General overview for investors in Hungary s Real Estate market

General overview for investors in Hungary’s Real Estate market During the past 25 years, the dynamics of the real estate market were determined by gen...
Author: Elijah Jackson
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General overview for investors in Hungary’s Real Estate market During the past 25 years, the dynamics of the real estate market were determined by general economic conditions in Hungary. Significant and long-lasting GDP growth started in 1997 and lasted until 2007. Since major real estate segments (office, retail, logistics) operated on a nonmarket basis before 1989, the changes resulted in significant improvements in this sector. A large number of existing major properties lost their former function and became idle, while large scale new and modern properties entered the market. As Hungary transformed into a market economy, the real estate market matured to reach western standards. In the aftermath of the crisis and despite limited international interest on the part of large REITs and major institutional investors in Hungary’s property market, many attributes in the sector low rents and the highest returns (in CEE comparison), and a shortage of new developments promise remarkable growth potential in the future. Sentiment data show prime yields in the range of 7.10%-7.25% for offices, 9.00%-9.25% for logistics, and 7.00%-7.50% for shopping centres. Corporate real estate investment volume increased by 11% year-on-year in the third quarter in Hungary, slightly under expectations, but still above the CEE average of 6%. The year 2015 seems to be significant in terms of transaction volume, although much more intense activity is anticipated in the second half of the year. Total transaction volume is expected to exceed the figure for 2014 by 20-30%. Transaction market activity was dominated by Hungarian investors, although foreign investors are showing increasing interest and are expected to realise more transactions in 2015. Demand for retail properties slightly decreased by the end of 2014 due to changes in legislation in the retail sector.

OFFICE MARKET The total stock of Budapest office space (including owner-occupied and speculative buildings) reached 3,277,949 sqm in the last quarter of 2015. Total modern office space equals 2,615,634 sqm of ‘A’- and ‘B’- category speculative office buildings and 662,315 sqm of owner-occupied buildings. In the first 3 quarters of 2015, gross take-up totalled 377,080 m2, reflecting growth of 8.1% over the same period of 2014. Sixty-four percent (64%) of this volume was made up of new leases, expansions, pre-leases and owner occupations, whereas the share of renewals reached only 36%. Net take-up totalled 241,750 m2, which indicates a 29% increase over the same period of 2014.

BUDAPEST MODERN OFFICE STOCK (M2) 4 000 000 3 500 000

24,00%

3 000 000

22,00%

2 500 000 2 000 000

18,00%

1 500 000

16,00%

1 000 000

14,00%

500 000

12,00%

0 2010

2011

2012

2013

2014

2015

2016

10,00%

Owner Occupied Stock Speculati ve Stock Vacancy

20,00%

After a long period of stagnation, an overall increase in average asking rents was first measured in the second half of 2015. In addition, most landlords offer lower incentives, which results in an even higher increase in effective rents. Asking rents in the latest new developments and pipeline projects are quoted at EUR 12.50-14.00, but more than 56% of properties are offered for the same asking rents as in the past year. Total new completions in 2016 are expected to equal 90,100 sqm in 6 buildings. Demand for the green certification of new and existing buildings continued to grow; 25% of total stock is certified already, covering 49 buildings and 10 certified leased areas. The total certified volume has increased rapidly in the past four years, equalling 866.700 sqm, compared to 100.000 sqm in 2011. Based on the opinion of credible real estate market players, due to continuous ageing and a permanent shortage of new space, potential future demand will not be adequately satisfied if the construction pipeline remains at the current level. This will leave a sizeable gap in the market and signal a new era for needed quality developments and unique solutions.

RETAIL MARKET The retail market experienced the most significant changes in structure and volume among all segments, with the entry of new retail types onto the market, which appeared throughout Hungary in the form of shopping centres, hypermarkets, DIY stores, thematic stores, supermarkets, discount stores etc. over a very short time. Almost all modern types of retail property appeared and expanded until 2008. Following the years of 2008 and 2009, the retail market in Hungary stabilised during 2010 as market players adjusted to the changed conditions. According to the Hungarian Council of Shopping Centers, total shopping centre space in 2015 remained 2,068,000 sqm, and the supply pipeline for new retail space remains fairly muted. Budapest represents more than 31% of total modern shopping centre space in Hungary.

BUDAPEST SHOPPING CENTRE STOCK (M2)

New Supply Existing Stock

1 000 000 900 000 800 000 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 2010

2011

2012

2013

2014

2015

2016

2017

As there are no projects under construction, new supply will remain at zero in 2015 and 2016. The next delivery is scheduled for 2017, when Futureal is to launch the Etele City Centre project in 2016 H1 with ca. 45,000 sqm GLA. Mundo has overhauled its shopping centre plans at Bosnyák tér (Budapest) (ca. 45,000 sqm GLA), but no clear development/opening schedule has been published. Development activity is still moderate in all retail segments; sporadic new hard-discount store, and thematic store developments were completed during the past year. Occupier demand remains healthy, with a growing number of international mass-market and high-end operators actively looking for space in key high street locations and in the best performing shopping centres. Typical monthly rental rates in shopping centres fall in the range of 20-65 EUR/sqm, 20-65 EUR/ sqm in high streets, 5-8 EUR/sqm in retail parks and 15-20 EUR/sqm in outlet centres.

INDUSTRIAL/LOGISTICS MARKET As most of the brownfield industrial sites were inadequate for modern production and logistics purposes, a high number of modern industrial sites was built over the past 25 years. Almost every larger city established new industrial and logistics parks. In 2014, more than 220 industrial parks existed in Hungary. The highest volume of modern industrial/logistics property is located in Budapest, although Győr and Kecskemét (due to stable demand generated by the large automotive industry) are also important industrial locations. The total area of these speculative properties in Budapest is 1,842,310 sqm, with 10% of properties accounting for premium quality city logistics. One building has been excluded from the segment of speculative properties, which was sold to an end-user. Construction activity – similarly to other market segments – is low; one 5,000 sqm new built-to-suit unit is expected to enter the market in 2015.

BUDAPEST MODERN INDUSTRIAL/LOGISTIC STOCK (M2) 1 900 000 1 850 000 1 800 000 1 750 000 1 700 000 1 650 000 1 600 000 1 550 000 1 500 000 1 450 000 0

23,00%

13,00% 8,00%

New Supply Existing Stock Vacancy %

18,00%

3,00% 2008

2009

2010

2011

2012

2013

2014

2015

Occupier demand significantly increased during the past year. Vacancy rates compared to the 2014 YE figure decreased by 3.4% and stand at 15.7% in 2015 Q3 – the lowest figure since 2008. The decrease is due to the lack of new developments and last year’s active occupier market. The highest proportion of take-up represented by new leases equals 58%, remaining practically unchanged compared to the previous year. The share of pre-leases increased to 15%, while the share of expansions declined to 27%. Key market players forecast market rent increases in the midterm for modern property. The most successful submarket is city logistics, with low fluctuation, stable rental fees, and low and decreasing vacancy levels. It is difficult to find appropriately sized, quality areas for new tenants, as large vacant and contiguous areas are not available on the market. Despite improving market fundamentals, developers are still not willing to launch speculative projects. Few new developments are made only for built to suit tenants in existing logistics parks.

TOURISM AND HOTEL MARKET Tourism is clearly one of the leading economic sectors in the world, which is effectively illustrated by its contribution of about 9% to the global GDP. The sector has shown a continuous increase ever since the economic recession in 2009, with the number of international tourist arrivals reaching 1,138 million in 2014 according to the statistics of the UNWTO, which equals a 4.7% increase compared to the previous year. The UNWTO forecasts continued growth in tourism in 2015, with an expected 3-4% y-o-y growth rate. At a global level, the most visited region is Europe, accounting for over half of international tourist arrivals. In 2014, the number of international arrivals in Europe increased by 4% and is expected to grow further by 3% to 4% in 2015. According to the WTTC, tourism is the 5th most relevant economic sector in Europe in terms of GDP impact.

VOLUME OF TOURISTS IN HUNGARY (2008-2014) 5,8%

5,3%

5,4%

5,0%

20 000 000

-5,0%

15 000 000 10 000 000

-15,0% 2008

2009

2010

2011

2012

2013

2014

Change in %

5,4%

accommodation establishments

4,5%

Number of guest nights spent In commercial

-6,3%

25 000 000

The positive trends are reflected in the Hungarian tourism sector as well: the inbound tourism volume shows an uninterrupted increase over the past five years. The number of guest nights spent in Hungarian commercial accommodation establishments exceeded 24 million nights in 2014, representing a 5.4% growth over 2013 and a dynamic improvement of roughly 30% over the year 2009. According to the latest data, further growth is expected for 2015, with the number of guest nights reaching 10.45 million in the first half of the year, equalling an increase of 5.7% compared to 2014 H1. The most visited region in Hungary is the Budapest - Central Danubian Region accounting for about 38% of total guest nights spent in the country (as of 2014). Over 20% of total guest nights are registered in the Balaton Region, while Western Transdanubia – a region famous for thermal spas and medical services – attracted more than 11% of guests.

GROSS ROOM REVENUES OF HOTEL ESTABLISHMENTS IN HUNGARY, BILLION HUF (2008-2014)

Gross Room Revenues of Hotel Establishments

180 160 140 120 100 80 60 40 20 0 2008

2009

2010

2011

2012

2013

2014

Average hotel occupancy was also highest in the Budapest - Central Danubian Region with 62.2% in 2014, which is over 10% higher than the national average (51.8%). The second best performing region in terms of hotel room occupancy rates was Western Transdanubia, performing slightly under the Hungarian average with 50%, while the hotel units of the Balaton Region had an average room occupancy rate of 49.3%. The gross room revenue of hotel establishments was in line with dynamically growing demand, and increased 50.3% to reach HUF 167.1 billion in 2014, and continued to rise in 2015 H1, with a remarkable 11.6% compared to 2014 H1.

BUDAPEST Budapest is the most visited destination of the country, accounting for almost 41% of total guest nights (about 8.1 million in 2014) spent at Hungarian hotels and tourist accommodation establishments. According to a recent publication, Budapest is the 6th most popular city break destination in Europe, due to its vast offerings, cultural heritage, exciting gastronomy, quality of hotels and buzzing nightlife. There were a total of 192 hotel units operating in Budapest in June 2015, with a total of 18,758 hotel rooms. 4-star hotels have the largest share, accounting for about 50% of all rooms, showing a continuous increase. As the market seems to have revived recently, and demand has shown sustained growth, developers, operators, investors and financiers show increased interest for new projects in Budapest. There are new hotel openings in the pipeline in the following 1-2 years – mainly 3, 4 and 5-star affiliated and independent projects in the central parts of the city.

NUMBER OF GUESTS AND GUEST NIGHTS SPENT IN COMMERCIAL ACCOMMODATION ESTABLISHMENTS IS BUDAPEST, 2008-2014 10 000 000 8 000 000

Number of Guests

4 000 000 2 000 000

Number of Guest Nights

6 000 000

0 2008

2009

2010

2011

2012

2013

2014

Statistics by category show that 4-star hotels registered a total of 3.8 million guest nights in 2012, indicating an increase of 62.4% compared to 2008. Demand for 5-star establishments was quite steady, with the top category realising 1.4 million guest nights in 2012, up by 8.4% compared to 2011. Total growth in demand in Budapest equalled 5.4% y-o-y in 2013 and this positive trend continued in 2014 and 2015 as well. The capital accounted for 8.15 million guest nights in 2014, indicating a sustained 2.5% increase in hotel guest nights compared to 2013, while the mid-term outlook continues to be encouraging, projecting growth of nearly 9% in 2015. The highest occupancy and average daily rates can be observed in the 5-star category (occupancy: 75.8%, ADR: EUR 117.4 as of 2014). In the 4-star segment, average occupancy was lower but still above the Budapest average (68.9%), while the ADR was EUR 52.6. The 3-star segment was characterised by an average occupancy of 62.5% and an ADR of EUR 34.6. Upon closer evaluation of the rates, hotels in downtown Budapest (District V) have traditionally over-performed market averages by a good 18-24% in terms of occupancy and over 50% with regard to ADR. The Budapest hotel market witnessed further dynamic growth in terms of key performance indicators in the first half of 2015. ADR increased by 5.2%, while REVPAR increased by 17% in the first 9 months of the year, suggesting strong growth for this year.

