2014 February 26, 2015 Disclaimer Forward Looking Statements It - - PowerPoint PPT Presentation

SUMMARY RESULTS FOR YEAR ENDING SEPTEMBER 30, 2014 AND PERFORMANCE UPDATE FOR THE QUARTER ENDING DECEMBER 31, 2014

February 26, 2015

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Disclaimer

Forward Looking Statements

It is possible that this presentation could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward- looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Company’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Amongst many factors that could cause actual results to differ materially from those described in the forward-looking statements include changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions

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Executive Summary

• Net Asset Value (“NAV”) per share increased by 2.16% from EUR 5.55 at March 31, 2014 to

EUR 5.67 as at September 30, 2014. Post the completion of the third round of redemption in December 2014, the restated net asset value per share of the Company based on the interim financial statements for the 6 month period ended September 30, 2014 is approximately EUR 6.41 per share

• Global crude oil prices tumbled for various macro reasons. Both WTI and Brent went down

below US$ 50 / bbl mark. Lower crude prices are helping India to address its Current Account Deficit (CAD) and fuel subsidy problems, both of which are structurally long term positives for the country

• Given easing inflationary expectations on the back of lower commodity prices, the Reserve

Bank of India (RBI) lowered the benchmark interest rate by 25 basis points (bps) in January

• 2015. Market participants expect RBI to lower the rates by 50-100 bps in CY 2015
• In the absence of support from opposition parties in passing critical legislations in the

parliament, the BJP led government has pushed through eight pieces of temporary legislation (known as ordinances) to convey its intent of implementing critical reforms

• Real Estate markets continue to remain steady since last update. Given the positive outlook

for India and the new Government’s vision of “Housing for All by 2022” as well as its Smart Cities’ initiative, real estate sector is expected to be one of the growth engines for the Indian economy going forward

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Executive Summary

• Exits achieved since last update
• Batanagar – INR 72.4 mn (EUR 0.93 mn)
• Exits – Fully Completed
• Mixed Use Development, Bhavnagar – Fully exited. Exit consideration of INR 75 mn (EUR 1

mn) has been received

• The Phoenix Mills Limited (PML) – Fully exited. Exit consideration of INR 179 mn (EUR

2.22 mn) has been received

• Phoenix United Mall, Agra – Fully exited. Exit consideration of INR 197.5 mn (EUR 2.42 mn)

has been received

• Exits – Partially Completed
• Treasure Town, Indore – Yatra has already received INR 385 mn (EUR 4.57 mn or 87.7% of

total consideration). Balance consideration of INR 61 mn (EUR 0.79 mn*) has been restructured by executing MOU. Additional consideration is expected in five tranches ending September 2015. Of this balance consideration, INR 10.7 mn is held in an escrow account

• City Centre Mall, Nashik – Yatra has partially exited from this project and received INR 212

mn (EUR 2.56 mn) out of net consideration of INR 406.6 mn till December 2014. Next tranche payment of INR 64.8 mn (EUR 0.8 mn*) is expected to be received in February 2015

• Residential Project, Bangalore – Yatra has contracted exit from this project and received INR

487.5 mn (EUR 6.34 mn) under a share buy-back scheme in November 2014. Next payment of INR 975 mn (EUR 12.66 mn*) is expected by end of March 2015. Yatra had earlier received INR 234 mn (EUR 3.22 mn) as its share of buy-back proceeds in FY2014

* Based on exchange rate of EUR 1 = INR 77.00 (as on December 31, 2014)

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Executive Summary

• Exits – Partially Completed (continued)
• Saket (Enterprise Level Investment), Hyderabad – The SPV completed its first

buyback in Q1 FY2015 and remitted INR 150 mn (EUR 1.84 mn) to K2. Mezz instrument is agreed to be retired by December 2015. The SPV’s liquidity is being closely monitored

• Batanagar, Kolkata –

The Fund has contracted exit from this project for gross consideration of INR 1,176 mn (EUR 15.27 mn*) and has received INR 212 mn (EUR 2.68 mn i.e. 18% of total consideration). Balance consideration is expected to be received in multiple tranches stretching up to September 2016

