The New Way To Arbitrage Overview 0407

“ THE NEW WAY TO ARBITRAGE
THE GERMAN REAL ESTATE

”
MARKET

MARCH 2012
© publity capital partners S.à.r.l. | Kilian C.M. Schramm – The New Way to Arbitrage German Real Estate | March 2012 | All Rights Reserved. 1

publity capital partners
NPL ASSET CLASS
publity capital partners S.à.r.l. invests in German NPL mortgages of Class B and C Real Estate using a
dedicated proprietary Master Servicing Model.

INDIVIDUAL SOLUTIONS
publity capital partners creates asset management solutions that allow tax optimized investing through
securitizations, bonds, structured debt instruments, investment funds, and holding companies.

PUBLITY PERFORMANCE
Our performance is the result of intelligent workouts with short recovery times. The audited publity
results confirm consistent two-figure returns.

SAFETY OF CAPITAL
Watertight trusteeship, clearly defined investment criteria, due diligence performed by independent
lawyers and real estate appraisers enable the direct purchase of NPL portfolios by the investor„s SPV
without the need of leverage. Perfected workout plans for top rated real estate servicers are supported
by optimization management, coaching, and controlling through our Master Servicer.


The German NPL Market
An emerging market with rapid growth

300
The German banking system is
NPL Volume in Mrd. Euro

experiencing a dramatic rise in
250
NPLs. Recent estimates range
200
from 300 to 750 billion Euro.
150 Source: PwC (04/2011) European Outlook for non-core and non-performing loan portfolios,
KPMG (09/2011) Global Debt Sales, Ernst & Young (2011) NPL-Market Study
100

50
PricewaterhouseCoopers:

“
0

The workout time for current
Source: publity AG, BaFin, published financial reports, Bankscope, Deutsche Bundesbank,
PwC (04/2011) European Outlook for non-core and non-performing loan portfolios
NPL portfolios is

”
10+ years
Source: PwC (04/2011) European Outlook for non-core and non-performing loan portfolios


NPL Market Players
Sellers Buyers


Targeted Investing
Direct purchase of real estate through NPL mortgages

Global Competition
Open Market Open real estate market, sale to highest bidder, low operating
Class A margins, low margin of safety and fallout risk is magnified by
leverage
Real Estate
Regional Competition
Foreclosure Sale Purchase through foreclosure sale to highest bidder, lower
Class A, B, C purchase price as open market, improved opportunity for
Real Estate higher operating margins

Insider Market
Direct Purchase NPLs Purchase and servicing of NPL portfolios, insider market with
Class A, B, C little or no competition, low purchase prices, high margin of
Real Estate safety, possibility of high operating margins and attractive
resale prices

Best Opportunities


The publity investment process
Indicative offer and purchase
3 To increase the margin of safety and improve profit margins, purchase
prices are derived from a combination of the due diligence of credit
records, the market appraisal, and the expected realistic sales price.

New appraisal of every property
2 Experienced independent real estate appraisers derive a realistic new property
value through on-site visits to over 90 % of the properties in a portfolio.

Due diligence of NPL mortgage documentation
1 A team of independent lawyers and publity„s experienced NPL portfolio
analysts scrutinize the portfolio data tapes and credit records for quality,
accuracy, and completeness.


publity Servicing Process
Greater success through the advantage of timely information
Sale to debtor or
Data entry and
freewill sales PoA
maintenance of Distribution of
NPL due diligence, Back Office System from debtor
work to real estate
new appraisal of servicers 8a
every property 4
6
2

1 9
5
Portfolio 7 Returns for
Forensic analysis
identification Real estate servicer 8b investors,
of every debtor
initiates contact new start for
Foreclosure and debtor
3 with debtor attempted recovery
Indicative offer of unsecured debt
and purchase


publity AG, your Master Servicer
Germany„s leading independent NPL Master Servicer

• Independent and owner-operated
• Established in the banking sector since 1998
• Trust through transparency and audited success
• Performance contracting with leading Real Estate
Servicers
• Success-based „all-in“ participation of 8 % of the
actual realized revenues
• For more information go to our website
www.publity.de


Master Servicer Responsibilities
Due Diligence, Management, Coaching, and Controlling

• Identify attractive NPL portfolios from an established network of over
180 large and regional banks
• Contracting and management of due diligence through independent
lawyers and independent appraisers before portfolio purchase
• Unique in-house forensic process for debtor analysis
• Contracting, Coaching, and Controlling of Real Estate Servicers
• Analyze of success ratios, strengths, weaknesses, and results
• Distribution of properties and business plans
• Controlling of processes and progress
• Consolidation of single reports into the Master Servicer reporting tools
• Redistribution of workloads away from underperforming Real Estate Servicers
• Continual reporting for investors


Real Estate Servicers (sub-servicers)
Responsibilities

• Loan restructuring negotiations with debtor whenever possible
• Development of a realistic workout plan for all properties
• Workflow management through time and sales planning
• Preparation of foreclosure in non-cooperative cases
• Management of legal and foreclosure proceedings
• Timely reporting on all properties and every debtor
• Continual maintenance and updating of the publity Back Office system
• „All-in“ remuneration of 22 % of actual recovery revenues (includes all
servicing costs and allows no extra charges)


Track Record
Established Master Servicer and Real Estate Servicers

MASTER SERVICER
As of February 2012, the Master Servicer publity AG manages
over 3,5 Bio. Euro in nominal mortgage debt with 70 employees.

