Share outperforms the european benchmark and peers

Enlarge picture

Taking into account the dividend paid of €1.05 per share, the performance of Deutsche EuroShop shares was 28.1% year-on-year (2009: +2.1%). The share price rose by 22.4%. As such, our share outperformed the European benchmark, the EPRA index (+18.6%, previous year: +35.1%) and its European peers* by a clear margin in 2010.

German open-ended property funds – our main competitors for investor capital alongside other real estate companies – achieved an average performance of -1.3% in the past year (2009: +2.5%) and attracted cash inflows of around €1.6 billion (2009: €3.2 billion).

Corio, Eurocommercial Properties, Klepierre, Mercialys and Unibail-Rodamco

Attendance up at annual general meeting

The Annual General Meeting was held in Hamburg on 17 June 2010. The 280 or so share holders present in the Handwerkskammer represented 61.5% (previous year: 56.5%) of the capital and approved all the items on the agenda.

* Corio, Eurocommercial Properties, Klepierre, Mercialys und Unibail-Rodamco

Successful capital increases

Deutsche EuroShop acquired the A10 Center in Wildau near Berlin at the beginning of January 2010. To refinance the equity component, we increased our capital in February 2010 through a rights issue at a ratio of 6:1. The new shares were acquired in full by existing shareholders exercising their subscription right and an oversubscription right granted by the Company. A total of 6,302,082 new shares were issued at a subscription price of €19.50 per share. This action raised around €123 million for Deutsche EuroShop. Investors expressed a willingness to acquire shares with a total value of more than €600 million, meaning that the issue was oversubscribed five-fold.

The same process was repeated in November, when 5,736,822 new shares were issued at a subscription price of €23.00 per share to finance the acquisition of the Billstedt-Center in Hamburg. Existing shareholders were able to participate in the rights issue at a ratio of 8:1 and again had an oversubscription right. The measure attracted huge interest, and overall demand ran to just under €850 million, meaning that the issue was oversubscribed by a factor of 6.4. It raised around €132 million for Deutsche EuroShop.

Between these two rights issues, we increased the share capital in July by issuing 1,780,000 new shares against non-cash contributions. These new shares were obtained by various holders of shares in the shopping centers in Wuppertal (City- Arkaden, 25%) and Dresden (Altmarkt-Galerie, 17%), which transferred their shares to Deutsche EuroShop.

We see the highly successful capital increases as confirmation that the capital market supports the path of growth we have embarked on and in which we invested nearly €500 million in 2010. Our shareholders entrusted around €255 million of fresh capital to us for this purpose, enabling us to maintain our conservative approach to financing and grow solidly.

The total number of Deutsche EuroShop shares in issue rose in comparison to the end of 2009 by 13,818,904 shares or 36.5% to 51,631,400.

Broad coverage of the share

Enlarge picture

26 analysts (as at: 31 March 2011, compared with 29 a year earlier) from well-known German and international financial institutions* now regularly follow our shares, and their recommendations introduce us to new groups of investors. This makes Deutsche EuroShop one of the property companies in Europe with the best coverage, and it also stands up to comparison with the MDAX (average of 22 analysts). Particularly good news is that other financial institutions intend to initiate coverage of Deutsche EuroShop in 2011. Information on the recommendations can be found available at www.deutsche-euroshop.com/research

The analysts are generally positive about the prospects for the Deutsche EuroShop share (as at 31 March 2010).

* ABN Amro, Aurel, Bankhaus Lampe, Bank of America Merrill Lynch, Berenberg Bank, Close Brothers Seydler, Commerzbank, Credit Suisse, Deutsche Bank, DZ Bank, equinet, Hamburger Sparkasse, HSBC, ING, Kempen & Co., Kepler Capital Markets, Macquarie, Metzler, M.M. Warburg & Co, Petercam Bank, Rabobank, Silvia Quandt Bank, Societe Generale, UBS, Unicredit and WestLB

Recognition for quality of IR work

In June, Deutsche EuroShop was awarded third place in the MDAX category of the “Capital Investor Relations Prize” for its investor relations activities. Each year, the business magazine Capital awards this high-profile prize for the best communication with the financial markets, judging companies on their target group focus, transparency, track record and non-financial reporting.

