Stoneleigh Village Development and Business Report for Bridge Loan April 2015.

Stoneleigh Village Development and Business Report for Bridge Loan April 2015. The following report provides a detailed information pack on Stoneleigh Village that was purchased December 2012 having been a stalled development that was left undeveloped while funded by Coutts and Co. The site history was originally an MOD site that was developed as a cottage Holiday destination with substantial facilities that included a Leisure pool, small gym and bar/restaurant. The Stoneleigh site is a prime location positioned next to Sidmouth in Devon set over 11 acres of land that overlook the Sea. This is an AOB (Area of outstanding Beauty) also world Heritage Coastline. The Site facilities were closed in 2010. There are 58 Cottages on site a mixture of 2 and 3 bed cottages. The 58 cottages were a mix of 38 leased and 19 estate cottages of which 12 had been completely extended, completely refurbished new windows, doors, electrics, kitchen, bathroom, patio, lounge and flooring. Permitted development was granted allowing all properties to be refurbished. The 17 new build planning was awaiting completion and the facilities needed to be extended to deliver a large gym, pool improved, cafe, restaurant and bar. The site properties varied from older style properties marketed for 70k to 100k to the newly refurbished cottages that were being marketed for 200,000, these are all brick built properties. The property use is for all year round holiday use and 365 year rental. SELECT VILLAGES STRUCTURE The structure created on purchase was a property company SIB and an operational company LOCA ventures. The plan is to continue establish the select villages brand at Stoneleigh, Pickering and South Wales. The Select group now has three locations 1. Stoneleigh Village (when complete 75 luxury Cottages + Facilities) 2. Pickering Village (site has planning for 154 villas plus facilities the events hall already exists) Pickering Village is set in 120 acres in Yorkshire nr York, and finally 3. Pembrey Village set in 70 acres as part of the national country park. 200 Villas set in coastal land nr the longest beech in Great Britain. The Select Village Structure has clear areas of value and service:- PROPERTY POSTFOLIO = A MIX OF 1,2,3,4 Bed Cottages and Villas. The property portfolio is a mix of residential and rental vocational properties that have a clear value and return. PROPERTY RENTALS = all properties are available to LOCA ventures for all year round rental the return ranges from 30,000 to 60,000 per annum. LOCA Ventures ltd has set up a central call centre for all property rentals This is a permanent support for all locations supported by additional supply agreements with established UK and International rental agencies. 1

www.selectvillages.com this is the Stoneleigh Village rental site. In addition we utilise the support services of airbandb.com, holidaycottages.com, bookings.com, bluechip.com, youvilla.com, homeaway.com. The combined support delivers all year round rental use for all cottages. OTHER INCOME STREAMS SECURED BY LOCA Select Villages. The investment by Loca Ventures/SIB in Stoneleigh and Pickering has delivered a clear business for property rentals plus the other key areas of value. LEISURE GYM & POOL providing membership incomes and support for day guests and the local community CAFE, BAR and RESTAURANT providing an all day offer for breakfast, lunch and dinner. The facilities offering a facility for the site and local community. EVENTS - Planned events from music to activity based in partnership with Global Events Management The events portfolio covers all locations in Devon, South Wales and Yorkshire. A full events calendar is available with financial support for all locations. The benefit of Events also improves the rental demands and rates. ENERGY Partnership The energy partnership provides a 20 year energy model that provides proven renewable energy solutions and funding with profit share returns. The overall site expansion has evolved through the success of Stoneleigh Village that has delivered sales returns and incomes that provide an all year round return for all areas of services = property rentals, Leisure incomes, restaurant, cafe & bar incomes plus events and energy. Over the next 24 months all sites will advance based on the investment and plans that have all been secured for delivery. STONELEIGH VILLAGE HISTORY AND COMPLETION (LOCA & SIB) Over a 16 month period LOCA / SIB have transformed the Stoneleigh site from a dormant holiday location to an active location that has advanced in each area and achieved clear milestones and successes. The Select Village model has been validated and expanded based on the success and transformation of properties, facilities and business incomes. DEC 2012 Stoneleigh was purchased by SIB and LOCA Ventures Limited. JAN 2013 to JUNE 2014 LOCA Ventures develops new plans for the facility complex that provide additional space for a Leisure Gym, Pool and Restaurant, Cafe and Bar. The plans needed to be secured to enhance the income options also support additional sales targets. 2

