PRESENTATION

Presentation on

DIRSI MALL, TBILISI

Description of Project

September 2014

AS GEORGIA AS Group Investment LLC

Contents

Executive Summary

Project Description

Country Factors

Market Assessment

Feasibility & Financial Forecasts

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5

Executive Summary

• Project DIRSI is a multi-use residential complex located in Tbilisi’s historic area for approximately 15,000 residents in 20 beautifully finished apartment blocks.

• The Shopping Mall is a short seven minutes car journey from Tbilisi center which makes it very attractively located compared to competing malls

• Currently, A-class shopping centers can charge up to USD 100 per month per square meter and DIRSI will be positioned below this range

• Consumer spending is concentrated in Tbilisi and due to the young demographic and increasing GDP/capita rate is expected to grow

• The project first phase is well into completion and close to 160 units have already been sold. With the completion of the shopping mall in 15-18 months, the value add to overall sales is expected to increase greatly.

• The project has an IRR of 11%

Contents

Executive Summary

Project Description

Country Factors

Market Assessment

Feasibility & Financial Forecasts

1

2

3

4

5

Dirsi Visuals

Project DİRSİ is a multi-use residential complex located Tbilisi’s historic area between the river Mtkvari and Cholokashvili Street. Upon completion it will house up to approximately 15,000 residents in 20 beautifully finished apartment blocks comprising 16-26 floors, which have studio type, 2, 3 an 4 room flats ranging between approximately 50-100 m2 each.

DİRSİ is conceived as a self-contained ‘mini-city’ with social infrastructure including kindergartens, schools, a shopping mall including food court areas, sports recreational facilities, a boulevard along the river bank, and a recreational park which will all be landscaped and accessible via a road built to enter the complex.

AS Georgia LLC was registered in Georgia in 2010 to execute Project DİRSİ and broke ground on the Project in 2011. AS Georgia is a subsidiary company of AS Group Investment LLC, Baku. AS Group of Companies has been a successful construction concern since 2003 and today, AS Group Investment has several companies operating within the Azerbaijan and regional construction space. The company offers a full turn-key solution, beginning with production of raw and building materials through to construction and finally to commissioning.

Project DİRSİ Summary

DİRSİ Mall has multiple selling points: • Providing easy to access shopping and food areas for residents; • Raising awareness of the DİRSİ Residential Project by creating additional consumer footfall; • Reinforcement of Brand Confidence as potential and existing buyers view execution of promised layouts.

From the results of a recent survey commissioned by AS Georgia, 65% of buyers and 57% of potential buyers rate existing infrastructure and closeness to shopping and entertainment centers as the 4th most important selling point after price, location and layout of apartment units. The DİRSİ Mall will be designed to accommodate the size and activities which best suit the target population , demographic, the location as well as existing and future competitors.

The Mall is a short seven minutes car journey from Tbilisi center and accounts for the consumption needs and habits of consumers. It will reflect the purchasing power of the catchment area both today and in so far as possible, will position for further consumer evolution and trends.

DİRSİ Mall Selling Points

DİRSİ Mall will be situated on on 3 levels with two car parks located in Basement Levels -2 and -1 and two levels of super-structure comprising retail space (Ground Floor and -2) for a total gross leasable area of 17,822 m2.

The general concept is to combine a closed convenient mini-mall anchored with a hypermarket and an open air strip-mall focusing on leisure and pleasure consumption.

Car Parks will occupy an area of 29,015 m2 on the Basement Level -2 and -1 levels providing parking capacity for 900 cars.

The plans call for includes 1 Hypermarket, 1 Anchor Store, 4 Medium Sized Units, 1 Kids Entertainment area, 4 Restaurants, 4 Cafés and 57 Smaller Stores.

The shopping center will provide a street “ambiance” with a lot of squares, terrace, green areas and water.

DİRSİ Mall Description

Mall Visuals

The strip mall is anchored by an electronic/music store of 1,000 m2 and 3 Medium Sized Units for textile and 1 for shoes;

North entrance will be the main entry from the surroundings with 1 restaurant, 1 café and one pool café;

The terraces will provide a soft junction between the center and the city;

The other 41 stores will seek to offer a mix of textile, sport goods stores, beauty/cosmetic, leisure, home decoration and appliances, accessories and book store. For that reason the shop size average is relatively large with 140m2;

The cafés are spread on the main corners and squares of the center to fix the customers and to create a downtown atmosphere.

Mall Visuals

The mall is positioned on 3 levels

2 levels of car parks (-2,-1) and 2 of retail (-2, Ground Floor)

Total GLA of 17,822 m2

Mall Visuals

Contents

Executive Summary

Project Description

Country Factors

Market Assessment

Feasibility & Financial Forecasts

1

2

3

4

5

Georgia is a country of 69,700 km2 with a population of 4.5 million, located in the South Caucasus. It borders on Turkey, Armenia and Azerbaijan in the South and Russia in the North. Not possessing any significant natural resources, FDI inflows are drivers of strong economic growth in Georgia since 2003.

In order to attract FDI, Georgia offers • stable economic development • liberal and free market oriented economic policy • reduced and simplified taxes (6 levels only) • streamlined licensing processes • preferential trade regimes • a well situated geographic location featuring, developed, integrated /

multimodal transport infrastructure • educated, skilled and competitive labor force

Higher consumer spending is concentrated in the eastern part and the capital (Tbilisi) due to having the highest income levels. Rural residents

account for 47.7% of the population (as of 4,484,000) and are classed as spending on food, clothes and footwear.

