Where in the world can you get over 200% RoI? (unleveraged)International Investment Forum – CCIR 3rd- 4th Oct: Where in the world can you get over 200% RoI? (unleveraged) International Investment Forum – CCIR 3rd- 4th Oct Mru Patel CEO and Chairman mrupatel@epissrl.com Mob: +40(0)729842853


Slide2: - Introduction & Background - Mission, Strategy and Objectives 200% RoI …. Where? Why ? How ? - Return on Investment examples Agenda


Slide3: Mission 2004 “To maximise the value of each investment whilst maintaining a balance of risk and providing strong independent financial checks and balances” Romania was voted the Number 1 country to invest (highest ROI) from a recent study by PWC (Televised on a Channel 4 program). The latest EU report also shows Romania as the highest growth country in Europe and highly likely to meet all the clauses in joining the EU in January 2007.


Slide4: Strategy 2006 Offer a range of tailored structures and investment profiles to suite high net worth individuals and institutions Match investor profile with risk Forge powerful strategic partnerships with top professional organisations Work with highly experienced and motivated individuals Using Local Teams


Slide5: Full end to end consultancy and management Investors with   €100k to €500K EPIS Romania Company Projects Special Purpose Vehicle (SPV) Romania Targeted Investments (off market) and via local network of finders and Key Banks and Government project EPIS SRL Romania Investors/Groups with >1M for private investments


Slide6: Why Invest in Romania ? EU accession (signed June 2005 - joining 2007) Unemployment decreasing from 15% in 2002 to 5% in 2006. Average salaries lower with a higher literacy than most of Eastern Europe. Interest rates down from 21.25% in mid-04, 17.9% in December 2004 and 7.5% in September 2006 Inflation down to 6.5% and decreasing Household credit very new (little to no geared purchase), an established mortgage system will drive the market further Growing middle-class who have an increased home ownership culture* Currency has stabilised and may appreciate further due to a liberalised FOREX policy Educated and well trained workforce Significant Market Opportunity – Property/Land prices more than doubled in the targeted areas over the past 8 months Source: The Economist Intelligence Unit, 2006 National Bank of Romania


Slide7: Sunday Times, PWC and Channel 4, – “Places in the Sun” and “Romanian Romance”, Analysis across European Property Market from Banks and Financial Institutions. Romania Voted the “Best place for Making money in Europe”. The number 1 country giving over 400% ROI in 10 years….. The Investment Manager (Mru Patel) has seen and experience, contacts, sources of 300%+ return on capital in 18months…. Even if this slows down to 100%p.a, its very hard to match with NO LEVERAGE ! Recent Press:


Research Headings – May 2004How I selected Romania for Investments ?: Research Headings – May 2004 How I selected Romania for Investments ? Local & Inward Investments Local commitment to devep’ts Local Tourism/Lifestyle Weather and Seasonal Trends Buy/Sale Market Recent growth trends Residential Market Land Market Commercial Market Industrial Market Natural resources consumption Culture, Tradition, Religion Values of People Local + Regional Infrastructure Planning Process + Bureaucracy Local Gov’t + State support Security (Financial + Criminal) Banking Infrastructure Rate of Growth/Demand Cost to build Material+ Skills availability Modern Architects/designs Scale of Dev’t Financial credit ratings Reference build costs Time to completion No. of Employees Available Temp Staff Customer care/pre+post sales Breadth + depth of portfolio Time in Business Architect reference Competitive advantage Quality of build Quality of Fixtures fittings Political Climate Macro economics FDI Level GDP Unemployment EU accession Legal structure Property ownership laws Natural Resources Population Immediate History Projected 5year outlook Independent reports/press Country Infrastructure Flying time/cheap flights Country relationships with EU Country Level Local/Regional Builders/ Developers Eval


Slide10: Projected GDP growth till 2020 Romania has the 5th highest projected long-term GDP growth rate in the world


Slide11: Romania FDI versus other CEE countries However, over the past few years, Romania has had consistently strong FDI levels compared to other CEE countries. Source: ING February 2006


Slide12: Source: ING February 2006 Real GDP growth in Romania Appears consistently strong, even when compared to other Emerging Europe countries


Slide13: Central bank reserves There are strong and increasing Central Bank Foreign Exchange Reserves, driven by privatisation receipts and purchases from the FOREX market* Graph Source: ING February 2006 *Source: The Economist Intelligence Unit, 2006


Some Multinationals in Romania?: Some Multinationals in Romania? ING Barring Citibank ABN Amro NATO Renault Northup Grumann Boeing DuPont Shell Siemens Phillips Microsoft Oracle Adobe Ericsson KPMG E&Y PWC Mahindra group Asmita (250M) Daimler Chrysler Roche GE C G Danone General Motors Alcatel Colgate Palmoilve Proctor Gamble L’Oreal Footlocker Clarke Shoes Unilever Liebrecht &wood AIG Volvo Chevron Texaco Bayer Raytheon Lockheed Martin Pfizer Novartis Merck Nestle Nike Smiths Group Tetra Pak Carrefour Good Year Tyres Willbrook Tata Mitall group Wipro (300M) Holcim Ozer Ikea Tesco Europe Many Investment funds Lukoil Amazon (200M) Nokia Ranbaxy (350M) Neocity (1B) Erste Bank


Slide15: Major Metros Population in Romania Metro City Population Bucharest 2.2M Constanta 345K Iasi 343K Timisoara 316K Cluj 336K Galati 346K Brasov 319K Ploiesti 249K Braila 226K It is projected that the most growth is expected in Bucharest rising to over 5M by 2012. The second ring road and outer boundary is already planned to accommodate for this expansion in population and business growth.


