EPI 4 Investor plc - European Property Investments

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EPI 4 Investor plc - European Property Investments

Important Notice Section 1This document ( the “Information Memorandum” ) has been madeavailable to you, or your financial adviser, for your exclusive use and forthe sole purpose of assisting you in considering a possible investment ina mixed German property portfolio ( the “Investment” ) through an Irishinvestment holding company “EPI 4 Investor plc” ( the “Company” ). TheInvestment is promoted by Europrop Asset Management Limited ( the“Promoter” ).The Information Memorandum does not purport to be all - inclusive ornecessarily to contain all the information that an interested party maydesire in deciding whether to participate in the Investment and may besubject to updating, revision or amendment.The Information Memorandum is not intended to form the basis ofany investment decision. Interested parties should carry out their owninvestigations and analysis of the Investment, the properties described inSection 5 ( the “Target Portfolio” ) and the information referred to in theInformation Memorandum and should consult their own advisers beforeproceeding with an Investment.The information and opinions contained in the InformationMemorandum are strictly confidential and accordingly, the contents ofthe Information Memorandum and any other information or opinionssubsequently supplied or given to you will constitute confidentialinformation ( “Confidential Information” ) and may not, without thewritten consent of the Company or the Promoter, be disclosed toor discussed with any person ( other than the recipient’s employeesand advisers who have a need to know and who agree to keep suchinformation confidential ) nor used for any purpose other than inconnection with an Investment in the Company.DisclaimerNeither the Company, the Promoter, any EPI ( asdefined below ) associated companies nor anyof their agents or advisors ( “Representatives” )make any representations or guarantee as tothe accuracy or completeness of the contentsof this Information Memorandum or anyother document or information referred to init, supplied, or which may be supplied, at anytime or any opinions or projections expressedtherein, nor are the Company, the Promoteror any EPI associated companies underany obligation to update this InformationMemorandum or correct any inaccuracies oromissions in it which may exist or becomeapparent. The illustrative financial projectionscontained in the Information Memorandumare based on judgmental estimates andassumptions made by the Company, thePromoter and any EPI associated companiesabout circumstances and events that havenot yet taken place. Accordingly, there canbe no assurance that the projected resultswill be attained. In particular, but withoutprejudice to the generality of the foregoing,no representation or warranty whatsoeveris given in relation to the reasonablenessor achievability of the illustrative financialprojections summarised in the InformationMemorandum or in relation to the bases andassumptions underlying such projections andinterested parties must satisfy themselves inrelation to the reasonableness, achievability,and accuracy thereof. Any liability of theCompany, the Promoter and any EPI associatedcompanies or their Representatives which isbased on the information and / or any opinionscontained in this Information Memorandumor any other document or information thatmay be supplied, or any omissions therefore,or otherwise is hereby expressly disclaimed.GeneralNeither the receipt of this InformationMemorandum by any person nor anyinformation supplied in connection with theInvestment is or is to be taken as constitutingthe giving of investment advice or the offeringor provision of investment business services.This Information Memorandum should notbe considered as a recommendation by thePromoter or the Company to participate inthe Investment and each potential investorshould make its own independent assessmentof the merits or otherwise of participatingin the Investment and should take its ownprofessional advice.Neither the issue of this InformationMemorandum nor any part of its contents isto be taken as any form of commitment onthe part of the Promoter or the Company toproceed with the Investment and the right isreserved to amend the proposed timetableand / or to terminate the procedure and toterminate any subsequent discussions andnegotiations with any interested party and / orto change any other aspect of the Investment,at any time and without assigning any reason.In no circumstances will the Promoters orthe Company be responsible for any costsor expenses incurred in connection with anyappraisal or investigation of the Investmentor for any other costs and expenses incurredby interested parties in connection with theInvestment. By receiving the InformationMemorandum, you agree that you will onrequest, return or procure the return of thisInformation Memorandum and all furtherinformation and material sent or madeavailable in connection with the Investmentwithout retaining any copies in whateverform and shall destroy any notes, analyses ormemoranda or other stored information ofany kind prepared by you, or on your behalf,to the extent that they contain or are in anyway related to such information.Restrictions on DistributionThis Information Memorandum and theinformation contained herein are private andconfidential and are for the use only of thepersons to whom such material is addressed.This Information Memorandum does notconstitute an offer or solicitation to any personnor does it constitute a Prospectus pursuantto the Prospectus ( Directive 2003 / 71 / EC )Regulations 2005.Without prejudice to the generality of theforegoing, the Information Memorandumdoes not constitute an offer or solicitationin any jurisdiction in which such offer orsolicitation is not permitted under applicablelaw. This Information Memorandum shall notform the basis of any contract.Risk FactorsWithout limiting the importance of theforegoing, your attention is, in particular,drawn to the risk factors mentioned at section11 of this Information Memorandum.2


Whereas with development projectsthere is a delay before income isgenerated, the existing propertieschosen have both reliable tenantsand a strong cash flow meaningincome is generated from the datethey are acquired. Furthermore, theexisting properties will enhancethe Investment by offering tangiblesecurity against bank borrowings forthe overall portfolio.The Company will acquire theproperties through a number ofGerman GmbH and Irish Limitedsubsidiary companies. Thesesubsidiary companies will be 82 %owned by the Company and 18 %owned by EPI 4 Promoter Limited,a vehicle owned by some of theDirectors of the Company. Theadditional funds required to purchasethe properties will be introducedby way of loan note capital from theCompany. To complete the purchaseand development of the targetproperties, the Company is seekingto raise € 50,000,000 in investor funds.It is intended that 100 % of the issuedshare capital of the Company will besubscribed for by the investors withthe balance of the investor fundsbeing introduced by way of loannotes ( subject to 2 % of the issuedshare capital of the Company beingretained by EPI 4 Promoter Limited forlater distribution as bonus shares onterms determined by the Company ).Initially funds will be held on depositby the Company and invested in thevarious projects when required. TheCompany shall issue shares and loannotes to investors once a minimumsum of € 2,000,000 has been raised.Further shares and loan notes will beissued by the Company to investorsat various stages to be determinedby the Company, once further fundsare raised during the Company’scontinued fundraising. Attentionshould be given to the Risk Factors,in particular the risk factor headed“Investment Risk” in section 11 of thisInformation Memorandum.The properties will be 100 % legallyowned by the subsidiaries withthe exception of the joint venturedevelopments which will be 50 %owned in aggregate by the Companyand EPI 4 Promoter Limited. Assome of the projects are alreadyowned and have been advancedthrough the planning stages byEPI or EPI associated companies,an independent valuation will besubmitted to the board before thePurchase / Investment is approved.The Company aims to financepurchases with a bank gearing ofcirca 60 % - 70 %. The bank borrowingswill be secured only on the propertiespurchased with no recourse to theinvestor’s other assets.It is intended that the Company andit’s German and Irish subsidiaries,taken as a whole, will wholly or mainlycarry on a trade or trades. Propertieswill be bought and sold during thelife of the Investment with a view tohaving all disposals completed by theend of 2013. Subject to availability ofcash, it is intended that part of theloan notes will be repaid to investorsduring the life of the Investment.Repayment of loan notes will bestructured to acknowledge earlyphase investors. The terms of repaymentof loan notes are set out in theloan note instrument for the Investment(the “Loan Note Instrument”)which is available for inspection.5


Investment Summary• Minimum Investment € 50,000• Non -Recourse Financing• Anticipated Gearing: circa 60 %- 70 %• Existing Properties with Strong Tenants• Initial Yield on Existing Properties: circa 6.7 %• High Yielding Development Projects• Suitable for both Direct and Pension Investments• Anticipated 5 Year Investment Term• Projected IRR: circa 24 % p.a.The Advantages of German Property Investment• Investing in Europe’s largest and the World’s 3 rd largest Economy• On - going recovery of the German economy and property values• Strong demand from international property investors( Investments in German commercial property amounted to € 50billion in 2007, representing a 4.4 % increase on the previous yearand 80 % of these transactions were cross - border ).• Currently higher yields than in Ireland or the UK• Eurozone Investment-– no exposure to currency risk.EPI entered the German propertymarket in 2004. At that time,yields on commercial propertieswere in the region of 8 % to 10 %and IRRs averaged 14 % - 18 % p.a.However, a variety of factors, includingdemand from international investors,as well as an increase in interest rates,have driven down yields within thelast 18 months.Present - day yields average between5 % and 7 % and IRRs are generallybetween 10 % and 14 %. It is worthremembering that despite thisyield compression, Germancommercial property is still a veryattractive investment whenthese returns are compared toDublin or London which averagebetween 2 % and 6 %.This Investment is projecting an IRR of 24 %.6


