ALUATION STUDY - TASE

VALUATION STUDY

of the property located at

Somogy county, 8700 Marcali, Rózsa utca (property registration number: 2027/11) on behalf of

Marcali Szálloda Kft.

Identification number: 2014/008 31 December 2013 Copy 1/2

Valuation study of the property located at Marcali, Rózsa utca Property Registration Number: 2027/11

Colliers International Real Estate Services Hungary Ltd.

2

Table of Contents

Executive Summary ................................................................................................................................................ 3 Part I. ..................................................................................................................................................................... 8 Market Overviews .................................................................................................................................................. 8

Macroeconomic Outlook .......................................................................................................................................... 9 Investment Market ................................................................................................................................................. 11 Tourism of Hungary ................................................................................................................................................. 13 Health and wellness hotel market .......................................................................................................................... 14 Four-star hotels in Somogy and Zala County .......................................................................................................... 16 Competition ............................................................................................................................................................ 16

Part II. .................................................................................................................................................................. 17 Property Details ................................................................................................................................................... 17

1. Location ......................................................................................................................................................... 18 2. Property Description ..................................................................................................................................... 21 3. Town Planning ............................................................................................................................................... 26 4. Legal status .................................................................................................................................................... 27

Part III. ................................................................................................................................................................. 28 Valuation ............................................................................................................................................................. 28

Income Approach .................................................................................................................................................... 29 Residual Value method (sub-method of the Income Approach) ........................................................................................ 29 GDV Calculation.................................................................................................................................................................... 30 Discounted Cash Flow calculation ....................................................................................................................................... 30 Hotel Calculations ................................................................................................................................................................ 31 Residual Calculation ............................................................................................................................................................. 33

Depreciated Replacement Cost Approach as secondary / control valuation approach ......................................... 37

Assumptions and Limiting Conditions .................................................................................................................. 42 General Assumptions & Definitions ..................................................................................................................... 44 Appendix .............................................................................................................................................................. 51



3

EXECUTIVE SUMMARY



4

Subject property: The subject property is a 4 star hotel structure with an approximate 55% readiness. The completed hotel development is planned to consist of 116-guest rooms and suites. The property will be categorized as a 4-star hotel with an estimated gross area of 13,986 m2. The proposed hotel facility will include a restaurant, café, pool bar, conference and meeting rooms, fitness/spa and pool area.

Address: Somogy county, 8700 Marcali, Rózsa utca

Property Registration Number: 2027/1

Location: The subject property is located in the northern part of Marcali, in

Rózsa utca, west of the Marcali Gyógyfürdő and Szabadidőközpont. The site is bordered by the Gizella utca and Rózsa utca. The subject property is situated only thirteen kilometers from Lake Balaton. The property is easily accessible by automobile and private bus lines. The property is situated near Main Road 68 and within close vicinity to the M7 motorway and another main road, road number 7. The site is situated close to most major attractions, such as the Marcali Gyógyfürdo and Szabadidoközpont, Hencse European Lakes Golf & Country Hotel, Keszthely, Kaposvár and Balaton. The Marcali Gyógyfürdo is within walking distance from the subject real estate.

Client: Marcali Szálloda Kft.

Seat 8700 Marcali, Rákóczi u. 11.

Owner: Marcali Szálloda Kft.

Seat 8700 Marcali, Rákóczi u. 11.

Purpose of the Valuation and the description of the assignment:

We understand that our valuation study is to be used for reporting purposes for the Israel Securities Exchange and is to serve as basis for the financial statements of the company, as of December 31, 2013, which will be made public.

Type of the subject property: Exempted unbuilt area

The total land area of the subject property based on the unofficial title deed (TAKARNET) dated at 18.03.2014.

45,000 m2

The total gross size of the property based on the received area information:

13,986 m2

Legal Status: The entries found on the title deeds have no affection the

property’s value and saleability. The detail analysis of the ownership structure can be found in the second part of this report.

Appraised title of ownership: 1/1 - freehold ownership. The Fair Value indicated in this report

assumes 1/1 freehold interest in the property. The potential



5

change in the ownership structure has no effect on the Fair Value of the subject property.

Zoning code and most important zoning parameters and restrictions.

The subject property is zoned as: Kgy – special medical and wellness center area As per the received information from our Client the subject property has a valid building but we have not received it. We assume the legal background of the property development this is a basic presumption of our valuation study.

Site inspection: 2014.03.03.

Date of Valuation: 2013.12.31.

Date of Issuance: 2014.03.18.

Validity of the Appraisal: The Appraisal is valid for the date of the valuation and may be

used three months following the date of the valuation.

Basis of Value: Fair Value

Applied Standards: Royal Institution Of Chartered Surveyors (RICS) Valuation

Standards 8th Edition International Valuation Standards 9th Edition (IVS 2011)

Valuation Methodology: We have determined the fair value of the subject property based

on the residual value method (sub-method of the income approach). Since the subject property is a development structure (special property) with an approximate 55% readiness, we have applied the Depreciated Replacement Cost Approach (Cost Approach) as secondary / control valuation approach.

Compliance: International Financial Reporting Standards (IFRS) 2013’

Source of the information used in our appraisal:

During the valuation, we have determined the interior size of the property based on information received from the Client, meanwhile the size of the land parcel was determined from the title deed. In order to establish the current legal situation of the property we have obtained valid and non-original extracts/ title deeds and site plans from the TAKARNET online system of the land registry office.

Exchange rate (HUF/Euro): 296,91

Fair Value (HUF): 1 200 000 000 Hungarian Forints (rounded value)

Fair Value (€): € 4 040 000 Euros (rounded value)

Liquidation (Forced Sale) Value – 45% of the Fair Value (HUF):

540 000 000 Ft Hungarian Forints (rounded value)

Liquidation (Forced Sale) Value – 45% of 1 818 000 Euros (rounded value)



6

the Fair Value (€):

Special Assumptions: MEASUREMENTS The property was not measured or surveyed by us, the dimensions and details are assumed to be in accordance with information provided to us by the representatives of the Client, unless otherwise stated. TECHNICAL DUE DILIGENCE We have not been provided with a technical due diligence for the subject asset. We have not undertaken a Building or Structural Survey as this was beyond the scope of our instructions. The actual readiness status (55%) of the structure was exploited from the technical performance status report received from the Client. We would like to add that based on our cursory inspection and professional experience the 55% readiness status of the subject object seems to us realistic however as mentioned before it is not our assignment to accurately reinforce and take full responsibility of the given technical status of the property. Due regard has been paid to the apparent state of repair and condition of the property, but condition surveys have not been undertaken, nor have woodwork or other parts of the structures which are covered, unexposed or inaccessible, been inspected. Therefore, we are unable to report that the property is structurally sound or free from any defects. We have made an assumption that the property is free from any rot, infestation, adverse toxic chemical treatments, and structural or design defects other than such as may have been mentioned in our report.

Registration Duty, Notorial Fees, VAT: We would like to call attention to the fact that in our appraisal,

the VAT content has been taken into consideration in accordance with statutory requirements; furthermore the Market Value does not include registration duty, notorial fees, any brokerage or legal fees that could change in different transaction scenarios.

Transferability(Legal definition): Transferable (Freely Transferable)

Saleability: Poor

Status of the valuer, conflicts of interest: We confirm that there are no conflicts of interest in our advising

on the value of the Property. We can also confirm that Colliers Magyarország Kft. will not benefit from this valuation instruction other than from the receipt of the valuation fee. We confirm that there is no dependence between Colliers and the Client. Colliers Magyarország Kft. hereby states that we have not performed any consultancy or brokerage services on behalf of Client in the past two years. As per the Appraisal and Valuation Standards published by the RICS (“The Red Book”), we confirm that there are no



7

stipulations with respect to the fees or other conditions that may affect the independence of our valuation or the results of the valuation and report.

Confidentiality: In addition to the limitations on publications etc., of this report

referred to in the „Conditions of Engagement,” we would further advise that publication of or reference to this valuation report will not be permitted without the express written consent of Colliers Magyarország Kft.

Significant Limiting Conditions: If we made a physical inspection of the property, individuals made

the inspection generally familiar with real estate and building construction. However, we do not opine on, nor are we responsible for, the structural integrity of the property including its conformity to specific governmental code requirements, such as fire, building and safety, earthquake, and occupancy, or any physical defects that was not readily apparent to the appraisers during their inspection. Nonetheless, the report will state all the known defects that require further inspection. No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed to be marketable and free of any deed restrictions and easements. The property is valued as though free and clear unless otherwise stated. We advise the bank to once more check the original documents that were the main guidance in the valuation. Unless noted, it is assumed that there are no encroachments or planning and building violations encumbering the property. No soil analysis or geological studies were ordered or made in conjunction with the report, nor were any water, oil, gas, or other subsurface mineral and use rights or conditions investigated, unless stated to the contrary in the report.

Report prepared by: Colliers Magyarország Kft.

Authorized signatory Valuers based on professional certification:

Balla Ákos MRICS, MBA EUFIM Registration number: 2008/200

Ábel Tőkés MRICS EUFIM Registration number: 2008/206



8

PART I.

MARKET OVERVIEWS



9

Macroeconomic Outlook

After contracting through 2012, the economy is expected to start expanding at a subdued pace in the course of 2013. Partly due to a rising participation rate, unemployment is projected to stagnate until mid-2014. As deleveraging, high uncertainty and poor business confidence will continue to weigh on private domestic demand, growth will hinge on exports and the current account surplus should widen further. While the Government has made substantial progress in reducing the budget deficit, international economic analysts agree that consolidation should be pushed towards expenditure restraint and more growth-friendly taxation, notably by phasing out distortive taxes on banks and non-tradable sectors. A key issue with current economic policy is related to a worsening business environment, which is to a large extent driven by the lack of predictability and distortive effects of government policies. These measures have contributed to a quick pace of banking sector deleveraging and declining investment demand, resulting in a historically low investment rate and reduced lending. In mid-2013, the National Bank of Hungary set out to boost credit availability and offset the effects of deleveraging by offering “free money” to commercial lenders, by extending a 500 billion HUF credit facility at 0% interest (with a maximum margin of 2.50%) to commercial banks known as the Funding for Growth Scheme. The stimulus programme proved to be immensely successful leading to a huge chunk of the loans being used to refinance existing debt, meanwhile also materializing in the real economy in the form of new loans. The program is expected to lead to an expanded 2,000 billion HUF credit facility by the end of 2014, albeit with slightly less favourable terms. The key rate set by the National Bank of Hungary - now with the new Governor György Matolcsy at the helm, often credited as being the mastermind of the unorthodox economic policies adopted by the government - has plunged to a record low, reaching 3.00% in December 2013. We expect further easing until the base rate falls to around 2.00-2.50%. In February 2013, the government issued $3.25 billion in US Dollar denominated bonds with a coupon of 5.25% to replace the IMF loan and has already registered for another $5 billion auction, though the coupon has not yet been made public, but is anticipated to be at least 100 basis points lower than the previous one.

