[PPT] - 22 nd September, 2014 Table of Contents I. Introduction to Acorn PowerPoint Presentation

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Issuance of 14% per annum, Medium-Term Note Programme Issued by Acorn Group / Siyara Properties LLP

22nd September, 2014

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Table of Contents

I. Introduction to Acorn Group II. What does a Developer do? III. Real Estate Investment Opportunity IV. Project Karen Ololua Ridge V. Transaction Overview VI. Q & A

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I. Introduction to Acorn Group

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Introduction to the Issuer - Acorn Group Limited

Acorn is the leading Real Estate Developer & Project Manager in the Region

2011 2012 201 3

Leading real estate developer and project manager in the East African Region

having been involved is some of the most iconic projects in the last decade such as Coca-Cola East & Central Africa Headquarters, Deloitte East Africa Head Office, Equity Centre, Britam Tower, Acorn House among others

Largest deal pipeline – with over KES 40 Billion of projects
Integrated and differentiated key capabilities in real estate : Development, Project

Management, Property & Facilities Management, Sales & Letting, Market Research

Experience with delivering institutional investment grade real estate developments

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Acorn’s Flagship Projects

Acorn is the leading Real Estate Developer & Project Manager in the Region

2011 2012 201 3

Coca-Cola Headquarters East and Central Africa Deloitte East Africa Head Office

Role of Acorn: Project Management

No. of Storeys:

Three Total built-up area: 6,214 m2 Total gross floor area: 4,100 m2 Total Lettable area: 3,853 m2 Start Date: Oct – 2007 Practical Completion: Sep – 2008 Construction Cost: KES 1,000 Mn Role of Acorn: Project Management

No. of Storeys:

Four Total built-up area: 8,291 m2 Total gross floor area: 3,608 m2 Total Lettable area: 3,067 m2 Start Date: July – 2008 Practical Completion: May – 2010 Construction Cost: KES 850 Mn

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Acorn’s Flagship Projects

Acorn is the leading Real Estate Developer & Project Manager in the Region

2011 2012 201 3

Acorn House Equity Centre

Role of Acorn: Developer

No. of Storeys:

Three Total gross floor area: 6,905 m2 Total Lettable area: 6,284 m2 Start Date: Feb – 2011 Practical Completion: Oct – 2012 Project Cost: KES 700Mn Project IRR: 36.4% Role of Acorn: Project Management

No. of Storeys:

Ten Total built-up area: 14,500 m2 Total Lettable area: 7,900 m2 Completed 2008 Project Cost: KES 900Mn

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Acorn’s Flagship Projects

2011 2012 201 3

Britam Towers

Role of Acorn: Project Management

No. of Storeys:

Thirty Total built-up area: 68,751 m2 Total Gross Floor area: 60,617 m2 Total Lettable area: 31,591 m2 Start Date Nov – 2012 Estimated Practical Completion July – 2016 Construction Cost: KES 7,000Mn

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Acorn’s Track Record is A Strong 37.5% Annualized Return

Strong record of executing projects across various real estate themes with 37.5% IRR

2011 2012 201 3

(all figures in millions of KES)

Project Description Role of Acorn Project Size Equity Size Equity IRR Project Duration (Months) Forest Edge Residential (Town-houses) Project Managers & Development Partners 167.0 61.6 51.5% 38 Tiara Properties Commercial Mixed Use Project Managers & Development Partners 1,584.0 343.2 29.6% 108 Gumba Investments Commercial Mixed Use Project Managers & Development Partners 554.4 167.2 31.2% 56 Prism Properties Retail Office Park Project Managers & Development Partners 352.0 52.8 36.4% 49 Stables Development Retail Office Park Project Managers & Owners 158.4 35.2 38.8% 35 Grand Total 2,816.0 660.0 37.5% 57

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Real Estate Investment: We Take A Thematic Approach

2011 2012 201 3

High

Economic Growth Growth of SMEs and Informal Sector Growing Middle Class Youth Bulge Rapid Urbanisation leading to Urban Sprawl Midscale Hotels √ √ √ Suburban/Outlet Malls √ √ √ √ Mixed Use Developments √ √ √ √ Commercial Offices √ √ Masterplan Developments √ √ √ √ Site and Service Schemes √ √ √ √

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II. What does a Developer do?

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A Real Estate Developer

Acorn is the leading Real Estate Developer, but not everyone can be a Developer

2011 2012 201 3

A real estate developer is a multi-faceted business that coordinates various high risk

activities that convert ideas on paper into Real Property in a profitable manner

Examples of Institutional Real Estate Developers are:

EMAAR – one of the most successful developer in the Middle East, Liberty Properties – South Africa, Lend Lease – Australia, Swire Properties – Hong Kong KB Homes – USA

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The Core Competencies Of A Real Estate Developer

Acorn embodies key competencies that are critical in the role of a Real Estate Developer

2011 2012 201 3

1.

