Real Estate Portfolio and Asset Solutions · NPL Portfolio Acquisitions Key driving factors for NPL transactions include the economics of the deal, accounting, tax, reputational and

Real Estate Portfolio and

Asset Solutions

2014

©2014 Tagor P.T. Management 1

Our Mission

TAGOR is a real estate management company with capabilities of acting as investor, asset manager and developer, focusing on performing and nonperforming real estate projects.

Our mission is to “add value” by developing and executing an operating plan to maximize the value of distressed real estate assets.

TAGOR has a deep understanding of the Romanian real estate market, excellent expertise and track record across all aspects of real estate, investment and development and access to significant finance through our

established partnerships and relationships with various investors.

Our focus is on transactions which enable us to leverage our capabilities and generate maximum value for all

stakeholders:

• Small or large portfolio or real estate assets and non-performing loans backed by real estate assets

• Acquisitions and bank joint ventures relating to single real estate assets and / or portfolios, including finished /

unfinished projects and all types or real estate (residential, commercial, retail, industrial etc.)


Key Considerations

We have developed partnerships with various investors which allow us to implement a wide range of

strategies and structures including portfolio or single asset acquisitions, joint ventures or servicing. We

represent international funds on the local market and we have access to a range of funding alternatives (e.g.

equity, mezzanine and debt) which allows us to optimize capital structures where and when needed.

Tagor benefits from an ongoing collaboration with Patron Capital, a leading European opportunistic real

estate investor, whereby senior Patron managers work closely with and participate in key origination and

management activities across Tagor’s investments.

Tagor team has extensive experience in identifying and tailoring strategies for real estate assets and

portfolios.

Our individual expertise and in-house capabilities in the area of development, asset management, marketing

and finance fully complement each other and enables Tagor to offer a complete “end-to-end” range of

solutions to holders of real estate assets, both performing and non-performing.

Presence in all major towns and cities across Romania through our network of four offices and our

established relationships with local authorities and service providers.

Partnership with

Patron Capital

Access to funding

Expertise and

capabilities


Key Considerations

Our principals and senior management have been involved in the acquisition, planning approval, construction

and delivery of a wide range of real estate projects across Romania. We have reviewed, valued and

assessed the investment potential of over 500 properties in Romania, including distressed assets and loans,

income-producing properties and corporate situations. Furthermore, we are involved in the acquisition,

development and renovation of real estate properties and projects comprising over 1.1 million m² and over 50

significant transactions across Romania.

We are a team with the discipline and passion to be pro-active and deliver performance within a flexible and

strategy-driven framework.

Our senior managers average over 20 years of experience and have a proven ability to execute complex

transactions in a challenging Romanian economic, legal and political environment.

Our development team incorporates in-house real estate professionals, engineers, project managers,

marketing specialists, lawyers and a finance reporting department.

Deep understanding

of the Romanian real estate market

Experienced team


Agenda

Investment Focus 5

NPL Portfolio Acquisitions 6

Focus on Finished and Unfinished Projects 7

Strategies for Unfinished or Finished Projects 8

Strategic Options 9

Clean Disposal / Sale 10

Risk Participation 11

Value Creation 12

External Servicer 13

JV with Patron Capital 15

Our Expertise 16

Our Projects 18


Investment Focus

Our investment focus is on packages of NPL, assets portfolios and single assets.

We are able to scale our investment in order to fit the requirements of a variety of transaction size, types and asset classes.

We are open to consider a wide range of asset classes such as distressed and non-performing loans, repossessed property

etc. This may include finished or unfinished projects, mortgages, corporate loans backed with real estate, commercial, retail,

logistics etc.

Key Challenges

■ Mass foreclosures can

create negative image

■ Flooding the market with

apartments at distressed

prices can drive prices down

and prevent developers

from investing in new

properties

Mortgages

Key Challenges

■ Projects negative image for

potential buyers

■ Deteriorating value if not

maintained properly

■ Buyers should have

resource and ability to

manage and complete

projects

Finished or Unfinished

ProjectsCorporate Loans

Key Challenges

■ The market is illiquid for

most categories of assets

(commercial real estate,

industrial, retail, logistics,

warehouses etc.)