Source: National Bank of Hungary

This incredible improvement and dramatic decline in interest rates (down from nearly 6.75% a year ago) has been partly due to the consolidation measures adopted by the Government and buoyed by a favourable international economic climate. Should the Federal Reserve increase their base rate, it is very likely that the Hungarian base rate will experience a jump, similar to most frail economies.

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

2012.07.10 2012.10.18 2013.01.26 2013.05.06 2013.08.14 2013.11.22

Evolution of the Base Rate

Rate



10

Prudent monetary policy is key to stabilising expectations and avoiding a weakening of the forint, which could threaten public and private sector balance sheets. Restoring financial intermediation, which is essential for investment and growth, requires avoiding ever-greening of bad loans through adequate provisioning and better targeting of debt restructuring programmes. The European Commission 2013 summer forecast projects only a slight reduction in public debt to around 78% of GDP by 2014 (from 79.2% of GDP in 2012), which could decrease further depending on the impact of the corrective measures. Growth for 2013 is expected to remain tepid, despite the country exiting recession in the spring of 2013. The overall consensus for GDP growth for 2013 hovers around 0.2-0.3%, meanwhile estimates for GDP growth in 2014 are around 1.5%, while Government estimates would put growth at 1.9%. The aforementioned growth rate was estimated on the basis that the rate of consumption growth, coupled with a rise in investments, supported by the low base rate, the central bank’s Funding for Growth Scheme and a more focused usage of EU funds will boost the economy. Since it is all but impossible to provide accurate forecasts over a 5 year horizon, we have combined forecasts by the National Bank of Hungary and the IMF and projected the same GDP growth rates 2015 onwards. We expect GDP growth to stabilize at 2% per annum over the period between 2015-2018. Also, according to the National Bank of Hungary, GDP growth will be driven primarily by net exports (manufacturing) and increases in household consumption.

GDP Growth and Inflation forecast

Source: Colliers Research and forecast based on HCSO and NBH data

Moderated by economic slack, inflation is projected to remain below 3.0% in 2014. The Government essentially forced utility companies to provide their services at a 10% discount to households leading to a huge drop in inflation. Mid-year figures showed inflation to be below 2%, hitting a record level unseen in Hungary. The Government has already announced they plan to have utility companies reduce bills by a further 10% by year end, which is expected to push inflation even lower. Meanwhile, the State Budget for 2014 shows a forecasted inflation of 2.8%, leading many analysts to believe the Government plans to slightly devalue the Forint, partly related to the proposed measures to convert FX loans. The long term inflation target of the National Bank of Hungary remains around 3.00%, therefore after a period of low inflation between 2013 – 2014, we have assumed such inflation levels from 2015 onwards. Unemployment rates saw decline in the past year, finally reaching single digits (9.9%) in 2013, and is projected to stagnate over 2014. New measures were introduced to boost participation rate among the working age population, but has been accomplished through public service jobs (essentially the alternative to welfare) rather than being added by the private sector.



11

Through an overall improvement of the economy and the country’s return to growth, we expect unemployment to remain broadly within a range of 9.0-10.0% for 2013-2014 and may decrease below 9.0% by 2015. Historically unemployment in Hungary has been hovering between 9.0-10.0% and experienced a jump following the onset of the financial crisis, almost reaching 11.0%. Due to the new public service programme implemented by the government, it is reasonable to expect that once private sector job growth picks up, the government will not phase out the said scheme, allowing for unemployment rates to fall below 9.0% for the first time since the crisis. We expect the majority of public service jobs being replaced by private sector jobs in manufacturing. The Hungarian government has been extremely proactive in attempting to attract manufacturing jobs (Automotive, Pharmaceutical etc.), to rural Hungary and implementing reforms in the agriculture sector to promote job creation. Such measures included providing state owned arable land to entrepreneurs.

Investment Market

OVERVIEW In 2013 the overall transaction volume in Hungary closed 280% up from the previous year, with roughly €350 million being traded. At first, overall volumes would seem attractive, suggesting that the market started recovering, which not necessarily was the case. Two internal trades, Roosevelt 7/8 office building and Orco’s two assets, accounted for 45% of the entire trading stock, whilst another 30% comprised of buildings in vacant possession.

Source: Colliers International

Prologis’ platform deal with Norges Bank contributed another 15% to the annual turnover, leaving a minimal amount for true institutional deals. The only (semitransparent) investment transaction was the acquisition by Bluehouse Capital of a hypermarket in Budapest anchored by Tesco (€19 million) and the rest of the income generating deals were made up of low volume supermarkets, mostly Spars. A gap is still evidenced between buyer and seller expectations, when considering pricing levels. Colliers is of the opinion that prime office yields are at 7.75%, retail at 7.50% and industrial at 9.25%+.



12

OUTLOOK 2014 is expected to be a year with higher contribution of institutional transactions considering deals already under offer. Also there are a few large investors on the sidelines willing to transact, but asset origination is becoming a key challenge mostly because of the lack of developments since 2009. An important element of transactional volumes is the level of available funding. Prime pricing for the year going forward is not expected to change significantly. Secondary and most certainly tertiary investment targets are likely to experience a drop in pricing. The annual volume is forecasted to stay close to €400 million at year-end.

OVERVIEW 2013 was a year of stabilization of the retail market with retail spending on a similar or slightly higher level than in 2012. Net wages for 2013 are up a reported 2%, mostly because of lower inflation and a round of wage increases in the public sector. People, however, seem to be cautious to spend the difference and rather save it. 2013 saw the opening of Árkád 2 which added an additional 20,000 m2 to the existing Árkád Shopping Centre, he successful development by ECE in Budapest’s District X. In terms of high street retail, Il Bacio di Stile, a multibrand luxury department store opened its doors on Andrássy út with the total floor size of 5,000 m2. The area around the Váci utca saw further improvements in various infrastructural projects including roads, expanding pedestrial streets and refurbishment of public buildings. In the retail investment market, smaller portfolios of supermarkets or individual supermarkets with the well known operators are the preferred product.

OUTLOOK

2014 will likely see a slight improvement in retail spending as net wages will continue to moderately increase in an improving overall economic climate. Budapest is expected to benefit from an increasing popularity amongst tourists, albeit of a young and low budget nature. There is little development in the pipeline with no significant completions planned for 2014. The first real addition to the Budapest retail landscape will be Futureal’s Etele tér in 2016. Supermarkets continue to seek expansion in innercity locations with smaller concepts.



13

Tourism of Hungary

Domestic tourism In 2013 domestic guests spent 10,9 million tourism nights in accommodation establishments resulting in a 5.3% rise in arrivals and an 4.6% increase in tourism nights year-on-year. Domestic tourism rose in all of the tourism regions – excluding the region of Western Transdanubia. In hotels accounting for 80% of domestic guest arrivals at accommodation establishments, the number of tourism nights was up by 4.5%.

Source: HCSO

Foreign visitors Foreign guests spent 11,9 million tourism nights in accommodation establishments, their number and the number of tourism nights spent by them increased year-on-year (by 5.1 and 4.6% respectively). Arrivals from the more important source countries changed differently. The number of arrivals from Germany and Austria decreased (by 4.7%, 5.7 respectively), while the number of nights spent by tourists from Poland, Russia and the Czech Republic rose (11.6%, 20.2%, and 6.1%, respectively). The hotel sector continues to benefit from a weak Hungarian Forint, which makes it cheaper for international tourist and encourages them to visit the Country, and has a direct operational benefit in hotels because room prices are quoted in EUR but paid in HUF at the daily exchange rate, which means that more HUF was collected to pay for operational costs that are primarily denominated in HUF.



14

Source: HCSO

Health and wellness hotel market

Hungary is extremely rich in thermal waters and its thermal water reserve is significant even on a world scale, rivalling that of Japan, Iceland, Italy and France. Thermal water can be found under some 80 % of Hungary’s surface and in most cases it is rich in minerals and with strong curative power. The interest in wellness hotel developments originated from a government objective to promote the segment, long considered an asset in the country, which was helped by the availability of European Union (EU) subsidy funding opportunities. The combination of real estate investor interest in the countryside of Hungary, available funding and a demand by local and international guests for better quality hotel establishments led to an increase in the number of hotels in and around the Balaton region. Of the country’s 150 hot water spa baths, there are 36 special medicinal baths in which the water contains radioactivity, sulphurous acid, salt bromine carbonate or iodine. Europe’s only cave-spa is in Northeast Hungary, in Tapolca, while Hévíz lake near lake Balaton is the best known thermal (33 C°) medicinal lake in Europe. For decades, Budapest enjoyed the moniker “the world’s spa capital” and some of its baths were already in operation during Turkish rule (16th-17th centuries). Currently there are some two dozen baths and 13 spas in the capital.

