TANKOVO MEWS DEVELOPMENT SITE

CONTENTS

Page No.
STATUS OF VALUER AND INSPECTIONS 1
COMPLIANCE 1
LOCATION 2
SITUATION 2
DESCRIPTION 3
LEGAL STATUS 4
TOWN PLANNING 5
ENVIRONMENTAL MATTERS 5
PROPOSED SCHEME 5
MARKET OVERVIEW 6
BLACK SEA HOLIDAY HOME COMMENTARY 8
DEMAND 13
SALES PRICES 14
FORECAST 15
VALUATION METHODOLOGY 16
MARKET VALUE 17
LIABILITY AND PUBLICATION 18

APPENDICES
Appendix I General Assumptions and Definitions
Your Ref
Our Ref G:\INTERNATIONAL\CFT\Projects\MPG
Date 27 March 2008 9 Marylebone Lane
London
W1U 1HL
The Directors Tel: 020 7935 4499
MPG Fax: 020 7487 1800
100 Pall Mall www.collierscre.com
London
SW1Y 5HP
Direct Line+44 20 7344 6609
Direct Fax +44 20 7344 6539
For the attention of Michael Gallucci Mobile +44 7768 500202
Chris.Fowler-Tutt@collierscre.co.uk

Dear Sirs

“TANKOVO MEWS” DEVELOPMENT SITE

In accordance with your instructions, we have inspected the above development site in order to
provide you with our opinion of Market Value, as at 31 January 2008, for secured lending purposes.

STATUS OF VALUER AND INSPECTIONS

The property has been inspected and valued by suitably qualified valuers who fall within the
requirements as to competence as set out in PS 1.4 and 1.5 of the Valuation Standards (the Red
Book) issued by the Royal Institution of Chartered Surveyors (the RICS). We confirm that Colliers
CRE complies with the requirements of independence and objectivity under PS 1.6 and that we have
no conflict of interest in acting on your behalf on this matter.

The property was inspected on 9 January 2007 by Kristian Engley BSc MRICS and supervised and
valued by Christopher Fowler-Tutt BSc MRICS.

The extent of our investigations and the sources of information on which we have relied upon are
described under PS 5 of the Red Book.

The General Assumptions and Definitions form Appendix I to this report.

COMPLIANCE

This appraisal has been prepared in accordance with the International Valuation Standards 2005 and
the RICS Valuation Standards (the Red Book). In the context of the valuation Colliers CRE act as an
Independent Valuer. The valuers do not have any direct or indirect personal or corporate
relationships with the property or Company that is the subject of this assignment and that might lead
to a potential conflict of interest.

This engagement has been performed independently and without bias toward the client or others.
We have complied with the code of conduct and adhered to the ethical standards set out in the RICS
Valuation Standards.
 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

LOCATION

The subject property is located on the eastern Black Sea coast of Bulgaria, in the locality of Aheloy,
a small rural village. Aheloy is located within the Pomorie Municipality and the wider Burgas region.
The village is located approximately 6km west of the Black Sea coastline and the Sunny Beach
tourist resort. Aheloy also lies approximately 5km west of town of Nessebar, 40km north of Burgas
and is 100km south of Varna.

The wider Burgas region is one of the most developed areas in Bulgaria. With the second largest
land area, it is the fourth most densely populated region of the country. The Burgas region operates
as an important gateway to the country, with 74% of Bulgaria’s imports and exports being handled
through the port of Burgas. The region provides 5.22% of the country’s GDP and houses Burgas
International Airport, the Burgas Port complex, and the Triple Way extended railway stations
between Burgas and Kamobat.

A large, highly skilled, labour pool in the region also serves the growing manufacturing and
construction industries, primarily concentrated around the city of Burgas. Bulgaria’s largest tourist
costal resort is the costal area of Sunny Beach situated approximately 5km north of Burgas. The
resort has upwards of 500 hotels stretching along and directly behind the beachfront, arranged over
medium to high-rise hotel blocks. The resort also houses a large number of apartment blocks
ranging in design and quality. Contributing further to the region’s tourist industry are the numerous
thermal mineral spa springs that populate the Burgas coastal areas.

A map extract showing the wider location of the village is detailed below:

Source: (Google Earth 2008)

SITUATION

MPG Associates Ltd 2

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

The subject property is located on the western fringes of Tankovo, approximately 400m from the
central area of the village. Tankovo has good road links, and is accessed via a secondary link road
leading north-west from the main E79 motorway. The E79 is the main arterial route into the Sunny
Beach resort from both northerly and southerly directions, providing a direct link to both the cities of
Varna and Burgas. The nearest international airport is located in Burgas (40km), with Varna (100km)
also housing an international airport.

