Deutsche EuroShop AG — Call Transcript 2017

Mar 8, 2017

CONFERENCE CALL

FY2016 – PRELIMINARY RESULTS

8 MARCH 2017

RETAIL TURNOVER 20161

Retail sector	% change in 2016	rent-to-sales ratio in %	% of sales	% of space
Department stores	-0.8	6.1	7.8	13.5
Food	-1.5	7.5	9.2	6.5
Fashion textiles	-0.9	12.2	29.7	38.9
Shoes & leather goods	-1.9	14.7	5.7	7.0
Sports	-2.9	9.3	4.1	4.8
Health & beauty	-0.1	7.1	11.8	5.9
General retail	-1.6	11.0	8.6	9.3
Electronics	0.8	4.2	13.5	8.1
Services	-0.1	4.8	5.0	1.7
Food catering	-0.1	13.2	4.6	4.3
Total	-0.75	9.2	100.0	100.0

RETAILERS

• Retail turnover development on a like-for-like basis: Germany -0.75%, abroad +1.3% DES-Portfolio overall: -0.5%
• Absolute turnover development: Germany -0.1%, abroad +1.1% DES-Portfolio overall: +0.0%

1 German centers on a like-for-like basis (turnover: €2.1 billion)

ACQUISITION OF SAARPARK-CENTER NEUNKIRCHEN

• Deutsche EuroShop acquired a 50% participation in the Saarpark-Center SPV from BAT Custodian
• Effective from 1 Oct. 2016
• Total investment: approx. €113 million (50%)
• Expected annualised rents effective from 2017: €12.8 million (100%)
• Expected NOI yield: 5.0%
• At-equity consolidation of the SPV

SHOPPING CENTERS

SHOPPING CENTERS

TENANTS STRUCTURE TOP 10 TENANTS1

	2016	2015
Metro Group2	4.7%	4.5%
H&M	3.6%	3.4%
New Yorker	2.4%	2.3%
Peek & Cloppenburg	2.2%	2.1%
Deichmann	2.0%	1.8%
Douglas3	2.0%	2.1%
C&A	1.9%	1.5%
REWE	1.7%	1.6%
dm-drogerie markt	1.4%	1.2%
Thalia	1.3%	1.0%
Total	23.2%	21.5%

Low level of dependence on the top 10 tenants

Other tenants

1 in % of total rents as at 31 Dec. 2016 2 excluding Kaufhof 3 perfumeries only

SHOPPING CENTERS

MATURITY DISTRIBUTION OF RENTAL CONTRACTS1

Weighted maturity 5.7 years

¹ as % of rental income as at 31 Dec. 2016

TARGET – PERFORMANCE COMPARISON

PROFIT AND LOSS ACCOUNT

in € thousand	01.01. – 31.12.2016	01.01 – 31.12.2015	Change
Revenue	205,136	202,854	1%
Property operating and management costs	-20,398	-19,383
Net operating income	184,738	183,471	1%
Other operating income	1,410	800
Corporate costs	-7,522	-7,975
EBIT	178,626	176,296	1%
Other financial income and expenses	2,530	2,274
Interest income	118	229
Interest expense	-52,918	-55,980
At equity result	54,283	68,355
Profit/loss attributable to limited partners	-17,894	-17,020
Net finance costs	-13,881	-2,142	> 100%
Measurement gains/losses	116,774	220,556
EBT	281,519	394,710	-29%
Taxes	-59,762	-85,428
Consolidated profit	221,757	309,282	-28%

VALUATION – INVESTMENT PROPERTIES 2016

in € thousand	2016	2015	Change
Revaluation	148,350	285,408	-137,058
Revaluation at-equity	28,711	47,180	-18,469
Acquisition expenses	-686	-476	-210
Minority interest	-30,890	-64,376	33,486
Valuation result before taxes	145,485	267,736	-122,251
Deferred taxes	-48,804	-78,070	29,266
Valuation result after taxes (attributable to Group shareholders)	96,681	189,666	-92,985