The most popular spa resorts in Hungary

Nr. City Guest nights*

1 Budapest 7,300,000

2 Hévíz 1,005,000

3 Hajdúszoboszló 716,000

4 Bük 635,000

5 Sárvár 447,000

6 Zalakaros 431,000 *in 2012, source: HCSO

Spa and wellness hotels have a share of 11.1% of bed places offered by commercial accommodation establishments. 24.6% of guests arrive at these facilities which mean a share of 26.5% of guest nights. 33.2% of



15

domestic arrivals and 33.0% of guest nights are registered in the spa and wellness hotels. Health tourism is an important motivation also for international travellers: spa and wellness hotels receive 15.8% of arrivals and 20.6% of guest nights. Meanwhile in spa hotels, the share of domestic guest nights is about 44.3%, in wellness hotels 69.1% of the guest nights are generated by domestic travellers. The average length of stay at spa hotels is above the commercial accommodation average. Main indicators of spa and wellness hotels In 2012 occupancy rate were 57,6% and 47,6% in spa- and wellness hotels respectively. The gross average room rate was 13,629 HUF in spa, and 15,609 HUF in wellness hotels. In 2012 wellness and spa hotels received 11% and 10% more guest than in the same period of the previous year respectively. From 2013 HCSO publishes only the main indicator of spa hotels. In 2013 occupancy was 62% in spa hotels, while the average room rate was 13,723 HUF. Popular spa resorts and the most visited towns in Hungary

City

No. of tourism

nights

Average length of

stay (nights)

Average

room rate of hotels

(HUF)

Occupancy of hotel rooms

No. of hotels (No. of rooms)*

3-star 4-star 5-star

Budapest 7 412 561 2,4 17 419 59,4% 77 (4702) 71 (9518) 16 (3434)

Hévíz 1 004 622 4,8 12 858 63,2% 13 (887) 8 (1220) 1 (230)

Hajdúszoboszló 712 764 3,7 9 593 44,4% 17 (774) 11 (904)

Bük 635 181 4,2 9 761 57,3% 5 (651) 4 (663)

Siófok 625 333 2,7 11 849 38,5% 20 (1254) 7 (780)

Balatonfüred 479 711 3,2 15 242 53,1% 12 (1114) 4 (357)

Sárvár 453 000 2,7 19 165 62,9% 8 (177) 4 (405) 1 (273)

Zalakaros 403 133 3,3 10 172 50,1% 9 (627) 3 (478)

Sopron 369 103 2,4 9 319 46,8% 6 (465) 6 (535)

Győr 357 916 2,3 10 858 58,7% 18 (667) 4 (110)

Eger 304 187 2,3 12 996 46,3% 12 (622) 3 (81)

Debrecen 248 397 2,5 12 353 34,2% 5 (406) 7 (320) 1 (174)

Harkány 163 625 3,3 9 456 32,6% 6 (245) 3 (253)

Source: HCSO, in 2012 * as of July 2012



16

Four-star hotels in Somogy and Zala County

Supply According to the Hungarian Central Statistics Office there were 12 four-star hotels in Somogy County including 1,037 rooms, while there were 5 four-star hotels in Somogy County including 1,037 rooms, while there were 18 four-star hotels in Zala County including 2,368 rooms. Occupancy

Year Occupancy (%)

Somogy county Zala county

2009 37 52,1

2010 36,2 52,1

2011 36,1 54,3

2012 41 55,6

Average room rate

Year Gross room rate (HUF)

Somogy county Zala county

2009 14,896 15,369

2010 13,833 13,751

2011 14,625 13,861

2012 14,486 14,802

Competition

There is no high quality accommodation in Marcali, the nearest four-star hotels are the following:

Hotel Location Room rate (€)

Single Double

Zenit Wellness Hotel Balaton Vonyarcvashegy 80 110

Hotel Vital Zalakaros 42 59

Hunguest Hotel Damona Zalakaros 59 80

Hotel Karos Spa Zalakaros 75 119

Hotel Bonvino Badacson Badacsonytomaj 60 75

Hunguest Hotel Pelion Tapolca 55 90

Danubius Health Spa Resort Héviz Hévíz 103 174

Palace Hotel Hévíz Hévíz 82 93

Hotel Europa Fit Superior Hévíz Hévíz 110 164

NaturMed Hotel Carbona Hévíz 123 187

The prices above are gross average room prices from booking.com (not rack rates) and pertaining to standard rooms at the date of the market research. Prices include half board or breakfast.



17

PART II.

PROPERTY DETAILS



18

1. Location

Location: The subject property is located in the northern part of Marcali, in Rózsa utca,

west of the Marcali Gyógyfürdő and Szabadidőközpont. The site is bordered by the Gizella utca and Rózsa utca. The subject property is situated only thirteen kilometers from Lake Balaton. The site is situated close to most major attractions, such as the Marcali Gyógyfürdo and Szabadidoközpont, Hencse European Lakes Golf & Country Hotel, Keszthely, Kaposvár and Balaton.

Direct neighbourhood: The immediate environment of the subject property is predominantly

residential and agricultural. The Marcali Gyógyfürdo is within walking distance from the subject real estate.

Visibility: The subject property has good visibility from the main road 68. and from Rózsa

utca.

Access by Car: The subject property has good vehicular accessibility. The property is situated

near main road 68 and within close vicinity to the M7 motorway and another main road, road number 7.

Access by Public Transportation:

The town, Marcali could be accessed by bus and train.

Access of the Balaton region:

The Balaton region is primarily serviced by Budapest Airport for international guests traveling by air or alternatively, Vienna or Bratislava airports. The existing highway infrastructure allows for convenient and effective access to the Balaton region. The new M0 ring road from the airport provides a direct connection from certain parts of the city and a direct link to the M7 highway leading to the Balaton. The M1 highway from Austria provides accessibility from Vienna, however there is not a highway built directly to the Balaton only partially. The M7 highway is completed and stretches to the border with Croatia and Slovenia, and passes along the south side of the Balaton.



19

View of the location of the subject property Source: maps.google.com

View of the location of the subject property Source: maps.google.com



20

ortophoto subject property Source: maps.google.com

Subject property

Marcali Gyógyfürdő és Szabadiőoközpont



21

2. Property Description

Plot Size: 45,000 m2

Plot description: The subject property is a 4 star hotel structure with an approximate

55% readiness. The technical status sheet with the readiness for the date of 31.12.2014. is attached to the appendices of this appraisal study. The completed hotel development is planned to consist of 116-guest rooms and suites. The property will be categorized as a 4-star hotel with an estimated gross area of 13,986 m2. The proposed hotel facility will include a restaurant, café, pool bar, conference and meeting rooms, fitness/spa and pool area. The subject plot where the subject structure is located has an irregular shaped form and has a slightly aslope surface. The land parcel is entirely encompassed by fence.

Availability of utilities: Fully serviced with public utilities

Floors Above Ground: Ground floor + 3 floor levels

Floors Below Ground: One floor

Total Gross Building Size: 13,986 m2

Start of construction: 2008

The project completion date has been postponed a number of times, with the main initial reason being the delay in receiving the financing facility from the MFB (Hungarian Development Bank), which then resulted in the building contractor entering into bankruptcy as per our latest information received from our Client.

Condition of the building: Colliers Magyarország Kft. would like to call the attention to the fact

that we have not performed any technical condition survey it was not our scope of work. According to our cursory inspection in at the date of 03.03.2014. the built up structure is seemed to be in an acceptable technical status considering the fact that the development came to halt for 2 years period. At the date of the valuation there have been ongoing construction and maintenance works on the subject property. It is simply impossible to state anything sure about the physical status of the structure for the date of the valuation (31.12.2013.) since the elapsed time (between 31.21.2013 and 03.03.2014.) several maintenance and construction works have been already carried out.

Functional description of the building(s):

The subject property will comprise five levels, including a basement, ground floor and three upper levels. We have received floor plans for all the sections of the hotel development. Four guest elevators are planed from the ground floor to all guest room floors. A staircase will also lead from the ground floor to the upper levels. The hotel will include 4 swimming pools, both indoor and out, including a pool for



22

children, thermal pool and standard pools. In addition, the wellness center will consist of a bath, sauna/steam areas and three therapy rooms targeted for medical related tourism. The parking facility will consist of 116 above parking places.

Technical details:

Foundation: The subject property is assumed to have a reinforced concrete foundation.

Load bearing structure: The subject property is assumed to have a reinforced concrete slab foundation. Reinforced concrete pillars (designed quality: C25) create the vertical load bearing structure. Reinforced concrete slabs and beams (designed quality: C25) give load bearing capacity in horizontal direction.

Roof: One segment of the building has reinforced concrete roofstructure (designed quality: C25) with roof tiles, other segments have classical partly built-in wooden structure with roof tiles, while other parts of the hotel, like restaurant or room of pools have flat roof made from reinforced concrete. (Roof above pools is green roof.) Dormer windows are covered with preweathered red copper sheets.

Stairs: The property has prefabricated reinforced concrete stairs (designed quality: C25) situated in the middle part of the building.

Waterproofing: Slab foundation is water proofing. The horizontal concrete walls of cellar must be protected again soil moisture.

External walls: The exterior walls between reinforced concrete pillars are from bricks with partly prefabricated reinforced concrete lintel beam.

Façade: The façade of the building mostly consists of newly installed heat insulated, tilt and turn window panes mounted within plastic frames. External walls are covered with heat insulation and plaster system. Wall finishes of entrances are limestone tiles.

Internal walls & divisions: Internal wall divisions are erected plasterboard partition walls. (Conventional plasterboard units mounted on aluminium frames with soundproofing material sandwiched in between.) The walls of sanitary rooms are special walls (with higher load bearing capacity).

Windows: Windows along the façade are heat insulated glass panes in plastic frame.

Internal doors: The internal doors will be high grade wooden doors with suitable soundproofing property.

Finishing and tiles The rooms will feature high grade wall to wall carpeting and high quality ceramic tiles in the bathrooms. The ceilings throughout the hotel will be covered by suspended ceilings to accommodate for cabling, HVAC systems and lighting.

HVAC: The entire building is planned to service with central HVAC systems, heating and cooling is provided to the rooms via fan coils. Special rooms, like kitchens and storages, wellness-part have designed systems.

Elevators: The property will be equipped with 4 main passenger elevators in the building core.

Gas, water and Electricity The property will be fully serviced with utilities. Special rooms, like kitchens and storages, wellness-part have designed systems.



23

Fire protection Fire hydrants integrated in walls and alarm system are designed in the whole property.

Building monitoring system SAUTER central building monitoring system is going to supply the operation of the hotel.

Tenants and leases: As per the received information from the Client the future hotel will

be operated as an independent entity, whereby the owner of the hotel property will establish a separate operating company that will have the sole purpose of managing the hotel, thus dividing the ownership of the land and building with that of the operating company. Hungarian countryside hotels are predominately operated under an independent name and operator.

Pictures of the Subject property:

View of the subject property 1.

