GENEBA PROPERTIES N.V. Annual report and financial statements 2015

GENEBA PROPERTIES N.V. Annual report and financial statements 2015 TABLE OF CONTENTS 1 PROFILE, MISSION & STRATEGY ...................................
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GENEBA PROPERTIES N.V. Annual report and financial statements 2015

TABLE OF CONTENTS 1

PROFILE, MISSION & STRATEGY ........................................................................................................................... 3

2

KEY FIGURES ......................................................................................................................................................... 4

3

KEY EVENTS 2015.................................................................................................................................................. 6

4

SHAREHOLDER INFORMATION ............................................................................................................................. 8

5

REPORT OF THE MANAGEMENT BOARD ............................................................................................................ 11

6

RESPONSIBILITY STATEMENT OF THE MANAGEMENT BOARD........................................................................... 30

7

IN CONTROL STATEMENT OF THE MANAGEMENT BOARD ................................................................................ 30

8

STATEMENT OF THE DEPOSITARY ...................................................................................................................... 31

9

REPORT OF THE SUPERVISORY BOARD............................................................................................................... 32

10

CONSOLIDATED FINANCIAL STATEMENTS 2015 ................................................................................................. 36

11

COMPANY FINANCIAL STATEMENTS 2015 ......................................................................................................... 78

12

OTHER INFORMATION ........................................................................................................................................ 88

13

SUBSIDIARIES ...................................................................................................................................................... 89

14

INDEPENDENT AUDITOR’S REPORT .................................................................................................................... 91

15

EPRA FIGURES ..................................................................................................................................................... 94

16

LIST OF DEFINITIONS .......................................................................................................................................... 96

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1

PROFILE, MISSION & STRATEGY

1.1. PROFILE •



• •



Geneba Properties N.V. (‘Geneba’ or ‘the Company’) is a European commercial real estate investment company based in Amsterdam, the Netherlands. The Company was established on 11 July 2013 and commenced business on 27 March 2014. Next to its main office in Amsterdam, Geneba has local offices in Munich and Mülheim, Germany. Geneba has more than € 700 million of Assets under Management, consisting of long-term leased commercial real estate (primarily office and logistics) located in Germany and the Netherlands. Geneba’s real estate portfolio generates at 31 December 2015 an annualised net rental income of € 63 million. The real estate portfolio is internally managed by an experienced management team with long-term experience and a strong network in real estate. The shares in Geneba trade at NPEX (www.npex.com), a trading platform for Small and Medium-sized Enterprises (SME’s). The Company’s main shareholder is Catalyst Coöperatief U.A., based in Amsterdam, through which two Canadian investment funds indirectly hold an 84% stake in Geneba. The funds are managed by The Catalyst Capital Group Inc. (‘Catalyst’), based in Toronto, Canada. Geneba was granted a license under the European Alternative Investment Fund Management Directive (‘AIFMD’) in March 2014 and is subject to the supervision of the Autoriteit Financiële Markten (‘AFM’, the Dutch Authority for Financial Markets) and De Nederlandsche Bank (‘DNB’, the Dutch Central Bank). 1.2. MISSION AND STRATEGY

The strategy of Geneba is focused on excellent stewardship, creating a solid real estate company for investors, tenants and lenders in the long-term. The guiding principles that the Company uses in realising this strategy are to be thorough in its approach, with a realistic market view and a long-term perspective for the Company. The acquisition profile of Geneba is focused on commercial real estate assets which function as an operational base for its tenants. Geneba’s mission statement can be summarised in one sentence: “We give home to corporate businesses in core Europe”. The geographical focus is on commercial real estate assets in Germany and in The Netherlands. We target light industrial and logistics facilities, ideally with a single tenant or selected, strong multi-tenant profiles. Specific attention is directed to the business model, the soundness, and the long-term outlook and prospective of the tenants using the assets for their businesses. Geneba is fully aware of its responsibilities as a property owner and supports its tenants through local offices and contacts. Geneba works in close cooperation with the tenants and carries out ongoing investments in the maintenance and development of its portfolio. Geneba provides on-site support in its role as a committed owner, investor and as a landlord that acts and thinks with the long-term interests of the tenant in mind. Geneba‘s strategy is to grow its asset base over the next years. In January 2015 Geneba successfully raised new equity of € 207 million through a Rights Issue. The proceeds of the Rights Issue have and are being invested in property acquisitions in line with our investment focus. This contributes to further diversification of Geneba’s portfolio and income stream. In acquiring and managing the assets Geneba will respond to the needs of each property and manage these pro-actively. Geneba focuses on keeping its properties in a state that corresponds to their specific usage environment. The preservation and - more important - the adaptation of each property to its respective purpose and function is a key goal Geneba strives to meet. This will ensure long-term use, sustainable income and solid returns.

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2

KEY FIGURES

2.1. FINANCIAL KEY FIGURES 2015

2014*

Investment properties

706,336

556,622

Capital and reserves attributable to the owners of the company

279,443

87,943

Long-term debt and shareholder loans

382,964

453,819

Loan to value ratio (incl. liabilities from acquisitions in 2015)

59%

82%

Equity ratio

35%

16%

Number of share in issue (at year-end)

85,226,746

29,759,096

Weighted average number of shares

60,700,958

30,506,130

Net asset value (NAV) per share (x €)

3.28

2.96

52,791

32,542

12%

14%

Direct investment result from continuing operations, attributable to equity holders

25,939

11,587

Indirect investment result from continuing operations, attributable to equity holders

-3,569

-11,101

Net result from continuing operations, attributable to equity holders

22,370

486

7,865

-7,606

30,235

-7,120

Net result per share, attributable to equity holders (x €)

0.50

-0.23

Direct investment result per share, attributable to equity holders (x €)

0.43

0.38

63,400

47,200

Average borrowing rate (%)

3.4%

5.0%

“Spot” borrowing rate (%)

2.1%

4.4%

Duration of long-term debt (years)

5.0

5.3

ICR (net rental income/net finance costs)

3.8

2.4

Weighted Average Lease Term (WALT) (years)

7.8

8.0

98.9%

100%

Balance sheet as per 31 December (x € 1.000)

Income statement for the period* (x € 1.000) Operational results from continuing operations Gross rental income Cost Ratio (G&A / Net rental income) (%)

Net result from discontinued operations, attributable to equity holders Net result, attributable to equity holders

Other key financials Annualised rental income (x € 1.000)

Occupancy rate (%)

*As Geneba started its business at the Plan Implementation Date (‘PID’) on 27 March 2014, the comparative figures cover the 12 month period 1 January till December, but only consist of 9 months of operations (27 March 2014 – 31 December 2014). The 2014 figures are restated in accordance with IFRS 5 as the Baltic portfolio is classified as held for sale in 2015.

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2.2. PORTFOLIO KEY FIGURES Geneba owns an investment property portfolio with a fair value of € 706 million and 663,000 square meters per 31 December 2015. In 2015 Geneba acquired nine logistics / light-industrial properties (7 in Germany and 2 in The Netherlands) for an amount of € 262 million (including acquisition costs) according to its strategy, “give home to corporate businesses in core Europe”. With the new acquisitions the portfolio consists of 19 properties (14 in Germany and 5 in The Netherlands). Except for the Baltic portfolio and one German asset (see 5.3.5. Value movements) external valuations have been performed in 2015. The major part of these properties were valued at 31 December 2015. For properties acquired in the second half of 2015 external valuations have been performed at acquisition date and have been updated internally at 31 December 2015. Based on this internal review the company used the values, extracted from the external valuation reports, in preparing the financial statements. The external valuations are performed in compliance with the valuation standards in the ‘Red Book’ of the Royal Institute of Chartered Surveyors (RICS) and the International Valuation Standards of the International Valuation Standard Committee (IVSC) and have been finalised under the rules set forth by Geneba’s Policies and Procedures with respect to the AIFMD regulations. Geneba indicated that the Baltic portfolio is non-strategic. During 2015 advanced progress was made to divest this portfolio. In March 2016 this sales transaction has been completed. The value of the divested portfolio was € 90 million (fair value of the investment properties in The Baltics as of 31 December 2014 amounted € 86 million). This has already been reflected in the balance sheet. Furthermore Geneba disposed one German asset in December 2015. This asset was deconsolidated in cooperation with the financing bank providing full release. This asset was also classified as nonstrategic. The disposal resulted in a decrease of the portfolio with € 9.5 million. The disposal of the Baltic portfolio and the German asset resulted in a decrease of liabilities of € 99 million and an improvement of the loan to value (LTV).

Property portfolio

Germany 2015

Number of tenants

The Netherlands

2014

2015

2014

Baltics* 2015

Total

2014

2015

2014

27

7

5

2

-

50

32

59

98.6%

100%

100%

100%

-

88.0%

98.9%

97.0%

14

7

5

3

-

45

19

55

598

438

108

33

-

86

706

557

55

44

8

3

-

10

63

57

Lettable floor area (in 1.000 sqm.)

517

275

146

29

-

85

663

389

Weighted average lease term

7.3

6.6

12.2

18.0

-

8.4

7.8

8.0

Occupancy rate at year-end (in %) Number of properties Investment properties (in € million) Annualised net rental income (in € million)

*The Baltic portfolio is sold in 2016 and classified as held for sale in the 2015 financial statements.

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3

KEY EVENTS 2015

6 January 2015 Successful completion of the Rights Issue that was announced on 3 December 2014. With the closing of the offering under the rights issue Geneba nearly triples its equity and will obtain up to € 207 million of new capital. 13 May 2015 Adoption of the audited (by PricewaterhouseCoopers Accountants N.V.) annual accounts of 2014 by the Annual General Meeting of shareholders and granting discharge to the members of the Management Board and the Supervisory Board for the management pursued and the supervision thereof during the financial year 2014, respectively. 25 August 2015 Publication of the interim financial statements as per 30 June 2015 reviewed by PricewaterhouseCoopers Accountants N.V. 11 September 2015 Geneba acquired a logistic property in Ulm, Germany let to the food company Transgourmet (Coop) with a total investment value of € 34 million (including purchase costs). 30 September 2015 Geneba continues to implement its growth strategy by investing around € 100 million in two strategically located properties in Mülheim and Gottmadingen, Germany with high quality tenants. With the new investments Geneba added well-located logistics and light industrial properties with long-term leases to international tenants Siemens, GNS, Siempelkamp and Constellium to its portfolio. 9 November 2015 Nomination of Mr. Tom de Witte as Chief Financial and Risk Officer (CFRO) of Geneba. 24 November 2015 Mr. Tom de Witte was appointed as Chief Financial and Risk Officer (CFRO) of Geneba after approval by the Extraordinary General Meeting of Shareholders held in Amsterdam. Also the below agenda items were approved during this meeting: I. Amendment of Geneba’s Articles of Association II. Authorisation to execute the notarial deed of amendment III. Authorisation of cancellation of shares 30 November 2015 Geneba acquired a logistics property in ‘s-Heerenberg, The Netherlands, for nearly € 60 million let to Wim Bosman (part of the Mainfreight group). This acquisition marks the largest single asset logistics transaction in the Netherlands in 2015 in terms of investment volume and size of the property. Geneba signs the sale and purchase agreement in respect to a ‘portfolio transaction’, followed by a notarisation on 4 December 2015 with respect to the acquisition of three properties in Leipzig, Chemnitz and Amberg, Germany. The total investment amount to approximately € 32 million which closed March 2016. 15 December 2015 On 15 December 2015 Geneba signed the sale and purchase agreement for the sale of the Baltic portfolio. The sale has been closed in March 2016.

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17 December 2015 Geneba acquired a newly developed high quality logistics property in Venlo, The Netherlands. The new investment in Venlo adds another 33,000 m² of high quality logistics space to Geneba’s portfolio. The sole tenant is DSV which developed the property and sold it post completion. 31 December 2015 Geneba acquired a high quality automotive distribution and light industrial property north-east of Munich (Mamming) with economic transfer on 31 December 2015. The new investment adds 14,000 m² of high quality automotive distribution and light industrial space to Geneba’s portfolio. The property is long-term leased to the well-known automotive supplier, Voith Industrial.

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4

SHAREHOLDER INFORMATION

4.1. GENERAL As per 31 December 2015, Geneba had issued 85,226,746 shares of which 216,071 shares were in the process of being cancelled (cancellation officially effective at 22 February 2016). The certificates of the shares of Geneba Properties N.V. are listed at NPEX since 27 March 2014 and traded since 7 July 2014. Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year and ordinary shares purchased by the Company or released for cancellation by the Monitor and held as treasury shares during the year. The Company did not have dilutive potential ordinary shares. 2015

2014

30,235 60,700,958

-7,120 30,506,130

0.50

-0.23

85,226,746

29,759,096

3.28

2.96

(In Thousands of Euros) Net result attributable to equity holders of the Company Weighted average number of ordinary shares in issue Basic and dilutes earnings per share Number of share in issue (at year-end) NAV per share The following shareholders hold an interest of more than 5% of the Geneba shares: • Catalyst Coöperatief U.A. holds 84% as per 31 December 2015 (2014: 42%).

