VALUATION of the Market Value of the properties “BSB II” Vorgebirgsstraße 49 in 53119 Bonn ‐ long‐term leasehold [Erbbaurecht] as at the date of valuation 30 st September 2012 Compiled by: Klaus Schlicht MRICS Assoc MAI Berlin, 9 th November 2012 € 23,620,000.00 Vorgebirgstraße 49 5.50 % GRI € 1,855,087.00 € 255,719.00 Void allowance 3.00 % NRI: € 1,405,663.71 13.70 7.30% 12.73 7.85% 5.95% lettable area (total): 14,112.79 m² lettable area (let) 14,112.79 m² lettable area (vacant) 0.00 m² Market Value: at an all‐risks‐yield Gross initial yield at market Net initial yield at market non recoverable costs Gross multiplier at current Gross initial yield at current Gross multiplier at market
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Market Value: 23,620,000 · V A L U A T I O N of the Market Value of the properties “BSB II” Vorgebirgsstraße 49 in 53119 Bonn ‐ long‐term leasehold [Erbbaurecht] as at the
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V A L U A T I O N of the Market Value of the properties “BSB II”
Vorgebirgsstraße 49 in 53119 Bonn ‐ long‐term leasehold [Erbbaurecht]
as at the date of valuation
30st September 2012
Compiled by: Klaus Schlicht MRICS Assoc MAI
Berlin, 9th November 2012
€ 23,620,000.00Vorgebirgstraße 49
5.50 %
GRI € 1,855,087.00
€ 255,719.00
Void allowance 3.00 %
NRI: € 1,405,663.71
13.70
7.30%
12.73
7.85%
5.95%
lettable area (total): 14,112.79 m²
lettable area (let) 14,112.79 m²
lettable area (vacant) 0.00 m²
Market Value:
at an all‐risks‐yield
Gross initial yield at market
Net initial yield at market
non recoverable costs
Gross multiplier at current
Gross initial yield at current
Gross multiplier at market
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4 Description of the Subject Property ........................................................................................ 10
4.1 Location of the town and the property ................................................................................................. 11
4.2 Basic statistical data .............................................................................................................................. 12
4.3 Key data ................................................................................................................................................. 14
5.2 Site Description ..................................................................................................................................... 20
6 Building .................................................................................................................................. 22
6.1 Office building ....................................................................................................................................... 22
6.2 Car park building ................................................................................................................................... 23
6.3 Exterior works / supply and waste disposal installations ...................................................................... 24
6.4 Condition and general assessment ....................................................................................................... 24
8.1 Choice of valuation approach ............................................................................................................... 35
8.2 Valuation assumptions – Market Value “As Is” ..................................................................................... 35
8.3 Suitability of the property for mortgage purposes ............................................................................... 37
9 Market Value ......................................................................................................................... 39
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10 Principles of the Valuation ...................................................................................................... 40
10.1 Disclosure and confidentiality ............................................................................................................... 40
10.2 Market Value ......................................................................................................................................... 40
10.3 Consideration of rights and encumbrances .......................................................................................... 40
1 The number of inquiries is the sum of all inquiries in the contained and significantly intersected zip code areas. 2 Offers of type hotel / gastronomy contain monthly leases. These leases are evaluated in the same way as monthly rents.
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Market overview
Index of requests Index of requests (related to Germany = 100) Legend for request index map (Index of total number of views of expose per offer per offering day (Germany = 100)):
Few offers (less than 3 offers)
Request strongly under average (Index: < 40)
Request under average (Index: 40 ‐ 80)
Average request situation (Index: 80 ‐ 120)
Request over average (Index: 120 ‐ 160)
Request strongly over average (Index: > 160)
(related to the German average) Source: IS24 ‐ Miet‐ und Kaufpreise für Gewerbeimmobilien, Immobilien Scout GmbH, Berlin Status: September 2012
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7.1.2 Commercial rent by Plötz
Good Location Average Location Modest Location
1999 (in DM/m²) 30‐35 18‐26 12‐17
2000 (in DM/m²) 30‐35 18‐26 12‐17
2001 (in DM/m²) 28‐36 18‐28 12‐18
2002 (in DM/m²) 30‐36 18‐28 12‐18
2003 (in EUR/m²) 13‐17 9‐13 6‐9
2004 (in EUR/m²) 12‐15 9‐12 7‐9
2005 (in EUR/m²) 12‐15,5 9‐12 7‐9
2006 (in EUR/m²) 13,5‐15 8,5‐13,5 5,5‐8,5
2007 (in EUR/m²) 13,5‐15 8,5‐13,5 5,5‐8,5
2008 (in EUR/m²) 10‐14,5 8,5‐10 5,5‐8,5
2009 (in EUR/m²) 10‐14,5 8,5‐10 5,5‐8,5
2010 (in EUR/m²) 8,5‐10 7,3‐8,5 6‐7,3
2011 (in EUR/m²) 10‐14,5 7‐10 5‐7
2012 (in EUR/m²) 10‐14,5 7‐10 5‐7
There are hardly any modern office spaces at the market, although there is a demand. Fewer proper‐ties are currently in construction.
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7.1.3 Commercial rent by Riwis
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Project Rose Portfolio 30.09.2012 Properties BSB II Bonn Vorgebirgsstr. 49 Page 32 of 50
7.1.4 Commercial rent by Thomas Daily
Rents and Yields Prime Rent (min. space 200sqm) Average Rent (min. space 200sqm) Development of Prime rents last 12 months Prognosis Development of Prime Rents next 12 months Prime Net Initial Yield Number of sales Vacancy Vacancy Rate Vacancy Development last 12 months Prognosis Vacancy next 12 months Demand Demand for modern Office Space during the past 12 months Prognosis Demand for Office Space next 12 months Height of Incentives Additional space planned or in construction
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7.1.5 Official Board of Valuers ‐ City of Bonn ‐ 2012
The rental spread slightly changed compared to last year, the upper end of the spread is equal to last year, only the lower end is a bit higher than in the Market Report 2011.
Regarding the Garages the rental situation is also positive, but a bit different, at some areas the upper end of the spread grew a little bit compared to last year.
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7.2 Summary
Following the loss of the main federal ministries and the accompanying departure of
foreign embassies, lobby groups etc. it was widely expected the Bonn office market
would collapse. This was not been the case and instead the market fared surprisingly
well. Nevertheless the rental height from 2009 to 2010 decreased sharply to a historic
low. As a result of the economic crises hardly any new office buildings are being con‐
structed, if there isn’t a reasonable size of space pre‐let. So the demand is beginning to
grow and there is hardly any modern office space available. This lead to the fact that
the lower end of the rental spread began a bit to grow and areas which were not so
popular start to achieve better rents, but the prime rent remains at last year’s height.
The contemporary rents paid at the subject property is 8.78 €/sqm, – that’s within the
spread for office buildings in general – but even below the average and at the very low
end for good office locations like the subject property – so the rent of 8.78 €/sqm is not
at market for a building of that good quality (especially after the renova‐
tion/modernization/park deck construction). We assume that at least 10.00 €/sqm are
the suitable market rent for the property.
In a market of such a weak demand like it was in 2009, when the rental contract was
signed, Telekom used its market power as major tenant especially in the Bonn area.
The property is underrented. We are using in the valuation the market rent and deduct
for the assumed rental period the difference. Due to the low contract rent and the
completely modernized building at which the tenant invested itself about one million
Euro, we assume for the valuation that the tenant will stay not only till the end of the
standard rental period (31.12.2016) but prolonged at least 1 time the contract for fur‐
ther 3 years (exercising at least 1 option).
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8 Valuation
8.1 Choice of valuation approach
The selection of one or more methods of valuation should be oriented towards the ac‐
tual behaviour of market participants, i.e. it must take into account those influences
that would govern the determination of the sale price in normal course of business.
The subject property is a standard office building. Comparable properties are mostly
dealt with from a yield point of view.
The following valuation has therefore been based on the internationally‐common in‐
vestment method.
We understand that the property is subject to a ground lease (Erbbaurecht).
8.2 Valuation assumptions – Market Value “As Is”
Note: All calculations are rounded to the nearest full Euro amount.
8.2.1 Lease contracts and rental level
We did not inspected any rental contracts, so we have to assume, that the figures
named in the excel rent roll are correct.
The building was refurbished and modernised from the owner of the building and the
Deutsche Telekom together. The owner also built a steel parking deck at the former
yard – so that there is place now for 432 cars. We were told that the owner spent
about 4 Mio € and the tenant about 1 Mio €.
The office rent (8.78 €/sqm) itself is within the lower end of the spread for office rent in
that area, and below the average, but it is NOT at market for a building of that good
quality. We are calculating with a market rent of 10.00 €/sqm office space, which we
think is conservatively set. The difference to the under‐rented contract rent will be de‐
ducted.
See Bullet 7.2.
The lower risk – due to the lower set market rent and the high quality of the tenant –
will be considered at the All Risks Yield.
8.2.2 Inflation, indexation
The leases are partly subject to indexation, although for the purposes of our valuation,
we have not reflected this indexation going forward, but have instead taken it into ac‐
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count in the yields adopted, which we consider a realistic approach that would be
adopted by a prudent purchaser.
8.2.3 All‐Risks Yield
Positive to mention is the location within walking distance to the city center, easy to
reach with public transport or car. The property was refurbished in 2010 to a good
modern standard on the basis of sophisticated demands from the new tenant –
Deutsche Telekom. The single‐tenant DT is well‐known, with a high creditworthiness
and had especially in 2008/2009 at the peak of the economic crises a high market pow‐
er to enforce a rental contract which is in favour for the tenant. The underrent is an
important argument why we think that DT will exercise its option right – and also the
fact that the building is newly refurbished by their demands – and that DT spent also 1
Mio Euro for refurbishing – and last but not least that there are less modern office in
central locations available or in construction (and even if they will be built – they could
not be offered for a cheaper rental price).
Since a property always comes with higher costs and risks, despite the aforementioned
qualities, the interest rate increases in line with each tenant’s creditworthiness and loss
of rental income risks. The construction phase of the parking garage and the refurbish‐
ment is over without severe problems.
Thus we consider an All‐Risks Yield of 5.5% to be appropriate for the property.
8.2.4 Non‐recoverable expenditure
Regarding non‐recoverable costs, we have estimated the costs for non‐recoverable op‐
erating costs and costs for management and maintenance. The estimates for that
property subject run at 2.00 % for service charges, 2.00 % for management (single ten‐
ant) and 8.00 €/m²‐ office space resp. 30 €/pc‐ parking space for maintenance (due to
the large modernisation in the last half a year).
Insurance and property taxes are typically recoverable costs that are being transferred
to the tenants.
8.2.5 Renovation and refurbishment costs
We were told that the new built park deck cost 4.050.000 €.
And we were told that the tenant spent ca. 1.000.000 € for the refurbishment of the
site.
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We were also told that the whole building was completely refurbished/modernised af‐
ter the demands of the new tenant (Telekom), and that the contemporary office stand‐
ard now is good modern office standard (incl. IT).
8.2.6 Rental void
The property is full let.
8.2.7 Purchasers’ on‐costs
Purchasers Costs are taken into account in the height generally adopted. Basis of the
calculation is the market value.
