OUR PROSPECTUS

June 2016

‘We identify promising investment opportunities, while operating with transparency, efficiency and effectiveness, in a regulated environment.’

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D Capital Investment Fund Fact Sheet

Towards the Opportunity Our Concept Investment Vehicle Considerations The Cyprus Alternative Investment Fund (“AIF”) What is an AIF The main advantages of establishing an AIF in Cyprus AIF Taxation Foreign Investors Taxation Eligibility of Investment for the Cyprus Naturalisation Scheme Single Regulating Authority The Regulating Authority – The Cyprus Securities and Exchange Commission (CySec) The Regulating Authority CySEC’s Vision and Mission Responsibilities of the Regulating Authority Choosing Cyprus to Establish and Operate the Fund

The Cyprus Economy Setting New Standards Fiscal Performance Inflation Economic Challenges Current Credit Ratings A Promising Long-Term Outlook Key Statistics

Investing In and Through Cyprus Tax System Legal and Regulatory Framework Macroeconomic Prospects and Opportunities European Union (EU) and European Monetary Union (EMU)

D Capital Investment Fund Governing Law and Fund Structure Fund Strategy and Objectives The Fund Investment Policy

Market Analysis and Review of the Targeted Sectors for Investment The Real Estate Sector in Cyprus Market Overview Increasing Sales and New Incentives Protecting Buyers Moving Upmarket Regaining Momentum The Real Estate Sector in Southeast Europe The Republic of Serbia Market Overview The Commercial Developments Market

CONTENTS

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The Retail Properties Market The Residential Properties Market The Industrial Buildings Market Conclusion Romania Overview of the Economy The Bucharest Office Market The Romanian Shopping Centres Market The Romanian Industrial Market The Romanian Land Market The Romanian Investment Market The Bucharest New Residential Market The Bucharest Hotel Market The New Real Estate Related Romanian Tax Rules The Healthcare and Medical Sector in Cyprus Strong Vital Signs Public and Private Excellence Creating an Efficient NHS Investing in Medical Tourism and e-Health Doctors Across Borders Innovative Education and Research A Healthy Prognosis The Tourism, Holiday and Leisure Sectors in Cyprus Cruising to Growth A Winning Package Poised for Growth Expanding Connections Diversification to Boost Investment Developing Niche Tourism Game Changers Challenges and the Future The Education and Research Sectors in Cyprus A Centre of Regional Excellence Investing in Education Excellent Universities World-Class Research An Expanding Knowledge Hub

Our First Call for Capital The Real Estate Sub Fund(s) An Overview of the Proposed Investment Approach Tax Implications of Purchasing Immovable Property in Cyprus Advantages in Following our Proposed Investment Approach Expertise and Long-Standing Experience In the Real Estate Sector Professional Network and Established Client Base The Real Estate Sub-Fund(s) Risk Mitigation Strategy The Real Estate Sub-Fund(s) Structure (Diagram) Projects Development Lifecycle Cash Flow and ROI Real Estate Inventory upon Acquisition of the Targeted Group (Completed Projects)

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Real Estate Inventory upon Acquisition of the Targeted Group (Planned Projects for Development) Proposed Projects Development Timeline Quantitative Analysis on the Proposed Projects Developments Key Facts on Inventory after Acquisition of the Targeted Group Key Graphical Representations of the Group Targeted For Acquisition

The Fund Manager The Company and Governing Law Members of the Board of Directors and Investment Committee An Overview The Board of Directors The Investment Committee The Fund Manager Structure

Professional Associates External Auditors Internal Auditors Fund Administrator International Legal Advisors Local Legal Advisors International Bankers Local Bankers

Contact Us

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D Capital Investment Fund LimitedMarch 2016Private company limited by sharesRepublic of CyprusRepublic of CyprusTo serve as an umbrella Alternative Investment Fund with a Limited Number of Persons (“AIFLNP”)(i) Real Estate (Cyprus)(ii) Real Estate (South-East Europe)(iii) Health Care and Medical(iv) Tourism, Holiday and Leisure(v) Education and Research The Cyprus Securities and Exchange Commission (“CySEC”)SKDA Capital LimitedPhysical and legal persons qualifying as well-Informed and/or professional investors75 physical and/or legal persons maximum€ 125.000 (One Hundred Twenty Five Thousand Euros)€ 100.000.000 (One Hundred Million Euros)€ 500.000.000 (Five Hundred Million Euros)9% 1.5% p.a. of Net Asset Value20% p.a. on the annual increase of NAV above the 9.0% hurdle rate Four years from the date of subscriptionSemi-annuallyAnnually, on an accrual basis

KPMG LimitedTreppides Fund Services LimitedAntis Triantafyllides & Sons LLCDracos & Efthymiou LLCK. Treppides & Co LimitedLoucas DemetriouBarclays plcBank of Cyprus plc

Company Name:Incorporated:

Legal Form:Established In:Tax Residence:

Purpose of Incorporation:

Sector Sub-Funds:

Regulated By:Fund Manager:

Unit Holders:Unit Holders Restrictions:

Min. Contribution Per Unit Holder:Max. Contribution Per Unit Holder:

Maximum AuM:Hurdle Rate:

Management Fee:Success Fee:

Lock-Up Period:NAV Reporting:

Dividend Distribution:

Professional AssociatesStatutory Auditor:

Administrator:Legal Advisors:

Internal Auditor:

Risk Manager:Bankers:

FACT SHEET

TOWARDS THE OPPORTUNITY

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Our Concept

The idea of D Capital Investment Fund came into being when its founders identified promising investment opportunities within several sectors of the Cyprus economy. This was a result of the unprecedented financial crisis that hit the country in the financial years 2009 to 2015. The enormous liquidity squeeze in the local economy that followed led to a significant drop in prices over all asset classes.

Investment vehicle considerations

The diversified nature of investment opportunities in the market called for the establishment of an investment vehicle geared towards a wide base of professional investors with varying risk and economic profiles.

At the same time, we kept as a priority the common expectation of investors for transparency, efficiency, effectiveness, capital growth, wealth maximisation, a clear exit route as well as the distribution of profits in a manner that would ensure the most beneficial tax treatment.

Taking all of the above into consideration, we reached the conclusion that our investment vehicle should operate under a strictly regulated environment which would meet common investor expectations, while allowing investors to choose tailor-made investment portfolios matching their unique individual profiles.

As the issues above are largely addressed by the Cyprus registered Alternative Investment Fund with a Limited Number of Persons (“AIFLNP”) we incorporated D Capital Investment Fund under its regulatory framework.

The Cyprus Alternative Investment Fund (“AIF”)

What is an AIF?

An AIF is a collective investment undertaking (including its investment compartments) that raises external capital from investors, with a view to investing it in accordance with a defined investment policy for the benefit of the investors.

The main advantages of establishing an AIF in Cyprus

(1) AIF taxation

• Bank and other interest received by open and closed end collective schemes is treated as business income, thus no defence tax (currently at 30%) is imposed; instead, it is only subject to 12.5% Corporation Tax;• Dividends, gains from the trading of securities, capital gains from sale of property abroad and the sale of shares of foreign property companies are all tax exempt;• There is no minimum participation on inbound dividends to qualify for tax exemption;• There is no subscription tax on the net assets of the fund;• Fund management services are not subject to VAT; and• If the unit holder is not a tax resident in Cyprus, the liquidation of open and closed end collective schemes is not taxable (restrictions to the exemption may apply).

(2) Foreign investors taxation

• No withholding tax on dividends;• No taxation on redemption of units (restrictions to the exemption may apply);• No deemed dividend distribution restrictions.

TOWARDS THE OPPORTUNITY

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(3) Eligibility of investment for the Cyprus Naturalisation Scheme

An additional advantage for an investor participating in a Cyprus AIF is the potential access to the naturalisation programme. An investment of at least €2.500.000 in such a fund (based and investing exclusively in Cyprus as well as being regulated by CySEC) can be, in principle, regarded as an approved financial investment for the foreign investors Naturalisation Scheme.

(4) Single regulating authority

With the implementation of the new framework for AIFs, all regulations have been consolidated under CySEC.

The Regulating Authority - The Cyprus Securities and Exchange Commission (CySEC)

The Regulating Authority

CySEC was established under the Securities and Exchange Commission (Establishment and Responsibilities) Law of 2001 (section 5) as a public legal entity. The operation of CySEC is governed by the laws regulating the Structure, Responsibilities, Powers, Organization of the Cyprus Securities and Exchange Commission and Other Related Matters (N73(I)/1009). CySEC’s vision and mission

The vision of CySEC is to establish the Cyprus securities market as one of the safest, most reliable and attractive destinations for investment. Its mission is to exercise effective supervision to ensure investor protection and the healthy development of the securities market. Responsibilities of the Regulating Authority

Following the recent enactment of legislation, CySEC is the supervisory authority for AIFs.

The main duties and responsibilities of CySEC are set out under the Law which regulates the Structure, Duties, Powers, Organisation of the Securities and Exchange Commission and Other Related Matters (L73(I)/2009, article 25) and may be summarised as follows:

• To examine applications and grant operating licenses to entities under its supervision, as well as to suspend and revoke such said licenses;• To supervise and regulate the operation of the Cyprus Stock Exchange and of other organised markets in the Republic as well as the transactions carried out in these markets;• To supervise and regulate the agencies under its supervision in order to ensure their compliance with the laws governing their operation;• To carry out all necessary investigations during the exercise of its duties under the law as well as on behalf of other foreign competent authorities;• To request and collect information which is necessary or conducive to the exercising of its duties under the law, including written requests for the provision of information from any relevant entity deemed to be in a position to provide such required information;• To impose administrative and disciplinary sanctions provided by the law;• To require the cessation of practices which are contrary to the securities market law;• To apply to a competent court for the issue of an order for detention, or charge or freezing or prevention of alienation or transaction involving assets;

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• To issue regulatory directives and decisions;• To cooperate and exchange data and information with other public authorities in the Republic, competent foreign supervisory authorities and other organisations.

CySEC is also responsible for supervising operations of the following entities and ensuring their compliance with the relevant legislation:

• Cyprus Investment Firms (CIFs);• Cyprus branches of Investment Firms (IFs) of other EU Member States;• Tied agents of CIFs;• Undertakings for Collective Investment in Transferable Securities (UCITS);• UCITS (Undertakings for Collective Investment in Transferable Securities) management companies;• UCITS agents;• Cyprus branches of UCITS management companies of other EU Member States;• Administrative services companies - trustee and fiduciary service providers;• Variable capital investment companies;• Alternative Investment Fund Managers (AIFMs);• Regulated markets;• Central Counterparty Clearing House (CCPs) of over-the-counter (OTC) derivatives;• Trade depositories of over-the-counter (OTC) derivatives.

Furthermore, the relevant legislation governs the supervision of the Central Securities Depositories (CSDs).

In addition to the above responsibilities, CySEC is also entrusted with powers and duties under the following laws:

• The Public Offer and Prospectus Law of 2005;• The Insider Dealing and Market Manipulation (Market Abuse) Law of 2005;• The Public Takeover Bids Law of 2007;• The Transparency Requirements (Transferable Securities Admitted to Trading on a Regulated Market) Law of 2007.

Choosing Cyprus to establish and operate the Fund

Cyprus offers a range of legal, regulatory and tax solutions to address and meet the needs of AIF promoters and investors alike.

Services such as setup and acquisition structuring, fund administration, legal, custody and audit are provided in a wide and customised range and at a competitive rate in comparison to other reputable fund jurisdictions.

The investment sector consists of highly skilled and educated multilingual specialist teams.

Additionally, at 12.5%, Cyprus’ corporate income tax rate is one of the lowest in the EU and the Eurozone. Cyprus’ financial climate also offers many other incentives to investors, such as full exemption from tax on gains from trading in securities and a generous participation exemption regime on foreign dividends, in conjunction with an extensive network of double tax treaties for international tax planning both at a corporate and individual level.

Furthermore, the country has rigorous anti-money laundering regulations in place, in line with EU and international standards.