Access to the property is via an unsurfaced track which runs in a westerly direction from the
periphery of the village. There is no direct road access to the property at present, with the property
lying approximately 50m south of the track. Tankovo has approximately 1,185 inhabitants (2007)
and is predominantly residential in nature, with local amenities limited to small family hotels and a
recently opened winery. An aerial photo of the site is shown below:

Source: (Google Earth 2008)

DESCRIPTION

The subject property comprises an undeveloped land plot with a total area of 5,239 m 2 (0.52
hectares). The property is currently used as agricultural grazing land with covering vegetation in the
form of short grasses. Topographically the plot is broadly level with a marginal south to north incline,
with no notable geographic features. The plot is arranged in a broadly regular, rectangular shape
with the longest axis of the plot running horizontally in an east-west orientation.

The plot is bounded by agricultural land to the north, south and west. The east of the site runs
parallel to a raised hedgerow which forms the boundary to the adjacent property, believed to be a
tomato farm. Approximately 50m to the south-west of the site are a line of overhead power lines,
running in a north-westerly direction. There is also a wind turbine located approximately 200m south-
east of the property. We have attached photos of the subject property below:

MPG Associates Ltd 3

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

View of property looking north View of property looking towards Tankovo (south-east)

View of property looking north-east View of unsurfaced access road

View of site looking north View of site looking towards Tankovo

LEGAL STATUS

We understand that the subject property is held freehold by MPG Associates ltd (MPG) and is free
from any legal encumbrances that may have a material impact on the value of the property.
However, we would advise interested third parties to make their own enquiries into the legal status of
the property to establish the current situation. We have been provided by MPG with the ownership
details for the property, which we have summarised in the table below:

MPG Associates Ltd 4

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Address Land parcel ID Size (sq m) Ownership document

Tankovo Village, Notary Deed № 99, volume VI, reg. № 4151, file
Nessebar 1039 dated 2006; registered with the Real Estate
№ 73571.35.30 5,239 Register under Deed № 124, volume VII, file №
Municipality,
1699 dated 2006
Burgas Region
Total Size 5,239

TOWN PLANNING

The subject property is currently zoned for residential development by the Nessebar Municipality as
per Order No. КД-14-02-1202 dated 5 June 2006. We have summarised the zoning parameters in
the table below:

Land parcel ID Coefficient of Density Eaves Height Permitted Use

construction (m)

ПИ 73571.35.30 0.8 40% 7 Holiday homes

BUILDING PERMISSION

We have had sight of the building permission permit dated 21 April 2007, authorised by the
Nessebar Municipality. The document provides permission for MPG to:

(i) Carry out the construction assembly works provided in the approved designs after the
opening of the building site and the determination of the building line and level.

(ii) To use part of the street and pavement roadway in accordance with the approved
coordinated design for Building organization and implementation project.

(iii) To keep the temporary existing buildings, as specified in the design for the completion
of the building/art. 148, par. 9 of the Territory Structure Act.

ENVIRONMENTAL MATTERS

We have not carried out soil, geological or other tests or surveys in order to ascertain the site
conditions or other environmental conditions of the properties. Additionally, we have not received an
environmental report or any comment on the environmental condition of the property. Subsequently,
our valuation assumes that there are no unusual ground conditions, contamination, pollutants or any
other substances that may be environmentally harmful and that may have a material affect on value.

PROPOSED SCHEME

We understand that the proposed scheme comprises 22 villas, car parking, and commercial service
units with a total built up area of 3,288 m². The residential accommodation is expected to be
arranged over three villas types, with Vila type A (typically 170 m²), Villa type B (typically 128 m² )
and Villa type C (typically 100 m² ). The villas will be arranged over ground and first floor and are
expected to have the following specification:

MPG Associates Ltd 5

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Foundations Reinforced concrete foundations.

External Walls Concrete block inner leaf, cavity insulation, 100m outer leaf with
rendered external finish.

Roof Roof structure to engineers design with metal interlocking, single ply
or asphalt roof finishes. P.V.C and metal gutters on proprietary
system.

Windows Double glazed units with composite aluminium / timber frames.

Internal Stairs Pre-cast concrete, with steel or software timber stairs between
floors, where applicable.

Electrical Installation Installation to comply with National, European Rules & Regulations.
All homes wired for Sky T.V, IT with security system and telephone
service integrated to a site wide provider.

Heating / Cooling Fitted with Heat-Pump centrally located piped & ducted to provide
fully automated system. Sized by mechanical engineer with a local
thermostatic control and timer.

Kitchen Units Fitted kitchen units with “facilities” for built in fridge/freezer,
washer/dryer, electric hob unit.

Patio Area Each villa will have its own patio area with decking and grass as per
architect’s drawings.

We have relied on the following schedule of areas for the proposed development provided by MPG.

