DolphinCapitalInvestors(DCILN)isanamethatIfirstresearchedbackinFebruary.Severalinteresting developmentshavetakenplaceintheinterim,andIhavedecidedtorevisittheinvestmentthesis. DolphinCapitalInvestors(DCI)islistedontheLSEsAIMindex.TheAthensdomiciledcompanyispart propertydeveloperandpartpropertyinvestor,withafocusonleisureintegratedresidentialresortsin SoutheastEurope,theCaribbean,andCentralAmerica.IncludingitsIPOin2005,thecompanyhasraised atotalof948millioninequityandaccumulatedalandbankatacostbaseof525million.Witha currentmarketcapof210million,thecompanyistradingata60%discounttothecostbaseofitsland bankanda70%discounttoitsNAV. Themarketswingsbetweenemotionsoffearandgreed.InDCIscase,themarketisbeingunnecessarily fearful.DCIslandbankisprimarilylocatedinSoutheastEurope,withthemajorityofitsassetsinGreece andCyprus.Furthermore,thelandbankwasaccumulatedpriorto2008,attheheightoftheglobalreal estateboom.Forthesetworeasonsandliquidityconcernsattheholdingcompany,DCIhasbeenleftfor dead. DCIpresentsarisk/rewardasymmetrythatisrarelyobserved.

AsIwillshowinthisresearchnote,the companyisfortifiedbyastrongbalancesheet,hasatalentedmanagementteamofowneroperators, andhasalandbankthathasbeenprudentlyaccumulatedandwillgeneratesignificantcashflowinthe shortandmediumterm.Myconservativevaluationpredicts350%+upsidetothecurrentshareprice. CompanyBackground:

DCIwasformedwiththeintentionofexploitingapropertyarbitrageopportunitythatexistsbetween SouthwestEuropeandSoutheastEurope.Astheabovetableshows,thetwogeographieshavesimilar landscapes.Infact,basedoncriteriasuchasnumberofBlueFlagbeachesandshorelinelengths, SoutheastEuropeappearstoofferamoreappealingsetuptopotentialvacationers.However,realityhas favoredSouthwestEurope,andSoutheastEuropehasfailedtoattractthesamenumberoftourists.Part ofthereasonforthistrendisrelatedtoproximity:NorthernEurope,averyimportantmarketforboth locales,isobviouslyclosertoSoutheastEurope.Othermajorreasonsforthediscrepancyinclude underinvestmentinresortinfrastructure.LocalpoliticsinSoutheastEuropearefilledwithlayersof

bureaucracyandtakingaplanfromthecradletothegravecanrequirehundreds,ifnotthousands,of signaturesandapprovals. WhenIspokewithananalystfromEdisonInvestmentResearch,hecitedlocalknowhowasoneof DCIskeystrengths.Inparticular,hewasstruckbymanagementsabilitytonavigatethedense bureaucraciesofseveralkeyportfoliocountries.Developersandresortoperatorswanttoestablisha greaterpresenceintheregionbutareturnedawaybythedauntingtaskofneedingtoformpolitical connections.Localknowisthereforeakeybarriertoentryandprovidessignificantdownside protectiontothevalueofDCIslandbank.AnanalystfromGoldmanSachsnotesthatmerelysecuring theappropriatepermitstobuildaresortcanenhancethelandsvalueby4x.

all figures in m Advanced Projects 1) The Porto Heli Collection 2) Venus Rock Golf Resort - (part of Aristo) 3) Playa Grande Club & Reserve 4) Pearl Island TOTAL Major Projects 5) Sitia Bay Golf Resort 6) Kea Resort 7) Scropio Bay Resort 8) Lavender Bay Resort 9) Plaka Bay Resort 10) Triopetra 11) Eagle Pine Golf Resort - (part of Aristo) 12) Apollo Heights Polo Resort 13) Livka Bay Resort 14) Mediterra Resorts Aristo Hellas TOTAL Aristo Cyprus Magioko Paphos Center Plot Panorama Residences Other Aristo Cyprus TOTAL GRAND TOTAL Cyprus 5 5 5 179 195 4,572 30 631 Greece Greece Greece Greece Greece Greece Cyprus Cyprus Croatia Turkey Cyprus 218 44 172 310 264 11 159 461 63 12 27 1,741 230 Greece Cyprus Dominican Republic Panama 334 498 941 864 2,636 371 Country Net Land Ownership (hectares) Net Independent RE Value

Theabove etableandpiechartsprov videsomeins sightintoDCI scurrentlan ndbank.Look kingfirstatth he table,thecompanysep paratesitsassetsintoadvancedprojec ctsandmajorprojects.Adv vancedprojec cts (PortoHe eli,VenusRock,PlayaGran nde,andPearlIsland)areh highpriorityc commitments sforDCI.The ese projectstendtobefur rtheralonginthepermittin ngprocessan ndhavemate erialnearterm mbenchmark ks. ojects,ontheotherhand,aremostlyin nthepermitti ngstageand areseveraly yearsawayfro om Majorpro generatingoperatingc cashflow.Athirddistinctio onismadefo orDCIsowne ershipstakein nAristo Developers,thelargestresidentialr realestatede evelopmentc companyinCy yprus.Aristoprojectspopulate listofadvancedprojects(V VenusRock)a andmajorpro ojects(EaglePineGolfRes sort),withthe boththel e remainderofitslandb bankaccounte edforatthebottomofth etable.Onanetbasis,the esizeofthe ,anindepend company slandbankis4,572hecta ares.ColliersI International, dentrealesta ateconsultancy, valuesthe ecompanysa assetsonaquarterlybasis s.Onanetba asis,Colliersv valuedthecompanysland d bankat6 631million(a asofJune30,2012).

Thepiechartsshowthegeographicspreadoftheportfolio.OriginallysetuptoinvestinSoutheast Europe,thecompanyaddedassetsin2007intheCaribbeanandCentralAmerican.Whiletheseareas areslightlymoresaturatedresortmarketsthanSoutheastEurope,DCIhasfoundopportunitiesinthe DominicanRepublicandPanamatodevelopanultraluxuryproductthatappealstohighnetworth individualsinNorthAmerica,aswellassurroundinggeographiesinCentralandSouthAmerica.Asa percentageofthecompanystotallandbank,theassetsintheCaribbeanaresubstantial.Whenbroken downbyinvestmentcost,theexposuretothisregionisviewedaslessmaterial.

