DIC Asset AG — Annual Report 2007

Mar 19, 2008

A n n u A l r e p o r t 2 0 0 7

DIC Asset AG at a glance		2007	2006	Change
rental income	eur million	93.6	38.4	+144%
Investment property disposal proceeds	eur million	122.9	64.5	+91%
total revenues	eur million	236.2	110.9	+113%
eBItDA	eur million	99.8	37.0	+170%
eBIt	eur million	80.0	28.5	+181%
profit before depreciation	eur million	55.9	23.5	+138%
Funds from operations (FFo)	eur million	44.6	21.8	+105%
profit for the period	eur million	36.1	15.0	+141%
earnings per share	eur	1.25	0.85	+47%
FFo per share	eur	1.55	1.24	+25%
Cash flow from operating activities	eur million	74.9	40.5	+85%
total assets	eur million	2,121.5	1,343.7	+58%
equity ratio	%	28.9	39.7	-10.8
Investments	eur million	902.0	873.3	+3%
Market value of investment property	eur million	2,187.5	1,275.3	+72%
net asset value	eur million	722.2	608.2	+18%
net asset value per share	eur	23.04	21.34	+8%

to our Shareholders	Heads & Figures	the Share	Management report	Financial Statements	Corporate Governance	portfolio

■ to our Shareholders	2
■ Heads & Figures	5
■ the Share	20

■	Group Management report
	Company and environment	28
	Business Development	34
	Sales and earnings Situation	46
	Financial position	52
	Asset position	55
	other Information	57
	risk report	64
	Material events after the Balance Sheet Date	73
	Forecast	74

■ Consolidated Financial Statements
profit and loss Account	79
Balance Sheet	80
Statement of Cash Flow	82
Statement of Changes in equity	83
notes	84
Auditors' report	123

Supplemental Information

Quarterly Financial Data	142
Multi-Year overview	143
list of Subsidiaries and Joint Ventures	144
Glossary	148
Contact	151

■ portfolio	132
report of the Supervisory Board	128
Corporate Governance report	124
■ Corporate Governance

Dear Shareholders and Business partners, employees and Friends of our Company,

In this report, we look back on our Company's most successful financial year to date: our three portfolio segments have been substantially expanded through several successful acquisitions and income has been increased to eur 236 million. thanks to our focussed and successful business model but also thanks to the outstanding performance and huge commitment of our employees, we have once again more than doubled our results to just over eur 36 million. With this result, DIC Asset AG ranks as one of the most profitable real estate companies in Germany.

You, as our shareholders, are investing in a rapidly expanding and effective company, which sets itself ambitious targets and implements them consistently and rapidly. We should like to take this opportunity to express our heartfelt thanks for the trust shown in our work. the Supervisory Board and Board of Directors would therefore like to increase the dividend once more on the basis of the outstanding financial year 2007 and are proposing payment of eur 1.65 per share to the general shareholders' meeting on 14 May. We are therefore continuing our consistent dividend policy.

Despite continuous success, significant growth and outstanding positioning, the equity market performance of recent months has also hampered our Company's share price. DIC Asset AG has no influence on macroeconomic factors and changes in the financial industry but it is in the current situation that the Company's outstanding position and robust business model prove themselves. We continue to concentrate our strategy on the elementary factors, which also form the basis for success in terms of longterm appreciation in the share price: outstanding results, a homogeneous and consistent business strategy and the creation of sustained value. We are convinced that this will also be expressed in the value of our share for our shareholders in future. Factors such as market position, quality and the Company's critical mass as well as the management's experience and reliability will increase in significance with regard to how we are perceived by outsiders and are already distinguishing us from our competitors:

• We have a balanced and attractive real estate portfolio in rapidly expanding locations. In addition to high-yield property let on long-term leases, this includes properties, which can be markedly increased in value through suitable optimisation measures and effective property management. In 2007, we invested some eur 1.2 billion in expanding our portfolio.
• Since last year, we have been conducting our property and asset management operations via our subsidiary DIC onSIte. In the course of the year, we have established five branches and consequently have a direct presence vis à vis our tenants and properties in the locations where our investment is concentrated. the figure of 124,000 m² achieved in letting our own properties in the first year represents an impressive success in this strategy for adding value. the fact that other market players would also like to invest in their own asset management structures in due course confirms the validity of our strategy. In this respect, we adopt a pioneering role.

Ulrich Höller, Chief Executive Officer

Prof. Dr. Gerhard Schmidt, Chairman of the Supervisory Board

■ our concentration on German commercial properties and our proximity to the market and our properties gives us the advantages of specialisation and guarantees that our decisions can be rapidly implemented. Management and staff have many years' expertise and are very familiar with the market and its players. We are extremely well established in the market, which means that, among other things, we can realise many acquisitions as off-market transactions.

We monitor market developments very precisely and can see various trends that can open up opportunities for development and further growth for us.

the current crisis on financial markets has already changed the investment market for commercial real estate. this process of change will continue over the next few months. today, the market is increasingly seeing the emergence of long-term oriented purchasers acquiring top quality properties with higher equity shares. We see opportunities here to sell properties that we have repositioned and are fully let at a substantial profit.

In addition, parts of portfolios and entire packages that were purchased only recently as last year's investment activity peaked will come back onto the market. Given current financing conditions, some owners will not be able to manage their properties attractively long-term. other market players are not in a position, for purely structural reasons, to implement the extensive measures needed to add value through property and asset management. We invested early in DIC onSIte as a property and asset management platform and are therefore able to take over properties of this kind and operate them successfully. We also carried out a successful capital increase in December 2007 to be able to exploit the emerging opportunities for acquisition.

Furthermore, we are opening up long-term profit potential through development measures. As part of portfolio purchases, we increasingly acquire space and properties with development potential, which can generate above average returns through investment and extensive rebuilding. In this connection, we fall back on the expertise and experience of the DIC Group. We are currently involved in three high profile developments with the Maintor and Bienenkorbhaus projects in Frankfurt and the opera offices in Hamburg.

We have created the framework conditions to profit from developments in the sector over the next few months and years, to continue our growth strategy and to continue achieving successful results in the interests of our shareholders.

the success of DIC Asset AG is based on the commitment, the skills and the drive of all our employees. We should like to thank them all for their extraordinary commitment and determination to promote the Company again and again.

prof. Dr. Gerhard Schmidt ulrich Höller Chairman of the Supervisory Board Chief executive officer

StronG FunDAMentAl DAtA

DIC Asset AG has made good use of a turbulent year to strengthen its position on the capital and real estate markets.

DIC Asset AG: high growth rate, demanding targets.

leads & Figures

■ Activities + events

DIC Asset AG: 2007 the year in real estate

regular acquisitions and sales keep the portfolio in tiptop condition.

2007 saw property sales amounting to eur 120 million and investments in excess of eur 1.2 billion.

■ Berlin, Badensche Straße, part of the portfolio since December 2006

Heads & Figures	the Share	Management report	Financial Statements	Corporate Governance	portfolio
-----------------	-----------	-------------------	----------------------	----------------------	-----------

■ Active Asset and portfolio Management

DIC Asset makes regular use of opportunities to realise profit through sales. At the same time, additional properties with greater potential are purchased.

■ Mannheim, Augustaanlage. prime properties and high-profile tenants provide a strong basis for success.

		Heads & Figures

■ revenue Base

DouBleD

rentAl InCoMe

more than

■ Bad Homburg, entrée office complex. Successful placement in February 2007

our growth is profitable: we are increasing our sales and income in a more than proportional manner to our costs.

■ Frankfurt, detail of the new City library

■ earnings power

€ 70 million higher eXpenSeS

€ 120 million higher eArnInGS

We are there wherever we invest – with five new branches providing real estate management close to properties and tenants.

■ Hamburg, Dammtorstraße. In direct vicinity: the new branch in the Hanseatic City

Heads & Figures

■ expansion

sqm lettable space new branches

DIC onSIte's regional rental managers ensure that floor space does not stand idle for long.

■ ludwigshafen, Centre for east Asian Studies at the university of Applied Sciences. Modern office premises on the banks of the rhine

Heads & Figures

■ reletting

acquired vacant newly let

115,000 sqm 124,000 sqm

the Share

Drastic reversal on international stock markets

on markets, 2007 was characterised by a marked change following years of stable upward growth. Since summer 2007, there have been increasing signs of turbulence as a consequence of the uS mortgage crisis and the global economy has slowed. on the German equities market, the strong euro and high oil prices have also acted as a brake on rising prices. Many experts are forecasting that prices will trend sidewards at international levels in the medium term.

Shares with a lower market capitalization and lower trading volumes looked more fragile; in contrast to major, heavily traded stocks they have been far more susceptible to bad news since summer 2007. the SDAX ended the year far lower than the DAX with a fall of 7% during the year.

Correction in January 2008 wipes out the price gains of the previous year

equities trading experienced a significant correction as a consequence of the global impact of the uS mortgage crisis in mid-January 2008 when shares fell significantly at an international level. the heaviest price falls since 11 September 2001 squeezed the DAX to around 6,600 points temporarily, wiping out all the ground gained in 2007. Similar reactions were apparent on almost all other international markets.

As a reaction to this, the American central bank, the Federal reserve, cut its key interest twice in January 2008 and the uS Congress has adopted a programme to stimulate the economy. the european Central Bank has left its key interest rate unchanged so far because of inflationary pressures in the european economic area.

Sub-prime crisis depresses real estate stocks in 2007

In contrast to the general market trend, european real estate stocks were significantly affected by the crisis facing American mortgage banks during 2007. the eprA/nAreIt europe Index, which depicts the performance of european real estate companies, closed with a loss of 34% on the year.

thanks to its good results, DIC Asset AG performed somewhat better than the general trend, however, it was unable to resist the global pasting suffered by real estate stocks as a consequence of the uS mortgage crisis. During the year, the share price was mostly slightly above the european sector index. the DIC Asset AG share closed the year with a fall of just under 30%. the share was also hit by the correction in January 2008 but it recovered more quickly than the market.

Real estate sector offers upside potential

Market observers and analysts expect equities to fluctuate markedly in 2008. the first quarter will depend on trends in banks' results. Should the problems in the real estate and financial markets spread to the whole of the uS economy, further interest rate cuts and measures to kick start the economy are to be expected.

As a consequence of the fall in prices, some real estate stocks at european level are, according to analysts' observations as at the beginning of March 2008, listed at a discount of 30% below the net asset value (nAV), the intrinsic value of the company's assets after deducting liabilities. Both German and european real estate equities performed markedly better than the standard stocks in the euro zone in January and February 2008. If the market normalizes, we expect a recovery in the share price for DIC Asset AG.

Elementary data since flotation is impressive

DIC Asset AG has performed very successfully since flotation and the switch to prime Standard in May 2006:

• the objectives for growth associated with the capital increases in 2006 were consistently pursued and successfully implemented: in the last two years, DIC Asset AG has invested more than eur 2 billion. In 2007, out of all the German real estate companies listed on the stock exchange, it was one of the most active investors.

• the good quarterly results and achievements of the target results for 2007 also show that DIC Asset AG is fulfilling its promises and achieving its targets. In less than two years, DIC Asset AG has grown to become one of Germany's largest real estate companies with a high income portfolio and five branch offices in Germany.

• Since flotation, the company has created sustained value for shareholders. the nAV per share has increased by eur 9.06 to eur 23.04 since 31.12.2005. the increase amounted to some +8% in 2007.

• Demand from corporate and private shareholders has significantly increased overall as a result of the increased price and the company's success. the volume of trade has significantly increased since flotation, with regular reports on shares being issued. Inclusion of the share's value in reputable indices has also increased interest.

Current price in eur (closing price on 29.02.2008) 20.51

The share

number of shares	31,499,999
Issued capital in eur	31,499,999
WKn / ISIn	509840 / De0005098404
Symbol	DAZ
Free float	50%
Major indices	eprA, Gpr 250, SDAX, DIMAX
Market segment	prime Standard, FWB, XetrA
otC markets	Berlin-Bremen, Düsseldorf, Hamburg, Hannover, Frankfurt, Munich, Stuttgart

Successful capital measures

In December 2007, DIC Asset AG carried out a capital increase in a difficult market environment and, as a result, raised some eur 62 million. the share capital was increased by 10% from eur 28.5 million to eur 31.35 million and the new shares were offered to shareholders for subscription. the major shareholders Deutsche Immobilien Chancen AG & Co. KGaA and Morgan Stanley real estate Funds (MSreF) exercised their subscription rights in full and also acquired new shares that were not purchased. We see this as a clear expression of confidence in our company.

Following the capital measure, the free float stands at the current level of 50.2% (previously: 54.9%). the Deutsche Immobilien Chancen Group holds 34.5% (previously: 30.6%) of the shares, Forum has a stake of 4.9% (previously: 5.3%) and MSreF holds 10.4% (previously: 9.2%).

Investor Relations activities extended

In financial year 2007, we intensified our relationships with analysts as well as institutional and private investors. the Board of Directors and the management have participated in numerous international analysts' events and capital market conferences, at which they have explained the Company's strategy and financial results to a broad range of interested parties. Furthermore, we inform our shareholders promptly of all the Company's transactions and developments via press releases on our website and by newsletter. In 2008, we shall continue to work at communicating DIC Asset AG and its successful business model to the financial world and at increasing interest in our shares still further.

Financial calendar
19 March 2008	Current analysts'	recommendations* (as	of Feb 2008)
9 April 2008	Dresdner Kleinwort German real estate Seminar, london
13 May 2008	publication of Interim report Q1/2008
14 May 2008	Annual General Meeting, Frankfurt			5
28-29 May 2008	Kempen european property Seminar, Amsterdam
4-5 June 2008	Deutsche Bank German Corporate Conference, Frankfurt
August 2008	publication of Interim report Q2/2008		2		*Bankhaus lampe,
4-5 September 2008	eprA Annual Conference 2008	1			Commerzbank, Deutsche Bank,
6-8 october 2008	eXpo real 2008				DZ Bank, HVB/uniCredit,
20-21 october 2008	real estate Shares Initiative 2008, Frankfurt				Kempen, Morgan Stanley,
november 2008	publication of Interim report Q3/2008	underweight	hold	buy	WestlB

Inclusion in the EPRA index

In September 2007, DIC Asset AG's share was included in the prestigious FtSe eprA/nAreIt index europe. the eprA index is one of the most important indices of listed real estate companies and shows the movement in prices of the world's largest companies across a range of categories. In addition to the eprA index, DIC Asset AG is also represented in the Gpr-250.

Dividend payment +120%

We should like our shareholders to participate in the positive development of DIC Asset AG and the good result in the reporting period. We propose a dividend payment of eur 1.65 per share for the past financial year. In this respect, the dividend is based on funds from operations and will be increased by eur 0.9 (+120%) compared with the previous year. In total some eur 51.7 million is to be paid out. When related to the price of eur 20.51 (29 February 2008), the dividend yield amounts to some 8%.

Positive range of opinions among analysts

our Company's share is regularly observed and evaluated by various prestigious institutions. We were able to extend the 2007 coverage by two institutions to the current figure of seven. In addition, another institution has initiated coverage of the DIC Asset AG since February 2008. our company is valued positively with most reporting analysts recommending buying shares in DIC Asset AG.

Company and Environment

■ The Company

DIC Asset AG is a real estate company that focuses exclusively in investing in German commercial real estate and maximising earnings from its investments. With real estate assets showing a market value of some EUR 2.2 billion at year end, the Company ranks as one of the largest listed real estate companies in Germany.

Total real estate assets: EUR 2.2 billion

Three investment segments with different opportunity/risk profiles

It invests in first-class, high yield real estate with long-term leases as well as properties that offer opportunities for optimisation that can be rapidly increased in value through measures such as repositioning, raising the occupancy rate or modernisation. The Company concentrates primarily on more complex portfolio acquisitions and off-market transactions .

As an active asset manager, DIC Asset AG regularly sells parts of its real estate assets to realise gains after periods of appreciation and to be able to undertake new investments.

In its subsidiary DIC ONSITE, DIC Asset AG has an experienced and effective property and asset management company. From five central offices located in areas where the portfolio is concentrated, its employees work on rapidly and efficiently implementing their respective business plans and increasing the value of their real estate.

Management and supervision

The Company is managed autonomously by the Board of Directors. The most important tasks of the Board are establishing corporate strategy, managing the Company, corporate planning and the development and operation of adequate risk management. The Board of Directors of DIC Asset AG currently consists of three members.

The Board of Directors works closely with the Supervisory Board, which is involved in all material decisions. The two Boards advise each other in a clearly regulated exchange of information, which goes beyond regular meetings. The Supervisory Board of DIC Asset AG consists of six members. In 2007, the Supervisory Board met the Board of Directors to discuss major commercial transactions and make decisions in a total of four meetings and 14 telephone conferences.

Remuneration report

The remuneration report and individual information on compensation of the Board of Directors and the Supervisory Board, divided by component, are contained in the report on corporate governance on page 125.

Locations

Since financial year 2007, DIC Asset AG has had a presence in five locations (Frankfurt, Mannheim, Berlin, Hamburg and Düsseldorf) from which it conducts its intensive property and asset management business in the locations where its portfolio is concentrated. The Board of Directors and head office are located in Frankfurt am Main from where the Group is managed and central administrative tasks are carried out.

Products and business processes

DIC Asset AG invests in expanding its real estate assets through acquisitions and project development and manages its own portfolio. It offers its commercial real estate to third parties to let and for sale.

Competitive position and sales market

DIC Asset AG concentrates on the German market for commercial real estate. When purchasing new properties, it competes with investors at a national and international level. Its advantages here are clearly its knowledge of and proximity to the properties.

When letting, DIC Asset AG competes with the owners of real estate that have properties in similar positions, of similar quality and in similar price categories. Because of the positive letting market, the competitive situation is favourable by and large. When selling its properties, success is decided by their quality, security of their rental income and finally the yield that can be achieved. Here, DIC Asset AG competes with suppliers of similar properties.

■ Strategy and Company management

In recent years, DIC Asset AG has evolved into one of the largest listed German real estate companies through its expansionary growth strategy. It invests in German commercial real estate, manages and develops the properties in its portfolios and sells them once it has increased their value. To do this, DIC Asset AG makes use of its many years' expertise and in-depth knowledge of the market. Its aim is to achieve continuous growth in all areas, maximising its earnings and expanding its market share. In so doing, it will pursue both internal growth and external growth through acquisitions.

The basis for this is provided by the successful business model of DIC Asset AG. With its own property and asset management organisation, DIC ONSITE, the Company benefits from effective support in rapidly implementing measures to increase the value of its properties and this provides an ideal basis for internal growth. In terms of external growth DIC Asset AG benefits from the extensive experience and proven track record of its employees and management; they can also, if necessary, have recourse to different sources of capital. DIC Asset AG continuously reviews any opportunities that present themselves in order to be able to exploit its chances of external growth.

In essence the Company is managed on the basis of aggregated earnings after taxes (earnings after taxes, EAT) from the individual investments. Planned developments and actual earnings are compared and monitored continuously. The Company also defines additional factors for success, which are pursued up to the level of the business plans for properties and portfolios. In this connection, the operating profit from real estate management (funds from operations, FFO), the increase in value from letting properties and funds from operations after deducting taxes related to capital employed (return on equity, ROE) are of central importance. In the case of the short to mediumterm subdistribution-orientated business plans used in the Opportunistic Co-Investments segment, the internal rate of return (IRR) is also used.

Reporting segments

DIC Asset AG is primarily involved in one sector of the economy. The segment classification follows the breakdown of the real estate portfolio according to returns and risk criteria. The real estate portfolio of DIC Asset is broken down into the segments Core, Value Added (VAD) and Opportunistic Co-Investments (OPP).

The Core segment encompasses high yield real estate let on long-term leases to prime tenants. The Value Added segment of the portfolio comprises properties with attractive growth potential that is realisable in the short to medium-term. Minority stakes in opportunistic investments in individual properties and portfolios, which are carried out with Deutsche Immobilien Chancen AG & Co. KGaA as lead investor, are held via the Opportunistic Co-Investments segment.

Strategic investments

Since 1 January 2007, DIC Asset AG has conducted its property and asset management via its subsidiary DIC ON-SITE. Its share in the company amounts to 75%. Further information on its investments is given in the Notes to the consolidated financial statements, from page 84. In essence these are property holding companies.

	Core	VAD	OPP
Area in sqm	461,000	581,000	172,000
Market value in EUR million	1,057,5	863,	266,1
Rental income in EUR million	48.7	44.	n.a.*

* relates to minority interests, therefore no rental income

■ General economic conditions

In the financial year, DIC Asset AG benefited from positive trends in the macroeconomic environment and the sector's good performance.

Macroeconomic trends

In 2007, the German economy recorded growth in gross domestic product of around 2.5%. Towards the end of the year, economic growth slowed due to the sub-prime mortgage crisis affecting American mortgage banks. While interest rates were low in recent years, funds were lent – the majority at variable rates which were low initially – even to borrowers with poor credit ratings. Up to spring 2007, increasing numbers defaulted on their loan repayments after interest rates were raised significantly in the USA. These loans were spread round the world's financial markets by the mortgage banks via structured investment products and have fallen dramatically in value in some cases.

In Spring 2008, uncertainty and restraint continue to prevail on global financial markets and this is also impacting on the German economy. In the last months of the year and as part of the current reporting period, banks and investment companies, which had invested in securitised loans, revalued their balance sheet positions and were forced in some cases to realise considerable losses. German financial institutions are also affected by this. A number of analysts and market observers, including the federal government, assume that the trend is far from over.

To avert the risk of a recession, the American central bank, the Federal Reserve, has cut key interest rates in several steps since mid-2007. In a final step the rate was cut dramatically by 0.75 percentage points in January 2008 and then by a further 0.5 percentage points to the current level of 3.0% a week later. By contrast, the European Central Bank (ECB) is keeping to its policy of stable interest rates. To date, the ECB has carried out no interest rate cuts and left the rate at 4.0% to counter inflation in the European economic area.

General conditions: gross domestic product and number of people employed (respective change in %)

On the basis of the current situation, which cannot be conclusively assessed, the federal government has cut its forecast for economic growth in 2008 to 1.7%. It assumes that, in addition to the problems caused by the US real estate crisis, the strength of the euro against the dollar and the current level of oil prices will depress the economy. The federal government's forecast echoes that of the leading economic research institutes, which are forecasting growth of between 1.5% and 2.0%.

The ifo index, which constitutes a leading indicator of economic growth in Germany, improved slightly to 104.1 points, in February 2008 with only 103.4 points being achieved in the previous month. The current business situation is thus perceived as better than January. Analysts are indicating an increase over three months, a phase of accelerated growth. The current rise is seen as an indication of the robust nature of the German economy in the light of worries of recession in the USA.

2007 was a very good year for the employment market: the number of unemployed fell by around 711,000, which represents the sharpest fall in the history of the Federal Republic. On average 3.8 million people were registered as unemployed across Germany in 2007. The positive trend has also continued in January 2008 with the employment market remaining stable at the beginning of the year.

Offenbach, Berliner Straße Wiesbaden, Frankfurter Straße

■ Developments in the sector

Rental market firms further

In 2007, some 3.7 million sqm of office space was let in Germany's largest office locations. This figure consequently exceeds the previous year's result by around 15%. The recovery in office markets reflects economic growth and is supported by strong demand in all segments of the market. Vacancy rates are falling further and top rentals are firming, with up-to-the-minute (in equipment terms) space playing the dominant role among top rents and net absorption. Construction activity also picked up again in 2007, however, the majority of the properties under development will not come onto the market until after 2008. Overall, the positive trend for the rental market is expected to continue in 2008 and another above average year is forecast.

Investment volume hits an all-time high

In 2007, record sales of around EUR 55 billion were achieved on the German commercial property investment market. Nevertheless the sub-prime crisis had a very marked impact on events and on the structure of the market. An extraordinarily high transaction volume was achieved in the first half of the year. The attractive – when compared internationally – relationship between the level of interest rates and the achievable rental yield ensured a constant influx of international capital. Because of fierce competition for investment properties, rental yields fell continuously until the end of the first half.

The transaction landscape changed in the second half with the reluctance of lending banks and the "wait and see" approach adopted by sellers. Investment volume and the proportion of investors operating with high levels of external capital fell sharply. In return the proportion of longer-term oriented investors and more heavily capitalised companies increased. Having fallen in the first half, yields recovered slightly. A sharp fall in transaction volume, exacerbated by the fall-out from the US mortgage crisis, is expected for 2008.

Neu-Isenburg, Martin-Behaim-Straße

Business development

2007 – an outstanding financial year

In financial year 2007, DIC Asset AG achieved the best result to date in its history. With a consolidated profit for the period of EUR 36.1 million, the previous year's profit was – as planned – more than doubled. Total income (chiefly rental income and the proceeds of sales) added up to over EUR 236.2 million. DIC Asset AG has pressed ahead successfully with its growth strategy and increased the market value of its real estate assets as at 31.12.2007 by EUR 912 million to EUR 2,188 million with targeted investments in all segments. Its shareholders should participate in its success through a dividend of EUR 1.65 per share. At a share price of EUR 20.51 (29 February 2008), this equates to a yield of 8%. The net asset value per share in the 2007 financial year amounts to EUR 23.04, and is thus an increase of some 8% on the

■ Acquisitions

Substantial expansion in the portfolio

In 2007, DIC Asset AG invested a total of EUR 1.2 billion in 126 properties with a total area of 20,000 sqm. This makes it one of the most active investors in real estate among listed German real estate companies. In the second half, when events on the transaction market almost came to a total standstill at times, DIC Asset AG was able to complete three acquisitions.

A total of some EUR 1.1 billion was expended on purchases in the Core and Value Added segments. Via its Opportunistic Co-Investments segment, the Company took a 20% stake in a transaction worth EUR 465 million.

Odin portfolio

In April 2007, DIC Asset AG acquired a portfolio with 26 properties and a lettable area of 263,000 sqm for the Core and Value Added segments. The office and commercial properties in various German cities such as Munich, Hanover, Darmstadt, Mannheim and Hamburg are let to tenants of undoubted creditworthiness such as the federal state of Hesse, Deutsche Bahn, GE Money Bank and Saturn. DIC Asset AG invested some EUR 460 million in total. The vacancy rate of 15% offers attractive potential for increasing the value of the portfolio.

V6A portfolio

In July 2007, the Core segment was boosted by eight topquality properties in the Cologne/Bonn conurbation and Neubrandenburg entailing an investment volume of some EUR 155 million. The best-known buildings among them are the "Rheinwerk" in Bonn and "SILO" and "ECR" in Cologne's Rheinauhafen. The properties, which are let on long-term leases generating substantial cash flow, are a component of the medium to long-term hold strategy. Following completion and full letting, four properties will be transferred to the ownership of DIC Asset AG in 2008 and 200.

• 26 properties
• 263,000 sqm lettable area
• Investment volume EUR 460 million

Magdeburg, Otto-von Guericke-Straße Cologne, Agrippinawerft

8 properties

• 50,000 sqm lettable area
• Investment volume EUR 155 million

Acquisitions during the financial year

EUR million		Investment volume	Number of properties
Apr	Odin portfolio	460	26
May	Helena portfolio*	3	54
Jul	V6A portfolio	155	8
Oct	Dolphin portfolio	320	25
Dec	Forum portfolio	173	13
Total		1,201	126

* Opportunistic investment, total transaction volume of EUR 465 million, DIC Asset AG participation of 20%

Dolphin portfolio

25 real estate complexes in the Rhine-Main area, Düsseldorf, Berlin and Munich were acquired from the AXA Group and DBV Winterthur in October 2007. These are used almost entirely as office properties. The insurance companies lease back more than a third of the space – some of it on long-term leases. The space is highly utilised with an occupancy rate of 4%. The majority of the properties, which were acquired for the Core and Value Added segments, will therefore be held in the medium to longterm portfolio.

Forum portfolio

In December 2007, 13 properties from the EURO Immo-Profil-Fonds were acquired from iii-Investment GmbH. In essence, they are retail properties located in the best positions in larger German cities. EUR 173 million was invested in the properties with space totalling 77,000 sqm, which equates to an initial rental yield of 6.5%. DIC Asset AG will increase the value of these properties through an intensive property and asset management programme. Title was transferred on 2 February 2008.

Helena portfolio

In financial year 2007, DIC Asset AG undertook an opportunistic investment together with the lead investor Deutsche Immobilien Chancen AG & Co. KGaA. 54 commercial and retail properties located predominantly in Frankfurt, Hamburg, Berlin and Düsseldorf were acquired from HANSAINVEST, the investment company owned by the SIGNAL IDUNA Group, for a total investment volume of EUR 465 million. DIC Asset AG holds a stake of 20% in this promising acquisition. There are opportunities to increase value most notably through reducing the vacancy rate from around 16% and through new leases after exploiting the properties' redevelopment potential.

25 properties

• 182,000 sqm lettable area

• Investment volume EUR 320 million

• 13 properties

• 77,000 sqm lettable area
• Investment volume EUR 173 million

Munich, Hanauer Straße Regensburg, Kassiansplatz Koblenz, Rizzastraße

• 351,000 sqm lettable area
• Investment volume EUR 465 million

■ Sales

Sales profits increased to EUR 17.7 million

DIC Asset AG sold a total of 25 properties in several transactions. As a result, the Company realised some EUR 122. million in pro rata sales proceeds. The profit from sales undertaken as part of the Company's policy of active portfolio management amounts to around EUR 17.7 million in financial year 2007. In the previous year, 41 properties were sold with a volume of EUR 64.5 million and for a profit of EUR 4.2 million.

The greatest sales success was achieved with the parcel marketed as the Mustang portfolio, which was placed very successfully with two Luxembourg investors in April 2007 for around EUR 86 million. The portfolio consisted of ten properties with a total area of 60,000 sqm. The properties, which are predominantly used as office space, are located in medium-sized German cities such as Bochum, Gelsenkirchen, Ulm, Regensburg and Ingelheim. The occupancy rate amounted to just under 5%.

In addition to smaller individual sales during the financial year, DIC Asset AG sold a residential portfolio with 353 units in July 2007. As a result, the residential real estate segment, which is irrelevant strategically, was reduced in order to be able to concentrate property and asset management capacities on core activities.

At the end of the financial year, a property in Hamburg, which was let on a long-term lease to Deutsche Telekom AG, was sold for some EUR 25 million. The sale was effected as a share deal in a results-oriented transaction. In addition, an attractive additional profit (promote) was achieved on the basis of a co-investment agreement, resulting in a total sales profit exceeding DIC Asset AG's nominal profit share of 50%.

Significant sales from opportunistic investments

In financial year 2007, DIC Asset AG profited from the sale of six properties via its minority stakes of 20% in each case in the Opportunistic Co-Investments segment. In addition to smaller properties, a property in Bad Homburg was sold very successfully to a Spanish investor for around EUR 47.5 million in February 2007.

Ownership of 16 properties was also transferred at the end of April 2007 to French investors INOVALIS, after the transaction was initiated in December 2006 as part of a portfolio sale.

The Opportunistic Co-Investment segment contributed significantly to the success of financial year 2007 with a profit of EUR 8.3 million. In addition to the sales mentioned above and the Company's ongoing asset management business, this is the result of the legal transfer of two portfolios. Their legal and financial structure was optimised and the increases in value achieved in the portfolios were taken into account by reporting the properties at their market values, as determined by external valuers.