■ Underdeveloped CRE

sector in Romania which is

main focus in Western

Europe for NPL transactions

■ Includes various types of

real estate backed

corporate loans which

require specific knowledge

and capabilities


NPL Portfolio Acquisitions

Key driving factors for NPL transactions include the economics of the deal, accounting, tax, reputational and general risk management,

legal, and regulatory considerations. These aspects impact the success or failure of structuring, implementing and executing NPL

transactions.

Banks have a number of options for managing their distressed loans, ranging from restructuring the debt to forcing borrowers into

liquidation. When considering whether disposal of certain assets or portfolios should be considered for distressed or non-performing

loans, the management of the potential sell-side institution will have to carefully consider whether the perceived negative effects are

outweighed by the advantages.

Accurate, reliable and complete data regarding non-performing loans are key to successful transactions. Romania has relatively strict

data protection laws which limit a seller’s ability to provide information that may allow an individual borrower to be identi fied.

To achieve a bankruptcy remote transfer of the NPLs (a true sale), structuring considerations will come into play during this phase of a

transaction. In addition to tax (particularly VAT and withholding tax considerations), the structure will largely be driven by the legal

aspects of the transferability of loans and related security interests and the resulting structure proposal will have to be reflected in the

transaction documentation.


Focus On Finished and Unfinished Projects

Tagor is able to evaluate finished and unfinished developments, identify and implement value enhancement strategies for such projects.

This may entail repositioning of the development if needed, project development and construction management for completion of the

project, marketing of units and assets etc.

In order to decide on an appropriate way of dealing with a finished or unfinished development, a preliminary assessment is re quired at the

outset. Assessing the current and future viability of unfinished developments often requires a case by case basis, based on full economic

insight, on reasonable assumptions including but not limited to projected cash flows.

All assessments are critically dependent on the expected commercial viability of the development and all cost benefit analyse s and

projections prepared for sites need to clearly demonstrate that additional financing add and/or preserve value, and/or minimi ze potential

loss in value.

Tagor has the ability and in-house expertise to execute the business plan, adding value and creating the exit.


Strategies for Unfinished or Finished Projects

Consolidation with

significant revisions

Consolidation and

phasing

Completion with

repositioning

Alternative land use options

■ This would includes repositioning of the asset to improve the marketability, functionality and sustainability of

unfinished developments.

■ For example, changes to land use range and mix, urban or landscape structure or form, building typologies or design, changing best use of buildings.

■ Units sizes could be changed to provide housing which is more in line with local market demand.

■ Consolidation of any completed or near-complete elements of the development with significant alterations to

uses and/or built form of the remaining incomplete element e.g. switch between residential, office, commercial

■ A phase or element of the originally planned and permitted development can be satisfactorily completed in

isolation from the remainder of the scheme.

■ The remaining unfinished structure / land should be brought to an acceptable state from a functional, visual and safety perspective. It may be necessary to rectify existing problems such as sanitary, drainage, road,

lighting and the landscape/open space.

■ This would also improve the image of the development and assist in restoring consumer interest in available

units.

Full site analysis to determine the best usage and course of action. Tagor professional team will conduct full

project analysis including: construction costs, permitting, best use, marketing, cash flow and financial analysis.

Based on the site-specific conditions to be considered, several development solution should be explored:


Strategic Options

As part of the decision making process for selected loans, a thorough assessment should be conducted to determine the best

realisation strategy for both the portfolio, sub-tranches and achieving the best solution for the bank.

Overview

■ The Bank would appoint Tagor as servicer undertaking both primary and special servicing for the portfolio.

■ We would be responsible for day to day asset management of the selected portfolio.