Fundraising- primary and secondary Date Number of shares (m) Price (p) Total fundraising (m) Pre-IPO Jun-05 5.00 n/a 5.0 IPO Dec-05 104.00 68 104.0 Placing Oct-06 217.96 93 300.0 Placing Jun-07 178.04 170 450.0 Placing Dec-11 26.21 27 8.5 Placing Sep-12 204.44 20 50.0 AVG/TOTAL 735.65 85 917.50

Asthetopchartshows,thecompanyssharepriceperformancesince2005hasbeenverydisappointing. Mostofthedisappointmentcanbeattributedtoexogenousmacroeconomicfactors.Thebottomtable showsthecompanysmajorfundraisingeffortsinthepublicmarkets.Mostoftheequityfinancingwas raisedpriortothesharepricecollapseof2007and2008,andassuch,theaveragepricepaidfornew shares(85p)issignificantlyabovethecurrentshareprice(26p).Thecompanyengagedina62.5million (Iapologizeforswitchingbetweencurrencies;thecompanyreportsinEuros,butisquotedinPounds) sharebuybackinthesummerof2008.Thebuybackhadlittleimpactinslowingthesharepricecollapse, andthecompanyhashadtoconduct2subsequentequityraisestocoverexpensesattheholding companyandothersmallerequitycommitmentsattheprojectlevel.Themostrecentequityraisein

September2012involvedNewYorkbasedhedgefundThirdPointCapital.ThirdPointcontributed30 million,thefoundingpartnerscontributed5million,andtheremaining15millionwaspurchasedby existingshareholders(thislastportionoftherightsissuewasmorethan4xoversubscribed).

Thepriortablewastakenfromthecompanyslatestinterimreport.Sinceaccumulatingthecurrentland bank,mostlyfrom20052008,thecompanyhasdiligentlyacquiredthenecessarypermitstobegin breakinggroundonvarioussectionsofitsadvancedprojects.Thepermittingprocessisongoingfor mostofthemajorprojectsbutsignificantprogresshasbeenmade.Intheintroductiontothisresearch note,IdescribeDCIaspartpropertydeveloperandpartpropertyinvestor.Thisdistinction(both developerANDinvestor)isimportantwhenanalyzingtheprogressinthepermittingprocess.DCIis inclinedtomonetizeinvestmentsasitseesfit,andthecompanywillmakedivestmentsatanystage duringaprojectslifecycle.Asmentionedearlier,theGSanalystwhocoveredDCIestimatedthatafully permittedprojectenhancedlandvaluesby4x.Healsoindicatedthatapartiallypermittedproject enhancedlandvaluesbyasmuchas2x.ThiswillbecomemoreimportantlaterasIdelveintothe companysstrategy,butthemeaningfulprogressmadeonthepermittingfrontshouldnotbeviewed lightly.Asstrategicbuyersbegintoreemergefromthewoodwork,DCIwillbeabletomakedivestments atNAV(orapremiumtoNAV)andlendcredibilitytotheindependentvaluationsofitsportfolio.
ExitsasofSept.26,2012 Landsite Dolphin Dolphinoriginal Dolphinexit Dolphinreturnon (hectares) stakesold investment(m) proceeds(m) investment(times) TsiliviAristo 11 100% 2 7 3.50x Amanmila 210 100% 2.8 5.4 1.90x Kea 65 33% 4 4.1 1.00x SeafrontVillas 3.6 100% 9 14 1.66x Kings'AvenueMall 4 100% 11 15 1.36x AristoDevelopersLtd 1,351 50% 208 375.5 1.80x TheNikkiBeachResort&SpaatPortoHeli 1 75% 4 6.9 1.83x PearlIslandFoundersPhase 106 100% 6 10.6 1.73x TOTAL 1752 247 439 1.78x

Inthisnexttable,Ihaveincludedahistoricallistofdivestments.TheAristoDevelopersdeal,whichtook placeinMarch2012,wasashareswap.Specifically,theoriginalfounderofAristoswappedhis ownershipstakeinDCIforacontrollingstakeinAristo.Still,thedealwasstruckontermsthat representedapositiveinvestmentreturnforDCI,andithadtheaddedbenefitofremovingAristodebt fromthecompanysconsolidatedfinancialstatements.AnothernoteworthydealwastheNikkiBeach exit,whichwasfinalizedinSeptember2012.TheSwissDevelopmentGroup(SDG),aprominentluxury resortinvestor,wasthebuyer.Inrecentconferencecalls,thecompanyhasmentionedtheNikkiBeach dealasasignofgoodthingstocome.BytransactingwithSDG,thecompanyreapedatwofoldbenefit: firstly,SDGisadiscerningbuyer,andtheirchoicetopurchasefromDCIsendsastrongmessagetothe marketaffirmingthequalityofDCIsassets;secondly,SDGhasdeeppockets,andifthingsgosmoothly, futureDCI/SDGdealsappearlikely.

