Stable investment opportunities in the growing real estate sector: P&P AG issues profit participation certificates 15% surplus dividends from a booming market environment

Despite the Euro crisis, there are still sectors booming with investment opportunities, which are more lucrative then ever. Investing in real estate is a stable investment opportunity with long-term returns.
Particular attention should be paid to market sector leaders and well-founded enterprises, so that the investment does not turn into a serious mistake. As an established real estate group, P&P AG provides clients with professional real estate investments throughout Germany and internationally. Founded as a sole proprietorship Peter & Partner in Zwickau in 1995, the corporation P&P AG offers a wide spectrum of outstanding services today. The corporation’s focal points include obtaining in-construction architecture of the highest quality as well as the area of new development.
Through the years, P&P AG has expanded by founding P&P Generalbau GmbH and the P&P Planwerk GmbH, which both operate under the umbrella of the P&P AG. Within the corporation, the P/&/P/AG is responsible for all back office services. This system guarantees the P&P Group’s total effectiveness and is a first for the real estate development industry. By centralising services independent of location, the P&P AG, together with its distribution partners, is able to successfully operate at practically any site or location

As a medium-sized real estate development enterprise, the P&P AG purchases properties throughout Germany in need of renovation in regular intervals as well as plots of land, primarily in the regions of Berlin, Hamburg, southern Germany and Saxony. Marked not only by a deep sense of responsibility and extreme attention to detail, the corporation’s projects are distinguished through its longstanding expertise. P&P AG’s current construction projects include freehold flats in Fulda, Augsburg, Berlin, Hamburg, Stuttgart and Ingolstadt.

A Stable Investment – High Returns: 15% profit sharing with participation certificates

In further expanding its Germany-wide activities, the P&P AG is issuing small-capital participation certificates with a volume of 2,000,000 Euro, divided among 20,000 profit participation rights of 100 Euro to a maximum of 20 investors. Such rights shall hold a minimum subscription of 5,000 Euros for the duration of five years. The annual basic dividend is 8% with a surplus dividend of 15% with distribution occurring in July of the following calendar year respectively.
This industry is currently experiencing an economic upswing, much to the benefit of investors participating in material assets. The P&P AG holds an ideal position within this market growth to further extend its role as a professional national provider of real estate investments.
With a projected turnover of 25,000,000 in 2012 to 35,000,000 Euro in 2015 and the connected increase in profit from 1,250,000 to 1,750,000 Euro within three years provides investors with returns from 17.38% to 21.13% - this indicates a growth increase of 3.75 percentage points, or 21.5%.

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Management
Ulf Hofmann, Dipl.-Ing. [graduated engineer]CEO
After receiving his degree as a graduated engineer [technical college], Ulf Hofmann directed his efforts towards the construction sector. Starting in 1993, he led the construction of over 20 commercial superstructures throughout Germany. A milestone in Ulf Hofmann’s career came with shifting paths and assuming leadership of the first restoration project in Zwickau as well as providing consultation for real estate investors. He is a founding member, the main shareholder and the chairman of the P&P AG (Ltd.).

Efficiency

The P&P AG – from sole proprietorship to real estate corporation

The cornerstone of the corporate group was set in 1995 with the founding of the sole proprietorship Peter & Partner in Zwickau. Specialising in restoring historical landmarks and properties in redevelopment areas led to an immediate and quite dramatic expansion, which resulted in the P&P Group receiving recognition as a leading property developer in the real estate sector after just a few years of operations.

In the Zwickau region alone, construction projects with sales volumes over 80 million € were implemented by 1999.

After projects were initially processed by various firms within the P&P Group, the founding of the P&P AG (PLC) in 2000 birthed a modern holding structure. The further corporation expansion occurred primarily through projects in the western states of Germany, especially in Würzburg, Fürth and Munich.

Company founder Michael Peter’s resignation led to the surrender of the Fürth branch, but also to an increased development of the branches in Munich, Berlin and Zwickau as well as the new foundation of a branch in Ingolstadt.

As an aid to further professionalism of processes, the P&P Generalbau GmbH (Ltd.) and the P&P Planwerk GmbH (Ltd.) were founded as 100 percent subsidiaries of the P&P AG. These affiliates implement all P&P property projects exclusively as the general contractor and/or planning/architectural firm as well as also working on behalf of third party contracting entities.

