DIRECT MARKET REPORT GERMAN RETAIL - Europe Real Estate

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5 covered by Petercam Research Available products Not many dedicated German retail players are on our radar screen. The best known listed players are Deutsche EuroShop, Hahn Group, Dawnay Day Treveria, BBI Immobilien and GWB. All have quite a distinctive business model. Vastned Retail left the German market in 2004, Eurocommercial Properties is looking passively for opportunities. Deutsche EuroShop 5 • Bloomberg ticker: DEQ GY Eq. • Market cap: EUR 941.8m • Free float: 81% Deutsche EuroShop buys & holds foremost shopping centres and currently has equity interests in 16 European shopping centres in Germany, Austria, Hungary and Poland. The market value of these shopping centres, which are predominantly in city centre locations, amounts to EUR2.6bn (1,650 shops, 643,000m 2 GLA). The occupancy rate has been in excess of 99% for quite some time now. Leases have 10 year duration, no break-up options are in place, turnover-linked rents and a CPI threshold. Rent to sales is 6.5-8.5%. Major tenants are the Metro Group, Douglas, Peek & Cloppenburg, H&M, New Yorker and Zara. Fashion is still king with 47% of all tenants from that sector. Most German centres are located in former Western Germany, Sulzbach, Viernheim and Passau being the most southern ones. Dresden and Dessau are the only centres in the former east. The Main-Taunus-Zentrum in Sulzbach (Frankfurt area) and the Rhein-Neckar-Zentrum in Viernheim (Mannheim area) are the only out-of-town locations within the portfolio. Exhibit 31 Portfolio overview Deutsche EuroShop Source: Deutsche EuroShop AG The company from Hamburg had it's IPO in the late 2000 and was founded by DB Real Estate, a subsidiary of Deutsche Bank and kicked off with EUR 450m on assets, today exclusively invests in shopping centres that are acquired either directly or indirectly by means of equity interests. When purchasing centres under development, a pre-let rate of at least 50% of the leasable space must be guaranteed, for existing buildings this rate should at least amount 80%. In addition, at least 25% of space in existing buildings must be let for a remaining term of more than five years. Locations must have a long-term catchment area of at least 100,000 inhabitants. Portfolio expansion is targeted at 10% per year by German retail update - 28/11/2007 34
acquisition of new shopping centres and extending their share in a holding. 2007 was a year of consolidation -no new investments were made-, 2008 will be important as 3 new centres will be operational for the first time. Galeria Baltycka in Gdansk opened its doors for business on 4 October 2007. One expects that this 74% stake contributes EUR 11.3m per year to rental income. The Hameln property is due to be opened in March 2008. The topping-out ceremony for the Stadt-Galerie in Passau was held on 11 October, with the centre scheduled to open in autumn 2008. Preletting rates for both properties are already high, at 95% for Hamelin and 76% for Passau. The company will focus more and more on Germany and bordering CEE countries (75%/25%). In the meantime all centres in France and Italy are disposed; in 2004 the exit of the Udine-Italy centre was a fact, in April 2006 Etrembières in Annemasse-France (close to Geneva) was sold, in December that same year the disposal of Viterbo-Italy was concluded. Mid 2007 the average net yield for the overall portfolio was 5.39%. Deutsche EuroShop is owned for 19% by the Otto family, which also holds 100% of the non listed ECE Projektmanagement G.m.b.H. & Co. KG. This also Hamburg based company has implemented leased and managed shopping centres since 1965 and is the largest (inner-city) retail center manager in Europe and Deutsche EuroShop's preferred center manager and supplier for developments. The company is conservatively leveraged and fully hedged against interest risks, for the moment the company is not applying for the REIT status. Investors buying DEQ GY shares up to 1 January 2009 continue to receive dividends without any tax deduction (return of equity), as of that date a flat rate of 25%, plus a solidarity surcharge applies. German retail update - 28/11/2007 35
Page 1 and 2: www.petercam.com Real Estate Novemb
Page 3 and 4: Executive Summary “The secret of
Page 5 and 6: Introduction Following the record r
Page 7 and 8: The ZEW Indicator of Economic Senti
Page 9 and 10: 2 Destatis 3 Federal Statistical Of
Page 11 and 12: Consumer Price Index Consumer price
Page 13 and 14: Exhibit 11 Division median net inco
Page 15 and 16: Exhibit 14 Population, purchase pow
Page 17 and 18: Exhibit 16 Life cycles of the vario
Page 19 and 20: Corporate tax rate to 15.8% In the
Page 21 and 22: (30%) 4 . The preference for hyperm
Page 23 and 24: Exhibit 20 Indexed space developmen
Page 25 and 26: Exhibit 23 Shopping centre pipeline
Page 27 and 28: y approximately 25 basis points by
Page 29 and 30: spread of DIY over shopping centres
Page 31 and 32: Rental levels Not only prime assets
Page 33: Exhibit 30 Retail yields and rents
Page 37 and 38: Dawnay Day Treveria • Bloomberg t
Page 39 and 40: Exhibit 34 Portfolio overview BBI I
Page 41: Petercam Institutional Research and

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