Market Knowledge - Experience in the Real Estate Industry is critical, as well as understanding the Market Pulse, Demographics and Trends 2. Finding Suitable Sites For Development - to assess a wide variety of sites against a future vision for a successful project 3. Creating Powerful Concepts - Creating a strong concept matched with exceptional architecture and aesthetic appeal 4. Negotiating Planning And Other Statutory Approvals - Developers also need to be highly creative and work with planners to present their applications in an appropriate and strategic way 5. Resolving Legal Issues - Real Estate Development comes together with a myriad of legal issues ranging from title and ownership documentation issues & various legal challenges

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The Core Competencies Of A Real Estate Developer, Continued

Acorn embodies key competencies that are critical in the role of a Real Estate Developer

2011 2012 201 3

6. Developing A Strong Business Case - a strong business case demonstrates strong financial and market

viability, and is a prerequisite for funding

7. Sourcing, Negotiating And Structuring Funding - For a development to succeed, it is very important to

Structure all sources of funding (Equity, structured finance and Debt) properly

8. Delivering The Project On Time, Budget And Quality - Execution and Completion delays, cost over runs

and poor quality are the biggest risks associated with development

9. Marketing And Creating Strong Brands - Institutional Developers Build Branded Real Estate Products,

which are then packaged and promoted

10. Letting And Selling Of Properties - Unlike most other products, 70% of the Decision to buy or Let a

Property is made at the Point Of Sale, hence a strong Team is needed for Sales

11. Property And Facilities Management - Many of the leading developers understand that the attractiveness
f developments depends on how well the properties are maintained and managed

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III. Real Estate Investment Opportunity

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Real Estate Investment: We Take A Thematic Approach

2011 2012 201 3

High

Economic Growth Growth of SMEs and Informal Sector Growing Middle Class Youth Bulge Rapid Urbanisation leading to Urban Sprawl Midscale Hotels √ √ √ Suburban/Outlet Malls √ √ √ √ Mixed Use Developments √ √ √ √ Commercial Offices √ √ Masterplan Developments √ √ √ √ Site and Service Schemes √ √ √ √

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Thematic Approach: A Practical Application

Each of the 5 themes was carefully chosen to target a solution to a real problem

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The Problem

The Solution The Opportunity 1 Nairobi and most urban centers are suffering from urban sprawl (the development of adhoc unstructured, un-serviced and unplanned urban centers) Decant the growing floating middle class into master planned communities Master Planned Communities & Mixed Use Developments 2 The demand for retail and entertainment by the Middle Class and Youth is growing faster with limited options currently available Construction of decent and aspirational shopping malls which service the middle class outside the urban sprawl and allows high traffic and provides retail, entertainment and food outlets Suburban / Outlet Malls 3 The demand for commercial space for growing middle to small businesses that wish to occupy entire buildings To provide small commercial offices for SME’s and informal sector together with rental residentials for the Youth Commercial Mixed Use (Retail, Offices & Residential) 4 Requirement for efficient and functional office space to cater for SME growth and their transition into Medium and Large corporates Experience in office development creates the ability to replicate the product for varying markets Commercial Office Parks 5 Lack of affordable and well-placed budget hotels which cater to the growing business clientele Provision of affordable, decent accommodation suiting the needs of a growing business clientele Budget hotels

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Prior Projects Demonstrate Attractive 67% Appreciation

Coming in early into projects has provided a 67% upside opportunity

2011 2012 201 3

In Kenya, and especially Nairobi, demand for residential property is forecast to outstrip supply in 2014,

largely in the middle to upper price range

Nairobi has recorded sustained growth in property prices over the past 5 years. More specifically, the

recent flagship developments

f

gated communities in middle and upper income areas have demonstrated capacity to generate attractive short term returns to early stage investors

Projects

Inception Date Location Description 18 Month Value Appreciation (%) Mbagathi Ridge 2012 Karen Site & Service (1 Acre) 118% Karen Hills 2012 Karen Site & Service (1 Acre) 79% Miotoni Ridge 2011 Karen 5-bed Town Houses 53% Tiara Properties 2010 Lavington 4-bed Town Houses 57% Green Park (Phase 2) 2012 Athi River 3-bed Bungalow 67% Phenom Estate (Phase 3) 2011 Langata 4-bed Maisonette 31% Average 67% Median 67%

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Return Comparison by Asset Class – RE is Highest & Most Stable

Real Estate has been the highest performing and projected to continue over the next 5 to 10 years