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THE CYPRUS ECONOMY

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“The Head of the European Stability Mechanism (ESM), Klaus Regling, has called the end of the Cyprus adjustment programme a great success”. Brussels, March 2016

Setting new standards

Exceeding international expectations with a return to growth in 2015, Cyprus is making steady progress in restructuring its economy and regaining investor confidence.

Cyprus surpassed all expectations when it exited the recession in 2015 – a year earlier than first projected – and continued towards economic growth in 2016. The country has proven to be remarkably resilient following the financial crisis and has implemented tough austerity measures to restructure its economy.

Despite the challenges Cyprus faced as one the smallest EU member states, the economic adjustment remains on track, with all key objectives set out by the country’s international lenders being met earlier than expected.

Hailed a success story by the Eurogroup, Cyprus’ target of exiting the programme in early 2016 was realised in March 2016 and the country has now reclaimed its status as a self-determining and thriving economy.

Fiscal performance

The primary balance for the government is forecast to reach a surplus of 2.1% of GDP in 2015, corresponding to a headline deficit of 0.7% of GDP. The general government primary surplus is expected to increase to 2.6% of GDP in 2016 and to remain broadly unchanged in 2017, according to the European Commission. Cyprus’ debt-to-GDP ratio peaked in 2014 and is projected to decline from about 107% in 2015 to 95% in 2017. Structural reforms are expected to put long-term public finances on a more sustainable path while simultaneously improving competitiveness.

Inflation

The European Commission further declared that the inflation rate in Cyprus was recorded at -1.2% in December 2015 and was expected to rise to 0.6% in 2016 and to 1.3% in 2017. With unemployment still high and inflation expectations still subdued, wage developments are expected to begin showing improvement slowly over the course of 2016 and 2017.

Economic challenges

The Cyprus economy is showing signs of bouncing back, yet serious challenges remain. The country continues to struggle with non-performing loans (NPLs) and public debt. To achieve real recovery, NPLs must be substantially decreased and moved away from the balance sheets of banks. A recently approved legal framework for foreclosures and insolvency is a positive development and is expected to support banks with loan restructuring and in turn revive the economy. Although there is much work to be done before the economy can reclaim its robustness, foreign investors are showing interest in the country. Prospects are good for the Cypriot economy. With a strong tourism sector, a rapidly developing investment fund sector and the discovery of significant quantities of natural gas in Cypriot waters, there is a positive outlook in the medium to long term. The tourism and business services sectors have fared particularly well, despite the crisis, and the country has continued to attract and retain business regardless of the overall downturn over the last few years.

Current credit ratings

Generally speaking, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the creditworthiness of a country, thus having a significant impact on the country’s borrowing costs.

THE CYPRUS ECONOMY

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Standard & Poor’s credit rating for Cyprus stands at BB- with a Positive Outlook; Moody’s rating for Cyprus sovereign debt is B1 with a Stable Outlook and Fitch’s credit rating for Cyprus is B+ with a Positive Outlook.

A promising long-term outlook

Cyprus has an open, free market, service-based economy with a long record of successful economic performance. Though the economy is still tackling structural challenges, the strong business environment, highly educated workforce and favourable tax regime remain in place. Looking ahead, measures have been put in place to reform public spending, privatise major utilities, accelerate initiatives to boost investment, develop the investment fund sector and push forward with natural gas exploitation. Taking all of this into account, with cautious optimism we can say that Cyprus is quickly returning to the prosperity of former years.

Key statistics

Official key statistics which have recently been released by the Cyprus Ministry of Finance reflect the current prospects and dynamic of the local economy:

Cyprus 10-Year Government Bond Yield

Source: Ministry of Finance; updated: 22/01/16

The substantial drop in the 10-Year Government Bond Yield reveals investor expectations for the Cyprus economy’s long-term performance are high with minimized potential exposure to risk and thus a low return on government bonds.

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GDP Growth (% Change)

* Forecast

**Estimate

Source: Ministry of Finance; updated: 10/02/16

Looking at the graphic representation above, we can see that the Gross Domestic Product of Cyprus in 2014 was estimated at -2.5%, or approximately half of the previous year’s deficit at the peak of the country’s financial crisis. That being said, the GDP is forecasted to be on the increase from 2015-2018, signalling the return of Cyprus’ economy to a positive growth phase.

Main Economic Indicators for Cyprus

2012 2013 2014e 2015f 2016f

GDP at constant market price (% change) -2.4 -5.9 -2.5 1.2 1.4

Unemployment Rate LFS (%) 11.9 15.9 16.1 16.0 15.0

Harmonized Index of Consumer Prices (% change) 3.1 0.4 -0.3 -1.0 0.9

Fiscal Deficit / Surplus (% of GDP) -5.6 -4.5 -4.6 n/a n/a

Public Debt (% of GDP) 79.3 102.5 108.2 106.3 105.1

Source: Ministry of Finance

The table above shows an analysis of the main economic indicators of the Cyprus economy. We can observe that the

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2007 2008 2010 2011 2015 2016 2017 20182009 2013 20142012

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forecasted figures in the Economic Year 2016 show that the Gross Domestic Product of Cyprus is expected to grow by 1.4% compared to 2015, while the unemployment rate is expected to drop by 1.0% to its pre-crisis position. The Harmonised Consumer Price Index is expected to be inflated by 0.9%, as opposed to the deflation of the economic year 2015, while the Public Debt figure as a percentage of the Gross Domestic Product is expected to drop by 3.1% from the corresponding figure from the Economic Year 2014.

All of the above factors show an economy that has emerged from the recession and is steadily heading towards achieving its long-term growth objective of a zero fiscal deficit.

The present economic environment in Cyprus offers a short window of opportunity for the realisation of exceptionally high returns (“super-profits”). The current backdrop features a liquidity squeeze and the prevalence of non-performing loans faced by financial institutions. These entities are currently negotiating with institutional investors willing to invest in the economy with a view to capitalising on these investments in the future. This would be possible due to capital appreciation in the short to medium term and further in the long-term through the generation of a steady flow of investment income.

D Capital Investment Fund is currently seeking to exploit this economic window of opportunity with the complete dedication of its human capital and professional network in Cyprus.

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INVESTING INAND THROUGH

CYPRUS

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Tax system

The Cyprus tax system is one of the most attractive in Europe. The country provides a simple, effective and transparent tax regime, fully compliant with EU laws and regulations.

The Organization for Economic Cooperation and Development (“OECD”) includes Cyprus on its ‘white list’ of 45 countries that have introduced and implemented high level and internationally agreed standards on what constitutes harmful tax practices.

Many types of income in Cyprus are tax exempt, including most international transactions, dividend income, profits from overseas permanent establishments as well as the sale of securities, while investors can also rely upon no withholding tax on dividends, interest and royalties paid from Cyprus.

Internationally, Cyprus has a network of double taxation agreements with more than 50 countries and complies with EU Directives that focus on reducing or eliminating foreign withholding tax, creating a beneficial tax environment for investors.

Legal and regulatory framework

Cyprus has a modern, comprehensive and progressive legal and regulatory framework based on English Common Law principles. The country’s legal framework is widely recognized as business-friendly and effective, allowing reliable and transparent business practices to thrive.

The Cyprus Investment Promotion Agency (“CIPA”) plays a leading role in developing and modernising the country’s legal framework by promoting new and improved legislation in a number of areas, always aiming at improving the overall investment environment. Naturally, as an EU member state, Cyprus’ legal framework is aligned with EU laws and regulations (the acquis communautaire).

Macroeconomic prospects and opportunities

Despite the challenges in recent years, economic recovery in Cyprus has happened in record time. Thanks to the government’s commitment to supporting economic recovery and growth, Cyprus has managed to turn the page, successfully facing the island’s economic challenges and re-establishing itself as a thriving business centre.

Recent official economic statistics (see above) show the country’s rapid improvement and indicate the prospect of a flourishing economy much sooner than expected:

• 10-year Government Bond Yield (page 15)• GDP Growth (% change) (page 16)• Main Economic Indicators for Cyprus (page 16)

European Union (EU) and the European Monetary Union (EMU)

The Republic of Cyprus became a full member of the EU on 1st May 2004. Accession to the EU was a natural step for Cyprus, driven by its culture and history of progress and development, as well as its unwavering commitment to becoming a true player on the European economic, social and political platform. Cyprus successfully assumed the EU Presidency from July to December 2012.

Leveraging a robust economic performance recorded by key economic indicators, Cyprus adopted the Euro as its national currency at the start of 2008. Joining the Eurozone meant that investors could take advantage of free access to an EU market valued at 500 billion, while also benefiting from fewer risks, lower costs and increased price transparency

INVESTING IN AND THROUGH CYPRUS

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across the Eurozone.

Accession to the EU, and subsequently the Eurozone, launched a new era of commitment to quality and growth in Cyprus. That growth continues with Cyprus’ commitment to Foreign Direct Investment opportunities in priority economic growth sectors.

Today, Cyprus actively participates in EU programmes that focus on promoting growth in various economic sectors, as well as entrepreneurship and innovation across sectors and processes.

D CAPITALINVESTMENT

FUND

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Governing law and fund structure

D Capital Investment Fund Limited is a private company limited by shares established under the Companies Law Cap. 113. It operates as an open-ended variable capital investment company.

The Company is authorised by CySEC to operate as an alternative investment fund with a limited number of persons (Alternative Investment Funds Law no. 131(I) of 2014 or the “AIF Law”) and is addressed solely to a limited number of professional and/or well-informed investors.

The sole object of the Company is the collective investment and management of its asset portfolio for the benefit of its members. Accordingly, and in compliance with the law and any relevant regulations, it takes every necessary step to achieve this goal.

The Fund is organized as an umbrella fund consisting of several investment compartments (“Sub-Funds”) (AIF Law, section 114(5)). A separate portfolio of assets is maintained under each Sub-Fund and will be invested in accordance with the investment objective and policy applicable to that Sub-Fund. Within a Sub-Fund, subject to CySEC approval, the Directors may decide to issue one or more classes of shares, the assets of which will be commonly invested but may be subject to different fee structures, distributions, currency or other specific features.

The Company has appointed SKDA Capital Limited as its external manager.

Fund strategy and objectives

The Fund’s short to medium term objective is to create a portfolio of investments that will provide a steady flow of “active” business income and “passive” investment income which will meet its target hurdle rate of 9%. This, in turn, will bedistributed to its investors annually, on an accrual basis.

To achieve its investment objective the Fund will be acquiring equity in companies in the real estate sector, with a focus on high-profile real estate projects in prime locations in Cyprus and Southeast Europe.

These tasks will be executed respectively by the first two Sub-Funds, Real Estate Sector (Cyprus) and Real Estate Sector (Southeast Europe). Investments held on behalf of these Sub-Funds will be owned by special purpose vehicles, which will be wholly owned by the Fund.

The long-term investment strategy provides for the diversification of the Fund’s investment portfolio by investing in the sectors of tourism, medicine and education in Cyprus. With the approval of the regulator, a corresponding number of Sub-Funds will be created for this purpose.

The overall strategic target of the Fund is the maximisation of its unit holders’ wealth via:

(a) Providing a steady source of income for its unit holders through its dividend policy;(b) Increasing its investment portfolio Net Assets Value through capital appreciation;(c) Ensuring long-term viability through its carefully crafted investment policy; and(d) Providing a clear exit route to any investors who may wish to liquidate their position.

The Fund investment policy

The Fund’s maximum allowed call for equity under its current license is €500.000.000 (Five hundred million Euros). The Fund’s start-up equity has been set at a minimum of €12.500.000 (Twelve million five hundred thousand Euros), out of which €10.000.000 (Ten million Euros) will be immediately utilised towards the acquisition of a Cyprus tax resident real estate group of companies. The remaining €2.500.000 (Two million five hundred thousand Euros) will be used as working capital. An additional call for another €12.500.000 (Twelve million five hundred thousand Euros) for working capital

D CAPITAL INVESTMENT FUND

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purposes is anticipated to take place by the end of the financial year 2016. This will cover a four-year development plan in full.