Within the corporate group, the P&P AG is responsible for all back office services, which include expansive administrative support of the subsidiaries, consolidated and specific controlling, central data processing including the provision of terminal connections at all site locations (via intranet) as well as long-term after sales services.

This system guarantees the P&P Group’s total effectiveness, thus being a first for the property development sector. Centralising services independent from the site location allows the P&P AG, together with its distribution partners, to successfully operate at practically any site or location.

As a medium-sized real estate development enterprise, the P&P AG regularly purchases properties throughout Germany in need of renovation as well as plots of land, primarily in the regions of Berlin, Hamburg, southern Germany and Saxony.

The P&P corporate group offers a wide spectrum of outstanding services. Today, and in the future, we dedicate our efforts to obtaining in-construction architecture of the highest quality, while also being your competent and reliable partner in the area of new development.

Each of our properties is developed with a deep sense of responsibility and extreme attention to detail. As our client, you profit from our longstanding experience and comprehensive expertise.

Creating lasting value.

Further services: project development, architectural services, general contractor and operator

Service

P&P AG (Ltd.) Projects

Freehold Flats in Fulda
Am Rosengarten – Luxury flats in a converted loft with a tax advantage

Dreamlike flats emerge from the buildings of a former wool factory built in 1904 and 1912 in Fulda. Spacious floor layouts and high-quality features such as parquet flooring, bath with bathtub and shower as well as a guest restroom create a one-of-a-kind living atmosphere. These historic buildings will house a total of 30 flats with living areas between 60 and 160 sq m. Almost every flat has a balcony or terrace. A lift will also be installed, which services the cellar and attic.

Freehold Flats in Augsburg
New Proviantbach Quarter – a historical landmark ensemble with tax benefits in Augsburg – received the ‘Augsburg Façade Prize 2010’.

Approximately 175 flats will be developed in the 19 buildings situated along the Proviantbachstraße and the Otto-Lindenmeyer-Straße. Constructed between 1890 and 1895 in the middle of the Augsburg textile quarter, the buildings, with their clinker façade, are under landmark protection as an ensemble. Additionally, the city of Augsburg has deemed the property a restoration area. Therefore, homebuyers may take advantage of increased tax deductions according to § 7h EStG.

Further Projects:
-Woodcube Hamburg
-Hiddenseestraße in Berlin
-Pappelallee 80/81 in Berlin
-Manchinger Str. 1/1a in Ingolstadt
-Johannisstraße in Stuttgart (general contractor services)
-Theresienstraße in Ingolstadt (architectural services)

Value Retention

Investments, Data and Facts
Use of Issue Proceeds
-Investment in further projects
-Utilisation of the currently booming market environment
-Accelerated growth and development

Advantages for Investors
The sector is currently experiencing an economic upswing, much to the benefit of investors participating in material assets.

The P&P AG holds an ideal position in this growing market to further expand its role as a professional provider of real estate investments Germany-wide.

For its new and additional projects, the P&P AG has a financing need of 2,000,000 Euro, which it will generate through issuing 20,000 profit participation certificates, each with a face value of 100 Euro. The P&P AG guarantees certificate holders an annual distribution at 8% of the face value. Additionally, 15% of the annual surplus will also be made available.

Calculation of Returns
Issued Sum        2,000,000 €
Dividends        8%
Surplus Dividends    15%
Calendar Year        2012            2013              2014              2015
Annual Profit        1,250,000 €    1,300,000 €    1,500,000 €    1,750,000 €
Returns on Investment
    In % p.a.         17.38%          17.75%          19.25%          21.13%

Forecast 2012 to 2015
2012    Turnover    25,000,000 €
    Expenses    23,750,000 €
    Profit          1,250,000 €

2013    Turnover    26,000,000 €
    Expenses    24,700,000 €
    Profit          1,300,000 €

2014    Turnover    30,000,000 €
    Expenses    28,500,000 €
    Profit          1,500,000 €

2015    Turnover    35,000,000 €
    Expenses    33,250,000 €
    Profit          1,750,000 €

Investment

An overview of the profit participation certificate

Form of Participation: returns-oriented participation in the form of mezzanine capital for a maximum of 20 investors.

