VALUATION REPORT. Letter A, 54, Bolshaya Morskaya St., St.-Petersburg, Russia. Domina Prestige Hotel

Transcription

1 VALUATION REPORT Letter A, 54, Bolshaya Morskaya St., St.-Petersburg, Russia Domina Prestige Hotel Valuation Report No.09/ VAL-I as at September 30, 2014 On behalf of Brickstone Real Estate Funds MARIS, INDEPENDENTLY PREPARES CLIENT VALUATIONS AND RELATED ADVICE AND IS SOLELY RESPONSIBLE FOR THE CONTENTS OF THIS REPORT.

2 CONTENTS 1. Executive Summary Valuation Report Property Report Market Commentary Valuation Commentary APPENDICES A. Location Plan B. Legal Documents C. Photographs D. Financial Tables E. Valuation Assignment F. Copies of Professional Certificates G. Information about the Valuers... 81

3 MARIS VALUATION REPORT Executive Summary EXECUTIVE SUMMARY The Property Address: Letter A, 54, Bolshaya Morskaya St., St.-Petersburg, Russia Main Use: 5-star hotel The Subject Property is a 5-star hotel with 109 rooms. The Property comprises a Gross Floor Area of 7,566.6 sq m. As at the date of valuation the Property were let on a short-term basis. Please refer to the Property Description section for more information about the Property. Tenure We have been supplied with the following documents confirming the rights to the Property (in copies): Agreement No.7407-ЗУ, dated October 28, 2013, for sale and purchase of the land plot under privatization process; Certificate of the State Registration of the Right to private property series 78-АЖ No , dated May 23, 2013; Certificate of Acceptance and Transfer of a Building, dated July 1, 2012; Commissioning certificate No в-2011, dated August 5, Tenancies and Covenant Strengths According to the data provided by the Client the hotel is occupied by a single tenant Domina Rus Ltd on a long-term basis. We have not been provided with a copy of the lease agreement for the hotel (see also Special Assumptions ). Page 3 EXECUTIVE SUMMARY Market Value Based on the Income Approach 37,900,000 (Thirty Seven Million Nine Hundred Thousand) Euro Net of VAT

4 MARIS VALUATION REPORT Executive Summary Reconciled Market Value Upon the assumption that there are no onerous restrictions or unusual outgoings of which we have no knowledge and subject to the comments made in our 'Valuation Report and the specific comments and assumptions defined in the report, we are of the opinion that the Market Value of the Property as at September 30, 2014, is: 37,900,000 (Thirty Seven Million Nine Hundred Thousand) Euro Or according to the official exchange rate of Central Bank of the Russian Federation 1,893,256,600 (One Billion Eight Hundred and Ninety Three Million Two Hundred and Fifty Six Thousand Six Hundred) Rubles Net of VAT Comments Strengths The subject Property represents a good quality 5-star hotel, fitted out to a high standard. The Property is located in the central, historical part St.-Petersburg. The Property is let to a single tenant a reputable international hotel operator. Opportunities The building is professionally managed. Development of transport infrastructure. Increase of the tourists flow in the region. Page 4 EXECUTIVE SUMMARY Good access to the Property by public and private transport. The building is well maintained and in good condition. Weaknesses Threats Limited leisure facilities. Increase in competition among hotels, especially in the center of the city.

5 MARIS VALUATION REPORT Valuation Report VALUATION REPORT Report Date October 15, 2014 Addressee Luigi Pesce Director of the fund Brickstone Real Estate Funds SICAV p.l.c. Address: Suite 2, Level 3, TG Complex, Brewery Street, Mriehel, BKR 3000, Malta The Property Property Description 5-star hotel located at: Letter A, 54, Bolshaya Morskaya St., St.-Petersburg, Russia The Subject Property comprises 7,566.6 sq m of hotel space. The Subject Property is a 7 (1-5-7, mansard) storey building. Please refer to the Property Description section for more information about the Property. Ownership Purpose Instruction Investment To provide our opinion of the Market Value of the Property as at the Valuation Date in accordance with the Valuation Agreement No.09/ VAL, dated September 18, Page 5 VALUATION REPORT Valuation Date September 30, 2014 Euro exchange rate Capacity of Valuer Purpose Rubles/Euro according to Central bank of the Russian Federation as at the Valuation Date External Valuer To estimate the Market Value of the freehold interest in the Property. The results of the Valuation are to be used for financial reporting for the 3rd quarter of year 2014

6 MARIS VALUATION REPORT Valuation Report Market Value Upon the assumption that there are no onerous restrictions or unusual outgoings of which we have no knowledge, and subject to the comments made in our 'Valuation Report and the specific comments and assumptions defined in the report, we are of the opinion that the Market Value of the Property as at September 30, 2014, is: 37,900,000 (Thirty Seven Million Nine Hundred Thousand) Euro Or according to the official exchange rate of Central Bank of the Russian Federation 1,893,256,600 (One Billion Eight Hundred and Ninety Three Million Two Hundred and Fifty Six Thousand Six Hundred) Rubles Net of VAT Compliance with Valuation Standards The valuation has been prepared in accordance with: - RICS Valuation Professional Standards, dated January 2014; - Law on Valuation Activity in the Russian Federation, No.135-FZ, dated July 29, 1998; - General Valuation Definitions, Valuation Approaches and Requirements of Valuation Procedures (FVS #1), Valuation Purpose and Basis of Value (FVS #2), Requirements of Valuation Reports (FVS #3), Valuation of real estate (FVS #7) (approved by the Orders of the Ministry of Economic Development of the Russian Federation dated July 20, 2007, ##254, 255, 256; dated September 25, 2014 #611, respectively); Page 6 VALUATION REPORT - Standards and rules of Appraisal activities of Nonprofit Partnership Community of specialistsappraisers SIAA including, but not limited to, the Standards and rules of Valuation of real property, approved by the Resolution of Partnership Board of NP SIAAs, Minutes #78, dated August 15, 2008, as amended by the Resolution of Partnership Board of NP SIAAs, Minutes # 184, dated October 19, 2010, and taking into account any further amendments and additions. The property details on which this valuation is based are as set out in this report. We confirm that we have sufficient current local and

7 MARIS VALUATION REPORT Valuation Report national knowledge of the particular property market involved, and have the skills and understanding to undertake the valuation competently. VALUATION REPORT Page 7

8 MARIS VALUATION REPORT Valuation Report Special Assumptions a. As the Subject Property is a trade related property subject the valuation is conducted under the assumption the Property is fully equipped operational entity. b. The Appraiser has not been provided with a copy of the lease agreement for the hotel building. According to the data supplied by the Client the hotel is occupied by a single tenant Domina Rus Ltd on a long-term basis. Assumptions Although this report should be read in conjunction with all the information set out in our report, we acknowledge that we have made various assumptions as to tenure, letting and planning; and the condition and repair of the building and site, including ground and groundwater contamination. Variations from our Standard Assumptions are set out below. Variation from Standard Assumptions If any of the information or assumptions on which the valuation is based is subsequently found to be incorrect, then the valuation figure may also be incorrect and should be reconsidered. None. Verification We recommend that before any financial transaction is entered into based upon this valuation, you obtain verification of the information contained within our report and the validity of the assumptions we have adopted. Page 8 VALUATION REPORT We would advise you that whilst we have valued the Property reflecting current market conditions, there are certain risks which may be, or may become, uninsurable. Before undertaking any financial transaction based upon this valuation, you should satisfy yourselves as to the current insurance cover and the risks that may be involved should an uninsured loss occur. Valuer The Property has been valued by a valuer who is qualified for the purpose of the valuation. For details please see the Appendices of the Report.

9 MARIS VALUATION REPORT Valuation Report Independence The total fees, including the fee for this assignment, earned by Maris Part of the CBRE Affiliate Network from the Addressee (or other companies forming part of the same group of companies) are less than 5.0% of the total revenues of Maris Part of the CBRE Affiliate Network. We confirm that Maris Part of the CBRE Affiliate Network has not had any involvement with the Property, nor the Client, in the last two years; consequently the total fees, including the fee for this assignment, earned by Maris Part of the CBRE Affiliate Network from the Client are less than 5.0% of the total revenues of Maris Part of the CBRE Affiliate Network. Conflict of Interest No conflicts exist. Reliance This report is for the use only of the party to whom it is addressed for the specific purpose set out herein and no responsibility is accepted to any third party for the whole or any part of its contents. Page 9 VALUATION REPORT

10 MARIS VALUATION REPORT Valuation Report Publication Neither the whole nor any part of our report nor any references thereto may be included in any published document, circular or statement, nor published in any way, without our prior written approval of the form and context in which it will appear. Such publication of, or reference to, this report will not be permitted unless it contains a sufficient contemporaneous reference to any departure from the Royal Institution of Chartered Surveyors Valuation Standards or the incorporation of the special assumptions referred to herein. Yours faithfully, Yours faithfully, Boris Moshensky General Director For and on behalf of Maris Part of the CBRE Affiliate Network T: E: bm@maris-spb.ru Kirill Akinshin MRICS Director, Consulting & Valuation Department For and on behalf of Maris Part of the CBRE Affiliate Network T: E: ak@maris-spb.ru Page 10 VALUATION REPORT Yours faithfully, Alyona Volobueva MRICS Senior Appraiser, Consulting & Valuation Department For and on behalf of Maris Part of the CBRE Affiliate Network T: E: ava@maris-spb.ru

11 MARIS VALUATION REPORT Valuation Report SCHEDULE OF MARKET VALUES Property Held for Investment PROPERTY The freehold interest in the hotel building (7,566.6 sq m) with the relevant plot of land (1,397 sq m), located at Letter A, 54, Bolshaya Morskaya St., St.-Petersburg, Russian Federation. MARKET VALUE 37,900,000 (Thirty Seven Million Nine Hundred Thousand) Euro Or according to the official exchange rate of Central Bank of the Russian Federation 1,893,256,600 (One Billion Eight Hundred and Ninety Three Million Two Hundred and Fifty Six Thousand Six Hundred) Rubles Net of VAT Page 11 VALUATION REPORT

12 MARIS VALUATION REPORT Valuation Report SCOPE OF WORK & SOURCES OF INFORMATION Sources of Information We have carried out our work based upon information supplied to us by the Client, Maris Part of the CBRE Affiliate Network internal data sources, and publicly available market data. Documents for Valuation We have been supplied with the following documents and information (in copies): Agreement No.7407-ЗУ, dated October 28, 2013, for sale and purchase of the land plot under privatization process; Certificate of the State Registration of the Right to private property series 78-АЖ No , dated May 23, 2013; Certificate of Acceptance and Transfer of a Building, dated July 1, 2012; Commissioning certificate No B-2011, dated August 5, 2011; Portable water delivery agreement No O-BC, dated February 11, 2011; Waste water collection agreement No O-BC, dated February 8, 2011; Page 12 VALUATION REPORT Statement of conformity No /017, dated June 11, 2011; Statement of compliance with obligations by investor, dated December 11, 2012; Heat supply agreement No.7927, dated December 1, 2010; Provision of services for a fee agreement, dated January 12, 2012.