Like-for-like measurement gains: +4.6%

FINANCIALS

FINANCIALS

VALUATION1 – INVESTMENT PROPERTIES 2016

SENSITIVITY ANALYSIS

in € thousand	Basis	change of -25bps	change of +25bps
Rent increase rates	1.39%	-101,100	+148,000
Discount rate	5.97%	+69,000	-69,200
Capitalization rate	5.21%	+114,200	-106,600
Cost ratio	10.17%	+10,400	-9,000

¹ External appraisers: since 2015: JLL

REVENUE BRIDGE 2016

€m			FINANCIALS
	Like for like growth:
	$+2.2 = 1.1\%$	205.1
202.9
2015	Increase in rents	2016

NET FINANCE COST BRIDGE 2016

€m FINANCIALS

* incl. valuation

FINANCIALS

EBT BRIDGE 2016

€m

PROFIT BRIDGE 2016

EARNINGS PER SHARE (EPRA)

in € thousand	2016	per share1	20152	per share1
Consolidated net profit	221,757	€4.11	309,282	€5.73
- IAS 40 valuation	-116,774	€-2.16	-220,556	€-4.09
- At-equity valuation	-28,711	€-0.55	-47,180	€-0.87
- Swaps	-2,910	€-0,05	-2,231	€-0,04
+ Deferred taxes	49,220	€0.91	78,423	€1.45
+ Acquisition costs on Share deal	1,093	€0.02	0	€0.00
EPRA Earnings	123,675	€2.29	117,738	€2.18
Number of shares (adj.)	53,945,536		53,945,536

FINANCIALS

• 1 The sum of the earnings per share amounts may not equal the totals due to rounding
• 2 The determination of EPRA earnings was adjusted for the 2016 financial year and the prior-year values restated accordingly. The increase in the prioryear value is the result of the adjusted recognition of deferred taxes in the calculation of this figure.

FUNDS FROM OPERATIONS (FFO)

in € thousand	2016	per share1	2015	per share1
Consolidated net profit	221,757	€4.11	309,282	€5.73
- IAS 40 valuation	-116,774	€-2.16	-220,556	€-4.09
- At-equity valuation	-28,711	€-0.53	-47,180	€-0.87
+ Costs conversion privilege	967	€0.02	967	€0.02
+ Deferred taxes (with at-equity)	52,650	€0.97	80,851	€1.50
FFO	129,889	€2.41	123,364	€2.29
FFO without Saarpark-Center	128,815	€2.39
Number of shares (adj.)	53,945,536		53,945,536

1 The sum of the amounts may not equal the totals due to rounding ² 2012 - 2016, Compound Annual Growth Rate (CAGR) € 1.68 2.08 2.23 2.29 2.41 2012 2013 2014 2015 2016 +9.4%2

FINANCIALS

BALANCE SHEET

in € thousand	31.12.2016	31.12.2015	Change
Non-current assets	4,036,533	3,768,118	268,415
Current assets	77,924	83,496	-5,572
Total assets	4,114,457	3,851,614	262,843
Group equity	1,916,148	1,767,859	148,289
Right to redeem of limited partners	324,559	293,113	31,446
Total equity	2,240,707	2,060,972	179,735
Financial liabilities	1,445,581	1,407,607	37,974
Deferred tax liabilities	359,365	309,528	49,837
Other liabilities	68,804	73,507	-4,703
Total equity and liabilities	4,114,457	3,851,614	262,843

	31.12.2016	31.12.2015
Equity ratio1	54.5%	53.5%
LTV ratio	34.2%	35.5%

¹ incl. non controlling interests

NET ASSET VALUE (EPRA)

in € thousand	2016		20151		Change2
	total	per share	total	per share
Equity	1,916,148	€35.52	1,767,859	€32.77	8.4%
Deferred taxes	365,927	€6.78	316,908	€5.87	15.5%
Fair value of Swaps	50,499	€0.94	50,452	€0.94	0.1%
NAV EPRA	2,332,574	€43.24	2,135,219	€39.58	9.2%
Number of shares	53,945,536		53,945,536

