LLC Chavchavadze 64B

Investor Presentation

July 2024
1
 Disclaimer
Disclaimer

This presentation does not represent the offering of securities, or any basis and/or advice The information contained in this presentation has not been independently verified by or on
for making an investment decision. Any potential investor shall make his/her decision behalf of the Company, the placement agents, any of their respective affiliates or by any
regarding the purchase of the securities based on the prospectus. These materials are not independent third party. To the extent permitted by law, neither the Company nor any of its
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information that may be necessary or desirable to evaluate “LLC Chavchavadze 64B” (the this presentation or otherwise arising in connection with this presentation. To the extent
"Company”) fully and accurately and shall not constitute an offer to sell or the solicitation of permitted by law, the placement agents accept no liability for any direct, indirect or
an offer to buy the securities. consequential loss or damage experienced by any person as a result of relying on all or any
part of this presentation and any liability is expressly disclaimed.
This Presentation is not a prospectus or offering memorandum and investors should not
subscribe for or purchase any securities referred to in this Presentation. This Presentation does Warnings with respect to future estimations/opinions: Assumptions, opinions and views
not constitute an offer to acquire any securities and should not be considered as a reflected in this presentation are solely opinions and forecasts of the Company. Forward-
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subscription for the securities may be made. The approved prospectus will be available at from an anticipated development, such as changes in regulatory systems, increased or new
web-page of the National Bank of Georgia: https://nbg.gov.ge/supervision/public- competition in the market, risks arising from acquisitions, interest rate and currency risks or
companies. The Company announces that the information provided in this presentation is in risks based on previous liabilities and litigation risks. Neither the Company nor its management
accordance with the prospectus. Herewith, for avoidance of any doubt, the company, the can answer for the future accuracy of the opinions expressed in this presentation or the actual
placement agents, and any other parties exclude their liability, to the maximum extent occurrence of the forecasts. The information contained herein has been prepared using
permitted by law, for any direct or indirect damage or loss incurred or potentially incurred by information available to the Company at the time of preparation of the presentation. External
any person as a result of reliance on or use of the information provided in the presentation. or other factors may have impacted on the business of the Company and the content of this
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This presentation does not intend to assess any risk in relation to the investment in placement agents or any of their affiliates undertake the obligation to provide access to any
securities. Any potential investor shall assess any such risks himself/herself. additional information or to update this presentation.

This Presentation and its content has not been approved or verified by National Bank of
Georgia.

2
 Disclaimer
Disclaimer

This presentation and its contents are confidential and proprietary to the Company and no part This presentation is not intended for distribution to, or use by, any person or entity in any
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information in this presentation until after the information has been made generally available. the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or
sold in the United States or to US persons (as such term is defined in Regulation S under the US
The securities provided in this presentation shall not be offered in any jurisdiction in which Securities Act of 1933) unless the securities are registered under the Securities Act, or an
such offer, solicitation or sale would be unlawful prior to registration, or in which jurisdictions exemption from the registration requirements of the Securities Act is available. The issuer of
such securities are not exempted from registration or additional qualification under the the securities has not registered, and does not intend to register, any portion of the offering in
securities laws of any such jurisdiction. the United States, and does not intend to conduct a public offering of securities in the United
States.
These materials are not to be considered as a recommendation by the company or the
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investment activity to which this communication relates will only be available to and will only
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rely on this communication.

3
 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

4
Indicative Bonds Offering Terms
The final terms will be specified after the approval of the the Final Term Sheet

Issuer ▪ “Chavchavadze 64b” LLC

Sector/Industry ▪ Real estate management, rental and development

Type of Bond ▪ Unsecured and unsubordinated bonds

Volume ▪ Up to EUR 20,000,000 equivalent, EUR 3,000,000 for the current tranche

Nominal value / Min. placement lot ▪ EUR 1,000 / 1 Bond

Currency ▪ Euro (€)

Estimated Issuance Date ▪ 22 August, 2024

Tenor ▪ 2 Years

Issue Price ▪ 100% of the nominal value of the bonds

Coupon Range ▪ 7.25%-7.75% Annual fixed coupon (the final coupon will be determined as a result of book-building)

Use of Proceeds ▪ Refinancing of existing bank liabilities

Coupon Payment ▪ Semi-annual

Placement Agent ▪ “Galt and Taggart” JSC and “TBC Capital” LLC

Listing ▪ Georgian Stock Exchange

Governing Law ▪ Georgian Law

strictly private & confidential 5

Indicative Bonds Offering Terms
The final terms will be specified after the approval of the the Final Term Sheet