Positive factors contributing to the rise in demand include the continued increase in passenger volume at Liszt Ferenc Airport. By surpassing forecasts and expectations, with 85 available scheduled flights to Budapest, 9.15 million passengers used the airport in 2014, indicating an increase of 7.5% compared to 2013, with 85 scheduled flights to Budapest. This tendency seems to continue in 2015. In June there were 11.8% more registered passengers (999,297) than in the same period of 2014. The advent of new airlines (Emirates) and new routes (e.g. Toronto) is a sign of sustained growth, and with targeted marketing, it will make its mark on the hotel scene. The upturn in the hotel and tourism market in Budapest, accompanied by a sustained price increase, has encouraged both foreign and domestic investors to explore development possibilities at all levels. Amongst new developments, the new presence of Ritz Carlton (scheduled to open in the summer of 2016) has fuelled hotel operators’ and investors’ appetite for luxury products in the Hungarian capital.

THERMAL, HEALTH AND MEDICAL TOURISM Health and medical tourism is one of the strongest subsectors of Hungarian tourism, which is popular with both foreign and domestic travellers. This is enhanced by the international recognition of the destination. As a result, Hungary is considered to be the fifth strongest health and medical destination in the world following Japan, Iceland, Italy and France. This is mainly because of Hungary’s excellent geographical location, the outstanding quality of thermal waters and abundant geothermal resources. Currently there are 137 cities and towns involved in some way in health and medical tourism and 14 of them have a medical class rating. In addition, Hungary has 77 qualified baths, more than 30 medical hotels and 113 wellness and spa hotels.

SHARE OF TOURISTIC REGIONS BASED ON NUMBER OF GUEST NIGHTS

4%

4%

Budapest and Central Danubian Region

1%

Lake Balaton

6%

Western Transdanubia 38%

8%

Northern Hungary Northern Hungarian Plains Southern Hungarian Plains

8%

Central Transdanubia Southern Transdanubia Lake Tisza 11%

20%

Around 61% of the total commercial accommodation capacity and 79% of hotels are located in these 137 cities. This strong concentration is reflected by demand as well – 90% of foreign guest nights and 68% of domestic guest nights were spent in the commercial accommodations of these cities and towns in 2012. Health and recreation were not the only motivation for travel, as many of these cities have other tourist attractions (cultural, natural, business etc.), medical tourists account for a large share of guest volume. Medical tourism is also considered to be one of the most important tourism subsectors based on the high performance of medical hotels. In 2014 the share of medical hotels increased further, accounting for 7.6% of total hotel guest arrivals (566,275 arrivals) and 11.0% of total hotel guest nights (2,019,948 nights). Medical hotels achieved an average room occupancy of 61.9% in 2014 (19.5% higher than national average occupancy in the hotel sector) and 10.9% higher REVPAR; they were characterised by lower seasonality and a remarkably longer average length of stay than in the hotel segment in general (3.6 nights versus 2.5 nights). In addition to domestic tourism, the largest feeder markets of medical hotels in 2013 were Germany (accounting for 25.4% of total foreign guest nights spent in medical hotels), Russia (21.6%), Austria (9.2%), the Czech Republic (5.8%) and Israel (3.9%). The share of neighbouring Romania, Slovakia and Ukraine ranged between 2-3%. International demand is supported greatly by Hévíz Airport, with a continuous increase in the number of flights and the number of available destinations. The number of passengers at Hévíz Airport increased by almost 18% y-o-y in 2014, accounting for about 33,000 passengers.

MANSION HOTELS Another important feature of the Hungarian tourism industry is the mansion hotel segment. These hotels usually offer a wide range of leisure activities, with a strong focus on recreational, medical and spa services. In 2012, approximately 87,000 tourists visited the mansion hotels of Hungary, with a total of 193,000 nights spent and HUF 1.419 billion (EUR 4.7 million) revenue generated. Although the mansion hotel segment is significantly lagging behind spas and the 5-star hotel segment, as a result of a stronger relative increase in demand, we expect a brighter future for mansion hotels compared to other segments.

WHY INVEST? • There is a sizeable gap in the market, signalling a new era for potential quality developments and unique solutions. • By investing in real estate, the highest returns can still be realised in the CEE region. • The retail sector has seen the arrival of luxury type vendors like Louis Vuitton, Armani etc. • Increasing rental demand for quality office space is yet to meet adequate supply. • A high investment appetite for quality income generating products meets limited supply. • According to the forecast of the World Health Organisation, health and medical tourism will become one of the leading sectors of the world economy by 2022. • Hungary is considered the fifth strongest health and medical destination in the world due to its excellent geographical location, outstanding quality of thermal waters and abundant geothermal resources. • The volume of tourism shows a continuously increasing trend since 2009 both in Budapest and in rural areas of Hungary, contributing to solidly performing hotels year in, year out. • The hotel market has shown double digit growth in visitation and REVPar this year. • There is an increasing number of investors eyeing the market, with strong preference for upscale/luxury hotels. • In Budapest there are still available spots in the city centre for hotel development and currently there is sufficient operator interest and available financing for hotel projects. • Improving image and increasing popularity of Budapest as a city-break and as a medical tourism destination. • Availability of highly skilled experts (e.g. physicians and doctors) improves the profitability and lowers the risk of medical tourism investments. • There are a number of seasonal destinations in provincial Hungary that could support the development of new hotels and resorts.

CONTACT DETAILS BDO Hungary, Hotel and Real Estate Services Ltd. +36 1 235 3010 [email protected] www.bdo.hu 1103 – Hungary, Budapest, Kőér street 2/a., Laurus Offices, Building C

BASIC PROJECT DATA

EcoDome Office building The Living Office SHORT DESCRIPTION Vacant land – with office building project. The new Ecodome Office Building offers high quality, LEED Platinum certified offices, providing 4,946 sqm gross lettable area and 90 underground parking spaces. The building provides a highly liveable environment on the Buda side of the city, with a breath-taking panoramic view from the upper floors. As a result of the wide development experience, conscious and consequent planning, the maintenance of EcoDome will be highly cost-efficient.

Funding requirement

EUR Sector Project owner Location Implementation period Overall Budget of the Project Investment need

9M

Real Estate B&L Estates Real Estate Investment Ltd. www.rockwoodholding.com/ecodome District 1, 13 Mészáros str., 2/a Pálya str., 1012 Budapest, Hungary Completion: 15-16 months from the start of construction. EUR 9 million Based on selected options: 1. Finance (possible as a partner) the development of the project: EUR 1-2 million 2. Pre-Lease the project from 1,500 up to 4,900 sqm 3. Sale when completed: EUR 12 million

I. PROJECT BACKGROUND Introduction to the Project owner B&L Estates Real Estate Investment Ltd. is an active player in the Hungarian real estate market and has significant experience both in commercial and residential projects. The owner has been involved in luxury residential developments in central Budapest, five star leisure projects in the countryside of Hungary and has substantial experience in the field of facility management. Key People: • Bálint Erdei, Chief Executive Officer B&L Estates Real Estate Investment

II. PROJECT DESCRIPTION Ecodome will be the ultimate unique and efficient green office building investment in Budapest, in an especially prestigious location in Central Buda. It will be ideally suited as a headquarter building operating with customised solutions The projected building is located in the Central Buda side of Budapest, in close proximity to Déli Pályaudvar (railway station) and an M2 metro station The Buda Boulevard (Alkotás street), Krisztina ring road and Déli Pályaudvar are all nearby. Mészáros street is directly connected to Lánchíd (the Chainbridge), making central Pest (CBD) easily accessible through the Várhegy (Castle Hill) tunnel. The M1 and M7 motorways are also readily accessible. The Ecodome Office Building offers high quality and environmentally conscious offices for companies requiring a liveable environment in Buda, together with a breath-taking panoramic view from the upper floors. The office areas are planned to be very bright in the modern-looking building thanks to the optimal depth; furthermore, they are able to satisfy bigger office needs on one floor of up to 1000 sqm. As a result of the consequent planning and long term development experience, the maintenance of EcoDome will be highly cost-efficient. A LEED certification with a “Platinum” score is planned.

Why invest

Target groups

• Central Buda is a prestige office building location. • Sustainable (LEED) certification competitive market advantage.

provides

• Low service charge level is very favourable for potential buyers. • No similar projects are in progress in the catchment area.

Competitive advantages • Central Buda is a prestige location for small and modern office buildings • The building will be installed with the most advanced green technologies, and will ensure low service charges, attractive for both potential occupiers and investors • A New building with an existing building permit that determines building shape but also provides the option of built to suit solutions for tenant needs

Property rights, licenses certifications • Final building permit, • LEED Platinum Classification, • 100% property rights.

Current position in the market – expected share “A” office segment, limited competition in the future.

Large multinational companies, law firms or start-ups looking for an office building in a good location and green environment for their HQ.

Short market description, main competitors As the current office development pipeline is very tight in Budapest, and market occupancy has grown remarkably in the past year, no primary competition is expected for the project. The building has few secondary competitors (existing office buildings in the Buda area), and the majority of which provide significantly larger, older, less flexible spaces, generally with higher service charges, and lack a sustainable certificate, which already is a must for new office buildings.

Key strategic partners (included: involved in project finance): • Major Hungarian banks (financial side), • Jones Lang LaSalle and Robertson (BNP Paribas Real Estate) (real estate side).

Key risks and measures to prevent risks market risk – relatively small building does not result in a significant increase in total stock, moreover, there is very limited new supply in the pipeline.

III. FINANCIAL INDICATORS Assumptions and main indicators Proposed income levels: The estimated/targeted average office lease is EUR 13/sqm/month. Construction cost: approximately EUR 9 million (including land cost) EBITDA Gross Potential Income is projected to be in excess of EUR 771,500/year from the second year of operation of the completed building. IRR, NPV (based on current market levels): • Yield 7.25%-9.8% based on selected option • Estimated Market Value : EUR 12 million (when completed)

Quantitative and Qualitative Indicators QUANTITATIVE INDICATORS Revenues / year 2015

Not relevant (development phase)

Mid-term revenues/year expectation

Gross Potential Income is projected to be in excess of €771,500/year (stabilized) from the second year of operation of the completed building

Mid-term market penetration expectation (%)

N/A

Available owner’s resources /available funds

property(land) ownership, project building permit, LEED certification

plans,

QUALITATIVE INDICATORS poor

adequate

Elaboration level

X

Existing client relations

X

Level of sectorial/market competition*

X

Owner’s background (market presence, experience)

X

Management background (knowledge, experience)

X

Level of innovation in the Project idea /Added value

X

Risk management plan

X

* poor = high competition

high

IV. INVESTMENT OFFER Required amount of investment

Based on negotiation with the project owner, see various forms of investment • Finance the existing project, EUR 1-2 million. Estimated return: 9-10% / year, in 24-36 months; • Leasing (pre-leasing) of the completed project, rate: 13 EUR/sqm /month + VAT 1,500 sqm - 4,900 sqm

Form of investment

• Invest in the completed project, EUR 12 million + VAT. Estimated return: 7.25% Guaranteed profit / estimated return

7.0-18.0% based on selected investment type

Estimated exit time

Approximately 36 months

Proposed capital/equity structure: • Based on the form of investment. • Equity/loan structure based on financing negotiations

Investment schedule: see above Proposed exit policy: • Subject to negotiations. Sale as completed and fully let in an approximately 36 month period.

