DIC Asset AG — Interim / Quarterly Report 2006

Aug 21, 2006

Q2

INTERIM REPORT 2ND QUARTER 2006

Key Figures Contents

H1 2006	H1 2005	Change
12.1	8.9	+36 %
4.2	1.0	+320 %
18.1	11.3	+60 %
9.4	7.3	+29 %
3.8	1.0	+280 %
0.27	0.13	+108 %
8.4	2.0	+320 %

	30 Jun 2006	31 Dec 2005	Change
Equity ratio	52.8 %	31.2 %	+21.6
Real estate asset volume	388.7	290.0	+34 %
Total assets	629.2	369.8	+70 %

WKN / ISIN	509840 / DE0005098404
Symbol	DAZ
Issued capital (EUR)	20,340,000
Number of shares	20,340,000
Free float	39 %
Sector	Financial services, Real estate
Indices	SDAX, DIMAX
Official market	Prime Standard FWB, Xetra
OTC market	Berlin-Bremen, Duesseldorf,
	Frankfurt, Munich, Stuttgart
Current share price*	EUR 22.30
52-week high*	EUR 37.15
52-week low*	EUR 12.40

Foreword	2
Portfolio Performance	5
Financial Position and Results of Operations	8
The Share	10
Material Events after the Balance Sheet Date	13
Outlook	13
Consolidated Financial Statements as at 30 June 2006
Consolidated Balance Sheet	14
Consolidated Profit and Loss Account	16
Statement of Changes in Equity	18
Statement of Cash Flow	20
Segment Reporting	21
Notes	22
Overview of Portfolio	24

* Source: vwd group, Xetra closing prices as at 14 Aug 2006

Foreword

2

Dear Shareholders, Business Partners, Employees and Friends

With regard to the second quarter of 2006, DIC Asset AG once again has good news to report to its shareholders. Following the resolution adopted at the General Meeting in February to double our capital base, the new shares were placed on the market in May 2006, raising the free float, as announced, to approximately 39 %. Our company has been included in the SDAX since June.

We have therefore laid the necessary foundations for further dynamic growth. At the same time, our share has been made more attractive to investors, offering greater transparency coupled with more comprehensive, faster information.

Our operative business developed during the second quarter in line with our expectations; three crucial key figures underscore our dynamism and solid footing, and are the foundations underpinning our growth strategy:

• ■ real estate assets, measured in terms of floor space, grew by more than 27 %;
• ■ consolidated net income more than quadrupled compared with the second quarter of 2005; and
• ■ as a result of the capital measures, the equity ratio rose to 52.8 % as at 30 June 2006.

Thanks to its ongoing successes in both transaction and portfolio management, DIC Asset AG continues to enjoy highly dynamic growth.

The total transaction volume for the first half of 2006 amounted to EUR 341 million. Excluding co-investors, EUR 223 million of this total relates to DIC Asset AG, of which EUR 217 million was related to acquisitions and EUR 6 million to the sale of property.

Ulrich Höller Chairman of the Board, CEO

Markus Koch Board Member, CFO

Jürgen Overath Board Member, COO

Company headquarters in the Grünhof Business Centre, Frankfurt am Main We have therefore further consolidated our position on the German real estate market. A key factor in our success is our proactive portfolio strategy, focusing on acquisitions, specific modernisation measures, projects to increase value in use, and repositionings. The current environment in which we operate is marked by growing demand on the rental markets, particularly as far as contemporary city-centre premises are concerned. At the same time, properties in these locations with development potential are frequently being disposed of by their previous investors. This situation is a source of excellent momentum for our business.

By drawing on its capital and know-how, DIC Asset AG is well placed to exploit the momentum inherent in the investment and rental markets. On the basis of our existing portfolio and through future acquisitions, we will continue to generate high value added for our shareholders in our capacity as experts in German commercial real estate. We expect DIC Asset AG to enter into further transactions involving comparable acquisitions during the second half of the year, on at least the same scale as in the first six months.

Frankfurt, August 2006

Ulrich Höller Markus Koch Jürgen Overath

Portfolio Performance

In addition to focusing on our operative business, our activities during the second quarter were also geared toward the capital increase of DIC Asset AG. As well as working to ensure our successful stock market debut in the Prime Standard segment, we also significantly expanded our portfolio in line with our growth strategy.

