The international financial markets were comparatively stable in 2004. With economic activity still moderate, the oil price rising to record highs and the US dollar weak, the momentum achieved in the previous year eased slightly. Nevertheless, leading European equity indices closed the year on an upward note. Investors continued to favour second-line stocks. This also benefited Deutsche EuroShop’s shares, which in September were admitted to the MDAX, Germany’s leading mid-cap index.

DAX, MDAX and SDAX „in“, TecDAX „out“

Events on the DAX, Germany’s premier equity index, were calmer in 2004 than they had been in previous years (2002: -44%, 2003: +37%). The index rose by 7.3% overall, from 3,965 to 4,256 points, and was thus only slightly down on its 52-week high on the last day of trading. As in 2003, second-line stocks last year met with keen interest on the part of investors: the MDAX index of mid-cap stocks gained 20.3% from its 2003 year-end close and climbed to a new all-time high, surpassing even the previous high reached in March 2000. The SDAX, comprising the top 50 companies below the MDAX, rose even more sharply, adding 21.6% in the course of the year. Only the TecDAX, the benchmark index for technology and growth stocks, recorded a slight fall of 3.8%.

Stock market development in 2004
in %

Deutsche EuroShop shares hit record high

Shortly before the end of the year, our shares exceeded their previous record level reached in 2001. On the penultimate day of trading, Deutsche EuroShop shares were at a new all-time high of € 38.88. They had started the year at € 33.75 and during the first six months followed a stable upward trajectory, with prices around the € 35.00 mark. As happens every year, buying interest increased a few weeks ahead of the Annual General Meeting, causing a sharp rise in the share price to almost € 38.00. This interest waned following the dividend payment on 18 June, and in August the share price dropped back to below € 33.00. In mid-August 2004, the share price found its floor and subsequently trended up. Our shares ended financial year 2004 at € 38.51. Deutsche EuroShop’s market capitalisation rose by around € 75 million, from € 527 million at the end of 2003 to € 602 million at the end of 2004

Performance nearly 20%

Including the dividend of € 1.92 per share, the year-on-year performance of Deutsche EuroShop’s shares was 19.8%. The share price rose by 14.1%. Deutsche EuroShop’s shares therefore slightly underperformed other listed German property companies and their European peer group *), but were also less volatile. Shares in open-ended real estate funds, with which we are also competing for investor capital, added an average of 3.3% in 2004 (2003: 3.3%).

*) Corio, Eurocommercial Properties, Klepierre, Liberty International und Rodamco Europe

Trend of the share
in %

Deutsche EuroShop achieves goal of admission to the MDAX

On 20 September 2004, Deutsche EuroShop’s shares joined the MDAX, the German mid-cap index. Deutsche Börse AG’s Equity Indices Working Group gave the go-ahead for the switch to the MDAX after our shares fulfilled both criteria (market capitalisation and market turnover) required for admission to the index for the first time in August. This means that we achieved one of our most important medium-term goals just 18 months after joining the Prime Standard. Our average daily trading volume almost tripled, rising from 6,200 shares in the previous year to 18,300 shares in financial year 2004 and thus cementing our place in the MDAX.

MDAX ranking trend

1) Calculation on monthly basis
2) Calculation on yearly basis

Admission to other leading indices

As expected, our shares were admitted to the EPRA Index (European Public Real Estate Association), a leading global index for property shares, on 1 January 2004. Then in April 2004, they were admitted to the second recognised index for property shares, the GPR 250 (GPR – Global Property Research). We hope that the increased profile that comes with belonging to the various indices will enable us to reach even more investors and convince them of the benefits of our shopping center shares.

Trend of the share
indexed (basis 1 January 2004 = 0)

Intensive Investor Relations activities

In 2004, we continued our IR activities, which aim to attract additional investors for Deutsche EuroShop’s shares. We presented our Company to international investors at seven national and international roadshows and four major capital market conferences, where we met with a positive response. We also held numerous one-on-one meetings with investors and analysts. Nine analysts (as at 31 March 2005) at well-known institutions in Germany and other European countries now monitor our shares on a regular basis, opening up new groups of investors as a result of their recommendations. For further information on the individual recommendations, please visit our website at Other banks are also planning to start research coverage of Deutsche EuroShop.