View of the subject property 2. View of the subject property 3.



24

View of the subject property 4. View of the subject property 5.

View of gravel road within the plot View of monolithic concrete structure

View of the immediate neighbourhood of the subject property

View of the subject property 6.

View of internal areas View of internal areas



25








26

3. Town Planning

The following table contains the zoning parameters of the subject property:

Zoning Code

Building plot Building

Smallest land parcel allowed

Maximum allowed land parcel

Minimum mandatory

Minimum mandatory

Maximum allowed

Size (m2)

Width

(m2)

Built in ratio (%)

Floor area ratio

(m2/ m

2)

Built in ratio below ground

(%)

Green surface ratio (%)

Height of the building (m)

Kgy – special medical and

wellness center area

10000 n/a 40 n/a n/a 40 n/a 15

Free standing zoning

View of the zoning map of the subject property source: Local Municipal Government

The building permit for the current project has been issued on the 1st October 2008, and the project needs to start construction within two years from the date of issue. We confirm that construction has started on time and there is approximately 45% of works remaining to complete. A copy of the building permit is attached in the appendix. However, this permit has now been extended Valuation / Transaction Consulting / Real Estate because there was a new request for a modification to the permit on February 23, 2010, and according to the law the construction period has now been automatically extended for 5 years from the last modification meaning till February 23, 2015. Based on the available contracts and documentation, interested third parties, potential buyers, investors and financing institutions are advised to make enquiries with the Local Municipal Government in order to establish the current situation.



27

4. Legal status

The following table contains the information obtained from the title deeds for the subject property:

Address: Plot Number: Type: Size (m2): Ownership:

8700 Marcali, Gizella utca 1.

2027/11 Exempted unbuilt area 45 000 1/1

Based on the analysis of the subject property, we have determined that based on entry 36424/2000.07.27., the freehold interest in the property is owned by Marcali Szálloda Kft. (8700 Marcali, Rákóczi utca 11.).

The property is located on a plot with a total land area of 45,000 square meters. The plot is registered in the Land Registry of the Körzeti Földhivatal Marcali and relates to Marcali; under the land register number outlined below. All land register papers relating to the property are attached in the appendix. The plot number 2027/11 is the final result of a merger between plots 2027/7, 2027/8, 2027/9, 2027/10 in May 2005. The title deed includes a notation of mortgage in the amount 378 000 000 HUF + increments for coverage of the subsidy received from the Nemzeti Fejlesztési Ügynökség (NFU), and a notation of general mortgage + increments in the amount of 567 869 851 HUF to the entitlement of Nemzeti Fejlesztési Ügynökség and a mortgage right in favour of Marcali Municipal Government in the amount of 6 750 000 HUF. The ownership paper also contains notations of pipelines easements for 1 905 m2 area, for 122 m2 area and for 89 m2 area respectively to the entitlement of E.ON Déltunántúli Áromhálózati Zrt. Interested third parties, potential buyers, investors and financing institutions are advised to make enquiries with the Local Land Registry in order to establish the current legal situation.



28

PART III.

VALUATION



29

Income Approach

Residual Value method (sub-method of the Income Approach)

Considering common market experience a developer would not be willing to sell a property below the amount provided by the subtraction of expenses out of the potential income generated by a project. In other words, a developer would realize a lesser amount of profit in case he would sell a property at prices that are given by the comparison of like transactions in the vicinity of a subject property, than in case he would go ahead with construction himself. Moreover, if the developer would not realize the project, but would only make sure that he had received all necessary permits and than dispose of the project, the amount of profit would still be much higher than that of a simple sale based on the comparative approach.

Therefore when looking at a land with potential development possibilities the project value needs to be taken into consideration and not the value determined by the comparable market data on similar lands as general land prices are way lower than the price of a land where major developments could take place. It has been our experience that extremely well located land parcels on the Open Market change hands based on their development value, not necessarily on the comparative value. The residual approach takes into consideration how much revenue could be reached by realizing a development according to the given ratios of the Development Ordinance (Gross Development Value) and how much costs are involved in executing the development. These costs involve the construction costs, ancillary costs, legal and agency costs, financing costs and the developer’s profit, including reserves. The residual value will be given by deducting the Total Development Cost from the Gross Development Value.

However, it was also common market experience that land parcels trade on the Open Market at 60-70% of their residual value. This contrasting phenomenon arises from the fact that in some cases the owner/developer lacks the necessary finances to realize a project by himself. Therefore, he is forced into disposing of a property or to seek out potential investment partners. Any investor purchasing a project or entering, as a pure financial investor wants to realize a higher amount of profit than it would be possible had he purchased a project based on its Residual Value.

We would like to mention that the Residual Value of a land parcel would be always significantly higher than that of its value based on comparative sales evidence if the development concept would be the highest and best use of the property. On the one hand as described earlier the aspect of developers is to focus on the potential of the project and not on its flat land price rate. Once again these maximum potentials of the project determining the actual Market Value of the land are calculated by the residual value of the project.

In order to arrive to the Gross Development Value of the prospective real-estate development we have applied the Discounted Cash Flow Calculation instead of using the Annual Capitalization Approach.

We have decided to make this switch as in our opinion the new method takes into consideration several elements that the older one (Annual Capitalization) did not:

a) the time it takes to lease-up a vacant building (more than one year); b) the likely costs incurred during the process of filling the building with tenants; c) the likely lease-up percentages per business quarter based on the experience of Colliers International’s

Market Research and Valuation divisions. The property is of a type, which is held for occupation or investment. As the property still would be income producing, we have valued it on the basis of the potential projected cash flows that it could produce.



30

GDV Calculation

Since the hypothetical development will come into existence (i.e. completely finished) within the next one year we have considered the future development’s individual income producing elements and have assigned each of them their potential revenues and expenses.

The Gross Development Value is constituted by:

The rental income generated by retail, office, industrial and miscellaneous functions and adjoining parking revenues;

Income generated from the hotel;

Sales income generated by the sale of residences and adjoining parking spaces; We have determined the potential sales prices and rental rates based on the professional opinions and experiences of the Research and Valuation Division of Colliers Magyarország Kft and as a result of our market research, which we have included in the research section of the report.

We would like to call attention to the fact, that with the above mentioned method, we can only estimate the future prices/ rental rates based on observable past tendencies, but it would be impossible be completely accurate.

Discounted Cash Flow calculation

Discounted Cash Flow calculations were applied to determine the Gross Development Value of the subject property.

The Discounted Cash Flow Analysis relies upon estimates of the property’s rental value, and of the rates of return that potential investors would require. We have prepared an 11-year Discounted Cash Flow (incomes vs. expenses) calculation, with assumptions set pertaining to the renting of the various lettable areas. We have determined the annual net operating income (NOI) from the cash flow stream. We have created the Income Value from the total amount of the series of eleven year results (the duration of the operational period and full completion of the project) and of the capitalized sum of the eleventh year NOI.

The gross development value for residential components has been calculated by multiplying the net salable residential, storage areas of the property and adjoining parking spaces with the sales prices designated within a given year. In case of a hotel, a ten year operating period is assumed which is calculated separately commencing from the date of completion.

After the eleventh year by considering the eleventh year’s status as a constant and supposing infinite cash flow we have capitalized the annual rental revenue, thus we have than taken the net present value of the resultant cash flow (discounted the annual cash flow to the date of the valuation). The result of the calculation represents the potential income value based on current Open Market conditions.



31

Hotel Calculations

We have used discounted cash flow calculations during our analysis of the hotel function. Throughout our calculations we have applied our professional experience on the hotel regarding income and expenditure, which we have used to determine the operating income of the property. We have projected these cash flows over a period of 10 years, after which we capitalized the tenth year’s income using a capitalization rate of 10% and discounted the capitalized income and the annual incomes to present value using a discount rate of 10%.

In our calculations room rates and prospective occupancy levels is based on our professional experience and market knowledge. Our main assumptions regarding the room rates, occupancy levels and the individual revenues and expenses broken down for the different services. Additionally, based on the above mentioned information, we have also taken into consideration the current trends in tourism and have applied our short and long term assumptions over a 10 year period.

The hotels total revenue was calculated from more components including room revenue, revenues from food and beverages, spa and wellness and miscellaneous revenues (telephone etc.).

The room revenue was calculated by multiplying the number the rooms available annually, with the average annual occupancy and the average room rate. Food and beverage and other revenues such conference, spa and wellness were calculated as a percentage of the room’s revenue and their costs are also expressed as a percentage of room revenue.

Expenses were calculated in two separate sections, those – based on the above – that can be directly attributed to a certain service and other undistributed operating expenses that are derived from the total revenue of the hotel. Such undistributed expenses are directly related to the daily operation of the hotel’s, overheads etc.

Assumptions: Underlying Projections of Income and Expenditures

In preparing these projections of income and expenditure due attention has been paid to data available on existing countryside 4 star wellness & SPA hotel’s revenues and cost ratios. In addition we have relied on the past and predicted performance of the Hotel. The cash flows have been provided by the Client. All figures are presented in € in constant value and in accordance with the Uniform System of Accounts for the Lodging Industry - Tenth Edition which is the generally adopted format within the international hotel industry.

The following are comments to the above assumptions:

Room Occupancy

Typical to any new hotels, we estimate the subject property would open at an occupancy level of 45% in the initial year. We estimate an annual increase in occupancy level until the occupancy level stabilizes in the 7th year of the hotel income cash flow. The 60% occupancy level was chosen to reflect a bit below the historic average occupancy level of the countryside 4 star wellness & SPA hotels.

Average Room Rate

The ADR applied in the year of opening are €50/night/room, giving a REVPAR of €22,5/night. We forecast a gradual increase of ADR over the years.

Food & Beverage

Typical countryside wellness / SPA 4 star hotels operate with a Food and Beverage share of 70-80% of the total



32

gross receipts. We have been conservative in our assumptions and estimated the food and beverage revenues at 80% of total gross receipts.

Spa & Wellness

The hotel will have spa and wellness area on the basement floor of the building. The revenue generated by this department will always constitute a low percentage of the total gross receipts of any city hotel (10%-20%). We have assumed very conservative 15% average revenue for the whole cash flow.

