Millenium Hospitality Real Estate SOCIMI S A : 2021 Financial Statements

Madrid, 15 March 2023

Millenium Hospitality Real Estate, SOCIMI, S.A. pursuant to the provisions of Article 17 of Regulation (EU) No. 596/2014 on market abuse and Article 228 of the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of 23 October, and related provisions, as well as Circular 3/2020 of the BME Growth segment of BME MTF Equity ("BME Growth"), hereby discloses the following

OTHER PRIVILEGED INFORMATION

• Audit reports corresponding to the Consolidated and Individual Financial Statements for the fiscal year ended 31 December 2022.
• Consolidated and Individual Financial Statements and Consolidated Management Report for the fiscal year ended 31 December 2022.
• Information on the Company's organisational structure and internal control system for compliance with the reporting obligations established by the Market.

The foregoing documentation is also available to the market on the Company's website (www.mhre.es).

In accordance with the provisions laid down in BME Growth Circular 3/2020, it is hereby stated that the information provided herein has been prepared under the sole responsibility of the Company and its directors.

We remain at your disposal for any further clarification you may require.

Best regards,

Javier Illán Plaza

Chairman and CEO

Millenium Hospitality Real Estate, SOCIMI, S.A.

Audit Report on the Consolidated Financial Statements issued by an Independent Auditor

MILLENIUM HOSPITALITY REAL ESTATE SOCIMI, S.A. AND SUBSIDIARIES

Consolidated Financial Statements and consolidated Management Report

for the year ended December 31, 2022

Ernst & Young, S.L.	Tel: [phone]
Calle de Raimundo Fernández Villaverde, 65	Fax: [phone]
28003 Madrid	ey.com

AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS ISSUED BY AN INDEPENDENT

AUDITOR

Translation of a report and financial statements originally issued in Spanish. In the event of discrepancy, the

Spanish-language version prevails

To the shareholders of MILLENIUM HOSPITALITY REAL ESTATE SOCIMI, S.A.:

Opinion

We have audited the consolidated financial statements of MILLENIUM HOSPITALITY REAL ESTATE SOCIMI, S.A. (the parent) and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2022, the separate consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement, and the explanatory notes thereto, for the year then ended.

In our opinion, the accompanying consolidated financial statements give a true and fair view, in all material respects, of consolidated equity and the consolidated financial position of the Group at December 31, 2022 and of its financial performance and its consolidated cash flows, for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union (IFRS-EU), and other provisions in the regulatory framework applicable in Spain.

Basis for opinion

We conducted our audit in accordance with prevailing audit regulations in Spain. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We are independent of the Group in accordance with the ethical requirements, including those related to independence, that are relevant to our audit of the consolidated financial statements in Spain as required by prevailing audit regulations. In this regard, we have not provided non-audit services nor have any situations or circumstances arisen that might have compromised our mandatory independence in a manner prohibited by the aforementioned requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Domicilio Social: C/ Raimundo Fernández Villaverde, 65. 28003 Madrid - Inscrita en el Registro Mercantil de Madrid, tomo 9.364 general, 8.130 de la sección 3ª del Libro de Sociedades, folio 68, hoja nº 87.690-1, inscripción 1ª. Madrid 9 de Marzo de 1.989. A member firm of Ernst & Young Global Limited.

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Key audit matters

Key audit matters are those matters that, in our professional judgment, were the most significant assessed risks of material misstatements in our audit of the consolidated financial statements of the current period. These risks were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon, and we do not provide a separate opinion on these risks.

Measurement of investment properties

Description The Group's consolidated statement of financial position shows an amount of 578,444 thousand euros in "Investment properties" at December 31, 2022, corresponding to the carrying amount of the buildings it owns, which represent 84% of total assets.

The parent's directors periodically determine the fair value of investment properties based on appraisals conducted by independent experts in accordance with the valuation standards of the Royal Institution of Chartered Surveyors ("RICS").

Given the significance of the amounts involved and the fact that determining the fair values of investment properties requires that independent experts, Group management and the parent's directors make significant estimates that entail applying judgments to determine the assumptions used (in particular, assumptions underlying estimated rents, discount rates and exit yields used for investment properties), we determined this to be a key audit matter.

Information on applicable measurement standards, the methodologies and principal assumptions and related disclosures are provided in Notes 4.3 and 7 of the explanatory notes to the consolidated financial statements.

Our

response In relation to this matter, our audit procedures included:

• Understanding the process designed by parent management to identify whether there are indications of impairment and to determine the fair value of assets recorded as "Investment properties," and assessing the design and implementation of the relevant controls in place in that process.
• Obtaining the valuation reports prepared by the independent experts engaged by parent management to appraise the real estate portfolio, assessing the competence, capacity, and objectivity of the experts for the purpose of using their work as audit evidence.
• Reviewing the appraisal models used by independent experts to determine the recoverable amounts of a sample of assets, with the involvement of our valuation specialists, focusing particularly on the mathematical coherence of the models and the reasonableness of the rents, comparable data, discount rates, initial exit yields, and the sensitivity analysis used.
• Reviewing the disclosures included in the explanatory notes to the consolidated financial statements and assessing their conformity with the financial reporting framework.

