Sale of Siemens 4,000-unit portfo- lio favours local German investors

Volume 3, Issue 56, March 24th, 2009
Inside REFIRE
REFIRE is a twice-monthly report focused
on providing market intelligence and back-
ground analysis to finance professionals in
German and continental European real es-
tate investment.
Whatever your particular area of specialisa-
tion, we think you’ll find timely, incisive infor-
mation within our pages, helping to inform
you of the key deals, the numbers, the mar-
kets, the players and the people.
The areas we focus on are:
US Funds in Europe
European REITs
German Real Estate Finance
German Non-Performing Loans (NPLs)
Retail Property Funds
Mortgage Securitisation
CMBS/RMBS
French SIIC’s
Refinancing
Euro-zone Property Financing
REFIRE has an extensive network of con-
tacts in the field of continental European real-
estate finance, which enables us to bring you
the latest and most relevant news. However,
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CONTENTS in this Issue:
DEALS ROUNDUP / from page 3
EDITORIAL / page 4
REPORT - /INTERVIEW page 6
UPCOMING EVENTS / page 12
PEOPLE…JOBS…MOVES / n/a
SUBSCRIPTION FORM / page 20
Sale of Siemens 4,000-unit portfolio
favours local German investors
The industrial combine Siemens last week sold off its entire remaining residential
housing holdings to a German housing consortium, in what was the first large
residential portfolio sale since the LEG North-Rhine Westphalia deal with Whitehall
Funds in June last year. The deal has significance in that it highlights the advantages
currently being enjoyed in German portfolio deals by companies with high levels of
equity and a conservative strategy, who can bid for larger portfolios without necessarily
looking for yields much beyond 4%-5%. This may now be favouring the more
solidly-financed German investment groups, at the expense of international buyers.
The buyers of the 4,000-unit housing
portfolio were a consortium of
three fairly small German housing associations
– the Bonn-based Wohnbau
GmbH, Munich-based GBW Gruppe
and Karlsruhe’s Volkswohnung AG.
Traditional international private equity
investors are not thought to have been
among the final round of bidders.
Although the price was not disclosed,
sources close to the deal suggest
that the consortium’s winning bid
in the auction process came in at between
€300m and �€320m. With a total
lettable area of 290,000 sq.m. across
the portfolio, this would suggest a sq.m.
price of over €�1,000 – which would rank
the deal up with some of the highest
prices paid in the boom years of 2006
and 2007. It prices the portfolio at considerably
more than the �€600 per sq.m.
that Goldman Sachs’ Whitehall Funds
paid last year for the 95,000-unit LEG
portfolio in a �€3.5bn transaction. The
LEG price was itself well below the average
of �€800 per sq.m. which investors
have paid for portfolio deals since
the year 2000. However, the Siemens
portfolio is said to be of above-average
quality, two-thirds of which has recently
been upgraded, with a vacancy rate of
less than 1%.
From the portfolio, Wohnbau AG,
which already manages 15,000 of its
own properties, will take over 1,100
properties in Munich and 1,500 in Erlangen,
both traditional Siemens strong-
Market welcomes new Eurohypo
Jumbo Pfandbrief, but
at a price
Commerzbank subsidiary Eurohypo returned
to the market with a jumbo Pfandbrief
this week, its first jumbo issue since
August last year and the subsequent near
seizing-up of the Pfandbrief market in the
wake of the Lehman Brothers closure......
see page 3
Terra Firma bids to buy
back �€6bn debt used to buy
Deutsche Annington
UK-based private equity investor Terra
Firma is offering to buy back the debt
held by its German residential housing
company Deutsche Annington,
Germany’s largest private landlord, albeit
at a hefty discount. .....see page 7
Fortress replaces Drescher
as boss of GAGFAH
Listed German housing group GAGFAH,
which is controlled by US private equity
investor Fortress Investments, said this
week that CEO Burkhard Drescher will
leave the company when his contract runs
out in July of this year.... see page 14
Speymill Deutsche Immobilien
sees residential yields
holding firm at 6.5%
The German residential sector is clearly
where the (relatively) positive news is coming
from for investors. SDIC presented interim
figures this week... see page 16

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holds. 800 properties in Erlangen will
be managed by GBW Gruppe, in addition
to its existing 10,000 units, while
Volkswohnung AG will take over more
than 500 units in Karlsruhe and Bruchsal,
to add to its 12,000 units in its home
town of Karlsruhe itself.
Social considerations are likely to
have played a decisive role in the bidding
outcome. Siegfried Russwurm,
human resources office at Siemens-
Wohnunggesellschaft, the Siemens
housing unit, commented “Social responsibility
has been a tradition at Siemens
since its founding and is firmly
anchored in our values. That’s why
safeguarding tenants’ rights was our top
priority in selecting a purchaser.”
As a result, the buying consortium
has agreed to abide by a comprehensive
social charter protecting the rights
of existing tenants, over 90% of whom
are past or present Siemens employees.
These include: A 20-year right of occupancy
by Siemens for its existing staff;
a ten-year moratorium on any re-sale of
the properties, individually or as part of
a portfolio; comprehensive restrictions
on rent increases; and the compulsory
absorption of Siemens housing administration
staff, should they wish to remain
with the group.
The buyers were quick to stress that
these conditions would not represent
an additional burden, given their existing
credentials. Udo Scheffel, CEO of
the GBW Group said, “As long-term-oriented
housing managers, none of these
terms represent a constraint on the consortium
members”. He did say, however,
that even for the consortium, raising
the finance had not been easy. “We
would have had real difficulty financing
this ourselves, if we had wanted to.”
He added that the deal took into account
current financing difficulties – “It’s
not priced at the high level of previous
years, given the quality. We’ve been
buying very conservatively recently and
watching our pennies.”
2
A recent study by rating agency Fitch
suggested that earlier opportunistic investors
in German residential portfolios
will have to refinance about �€11bn in
bank loans by 2013, likely to represent
‘considerable risk’ for the investors, according
to Fitch. While cash flows will
continue to service interest and capital
repayments, investors had not managed
to increase rents or reduce vacancies as
much as they had hoped, said Fitch,
estimating that the book value of such
property holdings were likely to be much
too high. Previous investors had generally
been targeting returns of between
9% and 20% on invested equity.
Germany/Results
IVG Immobilien plunges to
full year loss of �€452m � on
asset write-downs
The Bonn-based IVG Immobilien
AG, Germany’s largest listed commercial
property group, saw a nearly
�€750m turnaround in its consolidated
net figures for the full year 2008, as
last year’s profit figure of €�301m was
turned into a net loss of �€451.8m, almost
exclusively due to non-cash market
value changes, or write-downs on
its property portfolio, of nearly �€945m.
The dividend for the year has been
cancelled. In November, after a sharp
downward revision of its full-year forecast,
the company warned investors
of the likely scrapping of the dividend,
which had been �€0.70 in 2007.
In its preliminary unaudited figures
for fiscal 2008, the MDAX-listed IVG
said that despite the negative property
revisions, its operational business remained
stable. In its core business, the
company even increased its income:
Overall, revenues increased by 14.3%
to �€608.6m and operational EBIT rose
to �€722m from �€325m in 2007, largely
due to the partial sale of its caverns
business into a fund managed by IVG