Issuer ▪ “Chavchavadze 64b” LLC

Sector/Industry ▪ Real estate management, rental and development

Type of Bond ▪ Unsecured and unsubordinated bonds

Volume ▪ Up to EUR 20,000,000 equivalent, USD 10,000,000 for the current tranche

Nominal value / Min. placement lot ▪ USD 1,000 / 1

Currency ▪ USD ($)

Estimated Issuance Date ▪ 22 August, 2024

Tenor ▪ 2 Years

Issue Price ▪ 100% of the nominal value of the bonds

Coupon Range ▪ 8.25%-8.75% Annual fixed coupon (the final coupon will be determined as a result of book-building)

Use of Proceeds ▪ Refinancing of existing bank liabilities

Coupon Payment ▪ Semi-annual

Placement Agent ▪ “Galt and Taggart” JSC and “TBC Capital” LLC

Listing ▪ Georgian Stock Exchange

Governing Law ▪ Georgian Law

strictly private & confidential 6

Key Covenants & Bondholder Protection Mechanisms
Clearly Defined Bondholder Rights, Decision-making and Communication Process

Periodic & current statements

▪ Disclosure of the audited annual report no later than May 15;

▪ Disclosure of non-audited half-yearly statements no later than August 30;
▪ Other current statement defined by legislation;
▪ Relevant information are publicly available in both English and Georgian:
▪ https://nbg.gov.ge/
▪ https://gse.ge/
▪ https://reportal.ge

Financial Covenants

Ratio of consolidated leverage to investment value of

DSCR: =>1.2 Debt to EBITDA ratio: <=6.5x
property: <=70%

• If additional obligations are taken on, the company's debt • If additional obligations are taken on, the company's
• If additional obligations are taken on, the company's debt must
service coverage ratio must be at least 1.2 (calculated using the consolidated leverage to the investment value of the property
not exceed 6.5 times EBITDA;
LTM approach, over the last 12 months); must not exceed 70%.

Other Non-Financial Covenants

Maintaining insurance with financially stable insurers Continuation/maintenance of primary business activity Restrictions on disposals

Restriction on dividend payment Restriction on encumbering assets Property maintenance

strictly private & confidential 7

 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

8
Company Overview (1/2)

Business Description
Business Center with High Occupancy Rates and Premium Location

Chavchavadze 64B is an A-class business center

featuring modern architecture and a distinctive The company's core business activity is renting out
facade. The business center is located in the its 19-story office and commercial properties
city center, on Chavchavadze Avenue, Vake

Key Tenants:
The business center appeals to embassies and international organizations, therefore, the company's tenants
include:

EU Delegation Council of Europe EUMM Asian Blue Japan Embassy ALMA Modern and
ROCHE
Development Orchard Tobacco Of Contemporary
Bank Finance International Japan Georgian Art
Gallery

Development Timeline:
Establishment of Partnership with the Initiation of Partnership
Initiation of Partnership
EU Delegation and Signing of a 10- with the Council of
with JTI
Year Contract Europe

2011-2013 2018 2019 ძ 2020 2021 2022 2023

Completion of Construction
Founding the (Interior Works: 4 Initiation of
Company; Initiation of
Underground Floors, MEP, Partnership with
Obtaining Partnership with
HVAC Systems, BMS System the Asian
Construction Rights; EUMM
Setup) Development Bank

9
Company Overview (2/2)

Business Description
Business center with consistent and stable revenues

4-10 years 13,200+ sq.m USD 32 mln c. 96% c. 95% c. 90%

Average Duration of rent Net Leasable Area Occupancy Rate International Institutions Euro-Denominated
valued business center
agreements share among Tenants Revenue, 2023

The commercial real estate industry has experienced steady growth in recent Distribution of Rented Office Spaces by Tenant Type:
1 Growing Market years.. This is reflected in the sector's reduced vacancy rates and increasing rental
prices 83% 84%

Location is a critical determinant for businesses when selecting an office. 59% 56%
Central, Premium Chavchavadze 64B is located in one of the most desirable and premium locations—
2 Vake, on Chavchavadze Avenue. According to TBC Capital's research, the highest 39%
Location actual rental rates in the city are recorded in the Vake district.
35%

9% 12%
8% 4% 6% 5%
The company’s primary tenants are prestigious international organizations such as
3 High-Reputation the EU Delegation, the Embassy of Japan, international financial institutions, and
others. This high caliber of tenants significantly mitigates counterparty risk 31-დეკ-21 31-დეკ-22 31-დეკ-23 10-აპრ-24
Tenants 31-Dec-21 31-Dec-22 31-Dec-23 10-Apr-24