REAL ESTATE SERVICERS
publity currently contracts work to 4 real estate servicers, all with
long year experience, ratings, and over 600 employees.


publity capital partners - Asset Management
Creating asset management solutions to meet your needs

Asset Management Solutions
• Luxembourg Securitisations
• SICAV / SICAF Funds in Luxembourg or Ireland
• Bonds and structured debt instruments
• Holding companies
• Other tax efficient structures in other jurisdictions


Summary
Achieving performance achieved through intelligence and speed

SELL
buy low HIGH
Intelligent NPL Workout
Rapid reinvestment
„Capital Recycling“ and
consistent two-figure returns


Disclaimer
No securities are being offered by these materials. This presentation has been designed for
informational purposes only and under no circumstances should any information contained herein
be used or considered to be an offer to sell or solicitation of any offer to buy any securities or any
other instruments. Offers and sales of any securities or instruments may only be made pursuant to
offering documents which should be read carefully as investors may lose some or all of their
investment in connection with some of such securities. This communication is not intended to
provide accounting, legal, or tax advice or investment recommendations. Investors should contact
their own accounting, legal, or tax advisors for additional information. Information contained herein
is subject to change and the provider undertakes no duty to update the information or to supply
corrections. If securities described herein or other securities are offered, they will be offered
pursuant to official Term Sheets, which could contain material information not contained herein.
This communication in particular does not constitute any offer or solicitation to residents of any
jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is
unlawful to make such an offer or solicitation. This material is for your private information and may
not be copied or disseminated, and by accepting this material the recipient agrees to the aforesaid
and that this material will not be distributed to any other person.


A
Onsite Due Diligence
We welcome your visit to Leipzig to experience how publity„s
unique Master Servicer Model produces consistent returns. You
will receive a complete overview of track records, contracts,
pre-purchase due diligence and appraisal rollups, as well as the
servicing process, workout teams, reporting and controlling.

Before your visit you will receive:
• Nondisclosure agreement
• Data protection agreement
• Due Diligence Checklist


A Team
publity capital partners, Your Partner for German NPL Arbitrage
Stanley Bronisz Thomas Backs
Stanley Bronisz is partner and head of international Thomas Backs is partner and head of
investor relations at publity capital partners S.à.r.l. European investor relations at publity
He holds M.B.A. and M.A. degrees from S.M.U. in capital partners S.à.r.l. He holds a degree in
Dallas, Texas, and was a Robert Bosch Fellow. Mr. economics from the University of Cologne.
Bronisz„s led Fidelity Investments into the German Mr. Backs began his corporate career at
speaking market in 1989 and later served as Commerzbank and later Franklin
Managing Director for Pioneer Investments in Templeton. His over 20 years of experience
Europe. He has extensive knowledge in the in the investment industry, includes the
structuring, managing, and sales of investment structuring and sales of real estate and
vehicles and acts as an advisor to investment institutional investment products, as well as
companies. partner and board member positions in
Luxemburg.
Kilian Schramm
Kilian Schramm is partner and head of Investor
Services and Support at publity capital partners
S.à.r.l. He studied Mechanical Engineering at the
Technical University of Munich. Mr. Schramm‟s
previous experience includes a Swiss family office
and a quantitative hedge fund in San Jose,
California.


A
publity AG: Memberships & Associations

BDIU, German Association of Credit Collectors
GBA, German Bankers Association
IBF, International Bankers Forum e.V.
BKS, German Association for Credit Purchase and Servicing


A Live Track Record: secured portfolio1
NPL Portfolio consists only secured real estate backed NPLs.

<- - - - - - - - - - - - - - - - - - - - - - - - - Expected Lifetime - - - - - - - - - - - - - - - - - - - - - - - - - ->
<- - - Factual Figures - - - -> <- - - - - - - - - - - - - - - - Prognosis - - - - - - - - - - - - - - - - - ->
1. – 6. Month 7. – 12. Month 13. – 18. Month 19. – 24. Month 25. – 30. Month 31. – 36. Month Total

NPL Portfolio Acquisition 3.005.309 € 3.005.309 €

Revenues 906.984 € 1.671.214 € 1.500.000 € 1.500.000 € 300.000 € 300.000 € 6.178.198 €
Sale of Real Estate 895.234 € 1.638.195 € 1.500.000 € 1.500.000 € 300.000 € 300.000 € 6.133.429 €
Management of Real Estate2 7.750 € 18.019 € 0€ 0€ 0€ 0€ 25.769 €
Settlement with Debtor2 4.000 € 15.000 € 0€ 0€ 0€ 0€ 19.000 €

1: publity AG, Date: 7.03.2012
2: Income from “Management of Real Estate” and from “Settlement with Debtor” is set to 0 € in the prognosis.