3
.................................................
DEALS ROUNDUP
itself. In its Investment Division, net
rental income increased from €�216.4
million to €�321.0 million, an increase
of 3.4%over the previous year when
adjusted for property purchases and
sales.
Among IVG’s four principal business
divisions, the group’s Funds Division
claims in the preliminary report that
it maintained its market leadership in
the field of both specialised funds for
institutional investors and closed-end
funds for private investors. Assets under
management for institutional customers
increased from €�10.3 billion
in 2007 to �€12.0 billion at the end of
2008. With �€257 million of placed equity,
IVG Funds remained the German
market leader for closed-end property
funds. Meanwhile, IVG Caverns and
IVG Funds jointly placed 70 caverns
(underground oil and gas storage facilities)
among institutional investors
as a fund with €910 million of equity,
on which we have reported extensively
in previous issues of REFIRE. IVG Development
said it had implemented its
own scheduled sales programme with
an IVG share of � €425 million.
The new board chairman of IVG, Dr,
Gerhard Niesslein, commented on the
results, “The high negative market value
changes reflect the real estate markets’
sluggish development overall.
However, this does not affect IVG’s liquidity
and cash flow. Currently, we are
working hard to sustainably strengthen
IVG and to make adjustments that will
enable the company to cope with the
challenges in the market. Our efforts
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are focused on safeguarding the company’s
financing and on stabilising its
operational income. Our most promising
potential sources of earnings
include the successful asset management
of our properties and caverns, as
well as the funds business. In addition,
we will broaden our scope for action by
selectively selling properties.”
Niesslein said that talks were ongoing
with IVG’s banks to extend bilateral
lines of credit worth �€900m which are
due to expire in 2009, and described
them as “proceeding in a constructive
atmosphere”. IVG manages its own
portfolio of €�5.4bn of assets, as well
as nearly 40 specialised funds for institutional
investors with a volume of
�€12.0bn, and 10 closed-end funds with
a volume of €�3.3bn.
Germany still offers stable values,
says Pino Sergio, WGF’s founder
and CEO.
WGF Westfälische Grundbesitz und Finanzverwaltung AG | T: +49 211 68777-0 | F: +49 211 68777-100 | info@wgfag.de | www.wgfag.de

.................................................
EDITORIAL
German fund valuations are still erring on the side of optimism
The year 2009 will be a watershed
year for the big German open-ended
funds. Designed as the safe alternative
to riskier speculations, the funds
have a quasi-official status in the
panoply of German investment vehicles.
They’re almost like a privatised
version of government bonds, but offering
a higher yield.
It is a status they are anxious to
protect, and are well-positioned to
do so given their enormous power in
sucking up the savings of millions of individual
savers through their networks of
agents and local banks, reaching into every
town and village in Germany. In these
cash-strapped times, the funds are often
seen as the white knights in a battered
industry, the work-horses that have the
clout and the bulging coffers to drag the
industry out of its current slump.
The model has worked quite well in
the past. The funds promise a stable
yield, normally varying between 4% and
5%. In return, private investors pay a
spread of about 5% between the buy
and sell price of their unit certificates,
plus an annual management fee, all designed
to discourage short-term trading.
The unit price is quoted daily and is
freely tradeable. The spread is normally
waived for institutional investors, many
of whom have grown used to parking
their money in the funds as they would
in a short-term money account. It was
the large-scale withdrawal of these
funds that led to twelve of Germany’s
biggest funds freezing redemptions last
October. All, except for a couple of the
public funds, remain closed to redemptions
until October this year to safeguard
the funds’ liquidity.
We’ve noticed that since the middle of
last year, directors at open-ended funds
have been adding additional skills to their
fund management expertise.. Namely,
how to respond suitably vaguely when
pressed on the burning topic of property
valuations in their funds’ holdings.
We’ve attended several press conferences
with open-ended fund managers
recently. After giving us the positive news
on the optimistic outlook
for the future, the directors
brace themselves for the
inevitable onslaught from
the journalists present. In
the new, supposedly more
transparent era ushered in
by the closer assimilation
of real estate with the capital
markets, German business journalists
are keen to be seen to be asking the hard
questions, and not be fobbed off by the
glib responses of the well-coached and
media-savvy management. The newshounds
bare their fangs and bay for
blood, demanding hard answers. But on
the question of valuations, inevitably they
come away empty-handed.
They want answers to questions such
as, how big of a write-down will the fund
have to take when it next re-values its
properties? 10%? 20%? Or even 30%,
in line with real estate price falls in the
world’s key commercial centres? Ah, but
you see, as a cash-rich fund we can take
advantage of falling prices to average
down and get more bang for our buck at
the new lower prices. But what about the
loss of capital value on properties bought
and paid for at the peak of the market? A
good question, and we’re glad you asked
it. That’s the great thing about an openended
fund. We can smooth out the volatility
of peaks and troughs, in contrast to
the cyclical ups and downs of the listed
property sector, ensuring stable returns
for our investors. We can clearly see that
investors are looking for more stability.
Now, any more questions? Good. Well,
thank you all for coming.
Now, we do accept that there are better
and worse funds, and we also think the
gap between the two is widening. Many
are still coasting on the upward property
revaluations made once a year during the
boom years. We do understand that if the
4
funds took the same write-downs on their
assets that the private listed companies
are being forced by market circumstances
to do, then investors would be scrambling
for the exits. We know that the strategy of
investing in fully-let core properties with
blue-chip tenants on long leases protects
against the worst ravages of the market.
But, in real terms, all commercial properties
are going to be worth less than they
have been in the recent past. It may be
a matter of accounting semantics, but
sooner or later this will be reflected in real
returns.
Let’s remind ourselves of the basics.
The market value of a property is made up
of both steady streams of current cashflow,
and the cashflows that can be expected
once the current lease agreements
run out, multiplied by the number of lease
agreements, times the total space leased.
The German funds smooth all these factors
out for a payout of about 4%, a reasonable
return in stable times.
The smoothing effect of the open-ended
funds’ returns results from, theoretically,
not fully revaluing upwards previous
acquisitions in boom times, and not fully
devaluing properties when markets are in a
downturn. However, many funds boosted
returns by revaluing properties upwards
in the good years. They seem less willing
to make the downward adjustment – at
least yet. The buyer of shares in the fund
is paying for a past valuation that, at best,
should only be seen as an estimated value
based on a property’s imputed sustainable
future worth. Since there are not enough
current transactions, these estimates are
just guesstimates. Until distressed investors
are forced to sell, that is, when we’ll
suddenly have real benchmarks against
which to work.
The chances of those benchmarks being
higher than current valuations is nonexistent.
The dogs in the street know this.
Even to us, it seems clear what has to
happen.
Charles Kingston, Editor