დიპლომატიური კორპუსები
Embassies საერთაშორისო
International კომპანიები
Companies
4 Consistent and Stable The company primarily has 5-year contracts with its tenants with favorable terms.
ადგილობრივი
Local Companies კომპანიები
Throughout the duration of these contracts, rent is paid monthly at a fixed
Revenues amount, making the business stable and easily predictable

In recent years, tenant concentration has decreased, leading to a more diversified

The business center owned by the issuer is All Risk Property Insurance by the tenant list
5 All Risk Property insurance company Aldagi JSC, with a total insured amount of $16.8 million
Insurance
10
Business Center Overview

Business Description
The business center is constructed in compliance with modern standards and using the highest quality materials

The building's seismic indicator is 8 magnitudes, meaning that in the event of

1 an earthquake of this magnitude, the building's stability is not threatened

The company has a fire protection and life safety system that fully complies
2 with the standards of the National Fire Protection Association (NFPA)

The building's heating and cooling systems are equipped with devices from
3 the world's leading brands, Trane and Viessmann

The building is equipped with four elevators from the world's leading
4 manufacturer, Kone, one of which is fire-resistant (according to NFPA
standards)

To minimize thermal loss, NBK Terracotta materials have been used for the
5 facade, and Schuko materials for the windows

BMS - Building Management System

Heating and Air Conditioning Fire Protection and Life Safety

Water Supply System Access Management Systems
System System

11
 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

12
Founders and Organizational Structure (1/2)

Founders and Management

The company is managed by a strong leadership team with over 15 years of market experience

Lasha Sulkhan
Partners Papashvili Papashvili
50% 50%
Sulkhan Papashvili

• He served in the Tbilisi Garrison Military Prosecutor's Office and held the position of State Advisor for
Defense, Security, and Law Enforcement Agencies.
• Until 2003, he occupied various governmental positions.
• Since 2003, he has continued his career in the private sector through JSC Bank Republic and LLC Redix.
Business Center Vazhaze
Lasha Papashvili LLC
100%
• From 1993 to 1996, he held the positions of lawyer and head of the credit department at Bank Enguri.
• He has been the Chairman of the Supervisory Board of Bank Republic since 2013.
• Since 2007, he has held the role of General Director at Redix and subsequently at Redix Group.

Chavchavadze 64B LLC

Supervisory Board Members and the Director

• Ketevan Amanatashvili - has over 15 years of experience in the financial sector. Since 2021, she has held the position of Financial Director at Horeca-2021 LLC, the
managing company of Hotel Biography.

• Ana Kapanadze - has 13 years of experience in the commercial real estate sector. Since 2011, she has been the Deputy Financial Director of Redix LLC and, since 2020, has
held the position of Financial Director at the same company.

• Sopio Tikaradze - has over 15 years of experience in financial management, covering sectors such as real estate, auditing, financial institutions, construction, distribution,
and services. Since 2021, she has been the Deputy Financial Director at Redix LLC. Prior to this, she worked in accounting and reporting at the audit firm Nexia TA.

• Marine Akhvlediani - held various positions at JSC Bank Republic, a financial institution, until 2015. From 2016 to 2019, she has been the Director of Green LLC.

• Giorgi Maisuradze - has been the Senior Lawyer at Redix Group since 2011, where he has been involved in all major transactions. Prior to this, he worked at the U.S.
Embassy and other institutions and also served as an independent legal counsel, providing advisory services in civil and commercial law, as well as international business law.

• Ana Mikeladze - is the Director of "Chavchavadze 64B" and several other companies within the Redix Group
13
Founders and Organizational Structure (2/2)

Founders and Management

The issuer is a real estate management company and a member of the REDIX Group, which has been established in the market for many years

About REDIX Group

One of the largest groups in Georgia, investing across various sectors

The Redix Group oversees the management of business centers

including:
• Business Center Vazhaze LLC;
• Business Center Tabidze N1 LLC;
• Business Center on Leonidze LLC and others

The Redix Group also includes the following hotels:

• Chavchavadze 64A LLC Hilton Garden Inn Tbilisi Chavchavadze ;
• Aghobili LLC Hilton Double Tree.
• Samzeo LLC

Agro-businesses under the Redix Group:

• Kvarlis Baga LLC;
• Milk Laboratory LLC;
• Kvareli Cellar LLC and others

14
 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

15
 Revenues and Profitability
The company is characterized by stable profitability and EBITDA

Income and profitability dynamics (thousand GEL)

Occupancy and average price dynamics
Average annual revenue growth - 54% (CAGR 2021-2023)
90% 50.0 150.0%