 ManagementBackground/BofD/Fees/CorporateStructure: DCIisthemaininvestmentvehicleofDolphinCapitalPartners(DCP),whichisanindependentprivate equityfirmstartedin2004byMiltosKambouridesandPierreCharalambides.AsfarasIcantell,DCIis DCPsonlymaterialinvestment.Inadditiontothe2foundingpartners,Kambouridesand Charalambides,thecompanylists7employeesininvestmentmanagement,2inIR/marketing,7in finance,1inIT,and6inadmin(25employeestotal). KambouridesandCharalambidespreviouslyworkedtogetheratSorosRealEstatePartners(SREP), whereKambourideswasafoundingpartner.AccordingtoDCPswebsite,SREPwasformedin 1999[when]thecompanyraisedaUS$1billionfundandexecutedanumberofcomplexrealestate transactionsinWesternEuropeandJapan,includingasignificantinvestmentinseveralmasterplanned leisureintegratedresidentialcommunitydevelopmentsinSpain.SREPwasalsosignificantlyinvolvedin SoutheastEurope,andKambouridesandCharlambidesarenotedfortakingthereinsonthesedeals. PriortoSREP,bothKambouridesandCharalambideswereinvolvedinrealestateinsomecapacity. KambouridesworkedatGoldmanSachs,spearheadingrealestateprivateequitytransactionsintheUK, FranceandSpain.AndCharlambidesworkedatbothJPMorgan(primarilyinanM&Aadvisoryrole)and atHiltonInternational,wherehemanagedtheexecutionofoverUS$150millionworthofnewHilton InternationalhoteldevelopmentprojectsinCanada,theCaribbean,France,IndiaandScandinavia. TheboardofdirectorsconsistsoffiveindependentnonexecutivedirectorsandMiltosKambourides. Theindependentdirectorsshareanicemixofpoliticalwherewithalandinvestmentsavvy.Andreas Papageorghiou,thechairman,isthemanagingdirectorofaprominentCypriotlawfirmandfrom1978 to1980,hewastheMinisterofCommerce&Industry[inCyprus]andfrom1981to1993,hewasthe generalmanageroftheCyprusHousingFinanceCorporation.CemDuna,anotherdirector,managesa leadingTurkishconsultancycompanyandhasheldvariousrolesintheTurkishgovernment,including positionsasadirectambassadortotheUnitedNationsandasthelate[Turkish]PresidentTurgotOzals foreignpolicyadviser.Finally,athirddirector,ChristopherPissarides,was(inadditiontoothervarious accoladesandimpressivebusiness/governmentroles)therecipientofthe2010NobelPrizein economics.Followingtheunderwritingoftherecent50millionequityraise,andtheirsubscriptionto 30millionworthofshares,ThirdPointCapitalwillbeallowedtoappointasinglenonexecutive directortotheboard.GivenDanLoebstrackrecordofgeneratingshareholdervalue,thisdevelopment shouldbeviewedveryfavorably. Themanagementfeestructureisconventional.Thebasefeeiscalculatedas2%ofequityfundsraised (plusanyfurthergrossequityproceedsandretainedearnings),whichasofnow,is890million(aside letteragreementwasreachedtoexcludetherecentlyadded50millionfromfuturefees).A20% performancefeeispaidonreturnsabovean8%annualizedhurdlerate,andperformancefeesareheld inescrowandreleasedincrementallyupontheachievementofvariousaggregatereturntargets. Performancefeesheldinescrowarecurrentlyimmaterial.Myexpectation,asIwilllaterusein

estimatingthecompanysimmediatecashneeds,is17.8millioninmanagementfeesinboth2013and 2014. Shareholders:

Theshareholderlistincludesmanynoteworthynames.ThirdPointisnowthelargestshareholder,but ToscafundAssetManagementhasbeenaggressivelyaddingtotheirnewposition.Blackrockand Fortressremainlongtermshareholders.PeterCollery,oneofDavidEinhornsearlymentors,ownsa 2.92%stakeinthecompany.Finally,MiltosKambourideshasa13.51%stake. CorporateStrategy(indepth): Inthelandacquisitionprocess,thecompanytakesonenormousrisks.Forone,thecompanypurchases unpermittedland.IfDCIcannotsecuretheadequatecommercialrights,thelandbecomes,moreorless, worthless.Obviously,theriskturnsintorewardifthecompanysecurespermits,butdetermining appropriatelandacquisitionsisadiscerningprocessthatrequiresexperienceandsavvy.Riskmitigation comesfromextremeduediligence(whichincludesdiscussionswiththeappropriatepoliticalchannels) andbydisciplinedpurchasingoflandatlowpricesthatofferextremelypositiverisk/reward asymmetriesiftheappropriatepermitsareeventuallysecured.

Afterthelandacquisitionismadeandtheappropriatepermitsbegintobeacquired,DCIinitiatesthe planningprocessbysearchingforwellknown(branded)luxuryresortoperatorstopartnerwith.DCIisin thebusinessofdevelopingleisureintegratedresidentialresorts,andanygivenprojectcaninclude1to severalbrandedoperators.Asthetablesaboveshow,thelistofbrandedoperatorsforthevarious leisurecomponentsincludesAmanResorts,NikkiBeach,WaldorfAstoria,andJackNicklaus.DCIhasalso securedcommitmentsfromRitzCarltonandFourSeasonstodevelopseparateluxuryhotelsonPearl Island. Thebenefitsofsecuringabrandedpartneraremanifold.Mostnotably,themarketingchannelsavailable tocompaniessuchasRitzCarltonandFourSeasonsarewellestablishedandwillbenefitDCIbynotonly increasinghoteloccupancylevelsbutalsoproducingstrongerpresalesofitsresidentialunits.Iwillgo intothisingreaterdetaillater,butultrahighnetworthindividuals(DCIstargetdemographic)are

reluctanttopurchaseresidencesatnonbrandedsites.Assuch,brandassociationsarekeyforDCI(and alsoabarriertoentryforcompetition),andsofar,thecompanyhasbeenextremelyadeptatforming relationshipswithadiversegroupofupperechelonbrandedoperators.

Theabovechartbroadlysummarizesthedevelopmentprocessfromthecradletothegrave.Onthe fundingside,thecompanyishighlysensitivetothepotentialrisksthatcomewithfullscaleland developmentinremotelocationsandseekstomaintainanovercapitalizedholdingcompany.Land purchasesare,therefore,madeonadebtfreebasis.Furtherequitycontributionsaremadetodevelop theinitialinfrastructurerequirementsoftheprojectandtheinitialleisurecomponent/components (withamodicumofdebtfinancingbroughton).Intotal,thecompanytargetsa151570financing structureoneachproject,where15%oftotalfundingisequitybacked,15%isdebtbacked,andthe remaining70%comesfrompresales.Projectscanalsoincludesizablegovernmentsubsidies.Inthecase ofAmanzoe,theGreekgovernmentapprovedstatesubsidiesamountingto7.8million.Alldebt financingisringfencedwithabsolutelyNOclaimsontheholdingcompany.Theonlyexceptiontothis ruleisa$40millionconvertiblebond(sorryagainforswitchinginbetweencurrencies)issuancefrom March2011(welloutofthemoney,withastrikeof50p).Thefundswereusedtoprogressgolfcourse constructionatPlayaGrandeandaresettomaturein2016. Inthenextsectionofthisresearchnote,IwillincludeacasestudyofPearlIslandthatillustratesthe basicflowofprojectdevelopment,butitisimportanttounderstandthatDCIincorporatesbroadlythe sameframeworkacrosseachproject.Theleisurecomponent/componentsisthecenterpieceofeach projectandistherequisitefirststepatanyofDCIsleisureintegratedresidentialresorts.Thismakes logicalsensebecauseyoucannotmarketAmanVillaswithoutfirsthavinganestablishedAmanHotelor anAmanBeachClub,andsimilarly,youcannotmarketvillasatagolfcoursewithoutfirsthavinga playablegolfcourse.Theleisurecomponentnecessarilypredatestheconstructionofresidentialunits becausetheleisurecomponentisthedrawingforce. Oneimportantnoteonconstructionisthatthecompanytendstouselocalcontractors.ForVenusRock andotherAristoprojects,Aristoobviouslyperformstheconstructioninhouse.Inacasestudyof Amanzoe,thecompanyoutlinedthetenderingprocessfortheproject.Theprocesslastedfromfall2009 towinter2010.Fromalonglistofcontractors,thecompanyselectedfivenamesforfinalconsideration.