8.3 Suitability of the property for mortgage purposes
8.3.1 SWOT Analysis
Strengths:
Excellent tenant – Dt. Telekom, who will probably stay for a longer time due to a
modern building as its needs and at an underrent
Stable local office market with a low supply of available modern office space
Modern good office building with a high number of parking lots
Fully let
Rental contract till 31.12.2016, due to underrent we assume the tenant will exer‐
cise at least one option and stay till 31.12.2019
Large number of parking lots
Weaknesses:
Only city fringe not in the inner city area
single tenant
underrent
Threats:
unforeseen urban development
ground rent could increase
8.3.2 Saleability
In terms of the time period in which we consider a sale of the subject property would
be realised, we would estimate this to be 12‐15 months from the commencement of
the marketing period. Generally we would not envisage any difficulties in realising a
Project Rose Portfolio 30.09.2012 Properties BSB II Bonn Vorgebirgsstr. 49 Page 38 of 50
sale of this property, but we still have an economic crisis. So we can say with confi‐
dence is that any property valuations reported at the present time contain “abnormal
uncertainty” caused by “market instability”. RICS Guidance Note 5 (GN5) refers to such
circumstances thus:
“Unforeseen macroeconomic or political crises can have a sudden and dramatic effect
on markets. This could manifest itself by either panic buying or selling, or simply a disin‐
clination to trade until it is clear how prices in the market will be affected in the longer
term. If the valuation date coincides with the immediate aftermath of such an event,
the data on which any valuation is based may be confused, incomplete or inconsistent,
with an inevitable effect on the certainty that can be attached to it”.
The RICS considers that, where uncertainty could have a material effect on the valua‐
tion, the Valuer should draw attention to this, indicating the cause of the uncertainty
and the degree to which this is reflected in the reported valuation.”
Accordingly, please be advised that such circumstances exist and that we have advised
you in the context above, and that in our opinion the value of the Property is fairly
stated.
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9 Market Value
We assessed the following values for the subject property on the basis of information
gained and documentation provided and in accordance with the approaches described
above:
Market Value “As is” (derived from investment method): € 23,620,000
We are not aware of any other circumstances at the present time which have not al‐
ready been reflected in our assessment of value.
On the basis of the foregoing and with express reference to Section10 of this valua‐
tion, our opinion of the Market Value of the subject property:
5.2 Site Description ..................................................................................................................................... 22
8.1 Choice of valuation approach ............................................................................................................... 41
8.2 Valuation assumptions – Market Value “As Is” ..................................................................................... 41
Project Rose Portfolio 30.09.2012 Properties BSB III Wolfsburg Burgwall‐Braunschweiger Str. Page 3 of 55
8.3 Suitability of the property for mortgage purposes ............................................................................... 44
9 Market Value ......................................................................................................................... 44
10 Principles of the Valuation ...................................................................................................... 47
10.1 Disclosure and confidentiality ............................................................................................................... 47
10.2 Market Value ......................................................................................................................................... 47
10.3 Consideration of rights and encumbrances .......................................................................................... 47
roof Flat roofs covered with foil sheet and layer of gravel, as good as new, in good condition.
windows About 99 % double‐glazed windows with wooden frame in average condition; about 1 % windows with plastic frames in good condition.
entrance Entrance doors in good condition.
appurtenant structures Paved areas
Concrete block paving in the courtyard, some areas asphalted, good condition.
Rain water drains in functional condition.
New asphalted road. Unpaved areas / gardens
Courtyard areas planted, gardens available, in a well‐kept condition.
35 parking bays with concrete block paving /concrete grass pavers, as good as new (2005).
highlights/description 5 ‐14‐storey reinforced concrete structure (basement, ground floor, 1st up to and including the 12th floor) Underground garage no, but parking deck Type of structure Large‐sized reinforced concrete Panels, About 245 residential units 350 parking spaces for passenger cars incl. those on parking deck We learned that the apartments are getting system‐atically renovated when they become vacant. Referring to the TDD by Drees and Sommer, the building condition is relatively good. We reduced the height of the necessary capEx due to the measures the owner took over the years and the
Project Rose Portfolio 30.09.2012 Properties BSB III Wolfsburg Burgwall‐Braunschweiger Str. Page 26 of 55
Evaluation of the objects
Evaluation Comment
information of the Asset Management about the cost estimations of construction companies. Most of the offices are rented to the same tenant like Braunschweiger Str. – a VW daughter company.
Braunschweiger Strasse
Evaluation of the objects
Evaluation Comment
facade Large‐sized concrete panel covered with washed concrete components. Balconies and terrace walk‐ways in good condition.
roof Flat roof with bituminous sheeting (roofs above ground floor) and layer of gravel. Main roof: foil sheet (not properly laid to falls, pud‐dles were identified).
windows Windows: wooden frame with aluminium facing, good condition.
entrance Entrance door in good condition.
appurtenant structures Parking deck (2 levels) made of reinforced con‐crete/exposed concrete, in good condition. Paved areas
Concrete block paving for parking spaces for passenger cars.
Rain water drains in functional condition.
Own roads covered with poured asphalt, as good as new, good condition.
Pathways made of concrete slabs, good cond tion.
Unpaved areas / gardens
Courtyard areas planted, gardens available, in a well‐kept condition.
35 additional parking bays installed in 2005.
highlights/description 6‐storey reinforced concrete structure Type of structure Reinforced concrete frame with a curtain wall consisting of washed concrete components. Property refurbished/modernized in 2002. Cleaning of the façade components in 2003. Fit‐out of the entire basement so as to accommodate offices (2002/2003).
Project Rose Portfolio 30.09.2012 Properties BSB III Wolfsburg Burgwall‐Braunschweiger Str. Page 27 of 55
Evaluation of the objects
Evaluation Comment
The building – office space and roof was renovated and modernised in 2008 and 2009, we were told that the owner spent for that about 350.000 € and the tenant about 1.000.000 €. Asset Manager told us that the restored a park deck this year and renovated more of the flat roofs. The office tenant shares with the tenants of Burgwall the parking lots at the park decks – which are situat‐ed between the two buildings. Referring to the TDD by ‘Drees and Sommer’, the building condition is relatively good.
Vacancy (visible) Both Buildings
Evaluation Comment
Residential/office We learned that there are still several vacancies, mostly flats. But the vacancy size reduced in total for nearly 60 % within one year.
Project Rose Portfolio 30.09.2012 Properties BSB III Wolfsburg Burgwall‐Braunschweiger Str. Page 28 of 55
7 Market Overview
7.1 Schedule of rent for Wolfsburg
7.1.1 Akkommodation rent from Immobilienscout
Period of analyses: April 2012 till September 2012
Postcode District 38444 Municipality Wolfsburg
Total number of offers 117 350
Average time of offering (days) 11.8 12.1
Total number of views of expose 84,506 258,102
Total number of inquiries1 1,011 1,348
Total number of views of expose per offer 722.3 737.4
Index of total number of views of expose per offer (Germany = 100) 118 121
Total number of views of expose per offer per offering day 61.2 60.9
Index of total number of views of expose per offer per offering day (Germany = 100)
277 276
Index of average time of offering (days) (Germany = 100) 43 44
Map Micro / Makro Market:
Postcode District 38444 Municipality Wolfsburg
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Residential rents in the Postcode District 38444:
Offers (based on: 117 offers) Inquiries (based on: 1,011 inquiries)1
Living area Number of offers (rate)
Basic rent per m²
Spread interval (90 %)
Number of inquiries
Basic rent per m²
Spread interval (90 %)
Up to 30 m² 16 (13.7 %) 6.00 € 4.91 € ‐ 10.43 € 26 (2.6 %) 9.36 € 5.00 € ‐ 15.75 €
1 The number of inquiries is the sum of all inquiries in the contained and significantly intersected zip code areas. 2 Offers of type hotel / gastronomy contain monthly leases. These leases are evaluated in the same way as monthly rents.
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Market overview
Index of requests Index of requests (related to Germany = 100) Legend for request index map (Index of total number of views of expose per offer per offering day (Germany = 100)):
Few offers (less than 3 offers)
Request strongly under average (Index: < 40)
Request under average (Index: 40 ‐ 80)
Average request situation (Index: 80 ‐ 120)
Request over average (Index: 120 ‐ 160)
Request strongly over average (Index: > 160)
(related to the German average) Source: IS24 ‐ Miet‐ und Kaufpreise für Gewerbeimmobilien, Immobilien Scout GmbH, Berlin Status: September 2012
Project Rose Portfolio 30.09.2012 Properties BSB III Wolfsburg Burgwall‐Braunschweiger Str. Page 36 of 55
7.1.5 Commercial rent by Plötz
Offices:
Good Location Average Location Modest Location
1999 (in DM/m²) 20‐28 15‐21
2000 (in ) 20‐28 15‐21
2001 (in DM/m²) 20‐28 13‐16 10‐12
2002 (in ) 20‐28 15‐21
2003 (in EUR/m²) 8‐12 7‐8 5‐7
2004 (in EUR/m²) 8‐11 6,5‐8 5‐6,5
2005 (in EUR/m²) 8‐10 6,5‐8 5‐6,5
2006 (in EUR/m²) 7,5‐9 6‐7,5 5‐6
2007 (in EUR/m²) 7,5‐9 6‐7,5 5‐6
2008 (in EUR/m²) 7,5‐9 6‐7,5 5‐6
2009 (in EUR/m²) 7,5‐9 6‐7,5 5‐6
2010 (in EUR/m²) 8‐10 6,5‐8 5‐6,5
2011 (in EUR/m²) 8‐10 6,5‐8 5‐6,5
2012 (in EUR/m²) 8‐10 6,5‐8 5‐6,5
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7.2 Habitation Price Wolfsburg from ImmobilienScout24
Period of Analyses: April 2012 till September 2012
Postcode District 38444 Municipality Wolfsburg
Total number of offers 128 478
Average time of offering (days) 45.7 41.9
Total number of views of expose 83,537 415,119
Total number of inquiries1 219 282
Total number of views of expose per offer 652.6 868.4
Index of total number of views of expose per offer (Germany = 100) 109 146
Total number of views of expose per offer per offering day 14.3 20.7
Index of total number of views of expose per offer per offering day (Germany = 100)
102 149
Index of average time of offering (days) (Germany = 100) 107 98
Map Micro / Macro Market:
Postcode District 38444 Municipality Wolfsburg
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Residential prices in the Postcode District 38444:
Offers (based on: 128 offers) Inquiries (based on: 219 inquiries)1
9 Residential furnished 81.53 m² 10.74 €/m² 875.87 €
10 Retail 70.14 m² 5.37 €/m² 376.71 €
11 Storage 15.00 m² 3.00 €/m² 45.00 €
Total 128,541.90 € 20,814.15 m² 139,701.52 €
Annual GRI rd. 1,542,503.00 € 1,676,418.00 €
Burgwall‐Braunschweiger Str. Wolfsburg
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Property: Burgwall ‐ Braunschweiger Straße
Address: Wolfsburg
€ 17,900,000
6.00 %
11.60
8.6%
€ 1,676,418.00
(at market)
in % of GRI: 3.00 % = € 50,293.00
in % of GRI: 3.00 % = € 50,293.00
management
4.00 % = € 67,057.00
maintenance
per m² p.a. 9.00 €/m² = € 187,327.00
per parking lot p.a. 30.00 €/pc. = € 5,220.00
total non‐recs say: € 360,190.00
in % GRI: 21.5 %
Ground Lease € 102,558.92
€ 1,213,669.08
x 16.667
Gross capital value € 20,228,223.00
Capex Burgwall incl. 2 Parkdecks ‐€ 330,000.00
Underrent Office Space VW 53,010.72 €
(Standard lease term) 4.25 years 5.50% 3.70 = ‐€ 196,155.10
Vacancy
loss of GRI 15 months x 6,742.05 € € 101,130.79
operating costs 1,093.93 m² x 1.0 €/m² € 16,408.95
Refurbishment 1,093.93 m² x 200.0 €/m² € 218,786.00
Letting costs (Advertisement+Agent) 5 months x 6,742.05 € € 33,710.26
Total Vacancy costs ‐€ 370,036.01
Gross capital value € 19,332,031.89
4.5 % = € 805,501.00
2.0 % = € 358,001.00
1.5 % = € 268,500.00
say: € 1,432,002.00
* € 17,900,029.89
Market value rd. € 17,900,000.00
key data
11.60
8.62%
10.68
9.37%
6.78%
Value / m² ‐ lettable area 860 €/m²
Gross initial yield at market
Gross multiplier at market
Net initial yield at market
Gross initial yield at current
non‐recoverable costs
void allowance
market value as is:
All Risks Yield
Gross Multiplier at current
non‐rec. service charges
commercial in % of GRI
Gross Initial Yield at current
Calculation:
Annual gross rental income
agent
Summary
legal & notary
Total purchasers costs
Capital value ./. Purchasers costs
Gross multiplier at current
Net rental income p.a.