Significant expansion of real estate portfolio

Overall, 13 new properties with a proportionate floor space of

some 76,000 m2 were added to the portfolio. Meanwhile, two properties were disposed of. The total useable area of the properties held in the DIC Asset AG portfolio rose by approximately 27 % – compared with the first quarter – to 342,566 m2 as at 30 June 2006.

The Core segment com-

prises real estate offering a high level of rental income and suitable for long-term leasing to first-rate tenants. We expanded the Core portfolio during the second quarter to include three highquality properties with a total floor space of some 55,000 m2 :

• the headquarters building of VdS Schadenverhütung in Köln, which is the subject of a long-term lease;
• two office properties in Hannover and Nürnberg, which are leased to Deutsche Bahn AG and which are to be extensively renovated by the seller.

The Value Added segment comprises properties with attractive short or medium-term potential for a rise in value.

In this segment we can report the successful sale of a further property from the Fraspa portfolio, the full value-creation potential having been realised. Additionally in the second quarter, possession was transferred with regard to a Fraspa property, the sale of which had been contractually agreed during the previous quarter.

Furthermore we entered into a contractual agreement on the purchase of the Ruhr portfolio, comprising a total of 15 properties, in June 2006. Possession was transferred at the end of July. This portfolio, previously belonging to a project development company from Germany's Ruhr region, primarily comprises properties subject to long-term lease arrangements offering attractive value-creation potential. The best known properties are the Stadtbadgalerie in the centre of Bochum and Gelsenkirchen's administrative offices. The properties, covering a total useable area of 95,000 m2 , feature in both the Core and the Value Added segments.

The Opportunistic Co-Investments segment comprises holdings in specific opportunistic investments made by Deutsche

Office centre, Frankfurt (MEAG portfolio); below: VdS Headquarters, Köln

Immobilien Chancen AG & Co. KGaA. DIC Asset AG acts as a coinvestor in individual properties and portfolios with an elevated risk/reward profile which may, for example, be repositioned by means of project development measures.

During the second quarter we were involved in this regard in the acquisition from Hochtief AG of a portfolio of 10 commercial properties subject to long-

term leases in prime locations throughout Germany. The properties are being upgraded and repositioned on the basis of individual business plans that incorporate modernisation and restructuring measures.

The sale of two properties from the MEAG portfolio was agreed during the second quar-

ter. Possession of one of these properties was transferred at the end of July, with the second property due to change hands at the end of August.

As at 30 June 2006, DIC Asset AG's entire portfolio comprised 138 properties with a total useable area of 342,566 m2 . Within the space of half a year, the floor space of the property portfolio rose by 58%. The proportionate transaction volume with regard to DIC Asset AG was approximately EUR 223 million for the first half of 2006.

Leased long term to the town of Offenbach: Civic center Offenbach (Rhine-Main-Neckar Portfolio)

Financial Position and Results of Operations

Revenue growth of 60 %

Total revenues for the first half-year were EUR 6.8 million higher than during the first half of the previous year, at EUR 18.1 million. Rental income amounted to EUR 12.1 million, EUR 3.2 million higher than during the first half of the previous year, due to the significant increase in the total leased floor space. Revenues from the sale of real estate amounted to EUR 4.2 million, which related to two properties. During the previous year, one property was sold for EUR 1.0 million.

Expenses rise as planned

The total expenses of DIC Asset AG were up EUR 4.9 million on the same period of the previous year at EUR 10.7 million, a rise that can be primarily attributed to the higher level of property disposals. Costs relating to real estate were also up, due to the expansion of operations. There was a slight disproportionate rise in personnel expenses, as planned. One-off expenses relating to the issue of

capital amounted to EUR 9.9 million. After deducting deferred taxes, expenses in the amount of EUR 5.8 million were offset against the share premium, with a decreasing effect on equity.

Improvement in earnings

The first-half EBITDA (earnings before interest, income taxes, depreciation and amortisation) rose by 28.7 % compared with the previous year to EUR 9.4 million, whilst EBIT (earnings before interest and income taxes) was up 32.4 % to EUR 7.4 million.