■ Restructure portfolio in the short to medium term and revisit strategy in 12-24 months.

Key considerations

■ Scale and focus of restructuring and servicing

Assets

■ Likely to include longer term loans with stronger borrowers and lighter provisions, the potential discount through a sale in the current market of these loans, is likely to compare unfavourably with a hold to maturity outcome.

■ Finished or unfinished real estate projects

■ Variety of asset types

External Servicer3

Overview

■ The Bank would transfer loans to an SPV and a minority / majority share would be sold to Tagor and its partners/ investors.

■ We would also assume the servicing role for the assets / portfolio.

■ A minority share sale for the Bank would be preferable, and may provide a capital / liquidity uplift, with a lower P&L hit.

Key considerations

■ Allows the Bank to share in the upside with or without de-recognition on the disposal.

■ Can apply to the whole portfolio and may also provide solutions for Bank staff/systems.

■ Investor takes control of asset management, thereby accelerating recoveries.

■ Provides capital uplift if structured optimally.

Assets

■ These may include portfolios or single assets with loans which have defaulted and have moderate/high provisioning levels (i.e.: sub-performing or recently non-performing, finished or unfinished projects). The timing/costs to collect may be considerable or uncertain.

Risk Participation2

Overview

■ Sale of loans outright either on a standalone basis for single assets, or for segments of the portfolio to our partner investors and/or other investors introduced by us.

■ Servicing would also be transferred

■ Future servicing costs, P&L and capital issues dealt with “up front” by the bank.

Key considerations

■ Redeployment of management, staff and other resources and reduction in holding costs.

■ Improved liquidity, capital adequacy and possible taxation advantages for banks

Assets

■ These will typically include ‘non-performing’ loans which may be high risk, or loans of which exit strategies from the portfolio are desirable for strategic reasons (e.g. lack of servicing or collection capacity, rapidly increasing levels of arrears, unfinished projects).

Clean Disposal / Sale1

Range of potential options to be considered when determining real estate portfolio strategy:


Option Overview - Clean Disposal / Sale

External servicer3Risk Participation2Clean Disposal / Sale1

BankRE Single Assets or

Portfolios

& other investors (Debt/Equity)

Operational Platform

Work-out Management

Agreement

Acquisition

Sale

Clean disposal options should be considered for high risk non-performing loans

Tagor has the capability of sourcing capital for acquisitions through its established partner Patron Capital and other funds and in vestors

which it represents on the local market

Improved liquidity, capital adequacy and possible taxation advantages can be derived from the transaction


Option Overview – Risk Participation

SPV

& Other Investors (Debt/Equity)


Service Level Agreement

Equity stake %

Bank

DCBA

Equity stake %

Joint business plan / Waterfall

financing / Shareholder agreement

/ Management presentation /

Asset management agreement

In some cases, real estate assets or portfolios require enhancement strategies on all value levels (asset, capital and corporate)

Tagor takes part or full responsibility for the administration and management of the assets or loans under a tailored, strategy dri ven and

non-discretionary Service Level Agreement

Assets are typically transferred to an SPV in order to allow a more flexible ownership structure for capital providers

A correctly structured SPV can increase liquidity over time for its stakeholders and eventually facilitate de-recognition

External Servicer3Risk Participation2Clean Disposal / Sale1


Value Creation

100% Equity

Senior Debt

Equity and Junior

Debt

Transaction Discount

Senior Debt

Equity and Junior

Debt

Agre

ed T

ransfe

r V

alu

e

Futu

re V

alu

e C

reatio

n

Current Structure Year 1 Year 3/5



Option Overview - Servicing

Bank

RE Single Assets or

Portfolios

& other investors (Debt/Equity)


Work-out Management

Agreement

Potential Additional

Debt /Equity

Single asset exposures often require the identification and implementation of a real estate strategy

Capital and corporate level strategies should also be considered (including adding new capital)

Individual situations are dealt on a case by case basis

A tailored Work-out Management Agreement between our Operational Platform and the Bank is concluded based on the needs and

requirements of the client



Our Work - Out Method

Our work-out methods leading to value creation and improved recovery might include:

■ Completing a development

■ Repositioning and/or re-development of the Asset(s)

■ Putting into place strategies that enhance the operational performance of the Asset(s)

■ Putting in place divestment strategies (i.e. involving “packaging” and placement) for Asset(s)

■ Simplifying the corporate structure to enhance control and facilitate multiple exit strategies (e.g. selling assets vs. shares, etc.)

