A Member of Erste Bank-Group and Sparkassen Real Estate Leasing in Romania Harald Trinkl / Vasile Cristescu Bucharest, October 19th, 2006 National Leasing Conference ALB October 19 th, 2006

A Member of Erste Bank-Group and Sparkassen 2 Possible Objects for Real Estate Leasing  Office buildings  Logistic centers  Retail spaces  Production facilities  Hotels  Warehouses

A Member of Erste Bank-Group and Sparkassen 3 Clients for Real Estate Leasing  corporate clients:  services (office buildings)  commercial (supermarkets / retailers)  industrial (production facilities, warehouses, logistic centres)  public sector:  municipalities (town halls, schools and kindergardens, public transport and buildings)  private sector:  flats and houses

A Member of Erste Bank-Group and Sparkassen 4 Approval procedure  Analysis of project: plot location, expert valuation report concerning the plot of land and the building (if existing);  Analysis of the client’s credit standing;  Preparation of application to credit committee approval (either in Romania or with the shareholders of the leasing company);  Approval (with or without additional requirements).

A Member of Erste Bank-Group and Sparkassen 5 Different types of Real Estate Leasing 1.Finance leasing: One of the following criteria must be fulfilled:  all risks and benefits of the project / lease object are transferred to the lessee;  pursuant to the leasing agreement at the end of the lease term ownership over the lease object is transferred automatically to the lessee;  the lease term exceeds 75% of the standard useful life of the lease object; Benefit: long term financing.

A Member of Erste Bank-Group and Sparkassen 6 Balance Sheet in case of Finance Leasing Finance leasing: real estate is in the balance sheet of Lessee Lessor:Lessee: balancebalance -receivable to Lessee -refinancing P+L -interest -real estate -liabilities P+L -depreciation -interest

A Member of Erste Bank-Group and Sparkassen 7 Different types of Real Estate Leasing 2. Operate Leasing:  if no criteria for a finance leasing is met  the lessee is paying back a part of the total investment cost up to an agreed residual value  at the end of the contract the lessee is not obliged to buy the lease object (risk of the residual value remains with the lessor)  In case of an operate lease, Lessee has no liabilities in his books (therefore a better credit rating) – but residual value risk of Lessor

A Member of Erste Bank-Group and Sparkassen 8 Balance Sheet in case of Operate Leasing Operate leasing: real estate is in the balance of Lessor Lessor:Lessee: “off balance” balancebalance -real estate -refinancing P&L -depreciation -interests -lease instalments -- P&L -lease instalment / rent

A Member of Erste Bank-Group and Sparkassen 9 Balance Sheet in case of Operate Leasing Depreciation  In case of operate leasing, the residual value of the leasing contract is equal to the bookkeeping value of the lease object.  for example:  industrial buildings: years  office buildings: years  production halls: years  warehouse / retail:24-48 years

A Member of Erste Bank-Group and Sparkassen 10 Different types of Real Estate Leasing 3. Sale & Lease back: Owner of a property sells to a leasing company at market value. The leasing company leases back the property to the lessee. This results in a higher liquidity in the company and the client can invest in other projects. At the end of the duration of the lease, the client can become owner of the property again.

A Member of Erste Bank-Group and Sparkassen 11 Legal requirements Owner of plot Leasing company / General Contractor Lessee / General Contractor Construction company Purchase contract – Superficies/Rent - Concession Real estate leasing contract General contractor agreement Sub-contractor agreement

A Member of Erste Bank-Group and Sparkassen 12 Possible Structures to Secure the Real Estate  Acquisition of land – asset deal / share deal  Superficies Agreement / Long Term Rent  Concession (in case plot is state owned)

A Member of Erste Bank-Group and Sparkassen 13 Construction period  General contractor contract between lessor and lessee  Sub-contractor contract between lessee and construction company: specification of contraction works and costs  Additional Services from the lessor’s side (planning, site control, architectural services)  Payment by the leasing company to the general contractor according to progress in construction work  Common construction site visits  Calculation of interim financing

A Member of Erste Bank-Group and Sparkassen 14 Completion of construction  Taking over of the finished building:  taking over protocol has to be signed by lessor and lessee;  operating permits / authorizations have to be obtained by lessee from the competent authorities.  Lease period start  Calculation of Total investment costs

A Member of Erste Bank-Group and Sparkassen 15 Administration of lease contract  Total investment costs – will be defined and shall build the basis for the calculation for the lease instalments (construction services, interim financing, all other expenses referring to the construction like costs for notary, taxes will be added)  Invoicing of lease instalments  payment of land taxes to the authorities  insurance

A Member of Erste Bank-Group and Sparkassen 16 Thank you for your attention! Immorent Romania IFN SA Str. Stirbei Voda, nr , Sec. 1, Bucuresti Tel.: , Fax: