Deutsche EuroShop | Financial Report 2024
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Deutsche EuroShop | Financial Report 2024
![Independent auditor’s
report
To Deutsche EuroShop AG, Hamburg
REPORT ON THE AUDIT OF THE CON-
SOLIDATED FINANCIAL STATEMENTS
AND OF THE COMBINED MANAGEMENT
REPORT
AUDIT OPINIONS
We have audited the consolidated financial statements of
Deutsche EuroShop AG, Hamburg, and its subsidiaries (the
Group), which comprise the consolidated statement of
financial position as of 31 December 2024, and the consol-
idated statement of comprehensive income, consolidated
income statement, consolidated statement of changes in
equity and consolidated statement of cash flows for the
financial year from 1 January to 31 December 2024, and
notes to the consolidated financial statements, including a
summary of significant accounting policies. In addition, we
have audited the combined management report of Deutsche
EuroShop AG, Hamburg, for the financial year from 1 Jan-
uary to 31 December 2024. In accordance with the German
legal requirements, we have not audited the content of the
Declaration on Corporate Governance published on the
Company’s website (§§ 289f, 315d HGB), which is referred
to in the section of the combined management report with
the same title, or the reporting in the “Risk report” section
in the “Principles governing the risk management system
and internal control system” subsection of the combined
management report.
In our opinion, on the basis of the knowledge obtained in
the audit,
the accompanying consolidated financial statements
comply, in all material respects, with the IFRS
Accounting Standards (hereinafter “IFRS Accounting
Standards”) issued by the International Accounting
Standards Board (IASB) as adopted by the EU, and the
additional requirements of German commercial law
pursuant to § 315e (1) HGB [Handelsgesetzbuch: Ger-
man Commercial Code] and, in compliance with these
requirements, give a true and fair view of the assets,
liabilities and financial position of the Group as at
31 December 2024, and of its financial performance
for the financial year from 1 January to 31 Decem-
ber 2024, and
the accompanying combined management report as a
whole provides an appropriate view of the Group’s
position. In all material respects, this combined man-
agement report is consistent with the consolidated
financial statements, complies with German legal
requirements and appropriately presents the oppor-
tunities and risks of future development. Our opinion
on the combined management report does not cover
the content of the unaudited parts of the combined
management report listed above.
Pursuant to § 322 (3) sentence 1 HGB (German Commercial
Code), we declare that our audit has not led to any reser-
vations relating to the legal compliance of the consolidated
financial statements and of the combined management
report.
BASIS FOR THE AUDIT OPINIONS
We conducted our audit of the consolidated financial state-
ments and of the combined management report in accord-
ance with § 317 HGB and the EU Audit Regulation
(No. 537/2014, referred to subsequently as “EU Audit Reg-
ulation”) and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by
the Institut der Wirtschaftsprüfer [Institute of Public Audi-
tors in Germany] (IDW). Our responsibilities under those
requirements and principles are further described in the
“Auditor’s responsibilities for the audit of the consolidated
financial statements and of the combined management
report” section of our auditor’s report. We are independent
of the group entities in accordance with the requirements
of European law and German commercial and professional
law, and we have fulfilled our other German professional
responsibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) letter (f) of the EU
Audit Regulation, we declare that we have not provided
non-audit services prohibited under Article 5 (1) of the EU
Audit Regulation.We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our audit opinions on the consolidated financial statements
and on the combined management report.
REFERENCE TO ANOTHER MATTER
The consolidated financial statements and combined man-
agement report of Deutsche EuroShop AG, Hamburg, for
the previous financial year ended 31 December 2023 were
audited by another auditor who issued unmodified audit
opinions on these consolidated financial statements and
combined management report dated 12 April 2024.
Information and service
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![The Supervisory Board is responsible for overseeing the
Group’s financial reporting process for the preparation of
the consolidated financial statements and the combined
management report.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF
THE CONSOLIDATED FINANCIAL STATEMENTS AND
THE COMBINED MANAGEMENT REPORT
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and whether the combined management report as
a whole provides an appropriate view of the Group’s posi-
tion and, in all material respects, is consistent with the con-
solidated financial statements and the knowledge obtained
in the audit, complies with the German legal requirements
and appropriately presents the opportunities and risks of
future development, as well as to issue an auditor’s report
that includes our opinions on the consolidated financial
statements and on the combined management report.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
§ 317 HGB and the EU Audit Regulation and in compliance
with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut derWirtschaft-
sprüfer (IDW) and supplementary compliance with the ISAs
will always detect a material misstatement. Misstatements
can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of these consolidated financial statements and
this combined management report.
We exercise professional judgment and maintain profes-
sional skepticism throughout the audit. We also:
identify and assess the risks of material misstatement
of the consolidated financial statements and of the
combined management report, whether due to fraud
or error, design and perform audit procedures respon-
sive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our
audit opinions. The risk of not detecting a material mis-
statement resulting from fraud is higher than the risk
of not detecting a material misstatement resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the over-
ride of internal controls.
obtain an understanding of internal controls relevant
to the audit of the combined management report and
of arrangements and measures relevant to the audit
of the combined management report in order to design
audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an audit
opinion on the effectiveness of the internal controls of
the Group or these arrangements and measures.
evaluate the appropriateness of accounting policies
used by the executive director and the reasonableness
of estimates made by the executive director and related
disclosures.
conclude on the appropriateness of the executive
director’s use of the going concern basis of account-
ing and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we
are required to draw attention in the auditor’s report
to the related disclosures in the consolidated financial
statements and in the combined management report
or, if such disclosures are inadequate, to modify our
respective audit opinions. Our conclusions are based
on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions
may cause the Group to cease to be able to continue
as a going concern.
evaluate the overall presentation, structure and con-
tent of the consolidated financial statements, includ-
ing the disclosures, and whether the consolidated
financial statements present the underlying transac-
tions and events in a manner that the consolidated
financial statements give a true and fair view of the
assets, liabilities, financial position and financial per-
formance of the Group in compliance with IFRS
Accounting Standards as adopted by the EU and the
additional requirements of German commercial law
pursuant to § 315e (1) HGB.
plan and perform the audit of the consolidated finan-
cial statements to obtain sufficient appropriate audit
evidence regarding the financial information of the
entities or business areas within the Group to provide
a basis for our audit opinions on the consolidated
financial statements and on the combined manage-
ment report. We are responsible for the direction,
supervision and review of the audit activities per-
formed for the purpose of the audit of the consoli-
dated financial statements. We remain solely respon-
sible for our audit opinions.
evaluate the consistency of the combined management
report with the consolidated financial statements, its
conformity with [German] law, and the view of the
Group’s position it provides.
perform audit procedures on the prospective informa-
tion presented by the executive director in the com-
bined management report. On the basis of sufficient
appropriate audit evidence we evaluate, in particular,
the significant assumptions used by the executive
director as a basis for the prospective information, and
evaluate the proper derivation of the prospective infor-
mation from these assumptions. We do not express a
separate opinion on the prospective information and
on the assumptions used as a basis. There is a sub-
stantial unavoidable risk that future events will differ
materially from the prospective information.
the
MALL
s
life
Deutsche EuroShop
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Deutsche EuroShop | Financial Report 2024
- 2. Key figures in € million / per share in € 2024 2023 +/- Revenue 271.4 273.3 -1% Net operating income (NOI) 217.4 214.9 1% EBIT 216.3 212.7 2% Net finance costs (excluding measurement gains/losses1 ) -51.1 -43.2 -18% EBT (excluding measurement gains/losses1 ) 165.2 169.5 -3% Measurement gains/losses1 -14.6 -209.1 93% Consolidated profit 123.5 -38.3 - FFO per share 2.06 2.28 -10% Earnings per share 1.62 -0.51 - EPRA Earnings per share 2.10 2.29 -8% Equity2 2,145.7 2,379.0 -10% Liabilities 2,218.7 2,081.2 7% Total assets 4,364.4 4,460.2 -2% Equity ratio in %2 49.2 53.3 LTV ratio in % 39.2 33.2 EPRA LTV in %3 41.1 34.8 Cash and cash equivalents 212.4 336.1 -37% Net tangible assets (EPRA) 2,198.0 2,414.4 -9% Net tangible assets per share (EPRA) 29.02 31.58 -8% Dividend per share 1.004 2.60 - 1 Including the share attributable to equity-accounted joint ventures and associates 2 Including non-controlling interests 3 EPRA LTV: Ratio of net debt (financial liabilities and lease liabilities less cash and cash equivalents) to real estate assets (investment properties, owner-occupied prop- erties, intangible assets and other assets (net)). Net debt and real estate assets are calculated on the basis of the Group’s share in the subsidiaries and joint ventures. 4 Proposal REVENUE IN € MILLION 2022 2023 2024 212.8 273.3 271.4 EBIT IN € MILLION 2022 2023 2024 152.4 212.7 216.3 EBT (EXCLUDING MEAS- UREMENT GAINS/LOSSES) IN € MILLION 2022 2023 2024 130.2 169.5 165.2 FFO PER SHARE IN € 2022 2023 2024 2.11 2.28 2.06 Deutsche EuroShop at a glance
- 3. Deutsche EuroShop at a glance U2 Letter to the shareholders 4 The Executive Board 7 The Super visory Board 8 Report of the Supervisory Board 12 Declaration on Corporate Governance 2024 17 Investor Relations 24 The shopping center share 24 Key share figures in the ten-year overview 30 Financial calendar 31 Combined management report 32 Basic information about the Group 34 Economic review 36 Report on events after the reporting date 50 Outlook 50 Risk report 52 Opportunity report 59 Report of the Executive Board on relations with affiliated companies 60 Acquisition reporting 60 Declaration on corporate governance 61 Reporting on the annual financial statements of Deutsche EuroShop AG 62 Consolidated financial statements 66 Consolidated balance sheet 68 Consolidated income statement 70 Statement of comprehensive income 71 Consolidated statement of changes in equity 72 Consolidated cash flow statement 74 Notes to the consolidated financial statements for financial year 2024 75 Information and service 106 Shareholdings 108 Responsibility Statement by the Executive Board 109 Independent auditor’s report 110 EPRA reporting 116 Multi-year overview 126 Glossary 128 Contact and legal 132 1
- 4. We have shopping centers in five different countries ... 21 18 19 Gdansk Poland Brno Czech Republic 20 4 14 12 11 15 7 1 13 Wolfsburg 2 Wildau/Berlin Magdeburg 6 Dessau 3 Dresden Kassel Wetzlar 17 Hamelin Hamm Wuppertal Sulzbach/Frankfurt 10 Neunkirchen Viernheim/ Mannheim Passau Klagenfurt Austria 16 5 8 9 Hamburg Norderstedt Our goals For Deutsche EuroShop, it is not quick success that counts but a constantly stable portfolio performance. Our goal is to generate a high liquidity surplus from the long-term leasing of the shopping centers so that we can distribute an attractive dividend to our shareholders. With our investments, we focus on large, high-quality shopping centers in city centre locations and at established sites that operate as vibrant marketplaces in the commuter belt. Our values We are the only public limited company in Germany to invest exclusively in shopping centers in prime locations. We invest only in selected properties. High quality standards and a high degree of flexibility are just as important to us as sustainable income development through indexed and turnover- linked rental agreements. Added to this is an above-average occupancy rate and professional centre management. These are the core values of our success. 21 Pécs Hungary 1 Main-Taunus-Zentrum 2 A10 Center Altmarkt-Galerie 3 Altmarkt-Galerie 4 Rhein-Neckar-Zentrum 5 Herold-Center 6 Rathaus-Center 7 Allee-Center 8 Phoenix-Center 9 Billstedt-Center 10 Saarpark-Center 11 Forum 12 Allee-Center 13 City-Galerie 14 City-Arkaden 15 City-Point 16 Stadt-Galerie 17 Stadt-Galerie 18 Olympia 19 Galeria Bałtycka 20 City-Arkaden 21 Árkád 2
- 5. ... creating the space for more than 154million visitors per year to make new memories. 2,700stores 95.4 %occupancy rate 1 million m2 rental space 47.6 % Fashion 19.1 % Non-food/ electronics 10.8 % Food and supermarkets 7.6 % Health and beauty 5.2 % Catering 4.2 % Drugstore and hypermarkets 3.5 % Leisure entertainment 2.0 % Services Sector mix Retail mix rental space 3 Deutsche EuroShop
- 6. Let me start with what matters most to you: Your Deutsche EuroShop is still on course for success. Our balance sheet is solid, and our financial performance has met – if not exceeded – our expectations. But perhaps even more importantly, we are optimistic about the years ahead. We expect new opportunities for growth to emerge, and we are confident that we will be able to seize them. While 2024 remained a challenging year for the market, our shopping centers performed well in terms of their oper- ating business.Visitor numbers increased by 0.6%, and the retail sales of our tenants rose by 2.5%. The occupancy rate improved by a significant 2.4 percentage points to 95.4%, which is a particularly high level. Revenue reached €271.4 million, slightly below the previous year. This downturn was caused by temporary vacancies resulting from investment measures, a decrease in settle- ment payments and isolated falls in follow-on rents. EBIT came to €216.3 million, exceeding our forecast, and up 1.7% on the previous year. This figure benefited from other income from the reversal of impairments and provisions in addition to ancillary costs related to previous years. Exclud- ing measurement gains/losses, EBT declined by 2.5% to €165.2 million, while FFO decreased by 8.3% to €157.1 mil- lion. FFO per share fell by 9.6% to €2.06. Just because some earnings figures were lower than in the previous year does not mean that the Company performed worse in 2024. It is more accurate to say that our figures for 2023 were boosted by one-time effects. These included the acquisition of additional shares in shopping centers and the recovery of service charges from the COVID-19 period which had previously been written off. With regard to the dividend, I am pleased to propose – together with the Supervisory Board – a dividend of €1.00 per share at the Annual General Meeting. This is perhaps a good opportunity to highlight that strong performance year after year is not a given. Leasing in today’s market environment is hard work. Finding new tenants requires us to have a broad reach across Europe. Targeted investments play an essential role in keeping our shopping center portfolio attractive and future-proof. We take a proactive approach every day, safe in the knowledge that the decisions we are making now will benefit us four or five years down the road. Certain developments are out of our control: regulatory and political conditions, economic cycles, and their impact on financial markets. Interest rates are stabilizing, as are property values. We are seeing signs of recovery in the real estate investment market. However, it will take some time for us to benefit from this positive trend. These fac- tors still had a somewhat negative effect on our figures in 2024, although our measurement loss of €14.6 million was significantly lower than the €209.1 million decline recorded in the previous year. Our financial position is strong. There are no maturities scheduled for 2025, and we have already extended some of our 2026 maturities ahead of schedule. Our balance sheet is robust, with a consistently high equity ratio of 49.2% and an LTV of 39.2%, leaving us ample flexibility for future growth. All in all, we are well positioned to con- tinue investing in the future of our portfolio. Over the rest of the year, we plan to once again invest approximately €50 million to enhance the overall experience at our shop- ping centers, make structural improvements and advance our ESG strategy. When it comes to ESG, the “S” is just as important as the “E” for us. We see our 21 shopping centers as accessible and vibrant meeting places that offer customers a safe and personal shopping experience, foster social interaction, and actively engage with local communities. We are also well aware of the direct link between environmental factors and the long-term value of our properties. In 2024, we placed a strong focus on advancing our sustainability strategy and launched a comprehensive materiality analysis. Our goal is to minimize our environmental impact, anticipate risks and seize opportunities. We are convinced that this will enhance our resilience and strengthen our business model for the future. In closing, I would like to extend my sincere thanks to my outstanding team. For the past three years, I have had the privilege of being part of what is probably Germany’s smallest listed company in terms of headcount. Our entire team consists of just eight people. Four of them, including myself, only joined the team recently. Despite this, it feels like we have been working together for a decade. This is only possible thanks to the exceptional personal and pro- fessional chemistry that we have in the team. Everyone is fully aware of their strengths and brings them to bear. We know the best way to support each other, and we do so proactively. That is truly special. I am confident that we can build on this foundation to achieve great things over the coming years. As for the current financial year, we remain optimistic overall. We expect revenue and EBIT to be stable or see mild growth. We are assuming a slight reduction in EBT (excluding measurement gains/losses) and FFO, in view of lower planned financial income. Kind regards, Hans-Peter Kneip, CEO/CFO DEAR SHAREHOLDERS, ESTEEMED BUSINESS PARTNERS, 4 Company Deutsche EuroShop at a glanceLetter to the shareholders
- 7. Hans-Peter Kneip, CEO/CFO “Our property portfolios are solidly financed and well diversified. This sets us up well to continue on our path of successful development.” the MALL s life Deutsche EuroShop 5
- 8. We expect revenue of €268 million – €276 million We are forecasting operating earnings before interest and taxes (EBIT) in the current year of €209 million – €217 million Operating earnings before taxes (EBT) excluding measurement gains/losses for 2025 are expected to be €150 million – €158 million We expect funds from operations (FFO) to be in the range of €145 million – €153 million 6
- 9. The Executive Board HANS-PETER KNEIP, MEMBER OF THE EXECUTIVE BOARD (CEO/CFO) Born: 11 July 1979 Hans-Peter Kneip holds a degree in business administra- tion and graduated from European Business School in Oestrich-Winkel in 2004. He gained first professional experience in the finance and banking sector, including at Merrill Lynch in New York and J.P. Morgan in Frankfurt, before starting his career at French bank Société Générale in Paris in 2005. He worked in the bank’s corporate and investment banking division,most recently asVice President in Equity Capital Markets and Strategic Equity Transactions. During this time, he was mainly involved in IPOs, capital increases and structured equity financings for German and international listed companies. From 2012, Mr Kneip was Head of Corporate Finance at the MDAX-listed Berlin-based GSW Immobilien AG and played a leading role in the company’s merger with Deutsche Wohnen AG. From 2014 to 2020, Mr Kneip worked for MDAX-company LEG Immobilien AG in Düsseldorf, where he was initially responsible for corporate finance and later also took over treasury, controlling and risk management. After the IPO, he built up the group’s capital market financing and, as a member of the executive management, was entrusted with the strategic development of the company and its real estate portfolio. Until 2021, Mr Kneip was Chief Financial Officer of listed residential real estate company Accentro Real Estate AG in Berlin. Before joining Deutsche EuroShop AG, he was Managing Director of Deutsche Teilkauf GmbH in Cologne. Hans-Peter Kneip is a member of the Executive Board of Deutsche EuroShop AG since October 2022. He is married and has German citizenship. 7 the MALL s life Deutsche EuroShop
- 10. The Super visory Board Name: Reiner Strecker (Chairman) Born: 1961 Place of residence: Wuppertal Nationality: German On the Supervisory Board since: 2012 Elected until: 2025 Annual General Meeting Committee activities: Chairman of the Executive Committee, Member of the Audit Committee Memberships of other legally required super- visory boards and membership of compara- ble domestic and foreign supervisory bodies for business enterprises: Eckes AG, Nieder-Olm (Chairman) Carl Kühne KG (GmbH Co.), Hamburg (Chairman) Storch-Ciret Holding GmbH, Wuppertal (since 1 January 2025) akf Bank GmbH Co. KG, Wuppertal (until 30 April 2024) Position: Management consultant Career milestones: • 1981–1985: Degree in business administration, Eberhard Karls University, Tübingen • 1986–1990: Commerzbank AG, Frankfurt • 1991–1997: STG-Coopers Lybrand Consulting AG, Zurich (Switzerland) • 1998–2002: British-American Tobacco Group, Hamburg, London (United Kingdom), Auckland (New Zealand) • 2002–2009: British-American Tobacco ( Industrie) GmbH, Hamburg, Member of the Exe cutive Board for Finance and IT • 2009–2021: Vorwerk Co. KG, Wuppertal • 2010–2021: Personally liable partner • since 2022: Management consultant Skills profile: Retail X Real estate Business management X Accounting/auditing X Financing Capital market X Law ESG X Relationship to controlling/major share holders or Deutsche EuroShop AG: none Deutsche EuroShop securities portfolio as at 31 December 2024: 1,500 8 Company 8
- 11. Chantal Schumacher (Deputy Chairwoman) Benjamin Paul Bianchi Henning Eggers 1970 1975 1969 Munich London, United Kingdom Halstenbek Luxembourgish American German 2022 2022 2019 2027 Annual General Meeting 2027 Annual General Meeting 2029 Annual General Meeting Chairwoman of the Audit Committee Member of the Executive Committee Chairman of the Executive Committee, Member of the Audit Committee Sompo International Insurance (Europe) SA, Luxembourg (Luxembourg) (since 1 January 2025) SCOPE SE Co. KGaA, Berlin (until 22 August 2024) - ECE Group GmbH Co. KG, Hamburg Independent management consultant Managing Director, Head of Europe, Oak- tree Capital Management, London (United Kingdom) Member of Management, CURA Vermögens- verwaltung G.m.b.H., Hamburg • 1989–1994: Degree in Industrial Engineering, Solvay Brussels School of Economics and Management (Belgium) • 1994–1997: Banque Générale du Luxembourg (Luxembourg), Financial Analyst, International Lending and Structured Finance • 1997–1999: MBA studies at the University of Chicago, Chicago (USA) • 1999–2022: Allianz Group, Munich - during which 1999–2001: Allianz SE, Munich, Assistant to the Board of Management, Asset Management • 2001–2002: Fireman‘s Fund Insurance Company, Novato (USA), Actuarial Associate • 2002–2004: Allianz of America Corp, Novato (USA), Controller • 2004–2005: Allianz SE, Munich, Project Manager • 2005–2015: Allianz Global Corporate Specialty, Munich, Global Head of Planning Performance Management • 2015–2016: Allianz Partners SAS, Paris (France), Global Finance Director Travel Assistance • 2016–2018: Allianz Reinsurance, Munich, Chief Financial Officer (CFO) and Member of the Divisional Board • 2018–2020: Euler Hermes Group SAS, Paris (France), Group Chief Financial Officer (CFO) and Member of the Board of Management • 2020–2022: Global Program Director, Allianz SE, Munich • since 2023: Independent management consultant • Degree in engineering with double major in mathematics and civil engineering, Vanderbilt University, Nashville, Tennessee (USA) • 1998–2001: Goldman Sachs Group, Inc./ Archon Group, Dallas (USA), Tokyo (Japan), Seoul (South Korea) and Bangkok (Thailand), Associate • 2001–2005: Moore Capital Management/ Moore SVP, Tokyo (Japan), Senior Vice President • 2005–2012: Deutsche Bank AG, London (United Kingdom) and Hong Kong (SAR): - during which 2005–2007: Director SSG Europe • 2007–2009: Managing Director, Head of SSG Asia Co-Head of CRE Asia • 2009–2012: Managing Director, Global Head of Special Situations Group • 2013: Highbridge Principal Strategies, New York (USA), Consultant • since 2014: Oaktree Capital Management, London (United Kingdom) and New York (USA) - during which 2014–2019: Managing Director, Member of the Investment Committee • since 2019: Managing Director, Head of Europe • 1990–1995: Degree in business administration, University of Hamburg, certified business economist • 1999: German tax advisor exam • 1995–2000: PKF Fasselt Schlage auditing and tax consulting firm, Hamburg • since 2000: KG CURA Vermögensverwaltung G.m.b.H. Co., Hamburg (family office of the Otto family) • since 2013: Member of Management X X X X X X X X X X X X X none Shareholder representative of Oaktree Capital Management Shareholder representative of the Otto family 0 0 0.06% (indirectly) 9 the MALL s life Deutsche EuroShop 9
- 12. Name: Lemara Grant Stuart E. Keith Born: 1991 1982 Place of residence: London, United Kingdom London, United Kingdom Nationality: British British On the Supervisory Board since: 2022 2022 Elected until: 2027 Annual General Meeting 2027 Annual General Meeting Committee activities: - Member of the Capital Market Committee Memberships of other legally required super- visory boards and membership of comparable domestic and foreign super visory bodies for business enterprises: - - Position: Senior Vice President, European and AsiaTax Counsel (until 14 September 2024), Senior Vice President, Co-Head of Global Tax Structuring (since 15 September 2024), Oaktree Capital Management (UK) LLP, London) Managing Director, Oaktree Capital Manage- ment, London (United Kingdom) Career milestones: • 2010–2013: Law degree (LL.B Hons), Nottingham Trent University, Nottingham (United Kingdom) • 2014: Intensive legal practice course • 2014–2016: Clifford Chance LLP, London (United Kingdom), Trainee Solicitor • 2016–2021: Kirkland Ellis International LLP, London (United Kingdom), Tax Associate • 2018–2019: European Tax Secondee • since 2021: Oaktree Capital Management, London (United Kingdom) - during which 2021–2023: Vice President, European Tax Counsel • 2023–2024: Senior Vice President, European and Asia Tax Counsel • since 2024: Senior Vice President, Co-Head of Global Tax Structuring • Studied at Edinburgh University, Edinburgh, Scotland (United Kingdom), MA International Business • 2005–2007: Robert W. Baird Co, London (United Kingdom), Analyst, Mergers Acquisitions • 2007–2008: Goldman Sachs Co, London (United Kingdom), Analyst, Investment Banking • 2008–2012: Arcapita Limited, London (United Kingdom), Associate, Real Estate Private Equity • 2012–2020: Partners Group, London (United Kingdom), Vice President, Private Real Estate • since 2020: Oaktree Capital Management, London (United Kingdom), - during which 2020–2022: Senior Vice President Real Estate; since 2023: Managing Director Skills profile: Retail Real estate X Business management X Accounting/auditing X Financing X X Capital market X Law X ESG Relationship to controlling/major share holders or Deutsche EuroShop AG: Shareholder representative of Oaktree Capital Management Shareholder representative of Oaktree Capital Management Deutsche EuroShop securities portfolio as at 31 December 2024: 0 0 10 Company 10 The Super visory Board
- 13. Dr Volker Kraft Dr Henning Kreke Claudia Plath 1972 1965 1971 Hamburg Hagen/Westphalia Hamburg German German German 2022 2013 2019 2027 Annual General Meeting 2028 Annual General Meeting 2029 Annual General Meeting Member of the Capital Market Committee Chairman of the Capital Market Committee Member of the Capital Market Committee Allos S.A., São Paulo (Brazil) Douglas AG, Düsseldorf (Chairman) Thalia Bücher GmbH, Hagen (Westphalia) Encavis AG, Hamburg Axxum Holding GmbH, Wuppertal Noventic GmbH, Hamburg Perma-tec GmbH Co., Euerdorf Slyrs Destillerie GmbH Co. KG, Schliersee Ceconomy AG, Düsseldorf (until 14 February 2024) MEC Metro-ECE Centermanagement GmbH Co. KG, Düsseldorf Managing Director, ECE Real Estate Partners GmbH, Hamburg Managing Partner, Let‘s Go JMK KG and Kreke Immobilien KG, Hagen/Westphalia CFO, ECE Group Verwaltung GmbH, Hamburg • 1993–1997: Degree in business adminis- tration, University of St. Gallen, St. Gallen (Switzerland) • 1997–2000: Doctorate, University of St. Gallen, St. Gallen (Switzerland) • 2001–2008: Allianz Capital Partners GmbH, Munich, Director • since 2008: ECE Real Estate Partners GmbH, Hamburg, Managing Director • Studied business (BBA and MBA) at the University of Texas at Austin, Austin (USA), • Doctorate (Political Science) from the University of Kiel • 1993–2017: Douglas Holding AG, Hagen/ Westphalia • 1993–1997: Assistant to the Executive Board • 1997–2001: Member of the Board of Management • 2001-2016: Chairman of the Board of Management • since 2016: Let’s Go JMK KG and Kreke Immobilien KG, Hagen/Westphalia, Managing Partner • 1993–1996: Degree in business administration, Technical University of Berlin, cer- tified business economist • 1996–2020: Verwaltung ECE Projekt management G.m.b.H., Hamburg: - during which 1996–2001: Controller • 2001–2003: Group Manager Controlling • 2004–2009: Divisional Head of Controlling • 2009–2010: Director Asset Management Controlling (national) • 2010–2012: Senior Director Asset Management (national/ international) • 2013–2020: CFO • since 2021: ECE Group Verwaltung GmbH, Hamburg, CFO X X X X X X X X X X X X X X Member of the Management Board of ECE Real Estate Partners GmbH, Hamburg (Alexander Otto (major shareholder) is partner of the partner) none Member of the Management Board of ECE Group Verwaltung GmbH, Hamburg (Alexander Otto (major shareholder) is Chair- man of the Management Board) 0.12% (indirectly) 0 260 shares + 0.06% (indirectly) 11 the MALL s life Deutsche EuroShop 11
- 14. DEAR SHAREHOLDERS, Please find below a report on the work of the Supervisory Board in the past financial year. COLLABORATION BETWEEN THE SUPERVISORY BOARD AND THE EXECUTIVE BOARD During financial year 2024, the Supervisory Board per- formed the duties incumbent on it according to the law and the Articles of Association and closely oversaw the perfor- mance of the Deutsche EuroShop Group. The Executive Board coordinated the strategic orientation of the Company with the Supervisory Board, and discussed the status of strategy implementation with us at regular intervals. The Supervisory Board monitored and advised the Executive Board on its management of the business. The Executive Board informed us regularly, promptly and in detail about business developments. As the Chairman of the Supervisory Board, I was kept up to date in timely fashion by the Executive Board on all impor- tant events of significance for assessing the Company’s situation and development and its management. I was also given ongoing, detailed briefings between meetings of the Supervisory Board and its committees in regular confer- ence calls with the Executive Board. In 2024, the Executive Committee was kept continuously informed about current developments and notified in advance about intended, more far-reaching decisions of the Executive Board. FOCUS OF ADVISORY ACTIVITIES We conducted detailed examinations of our Company’s net assets, financial position, results of operations and risk management at our regular meetings. In this context, we also checked that the formal conditions for implementing an efficient system of monitoring our Company were met and that the means of supervision at our disposal were effective. We were informed on an ongoing basis of all significant factors affecting the business. We considered the perfor- mance of the portfolio properties, specifically their sales and visitor number trends, the accounts receivable and occupancy rates, and the Company’s liquidity position. We were also provided with prompt and continuous information about the payment patterns of our tenants. One area of focus for the advisory activities in financial year 2024 was the further development of the Company’s strategy with regard to the portfolio, environmental, social and govern- ance (ESG) issues and financing. Regular discussions were conducted with the Executive Board regarding trends on the capital, credit, real estate and retail markets and the impact of these on the Com- pany’s current and medium-term situation. As part of this, the Executive Board and the Supervisory Board examined various financing and refinancing options. We received regular reports detailing our tenants’ retail sales trends and banks’ lending policies. The Executive Board and the Supervisory Board also held regular discussions on how the Company was valued by the stock market and its par- ticipants and made peer group comparisons. This year we again devoted a lot of attention to the expected and implemented legislative changes that affect our Company. The Chairman of the Supervisory Board and the Executive Committee of the Supervisory Board also discussed other topical issues with the Executive Board as required. At regular meetings, the Executive Board informed the Supervisory Board about the consequences of the geopo- litical crises, political uncertainties and fears of recession for our operating business, among other issues. The focus was on the effects on inflation and interest rates as well as consumer behaviour. Transactions requiring the approval of the Supervisory Board or a committee were discussed and decided on at the scheduled meetings. Where required, circular resolutions were passed in writ- ing by the Supervisory Board or the responsible commit- tee for transactions of the Executive Board requiring approval. All resolutions in the reporting period were passed unanimously. To avoid conflicts of interest, any parties affected abstained from voting. Some meetings were held without the Executive Board present. Report of the Supervisory Board Reiner Strecker, Chairman of the Supervisory Board 12 Company
- 15. MEETINGS, TELEPHONE AND VIDEO CONFERENCES Four ordinary meetings of the Supervisory Board were held in financial year 2024, two in person and two as video conferences. Outside of the meetings, three circular res- olutions were passed. The Executive Committee held one meeting by video con- ference, and the Audit Committee held five meetings by video conference. The Capital Market Committee met once in financial year 2024. No member of the Supervisory Board attended only half or fewer than half of the meetings of the Supervisory Board and the committees on which they serve during the reporting year. You can find the individual attendance record of the members of the Supervisory Board in meet- ings of the Supervisory Board and its committees in the following overview: Supervisory Board Member since Appointment ends Plenum/ ordinary and extra ordinary Executive Committee Audit Committee Capital Market Committee Reiner Strecker (Chairman) 2012 2025 Annual General Meeting 4/4 1/1 5/5 - Chantal Schumacher (Deputy Chairwoman) 2022 2027 Annual General Meeting 4/4 - 5/5 - Benjamin Bianchi 2022 2027 Annual General Meeting 4/4 1/1 - - Henning Eggers 2019 2029 Annual General Meeting 4/4 1/1 5/5 - Lemara Grant 2022 2027 Annual General Meeting 4/4 - - - Stuart E. Keith 2022 2027 Annual General Meeting 4/4 - - 1/1 Dr Volker Kraft 2022 2027 Annual General Meeting 4/4 - - 1/1 Dr Henning Kreke 2013 2028 Annual General Meeting 4/4 - - 1/1 Claudia Plath 2019 2029 Annual General Meeting 4/4 - - 1/1 April meeting At the first ordinary meeting on 25 April 2024, the Executive Board and the auditor’s representatives explained the 2023 annual financial statements for the Company and the Group as well as the audit procedures and results. The Chair- woman of the Audit Committee reported on the committee’s discussions in this regard, as well as on its two previous meetings held in March and April 2024. The report on the 2023 financial year focused on our overall performance in addition to the acquisition of shopping center shares and the associated capital increase. The Executive Board explained its dividend proposal of €0.80 per share, which we approved. Finally, we approved and adopted the annual financial statements of the Company. We also approved the consolidated financial statements. The Executive Board and the Supervisory Board determined the agenda items for the Annual General Meeting in August 2024. These included the aforementioned dividend proposal, the proposal of RSM Ebner Stolz as the new auditor, and the extension of the expiring mandates of Supervisory Board members Claudia Plath and Henning Eggers. As the Chairman of the Executive Committee, I reported to the Supervisory Board on the meeting of the Executive Committee in February 2024. The Supervisory Board approved the amendment to Hans-Peter Kneip’s Executive Board contract which reflects his dual role as CEO and CFO. Following this, we discussed the results of the Supervisory Board’s self-assessment, which took place from February to March 2024. The meeting moved on to a report by the Executive Board on our shop- ping center portfolio and, in particular, on the changes in key operating figures such as visitor numbers, tenant rev- enue and rental payments. It also addressed the latest market developments, the consumer behaviour of visitors and the bankruptcy cases involving well-known retailers, some of whom are also tenants in our centers. The status of the DGNB (German Sustainable Building Council) recer- tification process for our shopping centers was also cov- ered, along with some key projects in our portfolio. Major updates are planned to enhance the appeal of these centers. These have the support of the Supervisory Board. The Chairman of the Capital Market Committee reported on the committee’s discussions and resolutions from March 2024 related to the Executive Board’s plans for bor- rowing, refinancing, and repayments, all aimed at further optimizing the Company’s financial position. Finally, we discussed updates to the portfolio and financing strategy and the status of the Company’s share buy-back pro- gramme with the Executive Board. June video conference Our ordinary meeting on 25 June 2024 was held in the form of a video conference. The meeting began with the Executive Board presenting the results for the first quarter and a pro- jection for financial year 2024. The Chairwoman of the Audit Committee reported on the agenda of the most recent Audit Committee meeting in May 2024. The Executive Board then provided an update on the latest developments in the retail sector, including visitor numbers and retail sales within the shopping center portfolio. It also reported on the current status of the DGNB recertification process and portfolio optimization measures. Targeted investments are currently being implemented to enhance the attractiveness of several shopping centers, including the A10 Center, Stadt-Galerie 13 the MALL s life Deutsche EuroShop
- 16. Hameln, the Rhein-Neckar-Zentrum, and the Main-Taunus- Zentrum. We discussed the current situation on the trans- action market for retail real estate and possible future opportunities with the Executive Board. The Executive Board explained the Company’s current financing situation, with a focus on the capital and financing structure optimization measures successfully implemented in the first half of 2024. We also discussed potential further financing meas- ures, the current liquidity situation and the ongoing share buy-back program with the Executive Board. The Super visory Board approved the plan to convene the Annual General Meeting scheduled for 29 August 2024 and its agenda. The meeting concluded with a discussion on recent legal developments that could become relevant to the Company in the future. September video conference The ordinary meeting of the Supervisory Board on 25 Sep- tember 2024, was once again held as a video conference. As Chairman of the Supervisory Board, I began by reporting on the Annual General Meeting that took place on 29 August 2024. The Annual General Meeting approved the increased dividend proposal, raising it from €0.80 per share to €2.60 per share. The Supervisory Board had previously given its approval to the decision of the Executive Board in this regard in a circular resolution on 8 August 2024. Following this, the Executive Board presented the results for the first half of the year, the latest full-year forecast for 2024 and the valuation of the real estate portfolio as of 30 June 2024. The Chairwoman of the Audit Committee reported on the key discussions from the August 2024 Audit Committee meeting. The Executive Board provided updates on opera- tional business developments and the impact of ongoing investment projects. It also reported on significant new ten- ants in our shopping centers, which have led to an increase in occupancy rates. The Supervisory Board addressed cur- rent market trends in the retail sector, including tenant insolvencies. The Executive Board also presented informa- tion about the successful completion of the DGNB recerti- fication process, which resulted in gold certifications for multiple shopping centers and a platinum certification for one. We discussed the investment market for shopping centers and potential future opportunities for the Company with the Executive Board. Additionally, we reviewed the Company’s financing situation with the Executive Board and approved an additional loan increase. Further discussions focused on developments in the debt capital markets and the options available for diversifying the Company’s financ- ing in the future. The Executive Board also provided an update on the status of the share buy-back program. The September meeting focused on a comprehensive report on the ESG strategy of the Company at a portfolio and Group level. The Supervisory Board, the Executive Board and asset manager ECE (participating as a guest) discussed the over- all ESG strategy in light of current regulatory requirements, key planned initiatives, and the expected reporting obliga- tions under the Corporate Sustainability Reporting Directive (CSRD). November meeting At the ordinary meeting on 26 November 2024, our Execu- tive Board presented the results for the first nine months of the year, the full-year forecast for 2024, and the reasons for the slight upward adjustment in the annual projections based on the figures through the first nine months of the year. It also presented to us the planning for financial years 2025 to 2029, which was subsequently approved by the Supervisory Board. The Chairwoman of the Audit Commit- tee reported on the key discussions from the Novem- ber 2024 Audit Committee meeting. The Executive Board reported on the latest developments within our portfolio. It addressed improvements in key operating figures and the conclusion of new lease agreements for retail spaces and parking space within our shopping centers which will con- tribute to higher rental income in the future. The Executive Board also provided an update on new insolvency cases – some of which involve our retail tenants. It also noted an overall decline in the number of such cases. The Board reported on the successful completion of investment pro- jects at the A10 Center and Stadt-Galerie Hameln. These were finished on schedule, cost less than expected and reduced the number of vacancies within our portfolio. The projects at the Rhein-Neckar-Zentrum and the Main- Taunus-Zentrum are at an advanced stage. The Board antic- ipates that the new rental spaces will also be completed on time. Additionally, the Executive Board announced that a property adjacent to Galeria Bałtycka in Gdańsk which was no longer needed had been sold a price in excess of its carrying amount. We discussed the investment market for shopping centers and recent transactions completed in the second half of 2024 with the Executive Board. The Novem- ber meeting focused on a comprehensive strategic dis- cussion regarding the real estate portfolio, corporate financing, and ESG. We specifically addressed the targeted further development of our shopping center portfolio, the potential diversification of the Company’s financing strat- egy on the capital markets, and the advancement of our sustainability strategy. The Supervisory Board approved further measures to optimize the loan portfolio and man- age liquidity. It delegated an additional review of capital market financing options and a potential corporate credit rating to the Capital Market Committee of the Supervisory Board. Finally, the Executive Board provided an update on the status of the share buy-back program, which is expected to come to an end in December 2024. 14 Company 14 Report of the Supervisory Board
