Deutsche EuroShop | Company Presentation | 09/12

COMPANY
PRESENTATION

09.2012

09.2012 COMPANY PRESENTATION

COMPANY

Equity Story
 Deutsche EuroShop is Germany´s only public company that invests solely in
shopping centers.
 Shopping centers are attractive investments
because of
– continuously positive development of rents
– stable long term growth
– prime locations
– high quality standards
 Deutsche EuroShop does not seek short-term success, but rather long-term growth
and the resulting stable increase in the value of the portfolio.

2


COMPANY

At a Glance
 19 shopping centers on high street and in established locations –
15 in Germany, 2 in Poland and one each in Austria and Hungary

Lettable space approx. 905,000 sqm1) avg. lettable space
Retail shops approx. 2,3101) per DES-center:
inner city 37,850
Market value approx. €3.6 billion1) sqm est. Locations
Rents per year €244 million1) 100,270 sqm
Occupancy rate 99%

 2011 portfolio valuation: 5.92% net initial yield (EPRA) 1) 100%-view

 Professional center management by ECE, the European market leader in this industry

3


COMPANY

Key Figures
REVENUE EBIT NUMBER OF SHARES
€m €m mn
+19%1) +21%1) +11%1)
190.0 165,7
51.63 51.63
144,2 124.0
127,6 110,7
115,3 98,1 34.37 34.37 34.37
95,8 78,5

2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
1) 2006-2011, Compound Annual
FFO PER SHARE DIVIDEND PER SHARE NAV PER SHARE2) 2)
Growth Rate (CAGR)
since 2010: EPRA NAV
€ € €
+10%1) +1.2%1) +0.6%1)
1.61
1.38 1.40 1.35 1.10 1.10 27.65
27.43
26.91 26.63
1.12 26.37
1.05 1.05 1.05

2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
4


COMPANY

Lease System
5
rent
Participation
in sales
4
growth of retail
turnover-linked rent industry
3

2

1
CPI-linked minimum rent
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 years

Lease standards:
 10 years lease only
 no break-up option
 turnover-linked rents
 minimum rents are CPI-linked

5


COMPANY

Lease System
 avg. rent per sqm and year: €250
 avg. turnover per sqm and year: €4,700 (avg. German retail: €3,430)
 Rent-to-sales-ratio: 7-11%
 weighted maturity of rental contracts: 7.4 years

TURNOVER-LINKED RENT LIKE-FOR-LIKE REVENUE
€m
5% 190.0 4%
190

4% 165
3%
144,2
3% 140
2,8% 127,6
2,6%
2,4%115,3 2%
2.2%
2,0%
115
2% 92,9 95,8
1,8% 1,8%
1.7%
90
72,1 1%
1% 61,4
65

0% 40 0%
2004 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011

Revenue Rate of turnover-linked rent
avg. 2.2%
German inflation
avg. 1.7%
DES´like-for-like revenue
avg. 2.1% 6


COMPANY

Targets
 Long term net asset value enhancement
 Main focus on NAV and dividend
 “buy & hold”-strategy, Continuous growth
 Stable and attractive dividends
Dividend yield: currently 3.7%
 Investment-focus:
At least 75% Germany and up to 25% Europe
 Portfolio extension by 10% per year
– by acquisition of new shopping centers
– by increasing existing amounts of holdings
– by expansion of portfolio centers

7


SHOPPING CENTERS

Overview

8


SHOPPING CENTERS

Germany

A10 Center Main-Taunus-Zentrum Altmarkt-Galerie
Location Wildau/Berlin Sulzbach/Frankfurt Dresden
Investment 100% 52.0% 67.0%
Lettable space sqm 118,500 117,900 77,000
Parking 4,000 4,500 500
Number of shops approx. 200 approx. 170 approx. 200
Occupancy rate 100% 100% 93%
Catchment area approx. 1.2 m. inhabitants approx. 2.2 m. inhabitants approx. 1.0 m. inhabitants
Opening/refurbishm. 1996 / 2011 1964 / 2004 / 2011 2002 / 2011