Neither the members of the Management Board nor members of the Supervisory Board owned Geneba shares during the reporting period. Samson Bélair/Deloitte & Touche Inc., Canada, (‘The Monitor’) was appointed to act as the Monitor in the CCAA (Companies’ Creditors Arrangement Act (Canada)) proceedings of Homburg Invest Inc. (‘HII’). Pursuant to the proceeding the Monitor transferred the initial portfolio of HII to Geneba. In the context of the proceeding the Monitor initially held 7,117,482 shares to be attributed to claim holders in case the claims are successful. In case claims are ultimately rejected the respective portion of shares will be cancelled. As per 1 January 2015 the Monitor held 5,764,781 shares. On 20 March 2015 the Monitor distributed 1,989,482 shares to claimholders. On 19 August 2015 another portion of 371,919 shares were distributed to claimholders by the Monitor. As per 6 November 2015 2,775,115 shares have been cancelled. As a consequence the Monitor holds 628,265 shares as per 31 December 2015. Of these shares 216,071 shares are cancelled in February 2016. On 3 December 2014, Geneba announced a Rights Issuance in which it offered a total of 74,397,740 new shares at a price of € 2.78 per share. This offering was fully underwritten by Catalyst, acting as a “back stopper” under a Subscription Agreement agreed on 1 December 2014 between Catalyst and Geneba. This meant that Catalyst committed to exercise all its own rights allocated to Catalyst in this Rights Issuance and that it committed to subscribe for the shares not exercised by other shareholders at any time the Management Board asks to do so in order to fund an investment proposal approved by the Supervisory Board. During the financial year 2015 under this Rights Issue the following issuances took place: • On 3 January 2015, the company issued 31,170,375 new shares for a price of € 2.78 (total € 86.7 million). Of the total amount called € 58.3 million was used to repay the outstanding shareholder loan. • On 28 September 2015, the company issued 5,827,338 new shares for a price of € 2.78 (total € 16.2 million).

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• • • •

On 13 November 2015, the company issued 9,410,072 new shares for a price of € 2.78 (total € 26.2 million). On 17 December 2015, the company issued 3,850,198 new shares for a price of € 2.78 (total € 10.7 million). On 29 December 2015, the company issued 2,638,558 new shares for a price of € 2.78 (total € 7.3 million). On 31 December 2015, the company issued 5,346,224 new shares for a price of € 2.78 (total € 14.9 million). € 10.3 million of the amount was paid-up by conversion of part of an outstanding shareholder loan.

On 2 December 2015, several investment proposals were approved by the Supervisory Board, subject to certain conditions to be fulfilled. As of 31 December 2015, the conditions of four investment proposals were not yet fully fulfilled. The total investment value (including acquisitions costs) for these approved and committed investment proposals amounts to approximately € 82 million for which € 35 million equity is called (total of 12,538,755 shares to be issued). The conditions have been fulfilled in the first quarter of 2016. As a consequence the interest of Catalyst further increased to 86% in 2016.

4.2. ANNUAL GENERAL MEETING OF SHAREHOLDERS On 13 May 2015 the General Meeting of Shareholders was held. All agenda items were approved. The resolutions which were adopted are: • Adoption of the audited annual accounts 2014 including the resolution that no dividend will be paid for 2014; • Discharge to the members of the Management Board and Supervisory Board for 2014; • Changes to the Management Board. As a result of the resignation of the CFRO, Mr. G. Littel was designated as delegated Supervisory Board member until a new member of the Management Board was appointed; • Remuneration of the Supervisory Board; • Authorisation of the Management Board to repurchase treasury shares; • Increase of the number of authorised shares from 105,000,000 to 290,000,000; • Prolongation designation of the Management Board as the body authorised (subject to Supervisory Board approval) to issue shares and to limit or exclude pre-emptive rights upon the issue of shares up to and including 13 November 2016;



Appointment of PricewaterhouseCoopers Accountants N.V. as the Company's external independent auditor for 2015.

4.3. EXTRAORDINARY MEETING OF SHAREHOLDERS On 24 November 2015, an Extraordinary Meeting of Shareholders was held. All agenda items were approved. The resolutions which were adopted are: • Appointment of Mr T. de Witte as CFRO; • Amendment of the articles of association: o Cancellation of references to the "Initial Period", since this period has ended on 1 September 2015; o Increase of the authorised capital of the Company to 310,000,000; o Changes in respect of the composition of the Supervisory Board in respect of the maximum number of supervisory board members and the requirements for the appointment of the chairman and the vicechairman of the supervisory board; o Authorisation of the Management Board to cancel 628,265 Company shares transferred by the Monitor to the Company. Following the approval of the amendment of the articles of association, the Supervisory Board choses Mr. G. De Alba as its Chairman. Dr. J. Scharpe steps down as chairman and remains ordinary member of the Supervisory Board.

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4.4. DIVIDEND POLICY Although Geneba realised a positive direct investment result for 2015 and the loan to value (‘LTV’) was further decreased in 2015, the Management Board decided that in 2016 no dividend will be paid. This is explained as follows: •

• •

Despite of the new acquisitions in 2014 and 2015, Geneba`s property portfolio is still concentrated on one single tenant/ property (54% of the total revenues in 2015). Consequently, Geneba needs to further diversify its portfolio and – more important- its revenues by acquiring new assets. The property additions shall also be financed with proceeds from direct operations. One property has to be refinanced in 2016. Alternative financing has not yet been obtained. Finally, in order to fulfil the requirements of its risk management policy, Geneba has to hold a constant liquidity buffer.

4.5. FINANCIAL CALENDAR 2016 14 April 2016:

Publication of Annual Report 2015

17 May 2016:

Annual General Meeting in Amsterdam

26 August 2016:

Publication Half Year Figures 2016

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5

REPORT OF THE MANAGEMENT BOARD

The following should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended 31 December 2015 of Geneba Properties N.V. (“Geneba” or “the Company”) prepared under International Financial Reporting Standards as adopted by the European Union (“IFRS – EU”) and with Part 9 of Book 2 of the Dutch Civil Code. 5.1. GENERAL Geneba started its business in March 2014 after the partial takeover of the real estate portfolio of the insolvent Canadian company Homburg Invest Inc. Income producing assets were carved-out of the “Homburg” portfolio and transferred to the newly founded Geneba entity in a cash free transaction. In 2014 important actions were taken which formed the basis for a successful year in 2015. These actions included the hiring of new management, the definition of the Company’s strategy, obtaining a AIFM license and listing on NPEX, and last but not least, the preparation for a Rights Issue to further grow the portfolio in line with the newly defined strategy. With the successful placement and closing of the Rights Issue in January 2015, Geneba was able to generate the necessary funds for further growth and diversification of its real estate portfolio in line with the new investment strategy. Geneba generated a significant improvement in the direct investment result from € 11.6 million over the 9 month period 2014 to € 25.9 million in 2015 (growth of 67% compared to 2014 annualized). Furthermore, Geneba managed to establish relationships to five new banks that have granted loans against newly acquired assets. For a full analyses of the implementation of the strategy reference is made to note 5.2. The Rights Issue, offering a total of 74,397,740 new shares at a price of € 2.78 per share, was fully underwritten by Geneba’s main shareholder and international fund manager The Catalyst Group Inc. (“Catalyst”), on behalf of its funds managed by Catalyst. In addition to exercising all its own rights under this Rights Issue, Catalyst on behalf of its funds, also committed itself to subscribe for the shares not exercised by other shareholders as a back stopper. Based on this Rights Issue on 3 January 31,170,375 new shares were issued, representing an increase in equity of € 86.7 million. The proceeds of this first portion of equity under the Rights Issue were partly used to refinance a shareholder loan from Catalyst and to finance the first acquisitions and expansion of an existing property. During 2015 27 million new shares were issued and paid-in for a total amount of € 75 million. With these proceeds and with additional mortgage financing and funds generated by the Company’s operations, the Company acquired in 2015 new investment property (incl. purchase costs) for an amount of € 262 million. Taking the above into account, 2015 is a very successful year as we grew the portfolio and important steps were made in realising our strategic objectives.

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5.2. IMPLEMENTATION OF STRATEGIC OBJECTIVES 2015 Based on the new defined strategy, several strategic objectives were achieved. In the table below, a summary is provided with an overview of the strategic objectives and the status of their implementation. Strategic objectives

Status as per 31 December 2015

Status as of 31 December 2014

Increase the portfolio and tenant base by further acquisitions

Acquisitions in 2015 of € 262 million Investment portfolio grew to € 706 million

Acquisitions in 2014 of € 53 million Investment portfolio grew to € 556 million

Further diversification in portfolio

Largest property represents 46% of portfolio

Largest property represents 62% of portfolio

Increase direct investment result/FFO

Direct investment result € 25.9 million (increase of 67% compared to 2014 annualized)

Direct investment result € 11.6 million (9 months)

Reduce leverage

LTV 59%

LTV 82%

Disposal of non-strategic assets

SPA for Baltics portfolio signed in December 2015, closed in March 2016 and disposal of another nonstrategic German office building.

Some smaller assets in Baltics portfolio were sold

Diversify debt portfolio

New mortgages were concluded with five German and Dutch banks new to Geneba

Strengthening team and local presence

Average number of employees 10.9 fte. Hiring of a/o new CFRO, Director Asset Management, Acquisition managers and business controllers, increasing the experience level in real estate and finance. New local offices were opened. Next to the Amsterdam head-office Geneba now also has offices in Munich and Mülheim. This allows us to be close to our tenants and actively manage the assets.

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Average number of employees 3.1 fte

5.3. DEVELOPMENT IN THE REAL ESTATE PORTFOLIO 5.3.1. Market trends in logistic property market in Germany and The Netherlands GERMANY Jones Lange LaSalle states that the transaction activity on the German logistics and industrial property market has been growing from quarter to quarter. After almost € 700 million in the first quarter and € 950 million in the second, the billion-euro-threshold has now been surpassed: € 1.1 billion was invested in this asset class between July and September 2015. Thus the transaction volume totalled € 2.7 billion for the first three quarters of the year, equating to a 20% increase year on year. Compared to the five-year average, the volume increased by as much as 84%. Based on expectations of an equally strong final quarter, 2015 is once again heading towards a new transaction record that would exceed last year’s result (€ 3.6 billion). Ultimately, the results have exceeded the € 4.0 billion threshold, a volume higher than the years 2006 and 2007. Table: German real estate investment volume (2010 Q1 – 2015 Q3). Source: JLL valuation reports 2015

Foreign capital sources made up the biggest share of the nine-month volume in 2015, accounting for € 1.9 billion. Of the six largest deals, Asian investors were responsible for five. Already in recent years, the logistics property investment market has become increasingly international in character. Three years ago, the share of foreign investors was just 44%, but this increased to 51% in 2013 and 65% in 2014 - a level that also applies to the current year. The logistics property investment market also has a stronger international character than investment markets for other property segments. Across all commercial property investment classes, the share of foreign investors is much lower at 54%. The most prominent and largest scale transaction was Logicor’s purchase of 36 assets for app. € 550 million from Immofinanz. The prime logistic property net yields for the specific Big-5 locations are: Berlin

Düsseldorf

Frankfurt

Hamburg

Munich

5.50%

5.35%

5.35%

5.35%

5.35%

Logistics properties experienced a decline in yields by a further 15 basis points to an average of 5.37% for the logistics regions of the seven strongholds. This leap is borne out by several completed transactions and is a result of the search by investors for an attractive yield. Compared to commercial buildings or office properties, yields for this asset class are still around 120-160 basis points higher. However, some recent transactions as well as the developments regarding lease lengths and limited availability of core products indicate that the warehousing prime yield might continue to decrease slightly or will remain stable in the next months. Core/quality properties in good locations that are let to tenants with strong covenants on a long-term basis are

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still the most popular potential investment choice and can even outperform the general trend on the market once the product is available. Based on the positive economic conditions and the stable lettings market, the German logistics investment market remains attractive and logistic rents are expected to remain stable and even increase in land constrained locations such as Stuttgart and Munich due to low supply along with strong market fundamentals. Capital is available from investors, and the pipeline and continuing interest levels point to further portfolio transactions in the next few months. The continuing positive demand for prime properties – driven by German and international institutional investors – will come up against an ever-diminishing supply. The high demand for logistics properties in Germany and the lack of supply lead to the rapid price growth in the logistic market. But the further the yields fall, the more it behoves investors to watch interest rate developments. There is no clear picture here for the remainder of the year; the financial markets fluctuate between interest rate rising factors and a new run on security-based investments. Most transactions are realised without conditions on financing and normally with a much lower LTV than was usual until 2008. At the same time, equity capital is much more sensitive to risk in contrast to borrowed capital. This raises the pressure on good and very good logistics investments. In the current financing environment with limited alternative investment options and Germany’s continuing attractiveness as the engine of Europe, a weakening of this situation is not to be expected. The attractiveness of the logistics market, with steady lettings volumes in the last 10 years, stable rents and extremely low vacancies in almost all locations, lies in its solid foundations and continuing growth through diversification and outsourcing in production and retail. In addition, the short development times and therefore fast reaction times mean that an excessive oversupply is not likely to occur even in declining markets. In addition, the e-commerce has a strong demand of large scale buildings (> 80,000 sqm.). A further driver is the re-configuration of supply chains and requirement of modern and efficient spaces. NETHERLANDS During the last years, logistic supply increased from 1.6 million sqm. in 2010 to 2.0 million sqm. in 2014. During the first half of 2015 supply decreased slightly and supply amounted to 1.95 million sqm. as per Q3 2015. Stable growth is predicted for Q4 2015. Table: Dutch real estate investment volume (2012 Q1 – 2015 Q3). Source: JLL valuation reports 2015

The light industrial supply fluctuated during the last year. Supply increased from 7.8 million sqm. in 2011 to 8.0 million sqm. in 2012. During 2013 light industrial supply decreased to approximately 7.7 million sqm. At the end of the fourth quarter of 2014 supply increased strongly to approximately 8.6 million sqm., an increase of approximately 12.6% compared to 2013 Q4. Light industrial supply in the first quarter of 2015 increased with 9% compared to the fourth quarter of 2014 and amounted 9.4 million sqm. At the end of Q3 2015 supply amounted to approximately 9.6 million sqm. A further increase is assumed.