- 17. COMMITTEES The Supervisory Board has established three fixed com- mittees: the Executive Committee, the Audit Committee and the Capital Market Committee. The committees have three or four (Capital Market Committee) members. The Executive Committee functions simultaneously as the Nomination Committee. Given the size of the Company and the number of Supervisory Board members, we still consider the num- ber of fixed committees and committee members to be appropriate. The Audit Committee issued the audit mandate to the auditor elected by the Annual General Meeting, mon- itored the services provided by the auditor and discussed the controls for the quality of the audit. The Executive Committee, in its simultaneous function as the Nomination Committee, held an ordinary meeting on 19 February. Five meetings of the Audit Committee took place. The meetings on 14 March and 5 April heard reports from the Executive Board and auditor on the annual finan- cial statements for 2023. The meetings on 13 May, 9 August and 11 November discussed the 2024 interim financial reports with the Executive Board. The Capital Market Com- mittee convened for a meeting on 27 March. CORPORATE GOVERNANCE In February 2024 and February 2025,together with the Exec- utive Board, we issued an updated declaration of conformity in relation to the recommendations of the Government Com- mission pursuant to Section 161 of the Aktiengesetz (AktG – German Public Companies Act) and made this permanently available on the Deutsche EuroShop AG website. A separate report on the implementation of the Deutscher Corporate Governance Kodex (DCGK – German Corporate Governance Code) is included in this Annual Report. The members of the Supervisory Board and the Executive Board declared in writ- ing at the beginning of 2025 that no conflicts of interest had arisen during financial year 2024. We have published a skills matrix for the Supervisory Board members in the “Declaration on Corporate Governance”.We regularly review the skills profiles of the Supervisory Board and adjust this if necessary. In 2017, the Supervisory Board decided that the Chairman of the Supervisory Board may conduct talks with investors on topics of relevance to the Supervisory Board in accord- ance with the recommendations of the DCGK and the “Prin- ciples for Dialogue between Investor and Supervisory Board”. No such talks were conducted in financial year 2024. In financial year 2024, three members of the Supervisory Board were independent. FINANCIAL STATEMENTS OF DEUTSCHE EUROSHOP AG AND THE GROUP FOR THE PERIOD ENDING 31 DECEMBER 2024 At the Audit Committee meeting on 17 March 2025 and at the ordinary Supervisory Board meeting on 25 March 2025, the Audit Committee and the Supervisory Board respec- tively examined in detail the annual financial statements of Deutsche EuroShop AG in accordance with German com- mercial law and the consolidated financial statements in accordance with International Financial Reporting Stand- ards (IFRS), each as at 31 December 2024, as well as the combined management report and Group management report for financial year 2024. Furthermore, the depend- ency report and compensation report were submitted to us for review. The auditor explained to us all matters which it regarded as being of particular significance for its audit of the consolidated financial statements, the dependency report and the compensation report, doing so in a manner that was easy to follow. The Supervisory Board shares the auditor’s assessment of the importance of these matters for the consolidated financial statements, the dependency report and the compensation report. The documents relating to the financial statements, the auditor’s reports and the Executive Board’s proposal for the utilisation of the unappropriated surplus were pre- sented to us in good time. The auditor appointed by the Annual General Meeting on 29 August 2024 – RSM Ebner Stolz GmbH Co. KG, Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Hamburg – had already audited the financial statements and issued an unqualified audit opinion in each case. The auditor also confirmed that the accounting policies, measurement methods and meth- ods of consolidation in the consolidated financial state- ments complied with the relevant accounting provisions. In addition, the auditor determined in the course of its assess- ment of the risk management system that the Executive Board had undertaken all required measures pursuant to Section 91 (2) AktG to promptly identify risks that could jeopardise the continued existence of the Company. The auditor’s representatives took part in the discussion of the annual financial statements and the consolidated finan- cial statements on the occasions of the Audit Committee meeting on 17 March 2025 and the ordinary Supervisory Board meeting on 25 March 2025 and explained the main findings. The Supervisory Board has come to the conclusion that there are no objections to be raised against the annual financial statements, the dependency report and compen- sation report or the audit conducted by the auditor. The combined management report meets statutory require- ments in the opinion of the Supervisory Board. The Supervi- sory Board agrees with the statements in the management report on the further growth of the Company. The Super- visory Board has issued its agreement with the result of the audit of the annual financial statements, adopted the annual financial statements and approved the consoli- dated financial statements. In addition, the Supervisory Board endorsed the Executive Board’s proposal for the appropriation of net income, according to which a partial amount of €75,743,854.00 of the unappropriated surplus of €251,502,280.25 for financial year 2024 is to be used 15 the MALL s life Deutsche EuroShop 15
- 18. to pay a dividend of €1.00 per no-par-value share carry- ing dividend rights, and the remaining partial amount of €175,758,426.25 is to be carried forward to new account. Based on the current market environment, Deutsche EuroShop looks to the future with optimism. Key economic factors such as interest rates and inflation have largely stabilized at levels that are favourable for our business model. At the same time, we are still confronted with geo- political crises, political uncertainties and fears of reces- sion, which are dampening consumer behaviour and pose challenges for the retail sector. Despite these issues, visitor numbers and tenant revenue in our shopping center port- folio have shown positive trends. Our company is actively laying the groundwork for a successful future by contin- uously and sustainably developing its real estate portfo- lio while ensuring that it has a stable long-term financing structure. We completed a number of key investment pro- jects and attracted numerous new tenants to our shopping centers in the 2024 financial year. We also took action to further optimize our capital and financing structure. All of our refinancing arrangements will be repaid by the middle of 2026, providing us with financial flexibility for additional investments. The Supervisory Board thanks the Executive Board and all employees of Deutsche EuroShop AG for their outstanding work and a successful financial year in 2024. Hamburg, 25 March 2025 Reiner Strecker, Chairman 16 Company 16 Report of the Supervisory Board
- 19. Declaration on Corporate Governance 2024 Deutsche EuroShop is a transparent company that oper- ates in accordance with a strategy geared towards long- term success. This focus on constancy is a key aspect of our corporate culture. Based on the legal and company- specific conditions governing management of a listed company, we strive to promote the trust of investors, cred- itors, employees, business partners and the public in the management and supervision of our Company. This goal is consistent with the requirements of a demanding cor- porate governance system. In conformity with principle 22 of the Deutscher Corporate Governance Kodex (German Corporate Governance Code) as well as Section 289f (1) of the Handelsgesetzbuch (HGB – German Commercial Code), this declaration contains a report by the Executive Board on corporate governance, also on behalf of the Super visory Board. OBJECTIVES AND STRATEGY The management focuses on investments in high-quality shopping centers in urban centers and established loca- tions offering the potential for stable, long-term value growth. A key investment target is the generation of high surplus liquidity from leases in shopping centers, which is paid out to shareholders in the form of an annual divi- dend. To this end, the Company invests its capital in shop- ping centers in different European regions in accordance with the principle of risk diversification. Germany is the main focus of investment. Indexed and turnover-linked commercial rents form the basis to achieve the high earn- ings targets. New investments must be financed from a balanced mix of sources, and borrowing must not account for more than 55% of financing across the Group over the long term. On the basis of a planned investment grade rating and the development of new financing instruments, the financing structure is to be further diversified in future. Interest rates are generally secured on a long-term basis when loans are taken out or extended. The aim is to keep the term (average fixed interest period) at over five years. DIVERSIFIED SHOPPING CENTER PORTFOLIO Deutsche EuroShop AG holds a balanced, diversified port- folio of shopping centers from Germany and other parts of Europe. We focus our investment activities on prime (1-a) locations in cities with a catchment area of at least 300,000 residents in order to guarantee a high level of investment security. SEIZING OPPORTUNITIES AND MAXIMISING VALUE In line with our fundamental buy and hold strategy, we consistently attach higher importance to the quality and yield of our shopping centers than to our portfolio’s rate of growth. We continuously monitor the market and make portfolio adjustments through acquisitions and sales when economically attractive opportunities arise. Rapid decision- making chains as well as considerable flexibility regarding potential investments and financing structures allow Deutsche EuroShop to react to a wide range of com- petitive situations. At the same time, the Group’s man- agement focuses on optimising the value of the existing portfolio of properties. TAILORED RENT STRUCTURE A key component of the rental model is a tailored rent structure. While individual owners in urban centers are often preoccupied with achieving the highest possible rental income from their property (which results in a mon- ostructured retail offering), we ensure an attractive sector mix and long-term optimisation of our rental income through combined costing. Rental partners pay sector- specific and turnover-linked rent that is regularly hedged through indexed minimum rents during the rental period. 17 the MALL s life Deutsche EuroShop 17
- 20. THE SHOPPING EXPERIENCE CONCEPT We have outsourced center management to an experienced external partner: ECE Marketplaces GmbH Co. KG (ECE), based in Hamburg. ECE has been designing, planning, build- ing, letting and managing shopping centers since 1965. The company is currently the European market leader, with around 200 shopping centers under management. We con- sider professional center management to be the key to suc- cess for a shopping center. In addition to guaranteeing standard opening hours and a consistently friendly, bright, safe and clean shopping environment, the center manage- ment can make use of unusual displays, promotions and exhibitions to turn shopping into an experience. As a long- term average, between 400,000 and 500,000 people visit our 21 centers every day and are captivated by not only the variety of sectors represented, but also by the wide range of themed exhibitions, casting events, fashion shows and attractions for children. As a result, the shopping centers become lively marketplaces where there is always some- thing new and spectacular on offer. In addition, new offers and services are continually being created as part of the ongoing integration of bricks-and-mortar shopping and online retailing. WORKING METHODS OF THE EXECUTIVE BOARD AND SUPERVISORY BOARD The strategic alignment of the Company is coordinated between the Executive Board and Supervisory Board, and the progress of strategy implementation is discussed at regular intervals. The Executive Board is required to inform the Supervisory Board regularly, promptly and in detail of relevant business developments. The Executive Board and Supervisory Board conduct regular and detailed analyses of the Company’s net assets, financial position and results of operations, as well as its risk management. In this con- text, a check is performed to verify the formal conditions for implementing an efficient system of managing and mon- itoring the Company, and to determine whether the means of supervision are effective. The significant factors affecting the business are determined by the Executive Board, which notifies the Supervisory Board. The committees advise on the development of the portfolio properties, their sales trends, accounts receivable, occupancy rates, construction measures and liquidity, as well as investment cost trends for our new development projects. The sales trends and payment patterns of tenants are monitored in detail so that potential impacts can be derived from these at an early stage if required. New investment opportunities are examined by the Execu- tive Board and, if necessary, presented to the Supervisory Board at regular Supervisory Board meetings. Investment decisions are made by the Executive Board and then sub- mitted to the Supervisory Board for approval within the framework of decision papers. Moreover, the Executive Board and Supervisory Board dis- cuss developments on the capital and credit markets as well as the effects of these not only on the Company’s strategy, but also in terms of raising equity and obtaining borrowed capital. The Supervisory Board and its committees additionally dis- cuss other topical issues with the Executive Board as required. Transactions requiring the approval of the Super- visory Board are discussed and resolved upon at the sched- uled meetings. Online retailing, its impact on footfall and sales in centers and the countermeasures taken to effec- tively combine the strategic advantages of our shopping centers with the opportunities afforded by e-commerce are extremely important in Executive Board reporting. In finan- cial year 2024, the inflation and interest rate environment, consumer behaviour trends, and the further development of our shopping centers – due in part to the investment projects undertaken – were at the forefront of discussions and decisions for the operating business. The Executive Board and Supervisory Board also dealt at length with the optimisation of the Company’s capital and financing struc- ture as well as with the future strategy with regard to the property portfolio, ESG (environmental, social and govern- ance) and financing. In the case of transactions by the Executive Board requiring approval, telephone or video conferences are also con- ducted with the Supervisory Board or its committees and circular resolutions are passed in writing. CORPORATE GOVERNANCE 2024 Deutsche EuroShop AG complies with all but one of the recommendations of the German Corporate Governance Code in the version dated 28 April 2022 (Code 2022) appli- cable at the time of issuing the current declaration of con- formity on 12 February 2025. EXECUTIVE BOARD AND SUPERVISORY BOARD The Executive Board and Supervisory Board performed their statutory duties in financial year 2024 in accordance with the applicable laws and the Articles of Association. The strategic alignment of the Company was coordinated between the Executive Board and Supervisory Board, and the progress of strategy implementation was discussed at regular intervals. The Supervisory Board was informed regularly, promptly and in detail by the Executive Board of business developments and the risk situation. Detailed information on the main areas of focus of the Supervisory Board’s activities in financial year 2024 can be found in the Annual Report 2024 of Deutsche EuroShop AG. In financial year 2024, there were no advisory or other con- tracts for work or services in existence between members of the Supervisory Board and the Company. 18 Company 18 Declaration on Corporate Governance 2024
- 21. REMUNERATION SYSTEM AND COMPENSATION REPORT The applicable remuneration system for the members of the Executive Board in accordance with Section 87a (1) and (2) sentence 1 of the Aktiengesetz (AktG – German Public Companies Act), which was approved by the Annual General Meeting on 18 June 2021, as well as the compen- sation report for financial year 2023 approved by the Annual General Meeting on 29 August 2024 and the auditor’s report on its audit are available to the public on the Deutsche EuroShop AG website at www.deutsche-euroshop.de. The compensation report for financial year 2024 and the audi- tor’s report pursuant to Section 162 AktG will be made available to the public on the same website. COMPOSITION AND DIVERSITY Supervisory Board In 2015, the Supervisory Board added a diversity concept to the goals specified in 2012 for its composition, both of which were confirmed in 2017 and last updated in 2019. The Supervisory Board gears itself to the needs of a listed company with a small staff base which makes long-term investments with high capital requirements. In view of this, the intention is for the Supervisory Board to be primarily composed of a majority of members who are independent of the Company and the Executive Board of both genders, who have special knowledge and experience of the retail trade, the letting of retail space, the management of shop- ping centers, the equity and debt financing of listed real estate companies, accounting principles and internal con- trol processes in accordance with German and/or interna- tional regulations and the fields of law, ESG and business management. It is intended that the proportion of women on the Supervisory Board is at least 30%. The upper age limit for members of the Supervisory Board is 70. The Supervisory Board also takes the view that professional qualifications and skills should be the key criteria for its members. For that reason, no rule has been adopted as to the length of time for which members may serve on the board. Since 2015, the Company has disclosed which skills are provided by the individual members of the Supervisory Board. The current skills matrix is as follows: Skills matrix Name Reiner Strecker (Chairman) Chantal Schumacher (Deputy Chairwoman) Benjamin Paul Bianchi Henning Eggers Lemara Grant Stuart E. Keith Dr Volker Kraft Dr Henning Kreke Claudia Plath Skills profile Retail X X Real estate X X X X X Business management X X X X X X X X Accounting/ auditing X X X X X X X Financing X X X X X X X Capital market X X X X X X Law X ESG X X X X 19 the MALL s life Deutsche EuroShop 19
- 22. The German Corporate Governance Code states that a member of the Supervisory Board “is not deemed independ- ent if they have a personal or business relationship with the Company, its governing bodies, a controlling share- holder or an associate thereof that could give rise to a mate- rial conflict of interest which is more than temporary”. Three of the total of nine members of the Supervisory Board are independent of the Company, the Executive Board and the controlling shareholder within the meaning of the Corporate Governance Code. These are Reiner Strecker, Chantal Schumacher and Dr Henning Kreke. When assessing Mr Strecker’s independence, the Super visory Board took into account the fact that he has been a member of the Supervisory Board for more than twelve years. The aforementioned period recommended by the Corporate Governance Code is one of several indicators which, taken individually, does not restrict Mr Strecker’s otherwise existing independence, as he has no personal or business relationship with the Company or its Executive Board that could give rise to a material and not merely tem- porary conflict of interest. Mr Strecker’s conduct in office shows that he continues to have the necessary critical dis- tance to the Company and its Executive Board. The length of service on the Supervisory Board ranges from 2.5 to 12.5 years, the average being around five years (as at 31 December 2024). Name Function Starting from Until the AGM, which will decide on... AGM in Membership of the Supervisory Board as at Dec. 2024 in years Reiner Strecker Chairman 13.07.2012 2024 2025 12.5 Chantal Schumacher Deputy Chairwoman 30.08.2022 2026 2027 2.5 Dr Volker Kraft 30.08.2022 2026 2027 2.5 Benjamin Paul Bianchi 30.08.2022 2026 2027 2.5 Stuart E. Keith 30.08.2022 2026 2027 2.5 Lemara Grant 30.08.2022 2026 2027 2.5 Dr Henning Kreke 20.06.2013 2027 2028 11.5 Henning Eggers 12.06.2019 2028 2029 5.5 Claudia Plath 12.06.2019 2028 2029 5.5 Average: 5.3 The Supervisory Board regularly assesses its effectiveness and that of its committees (self-assessment) on the basis of a questionnaire. The members of the Supervisory Board have the opportunity to express criticism, make suggestions and propose improvements. This efficiency review has potential implications, which are discussed on the Super- visory Board and, where necessary, implemented in the Supervisory Board’s work. The last self-assessment took place from February to March 2024. No deductible is provided for the DO insurance policy of the Supervisory Board. In the Executive Board and Super- visory Board’s view, a deductible has no effect on the sense of responsibility and loyalty with which the members of these bodies perform the duties and functions assigned to them. The Supervisory Board supervises and advises the Execu- tive Board in its management activities in accordance with the provisions of German company law and its rules of pro- cedure. It appoints the members of the Executive Board, and significant transactions by the Executive Board are sub- ject to its approval. The Supervisory Board is composed of nine members, who are elected by the Annual General Meeting. The Supervisory Board has established the notification and reporting duties to be met by the Executive Board. In addi- tion to a three-member Supervisory Board Executive Com- mittee (which also functions as a Nomination Committee), an Audit Committee and a Capital Market Committee were established, consisting of three and four members respec- tively. 20 Company 20 Declaration on Corporate Governance 2024
- 23. The members of the Supervisory Board are: Reiner Strecker, Chairman Chantal Schumacher, Deputy Chairwoman Benjamin Paul Bianchi Henning Eggers Lemara Grant Stuart E. Keith Dr Volker Kraft Dr Henning Kreke Claudia Plath Mr Strecker, Mr Bianchi and Mr Eggers are members of the Supervisory Board Executive Committee. The Executive Committee is chaired by the Chairman of the Supervisory Board. The Committee discusses urgent business matters and passes relevant resolutions. Moreover, it is responsible for preparing human resources issues concerning the Exec- utive Board. The Executive Committee of the Supervisory Board also fulfils the role of a Nomination Committee. The Audit Committee consists of Ms Schumacher as Finan- cial Expert and Chairwoman as well as Mr Eggers as second Financial Expert and Mr Strecker. It is responsible for issues relating to financial reporting, auditing and the prepara- tion of the annual and consolidated financial statements. It monitors the audit and assesses the quality of the audi- tor’s work. It also reviews the effectiveness of the internal control and risk management systems and the Company’s corporate governance principles. Former members of the Company’s Executive Board and the Chairman of the Super- visory Board generally do not chair the Audit Committee, to avoid conflicts of interest. Ms Schumacher qualifies as a financial expert in both accounting and auditing through her education (MBA with specialisation in finance in 1999) and her professional activ- ities at the Allianz Group (1999–2022), including Head of Controlling as well as Chief Financial Officer in various sub- sidiaries of the Group. Since 2021, Ms Schumacher has been a member of the Supervisory Board and Chairwoman of the Audit Committee at the rating agency Scope SE Co. KGaA, Berlin. Mr Eggers qualifies as a financial expert in both accounting and auditing through his education (tax consultant since 1999) and his professional activities as an employee and tax consultant at PKF Fasselt Schlage Wirtschaftsprüfungs- gesellschaft (1995–2000). Since 2013, Mr Eggers has been a member of the management board of KG CURA Vermö- gensverwaltung G.m.b.H Co., where he is responsible for accounting and finance. This fulfils the requirement of the Finanzmarktinte gritätsstärkungsgesetz (FISG – Financial Market Integrity Strengthening Act), which stipulates that one committee member must have experience in accounting and another member must have experience in auditing financial state- ments. The Capital Market Committee comprises Ms Plath, Mr Keith, Dr Kreke and Dr Kraft. The Capital Market Committee is chaired by Dr Kreke. The Supervisory Board’s powers relating to the utilisation of approved capital and conditional capital are transferred to the committee for decision- making and execution. In addition, decisions on the approval of the Supervisory Board for financing agreements are also delegated to this committee in individual cases if these meet the criteria of a transaction requiring approval. Executive Board The Executive Board of Deutsche EuroShop AG manages the Company in accordance with the provisions of German company law and its rules of procedure. The Executive Board’s duties, responsibilities and business procedures are laid down in its rules of procedure and – if there are multiple members on the Executive Board – in a schedule of responsibilities. The chief management duties of the Executive Board are the management of the Group and the determination of its strategic orientation and planning, and the establishment, implementation and monitoring of risk management. The diversity concept of the Supervisory Board for the Executive Board which was drawn up in 2015 was given concrete shape and expanded in April 2017. It proposes that the Executive Board should consist of members of both genders with a proportion of women of at least 30%. The composition of the Executive Board should be geared towards the needs of a listed company with a small staff base. This should take into account the requirements of accounting with high capital investment as well as the pre- dominantly national activities in long-term investment in retail properties. The members of the Executive Board are expected to have knowledge and experience in the appli- cation of accounting principles and internal control proce- dures according to German and/or international accounting standards, the retail trade and the management of shop- ping centers, equity and debt financing, the capital mar- ket, ESG, corporate and personnel management, corporate acquisitions and mergers, and the purchase and sale of real estate. The areas of expertise and experience in the case of multiple Executive Board members should complement each other. The upper age limit for members of the Executive Board is 60. 21 the MALL s life Deutsche EuroShop 21
- 24. As at 31 December 2024, the Executive Board of Deutsche EuroShop AG comprised one member. Hans-Peter Kneip Born: 11 July 1979 First appointment: 1 October 2022 Until: 30 September 2028 Hans-Peter Kneip joined Deutsche EuroShop AG in 2022 as a member of the Executive Board. He is a man- aging director and director at various companies in the Deutsche EuroShop Group, and is additionally respon- sible for ESG issues on the Executive Board. Together with the Executive Board, the Supervisory Board ensures long-term succession planning. The Supervisory Board devotes particular attention to the deferred end of the terms of office of members in combination with their respective experience and areas of expertise. Discussions and negotiations on potentially extending terms of office usually begin at least one year before the end of the cur- rent term of office so that internal and external successors can be appointed. In financial year 2024, the company was headed by Hans-Peter Kneip as sole member of the Exec- utive Board. Gender quota The Supervisory Board and the Executive Board took into consideration the German Act on Equal Participation of Men and Women in Executive Positions in the Public and Private Sectors that entered into force in 2015, and defined corre- sponding quotas. A quota of women of at least 30% was set for the Supervisory Board and Executive Board. The Exec- utive Board also set the same target for the management levels below the Executive Board. Due to the number of employees (seven), there is only one management level below the Executive Board. Since the quota was established in 2015, the target for the nine-member Supervisory Board has been met with three female members. The quota of women on the one-member Executive Board as at 31 December 2024 was 0%. The quota of women in the first management level below the Executive Board, which consists of four people, also stood at 25% on 31 December 2024. SHAREHOLDINGS Executive Board As at 31 December 2024, the Executive Board held a total of 15,144 shares, amounting to less than 1% of Deutsche EuroShop AG’s share capital. Supervisory Board As at 31 December 2024, the members of the Supervisory Board held 760 shares and indirect shareholdings totalling 0.25% of Deutsche EuroShop AG’s share capital, therefore below 1%. In addition to the general statutory provisions requiring public disclosure, the rules of procedure of the Executive Board and of the Supervisory Board govern the reporting duties of Executive Board and Supervisory Board members in the event of dealings involving shares in the Company or related rights of purchase or sale, as well as rights directly dependent on the Company’s share price. Directors’ dealings No securities transactions by members of the Executive Board or Supervisory Board or by certain persons related to members of the executive bodies were notified to Deutsche EuroShop AG during financial year 2024 in accordance with Section 19 of the Market Abuse Regulation (MAR). Relationships with shareholders Shareholders exercise their rights in matters concerning the Company at the Annual General Meeting. The Annual General Meeting elects the members of the Supervisory Board and passes resolutions approving the actions of the Executive Board and Supervisory Board. It decides on the utilisation of the unappropriated surplus and amendments to the Company’s Articles of Association. The Annual Gen- eral Meeting, at which the Executive Board and Supervisory Board give an account of the past financial year, takes place once a year. When resolutions are adopted at the Annual General Meeting, each share confers entitlement to one vote in line with the principle of “one share, one vote”. All share- holders are entitled to attend the Annual General Meeting and to speak and submit questions about items on the agenda. The pandemic having subsided, in financial year 2023 the Company returned to an in-person Annual General Meeting. Ms Plath and Mr Eggers were re-elected as members of the Supervisory Board at the Annual General Meeting on 29 August 2024. The term of office of Mr Strecker as member of the Supervisory Board ends with the Annual General Meeting for financial year 2024. Deutsche EuroShop reports to its shareholders and to the public on the Company’s business performance, financial position and results of operations four times a year in line with a financial calendar. Press releases also directly inform the public and the media of Company’s activities. 22 Company 22 Declaration on Corporate Governance 2024
- 25. Information that may materially influence the Company’s share price is published in the form of ad hoc disclosures in accordance with statutory requirements. The Executive Board gives regular presentations to analysts at physical and virtual conferences and at investor events as part of the Company’s investor relations activities. Ana- lyst conferences, for example to accompany earnings announcements, are streamed online, where they are avail- able to anyone interested in the Company. In addition, Deutsche EuroShop provides financial information and other information about the Deutsche EuroShop Group on its website. Compliance management The Executive Board has set up a compliance management system suitable for a holding company and gives appropri- ate consideration to legal and corporate governance requirements at a key affiliated service provider. In financial year 2019, the compliance management system and the internal control system (ICS) were adapted in particular to the requirements of Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie (ARUG II – German Act Imple- menting the Second Shareholder Rights Directive), which came into force on 1 January 2020. The Company set up a whistleblower system for the collection of anonymous internal and external information in the first quarter of 2018. The system is continuously adapted to the latest requirements. Accounting and audits The Deutsche EuroShop Group prepares its financial state- ments according to International Financial Reporting Stand- ards (IFRS) on the basis of Section 315e of the Handels- gesetzbuch (HGB – German Commercial Code). The annual financial statements of Deutsche EuroShop AG will continue to be prepared in line with the accounting provisions of the HGB. The Executive Board is responsible for preparation of the financial statements. The Chairwoman of the Audit Committee commissions the auditor of the annual financial statements, as elected by the Annual General Meeting. The stricter requirements for auditor independence are met in this process. At the Annual General Meeting on 29 August 2024, RSM Ebner Stolz GmbH Co. KG, Wirtschaftsprüfungs- gesellschaft Steuerberatungsgesellschaft was elected as the statutory auditor and Group auditor for the first time for financial year 2024 (previously BDO AG Wirtschaftsprü- fungsgesellschaft). Auditor Florian Riedl is responsible for auditing the annual financial statements. RSM Ebner Stolz did not provide any other assurance services or other ser- vices for the Company in the 2024 financial year. DECLARATION OF CONFORMITY In February 2025, the Executive Board and Supervisory Board of the Company jointly submitted their declaration of conformity with the recommendations of the Government Commission on the German Corporate Governance Code in accordance with Section 161 AktG. The declaration was made permanently available to the public on the Company’s website at www.deutsche-euroshop.de. Joint declaration by the Executive Board and Supervisory Board of Deutsche EuroShop AG relating to the recom- mendations of the Government Commission on the Ger- man Corporate Governance Code in accordance with Sec- tion 161 AktG The Executive Board and the Supervisory Board of Deutsche EuroShop AG declare that the Company has complied with, and will continue to comply with, the recommendations of the Government Commission on the German Corporate Gov- ernance Code as published on 28 April 2022, subject to just one exception. The consolidated financial statements are published within 120 days of the end of the financial year (Code Sec- tion. F.2). It is important to the Company to publish audited financial statements that have been approved by the Supervisory Board. An earlier publication date is not feasible due to the schedules for the preparation, auditing and adoption of the financial statements. Unaudited data of relevance to the capital market are published in advance. Hamburg, 12 February 2025 Executive Board and Supervisory Board Deutsche EuroShop AG 23 the MALL s life Deutsche EuroShop 23
- 27. SHARE PRICE HIGHLY VOLATILE The closing price of the Deutsche EuroShop share at the end of the prior year was €22.55 (Xetra). The share started the year on a downward trend and traded sideways from February to late May. A strong upward trend began in June and pushed the share price to an annual high of €27.40 on 15 August. A sharp correction followed, bringing the DES share down to its yearly low of €18.06 on 23 December. It then started a recovery that lasted until the end of the year. The DES share closed the year at a price of €18.50 and a market capitalisation of €1.4 billion. MIXED PICTURE IN COMPARISON TO BENCHMARK INDEX AND PEER GROUP Including the dividends of €1.95 and €2.60 per share dis- tributed on 11 January 2024 and 3 September 2024 respec- tively, the Deutsche EuroShop share recorded a slightly negative performance of -0.3%. Our share price perfor- mance in 2024 was therefore above that of the European benchmark for listed real estate companies, the EPRA index (-3.3%), but in the lower third for its European peer group1 , which reported average losses of -2.3% (median: +1.3%). The benchmark index for smaller companies, the SDAX, fell 1.8% in the year under review. 1 Carmila, Citycon, Eurocommercial Properties, Hammerson, IGD, Klépierre, Mercialys, Unibail-Rodamco-Westfield, Vastned, Wereldhave Over the past year, German open-ended property funds achieved an average performance of -0.6% (2023: +0.6%) and had cash outflows of €5.9 billion (2023: €+0.1 billion). STOCK MARKET PERFORMANCE in % 2024 2023 2022 DES share -0.3 +13.9 +57.5 DAX +18.8 +20.3 -12.3 SDAX -1.8 +17.1 -27.3 EURO STOXX 50 (Europe) +7.7 +19.2 -11.9 Dow Jones (USA) +12.9 +13.7 -8.8 Nikkei (Japan) +19.2 +28.2 -9.4 SHARE PRICE TRADING VOLUME in € in thousand 28 26 24 22 20 18 16 600 500 400 300 200 100 0 Jan 24 Feb 24 Mar 24 Apr 24 May 24 June 24 July 24 Aug 24 Sep 24 Oct 24 Nov 24 Dec 24 Jan 25 Feb 25 Deutsche EuroShop share closing price Trading volume 25 the MALL s life Deutsche EuroShop 25
- 28. Market capitalisation (basis: year-end closing price) in € million Annual performance incl. dividend SHARE PERFORMANCE AND MARKET CAPITALISATION in % in € million 60 40 20 0 -20 -40 2,200 1,700 1,200 700 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 15.3 -1.2 -8.6 -21.8 -30.2 -20.5 -0.3 13.9 57.5 10.4 2,183 2,086 2,098 1,566 904 1,632 1,724 1,415 1,140 1,367 SHARE PRICE TREND IN 5-YEAR COMPARISON in %, 100% = 31 Dec. 2019 Deutsche EuroShop share EPRA SDAX 150 125 100 75 50 25 Mar 20 June 20 Sep 20 Dec 20 Mar 21 June 21 Sep 21 Dec 21 Mar 22 June 22 Sep 22 Dec 22 Mar 23 June 23 Sep 23 Dec 23 Mar 24 June 24 Sep 24 Dec 24 SHARE PRICE TREND IN 2024 in %, 100% = 31 Dec. 2023 130 120 110 100 90 80 Jan 24 Mar 24 Apr 24 June 24 Aug 24 Oct 24 Dec 24 Feb 25 26 26 The shopping center share Investor Relations
- 29. ANALYST RECOMMENDATIONS OVER THE LAST 10 YEARS in %, as at 20 March 2025 negative neutral positive Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 Q1 17 Q3 17 Q1 18 Q3 18 Q1 19 Q3 19 Q1 20 Q3 20 Q1 21 Q3 21 Q1 22 Q3 22 Q1 23 Q3 23 Q1 24 Q3 24 Q1 25 100 90 80 70 60 50 40 30 20 10 0 STABLE COVERAGE OF THE SHARES Our shares are at present regularly covered by five ana- lysts1 from respected German and international institu- tions,2 and their recommendations introduce us to new groups of investors. In the course of the financial year, we lost one analyst (Oddo BHF) but gained another (Bank of America). Information on the recommendations can be found at: www.deutsche-euroshop.com/research Figures for the Deutsche EuroShop share WKN/ISIN 748 020/DE 000 748 020 4 Ticker symbol DEQ Share capital in € 76,464,319.00 Number of shares (no-par-value registered shares) 76,464,319 Treasury shares 720,465 Indices SDAX, CDAX, EPRA, MSCI Small Cap, HASPAX Official market Prime Standard Frankfurter Wertpapierbörse and Xetra OTC markets Berlin-Bremen, Düsseldorf, Hamburg, Hanover, Munich and Stuttgart The analysts are currently for the most part neutral with regard to the prospects for the DES share.1 1 As at 20 March 2025 2 Baader Bank, Bank of America, Berenberg Bank, Kepler Cheuvreux, M.M. Warburg 27 the MALL s life Deutsche EuroShop 27
- 30. AWARDS FOR REPORTING QUALITY The European Public Real Estate Association (EPRA) has again recognised the transparency of our reporting in terms of sector-specific financial ratios and on the topic of sustainability with a Gold Award. Further awards for our capital market communications can be found on our website at: www.deutsche-euroshop.de/Investor-Relations/Contact/ Awards SHARE BUY-BACK PROGRAMME CARRIED OUT In mid-December 2023, the Executive Board decided, with the approval of the Supervisory Board, to launch and carry out a share buy-back programme. As part of this, a total of 720,465 DES shares (corresponding to around 0.942% of the Company’s share capital) were repurchased between 21 December 2023 and 11 December 2024 at an average price of €20.82 per share and for a total of around €15.0 mil- lion. Further details can be found at: www.deutsche-euroshop.de/Investor-Relations/Share/ Share-Buyback MINIMAL CHANGES TO THE SHARE- HOLDER STRUCTURE The number of investors rose again slightly in 2024: Deutsche EuroShop now has around 9.020 shareholders1 (previous year: 8,740). The shareholder structure has barely changed overall: Hercules BidCo (pooled shares of Oaktree, Alexander Otto and CURA) holds the largest stake at 76.4%. Maren Otto holds 6.6% of DES shares, institutional investors around 3.3% (previous year: 3.8%) and private investors 12.7% (previous year: 13.2%). Deutsche EuroShop holds 0.94% of its own shares. The free float as defined by Deutsche Börse/Stoxx was 14.8% at the end of the year. There were no changes in the regional distribution. 97.6% of Deutsche EuroShop shares are held in domestic securi- ties accounts, while 2.4% are held by European and US investors. 9,020 shareholders SHAREHOLDER STRUCTURE 12.74% Private investors 76.44% Hercules BidCo 0.94% Treasury shares 3.33% Institutional in- vestors 6.55% Maren Otto Regional split 97.6% Germany 2.4% Rest of the world 1 as of 20 March 2025 28 28 Investor Relations Investor Relations The shopping center share
- 31. Proposed dividend: €1.00 per share The Executive Board, together with the Supervisory Board, has resolved to propose to the Annual General Meeting scheduled for 27 June 2025 the payment of a dividend of €1.00 per share for financial year 2024. TEN REASONS TO INVEST in Deutsche EuroShop shares 01. The only public company in Germany to invest solely in shopping centers 02. Prime locations 03. Proven, conservative strategy 04. Cash flow that can be planned over the long term 05. Shareholder-friendly dividend policy 06. Experienced management team 07. Solid performance track record 08. High occupancy rate 09. Inflation-protected rental agreements 10. Solidity combined with potential DIVIDEND SHARE PRICE in € in € 5 4 3 2 1 0 42 35 28 21 14 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 19.162 40.46 38.67 33.96 25.34 22.55 18.50 15.50 19.26 23.50 23.67 24.30 16.88 28.08 28.98 31.64 31.83 26.78 14.46 24.80 18.45 18.45 36.20 23.73 Deutsche EuroShop share closing price Dividend (distributed for the previous year) 1 = Proposal 2 = Share price on 19 March 2025 0.960.960.960.961.001.051.051.051.051.101.101.201.251.301.351.401.451.50 0.000.04 1.00 2.50 4.55 1.001 29 the MALL s life Deutsche EuroShop 29