CONTACT DETAILS MR. BÁLINT ERDEI, Chief Executive Officer B&L Estates Real Estate Investment Kft. + 36 30 999 1482 [email protected] www.rockwoodholding.com/ecodome

BASIC PROJECT DATA

Dózsa Office Complex - Landmark office building

Sector Project owner Location Implementation period

Investment need

Overall Budget of the Project

SHORT DESCRIPTION The Dózsa Office Complex consists of an eight-story landmark office project totalizing 41,000 sqm above ground, divisible in two separate phases of comparable size. The conceptual design was delivered by the internationally renowned London based Foster + Partners and the Budapest based TIBAA Studio. The office building targets marketleading, international corporations, looking for an opportunity to headquarter their activity in an efficient and exceptional “built to suit” office building.

Funding requirement

EUR

9-100 M

Real Estate Maxima III Kft. District 13, Dózsa György út 144-148, Budapest, Hungary • demolition works completed, • building permit to be filed on demand of tenant, • building permit documentation design phase: five months, • permitting process: five months. based on selected option: • Finance (possible as a Partner) the development of the project: EUR 25-50 million • Invest in the completed project: EUR 50-100 million • Acquire the development project (land+planned project): EUR 9-18 million • Leasing the completed project, from 5.000 up to 41.000 sq m EUR 9-100 million

I. PROJECT BACKGROUND Short decsription The Dózsa Office Complex project is managed by Codic (www.codic.eu ) CODIC International S.A. is a real estate developer of multi-functional projects, business parks, shopping centers, offices, and houses in Europe. It develops projects in Belgium, France, Luxemburg, Hungary, Romania. The company was founded in 1970 and is based in Brussels, Belgium.

Key People • Christophe BOVING MRICS, general Manager of Codic Hungary Kft. • Pál SZILVÁSI MSc in RE, Project Manager

II.

PROJECT DESCRIPTION

The plot is located along the important Dózsa György street which preserved well its “boulevard” character in comparison to the noisier Váci street, which it crosses at 300 meter distance only. The projected eight-story Dózsa Office Complex has a strong architectural identity and curved shapes. It is organized around a circular courtyard in the center that will remain accessible by visitors and customers, through openings between and a large gate in the surrounding buildings. The complex is planned to be divisible in two ownerships and in occupancies of flexible sizes, ranging from a few thousand to a total of 41,000 sq m. A BREEAM certification with an „Excellent” score is planned. The project has reached the stage of final concept and scheme design. The Building Permit request will be filed and tailored to suit tenants or investors’ demand.

Actuality The project disposes of a zoning plan that was tailored to fit the conceptual design delivered by Foster + Partners. The site has been cleared from all encumbrances and offers now to market- leading, international corporates a unique opportunity to headquarter their activity in a landmark, “built to suit” office project with a Foster + Partners signature, in the heart of the beautiful capital of Hungary.

Why invest? • Landmark building concept by Foster + Partners in a quality location and environment. • Various cooperation forms at investor’s preference. • Level of achievable profit (and risks) are based on the selected investment type. • Possibility to phase the development.

Competitive advantages • An opportunity of financing at an attractive rate and in safe conditions: Codic as a 50% quota holder is an international developer with an impressive track record and has proven in its 45 years of activity to be a perfect reliable borrower. • An opportunity to invest in a landmark project designed by Foster + Partners (Reichstag in Berlin, WTC towers in new York), at values which are without doubt the most competitive around the world and include high potential capital gain on top of already attractive immediate yields. Good leasing outlooks since recent office developments in the immediate surroundings of the building demonstrate very high leasing ratios within one year after completion. • An opportunity to lease office space in this landmark project that are 20% to 30% lower than in buildings of comparable standard and signature in other CE capitals.

Property rights, licenses, certifications • Approved Zoning Plan tailored to project, • Approved preliminary design documentation by the Environmental Authority. Current position in the market – expected share Prime office segment, limited competition in the future.

Target groups Big corporations looking for an emblematic building in a strategic location and green environment for their HQ.

Short market description, main competitors The inner “Váci corridor” has become the most preferred business location of many international corporates and the strongest growing office submarket of the city in the last years, both in terms of development and take-up. Within this submarket and even to extend of the city of Budapest, this project will come on the forefront in terms of standard and architectural signature. Competition and reference projects location wise are: Capital Square (95 % leased), Green House (98% leased), Vision Tower (80% leased), V17 (80% pre-leased, under construction).

Key strategic partners (included: involved in project finance) Financial institutes, investors and developers.

Key risks and measures to prevent risks Market risk – exclusive architecture to reach high added and time proof value has been initiated in the form of a master and conceptual plan, approved by the Administration.

III.

FINANCIAL INDICATORS

Based on form of investment, subject to negotiations with project owner

Proposed income levels

•The estimated/targeted average office lease is EUR 14/sqm/month + VAT.

EBITDA on equity (from construction start)

•N/A (data will be provided by project owner).

IRR, NPV (based on current market levels)

•Yield: 7-8% •ROI of 15% on development/investment and much more later on potential capital gain

Quantitative Indicators Revenues / year (first full year of operation)

Approx. EUR 5 million

Mid-term revenues/year expectation (stabilized year)

Approx. EUR 7.3 million

Qualitative Indicators poor

adequate

Elaboration level

X

Existing client relations

X

Level of sectorial/market competition*

X

high

Owner’s background (market presence, experience)

X

Management background (knowledge, experience)

X X

Level of innovation in the Project idea /Added value Risk management plan

X

IV.

INVESTMENT OFFER

Required amount of investment

• Based on negotiation with the project owner, see various forms of investment

Form of investment

• Finance the existing project, EUR 25 million + VAT / 20,000 sq m phase (two phases in total). Estimated return: 5-6% / year, in 36 months; • Invest in the completed project, EUR 50 million + VAT / 20,000 sq m phase (two phases in total). Estimated return: 7-8% / year; • Acquire the development project (land+planned project), Sale Price EUR 9 million + VAT / phase, (two phases in total); • Leasing (pre-leasing) of the completed project, at rate of EUR 14/sq m /month + VAT, 10,000 sqm - 40,000 sqm

Guaranteed profit / estimated return • 5-8% based on selected investment type Estimated exit time

Minimum 36 months

Proposed capital/equity structure

•Based on the form on investment. •Equity/loan structure based on financing negotiations.

Investment schedule

•Subject to negotiations.

Proposed exit policy

•Subject to negotiations.

CONTACT DETAILS MR. CHRISTOPHE BOVING MRICS, general Manager of Codic Hungary Kft. +32 49 627 9222 [email protected] www.codic.eu

BASIC PROJECT DATA

3* Congress Hotel

Sector Location Implementation period Operator search Raising bank financing Construction Overall Budget of the Project Bank financing

SHORT DESCRIPTION Unique opportunity to develop a 3* Business Hotel with 125 rooms in Budapest. The hotel will be located within 200 metres of the new Budapest Congress Centre. It will include meeting facilities, fitness room, wellness centre and restaurant.

Funding requirement EUR

3.5 M

(representing 100% of Equity) Tourism District IX, Vágóhíd Street, Budapest 30 - 36 months 4 - 8 months 4 - 8 months 18 - 24 months EUR 7 million EUR 3.5 million

I. PROJECT BACKGROUND The project owner is a project company created to successfully implement the 3* Congress Hotel project. For the required EUR 3.5 million investment, the project owner would sell 100% shares representing full ownership of the project company, in possession of development rights. The owners signed a contract with KRAFT & Associates – Tourism Development

(www.kraftassociates-td.com) to prepare the Business Plan and the financial projections for the project. KRAFT & Associates is also responsible for the hotel operator search. Several international hotel chains have expressed interest.

II. PROJECT DESCRIPTION This is a unique investment opportunity to develop a 3* business hotel in Budapest, ideally located within 200 metres of the planned new Budapest Congress Centre. The future hotel is located close to several important cultural sites, such as the Hungarian National Theatre (www. nemzetiszinhaz.hu) and the Palace of Arts (www.mupa.hu). Several office complexes have been built in the neighbourhood with major international tenants such as Morgan Stanley, Vodafone, IBM and Nestlé. The dynamically developing District IX attracts increasingly more business and leisure tourists, creating growing demand for a branded hotel. This hotel could become one of the first – if not the first – internationally branded hotels in the close vicinity of the planned Congress Centre. The hotel is planned to feature 125 guest rooms, meeting facilities on 130 m2, an 80 m2 fitness centre, breakfast area and private parking facilities.

The project planning and preparation phase (including operator search, obtaining necessary permits and raising bank financing) is expected to be completed within 12 months while construction will take approximately another 18-24 months after that. Once an investment decision is made, the new hotel could be in operation within 30-36 months.

WHY INVEST? In general, the growing Budapest market justifies the advent of new hotels in town and those, located in upcoming or mature areas of town – for example the broad vicinity of the development - will see successful and sustained operation going forward. As per the assessment of the project’s status, the future investor can take over a project that is ready for development and in possession of development rights. The hotel will benefit from the adjacent conference centre, driving substantial demand for the subject hotel, which until the advent of additional properties will be the only branded property in the area.Even beyond the opening of other hotels, it can remain a good price value proposition with a sustained position and solid income stream.

COMPETITIVE ADVANTAGES • Forthcoming development of the Budapest Congress Centre with a capacity of 4-5,000 people • Limited competition in the area • District IX is a dynamically developing district • Easy access to Liszt Ferenc International Airport (17 km) • Proximity to the Palace of Arts (www.mupa.hu) • Proximity to the National Theatre (www.nemzetiszinhaz.hu) • Significant presence of multinational companies • Proximity to Budapest’s largest open air club (www.budapestpark.hu) • Sufficient parking facilities • Good accessibility and high profile visibility from all directions • Efficient public transportation

PROPERTY RIGHTS, LICENCES, CERTIFICATIONS The project developer owns the 1,250 m2 project site. A set of architectural plans for the project were prepared in 2014 and are available for evaluation; it is understood that the final concept will be prepared in conjunction with the selected international hotel operating company to comply with the relevant brand standards and specifications. In terms of any building permit, there has been an initial building permit issued for an earlier concept, which has now expired, but once the new scheme has been finalised it can be re-issued within 6 months.

CURRENT POSITION IN THE MARKET – EXPECTED SHARE The project aims to fill a market niche for a business hotel in the vicinity of the future Budapest Congress Centre. The Budapest Congress Centre is an approximately EUR 80 million development, which will be financed from government funds and is planned to open in 48 months (2018-2019). For the realisation of the multi-thousand seat congress centre, the Government of Hungary has issued a governmental decree under registry number 1359/2014 (dated 30 June 2014), regarding many major developments and identifying the tasks and the deeds to be performed by the government commissioner assigned to manage ‘Large scale development projects in Budapest’. Since the surrounding area is home to many international companies with their headquarters located in the various office complexes along Soroksári út, and with easy access to the city centre, the area will attract a significant number of leisure and business tourists.

TARGET GROUPS Business travellers, attendees of conferences and other events held in Budapest Congress Centre, visitors of cultural events.

SHORT MARKET DESCRIPTION, MAIN COMPETITORS According to current market trends, there is a growing demand for international conferences in Budapest. Based on the number of international conferences held in Budapest, the city is ranked 9th in Europe while Hungary is the 18th most preferred conference and meetings destination in Europe (Source: www.iccaworld.com). In 2013, there were 1,017 international conferences held in Hungary (Source: www.turizmus.com). The number of conferences is expected to see an immediate and significant increase once the Budapest Congress Centre enters the market, driving substantial demand for quality hotels in the city.

MAIN COMPETITORS:

It must be noted that until the advent of another internationally branded hotel in the area, the subject property will be the only quality hotel in the area. Even beyond this point, it can remain the key midscale product offering a competitive price value proposition to its customers.

• Ibis Budapest Aero Hotel (www.ibis.com) • Mercure Budapest Duna (www.mercure.com) • Leonardo Budapest (www.leonardo-hotels.com) • In terms of future supply, there are currently no announced projects in close proximity.

III.

FINANCIAL INDICATORS

ASSUMPTIONS AND MAIN INDICATORS KRAFT & Associates – Tourism Development lead by its CEO Dr Péter Kraft (Vice President and Country Manager of the American Express Hungarian Subsidiary 1990-1997 and Tourism Secretary of Hungary 1999-2000) prepared the financial projections of the project.