Property sales 2007

EUR million		Transaction volume	DIC Asset AG share	Number of properties
Feb	Bad Homburg property	47	20%	1
Apr	Mustang portfolio	86	100%	10
Jul	Frankfurt individual property	4	50%	1
Jul	Various individual properties	11	20%	2
Jul	Abitare residential portfolio	20	100%	3
Oct	Properties from the Berlin portfolio	7	50%	10
Dec	Hamburg Telekom property	25	50%	1
Dec	Various individual properties	6	20%	3
Total		206		31

■ Portfolio

Real estate assets increased by more than 70%

DIC Asset AG's consistent growth strategy and sales undertaken as part of the Company's active portfolio management have had a marked impact on DIC Asset AG's segment volume. In total, the market value of its real estate assets rose by EUR 12 million (+71%) to EUR 2,188 million as at 31.12.2007.

• In the Core segment, which encompasses top quality properties on long-term leases, which are to be held in the medium to long-term, assets held increased by EUR 43 million (+71%) to EUR 1,058 million.
• Assets in the Value Added segment also increased significantly. Properties with value-added potential that can be realised in the short to medium term held up against the segment. Real estate assets here rose by EUR 337 million (+64%) to EUR 864 million.
• The portfolio volume in the Opportunistic Co-Investments segment doubled. The current market value stands at EUR 266 million.

In this segment, DIC Asset AG holds its minority stakes in opportunistic investments, which are undertaken together with Deutsche Immobilien Chancen AG & Co. KGaA as lead investor.

As a result of the large scale acquisitions in the other segments, the Value Added segment's share has reduced slightly but this should be offset in the medium term.

Net asset value up by EUR 114 million

The net asset value, the intrinsic value of DIC Asset AG, based on values reported in consolidated financial statements and complemented by the market value of real estate as confirmed by auditors stood at EUR 722.2 million (prev. yr EUR 608.1 million) as at 31.12.2007. The net asset value per share amounted to EUR 23.04 (prev. yr EUR 21.34) as at 31.12.2007. The increase was mainly due to the growth in real estate holdings and the increased value achieved in real estate project developments.

Segments proportion

Market value in %

Net asset value
EUR million	31.12.2007	31.12.2006
Market values of property, project developments and joint ventures	1,87.5	1,173.
+/- Other assets/liabilities incl. minority interests	12.1	15.1
Net loan commitments at carrying amount	-1,457.4	-760.8
Net asset value (NAV)	722.2	608.2
Number of shares (thsd.)	31,350	28,500
NAV/share (EUR)	23.04	21.34

■ Developments: three city structural projects under development

Development of the Frankfurt City Library completed successfully

Following a construction period of just under twelve months, the redevelopment of the Frankfurt City Library was completed on schedule. DIC Asset AG officially handed over the building to the City of Frankfurt as the occupant in September 2007. The total sales volume for the project, to which DIC Asset AG and MSREF each contributed 50%, amounted to some EUR 25 million. The property was sold to a leasing company as early as 2005, during the planning phase, having increased considerably in value.

The former administrative building, which was part of a portfolio of properties purchased from the Frankfurter Sparkasse at the end of 2004, was redesigned from the ground up and equipped for modern use. Internally, users are impressed by the spacious library and a distinctive central reading tower. To achieve the generous design, the roof was raised by one storey and the ceiling was opened to create a vast interior. Space for alternating exhibitions, events and a restaurant was created on the ground floor. The colouring provides a particularly striking element of the design: the ceiling is brightly coloured and together with the luminous red reading tower form an interesting contrast to the functional, modern library furniture.

The redevelopment, which generated a marked increase in value, is a successful example of the redesigning of a 150s building for modern use and also the result of successful collaboration between DIC Asset AG and the City of Frankfurt.

Frankfurt City Library

Construction work started on the Bienenkorbhaus

Work started on the incorporation of a new building and refurbishment of the Bienenkorbhaus complex in September 2007. The construction permit for the design, which was developed in close collaboration with the City of Frankfurt, was issued in summer. The aim of the development is to expand the area of the complex significantly and to reposition it. With this in mind, the Bienenkorbhaus is to be equipped with modern infrastructure and extended with a six storey new building. DIC Asset AG, together with MSREF, is investing a total of some EUR 75 million in the project. The Frankfurter Sparkasse will remain the anchor tenant with one branch but it will be joined in the new building by Ludwig Görtz GmbH, which will open a 2,400 sqm flagship store at the end of 2008. The complex will be reopened at the end of 2008 and will massively enhance the area surrounding it, namely Frankfurt's well-known shopping promenade the "Zeil".

Agreement on the MainTor project

In November 2007, the City of Frankfurt gave its agreement to the MainTor project. The major project will be created on Degussa production and administration site located in the heart of Frankfurt, which was previously inaccessible to the public. It encompasses two smaller towers of around 60 metres in height and the central WinX tower, which – at around 100 metres in height – will provide an attractive addition to the Frankfurt skyline. The opening and redevelopment of the site to form a lively urban neighbourhood will further increase the appeal of the banks of the river Main and the Frankfurt city centre. In addition to commercial space, the project will accommodate attractive residential space in a valuable and prime position on the Main. Degussa AG will remain on the site long-term as the anchor tenant.

The investment volume amounts to over EUR 500 million in total. DIC Asset has a 20% stake in the project via its Opportunistic Co-Investments segment. Initial destruction and construction work is planned to start from the second half of 2008.

At the end of February, Frankfurt's municipal authorities voted to adopt the proposed decision for the creation of a new development scheme. This details the key planning parameters for the site, particularly the use of land with plans for three high-rise buildings. This was therefore another important step made towards obtaining planning permission and the right to build.

Project development opportunities in Hamburg

Through the acquisition of the Primo portfolio in Hamburg at the end of 2006, several areas and properties with space offering potential for project developments were acquired. Among other things, work is currently ongoing on the Opera Offices project in the area of Große Theaterstraße and the corner of Dammtorstraße. Here, the space previously used by the Hamburger Oper's administration is to be converted into a new development offering office and retail space.

Frankfurt am Main, Bienenkorbhaus (Bee hive building) Frankfurt am Main, Project MainTor

■ Real estate management

A new Board member with responsibility for operations

Since October 2007, Dr. Jürgen Schäfer has been responsible for operations as a new Board member (COO). His role focuses on managing and further developing our strategically important Property and Asset Management Division, including managing the activities of DIC ONSITE and its 70 employees throughout Germany.

Letting income: DIC ONSITE is operating successfully

Since 1 January 2007, DIC ONSITE, a subsidiary of DIC Asset AG, has been managing the Company's real estate portfolio. From five branches located in the cities where investments are concentrated, its employees work directly on site increasing the value of its real estate assets through property and asset management measures such as increasing the occupancy rates or repositioning properties. The team at Mannheim's headquarters has increased considerably. In financial year 2007, new branches were also established in Frankfurt, Düsseldorf, Hamburg and Berlin, which are operating successfully in the market.

The properties in the Value Added and Opportunistic Co-Investments segments in particular have optimisation potential, which can be realised rapidly and sustainably in accordance with their individual business plans. In DIC ONSITE's first full financial year, namely 2007, some 124,300 sqm was let for the first time. Successes worthy of note included letting 5,300 sqm in Frankfurt to Deutsche Bank AG, 4,200 sqm to the Federal Employment Agency in Hamburg and 4,000 sqm to Deutsche Bahn AG in Koblenz. The total letting volume corresponds to annual rental income of some EUR 13.5 million.

Letting volume 2007 in sqm Office 82,300 Retail trade 15,000 Other commercial 21,400 Residential 5,600 Total 124,300 Parking spaces (units) 1,200

Our employees: the basis of DIC Asset AG's success

Our employees are a crucial component of DIC Asset AG's commercial success. To achieve and maintain a leading position among Germany's real estate companies, we are dependent on the performance, the skills, the commitment and enthusiasm of our employees. We use targeted measures to foster corporate loyalty, to offer them attractive career options and to support them actively in their professional development. In financial year 2007, a certified training programme was established for junior managers in cooperation with the International Real Estate Business School (IREBS), Regensburg.

Attracting highly qualified and talented employees to DIC Asset AG and retaining them is one of the principal tasks of our personnel management team. From a strategic perspective we work to position DIC Asset AG as a highly attractive employer and top address for candidates from the real estate and financial sectors. This includes working closely with national and international universities, technical colleges and recruitment fairs and we aim to expand these relationships significantly in future.

DIC Asset AG foregoes with the preparation of a report on research and development (R&D) in the management report, since although it supports research and training, it does not need or carry out its own research and development for its business activity.

On 31 December 2007, DIC Asset AG employed 82 staff at five locations in Germany. Through the establishment and expansion of its property and asset management company, DIC ONSITE, following the acquisition of shares at the start of 2007, the number of employees increased substantially by 71 compared with the number at 31 December 2006.

Employees

	31.12.2007	31.12.2006
Portfolio management and
investment	5	4
Property and asset management	68	3
Administration		4
Total	82	11

Share price hit by sub-prime crisis

The share's performance failed to reflect the successful business developments and the constant, outstanding results. It closed 30% down on the year and was consequently affected by the general, global devaluation in real estate companies in the wake of the US mortgage crisis. Details on the stock market year and the environment affecting the share are given on page 21.

Basis laid for attractive investments

In the second half of financial year 2007, the change in the market resulting from the uncertainty in the financial sector brought new opportunities for real estate investment in addition to possible risks. Heavily leveraged market players lost out in the competition for properties on the market. Yields recovered slightly. A higher equity share is currently a marked advantage in financing and realising acquisitions rapidly and sustainably. In order to continue its successful expansionary path and to be able to exploit any opportunities that arise rapidly and appropriately, DIC Asset AG increased its share capital by 10% in November 2007 by issuing new shares. In total 2.85 million shares were issued at a price of EUR 21.0 per share.

Within the framework of the subscription offer for the new shares, the major shareholders Deutsche Immobilien Chancen AG & Co. KGaA and MSREF exercised their subscription rights in full and in addition offered to acquire any shares that were not purchased pro rata at the subscription price. The successful conclusion of the capital measure confirms the confidence of the major shareholders and is evidence of the share's continued appeal. Accordingly, the free float currently stands at 50.2% (previously: 54.%). The Deutsche Immobilien Chancen Group's stake stands at 34.5% (previously: 30.6%), Forum holds 4.% (previously: 5.3%) and MSREF has 10.4% (previously: .2%) of the shares.

Sales and Earnings Situation

Rental income base more than doubled

The considerable expansion in the real estate portfolio significantly extended the revenue base of DIC Asset AG in the reporting year. Rental income soared to twice the figure for the previous year. In 2007, rental income of EUR 93.6 million was achieved, EUR 55.2 million (+144%) more than in the previous year. In 2007, the Core segment generated a share of 52% (EUR 48.7 million) of rental income, while the Value Added segment contributed 48% (EUR 44.8 million).

New source of income: Income from real estate management

As well as income from rental and sales, revenue from real estate management mainly for key financial partners is gaining in importance.

At 70%, the majority of rental income came from letting office space. Some 11% came from letting retail space, 1% from residential and 18% from other commercial space as well as parking spaces.

At the year-end, the portfolio had an occupancy rate of 8%. On the one hand, the result has been positively affected by the letting volume of some 124,300 sqm and, on the other hand, targeted investment in properties that can be improved increased the vacancy rate at the reporting date. At the end of 2006, the occupancy rate amounted to 1%. The average term remaining on tenancy agreements in the portfolio as a whole amounted to 6 years at the reporting date. In the Core segment, it amounted to 8 years, in line with the investment strategy, while in the Value Added and Opportunistic Co-Investment segments, figures of 3 years and 5 years were achieved respectively.

In the financial year, DIC Asset AG achieved total revenues of EUR 236.2 million. In addition to growth in the portfolio, this was due primarily to sales proceeds, which doubled compared with 2006.

Property and asset management as an additional source of income

DIC Asset AG achieved management fee income of EUR 3.3 million from property management. In the previous year, income of EUR 0. million was generated. The income is mainly from fees for property and asset management services provided by DIC ONSITE for properties from opportunistic investments. As well as DIC Asset AG, the main participants are the strategic finance partners, Deutsche Immobilien Chancen AG & Co. KGaA, DIC Capital Partners (Germany) GmbH & Co. KGaA and MSREF.

Gains on property disposal more than quadrupled

In the reporting year, DIC Asset AG sold 26 properties from the Core and Value Added segments with a total lettable area in excess of 100,000 sqm for EUR 122. million pro rata. In the previous year, proceeds of EUR 64.5 million were achieved through the sale of properties. The profit on the disposal of properties rose by EUR 13.5 million (+321%) to EUR 17.7 million. Six properties from opportunistic co-investments were also sold with a total volume of some EUR 64 million. The sale of these properties is expressed in the results of associated companies.

Revenues overview

Total revenues	236.2	110.9	43.1
Other income	1.7	8.0	3.3
Investment property disposal proceeds	122.	64.5	21.7
Rental income	3.6	38.4	18.1
EUR million	2007	2006	2005

Types of use * Annualised rental income in %

Constant gains on development projects

A profit at the level of the previous year of EUR 1.2 million was achieved from the sale of the Frankfurt City Library project development. The result was calculated using the percentage of completion method. The completion and handover of properties in 2007 ensured earnings were fully realised and credited to income.

Disproportionate increase in expenses

Operating expenses for personnel and administration rose less than average compared with the growth in rental income. Expenses for administrative tasks increased primarily as a result of the expansion in the portfolio by EUR 3.6 million (+10%) to EUR 6. million. In essence, personnel expenses rose as a consequence of the establishment and development of the property and asset management company DIC ONSITE by EUR 1.3 million (+46%) to EUR 4.1 million. As at 31 December 2007, DIC Asset AG employed 82 staff, 71 more than in the previous year. At EUR 1.8 million, depreciation and amortisation was EUR 11.3 million (+130%) higher than in the previous year.

Total expenses added up to EUR 156.2 million. The disproportionate increase is the result of increased profitability and the Group's successful property sales which more than quadrupled during the financial year. In the previous year, total expenses amounted to EUR 82.4 million.

Portfolio growth impacts on net financing costs

Negative net financing costs increased by EUR 33.3 million (+22%) to EUR -44.7 million. At EUR 53.4 million, interest expenditure turned out to be a significant EUR 37. million higher than in 2006. This development is mainly the result of the growth in funds borrowed and a general increase in interest rates. In addition, in 2006, investments were temporarily financed from equity following the capital increases and loan funds were only called off during the course of the year, which reduced overall financing costs. Interest and dividend income rose by EUR 3.5 million to EUR 8.8 million in the financial year.

Funds from operations increased

Funds from operations (FFO), before depreciation, taxes and profit from sales and development projects and dividend income, increased primarily as a result of the expansion in the portfolio and the increase in rental income by EUR 22.8 million (+105%) to EUR 44.6 million. However, because of the increase in financing costs and the higher purchasing prices, growth in operating income was below the increase in rental income.

Opportunistic Co-Investments: a significant contribution to profits

The profits from associated companies, which depict the results of DIC Asset AG's Opportunistic Co-Investments segment, increased more than fivefold by EUR 6.7 million (+41%) to EUR 8.3 million. Essentially, gains on the disposal of properties, ongoing income from asset management and the legal restructuring of two portfolios resulting in their being reported at market value contributed to this.

Income figures depict growth

The growth of DIC Asset AG is also reflected in the income figures: EBITDA (earnings before depreciation, interest and income taxes) rose by EUR 62.8 million (+170%) to EUR .8 million. EUR 52.2 million of EBITDA is attributable to the Core segment, EUR 47. million to the Value Added segment.

EBIT (earnings before interest and income taxes) rose by EUR 51.5 million (+181%) to EUR 80.0 million.

Real estate assets valuation method retained

As in previous years, DIC Asset AG values its real estate portfolio at net book values. Income and gains are only shown if they were realised through increased rentals or sales proceeds. Current income includes scheduled depreciation, which results proportionately from the anticipated useful life in accordance with IFRS. In 2007, income before depreciation amounted to around EUR 55. million (previous year: EUR 23.5 million).

Profit for the period: more than doubled yet again

As in the previous year, consolidated profit rose by more than 100%. In financial year 2007, the post tax profit rose by EUR 21.1 million (+141%) to EUR 36.1 million. The return (consolidated profit in relation to total revenues) rose by 1.8 percentage points to 15.3%.

Earnings overview

	2007	2006
FFO (EUR million)	44.6	21.8
EBITDA (EUR million)	.8	37.0
EBITDA in relation to total revenues	42.3%	33.4%
EBIT (EUR million)	80.0	28.5
EBIT in relation to total revenues	33.%	25.7%
Income before depreciation (EUR million)	55.	23.5
Income before depreciation in relation to total revenues	23.7%	21.2%
Consolidated profit (EUR million)	36.1	15.0
Consolidated profit in relation to total revenues	15.3%	13.5%
EPS (in EUR)	1.25	0.85

Financial Position of the Group

Centralised financial management

DIC Asset AG organises its financing centrally. This combined management of financing for all companies allows capital to be acquired at favourable levels, contributes to improvements in earnings and controls interest and liquidity risks. The incorporation of finance partners as shareholders in DIC Asset AG minimises the financing risk when procuring outside capital. The Company's financial liabilities are associated with normal market conditions, which are reviewed regularly. DIC Asset AG maintains good business relationships with various partner banks and, as a result, avoids being heavily dependent on individual financial institutions.

Equity increase extends financing leeway

In December 2007, DIC Asset AG increased its share capital by 10% and acquired equity of some EUR 62 million by issuing new shares. The equity is to be used to finance upcoming acquisitions.

In addition to procuring capital through banks, additional financing sources are available to DIC Asset AG through its partnership with investors of Deutsche Immobilien Chancen Group. This is currently primarily being utilised in the form of a loan from Provinzial Rheinland for an amount of EUR 11.3 million (previous year: EUR 12.5 million).

Acquisitions increase outside financing

All interest-bearing obligations of DIC Asset AG are reported under debts. During the financial year, debt was increased by EUR 66.7 million (+87%) to EUR 1,457.4 million largely because of borrowing during the course of acquisitions. The vast majority of DIC Asset AG's financing requirement is met by borrowing from banks.

Stable financing structure

In principle, the terms and interest rates of loans are geared to the business plans of the respective investments. Some 88% of all debt is composed of long-term interest-rate hedge agreements. A considerable portion of debt (65%) is agreed long-term with a term of more than five years. In 2008 only some EUR 15. million (1.1%) and in 200 some EUR 36.3 million (2.5%) are due to be repaid.

In addition to fixed interest-rate agreements, DIC Asset AG uses derivate financial instruments for hedging purposes in the case of debts with variable interest rates. In this way DIC Asset AG hedges the risk of rising interest rates and is therefore able to create an attractive and sustainable structure for the individual investments' business plans. As at 31 December 2007, the average annual interest rate for all DIC Asset AG's debts was 5.22%. Interest rates have risen in line with the general trend in the course of the financial year; as at 31 December 2006, the average interest rate was 4.70%.

		Portfolio

Debts overview
EUR million	2007	2006
Liabilities to banks	1,446.1	748.3
Other debts	11.3	12.5
Total debts	1,457.4	760.8
Total liabilities	1,508.8	809.7
Debt ratio	71.1%	60.3%
Equity	612.7	534.0
Equity ratio	28.%	3.7%

Debt terms

EUR million

Freely available assets at just under EUR 150 million

As at 31 December 2007, the net liquidity of DIC Asset AG (liquid assets, less short-term debt) had risen to EUR 14.4 million (previous year: EUR 16.2 million), primarily due to the capital increase at the end of the financial year.

Part of the liquid funds amounting to EUR 41.5 million is already earmarked to purchase the equity portion of the Forum portfolio. The purchase price was due when title was transferred on 2 February 2008. The Company also has contractually agreed loan commitments with a volume of EUR 6.7 million in place for these commitments.

DIC Asset AG does not make any use of off-balance sheet financing. The consolidated financial statements reflect all forms of the Company's financing. More detailed information on financing such as terms of loans or derivative financial instruments is provided in the Notes to the consolidated financial statements.

Investment at record level

In total DIC Asset AG invested EUR 1,201 million in real estate portfolios in five acquisitions in 2007. In the previous year, DIC Asset AG purchased real estate worth around EUR 1 billion. The two largest investments in the financial year were the purchases of the Odin portfolio (EUR 460 million) and the Dolphin portfolio (EUR 320 million).

A total of EUR 888 million in investments for the year is reported in the balance sheet. In addition, EUR 3 million relates to joint ventures with Deutsche Immobilien Chancen AG & Co. KGaA as lead investor in opportunistic investments. At the reporting date, the Company has investment commitments of EUR 13 million, which will, in essence, have an impact in financial year 2008 following the transfer of ownership.

Around EUR 46.4 million was invested in the Core segment. EUR 31.5 million came from investments in the Value Added segment and EUR 14.2 million from the Opportunistic Co-investments segment.

DIC Asset AG has sufficient resources in equity and secured outside capital for its obligations arising from investments in the financial year.

Cash flow: liquidity for investments involved

Cash flow in the 2007 financial year amounted to some EUR 28.7 million from current business activity. An additional EUR 736.7 million came from financial activity, largely from new borrowings. The cash flow was mainly used for the purchase of properties during the financial year, mostly for investment in the Odin and Dolphin portfolios. Sales during the financial year increased DIC Asset AG's cash holdings by some EUR 134.0 million. Majority of these funds have likewise flowed back out during the course of the year to finance acquisitions. DIC Asset AG has used resources totalling some EUR 77. million for investment purposes. At the end of the financial year, cash and cash equivalents amounted to EUR 165.3 million (previous year EUR 17.7 million).

The financing of DIC Asset AG is arranged on a long-term basis and is subject to constant review as part of ongoing planning. The steadiness and computability of cash flow from rental income allows liquidity to be forecast in a detailed fashion over a longer period and enables funds to be deployed in a targeted manner. With new acquisitions, long-term finance is agreed before purchase contracts are concluded. Under current conditions, DIC Asset AG is able at any time to fulfil its payment obligations in full and on schedule.

Overview of capital inflows

EUR million	2007	2006
Profit for the period	36.1	15.0
Cash flow from operating activities	28.7	23.
Cash flow from investing activities	-77.	-875.1
Cash flow from financing activities	736.7	1.
Increase in cash and cash equivalents	-14.5	140.6
Cash and cash equivalents as at 31 Dec	165.3	179.7

Asset Position of the Group

Balance sheet total increased to over EUR 2 billion

The balance sheet total as at 31 December 2007 rose by EUR 777.8 million (+58%) to EUR 2,121.5 million. This is largely attributable to the acquisition of real estate assets during the financial year.

Non-current assets grew by EUR 74.0 million (+72%) to EUR 1,04.3 million. In essence, the increase in real estate held as financial investments of EUR 764.8 million (+70%) to EUR 1,851.3 million is the result of the financial year's purchase and sale transactions, which are described in detail from page 37. Shares in affiliated companies changed by EUR 21.1 million (+254%) to EUR 2.4 million. The material changes here were also attributable to the purchase of properties within the Opportunistic Co-Investments segment (EUR +16.4 million) and the legal restructuring of two portfolios (EUR +4.7 million).

Current assets shrank slightly by EUR 16.1 million (-7%) to EUR 217.2 million, however, the structure changed only slightly compared with the previous year. The placement of shares carried out in December 2007 increased cash and cash equivalents by EUR 62.4 million in December 2007.

The majority of holdings are held in the Core and Value Added segments. The Core segment contained assets amounting to EUR 1,040.6 million as at 31.12.2007 (previous year EUR 52.2 million), the asset segment in the Value Added area amounted to EUR 11. million (previous year EUR 530.5 million). In the Opportunistic Co-Investments segment, assets, including investments, amounted to EUR 37.6 million (previous year EUR 16.0 million). Other assets amounted to EUR 126.2 million on the cut-off date and were made up of assets covering many segments, which were mainly held by DIC Asset AG.

Equity increased

As at 31 December 2007, equity increased by EUR 78.7 million (+15%) to EUR 612.7 million, primarily as a result of the capital inflow of EUR 62.4 million as a result of the capital increase in December 2007 and the increase in the balance sheet profit of EUR 14.2 million. On the basis of the Company's active investment policy and the marked expansion in its real estate assets, the equity ratio fell by 10.8 percentage points to 28.% at the year-end. Taking account of the positive difference from market to book values for real estate and investments, the equity level stands at 32.3%.

Liabilities

Non-current debt rose by EUR 66. million (+2%) to EUR 1,457.0 million, largely as result of financing the acquisition of the Odin (EUR +354.4 million) and Dolphin (EUR +237.0 million) portfolios. Sales of properties within the financial year reduced non-current debt by around EUR 85 million.

Overview of the balance sheet

EUR million	31.12.2007	31.12.2006
Total assets	2,121.5	1,343.7
Non-current assets	1,04.3	1,111.0
Current assets	217.2	233.4
Equity	612.7	534.0
Non-current liabilities	1,457.0	760.1
Current liabilities	51.8	4.6

Balance sheet structure in %

Current debt remained virtually at the level of the previous year with a slight increase of EUR 2.2 million (+4%) to EUR 51.8 million.

As with the assets, the majority of liabilities are similarly split between the Core and Value Added segments. Liabilities in the Core segment amounted to EUR 765.1 million as at 31.12.2007 (previous year EUR 385.6 million); liabilities in the Value Added segment amounted to EUR 707.2 million (previous year EUR 406.4 million). As with the earnings-risk structure, borrowing in the Value Added segment is higher than in the Core segment.

There are no off-balance sheet assets. All activities of DIC Asset AG are recorded in the consolidated financial statements.

Net asset value up

The net asset value of the intrinsic value of DIC Asset AG stood at EUR 722.2 million (previous year EUR 608.2 million), based on the consolidated balance sheet as at 31.12.2007 and supplemented by the market value of real estate as determined by appraisers. The net asset value per share increased by 8% to EUR 23.04 compared with the previous year.

Results of Operations, Financial and Asset Position of DIC Asset AG

DIC Asset AG is the management company of the DIC Asset Group. All group real estate activities are organised in the property companies. The earnings situation is therefore significantly influenced by the results from investments. DIC Asset AG prepares its separate financial statements in accordance with the HGB.

In financial year 2007, profits were increased by EUR 40.4 million to EUR 4.7 million. The increase is essentially due to higher earnings from investments (+ EUR 10.0 million) and to miscellaneous operational income from the sale of investments (+ EUR . million) compared with the previous year. Interest income also increased by EUR 6.4 million as a result of an increase in investment in and lending to joint ventures.

The Company's equity amounted to EUR 622.6 million as at 31 December 2007, some EUR 0.7 million more than in the previous year. As at 31 December 2007, the equity ratio of DIC Asset AG remained more or less static at 3% (previous year: 4%).

Risk Report

DIC Asset AG's risk management is an integral component of the principles of management and supervision in the Group. An effective system of risk management helps the Company to achieve its targets and secures its continued existence in the interests of its shareholders. We have therefore developed a risk management system for all areas of operations within DIC Asset AG and for agreement and control by our service providers. The fact that it is integrated within our organisation and mandatory for all parts of the business and all employees should ensure that risks are recognised promptly and can be countered in an appropriate and speedy manner.

Risk management system

DIC Asset AG's risk management system aims to recognise all relevant risks with regard to potential losses or disruptions at an early stage, to record them and to quantify them. The procedure ensures that optimal countermeasures are adopted to eliminate or manage risk. At the same time, the Board of Directors and Supervisory Board are kept regularly informed via established reporting channels. In addition, the Board of Directors is informed without delay of any material risks and information so that it can take appropriate action immediately.

Responsibility for identifying, reporting, assessing and managing occurring and potential risks has been decentralised and lies with the respective specialist level. Risk review processes, summary reporting and risk control processes are carried out centrally.

Risk identification

To identify risks as early as possible, DIC Asset AG monitors macroeconomic events, trends in both the real estate and the financial sectors and internal processes. Material business risks were defined to ensure a standardised and comprehensible approach. This compilation allows employees to recognise risks in a structured manner at different levels and responsibilities.

External risks

• ❖ Macroeconomic risks
• ❖ Sector-specific risks
• ❖ Regulatory and political risks
• ❖ Legal risks
• ❖ Natural hazards

Financial risk

• ❖ Currency risks
• ❖ Interest rate risks
• ❖ Financing and liquidity risks

Strategic risks

• ❖ Transaction risks
• ❖ Development risks

Operational risks

• ❖ Letting risks
• ❖ IT risks

Risk assessment

Risks identified with the help of the risk catalogue are assessed with regard to the probability of their occurring and the potential loss established. The extent of any potential impact on profits is assessed using scenario analyses or sensitivities.

Risk reporting

Information on risks entailing a substantial financial impact is notified by the specialist level immediately. Longerterm risks are integrated in the strategic planning process as a component. The Board of Directors is kept regularly informed via summary reports and, as a result, is able to act promptly and take appropriate risk management action.

Risk management and control

If necessary, the respective specialist managers together with the Board of Directors decide on an appropriate strategy for managing the risks. The control team monitors the operational success in managing risks and is therefore able to recognise deviations from plan in good time.

Risk management documentation

The existing guidelines, procedures, instruments, areas of risk and responsibilities are recorded in writing in individual documents. An authoritative document summarising standard conduct to be adopted across the Group in dealing with operational risk is currently being devised and will then be made available for all employees.

■ External risks

Macroeconomic risks

Companies' willingness to invest, consumer expenditure and unemployment impact most notably on DIC Asset AG's new letting activities. A recession therefore constitutes a short to medium-term risk for growth in sales. However, thanks to the long-term leases for our properties and the high utilisation rates this risk only affects a limited proportion of sales. To minimise this risk, DIC Asset AG concentrates particularly on long-term leases to top quality tenants, on spreading sales across a large number of different tenants and investing in rapidly growing regions. A recession can also have a negative impact on the DIC Asset AG's buying and selling activities as well as its growth targets and the realisation of capital growth. For 2008 we expect a slight slowdown in the economy in Germany. We consider the risk of an abrupt and dramatic change in economic activity to be slight. Should the risk occur, this could have a fairly serious negative financial impact on financial year 2008.

Sector specific risks

DIG Asset AG is exposed to risks within the real estate sector from various trends. In the letting market an oversupply of space can lead to price pressures, a loss of margin and vacancies. DIC Asset AG minimises this risk on the one hand by an intensive examination of the respective local market before any investment, on the other hand in its subsidiary DIC ONSITE it has a property and asset management organisation operating across Germany, which is able to implement suitable measures to let or reposition local properties directly and quickly. Furthermore, if prices for property acquisitions are rising due to strong demand or high interest rates, there is a risk that DIC Asset AG will not be able to implement its growth strategy fully. Given the current market situation, we consider that these risks are minor for financial year 2008, as would be the negative financial effects. Less demand as well as a reduction in sales prices combined with an increase in interest rates or a deterioration in financing options could considerably jeopardise DIC Asset AG's sales plans. If this complex scenario occurred, the negative consequences for the Company's results in financial year 2008 would be substantial.

Regulatory and political risks

DIC Asset AG is generally exposed to risks resulting from a change in the general conditions as a result of legislation or other provisions. Since DIC Asset AG's operations are confined to Germany and changes of this kind do not occur suddenly and surprisingly in most cases, there is sufficient time to react to changes. For financial year 2008, we consider the risk to be minor and we assess the possible financial impact of a risk of this kind to be minimal.

Legal risks

DIC Asset AG is exposed to the risk that third parties will assert claims or file actions for a possible breach of their rights within the framework of normal business operations. To minimise this risk, all material corporate actions such as purchase and sale transactions are carefully – in the vast majority of cases by external legal experts – checked to identify and avoid potential conflicts. There are no material legal disputes, which could constitute a considerable risk for the Company's future development, either pending or foreseeable. We consider the risk from current legal disputes to be low. These could have a minor financial impact.

The Company has withdrawn its request to the Federal Supreme Court of Germany (Bundesgerichtshof) to review the lawsuit filed by two shareholders in 2003 challenging the resolutions passed by the general shareholders' meeting of the Company on 27 August 2003 to approve the actions of the Board of Directors and the Supervisory Board for financial year 2002 and the use of the balance sheet profit. As a result, the rulings by the lower courts, which allowed the action, are binding in law. There are no significant effects on the Company arising from this situation.

In the lawsuit by a shareholder dating from 2004 aimed at having the consolidated financial statements from financial years 2002 and 2003 declared null and void, the shareholder's appeal against the ruling of inadmissibility was rejected by the Federal Supreme Court. As a result, the rulings by the lower courts, which had rejected the action, are also binding in law.

Finally, a motion for special court appraisal proceedings against the Company by several shareholders, with the petition for a determination of an appropriate additional cash payment for shareholders of the former DIC Beteiligungs- und Immobilien AG is pending. The petitions were rejected by the District Court in January 2005. The petitioners immediately filed an appeal which has not yet been decided. Because of the small number of shares concerned, the outcome of the appraisal proceedings will have no significant effect on the Company. It could result in a minor financial impact.

Overall, we consider the risk from current legal disputes is low. It could result in a minor financial impact.

Natural hazards

As is the case for any company, DIC Asset AG is exposed to natural hazards such as natural disasters, fire and accidents. In addition, damage to properties, in particular, can lead to physical damage and to the loss of regular rental income. In essence, DIC Asset AG counters these risks with comprehensive insurance cover. Given adequate compensation from the insurance companies, a minimal financial loss is to be assumed. We consider the likely occurrence of these natural hazards to be low.

■ Financial risks

Interest rate risks

Significant changes in interest rates can impair the Group's profitability, liquidity and financial position as well as its opportunities for expansion. DIC Asset AG counters interest rate risk by securing the current interest rate level long-term, most notably through fixed-interest agreements. In addition, interest rate hedge agreements and modern financing tools are used to hedge variable rate agreements. As at 31 December 2007, the average interest rate amounts to 5.22%. Almost 0% of all liabilities are fixed interest and concluded long-term. We estimate the probability of interest rate risks, which could have a substantial negative impact on current income in financial year 2008 to be low.

Financing and liquidity risks

Satisfaction of the Company's ongoing financing requirements entails the risk of having to accept disadvantageous financing conditions in the event of any liquidity crunch. DIC Asset AG has secured its financing requirements for its operations long-term. Similarly, when deciding on new acquisitions, affordable long-term financing is also a material condition. With its rental income base, DIC Asset AG benefits from strong cash flow that is foreseeable in the long-term. This risk is monitored and managed on an ongoing basis through the continual development of the Company's liquidity planning process. With regard to any planned acquisitions, financing is secured before contracts are concluded. In the case of future purchases, risks could arise with regard to the procurement of adequate financial resources. We categorise the risk probability and any potential negative impact as low.

Currency risks

There were no material currency risks at the reporting date. All rental income is paid in euro. Solely two sub-loans with an amount of CHF 10.1 million are maintained in Swiss francs.

■ Strategic risks

Transaction risks

DIC Asset AG has grown rapidly in recent years and is continuing to pursue its growth strategy. In the case of acquisitions, particularly large-scale portfolios, there are risks such as overvaluing potential income and synergies as well as undervaluing future cost increases and rental risks. The Company counters this risk before purchase with a detailed due diligence process and the preparation of business plans, which allow us to monitor the cost and income risks continuously through an ongoing process of adjustment. The staff involved have in-depth knowledge of the situation on regional markets and many years' expertise in transactions as well as in the real estate industry and, in particular, in-depth knowledge of the regional market situation. We therefore estimate this risk and its impact as medium-rise.

Development risks

DIC Asset AG undertakes project development work to reposition properties and increase their value and is involved in projects as part of its opportunistic co-investments. The vast majority of these projects are long-term in nature. Within the development period, risks may arise as a result of changes in market circumstances and delays in completing the development. Both may impact upon

projects' profitability and liquidity. To reduce this risk, we therefore only become involved in development projects where a long-term anchor tenant has been found and, as a result, the fundamental success of the project is guaranteed. In addition, we secure financing at an early stage and monitor our project developments closely and in real time. We also endeavour to preclude any cost risk and spread risks through various agreements such as involving general contractors. Potential construction risks are covered by appropriate contractual clauses and the arrangement of insurance cover. On the basis of current project developments, we estimate this risk as improbable and its potential impact as moderate.

■ Operational risks

Letting risks

DIC Asset AG minimises the risk of non-payment of rent by letting and leasing its properties to companies with good credit as well as a consistent and low risk business model. DIC Asset AG tries to avoid being dependent on a few major tenants who account for a large proportion of its sales (cluster risk). In addition, particularly when deciding on acquisitions, the risk of non-payment of rent is countered by an intensive analysis of properties, locations and tenants as well as constant monitoring of the development of relevant real estate markets. The Company also attaches great value to possibility of third party use of properties when considering investments. Generally, long-term tenancy agreements are desirable and measures are also taken promptly to extend expiring tenancy agreements. There is a risk of non-payment of rent in individual cases but we consider it minor when viewed collectively. In financial year 2008, tenancy agreements with a pro rata volume of some EUR 12.8 million will end. There are also rental agreements amounting to EUR 5.6 million, which are periodically extended for various terms and thus with no fixed date for termination. We assume that majority of these can be let at short notice by extending agreements or by subsequent lettings. This risk may result in minor negative financial effects for financial year 2008.

IT risks

A loss of the database or a longer failure in the systems used by DIC Asset AG could lead to its operations being disrupted. The Company has therefore protected itself against IT risks through an independent network and safeguards against external attacks. All relevant data are backed up daily. We therefore consider this risk and its possible consequences to be low.

■ Overall risk

With regard to the risks explained in this report and the current prospects for business, we do not anticipate any risks whose effect could jeopardise DIC Asset AG's existence.

Relationships to Affiliates

The Board of Directors has prepared a separate report on relationships to affiliates in accordance with § 312 AktG. The report ends with the following declaration:

"We hereby declare that according to the facts known to us at the time in which the legal transactions were conducted, our Company received or paid a commensurate consideration in each transaction. We took no actions at the behest of or on behalf of the controlling company."

Information on related parties in accordance with the provisions of IAS 24 can be found in the Notes to the consolidated financial statements.

Other Information

■ Information in accordance with §§ 289 Para. 4, 315 Para. 4 HGB and explanatory report

The following information provided under §§ 28 Para. 4, 315 Para. 4 HGB shows the position existing at the balance sheet date. This information together with the notes meet the requirements for an explanatory report under the § 120 Para. 3 Sentence 2 AktG.

Composition of the subscribed capital

The subscribed capital in the amount of EUR 31,34,.00 consists of 31,34, bearer shares in the form of no-par shares. There are no other classes of shares. All shares have the same rights and obligations. Each share gives entitlement to one vote at the general shareholders' meeting. The voting right begins when the statutory minimum deposit has been made on the shares. The rights

and obligations tied to the shares are shown in detail in the terms of the Stock Corporation Act (AktG), in particular §§ 12, 53a ff., 118 ff. and 186.

Restrictions affecting voting rights or the transfer of shares

The shareholders Deutsche Immobilien Chancen AG & Co. KGaA and Forum S.à r.l. (as well as Forum European Realty Income II. L.P., which is itself not currently a shareholder of DIC Asset AG, but beginning 15 October 2008 can acquire from Deutsche Immobilien Chancen AG & Co. KGaA 2,068,65 no par value shares in DIC Asset AG) have agreed to exercise jointly their voting rights at the general shareholders' meeting of DIC Asset AG as regards the contents of certain proposals ("shareholder voting agreement").

The shareholder voting agreement only comes into effect when the general shareholders' meeting of DIC Asset AG is to decide on (i) a capital increase against contributions in kind, or (ii) a merger in which in which neither Deutsche Immobilien Chancen AG & Co. KGaA nor a participating shareholder with a greater than 25% interest in Deutsche Immobilien Chancen AG & Co. KGaA nor a subsidiary of Deutsche Immobilien Chancen AG & Co. KGaA nor a subsidiary of a participating shareholder with a more than 25% interest in Deutsche Immobilien Chancen AG & Co. KGaA participates as a contributor in kind or as a legal entity participating in the merger.

If agreement cannot be reached between the parties to the shareholder voting agreement as to the exercise of the voting rights in the general shareholders' meeting of DIC Asset AG, Deutsche Immobilien Chancen AG & Co. KGaA has the right to determine the vote of Forum S.à r.l., its parent company Forum European Realty Income II L.P. or any of their associates.

With regard to the voting rights from 2,068,66 no par value shares in DIC Asset AG, Deutsche Immobilien Chancen AG & Co. KGaA has obligated itself to Forum European Realty Income II, L.P. to exercise the voting rights in such a way that neither the lien against these shares nor the ownership of these shares may be significantly impaired. Independently of the shareholder voting agreement, Deutsche Immobilien Chancen AG & Co. KGaA has promised, in the framework of an agreement on the election of the Supervisory Board of DIC Asset AG, the right to Forum European Realty Income II L.P. to elect one of the six members of the Supervisory Board of DIC Asset AG. If the number of members of the Supervisory Board of the Company is increased to nine, Forum European Realty Income II L.P. will be entitled to name two members of the Supervisory Board of DIC Asset AG.

Deutsche Immobilien Chancen AG & Co. KGaA has obligated itself to Forum European Realty Income II. L.P. to exercise its voting rights in accordance with the agreement at the general shareholders' meeting of DIC Asset AG during elections to the Supervisory Board.

DIC Capital Partners (Europe) GmbH and GCS Verwaltungs GmbH on the one side and Forum European Realty Income II L.P. and Forum S.à r.l. on the other side have agreed to the following "drag-along" and "tag-along" rights in relation to the shares in DIC Asset AG: If DIC Capital Partners (Europe) GmbH intends to sell or transfer shares of DIC Asset AG that it directly or indirectly holds (collectively: "DIC shares") itself or through one or more subsidiaries (including Deutsche Immobilien Chancen AG & Co. KGaA) to third parties that are not associated as defined in § 15 AktG with DIC Capital Partners (Europe) GmbH or GCS Verwaltungs GmbH, then DIC Capital Partners (Europe) GmbH has the irrevocable right to demand of Forum European Realty Income II L.P. and Forum S.à r.l. that the shares in DIC Asset AG that are held directly by Forum European Realty Income II L.P. or Forum S.à r.l. or other subsidiaries of Forum European Realty Income II L.P., or that Forum European Realty Income II L.P. will have acquired through a declaration of intent from Deutsche Immobilien Chancen AG & Co. KGaA after 15 October 2008 (collectively: "Forum shares") be sold and transferred to the acquirer under the conditions agreed between the acquirer and DIC Capital Partners (Europe) GmbH and/or GCS Verwaltungs GmbH ("drag-along right").

This drag-along right extends to that portion of the total Forum shares that corresponds to the sold DIC shares in relation to the total DIC shares. A condition of the dragalong right is that the consideration to be paid by the acquirer to Forum European Realty Income II L.P. and/or Forum S.à r.l. is due no later than 30 June 2012 and is payable in cash or freely transferable contributions in kind.

If Deutsche Immobilien Chancen AG & Co. KGaA intends to sell or transfer shares in DIC Asset AG it holds directly in an amount of more than 3% of the equity capital to a third party that is not an associate as defined in § 15 AktG with Deutsche Immobilien Chancen AG & Co. KGaA, then DIC Capital Partners (Europe) GmbH has the obligation, within the boundaries of the law, to exercise its influence as majority shareholder in such a way that Deutsche Immobilien Chancen AG & Co. KGaA guarantees to Forum S.à r.l. the right to sell its shares in DIC Asset AG to the acquirer at the same time ("tag-along right).

This tag-along right extends to that portion of the total Forum shares that corresponds to the sold DIC shares in relation to the total DIC shares.

The Board of Directors is unaware of any other restrictions which affect the voting rights or the transfer of shares.

Direct and indirect capital shareholdings

With regard to direct and indirect holdings in the capital of DIC Asset AG, the company has the notifications listed below pursuant to §§ 21 Para. 1 WpHG. With the exception of the notifications reproduced under numbers 11, 12 and 25, these are shareholders that hold more than 10% of the capital and voting rights of DIC Asset AG directly or indirectly. The share of the voting rights indicated corresponds to the share of the capital.

• 1. Pursuant to § 21 Para. 1 WpHG, Deutsche Immobilien Chancen AG & Co. KGaA, Frankfurt am Main has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006. The share of voting rights of Deutsche Immobilien Chancen AG & Co. KGaA now totals 35.0% (corresponding to 10,230,022 votes). Of these, 1.53% are classified as voting rights (corresponding to 436.50 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 2 Sentence 1 WpHG.
• 1. Pursuant to § 21 Para 1. WpHG, Deutsche Immobilien Chancen Beteiligungs AG, Frankfurt am Main has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006. The share of voting rights of Deutsche Immobilien Chancen Beteiligungs AG now totals 35.0% (corresponding to 10,230,022 votes). Of these, 30.56% are classified as voting rights (corresponding to 8,710,022 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 2 Sentence 1 WpHG.
• 1. Pursuant to § 21 Para. 1 WpHG, DIC Grund- und Beteiligungs GmbH, Erlangen, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006. The share of voting rights of DIC Grund- und Beteiligungs GmbH now totals 35.0% (corresponding to 10,230,022 votes). Of these, 30.56% are classified as voting rights (corresponding to 8,710,022 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 2 Sentence 1 WpHG.
• 1. Pursuant to § 21 Para. 1 WpHG, DIC Capital Partners (Europe) GmbH (formerly DIC Beteiligungs GmbH), Munich, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006. The share of voting rights of DIC Capital Partners (Europe) GmbH now totals 35.0% (corresponding to 10,230,022 votes). Of these, 30.56% are classified as voting rights (corresponding to 8,710,022 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 2 Sentence 1 WpHG.
• 1. Pursuant to § 21 Para. 1 WpHG, GCS Verwaltungs GmbH, Glattbach, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006. The share of voting rights of GCS Verwaltungs GmbH now totals 35.56% (corresponding to 10,230,022 votes). Of these, 30.56% are classified as voting rights (corresponding to 8,710,022 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 2 Sentence 1 WpHG.
• 1. Pursuant to § 21 Para. 1 WpHG, Prof. Dr. Gerhard Schmidt, Germany, has informed us that his share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006. The share of voting rights of Dr. Schmidt now totals 35.0% (corresponding to 10,230,022 votes). Of these, 30.56% are classified as voting rights (corresponding to 8,710,022 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 2 Sentence 1 WpHG.
• 1. Pursuant to § 21 Para. 1 WpHG, Forum European Realty Income S.à r.l., Luxembourg, Grand Duchy of Luxembourg, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006 and now stands at 35.0% (corresponding to 10,230,022 votes). 30.56% of these voting rights (corresponding to 8,710,022 votes) have been assigned to Forum European Realty Income S.à.r.l. pursuant to § 22 Para. 2 WpHG.
• 1. Pursuant to § 21 Para. 1 WpHG, Forum European Realty Income II, L.P., George Town, Cayman Islands, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006 and now stands at 35.0% (corresponding to 10,230,022 votes). 35.0% of these voting rights (corresponding to 10,230,022 votes) have been assigned to Forum European Realty Income II, L.P., pursuant to § 22 Para. 2 WpHG. Of these, 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 7.26% are classified as voting rights (corresponding to 2,068,65 votes) pursuant to § 22 Para. 1 Sentence 1 WpHG.

• . Pursuant to § 21 Para. 1 WpHG, Forum European Realty Income II, L.P., George Town, Cayman Islands, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006 and now stands at 35.0% (corresponding to 10,230,022 votes). 35.0% of these voting rights (corresponding to 10,230,022 votes) have been assigned to Forum European Realty Income II, L.P., pursuant to § 22 Para. 2 WpHG. Of these, 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 7.26% are classified as voting rights (corresponding to 2,068,65 votes) pursuant to § 22 Para. 1 Sentence 1 WpHG.

• 1. Pursuant to § 21 Para. 1 WpHG, Forum Partners Investment Management, LLC, Santa Fe, USA, has informed us that its share of the voting rights of DIC Asset AG fell below the 50% level on 8 December 2006 and now stand at 35.0% (corresponding to 10,230,022 votes). 35.0% of these voting rights (corresponding to 10,230,022 votes) have been assigned to Forum Partners Investment Management, LLC, pursuant to § 22 Para. 2 WpHG. Of these, 5.33% are classified as voting rights (corresponding to 1,520,000 votes) pursuant to § 22 Para. 1 Sentence 1 No.1 WpHG and 7.26% are classified as voting rights (corresponding to 2,068,65 votes) pursuant to § 22 Para. 1 Sentence 1 and Sentence 5 WpHG.
• 1. FMR Corp., Boston, Massachusetts, USA, informed us pursuant to Sec. 21 para. 1 sentence 1 German Securities Trading Act (WpHG) that its voting interest in DIC Asset AG, Frankfurt/Main has fallen below the threshold of 3% on 1 February 2007 and now stands at 1.71%. The voting rights are assigned to FMR Corp.

pursuant to § 22 (1) 2 WpHG in conjunction with § 22 (1) 1 No. 6 WpHG.

• 1. Stichting Pensioenfonds ABP, Heerlen, The Netherlands, informed us pursuant to Sec. 21 para. 1 sentence 1 German Securities Trading Act (WpHG) that its voting interest in DIC Asset AG, Frankfurt/Main has exceeded the threshold of 3 % on October 4, 2007 and amounts to 3.23 % (21,580 voting rights) on this day.
• 1. DIC ML GmbH, Frankfurt/Main, Germany, informed us pursuant to Section 21 para. 1 German Securities Trading Act (WpHG) that its voting share in DIC Asset AG, Frankfurt/Main, Germany, exceeded the threshold of 10 % on December 7, 2007 and amounts to 12.40 % (3,886,668 voting rights) on this day.
• 1. MSREF V Marble B.V., Amsterdam, the Netherlands, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are directly held by MSREF V Marble B.V.
• 1. MSREF V Cosmos B.V., Amsterdam, the Netherlands, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to MSREF V Cosmos B.V. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., whose attributed voting rights are 3% or more.
• 1. MSREF V International Holdings Coöperativ, U.A., Amsterdam, the Netherlands, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to MSREF V International Holdings Coöperativ pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V. and MSREF V Cosmos B.V., whose attributed voting rights are each 3% or more.
• 1. Morgan Stanley Real Estate Fund V International-TE, L.P., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to Morgan Stanley Real Estate Fund V International-TE, L.P. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V. and MSREF V International Holdings Coöperativ, U.A., whose attributed voting rights are each 3% or more.
• 1. Morgan Stanley Real Estate Fund V International-T, L.P., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attrib-

uted to Morgan Stanley Real Estate Fund V International-T, L.P. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V. and MSREF V International Holdings Coöperativ, U.A., whose attributed voting rights are each 3% or more.

• 1. Morgan Stanley Real Estate Investors V International, L.P., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to Morgan Stanley Real Estate Investors V International, L.P. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V. and MSREF V International Holdings Coöperativ, U.A., whose attributed voting rights are each 3% or more.
• 1. Morgan Stanley Real Estate Fund V Special International, L.P., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to Morgan Stanley Real Estate Fund V Special International, L.P. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V. and MSREF V International Holdings Coöperativ, U.A., whose attributed voting rights are each 3% or more.
• 1. MSREF V International-GP, L.L.C., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to MSREF V International-GP, L.L.C. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V., MSREF V International Holdings Coöperativ, U.A., Morgan Stanley Real Estate Fund V International-TE, L.P., Morgan Stanley Real Estate Fund V International-T, L.P., Morgan Stanley Real Estate Investors V International, L.P. and Morgan Stanley Real Estate Fund V Special International, L.P., whose attributed voting rights are each 3% or more.
• 1. MSREF V, L.L.C., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to MSREF V, L.L.C. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V., MSREF V International Holdings Coöperativ, U.A., Morgan Stanley Real Estate Fund V International-TE, L.P., Morgan Stanley Real Estate Fund V International-T, L.P., Morgan Stanley Real Estate Investors V International, L.P., Morgan Stanley Real Estate Fund V Special International, L.P. and MSREF V International-GP, L.L.C., whose attributed voting rights are each 3% or more.
• 1. MSREF V, Inc., New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.41% (3,262,022 voting rights). All voting rights are attributed to MSREF V, Inc. pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted via MSREF V Marble B.V., MSREF V Cosmos B.V., MSREF V International Holdings Coöperativ, U.A., Morgan Stanley Real Estate Fund V International-TE, L.P., Morgan Stanley Real Estate Fund V International-T, L.P., Morgan Stanley Real Estate Investors V International, L.P., Morgan Stanley Real Estate Fund V Special International, L.P., MSREF V International-GP, L.L.C. and MSREF V, L.L.C., whose attributed voting rights are each 3% or more.
• 1. Morgan Stanley, New York, USA, informed us pursuant to Sections 21 et seq. of the German Securities Trading Act (WpHG) that on December 7, 2007 its voting rights in DIC Asset AG, Frankfurt am Main, exceeded the threshold of 10% and since then amounts to 10.87% (3,40,081 voting rights). All voting rights are attributed to Morgan Stanley pursuant to § 22 (1) 1 no. 1 WpHG. An attribution is conducted, inter alia, via MSREF V Marble B.V., MSREF V Cosmos B.V., MSREF V International Holdings Coöperativ, Morgan Stanley Real Estate Fund V International-TE, L.P., Morgan Stanley Real Estate Fund V International-T, L.P., Morgan Stanley Real Estate Investors V International, L.P., Morgan Stanley Real Estate Fund V Special International, L.P., MSREF V International-GP, L.L.C., MSREF V, L.L.C. and MSREF V, Inc., whose attributed voting rights are each 3% or more.

• Massachusetts Mutual Life Insurance Company,

Springfield, Massachusetts, USA, informed us pursuant to Sections 21 para. 1, 24 German Securities Trading Act (WpHG) that the voting share of Oppenheimer Funds, Centennial, Colorado, USA, in DIC Asset AG, Frankfurt/Main, has fallen below the threshold of 3% on January , 2008 and amounted on January , 2008 to 11,303 shares, 2.1%. Furthermore, Massachusetts Mutual Life Insurance Company, Springfield, Massachusetts, USA, informed us pursuant to Section 21 para. 1 German Securities Trading Act (WpHG) that its voting share in DIC Asset AG, Frankfurt/Main, has fallen below the threshold of 3% on January , 2008 and now amounts to 11,303 shares, 2.1%, which are attributed to Massachusetts Mutual Life Insurance Company pursuant to Section 22 para. 1 sentence 1 no. 1 German Securities Trading Act (WpHG) via Oppenheimer Funds.

Statutory provisions and the requirements of the Articles of Incorporation on the appointment and dismissal of members of the Board of Directors and the amendment of the Articles of Incorporation

The appointment and dismissal of members of the Board of Directors is based on §§ 84, 85 AktG and § 7 of the Articles of Incorporation (version of 1 November 2007). Pursuant to § 7 Para. 1 of the Articles of Incorporation the Board of Directors is composed of at least one person. The Articles do not contain any special arrangements for the appointment or dismissal of individual members or all members of the Board of Directors. The Supervisory Board has the power of appointment and dismissal. It appoints members of the Board of Directors for a maximum term of office of five years. Members can be re-elected and the term of office can be renewed, in each case for up to five years.

Amendments to the Articles of Incorporation are made pursuant to §§ 17, 133 AktG and § Para. 6 and § 14 of the Articles of Incorporation (version of 1 November 2007). The Articles of Incorporation have not exercised the option to impose further requirements for amendments of the Articles. Unless prevented by statute, the general shareholders' meeting adopts resolutions by a simple majority of votes cast and, if the law prescribes a majority of shares besides a majority of votes, by a simple majority of the share capital in place when the resolution is made. The Supervisory Board has the power to make amendments to the Articles of Incorporation if only the wording is affected.

The Board of Directors' powers to issue and redeem shares

The powers of the company's Board of Directors to issue and redeem shares are all based on resolutions to that effect by the general shareholders' meeting, the content of which is shown below. With the exception of the authorisation to increase the share capital by up to EUR 14,250,000.00 (authorised capital), the Board has not made use of its powers.

Authority to acquire treasury shares

By resolution of the ordinary general shareholders' meeting of 6 June 2007 the Board of Directors is authorised until 5 December 2008 to acquire treasury shares of up to 10% of the company's share capital existing when the resolution is made. At no time may the acquired shares together with other own shares in the possession of the company or allocated to it under the §§ 71a ff. AktG represent more than 10% of the share capital. The power may not be used for the purpose of trading in own shares.

The power can be exercised as a whole or in instalments, once or more than once in succession, for one or more purposes, by the company or by third parties acting on their behalf or on behalf of the company.

At the Board of Directors' option shares can be acquired (1) on the stock exchange or (2) by a public bid made to all shareholders or by a public invitation to submit such a bid.

• (1) If the shares are acquired on the stock exchange, the price per share paid by the company (excluding transaction ancillary costs) may not be more than 10% over or under the price determined on the trading day by the closing auction in the Xetra trading system (or a comparable successor system) on the Frankfurt Stock Exchange.
• (2) If they are acquired by a public bid or a public invitation to submit such a bid, the purchase price offered or the margins of the purchase price spread per share (excluding transaction ancillary costs) may not be more than 15% over or under the average closing prices of the company's shares in the Xetra trading system (or a comparable successor system) on the Frankfurt Stock Exchange over the last five trading days before the day of the public announcement of the bid or the public invitation to submit a bid. If, after publication of a public bid or the public invitation to submit a bid, there are significant differences in the relevant price, the bid or the invitation to submit such a bid can be adjusted. In this case the average of the closing price of the company's shares in the Xetra trading system (or a comparable successor system) on the Frankfurt Stock Exchange over the last five trading days before the public announcement of any adjustment will be used as a

basis. The public bid or the invitation to submit such a bid may provide for further conditions. If the public bid is oversubscribed or, in the event of an invitation to submit such a bid, not all of several bids of equal value are accepted, shares must be allotted by quotas. A preferential acceptance of smaller numbers up to 100 offered shares per shareholder can be provided for.

The Board of Directors is authorised to use treasury shares acquired on the basis of this authorisation for any legal purpose, in particular the following:

• (1) The shares can be withdrawn without a further resolution of the general shareholders' meeting being required for the withdrawal or its execution. They can also be withdrawn by the simplified procedure without capital reduction by adjusting the pro rata mathematical amount of the remaining individual shares of the company's share capital. If they are withdrawn by the simplified procedure, the Board of Directors has the power to adjust the number of individual shares in the Articles of Incorporation.
• (2) The shares can also be disposed of in a way other than through the stock exchange or by an offer to the shareholders if the selling price payable in cash is not significantly lower than the market price of essentially equivalent shares already quoted. The number of the shares sold in this way together with the number of new shares that were issued during the life of this authorisation from authorised capital under the exclusion of subscription rights in accordance with § 186 Para. 3 Sentence 4 AktG, and the number of shares that can be created through the exercise of option and/or conversion rights or the fulfilment of conversion obligations

arising from warrant bonds or convertible bonds and or participation rights that were issued during the life of this authorisation under the exclusion of subscription rights in accordance with § 186 Para. 3 Sentence 4 AktG, does not exceed 10% of the share capital.

• (3) The shares can be sold for a contribution in kind, in particular in connection with the acquisition of businesses, parts of businesses or corporate interests and in connection with mergers of businesses.
• (4) The shares can be used to fulfil the conversion and/or subscription and/or option rights or conversion obligations as part of convertible bonds, bonds with warrants or dividend rights issued by the company or companies in which it holds a direct or indirect majority interest.

The Supervisory Board may decide that measures by the Board of Directors under a resolution of the general shareholders' meeting can only be taken with its approval.

Authorised capital

By resolution of the ordinary general shareholders' meeting of 6 June 2007, the Board of Directors was authorised, with the Supervisory Board's approval, to increase the share capital of the Company by 5 June 2012 by one or more issues of new individual bearer shares for cash and/or contributions in kind by up to EUR 14,250,000.00 (authorised capital).

Shareholders must be granted subscription rights. The new shares may also be assumed by one or more banks appointed by the Board of Directors to offer the shares (indirect subscription rights). The Board of Directors is, however, authorised to exclude shareholders subscription rights with the approval of the Supervisory Board,

(i) to compensate for fractional amounts;

• (ii) (if it is necessary to grant holders or creditors of the convertible and/or option bonds and/or participation rights issued by the Company or its direct or indirect majority-interest companies subscription rights to new shares in the amount that they would be entitled to after exercise of their conversion or option rights or after fulfilment of the conversion obligation;
• (iii) if shares are issued against contributions in kind, particularly as part of the acquisition of or merger with companies or parts of companies or the acquisition of interests in companies;
• (iv) if the shares of the Company are issued against cash contributions and the issue price per share is not significantly lower than the stock exchange price of shares with the same terms, previously issued shares at the time of the issue of the shares. In these cases, however, the exclusion of subscription rights can only take place if the number of the shares issued in this way together with the number of own shares that

were sold during the life of this authorisation under the exclusion of subscription rights in accordance with § 186 Para. 3 Sentence 4 AktG, and the number of shares that can be created through the exercise of option or conversion bonds and/or participation rights or the fulfilment of conversion obligations from conversion debentures and/or participation rights that were issued during the life of this authorisation under the exclusion of subscription rights in accordance with § 186 Para. 3 Sentence 4 AktG, does not exceed 10% of the share capital at the time the authorisation becomes effective or at the time of the issue of the new shares.

The Board of Directors is authorised, with the approval of the Supervisory Board, to determine the content of the share rights, the details of the capital increase as well as the conditions of the share issue, in particular the amount of the issue.

Entry of the approved capital in the Commercial Register of the District Court of Frankfurt am Main took place on 10 July 2007. After partial utilization by resolution of the Supervisory Board and the Board of Directors of 1 November 2007, the authorised capital is still EUR 11,400,001.00. The completion of the capital increase from the authorised capital and the corresponding amendment of the Articles of Incorporation were registered in the Commercial Register of Frankfurt am Main District Court on 3 December 2007.