German Property& Current Market Conditions Section 3Investments in German commercial property amountedto € 50 billion in 2007, representing a 4.4 per cent increaseon the previous year; 80 % of these transactions werecross - border, originating from international investors drawnby the attractive yield spreads of the German propertymarket, resulting from a combination of low interest rates anda positive macro - economic growth potential.With a population of circa 82 million, the German economyis the third largest in the world and the largest in the EUaccounting for over one third of the overall EU economy.A new growth locomotive amidst cyclical headwindsGermany could be on the way to becoming the new growthlocomotive in Europe. The phase of under - performance interms of GDP growth which has plagued Europe’s largesteconomy for years, is clearly over. It is forecast that the Germaneconomy will expand on par with the euro area next year. Inboth cases, a slowdown in growth to around 1.5 % - 2 % on theback of slower global growth, a stronger currency, and tightercredit markets is also predicted. But, contrary to previousdownturns, the German economy will likely master the comingdip better than many of its neighbours.The key economic performance indicatorsstrongly suggest that previous indicationsof an improvement in the Germaneconomy were accurate and that thereasons for inward property investmentare compelling.1111101091081071061051041031021011009998979695941413GERMAN KEY DATAGross domestic product / chain index / Seasonally and working - day adjusted1999 until 20071999 2000 2001 2002 2003 2004 2005 2006 2007GDPGerman Unemployment Rate %Germany does not rely on credit to growIt is estimated that more than 90 % of investment spendingin Germany is financed internally by corporate earningsor depreciation allowances. In other words, hardly anyinvestment spending relies on external financing. In addition,German household debt has not significantly increased in thelast decade. By contrast, in the euro area as whole, the shareof household debt in GDP rose by 18 percentage points overthe last 10 years.Competitive position remains strongIn addition, the heavy corporate restructuring and cost - cuttingof the last few years puts German companies in a betterposition than many of their European competitors and makesit somewhat easier to absorb the pressures of a strongereuro. Germany is the only industrial country that hasn’t lostmarket share in global goods markets to new competitors inemerging markets. According to the WTO, Germany was againthe largest exporter of goods globally in 2007.%121110987651191181171161151141131121111101091081071061051041031021011009998979695941996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007YearUnemploymentGermany / Turnover / Value / Seasonally adjusted / Domestic Market / Industry2003 until 20072003 2004 2005 2006 2007Industrial Turnover7


Professional Team & Track Record Section 4EPI 4 Promoter Ltd. was incorporatedfor the purpose of this Investment. Thedirectors of EPI 4 Promoter Ltd. areJohn Hickie and Gerry Collopy.The Shareholders in EPI 4 PromoterLtd. are Gerry Collopy, Ronny Meyer,John Hickie and Adrian O’Sullivan.Gerry Collopy is in partnership withAdrian O’Sullivan in the BenstevPartnership trading as EuropeanProperty Investments. The BenstevPartnership, trading as EPI Ireland,has in the past promoted syndicatedinvestments in German Property.European Property InvestmentsGbR. ( EPI ) is a leading Irish – Germanreal estate and property investmentadvisory company based in Germany.Since 2004, EPI have invested morethan 400 million Euro in Germanproperty on behalf of internationalclients. EPI acts as a principal insourcing, structuring, financing,developing and managing a diversityof property assets.Primarily these assets includecommercial office blocks andshopping centres as well as retail andresidential properties in Germany.EPI operates in association withestablished sales and distributionnetworks in Ireland and, togetherwith its major German partners, offersa personalised consultancy servicebased on the individual goals andneeds of each client.Berlin, November 2007Laying the foundation Stone atKönigstadt Caree, Alexander Platz,a €62 million EPI developmentproject. Included in the photois Mr. David Donoghue ( thirdfrom left ), Irish Ambassador toGermany, who was a special gueston the occasion.The principal partners of EPIGermany are Adrian O’Sullivan andRonny Meyer.8


PromoterEuroprop Asset Management Limited.Riverpoint, Bishop’s Quay,Limerick, IrelandProperty Investment AdvisorsEuropean Property Investments GbR.Grunewald Strasse 44,10825 Berlin, GermanyIrish Tax AdvisorsErnst & Young Tax ServicesBarrington House, Barrington Street,Limerick, IrelandGerman Tax AdvisorsErnst & Young AGFranzösische Straße 48,10117 Berlin, GermanyIrish Legal Advisors to the CompanyHolmes O’Malley Sexton SolicitorsBishopsgate,Limerick, IrelandGerman Accountants and AuditorsStoiber Gross und KollegenRegensburger Strasse 47,Straubing, GermanyInvestment Advisors, Accountants and AuditorsHDS Partnership2nd Floor, Riverpoint, Bishop’s Quay,Limerick, Ireland9


Team - Background to Promoter10Gerry Collopy is a native of Limerick and began his investment career withWoodchester Investment Brokers in 1985. He was Munster Area Manager whenhe left in 1991 to set up the Frontline Financial Group. Based in Mallow Streetin Limerick, this company became one of Limerick’s leading auctioneering andmortgage / insurance brokers. In 1997, Gerry began investing in the Londonproperty market on behalf of Irish clients and from here expanded into theSpanish market in 1999. Frontline Spanish Properties is one of the market leadersin the Costa del Sol and the Costa Blanca where they operate a full - time office.In 2004, Gerry set up European Property Investments with Adrian O’Sullivan toconcentrate on the German property market.John Hickie is a native of Limerick. His background is in financial services havingspent over 20 years with the BOI Group working in the areas of retail banking,asset management and private banking. He left the BOI in 2002 and joined aleading Kerry accountancy practice with a focus on financial services and taxbased property developments. John left in 2005 and was involved in the settingup of the Tralee - based asset management company Premier Asset Management( PAM ). PAM co - promoted the first German property syndicate fund with EPI in 2006and since then John has been involved with EPI and a leading Irish insurance companyon a pension based German property investment. John is a member of the Institute ofBankers in Ireland and has lectured on its behalf in the area of wealth management.Adrian O’Sullivan is a native of Clonakilty, West Cork and began working withGermany’s largest auctioneering chain DSI Ireland in 1990 and gained experiencein the property market all over Germany. In 1992, Adrian returned to Ireland,and set up Dr. Stange International, Ireland and recruited 30 auctioneering firmsthat operated as part of the chain. During this time, Adrian bought a number oftrophy properties for investors including Garnish Island, Parknasilla, Co. Kerry andCastlehyde House, Mallow, Co. Cork, now home to the dancer Michael Flatley.During this period Adrian, with some German partners, also developed a number ofproperties in the Leipzig area. He also invested in the licensed trade in Germany, TheNetherlands and Ireland. In 2004, Adrian set up European Property Investments.Ronny Meyer is a native of Eichsfeld in the German state of Thuringen, andspent the first ten years of his career in the building industry in Berlin. Shortlyafter the Berlin wall came down, Ronny went out on his own setting up aElectrical / Mechanical company in 1990. Ronny subcontracted for Adrian onbuilding projects around Leipzig in the mid 1990’s. Based in East Thuringen, thecompany acted as general contractor for construction projects all over Germany,including hospitals in Aachen, Leipzig and Jena as well as sport stadiums inCologne and Munich. With his reputation firmly established, Ronny movedinternational and successfully completed major construction projects in Russiaand Greece. Since 2004 he has been working with Adrian and Gerry.


