LOVCENINVEST A.D. RESIDENTAL - BUSINESS SETTLEMENT “MALO BRDO” Investment project

LOVCENINVEST A.D. GENERAL INFORMATION ABOUT THE INVESTOR LOVĆENINVEST AD Podgorica

81000 Podgorica, st. II Crnogorskog bataljona, No. 2i

Main activity:

Investment engineering and consulting in the construction industry, construction of residental and commercial buildings.

+ 382 20 273 125; fax: + 382 20 220 122;

E-mail: lovceninvest@yahoo.com

LOVCENINVEST A.D. HISTORY 1971 - Founded as a business association.

1980 - The founder of the Engineering Faculty in Podgorica.

1990 - Transformed into a company with initial capital of 30 companies in the field of design, construction, building trades, construction materials, equipment and related activities.The founders are even 45 employees of the former Lovćeninvest.

BUSINESS REFERENCES

In the past 40 years, along with its founders and partners, it designed, built or participated in the construction of a large number of residential, industrial, tourist, administrative, educational, sports and other high-rise buildings in the country and abroad.

We built hundreds of kilometers of highways, local and unclassified roads, tens of kilometers of railway, over a hundred bridges and a number of hydro-power facilities. When it comes to foreign countries, we built facilities in Libya, Iraq, Germany, Czechoslovakia, the USSR and Russia.

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LOVCENINVEST A.D.

Until 1990, along with its founders and partners, Lovćeninvest has designed and built, among others the

following capital facilities:

Roads: Herceg Novi - Kotor, Tivat - Budva - Petrovac - Bar - Ulcinj, Titograd - Petrovac, Titograd - Cetinje - Budva, Titograd - Nikšić - Plužine, Titograd - Kolašin - Mojkovac, Bijelo Polje - Ivangrad - Rožaje - Titova Mitrovica, city traffic arteries, local forests and non categorized roads...

Many parts of railroad Beograd - Bar (Smokovac, Bioĉe, Bratonožići, Lukovo, Krušev potok, Ostrvica), the section of Yugoslav part of the railroad Titograd - Tirana.

About hundred of bridges on the railroad Beograd-Bar and other roads in Montenegro.

Hydroelectric power stations: “Perućica”, “Glava Zete”, “Mušovića rijeka”.

Barriers and accumulative channels: “Slivlje”, “Krupac”, “Liverovići”, an embankment on Skadar Lake, melioration of

Bjelopavlica Plain...

Since 1990, year as a joint stock company, Lovćeninvest built:

Constructions in Business Center “Kruševac” in Podgorica (1992),

the country Dispatching Center of the Electric Power Company of Montenegro in Podgorica (1992),

Elementary school “Štampar Makarije” and ES “Pavle Rovinjski” in Podgorica (1993),

Business-residental facilities in the settlement “Malo brdo” in Podgorica:

L1, L2 (1991), V1,V4 (1992), N3/N4 and L3 (1995-1996).

Business-residental unit in the urban plot no. 42 DUP “New City1 and 2“ (2005-2007)

Abroad Russia: industrial complex in Raskazov; KVK, Pavilion 2 and Forum as part of International exhibition center in Moscow; Reconstruction of “Soljanka” in Moscow; Business-residental unit in the street “Ĉisti pereulog”

Germany: reconstruction of a nursing home in Rastatt; Parking Heertorplatz in Fulda; New central post office in Bonn;

Construction of bridges Tallbrücke and Saaletalbrücke - BAB A 71, Erfurt - Schweinfurt (2001-2003).

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LOVCENINVEST A.D. Business Center “Kruševac” in Podgorica

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LOVCENINVEST A.D. Business-residental facilities in the settlement “Malo brdo” in Podgorica

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LOVCENINVEST A.D. Elementary school “Štampar Makarije” and ES “Pavle Rovinjski” in Podgorica

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LOVCENINVEST A.D. Business-residental unit in the urban plot in Podgorica

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LOVCENINVEST A.D. FUTURE CONSTRUCTION Residental - Business Settlement “Malo brdo” (Little Hill)

INTRODUCTION Lovćeninvest AD has on disposal its own location to build on, in the urban area of Podgorica, covering an area of about

70.000 sq.m. The entire area is equipped with appropriate infrastructure. So far, about 300 apartments were built, and all

conditions for a continuation of building are fulfilled. Total area of free land for construction is around 53.000 sq.m on which

can be build over 65.000 sq.m of residential and office space.

Within the urban design of the city area of Podgorica, the area of “Malo Brdo” (Little Hill) was treated as part of a

comprehensive system of housing in different types of objects (strings, villas, independent buildings with a smaller

number of housing units, etc..), which ensures to future clients a wide variety of dwellings. We also planned to build an

office space, mostly in the ground floor of a number of housing units, intended for service activities for functioning of

that area.

The area in which the Lovćeninvest started construction and plans new buildings covers 69.440 square meters. So far, about

19.000 sq.m of residential and business premises were built and in accordance with the existing detailed urban plan, over

65.000 sq.m more is plan to be constructed.

When developing the detailed urban plan "Momisici A", particular attention was paid to:

- planning the construction of facilities that will ensure high standards of living;

- planning related additional facilities to the extent meeting the daily needs of the population;

- adjusting the planned construction to the terrain, so that conflict of natural and constructed is avoided.

These are preconditions that will affect the entire complex, through design and construction, to get characteristics of a

residential settlement.