13 MARIS VALUATION REPORT Valuation Report We have not provided independent verification of the information contained within the documents nor have we verified that it is complete and accurate. Where we have been supplied with legal documents relating to the Property, we have had regard to them in undertaking our valuations and our valuations reflect our understanding of such information. However, we do not take responsibility for the legal interpretation of these documents. We reserve the right to amend our opinions of value should any legal information be provided which contains a material variation from the assumptions we have adopted in our valuations. The Property Our report contains a brief summary of the Property s details on which our valuation has been based. Inspection The Property was inspected on October 08, 2014 Areas Environmental Matters We have not measured the Property but have relied upon the areas provided to us by the Client and stated in the Ownership Certificates for the Property submitted by the Client. We acknowledge that we have not undertaken any environmental audit or other environmental investigation or soil survey on the Property that may draw attention to the existence of any contamination or the possibility of any such contamination. We have not carried out any investigation into past or present uses of the Property nor of any neighbouring land to establish whether there is any potential for contamination from these uses or sites adjacent to the Property, and have therefore assumed that none exists. Page 13 VALUATION REPORT Repair and Condition We have not carried out building surveys, tested services, made independent site investigations, inspected woodwork, exposed parts of the structure which were covered, unexposed or inaccessible, nor arranged for any investigations to be carried out to determine whether or not any deleterious or hazardous materials or techniques have been used or are present in any part of the Property. We are unable, therefore, to give any assurance that the Property is free from defect.

14 MARIS VALUATION REPORT Valuation Report Town Planning We have not undertaken planning enquiries but assume that all issues relating to planning policy and law are either in place or will be in place upon practical completion. Title, Tenure, Planning and Lettings Details of title/tenure under which the Property is held and of any lettings to which it is subject are as supplied to us. We have not generally examined nor had access to all the deeds, leases or other documents relating thereto. Where information from deeds, leases or other documents is recorded in this report, this represents our understanding of the relevant documents. We should emphasise, however, that the interpretation of the documents of title (including relevant deeds, leases and planning consents) is the responsibility of your legal advisor. VALUATION REPORT Page 14

15 MARIS VALUATION REPORT Valuation Report VALUATION ASSUMPTIONS Capital Values The valuation has been prepared on the basis of Market Value which is defined as: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion". No allowances have been made for any expenses of realisation nor for taxation which might arise in the event of a disposal. Acquisition costs have not been included in our valuation. The Property No account has been taken of any inter-company leases or arrangements, nor of any mortgages, debentures or other charges. Landlord s fixtures such as central heating and other normal service installations have been treated as an integral part of the building and are included within our valuation. All measurements, areas and ages quoted in our report are as supplied to us by the Client. Page 15 VALUATION REPORT Environmental Matters In undertaking our work, we assumed that the Property is not contaminated and that no contaminative or potentially contaminative uses have ever been carried out on it. In the absence of any information to the contrary, we have assumed that: a. The Property is not contaminated and is not adversely affected by any existing or proposed environmental law; b. Any processes which are carried out on the Property that are regulated by environmental legislation are properly licensed by the appropriate authorities.

16 MARIS VALUATION REPORT Valuation Report Repair and Condition In the absence of any information to the contrary, we have assumed that: a. There are no abnormal ground conditions, nor archaeological remains present which might adversely affect the present or future occupation, development or value of the Property; b. The Property is free from rot, infestation, structural or latent defect; and c. No currently known deleterious or hazardous materials or suspect techniques have been used in the construction of, or subsequent alterations or additions to, the Property. d. We have otherwise had regard to the age and apparent general condition of the Property but comments made in the property details do not purport to express an opinion about or advise upon the condition of un-inspected parts and should not be taken as making an implied representation or statement about such parts. Title, Tenure, Planning and Lettings Unless stated otherwise within this report, and in the absence of any information to the contrary, we have assumed that: a. The Property possesses a good and marketable title free from any onerous or hampering restrictions or conditions; Page 16 VALUATION REPORT b. The building is erected in accordance with planning permissions, and has the benefit of permanent planning consents or existing use rights for its current use; c. The Property is not adversely affected by town planning or road proposals; d. There are no tenant s improvements that will materially affect our opinion of the rent that would be obtained on review or renewal; e. There are no user restrictions that would adversely affect value; f. The tenants meet their obligations under their leases; g. The building complies with all statutory and local authority requirements including building, fire, and health and safety regulations; h. Nothing would be revealed by any local search

17 MARIS VALUATION REPORT Valuation Report or replies to usual enquiries of the seller which would materially adversely affect the value of the Property. VALUATION REPORT Page 17

18 MARIS VALUATION REPORT Property Report PROPERTY DETAILS LOCATION The Subject Property is located at 54, Bolshaya Morskaya St. in Admiralteisky district of St.-Petersburg, about 900 metres from Admiralteiskaya metro station. Public Transport Connections The Subject Property can be conveniently accessed by both public and private transport. The Property is located within 1 minutes walk of the bus station, from where buses and mini-buses can be taken towards Nevskiy prospect, the main road of the city. Admiralteiskaya metro station is located quite close to the Property 900 meters. Private Transport Connections The Property can be accessed by car along Bolshaya Morskaya Street and Moyka River Embankment. There are several parking places near the Property for visitors. Cars can be left on neighbouring streets. Tourist buses can stop near the Property for a limited time. Pulkovo-1 and Pulkovo-2 Airports are located approximately 18 kilometres to the south of the Subject Property and can be reached in a minimum driving time of approximately 50 minutes (not allowing for traffic congestion). Vicinity of the Property The neighbourhood of the Subject Property is presented mainly by residential buildings. Commercial real estate objects in the surroundings are predominately office premises of governmental organisations located in former palaces. Moreover the neighbourhood is characterized by high concentration of museums and cultural heritage sites. Page 18 PROPERTY REPORT A location plan of the Property is provided in Appendix. DESCRIPTION Property The Subject Property is 5-star hotel with 109 rooms located in the reconstructed historical building in the city center. The reconstruction process of the building was finished in The hotel was opened in May The building of the Subject Property location was reconstructed and now equipped with central heating, ventilation and air-conditioning systems. The Property was found to be in excellent condition at the date of visual inspection. The physical and technical characteristics of the building currently comply with high standards for hotel buildings.

19 MARIS VALUATION REPORT Property Report The Subject Property is currently occupied by one tenant ( Domina Rus Ltd.) under a long-term lease agreement (see Special Assumptions ). Areas Our calculations are based on the floor areas submitted by the Owner. A breakdown of the Subject Property s areas is provided in the table below: Gross Floor Areas of the Property AREA, SQ M Total area of the building 7,566.6 inclusive of: basement 1,166.9 ground floor 1,087.1 first floor 1,104.8 second floor third floor fourth floor fifths floor sixth floor (mansard) Source: Client s data Condition & state of repair The Subject Property is a reconstructed historical building in excellent condition. During the course of our visual inspection we noted no faults in the condition of the premises and we assume that there have been no problems with the Property to date. The hotel was opened in May Page 19 PROPERTY REPORT We have not undertaken a structural survey or tested any of the services at the Property. We have not been supplied with a survey report prepared by any other firm. We have undertaken only a limited inspection for valuation purposes. Environmental considerations No significant current or historical sources of contamination have been identified which are likely to result in a significant liability based on a continuation of the current use of the site. For the purpose of our valuation we assumed that there are no contamination issues that would materially affect our valuation. Should this later transpire not to be the case, we reserve the right to amend our opinion of value accordingly. Town planning We have not made any further verbal enquiries to the planning department and have assumed that the current use of the site does not contravene any town planning regulations.

20 MARIS VALUATION REPORT Property Report From the documentation we viewed and from our inspection, there is nothing that has come to our attention that in our opinion would give rise to any contravention of statutory requirements. However, we cannot be certain that we have seen all documentation or physical acts or processes that would give rise to any contravention. We therefore reserve the right to amend our valuation accordingly if anything further comes to light. VAT All rents and capital values stated in this report are exclusive of VAT. LEGAL CONSIDERATIONS Tenure We have been supplied with the following documents (in copies) confirming the rights to the Property: Agreement No.7407-ЗУ, dated October 28, 2013, for sale and purchase of the land plot under privatization process; Certificate of the State Registration of the Right to private property series 78-АЖ No , dated May 23, 2013; Certificate of Acceptance and Transfer of a Building, dated July 1, 2012; Commissioning certificate No в-2011, dated August 5, The premises belong to Dom na Moyke Ltd. We recommend that any third parties who have a legal interest in the Property make all necessary investigations on their own behalf. Page 20 PROPERTY REPORT Tenancies We have not been provided with a copy of the lease agreement for the hotel building under appraisal. According to the data supplied by the Client, the hotel is occupied by a single tenant Domina Rus Ltd. on a long-term basis (see also Special Assumptions ). Rooms Floor Areas of 5-star hotel under appraisal are presented in the table below: First floor Second floor Third floor Fourth floor Fifths floor Sixth floor Total hotel rooms area 3,602.0 ROOMS' AREA, SQ M