5
.....from page 3
REFIRE: The markets have taken a
dim view of the group’s roller-coaster
expansion under previous CEO Wolfhard
Leichnitz, who left the company
on the 30th September last year. Under
Leichnitz, IVG increased its balance
sheet from €�3.6bn to €�9bn by tripling the
company’s debt load from €�2bn to more
than €�6bn in preparation for its supposed
role as a leading European property
platform and scheduled German
REIT, plans which have been seriously
scuppered by the financial crisis and the
nearly-stillborn market for German RE-
ITs. The profitable sale of the caverns
division last year offered a ray of hope to
investors, who nonetheless have been
selling the stock continuously, driving
the share price down 58% over the last
six months alone.
Dr Niesslein’s efforts since coming
on board from his previous position as
CEO of asset manager DeTeImmobilien
to succeed Leichnitz seem to have
been exclusively devoted to trimming
the balance sheet, including selling off
high-profile property assets where possible
and profitable, writing down asset
values, and shrinking the company’s
debt while renegotiating financing from
its banks. In the medium-term IVG is
likely to continue in this vein while it tries
to get back on track. Investors are still
largely staying clear.
Germany/Pfandbriefe
Market welcomes new Eurohypo
Jumbo Pfandbrief, but
at a price
Commerzbank subsidiary Eurohypo returned
to the market with a jumbo Pfandbrief
this week, its first jumbo issue since
August last year and the subsequent near
seizing-up of the Pfandbrief market in the
wake of the Lehman Brothers closure.
Initial reports from the market suggest that
demand for the bond has been brisk, with
the originally-planned volume of �€1bn be-
ing increased to �€1.25bn.
Eurohypo is the largest Pfandbrief
issuer in Europe, and the leader in the
jumbo segment of a volume of �€1bn upwards,
which are additionally subject to
certain specific trading restrictions. Its
latest jumbo is scheduled to mature in
five years time, on 24th March 2014.
90% of the bond has been placed with
German investors, with European neighbours
taking up the rest. Lead managers
for the deal are parent Commerzbank
and Dresdner Kleinwort, along
F O R M O R E D E T A I L S C O N T A C T :
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BOSTON
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with consortium banks Deutsche Bank,
Danske Bank, DZ Bank, HSBC and
LBBW.
While the market for Pfandbrief issues
has been sputtering back to life
this year, issuers are having to pay a
hefty premium to attract investors, well
above what they could offer in pre-crisis
days. Two recent German issues which
we reported on in REFIRE were received
well by the markets, but at a price. Landesbank
Baden-Württemberg (LBBW)
paid 75 basis points above the bench-
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mark swap rate at the beginning of Feb- pay triple-digit yield premiums on recent estate markets at home and abroad are
ruary for its issue, with the Postbank issues of similar securities – this issue is increasingly bearing the hallmark of the
paying 85 basis points a few days later. a step towards normalisation.”
ongoing shortage of liquidity and too
Eurohypo is paying 100 basis points The issuing of Pfandbriefe is Eurohy- low a level of equity capital in the hands
above the swap rate for its jumbo, a po’s most important refinancing instru- of investors. This and our own restric-
reflection of the markedly more difficult ment. The market for Pfandbriefe has tive credit policy will inevitably have an
market conditions prevailing in the cov- become even stickier recently with the effect on our business prospects for
ered bond markets. A year ago, larger implied threat from the blanket govern- the coming year. Even more so, since
jumbo Pfandbriefe could be placed in ment guarantee on German bank bonds we don’t have the same ability as be-
the market at an actual discount to the providing a form of rivalry to the counfore the crisis to finance loans through
swap rate. No longer.
try’s own prized Pfandbrief market, with securitisation or syndication which we
Eurohypo board member Ralf the government negotiating a likely ex- need to release the pressure on our own
Woitschig, responsible for public fitension of the guarantee from its current equity.”
nance and treasury, said of the latest three to up to five years.
Dr. Pörschke emphasised that refi-
jumbo issue, “We had a great deal of Eurohypo chairman Dr. Frank nancing still remained the key issue for
interest in the issue from investors as Pörschke confirmed recently that the the industry. “The traditional route of
soon as the books were opened. Al- bank was only selectively engaging in raising finance by issuing Pfandbriefe is
though the yield premium may seem the financing of new projects or acquisi- still very difficult, even though we’re be-
relatively high at first glance, in light of tions, inevitably with long-term customginning to see welcome signs of the mar-
the financial RZ_Anzeige_125x87mm:REAG crisis – indeed some of our ers 05.12.2008 of the bank. Speaking 12:03 to Dow Uhr Jones Seite ket coming 1 back to life”, he said. Being
best-known competitors have had to Newswires, Dr. Pörschke said, “Real
part of Commerzbank was a help in ac-
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7
.....from page 6
cessing liquidity, he added. “Within the
company we’ve organised our financing
such, that the issuing of Pfandbriefe is
handled by Eurohypo, while raising uncovered
financing, including for Eurohypo,
takes place at group level. All in all,
the Commerzbank group can draw the
benefits from its wide access to deposits
in its private client business.”
Germany/Debt Financing
Terra Firma bids to buy
back �€6bn debt used to buy
Deutsche Annington
According to a recent regulatory filing, the
UK-based private equity investor Terra
Firma is offering to buy back the debt held
by its German residential housing company
Deutsche Annington, Germany’s largest
private landlord, albeit at a hefty discount.
Terra Firma bought the Bochumbased
Deutsche Annington in 2000 for
�€2.25bn, in the process securitising
the acquisition cost through a series of
banks. It effectively financed the debt
by issuing mortgage-backed securities
from a special purpose vehicle called
German Residential Asset Note Distributor,
with the intention of utilising the
rental income and sales proceeds from
Annington’s 230,000 residential apartments
to pay off the interest on the debt.
Annington subsequently paid �€6.5bn in
2005 to buy another German residential
company Viterra, with its 138,000
apartments, from German energy group
E.ON AG. The deal was financed with
90% borrowings, which was subsequently
securitised.
In this latest twist, Terra Firma joins
a long list of private equity companies
looking to buy back debt in their own
and other companies held by private
equity investors. It now aims to buy
back nearly �€6bn of debt in Annington
in various tranches, taking advantage of
the drying-up of the buyout markets and
deep discounting on distressed debt
packages. It is bidding up to 70% of
nominal value for the most secure and
highly-rated tranches of the securitised
bonds, while less highly-rated tranches
are thought to be priced at a discount of
45-50% of nominal value.
REFIRE: It will indeed be interesting
to see whether the strategy works. In
16. Handelsblatt Jahrestagung
www.refire-online.com
the absence of fluid markets for such
debt portfolios, it is difficult to know
what the securities in the CMBS will ultimately
trade at, and who will finance
the deals. However, should the markets
become so desperate that holders of the
bonds will sell at any price to created
much-needed liquidity, then the mathematics
of the whole Deutsche Anning-
Immobilienwirtschaft 2009.
5. und 6. Mai 2009, The Ritz-Carlton Berlin
Claus-Jürgen Cohausz
Prognose – Wie entwickeln sich die Finanz- und Immobilienmärkte?
Investments – Wie sehen die Strategien der Zukunft aus?
Emerging Markets – Wie stimmen Risiko und Rendite?
M&A – Geht die Konsolidierung in der Immobilienbranche weiter?
Segmente – Was sind die wichtigsten Trends?
Projektentwicklung – Was wird den Markt bestimmen?
Politik – Was ist zu erwarten?
Anlageprodukte – Wie sieht die Zukunft von Fonds und REIT’s aus?
Kosten – Wo sparen und wo investieren?
Kredit – Wo sind die Wege aus der Klemme?
Finden Sie Wege zum Erfolg in schwierigen Zeiten!
Weiter Informationen finden Sie unter: www.immobilien-forum.com
Info-Hotline: +49 (0) 69 . 24 43 27 – 39 18
Anne Pape (Senior-Marketing-Managerin)
Telefax: +49 (0)69.24 43 27–49 18
E-Mail: anne.pape@informa.com
Prof. Dr. Michael Heise
Claus-Jürgen Cohausz, Mitglied des Vorstandes, Westdeutsche ImmobilienBank AG
Prof. Dr. Michael Heise, Chefvolkswirt, Allianz SE
Christian Ulbrich, CEO EMEA und Member of the Global Board, Jones Lang LaSalle
Wolfgang Weinschrod, Vorsitzender der Geschäftsführung, Pirelli & C. Real Estate Deutschland GmbH
Christian Ulbrich
Wolfgang Weinschrod
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Substanz entscheidet.