The targeted return on investment (ROI) for the Fund’s unit holders has been set at 9% per annum (hurdle rate), and will be paid out in the form of an annual dividend. The Fund’s lock-up period has been set at four years from the date of investment by the respective unit holders.

Following the completion of the initial lock-up period, investors will be allowed to redeem their fund units in equivalent properties developed / to be developed by the Fund at the applicable market rates.

The primary concern of the real estate Sub-Funds will be the development of high profile residential and commercial developments in prime locations in Serbia and Cyprus in the short to medium term period of 1-4 years. Such development is expected to yield an average return on investment after tax well above the pre-set hurdle rate of 9% per annum. This will be partly paid out as dividends to the Fund unit holders and partly reinvested by the Fund in other investment opportunities.

Upon the successful development and sale of 65% of its fully owned real estate subsidiary’s inventory, and provided that the additional capital call has been fully met, the Fund will start diversifying its investment portfolio. The diversification will occur in the form of an expansion into other sectors of the economy, specifically, the fields of tourism, medical servicesand education, because it is these areas that are expected to formulate the niche market sectors of the Cyprus economy in the foreseeable future. Assuming the maximum AuM of €500 million Euro is reached, we expect the spread of our capital investments to be carried out through separate sub-funds on each sector, as follows:

Fund Capital Allocation In Investment Sectors

20%Hotels and Specialised Holiday Centres

10%Real Estate and

Development (Abroad)

25%Real Estate and

Development (Cyprus)

7%Cash at Bank and

in Hand

29%Medical and Rehabilitation Centres

9%Private Higher Education Centres

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Expected % Contribution to the Fund’s Annual ROI by Sector of Investment

Market Weighted Average Return on Investment (ROI) Per Economic Sector

14%Real Estate and

Development (Abroad)

27%Real Estate

and Development (Cyprus)

31%Medical and Rehabilitation Centres

17%Hotels and Specialised Holiday Centres

10%Private Higher Education Centres 1%

Cash at Bank and in Hand

20.00%

15.00%

10.00%

5.00%

0.00%Real Estate and Development(Cyprus)

Real Estate and Development(Abroad)

Hotels and Specialized Holiday Centers

Medical and Rehabilitation Centers

Private Higher Education Centers

Cash at Hand and in Bank(Working Capital)

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MARKET ANALYSISAND REVIEW OF

THE TARGETED SECTORSFOR INVESTMENT

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1.0 The real estate sector in Cyprus

Market overview

The Cyprus real estate market is more attractive to foreign buyers now than it has been in decades. A combination of legislative changes and strategic planning by the construction industry mean this is the optimum time for overseas investors to move into the local real estate market.

Cyprus, with its year-round sunshine, high quality of life, and convenient location between three continents, has long been a magnet for international investors, expats, retirees and those looking to enjoy a second home in a mild and hospitable climate. Despite the uncertainty of fluctuating global economic cycles, these factors continue to have enduring appeal. The 2013 Knight Frank Global Lifestyle Review ranked Cyprus as the fifth best place in the world to relocate, establishing the island as the only European location alongside Switzerland to make it into the top five – ahead of London, Madrid and Monaco. Cyprus ranks highly due in part to its favourable tax regime for new residents, and particularly for high-net-worth individuals. In May 2014, the island ranked 11th out of 40 countries in the Top of the Props chart, which records the most searched for overseas destinations to buy property. Recent legislation, coupled with a continuing fall in real estate prices, has triggered new interest in the middle to lower end of the market, while sales of luxury, top-end developments have surpassed expectations.

Increasing sales and new incentives

Even as corrections to the overheated Cyprus property market continue, the numbers of completed sales are on the rise. Transaction volume rose by around 9% in the first eleven months of 2015, compared to the same period in 2014, with October 2015 seeing a 23% rise in property sales. Albeit a positive development, the volume was significantly lower than the peak recorded before the recession. According to RICS (Cyprus) residential property prices continued to fall, with the most resilient property types being residential houses, where prices have fallen 4% since 2014 and 30% since the fourth quarter of 2009.

The island’s once-booming construction industry contributes around 2% to Cypriot GDP, and the sector has certainly felt the chill winds of global economic austerity over recent years. During the first ten months of 2015 the number of building permits authorised for both residential and non-residential projects fell by 0.5% compared to 2014. Nevertheless, their value saw an increase of 18.3% to €846 million and their area increased by 14.2%. Although recovery in this sector has been modest, there are signs of a possible stabilisation of construction activity in the short term. New legislation has been enacted, providing additional benefits to investors in the property market, such as a 50% reduction in transfer fees for all sales and a 100% exemption from capital gains tax for profits on properties purchased by 31st December 2016. Prospective purchasers are also incentivised by recent changes to the rating bands for immoveable property tax (IPT). Another advantage of the new legislation is that it exempts properties valued at less than €200.000 from taxation, which constitutes around 54% of all properties on the island.

Perhaps unsurprisingly, local financiers remain cautious, but foreign investors are showing increasing interest in the Cypriot real estate sector. The latest reduction in property prices on the island provides an ideal opportunity for the foreign investor to enter the market, and the chance to acquire extraordinary properties at exceptional prices. Around 20% of sales are driven by foreign buyers, proving Cyprus remains on the list for investors, holiday-home seekers, expats and retirees. This trend is likely to continue throughout 2016, when new legislation allowing banks to foreclose on unserviced debts is expected to release a significant tranche of repossessed properties onto the market. There has already been strong local interest in the asset sales by Bank of Cyprus and Hellenic Bank and analysts speculate that as more properties become available, Cyprus will be an even more attractive proposition for the canny bargain hunter.

It is expected that transactions in the property market will remain concentrated on prime assets while overseas buyers, encouraged by the government’s Naturalization Scheme, will focus almost exclusively on high-end residential properties

MARKET ANALYSIS AND REVIEW OF THE TARGETED SECTORS FOR INVESTMENT

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of at least €500.000, according to a report published by Resolute Asset Management. Meanwhile, institutional investors are focused on yielding income from their investments, such as grade-A properties and sizeable plots of land with tourism development potential.

Protecting buyers

New property legislation was passed in 2015, ramping up protection for buyers in Cyprus, allowing owners to apply for their own title deeds. A contentious issue for years, the new property law is a welcome move, and aims to correct the failures of previous years when title deeds were not issued to those who had purchased property either because the property was mortgaged by the developer or the state could not go ahead with the transfer because of outstanding taxes. The new law grants the head of the land registry department the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions. Thanks to the new amendment, the process is set to become more efficient while giving prospective buyers peace of mind and a sense of security.

Moving upmarket

Traditionally, Cypriot developers have provided holiday homes for British buyers, due to the historical ties between Cyprus and the UK, and Cyprus’ strong tourist market and attractive tax treatment – particularly for expats and retirees (5% tax on pensions). Today, the sector is pursuing a more innovative strategy, targeting top-end clients with a range of exclusive villas in five-star gated complexes, golf course, seafront developments and luxury townhouses. Many buyers are non-EU nationals who have taken advantage of Cyprus’ residency and citizenship programmes to relocate to a European base. These programmes, which require the purchase of property, brought in over €2 billion in revenue over the past two years, with most enquiries coming from Russia, China and the Middle East. Recent studies conducted by global immigration experts rank the Cyprus’ Citizenship by Investment programme amongst the top ten worldwide. The scheme was introduced by the Cypriot government two years ago to attract high-net-worth individuals, investors and entrepreneurs with all the associated benefits available to Cyprus and EU nationals.

Regaining momentum

Although still recovering, the real estate and construction sectors are slowly making a comeback, with prestigious new developments in the pipeline and corporations investing in new, ambitious projects. Landmark buildings are springing up, such as the new global headquarters of Wargaming in the capital city, Nicosia.

Together with new investments in tourism infrastructure and hotels, oil and gas exploration in Cypriot waters has also given the ailing sector a boost. Additionally, projects with a special focus on golf courses and marinas have spurred new interest in large-scale projects in Cyprus. The country has seen a surge of investors looking into the acquisition of entire complexes and projects that are both in the planning stages and already under construction. Cyprus’ on-going effort to establish its first ever luxury casino resort is set to boost tourism and fuel demand for holiday rentals. These premier developments will become the driving force behind the construction industry in years to come. The varied range of exceptionally priced properties together with Cyprus’ 2016 growth prospects make this a golden opportunity to invest.

2.0 The real estate sector in Southeast Europe

2.1 Republic of Serbia

Market overview

2015 proved to be a very active year in Serbia, particularly the second half. A number of major projects were officially announced by key international developers already established in the market, with others looking for an opportunity to

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enter. Considering all this, we couldn’t be more optimistic about the real estate industry in Serbia in 2016.

The Serbian property market, currently underdeveloped, is becoming increasingly attractive for developers. Though, given the industry-wide absence of major construction activity in the last couple of years, companies making a timely move into the real estate industry may expect a “first mover” advantage following the full recovery of the market.

The commercial developments market

At nearly 8%, the office segment presently marks the lowest vacancy rate in the past four years, which means almost no or very limited choice of available modern office space. Put simply, the companies thinking of expansion in the short-to-mid-term might be facing a real challenge in finding adequate space, as at the moment very few office buildings can accommodate requests of 1,000+m2. As a result, tenants looking for larger and more sophisticated spaces are starting to look to built-to-suit options or to anchor some of the announced pipeline projects.

The retail properties market

The retail market presents an immense investment opportunity for both retailers and property developers, being comparatively one of the most underdeveloped segments in the Southeast Europe region overall. A city with a population of 2 million and just 3 western-style shopping centres gives a clear indication of such opportunities. As a result of this vacuum, a number of globally known brands are currently making strides in securing a position within the existing shopping schemes, especially in larger cities like Belgrade, Nis and Novi Sad.

The residential properties market

The residential market has stabilized over the past two years, both in terms of sales prices and the demand vs. supply ratio. Overall, the demand has been picking up since the second half of 2013, and the well-defined residential concepts at key city locations sell out within a year of construction.

The industrial buildings market

The industrial sector in Serbia has long been off the radar of international companies in need of such facilities, but the situation here is changing quarterly. Real activity with several large scale projects has been set to commence potentially as early as next year. However, even with such development, Serbia would still be massively lagging behind other countries in the region in the short-to-mid-term. Nevertheless, geographical position gives an advantage which is yet to be exploited.

Conclusion

Some of the major foreign developers are confidently unfolding marketing and sales strategies for their long awaited projects in Serbia, which inspires substantial confidence for the next year. The property market is being seriously investigated by some of the developers that have not shown a presence in Serbia in the past decade, most of them coming from the Middle East, Asia and the UK. Keeping all of the above in mind, we feel it is not too early to be optimistic.

2.2 Romania

Overview of the economy

The Romanian economy maintained one of the highest growth rates in Europe in 2015, for the fourth consecutive year (+3.7% YOY according to the flash GDP release). Growth was driven mainly by ample private consumption, similar to the

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trends emerging in Europe where low oil prices boosted disposable income. In Romania, other than the lower oil price, there were several factors which contributed to higher private consumption, namely:

• Repeated hikes to the minimum wage• Wage increases for several categories of public sector employees• Higher social benefits• Lower VAT for food products (from 24% to 9%)• Revitalized consumer confidence• Surging new RON-denominated lending (totalling RON 25.1bn in 2015; +44% YOY)

The stock of RON-denominated mortgage loans doubled during 2015, while RON-denominated consumer credit increased by 11% YOY. Driven by consumption, growth is expected to continue in 2016.

The Bucharest office market

Over 360,000m2 of leasable office space is scheduled for delivery in 2016. Approximately half of that is already pre-leased and an additional quarter is known to be under advanced negotiations. 11 out of the 15 projects planned for delivery in 2016 started construction works without having any pre-leases, but the majority secured tenants as the construction works advanced. In 2016 we expect more cautious development. The construction start for new projects will be subject to closed pre-lease transactions.

Over the last two years, the Bucharest office market welcomed more than 15,000m2 yearly from companies entering the market. We expect the same level of activity from new entries in 2016. In addition, companies that entered the market in the last two years are expected to generate additional new demand in the coming years.