Outofthosefivenames,proposalsrangedfrom35millionto58million.DCIeventuallynegotiateda 33.5millioncontractwithDomotechniki,afirmbasedinNorthernGreecewithwhatthecompany describesasafairlysolidbalancesheetandannualrevenuesof80million.A15year,33million termconstructionfacilitywasnegotiatedwithlocallendersat650bpsabovesixmonthEuribor.With expectedstatesubsidies,thenetconsiderationonthefacilityisbroughtdownto25.2million. ForDCI,onlyasmallportionofitsearningspotentialcomesfromaprojectsleisurecomponent.Rather, thebulkoffuturecashflowcanbeexpectedfromthesaleofresidentialunits,wherethefundingis doneonahighlyadvantageous,presalebasis.However,gettingtothecashcowstageofaprojectis timeconsumingandrequiressignificantupfrontcashconsiderationsinadditiontoovercomingthe aforementionedregulatoryburdens.Someofthisupfrontcashburn,asIwillshowinthePearlIsland casestudy,canbecurtailedbybringingonJVpartnersorsimplydivestingassetsenmasseaftervalue addedpermitshavebeensecured. PearlIsland(CaseStudy): OnehighlyillustrativeexampleofthecorporatestrategyisthePearlIslandproject.InJuly2008,DCI acquired60%ofPearlIslandfromGrupoEletaatanentrypriceof$1perm2,withanadditional considerationof$3perm2contingentontheprojectobtainingfullpermits.ByJulyof2009(1year later),thecompanyhadobtainedfullzoningandpermitsformorethan4millionm2ofdevelopable land,whichwillendupincludingc.1,100residentialunits,6luxuryhotels,aninternationalairport,and amarinawithupto500berths. In2011(year3oftheproject),DCIandGrupoEletajointlyinvestedanadditional$12millionintoPearl Island.Thefundswereallocatedtowardsbasicinfrastructureneeds,rangingfromroadconstructionto theestablishmentofbasicwaterinfrastructuretophase1constructionoftheairport.Otherupfront costsincludedvariousarchitecturalfees.ItwasaroundthistimethatDCIreceivedcommitmentsfrom RitzCarltonandFourSeasonstodevelopseparateluxuryhotelsontheisland.RitzCarlton,inparticular, signedaletterofintenttobuildaRitzCarltonReserveHotelwith80suites(adjacenttothefounders phase).Asexpected,thecompanyallocatedcontractingworkonthefoundersphasetovariouslocal, reputableoperatorsandannouncedthesaleof20lots(outof35)atanaveragevalueof$180/m2(for justtheland).Further,DCIobtained$15millionofbankdebtfromasyndicateoflocallenders.

Pearl Island founders' phase exit Total allocated cost $12.3 million Colliers' NAV $15.7 million Implied cash exit* Infrastructure commitment Total implied exit price Premium to cost Premium to Colliers' NAV $10 million $13 million $23 million 87.0% 46.5%

Pearl Island (total implied NAV) Founders phase $23 million Implied NAV of Pearl Island* $217 million Net implied NAV $130 million Current NAV Premium to current NAV $41 million 214.5%

*Assumes, from company guidance, that the founders' phase is c. 10% of future island profitability

*DCI w as paid $6 million for a 60% stake, so the implied cash exit on a gross basis w as $6 million/60% = $10 million

In2012(4yearsintotheproject),DCIannouncedthesaleofits60%stakeinthefoundersphaseto AlbertoVallarino,alargePanamanianrealestateinvestorforanimpliedexitpriceof$23million(itis importanttomentionthatthefoundersphaserepresentsonlyc.7%ofPearlIsland).The$23million representedan87%premiumtotheinitialcostbaseanda46.5%premiumtotheNAVbookedby Colliers.Theintangiblebenefitsofthisexitareenormousandnoteasilyquantifiable.Forone,DCIstill controls93%oftheisland,andanaccelerationofthefoundersphase(whichthistransactiondoes)will helpboostadjacentlandprices.Additionally,byexitingthefoundersphase,DCIfreesupfuturecapital commitmentsandcannowallocateresourcestowardsphase1andphase2.DCIalsohastheoptionof pursuinganearlyexitfromPearlIslandaltogether.Basedontheimpliedexitpricefromthefounders phase,DCIsstakeintheremainderofPearlIslandisvaluedat$130million,ora214.5%premiumtothe currentNAV.Morethanlikely,DCIwillseekJVpartnerstodevelopphases1and2,butifareasonable biddercamealong,thecompanywouldbemorethanwillingtoexittheproject. StructuralDrivers/StatusQuo:
Tourist arrivals Location Global Cyprus Dominican Republic Greece Panama Turkey

Time period YOY change +/Jan 1 - May 1 2012 5.0% Jan 1 - Aug 1 2012 3.5% Jan 1 - Aug 1 2012 7.3% Jan 1 - Aug 1 2012 0.0% Jan 1 - May 1 2012 4.7% Q1 2012 -6.0%

Aristo client origin Location 8 months to Aug 31, 2012 8 months to Aug 31, 2011 Russia 39.23% 48.31% China 22.37% 0% Other overseas 18.12% 12.17% Cyprus 15.79% 31.03% UK 4.48% 8.48%

Theprior3tablesrevealafewnoteworthytrendsaboutthecurrentoperatingenvironment.Forone, touristactivityappearstobeincreasingmoderately,albeitoffofaverylowbase,andthisisapositive trendthatisexpectedtocontinue.However,DCIoffersaproductthatcaterstotheveryhighendofthe market,anditwouldbeinappropriatetomakeanymeaningfulconclusionsoffofsuchabroaddata point.Instead,morenarrowlydefinedstructuralgrowthdrivers,suchastrendsamongtheultrarich, needtobeexamined. IntheirreportentitledBrandedDevelopments,KnightFrankconcludesthatdemandforbranded, residentialpropertyisstrongandexpectedtostrengtheninthecomingyears.Anumberoffactors, includingtherecentvolatilityinfinancialmarkets,haveconvincedwealthyindividualstoincreasetheir allocationtotangibleassets.Inparticular,brandedpropertiesarethemajorbeneficiaryofthistrend. Forpotentialbuyers,brandsrepresentqualityandanassuranceofvaluepreservation.KnightFrank notesthatbrandedresidencescommandanaverageupliftof31%comparedtoequivalentnon brandedschemes.