ton transaction, executed just prior to
the peak of the opportunistically-driven
hype, will take on a different dimension.
It is, of course, a recovery strategy that
favours the biggest players. Mid-sized
and smaller investors who had to raise
traditional (albeit generous) bank financing
at the time, and who are engaged in
painful re-negotiation with their banks in
a much less favourable climate, will be
shut out from this particular game.
Germany/Funds
Quantum Immobilien plans
doubling of German residential
fund to �€600m �
The Hamburg-based Quantum Immobilien
KAG, a fund subsidiary of the
Quantum Immobilien Group, said last
week that it plans to boost investments
by around ��€300 million in its Habitare
special residential real estate fund in the
next two years. It plans a target return of
5% per annum, in line with what it generated
in 2008, and an overall increase
in the fund’s volume to ��€1bn.
Philipp Schmitz-Morkramer, CEO
and joint founder (with Frank Gerhard
Schmidt) of Quantum Immobilien AG,
Networking with real estate professionals on
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said the new planned investment was to
meet demand for heightened interest in
the residential sector, seen as less risky
than the commercial sector in the current
climate. “What we are observing is
that institutional investors have become
far more interested in German residential
real estate. This is because the sector
offers a conservative and therefore attractive
opportunity-risk profile against
the backdrop of markets that are more
susceptible to fluctuation“, he said.
Habitare was set up at the end of
2005 as the first special real estate fund
in Germany. Since its launch it claims
annual returns of 6.3%. The fund is
structured into the three sub-segments
of: new construction, high quality and
return-oriented existing properties. The
target locations have been new and existing
buildings in the top six commercial
centres of Hamburg, Frankfurt Düsseldorf,
Cologne, Stuttgart and Munich.
The new funds will be invested in
medium-sized cities (plus Berlin) in the
western part of the country with populations
of 75,000 upwards, with growing
demographics and economic outlook,
according to Schmitz-Morkramer. The
fund currently has a portfolio of just
under €�300 million and around 3,200
8
residential units. “We have pursued a
restrained acquisition policy in the past
two years on account of the high price
level. However, given the current market
situation we see good opportunities
again for expanding our portfolio via selective
investments”, he said.
Quantum KAG also manages funds
such as the City Parking multi-storey
car park fund as well as City Select,
which invests in office properties in
German metropolitan regions as well
as selected medium-sized cities. Quantum
also provides individual investment
funds for institutional investors, which
invest both directly in real estate and indirectly
via other real estate funds. Total
assets under management of the various
funds amount to over �€1bn.
Germany/Listed Companies
Colonia Real Estate restructures
northern German portfolio
debt
In what looks like a piece of deft financial
manoeuvring, Germany’s third-largest listed
residential property company Cologne
Real Estate (CRE) explained to REFIRE
last week how they had refinanced a
1,600-unit residential portfolio in the northern
German state of Schleswig-Holstein.
CRE has been slashing costs and overhead
over the last two quarters, and taking
write-downs on its property holdings in
a bid to restructure its balance sheet and
concentrate on core activities.
The company signed new contracts
for financing the portfolio solely with the
state’s development bank Investment
Bank Schleswig-Holstein on behalf of
its subsidiary CRE Wohnen Immobilien
GmbH, in the process transferring
from a US bank. The US bank (which is
currently withdrawing from the German
market) waived a total of €�8.4m of existing
outstanding debt in return for a profit
participation warrant on future income
from the portfolio, and a further �€3.5m

9
Owner, Developer & Fund Speakers Currently Include:
Alessandro Bronda, Head of Global Investment Strategy
ABERDEEN PROPERTY INVESTORS
Matthew Ryall, Head of Indirect Investments & Capital Markets ALLIANZ
Robert Page, CEO ALPHA BETA FUND MANAGEMENT
Matt Wanderer, Principal ALTERRA CAPITAL GROUP
Hans Vrensen, Director-Securitisation Research BARCLAYS CAPITAL
Philip Blumberg, Chairman & CEO BLUMBERG CAPITAL PARTNERS
Kurt Becker, Head of Economic and Credit Research
COLLINEO ASSET MANAGEMENT GMBH
Dr. Geza Martin Toth-Feher, Managing Partner
CB EQUITY PARTNERS GMBH
Ramsey Mankarious, Chief Executive Offi cer
CEDAR CAPITAL PARTNERS LTD.
Roger Orf, CEO CITI PROPERTY INVESTORS
Tommy Brown, Principal & Co-Founder
CLERESTORY CAPITAL PARTNERS
Thomas Beyerle, Head of Research & Strategy DEGI
Douglas J. Edgelow, President EQUUS DEVELOPMENT CORPORATION
Charles I M Graham, Principal EUROPA CAPITAL LLP
Dirk Söhnholz, Managing Partner
FERI INSTITUTIONAL ADVISORS GMBH
Claudia Reich Floyd, Head Real Estate Securities
4IP MANAGEMENT (SAL. OPPENHEIM GROUP)
Stuart Jenkin, Managing Director FROGMORE
Kenneth A. Munkacy, Senior Managing Director
GID INTERNATIONAL GROUP/GID INVESTMENT ADVISERS LLC
Frank Croston, Partner HAMILTON HOTEL PARTNERS
Scott O’Donnell, Senior Managing Director
HARBERT MANAGEMENT CORPORATION (Europe) LLC
Otis Spencer, Director of Portfolio Management
HEITMAN INTERNATIONAL
www.refire-online.com
Bahram Motamedian, Managing Director HINES EUROPE
Jonathan J L Driscoll, Director HOJASCO CAPITAL LTD
Jos Short, Chief Investment Offi cer
INTERNOS REAL ESTATE INVESTORS LLP
Mark Long, Director, Investment Strategy and Research
INVISTA REAL ESTATE INVESTMENT MANAGEMENT
Mike Riley, Joint CEO THE LOCAL SHOPPING REIT PLC
Ruprecht Hellauer, Managing Director
LOHNBACH INVESTMENT PARTNERS GMBH
Patrick Janssen, Director - Portfolio Manager,
Structured Credit Products Fixed Income M&G
Lloyd Lee, Director MARATHON ASSET MANAGEMENT
Zsolt Kohalmi, Principal MEYER BERGMAN
Andrew Sutherland, Chief Executive MILLER DEVELOPMENTS
Van J Stults, Managing Director ORION CAPITAL MANAGERS
Ferhat Guven, Managing Director
PALADIN REALTY PARTNERS – EURASIA
Geoff Disston, Partner PROSPECT CAPITAL GROUP
Olan Cremin CEO QUINLAN PRIVATE
Michael Cox, Real Estate Strategist RBS GLOBAL BANKING & MARKETS
Oliver Ash, Managing Director RICHMOND DEVELOPMENTS
Robert Sheridan, President ROBERT SHERIDAN & PARTNERS, LLC
David Michelson, Advisor THREE ARCH INVESTMENT CORP. 1
Stephen Rosenburgh, President & CEO US LAND INVESTMENTS, LLC
David Schwartz, Managing Director WATERTON ASSOCIATES, LLC
For more information, Please visit: www.imn.org/eurodisre_refi re
IMN • Tel: +1 212 768-2800 • Fax: +1 212 768-2484 • Email: mail@imn.org