9


SHOPPING CENTERS

Germany

Rhein-Neckar-Zentrum Allee-Center Billstedt-Center
Location Viernheim Magdeburg Hamburg
Investment 100% 50.0% 100%
Parking 3,800 1,300 1,500
Opening/refurbishm. 1972 / 2002 1998 / 2006 1969 / 1977 / 1996

10


SHOPPING CENTERS

Germany

Phoenix-Center Forum Allee-Center
Location Hamburg Wetzlar Hamm
Investment 50.0% 65.0% 100%
Parking 1,600 1,700 1,250
Opening/refurbishm. 2004 2005 1992 / 2003 / 2009

11


SHOPPING CENTERS

Germany

City-Galerie Rathaus-Center City-Arkaden
Location Wolfsburg Dessau Wuppertal
Investment 100% 100% 100%
Parking 800 850 650
Opening/refurbishm. 2001 / 2006 1995 2001 / 2004

12


SHOPPING CENTERS

Germany

City-Point Stadt-Galerie Stadt-Galerie
Location Kassel Passau Hameln
Investment 100% 75.0% 100%
Parking 220 500 500
Opening/refurbishm. 2002 / 2009 2008 2008

13


SHOPPING CENTERS

Europe

Galeria Bałtycka City Arkaden Árkád
Location Gdansk, Poland Klagenfurt, Austria Pécs, Hungary
Investment 74.0% 50.0% 50.0%
Parking 1.050 880 880
Opening/refurbishm. 2007 2006 2004

14


SHOPPING CENTERS

Europe

Galeria Dominikanska
Location Wroclaw, Poland
Investment 33.3%
Lettable space sqm 32,900
Parking 900
Number of shops approx. 100
Occupancy rate 99%
Catchment area approx. 1.0 m. inhabitants
Opening/refurbishm. 2001

15


SHOPPING CENTERS

Our Tenants1)

1) selection of our well known tenants

16


SHOPPING CENTERS

Tenants Structure Top 10 Tenants1)

Low level of
dependence on
the top 10 tenants

Metro Group 6.0%

Douglas Group 4.4%

H&M 2.7%

New Yorker 2.3%
1) in % of total rents as at 31 Dec 2011
Deichmann 1.9%

Peek & Cloppenburg 1.9%

C&A 1.7%

REWE 1.6%

Inditex Group 1.4%

Esprit 1.4% Other tenants

Total 25.3% Total 74.7%

17


SHOPPING CENTERS

Maturity Distribution of Rental Contracts1)

 Long-term
contracts
guarantee rental
2012: 3% income
2017 et sqq:
2013: 2%  Weighted
69%
maturity
2014: 8%
7.4 years

2015: 8%
1) as % of rental income as at
31 December 2011

2016: 10%

18


SHOPPING CENTERS

Sector and Retailer Mix1)
non-food/
electronics Balanced sector
21% department
stores and retailer
11% diversification

food
7%
health &
beauty
6%
catering
4% inter-/national retailers
fashion services 47% 1) as % of rental income as at
50% 1% 31 December 2011

local entrepreneurs
29%

regional retail chains
24%
19


FINANCIALS

Key Figures H1 2012

€ million 01.01.-30.06.2012 01.01.-30.06.2011 Change
Revenue 104.5 91.1 15%
Net operating income 93.6 81.5 15%
EBIT 91.2 78.4 16%
Net finance costs -42.1 -38.8 -9%
Valuation result -1.9 -0.8
EBT 47.2 38.8 22%
Consolidated profit 32.6 27.2 20%
FFO per share 0.90 0.74 22%
EPRA Earnings per share 0.66 0.54 22%

€ million 30.06.2012 30.06.2011 31.12.2011
Total equity 1,434.6 1,502.7 1,473.1
Interest bearing debt 1,515.5 1,362.1 1,472.1
Other debt (incl. Deferred taxes) 293.8 145.4 279.9
Total assets 3,243.9 3,010.2 3,225.1
Equity ratio 44.2% 49.9% 45.7%
LTV ratio 48% 47% 47%
20