Size per Unit Total

Premises Units 2 2 2 Size
Area (m ) Terrace (m ) Total (m )
(m2)
Residential
Type A & A1 5 170.86 23.39 194.25 971.25
Type B 6 128.44 23.37 151.81 910.86
Type C 11 99.20 16.72 115.92 1,275.12
Subtotal 22 3 157.53
Commercial
Retail 1 98.54 98.54 98.54
Tower 1 32.08 32.08 32.08
Subtotal 130.62
Total 3,287.85

MARKET OVERVIEW

Bulgaria joined NATO in 2004 and the EU in January 2007. During the first half of the 1990s
Bulgaria’s economy shrunk dramatically owing to the loss of the COMECON markets, and UN
sanctions against its major trading partner Yugoslavia. In 1994, GDP began to show signs of growth
and inflation fell for the first time since transition commenced in 1990. The collapse of the economy
in 1996 was primarily due to an unstable banking system. Since 1997 the economy has gradually
recovered due to sound macroeconomic policies and a broad structural reform programme.

MPG Associates Ltd 6

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Since 2000, GDP has grown at 4% to 6% per annum and is forecast to grow by similar levels in 2007
and 2008.

Bulgaria macroeconomic data and forecasts

2005 2006e 2007f 2008f 2009f
Nominal GDP (Euro bn) 21.4 24.4 27.5 30.5 33.5
Per capita GDP (Euro) 2,780 3,170 3,590 4,010 4,420
Real GDP, yoy (%) 5.5 6.3 6.5 6.3 6.2
Inflation (CPI), yoy, avg (%) 5 7.3 6.2 4.7 3.6
Unemployment rate (%) 10.7 9.1 8 7.5 7
Exchange rate/Euro, avg 1.96 1.96 1.96 1.96 1.96
1M SOFIBOR (1), avg of the year 2.7 3.7 4.2 4.1 3.9
Current account/GDP (%) -11.3 -14.7 -14.2 -11 -9.5
FDI/GDP (%) 10.8 15.5 14 10.5 9
General government debt/GDP (%) 31.9 25 24.5 23 22
Budget balance/GDP (%) 2.3 3.5 2 1.5 1
Total external debt/GDP (%) 71.4 75 81 83.5 86

(1) Prior to SOFIBOR introduction yield on 3M treasury bonds was used as a benchmark interest
rate.
e – Estimate f – Forecast Source: Bank Austria

Bulgaria’s dynamic GDP and per capita income growth rates and increasing economic integration
since 2000, have been driven by domestic consumption and investment. Bulgaria’s GDP per head in
2005 was circa $3,500. The country remains the poorest of the CEE states (excluding Russia and
Ukraine). Its estimated GDP per capita in 2006 even at Purchasing Power Parity was just 30% of
the EU15 average, 35% of the EU25 average and 53% of the EU8 average.

The reform programme launched in the late 1990s led to a steady fall in inflation. However during the
period between 2003 – 2006, inflation has varied between 2.3% and 7.3%. Given the rapid GDP
growth, it will be difficult to bring down inflation much further in the short term which presents a threat
to the country’s targeted accession to the Eurozone in 2010.

Bulgaria’s unemployment level has also been falling since 2000, reaching circa 9% by year end
2006. This is the lowest level since the beginning of transition and compared with approximately
19% in 2000.

The biggest constraint on growth and risk to underlying economic stability in Bulgaria has been its
trade deficit. Estimated at approximately 15% of GDP in 2006, it is the highest in the CEE region
and is forecast to remain in double figures until the end of 2008. Furthermore, Bulgaria’s fixed
exchange rate has made it difficult for Bulgarian exports to remain competitive.

Surging inflows of capital goods in recent years, however, will continue to stimulate export growth,
providing sufficient financing for the current account shortfall and as such mitigating much of the
associated risk.

Growth Drivers

MPG Associates Ltd 7

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Bulgaria’s tourism sector generated more than €2 billion of revenue in 2006 from four million visitors
enjoying its sun, sand and sea along its 354km of Black Sea coast, skiing opportunities in the winter
and mountain landscapes in the interior. The sector accounted for approximately 14% of Bulgaria’s
GDP in 2006 and accounts for more than 140,000 jobs.

Bulgaria’s accession to the EU is contributing to a boom in tourism, raising its profile as a major
emerging travel destination. Post EU accession, the number of the foreign tourists in Bulgaria have
jumped by at least 10% in 2007 and a forecast by the World Tourism Organisation indicates that by
the year 2010, the number of tourists in visiting the country will annually exceed 20 million.

Since 2003, Bulgaria has seen booming interest from foreign investors. The driving forces have
been the EU accession process and membership; the highly-skilled multilingual workforce with the
EU’s most competitive wage; a stable and predictable business environment; the lowest operational
costs and tax rate in the EU and tax exemption and investment incentives for qualified investors.