Finally,AristoDevelopershaswitnessedasurgeinChinesebuyers,ademographicthathaspreviously contributedimmateriallytoresults.ThisgrowthinChineseactivityisdirectlyattributabletorecent legislativechangesintroducedbytheCypriotgovernment.Thenewlegislationentitlesindividualsand theirimmediatefamilymemberstopermanentresidencestatusiftheypurchaseapropertyexceeding 300,000.Thisspecifictailwindisexpectedtocontinueandshouldcontributemeaningfullytofuture dividendsupportfromAristo. CashNeeds: Asnotedintheintroductiontothisreport,muchofthedepressedvaluationinDCIssharesisrelatedto localfactors(Greece,undeveloped/noncashgeneratingassets,etc.),butanevenmoresignificant overhanghasbeenliquidityrelated.Transitioningaprojectthroughitslifecyclerequiressignificantup frontcashoutlayswithnomaterialcashgenerationuntilthemediumterm.Despiteprudentrisk management,DCIsawBScashdeclinetounder11millionattheendof2011.Withthe50million equityraise,asthefollowingtablewillshow,DCIaddressedtheseconcernsvigorouslyandwillbefully fundedforthenext2years(underconservativeassumptions).
CASH NEEDS/COMMITTED FUNDS Investment manager fees Net finance expense Equity investment at Playa Grande Total predicted cash expenses Nikki Beach Seafront Villas Pearl Island Committed cash proceeds Cash at beginning of period (postequity raise) Cash at end of period (deficit) OTHER EXPECTED SOURCES 2H12 Porto Heli Aman Villas Nikki Beach Apartments Exit of Aman Hotel Venus Rock Venus Rock Villas Playa Grande Aman Villas Expected cash from operating sources CASH SHORTFALL Cash at the beginning of the period Total predicted cash expenses Committed cash proceeds Expected cash from operating sources Cash at end of period 2H12 60.8 30.7 3.9 0.0 34.1 2013 34.1 61.3 11.9 37.6 22.2 2014 22.2 52.6 3.9 33.0 6.6 0.0 0.0 0.0 2013 14.0 0.0 20.6 2014 14.0 0.7 0.0 2H12 8.9 13.0 8.8 30.7 1.9 2.0 3.0 6.9 2013 17.8 26.0 17.5 61.3 1.9 7.0 3.0 11.9 2014 17.8 26.0 8.8 52.6 1.9 2.0 0.0 3.9

60.8 37.1

37.1 (12.4)

(12.4) (61.0)

0.0

3.0

6.0

0.0 0.0

0.0 37.6

12.4 33.0

Furthermore,byensuringliquidityforthenext2years,DCIallowsitsadvancedprojectstobegin generatingsignificantcashflow.Assuch,therecentequityraiseensuresnotonlyneartermliquidity, butittransitionsDCIintoasustainablestructurethatwillbeabletofundfuturedevelopmentprojects fromoperatingcash. Followingthe50millionequityraise(lookingattheabovetable),thecompanyscashpositionatthe beginningofH22012isestimatedat60.8million.Futurecashoutlayswithrespecttooperationsare estimatedatarunrateof43.8million,whichissplitbetweenmanagementfeesof17.8millionand netinterestpaymentof26million.Oneoftheprimaryreasonsfortherightsissuewastoinjectequity inPlayaGrande.Basedonmanagementsguidance,Iestimatethatthe35millionequityinjectionis spreadoutover2yearswith8.75milliontakingplaceinH22012,17.5millionin2013,andthe remaining8.75millioninH12014.Next,committedcashproceedsfromrecentlyannounced divestments(NikkiBeach,SeafrontVillas,andPearlIsland)areaccountedfor.Tobeconservative,Ihave notaccountedforanyprofitparticipationinthefuturesaleoftheSeafrontVillas. Withonlythecommittedcashproceedsfromannounceddivestments,DCIhasacashshortfallof61 millionbytheendof2014.However,otherexpectedsourcesofcashwillfillinthisgap.Thebulkof thosecashflowswillcomefromsalesofAmanVillas(allofmyassumptionsaredisplayedingreater detailinthevaluationappendix)atPortoHeliandPlayaGrandeandanexitfromtheAmanHotel. Obviously,thereissomeriskthattheseassumptionsdonotmaterializebut,tobeconservative,Ihave madenoprovisionforanynumberofotherpotentialsourcesofcashflow:amongotherthings,these sourcescouldincludefullorpartialexitsfrommajorprojects,afullorpartialexitfromPearlIsland, and/ordividendpaymentsfromAristo.Bytheendof2014,myforecastsshowthatDCIretainssurplus cashandiswellpositionedtocapturetheoperatingcashflowfromitsadvancedprojectsin2015and beyond. Obviously,itwouldbepreferredthatDCIhadastrongercashposition,butgiventheunprecedented headwindsofrecentyears,thefactthatthecompanyisstillsolventisahugeaccomplishmentanda testamenttotheriskmanagementemployedbyitsfoundingpartners.Asevidencedbythecurrent valuation,themarketclearlyhaslingeringconcernsaboutthecompanysliquidityprofile,butmy forecastsfindtheseconcernsoverstated. ManagementCashFlowProjections: Thefollowingtableshowsmanagementprojectionsforfuturecashflows.Assumingalloftheadvanced projectsandmajorprojectsareheldandoperatedtocompletion,DCIestimatesfuturecashflowfrom thecurrentportfolioof4,154million.TodetermineanNPVvalue,managementfees,corporate expenses,variousmarketing/brandingfeesandtaxesneedtobeaccountedfor,butevenifcashflows comeinwellbelowforecastedlevel,thevalueshoulddramaticallyexceedthecurrentmarketcapof 210million.

