Protected: In-depth info for board & investors

As part of our ongoing project development, we have been in contact with DMD Modular, a European modular construction specialist with direct experience delivering and installing projects in Iceland. We requested an indicative cost range for the construction of the cabin units to compare them with our own estimates based on feedback of Dutch builders.

Their initial indication is €2,300–2,500 per square metre, covering the full standard scope: factory-finished modules (including furnishings), transport from factory to site (including sea freight and in-country logistics), installation, and roof finishing. We are awaiting written confirmation that mobile crane costs on site are included within this scope, which we expect shortly.

Reassuringly, this range is very similar to what our own research showed us.

We want to be transparent: we do not yet have an independent, third-party validation of our construction cost assumptions, as technical drawings are not yet finalised. This is a deliberate consequence of project sequencing — drawings will be developed following zoning approval, which is the immediate next milestone. The current round is therefore pre-technical in nature, and part of its purpose is to unlock that next phase, including a formal cost review by an independent quantity surveyor.

In the meantime, the indicative pricing from DMD Modular aligns closely with our own projections and, in our view, provides a credible market reference. Their hands-on experience in Iceland — a market with well-understood logistical and climatic challenges — gives particular weight to their numbers. For additional context, per-room development costs published by HVS for comparable full-service hotel projects are consistent with the range we are working with.

We plan to stress-tested the financial model against a 10% increase in construction costs.  We don’t expect this scenario  to materially alter the project’s return profile or its overall viability. We are confident the current assumptions are grounded in market reality, and we will provide a formally validated cost plan as the project progresses through its next phase.

Prepared for investor reference · Based on formal appraisal dated 10 June 2026

The asset
Hugarró is a planned eco-luxury hospitality development on a 12.1-hectare site at Litli Botn, at the head of Hvalfjörður fjord — 55 kilometres northwest of Reykjavik and at the trailhead of Glymur, Iceland’s second-highest waterfall. The site benefits from master zoning approval (aðalskipulag) already in place, with detailed zoning (deiliskipulag) published for public consultation and final National Planning Agency approval expected imminently.

The approved development programme comprises:

• A 32-room hotel and 31 free-standing rotating cabins (up to 200-guest capacity)
• Seven geothermal pools and a 350m² wellness hub
• Five meeting facilities, staff housing, and a health-focused restaurant
• Total approved buildable area: 5,000m² of commercial hospitality space

The valuation
The formal appraisal was carried out by Croisette – Real Estate Partner, Iceland’s leading real estate advisory firm and the exclusive Nordic partner of Knight Frank — the world’s largest private property consultancy, active in over 60 countries. ¹ The report was authored by Styrmir Bjartur Karlsson, Managing Director and licensed real estate broker, who heads Croisette’s Iceland operations. ⁵ The valuation is prepared on a Market Value basis — the standard used by banks and institutional investors — and is of a quality accepted for financing purposes.

The assessed values are:

The step-up from master to detailed zoning reflects standard Icelandic planning practice: as planning certainty increases, so does the land’s bankable value — a well-established principle in property markets worldwide.

Iceland tourism: A market in sustained demand
Iceland welcomed 2.3 million international visitors in 2025, with the United States, United Kingdom, and Germany as the three largest source markets. ⁶ Tourism’s gross value added grew 5.5% in 2025 year-on-year, and Keflavík Airport is expected to handle approximately nine million passengers in 2026. ⁴

Demand for nature-based, premium wellness experiences — the exact segment Hugarró targets — is the fastest-growing corner of that market. Iceland now counts eight major geothermal lagoon destinations, all of which operate at or near capacity during peak season. ² The category has moved well beyond novelty; it is a structural pillar of Icelandic tourism.

Comparable projects
Two recently built geothermal wellness facilities provide useful context for assessing the Hugarró valuation:

Sky Lagoon (Reykjavik area): Phase 1 of this single-lagoon facility cost approximately ISK 4 billion (€24 million) to construct. ⁷ The fact that fully-zoned land rights for a more comprehensive mixed-use development are valued at 500 million ISK — roughly one-eighth of Sky Lagoon’s build cost alone — illustrates that the land valuation is measured and conservative relative to the asset class.

Laugarás Lagoon (Golden Circle, opened 2025): Construction of this 1,000m² geothermal lagoon on Iceland’s Golden Circle cost approximately ISK 2 billion (€13.7 million), with annual visitor projections of 150,000–250,000 guests. ³ Hugarró’s permitted development is significantly larger in scope, yet the land is valued at a fraction of Laugarás’s construction cost — again confirming the valuation sits comfortably within market norms.

In both cases, the underlying land value represents 10–15% of total anticipated project construction cost, which is exactly where one would expect it to sit for a planning-consented hospitality site in a premium natural setting.