Contingent capital

By resolution of the general shareholders' meeting of 1 July 2005 and the amending resolution of the ordinary general shareholders' meeting of 6 June 2007 the Board of Directors was authorised, with the Supervisory Board's approval, to issue one or several conversion and/or bonds with warrants or dividend rights (which can also bear dividend-related interest like an income bond) with or without conversion or subscription rights (also referred to as bonds below) with a term of up to 20 years and to grant creditors of bonds conversion or option rights to the company's shares with a proportional amount of the share capital of up to EUR 3,30,000.00 on the conditions of the bonds. The bonds can also bear variable interest which may also be completely or partially dependent on the amount of the company's dividend.

Besides euro, the bonds can also be issued in the legal currency of an OECD country, limited to the corresponding value in euro. They can also be issued by companies in which the company holds a direct or indirect majority interest (i.e. companies in which the company holds an indirect or direct interest with a majority of votes and capital); in this case the Board of Directors is authorised, with the Supervisory Board's approval, to guarantee the bonds and to grant holders or creditors of such bonds conversion or option rights to the company's shares.

If bonds with conversion rights are issued, the creditors can exchange their bonds on the loan terms for the company's shares. The proportion of the share capital of shares issued by conversion may not exceed the nominal value of the conversion bond. The exchange ratio is produced by division of the nominal value of a bond by the fixed conversion price for a share in the company. The conversion ratio may also be produced by division of the issue price of a bond below the nominal value by the fixed conversion price for a share in the company. The conversion ratio may be rounded up or down to a whole number; an additional amount payable in cash may also be fixed. There may also be a provision that fractions can be combined and/or settled in cash. The loan conditions may also provide for a variable conversion ratio.

The loan conditions may also provide for a conversion or option obligation at the end of the term or earlier (hereinafter also referred to as final maturity) or the right of the company, at final maturity of the bonds, to grant creditors of the bonds shares in the company instead of some or all of the payment of the cash amount due. The proportion of the share capital of the issued shares may not exceed the nominal value or an issue price below the nominal value of the bonds. The § Para. 1 AktG in conjunction with § 1 Para. 2 must be complied with.

Lastly, the loan conditions may stipulate that the company will not issue the company's shares in the event of conversion or exercise of the option or on fulfilment of the conversion or option obligations but rather pay the equivalent value in cash in accordance with the conditions of the bonds. The conditions of the bonds may also provide that, in the event of conversion or exercise of the option or on fulfilment of the conversion or option obligations, existing shares of the company may be granted at the company's discretion instead of new shares from contingent capital.

The conversion or option price set for a share must be either at least 80% of the average closing auction price of the company's share in the Xetra trading system (or a comparable successor system) on the Frankfurt Stock Exchange in the ten trading days before the day of the Board of Directors' resolution on the issue of the bonds or at least 80% of the average closing auction price of the company's share in the Xetra trading system (or a comparable successor system) on the Frankfurt Stock Exchange on those days on which the subscription rights are traded in the Xetra trading system (or a comparable successor system) on the Frankfurt Stock Exchange, with the exception of the last two trading days of rights trading.

Without prejudice to the § Para. 1 AktG, the conversion or option loan conditions may contain dilution protection clauses in the event that the company increases the share capital or issues further conversion or option loans or grants or guarantees other option rights and grants holders of conversion or option rights no subscription right to the extent to which they are entitled after exercising the conversion or option rights or fulfilling a conversion obligation during the conversion or option period while granting its shareholders a subscription right. The conditions may also provide for an escalation of the conversion or option price for other measures by the company which could result in a dilution of the value of the conversion or option price. In any event the proportion of the share capital of shares acquired for each bond may not exceed the nominal value of the bond.

When the bonds are issued the shareholders have a statutory subscription right provided that the subscription right is not ruled out by the following arrangements. If the bonds are issued by a company in which the company holds a direct or indirect majority interest as described above in (2), the company must secure the shareholders' statutory subscription right unless the subscription right is ruled out by the following arrangements. The bonds may also be issued to a broker with the obligation of offering them for subscription to shareholders.

The Board of Directors is authorised, with the Supervisory Board's approval, not to grant shareholders the right to subscribe to the bonds,

• to exclude fractions from the subscription right;
• in order to offer the conversion and/or option bonds and/or dividend rights invested with a conversion or subscription right for subscription to individual investors provided that the proportion of shares issued under these bonds does not exceed 10% of the share capital available when this authorization becomes effective and the resolution on the exercise of the authorization and the issue price of the bonds is not significantly lower than the theoretical market value of the bonds determined by the recognised methods of financial mathematics. The value of shares issued or disposed of under an authorization to that effect excluding the subscription right issued or disposed of in direct or corresponding application of the § 186 Para. 3 sentence 4 AktG (e.g. own shares or by authorization from authorised capital) is credited against the amount of 10% of the share capital, provided such credit is legal.

The Board of Directors is authorised to set the further details of the issue and terms of the bonds, in particular the term, issue and exercise periods and cancellation, issue price, conversion/option price, interest rate, denomination and adjustment of the subscription price and creation of a conversion obligation or by agreement with the executive bodies of the companies in which the company holds a majority interest issuing the bonds. The Board of Directors also specifies to whom the bonds can be offered.

To service conversion or option rights or conversion or option obligations as part of bonds issued by authorization of the general shareholders' meeting of 1 July 2005 with amending resolution of the ordinary general shareholders' meeting of 6 June 2007 until 30 June 2010 by the company or by a company in which the company holds a direct or indirect majority interest, the company's share capital has been conditionally increased by up to EUR 3,30,000.00 by the issue of up to 3,30,000 new individual bearer shares with entitlement to a dividend from the beginning of the financial year of their issue (contingent capital).

Major agreements on condition of a change of control as a result of a takeover bid

DIC Asset AG has entered into the following significant agreements that contain "change of control" clauses.

This includes a loan agreement with Provinzial Rheinland Lebensversicherung AG that provides for a cancellation right for the lender if Deutsche Immobilien Chancen AG & Co. KGaA ceases to hold at least a 30% interest in the equity of the Company.

In addition, DIC Asset AG is a partner to several joint ventures with Morgan Stanley Real Estate Funds (MSREF). MSREF will be granted the right in the case of a change of control to acquire the interests of DIC Asset AG in the respective real estate investment at the current market value. In particular, there is change of control if Deutsche Immobilien Chancen AG & Co. KGaA no longer directly or indirectly holds at least 30% of the shares and voting rights in DIC Asset AG.

Other information

The other information required under §§ 28 Para. 4, 315 Para. 4 HGB refers to circumstances that do not exist at DIC Asset AG. There are no shareholders with special rights conferring supervisory powers nor are there any voting right controls by employees with shares in the company's capital nor compensation agreements by the company with members of the Board of Directors or employees in the event of a takeover bid.

Material Events after the Balance Sheet Date

The economic transfer of the Forum portfolio containing 13 properties and with an investment volume of EUR 173 million took place on 2 February 2008. DIC Asset AG acquired the portfolio in December 2007 from iii-Investment GmbH.

Forecast

■ Development of general conditions

Positive assessment of the commercial real estate market

Leading economic research institutes and the federal government have cut their forecasts for 2008 in view of the situation on global financial markets resulting from the US mortgage crisis. On the basis of these consequences, which can still not be finally assessed, growth forecasts range between 1.5% and 2.0%. High oil prices and the strength of the euro against the dollar, which is restricting exports, are viewed as factors that will slow the German economy. Interest rate cuts are not expected with the European economy remains strong. Currently both the employment market and domestic demand are holding their own.

Even allowing for the current situation on financial markets, we expect that the economy as a whole will remain stable overall in 2008 despite a slowdown in the growth rate and that the commercial real estate market in Germany will perform positively.

Effective asset management is fundamental to success

The general conditions for investing successfully on the German commercial real estate market have changed. More heavily capitalised purchasers with the capacity to participate in the real estate economy are coming to the fore. Investment will be increasingly focused on boosting rental income and reducing vacancies. This will require extensive expert knowledge of real estate and the appropriate infrastructure.

With its in-depth knowledge of the German market, DIC Asset AG is excellently positioned to exploit this situation. Over the next few months, we expect that there will be a number of interesting opportunities to acquire properties that are no longer profitable for the vendors to manage in the current market situation or which can no longer be refinanced as banks adopt more restrictive lending policies on attractive terms.

Rental markets trending upwards

The economic growth of the past year has had a markedly positive impact on rental markets. We assume that rental markets will continue to grow although it is unlikely that we will match the growth seen in 2007. Positive growth will make it easier to let our properties and will stimulate sales in the group companies. We are ideally positioned to exploit these opportunities intensively with our property and asset management platform DIC ONSITE.

■ Forecast results of operations

Total revenues rise sharply

We are expecting an increase in total revenues in financial year 2008. The anticipated increase will result from internal growth, especially in rental income, and rising sales proceeds. In addition, properties acquired during 2007 will be included. The forecast only takes limited account of external sales growth from acquisitions because it is realised over a variable timeframe.

Internal growth is primarily attributable to the property and asset management services provided by DIC ONSITE such as new lets, the reduction in vacancies and the optimisation of tenancy agreements. For the portfolio as a whole including Opportunistic Co-Investments, we plan to relet some 175,000 sqm of space in financial year 2008. Overall we expect rental income to increase by some 50% to about EUR 140 million in 2008.

As part of our policy of active property and asset management we sell properties regularly. We aim to sell around 10% of our real estate assets per financial year. Sales will account for a significant proportion of our results in 2008. We are assuming a sales volume of around EUR 200 to 230 million for 2008 and that sales profits will rise sharply compared with 2007.

Potential opportunities are exploited

In the current market environment, we see attractive opportunities for expanding our portfolio to maximise earnings. In this connection, we shall continue to invest in high-yield properties let on long-term leases via the Core segment and in properties offering readily realisable value-added potential via the Value Added segment. We shall also participate in opportunistic investments where Deutsche Immobilien Chancen AG & Co. KGaA acts as lead investor. The capital increase in November 2007 and the profits realised from the disposal of properties will provide the basis for pursuing our growth strategy. In the coming months we are planning acquisitions with a volume of around between EUR 300 and 400 million. We also consider total acquisitions (including our participation in opportunistic co-investments) of up to EUR 1.5 billion are feasible in the next twelve to fifteen months.

Operating earnings to benefit from further improvements in efficiency

We expect a further increase in operating earnings. The improvement will be most strongly influenced by the successes and increases in efficiency of the Group's asset and property management. Thanks to positive economies of scale and the fact that the income statement is no longer burdened by the costs of integration and establishing DIC ONSITE across Germany, operating and administrative costs will be reduced further.

Growth in sales and a further improvement in overall profitability will contribute significantly to this positive development. In comparison with the previous year, we are expecting financing costs to increase, especially with regard to the current situation on financial markets.

Fundamental assumptions of the forecast

In planning for financial year 2008, fundamental assumptions were made. Achievement of the planned result is materially dependent on these conditions applying:

• The current general conditions remain unchanged. Despite the US mortgage crisis, we assume that macroeconomic growth will remain stable and that the commercial real estate market will perform well. We are not expecting interest rates to rise significantly either.
• We assume that we can complete the planned real estate sales in their entirety and achieve the target prices. Among other things, this presupposes a stable market.
• Internal growth is also a component of the planned result. We assume that we shall be able to let some 175,000 sqm from our own portfolio, including properties from opportunistic investments.

Target increase in profit to EUR 39-41 million

Depending on the abovementioned assumptions, particularly with its effect on the target profit from disposals, DIG Asset AG is planning to increase its profit for 2008 after depreciation, interest and taxes to EUR 3 to 41 million. Profit before depreciation should stand at between EUR 70 and 72 million.

We are also assuming that profits will increase in financial year 200.

Attractive dividend policy

In the interests of our shareholders we are continuing to pursue an attractive consistent dividend policy. We shall propose payment of a dividend of EUR 1.65 per share for the past financial year to the Supervisory Board. This is more than twice the dividend paid last year and should allow our shareholders to participate commensurately in the success and increase in the value of DIC Asset AG.

For 2008, we should like to continue to be guided by the growth in funds from operations and consequently expect a further increase in the dividend.

■ Expectations with regard to the financial position

We shall finance the planned acquisitions and investments from cash flow, equity capital and by borrowing. DIC Asset AG will use the liquidity in the form of freely available funds and the budgeted cashflow from real estate sales. We plan to use the proceeds, plus make optimal use of third party funds, to fund additional growth by DIC Asset AG.

■ Opportunities

DIC Asset AG's business development can be positively affected most notably through favourable trends in the following factors:

- Constant economic activity affecting demand for space:

A stable economy, which is also supported by low unemployment and high consumption, can lead to an increased demand for space to rent. For DIC Asset AG this means that vacant space can be let more easily and higher rentals achieved. We can exploit these opportunities consistently through our branches in the locations where our investment is concentrated.

-Stable interest rates:

Interest rates that remain relatively low or even fall slightly will allow us an attractive return on capital employed and also increases the chances of our obtaining refinance on favourable terms.

-Demand for German commercial real estate:

German commercial properties constitute a particularly attractive investment for foreign investors because of the relatively favourable conditions compared with other locations. For our sales activities this means that higher prices can be achieved and deals concluded more rapidly.

- Inclusion of portfolios with marked optimisation potential:

Thanks to its well organised property and asset management, DIC Asset AG can take on properties that hold no appeal to competitors on account of lack of management ability or capacity. Following repositioning, refurbishment or letting to new tenants, these can be optimally and profitably placed on the market.

Consolidated Financial Statements

Consolidated Profit and Loss Account for the Period from 1 January to 31 December 2007

TEUR	Notes	2007	2006
Total revenues		236,247	110,922
Total expenses		-156,206	-82,408
Gross rental income	1	93,564	38,392
Ground rents	2	-362	-15
Service charge income on principal basis	3	14,696	5,531
Service charge expenses on principal basis	3	-15,284	-5,653
Other real estate related operating expenses	4	-4,253	-1,667
Net rental income		88,361	36,588
Administrative expenses	5	-6,850	-3,289
Personnel expenses	6	-4,157	-2,757
Depreciation and amortisation	7	-19,777	-8,528
Management fee income	8	3,295	853
Other income	9	614	466
Other expenses	10	-341	-222
Net other income		273	244
Gain on development projects	11	1,165	1,158
Investment property disposal proceeds	12	122,913	64,521
Carrying value of investment property disposal	12	-105,182	-60,276
Profit on disposal of investment property		17,731	4,245
Net operating profit before financing activities		80,041	28,514
Share of the profit of associates	13	8,342	1,627
Dividend income	14	0	1,200
Net financing costs	15	-44,667	-11,424
Profit before tax		43,716	19,917
Income tax expense	16	-6,220	-985
Deferred income tax expense	16	-1,386	-3,921
Profit for the period		36,110	15,011
Attributable to equity holders of the parent	17	36,061	14,951
Attributable to minority interest	17	49	60
Basic (=diluted) earnings per share (EUR)	18	1.25	0.85

Consolidated Balance Sheet as at 31 December 2007

ASSETS

TEUR	Notes	31.12.2007	31.12.2006
Investment property	19	1,851,253	1,086,482
Office furniture and equipment	20	480	205
Investments in associates	21	29,442	8,344
Other investments	22	241	241
Derivatives	23	15,080	5,670
Intangible assets	24	229	317
Deferred tax assets	16	5,115	5,932
Other non-current assets	25	2,500	3,125
Total non-current assets		1,904,340	1,110,316
Development property held for sale	11	0	7,982
Receivables from the sale of property	26	1,153	5,331
Trade receivables	27	6,874	1,276
Receivables due from related parties	28	37,721	36,802
Income taxes receivable	29	1,878	1,812
Other receivables	30	2,475	372
Other current assets	31	1,783	62
Cash and cash equivalents	32	165,281	179,728
Total current assets		217,165	233,365
Total assets		2,121,505	1,343,681

EQUITY AND LIABILITIES

TEUR	Notes	31.12.2007	31.12.2006
Equity
Issued capital	33	31,350	28,500
Share premium	33	528,450	469,732
Hedging and translation reserve	33	7,769	4,128
Reserve from first-time application of IFRS	33	-2,373	-2,373
Other reserves	33	1,136	1,136
Retained earnings	33	44,842	30,595
Total shareholders' equity		611,174	531,718
Minority interest	17	1,574	2,296
Total equity		612,748	534,014
Liabilities
Interest-bearing loans and borrowings	34	1,441,555	750,270
Deferred tax liabilities	16	9,648	8,376
Derivatives	23	5,310	737
Other non-current liabilities	35	438	692
Total non-current liabilities		1,456,951	760,075
Interest-bearing loans and borrowings	34	15,887	10,496
Trade payables	36	1,610	20,537
Liabilities to related parties	28	10,483	7,605
Provisions	37	26	84
Income taxes payable	38	4,373	1,454
Other liabilities	39	19,427	9,416
Total current liabilities		51,806	49,592
Total liabilities		1,508,757	809,667
Total equity and liabilities		2,121,505	1,343,681

Consolidated Statement of Cash Flow for the Period ended 31 December 2007

TEUR	2007	2006
Operating activities
Net operating profit before interest and taxes paid	82,290	31,615
Realised/unrealised gains on development projects	-1,165	-1,158
Realised gains/losses on disposals	-17,731	-4,245
Depreciation and amortisation	19,777	8,528
Movements in receivables, payables and provisions	-169	3,763
Other non-cash transactions	-8,098	1,996
Cash generated from operations	74,904	40,499
Interest paid	-51,424	-17,519
Interest received	8,610	3,598
Income taxes paid	-3,366	-2,683
Cash flow from operating activities	28,724	23,895
Investing activities
Proceeds from sale of investment property	57,905	62,476
Proceeds from sale of development property	12,350	0
Acquisition/disposal of subsidiaries	60,351	-307
Acquisition of investment property	-894,573	-922,764
Capital expenditure on investment property	-1,722	-1,116
Acquisition/disposal of other investments	-12,612	-4,175
Loans/collection of principal on loans	1,841	-7,283
Development expenditure	-3,101	-1,783
Acquisition of office furniture and equipment	-318	-194
Cash flow from investing activities	-779,879	-875,146
Financing activities
Proceeds from the issue of share capital	62,415	415,604
Proceeds from other non-current borrowings	791,547	658,603
Repayment of borrowings	-94,872	-59,348
Payment of transaction costs	-1,007	-17,140
Dividends paid	-21,375	-5,818
Cash flow from financing activities	736,708	991,901
Net increase in cash and cash equivalents	-14,447	140,650
Cash and cash equivalents at 1 January	179,728	39,078
Cash and cash equivalents at 31 December	165,281	179,728

Consolidated Statement of Changes in Equity for the Financial Year 2007

				Reserve from
	Issued	Share	Reserve for	first-time	Other	Retained	Minority	Total
TEUR	capital	premium	cash flow hedges	application of IFRS	reserves	earnings	interest
Status as of 31 December 2005	10,170	97,043	-6	-2,373	1,136	7,132	2,242	115,344
Capital increase	18,330	397,274						415,604
Release of share premium		-14,325				14,325		0
Dividends 2005						-5,695	-6	-5,701
Profit for the period						14,951	60	15,011
Equity transaction costs net of tax		-10,260						-10,260
Gain from cash flow hedges			3,394					3,394
Gain from cash flow hedges of associates			740					740
Distribution from current period profits						-118		-118
Status as of 31 December 2006	28,500	469,732	4,128	-2,373	1,136	30,595	2,296	534,014
Capital increase	2,850	59,565						62,415
Dividends 2006						-21,375		-21,375
Profit for the period						36,061	49	36,110
Equity capital transaction costs net of tax		-847						-847
Gains from cash flow hedges			3,497					3,497
Gains from cash flow hedges of associates			144					144
Distribution from current period profits						-439		-439
Repayment of minority interest							-796	-796
Change of consolidation group							25	25
Status as of 31 December 2007	31,350	528,450	7,769	-2,373	1,136	44,842	1,574	612,748

Notes to the Consolidated Financial Statements

■ Information on the Company

DIC Asset AG (the "Company" or "DIC"), its subsidiaries and its proportionately consolidated joint ventures ("DIC Asset"), are active in the area of asset and portfolio management.

Shares in the Company are listed in the Prime Standard segment of the Frankfurt Stock Exchange and the stock exchanges in Munich, Düsseldorf, Berlin-Bremen, Hamburg, Stuttgart and Hanover.

DIC Asset AG, which is entered in the Commercial Register of the District Court of Frankfurt am Main (HRB 57679), has its registered office in Frankfurt am Main, Eschersheimer Landstr. 223.

The Supervisory Board is expected to approve the publication of the consolidated financial statements on 11 March 2008.

■ Accounting policies and procedures

Application of International Financial Reporting Standards

Under European Parliament and European Council Directive (EC) 1606/2002 on the application of international accounting standards (EU Directive) of 19 July 2002, all capital-market oriented companies with registered offices in the European Union are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) for financial years beginning on or after 1 January 2005.

DIC Asset AG has prepared its consolidated financial statements in accordance with IFRS and the supplementary regulations under § 315a Para. 1 HGB (Handelsgesetzbuch German Commercial Code) to be applied in accordance with German commercial law.

The accounting and valuation methods applied in the disclosures and the Notes to the consolidated financial statements in financial year 2007 are based on the same accounting and valuation methods applied in the consolidated financial statements in fiscal year 2006. The annual financial statements for the companies included in the consolidated financial statements are based on uniform accounting and measurement principles. Valuations based on tax regulations are not incorporated into the consolidated financial statements. The separate financial statements of the consolidated companies were prepared as at the reporting date of the consolidated financial statements.

The consolidated accounts were prepared in euro. Unless noted otherwise, all amounts are expressed in thousands of euro (TEUR). Figures may be rounded to the nearest EUR 1,000.

The profit and loss account was prepared using the costof-sales method, following the plan suggested by the European Public Real Estate Association (EPRA).

For purposes of clarity, individual items have been summarised in the profit and loss account and on the balance sheet. An explanation is provided in the notes. In accordance with IAS 1 "Presentation of Financial Statements", balance sheet reporting distinguishes between non-current and current liabilities. Liabilities and provisions are considered to be current if they mature within one year.

The consolidated financial statements for financial year 2007 have been prepared in accordance with the IFRS as implemented by the European Community. DIC takes into account all of the International Accounting Standards Board (IASB) standards and interpretations in force as at 31 December 2007. In this respect, IFRS 7 "Financial Instruments: Disclosures" was applied for the first time in financial 2007. This standard requires comprehensive information on the significance of financial instruments for the company's financial position and results as well as qualitative and quantitative information regarding the type and scope of the risks associated with the financial instruments. The first-time application of this standard has had no material effects on the Group's financial position, results and cash flow.

Effects of new accounting standards

The International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) have adopted additional standards and interpretations whose application is not yet required for financial year. Some of these IFRS will not be applicable until they have been recognised by the EU.

	Standard or interpretation	Obligatory application for financial years beginning on or after
	IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements
	and their Interaction	1 January 2008
	IFRIC 13 Customer Loyalty Programmes	1 July 2008
	IFRIC 12 Service Concession Arrangements	1 January 2008
	IFRIC 11 IFRS 2 Group and Treasury Share Transactions	1 March 2007
IAS 23	Borrowing Costs (revised 2007)	1 January 2009
IFRS 8	Operating Segments	1 January 2009
IAS 1	Presentation of Financial Statements: A) Revised Presentation (revised 2007) 1 January 2009
IFRS 3	Business Combinations (revised 2008) 1 July 2009
IAS 27	Consolidated and Separate Financial Statements (revised 2008)	1 July 2009

Based on the current business model, it is to be assumed that the first-time application of these provisions is unlikely to have any material effects on the consolidated financial statements of DIC Asset AG. The effects of the firsttime application of IFRS 3 (revised 2008) are at present still being examined.

■ Principles underlying the consolidated financial statements

Consolidation principles

Capital is consolidated in accordance with IFRS 3 "Business Combinations" by offsetting the book values of holdings against the proportional revalued equity of subsidiaries on the date of their acquisition. Assets and liabilities are recognised at their fair values. In accordance with IFRS 3, goodwill arising from business combinations is no longer amortised, but is subject to an annual review for impairment.

Negative goodwill resulting from the review is recognised immediately on the profit and loss account. Fair value increments and reductions are carried forward during subsequent consolidation in accordance with the corresponding assets and liabilities.

Intragroup profits and losses, sales, expenses and revenue and intragroup receivables and payables are eliminated. In the DIC Asset AG Group, trade payables and accruals are recorded at customary market conditions. The effects on income tax of consolidation processes affecting income are accounted for and deferred taxes are recognised. Joint ventures are consolidated on a proportional basis using the same principles.

The consolidated financial statements include the transactions of subsidiaries of which DIC Asset AG holds a controlling interest, either directly or indirectly, or if because of its economic control it benefits from the activities of the companies in question, normally through a 50% or greater interest. Subsidiaries are consolidated from the date on

which the possibility of control exists, and ends if there is no more possibility of control.

Joint ventures in accordance with IAS 31 "Interests in Joint Ventures" are proportionately consolidated in accordance with the interest held in the joint ventures.

In contrast, participations in which DIC Asset AG exercises significant influence but not joint management (usually through an interest of between 20% and 50%) are valued using the equity method. For holdings valued under the equity method, costs are increased or reduced annually in the amount of the corresponding change in shareholder's equity of the equity holding of DIC Asset AG.

During initial consolidation of holdings under the equity method, negative goodwill arising from the initial consolidation is treated in accordance with the principles of full consolidation. Profits and losses resulting from transactions between Group companies and associates are eliminated in accordance with the Group holdings in the associate.

Scope of consolidation

As at 31 December 2007, in addition to DIC Asset AG, a total of 136 (previous year: 72) subsidiaries in which DIC Asset AG holds a controlling interest, either directly or indirectly, or if because of its economic control it benefits from the activities of the companies in question, were incorporated into the consolidated accounts.

22 (previous year: 23) joint ventures were proportionately consolidated in accordance with IAS. The joint ventures had the following effect on the assets and liabilities and the income and expenses of the Group:

TEUR	2007	2006
Current assets	6,530	19,581
Non-current assets	113,920	130,514
Current liabilities	10,789	15,906
Long-term liabilities	89,021	110,630
Net assets	20,640	23,559
Income	12,857	10,662
Expenses	12,952	7,033
Annual profit	-96	3,629

Nine (previous year: five) companies were valued using the equity method. The associates reported the following assets and liabilities and income and expenses:

TEUR	2007	2006
Assets	1,213,889	613,395
Liabilities	1,069,934	575,397
Net assets	143,955	37,998
Income	86,039	40,150
Expenses	70,940	32,017
Annual profit	15,099	8,133

The consolidated subsidiaries are listed on page 144 in the appendix 1 to the notes to the consolidated financial statements. In addition, 22 (previous year: 23) joint ventures were proportionately consolidated. They are listed in appendix 2 on page 146.

DIC MSREF Objekt Hamburg GmbH was sold at end of the financial year. For this company, only the income and expenses have been included in the financial statements.

In addition, there is a total 20% direct or indirect interest in each of the following companies: DIC MSREF Weißfrauenstraße GmbH, Frankfurt am Main (including three subsidiaries: the "Degussa Portfolio"); DIC MSREF HMDD Portfolio GmbH (including nine subsidiaries: the properties taken over from MEAG); DIC MSREF HT Portfolio GmbH (including eleven subsidiaries: the properties taken over from Hochtief); DIC MSREF FF Südwest Portfolio GmbH (including six subsidiaries: the properties taken over from Falk); and DIC Hamburg Portfolio GmbH (including 18 subsidiaries: the properties taken over from the Hanseatic City of Hamburg as at 1 March 2007, the "Primo Portfolio"); DIC HI Portfolio GmbH (including its 26 subsidiaries; the properties taken over from HANSAINVEST); DIC BW Portfolio GmbH, DIC Opportunistic AG and DIC Development AG. These companies were accounted for as associates pursuant to IAS 28.13, using the equity method.

Currency conversion

The functional currency of all consolidated subsidiaries and joint ventures is the euro. Foreign-currency transactions are converted at the exchange rate on the day of the transaction. Profits and losses from the settlement of such transactions and from the conversion of monetary assets and liabilities as at the balance sheet date are included in the income statement.

Balance sheet items expressed in foreign currencies are valued at the exchange rate on the balance sheet date. Foreign-currency gains of TEUR 191 (previous year: TEUR 203) are recorded in the results.

■ Accounting and measurement principles

Sales and other operating income

Sales and proceeds from the sale of property are recognised at the time of transfer of risk, that is, at the time of the transfer of possession, rights and obligations, rather than at the time of entry into the property register, or when the service is provided, less discounts and rebates. This does not apply to contract revenue resulting from the application of the percentage-of-completion method when certain development projects are sold.

Investment property

Investment property is accounted for at cost less depreciation. Debt costs are not recognised as part of costs in equity. Land is not depreciated. Buildings are depreciated on a straight-line basis over their useful lives as follows:

	Useful life in years
Residential buildings	60
Office and commercial buildings, hotels	50
Department and retail stores, shopping arcades and centres	40
Parking facilities, underground parking facilities	40

The property of the Company is as a rule treated as an investment property, since property trading itself is not considered to be part of regular business activity. The fair value of these properties is indicated in the notes to the balance sheet. It is determined in accordance with internationally recognised evaluation methods, e.g. the discounted cash-flow method, or derived from available sales contract offers and/or from the current market price of comparable properties.

Office furniture and equipment

Office furniture and equipment are recorded at cost less depreciation. Debt costs are not recognised as part of costs in equity. Office furniture and equipment are depreciated on a straight-line basis. The useful life of office furniture and equipment is normally between three and 13 years.

Investments

Holdings measured under the equity method are recognised at their proportional equity using the amortised cost method.

"Available-for-sale" interests are included, and measured at fair value, provided this value can be determined reliably. If no such value is available, they are recognised at cost.

Intangible assets

Intangible assets are recorded at cost less amortisation. All intangible assets have a specific useful life and are thus amortised. Business software is amortised over three years; the useful life of concessions and other rights is normally 10 years.

Development properties held for sale

Development properties held for sale are accounted for according to the percentage-of-completion method. The stage of completion is calculated in accordance with expenses incurred. Income from contracts results from sales contracts and is recognised as income from development properties. Pro-rata borrowing costs are included in the determination of costs in accordance with IAS 23.

Receivables and other assets

Receivables and other assets, except for derivative financial instruments, are measured at cost less depreciation. Any impairment charges required are based on the actual risks of default.

Cash and cash equivalents

Cash and cash equivalents includes cash and cash at banks that is available within three months.

Provisions

Provisions take into account all recognisable obligations as at the balance sheet date that are based on past events and for which the amount or final maturity is uncertain. Provisions are recognised only on the basis of a legal or constructive obligation to a third party, the fulfilment of which makes an outflow of resources probable, to the extent that a reliable estimate can be made of the amount of the obligation.

Provisions are recognised at the amounts required to clear the obligations and are not offset against reimbursement rights.

For claims on future equity-price oriented cash flows, provisions accrue in instalments and are expensed on the basis of fair value, taking into account the pro-rated services provided during the vesting period.

Liabilities

With the exception of derivative financial instruments, liabilities are recognised at their repayment or fulfilment amounts or, applying the effective interest rate method, at cost less depreciation.

Deferred taxes

Deferred taxes arising from temporary differences between IFRS accounts and the tax balance sheets of the separate companies and from consolidation are recognised separately. Deferred tax assets also include tax reduction claims resulting from the anticipated use of existing tax loss carryforwards in subsequent years. They are capitalised if the realisation of these loss carryforwards is reasonably certain.