Spa and wellness services typically have a very high cost ratio, running between 70-80% of their annual revenue. We have chosen to use an average cost ratio of 70% over the entire cash flow period.

Other Income

We have combined the income generated by other departments, conference and telecommunications, foreign currency exchange, laundry, fitness and beauty spa facilities revenue. Other income does not include potential revenue from the ground floor retail units, those have been calculated as separate entities. We expect modest - 10% - stable income from these departments over the cash flow period.

Departmental expenses We have estimated the departmental expenses for the rooms at 20% in the first year. This cost will be stable the cash flow period to 20% once the hotel’s operation stabilizes. Food and beverage costs have been taken at 50% of their revenue, which are assumed to be stable. Costs on other income have also been estimated at 45% of revenue and as mentioned above, the costs of the spa operation have been assumed to 75%.

Undistributed operating expenses Administration and General, Marketing and Sales, Property Operation and Maintenance and Energy

Marketing revenue also includes the corporate marketing costs and use of the hotel chains’ booking service. Similar to administration and general, this cost can be reduced over time, once the operation of the hotel has stabilized. We have taken marketing expenses as 5% of the total revenue. Energy costs have been taken as 9% of total gross receipts, this cost increases over the entire cash flow period in a slightly lower proportion than the increase in revenue.

Fixed Charges -Property Tax, Local Tax, Insurance and Management fees

These costs include the remuneration of hotel management and the incentive fee typically determined in an advisory agreement. Other fix charges include parking garage rental (in scenarios where a garage was not constructed). We have assumed that taxes and insurance of the hotel would be covered by 3% of gross receipts.

Additional owner costs -Provision for Renewals, Advisory services and Royalty fees A cash reserve is adopted in the hotel industry to provide for the on-going replacement of furniture, fixtures & equipment. It is not intended to specifically cover major structural repairs/renovations and/or plant replacement. Reserves of 1 % of revenues were adopted, which increase up to 4% in the fourth year. The net result of the calculation is based on the above assumptions and is provided in the table overleaf (attached below), which represents the key operating figures for the hotel to the level of Adjusted Net Operating Income.



33

Residual Calculation

Our Gross Development Value and Residual calculations have been included in the valuation report. The following paragraphs contain our additional explanation and assumptions of the Residual Value: 1. The value of the completed project is usually known as the Gross Development Value. This is the capital

value of the finished development and is usually found by capitalization of the projected income, or by totalling the likely sales income from the scheme.

2. The costs of the development include all costs of construction, including professional fees (architects, quantity surveyors, etc.) the cost of borrowing the capital to undertake the scheme, acquisition costs and the developer’s profit.

a) First we determine the total construction costs of the property- the sum of “hard costs”. The

construction costs of the individual functions are calculated on the gross floor area of the property (including external walls and structural components of the building). The mechanical installation and structural construction costs, potential demolition costs, public utilities contributions and ancillary cost are covered by the developer, assuming the property would be handed over according to a developer’s finish standard. This includes structural components of the building, slabs and ceilings, external walls and coverings, building corridors and common areas, stairwells, elevators and electrical installations (ventilation, heating and cooling, fire protection, building monitoring systems and public utilities), but does not include tenant fit out costs (partition walls, electronic and IT cabling, recessed ceilings, lamp, bathrooms and kitchenette etc.). In case of hotels, the construction cost is not calculated based on the gross floor area, but on the number of rooms. Interior fit out is typically paid by the tenant. The aforementioned practice is common on the market, but a developer may grant fit out contribution for a tenant as a possible incentive. The construction costs were determined based on our professional experience and the studies published by the Bau-Data and Gardiner & Theobald construction cost database.

b) If construction on the development property is already under way at the date of the valuation and our Client was able to provide us information about the costs expended we would incorporate them in our calculations. We determine the stage of completion of the property, and multiply the hard costs with the ratio of outstanding costs. Soft costs are reduced according to the development budgets provided.

c) During the development of any project there could be demolition costs and extraordinary cost items that are uncommon or cannot be planned for in advance. The entry for ancillary costs deals with such extraordinary cost items which could include fit-out contributions for certain tenants, unusually high marketing expenses, property specific costs relating to exemption from agricultural use or land bank, infrastructural developments that fall outside of typical public utilities contributions or costs pertaining to possible soil contamination on the subject property. We also make allowances for demolition costs in case there are structures on the premises.

d) Although the developer’s profit margin makes some allowance for risk, many would argue that there should be no provision for miscalculation; however based on Colliers International’s experience a contingency sum of about 5% on building cost is advisable.

e) We have calculated with professional fees throughout our residual value calculations that are expressed as a percentage of the total construction costs. Professional fees can vary considerably depending upon the nature of the work, the size of the scheme and the problems encountered.



34

f) We have calculated these costs based on our professional experience and in accordance with the relevant professional scales conventionally observed within the building industry. Also, the more complex the project the higher the level of fees or, alternatively, the larger the scheme the more likely the percentage ratio of professional fees can be reduced. In our calculations professional fees are expended at the end of each development year.

i. Management fees - 3% of construction costs; ii. Legal fees – 0,25% of construction costs;

iii. Accounting and tax advisory fees - 0,25% of construction costs; 3. We have also taken into consideration the costs of financing that arise through the acquisition of the

property and the financing costs of the actual development. We multiple the development costs and the acquisition cost of a property with the amount of financing typically available on the market (typically 60%, with the remaining 40% equity being provided by the developer/investor), then multiplying this figure with a market interest rate in the given year. During our calculations we have assumed one year periods and the full interest on the development is allocated within the given year. Finally, these costs are added to the total development costs.

4. Developer’s profit the estimated figure for which a developer would undertake the risk of development. We have determined the developers profit as 10% of the invested equity (equity on development costs and acquisition).

5. Thus, deducting the Total Development Cost and the Developer’s Profit from the Gross Development Value of the property, we reach the properties Residual Value. The Residual Value is the highest amount a developer would be willing to pay for a development property while realizing the developers profit determined in our calculations.

The following table contains the value of the subject property based on the result of Residual Value Method of the Income Approach:

Residual value: EUR

NPV of total GDV: € 8 359 510

NPV of total development costs: € 3 934 495

NPV of total developers profit: € 384 228

Residual value: € 4 040 787



35

The following table contains our residual value calculations:

Net Present Value: € 8 359 510

Number of hotel rooms: 116

Capitalization rate: 10,00%

Available Room Nights: 42 340

Years: Year 1: Year 2: Year 3: Year 4: Year 5: Year 6: Year 7: Year 8: Year 9: Year 10:

Room Occupancy: 45% 50% 53% 55% 57% 59% 60% 60% 60% 60%

Average Room Rate: 50,0 52,0 54,0 55,1 56,2 57,3 58,5 59,6 60,8 62,0

Room Yield: 22,5 26,0 28,6 30,3 32,0 33,8 35,1 35,8 36,5 37,2

Room revenue: 952 650 1 100 840 1 211 771 1 282 648 1 355 875 1 431 519 1 484 898 1 514 596 1 544 888 1 575 785

Revenues:

% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%

€ 762 120 880 672 969 417 1 026 118 1 084 700 1 145 215 1 187 918 1 211 677 1 235 910 1 260 628

% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

€ 95 265 110 084 121 177 128 265 135 588 143 152 148 490 151 460 154 489 157 579

% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

€ 142 898 165 126 181 766 192 397 203 381 214 728 222 735 227 189 231 733 236 368

% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

€ 0 0 0 0 0 0 0 0 0 0

Total Revenues: € 1 952 933 2 256 722 2 484 130 2 629 428 2 779 545 2 934 614 3 044 040 3 104 921 3 167 020 3 230 360

Departmental Expenses:

% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%

€ 190 530 220 168 242 354 256 530 271 175 286 304 296 980 302 919 308 978 315 157

% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

€ 381 060 440 336 484 708 513 059 542 350 572 608 593 959 605 838 617 955 630 314

% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45%

€ 42 869 49 538 54 530 57 719 61 014 64 418 66 820 68 157 69 520 70 910

% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70%

€ 100 028 115 588 127 236 134 678 142 367 150 310 155 914 159 033 162 213 165 457

% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

€ 0 0 0 0 0 0 0 0 0 0

Total Departmental Expenses: € 714 488 825 630 908 828 961 986 1 016 907 1 073 639 1 113 673 1 135 947 1 158 666 1 181 839

Undistributed Operating Expenses:

% 7,0% 7,0% 7,0% 7,0% 7,0% 7,0% 7,0% 7,0% 7,0% 7,0%

€ 136 705 157 971 173 889 184 060 194 568 205 423 213 083 217 344 221 691 226 125

% 5,0% 5,0% 5,0% 4,8% 4,8% 4,8% 4,8% 4,8% 4,8% 4,8%

€ 97 647 112 836 124 207 124 898 132 028 139 394 144 592 147 484 150 433 153 442

% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0%

€ 78 117 90 269 99 365 105 177 111 182 117 385 121 762 124 197 126 681 129 214

% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0%

€ 175 764 203 105 223 572 236 649 250 159 264 115 273 964 279 443 285 032 290 732

Total Undistributed Operating Expenses: € 488 233 564 181 621 033 650 784 687 937 726 317 753 400 768 468 783 837 799 514

Gross Operating Profit: € 750 212 866 912 954 270 1 016 659 1 074 701 1 134 658 1 176 967 1 200 506 1 224 517 1 249 007

% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0%

€ 58 588 67 702 74 524 78 883 83 386 88 038 91 321 93 148 95 011 96 911

Fixed Charges:

Rents: € 0 0 0 0 0 0 0 0 0 0

Property and Other Taxes: € 0 0 0 0 0 0 0 0 0 0

Insurance: € 0 0 0 0 0 0 0 0 0 0

Other: € 0 0 0 0 0 0 0 0 0 0

Total Fixed Charges: € 0 0 0 0 0 0 0 0 0 0

Net Operating Income: € 691 624 799 210 879 746 937 776 991 314 1 046 619 1 085 646 1 107 359 1 129 506 1 152 096

% 1,0% 2,0% 3,0% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0% 4,0%

€ 19 529 45 134 74 524 105 177 111 182 117 385 121 762 124 197 126 681 129 214

Adjusted Net Operating Income: € € 672 095 € 754 075 € 805 222 € 832 599 € 880 133 € 929 235 € 963 884 € 983 162 € 1 002 825 € 11 251 699

NPV @ discount rate, 10 year, Terminal Value: capitalized

Year 10 ANOI @ capitalization rate: € 9 195 461

Conference (%):

Conference (%):

% of Department Revenues

Room (%):

Food and Beverages (%)

Other Operated Departments (%):

Spa & Wellness (%):

Sales & Marketing (Including Franchise Fees):

Spa & Wellness (%):

Other Operated Departments (%):

% of Total Revenues

Administration & General:

Util ity Costs:

Property Operation & Maintenance:

Management Fees (Base + Incentive Fees):

Replacement Reserves:

% of Room Revenue

Food and Beverages (%)



36

A. Hard Cost € 3 833 568

B. Soft Cost € 191 678

C. Contingency Sum € 201 262

D. Financing € 101 436

Total Development Cost: € 4 327 945

Net Present Value of Development Costs: € 3 934 495

E. Developer's profit: € 422 651

Net Present Value of Developer's profit: € 384 228

*Technical status/readiness sheet that was received from our client is attached to the appendix of this valuation report. We would like to call the attention we have not undertaken a Building or Structural Survey as this was beyond the scope of our instructions. The actual readiness status (55%) of the structure was exploited from the technical performance status sheet received from the Client. The €80 000 / room construction cost (pertaining to 4star hotel establishment) input is in line with our professional experience and market data that is underpinned by Colliers historical cost information about hotel properties in the region.