95.8%
90.5%
10, 000
45.0

80%

100. 0%

83.0% 40.0
61.9%
70%

7,640
72.1% 26.4%
8,000

50.0%

35. 0

60%

6,340 30.0

$27.0
$25.4 $24.6
0.0%

$24.4
50%

6,000

25. 0

4,424 40%

-50.0%

20.0

4,000

3,188 30%

15. 0

-100.0%

20%

10. 0

2,000

-150.0%

10%

5.0

0 0% 0.0 -200.0%

2022 2023 31.12.2021 31.12.2022 31.12.2023 10.04.2024

Net Income EBITDA EBITDA margin Average price per sq.m. Occupancy

▪ The occupancy rate of the property has significantly increased year by year (from 26% in 2021 to 96.6% as of April 2024), reflecting a sharp increase in the company's
revenues.
▪ Since the company's operating expenses are fixed and remain stable year by year, the sharp increase in revenues also ensures an increase in the EBITDA margin.
▪ The main source of income for the company is the office space leasing of business center "Chavchavadze 64b", which accounts for 98% of total revenue.
▪ Income from provided services includes compensation related to repairs and services, revenue from the sale of access cards and advertising services income.

16
Assets & Equity Structure

Breakdown of Assets, 2023

4.2% 1.6%

Investment Property

Issued short-term
91.7mln
91.7 mlnGEL
GEL loans
Other

94.2%

Fair value of the asset - $32 million.

▪ Approximately 94% of the company's total assets consist of
Total leasable area - 13,476 sq.m. investment property - the business center at Chavchavadze 64b.
▪ The company records investment property at fair value, which is
Net leasable area - 13,237 sq.m. assessed by an independent appraiser. As of December 31, 2023, the
total value is estimated at 32.1 million USD.
Average occupancy of office spaces - 95.8%*

* According to contracts signed as of April 10, 2024.

17
Assets & Equity Structure

Loan obligations (thousand GEL) Company financing structure (thousand GEL)

110%

170,000.0
101%

90%

84%
57,547
120,000.0 73%
70%

66%

50%

70, 000.0

75,526 66,755 60,454

67,145
30%

20,000.0

32,527 30,973 38,654

28,680
10%

(14,709) (14,709)
(32,722) (24,521)
-30,000.0 -10%

2021 2022 2023 After the issuance

Charter Capital Additional Paid in Capital Retained Loss Bank Loans Bonds Loans to Assets

• As of May 2024, the displayed loan liabilities reflect the effect of reduced loan
liabilities. Specifically, to reduce leverage, the parent company injected 7,200 GEL ▪ The company is mainly financed by loans received from commercial banks;
into the issuer's capital, after which the issuer repaid part of the bank loan. As a
result, as of May 10, 2024, the company's total loan liabilities decreased by 9,598 ▪ With the issuance of bonds, the company will refinance existing obligations, which
thousand GEL, from 67,145 thousand GEL on December 31, 2023, to 57,547 will contribute to the diversification of funding sources.
thousand GEL.

* As of the date of the prospectus, the company has withdrawn its Charter capital and instead created an additional paid-in capital, which currently amounts to 38,654 thousand GEL. For more information, see the prospectus under the section "Financial Condition."

18
Debt and Leverage Profile

Reduced leverage level over the years

20,000.0

20.94
22. 00

18,000.0

17.00

16,000.0

10.59
12. 00

6.21x 0.68x 2.12x 100%

14,000.0

12,000.0
6.21 7.00

2.00

Volume of the bonds to Interest coverage ratio (ICR), Unsecured liabilities after the
Volume of the bonds to
10, 000.0

investment property Considering the normalized issuance

(3.00)
normalized EBITDA EBITDA forecast***
**
8,000.0

6,000.0
9,735 (8.00)

4,000.0
6,340 (13.00)

2,000. 0
3,188 (18. 00)

0.0 (23.00)

2022 2023 2024 Forecast*

EBITDA Debt/EBITDA

• Normalized EBITDA includes a forecast made based on the following assumptions:

Net leasable area - 13,237 sq.m. Total leased area - 12,676 sq.m.
Office space occupancy - 95.8%** Average price per sq.m. - 27.0 $

* The official exchange rates of the US Dollar and Euro published by the National Bank of Georgia as of May 30, 2024, have been used to convert the volume of bonds and investment property into GEL. The average exchange rate for the period from January 1, 2024, to May 30, 2024, has been used to convert the
average price per square meter.
** The forecasted LTV (Loan-to-Value) is calculated as the ratio of the volume of the bonds to be issued to the value of the investment property as of 2023.
*** The forecasted interest coverage ratio is calculated as the ratio of the forecasted normalized EBITDA to the interest paid in cash in 2023.