Georgian Country Factors

GDP (PPP) USD 27.3 billion 2013 est.

GDP / Capita (PPP) USD 6,100 2013 est.

GDP % Household

Consumption

68.6% 2013 est.

GSP Growth rate 2.5% 2013 est.

% employed in

agriculture

55.6%

Inflation 0.5% 2013 est.

Central Bank Discount

Rate

4 % 2013 est.

Commercial Bank

Prime Lending rate

20.7% 2014, Feb.

*Source CIA Factbook

The increase in population, urbanization and in income level has led to retail sector growth and is expected to continue, noting that 55% of the population is between the ages of 15-54. The decline in inflation and interest rates has led to the development of new payment options and shopping are a driving force in the retail sector.

Consumer Spending

USD

Source: http://www.tradingeconomics.com/ (National

Statistic Office of Georgia

Georgian Consumer Spending Per Annum Since 2007, the acceleration of demand for imported products is increasing global brand implantation. Consumer Spending increased almost 50% in the last five years creating extra buying power. The increase means a change in the spending structure of customers from basic needs to retail consumption.

Contents

Executive Summary

Project Description

Country Factors

Market Assessment

Feasibility & Financial Forecasts

1

2

3

4

5

The Georgian commercial real estate market is still in the process of emerging from Soviet-style open markets and bazaars to modern shopping centers. Based on the future development pipeline, the next 3-4 years will see an additional 150,000 m2 of shopping center space come on-line.

Demand for commercial real estate is largely driven by the high growth rate of retail turnover in Tbilisi. From 2003 to 2008 retail turnover in Tbilisi grew by almost four times and from 2008 – 2014 it is estimated to have continued to grow at a fast pace. As in most markets, the growth of GDP per capita and the accompanying rise in levels of disposable income will affect demand.

Modern shopping centers represent attractive investment opportunities for Georgian and foreign developers as the retail real estate space is one of the most expensive property categories in Georgia.

Currently, A-class shopping centers can charge up to USD 100 per month per square meter. Rental rates in B-class shopping are in a range of USD 30-60 per month / m2

Market Assessment

Competitive Landscape Name Open GLA

sqm* Rent range

/sqm Main tenants

Tbilisi Mall 2012 72,000 US$ 15-100 (EUR 11-74)

Carrefour, Zara, Bershka, Stadivarius, Massimo-Dutti, Pull&Bear, Oysho, Gap, US Polo, Steve Madden, Banana Republic, Bakara, Aldo, Sergrant Major, New Look, Blanko

Goodwill Saburtalo

2012 9,512 US$ 34-138 (EUR 25-100)

Goodwill (Anchor), Lotto, Yves Rocher, OV, Collezione, Mandarina, Bakara

Qarvasala 2010 20,000 US$ 35 (exc VAT + energy)

Goodwill, Alcott, Bata, Piazza Italia, Ecco, Cashe, Colin’s

Tbilisi Central 2010 19,416 US$ 15-75 (EUR 11-55)

Goodwill (Supermarket) Sinequannone, Steve Madden, Lotto, Collezione, Beko

Didube Plaza 2008 11,426 US$ 16-25 (EUR 12-18)

Georgia (Supermarket), Local retailers

Pixel34 2008 11,225 US$ 90-100 (EUR 66-74)

Goodwill, Next, Bruno Banani, Bruno Magli, Wrangler

GTC 2005 10,000 US$10-100 Populi, Nike

Goodwill 2002 15,000 US$ 30 (EUR 22)

Jeans Gallery, Ceyo, Cervin, Yves Rocher, Bruno Banani, Mandarina, Arttime, Ici Paris

Kidobami 2002 10,000 EUR 40-45 Local Retailers

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• DİRSİ is positioned in the small – mid sized shopping mall space. It provides sufficient land for the variety of shops, restaurants and entertainment areas which will ensure that it is a “destination” space whilst decreasing risk by not competing at the “large” segment;

• AS Group Investment invests its own capital and has access to a large pool of bank liquidity from its origin country. It therefore has the necessary time horizon to allow a long-term outlook on its investments.

• The DİRSİ Mall will benefit from the patronage of residents in the DİRSİ Residential Project.

• Rents are priced to be very competitive with the rest of the market: the average weighted rent for DİRSİ Mall is EUR 29 which compares extremely favorably with the existing rent ranges.

Competitive Advantages for DİRSİ Mall

Contents

Executive Summary

Project Description

Country Factors

Market Assessment

Feasibility & Financial Forecasts

1

2

3

4

5

AS Georgia has positioned the DİRSİ Mall in the mid-range of Shopping Malls and will attract tenants which suit the area and the target demographic. Therefore, the price per square meter varies in the following range:

Rent Assumptions

Category of Unit Unit Price / Square Metre

Hypermarket EUR 13

Large Units EUR 17

Medium sized Units EUR 22

Small Shop Units EUR 40

Restaurants EUR 44

Leisure (Kids) EUR 22

Weighted Average / SQM EUR 29

Some investment decision making indicators associated with DIRSI Mall can be found below:

• NPV = 10 079 959 AZN (+) • IRR = 11% (>expected rate of return) • PI = 1,21 (>1) • Payback Period – 4,5 years Relying on these investment indicators we claim that DIRSI Mall is worth to invest and the investment will add up value to the firm.

Forecast Returns

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THANK YOU FOR YOUR ATTENTION