Construction Cost / room (€) 80 000

Construction Cost / room (€) without FF+E 72 000

Room Nr. 116

Current readiness of the building 55%



37

Depreciated Replacement Cost Approach as secondary / control valuation approach

Since the subject property is a development structure (special property) with an approximate 55% readiness – incomplete structure - In order to determine the Fair Value of the subject property, we have applied the Depreciated Replacement Cost Approach (Cost Approach).

The Depreciated Replacement Cost Approach contains two separate value elements. One is the land area belonging to the subject property, while the other is the depreciated value of the structure derived from the replacement value of the property.

The DRC method is based on an estimate of the current Gross Replacement Cost of all the buildings, plant and other site-works, less allowances for physical deterioration and all relevant forms of obsolescence and optimization. To this is added the current Market Value of the land for its existing use. It follows, therefore, that in estimating the value of the land for the existing use and the Gross Replacement Cost of the building, plant and other site works or, alternatively, the value of a notional substitute property in the same general locality, we had to make adjustments to reflect the difference in value to the undertaking, between the subject property and a new installation (which is what the Gross Replacement Cost relates to). At this stage of the valuation we had to regard the age and condition, the physical, economic, environmental and functional obsolescence and the physical arrangement of the various building and plant items.

When calculating the Depreciated Replacement Cost of a property, the value of the land is determined first. The land belonging to the property was determined based on the ownership document. According to our market research, we have found numerous properties with similar characteristics (based on their size, location and amenities), which are comparable to the subject property based on recent transactions or are currently for sale on the market.

From the pool of land comparables, adjustment factors were made to the sales price per square meter based on our professional experience and common market practice. The adjusted sales prices were then averaged out and multiplied by the size of the land parcel to attain the Sales Comparison Value of land belonging to the subject property.

The total gross size (in this case number of rooms) of the subject property was multiplied by the development costs determined using the research and database of the international cost expert Gardiner & Theobald, the Bau-data construction cost index database published by Axel Springer and our professional opinion. To arrive at a value that correctly reflects the property’s state we followed the guidance provided by Royal Institution of Chartered Surveyors (RICS) and applied the necessary discount and depreciation factors.

Finally, we add the figure from the Sales Comparison calculations for the land to the Depreciated Replacement Cost value of the warehouse building. Thus we arrive at the technical value – the Depreciated Replacement Cost Value of the subject property.



38

SALES COMPARISON APPROACH pertaining to the land parcel: The Sales Comparison Approach recognizes that property prices are determined by the market. Fair Value can, therefore, be calculated from a study of market prices for properties that compete with one another for market share. The comparative processes applied are fundamental to the Valuation Process. When data are available, the Sales Comparison Approach is the most direct and systematic approach to estimating value. When data are insufficient, the applicability of the Sales Comparison Approach may be limited. In a perfect market, where all property sales information is clearly posted through commonly available channels of information (internet, newspapers, trade journals, periodicals) and is available to all participants in the market the simplest method to estimate the Market Value of a subject property would be the Sales Comparison Approach. Unfortunately, the Hungarian property market is not such a perfect market. Therefore, during the valuation process we have enlisted primary, secondary and tertiary research to be able to build a suitable pool of comparative properties. The different phases of the research involved the following actions: • Primary research phase – We have inspected the immediate area of the subject property to look for comparative properties in the neighborhood. We have also spoke to agents within the given locale to find out any potential properties offered for sale or transaction information that may be relevant to our assignment. • Secondary research phase – We have researched the internet, newspapers, trade journals and periodicals to find suitable properties to build a usable comparison set. The Market Research Division of Colliers Magyarország Kft. were also involved to prepare a tailor-made research report pertaining to the subject property. The final pool of comparative properties has been picked according to our experience and information pertaining to the subject property. After sales data were gathered and verified, one or more units of comparison were selected and analyzed. The units of comparison use two components to produce a factor (for example the net sales price per square meter adjusted to the time of sale) that reflects precise differences between the compared properties. The units of comparison that buyers and sellers in a given market use in making their purchase and sale decisions take on special relevance and may be afforded greater weight. In our experience one such unique element is the location of a given property. For further clarification, please find below additional commentary on how the adjustment factors were considered and used:

1 Prior to the financial crisis of 2008 it was generally accepted practice on the market to assign positive adjustment factors to the square meter prices of transactions, comparable properties from previous years due to the estimated annual appreciation of property values. With a few notable exceptions this trend has completely been reversed, making it necessary to apply discounts to transactions happening at the peak of the Hungarian property boom. Different classes of real estate have decreased in value to varying degrees, with Class “A” properties losing the least of their value. Based on our professional opinion an average discount of 15% is in line with changes on the Hungarian property market, unless some other extreme circumstances, forms of serious detriment associated with the said property have occurred (for example: large scale environmental damage).

2 It has been the experience of Colliers Magyarország Kft. that properties usually do not sell at the per meter price they have been originally quoted on the Open Market. It has been our experience that the square meter price of a property is due to change positively or negatively, based on the skill and determination of the negotiating parties. During the preparation of our report, being conservative in our disposition, we have decreased the per meter square price of those properties that have yet to be sold



39

until the date of the valuation report. It is our opinion that a 10-15% decrease in the square meter square price is in line with the generally accepted practices and the experience of the market. Smaller decreases, or increases, in the per meter square price of a given property, could only occur should we speak of a highest quality Class "A" institutional grade investment vehicle (and there are more than a single party negotiating for the purchase).

3 During the preparation of our calculations we have tried to establish a common ground between the subject property and the comparable pool of properties regarding their sizes. Accordingly, to be able to gain a usable and applicable per square meter price we had to adjust the per square meter prices of the comparable properties. In case a given property is larger than the subject property, we have increased its per square meter price. In case a given property is smaller than the subject property, we have decreased its per square meter price. The adjustments (in a positive or negative direction) were made based on our experience that the larger a given property the less it is worth per square meter; and conversely the smaller a given property the more it is worth per square meter.

4 The geological shape and physical characteristics of the land could significantly influence its development possibility and potential. Topographically regular shaped and flat piece of land could be developed in a more easy way comparing to a land that has an irregular shaped form and a hilly surface. Naturally the degree of hardness and erodability of the ground structure (geological structure beneath the surface) has a relevant impact on the proposed development as well. These aspects of land have a very important significance in any circumstance of property development on the subject site. In case we had deemed the comparable property to be worse because of our comments, the subject property, we have increased it per square meter price.

5 During the preparation of our calculations we tried to categorize the comparable properties according to their geographic location. Accordingly, to be able to gain a usable and applicable per square meter price we had to adjust the per square meter prices of the comparable properties. In case a given property had a better geographic location than the subject property, we have decreased its per square meter price. In case a given property had a worse geographic location than the subject property, we have increased its per square meter price. The adjustments (in a positive or negative direction) were made based on our experience that per the square meter price of a given property is influenced to a large part by its location within a region, city or district. In our point of view the better located properties enjoys better mass transportation and vehicular accessibility. Adjustment factor because of accessibility by means of vehicles and mass transit (%): Beside the prestige of the location and immediate environment of the subject property the accessibility shows a great importance. The adjustments (in a positive or negative direction) were made based on our professional experience.

6. It has been the experience of Colliers International that in Open Market the actual development potential of a property depends largely on the zoning/town planning prescriptions and regulations pertaining to the subject property. Therefore we have applied an adjustment factor because of the buildable potential of a property. In this respect we have focused on the built-in and on floor are ratios of the subject property. Our comparison is based on the floor area ratio index. The better floor area ratio of a property the more it is worth per square meter; and conversely the worse floor area ratio of a property is in the less it is worth per square meter.

7. It has been the experience of Colliers Magyarország Kft. that in Open Market transactions leasehold rights/interests sell for (or worth) approximately half (50%) of freehold rights/interests. Therefore, in case a comparable property was a leasehold right/interest or contained in some part a leasehold right/interest we have essentially doubled the unit’s per square meter price not to have to discard it from our pool of comparables (as it would skew the comparable figures too far in a negative direction). Furthermore during the preparation of our calculations the last adjustment factor (the comments made in relation to a comparable property) has been made in a subjective manner based on the experience of Colliers Magyarország Kft. Like we have done before with the other adjustment factors, the subject property has been compared to the comparable properties.



40

The following table contains our Sales Comparison Calculations for the subject property:

Development Land 1. 2. 3. 4.

