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DES GB2015 Englisch

Market report dated Net initial yield 2014 Net initial yield 2015 Differ- ence 2014 to 2015 CBRE 4.50% 4.10% -0.40% BNP 4.50% 4.10% -0.40% Cushman Wakefield LLP 4.40% 3.95% -0.45% Change from 2014 to 2015 -0.40% to -0.45% Market reports indicate that peak yields from first-class shopping centers in prime locations in Germany have fallen by some 0.40%, with a similar trend also being observed at second-tier locations. Alongside the main parameters influencing the forecast rate of rent in- creases and the cost ratio, then, the change in market yields was the dominant factor influencing the valuation of the Group’s properties (€220.6 million) and those belonging to the companies in which it has invested and which are recognised at equity (€47.2 million). Borrowing and initial rental costs that are directly attributable to the acquisition, construction or production of a qualifying asset are includ- ed 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 in- vestment of specifically borrowed funds up to the point when these are used to obtain qualifying assets is deducted from the capitalisable 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 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 2015: in € thousand Level 1 Level 2 Level 3 Investment properties 0 0 3,356,655 There were no reclassifications between the hierarchical levels in the current financial year. LEASE AGREEMENTS In line with IAS 17, the tenancy agreements in the Deutsche EuroShop Group are classified as operating leases. The operating lease agree- ments relate to investment property owned by the Group with long-term leases. Rental income from operating leases is recognised in income on a straight-line basis over the term of the corresponding lease. The lessee has no opportunity to acquire the property at the end of the term. FINANCIAL INSTRUMENTS Financial assets and liabilities are recognised in the consolidated bal- ance sheet when the Group becomes a party to the contractual provi- sions governing the financial instrument. Financial instruments are generally recognised at fair value. The fair value is defined as the price that would be accepted or paid to transfer a liability in an arm’s length transaction between market participants. When measuring the fair value, it is assumed that the transaction upon which the price is based occurs on a main market to which the Group has access. The price is measured based on the assumptions that mar- ket participants would use for pricing. When determining fair value, a distinction is made between three assessment categories in accordance with IFRS 13: Level 1: At the first level of the “fair value hierarchy”, fair values are determined using publicly quoted market prices, as the best-possible objective indication of the fair value of a finan- cial asset or liability can be observed on an active market. Level 2: If there is no active market for an instrument, a company deter- mines the fair value using measurement models. These mod- els include use of the most recent arm’s-length transactions between knowledgeable and willing parties, comparison with the current fair value of another, essentially identical financial instrument, use of the discounted cash flow method and option pricing models. The fair value is estimated on the basis of the results of a method of measurement that uses data from the market to the greatest possible extent and is based as little as possible on company-specific data. 153 CONSOLIDATED FINANCIAL STATEMENTS Investment properties 003,356,655

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