.......from page 8
in potential pre-payment penalties. On
top of the release payment, CRE got a
further credit line from the state development
bank of up to €�8.0m to refurbish
the apartments and lower the vacancy
rate overall on the property portfolio,
The new deal settles the interest rate for
the entire refinancing at a fixed 5.0% for
the next 10 years.
In a comment on the new financing
arrangement, Colonia’s CEO Stephan
Rind said, “In completing the refinancing
of our northern German residential
portfolio we took another sep towards
restructuring our overall debt structure
and improving recurring cash flow. Despite
the fact that we have no further
significant refinancing due until the end
of 2011, we’re taking advantage of the
current market environment to continuously
improve our loan portfolio and deleverage
our balance sheet.” CRE owns
and manages about 20,000 residential
MIPIM Roundup
Like many visitors to this year’s MIPIM gathering at Cannes,
we came away thinking this had been a particularly productive
week. Perhaps that was because we managed to get
more sleep than usual, given the more subdued tempo of
the entertainment on offer. It was certainly unusual
to see the assembled throngs crowding
the public bars at 10pm – or even earlier. What,
have they no parties to go to? Evidently not.
Anyway, there’s no harm in slumming it. We’re
sure it’s character-building, and it does everyone
good to buy their own beers occasionally.
The new, more sober atmosphere was nonetheless conducive
to good talks and a less frenetic pace. Although the
number of German visitors was down by a third, according
to the fair organisers, you would hardly have noticed it judging
by the thirsty visitors to the always-hospitable Frankfurt
and Munich communal stands, and likewise the Hamburg
and Berlin areas at the top of the Palais.
According to Dr. Wulff Aengevelt of property advisors
Aengevelt Immobilien, his description of impending doom
units valued at about �€900m, while its
asset management subsidiaries handle
�€1.6bn of assets under management for
third parties.
Germany/Results
TAG Immobilien takes hit on
write-downs and cancels
dividend
The latest listed German property company
to announce major new cost-cutting
measures and cancel its dividend
is the Hamburg-based TAG Immobilien
AG, which posted a full-year after-tax
loss of ��€31.1m for 2008, in figures published
earlier this month.
The S-DAX-listed TAG Immobilien
saw its profit of �€16.5m from 2007 evaporate
due to write-downs on the value of
its assets. Revenue dropped by 18% in
2008 over the previous year to �€103m
following last year’s event, “like the last concert on the Titanic”
had thankfully failed to come to pass, at least from a
German perspective.
“All in all we had a very high level of quality and seriousness
among the partners we talked with, who all had more time
for in-depth discussions. Those interested
in buying are taking more time and care
in their deliberations, and are consciously
– and successfully - looking at properties
that may have been bought for too high
a price in the past. One seller, who paid
top dollar for a portfolio two years ago, is
now prepared to sell it for 30-40% less, because
he now needs liquidity. We have a fund manager
client who’s buying back a portfolio he sold two years ago,
but for 40% less.”
“We’re beginning to see a bottom for properties that are
being valued realistically, which means about 15% to 20%
less than in 2007. Clients with a genuine interest in buying
at these levels were at Cannes, and genuine progress was
made in bridging the gap between buyers’ and sellers’ differing
expectations.”
10
from €�125m, although rental income
rose strongly by 45% to �€54m, and net
income from ongoing property management
activities grew by 58% to �€34m
from €�21.8m the previous year. Sales
of residential and commercial property
brought in �€45m yielding a gross profit
of €�2.5m. (The company said that sales
for the first two months of 2009 have so
far been well up on earlier years, already
at �€28m).
Using the fair-value accounting
method, TAG took impairments of about
�€24m on its property holdings, primarily
caused by higher interest on commercial
property in particular, and by adjusting
commercial property holdings down
by 4.4% and residential by 1.7%.
The company’s equity-to-asset ratio
fell to 30.1% from 34.7% a year earlier,
and it now has a loan-to-value ratio of
67%, which CEO Andreas Ibel said was
“below market average. Our net equity

11
.......from page 10
is sufficient to get through an extended
slowdown.” While not ruling out further
impairments on commercial property,
Ibel said he was confident that residential
property was unlikely to be subject
to further downward revision.
The company said that in light of the
current financing crisis it was modifying
its previous business model, with a
renewed emphasis on rental activities
while scaling back new construction
and portfolio development at both parent
company and subsidiary Bau-Verein
zu Hamburg AG, likewise a listed
company. It said it plans staff and material
cuts of 50% by 2010.
TAG Immobilien specialises in residential
and commercial property in
major Germany cities, particularly Hamburg,
Berlin and Munich. The company
owns and manages 6,100 of its owns
properties and 7,200 properties for third
parties.
Germany/Banking
Corealcredit joins the queue
for German bank guarantees
The Frankfurt-based Corealcredit, one
of the smaller commercial and public sector
financiers, said last week that it had
applied to the German bank bailout fund
SOFFIN to avail of German state guarantees,
in a move which it said would better
enable it to issue bonds without placing
itself at a disadvantage to larger competitors.
It joins larger rival Aareal Bank
(see REFIRE Issue March 1st) in applying
to avail of the funds although the bank
itself expects to have been profitable in
full-year 2008, with adequate Tier 1 capital
of 11%, according to the bank. Total
guarantees that the bank is looking for
are likely to be less than �€1bn
Corealcredit is the reincarnation of
the old AHBR Allgemeinen Hypothekenbank
Rheinboden, rescued from imminent
bankruptcy in 2005 by the distressed
turnaround specialist, the US
investor Lone Star. It joins fellow Lone
Star subsidiary, the Düsseldorf-based
IKB Industriekreditbank, in applying
for state guarantees. IKB was bought
last year at a fire-sale price by Lone Star
after it had undergone an emergency
bailout by majority shareholder KfW
and a posse of leading German banks
following disastrous US sub-prime investments.
IKB has already availed of
guarantees of over �€5bn to enable it to
issue new bonds.
With a balance sheet of �€14.9bn, Corealcredit
is small compared to larger
rivals Aareal Bank, Eurohypo and Hypo
Real Estate, and while recovering from
its complete restructuring under Lone
Star, has like its rivals also sharply cut
back on new financing in its core business
of German commercial property
and public sector finance. Last year’s
new business is likely to have been
about �€1bn, about 50% less than new
business written in 2007.
The bank stabilisation fund SOFFIN
MEYER-KÖRING
Established in 1906
German Real Estate Law:
Competent. Concise.
In your language.
• All legal matters related to acquisitions
• Background advice to investors
• Legal Due Diligence checks
• Residential and commercial leases
Thomas Krümmel, LL.M., Rechtsanwalt
Schumannstraße 18 | 10117 Berlin | Tel. (030) 206 298-6
e-mail: kruemmel@meyer-koering.de | www.meyer-koering.de
www.refire-online.com
said last week that by February it had received
applications for €�294bn of bailout
aid, the bulk of which is for credit guarantees,
with a smaller amount reserved
for equity injections. Nearly �€200bn of
this has already been approved. The
government in Berlin has earmarked a
total of �€480bn to aid Germany’s banking
system, via applications channelled
through the SOFFIN.
Germany/Funds
Austria’s R-Quadrat launches
�€600m � German residential
high-yield fund
Another special fund announced its arrival
on the German market last week to
invest specifically in the lower-priced end
of the German residential sector. The
new fund, called High-Yield Residential
Deutschland (HYRD) is the brainchild of
the Austrian real estate asset manager
and developer R-Quadrat, who are join-