Track RecordEPI have extensive experience and considerable success in investing in German properties.Some previous investments include:Initial Yield 6.95%PFSG German Property Investment ( 2006 / 07 )Apart from taking a 5 % share in the Alexander Platz developmentbelow, this investment acquired an office block in Bavaria,(13 Units, circa 4,000 m ² ) and a large apartment building in the centreof Berlin with 112 apartments and 4 retail units.Total Investment:€ 20.5 millionInvestment Capital:€ 7 millionCombined starting yield: 6.95 %Initial Yield 7.25%Mollstrasse, Berlin ( 2006 / 07 )Situated adjacent to Berlin’s famous Alexander Platz in the city centre,this 20 storey office block, 212 bedroom hotel and medical centre willencompass over 26,000 m ² of rental area. The foundation stone waslaid on the 26th of November 2007 and completion is scheduled formid - 2009.The development opened with a yield of 7.25 %. Current marketconditions are likely to allow a sale at a 6.25 % yield and the targetyield for sale on completion is between 5.5 % and 5.75 %.Total Investment:€ 62 millionInvestment Capital:€ 15.5 millionTotal Investment €180 millionRegnitz Island Bamberg ( 2007 )This exciting development project is situated in the heart of Bambergin the state of Bavaria in Germany. It is the only waterside site left inthis UNESCO World Heritage City.It comprises 85,315 m ² in site area with planning permission in thefinal stages for 76,770 m ² of building area.This includes 45,610 m ² zoned mixed use and 31,160 m ² zonedresidential. Planning permission was granted in January 2008 for 266student apartments. Final planning permits will be issued for the wholesite in May / June, 2008. The development of these student apartmentsis proposed as a joint venture in this Investment.Projected Total Investment: € 180 million11


Target Portfolio Locations Section 55.7DuisburgDortmundEssenBonnDüsseldorfKölnWiesbadenSaarbrückenMainzFrankfurtStuttgardtKielSCHLESWIG-HOLSTEINMECKLENBURG-WESTERNPOMERANIABREMENLOWER SAXONYNORTHRHINE-WESTPHALIAHESSERHINELAND-PALATINATESAARLANDBADEN-WÜRTEMBERGHAMBURGSchwerinHannoverErlangenMagdeburgSAXONY-ANHALTErfurtTHURINGIA5.3BambergMünchen5.1BRANDENBURG5.2 5.5ElstalPotsdam5.6BERLINBAVARIA5.65.4Leipzig5.6RegensburgSAXONYDresden5.15.25.35.45.55.65.7ErlangenSiemens Office BuildingBerlinB5 Logistics and Solar ParkBambergStudent Apartments/RetailBerlinOffice and Lab ComplexBerlinResidential BuildingBerlinMunichRegensburgEXPEC - Property PortfolioKielBurger King12


5.1 Erlangen - Office Building (Under Contract)Tasomo GmbH has entered into an optional forward asset purchase agreementto buy this property. It is intended that the Company and EPI 4 Promoter Limitedwill purchase 100 % in aggregate of Tasomo GmbH.DetailsProperty:Office and Retail BuildingLocation:Wladimir Strasse, Erlangen, GermanyTenant: Siemens AG ( 2,400 m ² )Year of Construction: 1937 ( renovated 2007 )Site: circa 4,751 m ²Rental Area: 2,260 m ²Parking: 131Total Area: 5,598 m ²Rental Contract:10 YearsIndex: 5 / 75Rental Income:€ 416.410 p.a.Purchase Price: € 6,308,000Yield: circa 6.6 %SummaryElectronics giant Siemens is the anchor client in this property which is located inErlangen, close to Nuremberg in Bavaria. The building, which is a listed structure,incorporates circa 5,500 m ² and underwent substantial renovations in 2007.Siemens has a 10 year rental contract13


5.2 Berlin - B5 Logistics and Solar ParkThis innovative project combinesa state of the art logistics / lightindustrial centre together with asubstantial solar park on ca 90 acresite located on the outskirts of Berlin.The logistics / light industry centrewill incorporate circa 144,000 m ² ofrental space while the solar park willgenerate circa 6 megawatts of powerper annum.There is a written option agreement inplace with an EPI associated companyfor the purchase of this property. It isintended that the Company and EPI 4Promoter Limited will purchase 50 %in aggregate of this company.The project has been advancedthrough the planning stages byEPI or EPI associated companies.An independent valuation will besubmitted to the board before the finalpurchase / Investment is approved.LocationLocated less than 10 km from thewestern boundary of Berlin citycentre, the site is situated directly onthe National B5 Road and close to amotorway exit. It was formerly hometo an East German army divisionand was known as the Eagle & LionBarracks ( Adler - Löwenkasserne ).Since the fall of the Berlin Wall, thecity has expanded rapidly outwardsand the B5 axis is one of the majorexpansion zones.Less than 5 km away the Mc ArthurGlen Group recently purchased the B5Outlet Centre and plan a € 50 millionre - development of the site in theshort term. Adidas, Nike and othermajor brand names have a large retailpresence at the Outlet Centre. In the14Logistic Centre&Solar Parkother direction closer to Berlin, theHavel Shopping Centre is home tomore than 100 shops.A new inner waterway port at a costof € 20 million, is presently beingdeveloped at Wustermark ( 5 kmfurther west ) and is due for completionin the spring of 2008.DHL also have a large logistics centrenearby and other major players suchas the Netto Supermarket chain arealso located in the area.Across the road is the original 1936Olympic Village which is earmarked fora major redevelopment for residentialand recreational use.SiteThe land is presently zonedmixed - use and as it was previously anarmy barracks the site is already fullyserviced: water, electricity, roads etc.are all in place.The Logistics CentreAfter the demolition of existingbuildings, construction will commencein stages on circa 96,000 m ² oflogistics / light industrial buildings aswell as circa 48,000 m ² of state of theart refrigerated warehousing and thesite will be extensively landscaped.The Solar Park/Logistic HallsThe solar panels will be attached to theroof of the logistics halls, effectivelygiving a double use of the land.The solar park’s projected poweroutput is estimated at 6 megawattsp.a. which, put in perspective, isenough power to supply circa 2,500households.The existing connection to theelectrical grid is of sufficient size totake this output.


Government SupportIn August 2004, the Germangovernment passed a law toencourage providers to switch torenewable forms of energy. This lawis known as the Renewable EnergyLaw ( Erneuerbare - Energien -Gesetz / EEG ).Essentially, the main thrust of theselaws is as follows:The purchaser of electricity – in ourcase most probably the multi - nationalconcern E - ON – must purchase powergenerated by solar technologies.Not only this, the German governmenthas also laid down the price which thepurchaser must pay and the purchaseris also obliged to accept this power fora minimum period of 20 years.Detailed discussions have taken placewith the local planners and officialswho wholeheartedly support theplanned development and solar park.Interestingly, the project will mostprobably qualify for low - interestfinancing from the German KfW Bank( Bank for Reconstruction ) on twofronts. First, it is a renewable energyproject and secondly, it makes useof a former military base. Both ofthese factors qualify the applicant forlow - interest loans. Negotiations withthe German KfW Bank are on - going.This bank is owned by the FederalGovernment ( 80 % ) and theLänder ( 20 % ) and is one of the tenbiggest banks in Germany with abalance - sheet total of € 360 billion.DetailsPurchase and Development Costs ( 50 % ): € 40,000,000Projected Yield: 12 %15


5.3 Bamberg - Student Apartments / RetailOverviewThis exciting development projectis situated in the heart of Bamberg,Bavaria, Germany. It is the onlywaterside site left in this UNESCOWorld Heritage City. The sitecomprises 85,315 m ² in an area withplanning permission in the finalstages for 76,770 m ² of building area.This includes 45,610 m ² zoned mixeduse and 31,160 m ² zoned residential.The site is currently owned by anEPI associated partnership calledERBA Verwaltungs GbR. It is intendedthat a German GmbH will be formedwhich would then partner with theEPI principals to develop and sellthe apartments. It is intended thatthe Company will provide arm’slength mezzanine finance to theGerman GmbH for the purposes ofthis development which will provideinvestors with a return on intereston the borrowings. Circa 80 % of theresidential units will be single roomapartments of circa 27 m².The phased development plan canbe seen on the opposite page. Thearea coloured black parallel to thered area is the site that was gifted bythe developers to the city to builda 15,000 m 2 university building, tohouse the new music, computerand business departments. This€ 30,000,000 development will beginin July 2008.The area coloured red is an oldlisted warehouse building which willundergo a complete refit. Planningpermission has been granted for 266student apartments which enjoy aspecial tax status ( i.e. reconstructionof protected buildings andaccelerated depreciation ).This project is part of a huge urbandevelopment and is supported by thecity and university authorities.The project has been advancedthrough the planning stages byEPI or EPI associated companies.An independent valuation will besubmitted to the board before the finalPurchase / Investment is approved.16


UNIVERSITYBUILDINGDEVELOPMENT SITEFOR FURTHER UNIVERSITYDEVELOPMENT AND500 HOUSING UNITSTHE PROJECTSTUDENTAPARTMENTSSite Plan of the projects.The Project: Student ApartmentsDetailsDevelopment:266 Student ApartmentsLocation:Regnitz Island, City Centre BambergSite Size: circa 6,000 m ²Parking:circa 300 SpacesRental Area:circa 12,480 m ² Apartmentscirca 2,900 m ² RetailCompletion: end of 2009Investment:€ 36 million17


