Letter to shareholders – General Information

Dear Shareholder,

This letter is to keep you aware of the current status of projects within the Brickstone Growth & Development Fund Sicav plc.

Our last letter dated during October 2016, was sent when even the American Presidential polls gave a uniquely expected victory to presidential candidate Clinton. In fact, as we all know things have gone very differently, and in these days, the rejected candidate, by the press, is taking possession of the White House.

You will recognize that in our last letter, which in any case is displayed on our website www.brickstonefunds.com we exempted to express more opinions on the international situation because of a paradoxical situation, refusing to write that we have been always beliving in the business opportunities as we still believe today rkmnnrh.

In the light of the results that have materialized in the American elections, we believe we have acted correctly, but even if the temptation would have been strong to shout our joy for a candidate who at least verbally wants to resolve the international crisis with Russia, once again we have said nothing, waiting for realistic facts.

And although the actual facts at the political level have not yet been manifested, we find elements of economically practical changes that bode well both for a return to normalization, and in terms of a reversal of the NAV enhancement visit the website.

To make a brief profile of our projects Hotel St Petersburg, managed in the international crisis context, is defending its position both in terms of satisfaction by customers and employment. The hotel, that is subject to a mortgage of just over US $ 10 million is in a situation of self-sufficiency, being able to repay the loan installments in place with the bank.

There is not much to say in this present time with regards to the plot of land of Kryvoy Rog in Ukraine, except that at present, we believe it is wiser and advisable to wait until better times.

With regard to the hotel in Novosibirsk, the third and final project of Brickstone Fund, open to the public during the month of February 2016, the situation is slightly different.

On one hand, the structure is well recognized for its technical characteristics, the design, the comfort and hospitality of its services, and it is getting appreciatiated by the market even though its been only 10 months since it opened its doors for business and is showing very encouraging results, If, as we hope, there will be a solution to the sanctions imposed on Russia, then we could get even better results.

The problem the fund is facing is the debt burden on the company that controls the hotel, which had signed a loan of about US $ 30 million.

In the last two years we have seen, from the macroeconomic point of view, a deterioration of all key Russian indicators: interest rates went through the roof, the ruble has depreciated by halving its value, the economic and social expectations are precipitated.

In this context, the bank with which we had contracted the debt has forced us to return in part the exposure of the loan, arguing that the value of debt was higher than the valuation of the actual property.

Again we are not able to enter into the merits of how a hotel just recently finished may be valued at almost zero: lack of transactions with which to compare, deterioration of economic indicators and to finish the rigid application of mathematical models, lead to conclusions often illogical, but we have no choice but to accept under the circumstances.

This is a summary of the reason why the bank, faced with low valuations, imposed the return which in part, thanks to your support but also to the new investors, we were able to honor, lowering the debt to about 22 million USD; Unfortunally we were unable to honor the installment in last December, about 3 million USD.

Of course we have always been in close contact with the bank which restated a new request, which we had to accept with the hope of gaining some more time and try and find a new solution.

The new plan, signed in Moscow a few days ago, provides for the payment of 1.4 million USD by the 01/31/2017 and than three installments of approximately € 700,000 in June, September and December 2017.

If we will be able to honor these deadlines, then the situation will be very reasonably considered almost resolved as the type of loan, bullet, provides for the payment of interest in the coming years until 2023, indicative an amount of 3-400 thousand USD/year, and the final return in November 2023, with the entire remaining debt of approximately US $ 17 million.

The whole future seems to be brighter compared with few months ago and the feeling we gather on the field is good, but we have to achive this goal of repaying the next instalments, first of all the first at the end of this month.

We are doing the best either to convince new investors and to deal with the bank, but we would appreciate your concrete support because this step could be fundamental for our project in Novosibirsk.

We do believe that none of us can be responsabile for the general situation that we have been living during these two last years and none of us could predict such events. We just awoke up one day with a deteriorated environment were the solution to abandon the projects would have been more dangerous than to go on.

During these 2 years we faced many problems but we managed to achieve and overcome all the unpredictable situations: in front of us we have a future which could be quite different from the one we lived during these two last years: we must achive our commitments or we could face serious consequence.

We realize that we can not force anyone to participate in relation to their subscription: from the distant 2008, when the recession began, there haven’t been special moments of joy from the economic point of view and everyone must make the accounts with their own situation and their own resources.

However, we should remember once again, that in the face of a situation that is not attributable to anyone within the Brickstone Fund, even if we fail to gather everything the Fund needs to meet the commitments with the bank, we will continue to relate to the bank itself as we always had, trying to gain time and solve problems, aware, as you are aware once more today, of the decisions of the bank does not depend more from our actions if we don’t honor the next instalment, but simply by their willingness to meet us or not.

Yours Sincerely,
Luigi Pesce
Director