TASE - EGRE Israel Valuation Review of Romanian Properties for … · 2011-01-03 · DTZ Echinox...

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DTZ Echinox Floreasca II Business Center 40-44 Banu Antonache Street, 3rd Floor Sector 1, Bucharest, Romania

Report for

EGRE Israel

Valuation Review of Romanian Properties for

Related Party Transaction

Brasov

29 December, 2010

Brasov- EGRE Romania

Date of report: 20 December 2010

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1.� Terms of instruction, confidentiality and disclosure 1�

1.1� Our Appointment 1�1.2� Inspection 2�1.3� Information Received 2�

2.� Valuation Details 3�

2.1� Property Details 3�2.2� Valuation Details 3�

3.� Market Commentary 4�

3.1� Regional Market Overview 4�3.2� Transactional Evidence 8�

4.� Assessment of Valuation Assumptions 9�

4.1� Planning and Permitting 9�4.2� Cadastre 9�4.3� Residential Potential 10�4.4� Disposition Costs 10�4.5� Valuation Methodology 10�4.6� Assessment of Valuation in Relation to Valuation Standards 10�4.7� Conclusions 11�

5.� Confidentiality and Disclosure 12�

6.� Definitions of the Bases of Valuation 13�

7.� Photos 17�

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TZ Echinox Consulting

40-44 Banu Antonache Str., sector 1, Bucuresti, Romania Téléphone : +40 21 310 3100 www.dtz.com Registered at the Romanian Chamber of Commerce under no: J40/8550/2002; CUI: RO14860064

EGRE Ltd. For the attention of Gavriel Mei Zehav Chairman of the Audit Committee:

Our ref: CV 2010 0627 Email: [email protected] Direct tel: 972-50 5246 937 Date: 29 December 2010

Dear Sir, Client: EGRE Ltd. Properties: 24 Carpatilor Street, Brasov Romania

1. Terms of instruction, confidentiality and disclosure

1.1 Our Appointment

DTZ has been instructed by EGRE to review the valuation of land plot located at 24 Carpatilor Street, Brasov Romania as carried out by SHM Smith Hodgkinson, with the determining date 20/12/2010. We have been instructed to assess the valuation assumptions, inputs and methodologies. In addition, we will relate to any significant issues relating to compliance with International Valuation Standards for financial reporting, IVS3 (Valuation Reporting) and IVA1 (International Valuation Application) and compliance with disclosure obligations as set out by the Israel SEC. The valuation review is in regard to the sale by EGRE Ltd., an Israeli public company traded on the Tel Aviv Stock Exchange ("EGRE") of its indirect holdings in the projects in Romania to a company owned by the controlling shareholders of EGRE. The transaction will include: (1) the sale of EGRE's holdings in Ranitech Yezum (2007) Ltd, a Cypriot company which holds 50.7% of RSK Construction & Development Ltd., a Romanian company that holds the interests in the project companies in Romania ("RSK"); (2) the assignment of certain shareholder loans extended to RSK and its shareholders by EGRE; (3) the assignment of a consulting agreement between EGRE and RSK.1 We have not been instructed to provide an opinion regarding EGRE Ltd.’s rights in the subject properties, but rather to assess the valuations of the individual properties.

��Transaction as described by the client.�

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1.2 Inspection

The properties were inspected externally by Opher Barzilay, Senior Surveyor and Ionut Florescu (from DTZ Romania) on 16 December 2010. We have assumed that we have been informed of any material factors which affect the valuation.

1.3 Information Received

We have received the following document related to this report: � Copy of a valuation report and addenda dated 20 December 2010 produced by

SHM.

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2. Valuation Details

2.1 Property Details

From the valuation report provided to us we understand that the subject property comprises the following: Site 11,241 m2 POT (land occupation ratio) 76% CUT (land usage coefficient) 5.42 Land Definition (urban/non-urban) urban Planning Status (PUZ, PUD, Permit) Permit Use Residential

2.2 Valuation Details

The following are brief details of the property as presented in the reviewed valuation: Fair Value €5,200,000 Valuation Methodology Market Approach Land Value per Sq.m. €463

Rights Appraised Fee Simple (freehold)

��2 POT and CUT are calculated based on building permit.

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3. Market Commentary

3.1 Regional Market Overview

Economic overview

Short term indicators revealed GDP contraction to -0.5% year-on-year in Q2 2010. The resilience of economic activity remains unpredictable as the political and social unrest are affecting the national economic performance. The economic activity diminished in the third quarter driven by the government’s measures regarding public spending cuts combined with other austerity measures. Activity within industry remains meager; industrial production volume continued to record a decrease of 1% month-on-month in July whilst a similar trend was tracked by the construction output with -27.6% month-on-month. The construction industry was a weak contributor to the GDP within the third quarter. Household expenditures, a contributor to the GDP evolution remained very weak on account of a high unemployment rate and uncertainty in relation to future incomes (especially in the case of public sector employees). It is apparent the average households’ orientation towards saving money rather than spending at present. Thus, household expenditures registered negative results as retail sales decreased by 10% month-on-month in July 2010; non-food products were the most affected. In September, the Romanian authorities met their compliance requirements with the commitments agreed through the Stand-By Agreement from 2009 and received €885 million from the IMF and €1.15 billion from the European Commission. To date, total funds received from the EC and the IMF amount to €14.95 billion. In August 2010 the inflation rate increased to 7.58%, meaning 0.44 percentage points upwards compared to the level registered in the previous month, respectively 7.14% mainly due to the hike in VAT which rose from 19% to 24% from July 1st. According to the NBR projections the inflation rate is estimated to reach 7.8% by the end of 2010 whilst for 2011-year end the inflation rate is expected to reach the central target of 3%. The NBR base rate remained unchanged at a level of 6.25%; the same was applied to the minimum reserve requirements which remained at 15% for RON and 25% for foreign currency. The labour market indicators point to a slight improvement as the unemployment rate marginally decreased from 8.07% in April to 7.39% in August. It is believed that the speed of the recovery in the next period is proportional with the imbalances installed along with the financial turmoil occurred in the fourth quarter of 2008; as these imbalances are still existing the recovery is likely to be slow. Romania remains committed to take further measures aiming to increase the absorption of EU funds and improve the collection rate of tax.

Indicators and economic forecast, 2010–2012 (year-on-year comparison basis, %)

Indicator 2010 2011 2012

GDP 1.03 4.85 6.63

Consumer Price Index (CPI) 2.91 3.57 3.47

Unemployment rate 7.83 6.60 5.28

Consumer spending 2.30 5.29 6.46

Industrial production 3.95 8.35 7.30

Source: Oxford Economics

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Romanian Residential Market

The turmoil within international financial markets has shown repercussions on the Romanian real estate market with severe effects for the residential segment. This has caused a marked reduction in the volume of transactions with activity below the level of recent years and downturn adjustment of the prices to a peak of 50%. Moreover, starting with 2008 we have witnessed development portfolio being reconfigured, development projects being dissolved and construction process being suspended. Developers are now willing to finalise only the most advanced construction works whilst the planned developments are to be put on hold. In the past few years, the government has implemented policy to stimulate the demand for purchasing new dwellings. The measures include reducing the VAT to 5% for units of no more than 120 sq m built area and a price under €100,000. Another measure is Prima Casa program in which the government guarantee for loans under 60,000eur, for which the advance payment can be only 5%. Romania currently has an end-user market where the winners will be the projects which offer the best price/quality ratio, projects already built or those in an advanced stage of development. Also we continue to witness limited activity of investment funds and private investors in the market. Regarding the future evolution of residential prices, particularly their downturn, we are of the opinion that the general level of prices have already reached a resistance threshold, of approximately 40-50%, lower than the maximum values reached in the first half of 2008.

Brasov Residential Market

Over the past ten years it has been noted that the residential real estate market from Brasov City has gone through a period of intense development, which has slowed since 2008. Due to increasing income and availability of mortgages, demand has picked up, particularly in the medium and upper – medium sectors. Furthermore, prices of older residential stock have significantly increased during the last decade, a three times increase being reported at the peak moment, at the end of 2007. Due to the increasing demand a number of residential projects were started in the subject city between 2004 and 2007. Thanks to its attractiveness as a tourist destination, the entire Prahova Valley has taken off as a major area for development of holiday homes and recreational villas. Various residential districts can be identified according the age and quality of the housing stock and also by the income class of the population. The majority of the housing stock was built in the Communist period. The key residential areas outlined by DTZ’s market analysis are as follows:

� High-class residential neighbourhoods: Prund, Schei and Groaveri (in the south-west of the city), Blumana district (located in the city centre) and Centrul Civic characterised by a high density of population ranking second after Astra district. The Centrul Civic district is home of the most important buildings from the city – offices, banks, residential units.

� Medium class residential neighbourhoods: Astra (one of the most crowded residential neighborhood) and Racadau (Valea Cetatii) district characterised as a middle class housing area thanks to the proximity of green areas and spaciousness of dwellings, although the neighbourhood does not benefit the presence of significant commercial units. Racadau is the newest neighbourhood in Brasov, entirely built after 1970. The district of Noua, located in the south-east is defined by apartment block houses. The city has plans for extensive redevelopment and regeneration of the district with the help of the European Union funding to unfold the high tourism potential of the neighbourhood. Florilor district is also described as middle class housing areas. The mentioned neighbourhoods comprise ca 33% of Brasov City’s population as recorded in 2002, further to the latest Census of population and dwellings.