Properties:

Marcali, next to

the subject

property

Balatonszemes Somogy

county,

Buzsák

Kehidakustány,

next to thermal

bath

Source:

http://ingatlan.c

om/marcali/elad

o+telek/lakoove

zeti-

telek/somogy+

megye+marcali/

7134859?sid=0

http://ingatlan.

com/balatonsz

emes/elado+te

lek/lakoovezeti-

telek/balatons

zemes+csillag

+utca/2000884

9?sid=1

http://ingat

lan.com/b

uzsak-

buzsak-

csisztafur

do/elado+t

elek/udulo

ovezeti-

http://ingatlan.

com/zala/elad

o+telek/uduloo

vezeti-

telek/zala+me

gye+kehidaku

stany/4228888

?sid=1Date (year): 2014 2014 2014 2014

Size of the land (m2): 5 392 10 000 11 170 6 150

Zoning:

Residential Residential Holiday /

Residential

Holiday /

Residential

Maximum buildable floor area (m2): 5 392 10 000 11 170 6 150

Sales / asking price (€): 72 413 131 353 185 241 303 122

Sales / asking price (€/ maximum

buildable m2):

13 13 17 49

Adjustment factor because of time of

transaction (%): 0% 0% 0% 0%

Adjustment factor because of asking

price, conditions of payment (%): -20% -20% -20% -20%

Adjustment factor because of size (%): -4,0% -3,5% -3,4% -3,9%

Adjustment factor because of shape

and surface area (%): 0% 0% 0% 0%

Adjustment factor because of location

(%): 0% 0% 0% 0%

Adjustment factor because of

development ordinance, or availability

of public utilities (%): 10% 10% 10% 0%Adjustment factor for other

detriments / enhancements - based on

comments section (%): 0% 0% 0% 0%

Adjusted sales price / m2 (€): 12 11 14 38

Average sales price (€/m2): 19

Size of the subject property (m2): 45 000

Value (€): 841 465 € -



41

Adjustment factors explained

We have made a -20% adjustment to the properties found for sale on the open market, as it is our professional opinion, that in such cases the difference in the offer price and the actual sales price is quite substantial. The 20% discount was applied due to the currently observable crisis on the market, which slightly higher than the 10% formerly used in our calculations.

A 5% adjustment was made due to size per every 50,000 m2 due to the differences in the sizes of the comparable properties. The adjustment was made to the sales price of the comparable properties.

A 10% adjustment was used for comparable properties nr. 1; 2; 3 since these properties have less level of public utilization comparing to the subject property.

Therefore, the value of the subject land parcel based on the Sales Comparison Approach equals €841 465. SUMMARY OF OUR CALCULATION The following table contains our calculations of the depreciated replacement cost of the subject property:

Construction Cost / room (€) 80 000 Construction Cost / room (€) without FF+E 72 000 Room Nr. 116 Current readiness of the building 55% Estimated depreciation of the structures 5% Current Value of the structure 4 363 920 € 1 295 691 487 Ft

Value of land 841 465 € 249 839 271 Ft

Total DRC Value 5 205 385 € 1 545 530 758 Ft Exchange rate valid at the date of the valuation is 296,91 HUF/€

*Technical status/readiness sheet that was received from our client is attached to the appendix of this valuation report. We would like to call the attention we have not undertaken a Building or Structural Survey as this was beyond the scope of our instructions. The actual readiness status (55%) of the structure was exploited from the technical performance status sheet received from the Client.

The €80 000 / room construction cost (pertaining to 4star hotel establishment) input is in line with our professional experience and market data that is underpinned by Colliers historical cost information about hotel properties in the region.

It is our professional opinion, that the final value given by the Depreciated Replacement Cost calculations for the subject property is relevant. Therefore, the fair value of the property based on the Depreciated Replacement Cost Approach is around 1 545 530 758 HUF.



42

ASSUMPTIONS AND LIMITING CONDITIONS



43

1) Definition of Fair Value The Fair Value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. 2) Information

We have relied upon information provided by the representatives of the Client, insofar as it has appeared reasonable and supported by other evidence.

3) Documentation

We have assumed that the property has a good and marketable title, that all documentation is satisfactorily drawn and that there are no encumbrances, restrictions, easements or other outgoings of an onerous nature which would have an effect on the value of the interest under consideration, nor is there any material or significant litigation pending.

4) Measurements

The property was not measured or surveyed by us, the dimensions and details are assumed to be in accordance with information provided to us by the representatives of the Client, unless otherwise stated.

5) Planning, Zoning and other Legal Requirements

We are informed that the property is a legal conforming use of the site. The valuation assumes that all legal requirements have been met and that there are no present or prospective violations of any kind outstanding. No activities were revealed that might materially affect the property in the future.

6) Structural Survey

No structural survey was carried out, nor were any of the services tested. The property was last inspected on 3 March 2014 and although we cannot warrant that the property is free from defects, we observed that it was in good condition.

7) Deleterious Materials

No investigation was carried out into whether or not the buildings contain or have contained deleterious or hazardous materials, such as high alumina cement concrete, asbestos or radioactive matter. The valuation assumes that such materials neither are nor have ever been present.

8) Confidentiality

This report is confidential to the party to whom it is addressed or their other professional advisors for the specific purpose to which they refer, and no responsibility whatsoever is accepted to any third parties. Neither the whole, nor any part nor reference thereto, may be published in any document, statement or circular, nor in any communication with third parties, without our prior written approval of the form and context in which it will appear.



44

GENERAL ASSUMPTIONS & DEFINITIONS



45

GENERAL ASSUMPTIONS & DEFINITIONS

The valuation has been prepared in accordance with one or more of the following standards:

The RICS Valuation – Professional Standards (Incorporating the International Valuation Standards) January

2014 prepared by the Royal Institution of Chartered Surveyors (RICS). Whereby the valuation has been

prepared by a suitably qualified valuer, as defined by PS 2.3 of the Professional Standards unless any

variations have been specifically referred to under the heading “Special Remarks”

The International Valuation Standards 2013 (10th Edition) issued by the International Valuation Standards

Council (IVSC)

European Valuation Standards 2012 - 7th Edition published by The European Group of Valuers’ Associations

(TEGoVA)

Where local legislation requires the use of specific valuation standards these will be set out within our

valuation report.

MARKET VALUE

Where we have been instructed to value the properties on the basis of Market Value, we have done so in

accordance with VPS 4.1.2 of the Professional Standards issued by The Royal Institution of Chartered

Surveyors, which is defined as follows:

‘The estimated amount for which an asset or liability should exchange on the valuation date between a willing

buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had

each acted knowledgeably, prudently and without compulsion’.

The interpretative commentary on Market Value, as published in International Valuation Standards, has been

applied.

FAIR VALUE

Valuations based on Fair Value shall adopt one of the two definitions in accordance with VPS 4.1.5 of the

Professional Standards.

1. The definition adopted by International Valuation Standards Council (IVSC)

‘The estimated price for the transfer of an asset or liability between identified knowledgeable and willing

parties that reflects the respective interests of those parties’.

2. The definition adopted by the International Accounting Standards Board (IASB)

‘The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date’.

It is important to recognise that the two definitions of Fair Value are not the same. Valuations prepared for

financial reporting purposes under IFRS require the adoption of the IASB definition and IFRS 13 will apply.



46

The guidance in IFRS 13 includes:

‘The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the

asset or to transfer the liability would take place between market participants at the measurement date under

current market conditions. A fair value measurement requires an entity to determine all the following:

(a) the particular asset or liability that is the subject of the measurement (consistently with its unit of account)

(b) for a non-financial asset, the valuation premise that is appropriate for the measurement (consistently with

its highest and best use)

(c) the valuation technique(s) appropriate for the measurement, considering the availability of data with

which to develop inputs that represent the assumptions that market participants would use when pricing

the asset or liability and the level of the fair value hierarchy within which the inputs are categorised.

The references in IFRS 13 to market participants and a sale make it clear that for most practical purposes, Fair

Value is consistent with the concept of Market Value.

DEPRECIATED REPLACEMENT COST (DRC)

If we have provided a valuation based on Depreciated Replacement Cost, as set out in UKVS 1.16.1, UKVS

1.16.2, UKVS 1.16.3 and UKGN 2 of the Professional Standards, this has been arrived at in accordance with the

definition settled by the IVSC as follows:

‘The current cost of replacing an asset with its modern equivalent asset less deductions for physical

deterioration and all relevant forms of obsolescence and optimisation’.

The International Accounting Standards stipulate that DRC may be used as a basis for reporting the value of

Specialised Property in Financial Statements. DRC is recognised as a basis only for this purpose. For other

purposes DRC may be used as a method to support a valuation reported on another basis.

WORTH AND INVESTMENT VALUE

Where we have been instructed to provide a valuation based on worth, or investment value, we have done so

in accordance with VPS 4.1.4 of the Professional Standards issued by the Royal Institution of Chartered

Surveyors, which is the definition settled by the IVSC:

‘Investment value is the value of an asset to the owner or a prospective owner for individual investment or

operational objectives’.

This is an entity-specific basis of value. Although the value of an asset to the owner may be the same as the

amount that could be realised from its sale to another party, this basis of value reflects the benefits received

by an entity from holding the asset and, therefore, does not necessarily involve a hypothetical exchange.

Investment value reflects the circumstances and financial objectives of the entity for which the valuation is

being produced. It is often used for measuring investment performance. Differences between the Investment

Value of an asset and its Market Value provide the motivation for buyers or sellers to enter the marketplace.

MARKET RENT

Valuations based on Market Rent, as set out in VPS 4.1.3 of the Professional Standards; adopt the definition as

settled by the IVSC which is as follows:



47

‘The estimated amount for which an interest in real property should be leased on the valuation date between a

willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper

marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’

Market Rent will vary significantly according to the terms of the assumed lease contract. The appropriate

lease terms will normally reflect current practice in the market in which the property is situated, although for

certain purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the

frequency of rental changes, and the responsibilities of the parties for maintenance and outgoings, will all

impact on Market Rent. In certain states, statutory factors may either restrict the terms that may be agreed,

or influence the impact of terms in the contract. These need to be taken into account where appropriate. The

principal lease terms that are assumed when providing Market Rent will be clearly stated in the report.

Market Rents are provided for the purpose described in this report and are not to be relied upon by any third

party for any other purpose.

RENTAL ASSESSMENT

Unless stated otherwise within the report, our valuation has been based upon the assumption that the rent is

to be assessed upon the premises as existing at the date of our inspection.

REINSTATEMENT VALUATION

If we have prepared a Reinstatement Valuation we will not have carried out a detailed cost appraisal and the

figure should therefore be considered for guidance purposes only.