Structure: To the holder indicated on the profit participation right, participation in the profit and loss of the above mentioned corporation, rights to dividend payment, entitlement to surplus dividends, rights to reimbursement of the asset value upon termination

Issue Volume: 2,000,000.- € (divided among 20,000 profit participation rights with a nominal value of 100.-€) for a maximum of 20 investors

Duration: 5 years

Cancellation Period: 2 years by the end of the business year

Minimum Subscription: 5000.- €

Issue Price/Agio: 100% of the nominal value / agio shall not be charged to investors

Dividend/Bonus: Basic dividend at 8% p.a. of the nominal value, surplus dividends at 15% of the annual surplus

Payment of Dividends: by July 1 of the following calendar year

Reimbursement of Principal: Upon effective termination of the asset value, e.g. the nominal value less potential share in losses paid by July 1 of the following calendar year

Liability Risk: To the amount of the indicated nominal value
         No agio, no reserve liability

Notice: This offer is only valid in Germany

Information on Distance Selling

Company
P&P AG (named “Issuer” hereinafter), registered in the Commercial Register of the Local Court [Amtsgericht] of Chemnitz under HRB 18891.

Legal Representative
Mr Dipl.-Ing [graduated engineer] Ulf Hofmann (director)

Complete Business Address
Scheringerstraße 1, 08056 Zwickau, Germany

Business Field
The Issuer operates in the field of real estate
Regulatory Authority
The profit participation certificates are not subject to national control, nor is there any other regulatory authority over the use of the certificate’s issued proceeds.

Attributes of Participation: conclusion of the purchase agreement
The Issuer offers profit participation rights in the form of bearer papers (the “participation certificates”). The total nominal value of the certificates amounts up to 2,000,000 € (written: two million Euro) divided into shares of 100 € nominal value per certificate. This allows the investor to purchase certificates with a nominal value of 100 € each. The minimum number of certificates purchased is set at 50 (= 5000 €). Higher subscriptions must be divisible by 100 €. There is no limit for the maximum purchase amount.

This indicates returns-oriented participation in the form of mezzanine capital with a maximum of 20 investors.

The profit participation certificates do not entitle holders to participation rights under company law, such as rights to participate in general meetings of the Issuer or voting rights. A profit participation certificate is a capital commitment relationship under the law of obligations, with which the provision of a specific monetary value is promised at a specific time. In return for this service, the certificate holder receives a dividend for the committed capital.

The profit participation certificates partake in the profits and losses of the Issuer. Said certificates may be redeemed at their nominal value after a legally effective termination is submitted at the end of their duration. The certificate holder is entitled, at his/her request, to receive an abbreviated annual financial statement, or annual report where applicable. However, no costs shall be invoiced to the holder for said report.

For each business year within the certificate’s validity, holders receive a dividend at 8% of the subscribed certificate’s nominal value and a surplus dividend at 15% of the annual surplus in relation to the subscribed certificates. Both dividends shall be paid on July 1 of the following calendar year.

The dividend payout is limited in that, through said payout, accumulated loss may neither occur nor increase. Legislative regulations hold a significant position in determining accumulated profit/loss. If the relevant accumulated profit does not cover the payment of the certificate holder’s entitled dividend, said payment shall be reduced respectively. The reduced payout on the profit participation certificate shall depend on the relationship of the respective distribution rights to one another. This also holds valid in relation to certificates of equal rank issued in future, insofar as said certificate conditions allow for such regulations. In the event of reduced dividend distribution, the reduced amount shall be paid in the following business year. The subsequent payment on the participation certificates shall be made in proportion to relationships that the respective distribution rights have to one another.

During subsequent payouts, the distribution rights are to be served according to the order of the arrears collected, beginning with the oldest outstanding arrear and continuing to the most current.

Subscription is concluded through sending the purchase agreement to the Issuer and the electronic transfer of the subscription amount to the account 346 744 600 at the Deutsche Bank AG (IBAN 870 700 24). The purchaser’s contract of participation certificates is issued following acceptance of the subscription provided by the Issuer. The subscriptions shall be taken into account according to the order of receipt of said subscription amount on the above-mentioned bank account. After the electronic transfer is received, the subscriber shall receive written confirmation regarding the acquired profit participation certificates.