� Low class residential neighbourhoods: Tractorul and Bartolomeu districts located in the north and north-west of the city can be characterized as low income class settlements

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of deteriorating apartment blocks, mainly destined for the inhabitants that used to work in the surrounding industrial sites. Other residential neighbourhoods include Rasaritul, Sprenghi, Mihai Viteazul and Brasovul Vechi. Outside Brasov City the well-known mountain resorts Poiana Brasov, Predeal and Sinaia are dominated by holiday residential projects. As experienced in other important Romanian cities, such as Timisoara or Ploiesti, the north of Brasov City determined by the triangle San Petru Harman and Prejmer, Stupini and up to Bod is expected to see large amounts of residential developments, mainly individual villa type housing.

Official statistical data on housing stock is available up to 2008. The data indicates a relatively slow development of the housing stock with only in 2008 a significant amount of completions. In 2009 and 2010, the residential market has been blocked with only sporadic deliveries.

Housing stock in Brasov City (2006 – 2008)

Brasov City 2006 2007 2008 Number of dwellings 112,420 112,838 113,604 No. of rooms 265,222 267,151 269,426 Net area 4,473 4,513 4,550

According to the latest statistical data, the residential stock in the subject city stands at 113,604 units, representing 50% of the total stock of 227,209 units, recorded in the same period for the whole Brasov County. Considering a number of 278,712 inhabitants registered in 2008 for Brasov City and the 113,604 housing stock this works out to 407 dwellings per 1,000 inhabitants, in line with the overall average recorded for the EU member states joining in 2007, which stood at 400 units in 2002 – 2003 period. It has been observed the high private ownership ratio, considering that in 2002 over 95% of all dwellings was in private ownership, an extremely high figure even in wider EU context. In the last two years starting with the 2008 financial crisis, the decreasing demand for new residential accommodations drove the prices down. For the central areas the prices can reach €1,250/sq m + VAT, as in the case of Bellevue Residence compound developed by Gabi’s Development, while in other parts of the city the prices are ranging between €800 – 1,000/sq m + VAT as it is outlined below according the type of development:

Low to lower middle class under €800/sq m + VAT Middle class €800 – 1,000/sq m + VAT Higher middle class €1,000 – 1,250/sq m + VAT Upper class €1,250/sq m and up + VAT

According DTZ’s analysis upon the multi-family residential market from Brasov city, there are more than 4,000 apartments in the pipeline for the next three to five years within the subject area. The northern, western and south-eastern areas will see the largest amounts of residential development. In terms of new residential development, an important competition factor comes from the substantial deliveries of holiday apartment stock foreseen within the ski resorts. The largest known project in the city is Avantgarden, with a total of 2,361 units to be delivered, out of which approximately 40% have already been completed or are under construction.

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Major multi-family residential projects in Brasov City

Zone Project Developer No. of apartments Total Existing Planned

Centre - East Privilegio Brasov Volumetric Traian Park 156 0 156

West Avantgarden I Maurer&Kasper Construct

309 309 0

West Avantgarden II Maurer&Kasper Construct

252 252 0

West Avantgarden III Kasper Construct 1,800 440 1,360

West La ResiDance Ireland House and Holland Development 825 264 561

North Brasov Garden SYG 774 0 774 North - East Naturalis BSR Europe 650 0 650 South Tampa Gardens Kronvest 407 407 0

Centre Bellevue Residence

Gabi’s Development 144 144 0

Centre Sub Cetate Ancodom Brasov 36 36 0

South - West Seasons Residence

Gespi Investment 174 174 0

South - East Evocasa Viva Adama Holding 536 0 536 TOTAL 6,063 2,026 4,037

Source: DTZ Research Avantgarden project developed by Maurer&Kasper Construct and located at the western outskirts of Brasov is planned to be delivered within 3 distinctive phases: Avantgarden 1 comprising 309 residential accommodations, Avantgarden 2 with an additional 252 units and Avantgarden 3 with another 1,800 units out of which a total of 440 units have been already delivered or are in an under construction stage. The delivered and units under construction are reportedly 85% sold. According the information provided, 30-35% of the buyers reportedly originate from Brasov, around 40% from Bucharest and around 30% from abroad. Interest in acquiring apartments comes from international investors such as United Kingdom, Italy, USA, Spain, Germany and Belgium. La ResiDance is a low-rise residential apartment development comprising of 4 floors with underground parking. Developed in a joint-venture between Ireland House and Holland Development Group, the apartments are targeting the middle income segment. The project is located in the outskirts, in close proximity to Avantgarden project, at approximately 2 km west from the city centre. The project will benefit from an gym, a children’s playground and an all-weather soccer pitch. The entire project consists in the delivery of 825 units in different stages, the completion term being uncertain for the moment. Tampa Gardens provides a total of 407 apartments split between 2 phases. The first phase comprises of 256 apartments (2 buildings – Block A & B), while the second one 151 units (block C). The project lays at the foot of Tampa Hill in the south of the city, provided with underground and above ground parking spaces, a swimming pool and sports and leisure facilities. To date it has been reported that more than 80% of the entire project is sold out. Evocasa Viva residential compound is projected by Adama Holding, an important player on the Romanian real estate market with several projects in the pipeline in cities such as Bucharest, Ploiesti, Bacau, Iasi and with many others to come in Timisoara, Oradea, Arad and Suceava. This project of 536 middle class apartments will be erected in the district of Noua, near the city limits, few minutes away from the most important commercial area in the city. Bellevue Residences is developed by Gabi’s development company. The project comprises 144 apartments out of which approximately 90% are already sold, with around half of the purchasers coming from Brasov and the other half from Bucharest. British investors have reportedly also purchased several apartments within the compound.

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In the forthcoming period of time, significant mixed-use projects comprising also residential units have been announced for delivery. Important companies as Tiriac Imobiliare are projecting deliveries in the proximity of the IUS platform, while Centerra Capital Partners is planning the redevelopment of Tractorul industrial platform; first, the project will start with a large scale retail development projected to be delivered within 2 phases in a total gross built area of 280,000 sq m and 85,000 sq m GLA. Coresi Shopping City will be anchored by Auchan hypermarket which will occupy 10,500 sq m GLA. According to developer’s information all sections of the project (commercial and residential) might start simultaneously, however the focus of the developer is currently exclusively on the commercial part of the project. As for Tiriac Imobiliare project, this is currently on hold.

3.2 Transactional Evidence

Land Sales Transactions

The land market outside Bucharest is relatively poor in offers and appropriate comparables are not always easy to identify. The subject property located in Astra district is a large land area appropriate for residential development. Astra district is close to the city centre, developed along the main streets like Carpatilor or Calea Bucuresti containing mostly blocks of flats and several commercial centres. Currently the land market in this area is not very active. The offers mainly include small land plots with areas between 500 and 1500sqm for single house development. In these cases the asking prices vary between 300eur/sqm and 500eur/sqm. Offers for land plots with larger areas are rare but the prices per square meter have the same level as in the case of smaller plots. The main parameters that influence the asking prices for larger plots are the urbanism parameters, the access and the distance to utilities. We are aware of the following comparable market data in relation to the subject property. These examples are not exhaustive but include a variety of properties offered for sale which we have found to be the comparable in particular ways. Comparable 1 - Land plot in Astra area, close to Metrom Stadium, having an area of 4,357m2 and an asking price of 500eur/sqm. The land is intravillan, buildable with a maximum allowed height of GF+15, with all utilities nearby and direct access to asphalted street; Comparable 2 - Land plot in Astra area, south east of the subject, having an area of 10500m2 and an asking price of 450eur/sqm. The land is intravillan but not – buildable (it is grassland), with all utilities nearby and direct access to a paved street; Comparable 3 - Land plot in Noua Area, south east of the subject, having an area of 7322m2 and an asking price of 400eur/sqm. The land is intravillan, currently not buildable (grass land) but according PUG Brasov proposed for a maximum height of GF+18, with all utilities nearby and direct access to main street in the area; Comparable 4 - Land plot in Astra area, on Carpatilor street at the junction with Poienelor street, having an area of 10,000m2 and an asking price of 300eur/sqm. The land is intravillan, with all utilities nearby and direct access to main street in the area;

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4. Assessment of Valuation Assumptions

4.1 Planning and Permitting

The valuer indicates that the analyzed property is subject to a proposed residential development. The valuer mention that based on the information received from the client, on the plot of land 4 towers will be built with 2BS+GF+16F+M height regime each, total built area of 54,000 sqm above ground (~ 650 apartments), ~ 520 underground parking places and 280 storage rooms at the BS (for 50% of the apartments) plus 324 outdoor parking places to service the facility. DTZ has been provided with the building permit 753 from 15 August 2008 which allows for the constructions of a number of blocks of apartments having 2BS+GF+16F+M. the building permit will expire on 15 August 2011. Based on this, we consider that the assumptions related to urbanism regulations and planning made by the valuer are reasonable and consistent with the current situation.

4.2 Cadastre

The valuer indicates that the analyzed property includes the following topographic numbers: Topographic numbers: 6749/4/3, 6749/5, 6749/2/2/1/1, 6749/2/2/1/3, 6749/2/2/1/2 DTZ has been provided with the cadastral book excerpts indicating that the subject property includes 3 plots as follows:

cad CF Former Topo no. area (sqm) Plot 1 104327 104327 6749/6 164 Plot 2 101392 101392 6749/5 1,610 Plot 3 8563 115240 6749/2/2/1/1

6749/2/2/1/2 6749/2/2/1/3 6749/4/3

9,467

Total area 11,241 We noted the fact that the land plot of 164sqm having the cadastral number 104327 is missing from the SHM valuation. Beside this missing document, we consider that the assumptions related to cadastral situation made by the valuer are reasonable and consistent with the current situation.