www.capital.de
 

Deutsche EuroShop came second in the MDAX category of “BIRD 2010” (Beste Investor Relations Deutschland – Germany’s Best Investor Relations), having finished third in 2009. For the eighth time, the investor magazine Börse Online honoured those companies whose capital market communication is considered particularly open, honest and fair by private investors. In the overall assessment of 160 companies from the DAX, MDAX, SDAX and TecDAX, our investor relations activities earned us fifth place.

www.boerse-online.de
 

In addition, the international specialist magazine Institutional Investor awarded Deutsche EuroShop and its IR managers first prizes for “Best European Investor Relations”. We were also honoured again by the Deutscher Investor Relations Verband (DIRK – German Investor Relations Association) with the “Deutscher Investor Relations Preis 2010” in the MDAX category.

www.iimagazine.com
www.dirk.org
 

In the pan-European “Extel Survey”, we are pleased to announce that our capital market team was consistently placed among the top ten in the sector in the relevant categories.

www.extelsurveys.com

Annual report also wins awards

Our 2009 annual report entitled “The Euro-Shopper” was awarded the highly acclaimed “red dot” in the red dot design award, one of the largest and most prestigious design competitions in the world. This is the second “red dot” that Deutsche EuroShop has received for an annual report: the previous one was in 2007 for the “Feel Estate” report.

www.red-dot.de
 

In the “LACP 2010 Vision Awards Annual Competition” of the LACP (League of American Communications Professionals), our financial report was awarded bronze in the “Real Estate / REIT” category, with 96 out of a possible 100 points.

www.lacp.com
 

Further awards for our capital market communication can be found on our website at unter:

www.deutsche-euroshop.com/ircommunication

Stable shareholder structure

Enlarge picture

The number of investors rose further in 2010; Deutsche EuroShop now has around 10,000 shareholders (as at: 31 March 2011, previous year: 9,450, +6%). The structural distribution has hardly changed: institutional investors hold around 52.5% (previous year: 53.0%) of the shares, and private investors around 29.2% (previous year: 29.0%). The Otto family’s stake is 15%. The investment company BlackRock reports that it currently holds 3.3% of the shares.

Enlarge picture

The proportion of the Company held by foreign investors fell by two percentage points. Slight changes can be seen in the country distribution, with the proportion of US and Belgian investors, in particular, rising again, as in the previous year (by 1.8 and 0.7 percentage points respectively). However, the strongest increase in 2010 was in the proportion of British shareholders (up by 2.3 percentage points). South African and French investors were net sellers.

Dividend continuity

The Executive and Supervisory Boards will propose payment of a dividend of €1.10 per share for financial year 2010 to the Annual General Meeting in Hamburg of 16 June 2011. With our long-term strategy of a dividend policy based on continuity and a yield of 3.8% (based on the 2010 year-end closing price of €28.98), we hope to cement further the confidence of our existing shareholders and attract new investors. We also intend to distribute a dividend of at least €1.10 per share in future.

Tax free dividend

Enlarge picture

Dividends paid to shareholders domiciled in Germany are generally subject to income or corporation tax. Private investors are charged with the definitive withholding tax at a flat rate of 25% plus the solidarity surcharge as from 2009. Exceptions may be made under certain circumstances for dividend payments that are regarded as equity repayments for tax purposes (distributions from EK04 – equity class 04 – or, since 2001, from the tax-recognised contribution account). Deutsche EuroShop’s dividend fulfils this requirement. The dividend payment constitutes untaxable (i.e. tax-free) income for shareholders in accordance with section 20 (1) clause 1 sentence 3 of the Einkommensteuergesetz (German Income Tax Act).

However since 2009 these distributions are taxable due to the new legal status, as capital gains from securities are subject to tax if they are bought after 31 December 2008. In this case the acquisition costs are reduced by the dividends and lead to higher capital gains at the time of the disposal.

Would you like further information?
Then please visit our website 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: ir@deutsche-euroshop.com
Web: www.deutsche-euroshop.com/ir