19
 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

20
 Georgia Commercial Real Estate Overview
Commercial Real Estate Overview (1/3)
The rental rates for business centers in Tbilisi are increasing, while vacancy rates are decreasing

The business activity of business centers and offices in Georgia is Average Actual Rent, Tbilisi Business Centers ($/sq.m., excluding VAT)
mainly concentrated in Tbilisi

In 2022, due to improved economic conditions and the relocation of A კლასი

A-Class BB-Class
კლასი
28.5
international company offices to Georgia, the demand for office rentals 27.2 26.4 27.1
25.6
increased significantly 24.5

In recent years, the vacancy rate has shown a declining trend. In 2023,
the vacancy rate in A-class business centers was 10% 12.4 12.8 13.3 14.0
12.1 12.0

With the increase in business activities, the average actual rent has also
shown a rising trend. This upward trend is expected to continue in
2024.
2019 2020 2021 2022 2023 2024*

Average Rental Price for Office Spaces in Tbilisi in Individual and Multifunctional Buildings
Vacancy Rates, Tbilisi Business Centers
($/sq.m., excluding VAT)

62% 62% 12.7

A კლასი
A-Class 11.1
52%
B კლასი 9.3 9.0
B-Class

20% 21% 20%

17% 18%
15%
11% 10%
7%

2020 2021 2022 2023*

2019 2020 2021 2022 2023 2024*
21
 Georgia Commercial Real Estate Overview
Commercial Real Estate Overview (2/3)
The industry is characterized by stable rental yields

Average Rental Price for Office Spaces in Tbilisi in Individual and Multifunctional Buildings by
District ($/sq.m., excluding VAT)

In 2023, the highest rental prices for office space were in Vake, Mtatsminda, 16.7
and Saburtalo, while the lowest were in Gldani, Samgori, and Nadzaladevi 14.5

11.7 11.3 11.0 10.6 10.2 9.9

8.4 8.4
As the rental prices for office spaces increased more than the sale prices, the 7.6

rental yield for office spaces rose to 11.1% in 2022, compared to 10.9% in
2021

Saburtalo
Vake

Didi Digomi

Nadzaladevi
Samgori
Didube

Krtsanisi

Chugureti

Isani
Mtatsminda

Gldani
In 2023, however, the sale prices increased more than the rental prices,
resulting in a decrease in the rental yield for office spaces to 10.7%

Average Sale Price for Office Spaces in Tbilisi in Individual and Multifunctional Buildings ($/sq.m.) Rental yields for Office Spaces in Individual and Multifunctional Buildings, %

10.9% 11.1% 10.7%

1,419
10.1%
1,204
1,106
993

2020 2021 2022 2023* 2020 2021 2022 2023*

22
 Georgia Commercial Real Estate Overview
Commercial Real Estate Overview (3/3)
The growth in granted construction permits and the number of rental office spaces brought to market indicate the active expansion of the market.

The number of office space offers for rent and sale in Tbilisi in Individual and multifunctional
buildings
The area for office construction permits granted has grown in response to the
increased demand for office spaces and business centers განცხადებების
Number of offers, rent რაოდენობა, იჯარა განცხადებების
Number of offers,რაოდენობა,
sale გაყიდვა

The rising trend of 2022 continued into 2023. Specifically, permits granted for 33,733
office space construction increased fivefold compared to 2022, while permits
granted for office spaces in multifunctional buildings increased by 20%.

18,158
In 2023, there was also a significant increase in the number of office spaces
brought to market for sale and rent (doubled compared to the previous year), 10,311
9,446
reflecting increased activity in the market 5,567
1,700 2,521
959
The majority of the spaces were concentrated in Saburtalo (53%) and Vake (22%)
2020 2021 2022 2023*

Permits granted for construction, Office Spaces in multifunctional buildings Permits granted for construction, Business centers and offices in Tbilisi

100 ფართობი
Area რაოდენობა
Quantity 140

ფართობი
Area რაოდენობა
Quantity
121 120 45
23 23 25

90

113 93,766 120

40

80
41,555
20

78,362
35

16
100

70

30

60

66,563 66,300 13
65
80 15

62 57,741
25

11 27,466
55 25,838
50

10
44 45 47 60
20
9 9
21,303
40

10

41,860 41,621
30

40
15

17,838 11
28,018 10

12,873
11,693
20

20,855 20 10,796
10 5

5,908
0 0
0 0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023
23
 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

24
 Macroeconomic overview
Macroeconomic overview (1/2)
10-year average foreign
2023 GDP per capita 10-year average real GDP 10-year average inflation
direct investment (as % of
growth
GDP)
USD 8,210 5.2%
5.0%
Key Highlights 2023 FY

8.4%
Ease of doing business Ease of starting business Ease of registering property Business bribery risk

