Grand City Properties S A : Board of Directors Report

Grand City Properties S.A.

Société Anonyme 1, Avenue du Bois L-1251Luxembourg

R.C.S. Luxembourg: B165560

(the "Company")

REPORT OF THE BOARD OF DIRECTORS OF THE COMPANY

IN ACCORDANCE WITH ARTICLE 420-26 (5) OF THE LUXEMBOURG LAW DATED

10 AUGUST 1915 ON COMMERCIAL COMPANIES, AS AMENDED

The board of directors of the Company (the "Board of Directors") hereby presents in accordance with article 420-26 (5) of the law of 10 August 1915 on commercial companies, as amended, (the "Law") its report concerning the proposal to the extraordinary general meeting of the shareholders of the Company to authorize the Board of Directors to limit or suppress the shareholders preferential subscription rights during capital increases within the authorized capital framework as scheduled at item 1 of the agenda of the Company's extraordinary general meeting of shareholders (the "EGM" or "Meeting") convened to be held on 30 June 2021, at 11.40 a.m. (Central European Summer Time, "CEST"). In accordance with article 1 (1) of the Luxembourg law of 23 September 2020 on measures concerning the holding of meetings in companies and other legal entities, as amended, the Company will not hold a physical meeting. Shareholders have the opportunity to follow the EGM live via an audio webcast which will be available on 30 June 2021 at https://www.webcast- eqs.com/gcp20210630.

1. Background of the EGM

In connection with an extraordinary general meeting of the shareholders of the Company held on 9 August 2016 (the "2016 EGM"), it was resolved to authorize the Board of Directors to increase the corporate share capital within the limits of the authorized share capital as set out in the current articles of association of the Company up to an amount of EUR 40,000,000.00 for a period of five years after the 2016 EGM.

The Board of Directors now proposes to renew the authorized share capital amount of EUR 40,000,000.00 for a period of five (5) years from the date of the EGM, or in case of adjournment because no quorum has been reached at the first EGM, of the adjourned

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EGM that effectively resolved on the renewal of the authorized share capital of the Company. The renewal of the authorized share capital is aimed at providing the Company with more flexibility in connection with potential future capital markets and M&A transactions, as further described below in section 3 of this report.

As of the date hereof, the subscribed share capital of the Company amounts to seventeen million one hundred eighty-six thousand four hundred five euro (EUR 17,186,405) represented by one hundred seventy-one million eight hundred sixty- four thousand fifty (171,864,050) shares of a par value of ten cents (EUR 0.10) each, all of which are fully paid up.

2. Resolutions Concerning the Authorized Share Capital Submitted to the Shareholders' Votes at the EGM

During the EGM, it is proposed to the shareholders of the Company to adopt the following resolution related to the authorized share capital of the Company:

1. to approve the renewal of the existing authorized share capital of the Company of 40,000,000 and to approve the renewal of the authorization of the Board of Directors to increase the corporate share capital within the limits of the authorized share capital for a period of five (5) years from 30 June 2021, or in case of adjournment because no quorum has been reached at the first EGM, of the adjourned EGM that effectively resolved on the renewal of the authorized share capital of the Company;
2. to approve the report of the Board of Directors pursuant to article 420-26 of the law of 10 August 1915, on commercial companies, as amended from time to time, relating to the possibility of the Board of Directors to suppress or limit any preferential subscription rights of the shareholders in relation to an increase of the share capital made within the authorized share capital of the Company;
3. to grant to the Board of Directors as referred to in article 420-26 (5) of the law of 10 August 1915 on commercial companies, as amended from time to time, all powers to carry out capital increases within the framework of the authorized share capital and to suppress or limit any preferential subscription right of the shareholders of the Company on the issue of new shares; and
4. to amend article 5.2 of the articles of association of the Company (the "Articles") accordingly.

Resolution proposed by the Board of Directors:

"The Extraordinary General Meeting resolves to:

1. approve the renewal of the existing authorized share capital of the Company of EUR 40,000,000 and to approve the renewal of the authorization of the Board of Directors to increase the corporate share capital within the limits of the authorized share capital for a period of

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five (5) years from 30 June 2021, or in case of adjournment because no quorum has been reached at the first EGM, of the adjourned EGM that effectively resolved on the renewal of the authorized share capital of the Company;

1. approve the report of the Board of Directors relating to the possibility of the Board of Directors to suppress or limit any preferential subscription rights of the shareholders in relation to an increase of the share capital made within the authorized share capital of the Company;
2. grant to the Board of Directors all powers to carry out capital increases within the framework of the authorized capital and to cancel or limit any preferential subscription right of the shareholders of the Company on the issue of new shares; and
3. amend article 5.2 of the Articles to read as follows:

Article 5.2. Authorised capital

The corporate share capital may be increased from its present amount to forty million Euro (EUR 40,000,000) by the creation and the issue of new shares with a par value of ten Cent (EUR 0.10) each.