- 32. KEY SHARE FIGURES IN THE TEN-YEAR OVERVIEW 2024 2023 2022 2021 Market capitalisation in € million (basis: year-end closing price) 1,415 1,724 1,367 904 Number of shares (year-end) 76,464,319 76,464,319 61,783,594 61,783,594 Weighted average number of shares 75,136,922 75,136,922 61,783,594 61,783,594 High in € 27.40 (15.08.2024) 24.30 (16.08.2023) 26.38 (15.08.2022) 21.30 (13.08.2021) Low in € 18.06 (23.12.2024) 17.14 (31.10.2023) 14.02 (07.03.2022) 14.00 (13.12.2021) Year-end closing price (31 Dec.) in € 18.50 22.55 22.12 14.64 Dividend per share in € 1.001 2.60 4.45 1.00 Dividend yield (31 Dec.) in % 5.4 3.5 11.3 6.8 Annual development excl./ incl. Div. -18.030%/-0.3% +1.9%/+13.9% +51.1%/+57.5% -20.7%/-20.5% Average trading volume per day in units 19,715 14,751 145,982 148,159 Average daily trading volume in shares incl. Multilateral Trading Facilities 20,7792 15,540 336,666 418,885 EPS in € (basic) 1.62 -0.51 0.35 0.97 All share price information relates to Xetra. 1 Proposal 2 Source: Bloomberg, adjusted data, as at 13 January 2025 Would you like further information? Then visit us online or call us: Patrick Kiss and Nicolas Lissner Tel.: +49 (0)40 - 41 35 79-20 / -22 Fax: +49 (0)40 - 41 35 79-29 E-Mail: [email protected] Website: www.deutsche-euroshop.de/ir Patrick Kiss and Nicolas Lissner 30 30 Investor Relations Investor Relations The shopping center share
- 33. 2020 2019 2018 2017 2016 2015 1,140 1,632 1,566 2,098 2,086 2,183 61,783,594 61,783,594 61,783,594 61,783,594 53,945,536 53,945,536 61,783,594 61,783,594 61,783,594 58,248,007 53,945,536 53,945,536 26.50 (03.01.2020) 27.44 (21.05.2019) 33.90 (02.01.2018) 39.32 (18.04.2017) 42.52 (09.06.2016) 48.00 (10.04.2015) 9.52 (25.09.2020) 22.54 (16.08.2019) 24.98 (27.12.2018) 30.37 (25.10.2017) 35.86 (11.02.2016) 36.32 (06.01.2015) 18.45 26.42 25.34 33.96 38.67 40.46 0.04 0.00 1.50 1.45 1.40 1.35 0.2 0.0 5.9 4.3 3.6 3.3 -30.2%/ - 4.3%/10.4% -25.4%/-21.8% -12.2%/-8.6% -4.4%/-1.2% 11.8%/15.3% 153,503 149,891 192,835 212,422 142,133 152,355 455,895 458,797 526,239 533,866 412,750 449,500 -4.07 1.81 1.29 2.31 4.11 5.73 FINANCIAL CALENDAR 2025 22.01. Kepler Cheuvreux German Corporate Conference, Frankfurt 28.03. Consolidated financial statements 2024 29.04. Annual Report 2024 14.05. Quarterly statement 3M 2025 27.06. Annual General Meeting, Hamburg 14.08. Half-year Financial Report 2025 22.09. Berenberg and Goldman Sachs German Corporate Conference, Munich 23.09. Baader Investment Conference, Munich 13.11. Quarterly Statement 9M 2025 20.11. Kepler Cheuvreux Pan-European Real Estate Conference, London Our financial calendar is updated continuously. Please check our website for the latest events: www.deutsche- euroshop.com/ir 31 the MALL s life Deutsche EuroShop 31
- 35. Basic information about the Group 34 Group business model, targets and strategy 34 Management system 35 Economic review 36 Macroeconomic and sector- specific conditions 36 Business development and overall comment on the Group’s financial situation 38 Results of operations of the Group 39 Financial position of the Group 45 Net assets of the Group 47 Report on events after the reporting date 50 Outlook 50 Risk report 52 Principles governing the risk management system and internal control system 52 Accounting-related internal control system 53 Evaluation of the overall risk position 53 Presentation of material individual risks 54 Opportunity report 59 Report of the Executive Board on relations with affiliated companies 60 Acquisition reporting 60 Declaration on corporate governance 61 Reporting on the annual financial statements of Deutsche EuroShop AG 62 The information provided in the combined management report applies to Deutsche EuroShop AG (“Deutsche EuroShop AG”) and Deutsche EuroShop AG and its consoli- dated subsidiaries (“Deutsche EuroShop Group”). The annual financial statements of Deutsche EuroShop AG are reported on in a separate section of the combined manage- ment report. the MALL s life Deutsche EuroShop 33
- 36. Basic information about the Group GROUP BUSINESS MODEL, TARGETS AND STRATEGY Deutsche EuroShop AG is an Aktiengesellschaft (public company) under German law. The Company’s registered office is in Hamburg. Deutsche EuroShop AG is the only public company in Germany to invest solely in shopping centers in prime locations. A total of 21 shopping centers in Germany, Austria, Poland, Hungary and the Czech Repub- lic are held in the real estate portfolio. The Group generates its reported revenue from rental income on the spaces it lets in the shopping centers. These are held by independent companies, with Deutsche EuroShop AG holding stakes of 100% in 16 shopping centers and between 50% and 95% in the other five. Further infor- mation on the incorporation of these companies into the consolidated annual results is provided in the notes to the consolidated financial statements. The Group managing company is Deutsche EuroShop AG. It is responsible for corporate strategy, portfolio and risk management, financing and communication. The Deutsche EuroShop Group has a central structure and lean personnel organisation. OBJECTIVES AND STRATEGY The management focuses on investments in high-quality shopping centers in urban centers and established loca- tions offering the potential for stable, long-term value growth. A key investment target is the generation of high surplus liquidity from leases in shopping centers, of which a significant portion can be paid out to shareholders in the form of an annual dividend. To this end, the Company invests its capital in shopping centers in different European regions in accordance with the principle of risk diversification. Ger- many is the main focus of investment. Indexed and reve- nue-linked commercial rents ensure that high earnings targets are achieved. The Deutsche EuroShop Group aims to take advantage of favourable financing conditions while maintaining and expanding its pool of lenders and funding sources. The Group has historically financed its investment activities pri- marily through secured borrowings from various lenders. In order to further diversify its capital and financing struc- ture, especially in a market environment of rising interest rates and a tendency towards stricter credit requirements, the management is looking into expanding the capital and financing structure. Market opportunities for issuing one or more capital market instruments are also being explored and evaluated by Deutsche EuroShop AG. As a result, the Group’s loan-to-value (LTV) ratio could be increased to a range of 50% to 60%. Any issues are subject to prevailing market conditions and are intended to have an investment grade rating, depending on the financing instrument. DIVERSIFIED SHOPPING CENTER PORTFOLIO The Deutsche EuroShop Group has a balanced and diversi- fied portfolio of German and European shopping centers. The management focuses on investments in prime (1-a) locations in cities with a catchment area of at least 300,000 residents that bring a high level of investment security. SEIZING OPPORTUNITIES AND MAXIMISING VALUE In line with the buy hold strategy, the management is increasingly concentrating on shopping center quality and returns rather than rapid portfolio growth.We continuously monitor the market and make portfolio adjustments through acquisitions and sales when economically attractive oppor- tunities arise. Rapid decision-making chains as well as considerable flex- ibility regarding potential investments and financing struc- tures allow Deutsche EuroShop AG to react to a wide range of competitive situations. At the same time, the Group’s management focuses on optimising the value of the existing portfolio of properties. TAILORED RENT STRUCTURE One key component of the rental model is a tailored rent structure. While city center property owners often focus on obtaining the highest possible rents for their properties – creating a monolithic retail offering – the Deutsche EuroShop Group’s management uses a calculation combin- ing a range of factors to create an attractive sector mix and optimise long-term rental income. Rental partners pay rents that are customary in this sector and regularly consist mainly of a minimum rent linked to the consumer price index and a revenue-linked rent. 34 Combined management report
- 37. THE SHOPPING EXPERIENCE CONCEPT Deutsche EuroShop AG has outsourced center management to an experienced external partner: Hamburger ECE Mar- ketplaces GmbH Co. KG, Hamburg (“ECE Marketplaces“), based in Hamburg. The ECE Group has been designing, planning, building, letting and managing shopping centers since 1965. The Company is the current European market leader, with some 200 shopping centers under manage- ment. Deutsche EuroShop AG views professional center management as the key to successful shopping centers. In addition to guaranteeing standard opening hours and a con- sistently friendly, bright, safe and clean shopping environ- ment, the center management can make use of unusual displays, promotions and exhibitions to turn shopping into an experience. Each day, 400,000 to 500,000 shoppers visit the 21 Deutsche EuroShop centers, where they are impressed by the range of sectors represented, the diverse food options, the different leisure facilities, the rotating pro- motional activities including fashion shows, learning fairs and interactive exhibitions as well as a wide variety of attractions for children. As a result, the shopping centers become marketplaces where there is always something new and spectacular on offer. OMNI-CHANNEL APPROACH Deutsche EuroShop AG is seeing an ever closer connection between bricks-and-mortar stores and online retail. As a company that rents out a wide range of spaces in prime locations, it has been promoting an omni-channel approach for years – for its center locations as well as for its tenants. The centers in the portfolio form the heart of the guests’ shopping experience. They also function as an extensive warehouse. Viewing the centers as micro-hubs not only facilitates higher sales for retailers and faster delivery times for customers, but also contributes to reducing CO₂ by shortening transport routes. MANAGEMENT SYSTEM The Executive Board of Deutsche EuroShop AG manages the Group in accordance with the provisions of German company law and with its rules of procedure. The Executive Board’s duties, responsibilities and business procedures are laid down in its rules of procedure and in its schedule of responsibilities. The Group targets shopping centers with sustainable and stable value growth and a high liquidity surplus generated from long-term leases. These parameters are then used to derive relevant management indicators (performance indi- cators). For the Group, these are: revenue, EBIT (earnings before interest and taxes); EBT (earnings before taxes) excluding measurement gains/losses; and FFO (funds from operations) per share. Under commercial law, the perfor- mance indicators for the annual financial statements of Deutsche EuroShop AG are income from investments and earnings before taxes. Based on five-year medium-term planning for each shop- ping center, aggregated Group planning is drawn up once a year and the management indicator targets are estab- lished. Throughout the year, current performance is com- pared periodically (quarterly) against these targets and current projections. In addition, the value drivers behind the management indicators, such as rental income, visitor num- bers, re-letting statistics and collection ratios, are moni- tored in monthly controlling reports. This should make it possible to take the necessary urgent measures in the Group in good time. The Supervisory Board supervises and advises the Execu- tive Board in its management activities in accordance with the provisions of German company law and its rules of pro- cedure. It appoints the members of the Executive Board, and significant transactions by the Executive Board are sub- ject to its approval. The Supervisory Board comprises nine members, all of whom are elected by the Annual General Meeting. Members of the Executive Board are appointed and dis- missed on the basis of Sections 84 and 85 of the Aktieng- esetz (AktG – German Public Companies Act). Changes to the Articles of Association are made in accordance with Sections 179 and 133 AktG, and the Supervisory Board is also authorised, without a resolution of the Annual General Meeting, to adapt the Articles of Association to new legal provisions that become binding on the Company, as well as to resolve changes to the Articles of Association that only relate to the wording. More information about the Executive Board and the Super- visory Board can be found in the declaration on corporate governance. 35 the MALL s life Deutsche EuroShop
- 38. MACROECONOMIC AND SECTOR- SPECIFIC CONDITIONS Germany’s economy contracted for the second year in a row in 2024. According to calculations by the German Federal Statistical Office, real GDP declined by 0.2% in 2024 after price adjustments (2023: -0.3%). Experts attribute the lack of an economic upturn to both cyclical and structural chal- lenges, including growing competition for exports, high energy costs, persistently high interest rates, and uncertain economic prospects. The manufacturing sector performed particularly poorly and shrank by 3.0%, with key industries such as mechan- ical engineering and automotive suffering losses. Ener- gy-intensive sectors like metals and chemicals remained weak following years of declining production. The construc- tion sector was hit even harder, with gross value added falling by 3.8%. High building costs and capital expenses had a particularly negative impact on residential construc- tion. The services sector, on the other hand, grew by +0.8%, though performance varied across industries. While the gross value added of the combined trade, transport and hospitality sector stagnated, the information and commu- nications sector continued its expansion. Government-re- lated sectors such as public administration, education, and healthcare also recorded gains. Germany’s foreign trade remained weak, following the slug- gish performance of previous years. Despite a surge late in the year, exports declined by 1.0% compared to 2023 when adjusted for seasonal effects. Imports fell by 2.8%. In December 2024, seasonally adjusted exports increased by 2.9% compared to November, while imports rose by 2.1%. Exports and imports were up 3.4% and 4.5% respectively compared to the same period in the previous year. Consumer prices rose by 2.2% on average in Germany over the course of 2024. Inflation eased significantly compared to previous years and moved closer to the 2% target. This marked a substantial decline from 5.9% in 2023 and 6.9% in 2022. Real wages continued to rise for the sixth consecutive quar- ter. In the third quarter of 2024, real wages were 2.9% higher than the previous year. This trend was driven by inflation compensation premiums, collectively agreed wage increases, and one-time payments. According to the European Central Bank, financing condi- tions remained challenging for businesses in 2024 despite signs of stabilisation. In October 2024, the average corpo- rate loan interest rate stood at 4.7%, more than half a per- centage point below the previous year’s peak. Market-based finance costs had declined by over one percentage point from their highest level. Mortgage rates also fell and aver- aged 3.6% in October 2024 – about half a percentage point lower than their January 2023 peak. Private consumer spending saw a modest +0.3% increase on a price-adjusted basis according to the German Federal Statistical Office. However, the extent to which lower infla- tion and rising wages spurred consumer spending was lim- ited. The highest consumer spending increases were in healthcare (+2.8%) and transportation (+2.1%), while con- sumers spent significantly less on restaurants and accom- modation (-4.4%) as well as clothing and footwear (-2.8%). Government spending was more expansionary and increased by +2.4% on a price-adjusted basis. This was primarily driven by higher social and care-related expendi- tures. The ongoing weakness in the economy had a clear impact on the labour market. Even though the number of employed persons reached a record-high annual average of 46.1 mil- lion (+0.2%) in the previous year, unemployment also increased, with the unemployment rate rising to 6.0% in December – an increase of 0.3% year-over-year. Economic review 36 Combined management report
- 39. RETAIL Retail sales expanded by 1.1% in real terms in 2024, according to the German Federal Statistical Office. Sales declined by 0.5% in the first half of 2024 compared to the same period of the previous year, then rebounded by 2.6% in the second half of 2024 compared to the year before. Despite this upwards trend, overall retail sales in 2024 remained 2.6% below pre-pandemic levels in real terms. According to the Handelsverband Deutschland (HDE – Ger- man Retail Association), total sales in the German retail sector rose by 2.2% to €663.8 billion in the reporting year. Online retail sales increased by 3.5% in 2024 to €88.4 bil- lion. This accounted for approximately 13.3% of total retail sales, up from 13.0% in 2023. The competitive landscape of Deutsche EuroShop AG’s port- folio remains primarily influenced by online retail, inner-city stores, shopping centers in the immediate catchment area, and inner-city centers in major regional urban centers. For example, the city centers of Dortmund, Mannheim and Braunschweig are serious rivals to the Allee-Center in Hamm, the Rhein-Neckar-Zentrum in Viernheim and the City-Galerie in Wolfsburg, respectively. Another factor is additional competition in the form of grow- ing numbers or expansions of factory and designer outlets on greenfield sites outside the city limits and, to a certain extent, also within them. There are currently plans to expand a designer outlet in Zweibrücken, Saarland, which is in the catchment area of the Saarpark-Center in Neunkirchen. An outlet in Remscheid, in the catchment area of the City-Arkaden Wuppertal, is also scheduled to open in 2027. REAL ESTATE MARKET According to calculations by JLL, Germany’s investment market for commercial real estate recorded a transaction volume of €35.4 billion in 2024, a 14% increase compared to the previous year. This marked a recovery following the sharp decline in the market in the previous year (-52%). Residential real estate accounted for €10.5 billion, or 30% of the total transaction volume (2023: 29%). Logistics real estate saw a slight improvement in transaction volumes to €7.9 billion, or 22% of the total (previous year: 24%). Office real estate generated €5.5 billion in revenue (15%; previous year: 17%). Retail properties saw €5.6 billion in investment, or 16% of the total (2023: 17%). Supermarkets and retail parks accounted for nearly 40% of the transaction volume with over €2.1 billion. Transformation and repositioning increas- ingly became priorities for inner-city department stores and shopping centers. Meanwhile, prime retail locations bene- fited from a resurgence in international city tourism. Inves- tors and owners approached structural challenges inherent to shopping centers with experience-oriented concepts. According to JLL, top returns for real estate remained largely stable throughout 2024, with some positive and neg- ative fluctuations across asset classes. By the end of the year, the average top return across the seven metropolitan areas declined slightly to 3.56%. Accordingly, at the top shopping centers in Germany, top returns averaged 5.90% at the end of the year (2023: 5.50%). According to JLL, the reletting volume for retail properties reached 478,300 m² in 2024, marking a 6% increase year- over-year and significantly exceeding the five-year average of 438,000 m². The number of lease agreements rose from 878 in the previous year to 932, reflecting a stabilisation in the level of demand for large properties which significantly exceeded expectations. The number of stores in excess of 1,000 m² increased, driven primarily by the textile sector and department stores such as Woolworth, along with non- food discounters like Tedi and Action. This spurred a signif- icant increase in take-up. In total, 272,700 m² (or 57% of all leased space) was accounted for by large properties (1,000 m² or more), with nearly half (131,700 m²) attributed to the textile sector. SHARE PRICE PERFORMANCE The closing price (Xetra) of the Deutsche EuroShop share at the end of 2023 was €22.55. The share started the year on a downward trend and traded sideways from February to late May. A strong upward trend began in June and pushed the share price to its annual high of €27.40 on 15 August. A sharp correction followed, bringing the DES share down to its yearly low of €18.06 on 23 December. By year-end, the share recovered slightly and closed at €18.50. Taking the dividend of €4.55 per share paid during the year into account, this corresponds to a slightly negative performance of -0.3%. The SDAX performed somewhat weaker and posted a -1.8% decline over the same period. Deutsche EuroShop AG’s market capitalisation stood at €1.4 billion at the end of 2024. 37 the MALL s life Deutsche EuroShop
- 40. BUSINESS DEVELOPMENT AND OVERALL COMMENT ON THE GROUP’S FINANCIAL SITUATION Key consolidated figures in € million 01.01.- 31.12.2024 01.01.- 31.12.2023 ± Revenue 271.4 273.3 -0.7% EBIT 216.3 212.7 1.7% EBT (excluding measurement gains/losses)1 165.2 169.5 -2.5% EPRA2 earnings 159.7 172.4 -7.4% FFO 157.1 171.3 -8.3% Equity ratio in %3 49.2 53.3 LTV ratio in %4 39.2 33.2 EPRA2 LTV in %5 41.1 34.8 in € 01.01.- 31.12.2024 01.01.- 31.12.2023 +/- EPRA2 earnings per share6 2.10 2.29 -8.3% FFO per share 2.06 2.28 -9.6% EPRA2 NTA per share 29.02 31.58 -8.1% Weighted number of no-par-value shares issued6 76,090,428 75,136,922 1.3% 1 Including the share attributable to equity-accounted joint ventures and associates 2 European Public Real Estate Association 3 Including limited partner contributions of non-controlling interests 4 Loan-to-value (LTV): Ratio of net financial liabilities (financial liabilities less cash and cash equivalents) to non-current assets (investment properties and financial invest- ments accounted for using the equity method) 5 EPRA Loan-to-Value (EPRA LTV): Ratio of net debt (financial liabilities and lease liabilities less cash and cash equivalents) to real estate assets (investment properties, owner-occupied properties, intangible assets and other assets (net)). Net debt and real estate assets are calculated on the basis of the Group’s share in the subsidiaries and joint ventures. 6 The number of no-par value shares issued for 2023 takes into account, on a timeweighted basis, the capital increase against cash and non-cash contributions carried out at the beginning of 2023 and entered in the Commercial Register on 3 February 2023, as a result of which the number of Deutsche EuroShop AG shares in circula- tion increased from 61,783,594 to 76,464,319 no-par value shares. Furthermore, the 9,000 treasury shares acquired by 31 December 2023 and the 711,465 acquired by 31 December 2024 are taken into account when determining the weighted number of shares. 1 The occupancy rate is based on floor space, whereas in the previous year it was based on market rents, which corresponds to the definition of the EPRA occupancy rate. The Deutsche EuroShop Group’s operating business was stable and in line with expectations in financial year 2024. The slightly positive trend with respect to visitor numbers and revenue from our tenants continued. Compared to the same period of the previous year, visitor frequency at our shopping centers rose by 0.6%, and our tenants increased their retail sales by 2.5%. The occupancy rate1 increased from 93.0% in the previous year to 95.4% as at the report- ing date and was therefore at a high level. The EPRA occu- pancy rate remained stable at 93.3% (previous year: 93.3%). The forecast for financial year 2024, as stated in last year’s financial report, was as follows: revenue between €268 and €274 million; slight decline in EBIT to between €204 and €210 million; EBT (excluding measurement gains/losses) between €149 and €155 million; FFO: €146 to €152 million, or €1.91 to €1.99 per share. Following the publication of the quarterly report on 30 September 2024, the projections were refined (and revised upward in some cases) based on developments in the first nine months: Revenue: €268 million to €271 million EBIT: €207 million to €211 million EBT (excluding measurement gains/losses): €156 million to €160 million FFO: €151 million to €155 million Due to temporary vacancies resulting from investment measures in shopping centers, a downturn in settlement payments compared to the previous year, and a few cases of lower follow-on rents, revenue declined slightly in finan- cial year 2024 to €271 million – within the forecast range. EBIT for financial year 2024 amounted to €216 million, slightly exceeding the forecast. This was primarily due to a decline in operating center expenses and other income from the reversal of impairments and provisions in addition to ancillary costs related to previous years. EBT (excluding measurement gains/losses) came to €165 million, while FFO totalled €157 million. Both of these exceeded last year’s forecast, largely due to the EBIT-related effects described above. 38 Economic review Combined management report
- 41. In the opinion of the Executive Board, the Group’s results of operations developed positively overall in spite of the ongo- ing challenges it faced during the financial year (recession, geopolitical uncertainties and conflicts). The Executive Board still views the Group’s net assets and financial posi- tion as very solid, with an equity ratio of 49.2% and LTV of 39.2%. On the whole, the Executive Board is very satisfied with the operational performance in 2024. RESULTS OF OPERATIONS OF THE GROUP Change in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 ± in % Revenue 271,403 273,304 -1,901 -0.7 Operating and administrative costs for property -46,252 -49,542 3,290 6.6 Write-downs and derecognition of receivables -7,731 -8,858 1,127 12.7 NOI 217,420 214,904 2,516 1.2 Other operating income 9,074 35,335 -26,261 -74.3 Other operating expenses -10,189 -37,578 27,389 72.9 EBIT 216,305 212,661 3,644 1.7 At-equity profit/loss 16,581 5,005 Measurement gains/losses (at equity) -8,231 3,426 Deferred taxes (at equity) 474 65 At-equity (operating) profit/loss 8,824 8,496 328 3.9 Interest expense -49,083 -43,313 -5,770 -13.3 Profit/loss attributable to limited partners -14,397 -13,876 -521 -3.8 Other financial expenses -1,876 0 -1,876 – Interest income 5,408 5,492 -84 -1.5 Net finance costs (excluding measurement gains / losses) -51,124 -43,201 -7,923 -18.3 EBT (excluding measurement gains/losses) 165,181 169,460 -4,279 -2.5 Measurement gains/losses -22,870 -205,701 Measurement gains/losses (at equity) 8,231 -3,426 Measurement gains/losses (including at equity) -14,639 -209,127 194,488 93.0 Taxes on income and earnings -8,115 -5,379 -2,736 -50.9 Deferred taxes -18,439 6,834 Deferred taxes (at equity) -474 -65 Deferred taxes (including at equity) -18,913 6,769 -25,682 -379.4 Consolidated profit 123,514 -38,277 161,791 422.7 39 the MALL s life Deutsche EuroShop
- 42. Revenue Change in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 ± in % Main-Taunus-Zentrum, Sulzbach 35,845 36,776 -931 -2.5 Altmarkt-Galerie, Dresden 24,113 24,880 -767 -3.1 A10 Center, Wildau 18,058 17,497 561 3.2 Rhein-Neckar-Zentrum, Viernheim 17,498 17,170 328 1.9 Allee-Center, Magdeburg 16,965 17,250 -285 -1.7 Phoenix-Center, Harburg 13,835 14,393 -558 -3.9 Saarpark-Center, Neunkirchen 11,817 11,893 -76 -0.6 Billstedt-Center, Hamburg 11,353 11,053 300 2.7 Herold-Center, Norderstedt 11,231 11,751 -520 -4.4 Stadt-Galerie, Passau 10,330 10,338 -8 -0.1 Forum, Wetzlar 9,991 10,254 -263 -2.6 Allee-Center, Hamm 9,924 10,286 -362 -3.5 City-Arkaden, Wuppertal 8,355 8,381 -26 -0.3 City-Galerie, Wolfsburg 8,137 8,528 -391 -4.6 Rathaus-Center, Dessau 7,591 7,587 4 0.1 City-Point, Kassel 6,526 7,068 -542 -7.7 Stadt-Galerie, Hamelin 5,219 5,607 -388 -6.9 DES Verwaltung GmbH 1,408 1,161 247 21.3 Domestic 228,196 231,873 -3,677 -1.6 Galeria Bałtycka, Gdansk 18,407 17,746 661 3.7 Olympia Center, Brno 24,800 23,685 1,115 4.7 Abroad 43,207 41,431 1,776 4.3 Total 271,403 273,304 -1,901 -0.7 Revenue down slightly Revenue fell to €271.4 million (previous year: €273.3 million), down €1.9 million (-0.7%, like-for-like) year on year. The main reasons for this decline included temporary vacancies as a result of investment measures at shopping centers, lower settlement payments than in the previous year, as well as a few cases of lower fol- low-on rents. Turnover rents increased slightly year on year. Revenue in € million 2023 273.3 -0.7% 271.4 2024 40 Economic review Combined management report
- 43. CENTER OPERATING EXPENSES AS A PERCENTAGE DOWN ON PREVIOUS YEAR Center operating expenses of €46.3 million (previous year: €49.5 million) during the financial year, mainly comprising center management fees, non-apportionable ancillary costs, land taxes, building insurance and maintenance, were below the previous year in terms of their percentage of revenue at 17.0% (previous year: 18.1%). This decline is attributable to lower maintenance expenses, as well as optimisations to costs for center marketing. LOWER NEED FOR WRITE-DOWNS Write-downsandthederecognitionofreceivablesdecreased year on year by €1.1 million (12.7%) to €7.7 million (previ- ous year: €8.9 million). OTHER OPERATING INCOME AND EXPENSES Other operating income, in 2024 stemming primarily from the reversal of provisions, from income from rental receiv- ables for which impairment losses had been recognised in previous years as well as from additional payments with respect to ancillary costs, amounted to €9.1 million (previ- ous year: €35.3 million). This represents a significant decrease from the figure of €26.3 million recorded in the previous year, due in large part to income in 2023 of €16.2 million from the change in the scope of consolidation as part of the acquisition of additional shares in six property companies at the beginning of the year before. Further major contributors to other operating income were income from rental receivables written down in previous years (€3.2 million, previous year: €4.3 million), the reversal of provisions (€1.5 million, previous year: €1.7 million), and additional payments in conjunction with ancillary costs (€1.4 million, previous year: €10.5 million).Other operating expenses, which mainly comprised general administrative costs and personnel costs, fell to €10.2 million (previous year: €37.6 million). In the previous year, this item also included €30.2 million in expenses in connection with the change in the scope of consolidation and the related real estate transfer tax. EBIT SLIGHTLY UP ON THE PREVIOUS YEAR At €216.3 million, earnings before interest and taxes (EBIT) was slightly higher than in the previous year (€212.7 mil- lion). This was largely due to the rise in net operating income (NOI) related to declining operating center expenses and an expected year-on-year decline in revenues. DECLINE IN FINANCIAL GAINS/LOSSES EXCLUDING MEASUREMENT GAINS/LOSSES At €-51.1 million, financial gains/losses (excluding meas- urement gains/losses) declined year on year (€-43.2 mil- lion). At €5.4 million, interest income was almost on a par with the previous year (€5.5 million), while the interest expense of Group companies rose by €5.8 million. This was affected by loan increases for the Stadt-Galerie Passau (at the end of financial year 2023), the Allee-Center Magdeburg and the Allee-Center Hamm, as well as by first-time bor- rowing for the Rathaus-Center Dessau. Other financial expenses of €1.9 million in relation to redeeming a swap resulted from the long-term refinancing and increase in the loan for the Allee-Center Hamm at more preferable conditions. 41 the MALL s life Deutsche EuroShop
- 44. Proportionate and cumulative income statement of the joint ventures Change in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 ± in % City-Arkaden, Klagenfurt 6,950 7,017 -67 -1.0 Árkád, Pécs 5,027 4,752 275 5.8 Other 41 40 1 2.5 Revenue 12,018 11,809 209 1.8 Operating and administrative costs for property -1,673 -1,337 -336 -25.1 Write-downs and derecognition of receivables -203 -144 -59 -41.0 NOI 10,142 10,328 -186 -1.8 Other operating income 600 394 206 52.3 Other operating expenses -298 -477 179 37.5 EBIT 10,444 10,245 199 1.9 Interest income 56 9 47 522.2 Interest expense -1,366 -1,365 -1 -0.1 Financial gains/losses -1,310 -1,356 46 3.4 Current tax expense -311 -393 82 20.9 At-equity profit/loss (excluding measurement gains/ losses) 8,823 8,496 327 3.8 Measurement gains/losses 8,231 -3,426 11,657 340.3 Deferred taxes -474 -65 -409 -629.2 Share of profit/loss 16,580 5,005 11,575 231.3 SLIGHT DOWNTURN IN EBT (EXCLUDING MEASUREMENT GAINS/LOSSES) Despite the slight increase in EBIT, the downturn in financial gains/losses led to a 2.5% drop in EBT (excluding meas- urement gains/losses) to €165.2 million (previous year: €169.5 million). MEASUREMENT GAINS/LOSSES STABLE Persistently high interest rates and the sluggish recovery of the investment market for real estate in the reporting year continued to have an adverse impact on the valuation of the Group’s real estate assets (IAS 40), resulting in a measurement loss of €-14.6 million (previous year: €-209.1 million). Measurement gains/losses on real estate assets, after minority interests, broke down into a loss of €-22.9 million (previous year: €-205.7 million) from the measurement of the real estate assets reported by the Group and a gain of €8.2 million (previous year: €-3.4 million) from the meas- urement of the real estate assets of the joint ventures recorded on the balance sheet using the equity method. On average, real estate assets increased in value by 0.7% in the financial year (previous year: -4.2%). This was mainly due to ongoing investments of €47.2 million in the real estate assets reported on a Group level with unrealised losses from changes in market value of €-25.9 million and ongoing investments of €1.1 million in the real estate assets of the joint ventures accounted for using the equity method with unrealised gains from changes in market value of €8.2 million. Measurement gains/losses for properties ranged between -7.1% and +8.3%. INCREASE IN TAXES ON INCOME AND EARNINGS, DEFERRED TAXES Taxes on income and earnings increased to €8.1 million (previous year: €5.4 million) on the back of the improvement in earnings. Deferred tax provisions, including the share included in the at-equity result, were increased by €18.9 million in the year under review as a result of the decline in the stabilised fair values of real estate (previous year: €-6.8 million). 42 Economic review Combined management report
- 45. SIGNIFICANTLY HIGHER CONSOLIDATED PROFIT At €123.5 million, consolidated profit was a significant €161.8 million higher than the previous year (€-38.3 million) due to the improvement in measurement gains/losses, while earnings per share increased from €-0.51 to €1.62. EPRA earnings 01.01.-31.12.2024 01.01.-31.12.2023 in € thousand per share in € in € thousand per share in € Consolidated profit 123,514 1.62 -38,277 -0.51 Measurement gains/losses on investment properties1 14,639 0.19 209,127 2.78 Income and expenses from changes in the scope of consolidation2 0 0.00 7,258 0.10 Deferred taxes on EPRA adjustments3 21,556 0.29 -5,719 -0.08 EPRA earnings 159,709 2.10 172,389 2.29 Weighted number of no-par-value shares issued 76,090,428 75,136,922 1 Including the share attributable to equity-accounted joint ventures and associates 2 Including acquisition costs from the purchase of additional shares and after consideration of taxes 3 Affects deferred taxes on investment properties and derivative financial instruments EPRA earnings down due to one-off income in the previous yearEPRA earnings, which exclude measurement gains/losses, decreased by €12.7 million to €159.7 million or by €0.19 to €2.10 per share, in particular due to one- off income from ancillary costs and reversals of write-downs in the previous year. EPRA earnings in € million / in € per share 2023 172.4 2.29 75.1 Weighted number of no-par-value shares issued, in million 2022 129.6 61.8 2.10 2021 122.0 61.8 1.97 2020 124.5 61.8 2.02 76.1 159.7 2024 2.10 43 the MALL s life Deutsche EuroShop
- 46. Funds from operations 01.01.-31.12.2024 01.01.-31.12.2023 in € thousand per share in € in € thousand per share in € Consolidated profit 123,514 1.62 -38,277 -0.51 Measurement gains/losses on investment properties1 14,639 0.19 209,127 2.78 Income and expenses from changes in the scope of consolidation2 0 0.00 7,258 0.10 Deferred taxes1 18,913 0.25 -6,769 -0.09 FFO 157,066 2.06 171,339 2.28 Weighted number of no-par-value shares issued 76,090,428 75,136,922 1 Including the share attributable to equity-accounted joint ventures and associates 2 Including acquisition costs from the purchase of additional shares and after consideration of taxes 3 After consideration of taxes RESULTS OF OPERATIONS OF THE SEGMENTS The subsidiaries and equity-accounted joint ventures are included in the Group’s segment reporting in proportion to the Group’s share therein. A distinction is made between the shopping centers in Germany (“domestic”) and else- where in Europe (“abroad”) (for further details, please see our statements on segment reporting in the notes to the consolidated financial statements): Change in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 ± in % Revenue 262,144 262,636 -492 -0.2 - Domestic 206,961 209,436 -2,475 -1.2 - Abroad 55,183 53,200 1,983 3.7 EBIT 213,130 221,410 -8,280 -3.7 - Domestic 164,970 172,981 -8,011 -4.6 - Abroad 48,160 48,429 -269 -0.6 EBT (excluding measurement gains/losses) 169,625 184,810 -15,185 -8.2 - Domestic 128,119 143,274 -15,155 -10.6 - Abroad 41,506 41,536 -30 -0.1 Development of funds from operations Funds from operations (FFO) are used to finance our ongoing investments in portfolio properties, scheduled repayments on our long-term bank loans and as the basis for the distribution of dividends. Significant non-recurring effects that are not part of the Group’s operating activities are eliminated in the calculation of FFO. FFO decreased from €171.3 million to €157.1 million or from €2.28 per share to €2.06 per share (based on a time-weighted number of no-par value shares issued). -8.3% Funds from operations (FFO) in € million 171.3 2023 157.1 2024 44 Economic review Combined management report
- 47. FINANCIAL POSITION OF THE GROUP PRINCIPLES AND OBJECTIVES OF FINANCIAL MANAGEMENT For the purposes of financing its investments, the Deutsche EuroShop Group uses the stock exchange for procuring equity, as well as the credit and capital markets for procur- ing loans. Within the Group, both the individual property companies and Deutsche EuroShop AG act as borrowers from banks or, where necessary, bond debtors. Loans and bonds are taken out in euros for all Group companies. In general, the use of equity and loans for investments should be weighted equally and the equity ratio in the Group (including third-party interests) should not fall significantly below 45%. Market opportunities for the issuance of capital market instruments are also explored. A reorganisation of the capital and financing structure could increase the Group’s loan-to-value (LTV) ratio to a range of 50% to 60% in future. We finance our real estate projects on a long-term basis and also use derivative financial instruments to hedge against rising capital market rates. Hedging transactions are used to hedge individual loans. Deutsche EuroShop AG also has access to short-term financing instruments to ena- ble it to respond immediately to investment opportunities. Until used for investment, any cash not needed is invested short-term to finance ongoing costs or pay dividends. FINANCING ANALYSIS As at 31 December 2024, the Deutsche EuroShop Group reported the following key financial data: in € million 31.12.2024 31.12.2023 Change Total assets 4,364.4 4,460.2 -95.8 Equity (including third-party shareholders) 2,145.7 2,379.0 -233.4 Equity ratio in % 49.2 53.3 -4.1 Net financial liabilities 1,595.9 1,341.5 254.4 Loan-to-value (LTV) in % 39.2 33.2 6.0 At €2,145.7 million (previous year: €2,379.0 million), the Group’s economic equity capital, which comprises the equity of the Group shareholders (€1,884.5 million) and the equity attributable to third-party shareholders (€261.2 mil- lion), was down on the previous year overall due to the cap- ital increase carried out in January 2024 (€149.1 million) and the dividend paid in September 2024 (€197.5 million). Total assets went down accordingly by €95.8 million. The equity ratio (including the shares of third-party sharehold- ers) of 49.2% has decreased compared to the last reporting date (53.3%) due to the aforementioned dividend distribu- tions. However, it remained at a healthy level. Financial liabilities in € thousand 31.12.2024 31.12.2023 Change Non-current bank loans and overdrafts 1,795,909 1,665,679 130,230 Current bank loans and overdrafts 12,465 11,921 544 Total 1,808,374 1,677,600 130,774 Less cash and cash equivalents 212,438 336,071 -123,633 Net financial liabilities 1,595,936 1,341,529 254,407 Current and non-current financial liabilities increased from €1,677.6 million to €1,808.4 million in the reporting year. This €130.8 million rise was largely due to the increase in existing loans for the Allee- Center Magdeburg and Allee- Center Hamm as well as the loan taken out for the Rathaus- Center Dessau. Together with a fall in cash and cash equiv- alents, net financial liabilities totalled €1,595.9 million, a net increase of €254.4 million compared to the end of 2023 (€1,341.5 million). 45 the MALL s life Deutsche EuroShop
- 48. The net financial liabilities existing at the end of the year are used exclusively to finance non-current assets. This brought the percentage of non-current assets financed with debt capital (LTV) at the reporting date to 39.2% (previous year: 33.2%). EPRA LTV, which is based on the Group’s proportional share in the joint ventures and subsidiaries, amounted to 41.1% on the reporting date (previous year: 34.8%). EPRA Loan-to-Value (EPRA LTV) Proportional values in € thousand 31.12.2024 31.12.2023 Change Non-current and current bank loans and overdrafts 1,731,232 1,601,506 129,726 Owner-occupied property (IFRS 16, right-of-use asset) 230 292 -62 Other liabilities (net) 8,495 14,415 -5,920 Cash and cash equivalents -201,182 -322,233 121,051 Net financial debt 1,538,775 1,293,980 244,795 Investment properties 3,744,255 3,720,967 23,288 Owner-occupied property (IFRS 16, right-of-use asset) 223 286 -63 Intangible assets 12 23 -11 Property assets 3,744,490 3,721,276 23,214 EPRA LTV in % 41.1 34.8 6.3 The financing terms for consolidated borrowing as at 31 December 2024 were fixed at 2.60% p.a. (previous year: 2.43% p.a.) with an average residual maturity of 5.5 years (previous year: 5.8 years). The loans to the Deutsche EuroShop Group are maintained as credit facilities with 20 banks and savings banks in Germany, Austria and the Czech Republic. Loan structure as at 31 December 2024 Share of loans Amount Term Average interest rate in % in € million in years in % Interest rate lock-in up to 1 year 0.0 0.0 0.0 0.00 1 to 5 years 38.3 691.8 3.0 2.36 5 to 10 years 61.7 1,116.6 7.0 2.75 Total 100.0 1,808.4 5.5 2.60 Loan structure as at 31 December 2023 Share of loans Amount Term Average interest rate in % in € million in years in % Interest rate lock-in up to 1 year 0.0 0.0 0.0 0.00 1 to 5 years 41.6 697.6 3.4 2.50 5 to 10 years 58.4 980.0 7.5 2.37 Total 100.0 1,677.6 5.8 2.43 Of the 27 loans across the Group, 25 are subject to credit covenants with the financing banks. There are a total of 35 different covenants, including debt service cover ratios (DSCRs), interest cover ratios (ICRs), changes in rental income, the leverage ratio and the loan-to-value ratio (LTV ratio) of the property. The loan conditions were met in finan- cial year 2024. Based on current planning and estimates, the loan conditions will also be met in 2025. 46 Economic review Combined management report