x multiplier
Purchasers Costs (based on *)
tax
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Appendix 2: Sensitivity Analysis for Changes All Risks Yield
Yield
15,820,000.00 €6.75%0.75%
16,460,000.00 €6.50%0.50%
17,150,000.00 €6.25%0.25%
17,900,000.00 €6.00%Original Yield
17,710,000.00 €5.75%‐0.25%
19,600,000.00 €5.50%‐0.50%
20,570,000.00 €5.25%‐0.75%
Wolfsburg
Burgwall
Project Rose Portfolio 30.09.2012 Properties BSB III Wolfsburg Burgwall‐Braunschweiger Str. Page 55 of 55
Appendix 3: Photos
Appendix 4: Building Encumbrances Appendix 5: Land Register – we got only an actual register of Page 6071 Content deleted due to file capacity by order of applicant
V A L U A T I O N of the Market Value of the properties “BSB II”:
5.2 Site Description ..................................................................................................................................... 18
6 Building .................................................................................................................................. 21
6.1 Building ................................................................................................................................................. 21
6.2 Exterior works / supply and waste disposal installations ...................................................................... 22
6.3 Condition and general assessment ....................................................................................................... 23
7 Schedule of rent ..................................................................................................................... 24
7.1 Commercial rent from ImmobilienScout24........................................................................................... 24
8.1 Choice of valuation approach ............................................................................................................... 33
8.2 Valuation assumptions – Market Value “As Is” ..................................................................................... 33
8.3 Suitability of the property for mortgage purposes ............................................................................... 37
9 Market Value ......................................................................................................................... 39
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn, Kronacherstr. 9 Page 3 of 48
10 Principles of the Valuation ...................................................................................................... 40
10.1 Disclosure and confidentiality ............................................................................................................... 40
10.2 Market Value ......................................................................................................................................... 40
10.3 Consideration of rights and encumbrances .......................................................................................... 40
1 The number of inquiries is the sum of all inquiries in the contained and significantly intersected zip code areas. 2 Offers of type hotel / gastronomy contain monthly leases. These leases are evaluated in the same way as monthly rents.
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn, Kronacherstr. 9 Page 26 of 48
Market overview
Index of requests Index of requests (related to Germany = 100) Legend for request index map (Index of total number of views of expose per offer per offering day (Germany = 100)):
Few offers (less than 3 offers)
Request strongly under average (Index: < 40)
Request under average (Index: 40 ‐ 80)
Average request situation (Index: 80 ‐ 120)
Request over average (Index: 120 ‐ 160)
Request strongly over average (Index: > 160)
(related to the German average)
Source: IS24 ‐ Miet‐ und Kaufpreise für Gewerbeimmobilien, Immobilien Scout GmbH, Berlin Status: Juni 2012
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn, Kronacherstr. 9 Page 27 of 48
7.2 Retail trade Competition
Nearby Competition
Catchment Areas
BAU Do‐It‐Yourself
VMG Market large (1.500‐4.999 m²)
DIS Discounter ELE Electrics & Electronics
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn Kronacherstr. 1/9 Page 28 of 48
Legend:
distance by car 2 km
distance by car 5 km
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn Kronacherstr. 1/9 Page 29 of 48
Competition in Catchment Areas
Legend:
distance by car 2 km distance by car 5 km
BAU Do‐It‐Yourself
VMG Market large (1.500‐4.999 m²)
DIS Discounter ELE
Electrics & Electronics
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn Kronacherstr. 1/9 Page 30 of 48
Retail Trade
Nr
Run by Store Name Address Q1 Type Zone
2
Sales Area (m²)
Revenue3
(MEuro pa)
1
Kaufland Kaufland Kronacher Str. 97333 Unterwellenborn
H VMG 1,2 4,938 24.811
2
Electronic Partner
Medimax Kronacher Str. 117333 Unterwellenborn
H ELE 1,2 1,404
3
Praktiker Praktiker Kronacher Str. 17333 Unterwellenborn
H BAU 1,2 6,040
4
Norma Norma Ernst‐Thälmann‐Str. 1a7334 Kamsdorf
H DIS 2 900 2.913
5
Netto Netto Rasenweg 27318 Saalfeld
H DIS 2 710 2.874
6
Penny Penny Könitzer Str.7338 Kaulsdorf
S DIS ‐ 524 2.384
7
Rewe Ost Rewe Mörl Rathenaustr. 5‐77318 Saalfeld
H VMG ‐ 1,600 5.243
8
Aldi Nord Aldi Markt Pößnecker Str. 547318 Saalfeld
H DIS ‐ 799 4.922
1 Quality of geo‐position: H – near house number, S – within street, P – within ZIP code area 2 CA 1: distance by car 2 km ‐ CA 2: distance by car 5 km 2 Revenue deduced from line of sales average data by modelling
Summary: distance by car 2 km
Number total
Number Used (Area)
Number Used (Revenue)
Sales area (m²) Revenue (MEuro
pa)
Retail Trade 3 3 1 12,382 25
Summary: distance by car 5 km
Number total
Number Used (Area)
Number Used (Revenue)
Sales area (m²) Revenue (MEuro
pa)
Retail Trade 5 5 3 13,992 31
Source: Marktdaten, Nielsen TradeDimensions, Frankfurt am Main Status: August 2011 Source: Regionalkarte, TomTom Deutschland GmbH, Harsum Status: März 2011
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn Kronacherstr. 1/9 Page 31 of 48
7.3 Summary
Verification of Market Rent via Turnover per sq m of Sales Space
The Turnaround of the retail shops in the subject property – Kaufland – grew from our
first valuation in 2007 till this year in 2011 – unfortunately we were not provided with
data from the Praktiker Market. Especially the Kaufland has a rather high attractive‐
ness for the people in the area and is very high frequented. The high frequency is bal‐
ancing the low local retail relevant buying power.
According to market research results, the rents for similar buildings in the region are
in a range that seems quite according to the actual rents.
To be able to verify the market rent given this inconsistent image of comparative
rents, the expected achievable turnover per square metre of sales space is deter‐
mined.
A certain percentage is derived as a notional rent. This internal consideration of po‐
tential tenants is also provided in this report for control purposes.
The sources used include:
‐ “Handel Aktuell 2008‐2009” EHI at the University of Cologne
‐ geoport data portal – online enquiry current as at Date of Valuation
The average turnover determined by these institutes for “SB Warenhäuser” (Discount
Food markets > 4.000 sqm sales area with high percentage of non food articles) in
Germany amounted in the average to 4,267 €/m² of sales space (latest figures EHI‐
Handel Aktuell 2008‐2009 S. 315)
The purchasing power index in the special area of Unterwellenborn is 90.1 (see tab‐
loid above). The German average is 100.
This means that purchasing power in the core catchment area of the property is 9.9 %
lower than the German average. At an average competition situation, it is justified to
assume, therefore, that the turnover achievable in the region is 9.9 % below the aver‐
age.
If the average annual turnover per sqm of sales space, is lowered by 9.9 % (corre‐
sponding to the retail relevant purchasing power), from 4,267 €/m² p.a. to 3,845 €/m²
sales space p.a., this will result in a hypothetical turnover of ca. 18,986,610 € p.a. for
this discount supermarket (4,938 sq m sales space x 3,845 €). The actual turnaround is
24,811,000 – significantly higher – so we can take the real numbers for the turna‐
round.
Project Rose Portfolio 30.09.2012 Properties BSB II Unterwellenborn Kronacherstr. 1/9 Page 32 of 48
The actual rent for the Kaufland Market incl. the drinks cash and carry shop and the
4 Description of the Subject Property .......................................................................................... 9
4.1 Location of the town and the property ................................................................................................... 9
4.2 Basic statistical data (Source: State Statistics Offices) .......................................................................... 11
4.3 Key data Region Leipzig ......................................................................................................................... 13
5.2 Site Description ..................................................................................................................................... 20
7.1 Schedule of rent for Leipzig ................................................................................................................... 23
8.1 Choice of valuation approach ............................................................................................................... 32
8.2 Valuation assumptions – Market Value “As Is” ..................................................................................... 32
8.3 Suitability of the property for mortgage purposes ............................................................................... 35
9 Market Value ......................................................................................................................... 37
10 Principles of the Valuation ...................................................................................................... 38
10.1 Disclosure and confidentiality ............................................................................................................... 38
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 3 of 45
10.2 Market Value ......................................................................................................................................... 38
10.3 Consideration of rights and encumbrances .......................................................................................... 38
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 21 of 45
‐ Surface: level
‐ Roads and services: adopted public road,
electricity supply,
public water supply,
public sewerage system
gas connection
Town planning circumstances:
‐ Zoning Map No B‐Plan, only a land utilisation plan (“Flächen‐
nutzungsplan”), valid since 15.04.1995 ‐ M ‐mixed
use area)
‐ Classification: land ripe for development § 4 Abs, 4 BauNVO
Subsoil conditions: No information was available concerning the subsoil
conditions. It was assumed, without verification,
that there are no special, i.e., value relevant, subsoil
conditions and in particular no contamination.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 22 of 45
6 Buildings
The following schedule is only partial: only the important factors influencing value are shown with no claim to com‐
pleteness. Circumstances not determinable by external inspection were taken from planning documents, the building
specification and if appropriate oral statements by the persons present during the inspection.
Evaluation of the objects
Evaluation Comment
facade Plastered and painted
roof Flat landscaped roofs
windows Modern Metal and Plastic Windows,
entrance Metall – from the underground car park Metall Glass – Mainentrances above ground
appurtenant structures The parking lot in front of the building is mostly paved, and well maintained (clean and well cut green at the property line).
highlights/description The property consists of 4 modern multi‐family houses with 5 stories each. All four buildings, the underground garage and the roof are in a very good condition. The technical equipment is well maintained and in functional condition. The outdoor Facilities are in a very well condition. The whole resi‐dential premises are without Deficiencies and damages. The above ground parking lots are mostly used by visitors.
