Black Sea Property AS

Quarterly Report • Mar 31, 2016

Market update

Market update

BLACK SEA PROPERTY AS (TICKER: BSP:ME)

Market update 31 March 2016

Short summary of activities in Q1 2016

The quarter started with completion of an

oversubscribed rights issue and the listing of Black

Sea Property AS (the "Company") on Merkur Market.

During the quarter, the Company has also worked on

closing the transactions which were entered into with

EPO Invest KS and Aheloy Beach Commercial AS. The

closing of these transactions have proved more time

consuming than the Company excepted due to formal

requirements under Bulgarian law. There are still

certain ongoing processes which must be completed

before all parts of the transactions may be closed.

The Company has also worked on gaining an overview of

the extent of building activities to be effectuated

and possible entrepreneurs for the project, as further

described below.

Completion of Aheloy Beach Resort - status

The Company considers it expedient and material to the

completion of the project to have a local partner in

Bulgaria that can oversee and manage the day-to-day

works on the resort. Therefore, the Company has chosen

to hire two independent companies which will assist

the Company in its negotiations with entrepreneurs and

surveying the extent of building activities to be

effectuated. Upon commencement of the construction

works, the Company intends to hire one of these

companies to oversee and manage the day-to-day works

on the resort.

The Company has recently received a total of 7 tenders

from local entrepreneurs. Certain board members have

also met with the tendering entrepreneurs in Sofia.

The tenders indicate varying time spans for partial

completion of the resort. Several indicate a time span

of 4 months, while one tender indicates up to 10

months. The Company assumes that the indicated

construction periods depends greatly on the resources

available to each entrepreneur. The resources

available to the entrepreneur will be an important

part of the selection procedure.

The Company will now review the tenders in detail with

its local partners before commencing further

negotiations with the entrepreneur considered to have

submitted the best tender. The Company will take into

consideration inter alia the estimated price, quality

and execution capacity of the entrepreneurs, and not

focus solely on estimated price. A possibility which

is being explored by the Company is to offer partial

settlement for the construction works in completed

apartments. The Company considers that this may be

positive for the liquidity of the Company and as

security for the quality of the work.

The Company will hold follow-up/ negotiation meetings

in week 15, and will inform the market when entering

into final agreements with an entrepreneur.

The Company aims to initiate the construction works as

soon as possible, and are working towards completing

the necessary processes prior to start-up of the

construction works. The Company still considers that

the P, N and M buildings of the resort should be

completed first. The final construction plan will be

agreed upon with the chosen entrepreneur in due time.

Booking for 2017 season and expected opening of the

resort

The Company's main goal is to enter into agreements

with major tour operators for the 2017 season. The

booking activities and negotiation of agreements will

happen in parallel with the construction works. The

Company is continuously assessing the possibilities,

and the benefits of, opening the resort this season.

The timeline for opening the resort this season is

tight, and the Company do not wish to open the resort

before the resort is sufficiently completed to give

its guests a pleasant stay.

For further information, please contact:

Torbjørn Myhre, CEO

Tel: +47 952 57 235

E-mail: tm@fenixsecurities.no

About Black Sea Property AS:

Black Sea Property AS is a real estate company with

partial ownership to a real estate project on the

Black sea coast named Aheloy Residence Resort. Aheloy

Residence Resort is partially finished and will upon

completion consist of more than 1050 holiday

apartments and significant commercial

areas. The company effectively owns 75% of the

project. Black Sea Property AS aims to complete the

project, in order to realize its potential value

through sale of residential units and operation as a

hotel.