The property values had been set at 235,000 for a refurbished cottage. For initial sales we offered a discount based on the facilities being closed and planning outstanding. The first sales were secured after sales brochures and agreements were confirmed - COTTAGE 74 was sold for 200,000. Worked commenced to complete all existing cottages = 35, 46, 47, 48, 49, 50, 51, 55, 56, 57, 69, 70, 73 and 74. SIB/LOCA invested in all properties to complete interior refurbishments and some extensions. The Permitted development for site cottages allows a significant extension. STONELEIGH SITE MAP Image of standard semi cottage 74 sold for 200,000 in 2013. Interior and site view. 3

Plans of a standard two bed cottages identical for 46, 47, 48, 49, 50, 51, 55, 56, 69, 70, 73 & 74 LOCA / SIB have invested each month to complete all properties for sale and rental. The properties work being completed by a core team. ANDY Mc Cann an experienced project manager who was appointed to oversee all stages of development and planning D2 an experienced architect was engaged to advance all planning and development drawings for the cottage extensions and refurbishment plus facility planning and support drawings. Health and safety consultants, energy consultants and structural engineers were all engaged to support the LOCA / SIB development and operational plans An in house team of experienced construction staff were employed direct to live and work at Stoneleigh to deliver an approved plan 10 full time construction staff = foreman, electrician, plumber, carpenters, bricklayers, roofers and painter/decorators plus labourers. Are all working direct for LOCA Ventures. A local Electrical contractor was also engaged to support the facility plan and total rewiring, M&E need. All of the above team were appointed and still work for LOCA based on the program for delivering all development areas. OPERATIONAL SITE TEAM As there are existing cottages there needed to be a permanent present s onsite to maintain the grounds and estate. The 38 cottages that are leased by the estate received an annual service charge and ground rent. The service charge is to support all grounds and property maintenance plus waste collection and site cleaning. BILL Hayman was recruited as Stoneleigh Village General Manager responsible for the daily site management and rentals. A full time cleaner Sarah was recruited to manage all cottage cleans and change over support by an assistant cleaner Debbie Hayman was also recruited to support the furniture procurement for all cottages also general administration. The head office for LOCA being The Hijaz estate in Nuneaton also provided a core support for all accounts, procurement and administration. The overall site delivery was then clearly resourced to ensure all targets and milestones were achieved. Nick Spysznyk, Shaykh Siddiqi and faried provided the overall planning for all business areas. The six month program for establishing an experienced team was achieved at the same time sales agents were appointed to advance all cottage sales to realise property assets to generate additional income for construction, refurbishment and delivery of the facilities. MIDAS a property specialist group that has intelligent property investors were appointed selling property 74 Whitefoords LLP were also appointed to provide access to premiership footballers 4

Midas advanced to provide an initial interest when sales for holiday properties was low also mortgages for buyers were also an issue. Midas and LOCA succeeded in securing mortgage offers and the commencement of an active sales plan. Whitefoords LLP engaged and reviewed the site for investment by profiled premiership players. They agreed to advance with sales to their clients based on the property offer and proven values. JUNE 2014 to MARCH 2015 During the following months LOCA / SIB needed to finalise all sales agreements by providing a new 199 year lease that added value to the estate in terms of ground rents set at 1000 per annum with an annual RPI. There was also a management agreement to secure rentals incomes after sale of all properties. The following achievements were secured:- The 199 year lease was completed and added value to all properties all valuations confirmed the price of 235k for the standard semi cottage. Principality Building Society approved mortgages then Cumberland and now several mortgage providers are supporting Stoneleigh Village and Pickering Village, Rental commenced but low key as the facility plans were secured and build work commenced. Facility plans secured and advanced with all builders and consultants engaged. Facility Plans elevations of the front and side. 5