5.4 Munich - Office and Lab Complex (Under Contract)Construction is set to start shortlyon a large Office and Lab Complexsituated on a 2,150 m ² site in Munich.The Complex will have a rental areaof circa 3,656 m ² and the tenant is avery well established BiotechnologyCompany. The initial rental contractwill be for 15 years with indexationset at 100 %. Completion time for thisproject is estimated at 12 months.Two EPI associated companieshave entered into a forward sharepurchase agreement with thecurrent owner / developer of thisproperty which is a German GmbH.It is intended that the Companyand EPI 4 Promoter Limited willpurchase 100 % in aggregate of thisGerman GmbH upon completion ofthe development.Corporate ProfileThe Munich company RECIPE Chemicals + Instruments GmbH wasfounded in 1982. Since the end of the 1980s, RECIPE is involved in theHPLC analytics of body fluids for the purpose of clinical diagnostics( in vitro diagnostics ).Their products serve for the diagnosis of infections, for therapeutic drugmonitoring or are used for the bio - monitoring in the field of occupational andenvironmental medicine.With customers in around 40 countries world wide, the company belongs to theleading suppliers of this special analytic scope.DetailsLocation:Site Size: circa 2,150 m ²Parking:Hanauer Strasse 52, 80992 Munich84 SpacesRental Area: 3,656 m ²Rental Income p.a: € 579,000Rental Contract:15 YearsIndexation: 100 %Completion: 12 / 2008Tenant:Recipe Chemicals GmbHPrice: € 11,375,000Gross Yield: circa 5.10 %18


5.5 Berlin - Capital Tower, Residential BuildingSituated circa 4.5 km from Berlin’sfamous Alexander Platz in the citycentre and excellently served bypublic transport, this 17 storeyapartment block will be completelyre - developed. Originally built in1978, the building has already beencompletely gutted in preparation forfit - out. This building is located onthe corner of Altenhofer Strasse andLandsberger Alle – one of the mainarteries to the center of Berlin. Thevicinity has two modern shoppingcentres, medical facilities, schools andkindergartens. Around the corner isthe Sportforum offering extensivesports facilities. There is also a largepark close by.It is planned to convert the buildinginto a “Senior Living Residence” whichwill incorporate :• 2,668 m 2 Assisted Living• 6,000 m 2 Senior Living• 732 m 2 CommercialSome of these operators alreadysuccessfully lease other propertiesfrom us. A number of tenants includinga hairdresser, a physiotherapist anda nursing service, have expressedinterest in renting the retail space.A “Guaranteed Price” constructioncontract for € 6.14 million has beennegotiated with a major Germanbuilding company.Furthermore, a reduced interest loan,( 2.1 % interest rate ) to cover 60 % ofthe building cost is being negotiatedwith a state - body responsiblefor supporting the re - building /refurbishment of properties tothe highest standards. This furtherincreases the attractiveness of thisproject to the end purchaser as thisgreatly increases the surplus cashgenerated by the project.Germany has one of the oldestpopulation profiles in Europe andthis type of sheltered / assisted livingis a major growth area. We are indiscussion with a number of operatorsinterested in renting sections of thedifferent areas from us as generaltenants ( i.e. they would lease from usand sub - let to the individual elderlyGerman citizens ).DetailsTotal Investment: € 9,500,000Starting Yield: circa 8.5%19


5.6 Berlin, Munich, Regensburg - The EXPEC - Property PortfolioThis portfolio is currently controlled by an EPI associated company. BRP1 GmbHhas currently entered into a optional forward share purchase agreement to buythis company. It is intended that the Company and EPI 4 Promoter Limited willpurchase 100 % in aggregate of this company.The Expec Portfolio is a strategic investment portfolio spread across the majorGerman cities of Berlin, Regensburg and Munich. Much of the attraction is inthe fact that the deal comes with € 43,000,000 of non - recourse loans at attractiveinterest rates in place. The purchase will be done by way of a share deal saving€ 3.5 million in up - front fees.The Berlin properties are situated in a beautiful waterfront site and are currently100 % let. A waiting list exists for these apartments. There is also planningpermission for a further 80,000 sq. feet of buildings on the site which will beactively explored in the coming months.Regensburg, with its world famous university, is one of Bavaria’s wealthiest citiesand is where the largest part of the portfolio is situated. A shopping centre alongwith circa 250 student apartments offer the greatest opportunity to increaserental income in the short term.The apartment complex in Munich is situated in a sought after suburb and is verywell maintained.DetailsGross Income 2008: € 4,100,000Purchase Price: € 58,500,000Initial Yield: circa 7 %Investment Capital: € 16,500,00020


(Under Option)BerlinLocated in the Berlin district of Köpenick and includes 127 apartments and 37 commercial units.Regensburg6 properties located in the west of the city including 317 apartments ( incl. student apartments ) and ashopping centre with 24 Retail Units and circa 6,380 m ².MunichThe Property is located in the south of Munich and has 46 Apartments.21


5.7 Kiel - Burger King (Under Contract)Sibuna GmbH has entered into an optional forward asset purchase agreement tobuy this property. It is intended that the Company and EPI 4 Promoter Limited willpurchase 100 % in aggregate of Sibuna GmbH.DetailsProperty:Commercial Property in KielLocation:Kiel, Capital of the State ofSchleswig HolsteinTenant:Burger King Franchise( operates 4 other locations )Year of Construction: 2001Site: 2,795 m ²Rental Area: 1,803 m ²Parking: 55Rental Contract: to 2025Indexation: 10 / 100Existing rental income: € 141,500 p.a.Purchase price: € 2,200,000Starting Yield: 6.43 %SummaryPurpose built in 2001 for fast - food giant Burger King, this property encompassescirca1,800 m ² and is ideally located in the city of Kiel which is close to Hamburg.The 2,795 m ² site also has 55 parking spaces and tenant Burger King has anindexed rental contract to 2025.22


Investment Structure Section 623


Investment Structure Section 6The structure of this Investment willbe by way of an unlisted public limitedcompany, the EPI 4 Investor plc.Investors in the Company will receiveunits comprising of a combination ofordinary shares and loan notes, withevery € 10,000 invested representingone ordinary share of € 10 and loannotes in respect of the principal sumof € 9,990. No coupon rights attach tothe loan notes.Share CapitalThe rights and obligations attachingto the shares are set out in the articlesof association of the Company ( the“Articles of Association” ) which areavailable for inspection.Loan NotesThe terms of the loan notes are set outin the Loan Note Instrument which isavailable for inspection.German GmbH and IrishLimited SubsidiariesThe Company will invest inthe identified properties anddevelopments through a numberof German GmbH and Irish Limitedsubsidiaries. The Company will acquire82 % of the shares in the GermanGmbH and Irish Limited subsidiariesand will subscribe for loan notesto be issued by these companies.EPI 4 Promoter Limited will take theremaining 18 % of share capital ofthe German GmbH and Irish Limitedsubsidiaries but will not subscribe forany loan notes.Company. Such bonus shares will bedistributed by means of a transferfrom EPI 4 Promoter Limited directlyto the investor.In certain Investments, the Companyand EPI 4 Promoter Limited will own50 % in aggregate of the propertyinvestment, with joint venture partiesowning the remaining 50 %. Jointventure parties may be EPI associatedcompanies or other related parties.ExitThe planned life of the Company’sproperty investment is approximately5 years. It is currently intended thatthe Company will be either liquidatedor sold at the end of the Investmentdepending on market conditionsduring the life of the Investment.Investors should note the provisionsof the Articles of Association ofthe Company and the Loan NoteInstrument which are both availablefor inspection.Fees and Costs100 % of the funds invested will besubscribed for share capital and loannotes in the Company. The Companywill in turn invest in German propertythrough the subsidiaries or jointventure developments. It is theintention that the Company will loanfunds to these subsidiaries and jointventure developments.The Company and the GermanGmbH subsidiaries and IrishLimited subsidiary will incursome costs in relation to theirset up and for the acquisition ofproperties / developments. It isestimated that the costs will be circa10 % of total purchase price.introduced by the said parties. Agent’sfees as referred to below will be paidto German agents, EPI or other relatedparties. Property management anddevelopment fees may be paidunder the agreements referred to inparagraphs 4 and 5 on page 28.These costs are estimated asfollows:An introductory fee of 3 % of fundsraised will be paid to introducers. 2 %of funds raised will be apportioned toset up costs which include legal andtax advice, promotion, advertising,printing etc.German Real Estate Transfer Tax( Stamp Duty ) 3.5 % of propertyacquisition cost outside of Berlin( 4.5 % in Berlin ) is payable on assetdeals. Notar / legal fees are estimatedat 1.3%.Agent’s fees of 3 % of propertyacquisition costs for Share Dealsand agent’s fees of 5% of propertyacquisition costs for Asset Deals areestimated. Disposal fees, includinglegal and agent’s fees, are estimatedat 3% of property acquisition costs.However, all of these costs will not beincurred with each Investment. Forexample, in the event of a share deal,no RETT / Stamp Duty is applicable.The Company will incur administrationcosts in relation to office rental,secretarial and administrationexpenses. It is intended that therewill be a managing director of theCompany and fees will be payableto him / her in their capacity asmanaging director.The minimum investment amountper investor is € 50,000 which canincrease in multiples of € 10,000thereafter. Each investor will subscribefor shares in the Company and willmake a loan to the Company at thesame time. The Company will issueloan notes in respect of the loans tothe investors. The Company will ownthe properties individually through anumber of German GmbH and an IrishLimited subsidiary company and theB5Logistics Ltd. *Logistic Center & Solar ParkBerlinDevelopmentCompany will own 82 % of the sharecapital in these subsidiary companieswith EPI 4 Promoter Limited owningthe remaining 18 %.I n t h e c a s e o f j o i n t v e n t u r edevelopments, the Company andEPI 4 Promoter Limited will own 50 %in aggregate, with the joint venturepartner owning the remaining 50 %.The diagram below is indicative ofthe Company’s current InvestmentCapital TowerGmbHCapital TowerBerlinRedevelopmentproposal on the basis that € 50,000,000is raised in aggregate over the next 12months approximately. The identityof the properties and the level ofInvestment may be subject to changedepending on various market factorsand availability of funds. Please referto the risk factors as set out in section11 of this Information Memorandum,in particular the risk factor entitled“Investment Risk”.Munich Property 5GmbHBiotech ComplexMunichDevelopmentUp to 2 % of the share capital of theCompany will be retained by EPI 4Promoter Limited, comprising a poolof shares which may be transferred,EPI 4 Promoter Limited will not be paidat the discretion of the Promoter, toa fee during the life of the Investment.the first investors in the Company Introducer’s fees will be payable to As a shareholder of the Investment itas bonus shares to acknowledge appointed introducers, the Promoter will share in the profits. EPI 4 Promoter* It is intended that this subsidiary will be owned 50 % in aggregate by the Company and EPI 4 Promoter Limited and 50 % by a joint venture partner.their timely investment in the or other related parties if investors are Limited will not hold loan notes.24 25BRP 1 GmbHExpec PortfolioBerlin, Regensburg, MunichExistingIrish InvestorsPromotersSibuna GmbHBurger KingKielExistingShareCapitalLoanNotesShare Capital82 %OwnershipTasomo GmbHSiemensErlangenExisting18 %OwnershipEPI 4 Investor plc( Irish Holdco )MEZZANINEFINANCEErba ProjectStudent ApartmentsBambergDevelopmentEPI 4 Promoter Ltd.