Vacancy (visible)
Evaluation Comment
residential 1 vacant flats, rather rare so less for so many units
car park There is one underground parking lot for every flat,so hardly any of the 37 above ground car park are let, therefore we do not think the above ground parking spaces are sustainable let – and so we do not take the rent of the 5 rented spaces into account.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 23 of 45
7 Market Overview
7.1 Schedule of rent for Leipzig
7.1.1 Accommodation rent from ImmobilienScout24
Period of Analyses: January 2012 till June 2012
Postcode District 04347 Municipality Leipzig
Total number of offers 1,549 30,270
Average time of offering (days) 40.4 35.5
Total number of views of expose 291,305 8,402,036
Total number of inquiries1 8,554 16,917
Total number of views of expose per offer 188.1 277.6
Index of total number of views of expose per offer (Germany = 100) 27 40
Total number of views of expose per offer per offering day 4.7 7.8
Index of total number of views of expose per offer per offering day (Germany = 100)
18 31
Index of average time of offering (days) (Germany = 100) 149 131
Map Micro / Macro Market:
Postcode District 04347 Municipality Leipzig
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 24 of 45
Residential rents in the Postcode District 04347:
Offers (based on: 1,549 offers) Inquiries (based on: 8,554 inquiries)1
Living area Number of offers (rate)
Basic rent per m²
Spread interval (90 %)
Number of inquiries
Basic rent per m²
Spread interval (90 %)
Up to 30 m² 27 (1.7 %) 5.75 € 4.57 € ‐ 7.17 € 165 (1.9 %) 6.65 € 4.02 € ‐ 11.67 €
1 The number of inquiries is the sum of all inquiries in the contained and significantly intersected zip code areas.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 28 of 45
Market overview
Index of requests (related to Germany = 100) Average price per m²
Legend for request index map (Index of total number of views of expose per offer per offering day (Germany = 100)):
Few offers (less than 3 offers)
Request strongly under average (Index: < 40)
Request under average (Index: 40 ‐ 80)
Average request situation (Index: 80 ‐ 120)
Request over average (Index: 120 ‐ 160)
Request strongly over average (Index: > 160)
(related to the German average) Source: IS24 ‐ Kaufpreise für Wohnimmobilien, Immobilien Scout GmbH, Berlin Status: Juni 2012
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 29 of 45
7.1.3 Accommodation rent by Plötz
Population in Leipzig is growing constantly, so there is continuing demand for available modern resi‐dential space. Due to a high demand for modern or modernized flats and rare new errected multifami‐ly homes, rental prices for modern apartments still grow. The rents at the subject property are at the upper end for average locations.
Good Location Average Location Modest Location
1999 (in DM/m²) 10‐13 8‐10 6‐8
2000 (in DM/m²) 10‐13 7,5‐10 6,5‐8,5
2001 (in DM/m²) 10‐12 8‐9 6‐8
2002 (in DM/m²) 9,5‐12 7,5‐9 6,5‐8
2003 (in EUR/m²) 4,5‐5,75 3,5‐4,5 2,75‐3,5
2004 (in EUR/m²) 5‐7,25 4‐5 3‐4
2005 (in EUR/m²) 5,5‐7 4,5‐5,5 3,5‐4,5
2006 (in EUR/m²) 5,5‐7 4,5‐5,5 3,5‐4,5
2007 (in EUR/m²) 5,5‐7 4,25‐5,5 3,25‐4,25
2008 (in EUR/m²) 5,5‐7 4,25‐5,5 3,25‐4,25
2009 (in EUR/m²) 5,5‐7 4,25‐5,5 3,25‐4,25
2010 (in EUR/m²) 5,5‐7 4,25‐5,5 3,25‐4,25
2011 (in EUR/m²) 5,5‐7 4,25‐5,5 3,25‐4,25
2012 (in EUR/m²) 6‐8,5 4,8‐6 3,9‐4,8
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 30 of 45
7.1.4 Habitation Price by Plötz
Like in the most major cities in Germany this year the prices increased, and the valuation result for the subject property is at the lower end of the prices at the criteria “Average Location”
Good Location Average Location Modest Location
1999 (in DM/m²) 2000‐4000 2000‐3000 2000‐2000
2000 (in DM/m²) 2500‐3500 2200‐2600 1500‐2000
2001 (in DM/m²) 2700‐3800 2200‐2600 1500‐2000
2002 (in DM/m²) 2600‐3700 2100‐2600 1500‐2000
2003 (in EUR/m²) 1300‐1850 1000‐1300 750‐1000
2004 (in EUR/m²) 1300‐2500 1000‐1300 800‐1000
2005 (in EUR/m²) 1400‐1800 1000‐1400 600‐1000
2006 (in EUR/m²) 1400‐2500 1000‐1400 600‐1000
2007 (in EUR/m²) 1350‐2500 900‐1350 550‐900
2008 (in EUR/m²) 1350‐2500 900‐1350 550‐900
2009 (in EUR/m²) 1350‐2500 900‐1350 550‐900
2010 (in EUR/m²) 1350‐2500 900‐1350 550‐900
2011 (in EUR/m²) 1350‐2500 900‐1350 550‐900
2012 (in EUR/m²) 1450‐2650 900‐1450 600‐900
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 31 of 45
7.2 Summary
The valuer adopted the actual rents in his assessment of the capitalized income value.
As we predicted in 2011 residential rents in Leipzig grew during the last 12 months.
The contract rents in 2011 were at the upper end for good locations, but the nearly
unchanged actual rents in 2012 are only at the upper end of the range for an average
location, ‐ nonetheless, if there is a vacant flat at the site, letting efforts still lead to a
quick re‐letting, so we think the rents are high but at market, and positively more in
the middle of the market than last year.
If there is some vacancy in the property it never lasts long till a new tenant will move
in, only 1 flat is actually vacant. Modern residential space is still rare in that area and
only a few new projects of multifamily homes are reported in that district and it is ra‐
ther doubtful whether these will offer cheaper rents. The buildings are especially
popular at elder people living since a long time in the north‐eastern district of Leipzig,
because of the elevators and that the underground garages are easy accessible via the
lifts.
Like in the other major German cities, in Leipzig there is an investment boom for con‐
dominiums and multifamily homes so, this leads to rising sales prices in this market.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 32 of 45
8 Valuation
8.1 Choice of valuation approach
The selection of one or more methods of valuation should be oriented towards the ac‐
tual behaviour of market participants, i.e. it must take into account those influences
that would govern the determination of the sale price in normal course of business.
The subject property is a multi‐family building. Comparable properties are dealt with
from a yield point of view.
The following valuation has therefore been based on the internationally‐common “in‐
vestment method”.
We understand that the property is subject to freehold.
8.2 Valuation assumptions – Market Value “As Is”
Note: All calculations are rounded to the nearest full Euro amount.
8.2.1 Lease contracts and rental level
We did not inspected any rental contracts, so we have to assume, that the figures
named in the excel rent roll are correct.
For the following valuation, we assume that the rents achieved currently are achieva‐
ble over long term. Actual rents achieved are at market (as shown above).
According to market research results, the average offer comps for residential rents in
that postal district are 3.71 – 5.96 €/sqm for flats in a size between 31‐90 sqm – but
this range shows only 90 % of the whole market. And we have here one the few rare
modern good new built multi‐family homes in this location with now vacancy and
quick re‐let vacant apartments, so it is justified that the real rent in the property of
6.48 €/sqm is slightly above that benchmark. In the whole city of Leipzig the bench‐
mark for 90% of the offer comps for residential rents are around the 3.62 – 6.79 €/sqm
(for flats with comparable sizes to the subject property).
Because of solid demand for modern apartments in the area, the pretty good quality
and location of the buildings and the green external grounds, we take the actual rents
as market rent. We think that the fact that the tenants stay there for a long time, and
that there is only a small number of vacancy, and fast re‐lettings, are good signs that
this is market level.
Risks with regard to rental levels and vacancy rates are incorporated in the all‐risks
yield.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 33 of 45
8.2.2 Inflation, indexation
The leases are partly subject to indexation, although for the purposes of our valuation,
we have not reflected this indexation going forward, but have instead taken it into ac‐
count in the yields adopted, which we consider a realistic approach that would be
adopted by a prudent purchaser.
8.2.3 All‐Risks Yield
Positive to mention is that the building is modern and in the valuation we deduct ex‐
plicitly the costs for actual cap ex. Most of the tenants are elder people who always
lived in that area, they like at the building especially the easy access to the apartments
and the underground garage, but also the green exterior and the balconies. That the
local people like to live in the subject property can be seen by the fact that vacant flats
are getting rented quickly, despite the relatively high rent. Public transport and retail
shops are within walking distance. With bus or tram, the city center of Leipzig is only a
few minutes away.
Also in Leipzig is currently an investment boom which leads to stronger rises in the
prices for multifamily homes.
Although there is no letting problem the rents are relative high at the upper end of the
rental benchmark, so further increasing rents don’t seem to be expectable, that’s less
favourable.
Since a property always comes with higher costs and risks, despite the aforementioned
qualities, the interest rate increases in line with each tenant’s creditworthiness and
loss of rental income risks.
The official board of valuers of the City of Leipzig shows as cap rate so called
“Liegenschaftszinsen” with a yield spread for multifamily houses from 2.8%‐5.7%, and
an average of 4.2%.
Risks in investments of modern multi‐family houses are in general pretty low. But the
rents are relatively high, therefore we do not see a possibility to lower the yield com‐
pared to last year. For that reason we choose for that kind of a use at the valuation
date a cautious yield of 5.50 %.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 34 of 45
8.2.4 Non‐recoverable expenditure
Regarding non recoverable costs, we have estimated the costs for non recoverable op‐
erating costs and costs for management and maintenance. The estimates for the prop‐
erty subject run as 1 % for non recs. Service charges, respectively 4.0% for manage‐
ment (depending on the kind of building and especially the number of tenants) and
10.00 €/sqm for maintenance building (to keep the high quality of the buildings), 50
€/sqm (a bit above the average, because the easy accessible for the underground gar‐
age and 25 €/sqm for the few parking lots above ground.
Insurance and property taxes are typically recoverable costs that are being transferred
to the tenants.
8.2.5 Rental Void
The loss of income and the costs for the vacant apartment space have to be taken into
account at the date of valuation.
The outdoor parking lots are mostly not let, because there is in general one under‐
ground parking place per flat and enough parking spaces outside of the property for
free – we assume that these few outside parking places are not lettable on the long
few, so we do not take their (potential) income into account. But we deduct the
maintenance costs for them at the non‐recs.
We assume that the vacant flat will be rented within 12 months latest.
Vacancy risk is pictured in the ARY but additional costs in relation of a vacancy e.g. for
lawyers etc. is taken into account as void allowance at the non‐recs. We increased that
amount slightly to picture also at that point the risk of increased costs due to high
rents.
8.2.6 Other’s
We were told by the Asset Manager that there will be some cap ex necessary because
of some water in the underground garage and some additional painting. We also have
to deduct some money for repairing some of the parking‐lifts.
8.2.7 Purchasers’ on‐costs
Purchasers Costs are taken into account in the height generally adopted, Basis of the
calculation is the market value.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 35 of 45
8.3 Suitability of the property for mortgage purposes
8.3.1 SWOT Analysis
Strengths:
Good location for that kind of use (a quiet and green area – but close to the city
center and to transportation facilities)
Good infrastructure around
Only very few flats are below 70 sq m, it’s a general experience the fluctuation in
bigger flats is lower
Demand for modern flats in good quality within the city area
One underground parking lot per flat
Underground parking is accessible via lift from the flats without stairs
Tenants stay long‐term
Weaknesses:
Not lying in one of the fashionable newly restored city districts
A rent above the average
Opportunities:
A development in the area to a more consistent use – especially good quality resi‐
dential house
Threats:
In the future maybe newer multi‐family houses for a similar rents.
Development in the neighborhood which does not fit to high‐quality multi‐family
houses.
8.3.2 Saleability
In terms of the time period in which we consider a sale of the subject property would
be realised, we would estimate this to be 9‐12 months from the commencement of
the marketing period. Generally we would not envisage any difficulties in realising a
sale of this property, but we still have an economic crisis. So we can say with confi‐
dence is that any property valuations reported at the present time contain “abnormal
uncertainty” caused by “market instability”. RICS Guidance Note 5 (GN5) refers to such
circumstances thus:
“Unforeseen macroeconomic or political crises can have a sudden and dramatic effect
on markets. This could manifest itself by either panic buying or selling, or simply a dis‐
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 36 of 45
inclination to trade until it is clear how prices in the market will be affected in the long‐
er term. If the valuation date coincides with the immediate aftermath of such an event,
the data on which any valuation is based may be confused, incomplete or inconsistent,
with an inevitable effect on the certainty that can be attached to it”.