MAIN INDICATORS Year 1

Year 2

Year 3

Year 4

Year 5

125

125

125

125

125

Number of Rooms Average Daily Rate (ADR) (in EUR)

41

42

43

44

45

Occupancy Rate

55%

57%

60%

63%

63%

Revenue per Available Room

22

24

26

28

29

(RevPAR) (in EUR)

QUANTITATIVE AND QUALITATIVE INDICATORS QUALITATIVE INDICATORS All figures in EUR

Year 1

Year 2

Year 3

Year 4

Year 5

Sales (1000)

1,509

1,609

1,739

1,880

1,935

EBITDA (1000)

479

526

573

649

656

Free Cash Flow (1000)

212

65

129

208

249

IV.

INVESTMENT OFFER

Required amount of investment

EUR 3.5 million (representing 100% Equity)

Form of investment

Cash

THE INVESTED CAPITAL (EUR 3.5 MILLION) WILL GENERATE AN INTERNAL RATE OF RETURN (IRR) OF 13 %.

NEARBY BUILDINGS

Office Towers (Infopark)

National Theatre

CONTACT DETAILS MR. KRISZTIÁN BELLON, Project Manager +36 20 446 0801 [email protected] MR. AMBASSADOR PÉTER KRAFT, CEO +36 20 938 0737 [email protected] www.kraftassociates-td.com

ÖLTÖZŐ

RUHATÁROLÓ

23,79 m2

10,22 m2

TAKSZER 3,92 m2

ÖLTÖZŐ 24,12 m2

100 210

gazdaságili 100 2125

RAKTÁR 6,91 m2

RAKTÁR 12,24 m2

HULLADÉK 6,52 m2

gazdasági lépcső KÖZLEKEDŐ 37,72 m2

MOZGS. WC 6,20 m2

főlépcső

MELEGÍTŐ KONYHA 36,18 m2

WC

100 2125

BEVILÁGÍTÓ UDVAR

6,12 m2

100 210

100 210

100 2125

személyliek

WC

6,12 m2

ELŐCSARNOK 131,47

m2

RECEPCIÓ 11,68 m2

POGGYÁSZ 3,96 m2

ÉTTEREM 150,88 m2

BASIC PROJECT DATA

4*Branded Lifestyle Select-Service Hotel

Sector Location Implementation period Operator search Raising bank financing Construction Overall Budget of the Project Bank financing

SHORT DESCRIPTION Unique opportunity to develop a 4* internationally branded upmarket select service, lifestyle hotel with 140 to 143 rooms in Budapest. The proposed hotel will be l cated in close proximity to the city’s upscale promenade, Andrássy út, which is home to an array of luxury boutiques, in a very convenient location close to major sights.

Funding requirement

EUR

4M

(50% equity) or EUR 7.8 million (100% equity) Tourism Budapest, 6th District, Nagymező utca 18-22 months 4-6 months 2–4 months 16–18 months from the availability of financing EUR 13,6 million Up to EUR 9.5 million – subject to equity input

I. PROJECT BACKGROUND Short background The project owner, Rockwood Real Estate Ltd., is an SPV created for the NM38 hotel project. The owners of the company are active players in the Hungarian Real Estate scene, and have gained substantial experience in commercial and residential projects.

II. PROJECT DESCRIPTION This is a unique investment opportunity to develop a 4* internationally branded upmarket select service, lifestyle hotel in Budapest, located at Nagymező utca 38., a frequented area with small pubs and bars, running into Andrássy út, which provides a great opportunity for shopping, as world renowned brands (Louis Vuitton, Gucci, Armani, Burberry, etc.) have opened stores there, thus enhancing the overall recognition of the area as an upmarket and trendy hub. The future hotel is situated close to several important cultural sites, such as the Opera (www.opera.hu), the Music Academy (www.zeneakademia.hu), the Thalia Theatre (www.thalia.hu) and the Operetta Musical Theatre (www.operettszinhaz.hu). The site is located in a convenient and ideal destination for both business and leisure travellers, serviced by excellent infrastructure; the Metro, bus and tram lines make the various parts of downtown easily accessible. The hotel is planned to feature up to 143 guest rooms (133 standard and 10 deluxe rooms), small but compact meeting room/boardroom facilities on 50 m2, a 91 m2 recreational area (including a small-sized pool/whirlpool/sauna and fitness centre), a breakfast area, a 24/7 grab’n’go style outlet, a spacious bar lounge area and underground parking facilities. For the subject project, depending on the proposed investor’s consideration, either 50% and equity partnership or full ownership is available, when the current owner will hand over the building site, preliminary concept plans, other documents and all the necessary official permits needed for construction.

WHY INVEST? The 6th District is a classic example of a diplomatic district and, through Andrássy út, a frequented area of Budapest, it attracts more and more business and leisure tourists, thus creating growing demand for a branded hotel. This hotel could become one of the first internationally branded lifestyle hotels in Budapest’s downtown hotel sector. In general, the growing market justifies the advent of new hotels in the heart of the city, and one could foresee successful and economically viable operation going forward especially in the lifestyle sector, which is currently under-serviced in Budapest. Based on the assessment of the location and future market environment, the property has the potential to become one of the leading city centre upscale hotels in Budapest. The hotel will immediately be able to compete head-to-head with its competitive set and, by representing a unique product mix and design, could outperform some hotels located in the area.

Competitive advantages • • • • • • • •

Managed by an International Hotel Company Central location next to Andrássy út with excellent accessibility ‘Lifestyle’ hotel, new, contemporary design and layout Fresh and unique design, making the property stand out from the crowd High quality materials, continuous refurbishment due to larger FF&E reserve Immediate surrounding offering a variety of activities, adjacent to high-end shopping lettings Good accessibility on foot, by car or via public transport Efficient public transportation

Property rights, licenses and certificates The 1,190 m2 project site is owned by the developer. A set of architectural plans for the project have been prepared and are available for evaluation, yet it is understood that the final concept has to be prepared in conjunction with the selected international hotel operating company to comply with the relevant brand standards and specifications.

Current position in the market and expected share The future hotel will be able to capitalise on a gap between the mainstream hotels of the existing four- and five-star hotels and to remarkably differentiate itself due to its design-savvy and trendy development approach accompanied by the proposed strong brand message provided by the future operator.

Target groups They include leisure and business segments, including FIT guests, leisure groups, MICE and corporate guests. The most significant market segment will be independent travellers (FIT). The property will also attract an element of demand from the centrally located core five-star branded hotels, and mainly FIT and corporate clients who are seeking new experience.

Short market description, main competitors According to current trends, there is a growing demand for Budapest, and continuous demand and rate improvement characterise the market since 2009. In terms of occupancies, the average of commercial accommodation establishments in the 6th District was 69.6% in 2014, which is substantially higher than the city’s average, and even hotels of good quality were able to outperform this indicator by 10% to 15%, which justifies any hotel development in the area. As the market seems to have revived after the economic crisis, there are new hotel openings in the pipeline for the following years. The new development projects are concentrated in the central parts of the city, including three-, four- and a few five-star hotel projects.

Main competitors Overall, it can be said that there is no ideal competitive set for the future hotel. Hotels of relevance include primarily four-star properties situated in central Budapest, complemented by two five-star properties. • • • • • • • • • • • •

Iberostar Grand Hotel Hilton Budapest City Mamaison Hotel Andrássy Art’otel Budapest Lánchíd 19 Design Hotel Zenit Budapest Palace Continental Hotel Budapest NH Budapest City Courtyard by Marriott Radisson Blu Béke Hotel Budapest MGallery Hotel Nemzeti In terms of future supply, there are some announced projects that can be relevant regarding the proposed hotel: Hotel Ária, Zara Hotel Prestige and Andrássy A8.

III.

FINANCIAL INDICATORS

Assumptions and main indicators BDO Hungary Hotel and Real Estate Services Ltd. prepared the financial projections of the project.

Main indicators year 1

year 2

year 3

year 4

year 5

Number of rooms

143

143

143

143

143

Average Daily Rate (ADR) (in EUR)

71

73

75

78

80

58 %

62%

67%

71 %

75%

41

45

51

56

60

Occupancy Rate Revenue per Available Room (RevPAR) (in EUR)

Quantitative and qualitative indicators Qualitative indicators All figures in EUR ‘000

Year 1

Year 2

Year 3

Year 4

Year 5

Total Revenues

1,937

3,179

3,561

3,877

4,184

299

656

835

981

1,121

EBITDA

IV.

INVESTMENT OFFER

Required amount of investment

EUR 4 million (50% equity) or EUR 7.8 million (100% equity)

Form of investment

Equity participation/Full takeover

CONTACT DETAILS MRS. ÁGNES ZÁSZLÓS +36 30 600 7868 offi[email protected] www.rockwoodholding.com

BASIC PROJECT DATA

Zala Springs Golf Resort SHORT DESCRIPTION The project is a complex development programme consisting of various facilities. A new, luxury 5-star hotel with spa, villas, apartments, and the first RTJ II golf course in CentralEastern Europe to comply with the highest international standards, will all be constructed in Hévíz - Zalacsány. The project owner has already started part of the investment and seeks investors only for the implementation of the luxury hotel and the spa.

Funding requirement

EUR

36 M

(hotel and spa facilities)

Sector Project owner Location

Implementation period Investment offer

Tourism (wellness, recreation) SGHBIRDIE Ltd. Zalacsány is 200 km, about a one hour forty minute drive from Budapest, and 200 km or two and a half hours drive from Vienna. The Resort is only 10 minutes from Hungary’s second largest international Airport, co-owned by the Promoter, 5 minutes from Hévíz and a 15-minute drive from Lake Balaton. It is located in the centre of a famous wine and thermal region. 18 months The project owner seeks an investor solely for the hotel and spa elements where 100% of the hotel and spa will become the investor’s property.

I.

PROJECT BACKGROUND

The project was conceived and initiated by an Irish consortium in 2005. The investment reached its initial phase, but the investors froze the project due to the economic crisis. The 160-hectare project site was purchased by the current project owner in 2013. In March 2013, the development restarted. The 9-hole golf course opened on the 1st of April 2014 while the 18-hole championship Robert Trent Jones Jr. golf course and the state of the art clubhouse will be completed by July 2015.

General background of the management Mr. Gábor Széles is one of the best-known and acknowledged businessmen in Hungary. He holds the position of being the 4th wealthiest person in Hungary in 2014 (Forbes). His major enterprises include Ikarus bus manufacturing and the electronics company Videoton Holding Zrt. His media portfolio includes a daily newspaper and a nation-wide TV channel. GáborSzéles was Chairman of the National Association of Manufacturers for 18 years.

II.

PROJECT DESCRIPTION

Zala Springs Golf Resort will be a unique destination with golf, hotel, spa and residential elements, since it is expected to be the single championship golf course in Central-Eastern Europe that complies with the highest standards required to host international golf tournaments. It is expected to raise demand among golf lovers not only from Hungary, but also from the international golf community. International golf tournaments are expected to be organized here from 2016. Zala Springs Golf Resort is strategically located close to the thermal spring and wine tourist region around Lake Balaton, which will make it a popular tourist destination. The hotel and spa development is part of a complex project consisting of the following facilities: • a 5-star luxury hotel and a connected spa building • 600 residential apartments and villas for sale • an 18-hole Robert Trent Jones Junior golf course The project owner seeks investors only for the hotel and spa project element. The hotel is planned to have an interior space of 10,500 m2 and 200 rooms. The spa is planned to be 3,000 m2. There are four thermal wells drilled on site with the relevant permits available to utilize the natural hot thermal water in the spa.

WHY INVEST? Zala Springs Golf Resort will be a unique spa and golf complex with an exclusive golf course designed by Robert Trent Jones II. It is also strategically located close to Lake Balaton and surrounded by a popular thermal and wine region. The project will strengthen the image of Hungary to become an internationally acclaimed “Paradise of Thermal Springs”. The exceptional golf and spa theme with the 5-star luxury hotel and the villas will make this project a remarkable location among Central-Eastern Europe spa and golf tourism destinations. The complex will be situated on 160 hectares surrounded by a beautiful natural landscape.