- 49. Scheduled repayments totalling €20.7 million for the loans existing as at 31 December 2024 will be made from current cash flow during financial year 2025. Over the period from 2026 to 2028, repayments will average €22.4 million p.a. for existing loans. There are no loans to be rolled over in 2025, and loans totalling €174.5 million to be rolled over in 2026. A loan agreement is in place for a short-term working cap- ital line of credit in the amount of €50.0 million, which had not been drawn down as at 31 December 2024. INVESTMENT ANALYSIS In financial year 2024, investments continued to be made in modernising and positioning the existing portfolio and amounted to €47.1 million after €43.4 million in the pre- vious year. Liquidity analysis in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 Net cash flow from operating activities 160,433 175,063 Cash flow from investing activities -40,288 -62,952 Cash flow from financing activities -243,778 -110,983 Net change in cash and cash equivalents -123,633 1,128 Cash and cash equivalents at beginning of period 336,071 334,943 Cash and cash equivalents at end of period 212,438 336,071 The Group’s operating net cash flow of €160.4 million (pre- vious year: €175.1 million) constitutes the amount gener- ated by the Group through the leasing of shopping center space after deduction of all costs. It is primarily used to finance the dividends of Deutsche EuroShop AG and pay- ments to third-party shareholders as well as ongoing inter- est, loan repayments and investments. Cash flow from investing activities consisted of cash-effec- tive investments in portfolio properties (€47.1 million; pre- vious year: €43.4 million) and inflows from the sale of prop- erty in Poland totalling €6.9 million. In the previous year, this figure included the cash purchase price (€39.2 million) for the acquisition of additional shares in investments pre- viously accounted for using the equity method less the acquired cash and cash equivalents (€19.8 million). The cash flow from financing activities of €-243.8 million included the cash outflow from the ongoing repayment of financial liabilities of €30.5 million, the cash inflow from the assumption of financial liabilities of €158.4 million, the div- idend payment to Group shareholders of €346.6 million (previous year: €191.2 million), the pay-out to third-party shareholders of €10.2 million (previous year: €9.9 million), and the payment of €14.8 million for the acquisition of treasury shares. The cash flow from financing activities in the previous year included the cash inflow from the capital increase carried out in February 2023 in the amount of €61.9 million (after deduction of transaction costs of €2.3 million) and the payment of €19.5 million for the acqui- sition of additional shares in the limited partnership as part of the acquisition of minority interests at the beginning of financial year 2023. Cash and cash equivalents fell by €123.6 million in the year under review to €212.4 million (previous year: €336.1 million). NET ASSETS OF THE GROUP SLIGHT DECLINE IN TOTAL ASSETS The total assets of the Deutsche EuroShop Group went down by €95.8 million compared with the last reporting date to €4,364.4 million, largely due to the aforementioned div- idend payments. 47 the MALL s life Deutsche EuroShop
- 50. in € thousand 31.12.2024 31.12.2023 Change Current assets 244,048 368,244 -124,196 Non-current assets 4,120,357 4,091,953 28,404 Current liabilities 67,198 76,427 -9,229 Non-current liabilities 2,151,511 2,004,723 146,788 Equity (incl. third-party shareholders) 2,145,696 2,379,047 -233,351 Total assets 4,364,405 4,460,197 -95,792 CURRENT ASSETS DOWN SIGNIFICANTLY AFTER DIVIDEND PAYMENTS At the end of the year, current assets amounted to €244.0 million, significantly lower than in the previous year (€368.2 million). Cash and cash equivalents decreased to €212.4 million (previous year: €336.1 million) at the end of the reporting period, primarily due to dividend payments. The Group’s receivables (after write-downs) increased slightly by €1.3 million to €14.7 million (previous year: €13.4 million). Other assets fell by €1.9 million, from €18.7 million to €16.9 million. SLIGHT INCREASE IN NON-CURRENT ASSETS Non-current assets rose slightly by €28.4 million from €4,092.0 million to €4,120.4 million in the year under review. At 94.4% (previous year: 91.7%), they are still the most significant items of total assets. At €3,966.7 million, investment properties were largely on a par with the previous year (€3,947.0 million). While the costs of investments in portfolio properties resulted in addi- tions of €42.6 million, the measurement of the property portfolio triggered measurement losses totalling €22.9 mil- lion. Financial investments accounted for using the equity method increased by €8.8 million to €101.5 million, mainly as a result of measurement effects. Non-current assets Non-current liabilities Total equity (incl. third-party shareholders) Balance sheet structure Balance sheet total in € million 4,092.0 368.2 4,460.2 4,120.4 244.0 4,364.4 2024 2023 Assets 4,460.2 2023 2,379.0 2,004.6 76.4 4,364.4 2024 2,145.7 2,151.5 67.2 Liabilities Current assets Current liabilities 48 Economic review Combined management report
- 51. CURRENT LIABILITIES ON THE DECLINE, NON-CURRENT LIABILITIES ON THE RISE Current liabilities fell by €9.2 million to €67.2 million. This was largely driven by trade payables and tax liabilities. Non-current liabilities increased from €2,004.7 million to €2,151.5 million. This €146.8 million rise was largely due to the loan increases in Hamm and Magdeburg and the loan taken out by Dessau. EQUITY (INCL. THIRD-PARTY SHAREHOLDERS) Equity (including third-party shareholders) was €2,145.7 million at the end of the reporting year, down €223.4 million on the previous year’s equity (€2,379.0 mil- lion) owing to the dividend paid of €346.6 million and the consolidated profit of €123.5 million. At € 261.2 million, lim- ited partner contributions of non-controlling interests were largely unchanged from the previous year (€259.4 million). Net tangible assets according to EPRA Net tangible assets (NTA) as at 31 December 2024 amounted to €2,198.0 million compared to €2,414.4 million in the previous year. Due to the decrease in equity, mainly as a result of the dividend distributions for the 2024 financial year, NTA per share went down by €2.56, from €31.58 to €29.02 per share (-8.1%). EPRA net tangible assets in € million / in € per share Number of no-par-value shares issued as at the reporting date, in million 61.8 2020 2,309.7 37.38 76.5 2023 2,414.4 31.58 61.8 2022 2,335.9 37.81 61.8 2021 2,374.4 38.43 75.7 2,198.0 2024 29.02 EPRA NTA 01.01.- 31.12.2024 01.01.- 31.12.2023 in € thousand per share in € in € thousand per share in € Equity 1,884,540 24.88 2,119,667 27.72 Derivative financial instruments measured at negative fair value1 3,128 0.04 6,427 0.08 Equity excl. derivative financial instruments 1,887,668 24.92 2,126,094 27.80 Deferred taxes on investment properties and derivative financial instruments1 362,055 4.78 340,042 4.45 Intangible assets -12 0.00 -23 0.00 Goodwill as a result of deferred taxes -51,719 -0.68 -51,719 -0.67 EPRA NTA 2,197,992 29.02 2,414,394 31.58 Number of no-par-value shares issued as at the reporting date 75,743,854 76,455,319 1 Including the share attributable to equity-accounted joint ventures and associates 49 the MALL s life Deutsche EuroShop
- 52. Report on events after the reporting date No further significant events occurred between the report- ing date and the date of preparation of the financial state- ments. Outlook EXPECTED DEVELOPMENTS IN GENERAL CONDITIONS According to the German federal government’s annual eco- nomic report, the German economy faces a challenging position at the start of 2025. While the energy crisis has been averted and inflation curbed, fundamental structural issues persist. A shortage of labourers and skilled workers, excessive bureaucracy, and a hesitancy to invest on the part of public and private investors continue to hamper growth. The impact of trade policies is particularly hard to predict due to the actions of the new US administration and other factors. Against this backdrop, the German government expects to see only a slight increase in GDP of 0.3% for the current year. Growth drivers are likely to come primarily from pri- vate consumption with investment increasingly coming to bear as the year progresses However, foreign trade is expected to remain weak. Exports are projected to decline, while imports are set to rise, resulting in a notable negative contribution to growth. Employment levels are expected to remain stable due to the moderate economic recovery, while unemployment is expected to increase. Consumer prices are expected to rise by 2.2%, slightly above the 2% target. The European Central Bank (ECB) lowered base rates by 25 basis points at the end of January and at the beginning of March 2025. This less restrictive monetary policy is mak- ing loans more affordable for businesses and private households. At the same time, the intended effects of the ECB’s rate cuts are being curbed by fiscal policy debates and planning in Germany. In early March 2025, the CDU/ CSU and SPD parties announced that the debt brake would be overhauled in connection with debt-financed invest- ments of up to €900 billion in defence, the economy and infrastructure. Yields rose sharply and bond prices fell in response. Rising real incomes and the gradual easing of restrictive monetary policies are expected to stimulate demand over time. According to the ECB’s projections, infla- tion in the EU is expected to return to its medium-term target of 2% this year. In the investment market for retail real estate, JLL antici- pates a significant increase in market activity across all asset classes – from shopping centers and retail parks to high-street commercial buildings. JLL reports that the shopping center market is seeing a growing number of new international players, in contrast to other markets. After a mixed year in 2024, the German retail sector expects to see only a slight increase in revenue in 2025. The German Retail Association (HDE) is forecasting nominal revenue growth of 2% to €677 billion (real terms: +0.5%). The asso- ciation is predicting a nominal rise of 3% in revenue for online retail (real terms: +2%). These modest expectations stem from high levels of consumer uncertainty, the weak- ness of the economy, and political instability. AGREED TRANSACTIONS ARE THE FOUNDATION FOR REVENUE AND EARNINGS PLANNING Forecasts for the future revenue and earnings situation of our Group are based on a) the development of revenue and earnings at the existing shopping centers, and b) the assumption that, in view of the general conditions outlined above, there will be no substantial decline in revenue in the retail sector that would cause a large number of retailers to no longer be able to meet their obligations under existing leases. The Deutsche EuroShop Group’s revenue and earnings planning for 2025 does not include the future purchase or sale of any properties. The results of the annual valuation of our shopping centers are likewise excluded from our planning since they are difficult to predict. 50 Combined management report
- 53. REVENUE FOR 2025 The revenue of €271.4 million generated in financial year 2024 was down on the previous year but in line with our expectations. The main reasons for this decline included temporary vacancies as a result of investment measures at shopping centers, lower settlement payments than in the previous year, as well as a few cases of lower follow-on rents. Turnover rents increased year on year. Assuming a slight increase in rents coupled with lower turnover rents and settlement payments, revenue for 2025 should be in the range of €268 million to €276 million. OPERATING EARNINGS FOR 2025 At €216.3 million, earnings before interest and taxes (EBIT) in 2024 were affected by the slight rise in NOI related to declining center operating expenses and an expected year- on-year decline in revenues. We therefore expect EBIT to contract slightly to between €209 million and €217 million in 2025. EBT (excluding measurement gains/losses) amounted to €165.2 million in the year under review. In addition to the effects on EBIT described above, higher-than-expected interest income had a positive impact on the operating result, as did interest expense being lower than expected. Based on an anticipated increase in interest rates from fur- ther planned revaluations, the scheduled refinancing of existing loans and a downturn in interest income, we expect EBT (excluding measurement gains/losses) to be in the range of €150 million to €158 million in 2025. FFO PERFORMANCE FOR 2025 Funds from operations (FFO) amounted to €157.1 million in the year under review due to the positive developments described above and consequently exceeded our forecast adjusted in November 2024 (€151 million to €155 million). We expect that FFO will be between €145 million and €153 million in 2025, or between €1.91 and €2.02 per share1 . Revenue in € million 2023 2023 2023 2025 2025 2025 2024 2024 2024 EBIT in € million EBT in € million (excluding measurement gains/losses) Funds from operations in € million 2023 2025 2024 273.3 271.4 216.3 165.2 171.3 157.1 212.7 169.5 Goal 209– 217 268– 276 Goal Goal 150– 158 145– 153 Goal We view the development of the 2025 financial year as gen- erally positive and are anticipating development of revenue and EBIT to be stable to slightly positive. We are assuming a slight reduction in EBT (excluding measurement gains/ losses) and FFO compared to financial year 2024, in view of lower planned financial income. DIVIDEND POLICY One of Deutsche EuroShop AG’s key investment objectives is to generate an attractive liquidity surplus from the long- term leasing of shopping centers, which is distributed to shareholders in the form of regular dividends. The Company continually reviews opportunities to further increase its ability to distribute dividends in future years. In principle, the Company aims to distribute funds in excess of its liquidity requirements to its shareholders. However, the distribution of dividends is highly dependent on prevail- ing economic conditions, financing needs for further growth and other factors. For financial year 2024, the Executive Board, together with the Supervisory Board, and taking into account available liquidity and the operating outlook, has decided to propose to the Annual General Meeting the distribution of a dividend of €1.00 per share. The Company reserves the right to adjust its proposed resolution before or at the latest during the Annual General Meeting if it should prove possible and expedient to distribute a higher dividend owing to changed circumstances, in particular due to the creation of addi- tional liquidity through the conclusion of financing agree- ments. 1 Number of shares, not including treasury shares 51 the MALL s life Deutsche EuroShop
- 54. Risk report PRINCIPLES GOVERNING THE RISK MANAGEMENT SYSTEM AND INTERNAL CONTROL SYSTEM1 Deutsche EuroShop AG’s strategy is geared towards main- taining and increasing shareholders’ assets and generating sustainably high surplus liquidity from leasing real estate, thereby enabling the distribution of an appropriate and sus- tainable dividend. The focus of the risk management system is therefore on monitoring compliance with this strategy and, building on this, on identifying and assessing risks and opportunities as well as making fundamental decisions on how to manage these risks. Risk management ensures that risks are identified at an early stage and can then be eval- uated, communicated promptly and mitigated. Monitoring and management of the risks identified form the focal point of the internal control system, which at the Group level is essentially the responsibility of the Executive Board. The Supervisory Board is notified regularly and, if necessary, immediately by the Executive Board about identified risks. The internal control system is an integral part of the risk management system. Within the framework of its legal mandate for auditing the annual financial statements, the auditor checks whether the early warning system for risks is suitable for detecting at an early stage any risks or developments that might endanger the Company. The risk analysis, as a continuous process, promptly iden- tifies, evaluates and communicates the factors that may jeopardise the achievement of business targets. The pro- cess also includes management and control of the risks identified. The Executive Board was not aware of any information dur- ing the year under review that would have led it to believe that there were material inefficiencies in the effectiveness of the internal control system or risk management system, or that these systems were inappropriate in any way. Gen- erally, however, it should be borne in mind that an internal control system, irrespective of its design, provides no abso- lute guarantee of identifying deficiencies in our business processes. 1 This section of the combined management report is not subject to mandatory audit. Therefore, the information it contains has not been audited by the auditor RISK ANALYSIS Under existing service contracts, the Executive Board of Deutsche EuroShop AG is continuously briefed about the business performance of the shopping centers and the cor- responding property companies. Financial statements and financial control reports are submitted on a quarterly basis for each shopping center, and medium-term corporate plans are submitted annually. The Executive Board regularly reviews and analyses these reports, using the following information in particular to assess the level of risk: 1. Portfolio properties Trend in amounts outstanding Trend in occupancy rates Retail sales trend in the shopping centers Variance against projected income from the properties Observance of financial covenants in loan agreements 2. Centers under construction Pre-leasing levels Construction status Budget status Development of financial covenants in loan agreements and observance of disbursement conditions Risks are identified by observing issues and changes that deviate from the original plans and budgets. Risk manage- ment also involves the systematic analysis of economic data such as consumer confidence and retail sales trends, as well as ongoing monitoring of the activities undertaken by competitors. 52 Combined management report
- 55. RISK INVENTORY The risks identified in the course of the risk analysis are summarised in a risk inventory and evaluated in terms of their potential loss amounts and likelihood of occurrence in consideration of compensatory measures (from a net standpoint). The risk inventory is regularly examined and updated where necessary. Furthermore, the Executive Board uses scenario-based simulations where the key planning parameters (including rent, cost, return and interest rate trends) are altered to assess the way in which risk aggregation affects the Group’s continued existence. This analysis also allows for an eval- uation as regards which risks the Group is able to sustain. The Executive Board reports on significant risks at the Supervisory Board meetings. In the event of risks that jeop- ardise the continued existence of the Group, a report is issued immediately. ACCOUNTING-RELATED INTERNAL CONTROL SYSTEM Preparation of the financial statements is another impor- tant element of the internal control system and is monitored and controlled at the level of the Group holding company. Internal regulations and guidelines should ensure the con- formity of the annual financial statements and the consol- idated financial statements. The decentralised preparation of Group-relevant reports by the service provider is followed by the aggregation and con- solidation of the individual annual financial statements and the preparation of the information for reporting in the notes and combined management report by the accounting department of the holding company, with the aid of the con- solidation software Conmezzo. This is accompanied by manual process controls such as the principle of dual con- trol by the employees charged with ensuring the regularity of financial reporting and by the Executive Board. In addi- tion, within the scope of its auditing activities, the auditor of the consolidated financial statements performs pro- cess-independent auditing work, including with respect to financial reporting. ADVICE ON LIMITATIONS By virtue of the organisational, control and monitoring measures laid down in the Group, the accounting-related internal control system enables the full recording, process- ing and evaluation of Company-related matters as well as their proper presentation in Group financial reporting. Decisions based on personal judgement, flawed controls, criminal acts or other circumstances cannot be entirely ruled out, however, and may limit the effectiveness and reli- ability of the internal control and risk management system that is in use. Consequently, the application of the systems used cannot guarantee absolute security as to the correct, complete and timely recording of facts in Group financial reporting. The statements made relate solely to those subsidiaries included in the consolidated financial statements of Deutsche EuroShop AG for which Deutsche EuroShop AG is in a position, directly or indirectly, to dictate their financial and operating policies. EVALUATION OF THE OVERALL RISK POSITION The overall risk situation is presented in the following matrix. The potential extent of losses in the risk matrix is calculated on the basis of the impact on EBIT and FFO for the financial year following the year under review. When it comes to valuation risk, the accounting effects (change in investment properties or total assets) are analysed as well. The extent of losses is analysed on a consolidated basis. The factors that could influence the likelihood of occurrence and severity of the individual risks as well as the evaluation of the overall risk position due to ongoing geopolitical con- flicts cannot be estimated at the moment. Individual risks and the overall risk position are monitored on an ongoing basis and reassessed regularly. The ranges assigned to loss amounts were increased significantly compared to the previous year to take account of the increased volatility of external factors such as the rate of inflation or general interest rates. Risk matrix Extent of loss High: €50 million Valuation risk Medium: €5–50 million Risk of rent loss Rental risk Market and sector risk Low: up to €5 million Financing risk Legal risk Organisational risks IT risk Risk of damage Currency risk Management and cost risks Sustainability risks Low: 0–25% Medium: 25–50% High: 50% Likelihood of occurrence 53 the MALL s life Deutsche EuroShop
- 56. On the basis of the monitoring system described, Deutsche EuroShop AG has taken appropriate steps to identify devel- opments that could jeopardise its continued existence at an early stage and to counteract these. As in the previous year, the Executive Board conducted sim- ulations using consolidated liquidity planning to assess the extent to which the Group is able to bear individual risks or the concurrence of multiple individual risks. The Executive Board is accordingly not aware of any risks or risk aggre- gations that would jeopardise the continued existence of the Company and the Group. The Executive Board is also of the opinion that the Group is adequately positioned to take advantage of opportunities that may arise without having to enter into unacceptable risks. PRESENTATION OF MATERIAL INDIVIDUAL RISKS VALUATION RISK The value of a property is essentially determined by its capitalised earnings value, which in turn depends on factors such as the level of annual rental income, the management costs and the investment needs, the underlying location risk, the general condition of the property, the evolution of capital market interest rates and, in particular, the demand for shopping center properties. The appreciation or depre- ciation of property values is also impacted by various mac- roeconomic and regional factors as well as by factors spe- cific to those properties, which are for the most part unforeseeable and beyond the control of the Company. The factors described are taken into account in the annual mar- ket valuations of our portfolio properties by independent appraisers. These have a direct impact on the recognition of investment properties and measurement gains/losses due to the application of IAS 40. Rising capital market inter- est rates could negatively impact the valuation of the Deutsche EuroShop Group’s real estate portfolio as they tend to be associated with an increase in the discount and capitalisation rates used to determine the fair value of the portfolio as well as a downturn in the market prices paid for shares in shopping centers. As a result, higher interest rates typically have a negative effect on the market value of the Deutsche EuroShop Group’s real estate portfolio. Changes in market valuations may also affect compliance with loan conditions on existing financing arrangements (e.g. compliance with debt ratios) as well as the terms of new financing and refinancing agreements as a fall in mar- ket valuations would lead to a higher debt ratio. The assignment of external, independent appraisers with a great deal of experience in the industry, along with our own critical assessment of their appraisal, minimises the risk of measurement error. As part of efforts aimed at con- trolling value-driving factors, the Company has adopted further measures aimed at minimising valuation risk. The main focus here is on professional center, cost and leasing management at the shopping centers, which is ensured through the selection of suitable asset managers. All of our shopping centers are currently managed by ECE Market- places GmbH Co. KG, Hamburg, the European market leader in the area of shopping center management, with active maintenance management ensuring that the prop- erties are continuously kept in a sound general condition. In the previous year, the parameters used for estimation purposes, such as derived interest rates, market rents, management costs and re-letting periods, were influenced to a large degree by geopolitical conflicts with rising infla- tion and interest rates. Furthermore, the conflict in the Mid- dle East, political uncertainties and fears of recession are leading to increased uncertainty about economic conditions going forward. Given the ongoing major uncertainty regard- ing future developments, significant changes in market value cannot be ruled out in the short term despite both inflation and interest rates being on a downward trend. We therefore continue to consider the likelihood of occur- rence and the extent of loss of the valuation risk as high. MARKET AND SECTOR RISKS The share of purchases made in stores in Germany was 86.7%, slightly lower than in the previous year (87.0%). It is expected that online retail will continue to grow in future and increase its share of total retail sales. The segments of fashion, shoes and consumer electronics continue to dominate online commerce, and are also especially heavily represented in shopping centers. Despite the prevalence of online shopping, attractive retail spaces continue to be a strong draw for customers. The upwards trend in visitor numbers show that attractive and spacious retail facilities that are leaders in their respective catchment areas can continue to hold their own, offering customers a broad range of products, an enjoyable time and a special shopping experience. Alongside the growth in online retail, additional retail com- mercial space offered on the rental market, created for example through the building, expansion or modernisation of shopping centers or factory outlets both in city centers and on the outskirts, as well as through the revitalisation of retail locations in city centers, may cause realisable rev- enues in bricks-and-mortar retail trade to be distributed over more rental space overall and lead to lower space utilisation. In Hamburg, for example, Unibail-Rodam- co-Westfield SE is realising a large-scale project develop- ment for the Westfield Hamburg-Überseequartier, a mixed- use district within Hamburg’s HafenCity, which is scheduled to open at the end of the first quarter of 2025. Larger or improved rental space offerings in the competitive environ- ment of our shopping centers and a potentially permanent redistribution of retail revenues to online channels and the accompanying permanent drop in space utilisation for bricks-and-mortar retailers harbour the risk that subse- quent leases and/or renewals could be concluded at lower rents and/or under less favourable contractual terms, lead- ing to a downturn in EBIT and FFO. To counter the rising share of online retail along with the potential pressure on space utilisation, bricks-and-mortar retail is embracing floorspace restructuring and focusing on good retail locations, optimising product ranges, improv- ing quality of service and placing an emphasis on individual consultations when shopping. The interconnection between the offline and online worlds is also becoming increasingly important. Retailers are at different stages of progress and success in this regard, particularly as far as implementation of their omni-channel concepts is concerned. 54 Risk report Combined management report
- 57. The leisure, customer experience and meeting point aspects of our centers are continually being enhanced. In addition to the creation of new and attractive restaurant spaces, this includes our “At Your Service” and “Mall Beautification” investment programmes which were launched back in 2018. The aim is to make the centers a more pleasurable place to be and to raise the quality of service through tar- geted investments in, among other things, improved service and lounge areas, modern entertainment zones for kids, simplified in-house navigation when searching for shops or parking using touch screens or smartphone solutions, and intelligent parking guidance systems. To increase the appeal of the centers, the expansion of the entertainment offering is also being examined and progressed. For exam- ple, the indoor skydive concept opened in our Rhein-Neck- ar-Zentrum in 2021 has met with great success, so much so that a wide range of other leisure and food service options are currently being developed in the vicinity. Added to this, the Main-Taunus-Zentrum is in the process of receiv- ing a “Food Garden”, which will significantly expand the center’s culinary offering. These and other investments also improve the appeal of the locations beyond the immediate region. The conclusion of leases with as long a term as possible with tenants with high credit ratings across every retail segment also reduces market and sector risks. Inflation declined significantly in the 2024 financial year compared to the high rates triggered by the war in Ukraine. Interest rates have also gone down in the wake of the Euro- pean Central Bank’s (ECB) decision to cut base rates. Despite the ongoing geopolitical conflicts and persisting uncertainty, private consumption has seen a slight increase. While energy prices have generally been on a downward trend, they remain significantly higher in some areas than they were before the war in Ukraine. For retailers, high energy prices can become a massive burden if they cannot be passed on in full to customers. In addition, new cost increases as well as possible energy bottlenecks can lead to delivery problems for manufacturers and thus have a lasting negative impact on the revenue of our tenants. In contrast to the previous year, we regard the extent of loss as medium (previous year: high) due to the changed ranges, while the probability of occurrence remains high. RENTAL RISK The long-term success of the Deutsche EuroShop Group’s business model depends, in particular, on leases for retail space and the generation of stable and/or growing rental income in addition to low vacancy rates. Due to the medi- um-term and long-term renting of retail space, the Deutsche EuroShop Group is not as directly affected by short-term economic developments as company groups in other sec- tors. However, given retail commerce’s greater dependency on the state of the economy, we cannot rule out the possi- bility of a change in economic conditions impacting the Deutsche EuroShop Group’s business. Uncertainty driven by unclear political situations, economic fluctuations, the global economy and structural changes in the retail market are affecting demand for floor space, rent prices and contractual conditions. Insolvencies in the retail sector are also making their effect felt. According to the German Federal Statistical Office, the number of corporate insolvencies in Germany rose by 16.8% in 2024. It is expected to remain at a high level in 2025. Thus, there is the risk that floor space is not rented or is rented at inad- equate prices or excessively unfavourable conditions, for example with respect to lease terms or service charge apportionments. Low contributions to revenue from leasing and/or rising vacancy rates are also possible. Furthermore, the time required to negotiate new leases may extend beyond the planned timeframe. As a result, income and EBIT would turn out to be less than budgeted, and distributions to shareholders might have to be reduced due to the downturn in FFO. In addition, lower rental income may also affect compliance with loan condi- tions on existing financing arrangements as well as the terms of new financing and refinancing agreements. If the rental income for a property company is no longer sufficient to meet its interest and repayment obligations, this could lead to the loss of the entire property. We counteract this risk by transferring leasing manage- ment to professional market leaders in asset management as well as by keeping a close eye on the market with con- tinuous and early monitoring of upcoming regular or poten- tially expected unscheduled leasing. Furthermore, where enforceable on the market, we prefer to conclude medium- and long-term leases with proportionately high minimum rent agreements. Sustained high energy costs and interest rates are influ- encing demand for floor space, rental rates and the con- tractual conditions for new and renewed leases. The time it takes for a space to be re-let has also increased, leading to lower occupancy rates. As a result, the occupancy rate decreased from 97.6% at the end of 2019 to 95.4% at the end of 2024. Due to the continuing challenging economic and business environment, insolvency and re-letting risks remain ele- vated. In contrast to the previous year, we regard the extent of loss as medium (previous year: high) due to the changed ranges, while the probability of occurrence remains high. 55 the MALL s life Deutsche EuroShop
- 58. RISK OF RENT LOSS Deteriorating performance and credit ratings among ten- ants, which may also be triggered by serious external polit- ical or economic shocks, may lead to defaults on leases and other financial burdens. Defaults on leases may additionally have an impact on compliance with loan covenants, for example. The risk of default on leases consequently com- prises the rent payments in their entirety, allocable ancillary costs, as well as potential legal and reinstatement costs. Insolvency on the part of tenants, especially anchor tenants or shop chains, can moreover lead to increases in vacancy rates. Risk is minimised by carefully selecting tenants, regularly analysing their sales growth and amounts outstanding, as well as adopting re-letting measures early in the event of negative developments. As a rule, tenants also put up com- mensurate security deposits, which are able to offset some of the financial burden in the event of default. The requisite write-downs are recognised on the balance sheet in individual cases. These totalled €7.7 million in financial year 2024 (previous year: €8.9 million). It is not possible to rule out higher write-downs in financial year 2025 in view of the structural change in bricks-and-mortar retail and depending on economic developments within the context of today’s challenging macroeconomic environ- ment. These would have a negative impact on EBIT and FFO. We consider the absolute extent of loss to be on a compa- rable level to the previous year.We continue to consider the extent of loss and the of occurrence to be moderate. MANAGEMENT AND COST RISKS The complexity of the applicable court decisions and changes thereto could lead to corrections and objections in relation to ancillary costs, which in turn could lead to limits being enforced on passing the burden on to tenants and/or to subsequent reimbursements to the same. Besides finan- cial losses, this could also affect tenant satisfaction. Con- tinuous examination of ancillary cost invoicing based on current legislation minimises this risk. New changes in the law may also mean that additional costs cannot legally and/ or economically be passed on in their entirety to tenants as ancillary costs going forward. Expenditure on maintenance and investment projects can turn out higher than budgeted based on our past experi- ence. Differences may also materialise owing to external damage or loss, inaccurate assessment of maintenance requirements, or deficiencies that are not identified or are identified too late. We minimise risks from cost overruns in current investment projects and maintenance measures by taking cost models for all identifiable risks into account in our calculations as a precautionary measure at the planning stage. In addition, more large-scale construction contracts are normally only awarded on a fixed-price basis to general contractors with strong credit ratings. During the building phase, profes- sional project management is assured by the companies we commission. However, it is impossible to completely avoid cost overruns in individual cases. The war in Ukraine has led to higher energy costs in par- ticular and thus has a direct and indirect influence on man- agement and cost risks. In principle, a large portion of ancil- lary costs can be passed on to tenants, but a not inconsiderable portion remains with the landlord, so cost increases have a direct effect here. Indirectly, the burden from the cost increases can lead to payment difficulties for tenants or even to the termination of tenancies, resulting in potentially longer vacancy periods and necessary reno- vation measures. The share of non-allocable ancillary costs and necessary investments would therefore increase. To contain the cost risk from rising energy prices, our shopping centers are checked for energy efficiency; economically sensible measures, such as installing photovoltaic systems, are also implemented. FINANCING RISK As at the reporting date, the Group’s financial arrangement involved long-term loan agreements with fixed long-term interest rates. Following on from the refinancing concluded in 2024, no new finance or refinancing is currently planned (not until 2026). This means that, from today’s perspective, the Group is not exposed to any financing risk. We are con- stantly monitoring the interest rate environment so as to be able to react appropriately to interest rate changes. We minimise the financing risk for new property financing as far as possible by entering into long-term loans with fixed-interest periods of up to ten years. Interest rate levels are materially determined by underlying macroeconomic and political conditions and therefore can- not be predicted by the Company. There is a risk that refi- nancing may only be available at higher interest rates than before. This would negatively impact FFO. In their capacity as borrowers, the consolidated subsidiar- ies are required to comply with various predefined financial indicators (financial covenants) and other restrictive obli- gations or agreements. As of the reporting date, borrowers within the Deutsche EuroShop Group are required to meet 35 conditions. These conditions, which are reviewed on a regular basis, could limit the Deutsche EuroShop Group’s ability to finance its future operating and capital needs as well as to pursue acquisitions and other business activities. The ability to meet these conditions is dependent on a num- ber of factors, some of which may be beyond the Group’s control, such as a downturn in the industry and real estate markets or the inaccuracy of assumptions used for long- term planning and forecasts. Failing to comply with a finan- cial covenant could have serious consequences for the Deutsche EuroShop Group. If subsidiaries of Deutsche EuroShop AG breach a financial covenant or another restric- tive agreement, lenders could, under certain circumstances, demand the early repayment of a specific percentage of the loan amount, withhold funds, or terminate the respective financing agreement prematurely. 56 Risk report Combined management report
- 59. An economic and financial crisis, the substantial indirect repercussions of geopolitical crises (such as the war in Ukraine) on the operations and cash flow of retail proper- ties, as well as pronounced intensification of online com- petition or stricter regulation of the financial sector could lead to a significant deterioration of banks’ lending policies with respect to credit margins, financing terms and expiries, and loan conditions. Insolvencies of real estate companies, such as the Signa Group, could also have a negative impact on confidence in the property sector and therefore on banks’ lending practices. The eventualities would negatively affect the earnings and financial position of the Company and FFO. Under extreme circumstances, the financing market could dry up altogether. The possibility cannot be completely excluded that, due for example to a deterioration in the results of operations of individual property companies or a change in lending policy, banks may not be prepared to provide refinancing. The Deutsche EuroShop Group responds to this financing risk by concluding long-term loan agreements, avoiding the accumulation over time of loan maturities and observing appropriate debt ratios. Furthermore, the Group maintains long-term business relationships with a large number of investment, commercial and mortgage banks in its target markets in order to secure the best possible access to the capital markets. The Deutsche EuroShop Group occasionally uses derivative financial instruments that qualify for hedge accounting to hedge interest rate risks. These interest rate swap trans- actions transform variable interest rates into fixed interest rates. An interest rate swap is an effective hedge if the prin- cipal amounts, maturities, repricing or repayment dates, the interest payment and principal repayment dates, and the basis of calculation used to determine the interest rates are identical for the hedge and the underlying transaction, and the party to the contract fulfils the contract. The Com- pany counters the risk of default through stringent exami- nation of its contract partners which are also lenders. Inter- est rate swaps and the underlying transaction are generally reported as one item in the annual financial statements. Financial instruments are not subject to liquidity or other risks. A test of effectiveness for the hedges described is implemented regularly. SUSTAINABILITY RISKS Germany has committed itself to achieving ambitious climate targets as part of its Climate Action Programme 2030. The Climate Change Act (Klimaschutzgesetz) sets legally binding national climate targets and forms the core of the German government’s climate policy. Germany is aiming to be climate-neutral by 2045. The real estate sector is a major energy consumer. Since nearly 40% of global car- bon dioxide emissions are caused by the construction and operation of buildings, owners of commercial properties face significant risks related to climate change and poten- tial future costs for reducing carbon dioxide emissions and other related environmental impacts. Ten shopping centers in the Deutsche EuroShop Group’s portfolio were built before the turn of the millennium, eleven afterwards. Even though the older shopping centers (median age: 23 years as of late 2024) have largely been modernised and renovated, further investment will be required to meet stricter energy efficiency standards. The Deutsche EuroShop Group may be required to make substantial additional investments in its shopping centers to meet new energy efficiency standards and implement the measures which are needed to achieve this goal. As a result, The Deutsche EuroShop Group could face significant capital expenditures and modernisation costs for ESG measures and/or in order to comply with energy efficiency standards. Investor demand for ESG-compliant assets may continue to rise, potentially making future asset disposals more chal- lenging. The reputation of the Deutsche EuroShop Group may be damaged if it fails to implement ESG-related meas- ures and/or comply with new energy efficiency standards, or fails to implement its ESG strategy by other means. In addition, decreased demand from potential investors – who are increasingly looking for ESG-compliant assets – could prevent the Deutsche EuroShop Group from selling shop- ping centers that do not meet these standards or have a significant negative impact on the sale prices for non-com- pliant assets. Through early analysis and the planning of necessary measures in our shopping center properties, Deutsche EuroShop ensures that requirements and actions are imple- mented efficiently, on time, and at the appropriate scale with the support of expert asset managers and advisors. The measures for this are successively and individually reviewed and evaluated as part of the maintenance cycles for the centers. Investment needs are included in long-term planning for the centers. This ensures that the further development of properties is cost-efficient and spread out over time, with the use of public subsidies where available. Regulations and external reporting requirements related to the EU Taxonomy – such as the Corporate Sustainability Reporting Directive (CSRD) and its planned adoption in Ger- man law – have become significantly more stringent. We are now subject to an extensive set of new disclosure obli- gations. These obligations require us to have reliable data as well as additional resources. These heightened require- ments place substantial demands on our internal control systems, governance, monitoring and mandated external reporting processes. Given Deutsche EuroShop AG’s effi- ciently structured organisational structure, there is a risk of us not being able to meet these demands. This risk is being addressed through employee training and the engage- ment of external service providers and consultants. 57 the MALL s life Deutsche EuroShop