Between January and November 2006, the state exchequer received €3.2 billion of inward
investments. This equates to approximately 13% of GDP and more than 100% of current account
deficit. Bulgaria has the highest level of FDI as a percentage of GDP in the CEE region.

BLACK SEA HOLIDAY HOME COMMENTARY

Overview

The Black Sea holiday homes market experienced significant growth in 2006 and 2007. In excess of
19,500 residential apartment units were added to the overall supply in coastal resort areas bringing
the total to in excess of 50,694 units. A number of additional facilities such as golf courses also
emerged during 2007, providing added levels of amenity for visiting tourists. The completed and
proposed golf courses occupy both coastal and mountain locations. The emergence of these
recreational facilities in the area, is expected to strengthen the demand for holiday properties. The
quality of holiday home construction has also improved, in line with increasingly demanding buyer
requirements together with the premium pricing levels associated with these exclusive
developments.

Sunny Beach continues to be the most popular coastal resort in the Black Sea locality, accounting
for about 35% of all new supply to the market. Demand is predominantly formed by private
individuals from the United Kingdom and Ireland, and new markets, such as Russia, Romania and
the Baltic states, are becoming increasingly active in the Bulgarian market.

Supply

Overall trends

Most of the supply continues to be concentrated in the popular Sunny Beach resort area, which also
includes St. Vlas, Elenite, Nessebar, Ravda, Kosharitza, and Aheloy. The latter region accounts for
more than half of the current supply. However, the supply of new schemes has started shifting
towards medium and smaller resorts due to a number of key factors. Firstly, sharp increases in land
prices in popular destinations has prompted developers to invest in relatively unexplored areas.

Furthermore acquisition of substantial land plots, in large well developed areas, has become
increasingly hard to find. In addition, there has been an element of over-construction and market
saturation in these established resorts, with supply outstripping demand. In response, major
developers are starting to plan and build projects away from the primary resorts, and are focusing on

MPG Associates Ltd 8

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

secondary locations offering exclusivity, privacy, and added services and facilities like marinas and
golf courses.

The supply of vacation homes on Bulgaria’s Black Sea coast amounted to almost 50,700 units by the
end of December 2007, which represents 56% year-on-year growth. We have detailed the growth in
holiday home supply from June 2006 to December 2007 below.

Cum ulative Coastal Holiday Homes Supply

(Apartm ent Units)
60 000

50 000

40 000

30 000

20 000

10 000

0
June 2006 December 2006 June 2007 December 2007

Source: Colliers Research

As previously detailed, the pioneer developments were located in the Sunny Beach area, therefore
the market for vacation homes remains unevenly distributed between established, well known
resorts, and smaller and less popular locations. The proportional share of the Sunny Beach resort in
terms of overall supply remained constant. Bulgaria’s largest coastal resort currently accounts for
34% of the total coastal supply compared to 36% six months earlier. St. Vlas, another resort in the
greater Sunny Beach area, showed a significant 66% increase from December 2006. Ravda and
Sozopol continued to develop as leading holiday-home locations as cumulative supply in these
coastal towns increased by 73% and 83% respectively. Currently, their share of the total cumulative
supply is 7% and 6% respectively.

Developments geared towards families and terraced units gained more popularity, and their number
continues to grow. At present, properties of this type are mostly concentrated in Kosharitza, Sozopol
and Kavarna. However, due to the intensive construction in most of the established locations, some
major developers have shifted their focus away from these popular areas. The graph below shows
the distribution of holiday apartment supply in the established holiday home locations.

MPG Associates Ltd 9

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Cum ulative Supply of Coastal Holiday Hom es in Selected Resorts (Apartm ent
Units)

25 000

20 000

June 2005

15 000 December 2005

June 2006
December 2006
10 000
June 2007
December 2007
5 000

0
Golden Sands Ravda Sozopol St. Vlas Sunny Beach

Source: Colliers Research

Balchik, Byala, Kavarna, Obzor, and Pomorie are among the locations that have become more
popular and attractive for second-home projects over the last year. The increase in supply for Balchik
and Kavarna, has been driven primarily by the ongoing development of the golf courses in the
locality. As a consequence these resorts contribute significantly to the overall annual increase in
holiday homes built on the Black Sea coast during last year.

The overall share of the coastal holiday home market is shown below, with comparisons between
December 2006 and December 2007.