...... ...........................................
UPCOMING EVENTS
EVENTS/ CONFERENCES
March-April-May 2009
l
March 9th-11th, Monday-Wednesday
12th International Hotel Investment
Forum, Berlin, Germany
The 12th International Hotel Investment
Forum (IHIF) with the theme ‘Searching for
Deals’. Starting earlier this year with a ses-
sion dedicated to investment.
More info at: www.berlinconference.com
March 10th-13th, Tuesday-Friday
MIPIM, Cannes
One of the premier showcase events in the
real estate calendar, MIPIM brings together
the influential decision-makers in the mar-
ket, offering them access to a showcase of
development projects.
More info at: www.mipim.com
March 12th-13th, Thursday-Friday
IMN Global Covered Bond Conference,
London
The conference tackles such topics as the
impact of state-guaranteed programs on
the value of covered bonds as a funding
tool, funding options in an illiquid market,
pricing considerations,and returning liquidity
and value of the secondary market.
More info at: www.imn.org
March 19th-20th, Thursday-Friday
Retail Real Estate Summit, Wiesbaden,
Germany
A two-day event, mainly in German lan-
guage, on retail real estate investment in
Germany, which looks at possible ways at
countering the financial crisis-induced market
weakness.
More info at: www.conferencegroup.de
April 6th-7th, Monday-Tuesday
IMN European Distressed Real Estate
Conference, London
The conference covers the latest develop-
ments in distressed real estate debt & equity,
residential and commercial markets, as well as
providing a special focus on select European
geographic areas of distress.
More info at: www.imn.org
April 22nd-24th, Wednesday-Thursday
ICSC European Conference, Barcelona,
Spain
The International Council of Shopping Centres
is dedicating the third day to of the annual
event to Retail Friday, bringing retailers to-
gether with investors and developers.
More info at: www.immobilienforum.com
April 23rd-24th, Wednesday-Thursday
INREV Annual Conference, Athens, Greece
This year’s annual conference finds the non-
listed property funds industry facing its biggest
challenge yet as it contends with falling capital
values and the lack of availability of debt.
Industry experts gather to provide insight into
these major issues and to face the key ques-
tion of how the industry moves forwards from
here
More info at: www.immobilienforum.com
April 28th-29th, Tuesday-Wednesday
Deutsche GRI, Frankfurt
The Deutsche GRI will bring together the
leading international players and national deci-
sion-makers that are driving the real estate
business in Germany and Austria today. Like
all GRI meetings, the Deutsche GRI will have
no speakers and no panelists, just informal
discussions in small groups, where everyone
participates equally.
More info at: www.globalrealestate.org
April 22nd-24th, Wednesday-Thursday
ICSC European Conference, Barcelona,
Spain
The International Council of Shopping
Centres is dedicating the third day to of the
annual event to Retail Friday, bringing retail-
ers together with investors and developers.
More info at: www.immobilienforum.com
May 5th-6th, Tuesday-Thursday
Handelsblatt Real Estate Economy An-
nual Conference, Berlin
The 16th staging of the German-language
Handelsblatt conference brings together the
usual high-level speakers and delegates,
along with a sprinkiling of German politi-
cians, to focus on current German trends
and the immediate outlook for German
property investment.
More info at: www.immobilienforum.com
May 26th-28th, Tuesday-Thursday
Real Vienna, Vienna, Austria
The CEE/SEE-focused real estate and
investment fair is the annual platform for
business and networking for projects, invest-
ments and financing in central, eastern and
southeastern Europe. A comprehensive
program of side-events offers panel discus-
sions, with investor/project matchmaking
and a wide program of networking events.
More info at: www.realvienna.at
June 2nd-4th,Tuesday-Friday
Istanbul REstate, Istanbul, Turkey
Organised by Reed Exhibitions and the
Turkish Association of Real Estate Invest-
ment Companies GYODER, the trade fair is
expecting a total of over 200 exhibitors from
Europe, the Middle East and Africa, as well
as Russia and the CIS.
More info at: www.istanbulrestate.com
12

13
.......from page 11
ing forces with the IntReal fund management
platform of Warburg-Henderson.
The R-Quadrat fund aims to invest
up to €�600m in high-yielding residential
apartments in western German cities
with upwards of 100,000 inhabitants,
and in the eastern cities of Berlin,
Leipzig and Dresden. The fund targets a
10-year maturity, an annual yield of 5%
and a total IRR of 8% after expenses and
taxes. The fund will be administered by
IntReal, a fully-owned subsidiary of fund
manager Warburg-Henderson, which
offers a platform that is structured along
the lines of a German open-ended fund.
The IntReal platform recently kicked
off with its �€500m Europa Logistik fund
managed by long-term Warburg Henderson
partner HIH Hamburgische Im-
EVERY WORD COUNTS TRIPLE
EXPECT MORE
mobilien Handling.
Sascha Becker, CEO of R-Quadrat
Deutschland, summed up the pitch
for the new fund: “Investors can profit
from the marvellous buying opportunities
over the coming years and the
above-average appreciation potential
in the German residential sector in the
medium term. The German residential
market has been characterised by
a continuous reduction in new building
projects over the past few years. With
a growing number of households in the
coming years, demand will rise for lowcost
housing accommodation which the
fund aims to target, and which should
increase as the economy continues to
struggle.”
R-Quadrat Deutschland is a 100%
Drivers Jonas GmbH, Rahmhofstraße 2, 60313 Frankfurt am Main, Tel: +49 (69) 219 389 300, www.driversjonas.eu
www.refire-online.com
subsidiary of the Vienna-based R-Quadrat
Immobilien GmbH, which has �€550m
of assets under management in various
investment vehicles. R-Quadrat in turn
is owned 78% by Austria’s Metis Holding
AG and 22% by listed Frankfurt asset
management group Altira AG.
Austria/Results
Austria’s CA Immo takes 7%
property write-downs, sees
pre-tax plunge
The Vienna-listed CA Immo AG saw its
full-year figures for 2008 plunge into the
red after taking heavy write-downs on its
property holdings in Austria, German and
central and southern Europe.

The company, which last year acquired
Germany’s urban development
specialist Vivico AG, wrote down the
value of its holdings by €�285.6m, or
7%, turning 2007’s EBIT of a �€151.6m
profit into a loss for the full-year 2008
of �€152.6m. Pre-tax profits fell from
�€106.2m to a loss of €�295.4m. The company
said operational business was satisfactory,
with rental income up by 42%
to �€175.3m, profitable sales of assets of
more than �€300m, and an improvement
in operational cash flow. It secured financing
totalling �€850 since October
2008 for its key development projects,
and said it had no significant financial
liabilities due to mature until 2012.
Following the valuation write-downs,
CA Immo said that its gross yields (annualised
actual rents in relation to book
WHERE THE NEW EUROPE IS BUILT.
26–28 MAY 2009
MESSE WIEN, VIENNA
Supported by: Associated with
www.realvienna.com
14
values) now stood at about 6.0% for
Germany, 6.1% in Austria, and 7.3% in
eastern and southeastern Europe.
The good news from CA Immo is that
the company sold the recently-completed
27,000 sq.m. ATMOS office building
in Munich to German fund group Union
Investment Real Estate AG for �€100m.
The property will be allocated to the
buyer’s UniImmo Deutschland openended
fund. The anchor tenant in the
property is pharmaceutical firm Bristol-
Myers Squibb.
CA Immo also managed to secure
loan financing on its biggest development
project, the Tower185 building in
Frankfurt. A consortium led by Eurohypo,
and including DG Hyp, Deutsche
Hypo and Austria’s RZB, is lending
�€254m to fund construction of the landmark
building, which is already 60%
pre-let (to PriceWaterhouseCoopers,
for their European HQ) before construction
starts. The 100,000 sq.m. property
forms the entrance to Frankfurt’s Europaviertel
district, near the downtown
banking centre, currently under development
by CA Immo subsidiary Vivico.
It is due for completion in 2011.
CA Immo has expanded rapidly since
entering the German market two years
ago, and now has 60% of its total property
assets of €�3.8bn in Germany, including
the incorporated figures for Vivico.
In the short-term, the company’s focus
will be on its main western German urban
development projects, including the
Europaviertel in Frankfurt and the Arnulfpark
in Munich.
Germany/Listed Companies
Fortress replaces Drescher
as boss of GAGFAH
Listed German housing group GAGFAH,
which is controlled by US private equity
investor Fortress Investments, said this
week that CEO Burkhard Drescher will
leave the company when his contract