The RICS considers that, where uncertainty could have a material effect on the valua‐
tion, the Valuer should draw attention to this, indicating the cause of the uncertainty
and the degree to which this is reflected in the reported valuation.”
Accordingly, please be advised that such circumstances exist and that we have advised
you in the context above, and that in our opinion the value of the Property is fairly
stated.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 37 of 45
9 Market Value
We assessed the following values for the subject property on the basis of information
gained and documentation provided and in accordance with the approaches described
above:
Market Value “As is” (derived from investment method): € 11,080,000
We are not aware of any other circumstances at the present time which have not al‐
ready been reflected in our assessment of value.
On the basis of the foregoing and with express reference to Section 10 of this valua‐
tion, our opinion of the Market Value of the subject property:
Kurt‐Weill‐Straße 1‐7 in 04347 Leipzig (District of Schönefeld, parcel of land 228/5,
724/22, 724/24, 724/25, 724/26) on the valuation date of 30th September 2012 is
€ 11,080,000
(Eleven million eighty thousand Euro)
Berlin, 16th November 2012
Klaus Schlicht, MRICS Assoc MAI
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 38 of 45
10 Principles of the Valuation
10.1 Disclosure and confidentiality
This appraisal has been prepared in accordance with the International Valuation
Standards 2011 and the RICS Appraisal and Valuation Standards. In the context of the
valuation Klaus Schlicht has acted as an external Valuer working in a fee earning capac‐
ity for the named client. Klaus Schlicht does not have any direct or indirect personal or
corporate relationships with the properties or company that is the subject of this as‐
signment and that might lead to a potential conflict of interest. Furthermore, the
agreed compensation is not contingent upon any aspect of the report, including the
valuation results.
This engagement has been performed independently and without bias toward the cli‐
ent or others. We have complied with the code of conduct and adhered to the ethical
standards set out in the International Valuation Standards.
The valuation of the portfolio has been undertaken by Klaus Schlicht, This member of
the Royal Institution of Chartered Surveyors has not previously been signatories to val‐
uations provided to the client for the same purposes as this report.
The valuer has not previously completed a valuation in respect of this portfolio and has
had no other material relationship with the client to date.
10.2 Market Value
The Market Value was determined by using the Investment Method, in accordance
with the standards of the RICS (London) and the Appraisal Institute (Chicago III,), as
well as those stipulated in the German Federal Building Code (BauGB).
It is assumed that the tenants will accept the property in the long term. As the rent
calculated with is at market level, for our calculations using the Investment Method
the current ERV has been capitalised in perpetuity.
10.3 Consideration of rights and encumbrances
Rights and encumbrances of real property can result from numerous, sometimes very
different, grounds. Distinction must be made between the following types:
public‐law restrictions (protection of listed monuments, nature conservation law
etc,);
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 39 of 45
private law restrictions, which mainly result from the rights and restrictions of Na‐
chbarrecht (law concerning the respective interests of occupiers of adjoining
property);
limited real rights (rights of use, safeguarding and disposal, rights of acquisition
etc,);
rights equivalent to real property (ground leases, mineral rights etc,);
For the purposes of this valuation, any possible liens (mortgages, land charges and rent
charges) to which the property may be subject have not been reflected in the determi‐
nation of market value, as the specialised literature and case law are unanimous in the
opinion that such charges should be interpreted as personal circumstances.
We have not been provided with any legal due diligence report or declarative state‐
ments therein. So we could not take into afford any issues affecting value,
It has been assumed that the use of the site would not be significantly limited by the
easements recorded in the land register.
10.4 Documents
The above advisory opinion is the result of our research and on‐site findings without
carrying out a legal‐due‐diligence (e.g. lease contracts, ownership structure) or tech‐
nical‐due‐diligence (e.g. building structure, partitioning, fit out etc.), The delivered
documents (tenant lists, technical reports) for the above calculations were not audited
by the Valuer.
The Valuer Klaus Schlicht was not provided with the following documents by the client
and the documents were not requested by the Valuer as ordered by the client:
‐ a comprehensive legal due diligence
‐ rental contracts
In accordance with the client we assume that there are no facts in these documents
with significant influence on the market value.
10.5 Assumptions
10.5.1 Condition of the land
A valuation to market value can only reflect influences on value that may be ascer‐
tained by an external, non‐damaging survey.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 40 of 45
For the purposes of this valuation, it has therefore been assumed that the site is free
of contamination and that its characteristics as regards development would not in‐
volve any expenditure higher than is normal in the location, unless the external non‐
damaging survey provides indications that in the circumstances could result in a reduc‐
tion in value being deduced.
10.5.2 Condition of the buildings
Where there are buildings on the site, in the same way only circumstances that may be
ascertained by an external, non‐damaging survey can be reflected.
In this regard we must expressly point out that the following circumstances have not
been investigated by us:
No investigation of the structural stability of the buildings or of specific sound and
thermal insulation qualities has been carried out;
No verification of compliance with public‐law regulations (including consents, ac‐
ceptances, conditions etc,) or of any private‐law provisions affecting the existence
or user of the land and buildings has been carried out;
No investigations with regard to infestation by animal or vegetable pests (in timber
or masonry) or corrosion (in copper pipework) have been carried out;
No investigation of the buildings with respect to deleterious materials (e,g, asbes‐
tos, formaldehyde, high alumina cement etc,) has been carried out;
The functional capability of technical and other installations of the buildings has
not been tested;
It has been assumed, without verification, that as at the date of valuation the sub‐
ject property is covered by insurance, both as regards the type of potential dam‐
age and the appropriate amount of the sum insured.
In the following report it will be assumed that there is no adverse effect on value as a
result of the circumstances described above, unless, in the course of the non‐damaging
inspection, there were indications giving rise to inferences of a reduction in value re‐
sulting from these circumstances.
In the following report it will be assumed that there is no adverse effect on value as a
result of the circumstances described above, unless, in the course of the non‐damaging
inspection, there were indications giving rise to inferences of a reduction in value re‐
sulting from these circumstances.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 41 of 45
10.5.3 Volume and floor areas of buildings
This valuation is based on the assumption that the measurements adopted correspond
with the actual measurements, or that any discrepancies that may occur would not
have a significant effect on the outcome of the valuation.
Project Rose Portfolio 30.09.2012 Properties BSB II Leipzig, Kurt‐Weill‐Str. Page 42 of 45
Appendix 1: Calculations
Current GRI / Market GRI
Unit Main Area Contract rent Area Contract / m² Market / m² Market
5.2 Site Description ..................................................................................................................................... 23
7.1 Schedule of rent for Lahr ...................................................................................................................... 27
8.1 Choice of valuation approach ............................................................................................................... 36
8.2 Valuation assumptions – Market Value “As Is” ..................................................................................... 36
8.3 Suitability of the property for mortgage purposes ............................................................................... 39
9 Market Value ......................................................................................................................... 41
10 Principles of the Valuation ...................................................................................................... 42
10.1 Disclosure and confidentiality ............................................................................................................... 42
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 3 of 51
10.2 Market Value ......................................................................................................................................... 42
10.3 Consideration of rights and encumbrances .......................................................................................... 42
id since 09.03.1991, Usage: shopping center – large
scale retail (SO – EKZ); ‐ valid.
“Aufstellungsbeschluss” of the community of Lahr
to remodelling the zoning plan mentioned above ,
to enlarge the retail space at double the contempo‐
rary sitze.
“Auslegung des B‐Plans” Presentation of the B‐Plan
to the citizens.
Approval of the “Träger öffentlicher Belange” the
authorities whose interests could be affected by the
plan.
Bebauungsplan Blockschluck Im Götzmann 2. Än‐
derung ‐ August 2011 / zoning plan 2. Amendment,
not yet valid.
‐ Classification: land ripe for development § 4 Abs. 4 BauNVO
Subsoil conditions: No information was available concerning the subsoil
conditions. It was assumed, without verification,
that there are no special, i.e. value relevant, subsoil
conditions and in particular no contamination.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 25 of 51
6 Buildings
The following schedule is only partial: only the important factors influencing value are shown with no claim to com‐
pleteness. Circumstances not determinable by external inspection were taken from planning documents, the building
specification and if appropriate oral statements by the persons present during the inspection.
Evaluation of the objects
Evaluation Comment
facade The facade of the buildingsconcrete – partly painted and tin (used for advertising)
roof Flat roofs
‐ could not be inspected
‐ Assumption that there are no major immediate
costs caused by any roof damage
windows Metal Glass Windows.
entrance Needs some maintenance – looks tatty
appurtenant structures The parking lot in front of the building is mostly as‐phalted, with only a few trees and a little bit of green.
highlights/description The property consists of 2 retail outlet buildings – on of them has 2 floors and the other only 1. Directly at the western side of one building is – there is a OBI (DIY). The subject property can be seen very well from three major roads. The parking lots are mostly in front of the building (some of them – for the employees) are at the back‐side of the building at a not asphalted part of land parcel 1870. There is some renovations work necessary – we as‐sume that most of this will be done together with the future development of the site. So the refurbishment costs mentioned for the vacant space are only rudimentary, although we increased them this year to show that the current buildings will have to stay longer than previously assumed. In the moment the development is only delayed but in the case of a complete failing development even more higher refurbishment costs will have to be set in the calculation.