Minimum Contract Duration
The minimum contract duration covers 5 full business years. Termination of the contract is first possible only after a period of 2 years up to the end of this designated time frame.

Loss Sharing: Subordination
Profit participation certificate holders shall be affected by any potential accumulated loss of the Issuer through the reduction of repayment claims, namely the relationship of repayment claims to the equity capital as listed on the balance sheet (including profit participation certificate capital, yet without any other subordinated liabilities). In the event of capital reduction as a method to cover accumulated losses, the repayment claim of every certificate holder is reduced at the same ratio at which the stock is depreciated. Loss carryover from previous years shall not be taken into account here.

Should annual net profits be generated in the following business years after the certificate holder shares in corporate losses, then these profits are to be allocated towards raising the repayment claims – once the legal reserves have been replenished - up to the nominal value of the profit sharing certificates before further dividends are distributed or profits are appropriated. This obligation is only valid during the regular duration of the profit participation certificates. Should annual surplus profits not be sufficient enough to replenish certificate arrears, then replenishment of certificate capital will occur proportionate to the ratio of said certificate’s nominal value up to the total value of the certificate. This also applies to the respective ratio of certificates of equal rank issued in the future, insofar as their conditions deem such a right to replenishment valid.

In the event of bankruptcy or liquidation, the claims from the profit participation certificates shall rank behind all the demands of the Issuer’s other non-subordinated creditors.

Provisions under which the promised service must not be rendered in the event of non-availability
The Issuer reserves the right to completely or partially refuse purchase proposals. The (partial) refusal shall be made known in that the Issuer refunds the transferred amount to the subscriber. For each 100 € that are refunded, the respective request for certificate purchase shall be deemed rejected.

Total Price / Price Components
The subscription remains at the nominal value. Certificate holders and subscribers shall not accrue additional fees such as issue surcharges, administration costs, management fees etc. The price of every profit participation certificate correlates to its nominal value. The profit participation certificate sales price from December 15, 2011 is 100 € per certificate.

Taxation
The purchase, holding and the divestment of profit participation certificates are VAT-exempt. Likewise, the Federal Republic of Germany does not currently impose any stock exchange tax, company tax, stamp duty, or similar taxes on the assignment of participation certificates.

The profit participation certificate holder is responsible for submitting taxes on investment income according to the Income Tax Act. The Issuer shall not assume the responsibility of tax payment for the certificate holder.

Specifics regarding payment and delivery; additional costs
The payment of the sales price shall made via electronic transfer to the Issuer’s bank account 346 744 600 at the Deutsche Bank AG (IBAN 870 700 24). Delivery of the certificate shall occur via postal service to the subscriber’s given address.

Additional costs, which accrue through the use of distance communication mediums and which will be invoiced by the P&P AG
None.

Duration of Validity of the Information / Subscription Period
This information shall remain valid indefinitely. The subscription period is expected to begin on December 15, 2011 and ends on June 15, 2012, or when the Issuer receives the maximum number of subscriptions.

Service Provisions
Once the Issuer accepts the subscription proposal, no service provisions shall be entitled.

Participation Risks
The profit sharing certificates offered are burdened with specific risks; the total loss of the capital investment is possible, in particular. Profits generated in the past provide no guarantee for future yields. Furthermore, the investor is committed to his/her participation over a longer period of time and may not be able to access his/her employed capital during this time.

Contractual Termination/ Cancellation Periods
After the conclusion of the minimal contract duration, the certificate holder reserves the right to submit a notice of termination with a notice period of two years from the end of the calendar year.

Transferability and Fungibility
The profit participation certificates may be transferred freely at any time, without the Issuer’s approval.

Legal Order and Place of Jurisdiction
The legal order of the Federal Republic of Germany holds authority over any civil disputes that may arise from the legal relationship between the certificate holder and the Issuer. The place of jurisdiction, insofar as the investor is a consumer pursuant to § 13 BGB, shall be assigned according to the respective legal regulations. Otherwise, the place of jurisdiction as defined by the Issuer shall serve for all legal disputes that occur as a result of this contractual relationship.