Location-wise, future stock will be delivered in the already established office districts of Dimitrie Pompeiu and Floreasca – Barbu Vacarescu as well as in the emerging Central Western area.

The Romanian shopping centres market

The shopping centres stock in Romania is expected to increase by 500,000m2 by 2020. Out of this stock, 95,000m2 is to be delivered in Bucharest by the end of 2016, with ParkLake Plaza (70,000m2 Gross Leasable Area or “GLA”) being the largest future scheme announced. Timisoara, among the largest cities in Romania, is one of the most active in terms of announced projects given the strong performance of the retailers already present in the city and their interest to open new locations. Almost 200,000m2 of GLA is currently in varying stages of development in Timisoara and has been announced for delivery in the next 2-3 years. At this time, one of the schemes is already under construction.

The Romanian economy shows promise to continue on an upward trajectory in 2016. With a 5% estimated increase in household consumption for this year, we expect to see a further strengthening in retail sales. In all likelihood, the non-food sector will also register an additional boost in sales due to the VAT reduction.

The Romanian industrial market

The industrial sector finished up a rewarding year, as the market became more and more appealing to developers, investors, end users and tenants. Supported by a consumption upsurge over the past five years, the logistics sector witnessed a year of strategic opportunity and has taken the lead. Production segment increase was triggered by stable economic fundamentals, characteristic of Romania in the past few years.

More than 70% of the new developments announced to be delivered in 2016 in Bucharest are already leased or in various stages of negotiation, while the remaining stock will most likely be leased by the end of the current year. Further-

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more, we foresee vibrant activity for the industrial market in the near future, a prediction generated by the intense focus of new developers on opportunities in Romania who are interested in developing large projects of more than 100,000m2.

Riding on the heels of the continuously expanding e-commerce and same/next day deliveries sector, demand in the countryside from the production sector will continue to take the lead with logistics companies trying to catch up and optimize transportation routes from different areas of the country. In the absence of highway infrastructure linking to Bucharest or Targu Mures, the eastern part of the country remains an area of interest for manufacturers, with cheap labour costs and a dearth of interest from logisticians.

The Romanian land market

Residential and retail players will remain the most active land buyers in 2016. A few new residential developers are currently sizing the market for opportunities and a portion of these are likely to secure plots for future projects. However, they are more cautious compared to existing, locally experienced players.

Regarding the office segment, most developers will target the few remaining opportunities available in key areas. Eventually, we expect one or two notable acquisitions of office plots to be concluded in 2016 in Bucharest.

Securing sites with a valid zoning plan (PUZ) and building permits has become an important focus for the vast majority of developers. This concern is due to the frequent blockages and lengthy permit processes which developers have been burdened by in recent years. This in turn has increased development risks in the sector.

The Romanian investment market

2015 was the first year after the financial crisis that presented a real possibility of revival regarding the real estate investment market. We saw the largest number of transactions since 2007, new investors completing transactions (GLL, P3, and CTP) and generally an increased number of diverse investors looking at the Romanian market. Indeed, 2015 was a consolidating year, aligning both international and local influencing factors to create the right environment for an active investment market: favourable international capital flow dynamics, a positive macroeconomic environment, demonstrable market liquidity, growing investor appetite and, last but not least, an improved financing environment.

The Bucharest new residential market

In 2007, at the pinnacle of the residential market, Colliers International reported sales of over 7,000 new apartments per annum, estimating around 30% of the absorption to have been due to investors both large and small. 2015 marked the year when end user purchases exceeded peak market values, officially confirming the end of the recovery period of the new residential segment in Bucharest.

2016 will bring substantial changes to the real estate taxation system, which may lead to an increase in investors in coming years. However, financing is paramount to continuing market growth. Therefore, any changes, such as the oft discussed debt discharge law, will significantly impact the segment.

The announced supply in the next 24 months should be able to find buyers if financing remains easily accessible. Prices will increase, encouraged by the change in the 5% VAT law, but the growth in supply, particularly on the low-end segment, will continue to hold them in check.

The Bucharest hotel market

Supported by positive developments in 2014, the Bucharest hotel market registered a good track record for all indicators in 2015, revealing real prospective for future growth. With sustained national economic performance, the hospitality

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industry in Bucharest showed elevated volumes of both supply and demand.

The positive macroeconomic context is influencing both occupancy and ADR indicators, which are slowly mending their previous crisis hikes. The hospitality sector will expand mainly due to the interest of big hotel groups in new markets and the general development of tourism. Investors are likely to continue showing interest as they are more enthusiastic about prospecting the market for new hospitality projects, including reputable brands such as Hilton, Kempinski and Hyatt. Increasing competitiveness in the market will generate higher quality products that will be reflected in innovative hotel concepts and improved benefits, interrelated with consumer needs.

The new real estate related Romanian tax rules

2016 brings a lot of positive changes to the tax regime applicable to real estate companies. The most important are:

• VAT reverse charge for transactions• Reduced VAT rate for certain dwellings• Gradual removal of construction tax• Reduction in building tax rates• Change of the building tax regime from the nature of the owner to the nature of the property.

3.0 The Healthcare and Medical Sectors in Cyprus

Strong vital signs Internationally trained health professionals and rigorous adherence to high standards ensure that the quality of private healthcare in Cyprus is second to none. Thanks to advances in medical research, Cyprus can legitimately claim to be a world leader in certain fields of medical innovation.

The Cyprus healthcare sector is going through exciting times, with an imminent roll out of a new national health scheme which will upgrade and automate facilities to offer better care and service to patients. Cyprus is also renowned for its world-class medical research and is becoming a popular destination for medical tourists thanks to its top medical professionals, most of whom are educated at reputable universities in the UK, Greece, Western Europe, Russia and the US. In Cyprus, healthcare is provided by both the state and the private sector, with an impressive 74 private hospitals and clinics. The presence of numerous prestigious private healthcare facilities significantly enhances the island’s reputation as a centre for medical excellence and highlights the opportunities available to foreign investors. The island has also introduced opportunities for foreign doctors to carry out procedures in the country, a move that is fostering cooperation in the international medical field. The American Medical Center, which started out as a specialist cardiovascular institute, is one such state-of-the-art facility and now offers a wide range of medical services.

Public and private excellence

The public sector is highly centralized and most planning, organisation, administration and regulation is under the purview of the Ministry of Health. It is exclusively financed by the state budget, with services provided through a network of hospitals and health centres directly controlled by the Ministry. Substantial investment in the state sector has meant that procedures such as kidney transplants and open heart surgery, which once necessitated a journey overseas, are now routinely carried out within Cyprus. The private system is financed mostly by out-of-pocket payments and partially by voluntary health insurance (VHI). It largely consists of independent providers, the facilities being mostly physician-owned or private companies in which doctors are usually shareholders. Cyprus has one of the highest shares in out-of-pocket expenditure in Europe at 47.2%. The general government healthcare expenditure is 45.7% and the share of private insurance enterprises expenditure is only 4.5%. Cyprus ranks 24th out of 36 in the Euro Health Consumer Index 2014,

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although it has gained 40 points since 2013. Health expenditure decreased from 6.8% of the GDP in 2011 to 6.6% in 2012 and increased to 6.7% in 2013. Although the total expenditure on health in Cyprus as a percentage of the GDP (6.7%) in 2013 was lower than the OECD average, which was 8.9% in 2013, the healthcare statistics are in fact performing better than the EU average and can be said to be on par with the large and developed EU member states. This can attributed to Cypriot physicians’ qualifications and the combined efforts of the Ministry of Health, the Cyprus Medical Association and the Cyprus Medical Council to keep the bar high in Cyprus.

Creating an efficient NHS

Plans to roll out the much-anticipated and necessary National Healthcare Scheme (NHS) are in the pipeline and aim to upgrade public healthcare services and restructure health centres to make them autonomous. Cyprus has been working overtime in a bid to reform the sector and create a system that provides affordable care by reducing the cost of quality healthcare to all. A top priority for the government and the Ministry of Health in 2016 is to make healthcare more patient-oriented, reliable and accessible. In the short term, steps have been taken to reduce patient waiting time through the introduction of minor injuries units and an automated bed availability system. In a separate development, the Ministry of Health has embarked on a seven-year programme to computerise medical provision and develop an integrated health monitoring system. This will involve the introduction of digitised health records, the expansion of medical services to remote areas via telemedicine and robotics, and access to international medical data banks.

Investing in medical tourism and e-health

On a global scale, the medical tourism industry is worth up to an estimated $40 billion and accounts for approximately 2.5% of international tourism revenue with very positive growth prospects. Cyprus’ excellent and sophisticated medical infrastructure consisting of medical facilities, hospitals, laboratories and other diagnostic centres, as well as its highly educated healthcare professionals and top-class health services, are rapidly establishing the island as a centre for health tourism in the Mediterranean region. Coupled with the country’s ideal climate conditions throughout the year, this makes Cyprus an attractive destination for patients to combine treatment with a holiday and recovery with relaxation. The majority of medical tourists come from the UK, Germany, the Netherlands, Russia and the Middle East and most seek either dental or cosmetic procedures. However, increasing numbers now visit Cyprus for other care, such as fertility treatment. Meanwhile the island is gaining a reputation for other specialist procedures such as cancer surgery, minimally invasive spinal surgery and facial reconstruction. Another investment opportunity is e-health solutions. A cornerstone for the new NHS, health information systems and specialist ICT solutions will be in high demand over the next few years as Cyprus builds up its unified national health system.

Doctors across borders

Since 2013 the Cyprus government has taken concrete measures to promote medical tourism as well as cross-border medical cooperation by welcoming doctors worldwide to conduct procedures in Cyprus. Doctors from Israel, the United States and other non-EU countries are now allowed to provide services in Cyprus under certain conditions with procedures unhindered by bureaucracy and undue delays. This decision not only promotes medical tourism and helps generate income mainly for private hospitals, but it also encourages further training and knowledge exchange for Cypriot doctors, with a number of hospitals becoming centres of excellence in the eastern Mediterranean region, the Middle East and Europe. Cyprus is also gaining a reputation for other specialist procedures. A vast array of quality medical treatments for international patients is now offered, from basic check-ups and diagnostic tests to major surgery, including kidney haemodialysis, transplants and cardiothoracic surgery procedures, and orthopaedic and musculoskeletal surgery.

Innovative education and research

The establishment of medical schools in Cyprus was a decisive step in the on-going effort to improve the health sector and foster world-class research and innovation. Over the last five years, three medical schools, one public and two private,

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have been established in Cyprus, all affiliated with local hospitals. The sector recently received a significant boost with the establishment of a four-year Bachelor of Medicine and Bachelor of Surgery (MBBS) graduate course at the University of Nicosia (launched in the 2011 academic). The degree program combines the convenience of training within Cyprus with all the advantages of world-class expertise. It arose from a unique collaboration between the University of Nicosia and St George’s Hospital (University of London). It is expected that, in time, its graduates will make a significant contribution to medical research on the island.

Over the past 25 years Cyprus has seen highly commendable achievements in the fields of medical research and innovation. Pioneering research work has been undertaken at the Cyprus Institute of Neurology and Genetics, which developed a ground-breaking, non-invasive prenatal test for Down’s Syndrome. Research in the biomedical field has seen a tremendous increase, especially in the field of genetic diseases, hereditary cancer and biotechnology. These ambitious research projects, funded by both local and foreign sources, resulted in findings and new knowledge that has benefited the local population and the international community. The top-quality academic work in Cyprus is supported by important European funding, including ten European Research Council (ERC) grants, hundreds of high-impact publications in international peer-reviewed journals and invitations to present findings at major medical conferences around the world.

A healthy prognosis

To sum up, the calibre of healthcare in Cyprus is truly remarkable. The combination of internationally experienced personnel, advanced technological capabilities, and cost-effective, world-class medical services mean that this sector will continue to flourish and expand. The challenge of the current worldwide health workforce shortage may emerge as an opportunity for Cyprus’ growing educational industry. The country’s geographic position and EU membership provides opportunities for well-trained students originating from non-EU countries to acquire qualifications recognised by the EU. All of this means that Cyprus has the definite potential to develop the sector even further and establish itself as a strong player in the health and medical field in the wider region.