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4.3 Residential Potential

The reviewed valuation clearly describes the residential real estate market in Brasov, and details the development of infrastructure near the subject property. The reviewed valuation takes into account the different parameters of the subject property in relation to other residential project. A sensitivity analysis is provided.

4.4 Disposition Costs

The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net market value for financial reporting as required by RICS, IVA1 and Israeli Valuation Standard 17,1. This is the generally accepted Market practice in Romania which ignores the stamp duty, notary fees and associated taxes. The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net realisable value for financial reporting. We would allow for transaction costs of 1% of the Market Value to allow for tax paid by the seller (only for companies).

4.5 Valuation Methodology

The reviewed valuation is based on the Market (Comparison) Approach since this is the preferred method for valuing land. However due to the lack of transactional evidence, in carrying out this valuation review, the undersigned carried out valuation calculations based on the Residual Value Approach (Investment Approach). This approach yielded similar values to the Market Approach. This approach was based on transactional evidence of residential properties (approximately €900 per sm.), and assumed a 33 month period for development and sale of the individual residential units. The developer profit of 20% assumed in our calculations was in line with the actual developer profit in several recent projects which ranged from 12-25%. (As reported by publicly traded companies).

4.6 Assessment of Valuation in Relation to Valuation Standards

4.6.1 The data provided in the reviewed valuation is sufficient to determine value on a Market Basis as per clause 3.2 of the International Valuation Standards, Sixth Edition “White Paper, Valuation in Emerging Markets”.

4.6.2 In accordance with Israeli Valuation Standard 17.1 (Valuations for Financial Reporting according to the Israel Securities Law 1968 ) and IVA 1, general Details of the Appraiser’s engagement were outlined in the valuation including the objective of the valuation, the addressee and the rights to be valued.

4.6.3 In accordance with clauses 4.11 and 4.12 of Standard 17.1, the appraiser detailed the ownership rights and planning conditions of the subject property.

4.6.4 In accordance with clauses 4.14 and 4.15 of Standard 17.1 the appraiser detailed his considerations for the valuation methodology adopted, and the basis for his calculations. The calculations were clear and detailed in a chart.

4.6.5. The valuation relates to the full freehold rights in the valued property and does not deal with the rights of the individual stakeholders.

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4.7 Conclusions

The undersigned concludes that the reviewed valuation reflects Market Value and complies with the disclosure requirements of the Israeli and International valuation standards for financial reporting pertaining to land for development in an emerging market.

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5. Confidentiality and Disclosure

The contents of this Report and appendices are specific to the purpose to which they refer and are for that use only. We hereby explicitly consent to the inclusion of this Report and reference thereto in the Transaction Report that will be filed by EGRE with the Tel Aviv Stock Exchange and the Israeli Securities Authority on January 2011 and will relate to the transaction. It is understood that this valuation review will be published by the company in its reports to investors and the Israeli Stock exchange. However, in accordance with current practice, no responsibility is accepted to any other party in respect of the whole or any part of their contents. Before this Report, or any part thereof, is reproduced or referred to, in any document, circular or statement, and before its contents, or any part thereof, are disclosed orally for any other purpose, the valuer's written approval as to the form and context of such publication or disclosure must first be obtained. For the avoidance of doubt such approval is required whether or not DTZ is referred to by name and whether or not the contents of our report are combined with others. Yours faithfully,

Bogdan Sergentu Adina Cooper, Consultant DTZ Echinox DTZ Important Note: 1. This is a "desktop" overview provided for initial guidance only. It is not intended to be

and must not be relied upon as a substitute for the valuation conclusions that would be reached by DTZ following a full valuation commissioned and carried out on DTZ's standard terms and conditions. Such conclusions may well be materially different.

2. The opinions detailed above are totally dependent on the adequacy and accuracy of

the information supplied and the assumptions made. It should be noted that should these prove to be incorrect, the accuracy of this opinion will be affected.

3. We have not been advised of the purchase price of the property. If instructed to

undertake a valuation of the property, we will be required to investigate any recent marketing of the property. Any recent marketing is likely to provide the best evidence as to the current Market Value of the asset and therefore our findings following such an investigation may have a material impact on the Market Value reported. If a purchase price has been agreed we recommend that we are advised of it as soon as possible so we can reconsider our desktop opinion.

4. If any circumstances surrounding this property change between the issue of this

desktop review (such as a change in the purchase price) we may need to revise our desktop opinion.

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6. Definitions of the Bases of Valuation

Market Value

Market Value as defined in Practice Statement 3.2 of the RICS Valuation Standards ("the Red Book") and applying the conceptual framework which has been settled by the International Valuation Standards Committee (IVSC). Under PS 3.2, the term "Market Value" means "The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion." The conceptual framework settled by the IVSC is included in PS 3.2 and is reproduced below:- "3.2 The term property is used because the focus of these Standards is the valuation of

property. Because these Standards encompass financial reporting, the term Asset may be substituted for general application of the definition. Each element of the definition has its own conceptual framework.

3.2.1 'The estimated amount ...' Refers to a price expressed in terms of money (normally in the local currency) payable for the property in an arm's-length market transaction. Market Value is measured as the most probable price reasonably obtainable in the market at the date of valuation in keeping with the Market Value definition. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of Special Value.

3.2.2 '... a property should exchange ...' Refers to the fact that the value of an asset is an estimated amount rather than a predetermined or actual sale price. It is the price at which the market expects a transaction that meets all other elements of the Market Value definition should be completed on the date of valuation.

3.2.3 '... on the date of valuation ...' Requires that the estimated Market Value is time-specific as of a given date. As markets and market conditions may change, the estimated value may be incorrect or inappropriate at another time. The valuation amount will reflect the actual market state and circumstances as of the effective valuation date, not as of either a past or future date. The definition also assumes simultaneous exchange and completion of the contract for sale without any variation in price that might otherwise be made.

3.2.4 '... between a willing buyer ...' Refers to one who is motivated, but not compelled to buy. This buyer is neither over-eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than on an imaginary or hypothetical market which cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present property owner is included among those who

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constitute 'the market'. A valuer must not make unrealistic assumptions about market conditions or assume a level of Market Value above that which is reasonably obtainable.

3.2.5 '... a willing seller ...' Is neither an over-eager nor a forced seller prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the property at market terms for the best price attainable in the (open) market after proper marketing, whatever that price may be. The factual circumstances of the actual property owner are not a part of this consideration because the 'willing seller' is a hypothetical owner.

3.2.6 '... in an arm's-length transaction ...' Is one between parties who do not have a particular or special relationship (for example, parent and subsidiary companies or landlord and tenant) which may make the price level uncharacteristic of the market or inflated because of an element of Special Value, (defined in IVSC Standard 2, para. 3.11). The Market Value transaction is presumed to be between unrelated parties each acting independently.

3.2.7 '... after proper marketing ...' Means that the property would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably obtainable in accordance with the Market Value definition. The length of exposure time may vary with market conditions, but must be sufficient to allow the property to be brought to the attention of an adequate number of potential purchasers. The exposure period occurs prior to the valuation date.

3.2.8 '... wherein the parties had each acted knowledgeably, prudently ...' Presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the property, its actual and potential uses and the state of the market as of the date of valuation. Each is further presumed to act for self-interest with that knowledge and prudently to seek the best price for their respective positions in the transaction. Prudence is assessed by referring to the state of the market at the date of valuation, not with benefit of hindsight at some later date. It is not necessarily imprudent for a seller to sell property in a market with falling prices at a price which is lower than previous market levels. In such cases, as is true for other purchase and sale situations in markets with changing prices, the prudent buyer or seller will act in accordance with the best market information available at the time.

3.2.9 '... and without compulsion' Establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it.

3.3 Market Value is understood as the value of a property estimated without regard to costs of sale or purchase and without offset of any associated taxes."

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Market Rent

Market Rent as defined in Practice Statement 3.3 of the Red Book. Under PS 3.3 the term "Market Rent" means 'The estimated amount for which a property, or space within a property, should lease (let) on the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm's-length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion.' The commentary from the Red Book is reproduced below. "1. The definition of Market Rent is the Market Value (MV) definition modified by the

substitution of a willing lessor and willing lessee for a willing buyer and willing seller, and an additional Assumption that the letting will be on 'appropriate lease terms'. This definition must be applied in accordance with the interpretive commentary of MV at PS3.2, together with the following supplementary commentary:

1.1 '…willing lessor and willing lessee…' The change in the description of the parties simply reflects the nature of the transaction. The willing lessor is possessed with the same characteristics as the willing seller, and the willing lessee with the same characteristics as the willing buyer, save that the word 'price' in the interpretive commentary to MV should be changed to 'rent', the word 'sell' changed to 'let' and the word 'buy' changed to 'lease'. 1.2 '…appropriate lease terms…' MR will vary significantly according to the terms of the assumed lease contract. The appropriate lease terms will normally reflect current practice in the market in which the property is situated, although for certain purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the frequency of rent reviews, and the responsibilities of the parties for maintenance and outgoings, will all impact on MR. In certain States, statutory factors may either restrict the terms that may be agreed, or influence the impact of terms in the contract. These need to be taken into account where appropriate. Valuers must therefore take care to set out clearly the principal lease terms that are assumed when providing MR. If it is the market norm for lettings to include a payment or concession by one party to the other as an incentive to enter into a lease, and this is reflected in the general level of rents agreed, the MR should also be expressed on this basis. The nature of the incentive assumed must be stated by the valuer, along with the assumed lease terms.

