EREC 06

Investor Information Letter – EREC Performance-Linked Cash Flow Rights

Introduction

This letter sets out a brief description of the terms and structure for the sale of performance-linked cash flow rights under the EREC-06 Net Cash Flow Rights Sale Agreement between BF Diversified Real Assets Fund (the “Issuer” or the Fund”), IC Realty Ltd (the “Manager”), and the Investor.

Key Parties and Project Overview

• Issuer: BF Diversified Real Assets Fund, managed by its External Alternative Investment Fund Management Company – IC Realty Ltd
• Developer: Trockland Funkytown Holding GmbH

The Fund owns part of the real-asset project – FunkyTown that is a new mixed-use campus development with a total net area of approx. 43,000 m2. Renovation and construction started in September 2025 and should be finished by Q3 2029. The Fund intends to raise capital through the issuance of performance-linked cash-flow rights entitling investors to a contractual share of the Project’s final Net Cash proceeds.

Capital Structure

Total Invested Capital: €350,000

• Fund contribution: ≥175,000€ (50%)
• Investors contribution: ≤175,000€ (50%) (can be changed in future)
• Maximum contribution per investor – 87,500€ (allocation can be limited in case of oversubscription)

Investment Horizon

• Single entry at project start (Closing Date: 22 January 2026 (commitments due), Execution Date: 30 January 2026 (Payments due). The Issuer may stop accepting the commitments earlier in case of oversubscription.
• Expected End Date – 31 December 2029, unless extended.
• The Project offers two equally attractive pathways: Build-to-Sell, where the Fund and EREC investors fully exit and distribute proceeds by end of 2029, or Build-to-Hold, where the Project generates income by leasing the asset until the optimal market conditions arise, then selling to return your capital.
• With Build-to-Hold, you’ll receive annual dividends of 6 to 8% starting in Year 5 arising from the rental yield continuing until we distribute your full investment. These dividends count toward your overall Baseline return expectations.
• The investor may exit early by selling their Cash Flow Rights back to the Fund at the prevailing market price. In case the project finishes earlier all proceeds will be distributed in 10 working days, leading to higher IRR of investors.

Performance-Linked Sale of Cash Flow Rights

• EREC Investors buy 50% of the project’s future income for €175,000.
• Investor Baseline Expectation – 7% return (≈+28% over 4 years)
• If the project’s total IRR falls below 7%, the Fund reallocates part of its profit to ensure investors reach the 7% target, up to the limit of its own profits.
• Once investors achieve their baseline, profit sharing follows a two-
  level waterfall:

1. 1. Realistic: 7 – 12% p.a.: Fund retains 50% of investors’ incremental profit (in addition to its own project-related profit)
   2. Optimistic: >12% p.a.: Fund retains 75% of investors’ incremental profit(in addition to its own project-related profit)
   3. Loss: If final proceeds are below invested capital, losses are shared pro rata. Maximum investor exposure is limited to the Allocated Purchase Price.

• If the Project extends beyond 4 years, the 7% annual baseline continues to be accrued. For example, a 5-year duration requires a 35% minimum investor return before the Fund participates in profits.

Summary

The EREC 4+ year model offers a balanced structure with expected profit of 7% yearly, based on the high quality Real Estate Development project, where investors receive a secured baseline return with upside potential, while investing alongside with the professional and experienced Investment Fund.

Annex – Potential Scenarios

Disclaimer. This memorandum is not an offer or recommendation to invest. All binding terms of the Sale of the Cash Flow Rights are contained exclusively in the main agreement. Neither profit nor return of investment is guaranteed by the issuer or manager. KYC and AML checks must be completed and verified before acceptance of any funds.