Assessment
The appraised values are well-grounded. The per-m² rates applied by Croisette (ISK 50–55k at master zoning stage, rising to ISK 90–100k with full planning consent) are consistent with what comparable geothermal and hospitality assets have transacted at in Iceland. Hvalfjörður’s proximity to Reykjavik, its scenery, and its geothermal activity place it firmly in the upper tier of rural hospitality locations — a positioning that the approved 5,000m² programme fully supports.

Croisette’s standing as Knight Frank’s Icelandic representative, combined with Karlsson’s market knowledge and professional licensure, gives this valuation meaningful credibility. It is the type of report that lenders and institutional co-investors in Iceland expect and accept.

In short: the numbers are realistic, the methodology is sound, and the market context is supportive.

This summary is based on the formal land appraisal prepared by Croisette – Real Estate Partner (Knight Frank Iceland), dated 10 June 2026, supplemented by publicly available market data from the OECD, Statistics Iceland, and industry sources.

A preliminary concept for discussion — financial modelling in progress

The concept
We are exploring a cabin leaseback structure as a complementary financing mechanism for the project. Under this model, individual investors purchase a cabin (the building), while we retain ownership of the land. Investors then lease the cabin back to our management company, which operates it commercially as part of the wider resort. Investors receive a revenue share; we retain full operational control.

This is not a new idea. It has been tried, tested and refined across Europe for over 70 years.

The Landal precedent
Landal GreenParcs — founded in the Netherlands in 1954 — is the clearest proof of concept. It pioneered precisely this model: private investors own individual holiday cabins; the park operator manages all bookings, pricing, maintenance and guest experience on their behalf. Today (following its 2024 merger with Roompot), Landal operates 260+ parks across 9 countries, with around 23,000 holiday accommodations and 6 million guests per year.

The model works because the operator controls everything that matters — design standards, pricing, brand, guest experience — while the investor holds a real, transferable asset with an income stream attached. Landal even added a dedicated real estate brokerage arm (Landal Makelaardij) to facilitate cabin resales within their parks, demonstrating how a healthy secondary market can be built around the concept.

Why Iceland — and why this project

A critical advantage here is that our cabins are situated on commercially licensed land in Hvalfjarðarsveit and may be rented out year-round, without restriction. This distinguishes our offering sharply from comparable vacation plots in Iceland — such as those sold near Hvammsvík in 2021, which are classified as frístundahúsalóðir (vacation home plots) and subject to Iceland’s homestay legislation, limiting short-term rental to 90 days per year. Year-round commercial operation means a materially larger income potential for investors — and a more resilient business model for the operator.

The legal framework
Icelandic property law is well-suited to this structure. Two mechanisms provide robust legal grounding:

1. Lóðarleigusamningur (Ground Lease)
Under Lög nr. 75/2008, investors hold a long-term lease over the cabin’s footprint. They can freely transfer or mortgage their lease rights and building without requiring the landowner’s consent. We retain the land — and with it, the zoning approval and planning permissions. No land subdivision is required.

2. Þinglýstar kvöðvar (Registered Covenants)
Rather than relying solely on contractual chain clauses, our obligations — brand standards, rental pool participation, access rights to shared facilities, maintenance charge obligations — are registered as real covenants at Þjóðskrá Íslands. These bind every future owner automatically. They run with the property, not just the original investor. This is the strongest possible form of operational control, embedded in property law rather than contract alone.

The net effect: investors get a clean, transferable asset with clear income rights; we retain full control over how the resort operates.

Ownership flexibility as a strategic tool
An important feature of the model is that our management company can buy cabins directly — either as an alternative to raising third-party investor capital, or by exercising a right of first refusal when early investors wish to exit. This creates meaningful strategic flexibility:

• Quick financing when needed: sell cabins to investors to raise capital for development phases.
• Consolidation when performance allows: buy cabins back over time as the business generates cash, shifting ownership back in-house.
• Investor confidence: a credible buyback mechanism makes the investment more liquid and lowers the perceived risk for initial investors — particularly important in what is still a niche secondary market.

This is a lever that traditional hotel development financing simply does not offer.

What comes next
This memo is deliberately high-level. For investors in the Hugarró project to consider this option in earnest, we need to complete a financial model that honestly compares:

• Projected investor returns (revenue share scenarios — base / expected / upside) under the leaseback model
• The cost of capital under this model vs. our current financing structure
• Sensitivity to occupancy rates, seasonal patterns, and operating costs
• The impact of ground rent (if any) and management fees on net investor yield
• Other external financing options in Iceland and elsewhere

The legal architecture is sound. The market precedent is strong. The next step is the numbers.