MR will normally be used to indicate the amount for which a vacant property may be let, or for which a let property may re-let when the existing lease terminates. Market Rent is not a suitable basis for settling the amount of rent payable under a rent review provision in a lease, where the actual definitions and Assumptions have to be used."

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Existing Use Value

Existing Use Value as defined in UK Practice Statement 1.3 of the Red Book and applying the conceptual framework of Market Value which is reproduced above together with the supplementary commentary which is included in items 2 – 5 of UK PS 1.3. Under UK PS 1.3, the term "Existing Use Value" is defined as follows:- " The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the property required by the business and disregarding potential alternative uses and any other characteristics of the property that would cause its Market Value to differ from that needed to replace the remaining service potential at least cost".

Forced Sales According to Clause 27 of the IVSC Standards. (Draft June 2010) “The term “forced sale” is often used in circumstances where a seller is under compulsion to sell and a proper marketing period is not available. The price that could be obtained in these circumstances will depend upon the nature of the pressure on the seller and the reasons why proper marketing cannot be undertaken. It will also reflect the consequences for the seller of failing to sell within the period available. Unless the nature of and the reason for the constraints on the seller are known, the price obtainable in a forced sale cannot be realistically estimated. The price that a seller will accept in a forced sale will reflect its particular circumstances rather than those of the hypothetical willing seller in the market value definition. The price obtainable in a forced sale has only a coincidental relationship to market value or any of the other bases defined in this standard. A “forced sale” is a description of the situation under which the exchange takes place, not a distinct valuation basis.” (bold added by the undersigned). According to RICS PS 2.3 “The term “forced sale value” must not be used.

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7. Photos

��


Report for

EGRE Israel



Timisoara

29 December, 2010

Timisoara- EGRE Romania


�











7.� Photos 16�

��

�DTZ Echinox Consulting



Your ref: *** Our ref: CV 2010 0627 Email: [email protected] Direct tel: 972-50 5246 937 Date: 29 December 2010

Dear Sir, Client: EGRE Ltd. Properties: Green Acres - Strada Aurel Pop, nr.11 - Torontalului, Timisoara, Judetul Timis, Romania


1.1 Our Appointment

DTZ has been instructed by EGRE to review the valuation of land plot located at Strada Aurel Pop, nr.11 - Torontalului, Timisoara as carried out by SHM Smith Hodgkinson, with the determining date 20/12/2010. We have been instructed to assess the valuation assumptions, inputs and methodologies. In addition, we will relate to any significant issues relating to compliance with International Valuation Standards for financial reporting, IVS3 (Valuation Reporting) and IVA1 (International Valuation Application) and compliance with disclosure obligations as set out by the Israel SEC. The valuation review is in regard to the sale by EGRE Ltd., an Israeli public company traded on the Tel Aviv Stock Exchange ("EGRE") of its indirect holdings in the projects in Romania to a company owned by the controlling shareholders of EGRE. The transaction will include: (1) the sale of EGRE's holdings in Ranitech Yezum (2007) Ltd, a Cypriot company which holds 50.7% of RSK Construction & Development Ltd., a Romanian company that holds the interests in the project companies in Romania ("RSK"); (2) the assignment of certain shareholder loans extended to RSK and its shareholders by EGRE; (3) the assignment of a consulting agreement between EGRE and RSK.1 We have not been instructed to provide an opinion regarding EGRE Ltd.’s rights in the subject properties, but rather to assess the valuations of the individual properties.

��Transaction as described by the Client.�

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1.2 Inspection

The properties were inspected externally by Opher Barzilay, Senior Surveyor and Daniel Orha (from DTZ Romania) on 14 December 2010. We have assumed that we have been informed of any material factors which affect the valuation.



SHM. We have been provided with no further documentation.

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From the valuation report provided to us we understand that the subject property comprises the following: Site 53,545m2 POT (land occupation ratio) 33%, CUT (land usage coefficient) 3.3 Land Definition (urban/non-urban) urban Planning Status (PUZ, PUD, Permit) PUZ: Decision no. 418 issued on

30.09.2008 Use apartments and retail units/ services &

administrative buildings


The following are brief details of the property as presented in the reviewed valuation: Fair Value €15,300,000 Valuation Methodology Market Approach Land Value per Sq.m. €285 Rights Valued Fee Simple (freehold)

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Economic overview



Indicator 2010 2011 2012

GDP 1.03 4.85 6.63






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Timisoara Residential Market

When compared to Bucharest, the local authorities in Timisoara are rather strict about the approved development plan of the city. The so called ‘Metropolitan Timisoara’ foresees the extension of the limits of the city towards the north of the city, therefore including what are now small villages in the vicinity of Timisoara like Dumbravita, Ghiroda, Giarmata, Giroc, Mosnita Noua, Ortisoara, Sag. Similar to Bucharest, the north of Timisoara has become a location preferred by high-income residential developments, mostly villas built by private individuals. These new neighbourhoods are only housing locations, without services and supplementary facilities like kindergartens, playgrounds, schools, gym, medical centers, spa, cleaning companies, pharmacies, etc. The new supply of blocks of flats has been until now relatively poor. Most of these developments are stand alone blocks of flats on small plots of land completed by private individuals. Regarding location, the new residential developments are covering almost all major areas. Some of these projects developed during the last years are presented below:

Nr. Name of the project Location Developer Units Type

1 Calea Lugojului - Ghiroda

Calea Lugojului Private individuals 60 Villas

2 Rudolf Walter East ANL 40 Villas 3 Mosnita Noua Mosnita Sedako 60 Villas 4 Calea Urseni South-East Private individuals 80 Villas 5 Lidia East Private individuals 120 Villas 6 Calea Girocului South Braytim 90 Villas

7 Calea Torontalului

West (Sanicolaul Mare road)

Private individuals 40 Villas

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8 Dumbravita Sat Dumbravita Kapa Imobiliare 250 Villas

9 Banat 1 Dumbravita

Degran, RHM Cartier, Immoserv, Sedako, Euroconstruct

150 Villas

10 Banat 2 Dumbravita Private individuals 130 Villas

11 Dumbravita - Calea Aradului

Dumbravita Private individuals 50 Villas

12 Mosnita Veche Mosnita Private individuals N/a Villas

13 Cartier Rezidential Vest Sacalaz

Sacalaz area Mir Imobiliare 353 Villas

14 Mosnita Noua Mosnita Sedako 119 Villas

15 Proiect Rezidential Sag

Sag area Private individuals n/A Villas

16 Campina 1 Campina area Banu Construct 215 Apt. 17 Campina 2 Campina area Banu Construct 165 Apt.

18 Complex Rezidential Stuparilor

Stuparilor 45A Werk MB Construct 42 Apt.

19 Noua Timisoara ILSA area (Bd. Take Ionescu - Bega river)

Grupul Imobiliar Tender

1,500 Apt.

20 The Ring Aradului St./ Torontarului St.

Sinergy Est 242 Apt.

21 Palazzo Europa 1

n/A Sinergy Est 51 Apt.

22 Palazzo Europa 2

n/A Sinergy Est 46 Apt.

23 Ansamblul Amicitiei

Amicitiei St., Lipovei area

Impredil 48 Apt.

24 Brio Residence Gheorghe Baritiu St.

Victor Imobiliar & Business Development Timisoara

61 Apt.

The fastest developing areas in terms of new residential projects are the student camp areas such as Ionescu, Calea Aradului, Giroc, Cetatea, Lipoveni, Campina areas. Demand for these areas has been higher then for the rest of the city, especially for 1-2 rooms’ apartments with areas between 40-75 sq m. Price estimations for these new residential dwellings are ranging between €800 – 1,100/sq m.



The land market outside Bucharest is relatively poor in offers and appropriate comparables are not always easy to identify. The subject property located in Torontalului area is a large land plot appropriate for residential development. Torontalului district is has been developed along Torontalului street, which is a main egress route of the city leading from the centre towards north –west.