Profit for the period for the first half more than tripled, up by EUR 2.8 million to EUR 3.8 million. Contributing factors included higher net rental income, gains from the sale of real estate, and a higher share of the profits of associates – achieved through investments made in the Opportunistic Co-Investments segment. Additionally, the availability of higher capital resources resulted in lower financing costs on balance. There was a strong improvement in the profit margin (earnings in relation to total revenues), which grew by 12.3 percentage points to 20.8 %.

35 % increase in property assets

As at the end of the first half-year, the total assets of DIC Asset AG were up EUR 259.4 million compared with 31 December 2005 to EUR 629.2 million, representing growth of 70.1 %.

234.5 million, mainly due to the inflow of cash resulting from the capital increase.

High capital base for further growth

The issue of capital resulted in a significant increase of EUR 216.7 million in the capital base to EUR 332.0 million as at 30 June 2006. The equity ratio, at 52.8 %, has risen 21.6 percentage points compared with the 2005 year-end.

Primarily as a result of the increased acquisition activity, consolidated debt rose by EUR 42.8 million to EUR 297.2 million. This can be broken down into long-term debt in the amount of EUR 218.9 million, and short-term debt totalling EUR 78.3 million. With a view to optimising the financing structure, current acquisitions are being financed solely through equity for the time being, with the possibility of calling contractually agreed credit lines up to six months later.

Strong rise in cash flow

Cash flows from operating activities rose by EUR 6.4 million to EUR 8.4 million compared with the same period of the previous year, primarily due to the higher profit, increased interest revenue and the receipt of payments relating to purchase price claims. Spending, primarily on the acquisition of real estate, totalled EUR 139.9 million. EUR 284.4 million was raised for the financing of current and future investments, in the first instance through long-term loans and the issue of capital. As at the reporting date of 30 June 2006, cash and cash equivalents amounted to EUR 192.4 million.

First listing in the Prime Standard segment on the Frankfurt Stock Exchange on 8 May 2006

The Share

Successful stock market debut in the Prime Standard segment In early February the Extraordinary General Meeting resolved that the DIC Asset AG share should be floated in the Prime Standard segment of the Frankfurt Stock Exchange. Subsequently, our activities were focused on preparing for the secondary public offering, supported in this task by Deutsche Bank and Morgan Stanley, in the capacity of lead managers, and by Kempen & Co. and WestLB. During numerous talks and at roadshows staged in Europe and the US we very successfully presented the business model and strategy of DIC Asset AG to institutional investors during a second phase.

The subscription price for the shares offered was set at EUR 22 on 4 May 2006. The DIC Asset share was subsequently floated on the Frankfurt Stock Exchange in the Prime Standard segment on 8 May. The new shares commenced trading on their first trading day at EUR 28, following an issue that had been ten times oversubscribed. In total, a new issue volume of some EUR 214 million was achieved.

Inclusion in the SDAX

During the flotation, the strategic investors Morgan Stanley Real Estate Funds (MSREF) and Forum Partners became major shareholders in DIC Asset AG. The issue of new shares boosted the free float from a previous level of approximately 5 % to some 39 %. This increase and the rise in market capitalisation and trading volume resulted in the share being admitted to the small-cap index SDAX in mid-June 2006.

Share price trending upwards

In the course of a general correction on the equity markets in May 2006, the price of the DIC Asset share also lost ground. Prior to the capital issue the price had, furthermore, been characterised by the low free float and the correspondingly low level of liquidity. An upward trend has been in evidence since mid-June with the share rising to slightly above its issue price at the end of July. We are continually in talks with analysts and investors to improve awareness of the successful business model pursued by DIC Asset AG, and to raise general levels of interest in the share. At the end of July, two renowned banks issued buy recommendations for the DIC Asset AG share. The share continues to be regularly covered by analysts.

General Meeting decides on dividend and new authorised capital

At the Ordinary General Meeting on 5 May 2006 the shareholders approved the payment of a dividend of 56 cents per share for 2005. This dividend was distributed on 8 May 2006. The Meeting also resolved the creation of new authorised share capital in the amount of EUR 10,170,000.

