An overview

  Domestic International Total
Leasable space in m2 751,200 153,700 904,900
No. of shops 1,770 543 2,313
Occupancy rate* 99 % 98 % 99 %
Inhabitants in catchment area in millions 12.9 3.5 16.4
No. of centers 15 4 19

Location, location, location

We want to offer our tenants the location they need to reach their target group. Yet there are no compromises when it comes to quality: Each of our 19 shopping centers is in its own prime location. The majority of our properties are located in city centers, usually directly connected to the local pedestrian zone. In other words, in the locations which have historically provided a home to the retail sector. We own shopping centers at well-established locations outside the city limits, as well, which are important outside the region and also have a larger catchment area compared to the locations in city centers.

Undoubtedly one key factor for the success of an individual property is its transport links: In city centers, we seek out locations close to local public transport hubs such as central bus stops or train stations. The central bus stations in Passau and Hameln, for instance, are directly incorporated into our shopping centers and in Wuppertal both the central station for the overhead railway and the main train station are in the immediate vicinity of our shopping center. Our facilities outside the city centers are primarily visited by people driving cars and are each in easilyaccessible locations along motorways.

Each of our properties is equipped with a sufficient number of parking spaces to guarantee customers‘ maximum convenience. In city centers, parking spaces are offered at low prices. At locations outside city limits, visitors can choose from a large number of parking spaces at no charge. Of course spaces for disabled people and women are also offered.

Quality without any compromises

Each of our 19 centers is unique. The tenant structure is always the result of an intense process aimed specifically at supplementing the offerings of the city center in question. We want to work together with neighbouring merchants to increase the appeal of city centers to benefit the entire city. That also means that center managers participate actively in city marketing and even initiate it. Our focus is always on working with others in a spirit of fairness and partnership.

The architecture of each property is specifically designed to meet the demands of the location. And of course the functionality of such a complex building must be guaranteed. We value both the facility‘s integration into the urban landscape as well as its architectural design. Whenever possible, historical buildings can also be incorporated into the center and preserved. This was the case with the listed Intecta building, for example, which now forms an integral part of the Altmarkt- Galerie in Dresden and represents a particularly impressive example of an amalgamation of old and new.

The high demands we place on our properties also apply to the interior: There our objective is to offer visitors, customers and the employees of our tenants an enjoyable shopping experience and a pleasant environment. Intelligent lighting systems create the right atmosphere in the mall to suit the time of day and state-of-the-art climate control technology guarantees a comfortable temperature all year round. Quiet rest areas and fountains give people an opportunity to relax for a moment. Everybody should feel good and want to keep coming back. And that regardless of age: wide malls, escalators and lifts make it is possible to explore every part of the center without too much effort, even with a pushchair or wheelchair. Play areas await our smallest visitors and invite shoppers to take some time out; relaxing massage chairs are available for customers to use for a small fee.

Beautiful on the outside, green on the inside

As a long-term investor, we regard sustainability as a matter of course. Ongoing modernisation ensures that our centers remain competitive and retain their value. All of our shopping centers in Germany have been powered by green electricity since 2011. A change to energy from renewable sources is planned for our foreign properties, as well.

Moreover, we aim is to reduce energy consumption in our centers even further and thus reduce CO2 emissions. To achieve this aim, we invest in ultramodern technologies during construction such as heat exchangers and the latest generation of environmentally friendly lighting. Center management communicates closely with our tenants on the topic of environmental protection with the goal that they also steadily reduce the energy consumed in individual shops.

Prepared for tomorrow - today

The retail sector has always been in a constant process of change. One aspect of that change is that many retailers need to adapt their spaces over time to meet new requirements and thus enlarge or even scale them down. We are able to provide customised solutions to meet the demand for ever more varied spaces: Each tenant receives the floor space they need to implement their individual retail concept. Internal walls can be shifted without any major effort or expense. Reducing a larger retail space can open up an opportunity to integrate a new shop concept into the center.