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Currently the land market in this area is not very active. The offers for plots of land close to the city centre are scarce, including only small plots of land. Towards the periphery, the offer becomes more consistent with several offers active on the market. The land asking prices vary from 600eur/sqm in the case of small land plots within the city centre to less then 50eur/sqm for larger plots outside the boundaries of the city. The main parameters that influence the asking prices for larger plots are the urbanism parameters, the access and the distance to utilities. We are aware of the following comparable market data in relation to the subject property. These examples are not exhaustive but include a variety of properties offered for sale which we have found to be the comparable in particular ways. Comparable 1 - Land plot in Torontalului area, close to Metro Cash& Carry, having an area of 15,000m2 and an asking price of 50eur/sqm. The land is intravillan, buildable for industrial use, with all utilities nearby and direct access to asphalted street; Comparable 2 - Land plot in Torontalului area, close to Coca Cola factory, having an area of 81,300m2 and an asking price of 85eur/sqm. The land is intravillan, buildable for industrial use, with all utilities nearby and direct access to asphalted street; Comparable 3 - Land plot in Torontalului area, on Dej Street, having an area of 620m2 and an asking price of 400eur/sqm. The land is intravillan, buildable for apartment building, with all utilities nearby and secondary street access; Comparable 4 - Land plot in Aradului area, on Textilistilor Street, having an area of 765m2 and an asking price of 183eur/sqm. The land is intravillan, buildable for low density residential use, with all utilities nearby and access from concrete covered road; Comparable 5 - Land plot in Mehala area, on Cincinat Pavelescu Street, having an area of 689m2 and an asking price of 50eur/sqm. The land is intravillan, buildable for low density residential use, with all utilities nearby and access from concrete covered road; Comparable 6 - Land plot in Mehala area, near Piata de Gross, having an area of 744m2 and an asking price of 148eur/sqm. The land is intravillan, buildable for low density residential use, with all utilities nearby and access from concrete covered road;

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The valuer indicates that the analyzed property is subject to a proposed residential development. The valuer mention that has been provided with an approved PUZ which allows for the construction of a mixed use project having a maximum height of 2BS+GF+2/3F up to BS+Gf+20F. In the valuation, the valuer takes into account a CUT of 3.3 and a POT of 33% as part of the PUZ. DTZ has been provided with plans which are part of a PUZ regarding the subject property which indicates that on the subject plot of land 10 towers could be built with 2BS+GF+14F+2RF and 2BS+GF+17F+2RF height regime, with a total built area above ground of 138,923m2 equivalent of a CUT of 2.58. Based on this, we consider that the assumptions related to urbanism regulations and planning made by the valuer are reasonable and consistent with the current situation.

4.2 Cadastre

The valuer indicates that the analyzed property includes a number of 17 parcels or cadastral numbers totaling an area of 53,695sqm. DTZ has been provided with the cadastral book excerpts and cadastral plans indicating the land is formed of the following parcels: ��

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The reviewed valuation clearly describes the residential real estate market in Timisoara, and details the development of infrastructure near the subject property. The reviewed valuation takes into account the size of the subject property in relation to other residential projects. The reviewed valuation details the lack of trade in land for development purposes. The valuer has discounted 10% from the market asking price for similar plots in addition to making requisite adjustments in order to value the subject property.


The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net market value for financial reporting as required by RICS, IVA1 and Israeli Valuation Standard 17,1. This is the generally accepted Market practice in Romania which ignores the stamp duty, notary fees and associated taxes. The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net market value for financial reporting. We would allow for transaction costs of 1% of the Market Value to allow for tax paid by the seller (only for companies).


The reviewed valuation is based on the Market (Comparison) Approach since this is the preferred method for valuing land. However due to the lack of transactional evidence, in carrying out this valuation review, the undersigned carried out valuation calculations based on the Residual Value Approach (Investment Approach). This approach yielded lower values than the Market Approach. This approach was based on transactional evidence of residential properties (approximately €950 per sm.), and assumed a long period for development and sale of the individual residential units (8.5 years). The developer profit of 15% assumed in our calculations was in line with the actual developer profit in several recent projects which ranged from 12-25%. (As reported by publicly traded companies).







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4.7 Conclusions


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2. We have not formally inspected the property nor have we undertaken full verification

or research. The opinions detailed above are totally dependent on the adequacy and accuracy of the information supplied and the assumptions made. It should be noted that should these prove to be incorrect, the accuracy of this opinion will be affected.





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Market Value







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Market Rent





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Existing Use Value



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7. Photos

��


Report for

EGRE Israel



Iasi

29 December, 2010

��












6.� Definitions of the Basis of Valuation 11�

7.� Photos 15�

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Our ref: CV 2010 0627 Email: [email protected] Direct tel: 972 50 5246 937 Date: 29 December 2010

Dear Sir, Client: EGRE Ltd. Properties: Mountain View - Valea Lupului Village, Valea Lupului

Commune, Iasi County

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1.1 Our Appointment

DTZ has been instructed by EGRE to review the valuation of Mountain View Apartments, Valea Lupuluie Village, Valea Lupului Commune, Iasi County,Romania,as carried out by SHM Smith Hodgkinson, with the determining date 20/12/2010. We have been instructed to assess the valuation assumptions, inputs and methodologies. In addition, we will relate to any significant issues relating to compliance with International Valuation Standards for financial reporting, IVS3 (Valuation Reporting) and IVA1 (International Valuation Application) and compliance with disclosure obligations as set out by the Israel SEC. The valuation review is in regard to the sale by EGRE Ltd., an Israeli public company traded on the Tel Aviv Stock Exchange ("EGRE") of its indirect holdings in the projects in Romania to a company owned by the controlling shareholders of EGRE. The transaction will include: (1) the sale of EGRE's holdings in Ranitech Yezum (2007) Ltd, a Cypriot company which holds 50.7% of RSK Construction & Development Ltd., a Romanian company that holds the interests in the project companies in Romania ("RSK"); (2) the assignment of certain shareholder loans extended to RSK and its shareholders by EGRE; (3) the assignment of a consulting agreement between EGRE and RSK.1 We have not been instructed to provide an opinion regarding EGRE Ltd.’s rights in the subject properties, but rather to assess the valuations of the individual properties.

1.2 Inspection

The properties were inspected externally by Opher Barzilay, Senior Surveyor and Ionel Ionita (from DTZ Romania) on 13 December 2010. We have assumed that we have been informed of any material factors which affect the valuation.




��1 Transaction as described by the Client.

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From the valuation report provided to us we understand that the subject property comprises the following: Site 15,495 Sq.M. POT (land occupation ratio) 15% CUT (land usage coefficient) 0.6 Land Definition (urban/non-urban) urban Planning Status (PUZ, PUD, Permit) PUZ Use residential


The following are brief details of the property as presented in the reviewed valuation: Fair Value €640,000 Valuation Methodology Market Approach Land Value per Sq.m. €41.3 Rights Valued Fee Simple (Freehold)

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Economic overview



Indicator 2010 2011 2012

GDP 1.03 4.85 6.63






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Iasi Residential Market

Iasi market has evolved similar to the national market and the current downturn is visibly having significant effects. At least since the beginning of 2009 there are under way residential developments that sell at a pace significantly inferior to the previous years. In 2007 the players on the market were the investors that were acquiring important portfolios in order to exploit the investment potential. Nowadays, the bulk of the transactions are between developers and the end-users. Of course, because the sales are made “by piece” and not in packages, the overall pace and transaction volume is reduced. From the point of view of the transaction volumes, Iasi has also registered stagnation on the luxury segment. After the second quarter of 2008 the speculative acquisitions in this market area were almost non-existent. The areas of interest where important residential projects are being developed are Bucium, Copou, Tatarasi-Venetia, Pacurari. The central area of the town is represented by Palas project – a large scale scheme subject to our valuation – which is being developed by Iulius Group. A current trend on the residential market finds its presence in Iasi City as well. We refer here to the ecological projects that represent 10% of the total residential projects developed. It is estimated that in ten years the percentage will rise to 35-45%. This technique replaces the traditional concrete brick and cement with prefab materials. The rising trend of this technique is due to increasing interest in protecting the environment and the consciousness of its significance. In Iasi City such a project is being developed by Imperia Developments with an investment of about €8 million for an assembly of 65 units.

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As a general view concerning technical characteristics the local residential market is composed by apartment, villa and mixed compounds with studio, 2, 3, 4 rooms and penthouses. The area of units range between 50-215 sq m in case of apartments and 120-370 sq m in case of villas. Major residential projects are Palas and Green Park with 1,000 units. Facilities encountered here are: banking agencies, pharmacies, retail spaces, commercial galleries, travel agencies, ecological cleaning centres, ground and underground parking spaces, recreation areas, fitness clubs, spa centres.



The land market outside Bucharest is relatively poor in offers and appropriate comparables are not always easy to identify. The subject property is located east of Iasi city, at the limit of the city in Valea Lupului Village. It is a large land area appropriate for residential development. Valea Lupului has recently emerged as one of the new suburbs of Iasi targeted by developers and accommodating several commercial and residential developments. Among these the most important is Era Shopping center, located across DN27 from the subject. The developments have spread along DN27 from Iasi towards Targu Frumos containing mostly blocks of showrooms and retail units, beside new houses. Currently the land market in this area is not very active. The offers mainly include small land plots with areas between 500 and 1500sqm for single house development. In these cases the asking prices are varying between 50eur/sqm and 100eur/sqm. Offers for land plots with larger areas are rare and the prices per square meter trade at relatively lower levels then in the case of smaller plots. The main parameters that influence the asking prices for larger plots are the urbanism parameters, the access and the distance to utilities. We are aware of the following comparable market data in relation to the subject property. These examples are not exhaustive but include a variety of properties offered for sale which we have found to be comparable in particular ways. Comparable 1 - Land plot in Valea Lupului, second raw from Pacurari road (DN27), having an area of 5,000m2 and an asking price of 30eur/sqm. The land is intravillan, with all utilities nearby and direct access to unpaved roads; Comparable 2 - Land plot in Valea Lupului, second raw from Pacurari road (DN27), having an area of 2,000m2 and an asking price of 50eur/sqm. The land is intravillan, with all utilities nearby and direct access to paved roads; Comparable 3 - Land plot in Valuea Lupului, Platoul Beldiman, having an area of 3100m2 and an asking price of 30eur/sqm. The land is extravillan, currently not buildable, with no utilities and no direct access to paved streets; Comparable 4 - Land plot in Valea Lupului, second raw from Pacurari road (DN27), having an area of 4,714m2 and an asking price of 45eur/sqm. The land is intravillan, with all utilities nearby and direct access to paved roads;

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The valuer, mentioned that based on the Certificates of Urbanism issued received from the Client,for the Subject property, the land is zoned as urban (‘Intravillan’) and the applicable planning parameters indicated by “UTR” 20 are: Site Coverage Ratio :(‘POT’) : 15% Site density Ratio : (CUT’): 0.6 DTZ has been provided with some urbanization documents. From the documents from March 2008, the land has the general approval of the city architect for a PUZ, however in order to gain building rights, the developer must carry out infrastructure works such as water, electricity, etc. The valuer did not base his valuation assumptions on the approval of the final PUZ, therefore the undersigned view his planning assumptions as reasonable.