FINANCIALS

Loan Structure1)
Principle amounts Share of avg.
Interest lockin Duration (€ thousand) total loan interest rate
Up to 1 year 192,928 12.8% 3.26%
1 to 5 years 3.22 424,855 28.2% 4.85%
5 to 10 years 8.36 698,860 46.5% 4.33%
Over 10 years 12.48 187,623 12.5% 4.15%
Total 20121) 6.84 1,504,268 100.0% 4.32%

 Banks: 1) as of 30 June 2012
22 German and 6,00 8
1 Austrian 5.50 7
5,50 5.36 5.33 6
 Weighted maturity 5.27
5.03 5
of fixed interest periods 5,00 4
6.8 years 4.59 3
4,50 4.32 2
1
4,00 01)
2006 2007 2008 2009 2010 20112012 yrs
%
avg. Interest rate weighted maturities

21


FINANCIALS

Refinancings of 20121)
in € thousand new old +/-
Principle amounts 104,322 104,320 +0,002
Duration 10.0yrs 2.0yrs +8.0yrs
Interest rate 3.02% 5.83% -2.81%

Maturities until 20161)
end of fixed interest regular
periods respectively avg. interest redemption total
in € thousand expiring loans rate payments maturities 1) as of 30 June 2012

2012 17,100 5.82% 11,690 28,790
2013 177,900 3.75% 19,770 197,670
2014 12,000 5.07% 20,850 32,850
2015 78,600 5.06% 19,450 98,050
2016 170,700 5.43% 16,160 186,860

22


FINANCIALS

Valuation1) – Investment Properties 2011
Discounted cash-flow method 2010 2011 actual

expected yield of 10-year Macro-location 40.0%
2) Competitive environment 12.8%
German federal bonds 4.44% 4.34% 1.54%
average applied risk premiums 2.21% 2.34% Micro-location 19.2%
average discount rate 6.65% 6.68% Property quality 8.0%
average property operating Tenants risk 20.0%
and management costs 11.70% 11.80%
net initial yield (EPRA) 5.89% 5.92%

6,68 6,80 6,65 6,68
6,56 6,54
6,44 6,38

5,82 5,89 5,92
5,64
5,48 5,46 5,39 5,40 1) External appraisers:
Feri Research and GfK GeoMarketing
2) Status: 20 September 2012
2004 2005 2006 2007 2008 2009 2010 2011
discount rate net initial yield

Sensitivity analysis
in € thousand Basis change of -25bps change of +25bps
Rent increase rates 1.70% -106,300 111,700
Discount rate 6.68% 98,100 -93,300
Net initial yield 5.92% 138,000 -126,800
Cost ratio 11.80% 9,000 -9,000

23


FINANCIALS

Forecast
REVENUE
€m
207-211
190.0 178-182
127,6 144,2
115,3
95,8 174-178
+20% +11% +13% +32% +10% +2%
CAGR1): +19%

EBIT
€m
177-181
165,7 151-155
110,7 124.0
98,1 147-151
77,2
+27% +13% +12% +34% +8% +3%
CAGR1): +21%
1) Compound Annual Growth Rate
EBT WITHOUT VALUATION (CAGR) 2007-2011
2) incl. at-equity consolidation scenario
€m
94-97 98-101 3) at-equity consolidation
86.5 4) incl. dilution
54,9 63,9
48,7
38,9
+25% +13% +16% +36% +10% +4%
1 2 3 4 5 6 7
CAGR1): +22%

FFO PER SHARE
€m
1.70-1.74 1.76-1.80
1,38 1.40 1.40 1,61
1,12
+23% +1% +0% +15% +7% +3%
CAGR1)4): +9%
20122) 20133)
2007 2008 2009 2010 2011 2012 2013
24


SHOPPING CENTER SHARES

Dividend & Performance

Dividend1) Share price2)
1,20 28.08 28.98 29.60
30,00
24.30 24.80
1,15 23.73 23.50 23.67
1,10 1.10
25,00
1,10 19.26
16.88 1,05 1,05 1,05 1,05 20,00
1,05
1,00 15,00
1,00
0,96 0,96 0,96
0,95 10,00

0,90 5,00 1) respectively paid for the previous
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2)
financial year
2012: as of 20 September 2012
3) as of 31 Dec. 2011
4) German government bonds index
PERFORMANCE3)
DES DAX EPRA REX4)
1 year (2011) -14.4% -14.7%
3 years +16.4% = +5.2% p.a. +7.0% p.a.