■ Refinancing part or all of the current capital stack of the asset, its development and/or CAPEX funding

■ Reviewing original legal documentation and/or corporate governance structure for inconsistencies and legal recourse possibilities (if applicable)

■ Identifying recovery strategies on

asset, corporate & capital levels

■ Operational performance review &

planning

■ CAPEX identification and costing

■ Corporate and financial review &

modeling

■ Planning of exit strategies

■ Technical due diligence

■ Legal due diligence

■ Categorize and prioritize exposures

■ Business plan design &

establishment of recovery targets

■ Capital restructuring

■ Sourcing of capital & negotiation of

structures

■ Implementing operational

restructuring

■ Marketing

■ Repositioning / concept

■ Local property management

■ Project management (e.g. CAPEX

schedules)

■ Technical asset management

■ Asset enhancement & repositioning

■ Cost management

■ Operational management & control

■ Day-to-day portfolio management

■ Local property management

■ Asset management services

■ Reporting to all stakeholders

■ Choosing optimal divestment

strategy

■ Prepare strategic marketing

material, including multi-year

operation and maintenance plans

■ Host & manage data rooms

■ Management of multi-party sales

processes

■ Manage negotiation process

■ Supervise legal documentation

Assessment StabilisationRestructuring Divestment



JV With Patron Capital

PATRON CAPITAL - www.patroncapital.com

■ Established in 1999, Patron Capital Partners has evolved into one of the leading opportunistic real estate managers in Europe .

Main advisory offices located in the UK and Luxembourg and operations in Germany, Italy, Spain and Poland.

■ Patron represents approx. €2.5 billion of capital across several funds and related co-investments, from prominent universities,

major institutions, private foundations, and high net worth individuals located throughout North America, Europe and the Midd le

East.

■ Patron's strategy is to back local partners and management teams in growing their respective businesses, investing in property,

corporate operating entities, credit related businesses and debt related instruments, whose value is primarily supported by

property assets and is typically driven by a liquidity event with one of the existing parties.

■ To date approximately €1.9 billion invested and identified in more than 100 transactions across 57 investments or programs

involving over 40 million sq. foot of assets in 13 countries

■ Through its large network of partners and advisors, Patron is unparalleled as an originator or financial and operating investor and

partner.

TAGOR & PATRON CAPITAL JOINT VENTURE

■ Patron has to date invested substantial equity capital in Romania and Tagor is the asset, development and marketing manager for

Patron Capital across a number of projects

■ On going development, marketing and sales in 4 large scale projects are managed by Tagor

■ Tagor enjoys strong industry contacts with banks for construction financing.

■ Full complement of locally based skilled management team with deep industry insight, strong network and excellent working

relationship to local authorities. In addition to all around professionalism.

http://www.patroncapital.com/


Our Expertise

Tagor has the in-house ability and experience together with the management of selected third parties professionals to control and lead

the process of sourcing, analyzing, acquiring and managing single assets and large portfolios.