Approved facility plans for the Pool, Leisure, Cafe, Bar & Restaurant Planning permission was given by the Council East Devon District Council. The works commenced in August 2014 all old walls were taken down, the overall property roof was removed all foundations set and walls build RSJ s installed to create open plan spaced. The site office that was based in the facility was relocated to cottage 35. A major rebuild and works plan commenced. Between August and December all extensions were completed and foundations set a 40% increase in the over facility size. A new roof was completed and all internal works advanced to the point that windows, doors and the final phases could commence in January 2015. Planning and works resulted in 400,000 being invested in the facilities between the months of August 2014 and December 2014. Cottage refurbishments completed between JANUARY 2014 and December 2014 to provide properties for sale and rental. Cottages 35, 46, 47, 48, 49, 50, 51, 55, 56, 57, 69,70,73,74 were all completed. 6

Images of site works completed on a standard 2 bed cottage. SALES advanced throughout 2013/14 and the demand for Stoneleigh Village cottages increased as did the model for an investment cottage based on the 199 year lease also LOCA management to provide a rental support and return. MIDAS, WHITEFOORDS LLP and an additional agent REW advanced all sales to the point that several properties completed between the months of July 2013 to December 2015. COTTAGE SALES TYPES PRICE FURNITURE Land registry 74 SOLD 2 bed 200,000.00 yes 55 SOLD 2 bed 200,000.00 12,000.00 yes 48 SOLD 2 bed 200,000.00 12,000.00 yes 46 SOLD 2 bed 200,000.00 12,000.00 yes 50 SOLD 2 bed 200,000.00 12,000.00 yes 56 SOLD 2 bed 200,000.00 12,000.00 yes 69 SOLD 2 bed 200,000.00 8,000.00 yes 70 SOLD 2 bed 200,000.00 8,000.00 yes 17 SOLD/2015 2 bed 188,250.00 yes 72 SOLD /2015 new build 250,000.00 yes PROPERTIES SOLD 2014 2,038,250.00 76,000.00 2,114,250.00 The sales above have demonstrated several key points:- 1. THE PAST COTTAGE SALES on Stoneleigh for a prime two bed are worth 235k initially without the site being completed in terms of the facility block and landscaping. An old valuation by alder king advised that an uplift of 15% to 25% would apply to all cottages when complete. The property values would increase to 275k a standard two bed to 300,000 new build. 2. NEW BUILD there is 17 new build cottages that have a value of 250,000 to 325,000 for larger two and three bed cottages. The sale of 72 showed that people will now buy off plan the buyer received a discount but paid the full 250,000 to SIB / LOCA ventures. The New builds are now advancing as there are reserves taken for three all at 250,000. LOCA / SIB will retain ownership of the remaining new builds as the purpose of sales was to invest in the site through sales of estate cottages and purchase of the older style cottages that were much smaller than the estate existing two beds. 7

New build plans that are being delivered from May 2015 to December 2015. These properties are all prime properties based on the size and additional bathrooms. 17 New Build properties will advance Stoneleigh to 75 cottages. The presale demand is high based on full page advertisements that were placed in the telegraph, times and express. The presales offer is based on agreements prepared by SIB / LOCA for off plan sales Pickering and Stoneleigh provide modern cottages and Villas that all utilise the best renewable energies. 3. OLDER STYLE PROPERTIES The Challenge for LOCA / SIB was to transform older style smaller cottages that are mainly leased on 99 year leases that stand at 75 years in some cases. Some of these properties are marketed for sale by local agents at 70 to 80k. They are smaller and have limited living space compared to the larger existing two bed cottages. LOCA estate had a few older style cottages 17, 18, 27 and 28 these we decided to completely redesign to create the right size and extension at the same time staying within the permitted development approval. In January 2015 we commenced work and completed stripped out all interiors and extended to the front to create a larger living space and patio. The result has been incredible both 17 and 18 nearing completion have now both sold for 188,500. They have great views but the values are clear and confirmed. We are now progressing 27 and 28 and interest has advanced for viewing for the following two weeks. The success of completing the improved extension has now allowed LOCA to advance with a buy back of older properties and sales based on demand from the market. 8