7th place 2nd place 5th place 35th place

World Bank, World Bank, World Bank, International Trade,
2020 2020 2020 2023

Georgia's credit rating Real GDP growth, Y/Y % Overview

• According to assessments by the World Bank and other organizations, Georgia's business
environment is one of the best in the world.
10.6%11.0%
BB (Positive Outlook)
• A business-friendly environment and stable macroeconomic parameters contribute to
7.5%
2024, 29 January 6.6% 6.4% the continuous improvement of the country's sovereign credit rating, high levels of
6.1%
5.1% 5.2% 5.4% 5.4% investment, and sustainable economic growth.
4.1%
3.4% 3.4%
• From December 2023, the country gains a new opportunity by the attainment of EU
candidate status
Ba2 (Stable Outlook)
• Economic growth is forecasted to normalize to some extent while maintaining a high
2024, 5 April level.

• The positive trend in the macroeconomic environment is confirmed by the latest

publications from authoritative organizations - Georgia Unrest Highlights Governance
-6.3% Rather than Economic Risks
BB (Stable Outlook)
2024, 10 February
Source: Geostat, TBC Capital
25
 Macroeconomic overview
Macroeconomic overview (2/2)
Diversified foreign currency inflows

Foreign currency inflows (I Q 2016- IV Q 2023) Real GDP growth and GDP per capita (2016– 2023)
5000 Export
Tourism 25
4500 Real GDP growth (GEL) Real GDP growth per capita (GEL)
Remittances
4000 FDI 20
Export of IT services
3500 15
Inflows Real GDP growth (USD)
3000 Inflows excluding Russia 10

2500 5

2000 0

1500 -5

1000 -10

500 -15

0 -20
2016…

2016…

2016…

2016…

2017…

2017…

2017…

2017…

2018…

2018…

2018…

2018…

2019…

2019…

2019…

2019…

2020…

2020…

2020…

2020…

2021…

2021…

2021…

2021…

2022…

2022…

2022…

2022…

2023…

2023…

2023…

2023…
2016 2017 2018 2019 2020 2021 2022 2023

Source: Geostat Source: Geostat

Exchange rate (1 Jan 2023 – 13 May 2024) Current Trends

3.5 1.2

• The main driver of high economic growth in Georgia is the increase in foreign currency inflows,
3.0 particularly from exports, remittances, foreign direct investments, and tourism revenues. These
1.1 sources remain geographically diversified.
2.5
• Foreign currency inflows are the key to the Georgian Lari's stability, which in turn supports
significant growth in the economy when measured in USD and contributes to low inflation.
2.0 1.0
Jun-23

Aug-23

Nov-23

Dec-23
Jul-23
Apr-23

Oct-23
Feb-23

Sep-23

Feb-24

Apr-24
Mar-23

May-23

Mar-24

May-24
Jan-23

Jan-24

• Due to low inflation, the National Bank decided to reduce the monetary policy rate by 0.5
percentage points on January 31 2024, and by 0.75 percentage points on March 13 2024.
Currently, the monetary policy rate stands at 8.25%

EUR/GEL USD/GEL EUR/USD (right axis)

Source: NBG
26
 Contents
Contents

Indicative Bond Offering Terms

Business Description

Shareholders and Management

Key Financial Highlights

Georgia Commercial Real Estate Overview

Macroeconomic Overview

Annex

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Statement of Financial Position
31.12.2023 31.12.2022 01.01.2022
Financial statement, thousand GEL
(Audited) (Audited) (Audited))
Assets
Non-current Assets
Investment Property 86,330 74,845 71,245
Property, plant & equipment 645 531 618
Right-of-use asseta 360 23 -
Advances Paid for Property, Plant, and Equipment Purchase and Construction - 491 763
Total Non-current Assets 87,335 75,890 72,626

Current Assets
Inventories 166 285 34
Trade and Other Receivables 304 849 166
Short-Term Loans Issued 3,867 2,190 1,674
Cash and cash equivalents 16 88 414
Total Current Assets 4,353 3,412 2,288
Total Assets 91,688 79,302 74,914

Liabilities and Equity

Equity
Charter Capital 30,973 32,527 28,680
Retained Loss (14,709) (24,521) (32,722)
Total Equity 16,264 8,006 (4,042)

Long-term Liabilities
Loans 46,257 59,745 74,927
Lease liabilities 353 19 -
Advances received from tenants 900 350 343
Total Non-current Liabilities 47,510 60,114 75,270

Current Liabilities:
Trade and other payables 6,643 3,832 2,945
Loans 20,888 7,010 599
Lease liabilities 50 7 -
Accruals 333 333 142
Total current liabilities 27,914 11,182 3,686
Total Liabilities and Equity 91,688 79,302 74,914