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Due to the popularity of logistic properties in the Netherlands, prime net initial yields for logistic hotspots are currently within a bandwidth of 5,70% - 6,20% for Amsterdam Schiphol and Rotterdam. In Noord-Brabant and Noord-Limburg current prime net initial yields have a bandwidth of 5,75% - 6,25% and in Utrecht prime net initial yields fall within a bandwidth of 5,80% - 6,30%. 5.3.2. Overview of the Portfolio as per 31 December 2015 After two successful property acquisitions in December 2014 Geneba started the year with a property portfolio consisting of 55 properties with a total fair value of € 557 million. This portfolio was highly concentrated on one German asset and a property portfolio in the Baltic states of 45 properties, almost fully rented to one single tenant (SEB). As part of the further diversification of the portfolio Geneba managed to further grow the portfolio in 2015 with nine property acquisitions, of which seven are located in Germany and two in the Netherlands. Furthermore Geneba signed a sale and purchase agreement with an investor for the sale of the Baltic portfolio, which was successfully closed in March 2016. Furthermore Geneba disposed one German asset in December 2015. This asset was also classified as non-strategic. The disposal resulted in a decrease of the portfolio with € 9.5 million. Acquiring new assets, a sale of the Baltic portfolio and divestment of the German asset were our main objectives for the financial year 2015, contributing to the strategic goal of further diversification of the asset and tenant base and focus on Geneba’s newly defined core business. The property acquisitions during 2015 added 359 thousand sqm. (317 sqm. logistics and light industrial and 42 sqm. office space), a gross yield of 7.6% and € 20 million of annualised net rental income. The acquisitions were purchased at € 262 million (including purchase costs). Including the new acquisitions and excluding the German asset and Baltic portfolio, the portfolio of Geneba consists of 19 properties with a total of 663 thousand sqm., an average occupancy rate of 98.9% and a weighted average lease term of 7.8 years. The total fair value amounted to € 706 million as per 31 December 2015. Property portfolio

Germany 2015

Number of tenants

The Netherlands

2014

2015

2014

Baltics* 2015

Total

2014

2015

2014

27

7

5

2

-

50

32

59

98.6%

100%

100%

100%

-

88%

98.9%

97.0%

14

7

5

3

-

45

19

55

Investment properties (in € million) Annualised rental income (in € million)

598

438

108

33

-

86

706

557

55

44

8

3

-

10

63

57

Lettable floor area (in 1.000 sqm.)

517

275

146

29

-

85

663

389

Weighted average lease term

7.3

6.6

12.2

18.0

8.4

7.8

8.0

Occupancy rate at year-end (in %) Number of properties

*The Baltic portfolio is sold in March 2016 and consequently classified as held for sale in the financial statements 2015. A detailed description of Geneba’s property portfolio is provided on Geneba’s website (www.geneba.com).

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5.3.3. Acquisitions As part of Geneba’s growth strategy, the portfolio was extended with nine properties during 2015. These acquisitions fit in the investment profile as shown in the table below. Investment profile

Focus

Sector

Core industrial and logistic properties

Geographical

Core Europe, with focus on Germany and The Netherlands

Tenant

Medium-sized “Mittelstand” companies and large national and international companies with a proven business model and strong credit profile. Long-term leases providing a stable rental income

Lease-term Size

At least € 10 million (preferably not more than 10% of total portfolio)

Asset management

Possibilities to create value by supporting tenants’ business including redevelopment and on-site extensions

During 2015 the Company acquired the following investment properties for a total value of €262 million (including purchase costs): Logistic property in Ulm This property in Ulm, being one of the most important logistic hub’s of Germany is leased on a long-term basis to Transgourmet, a subsidiary of the Swiss Coop group. It operates 24/7 and is used for the distribution, preparation, refrigeration and storage of wholesale goods. The property is situated in Ulm, one of the most important logistics hubs in Germany. The modern logistics space has a total area of approx. 24.525 sqm. Technopark Mülheim (close to Düsseldorf) The Technopark consists of 18 buildings on a total area of 122.570 sqm. Siemens AG, GNS (Gesellschaft für Nuklear-Service GmbH) and technology supplier Siempelkamp are the main tenants on the site. Together with other large and medium-sized companies, they use the space for production, office and warehouse purposes. Onsite development possibilities are further available. Light industrial property in Gottmadingen The property is situated in the Singen/Gottmadingen logistics center (between Zürich and Stuttgart) within an established business region. It is let on a long-term basis to Constellium NV, a global aluminum processing plant. Constellium Singen GmbH uses the 51.507 sqm. space for the production of security products for the automobile and aviation industries. Light industrial property in Mamming A strategic warehouse, distribution and production facility with a long-term lease to a large automotive supplier (Voith International) servicing a large listed German car manufacturer from this site. The property provides 14.193 m² of lettable floor area on a total plot size of 28.300 sqm. and is located between Munich and Passau with good access to the A92.

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Three automotive distribution and light industrial properties in South East of Germany These properties are located in Leipzig, Chemnitz and Amberg focusing on the supply chain of the big car manufacturers in the area. The lettable area amounts to 38,979 sqm. in total. The properties are leased on a long-term basis to well-known automotive suppliers and logistics enterprises (Rhenus Logistics, Grammer and Dräxlmaier) and are fully integrated into the supply chain of German car manufacturers in the area. In the Netherlands the company purchased two logistic properties. Logistic property in ‘s-Heerenberg The property consists of 26 interconnected warehouses leased (on a long-term, 10 years) to Wim Bosman Logistic Services B.V., a subsidiary of Mainfreight Ltd., a listed New Zealand logistics and transport company. The property provides 84.806 sqm of lettable floor space with a total plot size of 158.230 sqm. The property is located near the German border, on one of the top logistic gateways and has an excellent connection to the A3 in Germany. Logistic property in Venlo This newly developed warehouse is leased on long-term (10 year) basis to DSV Solutions B.V., the Dutch subsidiary of DSV Solutions Holding A/S, a Danish listed global supplier of transport and logistics solutions. The property provides 32.642 m² of lettable floor area on a total plot size of 46.000 m² and is located in Trade Port Noord, one of the key logistics areas of the Netherlands in Venlo, close to the German border. It has excellent access to road, water and railway links to the port of Rotterdam and Germany (Ruhr area). As of 31 December 2015 several investment proposals were approved by the Supervisory Board, subject to certain conditions to be fulfilled. These proposals include six logistical and light industrial properties in Germany. Three of them are newly developed or to be developed turnkey properties. The total investment value (including acquisitions costs) for the approved investment proposals amounts to approximately € 82 million for which € 35 million equity is called (total of 12,538,755 shares to be issued). The conditions have been fulfilled in the course of the first quarter of 2016.

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5.3.4. Divestments/ Available for sale Baltic portfolio This portfolio is mainly let to and financed by the Swedish Bank SEB and its local subsidiaries and branches. The portfolio was considered to be non-strategic because of the limitations under the existing agreements with SEB to play an active role on restructuring this portfolio and in view of the specific building characteristics as well as the geographical and geopolitical situation. The Company managed to sign a sale and purchase agreement with an investor for the sale of the Baltic portfolio in December 2015. Geneba obtained the necessary approval of SEB for this sale as part of the change of control clause in the financing agreement. In March 2016 this sales transaction has been completed. As a consequence this portfolio was classified in the balance sheet as “assets and liabilities held for sale”. The value of the divested portfolio was € 90 million (fair value of the investment properties amounted € 86 million as of 31 December 2014). German non-strategic asset In one of the German assets asbestos was discovered during the financial year 2014, and this appeared to be more severe than expected. Furthermore, the tenant announced that they were not willing to extend the lease contract after 2018. These events resulted in a significant decline in the property’s fair value in 2014. Short-term repair measures for the asbestos were initiated in 2014 and 2015. After discussions with the tenant and the financing bank, Geneba decided to initiate a voluntary solvency procedure for the entity owning this property, which was granted by the Dutch Court as of 1 December 2015. Consequently Geneba no longer ‘controls’ this specific entity and asset as per this date. This resulted in a decrease of the portfolio value (compared to the value as of 1 January 2015) of € 9.5 million. 5.3.5. Value movements All properties have been externally valued in 2015, except for one German asset, being the asset near Munich leased to Infineon. The major part of these properties were valued at 31 December 2015. For properties acquired in the second half of 2015 external valuations have been performed at acquisition date and have been updated internally at 31 December 2015. Based on this internal review the company used the values, extracted from the external valuation reports, in preparing the financial statements. The external valuations are performed in compliance with the valuation standards in the ‘Red Book’ of the Royal Institute of Chartered Surveyors (RICS) and the International Valuation Standards of the International Valuation Standard Committee (IVSC) and have been finalised under the rules set forth by Geneba’s Policies and Procedures with respect to the AIFMD regulations. In line with Geneba’s procedures, there was a change of external appraisers during 2015 to Jones Lang LaSalle (JLL) from DTZ. The external valuations have been assessed by management and discussed with and approved by the Audit & Valuation Committee of the Supervisory Board. The following properties were not valued based on an external appraisal report: • The tenant of the “Campeon” office campus, located in the Munich area, has, as part of its original sale and lease back transaction negotiated a purchase option exercisable in October 2020. The agreed purchase price according to this option amounts € 274 million, which is lower than the estimated fair value. Based upon management’s current assessment, it is probable that the tenant will exercise this option. The property value is based on an internal valuation, taking into consideration the purchase option, resulting in a valuation of € 327.7 million and a negative value movement in 2015 of € 16 million. This is consistent with the valuation method as per 30 June 2015 and 31 December 2014. • No external valuation has been performed as per 31 December 2015 for the Baltic properties, based on the above mentioned sales agreement (see 5.3.4 Divestments). This portfolio is classified as held for sale and the 2015 results are accounted for as discontinued operations. The comparative 2014 results of the Baltics portfolio were restated and are separately shown as results from discontinued operations.

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5.4. FINANCING In general every property is acquired in a separate legal entity. The properties are financed at the level of the legal entity, with non-recurring mortgage debt with a loan-to-value between 50% and 60%. The remaining is financed by equity and/or a shareholder loan of the (ultimate) parent company, being Geneba Properties N.V. As a general principle there is no cross collateralisation between the different SPV’s. The major part of the loans have a fixed interest rate. New mortgage loans were underwritten against the acquisitions totalling € 126 million in 2015. These loans were provided by various German and Dutch banks. The duration of these new loans varied between 5-10 years. As a result of the planned sale of the Baltics portfolio, the loans provided by SEB against the Baltic portfolio are classified as “liabilities held for sale”. During 2015 a bank loan of € 22.5 million against assets needed to be refinanced. This loan was partly refinanced by other banks. The remaining portion was financed out of the cash flow from the Company’s operations and by a shareholder’s loan. As of 31 December 2015 the consolidated loan-to-value amounted to 59% compared to 82% at the end of 2014. The ICR is 3.8 (2014: 2.4). As of 31 December 2015, the Company’s subsidiaries complied with all covenants. The average interest rate decreased from 5.0% in 2014 to 3.4% in 2015. The high peak, shown in the loan expiry schedule, in 2020 relates for a significant part to the mortgage loans on the property let to Infineon. In 2020 Infineon has the option to purchase the property. Should the option not be exercised the lease term extends automatically by 5 years and a loan extension will have to be agreed. Assuming Infineon will exercise this option the related loans will be redeemed.