Annual General Meeting approves all agenda items

One of the most important IR events each year is the Ordinary General Meeting, which last financial year we convened for 17 June in Frankfurt am Main. The 120 or so shareholders in attendance represented 67.6% of the capital and unambiguously approved all agenda items with over 99.6% of the votes. The main items on the agenda concerned the creation of authorised capital, the relocation of the Company’s domicile from Eschborn to Hamburg and the election or re-election of three Supervisory Board members. In this context, DB Real Estate Management GmbH completed the process of hiving off Deutsche EuroShop from the Deutsche Bank Group by foregoing its right, in accordance with the Articles of Association, to appoint two Supervisory Board members.

Awards for IR activities and annual report

In 2004, Deutsche EuroShop received the “Capital Investor Relations Prize” in the SDAX category for its investor relations activities. Each year, the financial magazine Capital awards this well-known prize in recognition of the best communication with the financial markets, judging companies on the criteria timeliness, credibility, quality and corporate governance. We took part in Manager Magazin’s “Best Annual Report” ranking for the first time with our 2003 annual report and ranked a respectable fourth in the SDAX category, only just failing to make it into the top three. In the “International ARC Awards – The World’s Best Annual Reports” competition, our 2003 annual report received two awards, one in the “Real Estate” category and one in the “Judges’ Choice” category.

Online IR content even more informative

In June 2004, we re-launched our website with an improved structure and new layout. While the modern design follows the annual and quarterly reports, we have focused the content even more tightly on investor relations and providing information for the capital markets. New features include our online annual report, which enables readers to gain a quick overview of business developments on the Internet – with just a few clicks and without a long search. It was so well received by our online visitors that we will also prepare interactive, online versions of our quarterly reports in future ( In the IR Benchmark 2004 ranking by NetFederation and Handelsblatt, which focused mainly on content and service, the new website went straight to third place in the MDAX.

Registered shares: service and shareholder relationships

Unlike the more common bearer shares, our registered shares offer us the opportunity to “spoil” our shareholders with extra services. For example, Deutsche EuroShop’s shareholders regularly receive all interim and annual reports by post – something that contributes greatly to enhanced shareholder relationships and loyalty. Via our website, shareholders can view and update the addresses stored for them in the share register and add an e-mail address, for example. There are currently around 7,000 shareholders (as at 31 March 2005) on Deutsche EuroShop’s register, over 15% more than there were in March 2004.

Changes to the shareholder structure

In financial year 2004, the percentage of institutional investors among Deutsche EuroShop’s shareholders rose from 19% to 30%. At the same time, foreign interest in Deutsche EuroShop increased considerably: while just 2% of investors were based abroad at the beginning of 2004, the figure had risen to almost 13% in March 2005.

Shareholder structure (as at 31 March 2005)
in %

Property Share Initiative arouses considerable interest

On 21 October 2004, around 150 industry experts, investors, analysts and journalists from Germany and abroad met in Frankfurt am Main for the fourth Initiative Immobilien-Aktie (Property Share Initiative) conference. Interest in this initiative, which was co-founded by Deutsche EuroShop, grows from year to year. For the first time, the event was designed as a capital market conference: in addition to Deutsche EuroShop, six other listed German property companies gave presentations, and a number of one-on-one and group meetings with investors and analysts took place during the event. The main subject of the fourth conference was the possible introduction in Germany of REITs (Real Estate Investment Trusts).

REITs – An Overview

The new property shares
The world’s first REIT structures were introduced in the USA in the early 1960s. Like the Nasdaq, REITs – a new form of property company – were not a success story from the outset. It took several years for the long inefficient property sector to change radically. Just under 200 REITs with a market capitalisation of over USD 250 billion are now listed on the US stock markets. A further 18 countries, including the Netherlands (1969), Australia (1985), Italy (1994), Japan (2000) and lastly France (2003), have adapted the model successfully. Germany and the UK plan to introduce REITs in the coming year.

Tax transparency and flexibility
REITs are listed property companies that are exempt from corporation and trade tax at corporate level provided that they distribute most of their income to the investors and also fulfil further requirements. Shareholders pay tax on the dividends at their personal tax rate. However, the ‘half-income system’, whereby only half of the total dividend is subject to tax, does not apply to these shareholders as it does to shareholders in other types of incorporated firm. A mixture of a property fund and a listed property company, REITs therefore offer investors a vehicle tantamount to, but much more flexible than, a tax-transparent direct investment in property.