Vacancy (visible)
Evaluation Comment
retail Although the whole site is under planning, for the calculation all current uses/seizes are used, because it is rather uncertain whether the development will
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 26 of 51
Vacancy (visible)
Evaluation Comment
succeed.The main building with the former SB Waren‐haus/Hypmarket is vacant and could not be visited inside.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 27 of 51
7 Market Overview
7.1 Schedule of rent for Lahr
7.1.1 Commercial rent from ImmobilienScout24
Period of Analysis: April 2012 till September 2012
Postcode District 77933 District Ortenaukreis
Total number of offers 49 181
Average time of offering (days) 51.8 55.5
Total number of views of expose 3,551 13,375
Total number of inquiries1 63 144
Total number of views of expose per offer 72.5 73.9
Index of total number of views of expose per offer (Germany = 100) 73 74
Total number of views of expose per offer per offering day 1.4 1.3
Index of total number of views of expose per offer per offering day
(Germany = 100) 80 76
Index of average time of offering (days) (Germany = 100) 91 98
Map Micro / Macro Market:
Postcode District 77933 District Ortenaukreis
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 28 of 51
Commercial rents in the Postcode District 77933:
Offers (based on: 49 offers) Inquiries (based on: 63 inquiries)
1
Type Number of offers Basic rent per m² Spread interval (90 %) Total number of
1 The number of inquiries is the sum of all inquiries in the contained and significantly intersected zip code areas. 2 Offers of type hotel / gastronomy contain monthly leases. These leases are evaluated in the same way as monthly rents.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 29 of 51
Market overview
Index of requests Index of requests (related to Germany = 100) Legend for request index map (Index of total number of views of expose per offer per offering day (Germany = 100)):
Few offers (less than 3 offers)
Request strongly under average (Index: < 40)
Request under average (Index: 40 ‐ 80)
Average request situation (Index: 80 ‐ 120)
Request over average (Index: 120 ‐ 160)
Request strongly over average (Index: > 160)
(related to the German average) Source: IS24 ‐ Miet‐ und Kaufpreise für Gewerbeimmobilien, Immobilien Scout GmbH, Berlin Status: September 2012
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 30 of 51
7.1.2 Retail Rents
Nearby Competition
BAU Do‐ It‐Yourself
EKZ Shopping Center
TS Petrol station
DIS Discounter
ELE Electrics & Electronics
VMG Market large (1.500 ‐
4.999 m²)
DM Drugstore
GC Gardening
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 31 of 51
Catchment Areas
Legend:
distance by car 1.5 km
distance by car 5 km
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 32 of 51
Competition in Catchment Areas
Legend:
distance by car 2 km distance by car 5 km
BAU Do‐ It‐Yourself
EKZ Shopping Center
TS Petrol station
DIS Discounter
ELE Electrics & Electronics
VMG Market large (1.500‐4.999 m²)
DM Drugstore
GC Gardening
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 33 of 51
Shopping Center
Nr Store Name Address Q1 Zone
2
Sales Area (m²)
DL3 EH
4 GA
5 B/T
6
Car‐parks
Opening
E.1 Arena Einkaufs‐park
Alter Stadtbahn‐hof 1 77933 Lahr
H 1,2 16,400 5 24 5 440 27.05.2000
1 Quality of geo‐position: H – near house number, S – within street, P – within ZIP code area 2 Catchment Area: 1. distance by car 2 km / 2. distance by car 5 km 3 Services 4 Retail 5 Gastronomy 6 Visitors per day
1 Quality of geo‐position: H – near house number, S – within street, P – within ZIP code area 2 CA 1: distance by car 2 km ‐ CA 2: distance by car 5 km 2 Revenue deduced from line of sales average data by modelling
Summary: distance by car 2 km
Number total
Number Used (Area)
Number Used (Revenue)
Sales area (m²) Revenue (MEuro
pa)
Shopping Center 1 1 16,400
Retail Trade 16 15 7 25,902 39
Summary: distance by car 5 km
Number total
Number Used (Area)
Number Used (Revenue)
Sales area (m²) Revenue (MEuro
pa)
Shopping Center 1 1 16,400
Retail Trade 30 29 18 39,345 101
Source: Marktdaten, Nielsen TradeDimensions, Frankfurt am Main Status: August 2011 Source: Regionalkarte, TomTom Deutschland GmbH, Harsum Status: März 2011
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 35 of 51
7.2 Summary
There is a retail development project at the property, which is already running since
several years and which is now for us and for the city of Lahr as well surprisingly close
for failure, or at least delayed ‐ due to the fact that it is tailor‐made for the purpose of
OBI (DYI Market), but the client did not sign the rental contract with OBI right in time,
so OBI exercised its option for 3 more years at the old building at the neighbour site.
If the contract with OBI will be not signed, no competitor of OBI will take the space di‐
rectly at the side of an existing OBI, something like that does simply not exist anywhere
in Germany. So we have to take into account the possibility that the new zoning plan
will not be transmitted to reality, at least we have to assume that the current buildings
will stay longer as assumed before.
As a market rent at that kind of elderly buildings we take the actual rents. For the va‐
cant space we were told there are well known tenants with good creditworthiness ex‐
pressing their rental interest at a low rental height of 6.0 €/sqm, based at the quality of
the buildings at the date of the valuation. Regarding the state of condition of the build‐
ings and the rents the other tenants are paying for their spaces, which are bit better or
worse than the vacant space, 6.0 €/sqm p.m. seem to be a reasonable market rent.
However if the retail companies/prospective tenants accept the current building quali‐
ty and will invest own money in the amelioration of the sales space, what they usually
will do if they pay a low rent like 6.0 €/sqm, ‐ the owner of the building must also in‐
vest own money in the building and its technique; and the longer the potential tenant
will stay the more must be renovated or modernized. Therefore we increased the re‐
furbishment costs for the currently vacant space from 50 €/sqm last year to 150
€/sqm.
But anyhow the assumptions in this valuation are still a positive scenario, although
there is now up to 6 years’ time since the conservation of the status quo expires, there
are actual cases at the high court jurisdiction with an ending of the conservation of the
status quo already by 1‐2 years. The city authorities announced that they will go to
court if a city relevant retailer/s will move into the contemporary vacant retail space,
and so the city relevant retail space would be increased to above 4,000 m² sales space.
Nonetheless we have to mention that in the actual calculation we took into account at
the ARY that there is STILL a chance that the contract with OBI will be signed / the new
zoning plan will be transferred to reality. The city authorities sees it also that way and
thus stretched the payment deadlines from the “städtebauliche Vertrag” – the infra‐
structure development contract which was signed by the city of Lahr and the client, in
relation with new zoning plan.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 36 of 51
8 Valuation
8.1 Choice of valuation approach
The selection of one or more methods of valuation should be oriented towards the ac‐
tual behaviour of market participants, i.e. it must take into account those influences
that would govern the determination of the sale price in normal course of business.
The subject property is a building with only retail space. Comparable properties are
dealt with from a yield point of view.
The following valuation has therefore been based on the internationally‐common “in‐
vestment method”.
We understand that the property is subject to freehold.
8.2 Valuation assumptions – Market Value “As Is”
Note: All calculations are rounded to the nearest full Euro amount.
8.2.1 Lease contracts and rental level
We did not inspected any rental contracts, so we have to assume, that the figures
named in the excel rent roll are correct.
Concerning the rental contracts see above 7.2 and 3.3.
We assume that even in that case that the tenants are modernizing their space by
themselves (due to the cheap rent) – some costs stay at the owner. We assume that
with the increased refurbishment sum chosen, all these additional costs for the owner
are fully covered.
8.2.2 Inflation, indexation
The leases are partly subject to indexation, although for the purposes of our valuation,
we have not reflected this indexation going forward, but have instead taken it into ac‐
count in the yields adopted, which we consider a realistic approach that would be
adopted by a prudent purchaser.
8.2.3 All‐Risks Yield
Since a property always comes with higher costs and risks, despite the aforementioned
qualities, the interest rate increases in line with each tenant’s creditworthiness and
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 37 of 51
loss of rental income risks. The yield also depends on the competition in the catchment
area for that usage and risks concerning the tenants.
As mentioned in the last years – and it is still true ‐ the zoning SO Retail is very rare and
sought‐after, and it would be a great and unique chance for a large scale retail devel‐
opment in this economically healthy region. This chance is still open, although with a
smaller probability of realisation, therefore to represent that chance in the calculation
but showing that the risks of a failure grows we raised the yield slowly to 7.0%. None‐
theless if the development would finally fail the yield will have to be raised above the
current level.
8.2.4 Non‐recoverable expenditure
Regarding non recoverable costs, we have estimated the costs for non recoverable op‐
erating costs and costs for management and maintenance. The estimates for that
property run at 2 % for operating costs, respectively 2.0% for management (depending
on the kind of building and the number of tenants) and 7.00 €/m² for maintenance of
the building and 25 €/St outside parking places.
Insurance and property taxes are typically recoverable costs that are being transferred
to the tenants.
8.2.5 Refurbishment
The prospective tenants for the vacant space will only pay a rent at the lower end for
retail space in good location. So they cannot expect that the landlord will invest much
in the property. Therefore we assume only a minimum amount for Refurbishment.
Nonetheless we have to assume that the current vacant building will stay longer as as‐
sumed – therefore we increased the refurbishment costs substantially.
8.2.6 Additional Land Value
The size of the whole plot which is not been built at the date of the valuation, is much
bigger than needed only for a car park. In contrary the car park is so huge that it looks
too empty – that is as less favourable for retail shop than an overcrowded one. For
that reason and under the usual assumption that for one car 25 sq m of parking place
is needed, we could use 10,000 – 13,000 sq m for an additional retail building. We use
here the conservative amount of only 10,000 sq m.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 38 of 51
The local official board of valuers told us a Standard Ground Value (Bodenrichtwert) of
130 €/sq m for use of Sondergebiet (special Area “SO”), and they told us that the only
other large scale Shopping Center had reached a price of 240 € sq m land (although it is
only a little bit closer to the city center).
Therefore we think that 150 €/ sq m, which we use in our valuation for 1 sq m addi‐
tional land, is a realistic sum. But if the development will fail we will have to reduce the
value to the Standard Ground Value = Guideline Land Value (Bodenrichtwert) of 130
€/sq m.
8.2.7 Purchasers’ on‐costs
Purchasers Costs are taken into account in the height generally adopted. Basis of the
calculation is the market value.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 39 of 51
8.3 Suitability of the property for mortgage purposes
8.3.1 SWOT Analysis
Strengths:
Good location for that kind of use (at a thoroughfare)
Simple building type
Very high demand for such kind of a property (“SO” Retail Zoning for large scale
retail/shopping center)
Weaknesses:
Development with new and larger sales buildings at least delayed, due to a miss‐
ing rental contract with DIY Market OBI, that leads to a further use of the con‐
temporary outworn buildings
Limitation of the city relevant sales space by the new Zoning Plan
Buildings remain old – even when they are renovated
Opportunities:
Probable future rise of rents – after a development in a more further future
Successful Development in a further future
Threats:
More modern retail space at another property
8.3.2 Saleability
In terms of the time period in which we consider a sale of the subject property would
be realised, we would estimate this to be 12‐18 months from the commencement of
the marketing period. Generally we would not envisage any difficulties in realising a
sale of this property, but we still have an economic crisis. So we can say with confi‐
dence is that any property valuations reported at the present time contain “abnormal
uncertainty” caused by “market instability”. RICS Guidance Note 5 (GN5) refers to such
circumstances thus:
“Unforeseen macroeconomic or political crises can have a sudden and dramatic effect
on markets. This could manifest itself by either panic buying or selling, or simply a dis‐
inclination to trade until it is clear how prices in the market will be affected in the long‐
er term. If the valuation date coincides with the immediate aftermath of such an event,
the data on which any valuation is based may be confused, incomplete or inconsistent,
with an inevitable effect on the certainty that can be attached to it”.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 40 of 51
The RICS considers that, where uncertainty could have a material effect on the valua‐
tion, the Valuer should draw attention to this, indicating the cause of the uncertainty
and the degree to which this is reflected in the reported valuation.”
Accordingly, please be advised that such circumstances exist and that we have advised
you in the context above, and that in our opinion the value of the Property is fairly
stated.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 41 of 51
9 Market Value
We assessed the following values for the subject property on the basis of information
gained and documentation provided and in accordance with the approaches described
above:
Market Value “As is” (derived from investment method): € 7,050,000
We are not aware of any other circumstances at the present time which have not al‐
ready been reflected in our assessment of value.
On the basis of the foregoing and
with express reference to the assumption that the contract with OBI for the DIY De‐
velopment size will be signed,
Appendix 6,
and Section 10, of this valuation, our opinion of the Market Value of the subject prop‐
erty:
Im Götzmann 2 77933 Lahr
on the valuation date of 30th September 2012 is
€ 7,050,000
(Seven million and fifty thousand Euro)
Berlin, November 18th 2012
Klaus Schlicht, MRICS Assoc MAI
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 42 of 51
10 Principles of the Valuation
10.1 Disclosure and confidentiality
This appraisal has been prepared in accordance with the International Valuation
Standards 2011 and the RICS Appraisal and Valuation Standards. In the context of the
valuation Klaus Schlicht has acted as an external valuer working in a fee earning capaci‐
ty for the named client. Klaus Schlicht does not have any direct or indirect personal or
corporate relationships with the properties or company that is the subject of this as‐
signment and that might lead to a potential conflict of interest. Furthermore, the
agreed compensation is not contingent upon any aspect of the report, including the
valuation results.
