Santa Marina is the first holiday project of FPI Properties, located close to Sozopol.

FairPlay Properties REIT is the local market leader for securitization of real estates with a share of 14.59 per cent in assets, excluding investments in agricultural land.  The company's main activities are construction, renting and the sale of holiday properties. According to market evaluations prepared by Yavlena Impact ltd., the net value of FairPlay Properties' total assets was 149 million leva as of the end of November 2007 and net assets per share amounted to 2.94 leva.

FairPlay Properties has won the award for "The company with the best corporate management" among REITs, awarded by the local investors' association. The company has since the beginning of September 2007 been included in the BG REIT stock index.

General Information
FairPlay Properties (FPP) was established in July 2005 by FairPlay International JSC, a major Bulgarian investment and development company. In February 2006, FPP received its licence from the Financial Supervision Commission and was listed for trading on the BSE.

Since its establishment, FairPlay Properties has successfully carried out three capital increases and one bond issue. As of September 30 2007, the share capital of the company is 50.7 million leva.  

Investment Policy
FPP invests in the purchase of real estates (plots and buildings) and construction of new buildings on Bulgarian territory. FPP's strategy is to build a dynamic and well-diversified portfolio of assets, made up of different types of real estate properties in various regions of the country. FPP's priority medium-term market segments are residential buildings in holiday resorts, hotels and apartment houses (residential buildings, which offer apartments for rent combined with hotel services) in the country.

Investment Portfolio
FairPlay Properties' portfolio is very diverse in terms of location. Its total value was about 161 million leva (82.3 million euro) on November 30 2007, based on market value.   
As of September 2007, about 68 per cent of the company's secured assets were at Black Sea summer resorts, 31 per cent in ski resorts and two per cent in spa centres. About 60 per cent of current investments are concentrated in hotels and leisure apartments and the remaining 40 per cent in land and commercial properties. The company's future plans include the construction of commercial and residential properties in Sofia.
The 2006 investments programme was concentrated in two large holiday village projects. The first one, Santa Marina, is on the Bulgarian seaside near Sozopol. The second, Saint Ivan Rilski, is in the top skiing resort of Bansko. Another small-scale project was the construction of a holiday resort, Chernomoretz, (Chernomoretz I) in the Black Sea village of Chernomoretz.

Projects launched in 2007 were:
·A holiday resort in Sozopol;
·The Rila Lake Resort - a holiday complex in the mountain resort of Panichishte;
·Residential buildings in the town of Sandanski
·Chernomoretz II - a residential building for sale or rent in the village of Chernomoretz.

Investments and Projects

Name of the projects	Type	Investment period	TBA, sq.m.	Investments (in BGN, VAT not incl.)		Market value by Yavlena Impact Ltd, November 2007 (in BGN, VAT not incl.)
Apartments for sale
Santa Marina St.1	Apartments	2005-2007	17,609	19,982,700	19,982,700	14,107,110
Santa Marina St.2	Apartments	2006-2007	13,940	17,699,000	17,630,000	28,456,195
Santa Marina St.3	Apartments	2007-2011	54,858	80,749,000	14,713,000	56,166,957
Ivan Rilski	Apartments	2006-2007	7,145	6,435,000	6,435,000	12,967,631
Sozopol	Apartments	2008-2009	10,000	11,918,900	1,716,000	4,753,573
Sandanski	Apartments	2008-2010	18,000	24,371,100	1,198,000	7,054,116
Rila Lake Resort	Apartments	2008-2010	19,138	22,095,300	2,684,000	10,333,138
Future projects	Apartments	2008-2011	80,000	106,675,300	8,467,000
Properties for rent
Santa Marina St.1	Commercial properties	2006	5,333	4,486,700	4,486,700	4,273,917
Santa Marina St.2	Commercial properties	2006-2007	3,541	1,964,300	1,714,000	1,596,083
Santa Marina St.3	Commercial properties	2008-2010	11,510	13, 713,500	0	56, 166, 957
Ivan Rilski	Hotel	2006-2007	13,237	13,718,100	13,718,100	16,118,163
Chernomoretz I	Holiday base	2006-2007	3,150	3,300,000	3,046,000	3,223,583
Chernomoretz II	Residential Building	2007-2009	5,400	6,716,100	212,000	2,309,952
Panichishte	Hotel	2009-2010	8,202	15,025,100	0
Total				349,419,100	88,531,100	161,360,418

Management and Shareholders' Structure
According to local REITs legislation, FairPlay Properties has a one-tier system of management. A three-member Board of Directors presides over the company:
·Manu Todorov Moravenov - Chairmen of the Board of Directors and CEO
·Ivaylo Alexandrov Panov - Member of the Board of Directors
·Zdravko Kirilov Ivanov - Member of the Board of Directors

The managing company of FairPlay Properties REIT is FairPlay International JSC.

The company's major shareholder is FairPlay International JSC with a 65.5 per cent stake in the capital. The other shareholders are institutional investors (nine pension funds, 15 mutual funds, and investment companies) and more than 220 minority shareholders - individuals and legal entities.

Financial Results
The successful results from FairPlay Properties' business strategy can be viewed in the company's Q3 2007 financial statements. As of the end of September, net profits posted a 19-fold year-on-year increase to 7.85 million leva (4.01million euro). Total sales grew to 32.68 million leva (16.71 million euro) from 1.03 million leva (0.53 million euro) in Q3 2006. The company expects to boost profit to 9.81 million leva (5.02 million euro) in 2007.

In accordance with Bulgarian legislation on REITs, FairPlay Properties pays no corporate or capital gains tax and must distribute a minimum of 90 per cent of its profits in dividends. The expected dividend per share for this year is 0.12 leva (0.06 euro) after the fourth capital increase, reporting a dividend yield of seven per cent. The withholding tax on dividends was reduced from the current seven per cent to five per cent from January 1 2008.

The company planned a fourth capital increase from 50.70 million leva (25.92 million euro) to 60.84 million leva (31.11 million euro) at the beginning of 2008 to support next year's ambitious investment programme. The Financial Supervision Commission approved the prospectus for the fourth capital increase at the end of 2007.

	Revenue [BGN'000]	Net Profit [BGN'000]	EPS* [BGN]	P/E [x]	P/BV [x]
2006	2 447	841	0.01	164.22	2.67
2007F	44 027	9 809	0.16	14.08	2.24
2008F	56 382	14 644	0.24	9.43	1.51

* EPS, P/E и P/BV for 2006 and 2007 are restated on the base of the expected capital after the fourth capital increase.

The dynamic development of the Bulgarian real estate market boosts additional profits from construction business and quick sales. Real estate prices have reported substantial growth of at least 15 to 20 per cent every year since 2005 due to the credit expansion of local banks, the domestic population's increased purchasing power and greater interest from international investors since Bulgaria's EU accession.