- 60. We also face risks related to the increasing frequency of extreme climate events, such as severe storms, floods, heat waves and droughts. These have the potential to impact both our tenants and their customers, as well as the shop- ping center properties themselves. The risk of potential damage is mitigated by arranging appropriate insurance coverage and taking preventive measures. ORGANISATIONAL RISKS The Deutsche EuroShop Group has a lean organisational structure made up of an Executive Board and seven employ- ees. As a result, it relies heavily on external service provid- ers. The Deutsche EuroShop Group maintains contractual rela- tionships with service providers (such as center manage- ment companies) as part of its day-to-day business. The Deutsche EuroShop Group outsources all of its center man- agement to ECE Marketplaces. ECE Marketplaces provides its services under independent service agreements with the property companies for each shopping center. Under these agreements, ECE Marketplaces is responsible for center management, including leasing based on standard- ised contracts, maintenance and repairs, accounting, con- tract-related and legal matters, in addition to technical planning and architectural tasks. These center manage- ment contracts typically have a term of ten to 15 years, and are automatically extended by two to five years unless ter- minated. They predominantly allow for the contract to be terminated for cause if the shopping center in question is sold to a third party. If ECE Marketplaces were to terminate all or a significant portion of these contracts, the Deutsche EuroShop Group would need to either insource its asset management needs and expand its own resources – likely leading to higher costs – or secure contracts covering the center manage- ment services and potentially other services provided by ECE with alternative service providers within a short time- frame and possibly under less favourable conditions. Additionally, the Deutsche EuroShop Group maintains con- tractual relationships with tenants and third parties as part of its day-to-day business operations. If contractual part- ners failed to meet their obligations, the Deutsche EuroShop Group would have to bear the associated costs. Given the small number of employees of Deutsche EuroShop AG, the Company is dependent on individual per- sons in key positions. The departure of these key staff would lead to a loss of expertise, and the recruitment and induc- tion of new replacement personnel could temporarily impair day-to-day business. This kind of impairment is kept low by means of representation policies and the documen- tation of material work processes. CURRENCY RISK The Deutsche EuroShop Group’s activities are limited exclu- sively to the European Union’s economic area. Manageable currency risks arise in the case of the eastern European investment companies. These risks are not hedged because this is purely an issue of translation at the reporting date and is therefore not associated with any cash flow risks. The currency risk from operations is largely hedged by link- ing rents and loan liabilities to the euro. There is a risk that if the Hungarian forint, the Polish zloty or the Czech koruna were to plummet against the euro for an extended period of time, tenants would no longer be able to pay what would then be considerably higher rents denominated in a foreign currency. RISK OF DAMAGE Real estate properties are subject to the risk of total or partial ruin caused by external factors (e.g. damage from fire or flooding, vandalism, terror attacks), which can lead to repair costs and leasing defaults. These types of damage are hedged to the greatest possible extent by insurance policies with insurers with a high credit rating. It is, how- ever, conceivable that not all theoretically possible damage is adequately covered by insurance policies, or that this insurance coverage cannot be maintained on adequate terms in light of changing conditions in the insurance mar- ket, or that sufficient insurance protection will not even be offered. In addition, insurers may deny their services or a deterioration in the credit rating of an insurer may lead to potential defaults on payments in connection with the enforcement of insurance claims. In order to avoid damage, our properties are also actively secured by fire and burglary protection and anti-vandalism measures. LEGAL RISK The concept for our business model is based on the current legal situation, administrative opinion and court decisions, all of which may, however, change at any time. For example, amendments to the Real Estate Transfer Tax Act or changes in the related administrative opinion could result in a ret- roactive tax liability related to share deals. In pandemics or other crisis situations, there is a risk of legislators in Europe, including Germany and Poland, acting quickly to enact new laws or amend existing laws that granted tem- porary relief to tenants in terms of their rental payment obligations during public authority-mandated, pandem- ic-related business closures. The Company is not currently aware of any legal risks that could have a major impact on its assets or results of oper- ations. 58 Risk report Combined management report
- 61. IT RISK Deutsche EuroShop AG’s information system is based on a centrally managed network solution. Corrective and pre- ventive maintenance of the system is carried out by an external service provider. A detailed access policy ensures that staff and external service providers are granted access exclusively to the systems they require for their work. A virus protection concept and permanent monitoring of data traffic with respect to hidden and dangerous content are designed to protect against external attacks. All data rele- vant to operations is backed up daily by remote backup and also regularly on multiple storage media. In the event of a hardware or software failure in our system, all data can be reproduced at short notice. Opportunity report The Deutsche EuroShop Group forms part of a retail market undergoing dynamic structural trans formation. While bricks-and-mortar retail faces challenges from growth in online retail, and many transformation processes are being initiated more actively, the strict boundaries between the online and offline shopping world continue to disappear. The coronavirus pandemic has significantly increased the pressure to act and the required speed of implementation. Even before this, however, there was a clear trend towards purely online retailers increasingly opening shops and branch networks or gaining access to bricks-and-mortar retail chains and their branch networks through acquisi- tions or joint ventures. This development is based on the expectation from customers that they will be able to buy all products online or offline depending on the situation. Lots of retailers had to accept that they were only able to gen- erate satisfactory revenue during the closure phase with an omni-channel sales approach, as this sales approach opens up new opportunities in the areas of customer con- tact and service and provides revenue growth potential. Attractive bricks-and-mortar retail spaces and thus also shopping centers will continue to play an important role in the transformation of the retail landscape to a largely inte- grated omni-channel distribution. This is evidenced by the rapid and relatively significant recovery in customer footfall and tenant revenue in many segments following the reo- pening of stores after the lockdown. In addition, bricks-and- mortar spaces are increasingly lending themselves to being used as local logistics hubs for fast and cost-efficient deliv- ery services. Given the positioning of our shopping centers at prime loca- tions, broad sector diversification within the centers, the increasing link-up between the shopping centers and online retail, their conceptual adaptation with an emphasis on lei- sure, customer experience and meeting point aspects, and the increasing complementary importance of shop spaces for online retail, we see opportunities for further success even during the current accelerated phase of structural change. Due to the portfolio optimisation completed in early 2023 through the purchase of further minority interests, we see opportunities to grow the Company’s earnings in the long term, to increase the Company’s agility and to achieve bet- ter access to financing opportunities on the capital market. Additional attractive financing opportunities can lead to positive effects on EBT and FFO, especially in a market envi- ronment of rising interest rates and a tendency towards stricter loan conditions. There are also growth opportunities for Deutsche EuroShop AG, in keeping with its clearly defined, selective investment strategy, through the acquisition of further shopping centers or stakes therein. This, in turn, would pos- itively impact the results of operations. Further external growth can also enhance the diversification effect in the Company’s holdings portfolio. Due to the great degree of flexibility in the implementation of our acquisition and hold- ings structures, our good reputation with banks and as a reliable partner in the real estate market, the Company is well positioned to be able to continue to operate in the transactions market in such a way as to exploit opportuni- ties going forward. 59 the MALL s life Deutsche EuroShop
- 62. Report of the Executive Board on relations with affiliated companies Acquisition reporting Pursuant to section 312 of the AktG, the Executive Board has prepared a report on relations with affiliated compa- nies, which contains the following concluding statement: “I declare that, with regard to the legal transactions and other measures mentioned in the report on relationships with affiliated companies, and according to the circumstances known to us at the time legal transactions were carried out or measures were taken or omitted, the Company received appropriate consideration for each legal transaction and was not disadvantaged by the fact that measures were taken or omitted.” Deutsche EuroShop AG shares are traded on the Stock Exchange in Frankfurt am Main and other exchanges. As at 31 December 2024, 76.4% of the shares were held by Her- cules BidCo GmbH, which, based on voting agreements, belongs to Alexander Otto, among others (previous year: 76.4%). With regard to disclosures concerning direct or indirect shareholdings that exceed 10% of voting rights, please refer to the notes and the notes to the consolidated financial statements. The share capital amounted to €76,464,319 on 31 Decem- ber 2024 and was composed of 76,464,319 no-par-value registered shares. As at 31 December 2024, Deutsche EuroShop AG held 720,465 treasury shares, which confer no rights to the Company in accordance with Section 71b AktG. Please refer to the information in the notes to the consolidated financial statements under section “13. Equity and reserves” in the notes to the consolidated financial statements. The notional value of each share in the share capital is €1.00. The appointment and removal of members of the Executive Board are governed by Sections 84 and 85 AktG and Article 7 of the Articles of Association. Pursuant to Article 7 (1) of the Articles of Association, the Executive Board shall consist of one or more persons; furthermore, the Supervisory Board shall determine the number of members of the Exec- utive Board. Amendments to the Articles of Association are subject to Sections 179 and 133 AktG and Article 13 of the Articles of Association. Pursuant to Article 13 (4) of the Arti- cles of Association, the Supervisory Board shall be author- ised to resolve amendments and addenda to the Articles of Association that relate solely to wording. By resolution of the Annual General Meeting on 29 August 2023, the Executive Board was authorised, with the approval of the Supervisory Board, to increase the Company’s share capital by up to a total of €38,232,159 in increments through individual or multiple issues of new no-par-value registered shares against cash and/or non- cash contributions before 28 August 2028 (Authorised capital 2023). As at 31 December 2024, no use had been made of this authorisation. The Annual General Meeting held on 29 August 2023 author- ised the Executive Board to acquire treasury shares in the Company on the stock exchange before 28 August 2028 constituting up to 10% of the share capital available on entry into force or – if this is lower – on exercise of the authori- sation. As at 31 December 2024, 720,465 treasury shares had been repurchased on the stock exchange. This corre- sponds to 0.942% of the share capital as at the reporting date. 60 Combined management report
- 63. By resolution of the Annual General Meeting on 29 August 2023, the Executive Board was authorised, sub- ject to approval of the Supervisory Board, to issue con- vertible bonds and/or bonds with warrants or a combina- tion of such instruments on one or multiple occasions before 28 August 2028 with a total nominal value of up to €1.5 billion against cash contributions and/or contribu- tions in kind, in particular against investments in other companies, and to grant the holders of the respective, equally privileged bonds conversion and option rights/ obligations to new no-par-value shares in the Company up to a total of 38,232,159 shares as detailed in the terms and conditions for the bonds (“Bond conditions”). The bonds and the conversion and option rights/obligations can be issued with or without a term. The bonds may pay a fixed or variable rate of interest, in which case, as with a participating bond, the interest may also be dependent in full or in part on the level of the Company’s dividend (Conditional capital 2023). As at 31 December 2024, no use had been made of this authorisation. A change-of-control arrangement has been agreed with two employees. Under this arrangement, if and insofar as the Company informs them that they will no longer be employed in their current positions, these employees will have a spe- cial right of termination with a notice period of one month up to the end of the quarter, which will be valid for twelve months from the date the change of control takes effect. A change of control arises if Deutsche EuroShop AG merges with another company, if a public takeover bid has been made under the German Wertpapiererwerbs- und Über- nahmegesetz (WpÜG – Securities Acquisition and Takeover Act) and has been accepted by a majority of shareholders, if the Company is integrated into a new group of companies, or if the Company goes private and is delisted. In the event of such termination of the employment rela- tionship, these employees will receive a one-time payment amounting to three months’ gross salary multiplied by the number of years that they have worked for the Company, but limited to a maximum of 24 months’ gross salary. The Deutsche EuroShop Group does not currently have any other compensation agreements with members of the Exec- utive Board or other employees for the event of a change of control. The material provisions governing Deutsche EuroShop AG, which include a change of control clause for Deutsche EuroShop AG, primarily relate to credit facilities and loan agreements. In the event of a takeover, the relevant lenders are entitled to terminate the facility and where applicable demand immediate repayment. A takeover is defined as a third party taking control of Deutsche EuroShop AG; the takeover may also be made by a group acting jointly. The combined declaration in accordance with Section 289f and Section 315d HGB on corporate governance and on the Corporate Governance Code is published on the Deutsche EuroShop AG website at: www.deutsche-euroshop.de/Investor-Relations/Corpo- rate-Governance/Declaration-of-Conformity Declaration on corporate governance (Section 289f, Section 315d HGB) 61 the MALL s life Deutsche EuroShop Combined management report
- 64. Reporting on the annual financial statements of Deutsche EuroShop AG As the Group managing company, Deutsche EuroShop AG is responsible for corporate strategy, portfolio and risk management, financing and communication. As the holding company, the economic development of Deutsche EuroShop AG depends primarily on the business develop- ment of the Group’s operating companies. Deutsche EuroShop AG also directly participates in and shares the opportunities and risks of the Group companies. Therefore, please also refer to the reporting on the Group in the sec- tions “Macroeconomic and sector-specific conditions”, “Business development and overall comment on the Group’s financial situation”, “Risk report” and “Opportunity report” in this combined management report. The annual financial statements of Deutsche EuroShop AG were prepared in accordance with the rules of the German Commercial Code (HGB), in compliance with the German Stock Corporation Act (AktG), while the consolidated finan- cial statements were prepared according to IFRS rules. Results of operations of Deutsche EuroShop AG (HGB) Change in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 ± in % Other operating income 233 275 -42 -15 Personnel expenses -2,399 -1,820 -579 -32 Depreciation/amortisation and other operating expenses -3,169 -5,045 1,876 37 Investment income 61,448 76,253 -14,805 -19 Financial gains/losses -9,330 -8,041 -1,289 -16 Earnings before taxes 46,783 61,622 -14,839 -24 Taxes on income and earnings 2,047 -2,520 4,567 181 Other taxes 0 -9,820 9,820 – Net profit 48,830 49,282 -452 -1 Profit brought forward 202,672 500,000 -297,328 Unappropriated surplus 251,502 549,282 -297,780 Financial year 2024 for Deutsche EuroShop AG was char- acterised, on the one hand, by a downturn in investment income and the decline in other operating expenses. The higher-than-forecast investment income resulted in expected earnings before taxes that were also higher than originally anticipated, at €46.8 million versus the forecast range of €27.0 million to €33.0 million. Other operating expenses decreased by €1.9 million com- pared to the previous year. This was mainly due to expenses in the previous year in connection with the capital measure carried out in early 2023 and the acquisition of additional shares in six shopping center investments in the previous year. A principal component of the Company’s earnings is invest- ment income. At €61.4 million in 2023 (previous year: €76.3 million), this was €14.8 million lower than in the pre- vious year but exceeded the previous year’s forecast (€37 million to €43 million). Investment income was better than planned, in particular due to lower expenses for investments in rental areas and maintenance. Financial gains/losses were negatively impacted by the write-down on the investment in Saarpark Center Neunkirchen GmbH Co. KG (previously: Saarpark-Center Neunkirchen KG) in the amount of €9.3 million (previous year: €6.5 million). 62 Combined management report
- 65. Other taxes in the previous year relate to the real estate transfer tax triggered by the consolidation of shares at the level of Deutsche EuroShop AG in the course of the acqui- sition of additional shares in property companies in the previous year. Income from taxes on income and earnings were €2.0 mil- lion, compared with expenses of €2.5 million in the previous year. Of these amounts, €4.1 million in income was attrib- utable to deferred taxes (previous year: expenses of €1.6 million), and expenses of €2.0 million (previous year: €0.9 million) to taxes payable. Net assets of Deutsche EuroShop AG (HGB) Change in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 ± Financial investments 1,049,221 1,314,564 -265,343 Other non-current assets 66 50 16 Receivables and other assets 4,329 4,383 -54 Cash and bank balances 33,401 92,430 -59,029 Assets 1,087,017 1,411,427 -324,410 Equity 910,414 1,222,993 -312,579 Provisions 7,013 9,597 -2,584 Liabilities 89,055 94,211 -5,156 Deferred tax liabilities 80,535 84,626 -4,091 Liabilities 1,087,017 1,411,427 -324,410 The downturn in financial investments in financial year 2024 was related to the withdrawals from investees, which were equal to free liquidity, less the proportional net profits under commercial law in 2024 and write-downs of financial investments. Liquidity withdrawals increased compared to the previous year. This was largely due to the additions to the existing loans at the property companies in Passau, Magdeburg and Hamm. The dividends totalling €346.6 million approved at the Annual General Meetings in January and August 2024 reduced equity accordingly. Deutsche EuroShop AG’s equity ratio fell to 83.8% (previous year: 86.6%), remaining at a high level and providing the Company with a firm financial footing. 63 the MALL s life Deutsche EuroShop
- 66. Financial position of Deutsche EuroShop AG (HGB) in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 Net profit 48,830 49,282 Cash distributions on investees recognised in equity 250,801 80,815 Measurement of investments not affecting liquidity 9,331 6,463 Addition/reversal for deferred income taxes -4,091 1,607 1. Free cash flow from operating activities 304,871 138,167 2. Outflows for new investments 0 -58,753 3. Inflows from equity 0 64,252 Inflows/outflows from bank loans -341 -1,544 4. Inflows/outflows from financing activities -341 -1.544 5. Other cash changes in the balance sheet -2,150 2,151 6. Acquisition of treasury shares -14,800 -200 7. Dividend for the previous year -346,609 -191,161 Liquidity at the start of the year 92,430 139,518 Cash changes in liquidity (subtotal 1. – 7.) -59,029 -47,088 Liquidity at the end of the year 33,401 92,430 The free cash flow from operating activities of €304.9 mil- lion increased considerably compared to the previous year (€138.2 million). This was due to earnings from investments being lower than in the previous year and the additional liquidity distributions arising from the loan increases for Passau, Magdeburg and Hamm. For the past financial year, there was a return on the equity paid in amounting to €1,418.2 million of 21.5%, compared with 9.6% in the pre- vious year. Free cash flow per share rose from €1.84 to €4.01. The outflows for new investments in the previous year include the cash paid by Deutsche EuroShop AG as part of the acquisition of the additional shares in six property com- panies. The remaining purchase prices were settled by granting shares to the sellers. Outflows from financing activities resulted from the sched- uled repayment of long-term bank loans until the loan was transferred to Allee-Center Magdeburg GmbH Co. KG without affecting liquidity. Taking into account the cash changes in net working capital, liquidity ended the year at €33.4 million. The Executive Board is very satisfied with the results of operations, net assets and financial position in financial year 2024. FORECAST FOR DEUTSCHE EUROSHOP AG (HGB) Management expects the following changes in the key per- formance indicators: income from investments of €31 mil- lion to €37 million, and thus down significantly on 2024 (€61.4 million), and earnings before taxes of between €25 million and €31 million, also sharply lower than the figure seen in 2024 (€46.8 million). We consider ourselves to be very well positioned for finan- cial year 2025 in spite of the scheduled lower income from investments and the likewise declining earnings before taxes. Hamburg, 21 March 2025 64 Reporting on the annual financial statements of Deutsche EuroShop AG Combined management report
- 67. Forward-looking statements This combined management report contains forward-looking statements based on estimates of future developments by the Executive Board. The statements and forecasts represent esti- mates based on all of the information available at the current time. If the assumptions on which these statements and forecasts are based do not materialise, the actual results may differ from those currently forecast. Rounding and rates of change Percentages and figures stated in this report may be subject to rounding differences. The pre- fixes before rates of change are based on economic considerations: improvements are indi- cated by a plus (+); deteriorations by a minus (-). 65 the MALL s life Deutsche EuroShop
- 69. Consolidated balance sheet 68 Consolidated income statement 70 Statement of comprehensive income 71 Consolidated statement of changes in equity 72 Consolidated cash flow statement 74 Notes to the consolidated financial statements for financial year 2024 75 1.9 € billion in equity the MALL s life Deutsche EuroShop 67
- 70. Consolidated balance sheet Assets in € thousand Notes 31.12.2024 31.12.2023 ASSETS Non-current assets Intangible assets 7. 51,731 51,742 Property, plant and equipment 7. 371 449 Investment properties 8. 3,966,721 3,947,021 Investments accounted for using the equity method 9. 101,534 92,741 Non-current assets 4,120,357 4,091,953 Current assets Trade receivables 10. 14,711 13,419 Other current assets 11. 16,899 18,754 Cash and cash equivalents 12. 212,438 336,071 Current assets 244,048 368,244 Total assets 4,364,405 4,460,197 68 Consolidated financial statements
- 71. Liabilities in € thousand Notes 31.12.2024 31.12.2023 EQUITY AND LIABILITIES Equity and reserves Subscribed capital 76,464 76,464 Capital reserves 793,943 793,943 Retained earnings 1,014,853 1,249,269 Treasury shares -720 -9 Total equity 13. 1,884,540 2,119,667 Non-current liabilities Financial liabilities 14. 1,795,909 1,665,679 Deferred tax liabilities 16. 350,887 331,918 Limited partner contributions of non-controlling interests 17. 261,156 259,380 Other liabilities 15. 4,715 7,126 Non-current liabilities 2,412,667 2,264,103 Current liabilities Financial liabilities 14. 12,465 11,921 Trade payables 15. 7,349 10,635 Tax liabilities 15. 16,876 19,891 Other provisions 18. 12,669 14,459 Other liabilities 15. 17,839 19,521 Current liabilities 67,198 76,427 Total equity and liabilities 4,364,405 4,460,197 the MALL s life Deutsche EuroShop 69
- 72. Consolidated income statement in € thousand Notes 01.01.- 31.12.2024 01.01.- 31.12.2023 Revenue 19. 271,403 273,304 Property operating costs 20. -31,350 -34,808 Property management costs 21. -14,902 -14,734 Write-downs and disposals of financial assets 10., 22. -7,731 -8,858 Net operating income (NOI) 217,420 214,904 Other operating income 23. 9,074 35,335 Other operating expenses 24. -10,189 -37,578 Earnings before interest and taxes (EBIT) 216,305 212,661 Share in the profit or loss of associates and joint ventures accounted for using the equity method 9., 25. 16,581 5,005 Interest expense -49,083 -43,313 Profit/loss attributable to limited partners 17. -14,397 -13,876 Other financial expenses -1,876 0 Interest income 5,408 5,492 Financial gains/losses -43,367 -46,692 Measurement gains/losses 26. -22,870 -205,701 Earnings before taxes (EBT) 150,068 -39,732 Taxes on income and earnings 27. -26,554 1,455 Consolidated profit 123,514 -38,277 Basic and diluted earnings per share (€) 28. 1.62 -0.51 70 Consolidated financial statements
- 73. Statement of comprehensive income in € thousand Notes 01.01.- 31.12.2024 01.01.- 31.12.2023 Consolidated profit 123,514 -38,277 Items which under certain conditions in the future will be reclassified to the income statement: Actual share of the profits and losses from instruments used to hedge cash flows 13. 3,298 -790 Deferred taxes on changes in value offset directly against equity 13. -530 -239 Total earnings recognised directly in equity 2,768 -1,029 Total profit 126,282 -39,306 Share of Group shareholders 126,282 -39,306 the MALL s life Deutsche EuroShop 71
- 74. Consolidated statement of changes in equity in € thousand Notes Number of shares out- standing Subscribed capital Capital reserves 01.01.2023 61,783,594 61,784 494,526 Total profit 0 0 Capital increase 13. 14,680,725 14,680 299,417 Acquisition of treasury shares 13. -9,000 0 0 Dividend payments 13. 0 0 31.12.2023 76,455,319 76,464 793,943 01.01.2024 76,455,319 76,464 793,943 Total profit 0 0 Acquisition of treasury shares 13. -711,465 0 0 Dividend payments 13. 0 0 31.12.2024 75,743,854 76,464 793,943 72 Consolidated financial statements
- 75. Other retained earnings Statutory reserve Cash flow hedge reserve Treasury shares Total 1,482,264 2,000 -4,337 0 2,036,237 -38,277 0 -1,029 0 -39,306 0 0 0 0 314,097 -191 0 0 -9 -200 -191,161 0 0 0 -191,161 1,252,635 2,000 -5,366 -9 2,119,667 1,252,635 2,000 -5,366 -9 2,119,667 123,514 0 2,768 0 126,282 -14,089 0 0 -711 -14,800 -346,609 0 0 0 -346,609 1,015,451 2,000 -2,598 -720 1,884,540 the MALL s life Deutsche EuroShop 73
- 76. Consolidated cash flow statement in € thousand Notes 01.01.- 31.12.2024 01.01.- 31.12.2023 Consolidated profit 123,514 -38,277 Income taxes 27. 26,554 -1,455 Financial gains/losses 43,367 46,692 Amortisation/depreciation of intangible assets and property, plant and equipment with a finite life 7., 24. 140 123 Unrealised changes in fair value of investment property and other measurement gains/losses 26. 22,870 205,701 Distributions and capital repayments received 9. 7,801 6,335 Other non-cash income and expenses 0 14,036 Changes in trade receivables and other assets 10., 11. -13,083 -8,950 Changes in current provisions 18. -4,453 843 Changes in liabilities 15. -5,903 -9,817 Cash flow from operating activities 200,807 215,231 Interest paid -46,218 -40,302 Interest received 5,408 5,492 Income taxes paid 27. 435 -5,358 Net cash flow from operating activities 160,433 175,063 Investments in investment properties 8. -47,179 -43,481 Sale of investment properties 8. 6,906 0 Investments in intangible assets and property plant and equipment -15 -16 Acquisition of subsidiaries less acquired cash and cash equivalents 30. 0 -19,455 Cash flow from investing activities -40,288 -62,952 Assumption of financial liabilities 14., 29. 158,428 60,906 Repayment of financial liabilities 14. -30,520 -12,994 Repayment of lease liabilities 15. -103 -73 Acquisition of treasury shares 13. -14,800 -200 Payments to limited partners 17. -10,174 -9,904 Payments for the acquisition of additional shares in the limited partnership 30. 0 -19,538 Inflows from capital increases 13. 0 61,981 Payments to Group shareholders 13. -346,609 -191,161 Cash flow from financing activities -243,778 -110,983 Net change in cash and cash equivalents -123,633 1,128 Cash and cash equivalents at beginning of period 12. 336,071 334,943 Cash and cash equivalents at end of period 12. 212,438 336,071 74 Consolidated financial statements
- 77. Notes to the consolidated financial statements for financial year 2024 1. GENERAL DISCLOSURES The Group parent company is Deutsche EuroShop AG, Ham- burg, Germany. The Company’s head office is at Heegbarg 36, 22391 Hamburg, Germany. The Company is entered in the Hamburg Commercial Register (HRB 91799). Deutsche EuroShop AG focuses on acquiring, managing, using and selling investments of all kinds, and in particular investments in retail properties. The consolidated financial statements of Deutsche EuroShop AG have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), including the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the sup- plementary provisions of German commercial law required to be applied under Section 315e (1) of the Handelsgesetz- buch (HGB German Commercial Code). All IFRS and IFRIC interpretations endorsed by the European Commission and required to be applied as at 31 december 2024 have been applied. The Executive Board prepared the consolidated financial statements as at 31 December 2024 on 21 March 2025 and forwarded them to the Supervisory Board for examination and approval. In addition to the consolidated balance sheet, consolidated income statement and consolidated statement of compre- hensive income, the consolidated financial statements com- prise the consolidated statement of changes in equity, the consolidated cash flow statement and the notes to the con- solidated financial statements. Amounts are mainly presented in thousands of €. A detailed list of the companies included in the consolidated financial statements forms part of the notes. The annual financial statements of the consolidated com- panies were prepared on 31 December 2024, the reporting date of the consolidated financial statements. 2. BASIS OF CONSOLIDATION The scope of consolidation changed as follows compared with the previous year: Domestic1 Abroad1 Total FULLY CONSOLIDATED SUBSIDIARIES As at 01.01.2024 15 4 19 Additions 0 0 0 Disposals 0 0 0 As at: 31.12.2024 15 4 19 JOINT VENTURES INCLUDED IN ACCORDANCE WITH THE EQUITY METHOD As at 01.01.2024 0 3 3 Additions 0 1 1 Disposals 0 0 0 As at: 31.12.2024 0 4 4 ASSOCIATES INCLUDED IN ACCORDANCE WITH THE EQUITY METHOD As at 01.01./31.12.2024 0 1 1 1 Companies are allocated in accordance with the segment allocation based on the location of the respective shopping center. This may be different from the company domicile. the MALL s life Deutsche EuroShop 75
- 78. Subsidiaries The consolidated financial statements include the financial statements of the parent company and of the companies controlled by it. Deutsche EuroShop AG gains control when it: is in a position to take decisions affecting another com- pany, is exposed to fluctuating returns and reflows from this holding, and is able, by reason of its decision-making capacity, to influence such returns. At every reporting date, a new assessment is carried out to establish whether or not an investee is controlled, by ref- erence to whether circumstances indicate that one or more of these criteria have changed. Financial information of subsidiaries with significant non-controlling interests The Group holds a stake of 52.01% in Main-Taunus-Zentrum KG, Hamburg, and exercises a controlling influence over the Company. The other 47.99% of shares are in free float. The Company posted non-current assets of €670,721 thousand (previous year: €655,721 thousand) and current assets of €29,401 thousand (previous year: €38,573 thousand) as at the reporting date. Non-current liability items (exclud- ing limited partner contributions of non-controlling inter- ests) amounted to €220,359 thousand (previous year: €220,270 thousand) and current liability items totalled €4,958 thousand (previous year: €5,150 thousand). The Company generated revenue of €35,845 thousand (previ- ous year: €36,776 thousand) and net profit (after earnings due to limited partners) of €12,791 thousand (previous year: €-7,518 thousand). A dividend of €7,910 thousand (previous year: €7,434 thousand) was paid to limited partners in the year under review. Joint ventures Joint ventures in which Deutsche EuroShop AG has a major- ity of the voting rights together with third parties are clas- sified as joint operations and are accounted for using the equity method. Associates In accordance with IAS 28, where Deutsche EuroShop AG can exercise a significant influence but not control over companies, these investments are measured using the equity method. Investees Investments over which Deutsche EuroShop AG has neither significant influence nor control are generally measured at fair value. In line with IFRS 9, for initial recognition of an investment, the Group has the irrevocable right to choose to record the fair value adjustment in other income as well. As at 31 December 2024, the Group had no investees. Shareholdings The list of shareholdings as required by Section 313 (2) HGB is attached as a note to the consolidated financial state- ments. The list of shareholdings also includes a conclusive list of all subsidiaries that meet the conditions of Section 264b HGB and have exercised the option of exemption from specific provisions regarding the preparation, auditing and disclosure of the annual financial statements or manage- ment report. 3. CONSOLIDATION METHODS Under the purchase method, the cost is eliminated against the parent company’s interest in the remeasured equity of the subsidiaries at the date of acquisition or initial consol- idation. Any remaining excess of identified net assets acquired over cost of acquisition is recognised as goodwill in intangible assets. Any negative differences are recog- nised in income following a reassessment. Joint ventures and associates are measured using the equity method. The cost of acquiring the investment is rec- ognised here in income at an amount increased or reduced by the changes in equity corresponding to the equity inter- est of Deutsche EuroShop AG. Intragroup transactions are eliminated as part of the con- solidation of intercompany balances, income and expenses. 76 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 79. 4. CHANGES IN ACCOUNTING POLICIES AND VALUATION METHODS, ESTIMATES, ASSUMPTIONS, OPTIONS AND JUDGEMENTS Changes in accounting policies and valuation methods due to new accounting standards The following new or amended standards and interpreta- tions relevant for the business activities of the Group are required to be applied for the first time to the financial years ending on 31 December 2024: Amendment/ Standard Date applied (EU) Amendment Impact on the net assets, financial position and results of operations or cash flow of Deutsche EuroShop AG Classification of debt as current or non-current (Amendment to IAS 1) 01.01.2024 Clarification of the classification of liabilities as current and non-current No material impact the MALL s life Deutsche EuroShop 77
- 80. The following new or amended standards and interpreta- tions relevant for the business activities of the Group are not yet compulsory and have not been applied prematurely: Amendment/ Standard Expected date of application (EU) Expected Amendment Impact on the net assets, financial po- sition and results of operations or cash flow of Deutsche EuroShop AG Contracts Referenc- ing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) 01.01.2026 (Not yet endorsed by the EU) Clarification of the “own use exemption” Option to use contracts for electricity from nature-dependent renewable energy sources as hedging instruments under certain conditions Additional disclosure requirements with regard to the effects of the contracts on financial performance and future cash flow No material impact Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) 01.01.2026 (Not yet endorsed by the EU) Changes to the classification of financial assets using the SPPI criterion Definition of financial assets with non-recourse features Disclosure requirements for equity instruments that are measured at fair value and not recognised in profit or loss No material impact Annual Improvements to IFRS Accounting Standards (Volume 11) 01.01.2026 (Not yet endorsed by the EU) Hedge accounting by a first-time adopter (IFRS 1 – First-time Adoption of International Financial Reporting Standards) Disclosure of deferred difference between fair value and transaction price (IFRS 7 – Financial Instruments: Disclosures) Lessee derecognition of lease liabilities Transaction price (IFRS 9 – Financial Instruments) Determination of a “de facto agent” (IFRS 10 Consolidated Financial Statements) Cost method (IAS 7 – Statement of Cash Flows) No material impact Presentation and Disclosure in Finan- cial Statements (IFRS 18) 01.01.2027 (Not yet endorsed by the EU) Categorisation requirements for the income statement Elimination of disclosure options in the state- ment of cash flows for interest and dividends received and paid In the future, we will be required to use the new operating profit subtotal as the starting point for the indirect method of preparing statements of cash flows Requirements for notes related to manage- ment-defined performance measures (MPMs) and aggregation and disaggregation rules for the notes The comparative figures must be adjusted accordingly in the year of initial application. The effects of the first-time adop- tion of IFRS 18 on the consolidated financial state- ments of Deutsche EuroShop AG are currently being analysed. In addition, further standards and interpretations were adopted which are not expected to have any impact on the Group. 78 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 81. Estimates and assumptions The preparation of the consolidated financial statements necessitates the use of estimates and assumptions. These affect the reported amounts of assets, liabilities and con- tingent liabilities as at the reporting date, as well as the recognition of income and expenses during the reporting period. The actual amounts can differ from these estimates. Estimates and assumptions are evaluated on an ongoing basis and are based on historical experience and other fac- tors, including expectations related to future events. The assumptions and estimates that may have the greatest impact on assets and liabilities are those which are used when calculating the market values of investment proper- ties. Investment properties are valued in accordance with IAS 40 in conjunction with IFRS 13 using the discounted cash flow (DCF) method. Changes in market values are recog- nised in profit or loss under measurement gains/losses. This has an impact on the earnings position of Deutsche EuroShop AG. The valuation of investment properties involves a significant amount of uncertainty. The expected cash flows and the discount factor are particularly impactful parameters when it comes to valuation (for more details, see Section 8. Invest- ment Properties). Uncertain tax items for current and deferred taxes are sub- ject to estimates and assumptions regarding the occurrence of future events that may have an impact on the amount of tax expenses and tax liabilities. Deferred tax assets on loss carryforwards are recognised to the extent that it is prob- able that future taxable profits will be available against which the loss carryforwards can be offset. At each report- ing date, the assumptions and estimates regarding the probability of future taxable profits are reviewed with regard to offsetting against existing loss carryforwards. In addition, assumptions and estimates are made when determining useful lives and when recognising and meas- uring provisions. Options and judgements The following are the options and judgements that have the most significant effect on the amounts recognised in the financial statements. Investment properties are measured at their market value in accordance with IAS 40. Measuring investment properties at amortised cost would have a significant effect on carry- ing amounts and the corresponding income and expense items. The classification of an investment as an investment accounted for using the equity method is based on the assessment of significant influence or joint control, and may be a matter of judgement. The categorisation of financial assets and liabilities can be a matter of judgement. Judgement may be required with regard to revenue recog- nition in accordance with IFRS 15, which may affect the amount and timing of revenue. The consideration of termination and extension options when accounting for leases in accordance with IFRS 16 can be a matter of judgement. Assessing forward-looking information as part of the deter- mination of write-downs on receivables is subject to judge- ment. the MALL s life Deutsche EuroShop 79