4.2 Cadastre

The valuer indicates that the analyzed property includes the following cadastral numbers: 37/4/1/1/5/1, 37/4/1/1/5/2, 37/1/1/4, 37/1/1/3 DTZ has been provided with the cadastral book excerpts indicating that the subject property includes 4 plots as follows:

cad CF area (sqm)

Plot 3 37/4/1/1/5/1 1480 4,525 Plot 4 37/4/1/1/5/2 1527 4,285 Plot 5 37/1/1/4 1522 1,080 Plot 6 37/1/1/3 1521 5,605 Total area 15,495

We consider that the assumptions related to cadastral situation made by the valuer are reasonable and consistent with the current situation.


The reviewed valuation generally describes the residential real estate market in Iasi, and details the development of infrastructure near the subject property. In our independent site survey we found several new homes built by private individuals in the vicinity of the subject property. The reviewed valuation takes into account the size of the subject property in relation to other residential project. The reviewed valuation details the lack of trade in land for development purposes. The valuer has discounted 15-25% from the market asking price for similar plots in addition to making requisite adjustments in order to value the subject property.


The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net market value for financial reporting as required by RICS, IVA1 and Israeli Valuation Standard 17,1. This is the generally accepted Market practice in Romania which ignores the stamp duty,

�

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notary fees and associated taxes. The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net realisable value for financial reporting. We would allow for transaction costs of 1% of the Market Value to allow for tax paid by the seller (only for companies).


The reviewed valuation is based on the Market (Comparison) Approach since this is the preferred method for valuing land. However due to the lack of transactional evidence, in carrying out this valuation review, the undersigned carried out valuation calculations based on the Residual Value Approach (Investment Approach). This approach yielded lower values to the Market Approach. This approach was based on transactional evidence of individual residential properties (approximately €775 per sm.), and assumed a period for development and sale of the individual residential units of 3 years. The developer profit of 12% assumed in our calculations was in line with the actual developer profit in several recent projects which ranged from 12-25%. (As reported by publicly traded companies). The current market practice of individuals purchasing small lots for private development rather than professional developers building large schemes, is supported by the market approach, which is the adopted valuation method.







4.7 Conclusions


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2. We have not formally inspected the property nor have we undertaken full verification

or research. The opinions detailed above are totally dependent on the adequacy and accuracy of the information supplied and the assumptions made. It should be noted that should these prove to be incorrect, the accuracy of this opinion will be affected.





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6. Definitions of the Basis of Valuation

Market Value







�

- 12 -








�

- 13 -

Market Rent





�

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Existing Use Value



�

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7. Photos

��

Report for

EGRE Israel



Cluj

29 December, 2010

Cluj- EGRE Romania


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7.� Photos 15�

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Our ref: CV 2010 0627 Email: [email protected] Direct tel: 972-50 5246 937 Date: 29 December 2010

Dear Sir, Client: EGRE Ltd. Properties: Str. Mos Ion Roata F.N. Cluj Napoca, Cluj County Romania


1.1 Our Appointment

DTZ has been instructed by EGRE to review the valuation of land plot located at Str. Mos Ion Roata F.N. Cluj Napoca, Cluj County Romania as carried out by SHM Smith Hodgkinson, with the determining date 20/12/2010. We have been instructed to assess the valuation assumptions, inputs and methodologies. In addition, we will relate to any significant issues relating to compliance with International Valuation Standards for financial reporting, IVS3 (Valuation Reporting) and IVA1 (International Valuation Application) and compliance with disclosure obligations as set out by the Israel SEC. The valuation review is in regard to the sale by EGRE Ltd., an Israeli public company traded on the Tel Aviv Stock Exchange ("EGRE") of its indirect holdings in the projects in Romania to a company owned by the controlling shareholders of EGRE. The transaction will include: (1) the sale of EGRE's holdings in Ranitech Yezum (2007) Ltd, a Cypriot company which holds 50.7% of RSK Construction & Development Ltd., a Romanian company that holds the interests in the project companies in Romania ("RSK"); (2) the assignment of certain shareholder loans extended to RSK and its shareholders by EGRE; (3) the assignment of a consulting agreement between EGRE and RSK. 1 We have not been instructed to provide an opinion regarding EGRE Ltd.’s rights in the subject properties, but rather to assess the valuations of the individual properties.

��Transaction as described by the client.�

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1.2 Inspection

The properties were inspected externally by Opher Barzilay, Senior Surveyor and Dan Orha Director-Valuations from DTZ Romania on 15 December 2010. We have assumed that we have been informed of any material factors which affect the valuation.




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From the valuation report provided to us we understand that the subject property comprises the following: Site 322,440 sq.m. POT (land occupancy ratio) 24% CUT (land usage coefficient) 1.69 Land Definition (urban/non-urban) Intravillan (urban)-arable pasture land as per

Title documents. As per PUZ, multiple building uses including tall height residential, parks, gardens, leisure, public utilities.

Planning Status (PUZ, PUD, Permit) Certificate of Urbanization 2984 dated 19

June 2007 and 25 July 2008 PUZ Use see above Rights Appraised Fee Simple (freehold)


The following are brief details of the property as presented in the reviewed valuation: Fair Value €7,210,000 Valuation Methodology Market Approach Land Value per Sq.m. €22.36 Rights Valued Fee Simple (freehold)

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Economic overview



Indicator 2010 2011 2012

GDP 1.03 4.85 6.63






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Cluj Residential Market

The residential market in Cluj-Napoca city has competed with the Bucharest one in terms of pace of growth as we saw an increasing number of residential projects being launched to the market and in construction starts during recent years. The new supply has changed location from the central area of the town to areas around the city that are attractive because of a more pleasant environment. Potential clients are focusing on areas like Andrei Muresanu, Zorilor, Plopilor, Manastur and Buna Ziua. Andrei Muresanu residential compound – a luxurious project, developed by Chim & Mar Constructii and promoted by Nobila Casa Imobiliare is part of the stock supply and one of the first modern compounds completed in the subject city. The buildings are characterised by a modern architecture and an elegant design, spreading on ca. 11,000 sq m built area. Facilities provided here emphasize the importance of comfort and ambiance. Integrated in the same category, Luxury Residence is an apartment compound totalising 65 units and is located in the central area. CRE trust has in its investment portfolio two projects: a compound of 12 units that were delivered in 2005 and Bella Park compound (comprising both villas and apartments) with another 50 units. The apartments have surfaces between 30-85 sq m, gardens and a view to Feleac Hill. Further to the successful outcome of Bella Park, CRE trust decided to create extend it by developing Bella Park Extension comprising another 22 apartment units. Also benefiting from great views, this time due to the presence of the Somes River, Central Park Residence is a new residential compound in Plopilor area which enhances its amenities with a bike lane over the Somes River, illuminated alleys and modern architecture. River Tower project is located on the border of the Somes River providing 128 new apartments to the area with areas ranging from 30 to 86 sq m. This development has being run by Tower company and has been completed in Q2, 2008.

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Imoinvest 2 Cluj is a construction of 132 apartments situated on Nasaud St. and completed at the beginning of 2007. The developer of the project was Imoinvest. The apartments offer facilities such as superior quality of finish and IT&C infrastructure. Major existing and pipeline multifamily residential compounds in Cluj–Napoca City, 2010

Residential Compound Total no. of units

Delivery Delivered no. of units

UC no. of units

Contracted units* Available units*

% estim. no.

% estim. no.