Valuation:
Group Valuation Porto Heli Venus Rock Playa Grande Pearl Island Total Advanced Projects Major Projects (and Aristo) Total EV Total Debt Total Cash Estimated Management Incentive Fee Calculated NAV = NAV (w/ 20% liquidity discount) = Fully Diluted Shares = Calculated NAV/Share = Current Price/Share = Upside = 163,014,625 167,625,280 431,982,392 74,881,600 837,503,896 654,129,780 1,491,633,676 140,053,000 60,872,000 177,490,535 1,234,962,141 987,969,713 642,440,000 1.54 0.33 366%

Fororganizationalpurposes,Ihaveincludedavaluationappendixthatcarefullydetailsmyassumptions. Theabovetablesummarizestheresults,whichdetermineanNAV/Shareof1.54(366%abovethe currentsharepriceof0.33).ThevaluationincorporatesamixofNPVstylevalues(forprojectsonthe vergeofcashgeneration)andNAVcalculationsbasedoncomparablelandtransactionsandlisting prices.Inparticular,thevaluationsbasedoncomparablelandtransactionsandlistingpricesshould provetobeoverlyconservative. ForvaluingexcesslandinCyprus,theDominicanRepublic,Greece,andPearlIsland(seeprivateisland transactionsinappendix),Ideterminedanaveragelandprice/m2foreachlocalebasedonrecent transactionvaluesandapplieda50%haircut.ForexcesslandinTurkeyandCroatia,Ideterminedan averagelandprice/m2foreachlocalebasedonrecentlistingpricesandapplieda75%haircut.Thelatter valuationmethodology(forTurkeyandCroatia)couldbeviewedasinappropriate,andIagreethata transactionbasedvaluewouldhavebeenmorecredible.However,Ihaddifficultylocatingtransaction valuesinthesegeographies,and,evenifmymethodologyisflawed,thecontributionfromTurkeyand Croatia(20,880,000)endsupbeingimmaterialtogroupNAV. Finally,tocontinuewiththistrendofconservatism,Iapplya20%liquiditydiscount(30dayaverage volumeof572k)indeterminingthefinalgroupNAV.

Risks: WhenastocktradesatanenormousdiscounttoNAV,twopossibleexplanationsforthisphenomenon standout.Oneexplanationisthatthemarketbelievesthatthecompanyisheadingtowardsinsolvency. Theotherexplanationisthatthemarketbelievesthattheassetsideofthebalancesheetisinflated(or similarly,theliabilitysideoftheBSisunderstated).Hence,thesearethetworisksassociatedwithan investmentinDCI:thefirstriskisthatDCIcouldendupburningthroughcashandrunningupagainst liquidityconcerns;thesecondriskisthatDCIsassetsareworthsignificantlylessthantheircarrying values. Ihaveattemptedtovigorouslydispeltheliquidityconcernsandbelievethatthemathworksoutina fairlystraightforwardmanner.ThecashpositionisnotasrobustasIwouldlikeittobe,butevenina worstcasescenario,theonlyclaimsonholdingcompanyarethePlayaGrandeconvertibles(debtto grossassetsisonlyc.15%).Additionally,thecompanyhasacadreofdeeppocketedshareholderswho wouldbewillingtomakeadditionalequitycontributionsifcircumstancestookaturnfortheworst.With thefinalsliceoftherecentrightsissuemorethan4xoversubscribedbyexistingshareholders,thisthesis appearsvalid. Intermsofthecarryingvalueofitsassets,DCIhasmadematerialdivestmentsatNAV(oratapremium toNAV),butithasfailedtoinkabigdeal.EachofDCIsadvancedprojectsarenowfullyfundedatthe Phase1level,andifDCIcanmakeanearlyexitfromanyoneoftheseprojects(atNAV),theshareprice shouldrespondmeaningfully.ItiscertainlydifficultytovalueDCIsassets(giventhattransactionlevels areincrediblydepressed,Colliersisfacedwithadifficulttask)butcontinuedcommitmentsfromwell regardedbrandedpartnersshouldoffersomesolacetoshareholders.Itisimplausibletobelievethat RitzCarltonwouldengageinmeaningfulcommercewithDCI,ifitdidnotbelieveDCIsassetstobehigh quality.Finally,landpurchasesmadebythefoundersovertheyearsweredoneinanopportunistic mannerandshouldprovidedownsideprotectiontovaluations.Evenconsideringthedramaticdeclinein realestatepricessincethebulkofthelandpurchasesweremade,theacquisitionofvalueadded permitsintheinterimshouldhaveasubstantialoffsettingeffect. Conclusion/catalysts: Inconclusion,DCIoffersaverycompellingrisk/rewardscenario.Underthemostconservative assumptions,DCIsassetportfolioisseverelymispriced.Thepresenceofmarqueehedgefunds,suchas ThirdPoint,lendscredencetothisconclusion.ItisunlikelythatThirdPoint,whichmanages$9billion, wouldwasteitstimewithamicrocapstocksuchasDCIifitdidnotexpecttomakemanymultiplesofits initialinvestment.Whenthemarketisfearful,itistimetobuy,andDCIpresentssuchanopportunity. Thebiggestmaterialcatalystswillbeannounceddivestments(eitherpartialorfull)atNAVorpremiums toNAV.Ifthecompanycanvalidatetheindependentvaluationsofitsportfoliobydivestments,orbetter yetbybringingprojectsfromthebeginningtotheend,thepotentialsharepriceappreciationwillbe substantiallymorethanmyestimatedupsideof366%.