15
runs out in July of this year. He will be replaced
by William Joseph Brennan, who
joined Fortress only in September last year,
as CEO of GAGFAH and several of its key
operating subsidiaries. Brennan has been
the company’s chief operating officer since
January this year.
GAGFAH is the largest listed residential
property owner and manager in Germany,
with over 175,000 apartments.
A report in the weekend edition of the
Rheinische Post suggested that Mr. Drescher,
a former mayor of the Ruhr city
of Oberhausen, is leaving at the termination
of his contract due to “irreconcilable
differences of opinion” with
majority owner Fortress, in particular
concerning required quality standards
in the company’s housing stock and the
company’s future business strategy.
The Social Democratic Mr Drescher
surprised many in 2006 when he moved
from politics to join GAGFAH in 2006,
while parent company Fortress was being
derided as one of the “arch-locusts”
by left-leaning politicians at the time.
However, he convinced sceptics by
promising them that, “You should never
be allowed to forget that housing, the intimate
living space for humans, always
has a social dimension.” Fortress had
bought the GAGFAH group in 2004 for
€�3.5bn from the German state pension
insurance fund, the Bundesversicherungsanstalt
für Angestellte, which
needed the proceeds to top up its reserves.
The deal was opposed by many
politicians and tenants’ associations at
the time.
Speaking at a conference last summer
attended by REFIRE, Mr Drescher
still cut an optimistic figure, saying
“Current market turbulence arising out
of the US property and credit crisis will
in no way endanger either our business
or our plans for growth and expansion.”
Sources close to GAGFAH and tenants
of its apartment buildings are now
widely suggesting that GAGFAH has cut
back drastically on its plans to modernise
and maintain its properties, and is
pressing for further privatisations to tenants,
in order to meet demanding yield
targets from its US parent.
�������������������������������������������������������������������������
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www.refire-online.com
Clearly thing have gone downhill
since then. Sources at the Rhein-Ruhr
newspaper group WAZ suggest that
GAGFAH has dramatically cut back on
its maintenance obligations on many of
its properties, investing �€8.00 per sq.m.
rather than the �€12.00 necessary to
keep pace with competitors. Last year’s
controversial sale of 95,000 apartments
by state-owned LEG North-Rhine
Westphalia to Goldman Sachs’ Whitehall
Funds specified a minimum annual
maintenance expenditure of �€12.50 per
sq.m. as a condition of the sale.
Germany/Privatisation
Eight bidders for Berlin Immobilien
Holding portfolio
We have reported in the past on Berlin’s
efforts to auction off its extensive property
holdings bundled into its holding
entity Berlin Immobilien Holding (BIH).
This time it looks like real progress is being
made in finally finding a buyer for the
city’s hotch-potch of diverse assets, as-
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sembled involuntarily as a legacy from an
earlier era. Should the sale go ahead, it
would likely be the largest single transaction
in Germany this year.
The mixed portfolio consists of 4.8m
sq.m. of lettable space, spread over 595
individual properties including nearly
40,000 apartments, of which 13,600 are
in Berlin, about 1500 retail outlets, and
1200 other properties including nursing
homes, leisure and logistical units, and
sixteen properties outside of Germany.
Annual rental income on the properties
amounts to €�425m per annum.
Twelve strong expressions of interest
had been received by January, from
domestic and international investment
groups. According to spokesman Matthias
Kolbeck, BIH has now whittled
this down to eight ‘indicative offers’ for
the portfolio, which are a form of forerunner
offer to the final binding offers in
the auction process, being handled by
GPR 250 Europe
GPR 250 Germany
Swiss bank UBS. The properties are
largely held in 29 closed-end property
funds, a legacy of their previous owner
Bankgesellschaft Berlin’s voracious
but indiscriminate appetite for property
which helped to drive it into bankruptcy.
The assets were saved by the city of
Berlin in the year 2000 by offering extensive
guarantees to fund shareholders
to re-buy shares in the funds at a fair
price, which led to years of legal disputes.
Any buyer would be taking on
the liability of dealing with and abiding
by guarantees to minority partners in
the funds which contain the assets, in
which Berlin holds an average of 64% of
the relevant shares. It’s a complex construction,
but signs from Berlin are that
this time, despite the tough financing
climate, it really does wish to conclude
the deal, and end what has been a long
and messy chapter in city administration
and real estate ownership.
GRAPH-3
Total Return Performance GPR 250 Index (��
Graph of Total Return Performance of Europe and Germany in �€� currency over the past twelve months
REFIRE charts courtesy of GPR
Page 1
Germany/Residential
AIM’s Speymill Deutsche
Immobilien sees residential
yields holding firm at 6.5%
16
With all the brutal write-downs coming
thick and fast in the commercial property
sector, the German residential sector
is clearly where the (relatively) positive
news is coming from for investors.
Speymill Deutsche Immobilien Company
(SDIC), the AIM-listed pan-German residential
property company, released its
interim results this week, and they underline
the differences between the two
sectors of the market.
Speymill owns nearly 27,000 apartments
throughout Germany, many of
which are undergoing renovation. The
company said that property values remained
largely stable in the period,
though it saw a slight decrease in the
portfolio value of 0.7% to �€1.482 million,
Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Source: Global Property Research, 2009
150
125
100
75
50
25
0

17
equating to a 6.5% valuation yield on
current net rents as of 31st December
2008. Net asset value was down 3% to
�€1.03 per share using the EPRA valuation,
but down 28% to �€0.89 per share
under the IFRS accounting method due
to an interest rate swaps markdown of
�€102m, which has no cash impact or effect
on the company’s debt covenants.
The loan-to-value ratio including
cash stood at 74.2% at year-end. The
company has no refinancing in the near
future, with an average debt maturity of
5.4 years, and the earliest debt due for
repayment in late 2013. The company
said that all debt is fully hedged at an
average fixed interest rate of 4.72%.
There was a funds from operations
(FFO) loss of €�335,000 due to a higher
vacancy level as a result of the ongoing
refurbishment, which was 66% completed
by end-December and should be
finalised by July this year. Total cash
GPR 250 Europe
GPR 250 Germany
stood at €�62.9m at end-December, of
which �€38.2m is uncommitted.
Speymill chairman Raymond Apsey
said of the interim results, “We consider
German residential property to be
one of the most favourably positioned
sectors for 2009, and the German residential
property market should hold its
value well over the coming months. Our
valuations should also benefit from the
completion of our refurbishment programme
and the ensuing reduction in
vacancies.”
Germany/Open-ended Funds
DEGI sees funds inflows
holding stable, plans new
Europe-wide acquisitions
Frankfurt-based DEGI, the German fund
manager now part of Aberdeen Property
Investors, said it plans a number of
GRAPH-1
Total Return Performance GPR 250 Index (��
Page 1
www.refire-online.com
new acquisitions in markets now offering
attractive value, and said that it had invested
a total of �1.7bn for its public property
funds in 2008.
DEGI said it anticipated further positive
inflows to its funds, despite the
freezing of two of its public funds along
with ten other funds in Germany last
October. One of the funds, DEGI International,
has since re-opened, while
DEGI said it was confident that its second
public fund, DEGI Europa, would
re-open before the scheduled date of
October 2009. DEGI’s CEO Bärbel
Schomberg said at the press conference
that, “We are in a good position to
take advantage of new investment opportunities
in the current markets, which
are beginning to offer attractive values.”
Target countries include the UK, France
and Germany, among others.
Despite the current turbulence in the
markets, the one-year performance of
Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09
Source: Global Property Research, 2009
Graph of the total return performance of Europe and Germany in �Euro currency over the past five years
REFIRE charts courtesy of GPR, Global Property Research
400
350
300
250
200
150
100
50
0