Bonjour Residence 1,000 2014 142 858 11% 114 89% 886 Belle Ville 312 tbc 130 182 35% 109 65% 203 Manastur Vest Panoramic 219 tbc 124 95 30% 66 70% 153

Viva City Residence ~900 tbc 0 ~900 10% ~90 90% ~810 Iris Residential Compound

2,000 tbc 100 277 5% 100 95% 1,900

Tineretului Compound** 4,969 tbc 0 4,969 0% 0 100% 4,969

Trifoiului Compound 22 2010 - 2011

0 22 15% 3 85% 19

Bella Park - extension 22 Q4/2010 0 22 5% 1 95% 21 Sunny Hill Residence ~200 Q4/2010 0 ~200 n/A n/A n/A n/A Sunrise Residence 180 Q3/2010 0 180 0% 0 100% 180 Sala Sporturilor Compound

154 Q3/2009 154 0 100% 154 0% 0

Observator Project 260 Q2/2009 260 0 99% 258 1% 2 Central Park Residence

220 Q1/2009 220 0 80% 176 20% 44

Colina Park 72 2009 72 0 80% 58 20% 14 Errigal Residence 9 2009 9 0 100% 9 0% 0 Complex 3B 247 Q4/2008 247 0 100% 247 0% 0 Young Residence 422 Q4/2008 422 0 n/A n/A n/A n/A River Tower 128 Q2/2008 128 0 100% 128 0% 0 Prunilor Residence 18 2008 18 0 78% 14 22% 4 Bibescu Residence 9 2008 9 0 56% 5 44% 4 Cluj City Center 55 Q4/2007 55 0 100% 55 0% 0 Zorilor Compound 72 Q4/2007 72 0 100% 72 0% 0 Bella Park 24 Q1/2007 24 0 95% 23 5% 1 Alverna Towers 150 Q1/2007 150 0 100% 150 0% 0 Eden Residence 36 Q1/2007 36 0 100% 36 0% 0 Imoinvest 2 Cluj 132 Q1/2007 132 0 100% 132 0% 0 Luxury Residence 65 Q3/2006 65 0 100% 65 0% 0 TOTAL ~11,897 ~2,569 ~7,705 ~2,065 ~9,210

*out of the total number of units; **the scheme has an uncertain delivery date corroborated to the large number of units projected for delivery The planned supply abounds in residential projects. Out of the total estimated amount of apartment units announced to be completed, only around 2,600 have actually been delivered, 65% being currently under construction. As well as in Bucharest the mixed use developments are becoming more present on the market. When referring to large residential compounds we can name Cartierul Tineretului with 4,969 apartment units. According to information available on the market the project is to be developed in partnership with the city hall and there is information indicating that the construction process will be postponed at least two years ahead. According to the experience on the Romanian market, large scale projects had reduced capacity of sustainable absorption. Projects such as Cosmopolis (Vountari) have been stopped after the first phase completion, extended areas of land remaining undeveloped.

Together with other projects presented above the pipeline supply reaches more than 7,700 units of apartments.

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Land Comparables

The land market outside Bucharest is relatively poor in offers and appropriate comparables are not always easy to identify. The subject property located in Borhanci district is a large land area appropriate for low density residential development. Borhanci district is a periphery of Cluj relatively close to the city centre, developed along the main streets containing mostly individual houses and also blocks of flats. Borhanci district used to be one of the preferred development areas in Cluj. The extended area which is similar in terms of land prices with Borhanci district includes also Buna Ziua and Becas areas and we extended the search for the comparables in these areas too. Currently the land market in this area is not very active. The offers mainly include small land plots with areas between 500 and 1500 sqm for single house development. In these cases the asking prices are varying between 50eur/sqm and 150eur/sqm. Offers for land plots with larger areas are rare but the prices per square meter have the same level as in the case of smaller plots. The main parameters that influence the asking prices for larger plots are the urbanism parameters, the access and the distance to utilities. We are aware of the following comparable market data in relation to the subject property. These examples are not exhaustive but include a variety of properties offered for sale which we have found to be the comparable in particular ways.

Comparable 1 - Land plot in Someseni Area, close to Someseni Railway station, having an area of 11300m2 and an asking price of 60eur/sqm. The land is intravillan, with all utilities nearby and direct access to asphalted street; Comparable 2 - Land plot north east part of Cluj, close to Tetrarom II, having an area of 19,000m2 and an asking price of 65eur/sqm. The land is intravillan, with all utilities nearby and direct access to a paved road; Comparable 3 - Land plot in Bornhaci Area, close to Borhanci Street, having an area of 1500m2 and an asking price of 53eur/sqm. The land is intravillan benefiting of an approved PUD, with water, gas and electricity nearby and direct access to a paved road; Comparable 4 - Land plot in Bornhaci Area, close to Sperantei Street, having an area of 1450m2 and an asking price of 55eur/sqm. The land is intravillan, with water, gas and electricity nearby and direct access to a paved road.

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The valuer indicates that the analyzed property is subject to a proposed residential development. The valuer mention that based on the approved PUZ the subject is divided in several areas with maximum heights of GF+8 / 10 / 12 or 15 Floors. There are also some areas designated for parks, green areas, leisure etc. DTZ has been provided with the recommendation of the Urbanism committee of the Cluj city hall which recommends the approval of the subject PUZ. This document dated 09.07.2008 also indicates the overall CUT of 1.69 and the overall POT of 24%. Based on this, we consider that the assumptions related to urbanism regulations and planning made by the valuer are reasonable and consistent with the current situation.

4.2 Cadastre

The valuer indicates that the analyzed property includes the following numbers: 20239, 20224, 20233:

Cad no. area (sqm) Plot 1 20239 268,956 Plot 2 20224 36,084 Plot 3 20233 17,400 Total area 322,440

DTZ has not been provided with any separate information. We assume that the assumptions related to cadastral situation made by the valuer are reasonable and consistent with the current situation.


The reviewed valuation clearly describes the residential real estate market in Cluj- Napoca, and details the development of infrastructure near the subject property. The reviewed valuation takes into account the size of the subject property in relation to other residential project. The reviewed valuation details the lack of trade in land for development purposes. The valuer has discounted 15% from the market asking price for similar plots in addition to making requisite adjustments in order to value the subject property.


The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net market value for financial reporting as required by RICS, IVA1 and Israeli Valuation Standard 17,1. This is the generally accepted Market practice in Romania which ignores the stamp duty, notary fees and associated taxes.

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The valuation does not account for standard market costs to vendors for the disposition of the property necessary to determine the net realisable value for financial reporting. We would allow for transaction costs of 1% of the Market Value to allow for tax paid by the seller (only for companies).


The reviewed valuation is based on the Market (Comparison) Approach since this is the preferred method for valuing land. However due to the lack of transactional evidence, in carrying out this valuation review, the undersigned carried out valuation calculations based on the Residual Value Approach (Investment Approach). This approach yielded similar values to the Market Approach. This approach was based on actual transactional evidence of direct residential sales (approximately €800 per sm.), and assumed a period for development and sale of the individual residential units of 8.5 years. The developer profit of 15% assumed in our calculations was in line with the actual developer profit in several recent projects which ranged from 12-25%. (As reported by publicly traded companies).






4.6.5 The valuation relates to the full freehold rights in the valued property and does not deal with the rights of the individual stakeholders. The rights of minority shareholders are often discounted in relation to the percentage of the total value due to limiting factors related to the partnership in a property.

4.7 Conclusions


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2. The opinions detailed above are totally dependent on the adequacy and accuracy of

the information supplied and the assumptions made. It should be noted that should these prove to be incorrect, the accuracy of this opinion will be affected.





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Market Value







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Market Rent





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Existing Use Value



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CV 2010 0627 Mr. Asher Zamir, CFO Mr Gabriel Mei Zahav, Chairman Audit Committee EGRE Ltd. Ayalon Insurance Tower 12 Aba Hillel Silver St. 14th Floor Ramat Gan, Israel

6 December 2010 Dear Mr. Zamir and Mr. Mei Zahav, RE: VALUATION REVIEW OF 4 VALUATIONS CARRIED OUT BY SHM With reference to our recent discussions and to your request for DTZ to prepare a valuation review of the valuations carried out by SHM Smith Hodgkinson of the properties; Capitalor 24 Brashov, Iota Rota F.N. Cluj Napoca, Valea Lupului Village Iasi, and Mehala Neiborhood Timisoara we are pleased to provide below our Terms of Engagement for the valuation reviews to be provided to the audit committee of EGRE. Scope of Work I understand that our instructions are to carry out a valuation review, on behalf of the audit committee of EGRE. Opher Barzilay will carry out a site survey of each property where the valuation is to be reviewed. Adina Cooper, will undertake to answer verbal and written questions submitted by the Israeli SEC with regard to this valuation review, and attend meetings as required in conjunction with this work. I confirm that in this respect we would be acting as an External Valuer as defined within the RICS Appraisal and Valuation Standards Fifth Edition, issued by the Royal Institution of Chartered Surveyors (the ‘Red Book’). Purpose of Valuation The purpose of our work is to evaluate the assumptions, conclusions, methodologies, and the fulfilment of disclosure obligations as required by the Israeli SEC for a related parties transaction. We understand that our opinion will be an addendum to the report of the transaction for the SEC, and that our opinion might appear in other public documents pertaining to the transaction. The valuation review will include a determination whether or not the value attributed to the property in the SHM valuation is "Market Value". Compliance with Valuation Standards We shall not undertake a valuation of the property. However, we confirm that the analysis will be prepared in accordance with the appropriate sections of the Practice Statements (“PS”)

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within the RICS Valuation Standards, 6th Edition (the “Red Book”) and in accordance with IVSC standards for valuation reporting. Currency Unless otherwise agreed we would undertake and report our valuation in Euros. Timing The following is the proposed timetable for the work: By 6-12-2010 – receive draft valuations from EGRE 7-12/2010- Israeli Team in discussions with SHM with comments on the valuation drafts. DTZ Romania Team Prepares Market Information and Comps for property tour. 13-16/12 –property tour by Israeli Team By 22/12 Draft Valuation Review Signed Valuation Review will be provided within 2 days of receiving signed valuations by SHM ( not including the Christmas-New Years Holidays). Information Requirements You will provide us with copies of the valuations, detailing basic property information and the measurements of the properties. For the purpose of our analysis we will assume that this information is correct, unless during the course of our work we discover information to the contrary. We do not undertake to verify the basic property information provided, unless the information is deemed unreasonable or incomplete EGRE will provide us with details of the related party transaction in English including the rights to be sold in the respective properties. Conflicts of Interest We confirm that we will undertake the valuation acting as an External Valuer, qualified for the purpose of the valuation. We have carried out a conflict check and can confirm that there is no conflict of interest. Professional Indemnity Cover The Cap on liability is limited in relation to the valuation review so that DTZ’s aggregate liability arising out of, under or in connection with this Engagement shall be the lesser of €1,000,000 and 5% of the Market Value of the Engagement Properties. The cap on liability shall not apply in case of wilful misconduct on behalf of DTZ. Fees Our proposed fee will be €18,000 + VAT. I confirm my understanding that the report should be addressed to the audit committee of EGRE. Travel expenses incurred by the Israeli DTZ team will be arranged directly between the team and EGRE and paid directly by EGRE. Payment Terms 50% of the fee will be due upon executing this letter of engagement. 50% of the fee will be due within 5 days of receiving the signed Valuation Review.