Projected Returns Section 7This Table illustrates the initial capital required for each Project ( see 2008 ), and the projected surpluses on an annual basisfor each Project from rental Income and sales that can be the returned to the company over the term of the investment. Notwithstanding that, the Company may at it’s discretion re-invest certain monies during the term of the Investment should theDirectors deem it appropriate.Assumptions1. 5 year investment term.2. The Company receives a total of circa € 47,000,000 from the placing.Projected Cashflow Summary for EPI 4 Investor PLCProperty 2008SiemensBiotechBurger KingCapital TowerExpecLogistics CentreErbaSet up costsTotals- €3,048,109 € 102,836 € 102,742 €102,648 € 102,555 €4,248,664- €4,163,647 €2,030 € 2,030 €2,030 € 2,030 €5,488,373- € 835,493 €10,760 €10,751 € 20,742 €1,265,407 €0- €3,997,516 €3,727 € 6,367,727 €0 €0 €0- € 16,497,188 €404,219 €503,844 € 603,375 €702,813 €28,427,168- € 10,500,000 €0 €0 € 16,997,196 € 16,452,578 € 19,228,174- €5,500,000 €0 € 6,925,000 €0 €0 €0- €2,228,285 €0 €0 €0 €0 €0- € 46,770,238 € 523,572 € 13,912,093 € 17,725,991 € 18,525,383 € 57,392,379Total Return to Investor PLC: €108,079,417IRR: 24%Projected Cashflow Return on € 100,000 Invested Phase 120082009 2010 2011 2012 20132009 2010 2011 2012 2013€0 €0 € 30,845 €37,876 €39,584 €122,633This Table illustrates the projected cash available to an investor on a yearly basis.3.4.5.6.7.8.9.10.11.12.13.14.15.16.17.The properties outlined are purchased with a bank finance of circa 70 % ofthe property valueAcquisition costs etc. as outlined on page 24.Loan amortisation 2 %; Interest rate on borrowings of circa 5.3 % for 5 yearperiod.Rental income will be received in 2008 from Burger King, Siemens and theExpec Portfolio.Biotech and Capital Tower will be built in 2008 and some rental incomereceived in 2009.Capital Tower sold in 2010 for € 13,800,000 ( i.e. a yield of 6 % ) as a share dealand Profits returned to the Company.Rental Income increases as per the indexes in the contracts.Burger King sold in 2012 for € 2,890,000 ( i.e. yield of 5.5 % ) as a share dealand Profits returned to the Company.The Expec Portfolio € 88,000,000 ( i.e. yield of 6 % ), Siemens € 8,400,000 ( i.e.yield of 5.4 % ) and Biotech € 14,500,000 ( i.e. yield of 4.5 % ) are sold during2013 and profits returned to the Company.Bamberg repayment of mezzazine finance and interest earned € 6,925,000after tax returned to the Company in 2010.Facility management fees and repairs estimated 6 % - 9 % of rental income.€ 30,000,000 Loan drawn down for Logistic Centre in Phases between 2008and 2012.Some rental income received from Logistic Centre and Solar Park from 2010onwards.Profits on sale of Logistic Centre units returned to the company from 2011.All Properties / GmbH shares are sold by 2013Projected Investor Returns over 5 yearsInitial Investment €50,000 €100,000 €500,000 €1,000,000Return€115,469 €230,939 €1,154,695 €2,309,389This Table illustrates the projected return on varying sums invested over the term of the investment.The statements, estimates or projections are based upon various assumptions by management thatmay not prove to be correct. Such assumptions are inherently subject to significant economic andcompetitive uncertainties and contingencies, many of which are beyond the control of the Company,the Promoter and EPI 4 Promoter Limited, and upon assumptions with respect to future businessdecisions that are subject to change. There can be no assurance that actual results will meet theprojections, and actual results will vary, perhaps materially, from the projections.2627


The Board of Directors/Management Section 8Board of DirectorsThe board of directors of theCompany will consist of a minimumof 3 Directors. John Hickie and GerryCollopy, along with one other directorrepresenting the investors will makeup the board.The board of directors of the GermanGmbH subsidiaries will comprise ofnot more than two directors from theCompany and one director from EPI 4Promoter Ltd.The board of directors of the IrishLimited subsidiaries will comprise ofnot more than two directors from theCompany and one director from EPI 4Promoter Ltd.Arrangements may differ with theboards of directors of the jointventure investments. Decisions of theboard of directors of the Companyshall be taken in accordance withthe provisions of the Articles ofAssociation of the Company.All board meetings of the Companyand the Irish Limited subsidiaries willtake place in Ireland in accordancewith the Articles of Association of therelevant company. All board meetingsof the German GmbH subsidiaries willtake place in Germany in accordancewith their own constitutions. Auditedaccounts for the Company will beprepared annually and made availableto investors. German GmbH and IrishLimited subsidiary figures will bereflected in the Company’s accounts.Management1 ) The CompanyThe Company will manage the Investment from its registered office inIreland. This will entail supervision of the property and project managementin Germany in accordance with the terms of management agreements to beput in place and the objectives as set out in the Memorandum and Articlesof Association of the Company. The Company will deal with all queries inrelation to the Investment, reporting to investors and the filing of companyreturns in relation to Irish company obligations.2 ) German GmbH SubsidiariesGerman GmbH subsidiaries will be run from their registered officesin Germany. All agreements entered into by the German GmbHsubsidiaries will be approved by the Company as the majorityshareholder in these companies.3 ) Irish Limited SubsidiaryThe Irish limited subsidiary will be run from its registered office in Ireland. Allagreements entered into by the Irish limited subsidiary will be approved bythe Company as the majority shareholder in this company.4 ) Property ManagementThe German GmbH and Irish Limited subsidiaries will enter into propertymanagement contracts, where necessary, with FLG Immobilien 1 GmbH,an associated company of EPI at standard market rates. At present this rateis between 4 % and 6 % of the net cold rent depending on the number oftenants etc. FLG Immobilien 1 GmbH will manage the properties on a day today basis pursuant to the terms of the property management agreementsto be put in place between FLG Immobilien 1 GmbH and the German GmbHand Irish Limited subsidiaries.The terms of such property management agreements will be agreed withthe German GmbH and Irish Limited subsidiaries prior to implementationand are subject to approval from the relevant board of directors. FLGImmobilien 1 GmbH will provide a periodic report on the properties to therelevant subsidiaries.5 ) Project Development ManagementEPI will manage the Investment pursuant to the terms of a projectdevelopment agreement to be put in place between EPI and the GermanGmbH and Irish Limited subsidiaries.Audited accounts for the GermanGmbH subsidiaries and IrishLimited subsidiary will be availableon request.28