• Exit arrangement in place
• Market City Retail, Pune – Exit documentation is in place. Consideration of INR 716.64

mn (EUR 9.30* mn) is to be received by June 2015

• Forum IT SEZ, Kolkata – The Fund has contracted to exit from this investment for gross

consideration on INR 165 mn. The consideration is expected to be received in multiple tranches from March 2015 till September 2016

• Self liquidating residential projects with potential distribution prospects
• Residential Project, Pune – K2 received INR 245 mn (EUR 2.90 mn) from three rounds of

share buy-back program in FY2014. The operating cash flows remains healthy

• Market City Residential, Pune – Both the towers were officially launched for sale in Q4
• FY2014. Given the ticket size of the product, lead conversion is taking time.

* Based on exchange rate of EUR 1 = INR 77.00 (as on December 31, 2014)

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Executive Summary

• Stressed Assets
• Taj Gateway, Kolkata – The Project continues to be in default with multiple lenders.

Despite aggressive efforts from the Investment Manager, sale process is moving slow

• Treasure Market City, Indore – The lenders have taken over possession of the property as

the SPV defaulted on its debt commitments. E-auction conducted earlier did not see any participants due to perceived high reserve price. No new auction date has been

• announced. No residual equity value left for the shareholders, at the set reserve price

* The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

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Share Price Performance

Yatra Share Trading Volume- Monthly Yatra Share Price Performance

Note: NAV as of March 31, 2014 was announced to the market in July 2014 and the NAV as of September 30, 2014 was announced to the market in November 2014

• The highest closing price of the shares, for the quarter ending December 2014, has been EUR

4.01 whereas the lowest closing price was EUR 3.44. Latest share price as on December 31, 2014 was EUR 3.44

• The Company announced its third redemption offer in November 2014 which was over
• subscribed. The Company has redeemed 5,000,000 Ordinary shares at a price of EUR 4.00 per

Ordinary share on December 29, 2014, thereby returning EUR 20 million to its shareholders. The Company has returned total of EUR 37.5 million till date

• 50,000

100,000 150,000 200,000 250,000 300,000 350,000

20000 40000 60000 80000 100000 120000 1 2 3 4 5 6 7 8 9 11-04-2011 11-05-2011 11-06-2011 11-07-2011 11-08-2011 11-09-2011 11-10-2011 11-11-2011 11-12-2011 11-01-2012 11-02-2012 11-03-2012 11-04-2012 11-05-2012 11-06-2012 11-07-2012 11-08-2012 11-09-2012 11-10-2012 11-11-2012 11-12-2012 11-01-2013 11-02-2013 11-03-2013 11-04-2013 11-05-2013 11-06-2013 11-07-2013 11-08-2013 11-09-2013 11-10-2013 11-11-2013 11-12-2013 11-01-2014 11-02-2014 11-03-2014 11-04-2014 11-05-2014 11-06-2014 11-07-2014 11-08-2014 11-09-2014 11-10-2014 11-11-2014 11-12-2014 Share Price NAV Number of Shares

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Valuation of the Portfolio & NAV

• Portfolio valuation as at September 30, 2014 was based
• n internal desktop valuation carried out by the

Investment Manager inline with the valuation models prepared by CBRE as at March 31, 2014. CBRE had used RICS guidelines for its valuation exercise

• Projects where business plans are not finalized or

those involving long gestation period were valued on Direct Comparable Method (DCM) basis while the

• thers were valued on Discounted Cash Flow (DCF)

basis

NAV in EUR

• The valuation highlights are as follows:
• Asset Valuation of the invested portfolio based on internal desktop valuation as on

September 30, 2014 – EUR 57.6 million (March 31, 2014 – EUR 60.4 million)

• Decrease from March 2014 valuation – (4.6%). Most of this decline in valuation was

attributable to decline in value of Saket (decline of EUR 3.7 mn) and Taj (decline of EUR 0.7 mn) investments