5 years +9.1% = +1.8% p.a. -2.2% p.a.

Since IPO (2001) +104.8%= +6.7% p.a. -0.8% p.a. +4.7% p.a. +5.9% p.a. 25



Shareholder Structure1)

 9,900
shareholders
 Free float 85.0%

Otto Family
Private 15.0% UK 9%
Investors 1) Status: 1 September 2012
29.7% BlackRock 3.0% FR 7%

Hertie Foundation 3.0% Germany 61% US 5%
NL 4%
BE 3%
NO 3%
Institutional Investors CH 2%
49.3% Other 6%

26



Analysts‘ Consensus1)
avg. / in € 2012 2013
EBIT (€ million) 181.6 182.5 Status: 21 September 2012
FFO per share 1.72 1.81  25 analysts: one of the
EPS 1.99 1.97 best covered real estate
Dividend 1.14 1.20 companies in Europe2)
Price target 29.51

Sell Underperform Neutral Outperform Buy

 ING  ABN Amro  Baader Bank  Hamburger  Bank of America
 Credit Suisse  Bankhaus Lampe Sparkasse Merrill Lynch
 Natixis  Close Brothers  HSBC  Berenberg Bank
 Petercam Bank Seydler  Kempen & Co  Metzler
 Commerzbank  Kepler Capital  M.M. Warburg 1) aggregated by DES
 Deutsche Bank Markets 2) according to EPRA survey 3/2012
 DZ Bank  Oddo
 Equinet  Rabobank
 Green Street  Societe Generale
Advisors  UBS

100%

0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12
positive neutral negative
27


SHOPPING CENTER SHARE

10 Reasons to Invest
1. The only public company in Germany to invest solely
in shopping centers
2. Prime locations
3. Proven, conservative strategy
4. Stable cash flow with long term visibility
5. Shareholder-friendly dividend policy
6. Experienced management team
7. Excellent track record
8. Centers almost 100% let
9. Inflation-protected rental agreements
10.Solidity combined with growth potential

28


APPENDIX

Key Data of the Share

Listed since 02.01.2001
Nominal capital €51,631,400.00
Outstanding shares 51,631,400
Class of shares Registered shares
1)
Dividend 2011 €1.10
52W High €31.40
52W Low €22.91
Share price (20.09.2012) €29.60
Market capitalisation €1.53 billion
1) paid on 22.June 2012
avg. turnover per day last 12 months (XETRA) 136,700 shares
MDAX, EPRA, GPR, MSCI Small Cap,
Indices
EURO STOXX, STOXX Europe 600
Prime Standard
Official market
Frankfurt and XETRA
Berlin-Bremen, Dusseldorf, Hamburg,
OTC market
Hanover, Munich and Stuttgart
ISIN DE 000 748 020 4
Ticker DEQ, Reuters: DEQGn.DE
Market maker Close Brothers Seydler
29


APPENDIX

Retail turnover H1 2012*
% change rent-to-sales % of % of
Retail sector in 2011 ratio in % sales space
Department stores -0.1 6.0 8.7 15.6
Food +2.3 6.4 9.8 6.3
Fashion textiles -0.8 11.2 27.0 34.4
Shoes & leather goods -1.3 13.4 5.2 6.5
Sports +6.3 8.0 4.3 4.8
Health & Beauty +3.5 7.1 10.6 5.7
General Retail -1.2 10.0 10.9 11.7 * German centers on a like-for-like basis