The table below shows the long-term and short-term portion of the loan portfolio as of 31 December 2015 and the respective parts having fixed or floating interest rates. (in € millions)

Fixed

Floating

Total

in % of total

Long-term debt

344.2

19.5

363.7

95.0%

Short-term debt

17.6

1.7

19.3

5.0%

Total

361.8

21.2

383.0

in % of total

94.5%

5.5%

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5.5. FINANCIALS RESULTS 2015

5.5.1. Statement of income 2015

2014

Gross rental income, net of service charges

50,269

32,435

Property operating expenses, unrecoverable

-2,061

-884

Net rental income

48,208

31,551

Investment properties

-17,717

-8,801

Deconsolidation result

9,621

-

Total net adjustments

-8,096

-8,801

General and administrative expense

-5,926

-4,496

Net operational expenses

-5,926

-4,496

Operational result

34,186

18,254

51

327

Finance costs

-12,759

-13,298

Net finance costs

-12,708

-12,971

21,478

5,283

1,829

-4,143

23,307

1,140

7,865

-7,606

31,172

-6,466

(In Thousands of Euros)

Net adjustment to fair value of:

Finance income

Net result before income tax Income tax Net result from continuing operations Net result from discontinued operations Net result for the period

Please note the following when comparing 2015 with the 2014 income statement: • The 2014 figures cover only the period from the Plan Implementation Date, being 27 March 2014 (so approximately 9 months) compared to the full year 2015 (12 months) • The assets and liabilities with respect to the Baltics portfolio are classified as held for sale. In the income statement the results are shown separately as “net result from discontinued operations”. The comparative figures of 2014 are restated accordingly. The Company realised a net result from continuing operations of € 23.3 million, compared to the nine month period 2014 of € 1.1 million. The total direct investment result (calculated as net rental income minus general expenses, finance costs and corporate income tax, minus effect of minority share) over 2015 amounted to € 25.9 million (2014: € 11.6 million).

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This positive direct investment result was off-set by the negative indirect results (including net adjustments to fair value) of € 3.6 million (2014: € 11.1 million), resulting in a total net result from continued operations attributable to the shareholders of € 22.3 million (2014: € 0.5 million). 5.5.2. Rental Income and non-recoverable property operating expenses Total gross rental income for the period 1 January 2015 until 31 December 2015 was € 50.3 million compared to € 32.5 million in 2014. Next to the fact that the properties owned as of December 2014 contributed to the result for a full year, the acquisitions in 2015 resulted in an increase of gross rental income of € 3.3 million. In addition to this, the Hassmersheim property showed an increase of € 0.2 million due to an extension of the property which was completed in the course of 2014. The existing portfolio is expected to generate an annualised pro forma rental income of € 63 million. 87% of the rental income is generated from German assets, of which 61.5% relates to one single asset. 13% relates to the rental income from the five Dutch assets. For the 9 month period in 2014 the portfolio (excl. Baltics) generated a gross rental income of € 32.5 million. The non-recoverable property operating expenses amounted to € 2.1 million compared to € 0.9 million in 2014. The relatively low non-recoverable property operating expenses are due to the fact that a major part of the properties have a double net or even triple net lease agreement, which means that almost all property related costs can be charged to the tenant. 5.5.3. Net adjustments to fair value of properties, derivatives and loans The negative fair value adjustments amounted to € 18 million. The breakdown is as follows: • Negative value movement of € 16 million of Geneba’s largest German asset let to Infineon. For this property the tenant Infineon has a purchase option (at a predefined price) exercisable in 2020. Based upon management’s current assessment, it is probable that the tenant will exercise this option. The property value is based on an internal valuation, taking into consideration the purchase option, resulting in a value of € 327.7 million as of 31 December 2015. • Negative value movement of approximately € 12 million for properties acquired in 2015. The revaluations were mainly due to capitalized transfer taxes and other purchase costs paid on these assets. • Positive value movements of more than € 10 million on properties which were owned as of 31 December 2014 (excluding the asset leased to Infineon and the Baltics portfolio).

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5.5.4. General and Administrative Expense General and administrative expenses were € 5.9 million compared to € 4.5 million in 2014 (9 months). This includes, amongst others, wages and salaries (€ 2.3 million) and professional fees (€ 2.7 million) relating to recruitment, legal, tax, audit, depository, external compliance, public relations and other fees. The cost ratio (defined as general & administrative expenses divided by net rental income) decreased to 12% (14% for 2014). 5.5.5. Finance cost Interest expense on long-term debts in 2015 was € 12 million (9 months 2014: € 10.8 million). Despite of additional interest costs on mortgage loans for the 2015 acquisitions, financing costs decreased, due to the redemption of a shareholder loan at the beginning of 2015 and due to some one-off financing costs such as costs for obtaining the shareholder loan in 2014 and penalties as a result of early repayment of a loan in 2014. The weighted average interest rate on long-term debts dropped to 3.4% (2014: 5.0%). 5.5.6. Income tax expense Total income tax for 2015 amount to € 1.8 million gain. This amount consists of a positive movement in deferred taxes of € 4 million and income taxes of € 2.2 million, mainly due in Germany. Deferred tax assets have been recorded for tax losses that are expected to be compensated against future tax profits in The Netherlands for a total amount of € 1.9 million. Other deferred tax assets and liabilities relate to differences between commercial and fiscal value of properties, and amount to a liability of € 7.4 million (net). 5.5.7. Net result from discontinued operations The net result from discontinued operations is € 7.9 million (2014: € -7.6 million) and relates to the result from the Baltic portfolio that has been sold in March 2016 and in accordance with the applicable accounting principles is classified as held for sale and discontinued operations in the 2015 (and comparative 2014) figures of Geneba. 5.5.8. Balance sheet 31-12-2015

(In Thousands of Euros)

31-12-2014

Investment properties

706,336

556,622

Net asset value

279,443

87,943

Long-term debt and shareholder loans

382,964

453,819

Loan to value ratio (incl. liabilities from acquisitions)

59%

82%

Equity ratio

35%

16%

Number of share in issue (at year-end)

85,226,746

29,759,096

Weighted average number of shares

60,700,958

30,506,130

3.28

2.96

NAV per share

For an explanation on investment properties reference is made to section 5.3. Development of Real Estate Portfolio of the Management Board Report.

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5.5.9. Equity Geneba’s equity attributable to shareholders amounts to € 88 million as per 31 December 2014. The equity increased with € 161 million as a result of Rights issuance and with € 30 million being the net result in 2015. The total equity attributable to shareholders amounted to € 279 million as per 31 December 2015. With the proceeds from the Rights Issue the total outstanding shares increased from 29,759,096 as per 1 January 2014 to 85,226,746 shares as per 31 December 2015. For details on the issued capital reference is made to the shareholders information in this report. The total net asset value per share as of 31 December 2015 increased with 11% to € 3.28 (2014: € 2.96). The equity ratio amounts to 35% as per 31 December 2015 (2014: 16%). 5.5.10. Long-term debt For an explanation on the long-term debt reference is made to section 5.4. Financing of the Management Board Report. 5.6. RISK MANAGEMENT AND COMPLIANCE Risk management fulfils an important place in Geneba’s internal control system. Geneba pursues an active policy in the area of assessing and, if necessary, taking appropriate action regarding the risks that are associated with investing in property. The mix of assets is closely monitored, with a view to risk diversification, future lease contract expirations, property yields and trends in the property market. Geneba’s risk management procedures fall under the responsibility of the CFRO and are yearly assessed by its external compliance officer CLCS. The procedures are all documented in the company’s risk framework and are quarterly reported to the Management Board and Supervisory Board. The quarterly risk reporting is also shared with the depository, the external compliance officer and external independent auditor. Four main risks, which can have the largest impact on the realisation of Geneba’s strategy, are described below. 5.6.1. Concentration risk Concentration of tenants may adversely affect Geneba’s financial performance. If for any reason Geneba is unable to collect rents from one or more of its key tenants, Geneba’s revenues and its ability to pay the property operating and interest costs associated with the relevant property and the valuation of the related property could be materially adversely affected. Due to new acquisitions in 2015 and the effective disposal of the Baltic portfolio Geneba reduced the concentration risk. Nevertheless Geneba still has a concentration risk which in turn results in a high credit risk, vacancy risk and valuation risk. • Exposure to risk of its largest tenant (in Germany), 46% of portfolio, 54% of total rent (2014: 62% of portfolio, 59% of rent); • Exposure to risk of its second largest tenant (in Germany) 9% of portfolio, 10% of total rent (in 2014 Baltics: 15% of portfolio, 18% of rent). In order to manage these risks Geneba is in close contact with its tenants and monitors credit risks with help of rating agencies (Moody’s, Standard Poor, Graydon, Crediform Group) and tries to reduce the concentration risk by diversifying its portfolio.

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The Group has policies in place to ensure that rental contracts are entered into only with lessees with an appropriate credit history. Currently we have no material accounts receivable outstanding and we have not identified any material credit risks with our major tenants. The credit ratings of our tenants with high concentration risks are triple B and A+. 5.6.2. Interest rate risk The assets and liabilities of the Group (including the mortgages secured by the Group’s properties) have fixed and floating interest rate components resulting in an exposure to interest rate fluctuations. These fluctuations in interest rates will have an impact on the earnings of the Group. Increases in interest rates generally cause a decrease in demand for properties. Higher interest rates and more stringent borrowing requirements, whether mandated by law or required by banks, could have a significant negative effect on the Group’s ability to sell any of the Group’s properties. As a result, the Group’s financial results and condition or operating results could be materially adversely affected. As part of the risk management procedures Geneba implemented strict monitoring of the interest rate movements and quarterly reporting in order to manage positions for short- and long-term financing. Management analyses the Group’s interest rate exposure on a dynamic basis. Various scenarios are simulated, taking into consideration refinancing, renewal of existing positions and alternative financing sources. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. The simulation is done on a quarterly basis to verify that the maximum potential loss is within the limits set by management. If interest rates had been 100 basis points higher as per 31 December 2015, with all other variables held constant, net result before tax for the year would have been € 0.2 million lower. If interest rates had been 100 basis points lower with all other variables held constant, net result before tax for the year would have been € 0.2 million higher. The interest rate risks was further mitigated in 2015 as new loans have fixed interest rates. The following table classifies the loans based on floating and fixed interest rates: (In Thousands of Euros)

Floating interest rate Fixed interest rate Fair value adjustments loans Total

Value as per 31 December 2015

Value as per 31 December 2014

21,265

133,996

361,809

339,446

-110

-19,623

382,964

453,819

The effective average interest rate in 2015 amounted to 3.4% (2014: 5.0%). 5.6.3. Capital risks Geneba’s objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders; and to maintain an optimal capital structure to reduce the cost of capital. Part of the risk management procedure is to formulate a funding plan by the Management Board in order to be able to finance the growth of the portfolio. Furthermore Geneba focuses on maintaining strong relationships with its financing banks.

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Geneba monitors capital on the basis of loan to value and the gearing ratio. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated by Geneba as total borrowings less cash and cash equivalents. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus net debt. The loan to value (LTV) decreased from 82% to 59% in 2015. The gearing ratios at 31 December 2015 is 59.8% (2014: 82.9%). For the borrowings from banks covenants are in place which are constantly monitored by the management of the Group. These covenants mainly relate to LTV and ICR minimum requirements which need to be reported to the banks on a quarterly basis. As per 31 December 2015 all covenants are met. 5.6.4. Liquidity risks Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Geneba aims to maintain flexibility in funding by keeping a minimum level of cash. Risk control measures are set and implemented, and mainly consist of the elaboration of a financing strategy and bank policy by the Management Board and detailed cash flow projections including the finance requirements. Geneba’s liquidity position is monitored on a weekly basis by the management and is reviewed on a monthly basis by the Management Board and reported quarterly to the Supervisory Board. 5.7. SUSTAINABILITY Management acknowledges the importance of sustainability for Geneba and regularly discusses this topic with its tenants. Sustainability is also a selection criteria and specific point of attention during the due diligence of new investments and during extensions of existing properties. Some of the roofs of our properties are covered with solar panels to generate renewable energy. We will further analyse these type of sustainable investment possibilities and further develop and implement our sustainability policy in the coming period. 5.8. STAFF Geneba increased its number of staff during the year 2015 from 8 employees as per 31 December 2014 up to 15 employees as per 31 December 2015. With the increase in number of people and locations Geneba managed to add further experience and seniority to all departments and to have further local presence close to the markets it operates. The culture of Geneba can be characterized as informal and transparent, where each individual can make the difference by showing commitment and responsibility with a hands-on mentality. The real estate portfolio is internally managed. Technical management of the properties is outsourced to external managers. The team is led from the Amsterdam office by two statutory directors, being the CEO and CFRO and consists of three departments being Asset Management, Acquisition and Finance & Control. Next to informal consultations, the communication is guaranteed by periodic meetings at different levels within and between team members of the respective departments.