Business Plan Section 9As previously outlined, thisInvestment has been created with amix of existing properties with strongtenants and exciting developmentprojects offering high returns in orderto protect the investor’s capital, whilstalso allowing scope for sizeable gains.The business plan outlined belowis based on raising € 50,000,000 ininvestor equity. It is planned to raisethis equity in five fundraising phasescommencing on March - April 2008.A detailed description of theproperties below and the currentlegal position relating to each is setout at Section 5 above. Please alsorefer to the risk factors set out atSection 11 and in particular the riskfactor headed “Investment Risk”.2008March - April ( Phase 1 )Cash required: € 9,340,000to be used as follows:Burger King, Kiel € 840,000Expec - Portfolio € 3,000,000Biotech, Munich €1,500,000Capital Tower, Berlin € 2,000,000Logistic / Solar Park, Berlin € 2,000,000May - June ( Phase 2 )Cash required: € 11,000,000to be used as follows:Expec - Portfolio € 4,000,000Capital Tower, Berlin € 2,000,000Logistic / Solar Park, Berlin € 2,000,000Student Apartments, Bamberg € 2,000,000Siemens Erlangen € 1,000,000July - August - September ( Phase 3 )Cash required: € 9,550,000to be used as follows:Siemens Erlangen € 2,050,000Expec - Portfolio € 4,000,000Capital Tower, Berlin € 500,000Student Apartments, Bamberg € 2,000,000Logistic / Solar Park, Berlin € 1,000,000October - November - December ( Phase 4 )Cash required: € 9,000,000to be used as follows:Expec - Portfolio € 5,500,000Logistic Park, Berlin € 2,500,000Student Apartments, Bamberg € 1,000,0002009January - February - March ( Phase 5 )Cash required: € 8,200,000to be used as follows:Biotech, Munich € 2,700,000Logistic / Solar Park, Berlin € 3,000,000Student Apartments, Bamberg € 2,500,00029


Taking account of the present marketconditions, certain German GmbHsubsidiaries have signed contractsin relation to certain investmentsand, under the terms of the saidcontracts, the German GmbH hasa 12 month payment / investmentplan with the owners / joint venturepartners. Furthermore, in the eventof any deadlines not being met, anypenalties that may accrue are payableby EPI.As a final position in the Investment,it is intended that the Company willacquire 82 % of the share capital ofthe relevant subsidiary and that EPI 4Promoter Limited will acquire 18 %,except in the case of the joint ventureinvestments, where it is intended thatthe Company and EPI 4 PromoterLimited will acquire 50 % in aggregateof the share capital of the relevantsubsidiary with the joint venturepartner holding the remaining 50 %.Also, in the joint / venturearrangements, a smaller shareholdingby the Company and EPI 4 PromoterLimited may be considered iffundraising proves more difficultthan anticipated. The directors ofthe Company may also decide notto purchase the Expec Portfolio, thelargest single Investment, if it wasfelt this was prudent. This wouldnot unduly affect the IRR asthe funds raised would also beproportionally reduced.As the Company is a trading company,properties and developments will bebought and sold during the life of theInvestment using the German GmbHand Irish Limited subsidiaries. Suchpurchases and sales will take place inaccordance with the exit strategy asdetermined by the tax opinion.The most important property fromour “Return on Investment” point ofview is the “Logistic Park” and thiswill be secured with the first paymentof € 2,000,000 in March / April 2008.Flexible arrangements have beennegotiated with the Vendor / JointVenture Partners which allow someleeway in the event of falling behindin our fundraising schedule.30


EPI 4 Fund Taxation Summary Section 10Important notice: This taxation summary should be considered as a brief summary only. Ernst & Younghas provided a more comprehensive taxation opinion to the promoters which should be consideredcarefully by investors before proceeding with the investment. This summary document does notsubstitute for a detailed tax opinion and should not be relied upon as such.The Fund will be set up as an Irish incorporated limited company ( Irish Holdco )which will be tax resident in Ireland and will not be a close company for Irish taxpurposes. The investment structure will be as follows:Investors will introduce approximately 0.1% of their investment as share capitalinto Irish Holdco and the balance of the investor funds will be introduced asshareholder loan.Irish Holdco will own four targeted properties, which are considered to be passivelong term holds through the use of German GmbH companies. The fund will own82 % of each GmbH. The passive projects are:• The Siemens Building in Erlangen• The Burger King Building in Kiel• The Biotech Building in Munich• The Capital Tower Building in BerlinThe Fund will also acquire the Expec Property Portfolio as an active business witha view to breaking up and selling the Portfolio over a period of time to maximiseits value. In this case, Irish Holdco will establish a GmbH & Co. KG ( Expec KG ) toacquire 100 % of the shares in an existing GmbH ( BRP1 GmbH ). Irish Holdco willown 82 % of the KG with EPI 4 Promoter Ltd. owing the remaining 18 %.Irish Holdco will also participate in a significant development project, the LogisticsCentre and Solar Park in Berlin. Irish Holdco will acquire 41 % of an Irish companythat has been established for the purpose of acquiring the site and carrying outthe development.Irish Holdco has also been invited by a German developer to participate in thedevelopment of a waterside property in Bamberg. Irish Holdco will not hold anyequity interest in this project but instead will participate in development by theprovision of development funds.It is the intention of the promoter tomanage all of these Investments andthe timing of the various disposalsto satisfy the conditions of Section626B Taxes Consolidation Act ( TCA )1997 so that capital gains arisingon disposal or liquidation of thesubsidiary companies can qualify forexemption from Irish capital gainstax. As Irish Holdco will hold a numberof subsidiaries, some of which areactive trading companies and othershold property as long term passiveinvestments, it is critically importantthat at any time that there is a disposalof a subsidiary that that subsidiary itselfis a trading entity or if the subsidiarybeing disposed of is not a tradingentity at the time of the disposal thegroup taken as a whole is, wholly ormainly, carrying on a trade or trades.There will therefore be a significantonus on the promoter to monitorthe companies, the valuations of thevarious properties and the amount ofincome being derived from tradingand non-trading categories to ensurethat the conditions for qualificationfor the capital gains tax exemptionunder Section 626B are satisfied.31


It is planned to exit from the fourpassive projects by way of sale of theshares in the subsidiary GmbH entities.To the extent that the exemption under626B can be satisfied, no Irish capitalgains tax shall arise on the disposal.Under the current German / IrelandDouble Taxation Agreement ( DTA )no German tax on the capital gainshould arise. In the event that theDTA is replaced by the time that thedisposal takes place, then it is likelythat the new DTA would not includean exemption from tax in Germanyon the capital gain. In such a case, thecapital gain in Germany is likely to besubject to tax at a rate of 0.8 % ( or1.5 % if trade tax applies ).It is not planned to take any dividendsfrom the passive GmbH subsidiaries.To the extent that any cash surplusesare available on an annual basis, thesecan be repaid to Irish Holdco by wayof repayment of the shareholderloan. In turn Irish Holdco can releasethese funds to the investors by wayof repayment of the shareholder loanwithout any tax being applied.The rental income within the passiveGmbH entities will be subject to tax inGermany after deduction for interest,depreciation and other allowableexpenses. On the basis that trade taxdoes not apply to this rental income,the effective rate of German tax willbe 15.825 %.In relation to the Expec Portfolio, as thisis an active trading project, all incomereceived by the GmbH in Germanywill be subject to both corporateincome tax and trade tax pushing theeffective tax rate up to approximately30 %. Given the size of the project andthe amount of the bank loan involved,it is possible that the interest expensein the GmbH could be restrictedunder German thin capitalisationrules. Properly structured, it should bepossible to avoid the restriction andthis matter requires careful review.In this case, it is unlikely that exit willbe arranged by sale of the sharesin the GmbH but instead exit willbe arranged by way of sale of theunderlying properties followed by thepayment of a dividend to Irish Holdcoor the liquidation of the subsidiarycompany. Where Irish Holdco receivesa dividend from the subsidiarycompany, other than as a distributionon liquidation, that dividend is subjectto tax in Ireland at 25 %. However,full credit should be available for theGerman tax paid by that company andfor any withholding tax applied to thedividend, up to the effective Irish taxrate applying to the dividend. Underprovisions introduced in the 2008finance act, in some circumstancesan election can be made to treatthe dividend as trade income taxedat 12.5 %. This could provide anopportunity for better utilisation offoreign tax credits and should bereviewed and considered in advanceof taking a dividend from the GmbH.Where exit is achieved by way of saleof the underlying properties followedby a liquidation of the GmbH, anywithholding tax applied in Germanycan be refunded / credited on theoccasion of the assessment of the KGpartners in Germany. Therefore, thewithholding tax should not be a realadditional cost. The distribution canbe taxed at the KG level in Germanyat an effective rate of 1.5 %. No otherGerman taxes arise on the distributionfrom the GmbH. Irish capital gainstax will apply to Irish Holdco on theliquidation of the GmbH but reliancemay be placed on the capital gainstax exemption under 626B, subject tosatisfying the conditions.In the case of the Logistic Centre andSolar Park, this Investment has beenstructured through an Irish company.On the basis that that Irish companyis tax resident in Ireland and doesnot have a permanent establishmentpresence in Germany, then its rentalincome and profit from sale ofproperties will be subject to corporateincome tax in Germany at a rate of15.835 % but will not be subject totrade tax in Germany.32