VALUATIONAPPENDIX:
1) PORTO HELI

A) AMANZOE 1) Aman Hotel & Spa Assumptions: Keys = Initial room rate ( per night) = Max room rate ( per night) = First year occupancy = Second year occupancy = Max occupancy =

38 875 1,235 35% 45% 65% 2013 38 875 35% 4,247,688 4,247,688 0 0.0% 25,964,640 683,280 23,368,176 2014 38 963 10% 45% 6,007,444 5,461,313 28.6% 546,131 9.1% 2015 38 1,059 10% 53% 7,709,553 6,371,531 16.7% 1,338,022 17.4% 2016 38 1,165 10% 60% 9,692,009 7,281,750 14.3% 2,410,259 24.9% 2017 38 1,235 6% 65% 11,134,143 7,888,563 8.3% 3,245,580 29.1%

Total rooms Room rate growth Occupancy Revenue Opex growth NOI NOI margin Valuation (at 8x normalized NOI) = Implied price per room = Valuation (at 8x normalized NOI) w/ 10% discount for brand usage = 2) Aman Beach Club Land area (m2) 30,000 Price/m2

20

Estimated value 600,000

3) Aman Villas (Hilltop & Seafront) Assumptions: Total units = Villa size = Est. total size = ASP = ASP/Villa = Average constuction cost = Branding fee = Agency fee = Lots sold/year =

36 300m2 - 1,500m2 21,000m2 10,000/m2 6 million 2,500/m2 10% of sales revenues 3% of sales revenues 6 2013 6 6 3500 3500 10,000 35,000,000 2,500 3,500,000 1,050,000 8,750,000 5,425,000 16,275,000 70,881,868 2014 6 12 3500 7000 10,000 35,000,000 2,500 3,500,000 1,050,000 8,750,000 5,425,000 16,275,000 2015 2016 6 6 18 24 3500 3500 10500 14000 10,000 10,000 35,000,000 35,000,000 2,500 2,500 3,500,000 3,500,000 1,050,000 1,050,000 8,750,000 8,750,000 5,425,000 5,425,000 16,275,000 16,275,000 2017 6 30 3500 17500 10,000 35,000,000 2,500 3,500,000 1,050,000 8,750,000 5,425,000 16,275,000 2018 6 36 3500 21000 10,000 35,000,000 2,500 3,500,000 1,050,000 8,750,000 5,425,000 16,275,000

Lots sold = Total sold = m2 sold = Total m2 sold = ASP/m2 = Revenue = CC/m2 = Branding fee (10% of revs) = Agency fee (3% of revs) = Construction costs = Taxes (at 25%) = FCF = NPV (discounted at 10%) =

4) Remaining Land Bank (at Amanzoe) Land area (m2) 454,190 5) Amanzoe EV Estimated EV 70,881,868 23,368,176 9,083,800 600,000 103,933,844 Price/m2 20 Estimated value 9,083,800

Aman Villas Aman Hotel & Spa Land Bank Aman Beach Club Total EV = B) THE NIKKI AT PORTO HELI

1) Up-front sale of 75% stake to Swiss Development Group Transaction EV (for 75% stake) = 2) Nikki Beach Hotel Estimated value (w/ 10% discount for time Estimated price/room value of money) 23 500,000 11,500,000 6,900,000

Room count

3) Nikki Beach Apartments Assumptions: Total units = Apartment size = Est. total size = ASP = ASP/apt. = Average constuction cost = Branding fee = Agency fee = Units sold per year

43 c. 81 m2 3,481 m2 10,000/m2 740k 2,500/m2 10% of sales revenues 3% of sales revenues c. 7 2013 0 0 0 0 0 0 0 0 0 0 0 0 10,626,078 2014 7 7 567 567 10,000 5,666,710 2,500 566,671 170,001 1,416,678 878,340 2,635,020 2015 7 14 567 1133 10,000 5,666,710 2,500 566,671 170,001 1,416,678 878,340 2,635,020 2016 7 21 567 1700 10,000 5,666,710 2,500 566,671 170,001 1,416,678 878,340 2,635,020 2017 7 28 567 2267 10,000 5,666,710 2,500 566,671 170,001 1,416,678 878,340 2,635,020 2018 7 35 567 2833 10,000 5,666,710 2,500 566,671 170,001 1,416,678 878,340 2,635,020 2019 8 43 648 3481 10,000 6,476,240 2,500 647,624 194,287 1,619,060 1,003,817 3,011,452

Apartments sold = Total sold = m2 sold = Total m2 sold = ASP/m2 = Revenue = CC/m2 = Branding fee (10% of revs) = Agency fee (3% of revs) = Construction costs = Taxes (at 25%) = FCF = NPV (discounted at 10%) =
4) Nikki Beach EV

Up-front sale of 75% Nikki Beach Hotel Nikki Beach Apartments Total EV = C) SEAFRONT VILLAS Transaction EV =

Estimated EV 6,900,000 11,500,000 10,626,078 29,026,078

12,000,000

D) CHEDI HOTELS & VILLAS, JACK NICKLAUS SIGNATURE GOLF COURSE AND RESIDENCES Land area (m2) 2,460,000 E) PORTO HELI COLLECTION (TOTAL EV) Phase Amanzoe Nikki Seafront Villa Chedi, Jack Nicklaus Ownership stake 86% 25% 100% 100% Phase EV Net EV 103,933,844 89,383,106 29,026,078 12,431,519 12,000,000 12,000,000 49,200,000 49,200,000 TOTAL EV = 163,014,625 Price/m2 20 Estimated value 49,200,000

2) VENUS ROCK
1) Venus Rock Villas 2013 380,000 50 50 19,000,000 45% 8,550,000 1,900,000 665,000 5,985,000 81,596,947 40,635,280 2014 380,000 100 150 38,000,000 45% 17,100,000 3,800,000 1,330,000 11,970,000 2015 2016 380,000 380,000 200 200 350 550 76,000,000 76,000,000 45% 45% 34,200,000 34,200,000 7,600,000 7,600,000 2,660,000 2,660,000 23,940,000 23,940,000 2017 380,000 225 775 85,500,000 45% 38,475,000 8,550,000 2,992,500 26,932,500 2018 380,000 225 1000 85,500,000 45% 38,475,000 8,550,000 2,992,500 26,932,500

ASP Units sold Total units sold Revenue Pre-tax and fees margin Pre-tax and fees Branding & marketing (10% of sales) Taxes (at 10%) Post-tax FCF NPV (discounted at 10%) NPV (*49.8%)

2) Remaining Land Bank Total land at Venus rock is 1,000 hectares; assume from the above that 1,000 homes are sold by 2018 and that 2 homes cover roughly 1 hectare; therefore, 500 hectares were used up and 500 are remaining.