The board of directors is fully authorised:

• to increase the subscribed capital within the limits of the authorised capital as a whole at once, by successive portions or by continuous issues of new shares, to be paid up in cash, by contribution in kind, by conversion of shareholders' claims, or following approval of the annual general meeting of shareholders, by incorporation of profits or reserves into capital;
• to issue convertible bonds, notes, warrants and, generally, any financial instruments granting the right to their holders to subscribe for one or more shares of the Company. The board of directors may at its sole discretion determine the conditions under which the convertible bonds, the notes, the warrants or the financial instruments granting the right to their holders to subscribe for one or more shares of the Company shall be issued, including the type, the registered or bearer form, the price, the currency, the interest rate, as well as any condition relating to the issue, exercise, transfer and conversion of such convertible bonds, notes, warrants or financial instruments. Such issue shall comply with the limits of the authorised capital and with the applicable legal provisions and more particularly with article 420-27 of the Law, as applicable;
• to issue shares, options and any financial instruments granting the right to their holders to subscribe for one or more shares of the Company under any share option programme, management or any other incentive scheme of the Company (each a "Programme");

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• to determine the place and the date of the issue or of the successive issues, the terms and conditions of subscription and payment of the additional shares; and
• to suppress or limit the preferential subscription right of the shareholders with respect to (i) the above issue of additional shares against payment in cash, by contribution in kind, by conversion of shareholders' claims or by incorporation of profits or reserves into capital, (ii) the issue of convertible bonds, notes, warrants and any financial instruments granting the right to their holders to subscribe for one or more shares of the Company and (iii) the issue of shares, options and any financial instruments granting the right to their holders to subscribe for one or more shares of the Company under any Programme.

Such authorisation is valid for a period of five years starting from 30 June 2021 [or in case of adjournment because no quorum has been reached at the first EGM, of the adjourned EGM that effectively resolved on the renewal of the authorized share capital of the Company] and may be renewed by resolution of the general meeting of shareholders deliberating in the manner required for the amendment of the Articles. However, if any of the above-mentioned instruments are issued before or during this period the new shares may be issued upon conversion or exercise of said instruments also after the expiry of this period. As a consequence of each increase of capital so rendered effective, the first paragraph of article 5.1. will be amended such as to correspond to the increase so rendered effective; such modification will be documented in notarial form by the board of directors or by any persons appointed for such purposes and published in accordance with the Law."

3. Reasons and Circumstances for the Limitation or Suppression of Preferential Subscription Rights

This report has been issued by the Board of Directors in order to present the circumstances justifying the limitation or elimination of the preferential right of shareholders within the framework of an authorization granted to the Board of Directors for a period of five (5) years.

The Board of Directors acknowledges the necessity of being able to adapt the financial structure of the Company immediately with view to rapidly changing economic markets, real estate and stock markets in which it is involved and, thus, proposes to the EGM to authorize the Board of Directors to limit or suppress the preferential subscription rights of the shareholders in the event of future capital increases within the limits of the authorized share capital. In particular, the following reasons, each of which being sufficient to justify the implementation of the measure, shall be taken into account:

1. The authorized share capital with limitation or suppression of the preferential subscription rights of existing shareholders offers the Board of Directors the flexibility and speed required to become involved in public and private markets

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and to gather funds without having to resort to bank loans or bonds, and thus to develop and carry out quickly large real estate transactions.

1. The Company shall at all times be able to raise the necessary funds to cope with its changing needs in working capital, to cover unexpected charges, to preserve its cash balance, to improve its capital and debt structure, to strengthen its liquidity and to optimize the asset management and the cost of external funding.
2. The technique of authorized share capital with limitation or suppression of the preferential subscription right for existing shareholders will be used in the exercise of stock options, convertible bonds, warrants or other convertible securities into shares issued by the Company, the conversion of debt to capital.
3. In addition, the Company shall be authorized to limit or suppress the preferential subscription rights of the shareholders if it intends to make use of the authorized share capital in connection with any potential M&A transactions, take-over bids, share exchange offers to stakeholders and/or squeeze-out techniques in relation to other market participants. The option of limiting or suppressing the preferential subscription rights of the shareholders shall enable the Company to acquire companies, shares in companies in exchange for shares in the Company or to merge or combine businesses with other companies. This option shall put the Company in the position to react fast and flexibly on national and international markets in case of favorable offers or other opportunities to acquire companies or shares in companies or to merge or combine businesses with companies which operate in related business areas. It is not uncommon that negotiations result in the necessity, or that it is in the best interest of the Company, to provide the consideration for the transaction in shares instead of or in addition cash. In order to be able to effect acquisitions in such cases on short notice, the Company should be provided with the possibility to increase its share capital against contributions in kind with the option of limiting or suppressing the preferential subscription rights.
4. The long, costly and relatively complex procedure for the Company to convene a new extraordinary general meeting which could resolve on capital increases instead of what is proposed by point 1 of the agenda for the EGM may be, under certain circumstances, incompatible with certain fluctuations of the financial markets or business opportunities to which the Company is subject to.
5. The technique of authorized capital with limitation or suppression of the preferential subscription right for existing shareholders may also be used by the Board of Directors, as far as permitted by applicable laws, in the case of a hostile take-over bid or an attack, in an attempt to take control or any other capital action brought against the Company, planned or not, by third parties and to defend its values and projects, to sustain the employment of its staff and to guarantee protection of its holdings.
6. The Board of Directors will use the possibility of a capital increase out of authorized capital against contributions in kind under limiting or suppressing of

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