GERMAN USUFRUCT FUND I (GUF-I) PRESENTATION INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 1 - highly confidential -
CONTENTS 1 Fund Description ……………………………… . …………………… .......... 04 2 Term Sheet ………………………………… . ……………………… ............... 06 3 The EUR 400 Trillion Pension Gap ………………………… .. …… 07 4 Usufruct Market Size ………………………………………………… ...... 09 5 Value Creation and Financials ………………………………………… 10 6 Acquisition Pipeline ……………………………………………………… . 17 7 Team …………………………………………………………………………………… 22 8 Social Impact ……………………………………………………………………… 25 9 Attachments ………………………………………………………………… .. … 26 INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 2 - highly confidential -
DISCLAIMER This presentation relates to the PPM of a DIFC Fund to be incorporated in accordance with the Collective Investment Law 2010 and Rules of the Dubai Financial Services Authority (“DFSA”) as amended from time to time. This presentation must be read in conjunction with GUF-I Private Placement Memorandum and other related documents. INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 3 - highly confidential -
FUND DESCRIPTION (GUF-I) FUND DESCRIPTION GUF-I is purchasing real estate from retirees in Germany while granting them a lifelong right to live in the property (Usufruct). The fund therefore purchases the asset with the an average discount of >40% and “collects the rent upfront” . The fund has therefore no rental risk and can return higher yields to the investor while, at the same time, significantly reducing any investment risk. ✓ GUF-I has a higher expected return profile than comparable real estate funds WHY INVEST IN GUF-I ✓ GUF-I has no rental risk and has a 100% rental guarantee ✓ GUF-I has no property insurance/ maintenance costs ✓ GUF- I concept allows to purchase “off market” properties in prime locations normally not available ✓ GUF- I has a higher “enhancement value add opportunity” due to “off market” properties ✓ GUF-I is not impacted by Government regulations such as rent caps and others INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 4 - highly confidential -
INVESTMENT STRATEGY GUF-I is based on 1 GERMA GE MANY NY a 4 pillar 2 BE BERL RLIN GU GUF-I I inves ests ts exclus clusiv ively ely in n investment Ge Germ rman any, , one ne of f the he most t GU GUF-I I inves ests ts pred edomin ominately ely strategy providing stab able le ec economies nomies in n the he in n Berl rlin, n, one ne of f the he most t world. rld. a safe haven und nderv rval alued ued capita tals s in n the he world. rld. investment with a double digit 4 US USUF UFRU RUCT CT return profile 3 RES ESIDEN DENTIAL TIAL GU GUF-I I inves ests ts only nly in n real (base case net es estate e wi with h Usu sufruc ruct t GU GUF-I I inves ests ts onl nly y in o n off ff IRR 12%). contr co tracts acts an and ca can n the heref efor ore e mark rket t pri rime e resid iden ential tial real l buy properties perties wi with h a a estate e with h enh nhancem ancemen ent t disc scoun ount t >40% 0% (no no ren ental tal poten ential. tial. ri risk sk). ). INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 5 - highly confidential -
FUND TERM SHEET RESPONSIBLE Fund Name German Usufruct Real Estate Fund I (GUF-I) General Partner CES Investments Limited ENTITIES Fund Manager CES Investments Limited Fund DIFC Registration Number 3980 Fund Administrator APEX Legal Representative BSAH Ahmad Bin Hazeem & Associates LLP External Auditor Russel Bedford FUND Fund Profile Real Estate (Usufruct) Target Market Germany HIGHLIGHTS Fund Size EUR100 million Minimum First Close EUR10 million Minimum Subscription Amount EUR1 million Fund Life 7 + 1 years Initial Closing Q3 2020 Anticipated net IRR 12% Dividend 1.5% in Y2 rising to 6% by Y7 Fund Domicile DIFC, UAE FEE STRUCTURE Service Charges and Arranging Fee 2% of investor commitment Management Fee 1.5% p.a. on AUM Performance Fee 10% above hurdle rate of 7.5% with high water mark KEY PARTNERS Financial Model Review PWC Licensed Actuary (Germany) Peter Schramm German Real Estate Partner Engel & Völkers INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 6 - highly confidential -