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As of 31 December 2015 the composition of the team in number of people can be shown as follows: Management Board (CEO and CFRO)

2

Asset Management

4

Acquisition

3

Finance & Control

4

Office management

2

Total

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For 2016 Geneba expects a small increase in staff as our asset portfolio is expected to further increase. During 2015, IT, compliance, audit, depository, tax, PR and legal services were provided to Geneba through service contracts with third parties. A permanent education policy is in development for both staff, Management Board and Supervisory Board and staff is encouraged to attend external trainings and courses to further develop their skills and know-how. 5.9. CORPORATE GOVERNANCE Geneba Properties N.V. (the ‘Company’ or ‘Geneba’), is a public company incorporated under the laws of the Netherlands (naamloze vennootschap), having its official seat in Amsterdam, the Netherlands, and its registered office address at Apollolaan 153, 1077 AS, Amsterdam, the Netherlands. Geneba was incorporated on 11 July 2013 and operates under licence and supervision of the Authority for the Financial Markets (‘AFM’) and the Netherlands Central Bank (‘DNB’) as closed-end property investment company without a separate manager (beleggingsmaatschappij zonder aparte beheerder). This licence has been issued by the AFM on March 7, 2014. The shares of the Company are traded at NPEX. The Company started its business at the Plan Implementation Date (“PID”) on 27 March 2014. The Company has a two-tier board structure consisting of a Management Board (Raad van Bestuur) (the “Management Board”), which will manage its business and a Supervisory Board (Raad van Commissarissen) (the “Supervisory Board”), which will supervise and advise the Management Board. The Management Board and Supervisory Boards bring together people with diverse experiences, skills and knowledge appropriate for the market Geneba is in. The Management Board is composed of the following members:

Name Wulf Meinel Tom de Witte

Nationality, Gender, Age German, male, 54 Dutch, male, 49

Position Chief Executive Officer Chief Financial and Risk Officer

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Member Since 27 March 2014 24 November 2015

Term 3 years 3 years

The Supervisory Board is composed of the following members:

Name Gabriel de Alba

Nationality, Gender, Age American, male, 42

Marian Hogeslag Dutch, female, 49

Gerrit Littel

Dutch, male, 65

Jochen Scharpe

German, male, 56

Joern Stobbe

German, male, 49

Position Chairman of the Supervisory Board (as of 24 November 2015), Steering & Remuneration Committee and Asset Management Committee Member of the Supervisory Board and Steering & Remuneration Committee. Temporarily member of Audit Valuation Committee (from 28 April till 24 November) Vice-chairman of the Supervisory Board and chairman of the Audit & Valuation Committee (from 28 April till 24 November 2015 delegated member as a result of vacant CFRO position) Member of the Supervisory Board, Steering & Remuneration Committee and Asset Management Committee (till 24 November 2015 Chairman of the Supervisory Board) Member of the Supervisory Board and Audit & Valuation Committee

Member Since Incorporation at 11 July 2013

Term 4 years

Incorporation at 11 July 2013

4 years

27 March 2014

4 years

Incorporation at 11 July 2013

4 years

27 March 2014

4 years

Mr G. de Alba is Managing Director and Partner at The Catalyst Capital Group Inc., Canada. Catalyst manages its holding in Geneba through Catalyst Coöperatief U.A., Canada. As per 31 December 2015 Catalyst hold an 84% stake in Geneba. As a consequence Mr G. de Alba is not an independent member of the Supervisory Board within the meaning of the Articles of Association. The business address of all members of the Management Board and Supervisory Board is Apollolaan 153, 107 AS Amsterdam, The Netherlands. The Supervisory Board is divided into committees, focusing on specific aspects of the Company’s operations: • Steering and Remuneration Committee, which is entrusted with the supervision and advice on strategic decision-making and remuneration for the members of the Management Board; • Audit & Valuation Committee, which is entrusted with supervision and advice on primarily financial matters, reporting obligations and valuations; • Asset Management Committee is entrusted with the supervision and advice on, amongst others, in- and divestments decision making and performance of the investments. Each committee reports its findings to the full Supervisory Board. For the activities of the Supervisory Board and its subcommittees in 2015 reference is made to the Report of the Supervisory Board. As of 1 January 2013 the Act on Management and Supervision (‘Wet Bestuur en Toezicht’) came into effect. This Act introduced statutory provisions to ensure a balanced representation of men and women in management boards and supervisory boards of companies governed by this Act. Balanced representation of men and women is deemed to exist if at least 30% of the seats are filled by men and at least 30% are filled by women. Supervisory Board and Management Board members were selected on the basis of wide ranging experience, background, skills, knowledge and insights. The

27

Supervisory Board strived for more diversity in both Supervisory Board and Management Board. Geneba is aware that females are underrepresented in both the Management Board and the Supervisory Board. Personal information of Management Board and Supervisory Board can be found in this report and on the website (www.geneba.com). Although the Dutch Corporate Governance Code does not apply to Geneba because its shares are not admitted to trading on a multilateral trading facility or regulated market within the meaning of Act on Financial Supervision (“Wet Financieel Toezicht), Geneba highly values good corporate governance. Its internal Policies & Procedures are based on the requirements of the AIFMD. Since 2015 Geneba is a member of the Initiative Corporate Governance der Deutschen Immobilienwirtschaft eV (‘ICG’), which promotes Corporate Governance Standards and Compliance Systems for real estate companies active in Germany. The company regularly reports to shareholders, its compliance is continuously and closely assessed by its Supervisory Board, external compliance management (CLCS) and Geneba’s depositary (Orangefield). The financial statements are audited and the half year financial statements are reviewed by PricewaterhouseCoopers Accountants N.V. 5.10. OUTLOOK During 2015 important steps were made in implementing Geneba’s strategy creating a solid real estate company with geographical focus on commercial real estate properties in Germany and The Netherlands. With the successful closing of the Rights Issue in the beginning of 2015, funds were made available to execute the strategy. Geneba is fully aware of its responsibilities as a property owner. To be able to better support our tenants, local offices are opened in Munich and Mülheim during 2015. With the opening of the new offices we are able to provide on-site support in our role as a committed owner, investor and as a landlord that acts and thinks with the long term interests of the tenant in mind. The team was strengthened by hiring new employees with experience in acquisition, asset management and finance. Our mission statement is “We give home to corporate businesses in core Europe”. With the expansion of our team, the opening of the local offices and the proceeds from the Rights Issue Geneba was able to execute this mission with the acquisition of well located, high quality light industrial and logistical properties with strong tenants for an amount of € 262 million in 2015. Furthermore advanced progress was made in the disposal of non-strategic assets during 2015. A sale and purchase agreement was signed for the Baltic portfolio, which formally closed in March 2016. These important steps created a significantly stronger, profitable and better balanced company with an investment portfolio of more than € 700 million and an annual rental income of € 63 million. The loan to value decreased to 59% whereby the “spot” interest rate was reduced to 2.1% per annum. Taking this into account, Geneba’s portfolio generates, after deduction of interest, general & administrative expenses and income taxes, a strong cash flow based on long-term lease contracts of more than € 35 million annually. In 2016 Geneba will further invest the remaining amount under the Rights Issue. As of 31 December 2015 several investment proposals were already approved by the Supervisory Board, subject to certain conditions to be fulfilled. These proposals include six logistical and light industrial properties in Germany and will close in the first quarter 2016. Three of them are newly developed or to be developed turnkey properties.

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Furthermore Geneba will focus on creating additional value out of the existing properties in its portfolio. One of the bigger planned projects will be the development of a vacant piece of land of the Mülheim property. Negotiations have started with potential tenants and with local municipality for the necessary permits. Discussions with other tenants are initiated to discuss the possibilities of further expansion of the properties. With interest rates still low, the environment for investments remains attractive. The parameters suggest that that in 2016, demand of both domestic and international market players will remain high and in fact probably increase somewhat due to favourable asset parameters. Against this background, it seems likely that – despite their already extensive falls – yields will ease slightly further. Taken into account the positive climate for investments and the action taken in 2015, we are well underway in making Geneba a “safe and attractive” place for our investors and stakeholders. In 2016 we will focus on further growth and diversification in the portfolio. With the strong fundamentals created within the company during the past two years and the acquisition opportunities we currently see in our markets, we are of the opinion that Geneba is fully equipped to further grow and diversify the real estate portfolio in 2016 in the interest of its shareholders and tenants. We are considering several funding options to finance this further growth. We are convinced that the current quality of the portfolio, its cash flow generating capacity, the current loan to value and the experience available within Geneba’s team, enable us to attract additional funds and invest in new assets in line with our investment strategy. Finally we would like to thank our shareholders, tenants, financing banks, advisors and other stakeholders for their support and trust in the implementation of Geneba’s strategy. We also like to thank our colleagues for their hard work and dedication during the past year to realise the results we have accomplished in 2015.

Amsterdam, 14 April 2016 Management Board Geneba Properties N.V.

Dr. Wulf A. Meinel, CEO

Mr. Drs. Tom M. de Witte RA, CFRO

29

6

RESPONSIBILITY STATEMENT OF THE MANAGEMENT BOARD

In line with Article 5.25c of the Act on Financial Supervision, the Board of Management declares to the best of its knowledge that insofar as it can be expected to be known: • •

• •

7

the 2015 consolidated financial statements give a true and fair view of the assets and liabilities, the financial position and the result of Geneba and its consolidated subsidiaries; the additional information set out in this annual report gives a true and fair view of the state of affairs as at the balance sheet date and the course of events during the financial year of Geneba and its consolidated subsidiaries; the material risks to which Geneba is exposed are set out in the annual report; as regards financial reporting risks the management board states that the internal risk management and control systems regarding financial reporting risks worked properly in the year under review and provide a reasonable assurance that the financial reporting does not contain any errors of material importance.

IN CONTROL STATEMENT OF THE MANAGEMENT BOARD

We have a description of the organisation of the business operations (documented in our “Policies and Procedures”), which complies with the requirements of the Act on Financial Supervision (Wet Financieel Toezicht, ‘WFT’) and the Decree on Supervision of Market Conduct of Financial Firms (Besluit Gedragstoezicht Financiële Ondernemingen, ‘Bgfo’). We have assessed different aspects of the Policies and Procedures during the reporting period. During our assessment, nothing came to our attention on the basis of which we would have to conclude that the description as referred to in article 115 of the Bgfo does not meet the requirements as set out in the WFT and related regulations. On this basis, we declare as Management Board of Geneba Properties N.V. that we have a description of the organisation of the business operations referred to in article 115 Bgfo, which meets the requirements of the Bgfo. We are not aware of any indication that the organisation of the business operations was ineffective or materially deviated from the description. Therefore we declare with a reasonable degree of certainty that the organisation of the business operations during the reporting period has operated effectively and in accordance with its description.

Amsterdam, 14 April 2016 Management Board Geneba Properties N.V.

Dr. Wulf A. Meinel, CEO

Mr. Drs. Tom M. de Witte RA, CFRO

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8

STATEMENT OF THE DEPOSITARY Statement of the Depositary

Considering that Orangefield (Netherlands) B.V. (“the Depositary”) is appointed to act as depositary of Geneba Properties N.V. (“the Fund”) in accordance with section 21(1) of the Alternative Investment Fund Managers Directive (2011/61/EU) (the “AIFM Directive”); Such appointment and the mutual rights and obligations of the Fund and the Depositary of the Fund have been agreed upon in the Depositary Agreement dated 25 March 2014 between such parties, including the schedules to that agreement (the “Depositary Agreement”); and The Depositary issues this statement exclusively to the board of the Fund in relation to its regulatory oversight and monitoring duties and relates to the period 1 January 2015 up to and including 31 December 2015, (“the Period”). Responsibilities of the Depositary The Depositary acts as a depositary within the meaning of the AIFM Directive and provides its services in accordance with the AIFM Directive, the Delegated Regulation supplementing the AIFM Directive, applicable Dutch laws and regulations the policy rules issued by the European Securities and Market Authority and the policy rules of the Dutch Financial Markets Authority. The responsibilities of the Depositary have been described in the Depositary Agreement and include, in addition to the safekeeping, recordkeeping and ownership verification tasks (as defined in article 21(8) AIFM Directive), several monitoring and oversight tasks (as defined in article 21(7) and 21(9) AIFM Directive): • • • • •

Monitoring of the Fund’s cash flows, including identification of significant and inconsistent cash flows and reconciliation of the cash flows with the Fund’s administration; Ensuring that the sale, issue, re-purchase, redemption, cancellation and valuation of units or shares of the Fund are carried out in accordance with the applicable national law and the Fund documentation; Ensuring that in transactions involving the Fund’s assets any consideration is remitted to the Fund within the usual time limits; Ensuring that the Fund’s income is applied in accordance with the applicable national law and the Fund documents; and Checking if the Fund is managed in compliance with the investment restrictions and leverage limits as defined in the Fund documentation.