Resort Share in Coastal Holiday Hom es Supply

(Decem ber 2007)
1,0% Sunny Beach
1,0% St.Vlas
2,0%
3,0%
Ravda
2,0%
Sozopol
2,0%
Balchik
2,0%
Pomorie
3,0%
Elenite
34,0%
3,0%
Golden Sands
3,0% Aheloy
Obzor
4,0%
Primorsko

4,0% Byala
Kavarna
4,0% Tzarevo
Kosharitza
5,0%
8,0% Nessebar
5,0% Lozenetz
6,0% 7,0%
Chernomoretz
Others

MPG Associates Ltd 10

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Resort Share in Coastal Holiday Hom es Supply

(Decem ber 2006)
2,3% Sunny Beach
0,9%
St.Vlas
1,2%
Elenite
1,5%
Ravda
1,9%
Kavarna
2,0%

2,6%
Tzarevo
2,6% Balchik
2,8% Sozopol
35,3%
Pomorie
4,0%
Golden Sands
4,3% Obzor
Aheloy
4,6% Kosharitza
Primorsko
4,7% Byala
Nessebar
5,0% 6,9%
Lozenetz
5,4%
6,1%
5,8% Sinemoretz
Others

Source: Colliers Research

Characteristics of Supply

Coastal developments range from complexes offering fewer than 20 units, to resort villages featuring
more than 1,000 units. Currently the average number of units per complex is approximately 100
compared to 115 for the same period in 2006. The growing number of small developments has
contributed to this net size reduction. The charts below shows the size distribution of developments
in December 2006 and December 2007.

Size of Coastal Holiday Hom es Developm ents

(Decem ber 2007)

10%
37%
up to 50 units
50-199
200 and above

54%

MPG Associates Ltd 11

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Size of Coas tal Holiday Hom es De ve lopm e nts

(Dece m be r 2006)

8,9%

41,9% Up to 50 units
50 to 200 units
More than 200 units
49,2%

Source: Colliers Research

As shown by the above charts the net size of developments are reducing in size. The current share
of complexes with less than 50 units has decreased by 5% from 2007. However, this share has been
added to the next range of small size developments with up to 200 units. The share of large projects
offering over 200 units has decreased from 10 % to 8.9% for the same period, driven by more
moderate investment scope in general, and by the growing number of small local developers with
limited funding.

By Type of Apartment and Amenities

The supply of second-home apartments on the Black Sea coast is predominantly formed from one-
and two-bedroom apartments. However, large-scale developments also offer studios, three-bedroom
apartments and penthouses. In addition, there are developments designed as apartment hotels
which consist mainly of hotel type rooms and small apartments ranging in size between 20 to 35 m2.
A small number of developments offer apartments in a turn-key condition, featuring fitted bathrooms
and kitchens, while other developments offer basic kitchen furniture and air conditioning systems.

Many developments also offer a wide range of services and on-site facilities, such as private pools,
parks, shops, restaurants, sports and leisure amenities, parking lots, 24-hour security, maintenance
of common and private areas etc. Some developers even provide buyers with rental assistance,
furnishing, and redecoration of the apartments. However, only a small number of second-home
developments guarantee rental yields. These are mostly large-scale projects carried out by well
established developers.

By Development Status

Almost half of the Black Sea holiday home development schemes are currently under construction or
in the planning stage. However, the share of completed projects is growing and stood at 56.6% as at
December 2007.

MPG Associates Ltd 12

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Development Status Holiday Homes Supply

(December 2007)

50000

40000

30000 Under construction

Existing
20000

10000

0
Total Supply South Black Sea North Black Se a
Decem be r 2007

Source: Colliers Research

DEMAND

Bulgaria has emerged in recent years as a hot spot for holiday homes. The major factors driving
demand include Bulgaria’s EU accession, growth of the tourism industry in Bulgaria, and the
favorable landscape and climate for both coastal and mountain holiday home developments.
Furthermore, Bulgaria’s comparatively low real estate prices in relation to competing European
markets has also attracted a large number of international investors.

Buyers have become more demanding in terms of quality, added services, and development
features. They have acknowledged that poor construction and underdeveloped infrastructure do not
add value to the product. Holiday apartments in smaller and relatively unexplored resorts are in
higher demand than units in more popular and developed locations.

Demand is predominantly derived from private individuals from the UK and Ireland, followed by
Bulgarians living or working abroad, Russians, Germans, and Scandinavians. Additionally a small
section of the market is driven by bulk purchasers who distribute the purchased units in their local
markets. Recently, a higher number of Romanian investors have been active in the coastal holiday
home market. This sentiment has been driven by the perceived value and increased range of real
estate assets available in the Bulgarian coastal holiday home market. In addition, buyers from the
Baltic States have been active, and are likely to gain increasingly important investor status.

The highest levels of demand have been for one bedroom apartments (between 40 and 50 m 2) and
two bedroom apartments (between 70 and 80 m2). Purchasers are also increasingly aware of the
total lot size of their investments. Currently, investor sentiment has shifted towards detached and
semi-detached houses in compound developments.

