Black Sea Property AS

Capital/Financing Update • Mar 8, 2017

BLACK SEA PROPERTY AS - UPDATE ON CONSTRUCTION PROCESS

BLACK SEA PROPERTY AS - UPDATE ON CONSTRUCTION PROCESS

Reference is made to earlier stock exchange announcements

from Black Sea Property AS ("BSP" or the "Company")

regarding update on the construction work on Aheloy Beach

Resort in Bulgaria (the "Resort") and the launch of a NOK

22.5 million rights issue (the "Rights Issue") and call for

an extraordinary general meeting as announced on 27 February

Update on construction process

As previously announced the construction work on the Resort

resumed on 1 September 2016. The construction works on

building "N" is now fully complete with installation of

lifts and final work on schedule. Further, the landscaping

works on the grounds surrounding buildings P, N and M

together with furnishing of building in "N" are expected to

be finished by the end of April 2017. The Company has

prepared an adjusted project plan for the Resort, which

entail a reduction of number of apartments in building "K"

from 300 to 100 apartments, which reduces the Resort's total

number of apartments upon completion from 1,200 to 1,000,

whereby 841 apartments will be owned by the Company's

subsidiary Epo Aheloy OOD ("EPO Aheloy"). The reduction of

apartments in building "K" will improve the quality of the

remaining apartments and the Resort and reduce the financial

risks for completion. The adjusted project plan also involve

that building "M" will be finished before building "P" in

contradiction to earlier announcements.

As of today 232 apartments in the Resort is still owned by

the bankruptcy estate of the initial developer Aheloy

Residence OOD ("Aheloy Residence"). Due to simplified

legislative procedures now enforced, the Company is very

satisfied to announce that EPO Aheloy's acquisition of the

remaining apartments from the bankruptcy estate of Aheloy

Residence is now set to take place within Q1 or early Q2

this year. The Company has previously announced that these

acquisitions would not take place before Q3 this year. As a

consequence of this take over, EPO Aheloy's receivable

against Aheloy Residence will be reduced and thereby VAT

receivable from Aheloy Residence will be reduced

correspondingly.

The Resort will according to the adjusted project plan be

fully completed and operational before the summer season of

2018. The Company has previously announced that the Resort

would be partially opened for the summer season of 2017.

Having evaluated the current progress of the construction

works and the adjusted project plan, the Company still see

this as doable, however the Company has yet to decide

whether this is desirable from an overall prospective.

Hence, the Company will conduct a cost/benefit analysis,

including evaluation of start-up costs, rental income and

reputation associated with partial opening this year in

order to make a final decision on whether the Resort should

be partially opened before the summer season this year. The

Company has in relation to opening of the Resort started

initial works relating to setting up a management company

which shall run the Resort when operational and started to

establish connections with relevant tour operators.

In order to oversee the construction and development process

of the Resort and to maintain the interests of the Company

in Bulgaria, the Company has hired George Angelov with

effect from 1 April 2017. Mr. Angelov is well-known with the

project and has worked for the Company as a consultant

through Fenix Securities AS.

As announced earlier, sewage connection and electrical

supply for the Resort is outstanding. However, the Company

and EPO Aheloy are working against solving these outstanding

matters within May 2017. Progress on this matter have been

made since last update and water & sewage plans have now

been prepared and is currently pending with the regional and

local public administration.

Financing

As announced earlier, the Company needs additional financing

for construction and development of the Resort. The Board

has therefore proposed to launch the Rights Issue in order

to raise up to NOK 22.5 million for partial financing of the

construction works, apartment furnishing and works on the

commercial areas in buildings N, M and P. As previously

communicated, the Company has already received pre-

commitments to subscribe for new shares in the Rights Issue

for an amounts of NOK 12.3 million. A general meeting in the

Company will be held later today in order to resolve the

Rights Issue.

Information to be presented at the impending extraordinary

general meeting

The information presented above will be presented to the

shareholders of the Company at the general meeting on 8

March 2017 at 14.00 hours CET. Please also see the enclosed

presentation.

For further information please contact:

Egil Melkevik, Chairman

Tel: +47 90 77 09 76

E-mail: egil.melkevik@imenco.com

About Black Sea Property AS:

Black Sea Property AS is a real estate company with holdings

in a real estate project on the Black Sea

coast called Aheloy Beach Resort. Aheloy Beach Resort is a

partially-completed project and will upon

completion comprise over 1,000 apartments as well as

significant commercial space. Black Sea Property AS owns

indirectly 75% of the project. Black Sea Property AS will

work to finalize Aheloy Beach Resort, to realize the

project's added value through the sale of residential units

and hotel operations.

Forward-looking Statements

This stock exchange announcement may be deemed to include

forward-looking statements, such as statements that relate

to expected future income and costs and the expected closing

of transactions and its timing. Forward-looking statements

are typically identified by words or phrases, such

as "expect" and similar expressions or future or conditional

verbs such as "may", "will", "should", "would", and "could".

Forward-looking statements are the Company's current

estimates or expectations of future events or future

results. Actual results could differ materially from those

indicated by these statements because the realization of

those results is subject to many risks and uncertainties,

including operational factors that may affect the income

capabilities of the the Resort and failure to satisfy

conditions precedent for completion of the Resort. All

forward-looking statements included in this release are

based on information available at the time of the release,

and the Company assumes no obligation to update any forward-

looking statement.