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Senorio de Aloha - 2021 Review JOHN RILEY January 2022 Fellow owners When I was elected president in July 2020, I said that returning Senorio to a high-quality community would take between 3 and 5 years. The magnitude of deterioration in the infrastructure of the buildings (main buildings and garages), the improvements needed for support infrastructure (pools, irrigation, security systems, etc) would require a high level of engineering and management expertise, and more importantly, the funds to carry out the work. My view on this has not changed, except to say that the challenge is more difficult than I initially thought, but it is not insurmountable and my timeline to achieve it remains the same. In 2021 there were some advances that I would describe as “barely manageable”. To help you understand what I mean, I have selected a range of community management examples so you have an idea of what really happens day to day. I am brutally frank in my assessments because I cannot afford for you, or even myself, to become complacent and lose sight of what is needed to achieve our goals. 1. F I N A N C E S (Our financial situation is very weak.) At the time of my appointment in July 2020, the total debt of owners to the community exceeded 500,000 euros. We owed our creditors over 250,000 euros. As a consequence, the community was unable to carry out all routine maintenance and critical repairs. Priority number one was to stabilise our financial situation. I can say we have achieved some degree of stabilisation in the sense that we are no longer spending money we don’t have and are achieving better value for what we spend. With prudent financial management, I believe that over the next two or three years we can achieve a more stable balance and have funds available for capital repairs. “Your community is at a critical point. Vote for change next week for a secure future”

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January 2022 President’s Letter Key improvements in 2021 that have provided us with some degree of stability are • A 16% reduction in the total amount of money owed to us. • Reduction in the cost of some of our subcontractors, as contracts were pending renewal. However, I firmly believe there is room to reduce the number of contractors and the price we pay for these services. • Our creditors came knocking immediately after the July 2020 AGM asking for their money. This provided the opportunity to establish repayment plans that align with our income and a prudent spending plan. Appendix 1 attached details what we owe our creditors. Below you will see a summary of our financial situation in the third quarter of 2021 and a comparison with that of 2020. 1. The surplus for 2020 is after providing 80,546.77 € for the balance owed by owners. 2. The surplus for the 9 months to end of September 2021 of 77,562 € includes 57,183 € of garage and storage fees, and 24,000 € of WiFi fees. These items are for the whole year 2021, so the surplus for these nine months is, more accurately, approximately 56,000€. 3. The net balance of owners at end of September was 340,000 €, but the actual collectible amount is, probably, no more than 100,000 – 150,000 €. Therefore, the real financial position of the Community is that we owe approximately 100,000 €. Notes

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January 2022 President’s Letter 2 . I N F R A ST RU C T U R E Years of neglect mean that important aspects of Senorio’s infrastructure are in a dangerous state. This photo shows “live” electrical cables with an open protective box, and ceiling cracks have water running through them - a major hazard! (rather than allowing our maintenance man to clean up garden debris, Meridional should instruct him to ensure absolute safety of electrical connections) And some more specific examples are: • Very poor painting work between 2014-2018 that simply painted over cracks. It is now evident that costly repairs to the facades and terraces of all buildings will be needed in the coming years. The main cause of the damage has been poor maintenance of the planter irrigation systems. When we hold a general assembly, I will likely propose that irrigation be disconnected to prevent further damage, before a plan is carried out to perform the costly necessary repairs. • I would like to add that the painting contractor continues to claim we owe them 138,000 euros. The previous administrator failed to deliver the contract and complete record of invoices (believed to be in the order of 800-950,000 euros), and the painting contractor is unwilling to provide a copy to justify their claim. So until we see the documentation I will not authorise payment of this debt. • For years there has been an ongoing legal process against one of the community’s original general contractors for poor-quality work on ground-level infrastructure. This has caused substantial damage to several basement-level car parks. It is a race against time to obtain a favourable settlement through the courts (if we win the case) versus having to secure the necessary funds from owners or external financing to start repair work before the situation becomes critical. This entire process is likely to take several years to resolve.