21 MARIS VALUATION REPORT Property Report Average room area 33.4 Total room stock and other income parameters of 5-star hotel under appraisal are in the following table. Income parameters of Hotel real property subject under appraisal PARAMETER VALUE Total number of rooms 109 inclusive of: Mansard room 17 Superior room 73 Superior Moika view 4 Lifestyle Moika view 12 Junior Suite 2 Executive Suite 1 Restaurant 70 seats Bar 30 seats 2 conference halls 10 seats and 65 seats Fitness center in basement n/a Source: Data provided by the Client Page 21 PROPERTY REPORT

22 MARIS VALUATION REPORT Market Commentary MARKET COMMENTARY Macroeconomic Analysis of Russia External sector and Ruble exchange rate After a sharp 9% depreciation versus the USD in Q1, the Ruble managed to stabilize in Q2. During the quarter it appreciated by 5.8%, having finished Q2 at RUR/USD. All in all, in H1 the Ruble weakened by just 2.7% against the USD. The behaviour of the Ruble in Q2 provided optimism for both producers and customers and, no doubt, contributed to the growth in production and consumption. However, in July, the next round of escalation of geopolitical tensions triggered another wave of Ruble depreciation. This time depreciation reached 3.8% by the beginning of the fourth week of July. A target of RUR/USD by the end of 2014 is still likely. A weak Ruble is still a logical policy to support economic growth and budget revenues from oil and gas exports. RUR/USD, end of period, Rubles per 1 USD Page 22 MARKET COMMENTARY Dec 12 Feb Apr Jun Aug Oct Dec 13 Feb Apr Jun Source: Bank of Russia

23 MARIS VALUATION REPORT Market Commentary RUR/Euro, end of period, Rubles per 1 Euro RUR/Euro Page 23 Source: Bank of Russia In addition, this macroeconomic strategy seems to be rational in order to mitigate current limitations on the access of Russian companies to international capital markets. However, this strategy should be implemented within a framework, preventing significant acceleration of inflation. MARKET COMMENTARY Oil prices did not follow their usual seasonal pattern observed over the last few years, and remained stable within USD per barrel. In June, the average monthly price was 4.2% higher than that in March. However, by the middle of July, this growth had disappeared, and oil prices returned back into the USD per barrel range. Escalation of the geopolitical problems in the Middle East is one of the important contributors to the current high oil prices.

24 MARIS VALUATION REPORT Market Commentary Monthly average price, Brent, USD per barrel Dec 12 Feb Apr Jun Aug Oct Dec 13 Feb Apr Jun Source: IndexMundi Summing up, non-economic factors continued to have a strong impact and bring high volatility to the markets. The same scenario is expected to continue in H2, causing complicated problems to remain for medium-term business planning. Despite still high oil prices and solid Ruble appreciation, the international reserves of the Bank of Russia decreased in Q2 by USD 7.8 bln. At its peak, the decline was as large as USD 19 bln., followed by improvements in June, when international reserves increased by USD 11.1 bln. As a result, by the beginning of Q3, international reserves reached USD bln. The decline compared to the peak level of December 2012 amounted to USD 59.3 bln., or around 11%. Page 24 MARKET COMMENTARY The shrinkage of international reserves against a background of solid Ruble appreciation in Q2 might mean that the Bank of Russia was strongly concerned about high inflation. In April and May, consumer prices increased by 0.9% each month. It is highly probable that the CBR was trying to spur an increase in inflation rates via higher Ruble appreciation.

25 MARIS VALUATION REPORT Market Commentary International reserves, USD bln Dec 11 Feb Apr Jun Aug Oct Dec 12 Feb Apr Jun Aug Oct Dec 13 Feb Apr Jun Source: Bank of Russia The escalation of geopolitical problems in July 2014, followed by another wave of Ruble depreciation, had brought back to the agenda the old dilemma: international reserves or inflation?. The sharp depreciation of the Ruble in Q1 generated a positive impact on international trade. According to the CBR s preliminary estimates, in Q2 export of goods increased by USD 7.3 bln., or 5.7%. In turn, imports shrank by USD 4.3 bln., or by 5.1%. As a result, in Q2 2014, the current account surplus increased to USD 17.1 bln. from USD 1.8 bln. in Q Page 25 MARKET COMMENTARY The weakened Ruble managed to halt the more than 2 year long cycle of deterioration in the current account of the balance of payments. The financial account deficit is estimated at USD 16.6 bln. compared to USD 7.8 bln. in Q2 2013, and two thirds less than in Q All in all, in H1 2014, the balance of payments deficit was USD 37.7 bln., which is a significant deterioration compared to the USD 0.5 bln. surplus in the same period of Nonetheless, given the current size of Russia s international reserves, this amount is not critical. The negative impact of capital flight might still be compensated by other economic policy measures. Lending conditions Increased volatility on financial markets and geopolitical tensions led to the tightening of lending conditions. According to research by the Bank of Russia, lending conditions in early 2014 were as severe as they were at the beginning of 2009 (economic crisis) or at the end of 2011 (end of post-crisis recovery).

26 MARIS VALUATION REPORT Market Commentary In Q2 Ruble stabilization and positive trends in macroeconomic indicators contributed to some softening of lending conditions. However, the new wave of problems which appeared in July might significantly limit access to loans once more. Changes in interest rates on loans to non-financial organizations on a term of 1 year and more were minimal, which was quite unexpected given the general situation on the financial markets. Average lending rates minimally increased by 0.36 p.p. from 10.64% in January to 11% in April Lending rates in USD had even managed to decrease from 7% in January to 5.45% in April. Their behaviour in Euros was much more expected: growth from 6.56% to 8.63%. Given the current situation on the financial markets, we think that there are enough prerequisites for lending rates in RUR and USD to increase. However, it looks probable that average rates might be significantly influenced by loans with non-market commercial terms. Lending activity is showing signs of slowdown. According to CBR statistics, in January April the construction sector benefited from new loans of around RUR bln., which is 3.6% less than in the same period of The first signs of the slowdown appeared in March A similar situation is apparent in the Operations with real estate, leasing and other RE services segment. In January April 2014, newly granted loans amounted to RUR bln., which is 5.7% below that in Real sector Page 26 MARKET COMMENTARY According to the preliminary estimates from the Ministry of Economic Development, in Q2 Russian GDP increased by 1.2% compared to Q H1 GDP growth amounted to 1.1%. These results contribute to optimism regarding higher GDP growth in the whole of If current trends continue, GDP might increase at a rate closer to the higher end of the current forecast range of 0.4 1%.

27 MARIS VALUATION REPORT Market Commentary GDP growth, Russia, %, Y-o-Y 106,0 105,0 104,0 103,0 102,0 101,0 100,0 99,0 98,0 I II III IV 2011 I II III IV 2012 I II III IV 2013 I II III IV 2014 Source: Rosstat, Ministry of Economic Development of the Russian Federation Industrial production showed better performance and managed to increase by 1.5% according to Rosstat data. Consumer demand, measured by retail sales, also showed quite good strength, growing by 2.7% compared to the same period of Relatively good retail sales figures were observed despite the fact that the real disposable income of the population hardly changed in H According to the preliminary estimates from Rosstat, this indicator decreased by 0.2% in H compared to the same period of Page 27 MARKET COMMENTARY Investments in fixed capital also provided some reasons for optimism. In H1 they declined by 2.7% compared to some pessimistic yearly forecasts of a reduction of 4-5%. Summing up, the economy is currently following an intermediate pattern between the optimistic and pessimistic forecasts being discussed at the end of This survey has been prepared on the basis of materials provided by Rosstat ( Central Bank of Russian Federation ( Ministry of Economic Development of Russian Federation ( Ministry of Finance of the Russian Federation ( OECD ( Bloomberg ( World Bank ( UBS ( Goldman Sachs (www2.goldmansachs.com), as well as using data from the international rating agencies Standard & Poor's ( Fitch Ratings ( and Moody s Investors Service (

28 MARIS VALUATION REPORT Market Commentary Summary Q2 witnessed positive news from the fundamental macroeconomic factors: both the Ruble and GDP demonstrated an ability to show strong performance in a situation when geopolitical tensions are less severe; However, the latter remain quite negative for the Russian economy. It is highly probable that they will continue influencing economic trends, at least in Q3; With this in mind, CRE market participants are expected to continue following conservative business strategies; The removal of the threat of sanctions on sectors of the Russian economy is the key trigger for more aggressive business actions; Until then, demand on the CRE market is expected to be constrained. Nonetheless, developers will continue to finish ongoing projects. They are now attempting to have lower financial leverage, if possible. MARKET COMMENTARY Page 28

29 MARIS VALUATION REPORT Market Commentary Macroeconomic overview Saint Petersburg Saint-Petersburg is a city and the capital of the Leningradskiy Region. It is situated on the Neva River and has access to the Gulf of Finland to the west. Having a population of 5 mln. people and covering an area of 1,439 sq km, it is the second largest city in Russia after Moscow. It is also a major tourist center, attracting millions of tourists as a result of its historical heritage, architecture and culture. St.-Petersburg is an administrative center of the North-West Federal district, which consists of the Karelia republic, the Komi republic, the Arkhangelskaya region, the Vologodskaya region, the Kaliningradskaya region, the Leningradskaya region, the Murmanskaya region, the Novgorodskaya region and the Pskovskaya region. The city is divided into eighteen districts: Admiralteisky, Vasileostrovsky, Viborgsky, Kalininsky, Kirovsky, Kolpinsky, Krasnogvardeisky, Krasnoselsky, Krondshtatsky, Kurortny, Moskovsky, Nevsky, Petrogradsky, Petrodvortsovy, Primorsky, Pushkinsky, Frunzensky and Central. The highest growth rates have been seen in the production of food, equipment and machinery, and metallurgical goods. There are all kinds of transportation in St.-Petersburg: air, railway, water, and underground. The city has two airports (Pulkovo1 and Pulkovo 2) and 5 railway stations (Finlyandsky, Ladozhsky, Vitebsky, Baltiysky, and Moscovsky), as well as sea and river ports. Key Macroeconomic Indicators H 2014 GRP, billion Rubles 1, , , , ,291 n/a n/a Population, thousands people 4, , ,613 4, ,022 5,031 5,155 Unemployment, % Average per capita incomes, roubles Retail turnover, billion Rubles 16,865 19,937 25,897 26,069 27,795 31,407 n/a % to previous period Residential property construction, thousand sq m Investment in fixed capital, billion Rubles 3, , , , , ,584 1, % to previous period Page 29 MARKET COMMENTARY Industrial Production The index of industrial production in St.-Petersburg in 1H 2014 in comparison with 2013 amounted to 92.2%, including 8% decrease in the volume of manufacturing