Competitive advantages Zala Springs Golf Resort will be located in the wellness region of Hungary with excellent amenities and luxury services. There is a high demand for quality services not just from international but also from domestic tourists. The golf course will satisfy international standards thus it will welcome large international golf tournaments. A few additional advantages are as follows: • proximity to an international airport (Hévíz–Balaton Airport) co-owned by the Promoter • proximity to the spa town of Héviz and also Lake Balaton, one of the most popular domestic tourist destinations in Hungary • the Zala Springs product concept, which aims to deliver international 5-star standards • the diversity of activities to be provided at Zala Springs Golf Resort will attract visitors from various target markets • natural hot thermal water available on site (with four wells already permitted and drilled) • the presence of international brands (i.e. the international golf course developer brand Robert Trent Jones Jr.)

Property rights, licenses and certifications the 160-hectare project site is the property of the project owner.

Current position in the market The project is a greenfield development, which aims to be the highest standard golf course in Hungary with an exceptional luxury hotel and spa.

Target groups Wellness, spa and golf lovers, business travellers. After Budapest, the Balaton region is the second most visited tourism destination in Hungary, generating 20% of total guest nights of the country with an average occupancy rate of 49.3%. Tourists from the key golfing nations, namely Germany and Austria, are the primary markets for the Balaton Region and are directly connected to the region by air. Further opportunities to attract visitors from Scandinavian countries (also golfing countries) are being explored.

Short market description, main competitors According to current market trends, there is an increasingly strong demand for 4 and 5-star hotels in Hungary. The highest average daily rates (ADR) experienced in the 5-star luxury hotel segment were EUR 112 in 2014, which is expected to grow further in the coming years. Demand related to spas and medical hotels has also increased steadily and is responsible for 11.6% of total guest nights. In order to reduce seasonality in the golf and sport tourist segment, Zala Springs Golf Resort intends to enter the Meetings, Incentive, Conference and Exhibitions (MICE) market combined with the spa and medical tourism segment. The MICE market in Hungary is rather large with approximately 28,000 conference related events each year. The hotel complex with its state of the art and unique amenities and golf course will be unmatched in the Central-Eastern European region and targets mainly international tourists. The region of Zala is famous for its springs and bathing culture but lacks the complex services to be offered by Zala Springs Golf Resort. The main competitors, therefore, are only the thermal hotels of Budapest, Hévíz, Bük and Sárvár.

III.

FINANCIAL INDICATORS

Assumptions and main indicators All figures in EUR

year 1

year 2

year 3

year 4

Number of rooms Average Daily Rate (ADR) Occupancy

year 5

200

200

200

200

200

220

220

220

220

220

30%

40%

45%

55%

55%

Revenue per available rooms (RevPAR)

66

88

99

121

121

Revenue from hotels in total revenues

69.14%

69.14%

69.14%

69.14%

69.14%

Quantitative and qualitative indicators Quantitative indicators All figures in EUR

year 1

year 2

year 3

year 4

year 5

Sales

10,452,273

13,936,364

15,678,409

19,162,500

19,162,500

EBITDA

3,174,505

4,232,673

4,761,757

5,819,925

5,819,925

After tax operating cash flow

3,034,054

3,938,645

4,383,076

5,271,937

5,271,937

IV.

INVESTMENT OFFER

Required amount of investment

EUR 63 million

Form of investment

100% of the hotel and spa

CONTACT DETAILS MR. TAMÁS BENKÓCS + 36 30 934 7184 [email protected] www.zalasprings.hu

BASIC PROJECT DATA

Premium Health Park Kapuvár

Sector Project owner Location

Implementation period Investment offer

SHORT DESCRIPTION Construction and operation of two hotels (a 5-star hotel with 200 rooms and a 4-star hotel with 200 rooms), a 50-apartment medical village and a complex therapeutic and spa centre. Total development area is 500,000 m2.

Funding requirement

EUR

63 M

Tourism (medical) Kaputherm Ltd. Kapuvár is located 15 km from the Austrian border, 100 km from Vienna and 170 km from Budapest. It is an internationally well-known location for vascular patients due to its unique carbon-dioxide baths and medical services. 24 months 90% of the company through capital increase amounting to EUR 63 million

I.

PROJECT BACKGROUND

Short background The project company was set up by private investors and is supported by the local municipality in a written agreement. This provides a safe business environment for the potential investor from legal aspects and ensures an efficient and pro-active support to the investment.

General background of the management The management of the project have a wide range of experience with local and international projects. Mr. Sándor Kiss-Mihály, CEO is a well-known and respected local opinionleader. Mr. György Sztranyák was senior engineer at the construction of the National Health Centre in Baku, Azerbaijan and also worked on construction projects in Dubai. Dr Károly Salamon was chairman and CEO of Allianz Hungária, the largest insurance company in Hungary. Currently he is chairman and CEO of the insurance company of the MKB Bank Group.

II.

PROJECT DESCRIPTION

The aim of the project is to develop a ‘health park’ in Kapuvár including a 5-star and a 4-star hotel, a medical bath and an apartment complex with 50 units. Each hotel consists of 200 rooms and all buildings and facilities are located within a 50 hectares area. The Premium Health Park provides unique services such as medical water treatments, carbonic acid gas bath therapy, hydrotherapy, electrotherapy and other local special therapies along with auxiliary medical activities. The successful operation and overbooked carbon-dioxide treatments at the Angiological Department of Kapuvár Hospital and Clinic show that Kapuvár is internationally known among vascular patients. Besides the recreational and wellness services, the Health Park offers different sports activities (such as horse riding, tennis and swimming) and facilities suitable for conferences and cultural events.

WHY INVEST? • Kapuvár has wide international recognition in curing vascular diseases. The “miracle of Kapuvár” reflects the reputation deserved by the Kapuvár Hospital with the use of carbon-dioxide bath therapy and carbonic acid snow to treat circulation and respiratory diseases. Over past decades, nearly 30,000 patients were treated and healed with the therapy, which is also acknowledged by the Hungarian Cardiology Institute. • According to the forecast of the World Health Organisation, health and medical tourism will become one of the leading sectors of the world economy by 2022. Hungary is considered to be the fifth strongest health and medical destination in the world due to its excellent geographical location, outstanding quality of thermal waters and abundant geothermal resources.

Competitive advantages Carbon-dioxide baths have a centuries old tradition, which goes back even to Roman times. Kapuvár is an internationally known medical centre among vascular patients who are willing to stay for even 2 to 3 weeks to receive a full therapy. The state-owned Kapuvár Hospital provides the skills and expertise necessary for these unique therapies. Capacities at the Kapuvár Hospital are not sufficient to satisfy the increasing demand leading to constant overbooking. There are no similar investments known in the surrounding area that would be able to offer high quality accommodation and carbon- dioxide treatment in one place. Demand for these medical services is both fromthe domestic market and from the neighbouring countries. The demand for medical therapies surpasses the capacity of hospitals. Geothermal treasures provide a unique basis for medical tourism.

Property rights, licenses and certifications Licenses related to the utilisation of thermal water and the carbonic acid gas bath therapy used at the local hospital are held by the project company.

Current position in the market The project is a green field investment opportunity, which aims to be an internationally recognised spa and medical centre themed around the certified cardiovascular healing effects of carbon dioxide baths and therapy.

Target groups Patients with arterial diseases. There are approximately 400,000 vascular patients in Hungary, 60to 70 million in Europe and tens of millions globally. Demand for artery disease treatments is ever increasing from all social groups including elderly people from developed countries who are looking for premium services and accommodation when booking a treatment.

Key strategic partners The municipality of Kapuvár provides the project company with essential support ensuring the local regulatory background, and is committed to the developments targeting health care and tourism. State-owned Kapuvár hospital provides the skills and expertise for the unique therapies. The workforce is planned to be recruited from the medical staff of the hospital.

Short market description and main competitors

The main competitors are the thermal hotels of Budapest, Hévíz, Bük and Sárvár.

Location Budapest 5-star thermal hotels Aquincum Hotel

Hévíz

Other

4-star thermal hotels Danubius Health Spa

Danubius Health Spa Resort Aqua Danubius Thermal Hotel Hévíz

Lotus Therme Hotel

Budapest Danubius Hotel Gellért Resort Helia Danubius Health Spa Resort Margitsziget

III.

Greenfield Hotel Golf & Spa, Bükfürdő Danubius Health Spa Resort, Sárvár Danubius Thermal and Sport Hotel, Bükfürdő Hunguest Hotel Répce Gold, Bükfürdő

FINANCIAL INDICATORS Assumptions and main indicators

All figures in EUR

year 1

year 2

year 3

year 4

year 5

5-star hotel

200

200

200

200

200

4-star hotel

200

200

200

200

200

5-star hotel

110.9

110.9

110.9

110.9

110.9

4-star hotel

87.2

87.2

87.2

87.2

87.2

5-star hotel

40.0%

45.0%

50.0%

55.0%

60.0%

4-star hotel

40.0%

45.0%

50.0%

55.0%

60.0%

5-star hotel

44.4

49.9

55.5

61.0

66.5

4-star hotel

34.9

39.2

43.6

48.0

52.3

60.1%

66.6%

73.9%

73.9%

73.9%

Number of rooms

Average Daily Rate (ADR)

Occupancy

Revenue per available rooms (RevPAR)

Revenue from hotels in total revenues

Quantitative and Qualitative Indicators All figures in EUR Sales

year 1

year 2

year 3

year 4

year 5

11,675,869

11,856,270

11,870,003

13,050,404

14,230,804

EBITDA

7,606,439

7,551,760

7,430,415

8,475,737

9,521,058

After tax operating cash flow

6,738,515

6,692,585

6,590,655

7,468,725

8,346,795

IV.

INVESTMENT OFFER

Required amount of investment

EUR 63 million

Form of investment

90% of the company through capital increase amounting to EUR 63 million

CONTACT DETAILS MR. GYÖRGY SZTRANYÁK +36 30 446 6400 MR. SÁNDOR KISS-MIHÁLY +36 20 964 9362 [email protected]

BASIC PROJECT DATA

Saloc Inernational Spa & Golf Resort

Sector Project owner Location

Implementation period Overall budget of the project

I.

SHORT DESCRIPTION 179 hectares of beautiful undulating land with planning for over 900 units of real estate and a 254 bedroom Hotel. Thermal/Calcium spa with Medical and Wellness Centre plus Golf, Tennis, Riding, Cycling, swimming pools etc.

Funding requirement

EUR

20 M

Up to 80% of the company through capital increase

Wellness and Leisure Saloc International Kft. Egerszalok – situated 1hr 10 mins northeast of Budapest, within 5 kms of the historic city of Eger and the famous wine growing region of Hungary. Population in excess of 11 million people live within a 3hr drive of the resort. 7 years EUR 150 million

PROJECT BACKGROUND

Company was formed to acquire the land to build a world class Wellness and Leisure resort. Project was conceived by a group of Hungarian and UK developers who saw the potential of utilising the benefits of the Thermal Calcium waters located in Egerszalok to create an international golf and leisure resort. The board of Directors are experienced in development, tourism and leisure with expertise in Sales and marketing and have dealt with resorts of this kind and therefore able to bring a truly international resort to Hungary.

II.

PROJECT DESCRIPTION

WHY INVEST? Saloc International, with its unique Thermal waters, will create not just a leisure complex but a medical and Wellness centre – which will be staffed by top professional worldwide consultants. Martin Jensen (as CEO) has development experience in the UK, Romania and the Ukraine and owns other properties in Hungary. David Hodgson, one of the Saloc directors, has previously worked with the HNTO on Spa and Golf products over the last 10 years and helped to promote Hungary’s great medical footprint. Saloc’s considered partnership with RCi (the Wyndham Group) and International Property investment consultants across the globe will be bringing a unique marketing model which has a proven success worldwide. Two of the Board members also own www.eurobrix.com a successful Central and Eastern European property portal which is translated into 17 different languages. This will be a major source of advertising and PR with over 750,000 visitors a month to the site. The Resort will consist of a 4 Star, 254 Bedroom Hotel with Calcium Spa and 18 Hole Golf Course with practice range. 900 unit mixed development of Villas, Townhouses and Apartments. The owners seek investors to develop the project and there are also opportunities via our investment platform offering joint venture options on serviced plots, which will provide significant high returns on investment. Saloc International, although in the final stages of planning, has been selling units off-plan via a unique investment model to a worldwide client base which includes investors from Brazil, Lebanon, Dubai, Saudi, France and China – proving that we can attract a truly international client. With the unique Calcium Thermal Waters, with its known therapeutic qualities, the area is already attracting over 250,000 day visitors per year to the local spas. The owners have achieved the stage where final building permits are ready to be granted, by funding all expenditure to date from own resources and therefore have no bank borrowings.