Information on Distance Selling

Contractual and Communication Language
The contractual and communication language is German.

Extra-judicial Grievances and Redress Procedures
A consumer may – his/her right to invoke the courts notwithstanding – call upon the appointed conciliation board at the German Central Bank in the event of disputes resulting from the application of German Civil Code regulations concerning distance contracts on financial services. A pamphlet as well as the regulations for conciliation and arbitration procedures is available at the German Central Bank Conciliation Board [Deutsche Bundesbank, Schlichtungsstelle], Postbox 11 12 32, D-60047 Frankfurt am Main, Germany http://www.bundesbank.de/schlichtungsstelle/schlichtungsstelle.php.

Existence of Guarantee Funds or other Compensation Schemes
An institution or organisation responsible for securing the claims of investors and/or their indemnification does not exist for these profit participation certificates.

P&P AG Conditions for Profit Participation Rights from December Series A

Preface
The P&P AG, Scheringerstraße 1, 08056 Zwickau, Germany (hereinafter named “Issuer”) shall issue up to 20,000 profit participation rights at 100 € in return for payment of 2,000,000 € profit participation capital under the following conditions
§1    Profit Participation Capital
1. In return for payment of 2,000,000 € profit participation capital, the Issuer shall award up to 20,000 equally valid profit participation rights with a nominal value of 100 € each.  
2. The profit participation rights shall be issued individually with a minimum of 50 participation rights per investor.
3. The profit participation rights shall be documented in the Issuer’s profit participation register.
4. The participation right holder is required to notify the corporation of changes in his/her personal information, especially changes in address or bank account information.
5. The corporation reserves the right to provide a service without obligation to the profit participation right holders listed in the register.
6. Each owner of a participation rights package shall receive a certificate regarding his/her listing in the register.
7. Participation rights may be transferred solely through reassignment.

§2    Acquisition of Profit Participation Rights
By submitting the subscription certification, the interested party requests the transfer of profit participation rights in return for payment of the right’s price. After payment is received and the request for claim is approved, – wherein the corporation is not legal obligated – the interested party shall be entered as a participation rights holder into the participation rights register, about which he/she shall receive a certificate, which is valid as a record of ownership.

§ 3    Profit Sharing
1. The purchased profit participation rights shall be paid out in an annual dividend at 8% of the respective investment. Furthermore, the profit participation rights owners shall receive an additional 15% on their investment coming from the Issuer’s respective annual surplus. This surplus shall be calculated in relation to the subscribed profit participation rights.
2. An annual deficit may not occur through the distribution of dividends. Should the annual surplus not completely cover the necessary distribution, the payout sum allocated to each participation right will be reduced as appropriate. Unfulfilled claims on dividends shall carry a repayment claim taken from the annual surplus from future business years within the subscription duration.
3. The profit participation rights hold claim to profits acquired within the business year pro rata temporis for full months.
4. The distribution of profits to the participation rights from the previous business year shall be made 6 months after the end of the respective year, or by July 1 of the next year at the latest. In the event that the Issuer’s annual financial statement for the previous year is not concluded, payment shall occur on the first business day after definite conclusion.

§4 Loss Sharing
1. The profit participation capital shall take part in losses accrued by the Issuer in the same ratio as the authorised capital. Losses reduce the participation rights capital.
2. Should annual surpluses be generated in the following business years within the subscription’s duration, after the participation capital has already shared in the corporation’s previous accumulated losses, then these surpluses shall replenish the participation up to its nominal value. This must occur before alternative appropriations of earnings (including the profit distribution pursuant to § 3) are undertaken.