30 MARIS VALUATION REPORT Market Commentary production, and a 6.2% decline in the production and distribution of electricity, gas, and water. Industrial production index in St.-Petersburg (% to previous period) 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% Consumer Demand In 1H 2014, the volume of retail turnover in St.-Petersburg amounted to billion rubles, 0.7% less than in 1H Demand growth directly depends on growth in incomes. In January-May 2014, real cash incomes increased by 0.9% in comparison with the same period of During the period of January-May 2014, the average salary increased by 4.7% compared with the same period of 2013 and amounted to 38,375 rubles. Page 30 MARKET COMMENTARY Investment In 1H 2014, the level of investment of fixed capital in St.-Petersburg rose by 7% and amounted to 77 billion rubles. Unemployment By the end of June 2014, 9.1 thousand people were registered with the public unemployment services (job-seekers). The registered unemployment level was 0.3% of the economically active population in the first half of Consumer Price Index The consumer price index in 1H 2014 made up 105.7% (compared with 104% in the 1H 2013).

31 MARIS VALUATION REPORT Market Commentary Consumer price index, % ,2 114, ,5 109,4 105,9 106,1 106,7 105, H 2014 Construction Approximately 1.4 mln. sq. m of residential real estate was brought to the market during the first half of 2014 in St.-Petersburg. This figure is 48.9% higher than in 1H Delivery of residential property, thousand sq m thousand sq m Page 31 MARKET COMMENTARY Q1 Q2 Q3 Q4 Investment credit ratings On 21 March 2014, the international agency Fitch Ratings confirmed the long-term rating in foreign currency and rubles at BBB, and changed the forecast to

32 MARIS VALUATION REPORT Market Commentary negative. The long-term rating on the national scale was given at AAA (rus), with a forecast of stable. The short-term rating in foreign currency is F3. On 20 March 2014, the rating agency Standard & Poor's confirmed the long-term credit rating of St.-Petersburg to BBB, and downgraded the outlook to negative. On 1 July 2014, the rating agency Moody s raised the credit rating for St.- Petersburg on the global (international) scale, both in foreign currency and in rubles, to the level of Baa1 and issued an outlook of negative. The region s ratings are consulted by creditors when they look at applications from private companies to make borrowings. A high credit rating creates a favorable investment image, and influences the level of interest charged. This survey has been prepared on the basis of materials provided by Petrostat ( as well as using data from the international rating agencies Standard & Poor's ( Fitch Ratings ( and Moody s Investors Service ( Summary The index of industrial production in St.-Petersburg in 1H 2014 declined by 7.8% in comparison with the same period of From January-May 2014 real cash incomes increased by 0.9% in comparison with January-May Investment of fixed capital in St.-Petersburg increased by 7% in 1H 2014 and amounted to 77 billion Rubles. The inflation rate in 1H 2014 was 5.7% (compared to 4% in 1H 2013). The current investment credit ratings reflect growing geopolitical and economic risks. Page 32 MARKET COMMENTARY

33 MARIS VALUATION REPORT Market Commentary Hotel Market Overview Total Stock In H1 2014, there were 74 modern hotels operating in St.-Petersburg, offering a total of 16,159 rooms in 3, 4 and 5 star categories (each having more than 50 rooms). Hotel market key figures, H CLASS ROOMS HOTELS 5 stars 2, stars 6, stars 6, Total 16, Source: Maris Part of the CBRE Affiliate Network During the first six months of 2014 was opened two 4* hotels: Hotel Indigo St.Petersburg for 119 rooms (Chaikovskogo st., 17). Hotel Indigo is the first network boutique hotel in St.Petersburg operated by InterContinental Hotel Group. Park Inn by Radisson Pulkovo Airport St.-Petersburg new to the new Pulkovo terminal. The hotel will receive its first guests in August. New rooms opened in a 4-star boutique hotel Rossi on quay of the Fontanka River. Now the room inventory of the hotel increased to 58 rooms. In spring 2014 new 3-star 50-room hotel Aglaya Hotel&Courtyard for was opened on Razyezzhaya St. Page 33 MARKET COMMENTARY New trends One of the trends on the hotel real estate market of St.-Petersburg is the reconstruction of historical buildings for hotels of different categories. In the first quarter of 2014 the permission for reconstruction of The Shagin house on Fontanka river embankment 145b was issued. This historical building is supposed to be redeveloped for the hoter with 140 rooms. In the historical building on Chaikovskogo st., 17 was opened the boutique hotel Indigo. The hotel for Mariinskiy theatre is planned to be settled in the building on Sadovaya st., 17, where M.Y.Lermontov lived and wrote several compositions. Boutique hotels still continue to develop on the hotel market of St.-Petersburg. A boutique hotel is a small exclusive design hotel, which offers a special style and atmosphere with an individual approach to each client. Active development of apartment hotel market. Currently about 20 apartment hotels are being designed and constructed in different parts of the city. However, today in St.-Petersburg income generating real estate market can be called oversaturated due to the lack of demand, what may affect the future occupancy.

34 MARIS VALUATION REPORT Market Commentary Total stock structure by class Amongst the operating hotels, the greatest share is taken by 3* and 4* categories. They account respectively for 40 % and 43% of the total stock-side structure. In the 1st quarter 2014 the volume of 4* hotels increased by 0.4%. Total stock structure by class 100% 90% 16% 15% 15% 15% 16% 17% 17% 80% 70% 60% 38% 36% 39% 43% 43% 42% 43% 50% 40% 30% 20% 10% 0% 46% 48% 46% 42% 42% 41% 40% 3* 4* 5* Page 34 MARKET COMMENTARY Source: Maris Part of the CBRE Affiliate Network Saturation level in the segment of five-star hotels can be characterized as relatively high. Since 2012, the level of 5-star hotels increased by 1% due to the opening of two new luxury hotels. Since 2008, the share of five-star hotels has remained unchanged, but the amount of rooms in this category increased by 20%. However there is a lack of high quality supply in the middle segment, namely in the category 3-4 * there is potential for development. Prospects of hotel industry development on Vasilyevsky Island are ambiguous. From one hand, there are plans to close Lenekspo exhibition platform after new exhibition complex ExpoForum will be put into operation. From the other hand, the area now is actively developing, especially around alluvial territories along Morskaya quay; new residential and commercial real estate projects are realized and there are improvements in transport infrastructure. Total stock structure by location

35 MARIS VALUATION REPORT Market Commentary In St.-Petersburg the largest number of hotels is located in the city center. In four central districts (Centralniy, Admiralteiskiy, Petrogradskiy, Vasileostrovskiy) 67% of total quality room stock is represented. Total stock structure by location 18% 33% 13% 4% Admiralteysky Vasileostrovsky Petrogradsky Central Other 31% Source: Maris Part of the CBRE Affiliate Network In addition, hotel projects appear in the remote areas of the city. The mixed-use complex with hotel is being developed on Prospect Bolshevikov. In the first quarter of 2014 SPA hotel Michur Inn was commissioned in Leningrad region. Hotel real estate market of St.-Petersburg and the Leningrad region continues to diversify and expand through the region. Page 35 MARKET COMMENTARY Forecast In H the room inventory available in the southern part of the city will increase due to awaited opening of two hotels Hilton Hotels & Resorts and Hampton by Hilton (235 and 211 rooms) as a part of congress and exhibition complex ExpoForum. The Government of St.-Petersburg plans to develop the congress and exhibition tourism, focusing on major international and Russian exhibitions and conferences. According to the Governor of St.-Petersburg in 2020 St.Petersburg will reach the level of 180 international events each year, and thus increase the volume of convention and exhibition activities 5 times. Hotel operator InterContinental Hotels Group has announced plnas on construction of three hotels in St.-Petersburg. Among them Crown Plaza 4* on Sadovaya str., Holiday Inn 4* on Kremenchugskaya str. and one 5* hotel, which location is still not disclosed. Despite the fact that the most popular in the city are three-star hotels, most of the hotels, which are under construction, fall into the 5* and 4* categories.

36 MARIS VALUATION REPORT Market Commentary International Operators in St.-Petersburg In 2013 new operator Four Seasons entered the market together with the official opening of its first hotel in St.Petersburg. In 2014 the first Hilton hotel will be opened. In 2015 Golden Tulip Hotels. In the first half of 2014 its market presence in St.-Petersburg increased InterContinental Hotel Group, which opened a boutique hotel Indigo and Rezidor Hotel Group, which opened Park Inn by Radisson Pulkovo Airport St.-Petersburg. Furthermore, the following international chains are planning the further expansion on St.-Petersburg hotel market: InterContinental Hotel Group (the boutique hotel Indigo 4* and the Crowne Plaza 4* in the building of Nikolskie Riady). Starwood Hotels & Resorts (Aloft St.-Petersburg on Pirogovskaya emb.). Accor (hotel 4* at 5, Mayakovskogo St.). International operators in St.-Petersburg Cronwell Domina Starwood Best western Four Seasons Kempinski Belmond Top International Corinthia Rocco Forte Accor Marriott Sokos InterContinental Rezidor Page 36 MARKET COMMENTARY Количество номеров Source: Maris Part of the CBRE Affiliate Network 15 international operators are currently represented in St.-Petersburg, and they managed 51% of the high-quality hotels in the city. Demand Tourist inflow According to the information from tour operators in H the amount of international tourists, mainly from USA and Europe, has declined. Among main