NUMBER OF SHARES

NAV PER SHARE

FINANCIALS

1 The determination of the EPRA NAV was adjusted for the 2016 financial year and the 2015 values restated accordingly. The increase in the prioryear value is the result of the adjusted recognition of deferred taxes in the calculation of this figure. 2 of total amount

LOAN STRUCTURE INCL. CONVERTIBLE BONDS1,2

Interest lockin	Duration	Principle amounts (€ million)	Share of total loan	avg. interest rate
Up to 1 year		274.1	19.0%	1.26%
1 to 5 years	3.8	578.5	40.2%	4.34%
5 to 10 years	6.9	524.8	36.4%	3.14%
Over 10 years	11.0	63.0	4.4%	5.25%
20161 Total	5.1	1,440.4	100%	3.67%

¹ as of 30 Dec. 2016 2 excl. at-equity consolidated loans

FINANCIALS

MATURITIES UNTIL 20221,2

in € million	end of fixed interest periods respectively expiring loans	avg. interest rate	regular redemption payments	total maturities
2017	98.7 Convertible Bond	1.75%	16.5	115.2
2018	72.1	4.60%	17.8	89.9
2019	123.1	4.73%	14.7	137.8
2020	134.1	4.52%	10.1	144.2
2021	198.3	4.48%	8.2	206.5
2022	217.8	3.26%	7.8	225.7
	844.1

At-equity consolidated loans1

in € million	End of fixed interest periods respectively expiring loans	Avg. interest rate	DES' share
2017-2019	0
2020	35.0	4.00%	50%
2021	63.3	4.59%	50%
2022	0

Phoenix-Center, Hamburg, Saarpark-Center, Neunkirchen Saarpark-Center, Neunkirchen

¹ as of 31 Dec. 2016 2 excl. at-equity consolidated loans

OUTLOOK COMPANY

• Acquisition and integration of Olympia Brno
• Refinancings of approx. €200 million in the coming weeks
• Increase in dividend to €1.40 per share for all shares

Save the date:

Deutsche EuroShop Real Estate Summer in Brno on 5th & 6th September 2017

ACQUISITION DETAILS

OLYMPIA BRNO

03.2017

SHOPPING CENTERS

CENTER DETAILS

Investment:	100%
Lettable space:	85,000 sqm
Number of shops:	approx. 200
Occupancy:	98.5%
Parking:	approx. 4,000
Catchment area:	approx. 1.2 m. inhabitants
Opening/refurbishment:	1999/2014-2016
Anchor tenants:	H&M, Intersport, P&C Dusseldorf, Albert Hypermarket, Cinema City, Asko, C&A

Website: www.olympia-centrum.cz/en

FACTS & FIGURES

SHOPPING CENTERS

Operational KPIs
------------------	--

Productivity:	€2,550 per sqm
Average shop rent:	€19.25 per sqm & mth
Visitors 2015:	8.00 million
Rent-to-sales ratio:	10.1%
Occupancy rate:	98.5%
Weighted average lease term:	5.8 yrs

Brno
Capital of Southern Moravia region
Population:	City approx. 380,000 Metropolitan approx. 600,000 Regional approx. 1.2 million
Purchasing power index*:	109.2
Unemployment rate**:	4.2%
Website:	www.brno.cz

* Czech average = 100 ** Czech average = 4.6%

MAP OF THE PORTFOLIO

DES' 1ST CENTER IN CZECH REPUBLIC, 21ST OVERALL

SHOPPING CENTERS

LOCATION

• Strategically well placed
• Excellent visibility
• Very good infrastructure
• 4,000 parkings
• Central and convenient location
• Bus stops in front of the center

