדס אזרחי ושמאי מקרקעי�

.וועדת הביקורת והדירקטוריו� של פאנגאיה .1 : פוצהת .מירב סגל' הגב, "מ"בע) ר.ט(פאנגאיה ישראל ' חב .2