This flexibility sets our centers apart from classical business premises in city centers and represents a clear strategic advantage. For many retailers, this is a prerequisite for entering the market in a city where, due to its special property structure and inflexible layouts in the premier locations, e.g. in a mediaevalstyle pedestrian zone, no suitable spaces could be found. The whole of the retail sector in the city center can benefit through this addition to the city‘s offering.

Increasingly, shops are shifting from being pure retail areas to experience arenas. Through lavish shop interiors, extensive consultations and the opportunity to thoroughly test the product in the shop, the experience of shopping itself is elevated to event status. Examples of this include Hollister, an American fashion company that propels its mostly young customers into a Californian surf shop atmosphere or computer manufacturer Apple which offers free in-store workshops for its product lines to anybody interested and thus makes its devices accessible to people who are not as technically savvy.

Over a half a million visitors – every day

The catchment areas around our centers are home to over 16 million people in all, nearly 13 million of them in Germany. In theory at least, that means we reach about one of every 6 German citizens. The catchment area is ascertained according to standardised rules for each of our properties and updated on an annual basis. On any given workday, our centers are visited by an average of around 600,000 people.

Our top 10 tenants

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With a share of 6.0%, the Metro Group continues to be our biggest tenant. As one of the most important international retailers, it is represented in a large number of our centers by its distribution channels Media Markt and Saturn (consumer electronics), Real- SB-Warenhaus and Galeria Kaufhof Warenhaus. Behind this in second place with 4.4% is the Douglas Group, one of Europe‘s leading retailers with Douglas perfumeries, Thalia bookshops, Christ jewellery shops, Hussel confectioners and an AppelrathCüpper fashion store.

Overall, our 10 largest tenants are only responsible for one quarter of our rental incomes which shows that there is no major dependency on individual tenants.

Long-term rental contracts

Our standard rental contracts have a ten-year term. The weighted residual term at 31 December 2011 was 7.4 years with 69% of our rental contracts being secured until at least 2017.

External center management

Our long-term partner ECE Projektmanagement has been engaged to manage our 19 shopping centers. In addition, ECE implemented the development of the A10 Triangle as well as the expansions of the Main-Taunus- Zentrum in Sulzbach and the Altmarkt- Galerie in Dresden on our behalf.

ECE was founded in 1965 by mail-order pioneer Werner Otto and is held by the Otto family. It develops, plans, rents and manages shopping centers and develops other special properties. With 137 facilities currently under its management and around 3,000 employees, the company is Europe‘s market leader in the area of inner-city shopping centers.

Deutsche EuroShop benefits from this experience both inside Germany and abroad. Thanks to our streamlined structure, we are therefore able to focus on our core business and competence, portfolio management.

Cooperative teamwork

One of the core tasks of center management is putting together the right combination of retailers, service providers and catering outlets to suit the property and the local area. The mix of tenants and sectors is tailored to the location and refined over time as tenants change. The retail sector in the vicinity is analysed and monitored on a continuous basis, as well.

Targeted customer surveys are employed in the center to identify customers‘ needs and wishes. These are conducted on a regular basis and help us determine which sector or which product customers would like to see in the center in question. The center‘s management also strives to make space for retailers from sectors which have practically disappeared from city centers on account of current rents in prime locations yet which form part of an attractive retail mix such as specialist toy shops or pet stores.

As long-term real estate investors, the rental activities focus on permanent rent optimisation rather than short-term maximisation of rental income. Here we set ourselves apart from building owners in the classical pedestrian zone. We want to offer customers and visitors an attractive mix. Rather than focus on each shop space in isolation, we look at the tenant mix as a whole. The rent in each case is calculated primarily on the basis of the sales potential of the sector to which the tenant belongs as well as of its location within the shopping center. This system also makes it possible to offer an opportunity to new businesses and niche concepts.

The intention is that everybody will benefit from this system: As the landlord, we are able to build a relationship of trust with our tenants for the long term. Our tenants, in turn, benefit from the high volume of visitors, a key prerequisite for achieving adequate sales. And last but not least, our customers can enjoy a wide range of diverse products in each Deutsche EuroShop shopping center. This diversity extends from a wide variety of fashion concepts to shops for electronics and specialty foods through to services such as dry cleaner‘s, banks and post offices. Dining facilities top off the offering: cafés, (fast-food) restaurants and ice-cream parlours provide refreshment or nourishment in-between shopping.