A member firm of Ernst & Young Global Limited

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Assessment of compliance with the requirements of the SOCIMIs special tax regime

Description As explained in Note 1.1 of the explanatory notes to the accompanying consolidated financial statements, the parent and its subsidiaries avail themselves of the special tax regime for SOCIMIs established in Law 11/2009, of October 26, which regulates Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario "SOCIMI" (Spanish REITs), effective as of their respective dates of incorporation. One of the main characteristics of these entities is that they are not subject to corporate income tax.

Under the special tax regime, SOCIMIs are subject to compliance with certain requirements regarding, inter alia, corporate purpose, minimum share capital, equity investment, the income generated by these investments, trading on a regulated market or multilateral trading system, as well as information and mandatory distribution of profits. The assessment of compliance with some of these requirements involves estimates that entail judgments on the part of the parent management to establish the assumptions underlying those estimates.

Due to the complexity of making these estimates when assessing compliance with some of the aforementioned requirements and to the fact that failure to comply with these requirements, if not remedied, could render the parent ineligible to avail itself of the special tax regime, and given that, should this occur, the parent and its subsidiaries would be taxed under the general corporate income tax regime, which would have a significant impact on the consolidated financial statements, we determined this to be a key audit matter.

The information on applying the special tax regime for Spanish SOCIMIs and compliance with the related requirements is provided in Notes 1.1, 4.9 and 14.3 of the explanatory notes to the consolidated financial statements.

Our

response In relation to this matter, our audit procedures included the following:

• Understanding parent management's process for assessing compliance with the of the special SOCIMI regime requirements.
• Obtaining the documentation prepared by parent management related to compliance with the above requirements.
• Reviewing and assessing the reasonableness of the information obtained and its completeness with regard to all matters contemplated by prevailing regulations at the date of analysis, with the involvement of our tax specialists.
• Reviewing the disclosures included in the explanatory notes to the consolidated financial statements and assessing their conformity with the financial reporting framework.

Other information: consolidated management report

Other information refers exclusively to the 2022 consolidated management report, the preparation of which is the responsibility of the parent company's directors and is not an integral part of the consolidated financial statements.

A member firm of Ernst & Young Global Limited

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Our audit opinion on the consolidated financial statements does not cover the consolidated management report. In conformity with prevailing audit regulations in Spain, our responsibility in terms of the consolidated management report is to assess and report on the consistency of the management report with the consolidated financial statements based on the knowledge of the Group obtained during the audit, and to assess and report on whether the content and presentation of the consolidated management report are in conformity with applicable regulations. If, based on the work carried out, we conclude that there are material misstatements, we are required to disclose them.

Based on the work performed, as described in the above paragraph, the information contained in the consolidated management report is consistent with that provided in the 2022 consolidated financial statements and its content and presentation are in conformity with applicable regulations.

Responsibilities of the parent company´s directors for the consolidated financial statements

The directors of the parent company are responsible for the preparation of the accompanying consolidated financial statements so that they give a true and fair view of the equity, financial position and results of the Group, in accordance with IFRS-EU, and other provisions in the regulatory framework applicable to the Group in Spain, and for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the parent company are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with prevailing audit regulations in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with prevailing audit regulations in Spain, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

A member firm of Ernst & Young Global Limited

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• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors of the parent company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

From the significant risks communicated with the directors of the parent company, we determine those that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the most significant assessed risks.

We describe those risks in our auditor's report unless law or regulation precludes public disclosure about the matter.

ERNST & YOUNG, S.L.

(Registered in the Official Register of Auditors under Nº S0530)

(Signed on the original in Spanish)

__________________________________

María Teresa Pérez Bartolomé

(Registered in the Official Register of Auditors under Nº 15291)

March 15, 2023

A member firm of Ernst & Young Global Limited

MILLENIUM HOSPITALITY REAL ESTATE, SOCIMI, S.A. AND SUBSIDIARIES

Consolidated financial statements and consolidated management report for the year ended December 31, 2022

MILLENIUM HOSPITALITY REAL ESTATE, SOCIMI, S.A. AND

SUBSIDIARIES

Consolidated statement of financial position at

December 31, 2022

(Expressed in euros)