4.0 The Tourism, Holiday and Leisure Sectors in Cyprus

Cruising to growth

Tourism, the most resilient of Cyprus’ commercial sectors, spiked in 2015, with tourist arrivals hitting a decade high. With efforts to diversify its tourism product, new foreign investment pouring into the sector and plans for a world-class casino resort underway, the future of Cyprus’ tourism looks bright.

Tourism has been a key pillar of the Cyprus economy for decades. The sector has remained economically robust and is the only commercial sector in Cyprus to see continuous growth throughout the global financial crisis. The number of tourists visiting the island in 2015 reached almost 2.7 million, matching a previous record set in 2001. With a strong focus on further developing niche tourism and extending the season, the country’s efforts to diversify its offerings are beginning to bear fruit.

A winning package

Cyprus is well known for its hospitality and is renowned for its excellent quality of life, as evidenced by its award-winning tourist industry (Sustainable Destinations Global Top 100, VISION on Sustainable Tourism, Totem Tourism and Green Destination titles presented to Limassol and Paphos in December 2014). Cyprus ranks top amongst EU countries for clean swimming waters and has been awarded a total of 53 Blue Flags, achieving three records: the most Blue Flags per capita in the world, the densest concentration of Blue Flag beaches and the most Blue Flag beaches per coastline. However, Cyprus is much more than just a ‘sun and sea’, package-tour destination. A new offering of niche segments like sports and cultural tourism is on the rise. Although tourists are spoilt for choice in terms of accommodation - ranging

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from budget two and three-star hotels to a growing range of upmarket hotels with four and five-star status - a key growth segment is agrotourism, giving travellers a unique opportunity to enjoy and experience authentic Cyprus village life.

Poised for growth

Cyprus saw record-breaking arrivals in 2015, with indications that 2016 will build on this growth. There was an 8.9% increase overall in 2015, bringing total arrivals up to 2,659,405, according to the Cyprus Tourism Organisation (CTO). Cyprus attracted increasing numbers of visitors from Germany, Israel, Austria, France and the Netherlands as well as the Middle East. Most notably, 2015 saw the total number of British tourists exceed the one-million mark for the first time since 2011, constituting a 20% rise. The significant rise in UK arrivals has been attributed to the favourable exchange rate between the Pound Sterling (GBP) and the Euro, as well as lower fuel prices which have reduced airlines costs to Cyprus. Efforts by the government and the CTO to ‘reinvest’ in traditional tourist markets such as Britain and Germany have also helped introduce Cyprus to a new generation of tourists. The number of visitors from Greece and Germany rose 38% and 30% respectively in 2015 compared to 2014, while tourists from Sweden rose 1.8% and Israel 43%.

Russia, a traditionally strong market, has been a source of some concern with arrivals falling almost 18% to 524,853 in 2015 due to the devaluation of the rouble, making international travel unaffordable for many. However, Russian tourists remain the second largest tourist market for Cyprus and the negative performance is considered to be a temporary lull by Cyprus tourism experts. Long-term forecasts issued by the World Travel and Tourism Council, an authority on world tourism, paint a positive picture for Cyprus. By 2025, international tourist arrivals are forecast to total 3,734,000, generating an expenditure of €3.5bn – an increase of 4.2% per annum. Analysts are confident that Cyprus tourism will continue on a path of steady growth by consolidating its core attractions and diversifying and developing niche areas in response to changing consumer demand.

Expanding connections

Cyprus is forging ahead on multiple fronts under the ‘Open Skies’ policy, to extend both the number of originating airports and aircraft operators. Cyprus has completed several new agreements with countries such as Bahrain and Oman, and is in talks with various countries in Asia, Africa and South America. Although the demise of national carrier Cyprus Airways in 2015 was an tremendous blow to the industry, over 70 airlines continue to operate in and out of Cyprus with many expanding existing routes. Airlines such as British Airways, Emirates and Etihad have increased flying capacity to the island, along with others like commercial carrier Germania, low-cost Austrian airline NIKI and Qatar Airways.

Diversification to boost investment

Efforts continue to maximise the commercial potential of the island’s mild winter climate and to develop the sector as a year-round tourism destination, particularly for niche areas, like agrotourism, health and wellbeing, nautical, religious, conference, sports and wedding tourism. In fact, 2015 saw increased interest in bookings for March and November, the two months which have been identified as a first-stage priority in the plan to expand the season beyond the summer months. The CTO supports external investment through numerous incentive schemes. At the same time opportunities abound for investors looking to target tourists seeking special interest holidays.

Developing niche tourism

Cyprus enjoys a top position among Mediterranean and European wedding tourist destinations. 8,000 couples from abroad tied the knot on the island in 2015 alone. In terms of promoting its wedding tourism product, Cyprus’ key markets are the United Kingdom, Israel, Lebanon and Russia, with British holidaymakers constituting around half of the wedding traffic in Cyprus. Destination wedding site MarryAbroad ranks Cyprus as one of the top ten wedding destinations in the world for British couples planning to get married.

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The island is also a popular winter practice venue for international sports groups and athletes, a field with considerable growth potential.

Diving tourism is another area where growth is confidently predicted. An estimated 50,000 divers visit the island each year, many attracted by the opportunity to explore one of the top five dive sites in the world, the Swedish cargo vessel MS Zenobia, which sank off the coast of Larnaca in 1980. The CTO acquired four ships in 2015 in order to create more artificial diving reefs for tourists.

Golf tourism is also expanding rapidly and Cyprus boasts four 18-hole international standard courses, with plans to construct an additional seven to establish the island as a year-round destination for golfers.

Other developing areas include health and wellbeing holidays, with the recent creation of several exclusive spa hotels as well as a number of large-scale projects open for investment in the fields of rehabilitation and other wellness services.

Medical tourism is experiencing unprecedented growth due to Cyprus’ world-class reputation for high-quality private health care in a technologically advanced environment. Cosmetic surgery, diagnostic tests and fertility treatment top the list as the most popular procedures for medical tourists from the UK, Germany, the Netherlands, Middle East and Russia.

Game changers

The newly approved luxury casino resort offers particularly exciting investment potential. Legislation has been passed to award the first and only casino licence, and preliminary studies by the CTO predict annual government revenues of between €35 and €50 million. The licence has garnered much interest worldwide, with the winning bid expected to be announced by mid-2016. At the time of writing, the names of the bidders have not been officially announced, but it has been widely reported that the three frontrunners in the race are international hotel operator Hard Rock, resort hotel and casino chain Sun International, which has extensive interests in South Africa, and French company Bouygues, specialists in online gaming. The plan is to create a casino resort exceeding five-star requirements, including various leisure facilities such as hotels, spas and conference centres. Following the success of Limassol Marina, new luxury marinas are in the works for Larnaca, Ayia Napa and Paphos in a bid to boost nautical tourism.

Another potential game changer for the hospitality sector has been the deal with the Buena Vista Hospitality Group. A leading player in the world of hospitality and golf management, Buena Vista has plans to construct Europe’s largest integrated sports, health and wellness resort near Limassol. The company will also base its regional headquarters for the eastern Mediterranean, Middle East, and Balkans on the island.

The Cyprus hotel industry has also seen a boost from foreign investment. The Limassol hotel Alexander the Great was sold in a multi-million-euro deal, Le Meridien received a €20 million cash injection (75% investment), while the Amathus Hotel sold for €71 million. Larnaca is also seeing its fair share of investment, with a new Radisson Blu set to be completed and welcome its first guests by the summer of 2017. These deals have shown foreign investor confidence in the potential of the sector and are helping it move further upmarket.

Challenges and the future

Cyprus tourism has emerged robustly from the recession and is ready to play a leading role in the country’s economic renaissance. However, in order to reach its growth targets and stave off increasing competition, Cyprus must tackle challenges head on in the short and long term. Relatively expensive compared to other Mediterranean holiday destina-tions, Cyprus must push its initiatives through to upgrade and develop its infrastructure and product offering so that it can meet the demands of visitors paying more for their holidays. Nevertheless, there are great opportunities and the potential to develop the sector further thanks to its robust foundations and decades of experience in catering to tourists from around the world. Maintaining and boosting the success of this formidable sector will continue to take Cyprus from strength to strength.

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5.0 The Education and Research Sectors in Cyprus

A centre for regional excellence

Cyprus is well on its way to becoming a major educational hub in the Eastern Mediterranean, and is rapidly establishing an international reputation as a centre of excellence for scientific research and development.

Cyprus spends an impressive 6.67% of its GDP on education, ranking the country 5th among the EU27, while almost 50% of Cypriots aged 30 to 34 have university degrees, putting the island well above the EU average of 40%. The country’s educational institutions maintain consistently high academic standards and attract students from all over the world.

Investing in education

Since joining the EU in 2004, the number of foreign students studying in Cyprus has doubled and the country has ambitious plans to develop itself into a regional education centre. Today 30% of students (around 8,000) come from abroad – a figure which highlights the great funding opportunities that exist in Cyprus for new international universities, colleges and research institutes. The widespread use of English, the application of EU standards, a safe environment and good weather, all make the island an ideal place for foreign students seeking a top-notch, value-for-money education. Over the past year, Cypriot universities have been actively promoting themselves as providers of high-quality yet affordable tertiary education. President Anastasiades underlined his government’s determination to build on this promise by outlining plans to enable more tertiary courses to be offered in English and for the creation of an institutional framework attractive to postgraduate students coming from abroad.

Excellent universities

The island has eight universities that offer a wide range of courses and degree programmes. The oldest of these is the University of Cyprus, which teaches mainly in Greek. The University’s partner institution, the Cyprus University of Technology, aims to bridge the gap between pure and applied research and to forge close ties with Cypriot commerce and industry. The government also provides state funding for the Open University of Cyprus, as part of its commitment to lifelong learning. Cyprus also boasts a number of private universities, the oldest of which are the University of Nicosia, European University Cyprus and Frederick University. The University of Nicosia launched the island’s first degree programme in medicine, the result of a unique collaboration with St George’s Medical School at the University of London. In October 2012, the first British university to be established on the island, the University of Central Lancashire – Cyprus (UCLAN), accepted its first students. UCLAN-Cyprus offers courses in business, law and the sciences and provides students with a unique opportunity to study in both Cyprus and the UK. Another relatively new university is Neapolis, located in Paphos, which attracts both foreign and local students.

World-class research

When it comes to science and technology, Cyprus punches far above its weight. This was dramatically highlighted in 2014 by an innovative new global ranking scale, which assesses nations by their contribution to the good of society and humankind. According to the Good Country Index, compiled from UN and World Bank data, Cyprus ranks an astonishing 3rd out of 125 countries for its contribution to science and technology relative to its GDP. The recent discovery of offshore hydrocarbons in Cyprus has also prompted a collaboration between the University of Nicosia and the Mediterranean Institute of Hydrocarbons Technology (MIHT). Plans are underway to develop a comprehensive training programme designed to provide well-qualified personnel capable of filling the thousands of posts that are expected to arise from the exploitation of the gas fields. Collaboration with international educational institutions is a priority to ensure appropriate knowledge transfer and for Cyprus to develop into a hydrocarbon research base. Historically, research and development (R&D) has been scarce in Cyprus compared to the rest of Europe. However, the economic challenges of

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recent years have prompted an increased appreciation of ways in which research can generate new models of economic development and its potential to cultivate a knowledge-based economy in Cyprus.

President Anastasiades recently underlined his commitment to maximising the commercial potential of research and innovation and showed confidence in the ability of Cypriot enterprises to benefit from the knowledge transfer opportunities provided by EU-funded research initiatives. There is a renewed impetus towards the development of such opportunities, and employers’ organisations and research consultancies have agreed to collaborate in an effort to secure further EU research funding. Over the past six years, Cyprus has already harnessed nearly €80 million in EU funding for Cypriot-led research projects, but there is scope for this figure to increase if Cypriot funding bids are simplified and coordinated.