Competitive advantages Are emphasised by the uniqueness of the Calcium waters with its proven Therapeutic qualities the ONLY Calcium Thermal waters in Europe located in the wine growing regions of Hungary close to the Baroque City of Eger. The proximity of it seven neighbouring countries, all within several hours drive, emphasises this region as huge tourist attraction.

Property rights, licenses, certifications 179 hectares under option to the Property owners with legally binding contracts which will revert to the Company on granting of final building permits. The project has been adopted by the neighbouring village of Egerszalok with full support from National, Regional and Local government. All utilities and licenses have been confirmed and granted.

Current position in the market – expected share Although a green-field site, Saloc has already sold off-plan and proven that the project will attract a world-wide market. The intention is to work with the whole of Hungary – primarily to put Hungary on the international stage which will lead to SALOC becoming a leading Leisure and Wellness resort.

Target groups As already proven we have attracted an international market of investors and will attract visitors from Germany, Austria, UK and all surrounding countries.

Short market description, main competitors Saloc does not see any other resort in the region as a competitor as we wish to work together with similar projects on joint marketing initiatives to put Hungary in the forefront of the medical and Wellness/Leisure tourism sector. Income into existing spas in Hungary is currently growing at 20% and because of the Thermal waters this creates a year-round footfall. Saloc will also be attracting the world-wide Conference sector.

Key strategic partners Include KPMG financial advisers, EC HARRIS Project Development managers, HVS Operating Advisors and RCi (part of the Wyndham Group) marketing partners.

III.

FINANCIAL INDICATORS

Full KPMG feasibility study commissioned plus up to date full 10 year P & L forecasts available upon request. GDV: EUR 150 million with ROI of 22% Quantitative Indicators Total revenue of Sales of developable land EUR 71 million Costs - Land, Infrastructure, Utilities, Permissions and Permits, architects etc = EUR 21 million Net proceeds on residential EUR 50 million

Revenues

IV.

INVESTMENT OFFER

Required amount of investment

EUR 20 million

Form of investment

Credit Line

Proposed capital/equity structure: Investment schedule: Proposed exit policy for investors:

Debenture over Company Start date April 2015 via Sales of Real Estate after 5 years

CONTACT DETAILS MR. ISTVÁN FAZEKAS, Managing Director +36 20 619 6510 [email protected] www.salocresorthungary.com

BASIC PROJECT DATA

Scarbantia Hotel **** SHORT DESCRIPTION Unique opportunity to develop a multifunctional complex including a 4 star hotel with 142 rooms and a modern spa/wellness centre in the heart of Sopron. The planned hotel will be located in a central area of the town, in close proximity to downtown.

Funding requirement

EUR Sector Location Implementation period Operator search Raising bank financing Construction Overall Budget of the Project Bank financing

7M

Tourism II. Rákóczi Ferenc Street, Sopron 24-30 months 8-12months 6–8 months 16-18 months from obtaining financing EUR 32.5 million EUR 25,5 million

I.

PROJECT BACKGROUND

Brief summary of background The owner of the project is MH Scarbantia Hotel Ltd. The full ownership of the project subject to this teaser is available as the current owner would hand over the construction site, preliminary concept plans, other documents and all the necessary official permits required for the construction.

II.

PROJECT DESCRIPTION

This is a unique investment opportunity to develop a multifunctional complex including a 4 star hotel with 142 rooms and a modern spa/wellness centre in the heart of Sopron, located at II. Rákóczi Ferenc Street, in a central area of the town. The nearly 125 years old buildings on the property must be preserved to conserve the traditional landscape of the town, but the other buildings will be demolished and replaced by new wings with a contemporary design. The multifunctional complex is planned to feature a hotel with 142 rooms, a 900 m2 spa unit, compact meeting/boardroom facilities with a seating capacity of 150 people, a wellness and fitness centre, and a 2,030 m2 multifunctional area. The hotel is planned to feature an a’la carte restaurant, a pub, a drinkbar, retail units and leisure rooms. Since Sopron lacks modern, international quality hotel complexes and adequate spa and wellness facilities that target local and regional day visitors, there is a gap in the market this project may be able to fill.

WHY INVEST? Sopron is part of Lake Fertő tourism destination; the city and its immediate surroundings have a wide range of cultural, historical and natural values, making Sopron a city that warrants a multi-day stay. This hotel could be the leading modern, high-quality accommodation unit in Sopron. The revitalisation of the city centre and the implementation of the multifunctional complex would contribute to the recovery of tourism in Sopron.

Competitive advantages •

Wide range of high-quality services



First modern accommodation unit in Sopron



The proposed hotel will be very close to the historic city centre, as well as to the Lövérek, a favoured excursion area of the city

Property rights, licenses and certificates The 13.322 m2 project site is owned by the developer, MH Scrabantia Hotel Ltd. A set of architectural plans have been prepared for the project and are available for evaluation.

Current position in the market and expected share The wide range of services of the multifunctional complex guarantee a unique market-leading position. The location of the project and the current structure of the buildings may also allow for residential/ apartment development, an area in which the city shows a great deficit.

Target groups Leisure segment. The most significant market segment will be the independent travellers (FIT). In addition the proposed hotel would also be appealing for the local corporate traveller segment.

Short market description, main competitors Subdued demand characterises tourism in Sopron, related to the lack of significant touristic attractions and adequate promotion. Once the local products become reinvented and more sophisticated, Sopron can return to being one of the most visited cities in Hungary where it was ranked before.

Main competitors In terms of local competition the closest relevant establishments in town are Hotel Fagus – in need of improvement and repair, and small properties like Hotel Wollner. Other, higher quality accommodation only exists in the nearby Austria (Lutzmannsburg, Mörbisch or properties around the Neusiedler See).

III.

FINANCIAL INDICATORS

Assumptions and main indicators Updated financial projections shall be made available before the final investment decision by the prospective buyer, parallel with completing the due diligence procedure.

IV.

INVESTMENT OFFER

Required amount of investment

EUR 7 million

Form of investment

Full takeover

CONTACT DETAILS MRS. IBOLYA JAKUS +36 20 919 9717 [email protected]

BASIC PROJECT DATA

Hotel Arboretum SHORT DESCRIPTION Construction and operation of a 214-room 5-star hotel and 60 apartments with an exclusive medical and spa complex, sports and recreational facilities, a live casino and a 6-hole golf course. An ideal location for business purposes with a conference hall accommodating 760 guests.

Funding requirement

EUR Sector Project owner Location Implementation period Investment offer Overall budget of the project

40 M

Tourism (medical) Arbo Invest Ltd. Debrecen is located 102 km from Satu Mare (RO), 194 km from Kosice (SK), 154 km from Uzhgorod (UKR) and 237 km from Budapest (HU). 18 months 85% of the company through capital increase amounting to EUR 40 million EUR 47 million

I.

PROJECT BACKGROUND

Short background Arbo Invest is a project company dedicated solely to successfully develop the Hotel Arboretum investment project.

Organisation • Nóra Tanka-Pocsai, project owner o Levente Nagy, project manager • István Ceglédi, technical director o József Attila Pocsai, consultant Management background (including partner companies and relations) The company has over 10 years of experience in developing and implementing various tourism development projects. IavnCeglédi is a well-known and acknowledged expert with a vast experience in building and operating large scale construction projects. His references include Arbo Ranch, Hotel Balmaz****, Stop Shop Shopping Park, Fontana Restaurant and Leisure Park and Erdőspuszta Club Hotel****. All members of the management team are in possession of the necessary marketing, sales and international background to elevate the project to the realisation phase.

II.

PROJECT DESCRIPTION

Hotel Arboretum aims to offer multiple recreational, medical and spa services along with various sports and entertainment facilities to its visitors. The hotel comprises 214 rooms and 60 apartments, a main conference hall holding up to 760 guests, a spa and aqua park, a sports centre equipped with a bowling alley, a squash court, a golf simulator and a golf course for trainees plus a live casino. As part of the project, Hotel Arboretum was awarded a non-refundable grant to build a geothermic energy system, which will reduce the expected energy costs of the complex by approximately 60 to 70%. WHY INVEST? Hotel Arboretum will be a luxurious spa, sports and entertainment hotel complex. The planned facilities and services are in line with the current trends, which are showing a growing demand for premium medical, recreational and spa tourism. Demand for good quality and exclusive 5-star hotels is a rapidly growing segment in Hungary. Hotel Arboretum will be a spectacular complex with an easy to reach location not only from Hungary, but also from the neighbouring countries. Tourists are expected to come from Romania, Slovenia, the Ukraine and Russia with a rapid transfer from Debrecen International Airport. The casino, spa and conference complex will attract many of the wealthier traveller segments including recreation tourists, business travellers and high spending gambling tourists.

Competitive advantages The complex offers excellent spa and medical services; it is also ideal for sports lovers, business travellers, families, and tourists requiring premium services. The complex has promising development potential as the currently planned 9-hole golf course can be further developed into an 18-hole golf course, making the complex an ideal place to host professional golf tournaments. Debrecen International Airport is in close proximity to the planned hotel. The area and the site are rich in valuable quality mineral water resources (certified by balneological surveys), which can also be exploited and bottled for commercial purposes.

Property rights, licences and certifications The project has all the necessary building licences and permits. The planned casino complex is yet to obtain a gambling licence.

Current position in the market The project is a greenfield investment opportunity that aspires to be a leading luxury hotel in a region with strong international recognition and tourist base.

Target groups Hotel Arboretum targets spa and medical tourists including senior travellers, business travellers, tourists seeking high spending weekend casino getaways, sports lovers and families. Current trends show that there is an increasing demand for premium accommodation and services, while Hungary has a great reputation among international travellers. Debrecen International Airport provides easy access for foreign tourists who typically have twice the average spend of domestic guests. The planned casino complex has an enormous revenue generating potential.

Short market description and main competitors Overall growth in the tourism sector in Europe has had a favourable effect on the Hungarian tourism industry. The volume of tourism in terms of guest nights has been steadily rising since 2010 in the country, surpassing 24 million guest nights in 2014. The Northern Great Plain tourist region had a share of 8% in terms of total tourist demand in the country in 2014. Average daily rates of the 5-star hotel segment have been steady in the last few years, reaching EUR 112 in 2014. Medical hotels achieved an average room occupancy of 61.9% in 2014 (19.5% higher than the national average occupancy of the hotel sector), and a revenue per available room of EUR 30.3; they are also characterised by lower seasonality and a remarkably longer average length of stay compared to the hotel segment in general.

III.

FINANCIAL INDICATORS

Assumptions and main indicators All figures in EUR

year 1

year 2

year 3

year 4

year 5

214

214

214

214

214

Number of rooms in the hotel in the apartments

60

60

60

60

60

Average Daily Rate (ADR)

102

106

111

115

120

Occupancy

45%

55%

57%

59%

60%

Revenue per available rooms (RevPAR)

46

58

63

68

72

Revenue from hotels in total revenues

82%

81%

80%

80%

79%

Quantitative and Qualitative Indicators All figures in EUR

year 1

year 2

year 3

year 4

year 5

Sales

5,029,531

12,544,309

13,733,697

15,005,614

16,033,198

EBITDA

2,638,927

7,177,922

7,926,044

8,687,987

9,267,608

After tax operating cash flow

1,387,038

4,705,938

5,777,345

6,609,935

7,320,858

IV.