The rental income from this projectwill be subject to tax in Ireland at25 % but with a credit for the Germantax of 15.835 %. The profit on sale ofbuildings is likely to be treated astrading profit derived from an Irishtrade ( where certain managementfunctions relating to the trade arecarried out in Ireland ) and will besubject to tax in Ireland at 12.5 % witha credit for the German tax arising onthe same income.Exit can be arranged by way of sale ofthe underlying properties followedby the declaration of a dividend fromthe Irish company to Irish Holdco. Irishwithholding tax should not apply onthis dividend and Irish Holdco shouldnot be subject to any Irish tax onreceipt of the dividend. Any remainingsurplus in the Irish subsidiarycompany can then be paid out to theshareholders by way of liquidationof the Irish subsidiary company. Tothe extent that the distribution onliquidation does not exceed the costof the shares acquired in the Irishcompany by Irish Holdco, no Irishcapital gains tax should apply.Irish Holdco has also been invited toparticipate in Project Erba by way ofan advance of development funds.The profit in this Investment will eitherbe treated as trading income, taxedat 12.5 % or as passive income tax at25 %. Depending on the structureof the Investment in Germany, it ispossible that German withholdingtax could apply on the payment toIrish Holdco from this participationor, if structured as a passive loan,no German tax should apply on theinterest payment to Ireland.In terms of return on investment tothe shareholders in Irish Holdco, itis not planned that Irish Holdco willpay any dividends to its shareholders.To the extent that funds becomeavailable to Irish Holdco during theterm of the fund, any such surplus canbe used to repay shareholder loansin Irish Holdco without applicationof additional tax. Clearly any suchrepayment of shareholder loanswould be limited to the value of suchloans. We understand that those loanswould carry no interest and therefore,there would be no expectation ofinterest or other profit on repaymentof the shareholder loans.Once the shareholder loans havebeen fully repaid, there will be noexpectation of any further distributionof profit until final wind up of IrishHoldco. Once all of the Germaninvestments have been disposed of andall liabilities have been satisfied, IrishHoldco would, based on projections,at that stage hold significant cashfunds. It is planned to liquidate IrishHoldco and to release these funds tothe shareholders. Once the disposalof all investments is completed, andassuming the proceeds from all suchdisposals are held as non - chargeableassets ( Euro cash e. g. current account,deposit account etc. ), then no furthercapital gains tax should arise for IrishHoldco on the distribution of thesefunds on liquidation.The receipt of funds on distributionto the shareholders will be treatedas the disposal of shares in IrishHoldco by the investors and the gainis subject to Irish capital gains tax.The capital gain would be computedas being the difference between thefunds distributed on liquidation tothe shareholder less the base cost( i.e. the price paid for the shares ) lesstransaction costs associated with thepurchase of the shares in Irish Holdco.The capital gain will be subject tocapital gains tax at the rate in force atthe time of the disposal. The currentrate of Irish capital gains tax is 20 %.We understand that some Self-Directed Pension Plans, PersonalPension Plans and executive pensionfunds may contribute pension fundsto Irish Holdco. For those pensioninvestors, which are accepted bythe Revenue Commissioners to beapproved schemes, then underSection 608 TCA 1997, a full exemptionto capital gains tax is available to thepension fund.This document should be consideredas a brief summary only. Ernst & Younghas provided a more comprehensivetaxation opinion to the promoterswhich should be considered carefullyby investors before proceedingwith the Investment. This summarydocument does not substitute for adetailed tax opinion and should notbe relied upon as such.33


Risk Factors Section 11This is a speculative Investment. Prospective investors should seek their own professional advice beforeproceeding. Returns will depend on a number of factors. In particular, investors should consider thefollowing key risk factors. Whilst not comprehensive, the following is intended to highlight some of theprincipal issues which potential investors should consider:Investment RiskThe value of any investment made inthe Company may rise as well as falland the amount investors receiveback from the Investment may be lessthan the amount originally invested.An investment in the Company isspeculative in nature and involvesa degree of risk. Investors must beprepared to bear the economic riskof this Investment for an indefiniteperiod and be able to withstand totalloss of the Investment. There is noguarantee that the Company will besuccessful in raising sufficient funds tocontinue or complete its business planafter early investors have invested inthe Company or that it will proceedwith all of the proposed Investments.Investors should not consider thisInvestment unless they are preparedto accept changes to the proposedportfolio. The initial minimum sum tobe raised is € 2,000,000 which will beused to invest in the Logistic and SolarPark. As further funds are raised, thesewill be used to secure various projects.In the event that the Company isunsuccessful in raising the initial€ 2,000,000 under Phase 1, funds willbe returned to investors.Gearing RiskBank borrowings representapproximately 65 % of the purchasecost of each property to be acquired.Therefore, allowing for disposalcosts of 0.5 % in market value, afall in market value could result in34investors losing some, or all, of theirinvestment. In addition, there is therisk that net rental income falls andbank repayments cannot be made.The bank concerned would then be ina position to enforce its security andsell the building to repay the debtowed to it.Property RiskProperty values are affected by suchfactors as interest rates, economicgrowth, fluctuations in yields, changesin legislation and tenant default. Therecan be no guarantee on the overallperformance of the German propertymarket over the coming years or thatany of the exit strategies outlined inthis Information Memorandum will beavailable or practicable at the time ofintended exit.Liquidity RiskThis is a medium - term investment andinvestors’ interests may be difficult totransfer. Investors should not considerthis Investment unless they areprepared to postpone receiving anyreturn on their equity until the end ofthe life of the Investment.Tax RisksThis document has been prepared onthe basis of current Irish and Germantaxation legislation and the currentinterpretation thereof. These factorsmay change in accordance withfuture amendments to the law orinterpretation of the law.Target Level of ReturnNo representation is made as to thefuture performance of the Investmentand there is no assurance given thatthe Investment will achieve the targetlevel of return.Exit RisksExit strategy is conditional onprevailing market conditions duringthe life of the Investment.Early Years RiskThe costs of purchasing the propertieswill be circa 10 % of the total purchaseprice. Once sufficient funds are raised,the cost of purchasing will be paidfrom the fund. An initial fall in thefund value will result.Political RisksGermany is a politically stable anddemocratic environment. Howeverthis position could change during theterm of this Investment, which couldhave an effect on market conditions .