Deferred taxes are calculated on the basis of the tax rates applicable at the time of realisation.

In financial 2007, the corporate tax rate totalled 25% plus the solidarity surcharge of 5.5% of the corporate tax charge. This resulted in an actual corporate tax rate of 26.4%. Including trade tax the total tax rate equalled 40.1%. Following the corporation tax reform decided on by the Bundestag on 24 May 2007 and by the Bundesrat on 6 July 2007, the abovementioned total tax rate will be cut to 31.9% from 2008. In this respect, the lowering of the corporate tax rate from 25% to 15% will have a significant impact. The tax reduction has already been taken into account in the calculation of the deferred tax claims and liabilities of the group companies. This resulted in deferred tax income of TEUR 257.8.

Derivative financial instruments

Derivative financial instruments are recognised as assets or liabilities. Irrespective of their purpose, all derivative financial instruments are measured at fair value. They are initially accounted for on their date of origin. The expenses and income arising from the hedging of future cash flows, provided the conditions of IAS 39.88 are met, are recorded under equity with no effect on income, otherwise they are recorded on the income statement.

The results of accounting for the revenues accrued or deferred under equity are not included in the statement of profit and loss until the underlying transaction affects earnings

Foreign currency items

In the individual accounts of the group companies, all receivables and liabilities expressed in foreign currencies are valued at the exchange rate in effect as at the balance sheet date.

Assumptions underlying accounting estimates

A limited number of assumptions and estimates must be made in the consolidated financial statements, which may affect the amount and presentation of the reported assets and liabilities, the income and expenses, as well as the contingent liabilities. The principal areas of application for assumptions and estimates are the determination of the useful life of fixed assets, the calculation of discounted cash flows when testing for impairment, determinations of fair value and determinations of cash value of minimum lease payments and the establishment of provisions. Actual values may deviate from estimates.

■ Notes to the income statement

1. Rental income

Consolidated rental income rose by TEUR 55,172 (144%) from TEUR 38,392 to TEUR 93,564 in the financial year 2007. This increase is primarily due to rental income collected in 2007 from the end of 2006, and properties acquired during the year, primarily the Augusta Portfolio with TEUR 38,027 (2006: TEUR 8,958), the Odin Portfolio with TEUR 15,792 (2006: TEUR 0), the Berlin Portfolio with TEUR 5,030 (2006: TEUR 0) pro rata, the Ruhr Portfolio with TEUR 7,552 (2006: TEUR 3,546), the Dolphin Portfolio with TEUR 3,714 (2006: TEUR 0), the V6A Portfolio with TEUR 898 (2006: TEUR 0) and the properties leased to the Deutsche Bahn in Hanover with TEUR 1,192 (2006: TEUR 589) and

Nürnberg with TEUR 1,858 (2006: TEUR 516). In contrast, rental income was reduced by the sales at the end of 2006 and the middle of 2007 of the properties sold in the Mustang Portfolio by TEUR 1,787, the eight C&A properties by TEUR 3,234 and the properties taken over from the Frankfurter Sparkasse by TEUR 2,179.

2. Ground rents

These are ground rents for the properties of the Odin Portfolio in Munich (TEUR 200), Duisburg (TEUR 50), Hamburg (TEUR 40) and Lippstadt (TEUR 36) as well as for the Berlin Portfolio property located at Mariendorfer Damm 446 (TEUR 15 pro rata), the Fraspa Portfolio property located at Mainzer Landstraße 268, Frankfurt (TEUR 12 pro rata) and the Stadtbadgalerie property of the Ruhr Portfolio in Bochum (TEUR 9).

3. Service charge income and expenses on principal basis

Recognised costs include current expenses in connection with the properties or services rendered for the properties and buildings, including property tax. For the most part, these expenses may be assigned to the tenants as ancillary leasing costs (operating expenses, heat, etc.).

Service charge income on principal basis assigned to tenants rose by TEUR 9,165 (166%), and service charge expenses rose by TEUR 9,631 (170%). Both of these increases are mainly due to the expansion of the portfolio. With the exception of one property in the Augusta Portfolio, rental income was realised in the case of all investment property. Service charge expenses directly attributable to the one property were not significant in the financial year.

4. Other real estate-related operating expenses

The increase in other real estate-related expenses in financial year 2007 by TEUR 2,586 (155%) from TEUR 1,667 to TEUR 4,253 is chiefly the result of the expansion of the portfolio, increased maintenance costs from TEUR 463 to TEUR 1,881, an increase in the use of external service providers for administration of property and lease agreements from TEUR 471 to TEUR 626 as well as the increase in management fees from TEUR 446 to TEUR 476 payable by the proportionately consolidated companies to affiliated enterprises.

5. Administrative expenses

Administrative expenses compare with the prior year as follows:

TEUR	2007	2006
Legal and consulting fees	1,385	992
Ancillary financing costs	1,324	744
Advertising	532	52
Auditing costs	518	403
Rental and ancillary costs	505	181
External services	430	101
Accounting and administration fee	372	260
Automobile costs	330	111
Recruitment	232	158
EDP costs	228	52
Remuneration of Supervisory Board	204	197
Other	802	38
Total	6,862	3,289

The increase in legal and consulting fees is chiefly the result of the expansion of the portfolio. The item also includes the costs of legal disputes (see "Notes on risks, contingencies and other financial commitments") in the amount of TEUR 52 in 2007 and TEUR 70 in 2006. The increase in financing costs is chiefly connected with the liquidation of processing fees which were offset against financial liabilities on the balance sheet. Because of loan repayments at the properties sold in the Mustang Portfolio in the amount of TEUR 223 and the expansion of the portfolio the amount was higher compared with the previous year. Advertising costs primarily include costs for the preparation of reports and presentations and the preparation and publication of the financial report. The increase in auditing costs is a result of the significant increase in the scope of consolidation. The rental and ancillary costs item includes the rental costs for DIC ONSITE GmbH for the first time in the amount of TEUR 280.

The legal and consulting costs and the auditing costs includes the auditor's fees for the audit of the financial statements (TEUR 518), tax consulting (TEUR 182), and for other services in the amount of TEUR 72.

The item "Other" primarily includes travel costs, communications costs and contributions and taxes.

The Company granted remuneration totalling TEUR 204,475 to members of the Supervisory Board during the financial year. Additional details, particularly disclosures pursuant to § 314 Para. 1 No. 6 Letter (a), are provided in the management report.

6. Personnel expenses

Personnel expenses are composed of the wages and salaries of the staff of DIC Asset AG and DIC ONSITE GmbH acquired on 1 January 2007, as well as of related social security taxes.

The increase in personnel expenditure by TEUR 1,388 from TEUR 2,757 to TEUR 4,145 is mainly due to the initial inclusion of DIC ONSITE. The average staff level of the group thus increased by 52 employees. On the other hand, there was a decrease in the average number of employees at DIC Asset AG from 14 to 9 as some employees moved to DIC ONSITE.

In financial year 2007, the Board was granted compensation (before offsetting liabilities) totalling TEUR 870 (previous year: TEUR 1,537), TEUR 226 of which is attributable to options on 105,000 (previous year: 108,900) so-called "virtual shares" held by current members of the Board of Directors. On the other hand, the provision for options on "virtual shares" held by a former member of the Board of Directors in the amount of TEUR 478 was released in the financial year. Additional details, particularly disclosures pursuant to § 314 Para. 1 No. 6 Letter (a) Sentences 5 to 9 HGB, are provided in the management report.

7. Depreciation and amortisation of intangible assets and fixed assets

Depreciation and amortisation primarily affect recognised real estate and, to a lesser extent, office furniture and equipment and intangible fixed assets. Depreciation and amortisation rose noticeably by TEUR 11,249 from TEUR 8,528 to TEUR 19,777 over the prior year. The increase is primarily due to the considerable expansion of the portfolio and inclusion of real estate for the entire year that was acquired during 2006 or initially consolidated in 2007.

8. Management fee income

The income relates to property and asset management, leasing and disposition fees charged by DIC Asset AG and DIC ONSITE GmbH to the following companies:

TEUR	2007	2006
Deutsche Immobilien Chancen Beteiligungs AG	1,942	807
DIC Hamburg Portfolio GmbH	349	0
DIC HI Portfolio GmbH	199	0
DIC MSREF FF Südwest Portfolio GmbH	168	0
DIC MSREF Weißfrauenstraße GmbH	110	0
DIC MSREF HT Portfolio GmbH	47	0
DIC MSREF HMDD Portfolio GmbH	28	0
Hauptpost Erfurt GmbH & Co. KG	18	27
Deutsche Immobilien Chancen Objekt Coburg GmbH	9	9
Deutsche Immobilien Chancen Objekt Fellbach GmbH & Co. KG	5	10
DIC ONSITE GmbH's external customers	420	0
Total	3,295	853

Management fee income was reported in the previous year under other income.

The increase in property and asset management, leasing and disposition fees is primarily due to the expansion of the portfolio and the corresponding services provided by DIC Asset AG for the companies of the Deutsche Immobilien Chancen AG & Co. KGaA Group, in particular the joint venture companies in opportunistic co-investments. In addition TEUR 1,249 is attributable for the first time to services provided in the financial year by DIC ONSITE GmbH acquired during the financial year for both the group's opportunistic co-investments and external customers.

With the exception of DIC ONSITE GmbH's external customers, all listed revenues are considered transactions with related parties within the meaning of IAS 24.9 are involved.

9. Other income

The foreign currency gains result from the reporting date valuation of two bank loans in Swiss francs (nominal value as at 31 December 2007 CHF 10,104,502.42), which were taken out in 2003 by the companies Gewerbepark Langenfeld West 3 GmbH & Co. KG and DIC Objekt Frankfurt 1 GmbH & Co. KG.

TEUR	2007	2006
Foreign currency gains	191	203
Reversal of provisions	179	93
Insurance compensation	81	5
Income from non-monetary benefits	80	39
Other	83	126
Total	614	466

Other income consists primarily of income from the collection of value-adjusted receivables and tenant allowances for renovation costs.

10. Other expenses

This item consists chiefly of expenses for training, courier and translation services and other general organisational expenses.

11. Gain on development projects

This item of TEUR 1,165 (2006: TEUR 1,158) includes the pro-rated gain on the development project at Hasengasse (city library), Frankfurt am Main. Profit was calculated using the percentage-of-completion method in accordance with IAS 11. The total income from the contract was TEUR 12,350 (pro-rated). This property was sold under a contract dated 19 December 2005. The transfer of possession, rights and obligations took place on 1 July 2007.

In calculating the percentage of completion under the cost-to-cost method, borrowing costs accrued during the project were taken into consideration.

12. Profit on disposal of investment property

The profit on disposal of investment property rose against the previous year by TEUR 13,486 from TEUR 4,245 to TEUR 17,731.

In 2007 the Company made a profit of TEUR 12,270 on the sale of a portfolio of 10 properties to a foreign investor (socalled Mustang Portfolio). In addition the Company made a profit of TEUR 4,030 on the disposal of its interests in DIC MSREF Objekt Hamburg GmbH and profits of TEUR 468 on the sale of three residential properties in the AP portfolio, TEUR 24 on the sale of 10 properties acquired from the Landesbank Berlin and TEUR 939 on other sales from the portfolio of property acquired from the Frankfurter Sparkasse.

In comparison, the Company in the prior year made a profit of TEUR 2,057 on the disposal of a total of 33 properties acquired from the Frankfurter Sparkasse and eight TEUR 2,188 on the sale of eight C&A properties.

Selling costs of TEUR 1,049 (previous year TEUR 502) were offset against the proceeds of sales.

13. Share of the profit of associates

This item refers to the interest of DIC Asset AG in the following associates accounted for under the equity method of the profits and losses assumed for the financial year.

TEUR	2007	2006
DIC Opportunistic AG	4,935	0
DIC MSREF HT Portfolio GmbH	1,170	207
DIC MSREF HMDD Portfolio GmbH	899	653
DIC MSREF Weißfrauenstraße GmbH	789	473
DIC MSREF FF Südwest Portfolio GmbH	550	304
DIC Hamburg Portfolio GmbH	0	-10
DIC HI Portfolio GmbH	0	0
DIC BW Portfolio GmbH	0	0
DIC Development AG	-1	0
Profit from associates	8,342	1,627

14. Dividend income

Under IAS 31, the balance sheets and income calculations of joint ventures are included on a pro-rata basis in accordance with equity interest held. Because of contractual agreements with MSREF Sparks B.V., profit distribution agreements foresaw in the previous year a profit distribution that deviated from the pro-rata equity interests of the joint-venture partners. Thus the item "Income from longterm equity investments" showed the adjustment amounts for the accurate presentation of the contractually agreed share of profits of TEUR 1,200.

15. Net financing costs

This item is broken down as follows:

TEUR	2007	2006
Interest income	8,756	4,080
Interest expense	-53,423	-15,504
	-44,667	-11,424

In total, the negative financial results increased over the prior year by TEUR 33,243 from TEUR -11,424 to TEUR -44,667.

The increase in interest expenses can be explained primarily by the significant expansion of the real estate portfolio and the associated increase of TEUR 37,919 in interest expenses, while the interest income has increased chiefly due to higher interest on time deposits and daily allowances.

The financial results presented include an amount of TEUR 436 (previous year TEUR 1,181) from the valuation of derivative financial instruments (interest-rate swaps) at fair value.

16. Income taxes

Current income taxes exclusively affect profits subject to taxation of consolidated subsidiaries. The current tax expense is composed primarily of corporate taxes incl. solidarity surcharge (TEUR 4,359) and trade taxes on earnings (TEUR 1,861). The corporate tax loss carryforwards of DIC Asset AG were completely exhausted in the reporting period, thus the corporate tax expense increased accordingly in the financial year. On 31 December 2007, DIC Asset AG again reports a tax loss carryforward for purposes of trade taxes of TEUR 4,920. For this reason, current trade tax expenses only accrued to the Group's parent company to a limited extent, beyond loss deduction limitations.

TEUR	2007	2006
Current tax expense	6,220	985
Deferred tax expense	1,386	3,921
Total income tax expense	7,606	4,906

The increase in expenses for current income and gains taxes is due primarily to the taxation of the group's parent company DIC Asset AG. In the financial year the company claimed in full a corporate tax loss carryforward of TEUR 7,195 that existed on 1 January 2007. The deferred taxes result from timing differences between tax balance sheet values and IFRS balance sheet values and from existing trade tax loss carryforwards. Deferred taxes are calculated on the basis of the tax rates applicable at the time of realisation. The corporate tax rate of 15%, the solidarity surcharge (Solidaritätszuschlag) of 5.5% and the companyspecific trade income tax rates are taken into account in calculating domestic deferred taxes.

Deferred tax expenses compare with the prior year as follows:

TEUR	2007	2006
Deferred taxes on equity transaction costs	-159	-6,880
Deferred taxes on tax loss carryforwards	-2,327	4,602
Deferred taxes on carrying values of investment property	+1,107	-532
Deferred taxes on derivatives	-196	-488
Deferred taxes from percentage-of-completion valuation	+306	-306
Deferred taxes on other adjustments	-117	-317
Total	-1,386	-3,921

Deferred tax claims and liabilities can be classified into the following balance-sheet items (see table on the right):

The recognition of deferred tax liabilities on temporary differences in the area of investment properties in the amount of TEUR 4,432 (previous year TEUR 5,455) includes deferred tax liabilities arising from business combinations in accordance with IAS 12.19 in the amount of TEUR 1,898 (previous year TEUR 3,483).

The difference between the expected tax expense and the actual tax expense is as follows:

TEUR		31.12.2007 Assets Liabilities		31.12.2006 Assets Liabilities
Loss carryforwards	3,247	0	5,575	0
Investment properties	191	4,432	61	5,455
Derivative financial instruments	1,677	4,761	296	2,276
Percentage-of-completion valuation	0	0	0	306
Long-term interest-bearing debt	0	236	0	180
Other	0	219	0	159
Total	5,115	9,648	5,932	8,376

TEUR	2007	2006
Pre-tax Group results	43,716	19,917
Legal tax rate applies	40,14%	40,86%
Expected tax expense	17,548	8,138
Deviations from tax rate
Effects from differences in levy rates, staggered tariffs, tax-free amounts (trade tax)	-13	-75
Difference in deferred tax rate/income tax rate	-1,349	-568
Tax effects from deviations in the tax measurement basis
Effects of non-taxable consolidated losses	2,463	498
Effects of added depreciation on real estate for tax purposes	-414	-329
Effects of expanded reductions in taxable earnings from real estate management	-2,000	-1,406
Effects of tax results from partnership subsidiaries	229	-5
Effects from tax-free financial investment sales (95% tax free)	-8,297	-664
Consolidation activities without deferred taxes	726	-542
Effects from tax loss carryforwards	-198	-827
Permanent differences	546	536
Other deviations	-54	27
Recognition of deferred taxes	-1,475	175
Aperiodic effects	-106	-52
Actual total tax expense	7,606	4,906

The target tax rate to be applied was determined on the basis of the tax rates that applied in Germany in 2007 and 2006.

This is calculated from a corporate tax rate including solidarity surcharge of 21.44%, taking into consideration the tax deductibility of the trade tax (nominal corporate tax 25%; nominal solidarity surcharge 5.5%). The trade tax rate is 18.70% on the basis of the levy rate of the City of Frankfurt of 460%. To the extent the expanded reduction of trade taxes can be claimed, the resulting increased corporate tax rate was taken into account for the effects of the expanded reduction.

17. Profit allocated to other shareholders

From the current results of the financial year, TEUR 439 (previous year TEUR 118) are recorded as an obligation to minority shareholders. Additional profits allocated to minority shareholders of TEUR 49 (previous year TEUR 60) were credited to minority interests in equity from the results of the financial year. The complete performance of the profits/losses allocated to minority interest can be found in the consolidated statement of changes in equity.

For reasons of materialty, the minority share in partnerships is not shown as debt capital.

18. Earnings per share, Net asset value (NAV) and NAV per share

In accordance with IAS 33.12, earnings per share are calculated from the Group profit after minority interests and the number of the shares in circulation on an annual average.

Earnings per share	2007	2006
Group profits after minority interests (EUR)	36,060,714	14,951,095
Weighted average number of shares in issue	28,737,500	17,630,000
Basic (= diluted) earnings per share (EUR)	1.25	0.85

The dividends paid in 2007 and 2006 for the respective previous financial year totalled TEUR 21,375 (EUR 0.75 per share) and TEUR 5,695 (EUR 0.56 per share).

For 2007, the Board of Directors will propose a dividend in the amount of TEUR 51,727 (EUR 1.65 per share). About EUR 34.0 million of this dividend will be subject to capital gains tax. These dividends are not recorded as a liability in accordance with IAS 10 in these consolidated financial statements.

In accordance with the recommendation of the European Public Real Estate Association (EPRA), the net asset value (NAV) is calculated as at 31 December 2007 und 31 December 2006 as follows:

TEUR		31.12.2007 31.12.2006
Carrying amount of investment property	1,851,253	1,086,482
Difference between carrying amount
and fair value	81,734	59,713
Fair value of investments in associates	54,507	19,680
Fair value real estate in current assets	0	7,982
+/- Other assets/liabilities	193,736	197,366
Net loan commitments at carrying
amount	-1,457,442	-760,766
Minority interests	-1,574	-2,296
Net asset value (NAV)	722,214	608,161
Deferred taxes	-21,142	-24,133
NNAV	701,072	584,028
Difference between carrying amount
and fair value of net loan commitments	18,381	8,409
NNNAV	719,453	592,437
Number of shares in millions	31.35	28.50
NAV/share	23.04	21.34
NNAV/share	22.36	20.49
NNNAV/share	22.95	20.79

■ Notes to the balance sheet

19. Investment property

Investment property is valued at cost when acquired. Transaction costs are included in the initial valuation. The cost model in accordance with IAS 40.56 is used for subsequent valuations.

In this case, the investment properties are valued in accordance with the provisions of IAS 16, that is, at cost less depreciation, write-downs and appreciation.

on the discounted cash flow method (DCF).

To carry out impairment tests on investment properties in accordance with IAS 36, the summarised book values for land and buildings are compared to the calculated market values of the properties. The comparison is made on the basis of the gross market values, that is, not including transaction costs which could be incurred were the properties actually to be sold.

dance with internationally recognised standards, based

TEUR	2007	2006
Costs
As at 1 Jan.	1,101,579	295,197
Additions resulting from acquisitions	887,867	869,161
Additions resulting from subsequent expenditures	1,733	1,064
Disposals	111,234	63,843
As at 31 Dec.		1,879,945 1,101,579

Depreciation and amortisation

As at 1 Jan.	15,097	10,240
Additions	19,646	8,424
Disposals	6,051	3,567
As at 31 Dec.	28,692	15,097
Book value 31 Dec.		1,851,253 1,086,482
Book value 1 Jan.	1,086,482	284,917
Fair value		1,932,987 1,146,195

20. Plant and equipment

TEUR	2007	2006
Costs
As at 1 Jan.	238	44
Additions	337	194
Disposals	49	0
As at 31 Dec.	526	238
Depreciation and amortisation
As at 1 Jan.	33	12
Additions	62	21
Disposals	49	0
As at 31 Dec.	46	33
Book value 31 Dec.	480	205
Book value 1 Jan.	205	32

21. Investments in associates

TEUR	31.12.2007		31.12.2006
	Equity interest value	Book	Equity interest value	Book
Interest in:
DIC Opportunistic AG		20.0% 19,607	0	0
DIC MSREF
Weißfrauenstraße GmbH		20.0% 2,961	20.0% 2,105
DIC MSREF HMDD Portfolio GmbH		20.0% 2,344	20.0% 2,542
DIC MSREF FF Südwest Portfolio GmbH		20.0% 2,267	20.0% 1,792
DIC MSREF HT Portfolio GmbH 20.0% 2,254			20.0% 1,821
DIC Development AG	20.0%	9	0	0
DIC Hamburg Portfolio GmbH	1.2%	0	20.0%	84
DIC HI Portfolio GmbH	1.2%	0	0	0
DIC BW Portfolio GmbH	1.2%	0	0	0
		29,442		8,344

22. Other investments

As in the previous year, the recorded amount of TEUR 241 refers to a 5.4% interest in ING LPFE Bodenfeld GmbH & Co. KG. The fair value of this available-for-sale investment could not be reliably determined due to a lack of available stock exchange or market prices. A valuation by means of discounting the anticipated cash flows was not carried out due to the fact that cash flows cannot be reliably determined. Accounting was therefore carried out at cost.

23. Derivate financial instruments

The Company enters exclusively into interest rate swap agreements. In accordance with the contracts, the Group pays variable interest on a specific nominal sum and in return receives fixed interest on the same nominal sum. These interest rate swaps offset the effects of future changes of interest rates of the cash flows of the variable interest-bearing investments.

As at the balance sheet date, the following derivative financial instruments were held:

TEUR	31.12.2007 Nominal volume value	Fair	31.12.2006 Nominal volume value	Fair
Assets
Interest-rate hedge agreements (swaps)	449,238 15,080		414,435 5,670
Liabilities

Interest-rate hedge
agreements (swaps)	540,495 5,310	31,001	737

The book value of derivatives corresponds to their market value. There are no significant credit risks, as contracts for derivative financial instruments are entered into only with top-rated major banks.

The nominal and fair values of the interest-rate hedge agreements are as follows:

TEUR	31.12.2007		31.12.2006
	Nominal	Fair	Nominal	Fair
	volume value		volume value
Assets
DIC AP Portfolio GmbH	395,500 14,352		401,500 5,341
DIC Objekt Braunschweig GmbH	12,788	449	12,935	329
DIC Objekt Nürnberg GmbH 22,024		150	0	0
DIC Objekt Hannover GmbH 18,926		129	0	0
	449,238 15,080		414,435 5,670
Liabilities
DIC OP Portfolio GmbH	230,000 2,793		0	0
DIC VP Portfolio GmbH		86,500 1,289	0	0
DIC 26 Portfolio GmbH	95,000	507	0	0
DIC RMN-Portfolio GmbH	22,370	301	31,001	737
DIC MSREF Berlin Portfolio
GmbH (pro-rata)	50,000	260	0	0
DIC DP Portfolio GmbH	48,000	149	0	0
DIC Objekt Köln 1 GmbH	8,625	11	0	0
	540,495 5,310		31,001	737

As at 31 December 2007 positive and negative market values of TEUR 3,497 (previous year TEUR 3,394) after the deduction of deferred taxes were recorded in equity. The interest-rate hedge agreements run for between one and seven years.

The derivative financial instruments presented under liabilities for RMN-Portfolio GmbH are composed of three (previous year: four) interest-rate hedge agreements entered into in 2002, some of which mature by the end of 2011. The rules of hedge accounting are not applied to these agreements. Accordingly, the expenses and revenues arising from the changes in the fair value of the interest-rate agreements are reported on the income statement (cf. notes under 15. Net financing costs).

In financial years 2006 and 2007, holding companies in which DIC Asset AG has a indirect and direct 20% interest entered into interest-rate hedge agreements with a total nominal volume of TEUR 954,812 (previous year: TEUR 440,400) for purposes of hedging future variable cash flows. The property companies pay fixed-interest rates between 3.175% and 4.55% and receive interest payments at the 3-month Euribor rate. The expenses and revenues arising from the hedging of future cashflows are recorded by the property companies under equity with no effect on income. DIC Asset AG records its share of the changes recorded directly in the equity of the associates of TEUR 144 (previous year TEUR 740) after deducting deferred taxes in group equity in accordance with IAS 28.39.

TEUR	2007	2006
Costs
As at 1 Jan.	696	696
Additions	91	0
Disposals	403	0
As at 31 Dec.	384	696
Amortisation
As at 1 Jan.	379	302
Additions	69	77
Disposals	293	0
As at 31 Dec.	155	379
Book value 31 Dec.	229	317
Book value 1 Jan.	317	394

This item refers to the rights of use of a cafeteria in the business park in Ulm as well as software.

25. Other fixed assets

This item refers to the non-pro-rated consolidated longterm portion of a loan granted to DIC MSREF Frankfurt Portfolio GmbH by DIC Asset AG. The loan matures on 31 December 2009. In the previous year the loan was reported under "Receivables from related parties".

24. Intangible assets 26. Receivables from the sale of property

This item includes purchase-price claims arising from the sale at the end of 2006 of 31 Fraspa properties (TEUR 197), the sale of ten properties from the Mustang portfolio (TEUR 535) and sales from the DIC MSREF Berlin portfolio (TEUR 421 pro rata).

The receivables from the sale of real estate reported for the previous year referred to the sale of 31 Fraspa properties (TEUR 4,958), the sale of eight C&A properties (TEUR 317) and other purchase-price claims (TEUR 56).

	Portfolic

27. Trade receivables			Receiv- ables	Liabilities	Receiv- ables	Liabilities
This item consists primarily of receivables from operating costs and ancillary costs.	Deutsche Immobilien Chancen AG & Co. KGaA	a)	18,840	0	18,596	0
	DIC MSREF Berlin Portfolio GmbH	c)	3,932	0	3,877	0
	MSREF Sparks B.V.	a)	2,054	0	987	0
In financial year 2007 impairment charges on trade re	DIC MSREF HMDD Portfolio GmbH	b)	1,868	0	1,677	0
ceivables of TEUR 91 (2006: TEUR 0) were set aside. As at	DIC MSREF FF Südwest GmbH	b)	1,698	0	2,087	0
the balance sheet date, there were no further overdue	DIC Hamburg Portfolio GmbH	b)	1,674	61	324	0
claims that were not value-adjusted.	DIC MSREF Frankfurt Portfolio GmbH	c)	1,568	195	2,153	762
	DIC MSREF Weißfrauenstraße GmbH	c)	1,471	0	1,549	332
28. Receivables due from related parties	DIC MSREF HT Portfolio GmbH	b)	1,284	0	2,036	0
Relations with related parties are described in detail under	MSREF V Lupine B.V.	a)	1,132	4,471	1	513
"Notes on related parties". This balance-sheet item refers	Deutsche Immobilien Chancen Beteiligungs AG	a)	950	0	669	1,021
to the companies in the table on the right.	DIC MSREF Berlin GmbH	c)	630	0	983	0
	DIC Capital Partners (Europe) GmbH	a)	403	10	386	7
In 2007 DIC Asset GmbH acquired 74.9% of DIC ONSITE	DIC HI Portfolio GmbH	b)	187	377	0	0
	DIC Projekt Frankfurt 1 GmbH & Co. KG	a)	8	114	600	0
GmbH from FAY Management Holding AG. As part of the	MSREF V Daffodil Holding B.V.	a)	2	630	2	983
acquisition a guarantee dividend was agreed with the sel	MSREF Quick GmbH & Co. Verwaltungs KG	a)	0	4,110	163	3,877
ler which is to be entered as a liability discounted in ac	DIC Projektentwicklung GmbH & Co. KG	a)	0	277	121	107
cordance with IAS. At the same time this obligation re	DIC MSREF Objekt Hamburg GmbH	c)	0	0	552	0
presents an increase in the purchase price. Discounting	FAY Management Holding AG	b)	0	225	0	0
was waived due to the small amount.	Other		20	13	39	3
	Total		37,721	10,483	36,802	7,605

a) Related party under IAS 24.9a(ii)

b) Related party under IAS 24.9b c) Related party under IAS 24.9c

29. Income taxes receivable

The recorded amount refers to tax credit and tax refunds.

30. Other receivables

TEUR	2007	2006
Interest apportionment	1,055	0
Deposits	432	0
Value-added tax	405	252
Creditors with debit balances	198	42
Other	385	78
	2,475	372

31. Other assets

This item includes prepaid ground rents (TEUR 1,360, previous year: TEUR 0) and other prepaid expenses.

32. Cash at banks, cash on hand

Cash is available for use by the Company and is subject to no restrictions with the exception of an amount of TEUR 3,790. The invested capital of TEUR 3,790 is used to provide security for the loan provided to Deutsche Immobilien Chancen Objekt Regensburg GmbH & Co. KG.

33. Equity

a. Subscribed capital

The subscribed capital of the parent company DIC Asset GmbH was TEUR 31,350 as at the balance sheet date. It is divided into 31,349,999 bearer shares in the form of no-par shares, each of which represents an interest in the capital stock of EUR 1.00.

Under partial application of the powers under § 5 Para. 1 (authorised capital) of the Articles of Incorporation, with the resolutions by the Supervisory Board and the Board of Directors of DIC Asset AG, each made on 19 December 2007, a capital increase from TEUR 28,500 by TEUR 2,850 to TEUR 31,350 through the issue of 2,849,999 new bearer shares against cash contribution was undertaken. The nominal value of each share was EUR 1.00. § 4 Para. 1 of the Articles of Incorporation of the Company was rewritten as follows: "The share capital of the Company is TEUR 31,349,999 and is divided into 31,349,999 ordinary shares".

Entry in the commercial register of the District Court of Frankfurt am Main took place on 3 December 2007.

b. Authorised capital

With the resolution of the general shareholders' meeting of 6 June 2007, the Board of Directors was authorised to increase the share capital of the Company by a maximum of TEUR 14,250 with the approval of the Supervisory Board by 5 June 2012 through one or more issues of new bearer shares against cash consideration and/or contribution in kind (authorised capital).