The highly regarded Cyprus Institute (CyI) a non-profit science and technology research and educational institution, is at the forefront of much of the R&D conducted on the island today. CyI has close links with the renowned Massachusetts Institute of Technology (MIT), a collaboration which has produced ground-breaking work on the production of solar-generated electricity and methods of monitoring climate change. In recognition of its excellence, CyI was recently selected to participate in a leading role on an ambitious 10-year international initiative on global sustainability called Future Earth, which will attempt to co-ordinate new, interdisciplinary approaches to research sustainable development and the management of the transition to sustainability. CyI will act as a regional hub, managing the participation of the Middle East and North African scientists in the programme.

An expanding knowledge hub

Government and private sector investment, combined with careful strategic planning, has produced impressive results. Renewed emphasis on research and development and the cultivation of a knowledge-based economy has resulted in the production of innovative research across a range of disciplines and the consolidation of the island’s role as an expanding knowledge hub for the eastern Mediterranean.

OUR FIRST CALLFOR CAPITAL

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The Real Estate Sub-Fund(s)

An overview of the proposed investment approach

The Fund’s investment strategy implementation starts with the deployment of €12.500.000 (Twelve million five hundred thousand Euros). 80% of this sum will be used for the acquisition of 99.99% of the OSC of a leading real estate group of companies established in Cyprus and operating both in Cyprus and Southeastern Europe. The remaining 20% will go towards the group’s working capital requirements for implementing its projects development plan. An additional €12.500.000 call for capital for working capital purposes is anticipated to take place by the end of 2016, and will cover all capital needs for a four-year period, fully developing the group’s existing real estate inventory.

This will create a number of strategic advantages for the Fund, which would not be in place if we undertook the option of purchasing immovable property outright either directly from its owners or from institutional financiers who may have foreclosed it.

An analysis of the reasons which led us to undertake the option of taking over a local real estate group of companies is listed below:

(1) Tax Implications of purchasing immovable property in Cyprus

Although AIFs can offer a substantial number of benefits to an investor, other issues such as corporate taxation and property-related taxes were considered when evaluating a substantial investment in immovable property.

The tax implications and their potential impact on the target return on investment and the future cash flow position of the Fund were considered under both of the investment options at hand.

The outright purchase of immovable property directly from the property owners or from institutional financiers who may have foreclosed such properties had the following inherent weaknesses from the point of view of tax implications:

(a) Land Transfer Fees would be applicable on all immovable property purchases performed after 31st December 2016*1, on a progressive tax system basis, as follows*2:

Up To €85.000 3% €85.000 - €170.000 5% Over €170.000 8%

*1 Up to 31st December 2016: (a) all purchases of immovable property which are excluded from Value Added Tax (i.e. (i) land plots and (ii) housing or commercial units which have previously been inhabited by another person) will be subject to 50% of the above rates; and (b) all purchases of immovable property which were subject to Value Added Tax (i.e. everything excluding the items disclosed under (i) and (ii) above), will not be subject to Land Transfer Fees.

*2 Land Transfer Fees are payable on a unitary basis (unit-by-unit approach)

(b) The disposal of immovable property which has been purchased after 31st December 2016 by any person other than a licensed real estate company would attract Capital Gains Taxation (CGT) chargeable at 20% on the inflation adjusted profit, instead of the much lower Corporate Taxation of 12.5%, applicable on the taxable profits of a real estate company;

(c) Purchasing the properties outright, at distressed prices directly from property owners or institutional financiers, would not allow us to utilise the high historic cost of land and other expenses incurred on the property resulting in an

OUR FIRST CALL FOR CAPITAL

38

accelerated tax liability and effectively a lower available for dividend distribution profit after tax; and

(d) Purchasing a semi-concluded project outright, which may be a highly promising investment upon completion, would be subject to the standard VAT rate (currently at 19%) resulting in additional tied-up working capital.

Deploying funds towards the acquisition of a real estate group of companies, instead of purchasing the properties outright, will enable the Fund to overcome the potential tax implications which have been analysed above and secure the immediate and unconditional ownership of all immovable property owned by the group, both in Cyprus and abroad. The cost of investment of the Fund has been successfully negotiated by its management to be substantially lower than the open market value of the assets being acquired.

(2) Advantages in Following our Proposed Investment Approach

(a) No Land Transfer Fees on the acquired immovable property, as the legal ownership remains the same;

(b) No Value Added Tax will be payable on any of the Company’s semi-completed development projects, as there will be no sale of these properties to a new owner;

(c) We will be fully eligible to deduct, for corporation tax purposes, the high cost of immovable properties purchased at very high prices at the peak of the economy, as the company will continue to carry the properties’ historic cost in its books and records;

(d) Other capitalised expenses relating to the immovable properties, including capitalised bank interest on loans received for the acquisition of the property will also form an allowable deduction for corporation tax purposes;

(e) Future taxable profits realised from development projects will be eligible for set-off against existing taxable losses which can be carried forward for up to a five Financial Years;

(f) Group Loss Relief will be available to all Tax Group member companies, through which one company’s tax losses for the year can be settled against another company’s tax profits for the same year. A Tax Group for Group Tax Loss Relief purposes exists where one company holds >75% of one or more companies, directly or indirectly, for the whole tax year. Members of the tax group can relieve any unutilized tax losses against their own future taxable profits within a period of five years from the date that the tax loss has been incurred; and

(g) The acquisition of the company (or group of companies) will be made via the 99.99% dilution of the current shareholder(s) interest, in order to avoid Capital Gains Tax that would otherwise be applicable at a rate of 20% on the difference between the price offered for purchasing the shares of the company and the indexed and adjusted-for-inflation cost of the Cyprus-situated properties being acquired.

(3) Expertise and long-standing experience in the real estate sector

Teaming up with one of Cyprus’s prime real estate group of companies offers the advantage of seeing the local property market through the eyes of a large number of professional individuals who are experts in their field with solid experience in the local real estate market.

The benefits we expect to receive from this acquisition are many, including direct access to the relevant competent au-thorities, technical knowledge of country-specific requirements and co-operation with other well-established organisations involved in the construction industry.

39

(4) Professional network and established client base

Being successful in the real estate sector is synonymous with having a strong local and international sales network, an already established and strong client base in the country of reference and an excellent track record on project quality and post-sales support services.

The group of companies forming the target for acquisition has a long-standing and strong presence in the field of property development and in dealing with the demanding international private and corporate sector client base.

The group, which currently ranks among the top three development companies in the capital, established itself strongly in the market mainly due to its unique architecture and the prime locations of its developments.

City Link, one of the group’s high profile commercial developments, has been hosting the Embassy of the State of Kuwait in Cyprus since its establishment in the country. Most of the Embassy’s diplomats are also hosted in several of the group’s high profile residential developments.

Other high profile corporate clients and/or business associates of the group include the Department of Public Relations of the Cyprus Telecommunications Authority (CyTA), currently forming the largest corporation in the country, which has been active in the group’s developments for a number of years, and EuroLife, the country’s largest insurance corporation.

The group’s physical persons client base consists of high-status individuals including personnel from foreign embassy delegations, local and international business executives, medical doctors, artists and other high-calibre individuals.

The group currently has a fully operational presence in Cyprus, Romania, and Serbia and also operates a representation office in Tianjin, China.

The Real Estate Sub Fund(s) Risk Mitigation Strategy

Stage 1 - Market study / research

(1) Information is gathered on the property (including costs and quality) from third-party market experts to ensure independence and reliability of data.

(2) A market sensitivity analysis is carried out to ensure that, even if there are other projects which are currently under development or in the pipeline for development (i.e. being fully licensed and expected to commence construction within the next six months) in the identified areas, these will not fully cover the expected market demand.

(3) A thorough examination is made to assess the average profit return for the industry.

If a project is not determined to be of high quality or significantly profitable at this stage, it will be rejected. Stage 2 – Identification of property

Negotiations to obtain the best possible price (at or below the market rate) will take place with respect to the identified property. If it is determined that the best possible price cannot be obtained, and that the purchase cost shall exceed the available budget or funds, the purchase will not be concluded.

40

Stage 3 – Conception of idea / costing

(1) Internal models used to assess the viability of a project have been developed over a number of years to consider any factors and tackle any challenges that may arise during the evaluation of a project.

(2) An NPV (Net Present Value) analysis of the project is performed over a three-year period (this is the full project cycle, starting from the market study stage and running through to the expected sale of the whole project). If the NPV practice generates an IRR (Internal Rate of Return) that meets the minimum return expected for its development, the project is approved for further consideration and moves on to the next stage of the evaluation cycle. If the expected IRR is not met, the project is rejected.

(3) Once the project is deemed to be viable, funding is secured, either through banking finance, investor monies or a combination of both, to ensure that the required capital is available to commence construction of the project. Decisions about the funding of the project will take into consideration the immediate cost as well as long-term costs (e.g. interest rate payments).

Stage 4 – Identification of capable professionals / setting up know-how team of experts

(1) The project team shall be assessed based on its reputation, quality of work, ethic, and previous collaborations. To avoid conflict of interest, any such project team members will be independent professionals.

(2) If the actual cost of tenders received for the construction of the project is significantly different from the preliminary cost as projected by the QS, the project is rejected.

Stage 5 – Project design

(1) In order to be in a position to determine the optimal method and way to design and construct a project, from both a cost-effective and quality perspective, expert independent advice will be sought from third-party professionals. Meetings may be held between any persons involved, and will be minuted. All recommendations and decisions will be clearly documented and decisions reached at this stage will be fully supported.

Stage 6 – Licensing process

When applying to the relevant authorities for permits:

(1) All necessary documentation for permit or licence applications will be duly prepared, completed and signed.

(2) Queries made by any authority, with respect to the application or the project, will be addressed promptly and effectively.

Stage 7 – Construction

We envisage continuous monitoring of the construction phase to ensure that the work is carried out in accordance with the standards set both from a quality and cost-effectiveness perspective.

Stage 8 – Marketing and sales channels

Through affiliates and representative offices in the Gulf area, the Russian Federation and China, finished products and specially designed structures will be presented to buyers with a mature interest in acquiring property.

41

Communication with such affiliates and representative offices shall be constant and efficient so as to ensure the compiling of a secure and steady pipeline of sales. This will be in place in order to generate consistent cash flows and returns for the Sub-Fund.

A graphical representation of the risk management process as described above can be observed in a diagrammatic format below:

Market Study / Research

Identification of appropriate property

Conception ofidea and costing

Setting up team of experts

Project DesignLicensing process

Commencement ofconstruction

Marketing for saleof property

Completion of project and Sale

2.5 Years

1

2

3

4

56

7

8

9

42

The Real Estate Sub-Fund(s) Structure

Projects Development Lifecycle, Cash Flow and ROI

30th June2016

1st January2017

1st January2018

1st January2019

1st January2020

30th June2020

F.Y. 2016 F.Y. 2017 F.Y. 2018 F.Y. 2019 F.Y. 2020

1st Call ForCapital€12,500,000

2nd Call ForCapital€12,500,000

End of the 4 - year Lock-Up Period

Cash Outflow: €10,340,000 €19,266,000 €12,631,500 €10,552,500 €2,360,000 Units HoldersPosition can be LiquidatedCash Inflow: €1,210,000 €18,418,000 €28,597,000 €25,015,000 €14,545,000

Net Cash Flow: €-9,130,000 €-848,000 €15,965,500 €14,462,500 €12,185,00

Return on Investment62.56%

R.E. Projects Cumulative Cash Flows:

€-9,130,000 €-9,978,000 €5,987,500 €20,450,000 €32,635,000 Net Cash Position following on Capital Pepayment (Excl. Dividents)€39,964,500

R.E. Sub-Fund Cash Position: €3,370,000 €5,892,000 €11,879,500 €32,329,500 €64,964,500

Real EstateCompany No 1 (CY)

Real EstateCompany No 2 (CY)

Other Shareholders

D Capital InvestmentFund Limited

(CY)

SKDA Capital LimitedManagement Company

(CY)

Real EstateSub-Fund (Cyprus)

Real EstateSub-Fund

(S.E. Europe)

Subsidiary Real EstateCompany No 1 (SRB)