Share price from January 2006 to August 2006

Membership of key association

DIC Asset AG has been a member of the EPRA (European Public Real Estate Association) since May 2006. This association represents the interests of major real estate companies in the public domain, and has developed into an institution with a presence on the worldwide real estate market. As benchmarks, the indices developed by the EPRA for real estate shares are of the utmost relevance. Additionally, the EPRA promotes continuous improve-

ments to tax and reporting, and in the application of corporate governance. We have based our activities to date on the recommendations of the EPRA, and will cooperate closely with the association in future.

ca. 39% Free ßoat ca. 39% Free ßoat

Material Events after the Balance Sheet Date

The Ruhr portfolio was transferred at the end of July, adding 15 properties with a total useable area of 95,000 m2 to the real estate portfolio of DIC Asset AG. Also in late July, possession of a property sold from the MEAG portfolio was transferred.

Outlook

During the first half-year we agreed investments in first-rate properties and buildings with attractive value-creation potential in the proportionate amount of EUR 217 million. Our aim in the second half is to continue to grow strongly and in a focused way. The issue of the new shares and the capital increase in May have provided a significant amount of capital with which to achieve this aim. At present we are intensively reviewing numerous potential acquisitions, with a view to expanding our real estate portfolio. We are confident that we will be able to conclude further significant transactions, on a par with the first half of the year, during the second six months of 2006.

With regard to the 2006 financial year as a whole, we expect to achieve a clear increase in business and in our results, compared with the previous year.

Financial calender 07.–08.09.2006 EPRA European Public Real Estate Association, Annual Conference, Budapest 26.–28.09.2006 German Investment Conference, HypoVereinsbank, München 12.10.2006 6th Symposium of the Property Share Initiative ("Initiative Immobilien-Aktie"), Frankfurt 27.11.2006 German Equity Forum, Fall 2006, Frankfurt November 2006 Interim report for the third quarter

ca. 41%

Consolidated Profit and Loss Account for the period from 1 January to 30 June 2006

	1 Jan –	1 Jan –	1 Apr –	1 Apr –
	30 Jun 06	30 Jun 05	30 Jun 06	30 Jun 05
TEUR Total revenues	18,095	11,346	11,271	6,073
Total expenses	-10,736	-5,786	-7,155	-3,338
Gross rental income	12,127	8,943	6,100	4,465
Ground rents	-8	-8	-4	-4
Service charge income on principal basis	1,462	1,115	877	615
Service charge expenses on principal basis	-1,497	-1,243	-890	-697
Depreciation and amortization	-2,062	-1,760	-1,008	-880
Other real estate related operating expenses	-387	-254	-70	-144
Net rental income	9,635	6,793	5,005	3,355
Administrative expenses	-1,479	-1,112	-738	-536
Personnel expenses	-1,391	-516	-706	-188
Other income	324	320	111	25
Other expenses	-181	-10	-7	-6
Net other income	143	310	104	19
Investment property disposal proceeds	4,182	968	4,182	968
Carrying value of investment property disposals	-3,731	-883	-3,731	-883
Profit on disposal of investment property	451	85	451	85
Net operating profit before financing activities	7,359	5,560	4,116	2,735
Share of the profit of associates	373	0	141	0
Net financing costs	-2,790	-4,310	-1,128	-2,190
Profit before tax	4,942	1,250	3,129	545
Income tax expense	-877	-290	-626	-133
Deferred income tax expense	-308	-1	-62	150
Profit for the period	3,757	959	2,441	562
Attributable to:
Equity holders of the parent	3,645	893	2,387	542
Minority interest	112	66	54	20
Basic earnings per share (EUR)	0.27	0.13	0.14	0.08
Diluted earnings per share (EUR)	0.27	0.13	0.14	0.08

Consolidated Balance Sheet as at 30 June 2006

ASSETS

	30 Jun 2006	31 Dec 2005
TEUR
Investment property	383,507	284,917
Office furniture and equipment	107	32
Investments in associates	4,283	1,803
Other investments	241	241
Derivatives	299	0
Intangibles assets	355	394
Deferred tax assets	5,889	1,808
Total non-current assets	394,681	289,195
Development properties held for sale	5,194	5,041
Receivables from sale of properties	3	3,200
Trade receivables	1,239	1,024
Receivables due from related parties	34,569	31,630
Income taxes receivable	167	180
Other receivables	852	403
Other current assets	88	7
Cash and cash equivalents	192,408	39,078
Total current assets	234,520	80,563
Total assets	629,201	369,758