Shareholders must be granted subscription rights. The new shares may also be assumed by one or more banks appointed by the Board of Directors to offer the shares (indirect subscription rights). The Board of Directors is, however, authorised to exclude shareholders' subscription rights with the approval of the Supervisory Board:

• to compensate for fractional amounts;
• if it is necessary to grant holders or creditors of the convertible and/or option bonds and/or participation rights issued by the Company or its direct or indirect majority-interest companies subscription rights to new shares in the amount that they would be entitled to after exercise of their conversion or option rights or after fulfilment of the conversion obligation;
• if shares are issued against contributions in kind, particularly as part of the acquisition of or merger with companies or parts of companies or the acquisition of interests in companies;

– if the shares of the Company are issued against cash contributions and the issue price per share is not significantly lower than the stock exchange price of shares with the same terms, previously issued shares at the time of the issue of the shares. In these cases, however, the exclusion of subscription rights can only take place if the number of the shares issued in this way together with the number of own shares that were sold during the life of this authorisation under the exclusion of subscription rights in accordance with § 186 Para. 3 Sentence 4 AktG, and the number of shares that can be created through the exercise of option and/or conversion rights or the fulfilment of conversion obligations from option or conversion bonds and/or participation rights that were issued during the life of this authorisation under the exclusion of subscription rights in accordance with § 186 Para. 3 Sentence 4 AktG, does not exceed 10% of the share capital at the time the authorisation becomes effective or at the time of the issue of the shares.

The Board of Directors is authorised, with the approval of the Supervisory Board, to determine the content of the share rights, the details of the capital increase as well as the conditions of the share issue, in particular the amount of the issue.

Entry of the authorised capital in the commercial register of the District Court of Frankfurt am Main took place on 10 July 2007. Through the resolution of the Supervisory Board and the Board of Directors of 19 November 2007, the authorised capital stood at EUR 11,400,001 after partial drawdown. Entry of the carrying out of the capital increase from the authorised capital and the corresponding amendment to the Articles of Incorporation in the commercial register of the District Court of Frankfurt am Main took place on 3 December 2007.

c. Contingent capital

In accordance with the resolution adopted by the general shareholders' meeting of 19 July 2005 and the amendment adopted by the ordinary general shareholders' meeting of 6 June 2007, the share capital was conditionally increased (contingent capital) by up to TEUR 3,390, divided into up to 3,390,000 no-par bearer shares. The contingent capital increase will only be carried out if

• the holders or creditors of convertible and/or option bonds and/or of participation rights with conversion or subscription rights that were issued or guaranteed by the Company or one of its direct or indirect majority-interest companies until 30 June 2010 on the basis of the authorisation resolution in the shareholders' meeting of 19 July 2005 under agenda item 7, exercise their conversion or subscription rights or
• the holders or creditors of convertible and/or option bonds and/or of participation rights with conversion or subscription rights that were issued or guaranteed by the Company or one of its direct or indirect majority-interest companies until 30 June 2010 on the basis of the authorisation resolution in the shareholders'

meeting of 19 July 2005 under agenda item 7, who are required to exercise their conversion rights fulfil their conversion obligation

– and the contingent capital is necessary by the standards of the bond conditions.

The new shares participate in the profit from the beginning of the financial year in which they are created through the exercise of conversion or option rights or through the fulfilment of conversion or option obligations. With the approval of the Supervisory Board, the Board of Directors is authorised to determine additional details on the carrying out of the contingent capital increase.

d. Share premium

Additional paid-in capital of TEUR 59,565 was recorded in the reporting year; these funds were obtained through the issue of new bearer shares with a nominal value of TEUR 2,850 and represent the proceeds above the nominal amount.

e. Hedging reserve

This reserve includes profits in the amount of TEUR 3,497 (previous year: TEUR 3,394) from the cash flow hedge agreements of subsidiaries after deducting deferred taxes of TEUR 902 (previous year: TEUR 2,276) as well as profits in the amount of TEUR 144 (previous year: TEUR 740) from cash flow hedges of associates after the deduction of pro-rated deferred taxes of TEUR 21 (previous year: TEUR 15) (cf. 23. Derivate financial instruments).

TEUR	Book value	31.12.2007 Fair value	Book value	31.12.2006 Fair value
Long-term (> 1 year) interest-bearing debt
Variable-rate debt	173,937	173,937		215,125 215,125
Fixed-rate debt		1,267,618 1,252,030		535,145 527,856
		1,441,555 1,425,967		750,270 742,981
Short-term (< 1 year) interest-bearing debt
Variable-rate debt	6,232	6,232	2,161	2,161
Fixed-rate debt	9,655	6,862	8,335	7,215
	15,887	13,094	10,496	9,376
Total		1,457,442 1,439,061		760,766 752,357

The fair value of fixed-rate debt is based on discounted cash flows calculated on the basis of interest rates from the yield curve of 31 December 2007. The book values of variable-rate debt approximate fair value.

The maturities of variable-rate and fixed-rate debt are as follows:

34. Long-term interest-bearing debt Interest rates on the variable-rate debt were adjusted regularly. Interest-rate adjustment dates are based on the 1-month or 3-month Euribor plus an average margin of 0.83% (previous year: 0.88%). Fixed-rate debt carries an average interest-rate of about 5.19% (previous year: 4.81%).

As in the previous year, with the exception of a liability visà-vis Provinzial Rheinland Lebensversicherung AG of TEUR 11,250 (previous year TEUR 12,500) and a liability of Deutsche Immobilien Chancen Objekt Regensburg GmbH & Co. KG of TEUR 3,790 (previous year TEUR 0) (cf. 32. Cash at banks, cash on hand), the interest-bearing debt was secured entirely through mortgages in the year under review. The loan from Provinzial Rheinland Lebensversicherung AG was primarily secured through rights and claims from holdings in the share capital and common stock of the property companies of the Fraspa portfolio.

TEUR		31.12.2007			31.12.2006
	Total variable- rate debt	Total fixed- rate debt	Total fixed- rate debt Weighted interest	Total variable- rate debt	Total fixed- rate debt	Total fixed rate debt Weighted interest
< 1 Year	6,232	9,655	5.57%	2,161	8,335	4.70%
1 - 5 Years	49,889	444,143	5.37%	125,536	50,492	5.39%
> 5 Year	124,048	823,475	5.08%	89,589	484,653	4.77%
	180,169	1,277,273		217,286	543,480

35. Other non-current liabilities

In 2003 the property companies Gewerbepark Langenfeld West 3 GmbH & Co. KG and DIC Objekt Frankfurt 1 GmbH & Co. KG assumed loans to Hessische Landesbank from Deutsche Immobilien Chancen AG & Co. KGaA in the amount of TEUR 14,500 and TEUR 17,500 respectively. The loans bear an interest rate of 4.5% and have a remaining term through 30 December 2009. At the time the loans were assumed, the market interest rate for a similar loan with a similar term was 2.5%. As consideration for the assumption of the residual loan, Deutsche Immobilien Chancen AG & Co. KGaA made one-time interest-equalisation payments of TEUR 1,190 each to Gewerbepark Langenfeld West 3 GmbH & Co. KG and DIC Objekt Frankfurt 1 GmbH & Co. KG. These payments are reported on the profit and loss account over the remaining term. The items recognised as at the balance sheet date:

TEUR		31.12.2007 31.12.2006
Other non-current liabilities	438	692
Current share of other non-current liabilities *	339	339
	777	1,031

* see 39. Other liabilities

36. Trade payables

These liabilities include:

TEUR		31.12.2007 31.12.2006
Purchase price liability AP Portfolio	0	16,631
Other trade payables	1,610	3,906
	1,610	20,537

37. Provisions

These provisions include:

TEUR	01.01.	Use	Re-	lease cation	Allo- 31.12.
Project development costs	59	0	50	0	9
Litigation costs	25	8	0	0	17
	84	8	50	0	26

The item "Project development costs" refers to payments for project development for the WACO Projektmanagement AG property such as broker commissions, possible charges for the correction of defects and other services to be rendered for the benefit of the tenants.

The Company has individual legal disputes with former and current shareholders of DIC Asset AG that are connected with actions for rescission and other actions of individual minority shareholders. A provision in the amount of TEUR 17 has been made for costs of legal disputes.

38. Income taxes payable

in TEUR		31.12.2007 31.12.2006
Trade tax	2,456	618
Corporate tax	1,917	836
	4,373	1,454

TEUR		31.12.2007 31.12.2006
Property transfer tax	6,817	2,814
Value-added tax	1,978	906
Outstanding invoices	1,704	877
Tenant allowances DP Berlin	1,700	0
OP development costs	1,474	877
DP ancillary operating costs	866	0
Shared based payments	739	991
Deposits	560	0
Costs for valuation reports	558	0
Auditing costs	540	364
Profit-sharing	466	293
Interest adjustment *	339	339
Advance rent payments received	272	438
Supervisory Board compensation	260	222
Costs of disposal	52	174
Property tax	11	226
Equity transaction costs	0	728
Other	1,091	1,044
	19,427	9,416

* cf. 35. Other non-current liabilities

39. Other liabilities Liabilities arising from Supervisory Board compensation are liabilities to members of the Supervisory Board and are consequently recognised as liabilities to related parties within the meaning of IAS 24.9d. For information on the individual members, see "Related party disclosures" and the details on Supervisory Board compensation in the management report.

The performance-related compensation agreement with the members of the Board of Directors is treated by the Company as a share-price oriented compensation model. The three members of the Board of Directors hold options on 105,000 so-called "virtual shares" of the Company. These options may not be exercised by members of the Board of Directors until they have been on the board of DIC Asset AG for three years. As at 31 December 2007 the Company estimates the fair value per option at EUR 17.77 for Mr Höller and Mr Koch and EUR 6.24 for Dr. Schäfer. This estimate is based on the Black-Scholes option pricing model.

The critical parameters for this valuation model are the share price on the balance sheet date of EUR 21.75, the exercise price of EUR 2.90 for Mr Höller and Mr Koch and EUR 20 for Dr. Schäfer, the standard deviation of the expected share price return of 30% and the annual risk-free interest rate of 4.75%. Volatility as measured by the standard deviation of the expected share price return is based on statistical analyses of the daily share price over the last two years. During the financial year, no stock appreciation rights were exercised or expired. The stock appreciation rights of the former Board member Mr Overath in the amount of 33,900 options lapsed when he left the board as the holding period had not been reached. At the same time 30,000 stock appreciation rights were granted to the new Board member Dr. Schäfer.

The share-based compensation recognised as an expense of TEUR -252 in the reporting year should be considered a transaction with a related party within the meaning of IAS 24.9d. For additional details, in particular information in accordance with § 314 Para. 1 No. 6 Letter a sentences 5 to 9 HGB (German Commercial Code), please see the management report.

40. Additional notes on financial instruments

The table below shows the book values, valuations and fair values of all categories of financial assets and liabilities as recorded by IFRS 7. The main valuation categories for DIC in accordance with IAS 39 are Available-for-Sale Financial Assets (AfS), Loans and Receivables (LaR) and Financial Liabilities Measured at Amortised Cost (FLAC):

Portfolio

TEUR	Valuation category in acc. with IAS 39	Book value 31.12.2007		Valuation in accordance with IAS 39		Fair value 31.12.2007
			Cost (less depreciation)	Fair value recognised directly	Fair value recognised to profit or loss
ASSETS
Other investments	AfS	241	241			n.a.*
Derivate financial instruments with hedge relationship	n.a.	15,080		15,080		15,080
Other fixed assets	LaR	2,500	2,500			2,500
Claims from the sale of real estate	LaR	1,153	1,153			1,153
Trade receivables	LaR	6,874	6,874			6,874
Receivables from related parties	LaR	37,721	37,721			37,721
Other receivables	LaR	2,475	2,475			2,475
Other assets	LaR	1,783	1,783			1,783
Liquid funds	LaR	165,281	165,281			165,281
LIABILITIES
Long-term interest-bearing debt	FLAC	1,441,555	1,441,555			1,425,967
Derivate financial instruments with hedge relationship	n.a.	5,310		5,009	301	5,310
Other non-current debt	FLAC	438	438			438
Current debt	FLAC	15,887	15,887			13,094
Trade payables	FLAC	1,610	1,610			1,610
Liabilities to related parties	FLAC	10,483	10,483			10,483
Other liabilities	FLAC	19,427	19,427			19,427

* cf. in detail number 22

The corresponding values for the previous year are as follows: Net gains and losses from financial instruments are as fol-

TEUR	Valuation category in acc. with IAS 39	Book value 31.12.2006	Valuation in accordance with IAS 39	Fair value 31.12.2006
			Cost (less depreciation)	Fair value recognised directly	Fair value recognised to profit or loss
ASSETS
Other investments	AfS	241	241			n.a.*
Derivative financial instruments with hedge relationship	n.a.	5,670		5,670		5,670
Other fixed assets	LaR	3,125	3,125			3,125
Claims from the sale of real estate	LaR	5,331	5,331			5,331
Trade receivables	LaR	1,276	1,276			1,276
Receivables from related parties	LaR	36,802	36,802			36,802
Other receivables	LaR	372	372			372
Other assets	LaR	62	62			62
Liquid funds
	LaR	179,728	179,728			179,728
LIABILITIES
Long-term interest-bearing debt	FLAC	750,270	750,270			742,981
Derivative financial instruments with hedge relationship	n.a.	737			737	737
Other non-current debts	FLAC	692	692			692
Current debt	FLAC	10,496	10,496			9,376
Trade payables	FLAC	20,537	20,537			20,537
Liabilities to related parties	FLAC	7,605	7,605			7,605
Other liabilities	FLAC	9,416	9,416			9,416

* cf. in detail number 22.

lows:

TEUR	2007	2006
Available-for-Sale financial assets (AfS)	0	0
Loans and Receivables (LaR)	-104	-18
Financial Liabilities at Cost less Depreciation (FLAC)	301	737

Net gains and losses from loans and receivables contain changes in impairments, gains or losses from elimination as well as incoming payments and the reversal of impairment losses on amortised loans and receivables. Net gains and losses from financial liabilities at cost less depreciation are made up of gains or losses from elimination and the ineffective portion from fair value hedges.

Notes to the cash flow statement

The cash flow statement shows the origin and use of cash flows for financial years 2007 and 2006. Pursuant to IAS 7 "Cash Flow Statements", cash flows are separated into those derived from operations and those derived from investment and financing activities.

The funds in the cash flow statement includes all liquid funds shown on the balance sheet, i.e. cash on hand and credit balances with banks that can be made available within three months. As at 31 December 2007, the use of these funds was not subject to any restrictions.

Cash flows from investment and financing activities are calculated on the basis of payments, while the cash flow from operations is indirectly derived from the profit for the period before interest and income tax. Paid and collected interest and income tax paid are presented separately in "Cash flows from operations".

In addition to cash flows from inflows and outflows related to investment properties, investing activities include cash flows from inflows and outflows from plant and equipment, interests in associates, other investments as well as intangible assets. Also reported here are cash flows from the granting and repayment of short-term loans.

Investing and financing activities that did not result in changes in cash or cash equivalents are not included in the cash flow statement.

In the financial year the parent company DIC Asset AG acquired 74.9% in DIC ONSITE GmbH. The company was included accordingly in the consolidated financial statements in accordance with full consolidation regulations.

In financial year 2007, the following five fully consolidated companies were sold:

DIC Objekt Neuss GmbH DIC Objekt Freiberg GmbH DIC Objekt Wiesbaden GmbH DIC Objekt GelsenkirchenGmbH DIC Objekt Ingelheim GmbH

Furthermore in financial year 2007 the partially consolidated DIC MSREF Objekt Hamburg GmbH was sold.

In these transactions, the following assets and liabilities were assumed by the purchaser:

TEUR

-854
64,575
12,296
-736
405
854
51,756

For more information on the impact of the acquisition and sale of subsidiaries, please see details under "Scope of consolidation".

With effect from 1 January 2007 FAY Property Management GmbH was acquired at 74.9% by group companies and renamed DIC ONSITE GmbH.

The following were assumed with this transaction:

Capital inflows for company acquisitions	3,371
less: liquid funds acquired	0
Total purchase price	3,371
Current debt	948
Liquid funds	0
Acquired assets	4,319
TEUR

DIC ONSITE GmbH achieved sales of TEUR 5,000 in the financial year 2007 and a profit for the period of TEUR 77.

■ Segment reporting

The real estate portfolio of DIC Asset is composed of the segments "Core portfolio" (Core), "Value Added portfolio" (VAD) and "Opportunistic Co-Investments" (OPP). The "Other" segment primarily includes the group's parent company. For more details, see the description in the management report.

Because the Company is active in a single geographic segment (Germany), the Company does not report on its business activities by geographic location.

Segment reporting 2007

TEUR	Core	VAD	OPP	Other	Group
Rental income	48,726	44,838	0	0	93,564
Proceeds from sales	46,772	76,141	0	0	122,913
Profits from sales	8,966	8,765	0	0	17,731
EBITDA	52,227	47,884	-11	-282	99,818
EBIT	41,608	38,917	-11	-473	80,041
Profits from associates	0	0	8,342	0	8,342
EBT	17,401	11,642	8,331	6,342	43,716
Taxes					-7,606
Profit for the period					36,110
Segment assets Investments in associates Income tax claims	1,040,603 0	911,898 0	8,208 29,442	126,239 0	2,086,948 29,442 5,115
Consolidated assets					2,121,505
Segment liabilities Tax liabilities	765,115	707,191	8	22,422	1,494,736 14,021
Consolidated liabilities					1,508,757
Segment investments	496,351	391,515	14,182	0	902,048
Depreciation and amortisation	10,619	8,967	0	191	19,777

Segment reporting 2006

TEUR	Core	VAD	OPP	Other	Group
Rental income	21,158	17,234	0	0	38,392
Proceeds from sales	0	64,521	0	0	64,521
Profits from sales	0	4,245	0	0	4,245
EBITDA	20,488	20,950	0	-4,396	37,042
EBIT	15,455	17,481	0	-4,422	28,514
Profit from associates	0	0	1,627	0	1,627
EBT	7,146	12,456	1,627	-1,312	19,917
Taxes					-4,906
Profit for the period					15,011

Segment assets	592,177	530,547	7,673	197,196	1,327,593
Investments in associates	0	0	8,344	0	8,344
Income tax claims					7,744
Consolidated assets					1,343,681
Segment liabilities	385,583	406,363	332	7,559	799,837
Tax liabilities					9,830
Consolidated liabilities					809,667
Segment investments	434,328	434,833	4,175	00	873,336
Depreciation and amortisation	5,032	3,469	0	27	8,528

Leasing

The group has no financial leasing arrangements. All lease agreements that DIC has concluded with its tenants are classified as operating leases in accordance with IFRS. Accordingly, the group is the lessor in a number of operating leasing arrangements (rental agreements) of various types through the investment properties from which it derives the majority of its income and earnings.

Investment properties with a book value as at the balance sheet date of TEUR 1,851,253 (previous year: TEUR 1,086,482) were leased as part of operating leases. DIC Asset AG will receive the following minimum lease payments from existing leases:

TEUR		2008 2009-2012 from 2013
Future minimum
lease payments	107,363	307,235	260,571

The minimum lease payments include net rental income to be collected up to the agreed lease expiration date or by the earliest possible date of termination on the part of the lessee, regardless of whether notice of termination or non-renewal of a lease is actually expected.

The total expenses for operating leases in which the Company is the lessee were TEUR 105 (previous year: TEUR 49). The operating lease arrangements primarily involve leased vehicles. DIC Asset will make minimum lease payments of TEUR 48 in 2008 and TEUR 25 in 2009 to 2010 for existing operating leases not subject to termination.

■ Reporting on risk management

Explanations of the risk management system and the business risks are given in the company's management report under "Risk management". We are making the following supplementary notes on individual risks within the scope of IFRS 7:

Credit risk

A credit risk is the unexpected loss of income. This is especially the case if the debtor is not fully able to meet his obligations by the due date or if the assets serving as collateral lose value. The maximum default risk is represented by the book value of the financial assets recognised in the balance sheet (including derivative financial instruments with a positive market value). See paragraph 26 for value adjustments on customer receivables.

Liquidity risk

The following table shows the contractually agreed (undiscounted) interest payments and repayments of the original financial liabilities and derivative instruments at fair value as at 31 December 2007:

TEUR	2008	2012	2009 to 2013 and after
Non-derivative financial liabilities
Non-current interest-bearing debt	81,529		714,200 1,050,206
Other non-current liabilities	0	438	0
Current debt	32,703	0	0
Trade payables	1,610	0	0
Amounts owed to related parties	10,483	0	0
Other liabilities	19,427	0	0
Derivative financial liabilities	-3,884	-15,023	-6,378
	141,868		699,615 1,043,828

The values for the previous year are as follows:

TEUR	2007	2011	2008 to 2012 and after
Non-derivative financial liabilities
Non-current interest-bearing debt	37,305	232,156	643,058
Other non-current liabilities	0	692	0
Current debt	3,505	0	0
Trade payables	20,537	0	0
Amounts owed to related parties	7,605	0	0
Other liabilities	9,416	0	0
Derivative financial liabilities	631	2,520	2,260
	78,999	235,368	645,318

Interest rate risk

The Group's interest rate risk is mainly the result of debt, loans and interest-bearing investments. This risk is mitigated by using derivative instruments, in where variable interest payments are exchanged into fixed interest rate payments and hedged in this way against changes in interest rates; cf. number 22.

In accordance with IFRS 7, interest rate risks are presented by way of sensitivity analyses. These show the effects of changes in market interest rates on interest payments, interest income and expense, other income components and, if appropriate, on equity. The interest rate sensitivity analyses are based on the assumption that changes in market interest rates of primary financial instruments with fixed interest rates only affect income if these are measured at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7. Sensitivity analyses were therefore carried out only for financial derivatives (swaps) and variable interest-bearing financial liabilities for which there are no attributable interest-rate hedges. The effects of a market interest rate increase or decrease by 100 basis points on each balance sheet date would have the following implications for income and equity after taking deferred taxes into consideration:

TEUR		2007	2006
	+ 100 bp -100 bp		+ 100 bp -100 bp
Effect on income from variable interest-bearing financial debts	-842	+842	+97	-97
Effect on equity financial derivatives	+34,003 -34,003		+20,932 -20,932

■ Contingencies and other financial commitments

DIC Asset AG made a guarantee bond vis-à-vis Hypo Real Estate Bank AG (HRE) to the amount of its 20% holding in DIC HI Portfolio GmbH in which it undertook a maximum guarantee of a total of TEUR 2,000 on the basis of a loan agreement between DIC HI Portfolio GmbH and HRE.

In addition, a letter of comfort was issued for the subsidiaries of the associate incorporated "at equity", DIC MSREF HMDD Portfolio GmbH, regarding the 20% holdings of outstanding liabilities on the borrowers' part.

A sublease agreement is in effect between DIC Asset AG and Deutsche Immobilien Chancen AG & Co. KGaA, which has provided for a payment obligation of TEUR 19 monthly since 1 August 2007. The agreement remains in effect until 31 October 2014. If the lease agreement is not terminated in writing at least 12 months prior to expiration, it is automatically extended by an additional 12 months.

Additional financial obligations arise from operating lease agreements for vehicles in which the Company is the lessee; see "Leasing".

■ Related party disclosures

Related parties include the 22 proportionately consolidated companies as well as the nine companies incorporated at equity (see "Scope of consolidation").

Due to their significant influence, the following companies and persons are related parties:

• Deutsche Immobilien Chancen AG & Co. KGaA
• Subsidiaries of Deutsche Immobilien Chancen AG & Co. KGaA
• Deutsche Immobilien Chancen Beteiligungs AG
• DIC Grund und Beteiligungs GmbH
• DIC Capital Partners (Europe) GmbH
• GCS Verwaltungs GmbH
• MSREF Funding Inc. together with the companies of the MSREF Group
• Forum European Realty Income II L.P. (hereinafter "Forum")
• Prof. Dr. Gerhard Schmidt

Additional related parties are the Supervisory Board, the Board of Directors, executives and close relatives of these individuals.

The Company has filed a dependent company report on its relationships to these related parties. This report lists all legal transactions conducted by the Company or its subsidiaries with, at the behest or in the interest of affiliated enterprises over the past financial year, as well as all other measures taken or omitted by the Company at the behest or in the interest of these companies over the past fiscal year. The report concludes with the following statement:

"We hereby declare that according to the facts known to us at the time in which the legal transactions were conducted, our Company received or paid a commensurate consideration in each transaction. We took no actions at the behest of or on behalf of the controlling company."

An overview of legal transactions and relations with related parties is below.

■ Legal transactions with companies with significant influence

Deutsche Immobilien Chancen AG & Co. KGaA

There are connections between the personnel ("double mandate") of Deutsche Immobilien Chancen AG & Co. KGaA and its sole general partner, Deutsche Immobilien Chancen Beteiligungs AG, at the level of the Board of Directors and Supervisory Board. Two of the three members of the Board of Directors of the Company, Mr Ulrich Höller and Mr Markus Koch, are also members of the Board of Directors of Deutsche Immobilien Chancen Beteiligungs AG, whose board also consists of an additional member. Since March 2006, the members of the Board of Directors Ulrich Höller and Marcus Koch have had employment contracts with both Deutsche Immobilien Chancen Beteiligungs AG and the Company. Each of these companies pays 50% of their fixed compensation. In addition, there is variable compensation related to the performance of the Deutsche Immobilien Chancen KGaA Group and the DIC Asset Group, as well as options for shares of Deutsche Immobilien Chancen AG & Co. KGaA and compensation based on the share price of DIC Asset AG of the companies. There is also overlap of personnel in the Supervisory Board of DIC Asset AG, Deutsche Immobilien Chancen KGaA and Deutsche Immobilien Chancen Beteiligungs AG in the person of Prof. Dr. Gerhard Schmidt and Klaus-Jürgen Sontowski who are also indirectly significant limited shareholders in Deutsche Immobilien Chancen KGaA. In addition, Prof. Dr. Gerhard Schmidt is also the indirect majority shareholder of its sole general partner, Deutsche Immobilien Chancen Beteiligungs AG.

This company currently provides general property and building management services (including re-leasing services) as well as services related to technical building management for a total of 74 properties, including some in which Deutsche Immobilien Chancen AG & Co. KGaA has a controlling interest. In 2007, the total amount of compensation collected by the company for these services was TEUR 3,295 (excluding VAT). Of this, a total of TEUR 32 (excluding VAT) was compensation paid by the companies of Deutsche Immobilien Chancen AG & Co. KGaA Group.

The Company has placed itself at the disposal of Deutsche Immobilien Chancen AG & Co. KGaA with an overdraft facility, the interest on which has been set at 6% p.a., to be payable in arrears. As security for any part of the loan used, Deutsche Immobilien Chancen AG & Co. KGaA has pledged to the Company its 10% interests in Deutsche Immobilien Chancen Objekt Ulm 1 GmbH & Co. KG, Deutsche Immobilien Chancen Objekt Ulm 2 GmbH & Co. KG, Deutsche Immobilien Chancen Objekt Ulm 1 Erweiterung GmbH & Co. KG and Deutsche Immobilien Chancen Objekt Regensburg GmbH & Co. KG as well as 0.6% interest in the capital stock of ING LPFE Bodenfeld GmbH & Co. KG. As at 31 December 2007, the portion of this overdraft facility that had been used equalled TEUR 15,089 (previous year: TEUR 14,235). DIC Asset AG received interest credits in the amount of TEUR 854 (previous year TEUR 852) in the reporting period for the day-to-day money made available. Deutsche Immobilien Chancen AG & Co. KGaA has an open account relationship with some of the DIC Asset AG subsidiaries which is offset with reference to the reporting date. The Deutsche Immobilien Chancen AG & Co. KGaA companies shown in the table receive interest credits for the loans made available in the following amounts:

TEUR	2007	2006
Deutsche Immobilien Chancen Objekt Regensburg GmbH & Co. KG	11	0
Deutsche Immobilien Chancen Objekt Ulm 1 GmbH & Co. KG	32	29
Deutsche Immobilien Chancen Objekt Ulm 1 Erweiterung GmbH & Co. KG	61	58
DIC Objekt Frankfurt 1 GmbH & Co. KG	68	66
Gewerbepark Langenfeld West 3 GmbH & Co. KG	104	99

DIC Projektentwicklung GmbH & Co KG

DIC Projektentwicklung GmbH & Co. KG, in which Deutsche Immobilien Chancen AG & Co. KGaA has 100% interest, provides various services for DIC Asset AG. Included here are all services related to technical building management (e.g., defect removal, rebuilding management, maintenance) to be provided by the Company itself or on the basis of active service agreements with the Company to various property companies. In addition, DIC Projektentwicklung GmbH & Co. KG has assumed all accounting and other administrative functions, including IT services, of the Company and its subsidiaries.

Compensation for services related to accounting, finance, controlling and administration were calculated on the basis of expenditures and compensated in the amount of TEUR 26 in 2007 (previous year TEUR 70) for services rendered for the benefit of DIC Asset AG and TEUR 531 (previous year TEUR 243) for services for the benefit of the companies of the DIC Asset Group.

DIC Opportunity Fund GmbH

DIC Asset AG provides services in the property administration sector for DIC Opportunity Fund GmbH, in which Deutsche Immobilien Chancen AG & Co. KGaA has a 100% interest, for the administration of properties held directly or indirectly through holdings by DIC Opportunity Fund GmbH on the basis of an agreement dated 29 May 2004, revised on 6 January 2005. Beginning after 31 December 2005, the agreement is extended for an additional year if notice of termination is not given at least two months before the end of the year. The agreement may also be terminated at the end of the month with four weeks' notice if the shareholder structure of DIC Opportunity Fund GmbH undergoes fundamental changes. The amount of the fee is 1% of the annual net rent of the properties involved. The fee totalled TEUR 28 in 2007 (previous year TEUR 24).

Furthermore, on the basis of an agreement dated 22 October 2004, for itself and its associated companies DIC Opportunity Fund GmbH enlists the services of DIC Asset AG for its ongoing support and advice in the purchase and sale of portfolios and individual properties in the "opportunistic co-investments" sector as well as making its expertise available in this area. The amount of the fee is based on the personnel and material expenses incurred in the carrying out of project-related work on the basis of the financial and personnel accounting records of the contractual parties. The resulting compensation claims, plus VAT, are paid quarterly. In addition, DIC Asset AG is to be compensated for expenses in connection with activity for DIC Opportunity Fund GmbH. No payments were made in financial years 2005 to 2007.

For the years 2003, 2004 and 2005, DIC Asset AG pledged to reimburse Deutsche Immobilien Chancen Beteiligungs AG, the sole general partner of Deutsche Immobilien Chancen AG & Co. KGaA, 50% of the costs that are incurred by Deutsche Immobilien Chancen Beteiligungs AG in connection with the employment of members of the Board of Directors who work for the Company, exclusively or not. With the exception of fringe benefits, since the beginning of 2006, all members of the Board of Directors of DIC Asset AG have been compensated for their activities for Deutsche Immobilien Chancen Beteiligungs AG exclusively through it. The amount of reimbursement for the fringe benefits granted to Mr Ulrich Höller and Mr Markus Koch was TEUR 30 (previous year TEUR 26) for the financial year 2007. For additional details, please see the management report.