This engagement has been performed independently and without bias toward the cli‐
ent or others. We have complied with the code of conduct and adhered to the ethical
standards set out in the International Valuation Standards.
The valuation of the portfolio has been undertaken by Klaus Schlicht. This member of
the Royal Institution of Chartered Surveyors has not previously been signatories to val‐
uations provided to the client for the same purposes as this report.
The valuer has not previously completed a valuation in respect of this portfolio and has
had no other material relationship with the client to date.
10.2 Market Value
The Market Value was determined by using the Investment Method, in accordance
with the standards of the RICS (London) and the Appraisal Institute (Chicago III.), as
well as those stipulated in the German Federal Building Code (BauGB).
It is assumed that the tenants will remain in the property in the long term because of
the existing situation (combined occupation of the subject property with a very good
location). As the rent currently being paid is at market level, for our calculations using
the Investment Method the current ERV has been capitalised in perpetuity.
10.3 Consideration of rights and encumbrances
Rights and encumbrances of real property can result from numerous, sometimes very
different, grounds. Distinction must be made between the following types:
public‐law restrictions (protection of listed monuments, nature conservation law
etc.);
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 43 of 51
private law restrictions, which mainly result from the rights and restrictions of Na‐
chbarrecht (law concerning the respective interests of occupiers of adjoining
property);
limited real rights (rights of use, safeguarding and disposal, rights of acquisition
etc.);
rights equivalent to real property (ground leases, mineral rights etc.);
For the purposes of this valuation, any possible liens (mortgages, land charges and rent
charges) to which the property may be subject have not been reflected in the determi‐
nation of market value, as the specialised literature and case law are unanimous in the
opinion that such charges should be interpreted as personal circumstances.
We have not been provided with any legal due diligence report or declarative state‐
ments therein. So we could not take into afford any issues affecting value.
It has been assumed that the use of the site would not be significantly limited by the
easements recorded in the land register.
10.4 Documents
The above advisory opinion is the result of our research and on‐site findings without
carrying out a legal‐due‐diligence (e.g. lease contracts, ownership structure) or tech‐
nical‐due‐diligence (e.g. building structure, partitioning, fit out etc.). The delivered
documents (tenant lists, technical reports) for the above calculations were not audited
by the Valuer Klaus Schlicht.
The Valuer was not provided with the following documents by the client and the doc‐
uments were not requested by the valuer as ordered by the client:
‐ building encumbrance (Baulastenverzeichnis) / partly
‐ a comprehensive legal due diligence – espec. for the easements and the kind of a us‐
age for landparcel 1870.
‐ rental contracts
In accordance with the client we assume that there are no facts in these documents
with significant influence on the market value.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 44 of 51
10.5 Assumptions
10.5.1 Condition of the land
A valuation to market value can only reflect influences on value that may be ascer‐
tained by an external, non‐damaging survey.
For the purposes of this valuation, it has therefore been assumed that the site is free
of contamination and that its characteristics as regards development would not in‐
volve any expenditure higher than is normal in the location, unless the external non‐
damaging survey provides indications that in the circumstances could result in a reduc‐
tion in value being deduced.
10.5.2 Condition of the buildings
Where there are buildings on the site, in the same way only circumstances that may be
ascertained by an external, non‐damaging survey can be reflected.
In this regard we must expressly point out that the following circumstances have not
been investigated by us:
No investigation of the structural stability of the buildings or of specific sound and
thermal insulation qualities has been carried out;
No verification of compliance with public‐law regulations (including consents, ac‐
ceptances, conditions etc.) or of any private‐law provisions affecting the existence
or user of the land and buildings has been carried out;
No investigations with regard to infestation by animal or vegetable pests (in timber
or masonry) or corrosion (in copper pipework) have been carried out;
No investigation of the buildings with respect to deleterious materials (e.g. asbes‐
tos, formaldehyde, high alumina cement etc.) has been carried out;
The functional capability of technical and other installations of the buildings has
not been tested;
It has been assumed, without verification, that as at the date of valuation the sub‐
ject property is covered by insurance, both as regards the type of potential dam‐
age and the appropriate amount of the sum insured.
In the following report it will be assumed that there is no adverse effect on value as a
result of the circumstances described above, unless, in the course of the non‐damaging
inspection, there were indications giving rise to inferences of a reduction in value re‐
sulting from these circumstances.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 45 of 51
In the following report it will be assumed that there is no adverse effect on value as a
result of the circumstances described above, unless, in the course of the non‐damaging
inspection, there were indications giving rise to inferences of a reduction in value re‐
sulting from these circumstances.
10.5.3 Volume and floor areas of buildings
This valuation is based on the assumption that the measurements adopted correspond
with the actual measurements, or that any discrepancies that may occur would not
have a significant effect on the outcome of the valuation.
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 46 of 51
Appendices
Project Rose Portfolio 30.09.2012 Properties BSB II Lahr, Im Götzmann Page 47 of 51
Appendix 1: Calculations
Current GRI / Market GRI
Main Area Contract rent Area Contract / m² Market / m² Market
4 Description of the Subject Property ........................................................................................ 11
4.1 Location of the town and the property ................................................................................................. 12
4.2 Basic statistical data (Source: State Statistics Offices) .......................................................................... 13
4.3 Key data District Jena ............................................................................................................................ 15
5.2 Site Description ..................................................................................................................................... 22
6 Building .................................................................................................................................. 25
6.1 Building ................................................................................................................................................. 25
6.2 Exterior works / supply and waste disposal installations ...................................................................... 26
6.3 Condition and general assessment ....................................................................................................... 26
7 Schedule of rent ..................................................................................................................... 27
7.1 Commercial rent from ImmobilienScout24........................................................................................... 27
8.1 Choice of valuation approach ............................................................................................................... 36
8.2 Valuation assumptions – Market Value “As Is” ..................................................................................... 36
8.3 Suitability of the property for mortgage purposes ............................................................................... 39
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 3 of 50
9 Market Value ......................................................................................................................... 41
10 Principles of the Valuation ...................................................................................................... 42
10.1 Disclosure and confidentiality ............................................................................................................... 42
10.2 Market Value ......................................................................................................................................... 42
10.3 Consideration of rights and encumbrances .......................................................................................... 42
1 The number of inquiries is the sum of all inquiries in the contained and significantly intersected zip code areas. 2 Offers of type hotel / gastronomy contain monthly leases. These leases are evaluated in the same way as monthly rents.
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 29 of 50
Market overview
Index of requests Index of requests (related to Germany = 100) Legend for request index map (Index of total number of views of expose per offer per offering day (Germany = 100)):
Few offers (less than 3 offers)
Request strongly under average (Index: < 40)
Request under average (Index: 40 ‐ 80)
Average request situation (Index: 80 ‐ 120)
Request over average (Index: 120 ‐ 160)
Request strongly over average (Index: > 160)
(related to the German average)
Source: IS24 ‐ Miet‐ und Kaufpreise für Gewerbeimmobilien, Immobilien Scout GmbH, Berlin Status: September 2012
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 30 of 50
7.2 Retail trade Competition
Nearby Competition
BAU Do-It-Yourself
ELE Electrics & Electronics
VMG Market large (1.500-4.999 m²)
DIS Discounter
GC Gardening
EKZ Shopping Center
SBW SelfService Warehouse (More than 5.000 m²)
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 31 of 50
Catchment Areas
Legend:
distance by car 2 km
distance by car 7 km
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 32 of 50
Competition in Catchment Areas
Legend:
distance by car 2 km distance by car 7 km
BAU Do‐It‐Yourself
ELE Electrics & Electronics
VMG Market large (1.500‐4.999 m²)
DIS Discounter
GC Gardening
EKZ Shopping Center
SBW SelfService Warehouse (More than 5.000 m²)
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 33 of 50
Shopping Center
Nr Store Name Address Q1 Zone
2
Sales Area (m²)
DL3 EH
4 GA
5 B/T
6
Car‐parks
Opening
E.1 Burgaupark Keßlerstr. 12 7745 Jena
H 2 33,100 6 35 4 25,000 1,200 28.09.1995
E.2 Goethe‐Galerie Goethestr. 3b 7743 Jena
H ‐ 29,000 8 65 7 30,000 641 01.02.1996
E.3 Neue Mitte Jena Leutragraben 1 7743 Jena
H ‐ 11,000 1 32 7 180 24.10.2003
1 Quality of geo‐position: H – near house number, S – within street, P – within ZIP code area 2 Catchment Area: 1. distance by car 2 km / 2. distance by car 7 km 3 Services 4 Retail 5 Gastronomy 6 Visitors per day
Retail Trade
Nr
Run by Store Name Address Q1 Type Zone
2
Sales Area (m²)
Revenue3
(MEuro pa)
1
Praktiker Praktiker Zöllnitzer Str. 47751 Zöllnitz
H BAU 1,2 7,900
2
Netto Netto Erlanger Allee 1027747 Jena
H DIS 2 840 2.1
3 Media‐Saturn Media Markt Stadtrodaer Str. 1057747 Jena
Aldi Nord Aldi Markt Salvador‐Allende‐Platz 257747 Jena
H DIS 2 1,000 3.806
7
Kaufland Kaufland Karl‐Marx‐Allee 207747 Jena
H SBW 2 5,023 15.771
8
Netto Netto Stauffenbergstr. 437747 Jena
H DIS 2 680 1.677
9 Netto Netto Marktstr. 177747 Jena
H DIS 2 855 2.108
10 Netto Netto Im Borlich7751 Rothenstein
S DIS 2 600 1.979
11 Rewe Bau‐märkte
Klee Garten‐Center Lobedaer Str. 107745 Jena
H GC 2 4,500
12
Toom Toom Keßlerstr. 127745 Jena
H SBW 2 6,091 22.537
13
Rewe UE Pro Markt Keßlerstr. 127745 Jena
H ELE 2 1,500
14
Aldi Nord Aldi Markt Oßmaritzer Str. 27745 Jena
H DIS 2 799 3.041
15
Lidl Lidl Rudolstädter Str. 317745 Jena
H DIS 2 800 2.941
16 Netto Netto Hermann‐Pistor‐Str. 33a7745 Jena
H DIS ‐ 1,080 2.702
17 Norma Norma Friedrich‐Zucker‐Str. 1‐37745 Jena
H DIS 2 385 0.77
18 Aldi Nord Aldi Markt Jenaer Str. 117646 Stadtroda
H DIS 2 799 4.009
19
Rewe Ost Rewe Schmelzer Jenaer Str. 07646 Stadtroda
S VMG 2 2,000 5.326
20
Norma Norma Ziegenhainer Str. 54‐567749 Jena
S DIS ‐ 800 2.96
21
Edeka Nord‐bayern
Diska Dorfstr. 17751 Jena
H DIS ‐ 650 1.526
22
Netto Netto Tatzendpromenade 97745 Jena
H DIS ‐ 742 1.829
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 34 of 50
Nr
Run by Store Name Address Q1 Type Zone
2
Sales Area (m²)
Revenue3
(MEuro pa)
23 Aldi Nord Aldi Markt Leutragraben 17743 Jena
H DIS ‐ 799 3.041
24 Zeus Heimwerker Roscher & Wolf
Johannisstr. 197743 Jena
H BAU ‐ 180
25
Tegut Tegut Carl‐Zeiß‐Str. 47743 Jena
H VMG ‐ 2,055 12.0
26
Norma Norma August‐Bebel‐Str. 277743 Jena
H DIS ‐ 799 1.611
1 Quality of geo‐position: H – near house number, S – within street, P – within ZIP code area 2 CA 1: distance by car 2 km ‐ CA 2: distance by car 7 km 2 Revenue deduced from line of sales average data by modelling
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 35 of 50
7.3 Summary
There was no real change in the DIY Retail situation in Jena over the years – all large DIY
companies are already there. In general the turnover of the big DIY companies grew per
shop, but not this year.