13.43 11.58 10.86 10.29 9.27 9.23 8 6.76 6 6.1 5.89 5.05 5.55 5.67 2 4 6 8 10 12 14 16

MACRO ECONOMIC/REAL ESTATE SECTOR OVERVIEW

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Macro Economic Outlook

• In India, economic activity has been gradually strengthening. The World Bank’s Global

Economic Prospects report (GEP) report expects India to grow by 6.4% in 2015 and 7% in 2016 and 2017. International Monetary Fund (IMF) predicts that India’s GDP growth is expected to exceed that of China in 2016

• The new BJP led majority government has provided political stability in the country at the

center level. BJP has been winning state level elections too save for Delhi

• The Government is focusing on revival of capital investments and has taken many effective

steps to change the investment/business climate. ‘Make in India’ is the current theme. Present Finance Minister (State) had exposure to VC/PE funds and knows the needs of the industry

• The stock markets have also welcomed pro-business approach of the new government. The S&P

CNX Nifty has risen 46% since start of CY2014. Net inflows from FPIs / FIIs, in Indian equity markets, during this period is around USD 19 bn

• Global crude oil prices tumbled for various macro reasons. Both WTI and Brent index went

down below US$ 50/bbl mark. Lower crude prices are helping India to address its Current Account Deficit (CAD) and fuel subsidy problems, both of which are structurally long term positives for the country

• Given easing inflationary expectations on the back of lower commodity prices, the Reserve Bank
• f India (RBI) lowered the benchmark interest rate by 25 basis points (bps) in January 2015.

Market participants expect RBI to lower the rates by 50-100 bps in CY 2015

• Department of Industrial Policy and Promotion (DIPP) in India notified the changes in FDI

policy relating to real estate sector. Apart from the reduction in built-up area and minimum capitalization norms, it also removed the three year lock-in requirement for FDI investments

Source : Reserve Bank of India (RBI), Moneycontrol

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Real Estate Outlook

Source : JLL

• Residential markets continue to exhibit stable net absorption and capital value

appreciation

• In 4Q CY14, a total of 51,380 residential units were launched compared to 51,233 units during 3Q

CY14, a q-o-q increase of 0.3%. Bangalore, for the first time since 2006, has replaced NCR-Delhi from top with highest number of new unit launches in a particular quarter

• The absorption rate of residential units improved from 9.8% in 3Q CY14 to 10.1% in 4Q CY14. This

was indicative of moderate new launches and stable net absorption across all major residential markets

• Business friendly and stable government at the Centre is expected to increase the GDP growth which

in turn is expected to revive the demand for residential sector

• Office demand in 2014 surpassed supply causing the vacancy rate to decline
• During 4Q CY14, a total of 31 projects encompassing 6.5 mn sq ft of office space became operational,

taking India’s total stock to 405.9 mn sq ft

• Net absorption during 2014 was up by 11.2% with absorption of 29.9 mn sq ft in 2014 as against 26.8

mn sq ft in 2013

• Bangalore registered the highest absorption of 9.5 mn sq ft in CY14 among all seven major cities. This

was the highest absorption for Bangalore in last seven years

• A total of 35.6 mn sq ft of office space is expected to become operational in CY2015
• PE funds continue to show interest in buying operational assets with high occupancy. Now, listing as

a REIT is one of the exit option available for them

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Real Estate Outlook

• Retail sector in India saw a year of historically low supply and absorption in CY2014
• The retail sector in India recorded a supply of 1.3 mn sq ft in CY2014 as only 8 malls were completed

across the country. The sector saw an absorption of 1.6 mn sq ft in CY2014

• India's overall retail vacancy rate was at 17.6% at the end of CY2014 with NCR-Delhi seeing the

highest vacancy rate (23.4%) followed by Mumbai (21%). The vacancy may increase after the new mall launches in CY2015

• Online retail players like Flipkart and Snapdeal have received several large doses of funding from the

investors during last few months. With Amazon also in the game, these players have adopted aggressive marketing and pricing strategies, which has started impacting brick and mortar players. Fashion and electronics are the most affected product categories

• Hospitality: The industry witnessed softness in demand during CY2014 due to overall slowdown in the
• economy. Growth in room demand is, however, likely to pick up marginally from H2 CY2015 onwards.