37 MARIS VALUATION REPORT Market Commentary reasons are military-political situation in Ukraine and fear of the possibility of an armed conflict. Minor part of the tourists refuse from visiting St.-Petersburg due to ideological beliefs. Since the beginning of the year the shrink has accounted to 10%. Further drop is expected in summer. The incoming tourist stream was also affected by the modernization of Pulkovo airport, which increased the carrying capacity of the airport. In 2013 the increase amounted to 15%. During the first five months of 2014 passenger traffic was people, which is 12.8% more than during the same period of Mainly, these were Russian tourists. The priority areas of tourism considered by local authorities are water tourism, congress, exhibition and social tourism. It is planned to increase the popularity of St.-Petersburg as a center for various conferences, seminars, exhibitions, summits and other business activities of international format. Occupancy One of the characteristics of the St.-Petersburg hotel market is seasonality. Maximum occupancy of hotels is in June (the period of White Nights, International Economic Forum, the graduation event Scarlet Sails), and minimal occupancy is during the winter period. In January-March 2014, the average occupancy rate of hotels in St.-Petersburg was at the level of 40-50%, because the winter is a low season. Moreover according to travel agencies the number of tourists in St.-Petersburg during the New Year holidays decreased by 15% compared with The occupancy improved up to 85% by May-June. The amount of hotel rooms in St.-Petersburg outnumbers the amount of tourists, but there is a deficit during White Nights and Economic Forum. Page 37 MARKET COMMENTARY During the low season main demand for the hotels is produced by business tourists. Not so long ago hotels began to explore new ways of promotion in the market. Many hotels have started to announce their services on social networks, introduced the possibility of online booking. Online booking services conducted a survey on the results of which it was revealed that 80% of all online reservation in Russia accounts for Moscow and St.-Petersburg. There are additional services such as shuttle service to / from the airport, excursions, cultural and leisure activities, etc. An example could be an agreement between the Sokos Hotel Vasilievsky and Mikhailovsky Theatre concluded in spring A special box in the theatre is reserved for hotel guests, where tickets can be booked for any performance together with booking the room. Guests of the hotel can also pre-arrange a tour behind the scenes of the Mikhailovsky Theatre. Commercial Terms Rack rates in the hotels of St.-Petersburg depended on the season, as is traditional. In the majority of the city s hotels, low season lasts until mid-april. From then until mid-may is the semi-season. And from mid-may to the end of June is the high season. Furthermore, separate prices are established during the International

38 MARIS VALUATION REPORT Market Commentary Economic Forum (mid-june) and they, as a rule, are 20% or more above the rates for high season. The hotel real estate market in 2014 is characterized by the rising rack rates in hotels of all categories. The growth for 5* hotels amounted to 3%-7%, for 4* hotels - from 9% to 11%, for 3* hotels - from 10% to 15%. In 2014 the rate in 5* hotels during the International Economic Forum increased and averaged at 30,000 rubles per night, compared with 20,000 Rubles in The increasing rates in hotels are explained at a bigger extent by the changes in euro and dollar exchange rates. Nevertheless, hotels more and more often provide discounts and special offers. Rack rates* in 2014 CLASS LOW SEASON SHOULDER SEASON HIGH SEASON 5 stars $291 $329 $460 4 stars $174 $200 $300 3 stars $106 $128 $163 * US dollars, exclusive of VAT Source: Maris Part of the CBRE Affiliate Network The main trend of the past few years regarding the commercial terms is in retraction from firm prices policy in main hotels of St.-Petersburg. Active total stock growth has intensified a competition among hotels. As a result, most hotels have diversified their pricing by having various discounts and special offers aimed primarily at attracting tourists during the low season. Investment Deals In H no investment deals has been concluded in the market. Page 38 MARKET COMMENTARY

39 MARIS VALUATION REPORT Valuation Commentary VALUATION CONSIDERATIONS Highest and Best Use Analysis Highest and Best Use is the legal, physically possible, socially acceptable and financially optimal type of land use that generates a stream of cash flow that when capitalized at a market supported rate gives the highest value of the property. In determining the highest and best use of the Property, we took into account four general criteria: Legally permitted: examination only of alternatives which are legally allowed; Physically possible: examination of physically possible use alternatives in this location; Economically beneficial: examination of alternatives which are physically possible and legally allowed and which will be economically beneficial to the owner; Maximum efficiency: examination of economic uses which will provide maximum net operating income or maximum current value. The highest and best use analysis was based on the Property s location and surroundings, current market information, real estate market trends and forecasts, the characteristics of the Property and its current use. Taking into consideration that the Subject Property represents a hotel building of high class reconstructed recently in accordance with the modern project meeting the up-to-date standards of high class hotel real property, and has an excellent location, we have assumed that the current use of the Property provides the maximum market value. Page 39 VALUATION COMMENTARY The optimal use of the Subject Property The highest and the best use of the Subject Property is its current use 5-star hotel real property subject with conference facilities, fitness center, restaurant and bar leased out to a single tenant (international hotel operator). Marketability and Potential Purchasers We have had regard to the marketability and attractiveness of the Property. We outline our main comments and assumptions below: The Subject Property occupies an excellent location close to metro station, in the central part of St.-Petersburg developed business and administrative zone of the city, in surroundings of cultural heritage landmarks; it would appeal to a number of occupiers and investors not only because of the high quality of the constructions and advantageous project, but also because of its location. The hotel real property subject is let to a reputable tenant, belonging to an international hotel operator.

40 MARIS VALUATION REPORT Valuation Commentary While the St.-Petersburg hotel market is not performing well, the subject Property possesses a number of sound fundamentals that would appeal to a number of investors, both Russian and foreign: the constructions are of good quality, the hotel is leased out and managed by international operator and, therefore, have a secure income stream. Valuation Methodology Market Value in accordance with Federal Law On Valuation Activity in the Russian Federation No. 135-ФЗ, dated July 29, 1998 is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market typical for analogous objects; the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale; payment for the property is made in the money order. Market Value in conformity to the RICS Valuation Professional Standards, dated January 2014, is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. Page 40 VALUATION COMMENTARY Therefore, the definitions of the Russian Federal Standards and RICS Valuation Professional Standards do not contradict each other. The Appraiser s opinion on the Market Value of the Subject Property is effective as of the Date of the Appraisal. Any changes to the Subject Property and its neighborhood, as well as to the political, economic, juridical and any other environment that may happen after the Effective Date of the Appraisal and that may have influence on the market and, consequently, on the value of the property rights under the appraisal, are outside of the present Report. The date of the value estimation is September 30, The Subject Property was inspected on October 08, The valuation was conducted in the period from September 18, 2014 to October 15, 2014.

41 MARIS VALUATION REPORT Valuation Commentary Stages of Valuation Assignment for a valuation. Identification of a subject property. Determination of the purpose and function of an appraisal, rights being appraised, restrictions on the use of valuation report. Coordination with the Client of main assumptions and limiting conditions of the valuation. Description and analysis of a subject property. Location analysis, structural and technical conditions of a property being appraised. Quantitative and qualitative parameters of a Subject Property. Analysis of competition and factors, influencing value. Market analysis, correlation between supply and demand, and competition to the subject property, its dynamics and trend. Financial alternatives with similar investment risks. Typical market participants, their motivation, standard deal terms. Selection of appraisal methods in accordance with standard valuation approaches. According to valuation standards an appraiser, while doing an appraisal, must use (or has to justify refusal of use) cost, comparison, and Income Approaches to value. An appraiser can independently choose particular methods of valuation within the limits of each approach. Based on calculated results appraiser determines the final value of the Subject Property. Cost Approach methods of valuation based on determination of cost necessary to replace or to reproduce a subject property taking into account depreciation factor and value of the land parcel. Sales Comparison Approach methods of valuation based on comparison of a subject property with similar properties, which had been recently sold in the market. Income Approach methods of valuation based on determination of expected incomes that a subject property can generate. Page 41 VALUATION COMMENTARY Reconciliation of the value indications. The final analytical step in the valuation process is the reconciliation of the value indications - achieved by application of each of the valuation methods - into a single final result of the appraisal. The entire appraisal is being reviewed, making sure that the data available and the analytical techniques, rationales, and logic applied have led to consistent judgments. Data having been used in each of the appraisal methods are reviewed to make final judgment about their relative reliability, relevancy and sufficiency. Based on this judgment as well as on correspondence between each method applied and the determined purpose of an appraisal weights are assigned to each of value indication to calculate final value estimate. Appraisal Report. It is being prepared as a document including all the information with regard to conclusions, assumptions, and calculations that were made during valuation process. The valuation report is then presented to the Client.

42 MARIS VALUATION REPORT Valuation Commentary The Application of the Valuation Approaches to the Subject Property Cost Approach Cost Approach to value is based on the premise that the investor would pay for the property no more than the costs of purchasing a similar land plot and constructing its reproduction or replacement within a reasonable timeframe. In this approach, the value is derived by adding the estimated land value to the current cost of constructing improvements and then subtracting the amount of depreciation. The approach can give trustworthy results if replacement cost/reproduction cost, depreciation and land value are estimated with precision. The approach is best used, first, when a property under appraisal is recently constructed, its depreciation is insignificant and its use is the highest and best one for the plot of land, as well as in cases when a unique property (specialized) is being appraised and comparables are either few or not available. In accordance with The Appraisal of Real Estate, 12th Edition, Chicago, 2001, Cost Approach is most persuasive when a value of new or recently constructed buildings is determined. Due to the following factors it is considered, that the result, obtained by Cost Approach won t be correct. 1. From the point of view of Appraisers, the investment motivation defining a price level on subjects, comparable to the Subject Property on class and size, is the information on the performed transactions with similar subjects, a level of future profit from such subjects, but not the expenses for their construction. 2. The price level and future incomes from subject are defined (except for a class of a property and its size) by accessibility, professionalism of the managing company and other factors which also are not connected with volume of incurred building expenses. Page 42 VALUATION COMMENTARY 3. The Subject Property under appraisal is a building after reconstruction. Therefore, it is difficult to evaluate precisely replacement/reproduction costs as well as determine accrued depreciation of the building under appraisal. Numerous assumptions in the context of Cost Approach applied to the Property evaluation could lead to significant miscalculations and, therefore, decrease the reliability of the results. Hence, Cost Approach was not applied to the Subject Property value estimation. Comparison Approach Sales Comparison Approach is based on the assumption that market participants sell and buy properties analysing market information on similar deals. It is assumed that a reasonable buyer would not pay for the property being sold a price exceeding that the best market price asked for the property of comparable quality and use. The Appraiser produces a value indication by comparing the Subject Property with similar properties recently sold in the market taking into account differences between the Subject Property and comparable sales. The sale prices of the properties that a typical buyer is willing to pay for the property of

