Black Sea Property AS

Investor Presentation • Apr 25, 2018

Black Sea Property AS

Org. No. 914 892 902

Aheloy Beach Resort

April 2018

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Disclaimer

Black Sea Property AS ("Black Sea Property" or "BSP") has produced this presentation, which speaks as of 25 April 2018. The information contained in this presentation may be subject to change, and Black Sea Property assumes no obligation to update the contents of this presentation. Black Sea Property has made no enquires as to the correctness of the information provided to us by the Developers, and we have not requested or taken part in any due diligence reviews for any of the projects discussed in this report:

Black Sea Property has relied primarily on information provided by the board and management of the Developers in written or oral form;

The information includes non-factual information with regard to forward looking information which intrinsically is subjective and based on "best judgment".

Accuracy and completeness of information:

Although Black Sea Property believes the information to be correct as the time of the issuance of this presentation, there is no certainty that the information is correct or that it is complete. It is fully possible that had Black Sea Property had access to other or more extensive information, the conclusion and information of the report could have been materially different;

The conclusions in this report are made on the basis of a number of important assumptions. Whereas these are made to the best of our ability, based on discussions with management and access to relevant information, there is no certainty with regard to the correctness of these assumptions. Even relatively moderate changes to our assumptions may lead to material changes in to the information herein and the valuation of the developers and developments.

Black Sea Property judgment with regard to non-factual information:

Whereas the information provided to us has been the basis for the valuation and analysis, Black Sea Property has, as far as possible, evaluated the substance of the information independently and made its own opinion with regard to the implication of the information on the value of the developments.

Liability

Black Sea Property expressly disclaim any representation and warranty with regard to the contents of this presentation;

Black Sea Property will not accept any responsibility for the use of or reliance upon the information contained in this presentation whatsoever.

The Development

Building	Number of Units	Resort square meters	Average unit size	Other owners	Doba 1 units	EPOA owned units	EPOA sq. m estimate
N	175	13 237	75,64			175	13 237
М	183	12 834	70,13			183	12 834
P	244	16 553	67,84	109	50	85	5 766
L	306	18 800	61,44	8		312	19 169
K *	100	6 300	63,00			100	6 300
Total	1 008	67 724		117	50	855	57 306
				167 855
* Reduction according to new plans projected

* Reduction according to new plans projected

Previously concluded on 100 apartments in building K

Could be increased up to 300 apartments if deemed commercially beneficial

Recent Pictures

The Development – Resort Facilities Improvement

The Development – Resort Facilities Improvement

Achievements

• BSP has received a credit committee approved term sheet for a construction loan in the amount of EUR 3,000,000, with an interest rate of 3M EURIBOR + 3,5%
• The loan falls due in December 2024, and shall be repaid with one downpayment in December each year
• Disbursement of the loan is subject to entry into final agreements, establishment of mortgages, desposit of EUR 1,500,000 upfront, positive equity, reporting requirements and certain other conditions
• "EPO Aheloy" has successfully acquired ownership control over all assets in the now insolvent "Aheloy Residence".
• Signed Contract with Thomas Cook for 600 to 990 beds for the Summer season 2018.
• Due to uncertainty connected to opening date of the resort, 1 st year will be based on last minute sales

Achievements

• BSP has control and has made good progress in securing on time the utility connections.
• Technical parameters of the infrastructure, zoning, approvals and passage parcel plan execution are underway to obtain building permit.
• The legal disputes are now considered under control.
• "EPO Aheloy" is increasing its registered capital, meaning the loans provided by its shareholders are to be converted into equity, increasing the equity with BGN 20.9m.

W&S plans

Status Building Works

• All apartments (358) in buildings "N" and "M" are fully complete, with furniture and appliances installation in place.
• Finishing of Landscape works carried out as planned, including facade of buildings "L" and "K
• The construction works at the Resort are closely followed up and based on having necessary funding in place all necessary construction work will be in place till opening of the resort. This include commercial space and additional facilities needed (kids club space, amphitheater and new reception building).
• Building "P" is well conserved with repaired roof, drainage lines, terraces, insulation and internal unrepairable damaged elements removed and prepared for inside construction works to begin.
• This building is owned by EPO Aheloy together with certain other investors, we intend to reach an agreement with the external investors on their respective funding before starting actual construction works.