Moreover, supply additions are also expected to moderate leading to an increase in RevPARs between 2015 and 2016

Source : JLL & CRISIL Research

PORTFOLIO OVERVIEW AS AT DECEMBER 31, 2014

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Portfolio Snapshot (projects where full exit is yet to be negotiated)

Project Name Asset Class Partner Equity Committed (€ million) Equity Stake Current Status Residential Project, Pune Residential Kolte Patil 13.70* 49.00% Sales and construction

• f

Phase II is progressing well. Handover

• f

units had commenced in completed residential and commercial buildings in Phase I. Operating cash flows project remain healthy Saket Engineers, Hyderabad Enterprise Level Saket Group 7.36* 27.25% Partially exited in Q1 FY2015. Company’s liquidity is under stress Market City Residential, Pune Residential Phoenix Mills 4.58 20.00% Both the towers were officially launched for sale in Q4 FY2014. Sales is slower than management expectation. Construction is currently on hold due to delay in obtaining further approvals Forum IT SEZ, Kolkata Office Forum Group 16.68 49.00% Exit documentation is completed Taj Gateway, Kolkata Hospitality Jalan Group 4.64 40.00% The Project continues to be in default with multiple lenders. Despite aggressive efforts by the Investment Manager, sale process is moving slow Treasure Market City, Indore Mixed-use TWDPL 9.98 28.90% Lenders have taken over the possession of the property and it is under auction. No equity value left Total 56.94

* Partial exit achieved

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Portfolio Overview

Exit Status Completion of Phase I in Projects*

* Completion dates are for the first phases, are indicative and are dependant upon further project progress and sales velocity. It includes projects where full exit is yet to be negotiated viz. Taj, Saket, Residential Project – Pune (KPRE) and Market City Residential – Pune (Alliance). It does not include projects where development is stalled viz. Treasure Market City – Indore Retail and Forum IT Park ** The debt maturity profile considers the repayment of secured loans of the following ongoing projects: Saket, Pune Residential (Kolte Patil) and Pune Residential (Market City) where full exit is yet to be negotiated

Project wise contribution to NAV (as at September 30, 2014) Debt Maturity Profile (% of Total Sanctioned Debt)**

1 2 1 CY2013 CY2014 CY2015 CY2016 8 2 2 2 Exits fully / partially completed Exit arrangement are in place Exits under discussion / documentation Self liquidating residential projects with potential distribution prospects Stressed Assets

12.9% 39.8% 47.3% 0% 10% 20% 30% 40% 50% FY 15 FY 16 FY 17

DETAILED PROJECT UPDATES AS AT DECEMBER 31, 2014

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Residential Project, Pune

Investment Summary

City Population: 5.1 million Economic Drivers: Engineering, Automobile, IT,/ITeS (source: CBRE Research) Asset Class Residential led mixed use development Development Partner Kolte Patil Developers, a prominent Pune based residential real estate developer Saleable Area 2.0 million sq ft* K2’s Commitment €13.70 million^ K2’s Equity Stake 49% Land Acquisition Completed Development Plans Finalized for Phase I & partly for Phase II Planning Approvals Partial planning approvals received Debt Outstanding debt: €0.3 million (INR 19 million) ; Cash & Investments : €2.2 million (INR 170 million as on 31 December, 2014) Construction Status Handover of office units in Arissa has commenced. In City Vista (commercial tower) building, RCC works on 7th slab of Tower A is in progress and construction of basement in Tower B has commenced. In Beryl Phase II (residential), RCC work is completed and MEP work is in progress. In Langston (residential), MEP and finishing works is in progress. In Cheryl (residential), RCC work completed in building B1 and MEP work is in progress. Sales Update 465 apartments out of the launched 528 apartments have been sold. In commercial and retail, 159 out of 214 units launched have been sold. Recently, the Project has launched marketing campaign - ‘Nest Fest 2015’ which has received huge response from the home buyers and more than 100 units were sold Completion Date Q2 CY2015 for Phase – I Comments The Company has concluded a share buyback of INR 500 mn to its shareholders (K2 received INR 245 mn). Focus is to maintain sales momentum of launched units, obtain requisite approvals and development rights (in lieu of the handover of the road and amenities land) to launch the next phase and focus on distribution of the surplus cash flow to shareholders in March 2015 * Subject to development rights expected in lieu of handover of the road and area reserved for amenities to authorities ^ Partial exit achieved amounting to EUR 2.90 mn