43 MARIS VALUATION REPORT Valuation Commentary similar quality and use are judged to indicate a range in which the value estimate for the subject property will fall. The analysis of commercial real property market in St.-Petersburg has not revealed the possibility to apply Sales Comparison Approach in the context of the present Appraisal Report because the Appraiser have not got the information regarding asking and/or transaction prices on similar real estate subjects: high class hotel real properties. Income Approach Income Approach to value is based on the assumption that the property value directly depends on the present value of future net income flows that the property is capable of generating. In other words, an investor purchases the property at a current price in exchange for the right to receive future benefits of income and reversion. The Subject Property is income-generating one. Thus, its value can be derived by Income Approach with precision. Thus, Income Approach was used in the Subject Property evaluation. VALUATION COMMENTARY Page 43

44 MARIS VALUATION REPORT Valuation Commentary INCOME APPROACH Methodology of Income Approach Income approach to value is based on the assumption that the property's value directly depends on the present value of future net income streams that the property is capable of generating. In other words, an investor purchases the property at a current price in exchange for the right to receive future benefits of income and reversion. Thus, in the income capitalisation approach an appraiser indicating the market value follows two steps: Forecasting the anticipated future income of the property; Discounting future benefits into the present value. For the purpose of appraisal anticipated income streams from the property are included into a reconstructed operating statement representing the following items: Potential gross income (PGI) the total potential income attributable to the real property at full occupancy before operating expenses are deducted. It includes total rent payment and other benefits from the property. Rent loss could be observed due to vacancies. As a rule such losses are expressed as a percentage of potential gross income and estimated for each local market. Estimating an occupancy rate the appraiser must take into account current and projected supply and demand. Effective gross income (EGI) is the anticipated total income from all operations adjusted for vacancy. Net operating income (NOI) is the actual or anticipated net income remaining after all operating expenses are deducted from effective gross income, but before mortgage debt service and book depreciation are deducted. Page 44 VALUATION COMMENTARY Operating expenses (OPEX) are the periodic expenditures necessary to maintain the real property and continue the production of the effective gross income. Operating expenses include fixed expenses and variable expenses. Fixed expenses are operating expenses that do not vary with occupancy and rent rates. Property tax and land tax are usually considered as fixed expenses in appraisal practice in Russia. Variable expenses are operating expenses that generally vary with the level of occupancy or the extent of services provided. There are many types of variable expenses. These expenses include usually utilities payments water supply, heating, gas supply, electricity, cleaning, current maintenance and repair, parking area maintenance, security and etc. Two capitalisation methods direct capitalisation and yield capitalisation (discounted cash flow analysis) are used to discount future incomes.

45 MARIS VALUATION REPORT Valuation Commentary Direct Capitalisation converts a single year's income expectancy into an indication of value in one direct step: V = I / R, where: V is the value, I net operating income, and R capitalisation rate. Direct capitalisation can be used in case the net operating income is stable and does not change from year to year. In case a future change in the net operating income is forecasted discounting method should be used. Discounted cash flow (DCF) analysis transfers future income into present value. Discounted cash flow analysis can be used to discount cash flows and is universal. Discounting process is an effective method of comparing of different investment alternatives. The present value of future cash flows from the property in ownership is: V = CF1 / (1+Y1) + CF2 / (1+Y2) CFt / (1+Yt) t + VR where: V the value, СFn and Yn respectively, the cash flow and discount rate of period n (where n=1 t, t total period of planning); VR the proceeds from the resale of the Subject Property in the first post-planning period, discounted as of the effective date of the appraisal. VR = [CFt+1 / RT] / [1+Y t+1] t+1 The proceeds from the resale are calculated as the cash flow of the first postplanning year CFt+1 divided by the terminal capitalisation rate RT. Thus, the base for discounted cash flows method is the prognosis of subject functioning during the period which suggests the determination of main indexes such as prognosis term, income and cost characteristics and discount rate. Discounted cash flow method is normally applied to the existing real estate properties evaluation as they are capable to generate income cash flows and current use of the Subject Property is the highest and the best. Page 45 VALUATION COMMENTARY In the context of direct DCF-technique the Appraiser uses the following steps: 1. The appraisal of real estate cashflows. This index is equal to Potential Gross Income, calculated based on Subject s full occupancy. The Effective Gross Income (EGI) is the value of Potential Gross Income adjusted with occupancy losses. 2. Analysis and estimation of Operating expenses. 3. Determination of Net Operating Income (NOI) as Effective Gross Income less the operating expenses. 4. Discount rate, capitalisation rate and terminal capitalisation rate determination. 5. Future cash flows and proceeds from resale of the Subject Property are then discounted as of the Effective Date of the Appraisal. The Subject Property is a trade related property subject, i.e. any type of real property designed for a specific type of business where the property value reflects the trading potential for that business. The valuation of a trade related property subject is made under the assumption it is fully equipped operational entity. The

46 MARIS VALUATION REPORT Valuation Commentary value of trade related property normally reflects its income generating potential due to the buildings or other structures only being suitable for a specific type of trade. Trade related properties such as the Property are normally valued using the profits method having regard to revenue and operating profits. Operating profits are known as Adjusted Net Operating Income (Adj. NOI) after the Tenth revised Edition of the Uniform System of Accounts. Equally, they are commonly referred to as Earnings before Interest, tax, Depreciation and Amortisation (EBITDA). The Valuer assesses the fair maintainable level of trade and Adj. NOI that could be achieved by a reasonably efficient operator and which would form the basis for a bid in the open market. The capitalisation factor applied to the revenue or operating profits reflects growth potential, risk and the desirability of the property and is market derived. Even where specialised trading properties are leased and the rent payable is not linked to turnover or Adj. NOI, where possible an attempt is made to understand the fair maintainable level of trade at the property in an effort to estimate if the property is correctly rented. We have prepared valuations of the property on the basis of Market Value assuming a fully-equipped operational entity having regard to trading potential. Subject Property evaluation under Income Approach Assumptions and input data This section provides a summary of assumptions used in the financial model developed for the Property valuation under Income Approach. The highest and the best use of the Subject Property is current use 5-star hotel real property subject with conference facilities, fitness center, restaurant and bar leased out to a single tenant international hotel operator (see section Highest and best use analysis ). Page 46 VALUATION COMMENTARY Our Valuation is carried out assuming that the Property is available with vacant possession and assumes the performance that, in our opinion, a reasonable efficient operator would expect to achieve. Total area of the Subject Property is 7,566.6 sq m. In conformity with the highest and the best use of the Subject Property leasable area will be equal to its total area. Main income sources will be hotel rooms lease, incomes generated by conference and fitness facilities, as well as incomes from restaurant, bar and meal room service, as well as other hotel services (taxi booking, telephone, laundry and ect.). No extra revenue sources are identified as of the effective date of appraisal and planned in future. Parameters of the hotel real property under appraisal are presented in the section Property Description. Prognosis of Potential Gross Income generated by the hotel real property was made using annual escalation rate of 6.5% as a stable yearly growth rate supposed since the second prognosis year. The Appraiser accepted escalation of

47 MARIS VALUATION REPORT Valuation Commentary this issue at the level of the inflation rate (the average of the forecasted inflation rate in %, and planning index for %, stated by Ministry of Economic Development of the Russian Federation). The Appraiser assessed annual growth rate of fixed expenses (land tax payments and insurance payments) at the level of 5%. The DCF is calculated on a yearly basis for 10-years period and assumed a capitalised value based on a stabilized income of the property after this period (terminal value of the property less two percent of brocker s commission in post planning period). Euro was chosen as the currency of valuation. The exchange rate was set on September 30, 2014, as Rubles/Euro according to Central Bank exchange rate as of the Effective Date of Valuation. All calculations in Income Approach to the Subject Property value estimation are made exclusive of VAT unless another mentioned. Income analysis Potential gross income (PGI) the total potential income attributable to the real property at full occupancy before operating expenses is deducted. Room s revenue The Appraiser was supplied by the Clint with actual Rack Rates for for the hotel under appraisal. Rack rates in 5* hotel under appraisal TYPE OF ROOM NUMBER OF ROOMS RACK RATE, EURO, EXCL. OF VAT Mansard room Superior room Superior Moika view Lifestyle Moika view Junior Suite Executive Suite Average Rack Rate Page 47 VALUATION COMMENTARY Source: Client s data Thus, the average daily room rate for the hotel real estate subject under appraisal was accepted at the level of 185 Euro (exclusive of VAT) taking into account the discounts provided for on-line booking services as well as for tour operators, etc. Effective Gross Income (EGI) is the anticipated total income from all operations (Potential Gross Income) adjusted for vacancy. The base room's revenue for the hotel under appraisal (effective room s income) was calculated by multiplying the number of rooms by the average daily room rate, times 365 (the number of days in the year), times the annual average occupancy rate.