2011 2012 201 3

Traditional investments in public markets (fixed income and equities) have returned roughly 10%,

compared to 24% for real estate, whose return performance is projected to continue; and are more stable and uncorrelated with listed markets 23.50% 11.30% 9.70% 8.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Real Estate Bonds 91 Day T-Bill Equities (NSE 20) Per annum Return, 5 Year Average

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Coupling up a Developer & Funding Partner

Acorn, alongside Genghis and Cytonn are bridging the Supply and Demand gap in the Real Estate market

2011 2012 201 3

For many years, the supply and demand have been largely disconnected in the Kenyan Real Estate

market, characterized by adhoc forays by players on both sides

Partnerships, such as those of Acorn with Genghis and Cytonn, couple up a developer with a funding

partner to provide institutional grade real estate products for investment Large Sized Acorn Actis Centum/ Athena UAP Pension Funds ICEA / LION Medium sized Home Afrika AMS Properties Insurance Companies ICEA/ LION Financial Institutions Cytonn & Genghis HF Stanbic KCB S&L Mortgages Shelter Afrique Pension Funds (Lap Trust) Asset Managers Private Equity Funds Demand Side Supply Side

Acorn & Genghis + Cytonn

Institutional Players

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IV. Project Karen Ololua Ridge

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Karen Ololua Ridge Location

The site is located within reach of social,convenience and institutional facilities

2.0KM

2.5KM 29.4 Acres

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Karen Ololua Ridge Concept

A beautiful 29.4 Acre plot (2 parcels to be amalgamated) with a 400 metre frontage of Mbagathi River
Subdivided into 46 fully serviced plots of varied sizes and 46 duplex cottages
Ultimate buyers:- home owners and investors
Located near key conveniences; Karen shopping centre, medical facilities, fine dining, top tier schools
Perimeter wall topped with electric fence, CCTV, fiber optic cable backbone, electricity, borehole to

supplement water supply, landscaping along driveways, street lights

Commercial centre with a gym, entertainment, convenience shop(s), boutique offices
Ease of access – upgrade of Ngong Road and the newly done Southern Bypass
Design code to ensure that the whole estate remains aesthetically pleasing whilst allowing individual

freedom in design as well as maintaining a consistent design theme in the scheme

Estimated completion – June 2016

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Karen Ololua Ridge Master-Plan

Facilities on the well laid out Master-Plan include Fully serviced plots, a Club House, Convenience store and a Gym among many others

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A Prior Successful Story

Mbagathi Ridge is a similar, well executed site & service been undertaken by Acorn Group: 9 acres, Completed in 2014, Fully sold, 80% capital Appreciation

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V. Transaction Overview

SLIDE 29 29 29 Issuer Siyara Properties LLP, a wholly owned subsidiary of Acorn Group Limited Transaction Description Issue of Secured Structured Notes Issue Amount KES 1.728 Bn Note Currency Kenya Shillings (KES) Note Denomination (lot size) Kenya Shillings Four Million (KES 4,000,000/-) Note Rate Fourteen Percent Per Annum (14% p.a.) Fixed Rate Collateral (i) Assignment of sales proceeds from the Ololua Project (ii) Negative Pledge on the Property (iii) First Demand Guarantee by Acorn Group Ltd Real Estate Conversion Mechanism Noteholders will be entitled to redeem 8 notes to be converted into any of the available serviced plots until maturity at a Call Option Price Equivalent of KES 37.5m for a 0.5 acre plot (MAX of 10 options to be triggered on a first come first serve basis)

Key Features

Highlighted are the key features of the Transaction

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Key Transaction Parties

Receiving Bank Transaction Advisors Legal Advisor Registrar Note Trustee

CoSec.

Strong parties have come together in the structuring and issuance of the Note

SLIDE 31 31 31 1 The Siyara Notes have been structured in order to deliver the following core benefits to the Issuer and Investors Note Holders Contribute to the overall funding diversification strategy in view of the current pipeline of projects. 2 Tailored mid-term funding solution with enhanced Pricing Strategy leveraging (i) Low Pre-Sales Requirement and (ii) Optimized Project Turnaround. 3 Enhance the Company’s market visibility ahead of cash calls via DCM / ECM transactions (Listing, Bond issuance, etc.) 1 Attractive mid-term yield on a fully secured instrument 2 Superior Returns to be generated via the real estate conversion mechanism 3 Pre-emption Rights on the sale of new plots (from Month 6 to Month 9) 4 Liquidity Mechanisms (OTC platform) from Month 6, once the Concept & Master Plan have been finalized and approved

Transaction Rationale

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22 nd September, 2014 Table of Contents I. Introduction to Acorn - - PowerPoint PPT Presentation

Q&A