Current Status Current Status

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Saket (Enterprise Level Investment), Hyderabad

Investment Summary

City Population: 6.8 million Economic Drivers: IT/ITES, Pharmaceutical , Biotechnology (source: DTZ Research) Asset Class Unlisted Entity Level Investment (with focus on Residential) Development Partner Saket Engineers, a Hyderabad based mid-sized residential developer Saleable Area NA (4 ongoing projects and various undeveloped land parcels) K2’s Commitment €7.36 million^ (equity & mezz) K2’s Equity Stake 27.25% Debt Outstanding : €13.2 million Construction Status At Sriyam, handover for one tower is completed and balance minor work in the second tower will be completed depending on sales and collection progress. At Pranaam, handover of two towers is completed; third tower handover is in progress and construction on fourth tower is expected to recommence post reinstatement of building permission by authorities. At Bangalore site, finishing work is in progress for all the three residential blocks. Commercial upper floor construction is delayed due to delay in obtaining approvals. For Bhu:Sattva (villa project in Hyderabad), construction work on Phase I is in progress; handover has begun from December 2014. Plans have been submitted for approval of a new villa project near the corporate office of the Company Sales/Leasing Update 242 out of 272 apartments launched in Sriyam have been sold; 325 out of 378 apartments launched in Pranaam have been sold. Additionally, 122 units out of total 139 units in the Bangalore project and 67* units out of total 116 units in Bhu:sattva have been sold. Because of political reasons, Hyderabad residential market has slowed down substantially and company is affected because of this slowdown Completion Date FY 2015 for Phase I Comments Three out of four ongoing projects will be completed and expected to be sold in

• CY2015. Overall Hyderabad market has not improved even after elections and

stable government formation. The Company continues to struggle in terms of

• sales. Surplus cash flows from the ongoing projects is anemic. The launch of

new projects is currently lagging behind the initial schedule. The Investment Manager is focusing on balance mezz exit, which is dependent on success of Bhu:Sattva and new projects

Current Status Current Status

^ Partial exit achieved amounting to EUR 2.33 mn * Lower compared to 68 units reported till last quarter as cancellations were higher than fresh bookings

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Market City Residential, Pune

Investment Summary

City Population: 5.1 million Economic Drivers: Engineering, Automobile, IT/ITeS (source: CBRE Research) Asset Class Residential development (initial plan was to develop a hotel) Development Partner The Phoenix Mills (market capitalization : INR 55,035 mn as at December 9, 2014), a leading real estate developer, specializing in mall development and large format mixed use developments Saleable Area Phase I involves two residential towers admeasuring 0.35 million sq ft; Phase 2 includes some Joint Development Area for commercial / residential purposes K2’s Commitment €4.58 million K2’s Equity Stake 20% Land Acquisition Completed Development Plans Finalized for first residential tower Planning Approvals Partial planning approvals received Debt Outstanding : €5.7 million; Mainly used for construction & TDR acquisition Construction Status RCC works completed upto 6th slab for Tower 1. Construction is on hold due to delay in obtaining building plan approvals Sales Update 9 units have been sold, out of 81 launched across two residential towers Completion Date CY 2016 Comments Given the ticket size of the product, lead conversion is taking long time. Receipt of building plan approval in timely manner is critical to restart the construction at the earliest. Purchase of TDR in timely and cost efficient manner will be critical to achieve completion in timely manner and achieve desired profitability

Current Status Current Status