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January 2022 President’s Letter • For years there has been an ongoing legal process against one of the community’s original general contractors for poor-quality work on ground-level infrastructure. This has caused substantial damage to several basement-level car parks. It is a race against time to obtain a favourable settlement through the courts (if we win the case) versus having to secure the necessary funds from owners or external financing to start repair work before the situation becomes critical. This project is likely to take several years to resolve. • HIGH PRIORITY - Important changes to pool health and safety legislation were approved in 2000. A 20-year implementation period was granted to allow communities time to carry out costly and substantial works, for example, fencing the perimeter of each pool, inadequate water pumps, safety barriers for children, self-hygiene and filtration systems. Senorio has not complied with the main laws, & right now we do not have sufficient funds to carry out the necessary work. As president, I am personally responsible for any pool accident where we have failed to comply with the law. In the event of an inspection by the authorities, we risk having our pools closed for 3 years. Therefore, when we have an AGM, I will propose a plan for our pools to comply with regulations as soon as possible. • Our community’s irrigation systems do not function properly. A previous contractor sabotaged important parts of the system, which is why you see gardeners using hoses to water. Other areas of the system have not been properly maintained and need a complete overhaul. • SECURITY IS A MAJOR CAUSE FOR CONCERN - Our security systems are not what they appear to be (perversely, something good if they act as a deterrent). Many of the CCTV cameras visible are not working or do not provide the necessary coverage. And worse, Spanish privacy laws restrict CCTV viewing to everyone except authorised security personnel or police. This makes viewing in “real-time” situations or even in “post-event” situations very difficult and highly ineffective. In addition, our door and entry systems to the buildings break frequently and are often not repaired or maintained in time (the side door of the Mezquita has not closed properly for the entire year). A complete rethink of the security systems is needed,