As part of our ongoing project development, we have been in contact with DMD Modular, a European modular construction specialist with direct experience delivering and installing projects in Iceland. We requested an indicative cost range for the construction of the cabin units to compare them with our own estimates based on feedback of Dutch builders.

Their initial indication is €2,300–2,500 per square metre, covering the full standard scope: factory-finished modules (including furnishings), transport from factory to site (including sea freight and in-country logistics), installation, and roof finishing. We are awaiting written confirmation that mobile crane costs on site are included within this scope, which we expect shortly.

Reassuringly, this range is very similar to what our own research showed us.

We want to be transparent: we do not yet have an independent, third-party validation of our construction cost assumptions, as technical drawings are not yet finalised. This is a deliberate consequence of project sequencing — drawings will be developed following zoning approval, which is the immediate next milestone. The current round is therefore pre-technical in nature, and part of its purpose is to unlock that next phase, including a formal cost review by an independent quantity surveyor.

In the meantime, the indicative pricing from DMD Modular aligns closely with our own projections and, in our view, provides a credible market reference. Their hands-on experience in Iceland — a market with well-understood logistical and climatic challenges — gives particular weight to their numbers. For additional context, per-room development costs published by HVS for comparable full-service hotel projects are consistent with the range we are working with.

We plan to stress-tested the financial model against a 10% increase in construction costs.  We don’t expect this scenario  to materially alter the project’s return profile or its overall viability. We are confident the current assumptions are grounded in market reality, and we will provide a formally validated cost plan as the project progresses through its next phase.

Prepared for investor reference · Based on formal appraisal dated 10 June 2026

The asset
Hugarró is a planned eco-luxury hospitality development on a 12.1-hectare site at Litli Botn, at the head of Hvalfjörður fjord — 55 kilometres northwest of Reykjavik and at the trailhead of Glymur, Iceland’s second-highest waterfall. The site benefits from master zoning approval (aðalskipulag) already in place, with detailed zoning (deiliskipulag) published for public consultation and final National Planning Agency approval expected imminently.

The approved development programme comprises:

• A 32-room hotel and 31 free-standing rotating cabins (up to 200-guest capacity)
• Seven geothermal pools and a 350m² wellness hub
• Five meeting facilities, staff housing, and a health-focused restaurant
• Total approved buildable area: 5,000m² of commercial hospitality space

The valuation
The formal appraisal was carried out by Croisette – Real Estate Partner, Iceland’s leading real estate advisory firm and the exclusive Nordic partner of Knight Frank — the world’s largest private property consultancy, active in over 60 countries. ¹ The report was authored by Styrmir Bjartur Karlsson, Managing Director and licensed real estate broker, who heads Croisette’s Iceland operations. ⁵ The valuation is prepared on a Market Value basis — the standard used by banks and institutional investors — and is of a quality accepted for financing purposes.

The assessed values are:

The step-up from master to detailed zoning reflects standard Icelandic planning practice: as planning certainty increases, so does the land’s bankable value — a well-established principle in property markets worldwide.

Iceland tourism: A market in sustained demand
Iceland welcomed 2.3 million international visitors in 2025, with the United States, United Kingdom, and Germany as the three largest source markets. ⁶ Tourism’s gross value added grew 5.5% in 2025 year-on-year, and Keflavík Airport is expected to handle approximately nine million passengers in 2026. ⁴

Demand for nature-based, premium wellness experiences — the exact segment Hugarró targets — is the fastest-growing corner of that market. Iceland now counts eight major geothermal lagoon destinations, all of which operate at or near capacity during peak season. ² The category has moved well beyond novelty; it is a structural pillar of Icelandic tourism.

Comparable projects
Two recently built geothermal wellness facilities provide useful context for assessing the Hugarró valuation:

Sky Lagoon (Reykjavik area): Phase 1 of this single-lagoon facility cost approximately ISK 4 billion (€24 million) to construct. ⁷ The fact that fully-zoned land rights for a more comprehensive mixed-use development are valued at 500 million ISK — roughly one-eighth of Sky Lagoon’s build cost alone — illustrates that the land valuation is measured and conservative relative to the asset class.

Laugarás Lagoon (Golden Circle, opened 2025): Construction of this 1,000m² geothermal lagoon on Iceland’s Golden Circle cost approximately ISK 2 billion (€13.7 million), with annual visitor projections of 150,000–250,000 guests. ³ Hugarró’s permitted development is significantly larger in scope, yet the land is valued at a fraction of Laugarás’s construction cost — again confirming the valuation sits comfortably within market norms.

In both cases, the underlying land value represents 10–15% of total anticipated project construction cost, which is exactly where one would expect it to sit for a planning-consented hospitality site in a premium natural setting.