SHOPPING CENTERS

FLOORPLANS

SHOPPING CENTERS

TENANT MIX1

¹ as % of rental space

EXPIRY PROFILE OF RENTAL CONTRACTS1

SHOPPING CENTERS

as % of rental income

SHOPPING CENTERS

CATCHMENT AREA / COMPETITION

IMPRESSIONS - OUTSIDE

SHOPPING CENTERS

IMPRESSIONS - OUTSIDE

SHOPPING CENTERS

8 March 2017 FY2016 – Preliminary Results 32

IMPRESSIONS - INSIDE

SHOPPING CENTERS

FINANCIALS

FINANCIAL DETAILS

• Deutsche EuroShop acquires 100% of the shares in Olympia SPV from Rockspring and ECE European Prime Shopping Centre Fund I (50% each)
• Expected closing in H1 2017
• Total investment: approx. €382 million, net purchase price excl. debt of SPV and excl. acquisition costs: approx. €207 million
• financing by long term debt (approx. €217 million, 57%) and proceeds of capital increase (approx. €165 million, 43%)
• Expected annualised rents 2017: €20.1 million
• Expected NOI yield: 5.1%, expected net initial yield: 5.0%
• The SPV will be fully consolidated

Guidance for 2017 will be adjusted after the closing of the transaction, presumably with the publication of the annual report 2016

FINANCIAL CALENDAR

2017

23.03.	HSBC RE Conference, Frankfurt
25.03.	Stock Exchange Day, Munich
28.03.	Roadshow London, Metzler
30.03.	Roadshow Amsterdam, Commerzbank
03.04.	Roadshow Munich, Baader Bank
03.04.	Roadshow Zurich, Berenberg
28.04.	Publication of the Annual Report 2016
11.05.	Quarterly Statement 3M 2017
16.05.	Roadshow Helsinki, M.M. Warburg
19.05.	equinet ESN Conference, Frankfurt
19.05.	Warburg Highlights, Hamburg
01.06.	Kepler Cheuvreux German Property Day, Paris
07.06.	Kempen & Co European Property Seminar, Amsterdam
15.06.	Roadshow London, Green Street Advisors
15.06.	Roadshow Warsaw, Berenberg
16.06.	Roadshow Edinburgh, JP Morgan Cazenove

22.06.	Deutsche Bank dbAccess Conference, Berlin
28.06.	Annual General Meeting, Hamburg
15.08.	Half-year Financial Report 2016
05.-06.09.	DES Real Estate Summer
12.-13.09.	BoA Merrill Lynch Global RE Conf., New York
18.09.	Goldman Sachs & Berenberg German Conf., Munich
19.09.	Baader Investment Conf., Munich
29.09.	Societe Generale Pan European RE Conf., London
04.-06.10.	Expo Real, Munich
15.11.	Quarterly Statement 9M 2017
16.11.	Natixis European Mid Caps Conf., Paris
17.11.	Roadshow Amsterdam, Societe Generale
17.11.	Roadshow Brussels, Kempen & Co
21.11.	DZ Bank Equity Conf., Frankfurt
06.-07.12.	Berenberg European Conf., Pennyhill
11.-12.12.	HSBC Global RE Conf., Cape Town

APPENDIX

CONTACT

NICOLAS LISSNER Manager Investor & Public Relations

OLAF BORKERS Chief Financial Officer

WILHELM WELLNER Chief Executive Officer PATRICK KISS Head of Investor & Public Relations

Deutsche EuroShop AG Investor & Public Relations Heegbarg 36 22391 Hamburg

Tel. +49 (40) 41 35 79 – 20/ – 22 Fax +49 (40) 41 35 79 – 29 E-Mail: ir@deutsche-euroshop.com Web: www.deutsche-euroshop.com

ir-mall.com

• facebook.com/euroshop
• flickr.com/desag
• slideshare.net/desag
• twitter.com/des_ag
• youtube.com/DeutscheEuroShop

Important Notice: Forward-Looking Statements

Statements in this presentation relating to future status or circumstances, including statements regarding management's plans and objectives for future operations, sales and earnings figures, are forward-looking statements of goals and expectations based on estimates, assumptions and the anticipated effects of future events on current and developing circumstances and do not necessarily predict future results.

Many factors could cause the actual results to be materially different from those that may be expressed or implied by such statements. Deutsche EuroShop does not intend to update these forward-looking statements and does not assume any obligation to do so.

APPENDIX