Statement of the Depositary The Depositary has carried out such activities during the Period as considered necessary to fulfil its responsibilities as Depositary of the Fund. The Depositary has not identified any matters that require escalation to the Fund / Manager pursuant to the depositary agreement. Disclaimer This statement does not create, and is not intended to create, any right for a person or an entity that is not a party to the Depositary Agreement, and it does not override the Depositary Agreement. For completeness’ sake, the responsibility for compliance with the regulatory and statutory obligations of the Fund/Manager lies with the board of directors of the Fund/Manager. Was signed by Orangefield (Netherlands) B.V. Amsterdam, April 4, 2016

31

9

REPORT OF THE SUPERVISORY BOARD

9.1. GENERAL Geneba started its operations at the end of March 2014. Therefore the year 2015 can be seen as an important year to further develop the Company from its start-up phase and building solid fundamentals to further grow its business. In that respect important milestones were set in 2015. With the successful placement and closing of the Rights Issue in January 2015, the Company attracted the necessary funds to improve its financial structure and to extend and to further diversify its real estate portfolio. The Supervisory Board was closely involved in the preparation of the Rights Issue. It also reviewed a number of investment proposals prepared by the Management Board. Several proposals were approved after careful consideration, taking into account Geneba’s strategy and risk profile, and finally executed in 2015 and the beginning of 2016. The organisation was significantly strengthened by hiring several new employees, increasing the level of real estate and financial experience within the Company. With this strengthened team of professionals, important steps were made to further professionalize the organisation, amongst others by improving its procedures, reporting and internal and external communications. With the leave of the former CFRO in April 2015, the Supervisory Board was intensively involved in the hiring of a new CFRO, resulting in the appointment of Tom de Witte as new CFRO as of 24 November 2015. During the search period, Mr Gerrit Littel was temporarily designated as delegated Supervisory Board member in order to ensure more intensive supervision, advice and consultation towards the Management Board with respect to, amongst others, matters of finance and risk management. Furthermore, important steps were made to further optimize the real estate portfolio by disposing the non-strategic assets in Bochum and the Baltics. The respective proposals were extensively discussed with the Management Board and within the Supervisory Board and were both approved. The final closing of the Baltics portfolio took place in March 2016. 9.2. ACTIVITIES OF THE SUPERVISORY BOARD IN 2015 During 2015 there were four meetings of the Supervisory Board, which were also attended by the members of the Board of Management. All Supervisory Board members attended the meetings. In the context of making sound decisions, the Management Board always kept the Supervisory Board supplied with sufficient information in time. The Supervisory Board was kept informed about the activities, financial performance and other relevant aspects related to the business and the Company. In preparation for these meetings, various relevant memoranda and/or presentations were provided by the Management Board. For some topics, these documents were first discussed separately in the various subcommittees of the Supervisory Board. The chairman of these committees reported on these discussions in the meetings of the plenary Supervisory Board. Among the topics discussed in the Supervisory Board meetings were recurring items as strategy and risks, property and financial markets, the operational and financial performance, valuations, the annual report and half-year financial statements, press releases, dividend policy, funding, organisation and internal controls, corporate governance and remuneration levels. In addition, a number of other important non-recurring items were discussed during these meetings as described below. Minutes of all meetings were compiled by the notary of Loyens Loeff/Nauta Dutilh, signed by the chairman and approved by all members in the next meeting.

32

Between these meetings there was regular contact between the individual Supervisory Board members and the members of the Management Board. The chairman of the Supervisory Board acts as the initial point of contact within the Supervisory Board. The Chairman and the members of the Management Board regularly discusses the Company’s state of affairs. The chairman of the Audit & Valuation Committee was also in contact with the CFRO on several occasions. Key topics in 2015 In the April meeting, in addition to the approval of the annual report and the budget 2016 and other usual items, the leaving of the CFRO was discussed. In this context, the Supervisory Board decided to revise the Management Board and Supervisory Board resolutions, to temporarily designate Mr G. Littel as delegated Supervisory Board member in order to ensure more intensive supervision, advice and consultation towards the Management Board with respect to, amongst others, matters of finance and risk management. As a consequence it was decided to temporarily remove Mr. G. Littel as member of the Audit & Valuation Committee and to temporarily appoint Ms. M. Hogeslag as member of the Audit & Valuation Committee. In addition to the decision to search for a new CFRO, extensive discussions were held on the further growth, composition and remuneration levels of the organisation. It was, amongst other, decided to strengthen the organisation by hiring a new asset management director, additional asset and acquisition managers and a corporate controller. During this meeting also some investment proposals were approved and options for the nonstrategic assets in the Bochum and the Baltics were discussed and approved. The Supervisory Board furthermore approved the decision of the Management Board not to distribute dividend to the shareholders, as the Company requires all cash for the expansion of its portfolio. In the August meeting, next to the approval of the half-year financial statements and other usual items, the potential disposal of the Baltics portfolio, the refinancing of an expiring bank loan, the hiring of an associate director and the search/potential candidates for the vacant CFRO were discussed. During the meeting also several investment proposals were taken into consideration of which some of them were approved. The October meeting was held in the newly opened Munich office. In the October meeting, the Chairman of the Supervisory Board, Mr J. Scharpe decided to step-down as Chairman. The Supervisory Board accepted this step-down and decided to appoint Mr G. de Alba as the new Chairman. Mr. J. Scharpe remains member of the Supervisory Board. To formalize this change in composition of the Supervisory Board, the articles of association needed to be revised and approved by the meeting of shareholders. During the October meeting furthermore it was decided to select Mr T. de Witte for the vacant CFRO position. It was decided to convene an Extraordinary Shareholders meeting in November to request the required approval of Mr de Witte’s appointment as CFRO and some amendments in the articles of association of the Company. Next to these items, some investment proposals were discussed and approved. Also an update on the disposal of the non-strategic assets was given. For the refinancing of the earlier mentioned expiring bank loan, it was decided to underwrite a bridging loan from Catalyst RE Coöperation U.A. for the refinancing of this loan. Mr G. de Alba did not vote on this item because of a potential conflict of interest as a result of this related party transaction. In the November meeting, in line with the Company’s policies and procedures, the outcome of the tender procedure for a new appraiser was discussed. Based on this discussion it was decided to appoint Jones Lang LaSalle (JLL) as new appraiser for the property valuations to be used in the Company’s financial statements. Furthermore amongst other several investments proposals were discussed of which the major part was approved. In the year under review, except for the above mentioned bridging loan, no business transactions took place in which conflicts of interest could have played a role. In case of a conflict of interest, the respective supervisory board member abstains and does not vote on the respective transaction. The Supervisory Board took also the opportunity to meet in the absence of the Management Board to discuss its own functioning and that of the Board of Management. In this context also permanent education was discussed. Various

33

members of the Supervisory Board took part in modules dealing with various subjects, for example in the area of corporate governance. The Supervisory Board was also periodically informed by the Company about national and international property developments and on a frequent basis about developments relating to corporate governance. During 2015 the profile of the Supervisory Board was discussed. The Supervisory Board concluded that the Board in its current composition has the required diversity based on age, expertise, experience and background. In accordance with Dutch law, Geneba aims to have a least 30% of the positions on the Supervisory Board held by women. At present, 20% consists of women. Partly depending on the profile of the members to step down in the future, an assessment will be carried out to determine the required profile of the new members. Naturally the diversity targets, including balance distribution between men and women, will be a factor in such considerations. Under the current rotation scheme, members of the Board are appointed for four years, with possibly extension for another period of four years. The rotation scheme for the coming years is as follows: • 2016: none; • 2017: Mr. G. de Alba, Ms. M. Hogeslag and Dr. J. Scharpe; • 2018: Mr. G. Littel, Mr. J. Stobbe. 9.3. ACTIVITIES OF THE SUBCOMMITTEES IN 2015 The Supervisory Board has incorporated three subcommittees that prepare subjects delegated to them for decision making in the plenary Supervisory Board: Steering & Remuneration Committee, Asset Management Committee and Audit & Valuation Committee. Activities of the Steering & Remuneration Committee This committee was intensively involved in the appointment of a new CFRO. Furthermore performance criteria were formulated for the bonus of the CEO of the Management Board. A bonus proposal in line with the company’s Remuneration Report was made to the Supervisory Board. The Remuneration Report, which is included in the Rights Offering Prospectus can be found on the Geneba’s website. Activities of the Asset Management Committee This committee advised the Management Board and Supervisory Board on the investment proposals made by the Management Board. Furthermore it gave advice on the disposal of the non-strategic assets in the Baltics and Bochum. Activities of the Audit & Valuation Committee As mentioned above, during 2015 there was a change in composition of the Committee due to the temporarily delegation of Mr G. Littel in relation to the leaving of the former CFRO. During 2015 four meetings were held. During these meetings the following regular topics were discussed: the (interim) financial statements, budget, IFRS developments, risk management and cost control, financing and liquidity, the fiscal and legal position, internal control and administrative organisation, integrity, compliance and IT risks. The Committee was furthermore actively involved in the evaluation of the external valuation of the property portfolio including the selection procedure of a new appraiser and the appointment Jones Lang LaSalle. During 2015 the audit partner of PricewaterhouseCoopers rotated. The Chairman of the Audit & Valuation Committee approved the new audit partner proposed by the audit firm. 9.4. FINANCIAL STATEMENTS 2015 We are pleased to present the Annual Report of Geneba Properties N.V. for the financial year 2015, as prepared by the Management Board. The auditors PricewaterhouseCoopers Accountants N.V. have audited the financial statements and will issue an unqualified opinion thereon. We recommend the Annual General Meeting of shareholders to adopt the financial statements in accordance with article 28 of the articles of association of the Company. After adoption of the financial statements, we advise the shareholders’ meeting to discharge the members of the Management Board for the

34

management provided during 2015 and to discharge the members of the Supervisory Board for the supervision of the management exercised during 2015. The members of the Supervisory Board have endorsed the 2015 financial statements on the basis of the statutory obligations pursuant to Book 2, article 101 (2) of the Netherlands Civil Code. 9.5. DIVIDEND PROPOSAL We support the proposal of the Management Board that no dividend will be paid to the shareholders for the financial year 2015 as the Company is in a growth phase. At the Annual General Meeting of shareholders Geneba will put this proposal to the shareholders for approval. 9.6. STAFF Finally we would like to take this opportunity to express our appreciation and gratitude to the Management Board and Geneba’s staff for their efforts and dedication during the year.

Amsterdam, 14 April 2016 Supervisory Board Geneba Properties N.V.

Mr. G. de Alba

Ms. J.M. Hogeslag

Mr. G. Littel

Dr. J. Scharpe

Mr. J.G.H.W. Stobbe

35

10

CONSOLIDATED FINANCIAL STATEMENTS 2015

36

Consolidated statement of financial position As at 31 December before appropriation of the result for the period Note

(In Thousands of Euros)

2015

2014

Assets Non-current assets Investment properties

9

705,838

557,174

Lease incentives

9

498

-552

9

706,336

556,622

Intangible assets

10

79

81

Property, plant and equipment

10

294

230

Deferred income tax assets

18

3,792

-

710,501

556,933

Current assets Trade and other receivables

11

2,083

1,581

Cash and cash equivalents

12

8,568

26,359

Assets classified as held for sale

13

96,456

-

107,107

27,940

817,608

584,873

Total Assets Equity Share capital

14

1,705

611

Share premium

14

254,554

94,452

23,185

-7,120

279,443

87,943

Retained earnings Capital and reserves attributable to the owners of the company Non-controlling interests Total equity

7,876

7,859

287,319

95,802

363,680

334,981

Non-current liabilities Long-term debt

15

Deferred income tax liabilities

18

9,319

9,506

372,999

344,487

Current liabilities Trade and other payables

17

9,292

9,750

Liabilities from acquisitions

9

32,008

-

Shareholder’s loans

15

1,665

58,298

Current portion of long-term debt

15

17,619

60,540

Income tax payable

18

-

706

Derivative financial instruments

16

-

15,290

Liabilities classified as held for sale

13

96,706

-

157,290

144,584

Total liabilities

530,288

489,071

Total equity and liabilities

817,608

584,873

Notes are an integral part of these consolidated financial statements.

37

Consolidated statement of comprehensive income For the year ended 31 December Note

(In Thousands of Euros)

2015

2014 restated

Rental income

20

50,269

32,435

Service charges

20

2,522

38

-

69

Other charges Gross rental income

20

52,791

32,542

Property operating expenses

21

-4,583

-991

48,208

31,551

Net rental income Net adjustment to fair value of: Investment properties

9

-17,717

-8,801

Deconsolidation result

9

9,621

-

-8,096

-8,801

-5,926

-4,496

Net operational expenses

-5,926

-4,496

Operational result

34,186

18,254

Total net adjustments General and administrative expense

22

Finance income

24

51

327

Finance costs

24

-12,759

-13,298

-12,708

-12,971

21,478

5,283

1,829

-4,143

Net finance costs Net result before income tax Income tax expense

18

Net result from continuing operations

23,307

1,140

7,865

-7,606

Net result for the period

31,172

-6,466

Total comprehensive income (loss) for the period

31,172

-6,466

Net result and total comprehensive income (loss) attributable to: Equity holders of the Company Non-controlling interest

30,235 937

-7,120 654

0.37

0.02

From discontinued operations (€)

0.13

-0.25

From net result for the period (€)

0.50

-0.23

Net result from discontinued operations

13

Basic and diluted earnings per share from continuing and discontinued operations, attributable to the equity holders of the Company, based on weighted average number of shares From continuing operations (€)

Notes are an integral part of these consolidated financial statements.

38

25

Consolidated statement of changes in equity

(In Thousands of Euros)

Share capital

Share premium

Retained Earnings

Attributable to shareholders

NonControlling interest

Total Equity

45

255

-

300

-

300

Note

As at 1 January 2014 Share premium contribution

14

-

62

-

62

-

62

Share capital and share premium distribution

14

-45

-317

-

-362

-

-362

611

94,452

-

95,063

7,376

102,439

-

-

-

-

531

531

Dividend payments

-

-

-

-

-702

-702

Net result for the period

-

-

-7,120

-7,120

654

-6,466

Other comprehensive income

-

-

-

-

-

-

As at 31 December 2014

611

94,452

-7,120

87,943

7,859

95,802

As at 1 January 2015

611

94,452

-7,120

87,943

7,859

95,802

Impact of business combination Acquisition of subsidiary

7

Issuance of new shares

14

1,165

160,750

-

161,915

-

161,915

Cost of issue of new shares

14

-

-648

-

-648

-

-648

Cancellation of shares

14

-71

-

71

-

-

-

Acquisition of subsidiary

7

-

-

-

-

135

135

Dividend payments

-

-

-

-

-1,056

-1,056

Net result for the period

-

-

30,234

30,234

937

31,171

Other comprehensive income

-

-

-

-

-

-

1,705

254,554

23,185

279,443

7,876

287,319

As at 31 December 2015

Notes are an integral part of these consolidated financial statements.