ASSETS	Notes	12/31/2022	12/31/2021
NON-CURRENT ASSETS		602,269,955	405,829,116
Intangible assets	6	23,248	-
Property, plant, and equipment	6	19,257,122	17,304,370
Investment properties	7	578,444,000	387,702,000
Financial investments	8	2,044,851	822,746
Trade receivables	8	2,500,734	-
CURRENT ASSETS		89,610,124	122,699,831
Inventories	9	918,965	427,547
Trade and other receivables		14,672,391	13,021,504
Trade receivables	8	4,274,497	4,898,892
Other receivables	8	761	-
Receivable from public administrations	14	10,397,133	8,122,612
Financial investments	8	956,606	12,254,977
Other current assets	8	601,197	421,343
Cash and cash equivalents	10	72,460,965	53,545,370
		89,610,124	79,670,741
Assets held for sale	5	-	43,029,090
TOTAL ASSETS		691,880,079	528,528,947
EQUITY AND LIABILITIES
EQUITY		539,428,164	372,160,949
Capital and reserves		539,428,164	372,419,934
Share capital	11.1	116,032,487	76,926,101
Share premium	11.2	341,887,362	224,568,204
Reserves and retained earnings	11.3	70,761,203	62,458,447
Shares of the Parent company	11.4	(1,039,664)	(1,006,627)
Profit for the year attributed to the Parent company		11,786,776	9,473,809
Unrealized gains (losses) reserve	11.5	-	(258,985)
NON-CURRENT LIABILITIES		125,963,181	113,634,618
Borrowings		123,448,887	111,120,324
Bank borrowings	12.1	118,019,627	108,081,012
Finance lease payables	12.1	-	28,915
Other financial liabilities	12.3	5,429,260	3,010,397
Deferred tax liabilities	14	2,514,294	2,514,294
CURRENT LIABILITIES		26,488,734	42,733,380
Provisions	13	88,034	161,886
Borrowings		8,442,439	9,764,229
Bank borrowings	12.1	6,181,001	5,993,965
Finance lease payables	12.1	-	173,234
Other financial liabilities	12.3	2,261,438	3,597,030
Trade and other payables		17,931,927	12,566,031
Suppliers and other payables	12.4	14,829,451	10,448,445
Employee benefits payable (remuneration pending payment)	12.4	2,232,537	1,444,780
Payables to public administrations	14	503,388	346,634
Customer advances	12.4	366,551	326,172
Other current liabilities		26,334	53,351
		26,488,734	22,545,497
Liabilities associated with assets held for sale	5	-	20,187,883
TOTAL EQUITY AND LIABILITIES		691,880,079	528,528,947

The accompanying notes 1 to 20 are an integral part of the consolidated statement of financial position at December 31, 2022.

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MILLENIUM HOSPITALITY REAL ESTATE, SOCIMI, S.A. AND

SUBSIDIARIES

Consolidated separate income statement for the year ended December 31, 2022

(Expressed in euros)

	Notes	2022	2021
Continuing operations
Revenue		12,323,093	8,467,546
Lease income	7.4 & 16.1	9,875,588	7,149,381
Income from services provided	16.1	2,174,075	1,117,913
Sales income	16.1	273,430	200,252
Cost of sales		(160,143)	(116,735)
Other operating income		746,283	183,031
Employee benefits expense	16.2	(6,589,019)	(4,939,113)
Other operating expenses		(4,705,959)	(3,186,788)
External services	16.3	(3,791,186)	(2,219,290)
Taxes (other than income tax)		(914,773)	(967,498)
Impairment losses on accounts receivable	8.1	(74,058)	(872,726)
Change in fair value of investment properties	7	14,988,227	12,749,794
Depreciation and amortization	6	(856,351)	(670,820)
Impairment losses and gains (losses) on disposal of non-		(2,458,289)	(839,257)
current assets
Impairment losses and losses	6	(2,433,756)	(839,257)
Gains (losses) on disposals and other		(24,533)	-
Gains (losses) due to loss of control over subsidiaries	5	860,198	-
OPERATING PROFIT		14,073,982	10,774,932
Finance income		25,736	84,706
From marketable securities & other financial instruments		25,736	84,706
Finance costs	16.4	(2,014,078)	(1,362,861)
Third-party borrowings		(2,014,078)	(1,362,861)
Changes in fair value of financial instruments	8.2	(292,187)	(7,600)
Exchange gains (losses)		(6,677)	(15,368)
FINANCE COST		(2,287,206)	(1,301,123)
PROFIT (LOSS) BEFORE TAX		11,786,776	9,473,809
Corporate income tax	14	-	-
CONSOLIDATED PROFIT (LOSS) FOR THE YEAR		11,786,776	9,473,809
Profit for the year attributed to the Parent company		11,786,776	9,473,809
Profit for the year attributed to minority interests		-	-
EARNINGS PER SHARE
Basic earnings per share	4.20	0.12	0.15

The accompanying notes 1 to 20 are an integral part of the consolidated separate income statement for the year ended December 31, 2022.

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