Although the holiday homes market in Bulgaria has a relatively short track record, a significant
portion of the overall supply has already been absorbed by the market. The take up of Holiday Home
Developments as at December 2007 is shown below:

MPG Associates Ltd 13

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Take-Up of Holiday Homes Developments in Selected Black Sea Resorts

(December 2007)
Elenite
Aheloy
St. Vlas
Nessebar
Pomorie
Chermomoretz
Sunny Beach
Kosharitza
Sozopol
Primorsko
Golden Sands
Ravda
Lozenetz
Kavarna
St. Konstantin & Elena
Balchik
Byala
Obzor
White Lagoon/ Topola village

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Source: Colliers Research

Due to the increase in cumulative supply, the actual number of available units is growing. Elenite
continues to lead the coastal market with almost 85% of the entire supply being sold. In general,
existing developments exhibit a take-up rate around 50%, which also explains the high figure in
Elenite where the entire supply is completed and operational.

SALES PRICES

Overall sales prices in the resort apartment market have remained unchanged for the past six
months, as supply continues to outstrip demand, with price ranges remaining within last year’s limits.
A number of new high quality developments, offered primarily to overseas investors, have achieved
levels around €1,700 to 2,200 p/m2 and were initiated by international developers. However, there
are also many properties offered well below €1,000 p/m 2. In general, prices continue to range mostly
between € 800 and €1,800 p/m2.

The table below presents the sales price range per sq m of coastal vacation homes in different
locations.

MPG Associates Ltd 14

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Dec 2006 Dec 2007

Low High Low High
Resort Price Price Price Price
Sunny
Beach € 580 € 3 000 € 940 € 1 115
St.Vlas € 590 € 2 500 € 1 090 € 1 400
Elenite € 950 € 1 705 € 1 205 € 1 630
Kavarna € 550 € 2 050 € 830 € 1 090
Balchik € 700 € 1 520 € 1 050 € 1 540
Sozopol € 700 € 1 760 € 1 100 € 1 450
Pomorie € 650 € 2 310 € 870 € 1 170
Golden
Sands € 960 € 1 800 € 1 100 € 1 470
Aheloy € 585 € 1 540 € 955 € 1 300
Byala € 630 € 1 900 € 890 € 1 135
Nessebar € 550 € 1 500 € 1 015 € 1 150
Lozenetz € 800 € 1 400 € 1 050 € 1 250

*Prices include VAT

Source: Colliers Research

Prices of second homes vary depending on several criteria, the primary factors being location,
quality of holiday resort, complex facilities, and stage of completion. Prices were highest in the
popular holiday locations of Sunny Beach and St. Vlas in 2006. In 2007 the resorts achieving the
highest pricing levels have been Elenite and Balchik. However, prices in excess of €2,500 p/m2
should generally be considered exceptional, as no more than a couple of developments per location
have achieved such levels. In general, most prices fall between €900 and €1,600 p/m2.

Sales prices also vary according to the development status and level of completion. Usually,
apartments are offered for sale at different stages of the project. When offered off-plan, second
homes cost approximately 15% to 30% less than when finished. When offered at early stages of
construction, apartments are sold at prices 10% to 15% lower than completed ones.

With the increase in supply of holiday homes, the diversity of pricing schemes has also increased.
Some of the prices include VAT, while some prices are separated in several payments where some
of the payments are exclusive of VAT, thus lowering the effective VAT impact. In addition, some
prices correspond to different levels of finishing works, as well as furniture fit-out.

MPG Associates Ltd 15

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

The reason for these diverse pricing strategies is based on the price positioning that each developer
aims to achieve. The majority of second home buyers are interested in the overall size of investment,
which leads to fluctuation in price per sq m, as well as the condition of the property corresponding to
the price.

FORECAST

As previously noted, the holiday home market is relatively new and is expected to expand and see
further development and maturation. Supply of second home apartments is expected increase in the
near future, though at a slower rate than in the past couple of years. The overall quality of
developments is also expected to improve in line with purchaser expectations.

Demand for holiday apartments is also predicted to increase in the short term. The greatest potential
driving forces are improvements of the infrastructure, as well an increase in the level of professional
management services.

Companies specialising in property and rental management will play a key role in the evolution of
demand for holiday apartments. Currently this industry is emerging, and the companies have limited
track records and exposure to the market.

Subsequently, these companies will have to prove their competencies and quality of service to the
market, to reassure investors and individual owners using their services. Improved letting terms and
professional apartment maintenance will result in increased capital gains and a reduction in levels of
asset depreciation, therefore making investments more appealing to buyers.

Sales prices are expected to remain stable or show a slight increase in the near future. This forecast
is broadly consistent with the fact that the market has become relatively mature and demand is
driven by rational buyers.