INVESTMENT OFFER

Required amount of investment

EUR 40 million

Form of investment

85% of the company through capital increase amounting to EUR 40 million.

CONTACT DETAILS MR. LEVENTE NAGY +36 20 429 4878 [email protected]

BASIC PROJECT DATA

Hévíz Mansion Medical & Spa Hotel SHORT DESCRIPTION A unique opportunity to develop an upmarket Medical & Spa Hotel with 55 rooms and a 70 to 80-unit Luxury Apartment Park in Hévíz. The hotel will be located within 400 metres from the world-famous thermal lake. It is planned to include a wide range of medical spa facilities, a nostalgic restaurant, a winetasting bar, a library, a cigar room and a spa/wellness garden.

Funding requirement

EUR

4.5 M

(Representing 100% equity)

Sector Location Implementation period Raising bank financing Construction Total budget of the Project Bank financing

Tourism Ady Endre utca, Hévíz 12–18 months 4–6 months 12–16 months EUR 8.5 million EUR 4.0 million

I.

PROJECT BACKGROUND

Brief background The project owner is a Hungarian-based entity in full ownership of the building and the surrounding site. Initially, it has been established to carry out this project, and to profit from income generated from real estate sales and income from the hotel and the service fees paid by suite owners. The developers have spent considerable time and effort in obtaining a building permit for the scheme, and once a new investor is in place and/or sufficient financing is available, construction can commence immediately. Also, given the fact that the building was once functioning as a hotel with thermal/spa facilities, securing thermal water for the baths will not be an issue. The project is known and supported by local authorities.

II.

PROJECT DESCRIPTION

This is a unique investment opportunity to develop an upmarket Medical & Spa Hotel and Luxury Apartment Park in the very centre of Hévíz. The development site is situated at one of the most beautiful and highest points of the town, in Ady Endre utca, 300 to 400 metres from the worldfamous thermal lake. The centre of Hévíz and the other tourist attractions are just 10 minutes on foot from the site. Hévíz is one of Hungary’s most established and renowned spa towns, with easy and convenient access from the Hungarian capital (about 190 kilometres – 1.5 hours on motorway), whilst the Hévíz-Fly Balaton Airport is less than 30 minutes’ drive from here. The hotel would be recreated by the renovation and extension of the nearly 100 year-old mansion, which is one of the most symbolic buildings in town. The hotel is planned to feature 55 guest rooms (43 double rooms and 12 suites), a wide range of medical rehabilitation units (a medical bath with two pools and a newly built spa and wellness unit with a spa building), a nostalgic restaurant, a wine-tasting bar, a library, a cigar room and a spa wellness garden. Given the fact that the total land size reaches nearly 20 hectares, there is substantial land available for either extending the hotel capacities by reaching up to 200 hotel rooms or developing up to 70 suites in 1 or 2-floor townhouses, thereby creating a steady income or return on acquisition costs from real estate sales already in the development phase. Since the local market has seen significant transactions and interest from real estate buyers, this is a realistic scenario to pursue. Selling the suites also creates an additional guest flow for hotel services and possible service fees for residential owners, but also allows for the hotel’s future management to create leaseback schemes. +24,

MAGASSÁGI ÉRTELEMBEN HELYI RENDSZER MAGASSÁGI ALAPPONT A FŐÉPÜLET ÉSZAKI BEJÁRATI SZINTJE M=50.00 = +0,00

A

meglévő, tisztítandó terméskő falazat

B

meglévő, hőszigetelt faszerkezetű nyílászáró

C

új, hőszigetelt üvegezésű, fa szerkezetű nyílászáró

D

fagyálló kisméretű tömör tégla homlozat burkolat

E

homlokzati nemesvakolat törtfehér színben

F

horgany ereszcsatorna

G

természetes pala fedés

H

új, hőszigetelt üvegezésű, alumínium szerkezetű nyílászáró

+16,

+15,65

+15,65 +15,

I

G +13,36

új, acél korlát, bitonsági üveg mezőkkel

B

+9,24 +8,90

D

G

+7,3

F hő- és füstelvezető ajtó -tűz esetén automatikusan nyílik

F +4,87 +4,39

C

hő- és füstelvezető ablak -tűz esetén automatikusan nyílik

+5,09 +4,14

+4,09

E

+2,89

+3,4

E

I

+0,49 +0,06

-0,10

-1,10

-1,00 321

D

Füstgátló ajtó Sm légzárású, elektromágneses szerkezettel rögzített

-3,17

-3,15

hő- és füstelvezető ablak -tűz esetén automatikusan nyílik

A

hő- és füstelvezető ablak -tűz esetén automatikusan nyílik

H C

+0,02

+8,16

+7,93

+7,93

G

+1,50

+0,49 +0,12

+0,49 -0,30 -1,20

+0,21

B -1,30

+1,5

-0,01

WHY INVEST? Complete physical and mental relaxation, therapeutic and rehabilitation treatments and ultimate rest in high-quality accommodation guarantee a unique market-leading position. Such schemes are widely available in Western Europe, and given the fact that Hévíz’s tourism market has shown sustained growth over the past decade or so and the market has matured to support an upmarket product, it is the right time to invest in such a scheme. The existing facilities of the hotel, the planned guest-rooms, pools, the high capacity of treatment facilities and the hotel’s own thermal supply will ensure the success of the project. The sale of one part of the Suite Park to be constructed in the second development phase offers a significant guarantee for return on investment for both project units to be completed.

Competitive advantages • • • • • • • •

Exclusive environment High-quality services Treatment and after-care of dialysis patients Own spa-thermal water supply Nearly 100 year-old mansion, which is one of the symbolic buildings in Hévíz Combination of modern and traditional therapies, personalised medical treatments Highly-qualified medical team Services prescribed by doctors will be provided in the comfort of the guests’ own rooms (if all technical facilities are available) • Good visibility from all directions • Income from real estate sales to support return on the project • Opportunity to brand the property and the complex

Property rights, licenses and certificates The 20,000 m2 project site is owned by Claudia Hotel & Resort Szállodaipari Kft. A set of architectural plans for the project have been prepared and are available for evaluation. In terms of building permits, there has been a final building permit issued for a 55-room unit. The project has special support from the Municipality of Hévíz. The professional partners of the medical concept are the Hévíz Spa and the Saint Andreas Reuma Hospital, the town hospital of Keszthely, and leading experts of the ORFI and the Balneology Association.

Current position in the market and expected share In terms of the quality of services and target performance indicators, the hotel will be positioned among the leading hotels of Hévíz.

Target groups Premium-category health, medical and wellness tourists

Short market description, main competitors Medical hotels in Hungary achieved an average room occupancy rate of 61.9% in 2014 (19.5% higher than the national average occupancy rate in the hotel sector), a 10.9% higher REVPAR, and were characterised by lower seasonality and a remarkably longer average length of stay than the hotel segment in general (3.6 nights versus 2.5 nights). Hévíz is the second most popular destination in Hungary after Budapest.

Main competitors • • • • • •

Lotus Therme Hotel&Spa (www.lotustherme.accenthotels.com/hu) NaturMed Hotel Carbona (www.carbona.hu) Hotel Európa Fit (www.europafit.hu) Danubius Health Spa Resort Hévíz (www.danubiushotels.hu) Danubius Helath Spa Resort Aqua (www.danubiushotels.hu) In terms of future supply, there are some announced projects that can be relevant regarding the proposed hotel: Expansion of NaturMed Hotel Carbona and Éden Hotel Nemesbük

III.

FINANCIAL INDICATORS

Assumptions and main indicators BDO Hungary Hotel and Real Estate Services Ltd. prepared financial projections for the hotel project. Income from real estate sales, revenue from service fees from suites or any leaseback income or profit sharing have not been calculated. The following tables show the income potential of the hotel only.

Main indicators year 1 Number of rooms Occupancy Revenue per Room Sold (in EUR)

year 2

year 3

year 4

year 5

55

55

55

55

55

49.7 %

58.6 %

63.4 %

69.8%

74.6%

123

125

127

130

133

Quantitative and qualitative indicaton BDO Hungary Hotel and Real Estate Services Ltd. prepared financial projections for the hotel project. Income from real estate sales, revenue from service fees from suites or any leaseback income or profit sharing have not been calculated. The following tables show the income potential of the hotel only.

Qualitative indicators All figures in EUR

year 1

year 2

year 3

year 4

year 5

Total Revenues (1000)

620

1,470

1,625

1,825

1,995

EBITDA (1000)

117

385

455

566

639

EBITDA %

19%

26%

28%

31%

32%

IV.

INVESTMENT OFFER

Required amount of investment

EUR 4.5 million (representing 100% Equity)

Form of investment

Cash

CONTACT DETAILS MR. LÁSZLÓ ERDŐS +36 70 398 8313 [email protected]

VIENNA

ZAGREB, LJUBLJANA

BASIC PROJECT DATA

Lake Park Offices and Residences SHORT DESCRIPTION The project is a compact city next to Budapest, the capital of Hungary. The project embraces a built-up area of 200,000 m2, which includes office buildings, apartments, shopping opportunities, service industry units, as well as facilities for sports and recreation. There is a conference hotel with an additional conference center. Each segment of this property has been designed with environmentally conscious solutions and green energy.

Funding requirement

EUR Sector Project owner

49.5M

Real Estate ÚtnetÉpítő Kft. (subsidiary of Lavinamix Group)

Location Implementation period

Biatorbágy, Hungary Development period of 5 years (2015-2020 - ongoing project)

Overall Budget of the Project

EUR 101.5 M EUR (excluding industrial land) Sale price is 52 M EUR (with motorway connection and internal roads completed) Cost of completion: 49.5 M EUR

Investment need

Total: 49.5 M EUR to complete the whole project (cost of completion)

I. PROJECT BACKGROUND Introduction to the Project owner Lavinamix Építő Kft. was involved in almost all significant road and motorway construction projects in the past 20 years in Hungary. The very large volume of assets – consisting of close to 300 pcs of heavy duty and transportation vehicles, a metalworking unit and service background – owned by Lavinamix, qualified and experienced staff and major efforts to continuously renew the company resulted in its successful participation both in specialty and complete road construction projects. Main activities of Lavinamix: • Complete implementation of expressways and public roads • Construction of embankments and dams, flood prevention • Mining exploitation and quality processing of raw materials • Manufacturing of fresh concrete The Lavinamix Group holds an interest in several companies (in addition to Lavinamix Kft.): • ÚtnetÉpítő Kft.– Tópark real estate development • CEVIAÚtépítő Kft.– Concrete technology • Arany-Fény Kft. - Gastronomy • FogasHalászcsárda Kft. - Gastronomy • N-Zoll Trans Kft.– Renewable energy • Premier MinőségvizsgálóTechnológiai Kft.– Concrete technology • Euro Basalt a.s.- Mining • Lavinamix Slovakia s.r.o.– Mining and concrete mixing plant • SC Lavinamix Construct s.r.l.– Mining and concrete mixing plant

II. PROJECT DESCRIPTION The multifunctional Tópark real estate complex consists of 9 attached buildings with a total gross floor area of 90,000 sqm, plus two-story underground parking (60,000 sqm). The total floor area is allocated to office (45,000 sqm), residential (30,000 sqm) and commercial (15,000 sqm) functions, allowing the implementation of a conference center with a 800-1,000 person capacity and a business hotel with 140 rooms. As Lavinamix Group owns a further 13 hectares of industrial land with an existing road connection at a few hundred meters’ distance (along motorway M0), the main functions can be supported with production/logistic or R&D developments, if required. The Tópark project is a unique development opportunity, considering its location, size and potential to provide an optimal mix of functions in one location, delivering high standards of a built environment and meeting modern, contemporary tenant demands. One of the main advantages of the property complex is that it is situated immediately next to the lake of Törökbálint, providing numerous recreational opportunities for visitors of Tópark, as well as the people living and working here. The project includes the development of a 3 hectare green park area around the real estate complex. Exceptional visibility and advertising value for companies renting offices here, where 180,000 cars/day drive by on the motorways. Downtown Budapest can be reached in 15 minutes by care on the motorway. Public transport: a nonstop bus line can be operated. Opportunities to expand development sites to neighboring areas.