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January 2022 President’s Letter so that we can use the latest technologies to overcome the inherent weaknesses of a human security operation (Cofer - our most expensive contractor) The magnitude of these infrastructure problems exceeds the funds available through our current community fee level. The technical expertise needed to assess and manage these repairs exceeds our current capabilities. To address this, a budget and “priority repairs” work plan will be proposed at the March General Assembly, which will include a plan to raise funds beyond what we receive from community fees. The timeframe for this project will likely be 3 years. We will do everything we can to keep the increase in cost burden to owners to a minimum, but I assure you there will be a significant return on investment through increased property value. 3 . SU BCON T RAC T O RS (we need a complete rethink of our use of subcontractors) From the administrator down, Senorio’s services are performed by subcontractors. The only exception is Luis, the maintenance manager, who is directly employed by the community. The usual practice in Spain is for contracts to last one year and be renewed after. Termination of contracts mid-way through their term can result in the contractor claiming payment in full for the remainder of the contract, regardless of performance. (A) CLEANING. Early in the year we changed our cleaning contractor from Symant to ‘Cheli Services’ because we had been paying above market rates for a cleaning performance that was not of quality. To avoid costly redundancy payments to the three individual cleaners, they were kept and placed under the supervision of Cheli Services. Unfortunately, this did not work well. While the overall level of cleaning improved, there are serious frictions between the three cleaners and Cheli / Meridional. The cleaners spend long periods on medical leave (currently all three are on medical leave), and our two cleaners have been at my door crying over what they consider unfair treatment by their supervisors. From early summer onwards it has been necessary to hire additional cleaners to maintain quality levels and replace those on medical leave. It also seemed evident to me that the bad behaviour of “tenants”, such as leaving bags of rubbish at apartment doors, vomiting in entrances, thoughtlessly discarding food and cigarettes in the community, etc., increased the pressure on cleaning services. Irresponsible workers on renovations of various apartments also added work for our cleaners. Therefore, although the level of cleaning has improved, it can still be improved further. (B) GARDENING. In July we replaced Symant with Jaydo Services since we had been paying above market rates for a gardening service that did not meet our requirements. A peculiar aspect of the Symant contract was that it stipulated an 8-hour working day, but the agreement with the two gardeners was that they worked 6 hours daily from 08:00 hours. This explains why several owners expressed concern to me about the fact that the gardeners were going home at 14:00 hours, but gardening debris (on pathways, or at pools, etc.) had not been removed. Jaydon Service’s role is to supervise the work plan of the gardeners, and also provide expert technical guidance on maintaining our gardens. Jaydo has submitted cost estimates for introducing new plants to improve the gardens, but I am withholding authorisation pending review and ratification of the 2022 budget. As with the “cleaning contract”, we have kept the employees, in this case a father and daughter team. It is clear that a 6-hour working day is insufficient and when I see Luis (our highest-paid employee, and with a heavy maintenance workload) sweeping garden debris after the gardeners have gone home at 14:00 hours, it increases my concern that our operational efficiency simply is not good enough. (C) POOLS. Somewhat of a disaster if I’m being honest, & here’s why: LIFEGUARDS Many of you will know the difficulties we have had in opening the three pools this year. The key question I had to resolve early in the season with Meridional was the legal requirement for lifeguards with and without Covid restrictions. The law requires that pools with an area greater than 200m2 have a lifeguard. What was unclear is the situation with multiple pools and line of sight. In summary, our three pools exceed 200m2, which would require two lifeguards (and we only had funds for one). However, because the lifeguard would not have ‘line of sight’ to all 3 pools, I decided that the Mezquita pool would not be officially open, and therefore owners using it would do so at their own personal risk. I know this was frustrating for many owners, but remaining on the right side of health and safety was paramount in my decision-making. Having decided to hire a lifeguard, it was particularly frustrating for me to have to instruct and then remind the lifeguard to leave his chair and his iPhone at least every 15 minutes and take a security walk around the pools. I also had to ask him to occasionally use the pool skimmer to remove leaves and other debris from the pools and, according to law, register the names of all pool users (Meridional’s approach was for pool users to go and register at the concierge office, but that simply was not going to work). I say I was frustrated with this service because I discovered the lifeguard charges 4.25 euros per hour, but we pay the lifeguard contractor more than double that … but for what? Yes, they ensure that the lifeguard is qualified and, if ill, replace them, but does that represent good value for our money? I leave that to your imagination, but I think it highlights that we are paying an excessive profit margin to contractors. POOL MAINTENANCE CONTRACTOR For years the community maintained the same contractor using manual chemical dosing. In July Meridional recommended changing them because they were unable to maintain safe chlorine levels. A new contractor arrived, and Meridional sent Luis to receive training so he could take charge of chlorine administration (ideally we would have automated systems). By mid-August we were experiencing turbid water problems in 2 pools and had to close the pools for several days, which is not much short of a disaster in high season. In Meridional’s words at that time “The pool situation is quite complex”, which I interpreted as a series of combined problems causing the pools not to function properly. Lessons have now been learned and a new maintenance regime will be developed for 2022. These photos illustrate the circulation and water quality problems

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January 2022 President’s Letter CHILDREN’S POOL The photo below should raise two thoughts … Health and safety risk, and why do we pay all these contractors if this is the best they can do to seal a hazard, and leave it like that for days? It really hurts me as your President that between our Administrator, Concierge, and Maintenance we are not doing better than this. The problem with the children’s pool is a break in the underground pipes. The entire area needs to be excavated to replace the pipes. This will be carried out in spring. Health and safety? The truth is that the pools of a community should be a source of pride, but sometimes ours are a source of shame, and as mentioned earlier are out of compliance. Returning our pools to full compliance and operational efficiency will be one of the main priorities in 2022. This will require expert advice and a capital financing plan. I intend to present a proposal for your approval at the AGM, which is subject to Covid regulations, but I hope it will take place in March.