VALUATION METHODOLOGY

Residual Valuation

We have undertaken our valuation of the property on a day one basis, using Circle Developer, a
widely used valuation software package. In brief, the valuation takes account of the gross
development value attainable, whilst making allowance for construction costs, including contingency,
professional fees, finance charges, sales and marketing and legal fees and our opinion of a realistic
development margin for each individual project.

We set out our inputs in the table below:

Inputs - TANKOVO MEWS

Revenue Estimations
Total Area (Ex parking) (m2) 3,288
Total sale revenues €2,684,191

Total Development Cost

Construction hard costs €1,068,551
Total area (m2) 3,288

Soft Costs
Professional Fees €117,428
Marketing & Letting costs €80,000

MPG Associates Ltd 16

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

Disposal Fees €103,600

Acquisition Costs
Stamp Duty 2.0% €7,177
Acquisition Agent & Legal Fees €5,383

Other Costs
Finance Debit Rate 7% Credit Rate 7% €122,855

Profit on Cost €766,912

Land Value €358,858

Land Value (Rounded) €360,000

Time Scale & Phasing

A pre-construction period of 2 months has been adopted in the appraisal to allow for site preparation
prior to construction. We have adopted a construction period of 12 months, and a sales period of 20
months. This gives a total project length of 34 months.

Construction Costs

Construction costs have been taken at €325 per sq m for the residential and commercial elements of
the development. This rate reflects construction of the car parking and external areas.

Professional Fees & Marketing

Architects fees have been taken at €30,000 with admin and other professional fees at €87,428.
Marketing fees have been taken at €80,000 with letting agent’s and sales legal fees at €103,600.

Acquisition Costs

Stamp duty has been taken at 2.0% with agents fees at 1.0% and legal fees at 0.5%

Developer’s Profit

We have adopted a developer’s profit of 40% reflecting our opinion of the inherent risks associated
with the project.

Estimated Sales Values

Based on our analysis of market transactions together with existing off-plan sales we have adopted
the following sales values for the proposed development, summarised in the table below:

ITEM AREA (m2) Sales rate (€/m2) Total Sales (€)

Villa Type A & A1 971.25 850 825,563

Villa Type B 910.86 800 728,688
Villa Type C 1,275.12 750 956,340
Car Parking 550 200 110,000
Total 3,707.23 2,620,591

Commercial Elements

MPG Associates Ltd 17

 “TANKOVO MEWS”, TANKOVO, BURGAS, BULGARIA

We have included a commercial revenue input of €63,600, which reflects our estimation of the
capitalised rental income generated from the commercial units. We have adopted a capitalisation rate
of 11% when calculating our total estimated revenue.

MARKET VALUE

Having regard to the above we consider the Market Value of the subject property as described in this
report is €360,000 (Three hundred and sixty thousand euros).

LIABILITY AND PUBLICATION

This report and valuation has been provided exclusively for the use of the addresses for the
purposes set out herein. We do not accept any responsibility to any third party for the whole or any
part of its contents.

Neither the whole nor any part of this valuation or any reference thereto may be included within any
published document, circular or statement nor published in any way nor disclosed orally to a third
party, without our prior written consent to the form and context of such publication or disclosure.
Such approval is required whether or not Colliers CRE are referred to by name and whether or not
the report is combined with others. In breach of this condition, no responsibility can be accepted to
third parties for the comments or advice contained in this report.

Yours faithfully

Christopher J Fowler-Tutt BSc MRICS

Director
For and behalf of Colliers CRE

MPG Associates Ltd 18

 APPENDIX I

GENERAL ASSUMPTIONS AND DEFINITIONS

 GENERAL ASSUMPTIONS & DEFINITIONS

The valuations have been prepared by a suitably qualified valuer, as defined by PS1.4 and PS1.5 of the
Valuation Standards, on the basis set out below unless any variations have been specifically referred to
under the heading “Special Remarks”:

1 Market Value (MV)

Where we have been instructed to value the properties on the basis of Market Value, we have done
so in accordance with PS3.3 of the Valuation Standards issued by The Royal Institution of
Chartered Surveyors, which is defined as follows:

“The estimated amount for which a property should exchange on the date of valuation between a
willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without compulsion.”

The interpretative commentary on Market Value, as published in International Valuation Standards

1, has been applied.

2 Market Rent (MR)

Valuations based on Market Rent (MR), as set out in PS3.3 of the Valuation Standards, adopt the
definition as settled by the International Valuation Standards Committee which is as follows:

‘The estimated amount for which a property, or space within a property, should lease (let) on the
date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an
arm’s-length transaction after proper marketing wherein the parties had acted knowledgeably,
prudently and without compulsion.’