In the next five months in 2015 being April, May, June, July, August and September will see all properties being sold that delivers the estate the remaining funds to complete all areas. COTTAGE SALES TYPES PRICE FURNITURE deposit 18 reserved for sale 2 bed 188,500.00 6,000.00 paid 20 older style 3 bed 200,000.00 10,000.00 interest 12 older style 2 bed 165,000.00 6,000.00 for sale 21 older style 2 bed 165,000.00 6,000.00 for sale 28 older style 2 bed 165,000.00 6,000.00 for sale e2 older style 2 bed 188,500.00 6,000.00 interest 32 estate larger 2 bed 225,000.00 N/A paid 35 complete large 3 bed 3 bed 280,000.00 10,000.00 interest 57 complete large 3 bed 3 bed 325,000.00 10,000.00 for sale 64 reserved for sale 2 bed 250,000.00 N/A paid 65 reserved for sale 2 bed 250,000.00 N/A paid 66 reserved for sale 2 bed 250,000.00 N/A paid PROPERTIES for sale 2015 2,652,000.00 54,000.00 2,706,000.00 Stoneleigh Village will have completed a 24 month plan that has seen the site become an active development at the same time secure market sales that delivered funds to complete the facilities and also the funding for all new builds. The model has been validated on several levels 1 - Refurbished properties. 2 Older Style Properties and 3 New Builds. In all areas LOCA has achieved target sales. The remaining sales plan delivers 2.7m to complete all sites development plans. BUILD PROGRAM & COMPLETION The remaining phase of development has commenced for all areas of Stoneleigh. The success and onsite resources are ready to complete all remaining areas the new build program will be supported by KMS, an experienced construction partner also engaged for Pickering Village. 2015 Program FACILITY PLANS The remaining works can advance now that all windows and doors are in place. The internal works being 1 st Fix and plumbing are advanced to leave the remaining fit out of the restaurant, cafe and bar plus the pool and gym will be completed throughout April 2015 and May 2015 to open in June 2015. LOCA / SIB have invested 1m to complete all areas of the new facilities the trading incomes from all areas will be received from June 2015. ESTATE RENTALS The estate cottages have reached 9 for rental with an additional 5 delivered in April so 14 cottages will be rented to deliver 35k each property per annum to deliver a gross rental of 490k per annum. Rentals rates will be increased on opening of the facilities as demand for private accommodation with access to leisure and dining is clear all local market knowledge shows demand. NEW BUILDS The new build program commences throughout 2015 and completes in March 2016. The program is based on the 2016 season to provide all properties for full rental = 30 properties will be managed by LOCA to deliver maximum rentals 1m gross per annum.. 9

BUY BACKS a fund is secured to provide a rolling facility for buy backs and sales 5 are currently commenced with an additional five being agreed for buy back. The total buyback capacity for the site is 20 properties. The program will advance by phased completion five at a time each taking three months A twelve month program delivers all sales and additional sales returns. LANDSCAPING AND FINAL INFRASTRUCTURE the landscaping plan completes throughout September 2015 to February 2016. All areas are set for completion with the support of the team including the energy partnership. LOCA / SIB have managed all phases to achieve the transformation of a modern gated vacation complex. Through the growing UK demand for investment properties Stoneleigh Village has set the ground works for Pickering and South Wales. The development team are established and working to set deadlines for sales and facility opening. KMS add the additional support for new builds Information attached. LOAN FOR PROPERTY 73 and 10 STONELEIGH VILLAGE PROPERTY 73 Is a prime front of site with sea and valley views next to 74. The property is completed and rented for Vacation all year round delivering currently 20,000 per annum as the Stoneleigh site has not been fully marketed and will not be until the facilities complete. The property plans and drawings are identical to all the estate refurbished and sold properties past valuations show the property is worth 235k. With a secure rental that is being delivered. Property 73 will be offered as security for a short term loan allowing a first charge and income. PROPERTY 10 is offered as a second property that is an older style property that was extended by the previous owners. The extension is not as impressive as the extensions on properties 17 and 18. Property 10 is supported by a rolling short term lease that delivers 7,200 per annum. The valuation of 1o is supported by a previous valuation of property 1 that was values at 150,000. 10