Important determinant of the settlement itself is the concept of transport, with clearly segregated school and pedestrian

thoroughfares. The system of transverse and diagonal street alignments provides a good supply of all facilities in the resort,

for regular and special needs. Transport at rest is solved in a qualitative way - by building garages in the objects themselves,

and partly along the road.

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LOVCENINVEST A.D. LOCATION

With its location, topography and other natural features, the area of “Malo brdo” (Little Hill) is one of the most attractive

locations in Podgorica, especially for housing. When it comes to Podgorica, construction of housing in the settlement “Malo

brdo” (Little Hill) was the first planned attempt to develop the organized urban settlements on the hill.

An area which is included in the Detailed Urban Plan (DUP), whose owner is Lovceninvest, is located in the northeast of the

settlement “Malo brdo” (Little Hill), between wheels 46 and 115. Contact zones in this area are River Moraĉa and a corridor of

the forest belt, which positively affects the microclimate of the zone.

Residential and business settlement “Malo brdo” (Little Hill) is located in the city, 3 km far from the Republic Square,

which is the central town square, with excellent connections to all parts of the city, through the existing road network.

It should be noted that, due to geographical location and topography, the site has excellent insulation, ventilation, views ...

The terrains on the slopes of the “Malo brdo” (Little Hill) are stable and very favourable for construction and do not require

application of special measures for funding. The underground water level is low and equals to 15 m.

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LOVCENINVEST A.D. Plan of Podgorica with marked locations

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LOVCENINVEST A.D. Project “Malo brdo” - disposition of planned facilities

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LOVCENINVEST A.D. Project “Malo brdo” traffic-planned state

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LOVCENINVEST A.D. OVERVIEW OF PLANNED CONSTRUCTION IN THE “Malo brdo” (Little Hill)

Besides the already built 19.000 sq.m of residential and office space, about 65.000 sq.m is planned to be built. An

overview of the planned construction by urban plots is given in the table below:

2/36 3189,58 4320,00 Urban plot Area of an urban gross developed

plot in m² area in m² 2/37 3543,34 4320,00

2/9 2676,74

2/11 1579,65

2/38 4166,96

2/43 2448,00

3745,42

2945,79

4320,00

3888,00

2/12 3126,49 3162,00 2/44 1457,20 1656,00

2/13 42,00 2/45 1386,01 1296,00

2/14 50,00 2/54 1913,90 2232,00

2/47 45,00 2/53 2340,50 2232,00

2/46 42,00

2/15 839,46

2/16 1001,26

2/18 1085,67

2/52 1343,14

2/51 1602,01

2/50 1737,07

1461,31

2228,46

1727,10

1872,00

1872,00

2232,00

2/21 834,64 1335,42 2/49 1630,66 2232,00

2/22 634,43 1015,09 2/48 1645,96 1872,00

2/39 805,25 1288,40 Total zones 2 48169,01 61410,19

2/40 583,29 933,30

1/61

1916,43 1728,00 2/41 543,20 869,20

2/42 743,49 1189,60 1/62

2639,16 2592,00

2/34 1262,22 1656,00

2/35 3058,99 4320,00 Total zones 1 4555,59 4320,00

zone 1 and 2 52724,60 65730,19

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LOVCENINVEST A.D. Project “Malo brdo” - urban plots

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LOVCENINVEST A.D.

MARKET

Podgorica as an administrative and university center, where quarter of the Montenegrin population lives, is an immigration region, which along with a population growth affects the rapid and stable increase in population in the city and generates a constant demand for housing.

Not counting the inherited deficit, only in the period from 2007 to 2011, the demand in Podgorica was 10.563 dwellings, or

about 739.410 sq.m of living space, given the average size of an apartment of 70 sq.m.

year

No. inhabitants No. households mid-year mid-year*

Annual growth concluded Demand for households marriages dwellings**

2007. 176.569 53.505 657 1.380 2.037

2008. 178.554 54.107 601 1.117 1.718

2009. 180.809 54.790 683 1.330 2.013

2010. 185.046 56.075 1.285 1.124 2.409

2011. 185.937 57.346 1.271 1.115 2.386

* Number of inhabitants was divided with an average size of a household which is 3,3 **

Demand for dwellings = increase in households + concluded marriages

In previous period 6.366 apartments have been completed, in Podgorica, with total area of 474.457 sq.m. The deficit of the

apartments in Podgorica 2011. was 4.197 apartments (official statistic).

So, the market is there and the problem is not in the sale, but in the reduced purchasing power of the population. With affordable loans for the purchase of apartments, with appropriate garanties, everything what is built, would have a buyer.

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LOVCENINVEST A.D. ECONOMIC ASPECT

The expected price of construction in a “Malo brdo” (Little Hill) is €889,00 sq.m gross facility area. The cost structure is as follows:

Construction - handicraft works 550,00 sq.m

Design, management, monitoring and others 40,00 sq.m

Municipal contributions 84,00 sq.m

Price of land (300,00 €/sqm-urban plot) 215,00 sq.m

889,00 sq.m

Construction of the entire complex would cost approximately € 58.433.970,00 (65,730 sq.m x € 889 / sq.m).

Taking into account the quality of the location, quality of construction and planned housing standards, it is estimated that the selling price of the apartment will be at least 1.400 €/sq.m.

The average selling area of buildings that will be built in the “Malo brdo” (Little Hill), accounts for 80% of the total developed area, so that through the sale of apartments the total revenue of €73.617.600,00 is planned.

Therefore, we expect gross profit of 26% on the invested capital, which makes this project very attractive to potential investors.

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