Land area (m2) 5,000,000 3) Venus Rock Total EV Phase Venus Rock Villas Other Land

Price/m2 51

Estimated value 255,000,000

Ownership stake Phase EV Net EV 49.8% 81,596,947 40,635,280 49.8% 255,000,000 126,990,000 TOTAL EV = 167,625,280

3) PLAYA GRANDE
1) Aman Hotel (30 rooms) Assumptions: Keys = Initial room rate ( per night) = Max room rate ( per night) = First year occupancy = Second year occupancy = Max occupancy =

30 656 926 35% 45% 65% 2013 0 0 0% 0 0 0 2014 30 656 35% 2,514,120 2,514,120 0 0.0% 2015 30 722 10% 45% 3,555,684 3,232,440 28.6% 323,244 9.1% 2016 30 794 10% 53% 4,606,586 3,807,096 17.8% 799,490 17.4% 2017 30 873 10% 60% 5,736,504 4,309,920 13.2% 1,426,584 24.9% 2018 30 926 6% 65% 6,587,418 4,669,080 8.3% 1,918,338 29.1%

Total rooms Room rate growth Occupancy Revenue Opex growth NOI NOI margin

Valuation (at 8x normalized NOI) = Implied price per room = Valuation (at 8x normalized NOI) w/ 10% discount for brand usage and further 10% discount for time value of money = 2) Aman Villas (38 total) Assumptions: 38 units (sold over 6 years) ASP =

15,346,706 511,557

12,788,921

4,500,000 2014 4,500,000 6 6 27,000,000 75% 20,250,000 2,700,000 810,000 4,185,000 12,555,000 51,856,929 2015 4,500,000 6 12 27,000,000 75% 20,250,000 2,700,000 810,000 4,185,000 12,555,000 2016 2017 4,500,000 4,500,000 6 6 18 24 27,000,000 27,000,000 75% 75% 20,250,000 20,250,000 2,700,000 2,700,000 810,000 810,000 4,185,000 4,185,000 12,555,000 12,555,000 2018 4,500,000 6 30 27,000,000 75% 20,250,000 2,700,000 810,000 4,185,000 12,555,000 2019 4,500,000 8 38 36,000,000 75% 27,000,000 3,600,000 1,080,000 5,580,000 16,740,000

ASP Units sold Total units sold Revenue Pre-tax and fees margin Pre-tax and fees Branding fee (10% of sales) Agency fee (3% of sales) Taxes (at 25%) Post-tax FCF NPV (discounted at 10%) 3) Remaining Land Bank

950 acres total (assume 65 for Aman Hotel and Aman Villas); so, 885 left over Land area (m2) 8,850,000 Price/m2 42 Estimated value 371,700,000

4) Playa Grande Total EV Phase Aman Hotel Aman Villas Rest of Land Ownership stake 99% 99% 99% Phase EV 12,788,921 51,856,929 371,700,000 TOTAL EV = Net EV 12,661,032 51,338,359 367,983,000 431,982,392

4) PEARL ISLAND
1) Exit from Founder's Phase (7% of Island Size) Transaction EV = 2) Rest of Island Land area (m2) 13,392,000 3) Pearl Island Total EV Phase Exit from Founder's Phase Rest of Island Ownership stake 100% 60% Phase EV 10,600,000 107,136,000 TOTAL EV = Net EV 10,600,000 64,281,600 74,881,600 Price/m2 8 Estimated value 107,136,000 10,600,000

5) OTHER MAJOR PROJECTS (AND ARISTO)

Total area (m2) Net area (m2) Estimated price/m2 Net EV 2,800,000 2,184,000 20 43,680,000 650,000 435,500 20 8,710,000 1,720,000 1,720,000 20 34,400,000 3,100,000 3,100,000 20 62,000,000 4,400,000 2,640,000 20 52,800,000 110,000 110,000 20 2,200,000 3,190,000 1,588,620 51 81,019,620 4,610,000 4,610,000 51 235,110,000 630,000 630,000 24 15,120,000 120,000 120,000 48 5,760,000 270,000 270,000 51 13,770,000 3,920,000 1,952,160 51 99,560,160 TOTAL EV = 654,129,780

Project 1) Sitia Bay Golf Resort 2) Kea Resort 3) Scropio Bay Resort 4) Lavender Bay Resort 5) Plaka Bay Resort 6) Triopetra 7) Eagle Pine Golf Resort 8) Apollo Heights Polo Resort 9) Livka Bay Resort 10) Mediterra Resorts 11) Aristo Hellas 12) Rest of Aristo

Country Greece Greece Greece Greece Greece Greece Cyprus Cyprus Croatia Turkey Cyprus Cyprus

Ownership stake 78.0% 67.0% 100.0% 100.0% 60.0% 100.0% 49.8% 100.0% 100.0% 100.0% 100.0% 49.8%

6) CONSOLIDATED VALUATION
Group Valuation Porto Heli Venus Rock Playa Grande Pearl Island Total Advanced Projects Major Projects (and Aristo) Total EV Total Debt Total Cash Estimated Management Incentive Fee Calculated NAV = NAV (w/ 20% liquidity discount) = Fully Diluted Shares = Calculated NAV/Share = Current Price/Share = Upside = 163,014,625 167,625,280 431,982,392 74,881,600 837,503,896 654,129,780 1,491,633,676 140,053,000 60,872,000 177,490,535 1,234,962,141 987,969,713 642,440,000 1.54 0.33 366%

LANDTRANSACTIONAPP ENDIX: P

Turkey Location Alanya Alanya Alanya Alanya Alanya Antalya Antalya Antalya Antalya Antalya Belek Belek Belek Belek Belek Fethiye Fethiye Fethiye Fethiye Fethiye Kalkan Kalkan Kalkan Kalkan Kalkan Kas Kas Kas Kas Kas Kemer Kemer Kemer Kemer Kemer Side Side Side Side Side Price/m2 Size (m2) Price 225,000 33,500,000 149 33,000 8,000,000 242 10,000 5,000,000 500 720 78,000 108 6,132 450,000 73 4,500 5,000,000 1,111 332 90,000 271 9,500 65,000 7 1,050 290,000 276 260 18,000 69 5,700 3,000,000 526 31,000 3,850,000 124 15,000 675,000 45 2,650 250,000 94 470 35,000 74 1,280 1,200,000 938 750 170,000 227 2,400 330,000 138 420 60,000 143 610 58,500 96 4,750 110,000 23 350 19,000 54 180,000 1,600,000 9 9,600 75,000 8 1,230 200,000 163 10,000 80,000 8 2,000 69,000 35 19,300 925,000 48 19,000 1,050,000 55 10,000 150,000 15 5,015 200,000 40 4,000 800,000 200 33,000 4,000,000 121 9,000 3,000,000 333 2,100 375,000 179 650 38,000 58 415 68,000 164 5,500 50,000 9 1,700 1,350,000 794 430 40,000 93 Average = 191 Average (*25%) = 48