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January 2022 President’s Letter (D) SECURITY/CONCIERGE Cofer/HELP cost us 140,000 euros in 2021, making them our most expensive subcontractor. Unfortunately, with 153,000 euros, they are also our largest creditor. In 2021, I authorised a debt service payment of 27,000 euros, which is the maximum we can afford in these times of financial difficulty. I want to point out that we are paying current rates, and the debt refers to the period before my Presidency, when we did not have money to pay the rates. Many complaints have been received about this service, the vast majority relating to the lack of adequate response to a wide range of security issues, for example, illegal parking; overnight disturbances; illegal pool use, etc. Meridional automatically renewed the contracts until 2022 without consulting me. Given the complaints about the service, and that we paid 5,000 euros more than in 2020, I expected at least a discussion about how we might seek better performance from Cofer. When we have the opportunity for an AGM, we will have a frank and open discussion about the community’s practical security needs so that Cofer can better understand what we expect. 4 . I N T E R N A L M A I N T E N A N C E Much of our maintenance work is carried out through a combination of Luis and, where appropriate, ad-hoc contractors. Much of this work, as mentioned earlier in the “Infrastructure” section, is merely patching problems that are beyond the capabilities of our team and our current financial resources. I want to highlight some examples of where we are struggling with this current approach: • Meridional asked me in September to authorise a purchase of 1,900 euros for a new pump for the Alhambra pool because, and I quote, “the old pump is obsolete, it will be a waste of money to fix it”. The new pump broke within a month. At first I was told that “there is no warranty because it is not mechanical” (strange concept under EU law). Then I was informed that the warranty did not apply because, despite multiple protective filters, a foreign object or misuse had caused the turbine to fail. I was further informed that “the installer will not charge travel or labour costs for this incident and the community will only have to pay for the repair of the pump”. I spoke with him personally and as the community is a good customer and he wants this sorted in the best way possible, he will do his part. The repair at cost price of the installer is less than 400 €”. Fortunately, a fellow community member is a pump expert and I invited him to inspect the Alhambra pump room. In his expert opinion, the various filters could not have soiled the new pump. The “installer” also hinted that the fact that Luis did not report the problem with sufficient notice contributed to the problem. Luis denies this, stating that from day one, in his opinion, the higher specification pump was not appropriate for our pool, but he was overruled. On 5 October, Meridional promised a full report on the pump problems … I’m still waiting for it. In the meantime, I personally sent Luis to our long-standing pump repairer in San Pedro and paid 155 euros to fix the old “obsolete, waste of money” pump (now available as a backup) When I finally receive Meridional’s report, I hope there will be acknowledgement that the situation was poorly handled, and unnecessarily cost the community 2,300 euros. • In January 2021, an absent owner allowed weeds to block the terrace drain, causing a build-up of rainwater that eventually flooded the apartment below at a time when the owner was 3,000 km away and could not travel. The owner spent roughly 40-50 hours trying, first, to prevent water entering his apartment; second, to figure out how to engage his insurers with the representatives of the other owners; and third, how to engage Meridional not only to reduce the risk of this happening again, but also to work together for Meridional to develop a set of “emergency guidelines for water leaks”, step by step, so that all owners know what to do in such emergencies. • In February we had another flood in Mezquita. This time a water pipe, running from the water meter room directly to an apartment, burst above the ceiling over the basement lift entrance. By the time maintenance staff arrived, the ceiling was collapsing, but more importantly, three private storage areas had been flooded, causing irreparable damage to much of the owners’ belongings. The botched repair of the pipe resulted in it bursting three more times within a 5-week period, and this despite Meridional calling in an external plumber. Each time, the owners (who fortunately were present at the time) had to fend for themselves to clean up the mess… and believe me they were highly stressed by the failure to respond promptly and effectively, and were in constant communication with security/concierge and Meridional to force some action. Eventually, an entire section of pipes had to be replaced to resolve the problem. The conclusion is that we lacked the necessary knowledge to respond quickly, accurately assess the problem, and propose a permanent solution in a timely manner. • In May, a second pipe burst from Mezquita’s water meter room to an apartment. The circumstances were very similar to February’s. Luis and the plumber were able to resolve it more efficiently than the first time, but Meridional’s “emergency guidelines” were still not ready. While not 100% certain, the cause of the problem appears to be that the water pipes of all apartments, according to current standards, are not of a sufficiently high specification for water pressure. Luis has been instructed to ensure that the water pressure in meter rooms does not exceed the specification for the pipes, as clearly this has contributed to the problem. This photo illustrates a very unprofessional approach to a serious incident. During a 5-week period, this pipe burst 4 times, causing major flooding in the lift shaft, stairwells, and 3 storage areas below. To this day we are still waiting for a “emergency protocol” from Meridional on what an owner should do in such circumstances