The Next Step Section 1235


The Next Step Section 12Terms and ConditionsPersons interested in this Investmentshould refer to the enclosedapplication form. This application formmust be completed and returned,with payment, immediately to theCompany.A receipt for same shall be issuedInvestor Checklistimmediately and the investor’s nameand share holding entered in theCompany’s register at the earliestpossible opportunity.Phase 1 of this opportunity isscheduled to close to new investorson May 1st, 2008. Further phasesare currently scheduled to close asfollows: -Phase 2 - July 1st 2008, Phase 3 -October 1st 2008, Phase 4 - January1st 2009 and Phase 5 - April 1st 2009.Participations begin at € 50,000, andmultiples of € 10,000 thereafter.Prior to submitting the application form, please ensure the following checklist has been adhered to.a ) Complete the Application Formb ) Make cheques payable to “EPI 4 Investor plc”.c ) Cross the cheque “not negotiable” or make transfer to account:EPI 4 Investor plc, Bank of Ireland, 94 O’Connell Street, Limerick.Account Nr.: 86519451 IBAN: IE 54 BOFI 9043 1786519451Sorting Code: 90 - 43 - 17 BIC BOFIIE2DIndividuals1. Completed Application Form ( enclosed )2. Properly completed cheque made payable to “EPI 4 Investor plc” or bank transfer to above account3. Copy of Passport4. Certified copies of two original utility bills or bank statements not more than 3 months oldCompanies1. Completed Application Form ( enclosed )2. Properly completed cheque or bank transfer3. A copy of the Certificate of Incorporation4. A copy of the Memorandum and Articles of Association5. A list of directors names and addresses6. In the case of a Holding Company, please enclose a list of shareholders holding 10 % or more of the issuedshare capital, or, in the case of a Nominee Company, the company secretary and ultimate shareholdersshould be identified.7. VAT registration number8. If the cheque is signed by a company officer other than either a director or company secretary, then pleaseprovide the following:• copy of photo ID ( Passport/Drivers License )• PPS numberEach application, which will beirrevocable, should be made on theapplication form provided and beforwarded to:EPI 4 Investor plc,6th Floor, Riverpoint,Bishop’s Quay, Limerick, Ireland.Applications must be for a minimuminvestment of € 50,000 and multiplesof € 10,000 thereafter.Cheques and drafts must be madepayable to EPI 4 Investor plc or bybank transfer to the Account:Please write “4 th EPI Investment” asreason for transfer.All cheques and drafts will be presentedfor payment on receipt and the right isreserved to retain investment and anysurplus application monies, pendingclearance of applicant’s cheques andbanker’s drafts.Completion and delivery of anapplication form, accompanied bya cheque or draft, will constitute arepresentation that such a chequewill be honoured on the firstpresentation thereof.If any application is not accepted,the amount paid will be returned bycheque. The right is reserved to reject,without reason, any application or toaccept any application in part only. Ifany application is accepted for a lesseramount than the amount applied for,the balance of the amount paid willbe returned by cheque. All cheques,certificates and other documents willbe dispatched by post at the risk ofthe persons entitled thereto.In the event that this offering isoversubscribed, Investments willbe allocated on a first come firstserved basis.The Company reserves the right toalter the closing date for any or allof the phases of the Investment atits discretion.I / We hereby acknowledge that I / wehave received and considered theInformation Memorandum and inparticular, the Important Notice at thestart of the Information Memorandumand the Risk Factors in Section 11.I / We confirm that I have reviewed theInformation Memorandum relating tothe Company and this application ismade subject to the provisions of theInformation Memorandum.I / We acknowledge the terms ofthe Loan Notes to be issued by theCompany to me / us and the provisionsin respect to repayment thereof.I / We am / are not relying uponany information, representation orwarranty by the Company or thePromoter and I /we have consultedto the extent that I / we considerappropriate with my / our ownadvisers as to the financial, legal, taxand related matters concerning theInvestment and on that basis believethat such Investment is suitable andappropriate for me / us.I / We confirm that I am / we are 18years of age or over and I / we havethe authority to make the Investmentpursuant to this Application Formwhether this Investment is in my / ourown name or is made on behalf ofanother person or institution.I / We have made arrangements forpayment to be made by cheque, bankdraft or bank transfer for subscriptionsand acknowledge that the Companyreserves the right to reject anyapplication in whole or part withoutassigning any reason.I / We agree to provide the Companywith any additional documentationthat they may require to verify my / ouridentity in accordance with currentanti - money laundering legislation.I / We acknowledge that any delayby me / us in providing suchdocumentation may result in delayedprocessing of my / our applicationand / or delayed payment of any futureredemption payments to me / us orprocessing of share transfer requestson my / our behalf.I / We hereby hold the Company, thePromoter and EPI 4 Promotor Limitedharmless and indemnify them againstany loss arising as a result of a failureto process the application if suchinformation has been required andhas not been provided by me / us.I / We also warrant and declare that themonies being invested pursuant to thisapplication do not represent directlyor indirectly the proceeds of anycriminal activity and the Investmentis not designed to conceal suchproceeds so as to avoid prosecutionfor an offence or otherwise.I / We hereby agree to indemnifyand hold harmless each of theCompany, the Promoter andEPI 4 Promotor Limited and theirrespective directors, officersand employees against any loss,liability, cost or expense ( includingwithout limitation legal fees, taxesand penalties ) which may resultdirectly or indirectly from anymisrepresentation or breach of anywarranty, condition, covenant oragreement set forth herein or inany document delivered by me / usto any of them and shall notify theCompany immediately if any of therepresentations herein made are nolonger accurate and complete in all respects.I / We agree to provide to the Company at suchtimes as it may request such declarations,certificates or documents as it may reasonablyrequire in connection with this Investment.Should any information furnished to it becomeinaccurate or incomplete in any way, I / we herebyagree to notify the Company immediately of anysuch change.I / We hereby acknowledge that any notice ordocument may be served by the Company onme / us in the manner specified from time totime in the Information Memorandum and, forthe purposes of the Electronic Commerce Act2000, if I have provided an Email address or Faxnumber to the Company, consent to any suchnotice or document being sent to me / us byFax or electronically to the Fax number or Emailaddress previously identified to the Companyor its delegate which I / we acknowledgeconstitutes effective receipt by me / us of therelevant notice or document.I / We acknowledge that I / we are not obligedto accept electronic communication andmay at any time choose to revoke my / ouragreement to receive communications by Faxor electronically by notifying the Companyin writing at the above address provided thatmy / our agreement to receive communicationsby Fax or electronically shall remain in full forceand effect pending receipt by the Company ofwritten notice of such revocation.I / We have such knowledge and experience inbusiness and financial matters that I / we am / arecapable of evaluating the merits and risks ofan Investment by me / us in the Company ( forcorporate applicants only ).I / We confirm that the persons listed on theattached authorised signatories list and whosespecimen signatures appear on that list are dulyauthorised to give instructions with respect toshares held by us in the Company.I / We declare that this application is irrevocableby me / us for a period of 6 months from thedate hereof.I / We hereby certify that I am / we are aware of the risk involved inthis Investment and of the fact that inherent in such Investment isthe potential to lose all the sum invested.I / We confirm that the Company, the Promoter and EPI 4 PromotorLimited may rely on the terms and conditions set out in thisapplication form.Data Protection / Information about InvestmentServicesIn signing this application form, I / we acknowledge that theCompany is a data controller and hereby consent to the Companyand their respective delegates and duly authorised agents obtaining,holding, using, disclosing and processing data:I. To establish my / our identity and manage and administermy / our holding in the Company and any related accounts onan on - going basis;II.III.IV.For any other specific purposes where I / we have given specificconsent to do so;To carry out statistical analysis and market research;To comply with legal or regulatory requirements applicable tothe company of the Promoter or EPI Promotor 4 Limited or anyof them or applicable to me / usV. For disclosure or transfer whether in Ireland or any othercountries which may not have the same data protection laws asIreland, to third parties including my financial advisor ( whereappropriate ), regulatory bodies, the tax authorities in Ireland,auditors, technology providers for the purposes specifiedabove,andVI.For other legitimate business interests of the Company.I hereby acknowledge my / our right of access to and the right torectify my / our personal data.I / We consent to the sending by the Company of information aboutother investment services to me / us, by letter, telephone or otherreasonable means of communication.Please tick this box if you do not wishto receive such communications:I / We acknowledge my / our right to object to the processing ofmy / our data for direct marketing purposes by written request tothe Company free of charge.36 37


Application Form Part 1Application FormPart 2Please send completed Application Form pages 37 - 38 to:EPI 4 Investor plc, 6th Floor Riverpoint, Bishop’s Quay, LimerickTO: EPI 4 Investor plcI / We hereby apply to invest: €( amount in words )FOR INDIVIDUAL APPLICANTSEPI 4 Investor plc1. Signed, sealed and deliveredbyFirst Applicant in the presence of:Name of Witness:in accordance with and on the terms of and subject to conditions of this application form in respect of the Investmentreferred to in the Information Memorandum dated 17 - 03- 2008.(Block Capitals Please)Signature:Occupation:Individual( s ) / Company:Mr / Mrs / Ms: ( As on Passport )Passport Number:PPS Number:Date Of Birth:2. Signed, sealed and deliveredbyAdditional Applicant in the presence of:Name of Witness:Signature:Occupation:Mr / Mrs / Ms:Passport Number:FOR CORPORATE APPLICANTSPresent when Common SealPPS Number:Date Of Birth:Maiden Name:Insert Company Name(Limited ) was affixed heretoHome / Registered Address:Contact Telephone Number:Signed by:DirectorandDirector / SecretaryContact Name:Email:Company Registration Number:Please send completed Application Form pages 37 - 38 to:EPI 4 Investor plc, 6th Floor Riverpoint, Bishop’s Quay, Limerick38

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