We did not get information about the turnover of the Praktiker market at the subject
property but this is here of less relevance, because we were told that the contract rent is
already paid from a deposit and because of the weak economic situation of Praktiker
and their law suit against the rental contract we have to assume that they will leave af‐
ter the end of the standard rental period in about 2 years latest anyway. Regarding the
DIY market situation in the area in general and the reputation of Praktiker as nearly
bankrupt in particular the contract rent is above market. Therefore set the market rent
for the Praktiker rather conservative and cautious, below the Roller Rent, in order to
support a fast re‐letting till the end of the rental guarantee.
Due to the new rental contract with Roller, and taking into account their reputation as
(rental)‐price sensitive and their market power, we have to assume that this is market
rent.
So with the exception of the Praktiker space we take the contract rents as market rents,
and take the market rents for our valuation calculation. The difference between the
market rent and the Overrent at the Praktiker space is added in the calculation for the
remaining standard rental period.
For a description of the current rental situation at the subject property please see above
at section 3.3.
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 36 of 50
8 Valuation
8.1 Choice of valuation approach
The selection of one or more methods of valuation should be oriented towards the ac‐
tual behaviour of market participants, i.e. it must take into account those influences that
would govern the determination of the sale price in normal course of business.
The subject property – the compound ‐ consists of standard large scale retail buildings.
Comparable properties are mostly dealt with from a yield point of view.
The following valuation has therefore been based on the internationally‐common in‐
vestment method.
We understand that the property is subject to freehold.
8.2 Valuation assumptions – Market Value “As Is”
Note: All calculations are rounded to the nearest full Euro amount.
8.2.1 Lease contracts and rental level
We did not inspected all rental contracts, so we have to assume, that the figures named
in the excel rent roll are correct.
Market rents are taken into account for our valuation. The rent Praktiker is actually pay‐
ing (see Bullet 3.3) is clear below market, but together with the rental guarantee it is
above market for the time of the standard rental period (see Bullet 7.3). The difference
is added for the remaining time of the standard rental period.
Risks with regard to rental levels and vacancy rates are incorporated in the all‐risks yield.
8.2.2 Inflation, indexation
The leases are partly subject to indexation, although for the purposes of our valuation,
we have not reflected this indexation going forward, but have instead taken it into ac‐
count in the yields adopted, which we consider a realistic approach that would be
adopted by a prudent purchaser.
8.2.3 All‐Risks Yield
Since a property always comes with higher costs and risks, despite the aforementioned
qualities, the interest rate increases in line with each tenant’s creditworthiness and loss
of rental income risks.
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 37 of 50
According to that, we take into account the chance to use an additional landscape for
car‐cleaning or such things.
Despite this, we consider an all‐risks yield of 6.25% to be appropriate for the property.
The yield we have chosen was influenced because of the fact that ROLLER who are
known for their cautious rental policy early prolonged its rental contract till 2020 on a
low rental height and that the long time vacant space was rented till 2026. Both rental
contracts reduce the risk at that site. To reduce the risk and enlarge the chances to find
a new tenant we lowered this year the market rent of the current Praktiker space. Posi‐
tive to mention is also that the client is seriously negotiating about selling 50,000 sqm of
the huge vacant land around the retail properties for a price of ca. 30 €/sqm land, which
is above our cautious estimation.
8.2.4 Non‐recoverable expenditure
Regarding non recoverable costs, we have estimated the costs for non recoverable op‐
erating costs and costs for management and maintenance. The estimates for that prop‐
erty run at 1.5% for non recs service charge, 1.0% for management and 6.50 €/m² for
maintenance for the buildings and 25 €/sqm per parking lot above ground.
Insurance and property taxes are typically recoverable costs that are being transferred
to the tenants.
8.2.5 Renovation and refurbishment costs
The buildings are relatively new, and appropriate for modern large scale retail, and they
used by well known large retail companies which are caring for their sites. We didn’t see
at our site visit any actual need for a refurbishment. Nonetheless we have to assume
that some costs will occur when a new tenant will take the space of Praktiker.
8.2.6 Vacancy Costs
We suppose that about 2 years’ time (remaining rental period of Praktiker) will be
enough to search for a new tenant. Thus we do not take into account a loss of GRI for
searching a successor of the current tenant, but we deduct some vacancy time for the TI
construction period in ca. 2 years. And we deduct an amount for advertisement – con‐
sisting out of a marketing budget and an agent fee.
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 38 of 50
8.2.7 Additional landscape
There is an additional landscape, ready for an extension of the site. We assume that this
area could be used separately.
To act with caution, we attach to this additional land the standard ground value, pub‐
lished by the local land valuation board. And to be really on the safe side with the future
development, we calculated only with ca. 100,000 sq m net building land, of 266.390 sq
m gross building land (see above at 3.2 ‐ a tabloid with lot numbers). And we assume
that this additional land can not be sold at once. We assume 50,000 sqm can be sold in 5
years and the other 50,000 sqm in 10 years. For that reason we discount the value with
5.50 % over 5 years resp. 10 years.
We were told by the Asset Management that the client is currently negotiating seriously
about selling 50.000 sqm of gross building land for 30 €/sqm, so the 20 €/sqm we esti‐
mated for the whole compound of at least 100,000 sqm is rather conservative. After
phoning with the community we assume for this valuation that this land will liable to
additional local development charges when it will be built.
8.2.8 Purchasers’ on‐costs
Purchasers Costs are taken into account in the height generally adopted. Basis of the
calculation is the market value.
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 39 of 50
8.3 Suitability of the property for mortgage purposes
8.3.1 SWOT Analysis
Strengths:
well‐known nationwide retailers
well‐known location for large scale retail since years now
Modern large scale retail buildings suitable for that purpose
Close to Autobahn and easy to reach via car from all Parts of Jena and the country‐
side around
Region of Jena has a strong positive economical development, one the few rare ar‐
eas in the east with a grow in population
Weaknesses:
Praktiker is nearly bankrupt
Praktiker (DIY Company) will not renew their lease term, they are unsatisfied and
won a legal suit that allow them to cancel their rental contract. So a new tenant will
be probably necessary.
Opportunities:
Developing additional land
Selling additional land
Getting a more stable tenant than Praktiker
Threats:
Bigger and more sophisticated shopping agglomerations
No new tenant as a spare for Praktiker although there is more than two years’ time
to search for
8.3.2 Saleability
In terms of the time period in which we consider a sale of the subject property would
be realised, we would estimate this to be 9‐12 months from the commencement of the
marketing period. Generally we would not envisage any difficulties in realising a sale of
this property, but we still have an economic crisis. So we can say with confidence is that
any property valuations reported at the present time contain “abnormal uncertainty”
caused by “market instability”. RICS Guidance Note 5 (GN5) refers to such circumstances
thus:
“Unforeseen macroeconomic or political crises can have a sudden and dramatic effect on
markets. This could manifest itself by either panic buying or selling, or simply a disincli‐
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 40 of 50
nation to trade until it is clear how prices in the market will be affected in the longer
term. If the valuation date coincides with the immediate aftermath of such an event, the
data on which any valuation is based may be confused, incomplete or inconsistent, with
an inevitable effect on the certainty that can be attached to it”.
The RICS considers that, where uncertainty could have a material effect on the valua‐
tion, the Valuer should draw attention to this, indicating the cause of the uncertainty
and the degree to which this is reflected in the reported valuation.”
Accordingly, please be advised that such circumstances exist and that we have advised
you in the context above, and that in our opinion the value of the Property is fairly stat‐
ed.
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 41 of 50
9 Market Value
We assessed the following values for the subject property on the basis of information
gained and documentation provided and in accordance with the approaches described
above:
Market Value “As is” (derived from investment method): € 19,960,000
We are not aware of any other circumstances at the present time which have not al‐
ready been reflected in our assessment of value.
On the basis of the foregoing and with express reference to Section 10 of this valua‐
tion, our opinion of the Market Value of the subject property:
Zöllnitzer Straße 2‐4 07751 Zöllnitz (Page 469 cadastral unit 4, parcels of land 118/2,
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 48 of 50
Property: Zöllnitzer Straße
Address: Zöllnitz
€ 19,960,000
6.25 %
10.65
9.4%
€ 1,535,755.00
(at market)
in % of GRI: 3.00 % = € 46,073.00
in % of GRI: 1.00 % = € 15,358.00
management
1.50 % = € 23,036.00
maintenance
Buildings per m² p.a. 6.00 €/m² = € 139,801.00
Parking places per pc p.a. 25.0 €/pc = € 17,200.00
total non‐recs say: € 241,468.00
in % GRI: 15.7 %
€ 1,294,287.00
x 16.000
Gross capital value € 20,708,592.00
Overent Praktiker
Unit 1 288,754.80 €
Unit 1 cap. Standard rental period 2.13 years 6.25% 1.934 = € 558,448.28
Letting Praktiker space
Vacancy period 6 months x 48,443.10 € € 290,658.60
Operating Costs 6 months x 0.50 € € 29,065.86
Ti's 9,689 m² x 50.00 € € 484,431.00
Advertisement 6 months x 48,443.10 € € 290,658.60
‐€ 1,094,814.06
Discounted Sum 2.13 Years 0.879 = ‐€ 962,188.00
Total Vacancy costs ‐€ 962,188.00
Additional Landvaluedisc. 5 yrs resp. 10 yrs with 5,5% 2 x 50.000 m² à 20 €/m² ebp € 1,350,565.00
Gross capital value € 21,655,417.28
5.0 % = € 997,945.00
2.0 % = € 399,178.00
1.5 % = € 299,384.00
say: € 1,696,507.00
* € 19,958,910.28
Market value rd. € 19,960,000.00
key data (without Additonal Land Value)
10.65
9.39%
12.12
8.25%
6.96%
Value / m² ‐ lettable area 799 €/m²
Summary
legal & notary
Total purchasers costs
market value as is:
All Risks Yield
Gross Multiplier at current
non‐rec. service charges
commercial in % of GRI
non‐recoverable costs
Capital value ./. Purchasers costs
Gross multiplier at current
Net rental income p.a.
x multiplier
Purchasers Costs (based on *)
tax
void allowance
Calculation:
Annual gross rental income
Gross Initial Yield at current
Net initial yield at market
agent
Gross initial yield at current
Gross initial yield at market
Gross multiplier at market
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 49 of 50
Appendix 2: Sensitivity Analysis for Changes All Risks Yield
Yield
17,920,000.00 €7.00%0.75%
18,550,000.00 €6.75%0.50%
19,230,000.00 €6.50%0.25%
19,960,000.00 €6.25%Original Yield
20,750,000.00 €6.00%‐0.25%
21,610,000.00 €5.75%‐0.50%
22,550,000.00 €5.50%‐0.75%
Zöllnitz
Zöllnitzer Straße
Project Rose Portfolio 30.09.2012 Properties BSB II, IV Zöllnitz Zöllnitzerstr. 2‐4 Page 50 of 50
Appendix 3: Photo
Appendix 4: Standard Ground Value
Reques: Zöllnitzer Str 2, 07751 Zöllnitz Land parcel No.: der Praktiker mit dem Roller Markt
75.00 Euro/qm
Usage – retail purpose Developed land – free of local infrastructure charges ref. BauGB and KAG Source: Gutachterausschuss für Grundstückswerte für das Gebiet des Saale‐Holzland‐Kreises Date: 31.12.2010
Appendix 5: Building Encumbrance
Appendix 6: Land Register
Appendix deleted due to file size by order of applicant