THE RETIREMENT PROBLEM 02 The German 01 12% 8% deficit deficit EUR 150 billion pension Next Germany has Generations are already a gap saving less Pension Gap of money over 12% money.co com The Global 04 03 EUR 400 trillion pension Fast aging Interest rates gap population – did erode over 2020 cross over 13 years World Economic ic Forum point INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 7 - highly confidential -
THE SOLUTION – USUFRUCT FUND PROBLEM: Retirees with valuable property but shortfall in liquidity 52% of Germans own their home. However, retirees do not qualify for mortgages. Therefore many retirees are asset ri rich ch but ut ca cash sh poor or. They are forced to struggle in life battling increasing cost of living and healthcare. SOLUTION: Retirees unlocking property value through Usufruct and gaining immediate liquidity GUF-I offers to purchase the property under a Usuf ufruct ct contract giving a lifetime right to live in the property. Usuf ufruc ruct is defined in the BGB §§ 1030 – 1089 and has been used in Germany for centuries. This option provides immediate liquidity for the retirees and allows them to stay in their homes. Funds can be used to increase quality of life and/or provide support to loved ones. INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 8 - highly confidential -
MARKET SIZE GERMANY 2020 TOTAL MARKET ADDRESSABLE MARKET IN EUR BILLION USUFRUCT MARKET Total residential real GERMANY: 800 estate market in 677 EUR 7 billion Germany. 700 600 11% 500 2030 400 USUFRUCT EUR 6.2 MARKET 48% trillion 300 GERMANY: 41% 200 1% 5% EUR 34 billion 100 34 7 0 Own their Property and are < 65 Addressable USUFRUCT USUFRUCT Own their Property and are > 65 Market Market 2020 Market 2030 Don't own their Property INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 9 - highly confidential -
FUND VALUE CREATION 01 02 03 04 Property Property Capital 3 Layers of Value Enhancement Acquisition Appreciation Add Fund purchases the property During the holding period Property Value Enhancement Total Value Add with an average discount of capital appreciation gains will strategy implementation. > 40% (usufruct). Value Add 1 be recognized. Total Value Add Value Add 3 is already locked in after purchase. Capital Capital 03 03 Appreciation Appreciation Value Add 2 Capital Appr. Enhancement Enhancement 02 02 02 Value Add 1 Capital Appr. Discount Discount 01 01 01 01 Day 1 Day 1 Value Add Value Add Property Value Acquisition Acquisition Acquisition Acquisition Price Price Price Price INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 10 - highly confidential -
01 Property Acquisition EXAMPLE – PROJECT LEVEL 02 The Usufruct discount allow 06 GENDER: AGE: LIFE EXPECTANCY: PROPERTY VALUE: DISCOUNT: PAYMENT: Female 75 13 years EUR 1,000,000 46% EUR 524,000 us to get “the rent upfront”. GERMANY: 1,000,000 The discount reduces every Guaranteed Average Annual Rental Yield (unleveraged) EUR7 billion 900,000 6.1% year increasing the asset Rent “upfront” 800,000 value automatically. 700,000 600,000 The Usufruct discount 500,000 translates to a 6.1% rental 400,000 yield which is realized Purchase Price Market Price automatically. 300,000 200,000 The Fund has no rental risk 100,000 and is guaranteed 100% - Years occupied. Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 46.3% 41.5% 37.8 34.0% 30.2% 26.4% 22.7% 18.9% Discount The discount represents the rent which the Fund accounts for “upfront” INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 11 - highly confidential -
02 Property Enhancement EXAMPLE – PROJECT LEVEL GUF-I creates value BEFORE by obtaining building permits. The fund Old Single provides prime land Family Home and increases buildable area while modernizing the project. AFTER Modern Duplex INVESTMENT OPPORTUNITY - GERMAN USUFRUCT REAL ESTATE FUND I 12 - highly confidential -
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