- 82. 5. CURRENCY TRANSLATION The reporting currency of the company is the euro (€). The companies located outside the eurozone that are included in the consolidated financial statements are treated as legally independent, but economically dependent, integrated companies. The reporting currency of these com- panies is therefore different from the functional currency (€). Under IAS 21, annual financial statements prepared in foreign currencies are translated using the functional cur- rency method, with the result that the balance sheet is to be translated as if the transactions had arisen for the Group itself, because the local currency of the integrated compa- nies is deemed to be a foreign currency for these companies themselves. Monetary values are therefore translated at the closing rate and non-monetary items at the rate that applied at the time of initial recognition. Non-monetary items to be reported at fair value are translated at the closing rate. Items in the consolidated income statement are translated at average rates for the year or, in the event of strong fluctuations, using the rate that applied on the date of the transaction. Any translation differences arising in the case of discrep- ancies between the translation rates of the balance sheet and consolidated income statement are recognised in profit or loss. Translation was based on the following exchange rates: 31.12.2024 31.12.2023 € 1 = Closing rate Average rate Closing rate Average rate Hungarian forint (HUF) 411.35 397.07 382.78 380.57 Polish zloty (PLN) 4.27 4.31 4.35 4.54 Czech koruna (CZK) 25.19 24.73 24.73 24.12 6. SIGNIFICANT ACCOUNTING POLICIES AND VALUATION METHODS Revenue and expense recognition As a general rule, revenue from leasing the investment properties is recognised on a straight-line basis over the term of the lease. Tenant incentives granted are distributed on a straight-line basis over the lease term and reduce rev- enue. The rental concessions granted in connection with the coro- navirus pandemic, to the extent that they relate to receiva- bles that arose in the period up to the contractual agree- ment with the tenant,were treated as a waiver of receivables and recognised as a disposal of financial assets. Rental concessions that affect the period after the contractual agreement with the tenant are treated as a modification to the lease and are distributed on a straight-line basis over the remaining lease term from the date the agreement was reached. This approach is not applicable with respect to the suspension or reduction of rental payments made on the basis of an existing lease or by law. Those are treated as variable lease payments and recognised in revenue as they actually arise. When passing on operating costs, the Group acts as an agent for the service. The income from recharging is there- fore netted with the corresponding expenses in the income statement. This does not include operating costs that are passed on and for which the tenants do not receive a sep- arate service (property tax and building insurance). The proceeds received through the transfer of these expenses, which are included in the property operating costs, are rec- ognised in revenue (unnetted recognition). Other revenue and other operating income are recognised once the relevant service has been rendered or once the risk has passed to the customer. Other operating expenses are recognised once the service has been utilised or at the time when they are booked through profit and loss. Interest income and expense are accrued. Determination of fair values The Group regularly reviews the determination of fair val- ues for financial and non-financial assets and liabilities. It also conducts a regular assessment of significant, non-ob- servable input factors and carries out valuation adjust- ments. When determining the fair value of an asset or lia- bility, the Group uses observable market data wherever possible. Based on the input factors used in the valuation techniques, the fair values are categorised into different levels of the fair value hierarchy in accordance with IFRS 13: Level 1: Fair values determined using quoted prices in active markets. Level 2: Fair values determined using valuation methods where the input factors relevant for the fair value are based on directly or indirectly observable market data. Level 3: Fair values determined using valuation methods where the input factors relevant for the fair value are based on unobservable market data. 80 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 83. In the case of assets or liabilities that are recognised at fair value on a regular basis, it is determined based on a reas- sessment at the end of the financial year whether reclas- sifications took place between the hierarchical levels. In financial year 2024, as in the previous year, no reclassifi- cations were made between the hierarchical levels. Intangible assets Intangible assets include acquired software and software licenses of Deutsche EuroShop AG and goodwill. Software additions are measured at cost. These are amor- tised at 33 % using the straight-line method over the expected useful life of three years. The method of depreci- ation and the depreciation period are reviewed annually at the end of each financial year. Goodwill within the context of a company takeover arose as a positive difference between the fair value of the assets, liabilities and contingent liabilities at the time of acquisition as well as the deferred taxes of the acquired company and the consideration paid for it by the Group. Goodwill is not subject to amortisation. Property, plant and equipment Property, plant and equipment is reported at cost, less depreciation and, where applicable, impairment charges. Operating and office equipment comprises office equip- ment, tenant fixtures, fittings and technical equipment belonging to Deutsche EuroShop AG, and is depreciated using the straight-line method over three to 13 years. The method of depreciation and the depreciation period are reviewed annually at the end of each financial year. Property, plant and equipment also includes right-of-use assets under leases. Impairment losses on intangible assets and property, plant and equipment The value of the goodwill is reviewed at least once a year (as at 31 December) at the level of the cash-generating units of the Group to which goodwill was allocated at the time of acquisition. The impairment loss test as at 31 Decem- ber 2024 did not result in a need for write-downs, as in the previous year. For intangible assets with finite useful lives as well as for property, plant and equipment, the value is only reviewed if there are actual indications of impairment. An impairment loss is recognised in income in measurement gains/losses provided that the recoverable amount of the assets is lower than the carrying amount. The recoverable amount is the higher value from the fair value less costs of disposal and value in use. In the financial year, there were no indications of impairment for intangible assets with finite useful lives or for property, plant and equipment. Investment properties Under IAS 40, investment property must initially be meas- ured at cost at the date of acquisition. Property that is under construction and that is intended to be used as investment property following its completion also falls under the scope of IAS 40. Property held as a financial investment can either be recognised at amortised cost (cost model) or using the fair-value model. Subsequently, all properties must be measured at their fair value and the annual net changes recognised in income under measurement gains/losses (recurring fair value measurement). Investment property is property held for the long term to earn rental income or capital gains. Under IAS 40, investment property measured using the fair value model is no longer depreciated. Borrowing and initial rental costs that are directly attribut- able to the acquisition, construction or production of a qual- ifying asset are included in the cost of that asset until the time at which the asset is largely ready for its intended use. Income realised from the temporary investment of specif- ically borrowed funds up to the point when these are used to obtain qualifying assets is deducted from the capitalis- able costs of these assets. General administrative costs are not added to the costs of these assets. All other borrowing costs are recognised in income in the period in which they occur. Maintenance measures relating to property, plant and equipment are recognised as an expense in the financial year in which they occur. the MALL s life Deutsche EuroShop 81
- 84. Non-current assets held for sale The classification of real estate as non-current assets held for sale requires that the real estate is available for sale in its present condition and that the sale is highly probable and expected to occur within twelve months. A sale is con- sidered highly probable when the plan to sell has been decided, the necessary approvals have been obtained and the marketing process has begun. Investment properties reported in the balance sheet under non-current assets held for sale must be measured at fair value in accordance with IAS 40. Group as lessee The Group assesses at inception whether an agreement is a lease or not according to IFRS 16 and, for the term of provision, recognises an asset for the right of use granted and a lease liability. Initial measurement of the right of use and lease liability is at the present value of the lease pay- ments to be made. Discounting is at the Group’s marginal borrowing rate. Subsequently, the right of use is amortised on a straight-line basis over the term of the lease, and the lease liability is reduced by the lease payments made and increased by the interest accrued on the portion not yet repaid. Government grants To mitigate the effects of the coronavirus pandemic, the Group applied for bridging assistance III in the amount of €2.0 million in 2022. The bridging assistance III applied for must be recognised in profit or loss as a government grant if there is reasonable assurance that the Group will comply with the conditions attached to the grant and that the grant will be received. The income from the grant is shown under other operating income and the receivable under other assets. The application was approved and paid in mid-Feb- ruary 2022. The final accounts for the assistance awarded were submitted in October 2023 but had not been approved at the time of preparation. Financial instruments Financial assets and liabilities are recognised in the con- solidated balance sheet when the Group becomes a party to the contractual provisions governing the financial instru- ment. Financial instruments are allocated to an IFRS 9 measure- ment category when they are recognised for the first time. With financial assets, the measurement category is depend- ent on the cash flow property of the financial instrument and the business model of the Group which holds the finan- cial asset. Receivables and other current assets Receivables and other current assets are recognised at amortised cost less write-downs. As a general rule, the Group applies the simplified approach permitted under IFRS 9 and measures the write-down on the basis of the credit losses expected over the life of the asset. Limited partner contributions of non-controlling interests The distinction between equity and liabilities under inter- national accounting standards is set out in IAS 32 Financial Instruments: Presentation. In accordance with this stand- ard, the equity interests of third-party shareholders in com- mercial partnerships are reclassified as liabilities due to the shareholders’ potential right of redemption. According to Sections 131 et seq. HGB, shareholders in commercial partnerships have an ordinary legal right of termination of six months with effect from the end of the financial year, which the shareholders’ agreement can define from a long- term perspective, but cannot exclude. As a result of this stipulation, a liability rather than equity was recognised in the balance sheet. This liability must be measured at the repayment amount. 82 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 85. Financial liabilities Liabilities to banks/bank loans and overdrafts are reported at amortised cost. Discounts are deducted, which under IFRS 9 must be amortised over the term of the loan agree- ment and recognised annually as an expense. Trade payables Trade payables are recognised at their repayment amount. Other liabilities Other liabilities are recognised at amortised cost. Cash and cash equivalents Cash and cash equivalents include cash and bank balances (terms of up to three months) at their principal amounts. Derivative financial instruments Derivatives that qualify for hedge accounting in accordance with IFRS 9 are used to hedge interest rate risks. These are fixed-rate swaps to limit the interest rate risk of variable interest rate loans, which have terms extending to 2027. The interest rate hedges are recognised at fair value (recur- ring fair value measurement) under “Other assets” or “Other liabilities”. Changes are recognised directly in equity, provided that the conditions of the underlying and hedge transaction are identical. The effectiveness of the hedging measures is verified regularly using the degree of harmony between the contract terms for the hedged item and the hedge (critical term match). If the effectiveness between the hedged item and the hedge does not exist, the hedge is measured as a derivative at fair value in profit or loss. Pres- ent value is calculated based on discounted cash flows using current market interest rates. The final maturities of the interest rate hedges and loan agreements are identical. Investments accounted for using the equity method Investments in associates and joint ventures are initially recognised at cost in the balance sheet and adjusted by changes in the Group’s share of the equity of the associate/ joint venture after the date of acquisition. At every reporting date, the Group reviews whether there are indications that the shares are impaired in relation to the amortised carry- ing amounts. Deferred taxes In accordance with IAS 12, deferred taxes are recognised for all deductible temporary differences between the tax accounts and the IFRS balance sheet. Measurement is based on the tax rates that are expected to apply in the period in which the temporary differences are realised, according to the tax rates and regulations that are valid on the balance sheet date or will be valid in the near future. At present, deferred taxes are primarily formed on the differ- ences between the IFRS carrying amounts of the properties and financial liabilities and their carrying amounts for tax purposes. A uniform corporate tax rate of 15% plus the solidarity surcharge of 5.5% was used for German compa- nies, and in some cases a rate of 16.45% for trade tax. A tax rate of 9% was applied for Hungarian taxes, 19% for Polish taxes, 21% for Czech taxes and 23% for Austrian taxes. In accordance with IAS 12.74, deferred tax assets on existing loss carryforwards are offset against deferred tax liabilities. Other provisions Under IFRS, other provisions may only be recognised if a present obligation exists towards a third party and payment is more likely than not. Non-current provisions are dis- counted. Treasury shares Treasury shares are deducted directly from equity with the consideration paid, which includes directly attributable ancillary acquisition costs. The nominal amount of €1.00 per share is deducted from the subscribed capital, and the pre- mium on the nominal amount is recognised as a reduction in other retained earnings. the MALL s life Deutsche EuroShop 83
- 86. NOTES TO THE CONSOLIDATED BALANCE SHEET 7. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT Goodwill Software licenses Operating and office equipment in € thousand 2024 2023 2024 2023 2024 2023 Acquisition cost as at 01.01. 53,867 53,867 148 143 1,343 1,220 Addition from right-of-use assets (IFRS 16) 0 0 0 0 36 114 Additions 0 0 0 5 45 11 Disposals 0 0 0 0 -43 -2 As at 31.12. 53,867 53,867 148 148 1,381 1,343 Write-downs as at 01.01. -2,148 -2,148 -125 -114 -894 -784 Additions 0 0 -11 -11 -129 -112 Disposals 0 0 0 0 13 2 As at 31.12. -2,148 -2,148 -136 -125 -1,010 -894 Carrying amount as at 01.01. 51,719 51,719 23 29 449 436 Carrying amount as at 31.12. 51,719 51,719 12 23 371 449 The goodwill arose from deferred tax liabilities for the real estate assets that had to be recognised at the time of the initial consolidation (29 March 2017) of Olympia Brno. As at the reporting date, operating and office equipment included right-of-use assets under leases amounting to €305 thousand (previous year: €402 thousand). These result mainly from the rental of office space and the leasing of cars. 84 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 87. 8. INVESTMENT PROPERTIES in € thousand 2024 2023 Carrying amount 01.01. 3,947,021 3,351,821 Change in scope of consolidation 0 773,000 Additions 0 0 Disposals -6,300 0 Change in rental incentives 4,744 8,084 Recognised construction measures 47,179 43,481 Unrealised changes in fair value -25,923 -229,365 Carrying amount 31.12. 3,966,721 3,947,021 The changes in the scope of consolidation in the previous year relate to Allee-Center Magdeburg, Stadt-Galerie Pas- sau, Saarpark Center Neunkirchen and Phoenix-Center Har- burg. The stakes in the corresponding property companies were increased to between 75% and 100% at the beginning of the previous year through the acquisition of additional shares. Consequently, these centers were fully consolidated for the first time in the previous year. Investment properties continue to include a capitalised leasehold of €322 thousand. The annual ground rent of €10 thousand payable for this is charged to a tenant in the same amount. The unrealised changes in market value relate to appreci- ation and depreciation in accordance with IAS 40. The fair values of the properties in the period under review as at 31 December 2024 were determined by appraisers from Jones Lang LaSalle GmbH (JLL) in accordance with the guidelines of the Royal Institution of Chartered Survey- ors (RICS). As in previous years, the discounted cash flow method (DCF) was used. The compensation contractually fixed for the appraisal reports prior to preparation of the appraisals is independent of the measurement gains/ losses. The DCF method entails the calculation of the present value of future cash flows from the property in question as at the valuation date. In addition, the net income from the property in question is determined over a detailed planning period of (usually) ten years and a discount rate applied. A residual value is forecast for the end of the ten-year detailed plan- ning phase by capitalising the stabilised cash flows of the last budgeted year using an interest rate (capitalisation interest rate). In a second step, the residual value is dis- counted back to the measurement date. JLL applied the equated yield model in order to arrive at the discount and capitalisation interest rates. The capitali- sation interest rate was derived for each property individ- ually from initial rates of return from comparable transac- tions. At the same time, such determinants of value as inflation and changes in rent and costs were implicitly taken into account in the capitalisation interest rate. The risk pro- file specific to each property was also adjusted by reference to the relevant individual indicators. Examples of such indi- cators include the quality of the property’s location and position, market trends and developments in the competi- tive environment. JLL likewise derived the discount interest rates from comparable transactions, albeit subject to adjustments for projected increases in rent and costs, since these had been explicitly shown in the relevant cash flow. JLL applied the same methods in valuing domestic and for- eign real properties. The disposal in the financial year resulted from the sale of a property in Poland. The following overview shows the key assumptions used by JLL to determine the market values: the MALL s life Deutsche EuroShop 85
- 88. Valuation parameter 31.12.2024 31.12.2023 in % Domestic Abroad Total Domestic Abroad Total Rate of rent increases 1.67 0.93 1.52 1.58 1.04 1.47 Cost ratio 13.10 7.50 11.96 13.21 7.45 12.07 Discount rate 6.90 7.63 7.05 6.91 7.86 7.10 Capitalisation interest rate 5.70 5.96 5.75 5.57 5.93 5.64 The European and global economy may continue to be affected by wars, armed conflicts and geopolitical tensions. Increased trade policy uncertainties or trade conflicts as a result of the policies of the new US administration, among other things, as well as political changes could also signif- icantly jeopardise overall economic growth. Conditions on the property markets may be adversely affected by this, particularly in conjunction with renewed inflationary pres- sure and rising market interest rates. This can trigger changes in market value. We will continuously monitor the situation and any changes in value and include these in our future reporting. A 25 or 100 bp change in a material parameter (sensitivity analysis) of real estate appraisals would have the following pre-tax impact on measurement gains/losses (including the share attributable to at-equity consolidated companies): Sensitivity analysis – valuation parameters – Domestic – 31.12.2024 Basis Change in parameter in € million in % Rate of rent increases 1.67 + 0.25 percentage points - 0.25 percentage points 98.3 -92.6 3.3 -3.1 Cost ratio 13.10 + 1.00 percentage points - 1.00 percentage points -35.4 32.0 -1.2 1.1 Discount rate 6.90 + 0.25 percentage points - 0.25 percentage points -56.7 53.6 -1.9 1.8 Capitalisation interest rate 5.70 + 0.25 percentage points - 0.25 percentage points -79.8 83.8 -2.7 2.8 Sensitivity analysis – valuation parameters – Abroad – 31.12.2024 Basis Change in parameter in € million in % Rate of rent increases 0.93 + 0.25 percentage points - 0.25 percentage points 24.0 -21.0 3.1 -2.8 Cost ratio 7.50 + 1.00 percentage points - 1.00 percentage points -7.5 8.5 -1.0 1.1 Discount rate 7.63 + 0.25 percentage points - 0.25 percentage points -14.0 14.0 -1.8 1.8 Capitalisation interest rate 5.96 + 0.25 percentage points - 0.25 percentage points -17.5 20.0 -2.3 2.6 86 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 89. Sensitivity analysis – valuation parameters – Total – 31.12.2024 Basis Change in parameter in € million in % Rate of rent increases 1.52 + 0.25 percentage points - 0.25 percentage points 122.3 -113.6 3.3 -3.0 Cost ratio 11.96 + 1.00 percentage points - 1.00 percentage points -42.9 40.5 -1.1 1.1 Discount rate 7.05 + 0.25 percentage points - 0.25 percentage points -70.7 67.6 -1.9 1.8 Capitalisation interest rate 5.75 + 0.25 percentage points - 0.25 percentage points -97.3 103.8 -2.6 2.8 In the previous year, no differentiation was made between domestic and abroad as part of the sensitivity analysis. Changing the parameters led to the following results: Sensitivity analysis – valuation parameters – Total – 31.12.2023 Basis Change in parameter in € million in % Rate of rent increases 1.47 + 0.25 percentage points - 0.25 percentage points 117.9 -108.6 3.2 -2.9 Cost ratio 12.07 + 1.00 percentage points - 1.00 percentage points -41.1 45.0 -1.1 1.2 Discount rate 7.10 + 0.25 percentage points - 0.25 percentage points -67.1 71.6 -1.8 1.9 Capitalisation interest rate 5.64 + 0.25 percentage points - 0.25 percentage points -93.8 108.1 -2.5 2.9 Over the forecast period, rents were assumed to increase on average over the long term at 1.52% (previous year: 1.47%). On average, management and administrative costs at 11.96% (previous year: 12.07%) were deducted from the forecast rents. This resulted in an average net income of 88.04% (previous year: 87.93%). Actual management and administrative costs (excluding write-downs) amounted to 17.0% of rental income in the year under review (previous year: 18.1%). The appraisal showed that, for financial year 2024, the real property portfolio had an initial yield before deduction of transaction costs of 6.61%, compared with the prior-year figure of 6.64%, and an initial rate of return net of transaction costs (net initial yield) of 6.24%, following 6.25% in the previous year. The real estate value includes outstanding tenant incentives granted and still to be distributed over the term of the rental agreements amounting to €34,654 thousand (previous year: €29,910 thousand). The following shows details and disclosures in accordance with IFRS 13 for the hierarchical levels of the fair values of the Group’s investment properties as at 31 December 2024: IFRS 13 hierarchy levels in € thousand Level 1 Level 2 Level 3 Investment properties 0 0 3,966,721 There were no changes between the hierarchy levels between 2023 and 2024. The properties are predominantly secured by mortgages. There were secured financial liabil- ities in the amount of €1,808,374 thousand (previous year: €1,677,600 thousand). The rental income of the properties valued in accordance with IAS 40 was €271,403 thousand (previous year: €273,304 thousand). Directly associated operating expenses (excluding write-downs) amounted to €46,252 thousand (previous year: €49,543 thousand). the MALL s life Deutsche EuroShop 87
- 90. 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD in € thousand 2024 2023 Carrying amount as at 01.01. 92,741 443,069 Distributions and capital repayments received -7,801 -6,335 Share of profit/loss 16,581 5,005 Remeasurement 0 12,666 Additions 13 0 Disposals 0 -361,664 Carrying amount as at 31.12. 101,534 92,741 Joint ventures in which Deutsche EuroShop AG has a major- ity of the voting rights together with third parties are included in the consolidated financial statements in accord- ance with the equity method. They are important for the Group as a whole and operate shopping centers. The addition in the financial year relates to an immaterial holding in a general partner limited liability company (GmbH). The additions from remeasurement and the disposals in the previous year related to Allee-Center Magdeburg G.m.b.H. Co. KG, Phoenix-Center Harburg GmbH Co. KG, Stadt-Galerie Passau G.m.b.H. Co. KG and Saarpark Center Neunkirchen GmbH Co. KG (previously: Saarpark Center Neunkirchen KG). The stakes in the four companies were increased to between 75% and 100% at the beginning of the previous year through the acquisition of additional shares. Consequently, these centers were fully consolidated for the first time in the previous year. The joint ventures material to the overall Group posted the following asset and liability items and income items for the reporting year. The values do not correspond to the share attributable to the Group, but the total amounts: EKZ Eins Errichtungs- und Betriebs Ges.m.b.H. Co OG, Vienna1 Einkaufs-Center Arkaden Pecs G.m.b.H. Co KG, Hamburg2 in € thousand 31.12.2024 31.12.2023 31.12.2024 31.12.2023 Non-current assets 213,908 203,884 104,026 96,000 Current assets 4,338 5,786 6,282 6,873 of which cash and cash equivalents 3,453 4,731 3,817 5,401 Non-current liabilities 85,971 87,124 24,450 34,724 of which financial liabilities 85,970 87,124 24,450 25,050 Current liabilities 2,570 2,309 12,497 2,905 of which financial liabilities 567 554 600 600 Revenue 13,899 14,034 10,054 9,502 Net interest income -1,861 -1,924 -736 -773 EBT (excluding measurement gains/ losses) 10,186 10,813 8,075 6,957 Measurement gains/losses 9,612 -6,261 6,851 -591 Taxes on income and earnings 0 0 -1,562 -910 Net loss/profit for the year 19,798 4,552 13,364 5,457 Other income 0 0 0 0 Total profit 19,798 4,552 13,364 5,457 1 Includes the figures for the immaterial joint venture CAK City Arkaden Klagenfurt KG, Hamburg. The equity method valuation amounted to €909 thousand (previous year: €885 thousand) and the net profit for the year came to €24 thousand (previous year: €16 thousand). 2 Includes the figures for the immaterial joint venture Einkaufs-Center Arkaden Pecs Verwaltungs G.m.b.H., Hamburg. The equity method valuation amounted to €26 thou- sand (previous year: €0 thousand) and the net profit for the year came to €1 thousand (previous year: €0 thousand). 88 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 91. Under the equity method, the joint ventures changed as follows in the period under review: in € thousand EKZ Eins Errichtungs- und Betriebs Ges.m.b.H. Co OG, Vienna Einkau- fs-Center Arkaden Pecs G.m.b.H. Co. KG, Hamburg Equity method valua- tion as at 01.01.2023 61,922 32,148 Share of profit/loss 2,276 2,729 of which EBT (excl. measurement gains/losses) 5,406 3,479 of which measure- ment gains/losses -3,130 -296 Deposits/withdrawals -4,079 -2,255 Equity method valua- tion as at 31.12.2023 60,119 32,622 Share of profit/loss 9,899 6,682 of which EBT (excl. measurement gains/losses) 5,093 4,038 of which measure- ment gains/losses 4,806 3,425 Addition 0 13 Deposits/withdrawals -5,165 -2,636 Equity method valua- tion as at 31.12.2024 64,853 36,681 10. TRADE RECEIVABLES in € thousand 2024 2023 Trade receivables as at 31.12. 29,831 25,951 Write-downs as at 01.01. -12,532 -9,892 Change in scope of consolidation 0 -2,710 Utilisation 1,388 2,204 Change in write-downs for expected losses -3,976 -2,134 Write-downs as at 31.12. -15,120 -12,532 14,711 13,419 Receivables result primarily from rental invoices and ser- vices for which charges are passed on. The trade receiva- bles recognised at the reporting date are partially protected by means of guarantees, cash security deposits and letters of comfort. The measurement of receivables as at 31 December 2024 and the derecognition of receivables during the year resulted in total expenses of €7,731 thousand (previous year: €8,858 thousand). 11. OTHER CURRENT ASSETS in € thousand 31.12.2024 31.12.2023 Other receivables from tenants 3,787 5,050 Cash deposits 3,906 3,445 Prepaid center market- ing costs 691 1,661 Value added tax receivables 586 2,005 Other current assets 7,929 6,593 16,899 18,754 Other receivables from tenants mainly comprise receiva- bles for heating and ancillary costs. Receivables in € thousand Total up to 1 year over 1 year Trade receivables 14,711 14,697 14 (13,419) (13,419) (0) Other assets 16,899 16,899 0 (18,754) (18,754) (0) (Previous year’s figures) 31,610 31,596 14 (32,173) (32,173) (0) Trade receivables (after write-downs) were mainly overdue as at the reporting date. As in the previous year, other assets were not overdue as at the reporting date. the MALL s life Deutsche EuroShop 89
- 92. 12. CASH AND CASH EQUIVALENTS in € thousand 31.12.2024 31.12.2023 Current accounts 115,437 286,070 Short-term deposits/ time deposits 97,000 50,000 Cash 1 1 212,438 336,071 13. EQUITY AND RESERVES Changes in equity are presented in the statement of changes in equity. The share capital is €76,464,319, comprised of 76,464,319 no-par-value registered shares. All shares have been issued in full and have been fully paid up. As at 31 December 2024, Deutsche EuroShop AG held 720,465 treasury shares, which confer no rights to the Company in accordance with Section 71b AktG. The notional value of each share in the share capital is €1.00. The Annual General Meeting held on 29 August 2023 author- ised the Executive Board to acquire treasury shares in the Company on the stock exchange before 28 August 2028 constituting up to 10% of the share capital available on entry into force or – if this is lower – on exercise of the authorisation. The intended use of the treasury shares acquired on the basis of this authorisation can be found in the resolution on item 10 of the agenda of the Annual Gen- eral Meeting of 29 August 2023. The shares can be used, among other things, as part of business combinations and company acquisitions exclusive of shareholders’ subscrip- tion rights or sold to third parties for cash at a price that is not significantly lower than the stock market price at the time of sale. The shares may be promised and transferred by the Supervisory Board to the members of the Company’s Executive Board within the framework of determining the variable remuneration; they may also be redeemed without any further resolution by the Annual General Meeting. The Company may not use the authorisation for purposes of trading in treasury shares. At no time may the acquired shares, together with the treasury shares already held by the Company or attributable to it pursuant to Sections 71d and 71e AktG, account for more than 10% of the Com- pany’s share capital. In exercising this authorisation, the Executive Board of Deutsche EuroShop AG resolved a share buy-back pro- gramme with the approval of the Supervisory Board on 18 December 2023. Under this programme, up to 750,000 shares (corresponding to around 1.0% of the Com- pany’s share capital) are to be bought back in the period from 21 December 2023 to 20 December 2024. The maxi- mum volume of the share buy-back programme (acquisition costs excluding incidental acquisition costs) has been set at €15.0 million. In the period from 21 December 2023 to 11 December 2024, 720,465 treasury shares were repur- chased on the stock market at an acquisition price (exclud- ing incidental acquisition costs) of €15.0 million for an aver- age price of € 20.82 per share.This corresponds to €720,465 or 0.942% of the share capital as at the reporting date. By resolution of the Annual General Meeting on 29 August 2023, the Executive Board was also authorised, with the approval of the Supervisory Board, to increase the Company’s share capital by up to a total of €38,232,159 in increments through individual or multiple issues of new no-par-value registered shares against cash and/or non- cash contributions before 28 August 2028 (Authorised capital 2023). Furthermore, by resolution of the Annual General Meeting on 29 August 2023, the Executive Board was authorised, subject to approval of the Supervisory Board, to issue con- vertible bonds and/or bonds with warrants or a combina- tion of such instruments on one or multiple occasions before 28 August 2028 with a total nominal value of up to €1.5 billion against cash contributions and/or contribu- tions in kind, in particular against investments in other companies, and to grant the holders of the respective, equally privileged bonds conversion and option rights/ obligations to new no-par-value shares in the Company up to a total of 38,232,159 shares as detailed in the terms and conditions for the bonds (“Bond conditions”). The bonds and the conversion and option rights/obligations can be issued with or without a term. The bonds may pay a fixed or variable rate of interest, in which case, as with a participating bond, the interest may also be dependent in full or in part on the level of the Company’s dividend (Conditional capital 2023). As at 31 December 2024, no use had been made of this authorisation. The Extraordinary General Meeting on 8 January 2024 amended the resolution on the appropriation of profits from 29 August 2023 and approved a further dividend of €1.95 per share from the unappropriated surplus for 2022, which corresponds to a total dividend of €149,081 thousand, with the remaining amount of the 2022 unappropriated surplus of €350,919 thousand carried forward to new account. Deutsche EuroShop AG’s prior-year unappropriated surplus of €549,282 thousand was used by resolution of the Annual General Meeting on 29 August 2024 to pay a dividend of €2.60 per share, corresponding to a total dividend of €197,529 thousand, while the remaining amount of the unappropriated surplus of €351,753 thousand was carried forward to new account. The Executive Board and the Supervisory Board plan to pro- pose to the Annual General Meeting in June 2025 that Deutsche EuroShop AG’s unappropriated surplus for 2024 of €251,502 thousand be used to pay a dividend of €1.00 per eligible share and that the remaining amount of €175,758 thousand be carried forward to new account. The capital reserves contain amounts in accordance with Section 272 (2) nos. 1, 2 and 4 HGB. In addition, the capital reserves include costs of capital increases and their cor- responding deferred tax assets. 90 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 93. Retained earnings consist of the remeasurement reserves, currency items and accumulated profits carried forward at the time of transition to IFRS. Other total profit is divided into the following components: 2024 in € thousand Before taxes Taxes Net Cash flow hedges 3,298 -530 2,768 1 Definition according to loan agreements 2023 in € thousand Before taxes Taxes Net Cash flow hedges -790 -239 -1,029 14. NON-CURRENT AND CURRENT FINANCIAL LIABILITIES in € thousand 31.12.2024 31.12.2023 Non-current Current Non-current Current Bank loans and overdrafts 1,795,909 12,465 1,665,679 11,921 Bank loans and overdrafts relate to loans raised to finance property acquisitions and investment projects. Land charges on Company properties totalling €1,808,374 thou- sand (previous year: €1,677,600 thousand) serve as collat- eral. Current bank loans and overdrafts include the scheduled repayment portion of the long-term loans for 2025, accrued interest and repayments that were settled in early 2025. Discounts are amortised over the term of the loan. In the year under review, €29 thousand (previous year: €29 thou- sand) was recognised as an expense in the income state- ment. A total of €49,083 thousand (previous year: €43,313 thousand) was recognised in financial gains/losses as interest expense for bank loans and overdrafts. 25 of the 27 loan agreements currently contain arrange- ments regarding covenants. There are a total of 35 different covenants on debt service cover ratios (DSCRs), interest cover ratios (ICRs), changes in rental income, the equity ratio, the leverage ratio and loan-to-value (LTV) ratios, among other ratios, at a property or property company level. The relevant covenants at a Deutsche EuroShop AG Group level are LTV1 , secured LTV1 and ICR. An LTV1 of a maximum of 60%, a secured LTV1 of a maximum of 45% and an ICR of at least 1.8 have been agreed with the lenders. The LTV1 as at 31 December 2024 was 38.5% (previous year: 32.7%), the secured LTV1 as at 31 December 2024 was 38.4% (pre- vious year: 32.5%) and the ICR for 2024 was 5.6 (previous year: 6.5), meaning that the requirements were met. All other loan conditions were met in financial year 2024. Based on current planning and estimates, the loan condi- tions will also be met in 2025. The European and global economy may continue to be affected by wars, armed conflicts and geopolitical tensions. Increased trade policy uncertainties or trade conflicts as a result of the policies of the new US administration, among other things, as well as political changes could also signif- icantly jeopardise overall economic growth. Conditions on the property markets may be adversely affected by this, particularly in conjunction with renewed inflationary pres- sure and rising market interest rates. This may trigger changes in market value, which can have an impact on indi- vidual loan covenants (e.g. LTV). We will continuously mon- itor the situation and any changes in value and include these in our future reporting. Non-current and current financial liabilities arose from the following changes affecting liquidity and not affecting liquidity: in € thousand 2024 2023 Carrying amount as at 01.01. 1,677,600 1,479,251 Changes affecting liquidity 127,908 47,912 Changes not affecting liquidity Change in scope of consolidation 0 147,426 Change in carrying amount under the effective inter- est rate method 2,866 3,011 Carrying amount as at 31.12. 1,808,374 1,677,600 Changes affecting liquidity consisted of the take-up of non-current financial liabilities in the amount of €158,428 thousand (previous year: €60,906 thousand) and the repayment of current financial liabilities in the amount of €30,520 thousand (previous year: €12,994 thousand), in addition to one-off payments related to refinancing arrange- ments. The first-time consolidation of four companies pre- viously accounted for using the equity method increased the previous year’s financial liabilities by €147,426 thou- sand. the MALL s life Deutsche EuroShop 91
- 94. 15. OTHER NON-CURRENT AND CURRENT FINANCIAL LIABILITIES in € thousand 31.12.2024 31.12.2023 Non-current Current Non-current Current Interest rate swaps 3,128 0 6,427 0 Rental deposits 0 6,030 0 6,896 Other liabilities to tenants 0 3,762 0 4,728 Value added tax 0 2,533 0 1,684 Debtors with credit balances 0 4,553 0 4,935 Lease liabilities 631 103 628 99 Other 956 858 71 1,179 4,715 17,839 7,126 19,521 In connection with borrowing, interest rate hedges (interest rate swaps) were concluded to hedge against higher capital market interest rates. Their present value totalled €3,128 thousand as at the reporting date (previous year: €6,427 thousand). Other liabilities to tenants mainly comprise liabilities for heating and ancillary costs, obligations from construction cost subsidies granted, as well as prepaid rent. Liabilities in € thousand Total Current Non-current Financial liabilities 1,808,374 12,465 1,795,909 (1,677,600) (11,921) (1,665,679) Trade payables 7,349 7,349 0 (10,635) (10,635) (0) Tax liabilities 16,876 16,876 0 (19,891) (19,891) (0) Other liabilities 22,554 17,839 4,715 (26,647) (19,521) (7,126) (Previous year’s figures) 1,855,153 54,529 1,800,624 (1,734,773) (61,968) (1,672,805) 16. DEFERRED TAX LIABILITIES Deferred tax assets and liabilities are the result of tax effects of temporary differences and tax loss carryfor- wards: in € thousand 31.12.2024 31.12.2023 Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Investment properties 0 337,820 0 317,982 Investments accounted for using the equity method 0 19,922 0 18,268 Financial liabilities 0 3,802 0 5,859 Other liabilities Interest rate swaps (not recognised in profit or loss) 531 0 1,061 0 Loss carryforwards 9,451 0 8,455 0 Other 675 0 675 0 Deferred taxes before netting 10,657 361,544 10,191 342,109 Netting -10,657 -10,657 -10,191 -10,191 Deferred taxes after netting 0 350,887 0 331,918 92 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 95. In measuring deferred taxes, the tax rates applicable in accordance with IAS 12 are those valid under current leg- islation at the date at which the temporary differences will probably reverse. In the year under review, a corporate tax rate of 15% was used for the companies in Germany. In addition, a solidarity surcharge of 5.5% was recognised on the calculated cor- porate tax, and in some cases a rate of 16.45% for trade tax. As at the reporting date, there were trade tax loss carry- forwards of €50,470 thousand (previous year: €50,848 thou- sand) and corporation tax loss carryforwards of €0 thou- sand (previous year: €575 thousand). Deferred tax assets were recognised for these carryforwards to the extent that their realisation is reasonably certain. Of the additions to deferred tax assets on loss carryforwards in the financial year, €733 thousand has no impact on profit or loss. Of the deferred taxes, €3,837 thousand (previous year: €4,367 thousand) had been recognised directly in equity by the balance sheet date. As at the reporting date, there were taxable temporary dif- ferences of €8,107 thousand (previous year: €6,544 thou- sand) between the net assets of Group companies recog- nised in the consolidated financial statements and the tax basis of the shares in these Group companies (outside basis differences) for which no deferred taxes were recognised since the differences are not expected to be reversed in the foreseeable future. 17. LIMITED PARTNER CONTRIBUTIONS OF NON-CONTROLLING INTERESTS in € thousand 2024 2023 Settlement claim as at 01.01. 259,380 307,130 Earnings contributions 14,397 13,876 Share of measurement gains/ losses -2,447 -23,664 Addition 0 45,606 Disposal 0 -73,664 Outflows -10,174 -9,904 Settlement claim as at 31.12. 261,156 259,380 The limited partner contributions of non-controlling inter- ests include the equity interests of third-party sharehold- ers, which are to be reported in accordance with IAS 32 as debt capital. Due to the acquisition of the outstanding shares in Forum Wetzlar G.m.b.H. Co. KG and Einkaufs-Center Galeria Bal- tycka G.m.b.H. Co. KG at the beginning of the previous year and additional shares in Saarpark Center Neunkirchen GmbH Co. KG (previously: Saarpark Center Neunkirchen KG) at the end of the previous year, the corresponding redemption entitlements with respect to these companies totalling €73,664 thousand were derecognised in the pre- vious year. The additions of €45,606 thousand in the previ- ous year related to Phoenix-Center Harburg GmbH Co. KG and Saarpark Center Neunkirchen GmbH Co. KG (previ- ously: Saarpark Center Neunkirchen KG), whose shares were increased to 75% and 90% respectively at the begin- ning of the previous year through the acquisition of addi- tional shares. 18. OTEHR PROVISIONS in € thousand As at 01.01.2024 Utilisation Reversal Addition As at: 31.12.2024 Maintenance and construction work already performed but not yet invoiced 5,832 5,016 735 2,252 2,333 Fees 2,017 694 181 1,155 2,297 Other 6,610 3,960 538 5,927 8,039 14,459 9,670 1,454 9,334 12,669 As in the previous year, other provisions mainly include outstanding settlements for services received and person- nel expenses. As in the previous year, all provisions have a term of up to one year. the MALL s life Deutsche EuroShop 93
