THE BAGLIONI FUND

In 2006 Sorgente SGR began to set up a real estate investment fund characterized by the contribution of capital, known as the Baglioni Fund which was authorized by the Bank of Italy in November of the same year

It is reserved for institutional investors and envisages the possibility of issuing further shares after the initial date, therefore making it a semi-closed fund.
The Fund has a maturity of 30 years, which is the maximum permitted in the regulations governing investment funds. The proceeds will be distributed annually with 20% of the profits being set aside for contingencies each year. The fund's investment policy focuses on the hotel industry which has a high level of appeal on several levels: good performance of the sector (which is acquiring increasing importance in the Italian economy); the increasing awareness by hotel management of the responsibility they have for maintaining a high standard in the quality of properties they own, (a factor that constitutes a distinctive characteristic of the hospitality services); the opportunity of associating the buildings with high prestige brands. In light of these considerations, the choice of this type of investment is one that offers the greatest possibility of significant returns in real estate in the near future.
Sorgente has reached an agreement with one of the oldest and most prestigious hotel management firms, the Baglioni Group, to transfer all its real estate assets to the fund. The buildings in the Baglioni chain, are all highly prestigious and situated in the principle attractions for the luxury city tourist in Italy and France; something, moreover, that ensures a geographic diversification of the portfolio.
The Baglioni Group is a luxury hotel operator. The French properties are part of the Relais Chateaux chain. The real estate stock comprises approximately 300 rooms with very high annual occupation levels.
The initial value of the Fund is 100 million euros but following the envisaged further transfer of properties to the Fund, its total assets will increase to 150 million euros.
At 30 June 2007 the Fund’s net asset value stood at 46,982,433 euros compared to 45,44,093 on 31 December 2006, an increase of 3.27%. The unit share value (100,000 euros at the launch of the fund) has now increased from 105,310.400 on 31/12/2006 to 108,755.632 on 31 June 2007.

The results of the Fund, since its establishment, are set out in the following table:

  Value of Fund N° of shares Unit Value 6 month Var. % Annual Var. %
Start up date 43,200,000 432 100,000.000 - -
31 December 2006 45,494,093 432 105,310.400   5.,31
30 June 2007 46,982,433 432 108,755.632 3.27  
31 December 2007 51,979,180 432 120,322.176   14.25
30 June 2008 55,754,521 432 129,061.391 7.26   
31 December 2008 56,134,902 432 129,941.903   7.99
30 June 2009 52,461,397 432 121,438.419 -6.54  

The Baglioni Fund recorded, as of 30 June 2009, compared to December 2008, a share value of €129,941.903, This slight decrease (-6.54%) compared to the share value recorded at the end of the last year equal to € 129,941.903, was caused by the results of the valuation of the Independent Advisers on the shares owned by the Fund in property companies and on the properties owned. With activities amounting to over €96 million and with a performance of +21.44% since start-up, the compound average annual return (on a six-month basis), in any case, remains high at 6.74%. During the first six months, the Fund acquired the 100% of the share of the Saint Paul Investissement, which owns an important hotel complex in France, Aix en Provence, managed by the Baglioni Group. This investment represented yet another step in the creation of a portfolio of properties to be used for hotel purposes, providing geographic diversification while preserving the luxury class of hotel.