39

Consolidated statement of cash flows For the year ended 31 December Note

2015

2014 restated

21,478

5,283

9

17,717

8,801

- Deconsolidation result

9

-9,621

-

- Amortisation of long-term debt

15

163

178

- Depreciation of (in)tangible fixed assets

10

87

35

- Net finance costs

22

12,708

12,971

187

-6,021

(In Thousands of Euros) Cash flow from continuing operations Cash flows from operating activities Net result before income tax Adjustments for: - Loss/(gain) from fair value change on investment properties

Change in working capital and other

11/17

Cash generated from operations

42,719

21,247

-14,582

-11,567

Income tax paid

-2,867

-3,010

Net cash generated from / (used in) operating activities

25,270

6,670

Interest paid

Cash flows from investing activities Acquisitions of subsidiaries, net of cash acquired

7

-13,283

-8,143

Purchase of investment properties

9

-224,700

-3,743

Investments in (in)tangible fixed assets

10

-149

-280

-238,132

-12,166

Net cash generated from / (used in) investing activities Cash flows from financing activities Repayment of long-term debts

15

-105,525

-32,405

Proceeds from new long-term debts / shareholder loans

15

127,025

56,250

Received from issuance of shares, net of costs

14

150,930

-

Liabilities from acquisitions

32,008

-

Dividend to non-controlling interest

-1,055

-702

203,383

23,143

-9,479

17,647

Net cash generated from / (used in) financing activities Change in cash flows from continuing operations Cash flow from discontinued operations Cash flows from operating activities

13

3,696

7,512

Cash flows from investing activities

13

184

11,685

Cash flow from / (used in) financing activities

13

-5,872

-10,885

-1,992

8,312

Change in cash flows from discontinued operations

40

Note

2015

2014 restated

-11,471

25,959

Cash, beginning of period

26,359

400

Cash, end of period

14,888

26,359

Cash and cash equivalents

8,568

18,047

Cash and cash equivalents classified as held for sale

6,320

8,312

14,888

26,359

(In Thousands of Euros) Net (decrease) / increase in cash and cash equivalents

Presentation in the statement of financial position

Total cash as per 31 December

Investing and financing transactions that did not require the use of cash and cash equivalents are excluded from the cash flow statement. The group did not enter into such transactions during 2015 or 2014. Notes are an integral part of these consolidated financial statements.

41

Notes to the consolidated financial statements 1. GENERAL INFORMATION Geneba Properties N.V. (‘Geneba’ or ‘the Company’) was incorporated in the Netherlands by Stichting Oprichting Geneba Properties under the laws of the Netherlands on 11 July 2013.The corporate seat of the Company is in Amsterdam, the Netherlands and its registered office is at Apollolaan 153, 1077 AS in Amsterdam, the Netherlands. Geneba operates and leases, office, industrial and retail properties located in the Netherlands, Germany and the Baltic states. As per 27 March 2014, the Company acquired business from Homburg Invest Inc. (‘HII’) and in exchange shares of Geneba were issued to the former bondholders of HII and to the Catalyst Group. The shares are traded at NPEX in The Hague. The Company is a closed-end investment institution licensed under the Dutch Financial Markets Supervision Act and domiciled in Amsterdam, the Netherlands. The consolidated financial statements have been prepared by the Management Board and are authorised for publication by the Supervisory Board on 14 April 2016. The shareholders have the power to amend the consolidated financial statements after issue. These consolidated financial statements have been audited.

2. BASIS OF PREPARATION The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. STATEMENT OF COMPLIANCE The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“EU IFRS”), and the relevant provisions of Part 9 of Book 2 of the Dutch Civil Code. INCOME AND CASH FLOW STATEMENT Geneba has elected to present a single statement of comprehensive income, presents its expenses by nature and reports cash flows from operating activities using the indirect method. Interest received and paid are presented within operating cash flows. The acquisitions of investment properties are disclosed as cash flows from investing activities because this most appropriately reflects the Company’s business activities. BASIS OF MEASUREMENT The consolidated financial statements have been prepared on a going concern basis, applying a historical cost convention, except for the measurement of • investment property at fair value; • financial assets and liabilities (including derivative instruments) at fair value through income statement, which are recognised at fair value. Unless otherwise stated, the figures are presented in thousands of euros rounded to one decimal place. COMPARATIVE FIGURES As Geneba started its business at the Plan Implementation Date (‘PID’) on 27 March 2014, the comparative figures cover the 12 month period 1 January until 31 December, but only consist of 9 months of operations (27 March 2014 – 31 December 2014). Due to the disposal of the Baltic portfolio (see below) the 2014 have been restated in accordance with IFRS 5.

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DISPOSAL OF THE BALTIC PORTFOLIO The Baltic portfolio is mainly let to and financed by the Swedish Bank SEB. The portfolio was considered to be nonstrategic because of the limitations under the existing agreements with SEB to play an active role on restructuring this portfolio. The Company managed to sign a sale and purchase agreement with an investor for the sale of the Baltic portfolio in December 2015. Geneba obtained the necessary approval of SEB for this sale as part of the change of control clause in the financing agreement. In March 2016 this sales transaction has been completed. As a consequence the Baltic activities are reported as ‘discontinued operations’ in the Consolidated Statement of comprehensive income and as ‘assets and liabilities classified as held for sale’ in the Consolidated Statement of Financial Position as of 31 December 2015. As prescribed in IFRS 5, the 31 December 2014 Consolidated Statement of Financial Position has not been adjusted. In the Consolidated Statement of Comprehensive Income for 2014 and 2015, the net result for the period of the discontinued Baltic portfolio has been presented on a separate line ‘net result from discontinued operations’. The 2014 consolidated statement of comprehensive income has been adjusted for comparability purposes. The 2015 and 2014 consolidated statement of cash flows includes separate cash flows and cash balances of the discontinued business. Further details relating to the discontinued Baltic portfolio is presented in note 15. DECONSOLIDATION DUE TO LOSS OF CONTROL OF GERMAN ENTITY In one of the German assets asbestos was discovered during the financial year 2014, and this appeared to be more severe than expected. Furthermore, the tenant announced that they were not willing to extend the lease contract after 2018. These events resulted in a significant decline in the property’s fair value in 2014. Short-term repair measures for the asbestos were initiated in 2014 and 2015. After discussions with the tenant and the financing bank, Geneba decided to start a voluntary solvency procedure for the entity owning this property, which was granted by the Dutch Court as of 1 December 2015. At this date the court appointed a ‘bewindvoerder’ responsible for the legal entity. Consequently Geneba Properties N.V. has no longer ‘control’ over the German entity. In accordance with the applicable accounting policies the results of this entity until 30 November 2015 have been included in the consolidated financial statements of Geneba Properties N.V. As per 1 December 2015 the entity is no longer part of the consolidated financial statements of Geneba Properties N.V. This resulted in a decrease of the portfolio (compared to the value as of 1 January 2016 of € 9.5 million). FUNCTIONAL AND PRESENTATION CURRENCY Items included in the financial statements of each of Geneba’s entities (together the ‘Group’) are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial information will be presented in euros, which is the Company’s functional currency and the Group’s presentation currency. The only other functional currency used in the operations is the Lithuanian Litas. Lithuania introduced the Euro as per 1 January 2015. Therefore no exchange gain or loss shows up in the statement of comprehensive income. The exchange rate is fixed to the Euro (1 Euro = 3.4528 Litas). USE OF ESTIMATES AND ASSUMPTIONS The preparation of the consolidated financial statements in accordance with EU IFRS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and related assumptions are based on historical experience and various other factors considered appropriate. Actual results may differ from these estimates. The estimates and underlying assumptions are constantly reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The estimates, assumptions and management judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period relate to • The fair value of the investment property; • The fair value of derivatives; • The valuation of income taxes; • The valuation of deferred tax assets and liabilities.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date of which control is gained. A list of subsidiaries is included in chapter 13 of these financial statements. All the Group companies have 31 December as their year-end. Consolidated financial statements are prepared using uniform accounting policies. TRANSACTIONS ELIMINATED ON CONSOLIDATION Intragroup balances and any unrealised gains and losses arising from intragroup transactions are eliminated in preparing the consolidated financial statements. ACQUISITIONS Acquisitions can be either qualified as asset acquisition falling under IAS 40, or business combinations, falling under IFRS 3. The assessment is made based on whether a set of activities is taken over (business combination) or primarily investment property (asset acquisition). BUSINESS COMBINATIONS Geneba applies the acquisition method to account for business combinations. The consideration for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred from the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, at the noncontrolling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at each new acquisition date; any gains or losses arising from such re-measurement are recognised in the income statement. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement. DISPOSAL OF SUBSIDIARIES When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

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OPERATING SEGMENTS Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is the chief executive officer (CEO) and chief financial and risk officer (CFRO) of the Company. INVESTMENT PROPERTY Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the Group, is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. After initial recognition, Investment property is carried at fair value. Investment property under construction is measured at fair value if the fair value is considered to be reliably determinable. Gains and losses arising from changes in fair value are recognised in income statement. The portfolio is appraised every six months (30 June and 31 December) by external valuator who hold a recognised and relevant professional qualification and have experience relating to the location and category of the property being appraised. The fair value is defined as 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. Market values have been determined on the evidence of recent market transactions for similar properties in similar locations to the Group’s investment property. Appraisals require the use of both the conventional method and the net present value method. The conventional method involves valuation based on capitalisation at net initial yields for similar transactions. The net present value method gives an amount derived from the projected cash flows for at least the next ten years and end after ten years an exit value based on a yield. Estimated costs a purchaser will necessarily incur to acquire the property are deducted from the property value. Investment properties that are expected to be sold and that are in very advanced stage of negotiation are valued at the expected selling price. A number of inputs to the valuation process are not directly observable in the market and significantly impact the valuation. Therefore valuations are considered to be Level 3 in the fair value hierarchy. The fair value of investment property reflects, among other things, rental income from current leases and other assumptions market participants would make when pricing the property under current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised. Changes in fair values are recognised in the income statement. Investment properties are derecognised when they have been disposed. Where the Group disposes of a property at fair value in an arm’s length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in the income statement within net gain from fair value adjustment on investment property. An investment property shall be derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to inventories. A property’s deemed cost for subsequent accounting as inventories is its fair value at the date of change in use.

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Acquisitions and disposals of property available for letting are included in the balance sheet as property or designated as sold at the time when the obligation to buy or sell is entered into by means of a signed agreement, at which time the conditions of the transaction can be identified unequivocally and any contingent conditions included in the agreement can no longer be invoked, or the chance that they will be invoked is small, the material risks and benefits associated with the ownership of the property have been transferred and the actual control over the property has been acquired or has been transferred. Upon first recognition, the property is recognised at acquisition price plus costs attributable to the acquisition, including property transfer tax, property agency fees, due diligence costs, and legal and civil-law notary costs, and is recognised at fair value on subsequent balance sheet dates. INTANGIBLE FIXED ASSETS Intangible assets relate to software, which have finite useful lives and are measured at cost less accumulated amortisation and accumulated impairment losses. When software is recognised initially, they are measured at cost. Software is generally amortised on a straight line basis over a period of three years. Amortisation is recognised within the income statement. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of office equipment and computer equipment. Valuation is made at historical cost, after application of depreciation and any impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items and where applicable borrowing costs. Depreciation is applied on a linear basis to profit and loss on the basis of expected length of use and the residual value of the asset concerned. Depreciation is provided from the date the asset come into use. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at least at each financial year-end. The applied methodology of depreciation, length of use and the residual value is assessed at the end of every book year and adapted if necessary. The estimated useful life of the assets is 3-5 year. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the income statement. IMPAIRMENT OF NON-FINANCIAL ASSETS Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and depreciation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. LEASES Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to income statement on a straight-line basis over the period of the lease. Properties leased out under operating leases are included in investment properties. FINANCIAL ASSETS Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to- maturity financial assets and available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair value) in the income statement.

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Financial assets are derecognised only when the contractual rights to the cash flows from the financial asset expire or the Group transfers substantially all risks and rewards of ownership. The Groups financial assets consist of lands and receivables and available for sale financial assets. Financial assets recognised in the consolidated statement of financial position as trade and other receivables are classified as receivables. They are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. Cash and cash equivalents are subsequently measured at amortised cost. Cash and cash equivalents include cash on hand and balances with banks, net of bank overdrafts with a right of offset, and highly liquid temporary money market instruments with original maturities of three months or less. Bank borrowings are considered to be financing activities. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (‘EIR’) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement in finance costs for loans and in general and administrative expenses for receivables. IMPAIRMENT OF FINANCIAL ASSETS The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement. FINANCIAL LIABILITIES Liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss or other liabilities, as appropriate. Financial liabilities consist of trade payables and other payables and corporate income taxes payable. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. All loans and borrowings are classified as long-term debt except if the due date is less than one year. Initial recognition is at fair value less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost. The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one year, discounting is omitted.