48 MARIS VALUATION REPORT Valuation Commentary The Appraiser was supplied with the data regarding actual occupancy rate of the hotel for the 1st half of 2014 that made up 67%. Taking into account the fact that the average rack rates of the hotel are slightly lower than average rack rates in 5- star hotels segment in Saint-Petersburg the Appraiser assessed the average occupancy rate of the Property will stay at the level of 67%. The Appraiser assumed gradual achievement of annual stabilized occupancy rate at the level of 73% in two years with regard to current tendencies on Saint-Petersburg hotel market. Food and Beverage Revenue Food and beverage revenue will be generated by the hotel's restaurant and bar as well as room service. The Property under appraisal is a recently operated hotel. Therefore, food and beverage revenue could be estimated based on a percentage of room revenue that was determined from market studies of similar properties. In the context of Income Approach to the Subject Property evaluation food and beverage revenue is projected at 30% of total room revenue (that is effective room revenue equal to potential room revenue less vacancies). Conference Facilities Revenue There are 2 conference halls for 10 and 65 people, respectively, in the hotel under appraisal. Conference halls rental incomes inclusive of lease income for incorporated conference equipment and related services should be taken into consideration. Business tourism is well developed in St.-Petersburg (the largest share in tourists coming to the city 50%). Therefore, it is expedient to affirm availability of linear correlation of conference facilities revenue and hotel s occupancy. Hence, conference facilities revenue was estimated as 5% of effective room revenue. Page 48 VALUATION COMMENTARY Telephone/Communication Revenue Telephone revenue is generated from hotel guests charging local and long distance calls to their rooms and from out of town patrons using the hotel's public phones. It may also include revenue generated from other communication resources such as faxes, , or Internet connections. Telephone and communication revenue varies directly with changes in occupancy. This item was accepted at the level of 1% of effective room revenue. Other Incomes Other income represents revenue derived from sources other than the sale of guestrooms, food and beverages, and telephone/communication service. Depending on the type of hotel and the facilities and amenities offered, other income may include the following revenue items: Rents charged for store, office, concession, club, or storage space. Commissions from auto rental, movie rentals, photography, telegrams, and vending services.

49 MARIS VALUATION REPORT Valuation Commentary Concession revenue paid by others for the privilege of operating departments that might otherwise be operated by the hotel itself. Gift shops, barbershops, and beauty shops are typical concessions. Electronic games and pinball machines. Forfeited advance deposits and guaranteed no-shows. Interest income from hotel banking house accounts. Salvage revenue from the sale of old and obsolete items. There is fitness center in the hotel under appraisal that is supposed to generate extra incomes in addition to the listed above. Other income is highly sensitive to hotel s occupancy. Consequently, the level of other hotel incomes evaluated as 2% of effective room revenue. Total Revenue The base total revenue generated by the hotel real property subject is calculated by adding the five revenue components: Total Revenue = Room s Revenue + Food and Beverage + Conference Facilities + Telephone and Communication + Other Incomes. Net Operating Income (NOI) Net Operating Income generated by the Property is the actual net income remaining after all operating expenses are deducted from Effective Gross Income. Analysis of expenses Total operating expenses of a commercial real property subject are usually divided into variable and fixed expenses. Page 49 VALUATION COMMENTARY The Owner of the Property bear fixed expenses regardless of the Property s occupancy. These expenses are property tax and land tax/lease payments, insurance of the real property. Variable expenses are entirely driven by the Property s occupancy. In relation to hotel real property this expenses consists of departmental costs and undistributed expenses. The first group of expenses is related to the corresponding income generating department of a hotel. The second one is referred to the hotel functioning in a whole. Departmental expenses Room s expenses are dependent upon hotel s occupancy. The applicable unit of comparison could be either a percentage of room s revenue or an amount per occupied room. Hence, basing on analysis of operating expenses of comparable hotel properties this item was accepted at the level of 30% of effective room income.

50 MARIS VALUATION REPORT Valuation Commentary The food and beverage department expense consists of the combined costs incurred for the operation of a hotel's food, beverage, and banquet facilities. These expenses were estimated as 70% of food and beverage revenue. Conference Facilities expenses are related to rendering conference services. This expense item correlates directly with occupancy of conference halls and, consequently, estimated at the level of 20% of the corresponding income item. Telephone/Communication expenses consist of all costs associated with the operation of a hotel's telephone and communication department. Since most of these calls and related communication services are made by inhouseguests, these expenses are occupancy sensitive. Therefore, 80% of telephone and communication revenue is applied to evaluation this expense item. Other income expense covers all the expenses associated with other income revenue. Typically the appropriate unit of comparison is a percentage of other income. Fitness center services are usually supposed as collateral to hotel accommodation and low-profit ones. In the context of current valuation the index of other income expense assessed at the level of 80%. Undistributed expenses Undistributed expenses cannot be attributed to a particular department of a hotel. Most of them are relatively stable. Therefore, considering the components of undistributed expenses, the appropriate unit of comparison is a percentage of total hotel s revenue. In the context of the Subject Property evaluation the following items were considered as undistributed expenses: Undistributed Expenses evaluation EXPENSES Management Fee (base) 4% Administrative and General Expenses 3% Group Service Fee 2% Marketing 3% Start up expenses 3% Property Operations and Maintenance Expenses 2% Energy/Utility Costs 3% VALUE, % OF TOTAL HOTEL S REVENUE Page 50 VALUATION COMMENTARY Source: Analysis of Maris Part of the CBRE Affiliate Network Management Success Fee Separating the value of a hotel's business from the value of the real estate is difficult, but necessary for the purpose of hotel real estate property evaluation. Deducting the income of the non-realty items from the property's total stabilized net income leaves the income attributed to the real estate, which can then be capitalised into an estimate of value.

51 MARIS VALUATION REPORT Valuation Commentary The business value of a hotel is usually composed of the benefits that accrue from an affiliation with a brand name hotel company either through a franchise agreement or management contract. Typically, chain-affiliated lodging facilities outperform independent property interests. The process of isolating the value of a hotel's business is based on the premise that, by employing a professional management agent to handle the day-to-day operations of the property, an owner maintains only a passive interest. The managing agent in the form of a management fee has taken the income attributable to the business. Therefore, deduction of a management fee (base and incentive), from the stabilized net income removes a portion of the business component from the stabilized income stream. In the context of present hotel real property subject evaluation the Appraiser supposed expedient to estimate the management success fee (incentive) at the level of 10% of Net Operating Income of the hotel (that is EGI less departmental and undistributed expenses). Fixed expenses Property tax was estimated as 2.2% of the annual average net book value of the Property. Initial book value of the Subject Property submitted by the Client was used as the base for depreciation under the straight-line basis estimation. Property Insurance expenses were accepted at the level of 0.1% of Initial Book Value of the Property under appraisal basing on the analysis of the actual expenses for the other comparable hotel properties in operation. Land tax payments were estimated basing on the data supplied by the Client regarding actual tax payments. Thus, the amount of annual land tax payments makes up 26,273 Euro as at the Effective Date of Valuation. Page 51 VALUATION COMMENTARY Replacement allowance Based on our property inspection hotel real property subject under appraisal is in a fair condition as of the Effective Date of Valuation. However, we suppose that in several years the landlord will face with necessity of some repair implementation. That is why we suppose expedient to take into consideration some replacement allowance accumulation. Provision for capital repair (replacement allowance) is used to cover expenses on short lived items such as interior floor finish and etc. that need to be replaced on a regular basis. In order to accumulate the necessary funding, the owner normally opens an account. If the calculations do not account for the replacement allowance, the net operating income is overestimated. It is formed by the Owner through annual deduction of 1.0% of total hotel s revenue in order to cover in several years expenses required for capital repair of the Property.

52 MARIS VALUATION REPORT Valuation Commentary Discount rate Discount rate is used to determine a sum of money that an investor would pay today for the right to get expected incomes in the future. In general, discount rate reflects time preference of an investor (his readiness to change today s money into future incomes), taking into account specific risks of the market, on which the investor operates. Discount rate, as a rule, depends on alternatives, available for the investor. The discount rate is derived using the cumulative method. The risk-free rate is augmented by evaluating various risks involved in property ownership. Y = YRF + dyi, where YRF risk free rate; dyi an i- correction, when 1 < i < n. The risk free rate is estimated at the level of the effective yield to maturity of Eurobonds Russia 2020 nominated in Euro. The effective yield to maturity as at the Valuation Date made up 3.3%. The risks are as follows: TYPES OF RISK RISK PREMIUM Construction (hidden defects) 0 5% Illiquidity 0 5% Competition 0 5% Poor property management 0 5% Changes in legislation 0 5% Changes in the neighborhood 0 5% Other 0 5% Page 52 VALUATION COMMENTARY Construction risk includes nonobservance of terms, work quality project mistakes and finally loss of income. Illiquidity risk is connected with assets transfer in money. Real estate has low level of liquidity. Competition risk is related to competitors appearing in the proximity to the Subject Property. Poor property management is concerned with possible change in prognosis connected with Subject Property and consequentially with increase in advertising costs and consultant bringing in. Changes in legislation is related to probable changes in legislation which can influence on Subject s profitability. Changes in the neighborhood can low the attractiveness of the Subject as well as increase them. The risk of such change is connected first of all with negative consequences of probable change in the near environment. The discount rate for the Subject Property is estimated at the level of 11.8% (see the table below).

53 MARIS VALUATION REPORT Valuation Commentary TYPES OF RISK RATE Risk free rate (Average deposit rate) 3.3% Construction (hidden defects) 0.5% Illiquidity 2.5% Competition 2.0% Property management 1.0% Changes in legislation 1.0% Changes in the neighbourhood 1.0% Other 0.5% Discount Rate 11.8% Interviews with developers have proven the estimated discount rate. Capitalisation rate Capitalisation rate is the ratio between the net operating income produced by an asset and its capital cost (the original price paid to buy the asset) or alternatively its current market value. Capitalisation rate is an indirect measure of how fast an investment will pay for itself. Application of extraction method to capitalisation rate estimation is the most preferable on fully formed and well developed real property markets. Extraction method is based on analysis of existing data about comparable subjects sale price and income generating by them. As long as the sale prices and rental rates are known it is possible to calculate the capitalisation coefficients for comparable properties. As for the hotel real property subject under appraisal the Appraiser had no opportunity to apply extraction method to capitalisation rate estimations since lack of reliable information regarding transactions with comparable hotel properties. Therefore, the Appraisers used expert opinion method. Page 53 VALUATION COMMENTARY The capitalisation rate for the subject property have been adopted based on recent investment sales evidence known to us together with our general knowledge and opinion gained during discussions with investors. According Maris Part of the CBRE Affiliate Network expert opinion current capitalisation rate for 4-5* hotels in Saint-Petersburg is in the range of 11-13%. The cap or terminal cap rate adopted in the valuation is used to capitalise the stabilised net operating income in the final cash flow year into perpetuity. The cap rate, which is a growth implicit yield, is an appropriate market yield for the specific property, predominately reflecting the sustainability of the property, the location, use and quality of the buildings, depreciation for wear and tear as well as the investment market environment. As it is assumed in the valuation that the net operating income will be capitalised in year 11, expectations for the development of the real estate market as well as for the development of the cash flow after the end of this ten year period must also be reflected in the cap rate, hence, the use of equivalent yields.