MR will vary significantly according to the terms of the assumed lease contract. The appropriate
lease terms will normally reflect current practice in the market in which the property is situated,
although for certain purposes unusual terms may need to be stipulated. Matters such as the
duration of the lease, the frequency of rent reviews, and the responsibilities of the parties for
maintenance and outgoings, will all impact on MR. In certain States, statutory factors may either
restrict the terms that may be agreed, or influence the impact of terms in the contract. These need
to be taken into account where appropriate. The principal lease terms that are assumed when
providing MR will be clearly stated in the report.

Rental values are provided for the purpose described in this report and are not to be relied upon by
any third party for any other purpose.

3 Rental Assessment
Unless stated otherwise within the report, our valuations have been based upon the assumption that
the rent is to be assessed upon the premises as existing at the date of our inspection.

4 Reinstatement Valuation
If we have prepared Reinstatement Values we will not have carried out a detailed cost appraisal and
the figures should therefore be considered for guidance purposes only.

5 Purchase and Sale Costs

In arriving at our opinion of value we have allowed for purchaser’s costs of 3.5%. This reflects 2%
for land tax with the remainder being apportioned between agents and legal fees.
6 Measurements
In accordance with your instructions we have relied upon the floor plans and areas provided by the
Borrower.

Floor areas are provided for the purpose described in this report and are not to be relied upon by
any third party for any other purpose.

7 Condition
Unless otherwise stated within the report, we have not carried out a building survey, nor have we
inspected the woodwork or other parts of the structures which are covered, unexposed or
inaccessible and we are, therefore, unable to report that such parts of the properties are free from
rot, beetle or other defects.

Where we have noticed items of disrepair during the course of our inspections, they have been
reflected in our valuations, unless otherwise stated.

None of the services, drainage or service installations was tested and we are, therefore, unable to
report upon their condition.

We have not been provided with a Technical Due Diligence Report.

8 Environmental Matters
Unless otherwise stated within the report, we have not carried out soil, geological or other tests or
surveys in order to ascertain the site conditions or other environmental conditions of the properties.
Unless stated to the contrary within the report, our valuation assumes that there are no unusual
ground conditions, contamination, pollutants or any other substances that may be environmentally
harmful.

9 Fixtures and Fittings

In arriving at our opinions of value we have disregarded the value of all process related plant,
machinery, fixtures and fittings and those items which are in the nature of tenants’ trade fittings and
equipment. We have had regard to landlords’ fixtures such as lifts, escalators, central heating and
air conditioning forming an integral part of the buildings.

Where the properties are valued as an operational entity and includes the fixtures and fittings, it is
assumed that these are not subject to any hire purchase or lease agreements or any other claim on
title. No equipment or fixtures and fittings have been tested in respect of Electrical Equipment
Regulations and Gas Safety Regulations and we assume that where appropriate all such equipment
meets the necessary legislation. Unless otherwise specifically mentioned the valuation excludes any
value attributable to plant and machinery.

10 Tenure, Lettings and Reports on Title and/or Tenancies

Unless otherwise stated, we have not inspected the title deeds, leases and related legal documents
and, unless otherwise disclosed to us, we have assumed that there are no onerous or restrictive
covenants in the titles or leases which would affect the value.

11 Taxation
Whilst we have had regard to the general effects of taxation on market value, we have not taken
into account any liability for tax which may arise on a disposal, whether actual or notional, and
neither have we made any deduction for Capital Gains Tax, Valued Added Tax or any other tax.

12 Mortgages
We have disregarded the existence of any mortgages, debentures or other charges to which the
properties may be subject.
13 Operational Entities
Where the properties are valued as an operational entity and reference has been made to the
trading history or trading potential of the property, reliance has been placed on information supplied
to us. Should this information subsequently prove to be inaccurate or unreliable, the valuations
reported could be adversely affected.

Our valuations do not make any allowance for goodwill

14 Local authorities, Statutory Undertakers and Legal Searches

We have not made any formal searches or enquiries in respect of the properties and are therefore
unable to accept any responsibility in this connection. We have, however, relied on the planning
documentation and information provided by MPG.

15 Arrears
We have assumed that all rents and other payments payable by virtue of the leases have been paid
to date. If there are rent or other arrears, we recommend that we should be informed in order that
we may consider whether our valuation should be revised.

16 Insurance
In arriving at our valuation we have assumed that the buildings are capable of being insured by
reputable insurers at reasonable market rates. If, for any reason, insurance would be difficult to
obtain or would be subject to an abnormally high premium, it may have an effect on value.

17 Liability Cap
We confirm that the extent of our liability in respect of this valuation and report is limited to a
maximum sum of £50 million.

18 Standard Terms of Business

We confirm that this valuation report has been provided in accordance with our Standard Terms of
Business.