DEMIRE Deutsche Mittelstand Real Estate AG

M&A Activity • Sep 11, 2007

News Details

Corporate | 11 September 2007 08:30

First Investment by MAGNAT in Georgia; Acquisition of land plot in Tbilisi for project ‘Digomi Shopping’

MAGNAT Real Estate Opportunities GmbH & Co. KGaA / Miscellaneous

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++ First Investment by MAGNAT in Georgia

++ Acquisition of land plot in Tbilisi with local partner for project
'Digomi Shopping'

++ Extraordinary high profit potential of attractive project, supported by
strongly expanding economy

MAGNAT Real Estate Opportunities GmbH & Co. KGaA has, together with a local
partner and a further co-investor, acquired a 20,136 sqm land plot in
Tbilisi, the capital of Georgia. The purchase was effected through a local
project company, in which MAGNAT holds a majority of 56.25%.

The land plot is designated for construction of a speciality retail market
with up to 30.000 sqm of total usable space and 300 parking spaces.
Appropriate zoning of the land is available. Filings for the required
building permit will be completed in the first quarter of 2008; completion
of the project is planned for 2009. The location, approximately 10
kilometers north of the city center of Tbilisi and in the immediate
vicinity of the newly built American embassy, is situated directly at the
main routes and has evolved as one of the important retail- and shopping
centers in the periphery of Tbilisi.

Total project costs will amount to USD 20 million. The investment by MAGNAT
for its 56,25% share of the land plot is USD 2 million. Due to the strong
demand for commercial premises and the favourable land and construction
costs, MAGNAT expects that a rental yield (rental income in relation to
total costs) of up to 30% can be achieved. On this basis, upon sale of the
property a development yield of up to 100% on capital invested is possible.

Georgia’s economy has had a high annual GDP growth (real) of 8% p.a. on
average for several years in a row. Considering the solid basis of its
economic development in conjunction with a still significant
upside-potential – GDP / capita is at approx. USD 2.000 – the prerequisites
for continued strong economic growth are granted. Georgia has 4.5 million
inhabitants (herof more than one million living in the capital Tbilisi) and
has evidenced increasing pro-western orientation in the past years,
resulting in continuously increasing activity of western investors.

Jan Oliver Rüster, CEO of MAGNAT: 'After careful evaluation, with our
co-investment project 'Digomi Shopping', we realize our first investment in
Georgia. The crucial factors for our decision were the positive investment
climate in Georgia combined with high growth rates, the attractiveness of
the project and the cooperation with an experienced local partner with
long-standing business experience also in Germany. Entering Georgia is the
consequent prosecution of our strategy to invest in countries that show an
attractive return-/risk profile that is above average.'

++ About MAGNAT:
MAGNAT is a real estate company with a focus on real estate development in
Eastern European countries. Seed investors were the Silvia Quandt family,
the two financial investors Themis Equity Partners and Heliad Equity
Partners, and the management.

With its opportunistic strategy, MAGNAT capitalizes on inefficiencies in
real estate markets. In contrast to traditional investment strategies,
MAGNAT not only benefits from rental income, but also and primarily from
attractive development yields and the comparable short time of capital
employed in its projects. All projects must meet an above-average yield
requirement.

Management focuses on real estate markets with interesting development
cycles, i.e. undervalued markets ('anti-cyclical investing') and markets
with high economic growth rates ('growth markets'). The regional focus is
currently on Central, Eastern and South-Eastern Europe, supplemented by
opportunistic, special situations in the German home market.

Contact:

MAGNAT Real Estate Opportunities GmbH & Co. KGaA
Grueneburgweg 18
D - 60322 Frankfurt am Main

Investor Relations:
Jan O. Rüster, CEO, Tel.: +49 (0) 69 719 189 79 **0
E-Mail: jan.ruester@magnat-reop.com

Press Relations:
edicto GmbH
Axel Mühlhaus / Werner Rüppel
Tel.: +49 (0) 69-90550 55-2
E-Mail: amuehlhaus@edicto.de

11.09.2007 Financial News transmitted by DGAP
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