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January 2022 President’s Letter You can also help maintain correct water supply pressure by ensuring that the pipes and taps in your apartment are not clogged by calcium buildup, common in hard-water areas like this. You may be surprised, as I was, that the main water pipe from the basement meter room to your apartment is your property and not the community’s. I am still waiting for 100% confirmation of this as it makes no sense … how can owners without means to see or access be responsible for a pipe that runs through the ceilings and walls of the common area to their apartment? Therefore, it is vital that Luis supervise the pressures and be alert to any deterioration of the pipes. It also highlights why, in case of a pipe burst, Meridional should have already finalised a solid set of procedures so that the stress caused to owners last year is not repeated. Other things you should be aware of when your apartment risks suffering damage from another apartment or from common area facilities are: • A fundamental problem when trying to react to a problem from a vacant property is the law of trespass on someone’s private property. Luis could see from an adjacent terrace the weeds blocking the terrace drain, but was correctly informed that he could be prosecuted for trespass if he entered the terrace. While fires and threats to life constitute an emergency allowing trespass, apparently floods do not. My advice: get to know your neighbours. • If the problem is owner-to-owner, administrators will generally try to limit their involvement. Fundamentally, I have a problem with this as I believe administrators have a duty to assist all owners. They need to be willing to help as much as possible, especially if an owner is thousands of kilometres away and is not familiar with Spanish law and where to find local service providers such as emergency plumbers, electricians, etc. In many flood cases, the community’s common areas will also be affected, and as such the administrator has to be involved as well as the community’s insurers. In fact, as I write this a Giralda Portal 4 owner has just contacted me asking what to do because they have suffered water damage from the apartment above. If Meridional had carried out my request from almost a year ago to draft “emergency guidelines for water leaks”, then this latest owner suffering water damage would know exactly what to do and would not be turning to me for help and advice. • If your apartment is not insured fully comprehensive, you should bear this in mind. If your property suffers damage, the community or neighbours’ insurance may not cover you (and you may have to take your own legal action for damages). In the same way, if the problem stems from your apartment and you are not insured, you could be sued and taken to court. • Something that you all need to think about is whether we place a set of keys in a safe place for “key keeping”, which can only be accessed in an emergency and when owners are not present. Another option is to leave a spare set of keys with a trusted local person who can provide immediate access to your apartment in case of emergency. Acting quickly can seriously reduce damage and injury. Despite changing contractor, we continue to have problems with garage doors. For example, the Mezquita pedestrian door never closes on its own and has been like that all year and anyone can enter the community from the street. The Mezquita garage doors do not open fully and often jam. I understand that we currently don’t have the money to completely replace the doors and motors, but when hinges are in the wrong place, when areas of rusted metal can be welded to reduce pressure on hinges and motors, I’m sure you’re asking yourself, as am I, why these simple maintenance jobs are not being attended to. Here are the photos sent today showing the problem.