PURCHASE AND SALE COSTS

Where Purchase and/or Sale Costs have been allowed for within our opinion of value we have stated these

within our report.

MEASUREMENTS

We have not carried out a measured survey and have relied upon the areas supplied to us by the Client or

their representatives. We have assumed that these areas are correct and have been measured in accordance

with local market conditions.

CONDITION

Unless otherwise stated within the report, we have not carried out a building survey and are therefore unable

to report that the properties are free from defects.

We have assumed that no materials commonly considered as deleterious to health such as asbestos are either

currently or have ever been present within the properties.

ENVIRONMENTAL MATTERS

Unless otherwise stated within the report, we have not carried out soil, geological or other tests or surveys in

order to ascertain the site conditions or other environmental conditions of the properties. Unless stated to

the contrary within the report, our valuation assumes that there are no unusual ground conditions,

contamination, pollutants or any other substances that may be environmentally harmful.



48

FIXTURES AND FITTINGS

In arriving at our opinions of value we have disregarded the value of all process related plant, machinery,

fixtures and fittings and those items which are in the nature of tenants’ trade fittings and equipment. We have

had regard to landlords’ fixtures such as lifts, escalators, central heating and air conditioning forming an

integral part of the buildings.

Where the properties are valued as operational entities and include the fixtures and fittings, it is assumed that

these are not subject to any hire purchase or lease agreements or any other claim on title. No equipment or

fixtures and fittings have been tested in respect of any electrical equipment regulations or gas safety

regulations and we assume that where appropriate all such equipment meets the necessary local legislation.

Unless otherwise specifically mentioned the valuation excludes any value attributable to plant and machinery.

TENURE, LETTINGS AND REPORTS ON TITLE AND/OR TENANCIES

Unless otherwise stated, we have not inspected the title deeds, leases and related legal documents and, unless

otherwise disclosed to us, we have assumed that there are no onerous or restrictive covenants in the titles or

leases which would affect the value.

Where we have not been supplied with leases, unless we have been advised to the contrary, we have assumed

that all the leases are on a ‘full repairing and insuring basis’ i.e. (tenant’s responsible for costs) and that all

rents are reviewed or adjusted, at the intervals notified to us, based on a market acceptable indexation

provision, suitable for the properties being valued.

We have assumed that no questions of doubt arise as to the interpretation of the provisions within the leases

giving effect to the adjustment of rent.

We have disregarded any inter-company lettings and have arrived at our valuations of such accommodation

on the basis of vacant possession.

If a lawyers’ report on title/tenancies or similar legal report has been provided to us, our valuation will have

regard to the matters contained therein. In the event that a report on title/tenancies is to be prepared, we

recommend that a copy is provided to us in order that we may consider whether any of the matters therein

have an effect upon our opinion of value.

COVENANT STATUS OF THE TENANT/TENANTS

In the case of properties that are let, our opinion of value is based on our assessment of the investment

market’s perception of the covenant strength of the tenant(s). This has been arrived at in our capacity as

valuers on the basis of information that is publically available. We are not accountants or financial experts and

we have not undertaken a detailed investigation into the financial status of the tenants. We have, however,

reviewed where possible third party commentary, on the principal tenants. Our valuations reflect the type of

tenants actually in occupation or responsible for meeting lease commitments, or likely to be in occupation,

and the market’s general perception of their creditworthiness.

If the covenant status of the tenant(s) is critical to the valuation we recommend that you make your own

detailed enquiries as to the financial viability of the tenant(s) and if your conclusions differ from our own,

provide us with a copy of the report in order that we may consider whether our valuation should be revised.



49

ARREARS

We have assumed that all rents and other payments payable by virtue of the leases have been paid to date. If

there is rent or other arrears, we recommend that we should be informed in order that we may consider

whether our valuation should be revised.

TAXATION

Whilst we have had regard to the general effects of taxation on value, we have not taken into account any

liability for tax which may arise on a disposal, whether actual or notional, and neither have we made any

deduction for any tax on capital gains, local consumer tax (VAT) or any other tax.

MORTGAGES

We have disregarded the existence of any mortgages, debentures or other charges to which the properties

may be subject.

OPERATIONAL ENTITIES

Where the properties are valued as operational entities and reference has been made to the trading history or

trading potential of the properties, reliance has been placed on information supplied to us. Should this

information subsequently prove to be inaccurate or unreliable, the valuation reported could be adversely

affected.

Our valuation does not make any allowance for goodwill.

LOCAL AUTHORITIES, STATUTORY UNDERTAKERS AND LEGAL SEARCHES

We have not made any formal searches or enquiries in respect of the properties and are therefore unable to

accept any responsibility in this connection. However, we have where possible, made informal enquiries of

the local planning authority in whose area the properties is situated as to whether or not it is affected by

planning proposals. Accordingly, we have had to rely upon information obtained verbally or via the internet.

We have assumed that all consents, licenses and permissions including, inter alia, fire certificates, enabling the

properties to be put to the uses ascertained at the date of our inspection have been obtained and that there

are no outstanding works or conditions required by the lessor or statutory, local or other competent

authorities.

DEFECTIVE PREMISES, HEALTH & SAFETY AND DISABILITY AT WORK

Our valuations do not take account of any rights, obligations or liabilities, whether prospective or accrued,

under any legislation relating to defective premises, health & safety or disability at work. Unless advised to the

contrary, we have assumed that the properties comply with and will continue to comply with, all relevant and

current defective premises, health & safety and disability at work legislation.

INSURANCE

In arriving at our valuation we have assumed that the properties are capable of being insured by reputable

insurers at reasonable market rates. If, for any reason, insurance would be difficult to obtain or would be

subject to an abnormally high premium, it may have an effect on value.



50

LIABILITY

Our valuation is confidential to the party to whom it is addressed for the stated purpose and no liability is

accepted to any third party for the whole or any parts of its contents. Liability will not subsequently be

extended to any other party save on the basis of written and agreed instructions which may incur an additional

fee.



51

APPENDIX



52

Site Plan Title deed Floor plans

Building permit Technical status – readiness sheet



53



54



55



56



57



58



59



60



61



62



63



64



65



66

No % Huf

I/1. Earth work 95,00%

I/2. Cutting, earth and rock work 95,00%

I/3. Base slub 96,00%

I/4. Siding, scaffolding 95,00%

I/5. Concrete and ferroconcrete works 95,00%

I/6. Placement of each building structural elements 90,00%

I/7. Isolation of surface assorts with soil 95,00%

I/8. Masonry works 95,00%

I/9. Roof, water isolation, tinning, carpenter works 60,00%

I/10. Rendering, rabitz 0,00%

I/11. Covering 0,00%

I/12. Plasterboard walls building 70,00%

I/13. Heat isolation of the facade 0,00%

I/14. Carpenter works 0,00%

I/15. Metal works 0,00%

I/16. Outer doors and windows 71,00%

I/17. Internal doors 0,00%

I/18. Supplementary equipment 0,00%

II/1. Building aut. supervision system 0,00%

II/2. Property/wealth protection 0,00%

II/3. Fire alarm 0,00%

III./1. Water supply 70,00%

III./2. Outer public canal 70,00%

III./3. watering from sink well 0,00%

IV/1. Preparation for landscaping works 40,00%

IV/2. Internal road and parking places 0,00%

IV/3. Landscaping 60,00%

V/1. Precipitation diversion 50,00%

V/2. Garden eqipment building 0,00%

V/3. Plants 0,00%

VI/1.

Underfloor and radiator heating _ corridor, hall,

conference room 0,00%

VI/2. Cooling, FanCoil _ corridor, hall, conference room 0,00%

VI/3. Airing _ corridor, hall, conference room 0,00%

VI/4. Gas installtion _ corridor, hall, conference room 0,00%

VI/5. Electricity installation _ corridor, hall, conference room 0,00%

VI/6. Interior design _ corridor, hall, conference room 0,00%

VII/1. Restaurant Cooling, FanCoil 0,00%

VII/2. Restaurant Airing 0,00%

VII/3. Restaurant Electricity installation 0,00%

VII/4. Restaurant Interior design 0,00%

VIII/1. Kitchen Underfloor and radiator heating 0,00%

VIII/2. Kitchen Airing 0,00%

VIII/3. Gas installation 0,00%

VIII/4. Kitchen Electrity installing 40,00%

VIII/5. Kitchen Technology and Interior design 0,00%

IX/1. Rooms Underfloor and radiator heating 20,00%

IX/2. Rooms Cooling, FanCoil 30,00%

IX/3. Rooms Airing 0,00%

IX/4. Rooms Eletricity installing 35,00%

IX/5. Rooms Interior design 0,00%

X/1. Therapeutics Underfloor and radiator heating 0,00%

X/2. Therapeutics Cooling, FanCoil 0,00%

X/3. Therapeutics Airing 0,00%

X/4. Therapeutics Electricity installing 80,00%

X/5. Therapeutics Interior design 40,00%

XI/1. Wellness Underfloor and radiator heating 0,00%

XI/ 2. Wellness Cooling, FanCoil 0,00%

XI/3. Wellness Airing 0,00%

XI/4. Wellness Electricity installing 50,00%

XI/5. Wellness Swimming-pool technology 30,00%

XI/6. Wellness Interior design 20,00%

XII/1. Laundry Airing 0,00%

XII/2. Laundry Electricity installing 80,00%

XII/3. Laundry Interior design 20,00%

XIII/1. Service room Underfloor and radiator heating 90,00%

XIII/2. Service room Gas installation 0,00%

XIII/3. Service room Electricity installation 70,00%

XIII/4. Service room Interior design 20,00%

XIV. Mechanical main works 50,00%

XV. Electricity main works 51,00%

XVI. Elevators 0,00%

XVII. Fire water 0,00%

XVIII. Organization 50,00%

XIX. Shading structure / equipment 0,00%

XX. Public utility connection 50,00%

According to the budget the actual readiness is 55%

HOTEL MARCALI PERFORMANCE / teljesítmés

B u d g e t b y C o n s t r u c t i o n a l W o r k s Readiness

Constructional Works / Építési munkák value

TYPE OF WORK / MUNKANEM

Documents

ALUATION STUDY - TASE