- 96. NOTES TO THE CONSOLIDATED BAL- ANCE SHEET 19. REVENUE in € thousand 2024 2023 Minimum rental income 253,922 255,512 Allocable property tax and insurance 7,558 7,425 Turnover rents 8,679 7,662 Other 1,244 2,705 271,403 273,304 of which rental income directly attributable to investment properties in accordance with IAS 40 271,403 273,304 Other revenue relates primarily to settlement payments made by former tenants as well as compensation for use. The rental income reported here derives from operating leases and relates to rental income from investment prop- erties with long-term leases. The future minimum leasing payments from non-terminable rental agreements classi- fied as investment properties have the following maturities: in € thousand 2024 2023 Maturity within 1 year 237,388 246,789 Maturity from 1 year to 5 years 569,347 595,123 Maturity after 5 years 144,978 148,635 951,713 990,547 20. PROPERTY OPERATING COSTS in € thousand 2024 2023 Operating costs that cannot be passed on 11,174 8,183 Real property tax 8,276 7,845 Center marketing 3,175 7,756 Maintenance and repairs 2,484 6,919 Building insurance 2,526 2,249 Other 3,715 1,856 31,350 34,808 of which operating expenses directly attributable to investment properties in accordance with IAS 40 31,350 34,808 Ancillary costs which cannot be fully allocated are essen- tially operating costs which cannot be completely passed on to tenants as well as heating and ancillary costs in arrears for preceding years. The decrease in expenses for center marketing and for maintenance and repairs is due to cost optimisation and a lower level of necessary maintenance measures compared to the previous year. 21. PROPERTY MANAGEMENT COSTS in € thousand 2024 2023 Center management/agency agreement costs 14,902 14,734 of which operating expenses directly attribut- able to investment proper- ties in accordance with IAS 40 14,902 14,734 Center management/agency agreement costs depend to a large extent on the rental income generated. 94 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 97. 22. WRITE-DOWNS AND DISPOSALS OF FINANCIAL ASSETS in € thousand 2024 2023 Write-downs 7,047 5,714 Disposals of financial assets 684 3,144 7,731 8,858 of which operating expenses directly attribut- able to investment prop- erties in accordance with IAS 40 7,731 8,858 Please refer to the information in the notes to the consoli- dated financial statements under section 10. Trade receiv- ables. 23. OTHER OPERATING INCOME in € thousand 2024 2023 Reversals of write-downs 3,188 4,304 Income from the reversal of provisions 1,454 1,744 Income from ancillary costs from previous years 1,414 10,538 Income in connection with the change in the scope of consolidation 0 16,204 Other 3,018 2,545 9,074 35,335 Income from the change in the scope of consolidation in the previous year was related to the acquisition of addi- tional shares in six subsidiaries at the beginning of the previous year. Other operating income primarily consists of income from damages, insurance compensation and other reimburse- ments. 24. OTHER OPERATING EXPENSES in € thousand 2024 2023 Legal, consulting and audit expenses 3,128 2,749 Personnel expenses 2,399 1,820 Appraisal costs 2,016 550 Marketing costs 718 546 Financing costs 335 199 Supervisory Board compensation 188 188 Exchange rate losses 178 36 Fees and contributions 140 183 Write-downs 140 123 Land transfer tax 0 21,000 Expenses in connection with the change in the scope of consolidation 0 9,240 Other 947 944 10,189 37,578 Legal, consulting and audit expenses include €641 thou- sand in expenses for the auditing of Group companies (pre- vious year: €552 thousand). Personnel expenses include wages and salaries totalling €2,275 thousand (previous year: €1,720 thousand), social security contributions and expenses for pensions and other benefits amounting to €124 thousand (previous year: €100 thousand), of which €1 thousand was attributable to pension expenses in the previous year. Expenses in connection with the change in the scope of consolidation and expenses for real estate transfer tax related to the acquisition of additional shares in six subsid- iaries at the beginning of the previous year. 25. SHARE IN THE PROFIT OR LOSS OF ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD in € thousand 2024 2023 Profit/loss from joint ventures 16,573 4,997 Profit/loss from associates 8 8 Profit/loss from equity- accounted associates 16,581 5,005 The profit/loss of equity-accounted companies included a measurement gain/loss before deferred taxes of €8,231 thousand (previous year: €-3,426 thousand). EBT (excluding measurement gains/losses) for equity- accounted companies amounted to €9,134 thousand (previous year: €8,889 thousand). the MALL s life Deutsche EuroShop 95
- 98. 26. MEASUREMENT GAINS/LOSSES in € thousand 2024 2023 Unrealised changes in fair value -25,923 -229,365 Profit/loss attributable to limited partners 2,447 23,664 Gain on disposal 606 0 -22,870 -205,701 The profit from the sale resulted from the sale of a property in Poland. 27. TAXES ON INCOME AND EARNINGS in € thousand 2024 2023 Current tax expense -8,115 -5,379 Domestic deferred tax expense/income -26,362 -6,446 Foreign deferred tax expense / income 7,923 13,280 -26,554 1,455 Tax reconciliation Income taxes in the amount of €-26,554 thousand in the year under review (previous year: tax income of €1,455 thousand) are derived as follows from an expected income tax expense that would have resulted from applying the parent com- pany’s statutory income tax rate to the profit before tax. This was calculated using a tax rate of 32.28. in € thousand 2024 2023 Consolidated profit before income tax 150,068 -39,732 Theoretical income tax 32.28% -48,442 12,825 Tax rate differences for foreign Group companies 9,510 3,554 Tax rate differences for domestic Group companies 13,051 -7,697 Tax effect from change in tax rates 0 -5,575 Tax-free income/non-deductible expenses -327 -212 Tax effect from investments accounted for using the equity method -346 74 Change in scope of consolidation 0 -1,058 Aperiodic tax expense/income 0 -456 Current income tax -26,554 1,455 In the 2024 financial year, the effective income tax rate was 17.7% (previous year: 7.5%). The tax rate differences for domestic Group companies are primarily due to the extended trade tax reduction, which is why some of the property companies are not subject to trade tax. 28. EARNINGS PER SHARE 2024 2023 Group shareholders’ portion of profits / losses (€ thousand) 123,514 -38,277 Weighted number of no-par-value shares issued 76,090,428 75,136,922 Basic and diluted earnings per share (€) 1.62 -0.51 Basic earnings per share are determined by dividing the net income for the period to which shareholders of Deutsche EuroShop AG are entitled by the weighted average number of shares outstanding within the reporting period. There is no potential dilution as at the reporting date, e.g. through convertible bonds or share options, with the result that diluted earnings correspond to basic earnings. The number of no-par-value shares issued for 2024 takes into account, on a time-weighted basis, the 711,465 no-par- value shares acquired by 31 December 2024. 96 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 99. SEGMENT REPORTING Segment reporting by Deutsche EuroShop AG is carried out on the basis of internal reports that are used by the Executive Board to manage the Group. Internal reports dis- tinguish between shopping centers in Germany (“domestic”) and other European countries (“abroad”). As the Group’s main decision-making body, the Executive Board of Deutsche EuroShop AG first and foremost assesses the performance of the segments based on revenue, EBIT and EBT excluding measurement gains/losses. The meas- urement principles for segment reporting correspond to those of the Group. To assess the contribution of the segments to the individual performance indicators as well as to the Group’s perfor- mance, the income, expenditure, assets and liabilities of the joint ventures are included in internal reporting in propor- tion to the Group’s share in the same. Similarly, for subsid- iaries in which the Group is not the sole shareholder, income, expenditure, assets and liabilities are only consol- idated in proportion to the corresponding Group share. This results in the segments being divided as follows: Breakdown by geographical segment in € thousand Domestic Abroad Total Reconciliation 01.01.- 31.12.2024 Revenue 206,961 55,183 262,144 9,259 271,403 EBIT 164,970 48,160 213,130 3,175 216,305 Profit/loss of joint ventures and associates 0 0 0 16,581 16,581 Interest income 3,339 409 3,748 1,660 5,408 Interest expense -38,314 -7,063 -45,377 -3,706 -49,083 EBT (excluding measurement gains/losses) 128,119 41,506 169,625 -4,444 165,181 31.12.2024 Investment properties 2,980,295 763,960 3,744,255 222,466 3,966,721 Additions and recognised construction measures for investment properties 36,110 3,073 39,183 7,996 47,179 Goodwill 0 0 0 51,719 51,719 Investments accounted for using the equity method 0 0 0 101,534 101,534 Other segment assets 155,438 40,067 195,505 48,926 244,431 Segment assets 3,135,733 804,027 3,939,760 424,645 4,364,405 Segment liabilities 1,446,671 333,837 1,780,508 699,357 2,479,865 the MALL s life Deutsche EuroShop 97
- 100. in € thousand Domestic Abroad Total Reconciliation 01.01.- 31.12.2023 Revenue 209,436 53,200 262,636 10,668 273,304 EBIT 172,981 48,429 221,410 -8,749 212,661 Profit/loss of joint ventures and associates 0 0 0 5,005 5,005 Interest income 2,727 287 3,014 2,478 5,492 Interest expense -32,434 -7,180 -39,614 -3,699 -43,313 EBT (excluding measurement gains/losses) 143,274 41,536 184,810 -15,350 169,460 31.12.2023 Investment properties 2,985,707 735,260 3,720,967 226,054 3,947,021 Additions and recognised construction measures for investment properties 30,768 7,138 37,906 5,575 43,481 Goodwill 0 0 0 51,719 51,719 Investments accounted for using the equity method 0 0 0 92,741 92,741 Other segment assets 221,561 35,514 257,075 111,641 368,716 Segment assets 3,207,268 770,774 3,978,042 482,155 4,460,197 Segment liabilities 1,317,079 343,303 1,660,382 680,148 2,340,530 The adjustment of the proportionate consolidation of the joint ventures and subsidiaries in which the Group does not own a 100% stake is carried out in the reconciliation col- umn. Deferred tax liabilities are considered by the Executive Board of Deutsche EuroShop AG cross-segmentally and are therefore included in the reconciliation column for segment liabilities. Accordingly, the goodwill from the acquisition of Olympia Brno was allocated to the reconciliation column of the segment assets. The income and expenses in the pre- vious year in connection with the change in the scope of consolidation and the real estate transfer tax as part of the acquisition of minority interests in the previous year are also allocated to the reconciliation column. The reconcilia- tion column also contains the companies that are not allo- cated to either of the two segments (Deutsche EuroShop AG, DES Management GmbH and DES Beteiligungs GmbH Co. KG). These do not generate any revenue and were included in the reconciliation column after intra-Group eliminations with their EBIT of €-5,302 thousand (previous year: €-4,313 thousand) and EBT (excluding measurement gains/ losses) of €-4,149 thousand (previous year: €-2,100 thou- sand), in the segment assets with €38,401 thousand (pre- vious year: €97,558 thousand) and in the segment liabilities with €3,288 thousand (previous year: €2,724 thousand). In view of the geographical segmentation, no further infor- mation pursuant to IFRS 8.33 is given. 98 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 101. OTHER DISCLOSURES 29. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Amount stated in line with IFRS 9 in € thousand Measure- ment catego- ry in accord- ance with IFRS 9 Carrying amounts as at 31.12.2024 Amortised cost Fair value recognised in income Fair value recognised in equity Fair val- ue as at 31.12.2024 FINANCIAL ASSETS Trade receivables AC 14,711 14,711 14,711 Other assets AC 8,607 8,607 8,607 Cash and cash equivalents AC 212,438 212,438 212,438 FINANCIAL LIABILITIES Financial liabilities2 FLAC 1,808,374 1,808,374 1,728,690 Limited partner con- tributions of non-con- trolling interests FLAC 261,156 261,156 261,156 Trade payables FLAC 7,349 7,349 7,349 Other liabilities FLAC 13,332 13,332 13,332 Interest rate hedges not recognised in profit or loss2 n.a. 3,128 3,128 3,128 the MALL s life Deutsche EuroShop 99
- 102. Amount stated in line with IFRS 9 in € thousand Measure- ment catego- ry in accord- ance with IFRS 9 Carrying amounts as at 31.12.2023 Amortised cost Fair value recognised in income Fair value recognised in equity Fair val- ue as at 31.12.2023 FINANCIAL ASSETS Trade receivables AC 13,419 13,419 13,419 Other assets AC 9,408 9,408 9,408 Cash and cash equivalents AC 336,071 336,071 336,071 FINANCIAL LIABILITIES Financial liabilities2 FLAC 1,677,600 1,677,600 1,555,534 Limited partner con- tributions of non-con- trolling interests FLAC 259,380 259,380 259,380 Trade payables FLAC 10,635 10,635 10,635 Other liabilities FLAC 16,017 16,017 16,017 Interest rate hedges not recognised in profit or loss2 n.a. 6,427 6,427 6,427 1 Corresponds to Level 1 of the IFRS 7 fair value hierarchy 2 Corresponds to Level 2 of the IFRS 7 fair value hierarchy 3 Corresponds to Level 3 of the IFRS 7 fair value hierarchy Measurement categories in accordance with IFRS 9: financial assets measured at amortised cost (AC), at fair value through other comprehensive income (FVOCI), financial liabilities measured at amortised cost (FLAC) Carrying amounts, valuations and fair values according to measurement category With the exception of derivative financial instruments and other financial investments measured at fair value, financial assets and liabilities are measured at amortised cost. Due to the predominantly short-term nature of trade receivables and payables, other assets and liabilities, and cash and cash equivalents, the carrying amounts as at the reporting date do not deviate significantly from the fair values. The fair values of financial liabilities measured at amortised cost correspond to the cash values of debt-related pay- ments based on current interest rate yield curves (Level 2 in accordance with IFRS 13). The derivative financial instruments measured at fair value are interest rate hedges. Here, the fair value is equivalent to the cash value of future net payments expected to be received from hedging transactions (Level 2 in accordance with IFRS 13) based on current yield curves. Risk management In risk management, the emphasis is on ensuring compli- ance with the strategy and, building on this, on identifying and assessing risks and opportunities, as well as on the fundamental decision to manage these risks. Risk man- agement should ensure that risks are identified at an early stage and can then be evaluated, communicated promptly and mitigated. Risk analysis involves the identification and analysis of factors that may jeopardise the achievement of goals. 100 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 103. Market risks ___Liquidity risk The liquidity of the Deutsche EuroShop Group is continu- ously monitored and planned. The subsidiaries regularly have sufficient cash to be able to pay for their current commitments. The contractually agreed future interest and principle repayments of the original financial liabilities and deriv- ative financial instruments were as follows as at 31 December 2024: in € thousand Carrying amount as at 31.12.2024 Debt service 2025 Debt service 2026 – 2029 Debt service from 2029 Bank loans and overdrafts 1,808,374 71,963 899,392 1,116,271 in € thousand Carrying amount as at 31.12.2023 Debt service 2024 Debt service 2025 – 2028 Debt service from 2028 Bank loans and overdrafts 1,677,600 60,360 838,582 1,012,017 The amounts relate to all contractual commitments existing as at the reporting date. The variable interest payments from interest rate hedges were determined on the basis of the most recently defined interest rates prior to 31 Decem- ber 2024. The majority of the trade payables and other financial liabilities reported at the end of the financial year will fall due in the following year. ___Credit and default risk Write-downs on trade receivables are determined on the basis of the credit losses expected over the term. Unless the reasons for doing so can be refuted in individual cases, receivables that are more than 90 days overdue, taking into account the collateral provided by the tenant and valuable collateral, are written down in full. In addition, if information exists that points to an increased risk of default for a tenant, checks are made to decide whether receivables that are less than 90 days overdue should also be written down. During the year under review, write-downs of rent receiv- ables in the amount of €7,731 thousand (previous year: €8,858 thousand) were recognised under expenditure. The maximum default risk in relation to trade receivables and other assets totalled €23,318 thousand as at the report- ing date (previous year: €22,827 thousand). ___Currency and measurement risk The Group companies operate exclusively in the European Economic Area and conduct the lion’s share of their busi- ness in euro. This does not entail currency risks. With respect to the measurement risk of investment prop- erties, please refer to the sensitivity analysis in section “8. Investment properties”. ___Interest rate risk A sensitivity analysis was implemented to determine the effect of potential interest rate changes. Based on the finan- cial assets and liabilities subject to interest rate risk as at the reporting date, this shows the effect of a change on the Group’s equity. As at the reporting date, interest rate risks existed only for credit borrowed and the associated interest rate hedges. An increase in the market interest rate of 100 basis points would lead to an increase in equity (before taxes) of €1,184 thousand (previous year: €2,669 thousand). The vast majority of loan liabilities have fixed interest terms. As at the reporting date, loans totalling €59,000 thou- sand (previous year: €91,000 thousand) were hedged using derivative financial instruments. ___Capital management The Group’s capital management is designed to preserve a strong equity base with the aim of ensuring that its ability to repay its debts and financial well-being are maintained in future. The Group’s financial policies are also based on the annual payment of a dividend. in € thousand 31.12.2024 31.12.2023 Equity 2,145,696 2,379,047 Equity ratio in % 49.2 53.3 Net financial debt 1,595,936 1,341,529 Equity is reported here including the limited partner con- tributions of non-controlling interests. Net financial debt is determined from the financial liabilities as at the reporting date less cash and cash equivalents. the MALL s life Deutsche EuroShop 101
- 104. 30. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT The cash flow statement has been prepared in accordance with IAS 7 and is broken down into operating cash flow, cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. Cash flow from operating activities is derived from consol- idated profit using the indirect method. Net cash flow from operating activities, cash flow from investment activities and cash flow from financing activities are calculated using the direct method. Other non-cash income and expenses include the impact on earnings due to the acquisition of minority interests. The portion of the purchase prices paid in cash in the pre- vious year as part of the acquisition of additional shares in investments previously accounted for using the equity method was recognised in the cash flow of the previous year under the item “Acquisition of subsidiaries less acquired cash and cash equivalents” in the cash flow from investing activities. This item comprised the acquisition costs paid for the additional shares totalling €39,215 thou- sand less the acquired cash and cash equivalents of €19,760 thousand. The transaction costs paid were included in cash flow from operating activities. The proceeds from capital increases included in cash flow from financing activities in the previous year contain the cash proceeds from the capital increase of €64,252 thou- sand completed in February 2023 less transaction costs of €2,271 thousand. Cash flow from financing activities in the previous year also recognises payments for the acquisition of additional shares in the limited partnership. Cash and cash equivalents comprise cash and cash equiv- alents that may be converted into cash at short notice and at any time. As in the previous year, the financial resources fund as at the reporting date corresponded to the cash and cash equivalents (see section 12. Cash and cash equiva- lents). 31. CONTINGENT LIABILITIES There are contingent liabilities from real estate transfer tax in connection with the purchase of further shares in a sub- sidiary in the estimated amount of €11 million, as it is not entirely unlikely that these will be utilised in the meantime. Uncertainties exist with regard to the amount and timing of a possible temporary outflow of resources. In the event of legal proceedings, we assume that it is highly unlikely that we will be held liable. 32. OTHER FINANCIAL OBLIGATIONS There are other financial obligations of €51.2 million (pre- vious year: €69.2 million) arising from service contracts. There are financial obligations of €2.2 million (previous year: €4.8 million) which will arise in 2025 in connection with investment measures in our shopping centers. 33. HEADCOUNT An average of seven (previous year: six) people were employed in the Group during the financial year. 34. AUDITOR’S FEES The total fees invoiced by the auditor for the consolidated financial statements for financial year 2024 amounted to €387 thousand (previous year: €553 thousand). Of this amount, €387 thousand (previous year: €488 thousand) related to auditing services. 35. DECLARATION OF CONFORMITY WITH THE GERMAN CORPORATE GOVERNANCE CODE The Declaration of Conformity with the German Corporate Governance Code required by Section 161 AktG has been issued jointly by the Supervisory Board and the Executive Board, and has been made available to shareholders on the Deutsche EuroShop AG website under Investor Relations Corporate Governance Declaration of Conformity: www.deutsche-euroshop.de/Investor-Relations/Corpo- rate-Governance/Declaration-of-Conformity 36. RELATED PARTIES FOR THE PURPOSES OF IAS 24 Deutsche EuroShop AG’s subsidiaries, joint ventures and associates as well as the members of its Executive Board and Supervisory Board and their close family members are regarded as related parties for the purposes of IAS 24. The remuneration of the Supervisory Board and Executive Board is explained in the compensation report. It will be published together with the note on the formal audit on the website of Deutsche EuroShop AG no later than the date of publica- tion of the invitation to the Annual General Meeting. Hercules BidCo GmbH, Hamburg, held 76.44 % of the shares in Deutsche EuroShop AG as at the reporting date and is therefore considered a related party as defined by IAS 24. Hercules BidCo GmbH is indirectly under the joint control of Oaktree Capital Group Holdings GP, LLC, Wilm- ington, DE (United States of America) and Kommanditge- sellschaft CURA Vermögensverwaltung G.m.b.H. Co., Hamburg – the latter, in turn, being controlled by Mr Alex- ander Otto. ECE Group GmbH Co. KG, Hamburg, and its subsidiaries (together referred to below as the “ECE Group”) and CURATAX Treuhand GmbH Steuerberatungs- gesellschaft, Hamburg, both of which are controlled by Mr Alexander Otto, are therefore considered related par- ties as defined by IAS 24. The company has a conditional credit line with the related party Hercules BidCo GmbH. Accordingly, Hercules BidCo GmbH grants the company an interest-free loan if a reso- lution on the appropriation of profits passed with its major- ity of votes at a future Annual General Meeting of the com- 102 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 105. pany should lead to a shortfall in the applicable minimum liquidity. This credit line initially amounts to up to €500 mil- lion and is reduced over time. The conditions for utilisation were not met in the 2024 financial year; please refer to our ad hoc disclosure dated 31 March 2023 for further details. Fees for service contracts and subsidy agreements with the ECE Group and CURATAX Treuhand GmbH Steuerberatungs- gesellschaft totalled €28,330 thousand in the year under review (previous year: €31,922 thousand). These were par- tially offset by income from leases and mall marketing with the ECE Group in the amount of €14,304 thousand (previous year: €13,633 thousand). Receivables from the ECE Group came to €5,729 thousand (previous year: €5,729 thousand), while liabilities amounted to €2,575 thousand (previous year: €3,773 thousand). On 10 September 2024, the Group entered into a share pur- chase agreement with Kommanditgesellschaft CURA Ver- mögensverwaltung G.m.b.H. Co. for the acquisition of 50% of the shares in Einkaufs-Center Arkaden Pecs Verwaltungs G.m.b.H. (previously: PANTA 101 Grundstücksgesellschaft m.b.H.), Hamburg, for a purchase price of €13 thousand. 37. VOTING RIGHTS NOTICES In line with Section 160 (1) no. 8 AktG, we give notice that the following investments and changes to voting rights have been registered to Deutsche EuroShop AG in conformity with the duty of disclosure in accordance with Section 33 of the Wertpapierhandelsgesetz (WpHG – Securities Trading Act). The disclosures were taken from the latest notice by those subject to reporting requirements. It should be noted that the number of voting rights might have since changed within the respective thresholds, with no reporting obliga- tion arising: Shareholder Shareholding report as at Event, or reason for report New voting share of which direct of which indirectly attributable (in %) (in %) (in %) Oaktree Capital Group Hold- ings GP, LLC, Wilmington, DE, United States of America 13.09.2023 ...exceeds threshold (75) Execution of instruments 76.44 0.00 76.44 CURA Vermögensverwaltung G.m.b.H., Hamburg 13.09.2023 Voluntary Group notification due to threshold reached by a subsidiary Execution of instruments 78.62 0.00 78.62 Alexander Otto 13.09.2023 Voluntary Group notification due to threshold reached by a subsidiary Execution of instruments 78.62 0.46 78.16 Thomas Armbrust 13.09.2023 ...falls below threshold (3) 2.76 0.01 2.74 Maren Otto 13.09.2023 Voluntary Group notification due to threshold reached by a subsidiary 6.55 0.32 6.23 All voting rights notices received by Deutsche EuroShop AG can be found on the website of Deutsche EuroShop AG under Investor Relations Share Significant voting inter- ests. the MALL s life Deutsche EuroShop 103
- 106. 38. THE SUPERVISORY BOARD AND EXECUTIVE BOARD Supervisory Board The Supervisory Board of Deutsche EuroShop AG is com- posed of nine members. The Supervisory Board included the following members with membership of other statutory supervisory boards and membership of comparable super- visory bodies of business enterprises in Germany or other countries: Reiner Strecker, Wuppertal, Chairman Independent management consultant Eckes AG, Nieder-Olm (Chairman) Carl Kühne KG (GmbH Co.), Hamburg (Chairman) Storch-Ciret Holding GmbH, Wuppertal (since 1 January 2025) akf Bank GmbH Co. KG, Wuppertal (until 30 April 2024) Chantal Schumacher, Munich, Deputy Chairwoman Independent management consultant Sompo International Insurance (Europe) SA, Luxembourg (Luxembourg) (since 1 January 2025) Scope SE Co. KGaA, Berlin (until 22 August 2024) Benjamin P. Bianchi, London (United Kingdom) Managing Director, Head of Europe, Oaktree Capital Management, London (United Kingdom) Henning Eggers, Halstenbek Member of Management, CURA Vermögensverwaltung G.m.b.H, Hamburg ECE Group GmbH Co. KG, Hamburg Lemara Grant, London (United Kingdom) Senior Vice President, European Tax Counsel (until 14 September 2024), Senior Vice President, Co-Head of Global Tax Structuring (since 15 September 2024), Oaktree Capital Management London (United Kingdom) Stuart E. Keith, London (United Kingdom) Managing Director, Oaktree Capital Management, London (United Kingdom) Dr Volker Kraft, Hamburg Managing Director, ECE Real Estate Partners GmbH, Hamburg Allos S.A., São Paulo (Brazil) Dr Henning Kreke, Hagen/Westphalia Managing Partner, Let‘s Go JMK KG and Kreke Immobilien KG, Hagen/ Westphalia Douglas AG, Düsseldorf (Chairman) Thalia Bücher GmbH, Hagen (Westfalen) Encavis AG, Hamburg Axxum Holding GmbH, Wuppertal Noventic GmbH, Hamburg Perma-tec GmbH Co. KG, Euerdorf Slyrs Destillerie GmbH Co. KG, Schliersee Claudia Plath, Hamburg CFO, ECE Group Verwaltung GmbH, Hamburg CECONOMY AG, Düsseldorf (until 14 February 2024) MEC Metro-ECE Centermanagement GmbH Co. KG, Düsseldorf The remuneration of the members of the Supervisory Board totalled €188 thousand in the financial year (previous year: €188 thousand). 104 Notes to the consolidated financial statements for financial year 2024 Consolidated financial statements
- 107. Executive Board Hans-Peter Kneip, Düsseldorf The remuneration of the Executive Board – excluding pen- sion expenses – amounted to €682 thousand (previous year: €493 thousand), which includes performance-related remu- neration in the amount of €112 thousand (previous year: €124 thousand). Provisions totalling €239 thousand (previous year: €156 thousand) were formed for long-term incentive plans for the Executive Board. We refer to the notes on the compensation of the Executive Board and Supervisory Board in the separate compensation report published on the Company’s website. 39. EVENTS AFTER THE REPORTING DATE No significant events occurred between the balance sheet date and the date of preparation of the financial statements. 40. CONSOLIDATED FINANCIAL STATEMENTS The Company is included in the consolidated financial state- ments of Hercules Holding S.à.r.l., Luxembourg (City), which are published in the RCS Registre de Commerce et des Sociétés in Luxembourg (City), Luxembourg, in accordance with statutory provisions. Hamburg, 21 March 2025 Deutsche EuroShop AG The Executive Board Hans-Peter Kneip the MALL s life Deutsche EuroShop 105
- 109. Shareholdings 108 Responsibility Statement by the Executive Board 109 Independent auditor’s report 110 EPRA reporting 116 Multi-year overview 126 Glossary 128 Contact and legal 132 EPRA LTV 41,1% the MALL s life Deutsche EuroShop 107
- 110. SHAREHOLDINGS IN ACCORDANCE WITH SECTION 313 (2) HGB AS AT 31 DECEMBER 2024: Company name and domicile Interest in equity in % Fully consolidated companies: DES Verwaltung GmbH, Hamburg 100 DES Management GmbH, Hamburg 100 DES Shoppingcenter GmbH Co. KG, Hamburg1, 2 100 DES Beteiligungs GmbH Co. KG, Hamburg1 100 A 10 Center Wildau GmbH, Hamburg 100 Main-Taunus-Zentrum KG, Hamburg 52.01 Forum Wetzlar G.m.b.H. Co. KG, Hamburg1, 3 100 Objekt City-Point Kassel GmbH Co. KG, Hamburg1 100 Stadtgalerie Hameln GmbH Co. KG, Hamburg1 100 Altmarkt-Galerie Dresden GmbH Co. KG, Hamburg1, 2 100 Allee-Center Magdeburg G.m.b.H. Co. KG, Hamburg1, 2, 3 100 Stadt-Galerie Passau G.m.b.H. Co. KG, Hamburg1, 3 100 Saarpark Center Neunkirchen GmbH Co. KG (previously: Saarpark Center Neunkirchen KG), Hamburg1, 3 95.14 Phoenix-Center Harburg GmbH Co. KG (previously: Immobilienkommanditgesellschaft FEZ Harburg), Hamburg1 75 Einkaufs-Center Galeria Baltycka G.m.b.H. Co. KG, Hamburg 100 Einkaufs-Center Galeria Baltycka G.m.b.H. Co. KG, Sp. kom., Warsaw, Poland 100 CASPIA Investments Sp. z o.o., Warsaw, Poland 100 City-Point Beteiligungs GmbH, Hamburg 100 Olympia Brno s.r.o., Prague, Czech Republic 100 Joint ventures: CAK City Arkaden Klagenfurt KG, Hamburg 50 EKZ Eins Errichtungs- und Betriebs Ges.m.b.H. Co OG, Vienna, Austria 50 Einkaufs-Center Arkaden Pecs G.m.b.H. Co. KG (previously: Einkaufs-Center Arkaden Pecs KG), Hamburg 50 Einkaufs-Center Arkaden Pecs Verwaltungs G.m.b.H. (previously: PANTA 101 Grundstücksgesellschaft m.b.H.), Hamburg 50 Associates: EKZ Vier Errichtungs- und Betriebs Ges.m.b.H., Vienna, Austria 50 1 For these companies, use was made of the exemption from the disclosure obligation in accordance with Section 264b HGB. 2 For these companies, use was made of the exemption from the preparation of a management report in accordance with Section 264b HGB. 3 For these companies, use was made of the exemption from the preparation of notes in accordance with Section 264b HGB. Shareholdings (ANNEX TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS) Information and service 108
- 111. I declare that, to the best of my knowledge, and in line with the accounting policies to be applied, the consolidated financial statements present a true and fair view of the net assets, financial position and results of operations of the Group, and that the combined management report presents the course of business including business performance and the situation of the Group in a way that is true and fair and describes the material opportunities and risks relating to the likely development of the Group. Hamburg, 21 March 2025 Hans-Peter Kneip Deutsche EuroShop Responsibility Statement by the Executive Board the MALL s life Deutsche EuroShop 109
- 112. Independent auditor’s report To Deutsche EuroShop AG, Hamburg REPORT ON THE AUDIT OF THE CON- SOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED MANAGEMENT REPORT AUDIT OPINIONS We have audited the consolidated financial statements of Deutsche EuroShop AG, Hamburg, and its subsidiaries (the Group), which comprise the consolidated statement of financial position as of 31 December 2024, and the consol- idated statement of comprehensive income, consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows for the financial year from 1 January to 31 December 2024, and notes to the consolidated financial statements, including a summary of significant accounting policies. In addition, we have audited the combined management report of Deutsche EuroShop AG, Hamburg, for the financial year from 1 Jan- uary to 31 December 2024. In accordance with the German legal requirements, we have not audited the content of the Declaration on Corporate Governance published on the Company’s website (§§ 289f, 315d HGB), which is referred to in the section of the combined management report with the same title, or the reporting in the “Risk report” section in the “Principles governing the risk management system and internal control system” subsection of the combined management report. In our opinion, on the basis of the knowledge obtained in the audit, the accompanying consolidated financial statements comply, in all material respects, with the IFRS Accounting Standards (hereinafter “IFRS Accounting Standards”) issued by the International Accounting Standards Board (IASB) as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315e (1) HGB [Handelsgesetzbuch: Ger- man Commercial Code] and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial position of the Group as at 31 December 2024, and of its financial performance for the financial year from 1 January to 31 Decem- ber 2024, and the accompanying combined management report as a whole provides an appropriate view of the Group’s position. In all material respects, this combined man- agement report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the oppor- tunities and risks of future development. Our opinion on the combined management report does not cover the content of the unaudited parts of the combined management report listed above. Pursuant to § 322 (3) sentence 1 HGB (German Commercial Code), we declare that our audit has not led to any reser- vations relating to the legal compliance of the consolidated financial statements and of the combined management report. BASIS FOR THE AUDIT OPINIONS We conducted our audit of the consolidated financial state- ments and of the combined management report in accord- ance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as “EU Audit Reg- ulation”) and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Audi- tors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements and of the combined management report” section of our auditor’s report. We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2) letter (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the consolidated financial statements and on the combined management report. REFERENCE TO ANOTHER MATTER The consolidated financial statements and combined man- agement report of Deutsche EuroShop AG, Hamburg, for the previous financial year ended 31 December 2023 were audited by another auditor who issued unmodified audit opinions on these consolidated financial statements and combined management report dated 12 April 2024. Information and service 110
- 113. KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Key audit matters are those matters that, in our profes- sional judgement, were of most significance in our audit of the consolidated financial statements for the financial year from 1 January to 31 December 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters. In the following, we present the key audit matter from our point of view: Measurement of investment properties a) The risk for the consolidated financial statements As at the reporting date, the consolidated balance sheet shows investment properties with a carrying amount totalling €3,967 million (previous year: €3,947 million). This corresponds to 90.9% (previous year: 88.5%) of total assets. Deutsche EuroShop AG, Hamburg, measures investment properties at fair value in accordance with IAS 40 (IFRS 13). A net valuation result of €-22.9 million (previous year: €-205.7 million) is recognised for the 2024 financial year.This had a significant impact on con- solidated profit in the 2024 financial year (€123.5 million; previous year: €-38.3 million). The disclosures provided by the Group on investment properties are included in sections “6. Significant accounting policies and valuation methods”, “8. Investment properties” and “26. Measure- ment gains/losses” of the notes to the consolidated financial statements. In addition, further disclosures are provided in the comments on the net assets, financial position and results of operations as well as the oppor- tunities and risks in the outlook, risks and opportunities report in the combined management report. The fair value of the investment properties is deter- mined by the executive director on the basis of expert opinions by an external, internationally recognised expert. For this purpose, the appraiser received up-to- date property and tenant lists as well as earnings and maintenance plans. Based on this information, the appraiser determines the fair value using current mar- ket data and internationally recognised valuation meth- ods. The discounted cash flow method is used to dis- count the expected future cash flows of a shopping center as at the reporting date of 31 December 2024 using a market-based, property-specific discount and capitalisation rate. In the 2024 financial year, the appraiser carried out physical property inspections at ten properties. In the last 36 months, all properties have been physically inspected by the valuer. In our view, the valuation of investment properties was of particular significance in the context of our audit, as the valuation of this item, which is significant in terms of its amount, is based to a large extent on estimates and assumptions. Even minor changes in the parame- ters relevant to measurement can lead to significant changes in fair values. Significant parameters in the past financial year were the rental growth rate, the cost ratio and the discount and capitalisation rate. Their development reflects the different dynamics of property purchase price and rental price development, which is a significant factor for the development of fair values as at 31 December 2024 compared to the previous year. In addition, IAS 40 and IFRS 13 require a large number of disclosures in the notes, the completeness and appro- priateness of which must be ensured. b) Audit approach and conclusions Our audit procedures included an assessment of the valuation method with regard to compliance with IFRS 13. We have verified the accuracy and complete- ness of the property and tenant portfolios used on a sample basis. In addition, we examined the causes of changes in the value of selected shopping centers com- pared to the previous year and, in particular, assessed the appropriateness of the valuation parameters used, especially the rental growth rate, the cost ratio and the discount and capitalisation rates, taking into account the type and location of the selected properties. We discussed specific matters with the appraiser and the Executive Board in writing, by telephone and in person. In addition to the listed individual audit procedures, we also recorded the controls performed by the executive director. We visited one property with the appraiser and a further five properties with the center managers at the sites. We have also satisfied ourselves of the independence and qualifications of the external appraiser commis- sioned. With the knowledge that even small changes in the valuation parameters can have a material impact on the value of the investment properties, we also assessed the sensitivity analyses performed by the external appraiser and the effects of possible fluctuations in these parameters. We have also assessed the appropriateness of the dis- closures made in the notes to the consolidated financial statements. In our opinion, the Executive Board of Deutsche EuroShop AG, Hamburg, has implemented an appro- priate valuation method that is suitable for determining fair values in accordance with IFRS 13. the MALL s life Deutsche EuroShop 111
- 114. In our opinion, the estimates made by the executive director on which the accounting is based are suffi- ciently substantiated and enable an appropriate pres- entation in the consolidated financial statements. OTHER INFORMATION The executive director and the Supervisory Board are responsible for the other information. The other information obtained up to the date of this auditor’s report comprises: the Declaration on Corporate Governance published separately on the Company’s website, to which refer- ence is made in the section “Declaration on Corporate Governance (§ 289f, § 315d HGB)” of the combined management report the reporting in the section “Risk report” in the sub- section “Principles governing the risk management system and the internal control system” the Report of the Supervisory Board the other parts of the annual report already published at the time of this auditor’s report (“Deutsche EuroShop at a glance”, “Multi-year overview”, “The shopping center share”, “The Executive Board”, “The Supervisory Board”, “Glossary”, “Our values – Our goals”, “Declara- tion on Corporate Governance 2024”, “Letter from the Executive Board”, “EPRA Report 2024”), with the excep- tion of the consolidated financial statements, the audited content of the Group management report and our auditor’s report thereon, and the assurance pursuant to § 297 (2) sentence 4 HGB on the consolidated financial statements and the assurance pursuant to § 289 (1) sentence 5 in con- junction with § 315 (1) sentence 5 HGB on the com- bined management report. The following other information is expected to be made available to us after the date of this auditor’s report: the other parts of the annual report that have not yet been published The Supervisory Board is responsible for the report of the Supervisory Board. The executive director and the Super- visory Board are responsible for the declaration in accord- ance with § 161 AktG on the German Corporate Govern- ance Code, which is part of the Declaration on Corporate Governance published on the Company’s website (§ 289f, § 315d HGB). Furthermore, the executive director is responsible for the other information. Our audit opinions on the consolidated financial state- ments and on the combined management report do not cover the other information, and consequently we do not express an audit opinion or any other form of assurance conclusion thereon. In connection with our audit, our responsibility is to read the other information listed above, and thereby acknowl- edge whether the other information: is materially inconsistent with the consolidated finan- cial statements, with the audited content of the com- bined management report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other infor- mation obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the executive directors and the Super- visory Board for the consolidated financial statements and the combined management report The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRS Accounting Standards as adopted by the EU and the additional requirements of Ger- man commercial law pursuant to § 315e (1) HGB and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position and financial performance of the Group. In addition, the executive director is responsible for such internal control as determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud (i.e. fraudulent financial reporting and misappropriation of assets) or error. In preparing the consolidated financial statements, the executive director is responsible for assessing the Group’s ability to continue as a going concern. The executive direc- tor also has responsibility for disclosing, as applicable, matters related to going concern. In addition, the executive director is responsible for financial reporting based on the going concern basis of accounting unless there is an inten- tion to liquidate the Group or to cease operations, or there is no realistic alternative but to do so. Furthermore, the executive director is responsible for the preparation of the combined management report that, as a whole, provides an appropriate view of the Group’s position and is, in all material respects, consistent with the consol- idated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive director is responsible for such arrangements and meas- ures (systems) as considered necessary to enable the preparation of a combined management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the combined management report. Information and service 112 Independent auditor’s report