Market potential
German investors wishing to invest flexibly in property have so far had only two alternatives: open-ended property funds and property shares. Some funds ran into a crisis in 2004 and are having to cope with outflows of funds and a tarnished image. Of the roughly 40 listed property companies in Germany, only three are of international dimensions in terms of size and market turnover. These three companies have a combined market capitalisation of almost € 3 billion. This is despite the fact that Germany is the largest property market in Europe. Together, open-ended and closed-end property funds manage around € 250 billion – the majority of the real property assets held by institutionals. Initiative Finanzstandort Deutschland (IFD – Finance Initiative Germany) expects the market capitalisation of German REITs (G-REITs) to be almost € 130 billion in 2010. This is roughly the current volume of the MDAX (as at mid-March 2005).

Investor Protection Improvement Act in force

The Anlegerschutzverbesserungsgesetz (AnSVG – Investor Protection Improvement Act) has been in force since 30 October 2004. It implements the European Market Abuse Directive into national law and reformulates and tightens the legislation governing insider trading, ad hoc disclosures and directors’ dealings. At the same time, a series of new and extensive requirements were put in place, such as the requirement to maintain insider lists. Deutsche EuroShop's actions and communication have always been based on transparency and honesty. We therefore welcome the introduction of this Act and support its further development and implementation.

Fully international in 2005

By preparing our annual financial statements in accordance with IFRSs, we are removing a handicap that, under HGB accounting, previously made it difficult for us to communicate with investors outside Germany. Our results are now internationally comparable and require fewer explanatory notes. Having laid the foundations in this way, our goal this year is to increase awareness abroad of Deutsche EuroShop’s positive outlook and potential, but without neglecting our domestic market. Foreign investors are increasingly interested in our shares – not least due to the plans to introduce REITs in Germany. Between November 2004 and March 2005 alone, their share in the Company more than tripled from 4% to almost 13%.

Dividend constantly high

The Executive Board and the Supervisory Board will again propose the distribution of a dividend of € 1.92 per share for financial year 2004 to the Annual General Meeting, which is to be held in Hamburg on 23 June 2005. With our long-term strategy of a dividend policy based on continuity and a comparatively high yield of around 5% (on the 2004 year-end closing price of € 38.51), we hope to cement the confidence of our existing shareholders and attract new shareholders. In future too, we intend to distribute a dividend of at least € 1.92 per share.

Tax-free dividend

What is special about our dividend is its tax-free status for shareholders domiciled in Germany. Dividends paid to shareholders domiciled in Germany are generally subject to income or corporation tax. 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) number 1 sentence 3 of the Einkommensteuergesetz (German Income Tax Act). According to our current planning, we will be able to continue to distribute a tax-free dividend for at least seven more years.

Deutsche EuroShop Shares – Key Figures
WKN / ISIN 748 020 / DE 000 748 020 4
Ticker symbol DEQ
Share capital in € 20,000,000
Number of shares
(no-par value registered shares)
Indices MDAX, EPRA, GPR 250, EPIX 30
Official market Prime Standard,
Frankfurt Stock Exchange and Xetra
OTC markets

Berlin-Bremen, Dusseldorf,
Hamburg, Munich and Stuttgart

  2004 2003 2002 2001  
Market capitalisation (basis:
year-end closing price) (€m)
602 527 484 477  
High (€) 38.88
Low (€) 32.90
Year-end closing price (31 Dec.) (€) 38.51 33.75 31.00 30.50  
Dividend per share (€) 1.92 (1) 1.92 1.92 1.92  
Dividend yield (31 Dec.) (%) 5.0 5.7 6.2 6.3  
Annual performance excl./incl. dividend 14.1 %/19.8 % 8.9 %/15.1 % 1.6 %/7.9 % -20.6 %/ -  
Average daily trading volume
18,349 6,219 1,779 2,756  
EPS (€) 1.78 (2) 1.22 (2) -0.18 (3) -0.96 (3)  
CFPS (€) 2.37 0.98 - -  

All share price information up to 2002 relates to the Frankfurt Stock Exchange; all information from 2003 onwards
relates to Xetra.
1) proposed
2) IFRS accounting
3) HGB accounting

Would you like further information?
Then visit our website or call us:

Patrick Kiss

Tel.: +49 (0)40 - 41 35 79 20
Fax: +49 (0)40 - 41 35 79 29












Keen interest in second-line stocks












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Foreign investors discover
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