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January 2022 President’s Letter An owner on a 5th floor in Alhambra complained for months that water from the main roof was leaking into the ceilings of their apartment in several places after heavy rain. Eventually, Meridional brought in an advisor whose report indicated there were possible holes around the chimneys and several loose tiles allowing water in. Meridional called in a roofing contractor, but could only get a quote of 8,300 euros. That amount of money buys a lot of time and materials and, although I’m not an expert, I could not see how the planned repair could cost that much. It is standard practice to obtain a minimum of 2 and preferably 3 quotes, and I have reminded Meridional of this on several occasions when they have requested quotes. Feeling unable to approve an 8,000 euro expenditure from our limited cash, I personally brought in the roofing contractor from Santa María community in Elviria and asked them for a quote to repair the obvious holes and loose tiles - their price was 600 euros! I am very aware of the possibility that there might be another hole that might require the entire roof to be dismantled. But when you have limited funds, you make calculated management decisions and go the extra mile to find cost-effective contractors. Don’t you agree that it is ridiculous for the unpaid president to spend his time sourcing roofers, obtaining quotes and having to go supervise repairs in the absence of the apartment owner? I wonder why Meridional does not acknowledge that this is their responsibility, which they are paid for, when a minimum of 2 quotes are required, and then 1 is not sufficient. 5 . M I S C E L L A N E O U S MARIJUANA USE - During the last 3 months there was a difficult situation with a tenant exceeding reasonable personal use of marijuana. To the annoyance of several neighbours affected by the smoke entering their properties, it was their opinion that our Administrator and Security did not provide an adequate response to their complaints. When I investigated the response to owners I did not like it either and expressed this to owners in the Facebook group, to the annoyance of Meridional. On the other hand, once alerted, the apartment owner was very receptive & eager to be seen as a good-standing member of the community. I was in direct contact with the owner and, after several warnings to the tenant, they evicted them on 1 January. If it had been left to Meridional, roof repairs would have cost 8,300 euros plus 10% VAT. The president’s approach has cost so far 580 euros, including VAT.

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January 2022 President’s Letter • The statutes of our community are ambiguous, outdated and do not cover the breadth of issues that guide owners and limit community abuse. Owners need to vote on new rules and strengthen existing ones, so this will be on the agenda of the March General Assembly. • Many owners rent out their properties and, for the most part, they and their tenants act responsibly. However, during the high season there are many short-term tenants in Senorio and a minority (you know the type) cause a disproportionate amount of damage and disturbance. Last summer we experienced almost every imaginable disturbance and damage. The police were called on more than one occasion. I won’t go on at length, but suffice to say that there is a need to establish a set of procedures and strict rules governing rentals, and perhaps sanctions for repeat offenders. If owners benefit from rentals, they should be willing to accept the costs of damage and disturbance caused to the entire community. It may be a big ask, but perhaps owners should take the lead in proposing to the rest of the community the procedures and sanctions that will help minimise problems. • The status of the fire suppression systems has been a cause of concern for quite some time. It was evident that the community was not compliant in a number of aspects, and this not only posed a fire risk to the community but put it at risk of being prosecuted. After an external evaluation conducted early in the year, all systems were reviewed and approved and obsolete equipment was replaced. S U M M A RY What you have read in this report should tell you that the problems of Señorio are primarily management problems. The cosmetic services of cleaning, gardening, security and general maintenance, although improved from previous years, in my opinion still remain suboptimal and, in my opinion, cost us too much money for what we get. Meridional is the typical general administrator that manages the community’s accounts, communications with owners, debt collection and relationships and negotiations with subcontractors. I refer to this as back office work. But that is only part of what we pay for. Abandoned objects in common areas by irresponsible owners or contractors We now comply with fire regulations.

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January 2022 President’s Letter The other side is managing what happens day to day within Senorio. This includes • having a very regular presence within the community to anticipate and assess problems; • closely monitor the work of subcontractors and not take their performance for granted; • respond effectively to practical problems of owners; • real understanding of infrastructure and engineering problems; • working closely with the President and receiving his instructions, All of this requires good management practices and procedures. My performance expectations in this range of measures have not been met and I believe this is a direct consequence of insufficient skills and experience and an increasing tendency to avoid accountability to the President. Frankly, I no longer trust that Meridional can manage the normal operation of the community, let alone their ability to deal with the complex infrastructure problems that are now increasingly a priority. I do not reach these conclusions lightly. I have spent many hours analysing performance and considering how we will address the major challenges that lie ahead. When I identify problems, I seek solutions. So I want to assure you quickly that I have already identified the solutions and have spent 6 months working on a comprehensive plan that will take us to much higher levels of performance and stability. With this, the first part of my communication with you ends. The following presentation is my proposal to completely reinvent how we manage a community, replacing the current administrator with a combination of highly qualified specialists and cutting-edge management software.

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January 2022 President’s Letter A P P E N D I X 1 – O U R C R E D I T O R S