- 115. The Supervisory Board is responsible for overseeing the Group’s financial reporting process for the preparation of the consolidated financial statements and the combined management report. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE COMBINED MANAGEMENT REPORT Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the combined management report as a whole provides an appropriate view of the Group’s posi- tion and, in all material respects, is consistent with the con- solidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our opinions on the consolidated financial statements and on the combined management report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut derWirtschaft- sprüfer (IDW) and supplementary compliance with the ISAs will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and this combined management report. We exercise professional judgment and maintain profes- sional skepticism throughout the audit. We also: identify and assess the risks of material misstatement of the consolidated financial statements and of the combined management report, whether due to fraud or error, design and perform audit procedures respon- sive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material mis- statement resulting from fraud is higher than the risk of not detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the over- ride of internal controls. obtain an understanding of internal controls relevant to the audit of the combined management report and of arrangements and measures relevant to the audit of the combined management report in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an audit opinion on the effectiveness of the internal controls of the Group or these arrangements and measures. evaluate the appropriateness of accounting policies used by the executive director and the reasonableness of estimates made by the executive director and related disclosures. conclude on the appropriateness of the executive director’s use of the going concern basis of account- ing and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the consolidated financial statements and in the combined management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern. evaluate the overall presentation, structure and con- tent of the consolidated financial statements, includ- ing the disclosures, and whether the consolidated financial statements present the underlying transac- tions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial per- formance of the Group in compliance with IFRS Accounting Standards as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e (1) HGB. plan and perform the audit of the consolidated finan- cial statements to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business areas within the Group to provide a basis for our audit opinions on the consolidated financial statements and on the combined manage- ment report. We are responsible for the direction, supervision and review of the audit activities per- formed for the purpose of the audit of the consoli- dated financial statements. We remain solely respon- sible for our audit opinions. evaluate the consistency of the combined management report with the consolidated financial statements, its conformity with [German] law, and the view of the Group’s position it provides. perform audit procedures on the prospective informa- tion presented by the executive director in the com- bined management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive director as a basis for the prospective information, and evaluate the proper derivation of the prospective infor- mation from these assumptions. We do not express a separate opinion on the prospective information and on the assumptions used as a basis. There is a sub- stantial unavoidable risk that future events will differ materially from the prospective information. the MALL s life Deutsche EuroShop 113
- 116. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with the relevant inde- pendence requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and, where applica- ble, the actions taken or safeguards applied to eliminate independence threats. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial state- ments of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. OTHER LEGAL AND REGULATORY REQUIREMENTS Report on the assurance on the electronic rendering of the consolidated financial statements and the combined man- agement report, prepared for publication purposes in accordance with § 317 (3a) HGB ASSURANCE OPINION We have performed assurance work in accordance with § 317 (3a) HGB to obtain reasonable assurance as to whether the rendering of the consolidated financial state- ments and the combined management report (hereinafter the “ESEF documents”) contained in the electronic file “ESEF-Unterlagen Deutsche EuroShop AG 2024.zip” and prepared for publication purposes complies in all material respects with the requirements of § 328 (1) HGB for the electronic reporting format (“ESEF format”). In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained in the consolidated financial statements and the combined management report into the ESEF format and therefore relates neither to the information contained within these renderings nor to any other information contained in the file identified above. In our opinion, the rendering of the consolidated financial statements and the combined management report con- tained in the electronic file identified above and prepared for publication purposes complies in all material respects with the requirements of § 328 (1) HGB for the electronic reporting format. Beyond this assurance opinion and our audit opinion on the accompanying consolidated financial statements and the accompanying combined management report for the financial year from 1 January to 31 Decem- ber 2024 contained in the “Report on the audit of the con- solidated financial statements and of the combined man- agement report” above, we do not express any assurance opinion on the information contained within these render- ings or on the other information contained in the file iden- tified above. BASIS FOR THE ASSURANCE OPINION We conducted our assurance work on the rendering of the consolidated financial statements and the combined man- agement report contained in the file identified above in accordance with § 317 (3a) HGB and the IDW Assurance Standard: Assurance Work on the Electronic Rendering of Financial Statements and Management Reports, Prepared for Publication Purposes in Accordance with § 317 (3a) HGB (IDW AsS 410 (06.2022)). Our responsibility in accordance therewith is further described in the “Auditor’s Responsi- bilities for the Assurance Work on the ESEF Documents” section. Our audit firm has applied the quality manage- ment requirements of the IDW Quality Management Stand- ard: Requirements for Quality Management in Audit Firms (IDW QMS 1 (09.2022)). Responsibilities of the Executive Director and the Supervi- sory Board for the ESEF Documents The executive director of the company is responsible for the preparation of the ESEF documents with the electronic renderings of the consolidated financial statements and the combined management report in accordance with § 328 (1) sentence 4 No. 1 HGB and for the tagging of the consolidated financial statements in accordance with § 328 (1) sentence 4 No. 2 HGB. In addition, the executive director of the company is responsible for such internal controls considered neces- sary to enable the preparation of ESEF documents that are free from material – intentional or unintentional – non-compliance with the requirements of § 328 (1) HGB for the electronic reporting format. The supervisory board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process. Information and service 114 Independent auditor’s report
- 117. AUDITOR’S RESPONSIBILITIES FOR THE ASSURANCE WORK ON THE ESEF DOCUMENTS Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material inten- tional or unintentional non-compliance with the require- ments of § 328 (1) HGB. We exercise professional judgment and maintain professional skepticism throughout the audit. We also identify and assess the risks of material intentional or unintentional non-compliance with the require- ments of § 328 (1) HGB, design and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide a basis for our assurance opinion. obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of express- ing an assurance opinion on the effectiveness of these controls. evaluate the technical validity of the ESEF documents, i.e. whether the file containing the ESEF documents meets the requirements of the Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical specification for this electronic file. evaluate whether the ESEF documents provide an XHTML rendering with content equivalent to the audited consolidated financial statements and to the audited combined management report. evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Articles 4 and 6 of the Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, enables an appropri- ate and complete machine-readable XBRL copy of the XHTML rendering. FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF THE EU AUDIT REGULATION We were elected as group auditor by the consolidated gen- eral meeting on 29 August 2024. Pursuant to § 318 (2) HGB, we are the auditor of the consolidated financial statements, as no other auditor was appointed.We were engaged by the Chair of the Audit Committee on 27 October 2024. We have been the Group auditor of Deutsche EuroShop AG, Hamburg, since the 2024 financial year. We declare that the audit opinions expressed in this audi- tor’s report are consistent with the additional report to the Audit Committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report). OTHER MATTER – USE OF THE AUDITOR’S REPORT Our auditor’s report must always be read together with the audited consolidated financial statements and the audited combined management report as well as the assured ESEF documents. The consolidated financial statements and the combined management report converted to the ESEF format – including the versions to be published in the German Federal Gazette – are merely electronic ren- derings of the audited consolidated financial statements and the audited combined management report and do not take their place. In particular, the ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents provided in electronic form. GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT The German Public Auditor responsible for the engagement is Mr Till Kohlschmitt. Hamburg, 24 March 2025 RSM Ebner Stolz GmbH Co. KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Florian Riedl Till Kohlschmitt Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor) the MALL s life Deutsche EuroShop 115
- 118. The Brussels-based European Public Real Estate Associa- tion (EPRA) has set itself the goal of improving the trans- parency and comparability of reports published by listed companies in Europe. To this end, EPRA has defined key figures in its Best Practices Recommendations. Deutsche EuroShop supports this goal as a member of EPRA. 1 The current version of the EPRA Best Practices Recommendations can be found at: www.epra.com/finance/financial-reporting/guidelines The EPRA Best Practices Recommendations (hereinafter “BPR”), as amended,1 were used to determine the key fig- ures. February 2022 saw the publication of the current revised BPR, which include the introduction of an EPRA loan-to-value ratio (LTV ratio) as a key change. Overview of EPRA key figures 31.12.2024 31.12.2023 Change in € thousand per share in € in € thousand per share in € +/- in € thousand in % EPRA earnings 159,709 2.10 172,389 2.29 -12,680 -7.4 EPRA NRV 2,441,689 32.24 2,659,232 34.78 -217,543 -8.2 EPRA NTA 2,197,992 29.02 2,414,394 31.58 -216,402 -9.0 EPRA NDV 1,900,983 25.10 2,170,890 28.39 -269,907 -12.4 31.12.2024 31.12.2023 Change in % in % in % points EPRA loan-to-value ratio (EPRA LTV ratio) 41.1 34.8 6.3 EPRA net initial yield (EPRA NIY) 5.8 5.9 -0.1 EPRA “topped-up” net initial yield 5.9 5.9 0.0 EPRA cost ratio (incl. direct vacancy costs) 21.1 29.1 -11.5 EPRA cost ratio (excl. direct vacancy costs) 20.1 27.9 -7.8 EPRA vacancy rate 6.7 6.7 0.0 EPRA reporting Information and service 116
- 119. EPRA EARNINGS EPRA earnings represent sustained operating earnings and thus lay the foundation for a real estate company’s ability to pay a dividend. To calculate this, the profit/loss for the year is adjusted to reflect any income components that have no sustained, recurring impact on operational performance. EPRA earnings are therefore essentially comparable with the “funds from operations” (FFO) parameter used by us. In contrast to EPRA earnings, in the case of FFO all non-cash deferred taxes are adjusted. EPRA earnings 01.01. –31.12.2024 01.01.-31.12.2023 Change in € thousand per share in € in € thousand per share in € per share in € in % Consolidated profit 123,514 1.62 -38,277 -0.51 2.13 -417.6 Measurement gains/losses on investment properties 22,870 205,701 Measurement gains/losses on investment properties (at equity) -8,231 3,426 Measurement gains/losses on investment properties1 14,639 0.19 209,127 2.78 -2.59 -93.2 Income and expenses from changes in the scope of consolidation2 0 0.00 7,258 0.10 -0.10 -100.0 Deferred taxes on adjustments1 21,556 0.29 -5,719 -0.08 0.37 – EPRA earnings 159,709 2.10 172,389 2.29 -0.19 -8.3 Weighted number of no-par-value shares issued 76,090,428 75,136,922 1 Including the share attributable to equity-accounted joint ventures and associates 2 Including acquisition costs from the purchase of additional shares and after consideration of taxes On 12 January 2023, the Deutsche EuroShop Group con- cluded six purchase agreements for the acquisition of addi- tional shares in six property companies in which it already held an interest of between 50% and 75%. In 2023, the acquisition resulted in non-recurring non-operating income and expenses from changes in the scope of consolidation, which are to be adjusted accordingly. Income and expenses from changes in the scope of consolidation in 2023 also include ancillary acquisition costs from the acquisition of investments, which at €21.0 million mainly comprise the land transfer tax. EPRA EARNINGS in € million / in € per share 2023 172.4 2.29 75.1 Weighted number of no-par-value shares issued, in million 2022 129.6 61.8 2.10 2021 122.0 61.8 1.97 2020 124.5 61.8 2.02 76.1 159.7 2024 2.10 the MALL s life Deutsche EuroShop 117
- 120. NET ASSET VALUE EPRA net reinstatement value (EPRA NRV): The EPRA NRV determines the long-term net asset value that would be required to rebuild the Company in the exist- ing form. This approach excludes sales of assets and con- sequently does not include deferred taxes. The ancillary acquisition costs needed to rebuild the entity are added back at their appraisal value. EPRA NRV 31.12.2024 31.12.2023 in € thousand per share in € in € thousand per share in € Equity 1,884,540 24.88 2,119,667 27.72 Derivative financial instruments measured at fair value1 3,128 0.05 6,427 0.09 Deferred taxes on investment properties and derivative financial instruments1 362,055 4.77 340,042 4.45 Goodwill as a result of deferred taxes -51,719 -0.68 -51,719 -0.68 Less ancillary acquisition costs1 243,685 3.22 244,815 3.20 EPRA NRV 2,441,689 32.24 2,659,232 34.78 Number of no-par-value shares issued as at the reporting date 75,743,854 76,455,319 1 Including the share attributable to equity-accounted joint ventures and associates EPRA net tangible assets (EPRA NTA): The EPRA NTA measures the net asset value of a company based on a business model with a long-term focus. To do this, Group equity is adjusted for assets and liabilities that are unlikely to be realised if held over the long term. Deutsche EuroShop does not include deferred taxes when calculating the EPRA NTA as Deutsche EuroShop’s busi- ness model is geared towards generating long-term rental income rather than selling shopping centers for short- term profit. EPRA NTA 31.12.2024 31.12.2023 in € thousand per share in € in € thousand per share in € EPRA NRV 2,441,689 32.24 2,659,232 34.78 Ancillary acquisition costs1 -243,685 -3.22 -244,815 -3.20 Intangible assets -12 0.00 -23 0.00 EPRA NTA 2,197,992 29.02 2,414,394 31.58 Number of no-par-value shares issued as at the reporting date 75,743,854 76,455,319 1 Including the share attributable to equity-accounted joint ventures and associates Information and service 118 EPRA reporting
- 121. EPRA net disposal value (EPRA NDV): The EPRA NDV indicates the net asset value that would result if the assets and liabilities were not held to maturity. The EPRA NDV thus also factors in assets and liabilities measured at fair value as at the reporting date, which are unlikely to be realised taking a long-term view. In addition, it is assumed that deferred taxes from the balance sheet and from the fair value measurement of the financial lia- bilities will be realised and will therefore have to be deducted. EPRA NDV 31.12.2024 31.12.2023 in € thousand per share in € in € thousand per share in € EPRA NRV 2,441,689 32.24 2,659,232 34.78 Ancillary acquisition costs1 -243,685 -3.22 -244,815 -3.20 Derivative financial instruments measured at fair value1 -3,128 -0.04 -6,427 -0.08 Difference between non-accounted financial liabilities measured at fair value and their carrying amount1 82,699 1.08 125,093 1.63 Deferred taxes on difference between non-accounted financial liabilities measured at fair value and their carrying amount1 -14,537 -0.19 -22,151 -0.29 Deferred taxes on investment properties and derivative financial instruments1 -362,055 -4.77 -340,042 -4.45 EPRA NDV 1,900,983 25.10 2,170,890 28.39 Number of no-par-value shares issued as at the reporting date 75,743,854 76,455,319 1 Including the share attributable to equity-accounted joint ventures and associates EPRA NRV/NTA/NDV in € per share 41.11 37.38 31.31 41.11 42.10 38.43 32.37 41.11 41.49 37.81 34.49 34.78 31.58 28.39 32.24 29.02 25.10 in € million 2020 2021 2022 2023 2024 EPRA NRV 2,540.0 2,601.2 2,563.3 2,659.2 2,441.7 EPRA NTA 2,309.7 2,374.4 2,335.9 2,414.4 2,198.0 EPRA NDV 1,934.2 2,000.0 2,130.7 2,170.9 1,901.0 Number of no-par- value shares issued as at the reporting date, in million 61.8 61.8 61.8 76.5 75.7 the MALL s life Deutsche EuroShop 119
- 122. EPRA LOAN-TO-VALUE (EPRA LTV) The EPRA LTV ratio indicates the ratio of net debt to real estate assets. The assets and liabilities taken into account in the calculation are included in proportion to the Group’s share in the respective items. Another key difference to the LTV figures previously reported in the Group is the inclusion of other liabilities in the EPRA LTV ratio. EPRA LTV 31.12.2024 in € thousand Group At equity Share of third-party shareholders Total (pro- portional) Bank loans and overdrafts 1,808,374 55,793 -132,935 1,731,232 Securities 0 0 0 0 Hybrid financial instruments 0 0 0 0 Bonds 0 0 0 0 Derivative financial instruments in foreign currency 0 0 0 0 Other liabilities (net)1 24,710 -805 -15,410 8,495 Owner-occupied property (liabilities) 230 0 0 230 Debt with equity features 0 0 0 0 Less cash and cash equivalents -212,438 -3,675 14,931 -201,182 Net debt 1,620,876 51,313 -133,414 1,538,775 Investment properties 3,966,721 158,960 -381,426 3,744,255 Owner-occupied property 223 0 0 223 Real estate assets held for sale 0 0 0 0 Real estate assets under construction 0 0 0 0 Intangible assets (excluding goodwill) 12 0 0 12 Other assets (net) 0 0 0 0 Financial assets 0 0 0 0 Property assets 3,966,956 158,960 -381,426 3,744,490 EPRA LTV in % 41.1% 1 Other liabilities (net) include trade receivables as well as other assets less trade payables, tax liabilities, other provisions and other current liabilities. Information and service 120 EPRA reporting
- 123. 31.12.2023 Group At equity Share of third-party shareholders Total (pro- portional) 1,677,600 56,664 -132,758 1,601,506 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 33,032 -320 -18,297 14,415 292 0 0 292 0 0 0 0 -336,071 -5,083 18,921 -322,233 1,374,853 51,261 -132,134 1,293,980 3,947,021 149,960 -376,014 3,720,967 286 0 0 286 0 0 0 0 0 0 0 0 23 0 0 23 0 0 0 0 0 0 0 0 3,947,330 149,960 -376,014 3,721,276 34.8% the MALL s life Deutsche EuroShop 121
- 124. EPRA NET INITIAL YIELD AND EPRA “TOPPED-UP” NET INITIAL YIELD The EPRA net initial yield is calculated on the basis of annu- alised rental income as at the reporting date less the costs that are not allocable to tenants, calculated in proportion to the market value of the property including ancillary acquisition costs. The EPRA “topped-up” net initial yield also takes into account granted rental incentives in the deter- mination of annualised rental income. EPRA NET INITIAL YIELD (EPRA NIY) AND EPRA “TOPPED-UP” NET INITIAL YIELD in € thousand 31.12.2024 31.12.2023 Market value investment properties 3,966,721 3,947,021 Market value investment properties (at equity) 158.960 149,960 Market value investment properties1 4,125,681 4,096,981 Less expanded space1 -8,860 -15,160 Less ancillary acquisition costs1 243,685 244,815 Market value investment properties (gross) 4,360,506 4,326,636 Annualised rental income1 287,472 286,279 Non-allocable property expenses1 -32,989 -30,526 Annualised net rental income 254,483 255,753 Rental incentives and other rental adjustments1 1,949 1,352 Annualised “topped-up” net rental income 256,432 257,105 EPRA net initial yield (EPRA NIY) 5.8% 5.9% EPRA “topped-up” net initial yield 5.9% 5.9% 1 Including the share attributable to equity-accounted joint ventures and associates EPRA VACANCY RATE The EPRA vacancy rate is the ratio of the market value of vacant space to the market rent of the entire portfolio as at the reporting date. EPRA vacancy rate in € thousand 31.12.2024 31.12.2023 Market rent for vacancy1 18,523 17,811 Total market rent1 276,104 267,428 EPRA vacancy rate 6.7% 6.7% 1 Including the share attributable to equity-accounted joint ventures and associates Information and service 122 EPRA reporting
- 125. EPRA COST RATIO The EPRA cost ratio compares the sum of operating and administrative costs with rental income, allowing for an estimation of cost efficiency across comparable real estate companies. Operating and administrative costs comprise all expenses that cannot be allocated or passed on from the management of the property portfolio (excluding depreci- ation, interest and taxes) as well as Group management costs. Costs are not capitalised. EPRA cost ratio in € thousand 01.01.- 31.12.2024 01.01.- 31.12.2023 Operating and administrative costs for property1 47,925 50,879 Write-downs and derecognition of receivables1 7,934 9,002 Other operating expenses1 excluding financing costs 10,152 28,616 Other revenue from cost allocations and reimbursements1 -7,929 -7,605 EPRA costs (incl. direct vacancy costs) 58,082 80,892 Direct vacancy costs1 -2,821 -3,381 EPRA costs (excl. direct vacancy costs) 55,261 77,511 Rental revenue (excluding cost allocations and reimbursements)1 275,492 277,508 EPRA cost ratio (incl. direct vacancy costs)2 21.1% 29.1% EPRA cost ratio (excl. direct vacancy costs)3 20.1% 27.9% 1 Including the share attributable to equity-accounted joint ventures and associates 2 The EPRA cost ratio (incl. direct vacancy costs) excluding write-downs and derecognition of receivables would be 18.2% (previous year: 25.9%). 3 The EPRA cost ratio (excl. direct vacancy costs) excluding write-downs and derecognition of receivables would be 17.2% (previous year: 24.7%). the MALL s life Deutsche EuroShop 123
- 126. INVESTMENTS IN REAL ESTATE ASSETS Investments in the Group’s real estate assets amounted to: EPRA investments in real estate assets 31.12.2024 31.12.2023 in € thousand Group at equity Total Group at equity Total Acquisitions 0 0 0 773,000 0 773,000 Developments, new construction 0 0 0 0 0 0 Investment properties Incremental lettable space 0 0 0 0 0 0 Non-incremental lettable space 47,179 1,088 48,267 43,481 863 44,344 Tenant incentives 4,744 -301 4,443 8,084 63 8,147 EPRA investments in real estate assets1 51,923 787 52,710 824,565 926 825,491 1 Investments in 2024 and 2023 almost entirely affect cash in the year in question. The acquisitions in 2023 include the property values of four joint ventures previously accounted for using the equity method, which were included in the Group as subsidiaries for the first time following the acquisition of additional shares at the beginning of the financial year. The property companies concerned are as follows: Shareholding Group share Before acquisition Acquisition 2023 After acquisition Real estate values 1. Allee-Center Magdeburg G.m.b.H. Co. KG, Hamburg 50% 50% 100% 217,000 2. Stadt-Galerie Passau G.m.b.H. Co. KG, Hamburg 75% 25% 100% 157,000 3. Saarpark Center Neunkirchen GmbH Co. KG (previ- ously: Saarpark Center Neunkirchen KG), Hamburg 50% 40% 90% 172,000 4. Phoenix-Center Harburg GmbH Co. KG (previously: Immobilienkommanditgesellschaft FEZ Harburg), Hamburg 50% 25% 75% 227,000 Total 773,000 The 2023 purchase price for the additional shares in the four property companies totalled €227.8 million and was financed by means of a capital increase. The investments in the portfolio properties arise from investments in the center infrastructure and in rental areas as well as from the ongoing “At Your Service” investment programme. Interest was not capitalised as part of the investments. Information and service 124 EPRA reporting
- 127. EPRA LIKE-FOR-LIKE NET RENTAL GROWTH The EPRA like-for-like net rental growth shows growth based on an unchanged real estate portfolio composition. Acquisitions or sales during the reporting year are not taken into account. EPRA like-for-like net rental growth in € thousand 2024 Like-for-like change Like-for-like change (in%) 2023 Minimum rental income 253,922 -1,590 -0.6 255,512 Allocable property tax and insurance 7,558 133 1.8 7,425 Net rental income 8,679 1,017 13.3 7,662 Other 1,244 -1,461 -54.0 2,705 Revenue 271,403 -1,901 -0.7 273,304 of which Germany 228,196 -3,677 -1.6 231,873 Abroad 43,207 1,776 4.3 41,431 The portfolio change effects include the four joint ventures previously accounted for within the Group using the equity method, which were included in the Group as subsidiaries for the first time following the acquisition of additional shares at the beginning of the financial year. the MALL s life Deutsche EuroShop 125
- 128. in € million 2015 2016 2017 Revenue4 202.9 205.1 218.5 EBIT 176.3 178.6 192.4 Net finance costs (excluding measurement gains/losses1 ) -49.3 -44.1 -39.1 EBT (excluding measurement gains/losses1 ) 127.0 134.5 153.3 Measurement gains/losses1 267.7 145.5 12.9 Consolidated profit 309.3 221.8 134.3 Funds from operations (FFO) 123.4 129.9 148.1 FFO per share in € 2.29 2.41 2.54 Earnings per share in €2 5.73 4.11 2.31 EPRA earnings per share in € 2.18 2.29 2.42 Equity³ 2,061.0 2,240.7 2,574.9 Liabilities 1,790.6 1,873.8 2,052.1 Total assets 3,851.6 4,114.5 4,627.0 Equity ratio in %3 53.5 54.5 55.6 Cash and cash equivalents 70.7 64.0 106.6 Net tangible assets (EPRA) 2,135.2 2,332.6 2,668.4 Net tangible assets per share (EPRA) 39.12 43.24 43.19 Dividend per share 1.35 1.40 1.45 1 Including the share attributable to equity-accounted joint ventures and associates 2 Basic 3 Including non-controlling interests 4 In 2020, there was a change in the disclosure of revenue with adjustment of the comparative figure for the previous year 2019. A comparison with the years 2013 to 2018 is therefore only possible to a limited extent. 5 Includes the dividend of €1.95 and €2.50 per share resolved on 29 August 2023 and 8 January 2024 for the 2022 financial year. 6 Proposal Multi-year overview Information and service 126
- 129. 2018 2019 2020 2021 2022 2023 2024 225.0 231.5 224.1 211.8 212.8 273.3 271.4 199.1 197.5 161.2 152.5 152.4 212.7 216.3 -38.2 -34.3 -33.6 -26.9 -22.3 -43.2 -51.1 160.9 163.1 127.6 125.6 130.2 169.5 165.2 -58.3 -120.0 -429.6 -54.7 -106.4 -209.1 -14.6 79.4 112.1 -251.7 59.9 21.4 -38.3 123.5 150.4 149.6 123.3 122.3 130.1 171.3 157.1 2.43 2.42 2.00 1.98 2.11 2.28 2.06 1.29 1.81 -4.07 0.97 0.35 -0.51 1.62 2.39 2.56 2.02 1.97 2.10 2.29 2.10 2,573.4 2,601.5 2,314.8 2,377.8 2,343.4 2,379.0 2,145.7 2,036.8 1,957.1 1,922.6 1,901.0 1,864.7 2,081.2 2,218.7 4,610.2 4,558.6 4,237.4 4,278.8 4,208.1 4,460.2 4,364.4 55.8 57.1 54.6 55.6 55.7 53.3 49.2 116.3 148.1 266.0 328.8 334.9 336.1 212.4 2,667.5 2,613.4 2,309.7 2,374.5 2,335.9 2,414.4 2,198.0 43.17 42.30 37.38 38.43 37.81 31.58 29.02 1.50 0.00 0.04 1.00 4.455 2.60 1.006 Quarterly figures 2024 in € million 01.01.- 31.03.2024 01.04.- 30.06.2024 01.07.- 30.09.2024 01.10.- 31.12.2024 Revenue 66.0 66.8 67.2 271.4 Net operating income (NOI) 53.8 52.6 56.7 217.4 EBIT 54.4 53.0 55.4 216.3 EBT (excl. measurement gains/losses* ) 42.4 39.7 42.9 165.2 EPRA earnings 43.3 37.3 41.0 159,7 FFO 41.8 37.2 40.7 157,1 EPRA earnings per share in € 0.57 0.49 0.54 2.10 FFO per share in € 0.55 0.49 0.53 2.06 * Including the share attributable to equity-accounted joint ventures and associates the MALL s life Deutsche EuroShop 127
- 130. Anchor tenants Tenants that serve to attract other tenants. With their high customer footfall, they ensure that the entire shopping center is revitalised. The smaller tenants located around the anchor tenant benefit from the high customer frequency of the larger tenant. The way a shopping center is struc- tured in terms of the layout of the shops and the range of products on offer plays a crucial role in its success. Advertising value equivalence Index number for the assessment of the monetary value of an editorial article. It is based on the advertising rate of the medium. Asset class Classification of the capital and property market into dif- ferent investment segments. Benchmark A standard of comparison, e.g. an index which serves as a guideline. Measurement gains/losses DES calculation: Measurement gains/losses comprise unrealised changes in the market value of properties held as a financial investment (investment properties) before taxes. In the case of fully consolidated companies, the por- tion of the company that does not belong to the Group is deducted. Measurement gains/losses of associates and joint ventures accounted for using the equity method are contained in the at-equity profit/loss. Measurement gains/losses (including at equity) DES calculation: Measurement gains/losses plus the measurement gains/losses included in at-equity profit/ loss. Gross domestic product (GDP) The value of all goods and services that are produced in a national economy within a certain period of time, i.e. produced or rendered against payment. Cash flow per share The cash flow per share is calculated by dividing the cash flow by the number of shares issued by a company. The cash flow per share is used as the basis for calculating the price/cash flow ratio. Collection ratio The collection ratio measures the ratio of incoming pay- ments to rent and service charge receivables from tenants. Core Designation of a real estate investment and/or individual properties as well as the name of an investment style. The term refers to the relationship between risk and return. Core designates mature, transparent, sufficiently large markets or high-quality, well-situated properties that are fully let on a long-term basis to tenants with strong credit ratings. Other return/risk categories are value-added and opportunistic. Corporate governance The rules for good, value-driven corporate management. The objective is to control the company’s management and to create mechanisms to oblige executives to act in the interests of their shareholders. Covenants A clause in a loan agreement which pertains to and con- tractually defines the binding warranties to be adhered to by the borrower during the term of a loan. Glossary Information and service 128 Glossary
- 131. Coverage Information provided on a listed public company by banks and financial analysts in the form of studies and research reports. DAX Germany’s premier equity index. The composition of the DAX is established by Deutsche Börse AG on the basis of the share prices of the 40 largest German companies listed in the Prime Standard in terms of market capitalisation and market turnover. Discounted cashflow model (DCF) Method for the assessment of companies which is used to determine the future payments surpluses and discount them to the valuation date. Dividend The share of the distributed net profit of a company to which a shareholder is entitled in line with the number of shares he or she holds. EPS Earnings per share. EBIT Earnings before interest and taxes. DES calculation: EBT ex cluding net finance costs and measurement gains/losses (also see the consolidated income statement on page 80). EBT Earnings before taxes. EBT (excluding measurement gains/losses) DES calculation: EBT less measurement gains/losses (including at-equity profit/loss) and less the deferred taxes included in at-equity profit/loss. E-commerce Direct commercial relationship between supplier and buyer via the internet including the provision of services. EPRA European Public Real Estate Association: EPRA is an Amsterdam-based organisation that represents the inter- ests of the major European real estate companies in the public sphere and supports the development and market presence of European real estate corporations. EPRA earnings EPRA earnings represent sustained operating earnings and thus lay the foundation for a real estate company’s ability to pay a dividend. To calculate this, the profit/loss for the year is adjusted to reflect any income components that have no sustained, recurring impact on operational performance. The DES calculation is performed using the currently valid version of the EPRA Best Practice Recommendations, which can be found at www.epra.com/finance/financial-reporting/ guidelines EPRA NTA The EPRA NTA represents the net asset value based on a long-term business model. Here, Group equity is adjusted for assets and liabilities that are unlikely to be realised if held over the long term. Intangible assets are eliminated in the process. The DES calculation is performed using the currently valid version of the EPRA Best Practice Recom- mendations, which can be found at www.epra.com/finance/ financial-reporting/guidelines ESG ESG refers to a company’s commitment and its impact with regard to environmental, social and governance issues. Fair value The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Financial gains/losses The financial gains/losses of DES are made up of the fol- lowing items in the income statement: Share in the profit and loss of associates and joint ventures accounted for using the equity method, interest expense and income, profit/loss attributable to limited partners, income from investments and other financial income and expenses. the MALL s life Deutsche EuroShop 129
- 132. Food court Dining area of a shopping center where various vendors sell food at counters around a common seating area. Free cash flow The surplus liquidity from operating activities recognised in the income statement. This expresses the internal financing power of a company, which can be used for investments, the repayment of debt, dividend payments and to cover financing requirements. Funds from operations (FFO) Inflow of funds from operations used to finance our ongoing investments in portfolio properties, scheduled repayments on our bank loans and the annual distribution of dividends. DES calculation: Consolidated profit after adjustment for measurement gains/losses (including at-equity profit/loss), the non-cash expense of conversion rights and deferred tax expense. Gearing Ratio that indicates the relationship between liabilities and equity. Share capital The capital specified in the Articles of Association of a public company. The Articles of Association also deter- mine the number of shares into which the share capital is divided. The company issues shares in the amount of its share capital. Hedge accounting Financial mapping of two or more financial instruments that hedge one another. ifo Business Climate Index The ifo Business Climate Index is an important early indi- cator for economic development in Germany. To calculate the index, the ifo Institute asks around 7,000 companies every month for their assessment of the economic situation and their short-term corporate planning. International financial reporting standards (IFRS) International Financial Reporting Standards are based on International Accounting Standards (IASs). Since 1 Janu- ary 2005, listed companies have been required to apply IFRSs. IASs/IFRSs focus on the decision-usefulness of accounts. The key requirement with regard to the annual financial statements is fair presentation that is not qual- ified by aspects of prudence or risk provision. Annual financial statement Under German (HGB) accounting principles, the annual financial statements consist of a company’s balance sheet, profit and loss account, the notes to the financial statements and the management report. The annual financial state- ments of a public company are prepared by its executive board, audited by a certified public accountant (in Germany: Wirtschaftsprüfer) and adopted by the supervisory board. Consumer price index Also called the cost-of-living index, this is calculated in Germany by the Federal Statistical Office on a monthly basis. The CPI is the most important statistical indicator of a change in prices; the price of a basket of goods during a given period is compared with the price of the same basket during the base year. This change is also known as the inflation rate. Loan-to-value (LTV) Ratio of net financial liabilities (financial liabilities less cash and cash equivalents) to non-current assets (investment properties and investments accounted). Mall Row of shops in a shopping center. Market capitalisation The current quoted price for a share multiplied by the number of shares listed on the stock. Market capitalisation is calculated for individual companies, but also for sectors or entire stock markets, making them comparable with each other. MDAX German mid-cap index comprising the 50 most important securities after the 40 DAX members. Information and service 130 Glossary
- 133. Multi channelling Using a combination of online and offline communication tools in marketing. Net asset value (NAV) The value of an asset after deduction of liabilities. With regard to shares, the NAV constitutes their intrinsic value. The net net asset value (NNAV) is calculated by deducting deferred taxes from the NAV. Peer group A share price performance benchmark consisting of com- panies from similar sectors, put together on the basis of individual criteria. Performance The term performance describes the percentage appre- ciation of an investment or a securities portfolio during a given period. Pro forma Pro forma financial information supplements annual, con- solidated or interim financial statements to take account of transactions that took place during or after the reporting period. Their purpose is to show the potential impact of these transactions on the historical financial statements if they had already existed at the time the financial state- ments were prepared. Prolongation Extension of a loan coming out of the fixed interest period, also known as refinancing. The interest rates are merely readjusted; there is no change of lender. Roadshow Corporate presentations to institutional investors. SDAX German small-cap index comprising the 70 most important securities after the 40 DAX and 50 MDAX members. Savings ratio Share of savings of the income available in households. TecDAX The successor to the NEMAX 50, comprising the 30 largest German listed technology securities in terms of market capitalisation and market turnover. Turnover rent Rental amount that does not relate to the rental space but to the revenue generated on this space. Retail space Space in a building and/or an open area that is used for sales by a retail operation and that is accessible to cus- tomers. Service areas required for operational and legal purposes are not taken into account, nor are stairways or shop windows. The retail space is part of the leasable space of a business. Volatility Statistical measure for price fluctuations. The greater the fluctuations in the price of a security, the higher its vola- tility. Xetra An electronic stock exchange trading system that, in con- trast to floor trading, uses and open order book, thus increasing market transparency. The trading hours are from 9 am to 5:30 pm. Interest rate swap Exchange of fixed and variable interest pay able on two nominal amounts of capital for a fixed period. By means of an interest rate swap, interest rate risks may be controlled actively. the MALL s life Deutsche EuroShop 131
- 134. Published by Deutsche EuroShop AG Heegbarg 36 22391 Hamburg Germany Phone: +49 (0)40 - 41 35 79 0 Fax: +49 (0)40 - 41 35 79 29 www.deutsche-euroshop.com [email protected] Concept and design Berichtsmanufaktur, Hamburg Pictures Deutsche EuroShop, ECE, Uwe Hüttner, Patrick Kiss, Axel Martens, iStock Responsible for the editorial content: Deutsche EuroShop AG, Hamburg Contact and legal DISCLAIMER Author contributions: Texts identified by name do not necessarily reflect the opinion of Deutsche EuroShop AG. The respective authors are responsible for the content of the texts. Trademarks: All trademarks and brand or prod- uct names mentioned in this Annual Report are the property of their respective owners. This applies in particular to DAX, MDAX, SDAX and Xetra, which are registered trademarks and the property of Deutsche Börse AG. Rounding and rates of change: Percentages and figures stated in this report may be subject to rounding differences. The prefixes before rates of change are based on economic considerations: improvements are indicated by a plus (+); deteriorations by a minus (-). Forward-looking statements: This Annual Report contains forward-looking statements based on estimates of future developments by the Executive Board. The statements and forecasts represent estimates based on all of the information available at the current time. If the assumptions on which these statements and fore- casts are based do not materialise, the actual results may differ from those currently forecast. Publications for our shareholders: Annual Report (German and Eng- lish), Quarterly Statement 3M, Quarterly Statement 9M and Half-Year Financial Report (German and English). The Annual Report of Deutsche EuroShop is available online at www.deutsche-euroshop.com as a PDF file and ePaper. Convenience Translation – the German version is the only binding version Information and service 132
- 135. Deutsche EuroShop returns to SDAX After a two-year absence, the shares of Deutsche EuroShop have again been part of the small-cap index SDAX since 23 September 2024. With its inclusion, DES is one of the 70 most liquid and largest listed companies in Germany below the DAX and MDAX, measured by the market capi- talisation of the shares in free float. The return to the SDAX represents an important milestone in the stock market historyofDeutsche EuroShop since its IPO in 2001. DES was first rep- resented in the SDAX from 2003 to 2004, and subsequently became a member of the MDAX for 15 years. In 2019, a higher market capitalisa- tion of the free float in other companies meant that the DES share was once again listed in the SDAX until September 2022. Following the suc- cessful takeover bid by Oaktree and CURA, DES had to leave the SDAX, but continued to fulfil the high transparency requirements of the Prime Standard and international investors. Illustration: Floor tile with the Deutsche EuroShop stock exchange symbol at the Deutsche Börse Visitors Centre in Frankfurt am Main