§5    Duration, Repayment, Termination, Reassignment, Conversion
1. The profit participation rights’ duration is indefinite. Cancellation/termination is first possible at the end of the 5th business year. Should a written notice of termination not be submitted, the subscription duration is extended through the next respective business year.
2. The notice period for termination is two years. In the event that losses are accrued or claims to dividends are not fulfilled in the last year of the notice period, the termination may be revoked up to a month after recognition of these circumstances.
3. Validly terminated participation rights shall be redeemed at their asset value (nominal value less any pro rata loss sharing according to § 4). Payouts shall occur according to the conditions set out in § 3 para. 4. Between the end of the business year and the time period set in § 3 para. 4, the amount to be paid shall earn interest at 8% p.a.
4. The participation rights may be sold privately at any time throughout their validity. Sale of said rights does not require the approval of the Issuer. When the participation rights are transferred to a new owner, this holder shall be entered in the participation register, insofar as he/she can attest to ownership through the submission of purchase records.
5. Participation rights may be converted into shares at request of the rights holder and with approval of 75% of the corporate assembly, whereby the rate of exchange shall be negotiated in respect to economic conditions.

§6    Issuance of New Participation Rights
1. The Issuer reserves the right to bring out further profit participation rights under the same or different conditions as well as acquire capital in other forms.
2. In case of a new circulation of participation rights, the rights owner only processes preemptive rights when the corporate assembly approves said rights.
3. The participation right owner holds no claim that his/her distribution be paid out prior to other distribution claims, which must also be served, or to other participation rights or further capital investments.

§7 Holding Profit Participation Rights
The holding of profit participation rights will not be the concern of the Issuer as subject to § 4, whether caused by consolidation, conversion or transfer of the rights.

§ 8    Differentiation from Corporate Rights
The profit participation rights do not hold claim to profits, they do not equal shareholder’s rights, and especially do not contain any rights to participate or vote in the Issuer’s corporate assembly.

§9    Subordination / Liquidation Proceeds
1. The claims of the profit participation rights are subordinate to all other demands from creditors on the Issuer.
2. In the event of liquidation, the participation rights are to be addressed after the rights of other creditors, and yet before those of the Issuer’s share holders; sharing of liquidation proceeds shall not occur.
3. Should bankruptcy be declared, the participation capital will be repaid with funds from the Issuer’s assets only after the demands of non-subordinate creditors are met.  

§ 10 Modification of the Profit Participation Right Conditions
1. Sharing of losses (§ 4) may not be subsequently changed, the order of subordination may not be limited and the duration and notification period for termination (§ 5) may not be shortened. Premature repayments must be returned to the Issuer regardless of opposing agreements.
2.    The Issuer only reserves the right to modify or change the participation rights conditions via a unilateral declaration of intent in the following cases:
•    Alterations in the Issuer’s tax treatment of participation rights. As long as payouts to the participation rights by the Issuer are subject to corporation tax, the modification will take the form of a reduction at the amount of the corporation tax.
•    Changes in the formulation
•    Changes, which are necessary for exchange-based quotations, or to establish fungibility on an internet platform.
•    These modifications shall occur at reasonable discretions and with consideration of the interests of the Issuer, the shareholders and the profit participation rights owner.

§ 11 Announcements
Announcements made by the Issuer, which affect the participation rights, shall be made either in writing, via fax or email and via publication on the Issuer’s website.

§ 12 Closing Provisions
1. The participation rights conditions are determined solely under German law.  
2. The place of fulfillment is the registered headquarters of the Issuer and the place of jurisdiction is also the registered headquarters of the Issuer, insofar as it is permissible. In the event that the participation rights holder moves his/her domicile or place of habitual residence outside of the Federal Republic of Germany after conclusion of the contract, or if this domicile or habitual residence is not known at the time the dispute is brought to court, then the registered headquarters of the Issuer shall serve as the local place of jurisdiction.  
3. Should individual provisions of these profit participation rights conditions become partially or completely void, ineffective or inexecutable, the validity of the remaining provisions shall not be thereby affected. The void, ineffective or inexecutable provision will be replaced, at reasonable discretion, by the Issuer with a provision that most appropriately comprises the economic purpose of these conditions with consideration of the interests of all parties involved.


P&P AG, Scheringerstraße 1, 08056 Zwickau, Germany entered in the Commercial Register Chemnitz HRB 18891, Chairman Dipl.-Ing. [graduated engineer] Ulf Hofmann
Tel. +49 (0) 375 - 370 39-0
Fax +49 (0) 375 - 28 17 09
Internet http://www.pp-ag.de
Email info@pp-ag.de