DEGI’s funds is holding up well, she said.
As at 28 February 2009 (previous year’s
performance in brackets) DEGI Europa
was yielding 4.4 % (4.7 %), while DEGI
International was at 4.6 % (4.9
%). Of its institutional funds,
DEGI Global Business was 5.3
% (5.4 %), DEGI German Business
was 5.0 % (5.0 %) and
DEGI Europe Retail was 5.0 %
(4.5 %).
The company had expanded its letting
base strongly over the previous year, totalling
1.62m sq.m. by end-February, up
from 1.16m sq.m. the previous year, with
about 1,800 tenancy agreements across
its properties, compared to 1,400 in
2007. Overall, said Ms. Schomberg, DE-
GI’s funds, with returns of between 4.4%
and 5.3%, performed substantially better
than other investment fund categories
and fixed-interest securities, such as
German government bonds (which are
currently returning only 2.95%).
Ms. Schomberg said that DEGI’s
low-risk core policy of investing in fully-let
high-quality
properties with low
levels of debt was
appealing to safety-consciousinvestors.
“In times of
uncertainty, reliable
forms of investment tend to do particularly
well. People are looking for consistent
returns with transparent, comprehensible
forms of investment. This is
what our funds offer.” She added that,
“Our funds will be affected by the economic
downturn over the coming year.
However, we still anticipate returns to
be above the level of fixed interest comparable
investments, thanks to our longterm
tenancy agreements in place.”
Exclusively for commercial properties
Marketplace. Know-How. Europe.
18
Pressed by reporters on the thorny
subject of likely asset write-downs in its
DEGI Europa fund, board member Malcolm
Morgan said any downward revaluations
would likely be between zero
and 10%, without giving further details.
(Other open-ended fund managers in
Germany are likewise downplaying any
likely negative revisions, such as SEB
Immoinvest announcing at most “moderate
discounts”, and Deutsche Bank
subsidiary RREEF expecting “no great
revisions” to its property valuations.)
Meanwhile, DEGI head of research
Dr. Thomas Beyerle said at the press
conference that he viewed the current financial
crisis as a “healthy return to normality
on the real estate markets”. While
DEGI research showed that total investment
volume on the German market fell
to €�25.4m in 2008 from �€61.3m in 2008,
a fall of 58.6%, last year’s volume was

19
still higher than the years 2000-2004 before
the onset of the market boom, while
the years 2005-2007 were exceptional
by any historical standards, he said.
He said he expects a recovery in the
German office market with rising rents
from 2011 onwards, following a period
throughout this year of falling rents and
rising vacancy rates.
Europe/Funds
Natixis launches third Captiva
mixed fund, focus on
Germany, France and Italy
French property investment
group Natixis Capital Partners
said last week that it
had raised �€420m � from European
institutional investors
by the launch of its third real
estate fund Captiva Capital
Partners III.
The new fund is using three specific
investment platforms to invest primarily
in Germany, France, and Italy. The first,
agapia, will focus on German healthcare
properties, mainly medical clinics. The
axiom platform will invest in German
mixed-use and industrial properties, and
the third, Mercurio, will invest in Italian
retail warehouses in partnership with the
local CDS Group. The fund has already
invested �€165m � of equity to buy assets
worth €� �360m.
According to Phil Holland, CFO at
Natixis with whom REFIRE spoke during
the week, the emphasis will be on
opportunistic direct sale-and-leaseback
transactions, as well as buying and restructuring
industrial real estate assets.
Natixis’ previous Captiva funds, I and
II, were also similarly directed. Captiva
I focused on Italian sale-and-leaseback
and portfolio restructuring, while Captiva
II, among other investments formed and
took public Alstria Office REIT AG, the
Frankfurt-listed property manager which
subsequently became Germany’s first
REIT in 2007 (there are still only two German
REITs).
The new fund has also got a French
team in Paris managing the acquisition
and leaseback of an office campus in the
La Défense district from German pharmaceuticals
and healthcare company
Bayer.
John van Oost, managing partner at
Natixis Capital Partners, said “Our strategy
since foundation in 2001 has focused
on executing corporate transactions, including
structured sale-and-leasebacks
and pre-let developments. As the global
credit crisis has significantly reduced
access to capital, corporations
and governments
are increasingly
considering their real
estate assets as an instrument
to generate
liquidity. Whilst this is
particularly true in the
current environment, we see this trend
continuing in the longer term.”
Germany/Financing
Wave of refinancing imminent
among German listed
companies
A recent Bloomberg report on imminent
re-financings among Germany’s
listed property companies showed that
seven of the largest listed companies
had a debt burden of more than 65%.
Overall, the report highlighted that the
ten largest companies had short-term
liabilities of �€4.2bn, of which �€3.2bn
were held by just three companies – the
largest, IVG Immobilien, plus Patrizia
Immobilien and Vivacon AG, whose
debt amounted to over five times their
combined market value. The three companies’
market value has shrunk by over
83% in the past year.
Patrizia has the highest debt relative
to its size, at 80%. Of Patrizia’s loans
of �€1.3bn, over �€530m is due for repay-
www.refire-online.com
ment at the end of March, although the
company says it is confident of rolling
the loans over. Its largest lender is Hypo
Real Estate, itself in the process of nearnationalisation
and in receipt of over
�€100bn in government guarantees and
new credit. So far, lenders to the listed
companies have been extending loans
but demanding higher interest rates, as
they seek to avoid cashing in real estate
portfolios.
Germany/Listed Companies
Orco Property Group suspends
shares pending delayed
annual results
The Orco Property Group, the majority
shareholder in Orco Germany S.A, postponed
the release of its full-year 2008 results
last week and suspended trading in
its shares pending publication of the annual
results.
The company, listed on the Euronext
as well as in Prague, Budapest
and Warsaw, said in a statement that
it is also renewing its strategic options.
“In challenging real estate market and
credit conditions, the board of directors
of Orco Property Group has asked the
management team to pursue its in-depth
review of both operational and strategic
options”, it said. It expects to make a
further announcement this week.
Shares in Orco Property Group,
which has been a significant investor in
central European markets and through
its German subsidiary, in major Berlin
development and renovation projects,
have been hit by restrictive bank financing,
a fall in real estate prices in its
key markets, and the defection from the
group of several top managers, including
three vice-presidents. The shares
have lost more than 95% of their value
since the beginning of 2008. Reports
reaching REFIRE say that trading in
Warsaw and Prague in the company’s
shares may restart this week, but this
has not been confirmed.

.............................................................................................................................................................
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