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Certain Group companies obtain deposits from tenants as a guarantee for returning the property at the end of the lease term in a specified good condition or for the lease. Such deposits are treated as financial assets in accordance with IAS 39, and they are initially recognised at fair value. The deposit is subsequently measured at amortised cost. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand and balances with banks, net of bank overdrafts with a right of offset, and highly liquid temporary money market instruments with original maturities of three months or less. Bank borrowings are considered to be financing activities. NON-CURRENT ASSTES (OR DISPOSAL GROUPS) HELD FOR SALE Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell unless the assets are investment properties measured at fair value or financial assets in the scope of IAS 39 in which case they are measured in accordance with those standards. CURRENT AND DEFERRED INCOME TAX The tax expenses comprises current and deferred tax. Tax is recognised in the income statement, expect to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case the tax is also recognised in other comprehensive income or equity. The income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Group operates. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. The Group follows the tax liability method for determining income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the carrying amounts and tax bases of specific balance sheet items, especially the valuations of the properties. Deferred tax liabilities are recognised for all taxable temporary differences, except: • When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; • In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: • When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; • In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured based on enacted or substantively enacted tax rates and laws at the date of the financial statements for the years in which these temporary differences are expected to reverse, and adjustments are recognised in earnings as they occur.

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Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same tax authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial assets and liabilities are classified as financial assets at fair value through profit or loss (held for sale). The sole purpose of the derivative financial instruments contracted by the Group is to cover interest rate risks arising from operating, financing and investing activities. The Group does not hold any derivatives for trading purposes. It does not apply hedge accounting in accordance with IAS 39. Recognition of the derivative financial instruments takes place when the economic hedging contracts are entered into. They are measured initially and subsequently at fair value; transaction costs are included directly in finance costs. Gains or losses on derivatives are recognised in the profit or loss in net change in fair value of financial instruments at fair value through profit or loss. EQUITY Share capital is classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Dividend distribution to the Company’s shareholders is recognised as a liability in the consolidated financial statements in the period in which the dividends are approved. The Company measures the non-controlling interest at the non-controlling interest’s proportionate share of the acquiree’s identifiable assets and liabilities. LONG-TERM DEBTS Long-term debt is initially recognised at fair value less directly attributable transaction costs. After initial recognition, long-term debt is subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the consolidated statement of comprehensive income when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR calculation. The amortisation is included in interest expense in the combined statement of earnings and comprehensive earnings. The fair value adjustment of the SEB loan recognised at PID is amortised over the period of the loan and recognised in the consolidated statement of comprehensive income as amortisation of long-term debt. EMPLOYEE BENEFITS DEFINED CONTRIBUTION PLANS Geneba only has a defined contribution plan for one of its employees as per year-end (2014: three). Other employees do not have a pension scheme. A defined contribution plan is a pension plan under which Geneba pays fixed contributions into a separate entity. Geneba has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For the defined contribution plan, Geneba pays contributions to a privately administered pension insurance plan on a contractual basis. Geneba has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. PROVISIONS Provisions for legal claims are recognised when: • The Group has a present legal or constructive obligation as a result of past events; • It is probable that an outflow of resources will be required to settle the obligation; and • The amount can be reliably estimated.

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Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost. Where the Group, as lessee, is contractually required to restore a leased property to an agreed condition prior to release by a lessor, provision would be made for such costs as they are identified. This was not applicable in 2014 and 2015. REVENUE RECOGNITION Revenue includes rental income, and service charges and management charges from properties. The Group’s management has determined that all leases with its various tenants are operating leases. Rental income from operating leases is recognised on a straight-line basis over the lease term. When the Group provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straight-line basis, as a reduction of rental income. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income. Incentives for lessees to enter into lease agreements are spread evenly over the lease term, even if the payments are not made on such a basis. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the directors are reasonably certain that the tenant will exercise that option. Service and management charges are recognised in the accounting period in which the services are rendered. When the Group is acting as an agent, the commission rather than gross income is recorded as revenue. Amounts received from tenants to terminate leases or to compensate for overdue maintenance are recognised in the statement of comprehensive income when the right to receive them arises. GENERAL AND ADMINISTRATIVE EXPENSES Expenses include legal, accounting, auditing and other fees. They are recognised in profit or loss in the period in which they are incurred (on an accruals basis). FINANCE INCOME AND EXPENSE Interest income and expense are recognised within `finance income’ and `finance costs’ in profit or loss using the effective interest rate method (EIR), except for borrowing costs relating to qualifying assets, which are capitalised as part of the cost of that asset. The Group has chosen to capitalise borrowing costs on all qualifying assets irrespective of whether they are measured at fair value or not. The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, Geneba estimates cash flows considering all contractual terms of the financial instrument (for example, pre-payment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

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4. CHANGES IN ACCOUNTING POLICIES The following new standards, amendments to standards and interpretations relevant to Geneba are applied for the first time for the financial year beginning 1 January 2015. (A) CHANGES IN ACCOUNTING POLICIES Geneba did not change its accounting policies. (B) NEW AND AMENDED STANDARDS ADOPTED BY GENEBA The following standards have been adopted by Geneba and its subsidiaries (‘the Group’) for the first time for the financial year beginning on or after 1 January 2015: IFRIC 21, 'Levies', sets out the accounting for a liability to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognised. The Group is subject to levies which are paid annually and therefore the impact on Group's annual financial statements is not material. Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2015 are not applicable to the Group. (C) NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ISSUED BUT NOT YET ADOPTED BY GENEBA A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of Geneba, except the following set out on the following page: Amendments to IFRS 10, IFRS 12 and IAS 28 (effective for financial years starting on or after 1 January 2016). The amendments concern the consolidation of or by an investment entity and the application of the equity method by a non-investment entity to an investment entity. The Group does not expect the amendments to affect the presentation, notes or financial results of the Group; IFRS 15 Revenue from Contracts with Customers (effective for financial years starting on or after 1 January 2018). The standard contains guidelines for recognising turnover from contracts with customers. The Group does not expect application of the standard to have any material impact on the presentation, notes or financial results of the Group; IFRS 16 Leases (effective for financial years starting on or after 1 January 2019). This new standard, published on 13 January 2016, describes how both financial and operating lease contracts must be recognised. Investigation into the impact of this new standard still needs to be concluded. There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

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5. FINANCIAL RISK MANAGEMENT The risk management function within the Group is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Group is exposed during or at the end of the reporting period. Financial risk comprises market risk (including valuation risk and interest rate risk), credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. Risk management is carried out by the Management Board as part of the Policies & Procedures of the Company approved by the Supervisory Board. The Management Board provides written principles for overall risk management, as well as written policies covering specific areas, such as, interest rate risk, credit risk and investing excess liquidity. Risks are constantly monitored and quarterly risks reports are prepared by the Management Board and discussed with the Supervisory Board. 5.1. MARKET RISKS Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group’s market risks mainly arise from price risks (valuation risks) and risks due to interestbearing assets and liabilities, to the extent that these are exposed to general and specific market movements. Management sets limits on the exposure to interest rate risk that may be accepted, which are monitored on a quarterly basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements. Sensitivities to market risks included below are based on a change in one factor while holding all other factors constant. In practice, this is unlikely to occur, and changes in some of the factors may be correlated - for example, changes in interest rate and changes in valuations. 5.2. INTEREST RATE RISKS The assets and liabilities of the Group (including the mortgages secured by the Group’s properties) have fixed and floating interest rate components resulting in an exposure to interest rate fluctuations. These fluctuations in interest rates will have an impact on the earnings of the Group. Increases in interest rates generally cause a decrease in demand for properties. Higher interest rates and more stringent borrowing requirements, whether mandated by law or required by banks, could have a significant negative effect on the Group’s ability to sell any of the Group’s properties. As a result, the Group’s financial results and condition or operating results could be materially adversely affected. As part of the risk management procedures Geneba implemented strict monitoring of the interest rate movements by the finance director and quarterly reporting in order to manage positions for short- and long-term financing. Management analyses the Group’s interest rate exposure on a dynamic basis. Various scenarios are simulated, taking into consideration refinancing, renewal of existing positions and alternative financing sources. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. The simulation is done on a quarterly basis to verify that the maximum potential loss is within the limits set by management. If interest rates had been 100 basis points higher as per 31 December 2015, with all other variables held constant, net result before tax for the year would have been € 0.2 million lower. If interest rates had been 100 basis points lower with all other variables held constant, net result before tax for the year would have been € 0.2 million higher. Reference is made to note 15.

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The following table classifies the loans based on floating and fixed interest rates: (In Thousands of Euros)

Value as per 31 December 2015

Value as per 31 December 2014

21,265

133,996

361,809

339,446

-110

-19,623

382,964

453,819

Floating interest rate Fixed interest rate Fair value adjustments loans Total The effective average interest rate in 2015 amounted to 3.4% (2014 5.0%). 5.3. CURRENCY RISKS

The Group conducts its business only in Euros. For the financial year 2014 Lithuania Litas was used with a fixed rate (Litas 1 = € 0.2896) to the euro. As per 1 January 2015 Lithuania has introduced the Euro, so the Group does not bear exchange rate risks anymore. 5.4. PRICE RISKS (VALUATION RISKS) The Group has no exposure to price risks of equity securities or commodities. It is exposed to property price risk or property valuation risk. Reference is made to note 6 and note 9. 5.5. CAPITAL RISKS Geneba’s objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders; and to maintain an optimal capital structure to reduce the cost of capital. Part of the risk management procedure is to formulate a funding plan by the Management Board in order to be able to finance the growth of the portfolio. Geneba monitors capital on the basis of loan to value and the gearing ratio. The LTV decreased from 83% in 2014 to 59% in 2015. This decrease was mainly due to the disposal of the Baltic portfolio and deconsolidation of the German entity. New acquisitions have been financed at an LTV of 50%-60%. The gearing risk ratio is calculated as net debt divided by total capital. Net debt is calculated by Geneba as total borrowings less cash and cash equivalents. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus net debt. The gearing ratios at 31 December 2015 and at 31 December 2014 were as follows: 2015

(In Thousands of Euros)

Total borrowings

2014

382,964

453,819

Liabilities from acquisitions

32,008

-

Less: cash and cash equivalents

-8,568

-26,359

Net debt

406,404

427,460

Total equity

279,443

87,943

Total capital

685,847

515,403

59,3%

82.9%

Gearing ratio

53

For the borrowings from third parties covenants are in place which are constantly monitored by the management of the Group. These covenants mainly relate to LTV and ICR minimum requirements which need to be reported to the banks on a quarterly basis. As per 31 December 2015 all covenants are met. 5.6. CREDIT AND CONCENTRATION RISKS Concentration of tenants may adversely affect Geneba’s financial performance. If for any reason Geneba is unable to collect rents from one or more of its key tenants, Geneba’s revenues and its ability to pay the property costs associated with the relevant property and the valuation of the related property could be materially adversely affected. Due to new acquisitions in 2015 and the effective disposal of the Baltic portfolio Geneba reduced the concentration risk. Nevertheless Geneba still has a concentration risk which in turn results in a high credit risk, vacancy risk and valuation risk: • Exposure to risk of its largest tenant (Germany), 46% of portfolio, 54% of total rent, (2014: 62% of portfolio, 59% of rent); • Exposure to risk of its second largest tenant (Germany) 9% of portfolio, 10% of total rent; • Baltic portfolio (in 2015 classified as held for sale), 11% of total portfolio, 14% of total rent (2014 second largest tenant: 15% of portfolio, 18% of rent). In order to manage these risks Geneba is in close contact with its tenants and monitors credit risks with help of rating agencies (Moody’s, Standard Poor, Graydon, Crediform Group) and tries to reduce the concentration risk by diversifying its portfolio. The Group has policies in place to ensure that rental contracts are entered into only with lessees with an appropriate credit history. Currently we have no material accounts receivable outstanding and we have not identified any material credit risks with our major tenants. The credit ratings of our tenants with a high concentration risks are triple B and A+. Geneba’s maximum exposure to credit risk by class of financial asset other than derivatives and rental guarantee is as follows: 2015

(In Thousands of Euros)

Rent receivables Other financial assets Cash and cash equivalents

2014

284

184

99

637

8,568

26,359

The Group holds a majority of its cash accounts in a single financial institution. However as this financial institution has a credit rating of Aa2 (Moody’s), the credit risk is considered limited.

5.7. LIQUIDITY RISKS Liquidity risk mainly relates to the possibility of insufficient debt and equity available to refinance the current and longterm debts as they come due and to fund, the future growth of Geneba. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Geneba aims to maintain flexibility in funding by keeping a minimum level of cash or committed credit lines equal to one year of operating costs available. Risk control measures are set and implemented, and mainly consist of the elaboration of a financing strategy and bank policy by the Management Board and detailed cash flow projections including the finance requirements.

54

Geneba liquidity position is monitored on a weekly basis by the management and is reviewed quarterly by the Management Board and reported to the Supervisory Board. A summary table with maturity of financial assets and liabilities is presented below. As at 31 December 2015 (In Thousands of Euros)

Assets Trade and other receivables

No