COTTAGE SALES TYPES PRICE FURNITURE INCOME PA 73 estate 2 bed large 2 bed 235,000.00 6,000.00 20,000.00 10 older style 2 bed 150,000.00 3,000.00 7,200.00 PROPERTIES owned by estate 385,000.00 3,000.00 27,200.00 SECURITY PROVIDED = two properties that have a proven sales value combined of 85,000. Both properties have estate furnishing that cost 9,000 INCOME = Both properties provide an annual income of 27,200 LOCA Ventures will provide a 199 year lease that provides a clear value LTV that is covered by the sale exit for 73 or another property that is currently advancing. LOCA & SIB ASSET AND BUSINESS VALUES The Stoneleigh Village has been a development project for SIB and LOCA for the past 18 months. Based on sales and investment the site has advanced through each stage and value. VALUATION 2013 & LOCA INCOMES 2013 LOCA OPERATIONAL COSTS 11

Loca Ventures Ltd established a core team to establish the planning, mobilisation for construction, sales plan and estate management. A fund was provided to cover all monthly staff needs 25,000 per month covered all core cost VALUATION 2014 & LOCA INCOMES 2014 The Stoneleigh site had been established with success in property sales and development had commenced LOCA / SIB investing all sales receipts back in the estate facilities and estate building. Rental incomes commenced based on a low profile rental plan that enabled the properties to be let to 4 long-term rentals and open market rents. Work continues to advance on all areas of the Leisure facility, cafe, restaurant and bar. LOCA continued invest to complete all areas of the facilities. The Gym extensions advanced for internal works Planning changes made for all areas and agreed with the council Target to complete all external works on target for June 2014. LOCA OPERATIONAL Cost. The development team has continued to achieve the targets set in completing all properties and planning. Development team costs running at circa 20,000 per month 12

All procurement supported via Hijaz and Andy McCann. The Architect and planning team finalised all areas of works and approvals More cottages are completing and supported by increased sales support from REW The operations team continued to build a strong support for all existing leaseholders now 44 in total. Cottage rentals started to grow but still limited due to the facilities advancing but not open. The Onsite team remained stable to support all the estate site maintenance, cleaning and estate management. RENTALS and viewing increased and REW promoted new build sales via national press. VALUATION 2015 & LOCA INCOMES 2015 LOCA OPERATIONAL COSTS LOCA Ventures has established an onsite team for all areas of service delivery Estate Management includes an administration office (General Manager, Administration, Estate cleaning and maintenance staff). Cottage rentals team on site there is a cleansing team responsible for all cottage rentals, changeovers and management.. Leisure team responsible for membership and daily management of the Gym and Pool Restaurant cafe and bar staff and management 610,000 covers all management and procurement costs to run all of Stoneleigh Village. The central rental team and accounts being centralise. 13

BUILD & REFURBISHMENT COSTS A total of 5,665,000 would have been invested in Stoneleigh Village by September 2015. The construction team are all included in these costs. The position has advanced throughout 2014 and 2015 to provide a completed estate with 75 cottages that are leased, managed and retained to provide a sustained income stream and business. Development costs have been supported by estate property sales and investment through the Hijaz Group... CENTRAL HEAD OFFICE SUPPORT COSTS LOCA has also established the required support structure for the Select Villages based in the midlands. RENTALS An in house team supports and controls all rental agreements for Stoneleigh Village. Utilising national agents and networks the rental business can now be advanced to maximise increased rentals based on the completed facilities. ACCOUNT & ADMIN An in house team supports the procurement and accounts control and management for all Stoneleigh site activities. COMMERCIAL AGRREMENTS LOCA has an internal legal team that supports all sales and rental agreements. The Construction support is also covered for all requirements engagement of services, building warranties and supply agreements. VALUATION BASED ON SUCCESSFUL OPEREATING BUSINESS STREAMS 2016 LOCA ventures has established a new Leisure Group that can benefit from the UK demand for high quality leisure breaks through the provision of high quality rental homes (Cottages and Villas). The sales returns have all been reinvested into the estate to create a completed facility and property portfolio for all year round rental and leisure returns. Each valuation is based on the following principals:- Retained property values based on RICS valuations all properties will appreciate over time, current values have been established by site sales and financial property institutional validation. Rental incomes based on known market rentals for the local area and property type and offer Facility offer The standard leisure offer of membership will reach 400 members, this will be capped based on facility capacity and use. Day guests locally and site gusts staying in Stoneleigh cottages (75 in total completed 2015) The facility and rental/estate business will grow throughout 2015 and 2016 to reach a natural balance that shows a consistent turnover and net profit. The net profit sustained for two years demonstrates a business value; f sold a multiple of six times net profit value has been applied. GROUND RENTALS for all properties provide a 199 year lease security for annual ground rentals. The current ground rent is 1000 build each year by the national RPI growth. This value is an annual income that can be sold to pension groups / ground rental investment groups. The Stoneleigh site has grown year on year since the purchase of SIB and management of LOCA. Property values have grown based on the style of build and quality plus use being 365 days per annum. A total investment of 5.7m has delivered increased value and secured available incomes. 14