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All payments will be against an invoice. We attach to this letter a copy of our standard Terms of Engagement, which we would ask you to read and satisfy yourself with the basis upon which the valuation report will be prepared. In order to confirm this, we would ask you to sign the letter below and return a copy to us. If you have any queries or require any clarification then please do not hesitate to contact us and we are looking forward to hearing from you. Bogdan Sergentu Adina Cooper

Head of Valuation Department Head of Israel Desk, Consultant DTZ Echinox DTZ On behalf of EGRE Ltd., I confirm the Terms of Engagement contained in this letter and the attached schedule are accepted and agreed.

Signature ………………………………… Stamp Name ………………………………… Position ………………………………… Date …………………………………

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Valuation terms of engagement

Basis of value

The property will be valued on the following basis:- Market value

We shall assess Market Value in accordance with Practice Statement 3.2 of the RICS Appraisal and Valuation Standards (the ‘Red Book’). Under these provisions, the term ‘Market Value’ means ‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’. In undertaking our valuation on the basis of Market Value we will apply the interpretative commentary which has been settled by the International Valuation Standards Committee (IVSC). The commentary is included in PS 3.2. The commentary is reproduced below:- "3.2 The term property is used because the focus of these Standards is the valuation of property.

Because these Standards encompass financial reporting, the term Asset may be substituted for general application of the definition. Each element of the definition has its own conceptual framework.




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3.2.4 '... between a willing buyer ...' Refers to one who is motivated, but not compelled to buy. This buyer is neither over-eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than on an imaginary or hypothetical market which cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present property owner is included among those who constitute 'the market'. A valuer must not make unrealistic assumptions about market conditions or assume a level of Market Value above that which is reasonably obtainable.







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Notional purchaser's costs

The Market Value, which we shall attribute to the property, will not reflect any allowance in respect of stamp duty and purchaser’s costs. Taxation

No adjustment will be made to reflect any liability to taxation that may arise on disposal, nor for any costs associated with disposal incurred by the owner. Furthermore, no allowance will be made to reflect any liability to repay any government or other grants, taxation allowance or lottery funding that may arise on disposal. Plant and machinery

No allowance will be made in our valuation for any item of plant or machinery not forming part of the service installations of any building. Specifically excluded will be all items of plant, machinery and equipment installed wholly or primarily in connection with the occupant’s business, furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools. Further, no reflection will be made in our valuation of any goodwill that may arise from the present occupation of the property. Floor areas and inspections

We will physically inspect the property and will calculate our opinion of Market Value based upon details of site areas provided by the Client. Assumptions

We shall make certain ‘Assumptions’ in relation to facts, conditions or situations affecting the subject of, or approach to, our valuation that we will not verify as part of the valuation process. These Assumptions are referred below:- Site areas

As noted above, we will assume that the site areas provided to us are accurate. Title

We would normally anticipate being provided with access to the Title Deeds of the property. Unless specifically advised to the contrary by you or your legal adviser, we shall make the Assumption that title is good and marketable and free from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings. We shall also make the Assumption that the property is free from mortgages, charges or other encumbrances. Where a Valuation Report is required to contain site plans these will be based on extracts from the Land Registry or other maps showing, for identification purposes only, our understanding of the extent of title based on site inspections or copy title plans supplied to us. If verification of the accuracy of these plans is required the matter must be referred by you to your solicitors.

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Statutory requirements and planning

We will assume that there are no highway proposals, comprehensive development schemes and other ancillary planning matters that could affect property values. We will also seek to ascertain whether any outstanding planning applications exist which may affect the property, and whether it is listed or included in a Conservation Area. We shall also attempt to verify the existing permitted use of the property, and endeavour to have sight of any copies of planning permissions. We would state, however, that it would be considered unwise for a client to purchase or lend against a property without formal searches being undertaken to obtain more certain information on this matter. Condition of structure and services

We will base our valuation on the information in the Technical Specification provided to us. We do not propose to arrange for investigations to be made to determine whether high alumina cement concrete, calcium chloride additive or any other deleterious material may be used in the construction or any alterations of the property and, therefore, we will not be able to confirm that the property will be free from risk in this regard. For the purpose of our valuation, we shall make the Assumption that any such investigations would not reveal the presence of such materials in any adverse condition, unless advised to the contrary by you. No mining, geological or other investigations will be undertaken to certify that the site is free from any defect as to foundations. Unless otherwise advised, we shall make the Assumption that the load bearing qualities of the site of the property are sufficient to support the building constructed (or to be constructed) thereon and that there are no abnormal ground conditions, nor archaeological remains present which might adversely affect the present or future occupation, development or value of any of the properties. No tests will be carried out as to electrical, electronic, heating, plant and machinery, equipment, or any other services nor will the drains be tested. For the purposes of our valuation we shall make the Assumption that all services are functioning satisfactorily. It is a condition of DTZ Echinox or any related company, or any qualified employer, providing advice and opinion as to value, that the client and/or third party/ies (whether notified to us or not) accept that the Valuation Report in no way relates to, or gives warranties as to, the condition of the structure, foundations, soil and services. Environmental matters

We shall make enquiries of (either) you/the borrower/your professional advisers regarding environmental matters including contamination, and we shall have regard to any environmental reports which may be produced. However, we shall not provide a formal environmental assessment. However, if our enquiries or any reports indicate the existence of environmental problems without providing method statements and pricing for remedial works then we may not be able to issue a Valuation Report except on the Special Assumption that the subject property is

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assumed NOT to be affected by such environmental matters. In certain circumstances, the making of such a Special Assumptions may be unrealistic and our Valuation Report may include a statement that we have departed from the requirements of the RICS Appraisal and Valuation Standards. In these circumstances, our Valuation Report may include a recommendation that an investigation should be undertaken to quantify the costs and that subsequently our valuation should be reviewed. Where our enquiries lead us to believe that the property is unaffected by contamination or other environmental problems then unless you instruct us otherwise our valuation will be based on an Assumption that no contamination or other adverse environmental matters exist in relation to the property sufficient to affect value. Depending on the nature of the investigations made, our report may include a statement that, in practice, a purchaser might undertake further investigations and that if these revealed contamination, then this might reduce the value reported. Leases (if applicable)

We shall use the proposed tenancy information provided to us as the basis for the valuation. If available, we shall read any signed leases and associated documents provided to us by you, subject to the provisions of paragraph 6.7 below. We shall not be undertaking investigations into the financial strength of any tenants. Unless we become aware by general knowledge, or we are specifically advised to the contrary, we shall make an Assumption that:

a. where a property is occupied under leases then the tenants are financially in a position to meet their obligations, and

b. there are no material arrears of rent or service charges, breaches of covenant, current

or anticipated tenant disputes. However, our valuation will reflect the type of tenants proposed for occupation, or responsible for meeting the lease commitments, or likely to be in occupation, and the market's general perception of their creditworthiness. Supply of information

We shall make the Assumption that the information provided by you in respect of the property to be valued is both full and correct and our Valuation Report will contain a statement to this effect. We shall make the Assumption that details of all matters relevant to value within your collective knowledge, such as prospective lettings, rent reviews or indexation, outstanding requirements under legislation and planning decisions, have been made available to us, and that such information is up to date. Legal issues

Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant bearing on the value of an interest in property. No responsibility or liability will be accepted for the true interpretation of the legal position of our client or other parties.

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Where a valuer expresses an opinion upon legal issues affecting the valuation, either voluntarily or at the specific request of the client, then such opinion should be subject to verification by the client with a suitable qualified lawyer. In these circumstances, our Valuation Report will contain a statement that no responsibility or liability is accepted for the true interpretation of the legal position of the client or other parties in respect of the valuation of the property. Disclosures

We shall require that neither the whole nor any part of our Valuation Report may be reproduced or referred to in any document, circular or statement nor may be disclosed orally or otherwise to a third party in any way without the valuer's written approval of the form and context of such publication, reference or disclosure. Where you have indicated to us that it will be your intention to refer to our Valuation Report in a published source, our Valuation Report will incorporate the matters required to be referred to in any such case by the RICS Appraisal and Valuation Standards. Fee

Unless specifically agreed to the contrary, our fee will be exclusive of VAT. The fee includes for the provision of two copies of the Valuation Report. Where additional copies are required, a charge may be made to reflect the time spent and costs incurred. Upon completion of the valuation exercise we shall send to you our Valuation Report together with our invoice. The fees are payable within 5 days of the submission of the invoice.

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