Under the "German Investment Program Agreement" dated 29 July 2004 and the "Investment and Shareholder Agreement" dated 7 June 2005, certain joint ventures of DIC Asset AG (namely, DIC MSREF Frankfurt Portfolio GmbH, DIC MSREF Objekt Hamburg GmbH, DIC MSREF Berlin GmbH, DIC MSREF Weißfrauenstraße GmbH, DIC MSREF HMDD Portfolio GmbH, DIC MSREF HT Portfolio GmbH and DIC MSREF FF Südwest Portfolio GmbH) and their respective wholly owned property companies receive various services from Deutsche Immobilien Chancen Beteiligungs AG. Accordingly, the above-named companies and Deutsche Immobilien Chancen Beteiligungs AG have entered into agreements for the provision of various management services as well as commissions on the leasing and divestiture of real property, in each case at the time of establishment of these MSREF joint ventures. Moreover, special compensation arrangements have been established with DIC MSREF Frankfurt Portfolio GmbH, DIC MSREF HMDD Portfolio GmbH, DIC MSREF HT Portfolio GmbH and DIC MSREF FF Südwest Portfolio GmbH for releasing services. In addition, an agreement regarding development fees for DIC MSREF Weißfrauenstraße GmbH, DIC MSREF HMDD Portfolio GmbH, DIC MSREF HT Portfolio GmbH and DIC MSREF FF Südwest Portfolio GmbH was also concluded. Deutsche Immobilien Chancen Beteiligungs AG cluding sales tax:

Under the current asset management agreements, MSREF joint ventures are to provide the following compensation to Deutsche Immobilien Chancen Beteiligungs AG:

• Base management fee: 0.5% to 3% of annual net rent;
• Leasing fee (equates to a leasing commission): 2.5 net monthly rental or a net monthly rent, if an outside broker is involved;
• Disposition fee (equates to a sales commission): 1% to 3% of the sales price after transaction costs if no outside broker is involved, and 0.4% to 0.5% of the sales price after transaction costs if an outside broker is involved;
• Tenant improvement fee (equates to a fee for re-leasing services): 3.5% to 5% of the internal and external costs that arise from renovation for a new tenant (particularly for planning and renovation) or negotiable on the basis of this expense;
• Development fee: for project development services through initial leasing: dependent on expenses or market-rate compensation.

In 2006 and 2007, the following compensation was paid to Deutsche Immobilien Chancen Beteiligungs AG, in which MSREF holds 25.1% of the share capital, in each case ex-

Portfolio

	Base Mgm. Fees	Leasing Fees	Dispos. Fees	TI/Devel. Fees	Total
2007	24,118	192,893	402,000	600,000	1,219,011
2006	70,282	670,201	290,434	818,000	1,848,917
2007	90,756	0	0 0	0	90,756
2006	77,898	0	0	0	77,898
2007	36,766	0	0	0	36,766
2006	50,030	0	0	0	50,030
2007	294,000	0	0	500,000	794,000
2006	166,607	141,255	77,500	350,000	735,362
2007	107,118	267,002	807,475	0	1,181,596
2006	273,257	283,586	116,250	0	673,093
2007	55,779	0	475,000	0	530,779
2006	49,449	34,963	0	0	84,412
2007	122,174	0	0	0	122,174
2006	0	0	0	0	0
2007	100,606	16,192	70,500	0	187,298
2006	0	0	0	0	0
2007	831,317	476,087	1,754,975	1,100,000	4,162,380
2006	687,523	1,130,005	484,184	1,168,000	3,469,712

Aside from its Board of Directors, Deutsche Immobilien Chancen Beteiligungs AG has no employees of its own. For the purpose of providing the services assigned to it hereunder, it, for its part, makes use of services rendered by DIC Asset AG. Under an agreement of 16 November 2005 (supplemented by four addenda as a result of newly acquired portfolios), DIC Asset AG charges fees to Deutsche Immobilien Chancen Beteiligungs AG, the amount of which depends on whether, with the approval of the Company, the MSREF joint venture has contracted third-party service providers.

In particular, the agreement provides for compensation for services related to portfolio and asset management in the amount of 2% of the net annual rent or 0.5% of the net annual rent if an external management company is involved. Assistance with leasing is compensated in the amount of 1.5 times the agreed net monthly rent – or 0.75 times the agreed net monthly rent if an external broker was involved. The compensation paid for sales assistance equals 1% of the realised proceeds – or 0.25% of the realised proceeds if an external broker was involved. Individual properties and project developments may be subject to case-by-case arrangements. On the basis of this agreement, the DIC Asset AG charged Deutsche Immobilien Chancen Beteiligungs AG the following amounts for services related to MSREF joint ventures for 2006 and 2007, in each case excluding sales tax:

Recipient of service (EUR)		Asset Mgm. Fees	Leasing Fees	Dispos. Fees	Total
DIC MSREF Frankfurt (Fraspa) Portfolio GmbH	2007	12,059	115,736	262,750	390,545
	2006	34,024	401,254	128,648	563,926
DIC MSREF Berlin (eBay) GmbH	2007	15,126	0	0	15,126
	2006	13,138	0	0	13,138
DIC MSREF Objekt Hamburg GmbH	2007	8,667	0	0	8,667
	2006	33,354	0	0	33,354
DIC MSREF Weißfrauenstraße (MainTor) GmbH	2007	43,469	171,155	538,317	752,942
	2006	59,761	105,941	19,375	185,077
DIC MSREF HMDD (MEAG) Portfolio GmbH	2007	12,250	0	0	12,250
	2006	49,000	0	0	49,000
DIC MSREF HT (Hochtief) Portfolio GmbH	2007	37,979	0	118,750	156,729
	2006	24,725	21,045	0	45,770
DIC MSREF FF Südwest (Falk) Portfolio GmbH	2007	61,087	0	0	61,087
	2006	0	0	0	0
DIC MSREF Berlin Portfolio GmbH	2007	50,303	10,098	17,625	78,026
	2006	0	0	0	0
Overall totals	2007	240,940	296,989	937,442	1,475,370
	2006	214,002	528,240	148,023	890,265

The amount charged under this agreement by the Company to Deutsche Immobilien Chancen Beteiligungs AG totalled TEUR 1,475 in the financial year 2007 (previous year TEUR 890).

DIC Capital Partners (Europe) GmbH

The Company has granted to DIC Capital Partners (Europe) GmbH (formerly DIC Beteiligungs GmbH), which indirectly controls Deutsche Immobilien Chancen Beteiligungs AG as the general partner of Deutsche Immobilien Chancen AG & Co. KGaA, a loan in the amount of TEUR 700 at an interest rate of 4.5% p.a. (payable annually in arrears). The loan is unlimited and was valued at TEUR 403 as at by 31 December 2007. To secure the Company's loan repayment and interest claims against DIC Capital Partners (Europe) GmbH, DIC Capital Partners (Europe) GmbH has assigned to the Company its claims against Deutsche Immobilien Chancen Objekt Mozartstraße 33a GmbH for dividends and the repayment of a loan.

Under the "Shareholder Agreements" dated 27 November 2006 and 9 May 2007, two other joint ventures of DIC Asset AG, namely, DIC Hamburg Portfolio GmbH and DIC HI Portfolio GmbH, and their respective wholly owned property companies receive various services from Deutsche Immobilien Chancen Beteiligungs AG. DIC Hamburg Portfolio GmbH and DIC HI Portfolio GmbH are opportunistic co-investments in which DIC Asset AG has a 20% interest (1.2% directly and 18.8% indirectly through DIC Opportunistic AG).

Other investors are Deutsche Immobilien Chancen AG & CO. KGaA with a 30% interest which is held by its wholly owned subsidiary DIC Opportunity Fund GmbH (1.8% directly and 28.2% indirectly through DIC Opportunistic AG) and DIC Capital Partners (Germany) GmbH & Co. KGaA with a 50% interest (3% directly and 47% indirectly through DIC Opportunistic AG).

Accordingly, the above-named joint venture and Deutsche Immobilien Chancen Beteiligungs AG have entered into "Asset Management Agreements" for the provision of various management services as well as commissions on the leasing and divestiture of real property, in each case at the time of establishment of these joint ventures. Moreover, special compensation arrangements have been established with DIC Hamburg Portfolio GmbH for re-leasing services and an agreement regarding development fees has been concluded.

Under the existing service agreements ("Asset Management Agreements") these DICP joint ventures are to provide the following compensation to Deutsche Immobilien Chancen Beteiligungs AG:

• Base management fee: 1% of annual net rent;
• Leasing fee (equates to a leasing commission): 2.5 net monthly rental or a net monthly rent, if an outside broker is involved;
• Disposition fee (equates to a sales commission): 1.5% to 3% of the sales price after transaction costs if no outside broker is involved, and 0.5% to 1.5% of the sales price after transaction costs if an outside broker is involved;
• Tenant improvement fee (equates to a fee for re-leasing services): 3.5% to 4% of the internal and external costs that arise from renovation for a new tenant (particularly for planning and renovation) or negotiable on the basis of this expense;

– Development fee: for project development services through initial leasing: dependent on expenses or market-rate compensation.

In 2007, the following compensation, was paid to Deutsche Immobilien Chancen Beteiligungs AG, in which DICP GmbH & Co. KGaA holds 7.5% of the share capital, in each case excluding sales tax:

DICP joint ventures (EUR)		Base Mgm. Fees	Leasing Fees	Dispos. Fees	TI/Devel. Fees	Total
DIC Hamburg (Primo) Portfolio GmbH	2007	106,110	0	65,836	0	171,946
	2006	0	0	0	0	0
DIC HI (Helena) Portfolio GmbH	2007	115,955	76,196	0	0	192,151
	2006	0	0	0	0	0
Overall totals	2007	222,065	76,196	65,836	0	364,097
	2006	0	0	0	0	0

As, aside from its Board of Directors, Deutsche Immobilien Chancen Beteiligungs AG has no employees of its own in the property management sector, for the purpose of providing the services assigned to it hereunder, it makes use of DIC Asset AG materials and personnel.

DIC Asset AG charges fees to Deutsche Immobilien Chancen Beteiligungs AG, the amount of which depends on whether, with the approval of the Company, the DICP joint venture has contracted third-party service providers.

In particular, the amount of the fee for services related to portfolio and asset management is 2% of the net annual rent or 0.5% of the net annual rent if an external management company is involved. Assistance with leasing is compensated in the amount of 1.5 times the agreed net monthly rent – or 0.75 times the agreed net monthly rent if an external broker was involved. The compensation paid for sales assistance equals 1% of the realised proceeds – or 0.25% of the realised proceeds if an external broker was involved. Individual properties and project developments may be subject to case-by-case arrangements. On the basis of this agreement, the DIC Asset AG charged Deutsche Immobilien Chancen Beteiligungs AG the following amounts for services related to DICP joint ventures for 2007, in each case excluding sales tax:

Recipient of service (EUR)		Asset Mgm. Fees	Leasing Fees	Dispos. Fees	Total
DIC Hamburg (Primo) Portfolio GmbH	2007	53,055	0	11,931	64,986
	2006	0	0	0	0
DIC HI (Helena) Portfolio GmbH	2007	57,978	45,717	0	103,695
	2006	0	0	0	0
Overall totals	2007	111,033	45,717	11,931	168,681
	2006	0	0	0	0

Morgan Stanley Real Estate Funds (MSREF)

Together with companies of the MSREF group, DIC Asset AG has acquired interests in investment properties, including:

• a portfolio acquired from the Frankfurter Sparkasse, which is held via DIC MSREF Frankfurt Portfolio GmbH and its four wholly owned subsidiary property companies, under agreements dated 22 December 2004;
• the so-called eBay Campus, which is held by DIC MSREF Berlin GmbH and its three wholly owned subsidiary property companies, under agreements dated 23 August 2005;
• the Degussa property in Frankfurt am Main, which is held by DIC MSREF Weißfrauenstraße GmbH and its three wholly owned subsidiary property companies, under agreements dated 14 October 2005;
• properties transferred from MEAG, which are held by DIC MSREF HMDD Portfolio GmbH and its eight wholly owned subsidiary property companies, under agreements dated 14 December 2005;
• properties acquired from Hochtief, which are held by DIC MSREF HT Portfolio GmbH and its ten wholly owned subsidiary property companies, under agreements dated 24 May 2006;
• properties transferred from the Falk group, which are held by DIC MSREF FF Südwest Portfolio GmbH and its six wholly owned subsidiary property companies, under agreements dated 16 August 2006; and
• a portfolio acquired from the Landesbank Berlin, which is held via DIC MSREF Berlin Portfolio GmbH and its twelve wholly owned subsidiary property companies, under agreements dated 16 December 2006

(hereinafter referred to collectively as "joint ventures").

The Company holds an interest in the property companies for the Degussa property, those of the FF Südwest portfolio, the HT portfolio and the properties transferred from MEAG at 20% each indirectly through the portfolio companies. In addition, aside from the 50% stake in each of the divisions of the MSREF group, the Company holds a 30% indirect interest in DIC Opportunity Fund GmbH. In the remaining property companies, the Company and the respective MSREF companies are invested at 50% each indirectly through the portfolio companies.

With respect to the distribution of profits, the DIC companies are entitled to equity return-based profits paid in advance that, in the case of an equity return in the amount of 17.5%, equal to 10% of profits and reach their maximum amount of 30% of profits at equity returns of over 27.5%.

The Company continues to be bound by credit agreements with the Joint Ventures, under which the Company acts both as lender and borrower. The underlying credit comes in the form of overdraft facilities with an agreed interest rate of 6% p.a. in each case. Interest is payable in arrears at the end of the year or quarter or is added to the principal. The agreements call for neither fixed terms nor collateral security. With regard to the balances existing as of the balance sheet dates, see 28. "Receivables from related parties".

Forum European Realty Income II L.P. (Forum)

On 18 September 2005, Deutsche Immobilien Chancen AG & Co. KGaA and Forum European Realty Income II L.P. (hereinafter referred to as "Forum") entered into an agreement on the issue of a convertible bond, under which Forum has made available to Deutsche Immobilien Chancen AG & Co. KGaA a loan in the form of a convertible bond in the amount of EUR 30,000,000. The conversion rights provided for in the agreement entitle Forum at the earliest on 15 October 2008 and at the latest 13 October 2025 to convert the loan into 2,068,965 shares in the Company (corresponding to a conversion price of EUR 14.50 per share) currently held by Deutsche Immobilien Chancen AG & Co. KGaA. As a result of its accession to this agreement, the Company is entitled and obligated vis-àvis Deutsche Immobilien Chancen AG & Co. KGaA, to acquire up to a 40% share in the so-called "opportunistic investments" of Deutsche Immobilien Chancen AG & Co. KGaA. If Deutsche Immobilien Chancen AG & Co. KGaA makes an investment in real estate by implementing the "German Investment Program Agreement" of 29 July 2004 and 7 June 2005 through its subsidiary DIC Opportunity Fund GmbH together with companies of the MSREF group, the resulting equity share of the Company in "opportunistic investments" will be only 20% as a result of the 50% interest held by MSREF. This applies to investments in properties acquired from MEAG, Hochtief and Falk, as well as the Degussa property.

Through another agreement, dated 16 August 2006, DIC Beteiligungs GmbH (now DIC Capital Partners (Europe) GmbH) and its majority shareholder with Forum and Forum S.à r.l., have concluded agreements related to an interest in DIC Beteiligungs GmbH and a reorganisation of the business relationship with Deutsche Immobilien Chancen AG & Co. KGaA. These agreements also contain extensive provisions for rights to tag-along sales in connection with shares in the company held directly or indirectly by the parties.

Transactions with executives

Legal transactions with executives and their close relatives were entered into only to an insignificant extent.

Shareholder structure

Deutsche Immobilien Chancen AG & Co. KGaA, Frankfurt am Main, directly and indirectly, holds a minority stake of 34.53% (previous year: 37.58%) in DIC Asset AG. The corresponding announcement pursuant to § 20 AktG has been submitted to the Company.

Announcements pursuant to § 160 AktG

With regard to the present announcements pursuant to § 21 Abs. 1 WpHG ("Wertpapierhandelsgesetz" – German Securities Trading Act) relating to direct and indirect capital shareholdings of DIC Asset AG please refer to the information given in the section: "Direct and indirect interests in capital" in the group annual report.

Events after the balance sheet date

The economic ownership of the Forum portfolio with 13 properties and an investment volume of EUR 173 million took place on 29 February 2008. DIC Asset AG had acquired the portfolio in December 2007 from iii-Investment GmbH.

Employees

In 2007 the Group had an average of 61 employees. Due to the acquisition and integration of the property and asset management company DIC ONSITE GmbH following the takeover of the company shares the number of employees increased significantly compared with 2006. In addition, the Company made use of the services of the Deutsche Immobilien Chancen Group during the year.

Corporate Governance

The declaration regarding the German Corporate Governance Codex pursuant to § 161 AktG has been submitted and is available to shareholders at any time.

Supervisory Board

The members of the Supervisory Board are:

Prof. Dr. Gerhard Schmidt (Chairman), Attorney, Glattbach

Mr Klaus-Jürgen Sontowski (Deputy Chairman), Businessman, Nürnberg

Mr Michael Bock, Master of Business Administration, Düsseldorf

Mr Hellmar Hedder, Master of Sociology and Business, Münster

Mr Russell C. Platt, Managing Director (Chief Executive Officer), Santa Fé/USA

Mr Bernd Wegener, Real Estate economist (ebs), MRICS, Munich At the same time, the members of the Supervisory Board served on the following additional supervisory boards and supervisory bodies:

Prof. Dr. Gerhard Schmidt

• Grohe AG, Hemer: Chairman of the Supervisory Board;
• Grohe Beteiligungs GmbH, Hemer: Chairman of the Supervisory Board;
• TDF Media Broadcast GmbH, Bonn, Member of the Supervisory Board;
• TTL Information Technology AG, Munich: Member of the Supervisory Board;
• Deutsche Immobilien Chancen Beteiligungs AG, Frankfurt am Main: Chairman of the Supervisory Board; *
• Deutsche Immobilien Chancen AG & Co. KGaA, Frankfurt am Main: Chairman of the Supervisory Board; *
• DIC Capital Partners (Germany) GmbH & Co. KGaA, Munich: Chairman of the Supervisory Board; *
• DIC Capital Partners Beteiligungs GmbH, Munich: Chairman of the Supervisory Board; **
• DIC Capital Partners (Germany) Verwaltungs GmbH, Munich: Chairman of the Supervisory Board; **
• DIC Capital Partners OpCo (Germany) Verwaltungs GmbH, Munich: Chairman of the Supervisory Board; **
• DIC Capital Partners OpCo (Germany) GmbH & Co. KGaA, Munich: Chairman of the Supervisory Board; *
• DIC Capital Partners (Germany) III Verwaltungs GmbH, Munich: Chairman of the Supervisory Board; **
• DIC Opportunistic AG, Frankfurt am Main: Chairman of the Supervisory Board; *
• DIC Development AG, Frankfurt am Main: Chairman of the Supervisory Board: *

* Membership as defined in § 100 Para. 2 Sentence 2 AktG

** Supervisory Board not formed on the basis of legal requirements

Klaus-Jürgen Sontowski

• German Retail REIT AG, Erlangen: Chairman of the Supervisory Board;
• Deutsche Immobilien Chancen AG & Co. KGaA, Frankfurt am Main: Deputy Chairman of the Supervisory Board;
• Deutsche Immobilien Chancen Beteiligungs AG, Frankfurt am Main: Deputy Chairman of the Supervisory Board;
• DIC Opportunistic AG, Frankfurt am Main: Deputy Chairman of the Supervisory Board;
• DIC Development AG, Frankfurt am Main: Deputy Chairman of the Supervisory Board

Michael Bock

• Avenue des Arts, 35 S.A., Brussels, Belgium, Chairman of the Supervisory Board;
• KDV Kapitalbeteiligungsgesellschaft der Deutschen Versicherungswirtschaft AG, Düsseldorf: Deputy Chairman of the Supervisory Board;
• MediClin AG, Frankfurt am Main: Member of the Supervisory Board;
• DIC Capital Partners Beteiligungs GmbH, Munich: Member of the Supervisory Board; **
• DIC Capital Partners (Germany) Verwaltungs GmbH, Munich: Member of the Supervisory Board; **
• MUK Kapitalbeteiligungsgesellschaft mbH, Cologne: Member of the Supervisory Board; **
• ** Supervisory Board not formed on the basis of legal requirements

Russell C. Platt

• DIC Capital Partners Beteiligungs GmbH, Munich: Member of the Supervisory Board; **
• DIC Capital Partners (Germany) Verwaltungs GmbH, Munich: Member of the Supervisory Board; **
• South Asian Real Estate Ltd, India: non-executive Chairman of the Management Board;

– Duet India Hotels Asset Management Limited, Mauritius: Member of the Supervisory Board ** Supervisory Board not formed on the basis of legal requirements

In the financial year the company granted compensation of a total of EUR 204 to members of the Supervisory Board. Further details, in particular information in accordance with § 285 Sentence 1 No. 9 Letter a Sentences 5 to 9 HGB, are given in the annual report.

The Chairman of the Supervisory Board of the Company, Prof. Dr. Gerhard Schmidt, is a partner in the firm of lawyers Weil, Gotshal & Manges LLP. This firm received compensation for legal advisory services, which was reported under expenses, in the amount of TEUR 113 for the financial year 2007 and TEUR 682 for the financial year 2006.

Board of Directors

The members of the Board of Directors are:

Mr Ulrich Höller (Chairman), CEO, Master of Economics, Real Estate economist (ebs), Chartered Surveyor FRICS, Dreieich-Buchschlag

Mr Markus Koch, CFO, Master of Business Administration, Elz

Dr. Jürgen Schäfer, COO, Lawyer, Real Estate economist (ebs), MRICS, Bad Homburg (since 5 October 2007);

Mr Jürgen Overath, COO, Master of Economics, Hennef (up to 31 July 2007)

■ Responsibility Statement

To the best of our knowledge and belief we warrant that, in accordance with the accounting principles to be applied, the consolidated financial statements convey a picture of the Group's assets, liabilities, financial position and earnings that reflects actual circumstances and that business development including results and the situation of the Company as well as of the Group are depicted in such a way in the combined management report and Group management report that a picture that reflects actual circumstances is conveyed and the material opportunities and risks entailed in the Company's and the Group's likely development are described.

Frankfurt am Main, 29 February 2008

The Board of Directors

Ulrich Höller Markus Koch Dr. Jürgen Schäfer

We have audited the consolidated financial statements prepared by the DIC Asset AG, comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements, together with the group management report for the business year from 1 January to 31 December 2007. The preparation of the consolidated financial statements and the group management report in accordance with IFRS as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a para. 1 HGB and supplementary provisions of the articles of incorporation are the responsibility of the parent company's management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany, IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Auditors' Report Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS as adopted by the EU, the additional requirements of German commercial law pursuant to § 315a para. 1 HGB and supplementary provisions of the articles of incorporation and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development.

Nürnberg, 3 March 2008
Rödl & Partner GmbH
Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft
Hübschmann	Garve

Auditor Auditor

Essen, Gladbeckerstraße

Corporate Governance

DIC Asset AG is closely aligned with the regulations of the German Corporate Governance Code. The Board of Directors and the Supervisory Board have always worked in the interests of the shareholders for responsible and sustainable gains in the value of the company. The implementation of the Code is reviewed regularly. The Company's website contains an explicit statement in this regard by the Board of Directors and the Supervisory Board.

■ Management and Supervision

Board of Directors

In accordance with regulations governing stock corporations, DIC Asset AG is led by the Board of Directors. The Supervisory Board selects the members of the Board of Directors. The most important tasks of the Board are establishing the corporate strategy, leading the Company, corporate planning, and the development and operation of adequate risk management. It is also responsible for compliance, i.e. for adherence to the statutory provisions and the Company's internal guidelines. The Board of Directors of DIC Asset AG currently consists of three persons.

Supervisory Board

The Supervisory Board advises the Board of Directors and oversees its management of the business. It consists of six members selected from the shareholders' meeting. The Supervisory Board reported on its activities in financial year 2007 on pages 128-131 in the Report by the Supervisory Board. The Supervisory Board has created an audit committee that is involved in particular with the annual and consolidated financial statements, the audit and the focus of the audit as well as risk management and compliance. Each member of the Supervisory Board discloses any possible conflicts of interest to the Supervisory Board. When the Supervisory Board makes decisions regarding contracts with Supervisory Board members pursuant to § 114 AktG, the member concerned does not participate in the decision. No other conflicts of interest were reported in the financial year just ended.

■ Compensation of members of the Board

Compensation for the Board of Directors is established by the Supervisory Board of DIC Asset AG. In addition to fixed remuneration, Board compensation includes a variable, performance-based component and a long-term incentive component. The relationship between total remuneration and the individual compensation components is appropriate to the tasks of each member of the Board, their personal achievements, the performance of the Board as a whole and the economic situation of DIC Asset AG. There is no express provision in Board contracts for severance in the event service is ended. Severance may only be paid if there is an individually negotiated agreement.

Variable, performance-related compensation

The performance-related variable remuneration of the Board is based on the operating results of the DIC Asset Group and may not be higher than 50% of the fixed compensation. The amount of the variable compensation is determined annually by the Supervisory Board. Payments are normally made in March of the following year.

Stock-based compensation as long-term incentive

In addition, members of the Board of Directors hold options on so-called "virtual shares" of DIC Asset AG. The options are fictitious and do not give any right to purchase shares in DIC Asset AG, but only grant the right to a cash payment. When exercising the options, the members of the Board receive payments in the amount of the share price less a sum of EUR 2.90 per virtual share (Mr Höller and Mr Koch) and EUR 20.00 (Dr. Schäfer). The options may not be exercised until a member has served on the Board for three years. The share price is calculated based on the average of the closing prices of the last ten trading days. The total value of these options as at 31 December 2007 under IFRS stood at EUR 738,500. On the pertinent cut-off date, a liability, equivalent to the value of the virtual share options, is formed and debited against personnel expenditure.

Compensation in financial year 2007

In addition to their work for DIC Asset AG, two members of the Board of Directors held the same position for Deutsche Immobilien Chancen Beteiligungs AG in financial year 2007.

The total compensation of the members of the Board of Directors granted by DIC Asset AG amounted to EUR 391,648.18 in financial year 2007. The total compensation also includes the reversal of the liability of Euro 478,100 to compensate Mr Jürgen Overath in line with share prices on his departure.

■ Compensation of members of the Supervisory Board

Supervisory Board compensation is based on § 10 of the articles of incorporation of DIC Asset AG. Each member receives performance-related compensation appropriate to his activity.

Compensation of the Directors in 2007

EUR	Fixed compensation	Profit- sharing	Stock-based compensation	Other***	Total	Number of options issued	Earliest possible exercise date
Ulrich Höller	142,500.00	71,250.00	114,200.00	3,450.12	331,400.12	40,000	30.08.2009
Markus Koch	87,500.04	39,375.00	100,000.00	15,305.52	242,180.56	35,000	30.08.2009
Dr. Jürgen Schäfer*	62,500.02	23,437.50	11,700.00	5,858.93	103,496.45	30,000	30.09.2010
Jürgen Overath**	119,000.00	59,500.00	-478,100.00	14,171.05	-285,428.95	0
Total	411,500.06	193,562.50	-252,200.00	38,785.62	391,648.18	105,000

* from 1 October 2007

** until 31 July 2007

*** Other compensation includes non-monetary benefits from personal use of a company car and insurance subsidies

Members of the Supervisory Board receive fixed compensation of EUR 15,000 for each full year they are in office. As a variable, performance-dependent fee, each member receives EUR 2,556.46 for each percentage point of dividend over the rate of seven percent, calculated on the amount of equity, that is distributed, but no more than EUR 12,782.30. The Chairman receives double the fixed and variable compensation. Each member of the Supervisory Board receives, in addition to the remuneration, reimbursement of expenses and any value-added tax to be paid on the remuneration.

For membership of the Supervisory Board's committees, which have met at least once during the financial year, the members of the Supervisory Board receive compensation of EUR 2,500 per committee for each full financial year of their membership of this committee, but no more than EUR 5,000 in total. The chairman of a Supervisory Board committee receives twice this additional compensation.

The total compensation of the members of the Supervisory Board amounted to EUR 204,475 in the financial year.

In addition, for financial year 2007 TEUR 113 (previous year: TEUR 682) in fees for services received was paid to the legal office of Weil, Gotshal & Manges LLP, in which the Chairman of the Supervisory Board, Prof. Dr. Gerhard Schmidt, is a partner.

Shareholdings of the Board of Directors and Supervisory Board, Directors' Dealings

Pursuant to § 15a of the German Securities Trading Act (Wertpapierhandelsgesetz), individuals who hold management positions at DIC Asset AG must report to DIC Asset AG any transactions involving shares in the Company or related financial instruments, in particular derivatives, if they exceed EUR 5,000 for acquisitions and disposals in the calendar year. No such directors' dealings were reported in financial year 2007.

The number of shares in the Company or related financial instruments directly or indirectly held (for the purposes of § 15a WpHG) by members of the Board of Directors and the Supervisory Board is less than one percent of the shares in issue of DIC Asset AG.

■ Transparency and information

In the general shareholders' meeting, shareholders of DIC Asset AG make use of their rights. The general shareholders' meeting elects the members of the Supervisory Board and makes decisions on changes to the Supervisory Board and the Board of Directors as well as on Supervisory Board compensation. It also makes decisions on the use of profits, on amendments to the articles of incorporation and on important structural matters that have an impact on the policies of the Company. Every shareholder is entitled to take part in the general shareholders' meeting, to vote with his registered shares and to pose questions to the Board of Directors.

DIC Asset AG issues a report each quarter on business developments and the position of its earnings, finances and assets. In addition, the public is kept informed of developments in the Company through the use of a variety of media. Insider information that could have a significant influence on the share price is published immediately in the form of ad-hoc announcements.

Compensation of the Supervisory Board members 2007

Total	105,000	89,475	10,000	204,475
Bernd Wegener	15,000	12,782	-	27,782
Russell C. Platt	15,000	12,782	-	27,782
Hellmar Hedder	15,000	12,782	2,500	30,282
Michael Bock	15,000	12,782	5,000	32,782
Klaus-Jürgen Sontowski (Deputy chairman)	15,000	12,782	-	27,782
Prof. Dr. Gerhard Schmidt (Chairman)	30,000	25,565	2,500	58,065
EUR	Fixed compensation	Variable compensation	Committee membership compensation	Total

DIC Asset AG's website is an important tool for supplying information to shareholders, investors and the general public. On its website, DIC Asset AG provides financial reports as well as ad-hoc and other announcements in both German and English. A newsletter keeps interested investors up to date and the financial calendar provides information on important dates.

■ Financial reporting and auditing

DIC Asset AG publishes its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), while separate financial statements are published in accordance with HGB. These financial statements are prepared by the Board of Directors and reviewed by the Supervisory Board. The Supervisory Board recommends an auditor that is then chosen by the general shareholders' meeting. The auditor makes a statement of independence to the Supervisory Board.