For detailed information, please refer to the company's published periodic reports (including the annual audited financial statements)
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Statement of Comprehensive Income

2023 2022
Statement of Comprehensive Income, thousand GEL
(Audited) (Audited)
Revenues
Rental income 7,507 4,145
Revenue from services rendered 133 279
Net Revenue 7,640 4,424
Expenses
Tax expense (566) (549)
Salary expense (395) (343)
Depreciation and amortization (148) (107)
Utility expenses (90) (106)
Repair and maintenance expense (76) (73)
Insurance expense (46) (34)
Other expenses (127) (131)

Change in fair value of investment property 10,411 (3,626)

Net profit/(loss) from exchange rate differences (2,070) 13,803

Other (losses), net (75) (22)
Interest expense (net) (4,646) (5,035)
Profit for the year 9,812 8,201
Other comprehensive income - -
Total comprehensive income of the year 9,812 8,201

For detailed information, please refer to the company's published periodic reports (including the annual audited financial statements)
29
Cash Flow Statement
2023 2022
(Audited) (Audited)
Cash Flow From Operating Activities
Cash received from customers 13,833 10,235
Payments to suppliers and employees
(2,562) (9,795)
Net cash generated from operations 11,271 440
Interest paid (4,595) (3,525)
Interest received 232 35
Net cash generated from operating activities
6,908 (3,050)
Cash Flow From Investing Activities
Loans issued (7,278) (3,601)
Loans repaid 5,863 3,052
Purchase/construction of property, pland and equipment (679) (3,203)
Net cash used in investing activities
(2,094) (3,752)
Cash Flow From Financing Activities
Proceeds from loans 4,194 11,484
Loan repayments (7,523) (8,842)
Capital increase/(reduction) (1,554) 3,847
Net cash used in financing activities
(4,883) 6,489

Net (decrease) of cash and cash equivalents

(69) (313)

Cash and cash equivalents at the beginning of the year

88 414
Effect of foreign exchange rate changes on cash and cash equivalents
(3) (13)
Cash and cash equivalents at the end of the year 16 88

For detailed information, please refer to the company's published periodic reports (including the annual audited financial statements)
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 Key Financial Ratios
Ratio: 2023 2022
Financial leverage ratios
1. Debt to Equity 4.15 8.34
2. Interest coverage ratio (ICR) 1.11 0.62
3. Debt service coverage ratio (DSCR) 0.56 0.26
4. Debt/EBITDA 10.65 20.95
5. Debt to Assets 0.74 0.84
6. Debt to Total Capitalization 0.81 0.89

Profitability ratios
7. Return on assets 11.5% 10.6%
8. Return on equity 80.9% 413.8%
9. Return on invested capital 6.3% 24.4%
10. Operating profit margin 81.0% 69.6%
11. EBITDA margin 83.0% 72.1%
12. Net profit margin 128.4% 185.4%

Liquidity ratios
13. Liquid assets/total assets 0.05 0.04
14. Liquid assets/current liabilities 0.15 0.28
15. Current ratio 0.16 0.31
16. Operating cash flow ratio 0.35 (0.41)

Operating ratios
17. Fixed assets turnover ratio 0.09 0.06

Key financial covenants

Bank loan covenants:
18. Debt service ratio [limit: >=1.2] (TBC) 0.42 -0.33
19. Service ratio of cash liabilities to the bank [limit: >=1.2] (BOG) 1.22 1.11

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RISKS ASSOCIATED WITH THE COMPANY AND BONDS
Investing in bonds involves certain risks. Prospective purchasers of the Bonds should read bond issue prospectus carefully Brief information on the material risk factors specific to the Issuer’s business and securities being offered
before making an investment decision. In addition to the other information provided in the prospectus, potential investors,
before investing in the bonds, should carefully consider the risks described, taking into account their own financial 1. Economic instability and investment risk are high in developing countries such as Georgia:
situation and investment objectives. Any of the risks described could have a material adverse effect on the Company's 1.1. Political and governmental instability in Georgia will have a significant negative impact on the local economy and company
business, financial condition and results of operations. business;
1.2. Additional risk factors exist when investing in developing markets such as Georgia;
If any of these risks materialize, it could adversely affect the market value of the bonds. In addition, the following factors
are important in evaluating the market risks associated with bonds. The Company believes that the risk factors described 1.3. The company's operations may be negatively affected by the depreciation of the Georgian Lari against the US Dollar or other
represent the principal risks associated with investing in the Notes. However, additional risks and uncertainties that the economically linked currencies;
Company does not consider material or is not aware of might arise. Any such risks and uncertainties may have a similar 1.4. Since the company operates in Georgia, changes in Georgian economic conditions will affect the company;
adverse effect. Accordingly, the Company does not claim that the described risks of holding the bonds are exhaustive.
2. Risks associated with neighboring countries and the region:
2.1. Regional tensions could have a negative effect on Georgia's economy and company business;
2.2. Disruptions in neighboring markets could have a negative effect on Georgia's economy;