EQUITY AND LIABILITIES

	30 Jun 2006	31 Dec 2005
TEUR
Equity
Issued capital	20,340	10,170
Share premium	304,787	97,043
Hedging and translation reserve	706	-6
Reserve for first-time application of IFRS	-2,373	-2,373
Other reserves	1,136	1,136
Retained earnings	5,082	7,132
Total shareholders' equity	329,678	113,102
Minority interest	2,348	2,242
Total equity	332,026	115,344
Liabilities
Interest-bearing loans and borrowings	211,561	169,199
Deferred tax liabilities	5,425	4,946
Derivatives	1,025	1,918
Other non-current liabilities	861	1,241
Total non-current liabilities	218,872	177,304
Interest-bearing loans and borrowings	11,185	16,589
Trade payables	14,824	51,910
Liabilities to related parties	6,309	1,990
Provisions	356	450
Income taxes payable	1,949	1,519
Other liabilities	4,846	4,652
Advance payments received on sale of investment property	38,834	0
Total current liabilities	78,303	77,110
Total liabilities	297,175	254,414
Total equity and liabilities	629,201	369,758

Consolidated Statement of Changes in Equity as at 30 June 2006

TEUR	Issued capital	Share- premium	Reserve for cash flow hedges	Reserve from first-time application of IFRS	Other reserves	Retained earnings	Minority interest	Total
Status as of 31 December 2004	6,780	67,716	0	-2,373	1,136	3,215	2,371	78,845
Dividends 2004							-113	-113
Profit for the period						893	66	959
Status as of 30 June 2005	6,780	67,716	0	-2,373	1,136	4,108	2,324	79,691
Capital increase	3,390	37,290						40,680
Release of share premium		-7,951					-883	-8,834
Dividends 2004						-2,373		-2,373
Profit for the period						5,532	-48	5,484
Equity capital transaction costs net of tax		-12						-12
Loss from cash flow hedges of associates			-6					-6
Effect from first-time proportional consolidation of previously consolidated entities						-4		-4
Distribution from current period profits						-131		-131
Change of consolidation group							849	849
Status as of 31 December 2005	10,170	97,043	-6	-2,373	1,136	7,132	2,242	115,344
Capital increase	10,170	213,578						223,748
Dividends 2005						-5,695	-6	-5,701
Profit for the period						3,645	112	3,757
Equity capital transaction costs net of tax		-5,834						-5,834
Gains from cash flow hedges			177					177
Gains from cash flow hedges of associates			535					535
Status as of 30 June 2006	20,340	304,787	706	-2,373	1,136	5,082	2,348	332,026

Consolidated Statement of Cash Flow for the Quarter ended 30 June 2006

	1 Jan – 30 Jun 06	1 Jan – 30 Jun 05
TEUR
Operating Activities
Net operating profit
before interest and taxes paid	8,453	6,490
Realised gains/losses disposals	-451	-85
Depreciation and amortisation	2,062	1,760
Movements in receivables and payables	3,106	-972
Movements in provisions	-95	-51
Other non-cash transactions	56	422
Cash generated from operations	13,131	7,564
Interest paid	-5,996	-6,353
Interest received	1,735	864
Income taxes paid	-434	-41
Cash flows from operating activities	8,436	2,034
Investing activities
Proceeds from sale of investment property	4,183	4,915
Acquisition of investment property	-140,990	-115,401
Capital expenditure on investment properties	-289	-147
Acquisition/Disposal of other investments	-1,572	0
Loans/Collection of principal on loans	-1,131	-6,219
Acquisition of office furniture and equipment	-82	-49
Cash flow from investing activities	-139,881	-116,901
Financing activities
Proceeds from the issue of share capital	223,748	0
Proceeds from non-current borrowings	76,553	108,280
Repayment of borrowings	-38,794	-5,643
Advance payments received on sale of investment property	38,834	0
Payment of transaction costs	-9,865	0
Dividends paid	-5,701	-114
Cash flows from financing activities	284,775	102,523
Net increase in cash and cash equivalents	153,330	-12,344
Cash and cash equivalents at 1 January	39,078	18,660
Cash and cash equivalents at 30 June	192,408	6,316