54 MARIS VALUATION REPORT Valuation Commentary Therefore, the Appraiser assumed gradual decrease of investment risks in Saint- Petersburg during the planning period. Capitalisation rate for the Subject Property was accepted at the level of 9%. The Subject Property evaluation under Discounted Cash Flow Method For the Subject Property value estimation the following formula is used: V = CF1 / (1+Y1) + CF2 / (1+Y2) CFt / (1+Yt) t + VR where: V the value, CFn and Yn respectively, the cash flow and discount rate of period n (where n=1 t, t total period of planning); VR the proceeds from the resale of the Subject Property in the first post-planning period, discounted as of the effective date of the appraisal. The calculations are given in appendix. The conclusion on Discounted Cash Flow Method Based on our analysis and calculations, we came up to the conclusion that the value of the Subject Property under Income Approach as of September 30, 2014, can be reasonably estimated at, rounded: 37,900,000 (Thirty Seven Million Nine Hundred Thousand) Euro Net of VAT Page 54 VALUATION COMMENTARY

55 MARIS VALUATION REPORT Valuation Commentary OPINION OF VALUE Market Value Reconciliation involves the analysis of alternative value indications to determine the most likely market value of the Subject Property. Reconciliation is required because different value indications result from the use of multiple approaches and within the application of a single approach. Advantages and disadvantages of each approach applied are weighted. The information used in the value calculations is reliable since it has been derived from primary market sources, accounting documents. Cost Approach was not applied to the Subject Property evaluation since the building under appraisal is a reconstructed real property subject. Therefore, precise evaluation of replacement/reproduction costs and, especially, the accrued depreciation of the improvements under appraisal are rather difficult. Comparison Approach could not be applied to the Subject Property evaluation due to the lack of comparable properties recently sold and/or offered for sale on commercial real property market of Saint-Petersburg as of the Effective Date of Valuation. Income Approach was the only one applied to the Subject Property evaluation. It allows forecasting of the development of the Subject Property and taking into account market trends, risks and etc. Therefore, based on our analysis and calculations, we came up to the conclusion that Income Approach is the only one applicable to evaluation of the Subject Property. Thus, the Market Value of the Subject Property as of September 30, 2014, can be reasonably estimated at (rounded): Page 55 VALUATION COMMENTARY 37,900,000 (Thirty Seven Million Nine Hundred Thousand) Euro Or according to the official exchange rate of Central Bank of the Russian Federation 1,893,256,600 (One Billion Eight Hundred and Ninety Three Million Two Hundred and Fifty Six Thousand Six Hundred) Rubles Net of VAT

56 DO NOT DELETE MARIS VALUATION REPORT Location Plan Page 56 APPENDICES

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71 MARIS VALUATION REPORT Photographs PHOTOS OF THE PROPERTY THE PROPERTY WAS INSPECTED ON OCTOBER 08, 2014 Facade of the Property, view from Moyki River Emb. Facade of the Property, view from Bol shaya Morskaya St. Page 71 Bar Restaurant Fitness center Sauna

72 MARIS VALUATION REPORT Photographs PHOTOS OF THE PROPERTY THE PROPERTY WAS INSPECTED ON OCTOBER 08, 2014 Conference facilities Lobby Page 72 Mansard Hotel Room Mansard Hotel Room

73 MARIS VALUATION REPORT Photographs PHOTOS OF THE PROPERTY THE PROPERTY WAS INSPECTED ON OCTOBER 08, 2014 Superior Hotel Room Moika view Superior Hotel Room Moika view Page 73 Executive suite Hotel Room Executive suite Hotel Room

74 MARIS VALUATION REPORT Financial Tables Income Approach. The Subject Property value estimation under Discounted Cash-Flow Method (Euro, exclusive of VAT) Page 74

75 MARIS VALUATION REPORT Financial Tables PARAMETER/ YEAR BASEINDICATORS POST- PLANNING 10 PERIOD Occupacy 67% 70% 73% 73% 73% 73% 73% 73% 73% 73% 73% Rooms Average Daily Rate (Inflated) Revenue Per Available Room ,242 50,340 55,910 59,544 63,414 67,536 71,926 76,601 81,580 86,883 92,530 REVENUES Rooms 4,931,351 5,487,048 6,094,150 6,490,270 6,912,138 7,361,427 7,839,919 8,349,514 8,892,233 9,470,228 10,085,792 Food & Beverage 30% 2,113,436 2,351,592 2,611,779 2,781,544 2,962,345 3,154,897 3,359,965 3,578,363 3,810,957 4,058,669 4,322,482 Conference Facilities 5% 246, , , , , , , , , , ,290 Telephone/Communication 1% 49,314 54,870 60,942 64,903 69,121 73,614 78,399 83,495 88,922 94, ,858 Other 2% 98, , , , , , , , , , ,716 TOTALHOTELREVENUE 7,439,295 8,277,603 9,193,461 9,791,036 10,427,453 11,105,238 11,827,078 12,595,838 13,414,568 14,286,515 15,215,138 DEPARTAMENTALEXPENSES Rooms 30% 1,479,405 1,646,114 1,828,245 1,947,081 2,073,641 2,208,428 2,351,976 2,504,854 2,667,670 2,841,068 3,025,738 Food & Beverage 70% 1,479,405 1,646,114 1,828,245 1,947,081 2,073,641 2,208,428 2,351,976 2,504,854 2,667,670 2,841,068 3,025,738 Conference Facilities 20% 49,314 54,870 60,942 64,903 69,121 73,614 78,399 83,495 88,922 94, ,858 Telephone/Communication + Other revenue 80% 118, , , , , , , , , , ,059 TOTALDEPARTAMENTALEXPENSES 3,126,476 3,478,788 3,863,691 4,114,831 4,382,295 4,667,145 4,970,509 5,293,592 5,637,675 6,004,124 6,394,392 TOTALOPERATINGINCOME 4,312,818 4,798,815 5,329,770 5,676,205 6,045,158 6,438,093 6,856,570 7,302,247 7,776,893 8,282,391 8,820,746 UNDISTRIBUTEDEXPENSES Management Fee 4% 297, , , , , , , , , , ,606 Administrative & General Expenses 3% 223, , , , , , , , , , ,454 Group Service Fee 2% 148, , , , , , , , , , ,303 Marketing 3% 223, , , , , , , , , , ,454 Start up expenses 3% 223, Property Operations & Maintenance Expenses 2% 111, , , , , , , , , , ,227 Energy\Utility Costs 3% 223, , , , , , , , , , ,454 TOTALUNDISTRIBUTEDEXPENSES 1,450,662 1,365,805 1,516,921 1,615,521 1,720,530 1,832,364 1,951,468 2,078,313 2,213,404 2,357,275 2,510,498 INCOMEBEFOREFIXEDCHARGES 2,862,156 3,433,011 3,812,849 4,060,684 4,324,628 4,605,729 4,905,102 5,223,933 5,563,489 5,925,116 6,310,248 Management Sucсess Fee 10% 286, , , , , , , , , , ,025 INCOMEBEFOREFIXEDCHARGES 2,575,940 3,089,710 3,431,564 3,654,615 3,892,165 4,145,156 4,414,591 4,701,540 5,007,140 5,332,604 5,679,223 FIXEDEXPENSES Property tax 2.2% 440, , , , , , , , , , ,036 Insurance 0.1% 21,974 23,073 24,227 25,438 26,710 28,045 29,448 30,920 32,466 34,089 35,794 Land tax payments 26,273 26,273 27,587 28,966 30,415 31,935 33,532 35,209 36,969 38,818 40,759 42,797 Replacement allowance 1.0% 74,393 82,776 91,935 97, , , , , , , ,151 TOTALFIXEDEXPENCES 563, , , , , , , , , , ,778 NET OPERATINGINCOME 2,012,565 2,531,608 2,877,841 3,108,327 3,352,790 3,612,141 3,887,348 4,179,446 4,489,534 4,818,785 5,168,445 Page 75 CASH-FLOW 2,012,565 2,531,608 2,877,841 3,108,327 3,352,790 3,612,141 3,887,348 4,179,446 4,489,534 4,818,785 5,168,445 Discount Rate 11.8% Terminal Capitalisation Rate / Resale Proceeds 9.0% 56,278,625 Discount Factor DISCOUNTEDCASH-FLOW 1,903,395 2,141,578 2,177,521 2,103,683 2,029,636 1,955,846 1,882,703 1,810,528 1,739,586 1,670,092 18,446,987 VALUEOF THESUBJECT PROPERTY 37,861,555 ROUNDED 37,900,000

76 MARIS VALUATION REPORT Valuation Assignment Valuation Assignment The Property 5-star hotel located at: Letter A, 54, Bolshaya Morskaya St., St.-Petersburg, Russia. The Subject Property comprises 7,566.6 sq m Gross Floor Area of hotel space. The Subject Property is a 7 (1-5-7, mansard) storey building. Please refer to the Property Description section for more information about the Property. Purpose To estimate the Market Value of the freehold interest in the Property. Usage of the results The results of the Valuation will be used for financial reporting for the 3rd quarter of year Instruction To provide our opinion of the Market Value of the Property as at the Valuation Date in accordance with the Valuation Agreement No.09/ VAL, dated September 18, Page 76 Valuation Date September 30, 2014 Variation from Standard Assumptions None

77 MARIS VALUATION REPORT Copies of Professional Certificates Certificate of the membership in the Royal Institution of the Chartered Surveyors Page 77

78 MARIS VALUATION REPORT Copies of Professional Certificates Page 78

79 MARIS VALUATION REPORT Copies of Professional Certificates Certificate of the membership in the non-commercial partnership Self- Regulated Inter-Regional Association of Specialist Valuators Page 79

80 MARIS VALUATION REPORT Copies of Professional Certificates Page 80