3. Risks associated with legislative and judicial systems:

3.1. There may be challenges associated with legislative harmonization of the Georgian regulatory environment with the European
Union as required by the Deep and Comprehensive Free Trade Area agreement (DCFTA);
3.2. Uncertainties in the tax system in Georgia may result in the imposition of tax adjustments or fines against the company and
there may be changes in current tax laws and policies;
3.3. Uncertainties in the judicial system in Georgia, or any arbitrary or inconsistent state action taken in Georgia in the future, may
have a material adverse effect on the local economy, which could, in turn, have an adverse effect on the business;
3.4. The company may be subject to litigation risk from its customers, suppliers, and regulator;
3.5 Following the issuance and public offering of bonds, the company will become an accountable enterprise and will be subject to
additional legislative and reporting requirements;
3.6 The subscribed capital of the Company is not defined and, as such, will not be subject to the statutory restrictions, including
those governing the distribution of dividends and the reduction of equity.

4. Risks associated with the regulatory framework:

4.1. New regulations in this and other industries may negatively affect the company's operations;
4.2. Should the company fail to comply with any existing regulations related to money laundering or terrorist financing, or become
associated with such activities in the future , this may negatively impact the company;

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RISKS ASSOCIATED WITH THE COMPANY AND BONDS

Risks Related to the Issuer's Activities 10. Personnel Risks:

10.1. The shortage of qualified personnel in the market may hinder the development and effective operation of the company;
5. Market Risks: 10.2. Labor disputes and worker strikes may disrupt the company's operations and consequently negatively impact its operating
5.1. The company owns a single asset, a business center located in Tbilisi, making it significantly dependent on external results;
factors;
5.2. Increased competition in the market and oversupply of office spaces could negatively impact the issuer’s business; 11. Risks Related to Unforeseen Events:
5.3. The commercial real estate market is significantly dependent on the country's economic condition, which could 11.1. Unforeseen events such as natural disasters, emergencies, pandemics, and others may have a significant negative impact on
negatively impact the issuer’s business; the commercial real estate market and the company;
11.2. Insufficient insurance coverage of the assets owned by the company may have a significant negative impact on the
6. Operational Risks: company’s revenues;
6.1. The company's revenues are concentrated among a few tenants, and the company may be unable to renew or extend lease
agreements, which could negatively impact the company's financial condition; Risks related to the securities to be offered
6.2. If the company fails to fulfill its obligations to tenants, it may create a reputational risk, negatively impacting the issuer's
financial and operational activities; 12. Risks Associated with Market Price, Liquidity, and Yield of Bonds:
12.1. The market price of bonds may be volatile;
7. Risks Related to Investments and Liquidity 12.2. There may be no active trading market for the bonds;
7.1. Investments in real estate are illiquid; 12.3. Investors whose financial activities are denominated in a currency different from the bonds' currency may receive less
7.2. The company has issued loans to related parties and may face the risk of non-repayment of the issued loans; interest or principal than expected due to exchange rate fluctuations or currency regulation;

8. Risks Related to the Incomplete Placement of Bonds 13. Risks Related to Bond Rights:
8.1. If the full placement of the bonds is not achieved, in the event of the company's insolvency, secured creditors will be 13.1. Bonds represent the company's unsecured obligations;
given priority over bondholders; 13.2. The offer and sale of the bonds are subject to certain territorial/other country investor restrictions; 13.3. Bond terms
8.2 If the full placement of the bonds is not achieved, the company may face liquidity risk; may change or rights arising from bond term violations may be waived;
8.3 If the full placement of the bonds is not achieved, the company faces interest rate risk, which could significantly impact
the company's financing costs and, consequently, its financial condition; 14. Risks Related to the Legislative/Regulatory Framework of Bonds and Their Holding;
8.4 The company may violate financial or non-financial covenants specified by loan obligations; 14.1. Future changes in Georgian legislation may significantly negatively impact the bonds, including their registration on
the Georgian Stock Exchange and the taxation of income from bondholding;
9. Risks Related to Financial Accounting and Reporting: 14.2. Investors must rely on the procedures of the depository, paying agent, and, where applicable, bond account manager;
9.1. If the company fails to ensure an effective system of internal control processes, the accuracy of financial accounting and 14.3. Investment in bonds involves considerations related to the legality of the investment;
reporting may be compromised; 14.4. A bond purchase application may be partially satisfied;

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