Electronics -1.8 2.8 15.0 9.4
Services +1.4 4.8 4.2 1.5
Food catering +1.8 13.4 4.2 4.1
Total +0.3 8.2 100.0 100.0

30


APPENDIX

Purchasing Power Maps

31


APPENDIX

Our partner: ECE

 ECE develops, plans, builds, leases and manages large commercial real estate in the
sectors shopping, office, industries since 1965
 originally ECE was an abbreviation for the German word
Einkaufscenterentwicklung (Shopping center development)
 100% privately owned by the Otto family
 active in 16 European countries
 European market leader in the shopping center business
 Assets under management:
– 183 shopping centers
– 6 million sqm overall sales area
– approx.17,500 retail businesses
– €19 billion in annual sales

MANY INVESTORS RELY ON ECE:

32


APPENDIX

Environment
 Climate protection is one of the most important issues for Deutsche EuroShop. We believe
that sustainability and profitability, the shopping experience and environmental awareness
are not opposing forces. Long-term thinking is part of our strategy. This includes playing our
part in environmental protection.
 In 2011, all our German shopping centers had contracts with suppliers
that use regenerative energy sources such as hydroelectric power for
their electricity needs. The “EnergieVision” organisation certified the
green electricity for our centers in Germany with the renowned
“ok-power” accreditation in 2011. We plan to switch the centers in
other countries to green electricity as well in the next few years.
 The German centers used a total of around 59.4 million kWh of green electricity in 2011.
This represented 100% of the electricity requirements in these shopping centers, which also
used 1.1 kWh less than in the previous year. As a result, based on conservative
calculations this meant a reduction of around 23,400 tonnes in carbon dioxide emissions –
this equates to the annual CO2 emissions of around 1,060 two-person households. We
have already reduced the energy consumption of our shopping centers by using heat
exchangers and energy-saving light bulbs.
 Deutsche EuroShop, through its shopping centers, also supports a range of activities at
local and regional level in the areas of ecology, society and economy.

33


APPENDIX

Financial Calendar
2012
UniCredit Kepler
26.09.
German Investment Conference, Munich

27.09. Baader Investment Conference, Munich

Société Générale Pan-European Real Estate
04.10.
Conference, London

09.10. ExpoREAL, Munich

17.10. Roadshow Brussels, ING

17.10. Roadshow Zurich, Deutsche Bank

18.10. Roadshow Geneva, Deutsche Bank

13.11. Nine-month report 2012

15.11. Roadshow Paris, Metzler

20.11. Roadshow Stockholm/Helsinki, Berenberg

Bankhaus Lampe Retail Conference,
04.12.
Frankfurt

34


APPENDIX

Contact
Deutsche EuroShop AG
Investor & Public Relations
Oderfelder Straße 23
20149 Hamburg

Tel. +49 (40) 41 35 79 - 20 / -22
Fax +49 (40) 41 35 79 – 29 Claus-Matthias Böge
Chief Executive Officer
E-Mail: ir@deutsche-euroshop.com
Web: www.deutsche-euroshop.com

ir-mall.com
facebook.com/euroshop
flickr.com/desag Olaf G. Borkers
Chief Financial Officer
slideshare.net/desag This presentation is a FSC certified product.

twitter.com/des_ag
youtube.com/DeutscheEuroShop

Important Notice: Forward-Looking Statements

Statements in this presentation relating to future status or circumstances, including Patrick Kiss
statements regarding management’s plans and objectives for future operations, sales and Head of Investor & Public Relations
earnings figures, are forward-looking statements of goals and expectations based on
estimates, assumptions and the anticipated effects of future events on current and
developing circumstances and do not necessarily predict future results.

Many factors could cause the actual results to be materiallydifferent from those that may
be expressed or implied bysuch statements.

Deutsche EuroShop does not intend to update these forward-looking statements and does
not assume any obligation to do so. Nicolas Lissner
Manager Investor & Public Relations
35

Deutsche EuroShop | Company Presentation | 09/12

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