Contacts

Q1 2011

BPT Baltic Opportunity REIF Quarterly Fund Report

As of 31 March 2011

Panoramic view over Riga, Latvia

CoMMentARy

BPt Baltic opportunity Fund (ReIF) is a direct real estate fund investing in commercial properties in the Baltic States (esto-nia, Latvia and Lithuania) focusing on the capitals and other areas with a catchment population of +50,000. the Fund tar-gets institutional investors and should be seen as a medium term opportunity investment with a corresponding risk.

At the end of Q1 the Fund successfully raised additional capi-tal from an institutional investor, which ultimately provides the Fund with a better portfolio structure and risk-adjusted return profile. the target is still to have the Fund fully sub-scribed at year-end 2011. the Fund is currently working on completing the first acquisitions in the office segment in or-der to make use of the local expertise of BPt’s property man-agement team and benefit from the limited supply of quality office space while economies are growing.

ACtIvItIeS oveR the QuARteR

With a stronger capital base in place for the Fund, the man-agement team has continued to persistently screen the mar-kets in order to find the best value cases and pre-select ob-jects matching or exceeding our benchmark expectations. the real estate investment market has activated strongly at the end of the Q1 with an increasing number of properties on offer, majority of opportunities located in estonia and Lithua-nia. In spite of the large number of opportunities only a hand-ful qualifies as solid medium to long-term investments. It is important that even though the price at first can be very at-tractive, long-term appeal and exit prospects of the property remain equally, as good.

Currently, the Fund has reached a preliminary agreement to acquire two A-class office buildings in estonia and Lithuania. At the beginning of Q1 the management team was negotiat-ing an acquisition of two properties, but was not able to reach an agreement due to disagreement in price in the first case and lease agreement length in the second.

During Q1 2011, the management team has further shaped the work processes with the Fund’s depositary bank Swed-

PreliminaryagreementtoacquiretwoA-classofficebuildingssigned

BettermarketconditionsandsolideconomicgrowthinbothEstoniaandLithuanina

Newcapitalcommitmentsplannedtobeplacedbymid-2011

AlgisVaitiekunas Partner,FundManager email: av@bptam.com Direct tel. +370 5 204 71 10

TarmoKarotam FundManager email: tk@bptam.com Direct tel: +372 6 309 427

Fund Performance

nAv per share euR 99.60

Latest dividend per share n/a

total return since inception n/a

Return since inception annualised n/a

Portfolio

target number of properties when fully invested 15-20

target average gross property value when fully invested euR 5-50m

occupancy ratio (quarter average) n/a

Fund facts

Fund inception December 2010

expected exit 2015 with a possible 2 year extension

Status Closed-end, open for investments

target share capital euR 100.0m

Investment capacity euR 200.0m

Gross property value n/a

Loans n/a

Loan to value n/a

Interest coverage n/a

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bank and appointed qualified investment committee mem-bers to the Fund. At present, the investment committee has 3 members: Mrs. Kristel Meos (Chairman) – she is estonian, and one of the most accomplished persons in the Baltic pri-vate banking sector with broad experience within real estate; Mr. Andris Kraujins – he is Latvian, and today a private equity investor, but used to be a BPt partner and Mr. Lars ohnemus - Swiss, and Chairman and founder of BPt Asset Management.

MARKet outLooK

the end of Q1 2011 has brought a larger supply of investment opportunities to the market as many sellers are increasingly testing whether they are able to cash out from their real estate assets. Furthermore, many developers whose projects have been frozen over the past years are now getting squeezed by banks with refinancing deadlines and increasing interest rates. on the other side, banks are willing to take the neces-sary adjustments on loan terms and principles to find new ul-timate and reliable owners. In general, the number of buyers of commercial properties, especially larger objects remains very limited. Just one institutional grade deal was completed during Q1, by Citycon who bought the well known “Kristiine Shopping Center” (45,000 m2) in tallinn for 105 meuR.

the Baltic economies quickly bottomed-out in 2009, and from 2010 we’ve seen steady improvements and recovery. In es-tonia, after a strong rebound in Q4 2010, the economy con-tinued to grow at a rate of 8% in Q1. Respective Q1 numbers for Latvia and Lithuania were 3.4% and 6.9%. Growth is led by export, driven by a faster-than-expected recovery of ex-ternal demand from main export markets. Many companies that were able to overcome the difficult period of 2008 -2009 are now able to plan ahead, build strategic plans for the next three-five years and are thus looking to expand or establish their presence. vacancies are continuing to reduce, espe-cially in good quality properties. Rental rates remain stable with the first signs of upward trends only in select prime loca-tions in tallinn. highest take-up of office space comes from It, high-tech, the financial and energy sector and relocation of expanded back offices.

Salaries have also started to grow as they are getting adjusted to productivity/cost efficiency and as companies are making more and more profits, especially in export sectors. the retail sales however are remaining stable and the forecast is mod-erate (2-5% in 2011). this is due to the fact that household consumption will be affected by selected tax increases and food and energy driven higher inflation in 2011. Stronger re-tail sales growth is expected in 2012.

BPt Baltic opportunity Quarterly Fund Report Q1 2011

Development in NAV per share

Dec.10 Jun.11 Dec.11 Jun.12 Dec.12 Jun.1385

90

95

100

105

110NAV

0

2

4

6

8

10Dividend %

5 NAV = 6 mm(x-85)*1,2 mm

view over tallinn, estonia

Target allocation in percent

LithuaniaLatviaEstonia

40

30

30

40

30

30

RetailOfficeOther

Target allocation reflects the fund once it is fully invested.

vilnius, Lithuania

Fees

Management fee 1.9% of nAv per annum

Incentive fee 20% above a hurdle rate of 11% return on paid-in capital