CG malls europe - Commerz Real

6.3 Distribution
According to the above calculations, the earned returns (income returns) for 2009
without the depreciations on the value of the shopping centres would amount to approx.
3.8%. With a view to the ongoing negotiations with several new tenants who have made
their decision to open a new business in the shopping malls dependent on the payment of
a fit-out contribution by the owner, the Fund Management decided to set aside provisions
toward this end, and to reduce the amount distributed to the investors to 3.25% per
share. The distribution equals a 4.06% cash-on-cash return on the average fixed equity
for 2009. The amount distributed will be paid on 19 July 2010.
Total distribution in EUR 9,425,000.00
per share in EUR 3.25
Cash-on-cash return on initial equity invested 3.25%
Cash-on-cash return on average fixed equity 4.06%
6.4 Future Developments
As expected, the financial crisis did escalate into an economic crisis. During the opening
months of 2010, the crisis moreover expanded to impact the weaker Eurozone member
states as well. The national governments of the affected countries intend to address
the crisis with – in some cases – extensive austerity measures.
We assume that these austerity measures will have ramifications for the consumer
behaviour in Portugal and Spain. This will in turn impact sales at our shopping centres.
As a result, it is safe to expect that tenants will approach us with additional requests for
bonifications and discounts. It is equally likely to affect upcoming lease negotiations in
2010. We therefore project a slightly lower rental income compared to the previous year.
That said, we intend to counter this possible trend by stepping up our letting efforts. To
facilitate the lease negotiations with suitable tenants we should cover the fit-out costs for
shops they intend to open. Some of the cash flow not distributed will be earmarked for
this purpose.
Then again, investor interest in Spain appears to revive. Increased investment activities
in these countries would precipitate a decline in yield rates and thereby bolster real
estate values. One of our priorities remains to boost the competitiveness of the shopping
malls. Accordingly, we will undertake various face-lifting measures that will upgrade the
outer appearance of the malls.
Manager‘s Report on the Fund
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