A Live Track Record: secured portfolio1
Accuracy Analysis of Realized versus Expected Sales Prices
400000 60%

Deviation Realized vs.
Expected Sales Price [%]
Real Estate Sales Price [€]

350000 50%

40%
300000
30%
250000
20%
200000
10%
150000
0%
100000
-10%
50000 -20%

0 -30%

Expected Realized Deviation Average

1: publity AG, Date: 7.03.2012


A
Track Record: publity AG Single portfolio1
<- - - - - - - - - - - - - - - - - - Fund Lifetime / Audited Data - - - - - - - - - - - - - - - - ->
2008 2009 2010 2011 Total

Acquisition of NPL Portfolios 450.000 € 450.000 €

Revenues from Workouts 706.866 € 900.404 € 530.865 € 310.580 € 2.448.715 €

Direct Costs -276.560 € -330.121 € -219.260 € -153.174 € -979.115 €
Servicing Costs w/o VAT -212.060 € -270.121 € -159.260 € -93.174 € -734.615 €
Records Management w/o VAT -60.000 € -60.000 € -60.000 € -60.000 € -240.000 €
Due Diligence of Portfolios -4.500 € -4.500 €

Earnings to the Vehicle 430.306 € 570.283 € 311.605 € 157.406 € 1.469.600 €

Earnings to the Vehicle as %
of total acquisition costs
95,62 % 126,73 % 69,25 % 34,98 % 326,58 %
1: publity AG, Date: 31.12.2011, Auditor: Roedl & Partner


A Track Record: Task Force NPL-Fonds Nr. 11
NPL Portfolios: The underlying assets are unsecured NPLs.
<- - - - - - - - - - - - - - - - - - - - - - Fund Lifetime - - - - - - - - - - - - - - - - - - - - - - ->
<- - - - - - - - Audited Data - - - - - - - - -> <- - - - - - - - - Prognosis - - - - - - - - - ->
2010 2011 2012 2013 Total

Acquisition of NPL Portfolios 3.990.000 € 1.800.000 € 5.790.000 €

Revenues from Workouts 128.773 € 6.430.399 € 6.974.661 € 2.950.000 € 16.483.773 €

Direct Costs -118.532 € -2.007.102 € -2.152.398 € -945.000 € -5.223.032 €
Servicing Costs w/o VAT -38.632 € -1.929.102 € -2.092.398 € -885.000 € -4.945.132 €
Records Management w/o VAT -40.000 € -60.000 € - 60.000€ - 60.000 € -220.000 €
Due Diligence of Portfolios -39.900 € -18.000 € -57.900 €

Earnings to the Vehicle 10.241 € 4.423.297 € 4.822.263 € 2.005.000 € 11.260.741 €

0,18 % 76,40 % 83,29 % 34,63 % 194,49 %



A Track Record: Task Force NPL-Fonds Nr. 21
NPL Portfolios: The underlying assets are unsecured NPLs.
<- - - - - - - - - - - - - - - - - - - - - - - - - Fund Lifetime - - - - - - - - - - - - - - - - - - - - - - - - ->
<- - - - - - - - - - - - - - - - - - - - Prognosis - - - - - - - - - - - - - - - - - - - -
<-Audited Data->
->
2011 2012 2013 2014 2015 Total

Acquisition of NPL Portfolios 15.600.000 € 2.320.000 € 2.500.000 € 20.420.000 €

Revenues from Workouts 1.228.201 € 9.447.799 € 13.832.000 € 21.334.000 € 11.334.000 € 57.176.000 €

Direct Costs -674.460 € -3.007.540 € -4.324.600 € -6.550.200 € -3.550.200 € -18.107.000 €
Servicing Costs w/o VAT -368.460 € -2.834.340 € -4.149.600 € -6.400.200 € -3.400.200 € -17.152.800 €
Records Management w/o VAT -150.000 € -150.000 € -150.000 € -150.000 € -150.000 € -750.000 €
Due Diligence of Portfolios -156.000 € -23.200 € -25.000 € -204.200 €

Gross Recoveries 553.741 € 6.440.259 € 9.507.400 € 14.783.800 € 7.783.800 € 39.069.000 €




STANLEY W. BRONISZ
publity capital partners S.à.r.l.

E-Mail s.bronisz@publity-capital.com
Phone +49 172 432 3770


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