Why invest: • Unique opportunity for large scale investment in the CEE region; • Professional partnership with experienced construction company (project owner); • Flexibility of functional breakdown, based on tenant needs; • Additional development plots are available through acquisition; • Direct access to two motorways that serve heavy domestic and international traffic (Budapest-Vienna and Budapest Zagreb / Ljubljana connection), providing a high volume of potential customers/tenants for commercial spaces; • Due to the good location, considerable purchasing power and a market for a highly qualified workforce is available in the catchment area.

Competitive advantages: • Limited number of similarly sized development areas in the CEE region (development timing also considered); • Excellent geographical location in CEE; • The current development phase is at 55% (construction is in progress); • Timing advantage because building structures are already completed; • The competitive advantage of Tópark is that the construction of the office buildings is relatively cheap because of the construction-ready status, offering offices with downtown standards but below downtown rental rates; • Experienced support provided by the project owner and the government to complete the development.

Property rights, licenses, certifications • 100% property rights • building permits • LEED pre-certification.

Current position on the market: – expected share: Tópark is the first “outof-city small town property development” in Hungary, therefore its position is unique on the market • Experienced support provided by the project owner and the government to complete the development.

Target groups: • Apartments: potential buyers are expected from surrounding settlements and from west Hungarian cities. There is significant interest in the apartments for investment purposes. End user buyers are targeted from the younger generation (aged 20-30) and young families applying for special government housing subsides. The 50-60 age group is targeted as second home owners and investors.

Based on the anticipated large volume of the workforce in the office buildings, additional rental demand is expected. • Offices: A+ category office buildings with a LEED certificate will be developed in an urban environment (similarly to the office district of Budapest). In terms of potential tenants, the project is expecting mainly multinational tenants who will outsource their background activities or SSC services to the agglomeration areas. • Interest shown by the IT sector is also considerable, where there is a need to increase office floor space from one day to another, with a demand for a high level of office services, and the workplace must not necessarily be located in the city center. • Conference center: medium sized conferences targeted (800-1,000 persons) – low competition, as very limited supply is on the market in this segment. • Business hotel: clients/partners of office tenants, conference guests, tourism guests.

Short market description, main competitors:

Key strategic partners (also involved in project financing):

The Hungarian investment property market experienced a rapid recovery from 2013, with a strong increase in demand for good quality products. The occupier market in some segments (modern offices and logistics) remarkably strengthened at the same time. The number of property transactions in urban residential markets (in major cities) increased strongly in parallel with investment demand for new construction.

• HIPA, strategic advisors, professional real estate agencies for sales and rental.

Residential: • New legal regulations and statutory amendments provide resources for apartment purchases for families with several children; • Low prime rates prompt individual investors to invest in real estate; • In the past 7 years, a number of individuals planning to purchase apartments postponed their plans as a result of the economic recession; • No significant condominium development projects in the pipeline in the western agglomeration of Budapest.

Office: • Lowest vacancy rate in the past 8 years on the Budapest market; • High demand for good quality investment projects; • Very limited number of office development projects are in progress; • Need for large space in one location, but existing buildings unable to provide adequately sized offices.

Key risks and risk mitigation: risk to identify reliable and creditworthy investment partner for very high scale development.

Construction cost risk: as the construction industry gained momentum in several areas, prices are expected to increase. The probable additional costs are included (as reserve) in the investment calculations.

III. FINANCIAL INDICATORS Assumptions and main indicators • Proposed income levels:

Sales revenue - residential (in the period 2017-2018) 42.8 M EUR Rental revenue - office/retail (stabilized from yr. 2020) 6.1 M EUR/yr.

• Construction cost: 49.5 m EUR (excluding sale price) • EBITDA Gross Potential: N/A • IRR, NPV (based on current market levels): Expected Return On Investment 10.39% )

Quantitative and Qualitative Indicators

QUANTITATIVE INDICATORS Revenues / year 2015

Not relevant (development phase)

Mid-term revenues/year expectation

Based on future development plans

Mid-term market penetration expectation (%)

N/A

Owner’s available resources /available funds

property (land) ownership, zoning plans, public utility connections, existing road connections, existing building structures.

QUALITATIVE INDICATORS poor

adequate

Elaboration level

X

Existing client relations

X

Level of sectorial/market competition*

X

Owner’s background (market presence, experience)

X

Management background (knowledge, experience)

X

Level of innovation in the Project concept / Added value

X

Risk management plan

X

* poor = high competition

high

IV. INVESTMENT OFFER • 52 M EUR for property purchase, Required amount of investment

• +49.5 M EUR for construction costs based on existing development plans • Sale of property as is (land + building structure)

Form of investment

• Potential long-term partnership in construction phase

Guaranteed profit / estimated return

10.39%

Estimated exit time

4 years for full development and exit

Proposed capital/equity structure: • Based on the form of investment. • Equity/loan structure based on financing negotiations

Investment schedule: see above Proposed exit policy: • Residential: sale • Office/retail: lease or sale

CONTACT DETAILS MRS. ADEL CARLSON PROJECT MANAGER Phone: + 36 70 948 3687 [email protected] www.topark.hu www.utnet.hu

BASIC PROJECT DATA

Mezőkövesd-Mezőkeresztes Innovation Park SHORT DESCRIPTION Former military air base with fair quality existing runways (for heavy aircrafts, but not in operation) and developable land parcels. The site will be served with public utilities, allowing mixed use developments in line with proposed innovation park use. The property represents a unique opportunity for large-scale development with an opportunity for a dedicated airport (suitable for cargo use), direct highway access and connection to a high-speed railway line. Total land area 6,394,000 sqm. BTL ratio 40%.

Funding requirement

EUR Sector Project owner

15M

Real Estate Mezőkövesd City Council (39.9%) – project manager co-owners: Mezőkeresztes City Council (43.4%) Miskolc City Council (16.7%)

Location Implementation period

Overall Budget of the Project Investment need

Lövői út, Mezőkövesd, Hungary Sale of developable land area immediately (rapid process, due to clear ownership structure). Long-time partnership for airport operation. Partnership for land improvement or other developments, if required. Development period: 2-5 years. (Airport licensing and opening 2 years) Current Sale price 15M EUR 1. Current Sale 15m EUR + other optional developmental costs, based on intended use Airport licensing approx. 8m EUR 2. Lease

I. PROJECT BACKGROUND Introduction of the Project owner • Mezőkövesd City Council • Mezőkövesd is small-sized city (17,000 inhabitants) located along highway M3, approximately within one hour driving distance to Budapest. Although the city offers a wide range of tourist attractions (thermal bath, local folk art registered in the Unesco World Heritage List etc.), the local economy is also represented by industrial players. Top industries include: machinery production, automotive supplier production, metal processing, food industry. • Excellent quality agricultural lands around the city provide high output of sunflower and wheat production as well as poultry, beef cattle and swine production. • The investment-friendly environment provided by the city council together with a wide spectrum of vocational training in local schools results in an attractive location for companies and enterprises seeking a place for new operations.

II. PROJECT DESCRIPTION • The Mezőkövesd-Mezőkeresztes Innovation Park is a unique size development opportunity in Central and Eastern Europe. Total land area is 6,394,000 sqm, and allowed coverage is 40%. • The area will be supplied by necessary public utilities and is accessible from multiple directions (multiple entries) with a nearby highway connection. • Planned public utilities (construction start is planned for 2017): - Gas, 8 bar, 1000 m3/hour - Water, Ø 250, 5 bar, 300 m3/hour - Sewage, Ø 200, 4,000 m3/day - Electricity, 20/0,4 kV (500kW) • Direct connection to railway lines could be provided if required. This enormous building potential may provide working, living, an educational opportunities for several thousand people, and furthermore, the former military airport (3,500 meters long, existing runway) could provide an international link for passenger and cargo lines. • Runway parameter: 67/R/C/X/T, taxiways: 55/R/C/X/T and 42/R/C/X/T. • The innovation park is located in an undeveloped area, a 1-minute drive from

both Mezőkövesd and Mezőkeresztes as well as from the highway exit. This location provides the opportunity to design the projected development best optimized for the intended use. The low level of restrictions allows for optimum implementation.

Why invest: • Unique opportunity for large-scale investment in the CEE region (6,394,000 sqm land parcel in one place); • Exclusive opportunity to open an on-site airport (existing runway is available already) suitable for heavy aircraft operation; • Immediate connections;

highway,

railway

line

• High level of flexibility for potential uses; • Cooperation with local councils (Mezőkövesd and Mezőkeresztes) results in a very low level of risks for many aspects (ownership, licensing, public utilities, construction, other services, etc.); • Markets and workforce within reach: 350,000 inhabitants within 45 minutes distance, and over 3,000,000 within 60-80 minutes distance, universities in Miskolc, Debrecen, and 18 universities in Budapest.

Competitive advantages: • Limited number of similar sized development areas in the CEE region (also considering development timing); • On-site airport option; • Excellent geographical location in CEE; • Experienced support by project owner and government to complete the development;

Wtr

Gas Swg Elec

Gas Wtr Swg Elec

• Suitable for construction.

immediate

start

of

Property rights, licenses, certifications • Land zoning for innovation park use available;

transactions in urban residential markets (in major cities) increased strongly along with the investment demand for new constructions.

• 100% property rights; • All local licenses will be provided within a reasonable time period.

• HIPA, strategic advisors.

Current position on the market: • expected share: innovation park.

priority

project

Key strategic partners (also involved in project financing):



Target groups: Large multinational consortiums, strategic state investment funds.

Key risks and measures to prevent risks: • Risk to identify reliable and creditable investment partners for a exceedingly high scale development.

Market risk : Short market description, main competitors: The Hungarian investment property market demonstrated a quick start of recovery from 2013, with a strongly increasing demand for good quality products. The occupier market in some segments (modern offices and logistics) remarkably strengthened at the same time. The number of property

• Countryside location, no existing demand for high quality offices or R&D buildings on local basis at current time. Initial take-up should be provided by phase I. developments.

III. FINANCIAL INDICATORS Assumptions and main indicators • Proposed income levels: No similar project available in the catchment area • Construction cost: based on development plans of potential partner • EBITDA Gross Potential: N/A • IRR, NPV (based on current market levels): • Not available. Typical Property Investment Yields in Hungary: Office 7.5%, Shopping Centre 7.5%, logistics 8.5%-9.0% • Estimated Market Value as if completed: N/A

QUANTITATIVE Quantitative and Qualitative Indicators INDICATORS Revenues / year 2015

Not relevant (development phase)

Mid-term revenues/year expectation

Based on future development plans

Mid-term market penetration expectation (%)

N/A

Owner’s available resources /available funds

Property(land) ownership, zoning plans, plans for public utility connections, partnership in land improvement developments

QUALITATIVE INDICATORS poor

X X

Level of sectorial/market competition* Owner’s background (market presence, experience)

X

Management background (knowledge, experience)

X

Level of innovation in the Project concept / Added value

X

Risk management plan

X

* poor = high competition

high

X

Elaboration level Existing client relations

adequate

IV. INVESTMENT OFFER • 15 m EUR for property purchase, • +8 m EUR for airport licensing/reopening

Required amount of investment

• construction cost based on development plans of potential partner • Sale of developable land parcel • Long-time partnership for airport operation

Form of investment

• Land lease Guaranteed profit / estimated return

N/A

Estimated exit time

Long term use, based on development plans of potential partner

Proposed capital/equity structure: • Based on the form of investment. • Equity/loan structure based on financing negotiations

Investment schedule: see above Proposed exit policy: • Long term use.

CONTACT DETAILS MR. ZOLTÁN FEKETE, MAYOR, MEZŐKÖVESD VÁROS ÖNKORMÁNYZATA (MEZŐKÖVESD CITY COUNCIL) PHONE: + 36 305558680, +36 49 511 500 [email protected] WWW.MEZOKOVESD.HU