■ Declaration of Conformity

Pursuant to § 161 AktG, on 7 December 2007, the Board of Directors and the Supervisory Board made the following declaration of conformity to the recommendations of the government commission on corporate governance:

The Board of Directors and the Supervisory Board declare that DIC Asset AG complied with the recommendations of the government commission of the German Corporate Governance Code as published on 12 June 2006 from the date of its previous declaration on 21 November 2006 until 20 July 2007, and since 21 July 2007 has complied and will continue to comply with the recommendations published on 14 June 2007. The following exceptions previously applied or still apply:

• The members of the Board of Directors have been promised options on so-called "virtual" shares as remuneration components which act as a long-term incentive and have risk elements. When they exercise the options, the members of the Board of Directors receive share price-dependent payments which reflect the average price over the last ten trading days prior to exercising the options. Therefore, in deviation to Clause 4.2.3 of the Code, these options on virtual shares were and are not based on "demanding, relevant parameters" within the meaning of the Code. No possibility of limitation (cap) for extraordinary, unforeseen developments has been agreed.
• The Supervisory Board is required to propose suitable candidates for new appointments or reappointments to positions on the Supervisory Board by the General Meeting. In deviation from Clause 5.3.3 of the Code, no nomination committee has been formed for this purpose.

The deviation from Number 4.2.3 of the Code is based on the fact that the Company had already reached a compensation agreement with one member of the Board of Directors at a time at which the Company could not have known that it would not comply with the standards of the German Corporate Governance Code in the future.

In deviation from Number 5.3.3 of the Code, the Supervisory Board has not established a nomination committee because it takes the view that proposals for candidates for new elections to the Supervisory Board to the general shareholders' meeting should continue to be made by the entire Supervisory Board.

Koblenz, Rizzastraße

Report of the Supervisory Board

Through the year, the Board of Directors provided the Supervisory Board with regular, timely and comprehensive reports on the Company's and Group's position and progress as well as significant business events through written and oral reports. The Supervisory Board, through discussions with the Board of Directors, has provided insight into the economic position of the Company and continuously monitored management in accordance with the duties provided for by the law, the Articles of Incorporation and rules of procedure. The Supervisory Board has made decisions on questions that require its approval after undertaking its own review.

Audit Committee established

On 19 June 2006, the Supervisory Board created an audit committee that is involved in particular with the financial statements, risk management, compliance and the preparation of the issue of the mandate to the auditors and the setting of priorities for the audit.

The audit committee met twice in the reporting year. At its constituent meeting of 7 March 2007, Mr Michael Bock was elected chairman of the audit committee. Additional members of the audit committee are the chairman of the Supervisory Board, Prof. Dr. Gerhard Schmidt and Mr Hellmar Hedder. Both the consolidated and the annual financial statements for financial year 2006 of DIC Asset AG were discussed in detail in the presence of the auditor. At the meeting of the audit committee on 4 December 2007, current amendments and improvements to the German Corporate Governance Code were discussed, as was the interim report as at 30 September 2007 and the projection for 2007 explained by the Board of Directors. Furthermore, the priorities for the audit of the annual financial statements as at 31 December 2007 were set in consultation with the auditors.

The chairman of the audit committee provided regular, detailed reports on the work of the audit committee to the plenary meetings of the Supervisory Board.

Detailed advice on current issues

The Supervisory Board met for four regular meetings in the past financial year. In addition to the Company's current business development and the capital increase in November/December 2007, the Supervisory Board's meetings focused on important transactions such as the acquisition of the "Odin" portfolio from SEB Immobilien-Investment GmbH and the acquisition of the "Dolphin" portfolio from the AXA Group and DBV Winterthur.

At the meeting on 20 March 2007, the results of the meeting of the audit committee on 7 March 2007 were debated and discussed in detail. In addition, various acquisition projects were explained by the Board of Directors and the status of planned sales activities disclosed. On 1 January 2007, the takeover of the majority of the FAY Group's asset and property management company by DIC Asset AG and its integration as DIC ONSITE GmbH took place. The Board of Directors explained the status of the integration and, in particular, the organisational and personnel related questions associated therewith. Furthermore, the Board of Directors commented on the proposed agenda for the imminent shareholders' meeting.

At the meeting on 6 June 2007, the Board of Directors presented the results for the first quarter and explained their impact on the annual budget for 2007. Moreover, the current status of purchase/sale and letting activities was presented to the Supervisory Board and discussed jointly in a plenary meeting of the Supervisory Board.

The agenda for the meeting of the Supervisory Board on 19 September 2007 included current transaction processes and a debate on current letting activities. The Board of Directors explained various tenant-related issues in this connection and presented the alternative courses of action associated therewith. The Board of Directors also reported on the current status of the profit forecast for financial year 2007. In addition, current capital resources were analysed together with the Board of Directors and the fundamental option of increasing the share capital with subscription rights for existing shareholders in order to give the Company sufficient scope for further acquisitions was discussed.

At the meeting of the Supervisory Board on 7 December 2007, the Board of Directors reported on the completed capital increase and the associated changes to the shareholder structure. Furthermore, current activities in DIC Asset AG's various portfolios were presented by the Board of Directors. The Board of Directors also commented on the current projections for financial year 2007 with the help of a detailed presentation. The chairman of the audit committee reported to a plenary session of the Supervisory Board on the committee meeting of 4 December 2007 and the priorities for the annual and consolidated financial statements as at 31 December 2007.

In addition, 14 extraordinary meetings, at which current issues were dealt with, took place. They focused on addressing current purchase and sale transactions as well as current issues relating to the capital increase.

Where the Board of Directors asked the Supervisory Board to pass a resolution in these or other cases, the Supervisory Board was always provided with the requisite written draft of the resolution in sufficient time for them to prepare it. The Supervisory Board was also kept informed in detail and without delay of particularly important transactions by the Board of Directors between meetings through oral and written reports. If necessary, decisions were made using the written resolution procedure, which does not require the physical presence of the members.

Corporate Governance

The Supervisory Board issued the current declaration of conformity to the recommendations of the government commission on the German Corporate Governance Code pursuant to § 161 AktG together with the Board of Directors on 7 December 2007 and made it available to shareholders on the Company's website. The Supervisory Board also discussed the system of remuneration for the Board of Directors in this connection.

The members of the Management Board have been granted options on so-called "virtual" shares as remuneration components which act as a long-term incentive and have risk elements. When they exercise the options, the members of the Management Board receive share price-dependent payments which reflect the average price over the last ten trading days prior to exercising the options. Therefore, in deviation to Clause 4.2.3 of the Code, these options on virtual shares were and are not based on "demanding, relevant parameters" within the meaning of the Code. No possibility of limitation (cap) for extraordinary, unforeseen developments has been agreed.

In deviation to Clause 5.3.3 of the Code, no nomination committee has been formed. In principle, the proposal of suitable candidates for election or re-election to the Supervisory Board by the shareholders' meeting is incumbent upon the entire Supervisory Board.

In its meeting on 7 December 2007, the Supervisory Board discussed the audit of the efficiency of its activities in financial year 2007 in detail and will take account of noteworthy findings from the audit in its future work.

Each member of the Supervisory Board discloses any possible conflicts of interest to the Supervisory Board. When the Supervisory Board makes decisions regarding contracts with Supervisory Board members pursuant to § 114 AktG, the member concerned does not participate in the decision. No other conflicts of interest were reported in the financial year just ended.

Discussion of the 2007 annual and consolidated financial statements

The annual and consolidated financial statements prepared by the Board of Directors as at 31 December 2007, including the management report and the Group management report have been audited by Rödl & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Nürnberg, the auditors selected by the shareholders' meeting of 6 May 2007, and have been provided with unqualified certification. The corresponding financial statements and the reports of the auditors were presented to the members of the Supervisory Board in a timely manner. The audit committee undertook a preliminary audit of the financial statements and prepared the discussion of the Supervisory Board as regards these documents. The auditors participated in the discussions of the audit committee at its meeting of 3 March 2008 and reported on the significant results of their audit. The chairman of the audit committee reported on the significant content and result of the audit committee's preliminary audit to the entire Supervisory Board at its meeting on 11 March 2008.

The Supervisory Board also reviewed the annual and consolidated financial statements, the management report summarised with the Group management report, taking due account of the reports of the auditors and the chairman of the audit committee, and the dividend proposals of the Board of Directors and discussed them in detail in its meeting on 11 March 2008 in the presence of the auditors. The Supervisory Board is in agreement with the results of the auditor's audit. The result of the Supervisory Board's audit showed no cause for objections. The Supervisory Board approves the annual and consolidated financial statements prepared by the Management Board. The annual financial statements of DIC Asset AG are hereby approved.

In connection with the proposal on the distribution of profits, which was also submitted in a timely manner by the Board of Directors, the Supervisory Board also discussed the Board of Directors' balance sheet policy and financial planning in the audit committee and the entire Supervisory Board. In accordance with the results of its own audit, the Supervisory Board supports the proposal on the distribution of profits by the Board of Directors.

The Management Board report on relations with affiliates was also audited. The auditor issued the following unqualified certification on that report:

"According to our properly considered audit and evaluation, we confirm that

• 1. the actual information in the report is correct,
• 1. in the legal transactions mentioned in the report, under the circumstances known at the time they were undertaken, the consideration paid by the Company was not disproportionately high."

The Management Board report and the auditor's report were also presented to the individual members of the Supervisory Board in a timely manner. The auditor participated in the Supervisory Board's discussion of the Management Board report and reported on the most significant results of the audit.

The Supervisory Board also audited and approved the Management Board report on relations with affiliates. It also approved the results of the audit of the auditor's report. The result of its own audit gave the Supervisory Board no reason to object to the declaration made by the Management Board on the relations with affiliated companies, presented at the end of the report.

Changes to the Board of Directors

Jürgen Overath left the Board of Directors for personal reasons on 31 July 2007. The Supervisory Board would like to thank Mr Jürgen Overath for his contribution. In its meeting on 5 October 2007, the Supervisory Board appointed Dr. Jürgen Schäfer as a member of the Board of Directors (COO) of DIC Asset AG. The appointment of the Board of Directors member Markus Koch was extended until 31 July 2011.

At the shareholders' meeting on 6 June 2007 Prof. Dr. Gerhard Schmidt, Klaus-Jürgen Sontowski and Michael Bock were re-elected as members of the Supervisory Board. At its meeting held on 6 June 2007, the Supervisory Board elected Prof. Dr. Gerhard Schmidt as Chairman and Klaus-Jürgen Sontowski as Deputy Chairman of the Supervisory Board.

The Supervisory Board would like to thank the Board of Directors and the employees for their dedication and hard work during the past financial year.

Frankfurt am Main, 11 March 2008

The Supervisory Board Prof. Dr. Gerhard Schmidt - Chairman -

Portfolio

Portfolio overview*

as of mid-march 2008

			Opportunistic
	Core	Value Added	Co-Investments	Total
Number of properties	44	155	150	349
Portfolio volume ** in EUR million	1,065	1,046	264	2,375
Portfolio proportion	45%	44%	11%	100%
Net annual rent in EUR million	64	67	15	146
Lettable area in sqm	466,000	657,000	171,000	1,294,000
Rental income per sqm in EUR	11.50	9.70	8.20	10.20
Vacancy quote	4%	15%	16%	11%

* proportional to DIC Asset AG´s share ** market values confirmed by auditors

Growth of portfolio volume EUR million

March 2008	2,375
31.12.2007	2,188
31.12.2006	1,275
31.12.2005	338

Hansastraße: part of the Odin-Portfolio Hansastraße detail

Core Segment

• Long-term rentals, first-class properties and tenants
• Long-term investment horizon

• Regular and high cash flows

• In July 2007, the V6A portfolio with eight high-quality properties was purchased for EUR 155 million

• Further growth as a result of additional portfolio purchases Odin, Dolphin and Forum
• A successful sale at the end of the year: a property leased to Deutsche Telekom in Hamburg was sold

SILO and ECR, Agrippinawerft: two striking buildings from the V6A portfolio on Cologne's newly developed Rheinauhafen

Overview – Core segment

EUR million	2007	2006	∆
Rental income	48.7	21.2	+27.5
Earnings before tax	17.4	7.1	+10.3
Investments	496.4	434.4	+62.0
Market value of investment property	1,057.5	617.6	439.9

Market value of investment property

EUR million, as of 31.12.2007

Agrippinawerft detail

Value Added Segment

• Properties with value creation potential that can be quickly realised

• Properties with a medium risk/return profile

• April: sale of the Mustang portfolio with 10 properties for EUR 86 million

• Growth as a result of purchasing the Odin, Dolphin and Forum portfolios
• Renovation of Frankfurt's city library completed and handed over to the city in July 2007
• Renovation work on the Bienenkorbhaus begun in September 2007

Essen, Alfredstraße, acquired with the Odin portfolio

Overview – Value Added segment

EUR million	2007	2006	∆
Rental income	44.8	17.2	+27.6
Earnings before tax	11.6	12.5	-0.9
Investments	391.5	434.8	-43.3
Market value of investment property	863.9	527.1	+336.8

Alfredstraße detail

Opportunistic Co-Investments Segment

• Minority interests in opportunistic investments of Deutsche Immobilien Chancen AG & Co. KGaA

• High potential for value creation and higher risk

• Office complex in Bad Homburg successfully sold in February 2007

• May 2007: Helena portfolio from HANSAINVEST increases the segment by 54 properties
• Green light for MainTor project in November 2007

Koblenz, Rizzastraße, acquired as part of the Helena portfolio Rizzastraße detail

Overview – Opportunistic Co-Investments segment

EUR million	2007	2006	∆
Earnings before tax	8.3	1.6	+6.7
Investments	14.2	4.2	+10.0
Market value of investment property	266.1	130.6	+135.5

Frankfurt, Theodor-Heuss-Allee

Quarterly Financial Data

EUR million	Q1 2007	Q2 2007	Q3 2007	Q4 2007
Rental income	19.0	20.8	24.6	29.2
Investment property disposal proceeds	0.0	84.6	6.6	31.7
Total revenues	21.8	110.3	35.2	68.9
EBITDA	16.2	30.2	23.5	29.9
EBIT	12.1	25.3	18.7	23.9
FFO	10.4	10.2	8.8	15.2
Profit before depreciation	9.0	19.2	9.5	18.2
Profit for the period	4.9	14.4	4.7	12.1
Earnings per share (in EUR)	0.17	0.49	0.17	0.42

Cash generated from operations	15.7	19.0	16.8	23.4
Market value of investment property *	1,306.3	1,671.5	1,757.0	2,187.5
Total assets	1,396.1	1,805.3	1,769.7	2,121.5
Equity	540.6	541.4	540.6	612.7
Equity ratio in %	38.7	30.0	30.5	28.9
Total liabilities	855.5	1,263.9	1,229.1	1,508.8
Debt ratio in %	61.3	70.0	69.5	71.1

* acquisitions during the year considered at purchase costs

Multi-Year Overview

2007	2006	2005	2004	2003*
93.6	38.4	18.1	11.3	9.5
122.9	64.5	21.7	19.8	0.0
236.2	110.9	43.1	32.9	18.1
99.8	37.0	18.7	11.6	8.0
80.0	28.5	14.7	8.9	5.6
44.6	21.8	7.4	3.5	5.9
55.9	23.5	10.4	6.0	2.9
36.1	15.0	6.4	3.3	0.5
1.25	0.85	0.87	0.65	0.12
74.9	40.5	15.5	10.9	4.0
2,187.5	1,275.3	337.5	231.7	--
2,121.5	1,343.7	369.8	272.9	153.3
612.7	534.0	115.3	78.9	53.8
28.9	39.7	31.2	28.9	35.1
1,508.8	809.7	254.4	194.1	99.5
71.1	60.3	68.8	71.1	64.9

Net asset value 722.2 608.2 142.2 91.3 -- Net asset value per share in EUR 23.04 21.34 13.98 13.47 -- Earnings per share in EUR 1.65 0.75 0.56 0.35 0.05

* HGB figures

List of subsidiaries Appendix 1 of the notes to the consolidated financial statements

Consolidated subsidiaries

Name and registered office of company	Interest (%)
Deutsche Immobilien Chancen Objekt Herne GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Elmshorn GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Euskirchen GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Moers GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Neuss GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Offenbach GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Ludwigshafen GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Neunkirchen GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Schweinfurt GmbH & Co. KG, Erlangen	100.0
Deutsche Immobilien Chancen Objekt Karlsruhe GmbH, Erlangen	100.0
DIC Objekt Neumarkt GmbH, Frankfurt am Main	100.0
DIC RMN-Portfolio GmbH, Frankfurt am Main	100.0
DIC Objekt Stadthaus Offenbach GmbH, Frankfurt am Main	100.0
DIC Objekt Bensheim GmbH, Frankfurt am Main	100.0
DIC Objekt Dreieich GmbH, Frankfurt am Main	100.0
DIC Objekt Darmstadt GmbH, Frankfurt am Main	100.0
DIC Objekt Velbert GmbH, Frankfurt am Main	100.0
DIC Objekt Alsbach GmbH, Frankfurt am Main	100.0
DIC Objekt Alsbach 2 GmbH, Frankfurt am Main	100.0
DIC Objekt Hemsbach GmbH, Frankfurt am Main	100.0
DIC RMN Objekt 1 GmbH, Frankfurt am Main	100.0
DIC Objekt Köln 1 GmbH, Frankfurt am Main	100.0
DIC Objekt Nürnberg GmbH, Frankfurt am Main	100.0
DIC Objekt Hannover GmbH, Frankfurt am Main	100.0
DIC RP Portfolio GmbH, Frankfurt am Main	100.0
DIC RP Objekt Bochum GmbH, Frankfurt am Main	100.0
DIC RP Objekt Essen GmbH, Frankfurt am Main	100.0
DIC RP Objekt Merseburg GmbH, Frankfurt am Main	100.0
DIC RP Objekt Stadtbadgalerie Bochum GmbH, Frankfurt am Main	100.0
DIC RP Objekt 1 GmbH, Frankfurt am Main	100.0
DIC RP Objekt 2 GmbH, Frankfurt am Main	100.0
DIC AP Portfolio GmbH, Frankfurt am Main	100.0
DIC AP Objekt Augustaanlage GmbH, Frankfurt am Main	100.0
DIC AP Objekt Coblitzweg GmbH, Frankfurt am Main	100.0

Name and registered office of company	Interest (%)
DIC AP Objekt Düsseldorf GmbH, Frankfurt am Main	100.0
DIC AP Objekt Insterburger Str. 5 GmbH, Frankfurt am Main	100.0
DIC AP Objekt Insterburger Str. 7 GmbH, Frankfurt am Main	100.0
DIC AP Objekt Königsberger Str. 1 GmbH, Frankfurt am Main	100.0
DIC AP Objekt Königsberger Str. 29 GmbH, Frankfurt am Main	100.0
DIC AP Objekt Mainz GmbH, Frankfurt am Main	100.0
DIC AP Objekt P6 GmbH, Frankfurt am Main	100.0
DIC AP Objekt Stuttgarter Str. GmbH, Frankfurt am Main	100.0
DIC AP Objekt 1 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 2 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 3 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 4 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 5 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 6 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 7 GmbH, Frankfurt am Main	100.0
DIC AP Objekt 8 GmbH, Frankfurt am Main	100.0
DIC AP Objekt Konstanz GmbH, Frankfurt am Main	100.0
DIC AP Objekt Wiesbaden GmbH, Frankfurt am Main	100.0
DIC AP Objekt Oberursel GmbH, Frankfurt am Main	100.0
DIC AP Objekt Sinzheim GmbH, Frankfurt am Main	100.0
DIC AP Objekt 9 GmbH, Frankfurt am Main	100.0
DIC Asset Portfolio GmbH, Frankfurt am Main	100.0
WACO Projektmanagement AG, Luxemburg	100.0
DIC Asset AP GmbH, Frankfurt am Main	100.0
DIC Asset OP GmbH, Frankfurt am Main	100.0
DIC Asset DP GmbH, Frankfurt am Main	100.0
DIC OF Reit 1 GmbH, Frankfurt am Main	100.0
DIC OF Reit 2 GmbH, Frankfurt am Main	100.0
DIC OP Portfolio GmbH, Frankfurt am Main	100.0
DIC OP Objekt Darmstadt GmbH, Frankfurt am Main	100.0
DIC OP Objekt Duisburg GmbH, Frankfurt am Main	100.0
DIC OP Objekt Düsseldorf GmbH, Frankfurt am Main	100.0
DIC OP Objekt Hamburg GmbH, Frankfurt am Main	100.0
DIC OP Objekt Hannover GmbH, Frankfurt am Main	100.0

Name and registered office of company	Interest (%)
DIC OP Objekt Leverkusen GmbH, Frankfurt am Main	100.0
DIC OP Objekt Mannheim GmbH, Frankfurt am Main	100.0
DIC OP Objekt Marl GmbH, Frankfurt am Main	100.0
DIC OP Objekt München-Grünwald GmbH, Frankfurt am Main	100.0
DIC OP Objekt Objekt 1 GmbH, Frankfurt am Main	100.0
DIC OP Objekt Objekt 2 GmbH, Frankfurt am Main	100.0
DIC OP Objekt Objekt 3 GmbH, Frankfurt am Main	100.0
DIC OP Objekt Objekt 4 GmbH, Frankfurt am Main	100.0
DIC VP Portfolio GmbH, Frankfurt am Main	100.0
DIC VP Objekt Bonn GmbH, Frankfurt am Main	100.0
DIC VP Objekt Köln ECR GmbH, Frankfurt am Main	100.0
DIC VP Objekt Köln Silo GmbH, Frankfurt am Main	100.0
DIC VP Objekt Düsseldorf Nordstraße GmbH, Frankfurt am Main	100.0
DIC VP Objekt Düsseldorf Nürnberger Straße GmbH, Frankfurt am Main	100.0
DIC VP Objekt Moers GmbH, Frankfurt am Main	100.0
DIC VP Objekt Neubrandenburg GmbH, Frankfurt am Main	100.0
DIC VP Objekt Saalfeld GmbH, Frankfurt am Main	100.0
DIC VP Betriebsvorrichtungs GmbH, Frankfurt am Main	100.0
DIC DP Portfolio GmbH, Frankfurt am Main	100.0
DIC DP Wiesbaden Frankfurter Straße 50 GmbH, Frankfurt am Main	100.0
DIC DP Wiesbaden Frankfurter Straße 46-48 GmbH, Frankfurt am Main	100.0
DIC DP Hamburg Halenreie GmbH, Frankfurt am Main	100.0
DIC DP Düsseldorf Erkrather Straße GmbH, Frankfurt am Main	100.0
DIC DP Mönchengladbach Stresemannstraße GmbH, Frankfurt am Main	100.0
DIC DP Berlin Rosenthalerstraße GmbH, Frankfurt am Main	100.0
DIC DP Langenselbold Am Weiher GmbH, Frankfurt am Main	100.0
DIC DP München Hanauer Straße GmbH, Frankfurt am Main	100.0
DIC DP Hallbergmoos Lilienthalstraße GmbH, Frankfurt am Main	100.0
DIC DP Objekt 1 GmbH, Frankfurt am Main	100.0
DIC DP Objekt 2 GmbH, Frankfurt am Main	100.0
DIC DP Objekt 3 GmbH, Frankfurt am Main	100.0
DIC DP Objekt 4 GmbH, Frankfurt am Main	100.0
DIC DP Objekt 5 GmbH, Frankfurt am Main	100.0
DIC DP Objekt 6 GmbH, Frankfurt am Main	100.0

Name and registered office of company	Interest (%)
DIC DP Betriebsvorrichtungs GmbH, Frankfurt am Main	100.0
DIC 25 Portfolio GmbH, Frankfurt am Main	100.0
DIC 25 Ingolstadt GmbH, Frankfurt am Main	100.0
DIC 25 Trier GmbH, Frankfurt am Main	100.0
DIC 25 Weilburg GmbH, Frankfurt am Main	100.0
DIC 25 Herbron-Selbach GmbH, Frankfurt am Main	100.0
DIC 25 Unkel GmbH, Frankfurt am Main	100.0
DIC 25 Emmelshausen GmbH, Frankfurt am Main	100.0
DIC 25 Betriebsvorrichtungs GmbH, Frankfurt am Main	100.0
DIC 26 Portfolio GmbH, Frankfurt am Main	100.0
DIC 26 Leipzig GmbH, Frankfurt am Main	100.0
DIC 26 Regensburg GmbH, Frankfurt am Main	100.0
DIC 26 Flensburg GmbH, Frankfurt am Main	100.0
DIC 26 Frankfurt-Taunusstraße GmbH, Frankfurt am Main	100.0
DIC 26 Frankfurt-Kaiserstraße GmbH, Frankfurt am Main	100.0
DIC 26 München GmbH, Frankfurt am Main	100.0
DIC 26 Langenhagen GmbH, Frankfurt am Main	100.0
DIC 26 Erfurt GmbH, Frankfurt am Main	100.0
DIC 26 Bonn GmbH, Frankfurt am Main	100.0
DIC 26 Schwaben GmbH, Frankfurt am Main	100.0
DIC 26 Wiesbaden GmbH, Frankfurt am Main	100.0
DIC 26 Köln GmbH, Frankfurt am Main	100.0
DIC 26 Betriebsvorrichtungs GmbH, Frankfurt am Main	100.0
DIC Objekt Braunschweig GmbH, Frankfurt am Main	94.8
DIC Objektsteuerung GmbH, Frankfurt am Main	94.8
Deutsche Immobilien Chancen Objekt Mozartstr. 33a GmbH, Erlangen	94.0
DIC Objekt Frankfurt 1 GmbH & Co. KG, Frankfurt am Main	94.0
Gewerbepark Langenfeld West 3 GmbH & Co. KG, Bielefeld	93.2
Deutsche Immobilien Chancen Objekt Ulm 1 GmbH & Co. KG, Erlangen	90.0
Deutsche Immobilien Chancen Objekt Ulm 2 GmbH & Co. KG, Erlangen	90.0
Deutsche Immobilien Chancen Objekt Ulm 1 Erweiterung GmbH, Erlangen	90.0
Deutsche Immobilien Chancen Objektbeteiligungs GmbH, Erlangen	90.0
Deutsche Immobilien Chancen Objekt Regensburg GmbH & Co. KG, Erlangen	90.0
DIC ONSITE GmbH, Mannheim	74.9

List of joint ventures Appendix 2 of the notes to the consolidated financial statements

Joint ventures with proportionate consolidation

Name and registered office of company	Interest (%)
DIC MSREF Berlin GmbH, Frankfurt am Main	50.0
DIC Objekt Berlin 1 GmbH, Frankfurt am Main	50.0
DIC Objekt Berlin 2 GmbH, Frankfurt am Main	50.0
DIC Objekt Berlin 3 GmbH, Frankfurt am Main	50.0
DIC MSREF Objekt Hamburg GmbH, Frankfurt am Main	50.0
DIC MSREF Frankfurt Portfolio GmbH, Frankfurt am Main	50.0
DIC MSREF Frankfurt Objekt Zeil GmbH, Frankfurt am Main	50.0
DIC MSREF Frankfurt Objekt Hasengasse GmbH, Frankfurt am Main	50.0
DIC MSREF Frankfurt Objekt Börsenplatz GmbH, Frankfurt am Main	50.0
DIC MSREF Frankfurt Objekt 3 GmbH, Frankfurt am Main	50.0
DIC MSREF Berlin Portfolio GmbH, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Bundesallee, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Hardenbergstraße, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Berliner Straße, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Frankfurt, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Arnulfstraße, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Badensche Straße, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt Cottbus, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt 1, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt 2, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt 3, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt 4, Frankfurt am Main	50.0
DIC Berlin Portfolio Objekt 5, Frankfurt am Main	50.0

■ Glossary

Asset management

Value-orientated running and/or optimisation of properties through leasing management, repositioning or modernisation

Cash flow

Measure that shows the net inflow of cash from sales activities and other current activities during a given period

Change of control clause

Contractual provision in the event of a takeover by another company

Corporate Governance

Rules for sound, responsible business management. The aim is for management in line with values and standards in accordance with shareholders and other interested groups. The annual declaration of conformity to the German Corporate Governance Code provides a tool to assess the corporate governance

Debt ratio

Ratio of external capital to total capital as shown on the balance sheet

Derivative financial instruments

Derivative financial instruments, or derivatives, are reciprocal contracts, whose price determination is generally based on the trend of a market-dependent underlying security (e.g. shares or interest rates). They are used for various reasons, including hedging financial risks

Drag-along right

A right to demand the joint sale of shares

EBIT

Earnings before Interest and Taxes

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortisation

EPRA index

EPRA (European Public Real Estate Association) index family, used internationally, that details the performance of the world's largest listed real estate companies

Equity method

Method of determining the (company's) value based on discounted future cash flows

Fee

Payment for services to third parties or payment obligation as a result of using third-party services

FFO (Funds from operations)

Operating result from real estate management before depreciation and amortisation, taxes and profit from sales and development projects and dividend income

GPR-250

GPR (Global Property Research) index that groups together the world's 250 largest listed real estate stocks

Hedge (Cash flow hedge, Fair value hedge)

Agreement of a contract to safeguard and compensate for financial risk positions

IFRS (International Financial Reporting Standards)

IFRS have applied to listed companies since 1.1.2005. This should facilitate worldwide comparability of capital market-orientated companies. The focus is on information that is easy to understand and fair is paramount, ahead of protection of creditors and riskrelated matters

Impairment test

Obligatory periodic comparison under IFRS of market and book values and the assessment of potential signs of a sustained impairment in the value of assets

Interest swap

With interest swaps, counterparties exchange cash flows from fixed and variable loans. This enables interest rate risks within corporate financing to be hedged

Joint venture

Legally independent joint-venture company, in which two or more companies are involved

Market capitalisation

Total market value of a company listed on the stock exchange, resulting from the share price multiplied by the number of shares issued

NAV (Net asset value)

Represents the intrinsic value of a company. This is calculated from the value of assets minus liabilities

Operating leasing

Term connected with international valuation rules. It describes a periodic lease agreement that is not fully amortised by the lessor's financing costs

Percentage of completion method

The percentage of completion method is used in long-term project developments to assess the profit based on the degree of completion (performance progress)

Prime Standard

Segment of the Frankfurt Stock Exchange with the greatest relevance and degree of regulation

Property management

Complete property servicing by own efforts or by management of commercial, infrastructure and technical service providers

Tag-along right

Right to join a share sale transaction

■ Board of Directors

from left to right:

Markus Koch, 45 Board Member, CFO

Ulrich Höller, 42 Chairman of the Board, CEO

Dr. Jürgen Schäfer, 46 Board Member, COO

■ Contact

DIC Asset AG

Grünhof · Eschersheimer Landstraße 223 60320 Frankfurt am Main

Tel. +49 69 9 45 48 58-0 Fax +49 69 9 45 48 58-99

ir@dic-asset.de www.dic-asset.de

Forward-looking statements

This annual report contains statements that refer to future developments. Such statements constitute assessments that have been taken in the light of the information available. Should the assumptions on which they are based not prove accurate, or should – as specified in the section entitled Risk Report – risks occur, the actual results may differ from those anticipated.

© March 2008

Publisher: DIC Asset AG Grünhof · Eschersheimer Landstraße 223 60320 Frankfurt am Main

Note

This report is published in German (original version) and English (non-binding translation).

Concept and Design: LinusContent AG, Frankfurt am Main www.linuscontent.com