Capital Market Authority

Board of Directors Secretariat Board of Directors Decision No. 57 of 2014 Dated 13/4/2014 Regarding Minimum Requirements for the Contents of Valuation Reports and Their Preparation Methodology for Real Estate Assets Prior to Purchase, Sale, or Valuation for Calculating Net Asset Value

The Board of Directors of the Capital Market Authority Having reviewed the Capital Market Law issued by Law No. 95 of 1992 and its executive regulations and decisions issued in implementation thereof: And the Law on Issuance and Central Registration of Securities issued by Law No. 93 of 2000 and its executive regulations: And Law No. 10 of 2009 regulating supervision over non-banking financial markets and instruments: And Presidential Decree No. 192 of 2009 issuing the Statute of the Capital Market Authority: And the approval of the Authority's Board of Directors in its meeting held on 13/4/2014:

Decided:

(Article One) The attached controls shall apply to reports submitted by real estate valuation experts and the methodology for preparing such reports regarding real estate assets prior to their purchase or sale by the investment manager of the real estate fund, or their valuation by management service companies for the purpose of calculating net asset value.

(Article Two) This decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its publication in the Egyptian Gazette. Chairman of the Board of Directors Sherif Samy

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Minimum Requirements for the Contents of Valuation Reports and Their Preparation Methodology for Real Estate Assets Prior to Purchase, Sale, or Valuation for Calculating Net Asset Value

First - Methodology for Preparing a Real Estate Valuation Expert Report:

The valuation process begins with a clear definition of the valuation expert's scope of work, agreed upon with the report's beneficiary, and concludes with the preparation of the valuation report in accordance with the agreed requirements, conditions, and terms outlined in the scope of work. During the performance of their duties, the valuation expert must exercise the care of a prudent person in inspecting and conducting field verification of the asset under valuation, including all related locations and services, as well as reviewing all documents, contracts, and reports that could affect the asset or its value, and collecting and analyzing all relevant data and information. Furthermore, the report must: (a) Be clear, accurate, and written in a non-misleading manner. (b) Contain sufficient information to enable relevant parties to understand it correctly. (c) Adequately disclose any ordinary or exceptional assumptions, additional terms, or specific considerations affecting the valuation and value. It must include all assumptions to be considered during valuation and report preparation, whether they are standard and commonly used in practice or arise from special circumstances, with their clarification and justification for use.

Second - Minimum Contents of a Real Estate Valuation Expert Report:

1. Engagement Letter:

This is the reference letter from the expert to the client, placed outside the report, containing all property data including address, legal description, type of value to be determined, and the final estimate, along with the expert's professional certifications. It also specifies the number of report copies to be delivered to the client.

2. Subject Matter:

Summary of the engagement letter submitted by the client, clarifying property data, nature of ownership, and type of value to be determined.

3. Basis of Valuation:

Specifies the method or methods used to calculate the required value, thereby determining the type of valuation ("comprehensive and conclusive" or "limited").

4. Property Ownership:

Clearly states the type of ownership ("full" or "encumbered") and the registration status or allocation decision issued by a competent authority in the country, or its reliance on a court ruling of validity and enforceability, and extent of any mortgage, easement, or usufruct rights.

5. Inspection and Report Validity:

States the inspection date and the validity period for using the market value derived in the report, which depends on market stability and volatility.

6. Property Description:

Adequate description of the asset's geographical location to clearly identify it, such as: address, plot number, and any other distinguishing marks. Also, registration data with the Real Estate Registry or data of the valid allocation decision issued by a competent authority in the country. Current use purpose of the asset: residential, commercial, industrial, storage, hotel, retail, or other purposes. Description of the real estate asset itself: age, layout plan, total area, net leasable area, current division for use purposes.

7. Determination of Current Market Value of the Property:

The valuation expert determines the appropriate valuation method after considering the purpose of the valuation, commonly used methods and approaches (including: income capitalization method, comparable sales method), and the availability of necessary data and information. In the absence of sufficient information for a single method to reach a final value, reliance on more than one valuation method is required to derive benchmark values, which are analyzed and reconciled to reach a final value, with justification for its determination, such as selecting the most conservative value or the average of values resulting from the valuation methods used.

8. Summary:

Includes a summary of important points in the report and the final conclusions.

9. Report Limitations:

These are the disruptions and general limitations considered during report preparation, including:

• Definition of value.
• Report-specific disruptions.

10. Expert Certification:

That the expert has personally inspected the property and comparable properties (if any). The expert has no current or future interest in the property, whether personal or financial. The expert's fees are not contingent on the valuation value or report. That the analysis and results are bounded only by the limitations stated in the report. Absence of any persons – other than those mentioned in the report – having a relationship with any material part of the valuation or report.

11. Appendix:

A collection of supporting documents for the report that were used and referenced when determining the property's value, such as:

• Engagement letter.
• Property documents.
• Inspection photos of the property site.
• Professional valuation expert certification.