Valuations attached provides the growth areas and clarity year on year for all areas of Stoneleigh ACCOUNTS STRUCTURE The Select business values property incomes that are known. All cottages should be providing a return of 40k per annum based on known seasonal demands plus demand for all year round breaks. SIB provides a property company structure with estate values secured while LOCA builds the business values across each business stream. ACCOUNTS structure is supported by clear areas _ o General Payments and receipts covered through a LOCA account designated for all payments o Property sales account that support receipts and reinvestment o Rental incomes received by in house and agents o Estate incomes and costs supported by Service charge incomes and services to all cottages other than rental o Build and refurbishment costs all funds invested in Stoneleigh Recently establish to support the opening of the Stoneleigh facilities - two clear areas for monitoring and management. o Leisure account to collect all memberships, site guest and local community use o Cafe, Restaurant and Bar an all day offer from 7.30 am to 10 pm The accounts and business stream managed by experienced staff and team. BANK STATEMENTS Sales/income/NET Stoneleigh Village has been a development project from 2013 to 2015. There has been an ongoing team and program that has been successfully funded through estate sales and service charge, ground rent and recently (past 12 months) a property rental income. We have attached bank statement for 1. Sales receipts, 2. Rental receipts and 3. Rental receipts. Construction and refurbishment cost have been detailed to demonstrate the level of investment (estate investment) that has provided funding for all areas. PROPERTY VALUTIONS Property values have been validated by all sales achieved plus demand for all future sales. The two properties (73 and 10) offered for security has a proven sale value. The repayment of a short-term loan is secured by the sale of cottage 73 alone ( 235k). The estate has additional incomes from other sales plus rentals that demonstrate the agreement can be serviced and repaid. LOAN TO VALUE exposure is at a low level supported by a first charge guarantee. PAST VALUATION has all been validated by RICS surveys for most sales when a mortgage was required. There have been cash buyers that conducted there reviews prior to completion. FORECAST PLAN March 2015 to March 2016. A detailed cash flow has been provided for the next twelve (12) months. The cash flow and plan covers the completion of all remaining construction and refurbishments. SERVICE AREAS AND BUSINESS STREAMS All areas have been detailed to show known incomes and returns:- 15

o Secured Estate Incomes Ground rents and Service charges o Rental incomes current 14 cottages growing month on month o Leisure incomes commencing June 2015 o Cafe, Restaurant and Bar incomes commencing June 2015 o Property sales that continue month on month All costs and returns detailed for a 12 month period show:- TOTAL INCOME TOTAL COSTS NET CASH SURPLUS (after all costs) 6,724,730.65 4,611,370.00 2,113,360.65 ATTACHED CASH FLOW SUMMARY STONELEIGH VILLAGE REPORT APRIL 2015 COMPLETED BY LOCA VENTURES BOARD ALL INFORMATION VALIDATED BY PAST RESULTS & KNOWN DEMANDS APPENDICES Stoneleigh Village Brochure Stoneleigh Villages property sales summary Stoneleigh Village property valuations Property 73 details and value Property 10 details and value Sales advancing April 2015 to September 2015 Stoneleigh Facility plans and position Planning consent Stoneleigh Village 12 month Cash flow LOCA COMPANY REGISTRATION Shareholders details SIB & Nick Spysznyk Bank Statements 6 months Site Plans and images Select Villages Pickering Bank accounts Statement and summary 16