Segment Reporting

	1 Jan – 30 Jun 06	1 Jan – 30 Jun 05	1 Apr – 30 Jun 06	1 Apr – 30 Jun 05
TEUR
Gross rental income
Core	6,612	4,558	3,540	2,283
Value Added	5,515	4,385	2,560	2,182
Opp. Co-Investments	0	0	0	0
Other	0	0	0	0
Group	12,127	8,943	6,100	4,465
EBITDA
Core	6,270	4,278	3,285	2,081
Value Added	5,134	3,958	2,803	1,942
Opp. Co-Investments	0	0	0	0
Other	-1,983	-916	-964	-408
Group	9,421	7,320	5,124	3,615
EBT
Core	2,005	1,851	1,054	898
Value Added	3,042	285	1,965	91
Opp. Co-Investments	373	0	141	0
Other	-478	-887	-31	-445
Group	4,942	1,250	3,129	545

Notes

General information on reporting

These quarterly financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS). The quarterly accounts for the consolidated companies are based on uniform accounting and measurement principles. The consolidation, currency translation, recognition and measurement methods used are unchanged compared with the 2005 consolidated financial statements.

The auditors Rödl & Partner GmbH, Nürnberg, have inspected the quarterly financial statements and issued a corresponding certificate without negative findings.

Rights issue

On 3 February 2006 the General Meeting of DIC Asset AG resolved to increase the issued share capital by EUR 10,170,000.00, from EUR 10,170,000.00 to EUR 20,340,000.00, by issuing 10,170,000 new bearer no-par value shares ("unit shares") against cash contributions. For details of the rights issue see "The Share".

Notes to the consolidated financial statements

In conjunction with the expansion of the portfolio during the first half of 2006, further external loans in the amount of TEUR 76,553 were taken up. These serve to finance the RMN portfolio (TEUR 46,596), the Deutsche Telekom property in Braunschweig (TEUR 13,000), the Creditreform head office (TEUR 9,485), the third building on the eBay Campus (proportionate amount of TEUR 6,672) and the Fraspa Portfolio (proportionate amount of TEUR 800).

Of the contingent liabilities reported as at 31 December 2005 in the form of potential purchase price increases totalling TEUR 4,900, the amount of TEUR 3,300 was incurred and paid during the first half of 2006, the corresponding conditions having been fulfilled.

Dividend

The General Meeting of DIC Asset AG of 5 May 2006 resolved to distribute a dividend of TEUR 5,695 (EUR 0.56 per share). The dividend was distributed on 8 May 2006.

Other information

There were no changes to the composition of the Management Board or Supervisory Board during the period under review.

Attractive potential for value creation: Hochtief Portfolio X-act, Düsseldorf Forum am Anger, Erfurt

As at 30 June 2006 the company employed 14 members of staff (previous year: 10 employees).

Portfolio Overview

Property	Share (%)	Portfolio segment	Usable area m2
Bürocentrum Erlangen	94	Core	10,200
Business Park Regensburg	90	Core	3,800
Businesspark Langenfeld	93.2	Core	10,200
C&A Portfolio	100	VAD	46,800
Creditreform Headquarters	100	Core	7,600
Degussa Areal	20	OPP	64,400
Deutsche Bahn Nürnberg	100	Core	26,500
Deutsche Bahn Hannover	100	Core	21,900
eBay Campus	50	Core/VAD	19,300
Fraspa Portfolio	50	VAD	53,600
Hochtief Portfolio	20	OPP	105,400
MEAG Portfolio	20	OPP	154,500
Pfleiderer Headquarters	100	Core	9,400
Rhine-Main-Neckar Portfolio	100	Core/VAD	42,500
Science Park Ulm 1	90	Core	5,400
Science Park Ulm 2	90	VAD	4,500
Science Park Ulm 3	90	Core	8,500
Siemens Building Technologies	94	Core	10,300
Siemens Administration	94	Core	11,000
Telekom Braunschweig	94.8	Core	14,100
Telekom Hamburg	50	VAD	15,300
VdS Headquarters	100	Core	6,900

Location of Property

As at the end of July 2006

As at 30 June 2006

DIC A sset A G

Grünhof · Eschersheimer Landstr D -60320 F rankfurt am Main

ir@dic-asset.de · www.dic-asset.de Phone +49 69 9 45 48 58-0 · Fax +49 69 9 45 48 58-99 aße 223 Q

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