Pre - opening Budget

Expenses	Column1
Landscape construction	€	132 000
Building P construction cost		672 000
Architect, Planning, Engineers, Lawyers	€	170 000
Obtaining Assets	€	30 000
Remaining features N building	€	31 000
Sewage and fresh water connection	€	270 000
EVN Electricity	€	400 000
Interest UniCredit Bulbank Loan	€	120 293
Furniture, appliances and usability features М	€	52 000
Furniture, appliances and usability features P	€	266 447
Additional improvements furniture (M&N)	€	5 000
Reception	€	130 000
Finishing on the outside L&K	€	500 000
Pool II and sunbeds area	€	250 000
Management company initial cost		350 000
Amphiteather	€	100 000
Commercial areas	€	662 000
Restaurants, commercial improvements	€	203 000
Other unforеseen		200 000
Total	€	4 543 740

* Some of the expenses will occur post initial opening of the Resort

Hotel Operations Profit / EBIT P M N, target after 3 years operation

Discretionary Assumptions
Appartment units	Number	SQM
Building N	175	13 237
Building M	183	12 834
Building P	135	9158
Building P (other owners)	109	7395
Total	602
Operating N, M and P				Profit Euro	3 530 081
Open days	days	127		per key	5 864
Available appartments	appartments	493		Income per key	11 094
At 80% occupancy nights sold	nights	50 089
Average Daily Rate	euro	88
Costs including Food & Beverage	%	44
Suplementary services profit	euro	1 061 705
Net Profit Margin of operating and managing other owners, included in supplementary services profit		460 639
	May	June	July	Аugust	September
Оperating Days	17	30	31	31	18	127
Price per key	77	87	93	102	81	88

Hotel Operations Profit / EBIT P M N L K target after 3 years operation

Discretionary Assumptions
Appartment units	Number	SQM
Building N	175	13 237
Building M	183	12 834
Building P	135	9158
Building P (other owners) /excluded/	109	7395
Building L	298	18 800
Building K (reduced from original planning)	100	6 590
Total	1000
Operating N, M and P				Profit Euro	6 008 048
Open days	days	127		per key	6 008
Available appartments	appartments	891		Income per key	10 677
At 80% occupancy nights sold	nights	90 526
Average Daily Rate	euro	88
Costs including Food & Beverage	%	44
Suplementary services profit	euro	1 546 946
Net Profit Margin of operating and managing other owners, included in supplementary services profit		460 639
	May	June	July	Аugust	September
Оperating Days	17	30	31	31	18	127
Price per key	77	87	93	102	81	88

BSP's Forward Focus

• The resort is planned for opening to tourists in July 2018 for summer 2018 season with total 358 apartments in N & M, and the respective commercial areas and landscape.
• Securing financing. Monitoring liquidity, activity time schedule and budget.
• Completing construction according to budget and timeline.
• Focused on Water & Sewage and Electrical connections.
• Detailed technical projects are to be received in very near future, parcel plan to be approved by municipality prior to obtaining a building permit.
• Signing EVN contract with specified power availability and given connection point expected to completed in very near future.
• Securing access to public beach in the area.
• Setting up a management company activities and securing tourists.
• Acquiring permits for use of the buildings, categorization of the rooms and commercial licenses.
• Start of construction works in on building "P".
• Construction and equipment of the commercial space

Tourism & Property Highlights H2 2018

• The popularity of Bulgaria as a destination is constantly increasing and every year it is visited by more and more foreign tourists.
• The tourism sector data from the statistics for 2017, according to which foreign tourist visits exceeded 8,882 million and increased by 7,6% compared to a year earlier.
• An even higher growth of 9.3%is recorded in the revenues from international tourism. In 2017 total revenues from the sector amounted to BGN 6.895 billion, according to BNB data.
• In the last 2 years the average annual growth of tourist visits in the country is 12%, while data for the same period for the European Union is about 7%.
• The cheapest holiday destination for 2018, According to the Post Office's annual survey of on-the-ground costs, it's Bulgaria. After comparing prices in 42 destinations, for typical travel purchases such as drinks in local bars and restaurant meals, the Black Sea resort of Sunny Beach supplanted the Algarve as the top option for budget breaks.
• Sunny Beach ranked 6th by Realtor.com for most affordable international beach towns for expats.

Thank you for you attention.