Our investment strategy continues to focus clearly on Germany. 77% of our equity is invested here. Our biggest investment property is the Rhein-Neckar-Zentrum in Viernheim. The retail areas of Deutsche EuroShop’s 14 shopping centers are 100% leased, while the overall figure – including the office space in the individual shopping centers – is over 99%. The centers are located in catchment areas with a population of almost 12 million people. In Germany, our shopping centers reach over one tenth of the population.

	In Germany	Abroad	Total
Leasable space in m²	405,400	120,600	526,000
Parking spaces	15,260	4,720	19,980
No. of shops	rd. 850	rd. 440	rd. 1,290
Occupancy rate*	99%	100%	99%
Catchment area	8.8 Mio.	3.0 Mio.	11.8 Mio.

Center debuts

On 31 March 2004, Árkád Pécs, Hungary, in which we have a 50% interest, was opened on schedule and with 130 shops fully leased. The shopping center was well-received by the public and is developing into a new shopping focus for southwest Hungary as planned.

On 29 September 2004, Hamburg-Harburg’s new shopping attraction celebrated its debut: the Phoenix-Center with around 110 specialist shops, cafes and restaurants on three light-filled levels, and with a total retail space of around 26,500 m², offers an inspiring new shopping experience. All shop space is leased for the long term.

In the current financial year 2005, there was another premiere with the grand opening of the Forum Wetzlar – one of the biggest city-center shopping centers in Hessen. All of the 110 specialist shops, cafes and restaurants in the state-of-the-art center, which offers a new shopping experience on a retail space of around 23,500 m², are leased for the long term. The anchor tenants include a specialist consumer electronics retailer (Media Markt) and a self-service department store (Kaufland), among others.

Portfolio changes abroad

In mid-July 2004, we sold the Centro Commerciale Friuli shopping center in Udine, Italy for € 62 million to SEB Immobilien-Investment GmbH as part of our portfolio optimisation activities.

We were able to reinvest around one half of the sale proceeds at the beginning of August 2004: Deutsche EuroShop entered the Austrian market for the first time, acquiring a 50% interest in the City-Arkaden in Klagenfurt, which is scheduled to open in spring 2006. Our share of the investment volume amounts to almost € 75 million.

The shopping center offers 120 specialist shops on three levels with a total retail space of around 27,000 m². A further 3,000 m² will be available for restaurants and catering and ancillary retail services. Construction was begun in mid-September 2004. Over 65% of the shop space (as at March 2005) has already been leased long-term to well-known retail companies.

Low dependence on the top 10 tenants

Thanks to our diversification, our dependence on individual tenants remains low, as can be seen from the following chart.

Tenant mix by share of rental income in %

External center management

Active, reliable center management is particularly important for our constantly growing portfolio (more details on this topic are contained in the “Feature” on page 32). ECE Projektmangement is responsible for twelve of our centers; the other two centers are managed by Espansione Commerciale and Unibail.

ECE Projektmanagement

ECE Projektmanagement G.m.b.H. & Co. KG has implemented, leased and managed shopping centers since 1965. With 80 city-center shopping centers and district centers under management, the company is the market leader in Europe.

www.ece.de

Espansione Commerciale

Espansione Commerciale S.r.l. is responsible for the management of the Centro Commerciale Tuscia in Viterbo, Italy. Founded almost 20 years ago, the company currently manages 34 shopping centers in Italy and Eastern Europe.

www.espansione.com

Unibail – Espace Expansion

Shopping Etrembières in Annemasse, France is managed by Espace Expansion. Unibail is one of the leading management companies in France in this area: it has been successfully managing shopping centers for 30 years, and currently looks after 26.

www.unibail.fr

It’s all in the mix

The right mixture of shops is a decisive factor for the success of a shopping center. Leasing experts draw up an individual sector mix for each center that is tailored to the respective location. Our shopping centers offer the entire range of specialist retailers, with the area of fashion being a key focus. The offering covers clothing chains, specialist shops for jeans and leisurewear, menswear, numerous fashion boutiques, as well as a broad range of specialist shops for shoes, leather goods and accessories. Well-known brand manufacturers are to be found in close proximity. These include Esprit, S.Oliver, Zara and also clothing chain stores such as P&C, C&A, H&M or Breuninger, to name but a few.

Sector mix in% of space

Promotions attract visitors

The tenants’ advertising associations in the individual centers provide a constant stream of attractive promotions such as exhibitions, fashion shows and presentations by regional associations. There is no limit to the range of topics: whatever interests people should be covered in our centers. On peak days, individual centers attract up to 50,000 visitors.

Long-term agreements guarantee rental income

Rental agreements are generally of a long-term nature. 86% of rental income is contractually guaranteed until at least 2010, as can be seen in the following table:

Term of contracts* in %