Assessment
The appraised values are well-grounded. The per-m² rates applied by Croisette (ISK 50–55k at master zoning stage, rising to ISK 90–100k with full planning consent) are consistent with what comparable geothermal and hospitality assets have transacted at in Iceland. Hvalfjörður’s proximity to Reykjavik, its scenery, and its geothermal activity place it firmly in the upper tier of rural hospitality locations — a positioning that the approved 5,000m² programme fully supports.

Croisette’s standing as Knight Frank’s Icelandic representative, combined with Karlsson’s market knowledge and professional licensure, gives this valuation meaningful credibility. It is the type of report that lenders and institutional co-investors in Iceland expect and accept.

In short: the numbers are realistic, the methodology is sound, and the market context is supportive.

This summary is based on the formal land appraisal prepared by Croisette – Real Estate Partner (Knight Frank Iceland), dated 10 June 2026, supplemented by publicly available market data from the OECD, Statistics Iceland, and industry sources.

A preliminary concept for discussion — financial modelling in progress

The concept
We are exploring a cabin leaseback structure as a complementary financing mechanism for the project. Under this model, individual investors purchase a cabin (the building), while we retain ownership of the land. Investors then lease the cabin back to our management company, which operates it commercially as part of the wider resort. Investors receive a revenue share; we retain full operational control.

This is not a new idea. It has been tried, tested and refined across Europe for over 70 years.

The Landal precedent
Landal GreenParcs — founded in the Netherlands in 1954 — is the clearest proof of concept. It pioneered precisely this model: private investors own individual holiday cabins; the park operator manages all bookings, pricing, maintenance and guest experience on their behalf. Today (following its 2024 merger with Roompot), Landal operates 260+ parks across 9 countries, with around 23,000 holiday accommodations and 6 million guests per year.

The model works because the operator controls everything that matters — design standards, pricing, brand, guest experience — while the investor holds a real, transferable asset with an income stream attached. Landal even added a dedicated real estate brokerage arm (Landal Makelaardij) to facilitate cabin resales within their parks, demonstrating how a healthy secondary market can be built around the concept.

Why Iceland — and why this project

A critical advantage here is that our cabins are situated on commercially licensed land in Hvalfjarðarsveit and may be rented out year-round, without restriction. This distinguishes our offering sharply from comparable vacation plots in Iceland — such as those sold near Hvammsvík in 2021, which are classified as frístundahúsalóðir (vacation home plots) and subject to Iceland’s homestay legislation, limiting short-term rental to 90 days per year. Year-round commercial operation means a materially larger income potential for investors — and a more resilient business model for the operator.

The legal framework
Icelandic property law is well-suited to this structure. Two mechanisms provide robust legal grounding:

1. Lóðarleigusamningur (Ground Lease)
Under Lög nr. 75/2008, investors hold a long-term lease over the cabin’s footprint. They can freely transfer or mortgage their lease rights and building without requiring the landowner’s consent. We retain the land — and with it, the zoning approval and planning permissions. No land subdivision is required.

2. Þinglýstar kvöðvar (Registered Covenants)
Rather than relying solely on contractual chain clauses, our obligations — brand standards, rental pool participation, access rights to shared facilities, maintenance charge obligations — are registered as real covenants at Þjóðskrá Íslands. These bind every future owner automatically. They run with the property, not just the original investor. This is the strongest possible form of operational control, embedded in property law rather than contract alone.

The net effect: investors get a clean, transferable asset with clear income rights; we retain full control over how the resort operates.

Ownership flexibility as a strategic tool
An important feature of the model is that our management company can buy cabins directly — either as an alternative to raising third-party investor capital, or by exercising a right of first refusal when early investors wish to exit. This creates meaningful strategic flexibility:

• Quick financing when needed: sell cabins to investors to raise capital for development phases.
• Consolidation when performance allows: buy cabins back over time as the business generates cash, shifting ownership back in-house.
• Investor confidence: a credible buyback mechanism makes the investment more liquid and lowers the perceived risk for initial investors — particularly important in what is still a niche secondary market.

This is a lever that traditional hotel development financing simply does not offer.

What comes next
This memo is deliberately high-level. For investors in the Hugarró project to consider this option in earnest, we need to complete a financial model that honestly compares:

• Projected investor returns (revenue share scenarios — base / expected / upside) under the leaseback model
• The cost of capital under this model vs. our current financing structure
• Sensitivity to occupancy rates, seasonal patterns, and operating costs
• The impact of ground rent (if any) and management fees on net investor yield
• Other external financing options in Iceland and elsewhere

The legal architecture is sound. The market precedent is strong. The next step is the numbers.