Other Shareholders

Subsidiary Real EstateCompany No 1 (CY)

Subsidiary Real EstateCompany No 2 (CY)

Group Parent Real Estate Company No 1 (CY)

100%100%

99.99%00.01%

99.99% 00.01%

99.99% 87.5%

100%

43

Real Estate Inventory upon Aquisition of the Targeted Group (Completed Projects)

I/N Project Name Country City 1 Bed 2 Bed 3 Bed 4 Bed Sh. Room Offices Villas Plots

Business Units Available For Sale

1 Alexion Business Centre Cyprus Nicosia 1

Housing Units Available For Sale

1 Amalthia Cyprus Nicosia 1 2

2 Belvedere Cyprus Nicosia 1

3 Plazza Cyprus Nicosia 1

4 Venetian Residences Cyprus Nicosia 1

Land Plots Available For Sale

1 Ayia Varvara Cyprus Nicosia 1

2 Kalliopi Sfika Cyprus Nicosia 1

3 Macheriotis Cyprus Nicosia 1

4 Paliometocho Cyprus Nicosia 1

5 Pera Orinis - Phase A Cyprus Nicosia 5

6 Pera Orinis - Phase B Cyprus Nicosia 1

Total 1 4 0 1 0 1 0 10

Real Estate Inventory upon Aquisition of the Targeted Group (Planned Projects for Development)

I/N Project Name Country City 1 Bed 2 Bed 3 Bed 4 Bed Sh. Room Offices Villas Plots

Residential Development Projects

1 Acropol Residences Cyprus Nicosia 4

2 Apollo Tower Cyprus Nicosia 8 2 2

3 Centrum Cyprus Nicosia 12

4 Cosmopolis Park - Phase B Cyprus Nicosia 4

5 Dedinje Blu Residences Serbia Belgrade 9

6 Levande Hills Cyprus Nicosia 2 8 1

7 Makedonias Residences Cyprus Nicosia 5

8 Nicosia Skyline Life Expirience Cyprus Nicosia 15

9 Ostria Residences Cyprus Nicosia 4

10 Platys Gialos Residences Cyprus Larnaca 24

11 Scorpios Residences Cyprus Paphos 31

Total 2 28 8 23 2 0 68 0

44

Real Estate Projects To Be Developed

Housing Inventory Available For Sale

Land Plots Inventory Available For Sale

Office Inventory Available For Sale

Proposed Projects Development Timeline

I/N Project Name City 2016 2017 2018 2019 2020

1st Half 2nd Half 1st Half 2nd Half 1st Half 2nd Half 1st Half 2nd Half 1st Half 2nd Half

1 Dedinje Blu Residences Belgrade

2 Nicosia Skyline Life Expirience Nicosia

3 Platys Gialos Residences Larnaca

4 Apollo Tower Nicosia

5 Cosmopolis Park - Phase B Nicosia

6 Makedonias Residences Nicosia

7 Levande Hills Nicosia

8 Scorpios Residences Paphos

9 Centrum Nicosia

10 Ostria Residences Nicosia

11 Acropol Residences Nicosia

12 Plazza Nicosia

13 Belvedere Nicosia

14 Amalthia Nicosia

15 Venetian Residences Nicosia

16 Alexion Business Centre Nicosia

17 Kalliopi Sfika Nicosia

18 Paliometocho Nicosia

19 Macheriotis Nicosia

20 Ayia Varvara Nicosia

21 Pera Orinis - Phase B Nicosia

22 Pera Orinis - Phase A Nicosia

45

Project Name CityInitial

InvestmentOpenM.V.

Entry LevelProfit

AdditionalLand Cost

ConstrucionCost

DevelopmentProfit

EstimatedSales T/O

Return OnInvestment

€ € € € € € € %

Platys Gialos Larnaca 1,208,600 1,650,000 441,400 1,100,000 5,100,000 4,591,000 12,000,000 61.97

Acropol Residences Nicosia 493,000 550,000 57,000 1,400,000 907,000 2,800,000 47.91

Alexion Business

CentreNicosia 280,300 400,000 119,700 120,000 400,000 42.70

Amalthia Nicosia 250,000 350,000 100,000 100,000 350,000 40.00

Apollo Tower Nicosia 593,800 840,000 246,200 1,200,000 606,000 2,400,000 33.79

Belvedere Nicosia 104,800 130,000 25,200 25,000 130,000 24.05

Centrum Nicosia 442,400 640,000 197,600 1,450,000 408,000 2,300,000 21.54

Cosmopolis Park -

Phase BNicosia 115,200 157,000 41,800 960,000 325,000 1,400,000 30.21

Kalliopi Sfika Nicosia 410,000 600,000 190,000 190,000 600,000 46.34

Ayia Varvara Nicosia 250,000 430,000 180,000 180,000 430,000 72.00

Levande Hills Nicosia 323,300 560,000 236,700 1,250,000 607,000 2,180,000 38.56

Macheriotis Nicosia 450,000 480,000 30,000 30,000 480,000 6.67

Makedonias

ResidencesNicosia 518,600 710,000 191,400 1,300,000 681,000 2,500,000 37.47

Nicosia Skyline Life

ExpirienceNicosia 9,500,000 12,000,000 15,500,000 37,000,000 72.09

Ostria Residences Nicosia 433,800 573,000 139,200 1,250,000 716,000 2,400,000 42.53

Paliometocho Nicosia 198,400 300,000 101,600 102,000 300,000 51.21

Pera Orinis -

Phase ANicosia 293,000 430,000 137,000 137,000 430,000 46.76

Pera Orinis -

Phase BNicosia 527,400 740,000 212,600 213,000 740,000 40.31

Plazza Nicosia 148,500 215,000 66,500 67,000 215,000 44.78

Venetian Residences Nicosia 369,200 630,000 260,800 261,000 630,000 70.64

Scorpios Residences Paphos 7,300,000 2,800,000 10,100,000 38.36

Dedinje Blu

ResidencesBelgrade 1,329,700 1,980,000 650,300 2,600,000 4,070,000 8,000,000 103.58

Total 8,740,000 12,365,000 3,625,000 10,600,000 35,810,000 32,636,000 87,785,000 59.18

Quantitative Analysis on the Proposed Projects Developments

46

Investment Phase / Description Nicosia Larnaca Paphos Total InCyprus Belgrade

Total InSerbia

TotalWorldwide

Company Acquisition Phase (Year 0)

Open Market Value Of Properties To Be Released 8,735,000 1,650,000 - 10,385,000 1,980,000 1,980,000 12,365,000

Cost For Releasing The Properties From Lenders 6,201,700 1,208,600 - 7,410,300 1,329,700 1,329,700 8,740,000

Unrealised Profit Upon Releasing Of The Properties 2,533,300 441,400 - 2,974,700 650,300 650,300 3,625,000

Unrealised ROI % Upon Releasing Of The

Properties40.85% 36.52% - 40.14% 48.91% 48.91% 41.48%

Projects Development Phase (Years 1-4)

Estimated Sales Turnover 57,685,000 12,000,000 10,100,000 79,785,000 8,000,000 8,000,000 87,785,000

Total Estimated Sales Turnover 57,685,000 12,000,000 10,100,000 79,785,000 8,000,000 8,000,000 87,785,000

Investment In “Available For Sale” Inventory

(a) Housing Units For Resale 872,500 - - 872,500 - - 872,500

(b) Commercial Units For Resale 280,300 - 280,300 - - 280,300

(c) Plots Of Land For Resale 2,128,800 - - 2,128,800 - - 2,128,800

Sub Total - Available For Sale Inventory 3,281,600 - - 3,281,600 - - 3,281,600

Investment For The Acq’n Of Land For Development 10,420,100 2,308,600 - 12,728,700 1,329,700 1,329,700 14,058,400

Investment to cover the Cost Of Construction 22,810,000 5,100,000 7,300,000 35,210,000 2,600,000 2,600,000 37,810,000

Total Estimated Cost of Development 36,511,700 7,408,600 7,300,000 51,220,300 3,929,700 3,929,700 55,150,000

Total Estimated Gross Development Profit 21,173,300 4,591,400 2,800,000 28,564,700 4,070,300 4,070,300 32,635,000

Total Estimated Gross Profit Margin 36.71% 38.26% 27.72% 35.80% 50.88% 50.88% 37.18%

Total Estimated Return On Investment 57.99% 61.97% 38.36% 55.77% 103.58% 103.58% 59.17%

Key Facts on Inventory After Aquisition of the Targeted Group

47

Key Graphical Representations of the Group Targeted for Acquisition

Upon acquisition of the local real estate group, we will gain immediate access to debt-free immovable property licenced for development as per the above product mix chart.

The end product mix to be developed and sold in Cyprus will take the following form:

3One Bedroom

Apartments

32Two Bedroom

Apartments

8Three Bedroom

Apartments

10Plots for Resale

59Villas

24Four BedroomApartments

2Showrooms

1Office

63%Plots For Residential Development And WIP

10%Housing Units (Inventory) 24%

Plots for Resale (Inventory)

3%Business Units

(Inventory)

48

The final product mix in Serbia will take the following form:

The working capital deployment for the full immovable property assets portfolio of the group under acquisition will be as follows:

9Villas

€7,408,600Larnaca

€36,511,700Nicosia

€3,929,700Belgrade

€7,300,000Paphos

49

The estimated sales turnover spread upon the full deployment of the group’s projects development plan with respect to its existing immovable property inventory will be as follows:

The final profits spread following the full execution of the group’s projects development plan with respect to its existing immovable property inventory is expected to be as follows:

€57,685,000Nicosia€12,000,000

Larnaca

€8,000,000Belgrade

€10,100,000Paphos

€4,591,000Larnaca

€21,174,000Nicosia

€4,070,000Belgrade

€2,800,000Paphos

50

THE FUND MANAGER

51

The company and governing law

SKDA Capital Limited is a Cyprus registered private company limited by shares. It was established with the sole object, in accordance with the AIF Law, section 116(3)(b)(ii), of provisioning portfolio management services for D Capital Investment Fund, an AIFLNP. Accordingly, it may take any action and carry out any operations which it may deem useful or necessary for the accomplishment of that sole object to the full extent permitted by law and any relevant regulations.

Members of the Board of Directors and Investment Committee

An overview

We have been very rigorous in the process of enlisting the services of some of the most well-regarded and highly skilled professionals in the fields that the Fund will be active in. This will ensure an optimally efficient and effective decision making that will both protect the interests of the Fund’s unit holders and contribute towards their wealth maximisation.

THE FUND MANAGER

52

(i) The Board of Directors

Andreas Matsas

With ten years of investment banking experience at HSBC Investment Bank in London and Laiki Investments in Cyprus and another twelve years in corporate finance and strategic advisory, Andreas serves today as the CEO of a Cyprus Investment Firm regulated by CySEC.

He is also a member of the Board of Directors at a leading property development group in Russia and on the Board of Directors of an EMI (Electronic Money Institution) regulated by the Central Bank of Cyprus. Finally, he serves as a Strategy Consultant to various groups through an extensive network of associates in Europe, Russia, the Middle East, Iran and China.

Andreas holds a Bachelor’s Degree in Economics & Quantitative Techniques and an MBA from Imperial College, London. He is also a member of the Chartered Institute of Marketing in the UK and the Institute of Management in the UK. He is fully accredited by the International Council of Management Consulting Institutes (ICMCI) as a Management & Financial Consultant and a licensed stockbroker by the Stock Exchange Commission in Cyprus.

Mohammad Suheil Droubi

Professor Mohammad Suheil Droubi (born July, 1955 in Homs, Syria) is a financial consultant and expert in financing solutions for distressed businesses. Since 2012 he has been the managing partner of International Consultancy, a management consultancy firm in Dubai. Professor Suheil’s initial degree was a Bachelor’s in law completed in 1978 at the University of Damascus. In the years of 1979 and 1980 he received two diplomas in Public Law and in Public Administration and Finance. In 1989, he received his Doctorate of Business Administration in Banking and Financial Institutions. Professor Suheil used his educational background in both law and finance to venture into the field of Islamic banking and insurance. With expertise in two fields and a deep knowledge of Islamic religion, Professor Suheil was amongst the first who studied and taught the ever-growing discipline of Islamic finance.