Real diversity among tenants

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The fashion industry dominates our retail mix at 50%. Our customers, too, confirm the particular fashion expertise in our centers time and again in customer surveys. It is one reason why customers are sometimes even willing to travel long distances from the surrounding area to enjoy the wide selection and the quality of the professional advice.

To lend each of our properties their own individual character, care is taken to ensure that there is a balanced blend of regional traders and individual merchants as well as national and international chains. And this is where we differ from classical shopping streets in Germany where the percentage of chains sometimes exceeds 90%.

Retailing basics

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Our tenants are the pillar of our success. In addition to many regional dealers and individual merchants, they include Aldi, Apple, Bench, Bijou Brigitte, Breuninger, Burger King, C&A, Christ, dm-drogerie markt, Deutsche Post, Deutsche Telekom, Douglas, Esprit, Fielmann, Foot Locker, Galeria Kaufhof, Gerry Weber, Görtz, H&M, Hollister, Jack&Jones, Karstadt, Lacoste, Marc Cain, Media Markt, Marc O’Polo, New Yorker, Nordsee, Peek & Cloppenburg, REWE, Saturn, Starbucks, s.Oliver, Subway, Swarovski, Thalia, Timberland, TK Maxx, Tom Tailor, Tommy Hilfiger, Vero Moda, Vodafone, WMF and Zara.

A new shopping experience every day

Unlike in the traditional city centre where each individual retailer decides for itself how long it will be open, visitors can always rely on standard opening hours at our centers. This advantage is appreciated by customers who have to come a long way since they can depend on every tenant leaving the shop open until the last minute.

There is a Service Point manned by friendly staff who can answer any questions about the facility. Increasingly popular gift vouchers can be purchased here and frequently pushchairs can also be hired. Security staff ensure that visitors can feel safe at all times. Baby changing rooms, customer toilets and cash machines complete the offering. We pay special attention to cleanliness and have cleaning crews on duty throughout the day.

Each of our properties has its own marketing association and membership is automatic for all tenants. This gives them the opportunity to join a committee and actively contribute to the center‘s marketing strategy. That includes planning and organising events that transform the mall into a lively marketplace time and again. Fashion shows, casting shows, art exhibitions and job fairs provide visitors with a welcome change and new impressions. Local associations and charitable organisations are also invited to present themselves in our shopping centers. Last but not least, events surrounding the Easter and Christmas seasons as well as lavish decorations are among the projects undertaken by a marketing association.

Moreover, the marketing association coordinates the center‘s coherent advertising presence and edits the center newspaper. The paper is published several times per year and is distributed throughout the catchment area as an individual insert in regional daily newspapers. It provides readers with regular updates on news relating to the center such as new tenants, special sales and upcoming events. All of our centers also offer a great deal of information on their own websites and most actively participate in social media with their own channels. The classical advertising measures employed include radio ads, adverts on and inside local public transport, and illuminated advertising posters; targeted distribution ensures that these reach a large audience.

Investment Guidelines

Deutsche EuroShop’s key investment guidelines can be summarised as follows:

  • Deutsche EuroShop invests exclusively in shopping centers.
  • The minimum property size is 15,000 m2 of which no more than 15% may be office space or other non-commercial usage.
  • The locations must feature a catchment area of at least 300,000 inhabitants.
  • Shopping center projects are only purchased when an executable construction authorization can be produced and 40% of the leasable space is secured by long-term legally binding lease contracts.
  • Project developments without the right to build or that cannot facilitate pre-letting can be taken over as a joint venture. Project development costs may not exceed 5% in individual cases or 10% in total of the Deutsche EuroShop equity.
  • The main country of investment is Germany. In the long-term, investments in the rest of Europe may not exceed 25% of the total investment volume.

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