• Budget & Control

• Cash Flows

• Bank Finance

• Legal

• Accounting

• Reporting

• Market Research

• Full Marketing

• Concept & Strategy

• In-house Sales

• Advertising & PR supervision

• Reporting

• Advisory

• Valuations

• Value Enhancement

• Supervision

• Acquisition

• Administration

• Reporting

• Development Management

• Engineering

• Cost Management

• Design Supervision

• Zoning & Permits

• ReportingDEVELOPMENT MANAGEMENT

ASSET MANAGEMENT

FINANCE &

EQUITYMARKETING

TAGOR


Advising to Banks – Sample List of Projects

Bank/ Other Asset

Owner

Building structure (land/

(un)finished project/ apartment/

villa/ hotel)

Real Estate Type

(residential/ office/ retail/

logistic)

Estimated Deal Size/

Market Value (EUR)

Alpha Bank Unfinished building Residential/ Retail € 3.9 mil

Banca Romaneasca Unfinished project Residential € 4.3 mil

Banca Romaneasca Unfinished building Residential/ Retail/ Office € 2.3 mil

Piraeus Bank Block of flats Residential € 15.5 mil


Piraeus Bank Building 80% finalised Residential € 2.6 mil



Client Land Residential € 28 mil

Client Intravilan land +building Industrial Platform € 2 mil

Piraeus Bank 6 buildings - unfinished Residential € 12 mil

Piraeus Bank Hotel Residential € 13.6 mil


Unicredit Land+Villa Residential € 1.1 mil

Volksbank Building under construction Office class A € 5.4 mil


Our Projects– Adora Brand

Tagor is actively developing the following 4 key projects under a multi phase scheme:

■ Carpatica Bank financed in 2012 - Bucharest Bragadiru / Adora Urban Village: 550 units plus ancillary retail space.

Phase 1 of 75 apartments completed and 30% sold.

■ Piraeus Bank financed in 2013 - Bucharest Pipera: Initial 700 residential units, with 76

Phase 1 under construction for delivery in December 2014.

■ Volksbank Bank financed in 2013 - Arad Adora Park: 1,400 residential units and 4,000 m2 of retail space

Phase 1 of 107 units under construction for delivery in summer 2014.

■ Carpatica Bank financed in 2013 - Timisoara Adora Forest: 1,300 unit residential development and 1,000 m2 of retail space

Phase 1 of 107 units under construction for delivery in December 2014.

EuropaProperty has announced the short-list for 9th annual SEE Real Estate Awards nominating Tagor as Residential Developer of

the Year for 2013.


Contact

If you require any further information please contact us:

Manuel IonescuHead of Asset Management

Str. Luterana 2-4, Sc. C, Mezanin, Sector 1

Bucuresti, 010162

[email protected]

Phone +40 316 200 828/29/30

Fax +40 31 620 08 30

Ofer LiebersonFounder and Chairman

Str. Luterana 2-4, Sc. C, Mezanin, Sector 1

Bucuresti, 010162

[email protected]

Phone +40 316 200 828/29/30

Fax +40 31 620 08 30

IMPORTANT NOTICE

This presentation does not constitute an offer or invitation to persons to subscribe for or purchase any shares or other securities in any company or for persons to

enter or offer to enter into an investment agreement or to exercise any rights conferred by an investment to acquire, dispose of, underwrite or convert an investment.

The presentation contains basic information, statements, estimates and projections provided by the business and its management.

Any person or any business or assets referred to herein must satisfy himself as to all matters relating to that Company or such business assets including all the

information and statements contained herein.

Any matter, claim or dispute arising out of or in connection with this document, whether contractual or non-contractual, is to be governed by and determined in

accordance with Romanian law and, by accepting this document, you agree that the courts of Romania are to have exclusive jurisdiction to settle any dispute arising

out of or in connection with this document.

No reproduction and/or representation, be it whole or in part, may be made of this site without the prior written permission of Tagor P.T. Management SRL.

©2014 Tagor P.T. Management SRL, a Romanian limited liability company. All rights reserved. The Tagor name and logo are registered trademarks or trademarks.

mailto:[email protected]

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Documents

Real Estate Portfolio and Asset Solutions · NPL Portfolio Acquisitions Key driving factors for NPL transactions include the economics of the deal, accounting, tax, reputational and