Professor Suheil has published many articles and papers on diverse financial and administrative concepts on subjects such as Islamic financial engineering, Islamic financial products, hedging, credit underwriting, and risk management and mitigation.

Over the course of his career, Professor Suheil helped establish a number of banks and insurance companies in Syria, Lebanon, and Bahrain.

Mhd Khaled Haj Younes

Mhd Khaled Haj Younes is a highly motivated Biomedical Engineer residing in the United Arab Emirates. He obtained his Bachelor’s in Electrical Engineering at the University of Damascus, Syria, where he also became a member of the Syrian Engineers’ Association. He is an innovative and result-oriented leader focused on achieving exceptional results in a highly competitive environment that demands continuous improvement. He is well experienced in driving product, process and customer service improvements while building partnerships with key business decision makers.

Mr. Khaled Haj Younes’ investment scope has been focused in the past 13 years mainly on the healthcare industry. His involvement in healthcare spans the ownership and management of medical facilities to distribution of medical equipment and supplies in the Middle East market. His company, Aramed, represents a number of the most recognizable Europe-an brands and companies. Aramed grew from a local company into an enterprise conducting business primarily in four markets: UAE, Qatar, Bahrain and Oman.

53

(ii) The Investment Committee

Stavros Petrakides

Stavros has been the Managing Director of the CHAPS Developers Group of Companies since its incorporation in 2001. He is very well known for his wide spectrum of knowledge and professional experience, as is evidenced by his direct involvement with the accounting profession, the provision of financial services and the banking industry.

Stavros started his career working as an auditor for one of the “big four” firms in Cyprus and then in the financial services sector where he worked for some of the biggest organisations in the country. He later moved into the banking profession where he served as a credit officer, as a member of the bank’s offshore operations unit and as the head of the bank’s London factoring unit. His next step was to establish his own financial services company, which he later sold to one of the biggest financial services providers in Cyprus, and to incorporate the CHAPS Developers Group of Companies, where he is still serving as a member of the board. He was also recently appointed a non-executive director for two offshore financial services entities which are regulated by CySEC.

Stavros graduated as a Chartered Certified Accountant and is currently a fellow member of the Association of Chartered Certified Accountants (FCCA) and a member of the Institute of Certified Public Accountants of Cyprus (ICPAC).

Michalis A. Koutsoftas

Michalis currently serves as the Chief Financial Officer of the CHAPS Developers Group of Companies, and has more than 16 years of experience in the accounting profession. During the course of his career, Michalis has been directly involved in many business consultation projects, involving both start-up companies and well-established corporations, and has simultaneously taken part in the statutory audit practice of large corporations in Cyprus. Michalis joined the CHAPS Developers Group of Companies in 2007, and during his time with the firm he has been involved in a wide range of managerial activities. He stands out for his professionalism and hard work, his strong sense of business and personal ethics and his constant search for new challenges in his professional life.

Michalis holds an Advanced Diploma in Accounting and Business (AdvDip in Acc. & Bus.) and is a qualified Chartered Certified Accountant (ACCA). He is currently working towards achieving his professional qualification as an International Tax Consultant with the Chartered Institute of Taxation (CIOT). Michalis is a full Member of the Association of Chartered Certified Accountants and an Affiliate of the Institute of Certified Public Accountants of Cyprus (ICPAC).

Kyriacos Talattinis

Kyriacos started his career as trainee Valuation Surveyor from 1992 – 1995, in the Firm Rois Nicolaides & Associates, Chartered Surveyors & Valuers. Then he was Assistant to the Managing Director in the Nicosia, Larnaca and Famagusta offices from 1996-2000 (a period in which he acquired his professional membership to the Royal Institution of Chartered Surveyors). From 2001 to date he has been Managing Director for the Nicosia, Larnaca and Famagusta offices. Since that date he is one of the two Managing Directors in the Firm Rois Nicolaides, K.Talattinis, Ph. Christodoulou, Property Consultants LLC.

Currently, he is responsible for the coordination and supervision of professional personnel in relation to Valuation Reports for a wide variety of properties. He was also involved directly in the AQR of the banking institutions in Cyprus and with the Central Bank for the review of state-owned properties in relation to the public debt.

Additionally, he was member of the professional team for the preparation of the Urban Regeneration Plan of Larnaca Town (1998), part of the team for the Urban Regeneration Plan of Engomi Municipality (2005) and of the team for the Capital Nicosia (2008/2009). He took part in several scientific and professional conferences and discussion panels, as a panel member and a participant as well. He is now the

54

President of the Board of the Cyprus Association of Property Valuers; he served as member of the General Council of the Scientific and Technical Chamber of Cyprus and is an assessor of new graduates for election as members of the Scientific and Technical Chamber of Cyprus and RICS.

Marios Schizas

Marios started his actuarial career in 1999. From 2001 to 2008 he worked in London-based actuarial consultancy as well as investment banking firms. Marios joined Lux Actuaries & Consultants in 2010 and is responsible for the coverage of life insurance clients across all regions of operation on both statutory and consulting projects. He is the Appointed/Registered Actuary to a number of life insurers and reinsurers for companies in Malta and Cyprus, where he also leads a number of projects for product design and pricing, reserving and capital modelling for medium-size insurers on traditional, interest-sensitive and unit-linked products. Through his banking experience in various asset-liability matching exercises he has developed substantial insight into asset-hedging strategies. In addition, he works in several Solvency II projects for European clients and as a reviewing actuary to a number of local and international companies. He is leading the capital projection project for a major UK insurance company and also acts as a consultant on asset-liability management and ring fencing of insurance assets.

Loucas Demetriou

Loucas has over 15 years of experience in the investment sector. He has served for over 12 years as a risk manager, director and head of the middle and back office of an award-winning London-based emerging markets hedge fund. He is also the owner of an Administrative Service Provider company, which is licensed by CySEC, focusing on the provision of administration services to investment firms.

Loucas holds an MA in Finance from the University of Manchester and has graduated with a BSc in Economic Sciences from the Athens University of Economics and Business.

55

(iii) The Fund Manager Structure

Statutory Regulator(CySEC)

Board of Directors Legal AdvisorsTax Advisors

Financial AdvisorsRisk Manager

Team of Experts

SKDA Capital LtdFund Manager

Investment Committee for Each Sub-FundAdvisory Committee

Statutory AuditorInternal Auditor

D Capital Investment Fund Ltd

56

PROFESSIONALASSOCIATES

57

PROFESSIONAL ASSOCIATES

External Auditors – KPMG Limited

KPMG operates as an international network of member firms offering audit, tax and legal, advisory and accounting services. They work closely with us, helping us to mitigate risks and grasp opportunities.

KPMG’s clients include business corporations, governments and public sector agencies and not-for-profit organizations. They look to KPMG for a consistent standard of service based on high order professional capabilities, industry insight and local knowledge

In Cyprus, KPMG has more than 750 professionals working together to deliver value and provide its clients with the highest-quality service.

Internal Auditors – K. Treppides & Co Limited

K. Treppides & Co Ltd was established in 1985. The company’s reputation has continued to expand as a leading practice providing a holistic range of audit, tax, accounting, legal, consulting and financial advisory services to international companies.

Different clients’ success stories reflect the company’s innovative thinking in a range of industry sectors, including banking and investment banking, financial services firms, manufacturing companies, internet based companies, oil and gas companies and shipping companies.

Currently the company has offices in Nicosia and Limassol and employs over 185 people.

Fund Administrator – Treppides Fund Services Ltd

Treppides Fund Services was established in 2012 with a mandate to provide the highest level of professional services, including fund formation, licensing, accounting, administration and advisory.

The firm has the ability to support complex investment structures and meet the strict operational and reporting needs of fund managers. Having established a worldwide network of associates, Treppides Fund Services is able to cover various fund structures such as UCITS funds, hedge funds, private equity funds, real estate funds and others.

Treppides Funds Services Ltd considers its biggest asset to be its multi-disciplinary team, which consists of a blend of experienced lawyers, qualified accountants, MBA holders and other professionally qualified administrative staff. Having the experience, as well as access to state-of-the-art software, the team quickly established the firm as a leading service provider, both in number of funds and assets under administration in Cyprus.

International Legal Advisors – Antis Triantafyllides & Sons LLC

The law firm of Antis Triantafyllides & Sons LLC was founded in 1955. It is one of the oldest and most established law firms in Cyprus, providing high quality legal services in all areas of law to corporations, institutions, government entities and high net worth individuals.

The firm’s main practice focuses on domestic and international corporate law and banking and finance law. The firm also boasts one of the strongest litigation teams in the country and a premier tax department. All of the firm’s teams consist of both local and overseas qualified lawyers and legal consultants, who bring the value of their international experience to

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the firm and ultimately to their clients.

Mr. Antis Triantafyllides, the founder of the firm, was the Cyprus member of the Court of Arbitration of the International Chamber of Commerce throughout the greater part of his legal career.

Local Legal Advisors – Dracos & Efthymiou LLC

Dracos & Efthymiou LLC is a law firm based in Nicosia, Cyprus.

The firm provides legal advice across most areas of commercial law in both contentious and non-contentious fields.

The firm’s clients come from many different industries and range from large multinational corporations and foreign governments to small businesses and individuals who need premium legal advice.

The firm’s objective is to deliver advice that is sound, practical and cost-effective.

The philosophy at Dracos & Efthymiou LLC is not to offer as wide a range of services as possible, but to perform well on a consistent basis. The firm’s size enables it to control the quality of advice its clientele receives and deliver a personal level of service. Its personnel are highly qualified legal advisors who are used to working together with other law firms, accountants and other financial advisors to deliver commercially sound advice.

International Bankers – Barclays plc

Barclays is a transatlantic consumer, corporate and investment bank offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in its two home markets of the UK and the US.

Barclays UK is a personal and business banking franchise with true scale, built around customers’ needs with innovation at its core. It comprises UK retail banking operations, UK consumer credit cards business, UK-based wealth offering, and corporate banking for smaller businesses. With around 22 million retail customers, and almost one million business banking clients, Barclays is a pre-eminent UK financial services provider.

Local Bankers – Bank of Cyprus plc

Founded in 1899 and headquartered in Nicosia, Bank of Cyprus (“BoC”) is the leading banking and financial services group in Cyprus, with significant market shares across all businesses. It is licensed and regulated by the Central Bank of Cyprus.

BoC provides a wide range of financial products and services which include retail and commercial banking, finance, factoring, investment banking, brokerage, fund management, private banking, life and general insurance.

BoC has 135 branches, of which 129 are in Cyprus, 1 in Romania, 4 in the United Kingdom and 1 in the Channel Islands. It also has representative offices in Russia, Ukraine and China.

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CONTACT US

D Capital Investment Fund Ltd

62 Ifigenias StreetOffice 5012003 AcropolisNicosiaCyprus

T: +357 22 468600F: +357 22 468333 E: info@dcapitalfund.comwww.dcapitalfund.com

Legal Disclaimer: This document has been prepared by SKDA Capital Limited (the “Fund Manager”) solely for the purpose of assisting interested parties in deciding whether to proceed with their own independent, in-depth investigation and analysis of the D Capital Investment Fund and does not purport to contain all the information that may or should be required to evaluate the proposed investment. Terms are subject to change. Past performance is no guarantee of future results. The target return objectives are based on estimates of the investment manager and there is no assurance of future results. The performance fee is a fee paid to the manager of the fund, based on the fund’s profits. Details of all management and performance fees are outlined in the Fund’s prospectus. This document is not an offer to sell, or a solicitation for the offer to purchase, a security in any jurisdiction where such an offer, solicitation or sale would be unlawful. An investment in the Fund may only be made pursuant to the applicable offering documents and the appropriate review of the prospectus including but not limited to the Risk Disclosures section. SKDA Capital Limited is registered with the Cyprus Securities & Exchange Commission (“CySEC”) under the provisions of the applicable legislation. CySEC Registration Number RM4/2014.

All stated facts are accurate as at 31/5/16