Slide16: Demand Driver and Growth Trends European Union Joining EU in 2007- Under the treaty, Romania is expected to receive more than € 12 billion aid between . 2007 and 2009. This EU funding will stimulate and assist in the economic regeneration and also stimulate . their property markets. Cost of Borrowing The rate that ordinary citizens pay for a variable rate mortgage is in the range of 8 -11 per cent p.a. (down from 17%+ FY04). Once these Romania joins the EU, interest rates will fall in order to harmonise with interest rates in the Euro zone. Lower interest rates will further help stimulate the property markets. Manufacturing, Research. Logistics and BPO Many European and Indian companies manufacturing plants – Next, Wallis, Renault, Tata steel, clarke shoes uppers, Wipro, numerous pharma, numerous aerospace machinery parts, call centres, mobile technology developments, IT s/w developments, Foreign Direct Investments The figure has doubled in FY05 to over $5B. This figure is however not believed to be exact as numerous foreign companies now invest and operate directly rather than going via the NBR introducing loans, hence the stats are not accurate. Numerous funds are being introduced into Romania and growth is now increasing with major development, still not meeting demand ! “He who invests and develops first gains the highest returns “ Erste bank purchase of BCR (the largest retail bank) will bring European loan products to stimulate growth Romanian growing middle class with an ownership culture of accommodation Mortgages not easy at present but when its readily available, the market will grow further Salaries increasing and Bucharest population increasing (double by 2012). Huge demand for all sectors !


Slide17: Project Examples Project Bought Uranus – bought may 2005 for Euro 230 /sq mtr, December 2005 - on the market at 600 Euro/sq mtr at FMV (Jan 2006 removed from Market due to major new nearby road Projected new price with planning – 750 Euro/mtr by December 2006) 800Mtrs from Casa Poporlui (Peoples Palace) An area now planned to be reshaped with a lot of new service based companies moving in/new builds Currently Warehouses + Offices with rent of 12K USD p.a + bills Concept plans for residential (or commercial at the bottom floor) with leisure facility


Recent Opportunities: Recent Opportunities All realtors, developers and construction companies are still upbeat on the growth of the investment market and cannot see it slowing down for a further 2-3 years. The rents are foreseen to stabilize/come down slightly as the supply is available in the market. The typical returns in this market is still averaged at over 30%p.a. across the sector, with land and residential developments showing the highest growth and demand. However:


Slide19: 1. Land Bank Opportunities


Slide20: 2. Factory/Asset Strip Opportunities *Old factory in the heart of the city (an operational factory that could provide a small rental/operating profit whilst the project is reviewed for planning). Area is ideal for approx 14 floors of development of luxury apartments selling at a minimum of 1,500 Euro/sqm. There are17,050 sqm made up of a 14,500 sqm factories/offices (potential build space on this land could be 55,000 sqm) hence providing approx a minimum of 550 apartments and up to 750 apartments. Vendor wants to sell at 13M Euro (negotiable). This includes 2 other parcels nearby each valued at 1,000 Euro/sqm. ** Old factory with partial PUZ. We believe it will be possible to get a PUZ of P+14 on this site and at least 60,000 sqm built space. This land also has the benefit of some potential rental income whilst the planning process is underway i.e. a total space of 6,000 sqm of warehouse space up for rent at 5 Euro/sqm is possible, to pay for the planning costs, admin etc.


Slide21: Risks Currency Risk Legal & Regulatory European Union Red Tape/Bureaucracy Cost Of Borrowing Currency risk is minimised as local currency aligns to the Euro Zone Fy04-Fy05 – stable approx 3.5RON = 1 Euro All transactions to be done in Euros Over 97% of all land ownerships and title deeds documentation with Notarised procedures Government now takes responsibility of any Notarised deed sold Romania signed the EU accession treaty and is expected to become a full member of the EU on Jan 1, 2007, upon full compliance with certain terms. Under the treaty, Romania is expected to receive more than €12 billion aid between 2007 and 2009. This EU funding will stimulate and assist in the economic regeneration and also stimulate their property markets. New Government since beginning FY05 with a lot of cases for “cleaning up” the corruption image, and gaining strong contacts to assist in the process where necessary to speed up the matter For example, the rate that ordinary citizens pay for a variable rate mortgage is in the range of 8 -11 per cent p.a. It is believed that once these countries join the EU, interest rates will fall in order to harmonise with interest rates in the Euro zone. Lower interest rates should help stimulate the Romanian and Bulgarian property markets.


Slide22: Not For SALE !!!